TIDMJLEN
RNS Number : 0673P
JLEN Environmental Assets Group Ltd
16 June 2022
16 June 2022
JLEN Environmental Assets Group Limited
Announcement of results for the year ended 31 March 2022
The Directors of JLEN Environmental Assets Group Limited (the
"Company" or "JLEN") are pleased to announce the Company's results
for the year ended 31 March 2022.
Financial highlights
-- Portfolio valuation as at 31 March 2022 of GBP795.4 million
(31 March 2021: GBP571.4 million)
-- NAV per ordinary share of 115.3 pence as at 31 March 2022 (31
March 2021: 92.2 pence), primarily due to an upward revision to
electricity and gas price forecasts, including for assets acquired
during the period previously held at cost
-- Total dividends declared of 6.80 pence per ordinary share for
the year to 31 March 2022 (2021: 6.76 pence per ordinary share), in
line with the target set out in the 2021 Annual Report
-- Dividend cover of 1.10 times, on a paid basis for the financial year
-- Target dividend for the year to 31 March 2023 of 7.14 pence
per ordinary share(1) , a 5% increase from the dividend declared in
respect of the year to 31 March 2022
-- Total shareholder return for the period since IPO of 77.4% (7.4% annualised)
Portfolio highlights
-- Three acquisitions completed this year creating a portfolio consisting of 37 assets
-- First acquisitions in the biomass CHP and energy-from-waste sectors, increasing portfolio diversification. Acquisitions include Cramlington biomass, acquired out of administration at an attractive price
-- Company made its first divestment with the disposal of two
French wind farms at a 25% uplift to the value prior to commencing
the sales process
-- Diversified portfolio now 29% wind, 28% waste and bioenergy,
22% AD, 17% solar, 3% low carbon & energy efficiency and 1%
hydro by value
-- Overall, renewable energy generation portfolio 6% below
generation target, mainly due to low wind speeds in the period.
Continued good performance from the Agri AD assets, and solar
assets also above budget
Other highlights
-- Strong pipeline of diversified assets for further growth
-- The Company raised GBP118 million in two oversubscribed fundraisings
-- JLEN entered into a new ESG-linked GBP170 million revolving
credit facility expiring in May 2024
-- Appointment of Alan Bates and Jo Harrison to the Board of Directors, effective 10 June 2021
-- Set up of a dedicated ESG Committee at the Board level to sit
alongside and complement the work already done in this area by the
Risk and Audit Committees
Richard Morse, Chairman of JLEN, said:
"JLEN has had an outstanding year, with NAV appreciation per
share of 25%, GBP118 million raised through two oversubscribed
equity issues, investments into new sectors including biomass CHP
and energy-from -- waste, as well as a value-accretive divestment
of our French wind assets. The Company has also announced an
increase in the target dividend for the upcoming financial year of
5% to 7.14 pence per share(1) for the financial year to 31 March
2023.
"This year, JLEN has continued to support the decarbonisation
agenda through its investments in a diversified portfolio of 37
operational solar, onshore wind, waste and wastewater, hydro,
battery, anaerobic digestion, bioenergy and low carbon transport
projects based in the UK and Europe, representing a total of
359.5MW. The green energy producing part of the portfolio generated
over one million MWh of energy, enough to power more than 255,000
UK homes with electricity . The waste assets have avoided more than
695,000 tonnes of waste going to landfill and the JLEN portfolio,
particularly through its investment in CNG, has also contributed to
the decarbonisation of the UK road network."
Annual report
A copy of the annual report has been submitted to the National
Storage Mechanism and will shortly be available at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The annual
report will also be available on the Company's website at
www.jlen.com where further information on JLEN can be found.
Details of the conference call for analysts and investors
A webinar and in-person event for the annual results will be
held at 10:00 a.m. (UK time) on 16 June, hosted by Chris Holmes and
Chris Tanner, Co-lead Investment Managers to JLEN. To register for
the webinar, please contact SEC Newgate by email at
JLEN@secnewgate.co.uk.
Presentation materials will be posted on the Company's website,
www.jlen.com, from 9.00am.
For further information, please contact:
Foresight Group +44(0)20 3667 8100
Chris Tanner
Chris Holmes
Winterflood Investment Trusts +44(0)20 3100 0000
Neil Langford
Chris Mills
SEC Newgate +44(0) 20 3757 6880
Elisabeth Cowell
Axaule Shukanayeva
Max Richardson
(1) These are targets only and not profit forecasts. There can
be no assurance that these targets will be met or that the Company
will make any distributions at all.
OUR PURPOSE
JLEN aims to invest in a diversified portfolio of environmental
infrastructure that support more environmentally friendly
approaches to economic activity whilst generating a sustainable
financial return. It seeks to integrate consideration of
sustainability and environmental, social and governance ("ESG")
management into its activities, which help to manage risks and
identify opportunities.
-- diversified portfolio
-- sustainable financial return
-- environmental, social and governance
ABOUT JLEN
JLEN launched in March 2014 with a portfolio of eight seed
assets, raising GBP160 million at IPO. The Company now has a
portfolio value of GBP795.4 million.
2014
IPO
3 technology sectors - wind, solar and waste & bioenergy
8 assets
2017
1st investment into AD
4 technology sectors
24 assets (as at 31.03.2018)
2019
1st investment into hydro & co - located battery storage
5 technology sectors
30 assets (as at 31.03.2020)
2020
1st investment into low carbon transport
6 technology sectors
35 assets (as at 03.03.2021)
2021
JLEN shareholders approve updated investment policy
1st investment into standalone battery storage and bioenergy
Investment Manager
Foresight Group is a leading infrastructure and private equity
investment manager with a highly experienced global infrastructure
team supported by an in-house asset management team.
Investment attractions
-- Investment in renewable energy projects is supported by a
global commitment to the transition to a low carbon economy
-- The markets in which JLEN operates continue to evolve as the
buildout of sustainable infrastructure takes on new forms. JLEN's
broad investment policy allows it to continue building a resilient
and diversified portfolio of assets that have a range of operating
models that are not dependent on a single market or set of climatic
conditions
-- Potential upside to asset value comes from active management of the existing projects
Diversified portfolio
Environmental infrastructure is infrastructure assets, projects
and asset-backed businesses that utilise natural or waste resources
or support more environmentally - friendly approaches to economic
activity, support the transition to a low carbon economy or which
mitigate the effects of climate change.
The current portfolio includes 37 onshore wind, PV solar, waste,
wastewater processing, hydro, anaerobic digestion, bioenergy,
battery storage and low carbon refuelling projects in the UK and
Europe.
Environmental, social and governance
JLEN has a strong commitment to ESG and sustainable investing
with transparent monitoring and reporting processes.
AT A GLANCE
Our results for the full year ended 31 March 2022.
2022 2021 Change
--------------------------------------- -------------------- --------------- ------
Market capitalisation(1) GBP746.2m GBP612.3m +22%
Share price 112.8p 112.0p +1%
Annual dividend declared per share 6.80p 6.76p +1%
Net Asset Value GBP762.9m GBP504.2m +51%
Net Asset Value per share (1) 115.3p 92.2p +25%
Portfolio value GBP795.4m GBP571.4m +39%
Dividend cover(2) 1.10x 1.07x
Total shareholder return since IPO(1) 77.4% 65.3%
(7.42% annualised)
Renewable energy generated 1,314GWh 977GWh
(6% below target)
GHG emissions avoided >905,500 tCO(2) >445,000 tCO(2)
e (3) e(3)
Tonnes of waste diverted from landfill >695,000 >500,000
Acquisitions in the period 3 6
Contributed to community funds GBP418,000 >GBP380,000
FTE jobs supported >370 jobs
Portfolio generating capacity 359.5MW 310.7MW
Diversified portfolio 37 assets 36 assets
--------------------------------------- -------------------- --------------- ------
(1) The market capitalisation, total shareholder return, Net
Asset Value per share and dividend cover are alternative
performance measures ("APMs"). The APMs within the accounts are
defined on page 193 of the Annual Report 2022.
(2) On a paid basis.
(3) Methodology for calculating GHG emissions avoided has been
refreshed for 2022, please see page 106 of the Annual Report 2022
for further details.
Highlights
Investments in the period
Over 2021/22 JLEN invested in three new assets, two of which
were in new sub-sectors - biomass CHP and energy - from - waste.
The Company also allocated GBP13.3 million in follow on
investments.
French wind divestment
In January 2022, JLEN announced the value-accretive divestment
of its two operational French wind farms - Parc Éolien Le Placis
Vert and Energie Eolienne de Plouguernével.
Oversubscribed fundraises
Over the year under review, JLEN raised GBP118 million across
two oversubscribed fundraisings. In JLEN's most recent fundraise in
January 2022, the retail Offer for Subscription portion of the
fundraise was also significantly oversubscribed.
Sustainable financial return
JLEN aims to provide investors with a sustainable, progressive
dividend, paid quarterly, and to preserve the capital value of its
portfolio over the long term on a real basis.
PORTFOLIO AT A GLANCE
At 31 March 2022, the portfolio included onshore wind, PV solar,
anaerobic digestion, hydro, battery storage and waste and bioenergy
processing projects, and low carbon transport.
Acquisitions in the period
1 Cramlington Renewable Energy Developments ("CRED")
CRED owns a biomass combined heat and power plant ("CHP Plant")
and its underlying contracts and is located in Cramlington, UK. The
plant has a 26MW electrical capacity and 6MW of heat capacity.
Ownership interest: 100%
2 Energie Tecnologie Ambiente ("ETA")
ETA is a 16.8MW energy - from - waste ("EfW") power plant which
processes refuse derived fuel, located in the municipality of
Manfredonia in the Apulia region of southern Italy.
Ownership interest: 45%(1)
3 Sandridge Battery Storage Limited ("SBSL")
SBSL holds the development rights to construct the Sandridge
Battery Storage project, a 50MW lithium - ion battery energy
storage plant based in Melksham in Wiltshire, UK.
Ownership interest: 50%
Total assets
37 (2)
MW capacity
359.5 (2)
11 Wind 161
9 Anaerobic digestion 50.2
6 Solar 80.2
6 Waste & bioenergy 64.3
2 Hydro 3.8
3 Low carbon & energy efficiency n/a
------------------------------ ----
(1) Does not include indirect minority ownership via investment
into Foresight Energy Infrastructure Partners SCSp ("FEIP").
(2) Does not include investment into FEIP.
Wind
Bilsthorpe 10.2MW 1.0 ROC wind farm. Five MM82 Senvion turbines.
Ownership interest 100%
---------------------------------------------------------------------
Burton Wold Extension 14.4MW 0.9 ROC wind farm. Nine General Electric
1.6MW - 100 turbines.
Ownership interest 100%
---------------------------------------------------------------------
Carscreugh 15.3MW 0.9 ROC wind farm. 18 Gamesa G52 turbines.
Ownership interest 100%
---------------------------------------------------------------------
Castle Pill 3.2MW 1.0 ROC wind farm. Three 900kW EWT and one 0.5MW
Nordtank turbines.
Ownership interest 100%
---------------------------------------------------------------------
Dungavel 26MW 0.9 ROC wind farm. 13 Vestas 2MW V80 turbines.
Ownership interest 100%
---------------------------------------------------------------------
Ferndale 6.4MW 1.0 ROC wind farm. Eight 800kW Enercon turbines.
Ownership interest 100%
---------------------------------------------------------------------
Hall Farm 24.6MW 1.0 ROC wind farm. 18 MM82 Senvion turbines.
Ownership interest 100%
---------------------------------------------------------------------
Llynfi Afan 24MW 0.9 ROC wind farm. 12 Gamesa 2MW G80 turbines.
Ownership interest 100%
---------------------------------------------------------------------
Moel Moelogan 14.3MW wind farm. Nine Siemens SWT-62-1.3MW and two
Bonus-1.3MW turbines. 1.0 ROC on both turbine types.
Ownership interest 100%
---------------------------------------------------------------------
New Albion 14.4MW 0.9 ROC wind farm. Seven MM92 Senvion turbines.
Ownership interest 100%
---------------------------------------------------------------------
Wear Point 8.2MW 0.9 ROC wind farm. Four Senvion MM82 turbines.
Ownership interest 100%
---------------------------------------------------------------------
Waste & bioenergy
Bio Collectors The Bio Collectors food waste anaerobic digestion
plant processes around 100,000 tonnes of food waste each year. The
Bio Collectors waste collection business collects food waste from
in and around Greater London.
Ownership interest 70%
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Codford Biogas Codford Biogas is a 100,000 tonnes per annum food
waste permitted anaerobic digestion plant based in Wiltshire, UK.
Ownership interest 100%
-------------------------------------------------------------------
Cramlington Renewable Developments The asset comprises of a biomass
combined heat and power plant and its underlying contracts. The
plant has a 26MW electrical capacity and 6MW heat capacity.
Ownership interest 100%
-------------------------------------------------------------------
Energie Tecnologie Ambiente 16.8MW energy-from-waste power plant
which processes refuse derived fuel.
Ownership interest 45%(1)
-------------------------------------------------------------------
ELWA The ELWA project processes around 440,000 tonnes of household
waste each year from four London boroughs.
Ownership interest 80%
-------------------------------------------------------------------
Tay The Tay wastewater treatment project services the equivalent
of around 250,000 people from the Dundee and Arbroath areas.
Ownership interest 33%
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Anaerobic digestion
Biogas Meden Biogas - to - grid anaerobic digestion plant. Accredited
under both the Renewable Heat Incentive ("RHI") and Feed-in Tariff
("FiT"), c.5MWth and 0.4MWe.
Ownership interest 100%
---------------------------------------------------------------------
Egmere Energy Agricultural biogas - to - grid anaerobic digestion
plant. Accredited under both the RHI and FiT, c.5MWth and 0.5MWe.
Ownership interest 100%
---------------------------------------------------------------------
Grange Farm Agricultural biogas - to - grid anaerobic digestion
plant. Accredited under both the RHI and FiT, c.5MWth and 0.5MWe.
Ownership interest 100%
---------------------------------------------------------------------
Icknield Farm(2) Agricultural biogas - to - grid anaerobic digestion
plant. Accredited under both the RHI and FiT, c.5MWth and 0.4MWe.
Ownership interest 53%
---------------------------------------------------------------------
Merlin Renewables Agricultural biogas - to - grid anaerobic digestion
plant. Accredited under both the RHI and FiT, c.5MWth and 0.5MWe.
Ownership interest 100%
---------------------------------------------------------------------
Peacehill Farm Agricultural biogas - to - grid anaerobic digestion
plant. Accredited under both the RHI and FiT, c.5MWth and 0.25MWe.
Ownership interest 49%
---------------------------------------------------------------------
Rainworth Energy Agricultural biogas - to - grid anaerobic digestion
plant. Accredited under both the RHI and FiT, c.2.2MWe.
Ownership interest 100%
---------------------------------------------------------------------
Vulcan Renewables Agricultural biogas - to - grid anaerobic digestion
plant. Accredited under both the RHI and FiT, c.5MWth and 0.5MWe.
Ownership interest 100%
---------------------------------------------------------------------
Warren Energy Agricultural biogas - to - grid anaerobic digestion
plant. Accredited under both the RHI and FiT, c.5MWth and 0.5MWe.
Ownership interest 100%
---------------------------------------------------------------------
Solar
Amber 9.8MW comprising two separate sites: Five Oaks (4.8MW) and
Fryingdown (5MW). Both accredited under the pre - August 2011 UK
FiT regime.
Ownership interest 100%
---------------------------------------------------------------------
Branden 14.7MW comprising two separate sites: Luxulyan & Tredinnick
(8.9MW) and Victoria (5.8MW), both accredited for two ROCs.
Ownership interest 100%
---------------------------------------------------------------------
CSGH 33.5MW combined capacity comprising four sites: Higher Tregarne
(4.9MW) accredited for 1.6 ROCs, Crug Mawr (7.5MW), Golden Hill
(6.3MW) and Shoals Hook (14.8MW) accredited for 1.4 ROCs.
Ownership interest 100%
---------------------------------------------------------------------
Monksham Total generating capacity of 10.7MW. Accredited for 1.6
ROCs.
Ownership interest 100%
---------------------------------------------------------------------
Panther - small-scale solar portfolio 6.5MW portfolio of 1,099
systems of domestic rooftop, commercial rooftop and ground mount
solar installations, distributed across England, Scotland and Wales.
Accredited under the UK FiT regime.
Ownership interest 100%
---------------------------------------------------------------------
Pylle Southern Total generating capacity of 5MW. Accredited under
the UK FiT regime.
Ownership interest 100%
---------------------------------------------------------------------
Low carbon & energy efficiency
CNG Foresight Portfolio of CNG refuelling stations located in the
UK.
Ownership interest 25%(3)
------------------------------------------------------------------
Sandridge Battery Storage Construction stage battery storage asset
with a 50MW storage capacity.
Ownership interest 50%
------------------------------------------------------------------
West Gourdie Construction stage battery storage asset with a 50MW
storage capacity.
Ownership interest 100%
------------------------------------------------------------------
Hydro
Northern Hydropower Two run - of - river hydro plants and an operational
battery storage system. Both hydro plants accredited under FiT;
combined capacity between both hydro plants and the battery storage
system is 1.8MW.
Ownership interest 100%
-------------------------------------------------------------------------
Yorkshire Hydropower Two run - of - river hydro plants and an operational
battery storage system. Both hydro plants accredited under FiT;
combined capacity between both hydro plants and the battery storage
system is 2MW.
Ownership interest 100%
-------------------------------------------------------------------------
FEIP(4)
FEIP Skaftåsen Vindkraft AB 35-turbine wind farm under construction.
-------------------------------------------------------------------------
FEIP Torozos 94MW wind farm, which comprises 27 SGRE 132m, 3.5MW
wind turbines spread across two sites.
-------------------------------------------------------------------------
FEIP Puskakorpi Construction stage 88MW wind farm.
-------------------------------------------------------------------------
FEIP 85 Degrees Portfolio of operational and construction stage
geothermal heating and district heating plants with a 45MW capacity.
-------------------------------------------------------------------------
FEIP MaresConnect Development and construction stage project that
will comprise two high voltage direct current interconnector cables
under the Irish Sea.
-------------------------------------------------------------------------
FEIP Carna Construction stage co - located pumped storage hydro
and two co-located wind turbines with a combined capacity of 243.6MW.
-------------------------------------------------------------------------
In January 2020, JLEN made a commitment to Foresight Energy
Infrastructure Partners SCSp ("FEIP"), a Luxembourg limited
partnership investment vehicle. Through this investment JLEN has
exposure to a portfolio of European assets.
(1) Not including FEIP's ownership.
(2) JLEN also provides a senior secured loan facility to the project.
(3) JLEN holds 25% of the "A" shares. "A" shares have a
different economic entitlement than "B" shares, including a
priority return.
(4) Not including FEIP's 45% ownership of ETA.
MARKET AND OPPORTUNITIES
Recent global events have placed energy supply security and the
desire to decarbonise these sources at the forefront of European
energy policy.
The European Commission's REPowerEU plan calls for joint
European action to provide more affordable, secure and sustainable
energy.
Reducing dependence on natural gas requires growth and
development in several environmental infrastructure sectors from
solar and wind through to biogas and hydrogen, including the
networks that seek to harness these new or enlarged energy
sources.
Furthermore, as populations grow and demand for affordable food
and clean water increases, an emphasis on how countries can meet
these requirements in a sustainable and cost-efficient way has
become an important consideration. The use of controlled
environments, such as glasshouses, vertical farms and aquaculture,
present sustainable, energy efficient and low carbon solutions.
As environmental infrastructure assets that draw on knowledge of
renewable electricity, renewable heat and water treatment, we feel
it is a market sector that is well suited to JLEN's portfolio.
As a diversified environmental infrastructure fund, JLEN expects
these trends to create an attractive backdrop for further
investment into these markets, in the UK and Europe.
Investment policy Market developments Investment outlook
----------------------------- ------------------------------------ ---------------------------------
The Company invests in Factors including increasing The Institutional Investors
environmental infrastructure global population, rising Group on Climate Change
such as infrastructure living standards, increasing ("IIGCC") estimate the
assets, projects and urbanisation and greater scale up in capital required
asset-backed businesses scientific, public and in Europe to meet the
that utilise natural political focus on the goals of the Paris Agreement
or waste resources or effects of climate change within electricity generation
support more environmentally have all served to increase alone would be $2.0 trillion
friendly approaches to the importance and scale during the 2020s.
economic activity, support of the environmental
the transition to a low infrastructure market
carbon economy or which globally.
mitigate the effects
of climate change.
----------------------------- ------------------------------------ ---------------------------------
Generation of renewable Global investment in The UK Energy Strategy
energy the energy infrastructure published in April 2022
market has been significant, sets out an acceleration
with Bloomberg calculating of plans to secure clean
investment into energy energy, including producing
transition in 2021 totalling more electricity from
$755 billion (up 27% offshore wind in 2030
on the prior year). Zero (40GW) than it produced
or low carbon emission from gas in any year
energy generation capacity in history. The UK government
has been and continues is supporting onshore
to be central to European wind development through
carbon targets and is its inclusion in Contracts
a key requirement of for Difference ("CfD")
the global decarbonisation auctions and undertaking
agenda. Renewable energy a review of planning
is clean by nature and systems. Other forms
due to a combination of renewable energy generation
of reductions in capital present investment opportunities
costs and close-to-zero including the rapidly
marginal operating costs, maturing sector of hydrogen
is now increasingly able production.
to outcompete other sources
of new build generation.
----------------------------- ------------------------------------ ---------------------------------
Low carbon & energy Building an efficient Greater levels of flexibility
efficiency energy system that can in the form of battery
harness the benefits storage, electric vehicles,
brought by high penetration pumped hydropower and
of renewable generation hydrogen all play an
will be key to delivering important role alongside
a low carbon environment. improved system coordination
and low carbon transport
infrastructure such as
biofuels.
----------------------------- ------------------------------------ ---------------------------------
Supply and treatment COP26 called for a reduction Across Europe, new and
of water and processing in methane emissions, established energy-from-waste
of waste one contributor to this facilities can provide
being landfilling of investment opportunities.
biodegradable waste. These assets can be in
Infrastructure that promotes the form of combustion
recycling and where there plants creating power
are no alternatives to and heat, or anaerobic
landfilling using energy-from-waste digestion plants creating
facilities will aid this a valuable biogas. In
transition. Value - enhancing the UK, expected legislation
carbon capture and storage on food waste collections
("CCS") installations will create investment
on these waste facilities activity for new plants
can aid in reducing emissions. and owners of existing
ones with expansion potential.
----------------------------- ------------------------------------ ---------------------------------
Geographic spread of The challenge of addressing JLEN's mandate supports
investments climate change is a truly geographic diversification,
global one, evidenced reducing its exposure
by COP26 last year. The to the UK power market,
commitment to invest regulatory framework
into environmental infrastructure and weather systems.
as a means to decarbonising The Investment Manager
economies is demonstrable can take advantage of
by those countries providing in-country presence across
sustained and additional Europe and Australia
regulatory and financial to generate investment
support to this sector. opportunities outside
of the UK.
----------------------------- ------------------------------------ ---------------------------------
YEAR AT A GLANCE
The Company has had another good year, with two oversubscribed
placings in the period and the announcement of its first asset
divestments.
March 2021
-- Paid a dividend of 1.69 pence per share (relating to the
three-month period ended 31 December 2020)
May 2021
-- Acquisition of a 50% stake in Sandridge Battery Storage
Limited, a construction stage 50MW battery storage project located
in Wiltshire, UK
-- Acquisition of a 45% stake in Energie Tecnologie Ambiente, a
16.8MW energy-from-waste power plant located in Manfredonia,
Italy
-- Announced a new ESG-linked GBP170 million revolving credit facility expiring in May 2024
-- Raised GBP56.9 million in an oversubscribed placing
June 2021
-- Paid a dividend of 1.69 pence per share (relating to the
three-month period ended 31 March 2021)
-- Announced the appointment of Alan Bates and Jo Harrison as non - executive Directors
-- Acquisition of a 100% stake in Cramlington Renewable Energy
Developments Ltd, a biomass combined heat and power plant located
in Cramlington, UK
September 2021
-- JLEN annual general meeting
-- Announced the resignation of Peter Neville as non - executive Director
-- Paid a dividend of 1.70 pence per share (relating to the
three - month period ended 30 June 2021)
December 2021
-- Paid a dividend of 1.70 pence per share (relating to the
three-month period ended 30 September 2021)
January 2022
-- The Fund raised GBP60.7 million in an oversubscribed placing and offer for subscription
-- Announced the divestment of two French wind assets - Le Placis Vert and Plouguernével
March 2022
-- Paid a dividend of 1.70 pence per share (relating to the
three-month period ended 31 December 2021)
May 2022
-- The Company rejoined the FTSE 250
CHAIRMAN'S STATEMENT
The Company has had an outstanding year, with NAV per share
appreciation of 25%, GBP118 million raised through two
oversubscribed equity issues, investments into new sectors
including biomass CHP and energy-from - waste, as well as a
value-accretive divestment of our French wind assets. The Company
has also announced an increase in the target dividend for the
upcoming financial year of 5% to 7.14 pence per share(1) for the
financial year to 31 March 2023.
(1) These are targets only and not profit forecasts. There can
be no assurance that these targets will be met.
On behalf of the Board, I am pleased to present the Annual
Report of the Company for the year ended 31 March 2022.
Results
Last year I started my Chairman's statement with an
acknowledgement of the difficult and, for some, tragic challenges
of the Covid-19 pandemic. This year, I have to start with the
sombre backdrop of Russia's war in Ukraine and the sharp increase
in the cost of living that is severely affecting many families and
households. In such uncertain times, our thoughts are with those
less fortunate than ourselves, even as we remain focused on
navigating this uncertainty for the benefit of the Company, its
investors and all its stakeholders.
The Net Asset Value ("NAV") per share at 31 March 2022 was 115.3
pence, up from 92.2 pence at 31 March 2021. This uplift is
primarily due to a very substantial increase in current and
short-term power prices and inflation expectations in addition to
gains from moving the Cramlington biomass and ETA energy-from-waste
assets from the acquisition cost paid during the year to a
discounted cash flow ("DCF") valuation basis at the end of the
year, in accordance with JLEN's established valuation policy.
Current geopolitical events, most notably the war in Ukraine and
its resulting impact on energy markets have placed energy security
of supply and the desire to decarbonise energy sources at the
forefront of the political agenda. Climate change prevention and
mitigation strategies remain some of the most pressing issues of
our time. In November 2021, COP26 focused on how pledges and
targets to reach net zero can be met.
This year, JLEN has continued to support the decarbonisation
agenda through its investments in a diversified portfolio of 37
operational solar, onshore wind, waste and wastewater, hydro,
battery, anaerobic digestion, bioenergy and low carbon transport
projects based in the UK and Europe, representing a total capacity
of 359.5MW. The green energy producing part of the portfolio
generated over one million MWh of energy, enough to power more than
255,000 homes with electricity. The waste assets have avoided more
than 695,000 tonnes of waste going to landfill and the JLEN
portfolio, particularly through its investment in CNG, has also
contributed to the decarbonisation of the UK road network.
JLEN's profit after tax for the year was GBP185.0 million (2021:
GBP8.1 million) resulting in earnings per share of 30.6 pence
(2021: earnings per share of 1.5 pence). Removing unrealised
movements on investments at fair value, the adjusted profit before
tax is GBP42.2 million (2021: GBP37.0 million), equivalent to 7.0
pence per share (2021: 6.8 pence).
Cash received from the portfolio assets by way of distributions,
which includes interest, loan repayments and dividends, was GBP56.5
million during the year (2021: GBP48.2 million). After operating
and finance costs, cash flow from operations of the Group was
GBP46.2 million, covering the cash dividends paid during the year
of 6.79 pence per share by 1.10x on a paid basis.
In January 2022, the Board appointed Foresight Group LLP
("Foresight") as its alternative investment fund manager ("AIFM").
This had been prompted by the increasing size and complexity of the
portfolio and the need for more effective and efficient ways of
working. Given the Company's scale, it was no longer appropriate
for the Company to remain as a self-managed alternative investment
fund (with Foresight as the Investment Adviser) and the revised
management structure is widely adopted across the market. The fees
payable by the Company to Foresight under the new Investment
Management Agreement ("IMA") remain unchanged.
As AIFM, Foresight will have discretionary management authority,
however, it will remain subject to the Company's published
investment policy and the supervision of the Board. The Board also
retains overall responsibility for the Company's activities,
including reviewing its investment activity, performance, business
conduct and policy. In addition, in accordance with the terms of
the IMA, certain investment decisions are reserved to the Board,
including in respect of very large investments, those which would
involve taking the Company near to the limits of its available
borrowing facilities, those involving the Company investing in new
geographies or technologies and those which may cause reputational
risk to the Company.
Dividends and returns
The Company has delivered a dividend for the year covered 1.10x
(2021: 1.07x), in line with our progressive dividend policy.
Including profit from the sale of the French wind assets, the
dividend cover is 1.12x.
During the year, the Company paid a final dividend for the
period ended 31 March 2021 of 1.69 pence per share (GBP10.2
million). Dividends of 1.70 pence per share for the period ended 30
June 2021 were paid in September 2021 (GBP10.2 million). Interim
dividends of 1.70 pence per share were paid in December 2021
(GBP10.2 million) and 1.70 pence per share paid in March 2022
(GBP11.2 million).
The Board is pleased to confirm the dividend in respect of the
quarter to 31 March 2022 of 1.70 pence per share which was approved
on 16 May 2022 and will be paid on 24 June 2022, bringing the total
to the target of 6.80 pence per share for the full year.
The Board has decided to increase the Company's dividend target
to 7.14 pence per share for the year to 31 March 2023, in line with
the Company's progressive dividend policy. The outlook for cash
generation from the portfolio is very positive in the short term
due to higher power prices and the levels of price fixes that we
have been able to achieve in the market for merchant revenue
streams. As a result, we are confident of the Company's ability to
meet this target.
Over the 12-month period to 31 March 2022, shareholders saw a
share price total return of 7.4%.
Following on from the success this year, the raised dividend
target for next year is projected to be strongly covered in excess
of 1.5x. The additional headroom from the current year is largely
driven by:
-- first full year's contribution from assets acquired part way
through the year to 31 March 2022;
-- continuation of high power price and inflationary market environment;
-- yield forecasts from construction assets reaching operational status; and
-- continued roll out of asset enhancement opportunities.
The portfolio currently has price fixes secured over 77% for
Summer 2022 and 74% for Winter 2022 seasons, reducing exposure to
price volatility. Illustrating this, if merchant prices were to
fall by 50%, dividend cover is projected to move by less than 20
basis points - therefore still maintaining significant headroom in
the cover ratio.
Acquisitions and divestments
During the year under review, the Company announced investments
in three new projects:
-- a 50% stake in Sandridge Battery Storage Limited, a 50MW
construction stage battery storage project located in the UK;
-- a 45% stake in Energie Tecnologie Ambiente S.r.l., a 16.8MW
energy-from-waste plant located in Southern Italy; and
-- a 100% stake in Cramlington Renewable Energy Developments, a
biomass combined heat and power plant located in Cramlington, UK.
The plant has a 26MW electrical capacity and 6MW heat capacity.
The new acquisitions bring the total MW capacity of the
portfolio to 359.5MW and bring further diversification to the
portfolio both by technology type and geography.
The Company also made its first divestments, selling its two
French onshore wind farms, Parc Éolien Le Placis Vert and Energie
Eolienne de Plouguernével for a total consideration of EUR5.9
million. These divestments were at a significant uplift to the
pre-sales process valuation. Competition for the types of assets in
the Company's portfolio remains strong, reinforcing the valuations
that underpin our Net Asset Value.
Portfolio performance and value enhancement activities
During the year, overall generation from the renewable energy
portfolio was 1,314GWh, 6% below generation targets.
Low wind resource was the primary driver, as areas of the UK
during the summer saw their lowest wind speeds for 20 years. Wind
resource improved towards the end of the year but the wind
portfolio ended the year 16% below its generation target. Excluding
the wind portfolio, generation from the rest of the portfolio was
2% below budget, with Agri AD exceeding its generation target for
the fourth consecutive year and solar also meeting its generation
target.
The waste & bioenergy sub-sector, now the second largest
contributor to generation in the portfolio, was below target as the
Investment Manager made progress on legacy issues on the two newly
acquired assets and worked on installing upgrades and
enhancements.
Both concession-based waste and wastewater projects have
continued to perform in line with expectations and both projects
continue to perform well financially.
The portfolio of CNG refuelling stations performed extremely
well over the financial year and 16% more CNG was dispensed than
was targeted for the year. Also during the period, two further
refuelling stations were successfully completed, giving a total of
eight stations.
The construction stage battery assets have fallen behind their
completion schedule due to supply chain issues and completion of
the two projects is now expected to occur in 2023. The batteries
are currently held at cost and the financial consequences of delay
are expected to be offset by changes in market assumptions when the
valuation method changes to DCF.
Index power prices increased to unprecedented levels in the last
half of the year due to a combination of low renewables
contribution to the grid, a natural gas shortage and rising carbon
prices. The Investment Manager took this opportunity to fix future
seasons' outputs at prices above previous assumptions across the
portfolio.
Debt facilities
In May 2021, the Fund renewed its revolving credit facility
("RCF") that had been due to reach maturity in June 2022. The new
facility remains at a committed level of GBP170 million for three
years, expiring in May 2024. National Australia Bank and Royal Bank
of Scotland International have joined incumbent lenders ING, HSBC
and NIBC, broadening JLEN's banking relationships. The headline
margin is 200 bps over SONIA, with an adjustment of +/- 5 bps
depending on performance against ESG metrics including quantity of
renewable energy produced and contributions to community funds.
The RCF gives JLEN a committed source of flexible funding
outside of equity raisings at a low cost. The facility is
periodically paid down from the proceeds of equity issuance which
then enables JLEN to make new investments with the certainty of
funding and on a timely basis, reducing the performance drag
associated with holding excess cash.
Share capital
In May 2021, the Company raised GBP56.9 million via an
institutional placing, making full use of its tap issuance facility
of 10% of issued share capital. This was at a price of 104 pence
per share, a 12.8% premium to NAV, achieved via a book-building
process.
A further placing and offer for subscription in January 2022
raised GBP60.7 million at a price of 101 pence per share at a 2.6%
premium to NAV. Both placings and the offer for subscription were
significantly oversubscribed.
The proceeds have been used to pay down amounts outstanding
under the revolving credit facility and fund new environmental
infrastructure opportunities.
Sustainability and ESG
The investment world has now widely embraced ESG, a concept
which JLEN has adopted and actively promoted for many years. JLEN
has produced an ESG report since 2019 and has continued to progress
in this area, recently setting up a dedicated ESG committee of the
Board to oversee the work done in this area. The investment
community is still developing its preferred approach to ESG impact
metrics and measurement. The Board believes that helping
stakeholders to be informed on JLEN's ESG performance in a manner
which is consistent and that tracks performance over time is an
important part of its stakeholder communication.
JLEN has been proactively tracking metrics such as carbon
emissions avoided, renewable energy generated and waste recycled
for several years, and continually seeks ways to improve its
reporting and transparency for investors. Last year, this was
expanded by developing a suite of more than 15 ESG metrics that
were felt relevant to the Fund and that we have reported against
for the first time this year. Details of these KPIs can be can be
found on pages 99 to 112 of the Annual Report 2022.
Furthermore, last year our ESG performance was voluntarily
linked to a revolving credit facility, which incurs a higher or
lower interest rate depending on the Fund's ESG performance against
select ESG metrics. Further information can be found on page 90 of
the Annual Report 2022.
This year we have also included our first Task Force on
Climate-related Financial Disclosures ("TCFD") recommended
disclosure and this can be found on pages 49 to 67 of the Annual
Report 2022.
Post the period end in May 2021, the Company's efforts to
communicate its approach to ESG matters have been recognised by the
Association of Investment Companies ("AIC"), winning the Best
Communication of ESG award in their annual Communication
Awards.
Valuation
The Net Asset Value at 31 March 2022 was GBP762.9 million,
comprising GBP795.4 million portfolio valuation, GBP18.0 million of
cash held by the Group, less GBP53.6 million drawn on the Company's
(immediate subsidiary's) revolving credit facility, together with
positive working capital balances of GBP3.1 million.
The Investment Manager has prepared a fair market valuation of
the portfolio as at 31 March 2022. 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 Manager 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.
To provide assurance to the Board with respect to the valuation,
an independent verification exercise of the methodology and
assumptions applied by Foresight is performed by a leading
accountancy firm and an opinion is provided to the Directors. The
Directors have satisfied themselves as to the methodology used and
the assumptions adopted and have approved the valuation of GBP795.4
million for the portfolio as at 31 March 2022 and a Net Asset Value
per share of 115.3 pence.
Risks and uncertainties
The Board notes investors' recent appetite for the Company's
shares and the relative resilience of the renewables sector in
terms of valuations and the ability to maintain dividends compared
to other investment sectors in the face of extreme shocks such as
the Covid-19 pandemic and geopolitical upheaval.
The greatest risk the Company faces is to changes in short and
medium-term gas and electricity prices where the risk is that the
actual prices received vary significantly from the model
assumptions, leading (in adverse circumstances) to a shortfall in
anticipated revenues to JLEN. The opposite is also true and is the
case in the year under review. To minimise any short-term
uncertainty, the Company's policy is to fix prices on a high
proportion of generation for future seasons to insulate the Fund
from short-term power price changes.
A summary of the principal risks and uncertainties facing the
Company is included on pages 42 to 48 of the Annual Report
2022.
Outlook
As countries seek to move on from the damaging impact that
coronavirus has had on economies and livelihoods, governments are
reinforcing foundations for growth across green technologies. By
focusing on support to industry, job creation and innovation it is
anticipated that countries can address the lack of economic growth
over recent years in conjunction with addressing climate change and
commitments to achieving net zero. This mantra has been clearly set
out in the UK where the government's "Ten Point Plan for a Green
Industrial Revolution" demonstrates their commitment to tackling
climate change whilst delivering jobs and growth across the
country.
This is an exciting time for an environmental infrastructure
fund as it looks to the future with a rapid increase in renewable
energy generation, low carbon transport and the charging/fuelling
network needed to support this, carbon capture, hydrogen and
sustainable alternatives such as controlled environments and
opportunities in hard - to - abate sectors like agriculture and
construction. JLEN is well placed to capture investment
opportunities in these evolving asset classes with its broad
investment mandate and the expertise of its Investment Manager,
Foresight.
Indeed, over the last year JLEN has further diversified its
portfolio through investments into a biomass to heat and power
plant and an energy recovery from municipal waste facility. Both
these projects contribute positively to the environment through the
creation of renewable energy and the reduction of waste to
landfill, respectively. From a financial viewpoint, they both
benefit from government - backed revenues providing a source of
stable, inflation - linked dividends to JLEN, underpinning our own
progressive dividend policy for our shareholders.
Annual general meeting
The annual general meeting will be held on 1 September 2022 at
10.00am at the Company's registered office in Guernsey.
Shareholders are encouraged to submit their votes by proxy in
advance of the meeting and may provide details of any questions
they may have to the Company Secretary in advance of the meeting.
Responses to any queries will be made available on the Company's
website following the meeting.
Board matters
Peter Neville, who successively chaired our Risk Committee and
Audit Committee, stood down in September 2021 - he was a hugely
valued member of the Board and we wish him well in his retirement.
Jo Harrison, who chairs the ESG sub-committee, and Alan Bates have
joined during the year, further strengthening the breadth of
experience of the Board. I am immensely grateful to all our
Directors for their dedication, hard work and collegiality.
Finally, this is my last Chairman's statement before stepping
down, having been with JLEN since its IPO in 2014. I have had the
privilege of helping to oversee the Company's modest beginnings as
a late entrant to the newly emerging sector of "renewable
infrastructure", to its present status as a veteran of the sector
with a market capitalisation of GBP746.2 million and a diversified
mandate for environmental infrastructure that differentiates it
from its peers. Our recruitment process is well advanced and I am
confident that JLEN is in good hands and I wish the Company every
success for the future.
Richard Morse
Chairman
15 June 2022
STRATEGIC REPORT
INVESTMENT OBJECTIVES
Our key objectives are set out further below this report.
The Company aims to provide its investors with a sustainable,
progressive dividend per share, paid quarterly. It aims to
preserve, and where possible enhance, the capital value of its
portfolio on a real basis through the reinvestment of cash flows
not required for the payment of dividends.
The dividend for the year ended 31 March 2022 is 6.80 pence per
share on a declared basis. Over the longer term, the Company
targets an IRR of 7.5% to 8.5% (net of fees and expenses) on the
IPO issue price of 100 pence per share, through investment in a
diversified portfolio of environmental infrastructure.(1)
The Company seeks to maintain strong relationships with all its
stakeholders and those of its investments, including investors,
funders, key contractors, strategic partners, national and local
government and local communities.
Investment policy
JLEN's investment policy is to invest in a diversified portfolio
of Environmental Infrastructure. Environmental Infrastructure is
defined by the Company as infrastructure assets, projects and
asset-backed businesses that utilise natural or waste resources or
support more environmentally friendly approaches to economic
activity, support the transition to a low carbon economy or which
mitigate the effects of climate change. Such investments will
typically feature one or more of the following characteristics:
-- long-term, predictable cash flows, which may be wholly or
partially inflation - linked cash flows; and/or
-- long-term contracts or stable and well-proven regulatory and legal frameworks; and/or
-- well-established technologies, and demonstrable operational performance.
(1) These are targets only and not profit forecasts. There can
be no assurance that these targets will be met.
FUND OBJECTIVES
The Fund's key objectives and the measures against which they
are assessed are summarised below:
Financial Principal risks KPIs as at 31 March Outlook for 2023
objectives 2022
--------------- --------------------------------------------------------- -------------------------------------------------------- -----------------------------------------------------------
Predictable 6.80p
income * Volume of resource available dividend declared * High near-term power prices provides support for
growth for for the year, in dividend target, as do inflationary increases in
shareholders line with target contracted revenues
Provide * Power prices
investors * Target dividend for the next financial year 7.14
with a dividend pence(1) , up 5% from 2022 * Latest fixed price arrangements in place covering 77%
of 7.14 pence * Inflation of the portfolio by generation for Summer 2022 and
per 74% of the portfolio for Winter 2022 also restricts
share for the volatility
year * Changes in the legislative and regulatory framework
to 31 March that affect environmental infrastructure
2023.
* Operational risks in the portfolio
--------------- --------------------------------------------------------- -------------------------------------------------------- -----------------------------------------------------------
Preservation of GBP762.9m
capital over * Valuation risks (volume/energy Net Asset Value * Construction stage assets have potential for capital
the prices/inflation/feedstock costs/operational growth as they become operational
longer term performance) 115.3p
To preserve the Net Asset Value
capital value per share * Higher out-turn inflation beneficial to portfolio
of * Lack of future pipeline and/or funding valuation
the portfolio * NAV GBP762.9 million, up from GBP504.2 million at
over 31
the long term * Increased competition March 2021
on
a real basis
through * Changes in the legislative and regulatory framework * Net Asset Value per share 115.3 pence, up 23.1 pen
active that the environmental infrastructure market ce
management against 92.2 pence at 31 March 2021
of the
portfolio
and the
reinvestment
of cash flows
not
required for
the
payment of
dividends.
--------------- --------------------------------------------------------- -------------------------------------------------------- -----------------------------------------------------------
Investment, 37
growth * Lack of future pipeline and/or funding asset investments * Potential for further opportunities to co-invest with
and other investors in larger deals
diversification GBP795.4m
To invest in * Increased competition portfolio value
infrastructure * Likely continued emphasis on less competitive and
assets, 359.5MW evolving areas of environmental infrastructure
projects * Changes in the legislative and regulatory framework total diversified
and that affect the environmental infrastructure market capacity
asset-backed * Further scope to invest in European jurisdictions
businesses that * Portfolio value GBP795.4 million, up 39% from
utilise natural GBP571.4 million at 31 March 2021
or waste
resources
or support more * Predominantly UK portfolio balanced by sector: 29%
environmentally wind, 22% AD, 17% solar, 28% waste & bioenergy, 3%
friendly low carbon & energy efficiency and 1% hydro
approaches
to economic
activity,
support the
transition
to a low carbon
economy or
which
mitigate the
effects
of climate
change.
--------------- --------------------------------------------------------- -------------------------------------------------------- -----------------------------------------------------------
(1) These are targets only and not profit forecasts. There can
be no assurance that these targets will be met.
JLEN has developed ESG KPIs to measure its performance over time
against its stated ESG objectives.
Environmental, social and governance ESG KPIs
objectives
----------------------------------------- -----------------------------------------------------------
Promote the efficient use of resources
To invest into projects that manage * Renewable energy generated
the availability of natural resources,
whether through utilisation of renewable
resources, increasing resource or * GHG emissions avoided
energy efficiency, or reusing or
recovering waste.
* Volume of waste treatment
* Volume of water treatment
* Environmental incidents
* Purchased energy originating from renewable sources
* Management of biodiversity
* Assessment of major contractors against ESG criteria
----------------------------------------- -----------------------------------------------------------
Develop positive relationships
with the communities in which JLEN * Community funding
works
To encourage positive relationship
- building between portfolio assets * Health and safety incidents
and the communities in which they
sit.
* Community engagement procedures
* FTE jobs supported
* Accessibility of community fund documents
* Assessment of major contractors against ESG criteria
----------------------------------------- -----------------------------------------------------------
Ensure effective, ethical governance
across the portfolio * Portfolio audits of health and safety practices
To manage portfolio assets in a
way that
promotes ethical, effective governance. * Diversity of SPV directors
* Portfolio audits of tax and financial practices
* Inclusion of ESG in SPV board agendas
* Assessment of major contractors against ESG criteria
----------------------------------------- -----------------------------------------------------------
Over 2021/22 JLEN has focused on advancing its approach to ESG
by collecting baseline data against the ESG KPIs that were first
agreed in 2020/21. JLEN's KPIs are set out in the Sustainability
and ESG section of the report.
BUSINESS MODEL
JLEN invests in a diversified portfolio of environmental
infrastructure that support more environmentally friendly
approaches to economic activity whilst generating a sustainable
financial return.
Competitive advantage
Investment Manager - Foresight has a strong track record of
managing assets in the sector and has access to an extensive
pipeline of new projects.
Broad investment mandate/policy - allows for investment across a
diversified range of technology sub-sectors and geographies,
helping to reduce risks within the portfolio and providing a
broader base of assets to consider at the acquisition stage.
Existing portfolio - well - established portfolio of assets
which have the benefit of strong operational track records and
predictable, wholly or partially inflation-linked cash flows
supported by long-term contracts.
Sustainability - investment mandate is limited to investment in
projects and assets which support a more environmentally friendly
approach to economic activity and JLEN invests in assets with long
project lives of up to 35 years.
Operating model
Acquire
The Investment Manager uses its network of relationships to
originate environmental infrastructure opportunities. These are
screened for suitability and attractive opportunities are subject
to a full due diligence process to assess risks, valuation
assumptions and ESG considerations. Investment approval is multi -
level and culminates in a decision of the Company's Investment
Committee.
ESG considerations
Read more about ESG in the Sustainability and ESG section of the
report
ESG criteria are an integral element of the investment
assessment at the acquisition stage. The Investment Manager
undertakes a thorough rating analysis against a pre - determined
minimum threshold for that asset class.
Maintain
Active asset management is employed by the Investment Manager to
maintain consistent performance and asset condition across the
portfolio, identifying and, where possible, mitigating risks.
Strong communications between the JLEN Board, the Investment
Manager and external asset managers and other operational and
corporate counterparties aid in the management of the assets.
ESG considerations
Read more about ESG in the Sustainability and ESG section of the
report
Third-party service providers, sometimes with the assistance of
technical advisers, monitor and manage the ongoing performance of
each asset in the JLEN portfolio and these third parties are
regularly assessed by Foresight.
Enhance
All assets are included in a programme of enhancement
initiatives to increase operational and financial performance and
to better meet ESG objectives. Where appropriate, the Investment
Manager identifies where value can be realised to enhance the
valuation of the portfolio to the benefit of all stakeholders.
ESG considerations
Read more about ESG in the Sustainability and ESG section of the
report
The Investment Manager continually seeks to improve all areas of
ESG across the portfolio and new assets are assessed to see where
improvements to ESG matters can be made over the tenure of
ownership. ESG KPIs help to monitor progress in this area.
Hold/exit
JLEN's strategy is to hold its assets over the long term in
order to receive ongoing cash yield to support JLEN's dividend
targets. However, it will consider opportunities to generate value
for shareholders through the divestment of certain assets as they
arise. These opportunities will be evaluated against the Company's
strategy of diversification and the ability of the asset to
generate stable financial returns.
