SDCL Efficiency Income Trust Plc (SEIT) Earnings Call Transcript & Summary

Good morning, and welcome to the SDCL Energy Efficiency Income Trust Interim Results Presentation for the period ending 30th of September 2024. I'm Tamsin. I'm one of the fund managers and one of my responsibilities is Investor Relations. So today, we'll share updates on our progress and outline what we've been doing to increase total return, adapt to market conditions and support the share price while we continue to unlock the world's most valuable energy resource, which is, of course, Efficiency. For those of you who don't know us, we've got some brief bios on this slide. Jonathan Maxwell, who is our CEO and Founder, will take you through the overview and highlights. Ben Griffiths, who is my colleague in Fund Management, will take you through performance along with me. That will be Ben's opportunity to give you an in-depth overview of what's been happening at our top 5 largest assets. Eugene Kinghorn, who is our Group CFO, will take you through the financial highlights before handing back to Jonathan, who will give you the outlook and summary remarks.

I'll walk you through an overview and highlights to see it for the first half of this financial year. So the SDCL Energy Efficiency Income Trust, or SEEIT is unlocking the investment potential of the energy transition's largest market opportunity, Efficiency. SEEIT has a large and diversified portfolio, and it has a strong balance sheet. It's focused on delivering energy efficiency solutions to buildings, industry and transport in the United States, in the U.K. and in Europe. It's got a GBP 1.5 billion diversified portfolio. That's represented by just less than GBP 1 billion worth of net asset value and just over GBP 0.5 billion worth of debt. The company is operating in 10 countries, about 2/3 of the portfolio is in the United States. It has about 50,000 customers, about 50 projects and the weighted average life of its contracts is about 16 years. But the investment trust market today is distressed, and that's causing a significant dislocation in price versus value. But it also presents a significant value proposition today. SEEIT shares are trading at about a 45% discount to net asset value. But at net asset value, the portfolio is generating total returns of about 9.4% or 11% if we calculate that, keeping our gearing constant. And at that share price, that's a 13% dividend yield with dividends that are covered fully by cash flow. So to start with the highlights of the period to 30th of September 2024, I'll start with the big point, which is that we've had stable operations, which has underpinned performance and portfolio valuation movements despite macroeconomic headwinds. Net asset value per share is 90.6p compared to 90.5p in March, and that's after the impact of positive portfolio valuation movements, some of which were counteracted by negative FX movements post hedging. The weighted average discount rate applied to SEEIT's valuation remains at 9.4% levered. That compares to 9.4% in the last 2 valuations as well. The impact of reductions of risk-free rates during the year and certainly during the period to the end of September were materially absorbed through increases in risk premiums, offsetting 4 asset-specific reductions related to future cash flow assumptions. I'm going to cover 4 key points: performance, investment activity, balance sheet and market background. First, on performance. We've had a steady investment cash flows of about GBP 48 million for this period compared to GBP 47 million for the same period last year. So we're on track to provide full cash cover for our target dividends of 2025. Distributions from the portfolio are underpinned by solid operational performance with an aggregated EBITDA broadly in line with budget. Ben will cover the details shortly. In terms of investment activity, about GBP 100 million has been invested since March 2024, mainly into Onyx and EVN and all our new investment was organic. We've made no new acquisitions. Coming on to the balance sheet, we're currently carrying low levels of total gearing relative to the wider peer group. It's about 1/3 of enterprise value. Current leverage is currently within gearing limits and our disposal proceeds of GBP 90 million we used earlier this year to reduce short-term debt. Coming on to the balance sheet, the company has low levels of leverage compared to its peer group. It's about 1/3 loan to value. Currently, leverage is being maintained well within our gearing limits and disposal proceeds of about GBP 90 million earlier in the period were used to reduce short-term debt, and we have clear plans in place to reduce that going forward. From a market background perspective, we are operating in a distressed U.K. investment trust market, and that has caused a dislocation in price versus value. We're also operating in a higher for longer interest rate and inflation environment, but the fundamental commercial and policy tailwinds for energy efficiency remain. We're adapting to current market conditions. We are focused on shareholder value. We're positioning the portfolio for total return, and we're addressing the discount to net asset value. I'm going to cover 6 ways in which we're doing that. Number one is we are reducing and seeking to further reduce our short-term borrowings. We have an objective to reduce the revolving credit facility to between GBP 100 million and GBP 150 million by the end of calendar 2025. And then additionally, sales proceeds from any disposals will be used to reduce the RCF and potentially for share buybacks. Second, full or partial disposals are being pursued to recycle capital to reduce our