REG - SDCL Efficiency Inc. - Results for the year ended 31 March 2025
23/06/2025 07:00
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RNS Number : 8617N SDCL Efficiency Income Trust PLC 23 June 2025
23 June 2025
SDCL Efficiency Income Trust plc
("SEIT" or the "Company")
Announcement of Annual Results for the year ended 31 March 2025
SDCL Efficiency Income Trust plc (LSE: SEIT) ("SEIT" or the "Company") today
announces its financial results for the year ended 31 March 2025.
There will be a presentation for analysts and investors at 9.30am today. To
register, please follow this link:
https://sparklive.lseg.com/SDCLEFFICIENCYINCOMETRUST/events/4a1ff8ce-b3a7-423f-bb3d-489866b3af95/seit-2025-financial-year-annual-results
(https://sparklive.lseg.com/SDCLEFFICIENCYINCOMETRUST/events/4a1ff8ce-b3a7-423f-bb3d-489866b3af95/seit-2025-financial-year-annual-results)
.
The Company's full Annual Report and Audited Financial Statements for the year
ended 31 March 2025 can be found on the Company's website:
https://www.seitplc.com/ (https://www.seitplc.com/) . This has also been
submitted to the National Storage Mechanism and will be available shortly at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
Highlights
· Net Asset Value ("NAV") per share(APM) of 90.6p as at 31 March
2025 (30 September 2024: 90.6p; 31
March 2024: 90.5p)
· Investment cash inflow from the portfolio(APM) of £97 million on a
portfolio basis(APM), up c.5% on the prior year
· Aggregate dividends(APM) of 6.32p per share declared, in line with
target for year to 31 March 2025
· Dividend cash cover(APM) of 1.0x for the year ended 31 March 2025
(31 March 2024: 1.1x)
· Target dividend guidance increased to 6.36p per share for the
year ending 31 March 2026 (31 March 2025: 6.32p), 1.1 - 1.2x cash cover
targeted
· Profit before tax of £70 million for the year ended 31 March
2025, reversing a loss of £56 million in the prior year
· Portfolio valuation(APM) of £1,197 million as at 31 March 2025 (30
September 2024: £1,102 million; 31 March 2024: £1,117 million)
· Gross disposal proceeds of c.£90.8 million from disposal of UU
Solar in May 2024, which represented a small premium to September 2023
valuation.
Alternative Performance Measure (APM): See Annual Report Glossary of Financial
Alternative Performance Measures for further details on APMs used throughout
the report.
Tony Roper, Chair of SEIT, said:
"SEIT's operational performance was generally in line with expectations in the
year, with the portfolio delivering its targeted distributions to fully cover
the dividends for our shareholders.
"While dividends have increased and operational performance has improved, we,
like many of our peers, remain frustrated that our share price has drifted
down and our shares continue to trade at a material discount to NAV per share.
The status quo is clearly unsustainable. With this in mind, we have
announced today that the Board are considering all strategic options to
deliver value for all shareholders in an effective and efficient manner."
Jonathan Maxwell, CEO of SDCL, the Investment Manager said:
"SEIT's large and diversified portfolio demonstrated resilience amidst global
economic and geopolitical uncertainty. The portfolio delivered growing
operational performance, in line with expectations, to fully cover dividends,
despite significant CapEx during the year. Thanks to recently agreed
portfolio-level debt financing facilities, the focus going forward should be
less on investing and more on delivering increased operational performance.
"Structural trends such as persistently high energy prices and increasingly
unstable grids reinforced the value proposition of SEIT's decentralised energy
efficiency assets during the year. Expected growth in US industry and data
centre construction globally should represent operational tailwinds moving
forward.
"Current market dynamics continue to significantly impact share prices across
the infrastructure and renewable energy investment trust sector, and SEIT has
been no exception. We have intensified efforts to position SEIT's assets for
NAV growth, and the Company's balance sheet has been optimised. We are also
progressing opportunities across the portfolio to release liquidity, reduce
gearing and recycle capital, as we to seek to protect and crystallise
shareholder value."
-ENDS-
For Further Information
Sustainable Development Capital LLP T: +44 (0) 20 7287 7700
Jonathan Maxwell
Eugene Kinghorn
Ben Griffiths
Tamsin Jordan
Jefferies International Limited T: +44 (0) 20 7029 8000
Tom Yeadon
Gaudi Le Roux
Cardew Group T: +44 (0) 20 7930 0777
Ed Orlebar E: SEIT@cardewgroup.com
Henry Crane M: +44 (0) 7738 724 630
E: henry.crane@cardewgroup.com (mailto:henry.crane@cardewgroup.com)
Liam Kline M: +44 (0) 7827 130 429
E: liam.kline@cardewgroup.com (mailto:liam.kline@cardewgroup.com)
About SEIT
SDCL Efficiency Income Trust plc is a constituent of the FTSE 250 index. It
was the first UK listed company of its kind to invest exclusively in the
energy efficiency sector. Its projects are primarily located in North America,
the UK and Europe and include, inter alia, a portfolio of cogeneration assets
in Spain, a portfolio of commercial and industrial solar and storage projects
in the United States, a regulated gas distribution network in Sweden, a
portfolio of on-site energy recycling, cogeneration and process efficiency
projects, servicing the largest steel blast furnace in the United States and
a district energy system providing essential and efficient utility services on
one of the largest business parks in the United States.
The Company aims to deliver shareholders value through its investment in a
diversified portfolio of energy efficiency projects which are driven by the
opportunity to deliver lower cost, cleaner and more reliable energy solutions
to end users of energy.
The Company is targeting an attractive total return for shareholders with a
stable dividend income, capital preservation and the opportunity for capital
growth. The Company is targeting a dividend of 6.36p per share in respect of
the financial year to 31 March 2026. SEIT's last published NAV was 90.6p per
share as at 31 March 2025.
Past performance cannot be relied on as a guide to future performance.
Further information can be found on the Company's website at www.seitplc.com
(http://www.seitplc.com) .
Investment Manager
SEIT's investment manager is Sustainable Development Capital LLP ("SDCL"), an
investment firm established in 2007, with a proven track record of investment
in energy efficiency and decentralised generation projects in the UK,
Continental Europe, North America and Asia.
SDCL is headquartered in London and also operates worldwide from offices in
New York, Dublin Hong Kong and Singapore. SDCL is authorised and regulated in
the UK by the Financial Conduct Authority.
Further information can be found on at www.sdclgroup.com
(http://www.sdclgroup.com/) .
SDCL Efficiency Income Trust plc
Unlocking the world's most valuable energy resource: Efficiency
Annual Report and Audited Financial Statements
for the year ended 31 March 2025
Highlights
of the year to 31 March 2025
Investing in energy efficiency
90.6p
Net asset value
("NAV") per share (APM)
31 March 2024: 90.5p
30 September 2024: 90.6p
£97m
Investment cash inflow from the portfolio (APM)
up 5% on a portfolio basis(APM)
31 March 2024: £92m
6.32p
Aggregate dividends (APM)
per share declared, in line with target for 31 March 2025
31 March 2024: 6.24p
1.0x
Dividend cash cover (APM)
For the twelve months ended 31 March 2025
31 March 2024: 1.1x
6.36p
Target dividend(1) guidance
per share for the year ending 31 March 2026
31 March 2025: 6.32p
£70m
Profit before tax
31 March 2024: £56m loss
£1,197m
Portfolio Valuation (APM)
31 March 2024: £1,117m
30 September 2024: £1,102m
c.£90.8m
Gross disposal proceeds
From the disposal of UU Solar
1,000,791 tCO(2)e
Scope 4 emissions(2)
from the Company's portfolio in Y/E 2024
Y/E 2023: 841,687 tCO(2)e
(APM) Alternative Performance Measure: See Glossary of Financial Alternative
Performance Measures for further details on APMs used throughout this report.
