REG - Aquila Eur Renwables Aquila Euro Rnw-AERI - Half-yearly Report
27/09/2024 07:00
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RNS Number : 8833F Aquila European Renewables PLC 27 September 2024
AQUILA EUROPEAN RENEWABLES PLC
LEI No: 213800UKH1TZIC9ZRP41
HALF-YEARLY REPORT
FOR THE SIX MONTHS ENDED 30 JUNE 2024
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 2024
30 June 2024 31 December 2023
Ordinary Share price (cents) 64.9 78.5
NAV per Ordinary Share (cents)(1) 88.7 98.5
Ordinary Share price discount to NAV(1) (26.9%) (20.3%)
Net assets (EUR million) 335.5 372.5
Dividend Yield(4) 8.9% 7.4%
30 June 2024 30 June 2023
Dividends per Ordinary Share (cents)(3) 2.9 2.8
Ongoing charges(1,6) 1.1% 1.0%
Total NAV Return per Ordinary Share(1,2) (7.1%) (3.5%)
Dividend cover(1,5) 0.9x 1.2x
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. Dividend yield is calculated by dividing the target dividend of 5.79
cents per Ordinary Share for 2024 by the market share price as at 30 June
2024.
5. Calculation based on the operational result at special purpose
vehicle ("SPV") level. Refer to below for further details.
6. Calculation based on average NAV over the period and regular
recurring annual operating costs of the Company, further details can be found
below.
HIGHLIGHTS
· Dividend cover of 0.9x in 1H24 (1.4x before debt amortisation)
· 2024 target dividend guidance of EUR 5.79 cents (+5% increase vs.
2023) unchanged(2)
· Attractive dividend yield of 8.9%(3)
· In January 2024, the Company's inaugural ESG Report was released
on the Company's website, highlighting key metrics, environmental and social
initiatives
· In January 2024, AER signed a EUR 50 million five-year debt
facility with ING Bank N.V. Sucursal en España, secured by its 180 MWp
Spanish solar PV operating portfolio
· In June 2024, the Investment Adviser, Aquila Capital, signed a
strategic partnership with Commerzbank AG aimed at significantly accelerating
its growth into one of the leading asset managers for sustainable investment
strategies in Europe
SUBSEQUENT EVENTS
· The Sami appraisal case concerning the Norwegian wind farm The
Rock was heard before the local District Court between 27 May and 13 June
2024. A decision on the verdict is expected shortly
· In September 2024, the Investment Adviser announced the sale of
AER's 25.9% stake in the Norwegian wind farm Tesla at an attractive premium to
its net asset value
· A vote on the continuation and potential Managed Wind-Down of the
Company at the General Meeting ("GM") will be held on 30 September 2024
1. Dividend cover presented is net of project debt repayments and
assumes the 2024 target dividend is paid between 2024 and 2029. No
reinvestment 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. Dividend yield is calculated by dividing the target dividend of 5.79
cents per Ordinary Share for 2024 by the market share price as at 30 June
2024.
OVERVIEW
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 25.7 GW clean energy portfolio(1)
- EUR 24.8 billion development and construction pipeline
- 2030 Aquila Capital target of avoiding 1.5 billion tonnes of
CO(2) during its lifetime(2)
POSITIONING
- European focused (excl. UK), diversified by geography and
technology
- Cash flow supported by contracted revenues (PPAs, Government
regulated tariffs) to ensure earnings visibility and a diversified operating
portfolio
- Modest gearing level (36.3%) provides flexibility(3)
RETURNS
- Portfolio levered discount rate of 7.5% excluding fund level
leverage(4)
- Share price trading at a 26.9% discount to NAV(5)
- Attractive dividend yield of 8.9%(6)
- NAV total return since IPO of 13.7%(7)
1. Data as at 31 December 2023, including historical divestments.
2. According to the 'GHG Accounting for Grid Connected Renewable Energy
Projects' of the 'International Financial Institution's 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, available at:
https://www.aquila-capital.de/en/disclaimer-co2-lifetime-avoidance-clock.
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. Fund level leverage includes drawn RCF debt of EUR 26.1 million.
5. Based on the share price as at 30 June 2024 (64.9 cents) and the NAV
per Ordinary Share as at 30 June 2024 (88.7 cents).
6. Dividend yield is calculated by dividing the target dividend of 5.79
cents per Ordinary Share for 2024 by the market share price as at 30 June
2024.
7. Based on an opening NAV after launch expenses of EUR 0.98 per
Ordinary Share. Calculation includes dividends paid during the period.
AT A GLANCE
PORTFOLIO BREAKDOWN(1
)
By Technology
Wind energy - 213.7 MW
Solar - PV 230.7 MWp
Hydropower - 19.4 MW
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.
WIND ENERGY | 213.7 MW
TESLA HOLMEN II OLHAVA
150.0 MW 18.0 MW 34.6 MW
Ownership: 25.9%
Ownership: 100.0%
Ownership: 100.0%
SVINDBAEK THE ROCK DESFINA
32.0 MW 400.0 MW 40.0 MW
Ownership: 99.9%
Ownership: 13.7%
Ownership: 89.0%(1)
SOLAR PV | 230.7 MWP
BENFICA III ALBENIZ OURIQUE
19.7 MWp 50.0 MWp 62.1 MWp
Ownership: 100.0%
Ownership: 100.0%
Ownership: 50.0%
GRECO TIZA
100.0 MWp 30.0 MWp
Ownership: 100.0%
Ownership: 100.0%
HYDROPOWER | 19.4 MW
SAGRES
107.6 MW
Ownership: 18.0%
Overall CO(2)eq emissions avoided(2
) 1.4 million tonnes
Green energy produced(2
) 4.9 TWh
Households supplied(2
) 1.3 million
CHAIRMAN'S STATEMENT
INTRODUCTION
The first half of 2024 has witnessed a convergence of challenging
macro-economic conditions, including persistently high inflation and interest
rates, an increasingly fraught geopolitical environment, combined with lower
electricity prices and volatile wind, solar and hydro conditions. The
deteriorating macro-economic conditions widened the Company's share price
discount to Net Asset Value ("NAV") to -26.9% as at 30 June 2024, a problem
shared by our peer group of renewable energy investment trusts. Nevertheless,
despite this difficult backdrop, the Company's diversified operating portfolio
continued to deliver strong cash flows to enable a progressive dividend.
KEY DEVELOPMENTS
In January 2024, the Company, via its wholly owned subsidiaries, secured a EUR
50.0 million five-year debt financing for its 180 MWp unlevered Spanish solar
PV operating portfolio. We are pleased the debt financing was secured at
attractive terms, with an all -in interest rate below that of the existing
RCF. Net proceeds from the debt financing, which was drawn in January 2024,
were used to pay down the RCF. As at 30 June 2024, the Company maintains a
modest gearing level of 36.3% of Gross Asset Value ("GAV"). Moreover, in May
2024, in recognition of the fact that the Company is not pursuing new
investment opportunities in the current market environment and to save on
commitment fee expenses, your Board elected to reduce the RCF available
capacity limit from EUR 100.0 million to EUR 50.0 million.
In September 2024, the Company entered into a sale and purchase agreement with
Sunnhordland Kraftlag AS ("SKL") to sell its 25.9% interest in Tesla for a
consideration of approximately EUR 27.1 million.(1) Tesla is a 150 MW
operating onshore wind farm located in Southern Norway, which was acquired by
the Company in 2019. The buyer, SKL is a Norwegian energy company with a long
history of producing, developing and operating hydropower plants. SKL's
hydropower portfolio generates approximately 2,700 GWh in production per
annum. The sale price represents a 10.8% premium to the Company's fair value
of Tesla as at 30 June 2024. The majority of the sale proceeds will be used to
repay the Company's RCF, which is currently drawn to EUR 26.1 million
(excluding bank guarantees of EUR 2.8 million, which will remain in place).
Based on AER's net asset value as at 30 June 2024 and gearing levels, AER's
total leverage is expected to decrease from 36.3% to 31.7% on a pro forma
basis as a result of the sale and subsequent repayment of the RCF. The sale
transaction is subject to the grant of certain regulatory and governmental
approvals, with completion of the sale expected to occur by October 2024. The
sale is a further sign of the Board's ongoing commitment to secure greater
recognition of the value inherent in the portfolio.
1H24 PERFORMANCE
The Company's NAV per Ordinary Share was 88.7 cents as at 30 June 2024,
resulting in a NAV total return per Ordinary Share of -7.1%, including
dividends during the period. Movement in the NAV was primarily driven by a
decrease in short-term power price forecasts across the majority of the
portfolio in the first quarter of the year, reflecting lower commodity prices
(notably gas and coal) relative to last year, and a sharp decrease in the
price of Guarantees of Origin ("GoOs") in the second quarter of the year as a
result of lower demand due to lower than expected industrial activity. AER's
annualised total NAV return per Ordinary Share (including dividends paid) from
IPO to 30 June 2024 has been 2.6%(2).
1. The actual purchase price received will be subject to certain
adjustments depending on the date of closing.
