Annual Financial Report

RNS Number : 4743B

John Laing Environmental Assets Grp

17 June 2016

John Laing Environmental Assets Group Limited

Announcement of final results for the year ended 31 March 2016

The Directors of John Laing Environmental Assets Group Limited (the "Company" or "JLEN") are pleased to announce the Company's final results for the year ended 31 March 2016.

Financial Highlights

· Portfolio valuation as at 31 March 2016 of £264.5m (31 March 2015: £197.7m)

· NAV per ordinary share of 96.7 pence as at 31 March 2016 (31 March 2015: 101.2 pence). On an ex-dividend basis, NAV per ordinary share at 31 March 2016 is 95.2 pence compared to 98.2 pence at 31 March 2015, with the movement in the year reflecting primarily a reduction in forecast electricity prices

· Total dividends declared of 6.054 pence per ordinary share for year to 31 March 2016, in line with target set out in the 2015 Annual Report

· Quarterly dividends introduced from the end of calendar year 2015, with the first payment made in March 2016 in respect of the three months to 31 December 2015

· Share price total return for the period since IPO of 9.8%

Portfolio Highlights

· Robust operational and financial performance for the year to 31 March 2016

· Five acquisitions during the year, bringing the total number of assets in the portfolio to 15 and the capacity of the renewable energy assets in the JLEN portfolio to 129MW

· Strong pipeline of assets for further growth, both under the First Offer Agreement with the John Laing Group and from third parties

Financing Activity

· Successful equity fund raise in July 2015 raising gross proceeds of £65.0m

· Revolving credit facility increased from £50.0m to £65.0m in March 2016; £54.8m drawn at year end

· Successfully refinanced the bank debt in the wind asset portfolio on beneficial terms in March 2016

· Further equity raise under existing placing programme concluded in May 2016 raising gross proceeds of £35.2m and used to partially repay the revolving credit facility and provide for future acquisitions

Richard Morse, Chairman of JLEN, said:

"The Company has achieved its objectives in its second year since IPO, delivering dividends in line with expectations and further developing its portfolio through acquisitions. Performance has been resilient despite challenging market conditions, further demonstrating the benefits of JLEN's diversified portfolio of environmental infrastructure projects. The acquisition pipeline is healthy and we look forward to the present year with some confidence."

Annual report

A copy of the annual report has been submitted to the National Storage Mechanism and will shortly be available at www.morningstar.co.uk/uk/NSM. 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

There will be a call at 9.30am today for analysts and investors. To register for the call please contact Redleaf Communications on +44 (0)20 7382 4769, or by email on JLEN@RedleafPR.com.

Presentation materials will be posted on the Company's website, www.jlen.com, from 9.00am.

For further information, please contact:

John Laing Capital Management Limited

David Hardy

Chris Tanner

+44(0)20 7901 3559

Winterflood Investment Trusts

Joe Winkley

Neil Langford

+44(0)20 3100 0000

Readleaf Communications

Charlie Geller

Harriet Lynch

+44(0)20 7382 4769

Chairman's statement

On behalf of the Board, I am pleased to present the Annual Report of the Company for the year ended 31 March 2016.

Results

The Company has continued to make good progress in the development of its portfolio of environmental infrastructure assets during its second full year of trading since IPO, producing a good operational performance against a backdrop of continued falls in electricity prices and a further expansion of the portfolio, with five acquisitions totalling £75.5 million. As a result, at the year end JLEN has a diversified portfolio of 15 operational UK‑based solar, onshore wind, waste and wastewater processing projects.

The Net Asset Value ("NAV") per share at 31 March 2016 was 96.7 pence, compared with 101.2 pence NAV per share at 31 March 2015. After taking into account the quarterly dividend declared on 12 May 2016, to be paid on 24 June 2016, the ex‑dividend NAV per share at 31 March 2016 was 95.2 pence, a decrease of 3.1% on the ex‑dividend NAV per share of 98.2 pence at 31 March 2015. The reduction in NAV per share was due primarily to the Government's removal of the Climate Change Levy exemption for electricity from renewable sources from August 2015, announced in the July 2015 UK budget, together with the continued fall in the outlook for UK electricity prices, both of which have affected all renewable energy funds. As set out in the investment portfolio and valuation section of the strategic report, the diversification in JLEN's portfolio means that we have a relatively low exposure to electricity price movements compared with our peer group.

Profit after tax for the year was £6.2 million resulting in earnings per share of 3.0 pence. The Directors have recommended and declared a total dividend in respect of the year ended 31 March 2016 of 6.054 pence per share, above the earnings per share level of 3.0 pence for the year. The level of earnings per share of the Company in the current year is the result of the impact on the portfolio valuation of the lower electricity prices and the removal of LECs during the year as described above. However, taking account of the cash generation of the portfolio, the Board continues to believe that the portfolio is well positioned to deliver the target returns to shareholders.

Cash received from the portfolio assets by way of distributions, which includes interest, loan repayments and dividends, was £18.6 million during the year. Cash flow from operations of the Company of £14.3 million covered the declared interim dividends applicable to the year of 6.054 pence per share 1.05 times.

Dividends

It is the Directors' intention to pay shareholders a sustainable dividend, paid quarterly, that increases progressively in line with inflation, subject to market conditions, performance, financial position and outlook.

The Company met the initial IPO target of 6.0 pence per share for the year ended 31 March 2015 and will meet its target dividend for the year to 31 March 2016 of 6.054 pence per share being the initial target of 6.0 pence per share adjusted for inflation.

An interim dividend in respect of the six months to 30 September 2015 of 3.027 pence per share was paid in December 2015. The Company commenced paying quarterly dividends from January 2016, with the first payment of 1.5135 pence per share paid in March 2016 in respect of the three months to 31 December 2015. The Board is pleased to confirm the quarterly dividend in respect of the quarter to 31 March 2016 of 1.5135 pence per share, which was approved on 11 May 2016 and will be paid on 24 June 2016, bringing the total to the target of 6.054 pence per share for the full year.

The Company is targeting a full year dividend for the year ending 31 March 2017 of 6.14 pence per share.⁽¹⁾

Portfolio performance

During the year under review the performance of the portfolio has been robust and in line with expectations, with the wind assets showing generation slightly above budget, due to strong wind speeds during the winter after previously reported poor wind speed months during the summer, and the solar assets being slightly below budget due to lower than expected irradiation during the winter period. In terms of operational availability, the assets have performed at or above expectations and operational efficiencies are being realised as the portfolio expands.

The results from the renewable energy assets within the portfolio are dependent in part on the weather, which can be predicted with some degree of confidence over the long‑term but may vary over the short‑term. The Company's exposure to both solar and wind assets provides a degree of protection against variability and seasonality in resource as solar tends to be more productive at times when wind is less productive and vice versa.

The results from our renewable energy assets are also dependent in part on the level of electricity prices, which have trended noticeably lower, both spot and forward, since IPO. The impact on the Company continues to be mitigated by the fact that the Company has a relatively low exposure to electricity prices in its ROC and FiT operating projects compared to other portfolios held by peer funds and the waste and wastewater processing assets are not affected by the level of electricity prices. As previously reported, the announcements contained in the July 2015 Budget had a small net negative impact on the Company's NAV of approximately 0.4 pence per share, with the loss of revenue from Levy Exemption Certificates being partially offset by a reduction in the corporation tax rate. The limited impact on JLEN from the Budget reflected the benefits of diversification in the Company's portfolio with a number of assets being net beneficiaries of the corporation tax changes announced in the Budget. In our December 2015 NAV announcement we reported further significant falls in both short and longer term electricity price forecasts which caused a 3.3 pence reduction in NAV per share at 31 December 2015. During the final quarter of the financial year, further falls in electricity price forecasts have been experienced, producing a small reduction in NAV, although as discussed below this has been offset by the beneficial impact on NAV of the project debt refinancing.

For the waste and wastewater processing assets, financial performance has been broadly in line with expectations and volumes have been at or above expected levels. I am pleased to report that the facilities impacted by a fire at the Frog Island facility (part of the ELWA project) in August 2014 are anticipated to be restored to full operation in late June 2016, and during the period when operations were affected, the contract with East London Waste Authority continued to be fulfilled with no impact on distributions to the Company.

The relative resilience of the Company's NAV during the year, despite the impact of LECs and falling electricity prices noted above, demonstrates the benefits of the Company's portfolio diversification across a range of environmental infrastructure projects and its operational robustness.

Investment performance

Over the 12 month period to 31 March 2016 shareholders have seen a share price total return of ‑2.5% whilst over the same period the NAV total return per share was +3.1%. The discrepancy is largely due to the reduction in the premium of share price to NAV from 8.2% at 31 March 2015 to 2.6% at 31 March 2016.

Acquisitions

During the period under review, the Company announced the following acquisitions:

Monksham solar

Monksham solar is a 10.7MW solar park located near Frome in Somerset. In July 2015, JLEN acquired a significant economic interest in Monksham, which represented our first third party acquisition.

Branden solar

In March 2015, JLEN acquired a 64% stake in Branden solar. In July 2015, the Company acquired the remaining 36% stake. This was purchased from John Laing under the First Offer Agreement, underlining its continuing importance to the Company's acquisition pipeline.

Panther small scale solar portfolio

The Panther portfolio was acquired in two separate transactions and comprises 6.5MW of fully operational domestic rooftop, commercial rooftop and ground mount solar installations, with a total of 1,099 systems distributed across England, Scotland and Wales.

The two transactions, in October 2015 and November 2015, comprise 796 systems with 4.2MW of generation and 303 systems with 2.3MW of generation respectively.

Burton Wold Extension

Burton Wold Extension is a 14.4MW wind farm located near Burton Latimer in Northamptonshire. 100% of the project was acquired from John Laing under the First Offer Agreement in December 2015.

Pylle Southern solar

Pylle Southern solar is a 5MW solar park located near Shepton Mallet in Somerset. JLEN acquired 100% of the project from the original investors and Green Nation, the latter who were also developers of the Monksham solar park, in March 2016.

These acquisitions bring the total capacity of the renewable energy assets in the JLEN portfolio to 129MW.

Post the year end, on 9 May 2016, JLEN entered into an agreement to acquire 100% of the Parc Éolien Le Placis Vert wind farm from the German developer Energiequelle GmbH ("Energiequelle"), its first non‑UK acquisition. The project, operational since January 2016 and located in the municipality of Saint‑Gouéno in the Côtes‑d'Armor region of Brittany in north-western France, has a total generating capacity of 4MW and benefits from a 15‑year Feed‑in Tariff ("FiT") regime at a fixed rate adjusted annually for inflation. This acquisition, which is expected to complete in the coming weeks (subject to the customary consents), represents JLEN's entry into the French market and is consistent with JLEN's strategy of diversification. This marks JLEN's first collaboration with Energiequelle, an established German developer and operator of wind projects. We are in discussion with Energiequelle on acquisitions of a further 10MW of capacity in France, and we look forward to future partnering opportunities with Energiequelle.

Share issues and financing

In July 2015, we were delighted by the response from investors to our first equity fund raise since IPO, with JLEN successfully raising gross proceeds of £60 million through the issue of 59,405,940 ordinary shares at 101 pence per share, pursuant to a significantly oversubscribed Placing and Offer for Subscription. At the same time the Company launched a Placing Programme of up to 150 million new shares and in light of investor demand at this time the Company elected to undertake a first close under its Placing Programme for £5 million through the issue of 4,950,495 ordinary shares at 101 pence per share. The net proceeds of the issues were used to repay amounts drawn down on the Company's revolving credit facility and to fund the acquisitions of the remaining 36% stake in Branden solar from John Laing and the Monksham solar park as noted above.

The Company's revolving credit facility gives it the flexibility to acquire further assets on a timely basis, reducing the performance drag associated with holding excess cash. Post the equity raise in July 2015, the facility was used to finance the purchase of the last five acquisitions set out above and to assist this programme the facility was extended from its original level of £50 million to £65 million in March 2016.

Post the year end, in May 2016, JLEN successfully raised further equity under its Placing Programme, raising gross proceeds of £35.2 million through the issue of 36 million ordinary shares at 97.75 pence per share. This has enabled JLEN to reduce the balance outstanding on its revolving credit facility and to help fund the strong pipeline of opportunities available to the Company during the foreseeable future.

In my half‑year statement, I reported that the Company was investigating the possible refinancing of the project debt in its wind asset portfolio. I am pleased to report that the refinancing was successfully concluded with The Bank of Tokyo‑Mitsubishi UFJ Ltd, a member of MUFG, in March 2016. There was no increase in the gearing of the wind portfolio apart from an amount to cover the costs associated with the transaction and the refinancing has secured more beneficial terms for the portfolio which has had a positive impact on NAV. This is discussed further in the strategic report.

Valuation

The Net Asset Value at 31 March 2016 is £216.9 million, comprising £264.5 million portfolio valuation, £6.2 million of cash held by the Group, less £54.8 million drawn on the Company's immediate subsidiary's revolving credit facility, together with positive working capital balances of £1 million.

The Investment Adviser has prepared a fair market valuation of the portfolio as at 31 March 2016. This valuation is based on a discounted cash flow analysis of the future expected equity and loan note cash flows accruing to the Group from each portfolio investment. This valuation uses key assumptions which are recommended by the Investment Adviser using its experience and judgement, having taken into account available comparable market transactions and financial market data in order to arrive at a fair market value.

To provide assurance to the Board with respect to the valuation, an independent verification exercise of the methodology and assumptions applied by JLCM is performed by a leading accountancy firm and an opinion provided to the Directors.

The Directors have satisfied themselves as to the methodology used and the assumptions adopted and have approved the valuation of £264.5 million for the portfolio of 15 investments as at 31 March 2016.

Risks and uncertainties

While it is the Investment Adviser who manages the risks facing the Company on a day‑to‑day basis, it is the Board of the Company which retains ultimate responsibility. The Company's Risk and Audit Committees, which report to the Board, were formed to review the effectiveness of the Company's (and that of the Investment Adviser, Administrator and other third party service providers as it deems fit) internal control policies and procedures for the identification, assessment and reporting of risks.

The Board considers that the principal risks and uncertainties for JLEN have not materially altered from those set out in the Company's prospectus dated 4 June 2015. The full prospectus is available on JLEN's website, and a summary of the principal risks and uncertainties is included in the risks and risk management section of the strategic report. This specifically discusses the risks associated with the Base Erosion and Profit Shifting project ("BEPS"), a recent initiative between OECD countries, that has become relevant to our industry. In the UK Budget in March 2016 it was announced that measures to address the issue of interest deductibility and BEPS would be introduced from 1 April 2017 and the Treasury would consult with industry on the exact measures to be put in place. On 12 May 2016, HM Treasury issued its consultation document on detailed policy design and implementation, which is due to conclude in August 2016. The Investment Adviser will continue to lend its support to and participate alongside industry peers in the consultation processes run by HMRC but analysis based on the proposals set out in the consultation document shows no material impact on the projects in which JLEN invests.

Annual general meeting

The annual general meeting will be held on 17 August 2016 at 10am at the Company's registered office in Guernsey.

Outlook

The Board continues to work closely with the Investment Adviser in assessing the risks and opportunities in the environmental infrastructure market and reviewing the operational and financial performance of the Company. As discussed above, during the last year of trading we have seen a reduction in cash generation due to the removal of the Levy Exemption Certificate and continuing falls in UK wholesale electricity prices. Notwithstanding this, JLEN achieved a cash dividend cover of 1.05 times and is targeting an increase in its dividend for the year to 31 March 2017 in line with inflation.

Whilst there remains increased uncertainty in the wider UK renewable energy market following changes to reduce support to the sector under the Renewable Obligation Scheme and the Feed‑in Tariff regime, these will have no impact on JLEN's existing assets or the short‑term pipeline of acquisition opportunities.

The Board, through its Investment Adviser JLCM, actively continues to seek suitable projects to add to its portfolio both from John Laing and third parties. JLEN has the benefit of a First Offer Agreement with John Laing over a significant pipeline of environmental infrastructure projects which supports its growth plans in the next few years. Despite an increasingly competitive marketplace, the Company has acquired three assets from third parties during the year and continues to see a steady stream of attractive opportunities across the breadth of its investment mandate.

A key strength of the Company remains its strategy of diversification across a range of sectors and revenue sources within the environmental infrastructure space. This strategy has demonstrated resilience in the two years since IPO in the light of seasonal weather volatility and a downward shift in electricity prices. The Board believes the Company is well positioned to continue to deliver on its promises to its shareholders and is confident in its ability to fund the strong pipeline of environmental infrastructure opportunities available as we continue to build the portfolio.

Richard Morse
Chairman

16 June 2016

(1) This is a target only and not a profit forecast. There can be no assurance that this target will be met.

STRATEGIC REPORT

This strategic report has been prepared to clearly set out to shareholders the objectives, strategy, performance and principal risks of JLEN.

Investment objectives

To provide investors with a sustainable dividend per share, paid quarterly, that increases in line with inflation, and to preserve the capital value of its portfolio over the long term.

The Company aims to provide its investors with a sustainable dividend per share, paid quarterly, that increases progressively in line with inflation, and 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 per share for the first year of trading to 31 March 2015 was 6.0 pence, as targeted in the IPO Prospectus. The dividend for the year ended 31 March 2016 is 6.054 pence per share, representing an inflationary increase over the 6.0 pence per share for the year to 31 March 2015. 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 projects⁽¹⁾.

The Company seeks to maintain strong relationships with all its stakeholders and those of its investments, including investors, funders, key contractors and partners, national and local government and local communities.

1 This is a target only and not a profit forecast. There can be no assurance that this target will be met.

Strategy and investment policy

Investment in a diversified portfolio of operational environmental infrastructure projects.

The Company seeks to achieve its objectives by investing in a diversified portfolio of environmental infrastructure projects:

· that have the benefit of long‑term, predictable, wholly or partially inflation‑linked cash flows;

· that are supported by long‑term contracts or stable and well‑proven regulatory and legal frameworks; and

· that feature well‑established technologies, demonstrable operational performance and a track record of producing long‑term predictable revenues.

JLEN defines environmental infrastructure as infrastructure projects that utilise natural or waste resources or support more environmentally‑friendly approaches to economic activity. This could involve the generation of renewable energy (including solar, wind, hydropower and biomass technologies), the supply and treatment of water, the treatment and processing of waste, and projects that promote energy efficiency.