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) Following the review of environmental performance data by a
third-party, data methodology issues have been identified, resolved and
standardised. Additionally, data has been recalculated to match the calendar
year as opposed to the financial year. Both of these changes have resulted in
variations from previously reported environmental performance data. Further
information is detailed in the SEIT Climate Report.
Chair's Statement
Firstly, and most importantly, I would like to thank our shareholders for
their continued support.
Tony Roper
Chair
During the financial year, SEIT delivered a total return on an NAV basis(APM)
of 7.1% (financial year 2024: (4.7%)) and declared an aggregate 6.32 pence per
share in dividends (financial year 2024: 6.24p), fully covered by net cash
inflow from the portfolio. The portfolio EBITDA(APM) has increased and the
portfolio value is broadly in line with the prior year.
This has been delivered despite markets that have continued to present an
extraordinarily challenging environment for both SEIT and its peers.
While shareholder dividends and operational portfolio performance have
increased, we, like many of our peers, remain frustrated that our share price
has drifted down. We are disappointed to report a decline in share price total
returns of 7.78% in this financial year. With this in mind, the Investment
Manager continues to focus on steps to address the share price discount to
NAV(APM), as detailed later in this report. Most importantly, the Investment
Manager continues to assess the existing portfolio for opportunities to
release capital to pay down the RCF, return to shareholders and recycle into
the remaining portfolio when appropriate.
The Board continues to explore all potential opportunities available to
deliver value for all shareholders in an effective and efficient manner. This
is both in the context of the Company's longer-term plan to drive value for
shareholders and in a more wholesale and strategic manner.
Capital Markets
Over the past year, there has been a marked and well-documented dislocation
between the share prices of UK investment trusts and their underlying net
asset values. Despite sound investment strategies and good performance,
prevailing market uncertainty - fuelled by evolving regulatory frameworks,
fluctuating interest rates and broader economic headwinds-has driven share
prices to trade at significant discounts relative to their published
valuations. SEIT is no exception with shares trading at a discount to net
asset value(APM) of over 40% continuously since mid‑January 2025.
This divergence is indicative of a market that is increasingly influenced by
transient sentiment and liquidity concerns, rather than solely by the
long-term quality of the underlying assets. Such a dynamic not only
accentuates the prudence required in assessing true value but also underscores
the potential for attractive entry points for discerning investors, as
demonstrated by the continued relative liquidity of SEIT's shares.
Governance and Engagement with Shareholders
All resolutions were passed at our AGM in September 2024. The 2025 AGM will be
held on 3 September.
The Board and the Investment Manager have continued to engage with
shareholders throughout the year, recording over 200 interactions, virtually
or in person, and have listened to their feedback, as well as engaging with a
number of retail investors who continue to increase engagement with SEIT. The
Board is committed to ongoing dialogue with shareholders, especially during
this period of continued volatility.
Our engagement with shareholders and analysts resulted in the Company
increasing the level of its disclosures, providing investors with more
information related to the performance of individual investments as well as
the wider portfolio. In this Annual Report, there are further new disclosures
focused on providing greater comfort on the health of the underlying
portfolio. These include the aggregate portfolio-wide EBITDA and budget versus
actual EBITDA as well as projected long-term cash flows for each of the top
five portfolio companies. To expand on the "Approach to Valuations" section
from the 2025 Interim Report, the Investment Manager has also provided a
detailed valuation case study in the Investment Manager's report.
The Investment Manager and the Board have agreed an amendment of the
investment management fee structure to improve competitiveness and alignment.
Fees will be charged on a blend of NAV(APM) and market capitalisation from 1
October 2025. This agreement was reached in consultation with the Broker, and
in the context of the evolving market standards that seek to reduce costs and
align investment managers with the total return achieved by shareholders.
At the AGM Emma Griffin stood down as a non-independent Director and I would
like to extend my thanks for her work on SEIT. A recruitment process has been
taking place using an independent third-party search firm. From a long list
the process has narrowed down to two suitable candidates and the Company will
finalise its decision in due course.
Portfolio and Financial Performance
The portfolio's operational performance was generally in line with
expectations. On a consolidated basis, EBITDA(APM) for the year ended 31
December 2024 was on budget, delivering the targeted distributions to the
Company to cover the aggregate dividend declared in the year to 31
March 2025. Aggregated EBITDA(APM) for the portfolio, a new disclosure for
this reporting cycle, was c.£86 million. This does not include the EBITDA
increase expected from significant capital investment during 2024 into Onyx
and the completion of the construction of the cogeneration plant at
RED-Rochester.
SEIT's NAV(APM) per share at 31 March 2025 was 90.6 pence (90.5 pence at
31 March 2024), a small increase over the year, representing a total return
on a NAV basis(APM) of c.7.1% for the year. The earnings per share ("EPS") for
the financial year were 6.4 pence per share.
Dividends
Based on our current assumptions and expectations about future cash flow
projections, as well as considering the potential impact of disposals and
other balance sheet activity, the Company is announcing new dividend guidance
of 6.36 pence per share for the year to 31 March 2026, an increase of c.1%.
The Company continues to target progressive dividend growth thereafter.
The dividend forecast balances dividend growth with the Company's priority of
using cash to repay debt to support the value of the portfolio by
reinvestment. We also monitor our ability to return capital to investors
through other means, such as a share buyback programme.
Addressing the Share Price Discount to NAV (APM)
During the year, the Investment Manager has continued its efforts to address
the share price discount. This includes the following activities:
Disposals
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 summer 2024, private capital markets in the US and Europe showed cautious
recovery, with a modest uptick in deal volumes and favourable conditions for
buyers. This environment supported the launch of sale processes for Onyx
(North America) and EVN (UK), as the market adjusted to slower growth and
shifting investor sentiment.
However, rising macroeconomic and geopolitical uncertainty significantly
impacted deal activity by early 2025. US transactions have largely stalled,
while momentum in Europe and the UK has slowed. Increased cost volatility has
made forecasting and valuations more difficult, particularly around growth
potential. As a result, many companies are delaying major transactions,
leading to a notable decline in deal volumes.
Whilst the intention was to announce further disposals in the financial year,
this has taken longer than envisioned. The delay is for various reasons,
including the recent market dynamics outlined above, but we are ultimately
reluctant to sell assets when the value for shareholders would be diluted by
heightened uncertainty. The Board and Investment Manager are clearly
disappointed that our objectives have not yet been achieved, but both parties
remain focused on releasing liquidity from the portfolio. Any proceeds will be
used to reduce gearing and commence a share buyback programme.