ESG considerations
Read more about ESG in the Sustainability and ESG section of the
report
Typically, the proceeds from divestments will be used to repay
amounts outstanding under the Company's RCF and provide further
headroom to invest in new assets that provide an attractive
risk-adjusted return for investors and that are consistent with
JLEN's ESG objectives.
Our business activities result in
Income for shareholders
6.80p
Dividends of 6.80p declared for the year to 31 March 2022
Environmental benefits
1,314GWh
of green energy produced during the period
Enough electricity to power more than 255,000 UK homes
Social benefits
Over GBP418,000
provided to local communities in the year under review
Supporting government net zero carbon emissions targets with a
portfolio of 37 assets that support environmentally friendly
approaches to economic activity
Read more in the Sustainability and ESG section of the Annual
Report 2022
Underpinned by
Risk management
Strong governance
Financial management
Portfolio sectors
Wind
Anaerobic digestion
Solar
Waste & wastewater
Hydro
Low carbon & energy efficiency
FUND STRUCTURE
Guernsey - registered investment company with a premium listing
on the London Stock Exchange.
Introduction
The Company is a Guernsey - registered investment company with a
premium listing on the London Stock Exchange. The Company makes its
investments via a Group structure involving JLEN Environmental
Assets Group (UK) Limited ("UK HoldCo"), an English limited company
and wholly owned subsidiary of the Company, and additional
intermediate holding companies for certain projects (the Company
and UK HoldCo, together with their wholly owned intermediate
holding companies, the "Group"). Through the Group structure, at 31
March 2022 the Company owns a portfolio of 37 environmental
infrastructure investments in the UK, Spain, Finland, Holland,
Italy, Ireland and Sweden. The Company has a 31 March financial
year end, announces half - year results in November and full-year
results in June. The Company pays dividends quarterly, targeting
payments in June, September, December and March each year.
The Company is an externally managed Alternative Investment Fund
under the European Union's Alternative Investment Fund Managers
Directive.
In January 2022, Foresight Group was appointed Alternative
Investment Fund Manager ("AIFM"), pursuant to an investment
management and AIFM agreement (the "Investment Management
Agreement") in substitution for, and on materially the same
commercial terms as, the previous Investment Advisory Agreement
between the Company and Foresight Group, which has now been
terminated.
As Investment Manager, Foresight Group LLP takes investment
management decisions on behalf of the Company, subject to the terms
of the Investment Management Agreement. Foresight Group is subject
to the Company's published investment policy and the supervision of
the Company's Board of Directors.
In connection with Foresight Group's appointment as AIFM, the
Company appointed NatWest Trustee and Depositary Services Limited
("NatWest") as its depositary. NatWest performs the functions
required of a depositary of an alternative investment fund that is
incorporated outside the European Economic Area, such as the
Company, which has an EEA entity, such as Foresight, as its
AIFM.
The Company has a Board of six independent non - executive
Directors (details of whom can be found later in the report) whose
role is to manage the governance of the Company in the interests of
shareholders and other stakeholders.
The Board retains overall responsibility for the Company's
activities, including reviewing its investment activity,
performance, business conduct and policy. In addition, in
accordance with the terms of the Investment Management Agreement,
certain investment decisions are reserved to the Board, including
in respect of very large investments, those which would involve
taking the Company near to the limits of its available borrowing
facilities, those involving the Company investing in new
geographies or technologies and those which may cause reputational
risk to the Company. The Board also scrutinises the performance of
the Investment Manager, approves and monitors adherence to the
investment policy, determines the risk appetite of the Group, and
sets Group policies.
The Board meets a minimum of four times per year for regular
Board meetings and there are several ad hoc meetings dependent upon
business needs. In addition, the Board has four committees covering
Audit, Risk, ESG and Nomination. Investment decisions are delegated
to an Investment Committee comprising all members of the Board. The
Board fulfils the responsibilities typically undertaken by a
remuneration committee.
The Board as a whole also fulfils the functions of an investment
management engagement committee. The Board will review and make
recommendations on any proposed amendment to the Investment
Management Agreement, keep under review the performance of the
Investment Manager and will manage the risks of the delegation of
certain activities to the Investment Manager. The Board also
performs a review of the performance of the other key service
providers to the Fund and meets to conduct these reviews at least
once a year.
The key tasks of Foresight Group under the Investment Management
Agreement are as follows:
-- monitoring financial performance against Group targets and forecasts;
-- advising the Board on investment strategy and portfolio
composition to achieve the desired target returns within the agreed
risk appetite;
-- sourcing, evaluating and implementing the pipeline of new investments for the portfolio;
-- monitoring the operational management of, and managing the
investment cash flows from, the Group's investments;
-- minimising cash drag (having uninvested cash on the balance
sheet) and improving cash efficiency generally;
-- managing the process and analysis for quarterly NAV updates
and semi - annual valuations of the Group's portfolio submitted to
the Board for approval;
-- ensuring good financial management of the Group, having
regard to accounting, tax and debt covenants;
-- if required, hedging non - sterling investments; and
-- managing the Company's investor reporting and investor relations activities.
Further details on the Investment Manager are set out later in
the report and in note 15 to the financial statements with respect
to fees.
Sanne Fund Services Limited is Company Secretary and
Administrator to the Fund. Other key service providers to the JLEN
Group include Winterflood Securities as corporate broker, SEC
Newgate as financial public relations advisers, Mourant Ozannes as
legal advisers as to Guernsey law, Hogan Lovells as legal advisers
as to English law, Link Registrars as registrars, Deloitte LLP as
auditor, and NIBC, NAB, ING, RBSI and HSBC as lenders to the Group
via the new GBP170 million revolving credit facility.
The Board formally reviews the performance of all key service
providers on an annual basis.
Acquisitions
The Fund will seek to acquire further investments going forward
sourced via the Investment Manager's extensive deal-sourcing
capabilities across the geographies in which the Fund is permitted
to invest. In selecting the projects to acquire, the Investment
Manager and the Directors will be obliged to ensure that these
projects meet the Company's investment policy.
The Investment Manager will be subject to the overall
supervision of the Board, following appointment of Foresight Group
as AIFM some investment decisions have been delegated to Foresight
Group. Approvals for large investments or investments into sectors
new to JLEN are reserved for the Board, all of whom are independent
of the Investment Manager.
Potential disposal of investments
Whilst the Directors may elect to retain investment interests in
the portfolio of investments that the Fund acquires and any other
further investments made by the Fund over the long term, the
Investment Manager will regularly monitor the valuations of such
investments and any secondary market opportunities to dispose of
investment interests and report to the Directors accordingly. The
Directors only intend to dispose of investments where they consider
that appropriate value can be realised for the Fund or where they
otherwise believe that it is appropriate to do so. Proceeds from
the disposal of investment interests may be reinvested or
distributed at the discretion of the Directors.
STAKEHOLDER ENGAGEMENT
The Board is committed to promoting the long-term sustainable
success of the Company whilst conducting business in a fair,
ethical and transparent manner.
Whilst directly applicable to companies incorporated in the UK,
the Board recognises the intention of the AIC Code that matters set
out in Section 172 of the Companies Act 2006 are reported upon. The
Board strives to understand the views of the Company's key
stakeholders and to take these into consideration as part of its
discussions and decision - making process.
As an investment company, the Company does not have any direct
employees and conducts its core activities through third-party
service providers. Each provider has an established track record
and through regulatory oversight is required to have in place
suitable policies and procedures to ensure they maintain high
standards of business conduct, and employ corporate governance best
practice.
The Board strongly believes that fostering healthy and
constructive relationships with its broad range of stakeholders and
taking into consideration their respective interests as part of its
decision-making process should result in increased shareholder
value over the long term.
JLEN's principal stakeholders comprise of shareholders, the
Investment Manager, commercial service providers, asset-level
counterparties, local communities and debt providers. Pages 35 to
37 of the Annual Report 2022 explains why and how the Company
engages with these stakeholders and the actions taken by it to
ensure their interests are understood and considered in the Board's
strategic decision making. These relationships are considered
fundamental to the Company's sustainability and are monitored
carefully by the Board.
JLEN recognises that community engagement at our sites is an
ongoing process and that at times problems can arise before we can
address them; however, it is our stated objective to develop
positive relationships with the communities in which we work.
Improving our communications, complaints handling processes and
access to relevant information for local residents is an ongoing
process, and these goals have formed part of our ESG KPIs. More
information can be found on pages 108 to 110 of the Annual Report
2022.
Appointment of Foresight as Alternative Investment Fund
Manager
In January 2022, the Company announced the appointment of
Foresight as its external alternative investment fund manager, or
AIFM, with discretionary investment management authority for the
Company.
Since launch, the Company had been a self-managed alternative
investment fund which took its own investment management decisions
on the basis of advice from its Investment Adviser. The decision to
amend Foresight's mandate was taken in response to the enlarged
scale of the Company's portfolio, the volume of environmental
infrastructure propositions under consideration by Foresight and
consequently the frequency of routine decisions which required
Board approval.
To streamline the decision-making process for routine and less
significant investment transactions and to provide a framework
better suited for the ongoing growth of the investment portfolio,
the Board consulted extensively with Foresight and with external
advisers to define matters where Board decision - making would be
reserved from those where authority would be delegated to
Foresight, and agreeing other relevant circumstances where a matter
would require escalation to the Board.
Circumstances where an investment transaction would require
Board approval include those where:
-- the price represents more than 5% of the Net Asset Value of
the Company immediately post - acquisition;
-- would result in the Company's outstanding borrowings being
equal to more than 75% of the amount which the Company is able to
borrow at the relevant time;
-- if completed, would reasonably be expected to be detrimental
to the Company's dividend coverage and
-- would result in the Company being invested in environmental
infrastructure that is either reliant on nascent technologies,
based in a country or market where the Company was not yet
invested, is any way risking being inconsistent with the investment
policy, or could be expected to result in adverse publicity for, or
otherwise prejudice the reputation of the Company.
The Directors are pleased with Foresight's implementation of the
AIFM arrangements to date and believe the revised structure has
achieved the desired operational efficiencies, whilst retaining
control and oversight over the activities of the Investment
Manager.
Implementation of ESG-linked revolving credit facility
In May 2021 the Company agreed terms for a new three - year
facilities agreement which provides for a committed multi -
currency credit facility of GBP170 million and an uncommitted
accordion facility of up to GBP30 million.
The facility provides a clear linkage between JLEN's key
sustainability metrics and its ESG KPIs and provides for JLEN to
incur a premium or benefit from a discount to its margin and
commitment fee based on performance against defined ESG targets,
including:
-- Environmental: increase in the volume of clean energy produced
-- Social: the value of contributions to community funds
-- Governance: maintaining a low number of work - related
accidents, as defined under the Reporting of Injuries, Diseases and
Dangerous Occurrences ("RIDDOR") by the Health and Safety
Executive
Performance against the targets will be measured annually,
beginning in the year ended 31 March 2022, with the cost of the RCF
being amended in the following financial year. If successful in
achieving these KPIs, the benefits provided throughout the year to
a wide audience of stakeholders will in turn benefit the Company
and its shareholders with a reduced cost of funding. For more
information on the KPI targets in 2021/22 please see page 90 of the
Annual Report 2022.
Retail share issue
The Board recognises the high level of demand for the Company's
shares, evidenced in past issues of new shares, and particularly
the growing attention from the retail segment in investment
opportunities such as the Company.
In May 2021 the Board announced that the Company had raised
GBP59.6 million pursuant to an oversubscribed placing of new
ordinary shares. The May 2021 placing was undertaken largely as an
institutional offer and, acting in consultation with the Company's
advisers and in response to market feedback, the Board decided as
part of the subsequent issue in January 2022 to include an offer
for subscription option through which retail investors could
subscribe directly for new shares.
The January 2022 issue was significantly oversubscribed,
including the offer for subscription which received an
exceptionally high level of demand from retail investors. The Board
was pleased with the results of the January 2022 issue,
particularly through satisfying the apparent demand in the retail
investor market, and from such participation by retail investors
diversifying the investor base across a broader investor
demographic and creating additional liquidity for existing
shareholders.
Section 172
The considerations and activities undertaken by the Directors in
complying with section 172(1), (1) to (6), below, the stakeholder
groups concerned, and how the Directors have formed their opinion
are set out below.
The Board's annual cycle includes four scheduled meetings
between the Board and the Investment Manager where the agenda
includes updates on matters relevant to items (1)-(6). The reports
provided support the decisions taken to meet the objectives for
each of the foregoing sections. Supplementing the quarterly meeting
schedule are bi-weekly operational meetings between the Board, the
Investment Manager and relevant portfolio managers.
The Risk Committee receives a quarterly report on the Company's
key counterparty exposures, and relationships with the Company's
suppliers, customers and others forms part of the quarterly
operational review provided to the Board. A separate agenda item is
dedicated each quarter to matters concerning shareholder engagement
and sentiment, corporate broking activity, investor profile and
media engagement.
The investment vetting process adopted by the Investment Manager
in conjunction with the Risk Committee's oversight of the risk
management framework ensures consideration is given to items
relevant to the Section 172 statement.
Certain key stakeholder groups interface with the Company
primarily through the Investment Manager who is responsible for
communicating stakeholder concerns and receiving Board input on the
actions proposed to achieve a positive outcome through effective
engagement.
Annually, the Board meets with the Investment Manager and other
key advisers to review the strategic position of the Company, to
consider the longer-term factors relevant to the Board's decision
making and how such factors may affect the communities and the
local environments in which the Company operates.
Section 172 Commentary
-------------------------- ----------------------------------------------------
Long-term decisions The Board considers the likely long-term
consequences on all stakeholders as a routine
part of its decision-making process. In addition,
learning gained over the life of the Company
provides evidence on which the effectiveness
of past decisions can be assessed and is
considered as part of the annual strategy
day.
Please see pages 21 to 25 - investment objectives,
and 26 and 27 - business model in the Annual
Report 2022.
Interests of employees As an investment company, at a corporate
level, the Company does not have any direct
employees. However, certain underlying projects
of the Company do have employees and their
interests are managed at board level by the
respective project company and by third-party
asset-level counterparties.
Please see pages 112 and 113 - governance
KPIs, and page 115 corporate social responsibility
in the Annual Report 2022.
Fostering relationships The Board believes that building effective
with suppliers, customers business relationships with suppliers, customers
and others and other key counterparties is crucial to
preserving long-term shareholder value.
Excluding the Investment Manager, at the
corporate level, these stakeholders include
the Administrator and Company Secretary,
Corporate Broker, Legal Counsel, public relations
agency and the Auditor and tax advisers.
At the operational level, this includes asset-level
counterparties, local communities and debt
providers.
Please see pages 36 and 37 - stakeholder
engagement of the Annual Report 2022.
Acting fairly between Each decision taken by the Board considers
Company members the interests of shareholders as a whole
and safeguards are in place to avoid conflicts
of interest.
Please see pages 32 and 35 - stakeholder
engagement, and pages 130 and 131 - relations
with shareholders of the Annual Report 2022.
Impact on the community This topic is extensively covered in the
and environment Company's Sustainability and ESG Report.
Please see pages 34 to 37 - stakeholder engagement
and pages 97 to 115 - sustainability and
ESG of the Annual Report 2022
Maintaining high standards The Board strives to meet or exceed the standards
of business conduct expected of a public company owning and investing
in renewable infrastructure assets. Examples
include the development of the Company's
ESG KPIs, implementing an ESG-linked revolving
credit facility and adopting and reporting
against the TCFD requirements.
Please see pages 49 to 67 - TCFD Report,
and pages 97 to 115 Sustainability and ESG
of the Annual Report 2022.
-------------------------- ----------------------------------------------------
Stakeholder engagement on the topics of sustainability and
climate change
During the year under review, efforts have been made to engage
more proactively with key stakeholders on topics relating to
sustainability and climate change.
The Investment Manager engaged with its key counterparties -
external asset managers and operations and maintenance providers -
on a wide range of sustainability topics, including biodiversity
initiatives, scope 2 emissions, health and safety initiatives and
community engagement procedures. This resulted in increased uptake
of biodiversity initiatives across the solar portfolio and websites
being developed for some of the assets that did not have them in
the wind and solar portfolios, to help drive community engagement.
Conversations around switching to renewable energy providers were
also undertaken and scope 2 emissions data was collected for the
first time as part of the Company's TCFD disclosure.
Further engagement was undertaken by the Investment Manager
internally, with several best practice sessions on the collection
of ESG KPIs held for the asset managers. Individual sessions on
climate - related risks to the Company's assets were held between
each portfolio asset manager and members of the sustainability team
to identify climate - related risks and mitigation strategies. The
outcome of this engagement can be found in the Strategy and Risk
section of the TCFD disclosure.
Key counterparties * Biodiversity initiatives
* "Green" energy suppliers
* Scope 2 emissions
* Community engagement procedures
------------------ ------------------------------------------------------------
Investment * Climate risks and management
Manager
* JLEN's suite of ESG KPIs
------------------ ------------------------------------------------------------
JLEN Board
* TCFD training, training on AD sustainability
credentials, health and safety training, strategy day
with ESG and climate change topics covered
------------------ ------------------------------------------------------------
Stakeholder engagement metrics
During the period under review, the Company recorded the
following stakeholder engagement metrics:
39
meetings attended with institutional shareholders
1
AGM held
produced four factsheets, one Annual Report, one Half - year
Report, one ESG Report
2
analyst briefings held
3
training sessions attended by the Board and 1 strategy day
50
site visits attended by the Investment Manager
Shareholders
-------------- ---------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Rationale Key stakeholders How has JLEN communicated Key strategic decisions
Providers of * Retail investors and engaged? impacting stakeholder
equity * Annual general meeting group during period
finance and * Declared an increased dividend target of 6.80 pence
recipients * Institutional investors in line with investment objective, continuing to
of income * Regular market announcements position JLEN as an attractive proposition for
distributions. investors seeking income
* Private client and wealth managers
* Investor communications including quarterly
factsheets * Made three portfolio acquisitions which further
* Investor platforms diversified the portfolio and should prove accretive
to NAV in the long term
* Dedicated JLEN website
* Pensions and insurance providers
* Successful completion of the first asset divestment
* Investor roadshows hosted via video conference since launch, achieving a marked uplift to the last
* Proxy voting organisations internal valuation
* Views and feedback sought from institutional
shareholders via corporate broker * Formation of a dedicated ESG Committee to develop and
monitor the Company's sustainability and ESG
strategies
* Investor research notes produced by QuotedData and
frequent articles across traditional print and social
media
-------------- ---------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Investment
Manager
-------------- ---------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Rationale Key stakeholders How has JLEN communicated Key strategic decisions
Key * Foresight Group and engaged? impacting stakeholder
counterparty Regular Board meetings group during period
responsible in Guernsey and * Determination that the Investment Manager maintains a
for * Foresight Group employees via video conference robust internal control environment, and that the
delivering the during the period continued appointment of the Investment Manager is in
Board's attended by key the best interests of shareholders as a whole
strategy. investment personnel
Comprehensive assessment
of the contractual * Agreed the framework for Foresight's discretionary
relationship with investment mandate and the relevant criteria for
the Investment Manager escalation, creating an efficient decision - making
and their performance framework better suited to the continued growth of
Consulting on proposals the portfolio and the ongoing relationship with
and the parameters Foresight
for delegated authority
to take investment
decisions
Monitoring and assessing
JLEN's strategic
position within
the growing environmental
infrastructure market
and the expected
future development
of the market
Fortnightly calls
with the Investment
Manager to discuss
operational matters
and investment opportunities
under consideration
-------------- ---------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Commercial
service
providers
-------------- ---------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Rationale Key stakeholders How has JLEN communicated Key strategic decisions
Providers of * Administrator & Company Secretary and engaged? impacting stakeholder
essential * Regular scheduled update calls as well as specific group during period
business interactions on corporate actions and new portfolio * Key service providers retained, providing continuity
support * Corporate broker acquisitions of service and familiarity with the objectives of the
services. Company
* Legal advisers * Collaboration with multiple service providers in
publication of annual and interim reports
* Public relations agency
* Annual service provider performance review
* Auditor and tax advisers
* Consulting on regulatory, governance, accounting and
taxation matters
* Independent valuation specialists
-------------- ---------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Asset-level
counterparties
-------------- ---------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Rationale Key stakeholders How has JLEN communicated Key strategic decisions
Asset-level * Operations & Maintenance ("O&M") contractors and engaged? impacting stakeholder
technical * Regular update calls with O&M and MSA providers to group during period
and ensure adequate oversight of portfolio operations * Consolidation of insurance services at SPV level
operational * External management services ("MSA") providers across parts of the portfolio
management
service * Focused engagement on value enhancement opportunities,
providers. * Supply chain counterparties Landowners including rationalisation of service provision for * Acquired three new assets during the period,
cost savings and/or improved services increasing ongoing servicing requirements from O&M
counterparties
* Increased scrutiny of, and resource allocation to,
emerging risks identified * Entered a number of new technology types over the
period, including standalone battery storage and low
carbon transport
* Increased emphasis on the internal control framework,
to ensure that controls are both robust and
effective. * Successful further upgrade of capacity at Vulcan AD
site resulted in increased revenue
-------------- ---------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Local
communities
-------------- ---------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Rationale Key stakeholders How has JLEN communicated Key strategic decisions
Members of * Local authorities and agencies and engaged? impacting stakeholder
society * Frequent engagement with local authorities and other group during period
living in regulators to ensure safe and compliant operation of * JLEN donated over GBP418k to local community funds
proximity * Community funds our assets over the period, helping to address local needs and
to an asset of promote long-term sustainable and prosperous
the communities
Company, where * Landowners * Actively engage with local authorities on
the construction planning and obtaining necessary
operations of planning permissions * Implemented a programme of engagement with a local
that * Local environment community, in response to concerns raised by local
asset may have residents near to one of our sites
an * Regular interaction between the owners of land on
impact, * Local residents which our assets operate and the Investment Manager's
whether asset management team
positive or
negative.
* Conduct educational site visits for local community
schools and colleges
-------------- ---------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Debt providers
-------------- ---------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
Rationale Key stakeholders How has JLEN communicated Key strategic decisions
Providers of * Banks and engaged? impacting stakeholder
long-term * Regular updates provided on covenant compliance and group during period
debt to current positioning * Debt remained a key component of funding strategy
finance * Lenders during the period and the portfolio has utilised
assets within revolving debt facilities throughout
the * Consulted on the incorporation of ESG metrics into
portfolio. * RCF agent the interest margin and commitment fee payable on the
Providers revolving credit facility * New debt facilities were arranged that included an
of short to element of sustainability and ESG linkage; more
medium information on page 90 of the Annual Report 2022
- term debt
facilities
("RCF") to
finance
the
acquisition
of investment
opportunities.
-------------- ---------------------------------------------------- ------------------------------------------------------------ -----------------------------------------------------------
RISKS AND RISK MANAGEMENT
JLEN has a comprehensive risk management framework overseen by
the Risk Committee, comprising independent non - executive
Directors.
Risk is the potential for events to occur that may result in
damage, liability or loss. Such occurrences could adversely impact
the Company's business model, reputation or financial standing.
Alternatively, under a well - formed risk management framework,
potential risks can be identified in advance and can either be
mitigated or possibly even converted into opportunities.
Pages 41 to 48 of the Annual Report 2022 detail the principal
risks that the Directors consider are material which potentially
could occur in an environmental infrastructure project such as
those invested in by the Company.
Given that the Company delegates certain activities to the
Investment Manager and Administrator, reliance is also placed on
the controls of the Group's service providers.
In the normal course of business, each project will have
developed a rigorous risk management framework including a
comprehensive risk register that is reviewed and updated regularly
and approved by its Board. The purpose of JLEN's risk management
policies and procedures is not to eliminate risk completely, as
this is neither possible nor commercially viable. Rather, it is to
reduce the likelihood of occurrence and to ensure that JLEN is
adequately prepared to deal with risks so as to minimise their
impact should they materialise.
Risk identification and monitoring
JLEN has a separate Risk Committee, comprising four non -
executive Directors, which is responsible for overseeing and
advising the Board on the current and potential risk exposures of
the Fund, with particular focus on the Group's principal risks,
being those with the greatest potential to influence shareholders'
economic decisions, and the controls in place to mitigate those
risks.
The identification, assessment and management of risk are
integral aspects of the Investment Manager's and Administrator's
work in both managing the existing portfolio on a day - to - day
basis and pursuing new investment opportunities (though the Board
has ultimate responsibility for the risk management activities of
the Group).
The Investment Manager and Administrator have established
internal controls to manage these risks and they review and
consider the Group's key risks with the Risk Committee on a
quarterly basis, including new risks arising and/or changes in the
likelihood of any particular risk occurring. In the case of new and
emerging risks, assessment occurs outside of the quarterly cycle.
These systems of internal control were in place for the year under
review and continue to be in operation.
The Board reviews the performance of the Investment Manager and
Administrator, as well as other key service providers,
annually.
JLEN has a comprehensive risk management framework and risk
register that assesses: a) the probability of each identified risk
materialising; and b) the impact it may have on JLEN.
Mitigation actions have been developed with respect to each risk
so as first to reduce the likelihood of such risk occurring and
secondly to minimise the severity of its impact in the case that it
does occur.
The risk register is a "live" document that is reviewed and
updated regularly by the Risk Committee as new risks emerge and
existing risks change. The principal risks faced by the Group are
formally reviewed by the Risk Committee at each quarterly meeting
and a report from the Committee is presented to the Board for
consideration and approval. Each of the underlying projects is
overseen by an experienced general or contracts manager who reports
to their individual project board. The general and contract
managers maintain strong relationships between clients, sub -
contractors and other stakeholders. This ensures effective
management of potential risks.
Emerging risks and risks relevant to the year under review
Covid-19
Since the start of the first lockdown in March 2020, the Company
has experience of how the assets have performed considering the
challenges presented by the Covid - 19 pandemic. Operationally, the
portfolio has proven to be resilient, with only the Bio Collectors
food waste plant experiencing first-order consequences from
lockdown measures through a reduction in food waste volumes from
hospitality and commercial customers. This risk is now understood
and factored into the valuation. Now, as Covid-19 restrictions are
no longer enforced, risks lie more with supply chains that have
been disrupted during Covid-19 and are taking time to become
re-established. This is further exacerbated by the Russian invasion
of Ukraine, which impacts flows of some goods and commodities that
are important in the global economy.
Power prices
With the ending of the strict Covid-19 lockdowns and the
associated reduction in economic activity that drove down power
prices, wholesale electricity and gas prices have rebounded
extremely strongly. Existing high prices at the start of 2022 were
then pushed even higher by Russia's invasion of Ukraine and the
sanctions on Russian fossil fuels that followed.
JLEN's exposure to wholesale power prices is mitigated by the
practice of having a substantial proportion of generation for both
electricity and gas on fixed price arrangements for durations
ranging from six months out to three years. This provides
protection in the event that power prices retreat from their
current levels, but it also means that portfolio generation assets
may not always be free to capture the very highest prices that are
available from time to time. JLEN currently has fixes in place for
more than 53% of the portfolio to the end of March 2024.
The energy price situation has also raised the risk of energy
suppliers that provide PPAs to renewable generators becoming
insolvent. During the period, some portfolio companies had an
exposure to Bulb Energy, a supplier that was put into Special
Administration in November 2021. These exposures have been resolved
and resulted in an improvement in JLEN's financial position due to
securing improved terms with replacement PPA providers. The
Investment Manager continues to monitor the market carefully as it
contemplates new PPAs and undertakes to assess the counterparty
risk on existing energy suppliers.
Brexit - legal and regulatory risk
On 31 January 2020, the UK ceased to be a member of the European
Union, entering a limited transition period until 31 December 2020.
95% of JLEN's portfolio is located in the UK and none of JLEN's
existing assets has experienced legal or regulatory issues stemming
from Brexit. The Investment Manager expects the European component
of the portfolio to increase in the medium term. Due diligence is
conducted on all new acquisitions, including an assessment of legal
and regulatory risks whether impacted by Brexit or not, and so the
Investment Manager does not expect this aspect of Brexit to be a
material risk for the portfolio in the future. Brexit is creating
some second-order issues for portfolio companies due to supply
chain disruption and this is included as one of the Company's
principal risks (see below).
Change of AIFM
In January 2022, JLEN appointed its Investment Manager,
Foresight Group, as its external alternative investment fund
manager ("AIFM"). Prior to this, the Company was a self - managed
Alternative Investment Fund ("AIF") and Foresight Group was the
Investment Adviser. The contract terms remain materially unchanged;
however, the AIFM takes more of the day-to-day responsibility for
the Fund and it could be considered that there is an increased risk
of reliance on the Investment Manager. The risk is mitigated by the
relationship that has already been formed with the Investment
Manager, including periodic performance assessments and by the
Investment Manager's experience in the markets in which JLEN
operates.
Cost of living and risk of a windfall tax
With rising electricity and gas prices, there is a risk that
governments take action against parties, like the Company, that
benefit from these higher prices in order to mitigate the impact on
ordinary families. In the UK, the government has recently announced
an 'Energy Profits Levy' that imposes a temporary higher rate of
tax on UK oil and gas producers. While this Levy does not apply to
the electricity generation sector at this time, the government has
said that it is aware that the sector has made elevated profits and
that it plans to evaluate what steps to take. The emergence of this
specific risk has been factored into our current assessment of the
principal risk around 'changes to tax legislation and rates'.
JLEN's risk register covers six main areas of risk:
-- Strategic, economic and political
-- Operational, business, processes and resourcing
-- Financial and taxation
-- Compliance and legal
-- Asset specific
-- ESG
Each of these areas, together with the principal risks within
that category, are summarised in the table below, followed by a
detailed discussion of the mitigating factors.
Strategic, economic and political
Risk Potential impact Mitigation
--------------- ------------------------------------------------------------ -----------------------------------------------------------
1 Inflation
* The underlying assets in the portfolio, and therefore * Returns from the assets in the portfolio are highly
Link to Fund the returns expected from them, have some exposure to correlated with inflation due to revenues from PFI
objectives inflation. This ranges from direct exposure such as assets, green benefits for renewable energy assets
Predictable subsidies and service contracts that increase in line and most operational costs being directly linked to
income with RPI annually to other revenue and cost items an inflation index. This results in a "natural hedge"
growth for where the link to inflation is not contractual and ,
shareholders its effect must be estimated. removing the need for the use of derivatives to
mitigate inflation risk.
Change in year
Increased * Nominal discount rates are used in the DCF valuation
methodology used to value portfolio assets. There is * The change of dividend policy from "inflation -
Residual risk a risk that discount rates increase in a high linked" to "progressive" gives the Company additional
Major inflation environment, impacting valuations. flexibility to set dividend targets at a sustainable
level.
* In the current high inflation environment, there is
greater uncertainty than previously about how long
future high inflation will last. JLEN has adopted an
assumption of 5% RPI inflation for the current year,
dropping to 3% until 2030.
* Continue to monitor and seek advice from the
Company's independent valuation specialist.
--------------- ------------------------------------------------------------ -----------------------------------------------------------
2 Interest
rates * The Company has some relatively limited interest rate * Through the use of interest rate swaps and fixed rate
exposure, through its own cash deposits and bank loans, finance costs are fixed at the time of the
Link to Fund funding (UK HoldCo revolving credit facility) and contract being signed, substantially reducing
objectives deposits and funding within the projects themselves. interest rate risk.
Predictable
income
growth for * Interest rates have risen during the year under * The revolving credit facility has a floating interest
shareholders review and are forecast to rise further to combat charge over SONIA but this is mitigated as the
inflation. facility provides short-term finance prior to being
Change in year repaid with capital raise proceeds.
Increased
Residual risk
Moderate
--------------- ------------------------------------------------------------ -----------------------------------------------------------
3 Acquisitions
and pipeline * JLEN's intention is to grow the portfolio through the * The Investment Manager continually receives and seeks
acquisition of further environmental infrastructure. opportunities from the wider secondary market and
Link to Fund However, there is a risk that a pipeline of developers, both in the UK and overseas, assessing
objectives acquisitions does not materialise or that JLEN is over 500 deals in a typical year for suitability. It
Investment, uncompetitive and fails to acquire the desired has a well - established presence within the market.
growth assets.
and
diversification * JLEN's broad environmental infrastructure mandate
* There is a risk that due diligence carried out on captures a wider range of potential investments that
Change in year acquisition targets is insufficient and does not reaches beyond renewable energy to include assets
Decreased reveal all the facts that are relevant to the that support the transition to a low carbon economy
acquisition, leading to JLEN overpaying. or which mitigate the effects of climate change.
Residual risk Recent examples include low carbon transport and
Moderate storage assets.
Links to TCFD
* The Investment Manager commissions a suite of due
diligence from suitable consultants that are experts
in their fields for every acquisition. The Investment
Manager has significant experience of environmental
infrastructure assets and the risk areas to address
through due diligence. In the event that a consultant
fails to identify a risk item within their scope,
JLEN can seek to recover any loss it has suffered up
to the consultant's liability cap.
--------------- ------------------------------------------------------------ -----------------------------------------------------------
4 Funding of
acquisitions * There is a risk that JLEN is unable to achieve its * JLEN raised capital in January 2022, in an
and future stated ambition of growing the portfolio by acquiring oversubscribed equity issue. Since then, the
equity new assets due to a lack of funding, both from renewable infrastructure sector has performed very
fundraising corporate debt and equity capital from investors. well, emphasising its non-correlated nature with
mainstream markets that have been negatively impacted
Link to Fund by increasing market uncertainties and Russia's
objectives invasion of Ukraine.
Investment,
growth
and * JLEN has two years remaining on its three - year
diversification GBP170 million revolving credit facility and can
request a further GBP30 million uncommitted
Change in year accordion. This provides flexible short - term
Decreased finance to pursue acquisitions prior to raising
capital, mitigating the risk of inadequate funding
Residual risk affecting growth.
Moderate
--------------- ------------------------------------------------------------ -----------------------------------------------------------
5 Future of UK
capital * Under its investment policy, JLEN is required to hold * The UK government's adoption of a legally binding
spending at least 50% of its portfolio by value in UK assets. commitment to "net zero" carbon emissions by 2050
and other JLEN therefore has a significant interest in the underpins its support for environmental
target future of UK infrastructure spending. There is a risk infrastructure.
geographies that spending is either reduced or stopped altogether
or that the model used to procure environmental
Link to Fund infrastructure and/or renewable energy projects * In addition, JLEN has the ability to mitigate the
objectives carries a risk profile that would not allow JLEN to impact of a slowdown in UK deal flow through overseas
Investment, invest under its investment policy. acquisitions in order to diversify the portfolio and
growth reduce its reliance on the UK for investment
and opportunities.
diversification
Change in year * Russia's invasion of Ukraine has forced all Western
Decreased governments to consider the dependence of their
energy systems on Russian oil and gas and is leading
Residual risk to accelerated plans for decarbonisation together
Minor with increased focus on alternative energy sources
like biomethane and hydrogen that would fall within
JLEN's investment policy.
--------------- ------------------------------------------------------------ -----------------------------------------------------------
6 Reputational
* JLEN's activities span a range of environmental * The Company and the Investment Manager endeavour to
Link to Fund infrastructure sectors with multiple touch-points keep abreast of best practice in this area and
objectives with local stakeholders, regulators, contractual emerging issues from the portfolio with the capacity
Predictable counterparties and other parties who are active in to damage the Company's reputation are elevated to
income the areas in which JLEN operates. As JLEN grows and the Board. The Board has set up an ESG Committee
growth for its operations become more complex, the risk that chaired by Jo Harrison to focus on this.
shareholders JLEN is considered to have acted improperly increases,
Investment, leading to reputational damage and investors avoiding
growth the Company's shares. * The Investment Manager has incorporated ESG
and assessments into its investment processes that are
diversification intended to highlight potential weaknesses in target
Preservation of * JLEN aims to conduct its business in accordance with assets' ESG credentials before JLEN invests.
capital over ESG principles and is public in this aim. The ESG
the landscape is changing rapidly and there is increased
longer term scrutiny of businesses' claims in this area. JLEN * JLEN has stated its ESG objectives publicly and has
could suffer reputational damage if it is considered reported on a richer set of ESG metrics to try to
Change in year to be "greenwashing", leading to investors avoiding measure objective performance towards these
Increased the Company's shares. objectives.
Residual risk
Moderate
--------------- ------------------------------------------------------------ -----------------------------------------------------------
Operational, business, processes and resourcing
------------------------------------------------------------------------------------------------------------------------------------------
7 Volume of
wind, * By the very nature of wind, solar and water - related * For renewable energy projects there is a degree of
solar and environmental infrastructure projects, their protection from this variability in weather resource
rainfall financial performance is dependent on the volume of from portfolio diversification, as solar is more
resource weather resource available over time, whether productive in the summer and wind more productive in
measured through wind speeds, irradiance or the winter, with the absolute level of resource being
Link to Fund millimetres of rainfall. These are factors outside weakly negatively correlated.
objectives the control of JLEN or the projects themselves, with
Predictable the risk of a significant effect on performance if
income the outcome is significantly different from the * On all projects, technical consultants are employed
growth for assumptions made in forecasting revenue and costs and to advise on the assumptions which should be made
shareholders hence returns to JLEN. regarding volume and its impact on performance for
Preservation of each individual asset. Risks in this area diminish
capital over over time as operational track record provides a
the stronger base for forecasts than consultants'
longer term estimates.
Change in year
No change
Residual risk
Moderate
Links to TCFD
--------------- ------------------------------------------------------------ -----------------------------------------------------------
8 Volume and
cost * For environmental infrastructure assets that need to * The assets in JLEN's portfolio that rely on supplies
of feedstock source feedstock or analogous resources, there are of feedstock benefit from dedicated staff (whether
resource risks associated with the volume of feedstock employed by service providers or directly by the
available and the costs or revenues associated with asset) who work to source suitable feedstock at the
Link to Fund it. If sufficient feedstock is not available for an best price available.
objectives asset to operate at its optimum level, or feedstock
Predictable is only available at a cost that is more expensive
income than the investment case, then JLEN's returns can be * For agri-anaerobic digestion sites, it is common to
growth for materially affected. agree feedstock contracts that adjust for the dry
shareholders matter content in the biomaterial and relate pricing
Preservation of to that energy content and volume which is delivered.
capital over Should a shortfall be likely, for instance due to a
the poor harvest, substitute feedstocks are widely
longer term available.
Change in year
Increased
Residual risk
Major
Links to TCFD
--------------- ------------------------------------------------------------ -----------------------------------------------------------
9 Power prices
* The revenues of the renewable energy generating * The risk of exposure to variations in electricity and
Link to Fund assets are dependent to some extent on the market gas prices from assumptions made is mitigated by JLEN
objectives price of electricity and natural gas, which is out of in the following ways: i) short - term PPAs are used
Predictable the control of JLEN. There is a risk that the actual to fix electricity and gas prices for between one and
income prices received vary significantly from the model three years ahead depending on market conditions and
growth for assumptions, leading to a shortfall in anticipated many have floor prices; ii) forward prices based on
shareholders revenues to JLEN. market rates are used for the first two years where
Preservation of no fix is in place; and iii) quarterly reports from
capital over independent established market consultants are used
the to inform the electricity prices over the longer term
longer term used in the financial models. JLEN blends forecasts
from three consultants to reduce volatility in
Change in year assumed prices from period to period.
Increased
Residual risk * JLEN invests in a diversified portfolio of
Major environmental infrastructure assets that earn
revenues that do not depend on merchant power sales.
Links to TCFD At the year end, 71% of the portfolio's underlying
revenues were not related to merchant sales.
--------------- ------------------------------------------------------------ -----------------------------------------------------------
10 Cyber risk
* There exists a threat of cyber - attack in which a * JLEN has no dedicated IT systems and it relies on
Link to Fund hacker or computer virus may attempt to access the IT those of its service providers, principally the
objectives systems of the Group, the Investment Manager, the Investment Manager and Administrator, which have
Predictable Administrator or one of the project companies and procedures in place to mitigate cyber - attacks and
income attempt to destroy or use the data for malicious have robust business continuity plans in place.
growth for purposes. While JLEN considers that it is unlikely to Renewables assets are also susceptible to cyber
shareholders be the deliberate target of a cyber-attack, there is attack, for example if the control systems of wind
the possibility that it could be targeted as part of turbines are targeted, and the Investment Manager is
Change in year a random or general act. working to understand weaknesses in this area better
Increased in order to continue to improve controls to increase
security.
Residual risk
Moderate
--------------- ------------------------------------------------------------ -----------------------------------------------------------
Financial and
taxation
--------------- ------------------------------------------------------------ -----------------------------------------------------------
11 Portfolio
valuation * The discount rates used in the valuation exercise * The discount rates are reviewed on a regular basis
represent the Investment Manager's and the Board's and updated, where appropriate, to reflect changes in
Link to Fund assessment of the rate of return in the market for the market and in the project risk characteristics.
objectives assets with similar characteristics and risk profile.
Preservation of Increased underlying interest rates or expectations
capital over of prolonged high inflation may lead to increased * The gas and electricity generating assets have
the discount rates being applied by the market and a entered into short - term fixed price arrangements to
longer term consequential decrease in the portfolio value. remove some of the risk associated with changes in
power prices. Latest power prices are fixed for 77%
Change in year of generation for the current summer season and 74%
Increased * Asset values may not run in parallel to evolving for the upcoming winter 2022 season. A premium has
forecasts for future electricity and gas prices and been added to the discount rate for the Cramlington
Residual risk investors should expect some variation in asset biomass asset as it presents the most material risk
Moderate valuation from period to period, as and when a to the portfolio valuation from changing merchant
material movement from prior expectations is power prices.
identified. This risk is elevated during the current
period of volatility in power markets.
* Recent market transactions have supported the view
that attractive infrastructure assets remain in high
demand with institutional investors.
* To provide additional assurance to both the Board and
JLEN's shareholders with respect to the valuation, an
independent verification exercise of the methodology
and assumptions applied by Foresight is performed by
a leading accountancy firm and an opinion provided to
the Directors on a semi-annual basis.
--------------- ------------------------------------------------------------ -----------------------------------------------------------
Compliance and
legal
--------------- ------------------------------------------------------------ -----------------------------------------------------------
12 Changes to
tax legislation * JLEN values its portfolio based on current enacted * JLEN continues to monitor and participate in any
and rates corporation tax rates and tax rules in the relevant consultation processes with UK HMRC and to
jurisdictions in which it operates. Changes to these assess the impact of any additional changes which may
Link to Fund rates or rules in the future could impact the result from the introduction of differing
objectives valuation of the portfolio and the level of legislation.
Predictable distributions received from the portfolio.
income
growth for * The increase in the UK corporation tax rate from 19%
shareholders * JLEN works closely with expert tax advisers and to 25% from 2023, assumed to remain at that level for
Preservation of adopts tax positions which are based on industry the remaining portfolio life, is factored into the
capital over practice and in line with the wider Group strategy. valuation. While this risk has now crystallised,
the However, other than participating in industry there are other possible avenues for government to
longer term consultation processes, there is little within the increase revenues, and so the general risk remains
power of the Company that is able to mitigate changes elevated while government deficits remain large.
Change in year in corporation tax rates and tax legislation.
Increased
* The Investment Manager maintains membership of
Residual risk * The UK government has imposed a "windfall tax" on various trade bodies and participates in lobbying
Moderate North Sea oil and gas producers in light of the high efforts and calls for evidence to support the
cost of energy and the extraordinary profits such interests of the renewable energy sector.
producers are making. The government has also put the
electricity generation sector on notice that it is
considering whether such a tax should be extended to
include them. If this occurs, it is likely to capture
JLEN's renewable electricity generation assets such
as wind and solar projects, although it is not
possible to quantify the impact of such a move
without seeing the detail of how the tax will be
levied.
--------------- ------------------------------------------------------------ -----------------------------------------------------------
13 Changes in
regulation and * JLEN is required to comply with certain regulations, * Through a comprehensive compliance monitoring
government being a Guernsey company listed on the London Stock programme, JLEN ensures that it remains well informed
support Exchange, including those under the Alternative as to the legislation, regulation and guidance
Investment Fund Managers Directive ("AIFMD") and the relevant to both the Company itself as well as the
Link to Fund Foreign Account Tax Compliance Act ("FATCA"). There project entities in which it invests. The Board
objectives is a risk that failure to comply with any of the monitors compliance information provided by the
Preservation of relevant rules could result in a negative Administrator, Company Secretary, Investment Manager
capital over reputational or financial impact on the Company. and legal counsel and monitors ongoing compliance
the developments relevant to a Guernsey company listed on
longer term the London Stock Exchange.
Investment, * The newly emerging area of climate - related
growth disclosures is changing rapidly as understanding of
and what constitutes best practice evolves. There is a * JLEN has voluntarily addressed the requirements of
diversification risk that JLEN fails to disclose properly against the the Task Force on Climate-related Finance Disclosures
new requirements or that investors consider ("TCFD") in a separate section of this Annual Report.
Change in year disclosures to be insufficient.
No change
Residual risk
Moderate
Links to TCFD
--------------- ------------------------------------------------------------ -----------------------------------------------------------
Asset specific
--------------- ------------------------------------------------------------ -----------------------------------------------------------
14 Operational
risks * There is a risk that a health and safety event at a * The portfolio is constantly monitored by the
JLEN owned site could lead to increased costs at the Investment Manager to address risks as they are
Link to Fund site to prevent further occurrences. JLEN's identified.
objectives reputation could be adversely affected by publicity
Predictable generated by a health and safety event.
income * The use of a diverse range of service providers
growth for supplying management, operational and maintenance
shareholders * There is a risk that poor performance by sub - services ensures any failure of a single service
Preservation of contractors, or in the event of having to replace a provider has a minimal impact on the portfolio as a
capital over sub-contractor, that a replacement may only be found whole.
the at a higher cost, could adversely affect project cash
longer term flows.
* This risk is mitigated in part by the diversification
Change in year represented by JLEN's portfolio of assets.
No change * In the event of a single project suffering from a
material issue, distributions to the Fund could
Residual risk possibly be impacted absolutely or for a period of * The portfolio has material damage and business
Moderate time whilst the issue is resolved. This includes grid interruption insurance policies in place to cover
outages and constraints resulting in a project being against potential losses, although these do not
unable to export power and earn associated revenues. typically cover grid outages. Asset managers mitigate
the impact of this by maintaining a dialogue with
network operators and influencing when such outages
occur.
* The Board has in place a regime, overseen by the
Audit Committee, which provides the necessary comfort
that the internal control systems at the Investment
Manager, the Administrator and the operating
companies are effective.
* Each of the project assets have health and safety
policies that are adopted and monitored by the
project board of directors. Health and safety is a
standing item on board agendas, and reporting on
accidents and RIDDORs is received at every board
meeting. Regular health and safety audits on the
projects are carried out by independent specialists.
--------------- ------------------------------------------------------------ -----------------------------------------------------------
ESG
15 Climate
change * Climate change risk has been assessed as part of * Climate change risk has been assessed as part of
JLEN's TCFD report. For more information, see pages JLEN's TCFD report. For more information, see pages
Link to Fund 64 to 65 of the Annual Report 2022 49 to 67 of the Annual Report 2022 for mitigations.
objectives
Predictable
income
growth for
shareholders
Preservation of
capital over
the
longer term
Investment,
growth
and
diversification
Change in year
No change
Residual risk
Moderate
--------------- ------------------------------------------------------------ -----------------------------------------------------------
TCFD REPORT
Introduction
The Task Force on Climate-related Financial Disclosures ("TCFD")
was developed in 2015 by the Financial Stability Board to help
public companies and other organisations more effectively and
consistently report on climate - related risks and
opportunities.
This year, it has become mandatory for commercial companies with
a premium listing on the London Stock Exchange to report against
the TCFD recommendations on a comply or explain basis(1) . It is
expected that from 1 January 2022 all companies with a standard
listing will also be required to include a TCFD disclosure on a
comply or explain basis.
JLEN as an investment company, is not required under the Listing
Rules to include a full TCFD disclosure; however, the Board and the
Investment Manager believe that the nature of JLEN's business and
strategy is intrinsically aligned to the goal of a greener and less
carbon intensive future. Initiatives such as the TCFD are therefore
seen as a positive step in this direction. JLEN has voluntarily
included climate-related financial disclosures consistent with the
TCFD recommendations and recommended disclosures in these financial
statements with the following exception:
In respect to recommended disclosure 4C (found in the metrics
and targets section on pages 66 and 67 of the Annual Report 2022)
to describe the targets used by JLEN to manage climate-related
risks and opportunities and performance against these targets,
while base-line data has been collected for climate-related metrics
for FY22, JLEN plans to set targets against these in FY23..
