Foresight Environmental Infrastructure Limited (FGEN) Earnings Call Transcript & Summary

Thank you, everyone, for attending JLEN's '22, '23 financial year annual results. We really appreciate you taking the time to listen to us today. So first of all, I'll just go through some logistics. [Operator Instructions]. So hopefully, that's clear. And I'll now move on into the main presentation. Okay. So today, you'll be hearing from [ Ed ], first of all, on our financial results and the valuation. You'll then hear from me on portfolio matters and outlook. And finally, from Chris on the hydrogen opportunity that lies ahead of us. You also see on this slide, there are some stats about the investment manager, Foresight Group, the key point that we are making here is that there is a big team behind the 3 of us. So it's us on the stage today, but there's a huge depth of resource that we can call upon and so for example, if you look in the annual report, you'll see the portfolio managers highlighted to do so much to get the best out of the assets for us. So this is our fund overview slide. There's no need to dwell on this. I think most of you know the pitch by now. We are a diversified environmental infrastructure fund. And this has benefits in terms of no one set of risks predominating. And it also means that we're able to follow societal trends towards decarbonization and more sustainable economic activity. So that means we're able to look across a range of opportunities to assess where we see the best returns. Okay. I'll now hand over to Ed to go through the financial results.

Brilliant. Thanks, Chris. So for those who I haven't had a chance to meet me yet. My name is Edward Mountney. I'm on the investment team here at JLEN with the 2 Chris's having joined the team in 2022 last year before that held the role of Head of Evaluations. So there'll be no surprise that I'll be taking you through the finances and the valuations today. So we have a summary slide here just pulling out some of the key points of our performance for the last 12 months. And the things I'd like to draw on here NAV up 7% to 814.6 million, bringing us to 123.1 pence per share, delivering a period of pretty resilient growth in spite of the backdrop of economic turmoil and regulatory and political challenges. So that's really good. I'm also pleased to say that the board set the dividend target of 7.14 pence at the start of the financial year. We've delivered that and covered it -- sorry, 1.51x. So that's our highest dividend cover since IPO really showing the strength of the portfolio. In doing so, that means we've been able to take that surplus cash and invest it into value-accretive opportunities across the portfolio and really accelerate the growth of the fund. All this means JLEN has delivered 99% total shareholder return since our launch, which compares very favorably with the circa 60% total return from the FTSE all-Share Index over the same 9-year horizon. And this equates to 7.9% on an annualized basis. And the last thing to pull out on this slide is just in line with JLEN's progressive dividend policy. The Board has set a target of 7.57 pence for the year ahead that's a 6% increase on this year, and again, is expected to be well covered by the cash flows coming off of the portfolio. So next up, we've introduced a slide here on track record. And really, that's now getting to a point where we are looking back on the 9 years of the launch, we're coming up to the tenth year anniversary of this fund and just an opportunity to reflect, I wouldn't dwell on the detail too much. because I'm sure you're all very familiar with the results. But what I would like to pull out is that we've seen periods of falling power prices as well as record power prices over that time. We've seen regulatory and political interventions spanning 5 different prime ministers global wars, unpredictable weather patterns and the rest. But JLEN's diversification strategy continues to prove that a broad environmental infrastructure mandate can provide stable and steady returns to its investors. Okay. So moving on to the detail for today. Following last year's presentation, we had some feedback that we would like to -- people would like to hear more of the finances upfront. So we've brought forward some of those a little bit earlier than we otherwise normally would do. So we kick off here with the cash flow statement for the group. And what I'll pull out here, I appreciate it's quite small for those in the room, but the top item in this cash flow statement, cash distributions through investments is really shot up from 56 million to 83.6 million this year. And that's really a combination of high power prices being achieved across the portfolio as well as last year's acquisitions now being part of the portfolio for a full 12 months. Other points to touch on include the 72 million of acquisitions, which everyone will be familiar with from the half year results and the subsequent Capital Markets Day, funded