2. Based on an opening NAV per share of EUR 0.98.
In May 2024, your Board announced a 5.0% increase to the dividend and is
targeting 5.79 cents per Ordinary Share for 2024, on the basis that the
operating performance and cash flow of the Company will remain in line with
expectations. To date in 2024, the Company has paid or declared dividends of
2.9 cents per Ordinary Share, in line with the target. Since the IPO in June
2019, the Company has returned EUR 105.6 million to shareholders in the form
of dividends and share buybacks, equivalent to 25.3% of total raised
capital.(1)
Over the reporting period, total revenue was 17.1% 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 relative
to last year, lower demand from milder-than-expected temperatures in Europe,
lower GoO price forecasts and elevated filling levels of gas storage
reservoirs. The portfolio's production was 7.9% below budget over the
six-month period, primarily due to lower irradiation for the solar portfolio,
curtailment of the Iberian solar PV assets in times of negative power prices
and lower than forecast average wind resource in the Nordics. This in turn was
partially offset by continued strong performance from the hydropower portfolio
due to higher-than-forecast water availability, continuing a strong positive
trend for the hydropower portfolio since June 2023.
ESG
The Company contributes to the UN Sustainable Development Goals to ensure
access to affordable, reliable, sustainable and modern energy for all. Your
Board was pleased to release the Company's inaugural ESG Report in January
2024, highlighting key metrics, environmental and social initiatives that
illustrate the breadth of action that the Company has taken across its
portfolio. Full details of the Company's approach to combatting climate
change, enhancing biodiversity, boosting regional and local community
engagement, ensuring sustainable supply chain management and best-practice
labour standards, as well as other environmental and social topics, can be
found in this dedicated report.(2)
CONTINUATION VOTE
As mentioned in my last statement to you, the Board and the Investment Adviser
commenced a series of initiatives designed to secure greater appreciation of
the value inherent in the portfolio. In May 2024, the Company announced that,
following shareholder feedback and in light of sector trading conditions at
that time, it had decided to terminate the review of a possible combination
with another listed investment company by way of a Section 110 Scheme of
Reconstruction under the Insolvency Act 1986. Furthermore, in June the Company
announced that it had received enquiries from a number of parties relating to
a possible sale of all of the assets, geographic portfolios of assets or
individual assets of the Company. While some of these discussions remain
ongoing, none have been progressed sufficiently to put them to shareholders
and therefore, in accordance with the commitment made following the
continuation vote held in 2023, the Board is again providing shareholders with
a further opportunity to have their say as to the future of the company.
At the General Meeting ("GM") to be held on 30 September 2024, based on
shareholder feedback we expect that the resolution being proposed to
discontinue the fund in its current form will be approved, together with a
further resolution to adopt a revised investment policy providing for the
orderly realisation of the Company's assets. Aquila Capital, which holds
approximately 2.6% of the issued share capital of the Company intends to
abstain from voting, reflecting their views on good corporate governance. In
the event that these resolutions are approved, it is the Board's intention to
update shareholders as to its proposed orderly realisation strategy.
OUTLOOK
We expect the challenging macro-economic backdrop for the sector to improve in
the second half of 2024 as the Company is set to benefit from a number of
positive tailwinds, namely the increasing likelihood of central banks
beginning to cut interest rates and the market consensus that inflation in the
European Union should gradually recede towards the European Central Bank's
inflation target of 2.0%. Lower interest rates have the effect of reducing the
discount rate applied to the DCF valuation of assets, thus increasing value -
all other things being equal. Nevertheless, we expect inflation to remain
above the levels witnessed in the past decade due to a series of cyclical and
secular trends such as high labour demand supporting wage growth, ageing
demographics in the labour market, limited housing availability supporting
real estate prices, de-globalisation, energy shortages, disrupted supply
chains, and higher defence spending as a result of the continuing conflict in
Ukraine. The prospect of an escalation of the conflict in the Middle East
triggering supply disruptions and increased competition with Asia for
liquefied natural gas has already seen European natural gas prices climb
recently. In the short term, we expect these factors to raise the price floor
for commodities and, consequently, electricity prices.
Overall, the Board remains optimistic on the long-term outlook for the listed
renewable energy sector, driven by the urgent need to decarbonise the world's
energy supply, a broadly favourable European regulatory environment
incentivising energy security and the expectation of increasing power demand
from a recovery in European industrial activity, the electrification of
industry, heat and transport and the rising energy needs of data centres and
generative artificial intelligence ("AI").
IAN NOLAN
Chairman
26 September 2024
1. Raised capital including shares issued to the Investment Adviser as
payment of the management fee.
2. Available at:
https://www.aquila-european-renewables.com/fileadmin/user_upload/PDF_Files_Microsite/31.12.23_AER_ESG_Report.pd
(%20https:/www.aquila-european-renewables.com/fileadmin/user_upload/PDF_Files_Microsite/31.12.23_AER_ESG_Report.pd)
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INVESTMENT ADVISER'S REPORT
INVESTMENT ADVISER BACKGROUND(1)
Aquila Capital Investmentgesellschaft mbH ('Aquila Capital') is one of the
leading investment and industrial development companies, managing over EUR
14.6 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 clean energy transition and creating a more sustainable world. As at 31
December 2023, Aquila Capital transacted wind energy, solar PV, hydropower
energy and battery storage assets with a capacity of approximately 25.7 GW(2).
Additionally, it has projects in sustainable real estate and green logistics,
either completed, in construction or under development. Aquila Capital also
invests in energy efficiency, carbon forestry and green data centres.
Aquila Capital's expert investment teams comprise about 750 employees
worldwide. Moreover, the strategic partnership entered into 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 19 investment offices. Aquila
Capital currently has a significant pipeline of over 17.5 GW 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 ("PPAs"),
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 32 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, has appointed Aquila Capital as its
Investment Adviser for 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. Figures presented in this section refer to Aquila Capital
Investmentgesellschaft mbH and its partners within the Aquila Group. Data as
at 31 December 2023.
2. Data as at 30 June 2024 for the first six months of 2024, based on
current portfolio of the Aquila Group. For details on the methodology for
avoided emissions, refer to:
https://www.aquila-capital.de/fileadmin/user_upload/PDF_Files_Whitepaper-Insights/20231121_LAE_White
(https://www.aquila-capital.de/fileadmin/user_upload/PDF_Files_Whitepaper-Insights/20231121_LAE_White_paper_EN.pdf)
_paper_EN.pd
(https://www.aquila-capital.de/fileadmin/user_upload/PDF_Files_Whitepaper-Insights/20231121_LAE_White_paper_EN.pdf)
f
The Rock, Norway
The Investment Adviser announced a strategic partnership with Commerzbank AG
on 18 January 2024 aimed at significantly accelerating the Investment
Adviser's growth into one of the leading asset managers for sustainable
investment strategies in Europe. Commerzbank is a major listed European
banking institution serving a diverse client base of around 26,000 corporate
client groups and nearly 11 million private and corporate clients, with a
global presence in more than 40 countries. As part of this partnership,
Commerzbank will acquire a 74.9% stake in the Investment Adviser, whilst
ensuring the continued managerial independence of the Investment Adviser,
which will remain autonomous in terms of operations, investment decisions,
product development and brand representation. The parent company of the
Investment Adviser, Aquila Group, will remain engaged as a shareholder with
its remaining 25.1% shareholding. The existing Asset Management team
responsible for AER will remain unchanged. The transaction was completed
following the receipt of the required regulatory approvals on 3 June 2024.
CURRENT RENEWABLES PORTFOLIO OF AQUILA CAPITAL(1):
Portfolio Capacity(2)
Wind energy Solar PV Hydropower Energy storage systems 19 Offices
4,702 MW
15,733 MWp
1,050 MW
4,190 MW
1,010 WTGs
370 PV parks
295 plants
15 projects
1. Map is shown for illustrative purposes only. Exact locations of
offices and assets might deviate. Points indicate one or more assets and are
not indicative of size.
2. Data as at 31 December 2023, including historical divestments.
INVESTMENT PORTFOLIO
Project Country Capacity(1) Status COD(2) AssetLife Equipment Energy Offtaker Ownership Leverage(4) Acquisition
from COD(2)
Manufacturer
Offtaker(3)
in Asset
Date
Wind Energy
Tesla Norway 150.0 MW Operational 2013, 2018 25y Nordex PPA Statkraft 25.9%(6) 24.3% Jul-19
Holmen II Denmark 18.0 MW Operational 2018 25y Vestas FiP Energie.dk 100.0% 34.2% Jul-19
Olhava Finland 34.6 MW Operational 2013-2015 30y Vestas FiT Finnish Energy 100.0% 32.1% Sep-19
Svindbaek Denmark 32.0 MW Operational 2018 29y Siemens FiP Energie.dk 99.9% 18.1% Dec-19 & Mar-20
The Rock Norway 400.0 MW Operational 2022 30y Nordex PPA Alcoa 13.7%(6) 55.4% Jun-20
Desfina Greece 40.0 MW Operational 2020 25y Enercon FiP DAPEEP 89.0%(6,7) 54.1%(8) Dec-20
Solar PV
Benfica III Portugal 19.7 MW Operational 2017, 2020 40y AstroNova PPA Axpo 100.0% 0.0% Oct-20
Albeniz Spain 50.0 MW Operational 2022 40y Canadian Solar PPA Statkraft 100.0% 22.1% Dec-20
Ourique Portugal 62.1 MW Operational 2019 40y Suntec CfD ENI 50.0%(6) 0.0% Jun-21
Greco Spain 100.0 MW Operational 2023 40y Jinko PPA Statkraft 100.0% 28.4% Mar-22
Tiza Spain 30.0 MW Operational 2022 40y Canadian Solar PPA Axpo 100.0% 30.3% Jun-22
Hydropower
Sagres Portugal 107.6 MW Operational 1951-2006 n/a(5) Various FiT EDP/Renta 18.0%(6) 21.7% Jul-19
---------------
Total (AER Share) 463.8 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 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 90.5%.
