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JLEN Environmental Assets NAV surges 6.7% in 1st half

JLEN Environmental Assets (JLEN) has announced its interim results for the six months ended 30 September 2021, during which its NAV has risen from 92.2p per share to 98.4p, a 6.7% increase. This was driven primarily by an upward revision of the power price forecasts it uses, higher than forecast inflation during the period and a decrease in discount rates on the solar assets “in line with observable market evidence”. This marked increase in NAV was despite JLEN experiencing some challenges due to exceptionally low wind speeds during the period, which was the main detractor from its performance. Otherwise, JLEN reported that its portfolio performed well, in both operational and financial terms, with its agri AD, solar, hydro and its CNG refuelling station network all exceeded their generation targets.

Three acquisitions have increased portfolio diversification

JLEN made three acquisitions during the period, taking its total number of assets to 39, which includes investments in new sectors – biomass CHP and energy-from-waste. JLEN says that these recent bioenergy acquisitions provide potential for value enhancement, while its pipeline includes “value accretive opportunities”. Furthermore, they provide additional diversification within the portfolio. The biomass and energy-from-waste plants benefit from long-term subsidies, providing strong inflation-linked revenue streams.

The new investments were:

  • a construction stage battery storage project located in the UK;
  • a biomass combined heat and power plant located in the UK; and
  • an energy-from-waste plant located in Italy.

Dividend target of 6.8p reaffirmed

JLEN’s profit before tax for the period was £51.8 million (six months to 30 September 2020: £10.7 million) and its earnings per share for the period were 8.8 pence (six months to 30 September 2020: 2.0 pence). JLEN’s board says that, while it notes that the seasonal lack of wind is likely to have an impact on dividend cover for the year, it “is maintaining its determination to deliver targeted dividends to shareholders and reaffirms its guidance of 6.80 pence for the year to 31 March 2022”.

Dividend cover – 1.06 times

JLEN received cash from its portfolio by way of distributions (interest, loan repayments and dividends) of £26.7 million during the half year, an increase of 9.4% year-on-year (six months to 30 September 2020: £24.4 million). Net cash inflows from the investment portfolio (after operating and finance costs) were £21.7 million, an increase of 8.0% (six months to 30 September 2020: £20.1 million). Reflecting this, net cash inflows cover the interim dividends of £20.4 million paid in the half‑year period by approximately 1.06 times (six months to 30 September 2020: £18.3 million; 1.1 times).

Key highlights

The announcement provides a number of key highlights, which are detailed below.

Financial highlights

  • Portfolio valuation as at 30 September 2021 of £678.8m (31 March 2021: £571.4m)
  • NAV per ordinary share of 98.4 pence as at 30 September 2021 (31 March 2021: 92.2 pence), increase primarily driven by an upward revision of the power price forecast and above forecast inflation during the period
  • Further interim dividend of 1.70 pence per share declared making total dividend declared for the six months to 30 September 2021 of 3.40 pence, in line with the target set out in the 2021 Annual Report. Cash dividend cover of 1.06 times on dividends declared during the period
  • Share price total return for the period since IPO of 63.6% (6.8% annualised)

Portfolio highlights

  • Three acquisitions completed in the period, giving a total of 39 assets, including investments in new sectors – biomass CHP and energy-from-waste
  • Diversified portfolio by value: 29% wind, 24% anaerobic digestion (“AD”), 18% solar, 25% waste and wastewater, 2% hydro and 2% low carbon & energy efficiency
  • Operating performance of the portfolio during the six-month period was positive from several sectors of the portfolio, with agri AD, solar, hydro and our network of CNG refuelling stations all exceeding their generation targets.
  • The main detractor for the period was the wind portfolio, which was materially below generation target due to low wind resource

Other highlights

  • Strong pipeline of diversified assets for further growth
  • The Company raised £56.9 million in an oversubscribed placing in May 2021
  • Announced a new ESG-linked, £170 million revolving credit facility expiring in May 2024
  • Appointment of Alan Bates and Jo Harrison to the Board of Directors, effective 10 June 2021

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