gearing and to substantiate our valuations. Earlier this year, we sold UU Solar and advisers have been appointed and processes are now underway to sell significant stakes or to invite co-investors into Onyx and EVN. First round bids are expected imminently following a high degree of interest for both platforms. We're applying our capital allocation policy. The policy demands that a minimum return on hurdle rate is met by all capital allocations at the time of our investment. So as an example, on the 30th of September 2024, the share price was about 63p, and that implied a minimum return hurdle for any new investment of at least 13%. We're also actively managing gearing levels on our balance sheet. Total gearing levels at the moment are well within their limits, but processes ongoing to reduce our short-term gearing in favor of amortizing debt at the project level, aligned to the duration of assets. We're positioning the company's portfolio for total return. We're selectively funding growth projects from the extensive organic pipeline that exceeds thresholds set out in our capital allocation policy. Examples would include Onyx, Solar and EVN. And we're continuing to progress construction of accretive investment opportunities such as Red Rochester's cogeneration plant. And finally, we're supporting liquidity and marketability of the company's shares. We're actively promoting the company and bringing in new shareholders, including from the United States. We're expanding our Investor Relations, our communications and our media activity to raise the company's profile. And we have ongoing disclosure improvements and valuation validations to support the company. Just a reminder of why we are doing what we're doing. We're building a portfolio of energy efficiency solutions for buildings, industry and transport. The portfolio as a whole is providing essential energy services on site, such as electricity, heating, cooling and lighting. So what's energy efficiency? Energy efficiency means using less energy to achieve the same outcome. It cuts costs and it cuts carbon. Strategically, there are 2 ways that we look to do this. We've classified this within SEEIT's portfolio as energy generators and energy savers. On the energy generation side, we're out there to solve a problem. The problem is that most energy is lost through generation, transmission and distribution. And that's mostly generation, transmission and distribution through the grid before it even gets to the point of use. The solution such as in SEEIT's portfolio is about building more efficient energy generators closer to or right at the point of use. So you'll see a number of our portfolio investments specifically solving that problem as on-site energy generators. And we have another type of investment within the portfolio, which is energy savers. The problem that we're trying to solve is that so much energy is lost at the point of use due to inefficient equipment. So the solution that SEEIT is investing in is replacing equipment with more efficient solutions that use less energy to do the same job or even more and at the same time, cutting costs. So SEEIT's portfolio of solutions targets the largest and fastest-growing opportunity for energy efficiency, either as generators or savers or both in the biggest markets in the United States and Europe. Examples include Onyx, which Ben will unpack later. That does on-site solar and storage for commercial and industrial buildings. It includes primary energy. But what that's doing is going after hard-to-abate industries, recycling waste heat and gases and putting them to use. We've got investments like Red Rochester, which is a District Energy solution that provides 16 utility services to over 100 customers, a great example. We have investments like SEEIT Oliva, which is in the circular economy business, it's recycling heat and producing renewable energy for the agricultural sector in Spain. And we have investments like Driva, a great example of green gas recycling -- recycling municipal waste biogases and using that as the distribution for gas in the city. But we also have projects that are getting at specific energy saving opportunities. Probably one of the most famous ones is electric vehicles, which are so much more efficient, wind to wheel, for example, about 80% efficiency compared to about 20% efficiency for internal combustion engines. So electric vehicle fast charging hubs is the way that SEEIT is accessing that market, building fast charging hubs for large-scale operators. Other huge opportunities of things like lighting, heating, ventilation, air conditioning and SEEIT has invested in platforms like future energy solutions and providing finance to groups like Spark Fund to deploy projects and replicate and get scale. But while this is a diverse series of solutions to the fundamental problems that most energy is wasted, and we can do something about that despite the diversity of solutions, all of them fundamentally for the same commercial principle. SEEIT's portfolio assets are entering into contracts with creditworthy counterparties to provide reliable, cost-effective, energy-efficient solutions. And in return, they're benefiting from contracted revenue streams. All of the investments are designed to minimize levels and in fact, to take little or no unmitigated exposure to merchant energy prices. The portfolio as a whole has been constructed to have a positive inflation linkage. And the portfolio investments are designed to select commercial solutions that don't depend on subsidies. So the portfolio consists of commercial business models that are acquired or built to generate revenues that are uncoupled from power prices.