Limitations of the disclosure
Both the Investment Manager and the Board of JLEN are fully
supportive of the TCFD's goals in bringing climate change
considerations into mainstream reporting. However, analytical
frameworks for evaluating the complex impacts that climate change
will have on the markets in which JLEN operates are still in their
infancy.
The Board and the Investment Manager recognise the importance
for stakeholders of the Company to understand the climate change
risks and opportunities and how these are managed by the Company,
but it should be noted that there is no standardised way yet of
assessing these risks.
The Investment Manager believes that in time, across JLEN's peer
group and the market generally, a more sophisticated approach to
considering the climate risks specific to the Company's business
will be developed. In this first report, JLEN has endeavoured to
make disclosures against the TCFD recommendations that are true to
its understanding of the risks at this time and also relevant and
digestible for its range of stakeholders.
(1) The regulations were made on 17 January 2022 and apply to
reporting for financial years starting on or after 6 April 2022,
with guidance provided here:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1056085/mandatory-climate-related-financial-disclosures-publicly-quoted-private-cos-llps.pdf.
GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS
----------------------------------------------------------- ---------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------
Description: Description: Description: Description:
Disclose the organisation's Disclose the actual Disclose how the Disclose the metrics
governance around and potential impacts organisation identifies, and targets used
climate - related of climate-related assesses and manages to assess and manage
issues and opportunities. risks and opportunities climate-related relevant climate-related
on the organisation's risks. risks and opportunities
business, strategy where such information
and financial planning is material.
where such information
is material.
----------------------------------------------------------- ---------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------
Disclosure: Disclosure: Disclosure: Disclosure:
a. Describe the a. Describe the a. Describe the a. Disclose the
Board's oversight climate-related organisation's process metrics used by
of climate-related risks and opportunities for identifying the organisation
risks and opportunities. the organisation and assessing climate-related to assess climate-related
b. Describe management's has identified over risks. risks and opportunities
role in assessing the short, medium b. Describe the in line with its
and managing climate and long term. organisation's process strategy and risk
- related risks b. Describe the for managing climate-related management process.
and opportunities. impact of climate-related risks. b. Disclose scope
risks and opportunities c. Describe how 1, scope 2 and,
on the organisation's processes for identifying, if appropriate,
businesses, strategy assessing and managing scope 3 GHG emissions,
and financial planning. climate-related and the related
c. Describe the risks are integrated risks.
resilience of the into the organisation's c. Describe the
organisation's strategy, overall risk management. targets used by
taking into consideration the organisation
different climate-related to manage climate-related
scenarios, including risks and opportunities
a 2degC or lower and performance
scenario. against targets.
----------------------------------------------------------- ---------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------
Key initiatives Key initiatives Key initiatives Key initiatives
in 2021/22: in 2021/22: in 2021/22: in 2021/22:
* Enhanced the Company's oversight procedures in this * Developed the internal and external approach to * Reviewed and enhanced the approach to climate risk * Collected scope 1 and 2 emissions data in portfolio
area with the setting up of a separate ESG Committee reporting on and assessing climate-related risks and reporting within the JLEN risk framework management software tool
to sit alongside the Risk and Audit Committees opportunities
* Undertook an exercise with Foresight's portfolio * Worked with portfolio data management software
* Welcomed Jo Harrison to the Board of Directors. Jo * Started to develop climate scenario modelling managers to review physical risks to the assets in developer to tailor software specific to Foresight's
has specialist knowledge in areas of sustainability capabilities using in-house resources and external the portfolio ESG and sustainability requirements
and ESG expertise
* Further developed the JLEN reporting framework by * Collected data against climate-related metrics as
* Included TCFD training as part of JLEN's training and * Increased engagement with key counterparties at the classifying principal risks that have a climate part of the ESG metrics announced in the Annual
strategy day asset level on the subject of sustainability change aspect. Included a risk heat map that also Report 2021
shows climate change risk
* Streamlined the approach to asset - specific * Continued to develop approach to collect scope 3
assessments for TCFD and EU taxonomy reporting emissions data
----------------------------------------------------------- ---------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------
Planned initiatives Planned initiatives Planned initiatives Planned initiatives
in 2022/23: in 2022/23: in 2022/23: in 2022/23:
* Further training on climate-related topics for both * Continue to develop scenario modelling capabilities * The Investment Manager's Head of Risk is conducting a * Collect scope 3 emissions data
the Board and the Investment Manager and measure and assess the financial impact of these comprehensive review of the risk management framework
sensitivities ,
which is planned to include significant climate risk * Continue to develop the approach to ESG KPIs and set
analytics targets against them
----------------------------------------------------------- ---------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------
GOVERNANCE
TCFD recommended disclosures:
a) Describe the Board's oversight of climate-related risks and
opportunities.
b) Describe management's role in assessing and managing
climate-related risks and opportunities.
a) Describe the Board's oversight of climate-related risks and
opportunities
JLEN has a comprehensive risk management framework overseen by
the Risk Committee, comprising independent non-executive Directors,
which is responsible for overseeing and advising the Board on the
current and potential risk exposures of the Fund, with particular
focus on the Group's principal risks, being those with the greatest
potential to influence shareholders' economic decisions, and the
controls in place to mitigate those risks, including
climate-related risk. The Group's risk register treats
climate-related physical risk as a principal risk and identifies
various other risks that have a direct relevance to the Company
that are part of transition risk, such as changing power prices and
the extent of government support.
The Risk Committee meets on a quarterly basis and the duties of
the Risk Committee include the identification, measurement,
management and monitoring appropriately and regularly of all risks
relevant to the Company's investment strategy and to which the
Company is, or may be, exposed, including climate related
risks.
The ESG Committee also meets on a quarterly basis and considers
TCFD as a standing agenda point. The ESG Committee is primarily
concerned with setting the guiding principles and strategies of the
Company in respect of ESG matters and TCFD falls under this remit
for the purposes of the Committee. Where risks are identified by
the ESG Committee, these will be referred to the Risk Committee for
further consideration and inclusion in the risk register.
Over the financial year just passed, an update from the
Investment Manager on progress against TCFD reporting was delivered
at the Board's annual strategy and training day. Post the year end,
in May 2022, a training session hosted by a specialist consultant
was delivered to the Board and further training over the year is
being planned.
While JLEN's portfolio of environmental infrastructure assets is
not immune to the effects of climate change on an individual asset
basis, the Company's purpose and investment policy is to reduce the
rate of further climate change by seeking to invest in assets that
support more environmentally friendly approaches to economic
activity, support the transition to a low carbon economy or which
mitigate the effects of climate change.
Climate change-related training and informational sessions:
January 2022 - TCFD included as a topic at the JLEN strategy and
training day
May 2022 - Climate change training session with external
consultant
b) Describe management's role in assessing and managing
climate-related risks and opportunities
Assessing and managing climate-related risks
The identification, assessment and management of risks are
integral aspects of the Investment Manager's work in both managing
the existing portfolio on a day-to-day basis and pursuing new
investment opportunities (though the Board has ultimate
responsibility for the risk management activities of the Group).
The Investment Manager has established internal controls to manage
risks and reviews and considers the Group's key risks, with the
Risk Committee, on a quarterly basis, including climate risks, new
risks arising and/or changes in the likelihood of any particular
risk occurring.
Assessing and managing climate-related opportunities
There are two key opportunities that the Investment Manager
considers holistically on a regular basis:
Sector opportunities - the Investment Manager frequently
evaluates opportunities for investments that reduce CO(2) emissions
and enhance the move to a low carbon economy.
Value - enhancing opportunities - the Investment Manager
frequently assesses the assets for opportunities to enhance
climate-related performance.
At an investment level, the consideration of the sustainability
credentials of environmental infrastructure opportunities and their
physical resilience to climate - related risks is undertaken in
accordance with a set of sector-specific assessment parameters
underlying the five key areas of Foresight's proprietary
Sustainability Evaluation Tool. Transition risks are considered by
the Investment Manager's valuation team and these risks are then
escalated to the Company's risk register and the Board, if
appropriate. Transition opportunities are considered more
holistically by the Investment Committee and as part of the
Company's strategy. Further details of Foresight's approach to
sustainability and how this is carried through practically to
assessing climate-related risks and opportunities is set out on
pages 103 and 104 of the Annual Report 2022.
STRATEGY
TCFD recommended disclosures:
a) Describe the climate - related risks and opportunities the
organisation has identified over the short, medium and long
term.
b) Describe the impact of climate-related risks and
opportunities on the organisation's businesses, strategy and
financial planning.
c) Describe the resilience of the organisation's strategy,
taking into consideration different climate - related scenarios,
including a 2degC or lower scenario.
Broadly, the TCFD climate-related risks and opportunities can be
split into two categories:
Transition risks:
These are risks related to the transition to a net zero or low
carbon future. These risks fall into four categories: policy and
legal risk, technological risk, market risk and reputational risk.
See page 63 of the Annual Report 2022.
Physical risks:
These are the potential physical impacts of both acute and
chronic extreme weather events or changes to climate patterns. In
this report the physical risks as set out in the EU taxonomy were
considered; more information is set out on pages 61 to 62 of the
Annual Report 2022.
Opportunities
The Investment Manager considers that aspects of physical and
transition risks may represent opportunities for the portfolio. By
virtue of its investment policy, JLEN aims to make a significant
contribution to reducing CO(2) and climate change.
Impact
The potential for climate-related risks to impact investments is
considered as part of acquisition due diligence and is subsequently
monitored on an ongoing basis.
While climate-related risks are being considered separately in
this section, they are not considered to pose a greater risk than
those listed in the principal risk register found on pages 42 to 48
of the Annual Report 2022 and in some cases are duplicated.
The risks and opportunities and processes of assessment are
considered in more detail on pages 56 to 59 of the Annual Report
2022.
Top climate-related risks for the Company
Risks
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------
Displacement of
Changes to power existing assets
prices as a result Extreme weather-related Changes in regulation with new or other
of climate change events and government support technologies
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------
Description Description Description Description
* Lower than forecast power prices due to warmer * Extreme weather-related events, either chronic (e.g. * Changes in regulation to sectors in which JLEN is * As more resource and scientific - backed research is
winters or increased renewables deployment changing wind patterns, heat stress, rising sea already invested e.g. energy-from-waste not meeting dedicated to achieving net-zero goals, technologies
levels) or acute (e.g. storms, heat wave, drought, criteria to be considered aligned to the EU taxonomy could be developed that make current renewables or
floods), causing damage to Company assets or environmental infrastructure technologies obsolete.
* Increased power prices due to short-term negatively impacting their production An example of this could be fusion power displacing
shocks/decreased energy supplies from low wind * Changes in farming regulation which impact the agri all other forms of energy
resource or problems in the gas network could lead to AD portfolio
governments turning to less sustainable ways of
generating energy that are available in the shorter * Other technologies such as nuclear or coal being
term - e.g. coal * Government support for short-term energy solutions prioritised in the short to medium term
that negatively impact the transition to a low carbon
future e.g. support of coal
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------
Probability Probability Probability Probability
Likely Likely Possible Unlikely
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------
Level of residual Level of residual Level of residual Level of residual
risk risk risk risk
Moderate Negligible Negligible Minor
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------
Physical or transition Physical or transition Physical or transition Physical or transition
risk/opportunity risk/opportunity risk/opportunity risk/opportunity
Transition (market) Physical (acute, Transition (policy Transition (technological)
chronic) and regulation,
reputational)
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------
Investment Manager Investment Manager Investment Manager Investment Manager
response response response response
* The majority of assets in the portfolio earn revenues * Having conducted a review of the physical risks to * Given the diversified nature of the assets, the * It is considered more likely that new technologies
that are not dependent on merchant power sales and the portfolio (see pages 61 to 62 of the Annual impact is likely to be limited to a single asset or would be developed and JLEN is well positioned to
various mechanisms are in place to help mitigate the Report 2022), the physical risks are largely small part of the portfolio invest in new energy solutions once they become
risk of lower power prices (see principal risks on localised and the impact of a single event or limited proven at scale. It is unlikely that a single
pages 42 to 48 of the Annual Report 2022) set of events is deemed to have a negligible impact solution would be found for all the energy needs, bu
to the overall portfolio; nevertheless, this is kept * The risk over the long term is considered negligible t
under close review by the Investment Manager as other avenues or solutions would be found for the if it were, this would necessitate considerable
* Arguments for supporting less sustainable asset or technology affected, such as selling an buildout beyond the lifetime of JLEN's assets
alternatives to manage short-term power price shocks asset or finding alternative sources of feedstock
are, on the whole, not supported by society although * Further information on the mitigations considered
sometimes short-term pragmatism overrides this against volume of resource can be found in the risk
management section on pages 44 and 45 of the Annual
Report 2022
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------
Impact Impact Impact Impact
S F C S C S F S F
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------
Risk register Risk register Risk register Risk register
9 7 8 15 7 8 15 13 15 3 15
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------
Time period key:
S = Short term (0-5 years)
M = Medium term (5-10 years)
L = Long term (10+ years)
Impact key:
S = Strategy
F = Financial planning
C = Company's investments
Risk register key:
3 Acquisitions and pipeline
7 Volume of wind, solar and rainfall resource
8 Volume and cost of feedstock resource
9 Power prices
13 Changes in regulation and government support
15 Climate change
Opportunities
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- ---------------------------------------------------------------
Increased demand Increased governmental Technological developments Changes in weather
for environmental support for environmental and buildouts in patterns leading
infrastructure and infrastructure projects environmental infrastructure to buildout of certain
businesses which types of environmental
support the transition infrastructure or
to a low - carbon business
economy
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- ---------------------------------------------------------------
Description Description Description Description
* Increased demand for infrastructure which helps to * Government policies aimed at facilitating the * As new technologies become better developed, the * Changes in weather patterns could lead to
balance the intermittent generation profile of transition to a net zero carbon economy may subsidise Company is well positioned to invest in a diversified opportunities for new types of infrastructure or
renewables - e.g. battery storage certain technologies to increase their uptake or range of projects further investment into existing categories. An
buildout, creating further opportunities for example of this could be flood defence infrastructure
investment by JLEN in response to increased rainfall or sea level rise
* Increased demand for shorter - term solutions to or controlled environment agriculture facilities in
reach net zero by 2050, e.g. CNG refuelling stations response to higher temperatures
as a low carbon transport option while other
solutions such as hydrogen power are further
developed
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- ---------------------------------------------------------------
Level of opportunity Level of opportunity Level of opportunity Level of opportunity
High Medium Medium High
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- ---------------------------------------------------------------
Time period Time period Time period Time period
S M L S M L S M M L
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- ---------------------------------------------------------------
Physical or transition Physical or transition Physical or transition Physical or transition
risk/opportunity risk/opportunity risk/opportunity risk/opportunity
Transition (market) Transition (policy Transition (technological) Physical
and legal)
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- ---------------------------------------------------------------
Investment Manager Investment Manager Investment Manager Investment Manager
response response response response
* JLEN is already well positioned to invest in * Government support of emerging sectors will change * Attractiveness of investment opportunities will also * The Investment Manager reviews c. 500 deals a year in
environmental infrastructure sectors that support the the risk profile and may open up areas that would depend on the business models as well as the proven the environmental infrastructure space which allows
transition to a low carbon economy, as can be otherwise be insufficiently attractive for JLEN nature of the technology it to take advantage of these opportunities as they
demonstrated in the market and opportunities section investment arise
on pages 10 and 11 of the Annual Report 2022
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- ---------------------------------------------------------------
Impact Impact Impact Impact
S F S F S F S F C
----------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- ---------------------------------------------------------------
Time period key:
S = Short term (0-5 years)
M = Medium term (5-10 years)
L = Long term (10+ years)
Impact key:
S = Strategy
F = Financial planning
C = Company's investments
Resilience
JLEN believes that resilience is supported by owning a portfolio
that is diversified by location, technology, resource use and
revenue make-up. At the business level, the Investment Manager
engages with a range of specialists across different areas of
expertise and levels of the business to help drive and maintain a
resilient portfolio. Risks and opportunities are also assessed
within the framework discussed on page 65 of the Annual Report 2022
and on an ad hoc, day-to-day basis.
Climate change risk assessment methodology
What are climate change scenarios?
"Scenarios are alternative images of how the future might unfold
and are an appropriate tool with which to analyse how driving
forces may influence future emission outcomes and to assess the
associated uncertainties."
Source: The IPCC
For the purposes of this report, JLEN considers climate change
scenarios that have been developed by the United Nations ("UN")
Intergovernmental Panel on Climate Change ("IPCC") in their Sixth
Assessment Report.
In order to understand JLEN's physical climate risk, it
considered low, medium and high GHG emission scenarios as set out
by the IPCC in their Sixth Assessment Report.
Scenario Estimated warming (2041-2060)(1) IPCC scenario
---------------------------- -------------------------------- ----------------------------
Very low GHG emissions: 1.6degC Net zero, broadly equivalent
CO(2) emissions cut to to SSP1 - 1.9(2)
net zero around 2050.
Considered best case
scenario if net-zero
targets are met.
---------------------------- -------------------------------- ----------------------------
Intermediate GHG emissions: 2.1degC SSP2-4.5
CO(2) emissions around
current levels until
2050, then falling but
not reaching net zero
by 2100. Considered "middle
of the road" scenario.
---------------------------- -------------------------------- ----------------------------
Very high GHG emissions: 2.5degC SSP5-8.5
CO(2) emissions triple
by 2075. Considered worst
case scenario.
---------------------------- -------------------------------- ----------------------------
(1) Relative to pre-industrial levels, all regions.
(2) Analysis received regarding power price scenarios does not
explicitly map to specific IPCC scenarios.
Physical risk assessment
Methodology
Physical risks have always been considered as part of due
diligence when acquiring an asset and on an ongoing monitoring
basis.
This year an exercise was undertaken to review these risks
through the lens of specific climate - related risks. Initially,
these risks were considered as part of an exercise to review the
portfolio's compliance with the EU taxonomy (more information on
page 103 of the Annual Report 2022). The EU taxonomy recognises a
non-exhaustive list of climate-related physical risks and this list
was adapted for the JLEN portfolio.
Temperature-related Wind-related Water-related Solid mass-related
-------------------- ---------------- ---------------------- ------------------
Chronic Changing temperature Changing wind Changing precipitation Soil degradation
(air, fresh patterns patterns and
water, marine types (rain,
water) hail, snow/ice)
-------------------- ---------------- ---------------------- ------------------
Heat stress Precipitation Soil erosion
or hydrological
variability
-------------------- ---------------- ---------------------- ------------------
Temperature Sea level rise
variability Water stress
------- -------------------- ---------------- ---------------------- ------------------
Acute Heat wave Storm (including Drought Landslide
blizzards, dust
and sandstorms)
-------------------- ---------------- ---------------------- ------------------
Cold wave/frost Heavy precipitation Subsidence
(rain, hail,
snow/ice)
-------------------- ---------------- ---------------------- ------------------
Wildfire Flood (coastal,
fluvial, pluvial,
ground water)
------- -------------------- ---------------- ---------------------- ------------------
The Investment Manager conducted an interview with each of its
portfolio or asset managers to determine the impact of each of the
risks identified above on the Company's assets.
These risks were then considered, where possible, using the
IPCC's interactive atlas set to the following parameters:
-- region: Northern Europe (apart from ETA energy-from-waste
plant which is located in Southern Italy);
-- climate change scenario model: SSP2-4.5;
-- time frame: 2021-2040;
-- baseline: 1995-2014; and
-- mask: land.(1)
(1) Mask refers to a parameter of the IPCC atlas tool where the
choices are land, sea or mountains
For more information, please refer to the IPCC interactive atlas
tool, found here: https://interactive-atlas.ipcc.ch/.
Limitations of the assessment
Top climate-related physical risks (assuming methodology
considered on page 61 of the Annual Report 2022)
Risk Description Mitigation
----------- --------------------------------- -------------------------------
Heat stress Heat stress causes some The main mitigation is
loss of generation capacity through the diversification
within the solar portfolio; of the portfolio. Loss
the bioenergy and AD of production from the
portfolios also experience solar sites is marginal
some loss in efficiency and technical solutions
at higher temperatures. on the bioenergy and
Increased stress on components AD assets are available
is expected to lead to to help mitigate heat
a higher incidence of stress. Spare equipment
equipment failure. is often stockpiled to
quickly fix failures.
----------- --------------------------------- -------------------------------
Drought Drought can be an issue In times of drought,
for the feedstock of alternative feedstocks
the AD portfolio. Drought can be sourced and substituted
is a possible risk given with only a marginal
rising temperature expectations; loss of production and/or
however, Northern Europe increase in the cost
is forecast to have more of feedstock.
rain as a result of climate
change and consecutive
dry days are expected
to only increase by 0.3
days.
----------- --------------------------------- -------------------------------
Storms It is difficult to calculate Damage to sites from
whether storms will increase storms is more often
as a result of climate limited to one site and
change; however, it is not a risk to the whole
reasonable to think that portfolio. Risk from
storms will increase storm damage is mitigated
in occurrence and strength through the management
as climatic conditions of the site - experienced
undergo changes. counterparties, reliable
supply chains and a ready
stock of components that
are likely to fail or
be damaged can all help
to mitigate the risk.
----------- --------------------------------- -------------------------------
Future climate scenarios
High physical risk scenario using SSP5-8.5 (2.5degC warming
globally, in the near term)
The IPCC pathway SSP5-8.5 was used to assess a high physical
risk scenario on the JLEN portfolio. The assessment was conducted
using the methodology described on page 61 of the Annual Report
2022.
96% of the JLEN portfolio is situated in the UK and the median
remaining asset life of the portfolio is 17.1 years. The assessment
was therefore made through the lens of land-based climate changes
in the IPCC's Northern Europe region in the period from
2021-2040.
In this scenario, mean temperatures in Northern Europe increase
by 1.2degC (median). Frost and snow decrease while mean
precipitation increases 3.1% (median). Consecutive dry days
increase by 0.3 days (median) and surface wind decreases by 0.5%
(median). Sea level rises by 0.1 metres (median).
Therefore, the climate-related risks to the portfolio do not
change significantly from those assessed in the physical
climate-related risk assessment on a 2degC or lower scenario as
detailed on page 62 Annual Report 2022.
The financial impact of this has not yet been modelled but,
given the current holdings, the portfolio is not expected to have
material sensitivity to this scenario.
High transition risk scenario using SSP1-1.9 (1.5degC to 2degC
temperature change)
As is standard market practice, long - term gas and power price
projections used in JLEN's portfolio valuation are informed by
curves provided by independent market forecasters that most closely
represent a pathway between 2degC and 4degC.
In order to assess the potential long - term impact from climate
change in a high transition risk scenario, the Investment Manager
has obtained price projections produced under a net zero assumption
that successful efforts are made globally to limit warming to 2degC
- which is broadly equivalent to SSP1-1.9, under the United Nations
IPCC scenarios.
It is important to note there are many different pathways to net
zero, and different choices could have very different implications
for market prices and revenues; not least such as government
policy, technological advancement and societal change. However, for
the purposes of this scenario, we assume decarbonisation targets
are achieved such that negative emissions are reached in the UK
power sector by 2035 and economy - wide emission targets are met in
2050.
Whilst the Investment Manager will continue to refine its
approach to climate change modelling as both the policy and market
landscape evolves, the current projections suggest one potential
outcome is to see reductions in forecast annual baseload prices
being driven by the accelerated roll out of low marginal cost
intermittent renewables and their associated impact on the merit
order price setting mechanism.
Based on current independent projections, the impact of this
scenario has been estimated as a reduction in portfolio value of
approximately GBP52 million, equivalent to 6.6% of the portfolio or
7.9 pence per share of Net Asset Value, although the true impact is
expected to be softened by a combination of operational,
technological and market developments in the coming years, which
would at least partially offset the cannibalisation effect
currently projected in this scenario.
Limitations of the assessment
It should be noted that there is low model agreement across some
areas of the IPCC atlas tool. This could mean that some of their
assessments change in future.
While every effort was made to assess the probability and impact
of the physical risk correctly and accurately, it is anticipated
that sophistication in this area will increase over time as more
data and different methods of assessment are developed. It should
be noted that there is low model agreement across some areas of the
IPCC atlas tool. This could mean that some of their assessments
change in future.
RISK MANAGEMENT
TCFD recommended disclosures:
a) Describe the organisation's processes for identifying and
assessing climate - related risk.
b) Describe the organisation's processes for managing climate -
related risks.
c) Describe how processes for identifying, assessing and
managing climate - related risks are integrated into the
organisation's overall risk management.
a) Describe the organisation's processes for identifying and
assessing climate - related risk
JLEN has a comprehensive risk management framework and risk
register that assesses:
-- a measure of the probability of each identified risk materialising; and
-- the potential impact that risk event may have on JLEN.
Mitigation actions have been developed with respect to each risk so
as first to reduce the likelihood of such risk occurring and
secondly to minimise the severity of its impact in the case that it
does occur.
b) Describe the organisation's processes for managing
climate-related risks
The financial performance of environmental infrastructure
projects is dependent on the volume of resources available, be it
solar irradiation, wind, feedstock yields, waste or water. These
resources represent factors outside the control of JLEN or the
projects themselves. If assumptions made in forecasting revenue and
costs, and hence returns to JLEN, are incorrect, there is a risk of
a significant negative effect on performance. However, JLEN
considers the following mitigating factors for different parts of
the portfolio will ameliorate potential impacts:
Variability of weather resource
-- For renewable energy projects there is a degree of protection
from variability in weather resource from portfolio
diversification, as solar is more productive in the summer and wind
more productive in the winter, with the absolute level of resource
being weakly negatively correlated.
Falling volumes of resource on the waste and wastewater
projects
-- In addition, the waste and wastewater projects benefit from
"banded" volumetric payment arrangements that mean the projects are
relatively insensitive to falling volumes. The projects also
benefit from contractual exclusivity over the available waste or
water stream and, in the case of the waste projects, minimum
guaranteed volumes, further mitigating this risk.
Assumptions made regarding resource
-- On all projects, technical consultants are employed to advise
on the assumptions which should be made regarding volume and its
impact on performance for each individual asset.
Feedstock resource
-- For AD sites, it is common to agree feedstock contracts that
adjust for the dry matter content in the biomaterial and relate
pricing to that energy content and volume which is delivered.
Should a shortfall be likely, for instance due to a poor harvest,
substitute feedstocks are widely available.
c) Describe how processes for identifying, assessing and
managing climate - related risks are integrated into the
organisation's overall risk management
All potential investments are evaluated in accordance with
Foresight's proprietary in-house tool - the Foresight
Sustainability Evaluation Tool ("Foresight SET") - to ensure that
they meet the Investment Manager's definition of sustainable
infrastructure, and that climate-related risks are systematically
identified, assessed and subsequently managed.
METRICS AND TARGETS
TCFD recommended disclosures:
a) Disclose the metrics used by the organisation to assess
climate-related risks and opportunities.
b) Disclose scope 1, scope 2 and scope 3 greenhouse gas
emissions and the related risks.
c) Describe the targets used by the organisation to manage
climate - related risks and opportunities and performance against
targets.
a) Disclose the metrics used by the organisation to assess
climate-related risks and opportunities
To ensure that all potential investments meet our definition of
sustainable infrastructure, and that climate - related risks are
systematically identified, assessed and subsequently managed, they
are evaluated in accordance with Foresight's Sustainability
Evaluation Tool ("SET"). The SET is made up of five criteria that
cover the key areas of sustainability and ESG considerations to be
assessed and there is a specific climate-change resilience
parameter comprising 30-40 sub-criteria.
The Sustainability team carry out regular in-house consultation
to decide on the individual "weighting" for each KPI within each
climate change resilience parameter. The weighting dictates the
materiality of the KPI in the overall asset score, which can be
easily updated and amended based on new information obtained.
The physical risks are assessed as part of the climate change
resilience assessment parameter of the SET. Alongside the
assessment of the physical risks, transition risks are also
incorporated to the SET's climate change resilience parameter.
More information on the Foresight SET can be found on pages 103
and 104 Annual Report 2022.
b) Disclose scope 1, scope 2 and, if appropriate, scope 3
greenhouse gas emissions, and the related risks
What are scope 1, 2 and 3 emissions?
The Greenhouse Gas ("GHG") Protocol categorises greenhouse gas
emissions into three groups,
or "scopes":
Scope 1: direct emissions from owned or controlled sources.
Scope 2: indirect emissions from the generation of purchased
energy.
Scope 3: indirect emissions (not included in scope 2) that occur
in the value chain of the reporting company.
The Company's focus for quantitative reporting of exposure to
climate-related risk is achieved using the universally accepted
core metrics, as recommended by the TCFD (shown below).
TCFD core metrics
------------------- --------------------- ------------------ ------------------- ----------------------
Weighted average Total carbon Carbon Carbon
carbon intensity emissions footprint intensity Exposure to
(tCO(2) e/GBPm (tCO(2) e) (tCO(2) e/EURm (tCO(2) e/GBPm carbon - related
revenue)(1) invested) revenue)(1) assets (%)
------------------- --------------------- ------------------ ------------------- ----------------------
Portfolio's The absolute Total carbon Volume of carbon The amount or
exposure to greenhouse gas emissions for emissions per percentage of
carbon-intensive emissions associated a portfolio million pounds carbon - related
assets, expressed with the portfolio, normalised by of revenue (carbon assets in the
in tonnes CO(2) expressed in the market value efficiency of portfolio, expressed
e/GBPm revenue. tonnes CO(2) of the portfolio, a portfolio), in GBPm or percentage
e. expressed in expressed in of the current
tonnes CO(2) tonnes CO(2) portfolio value
e/GBPm invested e/GBPm revenue
------------------- --------------------- ------------------ ------------------- ----------------------
To be calculated To be calculated
in 2023 75,166 99 in 2023 16%
------------------- --------------------- ------------------ ------------------- ----------------------
1. The Investment Manager continues to work with third party MSA
providers to define a consistent methodology for collation of this
data.
At present, the calculation of these metrics is performed using
scope 1 and scope 2 emissions only, with scope 3 emissions to be
incorporated in future reports as the Investment Manager's
sophistication in this area advances. An update on this will be
provided in the Annual Report 2023.
Scope tCO(2) e in 2021/22
----------------------------- -------------------
Scope 1 Emissions (tCO(2) e) 68,368
Scope 2 Emissions (tCO(2) e) 6,798
Scope 3 Emissions (tCO(2) e) -
----------------------------- -------------------
Total 75,166
----------------------------- -------------------
Caveats to the data:
-- Where it has not been possible to collect data, assumptions
have been made using proxy technologies, sites and time periods to
provide as accurate as possible data;
-- scope 1 emissions do not yet include fugitive emissions from
AD sites (i.e. leaks, flaring, venting). There is work in progress
to better understand this aspect of the portfolio and will be
reported going forward;
-- where assets have renewables tariffs in place, this is deemed
to nullify their Scope 2 emissions and,
-- for vehicles operating at the PFI sites, these are owned and
operated by third-party contractors, who should account for the
vehicles' fuel use in their own Scope 1 emissions.
Data sources:
Calculation methodologies available at TCFD Hub
c) Describe the targets used by the organisation to manage
climate - related risks and opportunities and performance against
targets
JLEN's business is inherently linked to matters of climate
change. JLEN's ESG - linked loan facility includes a target against
generation of clean energy which can be directly linked to tonnes
of CO(2) avoided. During 2021/22 JLEN produced 1,314GWh of clean
energy, which equates to 905,906 tCO(2) e avoided (compared with
burning coal to produce energy). Further information and
methodology can be found on page 106 of the Annual Report 2022.
A workstream is currently underway to develop methodologies to
calculate the carbon footprints of the Company's assets, which will
help to further inform the portfolio decision-making and
target-setting processes.
JLEN records a range of other metrics that help to develop an
understanding of the direct and indirect environmental
characteristics of the portfolio. These can be found on pages 105
to 112 of the Annual Report 2022.
THE INVESTMENT MANAGER
JLEN is managed by Foresight Group LLP, an alternative
investment fund manager with over GBP8.7 billion of assets under
management and over 300 infrastructure assets.
Chris Tanner
Co-lead Investment Manager
Chris has been the co-lead Investment Manager to JLEN since
IPO.
He joined Foresight in 2019 as a Partner and currently works in
the London office. He has over 23 years of industry experience.
Chris is a Member of the Institute of Chartered Accountants in
England and Wales and has an MA in Politics, Philosophy and
Economics from Oxford University.
Chris Holmes
Co-lead Investment Manager
Chris has been co-lead Investment Manager to JLEN since January
2018.
He joined Foresight in 2019 as a Partner in the London office.
He has over 24 years' experience in infrastructure investment and
financing in PFI/PPP and renewable energy projects.
Chris has a BA (Hons) in Business Economics from the University
of Durham.
About Foresight Group
Foresight Group was founded in 1984 and is a leading
infrastructure and private equity investment manager. With a
long-established focus on ESG and sustainability - led strategies,
it aims to provide attractive returns to its institutional and
private investors from hard-to-access private markets. Foresight
manages over 300 infrastructure assets with a focus on solar and
onshore wind assets, bioenergy and waste, as well as renewable
energy enabling projects, energy efficiency management solutions,
social and core infrastructure projects and sustainable forestry
assets. Its private equity team manages eight regionally focused
investment funds across the UK and a SME impact fund supporting
Irish SMEs. This team reviews close to 2,500 business plans each
year and currently supports more than 130 SMEs. Foresight Capital
Management manages four strategies across six investment vehicles
with an AUM of over GBP1.6 billion.
Foresight operates from 12 offices across six countries in
Europe and Australia with AUM of GBP8.7 billion as at 31 March
2022. Foresight Group Holdings Limited listed on the Main Market of
the London Stock Exchange in February 2021
www.fsg-investors.com/
Updates over the period
In January 2022, JLEN appointed its Investment Manager,
Foresight Group LLP, as its external alternative investment fund
manager ("AIFM") with discretionary investment management authority
for the Company. For more information, please see page 31 of the
Annual Report 2022.
Q&A WITH LILY CROMPTON, GROUP SUSTAINABILITY LEAD
Tell us about your background
My background is very much as a sustainability professional,
I've been working in the sustainability field for over 13 years.
I've worked on delivering sustainable outcomes across major
infrastructure projects such as Crossrail and Thameslink in London,
as well as working on new office buildings in Canary Wharf under
strict sustainability assessment methodologies. My work to date has
spanned rail, the built environment, infrastructure, including
offshore wind farms, and even a small amount of work on a proposed
space port up in Scotland. My work has also led me to create and
deliver sustainability strategies which is what my role at
Foresight entails.
At university I studied Environmental Management and my career
started off with a heavy focus on the environment and quickly
developed into the more holistic approach to sustainability. I was
always passionate about conserving nature, managing resources
better and being an efficient business through better management of
materials and money - however the shift towards sustainability
really opened my eyes to the social side of sustainability too and
this continues to be a big driver in everything that I do.
What have been your highlights over the last year working at
Foresight?
I am now the Group Sustainability Lead at Foresight Group - I
joined the business last year originally to support the
infrastructure division in driving sustainability performance
improvements across the portfolio. In that role I developed a suite
of sustainability KPIs for our assets under management, working
with asset managers and operations and maintenance contractors to
establish how best to report against these new metrics. The end
goal being to enable us to demonstrate continual improvement,
identify inefficiencies and establish improvement plans for our
assets from construction, into operation and through to disposal.
The development of these KPIs has been a real highlight for me and
I was able to use the good work that JLEN had already started on in
this area to drive a wider approach for the whole Group.
What is your vision for Sustainability at Foresight?
I will be spending some time later this year to put in place a
formal sustainability mission statement for the business which will
lead to a set of objectives that we can all support. My personal
objective is for everyone in our business to understand what their
role is in delivering sustainable outcomes, whatever their business
function - we are all accountable and we can all make a positive
contribution to the company's sustainability outcomes. I want to
build a work environment that makes it obvious from the minute a
new member of staff or visitor walks into one of our offices that
we make every decision with sustainability in mind. Sustainability
isn't just about investing in the "right" products, it is about
embedding it into the little things too - I think a lot of us are
switched on to being relatively sustainable but there are always
more things we can do to assist in this when we have the proper
frameworks in place.
INVESTMENT POLICY
The Company seeks to achieve its objectives by investing in a
diversified portfolio of environmental infrastructure.
JLEN defines environmental infrastructure as infrastructure
assets, projects and asset-backed businesses that utilise natural
or waste resources or support more environmentally friendly
approaches to economic activity, support the transition to a low
carbon economy or which mitigate the effects of climate change.
Environmental infrastructure that the Company invests in
typically has one or more of the following characteristics:
-- they have the benefit of long-term, predictable cash flows,
which may be wholly or partially inflation - linked; and/or
-- they are supported by long-term contracts or stable and
well-proven regulatory and legal frameworks; and/or
-- they feature well-established technologies, and demonstrable operational performance.
The Company will invest in environmental infrastructure either
directly or through holding structures that give the Company an
investment exposure to environmental infrastructure. The Company's
investment interests in environmental infrastructure may include
partnership equity, partnership loans, membership interests, share
capital, trust units, shareholder loans and/or debt interests in or
to project entities or any other entities or undertakings in which
the Company invests or may invest.
Whilst there are no restrictions on the amount of the Company's
assets that may be invested in any individual type of environmental
infrastructure, the Company will, over the long term, seek to
invest in a diversified spread of investments both geographically
(although the UK will represent a minimum of 50% of the portfolio
by value) and across different types of environmental
infrastructure in order to achieve a broad spread of risk in the
Company's portfolio.
The Company will also ensure that its investment portfolio
comprises a minimum of five investments at any given time, save
that this requirement shall not apply when the Company is being
wound up or dissolved.
As technologies and the markets in which they contract develop
and become established, future investments may differ from those
currently within the portfolio. These assets may incorporate new
technologies that have a demonstrable track record or traditional
infrastructure projects with features such as greater exposure to
merchant markets in feedstock or by-products.
Investment restrictions
With the objective of achieving a spread of risk, the following
investment restrictions will apply to the acquisition of investment
interests in the portfolio:
-- the substantial majority of investments in the portfolio by
value and number will be operational. The Company will not acquire
investment interests in any investment if, as a result of such
investment, 25% or more of the NAV is attributable to projects that
are in construction and are not yet fully operational;
-- at least 50% of the portfolio (by value) will be based in the
UK and the Company will only invest in environmental infrastructure
located in the UK, member states of the European Union or OECD
countries and, accordingly, the Company will not make any
investment if, as a result of such investment, more than 50% of the
Net Asset Value immediately post - acquisition would be
attributable to investments that are not based in the UK; and
-- it is intended that interests in any single investment
acquired will not have an acquisition price (aggregated with the
value of any existing investment in the relevant project, asset or
business if relevant) greater than 25% of the Net Asset Value
immediately post - acquisition. In no circumstances will a new
acquisition exceed a maximum limit of 30% of the Net Asset Value
immediately post-acquisition.
Borrowing and gearing
The Company intends to make use of short - term debt financing
to facilitate the acquisition of investments (either by itself or
by one of its subsidiaries). Borrowing may be secured against the
assets within the portfolio. It is intended that such debt will be
repaid periodically by the raising of new equity finance by the
Company. The level of such debt is limited to 30% of the Company's
Net Asset Value immediately after the acquisition of any further
investment. Such debt will not include (and will be subordinate to)
any project-level gearing or borrowings by assets or businesses in
which the Company may invest which shall be in addition to any
borrowing at Company level.
The Company may acquire investment interests in respect of
projects that have non-recourse project finance in place at the
project entity level. The Company will target aggregate
non-recourse financing attributable to renewable energy generation
projects not exceeding 65% of the aggregate gross project value of
such projects. The Company will target aggregate non-recourse
financing attributable to projects structured as PFI/PPP projects
not exceeding 85% of the aggregate gross project value of such
projects. The Company will not invest in any project that would
cause the Company to be in breach of the targeted limits set out in
this paragraph if the Directors do not reasonably believe that the
relevant target leverage limit can be achieved within six months of
the date of investment in that project. It is therefore possible
that the Company may exceed the targeted gearing limits set out in
this paragraph, but only in circumstances where the Directors
reasonably believe that such breach can be cured (by achieving the
relevant target leverage limit) within six months of the date of
investment in the relevant project.
Hedging
Where investments are made in currencies other than pounds
sterling, the Company will consider whether to hedge currency risk
in accordance with the Company's currency and hedging policy as
determined from time to time by the Directors. Interest rate
hedging may be carried out to provide protection against increasing
costs of servicing debt drawn down by the Company to finance
investments.
This may involve the use of interest rate derivatives and
similar derivative instruments. Hedging against inflation may also
be carried out where appropriate and this may involve the use of
RPI swaps and similar derivative instruments. The currency,
interest rate and any inflationary hedging policies will be
reviewed by the Directors on a regular basis to ensure that the
risks associated with movements in foreign exchange rates, interest
rates and inflation are being appropriately managed.
Any hedging transactions (if carried out) will only be
undertaken for the purpose of efficient portfolio management to
enhance returns from the portfolio and will not be carried out for
speculative purposes. The execution of hedging transactions is at
the discretion of the Investment Manager, subject to the policies
set by and the overall supervision of the Directors.
Cash balances
Pending reinvestment or distribution of cash receipts or
repayments of any outstanding indebtedness, cash received by the
Company will be invested in cash, cash equivalents, near-cash
instruments, money market instruments and money market funds and
cash funds. The Company may also hold derivative or other financial
instruments designed for efficient portfolio management or to hedge
interest, inflation or currency rate risks. The Company and any
other member of the Group may also lend cash which it holds as part
of its cash management policy.
Origination of further investments
Each of the investments comprising the portfolio comply with the
Company's investment policy and further investments will only be
acquired if they comply with the Company's investment policy.
Subject to due diligence and agreement on price, the Fund will
seek to acquire those investments that fit the investment
objectives and investment policy of the Company. If, in the opinion
of the Directors, the risk characteristics, valuation and price of
the prospective investment are acceptable and consistent with the
Company's investment objective and investment policy, then (subject
to the Fund having sufficient sources of capital) an offer will be
made (without seeking the prior approval of shareholders) and, if
successful, the investment will be acquired by the Fund.
The Investment Manager will be subject to the overall
supervision of the Board, following appointment of Foresight Group
as AIFM some investment decisions have been delegated to Foresight
Group. Approvals for large investments or investments into sectors
new to JLEN are reserved for the Board, all of whom are independent
of the Investment Manager.
Potential disposal of investments
Whilst the Directors may elect to retain investment interests in
the portfolio of investments that the Company acquires, and any
other further investments made by the Company over the long term,
the Investment Manager will regularly monitor the valuations of
such investments and any secondary market opportunities to dispose
of investments and report to the Directors accordingly. The
Directors only intend to dispose of investments where they consider
that appropriate value can be realised for the Company or where
they otherwise believe that it is appropriate to do so. Proceeds
from the disposal of investments may be reinvested or distributed
at the discretion of the Directors.
Amendments to and compliance with the investment policy
Material changes to the investment policy of the Company may
only be made in accordance with the approval of the shareholders by
way of ordinary resolution and (for so long as the ordinary shares
are listed on the official list maintained by the Financial Conduct
Authority) in accordance with the Listing Rules. Minor changes to
the investment policy must be approved by the Directors.
The investment restrictions detailed above apply at the time of
the acquisition of investment interests and the values of existing
investment interests shall be as at the date of the most recently
published NAV of the Company, unless the Directors believe that
such valuation materially misrepresents the value of the Fund's
investment interests at the time of the relevant acquisition. The
Fund will not be required to dispose of investment interests and to
rebalance its portfolio as a result of a change in the respective
valuations of investment interests.
In conjunction with the Investment Manager, the Board is
considering whether to amend the Investment Policy to allow the
Company to deploy a limited amount of capital into projects that
are at a pre-construction stage. This is in response to
developments in the market for environmental infrastructure assets
where investors interested in long-term ownership of assets provide
capital to developers at an earlier stage in order to secure
privileged access to pipeline and potentially enhanced returns.
INVESTMENT PORTFOLIO AND VALUATION
Portfolio value increased to GBP795.4 million at 31 March 2022
from GBP571.4 million at 31 March 2021.
Investment portfolio
At 31 March 2022, the Group's investment portfolio comprised
interests in 37 project vehicles and investments into several
European projects through its investment in FEIP.
Commercial
Capacity operations
Asset Location Type Ownership (MW) date
------------------------------- ------------ ------------------------ --------- -------- ------------------------
Bilsthorpe UK (Eng) Wind 100% 10.2 Mar 2013
Burton Wold Extension UK (Eng) Wind 100% 14.4 Sep 2014
Carscreugh UK (Scot) Wind 100% 15.3 Jun 2014
Castle Pill UK (Wal) Wind 100% 3.2 Oct 2009
Dungavel UK (Scot) Wind 100% 26.0 Oct 2015
Ferndale UK (Wal) Wind 100% 6.4 Sep 2011
Hall Farm UK (Eng) Wind 100% 24.6 Apr 2013
Llynfi Afan UK (Wal) Wind 100% 24.0 Mar 2017
Jan 2003 &
Moel Moelogan UK (Wal) Wind 100% 14.3 Sep 2008
New Albion UK (Eng) Wind 100% 14.4 Jan 2016
Wear Point UK (Wal) Wind 100% 8.2 Jun 2014
------------------------------- ------------ ------------------------ --------- -------- ------------------------
Biogas Meden UK (Eng) Anaerobic digestion 100% 5.0(1) Mar 2016
Egmere Energy UK (Eng) Anaerobic digestion 100% 5.0(2) Nov 2014
Grange Farm UK (Eng) Anaerobic digestion 100% 5.0(2) Sep 2014
Icknield Farm UK (Eng) Anaerobic digestion 53% 5.0(1) Dec 2014
Merlin Renewables UK (Eng) Anaerobic digestion 100% 5.0(2) Dec 2013
Peacehill Farm UK (Scot) Anaerobic digestion 49% 5.0(3) Dec 2015
Rainworth Energy UK (Eng) Anaerobic digestion 100% 2.2(4) Sep 2016
Vulcan Renewables UK (Eng) Anaerobic digestion 100% 13(2) Oct 2013
Warren Energy UK (Eng) Anaerobic digestion 100% 5.0(2) Dec 2015
------------------------------- ------------ ------------------------ --------- -------- ------------------------
Amber UK (Eng) Solar 100% 9.8 Jul 2012
Branden UK (Eng) Solar 100% 14.7 Jun 2013
Mar 2014 &
CSGH UK (Eng) Solar 100% 33.5 Mar 2015
Monksham UK (Eng) Solar 100% 10.7 Mar 2014
Panther UK (Eng) Solar 100% 6.5 2011-2014
Pylle Southern UK (Eng) Solar 100% 5.0 Dec 2015
------------------------------- ------------ ------------------------ --------- -------- ------------------------
Bio Collectors UK (Eng) Waste management 70% 11.7(5) Dec 2013
Codford Biogas UK (Eng) Waste management 100% 3.8(4) 2014
Cramlington Renewable Energy Biomass combined
Developments UK (Eng) heat and power 100% 32.0(6) 2018
ELWA UK (Eng) Waste management 80% n/a 2006
Energie Tecnologie Ambiente
("ETA") Italy Energy-from-waste 45%(7) 16.8 2012
Tay UK (Scot) Wastewater 33% n/a Nov 2001
------------------------------- ------------ ------------------------ --------- -------- ------------------------
Oct 2011 &
Northern Hydropower UK (Eng) Hydropower 100% 1.8(8) Oct 2017
Oct 2015 &
Yorkshire Hydropower UK (Eng) Hydropower 100% 2.0(8) Nov 2016
------------------------------- ------------ ------------------------ --------- -------- ------------------------
CNG Foresight UK (Eng) Low carbon transport 25%(9) n/a Various
Sandridge Battery Storage UK (Eng) Battery storage 50% n/a Under construction
West Gourdie UK (Eng) Battery storage 100% n/a Under construction
------------------------------- ------------ ------------------------ --------- -------- ------------------------
FEIP
JLEN has a 2.5% allocation to FEIP.
Skaftåsen Vindkraft AB Sweden Wind n/a n/a Under construction
Torozos Spain Wind n/a n/a Dec 2019
Puskakorpi Finland Wind n/a n/a Under construction
Portfolio of geothermal
85 Degrees Netherlands heat n/a(10) n/a Operational/construction
MaresConnect Republic High voltage n/a n/a Development
of Ireland and under construction
Carna Scotland Pumped storage n/a n/a Under construction
hydro and co-located
wind
------------------------------- ------------ ------------------------ --------- -------- ------------------------
Total 359.5
--------------------------------------------------------------------- --------- -------- ------------------------
(1) MWth (thermal) and an additional 0.4MWe CHP engine for on-site power provision.