by a combination of drawdowns on the funds RCF as well as the surplus cash flows coming off the portfolio. And we have a bit more on the RCF in a couple of slides. But firstly, we take a look at the income statement and balance sheet. On the left-hand side, we have that income statement, and that's showing growth earned on the portfolio compared to last year showing very good growth from the 50.1 million up to 54.5 million. So that's not cash, that's interest earned and dividends coming out of the portfolio. And that, combined with an overall increase in the fair value of the portfolio gives us solid earnings per share of 14.9 pence. On the right-hand side, we have the net asset position of the fund and that show a portfolio value of over uplift in portfolio value of over GBP 100 million up to GBP 898 million. With the other key figure here being the RCF now standing at GBP 103 million, which brings us neatly to a slide on the group's debt position. So the main point to pull out here is that JLEN continues to operate with a very low level of gearing relative to both the sector as well as what the assets themselves can sustain. So 18% project level gearing going up to 27% when we add in the debt at the fund level, so that's the RCF, all of that long-term debt amortizes within the subsidy lives. There is no refinancing risk on long-term project finance debt, and interest rate risk is fully hedged at a project level. So JLEN, very well sheltered from the current lending environment. So we now have 103 million drawn on the RCF at the year-end. That's an ESG-linked facility with margins ranging from 195 basis points to 205 basis points. And we also managed to secure a 1-year extension on the facility to May 2025 and activated the accordion bringing the total facility size to GBP 200 million. So that gives us ample headroom to meet our build-out commitments over the year ahead. And Chris will have some further information on that later on in the presentation. Okay. So that draws us to the next part of the slides for today, where I'll take you through some of the valuation matters. So what we can see here is the usual valuation bridge format that you'll no doubt be familiar with. And I'll take you through some key points. So starting from left to right, we have the 72.1 million of acquisitions during the period. And that's acquisitions into the areas that we're familiar with, so the batteries, the controlled environment, those higher-yielding construction assets that we're starting to build out now. We've also had 83 million of cash off the portfolio, as I mentioned before, and that brings us to our rebased valuation of 783.9 million. And what we can see from here, all the movements on the right, the fair value increases show a 15% increase on the portfolio value above that rebased valuation, which is very strong growth. I'll pick out a couple of the items, and then we have some more slides to follow. Notably here, 57.7 million of increase from power prices, and that's not of the electricity generated levy that we've modeled throughout the portfolio. We then have 67.7 million of economic assumptions, and that's really actual inflation driving above our modeled assumptions from last year, combined with an increase in the 2023 RPI rate that we put through in September, we put through partially in September and then a bit more in December. And then the final point to pick out is the 39.1 million of discount rate reduction. So discount rates up, valuation down. And that's the 75 basis points that we put through at the half year valuation, recognizing that increase in [gilts] at the time. Okay. So moving on to at power prices in a little bit more detail. Main thing to point out here is that our methodology remains unchanged. So we're still using 2 years of market forwards before reverting to a blend of 3 market consultants adjusted for project-specific arrangements and price cannibalization. The blended curve on the right here is presented. And you can see the near-term uplift, which is really what's driving that portfolio valuation increase. So as I mentioned before, we've put through electricity generated levy already in the valuation. But what I will pull out just to reference to that is the average price over that levy period is GBP 104. So that obviously compares to the GBP 75 benchmark that they've set within the levy mechanism. Worth noting, if we're thinking about the levy is that whilst that affects part of JLEN's portfolio being electricity generating assets, a large part of JLEN's portfolio sits it's completely outside of the scope of that levy. So the gas generating assets like to highlight the majority of the ADs as well as the nonenergy generating assets like the waste processing facilities like the batteries. So completely outside of our [levy]. Okay. The slide before presented the power prices inclusive of the fixes that we've got across the portfolio. So we just have a slide here just illustrating to the extent those