The Company will invest in environmental infrastructure projects either directly or through holding or other structures that give the Company an investment exposure to environmental infrastructure projects.

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 always 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 projects comprising the current portfolio are underpinned by well‑established technologies, and it is intended that the equipment and systems used by the assets in the portfolio will not rely substantially on new technology and that they will have a significant track record of use in other projects. On acquisition, the relevant equipment will also have demonstrated operational performance. However, as environmental infrastructure is a relatively new asset class and the technologies that underpin it may be subject to technological advancements in the future, the actual investment allocation will depend on the development of the environmental infrastructure market, underlying technologies and the judgement of the Directors (on the advice of the Investment Adviser) as to what is in the best interests of the Company at the time of investment.

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 projects in the portfolio by value and number will be operational. The Fund will not acquire investment interests in any project if as a result of such investment, 15% 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 Fund will only invest in projects that are located in OECD countries;

· it is intended that investment interests in any single project acquired will not have an acquisition price greater than 25% of the NAV immediately post‑acquisition. In no circumstances will a new acquisition exceed a maximum limit of 30% of the NAV immediately post‑acquisition;

· the Company will make use of short‑term debt financing to facilitate the acquisition of investments. Borrowing may be secured against the assets comprising 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, which shall be in addition to any borrowing at Fund level; and

· the Fund may acquire investment interests in respect of projects that have non‑recourse project finance in place at the project entity level. The Company is limited to aggregate non‑recourse financing attributable to renewable energy generation and PPP projects not exceeding 65% and 85% respectively of the aggregate gross project value of such projects.

Hedging

Where investments are made in currencies other than pounds sterling, the Fund will consider whether to hedge currency risk in accordance with the Fund'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 Fund to finance investments. This may involve the use of interest rate derivatives and similar derivative instruments. Hedging against inflation may also be carried out 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.

Cash balances

Pending reinvestment or distribution of cash receipts, cash received by the Fund will be invested in cash, cash equivalents, near‑cash instruments, money market instruments and money market funds and cash funds. The Fund 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 complies with the Company's investment policy and further investments will only be acquired if they comply with the Company's investment policy.

The Company has the contractual right of first offer (in accordance with the First Offer Agreement) for environmental infrastructure projects in the UK, Ireland, Sweden and any other country in the European Union or the European Free Trade Association, which John Laing wishes to dispose of and that are consistent with the Company's investment policy. Subject to due diligence and agreement on price, the Fund will seek to acquire those projects that fit the investment objectives and investment policy of the Company.

The Fund will also seek out and review acquisition opportunities not connected with John Laing and will, where appropriate, carry out the necessary due diligence. If, in the opinion of the Directors the risk characteristics, valuation and price of the investment interests in the project or projects for sale is acceptable and is 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 interests in the relevant project or projects will be acquired by the Fund.

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 UK Listing 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.

Key performance measures

The key performance measures used by the Company to assess its performance over time against the objectives and strategy set out above are as follows:

· market capitalisation;

· dividend per share (declared);

· share price;

· total shareholder return for the period (share price basis);

· Net Asset Value;

· Net Asset Value per share;

· Net Asset Value growth (adjusting for dividends);

· portfolio value;

· number of investments; and

· largest single investment as a percentage of portfolio value.

The key performance measures for the year ended 31 March 2016 are set out in the operational and financial review of the strategic report.

Business model

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 John Laing 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 2016 the Company owns a portfolio of 15 environmental infrastructure investments in the UK. The Company has a 31 March year end and announces half-year results in November and full year results in June. The Company commenced paying quarterly dividends from January 2016, with the first payment in March 2016 in respect of the three‑month period to 31 December 2015.

The Company is a self‑managed Alternative Investment Fund under the European Union's Alternative Investment Fund Managers Directive. The Company has a Board of five independent non‑executive Directors (details of whom can be found in the governance section) whose role is to manage the governance of the Company in the interests of shareholders and other stakeholders. In particular, the Board 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 a number of ad hoc meetings dependent upon business need. In addition, the Board has three committees covering Audit, Risk 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 advisory engagement committee. The Board will review and make recommendations on any proposed amendment to the Investment Advisory Agreement, keeps under review the performance of the Investment Adviser and manages the risks of the delegation of certain activities to the Investment Adviser. 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 Board takes advice from the Investment Adviser, John Laing Capital Management Limited ("JLCM"), on matters concerning the market, the portfolio and new investment opportunities. Day‑to‑day management of the Group's portfolio is delegated to the Investment Adviser. The Company has an Investment Advisory Agreement in place with JLCM which can be terminated at 12 months' notice from 31 March 2018.

The key roles of the Investment Adviser 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 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;

· hedging non‑sterling investments; and

· managing the Company's investor reporting and investor relations activities.

Further details on the Investment Adviser are set out in the governance section and in note 15 to the financial statements on with respect to fees.

Praxis Fund Services Limited has been appointed as Company Secretary and Administrator. Other key service providers to the JLEN Group include Winterflood Securities and Barclays as joint brokers, Redleaf Communications as financial public relations advisers, Mourant Ozannes as legal advisers as to Guernsey law, Hogan Lovells as legal advisers as to English law, Capita Registrars as registrars, Deloitte LLP as auditor, and NIBC and HSBC as lenders to the Group via the £65 million revolving credit facility.

The Board reviews the performance of all key service providers on an annual basis.

Acquisitions

As noted above it is expected that further investments will include investments that will be acquired from John Laing under the terms of the First Offer Agreement entered into at IPO as well as investments purchased from non‑related parties.

The Company has established procedures to deal with any potential conflicts of interest that may arise from individuals at John Laing both advising the Directors on the "buy‑side" (for the Fund) and acting on the "sell‑side" (for John Laing and its subsidiaries) in relation to any acquisition of projects from John Laing. These procedures include:

· the creation of a separate "buy‑side" committee (representing the interests of the Fund as purchaser) and a separate "sell‑side" committee (representing the interests of the relevant John Laing company as seller), with each member of the "buy‑side" committee having the benefit of a release from his or her duties as a John Laing employee to the extent that these duties conflict with their duties to act in the interests of the Fund as a member of the "buy‑side" committee;

· a requirement for the "buy‑side" committee to conduct due diligence on the investment interests proposed to be purchased which is separate from and independent of any due diligence conducted for John Laing, and for a report on the fair market value of the investment interests to be obtained from an independent expert; and

· the establishment of information barriers between members of the "buy‑side" and "sell‑side" committees to ensure confidentiality and integrity of commercially sensitive information, and for individuals with economic interests in the investment interests to abstain from participating in committee discussions and votes on the relevant projects.

The Fund will seek to acquire further investments going forward both from John Laing and from the wider market. In selecting the projects to acquire, the Investment Adviser and the Directors will be obliged to ensure that these projects meet the Company's investment policy.

The Investment Adviser will be subject to the overall supervision of the Board and all decisions on the acquisition of new investments and the disposal of existing investments will be subject to the approval of the Directors, all of whom are independent of John Laing. To the extent that any Director is appointed to the Board in the future who is not independent from John Laing, any such Director will not participate in any decision to acquire investments from or sell investments to John Laing.

In view of the procedures and protections set out above and the fact that it is a key part of the Company's investment policy to acquire assets from John Laing, the Company will not seek the approval of shareholders for acquisitions of assets from John Laing in the ordinary course of the Company's investment policy.

The Registered Collective Investment Scheme ("RCIS") Rules require that any arrangements between a relevant person (as defined in the RCIS Rules) and the Company are at least as favourable to the Company as would be any comparable arrangement effected on normal commercial terms negotiated at arm's length between the relevant person and an independent party.

Potential disposal of investments

Whilst the Directors may elect to retain investment interests in the portfolio projects that the Fund acquires and any other further investments made by the Fund over the long term, the Investment Adviser will regularly monitor the valuations of such projects 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.

Discount management

By special resolution of the shareholders of the Company, passed on 13 August 2015, the Company has been granted shareholder authority (subject to the Listing Rules and all other applicable legislation and regulations) to purchase in the market up to 14.99% per annum of the ordinary shares in issue immediately following the passing of the resolution. This authority will expire at the conclusion of the next annual general meeting of the Company in August 2016. The Directors intend to seek renewal of this authority from shareholders at each annual general meeting.

It is the Company's investment objective to return value to shareholders in the form of dividends and capital distributions. The Company intends to distribute net income in the form of dividends. Furthermore, in normal market circumstances the Directors intend to favour pro rata capital distributions ahead of ordinary share repurchases in the market. However, if the ordinary shares have traded at a significant discount to NAV for a prolonged period the Board will seek to prioritise the use of net income after the payment of dividends on market repurchases over other uses of capital.

As part of the Company's discount management policies, the Board intends to propose a continuation vote if the ordinary shares trade at a significant discount to Net Asset Value per share for a prolonged period of time. If, in any financial year, the ordinary shares have traded, on average, at a discount in excess of 10% to the Net Asset Value per share, the Board will propose a special resolution at the Company's next annual general meeting that the Company ceases to continue in its present form. If such a vote is passed, the Board will be required to formulate proposals to be put to shareholders within four months to wind up or otherwise reconstruct the Company, bearing in mind the illiquid nature of the Company's underlying assets.

The discount prevailing on each business day will be determined by reference to the closing market price of ordinary shares on that day and the most recently published Net Asset Value per share.

Operational and financial review

The financial performance of the portfolio has been robust despite lower electricity prices during the year and operational availability has been at or above expectations.

Operational and financial review for the period

Key performance measures

The key performance measures for the year ended 31 March 2016 (compared to the previous period from incorporation on 12 December 2013 to 31 March 2015, an effective trading period of 12 months from IPO on 31 March 2014) are summarised below:

	Year ended	Period to
	31 March	31 March
	2016	2015
Market capitalisation	£222.7m	£175.2m
Dividend per share (declared)	6.054p	6.0p
Share price	99.25p	109.5p
Total shareholder return for the period (share price basis)	‑2.5%	+12.6%
Net Asset Value	£216.9m	£161.9m
Net Asset Value per share	96.7p	101.2p
Net Asset Value growth (adjusting for dividends)	‑3.1%	+0.2%
Portfolio value	£264.5m	£197.7m
Number of investments	15	11
Largest single investment as % of portfolio value	16.6%	21.4%

Portfolio performance

Operating performance of the portfolio during the year ended 31 March 2016 was robust and in line with expectations, with the wind assets showing generation 2% above budget due to strong wind speeds during the winter after previously reported poor wind speed months during the summer, and the solar assets being 2% below budget due to lower than expected irradiation during the winter period. In terms of operational availability, the assets have performed at or above expectations and operational efficiencies are being realised as the portfolio expands.

All of the projects have achieved the budgeted level of availability with the exception of the Carscreugh wind farm, which has experienced higher than expected downtime due to turbine set‑up issues. We are working with the turbine supplier to resolve these and we continue to benefit from availability warranties where faults are not rectified.

The environmental processing plants have also achieved full availability during the period, save for the ELWA fire which we reported in the 2015 Annual Report. The fire occurred at the Frog Island Mechanical Biological Treatment facility at the ELWA waste project. We are pleased to report that the Frog Island facility has continued to operate on an interim basis and in conjunction with the project's other facilities, the contract with East London Waste Authority continued to be fulfilled and operated, diversion from landfill targets met and distributions made in line with budgets during the year. The facilities affected have now been reinstated and full operations are anticipated to recommence in late June 2016.

The year under review has been categorised by variable weather patterns in the British Isles, with the wind projects experiencing good wind conditions over the winter of 2015‑16, leading to generation ahead of budget. However, during the summer of 2015, the UK experienced several low wind‑speed months, illustrating that wind conditions can vary significantly over individual months. For the year ended 31 March 2016, generation from the renewable energy portfolio was in line with budget, with generation from the wind assets 2% above expectations and that from the solar assets being 2% below budget. This situation is contrasted with financial year 2015, when extremely low winds speeds during the summer of 2014 led to a significant shortfall in budgeted generation, with winter 2014/2015 showing on‑budget performance. Overall generation across the portfolio of wind and solar assets since IPO for the 24 months to 31 March 2016 was approximately 6% and 2% below budget respectively, which is well within the range of expectations.

Overall the generation of the renewable energy assets in the portfolio is summarised as follows:

Portfolio generation (GWh)	2014‑15	2015‑16	Total
Wind portfolio actual generation	82	185	267
Variation from budget	‑20%	+2%	‑6%
Solar portfolio actual generation	10	30	40
Variation from budget	‑1%	‑2%	‑2%

Waste and wastewater flows have been in line with budget for the year. The environmental processing projects are relatively insensitive to volume changes due to the presence of banded payment arrangements that see the projects make little additional profit for a marginal unit of waste.

During the year, the UK has experienced a rapid and sustained reduction in both short‑term market prices and long‑term forecasts for electricity prices, with a simple average reduction over 25 years of 12% from corresponding levels at the start of the financial year. In response to this, where no fixed price arrangements exist for a project, we reflect market forward pricing for the next two years before reverting to a current long‑term forecast provided by a market consultant.

In January, we auctioned the electricity for some of the solar project sites for summer 2016 and winter 2016‑17 and achieved an outcome in line with our expectations given market conditions. The wind farms remain under long‑term electricity purchase agreements with a mixture of fixed and variable pricing arrangements.

Overall, 29% of the portfolio distributions are exposed to market electricity prices. Over 50% of the generation of the renewable energy assets is covered by fixes under existing PPAs for at least six months with the balance being at floating rates.

The impact on revenues and portfolio valuation is discussed in more detail in the analysis of financial results and investment portfolio and valuation sections below.

The effects of monthly variability and seasonality in production expected in a portfolio of intermittent renewables projects are substantially reduced by the overall technology diversification in JLEN's portfolio. In particular 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.

Acquisitions

During the year ended 31 March 2016, the Company made five acquisitions with a total investment value of £75.5 million. The assets were as follows:

Monksham solar

Monksham solar is a 10.7MW solar park located near Frome in Somerset. In July 2015, JLEN acquired a significant economic interest in Monksham, which represented its first third party acquisition.

Branden solar

Panther small scale solar portfolio

The two transactions, in October 2015 and November 2015, comprise 796 systems with 4.2MW of generation and 303 systems with 2.3MW of generation respectively.

The domestic portfolio comprises 1,033 individual systems with a total installed generating capacity of 3.4MW. The commercial portfolio consists of 66 installations totalling 3.1MW and is split between 52 ground mounted installations at farms located in the south‑west of England and Wales, and 14 rooftop installations distributed across schools in England, Wales and Scotland. All installations are accredited under the UK Feed‑in Tariff regime.

Burton Wold Extension

Burton Wold Extension is a 14.4MW wind farm located near Burton Latimer in Northamptonshire. 100% of the project was acquired from John Laing under the First Offer Agreement in December 2015.

Pylle Southern solar

Pylle Southern solar is a 5MW solar park located near Shepton Mallet in Somerset. JLEN acquired 100% of the project in March 2016.

These acquisitions bring the total capacity of the renewable energy assets in the JLEN portfolio to 129MW.

Financing

In July 2015, JLEN successfully raised gross proceeds of £60 million through the issue of 59,405,940 ordinary shares at 101 pence per share pursuant to a significantly oversubscribed Placing and Offer for Subscription. At the same time the Company launched a Placing Programme of up to 150 million new shares and in light of investor demand at this time, the Company elected to undertake a first close under its Placing Programme for £5 million through the issue of 4,950,495 ordinary shares at 101 pence per share. The net proceeds of the issues were used to repay amounts drawn down on the Company's revolving credit facility and to fund the acquisitions of the remaining 36% stake in Branden solar from John Laing and the Monksham solar park as noted above.

In October 2014, UK HoldCo entered into a three‑year £50 million revolving credit facility with HSBC and NIBC to fund new acquisitions and to provide working capital. This type of short-term financing is limited to 30% of the Net Asset Value. The intention is that borrowings under the facility will be repaid through cash received from the Company's investment assets and future equity raisings, as was the case following the equity fund raise in July 2015 noted above. In March 2016, the facility was extended to £65 million on the same terms. At 31 March 2016 the balance drawn on the revolving credit facility was £54.8 million.

In addition to the revolving credit facility, several of the projects have underlying project level debt which is not reflected in these financial statements. There is an additional gearing limit in respect of such debt of 85% of the aggregate gross project value (being the fair market value of such portfolio companies increased by the amount of any financing held within the projects) for PFI/PPP projects and 65% for renewable energy generation projects.

In the half‑year report, we noted that given the current favourable banking market for renewable energy assets, and the improvement in terms which might be possible at the time, the Investment Adviser was reviewing the funding options for the portfolio with a view to JLEN implementing a refinancing of, in particular, the debt in its wind portfolio. In March 2016, the Company completed a refinancing of the external debt in its portfolio of seven wind farms. The new arrangement with The Bank of Tokyo‑Mitsubishi UFJ Ltd is for a £76.5 million loan, fully amortising over 16 years with a refinancing at year five, and for a £3.3 million standby debt service facility. Interest rate hedging has been taken out for the full term to cover the long‑term amortisation profile. No additional debt was raised apart from as required to cover transaction costs and the breaking of existing hedging arrangements.

The refinancing has lowered the finance costs of the wind portfolio. It has also improved other terms, in particular removing cash sweeps which were a feature of the original project finance arrangements that have now been terminated.

The project‑level gearing at 31 March 2016 across the portfolio was 43.6% (31 March 2015: 47.3%) being 27.1% (31 March 2015: 25.0%) for the renewable energy assets and 62.2% (31 March 2015: 64.5%) for the PFI processing assets. Taking into account the amount drawn down under the revolving credit facility, the overall fund gearing at 31 March 2016 was 53.9% (31 March 2015: 57.0%).

As at 31 March 2016, the Group, which comprises the Company and the intermediate holding companies, had cash balances of £6.2 million (31 March 2015: £8.6 million).

Analysis of financial results

The Company prepared the financial statements for the year ended 31 March 2016 in accordance with International Financial Reporting Standards ("IFRS") as published by the EU. 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 (John Laing Environmental Assets Group (UK) Limited) 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 John Laing 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 15 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).

