Aquila European Renewables Plc Registered · LSE:AERI
Aquila European Renewables Plc Registered — Aquila European Renewables Income Fund — H1 2022 Earnings Presentation
48 slides from Aquila European Renewables Plc Registered's earnings presentation, 2022
Slide 1: Aquila European Renewables Income Fund Plc 1H22 Results
Aquila European Renewables Income Fund Plc (“AERIF”) 1H22 Results Albeniz (Spain) © 2022 AQUILA CAPITAL Generating Essential Investments 1
Slide 2: Table of Contents
Table of Contents 1 Introduction 2 Portfolio 3 Financial and Operating Performance 4 Valuation 5 Conclusion 6 Appendix © 2022 AQUILA CAPITAL 2
Slide 3: Investment Proposition
Investment Proposition Direct Asset Exposure to Wind, Solar PV & Hydro1 European Focused – Presence in 6 countries Contracted Revenues2 ~54% 50% Diversified contracted revenue 45% 51% structure – PPAs and Government Regulated Tariffs Target: 30-50% Target: 30-50% Investment grade counterparties – Go
Slide 4: 1H22 Highlights – A Number of Records and Milestones Achieved
1H22 Highlights – A Number of Records and Milestones Achieved KPIs (EUR cents, unless stated 1H22 1H21 FY21 otherwise) Dividend per ordinary share 2.6 2.5 5.0 NAV per ordinary share 105.5 99.4 102.6 Total NAV per ordinary share return 5.3% 1.9% 7.6% Share price per ordinary share 101.5 111.0 102.0 T
Slide 5: Environmental, Social and Governance Highlights
Environmental, Social and Governance Highlights AERIF Board of Directors & Investment AERIF Board of Directors & Investment Adviser visiting Benfica III, Portugal Adviser visiting Benfica III, Portugal – Aquila Capital’s 2021 ESG report released – now available on AERIF’s website – Currently rated a
Slide 6: AERIF Track Record Since IPO
AERIF Track Record Since IPO Capital Deployed or Total NAV Development Dividends Ongoing Charges Committed (EUR m)1 (Cents per Ordinary Share) (Cents per Ordinary Share)2 (% of NAV)3 Cumulative dividends paid 1.7% 425.5 IPO targets +5% NAV per share 117.3 111.8 1.4% 103.5 104.2 5.25 5.0 290.4 4.0 1.
Slide 7: Aquila Capital – Highly Experienced Investment Adviser
Aquila Capital – Highly Experienced Investment Adviser Clean Energy Portfolio – Installed and Developed Capacity Solar PV Wind energy Hydropower Energy storage systems Energy efficiency 334 PV parks 892 Wind turbines 264 Hydropower plants 9 Projects 20 Projects 11.4 GW 3.7 GW 0.9 GW 0.4 GW – One of
Slide 8: Table of Contents
Table of Contents 1 Introduction 2 Portfolio 3 Financial and Operating Performance 4 Valuation 5 Conclusion 6 Appendix © 2022 AQUILA CAPITAL 8
Slide 9: AERIF Portfolio Snapshot
AERIF Portfolio Snapshot Key Statistics – 30 June 20221 Wind energy Solar PV Hydropower The Rock 12 35 Investments Operating assets2 New investments Olhava (2022) 2 6 Tesla Projects under Countries construction (The Rock, Greco) Holmen II Svindbaek I+II 462.9 MW ~26 Total capacity Remaining asset li
Slide 10: 50% Growth in Capacity From Existing Commitments
50% Growth in Capacity From Existing Commitments Total Generating Capacity – AERIF Share (MW / MWp) +50% growth in capacity from existing commitments 500 100 400 55 300 50 Existing construction assets 30 463 200 308 228 100 197 132 0 IPO 2019 2020 2021 Tiza Albeniz 1H22 Operating The Rock Greco Tota
Slide 11: Portfolio Evolution Since IPO
Portfolio Evolution Since IPO1 Technology Geography Asset Status3 Asset Age IPO 19.2% 19.2% 19.2% 24.2% (2019) 100% 28.0% 28.0% 80.8% 28.7% 52.9% 3.8% 6.9% 14.5% 3.8% 1H22 14.4% Pro 13.6% Forma2 16.2% 45.4% 50.8% 40.2% 16.3% 85.5% 82.6% 6.0% More balanced portfolio mix to Enhanced geographical Intro
Slide 12: Attractive Contracted Revenue Base
Attractive Contracted Revenue Base Present Value of Contracted vs. Revenue Mix2 Non-Contracted Revenue (5 Years)1,2 100% Aquila will proactively seek to replace expired PPA / tariff contracts over time in order to maintain a high degree of contracted revenues 80% 29.4% 46.1% Market 60% Governmen
Slide 13: Construction Progress
