TIDMAERS TIDMAERI
RNS Number : 7476N
Aquila European Renewables PLC
27 September 2023
AQUILA EUROPEAN RENEWABLES PLC
LEI No: 213800UKH1TZIC9ZRP41
HALF YEARLY FINANCIAL REPORT
For the six months ended 30 June 2023
INVESTMENT OBJECTIVE
Aquila European Renewables plc ("AER", the "Company") seeks to
generate stable returns, principally in the form of income
distributions, by investing in a diversified portfolio of renewable
energy infrastructure investments.
Financial Information
as at 30 June 2023
30 June 31 December
2023 2022
---------------------------------------- ------- ------------
Ordinary Share price (cents) 89.5 92.3
NAV per Ordinary Share (cents)(1) 104.1 110.6
Ordinary Share price discount to NAV(1) (14.0%) (16.6%)
Net assets (EUR million) 403.3 451.7
---------------------------------------- ------- ------------
30 June 30 June 2022
2023
---------------------------------------- ------- ------------
Dividends per Ordinary Share (cents)(3) 2.8 2.6
Ongoing charges(1,5) 1.0% 1.1%
Total NAV per Ordinary Share(1,2) (3.5%) 5.3%
Total Shareholder return(1,6) (0.1%) 2.0%
Dividend cover(1,4) 1.2x 1.4x
---------------------------------------- ------- ------------
1. This disclosure is considered to represent the Company's
alternative performance measures ("APMs"). Definitions of these
APMs and other performance measures used, together with how these
measures have been calculated, can be found below. All references
to cents are in euros, unless stated otherwise.
2. Calculation based on NAV per Ordinary Share in euros,
includes dividends and assumes no reinvestment of dividends.
3. Dividends paid/payable and declared relating to the period.
4. Calculation based on the operational result at special
purpose vehicle ("SPV") level. Please see below for further
details.
5. Calculation based on average NAV over the period and regular
recurring annual operating costs of the Company.
6. Calculation based on Ordinary Share price in euros, includes dividends.
Highlights
- Dividend cover of 1.2x (1.7x before debt amortisation). Robust
dividend cover of 1.5x expected over the next five years(1) .
- Unchanged 2023 target dividend guidance of 5.51 cents (5.0% increase on 2022)(2) .
- EUR 30.7 million of capital returned to Shareholders in the
form of dividends and share buybacks during the first half of
2023.
- Active portfolio management delivered 3.2 cents per Ordinary
Share in valuation uplift following completion of asset life
extensions across 56.6%(3) of the portfolio.
- Completion of 50.0 MW in construction projects, resulting in a fully operational portfolio.
- EUR 4.9 million of project level debt repaid from operating
cash flow, resulting in modest gearing of 32.7%(4) of Gross Asset
Value ("GAV").
- In April 2023, the Company extended the maturity date of the
Revolving Credit Facility ("RCF") by twelve months to April
2025.
- Members of the Board of Directors and Investment Adviser acquired AER Ordinary Shares.
- In June 2023, 81.0% of the Company's shares in circulation
voted in favour of continuation at the Annual General Meeting
("AGM").
(-) Attractive yield of 6.6%.(5)
Subsequent Events
- Extension of the share buyback programme in July 2023. The
Company has acquired further shares equating to EUR 5.1 million at
an average share price of 85.0 cents.(6)
- On 1 September 2023, Myrtle Dawes was appointed as an
additional Board Member of the Company. Myrtle has over 30 years of
experience in the energy sector.
1. Dividend cover presented is net of project debt repayments,
excludes the impact of any future share buybacks and assumes the
2023 target dividend is paid in 2023 to 2027. No re-investment of
surplus cash flow or interest received is assumed. There can be no
assurance that these targets can or will be met and it should not
be seen as an indication of the Company's expected or actual
results or returns.
2. Subject to the portfolio performing in line with
expectations. These are targets only and not forecasts. There can
be no assurance that these targets can or will be met and it should
not be seen as an indication of the Company's expected or actual
results or returns.
3. Based on capacity (AER share).
4. Includes senior debt secured at project level (EUR 126.3
million) and RCF at HoldCo level (EUR 69.3 million excl.
guarantees).
5. Share price as at 19 September 2023. Assuming a full year dividend of 5.51 cents per share.
6. As at 19 September 2023
WHY INVEST?
The Company seeks to generate stable returns, principally in the
form of income distributions, by investing in a diversified
portfolio of renewable energy infrastructure investments
Market Opportunity
- Participation in Europe's green energy transition
- Highly experienced Investment Adviser:
- Managing a 19.7 GW1 European clean energy portfolio
- EUR 14.0 billion(1) development and construction pipeline
- 2030 Aquila Capital target of avoiding 1.5 billion tonnes of CO(2) during its lifetime(2)
AER Positioning
- European focused (excl. UK), diversified by geography and technology
- Strong dividend cover supported by contracted revenue and a diversified operating portfolio
- Modest gearing level (32.7%) provides flexibility(3)
Returns
- Portfolio levered discount rate of 7.7%(4)
- Trading at a 18.7% discount to NAV.(5)
- Disciplined capital allocation; EUR 20.0 million returned in share buybacks during 1H23
1. Data as at 30 June 2023, including historic divestments.
2. According to the "GHG Accounting for Grid Connected Renewable
Energy Projects" of the "International Financial Institutions
Technical Working Group on Greenhouse Gas Accounting", the feed-in
of electricity produced by renewable energies leads to a
theoretical avoidance of CO(2) emissions from fossil fuels
(Disclaimer CO(2) Lifetime Avoidance Clock | Aquila Capital
(aquila-capital.de).
3. This disclosure is considered to represent the Company's
alternative performance measures ("APMs"). Definitions of these
APMs and other performance measures used, together with how these
measures have been calculated, can be found below. All references
to cents are in euros, unless stated otherwise.
4. Assumes drawn RCF debt of EUR 69.3 million with an average
long-term all-in cost of debt of 4.79%.
5. Based on the share price as at 19 September 2023 (83.5 cents)
and the NAV per Ordinary Share as at 30 June 2023 (102.7 cents),
adjusted for dividends in respect of Q2 2023 paid on 8 September
2023 and buybacks.
AT A GLANCE
Portfolio Breakdown(1)
By Technology
Wind energy | 43.3%
Solar PV | 52.2%
Hydropower | 4.4%
By Country
Portugal | 15.0%
Norway | 16.7%
Denmark | 13.7%
Finland | 6.2%
Spain | 41.6%
Greece | 6.7%
By Status
Operating | 100.0%
Diversified Technologies
Wind energy
213.7 MW
Four Countries
Solar PV
230.7 MWp
Two Countries
Hydropower
19.4 MW
One country
1. Totals may not add up to 100% due to rounding differences.
As a result of the diversification of energy generation
technologies, the seasonal production patterns of these asset types
complement each other, providing a balanced cash flow profile,
while the geographic diversification serves to reduce exposure to
any one single energy market.
Wild energy | 213.7 MW Solar PV | 230.7 MWp Hydropower | 19.4 MW
---------------------- -------------------- --------------------
TESLA BENFICA III SAGRES
150.0 MW 19.7 MWp 107.6 MW
Ownership: 25.9% Ownership: 100.0% Ownership: 18.0%
HOLMEN II ALBENIZ
18.0 MW 50.0 MWp
Ownership: 100.0% Ownership: 100.0%
OLHAVA OURIQUE
34.6 MW 62.1 MWp
Ownership: 100.0% Ownership: 50.0%
SVINDBAEK GRECO
32.0 MW 100.0 MWp
Ownership: 99.9% Ownership: 100.0%
THE ROCK TIZA
400.0 MW 30.0 MWp
Ownership: 13.7% Ownership: 100.0%
DESFINA
40.0 MW
Ownership: 89.0%(1)
---------------------- -------------------- --------------------
1. Voting interest. Economic interest: 92.6%.
CHAIRMAN'S STATEMENT
On behalf of the Board of Directors, I am pleased to present the
2023 Interim Report of Aquila European Renewables plc.
Introduction
In my last statement to you in April, I was pleased to report
that the Company had reached its initial goal and now had an
efficiently invested balance sheet with a diversified and resilient
portfolio offering strong cash flow cover for a progressive
dividend. I also commented in that report on the large and
sustained discount to NAV at which the Company's shares had been
trading, which was the rationale for our EUR 20.0 million share
buyback programme announced in February.
Since that date, inflation has become a larger and more deeply
embedded problem for the UK economy, resulting in a consensus that
UK interest rates will need to remain 'higher for longer'. This
deteriorating macro-economic backdrop has contributed to further
significant weakness in the Company's share price, a problem that
is widely reflected across our peer group of renewable energy
investment trusts, and indeed across the investment trust sector
more generally.
The Board recognises and accepts this current signal from the
market - returns at what were previously our target level are not,
for the moment, sufficiently attractive for investors to wish to
entrust us with incremental capital. We continue to believe that
the Company's portfolio has been well constructed and that the
individual assets are sound and will deliver a reliable and
attractive future annual flow of income. Inflation in the European
Union has been steadily decreasing from its peak in October 2022.
It is already significantly lower than in the UK and expected to
fall further by 2025, as supply bottlenecks ease and food and
commodity prices normalise. It is also worth noting that interest
rates in Europe are generally lower than in the UK, further
differentiating the Company from its UK counterparts. Nevertheless,
as our investor base is skewed to the UK, we anticipate that the
effects of inflation and interest rates on our share price will
continue to be viewed by the market largely through a UK lens.
In the period, the Company has completed a significant
transformation of its portfolio, both in terms of growth in
operating capacity, as well as achieving a more balanced mix
between wind and solar PV technologies. The result is a more
efficient balance sheet and a diversified operating portfolio,
which offers strong cash flow to support a progressive dividend
that remains well covered despite recent downward revisions in
power prices. The Company also maintains a modest gearing level,
currently at 32.7%. Given that backdrop, combined with the
sustained share price discount to NAV, the Board has reacted
decisively by announcing a variety of initiatives to ensure the
value of the underlying portfolio is fully reflected in the share
price.
Key Initiatives
Given this context, and following the completion of the
inaugural EUR 20.0 million share buyback programme, the Board
decided to continue with a further allocation of capital to the
buyback programme. This is a sign of our confidence in the
underlying value of the existing portfolio and recognises that
buying back at a discount offers a better return on capital than is
currently achievable on new assets. It also aims to provide
additional short-term liquidity to investors. Under the initial
share buyback programme, a total of 20.8 million Ordinary Shares
were repurchased at an average price of 95.9 cents per Ordinary
Share, representing a discount of 7.9% to the Q2 2023 NAV. As at 19
September 2023, the latest time prior to the publication of this
report, the Company has acquired a further EUR 5.1 million in
shares at an average price of 85.0 cents per Ordinary Share.
Share buybacks remain a tactical, rather than a strategic
response to the valuation issues. When consensus around the
macro-economic outlook changes and UK inflation has peaked, we
anticipate a strong rebound in sector share prices. However, as the
timing of any such reversal is unknown, the Board continues to
pursue a variety of other initiatives whilst continuing to
carefully observe the inflationary outlook.
We have made good progress with these initiatives, including the
rollout of asset life extensions following the completion of due
diligence across part of the Company's solar PV and wind energy
assets (representing 56.6% of the portfolio's capacity). This has
increased the NAV by 3.2 cents per Ordinary Share during the
reporting period. The Company and its advisers will evaluate
further asset life extensions across the remainder of the
portfolio, subject to due diligence.
The Company's advisers continue to explore debt financing
opportunities to take advantage of its modest gearing levels in
order to build a larger-scale portfolio. They are also considering
a secondary listing on a European stock exchange to improve the
Company's marketability in Europe. An application has been
submitted to admit the Company's shares to trading on Euronext. A
further announcement will be made shortly.
Continuation Vote
At the Annual General Meeting ("AGM") held in June 2023, the
continuation resolution put forward to Shareholders was duly
passed. Aquila Capital, which holds approximately 2.3% of the
issued share capital of the Company, abstained from voting,
reflecting their views on good corporate governance. It was noted,
however, that certain other Shareholders voted against the
resolution. The Board continues to welcome Shareholder feedback and
has previously announced that Shareholders will have an additional
opportunity to vote on the continuation of the Company. This is
expected to be in September 2024.
Dividends and NAV
The Board announced a 5.0% increase to the dividend in February
2023 and is targeting 5.51 cents per Ordinary Share for 2023,
subject to the portfolio performing in line with expectations. To
date in 2023, the Company has paid or declared dividends of 2.8
cents per Ordinary Share. When combined with the EUR 20.0 million
share buyback, the Company has returned EUR 30.7 million to
Shareholders during the first half of 2023. Since the IPO in June
2019, the Company has returned EUR 86.9 million(2) to Shareholders
in the form of dividends and share buybacks.
The Company's NAV per Ordinary Share was 104.1 cents as at 30
June 2023, resulting in a total NAV return per Ordinary Share of
-3.5%, including dividends during the period. Movement in the NAV
was primarily driven by a decrease in power price curves across the
majority of the portfolio, which was driven by lower commodity
prices (notably gas and coal) and lower demand resulting from
milder temperatures experienced in Europe. AER's annualised total
NAV return per Ordinary Share (including dividends paid) from IPO
to 30 June 2023 has been 5.4%(3) .
1H23 Performance
During the reporting period, total revenue was 17.6% below
budget as a consequence of declining short-term electricity spot
market prices across most of the portfolio's markets, reflecting
the fall in commodity prices, lower demand from
milder-than-expected temperatures in Europe and elevated filling
levels of gas storage reservoirs.
The portfolio's production was 10.3% below budget, principally
as a result of below average wind speeds in the Nordics and
considerably lower precipitation than normal in Portugal for our
hydropower asset, Sagres, despite high technical availability
across the portfolio. In light of the latest downward revision in
near-term seasonal power price forecasts provided by independent
third-party consultants, the Company is expecting a dividend cover
of 1.2x for 2023, compared to 1.8x as announced in February 2023,
whilst guidance on dividend cover over the next five years was
adjusted to 1.5x on average (2023 to 2027).