Result for the year ended 31 March 2016

		Period from
		12 December
	Year ended	2013 to
All amounts presented in £million	31 March	31 March
(except as noted)	2016	2015
Net assets⁽¹⁾	216.9	161.9
Portfolio value⁽²⁾	264.5	197.7
Intermediate holding companies net liabilities⁽²⁾	(50.1)	(38.6)
Operating income	9.3	12.0
Net assets per share	96.7p	101.2p
Distributions, repayments and fees from portfolio	18.6	13.8
Profit before tax	6.2	9.4

(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 £161.9 million at 31 March 2015 to £216.9 million at 31 March 2016, primarily driven by the capital raise in July 2015.

The net assets of £216.9 million comprise £264.5 million portfolio value of environmental infrastructure investments and the Company's cash balances of £3.3 million, offset by £50.1 million related to the fair value of the intermediate holding companies and by other net liabilities of £0.8 million.

The intermediate holding companies' negative fair value of £50.1 million comprises cash balances of £2.9 million, offset by net liabilities of £53.0 million principally comprising the £54.8 million credit facility loan.

Analysis of the Group's net assets at 31 March 2016

All amounts presented in £million	At 31 March	At 31 March
(except as noted)	2016	2015
Portfolio value	264.5	197.7
Intermediate holding companies cash	2.9	5.0
Intermediate holding companies revolving credit facility debt	(54.8)	(43.7)
Intermediate holding companies other assets	1.8	0.1
Fair value of the Company's investment in UK HoldCo	214.4	159.1
Company's cash	3.3	3.6
Company's other liabilities	(0.8)	(0.8)
Net Asset Value at 31 March	216.9	161.9
Number of shares	224,356,435	160,000,000
Net Asset Value per share	96.7p	101.2p

At 31 March 2016, the Group (Company plus intermediate holding companies) had a total cash balance of £6.2 million (31 March 2015: £8.6 million), including £3.3 million in the Company's balance sheet (31 March 2015: £3.6 million) and £2.9 million in the intermediate holding companies (31 March 2015: £5.0 million), which is included in the Company's balance sheet within "investment at fair value though profit or loss".

At 31 March 2016, UK HoldCo had drawn £54.8 million of its revolving credit facility debt (31 March 2015: £43.7 million) which is included in the Company's balance sheet within investment at fair value through profit or loss.

The movement in the portfolio value from 31 March 2015 to 31 March 2016 is summarised as follows:

		Period from
		12 December
	Year ended	2013 to
All amounts presented in £million	31 March	31 March
(except as noted)	2016	2015
Portfolio value at start of the year/at incorporation	197.7	-
Acquisitions (net of post acquisition adjustments)	73.7	198.3
Distributions received from investments	(18.6)	(13.8)
Growth in value of portfolio	11.7	13.2
Portfolio value at 31 March	264.5	197.7

Further details on the portfolio valuation and an analysis of movements during the year are provided in the investment portfolio and valuation section in the strategic report.

Income

The Company's profit before tax for the year ended 31 March 2016 is £6.2 million, generating an earnings per share of 3.0 pence.

		Period from
		12 December
	Year ended	2013 to
All amounts presented in £million	31 March	31 March
(except as noted)	2016	2015
Interest received on UK HoldCo loan notes	10.2	8.1
Dividend received from UK HoldCo	7.5	1.7
Net (losses)/gains on investments at fair value	(8.4)	2.2
Operating income	9.3	12.0
Operating cost	(3.1)	(2.6)
Profit before tax	6.2	9.4
Earnings per share	3.0p	5.9p

In the year to 31 March 2016, the operating income was £9.3 million, including the receipt of £10.2 million interest on the UK HoldCo loan notes, £7.5 million of dividends also received from UK HoldCo and a net loss on investments at fair value of £8.4 million.

The operating costs included in the income statement for the year were £3.1 million, in line with expectations. These include £0.7 million of operating expenses and £2.4 million of Investment Adviser fees. Investment Adviser fees are charged at 1% of Adjusted Portfolio Value as set out in more detail in note 15 to the financial statements.

As noted earlier, the dividend in respect of the year ended 31 March 2016 is 6.054 pence per share while the earnings per share for the year is 3.0 pence. Profitability during the year was adversely affected by the impact of lower electricity prices and the removal of LECs. However, as noted in the cash flow section below, cash receipts from the portfolio for the year after operating, administrative and financing costs, cover the dividend declared for the year 1.05 times.

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 2016 was 1.5% (period ending 31 March 2015: 1.4%). 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's. Adjusting for the impact of the drawdown amount under the revolving credit facility, the ongoing charge ratio would be 1.4% (31 March 2015: 1.4%). JLCM believes this to be competitive for the market in which JLEN operates and the stage of development and size of the Fund, and demonstrates 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 2016 of £3.3 million. The breakdown of the movements in cash is shown below.

Cash flows of the Company for the year (£million):

		Period from
		12 December
	Year ended	2013 to
	31 March	31 March
	2016	2015
Cash balance at 1 April/at incorporation	3.6	-
Net issue proceeds from equity raise	63.8	157.3
Investment in UK HoldCo (equity and loan notes)	(63.8)	(156.9)
Interest on loan notes received from UK HoldCo	10.2	8.1
Dividends received from UK HoldCo	7.5	1.7
Directors' fees and expenses	(0.2)	(0.2)
Investment Adviser fee	(2.3)	(1.2)
Administrative expenses	(0.5)	(0.4)
Dividends paid in cash to shareholders	(15.0)	(4.8)
Company cash balance at 31 March	3.3	3.6

The Group had a total cash balance at 31 March 2016 of £6.2 million (2015: £8.6 million) and borrowings under the revolving credit facility of £54.8 million (2015: £43.7 million). The breakdown of the movements in cash is shown below.

Cash flows of the Group for the year (£million):

		Period from
		12 December
	Year ended	2013 to
	31 March	31 March
	2016	2015
Cash received from environmental infrastructure investments	18.6	13.8
Administrative expenses	(0.6)	(0.4)
Directors' fees and expenses	(0.2)	(0.2)
Investment Adviser fee	(2.3)	(1.2)
Financing costs (net of interest income)	(1.2)	(0.2)
Cash flow from operations	14.3	11.8
Net proceeds from share issues	63.8	157.3
Acquisition of investment assets	(75.7)	(198.9)
Reduction in acquisition price	-	0.6
Acquisition costs (including stamp duty)	(0.8)	(0.6)
Debt arrangement fee cost	(0.1)	(0.5)
Proceeds from borrowings under the revolving credit facility	11.1	43.7
Dividends paid in cash to shareholders	(15.0)	(4.8)
Cash movement in the period	(2.4)	8.6
Opening cash balance	8.6	-
Group cash balance at 31 March	6.2	8.6

During the year, the Group received cash distributions of £18.6 million from its environmental infrastructure investments, approximately £0.4 million below the distributions expected by the Group after adjusting for acquisitions during the year. This is due primarily to the impact, as discussed earlier, on the anticipated revenues from the renewable energy assets due to the removal of LECs from August 2015 and the impact of lower electricity prices throughout the year on projects where price fixes are not in place.

Notwithstanding this shortfall in distributions, cash received from investments in the year more than 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 2016. Cash flow from operations of the Company of £14.3 million covers dividends declared in respect of the year to 31 March 2016 of £13.6 million by 1.05 times.

The Company anticipates future revenues from its environmental infrastructure investments will continue to be in line with expectations and therefore will continue to fully cover future costs as well as planned dividends payable to its shareholders.⁽¹⁾

Dividends

During the year, the Company paid a final dividend for the period ended 31 March 2015 of 3.0 pence per share on 12 June 2015 (£4.8 million) in respect of the six month period to 31 March 2015.

An interim dividend of 3.027 pence per share was paid on 18 December 2015 (£6.8 million), in respect of the six month period to 30 September 2015, and a second interim dividend of 1.5135 pence per share on 24 March 2016 (£3.4 million) in respect of the quarter to 31 December 2015. The Company has declared an interim dividend of 1.5135 pence per share in respect of the quarter ended 31 March 2016 (£3.4 million), which is payable on 24 June 2016.

The target dividend for the year to 31 March 2017 is 6.14 pence per share, being the amount declared in respect of the year to 31 March 2016 of 6.054 pence per share, adjusted for inflation.⁽¹⁾

(1) These are targets only and not profit forecasts. There can be no assurance that these targets will be met.

Investment portfolio and valuation

Portfolio value increased to £264.5 million at 31 March 2016 from £197.7 million at 31 March 2015.

Investment portfolio

At 31 March 2016, the Group's investment portfolio comprised of interests in 15 project vehicles, all located in the UK:

					Commercial
				Capacity	operations
Asset	Location	Type	Ownership	(MWs)	date
Amber	UK (Eng)	Solar	100%	9.8	Jul 2012
Branden	UK (Eng)	Solar	100%	14.7	Jun 2013
Monksham	UK (Eng)	Solar	⁽¹⁾	10.7	Mar 2014
Pylle Southern	UK (Eng)	Solar	100%	5.0	Dec 2015
Panther	UK (Eng)	Solar	100%	6.5	2011 - 14
Bilsthorpe	UK (Eng)	Wind	100%	10.2	Mar 2013
Burton Wold Extension	UK (Eng)	Wind	100%	14.4	Sept 2014
Carscreugh	UK (Scot)	Wind	100%	15.3	Jun 2014
Castle Pill	UK (Wal)	Wind	100%	3.2	Oct 2009
Ferndale	UK (Wal)	Wind	100%	6.4	Sep 2011
Hall Farm	UK (Eng)	Wind	100%	24.6	Apr 2013
Wear Point	UK (Wal)	Wind	100%	8.2	Jun 2014
Dumfries & Galloway	UK (Scot)	Waste mgnt.	80%	n/a	2007
ELWA	UK (Eng)	Waste mgnt.	80%	n/a	2006
Tay	UK (Scot)	Wastewater	33%	n/a	Nov 2001

(1) 100% of "B" shares plus 100% of loans to the project. The "A" shareholders, investors under the Enterprise Investment Scheme, remain invested in the project. Including the loans, JLEN held an effective economic interest over 87% of the value of the project's cash flow (as calculated at acquisition).

The JLEN portfolio comprises a diversified range of assets across different sectors, technologies and revenue types.

Portfolio valuation

The Investment Adviser is responsible for carrying out the fair market valuation of the Company's investments which is presented to the Directors for their approval and adoption. The valuation is carried out on a quarterly basis as at 30 June, 30 September, 31 December and 31 March each year.

The Directors' valuation of the portfolio at 31 March 2016 was £264.5 million, compared to £197.7 million at 31 March 2015. The increase of £66.8 million is the net impact of new acquisitions, cash received from investments, changes in macroeconomic and electricity price assumptions, the refinancing of wind portfolio debt and underlying growth in the portfolio.

The total movement of investments during the year ended 31 March 2016 is shown in the table below:

	£m
Valuation of portfolio at 31 March 2015	197.7
Acquisitions in the year (net of post acquisition adjustments)	73.7
Cash distributions from portfolio	(18.6)
Rebased opening valuation of portfolio	252.8
Changes in forecast electricity prices	(16.6)
Changes in economic assumptions	(0.3)
Changes in discount rates	7.2
Net impact of wind portfolio refinancing	4.0
Discount rate unwind	17.4
Valuation of portfolio at 31 March 2016	264.5
Fair value of intermediate holding companies	(50.1)
Investments at fair value through profit or loss	214.4

Allowing for investments of £75.5 million (less £1.8 million recovered under the terms of acquisition agreements) and cash receipts from investments of £18.6 million, the rebased valuation is £252.8 million. The valuation at 31 March 2016 is £264.5 million (2015: £197.7 million), representing an increase over the rebased valuation of 4.6% over the year.

Each movement between the rebased valuation and the 31 March 2016 valuation is considered below:

Forecast electricity prices

The project cash flows used in the portfolio valuation at 31 March 2016 reflect contractual fixed price arrangements under PPAs where they exist and short‑term market forward prices where they do not for the next two years. Thereafter, the project cash flows assume future electricity prices in line with central forecasts from an established market consultant, adjusted by the Investment Adviser for project specific arrangements if required.

In common with generators selling into the wholesale market, JLEN has experienced a continuing downward trend in electricity prices during the year. Compared to the assumptions used in the valuation at 31 March 2015, on a time weighted average basis, the reduction in the power price assumptions is approximately 13% over a 25-year period (being a simple average reduction over 25 years of approximately 12%, including a reduction in market forward prices over the next two years of nearly 30%, down to an average of £37/MWh for winter (2015: £46) and £32/MWh (2015: £42) for summer).

The reduction in forecasts for future electricity prices compared to forecasts at 31 March 2015 and the update to forecast revenues from the renewable energy assets to reflect the announcement of the loss of the Climate Change levy exemption for renewable electricity in the July 2015 budget and the consequent loss of revenue from LECs, has reduced the valuation of the portfolio by £16.6 million.

Economic assumptions

Macroeconomic assumptions in respect of inflation, corporation tax and deposit interest rates have remained relatively constant during the year and the movement in valuation is therefore not significant. Inflation rates assumed in the valuation at 31 March 2016 are 2.20% in 2016 with 2.75% for all subsequent years. The long‑term UK corporation tax rate assumed is 20%, stepping down to 19% in April 2017 and 17% from April 2020 onwards, reflecting the rates enacted by legislation or included in the Finance Bill 2016, which is in line with market practice. Deposit rates assumed in the valuation reflect a range of deposit rates from 1.00% in 2016 with a gradual increase to a long‑term rate of 3.25% with effect from 2019 onwards.

Discount rates

The discount rates used in the valuation exercise represent the Investment Adviser's and the Board's assessment of the rate of return in the market for assets with similar characteristics and risk profile. The discount rates are reviewed on a regular basis and updated, where appropriate, to reflect changes in the market and in the project risk characteristics.

During the year since 31 March 2015, there has continued to be strong demand for income‑producing infrastructure assets, including environmental infrastructure projects as the market matures, resulting in a reduction in the prevailing discount rates applied for operating projects. The Investment Adviser, based on its experience of bidding in the secondary market for onshore wind and solar PV projects and the discount rates achieved on transactions in those sectors, has reduced the discount rates applied to the wind and solar assets to reflect the current market rates in the year‑end portfolio valuation.

In addition, during the year further ungeared solar assets were acquired and the proportion of solar as a percentage of the portfolio valuation increased from 28% to 41%. Lower valuation discount rates are applied to solar projects reflecting the lower risk apportioned by the market to this asset class.

Taking the above factors into account, and the change in mix of the portfolio during the year, the overall Weighted Average Discount Rate ("WADR") of the portfolio has reduced to 8.2% at 31 March 2016 (9.1% at 31 March 2015).

Net impact of wind portfolio refinancing

In March 2016, the Company completed a refinancing of the project debt in its wind asset portfolio. The refinancing was concluded with The Bank of Tokyo‑Mitsubishi UFJ Ltd, and whilst there was no increase in the gearing of the wind portfolio apart from an amount to cover the costs associated with the transaction, the refinancing secured more beneficial terms for the wind portfolio.

As part of the refinancing, updated operational energy yield assessments were obtained for all the wind assets and reflected in future revenue assumptions. JLEN was also able to make a claim related to the updated energy yield assessments under a Sale and Purchase Agreement, and the vendor has paid £2.0 million in settlement of that claim.

The portfolio valuation reflects the terms of the refinancing and the updated energy yield assessments. Together with the associated settlement amount of £2.0 million, which is included in the fair value of intermediate holding companies, the net outcome of the refinancing is an increase in NAV of £4.0 million.

Discount rate unwind

This represents the impact on the rebased portfolio value, all other measures remaining constant, of the effect of discount rate unwinding and represents an uplift of £17.4 million.

Valuation assumptions and sensitivities

The Net Asset Value of the Company is the sum of the discounted value of the future cash flows of the underlying asset financial models, the cash balances of the Company and UK HoldCo, other assets and liabilities of the Group less Group debt.

The portfolio valuation is the largest component of the Net Asset Value and the key sensitivities are considered to be the discount rate applied in the valuation of future cash flows and the principal assumptions used in respect of future revenues and costs.

A broad range of assumptions are used in our valuation models. These assumptions are based on long‑term forecasts and are not affected by short‑term fluctuations in inputs, be it economic or technical. The Investment Adviser exercises its judgement in assessing both the expected future cash flows from each investment based on the project's life and the financial models produced by each project company and the appropriate discount rate to apply.

The key assumptions are as follows:

Discount rate

The WADR of the portfolio at 31 March 2016 was 8.2% (9.1% at 31 March 2015). A variance of plus or minus 0.5% is considered to be a reasonable range of alternative assumptions for discount rates.

Volumes

Base case forecasts for renewable energy projects assume a "P50" level of power output. 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 under achieved. Hence the P50 is the expected level of generation over the long term.

The P90 (90% probability of exceedance over a 10‑year period) and P10 (10% probability of exceedance over a 10‑year period) sensitivities reflect the future variability of wind and solar irradiation and the uncertainty associated with the long‑term data source being representative of the long‑term mean.

For the waste and wastewater processing projects, forecasts are based on projections of future flows and are informed by both the client authorities' own business plans and forecasts and independent studies where appropriate.

Revenues in the PPP projects are generally not very sensitive to changes in volumes due to the nature of their payment mechanisms.

Electricity prices

Electricity price assumptions are based on the following: for the first two years cash flows for each project use forward electricity prices based on market rates unless a contractual fixed price exists, in which case the model reflects the fixed price followed by the forward price for the remainder of the two‑year period. For the remainder of the project life long‑term central case forecasts from an established market consultant and other relevant information is used, and adjusted by the Investment Adviser for project specific arrangements. The sensitivity assumes a 10% increase or decrease in electricity prices relative to the base case for each year of the asset life after the first two‑year period.

Inflation

The inflation assumptions used in the valuation as at 31 March 2016 are 2.2% for 2016 and 2.75% (31 March 2015: 2.75%) for the long‑term. Each project in the portfolio receives a revenue stream which is either fully or partially inflation‑linked.

Market outlook

Based on the current outlook for the portfolio and the markets in which it operates, the Board believes that the current portfolio is well‑positioned to continue to deliver the target returns of the Company.