(2) MWth (thermal) and an additional 0.5MWe CHP engine for on-site power provision.
(3) MWth (thermal) and an additional 0.25MWe CHP engine for on-site power provision.
(4) Electrical exporting plant measured as MWe.
(5) 10MWth and an additional 1.7MWe capacity through two CHP engines.
(6) 26MWe (electrical) and 6MWth (thermal).
(7) Not including FEIP's ownership.
(8) Includes a 1.2MW battery storage.
(9) JLEN holds 25% of the "A" shares. "A" shares have a
different economic entitlement than "B" shares, including a
priority return.
(10) JLEN has committed EUR20 million to FEIP.
The JLEN portfolio comprises a diversified range of assets
across different geographies, sectors, technologies and revenue
types, as illustrated in the analysis below as at 31 March 2022 (by
portfolio value and distributions from projects):
Portfolio value split by sector
Wind 29%
Waste & bioenergy 28%
Anaerobic digestion 22%
Solar 17%
Low carbon & energy efficiency 3%
Hydro 1%
------------------------------- ---
Portfolio value split by geography
UK 96%
Rest of Europe 4%
--------------- ---
Portfolio value split by remaining asset life
Up to 10 years 9%
11 to 20 years 57%
More than 20 years 34%
------------------- ---
Weighted average remaining asset life of the portfolio is 17.1
years.
Portfolio operator exposure (percentage of portfolio value)
SGRE 18%
Future Biogas 18%
BWSC 12%
ROC Energy 8%
Vestas 6%
Other 38%
-------------- ---
Portfolio value split by operational status
Operational 98%
Construction 2%
------------- ---
Portfolio value split by valuation methodology
Discounted cash flow 97%
Construction cost 2%
Other 1%
--------------------- ---
Portfolio valuation
The Investment Manager is responsible for carrying out the fair
market valuation of the Company's investments, which is presented
to the Directors for their approval and adoption. The valuation is
carried out on a quarterly basis as at 30 June, 30 September, 31
December and 31 March each year.
The Directors' valuation of the portfolio at 31 March 2022 was
GBP795.4 million, compared to GBP571.4 million at 31 March 2021.
The increase of GBP224.0 million is the net impact of new
acquisitions, cash received from investments, changes in
macroeconomic (including corporation tax rate), power price and
discount rate assumptions, and underlying growth in the portfolio.
A reconciliation of the factors contributing to the growth in the
portfolio during the year is shown in the chart found on page 77 of
the Annual Report 2022.
The movement in value of investments during the year ended 31
March 2022 is shown in the table below:
2022 2021
GBPm GBPm
--------------------------------------------------------------------------------------------- ------ ------
Valuation of portfolio at opening balance 571.4 537.1
Acquisitions in the year (including post-acquisition adjustments and deferred consideration) 82.4 62.9
Cash distributions from portfolio (56.5) (48.2)
--------------------------------------------------------------------------------------------- ------ ------
Rebased opening valuation of portfolio 597.3 551.8
Changes in forecast power prices 127.2 (15.2)
Changes in economic assumptions 26.1 (26.0)
Changes in discount rates 9.7 11.0
Changes in exchange rates (0.1) (0.1)
Balance of portfolio return 35.2 49.9
--------------------------------------------------------------------------------------------- ------ ------
Valuation of portfolio at 31 March 795.4 571.4
Fair value of intermediate holding companies (32.5) (67.3)
--------------------------------------------------------------------------------------------- ------ ------
Investments at fair value through profit or loss 762.9 504.1
--------------------------------------------------------------------------------------------- ------ ------
Allowing for investments of GBP82.4 million (including
post-acquisition adjustments, deferred consideration and disposals)
and cash receipts from investments of GBP56.5 million, the rebased
valuation is GBP597.3 million. The portfolio valuation at 31 March
2022 is GBP795.4 million (2021: GBP571.4 million), representing an
increase over the rebased valuation of 33% over the year (2021:
3.5%).
Valuation assumptions
As at the valuation date, 97% of the investments in JLEN's
portfolio are valued by discounting the future cash flows forecast
from the underlying assets' financial models, with the remaining
portfolio valued at cost.
Each movement between the rebased valuation and the 31 March
2022 valuation is considered below:
Forecast power prices
The project cash flows used in the portfolio valuation at 31
March 2022 reflect contractual fixed price arrangements under PPAs,
where they exist, and short - term market forward prices for the
next two years where they do not. The Company maintains a programme
of rolling price fixes for its energy generating projects,
typically having the majority of projects on fixed price
arrangements for the next six to 12 months in order to reduce the
revenue risk from price volatility.
Where generating projects in the portfolio do not have a fixed
price under their PPAs, JLEN has reflected the prices in the table
below, along with the comparable from last year in brackets (gross
of PPA discounts):
Avg. GBP/MWh Summer Winter
------------- -------- --------
Electricity 132 (52) 129 (61)
Gas 78 (14) 74 (17)
------------- -------- --------
At 31 March 2022, 76% of the renewable energy portfolio's
electricity and gas price exposure was subject to fixed prices for
the summer 2022 season and 64% for the winter season 2022/23.
After the initial two-year period, for the UK portfolio, the
project cash flows assume future electricity and gas prices in line
with a blended curve informed by the central forecasts from three
established market consultants, adjusted by the Investment Manager
for project-specific arrangements and price cannibalisation as
required.
For the Italian portfolio, project cash flows assume future
electricity prices informed by a leading independent market
consultant's long-term projections.
Short-term wholesale electricity and gas prices have increased
significantly over the year. Prices for the current summer 2022
season for electricity increased by close to 200% from April 2021
to March 2022. Gas prices were even more volatile, with an increase
of more than 400% from April 2021 to the peak during March 2022,
before falling back in April 2022 to a level still more than 200%
higher than a year earlier. Increases in prices across the wind,
solar and anaerobic digestion assets, including from the effect of
replacing expiring PPAs with new fixed price arrangements, have
increased the NAV by 5.6 pence.
In addition to this, a further 8.4 pence has been generated from
changes in electricity price assumptions at two bioenergy projects
that were previously held at acquisition cost in the 31 December
2021 valuation. These assets, ETA energy - from-waste in Italy and
Cramlington biomass CHP in the UK, were acquired in the summer of
2021 and prior to the invasion of Ukraine that has contributed
significantly to the subsequent volatility in power markets. Both
are baseload generators and had limited fixed price contracts in
place at the time of acquisition, making them well-placed to
benefit from recent rises.
The overall change in forecasts for future electricity and gas
prices compared to forecasts at 31 March 2021 has increased the
valuation of the portfolio by GBP127.2 million.
The graph on page 79 of the Annual Report 2022 represents the
blended weighted power curve used by the Company, reflecting the
forecast of three leading market consultants, adjusted by the
Investment Manager to reflect its judgement of capture discounts
and a normalised view across the portfolio of expectations of
future price cannibalisation resulting from increased penetration
of low marginal cost, intermittent generators on the GB network.
The curve is presented both with and without short - term PPA
pricing secured under fixed contract arrangements to illustrate the
scale of variance between weighted average pricing that the
portfolio is expecting to achieve versus the pricing available for
a 100% floating project. Short - term fixes have been secured at
levels significantly above the valuation assumptions forecast last
year, which has both contributed an uplift in Net Asset Value as
well as serving to mitigate exposure to the risk of prices falling
from their current levels, but it also means that the portfolio may
not always be free to capture the very highest prices that are
available from time to time.
Revenue analysis
The graph on page 79 of the Annual Report 2022 shows the way in
which the revenue mix of the renewables portfolio changes over
time, given the assumptions made regarding future power prices set
out above. As one would expect, merchant power revenues increase in
later years as the subsidies that projects currently enjoy
expire.
On an NPV basis (using the discount rate applicable to each
project), the relative significance of each revenue category
(including PFI) is as follows:
Contribution
to
revenue
type
portfolio
value
-------------------- ------------
Subsidy 56%
Long-term contracts 6%
Merchant power 29%
Other 9%
-------------------- ------------
The proportion of Fund revenues that come from the sale of
wholesale electricity and gas is 25% and 4% respectively. Despite
recent uplifts in energy prices, merchant power revenue remains a
low proportion and reflects the broader diversification of JLEN's
portfolio.
Economic assumptions
The 31 March 2022 valuation reflects an uplift in inflation
assumptions based on a combination of actual historic inflation and
recent independent economic forecasts.
Short-term RPI inflation rates (being the key index referenced
in subsidy and contractual mechanisms in JLEN's portfolio) assumed
in the valuation reflect an increased 2022 rate of 5% (2021: 3%)
before reverting to the established assumption of 3% until 2030,
reducing to 2.25% from 2031 onwards (31 March 2021: 3% until 2030,
reducing to 2.25% from 2031 onwards), whilst CPI inflation rates
assumed in the valuation at 31 March 2022 are 2.25% across all
years (31 March 2021: 2.25%) for UK assets and 1.3% for 2022,
stepping to 2% from 2025, for Italian assets (31 March 2021: not
applicable).
In light of the current economic environment, near-term actual
inflation may vary from assumptions applied within the portfolio
valuation, therefore the Investment Manager will continue to
monitor developments in this area. For illustrative purposes, where
inflation is higher than JLEN's valuation assumption by 3% for the
next three years, NAV would be expected to increase by 7.5 pence
per share.
Near-term UK corporation tax rates remain unchanged at 19%,
stepping up to 25% from April 2023 (31 March 2021: 19%, stepping up
to 25% from April 2023). The equivalent Italian assumption applies
the national rate of 24% plus applicable regional premiums (31
March 2021: not applicable).
UK deposit rates assumed in the valuation also remain unchanged
at 0.25% to 2024 and 1% thereafter (31 March 2021: 0.25% to 2024
and 1% thereafter). Italian deposit rates are presently assumed at
0% (31 March 2021: not applicable).
The euro/sterling exchange rate used to value euro - denominated
investments was EUR1.18/GBP1 at 31 March 2022 (EUR1.17/GBP1 at 31
March 2021).
The overall uplift in value resulting from changes to economic
assumptions in the year is GBP26.0 million.
Discount rates
The discount rates used in the valuations represent the
Investment Manager's and Board's assessment of the rate of return
in the market for assets with similar characteristics and risk
profile. The discount rates are reviewed on a regular basis and
updated to reflect changes in the market and in the project risk
characteristics.
During the year since 31 March 2021, there has continued to be
strong demand for income-producing infrastructure assets. The
Investment Manager, based on its experience of bidding in the
secondary market, has proposed a reduction in the discount rate
used for valuing UK solar assets of 50 basis points and 75 basis
points for UK wind assets. This reduction reflects market discount
rate observations. In addition to this, the discount rate for
JLEN's investment in low carbon refuelling infrastructure has also
been reduced as the rollout of new sites has continued
satisfactorily.
A risk premium has been added to the discount rate for
Cramlington biomass CHP, as Cramlington is the asset most sensitive
to changes in near - term electricity prices. It is expected that
the premium will be removed progressively as uncertainty around
actual prices captured reduces.
The discount rate used for asset cash flows which have received
lease extensions beyond the initial investment period of 25 years
retains a premium of 1% for subsequent years, reflecting the
merchant risk of the expected cash flows beyond the initial 25-year
period.
The overall increase in value resulting from changes to discount
rates in the year is GBP9.7 million.
Taking the above into account and reflecting the change in mix
of the portfolio during the year, the overall weighted average
discount rate ("WADR") of the portfolio was 7.3% at 31 March 2022
(31 March 2021: 7.3%).
Balance of portfolio return
This represents the balance of valuation movements in the year
excluding the factors noted above. The balance of the portfolio
return mostly reflects the impact on the rebased portfolio value,
all other measures remaining constant, of the effect of the
discount rate unwinding and also some additional valuation
adjustments from updates to individual project revenue assumptions.
The total represents an uplift of GBP35.2 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, and the
other assets and liabilities of the Group less Group debt.
The portfolio valuation is the largest component of the Net
Asset Value and the key sensitivities are considered to be the
discount rate applied in the valuation of future cash flows and the
principal assumptions used in respect of future revenues and
costs.
A broad range of assumptions is used in our valuation models.
These assumptions are based on long - term forecasts, whether
economic or technical. The Investment Manager exercises its
judgement in assessing both the expected future cash flows from
each investment based on the project's life and the financial
models produced by each project company and the appropriate
discount rate to apply.
The key assumptions are as follows:
Discount rate
The WADR of the portfolio at 31 March 2022 was 7.3% (31 March
2021: 7.3%). A variance of plus or minus 0.5% is considered to be a
reasonable range of alternative assumptions for discount rates.
An increase in the discount rate of 0.5% would result in a
downward movement in the portfolio valuation of GBP21.0 million
(3.2 pence per share) compared to an uplift in value of GBP22.0
million (3.3 pence per share) if discount rates were reduced by the
same amount.
Volumes
Base case forecasts for intermittent renewable energy projects
assume a "P50" level of electricity output based on reports by
technical consultants. The P50 output is the estimated annual
amount of electricity generation (in MWh) that has a 50%
probability of being exceeded - both in any single year and over
the long term - and a 50% probability of being underachieved. Hence
the P50 is the expected level of generation over the long term.
The P90 (90% probability of exceedance over a 10 - year period)
and P10 (10% probability of exceedance over a 10 - year period)
sensitivities reflect the future variability of wind, hydropower
and solar irradiation and the uncertainty associated with the long
- term data source being representative of the long - term
mean.
Separate P10 and P90 sensitivities are determined for each asset
and historically the results presented on the basis they are
applied in full to all wind, hydro and solar assets. This implies
individual project uncertainties are completely dependent on one
another; however, a recent Portfolio Uncertainty Benefit analysis
performed by a third-party technical adviser identified a positive
portfolio effect from investing in a diversified asset base. That
is to say that the lack of correlation between wind, hydro and
solar variability means P10 and P90 sensitivity results should be
considered independent. Therefore, whilst the overall P90
sensitivity decreases NAV by 6.0 pence per share, the impact from
solar, wind and hydro separately is only 1.3 pence per share, 4.4
pence per share and 0.3 pence per share respectively, as shown in
the chart overleaf.
Agricultural anaerobic digestion facilities do not suffer from
similar deviations as their feedstock input volumes (and
consequently biogas production) are controlled by the site
operator.
For the waste 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 and gas prices
Electricity and gas price assumptions are based on the
following: for the first two years, cash flows for each project use
forward electricity and gas prices based on market rates unless a
contractual fixed price exists, in which case the model reflects
the fixed price followed by the forward price for the remainder of
the two - year period. For the remainder of the project life, a
long - term blend of central case forecasts from three established
market consultants and other relevant information is used, and
adjusted by the Investment Manager for project-specific
arrangements and price cannibalisation.
The sensitivity assumes a 10% increase or decrease in power
prices relative to the base case for each year of the asset life
after the first two - year period. While power markets can
experience movements in excess of +/-10% on a short - term basis,
the sensitivity is intended to provide insight into the effect on
the NAV of persistently higher or lower power prices over the whole
life of the portfolio. The Directors feel that +/-10% remains a
realistic range of outcomes over this very long time horizon,
notwithstanding that significant movements will occur from time to
time.
An increase in electricity and gas prices of 10% would result in
an uplift in the portfolio valuation of GBP43.6 million (6.6 pence
per share) compared to a downward movement in value of GBP44.3
million (6.7 pence per share) if prices were reduced by the same
amount.
Feedstock prices
Feedstock accounts for over half of the operating costs of
running an AD plant. As feedstocks used for AD are predominantly
crops grown within existing farming rotation, they are exposed to
the same growing risks as any agricultural product. The sensitivity
assumes a 10% increase or decrease in feedstock prices relative to
the base case for each year of the asset life.
An increase in the feedstock prices of 10% would result in a
downward movement in the portfolio valuation of GBP9.0 million (1.4
pence per share) compared to an uplift in value of GBP9.0 million
(1.4 pence per share) if prices were reduced by the same
amount.
Inflation
Most projects in the portfolio receives a revenue stream which
is either fully or partially inflation - linked. The inflation
assumptions are described in the macroeconomic section on page 80
of the Annual Report 2022. The sensitivity assumes a 0.5% increase
or decrease in inflation relative to the base case for each year of
the asset life.
An increase in the inflation rates of 0.5% would result in an
uplift in the portfolio valuation of GBP19.4 million (2.9 pence per
share) compared to a decrease in value of GBP19.0 million (2.9
pence per share) if rates were reduced by the same amount.
In light of the current economic environment, near-term actual
inflation may vary from assumptions applied within the portfolio
valuation, therefore the Investment Manager will continue to
monitor developments in this area. For illustrative purposes, where
inflation is higher than JLEN's valuation assumption by 3% for the
next three years, NAV would be expected to increase by 7.5 pence
per share.
Euro/sterling exchange rates
As the proportion of the portfolio assets with cash flows
denominated in euros represented approximately less than 5% of the
portfolio value at 31 March 2022, the Directors consider the
sensitivity to changes in euro/sterling exchange rates to be
insignificant.
Corporation tax
The UK corporation tax assumptions applied in the portfolio
valuation are outlined in the notes to the accounts on page 185 of
the Annual Report 2022. The sensitivity below assumes a 2% increase
or decrease in the rate of UK corporation tax relative to the base
case for each year of the asset life.
An increase in the UK corporation tax rates of 2% would result
in a downward movement in the portfolio valuation of GBP11.5
million (1.7 pence per share) compared to an uplift in value of
GBP11.7 million (1.8 pence per share) if rates were reduced by the
same amount.
Sensitivities - impact on NAV at 31 March 2022
The chart on page 83 of the Annual Report 2022 shows the impact
of the key sensitivities on Net Asset Value per share, with the GBP
labels indicating the impact of the sensitivities on portfolio
value.
OPERATIONAL REVIEW
Portfolio performance
Operating performance of the environmental infrastructure
portfolio during the year ended 31 March 2022 was stable with no
material issues experienced. The renewables segment of the
portfolio produced 1,314GWh (2021: 977GWh) of green energy, 6%
below budget, primarily due to very low wind speeds experienced
over the year. The concession - based waste and wastewater projects
performed in line with their targets and the CNG portfolio of
refuelling stations outperformed against its fuel dispensed
target.
Index power prices increased to unprecedented levels over the
year under review. Initial market volatility arose due to a
combination of low renewables contribution to the grid, a natural
gas shortage and rising carbon prices. This was then exacerbated at
the end of the financial year by the invasion of Ukraine and the
implications for global power markets given the importance of
Russian oil and gas. While high prices had a relatively modest
effect upon the year under review due to the presence of earlier
price fixes on much of the portfolio's generation, the outlook for
captured prices in 2022/23 has increased significantly.
Portfolio performance to 31 March 2022
1,314GWh
green energy produced
16%
above CNG fuel dispensed target
>695,000
waste diverted from landfill (tonnes)
>35.6 billion
litres of wastewater treated
Renewable energy generating assets
Anaerobic digestion
The AD portfolio is the largest producer of energy on a GWh
basis and generated 39% of the GWh energy produced by the JLEN
portfolio. Gas generation (measured in GWh energy generated) was
508GWh, 3.1% ahead of target (2021 variance was 2.1%
favourable).
Seven of the nine plants outperformed or reached their
generation targets and notably strong performances came from
Icknield and Peacehill, which both performed >10% above their
generation targets.
The Vulcan plant, which underwent expansion and upgrade works in
the previous financial year, performed in line with its new
generation target. During the period under review, the plant
successfully installed further hardware upgrades which will improve
biogas production and operations on site.
Wholesale gas prices have been at unprecedented levels in the
latter part of the financial year. At 31 March 2022, the Investment
Manager has hedged gas volumes for future winter and summer periods
with 75% of capacity hedged until March 2023 tapering down to 60%
in summer 2023 and 41% in winter 2023.
The Investment Manager has seen an increase in demand for both
crop and waste - based green gas certificates and has been able to
secure short to medium - term contracts at favourable rates.
Waste & bioenergy
The renewable energy generating segment of the waste &
bioenergy portfolio is now the second largest producer of energy on
a GWh basis and generated 28% of the GWh energy produced by the
JLEN portfolio. The waste & bioenergy portfolio generated
363GWh over the year to 31 March 2022, 9.3% below target.
The assets suffered no material issues over the year but did
experience some short-term technical issues which led to downtime
in the period. The Investment Manager has been working with asset
operators to remedy these issues and improve resilience for the
future.
Highlights from the year include Codford successfully winning
its first municipal food waste tender in 2022; this represents a
long-term food waste contract and a consistent supply of feedstock
for the plant.
The Cramlington biomass plant, which was bought out of
administration with an identified list of operational matters to
address, has made good progress during the year, with scope for
further process improvements in periods to come.
Wind
The wind portfolio generated 359GWh over the year ended 31 March
2022 (27% by GWh energy generated), 15.6% below target. The
negative variance in production was primarily the result of
significantly lower wind resource. Monthly average wind speeds were
below long-term average through most of the period under review;
the only exception was February 2022, which saw the portfolio
generate 43% more electricity than anticipated.
The assets continued to perform well with turbine availability
1% above warranted levels for the year. However, overall
availability was down 2% on expectations, largely due to grid
outages and some intermittent issues with data coverage.
Power prices were substantially fixed across the portfolio
during the year and revenues were not impacted by the market
volatility in the period.
Value enhancements were ongoing over the year; the previously
reported aftermarket software and hardware upgrades which were
installed at Carscreugh were tested and proved a total uplift of
3.2% for the site's generation. Additionally, aerodynamic
enhancement hardware was installed at Burton Wold. The impact will
be quantified independently in the coming financial year and the
Investment Manager anticipates the impact to be c.2% uplift in
generation.
Solar
The solar portfolio performed well and overall availability was
in line with expectations. Generation from the solar assets (which
represent 6% of the portfolio energy generation for the year) at
78GWh was 0.7% above target (2021: 1.8% above budget) primarily due
to higher than forecast irradiance levels.
Power prices were substantially fixed across the portfolio
during the year and revenues were not impacted by the market
volatility in the period.
Hydro
The hydro assets performed 16.4% below generation target over
the course of the year. Although the measured annual rainfall was
marginally below the long-term average, the distribution of
rainfall had a negative impact on production. Periods of heavy rain
were followed by extended dry spells, both of which are detrimental
to the production capacity of the hydro assets. Despite this, the
assets continued to perform well with virtually no mechanical
downtime over the year.
Total
Portfolio since
generation 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 IPO
------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Wind portfolio
actual generation
(GWhe) 82 184 217 399 406 458 432 359 2,537
Variation
from budget(1) -7% +11% -15% 0% -9% +4% -1% -16% -5%
------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------
AD portfolio
actual generation
(GWhth/GWhe) - - - 51 262 352 461 508 1,634
Variation
from budget - - - +8% +4% +4% +2% +3% +3%
------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Solar portfolio
actual generation
(GWhe) 10 30 40 64 79 75 79 78 455
Variation
from budget(1) - 1% - 2% -12% -9% +2% -3% +2% +1% -3%
------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Waste &
bioenergy
actual generation
(GWhe) - - - - - - - 363 363(2)
Variation
from budget - - - - - - - -9% -9%
------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Hydro portfolio
actual generation
(GWhe)(3) - - - - - 3 5 5 13
Variation
from budget - - - - - -17% -15% -16% -16%
------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------
(1) Budgets adjusted to reflect operational energy yield
assessments carried out under contracted true-up mechanisms post
IPO.
(2) Does not include generation in 2020/21.
(3) Includes generation from Northern Hydropower Limited from 31 March 2020.
The average all-in price received by the differing technology
classes in the UK for their energy volumes generated in the year
ended 31 March 2022 is shown in the table below:
Year ended Year ended
Average all - in energy price 31 Mar 2022 31 Mar 2021
----------------------------- ----------------- --------------------
Onshore wind GBP99.64 per MWhe GBP84.26 per MWhe
AD electric 81.19MWhe -
AD gas-to-grid GBP109.69MWth GBP101.0 per MWhth
Biomass GBP147.27/MWhe -
Energy from Waste EUR173.75/MWhe -
Solar GBP267.0 per MWhe GBP196.8 per MWhe(1)
GBP232.65 per
Hydro MWhe GBP222.56 per MWhe
----------------------------- ----------------- --------------------
(1) Does not include Panther rooftop portfolio
The effects of monthly variability and seasonality in production
expected in a portfolio of intermittent renewables projects are
reduced by the extent of diversification in JLEN's portfolio.
Although agricultural AD plants have some indirect exposure to
weather patterns through the yield of harvests (feedstock), it is
very unlikely to impact on their gas volumes. The environmental
processing assets, apart from Tay, have revenues independent of
weather and all have revenues that vary little with changes in
volume of waste and wastewater processed. The Company now separates
the sensitivities illustrating the effect of different levels of
wind and solar resource on the portfolio valuation as there is no
indication that these weather resources are positively
correlated.
Assets which support the transition to a lower carbon future
Waste & bioenergy concessions
The ELWA waste project and the Tay wastewater project continue
to meet their contractual targets and operational performance has
been stable while the financial performance of both projects has
been in line with expectations.
For the ELWA waste project, financial performance has been
better than expected and operational performance and compliance
with contractual targets were also exceeded or met. Operational
performance targets were again exceeded with diversion from
landfill at 99.98%, substantially ahead of the 67% contract target,
and recycling at 29.8%, also ahead of the 22% contract target, and
ELWA was able to pay higher distributions than were budgeted.
The Tay wastewater project has performed well over the year and
flows were in line with expectations. As a result, distributions
from the project were in line with its budget.
Low carbon transport
The portfolio of CNG refuelling stations performed well over the
financial year, with 16% more CNG dispensed than budgeted for the
year although delays to new vehicle deliveries caused by global
supply chain issues led to this growth being lower than its full
potential.
The stations are used by a range of national hauliers including
Amazon and Royal Mail.
During the period, the refuelling stations at Avonmouth and
Eurocentral were successfully completed, in line with the
construction programme, and these sites are now operational. A
further refuelling station - Castleford - is due to be completed in
August 2022.
Battery storage assets
Operational assets
The operational batteries that are co-located at two of the
Company's hydro assets were traded exclusively in Firm Frequency
Response over the period, receipts for which were in line with
expectations.
The nature of the metering arrangements at both sites precluded
offering any of the new suite of grid support services being
gradually introduced by National Grid. With Firm Frequency Response
being phased out in 2022, the Investment Manager is exploring
options to install new metering hardware to maximise the trading
flexibility of the assets.
Development assets
JLEN owns two construction stage 50MW battery storage assets in
the UK: West Gourdie and Sandridge. Both sites have experienced
delays to their construction times due to increased lead times for
battery components. West Gourdie is expected to commence operations
towards the end of 2022. Sandridge is also faced with potential
delays to the grid connection which means it will likely commence
operations in 2023. The effect of delayed operations is expected to
be offset by the improved market outlook for large-scale battery
assets.
Other investments
FEIP
In January 2020, JLEN announced a commitment of EUR25 million to
Foresight Energy Infrastructure Partners SCSp ("FEIP"), a
Luxembourg limited partnership investment vehicle. At 31 March
2022, the Fund has invested in seven projects - two construction
stage onshore wind projects located in Sweden and Finland
respectively, an operational 94MW wind farm located in Spain, a
portfolio of geothermal heat and district heating assets located in
the Netherlands, a construction stage interconnector cable to
England located in Ireland and a construction stage pumped storage
hydro facility located in Scotland. FEIP also owns a 45% stake in
ETA, in which JLEN is also an investor. As at 31 March 2022 EUR4.8
million has been invested in the vehicle.
CNG Foresight investment
JLEN invested GBP3.8 million into CNG Foresight during the
period under review.
Power price hedging
JLEN's exposure to wholesale power prices is mitigated by the
practice of having a substantial proportion of generation for both
electricity and gas on fixed price arrangements for durations
ranging from six months out to three years. Following a
continuation of this programme post year end, the latest extent of
generation subject to fixes is as follows:
Summer Winter Summer Winter
2022 2022 2023 2023
-------------- ------ ------ ------ ------
Wind 87% 77% 85% 85%
Solar 100% 100% 100% 100%
Thermal 56% 56% - -
AD - electric 100% 100% 26% 26%
AD - gas 77% 77% 60% 61%
-------------- ------ ------ ------ ------
Acquisitions
Sandridge Battery Storage
In May 2021, JLEN acquired a 50% equity stake in Sandridge
Battery Storage Limited, which holds the development rights to
construct the Sandridge Battery Storage project, a 50MW lithium-ion
battery energy storage plant based in Melksham in Wiltshire,
UK.
Energie Tecnologie Ambiente
In May 2021, JLEN acquired a 45% equity stake in Energie
Tecnologie Ambiente S.r.l ("ETA"), a 16.8MW energy - from - waste
power plant which processes refuse derived fuel, located in the
municipality of Manfredonia in the Apulia region of southern Italy.
The investment has been made alongside FEIP, which also acquired a
45% equity stake. ETA was owned by Marcegaglia Investments S.r.l.
which retained a 10% equity stake in the EfW plant.
Cramlington Biomass
In June 2021, JLEN acquired a 100% equity stake in Cramlington
Renewable Energy Developments Ltd, which owns a biomass CHP Plant
and its underlying contracts. The CHP Plant is located to the north
west of the town of Cramlington in Northumberland and utilises
proven technology to process a diversified biomass fuel mix,
creating up to 26MW of electrical power and 6MW of heat for export
via private wire to industrial customers and the grid.
Divestments
In January 2022, JLEN announced the sale of its two French
onshore wind farms, Parc Éolien Le Placis Vert and Energie Eolienne
de Plouguernével for a total consideration of EUR5.9 million.
Acquisitions and divestments
3
acquisitions made in the period
48.8MW
capacity added to the portfolio
2
new technology sub-sectors
2
Asset divestments
Financing
On 21 May 2021, JLEN announced that it had signed a new
revolving credit facility with a three-year facility agreement
which provides for a committed multi - currency revolving credit
facility of GBP170 million and an uncommitted accordion facility of
up to GBP30 million.
The RCF provides an increased source of flexible funding outside
of equity raisings, with both sterling and euro drawdowns available
at lower rates than the existing facility. The agreement includes
an uncommitted option to extend for a further year and will be used
to make future acquisitions of environmental infrastructure to add
to the current portfolio, as well as covering any working capital
requirements.
The interest charged in respect of the renewed RCF is linked to
the Company's ESG performance, with JLEN incurring a premium or
discount to its margin and commitment fee based on performance
against defined targets. Those targets include:
-- environmental: increase in the volume of clean energy produced;
-- social: the value of contributions to community funds; and
-- governance: maintaining a low number of work - related
accidents, as defined under the Reporting of Injuries, Diseases and
Dangerous Occurrences ("RIDDOR") by the Health and Safety
Executive.
Performance against these targets will be measured annually with
the cost of the RCF being amended in the following financial year.
Lenders to the facility include three of the four previous lenders
(HSBC, ING and NIBC) plus two new participants (National Australia
Bank and Royal Bank of Scotland International). The margin can vary
between 195 bps and 205 bps over SONIA ("Sterling Overnight Index
Average") for sterling drawings and EURIBOR for euro drawings,
depending on performance against the ESG targets.
The Board is pleased to advise that two of the three KPI targets
were successfully achieved in the first year of implementation of
this facility, and the Board remains committed to delivering all
three KPI targets prior to the end of the facility agreement
period.
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.
As at 31 March 2022, drawings under the RCF were GBP53.6
million. Under its investment policy, JLEN may borrow up to 30% of
its NAV.
The project-level gearing at 31 March 2022 across the portfolio
was 19.9% (31 March 2021: 28.4%), being 16.3% (31 March 2021:
25.1%) for the renewable energy assets and 50.6% (31 March 2021:
51.2%) for the PFI processing assets. Taking into account the
amount drawn down under the revolving credit facility of GBP53.6
million, the overall fund gearing at 31 March 2022 was 23.7% (31
March 2021: 36.1%).
As at 31 March 2022, the Group, which comprises the Company and
the intermediate holding companies, had cash balances of GBP18.0
million (31 March 2021: GBP13.5 million).
Financing
GBP53.6m
drawn on RCF
23.7%
fund gearing(1)
(1) Gearing is an alternative performance measure ("APM"). The
APMs within the accounts are defined on page 193 of the Annual
Report 2022.
VALUE ENHANCEMENT
The Investment Manager has achieved various operational and
financial enhancements to projects over the period.
Power price fixes
Index power prices increased to unprecedented levels in the last
half of the year due to a combination of low renewables
contribution to the grid, a natural gas shortage and rising carbon
prices. The Investment Manager took this opportunity to fix future
seasons at prices above previous assumptions across the portfolio.
This was particularly beneficial to the Cramlington biomass plant
which has entered into a fix at a price that is more than double
the fees for the summer season 2022 than it had been previously
receiving in summer 2021.
Plant upgrades and technical optimisation on the waste &
bioenergy assets
Over the period a fuel preparation area was completed at
Cramlington; the area will be used to streamline the incoming fuel
process and will be leased to an external biomass supplier. This
allows for efficiencies and cost savings in the biomass supply
chain. Other upgrades are planned in the coming year to reduce
inefficiencies at the plant caused by known equipment problems.
Meanwhile, at ETA, technical optimisations to improve the disposal
of waste ashes from the plant are being explored.
Technical optimisations on the wind portfolio
Aerodynamic enhancement hardware was installed at Burton Wold.
The impact will be quantified independently in the coming financial
year; however, the Investment Manager expects an uplift of c.2%.
Other software upgrades have been identified to boost performance
on some sites and discussions are ongoing to implement these
upgrades.
General AD upgrades/improvements
An area of focus for the AD portfolio has been on improving
resilience to risks associated with digestate storage and removal.
Across the portfolio new digestate storage tanks and lagoons are
being planned or have already been installed.
CASE STUDY
Environmental, social and governance
Cramlington Renewable Energy Developments Limited
In June 2021, JLEN acquired a 100% stake in Cramlington
Renewable Energy Developments Limited ("Cramlington") which owns a
biomass combined heat and power plant and its underlying
contracts.
The plant uses proven technology to process a diversified
biomass fuel mix, creating up to 26MW of electrical power and up to
6MW of heat for export via private wire to industrial customers and
the grid.
Cramlington
---------------------- -------------------------------------------------
Project description Operational biomass combined heat and power plant
Acquisition date June 2021
Location Northumberland, UK
Ownership 100%
Commercial operations
date 2018
---------------------- -------------------------------------------------
Project information
The biomass cogeneration plant has a capacity to deliver 26MW of
electricity and 6MW of heat through combustion of c.245ktpa of
biomass residues and waste wood feedstock.
The project currently exports 21GWh of heat and 23GWh of
electricity to two neighbouring pharmaceutical companies.
What is biomass combined heat and power ("CHP")?
A CHP plant creates both electricity and heat from its fuel
source, which in Cramlington's case is a blend of woody biomass.
The fuel is mixed, screened and then fed onto a vibrating grate for
combustion. This process produces a hot flue gas which in turn
raises water temperature inside a boiler to produce superheated
steam. This steam is then used in a turbine to generate electricity
and heat. All heat is exported along with some electricity to
adjacent industrial customers with the remaining electricity
production exported to the national grid.
Sustainability
Biomass CHP contributes to a net-zero economy as the biomass
wood used to fuel the plant comes from trees which have in turn
absorbed carbon dioxide from the atmosphere. This carbon dioxide is
released during the combustion process but will be reabsorbed
provided the feedstock source is managed in line with sustainable
forest management standards. A proportion of Cramlington's
feedstock comes from waste-wood which could otherwise end up in
landfill. Meanwhile, the wood ash produced as a by-product of the
process can be used as a valuable fertiliser for crops.
Cramlington's bottom ash has been used to directly replace
artificial or mined sources of potash and lime as a soil
conditioner on agricultural land in North East England. This
provides a significant cost saving to local farmers.
Biomass CHP also falls within the EU taxonomy which provides
that subject to prescribed calculations, a bioenergy asset must
offer >80% GHG savings when compared to a fossil fuel comparator
in order to contribute substantially to climate change
mitigation.(1) Cramlington achieves 92.4% GHG savings on heat and
88.8% savings on electricity. The sustainability of generation
depends on both the material used and the distance from where that
material is sourced, with EU regulation stating this should be
within 500km. Cramlington sources material from within 500km of the
plant and uses a blend of clean, recycled wood, forestry residues
and small roundwood, all of which contribute to meeting
sustainability criteria.
(2) Contributing substantially to climate change mitigation is
one of the criteria prescribed for establishing whether an economic
activity may be classified as environmentally sustainable under the
EU Taxonomy.
CASE STUDY
Diversified portfolio
Foresight Energy Infrastructure Partners ("FEIP")
In January 2020, JLEN announced a commitment of EUR25 million to
Foresight Energy Infrastructure Partners SCSp, a Luxembourg limited
partnership investment vehicle.
FEIP's strategy is to invest in 10-15 opportunities created by
the transformational change underway in global energy markets. FEIP
is targeting a diversified portfolio of high-quality energy
infrastructure assets with strong sustainability characteristics
across the following sub-sectors:
i) renewable generation;
ii) renewable enabling infrastructure (e.g. energy storage); and
iii) transmission & distribution.
FEIP
-------------------- ------------------------------------------------------------------------------------------------
FEIP is a fund investing in energy infrastructure assets with strong sustainability
Project description characteristics
Geography Europe (80%), Northern America and Australia
JLEN investment EUR25 million
Total commitments
to FEIP as at 31
March 2022 EUR4.83 million
-------------------- ------------------------------------------------------------------------------------------------
JLEN's investment benefits
JLEN and FEIP's investment strategy are broadly aligned. JLEN
benefits from its investment in FEIP through an increased exposure
to European and construction stage assets.
The investment in FEIP allows JLEN to further diversify its
geographic and technology exposure, while also gaining an
allocation to construction stage assets which are expected to
enhance returns. Given construction stage assets can only represent
a small part of the Company's portfolio, the FEIP investment allows
a greater level of diversification than would be possible with
direct investments, providing for a more attractive risk - adjusted
return profile.
JLEN's commitment to FEIP has opened the possibility of
selective, co-investment opportunities such as the joint investment
into ETA Manfredonia.
FEIP's portfolio of assets as at 31 March 2022
Date of
Investment acquisition Ownership Country Technology MW capacity Stage
---------------- ------------- --------- ----------- ---------------- ----------- ------------------------
Onshore
Skaftäsen April 2020 20.98% Sweden wind 231 Construction
August Onshore
Torozos 2020 100% Spain wind 94 Operational
Onshore
Puskakorpi May 2021 100% Finland wind 88 Construction
ETA Manfredonia May 2021 45% Italy EfW 16.8 Operational
Portfolio
October of geothermal
85 Degrees 2021 51% Netherlands heat 45 Operational/construction
High voltage
direct
February Republic current Development
MaresConnect 2022 81.2% of Ireland interconnectors 750 and construction
Carna February 100% Scotland Pumped 210 pumped Construction
2022 storage storage
hydro and hydro +
co-located 33.6 wind
wind
---------------- ------------- --------- ----------- ---------------- ----------- ------------------------
SUSTAINABILITY AND ESG
CHAIRMAN'S FOREWORD
JLEN's approach to ESG is continually evolving and improving.
This year the focus has been on collecting baseline data against
the ESG KPIs that we announced in our 2021 Annual Report.
Richard Morse
Chairman
ESG has been at the heart of JLEN's ethos and operations from
the outset, long before the concept of ESG became an accepted
acronym. Our assets all fall within the top two tiers of the EU's
sustainability hierarchy; we have always had regard to social
responsibility and good governance; and we were the first
environmental asset fund to establish an ESG sub-committee of the
Board. JLEN frequently assesses its approach to ESG, seeking to
emulate and drive best practice wherever possible. In 2020, for the
first time, we articulated a set of ESG objectives which were
integrated into the Fund's objectives. In 2021 we announced that we
had developed and tested a range of ESG key performance indicators
("KPIs").
This year the focus has been on collecting baseline data against
these KPIs which we hope will provide a consistent framework
against which we can track the ESG performance of our portfolio
over time and help us to set ESG performance benchmarks.
Also this year, a dedicated ESG Committee at the Board level has
been set up to sit alongside and complement the work already done
in this area by the Risk and Audit Committees. We are proud of the
ongoing work that occurs to improve our ESG practices and that the
Company's investment activities are contributing to the transition
to a net-zero economy. We are conscious that our assets may not be
perfect from a sustainability perspective, but we are confident
that they will see improvement in this area under our
stewardship.
This year, JLEN was recognised for its ESG communication efforts
through the AIC Communication Awards 2022, winning the award for
"Best Communication of ESG".
We continue to see ESG criteria as critical to the management of
our business activities in all areas and is an integral part of our
day-to-day activities at the Investment Manager level. This year,
significant work has been done to address the recommendations of
the Task Force on Climate-related Financial Disclosures and we
present our analysis in this area on pages 49 to 67. Our approach
to both sustainability and ESG is progressing, but it is also well
established in its key themes and workstreams. We expect to
continue to evolve and improve our processes and use the KPI data
that we have collected this year to drive meaningful improvements
across all areas of ESG.
Richard Morse
Chairman
15 June 2022
AT A GLANCE
Environmental performance 2021/22
c.1,314,000 MWh energy generated
>905,500 GHG emissions avoided (tCO(2) e)
>35.6bn wastewater treated (billion litres)
>695,000 waste diverted from landfill (tonnes)
>135,000 waste recycled (tonnes)
>473,000 organic fertiliser produced (tonnes)
Social performance 2021/22
>GBP418,000 community funding
Governance performance 2021/22
35 health and safety audits
370
Full time equivalent jobs
Awards
-- AIC Communication Awards 2022 - Best Communication of ESG
Investment Manager PRI Scores
-- Foresight Group is a signatory to the Principles for
Responsible Investment (PRI), a set of voluntary guidelines that
help companies to address social, ethical, environmental and
corporate governance issues as part of the investment process.
Foresight's wider approach to the PRI's six responsible investment
principles were assessed in 2021 by the PRI for the year ending 31
December 2020 and a summary of the results are:
-- A+ for Strategy & Governance
-- A+ for Infrastructure
-- A for Private Equity
-- The 2020 assessment transparency report is available on our
website, or on the UN PRI website(1)
(1)
https://stpublic.blob.core.windows.net/pri-ra/2020/Investor/Public-TR/(Merged)_Public_Transparency_Report_Foresight%20Group%20LLP_2020.pdf.
JLEN'S APPROACH TO ESG
JLEN's approach to ESG is based on three core principles:
Assess, Monitor and Engage. Since the publication of the Fund's
first ESG report, JLEN has been focused on progressing each of
these principles in order to maintain a robust ESG framework.
JLEN's three ESG objectives are:
ESG objectives
-- Promote the efficient use of resources
-- Develop positive relationships with the communities in which JLEN works
-- Ensure effective, ethical governance across the portfolio
ESG KPIs
Over 2021/22 JLEN has focused on advancing its approach to
"Monitor" and "Engage" by collecting baseline data against the ESG
KPIs that were first agreed in 2020/21. JLEN's KPIs are set out
below and on page 25 of the Annual Report 2022.
Each KPI has a direct or indirect link to performance of the
investment and the Investment Manager considers these to be
important metrics in understanding the resilience of the portfolio
going forward. Each KPI feeds back to the ESG objectives, allowing
JLEN to quantify, where practicable, the ESG performance of its
investments. The table below sets out the full list of KPIs.
Environmental Social Governance
------------------------------- ------------------------------- -------------------------------
Portfolio audits of health
Renewable energy generated Community funding and safety practices
------------------------------- ------------------------------- -------------------------------
GHG emissions avoided Health and safety incidents Diversity of SPV directors
------------------------------- ------------------------------- -------------------------------
Community engagement Portfolio audits of tax
Tonnes of waste treated procedures and financial practices
------------------------------- ------------------------------- -------------------------------
Litres of wastewater Inclusion of ESG in SPV
treatment FTE jobs supported board agendas
------------------------------- ------------------------------- -------------------------------
Accessibility of community
Environmental incidents fund documents Governance oversight
------------------------------- ------------------------------- -------------------------------
Purchased energy originating Assessment of major contractors Assessment of major contractors
from renewable sources against ESG criteria against ESG criteria
------------------------------- ------------------------------- -------------------------------
Management of biodiversity
------------------------------- ------------------------------- -------------------------------
Assessment of major contractors
against ESG criteria
------------------------------- ------------------------------- -------------------------------
Collection of KPI data
This was the first full year that the Investment Manager has
collected the extended set of ESG data. Care has been taken to
validate this data and it is accurate to the best of the Investment
Manager's knowledge, however, as methodologies for collecting or
considering the data progress, it is conceivable that the data will
not be completely comparable year-on-year. In some instances
12-month data was not available and in these cases, an average was
calculated from the data available. All percentages are calculated
using the total number of SPVs as a denominator.
Mapping JLEN's portfolio against the United Nations Sustainable
Development Goals
The United Nations Sustainable Development Goals ("SDGs") are a
set of 17 goals for sustainable development.
To be achieved by 2030, they recognise that ending poverty must
go hand-in-hand with strategies that build economic growth and
address a range of social needs including education, health, social
protection and job opportunities, while tackling climate change and
environmental protection. JLEN has mapped its portfolio against the
SDGs and the results of this analysis are set out below:
SDG Target JLEN's performance
---------------------------- -------------------------------- --------------------------------
6 Clean water and sanitation 6.3 Improve water quality >35.6 billion litres
by reducing pollution, of wastewater treated
eliminating dumping and in 2021/22.
minimising release of
hazardous chemicals and
materials, halving the
proportion of untreated
wastewater and substantially
increasing recycling
and safe reuse globally.
---------------------------- -------------------------------- --------------------------------
7 Affordable and clean 7.2 Increase substantially 359.5MW capacity renewable
energy the share of renewable energy assets.
energy in the global
energy mix.
---------------------------- -------------------------------- --------------------------------
8 Decent work and economic 8.4 Improve progressively JLEN's portfolio is optimised
growth global resource efficiency to make the most of naturally
in consumption and production available resources such
and endeavour to decouple as wind power. By maximising
economic growth from the power produced by
environmental degradation, each turbine, JLEN ensures
in accordance with the that its assets are operating
10-year framework of as efficiently as they
programmes on sustainable can.
consumption and production,
with developed countries
taking the lead.
8.5 Achieve full and JLEN's KPI tracking jobs
productive employment in the portfolio as full
and decent work for all time equivalent ("FTE")
women and men, including informs this target.
for young people and
persons with disabilities,
and equal pay for work
of equal value.
---------------------------- -------------------------------- --------------------------------
9 Industry, innovation 9.1 Develop quality, 359.5MW capacity contributing
and infrastructure reliable, sustainable renewable energy to the
and resilient infrastructure, local grid.
including regional and
transborder infrastructure,
to support economic development
and human wellbeing,
with a focus on affordable
and equitable access
for all.
---------------------------- -------------------------------- --------------------------------
15 Life on land 15.5 Take urgent and JLEN's KPI tracking biodiversity
significant action to management plans and
reduce the degradation engagement across its
of natural habitats, portfolio informs this
halt the loss of biodiversity target.
and, by 2020, protect
and prevent the extinction
of threatened species.
---------------------------- -------------------------------- --------------------------------
Sustainability considerations are embedded throughout the JLEN
investment process and asset management procedures, from initial
investment screening through due diligence and into ongoing
monitoring and reporting. Overall responsibility for ESG resides
with the Board of JLEN, with analysis and reporting against ESG
criteria provided by the Fund's Investment Manager.
Assess Monitor Engage
---------------------------------- -------------------------------- -------------------------------
JLEN undertakes due diligence Third-party service providers, Stakeholder engagement
on each of its asset sometimes with the assistance is an important part
acquisitions, including of technical advisers, of JLEN's approach. Engagement
assessing a range of monitor and manage the with stakeholders occurs
ESG criteria. These criteria ongoing performance of through a combination
will now incorporate each asset in the JLEN of formal (e.g. contractual
the ESG KPIs as set out portfolio. Site visits obligations or industry
in this report. are undertaken to ensure events) and informal
that the asset's day-to-day channels (e.g. ongoing
Each asset is assessed running and ESG performance meetings and discussions).
against a range of sustainability is as expected, and there Further information on
evaluation criteria. are a range of environmental, stakeholder engagement
Assets are scored against governance and health can be found on pages
these criteria, providing and safety audits undertaken 31 to 37 of the Annual
an overall picture of by third parties to maintain Report 2022.
