Aquila European Renewables Plc Registered · LSE:AERI
Aquila European Renewables Plc Registered — Aquila European Renewables — FY2022 Earnings Presentation
55 slides from Aquila European Renewables Plc Registered's earnings presentation, April 2023
Slide 1: Aquila European Renewables Plc 2022 Results
Aquila European Renewables Plc 2022 Results 2022 Results Tiza (Spain) 1
Slide 2: Table of Contents
Table of Contents 1 Introduction 2 Portfolio 3 Financial and Operating Performance 4 Valuation 5 Conclusion and Outlook 6 Appendix © 2023 AQUILA CAPITAL 2
Slide 3: Introduction to Aquila European Renewables Plc (AER)
Introduction to Aquila European Renewables Plc (“AER”) 464 MW Portfolio of Operating Assets1 European Focused, Key Metrics Presence in 6 Countries Market capitalisation2 EUR 369 million Net Asset Value 51.5% 43.9% EUR 430 million (“NAV”)2 Discount to NAV2 (14.2%) Dividend yield2 5.8% Annualised tota
Slide 4: Why Invest?
Why Invest? Market Opportunity AER Positioning Returns – Opportunity to participate in Europe’s green – European focused (excl. UK), diversified by – Long-term return target of 6.0 to 7.5% (net of energy transition geography and technology fees and expenses) ▪ Significant capital required to meet gr
Slide 5: Strong Shareholder Focus
Strong Shareholder Focus Capital Allocation Focused on Strong Alignment of Interests Low Cost Vehicle Shareholder Returns – Aquila Capital has received 100% of its – Ongoing charges 1.1% of NAV – EUR 20 million share buyback programme Investment Advisory fee in AER shares since announced in February
Slide 6: Environmental, Social and Governance Highlights
Environmental, Social and Governance Highlights Households Tonnes of CO2 supplied with emissions avoided green energy annually 2022 2021 2022 2021 AER1 183k2 143k 192k2 156k Aquila Capital1 2,036k 1,660k 2,232k 1,850k Portfolio – 2022 portfolio production equated to 192k2 metric tonnes of CO2 equiva
Slide 7: Aquila Capital Achievements in 2022 – Leading the Energy Transition in Europe
Aquila Capital Achievements in 2022 – Leading the Energy Transition in Europe EUR 1.0 billion debt financing closed for Iberian First European battery storage project reaches pipeline, led by the European Investment Bank completion in Belgium – Landmark transaction which will significantly increase
Slide 8: Record 2022 Performance for AER
Record 2022 Performance for AER KPIs (EUR cents, unless stated 2022 2021 otherwise) Dividend per ordinary share 5.25 5.00 NAV per ordinary share 110.6 102.6 Total NAV per ordinary share return for 12.9% 7.6% the year (Sagres, Portugal) – 2022 total NAV return of 12.9%1, the highest one-year return s
Slide 9: Subsequent Events – Positive Start to 2023
Subsequent Events – Positive Start to 2023 1 2 3 12-month Extension +5% Increase in Target Completion of Guillena of Revolving Dividend for 20231 (Greco) & The Rock Credit Facility February 2023 April 2023 April 2023 4 5 AER Board and EUR 20 million Share Investment Adviser Buyback Programme On-mark
Slide 10: Track Record Since IPO