Director Appointment
I am pleased to welcome Myrtle Dawes as our newest non --
executive Director, who joined the Board of Directors on 1
September 2023 as a member of the Remuneration and Nomination
Committee and the Audit and Risk Committee. Myrtle, a chartered
chemical engineer, has over 30 years' experience in the energy
sector, both in the UK and overseas, covering leadership roles in
engineering, project management, technology and digital
transformation. Currently, she is CEO of the Net Zero Technology
Centre and non-executive Director at FirstGroup plc and the Centre
for Process Innovation. In 2017, Myrtle featured in Breaking the
Glass Ceiling and was selected as one of '100 Women to Watch' in
the Cranfield FTSE Board Report 2017. In 2021, she was recognised
by TE:100 as one of the 'Women of the Energy Transition'. Her
appointment was the result of an extensive process led by the
Nomination Committee and supported by a third-party search
firm.
Outlook
Despite the current market, the Board remains optimistic on the
long-term outlook for the listed renewable energy sector, bolstered
by the ever-more urgent need to decarbonise the world's energy
supply. We expect this to continue to ensure a favourable
regulatory backdrop.
It remains the Board's ambition to build a larger-scale
portfolio to further enhance the investment proposition for our
current and future Shareholders. Our share price clearly needs to
regain a premium to our NAV to enable us to re-embark on our growth
strategy. We hope that the Company's continued operational
performance, combined with our various initiatives and a more
propitious macro-economic environment, can return us to a growth
path.
In the meantime, the Board and its advisers will evaluate a
number of different initiatives to help address the issues facing
us and secure recognition in the share price of the real underlying
value of the portfolio. We are committed to pursuing broader
options if that value fails to be reflected in the share price. We
will keep Shareholders updated on any key developments.
Ian Nolan
Chairman
26 September 2023
1. These are targets only and not forecasts. There can be no
assurance that these targets can or will be met and it should not
be seen as an indication of the Company's expected or actual
results or returns.
2. As at 19 September 2023.
3. Based on an opening NAV per share of EUR 0.98.
INVESTMENT ADVISER'S REPORT
Leader in Investment and Asset Management in European
Renewables
Overall CO(2) eq emissions avoided(1)
2.2 million tonnes
Green energy produced(1)
7.4 TWh
Households supplied(1)
2.0 million
Investment Adviser Background
Aquila Capital Investmentgesellschaft mbH (Aquila Capital) is
one of the leading investment and industrial development companies,
managing over EUR 14.7 billion on behalf of institutional investors
worldwide and running one of the largest clean energy portfolios in
Europe. Over the past two decades, Aquila Capital and its
subsidiaries have committed themselves to supporting the green
energy transition and creating a more sustainable world. As at 30
June 2023, the Investment Adviser manages wind energy, solar PV,
hydropower energy and battery storage assets with a capacity of
approximately 19.7 GW(2) . Additionally, it has projects in
sustainable real estate and green logistics, either completed or
under development. Aquila Capital also invests in energy
efficiency, carbon forestry and data centres.
The Investment Adviser's dedicated expert investment teams
comprise over 700 employees worldwide. Moreover, the strategic
partnership entered in 2019 with Japan's Daiwa Energy &
Infrastructure draws on its sector networks and experience to
screen, develop, finance, manage and operate investments along the
entire value chain. As this business model requires local
management teams, Aquila Capital is represented across 17
investment offices. The Investment Adviser currently has a
significant pipeline of over 14.0 GW2 of development and
construction assets in the EMEA region, primarily in solar PV
located in Southern Europe. This represents an attractive source of
growth opportunities for AER.
Aquila Capital's in-house Markets Management Group ("MMG"), a
team of experts dedicated to sourcing and structuring Power
Purchase Agreements ("PPA"), market analysis, trading, origination,
FX, interest rates and other hedging products, has facilitated the
Company's proactive approach to hedging and risk management. Since
its inception, the team has structured, negotiated, and put in
place more than 40 PPAs and has created an extensive network of
offtakers, being recognised as one of the most important players in
the European landscape. The ultimate aim is to secure stable
revenues whilst always ensuring the best possible risk adjusted
return. MMG also supports the rest of the teams within Aquila by
providing market insights, analysis, research and regulatory
knowledge. It also undertakes regular reporting on market evolution
and events and ad-hoc research to identify emerging market
trends.
The Company's Alternative Investment Fund Manager ("AIFM"),
FundRock Management Company (Guernsey) Limited (previously known as
International Fund Management Limited), has appointed Aquila
Capital as its Investment Adviser in respect of the Company. Aquila
Capital's key responsibilities are to originate, analyse and assess
suitable renewable energy infrastructure investments and advise the
AIFM accordingly as well as to provide Asset Management
services.
1. Data as at 31 December 2022, sourced from the Aquila Capital annual Sustainability Report.
2. Data as at 30 June 2023, including historical divestments.
Current Renewables Portfolio of Aquila Capital(1) :
Portfolio Capacity(2)
Wind Solar Hydropower Energy 17 Offices
energy PV storage
systems
-------- ------ ---------- ----------- ----------
4,581 12,221 999 MW 1,860
MW MW MW
995 WTGs 344 PV 286 plants 26 projects
parks
-------- ------ ---------- ----------- ----------
1. Map is shown for illustrative purposes only, as at 30 June
2023. Exact locations of offices and assets might deviate. Points
indicate one or more asset and are not indicative of size.
2. Data as at 30 June 2023, including assets already sold.
Investment Portfolio
Asset
Life
from Equipment Energy Ownership Acquisition
Project Country Capacity(1) Status COD(2) COD(2) Manufacturer Offtaker(3) Offtaker in Asset Leverage(4) Date
----------- --------- ------------ ------------ ---------- ------ ------------ ----------- --------- --------- ----------- -----------
Wind Energy
---------------------- ------------ ------------ ---------- ------ ------------ ----------- --------- --------- ----------- -----------
150.0 2013,
Tesla Norway MW Operational 2018 25y Nordex PPA Statkraft 25.9%6 20.4% Jul-19
Holmen 18.0 Energie.d
II Denmark MW Operational 2018 25y Vestas FiP k 100.0% 33.8% Jul-19
34.6 Finnish
Olhava Finland MW Operational 2013-2015 27.5y Vestas FiT Energy 100.0% 36.6% Sep-19
32.0 Energie.d Dec-19
Svindbaek Denmark MW Operational 2018 29y Siemens FiP k 99.9% 17.2% & Mar-20
400.0
The Rock Norway MW Operational 2022 30y Nordex PPA Alcoa 13.7%6 48.8% Jun-20
40.0
Desfina Greece MW Operational 2020 25y Enercon FiP DAPEEP 89.0%7 49.7%8 Dec-20
----------- --------- ------------ ------------ ---------- ------ ------------ ----------- --------- --------- ----------- -----------
Solar
PV
----------- --------- ------------ ------------ ---------- ------ ------------ ----------- --------- --------- ----------- -----------
Benfica 19.7 2017,
III Portugal MW Operational 2020 40y AstroNova PPA Axpo 100.0% 0.0% Oct-20
50.0 Canadian
Albeniz Spain MW Operational 2022 40y Solar PPA Statkraft 100.0% 0.0% Dec-20
62.1
Ourique Portugal MW Operational 2019 40y Suntec CfD ENI 50.0%6 0.0% Jun-21
100.0
Greco Spain MW Operational 2023 40y Jinko PPA Statkraft 100.0% 0.0% Mar-22
30.0 Canadian
Tiza Spain MW Operational 2022 40y Solar PPA Axpo 100.0% 0.0% Jun-22
----------- --------- ------------ ------------ ---------- ------ ------------ ----------- --------- --------- ----------- -----------
Hydropower
----------- --------- ------------ ------------ ---------- ------ ------------ ----------- --------- --------- ----------- -----------
107.6
Sagres Portugal MW Operational 1951-2006 n/a5 Various FiT EDP/Renta 18.0%6 22.9% Jul-19
----------- --------- ------------ ------------ ---------- ------ ------------ ----------- --------- --------- ----------- -----------
Total (AER 463.8
Share) MW
---------------------- -------------------------------------- ------ ------------ ----------- --------- --------- ----------- -----------
1. Installed capacity at 100.0% ownership.
2. COD = Commissioning date.
3. PPA = Power Purchase Agreement, FiT = Feed-in tariff. FiP =
Feed-in premium, CfD = Contract for Difference. Further information
on the contracted revenue position can be found on below.
4. Leverage level calculated as a percent of debt plus fair value as at 30 June 2023.
5. 21 individual assets. Approximately ten years remaining asset
life when calculated using net full load years.
6. Majority of remaining shares are held by entities managed and/or advised by Aquila Capital.
7. Represents voting interest. Economic interest is 92.6%.
8. Calculation based on voting interest.
Ongoing Value Creation
154.8 MW(1) of construction projects completed
The Rock
Country: Norway
Date Acquired: June 2020
Status: Operational
Capacity: 400.0 MW
Interest: 13.7%
In March 2023, a takeover under the Engineering, Procurement and
Construction ("EPC") management agreement was achieved,
representing the final milestone for completion of the project. The
asset has been in production since November 2022 and provides
Alcoa's aluminium smelter in Mosjøen with renewable energy under a
14-year PPA. Alcoa's aluminium smelter is a key contributor to
employment and growth in Mosjøen.
As indicated in the 2022 Annual Report, in accordance with the
EPC takeover, Eolus will remain responsible for the upcoming
appraisal case with the Sami district and remains liable for any
negative financial implications. The case was expected to be heard
before the Helgeland District Court on 30 May 2023, however, the
District Court rescheduled the case as no mitigation measures have
been agreed to date. It is likely that a new hearing will be
scheduled for 27 May 2024. The project company expects the parties
will find good and workable solutions and AER Shareholders will be
updated in due course.
The project company, the developer and the turbine supplier
continue to be involved in an arbitration process to settle
outstanding claims related to construction delays and extensions of
time under the turbine supply agreement. The project company does
not expect the arbitration case to negatively affect its financial
position.
Jaén and Guillena
Country: Spain
Date Acquired: March 2022
Status: Operational
Capacity: 100.0 MWp
Interest: 100.0%
A key milestone was the commissioning of Guillena, the second
solar PV asset of the Greco portfolio, in April 2023. The first
asset, Jaén, has been operational since November 2022. Both assets
received their Provisional Acceptance Certificate ("PAC") in 2023,
representing the final milestone for completion.
Both Jaén and Guillena benefit from PPAs signed during
favourable market conditions in 2022. The contracts commenced in
April 2023 and August 2023, respectively.
In conjunction with Albeniz, completion of both The Rock and the
Greco portfolio has resulted in a valuation uplift of 8.8% (EUR
17.1 million, 4.4 cents per Ordinary Share)(2) versus cost as at 30
June 2023. Following the completion of these projects, the Company
has no further construction projects within its portfolio, however,
it retains the option to invest up to 30% of its Gross Asset Value
in development or construction projects, enabling additional value
creation over time.
1. AER share.
2. Q2 2023 net asset value minus acquisition costs, capital
expenditure, plus distributions paid up to 30 June 2023.
Capital Deployment Profile Since IPO
As at 30 June 2023, the Company's remaining outstanding
commitment is a EUR 1.3 million milestone payment associated with
the Guillena project (one of two assets within the Greco
portfolio). This payment was made upon receipt of the Provisional
Acceptance Certificate ("PAC") in September 2023, after the
reporting period, and was funded out of operating cash flows from
the Greco portfolio.
The Company aims to build a larger-scale portfolio to further
enhance its investment proposition and contribute to the green
energy transition. The Company, together with its Investment
Adviser, continues to monitor an attractive pipeline of investment
opportunities, underpinned by the Investment Adviser's substantial
development and construction pipeline throughout Europe (over 14.0
GW).
Contracted Revenue Position
Contracted revenue net present value(2)
EUR 239.1m
Contracted revenue (aggregate over asset life)(3)
EUR 346.4m
Contracted revenue over the next five years(1)
50.5%
Weighted average contracted revenue life(4)
10.5 years
The Company is diversified across six countries and six
different price zones in Norway (NO2 and NO4 regions), Iberia
(Spain and Portugal), Finland, Denmark and Greece, allowing it to
benefit from a diversified portfolio of offtake structures,
including subsidy schemes as well as PPAs from a wide variety of
counterparties.
Contracted revenues expected over the next five years, on a
present value basis, have decreased to 50.5% (31 December 2022:
51.9%) as a result of the upcoming expiry of existing tariffs and
PPAs across the portfolio, including Olhava, Albeniz and Ourique,
which expire from end of 2024 to 2027. The Company and its
Investment Adviser intend to replace these expiring contracts with
new PPAs over time, subject to prevailing market conditions.
Following an active period in 2022, no new PPAs were entered
into by the Investment Adviser and its in-house MMG division over
the reporting period. However, the Company will continue to focus
on maintaining a sufficient degree of contracted revenues to
mitigate its exposure to power price volatility. The Company's
contracted revenue position also provides flexibility to capitalise
on periods of higher power prices.
The portfolio has good visibility of future cash flows, with a
weighted average contracted revenue life of approximately 10.5
years (31 December 2022: 7.4 years). The Company contracts its
revenues with investment grade counterparties, consisting of
government entities, utilities and corporate entities. In case the
investment grade status is lost, credit enhancement tools such as
bonds, bank guarantees or letters of credit are put in place.
1. Forecast asset revenue from 1 July 2023 to 30 June 2028,
which is discounted by the weighted average portfolio discount rate
as at 30 June 2023.
2. Net Present Value of contracted revenue over entire asset
life as at 30 June 2023, discounted by the weighted average
portfolio discount rate.
3. Aggregate contracted revenue over entire asset life (not discounted).
4. New weighting methodology based on hedged production.
Financial Performance
Performance(1)
Electricity Production (GWh)
Variance
1H23
Against
Variance
Technology Region 1H23 1H22 (%) P50 Budget
------------ ------------------ ----- ----- -------- ----------
Denmark, Finland,
Wind energy Norway, Greece 260.5 216.0 20.6% (15.1%)
Solar PV Portugal, Spain 195.1 70.2 177.8% (0.8%)
Hydropower Portugal 33.2 17.2 93.4% (19.6%)
------------ ------------------ ----- ----- -------- ----------
Total 488.8 303.4 61.1% (10.3%)
-------------------------------- ----- ----- -------- ----------
Load Factors
Technology 1H23 1H22
------------- ----- -----
Wind energy 27.0% 32.3%
Solar PV 21.4% 13.7%
Hydropower 39.5% 21.4%
------------- ----- -----
Total 27.0% 24.6%
------------- ----- -----
Technical Availability(2)
Technology 1H23 1H22
------------- ----- -----
Wind energy 94.0% 96.8%
Solar PV 99.7% 99.6%
Hydropower 98.8% 99.1%
------------- ----- -----
Total 96.7% 97.4%
------------- ----- -----
Revenues(3) (EUR million)
Variance
Technology 1H23 1H22 (%)
------------- ---- ---- --------
Wind energy 16.9 18.8 (10.1)%
Solar PV 11.1 4.7 138.4%
Hydropower 3.5 2.7 30.0%
Total 31.5 26.1 20.5%
------------- ---- ---- --------
1. 1H23 data includes Guillena from April 2023. Desfina data
based on economic share (92.6%). 1H22 data includes Tiza from March
2022, Albeniz from June 2022. Desfina data based on voting share
(89.0%).