Balance sheet and gearing levels
During the year, the portfolio's total debt levels increased to £626 million
(as at 31 March 2025), or 34% of enterprise value, as the Company has
continued to fund growth, mostly at Onyx and RED-Rochester. Total debt
included c.£234 million of short-term debt in the revolving credit facility
("RCF"). At or around the time of publication, the RCF is expected to be
reduced to c.£216 million through active management of gearing(APM),
including better matching debt to the lives of the assets in mostly amortising
facilities. Whilst total debt levels are close to the Company's gearing limit,
this is being closely managed.
As announced in March, the Manager has refinanced SEIT's revolving credit
facility, securing terms for a further three years, with two one-year
extensions. By locking in a competitive margin with a rolling interest rate
cap, the refinanced RCF materially mitigates against interest rate risk for
the coming years. The increased capacity also allowed the Company to support
Onyx's growth without increasing the portfolio company's debt during the sales
process. Both the Board and the Manager remain committed to reducing the RCF
as swiftly as is practicable.
Positioning the Company's portfolio for total return growth
The Investment Manager's asset management team continues to implement an
active and disciplined approach to engaging with SEIT's portfolio companies
and targeting sustained value creation at the asset level. This encompasses
close collaboration with management teams to identify and address operational
inefficiencies, optimise cost structures and capitalise on emerging growth
opportunities. Notable examples include the construction of a new cogeneration
plant at RED-Rochester, delivering lower-cost and lower-emission electricity,
driving efficiency and future EBITDA(APM) and investing into the significant
growth opportunity at Onyx.
We are pleased that the portfolio continues to perform as intended and adds
value for shareholders over the medium and long term.
Capital Allocation Policy
During the year, SEIT invested £172 million into the organic opportunities
presented by the portfolio. Most of this investment was into Onyx, which
provides on-site solar and storage for commercial and industrial buildings
across the US. The Capital Allocation Policy ensured that all investment was
made with a minimum return hurdle implied by the alternative of buying back
shares at the time of investment. In practice, the majority of this
investment was made with an expected return in the mid to high teens. This
served to support the portfolio's growth prospects and its valuation.
Considering the continued capital requirements at Onyx, in balance with the
requirement to prudently manage short‑term gearing levels, since the end of
the financial year the Company has found alternative financing options, as
announced 11 June 2025. While we remain committed to disposals to release
liquidity and reduce overall debt levels, project-level financing is reducing
short-term debt and supporting Onyx's growth to protect shareholder value in
the immediate term.
Supporting the liquidity and marketability of the Company's shares
During the year, the Manager has added to its senior investor relations and
communications capabilities, with the intention of continuing to raise the
Company's profile, bring in new shareholders and improve disclosures. This
has resulted in increased investment from retail investors as well as
increasing positions from new institutional investors.
Name Change and Sustainability
On 21 May 2025, SEIT changed its name from SDCL Energy Efficiency Income Trust
to SDCL Efficiency Income Trust. This followed the release of the European
Securities and Markets Authority's ("ESMA") Guidelines on Fund Names, setting
out additional ESG-related benchmarking criteria for funds using
sustainability terms in their names. The ticker symbol remains the same and
all website traffic is being redirected to the new website at www.seitplc.com.
SEIT is an Article 9 Fund under the EU Sustainable Finance Disclosure
Regulation ("SFDR"), meaning that it is able to demonstrate that a majority of
its portfolio consists of investments focused on environmental, social and
governance ("ESG") criteria. I encourage you to turn to the full
sustainability update, but, in short, the Investment Manager's alignment to
and support for SFDR along with the Task Force on Climate-related Financial
Disclosures ("TCFD") has been robust in a time of significant ESG-related
regulatory change.
Outlook and Strategic Options
In relation to the Company and its investment portfolio, our investment
strategy remains a differentiator to our broader renewable infrastructure
peers. Our focus on energy efficiency offers an investment exposure largely
independent of power price fluctuations, while our diversified technology
portfolio provides increased resilience against the challenges posed by
geopolitical instability and extreme weather.
Stakeholders-including individuals, businesses and policymakers-in our key
markets across the US and Europe increasingly express concerns about energy
security as much as those about its cost. Coupled with the accelerating global
energy transition and persistently high energy prices, these tailwinds
underpin the merits of prioritising energy efficiency as a means of achieving
energy security, economic benefits and greenhouse gas emission reductions,
thus reinforcing SEIT's investment strategy.
However, the alternative asset segment of the UK investment trust market has
seen capital outflows and there are too many trusts for current shareholders,
leading to shares trading at large discounts to NAV per share. We are
operating with continued market volatility and price dislocation, with the
Investment Manager focused on what we can control-preserving financial
strength, executing our investment strategy and delivering long-term value.
While external challenges limit the pace and scope, we continue to seek the
best possible outcomes for shareholders.
Like most companies in our peer group, we are managing the balance sheet
prudently by seeking to reduce short‑term debt as soon as practicable, all
the while supporting the sustained growth that certain investments require-and
thus the enduring value-of our portfolio. Despite the continued negative
market sentiment, incremental disposals remain the priority for the Investment
Manager and the Board are hopeful of achieving this, notwithstanding the
delays encountered so far.
It is hard to see how the alternative asset segment of the UK investment trust
market can solve the current market issues without either a material
improvement in sentiment, consolidation or investments being sold, and capital
returned to shareholders. The status quo is clearly unsustainable and so the
Board is considering all strategic options to deliver value for all
shareholders in an effective and efficient manner. We will seek to gather
opinions of shareholders on possible outcomes over the coming weeks.
Strategy Investment Manager: Markets and Outlook
A Resilient Investment Strategy in Challenging Markets
SEIT has a diversified and actively managed portfolio, designed to deliver
resilient and growing revenue with significant opportunities to increase
NAV(APM) over time. This resilience was demonstrated in the year to 31 March
2025, with stable portfolio performance and continued dividend cover amidst
global economic uncertainty and geopolitical instability.
SEIT's investment strategy is specialised and fundamentally distinct, focused
on energy efficiency projects that not only improve energy productivity but
also often deliver energy solutions that are cheaper, cleaner and more
reliable than conventional grid supply. These investments are all designed to
achieve enduring competitive advantages, providing value throughout and beyond
their contracted lifetimes by addressing traditional inefficiencies inherent
in the supply and demand for energy.
Strong structural tailwinds continue to underscore the robustness of the
strategy, despite current pressure from tariffs or negative sentiment
surrounding clean energy. Persistently high energy prices and increasingly
unstable grids, combined with decarbonisation efforts and heightened concerns
over energy security, substantially reinforce the value proposition of SEIT's
decentralised energy generation projects. Although high interest rates have
exerted a temporary downward pressure on valuations, the fundamental
drivers-cost savings, reduced energy losses and sustainable income
generation-remain stronger than ever. SEIT's portfolio is well positioned to
capitalise on these dynamics.
However, current market dynamics continue to suppress shareholder returns. The
market environment is characterised by elevated interest rates, reduced
liquidity and a lack of active buyers. This has significantly impacted the
infrastructure and renewable energy investment trust sector, including SEIT.