Track Record Since IPO 27.6% total NAV return per ordinary share since IPO (7.1% annualised)1 Total NAV Development Dividends (Cents per ordinary share) (Cents per ordinary share)2 NAV per Share Cumulative dividends paid 125.1 5.25 5.5 111.8 5.0 103 .5 104 .2 4.0 +EUR 20 million share buyback progra
Slide 11: Table of Contents
Table of Contents 1 Introduction 2 Portfolio 3 Financial and Operating Performance 4 Valuation 5 Conclusion and Outlook 6 Appendix © 2023 AQUILA CAPITAL 11
Slide 12: Portfolio Snapshot
Portfolio Snapshot Key Statistics (31 Dec 2022)1 Wind energy Solar PV Hydropower The Rock 464 MW 12 Total capacity Investments New investments Olhava (2022) 6 ~25 Countries and Power Remaining asset life, Tesla Markets before extensions (years)2 Holmen II 52% 26% Svindbaek I+II Leverage Contracted r
Slide 13: Portfolio Transformation in 2022 – 80%+ Growth in Operating Capacity
Portfolio Transformation in 2022 – 80%+ Growth in Operating Capacity Total Generating Capacity – AER Share (MW / MWp) 500 50 400 50 55 300 50 30 464 200 414 229 100 198 133 0 IPO 2019 2020 2021 Tiza Albeniz The Rock Jaén 2022 Operating Guillena Total Capacity Capacity (Pro Forma) Completion Date: Ju
Slide 14: Portfolio Expected to Deliver Strong Dividend Cover
Portfolio Expected to Deliver Strong Dividend Cover – Portfolio growth underpins robust dividend cover (net of project debt repayments) – Dividend cover supports progressive dividend policy – Dividend fully covered under a range of downside scenarios – 2023 Dividend Cover 5 Year Average Dividend Cov
Slide 15: Attractive Contracted Revenue Base
Attractive Contracted Revenue Base Present Value of Contracted vs. Revenue Mix2 Non-Contracted Revenue (5 Years)1,2 100.0% 90.0% Aquila will proactively seek to replace expired PPA / tariff contracts over time 25.8% 48.1% 80.0% in order to maintain a high degree of contracted revenues 70.0% Market 6
Slide 16: Active Portfolio Management – Value Enhancing Initiatives
Active Portfolio Management – Value Enhancing Initiatives Initiative Comment Status • 3 x PPAs entered into in Spain in 2022 at peak market pricing – equivalent to ~15% of total portfolio annual production Active PPA Management • PPA price of > EUR 60 / MWh achieved for 5-7 years, almost double obse
Slide 17: Table of Contents
Table of Contents 1 Introduction 2 Portfolio 3 Financial and Operating Performance 4 Valuation 5 Conclusion and Outlook 6 Appendix © 2023 AQUILA CAPITAL 17
Slide 18: Production
Production Technology Country1 Electricity Production Load Factors Technical Availability3 (AER Share, GWh) (%) (%) 20222 2021 Variance (%) 2022 2021 2022 2021 Denmark, Finland, Wind 440.8 395.0 11.6% 31.9% 28.0% 96.6% 98.6% Norway, Greece Solar PV Portugal, Spain 187.5 79.0 137.3% 15.9% 18.1% 99.9%
Slide 19: Power Prices and Revenue
Power Prices and Revenue Technology Country1 Average Captured Price (EUR / MWh) Total Revenue1 (Merchant Only) (AER Share, EUR m) 2022 2021 Variance (%) 2022 2021 Variance (%) Denmark, Finland, Wind 96.5 53.2 81.6% 46.2 33.6 37.6% Norway, Greece Solar PV Portugal, Spain 82.5 65.2 26.5% 12.2 4.2 190.