fixes apply to different parts of the portfolio of different sectors within it and what we tend to fix is between 6 months out to 3 years. And we have a policy where we attempt to apply fixes in order to protect against downside risk that still give us the opportunity for upside value. So we fixed the high proportion of intermittent assets whilst keeping some of the base lead assets floating because assets with a base lead profile are those ones that are really able to capture the higher prices as they arise throughout a 24-hour period. You'll see that we are 76% fixed for summer 2023, going to 67% for the following winter and obviously, stepping down as we go forward throughout further seasons. But as we get closer to those, we'll continue to fix on [our] proportion. Okay. So discount rates. You may not remember the circumstances in the immediate buildup to the 30th of September valuations following the old fated mini budget leading to a series of events that ultimately saw a significant spike in gilt rates and a decision by the Board to increase discount rates by 75 basis points of that valuation. Subsequent to that, we saw a fairly steep decline following the valuation point at September, followed then by a period of relative stability up to this valuation date. And although we keep a watchful eye on the economic environment and increases to gilts since the year-end, we do not think any broad brush changes to the discount rates are appropriate for this valuation. And we continue to remain a very high risk premium above risk free rates that are shown on the chart on the right. Instead, what we've done is perform a project-specific review of discount rates, and that's included a reduction of our [ Cramlington ] Biomass facility at the year-end. Following the successful implementation of several key value enhancement initiatives, that were identified as part of the investment case for that asset, and we therefore, derisk those cash flows even further. All in all, this has led to a weighted average discount rate of 8.4%, up from 7.3% last year. And that's largely a result of those 75 basis point uplift we put through at the half year as well as the continued investment into higher IRR construction opportunities across the portfolio, such as the batteries in the glass house. So lastly for me is a slide summarizing JLEN's macroeconomic assumptions. Actual inflation in the opening months of this calendar year seems to be tracking our modeled assumptions quite well, so we haven't changed our views for this quarter. And the rest of the figures here are fairly self-explanatory. So I won't read them out loud, but please do let me know if you have any questions at the end of the presentation. For now, that brings me to an end so I'll pass back over to Chris.

Thanks very much, Ed. So I'll now talk about portfolio, ESG and then the market and outlook for the fund. So Slide 17 provides some information on the portfolio. You'll note that the construction element has gone up from 2% last year to 10%. we have an overall portfolio limit of 25% of NAV. And while we have ongoing construction activity within the portfolio, we'll also see projects become operational in the near term. And so we expect to be able to manage within that 25% limit very comfortably. It's also still heavily weighted towards the U.K. at 94%. We do expect the non-U.K. elements to grow modestly over the medium term. So for example, we're still continuing to deploy capital into the Rjukan aquaculture facility in Norway, and we have interests in hydrogen in Germany, where we also think there's a good chance that we'll deploy capital. Our investment policy states that we will always have a minimum of 50% of assets in the U.K., and I don't think we'll get close to testing that level. Some further portfolio analysis, illustrating the broad diversification of the portfolio. So there's a fairly even spread here between -- across wind, solar, AD and waste and Bioenergy. And then you see the newer areas of the controlled environment projects and then what we're terming low-carbon solutions, which is where the batteries and our hydrogen interest sit. So it's these newer areas where we'll see some growth in the short term as we build out what we have. I'll just touch on the remaining asset life at 17.1 years. So we are relatively conservative in the way we assess remaining asset life. For the wind and solar assets, we've only recognized life extensions where we have the land rights to do so. And so that's rather than making a blanket assumption that all of the assets will be able to go for longer. But of course, there's every chance they will do. And for the ADs, we've assumed that they end when their subsidies come to an end after 20 years. So although there's nothing concrete that we can point to in this area at the moment, we are seeing a lot of interest in green gas in the market, and that makes us increasingly hopeful that viable gas generating assets like the ones that we have