Traditional discount mitigation strategies, including share buybacks, asset
disposals and enhanced investor engagement, have not delivered a sustained
re-rating.
Since the disposal of UU Solar for a small premium early in the year, the
Company has been unable to complete disposals in the intended time frame, not
due to a lack of effort or asset quality, but because of a challenging market
backdrop. Investment trusts are often viewed as forced sellers, which
depresses achievable valuations. This is particularly true for US renewables,
where uncertainty around potential tariff escalations and shifting policy has
further dampened buyer appetite in an already cautious market. This has made
it extremely difficult to secure acceptable valuations or complete disposals
within a reasonable time frame.
Having initiated a formal sales process of Onyx, led by a leading M&A
adviser in 2024, the Company received a good number of initial bids in January
2025. Selected bidders were then taken through to the second round for
management presentations and due diligence. The process was nearing a
conclusion with final bids expected in April 2025, when market uncertainty
driven by the prospect of US tariff conflicts reached heightened levels. As a
result, these parties were unable to make final bids in line with our
timetable.
The sales process has since been modified to include alternative options that
are designed to release cash and reduce debt from Onyx and its operational
assets. We hope to update shareholders in the coming months.
During 2024 the management team of the EVN Group, of which SEIT is a minority
shareholder, commenced a process to raise equity capital. This also included
the possibility of purchasing Zood, a portfolio of 29 operational, ultra-fast
electric vehicle charging sites, managed by EVN and owned in their entirety by
SEIT. This process was delayed by the EVN Group for strategic reasons. The
Investment Manager is now exploring options to release cash from the Zood
portfolio.
Notable Drivers of Operational Portfolio Performance
Operational performance supports SEIT's dividend, with the portfolio
diversified by industry, technology and geography.
The five largest investments make up 81% of the portfolio by portfolio value
and 82% of EBITDA(APM). Understanding key trends that impact these investments
can help predict broader portfolio performance.
US domestic steel manufacturing: This sector is the main driver for Primary
Energy. Having traditionally operated within a complex, cyclical environment
over recent decades, it has transitioned from facing significant challenges to
cautious growth, supported by protective measures, infrastructure programmes
and demand from the automotive and construction sectors. Technological
advancements and government policies are expected to drive steady growth.
US industrial economic growth: This is crucial for RED-Rochester, particularly
non-durable manufacturing and retail distributors. Strong US consumer demand
driving industrial economic growth would likely lead to operational growth
should business development on the park bring new tenants on site, meaning new
utility customers for RED-Rochester.
AI and power grids: The impact of AI on power grids is significant for Onyx
and Driva. AI workloads in data centres cause unpredictable spikes in
electricity demand, challenging grid stability. The escalating energy needs of
AI-optimised data centres increases power prices, making on-site generation
and storage more appealing as it offers cheaper, more reliable services.
Addressing the Share Price Discount to NAV(APM)
The Company has previously reported on a six-point plan to address the
discount to NAV(APM). This remains a key focus for all stakeholders; opposite,
the Investment Manager answers some key questions about their ongoing work on
this.
A Q&A with the Investment Manager
Q. What is the Investment Manager doing to address the share price discount to
NAV(APM)?
A: As set out in previous reports, we have adopted a six-point plan to address
the share price discount to NAV(APM). This plan was designed to balance
pulling every lever available to us, whilst protecting long-term shareholder
value. Efforts to position the investments for NAV(APM) growth have been
intensified while working hard on both sides of the Atlantic to create
liquidity events from the investments. Portfolio-level leverage has been
renegotiated and refinanced to optimise the balance sheet, while a clear plan
to reduce short-term Company-level debt has been identified, despite
allocating capital to support the value of the growth investments. All the
while, investor relations and communications have been ramped up to support
the marketability and liquidity of the shares, bringing in new investors both
in the UK and the United States.
Q: How has SEIT's investment approach adapted to current market conditions?
A: This is a relatively young portfolio that was designed with strong,
long‑term growth prospects, primarily acquired during a very different
market environment. To protect the value of these investments without
continued equity raises, we needed to find ways to support their growth.
Careful use of debt has been a part of that, as has a renewed focus on value
creation strategies that are not dependent on high levels of CapEx.
We have adapted to current market conditions by setting out to deliver more
with less, transitioning from a portfolio designed primarily for steady and
growing dividend income with an opportunity for growth, to one that places a
stronger emphasis on growth without compromising its income-generating
capacity. This has involved careful use of both short-term gearing(APM) at the
Company level, and longer‑term project debt.
Q: Short-term debt has gone up since September 2024, are you still committed
to reducing it?
A: Absolutely. In a challenging environment of higher interest rates and
global economic uncertainty, we have been unable to fund growth with equity,
so we have used the Revolving Credit Facility ("RCF") to continue funding
Onyx's growth in the short term. We will use any future disposal proceeds to
pay down the RCF, but we've also been carefully managing the balance sheet to
create opportunities to move debt down to the portfolio level, where duration
can be better matched to the underlying assets, and where it amortises down,
gradually reducing over time. As an example, at or around the date of
publication, we expect to have reduced the RCF-from approximately £234
million to around £216 million-by introducing optimal long-term debt at Zood.
Additionally, we refinanced our RCF in March, securing a competitive margin
with rolling interest rate caps, mitigating interest rate risk and reinforces
a more proactive capital allocation strategy.
Q: What actions have you taken to recycle capital and support share price
valuations?
A: We continue to pursue multiple opportunities to recycle capital through
both disposals and the introduction of co-investors. These processes will not
only serve to reduce our RCF but also validate our asset valuations. In May
2024, we disposed of a major asset, UU Solar, at a price above its net asset
value. Additionally, we have run a formal process to potentially sell or
partially sell Onyx and supported the formal process to bring in an equity
investor for EVN. As noted by the Chair, we don't believe it's the right thing
to sell when the value is hampered by macro, and hopefully temporary, factors.
We are progressing opportunities to release liquidity, reduce gearing(APM) and
recycle capital. This remains a key priority as we seek to protect and
crystallise shareholder value.
Q In the current environment, is it possible to get a good price for
shareholders in a disposal process?
A: At the moment, achieving a good price in a disposal process is challenging,
though not impossible. Investment trusts are increasingly perceived by the
market as motivated or even forced sellers-regardless of whether that's
actually the case.
With SEIT's shares trading at a significant discount, potential buyers may
expect that any offer made at a modest premium to the current market price
will be well received. With such a gap between the true value and SEIT's
market price, that doesn't represent a good deal.
This could get worse; while private markets have so far continued to value
infrastructure assets closer to their fundamental worth, this divergence from
public market pricing is unlikely to persist indefinitely. Historically,
private market valuations tend to follow trends in public markets, albeit with
a delay. During periods of market stress or uncertainty, private valuations
may temporarily appear more stable, but they typically adjust over time to
reflect broader economic fundamentals and investor sentiment.
Q: How does project-level financing factor into your strategy?
A: Project-level debt is an important mechanism for us to reduce interest rate
risk and in time lower overall debt levels.