ESG performance. Foresight visibility over ESG performance
has minimum thresholds in the portfolio. This year, JLEN won the
for ESG performance, AIC's Communication Award
ensuring that, where Last year, JLEN developed 2022 for "Best Communication
necessary, post-investment a series of ESG KPIs of ESG".
improvement plans are to help inform this principle
implemented. and help to track the
performance of individual
assets, investment sectors
and the entire portfolio
over time. This year
JLEN has collected baseline
data to inform these
KPIs.
---------------------------------- -------------------------------- -------------------------------
Task Force on Climate-related Financial Disclosures
This year, for the first time, JLEN has included a TCFD
disclosure (found on pages 49 to 67 of the Annual Report 2022). As
part of this exercise, an initiative was undertaken to better map
the portfolio's exposure to climate - related physical risks.
Climate risks and opportunities are also assessed as part of the
Foresight SET (more information below).
Sustainable Finance Disclosure Regulation
JLEN is categorised as an Article 9 product for the purposes of
the EU Sustainable Finance Disclosure Regulation ("SFDR"). Pursuant
to Article 11 of the SFDR, certain disclosures relating to the
overall sustainability-related impact of the Company by means of
relevant sustainability indicators are set out below.
Sustainable Investment Objective of the Company
During the period 2021/22, the Company has maintained a climate
change mitigation objective and supported the transition to a low
carbon economy by investing in a diversified portfolio of
environmental infrastructure, including infrastructure assets,
projects and asset-backed businesses that utilise natural or waste
resources or support more environmentally friendly approaches to
economic activity.
Due to the inherent nature of JLEN's environmental
infrastructure assets, the Company's activities have contributed
materially towards the emissions reduction objectives set out under
the Paris Climate Agreement.
Performance of sustainability indicators
During the period 2021/22, Foresight Group LLP (the "AIFM") has
been using its Sustainability Evaluation Tool ("SET") to assess the
sustainability credentials of new investments. Information to
complete these assessments was gathered during due diligence. On
occasion, technical advisers were required to provide feedback on
pertinent questions relating to sustainability, while project
counterparties were required to have in place policies that cover
topics such as modern slavery, diversity promotion, employee growth
and corporate social responsibility.
Information around sustainability and ESG performance is
available in the annual report on pages 98 to 113 of the Annual
Report 2022.
Taxonomy regulation
The Company has made investments in infrastructure assets that
contribute to the climate change mitigation objective. 97% of
investments by value are made into environmentally sustainable
economic activities (as defined in Article 3 of the Taxonomy
Regulation).
Article 11 Periodic Disclosure
An article 11 SFDR Periodic Disclosure is available on the
Company website www.jlen.com and on request.
The Foresight Sustainability Evaluation Tool ("SET") and climate
risk
To ensure that all potential investments undertaken meet our
definition of sustainable infrastructure, and that climate -
related risks are systematically identified, assessed and
subsequently managed, they are evaluated in accordance with
Foresight's SET. The SET is made up of five criteria that cover the
key areas of sustainability and ESG considerations to be
assessed:
-- Sustainable Development Contribution: The contribution made
towards the global sustainability agenda, including an assessment
of its resilience to climate change-related risk and
opportunity
-- Environmental Footprint: The environmental impacts of an investment
-- Social Welfare: The interaction with local communities and the welfare of employees
-- Governance: The compliance with relevant laws and regulations
-- Third - Party Interactions: The sustainability of key
counterparties and the broader supply chain
The SET is an evolving tool and has been designed with
flexibility in mind, making it adaptable to new sectors, industry
frameworks and impact standards as the level of sophistication
around climate-related risk grows. Moreover, the materiality of
certain issues within each of these areas can be subject to
frequent change, therefore a framework that can adapt easily to
reflect these changes is important. The Sustainability team carry
out regular in-house consultation to decide on the individual
"weighting" for each KPI within each Climate Change Resilience
parameter. The weighting dictates the materiality of the KPI in the
overall asset score, which can be easily updated and amended based
on new information obtained.
The tool draws on IRIS+ indicators, which are an aggregation of
a number of widely recognised sustainability and climate-related
frameworks to measure, manage and optimise sustainability and
climate-related performance. These frameworks include GRESB, the
Global Reporting Initiative ("GRI"), the Sustainability Accounting
Standards Board ("SASB"), the UN SDGs, the Global Impact Investing
Network ("GIIN") and Principles for Responsible Investment
("PRI").
The final SET assessment, and the asset's corresponding
"Sustainability Web", are produced as part of investment due
diligence. An example of this web is shown below, with the "Climate
Change Resilience" parameter being highlighted.
Before any investment goes ahead, an assessment of both physical
and transition climate-related risk is made in the Climate Change
Resilience assessment parameter of the SET. This parameter is made
up of multiple KPIs, each of which is weighted based on internal
priority and materiality assessments and scored in line with
response bands corresponding to the five-point scale below:
-- 5 = High performance
-- 4 = Above average
-- 3 = Average performance
-- 2 = Below average
-- 1 = Low performance
An assessment of both physical and transition climate-related
risk is made in the Climate Change Resilience assessment parameter
of the SET. This parameter is made up of multiple KPIs, each is
weighted based on internal priority and materiality assessments and
scored in line with response bands corresponding to a five-point
scale below.
The KPIs include:
-- EU Taxonomy alignment assessment (the Taxonomy itself
includes a review of physical climate resilience)
-- Risk heatmap for a number of physical risks using Carbon
Brief scenarios to inform future weather patterns
-- Liability to pay carbon tax throughout asset life
-- Whether a documented stranded asset risk assessment has been made
-- Consideration of climate-related market-risks
An average is then calculated to produce an overall score for
the Climate Change Resilience assessment parameter, which is
reviewed and updated annually by the Asset Management team. This
quantitative KPI-based approach to assessing a project's exposure
to climate risk helps to standardise the quality of climate-related
assessment applied across the portfolio and also helps to guide and
focus Investment and Asset Management team resource on the areas
that require the most attention. The output and identified action
areas of each assessment parameter of the SET - including Climate
Change Resilience - are tabled at the asset companies' board
meetings to enable implementation of an asset-specific plan to
manage any material risks as required.
If the information required to complete the assessment is not
readily available through project documentation, technical advisers
may be tasked with conducting further investigation to address any
sustainability or climate change-related specific queries. Examples
may include an enhanced focus on flood risk under different climate
scenarios, or the transitionary risk presented by changing market
dynamics.
The above-mentioned physical risks are assessed as part of the
Climate Change Resilience assessment parameter. A Climate Risk
Heatmap is then produced which is used to identify the most
material physical risks an asset faces from climate-related extreme
weather events, allowing for further investigation to be conducted
or mitigation measures to be put in place.
Alongside the assessment of the physical risks, the
above-mentioned transition risks are also incorporated to the SET's
Climate Change Resilience parameter.
ENVIRONMENTAL
Objective: Promote the efficient use of resources.
Environmental criteria are embedded in the structure of JLEN's
investment and portfolio management activities. With its Investment
Manager, JLEN considers the following key environmental criteria
during due diligence of a potential acquisition and thereafter the
ongoing monitoring of its assets:
-- resource management;
-- life on land/below water; and
-- climate change and resilience.
In order to inform its environmental objective, JLEN intends to
consider the following environmental KPIs and associated
measurements.
Environmental KPI Measurement Baseline data 2021/22
----------------------------- ------------------------------ ---------------------------
Renewable energy generated MWh renewable electricity 742,331MWh(1) 571,461MWh(1)
MWh renewable heat
----------------------------- ------------------------------ ---------------------------
GHG emissions avoided tCO(2) e avoided(2) 905,906 tonnes CO(2)
avoided
----------------------------- ------------------------------ ---------------------------
Waste treatment (t) waste recycled 135,203 tonnes
(t) waste diverted 695,498 tonnes
from landfill
----------------------------- ------------------------------ ---------------------------
Water treatment (l) wastewater treated 35,620,619,000 litres
----------------------------- ------------------------------ ---------------------------
Reportable environmental
Environmental incidents incidents 5(3)
----------------------------- ------------------------------ ---------------------------
% of total purchased
energy(4) in the portfolio
Purchased energy originating originating from renewable
from renewable sources sources 47%
----------------------------- ------------------------------ ---------------------------
% of assets with biodiversity
Management of biodiversity plans 30%
number of assets engaged
with on biodiversity
issues 49%
------------------------------------------------------------ ---------------------------
(1) For assets which have a dual generation profile of both
electricity and heat, energy is converted and measured in the
energy profile that is predominant.
(2) Further information on the GHG avoided of each asset is available on the JLEN website.
(3) More information on environmental incidents can be found on
page 111 of the Annual Report 2022.
(4) Purchased energy refers to the fact that all assets have
their own energy requirements and where these requirements are not
met in full by an asset's own generation, energy is purchased from
energy suppliers for delivery via the grid.
Environmental KPIs summary
Over the 2021/22 period JLEN has increased the number of assets
in the portfolio which has led to an increase in renewable energy
generation and further GHG emissions avoided. This year the
Investment Manager has worked on implementing an enhanced ESG
mandate on its AD portfolio which has led to greater engagement on
various areas, including biodiversity. A workstream has also been
ongoing on the solar portfolio to implement landscape ecological
management plans. This work will be further expanded on in the
coming year.
JLEN has expressed a preference for renewable energy suppliers
to its SPV operators, however, some assets are tied into long-term
contracts with other suppliers. The expectation is that energy
purchased from renewable sources will increase over time as energy
supply contracts run out and are renewed.
Impact
In order to quantify some of the benefits being delivered by its
portfolio, JLEN works with Aardvark Certification Ltd to undertake
an independent, third-party assessment of the carbon impact of its
assets. Individual reports for each asset, as well as a portfolio
summary report, are published on the Fund's website.
JLEN considers that, in order to align with the goals of the
Paris Agreement on Climate Change, its assets should be minimising
the carbon footprint of their purchased energy. This year JLEN has
been monitoring the percentage of total purchased energy in its
portfolio originating from renewable sources. At present 47% of the
portfolio assets purchase energy from renewable sources and the
Investment Manager is monitoring this to see where improvements can
be made when energy purchase contracts become available for
renewal.
Biodiversity, or habitat management, plans have always been
implemented as part of JLEN's asset management activities where
required by planning. This year the Investment Manager has asked
its asset managers to consider and document biodiversity
enhancement activities on its portfolio.
Finally, a significant mechanism by which JLEN is able to
influence environmental performance of the portfolio is through
engagement with, and expectations of, service providers to the
portfolio. This year, the Investment Manager has stepped up that
engagement to communicate the levels of environmental performance
and this has resulted in enhanced initiatives being undertaken on
the AD portfolio, where its operator has an enhanced scope of
service to include more comprehensive ESG-focused management.
Portfolio electricity and carbon performance
A summary of the greenhouse gas benefits delivered by the
portfolio is provided in the table below.
2021/22 annual
greenhouse gas
emissions avoidance
Asset portfolio by sector (tCO(2) e)
-------------------------- --------------------
Wind 290,714
Solar (including rooftop) 59,917
AD 447,410
Hydro 4,233
Biomass 97,101
Energy-from-Waste 6,531
-------------------------- --------------------
Total 905,906
-------------------------- --------------------
Methodology
-- This calculation works on the premise that the marginal fuel type being displaced is coal
-- The calculations draw on the data presented in the IPCC's
(Intergovernmental Panel on Climate Change) Special Report on
Renewable Energy ("SRREN"), which uses a wide variety of
peer-reviewed research papers to establish median figures for the
lifecycle CO(2) intensities of different renewable energy
technologies. These are measured in gCO(2) e/kWh. AD and EfW are
not included in this report and have had their lifecycle
intensities informed by either third-party studies or EU
directives. These can be provided on request.
-- The carbon savings of a given technology are calculated by
multiplying its total generation (in MWh) by the IPCC listed CO(2)
intensity for that technology. This figure is then subtracted from
the CO(2) emissions that would be generated by an equivalent amount
of coal-powered generation.
-- This therefore acknowledges the fact that there is still a
CO(2) footprint associated with the production, transportation,
installation and operation of all renewable energy asset classes,
whilst simultaneously demonstrating the net benefit that technology
provides to the global decarbonisation agenda.
-- JLEN has moved from using an external consultant to provide
the total CO(2) avoided numbers and is now using the Investment
Manager's in house ESG team and management software for these
calculations.
JLEN's portfolio delivered 1,314 GWh green energy
And avoid emissions of >905,906 tCO(2) e
Enough electricity to power >255,000 UK homes
Case study
Biodiversity on JLEN's solar portfolio
Ecological condition assessments were undertaken in 2021 for all
solar sites and Landscape Ecological Management Plans were updated,
highlighting compliance issues, recommendations for management and
enhancement measures.
Additional biodiversity quantitative assessment activities were
performed on a trial basis across three sites including
biodiversity net gain calculations, species surveys and soil
testing.
Key findings at the Higher Tregarne solar site:
-- A Biodiversity Net Gain ("BNG") score of 110.18% was
calculated and showed that the retention and creation of valuable
habitats as part of the development plan has contributed
significantly to the general ecological value of the site. This
score is extremely high (as the mandatory gain to be introduced is
10% for developments) and shows that solar farms have an important
part to play in restoring ecological habitats;
-- a different management regime will be introduced to further
diversify the grassland and it is anticipated that the BNG score
could be increased further and,
-- a soil analysis has shown that nutrient levels are still
moderately high and this may be preventing a more diverse grassland
from becoming established. Consideration will be given to ways of
removing grass cuttings from the land and composting on the
site.
SOCIAL
Objective: Develop positive relationships with the communities
in which JLEN works.
The following social criteria are typically considered during
due diligence and ongoing monitoring of assets:
-- health and wellbeing;
-- local economic impact - job creation;
-- local social impact; and
-- community engagement and benefit.
In order to inform its social objective, JLEN has identified a
number of indicators and metrics, as seen below. The Fund's
investments are often situated in rural areas where there is
potential for both community benefit as well as community
disruption during construction and asset operation activities.
Social KPI Measurement Baseline data 2021/22
---------------------------- ------------------------------ ---------------------
Community funding GBP provided to community GBP418,000
projects
---------------------------- ------------------------------ ---------------------
Health and safety incidents RIDDOR reportable accidents 3(1)
---------------------------- ------------------------------ ---------------------
% of assets with formal
stakeholder/community
Community engagement engagement policies and
procedures processes 14%
% of assets with a clear,
easily accessible complaints
handling mechanism in
place 49%
----------------------------------------------------------- ---------------------
Jobs supported number of "full time 376 jobs(2)
equivalent" ("FTE") jobs
supported
---------------------------- ------------------------------ ---------------------
% of community funds
that are easily accessible
Accessibility of community and signposted for local
fund documents communities 83%
---------------------------- ------------------------------ ---------------------
(1) More information can be found on page 111 of the Annual Report 2022.
(2) FTE jobs were calculated using total hours worked over the
course of the year. In some instances, 12 months of data was not
available and in that case, an average number of hours worked was
calculated from the data available.
Social KPIs summary 2021/22
Over the year, JLEN's SPVs contributed GBP418,000 to the
communities in which they operate, GBP38,000 more than in the
previous year. The increase was due to acquiring new assets and an
increase in the community benefit funds available from the AD
portfolio. Further to this JLEN has endeavoured to make community
fund information more readily available by publishing this
information on its website and rolling out websites across the wind
portfolio with clear sign-posting to community benefit fund
information. The work of rolling out websites is continuing across
the portfolio to provide clear, accessible information about the
SPVs, any associated community benefit funds and to provide a
contact for the asset.
In the year 2022/23, the focus will be on improving community
engagement processes and complaints handling mechanisms. Many of
the assets already have informal processes in place that can be
articulated but work will be undertaken to formalise these
processes. This work has already started on the AD portfolio.
The number of FTE jobs supported is expected to grow as the
portfolio grows and this measure is important to JLEN, showing the
wider benefit of employment that JLEN's portfolio provides and
livelihoods it supports.
Skilled labour
Many of JLEN's assets are situated in rural areas, providing
vital skilled roles in smaller rural communities. A strong base of
qualified engineers is required in order to run the Fund's
environmental assets in the long term and to support increased
capacity for environmental assets, both in the UK and abroad. As a
specialist investor into environmental assets, JLEN is committed to
ensuring that those assets are managed and maintained by skilled
teams.
In order to support this, JLEN has collected data on the number
of jobs directly supported by the investment portfolio through its
third-party asset managers and other major contractors.
Community relationships
This year JLEN has tracked against its KPIs related to
developing positive relationships with the communities in which it
works. These KPIs relate to engagement procedures - ensuring that
clear, formal stakeholder engagement processes are in place for
each investment. If problems do arise during construction and
operation of the projects that impact the local community, JLEN is
committed to ensuring that local communities have access to a
clear, easily accessible complaints handling mechanism so that
complaints can be addressed as soon as possible. The data has
revealed that this is an area for improvement and JLEN is working
on improving this over the course of this year.
Most of JLEN's assets have a community fund associated with
them. Some of these are triggered by planning conditions, while
others have been put in place by JLEN in order to drive good
practice in community engagement. Community funds are often managed
by local bodies such as parish councils, with funds allocated to
projects designed to benefit the local community.
This year JLEN has been working to make information about these
community funds more accessible; community fund information was
added to the JLEN website to make it more readily accessible and
this year an exercise was undertaken to build websites for each of
the wind SPVs so that local communities have a readily available
landing spot to find information about community funds associated
with an asset and have a means of contacting the site in case of an
issue. This work had already been undertaken on the AD portfolio
and most of the AD sites have a website and community fund in
place.
Projects supported by JLEN's community funds include:
-- donation to a local bird conservation group;
-- funding of local care home specialising in dementia;
-- donation to a local food bank;
-- purchase of sports equipment and play equipment for various parks;
-- restoration of a parish church and contribution to repair of another church;
-- wildflower planting in village; and
-- redevelopment of educational and social outreach centre.
Case study
Training to upskill operatives at the ELWA waste processing
plant
In the financial year just passed, the ELWA waste plant, which
provides more than 190 full time equivalent jobs across its plants,
has provided over 4,000 hours of training. This included a wide
range of training from the management team through to operators and
maintenance teams. It also included both new starter inductions and
refresher training along with training provided to upskill
operatives and the management team and/or train
operators/maintenance teams on new equipment that has been
installed.
This programme of training helps to keep ELWA's workforce
skilled in the various areas of the business and also helps to
prevent health and safety and environmental incidents from
occurring.
Case study
Community fund that is supporting biodiversity
Egmere AD plant in North Norfolk contributes an annual sum of
GBP7,500 to its community benefit fund which is disbursed to a
range of different local projects. This year, one of the projects
that Egmere has contributed to is the North West Norfolk Ringing
Group ("NWNRG") which supports the British Trust for Ornithology
("BTO"), to undertake original ornithological research projects and
contribute to the national bird ringing scheme.
Recently, barn owls have been at the forefront of the group's
conservation work. To monitor numbers, the NWNRG tag any young
owlets with leg rings issued by the BTO.
The NWNRG and Holkham estate donated a barn owl box to Egmere
Energy. Previously, the owl box at Egmere has been inhabited and it
is hoped that now the box has been redesigned it will become
another barn owl home very soon.
ENVIRONMENTAL AND HEALTH AND SAFETY INCIDENTS
JLEN takes its environmental and health and safety
responsibilities very seriously and seeks to ensure effective
management of these issues in both its own operations and in its
investment portfolio. JLEN aims to manage risks and incidents in a
fair and transparent manner with appropriate action to reduce risk
wherever possible.
This report identifies the material environmental and health and
safety incidents in the JLEN portfolio in 2021/22.
Reportable environmental and health and safety incidents
2021/22
------------------------ -------
H&S incidents 3
Environmental incidents 5
------------------------ -------
The following reportable incidents were recorded for JLEN's
portfolio during 2021/22:
-- Waste & bioenergy plant reportable injuries:
-- An operator at one of JLEN's waste plants required time off
work when an improperly secured lever struck him on the head.
-- A sub-contractor working on a fixed ladder at the site fell
through one of the floors at the plant, necessitating an overnight
stay in hospital.
-- An employee had a needle pierce through the of their safety
boot which caused a puncture wound to their foot.
-- Waste & bioenergy environmental incidents:
-- At a waste plant, testing of surface water showed that a
sample exceeded the newly imposed Emission Limit Value ("ELV") for
phosphorus, that is included in the revised Environmental Permit
issued by the Environment Agency on 2 November 2021. The operator
is monitoring phosphorus levels and subsequent samples are within
the ELV.
-- Over the course of the year there were four incidences of a
waste plant exceeding its emissions limit, the root cause of this
has been investigated and the incident has been closed.
Health, safety and environmental incident recording and
reporting
Third-party asset managers are responsible for the day - to -
day management of HSE issues and are required to report incidents
to Foresight, which are recorded through their portfolio management
software. Depending on the requirement, the software can deliver
either a high degree of granularity on individual assets or an
aggregated snapshot of the portfolio's performance as a whole. This
allows the Investment Manager to monitor and report individual
asset performance as well as sector and portfolio level performance
to a range of internal stakeholders.
Foresight periodically contracts third parties to conduct
comprehensive health and safety audits of each site. This serves
both to encourage best possible working practices and acts as a
means of highlighting areas for development. Foresight staff also
perform spot auditing and reporting functions on selected assets on
an ongoing basis. Any recommendations from the audits are allocated
to the Investment Manager's asset management team, which then
becomes responsible for ensuring the recommendations are actioned
as necessary. These tasks are tracked through Foresight's portfolio
management software and monitored to ensure they have been resolved
in a timely manner. All audit results, shortfalls and
recommendations are included on the agenda of the asset's board
meetings.
GOVERNANCE
Objective: Ensure effective, ethical governance across the
portfolio.
Good governance is essential for JLEN's portfolio to achieve its
targeted returns and to minimise downside risk.
JLEN holds Board positions for each of its assets, which are
fulfilled by Foresight on its behalf. The Board members work to
promote good governance as part of the Fund's active engagement
with projects.
JLEN typically considers the following governance criteria
during due diligence and ongoing monitoring of assets:
-- anti-bribery and corruption;
-- modern slavery;
-- audit and tax practices;
-- environmental impact;
-- health and safety practices; and
-- Board composition.
In order to inform its governance objective, JLEN is formalising
the reporting of a number of governance indicators and has added
some further indicators to help promote improved performance over
time.
Governance KPI Measurement Baseline data 2021/22
--------------------------- -------------------------- ---------------------
Portfolio audits of
health and safety
practices % of assets audited 81%
--------------------------- -------------------------- ---------------------
Portfolio audits of
tax and financial
practices % of assets audited 98%
--------------------------- -------------------------- ---------------------
% of assets with at
least one female board
Diversity of SPV directors member 7%
--------------------------- -------------------------- ---------------------
% of assets with ESG
Inclusion of ESG in embedded into board
SPV board agendas agendas 93%
--------------------------- -------------------------- ---------------------
% of assets which
comply with a governance
policy and associated
documents, that are
reviewed on a periodic
Governance oversight basis 81%
--------------------------- -------------------------- ---------------------
Assessment of major % of new and existing
contractors against suppliers assessed
ESG criteria against ESG criteria 49%
--------------------------- -------------------------- ---------------------
Governance KPIs summary 2021/22
Overall, governance across the JLEN portfolio SPVs is well
established and this area receives a lot of oversight from asset
managers, both to adhere to best practice and to ensure the smooth
running of operations. All SPVs have regular board meetings,
usually on a quarterly basis and at least one Foresight employee is
a director of each SPV company. Health, Safety and Environment
issues are well documented and best practice solutions are shared
across the whole portfolio at monthly portfolio meetings attended
by Foresight asset managers.
JLEN mainly acquires operational assets which already have
governance processes in place, and it can take some time to embed
Foresight processes at the asset level. Work is continually
undertaken to standardise these processes and also in the course of
this, improve this process.
This year work has been undertaken and is ongoing to install an
improved suite of policies at the SPV level, with a focus on
installing voluntary slavery and human trafficking statements at
the SPV level.
Diversity of SPV directors
JLEN recognises that lack of gender diversity is a known issue
in the financial services industry. In order to drive progress and
increase gender diversity, JLEN has started tracking gender
diversity of SPV directors across all of its investments with the
intention of proactively increasing the proportion of female board
members over time. The Investment Manager has implemented the
following mechanisms and initiatives to improve performance in this
area:
-- Equal opportunities
-- To guide equal employment practices, this is the third year
that Foresight requires hiring managers to undertake Unconscious
Bias Training
-- Foresight's Inclusion & Diversity Committee which
develops and monitors Foresight's policies and procedures to ensure
qualifications, skill and experience from the basis for the
recruitment, placement, training and advancement of staff at all
levels
-- Gender equality
-- Foresight is a signatory to the Investing in Women Code, its
commitment is outlined on Foresight's website:
www.foresightgroup.eu/about-us/diversity-inclusion
-- Foresight is a signatory of the HM Treasury's Women In Finance Charter
-- Foresight is proactively working towards its five-year target
of 30% of women in senior management roles by 2024 and as at 30
September 2021 is at 25%
Inclusion of ESG in SPV board agendas
While HSE reporting has been formally included in all board
agendas for some time, and wider ESG issues have been regularly
included, this has historically been done reactively. In order to
support its stated ESG objectives, JLEN is now mandating that all
board agendas routinely include discussions around ESG matters
across each of its investments as a way to drive proactive
approaches to ESG going forward.
Modern slavery and human trafficking
As part of Foresight Group, JLEN's policy and practices in
relation to modern slavery and human trafficking are included in
the Group's Modern Slavery Act statement. The statement sets out
Foresight's approach to matters such as services and supply chain
due diligence and training of employees, recruitment and
welfare.
Over the year, the Investment Manager participated in the PRI
roundtable: Human Rights in Private Market Investing, with
discussions centring on how to build an organisational approach to
human rights, managing supply chain risk, and empowering portfolio
companies and assets.
Case study
Enhanced scope of management operations on the AD portfolio
This year, the largest operator on JLEN's AD portfolio has been
contracted for an enhanced scope of service to improve ESG
monitoring and implementation of ESG initiatives; as part of this,
a specialist ESG coordinator has been employed by the operator.
Some key areas of the enhanced scope include:
-- environment;
-- biodiversity;
-- greener farming;
-- health and safety reporting;
-- community engagement and,
-- employee engagement.
This enhanced scope of activities is particularly beneficial on
the AD portfolio which has close ties with the area in which it
works and local farming communities.
Q&A WITH JO HARRISON
Tell us about your background
My professional career has been spent chiefly working in the
water industry. I have worked at United Utilities for 24 years and
before joining United Utilities I worked in environmental
consultancy. My professional focus has mainly been on leading
environmental strategy and asset management activities, so the long
- term environmental impact on our water supply and management
systems is something I'm very interested in. My current main role
is Director of Environment Planning and Innovation at United
Utilities, so I investigate and plan for long - term requirements
facing the water industry - for example, meeting net - zero goals,
climate change adaptation and making sure we can meet ongoing
sustainability targets in the future as they become more stringent
over time.
What have been your highlights over your first year as a
Director of JLEN?
It has been fascinating to witness from the inside how JLEN
drives a financial return from delivering environmental benefits
and I clearly see the similarities with United Utilities as well as
the differences. JLEN's sole focus is operating environmental
assets effectively and efficiently so there have been many
parallels - for example, both JLEN and UU operate anaerobic
digestor assets as well as some solar generators. There is a
specific business dynamic which comes from a more commercial
mindset and whilst I have found my time here educational, I have
also been able to contribute a counterpoint perspective and see
that contribution make an impact - which is what being a Board
Director is all about.
How do you perceive the importance of Sustainability &
ESG?
Looking at the topic from a top-down perspective, it is
important for JLEN (and other businesses) to ensure there is a
clear overview of the environmental benefits that our assets
deliver - for ourselves as well as our customers - because the
assets JLEN manages have their own ESG footprint which needs to be
monitored. We are lucky to work in an organisation which
understands this need, taking proactive action to analyse and
manage the efficiency of assets and make consistent improvements to
demonstrate that we are living by our own environmental values. ESG
data should be used to drive business development as a matter of
routine as well as helping businesses identify the different
opportunities that exist to drive the push towards
sustainability.
How do you see your role evolving over time?
I'm looking forward to advancing JLEN's reporting on ESG
criteria over the next 12-18 months. Impact measurement is at
different stages of maturity depending on whether you are talking
about the E, the S, or the G, so there is a lot of room to make a
meaningful difference in this area. Six months ago we established a
formal ESG committee within JLEN and had our first meeting as part
and parcel of a normal Board process - this is important if we are
to establish business practices which prioritise ESG management as
part of everyday operations. Having launched our suite of ESG KPIs
in 2021, I want to use that data to learn and make continual
improvements in our ESG reporting as well as day-to-day decision
making - particularly in how we report our carbon emissions.
Jo Harrison
Director and Chair of the ESG Committee
CORPORATE SOCIAL RESPONSIBILITY
While JLEN does not have direct employees, it does have a
corporate culture which is guided by JLEN's Board of Directors and
the Investment Manager, Foresight. As Investment Manager to JLEN,
Foresight believes an engaged and empowered workforce supports the
Company's purpose. Foresight seeks to co-ordinate and manage its
corporate practices to maximise positive social and economic
contributions and minimise the environmental impact of its business
operations. The JLEN Board and Foresight typically meet informally
on a fortnightly basis and this ensures good communication between
these two key stakeholders. Engagement with key clients, employees,
community, environmental stakeholders, regulators, business
partners and suppliers is central to Foresight's approach.
Foresight divides its commitment to CSR into four segments:
1. marketplace - how they work with their customers and counterparties;
2. workplace - where they work, how they recruit and how they work with their staff;
3. environment - how they reduce their environmental impact; and
4. community - how they engage with the community.
Empowering the workforce of the future:
Since returning to a state of 'new normal', post the Covid-19
health crisis. The Investment Manager has been able to re-establish
its community outreach initiatives. This is aimed at providing
guidance and financial skills training for children and young
adults in the areas local to Foresight's offices. Some initiative
that Foresight has engaged on over the course of the year
include:
-- Foresight staff involvement in the Finance Industry Programme
with Amos Bursary, an organisation which helps young people of
African and Caribbean heritage to excel in education and other
opportunities, providing insights and an introduction to financial
services to over 30 students;
-- hosting a Careers Day for A-Level business students from the
Sacred Heart School in London Bridge. Foresight staff have also
visited the school for business and careers talks and,
-- partnering with Diversity VC on their Future VC programme to
offer paid internships to talented individuals from diverse
backgrounds and provide them with hands-on experience that will
help them succeed in their chosen careers.
FINANCIAL REVIEW
Analysis of financial results
The financial statements of the Company for the year ended 31
March 2022 are set out on pages 164 to 191 of the Annual Report
2022.
The Company prepared the financial statements for the year ended
31 March 2022 in accordance with UK adopted international
accounting standards as applicable to companies reporting under
those standards. In order to continue providing useful and relevant
information to its investors, the financial statements also refer
to the "Group", which comprises the Company, its wholly owned
subsidiary (JLEN Environmental Assets Group (UK) Limited ("UK
HoldCo")) and the indirectly held wholly owned subsidiary HWT
Limited (which holds the investment interest in the Tay
project).
Basis of accounting
The Company applies IFRS 10 and Investment Entities: Amendments
to IFRS 10, IFRS 12 and IAS 28, which states that investment
entities should measure all their subsidiaries that are themselves
investment entities at fair value. The Company accounts for its
interest in its wholly owned direct subsidiary JLEN Environmental
Assets Group (UK) Limited as an investment at fair value through
profit or loss.
The primary impact of this application, in comparison to
consolidating subsidiaries, is that the cash balances, the working
capital balances and borrowings in the intermediate holding
companies are presented as part of the Company's fair value of
investments.
The Company's intermediate holding companies provide services
that relate to the Company's investment activities on behalf of the
parent which are incidental to the management of the portfolio.
These companies are recognised in the financial statements at their
fair value, which is equivalent to their net assets.
The Group holds investments in the 37 portfolio assets which
make distributions comprising returns on investments (interest on
loans and dividends on equity) together with repayments of
investments (loan repayments and equity redemptions).
Results for the year ended 31 March 2022
Year ended Year ended
31 Mar 31 Mar
All amounts presented in GBPmillion (except as noted) 2022 2021
----------------------------------------------------------------- ---------- ----------
Net assets(1) 762.9 504.2
Portfolio value(2) 795.4 571.4
Operating income and gains/(losses) on fair value of investments 192.9 14.8
Net assets per share 115.3p 92.2p
Distributions, repayments and fees from portfolio 56.5 48.2
Profit before tax 185.0 8.1
----------------------------------------------------------------- ---------- ----------
(1) Also referred to as Net Asset Value or "NAV".
(2) Classified as investments at fair value through profit or
loss on the statement of financial position.
Net assets
Net assets increased from GBP504.2 million at 31 March 2021 to
GBP762.9 million at 31 March 2022, primarily driven by
acquisitions, the effect on the portfolio value of the increase in
long-term power price and short-term inflation forecasts, partially
offset by the increase of the long-term corporation tax rate.
The net assets of GBP762.9 million comprise GBP795.4 million
portfolio value of environmental infrastructure investments and the
Company's cash balances of GBP2.0 million, partially offset by
GBP32.5 million of intermediate holding companies' net liabilities
and other net liabilities of GBP2.0 million.
The intermediate holding companies' net liabilities of GBP32.5
million comprises a GBP53.6 million credit facility loan, partially
offset by cash balances of GBP16.0 million and other net assets of
GBP5.1 million.
Analysis of the Group's net assets at 31 March 2022
At 31
Mar At 31 Mar
All amounts presented in GBPmillion (except as noted) 2022 2021
---------------------------------------------------------- ----------- -----------
Portfolio value 795.4 571.4
Intermediate holding companies' cash 16.0 11.6
Intermediate holding companies' revolving credit facility (53.6) (82.0)
Intermediate holding companies' other assets 5.1 3.1
---------------------------------------------------------- ----------- -----------
Fair value of the Company's investment in UK HoldCo 762.9 504.1
---------------------------------------------------------- ----------- -----------
Company's cash 2.0 1.9
Company's other liabilities (2.0) (1.8)
---------------------------------------------------------- ----------- -----------
Net Asset Value at 31 March 762.9 504.2
---------------------------------------------------------- ----------- -----------
Number of shares 661,531,229 546,720,025
Net Asset Value per share 115.3p 92.2p
---------------------------------------------------------- ----------- -----------
At 31 March 2022, the Group (the Company plus intermediate
holding companies) had a total cash balance of GBP18.0 million (31
March 2021: GBP13.5 million), including GBP2.0 million in the
Company's balance sheet (31 March 2021: GBP1.9 million) and GBP16.0
million in the intermediate holding companies (31 March 2021:
GBP11.6 million), which is included in the Company's balance sheet
within "investments at fair value through profit or loss".
At 31 March 2022, UK HoldCo had drawn GBP53.6 million of its
revolving credit facility (31 March 2021: GBP82.0 million), which
is included in the Company's balance sheet within "investments at
fair value through profit or loss".
The movement in the portfolio value from 31 March 2021 to 31
March 2022 is summarised as follows:
Year ended Year ended
31 Mar 31 Mar
All amounts presented in GBPmillion (except as noted) 2022 2021
-------------------------------------------------------------------------------- ---------- ----------
Portfolio value at start of the year 571.4 537.1
Acquisitions and further investment (net of post-acquisition price adjustments) 88.0 62.9
Disposal of assets (5.6) -
Distributions received from investments (56.5) (48.2)
Growth in value of portfolio 198.1 19.6
-------------------------------------------------------------------------------- ---------- ----------
Portfolio value at 31 March 795.4 571.4
-------------------------------------------------------------------------------- ---------- ----------
Further details on the portfolio valuation and an analysis of
movements during the year are provided in the investment portfolio
and valuation section on pages 74 to 83 of the Annual Report
2022.
Income
The Company's profit before tax for the year ended 31 March 2022
is GBP185.0 million, generating earnings of 30.6 pence per share
(year ended 31 Mar 2021: 1.5 pence per share), driven by the gains
on fair value of investments attributable to the increase in
long-term power price and short-term inflation forecasts.
Year ended Year ended
31 Mar 31 Mar
All amounts presented in GBPmillion (except as noted) 2022 2021
----------------------------------------------------------------- ---------- ----------
Interest received on UK HoldCo loan notes 28.8 28.7
Dividend received from UK HoldCo 21.3 14.9
Net gains/(losses) on investments at fair value 142.8 (28.8)
----------------------------------------------------------------- ---------- ----------
Operating income and gains/(losses) on fair value of investments 192.9 14.8
----------------------------------------------------------------- ---------- ----------
Operating expenses (7.9) (6.7)
----------------------------------------------------------------- ---------- ----------
Profit before tax 185.0 8.1
----------------------------------------------------------------- ---------- ----------
Earnings per share 30.6p 1.5p
----------------------------------------------------------------- ---------- ----------
In the year to 31 March 2022, the operating income and
gains/(losses) on fair value of investments was GBP192.9 million,
including the receipt of GBP28.8 million of interest on the UK
HoldCo loan notes, GBP21.3 million of dividends also received from
UK HoldCo and net gains on investments at fair value of GBP142.8
million.
The operating expenses included in the income statement for the
year were GBP7.9 million, in line with expectations. These comprise
GBP6.6 million Investment Manager fees and GBP1.3 million operating
expenses. The details on how the Investment Manager fees are
charged are set out in note 15 to the financial statements.
Ongoing charges
The "ongoing charges" ratio is an indicator of the costs
incurred in the day - to - day management of the Fund. JLEN uses
the AIC-recommended methodology for calculating this ratio, which
is an annual figure.
The ongoing charges percentage for the year to 31 March 2022 was
1.19% (year ended 31 March 2021: 1.24%). 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 Net
Asset Value 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.
Adjusting for the impact of the drawdown amount under the revolving
credit facility, the ongoing charges ratio would have been 1.03%
(31 March 2021: 1.13%). Foresight believes this to be competitive
for the market in which JLEN operates and the stage of development
and size of the Fund, demonstrating that management of the Fund is
efficient with minimal expenses incurred in its ordinary
operation.
Cash flow
The Company had a total cash balance at 31 March 2022 of GBP2.0
million (31 March 2021: GBP1.9 million). The breakdown of the
movements in cash during the year is shown below.
Cash flows of the Company for the year (GBPmillion):
Year ended Year ended
31 Mar 31 Mar
2022 2021
------------------------------------------------ ---------- ----------
Cash balance at 1 April 1.9 1.8
Net proceeds from share issues 115.7 (0.2)
Investment in UK HoldCo (equity and loan notes) (116.0) -
Interest on loan notes received from UK HoldCo 28.8 28.7
Dividends received from UK HoldCo 21.3 14.9
Directors' fees and expenses (0.3) (0.3)
Investment Manager fees (6.3) (5.5)
Administrative expenses (1.2) (0.7)
Dividends paid in cash to shareholders (41.9) (36.8)
------------------------------------------------ ---------- ----------
Company cash balance at 31 March 2.0 1.9
------------------------------------------------ ---------- ----------
The Group had a total cash balance at 31 March 2022 of GBP18.0
million (31 March 2021: GBP13.5 million) and borrowings under the
revolving credit facility of GBP53.6 million (31 March 2021:
GBP82.0 million). The breakdown of the movements in cash during the
year is shown below.
Cash flows of the Group for the year (GBPmillion):
Year ended Year ended
31 Mar 31 Mar
2022 2021
----------------------------------------------------------------- ---------- ----------
Cash distributions from environmental infrastructure investments 56.5 48.2
Administrative expenses (1.1) (1.1)
Directors' fees and expenses (0.3) (0.3)
Investment Manager fees (6.3) (5.5)
Financing costs (net of interest income) (2.6) (1.8)
----------------------------------------------------------------- ---------- ----------
Cash flow from operations(1) 46.2 39.5
Net proceeds from share issues 115.7 (0.2)
Debt arrangement fee cost (2.2) -
Acquisition of investment assets and further investment (86.1) (63.0)
Disposal of assets 3.7 -
Acquisition costs (including stamp duty) (3.0) (1.4)
Short-term projects debtors - 0.4
(Repayment)/drawdowns under the revolving credit facility (27.9) 53.0
Dividends paid in cash to shareholders (41.9) (36.8)
----------------------------------------------------------------- ---------- ----------
Cash movement in the year 4.5 (8.5)
Opening cash balance 13.5 22.0
----------------------------------------------------------------- ---------- ----------
Group cash balance at 31 March 18.0 13.5
----------------------------------------------------------------- ---------- ----------
During the year, the Group received cash distributions of
GBP56.5 million from its environmental infrastructure investments,
an increase of 17.2% compared to 2021.
Cash received from investments in the year covers the operating
and administrative expenses and financing costs, as well as the
dividends declared to shareholders in respect of the year ended 31
March 2022. Cash flow from operations of the Group of GBP46.2
million covers dividends paid in the year to 31 March 2022 of
GBP41.9 million by 1.10x.
The Group anticipates that future revenues from its
environmental infrastructure investments will continue to be in
line with expectations and therefore will continue to cover fully
future costs as well as planned dividends payable to its
shareholders.(2)
Dividends
During the year, the Company paid a final dividend of 1.69 pence
per share in June 2021 (GBP10.2 million) in respect of the quarter
to 31 March 2021.
Interim dividends of 1.70 pence per share were paid in September
2021 (GBP10.2 million) in respect of the quarter to 30 June 2021,
of 1.70 pence per share in December 2021 (GBP10.2 million) in
respect of the quarter to 30 September 2021, and of 1.70 pence per
share in March 2022 (GBP11.2 million) in respect of the quarter to
31 December 2021. On 17 May 2022, the Company declared a final
dividend of 1.70 pence per share in respect of the quarter ended 31
March 2022 (GBP11.2 million), which is payable on 24 June 2022.
The target dividend for the year to 31 March 2023 is 7.14 pence
per share, a 5.0% increase from the dividend declared in respect of
the year to 31 March 2022.(2)
(1) "Cash flow from operations" is an alternative performance
measure ("APM"). The APMs within the accounts are defined on page
193 of the Annual Report 2022.
(2) These are targets only and not profit forecasts. There can
be no assurance that these targets will be met.
GOVERNANCE
CHAIRMAN'S INTRODUCTION
The Board believes that a strong corporate governance culture is
essential for the Company to achieve its investment objectives, to
mitigate downside risk, and to take account of the interests of key
stakeholders as part of its decision - making process.
Introduction
The Listing Rules and the Disclosure Guidance and Transparency
Rules ("Disclosure Rules") of the FCA require listed companies to
disclose how they have applied the principles and complied with the
provisions of the Corporate Governance Code to which the issuer is
subject. The provisions of the UK Corporate Governance Code ("UK
Code"), as issued by the Financial Reporting Council ("FRC") in
July 2018, are applicable to the year under review and can be
viewed at www.frc.org.uk.
The related Code of Corporate Governance (the "AIC Code"),
issued by the Association of Investment Companies ("AIC") provides
specific corporate governance guidelines to investment companies.
The AIC issued their revised code for member companies in February
2019 and this applies to accounting periods beginning on or after 1
January 2019. The FRC has confirmed that AIC member companies who
report against the AIC Code will be meeting their obligations in
relation to the UK Code and the associated disclosure requirements
of the Disclosure Rules. The AIC Code can be viewed at
www.theaic.co.uk.
The Guernsey Financial Services Commission ("GFSC") has issued a
Finance Sector Code of Corporate Governance. The Code comprises
Principles and Guidance and provides a formal expression of good
corporate practice against which shareholders, boards and the GFSC
can better assess the governance exercised over companies in
Guernsey's finance sector. Companies which report against the UK
Code or the AIC Code are also deemed to meet the Guernsey Code.
Statement of compliance with the AIC Code and Guide
The Board recognises the importance of a strong corporate
governance culture that meets the Listing Rules of the FCA. The
Board has put in place a framework for corporate governance that
reflects the scale, nature and complexity of the Company and its
operations. All Directors contribute in a meaningful way to Board
discussions and debates. The Board believes in providing as much
transparency on the Company's activities for stakeholders as is
reasonably possible. It should be noted that most of the Company's
day - to - day responsibilities are delegated to third parties and
the Company has no employees.
The Company is a member of the AIC and is classified within the
renewable energy infrastructure sector. The Company currently
complies (except as set out in the next paragraph) with the
principles and provisions of good governance contained in the AIC
Code (which complements the UK Code and provides a framework of
best practice for listed investment companies) and in accordance
with the AIC Code, the Company will be meeting its obligations in
relation to the UK Code and associated disclosure requirements of
the Listing Rules.
The UK Code includes provisions relating to the role of the
Chief Executive, executive Directors' remuneration and the need for
an internal audit function. The Board considers these provisions
are not relevant to the position of the Company, as all of the
Company's day-to-day management and administrative functions are
outsourced to third parties and it has no executive Directors,
employees or internal operations. The independent compliance
functions and internal control frameworks in place by service
providers undertaking the Company's critical business functions,
principally the Investment Manager and the Administrator, provides
comfort that the activities which would otherwise have been
undertaken by an internal audit function have been effectively
addressed through other means. Therefore, no further reporting has
been provided in respect of these provisions.
The functions which would typically be carried out by a
management engagement committee are performed by the Company's
Board as a whole and the Board has not considered it necessary to
appoint a separate remuneration committee.
BOARD OF DIRECTORS
Members of JLEN's Board of Directors, all of whom are
non-executive and independent of the Investment Manager, are listed
below.
Richard Morse
Chairman
Richard has more than 34 years' experience in energy and
infrastructure, including environmental energy. He is a partner at
Opus Corporate Finance, where he is a leader in the environmental
energy practice. His current boardroom experience includes
Bazalgette Tunnel Limited (Deputy Chairman and Chairman of the
Audit & Treasury Committee), The Woodard Corporation
(Chairman), and Heathrow Southern Railway Limited (non - executive
director).
Past experience
Richard trained as an investment banker, becoming Deputy Head of
Corporate Finance and head of the utilities and energy team at
Dresdner Kleinwort Wasserstein, before taking up senior roles in
the energy and utilities practices at Goldman Sachs and Greenhill
International, and a Senior Adviser role at Matrix Corporate
Capital.
Committee memberships
Nomination Committee (Chair)
ESG Committee
Richard Ramsay
Senior Independent Director
Richard is a chartered accountant with considerable experience
of the energy sector and the closed-end fund industry. He is
currently Chairman of Momentum Multi Asset Value Trust plc, an
investment trust.
Past experience
Richard's previous energy sector experience includes: leading
the Barclays de Zoete Wedd team that privatised the Scottish
electricity industry; a period at Ofgem as Managing Director
Finance and Regulation; working as director of the Shareholder
Executive, principally involved with government businesses in the
nuclear sector; and chairman of Northcourt Ltd, a provider globally
of nuclear insurance. At Ivory & Sime, Barclays de Zoete Wedd
and latterly at Intelli Corporate Finance, he has worked as a
corporate adviser in the closed-end funds sector, completing over
GBP2.5 billion of transactions. He has also previously been a
director of two investment trusts and one venture capital
trust.
Committee memberships
Audit Committee
Stephanie Coxon
Director
Stephanie is a Fellow of the Institute of Chartered Accountants
in England and Wales and is a non-executive director of several
London listed companies.
Past experience
Prior to becoming a non-executive director, Stephanie led the
investment trust capital markets team at PwC for the UK and Channel
Islands. During her time at PwC, Stephanie specialised in advising
FTSE 250 and premium London listed companies on accounting,
corporate governance, risk management and strategic matters.
Committee memberships
Audit Committee (Chair)
Remuneration Committee
Nomination Committee
Hans Joern Rieks
Director
Hans has over 26 years' experience within the global wind
industry and has previously worked for Siemens Gamesa and Vestas
Central Europe. He is highly regarded in the energy sector and has
successfully led growth agendas and international strategies. An
engineer by background, Hans has a strong technical grounding and
excellent operational experience of how to manage the constantly
evolving renewables landscape.
Past experience
Hans formerly led the Siemens wind business in EMEA, crafting
and implementing a growth strategy, as well as being directly
involved in the merger with Gamesa. Prior to this, he was President
and CEO of Vestas Central Europe and member of the Group Management
of Vestas Wind Systems A/S.
Committee memberships
Remuneration Committee (Chair)
Nomination Committee
ESG Committee
Alan Bates
Director
Alan has over 31 years' experience in the energy and
infrastructure sectors including electricity, gas and water
utilities. He has extensive experience in infrastructure operations
and has excellent strategic and commercial skills. He has developed
a broad understanding of the dynamics behind the energy transition
and has assisted the Government of Guernsey in developing its
energy policy. Alan has been the CEO of Guernsey Electricity since
2010 and is a Director of the Channel Islands Electricity Grid and
Alderney Electricity Limited.
