SDCL Efficiency Income Trust PLC · LSE:SEIT
SDCL Efficiency Income Trust — SDCL Energy Efficiency Income Trust — FY2023 Earnings Presentation
48 slides from SDCL Efficiency Income Trust's earnings presentation, Jun 28, 2023
Slide 1: Results Presentation: Financial Year to 31 March 2023
SDCL Energy Efficiency Income Trust plc Results Presentation: Financial Year to 31 March 2023 28 June 2023
Slide 2: Contents and Investment Manager Presentation Team
SDCL Energy Efficiency Income Trust plc Contents 1. Overview and Highlights Investment Manager Presentation Team 2. Portfolio Update 3. Financial Results Jonathan Maxwell, CEO Purvi Sapre, Fund Manager 4. Summary Remarks 5. Appendices Established SDCL in 2007 Fund Manager of SEEIT a. SEEIT Key M
Slide 3: 1. Overview and Highlights
SDCL Energy Efficiency Income Trust plc 1. Overview and Highlights 3
Slide 4: Highlights for the Year Ended 31 March 2023
SDCL Energy Efficiency Income Trust plc Highlights for the Year Ended 31 March 2023 Portfolio performance resilient amidst global macroeconomic and energy market volatility Impact of Rate Rises ▲ Weighted average discount rate applied to SEEIT’s valuation was increased by 70 basis points to 7.7% unl
Slide 5: SEEIT Overview
SDCL Energy Efficiency Income Trust plc SEEIT Overview Investment Objective: Generate an attractive total return for investors comprising stable dividend income and capital preservation, with the opportunity for capital growth Cashflows underpinned by contracts Financial Highlights for Year targetin
Slide 6: 2. Financial Results
SDCL Energy Efficiency Income Trust plc 2. Financial Results 6
Slide 7: NAV Per Share Bridge
SDCL Energy Efficiency Income Trust plc NAV Per Share Bridge Analysis of change in NAV during the year ended 31 March 2023 0.7 Discount rates, driven by rising interest NAV benefitted from positive correlation rates, increased across all jurisdictions, to inflation at portfolio level, but volatile r
Slide 8: SEEIT: Key NAV Sensitivities
SDCL Energy Efficiency Income Trust plc SEEIT: Key NAV Sensitivities Based on investment portfolio at 31 March 2023 1 March 2023 - Key Portfolio Sensitivites (pence per share) Discount Rates + / - 50 bps 2 Corporate Tax + / - 500 bps 2 Inflation - / + 50 bps FX + / - 10% (6.0p) (4.0p) (2.0p) 0p 2.0p
Slide 9: Large and Diversified Portfolio
SDCL Energy Efficiency Income Trust plc Large and Diversified Portfolio FTSE 250 company which has achieved substantial scale since its IPO in December 2018 Mar-192 Mar-20 Mar-21 Mar-22 Mar-23 NAV (£ millions) 98 324 694 1,073 1,125 NAV (p per share) 98.4 101.0 102.5 108.4 101.5 NAV total return in
Slide 10: 3. Portfolio Update
SDCL Energy Efficiency Income Trust plc 3. Portfolio Update 10
Slide 11: Portfolio Characteristics
SDCL Energy Efficiency Income Trust plc Portfolio Characteristics SEEIT’s diversified portfolio of cost effective, lower carbon and reliable energy solutions can be split into 3 categories, illustrated by the below examples Cleaner and More Efficient Supply Cleaner and More Efficient Supply Bringing
Slide 12: Investments Made During the Year Ended 31 March 2023
SDCL Energy Efficiency Income Trust plc Investments Made During the Year Ended 31 March 2023 The Company invested c.£240 million during the period, consisting of one large acquisition, a number of organic investments into the existing portfolio and several smaller investments c.£240 million invested
Slide 13: Asset Key Performance Indicators for Y/E December 2022
SDCL Energy Efficiency Income Trust plc Asset Key Performance Indicators (KPIs) for Y/E 31 December 2022 Enhancing disclosure by reporting on specific KPIs for the largest investments1 RED-Rochester c.22% Primary Energy c.18% £254m of SEEIT’s GAV 2 £195m of SEEIT’s GAV $14.6m $36.4m EBITDA EBITDA 7,
Slide 14: Challenges in the Year
SDCL Energy Efficiency Income Trust plc Challenges in the Year Certain challenges had a negative impact on valuation in the year Investment Challenge Reponses ▲ Volatile energy market led Spanish ▲ Management of CHP units and in-house gas procurement to Government to introduce price controls ensure
Slide 15: Active Asset Management: Value-Enhancing Activities
SDCL Energy Efficiency Income Trust plc Active Asset Management: Value-Enhancing Activities The Investment Manager seeks to drive performance through asset management. Construction Update ▲ Developed a new ▲ Focused on business ▲ Approved ▲ Identified significant ▲ Successfully strategy to improve a
Slide 16: Examples of Additional Upsides
SDCL Energy Efficiency Income Trust plc Examples of Additional Upsides There are additional upside opportunities that have not been reflected in SEEIT’s valuation, but could provide additional value over the short to medium term1 Onyx Renewable Partners RED-Rochester Example of an Additional Upside:
Slide 17: SEEIT Portfolio as at 31 March 2023