8. Calculation based on voting interest.
PORTFOLIO UPDATES AS AT 30 JUNE 2024
THE ROCK
Country: Norway
Technology: Onshore Wind
Date Acquired: June 2020
Status: Operational
Capacity: 400.0 MW
Interest: 13.7%
=========
The Sami appraisal case was heard before the Helgeland District Court between
27 May and 13 June 2024. A decision on the verdict is expected shortly.
As communicated with shareholders previously, Eolus, the developer of The
Rock, remains responsible for handling the appraisal case and for the economic
impact on the project company associated with the outcome of that case, as
well as the economic impact associated with the mitigation measures noted
above. The Company will continue to keep shareholders updated regarding any
key developments.
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 affect its
financial position. A ruling on this arbitration case is expected in the
fourth quarter of 2024.
The Rock, Norway
TESLA
Country: Norway
Technology: Onshore Wind
Date Acquired: July 2019
Status: Operational
Capacity: 150.0 MW
Interest: 25.9%
=========
In September 2024, the Company entered into a conditional sale and purchase
agreement with Sunnhordland Kraftlag AS ("SKL") to sell its 25.9% interest in
Tesla for a consideration of approximately EUR 27.1 million.(1)
Tesla is a 150 MW operating onshore wind farm located in Southern Norway,
which was acquired by the Company in 2019. The buyer, SKL is a Norwegian
energy company with a long history of producing, developing and operating
hydropower plants. SKL's hydropower portfolio generates approximately 2,700
GWh in production per annum.
The sale price represents a 10.8% premium to the Company's fair value of Tesla
as at 30 June 2024. The majority of the sale proceeds will be used to fully
repay the Company's RCF, which is currently drawn to EUR 26.1 million
(excluding bank guarantees of EUR 2.8 million, which will remain in place).
Based on AER's net asset value as at 30 June 2024 and gearing levels, AER's
total leverage is expected to decrease from 36.3% to 31.7% on a pro forma
basis as a result of the sale and subsequent repayment of the RCF. The sale
transaction is subject to the grant of certain regulatory and governmental
approvals, with completion of the sale expected to occur by October 2024.
1. Actual purchase price paid will be subject to certain adjustments
depending on the date of closing.
CONTRACTED REVENUE POSITION(1)
Contracted revenue net present value(3 -) EUR 230.9m
Contracted revenue (aggregate over asset life)(4) EUR 325.5m
Contracted revenue over the next five years(2) 53.2%
Weighted average contracted revenue life- 10.3 years
1. Data excluding Tesla, which entered into a conditional sale and
purchase agreement in September 2024.
2. Asset revenues are discounted by the weighted average portfolio
discount rate as of 30 June 2024 and are taken from 1 July 2024 onwards.
3. Contracted revenue as at 30 June 2024, discounted by the weighted
average portfolio discount rate.
4. Aggregate contracted revenue over entire asset life (not discounted).
FINANCIAL PERFORMANCE
PERFORMANCE(1
) Electricity Production (GWh)
Technology Region 1H23 Variance (%) Variance
1H24 against
1H24
P50 budget
Wind energy Denmark, Finland, Norway, Greece 279.8 260.5 7.4% (9.1%)
Solar PV Portugal, Spain 190.9 195.1 (2.1%) (14.0%)
Hydropower Portugal 54.7 33.2 64.8% 33.8%
--------------- --------------- --------------- ---------------
Total 525.5 488.8 7.5% (7.9%)
========= ========= ========= =========
Load Factors
Technology 1H24 1H23
Wind energy 30.7% 27.0%
Solar PV 18.8% 21.4%
Hydropower 64.9% 39.5%
--------------- ---------------
Total 31.3% 27.0%
========= =========
Technical Availability(2)
Technology 1H24 1H23
Wind energy 93.6% 94.0%
Solar PV 99.3% 99.7%
Hydropower 98.9% 98.8%
--------------- ---------------
Total 96.8% 96.7%
========= =========
Revenues(3) (EUR million)
Technology
1H24
1H23
Variance (%)
Wind energy 16.3 16.9 (3.6%)
Solar PV 9.2 11.1 (17.7%)
Hydropower 4.7 3.5 36.7%
--------------- --------------- ---------------
Total 30.2 31.5 (4.1%)
========= ========= =========
1. Desfina data based on economic share (1H24: 90.5%, 1H23: 92.6%). 1H23
Includes Guillena from April 2023.
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).
1H24 Monthly Production Performance vs. Budget (AER Share)
As shown in the graph above, the addition of solar PV assets to the portfolio
has significantly improved the stability of production across the portfolio
month to month and subsequently reducing 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 and solar PV.
The portfolio's production was 7.9% below budget over the reporting period,
primarily due to lower irradiation for the solar portfolio, curtailment of the
Iberian solar PV assets in times of negative power prices and
lower-than-forecast average wind resource in the Nordics. This in turn was
partially offset by continued strong performance from the hydropower portfolio
due to higher-than-forecast water availability, continuing a strong positive
trend for the hydropower portfolio since June 2023. Total weighted average
technical availability over the reporting period remained broadly unchanged at
96.8% (2023: 97.0%).
Technical availability and production at the Norwegian wind farm The Rock have
stabilised, exceeding budget by approximately 20.0% in June 2024 due to strong
wind resource. Production in August is expected to be approximately 40.0%
higher than budgeted due to continued strong wind resource.
As of June 2024, Olhava's historic Debt Service Coverage Ratio ("DSCR") ratio
was 0.96x, which is below the default threshold of 1.05x under the bank
financing with Skandinaviska Enskilda Banken ("SEB"). The breach is due to
continued low production and power prices, combined with higher debt
repayments (which are expected to reduce significantly from 2025 onwards, in
accordance with the existing debt amortisation schedule). The Investment
Adviser is currently in discussions with the lender to agree an appropriate
remedy, which may involve the use of the existing Debt Service Reserve Account
and/or an equity cure. The Company does not expect any material consequences
as a result of the breach.
Dividend cover (unaudited)(1)
EUR million(2) 1H24 1H23 Variance (%)
Asset income 30.2 31.5 (4.1%)
Asset operating costs (8.2) (7.9) 4.9%
Interest and tax (3.6) (2.5) 44.2%
--------------- --------------- ---------------
Asset underlying earnings 18.3 21.1 (13.3%)
Asset debt amortisation (5.3) (4.9) 9.2%
Company and HoldCo(3) expenses(4) (2.0) (2.2) (8.6%)
RCF interest and fees(5) (1.2) (1.2) 0.6%
--------------- --------------- ---------------
Total underlying earnings 9.7 12.8 (23.9%)
========= ========= =========
Dividends paid 10.7 10.7 (0.2%)
Dividend cover after debt amortisation (x) 0.9x 1.2x nmf.(6)
Dividend cover before debt amortisation (x) 1.4x 1.7x nmf.(6)
========= ========= =========
This table calculates dividend cover based on the underlying earnings of its
investment portfolio, taken from the profit & loss ("P&L") statements
from each of the Company's investments, with the exception of debt
amortisation which is taken from the cash flow statement. Each of the
Company's investments is held through special purpose vehicles ("SPVs"). The
SPV, Company and HoldCo financial statements are audited.
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.
The Company reported dividend cover of 0.9x during the first half of 2024.
However, the calculation does not take into account any liquidated damages
that some SPVs are entitled to from the availability guarantees. For the
assets Olhava and The Rock, the expected amount is around EUR 0.7 million (AER
share), which would increase the dividend cover ratio to 1.0x. Liquidated
damages will be included in the calculation at the time of crediting (probably
in the second half of the year).
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. Numbers and percentages may vary due to rounding differences.
2. Non-euro currencies converted to EUR as at 30 June 2024. Desfina
contribution reflects AER's economic interest (90.5%) rather than voting
interest (89.0%), whereas asset debt amortisation reflects the voting interest
of all assets throughout the report.
3. Tesseract Holdings Limited.
4. 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.
5. Excluding amortised one-off cost of the Revolving Credit Facility
("RCF").
6. Not meaningful.
Tesla, Norway
Cash Dividend Cover (unaudited)
EUR million(1) 1H24 1H23 Variance (%)
Company
Net cash flow from operating activities 5.8 11.2 (48.6%)
--------------- --------------- ---------------
HoldCo
Net cash flow from operating activities 4.2 (0.4) nmf.(7)
--------------- --------------- ---------------
Adjustments
Shareholder loan and equity repayments from operating activities(2) 3.7 2.4 54.0%
Distribution funded by Spanish bank financing(3) (3.9) - n/a
RCF interest and fees(4) (1.5) (1.6) (4.9%)
Asset cash flow used for investment activities(5) - 0.3 n/a
Other(6) 0.2 (0.3) nmf.(7)
--------------- --------------- ---------------
Adjusted net cash flow 8.5 11.7 (27.2%)
Dividends paid (10.7) (10.7) (0.2%)
(x) 0.8x 1.1x nmf.(7)
========= ========= =========
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, shareholder loan payments (interest or principal) or equity
repayments.