Alan is a Chartered Engineer, Fellow of the Institute of
Mechanical Engineers and a Member of the Institute of Engineering
Technology.
Past experience
Alan commenced his career with P&O and Princess Cruises as a
Marine Engineering Officer, followed by 19 years in the oil and gas
industry working for Mobil Oil/BP Oil and then International Energy
Group before becoming the Managing Director of Manx Gas in the Isle
of Man.
Committee memberships
Audit Committee
Remuneration Committee
Jo Harrison
Director
Jo has over 23 years' experience working in the water industry
and is the Director of Environment, Planning and Innovation at
United Utilities, where she is accountable for leading the approach
to environmental and long-term planning; including developing and
strengthening the approach to all aspects of the environment,
climate change and carbon, asset management, risk and resilience.
Jo is a chartered member of the Institute of Water and
Environmental Managers and is a Chartered Environmentalist. She is
also a trustee of the Rivers Trust.
Past experience
Jo has worked for United Utilities since 1998 and has a BSc in
Geography and Ecology from the University of Sheffield and an MSc
in Pollution and Environmental Control from Manchester University.
Jo was also previously a trustee of the Community Forest Trust.
Committee memberships
ESG Committee (Chair)
Remuneration Committee
GOVERNANCE AT A GLANCE
The corporate governance and Board structure is outlined
below.
Corporate governance framework
Chairman
Richard Morse
Directors Investment Manager
Stephanie Coxon Foresight Group led by Chris Holmes
Hans Joern Rieks and
Richard Ramsay Chris Tanner as co-lead Investment
Jo Harrison Managers
Alan Bates
Audit Committee Risk Committee ESG Committee Nomination Committee
Stephanie Coxon Hans Joern Rieks Jo Harrison (Chair) Jo Harrison (Chair)
(Chair) (Chair) Richard Morse Richard Morse
Alan Bates Stephanie Coxon Hans Joern Rieks Hans Joern Rieks
Richard Ramsay Alan Bates
Jo Harrison
--------------- ---------------- ------------------- --------------------
Board structure as at 31 March 2022
Board tenure
0-5 years = 4
6-8 years = 2
Board composition
Chairman = 1
Senior Independent Director = 1
Directors = 4
Gender diversity
Male = 4
Female = 2
Board activities
Strategy
Monitoring the evolution of the business development pipeline
following the changes introduced in March 2021 to the Company's
investment policy, particularly the relevance of emerging low
carbon and energy efficiency, agriculture and aquaculture
technologies.
Divestment of two French onshore wind farms in January 2022,
being the Company's first divestment since launch, achieving an
uplift to the valuation prior to the receipt of firm bids and
taking the opportunity to recycle capital on a value - accretive
basis for shareholders.
Ongoing assessment of the appropriateness of overseas markets
and opportunities to gain exposure through co-investment with other
Foresight-managed products.
Governance
Formation of a dedicated ESG Committee of the Board with
delegated responsibility for overseeing the development and
implementation of the Company's ESG strategy, which sets out the
guiding principles, objectives, strategic actions and policies with
respect to ESG matters.
Appointment of Foresight Group as AIFM with delegated authority
for taking certain investment decisions and items of expenditure
falling within the parameters set by the Board.
Independent remuneration policy review to ensure the Board's
practices remain fair and reasonable in the context of the Company,
reflect accepted market convention, whilst providing a competitive
basis for recruiting high-quality candidates for Board
succession.
Risk management
Monitoring of the impact from Brexit and the Ukraine crisis and
rising inflation to the supply chain, particularly where delays in
the procurement of spare parts or cost increases may be
experienced.
Careful monitoring of macroeconomic factors creating market
disruption, assessing the impact of rising interest rates,
inflation and volatile short-term power prices on the Company's
ability to maintain its target dividend.
Operational
Several milestones within the operational initiatives programme,
including risk mitigation programmes across certain AD sites to
secure additional long-term digestate storage facilities, technical
enhancements implemented across several solar sites increasing
yield, and early-stage investigations into carbon off-take
proposals involving the liquification and storage of carbon dioxide
AD plants.
Continued progress with the Group's value enhancement programme
from successful hardware upgrades on certain wind assets, and
software upgrades which enhanced the analytical and performance
monitoring feedback, identifying potential repairs earlier and
reducing project downtime.
BOARD LEADERSHIP AND COMPANY PURPOSE
The Board places a high degree of importance on ensuring that
high standards of corporate governance are maintained throughout
the Group.
Duties and responsibilities
The Board's annual cycle includes at least six scheduled
meetings per year and, should the nature of the activity of the
Company require it, additional meetings may be scheduled, some at
short notice. Between meetings there is regular contact with the
Investment Manager and the Administrator and the Board requires
information to be supplied in a timely manner by the Investment
Manager, the Company Secretary and other advisers in a form and of
a quality appropriate to enable it to discharge its duties, and in
a timely manner to enable full and proper consideration to be given
to the relevant issues. Outside of the formal meeting schedule,
informal sessions are held between the Board and an annual strategy
day is held by the Board with key advisers.
The Board has overall responsibility for the management of the
Company's affairs. Whilst discretionary management authority has
been delegated to the Investment Manager, the Board has adopted a
set of reserved powers which set out the particular areas where the
Board wishes to retain control. Such reserved powers include
decisions relating to the determination of investment policy and
approval of certain investment transactions, strategy, capital
raising, statutory obligations and public disclosure, financial
reporting, entering into any material contracts by the Company and
overseeing the Company's sustainability strategy.
The Board actively promotes a culture of openness, constructive
challenge and debate in the boardroom, underpinned by robust
internal controls and governance frameworks. Assessment of the
personality types of Board Directors and their cognitive and
interpersonal skills forms part of the Board's consideration of the
expected future leadership needs of the Company. In considering
these needs, the Board seeks to ensure that the practices and
behaviour throughout the Company's operations remain aligned with
the Company's purpose, values and strategy. No corrective actions
were taken during the year in response to matters arising which did
not meet the Board's expected standards.
An Investment Management Agreement between the Company and the
Investment Manager sets out the matters over which the Investment
Manager has delegated authority, including monitoring and managing
the existing investment portfolio, risk management, taking
investment decisions within the agreed parameters and also the
limits on cost and expenditure above which Board approval must be
sought. All other matters are reserved for approval by the Board of
Directors.
In contributing to the delivery of the Company's strategy, the
Board maintains a high level of engagement with the Investment
Manager and seeks to work in a collegiate and co-operative manner,
whilst encouraging open discussion, challenge and debate of all
significant matters relevant to the Investment Manager's delegated
authority. In addition to the Board's cycle of scheduled meetings,
members of the Board regularly attend fortnightly operational
update meetings hosted by the investment management team.
The Directors are expected to devote such time as is necessary
to enable them to discharge their duties. Where necessary, in
carrying out their duties, the Directors may seek independent
professional advice at the expense of the Company. The Company
maintains appropriate Directors' and Officers' liability insurance
in respect of legal action against its Directors on an ongoing
basis.
The Board has responsibility for ensuring that the Company keeps
proper accounting records which disclose with reasonable accuracy
at any time the financial position of the Company and which enable
it to ensure that the financial statements comply with The
Companies (Guernsey) Law, 2008, as amended. It is the Board's
responsibility to present a fair, balanced and understandable
assessment, which extends to interim and other price - sensitive
public reports.
Board operation
The overall management of the Company is the responsibility of
the Board, which exercises all the powers of the Company subject to
the relevant statutes, the Company's Articles of Incorporation, and
any directions given by resolutions passed by shareholders. The
Articles empower the Board to allot, grant options, warrants or
other rights over or otherwise dispose of the Company's shares as
the Board determines. The law permits the Company to make market
purchases of its own shares if the purchase has first been
authorised by a resolution of the Company.
Shareholders authorised the renewal of the Board's authority to
allot ordinary shares at the 2021 AGM and, subject to certain terms
and conditions, to repurchase ordinary shares on behalf of the
Company. Similar authorities are being sought at the forthcoming
AGM and details are set out in the notice of AGM.
The Board's annual cycle includes quarterly meetings where the
Directors follow a formal agenda which is fixed in advance and
standing agenda items at each quarterly meeting cover each area
where the Board has reserved decision-making power, in addition to
receiving reports from key service providers on portfolio
performance, asset valuations and enhancements, operational
matters, business development and capital allocation, ESG matters,
risk management, peer group information, regulatory and industry
developments. The Board actively monitors the environment in which
the Company operates to ensure any developments which may affect
the Company are considered. Strategy sessions are held at least
annually and are co-ordinated by the Investment Manager and key
advisers, which include site visits and technical briefings. The
Board's annual cycle also includes a dividend policy review session
and setting the target for the next financial year.
In order to discharge their duties and to operate effectively as
a Board, the Directors have full and timely access to all relevant
information concerning the Company.
The principal matters considered by the Board during the year
(including attending to matters formally reserved for its decision
making) included:
-- the appointment of Foresight as AIFM and the parameters of their revised mandate;
-- the strategic direction of the Company and the compatibility
of emerging technologies within the revised investment policy;
-- composition of the Board, diversity and succession planning;
-- the Annual Report and audited financial statements and the Half-year Report;
-- the dividend policy;
-- the activities of the Board's formally constituted
committees, including the formation of the ESG Committee;
-- the valuation policy, the recognition of value enhancements,
the inclusion of capture discounts and the ongoing appropriateness
of the blended power curve; and
-- the risk management framework and the principal risks facing the Company.
Committees of the Board
The Board has not deemed it necessary to appoint a separate
remuneration committee as, being comprised of six Directors, it
considers that such matters may be considered by the Board as a
whole. At the launch of the Fund, the remuneration of the Board was
fixed after consultation with independent external advisers and in
subsequent years the Board has reviewed the remuneration levels for
the Company and received industry comparison information from
advisers in respect of Directors' remuneration. The Company's
remuneration policy was last subject to a full independent review
in May 2022. As noted in the Directors' remuneration report on
pages 145 and 146 of the Annual Report 2022, an external review of
remuneration levels was undertaken subsequent to the financial year
end and recommendations for fee levels to apply from the financial
year commencing April 2022 will be proposed to shareholders as part
of the remuneration policy at the 2022 annual general meeting.
Following Foresight's appoint as AIFM, the Board will meet to
consider any investment proposals which fall outside of Foresight's
delegated authority (explained in further detail on page 31 of the
Annual Report 2022). The Board ensures compliance with the terms of
the investment policy of the Company and will consider and decide
on any changes to the investment policy (subject to obtaining the
relevant shareholder approvals), including geographical and
sectorial spread of investments, risk profile, investment
restrictions and the approach to project selection.
Prior to January 2022 the Board was responsible for making
discretionary management decisions in respect of the investment
portfolio (with reference as necessary to advice provided by
Foresight Group, which at that time acted as the Company's
Investment Adviser). In connection with Foresight's appointment as
discretionary Investment Manager, the Board and Foresight agreed
specific delegation parameters against which investment proposals
are to be assessed. In cases where the parameters are exceeded, the
transaction qualifies as a "Board Approval Transaction", therefore
falling outside the scope of Foresight's delegated authority.
Further details of Foresight's delegated authority are set out on
page 31 of the Annual Report 2022.
The Board as a whole also fulfils the functions typically
carried out by a management engagement committee. The Board reviews
and makes recommendations on any proposed amendment to the
Investment Management Agreement and keeps under review the
performance of the Investment Manager. The Board also performs a
review of the performance of other key service providers to the
Fund and meets at least once a year to undertake a qualitative
performance review. In the case of each service provider, the
review seeks to ensure that:
-- the terms of engagement remain fair and reasonable in the
context of the Company and the market;
-- their objectives remain aligned with those of the Company;
-- they have not been subject to any adverse event which may
present additional risk to the Company;
-- they remain appropriately incentivised to perform their duties to a high standard; and
-- their continued engagement remains in the best interests of the Company as a whole.
The Board notes the supporting guidance provided under provision
17 of the 2019 edition of the AIC Code on means by which investment
companies may assess the relationship with the manager. During
2021, the Board reviewed the Company's position against each of the
suggested considerations and concluded that the relationship was
operating effectively, that the duties of the Investment Manager
remained aligned with the objectives of the Company and that the
continued retention of the Investment Manager's services remained
in the best interests of the Company.
Audit Committee
The Company has established an Audit Committee, chaired by
Stephanie Coxon, which operates within clearly defined terms of
reference and comprises three non - executive Directors: Stephanie
Coxon, Alan Bates and Richard Ramsay, whose qualifications and
experience are noted on pages 122 and 123 of the Annual Report
2022. All members of the Audit Committee are independent Directors
and have no connections with the external auditor. The Audit
Committee meets at least three times a year, at times appropriate
to the financial reporting calendar.
Further details of the membership and activities of the Audit
Committee are described in this report on pages 139 to 123 of the
Annual Report 2022.
Audit Committee performance evaluation
For the financial year ended 31 March 2022, the Board is
undertaking an internal evaluation of the performance of the Audit
Committee. The evaluation process will include feedback from all
Committee members on the Committee's discharge of the duties
delegated under its terms of reference, and on the performance and
effectiveness of the Audit Committee Chair.
External audit
The Audit Committee is satisfied with the quality effectiveness
and independence of the audit process, and the effectiveness of the
recent audit and the performance of the external auditor is
reviewed annually. The review process includes receiving feedback
from all key personnel involved in the audit process and in the
production of the annual financial statements. Any findings from
the audit effectiveness review are communicated to the external
auditor in advance of their next engagement and considered as part
of the subsequent audit planning process.
The Directors are not aware of any circumstances which would
affect the recommendation that Deloitte be reappointed as external
auditor for the year ending 31 March 2023, expected to be confirmed
by the Board in the notice of the 2022 annual general meeting. The
Audit Committee also recommends the role of the external auditor is
retendered every 10 years, with the audit partner changing every
five years.
Risk Committee
The Company has also established a Risk Committee, which is
chaired by Hans Joern Rieks and comprises four non - executive
Directors: Hans Joern Rieks, Alan Bates, Jo Harrison and Stephanie
Coxon. The duties of the Risk Committee include the identification,
measurement, management and monitoring of all risks relevant to the
Company's investment strategy and to which the Company is or may be
exposed. Drawing from this, the Risk Committee is responsible for
determining the principal risks to which the Company is exposed,
being those most likely to threaten the business model, future
performance, solvency or liquidity. It is the responsibility of the
Risk Committee to advise the Board on the overall risk appetite,
tolerance and strategy of the Company, and to oversee the Company's
current risk exposures and the controls in place to mitigate those
risks. The Risk Committee meets at least four times per year.
Nomination Committee
The Nomination Committee, chaired by Richard Morse, comprises
three non - executive Directors: Richard Morse, Hans Joern Rieks
and Stephanie Coxon. The Nomination Committee's main function is to
regularly review the structure, size and composition of the Board
and to consider succession planning for Directors. The Nomination
Committee meets at least twice per year.
ESG Committee
The ESG Committee, chaired by Jo Harrison, comprises three
non-executive Directors: Jo Harrison, Richard Morse and Hans Joern
Rieks. The ESG Committee's main functions include guiding and
monitoring the development of the Company's sustainability and ESG
strategy, agreeing the Company's ESG objectives and monitoring
progress against the KPIs linked to each objective. The ESG
Committee will also assess and prioritise ESG risks and
opportunities for the Company, including assessing climate change
risks, and working with the Risk Committee and the Investment
Manager to ensure climate governance is integrated into the
Company's risk management.
Separate reports from the Audit, Risk, Nomination on their
activities for the year are set out on pages 135 to 144 of the
Annual Report 2022. The terms of reference for each of the
Committees are available on the Company's website or upon request
from the Company Secretary.
Directors' attendance
The attendance record of Directors for the year to 31 March 2022
is set out below.
Board Audit Risk Nomination ESG
meeting Committee Committee Committee Committee(1)
--------------------------------------------- ------- --------- --------- ---------- ------------
Number of meetings held 4 5 4 2 2
--------------------------------------------- ------- --------- --------- ---------- ------------
Richard Morse 4 - - 2 2
Stephanie Coxon 4 5 4 -(2) -
Peter Neville (resigned on 2 September 2021) 2 3 2 2 -
Richard Ramsay 4 5 - - -
Hans Joern Rieks 4 - 4 1 2
Alan Bates (appointed on 10 June 2021) 3 3(3) 3(4) - -
Jo Harrison (appointed on 10 June 2021) 3 - 3(5) - 2
--------------------------------------------- ------- --------- --------- ---------- ------------
(1) Jo Harrison, Hans Joern Rieks and Richard Morse were members
of the ESG Committee from its formation on 2 September 2021.
(2) Stephanie Coxon was a member of the Nomination Committee from 2 September 2021.
(3) Alan Bates was a member of the Audit Committee from 2 September 2021.
(4) Alan Bates was a member of the Risk Committee from 2 September 2021.
(5) Jo Harrison was a member of the Risk Committee from 2 September 2021.
A total of 18 other unscheduled Board meetings were held during
the year for specific purposes, which were attended by some, but
not all, of the Directors.
RELATIONS WITH SHAREHOLDERS
The Board encourages active engagement with shareholders and the
investment community.
Dialogue with shareholders
The Company welcomes the views of all shareholders and places
great importance on effective communication with its shareholders
through a variety of channels. The Investment Manager produces a
quarterly factsheet which is available on the Company's website.
The Chairman and senior members of the Investment Manager make
themselves available, as practicable, to meet with principal
shareholders, key sector analysts or other key stakeholders.
Meetings between institutional investors and the Investment Manager
are arranged periodically by the Company's broker and
representatives of the Company are open to meeting with all
investors, on request.
Feedback from these meetings is provided to the Board on a
regular basis. The Board is also kept fully informed of all
relevant market commentary on the Company by the Company's
financial PR agency, as well as receiving relevant updates from the
Investment Manager and the Company's broker.
Investor publications
All shareholders can address any feedback or queries concerning
the Company in writing at its registered address via the Company
Secretary.
The Chairman or the Senior Independent Director are willing to
meet with major shareholders to discuss any particular items of
concern or to understand their views on governance and the
performance of the Company, and the annual general meeting of the
Company provides a forum for shareholders to meet and discuss
issues with the Directors and the Investment Manager.
Company website
The Company's website, www.jlen.com, is regularly updated with
new information, research, videos and quarterly publications. The
Company's Prospectus, Key Information Document and Investor
Disclosure Document are all available for download. The Company
also maintains an issuer services page with the London Stock
Exchange, providing details of key contacts and corporate events
over the financial year.
Stakeholders, business relationships and socially responsible
investment
Section 172 statement
Whilst not directly applicable to companies incorporated outside
the UK, the Board recognises the intention of the AIC Code that
matters set out in Section 172 of the Companies Act 2006 are
reported.
The Board strives to understand the views of the Company's key
stakeholders and to take these into consideration as part of its
discussions and decision - making process. Additionally, the Board
promotes the success of the Company for the benefit of our members
as a whole as well as a broad range of stakeholders that we
recognise are material to the long - term success of the business.
We set out below the detail of how the Board has complied with its
duty under Section 172.
As an investment company, the Company does not have any
employees and conducts its core activities through third-party
service providers. Each provider has an established track record
and through regulatory oversight is required to have in place
suitable policies and procedures to ensure they maintain high
standards of business conduct, treat shareholders fairly and employ
corporate governance best practice. The stakeholders which the
Board has identified as being key are the Company's shareholders,
the Investment Manager, commercial service providers, asset-level
counterparties, local communities and debt providers. Understanding
the needs of each stakeholder group and ensuring the Company's
operations are conducted in a manner which recognises their
interests is crucial for ensuring the Company's long-term
sustainable success.
Further information on how the Company engages with stakeholders
can be found on pages 31 to 37 of the Annual Report 2022.
The Board's commitment to maintaining high standards of
corporate governance, combined with the Directors' duties enshrined
in company law, the constitutive documents, the Disclosure Guidance
and Transparency Rules, and the UK version of the Market Abuse
Regulation, provides shareholders with regular and detailed
announcements concerning the Company and its activities sufficient
for investors to make informed decisions concerning their
shareholding. A significant amount of time is dedicated at each
scheduled meeting to risk management and how effectively the
Company can preserve value for shareholders over the long term
through mitigating downside risk. Regular dialogue with the
Investment Manager and the corporate broker ensures the Board is
aware of the investment strategy and the views of major
shareholders and for these to be taken into consideration as part
of the Board's decision-making process.
Representatives of the Investment Manager are involved in the
governance framework of each project. This reinforces the effective
flow of relevant information to the Board on the activities of the
Company's significant counterparty exposures involved in operating
each project, and provides a communication channel through which
community stakeholders' views can be shared, considered at each
scheduled meeting of the Directors, and to ensure their interests
remain aligned with the objectives of the Company.
DIVISION OF RESPONSIBILITIES
The Board has overall responsibility for the management of the
Company's affairs.
Chairman
As Chairman, Richard Morse is responsible for leading the Board
and for ensuring its effectiveness in all aspects of its role.
Specific duties of the Chairman include demonstrating ethical
leadership, objective judgement, promoting the highest standards of
integrity, probity and a culture of openness and debate. The
Chairman sets the Board's agenda and ensures the Board has a clear
understanding of the views of those who provide the Company's
capital and that effective decision-making processes are in place,
supported by high - quality information, that take into
consideration the interests of all the Company's key
stakeholders.
The Chairman leads the annual performance evaluation of the
Board, with support from the Senior Independent Director, and acts
as appropriate on the results. One - on - one meetings are held
between the Chairman and the Directors each year, which provides an
additional forum through which any potential training needs are
identified, experiences of the Company are shared, or other
relevant Board matters are addressed.
Senior Independent Director
Richard Ramsay is the Senior Independent Director and provides
support to the Chairman on matters of Board effectiveness,
governance, and acting as an intermediary for the Directors,
shareholders and other key stakeholders. The Senior Independent
Director also provides an additional channel of communication
through which stakeholders may voice concerns, works annually with
the other Directors on reviewing the performance of the Chairman,
and is responsible for leading the succession planning arrangements
for the Chairman.
Non-executive Directors
Including the Chairman and the Senior Independent Director, the
Company currently has six independent non-executive Directors.
The Company Secretary
The Directors have access to the advice and services of Sanne
Fund Services (Guernsey) Limited, the Company Secretary and
Administrator, which is responsible to the Board for ensuring that
Board procedures are followed and that it complies with Guernsey
law and applicable rules and regulations of the Guernsey Financial
Services Commission and the London Stock Exchange. The Company
Secretary is also responsible for the timely delivery of
information to the Board and ensuring that statutory obligations
are met.
Market Abuse Regulation
The Board has formally adopted procedures in relation to the
Company's obligations under the UK version of the Market Abuse
Regulation ("MAR"), including procedures for the identification,
management and disclosure of price sensitive information, share
dealing by persons discharging managerial responsibility and their
persons closely associated. The Board is responsible for overseeing
the Company's compliance with MAR, and ensuring compliance with MAR
by the Directors.
AIFM Directive
The Company is categorised as an externally managed non - EEA
AIF for the purposes of the Alternative Investment Fund Managers
Regulations 2013 and the AIFM Directive. The Investment Manager has
received authorisation from the FCA to act as AIFM to the Company.
The Board has delegated responsibility for the Company's risk
management and portfolio management functions to the Investment
Manager, subject to specific delegation parameters described in the
Investment Management Agreement.
Although the Board delegates discretionary management authority
to the Investment Manager, it actively and continuously supervises
the Investment Manager in the performance of its functions and
reserves the right to take decisions in relation to the overall
investment and risk management policies and strategies of the
Company or to terminate the appointment of the Investment Manager
(subject to the terms of the Investment Management Agreement). The
Board has the right to request additional information or updates
from the Investment Manager in respect of all delegated matters,
including in relation to the identity of any sub - delegates and
their sphere of operation.
AIFM Directive disclosures
The Company is required, pursuant to Regulation 597(2) of the
Alternative Investment Fund Managers Regulations 2013 and Article
42(1)(a) of the AIFM Directive, to make certain specified
disclosures to prospective investors prior to their investment in
the Company, in accordance with the FCA's Investment Funds
sourcebook and Article 23 of the AIFM Directive (the "Article 23
Disclosures"). The Company has published an investor disclosure
document on its website (www.jlen.com) for the purposes of making
the Article 23 Disclosures available to prospective investors prior
to their investment in the Company.
During the financial year ended 31 March 2022, there was one
material change to the Article 23 Disclosures made available on the
Company's website, when the Company appointed Foresight as
Investment Manager on 11 January 2022, as detailed further in this
report.
AIFM Remuneration
The Investment Manager is categorised by the FCA as a Collective
Portfolio Management Investment ("CPMI") firm and is accordingly
subject to certain provisions of the FCA's AIFM Remuneration Code
and MIFIDPRU Remuneration Code for its MiFID business (the
"Remuneration Code").
The Investment Manager's Remuneration Policy (the 'Policy')
applies to all staff whose professional activities have a material
impact on the risk profiles of the Investment Manager or of the
funds it manages, including the Company. This includes senior
management, risk takers, control functions and any employee/member
receiving total remuneration that takes them into the same
remuneration bracket as senior management and risk takers.
The Manager's Remuneration Code Staff have been identified
as:
-- partners as members of the management body, of those
responsible for the prevention of money laundering and terrorist
financing and managerial responsibility for business units,
departments and teams; and
-- Directors/ Heads of Teams, including senior staff responsible
for investment management, IT, risk management and those with
authority to take decisions on the introduction of new
products.
The Investment Manager ensures that the Policy is consistent
with and promotes, sound and effective risk management and does not
encourage risk-taking which is inconsistent with the risk profile
of the funds it manages, including the Company. The Manager
recognises the importance of an effective remuneration policy in
order to attract, motivate and retain individuals of the necessary
ability and experience and to reward individuals both on an annual
basis and over the long term for their contributions to the success
of the Investment Manager, the Company and the Company's portfolio
of assets.
The Investment Manager ensures that were remuneration is
performance related, the total amount of remuneration is based on a
combination of the assessment of the performance of the individual
and of the Company (as an AIF) and of the Manager's overall
results. When assessing individual performance, financial and
non-financial criteria are considered. Variable remuneration
consists of bonus payments of employees.
The Investment Manager has an established Employee Remuneration
Committee to oversee the implementation of its remuneration
policies and practices established under the Remuneration
Codes.
The Company does not have any employees. The services in this
regard are provided by staff members of the Investment Manager in
its role as AIFM.
In accordance with the Alternative Investment Fund Managers
Regulations 2013 and related FCA rules, the Manager is required to
make certain remuneration disclosures available to investors and
the FCA. In accordance with these obligations, the Investment
Manager's Policy and the numerical remuneration disclosures in
respect to the relevant reporting period are available from the
Investment Manager on request.
Non-mainstream pooled investments
The Board notes the rules of the UK FCA on the promotion of
non-mainstream pooled investments.
The Board confirms that it conducts the Company's affairs, and
intends to continue to do so, in order that the Company's shares
will be excluded securities under the FCA's rules. This is on the
basis that the Company, which is resident outside the EEA, would
qualify for approval as an investment trust by the Commissioners
for HM Revenue and Customs under Sections 1158 and 1159 of the
Corporation Tax Act 2010 if resident and listed in the United
Kingdom. Therefore, the Company's shares will not amount to non -
mainstream pooled investments. Accordingly, promotion of the
Company's shares will not be subject to the FCA's restriction on
the promotion of non-mainstream pooled investments.
Significant voting rights
Details of shareholders with notifiable interests in the voting
rights of the Company can be found on page 149 of the Annual Report
2022.
Share repurchase
Subject to the provisions of the law and the Company's Articles
of Incorporation, the Company may purchase all or any of its shares
of any class, including any redeemable shares, and may hold such
shares as treasury shares or cancel them. During the year no shares
were acquired by the Company.
Amendment to the Company's Articles of Incorporation
Subject to the provisions of the law and the Company's Articles
of Incorporation, the Company's Articles can be amended by special
resolution.
COMPOSITION, SUCCESSION AND EVALUATION
Nomination Committee Report
The Board ensures it has the appropriate balance of skills,
experience, diversity and knowledge to operate effectively.
Committee members
Richard Morse
Chair of the Nomination Committee
Hans Joern Rieks
Director
Stephanie Coxon
Director
The Board of Directors has established a Nomination Committee
from the non - executive Directors of the Company. The Nomination
Committee, chaired by Richard Morse, operates within clearly
defined terms of reference which are considered and are then
referred to the Board for approval. A copy of the terms of
reference is available on the Company's website or upon request
from the Company Secretary.
The main roles and responsibilities of the Nomination Committee
are to:
-- regularly review the structure, size and composition of the
Board and make recommendations to the Board with regard to any
changes, based on merit and objective criteria (including skills,
knowledge and experience, and promoting diversity of gender, social
and ethnic backgrounds, cognitive and personal strengths);
-- give full consideration to succession planning for Directors,
ensuring effective plans are in place for orderly succession to the
Board and to oversee the development of a diverse pipeline for
succession, taking into account the challenges and opportunities
facing the Company; and
-- lead the process for appointments and be responsible for
identifying and nominating for the approval of the Board,
candidates to fill Board vacancies as and when they arise.
The Nomination Committee reports formally to the Board on its
proceedings on all matters within its duties and responsibilities
and how it has discharged its responsibilities. The Committee
typically meets at least twice a year and at such other times as
the Nomination Committee Chair shall require. Other Directors and
third parties may be invited by the Nomination Committee to attend
meetings as and when appropriate.
The initial and all subsequent members of the Board are selected
following a comprehensive recruitment exercise with the aim of
establishing a Board with the skills, knowledge, experience and
diversity necessary for providing effective leadership and
maintaining a governance framework suitable for the nature, scale
and complexity of the Company.
The Nomination Committee met twice during the financial year.
Matters considered by the Committee during the year included, but
were not limited to:
-- the Company's policy on diversity, ensuring this remained
aligned with the Company's strategy and objectives;
-- Director succession planning;
-- Director training;
-- the time requirements and independence of Directors; and
-- consideration and agreement of the terms of reference of the
Nomination Committee for approval by the Board.
Four meetings of the Nomination Committee were held during the
previous financial year, which achieved significant progress in
implementing the Board's succession plans, notably the appointments
of Alan Bates and Jo Harrison in September 2021, broadening the
operational, utilities industry and environmental skill sets
represented on the Board whilst also broadening its diversity.
In early 2022, the Nomination Committee was notified of the
intention of Richard Morse to retire from the Board, having served
as Chairman since the Company's inception and in December 2022
would be reaching his ninth year on the Board. In accordance with
the Board's succession plan, the Committee engaged a third party,
Savannah Partners Limited, to support a comprehensive recruitment
exercise to identify potential candidates to succeed Richard as
Board Chairman. The process is in advanced stages and the Committee
looks forward to announcing the outcome of the recruitment exercise
in due course.
Richard Ramsay has also indicated that, in line with the
Company's succession planning, he will be retiring from the Board
by the end of the calendar year. Savannah Partners have also been
retained to identify potential candidates to succeed him.
Savannah Partners Limited has no other connections with the
Company or its individual Directors.
A further meeting of the Nomination Committee was held
subsequent to the financial year end to receive and consider the
findings of the Board evaluation concerning the size, structure and
composition of the Board and the appropriateness of the current mix
of skills, knowledge and experience for its current activities, and
how effectively members of the Board work together to achieve their
objectives. No material areas for improvement or matters requiring
further attention were identified in the findings from the Board's
internal performance evaluation.
The Nomination Committee continues to maintain and develop the
Board's succession planning arrangements to ensure the arrangements
remain effective, and that a diverse pipeline for succession is
maintained which remains aligned with the Company's strategy and
future leadership needs. The Board is committed to maintaining at
least 40% female representation, and having at least one Board
member from an ethnic minority background before the December 2024
target.
Board succession timeline 2022
31 March 2022 31 July 2022 1 September 2022
-------------------------------- --------------------------- ---------------------------
At the year end, the During July 2022 the At the Company's AGM
Board consisted of six Board expects to announce on 1 September 2022,
non-executive Directors: the outcome of the Board's Richard Ramsay will retire
recruitment exercise from the Board, and will
* Chairman - Richard Morse; and the successor to not stand for re-election.
Richard Morse. All other Directors will
stand for re-election
* SID - Richard Ramsay; at the AGM.
* Stephanie Coxon;
* Alan Bates;
* Jo Harrison; and
* Hans Joern Rieks.
-------------------------------- --------------------------- ---------------------------
Board independence and composition
The Board consists of six Directors, all of whom are non -
executive and independent of the Company's Investment Manager and
other key service providers. Board independence is formally
reviewed annually against the factors suggested in the AIC Code as
likely to impair, or could appear to impair, independence, in
addition to any other relevant considerations. The Board considers
all of the Directors, including the Chairman, to be independent.
The Directors' details are contained on pages 122 and 123 of the
Annual Report 2022 and set out the range of investment, financial
and business skills and experience represented. Richard Morse has
been appointed Chairman and Richard Ramsay Senior Independent
Director.
The Board believes that the Directors provide the appropriate
balance of skills, knowledge and diversity necessary to manage the
affairs of the Company and to operate effectively as a Board.
Biographical details of the Directors are provided on pages 122 and
123 of the Annual Report 2022. The composition of the Board is
formally reviewed annually by the Nomination Committee with the
objective of ensuring that it meets the current and expected future
leadership needs of the Company. The Board's formal performance
evaluation also provides feedback from the Directors on aspects of
the Board's operation where greater effectiveness may be
achieved.
Tenure, succession planning and induction
The tenure of all Directors, including the Chairman, is expected
not to exceed nine years unless exceptional circumstances warrant,
such as to allow for phased Board appointments and retirements and
to ensure that the Board remains well balanced and that the skills,
knowledge and experience of the Board is refreshed at appropriate
intervals.
In 2019 the Board began the implementation of its succession
plan which involved a staged process of rotating the Directors
first appointed at the Company's launch. In accordance with
corporate governance best practice as set out in the AIC Code, each
Director will be subject to annual re - election by shareholders at
the annual general meeting. The Board maintains a succession
roadmap which documents the plans in place for a gradual phasing of
the Board and to avoid any undue disruption which may arise if more
than one Director were to retire within a short space of time.
On appointment to the Board, new Directors will be provided with
an induction pack by the Company Secretary containing all relevant
information regarding the Company, its history, operations, key
relationships, and their duties and responsibilities as Directors.
New appointees meet with each of the Directors and with
representatives of the Investment Manager. The Chairman is
responsible for agreeing the programme of induction training with
new appointees, and that any training needs of the existing
Directors are addressed.
The Nomination Committee is responsible for ensuring that a
diverse pipeline for succession is maintained, relevant to the
future leadership needs of the Company.
Board diversity
The Board supports the recommendations issued by the FTSE Women
Leaders Review (building on the work of the former
Hampton-Alexander and Davies Reviews) and the Listing Rule
requirement introduced in April 2022 requiring listed companies to
target at least 40% female board representation. The Board further
notes the recommendations of the Parker Review to have at least one
member of the Board from an ethnic minority background by December
2024.
The Board considers diversity in all its forms as part of its
succession planning and the Directors are committed to maintaining
a gender-balanced board, in addition to achieving the
recommendations of the Parker Review in advance of December 2024.
Acting on the findings from the Nomination Committee's review of
the size, structure and composition of the Board, the Directors
were pleased to announce the appointments of Alan Bates and Jo
Harrison in June 2021.
No Director has a service contract with the Company and the
terms and conditions of appointment for each of the Directors are
set out in writing between each individual and the Company. Copies
of the relevant appointment letters are available for inspection at
the Company's registered office.
Conflicts of interest
The Directors have undertaken to notify the Company Secretary as
soon as they become aware of any actual or potential new conflict
of interest. Only Directors who have no material interest in the
matter being considered will be able to participate in the Board
approval process. Other business relationships, including those
that conflict or may potentially conflict with the interests of the
Company, are taken into account when appointing Board members and
are monitored on a regular basis. The terms of each Director's
appointment letter with the Company requires that they seek prior
approval from the Board before taking up any additional external
appointments.
The Board recognises the holdings of ordinary shares in the
Company held by each of Richard Morse, Richard Ramsay, Stephanie
Coxon and Hans Joern Rieks, details of which are set out on page
150 of the Annual Report 2022. The Board considers these interests
at each scheduled meeting and remains satisfied that they do not
affect the ability of the Directors to exercise independent
judgement or their objectivity.
Performance and evaluation
The JLEN Board has adopted a process to review its performance
on a regular basis and such reviews are carried out internally on
an annual basis, with externally facilitated evaluation expected to
take place every three years. The annual evaluation of the Board
and the performance of its committees has taken the form of
questionnaires and discussion to assess Board effectiveness and
individual Director performance in various areas. The review of the
Chairman's performance is led by the Senior Independent
Director.
The last externally facilitated performance evaluation was
undertaken by Aspida Advisory Services Limited in respect of the
financial year ended 31 March 2020. The findings from the external
review were generally satisfactory and no material deficiencies
were identified. The next externally facilitated Board evaluation
will take place in 2023.
For the financial year ended 31 March 2022, the Directors
undertook an internal evaluation of the Board. The evaluation
process covered the composition of the Board and meeting process,
Board information, training and development, Board dynamics,
accountability and effectiveness.
Additional reviews were undertaken in respect of the performance
and effectiveness of the Chairman, and of the Audit Committee.
Certain points identified during the assessment which we have
agreed to take forward in the coming year include:
-- broadening the diversity of the Board with the objective of
meeting the targets set by the Parker Review before December
2024;
-- implementing a remuneration policy which better reflects
market practice and the time commitment and demands placed on the
Directors (as further explained in the Directors' Remuneration
report); and
-- certain enhancements to the Company's induction programme for
new Directors, based on the learning gained during stages of the
pandemic lockdown.
AUDIT, RISK AND INTERNAL CONTROL
Audit Committee report
Stephanie Coxon, Chair of the Audit Committee, is pleased to
present the Audit Committee report for the year ended 31 March
2022.
Committee members
Stephanie Coxon
Chair of the Audit Committee
Alan Bates
Director
Richard Ramsay
Director
The Audit Committee is appointed by the Board from the non -
executive Directors of the Company. The Audit Committee, chaired by
Stephanie Coxon, operates within clearly defined terms of reference
and includes all matters indicated by Disclosure Guidance and
Transparency Rule 7.1 and the UK Corporate Governance Code. The
terms of reference are considered by the Audit Committee at each
meeting and any changes are then referred to the Board for
approval. A copy of the terms of reference is available on the
Company's website or upon request from the Company Secretary.
Summary of the roles and responsibilities of the Audit
Committee
The main roles and responsibilities of the Audit Committee
are:
-- monitoring the integrity of the financial statements of the
Company and any formal announcements relating to the Company's
financial performance and reporting to the Board on significant
financial reporting issues and judgements contained therein;
-- reviewing the content of the Half - year and Annual Reports
and financial statements and advising the Board on whether, taken
as a whole, it is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company's
position, performance, business model and strategy;
-- agreeing with the external auditor the audit plan and
reviewing the auditor's report related to the Half - year Report
and the Annual Report and financial statements;
-- maintaining the Company's policy on the provision of
non-audit services by the external auditor;
-- reviewing and recommending for approval the audit,
audit-related and non-audit fees payable to the external auditor
and the terms of their engagement;
-- taking into account the principal risks, reviewing the
long-term viability and going concern statements, including the
underlying documentation prepared by the Investment Manager;
-- reviewing, in conjunction with the Risk Committee, the
adequacy and effectiveness of the Company's internal financial
controls and internal control and risk management systems;
-- reviewing the adequacy and security of the Company's arrangements for regulatory compliance, whistleblowing and fraud, recognising that responsibilities for whistleblowing arrangements reside with the Board as a whole;
-- making recommendations to the Board, to be put to
shareholders for approval at the annual general meeting, in
relation to the appointment, re - appointment and removal of the
Company's external auditor; and
-- assessing annually the effectiveness of the audit process and
the external auditor's independence and objectivity taking into
account relevant professional and regulatory requirements and the
relationship with the auditor as a whole, including the provision
of any non - audit services and the effectiveness of the audit
process.
The Audit Committee reports formally to the Board on its
proceedings on all matters within its duties and responsibilities
and how it has discharged its responsibilities.
Meetings
The Audit Committee meets at least three times a year and at
such other times as the Audit Committee Chair shall require.
In addition to the Audit Committee meeting formally with the
external auditor, the Chair of the Audit Committee has met them
informally on six further occasions and the independent valuations
specialists three times.
These informal meetings have been held to ensure the Audit
Committee Chair is kept up-to-date with the progress of their work
and that their formal reporting meets the Audit Committee's needs.
Any member of the Audit Committee may request that a meeting be
convened by the Company Secretary.
The external auditor may request that a meeting be convened if
it is deemed necessary.
Other Directors and third parties may be invited by the Audit
Committee to attend meetings as and when appropriate.
Annual general meeting
The Audit Committee Chair attends the annual general meeting to
answer shareholder questions on the Committee's activities.
Significant issues
The Audit Committee considered the following significant issues
during the year and in relation to the financial statements:
Valuation of investments
The Company is required to calculate the fair value of its
investments. Whilst a relatively high volume of transactions for
investments of this nature take place, there is not a suitable
listed or other public market in these investments against which
their value can be benchmarked. As a result, a valuation is
performed based on a discounted cash flow methodology in line with
IFRS 13 Fair Value Measurement.
The calculation of the fair value of the investments carries
elements of risk, mainly in relation to the assumptions and factors
such as:
-- the determination of the appropriate macroeconomic
assumptions underlying the forecast investment cash flows;
-- the determination of the appropriate assumptions regarding
future power prices, inflation forecasts, energy generation and
volumes underlying the forecast investment cash flows;
-- the determination of appropriate sensitivities to apply to meet the required disclosures;
-- the impact of project-specific matters on the forecast cash flows for each investment;
-- the determination of the appropriate discount rate for each
investment that is reflective of current market conditions;
-- the tax deductibility of interest expense under the Base
Erosion and Profit Shifting ("BEPS") legislation;
-- the underlying project financial models may not reflect the
underlying performance of the investment;
-- terms and costs of the future refinancing of senior debt on certain projects;
-- the cash flows from the underlying financial models may not
take into account current known issues; and
-- the updates performed on the underlying financial models may
result in errors in forecasting.
The Audit Committee is satisfied that the Investment Manager's
assumptions have been reviewed and challenged for:
-- the macroeconomic assumptions, including inflation and the
comparison of these assumptions to observable market data, actual
results and prior year comparatives;
-- the electricity price, gas price, energy generation and
volume assumptions, including the comparison of these assumptions
to observable market data, actual results and prior year
comparatives; and
-- the build - up of the discount rates for consistency and
reasonableness, benchmarking against market data and peers and
project-specific items.
The Audit Committee is also satisfied that the portfolio
valuation and associated disclosures have been audited for
mechanical accuracy, ensuring that the investments are brought on
balance sheet at fair value and that the independent valuation
carried out by an independent firm has been reviewed and challenged
by the Audit Committee, Board, and by the auditor.
Internal audit
The Audit Committee considers at least once a year whether or
not there is a need for an internal audit function. Currently, the
Audit Committee does not consider there to be a need for an
internal audit function specific to the Company, given that there
are no employees in the Company and the systems and procedures
employed by the Administrator and Investment Manager, including
their own internal controls and procedures in place in relation to
the Company and its subsidiaries, provide sufficient assurance that
a sound system of internal control, which safeguards the Company's
assets, is maintained.
External audit
Deloitte LLP has been the Company's auditor since incorporation
on 12 December 2013 and this is the eighth set of financial
statements on which it has expressed an audit opinion.
The Audit Committee has assessed the quality and the
effectiveness of the audit process. To draw its conclusions, the
Audit Committee reviewed:
-- the scope of the audit, the audit fee and the external
auditor's fulfilment of the agreed audit plan;
-- the degree of diligence demonstrated by them in the course of
their interaction with the Board, the Audit Committee and the
Administrator and Investment Manager;
-- the external auditor's assessment of the Group's principal risks; and
-- the report highlighting the matters that arose during the
course of the audit and the recommendations made by the external
auditor.
The Audit Committee has noted the recommendations under the UK
Code and the AIC Code to put the external audit out to tender every
five to 10 years. The Audit Committee has also noted the
requirements of the Competition and Markets Authority with respect
to external auditor services and retendering. This is the eighth
year of Deloitte's appointment as the Company's auditor.
The Audit Committee is satisfied with the quality, effectiveness
and independence of the audit process and it is recommended to the
Board that Deloitte LLP be reappointed as external auditor for the
year ending 31 March 2023. Following this year's audits, a detailed
auditor evaluation of the external auditors will be undertaken.
This evaluation will include obtaining feedback from senior finance
personnel who were exposed to the audit process to obtain their
input on the effectiveness of the external audit process
Non - audit services
The Audit Committee considered the extent of non - audit
services provided by the external auditor. The Company has adopted
a formal policy in relation to the provision of non-audit services,
pursuant to which the external auditor's objectivity and
independence is safeguarded through limiting non - audit services
to their role as reporting accountants for capital raising services
and in relation to the half - year interim review, subject to a
cap.
The Company paid GBP37,432 during the year for non - audit
services to Deloitte LLP, all in relation to the half - year
interim review.
Internal control
The Board is responsible for the Company's system of internal
control and for reviewing its effectiveness, and the Board has
therefore established an ongoing process designed to meet the
particular needs of the Company in managing the risks to which it
is exposed.
The process is based on a risk - based approach to internal
control through a matrix which identifies the key functions carried
out by the Investment Manager, Administrator and other key service
providers, the various activities undertaken within those
functions, the risks associated with each activity and the controls
employed to minimise and mitigate those risks and the risks at the
operating companies. The Audit Committee works in close co -
operation with the Risk Committee, with the prime responsibility of
the Audit Committee being the review of internal financial controls
and processes, and of the Risk Committee being the principal risks
and uncertainties facing the Company. A separate report on the
activities of the Risk Committee is set out on pages 143 and 144 of
the Annual Report 2022.
Activities of the Audit Committee
The Audit Committee met on five occasions during the year ended
31 March 2022. Matters considered at these meetings included, but
were not limited to:
-- reviewing the independent internal controls assurance process
put in place by the Investment Manager;
-- meeting with the independent valuation provider and with the
external auditor without representatives of the Investment Manager
present to receive their views in relation to the half-year and
year-end valuation and the appropriateness and implementation of
the Company's asset valuation methodology;
-- monitoring the ongoing appropriateness of the Company's blended power price curve;
-- reviewing the reappointment of the external auditor;
-- reviewing the effectiveness of the external auditor and the external audit process;
-- considering the short and long-term implications to asset
valuations and cash flows from the significant dislocation in
energy markets, rising inflation and interest rates;
-- reviewing the long-term viability and going concern
statements, including the underlying documentation;
-- approving the external audit fees;
-- considering and agreeing the terms of reference of the Audit
Committee for approval by the Board;
-- reviewing the proposed accounting policies and format of the financial statements;
-- reviewing the audit plan and timetable for the preparation of
the Annual Report and financial statements;
-- reviewing the Company's asset valuation methodology;
-- reviewing the independent valuation report; and
-- reviewing the 2022 Annual Report and financial statements and the 2021 Half - year Report.
No areas of significant disagreement or concern were highlighted
during the Audit Committee's activities during the year which
necessitated further action being taken outside of the Committee's
routine duties.
As a result of its work during the year, the Audit Committee has
concluded that it has acted in accordance with its terms of
reference.
Approval
On behalf of the Audit Committee:
Stephanie Coxon
Chair of the Audit Committee
15 June 2022
Risk Committee report
We are pleased to present the Risk Committee report for the year
ended 31 March 2022.
Committee members
Hans Joern Rieks
Chair of the Risk Committee
Stephanie Coxon
Director
Alan Bates
Director
Jo Harrison
Director
The Board of Directors has established a Risk Committee from the
non - executive Directors of the Company. The Risk Committee,
chaired by Hans Joern Rieks, operates within clearly defined terms
of reference and works closely with the Audit Committee in
monitoring the internal controls and risk management of the
Company.
The terms of reference are considered at least annually by the
Risk Committee and are then referred to the Board for approval. A
copy of the terms of reference is available on the Company's
website or upon request from the Company Secretary.