Our structural gearing(APM) is amortising, shorter than the lives of the
assets and typically includes long-term protection through swaps, minimising
interest rate risk. During the year, 64% of our portfolio debt was amortising,
with £15.7 million of capital repaid, a weighted average remaining life of
3.4 years, and an average interest rate of 5.7%. While transitioning from
short-term, Company‑level debt to project-level debt does not immediately
reduce total gearing(APM), the nature of these amortising facilities allows us
to significantly reduce overall gearing(APM) in the medium term without
needing further equity.
As noted above, we expect to have closed an additional project-level financing
facility for Zood, the portfolio of operational electric vehicle charging
sites, managed by EVN, the proceeds from this will be used in full to pay down
the Company's RCF. We are continuing conversations to complete similar
financing facilities elsewhere in the portfolio.
Q What role does your Capital Allocation Policy play in this transition?
A: Our Capital Allocation Policy is central to our strategy. It applies a
significant mid-teens return threshold (based on the then-prevailing share
price) to all new investments, ensuring we remain selective and disciplined in
our approach. We are pleased that many organic opportunities within the
pipeline not only meet but exceed this threshold.
Over the period, we invested a total of c.£172 million into our existing
portfolio, much of this was to address Onyx's pipeline of commercial solar
projects that deliver low-cost, more reliable energy to customers across the
US.
Q: What steps have been taken to support the liquidity and market visibility
of the Company's shares?
A: Understanding that some shareholders require an exit, we have sought to
support the liquidity of SEIT's shares. We recognised early the importance of
marketing in this environment and have bolstered our senior investor relations
and communications capabilities to raise the Company's profile. This
initiative has attracted new retail and institutional investors, increasing
the demand for shares. Demand doesn't match supply, but it is stronger than it
would otherwise have been. In the year from June 2024, one month average daily
trading volumes ("ADTV") have increased 4x and three month ADTV by 3x.
Performance | Company Key Performance Indicators
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.
Financial KPIs
2025: 90.6p
2024: 90.5p
Net asset value ("NAV")
per share (APM) (pence)
NAV (APM) divided by number of shares outstanding as at 31 March
NAV (APM) has remained stable despite downward pressures from the
macroeconomic environment during the period.
2025: 48.2p
2024: 59.1p
Share price (pence)
Closing share price as at 31 March
The share price has decreased predominantly due to market volatility and the
thematic adverse impact on alternative investments focused on UK investment
trusts.
2025: 6.32p
2024: 6.24p
Dividends per share (pence)
Aggregate dividends(APM) declared per share in respect of the financial year
The dividend increased year on year due to predictability of near-term cash
generation from the portfolio, plus new investments. The Company met its
stated dividend targets for the years ended 31 March 2024 and 31 March 2025.
2025: 1.0x
2024: 1.1x
Dividend cash cover (APM) (x)
Operational cash flow(APM) divided by dividends paid to shareholders during
the year
While a decrease on the prior year, the Company met its target of net
operational cash inflow to fully cover dividends paid for the years ended
31 March 2024 and 31 March 2025.
2025: 7.1%
2024: (4.7)%
Total return on NAV basis (APM) in the year (%)
NAV growth and dividends paid per share in the year
The payment of interim dividends contributed to a positive NAV (APM) return
in the year.
2025: 1.16%
2024: 1.02%
Ongoing charges ratio (APM) (%)
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
Ongoing charges remained in line with 2024; the ratio increase is reflective
of the reduction in average published NAV, given decrease from 2023. See the
Financial Review and Valuation Update.
Operational KPIs
2025: 16.0
2024: 16.4
Weighted average contracted investment life (years)
Weighted average number of years of contracted revenue remaining in investment
contracts (excludes all re‑contracting assumptions)
Decrease was in line with expectations.
2025: 49%
2024: 52%
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
Target is to maintain good portfolio diversification, this was achieved in
both financial years.
Performance | Portfolio: Key Updates
Portfolio Performance
SEIT's investment objective is to deliver an attractive total return for
investors, comprising stable dividend income, capital preservation and the
potential for capital growth. SEIT's portfolio generates predictable,
long-duration cash flows that supports SEIT's dividend distributions. The
following pages highlight the operational performance and active management
that underpin these consistent returns.
During the year, the portfolio delivered:
c.£86m
2024 Aggregate portfolio EBITDA(1)
c.£97m
Distributed, financial year 2025
SEIT's portfolio has a track record of delivering a steady stream of
distributions that have enabled the Company to fully cover a progressive
dividend paid to shareholders since IPO, as demonstrated in the chart below.
SEIT expects to continue a progressive dividend policy for the foreseeable
future.
SEIT has several larger portfolio companies, which form a foundation for
overall portfolio cash flows as well as providing established platforms to
generate growth opportunities. Of the c.£97 million distributed in the year,
74% was from these five portfolio companies. Underlying diversification
ensures revenue growth, despite recent volatility. Using conservative
estimates of gearing and largely excluding any expectations for accretive
projects, the following chart demonstrates the long-term cash flow
expectations of the portfolio, mostly driven by the five largest portfolio
companies. This demonstrates the long‑term security of the dividend as well
as the long-term nature of base case assumptions.
The revenues referred to in this section describe the revenues that are
assumed in the March 2025 Portfolio Valuation APM and therefore include both
contracted and uncontracted revenues. This is explained further in the
Financial Review and Valuation Update.
Investing for Total Return
The March 2024 Annual Report reconfirmed the Investment Manager's commitment
not to invest into any new inorganic investments and to remain completely
aligned with the Company's Capital Allocation Policy. Within this framework,
during the 2025 financial year the Company has continued to invest only in the
organic growth of the portfolio. Investments have met or exceeded the hurdle
implied by the alternative of buying back shares at the time of investment, as
set out in the Capital Allocation Policy. SEIT has invested £172 million
during the period, mostly into Onyx's growth pipeline.
Further upside opportunities remain, a number of which would require further
upfront investment, however many would not. As guided in the last annual
results, there has been positive progress on many of these value accretive
opportunities, with some delivering a net uplift of c.£20 million to the
March 2025 Portfolio Valuation(APM), while others are well advanced with good
prospects of adding further valuation uplift. These opportunities could
potentially add over £150 million to the NAV(APM) over the coming years,
although there can be no guarantee that this will be realised. We continue to
focus and prioritise the workstreams associated with these opportunities and
expect them to continue to develop.
Cash Flows Have Been Underpinned By Operational Performance
The diversified nature of the portfolio (e.g. by geography, technology,
industry and customers) ensures that it continues to deliver operational
performance to cover the dividend. Headwinds that may be encountered from time
to time at one asset can generally be offset by tailwinds at another.
The projects in the table below delivered a combined EBITDA of £70 million,
generally in line like-for-like budgets of £71 million for the period
Project equity value at Project-level Technical KPI EBITDA 2024 Δ from budget
31 March 2025 debt at at 31 December 2024 (local currency, EBITDA (%)
31 March 2025 millions) 2024
Oliva Spanish Cogeneration c.€125m c.€0 782,938MWh produced EUR 13.8 2%
Driva c.SEK 1,054m c.SEK 682m 92% green gas SEK 73.3 1%
Primary Energy c.$288m c.$155m 183MW average net production USD 38.9 0%
Onyx Renewable Partners c.$419m c.$50m (excluding RCF) 132,901MWh produced USD 12.41 -2%
RED-Rochester c.$299m c.$101m 6.6m MMBtus delivered USD 15.4 -11%
1) These figures use the FX rate as at 31 December 2024.