Construction Progress The Rock (400 MW) Albeniz (50 MWp) 72 of 72 turbines installed. 71 turbines have produced energy, and 60 Asset fully operational since June 2022 and recorded first revenue turbines have passed completion tests. Intensive work is ongoing to reach Positive results observed
Slide 14: 130 MWp of Solar PV Assets Acquired in 1H22
130 MWp of Solar PV Assets Acquired in 1H22 Tiza, Spain Greco (100 MWp) Tiza (30 MWp) AERIF Portfolio Benefits AERIF share: 100.0% AERIF share: 100.0% – AERIF’s largest acquisition since IPO – Commenced operations in March 2022 – Total solar PV capacity increased over – EUR 90 million plus earn-out
Slide 15: Table of Contents
Table of Contents 1 Introduction 2 Portfolio 3 Financial and Operating Performance 4 Valuation 5 Conclusion 6 Appendix © 2022 AQUILA CAPITAL 15
Slide 16: Asset Performance
Asset Performance 1H22 Monthly Production Performance vs. Budget (AERIF Share, GWh) – 1H22 production was 8.1% below budget 80 Outperformance in Nordic wind (+2.1%) Hydropower Wind energy Solar PV Budget Lower than expected wind levels in Greece (-10.4%) Tiza Albeniz commencement Portuguese so
Slide 17: Technology Diversification
Technology Diversification AERIF Monthly Production Output (% of Yearly Production)1 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% FY20 Portfolio Average FY21 Portfolio Average 1H22 Portfolio Average 2.0% 0.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec – Portfolio production profile has progressively stabil
Slide 18: Portfolio Correlation
Portfolio Correlation Portfolio Merchant Revenue Correlation Matrix1 Norwegian Wind Norwegian Danish Wind Finnish Wind Greek Wind Portugese Portugese Spanish Solar (NO4) Wind (NO2) Hydro Solar Norwegian 1.00 0.19 0.10 0.21 0.02 0.11 (0.17) (0.28) Wind (NO4) Norwegian 1.00 0.91 0.88 0.91 0.49 0.72 0.
Slide 19: 1H22 Electricity Prices
1H22 Electricity Prices 1H22 Daily Average Power Price1 Iberia (EUR / MWh) Iberia FY21 average Nord Pool 600 Nord Pool FY21 average Greece Greece FY21 average 400 254.3 200 190.3 132.1 0 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 – Iberia: Futures as at 20 September 20222 High electricity prices co
Slide 20: Conservative Gearing Position and Well Positioned for Growth
Conservative Gearing Position and Well Positioned for Growth Key Debt Metrics – 30 June 2022 (EUR m)1 Liquidity – 30 June 2022 (EUR m) Company level debt 0.0 Cash balance (excl. asset level cash holdings) − AERIF Plc 58.3 Asset level debt 140.3 − Tesseract Holdings Limited 0.8 Total debt 140.3 Total
Slide 21: Table of Contents
Table of Contents 1 Introduction 2 Portfolio 3 Financial and Operating Performance 4 Valuation 5 Conclusion 6 Appendix © 2022 AQUILA CAPITAL 21
Slide 22: 1H22 Net Asset Valuation
1H22 Net Asset Valuation Net Asset Value Bridge1 5.9 (EUR m) 8.9 1.3 430.6 7.5 (10.4) 417,4 Gain/(loss) on investments – EUR 16.4m (refer to Appendix) Profit/(loss) on ordinary activities after taxation – EUR 22.4m (refer to Appendix) FY21 Movement in Net profit / (loss) Net profit / (loss) Dividend
Slide 23: 1H22 Portfolio Valuation
1H22 Portfolio Valuation Portfolio Valuation Bridge (EUR m) Portfolio Valuation (EUR m)1 1H22 FY21 Var. (%) Tesla 35.3 31.4 12.4 8.2 0.3 2.3 0.9 1.7 1.7 1.9 0.7 373.4 Sagres 17.5 15.8 11.0 48.4 3.9 (5.3) Holmen II 32.7 24.5 33.7 (8.9) Olhava 27.6 27.3 1.2 Svindbaek 42.9 40.6 5.8 The Rock 39.7 45.0 (
Slide 24: Key Assumptions
Key Assumptions Real Electricity Price Forecasts – Weighted Average4 Metric 1H22 FY21 (EUR/ MWh) Discount rate Weighted 6.6% 6.5% average 200 FY21 Long-term inflation Weighted 2.0% 2.0% 1H22 (inc. new investments) average 1H22 (exc. new investments) 150 Remaining asset life Wind energy 23 years 23 y
Slide 25: Well-Positioned In a High Inflationary Environment
Well-Positioned In a High Inflationary Environment EU Electricity Prices Have Typically Outperformed EU Inflation1 Inflation Assumptions Used in the NAV (30 June 2022) 40% 2H22 2023 2024 2025 2026 2027 EU CPI EU Electricity Index 30% Eurozone 6.73% 2.78% 1.85% 1.90% 1.95% 2.00% 20% Denmark 4.01% 1.7