won't be switched off. It's not in the interests of an economy seeking to decarbonize heat, for example. And so we think there's a very good chance that something will come at the end of the subsidy life to keep them switched on, and that, of course, will be an upside for us. So Slide 19 is revenue analysis for the current portfolio. So here, we're looking at the underlying gross revenues of our portfolio companies. So in total, 62% of underlying portfolio revenues on an NPV basis have explicit inflation linkage. So the bulk of this is made up of the subsidized energy assets and then the concession projects, and you can see this on the graph. We also thought it would be useful to give you some insight into the newer parts of the portfolio, and you can see this in the third bar chart along. So a large chunk of our revenues here are coming from the batteries. So they're not quite the same as price taking renewables assets that are simply exporting into the wholesale market. But still, we recognize essentially market in nature subject to the skill of our route-to-market providers in maximizing the spread from cycling those batteries and their revenue arrangements are incentivized them to do that. For the rest, our revenues at CNG are index linked. So we are able to increase the cost for dispensing fuel in line with the RPI index. And for the controlled environment projects, so they are still in construction. So we don't have revenues for those projects yet. But what we do expect is that they will enjoy a degree of pricing power by virtue of their particular characteristics. And so that should enable them to protect their margins as their cost bases increase. In the case of the glass house, we're in possession of a very scarce government license that should have an advantage over imported materials that would also be higher cost and probably lower quality. In the case of Rjukan our operating cost base compares very favorably to traditional near coastal pens. And that's before we factor in the possibility of a resource rent tax in Norway that would affect sea-based growing operations, but not land-based operations like Rjukan. So that should also help us absorb any inflationary pressures. So the next 3 slides cover the assets in construction. Our CNG stations are progressing well. We have 3 in construction at the moment at various stages, and this is a pretty slick operation for us now. So we've built a number of stations. For the batteries, West Gordy became operational post the balance sheet end a couple of weeks ago. And this has provided us with valuable experience, particularly in the commissioning side of things and we'll be playing that back -- those remaining batteries, there are 3 of them and they're owned 50-50 with Foresight Solar. So SandRidge has started construction, and we expect it to start earning revenues the beginning of next year. Lunanhead and Clayfords are each in the latter stages of agreeing contracts with their EPC counterparties. They'll be done as to our systems and we expect them to come online at the end of 2024. The controlled environment builds are progressing well. What you see on the slide in the background here is a picture of the glass house, and we expect that to start growing the first plants later this year. Rjukan is a longer-dated build and here, the main facility itself is progressing well. We are reliant upon the municipality to build some connecting water infrastructure that had a slow start but is now also making good progress. So we expect to introduce the first batch of fish into the facility in 2024. And this first batch will actually grow out as the last parts of the build are being finalized around them. So just to [plause] it all onto 1 slide. Overall, we have about 48 million of capital to go into our existing bills over the next 12 months and we're well funded to do that. As Ed said, we've got plenty of headroom on the RCF. And looking further out, we have sufficient capital to enable us to continue to commit to the currently uncontracted batteries and also the hydrogen assets that we have priority rights over. Turning to performance. So in terms of performance, as you've heard, this has been the best year for JLEN since launching. So dividend cover of 1.51x. It's the highest dividend covered by some distance. And it's particularly pleasing that it's come at a time when we also have the highest proportion of the portfolio in construction assets that are yet to generate cash. And also, as you can see from the chart, we had an outage in the waste and bioenergy sector at Cramlington that also impacted upon cash generation. So I'll come back to Cramlington in a moment. But apart from that, all other parts of the portfolio have contributed well to the result that we've delivered. So moving on to Cramlington, and the first thing to say is that it has been and will continue to be a great asset for JLEN. So we bought it in 2021 out of administration, and it's on track to pay back its purchase