The SEEIT portfolio was designed to be a diversified portfolio that could deliver a steady stream of income. On the left-hand side of the screen, you can see the distributions from the portfolio since inception. During the period, the GBP 48 million was in line with the previous year or if not marginally above. Since IPO, the portfolio was ramping up and as such, issuing new shares in order to do so. With the yellow line on the bottom of the chart, we have intended to demonstrate that despite the size of the portfolio or regardless of the size of the portfolio or the market environment, it has done exactly what it was designed to do insofar as it has delivered a very steady stream of distributions. On the right-hand side of the screen, you can see that the distributions from the portfolio, GBP 48 million were more than sufficient to cover the dividends paid during the period. In fact, it was 1.1x covered. So in summary, this portfolio has performed insofar as it has delivered the distributions of cash that it was designed to deliver. So with this diagram, we've set out how we get from the GBP 66.2 million free cash flow to the 1.1x coverage. We start with that free cash flow at the portfolio level. And from that, we pay down all of the debt costs from the portfolio debt. That leaves us with GBP 48 million, which is distributed up to the SEEIT level. From there, we cover all of the financing costs relating to the RCF as well as the management fees and other expenses. This leaves us with GBP 35.8 million, which is more than sufficient to cover GBP 34.1 million of dividends paid during the period.

So far this year, the diversified portfolio has been performing slightly ahead of budget. And it's this performance that really drives the cash flows from the investments themselves, which covers the shareholder dividends. As with any diversified portfolio, there's been some assets that have overperformed and others that have experienced some challenges. But as I say, performance overall has been slightly ahead of budget. What we've done here is summarize the top 5 investments in the portfolio, which represents around 75% of the portfolio value. Now these investments have a variety of different elements that really drive performance, and we've tried to demonstrate that through some of the KPIs, the technical KPIs, which are shown here in the table. And how we drive performance is really through hands-on and engaged portfolio management and working very closely with the management teams of each of these projects. What I wanted to do is just take a little bit of time now to give you an overview of these top 5 projects and highlight some of the key developments during the period. Oliva has seen strong performance in the first half of the year, which has been delivered through maximizing the margins of the business through the active hedging activity of the energy prices. Whilst this hedging activity will continue for the rest of the year, this performance is expected to somewhat equalize in the remainder of the year. During the period, there's also been an update to the regulations in Spain. We are very disappointed to see that contrary to widespread industry belief, the cost of gas distribution wasn't covered in these updates, which has caused a onetime negative impact to NAV. Despite this, however, the rest of the updates to the regulations has been broadly well received and is expected to improve the transparency, predictability and hence stability going forward. Primary Energy has performed well this year, and that's very much expected to continue for the remainder of the year. The management team has been very busy progressing a couple of accretive projects, which are expected to deliver cost savings in the near future. During the period, Värtan Gas has rebranded to Driva, which in Swedish means to power, drive and operate, which very much signifies the intent of the business under its new strategy. Generally speaking, so far this year, operational performance has been good, albeit financial results have been slightly impacted by lower diversion of pipes within the city of Stockholm, which the company has paid to complete. Notwithstanding that, performance for the rest of the year has improved, and we're expected to be generally in line with budget by the end of the year. The rebrand of the organization signifies a really exciting new chapter for the business. And since the end of June, Driva has signed its first new significant Energy as a Service contract, thereby increasing the customer base and the revenues of the business. Onyx has set new company records for the number of sites being contracted, constructed and brought operational. For example, during the period and by the end of September, 3 months ahead of schedule, the company delivered 70 megawatts of sites to notice to proceed stage, which sees the start of construction. Meanwhile, on the operational portfolio, performance has been slightly below expectations. This in part has been due to low solar resource, but also due to some technical issues with the assets. We've been working very closely with management to ensure that we have clear plans in place in order to address these issues and improve performance going forward. Red Rochester has had a challenging year so far, seeing low demand from one of its key customers and also some higher maintenance costs, both which have resulted in lower EBITDA. The management team have put robust improvement plans in place in order to recover as much of this performance by the year-end. Although this is expected to be a short-term matter, the management are also working on a further mitigation in the amendment to the customer tariff. There's a range of options being discussed with the different customers, but all are designed to improve the EBITDA performance of Red Rochester, and we're hoping that this work can be concluded in the new year. Since the end of the period, there's also been some good news in relation to Li-Cycle and the construction of their hub project at Red Rochester, they've been able to close the financing of their government Department of Energy loan, which allows them to restart the construction of their project, which is expected to occur in the new year. Once complete, this will see a significant increase in the demand on Red Rochester's services and hence, the revenues to the business of Red Rochester expected to be towards the start of 2027. So in summary, there's been tremendous effort put into driving performance across the portfolio. And we're really pleased to see results coming in, in line and just ahead of budget.

