SDCL Energy Efficiency
Income Trust plc
Shaping the future of energy efficiency
Annual Report and Audited Financial Statements
for the year ended 31 March 2024
SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
About and Purpose
Supporting the
energy transition
SDCL Energy Efficiency Income Trustplc
SEEIT is the only FTSE 250 investment company
that has the specific sustainable investment
objective of mitigating climate change by investing
in energy efficiency projects.
The Company has grown its portfolio from £100
million in the UK at IPO in 2018, to a total enterprise
value of £1.5 billion across ten countries in Europe,
North America and Asia. It has developed and
invested in projects involving over 50,000 buildings,
industrial facilities and transport assets.
Why is this so important?
Energy efficiency is one of the largest, fastest,
cheapest and cleanest sources of greenhouse
gas emission reductions, energy productivity and
sustainable growth.
Energy is the largest source of greenhouse gas
emissions. Buildings, industry and transport
represent most of the demand for energy.
Andyetmost primary energy is lost.
In the United States, around 67% of energy
is lost
1
, mostly as waste heat, through the
extraction, conversion, generation, transmission,
distribution and usage process. At the point of
use, it is estimated that around 35% of the energy
consumed in commercial buildings is wasted
because of inefficiencies in cooling, space heating,
air conditioning, lighting and appliances.
Energy efficiency delivers 40% of the greenhouse
gas emission reductions needed by 2040 in the
International Energy Agency’s (“IEA”) Sustainable
Development Scenario (“SDS”). All net zero
pathways involve energy efficiency improvement
as global decarbonisation targets simply cannot
be achieved without it.
Meanwhile, despite the welcome and rapid
growth rates of the renewable energy sector,
the global energy system still remains 80% fossil
fuelled
2
. This is because renewables are taking
an increasing share of the energy market, but
at a rate of only around 0.4% per annum. At the
same time, the overall volume of energy supply,
whether higher or lower carbon, continues to rise,
as do the associated emissions.
Reducing wastage in both the demand
and supply for energy is therefore a crucial
opportunity.
Energy efficiency involves doing more with less,
delivering the same or more economic output
using less energy. It is crucial for the climate, for
cost and for energy security.
SEEIT’s investments are focused on projects that
provide more efficient supply of energy as well as
reducing the demand for, or waste of, it.
Find out more:
www.seeitplc.com
Contents
Introduction
About and Purpose 1
Highlights of the year to 31 March 2023 3
Why Invest?
(Investment Proposition)
4
Overview 4
Energy Efficiency 5
Attractive Investment Returns Strategy
6
Network Access and Expertise 7
Chair’s Statement 8
Strategic Report: The
Company and Portfolio Review
Strategy
Introduction to SDCL 12
The Team 12
Investment Manager: Markets
andOutlook
13
Business Model 15
Performance
Company Key Performance Indicators 16
Portfolio: Key Updates 17
Additional Portfolio Project Updates 34
Financial Review and Valuation Update 35
Environmental, Social and Governance
(“ESG”) Update
45
SEEIT Climate Change Report 54
TCFD Disclosures 61
Risk Management Framework 62
Viability Statement 65
Stakeholders and Section 172 66
Governance
Investment Policy and Approach 70
Board of Directors 71
Corporate Governance Statement 72
Nomination Committee Report 81
Audit and Risk Committee Report 83
Directors’ Remuneration Report 87
Report of the Directors 92
Statement of Directors’ Responsibilities 96
Financial Statements
Independent Auditor’s Report 98
Statement of Comprehensive Income 104
Statement of Financial Position 105
Statement of Changes
inShareholders’Equity
106
Statement of Cash Flows 107
Notes to the Financial Statements 108
Additional Information
Investment Policy 121
Company Information 123
Key Company Data 123
Sustainable Finance Disclosure
Regulation (“SFDR”)
124
Glossary 131
Glossary of Financial Alternative
Performance Measures (“APMs”)
133
1. Energy loss refers to the “rejected energy” referenced in the Lawrence Liverpool National Laboratory Sankey energy
flow diagrams, the most recent of which was published on 2022 energy data. These energy flow diagrams represent
the flow of primary energy to use in residential, commercial, industrial and transportation sectors, demonstrating how
energy is “rejected” during different parts of the energy generation, transmission and use process.
2. Figures based on IEA World Energy Balance report of 2019 energy usage.
1
SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Company Structure
SDCL Energy Efficiency Income Trust plc (the
“Company” or “SEEIT”) is the largest FTSE
250 company focused exclusively on energy
efficiency.
The Company is a closed-ended investment
company incorporated in England and Wales that
was admitted to the Official List and to trading
on the London Stock Exchange’s Main Market on
11 December 2018, with the objective to generate
an attractive total return for investors, comprising
stable dividend income and capital preservation,
with the opportunity for capital growth. SEEIT
is an Article 9 Fund under the EU’s Sustainable
Finance Disclosure Regulation (“SFDR”), with
the sustainable investment objective of climate
change mitigation through investments in energy
efficiency projects.
The Company has been established to provide
shareholders with access to investment into
energy efficiency infrastructure investments and
has a current portfolio comprising investments in
projects across the United States, Europe, the UK
and Asia.
The Company has an independent Board of
Directors and has appointed SDCL as Investment
Manager to manage the portfolio of investments
on its behalf.
It should be noted that when referring to
“investments” made by the Company, the
Company makes its investments via its sole direct
subsidiary and main investment vehicle, SEEIT
Holdco Limited (“SEEIT Holdco” or “Holdco”), and
the investment portfolio is held at Holdco level.
The Company holds no other investments.
References to “portfolio basis” includes the
impact if SEEIT Holdco were to be consolidated.
The revolving credit facility (“RCF”) referred to
in this document is held at Holdco level and the
Company itself does not hold any external debt.
The Investment Manager controls the actions
of Holdco and its direct and indirect subsidiaries
manage the existing investments that Holdco has
directly or indirectly invested in. Holdco typically
invests in project companies, which provide
energy efficiency solutions to counterparties
through long-term contracts with a fixed lifespan.
A project company, and by implication the
portfolio of investments as a whole, may have
a limited lifetime over which it provides target
returns to Holdco and ultimately the Company.
These project companies are structured so that
they can be sold in an active secondary market
for energy efficiency assets although each of
the investments will also have been assessed
individually to ensure appropriate alternative exit
strategies are in place.
About and Purpose:
Supporting the Energy Transition
continued
SEEIT Board
Investment Manager
Fund administrator
SEEIT Holdco
Project
companies
(includes senior
debt investments)
Project
companies
Project
companies
Project
companies
Corporate
investments
2018 2019 2020 2021 2022 2023 2024
Investment timeline
(disposal)(IPO)
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SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Highlights
of the year to 31 March 2024
Investing
in energy
efficiency
90.5p
Net asset value (“NAV”)
per share
the decrease in the year includes a reduction
of 11 pence attributed to an adverse 90 bps
increase in weighted average unlevered
discount rate in the year (100 bps in the six
months to Sept 2023)
31 March 2023: 101.5 pence;
30 September 2023: 90.6 pence
6.32p
Target dividend
1
guidance
per share for the year ending 31 March 2025
31 March 2024: 6.24p
c.£161m
Investment
mainly into existing investments during
theyear; a further c.£23 million invested since
the year end
31 March 2023: c.£240m
£92m
Investment cash inflow
fromtheportfolio
up 8% on a portfolio basis
31 March 2023: £85m
£56m loss
Loss before tax
includes unrealised loss of £118 million from
discount rate increases in the year
31 March 2023: £19m loss, including
£81 million unrealised loss
971,828 tCO
2
e
Scope 4 emissions
2
from the Company’s portfolio
31 March 2023: 1.2m tCO
2
e
6.24p
Aggregate dividends
per share declared, in line with target,
fullycash covered 1.1x for the year ended
31March 2024
31 March 2023: 6.0p
£1,117m
Portfolio Valuation
£1,066 million at 30 September 2023
31 March 2023: £1,100m
1. The target dividend stated above by the Company
is based on a projection by the Investment
Manager and should not be treated as a profit
forecast for the Company.
2. Previously reported as carbon savings.
APM APM APM
APM
APM
Alternative Performance Measure:
See Glossary of Financial Alternative
Performance Measures for further details
onAPMs used throughout thisreport.
Post Year-End
Following 31 March, the Company
completed the sale of its entire investment
in UU Solar for approximately £90 million
and at a premium to the 30 September
2023 valuation, using the proceeds to
reduce short-term gearing
APM
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SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Why Invest?
Overview
Enhancing value
for the long term...
energy
efficiency
Supporting the energy transition
through reducing energy loss.
attractive
investment returns
strategy
Distinct from traditional
fixed income products with
shareholder returns from both
dividends and capital growth.
network access
and expertise
An experienced Investment
Manager working alongside
portfolio company management
teams and counterparties, helps
to deliver value to shareholders.
Read more on page 5
Read more on page 6
Read more on page 7
FES lighting
Onyx
ON Energy
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SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Why Invest? continued
energy efficiency
Energy generators
4,979,953 MWh energy generated in the year
ending 31 March 2024
Problem:
Energy is lost during generation, transmission
and distribution to the point of use
Solution:
More efficient energy generators, bringing energy
generation closer to or at the point of use
Example within portfolio:
Onyx (on-site solar and storage), Oliva
(on-site cogeneration), Primary Energy
(on-site cogeneration)
Energy savers
379,589 MWh energy saved in the year ending
31March 2024
Problem:
Energy is lost during use due to inefficient
equipment
Solution:
Replace equipment with more efficient solutions
that use less energy to do the same job
Example within portfolio:
FES (LED lighting), Spark US Energy Efficiency
(energy systems as a service)
Energy efficiency means using
less energy to achieve the same
outcome; it saves money and
reduces carbon.
SEEIT is the first and only FTSE 250 listed
company focused exclusively on energy
efficiency.
Energy efficiency is a key element of the energy
transition. By reducing energy loss and emissions,
it is possible to decrease energy demand from
a centralised grid. Energy efficiency technology
is readily available, affordable and vital to
decreasing energy demand despite a growing
global population. When combined with rapid
deployment of solar and wind energy, energy
efficiency is capable of delivering half the
emission abatement needed by 2030 according
to the IEA’s Net Zero by 2050 scenario.
SEEIT focuses on Efficient and Decentralised
Generation of Energy (“EDGE”) projects. This
focus is a source of competitive strength, which
remains unique among UK investment trusts
and even across other major listed equity
capital markets. The Company’s EDGE projects
reduce energy lost in the supply, demand and
distribution of energy, hence reducing carbon
and costs while improving energy resilience and
security of supply.
By investing in energy efficient generators,
the Company’s energy efficiency projects can
alleviate strain on centralised energy systems,
enhancing their resilience and reducing emissions
associated with the transmission and distribution
of energy. Further, on-site energy generation
through technologies such as combined heat
and power (“CHP”) plants minimises energy loss
during conversion by harnessing waste heat, thus
maximising the utilisation of fuel resources.
The deployment of energy-saving technologies,
such as LED lighting, represents a cost-effective
and easily implementable solution to
curtail energy demand at the point of use.
Byreducing consumption without compromising
performance, these advancements not only
lower operational costs, but reduce energy
demand, therefore alleviating pressure on the
central energy grid.
This is particularly vital in the context of the
energy transition, as the integration of more
renewable energy sources necessitates a robust
and flexible grid capable of accommodating
variable inputs.
Together, energy generators and energy
savers deliver critical emissions reductions
and improvements in energy system resilience,
thereby supporting the energy transition to
netzero.
Invest in...
SEEIT’s portfolio of energy efficiency projects can
be broadly split into two categories:
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SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
The portfolio is diversified and
mostly operational (86%
1
) with
creditworthy counterparties
Underpinned by long-term
cash flows that cover a
growing dividend
SEEIT seeks to invest in projects with potential to exceed target
total returns
1
Cost reductions
and efficiency
improvements
e.g. in-house gas
procurement at Oliva
3
Unlocking
platformvalue
e.g. restructure
atVärtanGas
2
Investment in
higher-return projects
or new revenue
streams
e.g. new cogen plant
atRED-Rochester
Why Invest? continued
attractive investment
returns strategy
See pages 28 to 30 See pages 19 to 21 See pages 31 to 33
Illustrative project NAV over time
Invest in...
See Financial Review
formoredetail
See pages 35 to 44
See Portfolio Summary
formore detail
See pages 17 to 34
Year 15
Year 0
Underwriting Case: NAV plus distributions Opportunity for accretive upside
Acquisition
Year 1
Year 2 Year 3
Year 4
Year 10
1 2 3
Oliva RED-Rochester
1. Of portfolio value.
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SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
1. Groups of counterparties.
2. Over the previous 5 years.
Why Invest? continued
network access and expertise
Active funds:
4
AUM:
$2.5bn
SDCL (The Investment Manager)
Recent industry awards:
Business Green Awards 2024: ESG investor of the year
Environmental Finance, Sustainable Investment Awards 2021:
Boutique investment manager of the year
Shortlisted for a further 4 awards
2
SEEIT Portfolio
SEEIT is the first
UK-listed company
of its kind to invest
exclusively in the energy
efficiency sector.
Invest in...
Revenue counterparties:
45
1
Subcontractors:
>30
Employees at portfolio level:
>300
Employees:
50+
Global offices:
6
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SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
I would like to thank shareholders for their
support over what is now the second consecutive
financial year characterised by turbulent global
market conditions. I am pleased that in this
context SEEIT’s performance has been resilient
relative to the wider market.
During the year, SEEIT’s portfolio has delivered
an aggregated EBITDA
APM
in line with budget
and a fully cash-covered dividend. We have
seen positive results from the steps taken by the
Investment Manager to improve asset values
and to progress selective disposals, proving
previous asset values and strengthening SEEIT’s
balance sheet. Further details can be found in the
Investment Manager’s Report on pages 12 to 14.
SEEIT’s focus on energy efficiency is
differentiated from the other alternative income
investment trusts focused on infrastructure
or clean energy and, in this respect, it is the
only large-scale investment trust or FTSE 250
company of its kind benefiting from a diversified
portfolio of investments.
Capital Markets
The last year has been characterised by
continued relatively high inflation and interest
rates. This has put downward pressure on
valuations of income streams and asset values
inthe infrastructure sector.
Signs of lowering inflation and hopes for one or
more interest rate cuts by central banks during
2024 collided with stubborn inflation numbers
in the last quarter of the Company’s financial
year, limiting the opportunity to reduce discount
rates in the short term. Market uncertainty was
accompanied by geopolitical instability as the
wider ramifications of the Israel-Hamas and the
Russia-Ukraine conflicts continued to impact
supply chains and global capital markets.
At the same time, areas of the capital markets,
particularly in the UK investment trust market,
have been under pressure. March 2024
represented the 34th straight month of net
redemptions from multi-asset funds that are
traditional long-term shareholders, creating
a background of net selling and overhang in
the investment trust sector as a whole, and in
the alternative income markets in which SEEIT
operates.
This has contributed to a significant reduction
in SEEIT’s share price during the year. However,
the value that this represents has also been
identified by institutional investors and analysts,
and as a result, SEEIT has welcomed several new
shareholders to its register and looks forward to
continuing to deliver value and ensure that the
best shareholder outcomes can be achieved.
Governance and Engagement with
Shareholders
We thank shareholders for a strong vote in favour
of SEEIT’s continuation in the vote at the 2023
AGM, when all resolutions were passed. Our 2024
AGM will be held on 4 September and the notice
will be published in July. Emma Griffin has notified
the Board of her intention to stand down at
this AGM and so will not be seeking re-election.
Iwish to take this opportunity to thank Emma
for her valuable contribution and insight, and we
will seek to recruit a replacement as part of our
succession planning.
The Board and the Investment Manager have
engaged with shareholders throughout the year
and listened to feedback. This has resulted,
amongst other things, in an increase in the level
of disclosure that the Company provides in its
annual and semi-annual reporting, providing
investors with more information related to the
performance of individual investments as well
asthe wider portfolio.
“ On behalf of the Board, I am
pleased to present the Annual
Report and financial statements
(the “Annual Report”) for SDCL
Energy Efficiency Income Trust
plc (“SEEIT” or the “Company”) for
the year ended 31 March2024.”
Tony Roper|Chair
Chair’s Statement
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SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Governance and Engagement with
Shareholders continued
Also during the year, the Investment Manager has
been engaging with new prospective shareholders
to support the liquidity and marketability of
the Company’s shares. Thishas resulted in new
investments made by some predominantly
US-based institutional investors and a change in
composition of our shareholder register.
Addressing the Share Price Discount
to Net Asset Value
APM
During the year the Company bought back £20
million worth of its own shares. The Board and
Investment Manager will continue to assess
further buybacks if deemed in the best interests
of shareholders.
In our Interim Results, we set out a plan to help
to reduce the discount to net asset value at
which the Company’s shares have been trading.
This plan included a series of measures that the
Company is well advanced on implementing,
including:
– continuing to add value to the portfolio
through active asset management;
– achieving selective disposals to help to
reduce short-term gearing
APM
, to prove net
asset value
APM
and to recycle proceeds into
opportunities for increased total return.
Following the year end, thesale in May 2024 of
UU Solar (“UU”) to UK Power Network services
is an example (see Portfolio Summary on
page 18 for further details);
– increasing marketability and liquidity of
the Company’s shares by attracting new
institutional investors to the shareholder
register, as well as improving the profile
of the Company;
– applying its Capital Allocations Policy to focus
on those organic investments that exceed the
minimum return hurdles, being mainly further
investment into RED-Rochester, Onyx and
EVN; and
– planning actions based on feedback from
investors, leading to regular meetings with
analysts and major shareholders.
We are also considering further steps we could
take to narrow the discount, including:
– additional disclosures to improve investor
confidence in investments and their support
for the cash cover of the Company’s dividend;
– managing borrowing levels overall, and in
particular the level of short-term borrowings
through the Company’s RCF;
– marketing of the Company’s shares to wider
audience of potential investors, for example
in the United States, as well as the traditional
market for UK investment trusts; and
– subject to an improvement in share price,
acquisition of other smaller investment trusts
to improve scale and diversification.
Despite some improvements in the last quarter
of the financial year, we remain strongly of the
view that the Company’s share price does not
reflect the value of its investments, nor the
cashflows derived from them that allow the
Company to pay the current level of dividends
with progressive growth.
This represents a significant challenge, as well as
a substantial opportunity for new shareholders,
who are able to acquire SEEIT’s shares in the
market well below net asset value
APM
and with
anattractive dividend yield.
Portfolio and Financial Performance
The portfolio generated earnings in line with
expectations and cash flows that were more
than sufficient to cover the Company’s target
dividends.
SEEIT’s NAV
APM
per share at 31 March 2024 was
90.5 pence (101.5 pence at 31 March 2023), a
decrease of 11% in the year. The NAV is in line with
the 30 September 2023 NAV
APM
of 90.6pence
when the Company reported a reduction of
NAV
APM
, driven largely by an increase in discount
rates reflecting a “higher for longer” inflation and
interest rate environment.
The second half of the Company’s financial
year saw improvements in performance and
projections from significant investments such
as Primary Energy and Onyx, which have faced
delays and provisions in prior periods, as well
as from Oliva and Värtan that had been the
subject of regulatory uncertainty. The Investment
Manager’s Report on pages 12 to 14 expands
further on these matters.
Balance Sheet
As at 31 March total gearing
APM
was £485 million.
Since the year end, the Company has sold an
investment, enabling it to reduce its short-term
portfolio gearing
APM
. Total gearing
APM
has since
been reduced by 11% to approximately £430
million as at 31 May 2024.
This reduction in gearing
APM
was achieved
through a repayment of the revolving credit
facility (“RCF”) in May 2024, which was funded
through the c. £90 million proceeds of the sale
of the Company’s investment in UU Solar after
the year end. The drawn RCF is £98 million
1
,
substantially lower than the £155 million drawn
at 31 March 2024 after also accounting for new
investments in Onyx since 31 March 2024. Further
details can be found in the Finance and Valuation
Update on pages 35 to 44.
Under the agreed Capital Allocation Policy,
new investments during the period were limited
almost entirely to “organic investments” to
support existing portfolios and platforms and
where returns exceeded minimum hurdles.
Only one new investment was added to the
Company’s portfolio of corporate investments,
which is limited to up to 3% of its portfolio in
aggregate. This was £2.4 million invested in
Rondo, a thermal storage business in the United
States. The Company invested alongside a
number of large corporate strategic investors,
including Microsoft, Saudi Aramco and Rio
Tinto, in a technology solution aiming to help
decarbonise industrial heat, one of the highest
value and hardest to abate sectors.
While current market conditions and a prudent
approach to gearing create limitations in
SEEIT’s appetite to fund attractive development
and construction opportunities, it is seeking
co-investment from third-party investors on
certain assets. This is key to SEEIT’s ability to
deliver ongoing value and growth.
Chair’s Statement continued
1. As at 31 May 2024.
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Dividends
In line with previous guidance, in June 2024 the
Company announced its fourth interim dividend
for the year ended 31 March 2024 of 1.56 pence
per share. This provided an aggregate dividend
of 6.24 pence per share declared for the year
ended 31 March 2024, which was fully covered
1.1times by cash flow from the portfolio.
Based on our assessment of current cash flow
projections, the Company is announcing new
dividend guidance of 6.32 pence per share for
the year to 31 March 2025, an increase of c.1%,
and as before is targeting progressive dividend
growth thereafter. The dividend guidance
balances growing the dividend with the ability to
generate higher levels of surplus cash available
for repayment of debt and reinvestment in
investment opportunities.
Outlook
The Board and the Investment Manager are
committed to delivering value to, and positive
outcomes for, shareholders.
SEEIT is a unique investment company, fully
focusing on energy efficiency. It is investing in
solutions to an increasingly carbon-constrained
world, with an investment approach that is
consistently cash generative.
The majority of SEEIT’s investment cash
flows are contracted with high-quality client
counterparties, to which SEEIT is providing
essential energy services. This tends to make
SEEIT as important to its clients as they are to it.
SEEIT’s clients are typically essential providers
of products and services to their economies,
including, for example, steel manufacturers,
hospitals, universities, agricultural facilities,
utilities, hospitals and data centres. The average
remaining life of its contracts with clients is over
14 years.
In addition to SEEIT’s cash flows generated from
its operational assets, the Company’s portfolio
offers the opportunity for capital growth, for
example through its exposure to assets at the
development and construction phase. The
Investment Manager and management teams
of portfolio companies benefit from deep
experience and leadership. As such, the Company
is well positioned to achieve attractive levels of
total return for shareholders, underpinned by
income.
The Board remains cognisant of shareholder
feedback regarding capital efficiency,
recognising that capital is currently scarce.
Thismeans the Investment Manager is being
selective over new investment, focusing on
organic opportunities from the existing portfolio
and passing on a number of opportunities over
the last year.
The Investment Manager estimates the scale of
organic investments in the financial year ending
31 March 2025 to be between £75-125m, which
will be funded by a combination of utilisations
from the Company’s RCF (if appropriate), debt
utilisation at investment level and from selective
disposals.
The target is to keep the RCF at moderate levels.
Overall, gearing is well inside the total gearing
limit of 65% of NAV, with a current headroom of
approximately £200m.
In the year ahead, our focus will be on supporting
our existing portfolio with selective capital for
organic investment, and on working actively with
our portfolio companies, as well as strategic and
selective capital partners, to support growth and
to achieve strong returns.
As the world seeks to address the practical
challenges of the energy transition and efforts
to decarbonise, energy markets and their supply
chains face scarcities and price volatility. In
this context, investing in more efficient supply,
demand and distribution of energy, which is
SEEIT’s focus, becomes increasingly important
and valuable. We believe that SEEIT remains well
positioned to benefit from this opportunity.
Tony Roper
Chair
Chair’s Statement continued
EVN ON Energy
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What’s in this section
Strategy
Introduction to SDCL 12
The Team 12
Investment Manager: Markets
andOutlook
13
Business Model 15
Strategic
Report
Performance
Company Key Performance Indicators 16
Portfolio: Key Updates 17
Additional Portfolio Project Updates 34
Financial Review and Valuation Update 35
Environmental, Social and Governance
(“ESG”) Update
45
SEEIT Climate Change Report 54
TCFD Disclosures 61
Risk Management Framework 62
Viability Statement 65
Stakeholders and Section 172 66
Capshare
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SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Strategy | The Team
Meet the Investment TeamSustainable
Development
Capital LLP
Jonathan Maxwell
SDCL CEO & Founder
Jonathan is Founder and CEO of SDCL.
He has over 25 years’ experience in
international finance, infrastructure
and private equity and has overall
responsibility for SDCL’s investment
activities. He is Chair of the Investment
Committee for SEEIT. Since establishing
SDCL in London in 2007, the Group now
operates across the UK, Europe, North
America and Asia and has launched
energy efficiency project investment
funds in the UK, Ireland, Singapore and
New York. He has advised and invested
on behalf of a number of national
governments as well as a wide range of
institutional investors. Since 2012, SDCL
has launched a number of innovative
investment vehicles including the
London Stock Exchange listed SDCL
Energy Efficiency Income Trust plc. Prior
to establishing SDCL, Jonathan was
at HSBC Infrastructure and managed
the IPO of the HSBC Infrastructure
Company, the first Main Market, London
Stock Exchange listed infrastructure
fund, which now has an enterprise value
of over £3 billion. Jonathanhas a degree
in Modern History from Oxford University.
Purvi Sapre
SEEIT Fund Manager
Purvi is the Fund Manager for SEEIT
and has overall responsibility for Fund
activities and is a member of the
Investment Committee for SEEIT. Purvi
has over 15 years’ experience in Europe,
North America and emerging markets
investing on behalf of debt, equity
and impact investment funds. Purvi
has transacted and managed assets
across a number of renewable energy
technologies including solar, wind, energy
efficiency and waste to energy. Purvi
holds a Master’s in Chemical Engineering
with Environmental Technology and has
CIMA and IMC qualifications.
Eugene Kinghorn
SDCL Group CFO
Eugene is the Group CFO of the SDCL
Group and has overall responsibility
for the finance function covering its
corporate activity and its funds, including
SEEIT. He is a member of the Investment
Committee for SEEIT. Eugene has over
15 years of experience in financial and
portfolio management, with particular
focus on private equity and listed
infrastructure investment management.
He is responsible for portfolio and
investment management of SEEIT.
Eugene joined SDCL in early 2019 – prior
to joining SDCL, Eugene spent eleven
years with InfraRed Capital Partners
performing a variety of financial and
portfolio management roles.
Ben Griffiths
SEEIT Fund Management
Ben is Managing Director of SEEIT Fund
Management and is responsible for
the technical, financial and operational
performance of its investments.
Ben joined SDCL in September 2021
with twelve years’ experience in the
investment and renewable energy
industries.
Prior to SDCL, Ben led the portfolio
management of a c.£300m separately
managed account, managing a range of
technologies and sitting on the boards of
a range of investment companies.
He started his career at an engineering
consultancy working on a range of
renewable power projects, before
managing various energy from waste
and recycling construction and
operational projects at a UK waste
management firm.
Ben is a Chartered Engineer, with a
Master’s in Mechanical Engineering and
an MBA degree.
Sustainable Development Capital LLP
(“SDCL” or the “Investment Manager”) is an
independent investment firm with a proven
track record of investment in energy efficiency
and decentralised energy generation projects
in the UK, Europe, North America and Asia.
SDCL was established in 2007 and has a team
of over 50 professionals across offices in
London, Dublin, New York, Connecticut, Hong
Kong and Singapore.
With over 15 years of sector experience
in energy efficiency, SDCL has specialist
origination, project development, execution,
ESG, asset management and portfolio
management teams with support from
finance, compliance and risk. Since 2012,
SDCL has raised over £2 billion in capital
commitments, including seven funds, all
exclusively focused on energy efficiency.
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Macroeconomic Context and
Outlookfor SEEIT
Energy efficiency in the supply of and demand
for energy is fundamentally about reducing cost
and improving energy productivity. By reducing
losses traditionally associated with the supply of
and demand for energy, it is also a major source
of greenhouse gas emission reductions, energy
security and resilience.
It is important to understand that SEEIT is not
a merchant energy investor. Instead, it seeks to
invest in primarily long-term contracted income
streams with high-quality credit counterparties.
As such, it has limited exposure to energy prices
in its revenue streams and, wherever it does,
it seeks to mitigate these with contracted
arrangements for fuel supply or offtake contracts
for energy services. It is also not a highly
leveraged investment company with short-term
refinancing challenges. As such, it has limited
exposure to short-term interest rate movements
and availability of project finance. It is also
not a grid-connected, utility scale renewable
energy project investor. While it seeks to deploy
renewable energy technologies, it is not subject
to the same competitive dynamics or regulatory
uncertainties.
What SEEIT does do is concentrate on
investing in efficient energy services, generated
or applied close to or at the point of use.
SEEIT’s investments in decentralised energy
generation, as opposed to centralised or
grid-focused energy generation, are designed
to meet the needs of large end users of energy,
predominantly in the commercial, industrial,
public sector and transport markets. Its projects
seek to deliver energy services in the form of
power, heating and cooling where they are
needed at the highest practicable levels of
combined electrical and thermal efficiency.
Assuch, the majority of SEEIT’s projects deliver
energy services that are cheaper, cleaner and
more reliable than the grid. This is what makes
SEEIT’s decentralised energy generation projects
efficient and provides them with an enduring
competitive advantage and value even beyond
their initial contractedlives.
SEEIT also invests in projects that help to reduce
the amount of energy needed by end users to
produce the same level of work or economic
output. Most energy losses happen in the supply
of energy, mainly as heat losses at the point of
centralised generation, for example in gas-fired
power plants designed to create electricity for
the grid. However, large amounts of energy is
lost at the point of use, for example because
of sub-optimal mechanical and electrical
infrastructure such as lighting, heating, air
conditioning and controls. As such, SEEIT’s
projects seek to invest in the replacement or
upgrading of this infrastructure to reduce energy
demand and cut costs. Associated with demand
reduction, more efficient distribution of energy
services, such as district energy and electric
vehicle charging infrastructure, also creates
competitive advantages.
The combination of Efficient and Decentralised
Generation of Energy helps to define SEEIT’s
approach to energy investing and its competitive
advantage. We summarise this strategy and
approach with the acronym “EDGE”.
The macroeconomic context for energy efficiency
is important, both because of the contribution
that it can make to addressing systemic
energy-related challenges, and because of the
impact that the wider market conditions have on
the performance and value of SEEIT’s investment
portfolio.
Higher energy prices increase the advantage
and relative value of SEEIT’s energy services to
its clients and can help to extend project lives.
Extensions of major contracts within Primary
Energy and Oliva during the financial year are
good examples. Higher energy prices also tend to
support the business case for development and
construction of new energy efficiency projects
and, together with a pass-through of higher costs
of capital in a higher interest rate environment,
can improve returns on investment. Higher
rates of inflation can also help to increase those
contracted revenues in SEEIT’s portfolio that are
indexed to inflation.
Higher energy prices also feed into the price of
almost all goods and services in the economy,
thereby driving inflation and, ultimately, interest
rates. Energy prices have remained relatively
high and volatile, even after falling from recent
peaks in the aftermath of Russia’s invasion of
Ukraine. Tensions and conflict in the Middle East
have added to supply and price uncertainty.
Increasing supplies and exports of oil and gas
from the United States, which on their own would
have reduced energy prices, have been offset
by the production cuts made by other major
energy producers and exporters, thus inflating
overall energy prices. Energy prices in turn affect
the prices of most goods and services, including
food (from fertilisers to production and shipping),
manufacturing and transport. Increasing energy
prices is therefore inflationary. Central banks
tend to raise interest rates to combat inflation.
As the Chair notes in his statement, because
interest rates and inflation fell from their peaks in
2022 and 2023, there were hopes in the market
of further falls during the first quarter of 2024.
The United States Federal Reserve indicated
the potential for three interest rate cuts in 2024,
which helped to set positive market expectations.
However, higher-than-expected inflation
numbers in the first months of the calendar year
curbed expectations and reversed much of the
reduction in longer-term yields. For instance,
the yield on ten-year US Treasuries reduced
from around 5% in October 2023 to around
3.8% in January2024, only to increase again to
around 4.3% by the end of March 2024. Inflation
proved stubborn, underpinned by energy prices,
production, and shipping costs and growing
levels of government debt, while the ramifications
of the conflicts in Ukraine and the Middle East
continued to impact supply chains and global
capital markets.
These macroeconomic challenges tend to
increase costs, making energy efficiency projects
that reduce costs more attractive, urgent and
valuable. However, the financial implications
on SEEIT during the year translated into
higher discount rates applied to the cash flows
associated with SEEIT’s investments, which
have affected valuations. As such, we have been
focusing on what actions can be taken to improve
net asset value
APM
for shareholders irrespective
of broader macroeconomic conditions and what
steps can be taken to reduce the discount at
which the Company, like its peer group in the UK
investment trust market, is trading.
Strategy | Investment Manager: Markets and Outlook
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Strategy | Investment Manager: Markets and Outlook continued
Adapting to Market Conditions
Under prevailing market conditions, our
approach to investment, portfolio construction
and management of the balance sheet has
changed. This reflects an environment in which
the Company has not issued new equity since
September 2022 and is unlikely to do so for
sometime.
As a result, working closely with the Board as
Investment Manager, we have taken several
actions.
First, we are progressing selective disposals
of assets, which can be sold to create cash for
reinvestment at more attractive rates of return
or to repay short-term borrowings. Disposals
can also help to prove valuations in support of
the Company’s net asset value
APM
. A notable
disposal was the sale of UU Solar, completed
shortly after the end of the financial year, which
was achieved at a premium to the last reported
valuation.
Second, the Company’s short-term borrowing
facilities have been reduced from £155 million,
since 31 March 2024, to £98 million
1
using cash
proceeds from the disposal of UU Solar and
accounting for further investment into Onyx.
Further repayments of shorter-term borrowing
facilities are planned.
Third, we have agreed a Capital Allocations
Policy with the Board in 2023 that is aimed at
ensuring that returns on any new investment
compare favourably with any alternative
opportunity; for example, to buy back shares in
the market at a discount to net asset value
APM
,
or to reduce short-term borrowing facilities. The
Company benefits from a pipeline of projects
arising from its existing portfolio. During the year,
we have supported investments that exceed
return thresholds, for example at RED-Rochester,
Onyx and EVN that supports the Company’s
attractive investment return strategy over the
medium and long term.
Fourth, we have sought to increase the positive
correlation between the revenues from SEEIT’s
portfolio of investments and inflation. Examples
include the addition of inflation indexation, and
reduction of exposure to labour costs, at the
same time Primary Energy extended its major
contract with Cleveland-Cliffs in its Cokenergy
project for a further twelve years. An outcome
of SEEIT’s disposal of UU Solar has also been an
increase in the overall correlation of its portfolio
to inflation.
Fifth, we have sought to position the Company’s
portfolio for growth. Examples include:
– Onyx, where the rate of new contract signings
has tripled to over 75 megawatts (MW)
perannum;
– EVN, where, for example, the largest fast
charging hub in the UK was opened by the
Chancellor during the year and where rates of
deployment have grown several times; and
– RED-Rochester, where a substantial growth
in capacity is under construction to serve over
115 existing customers, as well as new ones.
Overall, some 14%
2
of SEEIT’s portfolio is
invested in projects at the development or
construction phase of their project investment
lifecycle, which provides opportunity for capital
growth in addition to the income generated by
operational assets. Within its 10% allocation to
development-stage assets, SEEIT has private
equity investments in growth companies, which
offer the potential to generate gains as well as
proprietary pipeline.
Sixth, we have been engaging with new
prospective shareholders to support the
liquidity and marketability of the Company’s
shares. This has resulted in significant new
investments made by a number of predominantly
US-based institutional investors and a change in
composition of our shareholder register.
In the short term, we are also seeking to
differentiate the Company by:
– promoting its shares, which trade at a
discount, to UK and international investors;
– increasing the Company’s profile in the
media;and
– distinguishing the Company from renewable
energy investment companies, which have
other market and trading characteristics.
We are also exploring other potential actions,
including progressing on additional selective
investment disposals or equity joint ventures to
create liquidity, strengthen the balance sheet,
improve the opportunity for total returns, reduce
gearing
APM
and to provide the opportunity to
return capital to shareholders, for example via
share buybacks or tender offers.
We expect that our investment activity
in the near and medium term will remain
somewhat limited and focused on the identified
opportunities within the existing portfolio. For
some of these opportunities we expect to utilise
the RCF, but at the same time remain cognisant
of the agreed Capital Allocations Policy and the
necessity to ensure that investments remain
accretive to the Company’s objective. Through
capital recycling we are aiming to substantially
repay the current RCF balance over the medium
term, notwithstanding the possibility that in the
near term the balance may increase.
1. As at 31 May 2024.
2. Of value.
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1
Identify/Secure
Investment
2
Develop/Construct/
Operate
3
Improve
4
Hold/Exit
SEEIT assesses investment opportunities based
on defined characteristics:
1. Fit the definition of energy efficiency
investments
2. Have a contractual structure with suitable
counterparties
3. Potential to generate accretive returns
– Heat, power and other energy delivery
services
– Active asset management
– Cost reductions and efficiency
improvements
– 14% of the portfolio is in construction
anddevelopment phase
– Crystallise value through selective disposals – Investment in higher-return projects
– Create and enhance revenue streams
– Reduce costs
Growing
dividend
C.£38 million
1
value increase recognised in NAV
APM
Selective
asset
disposals
to create liquidity, strengthen the
balance sheet and reduce gearing
APM
Strategy | Business Model
What We Do How We Do It
Outcome
SEEIT’s investment objective is
to generate an attractive total
return for investors comprising
stable dividend income and capital
preservation, with the opportunity for
capital growth.
SEEIT achieves this through investing principally
in a diversified portfolio of energy efficiency
projects with high-quality counterparties.
The contracts governing these energy
efficiency projects entitle SEEIT to receive
long-term cash flows once the energy efficiency
projects are operational.
See Financial Review on pages
35 to 44for further details
See Portfolio Summary on
page 18 for further details
See Portfolio Summary
on page 18 for further details
Underpinned By:
SEEIT’s strong ESG credentials
Read more in the Environmental, Social and Governance section
onpages 45 to 61.
Responsible risk management
Read more about our risks and mitigation in the Risk Management
Framework section onpages 62 to 64.
Robust corporate governance
Read more in the Governance Report onpages 72 to 80.
Onyx
1. In the year to 31 March 2024.
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Performance | Company Key Performance Indicators
Financial KPIs
Definition 31 March 2024 31 March 2023 Commentary
Net asset value (”NAV”) per share
APM
(pence)
NAV
APM
divided by number
of shares outstanding as at
31 March
90.5p 101.5p
NAV
APM
has decreased compared with
the prior year due to global increases in
risk-free rates pushing discount rates up
materially from March 2023 – see Financial
Review and Valuation Update.
Share price (pence)
Closing share price as at
31March
59.1p 84.0p
The share price has decreased
predominantly due to market volatility
and the thematic adverse impact on
alternative investments focused UK
investment trusts.
Dividends per share (pence)
Aggregate dividends
declared per share in respect
of the financial year
6.24p 6.0p
The dividend increased year on year
due to predictability of near-term
cash generation from portfolio, plus
new investments made previously. The
Company met its stated dividend targets
for the years ended 31March 2023 and 31
March 2024.
Dividend cash cover (x)
Operational cash flow
divided by dividends paid to
shareholders during the year
1.1x 1.2x
The target was for net operational cash
inflow to fully cover dividends paid. The
Company met its target for the years
ended 31 March 2023 and 31 March 2024.
Total return on NAV basis
APM
in the year (%)
NAV growth and dividends
paid per share in the year
(4.7)% (0.9)%
The payment of interim dividends
contributed to NAV
APM
return in the year,
although offset by significantly higher
discount rates, resulting in a material
decrease in return in both years.
Definition 31 March 2024 31 March 2023 Commentary
Ongoing charges ratio (%)
Annualised ongoing charges
(i.e. excluding investment
costs and other irregular
costs) divided by the average
published undiluted NAV
APM
in the period, calculated
in accordance with AIC
guidelines
1.02%
1.02%
Remained consistent year on year. See
Financial Review and ValuationUpdate.
Operational KPIs
Definition 31 March 2024 31 March 2023 Commentary
Weighted average contracted investment life (years)
Weighted average number of
years of contracted revenue
remaining in investment
contracts (excludes all
recontracting assumptions)
16.4 15.9
Increase was in line with expectations
and mainly due to one material contract
successfully renewed during the year.
Largest five investments as a % of gross asset value (“GAV
APM
”) (%)
Total value of five largest
individual investments divided
by the sum of all investments
held in the portfolio plus cash,
calculated at year end
52% 54%
Target is to maintain good portfolio
diversification, achieved in both
financialyears.
In the section below, the Company sets out its financial and operational key performance indicators (“KPIs”) used to track the performance of the Company over time against its objectives.
The Board believes that the KPIs detailed below provide shareholders with sufficient information to assess how effectively the Company is meeting its objectives.
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Performance | Portfolio: Key Updates
Portfolio by Geography
as at March 2024 | 2023
Portfolio by Project
as at March 2024 | 2023
Portfolio by Technology
as at March 2024 | 2023
Portfolio by Investment Stage
as at March 2024 | 2023
UK 16% | 17%
Europe 22% | 20%
US 62% | 59%
Asia Pacific 1% | <1%
Cash 2% | 3%
RED-Rochester 17% | 22%
Onyx – Obsidian I 12% | 8%
Primary – Cokenergy
9% | 9%
UU Solar 8% | 9%
Värtan Gas 6% | 6%
Primary – North Lake
4% | 4%
Capshare 3% | 3%
Onyx – Development
Platform 3% | 2%
Zood - Operational
3% | 0%
Primary – Portside
3% | 2%
Zood – Construction
2% | 2%
Oliva – Cepuente
2% | 2%
Remainder
of portfolio 27% | 27%
Cash 2% | 3%
Solar & Storage 26% | 23%
District Energy 18% | 22%
CHP (Waste gases
/other) 13% | 13%
CHP (Natural Gas) 12% | 9%
Gas Distribution
Networks 6% | 6%
EV charging 5% | 4%
Biomass 5% | 6%
Lighting 4% | 2%
Industrial process
efficiency solutions
4%|4%
Bundled Energy Efficiency
3% | 3%
Other technologies
4% | 5%
Cash 2% | 3%
Operating 86% | 74%
Construction
1
9% | 17%
Development 5% | 6%
Cash 2% | 3%
Overview
SEEIT has several larger investments, which form a foundation for overall portfolio cash flows as well
as providing established platforms to generate growth opportunities.
The summaries in this section describes the five largest groups of investments that are diversified
across the UK, North America and Europe, consisting of 23 individual investments making up c.71%
of SEEIT’s total portfolio by value. A detailed summary of these investments and their performance
during the year is outlined below.
This section sees the continuation of additional disclosures in relation to SEEIT’s larger portfolio
investments, including the provision of specific project-level KPIs, which has been kept consistent
with the previous year’s report. These KPIs are reported at calendar year-end (31 December 2023).
The Board and the Investment Manager continue to engage with the Company’s shareholders to
ensure that these disclosures are relevant, informative and beneficial.
For a more comprehensive understanding of these investments, Financial Review and Valuation
Movements, the principal risks, Risk Management Framework and Note 3 in the financial statements
provide further details.
The revenues referred to in this section describe the revenues that are assumed in the March 2024
Portfolio Valuation
APM
and therefore include both contracted and uncontracted revenues. This is
explained further in Financial Review and Valuation Update.
Investment Activity
The March 2023 Annual Report identified the following areas of strategic investment focus:
– efficiency improvement projects at RED-Rochester, which contribute directly to increasing the
project company’s profit margin;
– further scaling of EVN as it continues to establish itself as one of the UK’s largest EV charging
developers; and
– continued rollout of solar and storage projects through the Onyx platform.
During the year, out of total investments of c.£161 million, (as detailed in Note 11), c.£143 million has
been invested into four existing portfolio companies: Onyx (£61m), RED-Rochester (£36m), FES
(£37m) and EVN (£10m), capitalising on the opportunity for organic growth that they offer. A further
c.£15m was invested in existing portfolio companies (Spark Energy Efficiency and Turntide) earlier in
the year prior to the Investment Manager deciding to stop pursuing these investments in line with the
Capital Allocations Policy. The remaining investments of c.£4m were made into two new investments
(CPP and Rondo) early in the financial year as disclosed previously and were the only investments
made in the year not into existing portfolio companies. Theinvestment at RED-Rochester has been
to fund the construction capital for various projects, which are forecast to generate strong returns.
The investments into Onyx, EVN and FES are funding the installation or construction of the converted
pipeline of the respective businesses, helping deliver the intended growth of those businesses.
As part of the incremental investment in FES, a portfolio of loan facilities was acquired, secured
against an operational portfolio of LED lighting projects in the USA, offering double-digit returns
and attractive cash yields that also brought potential to realise further upside from operating and
financial efficiencies.
The information presented below summarises the portfolio of the Company across different metrics, using
the Company’s Gross Asset Value
APM
as at 31 March 2024 (and using 31 March 2023 for comparison).
1. Construction stage represent investments where
construction work has commenced or high degree of
confidence in it commencing.
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Performance | Portfolio: Key Updates continued
Investment Upside Focus
Further upside opportunities have also been
identified, a number of which would require
further upfront investment. These are being
developed by the Investment Manager across
the larger investments but are not included in
the March 2024 Portfolio Valuation
APM
. These
opportunities alone could potentially add over
£145 million to the NAV
APM1
over the next two to
five years, although there can be no guarantee
that this will be realised. As reported in the
following sections, throughout the year there
has been positive progress with many of these
opportunities across the portfolio, with some
already delivering an uplift of c.£38 million to
the March2024 Portfolio Valuation
APM1
, while
others are well advanced with good prospects
of adding further valuation uplift. We continue
to focus and prioritise the workstreams
associated with these opportunities and expect
them to continue to develop over thenext
fewyears.
Data shown below in the Portfolio Summary is
as at 31 March 2024 unless otherwisestated.
1
2
3
4
5
1. RED-Rochester
Rochester, NY
No. of projects: 1
2. Onyx Renewable Partners
Over 14 states in the US
No. of projects: 6
3. Primary Energy
Indiana, US
No. of projects: 5
5. Vartan Gas
Stockholm, Sweden
No. of projects: 1
4. Oliva Spanish Cogeneration
Spain
No. of projects: 9
RED-Rochester
1. Incremental to the associated capital, where
applicable.
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Performance | Portfolio: Key Updates continued
RED-Rochester
One of the largest commercial district energy systems in North America
EBITDA ($’000)
Y/E December 2023
1
15,903
Y/E December 2022
1
: 14,628
Investment Highlights
Investment type Direct equity (100%)
Acquisition date May 2021
Asset location Rochester, NY USA
No. of projects 1
Project equity value
and as a percentage of SEEIT’s GAV
APM
c.$252 million (c.£200 million) (c.17%)
Project-level debt c.$75 million
Capacity 117MW
Technology 16 on-site services, primarily process/heating steam,
electricity and process/space-conditioning cooling
Forecast project life remaining c.40 years
Lifecycle stage Operational
Counterparties/offtakers Over 115, including Eastman Kodak, Ortho, Li-Cycle and Amazon
O&M RED-Rochester staff
Fuel supply Natural gas and purchased electricity supplied from
Rochester Gas and Energy Corporation
Investment Overview
RED-Rochester is the exclusive provider of
a number of utility services to customers
within the Eastman Business Park (“EBP”) in
Rochester, New York in the US, for which it has
regulated utility-status franchise rights.
The project provides 16 on-site utility services
to EBP landowners and tenants under
long-term service contract agreements.
These services are delivered efficiently
without long-distance distribution losses and
are competitively priced, generally at a cost
lower than that available from the local utility
company outside EBP or third-party service
providers. The services include electricity,
steam, chilled water, low-temperature brine,
industrial wastewater treatment, compressed
air, nitrogen, industrial water, high-purity water
and industrial wastewater treatment.
RED-Rochester provides SEEIT with a platform
to grow the delivery of on-site, energy efficient
services to the local region, including the
expansion of operations beyond the EBP
to greater Rochester and the north-east of
theUSA.