2. Average technical availability based on weighted installed capacity (AER share).
3. Includes merchant revenue, contracted revenue and other
revenue (e.g. Guarantees of Origin, Electricity Certificates).
1H23 Monthly Production Performance vs. Budget (AER Share)
The Company's portfolio increased production by 61.1% during the
first half of 2023 compared to the same period in 2022, with
electricity produced amounting to 488.8 GWh (1H22: 303.4 GWh),
primarily due to added production from The Rock (400.0 MW) and Jaén
(50.0 MWp) becoming operational in November 2022. It also benefited
from the latest construction project Guillena (50.0 MWp), which
became operational in April 2023. These additional assets
contributed 135.7 GWh of production to the portfolio in the period
and represent approximately 27.8% of total production in the first
half of the year.
For the first six months of 2023, revenue was 17.6% below budget
due to falling electricity spot market prices across the
portfolio's markets. This reflected the decline in commodity
prices, milder -- than-expected temperatures in Europe and elevated
filling levels of gas storage reservoirs. Prices in the Nordics
were also impacted due to increased interconnection links to
Germany and the United Kingdom, placing further downward pressure
on prices in the region.
Production performance during the reporting period was 10.3%
below budget, driven by below average wind speeds in the Nordics,
and considerably lower precipitation than normal in Portugal for
the hydropower asset, Sagres. The solar PV portfolio performed in
line with budget over the first half of the year, whilst
performance at the Company's newest solar PV investment, Greco, has
been promising with production outperforming budget in 1H23.
Portfolio technical availability fell marginally from 97.4%(1)
to 96.7%, primarily due to The Rock suffering from defective
gearboxes and a malfunctioning anti-icing system, which impacted
availability in the first quarter of 2023. Availability and
production improved significantly in the second quarter of 2023 due
to the subsequent summer season and the progressive replacement of
the gearboxes, whereas the anti-icing system is expected to be
repaired before the onset of this year's winder season.
The Company's Spanish solar PV portfolio, and in particular
Jaén, was impacted by curtailments at the request of the
transmission agent and operator ("TSO") during the month of June,
which had a minor impact on revenue during the quarter.
Curtailments have been requested by the TSO because of
oversaturation of the grid from elevated solar PV production in the
summer months. The Company and its advisers have assessed the
impact to be of approximately 2.3 GWh of curtailed production for
Jaén, equivalent to around EUR 160.0 thousand for the month of
June. The number of curtailed hours during the reporting period for
the rest of the Company's Spanish solar PV portfolio was
negligible. The Investment Adviser is in the process of introducing
compliance software across its Spanish solar PV portfolio to
mitigate the impact of curtailments. The software was successfully
installed in late September 2023.
The addition of solar PV assets to the portfolio has
significantly improved the stability of production across the
portfolio month-to-month and has subsequently reduced the
portfolio's reliance on wind production. This is consistent with
the investment philosophy of the Company, which is seeking to
diversify across different technologies and provide a balanced
portfolio mix between wind energy and solar PV.
A research project, partially funded by the Investment Adviser
and the German Ministry for Economic Affairs and Climate Action
("BMWK"), is collecting data from the Company's Portuguese solar PV
asset Benfica III. The Investment Adviser's research partner, a
German company called 'Sunsniffer', has developed sensors for
photovoltaic modules which can be inserted into the module strings,
and a research institute called 'Forschungszentrum Jülich' has
developed machine learning tools for data analysis and failure
detection, allowing for an in-depth analysis of any underperforming
modules. Currently, the Investment Adviser, as per the industry
standard, monitors and operates at the string level. However, the
underperformance of one module can impact its entire string, and a
technician cannot identify which module in particular is affected
without checking every module of the affected string. The research
project is currently analysing the health status of the solar PV
park in order to determine where to incorporate the new sensors,
which would improve asset technical availability and, consequently,
production.
Dividend cover (unaudited)
Variance
EUR million(1) 1H23 1H22 (%)
--------------------------------------------- ----- ----- --------
Asset income 31.5 26.1 20.7%
--------------------------------------------- ----- ----- --------
Asset operating costs (7.9) (6.1) 28.5%
Interest and tax (2.5) (1.8) 41.8%
--------------------------------------------- ----- ----- --------
Asset underlying earnings 21.1 18.2 16.0%
--------------------------------------------- ----- ----- --------
Asset debt amortisation (4.9) (4.0) 21.7%
Company and HoldCo(2) expenses(3) , other(4) (2.2) 0.7 (408.2%)
RCF interest and fees (1.2) (0.2) 588.5%
--------------------------------------------- ----- ----- --------
Total underlying earnings 12.8 14.7 (12.7%)
--------------------------------------------- ----- ----- --------
Dividends paid 10.7 10.4 2.5%
--------------------------------------------- ----- ----- --------
Dividend cover after debt amortisation (x) 1.2x 1.4x (0.2%)
--------------------------------------------- ----- ----- --------
Dividend cover before debt amortisation (x) 1.7x 1.8x Nmf(5)
--------------------------------------------- ----- ----- --------
1. Non-euro currencies converted to EUR as at 30 June 2023.
Desfina contribution reflects AERs economic interest rather than
voting interest (92.6%).
2. Tesseract Holdings Limited.
3. Expenses reflect recurring ordinary costs and expenses at AER
and THL level. Legal fees, investment expenses and amortised
one-off cost of the Revolving Credit Facility ("RCF") is not
included. Expenses are reduced by interest income on cash at
banks.
4. 1H22 figure includes income accrued by AER in relation to
shareholder loans provided to construction assets.
5. nmf = not meaningful.
The table above calculates dividend cover based on the
underlying earnings of its investment portfolio, sourced from the
profit & loss ("P&L") statements from each of the Company's
investments, with the exception of debt amortisation which is
sourced from the cash flow statement. Each of the Company's
investments are held through special purpose vehicles ("SPV"). The
SPV, Company and HoldCo financial statements are unaudited.
Total underlying asset earnings are calculated by aggregating
the P&L of the Company's SPVs (adjusted for AER's share), less
any repayments of project level debt at the SPV level (adjusted for
AER's share), less fund level costs at the Company and HoldCo
level.
Cash Dividend Cover (unaudited)
Variance
EUR million(1) 1H23 1H22 (%)
--------------------------------------------------------- ------ ------ --------
Company
Net cash flow from operating activities 11.2 20.2 (44.4%)
Investment advisory fee funded by share issuance - 1.3 n/a
--------------------------------------------------------- ------ ------ --------
HoldCo
Net cash flow from operating activities (0.4) (17.6) (97.7%)
--------------------------------------------------------- ------ ------ --------
Adjustments
Shareholder loan and equity repayments(2) 2.4 8.1 (70.4%)]
RCF interest and fees (1.2) (0.2) 588.5%
Acquisition of accrued interest from Shareholder loan(3) 1.5 n/a
Asset cash flow used for investment activities(4) 0.3 - n/a
--------------------------------------------------------- ------ ------ --------
Other(5) (0.3) - n/a
--------------------------------------------------------- ------ ------ --------
Adjusted net cash flow 12.1 13.3 (9.5%)
--------------------------------------------------------- ------ ------ --------
Dividends paid (10.7) 10.4 2.5%
--------------------------------------------------------- ------ ------ --------
Cash dividend cover (x) 1.1x 1.3x Nmf(6)
--------------------------------------------------------- ------ ------ --------
663
The table above provides an alternative dividend cover
calculation based on actual cash distributions received by the
Company and HoldCo from the investment portfolio or SPVs. Cash
distributions are paid in the form of dividends or Shareholder loan
payments (interest or principal).
Adjusted net cash flow is calculated by consolidating net cash
flow from operating activities at the Company and HoldCo, subject
to certain adjustments (as shown in the table above), the most
notable being distributions from the Company's assets in the form
of Shareholder loan repayments from the Company's assets to the
HoldCo.
1. Non-euro currencies converted to EUR as at 30 June 2023.
Desfina contribution reflects AERs economic interest rather than
voting interest (92.6%).
2. Distributions from operating activities in the form of
Shareholder loan and equity repayments (Olhava EUR 2.2m, Tiza EUR
0.2m).
3. Accrued shareholder loan interest purchased at the Tiza acquisition in 1H22.
4. Part of Guillena PAC payment made by the operating company.
5. Capitalisation of shareholder loan interest.
6. nmf = not meaningful.
Gearing(1)
As at As at
30 June 31 December
EUR million 2023 2022 Variance
(%)
--------------------------------------------------- ------- ----------- --------
NAV 403.3 451.7 (10.7%)
Debt(2) 195.6 155.2 26.1%
GAV 598.9 606.9 (1.3%)
Debt (% of GAV)(3) 32.7 25.6 7.1 bps
Project debt weighted average maturity (years) 14.2 14.6 (0.4)
Project debt weighted average interest rate (%)(4) 2.6 2.5 0.1 bps
RCF interest rate (%)(5) 5.2 3.5 1.6 bps
--------------------------------------------------- ------- ----------- --------
The portfolio has modest gearing of 32.7% of GAV as at 30 June
2023 (31 December 2022: 25.6%)(6) .
The Company's prospectus allows it to operate with a maximum
gearing level of 50.0% of GAV(7) . The Company's asset level debt
is largely fully amortising with fixed interest rates.
Approximately EUR 4.9 million of asset level debt (AER share) was
repaid from operating cash flow in the first six months of
2023.
As at 30 June 2023, the RCF was drawn to EUR 75.0 million (31
December 2022: EUR 34.9 million), including bank guarantees, with
an undrawn limit of EUR 25.0 million. The RCF has been primarily
used to fund the Company's commitments related to the Greco project
(EUR 69.3 million in total), whilst the bank guarantees (EUR 5.7
million) have been primarily issued in relation to dismantling
bonds and PPA guarantees required for the Company's operating
assets in Spain. The RCF is a floating rate facility that expires
in April 2025, in light of the Company having exercised a
twelve-month extension option in 2023.
Debt Summary as at 30 June 2023(1)
Drawn Bullet Hedged
Debt
Project AER Share (EUR million) Currency Amortising Maturity Proportion Type
-------------------- --------- ----- ------------- -------- ----------------- -------- ---------- ------------
Tesla 25.9% 8.6 EUR Partly amortising Mar-29 100.0% Bank Debt
Sagres 18.0% 6.1 EUR Fully amortising Jun-33 70.0% Bank Debt
Dec-30/
Olhava 100.0% 16.8 EUR Fully amortising Sep-31 100.0% Bank Debt
Holmen II 100.0% 13.6 DKK Fully amortising Dec-37 93.2% Bank Debt
Svindbaek 99.9% 7.8 DKK Fully amortising Dec-37 100.0% Bank Debt
Debt Capital
The Rock: USPP 13.7% 31.5 EUR Fully amortising Sep-45 100.0% Markets
Debt Capital
The Rock: Green Bond 13.7% 11.0 EUR Bullet Sep-26 100.0% Markets
Desfina 89.0% 31.0 EUR Fully amortising Dec-39 100.0% Bank Debt
Subtotal 126.3 97.8%
-------------------- --------- ----- ------------- -------- ----------------- -------- ---------- ------------
RCF 100.0% 69.3 EUR Bullet Apr-25 0.0% Bank Debt
-------------------- --------- ----- ------------- -------- ----------------- -------- ---------- ------------
Total 195.6 63.1%
-------------------- --------- ----- ------------- -------- ----------------- -------- ---------- ------------
1. Foreign currency values converted to EUR as at 30 June 2023.
Data represents AER's share of debt. AER share of Desfina's debt
based on voting interest.
2. Debt corresponds to senior debt secured at project level and RCF at HoldCo level.
3. This disclosure is considered to represent the Company's
alternative performance measures ("APMs"). Definitions of these
APMs and other performance measures used, together with how these
measures have been calculated, can be found below. All references
to cents are in euros, unless stated otherwise.
4. Weighted average all in interest rate for EUR denominated
debt (excl. RCF). DKK denominated debt has an average weighted
interest rate of 2.8% (31 December 2022: 2.8%).
5. Consists of 1M EURIBOR plus a margin of 1.85%.
6. Excludes bank guarantees of EUR 5.7 million (31 December 2022: EUR 10.9 million).
7. The Company may take on long-term structural debt provided
that, at the time of entering into such debt, it does not exceed
50% of the prevailing Gross Asset Value. Any short-term debt, such
as a Revolving Credit Facility, will be subject to a separate
gearing limit so as not to exceed 25% of the Gross Asset Value at
the time of entering into such debt.
Valuation
Fair Value (unaudited, EUR million)
The table below shows the fair values of the investments held by
Tesseract Holdings Limited ("HoldCo"), the Company's wholly owned
subsidiary, as well as the reconciliation to the respective item on
the Company's balance sheet.
As at As at
30 June 31 December
EUR million 2023 2022 Variance
(%)
------------------------------------------------- ------- ----------- --------
Tesla 33.5 35.5 (5.7%)
Sagres 20.7 23.0 (10.0%)
Holmen II 26.6 39.5 (32.8%)
Olhava 29.2 27.2 7.3%
Svindbaek 37.4 46.9 (20.2%)
The Rock 44.6 41.7 7.0%
Benfica III 16.2 17.1 (5.3%)
Albeniz 51.2 55.1 (7.0%)
Desfina 31.4 28.5 10.2%
Ourique 33.5 36.4 (8.0%)
Greco 109.8 66.5 65.0%
Tiza 33.5 34.1 (1.8%)
------------------------------------------------- ------- ----------- --------
Fair value of investments (HoldCo)(1) 467.5 451.5 3.5%
------------------------------------------------- ------- ----------- --------
Cash and other current assets of HoldCo 3.0 6.4 (52.9%)
Revolving credit facility drawn by HoldCo (69.3) (24.0) 189.0%
Elimination of intercompany loans (0.4) (5.3) (92.2%)
------------------------------------------------- ------- ----------- --------
Investments at fair value through profit or loss 400.7 428.6 (6.5%)
------------------------------------------------- ------- ----------- --------
1. 1H23 includes new investments in Greco (EUR 45.3 million) and
'other' (EUR 0.3 million). 2022 data includes capital contributions
related to construction assets (Albeniz: EUR 6.3 million), new
investments (Greco and Tiza, combined: EUR 94.3 million), capital
injection (Sagres: EUR 2.2 million) and 'other' (EUR 0.3
million).
