Final Results

RNS Number : 6181D

SDCL Energy Efficiency Income Tst

27 June 2019

SDCL Energy Efficiency Income Trust plc

ANNOUNCEMENT OF FINANCIAL RESULTS

FOR THE PERIOD ENDED 31 MARCH 2019

SDCL Energy Efficiency Income Trust plc (LSE: SEIT) ("SEEIT" or the "Company") today announced its financial results for the period ended 31 March 2019.

Highlights

· Initial Public Offering (''IPO'') of £100 million in December 2018

· Acquisition of Seed Portfolio for £87¹ million in December 2018 and the first investment in the USA of £3.8m in March 2019

· Pipeline of near- and medium-term investment opportunities diversified across technology and geography

· Portfolio Valuation of £60.9 million at 31 March 2019²

· Cash of £38 million at 31 March 2019 - available for investments, including £30 million for three committed investment opportunities

· NAV per share as at 31 March 2019 of 98.4p, up from 98.0p at IPO

· Earnings per share in the period of 0.4p

· Interim Dividend of 1.0p declared relating to the period ending 31 March 2019

· Target dividend of 5p for year ending March 2020 and 5.5p for the year ending March 2021³

· Further fundraising additional £72 million raised, after period end on 16 April 2019

Tony Roper, Chairman of SEEIT, said:

"We are pleased to be reporting our inaugural annual results and are satisfied with the progress that we have made since our IPO in December 2018. After raising £100 million and acquiring our Seed portfolio, we raised a further £72 million in April 2019 from existing and new investors, whose support is much appreciated. The market for energy efficiency remains strong and we are focused on ensuring we create value and deliver stable returns for our shareholders in this emerging asset class."

Jonathan Maxwell, CEO of SDCL, the Investment Manager said:

"The portfolio that we have acquired since the IPO has performed in line with expectations, and we have demonstrated our ability to source and execute on additional investment opportunities that have enhanced and diversified it further. We have developed a healthy pipeline of projects that will allow us to deliver cheaper, cleaner and more reliable energy solutions to clients and provide stable, predictable cash flows to the company."

Notes

¹The Seed Portfolio comprised nine energy efficiency projects with a value of £57 million along with three contracted investment opportunities with identified counterparties totalling £30 million.
² Value of the portfolio of investments, see Section 3.2 Valuation of the Portfolio for details.
³ The target dividend stated here, matches the target dividend outlined in the November 2018 Prospectus and should not be treated as a profit forecast for the Company.

For Further Information

Sustainable Development Capital LLP

Jonathan Maxwell

Miles Alexander

Keith Driver

T: +44 (0) 20 7287 7700

Jefferies International Limited

Gary Gould

Tom Hovanessian

T: +44 (0) 20 7029 8000

TB Cardew

Ed Orlebar

Emma Crawshaw

T: +44 (0) 20 7930 0777 / E: SEEIT@tbcardew.com

M: +44 (0) 7738 724 630

SDCL ENERGY EFFICIENCY INCOME TRUST PLC

Chairman's statement

On behalf of the Board, I am pleased to present the first annual report and audited financial statements of SDCL Energy Efficiency Income Trust Plc (''SEEIT'' or ''The Company'') for the period ended 31 March 2019.

Following the Company's successful IPO in December 2018, SEEIT represents the first publicly listed investment trust in the UK with energy efficiency as its primary investment focus. The Board has appointed Sustainable Development Capital LLP ("SDCL") as Investment Manager for the Company.

Investment activity

SEEIT invests in a portfolio of energy efficient and distributed generation assets. As outlined in the November 2018 Prospectus, shortly after the IPO in December, SEEIT completed the acquisition of the Seed Portfolio of assets for a total commitment of £87 million. The portfolio comprising nine energy efficiency projects valued at c.£57 million is mostly operational and, spread across a range of technologies and counterparties, well diversified by credit, technology and regulatory risk. The projects in the Seed Portfolio include Combined Cooling/Heating and Power Plants ("CCHP"), biomass boilers and LED lighting projects, all located in the UK.

On 7 March 2019, we announced SEEIT's first acquisition in the United States, with the acquisition of Northeastern US CHP, a 71% interest in a portfolio of eight operating CCHP units on the east coast of the USA for a total cash consideration of $5.0 million.

On 19 June 2019, SEEIT announced that it has entered into a delivery framework to install, own and operate rooftop solar projects across a section of Tesco's estate in the UK for which it is budgeting an initial contracted investment of £5 million with potential for an additional £15 million to be contracted in projects across further sections of Tesco's UK estate.

SEEIT has assumed commitments to three framework investment programmes totalling c.£30 million - "Clarke", "VCo" and "Fastflow". Final investment decisions and drawdowns against these commitments, which are at the discretion of SEEIT, are expected to be made during the coming financial year.

Both the acquisition of the Seed Portfolio and SEEIT's subsequent investments in the UK and the United States demonstrate the Investment Manager's ability to source and execute investment opportunities in assets which deliver long-term, stable and predictable cash flows and provide environmental benefits. Discussions surrounding additional investments in Europe (predominantly on-site generation) and North America (a combination of on-site generation and energy conservation measures) are ongoing and if concluded successfully, will lead to additional investment by the Company in the coming financial year.

Financial performance

The net asset value ("NAV") per share was 98.4p at 31 March 2019. The Investment Portfolio was valued at £60.9 million as at 31 March 2019 comprising the Seed Portfolio and the US investment.

Investment cashflows from the portfolio during the period of £1.7 million were in line with expectations. Further details can be found in Section 3.1 - Financial Review.

Distributions

In line with previous guidance, on 14 May 2019 SEEIT announced its first interim dividend of 1.0p per share in respect of the period from IPO to the 31 March 2019.

Going forward, the Board anticipates paying semi-annual interim dividends, targeting total dividends of 5.0p per share for the year ending March 2020 and 5.5p per share for the year ending March 2021, in line with guidance in the November 2018 Prospectus.

Funding

SEEIT completed its initial public offering on 11 December 2018. On the 16th April 2019, the Company announced the results of a new primary issue of Ordinary Shares in the capital of SEEIT under its placing programme. We were delighted that the placing raised gross proceeds of £72.0 million.

The Company intends to use the proceeds of the placing together with debt financing to assist in funding the acquisition of certain pipeline project assets that were identified at the time of the IPO.

In April 2019 the Company, through its direct subsidiary, SEEIT Holdco, secured a revolving acquisition debt facility of £25 million as well as access to acquisition financing of up to £40 million. This additional borrowing capacity will enable SEEIT to access short-term capital to execute on its active deal pipeline, including some large potential acquisitions.

Shareholders

The Company is looking to maintain an open and constructive dialogue with shareholders. During the IPO and the subsequent placing the Investment Manager held extensive roadshows and additional meetings with shareholders. The Company is keen to take on board the views and opinions of shareholders. The Board will be available to answer shareholders' questions directly at the Annual General Meeting which will be held in September 2019 and Directors are available to meet shareholders when required.

Corporate governance

I am pleased to be joined on the Board by Christopher Knowles and Helen Clarkson who bring a wealth of relevant skills and experience. The Board recognises the importance of a strong corporate governance culture that meets requirements of the UK Listing Authority (''UKLA''), the Financial Conduct Authority (''FCA'') and the Association of Investment Companies (''AIC'') of which the Company is a member.

The Board has put in place a framework for corporate governance which it believes is appropriate for an investment company, in line with the best practices in relation to matters affecting shareholders, regulators and other stakeholders of the Company. With a range of relevant skills and experience, all Directors contribute to the Board discussions and debates. In particular, the Board believes in providing as much transparency for investors as is needed to ensure investors can clearly understand the prospects of the business while also preserving an appropriate level of commercial confidentiality.

Key Risks

SEEIT has established a risk management framework, which includes systems and procedures designed to enable the Company to ensure that all applicable risks pertaining to SEEIT can be identified, monitored and managed.

The key credit risks arising within the portfolio relate to applicable counterparties. At present, there are no specific matters to address in this regard.

Operational risk across the portfolio varies by project, with risks inherently higher for development/construction projects, than for operational assets with stable and predictable cash flows. The Board receives frequent updates from the Investment Manager on the progress of the portfolio's sole construction project, Huntsman Energy Centre, which due to delays in the project's commissioning process, is expected to become operational during the second half of the Company's financial year.

Outlook

The energy efficiency asset class is becoming an important component of energy supply and demand management. SEEIT is uniquely placed to contribute strongly to global decarbonisation - whilst providing a compelling investment opportunity and stable, predictable long-term yield.

The sourcing of operational energy efficiency and distributed generation assets remains a strong market opportunity, with the Investment Manager evaluating an extensive pipeline of attractive opportunities across both technology and geographies, in particular CCHP and rooftop solar in both Continental Europe and in the USA.