The main roles and responsibilities of the Risk Committee are
to:
-- when requested to do so, advise the Board on the overall risk
appetite, tolerance and strategy of the Fund, taking account of the
extent to which the risk profile of the Company corresponds to the
size, structure and objectives of the Company, in addition to the
current and prospective macroeconomic, financial and regulatory
environment, including relevant stakeholder issues;
-- oversee and advise the Board on the current risk exposures of
the Fund with particular focus on the Fund's principal risks, being
those which could influence shareholders' economic decisions, and
the controls in place to mitigate those risks;
-- keep under review the Fund's overall risk identification and
assessment processes and, in conjunction with the Audit Committee,
review the adequacy and effectiveness of the risk management
systems;
-- in conjunction with the Audit Committee, ensure that a
framework of strong corporate governance and best practice is in
place, which enables the Company to comply with the main
requirements of the Guernsey Code, UK Code or the AIC Code where
considered appropriate;
-- in conjunction with the ESG Committee, ensure the effective
integration of climate risk into the Company's risk management
framework;
-- when requested to do so, advise the Board on proposed
strategic transactions including acquisitions or disposals,
ensuring that a due diligence appraisal of the proposition is
undertaken, focusing in particular on risk aspects and implications
for the risk appetite and tolerance of the Fund, and taking
independent external advice where appropriate and available;
and
-- oversee the remit of the risk management function, its
resources, access to information and independence.
The Risk Committee reports formally to the Board on its
proceedings on all matters within its duties and responsibilities
and how it has discharged its responsibilities. The Committee must
meet at least four times a year and at such other times as the Risk
Committee Chair shall require. Other Directors and third parties
may be invited by the Risk Committee to attend meetings as and when
appropriate. The Risk Committee met four times in the year.
In order to assist it in fulfilling its role on behalf of the
Board, the Committee has established, in conjunction with the
Investment Manager, an ongoing process designed to meet the
particular needs of the Company in managing the risks to which it
is exposed. This is a risk - based approach through the maintenance
of a register which identifies the key risk areas faced by the
Company and the controls employed to minimise and mitigate those
risks. Scoring based on a traffic light system for likelihood and
impact is used to assess the significance to the Fund of each
individual risk. The register is updated quarterly and the
Committee considers all material changes to the risk ratings and
the action which has been, or is being, taken. By their nature,
these procedures will provide a reasonable, but not absolute,
assurance against material misstatement or loss.
Activities of the Risk Committee
The Risk Committee met on four occasions during the year ended
31 March 2022. Matters considered at these meetings included, but
were not limited to:
-- challenging the Investment Manager's views on risk movements during the period,
-- considering and agreeing the Company's principal risks;
-- monitoring developments with the Company's major counterparty exposures;
-- considering changes to the risk profile of the portfolio
arising from proposed investments in new asset classes or
geographies;
-- monitoring the development of emerging risks and assessing their impact on the Company;
-- agreeing the elevation of certain ESG-related risks into the risk management framework;
-- reviewing the effectiveness of the risk management function;
-- considering and agreeing the risk management responsibilities
transferring to Foresight on their appointment as AIFM; and
-- considering the regulatory risks associated with the
implementation of the TCFD and SFDR requirements.
REMUNERATION
Directors' remuneration report
Introduction
The Board has established separate Risk, Audit, ESG and
Nomination Committees to effectively oversee the activities of the
Group.
The Board has not deemed it necessary to appoint a remuneration
committee as, being comprised of six Directors, it considers that
such matters may be considered by the whole Board, provided that no
Director is involved in deciding their own remuneration.
The Board determines and agrees the policy for the remuneration
of the Directors of the Company, including the approval of any ad
hoc payments in respect of exceptional work required. No Director
is involved in determining his or her own remuneration.
As all Directors of the Company are non - executive, they
receive an annual fee appropriate for their responsibilities and
time commitment, but no other incentive programmes or
performance-related emoluments.
At IPO, the remuneration of the Board was fixed after
consultation with independent external advisers. The remuneration
policy is reviewed annually by the Directors to ensure it remains
appropriate in the context of the activities of the Company, that
the practices continue to support strategy and promote the
Company's long-term sustainable success, and that they reflect the
time commitment and responsibility of the role.
In 2022 an external review of the Company's remuneration policy
was carried out by Trust Associates and their recommendations were
considered by the Board as a whole prior to determining the policy
to apply for the financial year commencing 1 April 2022. Internal
remuneration policy reviews are undertaken annually by the
Directors for each year intervening an externally facilitated
review of remuneration.
The external remuneration review included a desktop benchmarking
exercise, comparing the Company's remuneration practices against
the broader listed investment company sector, companies based in
the Channel Islands, in addition to a selected peer group
comparison. Account was taken for the time, complexity and level of
risk involved for Directors, which was assessed based on the
findings of questionnaires and calls held with each Director, in
addition to comments received from the Investment Manager,
corporate brokers and the Company Secretary.
The findings confirmed that the Board continued to be highly
responsive to Company demands, demonstrated by the attendance
record at scheduled and ad hoc meetings held during the financial
year. It was also acknowledged that the Board had adopted a
conservative approach to reviewing its own remuneration by applying
only an inflationary increase in the 2019/20 financial year, then
retaining those fee levels for 2020/21 in light of the ongoing
uncertainty and market volatility caused by the Covid-19
pandemic.
The Directors are mindful of maintaining remuneration levels at
a level broadly consistent with market expectations to avoid fees
being a limiting factor by prospective Board candidates, whilst
also taking account of the time requirement expected for each Board
position and any additional responsibilities. In considering the
findings of the external remuneration review, relevant factors
included the Company remaining competitive against peers, the
additional scrutiny placed on FTSE 250 constituents, and to avoid
the need for substantial fee increases over future years as
inflation levels remain high. Having considered the recommendations
of the external review, the Board has agreed to adopt each
recommendation, without variation, conditional on ratification by
shareholders at the 2022 annual general meeting. The proposed
remuneration policy applicable for the financial year ending 31
March 2023 is set out below.
Remuneration policy
Each Director receives a xed fee per annum based on their role
and responsibility within the Company and the time commitment
required. It is not considered appropriate that Directors'
remuneration should be performance related and none of the
Directors are eligible for pension bene ts, share options,
long-term incentive schemes or other bene ts in respect of their
services as non - executive Directors of the Company. Shares held
by the Directors are disclosed in the report of the Directors. The
total remuneration of non - executive Directors has not exceeded
the GBP300,000 per annum limit set out in the Articles of
Incorporation of the Company (subsequently increased to GBP400,000
at the EGM held on 8 March 2021).
The Company's Articles of Incorporation empower the Board to
award additional remuneration where any Director has been engaged
in exceptional work on a time spent basis to compensate for the
additional time spent over their expected time commitment.
All of the Directors have been provided with letters of
appointment which stipulate that their initial term shall be for
three years, subject to annual re - election. The Articles of
Incorporation provide that Directors retire and offer themselves
for re - election at the rst annual general meeting after their
appointment and at least every three years thereafter. Pursuant to
the AIC Code, each Director retires and offers themselves for
re-election at each annual general meeting. A Director's
appointment may at any time be terminated by, and at the discretion
of, either party upon three months' written notice.
A Director's appointment will automatically end without any
right to compensation whatsoever if they are not re - elected by
the shareholders. A Director's appointment may also be terminated
with immediate effect and without compensation in certain other
circumstances.
The terms and conditions of appointment of non - executive
Directors are available for inspection at the Company's registered
of ce.
Details of individual remuneration
For comparative purposes, the table below sets out the
Directors' remuneration approved and actually paid for the year to
31 March 2022, as well as that proposed for the year ending 31
March 2023.
Annual base
proposed
for Paid
Director Role 2022/23 2021/22
------------------------- --------------------------- ----------- ----------
Chairman and Nomination
Richard Morse Committee Chair GBP75,000 GBP67,250
Richard Ramsay Senior Independent Director GBP50,600 GBP49,000
Hans Joern Rieks Risk Committee Chair GBP48,000 GBP42,500
Stephanie Coxon Audit Committee Chair
(from 3 September 2021) GBP55,000 GBP46,696
Jo Harrison (appointed 10
June 2021) ESG Committee Chair GBP48,000 GBP34,327
Alan Bates (appointed 10
June 2021) GBP46,000 GBP34,327
Peter Neville (resigned
2 September 2021) - GBP21,196
------------------------- --------------------------- ----------- ----------
Total GBP295,295
------------------------- --------------------------- ----------- ----------
Where the Company requires Directors to work on specific
corporate actions, an additional fee may be appropriately
determined. No additional fees were paid to the Directors for the
year ended 31 March 2022.
Directors are entitled to claim reasonable expenses which they
incur attending meetings or otherwise in performance of their
duties relating to the Company.
The total amount of Directors' expenses paid for the year ended
31 March 2022 was GBP1,653 (31 March 2021: GBP356).
Approval of report
The Board will seek approval at the annual general meeting on 1
September 2022 for both the remuneration policy and the annual
Directors' fees for routine business for the year ended 31 March
2023, as set out above.
REPORT OF THE DIRECTORS
The Directors are pleased to submit their report and the audited
financial statements of the Company for the year ended 31 March
2022.
Principal activities
JLEN Environmental Assets Group Limited is a company
incorporated and registered in Guernsey under the Companies
(Guernsey) Law, 2008. The Company was incorporated on 12 December
2013 with the Company registered number 57682.
At 31 March 2022, the total number of ordinary shares of the
Company in issue was 661,531,229 following two oversubscribed
equity issues, 54,672,002 and 60,139,202 new ordinary shares were
issued in May 2021 and January 2022 respectively.
The Company is a registered fund under the Registered Collective
Investment Scheme Rules and Guidance, 2021 and is regulated by the
Guernsey Financial Services Commission and, during the year, its
principal activity was as an investor in environmental
infrastructure that utilise natural or waste resources or support
more environmentally friendly approaches to economic activity.
Business review
The Company is required to present a fair review of its business
during the year ended 31 March 2022, its position at the year end
and a description of the principal risks and uncertainties it
faces.
This information is contained within the strategic report on
pages 21 to 119 of the Annual Report 2022.
Disclosure of information under Listing Rule 9.8.4
The Company is required to disclose information on any contract
of significance subsisting during the period under review:
-- to which the Company, or one of its subsidiary undertakings,
is a party and in which a Director of the Company is or was
materially interested; and
-- between the Company, or one of its subsidiary undertakings, and a controlling shareholder.
Details can be found in note 15 to the financial statements.
The Directors note that no shareholder has waived or agreed to
waive any dividends.
Results and dividends
The results for the year are set out in the financial statements
on pages 164 to 191 of the Annual Report 2022. On 17 May 2022, the
Directors declared a dividend in respect of the period 1 January
2022 to 31 March 2022 of 1.70 pence per share to shareholders on
the register as at the close of business on 6 June 2022, payable on
24 June 2022.
Going concern
The Company's business activities, together with the factors
likely to affect its future development, performance and prospects,
are set out in the strategic report. The financial position of the
Company, its cash flows and its liquidity position are also
described in the strategic report. In particular, the current
economic conditions, including the impact of the ongoing Ukraine
crisis on electricity and gas prices, have created a number of
risks and uncertainties for the Company and these are set out in
the risks and risk management section on pages 38 to 67 of the
Annual Report 2022. As part of the going concern assessment, the
Directors have also reviewed the results of the reverse stress test
and downside case which includes significant reduction in projects'
cash flows under severe negative power price and generation volume
assumptions. The financial risk management objectives and policies
of the Company and the exposure of the Company to credit risk,
market risk and liquidity risk are discussed in note 16 to the
financial statements.
The Company continues to meet its requirements and day - to -
day liquidity needs through both its own cash resources and those
of its investment entities, to which it has full recourse.
As a result the Company forecasts to meet all RCF covenants
requirements.
At 31 March 2022, the Company had net current assets of GBP0.1
million (31 March 2021: GBP0.1 million), including a cash balance
of GBP2.0 million (31 March 2021: GBP1.9 million). At UK HoldCo
level, the GBP170 million revolving credit facility was drawn to a
level of GBP53.6 million (31 March 2021: GBP82.0 million), with the
balance available for future acquisitions and working capital. JLEN
has sufficient cash balances to meet other current obligations as
they fall due, while all key financial covenants are forecast to
continue to be complied with.
Since 21 May 2021, JLEN has benefited from a GBP170 million
multi - currency revolving credit facility with accordion facility
of up to GBP30 million with ING, HSBC, NIBC, RBSI and NAB. This
revolving credit facility expires in May 2024. In addition, the
Company raised GBP56.9 million equity in May 2021 and GBP60.7
million equity in January 2022.
The Directors have reviewed Company forecasts and projections
which cover a period of not less than 12 months from the date of
the Annual Report, taking into account reasonably likely changes in
investment and trading performance, which show that the Company has
sufficient financial resources.
On the basis of this review, and after making due enquiries, the
Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going
concern basis in preparing the financial statements.
Long-term viability statement
The Directors have assessed the viability of the Group over the
three-year period to June 2025, taking account of the Group's
current position and the potential impact of the principal risks
documented in the strategic report. Based on this robust
assessment, the Directors have a reasonable expectation that the
Group will be able to continue in operation and meet its
liabilities as they fall due over the period to June 2025.
In making this statement, the Directors have considered and
challenged the reports of the Investment Manager in relation to the
resilience of the Group, taking into account its current position,
the principal risks facing it in severe but reasonable scenarios,
the effectiveness of any mitigating actions and the Group's risk
appetite. Sensitivity analysis has been undertaken to consider the
potential impacts of such risks on the business model, future
performance, solvency and liquidity over the period. In particular,
this has considered the achievement of budgeted energy yields, the
level of future power prices in this very volatile market,
continued government support for renewable energy subsidy payments
and the impact of a proportion of the portfolio not yielding.
The Directors have determined that a three - year look forward
to June 2025 is an appropriate period over which to provide its
viability statement. This is consistent with the outlook period
used in economic and other medium - term forecasts regularly
prepared for the Board by the Investment Manager and the discussion
of any new strategies undertaken by the Board in its normal course
of business. These reviews consider both the market opportunity and
the associated risks, principally the ability to raise third-party
funds and invest capital, or mitigating actions taken, such as a
reduction of dividends paid to shareholders or utilisation of
additional borrowings available under the RCF.
Internal controls review
Taking into account the information on principal risks and
uncertainties provided on pages 38 to 67 of the Annual Report 2022
of the strategic report and the ongoing work of the Audit and Risk
Committees in monitoring the risk management and internal control
systems on behalf of the Board, the Directors:
-- are satisfied that they have carried out a robust assessment
of the principal risks facing the Company, including those that
would threaten its business model, future performance, solvency or
liquidity; and
-- have reviewed the effectiveness of the risk management and
internal control systems and no significant failings or weaknesses
were identified.
Share capital
The Company has one class of ordinary shares which carry no
rights to fixed income. On a show of hands, each member present in
person or by proxy has the right to one vote at general meetings.
On a poll, each member is entitled to one vote for every share
held.
The issued nominal value of the ordinary shares represents 100%
of the total issued nominal value of all share capital. There are
no specific restrictions on the size of a holding nor on the
transfer of shares, which are both governed by the general
provisions of the Articles of Incorporation and prevailing
legislation. The Directors are not aware of any agreements between
holders of the Company's shares that may result in restrictions on
the transfer of securities or on voting rights. No person has any
special rights of control over the Company's share capital and all
issued shares are fully paid.
The Company's Memorandum and Articles of Incorporation contain
details relating to the rules that the Company has about the
appointment and removal of Directors or amendment to the Company's
Articles of Incorporation, which are incorporated into this report
by reference.
Authority to purchase own shares
A resolution to provide the Company with authority to purchase
its own shares will be tabled at the annual general meeting on 1
September 2022. This shareholder authority was last renewed at the
2021 annual general meeting.
Major interests in shares and voting rights
As at 31 March 2022, the Company had been notified, in
accordance with Chapter 5 of the Disclosure Guidance and
Transparency Rules, of the following interests in 5% or more of the
voting rights as a shareholder in the Company.
Percentage
of voting Number
rights of
and issued ordinary
Shareholder share capital shares
------------------------------------- ------------- ----------
Gravis Capital Management 7.46% 49,320,619
Newton Investment Management Limited 7.11% 47,036,377
Smith & Williamson Wealth Management 5.48% 36,257,959
------------------------------------- ------------- ----------
Board of Directors
The Board members that served during the year and up until the
date of this report, all of whom are non - executive Directors and
independent of the Investment Manager, are listed below. Their
biographical details are shown on pages 122 and 123 of the Annual
Report 2022.
Name Function
----------------------------------------- ------------------
Richard Morse Chairman
Peter Neville (resigned 2 September 2021) Director
Senior Independent
Richard Ramsay Director
Hans Joern Rieks Director
Stephanie Coxon Director
Alan Bates (appointed 10 June 2021) Director
Jo Harrison (appointed 10 June 2021) Director
----------------------------------------- ------------------
Re - election of Directors
At the first annual general meeting of the Company on 14 August
2014, all of the Directors offered themselves for re - election and
were duly re-elected. In compliance with the provisions of the AIC
Code of Corporate Governance, all of the Directors will stand for
re-election at each annual general meeting. Having considered the
results of the internal performance evaluation for the year ended
31 March 2022, the Directors are satisfied that the Board continues
to perform effectively, and that each Director continues to
demonstrate commitment to their roles. Each of the Directors has a
letter of appointment rather than a service contract.
Directors' interests
Directors who held office during the year and had interests in
the shares of the Company as at 31 March 2022 were:
Ordinary Ordinary
shares shares
of of
no par no par
value value
each held each held
at at
31 Mar 31 Mar
2022 2021
------------------------------------------ ---------- ----------
Richard Morse 103,535 103,535
Stephanie Coxon 15,000 -
Peter Neville (resigned 2 September 2021) n/a 29,896
Richard Ramsay 53,813 53,813
Hans Joern Rieks 95,000 -
Alan Bates - -
Jo Harrison - -
------------------------------------------ ---------- ----------
There have been no changes in the Directors' interests from 31
March 2022 to the date of this report.
Annual general meeting
The Company's annual general meeting will be held at 10.00am on
1 September 2022 at Sarnia House, Le Truchot, St Peter Port,
Guernsey, Channel Islands. Details of the business to be conducted
are contained in the notice of annual general meeting.
Appointment of the Investment Manager
On 1 July 2019, the Company changed Investment Adviser from John
Laing Capital Management Limited to Foresight Group. The existing
team that had been providing investment advice since JLEN's launch
in 2014 transferred to Foresight to continue working with the
Company. In January 2022, the former Investment Advisory Agreement
was terminated and the Company entered into a new Investment
Management Agreement with Foresight. Save for the addition of
certain additional regulatory obligations in connection with their
role as Alternative Investment Fund Manager and the delegation of
discretionary decision - making authority in relation to routine
investment transactions, the material terms, fees and provisions of
the Investment Management Agreement with Foresight Group are the
same as the previous Investment Advisory Agreement. It is the
Directors' opinion that the appointment of Foresight Group on the
agreed terms is in the best interests of the shareholders as a
whole.
Auditor
The Audit Committee reviews the appointment of the external
auditor, its effectiveness and its relationship with the Company
and its subsidiaries and joint ventures, which includes monitoring
use of the auditor for non - audit services and the balance of
audit and non - audit fees paid. Following a review of the
independence and effectiveness of the auditor, a resolution will be
proposed at the 2022 annual general meeting to reappoint Deloitte
LLP.
So far as the Directors are aware, there is no relevant audit
information of which the Company's auditor is unaware. Each has
taken all the steps necessary, as a Director, to be aware of any
relevant audit information and to establish that Deloitte LLP is
made aware of any pertinent information. This confirmation is
given, and should be interpreted in accordance with, the provisions
of Section 249 of the Companies (Guernsey) Law, 2008.
By order of the Board
Richard Morse
Chairman
15 June 2022
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors'
report and financial statements in accordance with applicable laws
and regulations. The Companies (Guernsey) Law, 2008 requires the
Directors to prepare financial statements for each financial year.
Under that law, the Directors are required to prepare the financial
statements in accordance with UK adopted international accounting
standards and the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss of the Company for that year.
In preparing these financial statements, International
Accounting Standard 1 requires that Directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in UK adopted international accounting
standards are insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the
entity's financial position and financial performance; and
-- make an assessment of the Company's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and which enable them to ensure
that the financial statements comply with the Companies (Guernsey)
Law, 2008. They are also responsible for safeguarding the assets of
the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Guernsey and the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with IFRS,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company;
-- the strategic report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings taken as a whole, together with a
description of the principal risks and uncertainties that we face;
and
-- the Annual Report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's position,
performance, business model and strategy.
By order of the Board
Richard Morse
Chairman
15 June 2022
INCOME STATEMENT
for the year ended 31 March 2022
2022 2021
Notes GBP'000s GBP'000s
-------------------------------------------------------- ----- -------- --------
Operating income and gains on fair value of investments 9 192,890 14,753
Operating expenses 5 (7,883) (6,649)
-------------------------------------------------------- ----- -------- --------
Operating profit 185,007 8,104
-------------------------------------------------------- ----- -------- --------
Profit before tax 185,007 8,104
Tax 6 - -
-------------------------------------------------------- ----- -------- --------
Profit for the year 185,007 8,104
-------------------------------------------------------- ----- -------- --------
Earnings per share
Basic and diluted (pence) 8 30.6 1.5
-------------------------------------------------------- ----- -------- --------
The accompanying notes form an integral part of the financial
statements.
All results are derived from continuing operations.
There is no other comprehensive income in either the current
year or the preceding year, other than the profit for the year, and
therefore no separate statement of comprehensive income has been
presented.
STATEMENT OF FINANCIAL POSITION
as at 31 March 2022
2022 2021
Notes GBP'000s GBP'000s
------------------------------------------------- ----- -------- --------
Non-current assets
Investments at fair value through profit or loss 9 762,855 504,093
------------------------------------------------- ----- -------- --------
Total non - current assets 762,855 504,093
------------------------------------------------- ----- -------- --------
Current assets
Trade and other receivables 10 219 14
Cash and cash equivalents 2,022 1,874
------------------------------------------------- ----- -------- --------
Total current assets 2,241 1,888
------------------------------------------------- ----- -------- --------
Total assets 765,096 505,981
------------------------------------------------- ----- -------- --------
Current liabilities
Trade and other payables 11 (2,191) (1,780)
------------------------------------------------- ----- -------- --------
Total current liabilities (2,191) (1,780)
------------------------------------------------- ----- -------- --------
Total liabilities (2,191) (1,780)
------------------------------------------------- ----- -------- --------
Net assets 762,905 504,201
------------------------------------------------- ----- -------- --------
Equity
Share capital account 13 664,401 548,848
Retained earnings 14 98,504 (44,647)
------------------------------------------------- ----- -------- --------
Equity attributable to owners of the Company 762,905 504,201
------------------------------------------------- ----- -------- --------
Net assets per share (pence per share) 115.3 92.2
------------------------------------------------- ----- -------- --------
The accompanying notes form an integral part of the financial
statements.
The financial statements were approved by the Board of Directors
and authorised for issue on 15 June 2022.
They were signed on its behalf by:
Richard Morse
Chairman
Stephanie Coxon
Director
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2022
Year ended 31 March 2022
----------------------------
Share
capital Retained
account earnings Total
Notes GBP'000s GBP'000s GBP'000s
--------------------------------------------------- ----- -------- -------- --------
Balance at 1 April 2021 548,848 (44,647) 504,201
Profit for the year - 185,007 185,007
--------------------------------------------------- ----- -------- -------- --------
Profit and total comprehensive income for the year - 185,007 185,007
Issue of share capital 13 117,599 - 117,599
Expenses of issue of equity shares 13 (2,046) - (2,046)
Dividends paid 7 - (41,856) (41,856)
--------------------------------------------------- ----- -------- -------- --------
Balance at 31 March 2022 664,401 98,504 762,905
--------------------------------------------------- ----- -------- -------- --------
Year ended 31 March 2021
---------------------------------
Share capital Retained
account earnings Total
Notes GBP'000s GBP'000s GBP'000s
--------------------------------------------------- ----- ------------- -------- --------
Balance at 1 April 2020 548,943 (15,929) 533,014
Profit for the year - 8,104 8,104
--------------------------------------------------- ----- ------------- -------- --------
Profit and total comprehensive income for the year - 8,104 8,104
Expenses of issue of equity shares 13 (95) - (95)
Dividends paid 7 - (36,822) (36,822)
--------------------------------------------------- ----- ------------- -------- --------
Balance at 31 March 2021 548,848 (44,647) 504,201
--------------------------------------------------- ----- ------------- -------- --------
The accompanying notes form an integral part of the financial
statements.
CASH FLOW STATEMENT
for the year ended 31 March 2022
2022 2021
Notes GBP'000s GBP'000s
-------------------------------------------------------------------- ----- --------- --------
Profit from operations 185,007 8,104
Adjustments for:
Investment interest (28,827) (28,701)
Dividends received (21,300) (14,900)
Net (gain)/loss on investments at fair value through profit or loss (142,763) 28,848
-------------------------------------------------------------------- ----- --------- --------
Operating cash flows before movements in working capital (7,883) (6,649)
(Increase)/decrease in receivables (204) 17
Increase in payables 411 60
-------------------------------------------------------------------- ----- --------- --------
Net cash outflow used in operating activities (7,676) (6,572)
-------------------------------------------------------------------- ----- --------- --------
Investing activities
Investments in subsidiaries (116,000) -
Investment interest 28,827 28,701
Dividends received 21,300 14,900
-------------------------------------------------------------------- ----- --------- --------
Net cash (used in)/from investing activities (65,873) 43,601
-------------------------------------------------------------------- ----- --------- --------
Financing activities
Proceeds on issue of share capital 13 117,599 -
Expenses relating to issue of shares 13 (2,046) (95)
Dividends paid 7 (41,856) (36,822)
-------------------------------------------------------------------- ----- --------- --------
Net cash from/(used in) financing activities 73,697 (36,917)
-------------------------------------------------------------------- ----- --------- --------
Net increase in cash and cash equivalents 148 112
Cash and cash equivalents at beginning of the year 1,874 1,762
-------------------------------------------------------------------- ----- --------- --------
Cash and cash equivalents at end of the year 2,022 1,874
-------------------------------------------------------------------- ----- --------- --------
The accompanying notes form an integral part of the financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2022
1. General information
JLEN Environmental Assets Group Limited (the "Company" or
"JLEN") is a closed - ended investment company domiciled and
incorporated in Guernsey, Channel Islands, under Section 20 of the
Companies (Guernsey) Law, 2008. The shares are publicly traded on
the London Stock Exchange under a premium listing. The audited
financial statements of the Company are for the year ended 31 March
2022 and have been prepared on the basis of the accounting policies
set out below. The financial statements comprise only the results
of the Company, as its investment in JLEN Environmental Assets
Group (UK) Limited ("UK HoldCo") is measured at fair value as
detailed in the key accounting policies below. The Company and its
subsidiaries invest in environmental infrastructure that utilise
natural or waste resources or support more environmentally friendly
approaches to economic activity.
2. Significant accounting policies
(a) Basis of preparation
The financial statements were approved and authorised for issue
by the Board of Directors on 15 June 2022. The set of financial
statements included in this financial report has been prepared in
accordance with UK adopted international accounting standards as
applicable to companies reporting under those standards.
IFRS as adopted by the European Union was brought into the UK
law and became UK adopted international accounting standards
effective 31 December 2020, with future changes being subject to
endorsement by the UK Endorsement Board. As such, the transition of
the Group and the Company to UK adopted international accounting
standards took place on 1 April 2021. There was no impact or
changes in accounting from the transition.
As a result of adopting the amendments to IFRS 10, IFRS 12 and
IAS 28 first adopted in the Company's Annual Report to 31 March
2015, the Company is required to hold its subsidiaries that provide
investment services at fair value, in accordance with IFRS 9
Financial Instruments: Recognition and Measurement, and IFRS 13
Fair Value Measurement. The Company accounts for its investment in
its wholly owned direct subsidiary UK HoldCo at fair value. The
Company, together with its wholly owned direct subsidiary UK HoldCo
and the intermediate holding subsidiary HWT Limited, comprise the
Group (the "Group") investing in environmental infrastructure
assets.
The net assets of the intermediate holding companies (comprising
UK HoldCo and HWT Limited), which at 31 March 2022 principally
comprise working capital balances, the revolving credit facility
and investments in projects, are required to be included at fair
value in the carrying value of investments.
Consequently, the Company does not consolidate its subsidiaries
or apply IFRS 3 Business Combinations when it obtains control of
another entity as it is considered to be an investment entity under
IFRS. Instead, the Company measures its investment in its
subsidiary at fair value through profit or loss.
The financial statements incorporate the financial statements of
the Company only.
UK HoldCo is itself an investment entity. Consequently, the
Company need not have an exit strategy for its investment in UK
HoldCo.
Each investment indirectly held has a finite life. For the PPP
assets, the shareholder debt will mature towards the end of the
concession, and at the end of the concession the investment will be
dissolved. In the case of renewable energy assets, the life of the
project is based on the expected asset life and the land lease
term, after which the investment will also be dissolved. The exit
strategy is that investments will normally be held to the end of
the concession, unless the Company sees an opportunity in the
market to dispose of investments. Foresight Group, the Company's
Investment Manager, and the Company's Board regularly consider
whether any disposals should be made.
The Directors continue to consider that the Company demonstrates
the characteristics and meets the requirements to be considered as
an investment entity.
The following standards which have not been applied in these
financial statements were in issue but not yet effective:
-- Reference to the Conceptual Framework - Amendments to IFRS 3
(applicable for annual periods beginning on or after 1 January
2022);
-- Property, Plant and Equipment: Proceeds Before Intended Use -
Amendments to IAS 16 (applicable for annual periods beginning on or
after 1 January 2022);
-- Onerous Contracts - Costs of Fulfilling a Contract -
Amendments to IAS 37 (applicable for annual periods beginning on or
after 1 January 2022);
-- AIP IFRS 1 First-time Adoption of International Financial
Reporting Standards - Subsidiary as a First-time Adopter
(applicable for annual periods beginning on or after 1 January
2022);
-- AIP IFRS 9 Financial Instruments - Fees in the "10 per cent"
Test for Derecognition of Financial Liabilities (applicable for
annual periods beginning on or after 1 January 2022);
-- AIP IAS 41 Agriculture - Taxation in Fair Value Measurements
(applicable for annual periods beginning on or after 1 January
2022);
-- Annual improvements to IFRS standards 2018-2020 Cycle
(effective for annual periods beginning on or after 1 January
2022)
-- IFRS 17 Insurance Contracts (applicable for annual periods
beginning on or after 1 January 2023);
-- Classification of Liabilities as Current or Non-current -
Amendments to IAS 1 (applicable for annual periods beginning on or
after 1 January 2023);
-- Definition of Accounting Estimates - Amendments to IAS 8
(applicable for annual periods beginning on or after 1 January
2023);
-- Disclosure of Accounting Policies - Amendments to IAS 1 and
IFRS Practice Statement 2 (applicable for annual periods beginning
on or after 1 January 2023); and
-- Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture - Amendments to IFRS 10 and IAS 28
(applicable for annual periods beginning on or after 1 January
2023).
The Directors do not expect that the adoption of the standards
listed above will have a material impact on the financial
statements of the Company in future periods.
The following standards became effective during the year and did
not have a material impact on the Company's reported results:
-- Covid-19-Related Rent Concessions - Amendment to IFRS 16
(applicable for annual periods beginning on or after 1 June
2020);
-- Covid-19-Related Rent Concessions beyond 30 June 2021 -
Amendment to IFRS 16 (applicable for annual periods beginning on or
after 1 April 2021 and,
-- Interest Rate Benchmark Reform - Phase 2 - Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (applicable for annual
periods beginning on or after 1 January 2021).
(b) Going concern
The Directors, in their consideration of going concern, have
reviewed comprehensive cash flow forecasts prepared by the
Company's Investment Manager, Foresight Group, which are based on
prudent market data, a reasonable worst case and a stress test
scenario and believe, based on those forecasts and an assessment of
the Company's subsidiary's banking facilities, that it is
appropriate to prepare the financial statements of the Company on
the going concern basis.
In arriving at their conclusion, the Directors assessed the
impact of the Covid-19 pandemic on operations, the potential risks
of the recent energy market disruption that has led to very high
energy prices and the risk of energy suppliers that provide PPAs to
renewable generators becoming insolvent. The Investment Manager has
reviewed the portfolio's exposure to this risk and has concluded
that it is currently not material to the Fund, although it
continues to monitor the market attentively.
The Directors also considered that the Company has adequate
financial resources, and were mindful that the Group had
unrestricted cash of GBP18.0 million (including GBP2.0 million in
the Company) as at 31 March 2022 and a revolving credit facility
(available for investment in new or existing projects and working
capital) of GBP170 million. As at 31 March 2022, the Company's
wholly owned subsidiary UK HoldCo had borrowed GBP53.6 million
under the facility, and as such GBP116.4 million is available to
draw. All key financial covenants under this facility are forecast
to continue to be complied with for at least 12 months from the
date of signing the annual financial statements.
The Directors are satisfied that the Company has sufficient
resources to continue to operate for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparation of these financial statements.
Refer to the report of the Directors for further
information.
(c) Revenue recognition - Operating income and gains/(losses) on
fair value of investments
Operating income and gains/(losses) on fair value of investments
in the income statement represents gains or losses that arise from
the movement in the fair value of the Company's investment in UK
HoldCo, dividend income and interest received from UK HoldCo.
Dividends from UK HoldCo are recognised when the Company's right to
receive payment has been established. Interest income is accrued by
reference to the loan principal outstanding, applicable interest
rate, and in accordance with the loan note agreement. Refer to note
9 for details.
(d) Taxation
Under the current system of taxation in Guernsey, the Company
itself is exempt from paying taxes on income, profits or capital
gains. Dividend income and interest income received by the Company
may be subject to withholding tax imposed in the country of origin
of such income. The underlying intermediate holding companies and
project companies in which the Company invests provide for and pay
taxation at the appropriate rates in the countries in which they
operate. This is taken into account when assessing the fair value
of the Company's investments.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held
on call with banks and other short - term highly liquid deposits
with original maturities of three months or less. Bank overdrafts
that are repayable on demand are included as a component of cash
and cash equivalents for the purpose of the cash flow statements.
Deposits held with original maturities of greater than three months
are included in other financial assets.
(f) Financial instruments
Financial assets and financial liabilities are recognised on the
Company's statement of financial position when the Company becomes
a party to the contractual provisions of the instrument. Financial
assets are derecognised when the contractual rights to the cash
flows from the instrument expire or the asset is transferred and
the transfer qualifies for derecognition in accordance with IFRS 9
Financial Instruments.
I) Financial assets
The Company classifies its financial assets as either
investments at fair value through profit or loss or financial
assets at amortised cost. The classification depends on the results
of the "solely payments of principal and interest" and the business
model test. The Company determines the business model at a level
that reflects how groups of financial assets are managed together
to achieve a particular business objective. This assessment
includes judgement reflecting all relevant evidence including how
the performance of the assets is evaluated and their performance
measured, the risks that affect the performance of the assets and
how these are managed and how management are compensated.
Monitoring is part of the Company's continuous assessment of
whether the business model, for which the remaining financial
assets are held, continues to be appropriate and, if it is not
appropriate, whether there has been a change in business model and
so a prospective change to the classification of those assets.
i) Investments at fair value through profit or loss
Investments at fair value through profit or loss are recognised
upon initial recognition as financial assets at fair value through
profit or loss in accordance with IFRS 10. In these financial
statements, investments at fair value through profit or loss is the
fair value of the Company's subsidiary, UK HoldCo, which comprises
the fair value of UK HoldCo and HWT Limited and the environmental
infrastructure investments.
The intermediate holding companies' net assets (UK HoldCo and
HWT Limited) are mainly composed of cash, working capital balances
and borrowings under the Company's wholly owned direct subsidiary's
revolving credit facility, and are recognised at fair value, which
is equivalent to their net assets. Although the working capital and
the revolving credit facility outstanding balance are measured at
amortised cost, their fair values do not materially differ from
their amortised costs.
The Company's investment in UK HoldCo comprises both equity and
loan notes. Both elements are exposed to the same primary risk,
being performance risk. This performance risk is taken into
consideration when determining the discount rate applied to the
forecast cash flows. In determining fair value, the Board
considered observable market transactions and has measured fair
value using assumptions that market participants would use when
pricing the asset, including assumptions regarding risk. The loan
notes and equity are considered to have the same risk
characteristics. As such, the debt and equity form a single class
of financial instrument for the purposes of disclosure. The Company
measures its investment as a single class of financial asset at
fair value in accordance with IFRS 13 Fair Value Measurement.
ii) Financial assets at amortised cost
Trade receivables, loans and other receivables that are non -
derivative financial assets and that have fixed or determinable
payments that are not quoted in an active market are classified as
"loans and other receivables". Loans and other receivables are
measured at amortised cost using the effective interest method,
less any impairment. They are included in current assets, except
where maturities are greater than 12 months after the reporting
date, in which case they are classified as non - current assets.
The Company's loans and receivables comprise "trade and other
receivables" and "cash and cash equivalents" in the statement of
financial position.
The loan notes issued by the Company's wholly owned subsidiary
UK HoldCo are held at fair value, which is included in the balance
of the investments at fair value through profit or loss in the
statement of financial position.
II) Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement.
i) Equity instruments
Ordinary shares are classified as equity. Costs directly
attributable to the issue of new shares that would otherwise have
been avoided are written off against the balance of the share
capital account as permitted by Companies (Guernsey) Law, 2008.
ii) Financial liabilities
Financial liabilities are classified as other financial
liabilities, comprising:
-- loans and borrowings which are recognised initially at the
fair value of the consideration received, less transaction costs.
Subsequent to initial recognition, loans and borrowings are stated
at amortised cost, with any difference between cost and redemption
value being recognised in the income statement over the period of
the borrowings on an effective interest basis; and
-- other non - derivative financial instruments, including trade
and other payables, which are measured at amortised cost using the
effective interest method less any impairment losses.
In accordance with IFRS 9, financial guarantee contracts are
recognised as a financial liability. The liability is measured at
fair value and subsequently in accordance with the expected credit
loss model under IFRS 9. The fair value of financial guarantees is
determined based on the present value of the difference in cash
flows between contracted payments required under the debt
instrument and the payments that would be required without the
guarantee, or the estimated amount that would be payable to a third
party for assuming the obligations.
III) Effective interest method
The effective interest rate is the rate that exactly discounts
estimated future cash payments or receipts through the expected
life of the financial instrument to the relevant asset's carrying
amount.
IV) Fair value estimation for investments at fair value
The Company's investments at fair value are not traded in active
markets.
Fair value is calculated by discounting at an appropriate
discount rate future cash flows expected to be received by the
Company's intermediate holdings, from investments in both equity
(dividends and equity redemptions), shareholder and inter-company
loans (interest and repayments). The discount rates used in the
valuation exercise represent the Investment Manager's and the
Board's assessment of the rate of return in the market for assets
with similar characteristics and risk profile. The discount rates
are reviewed on a regular basis and updated, where appropriate, to
reflect changes in the market and in the project risk
characteristics. The discount rates that have been applied to the
financial assets at 31 March 2022 were in the range 5% to 10% (31
March 2021: 5.5% to 13%). Refer to note 9 for details of the areas
of estimation in the calculation of the fair value.
For subsidiaries which provide management/investment - related
services, the fair value is estimated to be the net assets of the
relevant companies, which principally comprise cash, loans and
working capital balances.
(g) 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.
(h) Statement of compliance
Pursuant to the Protection of Investors (Bailiwick of Guernsey)
Law, 2020 the Company is a registered closed - ended investment
scheme. As a registered scheme, the Company is subject to certain
ongoing obligations to the Guernsey Financial Services Commission,
and is governed by the Companies (Guernsey) Law, 2008 as
amended.
3. Critical accounting judgements, estimates and assumptions
In the application of the Company's accounting policies, which
are described in note 2, the Directors are required to make
judgements, estimates and assumptions about the fair value of
assets and liabilities that affect reported amounts. Actual results
may differ from these estimates.
Key sources of estimation uncertainty
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
Investments at fair value through profit or loss
The fair value of environmental infrastructure investments is
calculated by discounting at an appropriate discount rate future
cash flows expected to be received by the Company's intermediate
holdings, from investments in both equity (dividends and equity
redemptions), shareholder and inter-company loans (interest and
repayments). Estimates such as the cash flows are believed to be
reasonable under the circumstances, the results of which form the
basis of making judgements about the fair value of assets not
readily available from other sources. Actual results may differ
from these estimates.
Discount rates used in the valuation represent the Investment
Manager's and the Board's assessment of the rate of return in the
market for assets with similar characteristics and risk profile.
The discount rate is deemed to be one of the most significant
unobservable inputs and any change could have a material impact on
the fair value of investments. Underlying assumptions and discount
rates are disclosed in note 9 and sensitivity analysis is disclosed
in note 16.
We have recently seen a sharp increase in power prices arising
from a combination of worldwide events, evidenced by a c.250%
uplift in the average monthly day ahead auction prices versus the
prior year. Since the year end, wholesale market forward prices
continue to demonstrate significant levels of volatility, however
the Investment Manager does not anticipate that this scale of
fluctuation is likely to be repeated and the following steps have
been taken to partially mitigate the portfolio's exposure to
further movement: i) shortterm PPAs are used to fix prices for
between one and three years ahead depending on market conditions;
ii) where there is no fix in place, forward prices based on market
rates are used for the first two years following the valuation
date; and iii) quarterly reports from independent established
market consultants are used to inform prices over the longer term.
The net result being that current elevated prices are forecast to
normalise before the end of the decade, as shown in the
illustrative blended power curves on page 79 of the Annual Report
2022, with the curve applied to 31 March 2022 valuations being on
average 16% higher per annum than the comparable curve applied at
31 March 2021.
Therefore while power markets can experience unexpected short
term movements, the Directors believe reporting a +/-10%
sensitivity remains appropriate to provide insight into the effect
on the NAV of persistently higher or lower power prices over the
whole life of the portfolio. The sensitivity is also consistent
with that shown in previous reports and with that shown by the
Company's listed environmental infrastructure peers, allowing for
comparisons to be determined.
Information on the sensitivity of the portfolio valuation to
movements in power price is disclosed in note 16.
Due to the current economic environment, the Investment Manager
and the Board believe that the rate of inflation should also be a
considered a key source of estimation uncertainty. Information on
the sensitivity of the portfolio valuation to movements in
inflation rate is disclosed in note 16.
Critical accounting judgements
Equity and debt investment in UK HoldCo
In applying their judgement, the Directors have satisfied
themselves that the equity and debt investments in UK HoldCo share
the same investment characteristics and, as such, constitute a
single asset class for IFRS 7 disclosure purposes. Please refer to
the accounting policies in note 2 for further detail.
Investment entities
The Directors consider that the Company demonstrates the
characteristics and meets the requirements to be considered as an
investment entity. Please refer to the accounting policies in note
2 for further detail.
4. Seasonality
Neither operating income nor profit are impacted significantly
by seasonality. While meteorological conditions resulting in
fluctuation in the levels of wind and sunlight can affect revenues
of the Company's environmental infrastructure projects, due to the
diversified mix of projects, these fluctuations do not materially
affect the Company's operating income or profit.
5. Operating expenses
Year ended Year ended
31 Mar 31 Mar
2022 2021
GBP'000s GBP'000s
------------------------------------ ---------- ----------
Investment management/advisory fees 6,644 5,563
Directors' fees and expenses 297 264
Administration fee 110 112
Other expenses 832 710
------------------------------------ ---------- ----------
7,883 6,649
------------------------------------ ---------- ----------
The Company had no employees during the year (31 March 2021:
nil). There was no Directors' remuneration for the year other than
Directors' fees as detailed in note 15 (31 March 2021: nil).
Included within other expenses is an amount of GBP120,000 to
Deloitte LLP for the audit of the Company for the year ended 31
March 2022 (year ended 31 March 2021: GBP105,000).
The Company paid GBP37,432 during the year for non - audit
services to Deloitte LLP, all in relation to the half-year interim
review (year ended 31 March 2021: GBP30,100 paid to Deloitte
LLP).
6. Tax
Income tax expense
The Company has obtained exempt status from income tax in
Guernsey under the Income Tax (Exempt Bodies) (Guernsey) Ordinance,
1989. JLEN is charged an annual exemption fee of GBP1,200.
The income from its investments is therefore not subject to any
further tax in Guernsey, although the investments provide for and
pay taxation at the appropriate rates in the countries 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.
7. Dividends
Year ended Year ended
31 Mar 31 Mar
2022 2021
GBP'000s GBP'000s
------------------------------------------------------------------------------------------- ---------- ----------
Amounts recognised as distributions to equity holders during the year (pence per share):
Final dividend for the year ended 31 March 2021 of 1.69 (31 March 2020: 1.665) 10,164 9,103
Interim dividend for the quarter ended 30 June 2021 of 1.70 (30 June 2020: 1.69) 10,224 9,240
Interim dividend for the quarter ended 30 September 2021 of 1.70 (30 September 2020: 1.69) 10,224 9,240
Interim dividend for the quarter ended 31 December 2021 of 1.70 (31 December 2020: 1.69) 11,246 9,240
------------------------------------------------------------------------------------------- ---------- ----------
41,857(1) 36,822(1)
------------------------------------------------------------------------------------------- ---------- ----------
(1) Total may not cast due to rounding.
A dividend for the quarter ended 31 March 2022 of 1.70 pence per
share was approved by the Board on 16 May 2022 and is payable on 24
June 2022.
8. Earnings per share
Earnings per share is calculated by dividing the profit
attributable to equity shareholders of the Company by the time
weighted average number of ordinary shares in issue during the
year:
Year ended Year ended
31 Mar 31 Mar
2022 2021
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 185,007 8,104
Number of shares
Time weighted average number of ordinary shares for the purposes of basic and diluted
earnings
per share 604,222,988 546,720,025
-------------------------------------------------------------------------------------------- ----------- -----------
The denominator for the purposes of calculating both basic and diluted
earnings per share is the same, as the Company has not issued any
share options or other instruments that would cause dilution.
Pence Pence
-------------------------------------------------------- -------- -------
Basic and diluted earnings per share 30.6 1.5
-------------------------------------------------------- -------- -------
9. Investments at fair value through profit or loss
As set out in note 2, the Company accounts for its interest in
its 100% owned subsidiary UK HoldCo as an investment at fair value
through profit or loss. UK HoldCo in turn owns investments in
intermediate holding companies and environmental infrastructure
projects.
The table below shows the movement in the Company's investment
in UK HoldCo as recorded on the Company's statement of financial
position:
31 Mar 31 Mar
2022 2021
GBP'000s GBP'000s
---------------------------- -------- --------
Fair value of environmental
infrastructure investments 795,408 571,414
Fair value of intermediate
holding companies (32,553) (67,321)
---------------------------- -------- --------
Total fair value of
investments 762,855 504,093
---------------------------- -------- --------
Reconciliation of movement in fair value of portfolio of
assets
The table below shows the movement in the fair value of the
Company's portfolio of environmental infrastructure assets. These
assets are held through other intermediate holding companies. The
table also presents a reconciliation of the fair value of the asset
portfolio to the Company's statement of financial position as at 31
March 2022, by incorporating the fair value of these intermediate
holding companies.
Cash,
working Cash, working
capital capital
and debt and debt
Portfolio in intermediate Portfolio in intermediate
value holdings Total value holdings Total
31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar
2022 2022 2022 2021 2021 2021
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------------------- --------- ---------------- -------- --------- ---------------- --------
Opening balance 571,414 (67,321) 504,093 537,094 (4,153) 532,941
Acquisitions
Portfolio of assets acquired 87,972 - 87,972 62,962 - 62,962
Disposal of assets (5,559) - (5,559) - - -
---------------------------------------- --------- ---------------- -------- --------- ---------------- --------
82,413 - 82,413 62,962 - 62,962
Growth in portfolio(1) 198,129 - 198,129 19,588 - 19,588
Yields from portfolio to intermediate
holding companies (56,548) 56,548 - (48,230) 48,230 -
---------------------------------------- --------- ---------------- -------- --------- ---------------- --------
Yields from intermediate holding
companies
Interest on loan notes(1) - (28,827) (28,827) - (28,701) (28,701)
Dividend payments from UK HoldCo to the
Company(1) - (21,300) (21,300) - (14,900) (14,900)
---------------------------------------- --------- ---------------- -------- --------- ---------------- --------
- (50,127) (50,127) - (43,601) (43,601)
Other movements
Movement in working capital in UK HoldCo - 5,189 5,189 - (10,327) (10,327)
Expenses borne by intermediate holding
companies(1) - (5,239) (5,239) - (4,835) (4,835)
Repayment/(drawdown) of UK HoldCo
revolving credit facility borrowings - 28,397 28,397 - (52,635) (52,635)
---------------------------------------- --------- ---------------- -------- --------- ---------------- --------
Fair value of the Company's investment
in UK HoldCo 795,408 (32,553) 762,855 571,414 (67,321) 504,093
---------------------------------------- --------- ---------------- -------- --------- ---------------- --------
(1) The net gain on investments at fair value through profit or
loss for the year ended 31 March 2022 is GBP142,763,000 (31 March
2021: net loss of GBP28,848,000). This, together with interest
received on loan notes of GBP28,827,000 (31 March 2021:
GBP28,701,000) and dividend income of GBP21,300,000 (31 March 2021:
GBP14,900,000) comprises operating income and gains/(losses) on
fair value of investments in the income statement.