The Company's NAV as at 30 June 2023 was EUR 403.3 million, or
104.1 cents per Ordinary Share (30 June 2022: EUR 430.6 million, or
105.5 cents per Ordinary Share). This represents a NAV total return
of -3.5% per Ordinary Share (1H22: 5.3%) including dividends.
Dividends of EUR 10.7 million (2.7 cents per Ordinary Share)
were paid during the reporting period, with respect to the last
quarter of 2022 and the first quarter of 2023.
The main drivers of NAV movement throughout the reporting period
include:
- forecast power prices: a decline in short-term electricity
price forecasts across most of the portfolio resulted in a decrease
of 12.1 cents per Ordinary Share. The methodology continues to
assume an average of two power price curves from independent market
analysts over the life of each asset, with the hydropower asset
Sagres utilising an average of three power curves. No forward or
futures curves are used;
- inflation: lower short-term CPI forecasts resulted in a
decrease of 0.4 cents per Ordinary Share;
- discount rate: the Company's discount rate has remained
unchanged at 7.2% compared to 2022(1) ;
- share buyback programme: completion of the EUR 20.0 million
share buyback programme increased the NAV per Ordinary Share by 0.8
cents; and
- asset life extensions: following completion of due diligence,
asset life extensions have been applied to the Company's Spanish
and Portuguese solar PV assets and one Danish wind asset, boosting
the NAV per Ordinary Share by 3.2 cents.
Valuation Methodology
The Company owns 100.0% of its subsidiary Tesseract Holdings
Limited ("HoldCo" or "THL"). The Company meets the definition of an
investment entity as described by IFRS 10. As such, the Company's
investment in the HoldCo is valued at fair value.
The Company has acquired underlying investments in SPVs through
its investment in the HoldCo. The Investment Adviser has carried
out fair market valuations of the SPV investments as at 30 June
2023 and the Directors are satisfied with the methodology, the
discount rates and key assumptions applied and the valuations.
All SPV investments are at fair value through profit or loss and
are valued using the IFRS 13 framework for fair value measurement.
The economic assumptions shown below were used in the valuation of
the SPVs.
Portfolio Valuation - Key Assumptions
As at As at
30 June 31 December
Metric 2023 2022
--------------------------------------- ----------------------- ------- -----------
Levered discount rate (asset level)(1) Weighted average 7.2% 7.2%
--------------------------------------- ----------------------- ------- -----------
Long-term inflation Weighted average 2.0% 2.0%
--------------------------------------- ----------------------- ------- -----------
Remaining asset life(2) Wind energy (years) 22 22
Solar PV (years) 39 29
Hydropower (years) 10 10
--------------------------------------------------------------- ------- -----------
Operating life assumption(3) Wind energy (years)(4) 26 26
Solar PV (years) 40 30
Hydropower (years) n/a n/a
--------------------------------------------------------------- ------- -----------
A key change in valuation assumptions compared to the previous
report relates to asset life extensions. Further information can be
found below.
1. Excludes the impact of the RCF. Including the RCF, the
levered discount rate increases to approximately 7.7%.
2. Remaining asset life based on net full load years. Does not
consider any potential asset life extensions.
3. Asset life assumption from date of commissioning.
4. Assumes an asset life of 25 to 30 years.
Asset Life Extensions
The Company and the Investment Adviser have been undertaking an
asset life extension programme during the first half of the year in
consultation with external technical advisers. Following the
conclusion of due diligence, the Company implemented the following
changes in asset life assumptions across the portfolio:
- Albeniz, Greco, Tiza (solar PV, 180.0 MW): increased from 30 to 40 years (+10 years);
- Benfica III, Ourique (solar PV, 50.7 MW): increased from 30 to 40 years (+10 years);
- Holmen II (wind, 18.0 MW): unchanged at 25 years; and
- Svindbaek (wind, 32.0 MW): increased from 25 to 29 years (+4 years).
The above changes in aggregate generated a value uplift of 3.2
cents per Ordinary Share (+2.9%) as at 30 June 2023. Holmen II
(18.0 MW), was assessed as not being suitable for an asset life
extension due to a turbine load assessment analysis.
The Board and Investment Adviser intend to rollout asset life
extensions across the remainder of the portfolio (109.0 MW,
comprising Desfina, Tesla, Olhava), subject to ongoing due
diligence.
Market Prices
In the first six months of 2023, power prices across European
geographies were characterised by persistent volatility, driven by
the downward trajectory of commodity prices, most notably gas. This
trend reflected a reduction in demand, spurred by mild temperatures
in Europe, elevated filling levels of gas storage reservoirs and
greater renewable generation feeding into the grid.
The Nordics electricity system spot price averaged 56.0 EUR per
MWh in the second quarter of 2023 against 85.1 EUR per MWh in the
first quarter of 2023, a decrease of 34.0%. Spot prices in Iberia
were traded, on average, at 80.9 EUR per MWh in the second quarter
of 2023, compared to 97.6 EUR per MWh in the first quarter of 2023,
a drop of 17.0%. In Greece, spot prices were 32.0% lower than the
previous quarter, averaging 106.3 EUR per MWh in the second quarter
of 2023 against 156.9 EUR per MWh in the first quarter of 2023.
Nordics
The Nordics electricity system spot price averaged 56.0 EUR per
MWh in the second quarter of 2023 against 85.2 EUR per MWh in the
first quarter of 2023, a 32.2% drop. The bearish trend across the
Nordics can be attributed to the following factors:
- normalising hydrological production, with hydro reservoirs
reaching the average levels expected for the period;
- decreasing fuel prices, leading to lower power prices in
Continental Europe, which increasingly affect the Nordics due to
expanded interconnections;
- higher wind energy output increasing supply; and
- reduced power demand as a result of mild weather.
Iberia
In Iberia, power prices gradually decreased over the reporting
period in conjunction with the downward trajectory of gas prices in
Europe, higher renewable output and reduced power demand, mostly as
a consequence of milder-than-expected weather in the first quarter
of the year. Spot prices in Iberia were traded, on average, at 80.9
EUR per MWh in the second quarter of 2023, compared to 97.6 EUR per
MWh in the first quarter of 2023. The front-year forward prices for
2023 have decreased from an average of 106.8 EUR per MWh in the
first quarter of 2023 to 99.8 EUR per MWh in the second quarter of
2023.
Greece
Due to the high proportion of hours in which gas-fired
generation sets the marginal price in the country's wholesale
market, power prices in Greece continue to trade at a premium to
those in Iberia and the Nordics, despite the strong downward pull
of fuel prices. Spot prices in Greece were 32.3% lower than in the
first quarter - in line with the falling trajectory of fuel prices
- and averaged 106.3 EUR per MWh in the second quarter of 2023
against 157.0 EUR per MWh in the first quarter of 2023.
Fuel Prices Evolution
The downward trend of commodity prices (notably gas and coal)
contributed to the continuation of the bearish trend in European
power price levels since the start of the year.
- European Union Emissions Allowances ("EUAs"): on average, EUA
prices traded on the EU's Emissions Trading System ("ETS") remained
flat due to low buying interest, low power demand and bearish
natural gas prices.
- Gas forward prices steadily declined over the reporting period
due to the reduction in demand caused by mild temperatures in
Europe, elevated filling levels of gas storage reservoirs and high
levels of LNG imports. On average, gas prices in the second quarter
plunged by roughly 34% over the previous quarter, dropping from
53.0 EUR per MWh in the first quarter of 2023 to 35.1 EUR per MWh
in the second quarter of 2023.
- Coal prices fell from an average of 146.2 USD per tonne in the
first quarter of 2023 to 118.6 USD per tonne in the second quarter
of 2023, in line with the trend of gas prices, due to weak
fundamentals for the sector and a negative macro -- economic
outlook.
Inflation
Investments in renewables represent an effective protection
against inflation. Renewables benefit from rising electricity
prices with no direct input cost burden given their reliance on the
weather. Over the last 20 or more years, European electricity
prices have typically outperformed European consumer price indices.
As a result, inflation is expected to continue to have a positive
impact on the earnings potential of the Company's portfolio.
Inflation in the European Union, at 5.5% in June, has been steadily
decreasing from its peak of 10.6% in October 2022 (8.4% average for
2022), and is expected to fall further as supply chain bottlenecks
ease and food and commodity prices normalise. The European Central
Bank expects headline inflation in the Eurozone to fall to 5.4% by
the end of 2023, 3.0% in 2024 and 2.2% in 2025. In contrast, the UK
has experienced higher levels of inflation compared to the EU, with
UK CPI at 7.9% in June (vs. 5.5% in the EU), a trend which has been
observed since 2001.
Outlook
Longer-term global trends for the renewable energy sector,
including decarbonisation, energy security and affordability,
continue to be strong. However, the first half of the year saw the
sector experience several headwinds including power price
volatility, supply chain bottlenecks and persistently high
inflation driving higher interest rates. Electricity prices in the
Company's key markets are forecast to continue to fall over the
medium term, reflecting the downward trend of commodity prices
witnessed in the first and second quarters of the year, as part of
a normalisation of prices from the peaks experienced in 2022.
Inflation is expected to remain at similarly elevated levels
despite the continuing quantitative tightening of central banks, at
least over the short term, in light of supply chain constraints
aggravated by the ongoing war in Ukraine and historically low
unemployment levels among the world's largest economies. However,
the current slowdown in China's economy is already lowering prices
for key raw materials, components, equipment or services in the
renewable supply chain, especially solar modules, and a recovery in
the country's economy may once again drive prices in an upward
trajectory.
A prolonged period of monetary tightening and higher interest
rates has led to a trend reversal in equity return expectations, as
evidenced by the share price decline across the sector observed on
the London Stock Exchange. Despite this, demand for renewable
assets remains strong, leading to a mismatch between public market
and private market return expectations.
Despite this difficult backdrop, the Company has been consistent
in executing its strategy since its IPO in 2019 and, as a result,
now benefits from a fully operational and diversified portfolio
which can deliver strong dividend cover.
The strong demand for renewables is underpinned by several
positive tailwinds. The greater certainty and visibility over the
European regulatory landscape is an encouraging tailwind for the
Company and the sector, bolstered by the fast-tracking of
permitting and greater access to public funding for renewable
energy projects that is intrinsic of many national deployment and
energy independence plans.
The repercussions of climate change, evidenced by the rise in
extreme weather events and the latest summer heatwaves, are
expected to add further impetus to net zero targets and
decarbonisation rates. Grid access and the need for capacity
upgrades also continue to be critical concerns across several
jurisdictions, given the high quantity of projects coming to market
with grid connection dates for the end of the decade and beyond.
This is generating added urgency for public and private investment
in the near future.
The Company is well positioned to benefit from these trends, in
light of its aim to build a larger-scale portfolio to further
enhance its investment proposition and directly contribute to the
green energy transition, deploying capital to help fund the
build-out of the very substantial construction pipeline (over 14.0
GW(1) in European geographies) that is being developed by its
Investment Adviser.
Aquila Capital Investmentgesellschaft mbH
26 September 2023
1. Data as at 30 June 2023, including historical divestments.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
1. Environmental
Aquila Group is focused on the investment and development of
essential assets. This includes clean energy (wind energy, solar
PV, hydropower and battery storage), sustainable infrastructure and
specialty asset classes, such as carbon forestry and energy
efficiency. Currently, it supplies two million homes with renewable
energy, which cumulatively avoids more than 10 million tonnes of
CO(2) e annually.
In 2022, Aquila Group formalised its mission to become one of
the world's leading sustainable investment and development
companies for essential assets by 2030. To show its commitment to
the mission, a Group-wide goal was set to avoid 1.5 billion tonnes
of CO(2) e by 2035 throughout the portfolio's lifetime, which is
equivalent to 4.1% of CO(2) e emissions worldwide in 2021(1) .
Using the appropriate tools, due diligence procedures and
experts, Aquila Group ensures that all material ESG factors are
identified, assessed and mitigated to protect investors from
potential financial downside, while considering their impact on
society and the environment. In this context, the Group's regulated
Alternative Investment Fund Manager ("AIFM") entity and the
Investment Adviser of AER manages all relevant ESG elements using
dedicated subject matter experts.
The Group is committed to the UN's 17 Sustainable Development
Goals, particularly climate action ("SDG 13"), clean energy ("SDG
7") and industry, and innovation and infrastructure ("SDG 9").
In 2018, the EU agreed to a climate and energy framework and set
ambitious goals for 2030. The aim is to have a clean, affordable
and reliable energy system in Europe, targeting the following
initiatives.
UN Sustainable Development Goals for Europe
40.0%
At least a 40.0% decline below 1990 levels in greenhouse gas
emissions
32.0%
A 32.0% share of renewables in the energy system
32.5%
A 32.5% improvement in energy efficiency
1. Worldwide CO(2) e emissions in 2021 were 36.3 billion tonnes
according to the International Energy Association: IEA, "Global
Energy Review: CO(2) Emissions in 2021" (March, 2022) p.3.
Available at:
https://www.iea.org/reports/global-energy-review-co2-emissions-in-2021-2.
The Company aims to invest in a diversified portfolio of
renewable energy infrastructure investments, such as hydropower
plants, wind and solar parks, across continental Europe and
Ireland. With the objective of providing investors with a
diversified portfolio of renewable assets, AER can deliver on its
investment objectives as well as contribute towards the green
economy. AER contributes to the following three UN Sustainable
Development Goals:
AER's Contribution to the UN Sustainable Development Goals
Contribution Towards
UN Sustainable
Goal Overview Development Goals
-------------------------- ------------------------------------------------------------ ----------------------
Ensure access to 7 AFFORDABLE AND
affordable, reliable, * AER's portfolio produces renewable energy, which CLEAN ENERGY
sustainable and modern contributes towards Europe's electricity mix.
energy for all.