The global renewable energy market remains strong and despite other political priorities, climate change remains one of the important areas of focus for governments and policymakers across the globe. Governments continue to promote policies and investment priorities to reduce greenhouse gas emissions in the near future and in December 2015, the UN Climate Change Conference held in Paris (COP 21) provided further support for decarbonisation initiatives on an increasingly co‑ordinated basis, including the further build‑out of renewable generation capacity and supporting technologies. At the conclusion of the conference the participating 195 countries agreed, by consensus, to the final global pact, the "Paris Agreement", to reduce emissions as part of the method for reducing greenhouse gas. In the document, the members agreed to reduce their carbon output "as soon as possible" and to do their best to keep global warming "to well below 2 degrees celcius". And whilst some have criticised the fact that significant sections are "promises" or aims and not firm commitments by the countries, others believe the plan to be "ambitious and balanced" and an "historic turning point" in the goal of reducing global warming.

The UK renewable energy market continues to attract significant investments and for the EU the European Environmental Agency forecasts that production from renewable sources of electricity is expected to continue to experience significant growth. This increasing contribution from renewables is also mainly driven by a generally supportive policy framework and governments' incentives for renewables, which reinforce investors' appetite for this type of asset. In the UK, whilst the reduced levels of support for new solar PV and onshore wind projects following the election of the new government in May 2015 were largely anticipated given the strength of historic investment, and will impact on developers of new developments in these areas, the government has indicated its continued support for future investment in newer areas of renewable technologies such as offshore wind, tidal and combined heat and power, all areas within the investment remit of JLEN for the future.

This support has been reinforced most recently by the announcement by the Energy Secretary in November 2015 that a second round Contracts for Difference ("CfD") FiT programme will be launched in by the end of 2016. This follows the successful launch in February 2015 of the first competitive auction, which awarded CfD subsidies to 27 renewable energy projects to deliver over 2GW of new renewable energy capacity across England, Scotland and Wales. The first allocation round attracted a high level of interest, with developers' bids significantly below market expectations and administrative strike prices set by the government.

The UK and European renewables markets in 2015 and 2016 have continued to be affected by low electricity prices, mainly driven by consistently falling oil and gas prices since the end of 2014. This commodity environment has primarily impacted conventional power generation but also renewables companies most exposed to electricity prices. In addition, in the UK the revenues of renewable generators were impacted by the early removal of LECs in the July 2015 budget. The ongoing weakness in wholesale electricity prices has resulted in both lower historic revenues and also lower forecasts of short and longer term electricity prices, which in turn has impacted on the NAV of all renewable energy funds. JLEN has been less affected by market conditions than its peers, due to its diversified portfolio (including waste management and wastewater), the inclusion of market forward prices for the next two years in the portfolio valuation and the extent of ROC and FiT revenues in its portfolio, which reduce its exposure to electricity prices. In 2016 and beyond, while the possibility of further falls in wholesale electricity prices cannot be dismissed, there may be upside potential for the portfolio if electricity prices recover over time. The timing and extent of changes to electricity prices will depend on a range of factors, including the impact of continued pressure on the UK capacity margin due to planned closures of coal‑fired generation plants and the continued delay in the commissioning of new nuclear plants. The Board and the Investment Adviser will continue to monitor markets and forecasts quarterly and reflect this in the reported NAV as appropriate.

Whilst in the UK the PFI programme for new waste and wastewater projects is now largely completed, there remain a large number of projects which continue to be held on corporate balance sheets which should provide an active secondary market for JLEN in the future.

Despite the issues noted above, the secondary market for environmental infrastructure projects remains both active and significant. The Investment Adviser continues to investigate potential markets and investments and has seen a steady flow of opportunities across all JLEN's asset classes during the year. In particular, JLEN has the benefit of a First Offer Agreement with John Laing over a significant pipeline of environmental infrastructure projects which supports its growth plans in the next few years. The Company expects that pursuant to the First Offer Agreement, environmental infrastructure projects that are in accordance with its investment policy with a combined investment value for the Fund of approximately £360 million at 31 December 2015 (as estimated by John Laing) will become available for acquisition by the Fund within the period to 31 December 2018.

Based on the current outlook for the portfolio and the markets in which it operates, the Board believes that JLEN is well‑positioned to continue to deliver the target returns of the Company, although it should be noted that delivery of the long‑term IRR targets will depend to an extent on the recovery of electricity prices from the current levels. The Board and the Investment Adviser also seek opportunities to improve the performance ahead of target through the delivery of additional operational scale efficiencies and through prudent portfolio and financial management.

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 Group'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.

The Company's prospectus dated 4 June 2015 details all the potential risks that the Directors consider are material that could occur in an environmental infrastructure project and in particular those in relation to renewable energy generation and PPP/PFI projects.

Given that the Company delegates certain activities to the Investment Adviser 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 possible but not commercially advisable. 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 comprised of three 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 Adviser'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 Adviser 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.

The Board's investment advisory engagement committee reviews the performance of the Investment Adviser 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. This is captured by a rating system assigning a 1, 2 or 3 to the probability and a 1, 2 or 3 to the magnitude of the impact (with 1 being the least probable/smallest impact and 3 being the most probable/greatest impact). The product of these two values represents the overall severity of the risk. The following red‑amber‑green system is used to prioritise and focus JLEN's risk management policies and procedures:

· red (score 6 - 9) very likely to occur or has occurred in the recent past; significant potential impact on the Group's stakeholders, reputation and/or financial standing if the risk occurred;

· amber (score 3 - 5) likely to occur, with a medium impact if the risk did occur; and

· green (score 1 - 2) unlikely to occur and only minor impact should the risk materialise.

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 risk register is 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 manager who reports to their individual project board. The general managers maintain strong relationships between clients, sub‑contractors and other stakeholders. This ensures effective management of potential risks.

JLEN's risk register covers five main areas of risk:

· strategic, economic and political;

· operational;

· financial and taxation;

· compliance and legal; and

· asset specific.

Each of these areas, together with the principal risks within that category, are summarised in the table overleaf, followed by a detailed discussion of the mitigating factors.

Strategic, economic and political
Risk	Potential impact	Mitigation
Inflation and interest rates	The underlying assets in the portfolio and therefore the returns expected from them have some exposure to inflation. The Company has some interest rate exposure, through its own cash deposits and bank funding and deposits and funding within the projects themselves.	Returns from the assets in the portfolio are highly correlated with inflation due to revenues from PFI assets, green benefits for renewable energy assets and most operational costs being directly linked to an inflation index. This results in a "natural hedge", removing the need for the use of derivatives to mitigate inflation risk. Through the use of interest rate swaps and fixed rate loans, finance costs are fixed at the time of the contract being signed, substantially reducing interest rate risk.
Acquisitions and pipeline	JLEN's intention is to grow the portfolio through the acquisition of further environmental infrastructure projects. However, there is a risk that a pipeline of acquisitions does not materialise.	JLEN benefits from a First Offer Agreement with John Laing giving it the right of first offer over a pipeline of environmental infrastructure projects, valued by John Laing at approximately £360 million at 31 December 2015, in the period to 31 December 2018. In addition, JLEN continually receives and seeks opportunities from the wider secondary market and developers, both in the UK and overseas.
Funding of acquisitions and future equity fundraising	There is a risk that JLEN is unable to achieve its stated ambition of growing the portfolio by acquiring new assets due to a lack of funding, both from corporate debt and equity capital from investors.	JLEN has a three‑year, £65 million revolving credit facility providing short‑term finance to pursue acquisitions. This is used to finance acquisitions prior to raising capital, mitigating the risk of inadequate funding affecting growth. Investors have been supportive of the infrastructure class in general and the environmental infrastructure/renewable energy class in particular and recent capital raises by JLEN and other listed infrastructure funds confirm the appetite investors have for infrastructure as an asset class.
Competition	JLEN, in pursuing investment opportunities and in seeking to raise further capital, competes against a number of other listed and private infrastructure funds. There is a risk that such competition could limit growth of the fund.	JLEN differentiates itself from its peer group in a number of ways, including its investment policy of investing in a diversified range of environmental infrastructure technologies and revenue streams, its aim to only raise capital against committed investments and through its First Offer Agreement with John Laing.
Future of UK capital spending	Under its investment policy, JLEN is required to hold at least 50% of its portfolio by value in UK assets. JLEN therefore has a significant interest in the future of UK infrastructure spending. Government financial support for new renewable energy and environmental processing assets has reduced significantly in recent years and there is a risk that spending is either reduced or stopped altogether or that the model used to procure environmental infrastructure and/or renewable energy projects offers a risk profile that would not allow JLEN to invest under its investment policy.	Should either of these risks materialise, the immediate impact on JLEN and the secondary PPP/renewable energy market would be small as there is sufficient deal flow in the UK market to sustain this space in the short to medium term, as primary participants seek to recycle equity to reinvest in new infrastructure projects. In addition, JLEN has the ability to mitigate the impact of a slowdown in UK deal flow through overseas acquisitions in order to diversify the portfolio and reduce its reliance on the UK for investment opportunities.
UK referendum on EU membership	There are three risks: firstly, that following announcement of the 'in‑out' referendum in respect of EU membership to be held on 23 June 2016, there is a period of volatility in the markets in the months preceding due to the uncertainty; secondly, that the UK could ultimately decide to exit the EU with potential for impact on UK gilt rates and the credit rating of the UK Government; and thirdly that a UK exit could trigger momentum for a second Scottish independence referendum. There is a risk that market turbulence or an exit from the EU will produce volatility in JLEN's markets.	At this stage it is not clear what the precise impact on the UK environmental infrastructure industry will be of an exit from the EU. With evidence that investors see listed infrastructure as a "safe haven" in times of market turbulence, JLEN could in fact benefit while any uncertainty remains, although it is not unreasonable to expect greater volatility in the share price over the coming months. At 31 March 2016, there are no project‑specific risks relating to a UK exit from the EU faced by any asset in the JLEN portfolio. Any impact of the post year end acquisition of the Saint‑Gouéno wind farm in France is not material to the Group.
Operational
Risk	Potential impact	Mitigation
Volume of resource	By the very nature of environmental infrastructure projects, their financial performance is dependent on the volume of resource available, be it solar irradiation, wind, waste or water. These are factors outside the control of JLEN or the projects themselves, with the risk of a significant effect on performance if the outcome is significantly different from the assumptions made in forecasting revenue and costs and hence returns to JLEN.	For renewable energy projects there is a degree of protection from this 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 uncorrelated. 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. 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.
Electricity prices	The revenues of the renewable energy solar and wind assets are dependent to some extent on the market price of electricity which is out of the control of JLEN. There is a risk that the actual prices received vary significantly from the model assumptions leading to a shortfall in anticipated revenues to JLEN.	The risk of exposure to variations in electricity prices from assumptions made is mitigated by JLEN in the following ways: (i) short‑term PPAs are used to fix prices for between one and three years depending on market conditions and many have floor prices; (ii) forward prices based on market rates are used for the first two years where no fix is in place; (iii) quarterly reports from an independent established market consultant are used to inform the electricity prices over the longer term used in the financial models. Due to the diversification in the portfolio, JLEN has relatively low exposure to electricity prices for the sector.
Financial and taxation
Risk	Potential impact	Mitigation
Valuation	The discount rates used in the valuation exercise represent the Investment Adviser's and the Board's assessment of the rate of return in the market for assets with similar characteristics and risk profile. Increased underlying gilt rates may lead to increased discount rates being applied by the market and a consequential decrease in the portfolio value. Asset values may not run in parallel to evolving forecasts for future electricity prices and investors should expect some variation in asset valuation from period to period, as and when a material movement from prior expectations is identified.	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. In general, independent forecasters expect UK wholesale electricity prices to continue to rise in real terms over the long term, based on tighter UK capacity margins in the short term and global energy supply and demand in the long term. 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 JLCM is performed by a leading accountancy firm and an opinion provided to the Directors.
Base Erosion Profit Shifting	JLEN values its portfolio based on current enacted corporation tax rates and tax rules. Changes to these rates or rules in the future could impact the valuation of the portfolio. In October 2015, the OECD published its final report on Base Erosion Profit Shifting ("BEPS"). The report recommends member states adopt a "fixed ratio rule", which limits net deductions of interest to a percentage of EBITDA. Infrastructure investments are particularly at risk from this, by virtue of their high gearing. As with other broad‑based regulatory initiatives, it is likely much will change before the eventual implementation of the rules, which as announced in the March 2016 budget will be introduced in April 2017. UK HMRC has recently published recommendations and continues to consult with UK companies on the detail of the application and implementation of the general principles of BEPS. The most important of the BEPS recommendations from an infrastructure investments perspective relates to restrictions on the deductibility of interest costs.	The Company, along with others in the infrastructure industry, has and will continue to take part in consultation on the development of detailed proposals with UK HMRC. Whilst it is still unknown exactly how the UK will implement the BEPS recommendations, based on the proposals set out in the most recent consultation document issued in May 2016 by HMRC, the Investment Adviser's initial assessment is that the impact on the Company's NAV is not expected to be material. There can be no certainty that the effect of such rules will be in accordance with the Investment Adviser's assessment of the information currently available. JLEN continues to monitor and participate in the consultation processes with the UK HMRC and to assess the impact of any proposed new legislation on the Company.
Compliance and legal
Risk	Potential impact	Mitigation
Regulatory - general	JLEN is required to comply with certain London Stock Exchange, UK Listing Authority and Guernsey regulatory requirements, regulations under the Alternative Investment Fund Managers Directives ("AIFMD") and the Foreign Account Tax Compliance Act ("FATCA"). There is a risk that failure to comply with any of the relevant rules could result in a negative reputational or financial impact on the Company.	Through a comprehensive compliance monitoring programme, JLEN ensures that it remains well informed as to the legislation, regulation and guidance relevant to both the Company itself as well as the project entities in which it invests. The Board monitors compliance information provided by the Administrator, Company Secretary, Investment Adviser and legal counsel and monitors ongoing compliance developments in the Channel Islands and with the London Stock Exchange and Financial Conduct Authority.
Regulatory - support for renewables	Changes in Government policy to new renewable energy have resulted in changes to, and in some cases, early closure of, the Renewables Obligation and Feed‑in Tariff regime. If these were applied retrospectively to current operating projects including those in the Group's portfolio, this could adversely impact the market price for renewable energy or the value of the green benefits earned from generating renewable energy.	The Government has evolved the regulatory framework for new projects being developed but has consistently stood behind the framework that supports operating projects as it understands the need to ensure investors can trust regulation. This principle of "grandfathering" was confirmed in the Energy Act 2013.
Asset specific
Risk	Potential impact	Mitigation
Operational risks	JLEN invests in projects where the majority of operational risk is retained by the public sector counterparty (relevant to PFI projects) or passed down to sub‑contractors. However, in all cases, some risk is retained by the project as set out above and identified in the Company's prospectus dated 4 June 2015. In the event of a single project suffering from a material issue, distributions to the Fund could possibly be impacted absolutely or for a period of time whilst the issue is resolved.	The portfolio is constantly monitored by the Investment Adviser to address risks as they are identified. The use of a diverse range of service providers supplying management, operational and maintenance services ensures any failure of a single service provider has a minimal impact on the portfolio as a whole. This risk is mitigated in part by the diversification represented by JLEN's portfolio of assets.

Corporate social responsibility

The business of the Company is to invest in environmental infrastructure projects. JLEN recognises the business imperative and moral obligation to carry out its activities in a socially responsible, safe and environmentally sustainable manner, with due consideration to human rights.

JLEN recognises the environmental, social and economic needs of the communities in which it works and looks for suitable opportunities to engage and support communities. The commitment to corporate social responsibility ("CSR") is delivered through programmes directly supported by JLEN and through the activities of JLCM, Praxis and JLEN's other partners who manage the projects and provide facilities management services to the portfolio assets. JLEN actively encourages its partners to engage with the local communities in which our projects are located. It is the engagement of these teams that operate our assets on a daily basis and support the communities in which they operate that makes the greatest difference. Examples of how the assets and partners have contributed to achieving JLEN's CSR ambitions are provided below:

Bilsthorpe wind farm

Bilsthorpe wind farm supports local employment and suppliers. In addition, it provides an annual contribution to the parishes of Eakring and Bilsthorpe in the form of a local community fund.

Burton Wold Extension wind farm

The Burton Wold Extension wind farm employs local suppliers and provides an annual contribution to the parishes of Cranford St John and Burton Latimer.

Amber solar park

The Amber solar parks project provides donations to support local causes on an ad hoc basis.

Wear Point wind farm

Wear Point wind farm has made a £4.5 million contribution to the Welsh economy by awarding contracts to Welsh businesses, including companies local to the site. The wind farm has also benefited the local community by the upgrading and refurbishing of Waterston's playing field. A further contribution has been made toward Pembrokeshire County Council's planned upgrading of the Pembrokeshire Coastal Path.

Carscreugh wind farm

Carscreugh wind farm was completed in June 2014 and employed local construction companies and suppliers during the development. Now that the wind farm is operational, Carscreugh has committed to providing funding to support local economic, social and environmental benefits in the community. To this end, Carscreugh is working with Foundation Scotland and Old Luce Community Council who have established a fund to bring together community funds from adjacent schemes for the benefit of the wider community.

John Laing

The John Laing Group's community investment strategy is delivered through its employees and a number of partners.

Since 2006 John Laing has been an active Patron of the Prince's Trust, which has allowed them to support disadvantaged and vulnerable young people across the UK, to help them move into work, education or training. The Group encourages its staff to become involved in activities and initiatives that benefit local communities and environments.

The John Laing Charitable Trust ("JLCT") supports the work of welfare visitors who look after the needs of former employees and their surviving partners. Its trustees set aside considerable funds each year to provide financial help and assistance. All John Laing employees or members of their immediate family directly involved in a charity are able to apply to JLCT for a grant to support a good cause and additionally JLCT is able, within certain limits, to match charitable donations raised by employees.

Praxis Fund Services

The PraxisIFM Group supports the local communities in which it operates, focusing on equipping people with the skills they need to lead successful and rewarding lives by supporting initiatives which provide learning, training and development opportunities and/or encourage people to lead healthy lifestyles. In Guernsey, this includes sponsoring the Guernsey Rugby Academy and the Delancey Flyers cycling league.

Health and safety

The physical location, operation and maintenance of environmental infrastructure projects may, if inappropriately assessed and managed, pose health and safety risks to those involved. The operation and maintenance of facilities may result in bodily injury or industrial accidents. If an accident were to occur in relation to one or more of the Group's investments and if the Group were deemed to be at fault, the Group could be liable for damages or compensation to the extent such loss is not covered under insurance policies. In addition, adverse publicity or reputational damage could ensue.

