Half Yearly Report

ECOFIN WATER & POWER OPPORTUNITIES PLC

Half-year Financial Results for the six months ended 31 March, 2014

Announcement of Unaudited Results

This announcement contains regulated information.

Summary of the Half-year to 31 March, 2014

· Total Shareholders' funds - net assets attributable to Ordinary and Zero Dividend

Preference ("ZDP") Shares - rose 9.0%

· The Net Asset Value ("NAV") per Ordinary Share rose 10.2% and 12.3% on a total return basis

· The total return per Ordinary Share (the change in the share price plus the dividends received and reinvested) was 13.4%

Performance for periods to 31 March, 2014

Ecofin Water & Power Opportunities plc (the "Company") was launched on 26 February, 2002 and its Ordinary Shares were first issued on 29 June, 2005. The performance of the Company and the indices shown below is presented on a total return basis, i.e., assuming reinvestment of dividends. The indices are net return indices calculated assuming the reinvestment of dividends net of withholding taxes using the tax rates applicable to non-resident institutional investors.

*Adjusted for changes in share capital

Chairman's Statement

Net asset and share price performance

This Half-year Report covers the six month period from 30 September, 2013 to 31 March, 2014, the first half of the Company's current financial year which will end on 30 September, 2014.

In the half-year to 31 March, 2014, the net assets of your Company attributable to both its Ordinary and ZDP Shareholders, that is, total Shareholders' funds, rose by 9.0% while the NAV per Ordinary Share rose by 10.2%, or by 8.5% on a diluted basis. The price of an Ordinary Share rose by 11.8% over the period as the discount to NAV at which Ordinary Shares traded narrowed slightly from 26.8% to 25.7%. On a total return basis, assuming that the dividends received by an Ordinary Shareholder were reinvested in the Company, the NAV per Ordinary Share rose by 12.3% and the total return on an Ordinary Share was 13.4%.

This performance compared favourably to the performance of the global equity markets over the half-year. The MSCI World Index of developed country equity markets rose by 6.5% in Sterling terms on a total return basis over the six month period. The MSCI World Utilities Index rose by 7.8% on a similar basis and the MSCI World Energy Index rose by 5.9%. As explained in the Investment Manager's Report on page 3 of the Half-year Report, the performance of the Company reflected its geographical asset allocation and stock selection and took place against a background of a stronger performance by the utility sector, particularly in Continental Europe. The progress at Lonestar Resources Limited ("Lonestar") also made a significant contribution to performance.

The net assets of your Company at 31 March, 2014 included additional shares in Lonestar, the Company's largest investment, which were to be issued to the Company if certain conditions were met by Lonestar by 2 July, 2014. These conditions were satisfied and on 7 May, 2014, following the end of the Company's half-year, the additional shares in Lonestar were duly issued.

Dividends on Ordinary Shares

The Directors increased the annual dividend payable to Ordinary Shareholders from 6.50p per share to 6.75p per share, an increase of 3.8%, with effect from the quarterly dividend which was paid on 28 February, 2014. As at 31 March, 2014, the Company's revenue reserves amounted to £21,066,000, equivalent to approximately 10.04p per Ordinary Share - or 1.49 times the value of a year's dividends at the new quarterly rate of 1.6875p per Ordinary Share. The Directors understand the importance of income to the Company's Shareholders and will review the level of dividends to be paid on a regular basis.

Continuation vote

On 27 February, 2014, the Board of your Company announced that in order to provide greater clarity to Shareholders in the run-up to the expiry of the ZDP Shares and the maturity of the Convertible Unsecured Subordinated Loan Stock ("CULS") in July 2016, it will convene a General Meeting of the Company in the first half of 2016 in order to propose an ordinary resolution that the Company continue its business as a closed-ended investment company. If the resolution is not passed, the Board will be required to put proposals for the reconstruction, reorganisation or wind-up of the Company to Ordinary Shareholders for their approval.

The Board

In recognition of trends in corporate governance, John Murray, a co-founder and Chairman of Ecofin Limited, the Company's Investment Manager, retired from the Board at the Annual General Meeting of the Company held on 10 March, 2014. Bernard Lambilliotte, his alternate and a co-founder and Chief Investment Officer of the Investment Manager, also ceased to be an alternate Director from that date. I would like to express my appreciation to both for their substantial contributions to the Board, while reassuring Shareholders that the Company will continue to benefit from their invaluable input, as the continuing Chairman and Chief Investment Officer, respectively, of our Investment Manager.

On 23 May, 2014, David Simpson, a former investment banker and partner of KPMG LLP, where he was latterly global head of mergers and acquisitions and previously head of nuclear advisory and the support services and infrastructure team, became a Director of the Company.

