REG - Asian Energy Impact Asian Energy - AEIT Asian Energy - AEIP - 31 December 2023 Unaudited NAV and Company Update
13/03/2024 07:00
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RNS Number : 6019G Asian Energy Impact Trust PLC 13 March 2024
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT MAY CONSTITUTE INSIDE
INFORMATION AS STIPULATED UNDER THE UK'S MARKET ABUSE REGULATION. UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, SUCH INSIDE INFORMATION IS NOW CONSIDERED TO
BE IN THE PUBLIC DOMAIN.
LEI: 254900V23329JCBR9G82
13 March 2024
Asian Energy Impact Trust plc
(the "Company" or "AEIT")
31 DECEMBER 2023 unaudited Net Asset Value
and COMPANY UPDATE
Asian Energy Impact Trust plc, the renewable energy investment trust providing
direct access to sustainable energy infrastructure in fast-growing and
emerging economies in Asia, announces its unaudited net asset value ("NAV") at
31 December 2023.
HIGHLIGHTS
· 31 December 2023 30 September 2023 31 December 2022
(audited)
(unaudited) (unaudited)
Net assets - US$ million 85.0 88.5 86.6
NAV per share - cents 48.4 50.4 49.3
NAV total return per share since IPO 1 (#_ftn1) -49.5% -47.5% -49.2%
· NAV as at 31 December 2023 (relative to 30 September 2023) reduced by US$3.5
million. This reflects a US$0.2 million increase in the underlying portfolio
valuations offset by costs of US$2.9 million incurred in the quarter and
US$0.8 million of dividends paid to shareholders.
· Following a capital investment of US$19.8 million in SolarArise India Projects
Private Limited ("SolarArise") to fund the equity required for constructing
the 200MW solar project that forms part of the Rewa Ultra Mega Solar Park (the
"RUMS project") (as announced on 11 October 2023), the Company and its UK
subsidiary, AEIT Holdings Limited, had cash balances at 31 December 2023 of
US$41.2 million (23.5 cents per share).
· Construction of the RUMS project commenced in November 2023, with current
project economics having deteriorated by US$1.1 million in the valuation as at
31 December 2023. Post the valuation date, issues between the landowner of the
Rewa Ultra Mega Solar Park ("RUMSL 2 (#_ftn2) ") and the surrounding farmers,
which were outside of the control of the Company, in January and February 2024
restricted construction work. It is expected that commissioning will not now
occur until late May 2024.
· As at 31 December 2023, gearing in AEIT's investment portfolio represented
56.0% of the Group's adjusted gross asset value ("GAV"). Gearing is not used
at the Company level.
· The audit of the Company's financial statements for the financial period ended
31 December 2023 is progressing and the annual results are expected to be
announced in early April.
NET ASSETS
Net assets as at 31 December 2023 were US$85.0 million, with a NAV total
return per share since IPO of -49.5%. The NAV per share decreased to 48.4
cents as at 31 December 2023. The following table reconciles the movements
from the last published NAV as at 30 September 2023.
Net assets bridge - US$'000s 30 September 2023
to 31 December 2023
Net assets at 30 September 2023 88,458
Change in fair value of investment portfolio 20,071
Capital injection for RUMS project (19,839)
Dividends paid to shareholders (773)
Investment management fees (545)
Other PLC costs (net) (643)
Additional professional fees following suspension (1,680)
Net assets at 31 December 2023 85,049
Fair Value of Investment Portfolio
The most significant movements in the fair value from 30 September 2023 to 31
December 2023 are summarised in the table below.
Fair value of investments bridge - US$'000s 30 September 2023
to 31 December 2023
Fair value of investments at 30 September 2023 25,494
RUMS project 18,742
Inflation, FX and roll forward of valuation date 955
Power prices 1,179
Generation (929)
Capital restructuring and tax adjustments (2,997)
Other adjustments 3,121
Fair value at 31 December 2023 45,565
RUMS project: The negative net present value ("NPV") associated with
completing the project was US$14.6 million as at 30 September 2023. Since
then, US$19.8 million was injected from SolarArise into the SPV. Actual
changes in the underlying project economics amounted to a US$1.1 million
reduction in value. The roll forward of the valuation date including updating
for macro-assumptions and other model updates were offset by an increase in
interest rate assumptions and an updated budget with additional capex.