RED-Rochester Revenues
andCostModel
The project is underpinned by predominantly
long-term contracted cash flows with positive
inflation correlation. RED-Rochester has
contracts with over 115 commercial and
industrial customers on fixed terms under an
approved tariff structure as follows:
– customers typically sign a 20-year contract
with no break clauses. Contract extensions
are assumed in the March 2024 Portfolio
Valuation
APM
;
– revenues are split:
– fixed charge: c.30% of revenues are
generated from fixed fees paid, unrelated
to demand or services procured;
– capacity-based charge: c.62% of
revenues are from a pre-determined
tariff, based on the cost of delivery of
each service used and the customer’s
associated demand; and
– overheads: c.8% of revenues are from a
fixed mark-up for each customer on the
total utility bill.
Future cash flows are also assumed from
growth opportunities, including accretive capital
enhancements such as the CHP plant described
on the next page that is expected to increase
future revenues.
MMBtus
1
delivered to customers
Y/E December 2023
6,494,000
Y/E December 2022
1
: 7,005,222
1. Unaudited figures.
RED-Rochester
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Value Accretion Potential
RED-Rochester has pursued value accretion in
the last year based on two priorities:
– increasing fixed revenues: RED-Rochester
has provided proactive support to EBP
landowners to pursue the lease or sale of
existing buildings and development of open
land. Even with positive progress in these
efforts in the period, RED-Rochester’s utilities
infrastructure remains underutilised overall
and has capacity to service more customers.
As new tenants join EBP, RED-Rochester
benefits from increased profits from the
additional fixed and demand fees that each
new customer will pay; and
– improving efficiency: The existing variable
tariff charge is based on a baseline efficiency
of the cost of delivering services from
2011. When RED-Rochester improves the
operational efficiency of any of its utility
services and reduces the unit delivery cost,
the business captures the full financial benefit
of this efficiency improvement.
Several upside opportunities are being pursued
at RED-Rochester that have not been reflected
in full in its valuation (unless otherwise stated),
but could provide additional value over the short
to medium term, including the following:
Existing Initiatives:
Performance | Portfolio: Key Updates continued
RED-Rochester
Increasing fixed revenues by
bringing new customers to EBP
Good progress with EBP property owners,
agreeingto improve the attractiveness of
vacant properties to potential tenants. Work
ongoing with a commercial real estate broker,
toimprove the marketing of the sites.
2023 reported
expectations
1
£10-20 million
over 2-4 years
Updated
expectations
2
£10-20 million
over 1-3 years
Improving efficiency
– CHP construction project
CHP construction has continued on schedule
and on budget, with completion expected
duringQ22025.
2023 reported
expectations
1
£10-15 million
over 2-3 years
Updated
expectations
2
£8 million in March 2024 NAV
APM
,
c.£2-7 million untaken, expected
over 1-2 years
Improving efficiency – other projects
A number of projects have progressed as
expected, with some being approved for
commencement and some finishing installation.
Additional accretive projects have been identified
and are under development to maintain a pipeline
of site efficiency improvements that accrue directly
to the business.
2023 reported
expectations
1
£5-10 million
over 1-3 years
Updated
expectations
2
£1 million in March 2024 NAV
APM
,
c.£4 million untaken, expected
over 1-2 years
Cost recovery of overheads
through tariff amendments
RED-Rochester has developed amendments
to the tariff to address the ability to recover
capitaland overhead costs. Theseamendments
aredue to be presented to andnegotiated with
EBP customers in mid-2024.
2023 reported
expectations
1
£5-10 million
over 3-5 years
Updated
expectations
2
£8 million in March 2024 NAV
APM
,
£10+million untaken, expected
over 2-5 years
1. Estimated potential value uplift (expressed as the NAV
APM
incremental to the associated capital) and time frame as
reported in the 2023 Annual Report.
2. Estimated potential value uplift (expressed as the NAV
APM
incremental to the associated capital) and time frame,
correct as at the reporting date.
Investment Risks and Mitigants
Risk type and description Mitigation
Operational:
Demand risk resulting in
lower-than-expected variable
revenues.
Historically, demand from customers at RED-Rochester is
relatively stable, as diversification across 115 customers mitigates
against individual customer demand volatility. However, lower
weather-related demand at EBP businesses has been observed in
the last year. Expected demand from Li-Cycle, a material customer
at EBP, has been adjusted downwards significantly as described on
the next page. The Investment Manager and RED-Rochester are
advancing options to renegotiate the tariff structure to mitigate
thisrisk and are also improving the marketing of available sites in
order to bring more customers into the park.
Development:
Construction delays of accretive
capital projects, including the
CHPplant.
Where appropriate, project contracts include liquidated damages
for contractor delays should they cause overruns in the construction
schedule. The schedules also assume a buffer for delays. Each project is
probability weighted based on the development stage, with some very
early development projects not yet included for tracking purposes.
Development:
Challenges in attracting new
businesses to locate within the EBP.
RED-Rochester management has been working closely with Eastman
Kodak and other EBP property owners to make land and buildings
more attractive to potential tenants. This includes making unoccupied
lots “shovel ready”, reducing development time and costs. Eastman
Kodak and RED-Rochester are now working with a commercial real
estate brokerage to improve marketing of availablesites.
Some potential tenants chose other locations or failed to progress,
resulting in taking a provision for these lost opportunities. All new
tenant prospects are now probability weighted based on progress
toagree to come to EBP.
Credit:
Default of counterparties.
By providing services to over 115 customers across the EBP,
the credit risk is diversified. The Investment Manager works with
other stakeholders, such as landowners, seeking to ensure the
creditworthiness of new customers does not degrade the overall
credit profile. In addition, the fixed charge component of the tariff is
joint and several between customers, thus limiting the impact of any
potential default.
Regulatory:
New York State is developing the
NewYork Carbon Cap and Investment
programme (“NYCI”) to reduce
greenhouse gas emissions in the
industrial, commercial building and
transportation business sectors.
Subject to the final details of the
programme, this could introduce
significant costs to RED-Rochester.
Rulemaking is in progress by State regulators, with implementation
expected in late 2024. RED-Rochester and Eastman Kodak are
collaborating to lobby State regulators and legislators to ensure
a favourable business classification to minimise or eliminate
the businesses’ requirements to purchase emissions credits.
RED-Rochester is also proposing tariff amendments to customers to
accommodate potential incoming legislation.
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Performance | Portfolio: Key Updates continued
RED-Rochester
Investment Updates for the Year
Several growth initiatives have progressed
that will support the operational and
financial performance at RED-Rochester.
RED-Rochester’s dedicated on-site
management team has made significant
progress to implement operational management
processes, refine the management and execution
of accretive projects, improve recruitment and
retention of key technical and administrative
talent, and identify opportunities to grow the
business development pipeline collaboratively
with EBP landowners.
Projects approved in 2022 were well progressed
in the last year, including:
– completion in early 2024 of construction of
the c.£7 million new chiller installation, with
site-wide chilled water system improvements
expected to be complete in Q2 2024; and
– construction of the c.£69 million CHP plant
(cogeneration turbine generator and heat
recovery steam generator) commenced in
2023 and remains on schedule and on budget,
with expected start of commercial operation
in Q2 2025.
As previously reported, an existing EBP tenant,
Li-Cycle, has been significantly expanding its
EBP facilities with the construction of a new
hub processing centre. To support Li-Cycle’s
schedule and targeted mid-2024 commercial
operations date, RED-Rochester executed
an interconnection agreement with Li-Cycle
and commenced construction to connect
Li-Cycle’s new facilities in Q2 2023. However,
Li-Cycle suspended EBP project construction
activities in Q4 2023, with construction at an
advanced stage, citing significant cost overruns
and related construction issues, none of which
were associated with any RED-Rochester
interconnection work. Li-Cycle announced in
Q1 2024 additional bridge funding that would
support restarting construction, which is now
expected to occur before the end of calendar
year 2024.
We have provisioned for projected revenues
being delayed from H2 2024 into 2025 and at a
materially lower level than previous projections,
fundamentally assuming that the Li-Cycle
facilities will come into operation.
Meanwhile, we have focused on educating and
communicating the value of site properties
owned by Eastman Kodak, the largest EBP
landowner. Eastman Kodak has appointed a
real estate broker, with which RED-Rochester is
working to improve the marketing of available
sites. RED-Rochester is also engaging directly
with potential tenants to communicate and
demonstrate the advantages of EBP sites in their
development plans, which has been positively
received.
Work has also progressed to identify and
commence development work for additional
accretive projects now included in the pipeline,
increasing the number of opportunities to
increase energy efficiency and revenue
generation.
In line with our projections in our Interim Results
during the year, EBITDA was c.21% below budget
for the calendar year 2023, driven by several
factors, including:
(a) lower-than-budgeted demand from a few
large customers, arising from unexpected
decreased market demand for their products,
lower electricity demand from Li-Cycle
construction activities, as well as slower arrival
of fleet electric vehicles at Amazon, lowering
their planned energy demand. Overall,
MMBtus delivered were c.10% under budget
as a result; and
(b) mild weather in the first half of 2023,
which resulted in lower demand for space
conditioning utility services, including steam
and chilled water.
We are therefore now developing amendments
to the current tariff structure to mitigate the
risk of recurrence. These amendments will be
presented to the EBP customers in mid-2024
forconsideration, negotiation and approval.
RED-Rochester RED-Rochester
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Performance | Portfolio: Key Updates continued
Onyx Renewable Partners (“Onyx”)
Commercial and industrial solar and storage platform in the USA
Investment Highlights
Investment type Direct equity (100% of operational assets; 100% development platform)
Acquisition date February 2021 original; June 2023 purchase of remaining 50% JV interest
in development platform
Asset location Currently operational in over 14 states in the USA
No. of projects 7
Project equity value
and as a percentage of SEEIT’s GAV
APM
c.$255 million (c.£201 million)
SEEIT – SM III, Janus II, CTAZ, and Obsidian I,
operational portfolios (c.5%)
Onyx – Obsidian II, GAF and Nova construction/late-stage
development portfolios (c.9%)
Onyx – Development platform (c.3%)
Project-level debt c.$102 million
Capacity 94MW operational
Technology Solar and battery storage
Forecast project life remaining c.34 years
Lifecycle stage Development, construction, operational
Counterparties/offtakers Over 100 across operational and construction sites
O&M Various
Fuel supply N/A
Investment Overview
Onyx Renewable Partners is one of the largest
and most established commercial and industrial
(“C&I”) on-site solar and storage platforms in
the United States, which owns and operates
over 225 operational C&I projects across 14 US
states.
SEEIT’s investment consists of:
(a) 100% ownership of portfolios of projects that
are operational (94MW) or in construction/
late-stage development (118MW); and
(b) 100% in the development platform.
SEEIT acquired the remaining 50% stake in
the development platform from Blackstone in
June2023.
Onyx provides SEEIT with a well-established
platform to expand its C&I solar power
generation and battery storage portfolio in
North America. The investments have strong
energy efficiency characteristics, increasing the
supply of on-site renewable energy, and help
customers by reducing their greenhouse gas
emissions related to the supply, distribution
and consumption of energy. Onyx has
also diversified its pipeline of investment
opportunities to include community solar.
Onyx Portfolio Revenues
and CostModel
The portfolio of projects consists of operational,
construction and development projects and
makes up c.84% of the investment’s value. The
portfolio of projects has the following revenue
structure once they are operational:
Power Purchase Agreements (“PPAs”): c.93%
of asset revenues are generated from delivery
of electric power to contracted end users. PPAs
have fixed indexation and are typically 20 years
in length (the Onyx portfolio PPA duration has a
weighted average of c.18 years).
Solar Renewable Energy Credits (“SRECs”):
c.7% of asset revenues are generated from
SRECs that are awarded within state-specific
regulatory structures that provide marketable
credits for each MWh of renewable energy
generated.
The valuation assumes that the current
construction and development-stage projects
within this portfolio will become operational
within a defined time frame.
Onyx Developer Revenues
and Cost Model
The Onyx development platform makes up
c.16% of the total Onyx value and has the
following revenue structure:
– asset management fees: c.52%, generated
from asset management fees charged by
Onyx for managing operational portfolios;
– EPC development margin: c.33%, achieved
on commercial operation date for delivery of
certain assets; and
– asset sales: c.15%, based on the net
proceeds from the future sale of assets
developed in the pipeline. Following the
June 2023 acquisition of the Blackstone
development platform interests, SEEIT will
retain all benefits of future asset sales.
EBITDA ($’000)
Y/E December 2023
1
13,621
2
Y/E December 2022
1
: 6,823
New projects at COD (MW)
Y/E December 2023
1
22
Y/E December 2022
1
: 14
MWh produced
3
Y/E December 2023
1
107,908
Y/E December 2022
1
: 62,007
Performance ratio
3
Y/E December 2023
1
95%
Y/E December 2022
1
: 95%
1. Unaudited figures.
Onyx
2. Reported EBITDA is that generated by the operational portfolios in Onyx. 3. Operational projects only.
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Performance | Portfolio: Key Updates continued
Onyx Renewable Partners (“Onyx”)
Investment Risks and Mitigants
Risk type and description Mitigation
Operational:
Near-term delays in development pipeline
to achieve expected commercial operations
dates (“COD”) reduces revenue and cash
flow; as valuation assumes quicker transition
of pipeline projects from development to
operational status.
The Investment Manager and Onyx have focused
on accelerating the conversion of the development
pipeline. KeyOnyx leadership positions are now filled
with individuals who are streamlining and accelerating
development activities. These include strategic marketing
and communications plans, expanded origination and lead
generation processes, improved project management,
derisked supply chain requirements and incorporation
ofquality management principles.
The development pipeline is more robust, with more initial
customer leads resulting in exclusivity, customer contract
execution and construction commencement. The larger
pipeline helps to mitigate the risk of execution delays.
Operational:
Underperformance of operational projects.
Onyx has implemented a company-wide quality programme
to reduce operational underperformance. This includes
quality controls and inspections during project construction,
installing tier 1 equipment with market-based warranties
and using OEM repair parts, best-in-class procedures and
preferred contractors to perform O&M at projectsites.
Operational:
Supply chain, interconnection issues and cost
increases.
During project development, PPA pricing includes
construction and operational costs with appropriate
contingencies based on Onyx’s experience and project
requirements identified at the time of signing. As part of the
focus on quality, Onyx is selecting standard components
across multiple projects to buy in bulk wherever possible
to minimise costs as well as streamlining maintenance and
spares requirements during operations.
Following approval of the US Inflation Reduction Act (“IRA”),
Onyx is proactively managing the interconnection and
permitting approval process, with long queues slowing
progress. High demand for electrical components globally,
especially equipment such as switchgear and transformers,
is being mitigated by Onyx using standard components
across projects and ordering in bulk in advance of expected
requirements, pushing design decisions earlier to get ahead
of these delays.
Value Accretion
Onyx is focused on value accretion, targeting two
main activities to raise the overall worth of the
development platform:
– increasing the number of prospective projects
in the solar and battery storage pipeline
adds to Onyx’s value. Valuation of the Onyx
development platform assumes a forecast
level of MW under management over a period,
with value created through revenues from
Onyx’s asset management and operations
(engineering, procurement and construction)
teams, recognising the intrinsic value derived
from the potential sale of any portfolio
project. Increasing the number of projects and
total MW in the pipeline increases the value of
the development platform; and
– improving the economics and margins
achieved on new individual solar and battery
storage projects can create value for SEEIT
given that it has an option to contract and
acquire projects at pre-agreed rates of return.
Several upside opportunities exist for Onyx that
have not been reflected in its valuation (unless
otherwise stated), which could provide additional
value over the short to medium term:
Operational cash flows – 10% increase in
expected MW deployment in the near term
Management is on track to build 75MW
in2024, in line with targets. In addition,
managementhas begun to develop a large
pipelineof community solar projects, partially
reflected in the valuation.
2023 reported
expectations
1
£5-10 million
over 3 years
Updated
expectations
2
£5-10 million
over 3 years
Development platform
– increase in MW deployment
2023 reported
expectations
1
£5-10 million
over 3+ years
Updated
expectations
2
£5-10 million
over 3+ years
Improved economics resulting
from the Inflation Reduction Act
The IRA continues to benefit Onyx primarily
throughthe long-term stability in investment
tax credits, improving underlying project
economicsand providing headroom in PPA pricing.
Indirectly, the wider economic stimulus provided by
the IRA and other recent policy efforts to promote
the energy transition in the US have benefited Onyx
through increasing customer approaches and a
consequently expanding pipeline.
2023 reported
expectations
1
£2-5 million
over 3-5 years
Updated
expectations
2
£2-5 million
over 2-4 years
1. Estimated potential value uplift (expressed as the NAV
APM
incremental to the associated capital) and time frame,
as reported in the 2023 Annual Report.
2. Estimated potential value uplift (expressed as the NAV
APM
incremental to the associated capital) and time frame,
correct as at the reporting date.
Existing Initiatives
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Investment Updates for the Year
The Investment Manager has worked closely with
the Onyx team to ensure that the investment has
the right leadership and support to develop and
convert its project opportunity pipeline. Specific
actions included:
– continuing collaboration with Onyx’s
management to drive growth and optimise
operations, asset management and business
development;
– the expansion of the Onyx management
team to enhance governance and increase
capacity, through the hiring of a Chief Legal
Officer, Chief Administrative Officer and a
Finance Senior Vice President;
– accelerating pipeline development and
execution through improved planning,
procurement, project management and
operational procedures; and
– implementation of quality programmes
focusing on improved project procurement
and construction, best-in-class customer
service, and effective execution of operations
and maintenance practices.
As a result of positive changes in the
development business, Onyx management
improved pipeline development in 2023,
executing a company record 75MW of project
PPAs in the calendar year, with 40MW of projects
achieving “notice to proceed with construction”
(“NTP”).
Annual delivery of projects to COD increased
c.70% year-on-year to December 2023. However,
this was under budget due in part to delays in
supply chain logistics in obtaining critical project
components as well as interconnection delays,
both exacerbated by significant market demand
resulting from the passage of the US IRA. While
improved, permitting and interconnection delays
remain challenging for projects to reach COD.
This remains a timing issue, which is factored into
forecasts, rather than resulting in lost projects.
Legacy delays in supply chain repair parts
availability, component failures, insurance claims
and customer co-ordination issues to resolve
third-party damages resulted in c.5% lower
production and performance than budgeted
for the period. Onyx’s asset management team
successfully resolved a number of these issues in
the last year, with the expectation that improved
maintenance practices and root cause analyses
will result in improved performance going
forward.
Performance | Portfolio: Key Updates continued
Onyx Renewable Partners (“Onyx”)
Onyx
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Performance | Portfolio: Key Updates continued
Primary Energy
Portfolio of on-site energy recycling, cogeneration and process efficiency projects, servicing the largest steel blast furnace in theUSA
Investment Highlights
Investment type Direct equity (100% in four projects; 50% in PCI Associates)
Acquisition date December 2019 (50%), December 2020 (15%), September 2021 (35%)
Asset location Indiana, USA
No. of projects 5
Project equity value
and as a percentage of SEEIT’s GAV
APM
c.$240 million (c.£190 million)
Consisting of:
Primary – Cokenergy (c.9%)
Primary – North Lake (c.4%)
Primary – Portside (c.3%)
Primary – PCI Associates (c.1%)
Primary – Ironside (<1%)
Project-level debt c.$159 million
Capacity 298MW
Technology On-site cogeneration, waste heat recovery process efficiency
Forecast project life remaining c.31 years
Lifecycle stage Operational
Counterparties/offtakers CC, USS
O&M Primary Energy, CC, USS
Fuel supply Waste gases from CC; natural gas supplied via CC and USS
Investment Overview
Primary Energy is a 298MW portfolio
comprising of three energy recycling projects
2
,
one natural gas-fired CHP project and a 50%
interest in an industrial process efficiency
project. These projects are fully integrated into
the operations of two steel mills in the USA, one
owned by Cleveland-Cliffs (“CC”) and the other
by United States Steel Corporation (“USS”).
The projects provide services critical to steel
mill operations, including fuel handling and
emissions control equipment. Primary Energy
has overall responsibility for the projects’ O&M
but uses line staff for site operations seconded
from CC and USS under contracts.
Primary Energy’s Cokenergy, North Lake and
Ironside facilities generate electricity used in
blast furnaces at the steel mills through the
recycling of waste gases, playing a crucial role
in reducing harmful emissions such as CO
2
and SO
2
and, in certain cases, serving as the
sole source for blast furnace emissions control
equipment and fuel handling. Primary Energy
also improves energy efficiency by bringing
energy generation closer to the point of use
and reducing heat wasted in the steel-making
process that would otherwise be vented
through stacks.
The projects qualify for Renewable Energy
Certificates (“RECs”) that are equivalent to
those generated by approximately 536MW of
solar or 374MW of wind projects, due to their
efficiency and environmental impact.
Primary Energy Revenues
and Cost Model
Approximately 73% of Primary Energy’s
revenues are derived from energy services to
CC’s Blast Furnace (“BF”) #7 at Indiana Harbor
Works (“IH”), the largest and most economically
competitive furnace facility of its kind in North
America. Remaining revenues are derived from
the Portside Project, which services USS BF
#14. Primary Energy’s revenues are split in the
following way between the five different projects:
– Cokenergy (c.54% of revenues): the project
receives waste gas and converts it to power
and steam to sell to CC’s BF #7 through
a long-term PPA that is index linked. The
revenues are protected from demand
fluctuations through a true-up mechanism;
– North Lake (c.19% of revenues): the project
receives waste gas and converts it into
power and steam and sells it back to BF
#7 through a long-term PPA, which is index
linked. The revenues are protected from
demand fluctuations through a true-up
mechanism;
– PCI (c.7% of revenues): the project is
50% owned with CC; the asset pulverises
metallurgical coal injected into IH BF
#7 for steel production. Revenues are
demand-based;
– Portside (c.18% of revenues): the project’s
revenues generated through the sale of
heat, power and softened water through
a long-term PPA with USS. Revenues are
capacity-based; and
– RECs (c.2% of revenues): the RECs are
generated by Cokenergy and North Lake
and are sold in the open market.
EBITDA ($’000)
Y/E December 2023
1
36,763
Y/E December 2022
1
: 36,450
Average net production (MW)
Y/E December 2023
1
182
Y/E December 2022
1
: 163
1. Unaudited figures. 2. As a result of the idling of IH BF #4, Ironside is currently operating as a CHP project.
Primary Energy
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Performance | Portfolio: Key Updates continued
Primary Energy
Investment Risks and Mitigants
Risk type and description Mitigation
Operational:
Recontracting of existing PPAs is assumed in
the forecasts and risk of recontracting terms
being below forecasts.
Primary Energy assets play a critical role in the operations
of two of the most profitable and critical blast furnaces
in North America, providing significant cost savings and
emissions reductions. Given our incumbent occupancy at
the sites, alternative energy sources would not be able to
compete on the same terms and associated benefits.
The successful renegotiation of the Cokenergy contract
during 2023 provides a reference point for the assumption
in the valuation that Portside will be successfully renewed in
the future at a higher level than the current contract.
Credit:
Offtaker is currently sub-investment grade.
Primary Energy counterparties CC and USS are
sub-investment grade. The CC blast furnaces associated
with the Primary Energy assets are some of the largest in
the USA and are highly profitable. Given their importance
to the North American steel market, the likelihood of not
finding a buyer, in the event of a credit default by CC, is
consideredlow.
Climate:
Development of new technologies to lower
carbon emissions may displace or make
obsolete existing pulverised coal injection
(“PCI”) technology, leading to reduction in
revenues.
The Investment Manager and Primary Energy are in
discussions with CC and USS to assess options for
employing best available technologies across the five
projects and will deploy, and/or replace, them into existing
assets if necessary.
Value Accretion Potential
Examples of upside opportunities at Primary
Energy that have not been reflected in its
valuation (unless otherwise stated), but could
provide additional value over the short to
medium term, include:
Existing Initiatives:
Additional revenues
and contracts from existing assets
Primary Energy continued discussions with
CC to develop requirements to allow Primary
Energy to pursue participation in the
MidcontinentIndependent System Operator
(“MISO”) capacity market. This is a prerequisite
to pursuing the increasing of electric generation
capacity at Primary Energy facilities.
2023 reported
expectations
1
£5-10 million
over 2-5 years
Updated
expectations
2
£5-10 million
over 1-4 years
Operational energy efficiency projects
Installation of one project (bag filters)
started in early 2023 and will be completed in
phases between 2024 and2026. A further two
projects were approved, with one due to become
operational in late 2024 (boiler feedwater heating)
and one due to become operational mid-2026
(variable frequency drives).
2023 reported
expectations
1
£2-5 million
over 2-3 years
Updated
expectations
2
£3 million in March 2024 NAV
APM
,
c.£4million untaken, expected
over 1-2 years
BF #4 restarted by Cleveland-Cliffs
CC has made no commitment regarding IH
BF #4 – hence the impact and time frames
remainuncertain.
2023 reported
expectations
1
£20-40 million
over an uncertain time period
Updated
expectations
2
£20-40 million
over an uncertain time period
Investment Updates in the Year
Primary Energy remains focused on maximising
operational performance at their five operating
facilities.
This was underscored by the successful major
overhaul of the Portside combustion engine
completed in April 2023, which included
replacement of the rotor to extend engine
operating life, improve reliability and reduce
required major maintenance for the life of this
component. This major overhaul was completed
on budget and on programme.
The Investment Manager supported Primary
Energy leadership in their development of the
interim operating agreement proposal, signed in
Q1 2023, for the continuation of select operations
at Ironside. This was following the idling of CC’s IH
BF #4 in 2022 and provided incremental revenues
to run Primary Energy’s more efficient boilers
using natural gas purchased by CC.
1. Estimated potential value uplift (expressed as the NAV
APM
incremental to the associated capital) and time frame,
as reported in the 2023 Annual Report.
2. Estimated potential value uplift (expressed as the NAV
APM
incremental to the associated capital) and time frame,
correct as at the reporting date.
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Performance | Portfolio: Key Updates continued
Primary Energy
The Investment Manager worked closely with
Primary Energy during 2023 in renewing the
Cokenergy contract, signed in January 2024.
Under this new twelve-year agreement, a
single-tier pricing structure for energy was
agreed that will improve revenues by c.13% and
enhance Primary Energy’s ability to execute
accretive projects with favourable returns.
Significant cost risk was removed with CC’s
agreement to assume all costs for O&M labour,
previously a Primary Energy responsibility. A
fee was also incorporated for CC to reimburse
Primary Energy for certain emissions programme
services. The majority of the benefit of the revised
contract terms had already been included in the
previous valuation.
The Investment Manager and Primary Energy
continue to pursue discussions with CC regarding
PCI, which provides pulverised metallurgical
coal that is essential for steelmaking in IHBF#7.
TheInvestment Manager is preparing for
negotiations for the renewal of the partnership
agreement with CC in September 2025. It will
engage with them to discuss options to extend
the asset life as well as consider technology
alternatives that align to SEEIT and CC objectives
for lower carbon emissions.
EBITDA for 2023 was slightly up, due to high
levels of operating availability and capacity from
CC’s IH BF #7, resulting in strong performance
and availability at the Cokenergy, North Lake
and PCI facilities. Despite CC’s continued idling of
IH BF #4, Ironside demonstrated above-budget
EBITDA and net production as CC used both
boiler and steam turbine generator capacity
that was not originally anticipated. The Portside
facility EBITDA was down due to below-budgeted
natural gas prices that depressed revenues
related to contracted cost savings mechanisms
as well as lower demand from the USS site due to
their market conditions.
Operations and maintenance costs across the
Primary Energy facilities were c.7% below budget
despite two unplanned outages caused by faults
within CC systems, for which the investment has
neither control nor responsibility, that affected
Cokenergy operations during the year.
Primary Energy
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Performance | Portfolio: Key Updates continued
Oliva Spanish Cogeneration (“Oliva”)
Portfolio of on-site waste recycling, on-site generation and process efficiency projects supporting the olive oil industry in Spain
Investment Highlights
Investment type Direct equity (100% owned, apart from Celvi which is 90% owned with 10%
owned by the offtaker)
Acquisition date November 2019
Asset location Andalucía, Spain
No. of projects 9
Project equity value
and as a percentage of
SEEIT’sGAV
APM
c.€151 million (c.£129 million)
Consisting of:
Oliva – Celinares (c.3% of GAV
APM
)
Oliva – Colinares (c.1%)
Oliva – Cepuente (c.2%)
Oliva – Cepalo (c.1%)
Oliva – Sedebisa (c.1%)
Oliva – Bipuge (c.1%)
Oliva – La Roda (c.1%)
Oliva – Celvi (c.1%)
Oliva – Biolinares (c.<1%)
Project-level debt £nil
Capacity 125MW
Technology On-site cogeneration, biomass, oil extraction
Forecast project life remaining Various, up to c.17 years
Lifecycle stage Operational
Counterparties/offtakers
Olive oil co-operatives, San Miguel Arcángel, Acesur, Spanish Government
O&M Sacyr
Fuel supply Natural gas, biomass, waste olive cake
Investment Overview
Oliva Spanish Cogeneration, located in
Southern Spain, comprises nine on-site
operating projects, of which five are efficient,
natural gas cogeneration CHP plants with a
combined capacity of 100MW, two are olive
waste biomass plants with a combined capacity
of 25MW and two are olive pomace processing
plants.
The investment has a good cash yield and
inflation correlation, as well as robust energy
efficiency credentials providing process
efficiencies compared with alternative heat
sources. In addition, the assets process waste
pomace to produce Orujo oil and electricity,
an efficient energy solution that reduces
greenhouse gas emissions.
Oliva Revenues and Cost Model
Oliva’s revenues are split in the following way:
RoRi: c.49% of revenues on average. The RoRi
is a regulatory payment from the government
paid to CHP and biomass assets and adjusted
to account for changes in revenues received
by the assets, namely sale of electricity, and
operating costs, namely natural gas and
EU Allowance emission certificates for the
cogeneration. This results in stabilised cash
flows and EBITDA over the long term. The
assets receive the RoRi for the remainder of
their asset life.
Electricity sales: on average c.35% of revenue
comes from electricity sales produced
by the biomass and CHP plants, which is
predominantly sold to the grid, as the heat
is used on site. While the revenues are linked
to market pricing, this is effectively hedged
through the RoRi and the management team’s
hedging policy.
Oil sales: c.12% of revenues on average come
from the product of the pomace processing,
namely the production of Orujo oil, which
Oliva sells through short-term contracts in
the market. The price of the oil is linked to the
cost of the biomass, providing a partial hedge
against this fuel supply cost.
EBITDA (€’000)
Y/E December 2023
1
68,827
Y/E December 2022
1
: (8,010)
MWh produced
1
Y/E December 2023
1
1,129,183
Y/E December 2022
1
: 827,966
1. Unaudited figures.
Oliva
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Performance | Portfolio: Key Updates continued
Oliva Spanish Cogeneration (“Oliva”)
Investment Risks and Mitigants
Risk type and description Mitigation
Regulatory:
Increase of EU Emissions Trading
System (“ETS”) costs.
The cost of EU ETS certificates has seen relative volatility over recent
years, albeit during 2023 there was a steady decline in the certificate
price. The costs of the EU ETS are reimbursed over the medium term
through the RoRi mechanism, which has seen positive structural
updates during the reporting period. Control of the EU ETS costs is
also subject to Oliva’s management team’s hedging policy, which is
constructed to reduce the impact of the market volatility.
Regulatory:
Update of RoRi mechanism: previous
timing delays by the Spanish
Government have improved, but
still exist, creating short-term cash
impacts on the business as well as
general uncertainty in the market.
Significant updates were received during the reporting period that
have seen an improvement to the structure of the RoRi. This should
result in more frequent updates that should allow for an improvement
in consistency with energy market pricing.
The Investment Manager remains cautious about the timely
administration of the scheme by the Spanish Government, and
therefore has continued lobbying efforts, through trade bodies, to try
to ensure timely decision making.
Regulatory:
Potential new regulations on
specification of olive oil – potentially
impacting the processing
requirements and/or impacting the
demand for olive oil.
Management is collaborating with industry associations and other
producers to inform the regulations about what an appropriate
specification would include.
Management is also investigating means to deliver the draft
specification as well as looking at alternative uses and markets for
the olive oil.
Climate:
Extreme weather conditions
(particularly drought) continue to
impact the olive harvest in Andalucía.
This would not only impact the
biomass assets within Oliva, but also
the operations of the offtakers.
The Investment Manager has brought olive feedstock procurement
expertise into the Oliva management team in order to more closely
manage the activity and to strengthen relationships with the
local supply chain. This is allowing Oliva to maximise procurement
opportunities and hence minimise the impact in the short term.
Capital projects are also being explored, which would increase
feedstock stockpiling capacity, further mitigating the risk in the
medium to long term. There are also capital projects in early
development looking to reduce the process water consumption of
the operations and hence mitigate the risk of water restriction during
periods of drought.
Health and safety:
Health and safety management
resulting in poor practices and
increased risk of health and safety
incidents.
The Investment Manager, along with the Oliva management team,
has increased the level of monitoring, reviews and auditing of the
O&M contractor to ensure contractual and regulatory compliance
and best practice is delivered across the operations.
Value Accretion Potential
The Investment Manager has been investigating
several upside opportunities at Oliva that have
not been reflected in its current valuation (unless
otherwise stated), but could provide additional
value over the short, medium and long term,
including:
Existing Initiatives:
Use of owned land for
additional revenues (e.g. solar)
Three projects (solar, olive oil extraction and
biogas generation) have been progressed
throughearly development, as expected.
Projectswill be progressed through detailed
development and necessary commercial
negotiations in order to complete a full appraisal
prior to an investment decision.
2023 reported
expectations
1
£1-3 million
over 3-4 years
Updated
expectations
2
£1-3 million
over 2-3 years
Extension of an existing contract
Offtake contract at the Celvi contract
successfully negotiated and executed,
foranadditional ten years.
2023 reported
expectations
1
£5-10 million
over 1 year
Updated
expectations
2
£7.3 million in
March 2024 NAV
APM
1. Estimated potential value uplift (expressed as the NAV
APM
incremental to the associated capital) and time frame,
as reported in the 2023 Annual Report.
2. Estimated potential value uplift (expressed as the NAV
APM
incremental to the associated capital) and time frame,
correct as at the reporting date.
Investment Updates in the Year
Following a challenging 2022, Oliva has
responded strongly through 2023. As a result of
diligent cash management through 2022, Oliva
was well positioned at the start of 2023. When
the global energy markets began to moderate at
the start of 2023, this was critical in allowing the
assets to swiftly return to operations in line with
expectations.
The level of support through the RoRi scheme
provided a strong tailwind for performance,
somewhat mirroring the headwinds experienced
during 2022. Towards the end of 2023 the
Spanish Government published long-expected
improvements to the RoRi scheme that are
expected to improve the administration of the
scheme and ensure a more suitable alignment of
the scheme with the global energy markets.
While the tailwind from the RoRi scheme
was a significant contributor to the positive
performance, a profit of c.€15 million was also
generated from the activities of the Oliva
in-house procurement team. This was the result
of successfully delivering Oliva’s clean spark
spread hedging policy.
Technical availability at the project sites has
largely been high, but there was a period of
significant downtime at the Cepuente site
that resulted from the landlord unintentionally
damaging the export cable during routine
sitework.
Operations were restored as a priority and
Oliva’s management team continue to work
with the landlord and insurers to recover the
lost revenues and repair costs, which amount to
c.€7million; this is not included in the financial
results for the year.
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Performance | Portfolio: Key Updates continued
Oliva Spanish Cogeneration (“Oliva”)
There have been two successful pieces of legal
and commercial work in the period. Firstly, the
heat offtake contract at Celvi has successfully
been extended for a further ten years,
coterminous with the project’s RoRi support,
under improved terms. Secondly, an arbitration
process with a previous gas supplier has reached
settlement in Oliva’s favour, seeing the return of
c.€3 million of pre-payments that the supplier
was unlawfully retaining.
In October 2023, a worker of a subcontractor
to Oliva’s O&M contractor sadly died at one
of the Oliva sites. The circumstances that led
to this incident are still subject to statutory
investigations, which are yet to be concluded.
This is expected during 2024. While Oliva is
co-operating fully with these investigations, the
Investment Manager and Oliva’s management
team have also taken timely and proactive steps
to conduct their own independent investigation,
which has concluded that there is no expectation
of any fault or liability being found against Oliva
or its management. The Investment Manager
and Oliva’s management team continue to work
closely with the O&M contractor to ensure that
health and safety best practices are maintained
at the sites.
Oliva
Oliva
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Performance | Portfolio: Key Updates continued
Värtan Gas
Green gas distribution and supply for the city of Stockholm
Investment Highlights
Investment type Direct equity
Acquisition date October 2020
Asset location Stockholm, Sweden
No. of projects 1
Project equity value and as a
percentage of SEEIT’s GAV
APM
c.SEK 940 million (c.£70 million) (c.6%)
Project-level debt c.SEK 682 million
Capacity Distributing approximately 225GWh/year of gas
Technology Green gas distribution
Forecast project life remaining c.21 years and terminal value
Lifecycle stage Operational
Counterparties/offtakers
Various, including c.50,000 residential customers and c.800 commercial and
industrial customers
O&M Värtan Gas
Fuel supply Biokraft, Gasum, Others
EBITDA (SEK million)
Y/E December 2023
1
58.9
Y/E December 2022
1
: 40.2
% of green gas
Y/E December 2023
1
91%
Y/E December 2022
1
: 78%
Investment Overview
Värtan Gas owns and operates the regulated
gas grid in Stockholm, Sweden. Over 80% of
the gas is renewable biogas, with a significant
proportion sourced from the city’s wastewater
facilities. Theinvestment was fully operational
from the point of acquisition, with strong
long-term yield metrics and inflation correlation.
Värtan Gas provides essential energy
infrastructure services, reducing pollution
and greenhouse gas emissions at the point
of use, through the displacement of natural
gas in buildings and diesel in transport. These
characteristics are aligned to Swedish national
and EU regional strategies to attain carbon
neutrality by 2040.
This investment has a substantial customer
base and opportunity to unlock further growth
potential – including through transport and
restaurant segments, as well as the opportunity
to diversify to supply Energy-as-a-Service
(“EaaS”) offerings to the customer base.
Värtan Gas Revenues and Cost
Model
The investment’s revenues consist of:
– fixed tariff (c.39% of revenues): annual fixed
fee to the regulated grid from end users,
which is not related to consumption and is
generally reviewed annually; and
– variable fee (c.61% of revenues): fees paid
for the supply of gas which are related to
consumption. Tariffs and prices are generally
reviewed annually, or more frequently if
required, and are predominantly based on
gas costs and a margin.
1. Unaudited figures.
Vartan Gas
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Performance | Portfolio: Key Updates continued
Värtan Gas
Investment Risks and Mitigants
Risk type and description Mitigation
Operational:
Churn rate (reduction) of customers
higher than expected, resulting in
fewer customers and lower revenues.
A new customer retention strategy has been implemented by
Värtan Gas management to improve the customer experience.
Churn has reduced during the reporting period, but remains a risk
to the business. New strategies are being developed to diversify
the customer base and offerings of Värtan Gas to mitigate both the
cause and effect of churn.
Operational:
Transport and restaurant revenues
lower than targeted, resulting in lower
revenues.
Electrification of Stockholm buses continues and therefore the
Värtan Gas management team is focusing on expanding into new
transport segments such as ferries/marine transport. New offerings
and sales resources have also been implemented to increase sales
opportunities to restaurants.
Regulatory:
Periodic regulatory updates causing
revenues to be less than expected.
This presents a cyclical risk that the business mitigates by active
engagement with the regulator and lobbying directly with other
transmission system operators (“TSOs”). The most recent risk was
mitigated through the successful appeal of the regulators’ previous
decision.
Commodity:
Volatility in biogas costs, resulting in
higher gas procurement costs.
Implementation of Värtan Gas’s hedging strategy continues to derisk
the volatility of the energy markets, hence enabling Värtan Gas to
effectively pass on these costs to the customers.
Biogas tax ruling:
Challenges to the application of tax
exemption to biogas, increasing the
cost of biogas.
The Swedish Tax Authority is reapplying for the tax exemption,
which is expected to be obtained during 2024. This does not impact
residential customers due to separate tax rules, but does impact
business customers in the short term. The impact on business
customers is limited by careful review of the prices set by Värtan Gas
and through engagement with them surrounding the tax exemption.
Value Accretion Potential
There are several examples of upside
opportunities at Värtan Gas that have not been
reflected in its current valuation (unless otherwise
stated), but could provide additional value over
the short to medium term, including:
Existing Initiatives:
Improved customer retention
New retention initiatives implemented,
and some positive results achieved in the short
term.However, the Investment Manager is
mindedto take a more conservative view on
thevalue potential in this area.
2023 reported
expectations
1
£3-5 million
over 2-3 years
Updated
expectations
2
£3-5 million
over 3-5 years
New offerings and new business lines
New EaaS customer offerings have been
developed through the period, with first
contractsbeing signed with customers. Solar
products are a strategic focus for development and
deployment over the coming period; initial progress
is in line with expectations.
2023 reported
expectations
1
£10-15 million
over 3-5 years
Updated
expectations
2
£10-15 million
over 2-4 years
Appeal of regulatory decisions
Appeal was successfully won, resulting in a
favourable revision in regulatory decision,
increasing revenue potential and regulated
assetbase (“RAB”).
2023 reported
expectations
1
£5-10 million
over 1-2 years
Updated
expectations
2
£14 million in
March 2024 NAV
APM
New Initiative
Liquefaction connection project
Project development completed and
customer contracts signed. Construction
duetostart mid-2024.
2023 reported
expectations
1
N/A
Updated
expectations
2
£3.9 million in March 2024 NAV
APM
,
£1.7million untaken, expected
over 1-2 years
1. Estimated potential value uplift (expressed as the NAV
APM
incremental to the associated capital) and time frame,
as reported in the 2023 Annual Report.
2. Estimated potential value uplift (expressed as the NAV
APM
incremental to the associated capital) and time frame,
correct as at the reporting date.
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Performance | Portfolio: Key Updates continued
Värtan Gas
Investment Updates in the Year
Performance during the year has been positive
with an overall increase of Värtan Gas’s key
performance indicators.
Some business-to-business (“B2B”) customer
segments, such as transport and restaurants,
have seen reductions in volumes. In transport,
the bus sector is undergoing electrification of
many of the bus fleets. Värtan Gas is looking
to replace these volumes by increasing supply
to the Stockholm marine industry, which has
an increasing pressure to decarbonise due
to incoming regulations. This transition in the
transport sector is expected to occur over the
coming few years. In the restaurant sector,
businesses appear to be operating with a close
eye on their cost base; hence the restaurant
volume consumption has seen a small decrease.
Värtan Gas has increased its sales team to
increase the restaurant customer base and has
also rolled out a Heater-as-a-Service product
to increase the gas sales to restaurants. Despite
these customer headwinds, Värtan Gas has
delivered the expected EBITDA performance,
which is largely a result of improved margin on
the gas sales cost; another positive outcome
from Värtan Gas’s gas hedging policy.
A positive outcome was reached in relation
to the appeal of the Swedish regulator’s (the
Energy Markets Inspectorates (“Ei”)) previous
decision relating to reductions in the RAB, hence
the revenue cap for the period 2023-2026. In
September 2023, following the appeal of the
TSOs (including Värtan Gas), the Ei confirmed
it would retract their initial decision. Following
this, in December 2023 and January 2024,
it republished their decisions in relation to
the calculation of the RAB and the assumed
weighted average cost of capital (“WACC”),
respectively. Both these updates were in the
favour of the TSOs and have had a positive
impact on the revenue potential and terminal
value, and hence valuation, of Värtan Gas.
Since joining in January 2023, Värtan Gas’s new
CEO has been focused on driving excellence
through the new consolidated organisational
structure, at the same time as devising a new
business strategy for delivering growth. During
2023, a new business line has been set up, named
Driva – the Swedish for drive, power, operate. The
Driva strategy is to develop new EaaS offerings,
predominantly for B2B customers. To date, the
Värtan Gas management team has developed
new EaaS offerings, completed market research
and testing, whilst developing the offerings on
a commercial and contractual basis. This has
resulted in the first EaaS contracts being signed
for heating and electric vehicle (“EV”) charging
products. Solar-as-a-Service is of particular
strategic importance and hence focus for the
Driva brand.
As well as the growth areas, stability and
sustainability of supply for biogas remains
strategically important for the Investment
Manager and the Värtan Gas management team.
Along with continued focus on increasing the
biogas content of the grid, which has been further
increased during the period, and successful
implementation of the hedging policy, the
Värtan Gas management team is also exploring
opportunities to vertically integrate the biogas
supply chain, with a strategy to be devised
during2024.
Vartan Gas
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The following section provides an update on matters occurring during the year, in relation to other
select investments from around the portfolio. The investment updates covered are based on
materiality of the investment and/or the matter being reported.
EVN
SEEIT’s dedicated EV charging infrastructure platform has had another positive year, with its number
of operational sites increasing from 6 to 23 (totalling 105 ultra-fast chargers, and another 150 fast
chargers). The pipeline of projects continues to grow, with another five sites currently undergoing
construction, soon to be handed over to the Charge Point Operator (“CPO”), and many more with
agreed leases.
In September 2023, at an event attended by the Chancellor of the Exchequer, EVN unveiled the UK’s
largest fast charging hub at the NEC in Birmingham, which saw 30 ultra-fast chargers and 150 fast
chargers handed over to the CPO.
FES
The Investment Manager has worked closely with FES management in the last year to assess
requirements to restructure the overall operations and development activities to restore profitability
and to establish a strategy that provides for long-term growth and sustainability of the FES
LED-lighting-as-a-service business. This has involved a streamlining of staffing and operations,
as well as some key hires such as a new CFO to strengthen financial controls and reporting. The
business development strategy was revised to focus on developing a robust pipeline targeting larger
multi-site enterprise business prospects that have longer sales cycles but higher revenue potential.
These changes will take some time to take full effect; however, during 2023, FES signed a total of
$22million of new contracts, including $15 million of completed installed contracts.
FES’s operational service contracts continue to operate and to deliver stable income. In October
2023, SEEIT acquired a senior ranking debt facility from Deutsche Bank at a heavily discounted price,
transferring the value of the related underlying FES service contacts to SEEIT.
Huntsman Energy Centre
The Huntsman project successfully completed commissioning and testing, achieving the start of the
operational phase in June 2023. Since then, the plant has also passed its performance testing and
has been delivering energy services to the customer, Huntsman Polyurethanes.
Since the start of operations, there have been reliability issues with the water treatment plant that
provides demineralised water to Huntsman. A significant focus of the Investment Manager has
been put towards satisfactory rectification of this matter, with an upgrade of the system, at the
contractor’s cost, expected to be completed in the summer.
Moy Park Biomass
The performance of the biomass boilers across the portfolio of sites continues to be strong, with
output in line with expectations.
As previously reported, the minority shareholder, which is also the feedstock provider, had submitted
two claims alleging force majeure (“FM”) events and made allegations of loss in relation to their
shareholding.
Performance | Additional Portfolio Project Updates
The FM claims were successfully managed by the Investment Manager to ensure continuity of
services to the end customer. In relation to the allegations of shareholder loss, the Investment
Manager successfully renegotiated the terms of the long-term feedstock agreement, to reflect
general changes in market conditions, and removed the minority shareholder to bring these matters
to a close.
GET Solutions
Following on from the previous period, where SEEIT’s GET Solutions project was impacted by record
high gas costs, in October 2023 the Investment Manager employed a new gas procurement agent
to improve visibility of the project’s forecast fuel costs and implement a more sophisticated hedging
policy. With energy markets still being elevated compared to long-term trends, fuel costs are still
above the expectations at the conception of the project; however, the future hedged position of the
project is much improved as a result of the change in gas procurement agent.
In addition to this, the Investment Manager has continued efforts to recover the historical high fuel
costs from the previous gas procurement agent (as per contractual terms), to improve the financial
position of SEEIT’s project. Commercial and contractual discussions continue with the previous gas
procurement agent to try and bring this matter to a conclusion.