The company's NAV was stable at 90.6p compared to 90.5p at March. Earnings was 3.2p, covering the dividends paid of 3.1p, and we remain on track to deliver a fully cash covered dividend for the full year of 6.32p, although the net FX was negative in the period. This remains within the expected parameters of the company's hedging policy. After adjusting for the FX, the company's total NAV return was 8.9% on an annualized basis. The weighted average discount rate remained at 9.4% on a gross basis, unchanged from March. Changes in the risk-free rates were absorbed by changes in the risk premiums. The manager also runs analysis on the whole portfolio, where we assume that project level structural gearing remains at 35% instead of amortizing out of free cash flow. On this basis, the implied return is estimated at 11%. Profit after tax was GBP 35 million, reflecting the stable valuation and underpinned by the operational performance discussed earlier. The balance sheet was stable with limited change to the company's net assets of around GBP 980 million since March, and we remain focused on maintaining a strong balance sheet. Cash from investments received during the period was GBP 48 million, in line with our expectations, and this supports a strong record of delivering a cash covered dividend to shareholders. Proceeds from the disposal earlier in the period was used to repay the RCF and subsequent drawings was used to fund organic investments, predominantly in Onyx and EVN.

So what are we doing to improve our share price and our net asset value total return? We set out here a series of objectives and actions. So let's start with gearing management. We want to maintain a prudent approach to gearing within our limits. We want to align the duration of our debt with underlying assets, and we want to ensure sufficient headroom to cover our near-term commitments. We've currently got about 1/3 loan to value in total debt and just over 20% of our debt sits downstairs at project level. Discussions are underway now to refinance the revolving credit facility at the holdco level. We're optimizing our project finance following a refinancing at Primary Energy. So this should pick up after near-term commitments. So in terms of actions, our debt today is about 1/3 of enterprise value. About 22% loan-to-value is at project level. At holdco level, discussions are underway to refinance our revolving credit facilities. At project level, we're looking to optimize our project finance. Examples of what we've done in the past would be extending the project financing at Primary Energy. Earlier this year, in May, we repaid about GBP 80 million worth of our revolving credit facilities and redraws are being minimized through active treasury management. Coming on to disposals and co-investments, we want to demonstrate asset valuations. We want to recycle capital into higher returning investments, and we want disposal proceeds to potentially fund share buybacks. So processes are underway now to sell significant stakes or to invite co-investors into Onyx and EVN. And this follows the disposal that we made earlier in the year of UU Solar. We're continuously reviewing our remaining portfolio to identify further opportunities. In terms of income growth, we're continuing to pay a progressive quarterly dividend. And those quarterly dividends are fully covered with net cash from the portfolio. In terms of action, we're on track to pay 6.32p per share dividend for this year. And at the current share price, it represents about a 13% dividend yield. Following income growth, we come on to NAV growth. We're looking to enhance NAV total return. We want to prioritize organic growth projects that exceed the threshold set out by our capital allocation policy. So far this year, we've invested GBP 100 million since March 2024 to support the growth mainly of Onyx and EVN. We've made no new acquisitions. And we're funding the construction of accretive investment opportunities like Red Rochester's cogeneration plant. And finally, share buybacks. There's potential for us to conduct share buybacks from disposal proceeds. This could potentially help to enhance net asset value and return capital to shareholders. So we remain mindful of the value of share buybacks, and we will continue to weigh this against alternative uses of capital. But to summarize, see it today. The company benefits from scale and diversification. It's got GBP 1.5 billion enterprise value, comprised of about GBP 1 billion of net asset value and about GBP 0.5 billion worth of debt. During this period, it made GBP 48 million of investment cash flows during the 6 months, and it's got investments in 10 countries, mainly in the United States and Europe. In terms of net asset value, we've had solid operational performance, providing positive overall portfolio valuations before the impact of FX movements. So to summarize, SEEIT benefits from scale and diversification. It's a GBP 1.5 billion portfolio enterprise value, about GBP 1 billion worth of net asset value, about GBP 0.5 billion worth of debt. During the period, it generated about GBP 48 million worth of investment cash flows, and it made those cash flows out of investments covering 10 countries, mostly in the United States and Europe. The net asset value is underpinned by solid operational performance that provided a positive overall portfolio valuation before the impact of FX movements. In terms of dividends, they were fully covered by free cash flow during the period, and this is projected to continue. The company is on track to meet forward guidance for dividends of 6.3p for this year. And in terms of total returns, NAV total return, our current investment process is to invest in line with the capital allocation policy, which means that we have to meet a minimum return on any new investment made to support our existing organic opportunity set. And in terms of the share price total return, we're making significant efforts to promote the company and to support the marketability and liquidity of its shares in the market. So I'll leave you with 3 key points. We have robust operational performance, which are generating strong levels of free cash flow. We've got a team which is delivering hands-on portfolio management designed to improve those cash flows and to drive investment performance. And we're maintaining attractive levels of income for our shareholders, while at the same time, providing opportunities for substantial total return upside. We really thank our shareholders for your support during this period and look forward to our annual results in a few months' time. Thank you.