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.
1. Non-euro currencies converted to EUR as at 30 June 2024. Desfina
contribution reflects AER's economic interest (90.5%) rather than voting
interest (89.0%), whereas asset debt amortisation reflects the voting interest
of all assets throughout the report.
2. Distributions from operating activities in the form of shareholder
loan and equity repayments.
3. Interest payments classified as cash flow from operating activities.
4. Including amortised one-off cost of the RCF (for 1H23, this is a
correction of the original calculation, which wasn't adjusted for RCF one-off
cost.)
5. In 1H23 part of Jaén and Guillena PAC payment made by the operating
company.
6. Adjustment for non-recurring expenses for Euronext listing (1H23:
capitalisation of Shareholder loan interest).
7. Not meaningful.
Gearing(1)
EUR million As at As at
30 June 2024
31 December 2023
Variance (%)
NAV 335.5 372.5 (9.9%)
Debt(2) 190.9 194.8 (2.0%)
GAV 526.4 567.4 (7.2%)
Debt (% of GAV)(3) 36.3 34.3 192bps
Project debt weighted average maturity (years) 10.8 13.9 (3.1)
Project debt weighted average interest rate (%)(4) 3.1 2.6 54bps
RCF interest rate (%)(5) 5.5 5.7 (22bps)
========= ========= =========
Debt Summary as at 30 June 2024(1)
Project Drawn Debt Bullet/ Hedged
AER Share
(EUR million)
Currency
amortising
Maturity
Proportion
Type
Tesla 25.9% 7.8 EUR Partly amortising Mar-29 100.0% Bank Debt
Sagres 18.0% 5.1 EUR Fully amortising Jun-33 70.0% Bank Debt
Olhava 100.0% 12.0 EUR Fully amortising Dec-30/Sep-31 100.0% Bank Debt
Holmen II 100.0% 11.8 DKK Fully amortising Dec-37 92.6% Bank Debt
Svindbaek 99.9% 7.0 DKK Fully amortising Dec-37 100.0% Bank Debt
The Rock: USPP Bond 13.7% 30.9 EUR Fully amortising Sep-45 100.0% Debt Capital Markets
The Rock: Green Bond 13.7% 11.0 EUR Bullet Sep-26 100.0% Debt Capital Markets
Desfina 89.0% 29.6 EUR Fully amortising Dec-39 100.0% Bank Debt
Albeniz 100.0% 10.9 EUR Partly amortising Dec-28 90.0% Bank Debt
Jaén 100.0% 12.1 EUR Partly amortising Dec-28 90.0% Bank Debt
Guillena 100.0% 16.8 EUR Partly amortising Dec-28 90.0% Bank Debt
Tiza 100.0% 9.7 EUR Partly amortising Dec-28 90.0% Bank Debt
Subtotal 164.8 95.5%
RCF 100.0% 26.1 EUR Bullet Apr-25 0.0% Bank Debt
Total 190.9 82.5%
1. Foreign currency values converted to EUR as at 30 June 2024. Data
represents AER's share of debt. AER share of Desfina 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 2023: 2.7%).
5. Consists of 1M EURIBOR plus a margin of 1.85%.
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.
Note the valuation decline for the Company's Spanish assets is more pronounced
than the rest of the portfolio as a result of the EUR 50 million debt
financing completed in 2024, with proceeds raised being distributed to THL.
EUR million As at As at Variance (%)
30 June
31 December
2024
2023
Tesla 24.5 25.8 (5.3%)
Sagres 18.5 20.1 (7.9%)
Holmen II 22.7 26.5 (14.6%)
Olhava 25.4 30.8 (17.5%)
Svindbaek 31.9 37.7 (15.5%)
The Rock 33.7 37.7 (10.6%)
Benfica III 13.7 16.1 (15.0%)
Albeniz 38.3 50.5 (24.1%)
Desfina 25.1 26.1 (3.7%)
Ourique 26.6 30.5 (12.8%)
Greco 73.0 103.4 (29.4%)
Tiza 22.3 32.5 (31.7%)
--------------- --------------- ---------------
Fair value of investments (HoldCo)(1) 355.7 438.0 (18.8%)
========= ========= =========
Cash and other current assets of HoldCo 6.0 9.6 (37.6%)
Revolving credit facility drawn by HoldCo (26.1) (74.7) (65.1%)
Elimination of intercompany shareholder loans (0.3) (0.5) (37.9%)
--------------- --------------- ---------------
Investments at fair value through profit or loss 335.3 372.4 (10.0%)
========= ========= =========
Desfina, Greece
1. 1H24 reflects the repayment of shareholder loans funded by the new
EUR 50.0 million debt facility of the Spanish solar PV portfolio.
NAV Bridge (EUR million)(1)
Portfolio Valuation Bridge (EUR million)(1)
1. Totals may not add up due to rounding differences.
2. Excludes the impact of capital contributions.
3. Non-recurring expenses and FX losses.
4. Reflects the payment of a purchase price retention of Ourique.
The Company's NAV as at 30 June 2024 was EUR 335.5 million or 88.7 cents per
Ordinary Share (31 December 2023: EUR 372.5 million or 98.5 cents per Ordinary
Share). This represents a NAV total return of -7.1% per Ordinary Share (1H23:
-3.5%) including dividends.
Dividends of EUR 10.7 million (2.8 cents per Ordinary Share) were paid during
the reporting period, with respect to the last quarter of 2023 and the first
quarter of 2024.
The main drivers of NAV movement throughout the reporting period include:
- Guarantees of Origin (GoOs): A sharp decrease in Guarantees of
Origin (GoOs) as a result of higher supply due to increase in RES capacity in
Europe combined with lower demand due to lower industrial activity in the
short term. Long-term GoO price forecasts have also declined reflecting
expectations of lower demand as European countries approach fully decarbonized
grids (-5.8 cents per Ordinary Share);
- Forecast power prices: Decrease in European power price
forecasts, especially in the short term, mirroring lower commodity prices,
lower demand due to mild winter weather conditions and structurally lower
demand/consumption (-2.2 cents per Ordinary Share);
- Discount Rate: The company's discount rate increased from 7.2%
as of 31 December 2024 to 7.5% as of 30 June 2024, resulting from a slight
increase in the risk free rate and the positive effect from the addition of
senior debt in the Spanish assets Albeniz, Tiza and Greco.
PORTFOLIO VALUATION - KEY ASSUMPTIONS
Metric As at As at
30 June
31 December
2024
2023
Discount rate Weighted average 7.5% 7.2%
Long-term inflation Weighted average 2.0% 2.0%
Remaining asset life(1) Wind energy (years) 22 22
Solar PV (years) 35 36
Hydropower (years) 9 9
--------------- --------------- ---------------
Operating life assumption(2) Wind energy (years) 28 28
Solar PV (years) 40 40
Hydropower (years) n/a n/a
========= =========
1. Remaining asset life based on net full load years. Includes Tesla, as
at 30 June 2024.
2. Asset life assumption from date of commissioning. Includes Tesla, as
at 30 June 2024.
MARKET COMMENTARY AND OUTLOOK
ELECTRICITY PRICE FORECASTS - ALL ASSETS (WEIGHTED AVERAGE)(1)
VALUATION SENSITIVITIES
1. Data reflects pricing forecasts as at 30 June 2024. All power prices
are in real terms as at 30 June 2024 and reflect the weighted average captured
price. Weighting is based on production sold at the market price.
MARKET PRICES
The first half of 2024 was marked by a decrease in short-term power price
forecasts across the majority of the portfolio, reflecting lower commodity
prices (notably gas and coal) relative to the same period last year, due in
large part to the elevated filling levels of gas storage reservoirs. Gas
prices have seen a recent uptick in light of the volatile geopolitical
environment and increased competition with Asia for liquefied natural gas,
despite still trading a markedly lower range than the record highs experienced
in the past few years. 1H24 has seen some recovery in electricity demand at a
transmission system level, with base demand up 2% across major markets
relative to the first half of 2023, partially due to the introduction of
demand reduction measures across several European jurisdictions in the first
quarter of 2023. Elevated hydropower production has been a trend across the
continent in 1H24, particularly in Iberia and the Nordics, with hydro
reservoir levels remaining high heading into the second half of the year.
NORDICS
Over the first six months of the year, power prices in the Nordics traded at
an average of EUR 46.8 per MWh (1H23: EUR 70.5 per MWh). The decrease in power
prices was driven mainly by the continued fall and normalisation of commodity
prices in 2024, as well as high hydropower output in the region. Power demand
in the Nordics has given signs of recovery in 2024. However, the greater
interconnection levels of the region's southern price zones (SE4, NO1, NO2,
DK1) with continental Europe meant that those zones were more affected by
volatile price drops in the continent's commodity and power prices, as opposed
to the less interconnected northern price zones (NO3 and NO4). As at 30 June
2024, AER has exposure to the NO2 and NO4 price zones in Norway via its
interests in Tesla and The Rock, respectively.
1H24 Average Daily Power Price(1)
1. European Network of Transmission System Operators for Electricity
("ENTSO-E"), 'Nordics' reflects the Nord Pool system price.