Slide 20: Underlying Financial Performance (Unaudited)
Underlying Financial Performance (Unaudited) Asset Underlying Financial Performance (AER Share)1 – Dividend cover of 1.4x reported in 2022 (2021: 1.1x). 1.9x excluding debt repayments EUR m 2022 2021 Variance (%) Asset income 63.2 42.2 49.6% – Robust dividend coverage, despite: Asset operating costs
Slide 21: Low Gearing with Significant Firepower
Low Gearing with Significant Firepower Debt / Gross Asset Value (31 December 2022)1 Key Debt Metrics (31 December 2022, EUR m)1 2022 2021 Variance 31.0% NAV 451.7 417.4 8.2% 25.7% 25.6% Debt2 155.2 144.3 7.5% GAV 606.9 561.8 8.0% Total debt (% of GAV) 25.6% 25.7% (0.1 bps) Weighted average maturity
Slide 22: Table of Contents
Table of Contents 1 Introduction 2 Portfolio 3 Financial and Operating Performance 4 Valuation 5 Conclusion and Outlook 6 Appendix © 2023 AQUILA CAPITAL 22
Slide 23: 2022 Net Asset Valuation Bridge
2022 Net Asset Valuation Bridge Net Asset Value Bridge1 (EUR m) 12.3 11.0 30.8 1.3 451.7 (21.2) 417.4 Gain/(loss) on investments – EUR 41.8m (refer to Appendix) Profit/(loss) on ordinary activities after taxation – EUR 54.1m (refer to Appendix) 2021 Movement in Net profit / (loss) Net profit / (loss
Slide 24: 2022 Portfolio Valuation
2022 Portfolio Valuation Portfolio Valuation Bridge (EUR m)1 Portfolio Valuation (EUR m)1 2022 2021 Var.(%) 460.0 6.3 0.4 2.8 5.4 1.0 451.5 15.1 6.5 Tesla 35.5 31.4 13.1 440.0 4.9 (3.2) Sagres 23.0 15.8 45.5 4.1 (0.1) 103.1 (12.4) 420.0 Holmen II 39.5 24.5 61.7 Olhava 27.2 27.3 (0.5) 400.0 Svindbaek
Slide 25: Captured Power Price Forecasts
Captured Power Price Forecasts (Nominal, EUR / MWh) Portfolio Weighted Average1 Nordics Weighted Average Iberia Weighted Average (Wind)1 (Solar PV, Hydro)1 200.0 Q4 2021 140.0 140.0 Q4 2022 120.0 120.0 150.0 100.0 100.0 Futures 80.0 80.0 100.0 60.0 60.0 50.0 40.0 40.0 20.0 20.0 0.0 0.0 0.0 2023 2026
Slide 26: Power Prices, Inflation and NAV Sensitivities
Power Prices, Inflation and NAV Sensitivities Impact on NAV per Ordinary Share 2023 2023 – 2027 2023 – 2032 Over Asset Year (1 Year) (5 years) (10 years) Life OPEX (+/-10%) (4) 4 Asset Life (-/+ 1 year) (2) 2 Power +10.0% +0.9 cents +3.4 cents +5.9 cents +10.8 cents Prices Inflation (-/+ 0.5%) (4) 5
Slide 27: Discount Rate Evolution
Discount Rate Evolution Portfolio Discount Rate Evolution 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q4 2019 Q4 2022 # of assets 5 # of assets 12 – Discount rate has reduced by ~40 bps since Q4
Slide 28: AER has Benefitted from Managing Construction Risk
AER has Benefitted from Managing Construction Risk Construction Assets at Cost vs. Q4 Valuation (EUR m)1 166.1 Aggregate valuation uplift from Up to 50 bps construction construction assets currently premia remain in place. reflected in the NAV: Equivalent to: 148.0 18.1 million +7.8 million 4.4 cent
Slide 29: AER is Currently Trading at its Historic Cost Basis
AER is Currently Trading at its Historic Cost Basis Implied Cost Basis (EUR m)1 451 (5) (16) 365 369 (66) Q4 2022 NAV Less: Q4 Dividend Less: Share Buyback Less: unrealised gains in Cost Basis Current Market NAV 2 Capitalisation – AER is trading at its implied cost basis for the portfolio, despite t
Slide 30: Attractive Forward Returns, Potential for Upside