price by 2025. And if we hadn't had this outage it would be sooner than that. So really great performance. What happened in this instance is that we were informed by the turbine manufacturer that a plant with a [router] from the same batch as Cramlington had a fault and therefore, there was a chance that we had a similar fault even though we weren't seeing that in performance data at that time. So in conjunction with our operating partners and technical experts, we decided to take the plant offline in a coordinated manner to investigate in order to avoid potentially greater issues down the line if it did turn out to have the fault. Indeed, it did, albeit at a much earlier stage and the fact that we took it off in a controlled manner meant that we already had contingencies in place to minimize that downtime. So while it was down, we were able to bring forward a whole load of planned maintenance work that would normally only be done over a matter of years. And this means that since it came back on in February, the plant has been really excelling. So very strong availability, very good performance. So of course, it's disappointing that the plant came offline at the time that it did. But we still managed to deliver our best ever distribution perform -- dividend cover performance. And now our largest asset is benefiting from a maintenance program that otherwise wouldn't have been possible in the time frame. And on this slide, we have the same analysis by technology, except this time, we're looking at it on a power-generated basis instead of cash. So you can see that generation doesn't necessarily move in the same direction as cash. So even as we delivered our best performance since IPO, we had areas that missed their generation budget. So one of those was waste in bioenergy, as I just mentioned. The other main one is wind down simply as a result of low wind speeds. The ADs, very pleasingly continued their streak of meeting or outperforming budget and that's been the case ever since we added them to the portfolio. So this is a very strong part of the book, providing diversification in baseload power or green gas. So Slide 26 on value enhancements. We're very focused on getting the most out of our assets and with a diversified portfolio like we have. We see a lot of different opportunities, they're pretty varied. Here are 3 of the largest ones in this period but we are, of course, doing the more straightforward things like asset retendering for asset service providers, lease extensions and stuff like that. So at Vulcan, we've started work on facilities to enable satellite gas producers to bring biogas to site to take advantage of Vulcan's rare open-ended renewable heat incentive subsidy. So there's significant capacity at the entry point here as a result of innovations on this part of the gas network. And so we're in a position to help stimulate the production of additional biomethane that otherwise may not be produced. The Cramlington fuel preparation area is one of those things that we identified as a key value enhancement when we bought the asset back in 2021. It provides the facility -- it provides the facilities for our operators to blend a more consistent fuel mix, and that improves efficiency within the boiler, also reduces blockages in the feeding line that would otherwise take the plant down. So I was there last month to see this, and it's a very impressive operation. And the last one here is the Private Wire between one of our ADs and the nearly complete glass house, so beneficial to both parties. So each party either enjoys higher revenues or pays, lower costs for energy than they would otherwise do if they approached the market. It also enables us to monetize otherwise waste heat via the renewable heat incentive. So all around, very good news. So just those 3 alone, we've committed around about 15 million to those kinds of initiatives, and we'll keep looking for more. So next 2 slides are on ESG. I won't spend too long on them, but for anyone who's interested, we're always very happy to go into more detail on this stuff. We are an Article 9 fund under SFDR, and we have consideration of decarbonization and sustainability as part of our investment policy. I'll just note our TCFD disclosures for this year and I encourage anyone who's interested to take a look in the annual report. It sets out the progress that we've made and also what we still have to do to be fully compliant, which is our ambition here. One of the things that we've done is increased our sophistication in the modeling of climate scenarios, and we do that using the [indiscernible] platform. So this is the best offering that we've seen to date in terms of integrating both the physical risk and the transition risk in 1 place across our range of assets. But I do think it's fair to say that this is an area that we'll see change in revisions to methodologies over time. This is something that's still in the process of becoming mainstream. And Slide 29 talks to our