IBERIA
Power prices in Iberia traded at an average of EUR 39.1 per MWh in 1H24 (1H23:
EUR 89.2 per MWh). The significant decrease in power prices was driven by i)
lower commodity prices, ii) depressed demand, despite demand being above 2023
levels it was still below 2021 levels, iii) elevated hydropower output (up 47%
year-on-year) due to heavy rainfall, and iv) higher solar output as a result
of solar PV capacity growth. Both Spain and Portugal recorded their first
negative prices, especially in the spring, due to a convergence of low demand
and significant renewable output.
GREECE
Power prices in Greece were more elevated than other European countries due to
the higher proportion of hours in which gas-fired generation sets the marginal
price in the country's wholesale market. However, the downward trajectory in
commodity prices still resulted in a substantial decrease in the average power
price for 1H24 to 79.0 per MWh (1H23: EUR 131.6 per MWh).
OUTLOOK
The challenging macro-economic environment is expected to improve in the
second half of 2024 as the Company is set to benefit from a number of positive
tailwinds, including the increasing likelihood of central banks cutting
interest rates and the market consensus that inflation in the European Union
should gradually recede towards the European Central Bank's inflation target
of 2.0%. Nevertheless, inflation is expected to remain above the levels
witnessed in the past decade due to a series of cyclical and secular trends
such as high labour demand supporting wage growth, ageing demographics in the
labour market, limited housing availability supporting real estate prices,
de-globalisation, energy shortages, disrupted supply chains, and higher
defence spending as a result of the continuing conflict in Ukraine. The
prospect of an escalation of the conflict in the Middle East triggering supply
disruptions and increased competition with Asia for liquefied natural gas has
already seen European natural gas prices climb recently. In the short term,
these factors are expected to raise the price floor for commodities and,
consequently, electricity prices.
Overall, the Company remains optimistic on the long-term outlook for the
listed renewable energy sector, driven by the urgent need to decarbonise the
world's energy supply, a broadly favourable European regulatory environment
incentivising energy security and the expectation of increasing power demand
from a recovery in European industrial activity, the electrification of
industry, heat and transport and the rising energy needs of data centres and
generative AI.
AQUILA CAPITAL INVESTMENTGESELLSCHAFT MBH
26 September 2024
1. Source: European Network of Transmission System Operators for
Electricity ("ENTSO-E"), Nordics reflects the Nord Pool system price.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
1. ENVIRONMENTAL
Aquila Group, the Investment Adviser of the Company, focuses on the investment
in, 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. In
1H24, Aquila Group's clean energy portfolio supplied 1.3 million homes with
renewable energy, which avoided 1.4 million tonnes of CO(2)e.(1)
In 2022, Aquila Group formalised a mission to become one of the world's
leading sustainable investment and development companies for essential assets
by 2030. To show commitment to the mission, it set a Group-wide goal to avoid
1.5 billion tonnes of CO2e by 2035 in its portfolio's lifetime, which is
equivalent to 4.1% of CO(2)e emissions worldwide in 2021.(2)
Using the appropriate tools, due-diligence procedures and experts, Aquila
Group ensures it identifies, assesses and mitigates all material ESG factors
to protect investors from potential financial downside, while considering
their impact on society and the environment. In this context, Aquila Group, a
regulated entity, manages all relevant ESG elements using dedicated
subject-matter experts. Together, we are committed to the UN Sustainable
Development Goals, particularly climate action (SDG #13), clean energy (SDG
#7), industry innovation, and infrastructure (SDG #9).
UN Sustainable Development Goals for Europe
At least a 40.0% decline below 1990 levels in greenhouse gas emissions
A 32.0% share of renewables in the energy system
A 32.5% improvement in energy efficiency
ANGELA WIEBECK
Chief Sustainability Officer at Aquila Capital
1. Data as at 30 June 2024 for 1H24, based on current portfolio of the
Aquila Group. For details on the methodology for avoided emissions, refer to:
https://www.aquila-capital.de/fileadmin/user_upload/PDF_Files_Whitepaper-Insights/20231121_LAE_White_paper_EN.pdf.
(https://www.aquila-capital.de/fileadmin/user_upload/PDF_Files_Whitepaper-Insights/20231121_LAE_White_paper_EN.pdf)
Please note that the actual grid emission factors for 2024 may be updated at a
later stage to reflect more recent data sources, thus the figures reported are
subject to change. Once reported, figures will not be restated.
2. Worldwide CO(2)e emissions in 2021 were 40.8 billion tonnes according
to the International Energy Association ("IEA"), available at:
https://www.iea.org/reports/global-energy-review-co2-emissions-in-2021-
(https://www.iea.org/reports/global-energy-review-co2-emissions-in-2021-2) 2
AER's Contribution to the UN Sustainable Development Goals
Goal Overview Contribution
Towards
UN Sustainable
Development Goals
Ensure access to affordable, reliable, sustainable and modern energy for all - AER's portfolio produces renewable energy which contributes towards
Europe's electricity mix
- 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 infrastructure, promote inclusive and sustainable - AER targets renewable investments that are supported by high quality
industrialisation and foster innovation components and infrastructure to optimise the energy yield and subsequent
return to 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 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, asset life)
Take urgent action to combat climate change and its impacts - The Company's 463.8 MW portfolio powered approximately 144.3 thousand
households and avoided approximately 145.3 thousand tonnes of CO(2) emissions
over the reporting period(1)
- 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
1. Actual AER contributions as at 30 June 2024. 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.
Environmental Initiatives
The natural environment around some of the Company's solar PV parks is the
Desierto de Tabernas National Park, situated in 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 implemented across some of the Company's solar PV parks for
local flora and fauna.
Flora
- Translocation of rain-fed olive trees
- 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
- Regular maintenance measures and monitoring
Albeniz, Translocated olive trees
Fauna
- Drinking troughs, feeding troughs and perches were installed in
order to suit the local fauna
- A hunting fence was installed to protect wildlife
- Bird nest boxes were installed, specifically for the nesting of
the lesser kestrel, common kestrel, barn owl and little owl species
- A study commissioned to analyse the degree of adaptation of bird
species to the presence of the solar PV parks, with special emphasis on the
lesser kestrel and Montagu's harrier species
- Stands for wild rabbits built to help the breeding and survival
of this species
2. SOCIAL
Renewable energy projects can 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. In light of the European
Green Deal boosting renewable energy projects, investment into clean-energy
assets has accelerated over recent years. As renewable energy deployment
increases, pressure on land is growing. The need to protect biodiversity may
result in conflicts over agricultural and renewable energy land usage.
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 by contracting local service
providers, paying local taxes, and lease payments for use of the land.
3. GOVERNANCE
Independent Board of Directors
The independent Board of Directors is responsible for AERʼs governance and
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.
Board and Employee Diversity
The Board of Directors is appointed based on expertise and merit, being
mindful of the benefits generated by diversity. The Board comprises members
with different skills and experiences, while endeavouring to comply with the
Listing Rules on diversity. The current Board comprises 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 culture
(some 655 nationalities are represented among its employees), and in gender
(its gender ratio is 62% male and 38% female).
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 Half-Yearly 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 of the Company for the six months ended 30 June 2024. The
outlook for the Company for the remaining six months of the year ending 31
December 2024 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 2023, 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 2023 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 Half-Yearly 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.
As discussed in the Chairman's Statement above, on 30 September 2024
shareholders will have a further opportunity to have their say as to the
future of the Company and to adopt a revised investment policy providing for
the orderly realisation of the Company's assets.
Despite the Company's uncertain future, it continues to meet its day-to-day
liquidity needs through its cash resources and RCF. In concluding that the
Company remains a going concern, the Directors have considered its cash
position, income, expense flows, and compliance with the RCF covenants. The
Company's net assets as at 30 June 2024 equated to EUR 335.5 million (31
December 2023: EUR 372.5 million). As at 30 June 2024, the Company and its
wholly owned subsidiary held EUR 1.57 million (31 December 2023: EUR 1.53
million) in cash, which excludes any additional cash held within the Company's
investments.
The Company and its subsidiaries have a modest level of debt, representing
36.3% of its Gross Asset Value as of 30 June 2024, comprised of an RCF (EUR
26.1 million drawn, excluding bank guarantees) and non-recourse debt at the
asset level (EUR 164.8 million). In January 2024, the Company, via its wholly
owned subsidiaries, entered into a bank debt financing at its Spanish solar PV
portfolio for EUR 50.0 million, the proceeds of which were primarily used to
repay the RCF, which is currently drawn to EUR 26.1 million as of the date of
approval of this document (excluding bank guarantees), representing
approximately 7.8% of its NAV as at 30 June 2024.
The Company is in compliance with its covenants related to the RCF. The Board
and its advisers have analysed the covenants of the RCF, and significant
headroom exists in relation to both the Interest Coverage Ratio ("ICR") and
Loan to Value covenant versus actual ratios based on 30 June 2024. On 5
September 2024, the Company announced that it had entered into a sale and
purchase agreement with Sunnhordland Kraftlag AS to sell its 25.9% interest in
Tesla for consideration of approximately EUR 27.1 million. The majority of the
sales proceeds will be used to fully repay the Company's RCF, excluding the
bank guarantees of EUR 2.8 million.