SDCL Energy Efficiency Income Trust plc SEEIT Portfolio as at 31 March 2023 Diversification by investment, technology, geography and lifecycle stage Technology exposure1,2 3% Solar & Storage 3% 5% Red Rochester District Energy 2% 3% 23% Primary - Cokenergy 22% CHP (Waste gases / other) 4% UU Solar C
Slide 18: Counterparties and Revenue Breakdown as at 31 March 2023
SDCL Energy Efficiency Income Trust plc Counterparties and Revenue Breakdown as at 31 March 2023 Diversification by counterparty and breakdown of contracted revenue Counterparties Contracted revenue1 Revenues associated with investment grade or equivalent SEEIT’s strategy is to focus on contracted i
Slide 19: Environmental Highlights from the Year Ending 31 March 2023
SDCL Energy Efficiency Income Trust plc Environmental Highlights from the year ending 31 March 2023 The Company has continued to provide critical, energy efficiency solutions to customers Equivalent to CO² 1,004,619 cars1 off the road 1,202,528 tCO2 4,373,103 MWh Carbon Emissions Saved Total energy
Slide 20: 4. Summary Remarks
SDCL Energy Efficiency Income Trust plc 4. Summary Remarks 20
Slide 21: Summary Remarks
SDCL Energy Efficiency Income Trust plc Summary Remarks Challenges High risk-free rates, as well as some project delays and regulatory FTSE 250 company with a issues that are expected to be non-recurring portfolio valuation of over £1bn Opportunities Opportunities to Significant value to be achieved
Slide 22: 5. Appendices
SDCL Energy Efficiency Income Trust plc 5. Appendices 22
Slide 23: a. SEEIT Key Metrics
SDCL Energy Efficiency Income Trust plc a. SEEIT Key Metrics 23
Slide 24: Market Drivers of Energy Efficiency
SDCL Energy Efficiency Income Trust plc Market Drivers of Energy Efficiency The macroeconomic landscape is driving demand for energy efficiency solutions High Energy Costs and Concerns over Energy Focus on Mitigating Policy Support for Market Volatility Security Climate Change Energy Infrastructure
Slide 25: Analysis of Change in Portfolio Valuation - Bridge
SDCL Energy Efficiency Income Trust plc Analysis of Change in Portfolio Valuation - Bridge Portfolio valuation change for the twelve months to 31 March 2023 Portfolio Valuation of £1,100m forms key part of balance sheet – reconciles to NAV of £1,125m through cash and working capital Material adv
Slide 26: Analysis of Change in Portfolio Valuation – Key Items
SDCL Energy Efficiency Income Trust plc Analysis of Change in Portfolio Valuation – Key Items Portfolio return Macroeconomic: Inflation Increased valuation by £49m Increased valuation by £17m 4.6% return on rebased portfolio in the year Near term (3 year) inflation assumptions higher than
Slide 27: SEEIT: Inflation Exposure
SDCL Energy Efficiency Income Trust plc SEEIT: Inflation Exposure SEEIT continues to build a portfolio with positive correlation to inflation • Positive correlation helped reduce impact from increases in discount rates Near-term inflation scenarios • Post 31 March 2023 inflation remains higher than
Slide 28: SEEIT Targets Progressive Dividends
SDCL Energy Efficiency Income Trust plc SEEIT Targets Progressive Dividends Dividends per share have grown year-on-year since IPO Key Comments Dividends per Share since IPO Dividends have progressively increased each year, in line with guidance provided at IPO 6.24p Dividend target for year 6.00
Slide 29: Breakdown of Debt Outstanding – 31 March 2023
SDCL Energy Efficiency Income Trust plc Breakdown of Debt Outstanding – 31 March 2023 Relatively low gearing limits and levels Current Borrowing Limits Target medium term borrowing of up to 35% of NAV Investment Level Debt GBP 361m o Equivalent to c.25% LTV1 Borrowing of up to 65% at point of ac
Slide 30: SEEIT: Foreign Exchange Hedging
SDCL Energy Efficiency Income Trust plc SEEIT: Foreign Exchange Hedging Key objective of managing FX risk is to minimise volatility in NAV from movements in FX rates SEEIT’s hedging strategy has been successful in protecting the NAV from material movements in foreign exchange rates, and providing st
Slide 31: Summary Financials
SDCL Energy Efficiency Income Trust plc Summary Financials1 Income Statement Year to 31 March 2023 (£m) Year to 31 March 2022 (£m) Total income (1.8) 92.5 Fund expenses & finance costs (16.7) (12.7) (Loss)/Profit before tax (18.5) 79.8 Earnings per share (p) 2 (1.8) 10.0p Ongoing charges 3 1.02% 1.0
Slide 32: Summary Financials (cont'd)
SDCL Energy Efficiency Income Trust plc Summary Financials (cont’d)1 Cashflow Statement Year to 31 March 2023 (£’m) Year to 31 March 2022 (£’m) Cash from investments2 85.1 64.7 Operating and finance costs (13.5) (11.8) Cash from operations 72.0 52.9 Equity issuance (net of costs) 132.6 343.9 New inv
Slide 33: Key Performance Indicators