[Operator Instructions] However, we do already have a few questions coming in. So perhaps we can start with a question about the RCF. Is there potential to refinance the RCF with longer-term debt?

This is Jonathan. So the answer is yes, there is opportunity. In fact, it's one of the features that we've identified in the presentation summary. Some of the underlying portfolio assets are yet to have gearing in place. A good example of that would be Oliva in Spain. Others have additional gearing capacity. At the moment, SEEIT leverage as a combination of shorter-term financing through its revolving credit facility and longer-term financing through project level debt and where there are opportunities, which there are to push the duration of our liabilities to better match our assets, we're continuously looking at opportunities to do that. And actually, I would expect a number of those opportunities in the -- by the first half of 2025.

Thanks, Jonathan. The next is in relation to disclosures. You have repeatedly said that you want to offer more disclosure. Surely, the best way to do that is provide accounts for each of your businesses. Eugene, perhaps you can take that one.

Thank you, Tamsin. So point one here is that we do agree that disclosures of our larger investments and their financial performance is important to stakeholders. And that is why we have focused on this over the last 12 to 18 months, and you have seen enhanced disclosures from us. Point two is, however, that the most important component of the company's NAV is the portfolio valuation. For this reason, we published a specific section this time on our approach to valuations. And the relevance here is that as part of that, we assess the impact of recent actual results and most importantly, what impact that may have on the portfolio valuation over the medium to long-term.

Thank you. So I think a few questions coming in about specific asset performance. We can start with one about Oliva. Do you expect to recover any value from the appeal against the emission of compensation for distribution costs? Ben can take these ones.

Yes. Thank you. So we are continuing to work on this and engaging with the government and through the industry associations. But from a valuation point of view, we've taken a conservative and pragmatic approach. So we're not assuming any recovery of that. So if there was a result there, that would be a positive. As Jonathan said, there's been a couple of other questions on the portfolio, so I'll just roll into those. But we've had a question -- a couple of questions actually on the technical issues being experienced at Onyx. Essentially, across a wide-ranging portfolio, it's nothing unusual. There have been some inverter downtime and equipment issues such as that. The team are already on well complete with addressing these issues. And again, there is a plan to address these going forward as well, so the performance is in line with expectations. There was also another question around commentary on Primary Energy performance and that being on the light side. Simply put, it's just because the performance has been very good and very robust. We're trying to report by exception. So it simply reflects that no news is good news essentially. And also a similar question on the rest of the portfolio outside of the big 5 assets and the performance there. And also pleased to say that it really reflects what we've been reporting in relation to the top 5 investments as well. The performance across the balance of the portfolio has also been in line with expectations. So certainly a positive period from that perspective.

Thank you, Ben. So there's been a number of questions coming in about the political environment in the U.S. and the possible impact on the IRA. Just as an example, there's a question that says in relation to disposals and/or co-investments -- pardon, I'm reading a different question. As an example, there's a question that says, can you comment on the possible impact on the business of any end to IRA incentives? Jonathan, perhaps you can cover this one and talk generally about the topic.