The Company's RCF is due to expire in April 2025 and whilst an extension has
not been agreed, the Company would expect to extend the facility with the
existing lenders should the need arise, on the basis that:
- the Company and its Investment Adviser have a strong
relationship with the RCF lenders;
- RCF lenders have put forward proposals in 2024 to extend the
facility, subject to agreeing commercial terms and credit approval;
- the Company and its subsidiaries have a modest level of debt of
approximately 36.3%; and
- the Company is in compliance with its RCF covenants and benefits
from a significant buffer compared to the actual ratios observed as at 30 June
2024.
Outside of the RCF, the Company and its HoldCo have no other noteworthy
liabilities.
The Company and its HoldCo's total expenses for the year ended 30 June 2024
were EUR 2.03 million, inclusive of RCF interest and fees (30 June 2024: EUR
2.15 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.
The Company also has access to a partially undrawn RCF (EUR 21.1 million
available) and other sources of liquidity should the need arise. On 12
September 2024, The Company announced the publication of a circular to convene
a General Meeting to be held on 30 September 2024 to allow shareholders to
vote on the continuation and potential Managed Wind-Down of the Company and
associated adoption of the New Investment Policy. The Board expect it will
take at least 12 months to realise the Company's assets and that the Company
will remain a going concern in the meantime.
Accordingly, while the Directors recognise that these conditions indicate the
existence of material uncertainty which may cast significant doubt about the
Company's ability to continue as a going concern, based on the assessment and
considerations above, the Directors have concluded that the financial
statements of the Company should be prepared on a going concern basis. The
financial statements do not include the adjustments that would result if the
Company were unable to continue on a going concern basis.
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
Half-Yearly 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 Half-Yearly Report has not been reviewed by the Company's Auditors. The
Half-Yearly Report was approved by the Board on 26 September 2024 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 2024
CONDENSED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE
2024
Six months ended 30 June 2024 Six months ended 30 June 2023
(Unaudited) (Unaudited)
Revenue
Capital
Total
Revenue
Capital
Total
Notes
(EUR '000)
(EUR '000)
(EUR '000)
(EUR '000)
(EUR '000)
(EUR '000)
Unrealised losses on investments 3 - (31,796) (31,796) - (24,091) (24,091)
Net foreign exchange losses - (9) (9) - (12) (12)
Interest income 4 8,182 - 8,182 8,656 - 8,656
Dividend income 4 - - - - - -
Investment advisory fees 5 (1,266) - (1,266) (1,496) - (1,496)
Other expenses (762) - (762) (649) - (649)
--------------- --------------- --------------- --------------- --------------- ---------------
Profit/(Loss) on ordinary activities before finance costs and taxation 6,154 (31,805) (25,651) 6,511 (24,103) (17,592)
Finance costs - - - - - -
--------------- --------------- --------------- --------------- --------------- ---------------
Profit/(Loss) on ordinary activities before taxation 6,154 (31,805) (25,651) 6,511 (24,103) (17,592)
Taxation 7 - - - - - -
--------------- --------------- --------------- --------------- --------------- ---------------
Profit/(Loss) on ordinary activities after taxation 6,154 (31,805) (25,651) 6,511 (24,103) (17,592)
========= ========= ========= ========= ========= =========
Return per Ordinary Share - diluted & undiluted (cents) 6 1.63 (8.41) (6.78) 1.64 (6.07) (4.43)
========= ========= ========= ========= ========= =========
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/(loss) for the periodʼ.
The notes are an integral part of these financial statements.
CONDENSED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2024
Notes As at As at
30 June
31 December
2024
2023
(Unaudited)
(Audited)
(EUR '000)
(EUR '000)
Fixed assets
Investments at fair value through profit or loss 3 335,291 372,403
--------------- ---------------
Current assets
Trade and other receivables 62 96
Cash and cash equivalents 1,571 1,532
--------------- ---------------
1,633 1,628
========= =========
Creditors: amounts falling due within one year
Trade and other creditors (1,415) (1,490)
--------------- ---------------
(1,415) (1,490)
========= =========
Net current assets 218 138
--------------- ---------------
Net assets 335,509 372,541
========= =========
Capital and reserves: equity
Share capital 8 4,082 4,082
Share premium 255,643 255,643
Special reserve 83,055 87,717
Capital reserve (7,886) 23,919
Revenue reserve 615 1,180
--------------- ---------------
Total Shareholders' funds 335,509 372,541
========= =========
Net assets per Ordinary Share (cents) 9 88.73 98.52
========= =========
Approved by the Board of Directors and authorised for issue on 26 September
2024 and signed on its behalf by:
IAN NOLAN
Chairman
Company number: 11932433
The notes are an integral part of these financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2024
For the six months ended 30 June 2024 Notes Share Share Special Capital Revenue Total
(Unaudited)
capital
premium
reserve
reserve
reserve
(EUR '000)
(EUR '000)
(EUR '000)
(EUR '000)
(EUR '000)
(EUR '000)
Opening equity as at 1 January 2024 4,082 255,643 87,717 23,919 1,180 372,541
Strategic review costs - - (691) - - (691)
Loss for the period - - - (31,805) 6,154 (25,651)
Dividend paid 10 - - (3,971) - (6,719) (10,690)
--------------- --------------- --------------- --------------- --------------- ---------------
Closing equity as at 30 June 2024 4,082 255,643 83,055 (7,886) 615 335,509
========= ========= ========= ========= ========= =========
For the six months ended 30 June 2023 Share Share Special Capital Revenue
(Unaudited)
capital
premium
reserve
reserve
reserve
Total
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
========= ========= ========= ========= ========= =========
The notes are an integral part of these financial statements.
CONDENSED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Notes Six months Six months
ended
ended
30 June
30 June
2024
2023
(Unaudited)
(Unaudited)
(EUR '000)
(EUR '000)
Operating activities
Loss on ordinary activities before finance costs and taxation (25,651) (17,592)
Adjustment for unrealised losses on investments 31,796 24,091
Decrease in trade and other receivables 34 5,592
Decrease in other creditors (413) (867)
--------------- ---------------
Net cash from operating activities 5,766 11,224
========= =========
Investing activities
Repayments of investments 3 5,316 3,813
--------------- ---------------
Net cash flow from investing activities 5,316 3,813
========= =========
Financing activities
Share buybacks 8 - (20,091)
Strategic review costs (353) -
Dividend paid 10 (10,690) (10,711)
--------------- ---------------
Net cash used in financing activities (11,043) (30,802)
========= =========
Increase/(Decrease) in cash and cash equivalents 39 (15,765)
--------------- ---------------
Cash and cash equivalents at the start of the period 1,532 19,893
--------------- ---------------
Cash and cash equivalents at the end of the period 1,571 4,128
========= =========
The notes are an integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
1. GENERAL INFORMATION
Aquila European Renewables 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 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 Half-Yearly Report have
been prepared in accordance with IAS 34 Interim Financial Reporting. The
accounting policies, critical accounting judgements, estimates and assumptions
are consistent and should be read in conjunction with the Company's latest
annual audited financial statements for the period ended 31 December 2023. The
financial statements for the year ended 31 December 2023 have been prepared in
accordance with the UK-adopted International Accounting Standards in
conformity with the requirements of the Companies Act 2006, as applicable to
companies reporting under those standards. The financial statements have been
prepared on the historical cost basis, except 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
2023. The audited annual accounts for the year ended 31 December 2023 have
been delivered to Companies House. The audit report thereon was unmodified.
The functional currency of the Company is euros (EUR), as this is the currency
of the primary economic environment in which the Company operates.
Accordingly, the financial statements are presented in euros, rounded to the
nearest thousand euros, unless otherwise stated.
Accounting for Subsidiary
The Company owns 100.0% of its subsidiary Tesseract Holdings Limited ("THL" or
"HoldCo"), 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" or "SHL") 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 an investment entity, and as described under IFRS 10, values its
SPV investments at fair value through profit or loss. SPV investments are
investments held at Holdco. Further details of the HoldCo and SPV structure
and investment can be found in note 14.
Going Concern
The Directors have adopted the going concern basis in preparing the financial
statements. Details of the Directorsʼ assessment of the going concern status
of the Company, which considered the adequacy of the Companyʼs resources and
the impact of risks and uncertainties, including the Company's continuation
vote are provided in the Interim Management Report which can be found above.
Segmental Reporting
The chief operating decision-maker ("CODM"), 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 CODM
to manage the Company presents the business as a single segment.
Critical Accounting Judgements, Estimates and Assumptions
The preparation of the financial statements requires management to make
judgements, estimates and assumptions in certain circumstances that affect
reported amounts. These are judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities.
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 IFRS 10.
The key assumptions that have a significant impact on the carrying value of
the Companyʼs 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
2024
2023
(Unaudited)
(Audited)
(EUR '000)
(EUR '000)
(a) Summary of valuation
Analysis of closing balance:
Investments held at fair value through profit or loss 335,291 372,403
--------------- ---------------
Total investments 335,291 372,403
========= =========
(b) Movements during the period
Opening balance, at cost 348,415 362,978
Purchases, at cost - -
Repayments, at cost (5,316) (14,563)
--------------- ---------------
Cost of investments 343,099 348,415
========= =========
Revaluation of investments to fair value:
Unrealised (losses)/gains on fair value of investments (7,808) 23,988
--------------- ---------------
Balance of capital reserve - investments held (7,808) 23,988
========= =========
Fair value of investments 335,291 372,403
========= =========
(c) Losses on investments in the period
Movement on unrealised valuation of investments held (31,796) (41,675)
--------------- ---------------
Losses on investments (31,796) (41,675)
========= =========
The fair value of the Companyʼs equity and the Shareholder loans investment
in HoldCo are determined by the underlying fair values of the SPV investments,
which are not traded and contain unobservable inputs. As explained in Note 2,
the Company has made a judgement to fair value of both the equity and
shareholder loan investments together. As such, the Companyʼs equity and the
Shareholder loans investments in HoldCo have been classified as Level 3 in the
fair value hierarchy.