Slide 26: Conservative Valuation Assumptions
Conservative Valuation Assumptions Asset life – Wind energy1 Asset life – Solar PV1 Long-term inflation1,2 Discount rate3 35 40 3.0% 9.0% 35 8.0% 30 2.5% 7.0% 30 25 2.0% 6.0% 25 20 5.0% 20 1.5% 4.0% 15 15 1.0% 3.0% 10 10 2.0% 0.5% 5 5 1.0% 0 0 0.0% 0.0% AERIF AERIF Peer 1 Peer 2 Peer 3 Peer 4 Peer 5
Slide 27: Key Regulatory Developments – Summary
Key Regulatory Developments – Summary Timeframe / Overview1 Comment2 Expiry Binding target for reduction of 1 Dec 2022 – Only applies to EU Member States, excludes AERIF’s Norwegian assets (represents ~20% of Q2 NAV)3 electricity consumption by (i) 5% 31 Mar 2023 The measures to be adopted in or
Slide 28: Key Regulatory Developments – Indicative Q2 NAV Sensitivities
Key Regulatory Developments – Indicative Q2 NAV Sensitivities Pro Forma Impact on Q2 NAV1 Sensitivity Time Period % Cents per Ordinary Share 10% reduction in power prices as a result of demand cuts2 1 Dec 2022 – 31 Mar 2023 (0.04%) (0.04) 10% reduction in power prices as a result of demand cuts2 (+1
Slide 29: Key Regulatory Developments – Concluding Comments
Key Regulatory Developments – Concluding Comments – AERIF is well positioned in the current regulatory climate: Regulatory uncertainty reinforces the benefits of AERIF’s pan-European strategy targeting geographic diversification and reduced reliance on any single power market Most regulatory cha
Slide 30: Table of Contents
Table of Contents 1 Introduction 2 Portfolio 3 Financial and Operating Performance 4 Valuation 5 Conclusion 6 Appendix © 2022 AQUILA CAPITAL 30
Slide 31: Outlook
Outlook – Portfolio well positioned Encouraging asset performance observed in Q3 2022 FY22 dividend guidance of 5.25 cents per Ordinary Share maintained Conservatively geared with funding capacity to support future growth – Pipeline Currently in advanced stages of due diligence in relation t
Slide 32: Table of Contents
Table of Contents 1 Introduction 2 Portfolio 3 Financial and Operating Performance 4 Valuation 5 Conclusion 6 Appendix © 2022 AQUILA CAPITAL 32
Slide 33: Environmental, Social and Governance Proposition
Environmental, Social and Governance Proposition Households Tonnes of CO2 supplied with green emissions offset energy annually annually AERIF1 235.3 thousand 247.9 thousand Aquila Capital2 1.7 million 1.9 million Environmental Social Governance – Investment strategy aligned with three of the – Appro
Slide 34: AERIF Key Milestones
AERIF Key Milestones IPO on 5th June Equity issuance AERIF secures Adviser fee is paid in AERIF (EUR 154m) (EUR 40m) EUR 40m ordinary shares for an additional revolving credit two years until 30 June 2023 facility Equity AERIF receives a issuance 4 Star GRESB (EUR 90m) rating Recognize
Slide 35: Portfolio Summary
Portfolio Summary Project Technology Country Capacity1 Status COD2 Asset Life Equipment Energy Offtaker Ownership Leverage4 Acquisition from COD Manufacturer Offtaker3 in Asset Date Tesla Wind energy Norway 150.0 MW Operational 2013, 25y Nordex PPA Statkraft 25.9%6 20.9% July 2019 2018 Sagres Hydrop
Slide 36: Targeting Assets in Locations with a Strong Underlying Resource
Targeting Assets in Locations with a Strong Underlying Resource Wind power density1 Average annual Solar power irradiation3 precipitation2 AERIF asset location 1Mean wind power density. 2Average annual precipitation in the EEA area (1940-2012). 3Global horizontal irradiation. Source: Global Wind Atl
Slide 37: Underlying Financial Performance (Unaudited)
Underlying Financial Performance (Unaudited) Asset Underlying Financial Performance (AERIF Share)1 EUR m 1H22 1H21 Variance (%) Production (GWh) 303.4 267.2 13.5 Average Revenue per MWh 86.0 70.1 22.7 Asset income 26.1 18.7 39.3 Asset operating costs (6.1) (3.7) 64.6 Interest and tax (1.8) (1.4) 24.
