REG - Aquila Energy Effcn. - Result of Investment Strategy Review

Aquila Energy Efficiency TrustAnnouncement

21/04/2022 07:00

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RNS Number : 8206I  Aquila Energy Efficiency Trust PLC  21 April 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EU NO. 596/2014) AS IT FORMS PART OF THE DOMESTIC
LAW OF THE UNITED KINGDOM BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT
2018 (AS AMENDED)

21 April 2022

Aquila Energy Efficiency Trust PLC

("AEET" or the "Company")

Result of Investment Strategy Review

The Company announced on 31 January 2022 that given slower investment
deployment than originally anticipated, the Board was undertaking a
comprehensive review of the Company's investment strategy (the "Review") with
a view to ascertaining how best to accelerate deployment, whilst maintaining
the Company's prudent credit criteria and return objectives.

The Board, which has been assisted by Complete Strategy Ltd, and having
consulted widely with Shareholders, has now finalised the Review and has
concluded that, whilst certain changes are required to enable the Investment
Adviser to execute on the Company's investment strategy, the market
opportunity for Energy Efficiency Investments located in Europe remains
attractive, particularly in the context of high energy prices. The Investment
Adviser is confident that deployment will materially increase over the
remainder of this year, targeting full deployment of the IPO proceeds by the
end of December 2022.

The Review recommended a number of actions to improve execution of the
Company's investment strategy and the following steps have been agreed with
the Investment Adviser:

-     Initial Continuation Resolution: at the time of its IPO (and as set
out in the Company's prospectus dated 10 May 2021), the Company proposed to
hold a vote (as an ordinary resolution) on the continuation of the Company at
the AGM to be held in 2025. This initial continuation resolution will now be
brought forward and is expected to be voted on by Shareholders during February
2023. Should deployment not improve materially in the next three months, the
Board will consider bringing the date of the Initial Continuation Resolution
forward;

-     Advisory Fees: under the Investment Advisory Agreement, the
Investment Adviser is entitled to an advisory fee based on the Company's NAV.
The Investment Adviser has agreed to amend the current Investment Advisory
Agreement such that any advisory fees payable are charged only on committed
capital (being the sum of funds actually invested and funds committed for
investment in Energy Efficiency Investments), with this amendment to be
applied retrospectively from the time of the Company's IPO;

-    Resource: the Investment Adviser is prepared to increase its dedicated
investment team with further new team members in addition to the resources it
has already brought to the team since the IPO, to further assist in the
Investment Adviser's target of full deployment of the IPO proceeds by the end
of December 2022; and

-     Complete Strategy Ltd will be engaged by the Company for an initial
period of six months to provide the Board with a detailed analysis of monthly
deployment performance, with the costs to be borne by the Investment Adviser.

The Board are of the opinion that a combination of the re-forecasting provided
by the Investment Adviser (as reviewed by Complete Strategy Ltd), actions to
be taken to improve the execution of the investment strategy, proposed
amendments to the advisory fee, revised timing of the Initial Continuation
Resolution and the additional resources outlined in this announcement provide
a basis for the Company to execute on its stated Investment Objective in the
near-term.

The fundamental importance to society of reducing primary energy consumption
is clear and the benefits of doing so remain highly attractive, including
lower energy costs, energy security, household savings, productivity and
carbon emission reductions.

Alongside the Review, the Board has been active in its search to recruit
additional Directors. High quality candidates have been identified and the
Company intends to provide an update on Board recruitment in the near-term.

Update on deployment & dividends

At the last update on 31 January 2022, the Company had agreed to invest a
total of approximately €17.6m, of which it had deployed a total of
approximately €11.9m. Since that time, the Company has deployed a further
€6.3m and committed €5.5m, taking total commitments to approximately
€23.1m, and deployment to approximately €18.2m. In addition, the Company
has approved a further €4m of investments which have not yet contractually
completed.

In light of slower than anticipated deployment to date and the current
expectation that the IPO proceeds will not be significantly deployed within
twelve months of Admission, the Company does not expect that its stated
dividend target of 3.5 pence per Ordinary Share for the financial year ending
31 December 2022 will be covered by earnings. The Board will review the
position in respect of any dividend which may be declared for the financial
year ending 31 December 2022 in light of the deployment of the IPO proceeds as
the year progresses.

Other matters

As a result of the Review and specifically the proposed amendments to the
Investment Advisory Agreement in respect of the advisory fee, the Company
expects to publish its audited report and accounts for the year ended 31
December 2021 by no later than 30 June 2022, in accordance with the temporary
forbearance granted by the FCA in respect of DTR 4.1.3 pursuant to the
Statement of Policy dated 26 March 2020.

The Company put in place a Placing Programme in its prospectus published at
IPO, which is scheduled to conclude on 9 May 2022. The Company will not be
issuing new Ordinary Shares and/or C Shares under that Placing Programme and
the Board has concluded to end that Placing Programme with immediate effect.
As a result, the Company will not be publishing a supplementary prospectus in
relation to this announcement.

Any terms used in this announcement, unless otherwise defined, will have the
same meaning as given to them in the prospectus issued by the Company on 10
May 2021.

For further information please contact:

Peel Hunt
(Broker)
020 7418 8900

Luke Simpson, Huw Jeremy (Investment Banking)

 

Buchanan (Financial PR)
 
020 7466 5000

Charles Ryland, Henry Wilson, George Beale

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