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 classification of the Companyʼs investments held at fair value is
detailed in the table below:
As at 30 June 2024
(Unaudited)
Level 1 Level 2 Level 3 Total
(EUR '000)
(EUR '000)
(EUR '000)
(EUR '000)
Investments at fair value through profit and loss - - 335,291 335,291
--------------- --------------- --------------- ---------------
- - 335,291 335,291
========= ========= ========= =========
As at 31 December 2023
(Audited)
Level 1 Level 2 Level 3 Total
(EUR '000)
(EUR '000)
(EUR '000)
(EUR '000)
Investments at fair value through profit and loss - - 372,403 372,403
--------------- --------------- --------------- ---------------
- - 372,403 372,403
========= ========= ========= =========
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 2024 (31 December 2023: none)
The movement on the Level 3 unquoted investments during the period is shown
below:
As at As at
30 June
31 December
2024
2023
(Unaudited)
(Audited)
(EUR '000)
(EUR '000)
Opening balance 372,403 428,641
Additions during the period - -
Repayments during the period (5,316) (14,563)
Unrealised losses on investments (31,796) (41,675)
--------------- ---------------
Closing balance 335,291 372,403
========= =========
Valuation Methodology
The Investment Adviser has carried out fair market valuations of the SPV
investments as at 30 June 2024 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 Companyʼs 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 7.5%
as at 30 June 2024 (31 December 2023: 7.2%).
Useful lives are based on the Investment Adviserʼs 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 lives of
hydropower assets are estimated in accordance with their expected concession
terms.
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. Long-term power price forecasts are provided by leading
marker consultants, updated quarterly.
Specifically commissioned external reports are used to estimate the expected
electrical output from the wind and hydropower farm and solar PV assets,
taking into account the expected average wind speed at each location and
generation data from historical operation. The actual electrical output may
differ considerably from that estimated in such a report mainly due to the
variability of actual wind to that modelled in any one period. Assumptions
around electrical output will be reviewed only if there is good reason to
suggest there has been a material change in this expectation.
The P50 level of output is the estimated annual amount of electricity
generation (in MW) that has a 50.0% probability of being exceeded both in any
single year and over the long term and a 50.0% probability of being
underachieved.
Climate risks can also affect the carrying value of the Company's underlying
investments. The Company relies (via the HoldCo or relevant SPVs) on
third-party technical advisers to consider the impact of climate risks when
assessing P50 production forecasts.
The operating costs of the SPV companies are frequently partly or wholly
subject to inflation and an assumption is made that inflation will increase at
a long-term rate. The SPV's valuation assumes long-term inflation of 2.0% (31
December 2023: 2.0%). The impact of physical and transition risks associated
with climate change is assessed on a project-by-project basis and factored
into the underlying cash flows as appropriate.
The following assumptions were used in the valuations:
Metric As at As at
30 June
31 December
2024
2023
(Unaudited)
(Audited)
Discount rate Weighted average 7.5% 7.2%
Long-term inflation Weighted average 2.0% 2.0%
Remaining asset life (weighted average)(1) Wind energy 22 years 22 years
Solar PV 35 years 36 years
Hydropower 9 years 9 years
========= =========
4. INCOME
Six months Six months
ended
ended
30 June
30 June
2024
2023
(Unaudited)
(Unaudited)
(EUR '000)
(EUR '000)
Interest income from Shareholder loans 8,164 8,624
Bank interest income 18 32
Dividend income - -
--------------- ---------------
Total income 8,182 8,656
========= =========
1. Remaining asset life based on net full load years. Includes Tesla, as
at 30 June 2024.
5. INVESTMENT ADVISORY FEES
Six months ended 30 June 2024 Six months ended 30 June 2023
(Unaudited)
(Unaudited)
Revenue Capital Total Revenue Capital Total
(EUR '000)
(EUR '000)
(EUR '000)
(EUR '000)
(EUR '000)
(EUR '000)
Investment advisory fees 1,266 - 1,266 1,496 - 1,496
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.
Share-based Payments
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 an 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.
The Company settled investment advisory fees by issuing Ordinary Shares and
purchasing Ordinary Shares in the market during the period to 30 June 2023. No
share-based payments occurred for the period to 30 June 2024. The Company has
issued and purchased the following shares to settle investment advisory fees
for the period under review:
In respect of the period to 30 June 2024 Investment Fair value of
(Unaudited)
advisory fees
issue price
Number of
Date of
Issued/
(EUR)
(EUR cents)
shares
transaction
Purchased
31 March 2024 n/a
30 June 2024 n/a
========= ========= =========
In respect of the period to 30 June 2023 Investment Fair value of
(Unaudited)
advisory fees
issue price
Number of
Date of
Issued/
(EUR)
(EUR cents)
shares
transaction
Purchased
31 March 2023 767,841 98.86 771,695 18 May 2023 Purchased
30 June 2023 728,290 87.00 831,701 7 August 2023 Purchased
========= ========= ========= ========= =========
6. RETURN PER ORDINARY SHARE
Return per ordinary share is based on the loss for the period of EUR
25,651,000 (30 June 2023: loss of EUR 17,592,000) attributable to the diluted
and undiluted weighted average number of Ordinary Shares in issue of
378,122,130 (30 June 2023: 397,096,237) in the period to 30 June 2024. Revenue
profit and capital loss are EUR 6,154,000 (30 June 2023: EUR 6,511,000) and
EUR 31,805,000 (30 June 2023: EUR 24,103,000) respectively.
No of ordinary shares
Weighted Average Number of Shares Used as the Denominator As at As at
30 June
30 June
2024
2023
(Unaudited)
(Unaudited)
Weighted average number of Ordinary Shares used as the denominator in 378,122,130 397,096,237
calculating undiluted earnings per share
The effect of settled investment advisory fees by issuing Ordinary Shares - -
(Note 5)
----------------- -----------------
Weighted average number of Ordinary Shares and potential Ordinary Shares used 378,122,130 397,096,237
as the denominator in calculating diluted earnings per share
========== ==========
7. TAXATION
Six months ended 30 June 2024 Six months ended 30 June 2023
(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 2024 As at 31 December 2023
(Unaudited)
(Audited)
No of shares (EUR '000) No of shares (EUR '000)
Allotted, issued and fully paid Ordinary Shares of 1 cent each ("Ordinary 378,122,130 4,082 378,122,130 4,082
Shares")
----------------- ----------------- ----------------- -----------------
Total 378,122,130 4,082 378,122,130 4,082
========== ========== ========== ==========
The Ordinary Shares shall carry the right to receive the profits of the
Company available for distribution and determined to be distributed by way of
interim or final dividends at such times as the Directors may determine in
accordance with the Articles of the Company. The holders of Ordinary Shares
have the right to receive notice of, and to attend and vote at, General
Meetings of the Company.
There were no shares issued during the six month period to 30 June 2024.
There were no shares purchased for treasury during the period to 30 June 2024.
During the period to 31 December 2023, the Company purchased for treasury a
total of 30,103,575 Ordinary Shares at an aggregate cost of EUR 27,964,000
(including stamp duty and other fees).
9. NET ASSETS PER ORDINARY SHARE
Net assets per ordinary share as at 30 June 2024 is based on EUR 335,509,000
(31 December 2023: EUR 372,541,000) of net assets of the Company attributable
to the 378,122,130 (31 December 2023: 378,122,130) Ordinary Shares in issue as
at 30 June 2024.
10. DIVIDEND PAID
The Company has paid the following interim dividends in respect of the year
under review:
Six months ended Six months ended
30 June 2024
30 June 2023
(Unaudited)
(Unaudited)
Cents per Cents per
Ordinary
Total
Ordinary
Total
Share
(EUR '000)
Share
(EUR '000)
31 December 2023 interim - paid 18 March 2024 (2023: 17 March 2023) 1.3775c 5,211 1.3125c 5,335
31 March 2024 interim - paid 14 June 2024 (2023: 23 June 2023) 1.4475c 5,479 1.3775c 5,376
Total 2.8250c 10,690 2.6900c 10,711
The dividend relating to the period ended 30 June 2024, 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 2024
30 June 2023
(Unaudited)
(Unaudited)
Total dividends paid in the period Cents per Total Cents per
Ordinary
(EUR '000)
Ordinary
Total
Share
Share
(EUR '000)
31 March 2024 interim - paid 14 June 2024 (2023: 23 June 2023) 1.4475c 5,479 1.3775c 5,376
30 June 2024 interim - paid 3 September 2024 (2023: 8 September 2023) 1.4475c 5,473 1.3775c 5,308
Total 2.8950c 10,952 2.7550c 10,684
11. Transactions with the Investment Adviser and Related Party Transactions
Fees payable to the Investment Adviser are shown in the Income Statement. As
at 30 June 2024, the fee outstanding to the Investment Adviser was EUR 618,503
(30 June 2023: EUR 728,282).