* Renewable energy is a cost-effective source of energy
compared to other options.
* AER's investments in renewable assets help support
and encourage further investment in the industry.
-------------------------- ------------------------------------------------------------ ----------------------
Build resilient 9 INDUSTRY, INNOVATION
infrastructure, promote * AER targets renewable investments that are supported AND INFRUSTRUCTURE
inclusive and sustainable by high quality components and infrastructure to
industrialisation optimise the energy yield and subsequent return to
and foster innovation. investors.
* AER's investments help support the construction of
shared infrastructure (e.g. substations), which
enables the further expansion of renewable energy
sources.
* AER's Investment Adviser, Aquila Capital, is
responsible for monitoring and optimising the
Company's day-to-day asset performance. This process
also involves actively exploring how new technologies
and other forms of innovation can be utilised to
enhance asset performance and sustainability (energy
yield, O&M and asset life).
-------------------------- ------------------------------------------------------------ ----------------------
Take urgent action 13 CLIMATE ACTION
to combat climate * The Company's 463.8 MW portfolio powered
change and its impacts. approximately 133.9 thousand households and avoided
approximately 134.8 thousand tonnes of CO(2) e
emissions over the reporting period.(1) AER has
ambitious goals to expand its portfolio, which will
be accretive to further CO(2) e avoidance over time.
* As a signatory to the UN Principles for Responsible
Investments ("UN PRI"), the Company's Investment
Adviser has integrated ESG criteria all along its
investment process for real assets, which includes
considerations of climate change.
-------------------------- ------------------------------------------------------------ ----------------------
GRESB
GRESB is a global ESG benchmark for real estate and
infrastructure which synthesises Environmental, Social and
Governance ("ESG") data. Following the successful GRESB assessment
undertaken in the previous year, AER received 88 points, which was
above the industry average of 82 points. The Company has commenced
the GRESB assessment for the current year and has submitted all the
required information. The results of the assessment are expected to
be published in October 2023.
1. Actual AER contribution as at 30 June 2023. The CO(2)
equivalent avoidance, the average European households supplied and
household emissions are approximations and do not necessarily
reflect the exact impact of the renewable energy projects. The
cited sources of information are believed to be reliable and
accurate; however, the completeness, accuracy, validity and
timeliness of the information provided cannot be guaranteed and
Aquila Capital accepts no liability for any damages that may arise
directly or indirectly from the use of this information.
Spanish Solar PV ESG Initiatives
The natural environment around some of the Company's solar PV
parks is the Desierto de Tabernas National Park, situated to the
south -- east of Spain and representing the only desert in the
entire European continent. This constitutes a rich biodiversity of
environmental resources that is of particular geological interest.
Specialist advisers have been commissioned to implement
environmental measures to mitigate the impact of the solar PV
plants on the environment and create habitats for flora and fauna.
Several visits per month are made to implement the measures,
monitor their evolution and make necessary adjustments. Below is a
selection of closely monitored measures that have been implemented
across some of the Company's solar PV parks for local flora and
fauna.
Flora
- Translocation of rain-fed olive trees
- Regular maintenance measures and monitoring
- Planting of broom and palmetto trees to promote landscape
integration and the creation of biotopes appropriate for local
species
- Clearing of vegetation through sheep grazing
Fauna
- Drinking troughs, feeding throughs and perches were installed
in order to favour the local fauna
- A hunting fence was installed in order to protect wildlife living in the area
- Bird nest boxes were installed around the solar PV park,
specifically for the nesting of the lesser kestrel, common kestrel,
barn owl and little owl species
- A study was commissioned to analyse the degree of adaption of
bird species to the presence of the solar PV park, with special
emphasis on the lesser kestrel and Montagu's harrier species
- Stands for wild rabbits have been built in order to help the
breeding and permanence of this species
Desfina Reforestation
In May 2023, two thousand trees were planted in Greece's
Parnassos National Park. The project company will ensure their
maintenance and watering for the following three years. A wooden
cabin was also constructed in 2022 at the entrance of the park for
the benefit of the local Forestry Authority.
2. Social
Renewable energy projects have an inherent major positive impact
on the environment with their ability to decarbonise the energy
sector, aiding the Company in the transition to a low carbon
economy. With the European Green Deal boosting renewable energy
projects, investment into clean energy assets has accelerated over
recent years. With the increase in renewable energy deployment, the
pressure on land is growing as the need to expand carbon sinks and
protecting biodiversity is in direct conflict with agricultural and
renewable energy production.
Conflicts can arise when new renewable projects compete against
other types of land usage, such as residential housing,
recreational areas, agriculture and nature conservation, or when
they cause landscape disruptions. Engagement with local communities
is an integral part of the Company's investment philosophy. The
assets continue to support communities through contracting local
service providers, payment of local taxes, as well as lease
payments for utilisation of the land.
3. Governance
The independent Board of Directors is responsible for AER s
sustainability policy and its implementation, with the daily
operations being delegated to its independent AIFM, FundRock
Management Company (Guernsey) Limited 'FundRock'. FundRock monitors
environmental, social and governance risks, which are fully
integrated across every single stage of its investment process. The
Aquila Group publishes its own Sustainability Report, describing
the Investment Adviser's approach to sustainability within the
investment process. Aquila Capital regards integrity and diversity
as key pillars in its governance and it has been vital for the
growth and success of the Company. The Investment Adviser is fully
regulated and supervised by the Federal Financial Supervisory
Authority in Germany.
The Company was pleased to announce the appointment of Myrtle
Dawes as a non-executive Director on 1 September 2023, joining the
Board of Directors as a member of the Remuneration and Nomination
Committee and the Audit and Risk Committee. Myrtle, a chartered
chemical engineer, has over 30 years' experience in the energy
sector, both in the UK and overseas, covering leadership roles in
engineering, project management, technology and digital
transformation. Currently, she is CEO of the Net Zero Technology
Centre and non-executive Director at FirstGroup plc and the Centre
for Process Innovation. In 2017, Myrtle featured in Breaking the
Glass Ceiling and was selected as one of '100 Women to Watch' in
the Cranfield FTSE Board Report 2017. In 2021, she was recognised
by TE:100 as one of the 'Women of the Energy Transition'.
Diversity
The Board of Directors is appointed based on expertise and
merit, being mindful of the benefits generated by diversity. The
Board is comprised of members with different skills and
experiences, whilst endeavouring to comply with the Listing Rules
on diversity. The current Board is comprised of three men and two
women, all non-executive Directors who have a significant number of
years of experience in their relevant fields.
Additionally, the Investment Adviser is also mindful of the
benefits provided by diversification, both in terms of culture (its
employees comprise 56 different nationalities) and in terms of
gender (its gender ratio is 58% men and 42% women). Additionally,
27% of people in leadership positions are female, of which two,
Susanne Wermter (CEO Aquila Clean Energy) and Christine Brockwell
(CPO Aquila Clean Energy), are ranked in the 'Top 100 Women's Green
Fund Power List', honouring women working in wind power
worldwide.(1)
1. As at 31 December 2022.
AER Board
Men | 3
Women | 2
Investment Adviser:
Men | 58%
Women | 42%
56 - Different nationalities
Supply Chain Management
The Investment Adviser's membership in associations such as the
Global Infrastructure Investor Association ("GIIA") and the Global
Listed Infrastructure Organisation ("GLIO") accord it the
opportunity to lobby for human and labour rights along the value
chain of several manufacturers. In addition, membership in the
associations is also beneficial in highlighting the economic
interests of the Investment Adviser to the relevant
authorities.
The Investment Adviser takes a multi-faceted approach to the
mitigation of governance risks, limiting exposure to risks within
the supply chain. All EPC and O&M contracts are negotiated with
contractors operating in a country adhering to the European Union's
labour minimum standards. Any sourcing of raw materials,
components, equipment or services from suppliers domiciled in
countries linked to the use of forced labour is made with
guarantees that such components are not associated with human
rights violations.
Moreover, an in-house onboarding and screening process for
suppliers is in place to prevent and mitigate any risk of human
rights violations, including a pre-screening of counterparties in
terms of bad press risk and a fully-fledged Know Your Customer
("KYC") process. All counterparties are monitored by the Investment
Adviser according to internal compliance and procurement
policies.
Measures include the selection of geographies with strong
regulatory frameworks, comprehensive internal due diligence
processes that examine counterparties and their governance
frameworks, and the use of specialist advisers to conduct technical
and legal due diligence analyses at the project level. All
governance measures are audited by major audit firms on a regular
basis.
INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT
The Directors are required to provide an Interim Management
Report in accordance with the Financial Conduct Authority ("FCA")
Disclosure Guidance and Transparency Rules ("DTR"). The Chairman's
Statement and the Investment Adviser's Report in this Interim
Report provide details of the important events which have occurred
during the period and their impact on the financial statements. The
following statements on Related Party Transactions, going concern,
the Statement of Directors' Responsibilities, the Chairman's
Statement and Investment Adviser's Report, together constitute the
Interim Management Report for the Company for the six months ended
30 June 2023. The outlook for the Company for the remaining six
months of the year ending 31 December 2023 is discussed in the
Chairman's Statement and the Investment Adviser's Report.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company are
detailed in the Company's most recent Annual Report for the year
ended 31 December 2022, which can be found on the Company's website
at www.aquila-european-renewables.com. These remain unchanged
during the period under review. The key risks are summarised
below:
- Economic and Political Risk - The revenue and value of the
Company's investments may be affected by future changes in the
economic and political situation;
- Operational Risk - The risk that the portfolio underperforms
and, as a result, the target returns are not met over the longer
term. The risk that service providers to the Company underperform,
and as a result, impact the Company's performance, reporting or
reputation;
- Financial Risk - The risk that the valuations and underlying
assumptions used to value the investment portfolio are not a fair
reflection of the market, resulting in the investment portfolio
being over or under-valued;
- Compliance, Tax and Legal Risk - The failure to comply with
relevant regulatory changes, tax rules and obligations may result
in reputational damage or create a financial loss to the Company;
and
- Emerging Risk - Climate-related threats and a potential
financial crisis have been identified as emerging risks. As climate
change continues to become a reality, the chance that one of the
Company's sites is affected by a climate -- related event, such as
flooding or wildfires, becomes more likely. Furthermore, the
Company is likely to be subject to newly introduced regulation in
the fight against climate change.
Principal risks, including emerging risks, are mitigated and
managed by the Board through policy setting and regular reviews of
the Company's risk matrix by the Audit Committee to ensure that
procedures are in place with the intention of minimising the impact
of the above-mentioned risks. The Board relies on periodic reports
provided by the Alternative Investment Fund Manager, Investment
Adviser and Administrator regarding risks that the Company faces.
When required, experts will be employed to gather information,
including legal advisers and environmental advisers.
The Company's Annual Report for the period ending 31 December
2022 contains more detail on the Company's principal risks and
uncertainties, including the Board's ongoing process to identify,
and where possible mitigate, the risks.
The Board is of the opinion that these principal risks are
equally applicable to the remaining six months of the financial
year as they were to the six months being reported on.
Related Party Transactions
The Company's Investment Adviser, Aquila Capital
Investmentgesellschaft mbH, and Directors are considered related
parties under the Listing Rules. Details of the amounts paid to the
Company's Investment Adviser and the Directors during the period
are detailed in note 11 of this Interim Report which can be found
below.
Going Concern
The Directors have adopted the going concern basis in preparing
the financial statements. The following is a summary of the
Directors' assessment of the going concern status of the
Company.
The Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for at
least twelve months from the date of this document. In reaching
this conclusion, the Directors have considered the liquidity of the
Company's portfolio of investments as well as its cash position,
income and expense flows. The Company's net assets as at 30 June
2023 were EUR 403.3 million (31 December 2022: EUR 451.7 million).
As at 30 June 2023, the Company held EUR 4.1 million (31 December
2022: EUR 19.9 million) in cash and cash equivalent. The total
expense for the period ended 30 June 2023 was EUR 2.1 million (30
June 2022: EUR 2.3 million). At the date of approval of this
document, based on the aggregate of investments and cash held, the
Company has substantial operating expenses cover representing
approximately 1.0% (as at 31 December 2022: 1.1%) of average net
assets during the year.
As at 30 June 2023, the Company had approximately EUR 126.3
million of non-recourse debt (on a proportional basis) at the SPV
level and the Directors are satisfied that all key financial
covenants are forecast to continue to be complied with for at least
the forthcoming twelve-month period from the date of this
document.
The Company has a modest level of gearing representing 32.7% as
at 30 June 2023 of its Gross Asset Value, comprised of a RCF (which
has an undrawn limit of EUR 10.7 million) and non-recourse debt at
the asset level. The Company (via its subsidiaries, where
applicable) is in compliance with its covenants related to the RCF
and non-recourse debt. The Company has recently negotiated an
extension to its RCF, which now expires in April 2025. The Board
and advisers have analysed the covenants of the RCF and, based on
stress testing the Company's RCF covenants, significant headroom
exists in relation to both the Interest Coverage Ratio ("ICR") and
Loan to Value Ratios. For example, based on the Company's RCF
compliance certificate for the second quarter of 2023, forward cash
flows would have to reduce by over 23.2% in order to breach the
Company's ICR.
The major cash outflows of the Company are the payment of
dividends, costs relating to the acquisition of new investments and
payment due in respect of the settlement of shares purchased in
respect of the Company's buyback programme. The Directors are
confident that the Company has sufficient cash balances to fund its
commitments.
This assessment has included a detailed review of the issues
arising following the war in Ukraine; high volatility in commodity
prices; the windfall revenue clawback on inframarginal technologies
(e.g. solar PV, wind energy, nuclear and hydropower); other taxes
that currently face the Company's assets, as discussed in the
Chairman's Statement and Investment Adviser's Report which can be
found above; and the impact of climate-related events on the
Company's assets. The Directors are also satisfied that the Company
would continue to remain viable under downside scenarios, including
a decline in long-term production and power price forecasts. For
example, based on the guidance provided in the Company's February
2023 Investor Presentation, the Company expects its 2023 target
dividend to be fully covered.
As announced on 30 May 2023, the Board has proposed a further
opportunity to vote on the continuation of the Company during the
financial year ending 31 December 2024. This is expected to be
around September 2024. If the Continuation Resolution is not
passed, then according to the Company's articles, the Directors
shall within six months of such Continuation Resolution not being
passed, put proposals to Shareholders for the reconstruction,
reorganisation or liquidation of the Company. Accordingly, the
Directors expect that if the Continuation Resolution is not passed,
an event which the Directors consider to be unlikely, formulating
and implementing any such proposals would require the Company to
continue operations for a period of at least twelve months from the
date of approval of the Company's financial statements.
