NAV: SEIT announced a NAV per share of 102p as at 30/09/20, resulting in a 4.8% NAV total return for the six months. Adjusting for the unwind of the discount rate, FX net of hedging, costs, the ex-dividend, and accretion from October’s share issuance, our estimated NAV becomes 101.6p. The shares currently trade on a 5.8% premium to this.

Assumptions: The portfolio’s weighted average discount rate remained unchanged at 7.5%, with no real mix effects given the limited portfolio activity during the reporting period. There were also minimal macroeconomic assumption changes, with the 7.1% return on the rebased portfolio valuation largely driven by the short extension assumed on the revenue duration of the Primary Energy assets following the new offtake contract, offset by the impact on performance from assets where remedial work to equipment was required. Given a UK RPI assumption of 2.75%, there is likely to be a small impact from RPI/CPI alignment to feed-through at a later stage.

Portfolio: Portfolio performance continues to look resilient. Blast Furnace 4, which was previously idled at the Primary Energy project – remembering that c.25% of revenues are from capacity-based payments – came back on-line in August, while low electricity prices in Spain (Oliva project) were mitigated by the RoRi regulatory mechanism. On the construction side, the Huntsman Energy Centre is now expected to be operational by H1 2021 following COVID-related delays, noting the contractual retention that does not become payable until after completion. Installation at the Tesco rooftop solar sites has also restarted, with seven of the sites now operational. Elsewhere, a useful credit counterparty breakdown was presented, with c.70% of revenues from investment-grade counterparties following the impact of the (non-investment grade) Cleveland Cliffs acquisition of ArcelorMittal’s U.S. assets.

Investment activity: Following the period-end, £107m has been deployed into the Gasnätet gas distribution network, and £2m into the Singapore energy efficiency portfolio. This has helped further increase diversification, as on a pro-forma basis Gasnätet is the largest project in the portfolio at 18% of NAV, outweighing the size of the Primary Energy and Oliva assets.

Balance sheet: The cash balance was £117m at the period end, but following October’s capital raise and the Gasnätet acquisition, the pro-forma cash balance is £112m, equivalent to 21% of NAV.

Dividends: SEIT’s board has reaffirmed its 5.5p dividend target for FY21. The dividend cover of 1.44x looks flattered by the impact of share issuance during the period on an ex dividend basis, and so we would expect full-year cover to be a little lower.

• Returns: NAV of 102p. EPS of 4.6p per share and a NAV TR of 4.8% for the period.
• Dividend: A quarterly dividend of 1.375p was paid during the period and a further 1.375p declared for the quarter ending 30 September. The trust is on target to deliver 5.5p for the year end 31 March 2020
• Gearing: The company was unlevered at the period end, following the £110m June equity capital raise
• Discount rate: There were no changes in discount rates during the period. The period end portfolio weighted average discount rate was 7.5% (range 4.5% to 8.5%)

SDCL Energy Efficiency — interims to 30/09/20: resilient results and NAV up +1%

NAV and attribution: NAV of 102.0p at 30/09/20 vs. 101.0p at 31/03/20. There was an immaterial positive FX impact (+£0.7m); unchanged discount rate remaining at 7.5%.

Dividend: The board reiterated the target dividend of 5.5pps for the year to 31/03/21. During the period, the Company paid a second interim dividend of 2.5pps in respect of the year ended 31/03/20 and having transitioned to paying quarterly interim dividends from 01/04/20, a first interim dividend of 1.375pps for the quarter to 30/06/20.

Cash and leverage: Net cash of £117m at 30/09/20, progressing to £175m at 07/12/20 following £105m equity raise and further investments. The cash is substantially committed to existing investment commitments and allocations to future projects. Leverage was c.25% of NAV (within target of 50% of NAV).