The Board and the Investment Manager regularly review the existing portfolio to find ways in which to unlock additional value and to optimise the portfolio. This includes finding investments opportunities that enhance the diversification of the portfolio and unlocking additional value through further active portfolio management.

I would like to thank shareholders for their support in the establishment of the Company and we look forward to working closely with the Investment Manager to deliver our stated investment objectives.

Tony Roper,

Chairman

2.2 Investment Proposition

Listed in December 2018 on the Premium segment of the Main Market of the London Stock Exchange ("LSE"), SEEIT is a first of its kind investment company focused primarily on investments in operational energy efficiency assets located primarily in the UK, Continental Europe and North America.

Investment objective

The Company's investment objective is to generate an attractive total return for investors comprising stable dividend income and capital preservation, with the opportunity for capital growth.

2.3 Business Model and Investment Strategy

SEEIT simplified structure

SEEIT's investments are held by its single direct subsidiary and main investment vehicle, SEEIT Holdco Limited.

SDCL and Sanne Group (UK) Limited (''Sanne'') are third party service providers appointed by SEEIT via, respectively, a management agreement and an administration agreement.

2.4 Company Key Performance Indicators ("KPIs")

The Company sets out below its financial KPIs which it uses to track the performance of the Company over time against the objectives as described in the Strategic Report.

Financial Item	Period ended 31 March 2019
NAV per share	98.4p
Premium/(discount) to NAV	5%
Earnings per share	0.4p
Dividend per share (declared for the period ending)	1.0p
Weighted Average Project Life	11.3 years
Largest five investments as a % of Investment Portfolio	88%
Largest investment as a % of Investment Portfolio	28%
Weighted average length of asset operations history	2.4 years
Ongoing Charges Ratio	1.38%

2.5 Investment Manager's Report

The Investment Manager

Sustainable Development Capital LLP is an investment firm with a proven track record of investment in energy efficiency and decentralised energy generation projects.

SDCL was founded in 2007 by Jonathan Maxwell and has raised over £500 million of capital commitments, including four funds exclusively focused on energy efficiency with projects in the UK, Europe, North America and Asia. SDCL is headquartered in London and also operates worldwide from offices in New York, Dublin and Singapore. The team consists of 23 employees, including 15 investment professionals.

Operational Highlights

Following the acquisition of the Seed Portfolio in December 2018, the portfolio has performed in line with expectations with no significant changes in the operation of the assets to report.

Lighting technology

Santander UK Lighting: In January 2019, Santander UK plc announced that their group would be closing 140 UK branches in 2019. Santander UK plc have yet to advise details of the branch closures. Subject to the timing of the closures, a payment from Santander as counterparty for early termination (based on kWh) will compensate for the early termination of those properties within the overall contract.

CCHP

The CCHP assets within the portfolio, including the Northeastern US CHP acquisition made in March 2019 are all operating in line with expectations, with no significant operational updates to report for the period.

Steam raising boiler technology

Huntsman Energy Centre: Production of steam (the point at which revenues are generated) is expected to occur in the second half of the financial year. This timing represents a delay from the expectation at the time of the acquisition of the Seed Portfolio, principally due to the complexity around the commissioning of the project, with the delay providing sufficient time for system testing prior to regular production of steam. All parties are continuing to work constructively to complete the construction phase per the timetable set.

At the time of the acquisition of Huntsman Energy Centre, as a result of historical delays, a 10% retention of the acquisition price was withheld. The retention will, subject to satisfaction of certain conditions, be partially paid out at commercial operations date, with the remainder paid out within nine months following commercial operations date. This retention mechanism has ensured that there has been no impact on the value of this investment to the Company as the delay in receiving steam revenues has been offset by a reduction in the retention amount payable directly attributable to the delay.

Biomass boiler technology

The biomass boiler assets within the portfolio are all operating in line with or above expectations, with no significant operational updates to report for the period.

At Moy Park Biomass, the production of heat was above expected levels for the year to March 2019 which has resulted in a one-off increase to expected cash flows to the Company - this has been reflected in the Portfolio Valuation.

Financial Highlights

The Company was successfully listed on the Main Market of the London Stock Exchange on 11 December 2018. IPO costs for the formation of SEEIT were capped at 2% (£2 million) of the £100m raised.

Shortly after the IPO, on 19 December 2018 SEEIT announced the completion of the Seed Portfolio acquisition, as outlined in the November 2018 Prospectus for a total cash commitment of £87 million.

The acquisition comprising nine energy efficiency projects valued at £57 million, which are predominately operational and well diversified across technologies and sectors with relatively low credit, technology and regulatory risk, together with three committed investment commitments with identified counterparties totalling c.£30 million.

On 7 March 2019, SEEIT announced the Company's first acquisition in the USA, Northeastern US CHP, a 71% interest in a high-quality portfolio of eight operating CCHP units on the east coast of the USA for a total cash consideration of $5.0 million.

Dividend declaration

Per previous guidance, on 14 May 2019 the Directors of SEEIT declared that an interim dividend of 1.0 pence per ordinary share be paid on 28 June 2019 to shareholders in respect of the period from incorporation to 31 March 2019.

Going forward, the Board anticipates paying semi-annual interim dividends, targeting total dividends of 5.0p per share for the year ending 31 March 2020 and 5.5p per share for the year ending March 2021, in line with guidance communicated in the November 2018 Prospectus.

As noted in the November 2018 Prospectus, if an election under SI2009/2034 is made by the Company to designate part or all of its dividends as an interest distribution in respect of an accounting period, then the corresponding dividends paid by the Company will be taxed as interest income on UK resident individual shareholders.

Funding and Capital

On 16th April 2019, the Board of Directors announced the results of a placing of new ordinary shares in the capital of SEEIT which had raised gross proceeds of £72.0 million.

The Company intends to use the net proceeds of the placing together with debt financing to assist in funding the acquisition of certain pipeline project assets that were identified at the time of the IPO as well as assets that have been sourced subsequently.

These assets include the portfolio of CHP projects in Southern Europe, identified in the November 2018 Prospectus, along with a healthy pipeline of additional investment opportunities, including CHP and rooftop solar projects in both Continental Europe and the United States which meet SEEIT's investment criteria and are expected to generate attractive returns.

Revolving Credit Facility

As advised in the November 2018 Prospectus, in the interests of capital efficiency, in order to enhance income returns, long-term capital growth and capital flexibility, SEEIT is permitted to maintain a conservative level of gearing. To implement this gearing, in April 2019 SEEIT, through its main investment vehicle, SEEIT Holdco, secured a revolving credit facility ("RCF") of £25 million with Investec Bank plc as well as access to acquisition financing of up to £40 million.

The RCF has an expiry of 30 June 2022 and will be used by the Company to execute on its active deal pipeline which includes some large potential acquisitions.

Key Risks

Credit/counterparty

The key credit risks arising within the portfolio relate to applicable off-take counterparties. There are no specific matters to highlight in this respect. However, it is noted that beyond the direct counterparty risks there is a related risk of early termination of certain of the off-take contracts (which may be more likely to crystalise in circumstances involving financial difficulties within such counterparties, or otherwise a result of key strategic changes). Project due diligence did not identify any basis for concluding that such contract terminations would be likely, as the applicable industrial plants are key, highly stable and strategically important, to the respective firms.

Operational risk

Operational risk will inevitably vary by project, but risks will inherently tend to be higher within development/construction projects, than with stable operating assets. Within the current portfolio, the only construction project (Huntsman Energy Centre) has been subject to construction delays, this highlights the inherent additional risk in construction stage assets. As stated in the Operational Highlights review above, this delay has had no material impact on returns.

Market

Electricity prices remain high in resource-constrained markets such as the UK and North-East USA, in combination with depressed natural gas prices, this continues to present an attractive incentive for alternative sourcing of lower cost and lower carbon energy through energy efficient or distributed generation solutions.

The market for both operational energy efficiency and distributed generation projects remains strong with a significant number of pipeline opportunities being seen since the IPO in December 2018.

Environmental, social and governance

Overview

SEEIT is focused on conducting business responsibly. That means behaving ethically, respecting people and the environment. SEEIT maintains a high standard of business conduct and stakeholder engagement so as to ensure a positive impact on the community and environment in which it operates. This requires monitoring and consideration of its stakeholders by building strong relationships with suppliers, customers, communities and authorities among others. SEEIT's relationships with its stakeholders, and its dedication to maintain a responsible approach to investment, is essential to position SEEIT well for the longer term - and is expected by its shareholders.

Sustainability

The integration of distributed generation and energy efficiency projects into the broader global energy generation mix serves to provide positive and sustainable long-term environmental impacts, providing a significant reduction in energy used to generate electricity, representing tangible and repeatable reductions in greenhouse gas emissions.