2) Onyx EBITDA (APM) is for the fully operational portfolios of assets
(total of four) and does not include portfolios still partly under
construction (total of two).
During the year, performance was largely in line with expectations, despite
some underperformance at RED‑Rochester. Since the end of the year,
operational performance at RED-Rochester has been strong.
To build on the project-level KPI disclosures provided in previous financial
reports, and to better understand the operational performance of the
portfolio, the Manager's expectations for EBITDA(APM) during the period as
well as the actual EBITDA(APM) have been provided. Please note, as in previous
reports, the operational measures and management budgets are produced and
monitored in line with the calendar year.
The summaries in this section describe the five largest portfolio companies
that are diversified across North America and Europe, consisting of 23
individual investments making up c.81% of SEIT's total portfolio by value. A
detailed summary of these investments and their performance during the year is
outlined in the following pages.
For a more comprehensive understanding of these investments, please see the
following sections: Financial Review and Valuation Movements, the Principal
Risks, Risk Management Framework and Note 3 in the financial statements.
Data shown above in the Portfolio Summary is as at 31 March 2025 unless
otherwise stated.
PERFORMANCE | Financial Review and Valuation Update
The Company generated resilient and growing revenue to cover the dividend, as
well as NAV growth.
Key Information as at 31 March 2025
£97m
Investment cash inflow
£70m
Profit before tax
6.4p
EPS
£1,197m
Portfolio value
Portfolio Cash Generation to Cover Dividends
The Company's investments generated free cash flows (APM) of £130 million in
the period. After allowing for debt repayments, the cash inflow from
investments (on a portfolio basis(APM)) was £97 million, an increase of c.5%
from the comparative period (March 2024: £92 million). After allowing for
Fund-Level costs of £28 million (March 2024: £20 million), this enabled the
Company to cover its cash dividends paid in the year of 1.0x. On a free cash
flow basis the cover was 1.9x.
The Company has delivered the cash to fully cover the target aggregate
dividend (APM) of 6.32 pence per share for the year ended March 2025.
Dividend cash cover(APM) twelve-month period to March 2025
Free cash flows at portfolio level before debt repayments(1) £(130.2)m
Debt repayments at project level £(32.9)m
Interest £(17.2)m
Capital repayment £(15.7)m
Investment cash inflow from the portfolio £97.3m
Fund expenses £(28.1)m
Finance costs £(14.4)m
Management fee and other expenses £(13.7)m
Net cash inflow from portfolio £69.2m
Dividends paid to shareholders £(68.4)m
Dividend cash cover(APM) 1.0x
1) After cash retained at project level for working capital
requirements.
Consolidated Gearing(APM) 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 to
operate on an unlevered basis. A large portion of the structural gearing (APM)
amortises from free cash flow generated by the relevant investment, so while
SEIT's structural gearing(APM) currently sits above target levels, this can
naturally reduce over time. The Investment Manager has a strategy to
incrementally manage gearing(APM) on the balance sheet by moving debt from the
short-term RCF to amortising structural gearing(APM). At 31 March 2025, the
weighted average life remaining on structural gearing(APM) is 3.4 years,
demonstrating that in a "do nothing" scenario, overall gearing(APM) would
reduce significantly in the medium term.
While no project-level financing is due to expire in the next two years, the
Investment Manager may seek to optimise through opportunistic refinancing
where possible. For example, the Cokenergy recontracting substantially
improves finance capacity and reduced risk, from the perspective of a lender.
From this, 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 £240 million RCF in place until March
2028, having recently refinanced and extended the expiry date by three years.
The Company intends for this to be short-term finance, repayable through
surplus distributions from the portfolio, refinancing proceeds at project
level and investment disposals. At 31 May 2024, the Company's RCF had reduced
to £98 million after a partial repayment following the disposal of UU Solar
in May 2024. As at 31 March 2025, £234 million of the Company's RCF was
drawn. The increase was used to fund investments, primarily the growth
pipeline at Onyx. At the time of publishing (June 2025), the Onyx pipeline is
no longer being funded through the Company's RCF. The RCF is expected to be
reduced to c.£216 million through new investment-level debt financing
facilities at Zood at or around the date of publication. The Investment
Manager is committed to reducing the RCF further during 2025 and continues to
work towards this goal.
Debt at
% of 31 Mar 25 Debt as a Debt as a
GAV (APM 1) (GBP) % of EV(2) % of NAV (APM)
Primary Energy (USA) 9.9% 121m 6.6%
RED-Rochester (USA) 6.4% 78m 4.3%
Onyx (USA) 10.5% 128m 7.0%
Värtan Gas (Sweden) 4.3% 53m 2.9%
Capshare (Portugal) 0.9% 11m 0.6%
Citi Riverdale (UK) 0.1% 1m 0.1%
Structural gearing 392m 21.5% 39.9%
Aggregate gearing 626m 34.4% 63.6%
Revolving Credit Facility 234m 12.8% 23.7%
At the time of publication, overall gearing(APM) levels remain largely
unchanged from 31 March 2025.
1) GAV consists of Portfolio Valuation and other assets, cash includes
net working capital.
2) Enterprise Value consists of c.£1.0 billion NAV and c.£0.6 billion
debt.
5.7% Weighted average interest rate of portfolio debt
2024: 6.0%
67% is fixed(1) Interest rate exposure of portfolio debt
2024: 80%
3.4 years Weighted average life remaining on debt
2024: 3.7 years
USA: Europe: UK: Portfolio-level debt by geography
84% 16% <1% 2024: USA: 80%, Europe: 19%, UK: <1%
£33m Portfolio debt repaid in the year(2)
2024: £26m
1) % of total debt that is fixed or has long term interest swaps in
place to mitigate interest rate exposure.
2) Incremental to the associated capital, where applicable.
Analysis of Movement in NAV (APM)
As of 31 March 2025, the NAV per share (APM) is 90.6 pence. We assess the
impact of the following components on valuations since 31 March 2024:
· Earnings per share in the year were 6.4 pence, which was made up of
Portfolio Valuation(APM) movements of: 9.2p (consisting of 0.5 pence of
macro changes and 8.7 pence of portfolio movements), net FX reduction of
0.1 pence and company expenses of 2.7 pence
· Dividends paid during the year were 6.3 pence
Opening NAV EPS Dividends paid Closing NAV
90.5p 6.4p (6.3)p 90.6p
Portfolio Valuation movements 9.2p
Macro changes (inflation and tax) 0.5
Valuation - portfolio movements 8.7
Portfolio Valuation movement 9.2
Net FX movement (0.1)p
Portfolio Valuation losses (1.1)
Hedging gains 1.0
NET FX movements (0.1)
Company expenses (2.7)p
Management fees (0.9)
RCF interest (1.4)
Other expenses (0.4)
Company expenses (2.7)
FX movement
The Company's hedging strategy is executed at the level of 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, and the
approach to achieving this objective remains unchanged from previous periods.