Statement of Directors' Responsibilities
The DTR of the FCA require the Directors to confirm their
responsibilities in relation to the preparation and publication of
the Interim Management Report and Financial Statements. The
Directors confirm to the best of their knowledge that:
- the condensed set of financial statements contained within the
Interim Report has been prepared in accordance with the
International Accounting Standard 34 - IAS 34 Interim Financial
Reporting; and
- the Interim Management Report, together with the Chairman's
Statement and Investment Manager's Report, includes a fair review
of the information required by 4.2.7R and 4.2.8R of the FCA
Disclosure Guidance and Transparency Rules.
The Interim Report has not been reviewed by the Company's
Auditors. The Interim Report was approved by the Board on 26
September 2023 and the above Responsibility Statement was signed on
its behalf by the Chairman.
Ian Nolan
Chairman
For and on behalf of the Board
26 September 2023
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2023
Six months ended 30 June 2023 Six months ended 30 June 2022
------------------------------------- --------------------------------------
(Unaudited) (Unaudited)
Revenue Capital Total Revenue Capital Total
Notes (EUR '000) (EUR '000) (EUR '000) (EUR '000) (EUR '000) (EUR '000)
-------------------------------- ----- ----------- ----------- ----------- ------------ ----------- -----------
Unrealised (losses)/gains on
investments - (24,091) (24,091) - 16,434 16,434
Net foreign exchange losses - (12) (12) - (5) (5)
Interest income 4 8,656 - 8,656 7,140 - 7,140
Dividend income 4 - - - 1,200 - 1,200
Investment advisory fees 5 (1,496) - (1,496) (1,522) - (1,522)
Other expenses (649) - (649) (779) - (779)
-------------------------------- ----- ----------- ----------- ----------- ------------ ----------- -----------
(Loss)/profit on ordinary
activities before finance costs
and taxation 6,511 (24,103) (17,592) 6,039 16,429 22,468
Finance costs - - - (99) - (99)
-------------------------------- ----- ----------- ----------- ----------- ------------ ----------- -----------
(Loss)/profit on ordinary
activities before taxation 6,511 (24,103) (17,592) 5,940 16,429 22,369
Taxation 7 - - - - - -
-------------------------------- ----- ----------- ----------- ----------- ------------ ----------- -----------
(Loss)/profit on ordinary
activities after taxation 6,511 (24,103) (17,592) 5,940 16,429 22,369
-------------------------------- ----- ----------- ----------- ----------- ------------ ----------- -----------
Return per Ordinary Share
(cents) 6 1.64 (6.07) (4.43) 1.46 4.03 5.49
-------------------------------- ----- ----------- ----------- ----------- ------------ ----------- -----------
Return per Ordinary Share -
diluted (cents) 6 1.64 (6.07) (4.43) 1.46 4.03 5.49
-------------------------------- ----- ----------- ----------- ----------- ------------ ----------- -----------
The total column of the Condensed Statement of Comprehensive
Income is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
during the period.
Return on ordinary activities after taxation is also the 'total
comprehensive income for the period .
The notes below are an integral part of these financial
statements.
CONDENSED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
As at As at
30 June 31 December
2023 2022
(Unaudited) (Audited)
Notes (EUR '000) (EUR '000)
------------------------------------------------- ----- ----------- -----------
Fixed assets
Investments at fair value through profit or loss 3 400,737 428,641
------------------------------------------------- ----- ----------- -----------
Current assets
Trade and other receivables 38 5,630
Cash and cash equivalents 4,128 19,893
------------------------------------------------- ----- ----------- -----------
4,166 25,523
------------------------------------------------- ----- ----------- -----------
Creditors: amounts falling due within one year
Trade and other creditors (1,647) (2,514)
------------------------------------------------- ----- ----------- -----------
(1,647) (2,514)
------------------------------------------------- ----- ----------- -----------
Net current assets 2,519 23,009
------------------------------------------------- ----- ----------- -----------
Net assets 403,256 451,650
------------------------------------------------- ----- ----------- -----------
Capital and reserves: equity
Share capital 8 3,874 4,082
Share premium 255,643 255,643
Special distributable reserve 101,556 125,082
Capital reserve 41,515 65,618
Revenue reserve 668 1,225
------------------------------------------------- ----- ----------- -----------
Total Shareholders' funds 403,256 451,650
------------------------------------------------- ----- ----------- -----------
Net assets per Ordinary Share (cents) 9 104.09 110.64
------------------------------------------------- ----- ----------- -----------
Approved by the Board of Directors and authorised for issue on
26 September 2023 and signed on its behalf by:
Ian Nolan
Chairman
Company number: 11932433.
The notes below are an integral part of these financial
statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2023
Special
For the six months Share Share distributable Capital Revenue
ended 30 June 2023 capital premium reserve reserve reserve Total
(Unaudited) Notes (EUR '000) (EUR '000) (EUR '000) (EUR '000) (EUR '000) (EUR '000)
---------------------------------- ----- ---------- ---------- -------------- ---------- ----------- ----------
Opening equity as at 1 January
2023 4,082 255,643 125,082 65,618 1,225 451,650
Share buybacks 8 (208) - (19,883) - - (20,091)
Loss for the period - - - (24,103) 6,511 (17,592)
Dividend paid 10 - - (3,643) - (7,068) (10,711)
---------------------------------- ----- ---------- ---------- -------------- ---------- ----------- ----------
Closing equity as at 30 June 2023 3,874 255,643 101,556 41,515 668 403,256
---------------------------------- ----- ---------- ---------- -------------- ---------- ----------- ----------
Special
For the six months Share Share distributable Capital Revenue
ended 30 June 2022 capital premium reserve reserve reserve Total
(Unaudited) Notes (EUR '000) (EUR '000) (EUR '000) (EUR '000) (EUR '000) (EUR '000)
---------------------------------- ----- ---------- ---------- ------------- ----------- ----------- ----------
Opening equity as at 1 January
2022 4,069 254,388 134,393 23,853 740 417,443
Shares issued in period 8 13 1,313 - - - 1,326
Share issue costs - (61) - - - (61)
Profit for the period - - - 16,429 5,940 22,369
Dividend paid 10 - - - - (10,447) (10,447)
---------------------------------- ----- ---------- ---------- ------------- ----------- ----------- ----------
Closing equity as at 30 June 2022 4,082 255,640 134,393 40,282 (3,767) 430,630
---------------------------------- ----- ---------- ---------- ------------- ----------- ----------- ----------
The notes below are an integral part of these financial
statements.
CONDENSED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2023
Six months Six months
ended ended
30 June 30 June 2022
2023
(Unaudited) (Unaudited)
Notes (EUR '000) (EUR '000)
----------------------------------------------------------------------- ----- ----------- ------------
Operating activities
(Loss)/profit on ordinary activities before finance costs and taxation (17,592) 22,468
Adjustment for unrealised loss/(profit) on investments 24,091 (16,434)
Decrease/(increase) in trade and other receivables 5,592 (1,647)
(Decrease)/increase in other creditors (867) 15,784
----------------------------------------------------------------------- ----- ----------- ------------
Net cash from operating activities 11,224 20,171
----------------------------------------------------------------------- ----- ----------- ------------
Investing activities
Purchase of investments 3 - (48,350)
Repayments during the period 3 3,813 1,459
----------------------------------------------------------------------- ----- ----------- ------------
Net cash flow from/(used in) investing activities 3,813 (46,891)
----------------------------------------------------------------------- ----- ----------- ------------
Financing activities
Proceeds of share issues 8 - 1,326
Share issue costs - (61)
Share buybacks (20,091) -
Dividend paid (10,711) (10,447)
Finance costs - (99)
----------------------------------------------------------------------- ----- ----------- ------------
Net cash used in financing activities (30,802) (9,281)
----------------------------------------------------------------------- ----- ----------- ------------
Decrease in cash (15,765) (36,001)
----------------------------------------------------------------------- ----- ----------- ------------
Cash and cash equivalents at start of period 19,893 94,275
----------------------------------------------------------------------- ----- ----------- ------------
Cash and cash equivalents at end of period 4,128 58,274
----------------------------------------------------------------------- ----- ----------- ------------
The notes below are an integral part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2023
1. General Information
Aquila European Renewables plc (formerly Aquila European
Renewables Income Fund plc; "AER", 'the Company') is a public
company limited by shares, incorporated in England and Wales on 8
April 2019 with registered number 11932433. The Company is
domiciled in England and Wales. The Company is a closed -- ended
investment company with an indefinite life. The Company commenced
its operations on 5 June 2019 when the Company's Ordinary Shares
were admitted to trading on the London Stock Exchange. The
Directors intend, at all times, to conduct the affairs of the
Company so as to enable it to qualify as an investment trust for
the purposes of section 1158 of the Corporation Tax Act 2010, as
amended.
The registered office and principal place of business of the
Company is 6th Floor, 125 London Wall, London, EC2Y 5AS.
The Company's investment objective is to generate stable
returns, principally in the form of income distributions, by
investing in a diversified portfolio of Renewable Energy
Infrastructure Investments.
The Company's Investment Adviser is Aquila Capital
Investmentgesellschaft mbH, authorised and regulated by the German
Federal Financial Supervisory Authority.
FundRock Management Company (Guernsey) Limited (formerly Sanne
Fund Management (Guernsey) Limited) acts as the Company's
Alternative Investment Fund Manager for the purposes of Directive
2011/61/EU of the Alternative Investment Fund Managers
Directive.
Apex Listed Companies Services (UK) Limited (formerly Sanne Fund
Services (UK) Limited) provides administrative and company
secretarial services to the Company under the terms of an
administration agreement between the Company and the
Administrator.
2. Basis of Preparation
The condensed financial statements included in this Interim
Report have been prepared in accordance with IAS 34 Interim
Financial Reporting. The accounting policies, critical accounting
judgements, estimates and assumptions are consistent with those
used in the latest audited financial statements to 31 December 2022
and should be read in conjunction with the Company's annual audited
financial statements for the period ended 31 December 2022. The
financial statements for the year ended 31 December 2022 have been
prepared in accordance with the UK-adopted International Accounting
Standards in conformity with the requirements of the Companies Act
2006. The financial statements have been prepared on the historical
cost basis, as modified for the measurement of certain financial
instruments at fair value through profit or loss.
The interim financial statements have also been prepared as far
as is relevant and applicable to the Company in accordance with the
Statement of Recommended Practice ("SORP") issued by the
Association of Investment Companies ("AIC") in July 2022.
These condensed financial statements do not include all
information and disclosures required in the annual financial
statements and should be read in conjunction with the Company's
annual financial statements of 31 December 2022. The audited annual
accounts for the year ended 31 December 2022 have been delivered to
Companies House. The audit report thereon was unmodified.
These financial statements are presented in euro (EUR), which is
the currency of the primary economic environment the Company
operates in, and are rounded to the nearest thousand, unless
otherwise stated.
Accounting for Subsidiary
The Company owns 100.0% of its subsidiary Tesseract Holdings
Limited ("THL"), whose registered office and principal place of
business is Leaf B, 20th Floor, Tower 42, Old Broad Street, London,
England, EC2N 1HQ. The Company has acquired Renewable Energy
Infrastructure Investments (the SPVs) through its investment in the
HoldCo. The Company finances the HoldCo through a mix of loan
investments and equity. The loan investment finance represents
Shareholder loans (the "Shareholder loans") provided by the Company
to HoldCo. The Company meets the definition of an investment entity
as described by IFRS 10. Under IFRS 10, an investment entity is
required to hold subsidiaries at fair value through profit or loss
and therefore does not consolidate the subsidiary.
The HoldCo is also an investment entity, and as described under
IFRS 10, values its SPVs investments at fair value through profit
or loss.
Going Concern
The Directors have adopted the going concern basis in preparing
the financial statements. Details of the Directors assessment of
the going concern status of the Company, which considered the
adequacy of the Company s resources and the impact of risks and
uncertainties, including the Company's continuation vote which the
Board have proposed will be placed before Shareholders in September
2024, are provided in the Interim Management Report which can be
found above.
Segmental Reporting
The chief operating decision-maker, which is the Board, is of
the opinion that the Company is engaged in a single segment of
business, being investment in renewable energy infrastructure
assets to generate investment returns while preserving capital. The
financial information used by the Board to manage the Company
presents the business as a single segment.
Critical Accounting Judgements, Estimates and Assumptions
The preparation of the financial statements requires the
application of estimates and assumptions, which may affect the
results reported in the financial statements. Estimates, by their
nature, are based on judgement and available information.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying value of assets and
liabilities are those used to determine the fair value of the
investments, as disclosed in note 3 to the financial
statements.
The Directors have concluded that the Company meets the
definition of an investment entity as defined in IFRS 10.
This conclusion involved a degree of judgement and assessment as
to whether the Company met the criteria outlined in the accounting
standards.
The key assumptions that have a significant impact on the
carrying value of the Company s underlying investments in the SPVs
are the discount rates, useful life of the assets, the rate of
inflation, the price at which the power and associated benefits can
be sold, the amount of electricity the assets are expected to
produce and operating costs of the SPVs.
3. Investments at Fair Value through Profit and Loss
As at As at
30 June 31 December
2023 2022
(Unaudited) (Audited)
----------- --------------
Investments Investments
at at
Fair Value Fair Value
through through Profit
Profit
or Loss or Loss
(EUR 000) (EUR 000)
----------------------------------------------------------------------------------------- ----------- --------------
(a) Summary of valuation
Analysis of closing balance:
Investments held at fair value through profit or loss 400,737 428,641
----------------------------------------------------------------------------------------- ----------- --------------
Total investments 400,737 428,641
(b) Movements during the period/year
Opening balance of investments, at cost 362,978 293,068
Purchases at cost - 71,369
Repayments during the period/year (3,813) (1,459)
----------------------------------------------------------------------------------------- ----------- --------------
Cost of investments 359,165 362,978
----------------------------------------------------------------------------------------- ----------- --------------
Revaluation of investments to fair value:
Unrealised gains in fair value of investments 41,572 65,663
----------------------------------------------------------------------------------------- ----------- --------------
Balance of capital reserve - investments held 41,572 65,663
----------------------------------------------------------------------------------------- ----------- --------------
Fair value of investments 400,737 428,641
----------------------------------------------------------------------------------------- ----------- --------------
(c) (Loss)/gains on investments in the period/year (per Statement of Comprehensive
Income)
Movement on unrealised valuation of investments held (24,091) 41,778
----------------------------------------------------------------------------------------- ----------- --------------
(Loss)/gains on investments (24,091) 41,778
----------------------------------------------------------------------------------------- ----------- --------------
Fair Value Investments
The Investment Adviser has carried out fair-market valuations of
the SPV investments at 30 June 2023 and the Directors have
satisfied themselves as to the methodology used, the discount rates
and key assumptions applied, and the valuation. All SPV investments
are at fair value through profit or loss and are valued using the
IFRS 13 framework for fair value measurement.