UU Solar
Following the year end, in May 2024, the Investment Manager successfully sold the investment in
UU Solar to UK Power Networks Services Holdings Limited. The agreed price represented a 4.5%
premium to the Company’s 30 September 2023 valuation.
In the lead-up to the exit, the Investment Manager had progressed a number of workstreams, such
as repowering projects and strategic inverter procurement, as well as commencing the installation of
a new control (SCADA) system across the portfolio. These workstreams were important in relation to
forecasting an improvement in performance of the portfolio, therefore supporting the agreed price
at a premium to valuation.
St Barts Hospital
During August 2023, the contract with St Barts Hospital in London came to a successful conclusion.
This saw the project delivering all services to the hospital in line with expectations, and the ownership
of the assets transferring to the hospital as intended.
Santander Lighting
In July 2023, Santander exercised its option to end the contract early as part of a capital expenditure
programme across its business. This exercise was successfully completed, with final payment
received during Q1 2024.
Portfolio Project Exits
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Performance | Financial Review and Valuation Update
Financing
The Investment Manager seeks to maintain a conservative level of total gearing
APM
consistent with
the Company’s tolerance for financial risk. Total gearing
APM
is measured on a look-through basis by
including debt at Company level through to the investment portfolio level. The Company’s investment
policy provides for a target medium-term gearing
APM
of 35% of NAV
APM
(“structural gearing”
APM
)
and a consolidated borrowing limit of 65%, which includes the longer-term structural gearing
APM
and
acquisition financing facilities used to finance the Company’s investments over a shorter term, both
calculated at the time of borrowing.
Refinancing risk at the portfolio level is managed through low gearing
APM
, staggered debt tenors and
maintaining low absolute levels of refinancing requirements over the medium term.
Financial Performance
The Company’s investment strategy and the Investment Manager’s focus on asset management
has helped manage downside risks and target value-accretive opportunities during the year,
notwithstanding market volatility.
£92m
2023: £85m
Investment cash inflow from the
portfolio
up 8% on a portfolio basis
APM
, providing 1.1x
dividend cash cover
APM
£(56)m
2023: £(19)m
Loss before tax
reflects income of £64 million less the
unrealised loss of £(118) million from increased
discount rates and specific valuation
adjustments.
(5.2)p
2023: (1.8)p
Loss per share
comprising income components of 5.7 pence,
made up from inflation increases, FX gain and
portfolio performance, less capital component of
10.8 pence, made up of discount rate movements.
Consolidated Gearing Position
The structural gearing
APM
target is measured across the portfolio, enabling the Company to optimise
for efficiency and risk, utilise debt where it can be most efficiently sourced and enable a significant
part of the portfolio (41 out of 54 investments) to operate on an unlevered basis. Alarge portion
of the structural gearing
APM
amortises from free cash flow generated by the relevant investment
and although the absolute exposure to portfolio-level gearing
APM
in GBP terms has reduced, as a
percentage it has increased due to the reduction in the Company’s NAV
APM
.
There is no refinancing requirement at a portfolio level until at least 2025, although the Investment
Manager may look to optimise through opportunistic project-level refinancing. Forexample, the
Cokenergy recontracting substantially improves the finance capacity and risk from the perspective
of a lender, from which the Investment Manager anticipates improvement of terms in the Primary
Energy financing whilst retaining benefit from the long-term interest rate swaps currently in place.
The Company, via Holdco, also has a £180 million RCF in place until June 2026, having recently
extended/refinanced the expiry date by twelve months. The Company intends for this to be a
temporary finance, repayable through surplus distributions from the portfolio, refinancing proceeds
at investment level and investment disposals which the Investment Manager is currently pursuing.
As at 31 March 2024, the Holdco RCF had been drawn by £155 million to fund investments.
At31May2024, the drawing had reduced to £98 million after a partial repayment following the
disposal of UU Solar in May 2024. Based on investment outlook, the RCF could be £110-£130 million
drawn at 30 September 2024 (before any proceeds from a disposal or portfolio-level refinancing),
subject to returns from proposed investments meeting the Capital Allocation Policy criteria. The
estimated drawings are predominantly based on projected capital requirements for Onyx andEVN.
% of GAV
APM 1
Debt at 31 Mar 24 Debt as a % of EV
2
Debt as a % of NAV
APM
Primary Energy (USA) 17% £126m 40%
N/A
RED-Rochester (USA) 17% £59m 24%
Onyx (USA) 17% £81m 30%
Vartan Gas (Sweden) 6% £51m 46%
Capshare (Portugal) 1% £14m 30%
Citi Riverdale (UK) <1% £1m 34%
Structural gearing
(medium-term target =35% NAV
APM
)
£330m 21% 34%
(32% at March 2023)
Aggregate gearing including RCF
(cap = 65% NAV
APM
)
£485m 30% 49%
(32% at March 2023)
1. Percentage of investment as a percentage of gross asset value (“GAV”) as at 31 March 2024, consisting of
Portfolio Valuation and other assets.
2. Enterprise value (“EV”) equals the Investment value included in the Portfolio Valuation plus debt at
investmentlevel.
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Performance | Financial Review and Valuation Update continued
Gearing summary as at 31 March 2024
Investments
geared
12
1
/54 investments
2023: 14/55
Weighted average
interest rate of
portfoliodebt
6.0%
2023: 5.8%
Interest rate exposure
of portfolio debt
80% is fixed
2
2023: 80%
Portfolio-level debt
bygeography
USA: 80%
Europe: 19%
UK: <1%
2023: USA: 79%,
Europe: 20%, UK: <1%
Weighted average life
remaining on debt
3.7 years
2023: 4.0 years
Portfolio debt
repaidin the year
3
£26m
2023: £18m
March 2024 SEEIT sensitivities (pence per share)
(5.0) (4.0) (3.0) (2.0) (1.0) 0.0 1.0 2.0 3.0 4.0 5.0 6.0
FX
4
+/- 10%
Discount Rates +/- 50 bps
Inflation -/+ 100 bps
Corporate Tax +/- 500 bps
Negative change to assumption
Positive change to assumption
Contracted Revenue over time
The Company derives its return on its investments primarily through receipt of contracted cash flows
through the operational life of the investments in the portfolio. These are often calculated upfront and
can be based on a variety of factors, including, but not limited to: heat and electricity availability, output
of heat and electricity, opportunity for energy savings or other energy-related services. Cash flows
may however be variable or fluctuating for certain investments, if they rely on a host counterparty’s
demand for energy or can be impacted by volatility in the energy market. The valuation of certain
investments also assumes that cash flows will continue beyond the current contractual period.
Once operational, investments provide attractive levels of cash distributions, and are designed to
achieve relatively high, contracted and reasonably predictable cash flows. The quality of these cash
flows is supported through investments with strong delivery partners, where the risks involved in
implementation, operation and the associated revenues can be identified and mitigated.
Amortisation of existing debt (GBPk)
Q2
2024
Q3
2024
Q4
2024
Q4
2025
Q3
2025
Q2
2025
Q1
2025 2026 2027 2028 2029 2030 2031
2032 2034 2035 20362033
Amortisation of existing debt – From project cash (GBPk) Amortisation of existing debt – From debt drawn (GBPk)
80,000
60,000
40,000
0
20,000
1. Includes five projects at Primary Energy and three projects at Onyx.
2. % of total debt that is fixed or has long term interest swaps in place to mitigate interest rate exposure.
3. Incremental to the associated capital, where applicable.
4. FX is shown after the impact on hedging.
Inflation
Inflation correlation is derived from a combination of explicit linkage to revenues, through contract
or regulatory mechanisms, and de facto linkage applied on recontracting events or through
discretionary annual tariff increases. Inflation correlation is a relevant metric when evaluating new
investment opportunities and when recontracting on existing projects within the portfolio. The
Company’s projects are in a number of different geographic regions, which diversifies and mitigates
the impact of inflation volatility for the portfolio.
Positive inflation correlation on investment returns has increased since 31 March 2023 as a result of
increased contractual inflation linkage related to new contracts and renewals.
March 2024 SEEIT Structural Gearing (£’000)
500,000
400,000
300,000
250,000
200,000
150,000
100,000
0
50,000
Sep
24
Sep
26
Sep
28
Sep
30
Sep
32
Sep
34
Sep
36
Sep
38
Sep
40
Sep
43
Sep
45
Refi, Floating
Refi, Fixed
Sep
25
Sep
27
Sep
29
Sep
31
Sep
33
Sep
35
Sep
37
Sep
39
Sep
41
Sep
44
Sep
42
Existing, Floating
Existing, Fixed
450,000
350,000
36
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SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Performance | Financial Review and Valuation Update continued
Based on the model of projected future cash flows over the next 15 years, the Investment Manager
believes that the Company will generate sufficient cash to fully cover dividends over the medium to
long term, with excess cash flows after dividend payments expected to be reinvested to grow the
Company’s NAV
APM
in line with its target returns
1
.
The visibility of revenues derived from the contracts at the operational phase provides support for
an attractive and growing yield to be returned to investors.
1. Note: The chart above is for illustrative purposes only, assuming a 16-year weighted average portfolio term and
does not represent a forecast. There can be no assurance that these cash flows will be met. The hypothetical
cash flows do not take into account any unforeseen costs, expenses or other factors which may affect the
portfolio assets and therefore the impact on the cash flows to the Company. As such, the graph above should
not, in any way, be construed as forecasting the actual cash flows or actual returns from the portfolio.
2. The chart covers only a 20 year period even though cash flows are projected to continue beyond this period.
Contracted Uncontracted
Existing – Long-term contracts
– Rolling annual contracts (e.g. in Vartan
Gas where majority of customers have
contracts that are rolled over automatically
on an annual basis)
– Short-term contracts prior to their expiry
(e.g. spill electricity, RECs, etc.)
– Ancillary revenues that are considered side
products of primary revenues in certain
projects (e.g. olive oil sales at Oliva Spanish
Cogeneration)
– Contract life extensions where the customer
can be considered to have a viable alternative
source of energy at the end of the existing
contract (e.g. Onyx where it is assumed that
the customer will seek an extension for a few
years instead of decommissioning)
Growth – Contracts due to be recontracted in the
future, where there is a clear history of
recontracting and the customer does not
have another viable or contractual source of
energy (e.g. extension of existing contracts
in RED-Rochester and Primary Energy)
– Growth assumptions based on existing
contracts (e.g. RED-Rochester where
revenue growth is assumed from successful
delivery of value accretive capital expansion
and addition of new customers)
– Expansion of developer platforms (e.g. future
C&I solar portfolios developed by Onyx)
Based on the above characteristics, as at 31 March 2024, 75% (March 2023: 79%) of the Portfolio
Valuation
APM
by value is considered to be contracted and 25% (March 2023: 21%) is considered to be
uncontracted.
Dividends
The Company paid a total of £67 million in dividends to shareholders during the year. This included
the last quarterly interim dividend for the year ended 31 March 2023 and the first three quarterly
interim dividends for the year ended 31 March 2024. The Company has declared the fourth quarterly
interim dividend for the year ended 31 March 2024. This is payable at the end of June 2024, delivering
the target of a 6.24 pence per share total dividend related to the year ended March 2024.
Based on the projected investment cash flows from the current portfolio prepared by the Investment
Manager, the Company has announced new dividend guidance of 6.32 pence per share for the year
to 31 March 2025 and, as before, will target progressive dividend growth thereafter. The Company has
increased its annual dividend each year since its IPO in 2018. The Company intends to continue to pay
interim dividends on a quarterly basis through four broadly equal instalments (in pence pershare).
Dividend Growth (pence per share)
The Company paid a stub dividend of 1 pence per share for the four-month period between its IPO and
March2019. Thereafter, dividends reflect the full-year dividends declared in relation to each financial year
toMarch 2024 and targeted thereafter.
Future expectations
2020 2021 2022 2023 2024 20262025
5.00
5.50
5.62
6.32
6.00
6.24
Data TBC
Project Revenues
2
(£m)
as at March 2024
400
300
200
100
0
2025
Uncontracted
Contracted
2026
2027 2028 2029 2030
2031
2032
2033
2034
2035
2036
2037
2038 2039
2040 2041 2042 2043 2044 2045
600
500
Long term cash flow 15 year (£’000)
2025 2026 2027 2028 2029 2030 2031
2032 2034 2035 2036
2037
2038 2039
2040
2033
Distributable cash flow (LHS) Dividends paid to shareholders (LHS)
120,000
20,000
0
40,000
80,000
100,000
60,000
37
Financial Statements Additional InformationGovernanceStrategic ReportIntroduction
SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Performance | Financial Review and Valuation Update continued
Analysis of Movement in NAV
APM
As of 31 March 2024, the NAV per share
APM
was 90.5 pence, a decrease of 11.0 pence from 101.5 pence
at 31 March 2023. After taking into account dividend paid (6.2p), this decrease reflects the impact
of increased discount rates (negative 10.8 pence per share) offset primarily by an uplift in portfolio
performance of 6.1 pence. These are further described below in the Portfolio Valuation section.
Revisions to medium-term inflation assumptions had a small negative impact on NAV
APM
of 0.3 pence.
The adverse impact of FX movements was limited to 0.1 pence, in line with expectations of using foreign
currency hedging to limit volatility in NAV
APM
from fluctuations in the valuations of non-GBP investments.
Portfolio Valuation
APM
Approach
The Investment Manager is responsible for carrying out the fair market valuation of SEEIT’s
portfolio of investments (the “Portfolio Valuation”
APM
), which is presented to the Directors for their
consideration and approval. A Portfolio Valuation
APM
is carried out on a six-monthly basis, at 31March
and 30Septembereach year. The Portfolio Valuation
APM
is the key component in determining the
Company’sNAV
APM
.
Movement in NAV in the year (pence per share)
Opening
NAV
(March 2023)
Change in
macroeconomic
assumptions
FX
movements
Portfolio
performance
Dividends
paid
Impact
of share
buyback
Changes in
discount
rates
Closing
NAV
(March 2024)
NAV before
discount rates
and buyback
101.5
(0.3)
6.1
(6.2)
101.2
0.1
0.1
(10.8)
90.5
The Company has a single investment in a directly and wholly owned holding company, SEEIT Holdco.
It recognises this investment at fair value. To derive the fair value of SEEIT Holdco, the Company
determines the fair value of investments held directly or indirectly by Holdco (the Portfolio Valuation
APM
)
and adjusted for any other assets and liabilities. The valuation methodology applied by Holdco to
determine the fair value of its investments is materially unchanged from the Company’s IPO and has
been applied consistently in each subsequent valuation. See Note 4 for further details on the valuation
methodology and approach. A reconciliation between the Portfolio Valuation
APM
at31 March 2024 and
investment at fair value shown in the financial statements is given in Note 11.
For the Portfolio Valuation
APM
at 31 March 2024, the Directors commissioned a report from a third-party
valuation expert to provide their assessment of the appropriate discount rate range for each investment
(excluding small investments with an aggregate value of less than 2% of the Portfolio Valuation
APM
at
31March 2024) in order to benchmark the valuation prepared by the Investment Manager. Thediscount
rate applied to each investment by the Investment Manager was within the ranges advised by the
third-party valuation expert, (with the exception of a few instances where the Investment Manager
selected higher discount rates to compensate for risk within the underlying cashflows).
In addition, for the Portfolio Valuation
APM
at 31 March 2024, the Company benefited from full scope
third-party valuation reports on Onyx (comprising its operational, construction and development
components), EVN’s development component and four corporate investments in the portfolio (Turntide,
Rondo, ON Energy and Iceotope). The Investment Manager used the outputs of these reports as their
basis for the purpose of valuing these investments in the Portfolio Valuation
APM
at31March 2024.
Movements in Portfolio Valuation
The Portfolio Valuation
APM
as at 31 March 2024 was £1,117 million, an increase of 2% compared with
£1,100 million as at 31 March 2023.
After allowing for investments made of £161 million and cash receipts from investments of £92million,
the Rebased Portfolio Valuation
APM
is £1,169 million. Adjusting for changes in macroeconomic
assumptions, foreign exchange movements (excluding the effect of hedging) and changes in
discount rates, this resulted in a portfolio return of £93 million, equating to an 8.0% return in the
period. The return takes into account a number of project-specific valuation movements described
under Balance of Portfolio Return below.
The weighted average remaining life of investments as at 31 March 2024 is 16.4 years
(31March2023: 15.9 years), when calculated purely on when current contracts end. When based on
the 31 March 2024 Portfolio Valuation
APM
, which includes assumptions for recontracting and contract
life extensions, the weighted average remaining life is 26.4 years (March 2023: 28.0 years).
Further information on key investments and potential future valuation movements can be found in
Note 3.
38
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SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Performance | Financial Review and Valuation Update continued
Valuation Movements
A breakdown of the movement in the Portfolio Valuation
APM
in the year is illustrated in the following chart.
Valuation bridge - March 2023 to March 2024 (£m)
Portfolio Valuation
– 31 March 2023
New
investments
Cash from
investments
Rebased Portfolio
Valuation
APM
Changes in
macroeconomic
assumptions
Changes in
foreign exchange
Changes in
discount rates
Balance of
portfolio return
Portfolio Valuation
APM
– 31 March 2024
1,100
1,117
(92)
(3)
(24)
(118)
93
1 61
1,169
£(3)m
i) Changes in
macroeconomic assumptions
Read more on page 40
£(24)m
ii) Change in foreign exchange
Read more on page 40
£(118)m
iii) Changes in discount rates
Read more on pages 40 and 41
£93m
iv) Balance of portfolio return
Read more on page 41
39
Financial Statements Additional InformationGovernanceStrategic ReportIntroduction
SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Return from the Portfolio of the Rebased Portfolio Valuation
APM
Each movement between the Rebased Portfolio Valuation
APM
of £1,169 million and the 31March2024
valuation of £1,117 million is considered in turn below:
i) Changes in macroeconomic assumptions – impact of £3 million:
– Inflation assumptions: consistent with March 2023, the approach in all jurisdictions is to apply
a three-year near-term bridge to the relevant long-term inflation assumption. Given the
persistently high global inflation since March 2023, this has resulted in an uplift in the valuation
due to higher than previously assumed near-term inflation, compared with the assumptions
applied for the March 2023 valuation. The long-term inflation assumptions remain the same as
applied to the March 2023 valuation.
– Tax rate assumptions: there were no changes to corporation tax rate assumptions during
theyear.
ii) Changes in foreign exchange rates – impact of £23.5 million (before hedging):
– The investment portfolio decreased £23 million during the year from movements in foreign
exchange rates, driven by the movement of GBP against the US dollar, euro, Singapore dollar and
Swedish krona since 31 March 2023 or since new investments were made in the year.
– However, it is important to note that this only reflects the movement in underlying investment
values, and it does not take into account the offsetting effect of foreign exchange hedging that
SEEIT Holdco applies outside of the Portfolio Valuation
APM
.
– SEEIT Holdco experienced an aggregate gain of £24 million due to foreign exchange hedging.
– Therefore, the overall foreign exchange movements did not have a significant impact on NAV
APM
during the year, resulting in a net gain of less than £1 million from foreign exchange movement.
iii) Changes in valuation discount rates - impact of £(118) million:
– The discount rate used for valuing each investment represents an assessment of the rate of
return at which infrastructure investments, with similar cash flow assumptions and risk profiles,
would trade on the open market.
– During the year, there were further significant increases in interest rates globally, including in key
geographical areas of SEEIT’s portfolio, thus continuing a trend from the last 18 to 24 months.
This has stemmed from geopolitical uncertainties and a high inflationary environment due, in part,
to high energy costs.
– The Investment Manager considered it necessary to apply a significant increase to discount rates
and, having assessed geographical areas as a whole and each project individually, has applied
discount rate increases that increased the weighted average discount rate by approximately 90
bps to 8.6% on an unlevered basis (March 2023: 7.7%). On a levered basis, which assumes existing
portfolio-level debt is refinanced at current market rates, incorporating existing interest rate
swaps into the interest cost assumption, the weighted average discount rate has increased to
9.4% (March 2023: 8.5% and September 2023: 9.4%).
– This has led to an increase in discount rates across the whole investment portfolio in this period
that in aggregate resulted in a decrease in the Portfolio Valuation
APM
of c.£117 million.
Performance | Financial Review and Valuation Update continued
– Of this adverse movement in discount rates, c.£31 million relates to adjustments made to
asset-specific risk premiums. This includes:
– an adjustment of c.£26 million to reflect the uncertainty over Li-Cycle’s future energy demand
in light of their construction delays factored into the valuation of RED-Rochester; and
– an adjustment of c.£5 million to reflect a risk of the value for which RECs can be sold for in the
USA after 2026.
– Since March 2023, there has been limited market activity to help set benchmarks for appropriate
discount rates for the investments in the Portfolio Valuation
APM
.
Weighted average discount rate at 31 March 2024
Levered/unlevered UK US Europe/Asia Combined
Levered
2024 8.1% 9.6% 9.1% 9.4%
2023 7.1% 8.9% 8.4% 8.5%
Unlevered
2024 8.1% 8.8% 8.2% 8.6%
2023 7.1% 7.9% 7.4% 7.7%
Discount rate ranges (unlevered) at 31 March 2024
UK US Europe/Asia Combined
2024 6.10%-10.30% 7.60%-11.25% 5.15%-11.40% 5.15%-11.40%
2023 4.75%-8.75% 6.50%-9.00% 4.75%-10.25% 4.75%-10.25%
Breakdown of discount rate (unlevered) at 31 March 2024
UK US Europe/Asia Combined
Weighted average risk-free rate
2024 4.4% 4.3% 3.0% 4.0%
2023 3.7% 3.7% 3.0% 3.6%
Risk premium
2024 4.4% 3.8% 5.2% 4.6%
2023 4.1% 3.5% 4.3% 4.1%
Weighted average discount rate (unlevered)
2024 8.8% 8.1% 8.2% 8.6%
2023 7.9% 7.2% 7.3% 7.7%
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SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Performance | Financial Review and Valuation Update continued
The Investment Manager reviews movements in discount rates for each individual asset at each
valuation date. The key approach to the overall discount rate can be summarised as:
– risk-free rate of each individual asset is assessed against relevant government bonds, taking into
account length of cash flows and geography; and
– risk premium taking into account asset-specific premiums, considering inter alia country risk,
market risk, construction risk, counterparty risk and credit risk.
– Credit risk is determined by deducting the risk-free rate applied to each asset from the most
relevant corporate bond yield curve, accounting for the credit rating and maturity of each
asset. Where the counterparty is not rated, it may require some judgement to determine the
appropriate credit rating.
iv) Balance of portfolio return – impact of £93 million:
– This refers to the balance of valuation movements in the period, excluding (i) to (iii) above, which
provided an uplift of £93 million. The balance of portfolio return reflects the net present value of
the cash flows unwinding over the period at the average prevailing portfolio discount rate, and
various additional valuation adjustments described below. The portfolio delivered a return of
8.0% in the year with details on key movements described below.
– The Portfolio Valuation
APM
as at 31 March 2024, and by implication the return achieved over the
period, includes a number of key estimates and judgements of future cash flows expected from
different investments. In addition, specific adjustments to future cash flows were required for
events during the period that affected the actual outcome from certain investments.
– The key factors that have had a material impact on the 31 March 2024 Portfolio Valuation
APM
listed out below, have had a value impact of 1% or higher on the Company’s NAV
APM
:
– RED-Rochester
– Prior to preparing the Portfolio Valuation
APM
as at 30 September 2023, the Investment
Manager and the RED-Rochester management team conducted an additional in-depth
review of actual results and how certain long-term assumptions were applied in the project
financial model. Several revenue and cost estimates were revised, up and down, with a
material net adverse impact on the overall valuation of c.£26 million. No further changes were
made to the Portfolio Valuation
APM
as at 31 March 2024.
– The Portfolio Valuation
APM
as at 30 September 2023 reflected a combination of updates to
projected loads, business development assumptions, operating costs, labour costs and timing
of new efficiency projects, which caused a reduction in the overall valuation of c.£17 million.
Positive movements in the second half of the year in relation to new efficiency projects broadly
offset a reduction in value from a downwards revision of expected revenue from Li-Cycle (also
referred to in discount rates updates above).
– After adjusting for new investment into RED-Rochester and distributions received during the
second half of the financial year, the valuation of RED-Rochester at 31 March 2024 is in line
with the valuation at 30 September 2023.
– Oliva Spanish Cogeneration
– The Spanish Government published regulatory updates in the period to the RoRi, an incentive
scheme to provide a return on operations and investments, that allows for a substantial
reduction in uncertainty and therefore greater ability to plan financial optimisation of the
plants in the near to medium term.
The overall positive impact on the valuation of Oliva was c.£30 million, after netting off by
a reduction of value from standard updates to commodity pricing that form part of the
regulatory updates. The majority of the positive impact was reflected in the September 2023
valuation of Oliva, with the valuation of Oliva at31March2024 in line with the valuation at
30September 2023.
– Värtan Gas
– The periodic regulatory update in late 2022 relevant to Värtan Gas changed both the WACC
and RAB used in calculating the value of the regulated investment, causing an adverse impact
on the 31 March 2023 valuation. Värtan Gas has since successfully appealed against the
update, resulting in a c.£14 million positive impact (already reflected in the September 2023
valuation) and thus substantially reversing the adverse impact on the previous valuation.
– Further positive changes to the WACC and RAB added incremental value of c. £10 million in
the second half of the financial year.
– Onyx
– As referred to above, for the valuation of the entire Onyx business at 31 March 2024, an
independent valuation expert provided a valuation range from which the Investment Manager
derived its valuation. The valuation included for the first time a recognition of a pipeline of
future investment opportunities in community solar projects. The valuation applied by the
Investment Manager was towards the conservative end of the range provided and after
adjusting for new investments and distributions during the year, resulted in a positive impact
on the valuation of Onyx of c. £35 million.
Additional information and sensitivities are disclosed in the critical estimates and judgements section
of Note 3 on pages 111 and 112.
Financial Information
As described in detail in Note 2, the Company meets the conditions of being an investment entity in
accordance with IFRS 10. This report is prepared on a consistent basis to previous reports whereby
the IFRS 10 investment entity exemption is applied to the financial statements.
To provide shareholders with more transparency into the Company’s capacity for investment, ability
to make distributions, operating costs and gearing
APM
levels, results have been reported in the pro
forma tables below on a non-statutory “portfolio basis”
APM
, as it has been done in previous years, to
include the impact if SEEIT Holdco were to be consolidated by the Company on a line-by-line basis.
The Directors consider the non-statutory portfolio basis
APM
to be a more helpful basis for users of the
accounts to understand the performance and position of the Company. This is because key balances
such as cash and debt balances carried in Holdco and all expenses incurred in Holdco, including debt
financing costs, are shown in full rather than being netted off.
The impact of including Holdco is shown in the Holdco reallocation column in the income statement
and balance sheet, which reconciles back to the statutory financial statements (IFRS) and
constitutes a reallocation between line items rather than affecting NAV
APM
and earnings. In the cash
flow statement, the Holdco reallocation column simply represents the net difference between the
portfolio basis
APM
and IFRS for movements that may occur only in Holdco or only in the Company.
NAV per share
APM
and earnings per share are the same under the portfolio basis
APM
and the
IFRSbasis.
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Financial Statements Additional InformationGovernanceStrategic ReportIntroduction
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Summary Financial Statements
Portfolio basis summary income statement
Year to 31 March 2024 Year to 31 March 2023
£’million Portfolio basis Holdco reallocation IFRS (Company) Portfolio basis Holdco reallocation IFRS (Company)
Total (loss) (33.0) (11.7) (44.7) (1.8) (4.8) (6.6)
Expenses and finance costs (22.7) 11.1 (11.6) (16.7) 4.7 (12.0)
(Loss) before tax (55.7) (0.5) (56.3) (18.5) (0.1) (18.6)
Tax (0.5) 0.5 — (0.1) 0.1 —
(Loss)/earnings (56.3) — (56.3) (18.6) — (18.6)
(Loss)/earnings per share (pence) (5.2) — (5.2) (1.8) — (1.8)
Portfolio basis balance sheet
Year to 31 March 2024 Year to 31 March 2023
£’million Portfolio basis Holdco reallocation IFRS (Company) Portfolio basis Holdco reallocation IFRS (Company)
Investments at fair value 1,117.4 (133.6) 983.86 1,099.6 28.3 1,127.8
Working capital 15.5 (17.9) (2.4) (39.9) 37.2 (2.7)
Debt (155.0) 155.0 — — — —
Net cash 3.9 (3.4) 0.5 65.7 (65.4) 0.3
Net assets attributable to ordinary shares 981.9 — 981.9 1,125.4 — 1,125.4
NAV per share
APM
(pence) 90.5 — 90.5 101.5 — 101.5
– Total income: Income at the Company level is the income it receives from Holdco which contrasts to portfolio basis
APM
where the income is received from the portfolio assets.
– Expenses and finance costs: Investment transaction costs are incurred at Holdco only and therefore not included in the Company income statement.
– Investment at fair value: Company valuation excludes Holdco’s other net assets (see Note 11 for detailed reconciliation).
Treasury Management
Cash cover
APM
for dividends paid
The financial year saw cash inflow from investments (on a portfolio basis
APM
) of £92 million, an increase of c.10% from the previous year’s £84 million. After allowing for Fund-level costs of £20 million
(March2023: £13.5 million), this enabled the Company to cover its cash dividends of £67 million by 1.1x, maintaining a similar level as the previous year (March 2023: 1.2x).
The main factor affecting the increase in Fund-level costs compared to the previous year is interest payable on drawn amounts on the RCF. In turn, this caused the cash cover to be marginally lower than
lastyear.
Maintaining positive levels of cash cover
APM
has resulted in cumulative excess cash cover
APM
of c.£34 million since IPO, demonstrating the consistent nature of the income from the underlying assets in the
portfolio, as well as the ability of the portfolio to generate excess cash that can be reinvested for an accretive return.
Performance | Financial Review and Valuation Update continued
42
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SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Performance | Financial Review and Valuation Update continued
Hedging Strategy
FX hedging
The Company’s hedging strategy is executed at the level of SEEIT Holdco, so the Company itself is
only indirectly exposed to foreign exchange movements. The objective of the Company’s hedging
strategy is to protect the value of both near-term income and capital elements of the portfolio from
a material impact on NAV
APM
arising from movements in foreign exchange rates.
This is achieved on an income basis by hedging forecast investment income from non-sterling
investments for up to 24 months through foreign exchange forward sales. On a capital basis, it is
achieved by hedging a significant portion of the portfolio value through rolling foreign exchange
forward sales. The Investment Manager also seeks to utilise corporate debt facilities in the local
currency to reduce foreign exchange exposure.
As part of the Company’s hedging strategy, the Investment Manager regularly reviews the
non-sterling exposure in the portfolio and adjusts the hedging levels accordingly while considering
the cost benefit of the hedging activity. The hedging strategy also involves ensuring regular
calculation of sufficient cash headroom, so as to meet potential liquidity requirements imposed by
hedging counterparties during periods of volatility that may adversely affect the Company.
As demonstrated below, the portfolio has a substantial exposure to non-GBP assets. In the
execution of hedging strategy, the Investment Manager has chosen to retain high levels of
hedging during the year, typically ranging between 75-90% of the value of the underlying non-GBP
investments.
The hedging strategy effectively mitigated the decrease in portfolio value attributed to foreign
exchange of £23.5 million, resulting in a marginal foreign exchange loss after taking into account
hedging gains of £24 million. Consequently, the impact on the NAV
APM
due to currency movements
inthe year was limited to 0.1 pence per share loss, which equates to less than 1% of NAV
APM
.
Interest Rate Hedging
During the year the Investment Manager assessed hedging options to mitigate the risk of
unfavourable interest rate movements associated with the RCF floating rate. This resulted in the
Company, via Holdco, successfully executing an interest rate cap (“IR cap”) against RCF drawdowns,
limiting the total interest rate exposure to c.7.0%. The IR cap remains in place at the time of this
report, adjusted for RCF movements since 31 March 2024, and continues to protect against adverse
interest rate movements.
Revolving Credit Facility
The Investment Manager periodically considers refinancing options aligned to the pipeline of new
and existing investments. At 31 March 2024, the RCF was drawn at £155 million. Following the year
end, the drawn amount has reduced to £98 million
1
, the net decrease coming from applying disposal
proceeds from UU Solar to the RCF balance.
Ongoing Charges
The portfolio’s ongoing charges ratio
APM
remained in line with previous years at 1.02% (March2023:
1.02%). Ongoing charges, in accordance with AIC guidance, are defined as annualised ongoing
charges (i.e. excluding acquisition costs and other non-recurring items) divided by the average
published undiluted net asset value
APM
in the year). Ongoing charges percentage has been calculated
on the portfolio basis
APM
to take into consideration the expenses of the Company andHoldco.
1. At 31 May 2024.
Current FX hedging levels
Impact on NAV
APM
arising from FX
FX gain on hedging
24.0
FX loss in portfolio
(23.5)
Net impact
0.5
Total hedging
£739m
USD: £544
EUR: £138
SEK: £57
Total non-GBP assets
£934m
USD: £687
EUR: £170
SEK: £77
Hedging level
79%
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Performance | Financial Review and Valuation Update continued
Portfolio Basis Cash Flow Statement
31 March 2024 31 March 2023
£’million Portfolio basis Holdco reallocation IFRS (Company) Portfolio basis Holdco reallocation IFRS (Company)
Cash from investments 92.5 44.9 137.4 85.1 (0.3) 84.8
Operating and finance costs outflow (20.0) (2.8) (17.2) (13.1) 3.1 10.0
Net cash inflow before capital movements 72.5 47.7 120.2 72.0 2.8 74.8
Cost of new investments including acquisition costs (163.7) 131.0 (32.7) (240.2) (52.2) (292.4)
Share capital raised/(share buybacks) net of costs (20.1) — (20.1) 132.6 — 132.6
Movement in borrowings 120.8 (120.8) — 29.6 (29.6) —
Movement in capitalised debt costs and FX hedging (4.1) 4.1 — (37.3) 38.5 1.2
Dividends paid (67.2) — (67.2) (62.0) — (62.0)
Movement in the period (61.8) 62.0 0.2 (105.3) (40.5) 145.8
Net cash at start of the period 65.6 (65.3) 0.3 170.9 (24.9) 146.1
Net cash at end of the period 3.9 (3.3) 0.5 65.6 (65.3) 0.3
Going Concern
The Directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt the going concern basis of accounting in
preparing the financial statements. Further details of the processes carried out by the Company in determining that the going concern basis continues to be appropriate can be found in the Report of the
Directors and Note 2 on pages 94 and 95, and 109 respectively.
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Onyx
Performance
Environmental,
Social and
Governance
(“ESG”) Update
Scope 4 emissions
1
972,201 tCO
e
avoiding the equivalent amount of carbon
generated by 872,712 average cars annually
2
Energy saved
3
379,589 MWh
reducing the equivalent amount of average
energy demanded by 26,732 houses annually
4
What’s in this section
ESG Committee Chair’s Introduction 46
SEEIT Sustainability Framework
– Principle 1: Champion Energy Efficiency
– Principle 2: Deliver Net Zero Energy
– Principle 3: Promote Sustainable SupplyChains
– Principle 4: Support Our Communities
– Principle 5: Match Best Practice
47
48
50
50
51
52
SEEIT’s ESG Management Process 53
SEEIT Climate Change Report 54
TCFD Disclosures 61
1. For the year ending 31 March 2024 and based on an analysis of the portfolio. Scope 4 emissions refer to the
previously reported on “carbon savings” KPI.
2. Based on the Statistica average CO emissions from new cars in the United Kingdom from 2004-2023.
3. For the year ending 31 March 2024 and based on an analysis of the portfolio.
4. Based on the Ofgem 2023 average annual energy usage of houses in the UK.
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Strategic Report
ESG Committee
Chair’sIntroduction
Performance | Environmental, Social and Governance (“ESG”) Update continued
Key initiatives
Achievements during the year Goals for next year
Over the year, the Company delivered on the
following key initiatives:
1. Finalised the SEEIT Sustainability Framework
2. Updated the ESG Management Process
3. Progressed climate change risk identification and
mitigation analysis
The Company plans the following key initiatives
nextyear:
1. Continue the implementation of the Sustainability
Framework at portfolio companies
2. Further enhance climate change risk work, with a
focus on mitigation and adaptation
“ Reflecting on the year, the
Investment Manager has
made significant progress
by redefiningthe Company’s
sustainability priorities through
the Framework and building
up its ESG governance and
management process to
alignwith new standards.”
Helen Clarkson OBE
|Chair of ESG Committee
On behalf of the SEEIT Board and the Company’s ESG Committee, I am pleased to introduce the 2024
ESG Update for the financial year ended 31 March 2024. In this section, we will share the progress
SEEIT has made towards fulfilling its sustainability commitments during the year.
As the first London-listed fund to invest exclusively in energy efficiency projects, SEEIT has a history
of being defined by its sustainability-related focus. The Company has followed this philosophy in its
sustainability principles, where a growing body of ESG regulations and standards could have made it easy
to let the marketplace define a firm’s ESG priorities. Instead, the Investment Manager worked with the
Board to develop the SEEIT Sustainability Framework (the “Framework”), which reflects the Company’s
ESG priorities. We are pleased to use the 2024 ESG Update to introduce the Framework.
Due to the development of the Framework, along with the evolution of sustainability standards in the
wider market, the Investment Manager has revised its ESG Management Process and ESG-related
governance to better align with internal and external standards.
As its Chair, I am delighted to highlight that a key part of this work included creating a dedicated ESG
Committee at the SEEIT Board to oversee the implementation of the Framework and the subsequent
revisions of the Company’s ESG processes, policies and standards.
Another major focus for the year was on the governance, identification and management of climate
change risks. The focus on climate change risk has led to the drafting of SEEIT’s first “Climate Change
Report”, which forms a major part of the 2024 ESG Update.
Finally, we were very pleased that the Company won the Association of Investment Companies (“AIC”)
2023 Best ESG Communication Award and the Investment Manager won ESG Investor of the Year at
the 2024 Business Green awards. Both achievements demonstrate the Investment Manager’s and
Company’s leadership in sustainability.
Reflecting on the year, the Investment Manager has made significant progress by redefining the
Company’s sustainability priorities through the Framework and building up its ESG governance and
management process to align with new standards. The Company is well positioned to progress its
sustainability practices and further implement the Framework through continued engagement with
portfolio companies.
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Strategic Report
SEEIT Sustainability Framework
Performance | Environmental, Social and Governance (“ESG”) Update continued
During the year, the Investment Manager
collaborated closely with the SEEIT Board and
specifically the newly formed ESG Committee
to identify SEEIT’s top ESG priorities based on
the UN Sustainable Development Goals (“UN
SDGs”). The Investment Manager used those
ESG priorities to establish the five principles of
the SEEIT Sustainability Framework (the “ESG
Principles”).
The ESG Principles will be used during the due
diligence process to assess new investments,
and then as a framework for engaging
with management teams and third parties
responsible for the day-to-day operations
within each business.
The Framework’s ESG Principles have
not only influenced the revision of the
Company’s Responsible Investment Policy
1
but also prompted engagement with
portfolio companies and driven updates
to the Investment Manager’s overall ESG
Management Process for SEEIT.
Importantly, the Framework marks a transition
from monitoring ESG performance at portfolio
companies to actively managing outcomes.
The Framework is intended to provide portfolio
companies with clear guidance on the ESG
priorities of the Company and set KPIs and
minimum standard policies to measure ESG
performance.
Principle 1
Champion
energy
efficiency
Links to UN SDGs
Principle 4
Support our
communities
Links to UN SDGs
Principle 3
Promote
sustainable
supply chains
Links to UN SDGs
Principle 2
Deliver net
zeroenergy
Links to UN SDGs
Principle 5
Match best practice
Investment strategy
Invest in energy efficiency solutions that reduce emissions, reduce
waste, and improve reliability.
ESG management
Managing general ESG factors that impact the Company’s portfolio
companies and their operations
Read more on page 48 Read more on page 50 Read more on page 50 Read more on page 51
Read more on page 52
1. The SEEIT Responsible Investment Policy can be found on SEEIT’s website. The Responsible Investment Policy was approved and published after the period ended 31 March 2024.
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Capshare
Performance | Environmental, Social and Governance (“ESG”) Update continued
SEEIT Sustainability Framework
Principle 1: Champion Energy Efficiency
“Champion Energy Efficiency” is Principle 1 of the Framework, reflecting the Company’s focus on energy
efficiency. Principle 1 highlights the energy impact of the Company’s portfolio companies and commits to
advocating for the role of energy efficiency in the energy transition.
At present, the Company uses three KPIs across its portfolio to demonstrate the energy impact of portfolio
companies and to measure their success: energy savings, energy generation and Scope 4 emissions, also
referred to as carbon savings.
In addition to these KPIs, a few of SEEIT’s energy generating investments have the potential to do so more
efficiently. The Investment Manager reviews these investments to identify further energy efficiencies and
prioritises asset improvements that can deliver this. As part of the implementation of this Principle, the
Investment Manager will continue this engagement and unlock further efficiencies at relevant investments.
Finally, the Investment Manager continues to champion energy efficiency and its role in the energy
transition. The Investment Manager’s CEO, Jonathan Maxwell, published a book called “The Edge: How
Competition for Resources is Pushing the World, and Its Climate, to the Brink – and what We Can Do
about It,” and has appeared in numerous media engagements throughout the year advocating for energy
efficiency.
KPI Definition Energy efficiency impact
Energy
savings
Energy savings refers to the estimated
reduction in customer energy demand due to a
SEEIT investment. These savings are normally
achieved through investments in appliances,
such as LED lighting or HVAC systems, which
require less energy to achieve the same result.
Reduced energy waste at the point of use.
These investments decrease the energy
customers need, without changing their
operations, which in turn lowers energy
consumption and carbon emissions.
Energy
generation
Energy generation refers to the amount of
decentralised energy produced by an energy
efficient investment. Progress towards this KPI
is achieved through investments that generate
energy behind-the-meter.
Reduced waste associated with centralised
energy generation, such as transmission and
distribution losses. These investments also shift
the customer’s demand from the electrical
grid to on-site energy generation, therefore
decreasing pressure on the centralised system
and promoting energy system resiliency.
Scope 4
emissions
(carbon
savings)
Scope 4 emissions refer to the avoidance of
in GHG emissions achieved by a particular
project when compared to a relevant
counterfactual.
Scope 4 emissions quantify the benefit arising
from energy saving and energy generating
investments.
Generation Transmission & distribution Point of use
Energy Generators Energy Savers
4,979,953 MWh 379,589MWh
energy generated energy saved
Scope 4 Emissions
972,201 tCO
2
e
carbon saved
1. Based on an analysis of the portfolio.
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Performance | Environmental, Social and Governance (“ESG”) Update continued
SEEIT Sustainability Framework
Principle 1: Champion Energy Efficiency continued
Investment Spotlight:
Championing
energyefficiency
atRED-Rochester
In 2021, the Company acquired one of the
United States’ largest district energy systems,
RED-Rochester, from Ironclad Energy Partners
LLC. RED-Rochester exclusively provides utility
services to over 100 commercial and industrial
customers within the 1,200-acre Eastman
Business Park in Rochester, New York.
The Investment Manager and RED-Rochester
are both committed to improving the efficiency
of the district energy generation system
to provide customers with resilient and
low-carbon utility services.
As such, the Investment Manager invested
into the construction of a 38MW cogeneration
(“cogen”) plant that will serve new customer
electricity loads and improve the overall park
thermal efficiency by c.12%. The cogen plant
will be using natural gas once operational and
is increasing capacity at RED-Rochester, so
while it is increasing energy efficiency it will also
be improving its emissions in the first instance.
The plant can however use 100% hydrogen fuel
and will transition to low-carbon fuel once that
is commercially and economically available.
Additionally, the cogen plant has been
refurbished from existing equipment, thus
saving carbon emissions that would have
resulted from constructing a new unit.
In addition to the cogen investment, since
2017, RED-Rochester has been awarded $17.5
million in funding towards energy efficiency
projects from New York State Energy Research
and Development Authority (“NYSERDA”)
across multiple programmes.
Most recently, RED-Rochester was awarded
a $5 million grant from NYSERDA’s “C&I
Carbon Challenge”. The grant will go towards
other carbon-reduction projects, including
electrification of steam chillers and waste
heat recovery for compressed air generation.
Further, in 2022, RED-Rochester successfully
completed its obligations to NYSERDA for the
2019 Carbon Challengeaward.
RED-Rochester’s efforts to enhance the
energy efficiency of its activities shows
alignment to the Company’s energy efficiency
principle.
RED-Rochester
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Performance | Environmental, Social and Governance (“ESG”) Update continued
SEEIT Sustainability Framework
Principle 2: Deliver Net Zero Energy
608,024
MWh renewable energy generated
1
in the year to 31 March 2024
725,976
tCO
2
e emissions (S1 + S2)
2
in the year to 31 March 2024
Principle 2 of the SEEIT Sustainability Framework underpins the Company’s commitment to providing
customers with low-carbon energy by choosing investments that are aligned to net zero and engaging
with current investments on their net zero trajectory. It recognises that energy efficiency solutions
must be paired with low-carbon, renewable energy generation in order to reach net zero emissions in
line with the Paris Climate Agreement.
During the year, the Investment Manager reviewed the Company’s emissions and selected some of the
highest-emitting companies to engage with on net zero goals and strategy. The Investment Manager
has also integrated questions around net zero into its due diligence process and will require that
potential investments with material emissions can demonstrate alignment with the its net zero goals.
As part of the Investment Manager’s Glasgow Financial Alliance for Net Zero (“GFANZ”) target, which
is set out in more detail in the Climate Report section of the 2024 ESG Update on pages 54 to 60, the
Company will begin reporting on the net zero target coverage of SEEIT’s portfolio. The Investment
Manager will also track KPIs such as greenhouse gas emissions and the amount of renewable energy
generated to monitor the implementation of this principle across the Company’s portfolio.
Energy efficiency has been the focus of the Company, but Principle 2 highlights that reaching net
zero is also a priority. Further work is necessary to reach net zero, but the Investment Manager is
committed to achieving this important objective.
Principle 3: Promote Sustainable Supply Chains
82%
3
of the portfolio by value covered by a supplier code of conduct against unsafe working conditions,
precarious work, child labour and forced labour in the year to 31 March 2024
“Promote Sustainable Supply Chains” has been chosen as Principle 3 of the Framework, reflecting the
Company’s goal to provide customers with sustainable energy services from both an environmental
and social perspective. The first phase of implementing this principle is setting the Company’s supply
chain standards and engaging with portfolio companies to understand existing processes, policies and
suppliers.
The Investment Manager has developed a Human Rights Policy
4
setting out key supply chain
standards as they relate to human rights and modern slavery. The supply chain standards inform a
questionnaire that the Investment Manager uses when conducting due diligence on key third parties
involved in a potential transaction. The Investment Manager intends to engage with the Company’s
portfolio companies to develop similar policies and processes to review the standard alignment of
third-party suppliers.
Finally, as part of the ESG asset management process, the Investment Manager has begun
incorporating an asset management third-party questionnaire, separate from the normal annual
ESG questionnaire, to monitor the policies of third parties in charge of the day-to-day operations of
a project. Over the next year, the Investment Manager intends to work with portfolio companies to
review their key third parties and will promote engaging with those third parties on their alignment with
the human rights standards.
Onyx Baseload
1. Based on an analysis of the portfolio.
2. Based on an analysis of the portfolio. The Company’s GHG emissions predominately represent emissions associated with generating energy.
3. Based on an analysis of 95% of the portfolio by value in scope of the analysis.
4. The Investment Manager’s Human Rights Policy can be found on SDCL’s website.
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Performance | Environmental, Social and Governance (“ESG”) Update continued
SEEIT Sustainability Framework
Principle 4: Support Our Communities
92%
of portfolio by value covered by Diversity
and Inclusion (“D&I”) policies in the year to
31March 2024
1 incident
1
of discrimination reported at a portfolio
company during the year 31 March 2024
Principle 4 of the Framework concerns the role the Company has within its communities. In addition to
providing customers with sustainable services, the Investment Manager is focused on ensuring that its
community, namely the employees at SEEIT’s portfolio companies, work in well-managed, supportive
and flourishing workplaces. Therefore, the Investment Manager is promoting policies and initiatives in
each of these workplaces aligned to the following four pillars:
Onyx
1
3
2
4
Diversity and inclusion Training and development
Mental and physical health Local charitable activities
The Investment Manager has begun engaging with portfolio companies around the four pillars
to determine whether they have policies and initiatives in place with respect to each. In time, the
four pillars of employee experiences will be used to monitor portfolio company compliance with
thisprinciple.