SDCL will seek to ensure that all suppliers have appropriate sustainability policies in place, with a focus on procurement and employment policies.

SEEIT also seeks to minimise any local impacts through extensive consultation with statutory consultees, local authorities and, where appropriate, local communities. Engagement with stakeholders is maintained to the highest standards once assets become operational.

Anti-bribery and Corruption

Although SEEIT has no employees, the Company is committed to respecting human rights in its broader relationships. SEEIT does not tolerate corruption, fraud, the receiving of bribes or breaches in human rights. Both SEEIT and SDCL have anti-corruption and bribery policies in place in order to maintain standards of business integrity, a commitment to truth and fair dealing and a commitment to complying with all applicable laws and regulations.

SDCL employees are provided with training for anti-bribery and corruption which is completed annually. All counterparties are assessed by the Investment Manager to mitigate against bribery and corruption. When SDCL completes acquisitions on behalf of SEEIT, there is vendor due diligence and all sales and purchase agreements are required to have anti-bribery and corruption prevention clauses.

Corporate Culture

The Company's approach to sustainability and corporate culture includes:

· Considering the risk culture of the Company on a regular basis to confirm it is appropriate, is expected to support the sustainability of the company, and is consistent with the risk appetite;

· Embedding and improving on good practices in the day-to-day management processes - which are assessed by the Board in the course of the quarterly Board meetings as well as in a wide range of ad hoc interactions during the year;

· Promoting an appropriate culture of stewardship, responsibility, accountability and openness; and

· A focus by the Board and SDCL on appropriate interaction with key stakeholders, including shareholders, lenders, regulators, vendors, co-investors and suppliers.

As SEEIT has no employees, the Directors look through to the culture of SEEIT's key service providers on an ongoing basis including annual reviews. The Board interacts regularly with staff of the Investment Manager both at senior and operational levels, in both formal and informal settings. This promotes greater openness and trust between the key individuals engaged in delivering against the Company's objectives and ensures the Investment Manager remains fully aligned with the Company's corporate culture and approach to sustainability. The Board also engages closely throughout the year with the Company's administrator, brokers, and legal and public relations advisers to gauge the broader positioning and direction of the business.

Outlook and Strategy

SDCL and the Board of SEEIT are focused on delivering value enhancement in the portfolio whilst ensuring ongoing preservation of value.

The Investment Manager continues to seek out predominantly operational opportunities which are well suited for the Company's investment objectives and policies. These projects will be sourced from key private and public sector sources, utilising SDCL's long standing relationships with third-party developers, utility companies, project owners, energy service companies, financial intermediaries and from counterparties, directly.

SDCL is continuing to source energy efficiency assets, often perceived as non-core by, the sale of which can provide effective balance sheet relief for counterparties. This continues to be a high level of focus in the sourcing of potential assets, along with opportunities stemming from portfolio realignments and opportunities from developers seeking to recycle capital.

Pipeline

The Company is progressing with the evaluation of a pipeline of further investment opportunities that were identified at the time of the IPO. Two of the three opportunities identified in the November 2018 Prospectus have been closed - involving cogeneration in the United States and rooftop solar photovoltaic (''PV'') in the UK. The Company continues to progress with the third opportunity involving investment in a portfolio of cogeneration in Spain, where discussions with the vendor are ongoing. The Investment Manager intends to use the proceeds of the placing conducted in April 2019, to the extent necessary together with debt facilities available to the Company, to fund the current project pipeline assets.

The Investment Manager has developed a healthy pipeline of additional investment opportunities, including cogeneration, lighting and other efficient and decentralised energy projects, predominantly in Europe and North America. Most of these opportunities are portfolios of operational assets, although some are larger scale individual projects that meet the Company's investment and risk criteria. To a more limited extent, the Company may invest in projects at any earlier stage, for instance during construction, provided that they contribute to positive cash flow within the coming financial year.

Projects are sourced through direct bilateral engagement by the Investment Manager via its established relationship network, as well as through selective participation in formal sales processes where the Investment Manager believes that the Company has a competitive advantage. Significant emphasis is placed by the Investment Manager in its deal sourcing process on the contribution that prospective investment can make to portfolio returns and diversification by geography, technology and counterparty.

The value of the opportunities represented by the near-term investment pipeline considerably exceeds the cash that the Company currently has available for investment, which supports the ability to be selective and also raises good prospects for increasing the Company's capitalisation through further debt or equity financing.

3 Strategic Report: Portfolio Review

3.1 Financial Review

Financial information

In accordance with IFRS 10 the Company carries investments at fair value as it meets the conditions of being an Investment Entity.

In order to provide shareholders with more transparency into the Company's capacity for investment, ability to make distributions, operating costs and gearing levels, results have been reported in the pro forma tables below on a non-statutory "Portfolio Basis" to include the impact if SEEIT Holdco Limited ("Holdco") were to be consolidated on a line-by-line basis.

The Directors consider the non-statutory Portfolio Basis to be a more helpful basis for users of the accounts to understand the performance and position of the Company because key balances, including cash and debt balances carried in Holdco and expenses incurred in Holdco, are shown in full rather than being netted off.

The impact of including Holdco is shown in the Holdco reallocation column which reconciles back to the statutory financial statements ("IFRS") and constitute a reallocation between line items rather than affecting NAV and Earnings.

NAV per share and Earnings per share are the same under the Portfolio Basis and the IFRS basis.

Summary Financial Statements

Portfolio Basis Summary Income Statement

Period to 31 March 2019
£'000	Portfolio Basis	Holdco reallocation	IFRS (Company)
Total Income	1,626	(64)	1,562
Expenses & Finance Costs	(1,211)	64	(1,147)
Profit/(loss) before Tax	415	-	415
Tax	-	-	-
Earnings	415	-	415
Earnings per share (pence)	0.4	-	0.4

On the Portfolio Basis, Total Income of £1,626k represents the return from the portfolio recognised as income comprising dividends, interest and valuation movements. Further detail on the valuation movements is given in Section 3.2 Valuation of the Portfolio.

On an IFRS basis, both Total Income and Expenses & Finance Costs are lower than on the Portfolio Basis, as costs incurred by the Holdco are included within Total Income under IFRS, not under Expenses & Finance Costs. Total income of £1,562k comprises income received by the Company and valuation movements in its investments.

Total fees accruing to the Investment Manager were £241k for the period, comprising the 0.9% p.a. management fee for assets up to £750m.

In the period - the Company and Holdco incurred £680k of acquisition costs on new investments, primarily relating to the acquisition of the Seed Portfolio, unsuccessful bids and bids in progress (mainly legal, technical and tax due diligence).

Neither the Investment Manager nor any of its affiliates receives other fees from the Company's portfolio of investments.

On both the Portfolio Basis and IFRS basis, Earnings were £415k and Earnings per share were 0.4p.

Portfolio Basis Balance Sheet

31 March 2019
£'000	Portfolio Basis	Holdco reallocation	IFRS (Company)
Investments at fair value	60,850	484	61,334
Working capital	(2,004)	1,078	(926)
Net cash	39,569	(1,562)	38,007
Net assets attributable to Ordinary Shares	98,415	-	98,415
NAV per share	98.4	-	98.4

On a Portfolio Basis, Investments at fair value are £60,850k, representing the Portfolio Valuation. Further detail on the movement in Investments at fair value is given in Section 3.2 Valuation of the Portfolio.

On a Portfolio Basis, net cash at 31 March 2019 was £39,569k; mainly reflecting cash from equity capital raised net of cash used for acquisitions. The Company is expecting to utilise the cash balance in delivering the identified pipeline.

An analysis of net cash movement is shown in the cash flow analysis below.

On an IFRS basis, Investments at fair value were £61,334k, reflecting the Portfolio Basis Investments at fair value, cash held by Holdco and working capital in Holdco.

NAV per share was 98.4p. NAV per share has increased by 0.4p since the IPO, reflecting the earnings in the period.

Portfolio Basis Cash Flow Statement

31 March 2019
£'000	Portfolio Basis	Holdco reallocation	IFRS (Company)
Cash from investments	1,687	(1,653)	34
Operating and finance costs outflow	(425)	11	(414)
Net cash inflow/(outflow) from operations before capital movements	1,262	(1,642)	(380)
Cost of new investments including acquisition costs	(59,507)	80	(59,427)
Share capital raised net of costs	97,813	-	97,813
Movement in the year	39,569	(1,562)	38,007
Net cash at start of the period	-	-	-
Net cash at end of the period	39,569	(1,562)	38,007

Cash inflows from the portfolio on a Portfolio Basis were £1,687k, in line with expectations.

