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

General/ 08 December 2020

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

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

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

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

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