The key assumptions that have a significant impact on the
carrying value of the Company s underlying investments in SPVs are
the discount rates, useful life of the assets, the rate of
inflation, the price at which the power and associated benefits can
be sold, the amount of electricity the assets are expected to
produce and operating costs of the SPVs.
The discount factors applied to the cash flows are reviewed
annually by the Investment Adviser to ensure they are at the
appropriate level. The weighted average valuation discount rate
applied to calculate the SPV valuation is 7.2% as at 30 June 2023
(31 December 2022: 7.2%).
Useful lives are based on the Investment Adviser s estimates of
the period over which the assets will generate revenue, which are
periodically reviewed for continued appropriateness. The assumption
generally used for the useful life of the wind farms is 25 to 30
years and solar PV is 40 years. The actual useful life may be a
shorter or longer period depending on the actual operating
conditions experienced by the asset.
The operating costs of the operating companies are frequently
partly or wholly subject to indexation, and an assumption is made
that inflation will increase at a long-term rate. The SPV's
valuation assumes long-term inflation rates according to long-term
central bank targets.
The price at which the output from the generating assets is sold
is a factor of both wholesale electricity prices and the revenue
received from the government support regime. Future power prices
are estimated using external third-party forecasts, which take the
form of specialist consultancy reports. The future power price
assumptions are reviewed as and when these forecasts are updated.
There is an inherent uncertainty in future wholesale electricity
price projection. Power prices used in the valuation are based on
market forward pricing, and then a rolling average of capture
rates.
The following assumptions were used in the valuations:
As at As at
30 June 31 December
2023 2022
Metric (Unaudited) (Audited)
------------------------------------------- ------------ ----------- -----------
Weighted
Discount rate average 7.2% 7.2%
------------------------------------------- ------------ ----------- -----------
Weighted
Long-term inflation average 2.0% 2.0%
------------------------------------------- ------------ ----------- -----------
Remaining asset life (weighted average)(1) Wind energy 22 years 22 years
Solar PV 39 years 29 years
Hydropower 10 years 10 years
-------------------------------------------------------- ----------- -----------
1. Remaining asset life based on net full load years, does not
consider any potential asset life extensions.
Fair Value Measurements
IFRS 13 requires disclosure of fair value measurement by level.
The level of fair value hierarchy within the financial assets or
financial liabilities is determined on the basis of the lowest
level input significant to the fair value measurement. Financial
assets and financial liabilities are classified in their entirety
into only one of the following three levels:
Level 1
The unadjusted quoted price in an active market for identical
assets or liabilities that the entity can access at the measurement
date.
Level 2
Inputs other than quoted prices included within Level 1 that are
observable (i.e. developed using market data) for the asset or
liability, either directly or indirectly.
Level 3
Inputs that are unobservable (i.e. for which market data is
unavailable) for the asset or liability.
The fair value of the Company s equity and the Shareholder loans
investments in HoldCo are determined by the underlying fair values
of the SPV investments, which are not traded and contain
unobservable inputs. As such, the Company s equity and the
Shareholder loans investments in HoldCo have been classified as
Level 3.
The classification of the Company s investments held at fair
value is detailed in the table below:
As at 30 June 2023
(Unaudited)
------------------------------------------
Level 1 Level 2 Level 3 Total
(EUR 000) (EUR 000) (EUR 000) (EUR 000)
-------------------------------------------------- --------- --------- --------- ---------
Investments at fair value through profit and loss - - 400,737 400,737
- - 400,737 400,737
-------------------------------------------------- --------- --------- --------- ---------
As at 31 December 2022
(Audited)
------------------------------------------
Level 1 Level 2 Level 3 Total
(EUR 000) (EUR 000) (EUR 000) (EUR 000)
-------------------------------------------------- --------- --------- --------- ---------
Investments at fair value through profit and loss - - 428,641 428,641
- - 428,641 428,641
-------------------------------------------------- --------- --------- --------- ---------
Due to the nature of the investments, they are always expected
to be classified as Level 3. There have been no transfers between
levels during the period ended 30 June 2023 (31 December 2022:
nil).
The movement on the Level 3 unquoted investments during the
period is shown below:
As at As at
30 June 31 December
2023 2022
(Unaudited) (Audited)
(EUR 000) (EUR 000)
-------------------------------------------- ----------- -----------
Opening balance 428,641 316,953
Additions during the period/year - 71,369
Repayments during the period/year (3,813) (1,459)
Unrealised gains on investments adjustments (24,091) 41,778
-------------------------------------------- ----------- -----------
Closing balance 400,737 428,641
-------------------------------------------- ----------- -----------
4. Income from Investments
Six months Six months
ended ended
30 June 30 June 2022
2023
(Unaudited) (Unaudited)
(EUR 000) (EUR 000)
--------------------------------------- ----------- ------------
Interest income from Shareholder loans 8,624 7,140
Bank interest income 32 -
Dividend income - 1,200
--------------------------------------- ----------- ------------
Total income 8,656 8,340
--------------------------------------- ----------- ------------
5. Investment Advisory Fees
Six months ended 30 June 2023 Six months ended 30 June 2022
(Unaudited) (Unaudited)
---------------------------------- ----------------------------------
Revenue Capital Total Revenue Capital Total
(EUR '000) (EUR '000) (EUR '000) (EUR '000) (EUR '000) (EUR '000)
------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Investment advisory fees 1,496 - 1,496 1,522 - 1,522
------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Under the Investment Advisory Agreement, the following fee is
payable to the Investment Adviser:
a) 0.75 % per annum of NAV (plus VAT) of the Company up to EUR
300.0 million;
b) 0.65 % per annum of NAV (plus VAT) of the Company between EUR
300.0 million and EUR 500.0 million; and
c) 0.55 % per annum of NAV (plus VAT) of the Company above EUR
500.0 million.
During the first two years of its appointment, the Investment
Adviser has undertaken to apply its fee (net of any applicable tax)
in subscribing for, or acquiring, the Company's Ordinary Shares. If
the Ordinary Shares are trading at a premium to the prevailing NAV,
the Company will issue new Ordinary Shares to the Investment
Adviser. If, however, the Ordinary Shares are trading at a discount
to the prevailing NAV at the relevant time, no new Ordinary Shares
will be issued by the Company and instead the Company will instruct
its broker to acquire Ordinary Shares to the value of fee due in
the relevant period. The current Investment Adviser fee arrangement
with Aquila Capital Investmentgesellschaft mbH was extended whereby
the Investment Adviser fee is fully paid in the shares of the
Company for additional two years until 30 June 2023.
The Investment Adviser is also entitled to be reimbursed for
certain expenses under the Investment Advisory Agreement. These
include out-of-pocket expenses properly incurred by the Investment
Adviser in providing services, including transactional,
organisational, operating or travel expenses.
Share-based Payments
The Company settled investment advisory fees by issuing Ordinary
Shares and purchasing Ordinary Shares in the market. The Company
has issued/purchased the following shares to settle investment
advisory fees for the period under review:
Investment Fair value
advisory of issue Date of
In respect of the period to 30 June 2023 (Unaudited) fees (EUR) price (EUR Number of transaction Issued/
cents) shares Purchased
------------------------------------------------------ ----------- ----------- --------- ------------- ----------
31 March 2023 767,833 98.86 771,695 18 May 2023 Purchased
7 August
30 June 2023 728,290 87.00 831,701 2023 Purchased
------------------------------------------------------ ----------- ----------- --------- ------------- ----------
Investment Fair value
advisory of Number of Date of transaction Issued/
In respect of the period to 30 fees issue price shares Purchased
June 2022 (Unaudited) (EUR) (EUR cents)
--------------------------------- ---------- ------------ ----------- --------------------- -----------
31 March 2022 566,465 102.11 554,773 1 June 2022 Issued
31 March 2022 183,233 103.76 176,300 1 June 2022 Purchased
8 August
30 June 2022 772,650 101.00 760,053 2022 Purchased
--------------------------------- ---------- ------------ ----------- --------------------- -----------
6. Earnings/(Loss) Per Ordinary Share
Earnings per share is based on the loss for the period of EUR
17,592,000 (30 June 2022: profit of EUR 22,369,000) attributable to
the undiluted weighted average number of Ordinary Shares in
circulation of 397,096,237 (30 June 2022: 407,601,334) and the
diluted weighted average number of Ordinary Shares in circulation
of 397,096,237 (30 June 2022: 408,887,627) in the period to 30 June
2023. Revenue profit and capital loss are EUR 6,511,000 (30 June
2022: EUR 5,940,000 profit) and EUR 24,103,000 (30 June 2022: EUR
16,429,000 profit), respectively.
Number of Ordinary
Shares
------------------------
As at 30 As at 30
June June
2023 2022
Weighted Average Number of Shares Used as the Denominator (Unaudited) (Unaudited)
-------------------------------------------------------------------------------------------- ----------- -----------
Weighted average number of Ordinary Shares used as the denominator in calculating basic
earnings
per share 397,096,237 407,601,334
-------------------------------------------------------------------------------------------- ----------- -----------
The effect of settled investment advisory fees by issuing Ordinary Shares - 1,286,293
Weighted average number of Ordinary Shares and potential Ordinary Shares used as the
denominator
in calculating diluted earnings per share 397,096,237 408,887,627
-------------------------------------------------------------------------------------------- ----------- -----------
7. Taxation
Six months ended 30 June 2023 Six months ended 30 June 2022
(Unaudited) (Unaudited)
----------------------------------- -----------------------------------
Revenue Capital Total Revenue Capital Total
(EUR '000) (EUR '000) (EUR '000) (EUR '000) (EUR '000) (EUR '000)
------------------------------- ---------- ---------- ----------- ----------- ---------- ----------
Corporation tax - - - - - -
------------------------------- ---------- ---------- ----------- ----------- ---------- ----------
Total tax charge for the period - - - - - -
------------------------------- ---------- ---------- ----------- ----------- ---------- ----------
Investment companies that have been approved by HM Revenue &
Customs under section 1158 of the Corporation Tax Act 2010 are
exempt from tax on capital gains. Due to the Company's status as an
investment trust, and the intention to continue meeting the
conditions required to obtain approval in the foreseeable future,
the Company has not provided for deferred tax on any capital gains
or losses arising on the revaluation of investments.
8. Share Capital
As at 30 June 2023 As at 31 December
2022
(Unaudited) (Audited)
------------------------ ------------------------
No. of shares (EUR 000) No. of shares (EUR 000)
--------------------------------------------------------------- ------------- --------- ------------- ---------
Allotted, issued and fully paid Ordinary Shares of 1 cent each 408,225,705 4,082 408,225,705 4,082
Shares bought back and held in treasury (20,823,043) (208) - -
--------------------------------------------------------------- ------------- --------- ------------- ---------
Total 387,402,662 3,874 408,225,705 4,082
--------------------------------------------------------------- ------------- --------- ------------- ---------
There were no shares issued during the six months period to 30
June 2023.
On 3 February 2022, the Company issued 731,520 Ordinary Shares
to the Company s Investment Adviser in relation to advisory fees
payable for the period ended 31 December 2021. In addition, on 9
June 2022, the Company issued a further 554,773 Ordinary Shares to
the Company s Investment Adviser in relation to advisory fees
payable for the period ended 31 March 2022.
During the period under review, the Company purchased for
treasury a total of 20,823,043 Ordinary Shares at an aggregate cost
of EUR 20,091,000 (including stamp duty and other fees) at an
average price per Ordinary Share of 95.9 cents. There were no
shares purchased for treasury during the year to 31 December
2022.
9. Net Assets Per Ordinary Share
Net assets per Ordinary Share as at 30 June 2023 is based on EUR
403,256,000 (31 December 2022: EUR 451,650,000) of net assets of
the Company attributable to the Ordinary Shares in issue as at 30
June 2023 of 387,402,662 (31 December 2022: 408,225,705).
10. Dividend Paid
Six months ended Six months ended
30 June 2023 30 June 2022
(Unaudited) (Unaudited)
----------------------- -----------------------
Cents per Cents per
Ordinary Total Ordinary Total
Total dividends paid in the period Share (EUR '000) Share (EUR '000)
-------------------------------------------------------------------- --------- ------------ --------- ------------
31 December 2022 interim - paid 17 March 2023 (2022: 11 March 2022) 1.3125c 5,335 1.2500c 5,096
31 March 2023 interim - paid 23 June 2023 (2022: 17 June 2022) 1.3775c 5,376 1.3125c 5,351
-------------------------------------------------------------------- --------- ------------ --------- ------------
Total 2.6900c 10,711 2.5625c 10,447
-------------------------------------------------------------------- --------- ------------ --------- ------------
The dividend relating to the period ended 30 June 2023, which is
the basis on which the requirements of section 1159 of the
Corporation Tax Act 2010 are considered, is detailed below:
Six months ended Six months ended
30 June 2023 30 June 2022
(Unaudited) (Unaudited)
----------------------- -----------------------
Cents per Cents per
Ordinary Total Ordinary Total
Total dividends declared in the period Share (EUR '000) Share (EUR '000)
31 March 2023 interim - paid 23 June 2023 (2021: 17 June 2022) 1.3775c 5,376 1.3125c 5,351
30 June 2023 interim - paid 8 September 2023 (2021: 2 September
2022) 1.3775c 5,308 1.3125c 5,353
-------------------------------------------------------------------- --------- ------------ --------- ------------
Total 2.7550c 10,684 2.6250c 10,704
-------------------------------------------------------------------- --------- ------------ --------- ------------
11. Transactions with the Investment Adviser and Related Party
Transactions
AIFM fees for the period ended 30 June 2023 amount to EUR 58,778
(30 June 2022: EUR 63,132). As at 30 June 2023, the fee outstanding
to the AIFM was EUR 23,552 (30 June 2022: EUR 9,832). The AIFM,
Company Secretary and Administrator are part of the same PraxisIFM
Group which was acquired by Sanne Group plc, which was then
subsequently acquired by Apex Group. The Company Secretary and
Administrator fees for the period ended 30 June 2023 amount to EUR
123,774 (30 June 2022: EUR 134,000).