The cost of new investments by the SEEIT group on a Portfolio Basis of £59,507k includes the cash cost of the Seed Portfolio acquisition at IPO of £54,456k (net of contractual retentions of £2.7 million) and the new US investment of £3,803k. The acquisition of the Seed Portfolio also included a cash commitment of £30 million which has not yet been drawn.

At the point of acquiring the Seed Portfolio, a total of £2.7 million retentions were withheld by the Company of which £1.5 million was subject to finalising and agreeing the working capital of the investments acquired and £1.2 million in relation to Huntsman Energy Centre which requires certain condition to be met. At 31 March 2019, the SEEIT group is expecting to pay c. £2.3 million of the £2.7 million contractual retentions, the reduction comprising a £0.1 million adjustment in relation to the finalised working capital of the investments acquired and a £0.3 million reduction as a result of delays in the completion of construction works of the Huntsman Energy Centre project. The contractual retention for the Huntsman Energy Centre does not become payable until after construction completion and is subject to further conditions being met.

On an IFRS basis, costs of new investments of £59,427k reflects funding extended by the Company to Holdco in the period.

Hedging for the Group is undertaken by Holdco and therefore the Company had no cash flows for this on an IFRS basis. Holdco enters into forward sales to hedge foreign exchange exposure in line with the Company's hedging policy set out below (see 'Foreign Exchange Hedging'). On a Portfolio Basis, there was no cash flow in the period although hedges were put in place for the US investment prior to 31 March 2019.

Ongoing charges

Ongoing charges, in accordance with Association of Investment Companies ("AIC") guidance, are defined as annualised ongoing charges (i.e. excluding acquisition costs and other non-recurring items) divided by the average published undiluted net asset value in the period. On this basis the Ongoing charges percentage is 1.38% when the Company's initial period of activity is extrapolated to a full year.

Group Drawings and Gearing Levels

A revolving credit facility ("RCF") was put in place in April 2019 and therefore as at 31 March 2019, Holdco had no drawings.

The RCF was entered into by Holdco for £25 million and has an expiry date of 30 June 2022. It also provides for access to additional £40 million of acquisition financing. The Company is therefore able to confirm that sufficient working capital is available for the financial year ending 31 March 2020, without needing to refinance. The Investment Manager will, however, periodically consider refinancing options aligned to the pipeline of potential transactions.

Foreign Exchange Hedging

The Company, through currency hedges entered into by Holdco, aims to limit volatility of NAV per share to movements in foreign exchange rates. Forward sales of foreign currency are put in place for a period of up to 2 years taking into account the cost benefit of hedging activity whilst retaining the key objective of materially mitigating the impact of foreign exchange movements on the Company's results.

3.2 Valuation of the Portfolio

Introduction

The Investment Manager is responsible for carrying out the fair market valuation of the SEEIT group's portfolio of investments (the "Portfolio Valuation") which is presented to the Directors for their consideration and approval. A valuation is carried out on a six-monthly basis, as at 31 March and 30 September each year. The Portfolio Valuation is the key component in determining the Company's NAV.

For non-market traded investments (being all the investments in the current portfolio), the valuation is based on a discounted cash flow methodology and adjusted in accordance with the IPEV (International Private Equity and Venture Capital) valuation guidelines where appropriate to comply with IFRS 13 and IFRS 9, given the special nature of infrastructure investments. Where an investment is traded in an open market, a market quote is used.

The Investment Manager exercises its judgment in assessing the expected future cash flows from each investment based on the project's expected life and the financial models produced for each project company and adjusts the cash flows where necessary to take into account key external macro-economic assumptions and specific operating assumptions.

The fair value for each investment is then derived from the application of an appropriate market discount rate to reflect the perceived risk to the investment's future cash flows and the relevant year end foreign currency exchange rate to give the present value of those cash flows. The discount rate takes into account risks associated with the financing of an investment such as investment risks (e.g. liquidity, currency risks, market appetite), any risks to the investment's earnings (e.g. predictability and covenant of the income) and a thorough assessment of counterparty credit risk, all of which may be differentiated by the phase of the investment.

The Investment Manager uses its judgement in arriving at the appropriate discount rate. This is based on its knowledge of the market, taking into account intelligence gained from its bidding activities, discussions with financial advisers in the appropriate market, and publicly available information on relevant transactions.

The valuation methodology is unchanged from the Company's IPO and details of the valuation methodology can be found in the Company's November 2018 Prospectus.

Portfolio Valuation

The Portfolio Valuation as at 31 March 2019 was £60,850k. This valuation compares to £57,156k as at the IPO on 11 December 2018 (up 6.7%). A reconciliation between the Portfolio Valuation at 31 March 2019 and Investment at fair value shown in the financial statements is given in Note 8 to the financial statements, the principal differences are as per the table below.

	£'000
Portfolio Valuation	60,850
Holdco cash	1,562
Holdco net working capital	(1,077)
Investment at fair value (see Note 8)	61,334

Valuation Movements

Valuation Movements During the Period To 31 March 2019 (£'000)
Portfolio Valuation - acquired at IPO		57,156
New Investments (since IPO)	3,803
Cash Receipts from Investments	(1,653)
		2,150
Rebased Portfolio Valuation		59,306
Changes in Macroeconomic Assumptions	186
Changes in Discount Rates	181
Balance of Portfolio Return	1,176
		1,544
		60,850

The opening valuation after acquiring the Seed Portfolio shortly after the IPO was £57,156k. Allowing for investments of £3,803k and cash receipts from investments of £1,653k, the rebased valuation is £59,306k.

Additional investments of £3,803k in the period comprise the following:

· a £3,803k investment in Northeastern US CHP

Return from the Portfolio

Each movement between the rebased valuation of £59,306k and the 31 March 2019 valuation of £60,850k is considered in turn below:

(i) Changes in macroeconomic assumptions:

Inflation assumptions: Long-term inflation assumptions of 2.75% p.a. were applied to all UK projects, resulting in a minor adjustment in the valuation of £186k.

Tax rate assumptions: The assumptions for tax rates in the UK are unchanged from IPO and in the USA it is unchanged from the acquisition assumption.

(ii) Reduction in valuation discount rates:

There were no changes to discount rates applied to the investments acquired as part of the Seed Portfolio. The £181k uplift in valuation is as a result of a reduction in the discount rate applied to Northeastern US CHP.

The Company commissioned an independent review of the valuation discount rates adopted at IPO in relation to the Seed Portfolio which confirmed the rates used were appropriate. Each of these discount rates were reviewed again for the 31 March 2019 valuation to determine if they remain appropriate.

The discount rate used for valuing each investment represents an assessment of the rate of return at which infrastructure investments with similar risk profiles would trade on the open market.

The weighted average portfolio valuation discount rate as at 31 March 2019 was c.6.5%.

(iii) Balance of portfolio return:

This refers to the balance of valuation movements in the year (excluding (i) to (ii) above) and represents an uplift of £1,176k. The balance of portfolio return mostly reflects the net present value of the cash flows brought forward for the period at the average prevailing portfolio discount rate and reflects good operational cashflow performance.

The portfolio return also included some additional valuation adjustments - the valuation of the Huntsman Energy Centre has seen a reduction of c. £300k as a result of the delay in finalising the completion of the construction which is anticipated to occur in the second half of the financial year. The NAV of the Company is however not affected as the contractual retention payable in relation to this project as part of the acquisition of the Seed Portfolio has decreased by a similar amount.

At Moy Park Biomass, production of heat in the year to 31 March 2019 was higher than forecast, resulting in a one-off increase of the valuation.

Valuation Assumptions

		31 March 2019
Inflation rates	UK (RPI)	2.75% p.a.
Inflation rates	USA (CPI)	2.00% p.a.
Tax rates	UK	19% to March 2020, 17% thereafter
Tax rates	USA	21% Federal & 3-9% State rates
Foreign exchange rates	USD/GBP	0.77

Key Sensitivities

For each of the sensitivities, it is assumed that potential changes occur independently of each other with no effect on any other base case assumption, and that the number of investments in the portfolio remains static throughout the modelled life.

Discount Rate Sensitivity

Whilst not a macro-economic assumption, the weighted average discount rate that is applied to each portfolio company's forecast cash flow, is the single most important judgement and variable for the purposes of valuing the portfolio.

A 0.5% increase in the discount rates would result in a NAV per share decrease of 1.4p based on the Portfolio Valuation as at 31 March 2019. A 0.5% decrease in the discount rates would result in a NAV per share increase of 1.4p based on the Portfolio Valuation as at 31 March 2019.

Corporation Tax Rate Sensitivity

The profits of each portfolio company are subject to corporation tax in the country where the project is located. The sensitivity considers a 5% movement in tax rates in all jurisdictions.