Slide 38: Summary Income Statement
Summary Income Statement 1H22 1H21 EUR k Revenue Capital Total Revenue Capital Total Unrealised gains on investments - 16,434 16,434 - 3,288 3,288 Net foreign exchange losses - (5) (5) - 3 3 Interest income 7,140 - 7,140 4,834 - 4,834 Dividend income 1,200 - 1,200 Investment advisory fees (1,522) -
Slide 39: Summary Balance Sheet
Summary Balance Sheet EUR k 1H22 FY21 Assets Cash and cash equivalents 58,274 94,275 Trade and other receivables 10,945 9,298 Investments at fair value through profit or loss 380,278 316,953 Liabilities Other creditors (18,867) (3,083) Net assets 430,630 417,443 Net assets per Ordinary Share (cents)
Slide 40: Summary Cash Flow
Summary Cash Flow EUR k 1H22 1H21 Operating activities Profit on ordinary activities before finance costs taxation 22,468 6,248 Adjustment for unrealised gains on investments (16,434) (3,288) Increase in working capital 14,137 (37,680) Net cash flow from / (used in) operating activities 20,171 (34,7
Slide 41: Debt Summary (30 June 2022)
Debt Summary (30 June 2022) Project AERIF Share Drawn Debt Currency Bullet / Maturity Hedged % Type (EUR million)1 Amortisation Tesla 25.9% 9.3 EUR Partly amortising Mar 2029 100.0% Bank Debt Sagres 18.0% 10.4 EUR Fully amortising Dec 2028 / 70.0% Bank Debt Jun 2030 Olhava 100.0% 21.4 EUR Fully amor
Slide 42: Structure
Structure Ownership Relationship Shareholders Independent Board of Directors 4 x Non-executive Board of Directors Service Providers Broker and Placing Agent: Numis Securities Investment Adviser: Company AIFM and Aquila Capital Secretary: Aquila European Sanne Fund Management Renewables Income (Guern
Slide 43: Summary
Summary FY19 FY20 FY21 1H22 Market Capitalisation (EUR m) 166.7 337.6 415.1 414.3 NAV (EUR m) 158.9 316.9 417.4 430.6 # investments 5 9 10 12 # countries 4 6 6 6 MW capacity (AERIF share) 110 301 332 462 Contracted revenue (%) 72.5% 73.9% 68.5% 53.9% Total Shareholder return per Ordinary Share (%) 8
Slide 44: Key Terms
Key Terms Aquila European Renewables Income Fund Plc Fund structure UK-domiciled closed-end investment company Listing Premium Segment of the London Stock Exchange Ticker / ISIN in EUR / SEDOL AERI / GB00BK6RLF66 / BK6RLF6 Ticker / ISIN in GBP / SEDOL AERS / GB00BK6RLF66 / BJMXQK1 Currency Fund rais
Slide 45: Contact Details
Contact Details EMEA Asia APAC Hamburg (HQ) Senningerberg Zurich London Singapore Valentinskamp 70 Airport Center Luxembourg AQ Investment AG 20th Floor, Leaf B 138 Market Street 20355 Hamburg 5, Heienhaff Poststrasse 3 Tower 42 #15-03 Capita Green Tel.: +49 (0) 40 87 50 50-100 1736 Senningerberg 80
Slide 46: Important Notice
Important Notice FOR INSTITUTIONAL/PROFESSIONAL INVESTORS ONLY. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA, OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE
Slide 47: Important Notice (cont’d)
Important Notice (cont’d) The information contained in this document is given at the date of its publication (unless otherwise marked) and may be incomplete and subject to change. In particular certain figures contained in this presentation, including financial information, are unaudited and may be
Slide 48: Important Notice (cont’d)
Important Notice (cont’d) The Fund is incorporated and registered in England and Wales as a public company limited by shares under the Companies Act 2006 (as amended). A prospectus has been issued for the Fund, which is, together with further documents and information available free of charge via we
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