Inflation, FX and roll forward: For inflation, the approach is to blend two
inflation forecasts from reputable third-party sources and apply this
consistently to assumptions. For FX, valuations are converted from local
currency at the relevant spot rate at the balance sheet date. The discount
rate unwind includes the NPV of future cashflows being brought forward from
the last valuation date to 31 December 2023 as well as the inclusion of actual
performance figures during the period.
Power prices: In determining the forecast for power prices, the approach taken
is to blend at least two price curves as prepared by third-party independent
market forecasters that are reputable in the relevant markets. The updated
forecasts received for the Philippines and Vietnam for Q4 2023 were higher
than those from Q2 2023 which were utilised in the 30 June 2023 and 30
September 2023 valuations. For the Philippines, the updated blended price
forecast shows a notable increase in the very short term, a slight decrease in
the late 2020s, followed by a moderate increase throughout the remainder of
the modelled time period. For Vietnam, the updated blended price forecast
remains very similar in the short term, with a moderate premium relative to
the previous forecast emerging in the 2030s and a more significant premium in
the 2040s.
Generation: A technical advisor was appointed in September 2023 to provide
updated P50 3 (#_ftn3) yield assessments. Reports have now been received for
SolarArise and have been updated in the model. The reports received include a
"best case P50" and "worst case P50" forecast. The resulting generation from
taking the midpoint is slightly below the estimated reduction applied to the
P50 yield assessments at time of acquisition utilised in the 30 September 2023
valuation. The P50 utilised in the 31 December 2023 valuation represents the
midpoint of the two forecasts. The reports for the Philippine and Vietnamese
assets are still to be received and are expected to be utilised in the 31
March 2024 valuation. The Transitional Investment Manager is continuing to
work with the technical advisor and the SolarArise asset manager to further
understand the root causes of the underperformance of the SolarArise assets to
best evaluate possible optimisation options.
Capital restructuring and tax adjustments: As a result of the capital
injection into the RUMS project, a reorganisation of intercompany debt was
required within the SolarArise SPVs, resulting in greater cash traps as
distributions are delayed. This resulted in a negative US$3.2 million impact
on the valuation. A review is underway to consider options for optimising
the SolarArise capital structure.
Other adjustments: The most material element, which accounted for US$2.3
million of the US$3.1 million movement, was updating assumptions for
decommissioning and residual land value where land is owned in India. The
balance of the other adjustments related predominantly to operational cost
revisions. No changes were made to the discount rates applied which are in the
range of 10.0% - 12.5%.
Dividends
The Board declared a third interim dividend in respect of the year ended 31
December 2023 (the "Q3 2023 Dividend") of 0.44 cents per ordinary share in
respect of the quarter ended 30 September 2023 (total cost: US$0.8 million).
The Q3 2023 Dividend was paid on 11 December 2023 to shareholders on the
register at the close of business on 17 November 2023. The Q3 2023 Dividend
was funded out of the Company's distributable capital reserves and this
outflow is reflected in the 31 December 2023 NAV.
The Board does not intend to declare a dividend in respect of the quarter
ended 31 December 2023 prior to completion of the strategic review, the
outcome of which is expected to be announced by early April 2024.
Expenses
In the three-month period ended 31 December 2023, investment management fees
totalled US$0.5 million of which US$0.1 million may be claimed by the former
Investment Manager (but is not being paid to the former Investment Manager
whilst the Board evaluates all available options) and US$0.4 million is
payable to the Transitional Investment Manager for work carried out by it
since 1 November 2023. This full amount remains accrued and unpaid at the
period end.
Other PLC costs are shown net of interest received on cash deposits of US$0.6
million and realised foreign exchange gains of US$0.3 million.
Since the material uncertainty arose during the preparation of the December
2022 accounts and audit, additional professional fees have been incurred to
provide an in-depth examination of the valuations, to review and validate the
valuation models, to undertake an extensive review into the tax and cash
extraction positions, to undertake a comprehensive review of the RUMS project
and seek advice with regard to the likely abort liabilities and to provide
advice associated with the share suspension, shareholder meeting requisitions
by funds affiliated with the former Investment Manager, the changes to the
investment policy, effecting the change in Investment Manager and the Board's
ongoing strategic review. Additional professional fees incurred since
suspension of listing in the Company's shares total US$5.3 million, of which
US$3.6 million was included in the September 2023 NAV and a further US$1.7
million was incurred in the quarter ending 31 December 2023. The Board is
investigating the Company's right to seek compensation for these additional
professional fees whilst reserving all the Company's other rights.