Outlook

According to the International Monetary Fund ("IMF"), the pace of global economic activity is strengthening and should continue to improve this year and in 2015, driven largely by recovery, albeit uneven, in the developed economies. Risks remain, however, and the IMF identifies weaknesses in emerging economies, lower than expected inflation in developed economies - particularly in the Euro-zone - and the re-emergence of geopolitical risks as the principal threats to an acceleration of overall economic growth. In the IMF's view, monetary policy in the major developed economies should remain broadly accommodative, given the fragility of the global recovery.

Investor sentiment toward the utility sector has improved in many markets in recent months given the underlying values and yields on offer. The global utility industry is also experiencing a period of change due to a number of factors whose importance varies from market to market but which include: the enormous changes taking place in the gas and energy industries, particularly in the United States, the growing importance of renewable energy in the generation mix, and the need to replace ageing plant and to build new infrastructure. The Company's portfolio should benefit from these developments and the Investment Manager is confident of producing a satisfactory total return for Shareholders in the current financial year.

Ian Barby

Chairman

29 May, 2014

Investment Manager's Report

Economy and markets

In the six months to 31 March, 2014, the global economy continued its slow recovery from recession with much of the modest acceleration in global growth attributable to recovery in the developed countries. The emerging economies, however, are estimated to have accounted for more than two-thirds of global growth over the period. Growth in the developed economies was strongest in the United States, Canada, the United Kingdom and Japan with growth in the Euro-zone turning positive but remaining weak. In the emerging economies, Chinese growth is estimated to have slowed slightly over the period.

Financial markets in the six months covered by this Half-year Report were marked by a contrast between developments in the last quarter of 2013 and the first quarter of 2014. US Government bonds traded within a relatively narrow yield range during the fourth quarter of 2013 as did the bonds of most other developed countries. Equity markets were strong, particularly in developed countries, with the MSCI World Index of developed country equity markets up 5.7% over the quarter on a total return basis in Sterling terms. In emerging markets, the MSCI Emerging Markets Index rose by 2.0% and the HSCEI Index of Chinese companies listed in Hong Kong rose by 2.5% over the quarter, both on a total return basis and in Sterling.

In January, however, volatility returned to financial markets. The principal cause was renewed concerns about the economic fundamentals of many emerging economies, particularly in an environment characterised by the prospect of improved returns in developed markets and the likelihood of higher US interest rates. Mixed economic data from the United States attributable to a severe winter, a slowing of growth in China and geopolitical concerns also contributed to the increase in volatility. 'Safe haven' assets were the beneficiaries with gold, the US Dollar and US Treasury bonds rising in value.

As a result of the volatility in global equity markets, the MSCI World Index of developed markets rose by only 0.8% in the first quarter of 2014 on a total return basis in Sterling while the MSCI Emerging Markets Index and the HSCEI Index of Chinese companies fell by 0.5% and 7.5%, respectively. Over the six month period, however, due to the strong growth in equity markets in the fourth quarter of 2013, the MSCI World Index of developed markets rose by 6.5% and the MSCI Emerging Markets Index rose by 1.5%, both on a total return basis in Sterling.

Performance

The Company's portfolio performed strongly over the half-year and the price of the Company's Ordinary Shares rose by more than the increase in NAV per share as the discount to NAV at which the Company's Ordinary Shares traded narrowed. The NAV per Ordinary Share as shown in the financial statements contained in this Half-year Report rose by 10.2% while the actual last traded price of an Ordinary Share rose by 11.8% over the six month period.

To allow performance comparisons between investment trusts which pay dividends, such as the Company, and those which do not, market practice is to assume that any dividends paid to investors are reinvested in shares of the investment trust. This produces adjusted net asset per share values and share prices which can then be compared to equity market indices prepared on the same total return basis. On this total return basis, the NAV per Ordinary Share of the Company rose by 12.3% and the share price rose by 13.4% in the six months to 31 March, 2014.

The performance of the Company's portfolio in the six months to 31 March, 2014 is attributable to an outperformance of the global utilities sector after years of relative underperformance, an asset allocation to Continental European utilities and renewable energy, areas which performed particularly well, and to stock selection which saw many of the Company's largest holdings and special situation investments perform very strongly. Over the half-year, the MSCI World Utilities Index outperformed the MSCI World Index of developed markets after underperforming it in each calendar year since 2008, with the exception of 2011. In each of the major markets in which the Company invests, that is, the United Kingdom, the Euro-zone and the United States, the utility sectors also outperformed the broader equity markets over the six month period. The recovery in the Euro-zone was particularly strong with the Euro Stoxx Utilities Index gaining 18.6% in total return Sterling terms compared to a gain of 9.8% in the broad Euro Stoxx Index.

