Aquila European Renewables Plc Registered · LSE:AERI
Aquila European Renewables Plc Registered — Aquila European Renewables — FY2023 Earnings Presentation
49 slides from Aquila European Renewables Plc Registered's earnings presentation, April 2024
Slide 1: Aquila European Renewables Plc 2023 Results
AQUILA EUROPEAN RENEWABLES PLC 2023 Results © 2024 Aquila Capital Ourique, Portugal
Slide 2: Table of Contents
TABLE OF CONTENTS 1. Introduction 2. Portfolio 3. Financial and Operating Performance 4. Valuation and Power Prices 5. Capital Allocation and Conclusion 6. Appendix © 2024 Aquila Capital 2
Slide 3: Overview of Aquila European Renewables Plc (AER)
OVERVIEW OF AQUILA EUROPEAN RENEWABLES PLC (“AER”) 464 MW Operating Portfolio European Focused, Presence in 6 Countries Key Metrics 4.6% Market capitalisation1 EUR 273.0 million Net Asset Value (“NAV”) EUR 372.5 million 42.2% Discount to NAV2 (25.3%) Dividend yield3 7.4% 53.2% Total NAV return since
Slide 4: Highlights
HIGHLIGHTS KPIs (EUR cents, unless stated otherwise) 2023 2022 Dividend per share1 5.51 5.25 NAV per share 98.5 110.6 Total NAV return per share (%)2 (6.0%) 12.9% − Total underlying earnings of EUR 22.3 million (2022: EUR 29.1 million) − Dividend cover of 1.1x after debt amortisation (2022: 1.4x). 1
Slide 5: Board Review of Options
BOARD REVIEW OF OPTIONS UPDATE POST AGM VOTE COMPANY UPDATE Restatement of commitment to Indications of interest received explore different initiatives from multiple parties to engage in Intention to provide second a potential section 110 opportunity to vote on transaction Company’s continuation by
Slide 6: Track Record of Dividend Growth and Returning Capital to Shareholders
TRACK RECORD OF DIVIDEND GROWTH AND RETURNING CAPITAL TO SHAREHOLDERS Dividends per share since IPO +5.0% +5.0% 5.79 cents per share +5.0% dividend target1 for 2024 5.51 5.79 5.25 5.00 4.00 5% annual growth in dividend per share since 2021 1.50 ~EUR 95 million capital returned to shareholders via di
Slide 7: Environmental, Social and Governance Highlights
ENVIRONMENTAL, SOCIAL AND GOVERNANCE HIGHLIGHTS Households supplied with green Tonnes of CO2 emissions avoided energy annually 2023 2022 2023 2022 AER1 266k 183k 268k 192k Aquila Capital 2,260k2 2,036k3 2,350k2 2,232k3 Myrtle Dawes − Completion of annual Global Real Estate Sustainability Benchmark (
Slide 8: Investment Adviser Strategic Partnership with Commerzbank AG
INVESTMENT ADVISER STRATEGIC PARTNERSHIP WITH COMMERZBANK AG Transaction Details Overview − Commerzbank to acquire a 74.9% − Investment Adviser will remain interest in Aquila Capital autonomous in terms of operations, Investmentgesellschaft Leading Bank for the investment decisions, product European
Slide 9: Table of Contents
TABLE OF CONTENTS 1. Introduction 2. Portfolio 3. Financial and Operating Performance 4. Valuation and Power Prices 5. Capital Allocation and Conclusion 6. Appendix © 2024 Aquila Capital 9
Slide 10: Portfolio Snapshot
PORTFOLIO SNAPSHOT Key Statistics (31 December 2023)1 The Rock Olhava 464 MW 12 Total capacity Investments Wind energy Solar PV Tesla 6 ~29 Countries and Power Remaining asset life Hydropower Markets (years)2 Holmen II Svindbaek I+II 52% 34% Contracted revenue3 Leverage4 Portfolio Allocation by Tech
Slide 11: Attractive Contracted Revenue Base
ATTRACTIVE CONTRACTED REVENUE BASE Present Value of Contracted vs. Non-Contracted Revenue Revenue Mix (5 Years)1 100.0% 90.0% Aquila will proactively seek to replace expired PPA / tariff contracts over time 80.0% in order to maintain a high degree of contracted revenues 25.9% 48.0% 70.0% Market 60.0
Slide 12: Delivering on Initiatives
DELIVERING ON INITIATIVES Initiatives Commentary Impact − Asset life extensions completed for 76.3% of the portfolio1. One asset outstanding which is subject to due diligence +4.6 cents per share Guillena contributing to income since April − Final construction projects completed (Guillena and The Ro