A 5% increase in corporation tax rates would result in a NAV per share reduction of 0.9p based on the Portfolio Valuation as at 31 March 2019. A 5% decrease in corporation tax rates would result in a NAV per share increase of 0.8p based on the Portfolio Valuation as at 31 March 2019.

Foreign Exchange Rate Sensitivity

This sensitivity considers a 10% movement in relevant non-GBP currencies, which in the case of the Portfolio Valuation at 31 March 2019 is US Dollar.

A 10% increase in foreign exchange rates would result in a NAV per share reduction of 0.3p based on the Portfolio Valuation as at 31 March 2019. A 10% decrease in foreign exchange rates would result in a NAV per share increase of 0.2p based on the Portfolio Valuation as at 31 March 2019.

Inflation Rate Sensitivity

This sensitivity considers a 0.5% p.a. movement in long term inflation in the UK and USA.

A 0.5% p.a. increase in inflation rates would result in a NAV per share reduction of 0.2p based on the Portfolio Valuation as at 31 March 2019. A 0.5% p.a. decrease in inflation rates would result in a NAV per share increase of 0.2p based on the Portfolio Valuation as at 31 March 2019. The Company's NAV has limited exposure to inflation and does not expect this to increase in the future.

Please refer to Note 13 in the Notes to the Financial Statements for further detail.

3.3 Investment Portfolio

Portfolio Analysis

Five largest investments in the portfolio

The table below shows the five largest investments in the Investment Portfolio as a proportion of the overall Portfolio Valuation which excludes cash held by the Company at 31 March 2019.

Project	As a % of the Investment Portfolio
Santander UK Lighting	28%
Moy Park Biomass	24%
Huntsman Energy Centre	23%
Northeastern US CHP	7%
Moy Park Lighting	6%
Five largest assets - total	88%
Remaining Investment Portfolio assets	12%
Total	100%

Overview of the five largest investments

Santander UK Lighting - UK

LED Lighting project comprising 90,000 lamps across over 800 of Santander's offices and branches across the UK. Building management systems, processes and optimisation and HVAC units have also been installed in certain offices. The counterparty has entered into a services agreement with the project SPV for the provision of lighting which currently has seven years remaining.

As outlined in Section 2.5 Investment Manager's Report above, in January 2019, Santander UK plc announced that their group would be closing 140 UK branches over the course of 2019. Santander UK plc have yet to advise details of the branch closures to the Company. Subject to the timing of the closures, a payment from Santander as counterparty for early termination (based on kWh) is expected to compensate for the early termination of those properties within the overall contract.

Moy Park Biomass - UK

The Moy Park project comprises 86 biomass boilers at several poultry farms operated by Moy Park in Lincolnshire, UK. The counterparty has entered into a heat supply agreement, under which they are contracted to pay a fee for each boiler in addition to a variable amount for heat produced above a threshold. In addition, the project is entitled to a sum under the Renewable Heat Incentive from OFGEM, calculated with reference to the heat output of the boilers. The project has approximately 17 years left to run.

The biomass boilers use wood pellets as feedstock. The project SPV has contracted with Land Energy Girvan Limited to supply wood pellets for 20 years.

Huntsman Energy Centre - UK

This project involves the installation of three steam raising boilers and two steam compressors at the counterparty's premises in Wilton, North Yorkshire, UK. The counterparty has entered into a steam services agreement with the project SPV to design, build, operate and maintain the project, pursuant to which the project SPV will sell the steam generated to the counterparty, in return for contracted revenues. The term of the contract once the project becomes operational is 15 years.

Northeastern US CHP - USA

The project, which comprise CHP units for a prison, university, multi-family developments and a nursing home, have a total installed capacity of 2.5MW of CHP and 1,250 tonnes of cooling capacity. The units are each subject to Energy Purchase Agreements, which benefit from long-term contracted cash flow, and each unit has been fully operational and revenue generating for over a year. Revenues from the sites are generated through electricity sales, the provision of hot and chilled water and from electricity demand reduction.

Moy Park Lighting - UK

Moy Park Lighting comprises LED lighting at 15 Moy Park sites across the UK. The project has been structured as a loan, with funding provided directly to a project SPV established by Future Energy Services (''FES''), which SEEIT has acquired. The project SPV owns the assets, with FES responsible for the delivery, operation and maintenance of the project. The Seller Funds and FES, through the joint venture vehicle have entered into a loan facility directly with the project SPV, which has approximately 5 years left to run.

Portfolio diversification by technology

The largest exposure by technology as at 31 March 2019, calculated on a gross asset basis at 21% is in lighting (Santander UK Lighting, Moy Park Lighting and NCP Lighting) and this is spread across different technology providers including GE Lighting and FES. The second largest technology exposure is to biomass (Moy Park Biomass) with 15%. Gas boilers (Huntsman Energy Centre) represent 14%.

Both the biomass and the gas boilers are through EPC & O&M with Engie representing 29% of the portfolio. No other providers represent more than 10% of the portfolio.

Portfolio diversification by geography

At 31 March 2019, the majority (93%) of the Investment Portfolio is located in the UK, with the entire Seed Portfolio acquisition comprising of UK based assets.

The Northeastern US CHP investment (7% of the Investment Portfolio) represents the Company's first investment outside of the UK.

On behalf of the Board

Tony Roper,

Chairman

STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD FROM 12 OCTOBER 2018 TO 31 MARCH 2019

	Note	For the period ended 31 March 2019 £'000
Income
Investment income	4	1,562
Total income		1,562
Fund expenses	5	(1,147)
Operating profit		415
Profit for the period before tax		415
Tax	6	-
Profit and total comprehensive income for the period after tax		415
Profit and total comprehensive income for the period attributable to: Equity holders of the Company		415
Earnings Per Ordinary Share (pence)	7	0.4

The accompanying Notes are an integral part of these financial statements.

All items in the above Statement derive from continuing operations.

Other comprehensive income

There were no items of other comprehensive income in the current period.

STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2019

	Note	31 March 2019 £'000
Non-current assets
Investment at fair value through profit or loss	8	61,334
		61,334
Current assets
Trade and other receivables	9	2,001
Cash and cash equivalents		38,007
		40,008
Current liabilities
Trade and other payables	10	(2,927)
Net current assets		37,081
Net assets		98,415

Capital and reserves
Share capital	11	1,000
Share premium		-
Other reserves	11	97,000
Retained earnings		415
Total equity		98,415
Net assets per share (pence)		98.4

The accompanying Notes are an integral part of these financial statements.

The financial statements for the period ended 31 March 2019 of SDCL Energy Efficiency Income Trust plc were approved and authorised for issue by the Board of Directors on 26 June 2019.

Signed on behalf of the Board of Directors:

Helen Clarkson Tony Roper

Director Director

Company number: 11620959

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE PERIOD FROM 12 OCTOBER 2018 TO 31 MARCH 2019

	Note	Share Capital £'000	Share Premium £'000	Other distributable reserves £'000	Retained earnings £'000	Total £'000
Balance at 12 October 2018		-	-	-	-	-
Shares issued	11	1,000	99,000	-	-	100,000
Share issue costs	11	-	(2,000)	-	-	(2,000)
Reserves transfer			(97,000)	97,000	-	-
Profit and total comprehensive income for the period		-	-	-	415	415
Shareholders' equity at 31 March 2019		1,000	-	97,000	415	98,415

Other distributable reserves were created through the cancellation of the Share Premium account on 12 March 2019. This amount is capable of being applied in any manner in which the Company's profits available for distribution, as determined in accordance with the Companies Act 2006, are able to be applied.

The accompanying Notes are an integral part of these financial statements.

STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM 12 OCTOBER 2018 TO 31 MARCH 2019

	Note	For the period ended 31 March 2019 £'000
Cash flows from operating activities
Operating profit for the period		415
Adjustments for:
Gain on investment at fair value through profit or loss		(78)
Operating cash flows before movements in working capital		337
Changes in working capital
Movement in trade and other receivables	9	(2,001)
Movement in trade and other payables	10	227
Net cash used in operating activities		(1,437)
Cash flows from investing activities
Purchase of investment		(58,556)
Net cash used in investing activities		(58,556)
Cash flows from financing activities
Net proceeds from the issue of shares		98,000
Net cash generated from financing activities		98,000
Net movement in cash and cash equivalents during the period		38,007
Cash and cash equivalents at the beginning of the period		-
Cash and cash equivalents at the end of the period		38,007

The accompanying Notes are an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD FROM 12 OCTOBER 2018 TO 31 MARCH 2019

1. General Information

The Company is registered in England and Wales under number 11620959 pursuant to the Companies Act 2006. The Company's registered office and principal place of business is Asticus Building, 2nd Floor, 21 Palmer Street, London, SW1H 0AD. The Company was incorporated on 12 October 2018 and is a Public Company and the ultimate controlling party of the group.