Major contributors to performance were the small independent French power producer Direct Énergie, Lonestar, the Company's largest holding, southern European utilities and utility-related companies including the Spanish utilities Endesa and Enagás and the pipe manufacturer Tubacex and the Italian power producer Enel, National Grid in the UK and the US companies NextEra Energy, Quanta Services and Williams Companies. All of the Company's ten largest investments at 31 March, 2014 contributed strongly to its performance with the exception of the UK power company SSE, which posted a small gain, and the offshore drilling company Seadrill whose share price declined over the period. Against the background of a weak market, the Company's portfolio of Chinese holdings also contributed positively to performance.

Over the six months to 31 March, 2014, Sterling gained approximately 2.9% against the US Dollar and 3.8% against the Australian Dollar in which the shares of Lonestar are denominated. Sterling appreciated 1.2% against the Euro. As the policy of the Company is to hedge its Euro positions but to leave its other currency exposures un-hedged, the strengthening of Sterling adversely affected the performance of the portfolio.

Portfolio developments

An analysis of the Company's investment portfolio by geography, sector or type of investment and the market capitalisation of the companies in which the Company is invested is shown on page 6 of the Half-year Report. The changes over the six month period reflect market and foreign currency movements as well as asset allocation decisions. Over the period, the Company increased its exposure to Europe and to non-regulated utilities, infrastructure and alternative energy while reducing its exposure to unquoted investments and bonds. The decline in the geographical exposure to the United States primarily reflects the reduction in the Company's investments in bonds due to heightened interest rate risk.

The Company's ten largest holdings at 31 March, 2014 were little changed from those at the Company's year-end. The holding at year-end in the US pipeline company Kinder Morgan was sold and the investment in the UK water company Pennon Group reduced during the half-year. These were replaced in the ten largest holdings by the UK power company SSE and the Spanish utility Enagás in which the Company increased its investments over the period. Major purchases over the six months were of Melrose Industries, Enel, Sempra Energy, United Utilities and SSE while major sales were of Kinder Morgan, Iberdrola, Bilfinger, Drax Group and Origo Partners.

Lonestar

Lonestar remained the Company's largest investment, accounting for 11.7% of the portfolio at 31 March, 2014. The Company owned 55.5% of Lonestar at the end of the half-year which included additional, deferred shares which were to be issued to the Company in the event that certain conditions were met by 2 July, 2014. After the end of the half-year, Lonestar's board of directors unanimously resolved that the conditions had been met and the new shares were issued to the Company on 7 May, 2014.

Lonestar made very good progress in the six months to 31 March, 2014 and continued to concentrate its activities in the Eagle Ford basin in south Texas. After selling its acreage in the Barnett basin in north Texas, it completed a major acquisition for $71 million in the Eagle Ford basin in February 2014 and raised $220 million in the US bond market through an issue of five year notes in April which was oversubscribed. Following the note issue, Lonestar is expected to be self-financing for the foreseeable future.

Lonestar currently has net acreage of approximately 23,000 acres and proved and probable reserves of some 36 million barrels of oil equivalent (mmboe), an increase of 279% since the merger of Ecofin Energy Resources plc with the Australian company Amadeus which created Lonestar in January 2013. Lonestar expects to have 38 operating wells in the Eagle Ford basin by the end of 2014 and its drilling inventory - sites identified for future development - has grown from 29 wells at the time of the merger to 135 today. Lonestar's earnings before interest, tax, depreciation and amortisation ("EBITDA") doubled between the first quarter of 2013 and the first quarter of 2014 and the company is currently indicating EBITDA guidance for 2014 of between $105 and $125 million compared to EBITDA of $53 million in 2013.

Lonestar's share price rose by 9.4% over the Company's half-year but remains undervalued against its peers on the basis of its reserves, production and EBITDA. Smaller Australian listed natural resource companies came under pressure in early 2014, but Lonestar's management is devoting considerable effort to investor communications which has resulted in a broadening of coverage of the company by analysts.

Outlook and strategy

Against a background of slowly improving prospects for global growth but continuing concerns about emerging economies, the weakness of Euro-zone growth and the prospects for interest rates, particularly in the United States, the outlook for the sectors in which the Company invests is improving. While challenging for many industry participants, fundamental changes affecting utility, infrastructure and energy markets in the developed markets are creating new opportunities for investors, as is the need for new investment in these industries. The modest outlook for global growth and the nature of the changes taking place means, however, that the dispersion of returns in equity markets is likely to be great which will put a premium on asset allocation and stock selection.