The JLEN, UK HoldCo and individual project entity boards have health and safety policies and review health and safety at each of their respective scheduled Board meetings. The Group engages the Investment Adviser to carry out a rolling programme of independent audits of the health and safety policies and compliance of its projects and all major suppliers.

Environment

JLEN takes its environmental responsibilities very seriously and seeks to ensure effective environmental management, not only of its own direct activities but also the indirect aspects and impacts resulting from the occupation and use of its environmental infrastructure projects.

This strategic report is approved by the Board of Directors.

Richard Morse
Chairman

16 June 2016

GOVERNANCE

Board of Directors

Members of JLEN's Board of Directors, all of whom are non‑executive and independent of the Investment Adviser, are listed below.

Richard Morse
Chairman

Richard has more than 30 years' experience in energy and infrastructure, including environmental energy. He is a partner at Opus Corporate Finance where he leads the environmental energy practice and his boardroom experience includes roles with Thames Tideway Tunnel, Private Infrastructure Development Group and Howard de Walden Estates Limited.

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

Christopher Legge
Director

Chris was head of Audit and Accountancy for eight out of the 20 years he worked for Ernst & Young in Guernsey. He was responsible for multiple audits of banking, insurance, investment fund, property fund and other financial clients before being appointed managing partner in 1998.

Past experience
Since retiring from Ernst & Young in 2003, Chris has held numerous non‑executive directorships in the UK listed financial services sector, including BH Macro Limited (FTSE 250), Third Point Offshore Investors Limited and Ashmore Global Opportunities Limited where he also chairs the Audit Committee. He is a Fellow of the Institute of Chartered Accountants in England and Wales.

Committee memberships
Audit Committee
Risk Committee

Denise Mileham
Director

Denise has acted in non‑executive director roles for the past seven years and previously sat on the board of Resolution Limited, the FTSE 100 listed company. She was previously an executive director at Kleinwort Benson (Channel Islands) Fund Services, acting as Head of Fund Administration and Deputy Head of Fund Services.

Past experience
In Denise's early career she undertook numerous roles at Credit Suisse including Compliance Officer in the fund administration department. A Fellow of the Securities and Investment Institute since 2006, she is also a member of the Institute of Directors, the Guernsey NED Forum and Guernsey Investment Fund Association and previously sat on their Technical Committee.

Committee memberships
Nomination Committee
Risk Committee

Peter Neville
Director

Peter has more than 36 years' experience in the financial services and financial services regulatory sectors in the UK and overseas. He has worked in merchant banking and corporate finance in the UK and the Far East, undertaking IPOs, corporate restructurings, mergers and acquisitions and project finance. In addition to his other non‑executive positions, Peter currently serves as a non‑executive director of both Kleinwort Benson (Channel Islands) Limited, the Guernsey based bank, and its holding company.

Past experience
Peter was Director General of the Guernsey Financial Services Commission from 2001 until 2009. His boardroom experience has included acting as a non‑executive director of Mytrah Energy Limited and as a member of the Board and Chairman of the Audit and Risk Committee of the Channel Islands Competition and Regulatory Authorities.

Committee memberships
Risk Committee
Audit Committee
Nomination Committee

Richard Ramsay
Senior Independent Director

Richard is a chartered accountant with considerable experience in the energy sector including: leading the Barclays de Zoete Wedd team that privatised the Scottish electricity industry; Managing Director - Finance and Regulation for a period at Ofgem; and Director of the Shareholder Executive, principally involved with government businesses in the nuclear sector. He is currently chairman of Seneca Global Income & Growth Trust plc. He also currently chairs a managing agency focused on the global nuclear insurance market.

Past experience
At Ivory & Sime, Barclays de Zoete Wedd and at Intelli Corporate Finance he worked in the closed‑end funds sector, completing over £2.5 billion of transactions.

Committee memberships
Audit Committee

The Investment Adviser

JLEN is advised by John Laing Capital Management Limited ("JLCM"). JLCM is a wholly owned subsidiary of John Laing Group plc.

David Hardy
Investment Adviser

David is a Director of JLCM with over 20 years' corporate finance, M&A, fundraising and deal closure experience spanning infrastructure, PFI and renewables projects.

Joining John Laing in 2005, he led the equity investment of numerous UK PFI/PPP projects across various sectors. From 2011 he was responsible for the divestment of mature projects for the John Laing Group. Prior to joining John Laing, David was a Corporate Finance partner at KPMG.

David has a BSc in Management Sciences from Manchester University and is a member of the Institute of Chartered Accountants in England and Wales.

Chris Tanner
Investment Adviser

Chris is a Director of JLCM with over 15 years' experience in infrastructure including PPPs, economic infrastructure and renewables.

Prior to joining John Laing, he was a Principal in Henderson's private equity infrastructure team. In the 18 months prior to joining JLCM he was on secondment to John Laing as Corporate Finance Director. Preceding Henderson, Chris worked at PricewaterhouseCoopers for 11 years.

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.

Jane Tang
Senior Investment Manager

Jane is a Chartered Financial Analyst with over 15 years' experience in corporate finance, including working on numerous PFI and infrastructure deals.

Prior to joining John Laing in 2007, she was an Assistant Director at PricewaterhouseCoopers in London and, prior to that, in Singapore.

Jane is a member of the Institute of Chartered Financial Analysts and has a BA in Business Administration from the National University of Singapore.

Muxin Ma
Senior Investment Manager

Muxin is a Chartered Financial Analyst with over 9 years' experience in infrastructure investment, with a focus on concession‑based PPP and PFI projects and renewable energy generation projects.

Prior to joining John Laing in July 2015, Muxin was a Principal in the private equity team of Henderson Global Investors.

Before this, Muxin worked on London Underground's £30 billion Tube PPP programme at Transport for London and was previously in the Transaction Services team at Deloitte.

Muxin is a CFA charterholder and has an MSc in Investment Management from Cass Business School in the UK, an ESCP degree in Finance and a BA from Peking University in China.

Corporate governance statement

The Board recognises the importance of a strong corporate governance culture.

Introduction

The Listing Rules and the Disclosure and Transparency Rules ("Disclosure Rules") of the UK Listing Authority ("UKLA") 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 September 2012, and updated in September 2014, 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") in February 2013, provides specific corporate governance guidelines to investment companies. The AIC issued their revised code in February 2015. The FRC has confirmed that AIC member companies who report against the AIC Code and who follow the AIC's Corporate Governance Guide for Investment Companies ("AIC Guide") 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 of Guidance, and provides a formal expression of good corporate practice against which shareholders, boards and 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 UKLA. The Board has put in place a framework for corporate governance which it believes is appropriate for the Company. All Directors contribute to Board discussions and debates. The Board believes in providing as much transparency for shareholders 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 has considered the principles and recommendations of the AIC Code and has decided to follow the AIC Guide. The Company has complied with the recommendations of the AIC Code and the relevant provisions of the UK Code, except as set out below.

The UK Code includes provisions relating to the role of the Chief Executive, executive Directors' remuneration and the need for an internal audit function. For the reasons set out in the AIC Guide, and as explained in the UK Code, the Board considers these provisions are not relevant to the position of the Company, as it has no executive Directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions.

AIFM Directive

The Company is categorised as an internally managed non‑EEA AIF for the purposes of the AIFM Directive and as such neither it nor the Investment Adviser is required to seek authorisation under the AIFM Directive. The Board retains responsibility for the majority of the Company's risk management and portfolio management functions, and performs a number of its management functions through the various committees described below.

The Board delegates certain activities to the Investment Adviser, but actively and continuously supervises the Investment Adviser in the performance of its functions and reserves the right to take decisions in relation to the investment policies and strategies of the Company or to change the Investment Adviser (subject to the terms of the Investment Advisory Agreement). The Board retains the right to override any advice given by the Investment Adviser if acting on that advice would cause the Company not to be acting in the best interests of investors, and more generally to provide overriding instructions to the Investment Adviser on any matter within the scope of the Investment Adviser's mandate. The Board also has the right to request additional information or updates from the Investment Adviser in respect of all delegated matters, including in relation to the identity of any sub‑delegates and their sphere of operation.

AIFM Directive Disclosures

As explained in Part 11 of the Company's prospectus dated 4 June 2015, the Company is required, pursuant to 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 Article 23 of the AIFM Directive (the "Article 23 Disclosures").

As at the date of this report, the material updates to the Article 23 Disclosures contained in Part 11 of the Company's prospectus dated 4 June 2015 are as follows:

· as detailed further in this report and in an announcement made by the Company on 17 March 2016, the revolving credit facility entered into by (inter alia) UK HoldCo and the Company on 9 October 2014 has been extended, on the same terms, from £50 million to £65 million; and

· the Investment Adviser has entered into a side letter with a shareholder to rebate part of the base fee (which is described in note 15 to the financial statements) attributable to that shareholder's shares. Winterflood Securities has entered into a similar arrangement in respect of a rebate of a proportion of its placing commission attributable to the same shareholder. The Investment Adviser and/or Winterflood Securities may enter into similar arrangements with investors in the future without the prior approval of, or disclosure of the detail of, those terms to shareholders. The types of investors who may benefit are investors making significant or strategic investments.

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.

The Board

The Board consists of five Directors, all of whom are non‑executive and independent of the Company's Investment Adviser. The Directors' details are contained in the board of Directors section in the governance part 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 meets at least four times a 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 Adviser and the Administrator and the Board requires information to be supplied in a timely manner by the Investment Adviser, the Company Secretary and other advisers in a form and of a quality appropriate to enable it to discharge its duties.

The tenure of Directors is expected to not exceed nine years unless exceptional circumstances warrant such as to allow for phased Board appointments and retirements. The Company intends that each Director will stand for re‑election at the annual general meeting of the Company at intervals of no more than three years. The Board has adopted a policy for any long‑standing Directors who have held office for nine years or longer to stand for re‑election annually.

The Board is mindful and supportive of the principle of widening the diversity of its composition. It is also committed to appointing the most appropriate available candidate based on merit, taking into account the skills and attributes of both existing members and potential new recruits and thereby the balance of skills, experience and approach of the Board as a whole which will lead to optimal Board effectiveness.

The terms and conditions of appointment of the Directors are available for inspection at the Company's registered office.

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 external facilitation expected to take place every three years. The annual evaluation of the Board and the individual committees has taken the form of questionnaires and discussion to assess Board effectiveness and individual Director performance in various areas.

The Board carried out its first evaluation in September 2015 following the completion of the first year's trading and the issue of the Company's first Annual Report since IPO. Reviews by the Audit, Risk and Nomination Committees were carried out in July 2015. The results of the evaluation process concluded that the Board was functioning effectively and the Board and its committees provided a suitable mix of skills and experience.

Any new Directors will receive an induction from the Investment Adviser and the Administrator as part of their induction process. All Directors will receive other relevant training as necessary, including site visits.

Duties and responsibilities

The Board is responsible to shareholders for the overall management of the Company. 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 investments, strategy, capital raising, statutory obligations and public disclosure, financial reporting and entering into any material contracts by the Company.

The Directors have access to the advice and services of Praxis Fund Services Limited, the Company Secretary and Administrator, who 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.

An Investment Advisory Agreement between the Company and the Investment Adviser sets out the matters over which the Investment Adviser has delegated authority including monitoring and managing the existing investment portfolio, and also the limits on cost and expenditure above which Board approval must be sought. All other matters are reserved for the approval by the Board of Directors.

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.

Committees of the Board

The Board has not deemed it necessary to appoint a remuneration committee as, being comprised of five Directors, it considers that such matters may be considered by the whole Board. The remuneration of the Board has been fixed after consultation with independent external advisers and as noted in the Directors' remuneration report was subject to further review during the year.

The Company has established an Audit Committee, chaired by Christopher Legge, which operates within clearly‑defined terms of reference and comprises three non‑executive Directors: Christopher Legge, Peter Neville and Richard Ramsay whose qualifications and experience are noted in the board of Directors section. The Audit Committee meets at least three times a year at times appropriate to the financial reporting calendar.

The duties of the Audit Committee in discharging its responsibilities include reviewing the Annual Report and financial statements; the Interim Report and financial statements; the system of internal controls; and the terms of appointment of the auditor, together with their remuneration. It is also the forum through which the auditor reports to the Board. The Audit Committee also reviews the objectivity of the auditor along with the terms under which the external auditor is engaged to perform non‑audit services. The provisions in place to maintain the independence and objectivity of the auditor include the requirement to replace the lead audit partner every five years, and restrictions on the delivery of non‑audit services to the Company, with such services and the terms under which these are to be provided, considered by the Audit Committee on a case by case basis. Notwithstanding such services, the Audit Committee considers Deloitte LLP to be independent of the Company and that the provision of such non‑audit services is not a threat to the objectivity and independence of the conduct of the audit.

The Company has also established a Risk Committee, which is chaired by Peter Neville and comprises three non‑executive Directors: Peter Neville, Christopher Legge and Denise Mileham. 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. 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.

The Company has also established a Nomination Committee, chaired by Denise Mileham and which comprises three non‑executive Directors: Denise Mileham, Richard Morse and Peter Neville. 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.

Separate reports from the Audit, Risk and Nomination Committees on their activities for the period are set out in the governance section.

The Board as a whole performs the functions typically undertaken by an Investment Committee. 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. The Board also makes discretionary management decisions in respect of the investment portfolio (with reference as necessary to advice provided by the Investment Adviser), but may appoint sub‑committees to meet on an ad hoc basis to consider potential acquisitions and disposals of particular investments.

The Board as a whole also fulfils the functions of an Investment Advisory Engagement Committee.

The Board will review and make recommendations on any proposed amendment to the Investment Advisory Agreement and keeps under review the performance of the Investment Adviser. The Investment Advisory Engagement Committee also performs a review of the performance of other key service providers to the Fund and meets at least once a year.

The attendance record of Directors for the year to 31 March 2016 is set out below.

	Board	Audit	Risk	Nomination
	Meeting	Committee	Committee	Committee
Number of meetings held	4	4	4	2
Richard Morse	4	n/a	n/a	2
Christopher Legge	2	4	2	n/a
Denise Mileham	4	n/a	4	2
Peter Neville	4	4	4	2
Richard Ramsay	4	4	n/a	n/a

A total of 11 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 Company welcomes the views of shareholders and places great importance on communication with its shareholders. The Investment Adviser produces a regular factsheet which is available on the Company's website. Senior members of the Investment Adviser make themselves available, as practicable, to meet with principal shareholders and key sector analysts. 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 Adviser and the Company's brokers.

All shareholders can address their individual concerns to the Company in writing at its registered address. The annual general meeting of the Company provides a forum for shareholders to meet and discuss issues with the Directors and the Investment Adviser.

Statement of Directors' responsibilities

The Directors are responsible for preparing the Directors' report and financial statements in accordance with applicable laws and regulations. Company law (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 International Financial Reporting Standards ("IFRS") as adopted by the European Union and IFRS as issued by the International Accounting Standards Board ("IASB"). Under Company law 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 period.

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 IFRS 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;

· make an assessment of the Company's ability to continue as a going concern; and

· make judgements and estimates that are reasonable and prudent.

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 confirm that they have complied with these requirements in preparing the financial statements.

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 performance, business model and strategy.

By order of the Board

Richard Morse
Chairman

16 June 2016

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 2016.

Principal activities

John Laing 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 register number 57682.

At 31 March 2015 the total number of ordinary shares of the Company in issue was 160,000,000. The number of ordinary shares in issue was increased in July 2015 by 59,405,940 shares pursuant to a Placing and Offer for Subscription and by 4,950,495 shares pursuant to a first close under the Company's Placing Programme. At 31 March 2016 the total number of ordinary shares of the Company in issue was 224,356,435.

The Company is a registered fund under the Registered Collective Investment Scheme Rules 2015 and is regulated by the Guernsey Financial Services Commission and, during the year, its principal activity was as an investor in environmental infrastructure projects 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 2016, 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.

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 of 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 12 May 2016, the Directors declared a dividend in respect of the period 1 January 2016 to 31 March 2016 of 1.5135 pence per share to shareholders on the register as at the close of business on 20 May 2016.

Going concern

The Company's business activities, together with the factors likely to affect its future development, performance and position, are set out in the strategic report. The financial position of the Company, its cash flows and its liquidity position are described in the strategic report. In particular, the current economic conditions have created a number of risks and uncertainties for the Company and these are set out in the risks and risk management section in the strategic report. 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 of 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.

In October 2014, JLEN secured a three‑year £50 million multi‑currency revolving credit facility with NIBC and HSBC. The facility was extended on the same terms to £65 million in March 2016. The facility is used primarily to fund acquisitions, and is repaid through raising equity in the market. The facility is intended to be additional resource and not structural financing.

At 31 March 2016, the Company had net current assets of £2.5 million (31 March 2015: £2.9 million), including a cash balance of £3.3 million (31 March 2015: £3.6 million). At UK HoldCo level, the £65 million revolving credit facility was drawn to a level of £54.8 million (31 March 2015: £43.7 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.

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 March 2019, taking account of the Group's current position and the potential impact of the principal risks documented in the strategic review. 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 March 2019.

In making this statement, the Directors have considered and challenged the reports of the Investment Adviser in relation to the resilience of the Group, taking account of 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, both on an individual and combined basis. In particular, this has considered the achievement of budgeted energy yields, the level of future electricity prices, continued government support for renewable energy subsidy payments and the impact of a significant proportion of the PFI portfolio not yielding. The sensitivity analysis was premised on a number of assumptions, including that the Group's current revolving credit facility remains in place and that there will be sufficient liquidity within the market to raise new capital as and when required,

The Directors have determined that a three‑year look forward to March 2019 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 Adviser 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.

Internal controls review

Taking into account the information on principal risks and uncertainties provided in the risks and risk management section 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 issued ordinary share capital of the Company was increased in July 2015 through the issue of shares pursuant to a Placing and Offer for Subscription and a first close under the Company's Placing Programme.

The Company has one class of ordinary shares which carries 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 17 August 2016. This shareholder authority was renewed at the 2015 annual general meeting.

Major interests in shares and voting rights

As at 31 March 2016, the Company had been notified, in accordance with chapter 5 of the Disclosure and Transparency Rules, of the following interests in 5% or more of the voting rights as a shareholder in the Company.