On 7 December 2018, the Company announced the results of its initial public offering ("IPO"), which raised gross proceeds of £100m. The Company's ordinary shares were admitted to the premium segment of the UK Listing Authority's Official List and to trading on the Main Market of the London Stock Exchange under the ticker SEIT on 11 December 2018. Subsequent fundraising in April 2019 raised gross proceeds of £72m. Details can be found in Note 16.

The Company's objective is to generate an attractive total return for investors comprising stable dividend income and capital preservation, with the opportunity for capital growth through the acquiring and realising of a diverse portfolio of energy efficient projects.

The Company currently makes its investments through its principal holding company and single subsidiary, SEEIT Holdco Limited ("HoldCo"), and intermediate holding companies which are directly owned by the Holdco. The Company controls the investment policy of each of the Holdco and its intermediate holding companies in order to ensure that each will act in a manner consistent with the investment policy of the Company.

The Company has appointed Sustainable Development Capital LLP as its Investment Manager (the "Investment Manager") pursuant to the Investment Management Agreement dated 22 November 2018. The Investment Manager is registered in England and Wales under number OC330266 pursuant to the Companies Act 2006. The Investment Manager is regulated by the FCA, number 471124.

The financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Company operates.

2. Significant Accounting Policies

a) Basis of accounting

The financial statements have been prepared in accordance with The Companies Act 2006 and International Financial Reporting Standards adopted for use in the European Union ("IFRS"). Such financial statements will be prepared under the historical cost convention, except for certain investments and financial instruments measured at fair value through the Statement of Comprehensive income. The principal accounting policies adopted are set out below and consistently applied, subject to changes in accordance with any amendments in IFRS.

Fair value is the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis.

(i) New and amended standards adopted by the Company

The Company adopted the following standards that became effective during the current year, although they had no material impact on the Company's financial statements.

· IFRS 9 Financial Instruments

· Annual Improvements to IFRS Standards 2014-2016 Cycle

· IFRS 15 Revenue from Contracts with Customers

(ii) New standards and interpretation not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 31 March 2019 reporting periods and have not been early adopted by the group. The group's assessment of the impact of these new standards and interpretations is set out below.

Title of standard	IFRS 16, 'Leases'
Nature of change	IFRS 16 was issued in January 2016. It will result in almost all leases being recognised on the balance sheet by lessees, since the distinction between operating and finance leases is removed. Under the new standard, an asset (that is, the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.
Impact	The Company has no leases and hence does not expect any impact on the financial statements.

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

b) IFRS 10, Investment entities exemption

The Company invests all of its investable cash into SEEIT Holdco Limited (the "Holdco") as advised by the Investment Manager.

The sole objective of the Holdco is to enter into several energy efficient projects, via individual corporate entities. The Holdco issues equity and loans to finance the projects.

The Directors have concluded that in accordance with IFRS 10, the Company meets the definition of an investment entity. Under IFRS 10 investment entities are required to hold subsidiaries at fair value through the Statement of Comprehensive Income rather than consolidate them. There are three key conditions to be met by the Company for it to meet the definition of an investment entity. For each reporting period, the Directors assess whether the Company continues to meet these conditions:

(i) The Company has obtained funds for the purpose of providing investors with investment management services.

(ii) The business purpose of the Company, which was communicated directly to investors, is investing solely for risk adjusted returns (including having an exit strategy for investments).

(iii) The performance of substantially all investments is measured and evaluated on a fair value basis.

In assessing whether the Company meets the definition of an investment entity set out in IFRS 10 the Directors note that:

(i) the Company has multiple investors with shares issued publicly on London Stock Exchange and obtains funds from a diverse group of shareholders who would otherwise not have access individually to investing in energy efficient projects;

(ii) the Company's purpose is to invest funds for both investment income and capital appreciation. The Holdco and its SPVs have indefinite lives however the underlying assets do not have an unlimited life and therefore minimal residual value and therefore will not be held indefinitely; and

(iii) the Company measures and evaluates the performance of all of its investments on a fair value basis which is the most relevant for investors in the Company. The Directors use fair value information as a primary measurement to evaluate the performance of all of the investments and in decision making.

The Directors are of the opinion that the Company meets all the typical characteristics of an investment entity and therefore meets the definition set out in IFRS 10.

The Directors believe the treatment outlined above provides the most relevant information to investors.

c) Going concern

The Directors are satisfied that the Company has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of approval of the financial statements. The Directors have reviewed the Company's financial projections and cash flow forecasts and believe, based upon those projections and forecasts that it is appropriate to prepare the financial statements on a going concern basis. Accordingly, they continue to adopt the going concern basis in preparing its financial statements. Further detail is contained in the Strategic Report.

d) Segmental reporting

The Chief Operating Decision Maker ("CODM") being the Board of Directors, is of the opinion that the Company is engaged in a single segment of business, being investment in energy efficient projects to generate investment returns whilst preserving capital. The financial information used by the CODM to manage the Company presents the business as a single segment.

e) Foreign Currency Translation

Foreign currency and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates, the Company's functional currency. The financial statements are presented in Pounds Sterling which is the Company's functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into Pounds Sterling using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.

f) Income

Dividend income and investment income from financial assets at fair value through profit or loss is recognised in the Statement of Comprehensive Income within investment income when the Company's right to receive payments is established.

Fair value gains on financial assets at fair value through profit or loss is recognised in the Statement of Comprehensive Income at each valuation point.

Finance income comprises interest earned on cash held on deposit. Finance income is recognised on an accruals basis. Other income is accounted for on an accruals basis using the effective interest method.

g) Dividends

Dividends to the Company's shareholders are recognised when they become legally payable. In the case of interim dividends, this is when they are paid. In the case of final dividends, this is when they are approved by the shareholders at the Annual General Meeting.

h) Fund Expenses

All expenses including investment management fees, transaction costs, non-executive directors' fees are accounted for on an accruals basis. Share issue expenses of the Company directly attributable to the issue and listing of shares are charged to the share premium account.

i) Acquisition costs

In line with IFRS 3 (Revised), acquisition costs are expenses to the Income Statement as they are incurred.

j) Taxation

The Company is liable to UK corporation tax on its income. The Company is exempt from UK corporation tax on chargeable gains as it has been approved by HMRC as an investment trust company.

Current tax is the expected tax payable on the taxable income for the period, using tax rates that have been enacted or substantively enacted at the date of the Statement of Financial Position.

Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences

and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred tax assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit or the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments, except where the Company is able to control the timing of the reversal of the difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to the Statement of Comprehensive Income except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off tax assets against tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Deferred tax assets and liabilities are not discounted.

k) Cash and cash equivalents

Cash and cash equivalents includes deposits held at call with banks and other short-term deposits with original maturities of three months or less. There is no expected credit loss as the bank institution has a credit rating of BBB+ and all cash is held at call from the bank.

l) Trade and other receivables

Trade and other receivables are non-derivative financial assets with fixed or determinable payments that not quoted in an active market. Receivables are initially recognised at fair value. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. The Directors also consider any expected credit loss and will subsequently re-measure receivables to ensure they are held at fair value. Given the nature of receivables, however, and the short time length involved between their origination and settlement, their amortised cost is considered to be the same as their fair value at the date of origination.

The Company has assessed IFRS 9's new expected credit loss model and does not consider any impact on these financial statements.

m) Trade and other payables

Trade and other payables are initially recognised at fair value, and subsequently re-measured at amortised cost using the effective interest method where necessary.

n) Financial instruments

Financial assets and financial liabilities are recognised in the Company's Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the contractual rights to the cash flows from the instrument expire or the asset is transferred and the transfer qualifies for derecognition in accordance with IFRS 9 Financial instruments.

Investments are recognised when the Company has control of the asset. Control is assessed considering the purpose and design of the investments including any options to acquire the investments where these options are substantive. The options are assessed for factors including the exercise price and the incentives for exercise.

The Company classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value through profit or loss; and

• those to be measured at amortised cost.

At initial recognition, the Company measures a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in the statement of comprehensive income. The Company subsequently measures all equity investments at fair value and changes in the fair value of financial assets at FVPL are recognised as gains/(losses) on investments at fair value through profit or loss within investment income.Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

o) Share Capital

The Company's ordinary shares are not redeemable and are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction in equity and are charged to the share premium account. The costs incurred in relation to the IPO of the Company were charged to the share premium account.

3. Critical accounting estimates and judgements

The preparation of financial statements in accordance with IFRS requires the Directors to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the period. Actual results could differ from those estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period or in the period and future periods if the revision affects both current and future periods.

Judgements

Investment entity

As disclosed in Note 2, the Directors have concluded that the Company meets the definition of an investment entity as defined in IFRS 10, IFRS 12 and IAS 27. This conclusion involved a degree of judgement and assessment as to whether the Company met the criteria outlined in the accounting standards.