The balances in the table above represent the total net movement
in the fair value of the Company's investment. The "cash, working
capital and debt in intermediate holding companies" balances
reflect investment in, distributions from or movements in working
capital and are not value generating.
Fair value of portfolio of assets
The Investment Manager has carried out fair market valuations of
the investments as at 31 March 2022. 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 valuations performed since the launch of the
Fund in March 2014.
Discount rates applied to the portfolio of assets range from 5%
to 10% (31 March 2021: 5.5% to 13.0%). The weighted average
discount rate of the portfolio at 31 March 2022 is 7.3% (31 March
2021: 7.3%).
The following economic assumptions have been used in the
discounted cash flow valuations:
31 Mar 2022 31 Mar 2021
------------------------------ ---------------------------- ------------------------
UK - inflation rates 5% for 2022, decreasing 3% for 2021,
to 3% until 2030,
decreasing to 2.25% from decreasing to 2.25% from
2031 2031
Italy - inflation rates 1.3% for 2022, n/a
stepping to 2% from 2025
UK - deposit interest rates 0.25% for 2022, 0.25% for 2021,
rising to 1% from 2025 rising to 1% from 2025
Italy - deposit rates 0% n/a
UK - corporation tax rates 19% to April 2023, n/a
increasing to 25% thereafter
Italy - corporation tax rates National rate of 24%, n/a
plus applicable regional
premiums
Euro/sterling exchange rate 1.18 1.17
------------------------------ ---------------------------- ------------------------
Refer to note 16 for details of the sensitivity of the portfolio
to movements in the discount rate and economic assumptions.
The assets in the intermediate holding companies substantially
comprise working capital, cash balances and the outstanding
revolving credit facility debt; therefore, the Directors consider
the fair value to be equal to the amortised cost.
Details of environmental infrastructure project investments were
as follows:
% holding at 31 Mar 2022 % holding at 31 Mar 2021
-------------------------- --------------------------
Shareholder Shareholder
Project name Equity loan Equity loan
---------------------- --------- --------------- --------- ---------------
Amber 100% 100% 100% 100%
Bilsthorpe 100% 100% 100% 100%
Bio Collectors 70% 100% 70% 100%
Branden 100% 100% 100% 100%
Burton Wold
Extension 100% 100% 100% 100%
Carscreugh 100% 100% 100% 100%
Castle Pill 100% 100% 100% 100%
CNG Foresight 25% 25% 25% 25%
Codford 100% n/a 100% n/a
Cramlington 100% 100% n/a n/a
CSGH 100% 100% 100% 100%
Dungavel 100% 100% 100% 100%
Egmere Energy 100% 100% 100% 100%
ELWA 80% 80% 80% 80%
ETA Manfredonia 45% 45% n/a n/a
Ferndale 100% 100% 100% 100%
Grange Farm 100% 100% 100% 100%
Hall Farm 100% 100% 100% 100%
Icknield 53% 100% 53% 100%
Le Placis Vert(1) n/a n/a 100% 100%
Llynfi 100% 100% 100% 100%
Biogas Meden 100% 100% 100% 100%
Merlin Renewables 100% 100% 100% 100%
Moel Moelogan 100% 100% 100% 100%
Monksham 100% 100% 100% 100%
New Albion Wind
Farm 100% 100% 100% 100%
Northern Hydro 100% n/a 100% n/a
Panther 100% 100% 100% 100%
Peacehill 49% 100% 49% 100%
Plouguernével(1) n/a 100% n/a 100%
Pylle Southern 100% 100% 100% 100%
Rainworth 100% 100% 100% 100%
Sandridge 50% 50% n/a n/a
Tay 33% 33% 33% 33%
Vulcan 100% 100% 100% 100%
Warren 100% 100% 100% 100%
Wear Point 100% 100% 100% 100%
West Gourdie 100% n/a 100% n/a
Yorkshire Hydro 100% n/a 100% n/a
---------------------- --------- --------------- --------- ---------------
(1) Assets were disposed of in January 2022.
Additionally, the fair value of the portfolio of assets includes
the Fund's investment into FEIP, details of which can be found on
page 88 of the Annual Report 2022.
Details of investments made during the year
In May 2021, the Group acquired a 50% equity stake in Sandridge
Battery Storage Limited, which holds the development rights to
construct a 50MW lithium-ion battery energy storage plant based in
Wiltshire, UK. Total amount invested as at 31 March 2022 was GBP3.1
million.
In May 2021, the Group acquired a 45% equity stake in Energie
Tecnologie Ambiente S.r.l. ("ETA"). ETA is a 16.8MW
energy-from-waste power plant which processes refuse derived fuel,
located in the municipality of Manfredonia, Italy. The total
consideration paid was EUR27.5 million.
In June 2021, the Group acquired a 100% equity stake in
Cramlington Renewable Energy Developments Limited, a biomass
combined heat and power plant project, based in Northumberland,
UK.
During the period, GBP4.4 million was injected into CNG
Foresight Limited. The portfolio holds eight natural gas refuelling
stations, of which one is in construction phase.
The Group invested EUR0.4 million into Foresight Energy
Infrastructure Partners SCSp ("FEIP") during the period.
The Group also invested GBP1.0 million into the Vulcan
Renewables upgrade, GBP3.9 million into the FS West Gourdie
construction asset and GBP1.9 million to various projects for value
enhancement initiatives.
10. Trade and other receivables
31 Mar 31 Mar
2022 2021
GBP'000s GBP'000s
-------------------- -------- --------
Prepayments 219 14
-------------------- -------- --------
Balance at 31 March 219 14
-------------------- -------- --------
11. Trade and other payables
31 Mar 31 Mar
2022 2021
GBP'000s GBP'000s
-------------------- -------- --------
Accruals 2,191 1,780
-------------------- -------- --------
Balance at 31 March 2,191 1,780
-------------------- -------- --------
12. Loans and borrowings
The Company had no outstanding loans or borrowings at 31 March
2022 (31 March 2021: GBPnil), as shown in the Company's statement
of financial position.
As at 31 March 2022, the Company held loan notes of GBP348.9
million which were issued by UK HoldCo (31 March 2021: outstanding
amount of GBP318.9 million).
On 21 May 2021, UK HoldCo successfully refinanced its revolving
credit facility with a three-year agreement with ING, HSBC, RBSI,
NAB and NIBC which provides for a committed facility of GBP170
million. The consortium of lenders includes three existing lenders
(ING, HSBC and NIBC) and two new participants (RBSI and NAB). The
margin can vary between 195 bps and 205 bps over SONIA ("Sterling
Overnight Index Average") for sterling drawings, and over EURIBOR
for euro drawings, depending on the Company's performance against
pre-defined ESG targets. The facility will be used to finance the
acquisitions of environmental infrastructure projects and to cover
working capital requirements.
As at 31 March 2022, UK HoldCo had an outstanding balance of
GBP53.6 million under the facility (31 March 2021: GBP82.0
million). The loan bears interest of SONIA + 195 to 205 bps and is
intended to be repaid by proceeds from future capital raises.
There were no other outstanding loans and borrowings in either
the Company, UK HoldCo or HWT at 31 March 2022.
13. Share capital account
Number 31 Mar 31 Mar
of 2022 2021
shares GBP'000s GBP'000s
----------------------------------- ----------- -------- --------
Opening balance at 1 April 2021 546,720,025 548,848 548,943
Shares issued in the year 114,811,204 117,599 -
Expenses of issue of equity shares - (2,046) (95)
----------------------------------- ----------- -------- --------
Balance at 31 March 2022 661,531,229 664,401 548,848
----------------------------------- ----------- -------- --------
In May 2021, the Company raised gross proceeds of GBP56.9
million by way of issuing a total of 54,672,002 new ordinary shares
at 104 pence per new ordinary share.
In January 2022, the Company raised gross proceeds of GBP60.7
million by way of issuing a total of 60,139,202 new ordinary shares
at 101 pence per new ordinary share.
Following these issuances, at 31 March 2022, the Company's share
capital is comprised of 661,531,229 fully paid-up 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.
14. Retained earnings
31 Mar 31 Mar
2022 2021
GBP'000s GBP'000s
-------------------- -------- --------
Opening balance (44,647) (15,929)
Profit for the year 185,007 8,104
Dividends paid (41,856) (36,822)
-------------------- -------- --------
Balance at 31 March 98,504 (44,647)
-------------------- -------- --------
15. Transactions with Investment Manager and related parties
Transactions between the Company and its subsidiaries, which are
related parties of the Company, are fair valued and are disclosed
within note 9. Details of transactions between the Company and
related parties are disclosed below. This note also details the
terms of the Company's engagement with Foresight Group as
Investment Manager.
Transactions with the Investment Manager
In January 2022, Foresight Group was appointed AIFM, pursuant to
an investment management and AIFM agreement in substitution for,
and on materially the same commercial terms as, the previous
Investment Advisory Agreement between the Company and Foresight
Group, which has now been terminated.
Foresight Group is the Company's Investment Manager. Foresight's
appointment as Investment Manager is governed by an Investment
Management Agreement.
Foresight Group is entitled to a base fee equal to:
a) 1.0% per annum of the Adjusted Portfolio Value(1) of the
Fund(2) up to and including GBP500 million; and
b) 0.8% per annum of the Adjusted Portfolio Value of the Fund in excess of GBP500 million.
The total Investment Manager fee charged to the income statement
for the year ended 31 March 2022 was GBP6,644,000 (31 March 2021:
GBP5,563,054), of which GBP1,734,909 remained payable as at 31
March 2022 (31 March 2021: GBP1,440,832).
(1) "Adjusted Portfolio Value" is defined in the Investment Advisory Agreement as:
a) the fair value of the investment portfolio; plus
b) any cash owned by or held to the order of the Fund; plus
c) the aggregate amount of payments made to shareholders by way
of dividend in the quarterly period ending on the relevant
valuation day, less
i. any other liabilities of the Fund (excluding borrowings); and
ii. any uninvested cash.
(2) "Fund" means the Company and JLEN Environmental Assets Group
(UK) Limited together with their wholly owned subsidiaries or
subsidiary undertakings (including companies or other entities
wholly owned by them together, individually or in any combination,
as appropriate) but excluding project entities.
Transactions with related parties
During the year, the Directors of the Company, who are
considered to be key management, received fees of GBP295,295 (31
March 2021: GBP263,754) for their services. The Directors of the
Company were also paid GBP1,653 of expenses (31 March 2021:
GBP355).
The Directors held the following shares:
Ordinary Ordinary
shares shares
of no
par of no par
value
each value each
held at held at
31 Mar 31 Mar
2022 2021
------------------------------------------ -------- ----------
Richard Morse 103,535 103,535
Peter Neville (resigned 2 September 2021) n/a 29,896
Richard Ramsay 53,813 53,813
Hans Joern Rieks 95,000 -
Stephanie Coxon 15,000 -
Alan Bates - -
Joanne Harrison - -
------------------------------------------ -------- ----------
All of the above transactions were undertaken on an arm's length
basis.
The Directors were paid dividends in the year of GBP14,929 (31
March 2021: GBP13,696).
16. Financial instruments
Financial instruments by category
The Company held the following financial instruments at 31 March
2022. There have been no transfers of financial instruments between
levels of the fair value hierarchy. There are no non - recurring
fair value measurements.
31 March 2022
---------------------------------------------------------
Financial Financial Financial
assets assets liabilities
held at at fair at
Cash and amortised value amortised
through
bank balances cost profit cost Total
or loss
GBP'000s GBP'000s GBP000s GBP000s GBP000s
----------------------------------------------------------- ------------- --------- --------- ----------- -------
Non - current assets
Investments at fair value through profit or loss (Level 3) - - 762,855 - 762,855
Current assets
Trade and other receivables - 219 - - 219
Cash and cash equivalents 2,022 - - - 2,022
----------------------------------------------------------- ------------- --------- --------- ----------- -------
Total financial assets 2,022 219 762,855 - 765,096
----------------------------------------------------------- ------------- --------- --------- ----------- -------
Current liabilities
Trade and other payables - - - (2,191) (2,191)
----------------------------------------------------------- ------------- --------- --------- ----------- -------
Total financial liabilities - - - (2,191) (2,191)
----------------------------------------------------------- ------------- --------- --------- ----------- -------
Net financial instruments 2,022 219 762,855 (2,191) 762,905
----------------------------------------------------------- ------------- --------- --------- ----------- -------
31 March 2021
--------------------------------------------------------
Financial
Financial assets Financial
at fair
Cash and assets value through liabilities
bank held at at
balances amortised profit amortised Total
cost or loss cost
GBP'000s GBP'000s GBP000s GBP000s GBP000s
----------------------------------------------------------- -------- --------- ------------- ----------- -------
Non - current assets
Investments at fair value through profit or loss (Level 3) - - 504,093 - 504,093
Current assets
Trade and other receivables - 14 - - 14
Cash and cash equivalents 1,874 - - - 1,874
----------------------------------------------------------- -------- --------- ------------- ----------- -------
Total financial assets 1,874 14 504,093 - 505,981
----------------------------------------------------------- -------- --------- ------------- ----------- -------
Current liabilities
Trade and other payables - - - (1,780) (1,780)
----------------------------------------------------------- -------- --------- ------------- ----------- -------
Total financial liabilities - - - (1,780) (1,780)
----------------------------------------------------------- -------- --------- ------------- ----------- -------
Net financial instruments 1,874 14 504,093 (1,780) 504,201
----------------------------------------------------------- -------- --------- ------------- ----------- -------
The Company's investments at fair value through profit or loss
are classified at Level 3 within the IFRS fair value hierarchy.
The Level 3 fair value measurements derive from valuation
techniques that include inputs to the asset or liability that are
not based on observable market data (unobservable inputs).
In the tables above, financial instruments are held at carrying
value as an approximation to fair value unless stated
otherwise.
Reconciliation of Level 3 fair value measurement of financial
assets and liabilities
An analysis of the movement between opening and closing balances
of the investments at fair value through profit or loss is given in
note 9.
The fair value of the investments at fair value through profit
or loss includes the use of Level 3 inputs. Please refer to note 9
for details of 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:
31 March 2022
----------------------------- ------------------ --------- ------------------
Discount rate Minus 0.5% Base 7.3% Plus 0.5%
Change in portfolio valuation Increases GBP22.0m GBP795.4m Decreases GBP21.0m
Change in NAV per share Increases 3.3p 115.3p Decreases 3.2p
----------------------------- ------------------ --------- ------------------
31 March 2021
----------------------------- ------------------ --------- ------------------
Discount rate Minus 0.5% Base 7.3% Plus 0.5%
Change in portfolio valuation Increases GBP18.8m GBP571.4m Decreases GBP17.8m
Change in NAV per share Increases 3.4p 92.2 Decreases 3.3p
----------------------------- ------------------ --------- ------------------
The sensitivity of the portfolio to movements in long-term
inflation rates is as follows:
In light of the current economic environment, near-term actual
inflation may vary from assumptions applied within the portfolio
valuation, therefore the Investment Manager will continue to
monitor developments in this area. For illustrative purposes, where
inflation is higher than JLEN's valuation assumption by 3% for the
next three years, NAV would be expected to increase by 7.5 pence
per share.
31 March 2022
----------------------------- ------------------ ---------------- ------------------
Base 5% (2022)
then 3% to 2030
Inflation rates Minus 0.5% then 2.25% Plus 0.5%
Change in portfolio valuation Decreases GBP19.0m GBP795.4m Increases GBP19.4m
Change in NAV per share Decreases 2.9p 115.3p Increases 2.9p
----------------------------- ------------------ ---------------- ------------------
31 March 2021
----------------------------- ------------------ ------------------ ------------------
Inflation rates Minus 0.5% Base 3% then 2.25% Plus 0.5%
Change in portfolio valuation Decreases GBP19.0m GBP571.4m Increases GBP19.7m
Change in NAV per share Decreases 3.5p 92.2p Increases 3.6p
----------------------------- ------------------ ------------------ ------------------
The fair value of the investments is based on a "P50" level of
electricity generation for the renewable energy assets, being the
expected level of generation over the long term.
Wind, solar and hydro assets are subject to electricity
generation risks. The sensitivities of the investments to movements
in the level of electricity output are as follows:
The sensitivity of the portfolio to movements in energy yields
based on an assumed "P90" level of electricity generation (i.e. a
level of generation that is below the "P50", with a 90% probability
of being exceeded) and an assumed "P10" level of electricity
generation (i.e. a level of generation that is above the "P50",
with a 10% probability of being achieved) is as follows:
31 March 2022
----------------------------- ------------------ --------- ------------------
Energy yield: wind P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP28.8m GBP795.4m Increases GBP28.8m
Change in NAV per share Decreases 4.4p 115.3p Increases 4.4p
----------------------------- ------------------ --------- ------------------
Energy yield: solar P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP8.7m GBP795.4m Increases GBP8.8m
Change in NAV per share Decreases 1.3p 115.3p Increases 1.3p
----------------------------- ----------------- --------- -----------------
Energy yield: hydro P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP2.2m GBP795.4m Increases GBP2.7m
Change in NAV per share Decreases 0.3p 115.3p Increases 0.4p
----------------------------- ----------------- --------- -----------------
31 March 2021
----------------------------- ------------------ --------- ------------------
Energy yield: wind P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP24.4m GBP571.4m Increases GBP25.0m
Change in NAV per share Decreases 4.5p 92.2p Increases 4.6p
----------------------------- ------------------ --------- ------------------
Energy yield: solar P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP6.4m GBP571.4m Increases GBP7.1m
Change in NAV per share Decreases 1.2p 92.2p Increases 1.3p
----------------------------- ----------------- --------- -----------------
Project cash flows used in the portfolio valuation reflect
contractual fixed price arrangements under PPAs, where they exist,
and short-term market forward prices for the next two years
following the valuation date where they do not.
After the initial two-year period, project cash flows assume
future electricity and gas prices in line with a blended curve
informed by the central forecasts from three established market
consultants, adjusted by the Investment Manager for
project-specific arrangements and price cannibalisation as
required.
The sensitivity of the portfolio to movements in electricity and
gas prices is as follows:
The Directors have assessed that a reasonable possible long-term
movement of energy prices continues to be +/-10% given the
long-term nature of the portfolio, notwithstanding that significant
short-term energy price movements have occurred in the period due
to the recent energy market disruption.
31 March 2022
----------------------------- ------------------ --------- ---------------
Energy prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases GBP44.3m GBP795.4m Increases 43.6m
Change in NAV per share Decreases 6.7p 115.3p Increases 6.6p
----------------------------- ------------------ --------- ---------------
31 March 2021
----------------------------- ------------------ --------- ------------------
Energy prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases GBP24.8m GBP571.4m Increases GBP25.0m
Change in NAV per share Decreases 4.5p 92.2p Increases 4.6p
----------------------------- ------------------ --------- ------------------
Waste & bioenergy assets (excluding Bio Collectors) do not
have significant volume and price risks and therefore are not
included in the above volume and price sensitivities.
The sensitivity of the portfolio to movements in corporation tax
rate is as follows:
31 March 2022
----------------------------- ------------------ ------------- ------------------
Corporation tax Minus 2% Base 19% then Plus 2%
25%
Change in portfolio valuation Increases GBP11.7m GBP795.4m Decreases GBP11.5m
Change in NAV per share Increases 1.8p 115.3p Decreases 1.7p
----------------------------- ------------------ ------------- ------------------
31 March 2021
----------------------------- ----------------- ----------------- -----------------
Corporation tax Minus 2% Base 19% then 25% Plus 2%
Change in portfolio valuation Increases GBP8.4m GBP571.4m Decreases GBP8.3m
Change in NAV per share Increases 1.5p 92.2p Decreases 1.5p
----------------------------- ----------------- ----------------- -----------------
The sensitivity of the portfolio to movements in AD feedstock
prices is as follows:
31 March 2022
----------------------------- ----------------- --------- -----------------
Feedstock prices Minus 10% Base Plus 10%
Change in portfolio valuation Increases GBP9.0m GBP795.4m Decreases GBP9.0m
Change in NAV per share Increases 1.4p 115.3p Decreases 1.4p
----------------------------- ----------------- --------- -----------------
31 March 2021
----------------------------- ----------------- --------- -----------------
Feedstock prices Minus 10% Base Plus 10%
Change in portfolio valuation Increases GBP8.9m GBP571.4m Decreases GBP9.3m
Change in NAV per share Increases 1.6p 92.2p Decreases 1.7p
----------------------------- ----------------- --------- -----------------
Euro/sterling exchange rate sensitivity
As the proportion of the portfolio assets with cash flows
denominated in euros represented less than 5% of the portfolio
value at 31 March 2022, 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.
Capital risk management
Capital management
The Group, which comprises the Company and its non -
consolidated subsidiaries, manages its capital to ensure that it
will be able to continue as a going concern while maximising the
return to shareholders through the optimisation of the debt and
equity balances. The capital structure of the Group principally
consists of the share capital account and retained earnings as
detailed in notes 13 and 14, and debt as detailed in note 12. The
Group aims to deliver its objective by investing available cash and
using leverage whilst maintaining sufficient liquidity to meet
ongoing expenses and dividend payments.
Gearing ratio
The Company's Investment Manager reviews the capital structure
of the Company and the Group on a semi - annual basis. The Company
and its subsidiaries intend to make prudent use of leverage for
financing acquisitions of investments and working capital purposes.
Under the Company's Articles, and in accordance with the Company's
investment policy, the Company's outstanding borrowings, excluding
the debts of underlying assets, will be limited to 30% of the
Company's Net Asset Value.
As at 31 March 2022, the Company had no outstanding debt.
However, as set out in note 12, the Company's subsidiary UK HoldCo
has a GBP170 million revolving credit facility, which was drawn by
GBP53.6 million at 31 March 2022.
Financial risk management
The Group's activities expose it to a variety of financial
risks: capital risk, liquidity risk, market risk (including
interest rate risk, inflation risk and power price risk) and credit
risk. The Group's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
For the Company and the intermediate holding companies,
financial risks are managed by the Investment Manager, which
operates within the Board-approved policies. For the environmental
infrastructure investments, due to the nature of the investments,
certain financial risks (typically interest rate and inflation
risks) are hedged at the inception of a project. All risks continue
to be managed by the Investment Manager. The various types of
financial risk are managed as follows:
Financial risk management - Company only
The Company accounts for its investments in its subsidiaries at
fair value. Accordingly, to the extent there are changes as a
result of the risks set out below, these may impact the fair value
of the Company's investments.
Capital risk
The Company has implemented an efficient financing structure
that enables it to manage its capital effectively. The Company's
capital structure comprises equity only (refer to the statement of
changes in equity). As at 31 March 2022, the Company had no
recourse debt, although as set out in note 17, the Company is a
guarantor for the revolving credit facility of UK HoldCo.
Liquidity risk
The Directors monitor the Company's liquidity requirements to
ensure there is sufficient cash to meet the Company's operating
needs.
The Company's liquidity management policy involves projecting
cash flows and forecasting the level of liquid assets necessary to
meet these. Due to the nature of its investments, the timing of
cash outflows is reasonably predictable and, therefore, is not a
major risk to the Company.
The Company was in a net cash position and had no outstanding
debt at the balance sheet date. At the balance sheet date, the
Group had debt of GBP53.6 million, being the amount drawn on the
revolving credit facility.
Market risk - foreign currency exchange rate risk
As the proportion of the portfolio assets with cash flows
denominated in euros represented less than 5% of the portfolio
value at 31 March 2022, the Directors consider the sensitivity to
changes in the euro/sterling exchange rate to be insignificant.
Where investments are made in currencies other than pounds
sterling, the Company will consider whether to hedge currency risk
in accordance with the Company's currency and hedging policy as
determined from time to time by the Directors. A portion of the
Company's underlying investments may be denominated in currencies
other than pounds sterling. However, any dividends or distributions
in respect of the ordinary shares will be made in pounds sterling
and the market prices and Net Asset Value of the ordinary shares
will be reported in pounds sterling.
Currency hedging may be carried out to seek to provide some
protection for the level of pounds sterling dividends and other
distributions that the Company aims to pay on the ordinary shares,
and in order to reduce the risk of currency fluctuations and the
volatility of returns that may result from such currency exposure.
Such currency hedging may include the use of foreign currency
borrowings to finance foreign currency assets and forward foreign
exchange contracts.
Financial risk management - Company and non - consolidated
subsidiaries
The following risks impact the Company's subsidiaries and in
turn may impact the fair value of investments held by the
Company.
Market risk - interest rate risk
Interest rate risk arises in the Company's subsidiaries on the
revolving credit facility borrowings and floating rate deposits.
Borrowings issued at variable rates expose those entities to
variability of interest payment cash flows. Interest rate hedging
may be carried out to seek to provide protection against increasing
costs of servicing debt drawn down by UK HoldCo as part of its
revolving credit facility. This may involve the use of interest
rate derivatives and similar derivative instruments.
Each infrastructure investment hedges their interest rate risk
at the inception of a project. This will either be done by issuing
fixed rate debt or variable rate debt which will be swapped into
fixed rate by the use of interest rate swaps.
Market risk - inflation risk
Some of the Company's investments will have part of their
revenue and some of their costs linked to a specific inflation
index at inception of the project. In most cases this creates a
natural hedge, meaning a derivative does not need to be entered
into in order to mitigate inflation risk.
Market risk - power price risk
The wholesale market price of electricity and gas is volatile
and is affected by a variety of factors, including market demand
for electricity and gas, the generation mix of power plants,
government support for various forms of power generation, as well
as fluctuations in the market prices of commodities and foreign
exchange. Whilst some of the Company's renewable energy projects
benefit from fixed prices, others have revenue which is in part
based on wholesale electricity and gas prices.
A decrease and/or prolonged deterioration in economic activity
in the UK, for any reason, could result in a decrease in demand for
electricity and gas in the market. Short - term and seasonal
fluctuations in electricity and gas demand will also impact the
price at which the investments can sell electricity and gas. The
supply of electricity and gas also impacts wholesale electricity
and gas prices. Supply of electricity and gas can be affected by
new entrants to the wholesale power market, the generation mix of
power plants in the UK, government support for various generation
technologies, as well as the market price for fuel commodities.
Volume risk - electricity generation risk
Meteorological conditions poorer than forecast can result in
generation of lower electricity volumes and lower revenues than
anticipated.
Credit risk
Credit risk is the risk that a counterparty of the Company or
its subsidiaries will default on its contractual obligations it
entered into with the Company or its subsidiaries. Credit risk
arises from cash and cash equivalents, derivative financial
instruments and deposits with banks and financial institutions, as
well as credit exposures to customers. The Company and its
subsidiaries mitigate their risk on cash investments and derivative
transactions by only transacting with major international financial
institutions with high credit ratings assigned by international
credit rating agencies.
The Company's infrastructure investments receive regular, long -
term, partly or wholly index - linked revenue from government
departments, local authorities or clients under the Renewables
Obligation and Feed - in Tariff regimes. The Directors believe that
the Group is not significantly exposed to the risk that the
customers of its investments do not fulfil their regular payment
obligations because of the Company's policy to invest in
jurisdictions with satisfactory credit ratings.
Given the above factors, the Board does not consider it
appropriate to present a detailed analysis of credit risk.
The Company's maximum exposure to credit risk is the GBP348.9
million owed by HoldCo, detailed in note 12.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group adopts a
prudent approach to liquidity management by ensuring it maintains
adequate reserves and banking facilities by continuously monitoring
forecast and actual cash flows and matching the maturity profiles
of financial assets and liabilities.
The Directors monitor the Company's liquidity requirements to
ensure there is sufficient cash to meet the Company's operating
needs.
The Company's liquidity management policy involves projecting
cash flows and forecasting the level of liquid assets required to
meet its obligations. Due to the nature of its investments, the
timing of cash outflows is reasonably predictable and, therefore,
is not a major risk to the Group.
Debt raised by asset investments from third parties is without
recourse to the Group.
17. Guarantees and other commitments
As at 31 March 2022, the Company has provided a guarantee over
the Company's wholly owned subsidiary UK HoldCo's obligations under
the GBP170 million RCF signed on 21 May 2021.
On 28 January 2020, the Group committed EUR25 million to
Foresight Energy Infrastructure Partners SCSp ("FEIP"), a
Luxembourg limited partnership investment vehicle, of which EUR4.8
million has been invested at the balance sheet date (equivalent to
GBP4.1 million at the 31 March 2022 prevailing exchange rate).
On 4 December 2020, the Group committed up to GBP20 million to
CNG Foresight Limited, to fund the construction of a further
pipeline of CNG refuelling stations as part of a national network.
A total of GBP11.1 million has been invested at the balance sheet
date (GBP6.6 million as at 31 March 2021).
The Company had no other commitments or guarantees.
18. Subsidiaries
The following subsidiaries have not been consolidated in these
financial statements as a result of applying the requirements of
"Investment Entities: Applying the Consolidation Exception
(Amendments to IFRS 10, IFRS 12 and IAS 27)":
Place of Registered Ownership Voting
Name Category business office interest rights
------------------------------------------ ------------------------------- --------- ----------- --------- ------
JLEN Environmental Assets Group (UK)
Limited(1) Intermediate holding UK A 100% 100%
HWT Limited Intermediate holding UK B 100% 100%
JLEAG Solar 1 Limited Operating subsidiary UK C 100% 100%
Croft Solar PV Limited Operating subsidiary (dormant) UK C 100% 100%
Cross Solar PV Limited Operating subsidiary (dormant) UK C 100% 100%
Domestic Solar Limited Operating subsidiary (dormant) UK C 100% 100%
Ecossol Limited Operating subsidiary (dormant) UK C 100% 100%
Hill Solar PV Limited Operating subsidiary (dormant) UK C 100% 100%
Share Solar PV Limited Operating subsidiary (dormant) UK C 100% 100%
Tor Solar PV Limited Operating subsidiary (dormant) UK C 100% 100%
Residential PV Trading Limited Operating subsidiary (dormant) UK C 100% 100%
South-Western Farms Solar Limited Operating subsidiary (dormant) UK C 100% 100%
Angel Solar Limited Operating subsidiary (dormant) UK C 100% 100%
Easton PV Limited Project holding company UK D 100% 100%
Pylle Solar Limited Project holding company UK D 100% 100%
Second Energy Limited Operating subsidiary UK D 100% 100%
ELWA Holdings Limited Project holding company UK E 80% 80%
ELWA Limited(2) Operating subsidiary UK E 80% 81%(2)
JLEAG Wind Holdings Limited Project holding company UK A 100% 100%
JLEAG Wind Limited Project holding company UK A 100% 100%
Amber Solar Parks (Holdings) Limited Project holding company UK D 100% 100%
Amber Solar Park Limited Operating subsidiary UK D 100% 100%
Fryingdown Solar Park Limited Operating subsidiary (dormant) UK D 100% 100%
Five Oaks Solar Parks Limited Operating subsidiary (dormant) UK D 100% 100%
Bilsthorpe Wind Farm Limited Operating subsidiary UK F 100% 100%
Ferndale Wind Limited Project holding company UK F 100% 100%
Castle Pill Wind Limited Project holding company UK F 100% 100%
Wind Assets LLP Operating subsidiary UK F 100% 100%
Hall Farm Wind Farm Limited Operating subsidiary UK F 100% 100%
Branden Solar Parks (Holdings) Limited Project holding company UK D 100% 100%
Branden Solar Parks Limited Operating subsidiary UK D 100% 100%
KS SPV 3 Limited Operating subsidiary UK D 100% 100%
KS SPV 4 Limited Operating subsidiary UK D 100% 100%
Carscreugh Renewable Energy Park Limited Operating subsidiary UK F 100% 100%
Wear Point Wind Limited Operating subsidiary UK F 100% 100%
Monksham Power Ltd Project holding company UK D 100% 100%
Frome Solar Limited Operating subsidiary UK D 100% 100%
BL Wind Limited Operating subsidiary UK F 100% 100%
Burton Wold Extension Limited Operating subsidiary UK F 100% 100%
New Albion Wind Limited Operating subsidiary UK F 100% 100%
Dreachmhor Wind Farm Limited Operating subsidiary UK F 100% 100%
France Wind GP Germany GmbH(3) Project holding company DE G 100% 100%
France Wind Germany GmbH & Co. KG(3) Project holding company DE G 100% 100%
CSGH Solar Limited Project holding company UK A 100% 100%
CSGH Solar (1) Limited Project holding company UK A 100% 100%
sPower Holdco 1 (UK) Limited Project holding company UK D 100% 100%
sPower Finco 1 (UK) Limited Project holding company UK D 100% 100%
Higher Tregarne Solar (UK) Limited Operating subsidiary UK D 100% 100%
Crug Mawr Solar Farm Limited Operating subsidiary UK D 100% 100%
Golden Hill Solar (UK) Limited Project holding company UK D 100% 100%
Golden Hill Solar Limited Operating subsidiary UK D 100% 100%
Shoals Hook Solar (UK) Limited Operating subsidiary UK D 100% 100%
CGT Investment Limited Project holding company UK H 100% 100%
CWMNI GWYNT TEG CYF Operating subsidiary UK H 100% 100%
Moelogan 2 (Holdings) Cyfyngedig Project holding company UK H 100% 100%
Moelogan 2 C.C.C. Operating subsidiary UK H 100% 100%
Vulcan Renewables Limited Operating subsidiary UK I 100% 100%
Llynfi Afan Renewable Energy Park
(Holdings) Limited Project holding company UK A 100% 100%
Llynfi Afan Renewable Energy Park Limited Operating subsidiary UK A 100% 100%
Green Gas Oxon Limited Project holding company UK J 52.6% 52.6%
Icknield Gas Limited Operating subsidiary UK J 52.6% 52.6%
Egmere Energy Limited Operating subsidiary UK I 100% 100%
Grange Farm Energy Limited Operating subsidiary UK I 100% 100%
Merlin Renewables Limited Operating subsidiary UK I 100% 100%
Biogas Meden Limited Operating subsidiary UK I 100% 100%
Yorkshire Hydropower Holdings Limited Project holding company UK F 100% 100%
Yorkshire Hydropower Limited Operating subsidiary UK F 100% 100%
Warren Power Limited Project holding company UK I 100% 100%
Warren Energy Limited Operating subsidiary UK I 100% 100%
Northern Hydropower Holdings Limited Project holding company UK F 100% 100%
Northern Hydropower Limited Operating subsidiary UK F 100% 100%
Codford Biogas Limited Operating subsidiary UK K 100% 100%
FS West Gourdie Limited Operating subsidiary UK D 100% 100%
Rainworth Energy Limited Operating subsidiary UK L 100% 100%
Bio Collectors Holdings Limited Project holding company UK M 70% 70%
Bio Collectors Limited Operating subsidiary UK M 70% 70%
Riverside Bio Limited Operating subsidiary UK M 70% 70%
Riverside AD Limited Operating subsidiary UK M 70% 70%
Spruce Bioenergy Limited Project holding company UK A 100% 100%
Cramlington Renewable Energy Developments
Limited Operating subsidiary UK N 100% 100%
------------------------------------------ ------------------------------- --------- ----------- --------- ------
(3) JLEN Environmental Assets Group (UK) Limited is the only entity directly held by the Company.
(4) ELWA Holdings Limited holds 81% of the voting rights and a
100% share of the economic benefits in ELWA Limited.
(5) Underlying French Wind Assets were disposed of in January 2022.
Registered offices
A. The Shard, 32 London Bridge Street, London SE1 9SG
B. 50 Lothian Road, Festival Square, Edinburgh, Midlothian EH3 9WJ
C. 1 Filament Walk, Suite 203, Wandsworth, London SW18
D. Long Barn, Manor Farm, Stratton-on-the-Fosse, Radstock BA3 4QF
E. Dunedin House, Auckland Park, Mount Farm, Milton Keynes MK1 1BU
F. C/O Res White Limited, Beaufort Court, Egg Farm Lane, Kings Langley, Hertfordshire WD4 8LR
G. Steinweg 3-5, Frankfurt am Main, 60313, Germany
H. Cae Sgubor Ffordd Pennant, Eglwysbach, Colwyn Bay, Conwy LL28 5UN
I. 10-12 Frederick Sanger Road, Guildford, Surrey GU2 7YD
J. Friars Ford, Manor Road, Goring, Reading RG8 9EL
K. Upton Wold, Moreton-in-Marsh, Gloucestershire GL56 9TR
L. C/O Material Change, The Watering Farm, Creeting St. Mary, Ipswich, Suffolk IP6 8ND
M. 10 Osier Way, Mitcham, Surrey CR4 4NF
N. 8 White Oak Square, London Road, Swanley BR8 7AG
19. Events after balance sheet date
A dividend for the quarter ended 31 March 2022 of 1.70 pence per
share, amounting to GBP11.2 million, was approved by the Board on
16 May 2022 for payment on 24 June 2022.
GLOSSARY OF KEY TERMS
AD
anaerobic digestion
agri AD
anaerobic digestion plant that accepts agricultural feedstocks
such as grain and/or animal manure
AIFM Directive
the EU Alternative Investment Fund Managers Directive (No.
2011/61/EU)
APMs
alternative performance measures are financial measures that are
not currently defined or specified in the applicable financial
reporting framework
bps
basis points
Brexit
the UK referendum on 23 June 2016 in which a majority of voters
voted to exit the EU
CfD
Contracts for Difference
CHP
Combined heat and power plant
the Company or JLEN or the Fund
JLEN Environmental Assets Group Limited
CPI
Consumer Price Index
DCF
Discounted cash flow
EU
European Union
FiT
the Feed - in Tariff
gross project value
the fair market value of the investment interests held in a
project as increased by the amount of any financing in the relevant
project entity
Group
JLEN Environmental Assets Group Limited and its intermediate
holding companies UK HoldCo and HWT Limited
GWh
gigawatt hour
intermediate holding companies
companies within the Group which are used as pass-through
vehicles to invest in underlying environmental infrastructure
assets, namely UK HoldCo and HWT Limited
Investment Manager or Foresight
Foresight Group LLP
IPO
Initial Public Offering
IRR
internal rate of return
MWe
megawatt electric
MWh
megawatt hour
MWth
megawatt thermal
NAV
Net Asset Value
OECD
Organisation for Economic Co - operation and Development
portfolio
the 37 assets in which JLEN had a shareholding as at 31 March
2022
portfolio valuation
the sum of all the individual investments' net present
values
PPAs
Power Purchase Agreements
PPP/PFI
the Public Private Partnership procurement model
price cannibalisation
the depressive influence on the wholesale power price at timings
of high output from intermittent weather-driven generation such as
solar and wind
PV
photovoltaic
RCF
revolving credit facility
RHI
Renewable Heat Incentive
RPI
Retail Price Index
ROCs
Renewables Obligation Certificates
SPV
special purpose vehicle
UK HoldCo
JLEN Environmental Assets Group (UK) Limited, wholly owned
subsidiary of JLEN Environmental Assets Group Limited
WADR
the weighted average discount rate
ALTERNATIVE PERFORMANCE MEASURES ("APMs")
APM Purpose Calculation
-------------------------------------- -------------------------------------- --------------------------------------
Total shareholder return (since IPO & Measure of financial performance, Since IPO: closing share price as at
annualised) indicating the amount an investor 31 March 2022 plus all dividends since
reaps from investing since IPO assumed reinvested,
IPO and expressed as a percentage divided by the share price at IPO,
(annualised or total since IPO of the expressed as a percentage
Fund)
Annualised: closing share price as at
31 March 2022 plus all dividends since
IPO assumed reinvested,
divided by the share price at IPO, to
the power of 1 over the number of
years since IPO, expressed
as a percentage
-------------------------------------- -------------------------------------- --------------------------------------
Net Asset Value per share Allows investors to gauge whether The net assets divided by the number
shares are trading at premium or a of ordinary shares in issuance
discount by comparing
the Net Asset Value per share with the
share price
-------------------------------------- -------------------------------------- --------------------------------------
Market capitalisation Provides an indication of the size of Closing share price as at 31 March
the Company. 2022 multiplied by closing no. of
ordinary shares in issuance.
-------------------------------------- -------------------------------------- --------------------------------------
Gearing Ascertain financial risk in the Total debt in the Company and its
Group's balance sheet Group as a % of the sum of the
Company's and its Group net
asset + debt
-------------------------------------- -------------------------------------- --------------------------------------
Cash flow from operations Gauge operating revenues and expenses Cash flow of the Group. Breakdown can
of the Group be observed on page 119 of the Annual
Report 2022 (financial
review)
-------------------------------------- -------------------------------------- --------------------------------------
Cash dividend cover Investors can gauge the ability of the Cash flow from operations of the group
Group to generate cash surplus after (refer to page 119 of the Annual
payment of dividend Report 2022) divided
by dividend paid within the reporting
period (FY 21/22: 1.10x)
Cash dividend cover on a declared
basis for FY 21/22 is 1.08x
-------------------------------------- -------------------------------------- --------------------------------------
COMPANY SUMMARY
Below are the Company key facts, advisers and other
information.
Company information JLEN Environmental Assets Group Limited is a Guernsey - registered closed - ended investment
company (registered number 57682) with a premium listing on the London Stock Exchange
--------------------- -----------------------------------------------------------------------------------------------
Registered address Sarnia House, Le Truchot, St Peter Port, Guernsey GY1 1GR
--------------------- -----------------------------------------------------------------------------------------------
Ticker/SEDOL JLEN/BJL5FH8
--------------------- -----------------------------------------------------------------------------------------------
Company year end 31 March
--------------------- -----------------------------------------------------------------------------------------------
Dividend payments Quarterly in March, June, September and December
--------------------- -----------------------------------------------------------------------------------------------
Investment Manager Foresight Group LLP, No OC300878, registered in England and Wales and authorised and regulated
by the Financial Conduct Authority
--------------------- -----------------------------------------------------------------------------------------------
Company Secretary Sanne Fund Services Limited, a company incorporated in Guernsey on 13 April 2005 (registered
and Administrator number 43046)
--------------------- -----------------------------------------------------------------------------------------------
Market capitalisation GBP746.2 million at 31 March 2022
--------------------- -----------------------------------------------------------------------------------------------
Investment Manager 1.0% per annum of the Adjusted Portfolio Value of the investments up to GBP0.5 billion, falling
fees to 0.8% per annum for investments above GBP0.5 billion.
No performance or acquisitions fees
--------------------- -----------------------------------------------------------------------------------------------
Investment Manager Rolling one-year notice
term
--------------------- -----------------------------------------------------------------------------------------------
ISA, PEP and SIPP The ordinary shares are eligible for inclusion in PEPs and ISAs (subject to applicable
status subscription
limits) provided that they have been acquired in the market, and they are permissible assets
for SIPPs
--------------------- -----------------------------------------------------------------------------------------------
AIFMD status The Company is classed as an externally managed Alternative Investment Fund under the
Alternative
Investment Fund Managers Regulations 2013 and the European Union's Alternative Investment
Fund Managers Directive
--------------------- -----------------------------------------------------------------------------------------------
Non-mainstream The Board conducts the Company's affairs, and intends to continue to conduct the Company's
pooled investment affairs, such that the Company would qualify for approval as an investment trust if it were
status resident in the United Kingdom. It is the Board's intention that the Company will continue
to conduct its affairs in such a manner and that independent financial advisers should
therefore
be able to recommend its ordinary shares to ordinary retail investors in accordance with the
FCA's rules relating to non - mainstream investment products
--------------------- -----------------------------------------------------------------------------------------------
FATCA The Company has registered for FATCA and has a GIIN number 2BN95W.99999.SL.831
--------------------- -----------------------------------------------------------------------------------------------
Investment policy The Company's investment policy is set out on pages 70 to 73 of the Annual Report 2022
--------------------- -----------------------------------------------------------------------------------------------
Website www.jlen.com
--------------------- -----------------------------------------------------------------------------------------------
DIRECTORS AND ADVISERS
Directors
Richard Morse (Chairman)
Alan Bates (appointed on 10 June 2021)
Stephanie Coxon
Jo Harrison (appointed on 10 June 2021)
Peter Neville (resigned 2 September 2021)
Richard Ramsay
Hans Joern Rieks
Administrator to the Company, Company Secretary and registered
office
Sanne Fund Services Limited (formerly Praxis Fund Services)
Sarnia House
Le Truchot
St Peter Port
Guernsey GY1 1GR
Channel Islands
Registrar
Link Registrars (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey GY2 4LH
Channel Islands
UK transfer agent
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent B43 4TU
United Kingdom
Auditor
Deloitte LLP
Regency Court
Glategny Esplanade
St Peter Port
Guernsey GY1 3HW
Channel Islands
Investment Manager
Foresight Group LLP
The Shard
32 London Bridge Street
London SE1 9SG
United Kingdom
Public relations
SEC Newgate
14 Greville Street
London EC1N 8SB
United Kingdom
Corporate broker
Winterflood Securities Limited
The Atrium Building
Cannon Bridge House
25 Dowgate Hill
London EC4R 2GA
United Kingdom
Corporate bankers
HSBC
PO Box 31
St Peter Port
Guernsey GY1 3AT
Channel Islands
Public company directorships
Richard Morse
JLEN Environmental Assets Group Limited
Alan Bates
JLEN Environmental Assets Group Limited
Stephanie Coxon
JLEN Environmental Assets Group Limited
Apax Global Alpha Limited
International Public Partnerships Limited
PPHE Hotels Group Limited
PraxisIFM Group Limited
Jo Harrison
JLEN Environmental Assets Group Limited
Richard Ramsay
JLEN Environmental Assets Group Limited
Momentum Multi Asset Value Trust plc
Hans Joern Rieks
JLEN Environmental Assets Group Limited
CAUTIONARY STATEMENT
Pages 01 to 117 of the Annual Report 2022, including our
purpose, about us, at a glance, portfolio at a glance, market
opportunities, year at a glance, the Chairman's statement,
investment objectives, fund objectives, business model, fund
structure, stakeholder engagement, risks and risk management, the
Investment Manager, investment policy, investment portfolio and
valuation, operational review, value enhancement, case studies,
sustainability and ESG, and financial review (together, the review
section) have been prepared solely to provide additional
information to shareholders to assess JLEN's strategies and the
potential for those strategies to succeed. These should not be
relied on by any other party or for any other purpose.
The review section may include statements that are, or may be
deemed to be, "forward-looking statements". These forward - looking
statements can be identified by the use of forward - looking
terminology, including the terms "believes", "estimates",
"anticipates", "forecasts", "projects", "expects", "intends",
"may", "will" or "should" or, in each case, their negative or other
variations or comparable terminology.
These forward - looking statements include all matters that are
not historical facts. They appear in a number of places throughout
this report and include statements regarding the intentions,
beliefs or current expectations of the Directors and the Investment
Manager concerning, amongst other things, the investment objectives
and investment policy, financing strategies, investment
performance, results of operations, financial condition, liquidity,
prospects, opportunities and distribution policy of the Company and
the markets in which it invests.
These forward - looking statements reflect current expectations
regarding future events and performance and speak only as at the
date of this report. By their nature, forward - looking statements
involve risks and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the
future.
Forward - looking statements are not guarantees of future
performance or results and will not necessarily be accurate
indications of whether or not or the times at or by which such
performance or results will be achieved. The Company's actual
investment performance, results of operations, financial condition,
liquidity, prospects, opportunities, distribution policy and the
development of its financing strategies may differ materially from
the impression created by the forward - looking statements
contained in this report.
Subject to their legal and regulatory obligations, the Directors
and the Investment Manager expressly disclaim any obligations to
update or revise any forward - looking statement contained herein
to reflect any change in expectations with regard thereto or any
change in events, conditions or circumstances on which any
statement is based.
In addition, the review section may include target figures for
future financial periods. Any such figures are targets only and are
not forecasts.
This Annual Report has been prepared for the Group as a whole
and therefore gives greater emphasis to those matters which are
significant to JLEN Environmental Assets Group Limited and its
subsidiary undertakings when viewed as a whole.
ENDS
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