1. The incident was raised and settled using an external agency. The incident occurred at a portfolio company
that SEEIT holds a minority investment in. The Investment Manager investigated the incident and found that
appropriate remediation efforts occurred following the incident.
As part of the review of the third parties engaged with SEEIT’s portfolio companies, one incidence of
discrimination was reported by a third party that manages a SEEIT investment. The incident was not at a SEEIT
portfolio company. The Investment Manager reviewed the incident and confirmed that the incident was resolved
and that appropriate mitigation actions are in place.
Investment Spotlight:
Improving employee
wellbeing at Onyx
RenewablePartners
In 2020, SEEIT acquired Onyx Renewable
Partners, one of the largest and most
established commercial and industrial (“C&I”)
on-site solar and storage platforms in the
United States. Onyx owns and operates
over225 operational C&I projects across
14US states.
Over the past few years, Onyx has
consistently prioritised enhancing employee
experiences aligned with the “Support Our
Communities” principle in the Framework.
Onyx does this through its dedication to
training members of the community through
its participation in initiatives such as the
“Hiring Our Heroes Programme” and creation
of an internship programme. The Hiring Our
Heroes Programme facilitates connections
between US military veterans and private
sector companies for fellowship opportunities.
In addition, Onyx’s internship programme
aims to offer valuable working experience
to college students, further contributing to
community support and talent development.
Onyx also demonstrates its commitment
to diversity and inclusion through robust
recruitment efforts and support for
employees to engage in affiliate groups
such as Women of Renewable Industries
andSustainable Energy (“WRISE”).
Finally, Onyx underpins its efforts to support
its employees through an annual employee
engagementsurvey.
Onyx
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Performance | Environmental, Social and Governance (“ESG”) Update continued
SEEIT Sustainability Framework
Principle 5: Match Best Practice
The first four Principles of the Framework focus on the Company’s particular ESG-related goals.
Thefifth Principle acknowledges that there are many frameworks and standards in the ESG field
that the Company aims to comply with. In particular, following best practice for the Company means
fulfilling its legal and voluntary obligations, including the following:
The standards included in Principle 5 have commitments that span from minimum standard policies
to disclosure requirements to monitoring of specific KPIs. Principle 5 ensures that meeting those
commitments is a key sustainability priority for the Company and forms a major part of the Investment
Manager’s ESG Management Process for the Company.
Commitment
1
3
5
2
4
EU Sustainable Finance
Disclosures Regulation (“SFDR”)
Task Force on Climate-related
Financial Disclosures (“TCFD”)
Streamlined Energy
and Carbon Reporting
(“SECR”)
Glasgow Financial Alliance for
Net Zero (“GFANZ”) – SDCL
Commitment
United Nations’ Principles for
Responsible Investment (“UN
PRI”) – SDCL Commitment
Baseload
ESG Asset Management KPI 2024 Score Card
1
Sustainability Framework Indicator KPI
Principle 1 –
Champion Energy
Efficiency
Energy savings 379,589 MWh
Total energy generated 4,979,953 MWh
Scope 4 emissions/carbon savings 972,201 tCO
2
e
Principle 2 – Deliver
Net Zero Energy
Scope 1 and 2 emissions 725,976 tCO
2
e
Renewable energy generated 608,024 MWh
Principle
3 - Promote
Sustainable Supply
Chains
% portfolio by value covered by a supplier
code of conduct against unsafe working
conditions, precarious work, child labour and
forced labour
81%
Principle 4 - Support
Our Communities
% portfolio by value covered by diversity and
inclusion policies
92%
Number of incidents of discrimination
reported in investee companies
1 incident
Principle 5 - Match
Best Practice
% of portfolio by value covered by health and
safety policies
100%
% of portfolio by value with violations of UN
Global Compact principles and Organization
for Economic Cooperation and Development
(OECD) guidelines for Multinational
enterprises
0%
% of the portfolio by value covered by codes
of conduct relating to anti-bribery and
corruption
92%
% of portfolio by value covered by a grievance/
complaints handling mechanism/process
89%
% of portfolio by value covered by a policy to
protect whistleblowers
92%
1. KPIs for Principle 1 and 2 are based on an analysis of the portfolio for the year to 31 March 2024. KPIs for
Principles 3, 4 and 5 are based on an analysis of c.95% of the portfolio by value in scope of that analysis, also
forthe year to 31 March 2024.
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SEEIT’s ESG Management Process
Performance | Environmental, Social and Governance (“ESG”) Update continued
The Investment Manager’s ESG Management
Process for the Company refers to the
integration of sustainability considerations
into due diligence, asset management and
reporting.
The Investment Manager is responsible for
the day-to-day activities relating to the ESG
Management Process. SEEIT’s ESG Committee
oversees the overall effectiveness of and
material outcomes or findings relating to the
process.
During the year, the Investment Manager
revised the ESG Management Process to align
with the Framework and SFDR requirements.
Specifically, the Investment Manager created
a risk rating for each indicator in the due
diligence questionnaire to assess alignment
with the Framework and confirm an investment
aligns with the SFDR’s “do no significant harm”
requirement.
The ESG investment due diligence process
entails initial identification of ESG red
flags, followed by preliminary and detailed
assessments for alignment with the
Framework. Post-investment, the Investment
Manager interacts with investments through
regular meetings, bi-annual environmental
performance reporting and annual ESG
questionnaires, enabling ongoing monitoring
and management as necessary. Key
performance indicators reflecting portfolio
companies’ ESG performance are reported
in the annual SEEIT ESG Update, as shown
in theSustainability Framework section on
pages47 to 52.
Investment due diligence Asset management Reporting
Go/No Go
review
Initial due
diligence
Detailed due
diligence
Environmental
performance
survey
Annual ESG
survey
Ongoing
engagement
Results reporting
Disclosures
Marketing & investor materials
ESG findings incorporated into IC papers Investor DDQs
SEEIT Sustainability Framework
Principle 1:
Champion Energy
Efficiency
Principle 2:
Deliver net zeroenergy
Principle 3:
Promote sustainable
supply chains
Principle 4:
Support Our
Communities
Principle 5: Match Best Practice
EVN
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SEEIT Climate Change Report
Performance | Environmental, Social and Governance (“ESG”) Update continued
Year ended 31 March 2024
“ Though we have published
climate risk sections in the past,
this first SEEIT ClimateReport
represents the progress
theInvestment Manager
has made in identifying and
monitoring the Company’s
climate change risks and
opportunities.”
Anjali Berdia|SDCL Sustainability Manager
The SEEIT Climate Change Report (“Climate
Report”) is designed to provide shareholders,
clients and wider stakeholders with insights
into the Company’s approach to identifying
and managing climate-related risks and
opportunities.
The Investment Manager and the Company
are both supporters of the TCFD, recognising
that climate change presents significant risks
and opportunities for the Company in the short,
medium and long term. While the UK’s Financial
Conduct Authority (“FCA”) made publishing a
TCFD report mandatory for many companies in
the UK in January 2023, the Company is not in
scope of this requirement.
Nevertheless, the Investment Manager finds that
the TCFD’s recommendations on governance,
strategy, risk management and metrics provide
a useful framework for monitoring, managing and
increasing transparency around climate-related
risks and opportunities. The TCFD’s eleven
recommended disclosures are outlined in the
Appendix of this report, with corresponding
page numbers referencing where the information
can be found. Climate change risk is integrated
into the Company’s overall risk framework,
more information of which is within the Risk
Management Framework section, starting on
page 62.
Baseload
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Performance | Environmental, Social and Governance (“ESG”) Update continued
SEEIT Climate Change Report Year ended 31 March 2024
Governance
Governance framework
Oversight and management of climate-related issues are incorporated into the Company’s existing
governance structure and Risk Management Framework. Following consultation with the Investment
Manager, the Board approves the Company’s investment policy, long-term objectives and
commercial strategy, as stated in the Introduction and Strategic Report. Reports of the proceedings
and decisions of the Audit and Risk Committee and ESG Committee, alongside others, are received
by the Board quarterly.
Under the direction of the Board and its respective Committees, the Investment Manager is
responsible for the day-to-day management of climate-related risks and opportunities impacting the
Company. The Investment Manager integrates the identification and monitoring of climate-related
risks and opportunities into the ESG Management Process outlined in the ESG Update.
The Investment Manager does this in the first instance through due diligence questionnaires and
checklists, including the ESG questionnaire with climate-related questions specific to physical
and transition risks. Post-investment, the Investment Manager monitors and manages material
climate-related risks through regular discussions with investments and the ESG asset management
questionnaire.
Climate reporting is integrated into the Audit and Risk Committee discussions, with the Investment
Manager notifying the Board of urgent matters arising outside of the regular reporting cycle.
In addition to engagement with portfolio companies and the Board to manage climate change risk,
the Investment Manager has made efforts to educate its employees about climate change risks and
opportunities. Over the year, the Investment Manager received ESG-related training on the mandatory
and voluntary obligations of the Company, including the TCFD Framework.
The Board, Audit and Risk Committee, ESG Committee and the SDCL Investment Committee all
have delegated responsibilities relating to climate issues. The SDCL ESG team identifies and raises
climate-related risks to the SDCL Investment Committee and reports them to the Audit and Risk
Committee through the risk framework. The ESG Committee is involved in climate change risks and
opportunities from a strategic perspective through its oversight of the Framework and the ESG
Management Process. Both the ESG Committee and Audit and Risk Committee report to the Board.
Strategy
Climate-related opportunities
The assessment of climate-related opportunities is fundamental to the Company’s investment
strategy, as the Company supports the global transition to a low-carbon future through energy
efficiency investments. The opportunities for the Company to invest in energy efficiency projects that
support the energy transition increases in scenarios with stronger government policies and public
support for those investments. The Investment Manager monitors the emergence of government
policies that impact the success of the Company to assess climate-related opportunities, as set out
in Investment Manager: Markets and Outlook on pages 13 and 14.
Climate-related risks
The assessment of both physical and transition climate-related risks is carried out by the Investment
Manager once per material investment and then reviewed on an annual basis for changes occurring
during the year.
Physical climate risks
Physical climate risks assessed fall into two categories:
Acute physical risks are event-driven, e.g. rainfall flooding and typhoons, whereas chronic physical
risks are caused by longer-term shifts in climate patterns, e.g. extreme heat and drought.
To assess physical climate risks, the Investment Manager conducts scenario analysis through a
specialist third-party provider, analysing the impact under Representative Concentration Pathways
(“RCP”) two scenarios (RCP 8.5 and RCP 2.6) over two forward-looking time periods (2021-40 and
2041-60). Both time periods are compared to a baseline period (2006 or 2014-2020). Further details
are provided below.
RCP Range of global mean temperature increase by 2100 (from pre-industrial baseline) (Celsius)
8.5 3.2-5.4 degrees (Business-as-usual scenario without additional efforts to constrain
emissions, resulting in warming of more than 4 degrees)
2.6 0.9-2.3 degrees (Net zero pathway that aims to keep warming below 2 degrees)
Time horizon Period covered
2020 Historical data (2006 or 2014-2020), baseline period
2030 2021-2030
2050 2031-2050
SEEIT Board
SEEIT ESG Committee SEEIT Audit and Risk Committee
SDCL Investment Committee
SDCL ESG Team
Acute1
2 Chronic
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Strategy continued
Climate-related risks continued
Transition climate risks
Transition climate risks assessed can be split into four categories:
Performance | Environmental, Social and Governance (“ESG”) Update continued
SEEIT Climate Change Report Year ended 31 March 2024
To assess transition risks, the Investment Manager regularly engages with portfolio companies,
remaining up to date with policy changes, new technologies, market movements and changing
customer demands in the relevant region. The Investment Manager also engages with a third-party
provider to assess its carbon financial risk exposure due to the EU-ETS within EU markets on a
quarterly basis.
Transition-physical risk: conceptual overview
Typically, at RCP 8.5, a “Business-as-usual” scenario, the Company would face higher threat from
physical risks, as emissions are expected to continue rising at current rates, increasing global
temperatures to >4 degrees Celsius. However, at RCP 2.6, an “Aggressive” mitigation scenario, the
Company would face higher threat from transition risks, as emissions are expected to halve by 2050,
limiting temperature increases to below 2 degrees Celsius. This is outlined in the diagram below.
1
3
2
4
Policy and legal risk Technological risk
Market risk Reputational risk
Transition-physical risk: company overview
The tables below provide both a high-level summary and granular breakdown of the top physical
and transition risks impacting the Company. Mitigation actions, both current and proposed, have
also been outlined below.
Summary of portfolio-level climate change risks
Risk description Comment
Physical risks
relating to climate
change
The physical risks associated with the SEEIT portfolio primarily fall into three categories:
1. reduced feedstock availability;
2. lower demand for products due to milder weather; and
3. operational delays due to extreme weather events and asset damage.
These risks have been identified predominantly using specialist third-party climate
modelling software. Select risks
1
have been identified because the portfolio company
has begun to see them materialise.
Transitional risks
relating to climate
change
Transition risks within the SEEIT portfolio primarily stem from two main sources:
1. policy and legal changes related to decarbonisation may result in higher
operational costs for assets with material emissions; and
2. customer demand for the energy products generated by portfolio companies
reduces due to shifting consumer preferences for lower-carbon products.
These risks have been identified using the TCFD’s transition risk framework and
through engagement with the asset management team and portfolio companies.
Physical climate-related risks
Risk and category Impact Mitigation Actions
Extreme heat
Physical – chronic
Reduced olive yields, limiting biomass
feedstock availability.
Diminished customer demand for heat,
resulting in reduced revenuestreams.
Source biomass feedstock from
fartheraway.
Acquire a different site with greater
biomass storage capacity.
Monitor customer demand and consider
amending tariffs.
Drought
Physical – chronic
Limited water availability for processes
at sites.
Seek alternative water sources.
Invest in new drought-resistant
technologies.
Rainfall flood
Physical – acute
Asset damage and/or operational
delays.
Impact on harvest yields due to
adverse effects on soil saturation,
erosion and fruit quality.
Source biomass feedstock from areas
less exposed to flooding.
Acquire a different site less exposed
toflooding.
Acquire appropriate natural catastrophe
insurance.
1. These select risks that have materialised, specifically reduced biomass feedstock at Oliva and milder weather at RED, are considered in the Portfolio Valuation. Other risks are hypothetical and have been identified under multiple
climate scenarios and timelines. The Audit and Risk Committee review both materialised and hypothetical climate related risks as part of the risk framework.
Physical Risk
Transitional Risk
RCP 8.5
RCP 2.6
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Performance | Environmental, Social and Governance (“ESG”) Update continued
SEEIT Climate Change Report Year ended 31 March 2024
Strategy continued
Climate-related risks continued
Transition climate risks continued
Transition climate-related risks
Risk and category Impact Mitigation Actions
Higher operating
costs due to new
carbon policies
Transition – policy
and legal
Reduced financial support from
governments, e.g. Spanish Regulatory
Regime.
Introduction of New York Climate
Leadership and Community Protection
Act capping GHG emissions.
Specific fines and penalties associated
with methane leakage would require
pipe relining.
Monitor emerging policies.
Engage with lobbyists, industry
association members and others
involved in policymaking.
Determine how to align trajectories to
be future-proofed for emission-related
regulations.
Decreased
demand for
products
Transition – market
Higher decarbonisation pressures from
customers and governments seeking
low-carbon/renewable energy sources.
Build out a decarbonisation plan with
portfolio companies.
Demonstrate a commitment to
sustainability or adapt to evolving
environmental regulations and consumer
preferences.
Physical risk climate modelling approach
The Company conducts its analysis on the impacts from chronic and acute physical risks through
a third-party provider and uses its climate hazard score to assess potential physical risk facing
theasset.
Climate hazard score:
The climate hazard score rates the severity of various climate hazards on a scale of 0-100 based on
the geographical location of the assets. The score is not weighted based on the size and valuation of
assets.
Using the climate hazard score, as well as real-time information of the climate impacts on an
investment, the Investment Manager assigns a risk rating to each climate risk. The risk rating mirrors
the risk rating system used for all other portfolio risks.
Climate Change Risk Management
Climate-related risks and opportunities are integrated across all components of the Company’s Risk
Management Framework and thus follow the same monitoring, managing and governance structure
as other types of risk. The Company’s broader Risk Management Framework is detailed in the Risk
Management section on pages 62 to 64; however, a summary of how the risk framework pertains to
Climate Change risk isoutlined below:
Risk strategy
The climate change risk strategy of the Company is set by the Board, with input from the Investment
Manager. Further details on how climate-related risks and opportunities are integrated into the
Company’s strategy are set out in the Strategy section of this report on pages 55 to 57.
Risk appetite
Within climate change risk, the Company has a low appetite for physical risks and a medium
appetite for transition risk, as the Company is looking to benefit from the transition to a low-carbon
economy and take advantage of new technologies and policies to enhance investment returns.
Risk management policies
The Company documents its procedures relating to climate issues in its Responsible Investment
Policy and will include specific reference in its Risk Management Policy over the following year.
Risk governance
Governance of climate change risk is set out in the Governance framework on page 55 of this report.
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Performance | Environmental, Social and Governance (“ESG”) Update continued
SEEIT Climate Change Report Year ended 31 March 2024
Metrics and Targets
Climate-related environmental performance data
The Company reports on a variety of metrics related to carbon and energy savings, energy generation and GHG emissions (Scopes 1, 2 and 3), which are calculated by monitoring environmental performance
data of all investments quarterly. The climate-related metrics are calculated using guidance from the Greenhouse Gas Protocol and the UK SECR legislation. The data is collected individually from the portfolio
companies and collated by an external consultant based on actual energy usage and generation. The data is then reviewed by the external consultant and the Investment Manager. The energy performance
data disclosed for the year ending 31 March2024 covers the majority of the projects in SEEIT’s portfolio for the period, making up c.99% of the portfolio by value in scope of the analysis.
The Company monitors its energy performance data to track progress against its sustainability indicators, namely Scope 4 emissions (carbon savings) and energy savings. Furthermore, the Company tracks
the relevant GHG emissions of assets to monitor its environmental impact and will inform the degree of risk associated with an accelerated net zero transition on a project-by-project basis.
The calculation approach in each case follows several key principles to maintain a consistent approach. The principles are:
– where possible, to capture fundamental data regarding project performance. Examples of this data include energy generated (kWh) and fuel consumed (kWh);
– use publicly available emissions factors from government sources specific to the project location;
– where a project was commissioned or purchased by the Company midway through the reporting period, only the portion of the period after commissioning or purchase date should be recognised; and
– where the Company owns less than 100% of a project, the total project savings should be reduced pro-rata with the ownership percentage.
The data-gathering process is predominantly manual and therefore dependent on accurate reporting from the management teams and other sources at the asset level. Market practice and processes keep
improving and the Investment Manager is actively engaged in seeking the most up-to-date and accurate data for each of the investments.
Principal environmental performance data of the Company’s portfolio is set out in the tables below.
Data Deviations Compared to Last Year:
During this period, the Manager found that two portfolio companies were reporting on energy savings and Scope 4 emissions with calculation methodologies that were inconsistent with those used for the rest
of the portfolio. Additionally, the carbon intensities of the local electrical grid in most of the jurisdictions SEEIT invests in decreased, therefore reducing the benchmark used to calculate the carbon avoided
from the Company’s investments. The combination of decreasing carbon intensities of local electrical grids and these two calculation inconsistences have offset the increase in Scope 4 emissions from some
portfolio companies, leading to a net decrease when compared to last period. The Company’s Scope 4 emissions may fluctuate from period to period given it is calculated is based on relevant counterfactual
scenarios, such as the carbon intensities of local electrical grids, and those calculation methodologies are consistently being reviewed and improved.
Further, Scope 1 emissions have increased compared to last year because one of the portfolio companies returned to full operation. In pursuance of the Investment Manager’s net zero target, it is the intention
for the Company’s overall GHG emissions to decrease overtime, but changes in investment operations or the portfolio’s composition may lead to data fluctuations.
Portfolio Scope 4 emissions
1
and energy
2
savings
Scope 4 emissions/carbon savings tCO
2
e Energy savings MWh
2023/24 2022/23 2023/24 2022/23
APAC 7,447 8,136 10,048 10,613
EU 144,504 153,474 4,464 1,518
UK 30,620 18,980 23,521 37,849
US 789,630 1,021,939 341,556 337,889
Total portfolio 972,201 1,202,528 379,589 387,868
1. Scope 4 emissions, previously referred to as “carbon savings” in SEEIT’s Annual Reports, refer to the reduction in GHG emissions achieved by a project compared to a relevant counterfactual, i.e. how the customer would receive the
energy services in the absence of said project.
2. Energy Savings refer to the electrical and thermal energy not consumed at the point of use due to a SEEIT investment.
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Metrics and Targets continued
Climate-related environmental performance data continued
Portfolio energy generation
Performance | Environmental, Social and Governance (“ESG”) Update continued
SEEIT Climate Change Report Year ended 31 March 2024
4,979,953 MWh
Total Energy Generated as at 31 March 2024
4,373,103 MWh
Total Energy Generated as at 31 March 2023
Renewable electricity generated
MWh
Renewable heat generated
MWh
Non-renewable electricity generated
MWh
Non-renewable heat generated
MWh
2023/24 2022/23 2023/24 2022/23 2023/24 2022/23 2023/24 2022/23
APAC 5,715 5,772 — — — – – –
EU 196,365 227,449 204,914 214,394 634,302 353,882 316,112 239,165
UK 51,161 34,069 36,523 34,838 27,262 42,002 100,641 48,728
US 113,347 89,301 — — 1,878,686 1,701,990 1,414,925 1,381,514
Total portfolio 366,587 356,591 241,437 249,232 2,540,250 2,097,873 1,831,679 1,669,406
Portfolio GHG emissions
1
Scope 1 Scope 2 Scope 3
tCO
2
e MWh
2
tCO
2
e MWh tCO
2
e
2023/24 2022/23 2023/24 2022/23 2023/24 2022/23 2023/24 2022/23 2023/24 2022/23
APAC — — – — — — — — — —
EU 336,701 180,776 2,844,317 2,148,396 2,719 2,479 12,865 14,578 4,734 2,482
UK 6,018 6,645 74,696 74,876 0.1 — 5,665 — 26,169 16,829
US 375,213 361,550 2,049,597 1,973,844 6,246 7,372 58,749 68,228 92,360 255,283
Total portfolio 717,933 548,971 4,968,610 4,197,116 8,965 9,851 77,280 82,806 123,263 274,594
1. The Company’s Scope 1, 2 and 3 emissions predominately represent fuel used to generate energy in SEEIT’s energy generating assets. The Company does receive emission data from portfolio companies on factors such as business
travel, office energy use, etc., but not all portfolio companies currently report to that level of granularity.
2. MWh in the emissions table refers to the energy consumed associated with the disclosed emissions.
726,898 tCO
e
Scope 1 and 2 emissions as at 31 March 2024
558,821 tCO
e
Scope 1 and 2 emissions as at 31 March 2023
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Performance | Environmental, Social and Governance (“ESG”) Update continued
SEEIT Climate Change Report Year ended 31 March 2024
Metrics and Targets continued
Climate-related environmental performance data continued
Carbon intensity indicators
1
Weighted average carbon intensity
tCO
2
e/£m value
Carbon footprint
tCO
2
e/£m value
Carbon intensity
tCO
2
e/£m value
Exposure to carbon-related assets
%
2023/24 2022/23 2023/24 2022/23 2023/24 2022/23 2023/24 2022/23
APAC — — — — — — —% —%
EU 3,220 1,680 304 173 1.552 1,516 6.2% 6.1%
UK 1,041 1,519 5 6 301 472 —% —%
US 1,912 1,459 341 349 2,998 2,721 —% —%
Total portfolio 6,174 4,658 651 529 1,980 2,060 6.2% 6.1%
1. Definitions of the carbon intensity factors are as follows:
– Weighted Average Carbon Intensity: The portfolio’s exposure to carbon-intensive companies, expressed in tCO2e/£m value. The KPI compares an investment’s Scope 1 and 2 emissions, normalised by ownership, with its portfolio
value.
– Carbon Footprint by value: Total carbon emissions for the portfolio normalised by the ownership of the asset, expressed in tCO2e/£m value. The KPI compares the investment’s Scope 1 and 2 emissions, normalised by ownership,
with the entire portfolio value.
– Carbon Intensity by Revenue: The volume of carbon emissions per million dollars of revenue, expressed in tCO2e/£m revenue. The KPI compares the investment’s Scope 1 and 2 emissions with its revenue, both normalised by
ownership. The KPI is recalculated at the regional and total portfolio level based on overall Scope 1 and 2 emissions and revenue of the majority of the portfolio.
– Exposure to Assets Active in the Fossil Fuel Sector: The percentage of assets active in the fossil fuel sector in the portfolio, expressed as a percentage of the current portfolio value. Active in the fossil fuel sector is defined as
“companies that derive any revenues from exploration, mining, extraction, production, processing, storage, refining or distribution, including transportation, storage and trade, of fossil fuels. The 6.2% represents one asset,
VartanGas, which has limited exposure to fossil fuels as most of the fuel it distributes is biogas (c.91% in the year ended 31 March 2024).
Climate targets
Glasgow Financial Alliance for Net Zero (“GFANZ”)
Through the Net Zero Asset Managers initiative (“NZAM”), the Investment Manager is committed to supporting the goal of reaching net zero by 2050 or sooner (in line with 1.5 degrees) and investing in
alignment with that target. Specifically, the Investment Manager is committed to the following targets as set by the Net Zero Investment Framework (“NZIF”):
1 2Portfolio Coverage Target Engagement Threshold
Aims for 100% of the Company’s financed
emissions in material sectors to be
considered net zero, aligned to net zero,
oraligning to net zero by 2030.
Aims for 100% of the Company’s financed
emissions in material sectors to be
considered net zero or aligned to net
zeroby2040.
Aims for 100% of the Company’s financed emissions in material sectors to be subject to direct
or collective engagement and stewardship actions by 2030.
Progress against the above targets will be disclosed in the subsequent Climate Change Report, following the development and formalisation of the Company’s Transition Plan.
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TCFD Disclosures
Recommendation
Page reference in
Climate Change Report
Governance
Describe the Board’s oversight of climate-related risks and opportunities. 55
Describe management’s role in assessing and managing climate-related risks and opportunities. 55
Strategy
Describe the climate-related risks and opportunities the organisation has identified over the short, medium and long term. 55 - 57
Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning. 55 - 57
Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lowerscenario. 55 - 57
Risk Management
Describe the organisation’s processes for identifying and assessing climate-relatedrisks. 57
Describe the organisation’s processes for managing climate-related risks. 57
Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s overall risk management. 57
Metrics and Targets
Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process. 58 - 60
Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 GHG emissions, and the relatedrisks. 58 - 60
Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. 58 - 60
Performance | Environmental, Social and Governance (“ESG”) Update continued
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Risk Management Framework
The Company maintains a comprehensive Risk Management Framework that encompasses all facets
of its operations. This framework includes systems and protocols to identify, monitor and mitigate
relevant risks associated with the Company’s operations, its investment portfolio and/or stakeholders.
The Investment Manager plays a crucial role as a service provider to the Company and is responsible
for maintaining the Risk Management Framework. The Board sets the Company’s risk appetite,
aiming for a balance of risk mitigation and generating return to shareholders. Oversight of the Risk
Management Framework and risk tolerances is entrusted to the Company’s Audit and Risk Committee,
convening at least quarterly. The Committee’s responsibilities include monitoring risks against
predetermined risk tolerance levels and assessing the adequacy and efficacy of the Company’s
internal financial controls, internal controls and risk management systems.
Regular risk management reports from the Investment Manager are provided to the Audit and
Risk Committee to maintain oversight of the Company’s risk profile, alongside updates to the risk
register, which entails rating each risk, detailing mitigating factors and highlighting relevant controls.
The Committee, together with the Investment Manager, engages in ongoing discussions regarding
emerging risks and potential mitigation strategies. External advisers are consulted by the Company
asneeded.
Within the broader Risk Management Framework, the activities of key service providers, including the
Investment Manager, are also captured. The Investment Manager maintains its own Risk Management
function with appropriate systems and controls, upon which the Company relies.
Performance | Risk Management Framework
Risk strategy
The risk strategy of the Company is set by the Board, with the input from the Investment Manager.
In determining the identity of the risks to the Company, how these risks should be managed,
implementing appropriate controls and setting appropriate risk appetites, the Company
demonstrates how the principal risks to the business have been mitigated.
Risk appetite
Each risk within the Company’s Risk Management Framework is set a risk appetite, the level of risk
that the Company is willing and able to tolerate. These risks are managed against predetermined
thresholds in order to ensure the appropriate level of risks is maintained throughout the firm and
aligns to the firm’s strategy.
Risk management policies
Risk management policies within the Company outline the procedures which ensure all applicable
risks pertaining to the Company are effectively identified, monitored and managed.
Risk governance
The Company’s risk management strategy permeates through the Company and effective
corporate governance structure. The Audit and Risk Committee is accountable for the oversight
of the Company’s risk profile and receives quarterly reports pertaining to the top risks, associated
controls and agreed risk appetites.
Risk management process
The Company’s risk management process is perpetual and at the heart of the Company’s Risk
Management Framework, it involves:
1) Risk identification;
2) Risk analysis and assessment;
3) Risk treatment; and
4) Risk monitoring and reporting.
Principal Risks
The primary risks facing the Company and its investment portfolio have been outlined in the table
provided below. These risks are monitored on an ongoing basis by the Investment Manager and are
regularly reviewed by both the Board and the Audit and Risk Committee.
The principal risks encountered by the Company and its investment portfolio largely remain
consistent with those of the previous year, although there may have been shifts in the likelihood of
certain risks materialising over time.
These principal risks either directly impact the Company or indirectly impact the Company via the
investment portfolio. It is anticipated that the identity of these risks will remain constant throughout
the year. Emerging risks are continually assessed and considered by the Investment Manager and
Audit and Risk Committee.
Risk appetite
Risk management policies
Risk governance
Risk management process
Report and monitor
Treat
Identify
Analyse and assess
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Performance | Risk Management Framework continued
Outlined below are the Company’s principal risks and their associated mitigating controls.
Risk
type
Risk change
(toprevious
year)
Risk
description Mitigation
Operational
risk
Same The risk that operational control
failures may disrupt operations of
the Company and impact financial
performance and investor returns.
Potential impact:
– Loss of key personnel impacts
investment decision making.
– Cyber incident at the Investment
Manager impacts operations.
– The Board has ongoing oversight
of the performance of SDCL and
focuses upon SDCL’s resources.
– The Investment Manager has
long-term incentive plans in
place to retain key staff and
large enough investment teams
for succession plans to be
implemented.
– Business continuity planning at the
Investment Manager is tested at
least annually to minimise the risk
of operational disruption.
Market
sentiment and
share price
discount risk
Increase Risk of the share price continuing
to trade at a discount to NAV
pershare
APM
and market sentiment
for listed infrastructure investment
trusts remaining unfavourable.
Potential impact:
– Poor shareholder returns.
– Inability to raise new equity
capital.
– The Board regularly reviews the
share price discount and can
implement a share buyback
programme.
– The Investment Manager has
a stepped plan targeted at
eliminating the discount.
Financial risk Same The risk of being unable to manage
portfolio debt, debt at SEEIT Holdco
and/or fulfil the Company’s financial
obligations.
Potential impact:
– Excessive cost of debt
hinders the ability to meet the
Company’s target returns.
– Inability to renew the
Company’sRCF.
– The Company maintains a
maximum level of leverage which is
continuously monitored.
– The Investment Manager regularly
provides financial forecasts and
management accounts to ensure
the Company meets its financial
obligations.
– The Company will use proceeds
from selective disposals to pay
down debt as required.
FX risk Same The risk of exchange rate
fluctuations impacting the value
ofNAV
APM
.
Potential impact:
– Reduction in the value of
non-GBP assets and their
revenue.
– Volatile FX rates increase the
cost of FX hedging.
– The Company enters into FX
hedging arrangements to protect
the Company’s NAV
APM
from
material adverse exchange rate
movements.
– The Investment Manager
maintains a target level of
unhedged non-GBP exposure at
Company level.
Risk
type
Risk change
(toprevious
year)
Risk
description Mitigation
Liquidity risk Same The risk that the Company cannot
meet its financial obligations as they
fall due.
Potential impact:
– Inability to make dividend
payments.
– Inability to fund operating
expenses or portfolio
commitments.
– The Investment Manager maintains
a Treasury Policy for the Company,
compliance of which is reported to
the Board quarterly.
– The Investment Manager provides
regular cash flow forecasts and
stress testing analysis for the Board
to review.
– The RCF provides additional liquidity
as required.
– The Investment Manager considers
strategic disposals when it can
maximise value for shareholders and
raise funds for future investment.
Macroeconomic
risks
Increase Interest rate risk:
– The risk of changes in Portfolio
Valuation
APM
due to higher
interestrates.
Potential impact:
– Higher interest rates increase
discount rate and decrease the
value of assets.
– Greater cost of borrowing.
– The Investment Manager uses
predominantly fixed rate hedging
to manage the portfolio’s debt
interest rate exposure and
minimise the impact of rising
interest rates on the cost of debt.
– The Investment Manager performs
stress testing to assess the impact
of future interest rate increases.
Same Inflation risk:
– The risk of changes in
market valuations, fund
underperformance and/or
incurred losses due to higher
inflation.
Potential impact:
– Increased costs of asset
operations.
– Reduced demand as prices rise.
– The Investment Manager monitors
portfolio correlation with inflation,
including via stress testing, and
assesses expected correlation
in respect of new prospective
investments.
– The Investment Manager builds
the portfolio to minimise the risk
of inflation mismatch and seeks
to ensure the Company’s portfolio
has a positive correlation to
inflation.
Same Energy and gas price risk:
– The risk of changes in Portfolio
Valuation
APM
, due to changes in
energy and gas prices.
Potential impact:
– Reduced profitability of assets.
– Increased competition for
consumers.
The Investment Manager reduces the
risks by:
– hedging exposure to gas and
energy prices in the short term;
and
– making arrangements to pass
on material price risk to the
counterparty in the longer term.
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Risk
type
Risk change
(toprevious
year)
Risk
description Mitigation
Reputational,
regulatory and
governance risk
Same – The risk that SEEIT does not
comply with its regulatory
requirements, investment
mandates and governance
requirements.
Potential impact:
– Loss of investor confidence.
– Increased cost of operations.
– The Investment Manager
undertakes regular horizon
scanning for upcoming changes to
regulation.
– The Investment Manager
has an independent second
line compliance team that is
responsible for ensuring alignment
to regulation, alongside the
Company Secretary.
– As required, third-party advisers
are engaged to support regulatory
implementation and provide
assurance.
Climate risk Increase – The risk that climate change
will have a negative impact
on the underlying portfolio
and therefore the Company’s
financial performance and
NAV
APM
.
Potential impact:
– Physicl risk – dmge to
ssets, disruption of supply
chains, lower demand for heat
or cooling, and interruption to
business operations.
– Transitional risk – impacts of
policy change, technology
changes and consumer demand
changes.
– The Investment Manager conducts
climate change analysis as part
of its existing Risk Management
Framework and reports regularly
to the ARC.
– Further details can be found in the
Climate Change Report on pages
54 to 60.
Investment risk Same – Poor investment performance
at an asset level impacting the
valuation of the portfolio.
Potential impact:
– Material issue at an asset
impacting operations.
– Miscalculation of an
investment’s risk/return profile.
– The Investment Manager
undertakes a comprehensive
due diligence process before
investment is made.
– The Investment Manager
proactively engages with portfolio
assets to address issues and
optimise performance.
– The management teams of
portfolio assets are incentivised to
optimise operational performance.
Performance | Risk Management Framework continued
Risk
type
Risk change
(toprevious
year)
Risk
description Mitigation
Performance
risk
Same – The risk that SEEIT fails to
meet financial objectives and
investment returns.
Potential impact:
– Company fails to deliver on
target returns and dividends.
– Diminishing investor sentiment.
– The Company has appointed
an Investment Manager who is
an experienced specialist in the
industry with a strong track record.
– There is Investment Committee
scrutiny, due diligence processes
and risk management disciplines,
including counterparty credit
assessments.
– The Investment Manager aims to
construct a diversified portfolio
and monitors concentration limits
on the maximum asset size.
Market
regulatory risk
Same The risk that the Company
underperforms due to regulatory
changes that impact the asset
valuation and viability of their
investments.
Potential impact:
– Increased regulation increases
operational cost of assets.
– Regulation drives away demand.
– The Investment Manager
continuously assesses the impact
that future regulation will have on
the assets.
– There is proactive engagement
with stakeholders at the asset
level to align to regulatory
requirements in the most efficient
manner possible.
Counterparty
risk
Same Offtaker credit risk:
– The risk that an offtaker to a
transaction at an asset level will
not pay their dues, resulting in
the Company suffering a loss.
Potential impact:
– Loss of asset revenue.
– Poor contract renewal terms
leading to reduction in revenue.
The Investment Manager minimises
credit risk via:
– qualitative and quantitative due
diligence on the creditworthiness
of counterparties;
– credit ratings of counterparties
being continuously monitored;
– controls added into the
contracting arrangements;
– counterparties being essential
services; and
– diversification of counterparties.
Same Contractor risk (O&M providers):
– The risk that an operating
counterparty for an asset will fail
todischarge its obligations.
Potential impact:
– Delays in development/
construction before revenue
generation.
– Increased cost in getting assets
operational.
– The Investment Manager performs
due diligence on the contractors
to minimise the risk of operational/
construction delays.
– Contract rights between
counterparties are substitutable.
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Viability Assessment Period
The Directors have assessed the prospects of the Company over a five-year period to
31March2029. Consistent with prior years, the Directors have determined that five years is an
appropriate period over which to provide this viability statement, as this period accords with the
Company’s business planning exercises and is appropriate for the investments owned by the
Company and the nature of the Company.
Assessment process
In making this statement, the Directors have considered the resilience of the Company, taking
account of its current position, the principal risks facing the business in severe but plausible downside
scenarios and the effectiveness of any mitigating actions.
The Company benefits from a diversified portfolio of investments, of which the majority have a high
degree of contracted long-term cash flows and a set of risks that can be identified and assessed
and would not be expected to change materially from one period to the next.
The individual investments are each supported by detailed financial models, and those investments
that have financing in place have done so on a non-recourse basis to the Company. The Directors
believe that the diversification within the portfolio, of predominantly operational investments, helps
to withstand and mitigate the identified risks the Company may face.
The Investment Manager prepared, and the Directors reviewed, five-year cash flow projections
as part of business planning – including as part of the approval process of the Company’s budget
and business plan, and undertook to approve dividends on a quarterly basis after reviewing
medium-term cash flow projections. The projections consider cash flows, dividend cover, investment
policy compliance and other key financial indicators over the period. These projections are based
on the Investment Manager’s expectations of future asset performance, income and costs, and are
consistent with the methodology applied to provide the valuation of the investments during the year.
The Investment Manager provided analysis on these projections at various points through the year,
considering the potential impact of the Company’s principal risks actually occurring in severe but
plausible downside scenarios.
The Audit and Risk Committee had the opportunity to review and challenge the scenario analysis,
which included the potential adverse impact of the scenarios detailed below on the Company’s
projected near-term, medium and long-term cash flows, and the associated effect on the ability to
pay dividends, ability to settle ordinary liabilities and on earnings and the NAV
APM
.
Performance | Viability Statement
Scenarios reviewed and their impact
The Investment Manager selected these scenarios on the basis that each could reasonably be
assumed, before mitigants, to have a plausible but severe impact affecting the Company directly
or indirectly, caused by market factors such as a high interest and high inflation environment and
a global recession, or investment-specific factors that are unique to an individual or group of
investments in the SEEIT portfolio:
– significant delay and cost increases associated with the construction of a cogeneration facility
at RED-Rochester, resulting in additional debt costs. This potentially causes covenant breaches
in debt facilities which in turn places the Company’s ability to cash cover
APM
its dividends under
pressure in specifically identified future years; and
– a permanent cancellation of construction by a key customer (Li-Cycle) at RED-Rochester that
materially reduces revenues generated at the investment. Overall cash cover
APM
is under pressure
in specifically identified future years due to potential covenant breaches, in turn potentially
affecting the Company’s ability to pay distributions to shareholders.
The Audit and Risk Committee reviewed and challenged the Investment Manager on each of the
scenarios presented. This included reviewing the likelihood of the risks of the scenarios materialising
and considering the potential mitigants that the Investment Manager could apply to reduce any
potential downside risk. The Audit and Risk Committee concluded that the scenarios, each prepared
individually, demonstrated good resilience of the Company against adverse factors impacting its
portfolio.
The Investment Manager also provided the Audit and Risk Committee with a severe scenario
(i.e.no revenues received) that calculated the extent of the loss in revenue required to threaten
the Company’s solvency. The outcome of this scenario provided comfort that the Company should
remain viable over the period assessed.
Confirmation of viability
Based on the reviews conducted throughout the year, the Directors confirm that 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 to 31 March 2029.
On behalf of the Board
Tony Roper,
Chair
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Section 172: Promoting the Success of the Company
The Directors consider, both individually and together, that they have fulfilled their duties under
Section 172 of the Companies Act 2006 to act in good faith and to promote the success of the
Company for the benefit of shareholders and stakeholders as a whole, having regard to the
stakeholders and matters set out in Section 172 of the UK Companies Act 2006 (“Companies Act”)
inthe decisions taken during the year, as set out below:
Section 172(1) Description
(a) the likely
consequences of
any decision in the
longterm
During the year under review, the Board believes it acted in good faith, with a view to
promoting the Company’s long-term sustainable success and to achieving its wider
objectives for the benefit of its shareholders as a whole, having had regard to wider
stakeholders and the other matters set out in Section 172 of the Companies Act.
See the rest of this section for the Board’s decisions on approving dividends,
implementing a share buyback programme, agreeing a Capital Allocations Policy
with the Investment Manager and the oversight and monitoring of the Investment
Manager’s activities in relation to risk and portfolio management for the Company.
(b) the interests of the
Company’s employees
As a closed-ended investment company, the Company does not have any direct
employees.
During the year, the interests of employees in project companies in the portfolio were
considered when making decisions for the Company’s benefit, such as promoting
positive health and safety cultures and other ESG initiatives (further details can be
found in the ESG Update on pages 45 to 53).
(c) the need to foster
the Company’s
business relationships
with suppliers,
customers and others
The Company’s approach is described under “Stakeholders” below.
(d) the impact of the
Company’s operations
on the community and
the environment
The Board places a high value on the monitoring of ESG issues and sets the overall
strategy for ESG matters related to the Company. The Board provides oversight for
the managing of climate-related risks for the portfolio by the Investment Manager,
including transparent disclosure of these risks, and reviews mitigating actions taken by
the Investment Manager to reduce or eliminate them where possible.
A description of the Company’s Responsible Investment Policy is available on the
Company’s website and further detail on climate-related risks is set out in the ESG
Update on pages 45 to 53 and the Risk Management Framework on pages 62 to 64.
Further details of matters discussed and agreed by Directors during the year are
described in the ESG Update on pages 45 to 53.
(e) the desirability of the
Company maintaining
a reputation for high
standards of business
conduct
The Board’s approach is described under “Culture and Values” below. For further
information please also see the ESG Update on pages 45 to 53.
(f) the need to act fairly
between members of
the Company
The Board’s approach is described under “Stakeholders” below. For further information
please also see the Corporate Governance Statement on pages 72 to 80.
Performance | Stakeholders and Section 172
The issues, factors and stakeholders the Directors consider relevant in complying with Section
172(1) (a) to (f) are described in detail below. The Investment Manager provides updates to the
Board at quarterly meetings on the above items, including the rationale behind investment
decisions, its relationships with the Company’s shareholders and key stakeholders and the
Company’s reputation in the broader market. This is further supported by reports from several
advisers such as the Company’s broker and financial PR consultant.
Further, the Companies (Miscellaneous Reporting) Regulations 2018 require Directors to explain
how they have discharged their duties under Section 172(1) of the Companies Act 2006 in
promoting the success of their companies for the benefit of “members as a whole”. The Board’s
approach is described under “Stakeholders” below.
Stakeholders
The Board challenges the Investment Manager to balance the interests and concerns of all
stakeholders effectively to ensure continuing positive stakeholder engagement. The Company
is committed to maintaining good communications and building positive relationships with
all stakeholders. To achieve this, the Company, either directly or via the Investment Manager,
interacts with a variety of stakeholders relevant to its success. The Company seeks to achieve the
correct balance between engagement and communication, whilst working within the limitations of
what can be disclosed to the various stakeholders, maintaining confidentiality of market and/or
commercially sensitive information.
The Company has identified the following key stakeholders:
– shareholders;
– the Investment Manager;
– the Company’s key service providers;
– the Company’s investment business partners (including host counterparties); and
– lenders at project level and corporate level.
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Stakeholders Why they are important Engagement
Shareholders As the Company is
an investment trust
listed on the London
Stock Exchange and a
constituent of the FTSE
250 index, its shareholders
are also its main
stakeholders. Continued
shareholder support and
engagement are critical
to the existence of the
Company and to the
delivery of the long-term
strategy.
The Company currently has over 350 shareholders.
Through the Company’s engagement activities, it strives to
obtain investor endorsement for the Company’s strategic
objectives and how they are executed.
In light of the persistent share price discount to NAV per share,
the Board and the Investment Manager agreed to a Capital
Allocations Policy, asdescribed elsewhere in the Annual Report,
taking into account shareholder feedback on how capital should
be used.
The Company also engaged, directly or via the Investment
Manager, with shareholders in the year through meetings,
market announcements and various written materials, available
on the Company’s website.
In April 2023, and after a period of the Company’s shares
trading at a discount to NAV
APM
, the Board authorised a share
buyback programme as part of the Company’s discount control
strategy in order to increase liquidity in the Company’s shares.
At every Board meeting, the Directors received updates on
share trading activity, share price performance, shareholder
feedback and any mention of the Company in the press.
Through a combination of the above engagement activities,
clear reporting and shareholder support, the Board has been
able to ensure the Investment Manager’s investment aligned
with the investment strategy appropriate for the tougher
market conditions compared to previous years. The Company
will continue to engage actively with shareholders.
The Investment
Manager
The Investment Manager’s
performance is critical for
the Company to deliver its
investment strategy and
meet its objectives.
Constructive and ongoing engagement with the Investment
Manager is important to ensure that the expectations of
shareholders are being met and that the Board is aware of any
challenges to the investment strategy or management of the
Company’s portfolio of investments.
The Board conducts both an ongoing and an annual review
of the Investment Manager’s performance and terms of
engagement, and provides feedback after such reviews. The
most recent annual review took place in March 2024 and written
feedback was given to the Investment Manager.
The Board and the Investment Manager maintain an open and
ongoing dialogue on key issues facing the Company with a view
to ensuring that key decisions relating to, inter alia, potential
investments, portfolio performance and the Company’s
investment strategy are aligned with achieving long-term value
for shareholders. This open dialogue takes the form of at least
quarterly scheduled Board meetings and frequent informal
contact, as appropriate to the subject matter.
Performance | Stakeholders and Section 172 continued
Stakeholders Why they are important Engagement
Key service
providers
The Company has a
number of other key
service providers, each
of which provides a
vital service to the
Company and ultimately
to its shareholders.
The Company’s key
service providers are
the Administrator and
Company Secretary,
Auditor, Corporate Broker,
Depositary and Registrar.
During the year, the Company conducted a review of the terms
of all key service provider engagements along with their fee
levels to ensure an appropriate level of support was being
provided to the Company.
The Directors provided specific feedback to key service
providers with the aim of ensuring the Company receives an
appropriate service.
The Company seeks to ensure a two-way engagement between
the Board and key service providers on service delivery
expectations and feedback on important issues experienced by
service providers.