GEARING
Gearing is not used at the Company level. As at 31 December 2023, US$7.2
million had been drawn under the US$54.9 million project finance facility for
construction of the RUMS project. As at 31 December 2023, SolarArise's SPVs
had aggregate external borrowings of US$108.6 million (30 September 2023:
US$102.8 million) and the Vietnamese assets had external borrowings of
US$1.3 million (30 September 2023: US$1.3 million), whilst the Philippine
assets were ungeared. As at 31 December 2023, gearing in the investment
portfolio represented 56.0% (30 September 2023: 54.6%) of the Group's adjusted
GAV. On a pro forma basis, gearing would increase to 64.5% once the full
project finance facility of the RUMS project is drawn down based on the NAV as
at 31 December 2023.
UPDATE ON OPERATING ASSETS
The Transitional Investment Manager is progressing with its review of the
Company's portfolio as part of the strategic review being undertaken by the
Board. Operational performance data for the assets from 1 January 2023 to 31
December 2023 has been examined.
The 2023 asset level budgets included a 5% reduction in generation based on
historical observed underperformance from the existing P50 generation
expectations. Actual performance in the year was 8.3% below the existing P50s.
Of this, 3.8% was in relation to lower irradiance and the other
underperformance was related to site-specific issues as anticipated in the
budgets. In particular, two of the SolarArise sites had specific issues that
impacted generation. TT2 experienced issues with pollution in the area and TT6
experienced issues with flooding and the control system. For SolarArise, the
midpoint of the technical advisor's updated best and worst case P50 forecasts
will be used to set the generation budget for 2024 which consider lower
expectations for irradiance and site-specific performance issues.
With respect to the Vietnamese portfolio, one of the assets, which is a
rooftop solar project on a furniture factory, is significantly underperforming
against expectations. This is a result of sawdust from the facility below
escaping and settling on the panels. A solution for this is under
investigation with the operations and maintenance provider and the
rectification plan is expected to be in place by the end of Q2 2024.
UPDATE ON RUMS PROJECT CONSTRUCTION
Construction of the RUMS project commenced in November 2023. All the solar
modules have arrived on site, alongside the majority of the other equipment
needed to build the solar farm.
Construction faced delays due to farmers from the surrounding land temporarily
restricting access to the construction site in early to mid-January and
limiting on-site activities from 29 January to mid-February 2024. This stemmed
from land-related issues, for example to do with road access, between the
owner of the land, RUMSL and the neighbouring farmers. Resolution between
these parties was outside of the Company's control. However, SolarArise's
local asset manager escalated the issue within the relevant Indian government
departments and local authorities. Following resolution, construction
recommenced in the third week of February.
Additionally, the project's budget did not initially include provisions for
the installation of dynamic reactive power equipment. The responsibility for
this additional infrastructure, as mandated by Central Electricity Authority
regulations, was unclear. In January 2024, in a meeting with RUMSL, SolarArise
and other significant developers were informed that the cost would need to be
self-funded by SolarArise.
RUMSL is also now behind schedule in constructing the transmission line and
other infrastructure required for commissioning. It is expected that
commissioning will not occur until late May 2024.
A US$2.8 million contingency was included in the modelled project costs in the
31 December 2023 valuation. Delays to the commissioning date beyond 31 March
2024 impacts the project costs. Every month of delay beyond 31 March 2024
will have a negative impact of US$0.5 million - US$0.7 million per month on
NAV. In isolation, this is projected to result in a decrease in valuation of
approximately US$1.4 million for a 31 May 2024 commissioning date, and
approximately US$2.1 million for a 30 June 2024 date. Contractual avenues to
recoup additional costs will be explored.
The Board has approved additional cash funding of up to US$4.5 million to fund
the project delays and additional costs. The NAV impacts presented above
assume this cash injection has taken place.
Q4 2023 FACTSHEET
The Company's factsheet for the quarter ended 31 December 2023 will be
available shortly on its website, www.asianenergyimpact.com
(https://url.avanan.click/v2/___http:/www.asianenergyimpact.com___.YXAxZTpzaG9yZWNhcDphOm86Mjc3YWRiNjllOGU4MmM0MzgwMDBmYzRkOTRjMTYzMjc6NjpkYjBjOjc3Y2IwN2Y2Yjc1OWRmZjJkMmIyMGZmZjVmOTE3ZjJiMjQ3YWNmYzc4MjQ1ZWVkNTRjZTNiYmU0N2JlMWIwMzY6cDpU)
.
The person responsible for arranging the release of this announcement on
behalf of the Company is Uloma Adighibe of JTC (UK) Limited, the Company
Secretary.