The Company will continue to maintain a geographically diversified, largely 'transatlantic' portfolio with a modest exposure to emerging markets. The balance between North America and Europe, including the United Kingdom, will be influenced by investment themes and valuations as well as macroeconomic considerations. The Company's emerging markets exposure is likely to be focused on China given its level of infrastructure spending and the role it plays in the global renewable energy sector.

In the current market, North America still represents the best risk reward profile with increased visibility on the economy, a benign regulatory environment, relatively less market volatility and a very large and diverse investment universe. Power markets are changing due to environmental regulation, the growth of renewable energy generation and regional capacity constraints while the shale energy revolution is driving massive new investment in infrastructure such as pipelines.

In Continental Europe, after years of industry turmoil, conditions are stabilising and much of the sovereign and regulatory risk in the utility sector is reflected in equity market valuations. Politicians also appear to be becoming more supportive of the power industry out of a concern for the security of future energy supply following a massive investment in renewable energy, years of under-investment in thermal power plants and the resulting high energy costs for industry and households. As a consequence, the sector is looking more attractive to investors given the values and yields on offer and managements' strategies are once again becoming a key differentiator of company performance.

In the United Kingdom, the investable universe is small and political risk has increased as energy affordability has become an issue in the run-up to a General Election in May 2015. A major theme in the power sector is the closure of power plants and the slow pace of investment in new generating capacity which is leading to declining reserve margins which, over time, should lead to higher power prices and more incentives for new investment. The water sector has also been going through a periodic regulatory review which saw valuations come down to more attractive levels before the review provided investors with greater clarity about allowable returns.

We see value in Europe in utilities with recovery stories and sustainable dividends and in a range of power and energy transmission companies in the United States. We are overweight companies in the gas transmission and energy infrastructure businesses as the role of natural gas, as a low cost and low CO2 emissions source of power generation, is one of the major themes in the global power industry. We are selectively invested in renewable energy which, although transformational in power industry terms, is still subject to changing government energy policies. As a consequence we favour defensive, utility-like renewable energy developers. Lonestar, the Company's largest holding, is now a fast growing operating company and we are focused on maturing the company's assets, broadening the market for its shares and ultimately realising value for the Company's Shareholders.

Ecofin Limited

29 May, 2014

Consolidated Statement of Comprehensive Income

for the half-year ended 31 March, 2014

The total column of this statement represents the Group's profit or loss, prepared in accordance with IFRS. The supplementary revenue and capital return columns are prepared under guidance published by the Association of Investment Companies ("AIC"). All items derive from continuing operations; the Group does not have any other recognised gains or losses.

Consolidated and Company Balance Sheets

for the half-year ended 31 March, 2014

Consolidated and Company Cash Flow Statements

for the half-year ended 31 March, 2014

Consolidated Statement of Changes in Equity

Notes to the Financial Statements

1. Accounting policies

1.1 Basis of preparation

The half-year financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34 "Interim Financial Reporting" and in accordance with the Statement of Recommended Practice ("SORP") for investment trusts issued by the AIC in January 2009, where the SORP is not inconsistent with International Financial Reporting Standards ("IFRS").

The financial information contained in this Half-year Report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the periods ended 31 March, 2014 and 31 March, 2013 have not been audited. The financial information for the year ended 30 September, 2013 has been extracted from the latest published audited accounts. Those accounts have been filed with the Registrar of Companies and included the Independent Auditor's Report which, in respect of both sets of accounts, was unqualified, did not contain an emphasis of matter reference, and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006. Those statutory accounts were prepared in accordance with IFRS, as adopted by the European Union.

The functional currency of the Company is Sterling as this is the currency of the primary economic environment in which the Company operates. Accordingly, the financial statements are presented in Sterling rounded to the nearest thousand pounds. The same accounting policies, presentation and methods of computation have been followed in these financial statements as were applied in the preparation of the Company's financial statements for the previous accounting periods, except for the following new standard which is now effective.

IFRS 13 Fair Value Measurement

IFRS 13, which defines fair value, is effective for annual periods beginning on or after 1 January, 2013 and sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair value measurements. IFRS 13 applies when another IFRS requires or permits fair value measurements. It does not introduce any new requirements to measure an asset or a liability at fair value, change what is measured at fair value in IFRS or address how to present changes in fair value. The adoption of this standard has therefore had no impact on the financial statements.

1.2 Presentation of statement of comprehensive income

In order to better reflect the activities of the Company as an investment trust company, and in accordance with guidance issued by the AIC, supplementary information which analyses the Consolidated Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Consolidated Statement of Comprehensive Income. In accordance with the Company's Articles of Association, net capital returns may not be distributed by way of dividend. Additionally, net revenue is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 1158 of the Corporation Tax Act 2010.