The annual review in 2023 of key service providers instigated a
change in Company Secretary and Administrator. Supported
by the Investment Manager, a successful transition to JTC was
achieved during 2023.
Investment
business
partners
(including host
counterparties)
The Company has
various business partners
including, crucially, the
counterparty hosts to
whom the Company’s
investments are providing
critical energy services,
as well as subcontractors
who provide key
services to individual
or groups of portfolio
companies. Such services
include operations and
maintenance, technical
asset management and
EPC construction that are
considered vital to the
success of the investments.
As the Company acquires new portfolio investments, the
Investment Manager undertakes a review of the contracting
terms of all counterparties to ensure they are fair and
appropriate.
The Directors received an update on actions during the year
for the Investment Manager to seek to maintain long-term
collaborative partnerships with these counterparties to ensure
relationship stability and that the Company’s investment return
targets are achieved.
Lenders at
project level
and corporate
level
The availability of funding
and liquidity are crucial
elements in ensuring
the Company’s ability to
execute against attractive
investment opportunities
as they arise.
Considering how important the availability of funding is, the
Company aims to demonstrate to its lenders, through regular
reporting and dialogue, that it is a well-managed business
and, in particular, that the Investment Manager is focused on
providing regular and careful management of risk within the
investment portfolio and the Company as a whole.
During the year, the Directors received and reviewed the
Investment Manager’s recommendation for exercising a
one-year extension of the RCF held by the Company’s single
subsidiary, SEEIT Holdco, thereby ensuring that the Company
had access to liquidity to make further investments.
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Performance | Stakeholders and Section 172 continued
The Board of Directors at Oliva
The Directors’ overarching duty is to promote the success of the Company for the benefit of
shareholders, with due consideration of other stakeholders’ interests. The Company seeks to
maintain high standards of business conduct and corporate governance, and to ensure via the
Investment Manager that appropriate oversight, control and suitable policies are in place to
guarantee stakeholders are treated fairly.
The Board seeks to ensure the alignment of its purpose, values and strategy with this culture
of openness, debate and integrity through ongoing dialogue and engagement with its key
stakeholders. The Board, made up of 40% male and 60% female members, aims to achieve a
supportive business culture combined with constructive challenge, and to provide a regular flow of
information to shareholders and relevant information as required to other key stakeholders. Both the
Board and the Investment Manager support equal opportunities for recruitment and when managing
existing employees – regardless of age, race, gender, or personal beliefs and preferences.
Although the Company has no employees, it is committed to respecting human rights in its broader
relationships. The Company does not tolerate corruption, fraud, bribes or human rights breaches.
TheCompany aims to maintain standards of business integrity, a commitment to truth and fair
dealing, and a commitment to complying with all applicable laws and regulations.
The Company has several policies and procedures in place to assist with maintaining a culture of
good governance, including those relating to diversity, anti-bribery – including the acceptance of
gifts and hospitality – tax evasion, conflicts of interest, whistleblowing and Directors’ dealings in
the Company’s shares. The Board assesses and monitors compliance with these policies regularly
through Board meetings and the annual evaluation process.
The Board seeks to appoint the most appropriate service providers for the Company’s needs
and evaluates their services on a regular basis. The Board considers the culture of the Investment
Manager and other service providers through regular reporting and by receiving regular
presentations, as well as through ad hoc interactions.
The Board and Manager at Oliva
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What’s in this section
Investment Policy and Approach 70
Board of Directors 71
Corporate Governance Statement 72
Nomination Committee Report 81
Audit and Risk Committee Report 83
Directors’ Remuneration Report 87
Report of the Directors 92
Statement of Directors’ Responsibilities 96
Governance
RED-Rochester
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Investment Objective
The Company’s investment objective is to
generate an attractive total return for investors
comprising stable dividend income and capital
preservation, with the opportunity for capital
growth.
Summary of the Investment Policy
– The Company seeks to achieve its
investment objective by investing principally
in a diversified portfolio of investments
with high-quality, private and public sector
counterparties. The contracts governing these
investments typically entitle the Company, on
the whole, to receive stable and predictable
cash flows. The Company’s returns are derived
from contractual payments by counterparties
in respect of each relevant investment.
– Whilst the Company invests predominantly in
operational investments, the Company may,
under certain circumstances, invest while
such investments are in a construction or
development phase. In addition, the Company
may, to a limited extent, invest in developers,
operators or managers of energy efficiency
infrastructure investments.
– In respect of the investment portfolio, the
Company seeks to diversify its subcontracting
exposure by contracting, where commercially
practicable, with a range of different
engineers, manufacturers or other service
providers.
– Investments may be acquired individually or
as a portfolio. The Company may also invest
jointly with a co-investor. The Company
aims to achieve diversification by investing
in a range of different energy efficiency
technologies and contracting with a wide
range of counterparties.
– Though the Company initially focused its
attention on investing in the UK, over time the
Company has expanded to invest in projects
in Europe, North America and the Asia-Pacific
region.
– In pursuing its investment policy, the Company
will seek to target sustainable investments,
for example by making investments that
contribute to GHG emission reductions.
Gearing
APM
The Company maintains a conservative level
of aggregate gearing
APM
in the interests of
capital efficiency, to enhance income returns,
long-term capital growth and capital flexibility.
The Company’s target medium-term gearing
APM
is 35% of net asset value (“NAV”)
APM
, calculated
at the time of borrowing (“structural gearing”).
The Company may also enter borrowing facilities
on a short-term basis to finance acquisitions
(“acquisition finance”), provided that the
aggregate consolidated borrowing of the
Company and the investment portfolio, including
any structural gearing
APM
, shall not exceed 65%
of NAV
APM
, calculated at the time of borrowing.
The Company intends to repay any acquisition
finance with the proceeds from capital
raisings and/or capital recycling in the short to
mediumterm.
Structural gearing
APM
and acquisition finance are
employed either at the level of the Company,
at the level of the relevant investment or at the
level of any intermediate wholly owned subsidiary
of the Company. Structural gearing
APM
and
acquisition finance primarily comprise bank
borrowings, though small overdraft facilities may
be used for flexibility in corporate transactions.
Use of Derivatives
The Company may use derivatives for efficient
portfolio management but not for investment
purposes. In particular, the Company may
engage in full or partial interest rate hedging or
otherwise seek to mitigate the risk of interest
rate increases and full or partial foreign exchange
hedging to mitigate the risk of currency inflation.
The Company does not typically enter into
hedging contracts and other derivative contracts
directly but may do so via its subsidiaries when
they are available in a timely manner and on
terms acceptable to it. The Company reserves
the right to terminate any hedging arrangement
in its absolute discretion.
Cash Management
Whilst it is the intention of the Company to be
fully or near fully invested in normal market
conditions, the Company may hold cash
on deposit and invest in cash-equivalent
investments, which could include short-term
investments in money market type funds and
tradeable debt securities. For further details
please see the Company website:
https://www.seeitplc.com/.
Investment Policy and Approach
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Board of Directors
Anthony (Tony) Roper
Independent Non-Executive Chair
Appointed: 12 October 2018 Appointed: 12 October 2018 Appointed: 21 October 2020 Appointed: 12 October 2018 Appointed: 1 January 2022
Helen Clarkson OBE
Independent Non-Executive Director
Christopher (Chris) Knowles
Senior Independent Non-Executive Director
Emma Griffin
Independent Non-Executive Director
Sarika Patel
Independent Non-Executive Director
Tony started his career as a structural
engineer with Ove Arup and Partners in
1983. In 1994 he joined John Laing plc
to review and make equity investments
in infrastructure projects both in the UK
and abroad and then in 2006 he joined
HSBC Specialist Investments to be the
fund manager for HSBC Infrastructure
Company Limited (now HICL Infrastructure
plc). In 2011, Tony was part of the senior
management team that bought HSBC
Specialist Investments from HSBC, renaming
it InfraRed Capital Partners.
Tony was a managing partner and a senior
member of the infrastructure management
team at InfraRed Capital Partners until
June 2018, during which time he oversaw
the successful launch of The Renewables
Infrastructure Group on the London Stock
Exchange.
Tony is the chair of abrdn European
Logistics Income plc.
Tony has a master’s degree in Engineering
from the University of Cambridge and is
an Associate Chartered Management
Accountant (“ACMA”).
Helen joined Climate Group in March 2017
as Chief Executive Officer. Climate Group
is an international non-profit organisation
with a mission to drive climate action, fast.
Climate Group builds networks of leading
governments and businesses working on
issues such as renewable electricity and zero
carbon steel, to shape markets and policy.
Helen also sits on the board of the We Mean
Business Coalition.
Prior to joining the Climate Group, Helen
worked at Forum for the Future where
she founded the organisation’s US office.
At Forum, Helen led work with large US
corporations such as Target, Walmart, Nike,
Gap and Levi Strauss & Co. to solve complex
sustainability challenges. Helen joined Forum
from Médecins Sans Frontières where she
worked on humanitarian missions across a
number of conflict zones.
Helen qualified as a Chartered Accountant
with Deloitte and has an undergraduate
degree from the University of Cambridge,
and a master’s degree from the University of
London. In 2022 Helen was awarded an OBE
for services to the climate.
Chris has over 40 years’ experience in
projects, infrastructure and environmental
finance and economics, much of it at the
European Investment Bank (“EIB”), heading
its infrastructure and environmental
investment funds business from 2005 to
2017 (clean energy, energy efficiency, carbon
finance and natural capital).
From 2000 to 2005 he led EIB’s financing
in the transport and infrastructure sectors
in Spain, then Europe’s largest national
infrastructure programme, much of it in public-
private partnership form. He spent the 1980-
90s in similar jobs elsewhere in Europe and in
Africa. Prior to EIB he worked for the Lesotho
National Development Corporation, the
European Commission and Lazard Brothers.
Chris also serves as a NED on a number
of private equity and debt funds pursuing
ESG and impact strategies globally. He is
a member of various advisory committees,
including that for the Climate Bond Initiative
and the Organisation for Economic
Co-operation and Development (“OECD”)
Centre for Green Finance & Investment.
Chris holds degrees in Economics and
Management from the University of Durham.
Emma is an experienced director,
having worked in both the UK and North
America. She has broad capital markets
and significant international investment
expertise, gained as both an executive
and non-executive director. From 2002
to 2013 Emma was a founding partner
of Oriel Securities, which was sold to
Stifel Corporation, and in her early career
she worked for HSBC James Capel and
Schroders.
Emma currently serves as a non-executive
director of St James’s Place plc and of
IA Financial Group (listed on the TSX in
Canada). She is also a director of privately
owned ED&F Man Holdings and serves
on the board of Claridge Inc., a private
investment firm, and on the board of one
of its largest individual investments. Emma
is also a director of N.M. Rothschild & Sons
Limited.
Emma has a master’s degree in Latin and
Greek from the University of Oxford.
Sarika is an experienced business leader
across public and private organisations
and has worked as a senior corporate
finance professional within technology and
infrastructure sectors at Grant Thornton
and Zeus Caps. She was the Director of
Innovation and all business sectors at the
London Development Agency attracting
and supporting businesses in London.
Sarika chairs abrdn Equity Investment Trust
plc and is a non-executive director and
chair of the audit committee at, Foresight
Forestry Fund plc . Sarika is the Chair of
Action for Children and is a board member
and chair of the audit, risk and assurance
committee of the Office for Nuclear
Regulation,.
She has held various Board positions at
Sequoia Economic Infrastructure Fund, The
Gambling Commission, Imperial Healthcare
NHS Trust, University of Greenwich etc
Sarika is a Chartered Accountant and
a Chartered Marketer and is a double
graduate in Law and Commerce.
R A
Key:
A
Audit and Risk
Committee Chair
M
Management Engagement
Committee Chair
N
Nomination
Committee Chair
R
Remuneration
Committee Chair
E
ESG
Committee Chair
N ME
As at the date of this Annual Report, the Board consists of five Directors who have complementary and relevant skills and backgrounds.
The Directors are of the opinion that the Board as a whole has an appropriate balance of skills, experience and diversity.
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AIC
Code Principle Compliance statement
B The Board should establish the
Company’s purpose, values and
strategy, and satisfy itself that
these and its culture are aligned.
All Directors must act with
integrity, lead by example and
promote the desired culture.
The Company’s investment objective is to generate an attractive
total return for investors comprising stable dividend income and
capital preservation, with the opportunity for capital growth.
The Board seeks to ensure the alignment of its purpose, values and
strategy with a culture of openness, debate and integrity through
ongoing dialogue and engagement with its stakeholders. The
Directors aim to achieve a supportive business culture combined
with constructive challenge and to provide a regular flow of
information to shareholders and other stakeholders.
C The Board should ensure that
the necessary resources are in
place for the Company to meet
its objectives and measure
performance against them. The
Board should also establish
a framework of prudent and
effective controls, which enable
risk to be assessed and managed.
The Directors regularly consider the Company’s financial position
in the context of its business model, the balance sheet, cash flow
projections, availability of funding and the Company’s contractual
commitments.
The Company is subject to various risks in pursuing its objectives
and, in order to effectively assess and manage risk, appropriate
controls and policies are in place, which are regularly reviewed and
assessed by the Audit and Risk Committee. These are detailed in
the Risk Management Framework on pages 62 to 64, in the Audit
and Risk Committee Report on pages 83 to 86 and in Note 13 to
the financial statements on pages 118 to 120.
The Directors confirm they have carried out a robust assessment
of the emerging and principal risks facing the Company, including
those that would threaten its business model, future performance,
solvency or liquidity. See the Risk Management Framework on
pages 62 to 64, for further details.
The Directors have assessed the prospects of the Company over a
five-year period to 31 March 2029. The Directors have determined
that a viability statement for a five-year period is appropriate as
this period accords with the Company’s business planning exercises
and is appropriate for the investments owned by the Company and
the nature of the Company.
See page 65 for further details on the Viability Statement.
D In order for the Company to
meet its responsibilities to
shareholders and stakeholders,
the Board should ensure effective
engagement with, and encourage
participation from, these parties.
The Company describes its key stakeholders, the reason they are
important, how it seeks to gain an understanding of their interests
and how the Board engages with them, whether directly or via
the Investment Manager, on pages 66 to 68, Stakeholders and
Section172.
Corporate Governance Statement
This Corporate Governance Statement forms part of the Directors’
Report
The Board of Directors has considered the Principles and Provisions of the Association of Investment
Companies (“AIC Code”) published in February 2019. The AIC Code addresses the Principles
and Provisions set out in the UK Corporate Governance Code 2018 (the “UK Code”) published in
July2018, as well as setting out additional Provisions on issues that are of specific relevance to the
Company.
Statement of Compliance with the AICCode
The Board recognises the importance of a sound corporate governance culture that meets the
requirements of the UK Listing Authority and the AIC Code.
As an AIC member, the Company has considered the Principles and Provisions of the AIC Code,
which addresses the Principles and Provisions set out in the UK Code. The Board considers that
reporting against the Principles and Provisions of the AIC Code, which has been endorsed by the
FRC, provides more relevant information to shareholders. The AIC code can be found at
www.theaic.co.uk and the UK Code can be found at www.frc.org.uk.
The Company has complied with the Principles and Provisions of the AIC Code. In respect of the
UK Code, the following items which are not considered to be relevant (and so are not reported on
further) due to the Company being an externally managed investment company with no Executive
Directors or employees:
– the role of the Chief Executive.
The AIC Code includes an explanation of how the AIC Code adapts the Principles and Provisions set
out in the UK Code to make them relevant for investment companies.
Set out below are the full details of how the Company has applied the Principles of the AIC Code:
AIC
Code Principle Compliance statement
A A successful company is led by
an effective board, whose role
is to promote the long-term
sustainable success of the
Company, generating value for
shareholders and contributing to
wider society.
In managing the Company, the aim of the Board and of the
Investment Manager is always to ensure the long-term sustainable
success of the Company and, therefore, the likely long-term
consequences of any decision are a key consideration. The Board
is subject to an annual evaluation, the results of which indicate
that the Board performs effectively as a whole. As part of the
evaluation process, the Board identifies areas in which they could
further improve, and performance in these areas is monitored
throughout the year and at the point of the next annual evaluation.
Further information on the Board evaluation process can be found
in the Nomination Committee Report on pages 81 and 82.
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Corporate Governance Statement continued
AIC
Code Principle Compliance statement
J Appointments to the Board
should be subject to a formal,
rigorous and transparent
procedure, and an effective
succession plan should be
maintained. Both appointments
and succession plans should be
based on merit and objective
criteria and, within this context,
should promote diversity of
gender, social and ethnic
backgrounds, cognitive and
personal strengths.
The Company is committed to ensuring that any vacancies arising
are filled by suitably qualified candidates.
The Board has adopted a Diversity Policy, which acknowledges the
benefits of greater diversity, and remains committed to ensuring
that the Company’s Directors bring a wide range of skills, knowledge,
experience, backgrounds and perspectives to the Board.
Appointments of new Directors to the Board follow a structured
and transparent process as described further below. The
Company’s policy on the tenure of Directors also helps guide
long-term succession plans and recognises the need and value of
progressive refreshing of the Board. Both policies are described in
more detail below.
K The Board and its Committees
should have a combination of
skills, experience and knowledge.
Consideration should be given to
the length of service of the Board
as a whole and membership
regularly refreshed.
The Nomination Committee, which comprises the whole Board, is
responsible for identifying and recommending to the Board the
appointment of new Directors.
The Nomination Committee reviews, at least annually, the key skills
and experience of each Director and the skills matrix is reviewed at
least once per year to ensure that the Board has an appropriate
mix of skills and experience, particularly when considering
longer-term succession plans.
L Annual evaluation of the Board
should consider its composition,
diversity and how effectively
members work together to
achieve objectives. Individual
evaluation should demonstrate
whether each Director continues
to contribute effectively.
The Directors are aware that they need to monitor and improve
Board performance continuously and recognise that this can
be achieved through regular Board evaluation, which provides a
valuable feedback mechanism for improving Board effectiveness.
In line with the AIC Code, the Board has agreed that an external
Board evaluation will be carried out every three years and, in the
intervening years, evaluations will be carried out by means of
questionnaires and interviews.
An internal evaluation of the performance of the Board, its
Committees and individual Directors took place during the
year, and was led by the Chair with the support of the Senior
Independent Director and the Company Secretary. The next
external evaluation is due to take place in 2025.
Further details of the results of the Board evaluation process can
be found in the Nomination Committee Report on pages 81 and 82..
M The Board should establish
formal and transparent policies
and procedures to ensure the
independence and effectiveness
of external audit functions and
satisfy itself on the integrity
of financial and narrative
statements.
The Audit and Risk Committee supports the Board in fulfilling its
oversight responsibilities by reviewing the performance of the
independent auditor, audit quality and the auditor’s objectivity
and independence. The Audit and Risk Committee also reviews
the integrity and content of the financial statements, including the
ongoing viability of the Company.
More details can be found in the Audit and Risk Committee Report
on pages 83 to 86.
AIC
Code Principle Compliance statement
F The Chair leads the Board and
is responsible for its overall
effectiveness in directing
the Company. They should
demonstrate objective
judgement throughout their
tenure and promote a culture of
openness and debate. In addition,
the Chair facilitates constructive
board relations and the effective
contribution of all Non-Executive
Directors, and ensures that
Directors receive accurate, timely
and clear information.
The role and responsibilities of the Chair are described in the
Corporate Governance Statement on pages 72 to 80. The
Company recognises that the Chair leads the Board and is
responsible for its overall effectiveness in directing the affairs of the
Company.
The annual evaluation of the Board’s effectiveness always
considers the performance of the Chair, and whether they have
performed their role effectively. The Directors have concluded
that the Chair has fulfilled his role and performed well to support
effective functioning of the Board as evidenced in the internal
Board evaluation that took place during the latter part of the
financial year.
G The Board should consist of
an appropriate combination
of Directors (and, in particular,
independent Non-Executive
Directors) such that no one
individual or small group of
individuals dominates the Board’s
decision making.
During the year under review, the Board consisted only of Non-
Executive Directors and all of the Directors are deemed to be
independent of the Investment Manager. In the Board’s opinion,
each Director continues to provide constructive challenge and
robust scrutiny of matters that come before the Board.
The Board also considers the composition of the Board as well as
longer-term succession plans. The Board is satisfied that the Board’s
current composition is adequate to appropriately discharge its
duties and currently has no intentions to alter its composition.
H Non-Executive Directors should
have sufficient time to meet
their Board responsibilities. They
should provide constructive
challenge, strategic guidance,
offer specialist advice and hold
third-party service providers to
account.
The Board considers the required time commitment annually
and, during the year under review, the Board concluded that all
Directors continued to devote sufficient time to the business of
the Company. Through their contributions in meetings, as well
as outside of the usual meeting cycle, the Directors share their
experience and guidance with, as well as constructively challenge,
the Investment Manager.
The Management Engagement Committee annually assesses the
performance of all material third-party service providers.
I The Board, supported by the
Company Secretary, should
ensure that it has the policies,
processes, information, time and
resources it needs in order to
function effectively and efficiently.
The Board’s responsibilities are set out in the Schedule of Matters
Reserved for the Board and certain responsibilities are delegated
to its Committees, so that it can operate effectively and efficiently.
All Board policies were reviewed and, where appropriate, updated
during the year. They continue to be reviewed on a regular basis.
Directors are also provided with any relevant information and have
access to the Company Secretary and independent advisers, if
required.
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Corporate Governance Statement continued
AIC
Code Principle Compliance statement
N The Board should present a fair,
balanced and understandable
assessment of the Company’s
position and prospects.
The Audit and Risk Committee supports the Board in assessing
that the Company’s Annual Report presents a fair, balanced
and understandable assessment of the Company’s position and
prospects.
Please refer to the Audit and Risk Committee Report on pages 83
to 86, forfurther information.
O The Board should establish
procedures to manage risk,
oversee the internal control
framework, and determine the
nature and extent of the principal
risks the Company is willing
to take in order to achieve its
long-term strategic objectives.
The work of the Audit and Risk Committee supports the Board
through its independent oversight of the financial reporting process
– including the financial statements, the system of internal control
and management of risk, the appointment and ongoing review
of the quality of the work and independence of the Company’s
external auditor – is described in the Audit and Risk Committee
Report on pages 83 to 86.
P Remuneration policies and
practices should be designed to
support strategy and promote
long-term sustainable success.
The Directors are all non-executive and independent of the
Investment Manager. They receive fees and no component of
any Director’s remuneration is subject to performance factors.
Whilst there is no requirement under the Company’s Articles of
Association or letters of appointment for Directors to hold shares
in the Company, all Directors do hold shares in the Company and
the details of their shareholdings are set out in the Directors’
Remuneration Report on pages 87 to 91.
Q A formal and transparent
procedure for developing a
policy for remuneration should be
established. No Director should
be involved in deciding their own
remuneration outcome.
The Board has established a separate Remuneration Committee,
which, as the Company has no employees and the Board is
comprised wholly of Non-Executive Directors, is comprised of
all the Directors. Directors’ remuneration is determined by the
Committee, at its discretion within an aggregate ceiling as set out
in the Company’s Articles of Association. Each Director abstains
from voting on their own individual remuneration. The details of
the Remuneration Policy and Directors’ fees can be found in the
Directors’ Remuneration Report on pages 87 to 91. The terms and
conditions of the Directors’ appointments are set out in their letters
of appointment, which are available for inspection on request at
the registered office of the Company.
R Directors should exercise
independent judgement and
discretion when authorising
remuneration outcomes, taking
account of Company and
individual performance, and wider
circumstances.
The process of reviewing the Directors’ fees is described in the
Directors’ Remuneration Report on pages 87 to 91, although
because there are no performance-related elements of the
remuneration, there is very little scope for the exercise of discretion
or judgement.
During the year, the Remuneration Committee engaged Trust
Associates LLP to carry out a remuneration review of the Board.
This was led by the Remuneration Committee Chair with the
support of the Senior Independent Director.
Principle E of the UK Code relates to the treatment of employees and so is generally not applicable
to companies under the AIC Code if, as in the case of the Company, there are no employees.
The Board of Directors
The Directors of the Company who were in office during the year and up to the date of signing the
financial statements are listed in the Board of Directors on page 71.
Board Independence
The Board consists of five independent Non-Executive Directors, who were considered independent
of the Investment Manager at the time of their appointment. The independence of the Directors is
reviewed as part of the annual evaluation process and, in line with the guidelines of the AIC Code,
continue to be considered independent in character and judgement and entirely independent from
the Investment Manager.
Appointment of New Directors
Any appointments to the Board are subject to a formal, rigorous and transparent process.
Responsibilities of the Nomination Committee include satisfying itself that there is succession
planning in place for Directors to ensure continued refreshment of the Board and its Committees;
determining membership of the Board’s Committees in conjunction with the respective Committee
Chairs for approval by the Board; and identifying and nominating for the approval of the Board,
candidates to fill Board vacancies, as and when they arise.
As part of the appointment process, the Nomination Committee:
– evaluates the balance of skills, knowledge and experience on the Board;
– will draw up a description of the role, including the capabilities required, and use an external
search consultancy, if considered necessary and appropriate, in the search for candidates;
– will ensure that appointments are made based on merit and after assessing candidates by
means of objective criteria, including, but not limited to, the Board’s Diversity Policy; and
– will ensure that appointees have enough time available to devote to their position, and also
determine the terms and conditions of the appointment of Non-Executive Directors, setting
out clearly what is expected of them in terms of time, commitment, committee service and
involvement outside of Board meetings.
Induction Process
New appointees to the Board are provided with a full induction programme.
The programme is based on the Corporate Governance Institute UK & Ireland’s “Induction of
directors” guidance note, adapted to the requirements of the Company, and is designed to:
(i) build an understanding of the nature of the Company, its business and its markets;
(ii) build a link with the Board; and
(iii) build an understanding of the Company’s main relationships.
The programme covers the Company’s investment strategy, policies and practices. The Directors
are also given key information on the Company’s regulatory and statutory requirements as they
arise, information on the role of the Board including matters reserved for its decision and the terms
of reference for the Board Committees; the Company’s corporate governance practices; and
procedures and the latest financial information.
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Corporate Governance Statement continued
Incoming Directors are also afforded the opportunity to meet early on with the current
Non-Executive Directors, key personnel from the Investment Manager and other key service
providers, including the independent auditor, the Company Secretary and Administrator, and
theCorporate Broker.
Terms of Appointment
The terms of appointment of the Directors are formalised in letters of appointment, copies of
which are available for inspection at the Company’s registered office. None of the Directors have
a contract of service with the Company nor has there been any other contract or arrangement
between the Company and any Director at any time during the year.
Re-Election
The Articles of Association provide that each of the Directors shall retire at each AGM. All Directors
intend to retire at the forthcoming AGM. Emma Griffin will not be standing for re-election and
the remaining Directors will offer themselves for re-election. Chris Knowles will replace Emma as
Remuneration Committee Chair.
As set out further below, the Board carries out an annual review of each Director and the Board
as a whole. The Board believes that the balance of skills, gender, experience and knowledge of the
current Board provides for a sound base from which the interests of investors will be served to a
highstandard.
The Board recommends the re-election of those Directors standing at the forthcoming AGM.
Board Responsibilities
Under the leadership of the Chair, the Board is responsible for the effective stewardship of the
Company’s affairs, including strategy, corporate governance, risk assessment and overall investment
policy.
Role and Responsibilities of the Chair
The Chair leads the Board and is responsible for its overall effectiveness in directing the affairs of the
Company. Key aspects of the Chair’s role and responsibilities are to:
– act with objective judgement;
– promote a culture of openness and debate;
– facilitate constructive Board relations and the effective contribution of all Directors;
– work with the Company Secretary to ensure that all Directors receive accurate and timely
information so that they can discharge their duties;
– seek regular engagement with the Company’s shareholders; and
– take any necessary actions following the results of the annual evaluation of the performance of
the Board, its Committees andindividual Directors.
The Chair, Tony Roper, met the independence criteria upon appointment and has continued to meet
this condition throughout his term of service.
Role and Responsibilities of the Senior Independent Director
The key elements of the Senior Independent Director’s role are to:
– act as a sounding board for the Chair;
– lead the annual evaluation of the Chair as part of the annual evaluation process;
– in the event of any major difference of opinion on the direction of the Company, act as an
intermediary between the Chair, other Directors and the Investment Manager; and
– provide a conduit for views of shareholders in the event that the usual channels are not available
or not suitable in the circumstances.
Chris Knowles was appointed as Senior Independent Director at IPO.
The responsibilities of the Chair and Senior Independent Director are available on the Company’s
website.
Delegation of Responsibilities
The Board has delegated the following areas of responsibility to a number of service providers,
eachengaged under separate contracts:
Company Secretary and Administrator
During the year, on 1 October 2023, the Company appointed JTC (UK) Limited as Company
Secretary and Administrator in place of Apex Group Secretaries (UK) Limited as Company Secretary
and Apex Group Fiduciary Services (UK) Limited as Administrator. Day-to-day administration has
been delegated to the Company Secretary and Administrator.
The Board has access to the Company Secretary to advise on all governance and day-to-day
administrative matters. The Company Secretary is also responsible to the Board for ensuring that
allthe Company’s continued statutory obligations are met.
Investment Manager
The management of the Company’s portfolio is delegated to the Investment Manager, Sustainable
Development Capital LLP.
The Investment Manager has full discretion, within agreed parameters, to make investments in
accordance with the Company’s investment policy and has responsibility for financial administration
and investor relations, in addition to advising the Board in relation to further capital raisings and the
payment of dividends amongst other matters, subject to the overall supervision and oversight of the
Board.
Among the specific tasks of the Investment Manager are the overall financial management of the
Company and existing portfolio as a whole, including the deployment of capital, management of the
SEEIT Group’s debt facilities, hedging arrangements, the sourcing of new investments, operating
the Risk Management Framework, preparing the semi-annual valuations, the statutory accounts,
the management accounts, business plans, presenting results and information to shareholders,
co-ordinating all corporate service providers to the Company and giving the Board general advice.
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Corporate Governance Statement continued
Members of the Investment Manager are also appointed as Directors of the SEEIT Group’s project
companies and/or intermediate holding companies. As part of their role in managing the portfolio,
those Directors attend board meetings of these companies and make appropriate decisions.
Material decisions are referred back to the Investment Manager’s Investment Committee for
consideration. The Company’s Board is consulted on key matters relevant to the Company’s
strategy, policies or overall performance, both on an ad hoc basis, where required, and during formal
reporting sessions, including all matters outside of the Investment Manager’s delegated authority.
Share Premium Account
At the Company’s 2023 AGM, shareholders voted in favour of the special resolution authorising the
Company to cancel £300 million of the amounts standing to the credit of its share premium account.
On 21 November 2023, following approval by the Court, the Company cancelled £300 million of its
share premium account, creating distributable reserves which may be used by the Board to deliver
returns to shareholders in the future, should they consider it appropriate to do so.
Board Tenure Policy
The Board’s policy regarding tenure of service of the Directors, including its Chair, is that any
decisions regarding tenure should balance the benefits of continuity and knowledge and the
orderly transition of responsibilities through succession plans for the retirement and appointment
of Directors against the need to periodically refresh the Board’s composition to maintain an
appropriate mix of the required skills, experience, diversity and length of service. The Board
considers each of the Directors’ independence carefully on an annual basis as part of the Board’s
self-evaluation and succession planning process.
It is not envisaged that any Board members will continue on the Board past nine years, except where
required by Company circumstances at that time – and then only for a limited period, to be agreed
by the Board as a whole, taking into account their independence and the need to balance this
against the benefits of maintaining continuity, knowledge and experience.
Culture
The culture of the Board is considered as part of the annual performance evaluation process that
is undertaken by each Director. The culture of the Company’s service providers, including their
policies, practices and behaviour, is considered by the Board as a whole during the annual review
of the performance and continuing appointment of all service providers. Further information on the
Company’s culture and values and engagement with its service providers and other stakeholders is
set out in Stakeholders and Section172 on pages 66 to 68.
Diversity
Diversity, including, but not limited to, gender, ethnicity, professional and industry-specific knowledge
is an important consideration in ensuring that the Board and its Committees have the right balance
of skills, experience, independence and knowledge necessary to discharge their responsibilities.
Theright blend of perspectives is critical to ensuring an effective Board and a successful Company.
The Board has adopted a Diversity Policy and considers that its composition, with respect to the
balance of skills, ethnicity and cultural diversity, gender, experience and knowledge, coupled with a
mixed length of service, provides for a sound base from which the interests of shareholders will be
served to a high standard.
The Board of Directors comprised five independent Non-Executive Directors, two male and three
female (being 60% female representation), as at 31 March 2024.
The Company supports the recommendations of the FTSE Women Leaders Review published in
February 2022, which builds on the work of the Hampton-Alexander Review and has increased
the voluntary target for FTSE 350 boards to be represented by a minimum of 40% of women.
TheCompany also supports the Parker Review’s recommendations to increase ethnic and cultural
diversity on boards, including its target for FTSE 250 boards to have at least one director from
an ethnic minority background by 2024; develop a pipeline of candidates planning for succession
through mentoring and sponsoring, and enhancing transparency and disclosure to record and track
progress against the objectives. The Company meets the recommendations and targets of these
three reviews as at 31 March 2024.
In accordance with the Listing Rules, the Company is required to include a statement in the
annualfinancial report setting out whether it has met the following targets on Board diversity as at
31March2024:
(a) at least 40% of individuals on the Board are women;
(b) at least one of the senior Board positions (defined by the FCA as either the Chair, SID, CEO or
CFO) is held by a woman; and
(c) at least one individual on the Board is from a minority ethnic background.
The following tables set out the prescribed format for information in accordance with the
requirements of Listing Rule 9 Annex 2.
Table for reporting on gender identity or sex
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (SID and Chair)
Men 2 40% 2
Women 3 60% —
Not specified — — —
Table for reporting on ethnic background
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (SID and Chair)
White British or other White
(including minority-white groups) 4 80% 2
Mixed/Multiple ethnic groups — — —
Asian/Asian British 1 20% —
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Corporate Governance Statement continued
As at 31 March 2024, the Board meets the criteria of target a) as 60% of the Board are women, andtarget c) as one Board member is from a minority ethnic background.
With regard to target b) the Company does not have Executive Directors and therefore does not have a CEO or CFO, and therefore none of the senior Board positions, as defined by the FCA, are held by a
woman. However, the Board considers the role of the Audit and Risk Committee Chair to be a senior Board position given the nature of the Company as an investment trust. That role is the second highest
remunerated position on the Board, reflecting the importance of the position and the time commitments it commands and is held by a woman. Therefore, under this interpretation, the Board considers that at
least one of the senior Board positions is held by a woman.
Matters Reserved for the Board
The Directors have adopted a formal schedule of matters specifically reserved for their approval. The Directors have overall responsibility for the Company’s business activities in accordance with the
Company’s Articles of Association and investment policy. The Board has delegated certain functions as described further below and retains the right to vary the delegation from time to time.
Reserved matters for the Board’s approval include:
– capital raising activities;
– declaring dividends;
– reviewing the performance and appointments of key service providers;
– setting terms of reference for the Board and relevant Board Committees; and
– monitoring the constitution and efficiency of the Board and its Committees and key governance aspects such as general meetings and shareholder circulars.
Committees of the Board
The Board has five Committees to assist with its operations: the Audit and Risk Committee, the Remuneration Committee, the Nomination Committee, the Management Engagement Committee and the ESG
Committee. The delegated responsibilities of each Board Committee are clearly defined in formal terms of reference, which are available on the Company’s website.
The Company Secretary acts as secretary to each Committee. No persons other than the Committee members are entitled to attend Committee meetings unless formally invited by the respective Committee.
Memberships of the Board Committees as at 31 March 2024 are as follows:
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
Management
Engagement
Committee ESG Committee
Chair Sarika Patel Emma Griffin Tony Roper Helen Clarkson Helen Clarkson
Members Helen Clarkson Helen Clarkson Helen Clarkson Emma Griffin Chris Knowles
Emma Griffin Chris Knowles Emma Griffin Chris Knowles
Chris Knowles Sarika Patel Chris Knowles Sarika Patel
Tony Roper Tony Roper Sarika Patel Tony Roper
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Corporate Governance Statement continued
Audit and Risk Committee
The Board considers that the members of the Audit and Risk Committee have the requisite skills and
experience to fulfil the responsibilities of the Committee. The Chair of the Audit and Risk Committee
has significant recent and relevant financial experience. The Audit and Risk Committee has direct
access to the Company’s independent auditor and provides a forum through which the independent
auditor reports to the Board. Representatives of the independent auditor attend meetings of the
Audit and Risk Committee at least twice per year.
Further details about the Audit and Risk Committee and its activities during the year under review
are set out in the Audit and Risk Committee Report on pages 83 to 86.
Remuneration Committee
The Remuneration Committee meets at least once per year and deals with matters of Directors’
remuneration. In particular, the Remuneration Committee reviews and makes recommendations
to the Board regarding the ongoing appropriateness and relevance of the Remuneration Policy,
Directors’ annual fee levels and also considers the need to appoint independent professional
external remuneration consultants.
Further details about the Remuneration Committee and remuneration matters are set out in the
Directors’ Remuneration Report on pages 87 to 91.
Nomination Committee
The Nomination Committee meets at least once per year to consider Board succession planning and
recruitment and to conduct the annual Board evaluation exercise.
Further details about the Nomination Committee and its activities during the year under review are
set out in the Nomination Committee Report on pages 81 and 82.
Management Engagement Committee
The Management Engagement Committee meets at least once per year to assess the performance
of the Investment Manager and the Company’s other key third-party service providers. This
annual review process includes two-way feedback, which provides the Board with an opportunity
to understand the views, experiences and any issues encountered by service providers during the
year. In addition, the Management Engagement Committee is actively involved in reviewing the
contractual relationships of the Investment Manager and the Company’s other key third-party
service providers and ensuring the contractual terms remain aligned with the objectives of the
Company and the interests of shareholders.
Following the Committee’s assessment of the Investment Manager, and based on its performance,
the continued appointment of the Investment Manager is considered to be in the interests of
shareholders as a whole, and it was recommended that SDCL continue as Investment Manager.
ESG Committee
In keeping with its commitment to ESG matters, in November 2023, the Company formally
established an ESG Committee. The ESG Committee comprises of two Directors and is scheduled
to meet at least twice a year. However, given its set-up date, the Committee held one inaugural
meeting during the year. Matters discussed included an update on the implementation of the
Company’s Sustainability Framework and the UK’s Sustainable Disclosure Requirements. Further
details on the Company’s approach to ESG can be found in the ESG Update on pages 45 to 53.
Meetings
The Board is scheduled to meet at least four times per year and between these formal meetings
there is regular contact with the Investment Manager, the Administrator, the Company Secretary
and the Corporate Broker. The Directors are kept fully informed of investment and financial controls,
and other matters that are relevant to the business of the Company that should be brought to the
attention of the Directors.
The agenda for all Board meetings are circulated to the Board in advance of the meeting as part
of the Board papers. The directors consider agenda items and may request any agenda items to
be added that they consider appropriate for Board discussion. Each Director is required to inform
the Board of any potential or actual conflicts of interest prior to Board discussions. Board meetings
include a review of investment performance and associated matters such as health and safety,
marketing, investor relations, risk management, gearing
APM
, general administration and compliance,
peer group information and industry issues.
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Corporate Governance Statement continued
The number of scheduled Board and Board Committee meetings held during the year and the attendance of the individual Directors is shown below:
Scheduled
Board meetings
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
Management
Engagement
Committee ESG Committee
No. of meetings held 4 4 1 1 1 1
Tony Roper 4 4 1 1 1 N/A
Helen Clarkson 4 4 1 1 1 1
Chris Knowles 4 4 1 1 1 1
Emma Griffin 4 4 1 1 1 N/A
Sarika Patel 4 4 1 1 1 N/A
During the year ended 31 March 2024, there were 14 additional ad hoc Board meetings, one ad hoc Audit and Risk Committee and one ad hoc Nomination Committee meeting held to deal with administrative
matters. These were attended by those Directors available and/or delegated by the Board to one or more members to action.
Insurance and Indemnity Provisions
Directors’ and Officers’ liability insurance cover is in place in respect of the Directors. The Company’s Articles of Association provide, subject to the provisions of UK legislation, an indemnity for Directors in
respect of costs which they may incur relating to the defence of any proceedings brought against them arising out of their positions as Directors, in which they are acquitted, or judgement is given in their favour
by the Court.
Except for such indemnity provisions in the Company’s Articles of Association and in the Directors’ letters of appointment, there are no qualifying third-party indemnity provisions in force.
The Board has agreed arrangements whereby Directors may take independent professional advice in the furtherance of their duties.
Conflicts of Interests
It is the responsibility of each individual Director to avoid an unauthorised conflict of interest situation arising. All Directors must inform the Board as soon as they become aware of the possibility of an interest
that conflicts, or might possibly conflict, with the interests of the Company.
A register of conflicts is maintained by the Company Secretary and regularly reviewed by the Board to ensure that any authorised conflicts remain appropriate. The Directors are required to confirm at Board
meetings whether there has been any change to their position.
The Board has adopted a policy that records all gifts and hospitality in excess of £50 accepted by the Directors from the Company’s service providers and other relevant third parties.
Reporting on Stakeholder Engagement
The Company sets out how it interacts and engages with its stakeholders on pages 66 to 68, Stakeholders and Section 172. The stakeholder relationships identified provide the foundation for the Company’s
sustainability, which in return provides benefits to all parties. Both the Board and the Investment Manager value the importance of maintaining a high standard of business conduct and stakeholder
engagement in order to ensure a positive impact on the environment in which the Company operates.
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Corporate Governance Statement continued
Relations with Shareholders
The Company welcomes the views of its shareholders, placing great importance on communication
with them. Senior members of the Investment Manager make themselves available, as practicable,
to meet with shareholders and key sector analysts, and feedback from these meetings is provided
to the Board. The Directors also make themselves available to engage with shareholders and offer
meetings annually as part of good governance to those shareholders who wish to meet them.
The Board is kept fully informed of all relevant market commentary on the Company by the
Company’s Financial PR consultant, as well as receiving relevant updates from the Investment
Manager and the Corporate Broker.
The Company reports formally to shareholders twice per year through its interim and annual financial
statements. Further details on shareholder engagement are included in the S172 Statement on page
66.
The results of the AGM are announced by the Company promptly after the relevant meeting and are
also published on the Company’s website. Additionally, other notices and information are provided
to shareholders on an ongoing basis through the Company’s website in order to assist in keeping
shareholders informed.
The Company Secretary and Registrar monitor the voting of the shareholders and proxy voting is
taken into consideration when votes are cast at the AGM.
The Company is committed to ongoing shareholder dialogue and takes an active interest in voting
outcomes. Where there are substantial votes against any resolution at an AGM, the Company will
consider what, if any, actions it intends to take going forward.
2023 AGM
The 2023 AGM of the Company was held on 11 September 2023. Resolutions 1 to 12 were proposed
as ordinary resolutions. In accordance with the Articles, this included a vote to approve the
continuation of the Company as a closed-ended investment trust until the conclusion of the AGM, to
be held in 2026. Resolutions 13 to 16 were proposed as special resolutions as follows:
– to approve the purchase of the Company’s own shares;
– to authorise the disapplication of statutory pre-emption rights;
– to approve that a general meeting may be convened on not less than 14 clear days’ notice; and
– to approve the reduction of the share premium account of the Company.
Each of the resolutions proposed at the AGM were passed.
2024 AGM
The next AGM of the Company is currently scheduled to be held on 4 September 2024.
A separate notice convening the AGM will be sent to shareholders and expected to be published on
the Company’s website in July 2024 and will include an explanation of the items of business to be
considered at the meeting.
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Nomination Committee
The Nomination Committee is chaired by Tony
Roper and the membership of the Committee
comprises all Directors of the Company, given
that they are all independent and non-executive.
During the year, the Nomination Committee
held two meetings. The Nomination Committee
operates within clearly defined terms of
reference, which are available on the Company’s
website.
Function of the Nomination
Committee
The principal duties of the Nomination
Committee are to:
– regularly review the structure, size and
composition required of the Board and make
recommendations to the Board with regard to
any changes (including skills, knowledge and
experience in accordance with Principle K of
the AIC Code);
– give full consideration to succession
planning for Directors, taking into account
the challenges and opportunities facing the
Company, and to oversee the development of
a diverse pipeline for succession;
– be responsible for identifying and nominating,
for the approval of the Board, candidates to
fill Board vacancies as and when they arise;
and
– oversee a formal and rigorous annual
evaluation of the performance of the Board,
its Committees, the Chair and individual
Directors.
Matters Reviewed in the Year
Succession planning
The Committee annually reviews its effectiveness,
composition and long-term succession planning.
This process takes into consideration the balance
of skills, knowledge, experience, independence
and diversity of the Board, to ensure any new
appointments complement or address any gaps
in these areas.
The Committee has reviewed the composition
of the Board and is satisfied that the Board’s
current composition is appropriate to adequately
discharge its duties. The Committee has no
immediate concerns regarding the independence
or tenure of the Board as the longest-serving
Directors have been in office for less than six
years, having been appointed in October 2018,
which is less than the nine years that could, as
noted in the AIC Code, impair a non-executive
director’s independence. Notwithstanding this,
the Committee has implemented an emergency
succession plan which is reviewed annually and
continues to monitor succession.
Tony Roper
|Chair of the Nomination Committee
Nomination Committee Report
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Nomination Committee Report continued
Board performance evaluation
The Board recognises the importance of the
AICCode’s recommendation in respect of
evaluating the performance of the Board as
a whole, the Committees of the Board and
individual Directors. The Chair, with the assistance
of the Senior Independent Director and the
Company Secretary, oversaw an internal Board
evaluation process with respect to the year
ended 31March2024.
The evaluation followed a number of stages as
outlined below:
– an update was given against the performance
of the recommendations and actions from the
prior year;
– all Directors responded to questionnaires
about the Chair, the Board and its
Committees;
– the Chair held individual meetings with each
Director to understand their views on the
performance of the Board;
– the Senior Independent Director collated
feedback from the Non-Executive Directors,
excluding the Chair, on the performance of the
Chair;
– a summary of results, together with
anonymised comments, was collated into a
comprehensive report and presented to the
Nomination Committee; and
– an action plan for the Board and its
Committees with recommendations of areas
to improve was prepared and approved by
the Committee.
The evaluation addressed all areas relating
to the Board, its Committees, the Chair, the
individual Directors and their performance. The
scope of the evaluation was in line with other
internal evaluations conducted in previous
years to track progress in each assessed area,
which included, but was not limited to: Board
and Committee relationships, composition,
effectiveness, leadership, roles, activities,
development and engagement with and impact
on various stakeholder groups. The evaluation
also explored other items including culture and
the Board processes for developing strategy,
dealing with investments and managing risk.
Overall, the evaluation was positive and
indicated a high level of satisfaction with the
operation of the Board. It also demonstrated
that the Board and Investment Manager were
operating effectively and showed the necessary
commitment to the effective fulfilment of their
duties. A number of areas were highlighted as
strengths, including:
– calibre of depth and experience;
– leadership of the Board and of each
Committee;
– Board dynamics and communication;
– sufficient opportunity to challenge and
support the Investment Manager;
– clear consensus around strategy; and
– good oversight of the Company’s
performance.
The evaluation also highlighted a number
of opportunities for improvement, including:
identifying further training and development
opportunities to assist the Board and each
individual Director to continue their professional
development, and continuing to improve the
presentation and challenge of risk management
key performance indicators.
Terms of reference
The Committee reviewed its terms of reference
in March 2024 to ensure that it was still operating
effectively and in line with its delegated duties
and responsibilities.
Tony Roper
Chair of the Nomination Committee
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Sarika Patel
|Chair of the Audit and Risk Committee
Audit and Risk Committee Report
The Audit and Risk Committee is chaired
by Sarika Patel and the membership of the
Committee comprises all Directors of the
Company, all of whom are independent and
non-executive.
The Board is satisfied that the Committee is
properly constituted. Tony Roper is a member of
the Audit and Risk Committee, notwithstanding
his appointment as Chair of the Board, given his
independence at the time of his appointment
and throughout his service. The Board believes
that his extensive experience in dealing with
matters such as valuation and risk management
is relevant to the Committee.