In line with the policy, the Investment Manager maintained hedging levels of
between 75-90% of its non-GBP investment. The negative impact of FX movements
reported in the interim results has been offset during the second half of the
year, which meant the impact to NAV (APM) due to currency movements in the
period was limited to £0.75 million, which is less than 1% of NAV (APM).
Company expenses
Company expenses are primarily comprised of finance and interest costs
relating to the RCF (c.£14.6 million) and management fees (c.£8.7 million).
RCF costs have increased along with its size but are expected to reduce as
portfolio gearing(APM) is managed across the balance sheet and the RCF
reduces. The Board and the Investment Manager are both committed to bringing
down short-term borrowing as a matter of priority.
Dividends paid
The Company paid a total of £68 million in dividends to shareholders in the
year. This included the last quarterly interim dividend for the year ended 31
March 2024 and the first three quarterly interim dividends for the year ended
31 March 2025. The Company has declared the fourth quarterly interim dividend
for the year ended 31 March 2025, this is payable at the end of June 2025,
delivering the targeted 6.32 pence per share for the year ended 31 March 2025.
Based on the projected investment cash flows from the current portfolio
prepared by the Investment Manager, the Company has announced new dividend
guidance of 6.36 pence per share for the year to 31 March 2026 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 per share).
Further detail on dividend cash cover (APM) can be found in the Financial
Review and Valuation Update.
Portfolio Basis NAV (APM)
Portfolio Valuation Working capital RCF Cash NAV (APM)
( )
£1,197m £13m £(234)m £8m ( )£984m
Gearing (APM) summary as at 31 March 2025
March 2025: Portfolio Valuation (APM)
Movements in Portfolio Valuation(APM)
The Portfolio Valuation(APM) as at 31 March 2025 is £1,197 million, compared
with £1,117 million as at 31 March 2024.
After allowing for investments made of £172 million and cash receipts from
investments of £184 million (including proceeds from the disposal of UU
Solar), the Rebased Portfolio Valuation (APM) is £1,105 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 movement of £98 million.
Further information on key investments and potential future valuation
movements can be found in Note 3.
Approach
The Investment Manager is responsible for carrying out the fair market
valuation of SEIT's portfolio of investments (the "Portfolio Valuation
(APM)"), which is presented to the Directors for their consideration and
approval. Portfolio Valuations (APM) are carried out on a six-monthly basis,
at 31 March and 30 September each year. The Portfolio Valuation (APM) is the
key component in determining the Company's NAV (APM).
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 adjusts 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) at 31 March 2025 and investment at fair value shown in the
financial statements is given in Note 11.
For the Portfolio Valuation (APM) at 31 March 2025, the Directors commissioned
a third-party valuation expert to provide a valuation report for the portfolio
of investments in addition to the assessment of the appropriate discount rate
range for each investment (excluding small investments with an aggregate value
of less than 22% of the Portfolio Valuation (APM) at 31 March 2025) in order
to support the valuation prepared by the Investment Manager. The valuation of
each investment was within the ranges advised by the third-party valuation
expert.
Please refer to the Strategic Report where the approach to valuation is
described in detail using RED‑Rochester as a case study.
Valuation Movements
A breakdown of the movement in the Portfolio Valuation (APM) in the year is
illustrated in the following chart and set out in the table below.
Valuation Bridge - March 2024 to March 2025 (GBP Millions)
Changes in macroeconomic assumptions Changes in foreign exchange rates Portfolio movements
£5m £(12)m £98m
Read more below Read more below Read more below
Changes in macroeconomic assumptions - impact of £5 million:
· Inflation assumptions:
· consistent with previous years. The approach to all geographies is
to apply three-year near-term bridge to
the relevant long-term inflation assumption;
· 2025 expectations are marginally increased in both US and UK, based
on latest inflation curves; and
· long-term inflation assumptions remain the same as applied to the
March 2024 valuation.
· Tax rate assumptions:
· no changes to corporation tax rate assumptions during the period.
Changes in foreign exchange rates - impact of £(12) million (before hedging):
· Investment portfolio decreased by £12 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
2025 or since new investments were made in the year.
· This reflects only the movement in underlying investment values and
does not account for the offsetting effect of foreign exchange hedging
that SEEIT Holdco applies outside of the Portfolio Valuation (APM).
· SEEIT Holdco experienced an aggregate gain of £11 million due to
foreign exchange hedging.
· Overall foreign exchange movements did not have a significant impact
on NAV (APM) during the year, resulting in a net loss of c.£1 million
from foreign exchange movement, staying within expected outcomes of the
existing hedging strategy.
Portfolio movements - impact of £98 million:
· Portfolio weighted average discount rate ("WADR") of 9.6% levered
(March 2024: 9.4%).
· The WADR is considered a reasonable proxy for the return than can
be generated by the portfolio over time, all other factors remaining
equal.
Weighted average discount rate at 31 March 2025
(compared to 31 March 2024)
Levered/unlevered UK US Europe/Asia Combined
Levered
2025 9.1% 9.9% 8.8% 9.6%
2024 8.1% 9.6% 9.1% 9.4%
Unlevered
2025 9.1% 8.7% 7.8% 8.5%
2024 8.1% 8.8% 8.2% 8.6%
Breakdown of discount rate (unlevered) at 31 March 2025
(compared to 31 March 2024)
UK US Europe Combined
Weighted average risk-free rate
2025 5.0% 4.4% 3.2% 4.2%
2024 4.3% 4.4% 3.0% 4.0%
Risk premium
2025 4.1% 4.2% 4.7% 4.3%
2024 3.8% 4.4% 5.2% 4.6%
Weighted average discount rate (unlevered)
2025 9.1% 8.7% 7.8% 8.5%
2024 8.1% 8.8% 8.2% 8.6%
· This refers to the balance of valuation movements in the period,
excluding (i) to (iii) above, which provided an uplift of £98 million. The
portfolio movements reflect in aggregate:
· the net present value of the cash flows unwinding over the period
at the average prevailing portfolio discount rate
· specific adjustments to future cash flows were required for events
during the period that affected the actual outcome from certain investments
(see below for Oliva, Onyx, RED and Primary);
· on a very selected basis, certain asset-specific risk premiums were
adjusted up and down for an overall decrease in risk premiums - reductions in
risk premiums were made in RED-Rochester, Primary Energy, Onyx and Driva
(formerly Värtan Gas) to reflect greater certainty over specific assumptions
for future cash flows or as a reversal of a provision held at March 2024 for a
risk to future cash flows where the provision has now been replaced with
estimated cash flows instead.
· The Portfolio Valuation(APM) as at 31 March 2025, 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
2025 Portfolio Valuation (APM) are listed below; these have had a value impact
of 1% or higher on the Company's NAV (APM):
Additional information and sensitivities are disclosed in the critical
estimates and judgements section of Note 3.
Oliva Spanish Cogeneration
· The Spanish Government published regulatory updates in the period
to the RoRi, a local incentive scheme to provide a return on operations and
investments, that did not include the positive updates for compensation of
distribution costs that the market was expecting.
· As a result, a one-off adverse impact on Portfolio Valuation(APM)
of £15 million - in line with the estimated impact of this valuation
assumption included in Note 3 in the March 2024 Annual Report.
· Industry is expecting to appeal against the omission of
compensation for distribution costs from this periodic regulatory update.