1.3 Going concern

The Directors have carefully reviewed the Company's current financial resources, the majority of net assets being securities which are traded on recognised stock exchanges, and the projected expenses for the next 12 months. They have also taken into consideration the Company's investment policy, its risk management policies, and its borrowing facilities. On the basis of that review, the Directors are satisfied that the Company's resources are adequate for the Company to continue in business for the foreseeable future and that, accordingly, it is appropriate to prepare the financial statements on a going concern basis.

1.4 Use of estimates

The preparation of financial statements requires the Company to make estimates and assumptions that affect the items reported in the Balance Sheet and Statement of Comprehensive Income and the disclosure of contingent assets and liabilities at the date of the financial statements. Although these estimates are based on management's best knowledge of current facts, circumstances and, to some extent, future events and actions, the Company's actual results may ultimately differ from those estimates, possibly significantly. The investments in the equity and fixed-interest stocks of unquoted companies that the Company holds are not traded and as such the prices are more uncertain than those of more widely traded securities. The unquoted investments are valued by reference to valuation techniques approved by the Directors and in accordance with the International Private Equity and Venture Capital ("IPEV") Guidelines.

As at 31 March, 2014 the Company's investment in Lonestar included 44,579,478 deferred consideration shares, and the fair value of these shares was estimated to be £7.2 million based on the listed price of the ordinary shares. On 7 May, 2014, 44,579,478 ordinary shares in Lonestar were issued to the Company as the condition attached to the deferred consideration shares was satisfied. Please also refer to note 12 (Events after the end of the reporting period).

1.5 Segmental reporting

The chief operating decision maker has been identified as the Board. The Board reviews the Company's internal management accounts in order to analyse performance.

The Directors are of the opinion that the Company is engaged in one segment of business, being the investment business. As an investment entity and as a result of the adoption of IFRS 10 Consolidated Financial Statements (including the Investment Entities amendment), the Company is no longer required to consolidate Lonestar and therefore a breakdown of activities between the main investing activities and the oil and gas operations of Lonestar is no longer necessary.

Geographical segmental analysis pertaining to the Company has not been disclosed because the Directors are of the opinion that as an investment company the geographical sources of revenues received by the Company are incidental to its investment activity. The geographical allocation of the investments from which income is received and to which non-current assets relate is given on page 6 of the Half-year Report.

2. Income

3. Net asset value

Diluted NAV

The diluted NAV per Ordinary Share has been calculated on the assumption that the £79,949,563 (31 March, 2013 and 30 September, 2013: £79,949,563) nominal amount of CULS was fully converted on a 57.92:100 basis into 46,308,781 additional Ordinary Shares (31 March, 2013 and 30 September, 2013: 46,308,781). This results in adjusted net assets, as noted below:

4. Return per class of share

The total return per Ordinary Share shown above can be further analysed between revenue and capital, as below:

Diluted return per Ordinary Share

The diluted return per Ordinary Share is calculated on the assumption that the CULS is converted at the beginning of the financial period on 30 September, 2013 into additional Ordinary Shares and that earnings reflect the savings in finance costs on the CULS after taxation. This results in an adjusted revenue return of £7,881,000 (31 March, 2013: £4,823,000 and 30 September, 2013: £17,475,000), an adjusted capital return of £39,219,000 (31 March, 2013: £19,903,000 and 30 September, 2012: £24,997,000) and adjusted weighted average shares in issue of 256,118,264 (31 March, 2013 and 30 September, 2013: 256,118,264).

The assumed conversion was dilutive for the half-year ended 31 March, 2014 and for the financial periods ended 30 September, 2013 and 31 March, 2013.

The capital return on ZDP Shares is the increase during the period of the calculated value of these shares.

5. Dividends on Ordinary Shares

IAS 10 "Events after the Balance Sheet Date" requires dividends to be recognised in the period in which they are paid. The Company increased the annual dividend payable to Ordinary Shareholders from 6.50p to 6.75p per share with effect from the quarterly dividend paid on 28 February, 2014. The current dividend policy is to pay four quarterly dividends of 1.6875p per share to Ordinary Shareholders totalling 6.75p per share per year, markets permitting.

Amounts recognised as distributed to Ordinary Shareholders in the half-year to 31 March, 2014 are as follows:

6. Share capital

Ordinary Shares

At 31 March, 2014 there were 209,809,483 Ordinary Shares in issue (31 March, 2013: 209,809,483 and 30 September, 2013: 209,809,483) and 568,409 Ordinary Shares held in Treasury (31 March, 2013: 568,409 and 30 September, 2013: 568,409).