Yes. I think just a few fundamental points. SEEIT’'s portfolio was being constructed and largely was in the United States prior to the incoming Inflation Reduction Act. But the other feature -- in other words that they're built on commercial foundations which predate the Inflation Reduction Act. There were some real and potential advantages from the Inflation Reduction Act. But a few other points as well. The new incoming administration has a huge focus on efficiency. One of the policies actually is the creation of a -- what's been described anyway as a Department of Government Efficiency. So I think we -- on Page 23 of the presentation, we have highlighted the fact that this is an opportunity now to turn attention to and to address the substantial costly losses of Primary Energy in the United States, both in public sector and in the private sector. We think that our projects that cut costs, which they do improve productivity and at the same time, give back benefits for the environment are consistent with the objectives of both sides of the political aisle in the United States. Specifically, there are a number of policy instruments in the U.S., which have provided some additional tailwinds for some of the sectors in which the renewable energy industry has been operating, some of which have had benefits for energy efficiency, notwithstanding that it should stand on its own 2 feet. Anyway, examples less well telegraphed is the bipartisan infrastructure law. It's about $1 trillion of federal investment to improve infrastructure across the United States, $62 billion for clean energy. And then, of course, the flagship Inflation Reduction Act. Again, on Page 23, we've identified some of the specific elements of the Inflation Reduction Act that prospectively have benefits in and around the energy efficiency sector. So for example, there are rebates for energy efficiency in buildings. There is a greenhouse gas reduction fund. There are Department for Energy loan guarantees available. But coming back to it, SEEIT’'s portfolio has been constructed on a basis, which is fundamentally directed at commercial merit. And we think that those commercial merits are as robust as they ever have been. The final statement is there's plenty of other commentary in the press more broadly on the potential adjustments or even repeal of elements of the Inflation Reduction Act and the impact that it could have on the clean energy sector, but also, frankly, the enormous benefits that, that program has already brought to a number of Republican states across the U.S. So although I don't think we are in the extent of the firing that at all for Inflation Reduction Act, in fact, there's potential for it not to have a substantial impact at all on our portfolio. And we do think that there are some fundamental residual sort of policy merits to efficiency. And indeed, I think that efficiency will come to the fore in this next administration. People have to cut costs and improve productivity in this environment. And the best way to do that in the energy sector is being more efficient with it.

Thank you, Jonathan. So we've had a number of questions coming in relating to the disposal/co-investment processes that are underway at Onyx and EVN. I think perhaps we can group these questions together. Primarily, I think the interest is to understand our confidence level in the timing as well as potentially why these assets and what our preferences are in relation to the disposal, partial disposal or co-investment. Jonathan, can you take that?

Yes. So strategically, SEEIT in the business of looking to deliver efficient supply or produce a more energy-efficient demand solution for its customers in buildings industry and transport. So the portfolio has been constructed to go into what we think are the most important largest potentially fastest-growing markets and those verticals. For example, in the United States, we've got a big position in the rooftop solar and storage sector, which is through Onyx Renewables. We have District Energy platform through Red Rochester. And we have a hard to abate industrial platform through our steel interventions with Primary Energy. So these are just 3 strategic examples about how you deliver lower cost, lower carbon, more reliable energy to customers. Specifically, the one of the largest and fastest-growing verticals in that market in the United States that's scalable, repeatable is in the solar and storage sector. And we've seen tremendous demand pickup for that over the course of the last year or 2. And the reason I'm giving you the huge back story is that is why we have confidence in Onyx Renewables. We're delighted to have seen the pickup in new business and the sheer demand for the solution. And that's also what's led to a high degree of interest in the platform. It's one of the largest solar and storage platforms of its kind in the U.S. And therefore, that's -- I think to answer one of the specific questions, that's what's giving us confidence that the sheer number of inquiries responding to potential investment in or co-investment with the platform. The other -- one of the other sort of big areas, of course, of the clean energy transition and decarbonization is -- has been electric vehicle charging infrastructure, and that kind of remains an underserved market. We were very, very early mover through the electric vehicle, and that's built one of the largest, if not the largest network of its kind of infrastructure -- and again, for those reasons, that's why it's elicited interest on the capital market. So that gives a combination of why we're focused on bringing in additional capital to help us move those businesses further faster, but also why they're attractive to outside and third-party investors.

Thank you, Jonathan. So a question that's just come in relating to life cycle construction. Once construction restarts, will it have a positive impact on NAV? Or will you keep a conservative approach and only write up the value once it starts generating revenue?

Yes. So I think it's Ben here. So I think the answer is yes and yes. Effectively, we're taking a conservative approach to that valuation to ensure that there are no adverse surprises through the progress of that project. So we're tracking the progress extremely closely to make sure we're aware of where they are in that construction and bringing it online. So our current approach is one of conservatism and being pragmatic. And then yes, if it comes online as currently expected, we would have that -- we would expect that to have a positive impact.

Moving on to question. So okay. So could you provide some commentary on the potential growth and maintenance CapEx that might be needed in the next 12 months? Aware that Onyx is in a process, but it also seems it may require more capital to maintain its trajectory.