Attractive Forward Returns, Potential for Upside Indicative Forward Returns1 Indicative Upside from Asset Life Extensions Impact on NAV per 9.3 % Ordinary Share2 Implied Pro Asset Life NAV per Sensitivity Forma NAV Technology Assumption Ordinary % 7.2 % (Years) Per Ordinary + (Years) Share Share Win
Slide 31: Table of Contents
Table of Contents 1 Introduction 2 Portfolio 3 Financial and Operating Performance 4 Valuation 5 Conclusion and Outlook 6 Appendix © 2023 AQUILA CAPITAL 31
Slide 32: Regulatory & Market Update
Regulatory & Market Update European (“EU”) Commission Country-specific Regulations – EU Market Design Reform – Norway: following public consultation process, decision of tax changes to be announced in June 2023 ▪ No change to existing pay-as-clear market design – Denmark: implementation of EUR 180 /
Slide 33: Pipeline – Substantial Opportunities for Future Expansion
Pipeline – Substantial Opportunities for Future Expansion – Aquila Capital manages one of the largest early stage clean energy Existing Aquila Capital portfolios in Europe AER Portfolio Development Area (AER Share)1 Portfolio1 – ~EUR 10 billion of capital required to realise the opportunity and Nord
Slide 34: Conclusion and Outlook
Conclusion and Outlook – Strong performance in 2022, delivering a record total NAV return of 12.9% and healthy dividend cover of 1.4x (1.9x excluding debt repayments) – Growth in operating capacity has transformed the portfolio, now 100% operational with strong dividend cover expected over the next
Slide 35: Table of Contents
Table of Contents 1 Introduction 2 Portfolio 3 Financial and Operating Performance 4 Valuation 5 Conclusion and Outlook 6 Appendix © 2023 AQUILA CAPITAL 35
Slide 36: 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 20.2% July 2019 2018 Sagres Hydrop
Slide 37: Portfolio Evolution Since IPO
Portfolio Evolution Since IPO1 Technology Geography Asset Status Asset Age 2019 19.2% 19.2% 19.2% IPO 24.2% 100% 28.0% Year 28.0% 80.8% 28.7% 52.9% 4 construction 5.7% assets 15.3% completed 4.6% 2022 since IPO 21.2% Pro 100% 43.9% 5.5% Forma2 51.5% 40.7% 17.3% 74.2% 15.5% 4.6% 1Allocation is based
Slide 38: Counterparty Exposure
Counterparty Exposure 2023 Counterparty Exposure by Total Contracted Revenue Counterparty Exposure by Total Contracted Revenue 2023 – 2030 (AER Share, %) (AER Share, %) 100% 8.6% 90% 21.5% 80% 8.7% 70% 60% 8.8% 50% 40% 9.0% 20.9% 30% 20% 10.4% 10% 12.0% 0% 2023 2024 2025 2026 2027 2028 2029 2030 © 2
Slide 39: Valuation Assumptions
Valuation Assumptions Metric 2022 2021 Discount rate Weighted average 7.2% 6.5% Remaining asset life Wind energy 22 years 23 years (Weighted Average)1 Hydropower 10 years 11 years Solar PV 29 years 27 years Operating life Wind energy 26 years 26 years (Weighted Average)2 Hydropower n.a. n.a. Solar P
Slide 40: Valuation Assumption Benchmarking
Valuation Assumption Benchmarking Asset life – Wind energy1 Asset life – Solar PV1 Long-term inflation1,2 Discount rate3 35 45 3.00% 9.0% 40 8.0% 30 2.50% 35 7.0% 25 30 2.00% 6.0% 20 25 5.0% 1.50% 15 20 4.0% 15 1.00% 3.0% 10 10 2.0% 0.50% 5 5 1.0% 0 0 0.00% 0.0% AER AER AER Peer 4 Peer 7 Peer 5 Peer
Slide 41: Board of Directors
Board of Directors Ian Nolan Dr. Patricia Rodrigues David McLellan Kenneth MacRitchie Non- Executive Chairman Chair of the Remuneration and Nomination Chair of the Audit and Risk Committee and Member of the Remuneration and Nomination Committee and member of the Audit and Risk member of the Remunera
Slide 42: Summary Income Statement