Estimates

Investment valuations

The Board of Directors has appointed the Investment Manager to produce investment valuations based upon projected future cash flows. These valuations are reviewed and approved by the Board. The investments are held indirectly through the Holdco and its intermediate holding companies.

IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Board bases the fair value of the investments on the information received from the Investment Manager. The Company classified its investment at fair value through profit or loss as Level 3 within the fair value hierarchy.

Fair values for those investments for which a market quote is not available, in this instance being all investments, are determined using the income approach which discounts the expected cash flows at the appropriate rate. The investment at fair value through profit or loss is valued by discounting future cash flows to the group from investments in both equity cash flows, such as dividends and equity redemptions, and subordinated loans cash flows, such as interest and principal repayments, at an appropriate discount rate.

The valuation at 31 March 2019 includes significant estimates for future cash flows, including an estimate of costs remaining to complete a construction asset and the expected cash flows from one project for production of heating in excess of the contractual minimum production.

The weighted average discount rate applied in the March 2019 valuation was 6.5%. The discount rate is considered one of the most unobservable inputs through which an increase or decrease would have a material impact on the fair value of investment at fair value through profit or loss. Further estimates are made on macroeconomic assumptions on inflation, corporation tax and foreign exchange which are further described in Note 8 and Note 13.

4. Investment Income

	Period ended 31 March 2019 £'000
Dividend income	1,450
Bank interest received	34
Gain on investment at fair value through profit or loss (Note 8)	78
Investment income	1,562

5. Fund Expenses

	Period ended 31 March 2019 £'000
Investment management fees	241
Transaction costs	629
Non-executive directors' fees	34
Other expenses	145
Fees to the Company's independent auditor:
- for the audit of the statutory financial statements	98
Fund Expenses	1,147

In addition to the above, fees of £27k were paid by Holdco to the Company's independent auditor for other audit related services.

As at 31 March 2019, the Company had no employees. The Company confirms that it has no key management personnel, apart from the Directors disclosed in Directors' Remuneration Report. There is no other compensation apart from those disclosed.

6. Taxation

The tax for the period shown in the Statement of Comprehensive Income is as follows.

	Period ended 31 March 2019 £'000
Profit for the period before taxation	415
Profit for the period multiplied by the standard rate of corporation tax of 19%	79
Fair value movements (not subject to taxation)	(15)
Dividends received (not subject to tax purposes)	(276)
Surrendering of tax losses to unconsolidated subsidiaries	212
UK Corporation Tax	-

7. Earnings per Share

	Period ended 31 March 2019 '000
Profit and comprehensive income for the period	415
Weighted average number of ordinary shares	100,000
Earnings per ordinary share (pence)	0.4

There is no dilutive element during the financial period and subsequent to the financial period.

8. Investment at fair value through profit or loss

Valuation methodology

The Directors have satisfied themselves as to the methodology used and the discount rates and key assumptions applied in producing the valuations. All investments are at fair value through profit or loss.

8. Investment at fair value through profit or loss (continued)

any risks to the investment's earnings (e.g. predictability and covenant of the income) and a thorough assessment of counterparty credit risk, all of which may be differentiated by the phase of the investment.

The Company records the fair value of Holdco by calculating and aggregating the fair value of each of the individual project companies and holding companies in which the Company holds an indirect investment.

The total change in the value of the investment in the HoldCo is recorded through profit and loss in the Statement of Comprehensive Income.

Fair value measurement by level

IFRS 13 requires disclosure of fair value measurement by level. Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety which are described as follows:

• Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The Company's indirect investments have been classified as level 3 as the investments are not traded and contain unobservable inputs. The Company's investment is considered to be a level 3 asset. As the fair value of the Company's equity and loan investments in the Holdco is ultimately determined by the underlying fair values of the SPV investments or debt schedules, the Company's sensitivity analysis of reasonably possible alternative input assumptions is the same across all its investments.

Investment reconciliation

The Company owns the Investment Portfolio through its direct investment in the wholly owned HoldCo. This is comprised of the Investment Portfolio and the residual net assets of the HoldCo. The Total Investment at fair value is recorded under Non-Current Assets in the Statement of Financial Position.

	31 March 2019 £'000
Acquisitions at cost at IPO	57,156
New investments	4,100
Movement in fair value	78
Closing investment at fair value through profit or loss	61,334

Shortly after the IPO, the Seed Portfolio was acquired via an investment of £57,156k in Holdco, incurring transaction costs of £629k. An additional investment in Holdco was made on 28 February 2019 for a total consideration of £4,100k in relation to acquiring the Northeastern US CHP investment.

8. Investment at fair value through profit or loss (continued)

A reconciliation between the Portfolio Valuation, being the valuation of the Investment Portfolio, and the Investment at fair value through profit or loss per the Statement of Financial Position is provided below. The principal differences are the balances in Holdco for cash and working capital.

	£'000
Portfolio Valuation	60,850
Holdco cash	1,562
Holdco net working capital	(1,077)
Investment at fair value through profit or loss (see Note 8)	61,334

Due to the nature of the investments, they are always expected to be classified as level 3. There have accordingly been no transfers between levels during the period.

Valuation Assumptions

		31 March 2019
Inflation rates	UK (RPI)	2.75% p.a.
Inflation rates	USA (CPI)	2.00% p.a.
Tax rates	UK	19% to March 2020, 17% thereafter
Tax rates	USA	21% Federal & 3-9% State rates
Foreign exchange rates	USD/GBP	0.77

The following table shows the investments of the Company owned via the Holdco.

Investment	Place of Business	Ownership Interest
Huntsman Energy Centre	United Kingdom	100%
Northeastern CHP	USA	71%
Santander UK Lighting	United Kingdom	100%
Moy Park Biomass	United Kingdom	100%
Moy Park Lighting	United Kingdom	100%
Riverdale Datacentre	United Kingdom	100%
St Barts CHP	United Kingdom	100%
Holywell Solutions	United Kingdom	100%
SmartEnergy	United Kingdom	49%
NCP Lighting	United Kingdom	50%

[1] Debt investment only

In March 2019 the Company, via its subsidiary, acquired a 71% interest in Northeastern US CHP from a US based fund managed by an affiliate of the Investment Manager. The consideration paid was US$5.0 million.

9. Trade and other receivables

	31 March 2019 £'000
Dividend receivable	1,450
Prepayments	236
VAT receivable	206
Other receivables	109
Total trade and other receivables	2,001

10. Trade and other payables

	31 March 2019 £'000
Due to investment	2,700
Other payables	227
Total trade and other payables	2,927

Amounts due to investment are interest free, unsecured, have no fixed repayment schedule and are repayable on demand.

11. Share capital and reserves

Share issuance

Number of shares

'000

Gross amount raised £'000

Issue costs £'000

Share capital

£'000

Other Reserves

£'000

Issued on 11 December 2018

100,000

(2,000)

1,000

97,000

Total issued at 31 March 2019

100,000

(2,000)

1,000

97,000

The Company currently has one class of ordinary share in issue. All the holders of the ordinary shares, which total 100,000,000, are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company.

Retained reserves
Retained reserves comprise the retained earnings as detailed in the Statement of Changes in Equity.

12. Net assets per ordinary share

	31 March 2019
Shareholders' equity (£'000)	98,415
Number of ordinary shares ('000)	100,000
Net assets per ordinary share (pence)	98.4

13. Financial risk management

Capital management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders. In accordance with the Company's investment policy, the Company's principal use of cash (including the proceeds of the IPO) has been to fund investments as well as ongoing operational expenses.

The Board, with the assistance of the Investment Manager, monitors and reviews the broad structure of the Company's capital on an ongoing basis. The capital structure of the Company consists entirely of equity (comprising issued capital, reserves and retained earnings).

The Company is not subject to any externally imposed capital requirements.

Financial risk management objectives

The Board, with the assistance of the Investment Manager, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyses exposures by degree and magnitude of risk.

These risks include market risk (including price risk, currency risk and interest rate risk), credit risk and liquidity risk.

Price risk

The value of the investments directly and indirectly held by the Company is affected by the discount rate applied to the expected future cash flows and as such may vary with movements in interest rates, inflation, power prices, market prices and competition for these assets.

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is indirectly exposed to currency risk through its HoldCo as investments are held in GBP, EUR and USD.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. the Company's financial assets and financial liabilities are at a pre-determined interest rate, as a result the Company is subject to limited exposure to risk due to fluctuations in the prevailing levels of market interest rates.

13. Financial risk management (continued)

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company.

The Company does not have any significant credit risk exposure to any single counterparty in relation to trade and other receivables. On-going credit evaluation is performed on the financial condition of accounts receivable.

