JLEN Environmental Assets Group Ltd (LON: JLEN) maintained the value of its portfolio in the six months to September 2023, but its NAV slipped by 3% following dividend payments.
NAV is 119.7p/share and there is net debt of £124.6m. The revolving credit facility is £200m and there is £75m left to draw down – this facility lasts until May 2025. This year’s total dividend will be increased by 6% to 7.57p/share.
Three-fifths of income is index-linked. There was record cash generation from the renewables assets and this provided additional cash to be reinvested. Management is seeking to recycle capital by selling some of the wind and solar assets. There are spare bank facilities, but management is cautious about increasing borrowings.
The portfolio has changed over recent years with wind down to 28% of the total. Waste and bioenergy is 24%, anaerobic digestion 19% and solar 14%. Various assets make up the rest of the portfolio.
Hydrogen production is currently the focus for new investment. The first investment with partner HH2E should soon reach final investment decision. There is a second potential hydrogen development.
The share price has fallen to 95.5p, which is a discount of one-fifth to NAV. The average discount so far in this financial year is 13%. If it averages more than 10% for a whole financial year, the investment company has to have a discontinuation vote. This will not necessarily be in favour of discontinuation.
There are plans for share buy backs to help to reduce the discount to NAV.