7. Non-current liabilities

6% Convertible Unsecured Subordinated Loan Stock 2016

On 29 July, 2009, the Company issued £80,000,000 nominal amount of CULS. The loan stock can be converted at the election of holders into Ordinary Shares during the months of May and November each year until May 2016 at a rate of 1 Ordinary Share for every 172.6445p nominal of CULS. It may also become compulsory for holders to convert their loan stock into Ordinary Shares of the Company at the conversion price then applicable if 80% or more of the nominal amount of the CULS issued has already been converted or has otherwise ceased to be in issue. Interest is paid on the CULS on 31 May and 30 November each year. The interest is charged 25% to revenue and 75% to capital within the Consolidated Statement of Comprehensive Income, in line with the Board's expected long-term split of returns from the investment portfolio of the Company.

As at 31 March, 2014 the nominal amount of CULS in issue was £79,949,563 (31 March, 2013 and 30 September, 2013: £79,949,563).

Zero Dividend Preference Shares

On 29 July, 2009, the Company's subsidiary, EW&PO Finance plc, issued 60 million ZDP Shares at a price of 100p per share. The ZDP Shares will mature on 31 July, 2016 and had a gross redemption yield of 7% per annum at issue; that is, investors will receive 160.70p on 31 July, 2016 for every 100p invested. As at 31 March, 2014, there were 60 million ZDP Shares in issue (31 March, 2013 and 30 September, 2013: 60 million). The Company issued to its subsidiary, EW&PO Finance plc, a non-interest bearing Subordinated Unsecured Loan Note 2016 ("Loan Note") equal to the net proceeds of the ZDP Share issue which were lent by the subsidiary to the Company under an agreement dated 29 September, 2009. This will be repaid or redeemed at par on 31 July, 2016 or earlier on demand by the subsidiary. The Company also entered into a subsidiary capital contribution agreement whereby the Company will undertake to contribute such funds to the subsidiary as will ensure that the subsidiary will have, after the repayment of the Loan Note by the Company, sufficient assets to satisfy the final capital entitlement of the ZDP Shares.

8. Effective rate of tax

The effective rate of tax reported in the revenue column of the Consolidated Statement of Comprehensive Income for the half-year ended 31 March, 2014 is 10% (half-year to 31 March, 2013: 13% and year to 30 September, 2013: 8%) based on a revenue return before tax of £8,787,000 (half-year to 31 March, 2013: £4,868,000 and year to 30 September, 2013: £17,352,000). This differs from the standard rate of tax of 23% (31 March, 2013: 24% and 30 September, 2013: 23%) as a result of income not taxable for corporation tax purposes.

9. Principal risks

The principal risks facing the Company along with, where appropriate, the steps taken by the Company's Board to mitigate such risks are summarised on pages 19 to 22 and note 20 to the financial statements in the Annual Report and Accounts for the year ended 30 September, 2013 (available on the Investment Manager's web pages (www.ecofin.co.uk) and from the Company Secretary). These include investment performance and market risk, income risk, liquidity risk, the Company's investment in majority owned Lonestar, operational risks, and a loss of key investment personnel or clients by the Investment Manager which may impair its ability to manage the Company's assets. Additional risks relate to the Company's capital structure and use of gearing, investment in unquoted securities and securities of companies incorporated in non-OECD or emerging markets, and foreign exchange risk. A further risk relates to the interaction of supply and demand and general market or sector sentiment, as reflected in the discount to NAV at which the Ordinary Shares trade in the secondary market. The specific financial risks associated with foreign currencies, interest rates, market prices, liquidity, credit, valuations and the use of derivatives - which may or may not be material to the Company - are described below:

Foreign currency risk

The value of the Company's assets and the total return earned by Shareholders can be significantly affected by foreign exchange movements as most of the Company's investments are denominated and quoted in currencies other than Sterling, the currency in which the Company's financial statements are prepared. The Company's exposure to fluctuations in exchange rates will, to some extent, be mitigated by any borrowings in currencies other than Sterling and any long-term currency hedges.

Interest rate risk

The Company is only exposed to significant interest rate risk through its prime brokerage borrowings with Citigroup and through the fair value of investments in fixed-interest rate securities. Borrowings varied during the half-year and at 31 March, 2014 amounted to £22,633,000 in a variety of currencies. Due to a change in investment strategy, the Company's fixed-income portfolio at 31 March, 2014 was valued at £13,112,000 compared with £31,273,000 as at 30 September, 2013.

The CULS was issued by the Company at a fixed cost until its conversion and is carried in the Balance Sheet at amortised cost rather than fair value. The ZDP Shares issued by the Group had a gross redemption yield of 7% at their issue; the ZDP Shares were placed with investors at a price of 100.00p per ZDP Share on 29 July, 2009 and will be redeemed by the Group on 31 July, 2016 for 160.70p per ZDP Share.