SDCL Energy Efficiency Income Trust plc Key Performance Indicators (“KPIs”) 31 31 KPI Definition March March Commentary 2023 2022 Financial NAV per share (p) NAV divided by no. of shares outstanding as at 31 March 101.5p 108.4p NAV has decreased compared with the prior year due to global increases i
Slide 34: Proactively Managing the Discount to NAV
SDCL Energy Efficiency Income Trust plc Proactively Managing the Discount to NAV The Investment Manager and Board have responded to the discount to NAV by implementing a share buyback program Share price performance YTD NAV/s 27 Feb 2023 7 Jun 2023 Start of the Share 104.5p Announced Q3 interim Anno
Slide 35: Summary of Valuation Methodology
SDCL Energy Efficiency Income Trust plc Summary of Valuation Methodology Fair value of the Company’s investments calculated in accordance with International Private Equity and Venture Capital guidelines where appropriate to comply with IAS 39 Independent specialists advise Board on discount rate
Slide 36: b. SEEIT Portfolio, New Investments and Overview
SDCL Energy Efficiency Income Trust plc b. SEEIT Portfolio, New Investments and Overview 36
Slide 37: Existing Portfolio Overview
SDCL Energy Efficiency Income Trust plc Existing Portfolio Overview Scale and diversification achieved through new portfolio additions in line with policy Key Supply Demand Distribution IPO: Dec-18 Mar-19 Jun-19 Sep-19 Nov-19 Apr-21 Dec-201 Oct-20 Sep-20 Aug-20 Feb-20 2 CapShare May-21 Sep-21 Jul-21
Slide 38: Portfolio Development since 31 March 2022
SDCL Energy Efficiency Income Trust plc Portfolio Development since 31 March 2022 c.£240m of investment commitments during the year to 31 March 2023, £30m thereafter Project Investment/Commitment Date Type Location Investment/Commitment Amount Investment activity during the year UU Solar September 2
Slide 39: d. Investments made during the period
d. Investments made during the period 39
Slide 40: Investment: UU Solar
SDCL Energy Efficiency Income Trust plc Investment: UU Solar Portfolio of operational, on-site, behind-the-meter predominantly solar PV projects in UK High level overview Location: UK Technology: Solar PV, Wind and Hydro Stage: Operational Capacity: 69MW total (67MW solar PV, 2MW wind and 0.1MW hydr
Slide 41: Investment: Iceotope
SDCL Energy Efficiency Income Trust plc Investment: Iceotope Investment in an energy efficient data centre immersion cooling company headquartered in Sheffield, UK High level overview Location: Sheffield, UK Technology: Energy efficient immersion cooling for data centres Stage: Corporate Investment
Slide 42: Investment: Baseload
SDCL Energy Efficiency Income Trust plc Investment: Baseload Financing of a portfolio of geothermal projects developed by Baseload through a €25 million convertible debt facility High level overview Location: Iceland, Japan & US Technology: Low Temperature Geothermal Stage: Operation, development an
Slide 43: Investment: ON.Energy
SDCL Energy Efficiency Income Trust plc Investment: ON.Energy Investment in a developer and operator of energy storage projects, together with a conditional commitment to fund behind-the-meter projects for C&I customers in North America High level overview Location: United States Technology: Battery
Slide 44: Investment: Turntide Technologies
SDCL Energy Efficiency Income Trust plc Investment: Turntide Technologies Investment in a manufacturer of energy efficient motor systems that reduce carbon emissions and energy costs in the commercial real estate, agriculture, and transportation industries High level overview Location: United States
Slide 45: Investment: BlocPower
SDCL Energy Efficiency Income Trust plc Investment: BlocPower Financing of energy efficiency equipment in the form of senior secured debt, in New York High level overview Location: New York, NY Technology: Heat pumps, LED lighting, Solar PV, battery storage Investment in the form of a participation
Slide 46: Investment: Carolina Poultry Power Farmville (CPP Biomass)
SDCL Energy Efficiency Income Trust plc Investment: Carolina Poultry Power Farmville (“CPP Biomass”) Investment in a poultry waste to energy project located in Farmville, North Carolina High level overview Location: Farmville, North Carolina, USA Technology: Biomass boiler and steam turbine generato
Slide 47: Important notice
SDCL Energy Efficiency Income Trust plc Important notice THIS PRESENTATION IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION. THIS PRESENTATION IS NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, INTO OR WITHIN CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH AFR
Slide 48: Important notice
SDCL Energy Efficiency Income Trust plc Important notice This presentation does not constitute or form part of any offer for sale or subscription or any solicitation of any offer to buy or subscribe for any securities and neither this document nor any part of it forms the basis of or may be relied o
SDCL Energy Efficiency Income Trust — FY2023 Earnings Presentation on 6ix