Enquiries
Asian Energy Impact Trust plc Tel: +44 (0)20 3757 1892
Sue Inglis, Chair
Octopus Energy Generation (Transitional Investment Manager) Tel: +44 (0)20 4530 8369
Press Office aeit@octopusenergygeneration.com
Shore Capital (Joint Corporate Broker) Tel: +44 (0)20 7408 4050
Mark Percy / Rose Ramsden (Corporate)
Adam Gill / Matthew Kinkead / William Sanderson (Sales)
Fiona Conroy (Corporate Broking)
Peel Hunt LLP (Joint Corporate Broker) Tel: +44 (0)20 7418 8900
Luke Simpson / Huw Jeremy (Investment Banking Division)
Alex Howe / Richard Harris / Michael Bateman / Ed Welsby (Sales)
Smith Square Partners LLP (Financial Advisor) Tel: +44 (0)20 3696 7260
John Craven / Douglas Gilmour
Camarco (PR Advisor) Tel: +44 (0)20 3757 4982
Louise Dolan / Eddie Livingstone-Learmonth / Phoebe Pugh asianenergyimpacttrust@camarco.co.uk
(mailto:asianenergyimpacttrust@camarco.co.uk)
About Asian Energy Impact Trust plc
Asian Energy Impact Trust plc listed on the premium segment of the main market
of the London Stock Exchange in December 2021 and was awarded the Green
Economy Mark upon admission. The Company is an Article 9 fund under the EU
Sustainable Finance Disclosure Regulation.
With effect from 1 November 2023, the Company appointed Octopus Energy
Generation as its transitional investment manager until 30 April 2024 (the
"Transitional Investment Management Period"). The Transitional Investment
Management Period will allow the Board with its advisers to complete the
strategic review of options for the Company's future.
Further information on the Company can be found on its website at
www.asianenergyimpact.com
(https://url.avanan.click/v2/___http:/www.asianenergyimpact.com___.YXAxZTpzaG9yZWNhcDphOm86Mjc3YWRiNjllOGU4MmM0MzgwMDBmYzRkOTRjMTYzMjc6NjpkYjBjOjc3Y2IwN2Y2Yjc1OWRmZjJkMmIyMGZmZjVmOTE3ZjJiMjQ3YWNmYzc4MjQ1ZWVkNTRjZTNiYmU0N2JlMWIwMzY6cDpU)
.
About Octopus Energy Generation
Octopus Energy Generation ("OEGEN" or the "Transitional Investment Manager")
is driving the renewable energy agenda by building green power for the future.
Its London-based, leading specialist renewable energy fund management team
invests in renewable energy assets and broader projects helping the energy
transition, across operational, construction and development stages. The team
was set up in 2010 based on the belief that investors can play a vital role in
accelerating the shift to a future powered by renewable energy. It has a
13-year track record with approximately £6 billion of assets under
management (AUM) (as of September 2023) across 16 countries and total 3.2GW.
These renewable projects generate enough green energy to power 2.3 million
homes every year, the equivalent of taking over 1.2 million petrol cars off
the road. Octopus Energy Generation is the trading name of Octopus Renewables
Limited.
Further details can be found at www.octopusenergygeneration.com
(https://url.avanan.click/v2/___http:/www.octopusenergygeneration.com/___.YXAxZTpzaG9yZWNhcDphOm86YWU5MjAzMTY0ODg2OGJjYzQ1NDUwNTU1OGVmZTc0ZmY6NjoyOTI1OmQyNWZmZDNlNzk1MmRhMGYxNTFmYzFkZjgyMmE2OWRiODBjZGQ5MmZmYTg2YTBjNzBjY2JmZGExZDhiNDM1N2M6cDpU)
.
1 (#_ftnref1) NAV total return per share represents the total return to
shareholders, being the combined effect of the rise or fall in the NAV per
share over the relevant period and assumes dividends paid in the relevant
period are reinvested immediately in the Company at the prevailing NAV per
share, in comparison to the NAV per share at the IPO.
2 (#_ftnref2) RUMSL is a joint venture between Madhya Pradesh UrjaVikas
Nigam Limited and Solar Energy Corporation of India. Solar Energy Corporation
of India Ltd is a company of the Ministry of New and Renewable Energy,
Government of India.
3 (#_ftnref3) The term 'P50' refers to the median probability scenario for
the energy output of a solar asset. It means that there is a 50% chance that
the actual energy production will exceed the P50 estimate and a 50% chance
that it will fall below.
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