ESG KPIs. We provided information on these for the first time last year. I'm pleased to say that this year, 13 out of the 20 have seen improved or stable performance. And of the remaining 7, 5 of them have -- we've revised methodology to make them more appropriate. So they're not directly comparable. That only leads to that have moved downwards. It's only a very slight downward movement in some of the waste arisings categories. So that's simply as a result of what comes to us. So overall, very pleased with the performance here. So next couple of slides are on market and outlook. And this year, we've tried to be more direct in saying where we do and where we don't expect to deploy capital over the coming year. So there's more detail in Pages 12 to 18 of the annual report, but we've attempted to summarize it here. So what we're saying is what we think are the growth prospects for the sector in the U.K. and in Europe and then what our intentions are for that particular sector. So taking wind first, there is undoubtedly going to be significant growth in the sector. So taking the U.K. as an example, the government is aiming to add 50 gigawatts of offshore wind by 2030 and also reviewing the planning system to make it easier for onshore wind. So notwithstanding that, I don't think it's going to be an area of focus for us, and that's mainly on a returns basis. It may be that some construction stage assets meet our hurdle requirements, if they do, it will be on an opportunistic basis. It's a similar story with solar. We just don't see our return requirements being met by mainstream opportunities. What we are seeing though are our developers come forward with pipelines often of solar and battery assets together, and we are open to striking partnerships in this kind of area. Making use of the 5% allocation of NAV that we have to development-stage assets. So these kinds of partnerships have the advantage, particularly at the current moment when equity markets are closed of being quite capital-light but also potentially securing pipeline for later when hopefully, equity markets reopen. Not much in the U.K. AD market that suits us at the moment. So we are looking for larger plants that can sustain a proper level of operating costs, not doing that we think is not a good strategy. We're absolutely open to adding more assets here if we find the right one. The real action seems to be in Europe, where the EU stated aim of stimulating a significant increase in biomethane to 35 billion cubic meters by 2030. So that's really in response to the Russian war in Ukraine and energy security and Reliance and Russian gas. So this drive is resulting in some attractive national subsidies coming through in places like Spain and Italy. We have colleagues on the ground in these markets, and they're keeping a close eye on this for us. Biomass and energy from waste. So the powering up written policy statement from department for energy security and net 0 business as they don't like to be called, has a lot to say about bioenergy with carbon capture and storage. And government is also consulting on a subsidy regime to incentivize deployment of this. So we will follow this. But it's quite likely these projects will be both large in terms of construction costs and also be relatively high construction risk. So I don't think it will be a priority for us. Moving on to some of the newer areas. So controlled environment, there is a big pipeline here for someone to address. When we did the deals in 2022. We had a real influx of approaches from developers looking for support for their particular projects. But I don't think it's something that JLEN is going to be doing in the short term. What we'll focus on is building out what we have and seeing how they perform. So it's a similar story for low carbon transport, this is a significant market opportunity. And we've already seen how there are adjacencies with other things that we do. So for example, our CNG biomethane refueling business adjacent to our AD businesses. We do see a modest flow of relatively early-stage projects in sustainable fuels. And it may be that in the future, we hold important molecules for these processes, so green hydrogen, biomethane, for example. But for now, what we'll do is we'll focus on the build-out of further CNG stations from our existing commitment. Batteries, we've made 4 investments here. And when they are built out, we will have deployed roughly 10% of the portfolio into that sector. So this is a very competitive market at the moment. And so given the extent of deployment and also the experience that we'll gain now from having our first operating battery in West [Gordy], also noting the high prices that we would have to pay to acquire new assets. It feels right that we pause on new investments to see how the existing batteries get on. And that takes us to hydrogen. We are certainly very excited by hydrogen. And Chris will be spending more of his time on this wider opportunity. So over to him.