The Audit and Risk Committee operates within
clearly defined terms of reference, which are
available on the Company’s website. It is also
the formal forum through which the independent
auditor reports to the Board of Directors and
met five
1
times during the year.
The terms of reference are reviewed annually.
The Committee last reviewed its terms of
reference in March 2024 and is satisfied that it is
still operating effectively.
The main functions of the Audit and Risk
Committee are:
– considering and understanding the key risks
of misstatement of the financial statements
and formulating an appropriate plan to review
and address these and agreeing with the
Investment Manager its processes to manage
these risk areas;
– reviewing the appropriateness of the
Company’s accounting policies;
– reviewing the valuation of the Company’s
investment portfolio prepared by the
Investment Manager and making a
recommendation to the Board on the
valuation;
– making recommendations to the Board, for
approval at the Company’s Annual General
Meeting, relating to the appointment,
reappointment and removal of the Company’s
independent auditor;
– agreeing with the independent auditor the
external audit plan, including discussing with
the independent auditor the key risk areas
within the financial statements;
– reviewing and recommending to the Board,
for approval, the audit, audit-related and
non-audit fees payable to the independent
auditor or their affiliated firms overseas and
the terms of their engagement;
– reviewing the scope, results,
cost-effectiveness, independence and
objectivity of the independent auditor,
as well as reviewing the effectiveness of
the external audit process and making
any recommendations to the Board for
improvement of the audit process;
– reviewing and recommending for approval
the Viability and Going Concern Statements
and reviewing the work prepared by the
Investment Manager in support of these
statements;
– monitoring the current and emerging risk
exposures on behalf of the Board and
challenging the actions taken to mitigate
against such risks, taking into account
scenario analysis;
– ensuring the adequacy and effectiveness of
the internal control and risk management
systems;
– assessing, and recommending to the Board
for approval, the contents of the half-year and
annual financial statements and reviewing
the independent auditor’s report on these,
including consideration as to whether the
financial statements are overall fair, balanced
and understandable;
– reviewing the appropriateness of the
Company’s accounting policies;
1. The Audit and Risk Committee had four scheduled meetings during the reporting period and received one
valuation update from the Investment Manager.
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Audit and Risk Committee Report continued
– ensuring the adequacy and effectiveness of
the internal control and risk management
systems;
– reviewing the effectiveness of controls of
subcontractors and suppliers;
– considering, and recommending to the Board
for approval, the Investment Manager’s
recommendations to changes in the
Company’s Risk Management Policy and
Treasury Policy;
– reviewing the Company’s risk appetite and
overall risk management approach;
– considering any report or information
received in respect of whistleblowing;
– reviewing the adequacy of arrangements for
its contractors and external third parties to
raise concerns about possible wrongdoing;
– reviewing the Company’s procedures for
detecting fraud and the systems and controls
for the prevention of bribery; and
– reporting to the Board on how it has
discharged its duties.
None of the members of the Audit and Risk
Committee have any involvement in the
preparation of the financial statements of
the Company, as this has been contracted to
the Investment Manager and the Company’s
Administrator.
The Audit and Risk Committee meets the
independent auditor regularly and as required.
It discusses the scope of annual audit work and
audit findings with the independent auditor.
The independent auditor attends the Audit
and Risk Committee meetings at which the
annual and interim financial statements are
considered. The Committee also meets with the
independent auditor without representatives
of the Investment Manager and Administrator
being present. The Committee has direct access
to the independent auditor and to key senior
staff of the Investment Manager. It reports its
findings and recommendations to the Board,
which retains the ultimate responsibility for the
financialstatements of the Company.
Significant Activities in the Year
During the year, the Audit and Risk Committee’s
discussions have been broad, ranging and
focused on, but not limited to:
– agreeing the audit plan and fees with the
independent auditor in respect of the review
of the half-yearly report for the six months
ended 30 September 2023 and the statutory
audit of the Annual Report for the year ended
31 March 2024, including the principal areas
of focus;
– receiving and discussing with the independent
auditor their report on the results of the
review of the half-yearly financial statements
and the year-end audit;
– meeting independently with the external
auditor, including the new audit partner
following the mandatory rotation of the
previous audit partner in accordance with
theFRC’s Ethical Standard for Auditors;
– reviewing and challenging information
received from the Investment Manager
recommending the rationale for preparing
the financial statements on a going concern
basis, including a viability statement. This
was discussed with the independent auditor
prior to concluding that the recommendation
be made by the Committee that the Board
approve the adoption of the financial
statements on a going concern basis and
theirapproval of the viability statement;
– reviewing and challenging the valuation
prepared by the Investment Manager and
its valuation process, together with the
independent auditor;
– reviewing and recommending to the
Board the continued application of IFRS 10
investment entity, which is considered a key
judgement for the Company’s accounting
policies;
– reviewing the Company’s annual and
half-yearly financial statements and
recommending these to the Board for
approval;
– reviewing climate change risks and discussing
with the Investment Manager their current
actions outlined to mitigate future climate
change risk impact;
– conducting a review of the risk management
systems of the Company and its third-party
service providers, and introducing further
enhancement to the system;
– reviewing the Investment Manager’s ongoing
programme of stress scenarios aimed at
understanding the impact on the Company
ofplausible downside scenarios;
– reviewing the Company’s Risk Management
Policy and Treasury Policy; and
– reviewing reports of internal controls of key
advisers and gaining assurance from the
Investment Manager and Administrator on
these.
In addition to formal Audit and Risk Committee
meetings during the year, the Committee has
had regular contact and meetings with the
Investment Manager, the Administrator and the
independent auditor.
Key Issues Considered for
FinancialStatements
After discussion with the Investment Manager
and the independent auditor, the Audit and
Risk Committee determined that the key risks
of misstatement of the Company’s financial
statements related to the valuation of the
Company’s investment in SEEIT Holdco and in
turn the valuation of the underlying investments
held via SEEIT Holdco.
Valuation of Investments
As outlined in Note 11 to the financial statements,
the total carrying value of the investment
portfolio at fair value at 31 March 2024 was
£1,117.4million (31 March 2023: £1,099.6 million).
Market quotations are not available for these
financial assets, and therefore their valuation is
undertaken using predominantly a discounted
cash flow methodology, or a similar method
to determine the fair value of an investment.
This requires a number of material estimates to
be made, as further explained in Note 3 to the
financial statements.
The valuation process and methodology was
discussed by the Audit and Risk Committee
with the Investment Manager at the time of
the interim review, in March 2024, prior to the
year-end valuation process, and again post
year end in May 2024 and June 2024 as part of
the year-end sign-off process. The Investment
Manager carries out a valuation semi-annually
and provides a detailed valuation report to the
Company.
The Audit and Risk Committee reported to the
Board on the challenges it made to the valuation
and the outcome of discussions with the
Investment Manager and independent auditor
on the valuation, particularly in relation to key
judgements. The Audit and Risk Committee met
with the independent auditor when it reviewed
and agreed the independent auditor’s Group
audit plan, and also at the conclusion of the audit
of the financial statements, focusing much of
its discussion on the valuation process and the
outcome of the audit of the valuation.
The Company engaged independent valuation
experts to provide a report on a fair and
reasonable range of discount rates for the
investments in the portfolio as at 31 March2024.
The Audit and Risk Committee received a
presentation from the independent valuation
expert and challenged the assumptions and
conclusions as needed. The Audit and Risk
Committee was satisfied that this report
confirmed the reasonableness of the discount
rates applied by the Investment Manager in its
valuation of the portfolio as at 31 March 2024.
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Audit and Risk Committee Report continued
Valuation of investments –
keyforecast assumptions
The Audit and Risk Committee considered in
detail those assumptions that are subject to
judgement and may have a material impact on
the valuation. The key assumptions are:
Valuation discount rates
The vast majority of the underlying investments
are valued using a discounted cash flow
valuation. A small selection of investments
were valued using other forms of fair value
calculations, such as earnings multiples, and
certain investments were held at cost as the
most accurate reflection of their fair value.
The discount rates adopted to determine
the valuation are selected by the Investment
Manager and recommended to the Audit and
Risk Committee. These discount rates are
applied to the expected future cash flows for
each investment’s financial forecasts to arrive
at a discounted cash flow valuation which is, in
turn, sensitive to the discount rate selected. The
Investment Manager is experienced and active
in the valuation of these investments and adopts
discount rates which reflect their understanding
of the current market. It is noted, however, that
the judgement required is subjective and there
are a range of discount rates which could be
applied. The discount rate assumptions and the
sensitivity of the valuation of the investments
to this discount rate are set out in the Financial
Review and Valuation Update on pages 35 to 44
and Note 4 on pages 113 and 114.
The Audit and Risk Committee discussed with
the Investment Manager the process adopted
to arrive at the selected valuation discount
rates, which includes comparison with other
market transactions. These discount rates were
cross checked against an independent review
of valuation discount rates by the independent
valuation expert and the Audit and Risk
Committee satisfied itself that the rates applied
were appropriate. The independent auditor
explained to the Audit and Risk Committee the
results of its review and audit of the valuation,
including its consideration of the Company’s
underlying cash flow projections, the economic
assumptions and discount rates.
Macroeconomic assumptions
Macroeconomic assumptions include inflation,
foreign exchange and tax rate assumptions.
The Investment Manager’s assumptions in this
area are set out and explained in the Financial
Review and Valuation Update on pages 35 to
44. The Audit and Risk Committee reviewed
and discussed the methodology by which the
Investment Manager derived the assumptions
and agreed its appropriateness.
Other key assumptions
The Investment Manager has discussed and
agreed the key valuation assumptions with the
Audit and Risk Committee. These included critical
estimates and judgements regarding future cash
flow assumptions, predominantly for investments
in Primary Energy, Onyx, RED-Rochester, Oliva
Spanish Cogeneration and Värtan Gas. In relation
to certain key judgements underpinning the
valuation, the Investment Manager has provided
sensitivities showing the impact of changing
economic assumptions, further described in
Note 3 on pages 111 and 112. These have been
reviewed by the Investment Manager and the
Audit and Risk Committee to assist in forming an
opinion on the fairness and balance of the Annual
Report, together with their conclusion on the
overall valuation.
Key Risks Considered
The Company’s key risks are set out in more
detail in the Risk Management Framework on
pages 62 to 64.
The Audit and Risk Committee actively provides
risk management oversight, and reviews and
challenges on a regular basis the risk updates
provided by the Investment Manager.
These risks and reviews included:
Counterparty and credit risk
– reviewing the dynamic levels of risk
associated with the counterparties
associated with the Company’s investments;
– reviewing stress tests assessing the impact of
material counterparty defaults;
– assessing the Investment Manager’s
feedback on mitigants available to the
Company; and
– monitoring compliance with the Company’s
Treasury Policy in relation to exposures to
deposit takers.
Operations and business
interruptionrisk
– receiving updates from the Investment
Manager on the risks specific to each asset
and the potential impact of these risks on
the valuation of the Company’s portfolio as
awhole; and
– receiving and challenging regular formal and
informal updates from the Investment Manager
on the level of business interruption or potential
for business interruption at the operational
level of the investments, particularly focusing
on identifiable event risks.
Macroeconomic and market risk
– reviewing the impact of global volatility
in inflation, including the sensitivity of the
valuations of the Company’s underlying
investments to changes in inflation in the near,
medium and long term;
– reviewing the impact of the Ukraine and
Middle East conflicts and the emerging risk
of larger-scale conflict as well as seeking
assurance on compliance with sanctions;
– reviewing the impact of potential global rises
in corporation taxes, including the sensitivity
of the valuations of the Company’s underlying
investments to potential changes not yet
enacted, discussing potential mitigants
available to the Company and agreeing
reviews to be undertaken by the Investment
Manager; and
– reviewing the impact on the portfolio of a
period of recessionary environment in the key
jurisdictions in which the Company operates.
Internal Controls and
RiskManagement
The Audit and Risk Committee is responsible for
reviewing and monitoring the effectiveness of
the Company’s internal control systems and risk
management systems on which it is reliant.
The Board has considered the need for an
internal audit function, and it has decided that
the systems and procedures employed by the
Investment Manager and the Administrator,
including their own internal review processes and
processes 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. An internal
audit function specific to the Company is
therefore considered unnecessary at this time;
however, the Board is keeping this under regular
review and focuses on identifying any areas
where internal control improvements can be
made.
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Audit and Risk Committee Report continued
The Audit and Risk Committee recognises that
these control systems can only be designed to
manage rather than eliminate the risk of failure
to achieve business objectives. It is understood
that they provide reasonable, but not absolute,
assurance against material misstatement or loss,
and rely on the operating controls established by
the Company’s Administrator and the Investment
Manager.
The Audit and Risk Committee assesses the
effectiveness of the internal controls, internal
financial controls and risk management systems
on a continuing basis and receives regular
reports on these systems. The Committee
believes that the Company’s internal controls and
processes are satisfactory, and that appropriate
systems are in place.
Appointment of the
IndependentAuditor
PricewaterhouseCoopers LLP (“PwC”) was
appointed as independent auditor for the
SEEIT Group at the IPO of the Company in
December2018.
The objectivity of the independent auditor is
reviewed by the Audit and Risk Committee,
which also reviews the terms under which
the independent auditor may be appointed
to perform non-audit services. The Audit
and Risk Committee reviews the scope and
results of the audit, its cost-effectiveness
and the independence and objectivity of the
independent auditor, with particular regard to
any non-audit work that the independent auditor
may undertake and the level of non-audit fees.
In order to safeguard auditor independence
and objectivity, the Audit and Risk Committee
ensures that any other advisory and/or
consulting services provided by the independent
auditor do not conflict with its statutory audit
responsibilities.
Non-audit services generally only cover reviews
of interim financial statements and capital
raising work. The independent auditor may not
undertake any work for the Company in respect
of the preparation of the financial statements,
preparation of valuations used in financial
statements, provision of investment advice,
taking management decisions or advocacy work
in adversarial situations.
The total proposed fees for audit services
amounted to £0.7 million for the year ended
31March 2024, and £0.2 million related to the
audit of its direct subsidiary, SEEIT Holdco, and
some of the SEEIT Group’s intermediate and
project subsidiaries. Non-audit fees amounted
to £80k for the year ended 31 March 2024 due to
the interim review of the Company’s half-yearly
financial statements.
Notwithstanding such non-audit services, the
Audit and Risk Committee considers PwC 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
theconduct of the audit.
To fulfil its responsibility regarding the
independence of the independent auditor, the
Audit and Risk Committee considered:
– a report from the independent auditor
describing their arrangements to identify,
report and manage any potential
independence threats; and
– the extent of non-audit services provided by
the independent auditor.
To assess the effectiveness of the external audit
process, the Audit and Risk Committee reviewed:
– the independent auditor’s fulfilment of the
agreed audit plan and variations from it;
– the evaluations from the Investment Manager
and Administrator on the performance of the
independent auditor’s team; and
– all reports highlighting any significant issues
that arose during the course of the audit.
The Audit and Risk Committee is satisfied
with PwC’s effectiveness and independence
as auditor, having considered the degree
of diligence and professional scepticism
demonstrated by the firm. As such, the
Committee has not considered it necessary
during this period to conduct a tender process
for the appointment of its independent auditor
for the year ending 31March 2025. Resolutions
to reappoint PwC and authorise the Board
to determine the Auditor’s remuneration
will be proposed at the forthcoming Annual
GeneralMeeting.
In accordance with the FRC’s guidance, the audit
will be tendered within ten years of the initial
appointment. As this is the sixth audit conducted
by PwC and the fifth full year of operation of the
Company, it is not expected that the Company
will tender the external audit in the near future.
Following the rotation of the previous audit
partner at the end of the 2023 full-year audit, this
is the Company’s first audit with the new audit
partner, MilesSaunders.
The Audit and Risk Committee will conduct a
formal review of PwC following the issue of these
financial statements to ensure that the Audit
and Risk Committee considers all aspects of the
independent auditor’s service and performance.
Whistleblowing
The Board has a Whistleblowing Policy which
details how the Board, staff of the Company’s
key advisers and project companies may, in
confidence, raise any concerns. The policy is
reviewed annually.
Sarika Patel
Chair of the Audit and Risk Committee
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Emma Griffin
|Chair of the Remuneration Committee
Directors’ Remuneration Report
The Remuneration Committee is chaired by
Emma Griffin and the membership of the
Committee comprises all Directors of the
Company, all of whom are independent and
non-executive.
The Board is satisfied that the Committee is
properly constituted. Tony Roper, the Company’s
Chair, is a member of the Remuneration
Committee given his independence at the time of
his appointment and throughout his service.
The Board presents the Directors’ Remuneration
Report for the year ended 31 March 2024, which
is made up of two sections: the Annual Report on
Remuneration and the Directors’ Remuneration
Policy report.
Annual Report on Remuneration
The Remuneration Committee’s main functions
include:
– agreeing the policy for the remuneration of
the Directors and reviewing and proposing
changes to the Company’s Remuneration
Policy;
– reviewing and considering ad hoc fees to the
Directors in relation to duties undertaken over
and above routine business; and
– appointing independent professional external
remuneration consultants, as may be required
from time to time.
The Remuneration Committee met three
1
times
during the year and operates within clearly
defined terms of reference, which are available
on the Company’s website. The Committee
reviewed its terms of reference in March 2024 to
ensure that it continues to operate effectively.
The key activities during the year included:
– selecting a suitably qualified independent
professional external remuneration consultant
to undertake a review of the Directors’ annual
remuneration;
– reviewing advice received in early 2024
from an independent professional external
remuneration consultant; and
– discussing and agreeing the level of Directors’
annual remuneration to be recommended to
the Board for the next financial year.
These activities are described further below.
Regulation requires the Company’s independent
auditor to audit certain disclosures provided.
Where disclosures have been audited, they
are indicated as such. The auditor’s opinion is
included in their report on pages 99 to 103.
Statement of the Chair of the
Remuneration Committee
The Committee assists the Board in developing
a fair and transparent framework for setting the
levels of Directors’ remuneration while having
regard to the Company’s financial position and
performance, remuneration in other companies
of comparable scale and complexity and market
statistics generally. It also reviews the ongoing
appropriateness and relevance of the Directors’
Remuneration Policy. No Director is involved in
determining their own remuneration.
The Board may determine that additional
remuneration may be paid, from time to time,
to any one or more Directors in the event such
Director or Directors are requested by the Board
to perform extra or special services on behalf of
the Company. Where the Company requires the
Directors to work on specific corporate actions,
such as the raising of further equity, an additional
fee will be determined, on each occasion, by the
Committee and recommended to the Board.
1. The Remuneration Committee had one scheduled meeting during the reporting period and met on two further
occasions on an ad hoc basis to discuss remuneration matters.
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Directors’ Remuneration Report continued
Directors’ Remuneration Review and Review of Directors’ Fees for the Year
to31 March 2025
During the year, the Committee engaged an independent external remuneration consultant, Trust
Associates 2022 LLP (“Trust Associates”), who have particular expertise in the investment company
sector, to carry out a review of the remuneration paid to the Company’s Directors. Trust Associates
had also undertaken a review of the Directors’ remuneration in 2021.
The methodology employed by Trust Associates included comparing the remuneration of the
Directors to that of c.305 companies in the investment company sector generally, as well as peer
group companies and the infrastructure sector. Trust Associates spoke individually to each Director,
who also provided written detail on estimated time spent on the business of the Company and
other factors that they believed should be considered when setting fee levels. Trust Associates also
spoke to senior members of the Investment Manager to understand their perspective of the Board’s
work and time commitment. As part of their review, Trust Associates also considered the impact
of inflation, given that CPI had increased 19% between April 2021 and January 2024, the market
capitalisation and the discount to NAV
APM
.
Following their review, Trust Associates provided a report to the Remuneration Committee with their
recommendations which were accepted by the Remuneration Committee. The recommendations of
the Remuneration Committee, in relation to the fees of the Directors for the year to 31 March 2025,
which were considered carefully, are set out below. Increases will be implemented in two phases,
subject to approval by shareholders of the advisory vote on the Remuneration Policy at the Annual
General Meeting in September 2024. The initial increase would then be backdated to 1 April 2024 as
follows:
– the base annual Directors’ fee be increased to £55,000 (2024: £49,500);
– the annual fee paid to the Company’s Chair be increased in two stages to £76,000 in the financial
year ending 31 March 2025 and then to £82,500 in the financial year ending 31 March 2026 (2024:
£69,500);
– the annual fee paid to the Company’s Audit and Risk Committee Chair be increased in two stages
to £61,000 in the financial year ending 31 March 2025 and then to £66,000 in the financial year
ending 31 March 2026 (2024: £54,000);
– the annual supplement paid to the Audit and Risk Committee Chair was removed (2024: £5,000);
– the annual supplement for the roles of the Senior Independent Director, the Remuneration
Committee Chair and the Management Engagement Committee Chair to be removed
(2024:£2,000);
– additional fees, up to a limit of £10,000 per Director, can be paid for specific corporate work that
may be undertaken during the year. There were no additional fees recommended for the year
ended 31 March 2024 (2024: £10,000); and
– the cap on the aggregate annual Directors’ base remuneration remains at £400,000
(2024:£400,000).
Directors’ Remuneration for the Year Ended 31 March 2024 (audited)
The table below sets out the Directors’ remuneration for the year ended 31 March 2024:
Fees for the
year ended
31 March 2024
Total
£’000
Fees for the
year ended
31 March 2023
Total
£’000
Tony Roper Chair 69.5 69.5
3
Helen Clarkson Management Engagement Committee
Chair 51.5
1
49.5
3
Emma Griffin Remuneration Committee Chair 51.5
1
51.5
3
Chris Knowles Senior Independent Director 51.5
1
51.5
3
Sarika Patel Audit and Risk Committee Chair 54.5
2
54.5
3
Total 278.5 276.5
1. These figures include an annual supplement of £2,000 paid to each of Helen Clarkson, Emma Griffin and
Chris Knowles for their respective roles as Chair of the Management Engagement Committee, Chair of the
Remuneration Committee and Senior Independent Director.
2. This figure includes an annual supplement of £5,000 paid to Sarika Patel for her role as Chair of the Audit and
Risk Committee.
3. This figure includes the sum of £2,500 that was agreed to be paid to each Director on top of their base fee
inrespect of work undertaken in relation to the capital raising in September 2022.
The Directors’ remuneration for the year ended 31 March 2024, detailed in the table above, is
inclusive of the increases in the Directors’ fees noted in the Directors’ Remuneration Report
approved by the shareholders at the AGM held on 11 September 2023.
The Directors are also entitled to be paid all reasonable expenses properly incurred by them in
connection with the performance of their duties. These expenses include those associated with
AGMs, Board or Committee meetings and legal fees. During the year, such expenses were de minimis
and were in line with the Directors’ Expenses Policy.
There are no other taxable benefits payable by the Company other than certain expenses which may
be deemed to be taxable. None of the above fees were paid to third parties.
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Annual Percentage Change in the Directors’ Remuneration
The annual percentage change in remuneration in respect of the financial years prior to the current year in respect of each Director’s role is detailed in the table below. The annual percentage change is
calculated based on the aggregate annual base Directors’ remuneration plus any additional fees, where applicable, for additional corporate work or acting in the role as either Chair of the Company, Senior
Independent Director or as the Chair of a Board Committee.
Director Role Date appointed 2020-2021 2021-2022 2022-2023 2023-2024
Tony Roper Chair 12 October 2018 11.1% 30.0% 3.1% —
Helen Clarkson
1
Management Engagement Committee Chair 12 October 2018 14.2% 25.0% (6.0)% 4.0%
Emma Griffin Remuneration Committee Chair 21 October 2020 — 17.5% 4.3% —
Chris Knowles Senior Independent Director 12 October 2018 14.2% 17.5% 4.3% —
Sarika Patel
2
Audit and Risk Committee Chair 1 January 2022 N/A N/A — —
1. Helen Clarkson was the Audit and Risk Committee Chair for the period from 1 April 2021 to 1 January 2022, although received fees consistent with remuneration of the Audit and Risk Committee Chair up to 31 March 2022 to ensure an
orderly handover to Sarika Patel.
2. Sarika Patel was appointed as a Non-Executive Director and Audit and Risk Committee Chair on 1 January 2022, and fees were paid pro-rata for the year ended 31 March 2022 accordingly. If Sarika had been a Non-Executive Director
and the Audit and Risk Committee Chair for the full year to 31 March 2022, the annual percentage change in her remuneration for the year to 31 March 2023 would be 4.0%.
Relative Importance of Spend on Pay
The table below sets out the total remuneration paid to the Directors in comparison to total aggregate amount of dividends paid to the Company’s shareholders for the year ended 31 March 2024:
Year to
31 March 2024
£’000
Year to
31 March 2023
£’000 % change
Directors’ remuneration 278.5 276.5 0.72
Dividends paid to shareholders 67,199 62,029 8.33
Company Performance
Directors’ Remuneration Report continued
Shareholder return since IPO
The graph above highlights the comparative total shareholder return (“TSR”) for an investment in the Company from inception to 31 March 2024 compared with an investment in the FTSE 250 index over the
same period. The Company is a member of the FTSE 250 and All-Share Index, hence they have been selected for this graph.
The Board is responsible for the Company’s investment strategy and performance, although day-to-day management of the Company’s affairs, including the management of the Company’s portfolio, has
been delegated to the Investment Manager. An explanation of the performance of the Company is given in the Financial Review and Valuation Update on pages 35 to 44.
50.0%
40.0%
20.0%
10.0%
30.0%
0.0%
(40.0%)
(20.0%)
(30.0%)
(10.0%)
Dec
18
Oct
19
Aug
20
Jun
21
Apr
22
Feb
23
Dec
23
May
24
SEEIT: (21.1%)
May
19
Mar
20
Jan
21
Nov
21
Sep
22
Jul
23
FTSE 100: +18.3%
FTSE 250: +13.7%
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Directors’ Interests in the Company (audited)
As at 31 March 2024, the interests of the Directors and any Persons Closely Associated (“PCAs”), as
defined in Article 3(1)(26) of the UK Market Abuse Regulation (“MAR”), in the ordinary shares of the
Company are set out in the table below:
Ordinary shares
of £0.01 each held
at 31 March 2024
Ordinary shares
of £0.01 each held
at 31 March 2023
Tony Roper 198,500 148,500
Helen Clarkson 20,000 20,000
Emma Griffin 20,509 20,509
Chris Knowles
1
126,000 94,000
Sarika Patel 30,000 25,000
Total 395,009 308,009
1. Chris Knowles’ spouse, whom under MAR is his PCA, holds 49,000 ordinary shares in the Company and these are
included in the figure shown in the above table.
There have been no changes to any of the above holdings between 31 March 2024 and the date of
this report.
None of the Directors or any of their PCAs had a material interest in the Company’s transactions,
arrangements or agreements during the year.
As at the date of this report, Jonathan Maxwell, CEO and Founder of the Investment Manager, holds
240,000 ordinary shares. Jonathan Maxwell is considered to be a Person Discharging Managerial
Responsibilities (“PDMR”) by both the Board of Directors and Investment Manager.
There have been no changes in the year in respect of each of the Directors as notifiable to the
Company in accordance with DTR 3.1.2.
Statement of Voting at AGM on the Annual Report
A binding ordinary resolution approving the Remuneration Policy was approved by shareholders at
the AGM held on 12 September 2022 and an advisory vote adopting the Directors’ Remuneration
Report for the year ended 31 March 2023 was approved by shareholders at the AGM held on
11September 2023.
The votes cast were as follows:
Directors’
Remuneration
Report
(AGM 2023)
Remuneration
Policy
(AGM 2022)
Votes for 832,588,649 838,755,779
% 94.22 99.68
Votes against 51,039,516 2,723,252
% 5.78 0.32
Total votes cast 883,628,165 841,479,031
Votes withheld 45,696 29,735
A resolution to approve this Directors’ Remuneration Report in respect of the year ended
31March2024 will be proposed at the forthcoming AGM. The Directors’ Remuneration Policy is
required to be presented to shareholders for approval every three years and is due to be next
presented at the AGM to be held in 2025.
Remuneration Policy
This Remuneration Policy provides details of the Remuneration Policy for the Directors of the
Company. All Directors are independent and non-executive, appointed under the terms of letters of
appointment, and none of the Directors has a service contract. The Company has no employees.
This Remuneration Policy was approved by shareholders at the AGM of the Company held on
12September 2022 and is also available on request at the Company’s registered office.
The Company follows the recommendation of the AIC Code that Non-Executive Directors’
remuneration should reflect the time commitment and responsibilities of the role.
The Board’s policy is that the remuneration of Non-Executive Directors should reflect the experience
of the Board as a whole and be determined with reference to comparable organisations and
appointments.
The fees of the Non-Executive Directors are determined within the limits set out in the Company’s
Articles of Association and Directors’ remuneration is determined by the Remuneration Committee,
at its discretion within the current aggregate limit of £400,000, as set out in the Company’s Articles
of Association.
Directors’ Remuneration Report continued
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Directors’ Remuneration Report continued
There are no performance conditions attached to the remuneration of the Directors as the Board
does not consider such arrangements or benefits necessary or appropriate for Non-Executive
Directors.
The Company is committed to ongoing shareholder dialogue and any views expressed by
shareholders on the fees being paid to Directors would be taken into consideration by the Board
when reviewing the Directors’ Remuneration Policy and in the annual review of Directors’ fees.
Under the Directors’ letters of appointment, there is no notice period. All Directors of the Company
receive an annual fee appropriate for their responsibilities and time commitment but no other
incentive programme or performance-related emoluments. As such, there are:
– no service contracts with the Company;
– no long-term incentive schemes;
– no options or similar performance incentives; and
– no payments for loss of office unless approved by shareholder resolution.
The Directors’ remuneration shall:
– reflect the responsibility, experience, time commitment and position of each Director on the
Board;
– allow the Chair and the Audit and Risk Committee Chair to be remunerated in excess of any
potential remaining Board members to reflect their increased roles of responsibility and
accountability;
– be paid quarterly in arrears;
– include remuneration for additional, specific corporate work, which shall be carefully considered
and only become due and payable on completion of that work; and
– be reviewed annually and, at least every three years, by an independent professional external
remuneration consultant with experience of investment companies and their fee structures.
Following the report of Trust Associates, who had been engaged to carry out a remuneration view
of the Directors, the Remuneration Committee met in March 2024 to consider the current levels of
Directors’ remuneration and the proposed level of base Directors’ remuneration for the year ending
31 March 2025. The proposed remuneration recommendations for the year ending 31 March 2025
would result in an increase in the aggregate Directors’ annual base remuneration to £313,500 in
the coming year. This included removing the premium for certain Committee Chairs and the Senior
Independent Director and staggering the increase of the Board Chair and Audit and Risk Committee
Chair over two stages. The Board accepted the Committee’s recommendation for the base level of
the Directors’ remuneration for the year ending 31 March 2025, per the table below.
Proposed Base Directors’ Fees to be Paid for the Year Ending 31 March 2025:
Proposed base
fees to be paid for
the year ending
31 March 2025
Total
£’000
Base fees paid
for the year ended
31 March 2024
Total
£’000
Tony Roper Chair 76.0
1
69.5
Helen Clarkson Management Engagement Committee
Chair 55.0 51.5
Emma Griffin Remuneration Committee Chair 55.0 51.5
Chris Knowles Senior Independent Director 55.0 51.5
Sarika Patel Audit and Risk Committee Chair 61.0
2
54.5
Total 302.0 278.5
1. Chair’s increase to be in two stages: £76,000 and £82,500, respectively.
2. Audit and Risk Committee Chair’s increase to be in two stages: £61,000 and £66,000, respectively.
The Board also considered the availability of each Director, taking into account their other
commitments, and concluded that each Director made adequate time available for the appropriate
discharge of the Company’s affairs. Each Director abstains from voting on their own individual
remuneration.
The Directors’ Remuneration Report was approved by the Board on 26 June 2024 and signed on
its behalf by:
Emma Griffin
Chair of the Remuneration Committee
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The Directors are pleased to present the Annual Report for the year ended 31 March2024. In
accordance with the Companies Act 2006 (as amended), the Listing Rules and the Disclosure Guidance
and Transparency Rules, the Corporate Governance Statement, the Directors’ Remuneration Report,
the Audit and Risk Committee Report, the Nomination Committee Report and the Statement of
Directors’ Responsibilities should be read in conjunction with one another and the Strategic Report.
Aspermitted by legislation, some of the matters normally included in the Directors’ Report have
instead been included in the Strategic Report, as the Board considers them to be of strategic
importance. Therefore, a review of the business of the Company, recent events and outlook can be
found in the Strategic Report: The Company and Portfolio Review on pages 11 to 68. Information
regarding Environmental, Social and Governance matters can be found Strategic Report: ESG and
Risk on pages 45 to 64.
Corporate Governance
The Company’s Corporate Governance Statement is set out in the Corporate Governance
Statement on pages 72 to 80 and forms part of thisreport.
Details regarding independent professional advice and insurance are set out in the Corporate
Governance Statement on pages 72 to 80.
Principal Activity
The Company is a closed-ended UK investment trust that invests in energy efficiency infrastructure
projects. Further details can be found in the Strategic Report on pages 11 to 68. The Directors do not
anticipate any change in the principal activity of the Company in the foreseeable future.
Investment Trust Company Status
The Company has been approved as an investment trust under Sections 1158/1159 of the
Corporation Tax Act 2010. The Company has continued to meet relevant eligibility conditions and
ongoing requirements as an investment trust, in particular that the Company must not retain more
than 15% of its eligible investment income. The Directors are of the opinion that the Company
continues to conduct its affairs as an Approved Investment Trust under the Investment Trust
(Approved Company) (Tax) Regulations2011.
Non-Mainstream Pooled Investments
As a UK investment trust, the Company’s shares are excluded from the restrictions in the FCA Rules
on the marketing of non-mainstream pooled investments (“NMPIs”) to “ordinary retail clients” and
the Company is accordingly not considered to be a NMPI. The Company currently conducts its
affairs and intends to continue to do so for the foreseeable future, in order that its shares can be
recommended by a financial adviser to ordinary retail investors in accordance with the FCA Rules on
NMPIs. As an equity security admitted to listing on the premium listing segment of the Official List of
the FCA and to trading on the Main Market of the London Stock Exchange, the ordinary shares of
the Company are expected to qualify as a readily realisable security. Accordingly, it will not be either
a (i) speculative illiquid security; (ii) a non-mass market investment; or (iii) a restricted mass market
investment.
Report of the Directors
Directors
The Directors in office at the date of this report and their biographical details are shown in the Board
of Directors on page 71.
Details of the Directors’ terms of appointment can be found in the Corporate Governance Statement
on pages 72 to 80. The beneficial interest of the Directors and their connected persons in the
ordinary shares of the Company are set out inthe Directors’ Remuneration Report on pages 87 to 91.
The Investment Manager
The Company and the Investment Manager entered into the Investment Management Agreement
pursuant to which the Investment Manager has been given responsibility, subject to the overall
supervision of the Board, for active discretionary investment management of the portfolio in
accordance with the Company’s investment objective and policy.
The Investment Manager is authorised and regulated as an alternative investment fund manager
(“AIFM”) by the FCA and, as such, is subject to the FCA rules in the conduct of its investment business.
As the entity appointed and responsible for risk management and portfolio management, the
Investment Manager is the Company’s AIFM. The Investment Manager has full discretion under
the Investment Management Agreement to make investments in accordance with the Company’s
investment policy. This discretion is, however, subject to:
(i) the Board’s ability to give instructions to the Investment Manager from time to time; and
(ii) the requirement of the Board to approve certain investments where the Investment Manager has
a conflict of interest in accordance with the terms of the Investment Management Agreement.
The Investment Manager also has responsibility for financial administration and investor relations,
advising the Company and its Group in relation to the strategic management of the portfolio,
advising the Company in relation to any significant investments and monitoring the Company’s
funding requirements.
The Board keeps the performance of the Investment Manager under continual review. The Directors
believe that the continuing appointment of the Investment Manager, on the agreed terms, is in the
best interest of the Company and its shareholders as a whole.
Further information on the SDCL Group can be found on the website: https://www.sdclgroup.com/.
Articles of Association
The Company’s Articles of Association set out its internal regulations and cover the rights of the
shareholders, the appointment of Directors and the conduct of the Board and general meetings.
The Articles of Association may be amended by the shareholders of the Company by special
resolution (requiring a majority of at least 75% of the persons voting on the relevant resolution).
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Report of the Directors continued
Treasury Shares
The Companies Act allows companies to hold shares acquired by way of market purchase as
treasury shares, rather than having to cancel them. This gives the Company the ability to re-issue
ordinary shares quickly and cost effectively, thereby improving liquidity and providing the Company
with additional flexibility in the management of its capital base. Ordinary shares will not be sold from
treasury at a price less than the (cum income) NAV
APM
per existing ordinary share at the time of
their sale. As at 31 March 2024, the Company held 23,289,495 ordinary shares in treasury which is
unchanged as at the date of this Annual Report.
Share Repurchases and Discount Management
The Company may seek to address any significant discount to NAV
APM
at which its ordinary
shares may be trading by purchasing its own ordinary shares in the market on an ad hoc basis.
Asoutlined above, 23,289,495 ordinary shares were bought back by the Company during the year
to31March2024.
At the AGM held on 11 September 2023, the Company was granted the authority to purchase up
to 14.99% of the Company’s ordinary share capital in issue at the date that the AGM notice was
published, amounting to 163,871,572 ordinaryshares.
The maximum price (exclusive of expenses) which may be paid for an ordinary share must not be
more than the higher of:
(i) 5% above the average of the mid-market values of the ordinary shares for the five business days
before the purchase is made; or
(ii) the higher of the price of the last independent trade and the highest current independent bid for
the ordinary shares.
Ordinary shares will be repurchased only at prices below the prevailing NAV
APM
per ordinary share,
which should have the effect of increasing the NAV
APM
per ordinary share for remaining shareholders.
It is intended that a renewal of the authority to make market purchases will be sought from
shareholders at each AGM of the Company and authority for the Company to purchase up to
166,195,487 ordinary shares (subject to a maximum of 14.99% of the ordinary shares in issue,
excluding those shares held in treasury, at the date of the AGM) will be sought at the forthcoming
AGM. Purchases of ordinary shares will be made within guidelines established from time to time by
the Board. Any purchase of ordinary shares would be made only out of the available cash resources
of the Company. Ordinary shares purchased by the Company may be held in treasury or cancelled.
Purchases of ordinary shares may be made only in accordance with the Companies Act, the Listing
Rules and the Disclosure Guidance and Transparency Rules.
Investors should note that the repurchase of ordinary shares is entirely at the discretion of the Board
and no expectation or reliance should be placed on such discretion being exercised on any one or
more occasions or as to the proportion of ordinary shares that may be repurchased.
AIFM Requirements
AIFM Directive (“AIFMD”) requirements have continued to apply since 1 January 2021, through
existing transposed rules replicating EU AIFM Directive (2011/611/EU), within the rules of the
UK’s FCA. AIFMD requirements impose detailed and prescriptive obligations on fund managers,
including prescriptive rules on measuring and capping leverage, the treatment of investors,
liquidity management, the use of depositaries and cover for professional liability risks. The AIFMD
requirements further impose conditions on the marketing of entities such as the Company to
investors in the UK.
Independent Auditor and DisclosureofInformation
PricewaterhouseCoopers LLP has expressed its willingness to continue in office as independent
auditor of the Company, and resolutions for its reappointment and to authorise the Audit and Risk
Committee to determine its remuneration will be proposed at the forthcoming AGM.
Further information about the Company’s independent auditor, including tenure, can be found in the
Audit and Risk Committee Report on page 83 to 86.
Financial Risk Management
The principal risks and uncertainties facing the Company are set out in Risk Management
Framework. Information about the Company’s financial risks and policies for managing these risks
are set out in Note 13 to thefinancial statements.
Foreign Account Tax Compliance Act (“FATCA”) and the OECD Common
Reporting Standards (“CRS”)
The Board, in conjunction with the Company’s service providers and advisers, will ensure
the Company’s compliance with FATCA and CRS requirements are to the extent relevant to
theCompany.
Share Capital
As at 31 March 2024 and 26 June 2024, being the last practicable date prior to the publication of
this Annual Report, the issued share capital of the Company was 1,108,709,053 ordinary shares, with
23,289,495 shares held in treasury, thereby leaving a total voting rights figure of 1,085,419,558.
Details of movements in share capital during the year are shown in Note 12 to the financial statements.
The Company has one class of ordinary shares which carry no rights to fixed income and have no
restrictions attached to them. Shareholders are entitled to all dividends paid by the Company and,
on a winding up, provided the Company has satisfied all of its liabilities, the shareholders are entitled
to all of the surplus assets of the Company.
Shareholders are entitled to attend and vote at all general meetings of the Company and, on a poll,
to one vote for each ordinary share held.
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Report of the Directors continued
Share Premium Account
At the Company’s 2023 AGM, shareholders voted in favour of the special resolution authorising the
Company to cancel £300 million of the amounts standing to the credit of its share premium account.
On 21 November 2023, following approval by the Court, the Company cancelled £300 million of its
share premium account, creating distributable reserves which may be used by the Board to deliver
returns to shareholders in the future, should they consider it appropriate to do so.
Significant Voting Rights
As at 31 March 2024, the Company is aware or had been informed of the following notifiable
interestsin the voting rights of the Company, in accordance with Disclosure Guidance and
Transparency Rule 5.1.2:
Number of ordinary
shares held % of voting rights
Investec Wealth & Investment Limited 141,200,533 14.01
M&G plc 134,282,702 12.37
GASC MGP, LLC 132,616,055 12.22
BlackRock, Inc. 109,063,316 10.05
Evelyn Partners 55,982,058 5.16
CCLA Investment Management 47,891,684 4.41
The Company has been informed of the following changes to notifiable interests between
31March2024 and 26 June 2024, being the last practicable date prior to the publication of this
Annual Report:
Number of ordinary
shares held % of voting rights
M&G plc 130,979,478 12.07
GASC MGP, LLC 147,066,055 13.55
Dividends to Shareholders
The Company’s policy is to pay interim dividends on a quarterly basis, so typically there is no final
dividend payable.
The total aggregate interim dividends attributable to shareholders for the year amounted to
£67.2million (2023: £62.0 million).
Details of the interim dividends paid during the year under review are noted in the table below:
Dividend Year ended Dividend per share
Aggregate
dividend paid
£m
Fourth interim dividend 31 March 2022 1.405p 16.4
First interim dividend 31 March 2023 1.5p 16.9
Second interim dividend 31 March 2023 1.5p 16.9
Third interim dividend 31 March 2023 1.5p 16.9
On 5 June 2024, the Board declared a fourth interim dividend of 1.56p per share with respect to the
year ended 31 March 2024, payable on 28 June 2024.
Going Concern
The Board and the Investment Manager have performed an assessment of the current exposure
to the conflicts in Ukraine, Russia and the Middle East and the potential impact to the Company’s
and the portfolio companies’ operations. The Company is a UK registered public company. Currently
neither the Company, the Investment Manager nor the Company’s investments conducts business
and operations in the regions; therefore the Company is not subject to any direct impact by this
event. The Investment Manager duly considered any restriction imposed by relevant sanctions, and
its impact on the portfolio companies and have concluded there are no direct material implications.
The Company has carried out an assessment of the impact of the global rise in inflation on its
portfolio and has concluded that overall there is a positive correlation to inflation and there is no
adverse impact.
In assessing whether the Company is a going concern for a period of at least twelve months from the
approval of the Annual Report, the Directors have reviewed a cash flow forecast to December 2025,
taking into consideration potential changes in investment and trading performance and applying a
10% reduction in income to test the resilience of cash flows in the near term. The forecast results in
positive cash flows for the foreseeable future that meets the liabilities as they fall due.
They also reviewed a severe downside scenario where the Company receives no income from its
investment for the next twelve months but continues with existing committed payments for running
the Company. Even under this stress scenario, the Company would have sufficient cash reserves
to continue as a going concern. As at 31 March 2024, the Company’s net assets were £981.9 million
(March 2023: £1,125.4 million), including cash balances of £0.5 million (March 2023: £0.3 million).
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Report of the Directors continued
Going Concern continued
Further amounts of cash are held by the Company’s direct and indirect subsidiaries (including Holdco
which has c.£3.4 million (March 2023: c.£65.4 million) at the year-end), which are sufficient to meet
current obligations as they fall due. The major cash outflows of the Company are the payment of
dividends and payments relating to the investment in new assets, both of which are discretionary.
The Company’s single subsidiary, SEEIT Holdco, has £180m Revolving Credit Facility (“RCF”) that has
adequate headroom in its covenants that have been tested for historic and forward interest cover
and loan to value limits. As at 31March2024, £155 million (March 2023: £nil) of the RCF was drawn
down. The Company is a guarantor tothe RCF but has no other guarantees or commitments.
The Directors are satisfied that the Company has sufficient resources to continue in operation for the
foreseeable future, a period of not less than twelve months from the date of approval of the interim
financial statements., and that it is appropriate to prepare the financial statements on a going
concern basis.
Directors’ Responsibilities Pursuant to Section 172 of the Companies Act 2006
The Directors fulfilled their duties under Section 172 of the Companies Act 2006 to act in good faith
and to promote the success of the Company for the benefit of shareholders as a whole. See pages
66 to 68 Stakeholders and Section 172 for further details.
Employees and Officers of the Company
The Company does not have any employees and therefore employee policies are not required.
The Directors of the Company who were in office during the year and up to the date of signing the
financial statements are listed in the Board of Directors on page 71.
Greenhouse Gas Emissions
Information about the Company’s greenhouse gas emissions are set out in the SEEIT Climate
Change Report on pages 54 to 60.
Political Donations
The Company made no political donations during the year or the preceding year.
Anti-Bribery and Tax Evasion
The Company is committed to ensuring that the Company, its subsidiaries, partners, agents and
anyone contracted to it, including the Company’s Investment Manager and key service providers,
complies with the requirements of the UK Bribery Act 2010 or equivalent legislation in other
jurisdictions.
The Company does not tolerate tax evasion in any of its forms in its Group or the project companies
in which it invests. The Company complies with the relevant UK law and regulation in relation to
the prevention of facilitation of tax evasion and supports efforts to eliminate the facilitation of tax
evasion worldwide. It also works to make sure its business partners share this commitment.
The Company’s Anti-Bribery and Criminal Finances Policy is published on the Company’s website.
These statements are reviewed annually by the Board.
Requirements of the Listing Rules
Listing Rule 9.8.4 requires the Company to include certain information in a single identifiable section
of the Annual Report or a cross-reference table indicating where the information is set out. The
Directors confirm that there are no matters requiring disclosure in relation to Listing Rule 9.8.4.
The Report was approved by the Board on 26June 2024 and signed on its behalf by:
Tony Roper
Chair
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Statement of Directors’ Responsibilities
Statement of Directors’ Responsibilities in Respect of theFinancial
Statements
The Directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each financial year. Under
that law, the Directors have prepared the financial statements in accordance with UK-adopted
International Accounting Standards.
Under company law, 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 loss of the
Company for that period. In preparing the financial statements, the Directors are requiredto:
– select suitable accounting policies and then apply them consistently;
– state whether applicable UK-adopted International Accounting Standards have been followed,
subject to any material departures disclosed and explained in the financial statements accounts;
– make judgements and accounting estimates that are reasonable and prudent; and
– prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Company will continue in business.
The Directors are responsible for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are also 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 enable them to ensure that the financial statements and the
Directors’ Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the Company’s website.
Legislation in the United Kingdom governing the preparation and dissemination offinancial
statements may differ from legislation in other jurisdictions.
Directors’ Confirmations
The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed in the Board of Directors on page 71,
confirm that, to the best of their knowledge:
– the Company financial statements, which have been prepared in accordance with UK-adopted
International Accounting Standards, give a true and fair view of the assets, liabilities, financial
position and result of the Company; and
– the Strategic Report: Portfolio Review includes a fair review of the development and performance
of the business and the position of the Company, together with a description of the principal risks
and uncertainties that itfaces.