As at 31 March 2019 there were no receivables considered impaired. At investment level, the credit risk relating to significant counterparties is reviewed on a regular basis and potential adjustments to the discount rate are considered to recognise changes to these risks where applicable.

The Company maintains its cash and cash equivalents across various banks to diversify credit risk. These are subject to the Company's credit monitoring policies including the monitoring of the credit ratings issued by recognized credit rating agencies.

The Company has no financial assets that are subject to the expected credit loss model. Investments are held at fair value using discounted cash flows. Receivables are primarily intercompany and taxation. While cash and cash equivalents are subject to the impairment requirements of IFRS 9, there was no identified impairment loss.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Board of Directors has established an appropriate liquidity risk management framework for the management of the Company's short-, medium- and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves by monitoring forecast and actual cash flows and by matching the maturity profiles of assets and liabilities.

The table below shows the maturity of the Company's non-derivative financial assets and liabilities. The amounts disclosed are contractual, undiscounted cash flows and may differ from the actual cash flows received or paid in the future as a result of early repayments.

	Up to 3 months £'000	Between 3 and 12 months £'000	Between 1 and 5 years £'000	Total £'000
Assets
Cash and cash equivalents	38,007	-	-	38,007
Trade and other receivables	1,559	-	-	1,559
Liabilities
Trade and other payables	(2,927)	-	-	(2,927)
Total	36,639	-	-	36,639

13. Financial risk management (continued)

Discount rates

The discount rates used for valuing each renewable infrastructure investment are based on both the industry discount rate and on the specific circumstances of each project. The risk premium takes into account risks and opportunities associated with the investment earnings.

The discount rates used for valuing the investments in the portfolio are as follows:

	31 March 2019
Weighted Average discount rate	6.5%
Discount rates	4.5% to 9.5%

A change to the weighted average discount rate by plus or minus 0.5% has the following effect on the NAV.

Discount rate

NAV/share impact

-0.5%

change

Net asset value

+0.5% change

NAV/share impact

31 March 2019

1.5p

£1,455k

£98,415k

(£1,395k)

(1.4p)

Inflation rates

The portfolio valuation assumes long-term inflation of 2.75% per annum for UK investments (based on UK RPI) and 2.0% per annum for the US investment (based on US CPI). A change in the inflation rate by plus or minus 0.5% has the following effect on the NAV, with all other variables held constant.

Inflation rate

NAV/share impact

-0.5%

change

Net asset value

+0.5% change

NAV/share impact

31 March 2019

0.3p

£289k

£98,415k

(£209k)

(0.2p)

Corporation tax rates

The portfolio valuation assumes tax rates based on the relevant jurisdiction as shown in Note 8. A change in the corporation tax rate by plus or minus 5% has the following effect on the NAV, with all other variables held constant.

Corporation tax rate

NAV/share impact

-5%

change

Net asset value

+5% change

NAV/share impact

31 March 2019

0.9p

£891k

£98,415k

(£886k)

(0.9p)

13. Financial risk management (continued)

Foreign exchange rates

The portfolio valuation assumes foreign exchange rates based on the relevant jurisdiction as shown in Note 8. A change in the foreign exchange rate by plus or minus 10% has the following effect on the NAV, with all other variables held constant. The effect is shown after the effect of hedging which reduces the impact of foreign exchange movements on the Company's NAV.

Foreign exchange rate

NAV/share impact

-10%

change

Net asset value

+10% change

NAV/share impact

31 March 2019

0.3

£260k

98,415

(£260k)

(0.3p)

14. Subsidiaries

The following table shows the subsidiaries of the Company. As the Company is regarded as an Investment Entity, these entities have not been consolidated in the preparation of the financial statements.

Investment	Place of Business	Ownership Interest
SEEIT Holdco Limited	United Kingdom	100%
EECo Kingscourt Limited	United Kingdom	100%
SEEIT Europe Limited	United Kingdom	100%
EECo Data Centres No. 1 Limited	United Kingdom	100%
SEEIT US Limited	United Kingdom	100%
EECo Biomass No 1 Limited	United Kingdom	60%
EECo Evergreen Limited	United Kingdom	100%
EECo Wilton No. 1 Limited	United Kingdom	100%
EECo Car Parks No. 2 Limited	United Kingdom	50%
SmartEnergy Finance Two Limited	United Kingdom	49%
SDCL VCO Energy Limited	United Kingdom	100%
Combined Heat and Power Investments Limited	United Kingdom	100%
Energy Efficient Global UK Project Limited	United Kingdom	100%
EECo Smithfield Limited	United Kingdom	100%
SDCL Solar Edge	United Kingdom	100%
SDCL TG Cogen, LLC	USA	100%

The subsidiaries above with the exception of SDCL TG Cogen, LLC are registered at Foxglove House, 166 Piccadilly, London, United Kingdom, W1J 9EF. SDCL TG Cogen, LLC is registered in Delaware, USA.

15. Related parties

The Company and Sustainable Development Capital LLP (the "Investment Manager") have entered into the Investment Management Agreement pursuant to which the Investment Manager has been given responsibility, subject to the overall supervision of the Board, for active discretionary investment management of the Company's Portfolio in accordance with the Company's investment objective and policy.

As the entity appointed to be responsible for risk management and portfolio management, the Investment Manager is the Company's AIFM. The Investment Manager has full discretion under the Investment Management Agreement to make investments in accordance with the Company's investment policy from time to time. This discretion is, however, subject to: (i) the Board's ability to give instructions to the Investment Manager from time to time; and (ii) the requirement of the Board to approve certain investments where the Investment Manager has a conflict of interest in accordance with the terms of the Investment Management Agreement. The Investment Manager also has responsibility for financial administration and investor relations, advising the Company and its group in relation to the strategic management of the Portfolio, advising the Company in relation to any significant acquisitions or investments and monitoring the Company's funding requirements.

Under the terms of the Investment Management Agreement, the Investment Manager will be entitled to a fee calculated at the rate of:

· 0.9 per cent, per annum of the adjusted NAV in respect of the Net Asset Value of up to, and including, £750 million; and

· 0.8 per cent, per annum of the adjusted NAV in respect of the Net Asset Value in excess of £750 million.

The management fee is calculated and accrues monthly and is invoiced monthly in arrears. During the period ended 31 March 2019, management fees of £241k was incurred of which £69k was payable at the period end.

In March 2019 the Company, via its subsidiary, acquired a 71% interest in Northeastern US CHP from a US based fund managed by an affiliate of the Investment Manager.

As at 31 March 2019, £2.7m was due to the Holdco in relation to the acquisition of the Investment Portfolio. During the period £58.6m of funding was provided by the Company to the HoldCo for investment acquisitions.

16. Events after the reporting period

The Directors have evaluated subsequent events from the date of the financial statements through to the date the financial statements were available to be issued. There were no subsequent events identified which require adjustment or disclosure in these financial statements other than those stated below.

In April 2019, the Company became the Guarantor of the Revolving Credit Facility (RCF) secured by its subsidiary (Holdco). The RCF includes a three-year revolving tranche of £25 million and acquisition finance of up to £40 million.

On 18 April 2019, the Company issued 71,287,129 new ordinary shares at a price of 101.0 pence per share raising gross proceeds of £72m. The Company intends to use the proceeds from the Placing to fund the acquisition of certain pipeline project assets.

On 14 May 2019, the Company declared an interim dividend of 1.0 pence per share for the period ending 31 March 2019. The dividend is payable on 28 June 2019.

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Directors	Sponsor, Broker and Placing Agent
Tony Roper, Chairman	Jefferies International Limited
Christopher Knowles	Vintners Place
Helen Clarkson	68 Upper Thames Street
	London, EC4V 3BJ

Registered Office	Legal Adviser
Asticus Building	Herbert Smith Freehills LLP
2nd Floor	Exchange House
21 Palmer Street	Primrose Street
London	London
United Kingdom	EC2A 2EG
SW1H 0AD

Company Secretary and Administrator	Depositary
Sanne Group (UK) Limited	Sanne Group Administration Limited
21 Palmer Street	21 Palmer Street
London	London
United Kingdom	United Kingdom
SW1H 0AD	SW1H 0AD

Investment Manager	Registrar
Sustainable Development Capital LLP	Computershare Investor Services plc
Foxglove House	The Pavilions
166 Piccadilly	Bridgwater Road
London	Bristol
W1J 9EF	BS13 8AE

Independent Auditor	Bankers
PricewaterhouseCoopers LLP	RBS International
The Atrium	280 Bishopsgate
1 Harefield Road	London
Uxbridge	EC2M 4RB
Middlesex
UB8 1EX

Public Relations
TB Cardew
5 Chancery Lane
Holborn, London EC4A 1BL