	Percentage
	of voting rights	Number of
	and issued	ordinary
Shareholder	share capital	shares
John Laing Pension Trust Limited	21.3%	47,840,000
John Laing Investments Limited	6.98%	15,656,731
Baillie Gifford & Co Limited	7.09%	15,900,000

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 Adviser, are listed below. Their biographical details are shown in the board of Directors section.

Name				Function
Richard Morse				Chairman
Christopher Legge				Director
Denise Mileham				Director
Peter Neville				Director
Richard Ramsay				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 subsequent years one third of the Board will stand for re‑election and at the annual general meeting to be held on 17 August 2016, Richard Ramsay and Peter Neville will put themselves forward for re‑election. 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 2016 were:

	Ordinary shares	Ordinary shares
	of no par value	of no par value
	each held at	each held at
Name	31 March 2016	31 March 2015
Richard Morse	83,042	50,000
Christopher Legge	29,896	25,000
Denise Mileham	28,160	20,000
Peter Neville	29,896	25,000
Richard Ramsay	53,813	45,000

There have been no changes in the Directors' interests from 31 March 2016 to the date of this report.

Annual general meeting

The Company's annual general meeting will be held at 10am on 17 August 2016 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 Adviser

John Laing Capital Management acts as the Investment Adviser to the Company. A summary of the contract between the Company, its subsidiaries and joint ventures and JLCM in respect of services provided is set out in note 15 to the financial statements. It is the Directors' opinion, based upon the performance in the year ended 31 March 2016, that the continuing appointment of JLCM on the agreed terms is in the best interests of the shareholders as a whole.

Events after the balance sheet date

In May 2016, JLEN entered into an agreement to acquire a 100% interest in the 4MW Saint‑Gouéno wind farm in Brittany, France from Energiequelle GmbH for a total consideration, including working capital, of €2.5 million. The acquisition, which is expected to complete in the coming weeks (subject to the customary consents), represents JLEN's first investment outside of the UK and was financed using JLEN's revolving credit facility.

In April 2016, JLEN announced a proposal to issue further shares under its Placing Programme. The issue, in May 2016, resulted in gross proceeds of £35.2 million through the issue of 36.0 million ordinary shares at 97.75 pence per share. The proceeds of the issue were used to repay part of the amounts drawn under the revolving credit facility.

A dividend for the quarter ended 31 March 2016 of 1.5135 pence per share, amounting to £3.4 million, was approved by the Board on 11 May 2016 for payment on 24 June 2016.

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 2016 annual general meeting to reappoint Deloitte LLP.

Each Director believes that there is no relevant information of which our auditor is unaware. Each has taken all 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

16 June 2016

Directors' remuneration report

Introduction

The Board has not deemed it necessary to appoint a remuneration committee as, being comprised of five Directors, it considers that such matters may be considered by the whole Board.

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 (e.g. for the work involved with the issue of prospectuses and equity fund raises).

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. During the year the Board reviewed the remuneration levels appropriate for the Company and received industry comparison information from the Investment Adviser in respect of Directors' remuneration.

The Board has agreed that an independent professional consultant is appointed during 2016 to review Directors' Remuneration and consider the appropriate levels to apply from 2017 onwards.

Remuneration policy

Each Director receives a ﬁxed 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 beneﬁts, share options, long term incentive schemes or other beneﬁts in respect of their services as non‑executive Directors of the Company. The total remuneration of non‑executive Directors has not exceeded the £300,000 per annum limit set out in the Articles of Incorporation of the Company.

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 re‑election. The Articles of Incorporation provide that Directors retire and offer themselves for re‑election at the ﬁrst annual general meeting after their appointment and at least every three years thereafter. 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 ofﬁce.

Details of individual remuneration

During the year the Board, with assistance from the Investment Adviser and the Administrator, reviewed the Board performance and remuneration levels appropriate for the Company and considered these alongside the levels set for other similar investment companies and recommended that a one‑off increase from 1 April 2016 was appropriate for the Chairman of the Board to align his remuneration closer to that of the comparator group and that a cost of living increase was appropriate for the other Directors.

For comparative purposes the table below sets out the Directors' remuneration approved and actually paid for the year to 31 March 2016, as well as that proposed for the year ending 31 March 2017.

				Additional fees
		Base proposed	Base paid	for fund raising	Total fees for
Director	Role	for 2016/2017	2015/2016	in 2015/2016	2015/2016
Richard Morse	Chairman	61,000	50,000	5,000	55,000
Richard Ramsay	Senior Independent Director	46,000	45,000	5,000	50,000
Christopher Legge	Audit Committee Chairman	36,000	35,000	5,000	40,000
Denise Mileham	Nomination Committee Chairman	36,000	35,000	5,000	40,000
Peter Neville	Risk Committee Chairman	36,000	35,000	5,000	40,000
Total		215,000	200,000	25,000	225,000

Where the Company requires Directors to work on specific corporate actions such as further equity raisings, an additional fee will be appropriately determined. Additional fees payable to the Directors for the year ended 31 March 2016 relate to the fundraising programme launched in the year. In June 2015, the Company launched a Placing and Offer for Subscription and established a Placing Programme that would permit the Company to issue up to 150 million new shares over the period of 12 months from the date of publication of the Company's prospectus dated 4 June 2015.

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 2016 was £3,741 (31 March 2015: £3,969).

Approval of report

The Board will seek approval at the annual general meeting in August 2016 for both the Remuneration Policy and the annual Directors' fees for routine business for the year ended 31 March 2016 and fees for additional specific exceptional work, as set out above.

Audit Committee report

Summary of the roles and responsibilities of the Audit Committee

The Audit Committee is appointed by the Board from the non‑executive Directors of the Company. The Audit Committee, chaired by Christopher Legge, operates within clearly defined terms of reference and includes all matters indicated by Disclosure and Transparency Rule 7.1 and the UK Corporate Governance Code. The terms of reference are considered annually by the Audit Committee and are then referred to the Board for approval. A copy of the terms of reference is available upon request from the Company Secretary.

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 performance, business model and strategy;

· 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;

· 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;

· assessing annually 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; and

· reviewing any public statements concerning the long‑term viability of the Company.

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.

Composition of the committee

The members of the Audit Committee are:

· Christopher Legge (Chairman);

· Peter Neville; and

· Richard Ramsay.

Meetings

The Audit Committee meets at least three times a year and at such other times as the Audit Committee Chairman shall require.

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 Chairman attends the annual general meeting to answer shareholder questions on the Committee's activities.

Significant issues

The Audit Committee considered the following significant issues in relation to the financial statements:

Valuation of investments

The Company is required to calculate the fair value of its investments. Whilst there is a relatively active market for investments of this nature there is not a suitable listed, or other public market in these investments against which their value can benchmarked. As a result, a valuation is performed based on a discounted cash flow methodology in line with IAS 39 Financial Instruments: Recognition and Measurement and IFRS 13 Fair Value Measurement.

The calculation of the fair value of the investments carries elements of risks, 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 electricity prices, energy generation and volumes underlying the forecast investment cash flows;

· 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 future provisions in the UK regarding the tax deductibility of interest expense once the BEPS recommendations are implemented;

· the underlying project financial models may not reflect the underlying performance of the investment;

· 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 result in errors in forecasting.

The Audit Committee is satisfied that the Administrator and Investment Adviser's assumptions have been reviewed and challenged for:

· the macroeconomic assumptions, including the comparison of these assumptions to observable market data and actual results;

· the electricity price, energy generation and volume assumptions, including the comparison of these assumptions to observable market data and actual results; and

· the build‑up of the discount rates for consistency and reasonableness, benchmarking against market data and peers.

The Audit Committee is also satisfied that the portfolio valuation and associated disclosures has 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 auditor.

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 Adviser, 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. 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 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 in the governance section.

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 Adviser, including their own internal controls and procedures in place in relation to the Company, provide sufficient assurance that a sound system of internal control, which safeguards the Company's assets, is maintained. In addition, internal audits of the projects are performed periodically by the Investment Adviser who reports findings to the Audit Committee.

External audit

Deloitte LLP has been the Company's auditor since incorporation on 12 December 2013 and these are the second set of financial statements on which it has expressed an audit opinion.

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.

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 Adviser;

· the auditor assessment of the Group's main 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 revisions to the UK Corporate Governance Code introduced by the Financial Reporting Council in September 2012 and updated in September 2014, and the AIC Code of Corporate Governance issued in February 2013 and revised in February 2015, and in particular the recommendation, in each, 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.

The Audit Committee is satisfied with the effectiveness and independence of the audit process and as such recommended to the Board that Deloitte LLP be re‑appointed as external auditor for the year ending 31 March 2016. The Audit Committee also recommended the audit appointment is retendered every 10 years, with the audit partner changing every five years.

Non‑audit services

The Audit Committee considered the extent of non‑audit services provided by the external auditor. The external auditor's objectivity and independence is safeguarded through limiting non‑audit services to their role as reporting accountants for capital raising services.

Activities of the Audit Committee

The Audit Committee met on four occasions during the year ended 31 March 2016. Matters considered at these meetings included but were not limited to:

· review of the appointment of the external auditor;

· review of the effectiveness of the external auditor;

· approval of the external audit fees;

· consideration and agreement of the terms of reference of the Audit Committee for approval by the Board;

· review of the proposed accounting policies and format of the financial statements;

· review of the audit plan and timetable for the preparation of the Annual Report and Financial Statements; and

· review of the 2015 Annual Report and Financial Statements and the 2015 Half‑year Report.

Approval

On behalf of the Audit Committee:

Christopher Legge
Chairman of the Audit Committee

16 June 2016

Risk Committee report

The Board of Directors has established a Risk Committee from the non‑executive Directors of the Company. The Risk Committee, chaired by Peter Neville, 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 annually by the Risk Committee and are then referred to the Board for approval. A copy of the terms of reference is available upon request from the Company Secretary.

The main roles and responsibilities of the Risk Committee are:

· when requested to do so, advise the Board on the overall risk appetite, tolerance and strategy of the Fund, taking account of 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 Corporate Governance Code or the AIC Code where considered appropriate;

· 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 members of the Risk Committee are:

· Peter Neville (Chairman);

· Christopher Legge; and

· Denise Mileham.

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 meets at least four times a year and at such other times as the Risk Committee Chairman shall require. Other Directors and third parties may be invited by the Risk Committee to attend meetings as and when appropriate.

In order to assist it in fulfilling its role on behalf of the Board, the Committee has established in conjunction with the Investment Adviser 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.

Nomination Committee report

The Board of Directors has established a Nomination Committee from the non‑executive Directors of the Company. The Nomination Committee, chaired by Denise Mileham, 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 upon request from the Company Secretary.

The main terms of reference of the Committee are:

· regularly review the structure, size and composition of the Board and make recommendations to the Board with regard to any changes (including skills, knowledge and experience in accordance with Principle 6 of the AIC Code);

· give full consideration to succession planning for Directors taking into account the challenges and opportunities facing the Company; and

· be responsible for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise.

The members of the Nomination Committee are:

· Denise Mileham (Chairman);

· Richard Morse; and

· Peter Neville.

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 meets at least twice a year and at such other times as the Nomination Committee Chairman shall require. Other Directors and third parties may be invited by the Nomination Committee to attend meetings as and when appropriate.

All members of the Board were recruited in the summer of 2013 and appointed to the Board on incorporation of the Company on 12 December 2013. The Chairman Richard Morse was appointed by John Laing and in conjunction with the Investment Adviser undertook a comprehensive recruitment process for the remaining members of the Board, with the aim of establishing a Board with the skills, knowledge and experience necessary for the proposed listing of the Company and its subsequent management and operation.

The Nomination Committee met twice during the year, in June and August 2015. Matters considered at these meetings included but were not limited to:

· the results of the Committee self‑evaluation carried out in July 2015;

· the results of the review of the composition of the Board and the appropriateness of the current mix of skills, knowledge and experience for its current activities;

· Director succession planning;

· governance of subsidiaries; and

· consideration and agreement of the terms of reference of the Nomination Committee for approval by the Board.

Based on its review of the composition of the Board, the Committee concluded that the current mix of skills, knowledge and experience is appropriate for its current activities. The Committee noted that the Board was satisfied with the evaluations process conducted for 2015 and a similar process would be repeated in 2016. It was expected that an external evaluation would be arranged for 2017.

Independent auditor's report
to the members of John Laing Environmental Assets Group Limited

Opinion on financial statements of John Laing Environmental Assets Group Limited

In our opinion the financial statements:

· give a true and fair view of the state of the Company's affairs as at 31 March 2016 and of its profit for the year then ended;

· have been properly prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union; and

· have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.

The financial statements comprise the statement of financial position, income statement, the statement of changes in equity, the cash flow statement and the related notes 1 to 19. The financial reporting framework that has been applied in their preparation is applicable law and IFRS as adopted by the European Union.

Separate opinion in relation to IFRS as issued by the IASB

As explained in note 2 to the financial statements, in addition to applying IFRS as adopted by the European Union, the Company has also applied IFRS as issued by the International Accounting Standards Board (IASB).

In our opinion the financial statements comply with IFRS as issued by the IASB.

Going concern and the Directors' assessment of the principal risks that would threaten the solvency or liquidity of the Company

As required by the Listing Rules we have reviewed the Directors' statement regarding the appropriateness of the going concern basis of accounting contained within note 2 to the financial statements and the Directors' statement on the longer‑term viability of the Company contained within the Report of the Directors.

We have nothing material to add or draw attention to in relation to:

· the Directors' confirmation in the report of the Directors 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;

· the disclosures in the risks and risk management section that describe those risks and explain how they are being managed or mitigated;

· the Directors' statement in note 2 to the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them and their identification of any material uncertainties to the Company's ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;

· the Directors' explanation in the report of the Directors as to how they have assessed the prospects of the Company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

We agreed with the Directors' adoption of the going concern basis of accounting and we did not identify any such material uncertainties. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company's ability to continue as a going concern.

Independence

We are required to comply with the Financial Reporting Council's Ethical Standards for Auditors and we confirm that we are independent of the Company and we have fulfilled our other ethical responsibilities in accordance with those standards. We also confirm we have not provided any of the prohibited non‑audit services referred to in those standards.

Our assessment of risks of material misstatement

The assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team.

Risk

How the scope of our audit responded to the risk

Valuation of investments at fair value

As described in the accounting policies in note 2 to the financial statements, the fair value of the Company's investments is determined using a discounted cash flow methodology, as there is no liquid market for these projects. The complexity of this methodology, as well as a number of significant judgements, mean there is a risk that the fair value of these environmental infrastructure assets is not appropriate. As shown in the statement of financial position, the total fair value of the Company's investments as at 31 March 2016 was £214.4 million.

The key judgements included in the valuation are:

· discount rates which must be reflective of current market conditions; and

· macroeconomic assumptions - including forward electricity prices, energy yields, corporation tax,
and inflation.

In addition, during the year, the Company refinanced its wind portfolio under a new subgroup with a single holding company. The Company now values all wind assets under a single portfolio valuation, and as a result, the Investment Adviser has consolidated the wind assets, reassessing the future cash flows based on updated energy yield assessments and applied a single discount rate to the wind portfolio as a whole. The total fair value of the Company's wind portfolio investment as at 31 March 2016 was £97 million.

We obtained assurance over the appropriateness of the Directors' judgement applied in determining the fair value of the portfolio by:

· challenging the discount rates and the forecast cash flows, including the macroeconomic assumptions underpinning them;

· assessing the performance of the portfolio in the period against prior period forecasts;

· using our valuation specialists to support our challenge of the valuation of investments, the appropriateness of the Directors' judgements, and challenging their independent specialists; and

· using our tax specialists to assess the impact of tax developments.

With respect to the wind refinancing, we challenged:

· the treatment of the wind portfolio as a single asset for valuation purposes;

· the forecast cash flows, including the macroeconomic assumptions underpinning them, in particular the revised energy yields, by reference to competent person reports, observable market data and forecasts;

· the refinancing assumptions, including the potential refinancing risk; and

· the appropriateness of the use of a single discount rate applied to the wind portfolio, and comparing to relevant peers and recent market transactions.

We also reviewed the appropriateness of the disclosures in the financial statements in relation to the refinancing and the resultant impact on the Company's results.

Last year our report included one other risk which is not included in our report this year: Application of Investment Entities Standards. This has not been included this year as there have been no further clarifications or amendments to the Investment Entities Standards, following initial adoption in the prior year.

Additionally, the risk concerning the Valuation of Investments at Fair Value includes focus on the wind portfolio valuation, as a result of the refinancing during the year.

The description of risks above should be read in conjunction with the significant issues considered by the Audit Committee discussed in the Audit Committee report.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Our application of materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.

We determined materiality for the Company to be £4.3 million (2015: £3.2 million), which is 2% of investments at fair value through profit or loss. We believe this is the most appropriate benchmark as the fair value of investments is considered to be one of the principal considerations for members of the Company in assessing financial performance.

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £214,000 (2015: £60,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

An overview of the scope of our audit

Our audit was scoped by obtaining an understanding of the entity and its environment, including internal control, and assessing the risks of material misstatement. Audit work to respond to the risks of material misstatement was performed directly by the audit engagement team.

Matters on which we are required to report by exception

Adequacy of explanations received and accounting records

Under the Companies (Guernsey) Law, 2008 we are required to report to you if, in our opinion:

· we have not received all the information and explanations we require for our audit; or

· adequate accounting records have not been kept; or

· the financial statements are not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

Corporate governance statement

Under the Listing Rules we are also required to review part of the corporate governance statement relating to the Company's compliance with certain provisions of the UK Corporate Governance Code. We have nothing to report arising from our review.

Our duty to read other information in the Annual Report

Under International Standards on Auditing (UK and Ireland), we are required to report to you if, in our opinion, information in the Annual Report is:

· materially inconsistent with the information in the audited financial statements; or

· apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Company acquired in the course of performing our audit; or

· otherwise misleading.

In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the Directors' statement that they consider the Annual Report is fair, balanced and understandable and whether the Annual Report appropriately discloses those matters that we communicated to the Audit Committee which we consider should have been disclosed. We confirm that we have not identified any such inconsistencies or misleading statements.

Respective responsibilities of Directors and auditor

As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). We also comply with International Standard on Quality Control 1 (UK and Ireland). Our audit methodology and tools aim to ensure that our quality control procedures are effective, understood and applied. Our quality controls and systems include our dedicated professional standards review team and independent partner reviews.