In the case of each Director in office at the date the Directors’ Report is approved:
– so far as the Director is aware, there is no relevant audit information of which the Company’s
auditor is unaware; and
– they have taken all the steps that they ought to have taken as a Director in order to make
themselves aware of any relevant audit information and to establish that the Company’s auditor
is aware of that information.
The Annual Report and financial statements were approved by the Board on 26 June 2024 and
the above responsibility statement was signed on its behalf by:
Tony Roper
Chair
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What’s in this section
Financial
Statements
Independent Auditor’s Report 98
Statement of Comprehensive Income 104
Statement of Financial Position 105
Statement of Changes in Shareholders’
Equity
106
Statement of Cash Flows 107
Notes to the Financial Statements 108
Investment Policy 121
Company Information 123
Key Company Data 123
Sustainable Finance Disclosure
Regulation ("SFDR")
124
Glossary 131
Glossary of Financial Alternative
Performance Measures ("APMs")
133
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Primary Energy
Report on the audit of the financial statements
Opinion
In our opinion, SDCL Energy Efficiency Income Trust plc’s financial statements:
– give a true and fair view of the state of the company’s affairs as at 31 March 2024 and of its loss
and cash flows for the year then ended;
– have been properly prepared in accordance with UK-adopted international accounting
standards; and
– have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Audited Financial
Statements (the “Annual Report”), which comprise: the statement of financial position as at
31March2024; the statement of comprehensive income, the statement of changes in shareholders’
equity and the statement of cash flows for the year then ended; and the notes to the financial
statements, comprising material accounting policy information and other explanatory information.
Our opinion is consistent with our reporting to the Audit and Risk Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’
responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard,
as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s
Ethical Standard were not provided.
Other than those disclosed in the notes to the financial statements, we have provided no non-audit
services to the company or its controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
– The company invests in a diversified portfolio of energy efficiency projects through an
intermediate holding company named SEEIT Holdco Limited. We performed an audit of the
company including its investment in SEEIT Holdco Limited.
– All of our audit work was conducted in the UK by the company audit team.
Key audit matters
– Valuation of Investment at fair value through profit or loss
Materiality
– Overall materiality: £9.8m (2023: £11.3m) based on 1% of total assets.
– Performance materiality: £7.4m (2023: £8.5m).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most
significance in the audit of the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) identified by the
auditors, including those which had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team. These matters, and
any comments we make on the results of our procedures thereon, 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.
This is not a complete list of all risks identified by our audit.
Independent Auditor’s Report
to the members of SDCL Energy Efficiency Income Trust plc
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Independent Auditor’s Report continued
to the members of SDCL Energy Efficiency Income Trust plc
Our audit approach continued
Key audit matters continued
Ability to continue as a going concern (Continuation vote), which was a key audit matter last year, is
no longer included because a continuation vote is only required once every three years. Otherwise,
the key audit matter below is consistent with last year.
Key audit matter How our audit addressed the key audit matter
Valuation of Investment at fair
value through profit or loss
The company has £983.8 million
of investments recorded at fair
value and these are significant in
the context of the overall balance
sheet of the company. See note 11
for details.
We planned our audit to critically assess management’s
assumptions and the investment valuation model in which
they are applied;
The company invests through a
holding company which in turn
holds debt and equity interests in
project companies (the “underlying
investment portfolio”) which are not
listed and therefore are not actively
traded.
We have evaluated the design and implementation of
relevant controls over the preparation of the portfolio
valuation. However, we have not relied on controls as
substantive procedures are determined to be more effective
for this audit;
The fair value of the underlying
investment portfolio has principally
been valued on a discounted cash
flow basis, which necessitates
significant estimates in respect
of the forecasted cash flows
and discount rates applied. The
directors also engaged external
valuations experts to support them
with determining the fair value of
some investments.
We assessed the reasonableness of key assumptions made
by management in the applicable valuation models;
We tested the mathematical accuracy of a sample of the
valuation models;
The directors’ assessment of those
fair values involves estimates
about the future results of the
underlying businesses, in particular
around future revenues and
discount rates applied to future
cash flow forecasts. Based on
the historical performance of
investments and best estimates of
future assumptions, the directors
believe that these fair values are
reasonable.
We performed detailed testing over the significant inputs
in a sample of investment valuation models. The testing
entailed obtaining appropriate supporting documentation
and audit evidence over the significant inputs and challenging
management to justify the estimates made;
Key audit matter How our audit addressed the key audit matter
Determining the valuation
methodology and the inputs and
assumptions within the valuation is
subjective and complex particularly
given the current macroeconomic
conditions. There is also growing
scrutiny on the valuation of
investments given the potential
impacts of climate change. This,
combined with the significance of
the unlisted investments balance in
the statement of financial position,
meant that this was a key audit
matter for our current yearaudit.
We specifically considered management’s assessment of the
impact of climate change on the fair valuation of investments
and tailored our audit approach to respond to the audit risks
identified. In particular, we:
– challenged management on how the impact of climate
commitments made by the company would impact the
assumptions within the discounted cash flows prepared by
management that are used in the valuation of investment
at fair value through profit or loss;
– evaluated whether the impact of both physical and
transition risks arising due to climate risk had been
appropriately considered and included in the valuation; and
– with assistance from our valuation experts for certain assets,
evaluated the appropriateness of the key assumptions
used by management to model the impact of climate risk,
including the reasonableness of adjustments to the future
cash flows and the discount rates where applicable.
We used our internal valuation specialists in the United
Kingdom, Sweden and Spain to provide audit support in
reviewing and concluding on the fair valuation of certain
investments in the underlying investment portfolio. They (a)
assessed the appropriateness of the valuation methodology
and approach and (b) assessed the appropriateness of the
discounted cash flow valuation models, including comparing
the discount rate and certain other key assumptions against
those used by comparable market participants, where
appropriate and/or other macroeconomic data and (c)
concluded that the overall valuation is reasonable;
In addition, we have assessed the competence and
objectivity of management’s experts and engaged with our
valuation specialists to read the independent third-party
reports that management have obtained to support the
valuation of certain assets within the portfolio. We confirmed
that they have been prepared using an appropriate
methodology, confirmed the source for the data inputs to
management’s models, and challenged key estimates; and
As a result of our testing, we have obtained sufficient audit
evidence to conclude that the overall valuation of the
portfolio as a whole is materially reasonable.
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Independent Auditor’s Report continued
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Our audit approach continued
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial statements as a whole, taking into account the structure of the company,
theaccounting processes and controls, and the industry in which it operates.
As part of designing our audit approach, we determined materiality and assessed the risks of
material misstatement in the financial statements. In particular, we looked at where the directors
made subjective judgements, for example in respect of significant accounting estimates that
involved making assumptions and considering future events that are inherently uncertain.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential
impact of climate risk on the financial statements and the fair valuation of investments in particular.
In addition to enquiries with management, we also understood the governance processes in place
by the company to assess climate risk and read the additional reporting made by the entity within
its Annual Report on climate, particularly focusing on the section where the company sets out its
climate related risks.
We challenged the completeness of management’s climate risk assessment by reading external
reporting made by management. We challenged the consistency of management’s assessment
with internal climate plans and board minutes and considered the information published by the
management on the entity’s website and communications for details of climate related impacts.
Management have made a commitment to the Glasgow Financial Alliance for Net Zero (GFANZ)
which aligns them to accelerate the transition to a net zero economy. As part of its commitment to
GFANZ, and specifically the Net Zero Asset Managers Initiative, management is developing a net
zero strategy for the company. This commitment does not directly impact financial reporting, as
management has not yet developed a pathway to deliver this commitment and will only be able to
model the impact once the pathway is developed.
Using our knowledge of the business and with assistance from our internal valuation experts we
evaluated management’s risk assessment and adjustments to the financial statements and resulting
disclosures, where significant. We considered the Valuation of investment at fair value through profit
or loss to potentially be materially impacted by climate risk and consequently we focused our audit
work in these areas.
Where climate risk relates to a key audit matter our audit response is given in the key audit matters
section of our audit report. We also considered the consistency of the disclosures in relation to
climate change within the Annual Report with the financial statements and our knowledge obtained
from our audit.
Our procedures did not identify any further material impact in the context of our audit of the financial
statements as a whole, or our key audit matters for the year ended 31 March 2024.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative
thresholds for materiality. These, together with qualitative considerations, helped us to determine
the scope of our audit and the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a
whole as follows:
Overall company materiality
£9.8m (2023: £11.3m).
How we determined it
Based on 1% of total assets
Rationale for benchmark applied
We believe that total assets is the most
appropriate benchmark because this is the key
metric of interest to investors and is a generally
accepted measure used for companies in
thisindustry.
We use performance materiality to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our audit and the nature and extent of
our testing of account balances, classes of transactions and disclosures, for example in determining
sample sizes. Our performance materiality was 75% (2023: 75%) of overall materiality, amounting to
£7.4m (2023: £8.5m) for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history
of misstatements, risk assessment and aggregation risk and the effectiveness of controls –
andconcluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit and Risk Committee that we would report to them misstatements
identified during our audit above £0.5m (2023: £0.56m) as well as misstatements below that amount
that, in our view, warranted reporting for qualitative reasons.
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Independent Auditor’s Report continued
to the members of SDCL Energy Efficiency Income Trust plc
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going
concern basis of accounting included:
– Testing the mathematical integrity of the cash flow forecasts and the models and reconciled
these to Board approved budgets;
– Challenging management on the appropriateness of key assumptions in particular whether
all capital commitments to the investment companies had been appropriately reflected in
management’s models and considering their reasonableness in the context of other supporting
evidence gained from our audit work;
– Reading the debt agreements to confirm the terms and conditions, including covenants.
Thecovenants were consistent with those used in management’s going concern assessment;
– Agreeing all cash balances as at 31 March 2024 to third-party evidence and considering the
available financing. This supported the directors’ conclusion that sufficient liquidity headroom
remained throughout the assessment period;
– Testing the mathematical accuracy of the covenant calculations, and confirming based on
management’s calculations that covenant compliance remained throughout the assessment
period; and
– Considering the severe downside scenario to assess the viability of the company in such
circumstances. This included an assessment of the company’s ability to meet its debt covenants
and ability to repay its liabilities as they fall due.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the company’s
ability to continue as a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a
guarantee as to the company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the AIC Corporate Governance
Code, we have nothing material to add or draw attention to in relation to the directors’ statement in
the financial statements about whether the directors considered it appropriate to adopt the going
concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial
statements and our auditors’ report thereon. The directors are responsible for the other information.
Our opinion on the financial statements does not cover the other information and, accordingly, we
do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any
form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If we identify an apparent material inconsistency or material misstatement,
we are required to perform procedures to conclude whether there is a material misstatement of the
financial statements or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Report of the Directors, we also considered whether the
disclosures required by the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to
report certain opinions and matters as described below.
Strategic report and Report of the Directors
In our opinion, based on the work undertaken in the course of the audit, the information given in the
Strategic report and Report of the Directors for the year ended 31 March 2024 is consistent with the
financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the company and its environment obtained in the
course of the audit, we did not identify any material misstatements in the Strategic report and
Report of the Directors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly
prepared in accordance with the Companies Act 2006.
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Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern,
longer-term viability and that part of the corporate governance statement relating to the
company’s compliance with the provisions of the AIC Corporate Governance Code specified for our
review. Ouradditional responsibilities with respect to the corporate governance statement as other
information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the corporate governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit, and we have nothing material to add or
draw attention to in relation to:
– The directors’ confirmation that they have carried out a robust assessment of the emerging and
principal risks;
– The disclosures in the Annual Report that describe those principal risks, what procedures are
in place to identify emerging risks and an explanation of how these are being managed or
mitigated;
– The directors’ statement in 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 as to their assessment of the company’s prospects, the period this
assessment covers and why the period is appropriate; and
– The directors’ 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 its
assessment, including any related disclosures drawing attention to any necessary qualifications
or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the company was
substantially less in scope than an audit and only consisted of making inquiries and considering the
directors’ process supporting their statement; checking that the statement is in alignment with the
relevant provisions of the AIC Corporate Governance Code; and considering whether the statement
is consistent with the financial statements and our knowledge and understanding of the company
and its environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the corporate governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
– The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced
and understandable, and provides the information necessary for the members to assess the
company’s position, performance, business model and strategy;
– The section of the Annual Report that describes the review of effectiveness of risk management
and internal control systems; and
– The section of the Annual Report describing the work of the Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement
relating to the company’s compliance with the Code does not properly disclose a departure from
arelevant provision of the Code specified under the Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible
for the preparation of the financial statements in accordance with the applicable framework and for
being satisfied that they give a true and fair view. The directors are also responsible for such internal
control as they determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the company and industry, we identified that the principal risks of
non-compliance with laws and regulations related to environmental regulations, and we considered
the extent to which non-compliance might have a material effect on the financial statements. We
also considered those laws and regulations that have a direct impact on the financial statements
such as the Companies Act 2006 and UK Tax legislation, including section 1158 of the Corporation
Tax Act 2010 and the regulations made thereunder. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial statements (including the risk of override
of controls), and determined that the principal risks were related to the valuation of investment
and posting inappropriate journal entries to achieve desired financial results. Audit procedures
performed by the engagement team included:
– Discussions with management, including consideration of known or suspected instances of non-
compliance with laws and regulations and fraud;
– Evaluation of design and implementation of management’s controls designed to prevent and
detect irregularities. However, we have not relied on controls as substantive procedures are
determined to be more effective for this audit;
– Reviewing the minutes of meetings of the Board and its committees;
– Challenging the assumptions and judgments made by management in their significant accounting
estimates relating to the valuation of investments; and
– Identifying and testing journal entries, in particular certain journal entries posted with unusual
account combinations.
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Independent Auditor’s Report continued
to the members of SDCL Energy Efficiency Income Trust plc
Responsibilities for the financial statements and the audit continued
Auditors’ responsibilities for the audit of the financial statements continued
There are inherent limitations in the audit procedures described above. We are less likely to
become aware of instances of non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial statements. Also, the risk of not
detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances,
possibly using data auditing techniques. However, it typically involves selecting a limited number of
items for testing, rather than testing complete populations. We will often seek to target particular
items for testing based on their size or risk characteristics. In other cases, we will use audit sampling
to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on
the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a
body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose.
We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not obtained all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the company, or returns adequate for our
audit have not been received from branches not visited by us; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– the financial statements and the part of the Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit and Risk Committee, we were appointed by the
members on 10 December 2018 to audit the financial statements for the year ended 31 March2019
and subsequent financial periods. The period of total uninterrupted engagement is six years,
covering the years ended 31 March 2019 to 31 March 2024.
Other matter
The company is required by the Financial Conduct Authority Disclosure Guidance and Transparency
Rules to include these financial statements in an annual financial report prepared under the
structured digital format required by DTR 4.1.15R - 4.1.18R and filed on the National Storage
Mechanism of the Financial Conduct Authority. This auditors’ report provides no assurance over
whether the structured digital format annual financial report has been prepared in accordance with
those requirements.
Miles Saunders
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Watford
26 June 2024
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Statement of Comprehensive Income
For the year ended 31 March 2024
Note
For the
year ended
31 March 2024
£’millions
For the
year ended
31 March 2023
£’millions
Investment loss 5 (44.7) (7.8)
Total operating loss (44.7) (7.8)
Finance income 0.2 1.2
Fund expenses 6 (11.8) (12.0)
Loss for the year before tax (56.3) (18.6)
Tax on loss on ordinary activities 7 — —
Loss for the year (56.3) (18.6)
Total comprehensive loss for the year (56.3) (18.6)
Attributable to:
Equity holders of the Company (56.3) (18.6)
Loss per ordinary share (pence) 8 (5.2) (1.8)
The accompanying Notes are an integral part of these financial statements.
All items in the above Statement derive from continuing operations.
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Statement of Financial Position
As at 31 March 2024
Note
31 March 2024
£’millions
31 March 2023
£’millions
Non-current assets
Investment at fair value through profit or loss 11 983.8 1,127.8
983.8 1,127.8
Current assets
Trade and other receivables 0.2 0.6
Cash and cash equivalents 0.5 0.3
0.7 0.9
Current liabilities
Trade and other payables (2.6) (3.3)
Net current liabilities (1.9) (2.4)
Net assets 981.9 1,125.4
Capital and reserves
Share capital 12 11.1 11.1
Share premium 12 756.8 1,056.8
Other distributable reserves 12 339.3 39.3
(Accumulated losses)/retained earnings (125.3) 18.2
Total equity 981.9 1,125.4
Net assets per share
APM
(pence) 10 90.5 101.5
The accompanying Notes are an integral part of these financial statements.
The financial statements on pages 104 to 107 were approved by the Board of Directors on 26 June 2024 and signed on its behalf by:
Sarika Patel Tony Roper
Director Director
Company number: 11620959
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Statement of Changes in Shareholders’ Equity
For the year ended 31 March 2024
Note
Share capital
£’millions
Share premium
£’millions
Other
distributable
reserves
£’millions
Retained earnings
/(accumulated
losses)
£’millions
Total equity
£’millions
Balance at 1 April 2023 11.1 1,056.8 39.3 18.2 1,125.4
Share buyback 12 — — — (20.0) (20.0)
Share transaction costs 12 — — — (0.1) (0.1)
Cancellation of share premium account (300.0) 300.0 — —
Dividends paid 9 — — — (67.1) (67.1)
Total comprehensive loss for the year — — — (56.3) (56.3)
Balance at 31 March 2024 11.1 756.8 339.3 (125.3) 981.9
Note
Share capital
£’millions
Share premium
£’millions
Other
distributable
reserves
£’millions
Retained earnings
/(accumulated
losses)
£’millions
Total equity
£’millions
Balance at 1 April 2022 9.9 925.1 39.3 98.8 1,073.1
Shares issued 1.2 133.8 — — 135.0
Share issue costs — (2.1) — — (2.1)
Dividends paid 9 — — — (62.0) (62.0)
Total comprehensive income for the year — — — (18.6) (18.6)
Balance at 31 March 2023 11.1 1,056.8 39.3 18.2 1,125.4
The accompanying Notes are an integral part of these financial statements.
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Statement of Cash Flows
For the year ended 31 March 2024
Note
For the
year ended
31 March 2024
£’millions
For the
year ended
31 March 2023
£’millions
Cash flows from operating activities
Total comprehensive loss for the year before tax (56.3) (18.6)
Adjustments for:
Loss on investment at fair value through profit or loss 5 116.2 74.3
Loan interest income 5 (6.5) (9.0)
Operating cash flows before movements in working capital 53.4 46.7
Changes in working capital
Decrease/(increase) in trade and other receivables 0.4 (0.3)
(Decrease)/increase in trade and other payables (0.7) 1.8
Net cash generated from operating activities 53.1 48.2
Cash flows from investing activities
Additional investment in Holdco 11 (38.4) (292.4)
Loan principal repayment received 11 66.2 18.5
Loan interest income received 6.5 9.0
Net cash generated from/(used in) investing activities 34.3 (264.9)
Cash flows from financing activities
Proceeds from the issue of shares 12 — 135.0
Share buyback payments 12 (20.0) —
Payment of shares issue/buyback costs (0.1) (2.1)
Dividends paid 9 (67.1) (62.0)
Net cash (used in)/generated from financing activities (87.2) 70.9
Net movement during the year 0.2 (145.8)
Cash and cash equivalents at the beginning of the year 2 0.3 146.1
Cash and cash equivalents at the end of the year 2 0.5 0.3
The accompanying Notes are an integral part of these financial statements.
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Notes to the Financial Statements
For the year ended 31 March 2024
1. General Information
SDCL Energy Efficiency Income Trust plc (the “Company”) is a Public Company limited by shares,
incorporated on 12 October 2018 and registered and domiciled in England, United Kingdom, under
number 11620959 pursuant to the Companies Act 2006. The Company’s registered office and
principal place of business is The Scalpel, 18th Floor, 52 Lime Street, London, EC3M 7AF.
The Company’s ordinary shares were first admitted to the premium segment of the UK Listing
Authority’s Official List and to trading on the Main Market of the London Stock Exchange under the
ticker SEIT on 11 December 2018.
The Company’s objective is to generate an attractive total return for investors comprising stable
dividend income and capital preservation, with the opportunity for capital growth through the
acquiring and realising of a diverse portfolio of energy efficiency infrastructure projects.
The Company currently makes its investments through its principal holding company and single
subsidiary, SEEIT Holdco Limited (“Holdco”), and intermediate holding companies (together referred
to as the “Group”), which are directly owned by the Holdco. The Company controls the investment
policy of each of the Holdco and its intermediate holding companies in order to ensure that each will
act in a manner consistent with the investment policy of the Company.
The Company has appointed Sustainable Development Capital LLP as its Investment Manager
(the“Investment Manager”) pursuant to the Investment Management Agreement dated
22November 2018. The Investment Manager is registered in England and Wales under number
OC330266 pursuant to the Companies Act 2006. The Investment Manager is regulated by the FCA,
number 471124.
The financial statements are presented in pounds sterling because that is the currency of the
primary economic environment in which the Company operates. All values are rounded to the
nearest million (£ million), except otherwise indicated.
2. Significant Accounting Policies
a) Basis of accounting
The financial statements of the Company have been prepared in accordance with UK-adopted
International Accounting Standards and with the requirements of the Companies Act 2006, as
applicable to companies reporting under those standards. The financial statements are prepared
under the historical cost convention, except for certain investments and financial instruments
measured at fair value through profit or loss.
Fair value is the price that would be received on sale of an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another valuation technique. In estimating the
fair value of an asset or liability, the Company takes into account the characteristics of the asset or
liability if market participants would take those characteristics into account when pricing the asset
or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these
financial statements is determined on such a basis.
The principal accounting policies adopted are set out below and consistently applied, subject to
changes in accordance with any amendments in IFRS.
(1) New standards and amendments to existing standards effective 1 April 2023
The following standard has been issued and are effective for annual periods beginning 1 April 2023:
– IAS 8 (amended) – Amendments regarding the definition of accounting estimate – effective from
1 January 2023.
Adoption of the above did not have a material effect on the financial statements of the Company.
(2) New standards, amendments and interpretations effective after 1 April 2023 and
have not been early adopted
The following standards have been issued but are effective for annual periods beginning after
1April2023 and have not been adopted early;
– IFRS 7 (amended) – Amendments regarding supplier finance arrangements – effective from
1January 2024;
– IFRS 18 – Presentation and Disclosures in Financial Statements – effective from 1 January 2027.
IFRS 18 will not impact the recognition or measurement of items in the financial statements, but it
might change what an entity reports as its operating profit or loss;
– IAS 1 (amended) – Amendments regarding the classification of debt with covenants – effective
from 1 January 2024; and
– IAS 7 (amended) – Amendments regarding supplier finance arrangements – effective from
1January 2024.
Except as stated above, none of these are expected to have a material effect on the financial
statements of the Company.
b) IFRS 10 – basis of consolidation and investment entities exemption
The Company applies IFRS 10 Consolidated Financial Statements. As in the previous year, the
Directors have concluded that in accordance with IFRS 10, the Company continues to meet the
definition of an investment entity having re-evaluated the criteria (see below) that needs to be met.
The financial statements therefore comprise the results of the Company only and no subsidiaries are
consolidated on a line-by-line basis.
The Company invests its investable cash into SEEIT Holdco when a targeted investment has been
approved by the Investment Manager’s Investment Committee. The sole objective of the Holdco is
to enter into several energy efficiency projects, via individual corporate entities. The Holdco issues
equity and loans to finance the projects. Holdco also incurs overheads and borrowings on behalf of
the Group. As a result, the Directors have provided an alternative presentation of the Company’s
results in the Strategic Report, which includes a consolidation of Holdco.
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Notes to the Financial Statements continued
For the year ended 31 March 2024
2. Significant Accounting Policies continued
Under IFRS 10, investment entities are required to hold subsidiaries at fair value through profit or
loss rather than consolidate them. There are three key conditions to be met by the Company for it to
meet the definition of an investment entity. For each reporting period, the Directors assess whether
the Company continues to meet these conditions:
(i) the Company has obtained funds for the purpose of providing investors with investment
management services;
(ii) the business purpose of the Company, which was communicated directly to investors, is investing
solely for risk-adjusted returns (including having an exit strategy for investments); and
(iii) the performance of substantially all investments is measured and evaluated on a fair value basis.
The Company is an investment company, providing investors exposure to a diversified portfolio of
energy efficiency infrastructure projects that are managed for investment purposes.
During the year ended 31 March 2024, the Company, via Holdco, made additional investments but
primarily into existing investments. The Directors assessed that there was no fundamental change
to the Company and its portfolio of investment that would cause the Company not to satisfy the
conditions of an investment entity under IFRS 10. As a result, the Company continues to apply the
investment entity conditions under IFRS 10 to its financial statements.
c) Going concern
The Directors have considered the following current matters alongside the regular cash flow and
business activities in assessing that it is appropriate to prepare the financial statements on a going
concern basis:
Ukraine and Middle East conflicts
The Board and the Investment Manager have performed an assessment of the current exposure
to the conflicts in Ukraine, Russia and the Middle East and the potential impact to the Company’s
and the portfolio companies’ operations. The Company is a UK registered public company. Currently
neither the Company, the Investment Manager nor the Company’s investments conducts business
and operations in the regions; therefore the Company is not subject to any direct impact by this
event.
Manager duly considered any restriction imposed by relevant sanctions, and its impact on the
portfolio companies and have concluded there are no direct material implications.
Inflation and cost of energy crisis
The Company has carried out an assessment of the impact of the global rise in inflation on its
portfolio and have concluded that overall there is a positive correlation to inflation and there is no
adverse impact.
The Directors are satisfied that the Company has sufficient resources to continue in operation for
the foreseeable future, a period of not less than twelve months from the date of approval of the
financial statements. The Directors have reviewed the Company’s financial projections and cash flow
forecasts, including the potential impact from this and believe, based upon those projections and
forecasts and various risk mitigation measures in place, that it is appropriate to prepare the financial
statements on a going concern basis.
Regular cash flow and business activity
In assessing whether the Company is a going concern for a period of at least twelve months from the
approval of the Annual Report, the Directors have reviewed a cash flow forecast to December2025,
taking into consideration potential changes in investment and trading performanceand applying a
10% reduction in income to test the resilience of cash flows in the near term. The forecast results in
positive cash flows for the foreseeable future that meets the liabilities as they fall due.
They also reviewed a severe downside scenario where the Company receives no income from its
investment for the next twelve months but continues with existing committed payments for running
the Company. Even under this stress scenario, the Company would have sufficient cash reserves
to continue as a going concern. As at 31 March 2024, the Company’s net assets were £981.9 million
(31March 2023: £942.8 million), including cash balances of £0.5 million (31 March 2023: £0.5 million).
Further amounts of cash are held by the Company’s direct and indirect subsidiaries (including Holdco
which has c.£3.3 million (31 March 2023: c.£62 million) at the year end), which are sufficient to meet
current obligations as they fall due. The major cash outflows of the Company are the payment of
dividends and payments relating to the investment in new assets, both of which are discretionary.
The Company’s single subsidiary, Holdco, has £180m RCF that has adequate headroom in its
covenants that have been tested for historic and forward interest cover and loan to value limits. As
at 31March2024, £155 million (31 March 2023: £nil) of the RCF was drawn down. The Company is a
guarantor to the RCF but has no other guarantees or commitments.
Closing summary
The Directors are satisfied that the Company has sufficient resources to continue in operation for the
foreseeable future, a period of not less than twelve months from the date of approval of the interim
financial statements., and that it is appropriate to prepare the financial statements on a going
concern basis.
d) Segmental reporting
The Chief Operating Decision Maker (“CODM”), being the Board of Directors, is of the opinion that the
Company is engaged in a single segment of business, being investment in energy efficiency projects
to generate investment returns whilst preserving capital. The financial information used by the CODM
to manage the Company presents the business as a single segment.
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Notes to the Financial Statements continued
For the year ended 31 March 2024
2. Significant Accounting Policies continued
e) Foreign currency translation
Foreign currency and presentation currency
Items included in the financial statements of the Company are measured using the currency of the
primary economic environment in which the entity operates, the Company’s functional currency.
The financial statements are presented in pounds sterling which is the Company’s functional and
presentation currency.
Transactions and balances
Foreign currency transactions are translated into pounds sterling using the exchange rates prevailingat
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement of Comprehensive Income.
f) Income
Dividend income and investment income (including loan interest income) from financial assets at
fair value through profit or loss is recognised in the Statement of Comprehensive Income within
investment income when the Company’s right to receive payments is established.
Fair value gains on financial assets at fair value through profit or loss are recognised in the
Statement of Comprehensive Income at each valuation point.
Finance income comprises interest earned on cash held on deposit. Finance income is recognised
on an accruals basis. Loan interest income is accounted for on an accruals basis using the effective
interest method.
g) Dividends payable
Dividends to the Company’s shareholders are recognised when they become legally payable. In the
case of interim dividends, this is when they are paid. In the case of final dividends, this is when they
are approved by the shareholders at the AGM.
h) Fund expenses
All expenses including investment management fees, transaction costs and Non-Executive
Directors’ fees are accounted for on an accruals basis. Share issue expenses of the Company directly
attributable to the issue and listing of shares are charged to the share premium account.
i) Acquisition costs
Acquisition costs are expensed to the Statement of Comprehensive Income as they are incurred.
j) Taxation
The Company is approved as an Investment Trust Company (“ITC”) under sections 1158 and 1159 of
the Corporation Taxes Act 2010 and Part 2 Chapter 1 Statutory Instrument 2011/2999 for accounting
periods commencing on or after 25 May 2018. The approval is subject to the Company continuing
to meet the eligibility conditions of the Corporations Tax Act 2010 and the Statutory Instrument
2011/2999. The Company intends to ensure that it complies with the ITC regulations on an ongoing
basis and regularly monitors the conditions required to maintain ITC status.
From 1 April 2015, there was a single corporation tax on its income rate of 19%. This rate has
increased to 25% since 1 April 2023. Current tax is the expected tax payable on any taxable income
for the period, using tax rates that have been enacted or substantively enacted at the date of the
Statement of Financial Position and end of the relevant period. TheCompany may use taxable
losses from within the Group to relieve taxable profits in the Company and also income streams part
of the dividends paid into interest payments to achieve tax efficiency for the Company. The increase
in the headline rate of corporation tax does impact on the valuation of the Company’s investments.
k) Cash and cash equivalents
Cash and cash equivalents include deposits held at call with banks and other short-term deposits
with original maturities of three months or less. Cash is spread across three banks including at the
Money market fund managed by JP Morgan. It is a highly liquid investment and readily convertible to
a known amount of cash. There is no expected credit loss as the bank institutions have credit ratings
of at least BBB+ and all cash is held at call from the banks.
l) Financial instruments
Financial assets and financial liabilities are recognised in the Company’s Statement of Financial
Position when the Company becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the instrument
expire or the asset is transferred and the transfer qualifies for derecognition in accordance with IFRS
9 Financial Instruments.
Investments are recognised when the Company has control of the asset. Control is assessed
considering the purpose and design of the investments including any options to acquire the
investments where these options are substantive. The options are assessed for factors including the
exercise price and the incentives for exercise.
The Company classifies its financial assets in the following measurement categories:
– those to be measured subsequently at fair value through profit or loss; and
– those to be measured at amortised cost.
At initial recognition, the Company measures all investments at its transaction price net of
transaction costs that are directly attributable to the acquisition of the financial asset. The Company
subsequently measures all investments at fair value and changes in the fair value are recognised as
gains/(losses) on investments at fair value through profit or loss within investment income.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual
obligation is discharged, cancelled or expired.
m) Trade and other receivables
Trade and other receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. Those include VAT receivable and other receivables which
are intercompany balances due from subsidiaries. Receivables are initially recognised at fair value.
They are subsequently measured at amortised cost, less any expected credit loss.
The Company has assessed IFRS 9’s expected credit loss model and does not consider that there is
a material impact on these financial statements.
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Notes to the Financial Statements continued
For the year ended 31 March 2024
2. Significant Accounting Policies continued
n) Trade and other payables
Trade and other payables include accruals and other payables and initially are recognised at fair
value, and subsequently measured at amortised cost using the effective interest method.
o) Share capital and share premium
The Company’s ordinary shares are not redeemable and are classified as equity. Incremental costs
directly attributable to the issue of ordinary shares and share options are recognised as a deduction
in equity and are charged from the share premium account. The costs incurred in relation to the IPO
and subsequent fundraisings of the Company were charged from the share premium account.
p) Treasury shares
The Company recognises the purchase of its own equity instruments in treasury shares, which are
deducted from retained earnings. No gain or loss is recognised in the Statement of Comprehensive
Income on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
3. Critical Accounting Estimates and Judgements
The preparation of financial statements in accordance with IFRS requires the Directors to make
judgements, estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of income and expense during the year. Actual results could differ from those
estimates. 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
only affects that period or in the period and future periods if the revision affects both current and
future periods.
Judgements
Investment entity
As disclosed in Note 2, the Directors have concluded that the Company continues to meet
the definition of an investment entity as defined in IFRS 10. This conclusion involved a degree
of judgement and assessment as to whether the Company met the criteria outlined in the
accountingstandards.
Estimates
Investment valuations
The key area where estimates may be significant to the financial statements is the valuation of the
Company’s single subsidiary, SEEIT Holdco, which in turns holds investments in a portfolio that are
held at fair value (the “Portfolio Valuation
APM
”). See Note 11 for calculation.
IFRS 13 establishes a single source of guidance for fair value measurements and disclosures
about fair value measurements. Fair value is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants at the
measurementdate.
The Board of Directors has appointed the Investment Manager to produce the Portfolio Valuation
APM
at 31 March 2024, which includes estimates of future cash flows that have the potential to have a
material effect on the measurement of fair value.
The key estimates made include:
Discount rate
The weighted average unlevered discount rate (post tax) applied in the 31 March 2024 valuation was
8.6% (31 March 2023: 7.7%) and 9.4% on a levered basis (31 March 2023: 8.5%). The discount rate is
considered one of the most unobservable inputs through which an increase or decrease would have
a material impact on the fair value of investment at fair value through profit or loss. An appropriate
discount rate is applied to each underlying asset. The range of discount rates applied and its
sensitivity to movements in discount rates is shown in Note 4.
Macroeconomic assumptions
Further estimates have been made on the key macroeconomic assumptions that are likely to have
a material effect on the measurement of fair value being inflation, corporation tax and foreign
exchange, which are further described in Note 4.
Investment-specific cash flow assumptions and sensitivities
The below highlights several key investment-specific estimates made for the Portfolio Valuation
APM
at 31 March 2024:
Primary Energy – An estimate has been made to determine the future demand for generation by
the offtaker in the PCI asset. If the demand assumed is 25% less than estimated, the Investment
at fair value through profit or loss at 31 March 2024 could be reduced by between an estimated
£5million and £15 million, assuming no other mitigants are available.
Onyx – The process of converting development assets into construction and then operational
stages has been adversely affected by delays in the financial year, however an estimate has been
made for the amount of megawatts that is expected to be become mechanically complete and earn
revenues in 2025 and 2026. If only 75% of the megawatts are achieved in each of 2025 and 2026,
the Investment at fair value through profit or loss at 31 March 2024 could be reduced by between an
estimated £5 million and £10 million, assuming no other mitigants are available.
An estimate has been made for the amount of megawatts that is expected to be deployed from
the development pipeline in 2026 to 2030. This estimate and methodology has not changed since
March2023, however if only 50% of the development pipeline is achieved, including community solar
projects, the Investment at fair value through profit or loss at 31 March 2024 would be reduced by
between an estimated £25 million and £35 million, assuming no other mitigants are available.
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Notes to the Financial Statements continued
For the year ended 31 March 2024
3. Critical Accounting Estimates and Judgements continued
Oliva Spanish Cogeneration - There are updates under the regulatory regime governing the
nine investments that have currently been published in draft form and awaiting finalisation. Key
estimates are made in applying the draft legislation, specifically regarding the compensation for gas
distribution and grid costs that is forecast. If this compensation is excluded from the final legislation
and no other changes are introduced, then the Investment at fair value through profit or loss at
31March 2024 could be reduced by between an estimated £15 million and £25 million.
RED-Rochester - Estimates have been made regarding future capital expenditure projects at the
site and the expected increase to overall revenues, the most material being the construction of
a cogeneration plant expected to complete in 2025. If the cogeneration plant delivers only 75%
of the energy savings currently assumed, the Investment at fair value through profit or loss at
31March2024 would be reduced by between an estimated £10 million and £20 million.
Estimates have been included for revenues related to providing electricity to customers based on
projected demands and an assumed power price charged to customers. If market power pricing is
25% lower than assumed, the Investment at fair value through profit or loss at 31 March 2024 would
be reduced by between £5 million and £10 million.
In addition, estimates have been included, based on projected growth of earnings in the
RED-Rochester business, that a gain share pay-out will be made to the external asset management
team tasked with delivering the growth within the next seven years, linked to the investment
increasing its profitability. Furthermore, the projected growth is assumed to deliver a business
capable of continuing to serve customers at the Eastman Business Park for a further 20 years
beyond the c. 20 years lifetime assumed at the time of the original investment. Should only 15 years
of the targeted economic life extension occur, the Investment at fair value through profit or loss at 31
March 2024 would be reduced by between £10 million and £20 million, assuming no other mitigants
are available.
Estimates have been included for the timing of completion of construction work undertaken by
Li-Cycle and the levels of their near to medium term and long term demand for energy services. If
there is a material delay in the construction work and a 50% reduction in future demand for energy
services, the Investment at fair value through profit or loss at 31 March 2024 would be reduced by
between £10 million and £25 million, assuming no other mitigants are available.
Värtan Gas - The future cash flows includes an assumption that the management team will target a
decline in customer numbers at a year-on-year rate that is lower than the historic average decline.
There are also a number of accretive expansion opportunities for the Värtan Gas investment in the
Stockholm region’s transport sector for which estimates have been made around the future growth
profile in relation to decarbonisation targets and electrification. If the recent historic average rate
to customers is applied for the next five years and no growth in revenue from transport is achieved
over the next ten years, the Investment at fair value through profit or loss may potentially reduce by
between £5 million and £10 million, assuming no other mitigants are available.
4. Financial Instruments
Valuation methodology
The Company has a single investment wholly owned holding company (Holdco). It recognises this
investment at fair value. To derive the fair value of Holdco, the Company determines the fair value of
investment held directly or indirectly by Holdco and adjusts for any other assets and liabilities. See
Note 11 for a reconciliation of this fair value.
The valuation methodology applied by Holdco to determine the fair value of its investments is
described below and is consistent with the methodology described in the March 2023 Annual Report.
The Directors have satisfied themselves as to the methodology used and the discount rates and
keyassumptions applied in producing the valuations. All investments are at fair value through profit
or loss.
For non-market traded investments (being all the investments in the current portfolio), the valuation
is based on a discounted cash flow methodology and adjusted in accordance with the IPEV
(International Private Equity and Venture Capital) valuation guidelines where appropriate to comply
with IFRS 13 and IFRS 9, given the special nature of infrastructure investments. Where an investment
is traded in an open market, a market quote is used. Certain investments may be held at cost if in
the early part of a construction phase, however this will still be supported by a discounted cash flow
analysis or similar method to determine fair value. For certain investments, fair value is determined
through assuming a price that can be achieved per MW.
The Investment Manager exercises its judgement in assessing the expected future cash flows from each
investment based on the project’s expected life and the financial models produced for each project
company and adjusts the cash flows where necessary to take into account key external macroeconomic
assumptions and specific operating assumptions. Assumptions for future cash flows may include
successful recontracting and project life extensions, as well as cash flow linked to assumptions made on
growth rates and further business development opportunities within existingprojects.
The fair value for each investment is then derived from the application of an appropriate market
discount rate (on an unlevered basis) to reflect the perceived risk to the investment’s future cash
flows and the relevant year-end foreign currency exchange rate to give the present value of those
cash flows. Where relevant, project-level debt balances are then netted off to arrive at the valuation
for each investment The discount rate takes into account risks associated with the financing of an
investment such as investment risks (e.g. liquidity, currency risks, market appetite), any risks to the
investment’s earnings (e.g. predictability and covenant of the income) and a thorough assessment
ofcounterparty credit risk, all of which may be differentiated by the phase of the investment.
Specific risks related to each asset that can be attributed to climate-related risks are assessed
and where required, adjustments are made to expected future cash flows or reflected in the
asset-specific discount rate that is applied.
The Investment Manager uses its judgement in arriving at the appropriate discount rate. This is
based on its knowledge of the market, taking into account intelligence gained from its bidding
activities, discussions with financial advisers in the appropriate market and publicly available
information on relevant transactions.
Fair value measurement by level
IFRS 13 requires disclosure of fair value measurement by level. Fair value measurements are
categorised into Level 1, 2 or 3 based on the degree to which inputs to the fair value measurements
are observable and the significance of the inputs to the fair value measurement in its entirety which
are described as follows:
– Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the
Company can access at the measurement date;
– Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for
the asset or liability, either directly or indirectly; and
– Level 3 inputs are unobservable inputs for the asset or liability.
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Notes to the Financial Statements continued
For the year ended 31 March 2024
4. Financial Instruments continued
Investment at fair value through profitorloss
Level 1
£’millions
Level 2
£’millions
Level 3
£’millions
31 March 2024 — — 983.8
31 March 2023 — — 1,127.8
The Company’s indirect investments have been classified as Level 3 as the investments are not traded and contain unobservable inputs. As the fair value of the Company’s equity and loan investments in the
Holdco is ultimately determined by the underlying fair values of the SPV investments or debt schedules, the Company’s sensitivity analysis of reasonably possible alternative input assumptions is the same
across all its investments. The reconciliation of Level 3 fair value is disclosed in Note 11.
Valuation assumptions
31 March 2024 31 March 2023
Inflation rates UK (RPI) 3.3% declining to 2.9% by 2026, 3.0% p.a. long term 7.8% declining to 3.0% by 2025, 3.0% p.a. long term
UK (CPI) 2.5% declining to 2.2% by 2026, 2.0% p.a. long term 6.6% declining to 1.5% by 2025, 2.0% p.a. long term
Spain (CPI) 2.9% declining to 2.0% by 2026, 2.0% p.a. long term 4.6% declining to 2.1% by 2025, 2.0% p.a. long term
Sweden (CPI) 2.9% declining to 2.0% by 2026, 2.0% p.a. long term 7.0% declining to 2.2% by 2025, 2.0% p.a. long term
Singapore (CPI) 3.0% declining to 2.0% by 2026, 2.0% p.a. long term 5.0% declining to 2.0% by 2025, 2.0% p.a. long term
Ireland (CPI) 2.3% declining 1.7% by 2026, 2.0% p.a. long term 5.8% declining to 2.3% by 2025, 2.0% p.a. long term
USA (CPI) 2.6% declining to 2.2% by 2026, 2.0% p.a. long term 3.7% declining to 2.1% by 2025, 2.0% p.a. long term
Tax rates UK 25% 25%
Spain 25% 25%
Sweden 20.6% 20.6%
Singapore 17% 17%
Ireland 12.5% 12.5%
USA 21% Federal & 3% to 9% States rates 21% Federal & 3-9% State rates
Foreign exchange rates EUR/GBP 0.86 0.88
SEK/GBP 0.07 0.08
SGD/GBP 0.59 0.61
USD/GBP 0.79 0.81
Discount rates
The discount rates used for valuing the investments in the portfolio are as follows:
31 March 2024 31 March 2023
Weighted average discount rate (on unlevered basis) 8.6% 7.7%
Weighted average discount rate (on levered basis) 9.4% 8.5%
Discount rates 5.15% to 11.40% 4.75% to 10.25%
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Notes to the Financial Statements continued
For the year ended 31 March 2024
4. Financial Instruments continued
Sensitivities
The sensitivities below show the effect on net asset value
APM
of assuming a different range for each key input assumption, in each case applying a range that is considered to be a reasonable and plausible
outcome for the market in which the Company has invested.
Discount rates
A change to the weighted average levered discount rate by plus or minus 0.5% has the following effect on the net assets.
Discount rate NAV/share
APM
impact -0.5% change Net asset value
APM
+0.5% change NAV/share
APM
impact
31 March 2024 5.0p £53.9m £981.9m £(49.6)m (4.6)p
31 March 2023 5.0p £55.1m £1,125.4m £(50.3)m (4.5)p
Inflation rates
The Portfolio Valuation
APM
assumes long-term inflation as indicated above in the UK, USA, Spain, Singapore, Portugal and Sweden. A change in inflation rate by plus or minus 1.0% has the following effect on the
net assets, with all other variables held constant.
Inflation rate NAV/share
APM
impact
-1% (2023: -0.5%)
change Net asset value
APM
+1% (2023: +0.5%)
change NAV/share
APM
impact
31 March 2024 (4.4)p £(47.7)m £981.9m £57.2m 5.3p
31 March 2023 (1.5)p £(16.4)m £1,125.4m £18.3m 1.7p
Corporation tax rates
The Portfolio Valuation
APM
assumes tax rates based on the jurisdiction. A change in the corporate tax rate by plus or minus 5% has the following effect on the net assets, with all other variables held constant.
Corporation tax rate NAV/share
APM
impact -5% change Net asset value
APM
+5% change NAV/share
APM
impact
31 March 2024 3.4p £36.6m £981.9m £(36.4)m (3.3)p
31 March 2023 2.7p £29.5m £1,125.4m £(29.8)m (2.7)p
Foreign exchange rates
The Portfolio Valuation
APM
assumes foreign exchange rates based on the relevant foreign exchange rates against GBP at the reporting date. A change in the foreign exchange rate by plus or minus 10% (GBP
against euro, Swedish krona, Singapore dollar and US dollar) has the following effect on the NAV, with all other variables held constant. The effect is shown after the effect of current level of hedging which
reduces the impact of foreign exchange movements on the Company’s net assets.
Foreign exchange rate NAV/share
APM
impact -10% change Net asset value
APM
+10% change NAV/share
APM
impact
31 March 2024 0.9p £93.7m £981.9m £(93.7)m (0.9)p
31 March 2023 0.8p £9.0m £1,125.4m £(9.0)m (0.8)p
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Notes to the Financial Statements continued
For the year ended 31 March 2024
7. Tax
The tax for the year shown in the Statement of Comprehensive Income is as follows.
Year ended
31 March 2024
£’millions
Year ended
31 March 2023
£’millions
Loss for the year before taxation (56.3) (18.6)
Tax on loss on ordinary activities for the year multiplied
by the standard rate of corporation tax of 25%
(31March2023: 19%) (14.1) (3.5)
Fair value movements (not subject to taxation) 29.0 14.1
Dividends received (not subject to taxation) (16.3) (10.9)
Surrendering of tax losses to unconsolidated subsidiaries 1.4 0.3
Total tax charge — —
The corporation tax rate increased from 19% to 25%, with effect from 1 April 2023. No deferred tax
was recognised in the periods.
8. Profit/(loss) per Ordinary Share
Year ended
31 March 2024
Year ended
31 March 2023
Profit/(loss) for the year (£’millions) 56.3 (18.6)
Weighted average number of ordinary shares (‘000) 1,090,075 1,056,150
Loss per ordinary share (pence) (5.2) (1.8)
There is no dilutive element during the current or prior financial year, or subsequent to the
financialyear.
5. Investment loss
Year ended
31 March 2024
£’millions
Year ended
31 March 2023
£’millions
Dividend income 65.0 57.5
Loss on investment at fair value through profit or loss
(Note 11) (116.2) (74.3)
Loan interest income 6.5 9.0
Investment loss (44.7) (7.8)
Interest income is in respect of coupon bearing loan notes issued to the Company by Holdco
(Note15). The loan notes accrue interest at 6%, are unsecured and repayable in full on 18 April 2039.
Loan Interest income is recognised in the Statement of Comprehensive Income on an accruals basis.
The loss/gain on investment is unrealised.
6. Fund Expenses
Year ended
31 March 2024
£’millions
Year ended
31 March 2023
£’millions
Investment management fees (Note 15) 9.2 9.6
Non-Executive Directors’ fees (Note 16) 0.3 0.3
Other expenses 1.6 1.3
Fees to the Company’s independent auditor
- for the audit of the statutory financial statements 0.7 0.7
- for audit-related assurance services 0.1 0.1
Fund expenses 11.8 12.0
As at 31 March 2024, the Company had no employees (31 March 2023: nil) apart from Directors in
office. The Company confirms that it has no key management personnel, apart from the Directors
disclosed in Directors’ Remuneration Report on pages 87 to 91 of the Annual Report. There is
no other compensation apart from those disclosed. Additional fees relating to the audit of the
Company’s subsidiaries were £0.3m (2023: £0.3m).