Market price risk

The Company's investment portfolio is subject to fluctuations, volatility and the vagaries of market prices. The Directors seek to mitigate this risk by ensuring proper controls exist through the Investment Management Agreement for maintaining a diversified portfolio of securities of utility and utility-related companies and by ensuring that there are balances within the portfolio by geography, sub-sector and types of instrument. Please refer to the Portfolio Analysis on page 6 of the Half-year Report.

The ZDP Shares and the CULS provide gearing which is used to enhance returns for Ordinary Shareholders, although this gearing also increases Ordinary Shareholders' exposure to market risk resulting in greater volatility in the net assets attributable to Ordinary Shareholders.

Liquidity risk

The Company's assets mainly comprise readily realisable securities which can easily be sold to meet funding commitments if necessary. Unlisted investments in the portfolio are, however, subject to liquidity risk. A liquidity analysis is prepared on at least a quarterly basis as part of the Investment Manager's Report and the liquidity profile of all securities, including any unquoted and thinly traded securities, is reviewed by the Board.

Credit risk

Credit risk is mitigated by diversifying the counterparties with which the Investment Manager conducts investment transactions. The credit standing of all counterparties is reviewed periodically with limits set on amounts due from any one broker.

10. Fair values of financial assets and financial liabilities

Except for the Company's CULS and ZDP Shares which are measured at amortised cost, financial assets and financial liabilities of the Company are carried in the Balance Sheet at their fair value (investments and derivatives) or the Balance Sheet amount is a reasonable approximation of fair value (due from brokers, dividends receivable, accrued income, cash at bank, due to brokers and prime brokerage borrowings). The fair value is the amount at which the asset could be sold or the liability transferred in a current transaction between market participants, other than a forced or liquidation sale.

* This includes the equity component of the CULS of £5,417 (30 September, 2013: £5,417)

** Market values have been used to determine the fair values of the Company's CULS and the ZDP Shares shown in the table above

Fair values

The Company measures fair values using a three-level fair value hierarchy that reflects the level of judgement involved in estimating fair value. The hierarchy categorises the inputs used in valuation techniques into three levels:

• Level 1 - valued using quoted prices, unadjusted, in active markets for identical assets or liabilities

• Level 2 - valued by reference to valuation techniques using observable inputs for the asset or liability other than quoted prices included within Level 1

• Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data for the asset or liability

If the inputs used to measure fair value are categorised into different levels of the hierarchy, the investment is categorised entirely according to the lowest priority level that is significant to the fair value measurement of the relevant asset or liability. The Company's unquoted investments and the deferred consideration shares in Lonestar are categorised as Level 3 and their fair values are determined by the Directors using valuation methodologies in accordance with the IPEV Guidelines using the following valuation methodologies:

i) Investments which have been made recently are held at cost which, unless another methodology gives a better indication, is considered to be the most reliable indicator of fair value

ii) Investments in funds are valued at their NAV where their NAVs are struck using fair value accounting policies

iii) Investments in bonds are valued using Merrill Lynch index prices, the Bloomberg Valuation Service ("BVAL") or at prices quoted by brokers

iv) Where a value is indicated by a material arm's length transaction by a third-party in the shares of an investment, this price is considered to be the most appropriate measure of fair value

v) Unlisted investments may also be valued at the Directors' discretion using a number of methodologies including earnings multiple comparisons, discounted cash flow analyses and industry valuation benchmarks

There have been no transfers during the period between Levels 1 and 2, and no transfers into or out of Level 3. A reconciliation of fair value measurements in Level 3 is set out below:

11. Financial commitments and contingent liabilities

As at 31 March, 2014, the Company had a commitment to invest $3,596,000 in Integradora de Sevicios Petroleros Oro Negro S.A.P.I. De C.V. ("Oro Negro"), a Mexican oilfield services company. At the time of publication of this Report, approximately one-quarter of this commitment remained outstanding.

12. Events after the end of the reporting period

As at 31 March, 2014, the Company owned 53.5% of the ordinary share capital of Lonestar, a listed Australian company, as a result of a reverse acquisition of Amadeus Energy Limited by Ecofin Energy Resources plc ("EER"), an unquoted company 87.5% owned by the Company, which was completed in January 2013. Lonestar is registered and incorporated in Australia although its operations are based entirely in the United States. As a part of the reverse acquisition agreement, Lonestar agreed to issue 44,579,478 ordinary shares to the Company (in addition to the Company's holding of 372,846,453 ordinary shares in Lonestar) in the event that either the PV-10 value of proved and probable reserves on Lonestar's Gonzo property indicated a value of at least US$40 million or the share price traded consistently above $0.40 Australian Dollars before 2 July, 2014. Further to an independent petroleum engineering report and independent legal opinion, the board of Lonestar resolved unanimously that the PV-10 value of proved and probable reserves on the Gonzo property exceeded US$40 million and on 7 May, 2014, 44,579,478 ordinary shares in Lonestar were issued to the Company. Including these additional ordinary shares, the Company owns 55.5% of the share capital of Lonestar.