This report is made solely to the Company's members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non‑financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

John Clacy, FCA
For and on behalf of Deloitte LLP
Chartered Accountants and Recognised Auditor
Guernsey, Channel Islands

16 June 2016

Income statement
for the year ended 31 March 2016

			Period from
			incorporation on
			12 Dec 2013
		2016	to 31 Mar 2015
	Notes	£'000s	£'000s
Operating income	9	9,317	11,973
Operating expenses	5	(3,118)	(2,617)
Operating profit		6,199	9,356
Bank interest income		-	1
Profit before tax		6,199	9,357
Tax	6	-	-
Profit for the year/period		6,199	9,357
Earnings per share
Basic and diluted (pence)	8	3.01	5.85

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 period, other than the profit for the year/period and therefore no separate statement of comprehensive income has been presented.

Statement of financial position
as at 31 March 2016

		2016	2015
	Notes	£'000s	£'000s
Non‑current assets
Investments at fair value through profit or loss	9	214,400	159,043
Total non‑current assets		214,400	159,043
Current assets
Trade and other receivables	10	31	14
Cash and cash equivalents		3,312	3,622
Total current assets		3,343	3,636
Total assets		217,743	162,679
Current liabilities
Trade and other payables	11	(852)	(770)
Total current liabilities		(852)	(770)
Total liabilities		(852)	(770)
Net assets		216,891	161,909
Equity
Share capital account	13	221,122	157,352
Retained earnings		(4,231)	4,557
Equity attributable to owners of the Company		216,891	161,909
Net assets per share (pence per share)		96.7	101.2

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 16 June 2016. They were signed on its behalf by:

Richard Morse Christopher Legge
Chairman Director

Statement of changes in equity
for the year ended 31 March 2016

		Year ended 31 Mar 2016
		Share capital	Retained
		account	earnings	Total
	Notes	£'000s	£'000s	£'000s
Balance at 1 April 2015		157,352	4,557	161,909
Profit for the year		-	6,199	6,199
Profit and total comprehensive income for the year		-	6,199	6,199
Issue of share capital	13	65,000	-	65,000
Expenses of issue of equity shares	13	(1,230)	-	(1,230)
Dividends paid		-	(14,987)	(14,987)
Balance at 31 March 2016		221,122	(4,231)	216,891

		Period from incorporation on
		12 Dec 2013 to 31 Mar 2015
		Share capital	Retained
		account	earnings	Total
	Notes	£'000s	£'000s	£'000s
Balance at incorporation		-	-	-
Profit for the period		-	9,357	9,357
Profit and total comprehensive income for the period	-	9,357	9,357
Issue of share capital	13	160,000	-	160,000
Expenses of issue of equity shares	13	(2,648)	-	(2,648)
Dividends paid		-	(4,800)	(4,800)
Balance at 31 March 2015		157,352	4,557	161,909

The accompanying notes form an integral part of the financial statements.

Cash flow statement
for the year ended 31 March 2016

		Period from
		incorporation on
		12 Dec 2013
	2016	to 31 Mar 2015
	£'000s	£'000s
Profit from operations	6,199	9,356
Adjustments for:
Investment interest	(10,210)	(8,100)
Dividend received	(7,500)	(1,700)
Net loss/(gain) on investments at fair value through profit or loss	8,393	(2,173)
Operating cash flows before movements in working capital	(3,118)	(2,617)
Increase in receivables	(17)	(14)
Increase in payables	82	770
Net cash outflow from operating activities	(3,053)	(1,861)
Investing activities
Investments in subsidiaries	(30,750)	(66,870)
Loan to subsidiaries	(33,000)	(90,000)
Investment interest	10,210	8,100
Dividend received	7,500	1,700
Net finance income	-	1
Net cash used in investing activities	(46,040)	(147,069)
Financing activities
Proceeds on issue of share capital	65,000	160,000
Expenses relating to issue of shares	(1,230)	(2,648)
Dividends paid	(14,987)	(4,800)
Net cash from financing activities	48,783	152,552
Net (decrease)/increase in cash and cash equivalents	(310)	3,622
Cash and cash equivalents at beginning of the year/period	3,622	-
Cash and cash equivalents at end of year/period	3,312	3,622

The accompanying notes form an integral part of the financial statements.

Notes to the financial statements
for the year ended 31 March 2016

1. General information

John Laing Environmental Assets Group Limited (the "Company" or "JLEN") is a closed‑ended investment company domiciled and incorporated in Guernsey, Channel Islands, under Section 20 of the Companies (Guernsey) Law, 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 2016 and have been prepared on the basis of the accounting policies set out below. The financial statements comprise only the result of the Company as its investment in John Laing 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 projects that utilise natural or waste resources or support more environmentally friendly approaches to economic activity.

During the year, the Company successfully raised gross proceeds of £65 million through the issue of ordinary shares and continued to manage its investment in UK HoldCo, adding three solar projects, a wind project and an additional stake in an existing solar project to its portfolio of environmental infrastructure assets.

2. Significant accounting policies

(a) Basis of preparation

The financial statements were approved and authorised for issue by the Board of Directors on 16 June 2016. The set of financial statements included in this financial report has been prepared in compliance with the Companies (Guernsey) Law, 2008 and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and IFRS as issued by the International Accounting Standard Board ("IASB") using the historical cost basis, except that the financial instruments classified at fair value through profit or loss are stated at their fair value.

As a result of adopting the amendments to IFRS 10, IFRS 12 and IAS 28 first adopted in the Company's Annual Report to 31 March 2015, the Company is required to hold its subsidiaries that provide investment services at fair value, in accordance with IAS 39 Financial Instruments: Recognition and Measurement, and IFRS 13: Fair Value Measurement. The Company accounts for its investment in its wholly owned direct subsidiary UK HoldCo at fair value. The Company, together with its wholly owned direct subsidiary UK HoldCo 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 2016 principally comprise working capital balances, the bank loan and investments in projects, are required to be included at fair value in the carrying value of investments.

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 (subordinated debt together with equity) has a finite life. For the PPP assets, the subordinated 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 or 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. John Laing Capital Management Limited, the Company's Investment Adviser 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:

· IFRS 9 Financial Instruments

· FRS 14 Regulatory Deferral Accounts

· IFRS 15 Revenue from Contracts with Customers

· IFRS 16 Leases

· Amendments to IAS 7: Disclosure Initiative

· Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses

· Amendments to IAS 1: Disclosure Initiative

· Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

· Amendments to IAS 27: Equity Method in Separate Financial Statements

· Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation

· Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations

· Annual Improvements to IFRSs: 2012‑2014 Cycle

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.

(b) Going concern

The Directors, in their consideration of going concern, have reviewed comprehensive cash flow forecasts prepared by the Company's Investment Adviser, John Laing Capital Management Limited, which are based on prudent market data and believe, based on those forecasts and an assessment of the Company's subsidiary's banking facilities, that it is appropriate to prepare the financial statements of the Company on the going concern basis. In arriving at their conclusion that the Company has adequate financial resources, the Directors were mindful that the Group had unrestricted cash of £6.2 million (including £3.3 million in the Company) as at 31 March 2016 and a revolving credit facility signed on 9 October 2014 and amended on 1 March 2016 (available for investment in new or existing projects and working capital) of £65 million, which expires in October 2017.

As at 31 March 2016, the Company's wholly owned subsidiary UK HoldCo had borrowed £54.8 million under the facility to finance the facility cost and the acquisition of environmental infrastructure projects.

After the balance sheet date, the Company raised gross proceeds of £35.2 million through the issue of ordinary shares. This has enabled JLEN to reduce the balance outstanding on its revolving credit facility.

All key financial covenants are forecast to continue to be complied with throughout the next year.

The Directors are satisfied that the Company has sufficient resources to continue to operate for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing these financial statements.

Operating income 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 received from UK HoldCo and interest income accrued 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 balance sheet 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 IAS 39 Financial Instruments: Recognition and Measurement and IFRS 13 Fair Value Measurement.

(a) Financial assets

The Company classifies its financial assets as either fair value through profit or loss or loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(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, investment 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.

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 have 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) Loans and receivables

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.

(b) 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 or associated with the establishment of the Company 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, are measured at amortised cost using the effective interest method less any impairment losses.

The effective interest rate is that 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.

(d) 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), subordinated and intercompany loans (interest and repayments). The discount rates used in the valuation exercise represent the Investment Adviser's and the Board's assessment of the rate of return in the market for assets with similar characteristics and risk profile. The discount rates are reviewed on a regular basis and updated, where appropriate, to reflect changes in the market and in the project risk characteristics. The discount rates that have been applied to the financial assets at 31 March 2016 were in the range 6.5% to 9.6% (31 March 2015: 7.0% to 11.0%). 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.

During the year, all revenues were generated in the UK.

(h) Statement of compliance

Pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 1987 the Company is a registered closed‑ended investment scheme. As a registered scheme, the Company is subject to certain ongoing obligations to the Guernsey Financial Services Commission, and is governed by the Companies (Guernsey) Law, 2008 as amended.

3. 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

Fair value of intermediate holdings companies

The Directors consider that the carrying value of the financial assets and financial liabilities recorded at amortised cost in the financial statements are approximately equal to their fair value.

Fair value of environmental infrastructure investments

Fair values for those investments for which a market quote is not available are determined using the income approach which discounts the expected cash flows at the appropriate rate. In determining the discount rate, regard is had to risk free rates, specific risks and the evidence of recent transactions. Underlying assumptions and discount rates are disclosed in note 9.

Critical accounting judgements

Equity and debt investment in UK HoldCo

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	Period ended
	31 Mar 2016	31 Mar 2015
	£'000s	£'000s
Investment advisory fees	2,446	1,735
Directors' fees and expenses	203	254
Administration fee	82	85
Other expenses	387	543
	3,118	2,617

The Company had no employees during the year. There was no Directors' remuneration for the year other than Directors' fees as detailed in note 15.

Included within other expenses is an amount of £79,000, which was accrued or paid to Deloitte LLP in the year for Deloitte LLP's review of the Company's half year financial information and for the audit of the Company for the year ended 31 March 2016 (period ended 31 March 2015: £104,000).

The Company paid £58,500 (period ended 31 March 2015: £409,000) to Deloitte LLP in respect of non‑audit services related to the Company's capital raise on 16 July 2015.

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.

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 and loss, are included in the estimate of the fair value of these investments.

7. Dividends

	Year ended	Period ended
	31 Mar 2016	31 Mar 2015
	£'000s	£'000s
Amounts recognised as distributions to equity holders during the year/period:
Final dividend for the period ended 31 March 2015 of 3.0 pence per share	4,800	-
Interim dividend for the six months ended 30 September 2015 of 3.027 pence per share (30 September 2014: 3.0 pence per share)	6,791	4,800
Interim dividend for the quarter ended 31 December 2015 of 1.5135 pence per share	3,396	-

A dividend for the quarter ended 31 March 2016 of 1.5135 pence per share, amounting to £3.4 million, was approved by the Board on 11 May 2016 and is payable on 24 June 2016. The dividend has not been included as a liability at 31 March 2016.

8. Earnings per share

Earning per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average of the number of ordinary shares in issue during the year:

	Year ended	Period ended
	31 Mar 2016	31 Mar 2015
	£'000s	£'000s
Earnings
Earnings for the purposes of basic and diluted earnings per share being net profit attributable to owners of the Company	6,199	9,357
Number of shares
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share	205,717,686	160,000,000

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	3.01	5.85

9. Investments at fair value through profit or loss

As set out in note 1, 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 2016	31 Mar 2015
	£'000s	£'000s
Fair value of environmental infrastructure investments	264,486	197,717
Fair value of intermediate holding companies	(50,086)	(38,674)
Fair value	214,400	159,043

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 2016, by incorporating the fair value of these intermediate holding companies.

		Cash, working			Cash, working
		capital and debt			capital and debt
		in intermediate			in intermediate
	Portfolio value	holdings	Total	Portfolio value	holdings	Total
	31 Mar 2016	31 Mar 2016	31 Mar 2016	31 Mar 2015	31 Mar 2015	31 Mar 2015
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Opening balance/at incorporation	197,717	(38,674)	159,043	-	-	-
Acquisitions
Portfolio of assets acquired	75,506	-	75,506	198,905	-	198,905
Post acquisition price adjustments	(1,835)	-	(1,835)	(611)	-	(611)
	73,671	-	73,671	198,294	-	198,294
Growth in portfolio
Growth from discount rate movements*	7,239	-	7,239*	6,741	-	6,741*
Growth from discount rate unwind*	17,390	-	17,390*	12,524	-	12,524*
Changes in economic assumptions*	(274)	-	(274)*	(769)	-	(769)*
Wind assets refinancing*	3,955		3,955*	-	-	-*
Changes in LECs and forecast electricity prices*	(16,618)	-	(16,618)*	(5,300)	-	(5,300)*
	11,692	-	11,692	13,196	-	13,196
Yields from portfolio to intermediate holding companies
Dividends received from portfolio assets	(1,119)	1,119	-	(688)	688	-
Interest received from portfolio assets	(9,143)	9,143	-	(6,619)	6,619	-
Loans and equity repayments received from portfolio assets	(8,215)	8,215	-	(6,466)	6,466	-
Other fees	(117)	117	-	-	-	-
	(18,594)	18,594	-	(13,773)	13,773	-
Yields from intermediate holding companies
Interest on loan notes*	(10,210)	(10,210)*	-	(8,100)	(8,100)*	-
Dividend payment from UK HoldCo to the Company*	-	(7,500)	(7,500)*	-	(1,700)	(1,700)*
	-	(17,710)	(17,710)	-	(9,800)	(9,800)
Other movements
Investment in working capital in UK HoldCo	-	(766)	(766)	-	2,256	2,256
Increase in debtor related to the agreed settlement on updated energy yield assessments under Sale and Purchase Agreements	-	1,985	1,985	-	-	-
Administrative expenses borne by intermediate holding companies*	-	(2,375)	(2,375)*	-	(1,223)	(1,223)*
Drawdown of UK HoldCo revolving credit facility borrowings	-	(11,140)	(11,140)	-	(43,680)	(43,680)
Fair value of the Company's investment in UK HoldCo	264,486	(50,086)	214,400	197,717	(38,674)	159,043

* The net loss on investments at fair value through profit or loss for the year ended 31 March 2016 is £8,393,000 (31 March 2015: gain of £2,173,000). This, together with interest received on loan notes of £10,210,000 (31 March 2015: £8,100,000) and dividend income of £7,500,000 (31 March 2015: £1,700,000) comprises operating income in the income statement.

The table opposite shows 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 Adviser has carried out fair market valuations of the investments as at 31 March 2016. The Directors have satisfied themselves as to the methodology used and the discount rates applied for the valuation. Investments are all investments in environmental infrastructure projects and are valued using a discounted cash flow methodology, being the most relevant and most commonly used method in the market to value similar assets to the Company's. The Company's holding of its investment in UK HoldCo represents its interest in both the equity and debt instruments. The equity and debt instruments are valued as a whole using a blended discount rate and the value attributed to the equity instruments represents the fair value of future dividends and equity redemptions in addition to any value enhancements arising from the timing of loan principal and interest receipts from the debt instruments, while the value attributed to the debt instruments represents the principal outstanding and interest due on the loan at the valuation date.

The valuation techniques and methodologies have been applied consistently with the valuations performed since the launch of the Fund in March 2014.

Discount rates applied to the portfolio of assets range from 6.5% to 9.6% (31 March 2015: 7.0% to 11.0%). The weighted average discount rate of the portfolio at 31 March 2016 is 8.2% (31 March 2015: 9.1%).

The following economic assumptions have been used in the discounted cash flow valuations:

	31 Mar 2016	31 Mar 2015
UK - inflation rates	2.2% for 2016 and 2.75% from 2017	2% for 2015 and 2.75% from 2016
UK - deposit interest rates	1% for 2016, gradually rising to 3.25% from 2019	1% for 2015, gradually rising to 3.5% from 2019

The long term UK corporation tax rate assumed in the 31 March 2016 portfolio valuation is 20%, stepping down to 19% in April 2017 and 17% from April 2020 (31 March 2015: 20%).

Fair value of intermediate holding companies

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 book values.

Details of environmental infrastructure projects investments were as follows:

	% holding at 31 March 2016		% holding at 31 March 2015
		Subordinated		Subordinated
Project name	Equity	loan stock	Equity	loan stock
Amber	100%	100%	100%	100%
Bilsthorpe	100%	100%	100%	100%
Branden	100%	100%	64%	64%
Burton Wold Extension	100%	100%	-	-
Carscreugh	100%	100%	100%	100%
Castle Pill	100%	100%	100%	100%
Dumfries and Galloway	80%	100%	80%	100%
ELWA	80%	100%	80%	100%
Ferndale	100%	100%	100%	100%
Hall Farm	100%	100%	100%	100%
Panther	100%	100%	-	-
Monksham	⁽¹⁾	100%	-	-
Pylle Southern	100%	100%	-	-
Tay	33%	33%	33%	33%
Wear Point	100%	100%	100%	100%

(1) 100% of "B" shares. The "A" shareholders under the Enterprise Investment Scheme remain invested in the project. Including the loans, JLEN held an effective economic interest over 87% of the value of the project's cash flows (as calculated at acquisition).

On 30 July 2015, the Group acquired the remaining 36% interest in the Branden solar park project from John Laing and the entirety of 'B' shares plus other economic interests in the Monksham solar park project for a total cash consideration of £20.4 million, including working capital.

Under two separate transactions on 30 October 2015 and 13 November 2015, UK HoldCo acquired a solar photovoltaic portfolio owned under Venture Capital Trusts and Enterprise Investment Schemes for a cash consideration of £28.5 million, including working capital, fully funded by the Group's revolving credit facility.

On 2 December 2015, the Group acquired Burton Wold Extension wind farm located in Northamptonshire from John Laing for a cash consideration, including working capital, of £21.8 million.

On 17 March 2016, the Group acquired Pylle Southern solar park for a total consideration, including working capital, of £6.1 million. £1.3 million of the consideration was paid after the year end under the terms of the sale and purchase agreement.

10. Trade and other receivables

	31 Mar 2016	31 Mar 2015
	£'000s	£'000s
Prepayments	31	14
Balance at 31 March	31	14

11. Trade and other payables

	31 Mar 2016	31 Mar 2015
	£'000s	£'000s
Accruals	852	770
Balance at 31 March	852	770

12. Loans and borrowings

The Company had no outstanding loans or borrowings at 31 March 2016 (31 March 2015: £nil), as shown in the Company's statement of financial position.