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Notes to the Financial Statements continued
For the year ended 31 March 2024
9. Dividends
Year ended
31 March 2024
£’millions
Year ended
31 March 2023
£’millions
Amounts recognised as distributions to equity holders during the year:
Fourth quarterly interim dividend for the year ended 31 March 2022 of 1.405 pence per share — 13.9
First quarterly interim dividend for the year ended 31 March 2023 of 1.5 pence per share — 14.9
Second quarterly interim dividend for the year ended 31 March 2023 of 1.5 pence per share — 16.6
Third quarterly interim dividend for the year ended 31 March 2023 of 1.5 pence per share — 16.6
Fourth quarterly interim dividend for the year ended 31 March 2023 of 1.5 pence per share 16.4 —
First quarterly interim dividend for the year ended 31 March 2024 of 1.56 pence per share 16.9 —
Second quarterly interim dividend for the year ended 31 March 2024 of 1.56 pence per share 16.9 —
Third quarterly interim dividend for the year ended 31 March 2024 of 1.56 pence per share 16.9 —
Total dividends 67.1 62.0
All dividends have been paid out of distributable reserves. Further information on distributable reserves can be found in Note 12.
10. Net Assets per Share
APM
Year ended
31 March 2024
Year ended
31 March 2023
Shareholders’ equity (£’millions) 981.9 1,125.4
Number of ordinary shares (‘000) 1,085,420 1,108,709
Net assets per ordinary share (pence) 90.5 101.5
11. Investment at Fair Value through Profit or Loss
The Company recognises the investment in Holdco, its single directly owned holding company, at fair value. Holdco’s fair value includes the fair value of each of the individual project companies and holding
companies in which the Holdco holds a direct or an indirect investment, along with the working capital of Holdco.
Year ended
31 March 2024
£’millions
Year ended
31 March 2023
£’millions
Brought forward investment at fair value through profit orloss 1,127.8 928.2
Loan investments in the year — —
Equity investments in the year 38.4 292.4
Loan principal repaid in the year (66.2) (18.5)
Movement in fair value (116.2) (74.3)
Closing investment at fair value through profit or loss 983.8 1,127.8
Movement in fair value is recognised through investment income in the Statement of Comprehensive Income (see Note 5).
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Notes to the Financial Statements continued
For the year ended 31 March 2024
11. Investment at Fair Value through Profit or Loss continued
Of the closing investment at fair value through profit and loss balance, £65 million (31 March2023:
£131 million) relates to loan investment (also see Note 5) and £916 million (31 March 2023:
£996million) relates to equity investment.
A reconciliation between the Portfolio Valuation
APM
, being the valuation of the investment portfolio
held by Holdco, and the investment at fair value through profit or loss per the Statement of Financial
Position is provided below. The principal differences are the balances in Holdco for cash and
workingcapital.
Year ended
31 March 2024
£’millions
Year ended
31 March 2023
£’millions
Portfolio Valuation (see Financial Review and Valuation
Update for details)
1,117.4 1,099.6
Holdco cash 3.4 65.4
Holdco intercompany debt 65.2 —
Holdco RCF (155.0) —
Holdco net working capital (47.2) (37.2)
Investment at fair value per Statement of
FinancialPosition 983.8 1,127.8
Investments by the Company
During the year ended 31 March 2024, the Company invested £32.7 million (31 March 2023:
£292.4million) into Holdco for new portfolio investments and to fund acquisition costs. Acquisition
costs are expensed to the income statement at Holdco as they occur.
Portfolio investments, via Holdco
During the year ended 31 March 2024, Holdco invested £161 million (31 March 2023: £236 million)
inportfolio investments.
Project
Investment/Commitment
Date Type Location
Investment/
Commitment Amount
Spark US Energy Efficiency 2 Various in the period Organic USA c.£9.0m
RED-Rochester Various in the period Organic USA c.£35.8m
Onyx – HoldCo Various in the period Organic USA c.£61.1m
Tallaght Hospital July 2023 Organic Ireland c.£1.5m
Turntide August 2023 Organic USA c.£3.1m
Biocpower Various in the period Organic UK c.£0.4m
EV Networks Various in the period Organic UK c.£10.0m
Project
Investment/Commitment
Date Type Location
Investment/
Commitment Amount
FES Various in the period Organic USA c.£36.6m
CPP 1 June 2023 New UK c.£1.2m
Rondo Energy June 2023 New USA c.£2.4m
c£161.1m
12. Share Capital and Share Premium
Ordinary shares of £0.01
Year ended
31 March 2024
‘000
Year ended
31 March 2023
‘000
Authorised and issued at the beginning of the year 1,108,709 990,288
Shares issued – during the year — 118,421
Share buyback
1
(23,289) —
Authorised and issued at the end of year 1,085,420 1,108,709
Treasury shares
Year ended
31 March 2024
‘000
Year ended
31 March 2023
‘000
Balance at the beginning of the year — —
Share buyback during the year 23,289 —
Balance at the end of the year 23,289 —
Share Capital
31 March 2024
£’millions
31 March 2023
£’millions
Balance at the beginning of the year 11.1 9.9
Issue of ordinary shares — 1.2
Total as at 31 March 2024 11.1 11.1
Share premium
31 March 2024
£’millions
31 March 2023
£’millions
Balance at the beginning of the year 1,056.8 925.1
Issue of ordinary shares 133.8
Costs of issue of ordinary shares — (2.1)
Transfer to other distributable reserves (300.0) —
Total as at 31 March 2024 756.8 1,056.8
1. All repurchased shares are held in treasury.
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Notes to the Financial Statements continued
For the year ended 31 March 2024
12. Share Capital and Share Premium continued
In September 2022, the Company issued 118,421,053 new ordinary shares at a price of 114 pence per
share, raising gross proceeds of £135 million.
On 3 April 2023, the Company announced the commencement of a Share Buyback Programme.
Allrepurchased shares are held in treasury. £20 million of the Company’s available cash reserves was
allocated to the Share Buyback Programme and as at 31 March 2024, the full allocation has been
utilised.
The Company currently has one class of ordinary share in issue. All the holders of the £0.01 ordinary
shares, which total 1,108,709k (31 March 2023: 1,108,709k) and are fully paid (31 March 2023: fully
paid), are entitled to receive dividends as declared from time to time and are entitled to one vote
pershare at general meetings of the Company.
Other distributable reserves were created through the cancellation of the share premium account
on 12 March 2019. On 24 November 2023, the Company cancelled a further £300 million of its share
premium, creating additional distributable reserves. This amount is capable of being applied in any
manner in which the Company’s profits available for distribution, as determined in accordance with
the Companies Act 2006, are able to be applied.
Other distributable reserves and retained earnings are detailed in the Statement of Changes in
Shareholders’ Equity.
13. Financial Risk Management
Financial risk management objectives
The objective of the Company’s financial risk is to manage and control risk exposure of the
underlying investment portfolio held by Holdco. The Board is responsible for overseeing the
management of financial risks; however, the review and management of financial risks is delegated
tothe Investment Manager. The Investment Manager monitors and manages the financial risks
relating to the operations of the Company through internal procedures and policies designed to
identify, monitor and manage the financial risks to which the Company is exposed.
These risks include market risk (including price risk, currency risk and interest rate risk), credit risk
andliquidity risk.
Price risk
The value of the investments directly and indirectly held by the Company is affected by the discount
rate applied to the expected future cash flows and as such may vary with movements in interest
rates, inflation, power prices, market prices host demand for energy services and competition for
these assets.
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. The Company receives loan interest, loan principal
and dividends from its single investment, Holdco, in sterling. However, the Company is indirectly
exposed to currency risk through its Holdco as its investments include non-sterling investments held
in euro, US dollar, Singapore dollar and Swedish krona.
The Company monitors its foreign exchange rate exposures using its near-term and long-term cash
flow forecasts. Its policy is to use foreign exchange hedging (via Holdco) to provide protection to the
level of sterling distributions that the Company aims to pay over the medium term, where considered
appropriate. This may involve the use of forward exchange.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates.
The Company, via Holdco, invests indirectly in loans in project companies, usually with fixed interest
rate coupons. Where floating rate debt is owned, the primary risk is that the portfolio’s cash flow will
be subject to variation depending on changes to base interest rates. The portfolio’s cash flows are
continually monitored and reforecasted to analyse the cash flow returns from investments.
The Company’s policy is to ensure that interest rates are sufficiently hedged, when entering into
material medium/long-term borrowings, to protect the Company and portfolio companies’ net
interest margins from significant fluctuations in interest rates. This may include engaging in interest
rate swaps or other rate derivative contracts at the subsidiary level under direction of the Company.
The Company’s financial assets and financial liabilities are at a pre-determined interest rate, as a
result the Company is subject to limited exposure to risk due to fluctuations in the prevailing levels
ofmarket interest rates.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
ina financial loss to the Company through a reduction in future expected cash receipts.
The key counterparties are the project companies in which the Company makes indirect investments
via Holdco. The projects companies’ near-term cash flows forecasts are used to monitor the timing
of cash receipts from project counterparties and are reviewed regularly to demonstrate the projects’
ability to pay interest and dividends when they fall due.
The Company does not have any significant credit risk exposure to any single counterparty in
relation to trade and other receivables. Ongoing credit evaluation is performed on the financial
condition of accounts receivable.
As at 31 March 2024, there were no receivables considered impaired (31 March 2023: £nil). At an
investment level, the credit risk relating to significant counterparties is reviewed on a regular basis
and potential adjustments to the discount rate are considered to recognise changes to these risks
where applicable.
The Company maintains its cash and cash equivalents across various banks to diversify credit risk.
These are subject to the Company’s credit monitoring policies including the monitoring of the credit
ratings issued by recognised credit rating agencies. The Company’s cash and deposits are held with
counterparties that meet strict investment rating criteria per the Company’s Treasury Policy.
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Notes to the Financial Statements continued
For the year ended 31 March 2024
13. Financial Risk Management continued
The Company is at risk of credit loss on its loans, receivables, cash and deposits. Underlying investments are held by Holdco at fair value using discounted cash flows. Receivables are primarily intercompany
and taxation. While cash and cash equivalents are subject to the impairment requirements of IFRS 9, there was no identified credit loss.
The Company’s maximum exposure to credit risk over financial assets is the carrying value of those assets in the Statement of Financial Position.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Board of Directors has established an appropriate liquidity Risk Management Framework for the
management of the Company’s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves by monitoring forecast
and actual cash flows and by matching the maturity profiles of assets and liabilities.
Risk is spread by holding cash at three separate banking institutions and the Company also ensures that Holdco has sufficient banking facilities by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities.
Unconsolidated project companies are subject to contractual agreements that may impose temporary restrictions on their ability to distribute cash. Such restrictions are not deemed significant in the context
of the overall liquidity.
The table below shows the maturity of the Company’s non-derivative financial assets and liabilities. The amounts disclosed are contractual, undiscounted cash flows and may differ from the actual cash flows
received or paid in the future as a result of early repayments. Balances due within twelve months equal their carrying balances as the impact of discounting is not significant.
As at 31 March 2024
Up to
3 months
£’millions
Between 3 and
12 months
£’millions
Between 1 and
5 years
£’millions
Total
£’millions
Assets
Cash and cash equivalents 0.5 — — 0.5
Trade and other receivables 0.1 — — 0.1
Liabilities
Trade and other payables (2.5) — — (2.5)
Total (1.9) — — (1.9)
As at 31 March 2023
Up to
3 months
£’millions
Between 3 and
12 months
£’millions
Between 1 and
5 years
£’millions
Total
£’millions
Assets
Cash and cash equivalents 0.3 — — 0.3
Trade and other receivables 0.5 — — 0.5
Liabilities
Trade and other payables (3.3) — — (3.3)
Total (2.4) — — (2.4)
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Notes to the Financial Statements continued
For the year ended 31 March 2024
13. Financial Risk Management continued
Capital management
The Company manages its capital to ensure that it will be able to continue as a going concern while
maximising the return to shareholders. In accordance with the Company’s investment policy, the
Company’s principal use of cash (including the proceeds of the IPO) has been to fund investments via
Holdco as well as ongoing operational expenses.
The Board, with the assistance of the Investment Manager, monitors and reviews the broad structure
of the Company’s capital on an ongoing basis. The capital structure of the Company consists entirely
of equity (comprising issued capital, other distributable reserves and retained earnings).
The Company is not subject to any externally imposed capital requirements.
14. Related Undertakings
The following table shows the Company’s single direct subsidiary (SEEIT Holdco Limited). Appendix A
lists the Company’s indirect subsidiaries through SEEIT Holdco Limited.
Investment
Country of
incorporation
& place of business
Shareholding at
31 March 2024
Shareholding at
31 March 2023
SEEIT Holdco Limited United Kingdom 100% 100%
15. Related Parties
The Company and Sustainable Development Capital LLP (the “Investment Manager”) have entered
into the Investment Management Agreement pursuant to which the Investment Manager has
been given responsibility, subject to the overall supervision of the Board, for active discretionary
investment management of the Company’s portfolio in accordance with the Company’s investment
objective and policy.
As the entity appointed to be responsible for risk management and portfolio management, the
Investment Manager is the Company’s AIFM. The Investment Manager has full discretion under
the Investment Management Agreement to make investments in accordance with the Company’s
investment policy from time to time. This discretion is, however, subject to: (i) the Board’s ability
to give instructions to the Investment Manager from time to time; and (ii) the requirement of the
Board to approve certain investments where the Investment Manager has a conflict of interest in
accordance with the terms of the Investment Management Agreement. The Investment Manager
also has responsibility for financial administration and investor relations, advising the Company and
its Group in relation to the strategic management of the portfolio, advising the Company in relation
to any significant acquisitions or investments and monitoring the Company’s funding requirements.
Under the terms of the Investment Management Agreement, the Investment Manager will be entitled
to a fee calculated at the rate of:
– 0.9%, per annum of the adjusted NAV
APM
in respect of the net asset value
APM
of up to, and
including, £750 million; and
– 0.8%, per annum of the adjusted NAV
APM
in respect of the net asset value
APM
in excess of
£750million.
The management fee is calculated using an adjusted NAV which is the latest published NAV
APM
at the relevant time, less uncommitted cash and adjusted on a daily basis for new acquisitions, new
cash committed to investments, disposals and changes in amounts of debt drawn.
The management fee accrues monthly and is invoiced monthly in arrears. During the year ended
31March 2024, management fees of £9.2 million (31 March 2023: £9.6 million) were incurred of which
£1.4 million (31 March 2023: £2.5 million) was payable at the year end.
During the year ended 31 March 2024, £38.4 million (31 March 2023: £292.4 million) of funding was
provided by the Company to the Holdco for investment acquisitions and the repayment of the RCF
utilised by Holdco.
During the year ended 31 March 2024, coupon bearing loan notes of £nil (31 March 2023: £nil) were
issued. During the year ended 31 March 2024, Holdco had repaid coupon bearing loan notes of
£66.2million (31 March 2023: £18.5 million). In the year to 31 March 2024, £6.5 million interest had
accrued on the loan notes (31 March 2023: £8.9 million) of which £nil is outstanding at the year end
(31March 2023: £0.2 million).
16. Key Management Personnel Transactions
The Directors of the Company, who are considered to be key management, received fees for their
services. Their fees were £0.3 million (disclosed as Non-Executive Directors’ fees in Note 6) in the
year (31 March 2023: £0.3 million), which included £289,000 for Director salaries (31 March2023:
£289,000), £18,000 for national insurance contributions (31 March 2023: £18,000) and £11,000 for
thereimbursement of expenses (31 March 2023: £10,000).
17. Guarantees and Other Commitments
The Company is the guarantor of the RCF between Holdco and Investec Bank plc.
The Company holds a revolving credit facility (“RCF”) that it holds through its wholly owned
subsidiary, SEEIT Holdco, amounting to £180 million. The RCF, which is SONIA linked and has a margin
of 2.65%, with an initial expiry date of June 2024 with options to extend for a further two years and
includes an accordion function for a further £20 million increase on an uncommitted basis. Post year
end, the RCF was extended to June 2026.
18. Events After the Reporting Period
The Directors have evaluated subsequent events from the date of the financial statements through
to the date the financial statements were available to be issued.
Between April and June 2024, the Company made the following investments, via SEEIT Holdco:
– a further investment c.£22.2 million in Onyx; and
– a further investment c.£2.1 million in FES Lighting.
The Company completed the sale of UU Solar for approximately £90 million in May.
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Investment Policy
Investment
Country of
incorporation &
place of business
Shareholding at
31 March 2024
COGEN TWO LLC USA 100%
SEEIT CAPITAL LLC USA 100%
SEEIT CAPITAL II LLC USA 100%
SEEIT PE 1 LLC USA 100%
SEEIT PE 2 LLC USA 100%
PERC Midco LLC USA 100%
PERC Holdings 2 LLC USA 100%
Primary Energy Recycling Corporation USA 100%
Primary Energy Recycling Holdings LLC USA 100%
Primary Energy Operations LLC USA 100%
Cokenergy LLC USA 100%
North Lake Energy LLC USA 100%
Portside Energy LLC USA 100%
Ironside Energy LLC USA 100%
Harbor Coal LLC USA 100%
PCI Associates USA 50%
SEEIT Red Holdco LLC USA 100%
SEEIT District Energy LLC USA 100%
Recycled Energy Development LLC USA 100%
RED-Rochester LLC USA 100%
SEEIT Hemisphere Holdco LLC USA 100%
SEEIT Hemisphere I LLC USA 100%
SEEIT Hemisphere II LLC USA 100%
SEEIT Hemisphere III LLC USA 100%
Iceotope Technologies US Inc USA 100%
SEEIT US Lighting Holdings LLC USA 100%
SEEIT US Lighting LLC USA 100%
SEEIT TT LLC USA 100%
Turntide Technologies Inc USA 100%
SEEIT ON Holdco LLC USA 100%
Appendix A – List of SEEIT plc’s Indirect Subsidiaries
The following table shows the Company’s indirect subsidiaries and related undertakings. As the
Company applies IFRS 10 and investment entities (Amendments to IFRS 10) (see Note 2), these
entities have not been consolidated in the preparation of these financial statements:
Investment
Country of
incorporation &
place of business
Shareholding at
31 March 2024
EECO Kingscourt Limited United Kingdom 100%
EECO Biomass No. 1 Limited United Kingdom 60%
EECO Data Centres No. 1 Limited United Kingdom 100%
EECO Wilton No. 1 Limited United Kingdom 100%
SmartEnergy Finance Two Limited United Kingdom 49%
SEEIT UK 1 Limited United Kingdom 100%
Combined Heat and Power Investments Limited United Kingdom 100%
Energy Efficient Global UK Project Limited United Kingdom 100%
SEEIT Asia Limited United Kingdom 100%
EECo Smithfield Limited United Kingdom 100%
SEEIT Europe 2 Limited United Kingdom 100%
SDCL Solar Edge Limited United Kingdom 100%
Zood Infrastructure Limited United Kingdom 100%
SEEIT Europe Limited United Kingdom 100%
SEEIT US TWO Limited United Kingdom 100%
SEEIT Magma Limited United Kingdom 100%
SEEIT Bloc Limited United Kingdom 100%
SEEIT CPP Limited United Kingdom 100%
SIAF Energia S.A United Kingdom 80%
Iceotope Technologies Limited United Kingdom 100%
Iceotope Liquid Cooling Limited United Kingdom 100%
KU:L Sistem Limited United Kingdom 100%
SEEIT Sol Limited United Kingdom 100%
Greenland Investment Partners Limited United Kingdom 100%
SEEIT US Limited USA 100%
SDCL TG COGEN LLC USA 71%
COGEN ONE LLC USA 100%
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Investment Policy continued
All related undertakings that have a place of business in the United Kingdom are registered in the
United Kingdom and their principal place of business and registered office is The Scalpel, 18th Floor,
52 Lime Street, London, EC3M 7AF.
All related undertakings that have a place of business in the US are registered in Delaware, US, and
their registered office is 1209 Orange Street, Wilmington, Delaware, US, with their principal place of
business in 1120 Avenue of the Americas, New York, New York 10036, US.
All related undertakings that have a place of business in Spain have their principal place of business
and registered office in Calle Príncipe de Vergara 112, Planta Cuarta, 28002 Madrid, Spain.
All related undertakings that have a place of business in Ireland have their principal place of business
and registered office in 55 Merrion Square South, Dublin, DO2 YD65.
All related undertakings that have a place of business in Singapore have their principal place of
business and registered office in 6 Eu Tong Sen Street #11-09, The Central, Singapore 059817.
All related undertakings that have a place of business in Sweden have their principal place of
business and registered office in RÅSUNDAVÄGEN 12, 16967 Solna, Stockholm County, Sweden.
Investment
Country of
incorporation &
place of business
Shareholding at
31 March 2024
ON Energy Storage LLC USA 100%
SEEIT BTB LLC USA 100%
SEEIT Net Zero LLC USA 100%
EE CO Ireland Hospitals TUH Limited Ireland 100%
Iceotope Technologies Limited Ireland 100%
SEEIPL 4 Pte Ltd Singapore 100%
SEEIPL 1 Pte Ltd Singapore 100%
SEEIPL 3 Pte Ltd Singapore 100%
Shire Oak Green Asia Portfolio 2 Pte Ltd Singapore 100%
Walworth Invest S.L. Spain 100%
SEEIT Oliva, S.A. Spain 100%
SEEIT GAS S.L Spain 100%
Compañía Orujera de Linares, S.L Spain 100%
Bioeléctrica de Linares, S.L. Spain 100%
Compañía Energética de Linares S.L. Spain 100%
Compañía Energética Pata de Mulo S.L. Spain 100%
Compañía Energética Puente del Obispo Spain 100%
Compañía Energética de La Roda, S.L. Spain 100%
Biomasas de Puente Genil. S.L. Spain 100%
Secaderos de Biomasa, S.L . Spain 100%
Compañía Energética Las Villas, S.L. Spain 90%
SEEIT EUROPE 2 SWEDEN Holding AB Sweden 100%
Värtan Gas Stockholm AB Sweden 100%
Värtan Gas AB Sweden 100%
Gasnätet Stockholm AB Sweden 100%
Stockholm Gas AB Sweden 100%
Baseload Capital Sweden AB Sweden 100%
SOGA Uranus Company Limited Vietnam 100%
SOGA Mercury Company Limited Vietnam 100%
SOGA Triton Company Limited Vietnam 100%
Appendix A – List of SEEIT plc’s Indirect Subsidiaries continued
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Company Information Key Company Data
Directors
Tony Roper (Chair)
Helen Clarkson
Emma Griffin
Christopher Knowles
Sarika Patel
Registered Office
The Scalpel, 18th Floor
52 Lime Street
London
EC3M 7AF
Company Secretary
andAdministrator
JTC (UK) Limited
The Scalpel, 18th Floor
52 Lime Street
London
EC3M 7AF
Sponsor, Broker and Placing Agent
Jefferies International Limited
100 Bishopsgate
London
EC2N 4JL
Legal Adviser
Herbert Smith Freehills LLP
Exchange House
Primrose Street
London
EC2A 2EG
Depositary
Indos Financial
The Scalpel, 18th Floor
52 Lime Street
London
EC3M 7AF
Investment Manager
Sustainable Development Capital
LLP
5th Floor
1 Vine Street
London
W1J 0AH
Independent Auditor
PricewaterhouseCoopers LLP
40 Clarendon Road
Watford
Hertfordshire
WD17 1JJ
Public Relations
TB Cardew
29 Lincoln’s Inn Fields
London
WC2A 3EG
Registrar
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Bankers
RBS International
440 Strand
London
WC2R 0QS
Company name SDCL ENERGY EFFICIENCY INCOME TRUST PLC
Registered address The Scalpel, 18th Floor
52 Lime Street
London
EC3M 7AF
Listing London Stock Exchange – Premium Listing
Ticker symbol SEIT
SEDOL BGHVZM4
Index inclusion FTSE All-Share, FTSE 250
Company year end 31 March
Dividend payments Quarterly
Investment Manager Sustainable Development Capital LLP
Company Secretary & Administrator JTC (UK) Limited
Shareholders’ funds £1.0 billion as at 31 March 2024 (31 March 2023: £1.1billion)
Market capitalisation £0.6 billion as at 31 March 2024 (31 March 2023: £0.9billion)
Management fees 0.9% p.a. of NAV
APM
(adjusted for uncommitted cash) upto
£750 million, 0.8% p.a. thereafter
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 by purchase in the market,
and they are permissible assets for SIPPs
Website www.seeitplc.com
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Sustainable Finance Disclosure Regulation (“SFDR”)
Periodic disclosure for the financial products referred to in Article 9, paragraphs 1 to 4a, of Regulation (EU) 2019/2088 and Article 5, first paragraph,
ofRegulation (EU) 2020/852
Sustainable investment means an investment
in an economic activity that contributes to an
environmental or social objective, provided that
the investment does not significantly harm any
environmental or social objective and that the
investee companies follow good governance
practices.
The EU Taxonomy is a classification system laid
down in Regulation (EU) 2020/852, establishing
a list of environmentally sustainable economic
activities. That Regulation does not lay down a
list of socially sustainable economic activities.
Sustainable investments with an environmental
objective might be aligned with the Taxonomy
or not.
Product name: SDCL Energy Efficiency Income Trust plc Legal entity identifier: 213800ZPSC7XUVD3NL94
Sustainable investment objective
Did this financial product have a sustainable investment objective?
Yes
No
It made sustainable investments with an environmental objective:
100%
1
in economic activities that qualify as environmentally sustainable
under the EU Taxonomy
in economic activities that do not qualify as environmentally
sustainable under the EU Taxonomy
It promoted Environmental/Social (E/S) characteristics and while
it did not have as its objective a sustainable investment, it had a
proportion of ___% of sustainable investments
with an environmental objective in economic activities that qualify
as environmentally sustainable under the EU Taxonomy
with an environmental objective in economic activities that do not
qualify as environmentally sustainable under the EU Taxonomy
with a social objective
It made sustainable investments with a social objective: 0 % It promoted E/S characteristics, but did not make any sustainable
investments
To what extent was the sustainable investment objective of this financial product met?
Sustainability indicators measure how
the environmental or social characteristics
promoted by the financial product are attained.
How did the sustainability indicators perform?
The sustainability indicators used to measure attainment of the sustainable investment objectives are carbon savings, also referred to as Scope 4
emissions in this report, (measured in tCO
2
e) and amounts of electrical and thermal energy saved (measured in kWh), as both directly relate to the
Company’s sustainable objective of climate change mitigation through energy efficiency projects.
972,201 tCO
2
e saved across the portfolio in year ended 31 March 2024.
379,589 MWh electrical and thermal energy saved in year ended 31 March 2024.
1. 100% of the Company’s investments fall into its definition of an energy efficiency project, which is critical to the Company’s definition of a sustainable investment. Due to its calculation methodology and local electrical grid carbon
intensities, the Company holds a few investments that do not currently contribute to the sustainability indicator of carbon savings. The Company still considers these to be energy efficiency projects and the Company has the intention
to decarbonise these projects overtime in line with the Investment Manager’s overall net zero commitment.
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Sustainable Finance Disclosure Regulation (“SFDR”) continued
…and compared to previous periods?
1,202,528 tCO
2
e saved across the portfolio in the period ending 31 March 2023.
387,868 MWh electrical and thermal energy saved in the period ending 31 March 2023.
The sustainability impact indicators reported during the period ending 31 March 2024 are lower than those reported or the previous period for the
followingreasons:
1. The carbon intensity of the electrical grids across the jurisdictions in which SEEIT invests in have decreased. SEEIT uses electrical grid carbon intensity
tobenchmark the carbon saving calculations for its investments, so as that benchmark decreases, so do the carbon savings.
2. The Investment Manager identified two issues with the way that investments have previously reported their carbon and energy savings. Correcting
these inaccuracies has led to a decrease in the portfolio’s overall carbon savings.
Principal adverse impacts are the most
significant negative impacts of investment
decisions on sustainability factors relating to
environmental, social and employee matters,
respect for human rights, anti-corruption and
anti-bribery matters.
How did the sustainable investments not cause significant harm to any sustainable investment objective?
The Company ensures that its sustainable investments do not cause significant harm to any sustainable investment objectives through its ESG
Management Process, which incorporates ESG considerations into investment due diligence and asset management. Potential investments are carefully
assessed during due diligence through multiple stages, including a go/no go review, initial due diligence review and detailed due diligence review.
Allmandatory and additional principle adverse impact indicators (PAI indicators) are assessed as part of the completion of this process. Each PAI indicator
has an associated risk threshold to determine next steps and confirm the investment does no significant harm.
Post-investment, SDCL’s asset management and ESG teams monitor the operations, policies and business conduct of an investment through bi-annual
andannual questionnaires to make sure it is not doing significant harm and is performing in line with the Company’s ESG minimum standards.
How were the indicators for adverse impacts on sustainability factors taken into account?
The Investment Manager uses the PAI indicators to confirm that the Company’s asset companies do no significant harm. When a potential investment
opportunity is assessed, the ESG questionnaire has specific questions covering mandatory and additional PAI indicators to determine whether the
investment breaches the risk thresholds set for each PAI indicator. The PAI indicators are then monitored annually through an ESG questionnaire, that asks
specific questions based around said indicators.
Were sustainable investments aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business
and Human Rights? Details:
The Company avoids investing in projects that are in breach of the ILO standards, UNGPs, UNGC or OECD Guidelines for Multinational Enterprises.
TheInvestment Manager actively considers alignment of potential investments with the OECD Guidelines and UNGPs through the ESG due diligence
process and investment decision and during the asset management phase.
How did this financial product consider principal adverse impacts on sustainability factors?
As disclosed above, the Company takes indicators for principal adverse impacts into account as part of the do no significant harm process. However, as the
Company’s AIFM does not consider principal adverse impacts at entity level under Article 4 SFDR, the Company does not consider principal adverse impacts
at product level for the purposes of Article 7 SFDR.
1. Energy savings refers to the electrical and thermal energy not consumed at the point of use by the customer due to a SEEIT investment.
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Sustainable Finance Disclosure Regulation (“SFDR”) continued
What were the top investments of this financial product?
The list includes the investments constituting
the greatest proportion of investments of the
financial product during the reference period
which is:
31 March 2023 – 31 March 2024
Large investments Sector % assets Country
RED-Rochester Energy 18 US
Onyx – Obsidian I Energy 12 US
Primary Energy – Cokenergy Energy 9 US
UU Solar Energy 8 UK
Värtan Gas Energy 6 Sweden
What was the proportion of sustainability-related investments?
Asset allocation describes the share of
investments in specific assets.
What was the asset allocation?
100% of the Company’s assets are sustainable with an environmental objective.
Investments
Environmental
100%
Social
Taxonomy-
aligned
Other
100%
#1 Sustainable
100%
#2 Not
sustainable
#1 Sustainable
covers sustainable investments with environmental or social
objectives
#2 Not sustainable
includes investments which do not qualify as sustainable
investments.
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Sustainable Finance Disclosure Regulation (“SFDR”) continued
What was the proportion of sustainability-related investments? continued
In which economic sectors were the investments made?
All of the Company’s investments fall into the “energy” sector.
To what extent were sustainable investments with an environmental objective aligned with the EU Taxonomy?
Taxonomy-aligned activities are expressed as
a share of:
– turnover reflects the “greenness” of investee
companies today;
– capital expenditure (“CapEx”) shows the
green investments made by investee
companies, relevant for a transition to a
green economy; and
– operational expenditure (“OpEx”) reflects
the green operational activities of investee
companies.
Currently, 0% of the Company’s assets are EU Taxonomy aligned.
To comply with the EU Taxonomy, the criteria for
fossil gas include limitations on emissions and
switching to renewable power or low-carbon
fuels by the end of 2035. For nuclear energy,
the criteria include comprehensive safety and
waste management rules.
Did the financial product invest in fossil gas and/or nuclear energy-related activities that comply with the EU Taxonomy
1
?
Yes
in fossil gas in nuclear energy
No
1. Fossil gas and/or nuclear-related activities will only comply with the EU Taxonomy where they contribute to limiting climate change (“climate change mitigation”) and do
not significantly harm any EU Taxonomy objectives - see explanatory note in the left hand margin. The full criteria for fossil gas and nuclear energy economic activities that
comply with the EU Taxonomy are laid down in Commission Delegated Regulation (EU) 2022/1214.
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Sustainable Finance Disclosure Regulation (“SFDR”) continued
To what extent were sustainable investments with an environmental objective aligned with the EU Taxonomy? continued
Did the financial product invest in fossil gas and/or nuclear energy-related activities that comply with the EU Taxonomy
1
? continued
The graphs below show in green the percentage of investments that were aligned with the EU Taxonomy. As there is no appropriate methodology to
determine the Taxonomy - alignment of sovereign bonds
1
, the first graph shows the Taxonomy alignment in relation to all the investments of the financial
product including sovereign bonds, while the second graph shows the Taxonomy alignment only in relation to the investments of the financial product other
than sovereign bonds.
1. Taxonomy-alignment of investments including sovereign bonds
1
1. For the purpose of these graphs, “sovereign bonds” consist of all sovereign
exposures.
2. Taxonomy-alignment of investments excluding sovereign bonds
1
Enabling activities directly enable other
activities to make a substantial contribution to
an environmental objective.
Transitional activities are activities for which
low-carbon alternatives are not yet available
and among others have GHG emission levels
corresponding to the best performance.
What was the share of investments made in transitional and enabling activities?
0%
How did the percentage of investments that were aligned with the EU Taxonomy compare with previous reference periods?
N/A
OpEx
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100%
Turnover
CapEx
OpEx
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100%
Turnover
CapEx
Taxonomy aligned investments 0%
Other investments 100%
Taxonomy aligned investments 0%
Other investments 100%
This graph represents 100% of the portfolio
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Sustainable Finance Disclosure Regulation (“SFDR”) continued
What was the share of sustainable investments with an environmental objective not aligned with the EU Taxonomy?
These are sustainable investments with an
environmental objective that do not take
into account the criteria for environmentally
sustainable economic activities under
Regulation (EU) 2020/852.
100% - the sustainable investments made by the Company all have an environmental objective and are 0% Taxonomy - aligned.
What was the share of socially sustainable investments?
0% - the Company does not make socially sustainable investments.
What investments were included under “#2 Not sustainable”, what was their purpose and were there any
minimum environmental or social safeguards
N/A – the Company allocated 100% of assets to sustainable investments. Other assets of the Company are limited to cash held on deposit and cash
equivalent investments, which may include short-term investments in money market type funds and tradeable debt securities.
What actions have been taken to attain the sustainable investment objective during the reference period?
As laid out in its pre-contractual disclosure and pursuant to the Company’s investment policy, save for any investment in cash and cash equivalents,
the Company principally invests in energy efficiency projects, the objectives of which are to achieve one or more of the following: a reduction in energy
consumption, a reduction of GHG emissions, or an increase in the supply of renewable energy. The sustainable objective achieved by the Company’s
investments is climate change mitigation, as all the investments must contribute to one or more of the above criteria.
During the period, the Company contributed to its sustainable investment objective of climate change mitigation through continued investment in energy
efficiency projects. The Company invested c.£161 million in the year, c. £142 million has been invested into four existing portfolio companies: Onyx (£61m),
RED-Rochester (£36m), FES (£36m) and EVN (£9m). A further c. £15m was invested in existing portfolio companies (Spark Energy Efficiency and Turntide)
earlier in the year prior to the Investment Manager deciding to stop pursuing these investments in line with the Capital Allocations Policy. The remaining
investments of c. £4m were made into two new investments (CPP and Rondo) early in the financial year as disclosed previously and were the only
investments made in the year not into existing portfolio companies.
More details of these investments and their sustainability characteristics are detailed in the Company’s Annual Report, The Investment Manager’s Report on
pages 12 to 14.
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Sustainable Finance Disclosure Regulation (“SFDR”) continued
?
How did this financial product perform compared to the reference benchmark?
Reference benchmarks are indexes to measure
whether the financial product attains the
environmental or social characteristics that
they promote.
The Company does not use a reference benchmark to assess ESG performance.
How did the reference benchmark differ from a broad market index?
N/A
How did this financial product perform with regard to the sustainability indicators to determine the alignment of the reference benchmark with the
sustainable investment objective?
N/A
How did this financial product perform compared with the reference benchmark?
N/A
How did this financial product perform compared with the broad market index?
N/A
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Glossary
AIC
the Association of Investment Companies
AIFM
an alternative investment fund manager, within
the meaning of the AIFM Directive
AIFM Directive
2011/61/EU of the European Parliament and
of the Council of 8 June 2011 on Alternative
Investment Fund Managers and amending
Directives 2003/41/EC and 2009/65/EC and
Regulations (EC) No. 1060/2009 and (EU)
No. 1095/2010; the Commission Delegated
Regulation (EU) No. 231/2013 of 19 December
2012 supplementing Directive 2011/61/EU of
the European Parliament and of the Council
with regard to exemptions, general operating
conditions, depositaries, leverage, transparency
and supervision
Board
the Board of Directors of the Company, who have
overall responsibility for the Company
CHP
combined heating and power
Company
SDCL Energy Efficiency Income Trust plc, a
limited liability company incorporated under
the Act in England and Wales on 12 October
2018 with registered number 11620959, whose
registered office is at 6th Floor, 125 London Wall,
London, EC2Y 5AS
Company SPV
a Project SPV owned by the Company or one of
its affiliates through which investments are made
Contractual Payment
the payments by the Counterparty to the
Company or relevant Project SPV under the
contractual arrangements governing an energy
efficiency project, whether such payments
take the form of a service charge, a fee, a loan
repayment or other forms of payments as may
be appropriate from time to time
Counterparty
the host, beneficiary or procurer of the energy
efficiency project with whom the Company has
entered into the energy efficiency project, either
directly or indirectly through the use of one or
more Project SPVs
Decentralised
energy that is produced close to where it will be
used, rather than at a large, centralised plant
elsewhere, delivered through a centralised grid
infrastructure
Energy Efficiency
using less energy to provide the same level of
energy. Efficient energy use is achieved primarily
through implementation of a more efficient
technology or process
Energy Efficiency Equipment
the equipment that is installed at or near the
premises of a counterparty or a site directly
associated with an energy efficiency project,
including, but not limited to, solar, storage,
CHP units, heat pumps, HVAC units, lighting
equipment, motors, controls, biomass boilers
and steam raising boilers (including IP steam
processors) and green fuels for use in the built
environment or transport produced at or near
the point of use or via a distribution network
Energy Efficiency Project
a project, the objective of which is to achieve one
or more of the following criteria:
– reduce energy consumed and/or related
GHG emissions arising from the existing and/
or future supply, transmission, distribution or
consumption of energy;
– reduce its Scope 1 GHG emissions (“Direct
GHG emissions occur from sources that are
owned or controlled by the Company”) and
Scope 2 GHG emissions (“electricity indirect
GHG emissions from the generation of
purchased, or generated on-site, electricity
consumed by the Company”) as defined
by the GHG Protocol, directly and/or in
conjunction with offsets that may be used
to deliver additional net emissions reduction
benefits;
– increase the supply of renewable energy
generated on the premises of a counterparty
or generated at a site directly associated with
the premises of a counterparty;
– reduce emissions and energy consumption in
non-domestic sectors, which include:
– all forms of energy supply, conversion,
distribution or transmission not originating
within a private domestic dwelling,
including district heating systems and CHP
systems;
– demand for energy in non-domestic
buildings including commercially owned
or used property and public sector owned
buildings;
– demand for energy in industrial and light
manufacturing plant and machinery,
operations and logistics;
– demand for energy in the transport sector;
and
– through the deployment of energy
efficiency measures in public and private
infrastructure, such as in utilities (including
the installation of smart metering
equipment) and street lighting; or
– otherwise satisfy, in the Investment Manager’s
reasonable opinion, any other criteria
or measurement of energy efficiency in
an industry or sector, or by using energy
efficiency technologies that are compatible
with the Company’s investment objective and
policy
Energy Efficiency Technology
technologies deployed to achieve an
improvement in energy efficiency
EPC
Engineering, procurement and construction
GHG
greenhouse gases
Holdco
is SEEIT Holdco Limited, the Company’s single
wholly owned subsidiary
HVAC
heating, ventilation and air conditioning
Investment Manager Sustainable Development
Capital LLP
a limited liability partnership incorporated in
England and Wales under the Limited Liability
Partnership Act 2000 with registered number
OC330266
Investment Portfolio
is the portfolio of energy efficiency investments
held by the Company via its single wholly owned
subsidiary, SEEIT Holdco Limited
ISA
individual savings account
kWh
kilowatt-hours used or generated per hour
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Glossary continued
Lighting Equipment
energy efficient lighting used in connection with
an energy efficiency project, including, but not
limited to, LEDs and associated fittings
MWh
megawatt hours used or generated per hour
NAV
net asset value
Ordinary Shares
an ordinary share of £0.01 in the capital of the
Company issued and designated as “ordinary
shares” of such class (denominated in such
currency) as the Directors may determine in
accordance with the Articles and having such
rights and being subject to such restrictions as
are contained in the Articles
O&M Contractors
operations and maintenance contractors, the
contractor appointed by the Company or the
relevant Project SPV to perform maintenance
obligations in relation to the relevant energy
efficiency projects
PEP
personal equity plan
Portfolio Valuation
the Investment Manager is responsible for
carrying out the fair market valuation of the
SEEIT Group’s portfolio of investments
RAB
regulated asset base
RCF
is the revolving credit facility of SEEIT Holdco
Limited, used by SEEIT for capital efficiency in
making new investments
RoRi
the “Return on Operations” incentive payment
and the “Return on Investment” incentive
payment under Spain’s Royal Decree-Law
9/2013 under which qualifying energy generation
assets are compensated, in the medium to long
term, for fluctuations in revenues and costs
against an established base case
SDCL Group
the Investment Manager and the SDCL Affiliates
SEEIT
the Company
SEEIT Holdco
see Holdco
SIPP
self-invested personal pension
SPVs
special purpose vehicles
WACC
weighted average cost of capital
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Glossary of Financial Alternative Performance Measures (“APMs”)
The Company uses APMs to provide shareholders and stakeholders with information it deems relevant to understand and assess the Company’s historic performance and its ability to deliver on the stated
investment objective.
Measure Calculation Why the Company uses the APM 31 March 2024
31 March 2023
(comparison) Reconciliation/cross reference
Aggregate
dividends
The sum of the dividend declared in
theperiod:
June 2023: 1.56p
September 2023: 1.56p
December 2023: 1.56p
March 2024: 1.56p
6.24p per
share
6.0p per share Referred to in Highlights of the year to 31March 2024 on
page 3
Cash cover Operational cash inflow from
investments into Holdco less fund
expenses in the Company and
Holdco, divided by dividends paid to
shareholders
Provides a metric for the level of cash
generated, enabling the Company to
pay dividends to shareholders
1.1x 1.2x Portfolio basis net cash inflow (£72.5m, p.45) divided by
dividends paid in the Statement of Changes in Equity
(£67.2m)
Cumulative excess
cash cover
Excess cash inflow from investments net
of dividends paid to shareholders, on a
cumulative basis since IPO
Provides a metric for the number of
times the Company can pay dividends
to shareholders. This is not considered
an APM in the current year.
£34.2m £29.2m Referred to in the Financial Review and Valuation Update on
pages 35 to 44
EBITDA Earnings before interest, taxes,
depreciation and amortisation
£(56.3)m £(18.6)m Referred to in the Chair’s statement on pages 8 to 10
Gearing Consolidated outstanding debt at
Holdco and investment level (£485m)
divided by NAV at the year end
(£981.9m)
To indicate the Company’s direct and
indirect exposure to debt obligation
49% 32% Referred to in the Chair’s Statement on pages 8 to 10 and
the Investment Manager’s Report on pages 12 to 14
Gross asset value
(“GAV”)
All assets of the Company (non-current
assets and current assets)
It provides a metric that allows for
useful analysis of underlying portfolio
exposures
£984.5m £1,128.7m Statement of Financial Position shows non-current assets
and current assets)
Investment cash
inflow from the
portfolio
Cash received from the portfolio
investments at Holdco during the period
This provides shareholders with a
metric that allows for tracking the
Company’s performance year-on-year
£92.5m £85.1m Referred to in the Financial Review and Valuation Update on
pages 35 to 44
NAV per share NAV (£981.9m), divided by total shares
in issue, 1,085.4m at the balance
sheetdate
This provides shareholders with a
metric that allows for tracking the
Company’s performance year-on-year
90.5p 101.5p NAV per share shown on the Statement of Financial Position
on page 105
Net asset value
(“NAV”)
Net assets attributable to ordinary
shares by deducting gross liabilities
(£2.6m) from gross assets (£984.5m)
It provides a metric that allows
for useful comparison to similar
companies and that allows for useful
year-on-year comparisons of the
Company
£981.9m £1,125.4m NAV is shown on the Statement of Financial Position on
page 105
133
Financial Statements Additional InformationGovernanceStrategic ReportIntroduction
SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
Measure Calculation Why the Company uses the APM 31 March 2024
31 March 2023
(comparison) Reconciliation/cross reference
Ongoing charges
ratio
In accordance with AIC guidance,
defined as annualised ongoing charges
on portfolio basis (i.e. excluding
investment costs and other non-
recurring items), £11.2m divided by the
average published undiluted net asset
value in the year of £1,094.7m
Used as a metric in the investment
company industry to compare
cost-effectiveness
1.02% 1.02% Discussed in Financial Review and Valuation Update on
pages 35 to 44
Reconciliation of expenses used in ongoing charges calculation
£'m
Fund expenses (income statement) 11.6
Less Company expenses excluded from
definition of ongoing charges
(0.6)
Add Holdco expenses included in definition
of ongoing charges
0.2
A Total annualised ongoing expenses 11.2
B Average NAV (includes Sept 22, March 23
and Sept 23)
1,094.7
Ongoing charges (A/B) 1.02%
Operational
cashflow
Cash inflow from investments net of
operating and finance costs
Used in dividend cash cover
calculation
£72.5 £71.4 Referred to in the Financial Review and Valuation Update on
pages 35 to 44
Portfolio basis Portfolio basis includes the impact
if Holdco (the Company’s only direct
subsidiary) were to be consolidated on a
line-by-line basis
See Financial Review and Valuation for
detailed description
N/A N/A Reconciliation provided in, the Financial Review and
Valuation Update on pages 35 to 44
Portfolio Valuation The fair value of all investments in
aggregate that are held directly or
indirectly by Holdco
It provides relevant information of the
value of the underlying investments
held indirectly by the Company from
which it is ultimately expected to
derive its future revenues.
£1,117m £1,100m Reconciliation provided in the Financial Review and
Valuation Update on pages 35 to 44
Rebased valuation
(portfolio basis)
Portfolio Valuation brought forward, plus
new investments (including transaction
costs) during the period less cash from
investments.
Used to derive the fair value
movement of the portfolio.
£1,168.8m £1,068.6m Referred to in the Financial Review and Valuation Update on
pages 35 to 44
Total return on
NAVbasis
Interim dividends paid and movement
in NAV per share over the course of the
relevant period, divided by opening NAV
NAV return in the period:
Dividends paid: 6.18p
NAV movement: (11)p
NAV return since IPO:
Dividends paid: 27.8p
NAV movement: (7.5)p
This provides shareholders with a
metric that allows for tracking the
Company’s performance year-on-year
(4.3%) (0.9%) Referred to in the Highlights section on page 3 and, the
Financial Review and Valuation Update on pages 35 to 44
Glossary of Financial Alternative Performance Measures (“APMs”) continued
134
Financial Statements Additional InformationGovernanceStrategic ReportIntroduction
SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
SEEIT Annual Report 2024|SDCL Energy Efficiency Income Trust plc
SDCL Energy Efficiency
Income Trust plc
The Scalpel, 18th Floor
52 Lime Street
London
EC3M 7AF
www.seeitplc.com