Yes. Thank you for this question. I think we should focus here on growth CapEx rather than maintenance CapEx. Maintenance CapEx is funded through free cash flow generated by these assets themselves. Yes, we are -- you've heard that we're looking at disposal and/or co-investment options for Onyx. From a shareholder perspective and a returns perspective, we certainly want to ensure that further capital is sourced for the Onyx pipeline and the Onyx growth. There's no legal mandatory obligation on SEEIT to fund that. But our focus is on ensuring that the pipeline that they have secured has the ability and the capital behind it to sustain that growth.

Thank you, Eugene. Question here, Jonathan, perhaps you can take this. An investor is interested to know whether or not we will list in the U.S.A.

So I think the question I could answer is that there is potential interest from the United States investors to invest in SEEIT. We've actually seen a number of U.S. investors joining the register. So we thank them to the extent they're listening. to today's call. We are, in fact, going to be in the United States over the course of the next week or so, continuing to bring the company to the attention, not just of U.K., European investors, but in the United States to U.S. investors as well. The company's share price, we have stated, we believe, is significantly dislocated from its underlying value. And we think that this is obviously an opportunity for us to improve the marketability and liquidity of the shares for existing investors and it's a very substantial opportunity for any new investors. There was a question in this list about what we are going to be doing to improve liquidity, and that is part of the story. I think right now, our perspective has been that the traditional investor base for investment trusts has faced pressures over the course of the last 3 or 4 years. We've seen substantial ongoing net asset outflows from the traditional owners and buyers of these investment trust in general and SEEIT within that context. So one of the features that we are looking at and have been successful in so far to some degree is bringing the company to the attention of nontraditional buyers who can take an opportunity to join the company at extremely interesting entry point.

Thank you. There's a number of questions coming in about Onyx specifically, one investor particularly keen that we don't sell it, but more specifically about the current business model to deliver projects and then sell the power, perhaps an option is to sell the projects themselves back to the customers instead as a way of recycling capital. Also, does the valuation of Onyx assume a pipeline funded and does SEEIT have the ability to fund this? Perhaps group these questions together, Jonathan?

Lots of questions. I mean -- so one of the questions was the desirability of holding rather than selling Onyx. And that's one of the key reasons that our preference -- expressed preference has been to either introduce a co-investment partner into Onyx to join us on the journey to further grow that business or indeed to introduce equity co-investors into the underlying partnership or projects. So that does -- that's a little bit like your concept of selling the projects back to the customers instead would effectively be recycling stake or underlying project cash flows into the investors. So look, we do -- we are really pleased and excited about the work that we've done on Onyx. We have had a journey since our acquisition, which has involved fundamental, we think, improvements in process and structure and management and operations and development. We're delighted with the new C-suite that has been introduced into the company. The company has multiplied the rate at which it's printing new power purchase agreements in the market. It's got a great brand. So yes, we are excited about the future of that company. From a valuation perspective, Eugene may comment a bit more here, but the fundamental valuation techniques would include, for example, discounted cash flow against the existing operational portfolio, discounted cash flow against the portfolio under construction and to some degree, a recognition of the value of projects under earlier stage development. So it's those 3 parts of really the layer cake of constructing the valuation for Onyx. Eugene, I don't know if there's any other comments you wanted to make on the valuation of Onyx, although I would also probably say that we've also taken third-party view on valuation during the course of this year as well as in the journey to sort of further substantiate and underlying value of that company, which we think is very attractive.

Yes, that's correct. We took that third-party valuation. We've been using that as a guide to our own valuation for Onyx. And in the period, we were able to take an increase based on the pipeline development and the strong growth and execution of that pipeline that Onyx has achieved, and that's allowed us to take additional value in this period for Onyx.

Thank you. I think we'll stick with Eugene, if that's all right. The next question is, can you break down the portfolio gain of circa GBP 69 million not explained by Oliva and Onyx?

Yes. Thank you for that question. So in the period, we had that circa GBP 68 million of portfolio movement. That is predominantly the unwind of the discount rate. As a reminder, that's 9.4% on a gross basis. There were specific adjustments to Oliva and Onyx, as mentioned. And then we had a selected small number of adjustments between risk premiums and cash flow adjustments. So breaking that number into components, I would say it's roughly 1/3 between those categories of the unwind of the discount rate changes to very specific assets and then the 2 specific adjustments to Onyx and Oliva. Happy to take that one offline.