Summary Income Statement 2022 2021 Revenue (EUR k) Capital (EUR k) Total (EUR k) Revenue (EUR k) Capital (EUR k) Total (EUR k) EUR k Unrealised gains on investments - 41,778 41,778 - 19,236 19,236 Net foreign exchange losses - (13) (13) - (7) (7) Interest income 15,929 - 15,929 11,783 - 11,783 Divid
Slide 43: Summary Balance Sheet
Summary Balance Sheet EUR k 2022 2021 Assets Cash and cash equivalents 19,893 94,275 Trade and other receivables 5,630 9,298 Investments at fair value through profit or loss 428,641 316,953 Liabilities Other creditors (2,514) (3,083) Net assets 451,650 417,443 Net assets per ordinary share (cents) 1
Slide 44: Summary Cash Flow
Summary Cash Flow EUR k 2022 20211 Operating activities Profit on ordinary activities before finance costs taxation 54,179 26,942 Adjustment for unrealised losses / (gains) on investments (41,778) (19,236) Working capital adjustments 4,527 (3,262) Net cash flow from / (used in) operating activities
Slide 45: Reconciliation – Income Statement
Reconciliation – Income Statement Aquila European Renewables (AER Plc) Income Statement (EUR k) 2022 2021 AER Plc 3 Gains/(losses) on investments 41,778 19,236 Net foreign exchange losses (13) (7) Shareholder 1 Dividends 2 1 Interest income 15,929 11,783 Loans 100% Investment advisory fees (3,150) (
Slide 46: Reconciliation – Balance Sheet
Reconciliation – Balance Sheet Aquila European Renewables (AER Plc) Balance Sheet (EUR k) 2022 2021 AER Plc Assets Shareholder Cash 19,893 94,275 1 Equity 2 Loans Trade and other receivables 5,630 9,298 100% 3 Portfolio value 428,641 316,953 Tesseract Holdings 3 Limited Liabilities Shareholder Equit
Slide 47: Dividend Cover Assumptions
Dividend Cover Assumptions Item Assumptions (as at Q4 2022) • P50 production • Average of analyst power price curves (captured rate) used in the Q4 2022 NAV General • Guillena assumed to be operational by April 2023 • Assumes no additional investments • Dividend of 5.51 cents per ordinary share Divi
Slide 48: Regulatory Update Summary
Regulatory Update Summary Measure Timeframe Comment Clawback for market revenues and PPAs above EUR 67 MWh threshold Sep 2021 – Dec 2023 • Existing PPAs unaffected constraining market revenue capture prices to EUR 85 to 100 / MWh • Reflected in Q4 2022 valuation model Gas cap with starting at EUR 40
Slide 49: Debt Summary (31 December 2022)
Debt Summary (31 December 2022) Project AER Share Drawn Debt Currency Bullet / Maturity Hedged % Type (EUR million)1 Amortisation Tesla 25.9% 9.0 EUR Partly amortising Mar 2029 100.0% Bank Debt Sagres 18.0% 7.0 EUR Fully amortising Jun 2033 70.0% Bank Debt Olhava 100.0% 19.2 EUR Fully amortising Dec
Slide 50: 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 FundRock Management Renewables Plc Company (Gu
Slide 51: Key Terms
Key Terms Aquila European Renewables 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 raising, reporti
Slide 52: Summary
Summary 2019 2020 2021 2022 Market capitalisation (EUR m) 167 338 415 377 NAV (EUR m) 159 317 417 452 # investments 5 9 10 12 # countries 4 6 6 6 MW capacity (AER share) 110 301 332 464 Contracted revenue (%) 72.5% 73.9% 68.5% 51.9% Total shareholder return per ordinary share (%) 8.6% 2.0% 0.5% (4.5
Slide 53: 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 54: 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 55: 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
Aquila European Renewables — FY2022 Earnings Presentation on 6ix