Fees payable to the Investment Adviser are shown in the Income
Statement. As at 30 June 2023, the fee outstanding to the Manager
was EUR 728,282 (30 June 2022: EUR 772,798).
Fees are payable to the Directors for the year to 31 December
2022 at an annual rate of EUR 75,000 to the Chairman, EUR 50,000 to
the Chair of the Audit and Risk Committee and EUR 43,000 to the
other Directors. Directors' fees paid during the year were EUR
169,000. With effect from 1 January 2023, fees were increased by 5%
for Mr MacLellan, Dr Rodrigues and Mr MacRitchie. With effect from
1 January 2023, fees were paid at an annual rate of EUR 75,000 to
the Chairman, EUR 52,500 to the Chair of the Audit and Risk
Committee and EUR 45,150 to the other Directors.
During the period, the Company advanced Shareholder loans to
HoldCo of EUR nil (30 June 2022: EUR 48,350,000). The accrued
interest and the Shareholder loans outstanding at the period end
were EUR 244,638,000 (30 June 2022: EUR 247,284,518).
The Directors had the following shareholdings in the Company,
all of which were beneficially owned.
Ordinary Ordinary
Shares Shares
as at as at
30 June 31 December
2023 2022
(Unaudited) (Audited)
------------------- ----------- -----------
Ian Nolan 150,000 100,000
David MacLellan 125,000 75,000
Kenneth MacRitchie 50,000 50,000
Patricia Rodrigues 50,000 50,000
------------------- ----------- -----------
12. Commitments and Contingencies
As at 30 June 2023, the Company's remaining outstanding
commitment is a EUR 1.3 million milestone payment associated with
the Guillena project (one of two assets within the Greco
portfolio). This payment was made upon receipt of the Provisional
Acceptance Certificate ("PAC") in September 2023, after the
reporting period, and was funded out of operating cash flows from
the Greco portfolio. The Company did not have any new investments
or capital commitments during the first six months of 2023 and
continues to maintain investment discipline when assessing new
investment opportunities.
13. Distributable Reserves
The Company's distributable reserves consist of the special
reserve and revenue reserve. Capital reserve represents unrealised
investments and as such is not distributable.
The revenue reserve is distributable. The amount of the revenue
reserve that is distributable is not necessarily the full amount of
the reserve as disclosed within these financial statements of EUR
668,000 as at 30 June 2023 (31 December 2022: EUR 1,225,000).
14. Subsidiaries, Associates and Other Entities
The following table shows subsidiaries of the Company. As the
Company is regarded as an investment entity as referred to in note
2, these subsidiaries have not been consolidated in the preparation
of the financial statements.
Profit/(Loss)
Profit/(Loss) for the year Total assets
for the period ended Total assets balances
as at
Subsidiary ended 31 December balances 31 December
entity as at
name and Effective Country of 30 June 2023 2022 30 June 2023 2022
registered ownership Investment incorporation (EUR million) (EUR million) (EUR million) (EUR million)
address %
-------------- --------- -------------- -------------- -------------- ------------- ------------- -------------
Tesseract
Holdings
Limited Leaf
B, 20th HoldCo
Floor, Tower Subsidiary
42 Old Broad entity, owns
Street underlying
London EC2N SPV
1HQ 100.0 investments United Kingdom (28.5) 43.0 156.1 180.2
-------------- --------- -------------- -------------- -------------- ------------- ------------- -------------
The following table shows the investments held via SPVs which
are held by Tesseract Holdings Limited, the Company's wholly owned
subsidiary.
Profit/(Loss)for
Profit/(Loss) the year Total
for the ended Total assets assets
period 31 December balances balances
Effective Country of ended 2022 as at 30 as at 31
ownership Activity incorporation 30 June (EUR million) June 2023 December
Subsidiary entity % 2023 (EUR (EUR million) 2022
name and million) (EUR
registered address million)
------------------- ---------- ---------- -------------- -------------- ---------------- -------------- ---------
Holmen II Wind Park Subsidiary
ApS entity,
Københavnsvej owns
81 investment
4000 Roskilde in Holmen
Denmark 100.0 II Denmark 9.9 DKK 4.3 182.8 DKK 27.2
------------------- ---------- ---------- -------------- -------------- ---------------- -------------- ---------
Aalto Wind No 2
Ltd. Oy
c/o Intertrust
(Finland) Oy Subsidiary
Bulevardi 1, 6th entity,
floor owns
FI-00100 Helsinki, investment
Finland 100.0 in Olhava Finland 1.1 (0.0) 48.6 53.0
------------------- ---------- ---------- -------------- -------------- ---------------- -------------- ---------
Prettysource Lda Subsidiary
Avenida Fontes entity,
Pereira de Melo, owns
n. 14 investment
11. floor, 1050 in Benfica
121 Lisbon 100.0 III Portugal 0.0 0.1 4.4 4.2
------------------- ---------- ---------- -------------- -------------- ---------------- -------------- ---------
Astros Irreverentes
Unipessoal Lda Subsidiary
Avenida Fontes entity,
Pereira de Melo, owns
n. 14 investment
11. floor, 1050 in Benfica
121 Lisbon 100.0 III Portugal 0.0 0.1 4.4 4.2
------------------- ---------- ---------- -------------- -------------- ---------------- -------------- ---------
Contrate o Sol Subsidiary
Unipessoal Lda entity,
Rua Filipe Folque owns
no. 10J, 2 Dto, investment
1050-113 in Benfica
Lisbon 100.0 III Portugal 0.0 0.2 2.1 2.1
------------------- ---------- ---------- -------------- -------------- ---------------- -------------- ---------
Argeo Solar S.L.
Paseo de la Subsidiary
Castellana entity,
259D, 14S-15, owns
Madrid investment
Spain 100.0 in Albeniz Spain (1.4) (1.7) 37.5 40.2
------------------- ---------- ---------- -------------- -------------- ---------------- -------------- ---------
Vector Aioliki Subsidiary
Desfinas S.A. entity,
Salaminos Str. 20 owns
15124 Maroussi investment
Attica, Greece 89.0 in Desfina Greece 0.3 2.2 52.4 56.7
------------------- ---------- ---------- -------------- -------------- ---------------- -------------- ---------
Ega Suria S.L. Subsidiary
Paseo de la entity,
Castellana 259D owns
Floors 14 and 15 investment
28046 Madrid 100.0 in Tiza Spain 0.4 0.4 27.9 24.1
------------------- ---------- ---------- -------------- -------------- ---------------- -------------- ---------
Azalent Investment
S.L. Subsidiary
Paseo de la entity,
Castellana 259D owns
Floors 14 and 15 investment
28046 Madrid 100.0 in Greco Spain 0.1 (0.4) 99.5 52.4
------------------- ---------- ---------- -------------- -------------- ---------------- -------------- ---------
Svindbaek Vindkraft Subsidiary
HoldCo ApS entity,
Gyngemose Parkvej owns
50 investment
2860 Søborg in
2860 Søborg 100.0 Svindbaek Denmark 0.4 2.1 36.9 37.5
------------------- ---------- ---------- -------------- -------------- ---------------- -------------- ---------
The following table shows associates of the Company. The
Company's investments in associates are held through HoldCo.
Profit/(Loss)
Profit/(Loss) for the Total assets
year
for the ended Total assets balances
period as at
Associate ended 31 December balances 31 December
entity as at
name and Effective Country 30 June 2022 30 June 2022
of 2023 2023
registered ownership Activity incorporation (EUR million) (EUR million) (EUR million) (EUR million)
address %
--------------------- --------- ---------- ------------- ------------- ------------- ------------- -------------
Palea Solar
Farm
Ourique S.A
Avenida Fontes Associate
Pereira de entity,
Melo, owns
no. 14, 11. equity
Andar investment
1050-121 in
Lisbon Portugal 50.0 Ourique Portugal 0.5 (0.4) 51.7 51.3
--------------------- --------- ---------- ------------- ------------- ------------- ------------- -------------
Midtfjellet 25.9 Associate Norway (9.7) NOK 132.0 NOK 958.9 NOK 1,069.7
Vindkraft entity, NOK
AS owns
Sandvikvågvegen equity
45 investment
N-5419 Fitjar, in Tesla
Norway
--------------------- --------- ---------- ------------- ------------- ------------- ------------- -------------
As disclosed in note 3, the Company finances the HoldCo through
a Shareholder loan and equity. The Shareholder loan accrues at an
interest rate of 7.0%.
HoldCo finances its SPV investments through a mix of Shareholder
loans and equity. The Shareholder loans accrue at an interest rate
range of 2.5% to 9.75%.
There are no restrictions on the ability of the Company s
subsidiaries and associates entities to transfer funds in the form
of interest and dividends.
15. Post Balance Sheet Events
Share Buyback Programme
Since the period end and as at 19 September 2023, being the
latest practical date prior to the release of these accounts, the
Company had purchased for treasury a total of 6 million Ordinary
Shares at an aggregate price of EUR 5.1 million at an average price
per Ordinary share of 85.0 cents.
New Board Member
On 1 September 2023, Myrtle Dawes was appointed as an additional
Board member.
16. Status of this Report
These interim financial statements are not the Company s
statutory accounts for the purposes of section 434 of the Companies
Act 2006. They are unaudited. The unaudited Interim Financial
Report will be made available to the public at the Company s
registered office. The report will also be available in electronic
format on the Company s website, www.aquila -- european --
renewables.com.
The information for the year ended 31 December 2022 has been
extracted from the last published audited financial statements,
unless otherwise stated. The audited financial statements have been
delivered to the Registrar of Companies. PricewaterhouseCoopers LLP
reported on those accounts and their report was unqualified, did
not draw attention to any matters by way of emphasis and did not
contain a statement under sections 498(2) or 498(3) of the
Companies Act 2006.
The Interim Financial Report was approved by the Board on 26
September 2023.
ALTERNATIVE PERFORMANCE MEASURES
In reporting financial information, the Company presents
alternative performance measures ("APMs"), which are not defined or
specified under the requirements of IFRS. The Company believes that
these APMs, which are not considered to be a substitute for or
superior to IFRS measures, provide stakeholders with additional
helpful information on the performance of the Company. The APMs
presented in this report are shown below:
Discount
The amount, expressed as a percentage, by which the share price
is less than the net asset value per Ordinary Share.
As at 30 June 2023
-------------------------------------------------------
NAV per Ordinary Share (cents) a 104.1
Share price (cents) b 89.5
------------------------------- ------------- -------
Discount (b÷a)-1 (14.0%)
------------------------------- ------------- -------
Ongoing Charges
A measure, expressed as a percentage of average net assets, of
the regular, recurring annual costs of running an investment
company.
As at 30 June 2023
-----------------------------------------------------
Average NAV (EUR '000) a 418,009
Annualised expenses (EUR '000) b 4,312
------------------------------- ----------- -------
Ongoing charges (b÷a) 1.0%
------------------------------- ----------- -------
Total Return
A measure of performance that includes both income and capital
returns. This takes into account capital gains and reinvestment of
dividends paid out by the Company into the Ordinary Shares of the
Company on the ex-dividend date.
As at 30 June 2023 Share price NAV
---------------------------------- ----------------- ----------- ------
Opening at 1 January 2023 (cents) a 92.3 110.6
Dividend adjustment b 2.7 2.7
Closing at 30 June 2023 (cents) c 89.5 104.1
---------------------------------- ----------------- ----------- ------
Total return ((b+c)÷a)-1 (0.1%) (3.5%)
---------------------------------- ----------------- ----------- ------
Dividend Cover
Dividend cover ratio calculation based on net results generated
at the SPVs adjusted for the Company level expenses during the
period:
Period ended Period ended
30 June 30 June
2023 2022
-------------------------------------------- --------- ------------ ------------
Net result generated at the SPVs (EUR '000) a 12,806 14,675
Dividend paid (EUR '000) b 10,711 10,447
-------------------------------------------- --------- ------------ ------------
Dividend cover ratio a÷b 1.2x 1.4x
-------------------------------------------- --------- ------------ ------------
Dividend cover ratio calculation based on the consolidated cash
flow of the Company and its HoldCo:
Period ended Period ended
30 June 30 June
2023 2022
------------------------------------------------------------ --------- ------------ ------------
Adjusted net cash flow from operating activities (EUR '000) a 12,080 13,346
Dividend paid (EUR '000) b 10,711 10,447
------------------------------------------------------------ --------- ------------ ------------
Dividend cover ratio a÷b 1.1x 1.3x
------------------------------------------------------------ --------- ------------ ------------
Gross Asset Value
The Company's gross assets comprise the NAV of the Company's
Ordinary Shares and the debt at the underlying SPV level, with the
breakdown as follows:
Period ended Period ended Year ended
30 June 30 June 31 December
2023 2022 2022
--------------------------------- ------ ------------ ------------ -----------
Net Asset Value (EUR '000) a 403,256 430,630 451,650
Debt at the SPV level (EUR '000) b 126,291 140,310 131,203
RCF drawn (EUR '000) c 69,349 - 24,000
--------------------------------- ------ ------------ ------------ -----------
Gross Asset Value (EUR '000) a+b+c 598,896 570,939 606,853
--------------------------------- ------ ------------ ------------ -----------
Gearing
The Company's gearing is calculated as total debt as a
percentage of Gross Asset Value
Period ended Period ended Year ended
30 June 30 June 31 December
2023 2022 2022
--------------------------------- ------------- ------------ ------------ -----------
Gross Asset Value (EUR '000) a 598,896 570,939 606,853
Debt at the SPV level (EUR '000) b 126,291 140,310 131,203
RCF drawn (EUR '000) c 69,349 - 24,000
--------------------------------- ------------- ------------ ------------ -----------
Gearing ratio (b+c)÷a 32.7% 24.6% 25.6%
--------------------------------- ------------- ------------ ------------ -----------
[ENDS]
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END
IR BIGDCIGDDGXL
(END) Dow Jones Newswires
September 27, 2023 02:00 ET (06:00 GMT)
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