Performance: Performance across the operational assets in the portfolio has been substantially in line with expectations, with a limited number of instances where there have been and continue to be some short-term impacts on operational and financial performance due to the COVID-19 pandemic. The largest single impact on the Company came from Primary Energy, when the Ironside project was not required to deliver energy services during the idling of a steel production facility that was temporarily idled in April 2020 (due to COVID-19 related steel production slowdown), although the facility came back online in August 2020. Re-contracting negotiations for this specific project were successfully concluded whilst the project was idled, extending the contract for a further 10 years. (Analyst: Max Haycock)

Find article here (paywalled): https://www.environmental-finance.com/content/news/news-round-up-cdp-seeit-mirae-asset-and-more.html

Energy efficiency project investor SDCL Energy Efficiency Income Trust posted a positive first-half performance and said it was on track to meet its dividend guidance for the full year.
The company’s net asset value total return per share rose 4.8%, while its pre-tax profit jumped to £17.2 million, up from £2.3 million.
SDCL declared a second-quarter dividend of 1.375p per share and reiterated guidance for a full-year payout of 5.5p per share.
‘SEEIT’s portfolio continues to perform and exhibit resilience, delivering cheaper, cleaner and more reliable energy solutions to its expanding client base,’ chief executive Jonathan Maxwell said.
‘The energy efficiency market in Europe, the US and the UK is set for further growth following increased commitments to decarbonise, the launch of the European Commission’s Renovation Wave and with the incoming Biden Administration putting energy efficiency in buildings and transport at the centre of its ambitious climate plans.’
‘We are very well positioned to benefit from this environment through our existing portfolio and through our pipeline by making new investments where we can secure value for shareholders.’
At 9:44am: [LON:SEIT] share price was 0p at 108.5p

SDCL Energy Efficiency Income Trust PLC – closed-ended investment company focused primarily on operational energy efficiency assets located in the UK, Continental Europe, North America – Net asset value per share ended September at 102.0 pence, up from 101.0p at March 31. Declares interim dividend of 2.75p, in line with guidance and on track for 5.5p annual target. NAV total return in first half 4.8%. Chair Tony Roper says: “We are very pleased with our portfolio’s performance and resilience over the last six months. Although it has been an exceptionally challenging period for global markets, the company has continued to perform in line with expectations as well as grow and diversify by technology, sector and geography. We are very grateful for the continued support from new and existing investors.”

• SDCL Energy Efficiency Income (SEEIT) has agreed to pay £100m to acquire a 100% interest in Värtan Gas Stockholm (VGSAB), the owner of the established, operational and regulated gas distribution network for Stockholm, Sweden. The consideration will be funded from existing cash reserves (including part of the proceeds from the recent £105m capital raise) and debt facilities, which includes a £30m short term acquisition facility that has been added to SEEIT’s current £40m RCF. VGSAB’s existing project debt finance facilities, which are equivalent to c.£26m, will remain in place. The investment represents c.19.5% of net assets following the recent fundraise.
• The VGSAB group owns and operates Stockholm’s regulated gas grid, the majority of which is sourced from locally produced biogas (c.70%). It supplies and distributes to over 58,000 residential, commercial, industrial, transportation and real estate customers in Stockholm.
• Investment Case: The manager notes that it is an essential infrastructure service that helps to reduce pollution and greenhouse gas emissions by reducing and reusing waste gases both at the point of production. SEEIT intends to work towards increasing the proportion of green gas in the network to 100% over time. The grid is an essential component of an integrated system, aligned with national and regional strategies to attain carbon neutrality by 2040. Revenues are primarily regulated, and predominantly based on fixed tariffs with relatively low sensitivity to customer demand or consumption. The manager also believes that there are opportunities for revenue growth from serving new transport customers, as commercial and municipal vehicle fleets continue to switch to cleaner fuels, including biogas. In addition, there are opportunities to deliver new energy and infrastructure services to customers by developing the network and through vertical integration.
• Numis View: The acquisition was flagged as part of a near term pipeline in the recent capital raise which saw SEEIT issue 100m shares at 105p, raising gross proceeds of £105m, up-scaled from the targeted amount of £80m. Management notes that the investment is expected to meet and exceed SEEIT’s total returns targets (7-8%) and to further support its progressive dividend policy. SEEIT is currently targeting a dividend of 5.5p (5.2% yield) for the year ending 31 March 2021.

Equity investment of c. £100m for a 100% interest in the ultimate owner of the established, operational and regulated gas distribution network for Stockholm, Sweden. The majority of the gas is sourced from locally produced biogas (c.70%) and supplies and distributes to over 58,000 residential, commercial, industrial, transportation and real estate customers in Stockholm. The Company intends to work towards increasing the proportion of green gas in the network to 100% over time. The revenues are primarily regulated and predominantly based on fixed tariffs with relatively low sensitivity to customer demand or consumption, with the manager believing that there are opportunities for growth.