I just -- this is Jonathan. I just came away from my 12-year-old Charles Dickens play. So we've had a question here about unexpected expectations. This was about the revenue and profit enhancing measures that we had identified in previous reports and accounts and between 2024 and 2027. So just to point out some specific achievements, which I'm frankly delighted to be able to talk about from both SEEIT and the underlying portfolio company management perspective, just as some examples of revenue and therefore, value-enhancing measures that are starting to come through in the portfolio. I think we've spoken quite a bit today about Onyx. But again, it is a very substantial increase in performance metrics like new PPA signings, new conversion of projects from construction to operation -- so all of the key KPIs on construction and development and going into operations or moving positively and translating into value increases. We have also seen investments being made in projects or portfolios like Red. And even if there are in some parts of that portfolio because we've got about 116 customers, sometimes there are some setbacks with individual customers. Overall, the investments that we've been made have been accretive, for example, building out the new high-efficiency cogeneration projects that we have implemented there. We have obviously taken steps on financial side, not just the physical side. We talked about the refinancing of primary, I think, which was really pleased with. And then finally, but not finally, but the final example I'll give is a lot of work that's been going on actually with the now rebranded Värtan as Driva. And one of the reasons that the Driva power name has been attributed is that we have so many customers, I think 800 commercial customers -- commercial industrial customers in Stockholm and thousands of residential customers. So one of the examples that we were looking at there was whether or not there was an opportunity to provide additional energy services like rooftop solar, potential other type of transport services rather than just biogas like electric vehicle charging for the bus networks. So we've now started to see the first contracts being signed there as well, which are revenue and value accretive. So these are just some examples of the work that we are doing that's adding value to the portfolio.

Thank you, Jonathan. There's a question coming about whether or not we are in discussions with any specific investors about why they are potentially selling down their stake sort of multifaceted answer to that. We work alongside our broker to remain engaged with our primary shareholders and as many of the register as we can at all times. Of course, we have been in a close period recently, and we're about to commence a roadshow in which we hope to get as much feedback as we can. The feedback that we've had so far is that in the majority of cases, the sales have been largely unrelated to us and the activities that we've taken. We are always open to more feedback, and we will continue to engage and take all of that on board as much as possible. I'm just reviewing to see if we've missed any questions that have come in. If there's anything that we've missed and you'd like to repost, please do so. Otherwise, I think we've answered the majority of these questions now. I'll pause for a minute in case somebody does want to repost.

I just maybe just as we're doing that to sort of wrap up a little bit in terms of where we are. We -- I think what we hope this set of results generates is that the underlying business and portfolio continues to demonstrate characteristics that are sound, that are delivering a combination of income and cash flow that are covering our dividends. We are acutely sensitive to the discounts at which the shares trade in the market. And we are -- I think we've outlined here repeated not just the 6 steps that we're taking, but what we've already done and what we are doing and what we're going to be doing in the future. From a bigger picture perspective, I think that the sector overall, the clean energy sector has obviously been affected by sentiment, but not least by the point that was raised earlier about potential change of administration impact on the sector. What I would say about energy efficiency, having said that, is that while it's not immune to sentiment, the underlying commercial -- and frankly, policy merits of energy efficiency are just as strong, if not stronger, than they ever have been before. European energy prices are incredibly high, multiples of the price that we pay for energy in Europe versus America. And we're seeing, frankly, Europe is going to have to do something about that. That's why its energy efficiency first policy is now translating into billions of incentives directed at reducing energy waste. Page 23 middle column outlines the Fit for 55, the REPowerEU and the European Green Deal Industrial Plan. But fundamentally, the projects are about cutting costs, improving productivity as well as cutting carbon. And for that reason, commercial merits alone underlying the important, frankly, the massive growth opportunity in the United States. It spends trillions on energy and therefore, is wasting trillion. We think that saving money is a feature that rarely go out of fashion. In fact, it's probably more important than ever before.

Thank you. There is another question that's come in on valuations. So what is the reason for an increase in U.K. risk premium from 3.8% to 6%. That's an increase of over 50% in 6 months. Eugene?

Yes. Thank you. There are a couple of reasons, but the main reason is the disposal of UU Solar. It was at a weighted average discount rate below the prevailing portfolio weighted average discount rate. So removing that from the portfolio in this period is the key driver. And there were a couple of other smaller adjustments, but that's the key driver to point out.

It's a commentary on the specific characteristics of our portfolio, not necessarily a commentary on the risk associated with investing in the U.K.

That is correct.

Even if it has gone up a bit. Thank you very much.

Thank you, everyone, for your time and for attending. We appreciate your engagement, and we are always available if you would like to follow up with questions directly or if you would like to have a meeting with us during the roadshow and that's not already booked in, please do let us know. Thanks very much.