Great. Thank you, Chris, and good morning, everybody. So as Chris mentioned earlier, I'll be leading, [we go be] leading on full-size hydrogen infrastructure initiatives, while continuing to play a key role in JLEN investment activity. I'll have a few slides today to illustrate why we are excited by what the hydrogen sector can offer, both in the medium and long term as countries seek to decarbonize across a range of sectors. So firstly, it offers an ability to manage the intermittency of renewable energy generation through acting as a low-cost storage medium. And as we build out more production facilities over the course of this decade, we can start to think about storing this gas in very large volumes to respond to longer seasonal fluctuations in demand. And a good example of this is the high net initiative you might have heard of in [Cheshire] where salt carbons are being repurposed to store 35,000 tons of hydrogen and to give you a feel for the size of that 1 ton delivers around 33-megawatt hours. So the storage capability will be equivalent to powering some 400,000 homes for a year. Hydrogen can act as an energy carrier in many different forms, particularly compelling as we find our electricity grids coming under increasing strain. So repurposing our existing gas pipelines and blending hydrogen and both solutions here as well as transporting it further distances. And it also has a role to play in decarbonizing hard-to-abate sectors such as industry and transport where electrification doesn't offer a viable alternative and the switch to hydrogen offers a similar energy profile to natural gas. So in terms of sourcing and managing new deals in this sector for JLEN, we are very well placed through our track record of investing into adjacent industries. And across our portfolio for the funds at foresight managers, we have over 4 gigawatts of green energy generation from close to 250 generating assets. And the experience has been gained not only in the investments made already to develop electrolyzer solutions for hydrogen production, but the numerous other transactions that we have assessed as potential investments in this sector all of which provides a very solid knowledge base. We are an owner and operator of port and highway infrastructure, we also own a large gas pipeline and therefore very well placed to understand and possibly offer solutions to transporting hydrogen to end users. We understand how to use gas molecules for applications in transport such as JLEN CNG refueling stations and its gas-to-grid AD projects that produce a biomethane to inject into the U.K. gas network. And all of this and the partnerships we have established sets us up well to secure further investment opportunities in this fast and growing sector for JLEN. So JLEN has made its first investment into hydrogen through a company called HH2E. This was established by Alex Voigt, Andreas Schierenbeck and Mark Page all of whom have excellent credentials and connections to capitalize on Germany's move to hydrogen economy. And to demonstrate at this point, earlier this year, I took part in a roundtable discussion hosted by HH2E at the [indiscernible] with influent politicians who have a role in shaping German legislation to facilitate growth in this sector. So HH2E are focusing on supplying hydrogen to industrial customers across Germany and is well progressed in developing its first 2 projects. And through JLEN's involvement in HH2E, we have secured priority access to a number of projects in this pipeline. And we expect the first of these projects to tear back transaction to progress to financial close during the course of this year. And this is a sizable project with CapEx of some EUR 230 million, 30% of which will be financed through government subsidies and the remainder, JLEN will have a right but not an obligation to participate in the financing of the proportion of this alongside other shareholders. And the concept they use is to harness green electricity and with the use of long-duration battery storage technology create hydrogen through electrolysis for long periods, maximizing the efficiency of the electrolyzers. It's important to stress that HH2E are not developing any new technology, but they're partnering with established market players, such as now for the electrolyzer equipment. And we see these projects as compelling investment opportunities for JLEN. They offer infrastructure-like characteristics through established technology, offtake contracts with strong corporate counterparties, support through national and local government a clear role in decarbonizing economies, the potential to offer greater returns than established renewable sectors, and they add further diversification to JLEN's portfolio. I'll finish up there, and I think hand back to Chris.

Ok, thanks very much for listening. So, it's been a very good year for JLEN. We've delivered our best financial performance since IPO with dividend cover of 1.51x and we've done it while investing in construction assets that should provide accretive cash yield as they become operational. And this gives us the confidence to increase the dividend by 6% to 7.57p. So, we do recognize markets are effectively closed till listed in for funds at the moment, and we'll be cautious while this remains the case. Hopefully you've heard what we'll mainly be doing is focusing on the pipeline assets that we already have in place. nevertheless, we are well resourced and well positioned to take advantage of the growth opportunities in front of us such as the hydrogen opportunity you just heard about.