Onyx
· The Onyx team delivered strongly on their pipeline targets for
2024, and in addition, have made very good progress on securing PPAs for 2025.
This gives the Investment Manager confidence in the near-term pipeline and the
valuation overall.
· The US administration's recent tariff announcements have resulted
in uncertainty around the potential impact of tariffs on Onyx. Scenarios
analysis has been performed and has been a key consideration when arriving at
the valuation. Note 3 provides a sensitivity to slower deployment which may
come as a result of regulatory uncertainty or increased supply costs that are
not possible to fully mitigate against by passing it on to customers.
· A measured view was taken for the overall valuation of Onyx at
March 2025, including the operational, construction and development
components. Adjusting for new investments, distributions and the valuation
impact of construction assets becoming operational, the valuation was broadly
flat on a like-for-like basis compared to March 2024, partially reversing
positive movements in the first half of the year.
RED-Rochester
· During the second half of the financial year, there has been an
increased level of uncertainty regarding the planned Li-Cycle
facility. This has been reflected in a reduction in likely revenue forecast
from the LiCycle facility which has resulted in an adverse impact on Portfolio
Valuation(APM) of £17 million. The Valuation Case Study presented earlier
provides further insight into the use of probability outcomes to assess and
value different outcomes in relation to the dynamic situation for Li-Cycle.
· The Cogen project has now achieved COD and is due to come online fully
as scheduled in Q2 2025. As such, the probability applied to future cash flows
has increased from 80% to 100%, and this has produced an uplift to Portfolio
Valuation (APM) of £16 million.
Primary Energy
· The Public Utilities Commission of Ohio ("PUCO") has reviewed North
Lake's request to increase REC-eligible capacity from 15MW to 90MW, and as at
31 March 2025 a conditional approval was received. Primary Energy's management
viewed the likelihood of final approval as near certain, and in recognition of
this positive momentum, have included the expanded capacity was included in
the valuation at 80% probability. This resulted in Portfolio Valuation (APM)
uplift of £15 million. Full approval has since been received and the full
value will be included in the next valuation.
· In the 2025 Budget, Primary Energy's management significantly reduced
previously forecasted cost savings from FY2025. The majority of these relate
to ongoing maintenance of roadways, buildings and fire safety systems and
resulted in an adverse impact to Portfolio Valuation (APM) of £12 million.
Ongoing Charges (APM)
The portfolio's ongoing charges ratio (APM), in accordance with AIC guidance,
is 1.16% (March 2024: 1.02%). Overall operating costs have remained in line
with 2024, the increase is reflective of the reduction in average published
NAV. The ongoing charges percentage has been calculated on a Company basis to
take into consideration the expenses of the Company and Holdco.
March 2025 March 2024
Expenses - Management fees £8.7 million £9.2 million
Expenses - Other £2.7 million £2.0 million
Average NAV £983.0 million £1,094.0 million
Ongoing charges % 1.16% 1.02%
Directors' Responsibility Statement
The 2025 Annual Report which will be published as noted above contains a
responsibility statement in compliance with DTR 4.1.12. This states that on 20
June 2025, the date of the approval of the Annual Report, the Directors
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 profit 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 it faces.
Tony Roper
Chair
Statement of Comprehensive Income
For the year ended 31 March 2025
For the For the
year ended year ended
31 March 2025 31 March 2024
Note £'millions £'millions
Investment income/(loss) 5 81.2 (44.7)
Total operating income/(loss) 81.2 (44.7)
Finance income - 0.2
Fund expenses 6 (11.1) (11.8)
Profit/(loss) for the year before tax 70.1 (56.3)
Tax on profit/(loss) on ordinary activities 7 - -
Profit/(loss) for the year 70.1 (56.3)
Total comprehensive income/(loss) for the year 70.1 (56.3)
Attributable to:
Equity holders of the Company 70.1 (56.3)
Earnings/(loss) per ordinary share (pence) 8 6.4 (5.2)
All items in the above statement derive from continuing operations.
Statement of Financial Position
As at 31 March 2025
31 March 2025 31 March 2024
Note £'millions £'millions
Non-current assets
Investment at fair value through profit or loss 11 984.2 983.8
984.2 983.8
Current assets
Trade and other receivables 0.3 0.2
Cash and cash equivalents 0.9 0.5
1.2 0.7
Current liabilities
Trade and other payables (1.8) (2.6)
Net current liabilities (0.6) (1.9)
Net assets 983.6 981.9
Capital and reserves
Share capital 12 11.1 11.1
Share premium 12 756.8 756.8
Other distributable reserves 12 270.9 339.3
Accumulated losses (55.2) (125.3)
Total equity 983.6 981.9
Net assets per share (APM) (pence) 10 90.6 90.5
The financial statements within the annual report were approved by the Board
of Directors on 20 June 2025 and signed on its behalf by:
Sarika Patel
Director
Tony Roper
Director
Statement of Changes in Shareholders' Equity
For the year ended 31 March 2025
Other
distributable Accumulated
Share capital Share premium reserves losses Total equity
Note £'millions £'millions £'millions £'millions £'millions
Balance at 1 April 2024 11.1 756.8 339.3 (125.3) 981.9
Dividends paid 9 - - (68.4) - (68.4)
Total comprehensive income for the year - - - 70.1 70.1
Balance at 31 March 2025 11.1 756.8 270.9 (55.2) 983.6
Retained
Other earnings/
distributable (accumulated
Share capital Share premium reserves losses) Total equity
Note £'millions £'millions £'millions £'millions £'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
.
Statement of Cash Flows
For the year ended 31 March 2025
For the For the
year ended year ended
31 March 2025 31 March 2024
Note £'millions £'millions
Cash flows from operating activities
Profit/(loss) for the year before tax 70.1 (56.3)
Adjustments for:
(Gain)/loss on investment at fair value through profit or loss 5 (7.3) 116.2
Loan interest income 5 (3.9) (6.5)
Operating cash flows before movements in working capital 58.9 53.4
Changes in working capital
(Increase)/decrease in trade and other receivables (0.1) 0.4
Decrease in trade and other payables (0.8) (0.7)
Net cash generated from operating activities 58.0 53.1
Cash flows from investing activities
Additional investment in Holdco 11 (7.0) (38.4)
Loan principal repayment received 11 13.9 66.2
Loan interest income received 3.9 6.5
Net cash generated from investing activities 10.8 34.3
Cash flows from financing activities
Share buyback payments 12 - (20.0)
Payment of share buyback costs - (0.1)
Dividends paid 9 (68.4) (67.1)
Net cash used in financing activities (68.4) (87.2)
Net movement during the year 0.4 0.2
Cash and cash equivalents at the beginning of the year 2 0.5 0.3
Cash and cash equivalents at the end of the year 2 0.9 0.5
The financial information set out above does not constitute the Company's
statutory financial statements for the years ended 31 March 2025 or 2024 but
is derived from those financial statements. Statutory financial statements for
2024 have been delivered to the registrar of companies, and those for 2025
will be delivered in due course. The auditors have reported on those financial
statements; their reports were (i) unqualified, (ii) did not include a
reference to any matters to which the auditors drew attention by way of
emphasis without qualifying their report and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
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