13. Related party disclosure

Ecofin Limited acts as Investment Manager to the Company. Details of the relationship between the Company and the Investment Manager are set out in the Strategic Report and note 6 to the financial statements in the Annual Report and Accounts to 30 September, 2013. Management fees for the half-year to 31 March, 2014 amounted to £3,378,000 (half-year to 31 March, 2013: £3,735,000 and year to 30 September, 2013:£7,520,000). Amounts still outstanding and included within other financial liabilities on the Balance Sheet were £1,752,000 (half-year to 31 March, 2013: £1,908,000 and year to 30 September, 2013: £1,950,000).

The Company owns the whole of the ordinary share capital (£50,000) of EW&PO Finance plc, a company which has issued the Group's ZDP Shares and which is the holder of the Loan Note. The movement in the Loan Note during the period amounted to £2,801,000 (half-year to 31 March, 2013: £2,664,000 and year to 30 September, 2013: £5,388,000) and the balance outstanding at the half-year end included on the Balance Sheet was £81,996,000 (half-year to 31 March, 2013: £76,471,000 and year to 30 September, 2013: £79,195,000).

Bernard Lambilliotte is a director of Lonestar, the Company's largest investment; he is also a director of Oro Negro in which the Company has an investment.

Fees paid to Directors of the Company during the six months to 31 March, 2014 totalled £73,000 (half-year to 31 March, 2013: £101,000 and year to 30 September, 2013: £161,000; both of these amounts included consultancy fees which ceased on 30 September, 2013).

Support

The Company has no contractual commitments or current intentions to provide any other financial or other support to its unconsolidated subsidiaries.

Restrictions

There are no restrictions on the Company's ability to access or use the assets of its wholly-owned subsidiary EW&PO Finance plc and settle the liabilities of the Group. The Company has no ability to access or use the assets of its unconsolidated subsidiary Lonestar and Lonestar has no ability to access the assets of the Company.

Interim Management Report

Except as set out on page 24 of the Half-year Report, there have been no related party transactions undertaken by the Company in the first six months of the current financial year and there have been no changes to the related party disclosures described in the Annual Report and Accounts of the Company for the year to 30 September, 2013.

The Directors consider that the Chairman's Statement and the Investment Manager's Report on pages 2 to 5 of this Half-year Report, the above disclosure on related party transactions and the Directors' Responsibility Statement below, together constitute the Interim Management Report of the Company for the half-year to 31 March, 2014 and satisfy the requirements of Disclosure and Transparency Rules 4.2.3 to 4.2.11 of the Financial Conduct Authority. Ernst & Young LLP, the Company's Auditor, has reviewed this Half-year Report for the six months to 31 March, 2014.

Directors' Responsibility Statement

The Directors listed on page 27 of this Half-year Report confirm that to the best of their knowledge:

(i) the condensed set of financial statements within the Half-year Report has been prepared in accordance with IAS 34, "Interim Financial Reporting", as adopted by the European Union;

(ii) the Interim Management Report includes a fair review, as required by Disclosure and Transparency Rule 4.2.7 R, of important events that have occurred during the six months to 31 March, 2014 and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

(iii) the Interim Management Report includes a fair review of the information concerning related party transactions as required by Disclosure and Transparency Rule 4.2.8 R.

This Half-year Report was approved by the Board on 29 May, 2014 and the above Directors' Responsibility Statement was signed on its behalf by

Ian Barby

Chairman

29 May, 2014

Half-yearly Report 2014

The Company's Half-year Report for the six months ended 31 March, 2014 will be posted to Shareholders in June 2014. Copies of the Half-year Report and Financial Statements will be available from the Registered Office of the Company at 55 Moorgate, London EC2R 6PA and on the website, www.ecofin.co.uk, which is a website maintained by the Company's Investment Manager, Ecofin Limited. A copy of the Half-year Report for the six months ended 31 March, 2014 has been submitted to the National Storage Mechanism of the UK Listing Authority and will shortly be available for inspection at: www.Hemscott.com/nsm.do.

For further information, please contact:

Susan Gledhill

Company Secretary

For and on behalf of

BNP Paribas Secretarial Services Limited

Tel: 020 7410 5971

29 May, 2014