AIFM fees for the period ended 30 June 2024 amount to EUR 60,330 (30 June
2023: EUR 58,778). As at 30 June 2024, the fee outstanding to the AIFM was EUR
18,949 (30 June 2023: EUR 23,552). The Company Secretary and Administrator
fees for the period ended 30 June 2024 amount to EUR 88,911 (30 June 2023: EUR
123,774).
Fees are payable to the Directors in respect of the year to 31 December 2024
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. Directors'
fees paid during the six month period to 30 June 2024 was EUR 97,000.
During the period, the Company received repayments of its Shareholder loans to
HoldCo of EUR 5,316,000 (30 June 2023: nil). The accrued interest and the
Shareholder loans outstanding at the period end were EUR 228,572,000 (30 June
2023: EUR 244,638,000).
The Directors had the following shareholdings in the Company, all of which
were beneficially owned.
Ordinary shares Ordinary shares
as at
as at
30 June
31 December
2024
2023
(Unaudited)
(Audited)
Ian Nolan 150,000 150,000
David MacLellan 125,000 125,000
Kenneth MacRitchie 50,000 50,000
Patricia Rodrigues 50,000 50,000
Myrtle Dawes nil nil
12. Commitments and Contingencies
The Company did not have any new investments or capital commitments during the
first six months of 2024 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 615,000 as at 30 June 2024
(31 December 2023: EUR 1,225,000).
14. Unconsolidated Subsidiaries, Joint Venture and Associates
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.
Subsidiary entity Effective Investment Country of Profit/(Loss) Profit/(Loss) Total assets Total assets
name and
ownership %
incorporation
for the period
for the year
balances as at
balances as at
registered address
ended
ended
30 June
31 December
30 June
31 December
2024
2023
2024
2023
(EUR million,
(EUR million,
(EUR million,
(EUR million,
unless
unless
unless
unless
otherwise
otherwise
otherwise
otherwise
stated)
stated)
stated)
stated)
Tesseract Holdings Limited Leaf B, 20th Floor, Tower 42 Old Broad Street 100.0 HoldCo Subsidiary entity, owns underlying SPV investments United Kingdom (31.8) (41.7) 335.6 447.6
London EC2N 1HQ
The following table shows the investments held via SPVs which are held by
Tesseract Holdings Limited, the Company's wholly owned subsidiary.
Subsidiary entities Effective Activity Country of Profit/(Loss) Profit/(Loss) Total assets Total assets
name and
ownership %
incorporation
for the period
for the year
balances as at
balances as at
registered address
ended
ended
30 June
31 December
30 June
31 December
2024
2023
2024
2023
(EUR million,
(EUR million,
(EUR million,
(EUR million,
unless
unless
unless
unless
otherwise
otherwise
otherwise
otherwise
stated)
stated)
stated)
stated)
Holmen II Wind Park ApS 100.0 Subsidiary entity, owns investment in Holmen II Denmark 9.6 DKK 1.5 163.2 DKK 23.6
Københavnsvej 81
4000 Roskilde
Denmark
Aalto Wind No 2 Ltd. Oy 100.0 Subsidiary entity, owns investment in Olhava Finland 1.5 (0.0) 44.5 45.4
c/o Intertrust (Finland) Oy
Bulevardi 1, 6th floor
FI-00100 Helsinki, Finland
Prettysource Lda 100.0 Subsidiary entity, owns investment in Benfica III Portugal (0.1) 0.0 4.2 4.1
Avenida Fontes Pereira
de Melo, n.º 14
11.º floor, 1050 121 Lisbon
Astros Irreverentes 100.0 Subsidiary entity, owns investment in Benfica III Portugal (0.1) 0.0 4.2 4.1
Unipessoal Lda
Avenida Fontes Pereira
de Melo, n.º 14
11.º floor, 1050 121 Lisbon
Contrate o Sol 100.0 Subsidiary entity, owns investment in Benfica III Portugal (0.1) 0.0 2.0 2.1
Unipessoal Lda
Rua Filipe Folque
no. 10J, 2 Dto, 1050-113
Lisbon
Argeo Solar S.L. 100.0 Subsidiary entity, owns investment in Albeniz Spain (1.2) (2.2) 37.2 37.2
Paseo de la Castellana
259D, 14S-15, Madrid,
Spain
Vector Aioliki Desfinas S.A. 89.0 Subsidiary entity, owns investment in Desfina Greece 0.7 2.5 51.8 53.3
Salaminos Str. 20
15124 Maroussi
Attica, Greece
Ega Suria S.L. 100.0 Subsidiary entity, owns investment in Tiza Spain 0.4 (0.6) 34.8 33.1
Paseo de la Castellana 259D
Floors 14 and 15
28046 Madrid
Azalent Investment S.L. 100.0 Subsidiary entity, owns investment in Greco Spain 0.2 0.6 71.0 97.4
Paseo de la Castellana 259D
Floors 14 and 15
28046 Madrid
Svindbaek Vindkraft 100.0 Subsidiary entity, owns investment in Svindbaek Denmark 0.4 (1.4) 31.6 35.9
HoldCo ApS
Gyngemose Parkvej 50
2860 Søborg
The following table shows associates of the Company. The Company's investments
in associates are held through HoldCo.
Joint venture and Effective Activity Country of Profit/(Loss) Profit/(Loss) Total assets Total assets
associate entities
ownership %
incorporation
for the period
for the year
balances as at
balances as at
name and
ended
ended
30 June
31 December
registered address
30 June
31 December
2024
2023
2024
2023
(EUR million,
(EUR million,
(EUR million,
(EUR million,
unless
unless
unless
unless
otherwise
otherwise
otherwise
otherwise
stated)
stated)
stated)
stated)
Palea Solar Farm 50.0 Associate entity, owns equity investment in Ourique Portugal (0.2) (0.0) 42.1 42.8
Ourique S.A
Avenida Fontes
Pereira de Melo,
no. 14, 11. Andar
1050-121 Lisbon Portugal
Midtfjellet Vindkraft AS 25.9 Associate entity, owns equity investment in Tesla Norway (1.2) NOK (35.0) NOK 839.1 NOK 905.9 NOK
Sandvikvågvegen 45
N-5419 Fitjar, Norway
As disclosed in note 3, the Company finances the HoldCo through a mix of
Shareholder loan and equity. A Master Shareholder Loan was agreed in 2023
between the Company and its subsidiary with an initial 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, joint
venture and associate's entities to transfer funds in the form of interest and
dividends.
15. Post Balance Sheet Events
Tesla Sale
In September 2024, the Investment Adviser announced the sale of AER's 25.9%
stake in the Norwegian wind farm Tesla at an attractive premium to its net
asset value.
Vote on the Continuation and Potential Wind-Down of the Company
On 12 September 2024, The Company announced the publication of a circular to
convene a General Meeting to be held on 30 September 2024 to allow
shareholders to vote on the continuation and potential Managed Wind-Down of
the Company and associated adoption of the New Investment Policy.
16. Status of this Report
These half-yearly financial statements are not the Companyʼs 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 Companyʼs registered office. The report will also be
available in electronic format on the Companyʼs website,
www.aquila-european-renewables.com.
The information for the year ended 31 December 2023 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 2024.
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 2024
NAV per Ordinary Share (cents) a 88.73
Share price (cents) b 64.90
Discount (b÷a)-1 (26.86%)
========== ==========
Ongoing Charges
A measure, expressed as a percentage of average net assets (quarterly net
assets averaged over the year), of the regular, recurring annual costs of
running an investment company.
As at 30 June 2024
Average NAV (EUR '000) a 362,787
Annualised expenses (EUR '000) b 3,837
Ongoing charges (b÷a) 1.06%
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 2024 Share price NAV
Opening at 1 January 2024 (cents) a 78.50 98.50
Dividend adjustment b 2.8 2.8
Closing at 30 June 2024 (cents) c 64.90 88.73
Total return ((b+c)÷a)-1 (13.7%) (7.1%)
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
2024
2023
Net result generated at the SPVs (EUR '000) a 9,740 12,806
Dividend paid (EUR '000) b 10,690 10,711
Dividend cover ratio a÷b 0.9x 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
2024
2023
Adjusted net cash flow from operating activities (EUR '000) a 8,512 11,690
Dividend paid (EUR '000) b 10,690 10,711
Dividend cover ratio a÷b 0.8x 1.1x
Gross Asset Value
The Company's gross assets comprise the net asset values 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
2024
2023
2023
Net Asset Value (EUR '000) a 335,509 403,256 372,541
Debt at the SPV level (EUR '000) b 164,782 126,291 120,126
RCF drawn (EUR '000) c 26,085 69,349 74,716
Gross Asset Value (EUR '000) a+b+c 526,375 598,896 567,383
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
2024
2023
2023
Gross Asset Value (EUR '000) a 526,375 598,896 567,383
Debt at the SPV level (EUR '000) b 164,782 126,291 120,126
RCF drawn (EUR '000) c 26,085 69,349 74,716
Gearing ratio (b+c)÷a 36.3% 32.7% 34.3%
Enquiries:
Company Secretary
Apex Listed Companies Services (UK) Ltd
Tel: +44 (0) 20 4582 6470
The Half-yearly financial report will be submitted to the National Storage
Mechanism and will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
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