The Company's immediate subsidiary, UK HoldCo, as borrower and the Company, as guarantor, benefit from a three‑year revolving credit facility of £65 million with HSBC and NIBC which expires on 9 October 2017. The facility, signed on 9 October 2014 and amended on 1 March 2016 to increase to £65 million, can be used to make acquisitions of environmental infrastructure projects and to cover working capital requirements. The loan bears interest of LIBOR + 2.5% and will be repaid by the proceeds from future capital raises.

At 31 March 2016, UK HoldCo had drawn £54.8 million (31 March 2015: £43.7 million) on the facility. This amount is included in the "Investment at fair value through profit or loss" in the Company's statement of financial position.

There were no other outstanding loans and borrowings in either the Company, UK HoldCo or HWT Limited.

13. Share capital account

	31 Mar 2016	31 Mar 2015
	£'000s	£'000s
Opening balance/balance on incorporation	157,352	-
Shares issued in the year/period	65,000	160,000
Expenses of issue of equity shares	(1,230)	(2,648)
Balance at 31 March	221,122	157,352

On 15 July 2015, 64,356,435 new ordinary shares of no par value were issued and fully paid at a price of 101.0 pence.

At 31 March 2016, the Company's share capital was comprised of 224,356,435 ordinary shares of no par value.

On 27 May 2016, the Company announced that it had raised £35.2 million by way of a cash placing of 36.0 million new ordinary shares to institutional investors pursuant to its existing Placing Programme.

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 2016	31 Mar 2015
	£'000s	£'000s
Opening balance/balance on incorporation	4,557	-
Profit for the year/period	6,199	9,357
Dividends paid	(14,987)	(4,800)
Balance at 31 March	(4,231)	4,557

15. Transactions with Investment Adviser and other 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 other related parties are disclosed below. This note also details the terms of the Company's engagement with John Laing Capital Management Limited as Investment Adviser together with the details of investment acquisitions from John Laing, of which JLCM is a wholly owned subsidiary.

Transactions with the Investment Adviser

JLCM is the Company's Investment Adviser. JLCM's appointment as Investment Adviser is governed by an Investment Advisory Agreement which may be terminated after an initial four year term, starting 31 March 2014, by either party giving one year's written notice.

JLCM is entitled to a base fee equal to:

a) 1.0% per annum of the Adjusted Portfolio Value* of the Fund** up to and including £500 million; and

b) 0.8% per annum of the Adjusted Portfolio Value of the Fund in excess of £500 million.

The total Investment Adviser fee charged to the income statement for the year ended 31 March 2016 was £2,446,000 (period from incorporation on 12 December 2013 to 31 March 2015: £1,735,000) of which £659,000 remained payable as at 31 March 2016 (31 March 2015: £511,000).

* 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.

** Fund means the Company and John Laing Environmental Assets Group (UK) Limited together with their wholly owned subsidiaries or subsidiary undertakings (including companies or other entities wholly owned by them together, individually or in any combination, as appropriate) but excluding project entities.

Other transactions with related parties

During the year, the Company's wholly owned subsidiary, UK HoldCo, acquired the remaining 36% stake in the Branden solar park project and the Burton Wold Extension wind farm from John Laing as detailed in note 9.

During the year, the Directors of the Company, who are considered to be key management, received fees of £200,000 (period ended 31 March 2015: £250,000) for their services. The Directors of the Company were also paid £3,741 of expenses (year ended 31 March 2015: £3,969). As set out in the Directors' remuneration report in the governance section, it is proposed to pay the Directors additional fees totalling £25,000 for the year ended 31 March 2016.

During the year, the Directors subscribed for and were issued new ordinary shares, which are detailed in the table below:

	Subscribed and issued
	as part of the issue of
	64,356,435 new ordinary		Other subscriptions		Total number of
	shares on 15 Jul 2015		during the year		shares held at
	(number of shares)	Consideration	(number of shares)	Consideration	31 Mar 2016
Richard Morse	9,792	£9,890	23,250*	£24,470	83,042
Richard Ramsay	8,813	£8,901	-	-	53,813
Christopher Legge	4,896	£4,945	-	-	29,896
Denise Mileham	8,160	£8,242	-	-	28,160
Peter Neville	4,896	£4,945	-	-	29,896

* On 23 November 2015, Richard Morse subscribed for an additional 23,250 shares for a consideration of £24,470.

All of the above transactions were undertaken on an arm's length basis.

The Directors were paid dividends in the year of £15,157 (period ending 31 March 2015: £4,950).

16. Financial instruments

Financial instruments by category

The Company held the following financial instruments at fair value at 31 March 2016. 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 2016
			Financial
			assets at fair	Financial
	Cash and	Loans and	value through	liabilities at
	bank balances	receivables	profit or loss	amortised cost	Total
	£'000s	£'000s	£'000s	£'000s	£'000s
Levels	1	1	3	1
Non‑current assets
Investments at fair value through profit or loss (Level 3)	-	-	214,400	-	214,400
Current assets
Trade and other receivables	-	31	-	-	31
Cash and cash equivalents	3,312	-	-	-	3,312
Total financial assets	3,312	31	214,400	-	217,743
Current liabilities
Trade and other payables	-	-	-	(852)	(852)
Total financial liabilities	-	-	-	(852)	(852)
Net financial instruments	3,312	31	214,400	(852)	216,891

	31 March 2015
			Financial
			assets at fair	Financial
	Cash and	Loans and	value through	liabilities at
	bank balances	receivables	profit or loss	amortised cost	Total
	£'000s	£'000s	£'000s	£'000s	£'000s
Levels	1	1	3	1
Non‑current assets
Investments at fair value through profit or loss (Level 3)	-	-	159,043	-	159,043
Current assets
Trade and other receivables	-	14	-	-	14
Cash and cash equivalents	3,622	-	-	-	3,622
Total financial assets	3,622	14	159,043	-	162,679
Current liabilities
Trade and other payables	-	-	-	(770)	(770)
Total financial liabilities	-	-	-	(770)	(770)
Net financial instruments	3,622	14	159,043	(770)	161,909

The above table provides an analysis of financial instruments that are measured subsequent to their initial recognition at fair value as follows:

· Level 1: fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

· Level 2: fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

· Level 3: fair value measurements are those derived from valuation techniques that include inputs to the asset or liability that are not based on observable market data (unobservable inputs).

There were no transfers between Level 1 and 2, Level 1 and 3 or Level 2 and 3 during the year.

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 2016
Discount rate	Minus 0.5%	Base 8.2%	Plus 0.5%
Change in portfolio valuation	Increases £10.9m	£264.5m	Decreases £10.3m
Change in NAV per share	Increases 4.9p	96.7p	Decreases 4.6p

31 March 2015
Discount rate	Minus 0.5%	Base 9.1%	Plus 0.5%
Change in portfolio valuation	Increases £8.1m	£197.7m	Decreases £7.6m
Change in NAV per share	Increases 5.1p	101.2p	Decreases 4.8p

The sensitivity of the portfolio to movements in long term inflation rates is as follows:

31 March 2016
Inflation rates	Minus 0.5%	Base 2.75%	Plus 0.5%
Change in portfolio valuation	Decreases £10.9m	£264.5m	Increases £11.5m
Change in NAV per share	Decreases 4.9p	96.7p	Increases 5.1p

31 March 2015
Inflation rates	Minus 0.5%	Base 2.75%	Plus 0.5%
Change in portfolio valuation	Decreases £8.4m	£197.7m	Increases £8.6m
Change in NAV per share	Decreases 5.3p	101.2p	Increases 5.4p

Wind and solar assets are subject to electricity price and electricity generation risks. The sensitivities of the investments to movements in the level of electricity output and electricity price are as follows:

The fair value of the investments is based on a "P50" level of electricity generation for the renewable energy assets, being the expected level of generation over the long term. The sensitivity of the portfolio to movements in energy yields based on an assumed "P90" level of electricity 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 2016
Energy yield	P90 (10 year)	Base P50	P10 (10 year)
Change in portfolio valuation	Decreases £21.6m	£264.5m	Increases £21.7m
Change in NAV per share	Decreases 9.6p	96.7p	Increases 9.7p

31 March 2015
Energy yield	P90 (10 year)	Base P50	P10 (10 year)
Change in portfolio valuation	Decreases £19.4m	£197.7m	Increases £18.8m
Change in NAV per share	Decreases 12.1p	101.2p	Increases 11.8p

The sensitivity of the portfolio to movements in electricity prices is as follows:

31 March 2016
Electricity prices	Minus 10%	Base	Plus 10%
Change in portfolio valuation	Decreases £9.6m	£264.5m	Increases £9.5m
Change in NAV per share	Decreases 4.3p	96.7p	Increases 4.2p

31 March 2015
Electricity prices	Minus 10%	Base	Plus 10%
Change in portfolio valuation	Decreases £7.8m	£197.7m	Increases £7.7m
Change in NAV per share	Decreases 4.9p	101.2p	Increases 4.8p

Waste and wastewater assets do not have significant volume and price risks.

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 share capital account and retained earnings as detailed in notes 13 and 14, debt as detailed in note 12 and cash and cash equivalents. 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 Adviser 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 2016, the Company had no outstanding debt. However as set out in note 12, the Company's subsidiary UK HoldCo raised a revolving credit facility in October 2014 (amended in March 2016) and at 31 March 2016, there was a loan outstanding in UK HoldCo of £54.8 million.

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 electricity 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 Adviser 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 Adviser. The various types of financial risk are managed as follows:

Financial risk management - Company only

The Company accounts for its investments in it 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 2016 the Company had no recourse debt, although as set out in note 12, 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 net debt of £54.8 million, being the amount drawn on the revolving credit facility to purchase assets described in note 9.

Market risk - foreign currency exchange rate risk

As at 31 March 2016 the Company has only invested in UK projects denominated in pounds sterling.

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 pound 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 the Company's subsidiary John Laing Environmental Assets Group (UK) Limited, as part of its revolving credit facility. This may involve the use of interest rate derivatives and similar derivative instruments.

Each asset 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 - electricity price risk

The wholesale market price of electricity is volatile and is affected by a variety of factors, including market demand for electricity, 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 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 in the market. Short‑term and seasonal fluctuations in electricity demand will also impact the price at which the investments can sell electricity. The supply of electricity also impacts the wholesale electricity price. Supply of electricity 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 asset 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.

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 2016, the Company has provided a guarantee under the Company's wholly owned subsidiary UK HoldCo's £65 million revolving credit facility due to expire on 9 October 2017.

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 Investment Entities: (Amendments to IFRS 10, IFRS 12 and IAS 27) and Investment Entities: Applying the Consolidation Exemption (Amendments to IFRS 10, IFRS 12 and IAS 28):

		Place of	Ownership
Name	Category	business	interest	Voting rights
John Laing Environmental Assets Group (UK) Limited	Intermediate holding	UK	100%	100%
HWT Limited	Intermediate holding	UK	100%	100%
JLEAG Solar 1 Limited	Project holding company	UK	100%	100%
Croft Solar PV Limited	Operating subsidiary	UK	100%	100%
Cross Solar PV Limited	Operating subsidiary	UK	100%	100%
Domestic Solar Limited	Operating subsidiary	UK	100%	100%
Ecossol Limited	Operating subsidiary	UK	100%	100%
Hill Solar PV limited	Operating subsidiary	UK	100%	100%
Share Solar PV Limited	Operating subsidiary	UK	100%	100%
Tor Solar PV limited	Operating subsidiary	UK	100%	100%
Residential PV trading Limited	Operating subsidiary	UK	100%	100%
South‑Western Farms Solar Limited	Operating subsidiary	UK	100%	100%
Angel Solar Limited	Operating subsidiary	UK	100%	100%
Easton PV Limited	Project holding company	UK	100%	100%
Pylle Solar Limited	Project holding company	UK	100%	100%
Second Energy Limited	Operating subsidiary	UK	100%	100%
ELWA Holdings Limited	Project holding company	UK	80%	80%
ELWA Limited⁽¹⁾	Operating subsidiary	UK	80%	81%
JLEAG Wind Holdings Limited	Project holding company	UK	100%	100%
JLEAG Wind Limited	Project holding company	UK	100%	100%
Amber Solar Parks (Holdings) Limited	Project holding company	UK	100%	100%
Amber Solar Park Limited	Operating subsidiary	UK	100%	100%
Fryingdown Solar Park Limited	Operating subsidiary (dormant)	UK	100%	100%
Five Oaks Solar Parks Limited	Operating subsidiary (dormant)	UK	100%	100%
Bilsthorpe Wind Farm Holdings Limited	Project holding company	UK	100%	100%
Bilsthorpe Wind Farm Limited	Operating subsidiary	UK	100%	100%
Ferndale Wind Limited	Project holding company	UK	100%	100%
Castle Pill Wind Limited	Project holding company	UK	100%	100%
Wind Assets LLP	Operating subsidiary	UK	100%	100%
Shanks Dumfries and Galloway Holdings Limited	Project holding company	UK	80%	80%
Shanks Dumfries and Galloway Limited	Operating subsidiary	UK	80%	80%
JL Hall Farm Holdings Limited	Project holding company	UK	100%	100%
Hall Farm Wind Farm Limited	Operating subsidiary	UK	100%	100%
Branden Solar Parks (Holdings) Limited	Project holding company	UK	100%	100%
Branden Solar Parks Limited	Operating subsidiary	UK	100%	100%
KS SPV 3 Limited	Operating subsidiary	UK	100%	100%
KS SPV 4 Limited	Operating subsidiary	UK	100%	100%
Carscreugh (Holdings) Limited	Project holding company	UK	100%	100%
Carscreugh Renewable Energy Park Limited	Operating subsidiary	UK	100%	100%
Wear Point Wind Holdco Limited	Project holding company	UK	100%	100%
Wear Point Wind Limited	Operating subsidiary	UK	100%	100%
Monksham Power Ltd	Project holding company	UK	⁽²⁾	⁽²⁾
Frome Solar Limited	Operating subsidiary	UK	⁽²⁾	⁽²⁾

(1) ELWA Holdings Limited holds 81% of the voting rights and 100% share of the economic benefits in ELWA Limited.

(2) 100% of "B" shares plus 100% of loans to the project. The "A" shareholders, investors under the Enterprise Investment Scheme, remain invested in the project. Including the loans, JLEN held an effective economic interest over 87% of the value of the project's cash flow (as calculated at acquisition).

19. Events after balance sheet date

On 27 May 2016, the Company successfully raised gross proceeds of £35.2 million through the issue of 36.0 million ordinary shares of no par value in the Company at 97.75 pence per ordinary share.

A dividend for the quarter ended 31 March 2016 of 1.5135 pence per share, amounting to £3.4 million, was approved by the Board on 11 May 2016 for payment on 24 June 2016.

On 9 May 2016, UK HoldCo entered into an agreement to acquire 100% of a 4MW capacity wind farm in Northwest France for a total consideration, including working capital, of €2.5 million, fully funded by the Group's revolving credit facility. This acquisition is expected to complete in the coming weeks, subject to the customary consents.

There are no other significant events since the year end which would require to be disclosed.

ADDITIONAL INFORMATION

Company summary

Below are the Company key facts, advisers and other information.

Company information	John Laing 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 Adviser	John Laing Capital Management Limited, incorporated in England and Wales on 19 May 2004 under the Companies Act 1985 (registered number 5132286) and authorised and regulated in the UK by the Financial Conduct Authority ("FCA")
Company Secretary and Administrator	Praxis Fund Services Limited, a company incorporated in Guernsey on 13 April 2005 (registered number 43046)
Market capitalisation	£222.7 million at 31 March 2016
Investment Adviser fees	1.0% per annum of the Adjusted Portfolio Value of the investments up to £0.5 billion falling to 0.8% per annum for investments above £0.5 billion. No performance or acquisitions fees
ISA, PEP and SIPP status	The ordinary shares are eligible for inclusion in PEPs and ISAs (subject to applicable 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 a self‑managed Alternative Investment Fund under the European Union's Alternative Investment Fund Managers Directive
Non‑mainstream pooled investment status	The Board conducts the Company's affairs, and intends to continue to conduct the Company's affairs, such that the Company would qualify for approval as an investment trust if it were 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 advisors 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 in the strategy and investment policy section of the strategic report and is detailed on page 60 of the Company's prospectus dated 4 June 2015.
Website	www.jlen.com

Directors and advisers

Directors
Richard Morse (Chairman)
Christopher Legge
Denise Mileham
Peter Neville
Richard Ramsay

Administrator to the Company, Company Secretary and Registered Office
Praxis Fund Services Limited
Sarnia House
Le Truchot
St Peter Port
Guernsey GY1 1GR
Channel Islands

Registrar
Capita Registrars (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey GY2 4LH
Channel Islands

UK Transfer Agent
Capita 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 Adviser
John Laing Capital Management Limited
1 Kingsway
London WC2B 6AN
United Kingdom

Public Relations
Redleaf Communications
First Floor
4 London Wall Buildings
Blomfield Street
London EC2M 5NT
United Kingdom

Joint Corporate Brokers
Winterflood Securities Limited
The Atrium Building
Cannon Bridge House
25 Dowgate Hill
London EC4R 2GA
United Kingdom

Barclays
5 The North Colonnade
Canary Wharf
London E14 4BB
United Kingdom

Corporate Bankers
HSBC
PO Box 31
St Peter Port
Guernsey GY1 3AT
Channel Islands

Public company directorships
Richard Morse
John Laing Environmental Assets Group Limited

Christopher Legge
Ashmore Global Opportunities Limited, London - Main Market
BH Macro Limited, London - Main Market
John Laing Environmental Assets Group Limited
Sherborne Investors (Guernsey) B Limited, London - SFM
Third Point Offshore Investors Limited, London - Main Market
TwentyFour Select Monthly Income Fund Limited, London - Main Market

Denise Mileham
John Laing Environmental Assets Group Limited

Peter Neville
John Laing Environmental Assets Group Limited

Richard Ramsay
Seneca Global Income & Growth plc, London - Main Market

This information is provided by RNS
The company news service from the London Stock Exchange

END

This information is provided by RNS

The company news service from the London Stock Exchange

END

ACSUNUNRNOANAAR