Slide 13: Table of Contents
TABLE OF CONTENTS 1. Introduction 2. Portfolio 3. Financial and Operating Performance 4. Valuation and Power Prices 5. Capital Allocation and Conclusion 6. Appendix © 2024 Aquila Capital 13
Slide 14: Balanced Technology Mix Has Reduced Volatility
BALANCED TECHNOLOGY MIX HAS REDUCED VOLATILITY Expected Monthly Distribution of Production (%) 2023 Actual Monthly Production (GWh) 14.0% 100.0 90.0 12.0% 80.0 10.0% 70.0 8.0% 60.0 50.0 6.0% 40.0 4.0% 30.0 20.0 2.0% 10.0 0.0% - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Slide 15: Production
PRODUCTION Technology Electricity Production (AER Share, GWh) Load Factors (%) Technical Availability (%)1 2023 2022 Variance (%) 2023 2022 2023 2022 Wind 508.5 440.8 15.4% 26.3% 31.9% 94.0% 96.6% Solar PV 402.6 187.5 114.8% 20.7% 18.9% 99.8% 99.9% Hydropower 60.8 38.2 59.3% 35.8% 22.5% 98.3% 99.2%
Slide 16: Power Prices and Revenue
POWER PRICES AND REVENUE Technology Country Average Realised Price (EUR / MWh)1 Total Revenue (AER Share, EUR million)2 2023 2022 Variance (%) 2023 2022 Variance (%) Denmark, Finland, Wind 63.0 104.8 (39.9%) 32.0 46.2 (30.6%) Norway, Greece Solar PV Portugal, Spain 58.8 65.0 (9.5%) 23.7 12.2 94.4% H
Slide 17: Dividend Cover
DIVIDEND COVER Variance Dividend Cover (EUR million)1 2023 2022 (%) Commentary Asset income 62.5 63.2 (1.1%) − 2023 dividend cover of 1.1x (1.6x before debt amortisation) Asset operating costs (14.9) (12.3) 20.3% − Lower than expected power prices and wind production Interest and tax (6.2) (6.0) 4.0
Slide 18: Table of Contents
TABLE OF CONTENTS 1. Introduction 2. Portfolio 3. Financial and Operating Performance 4. Valuation and Power Prices 5. Capital Allocation and Conclusion 6. Appendix © 2024 Aquila Capital 18
Slide 19: 2023 Net Asset Valuation Bridge
2023 NET ASSET VALUATION BRIDGE Net Asset Value Bridge (EUR million) − 2023 NAV –10.9% or –12.1 cents per share (total 451.7 NAV return of –6.0% including dividends) − Decrease in short-term electricity price 11.8 forecasts across the portfolio (-11.0 cents)3 (27.8) 18.3 372.5 − Norwegian tax change
Slide 20: 2023 Portfolio Valuation
2023 PORTFOLIO VALUATION Portfolio Valuation Bridge (EUR million) Portfolio Valuation (EUR million)1 2023 2022 Variance 46.4 3.7 Tesla 25.8 35.5 (27.2%) (9.6) (2.8) 451.5 (13.0) Sagres 20.1 23.0 (12.4%) (9.2) (4.0) 438.0 (1.2) (4.9) (2.4) (6.5) Holmen II 26.5 39.5 (32.9%) (8.4) (1.7) Olhava 30.8 27.
Slide 21: Power Price Developments
POWER PRICE DEVELOPMENTS Electricity Spot Prices (EUR / MWh)1 600 Nordics Spain Nordstream cuts and summer energy crisis. Spain spot does not Spot increases to unprecedent level Further fall in spot prices: reflect this in the price of gas as a Spot fall following: 500 driven by Ukraine war-related
Slide 22: Power Price Forecasts (Real, 2023)
POWER PRICE FORECASTS (REAL, 2023) Weighted Average Price Electricity Price Forecasts (Weighted Average, EUR / MWh)1 2024 – 2028 2029 – 2033 2034 – 2050 (EUR / MWh)2 150.0 Nordic Wind 57.5 57.1 48.8 100.0 Iberian Solar 56.1 44.6 41.8 50.0 0.0 Portfolio Weighted 2024 2026 2028 2030 2032 2034 2036 203
Slide 23: Discount Rate and Inflation Developments
DISCOUNT RATE AND INFLATION DEVELOPMENTS Portfolio Discount Rate Evolution (Before Fund Level Leverage) 2023 Portfolio Discount Rate and Implied Risk Premium1 7.8% 7.6% 7.4% (2.8%) 7.2% 7.0% 6.8% 7.2% 6.6% 4.4% 6.4% 6.2% 6.0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Portfolio Adjusted Disc
Slide 24: Power Prices, Inflation and NAV Sensitivities
POWER PRICES, INFLATION AND NAV SENSITIVITIES Impact on NAV (cents per share)1 NAV Sensitivities (cents per share) 2024 – 2028 2024 – 2033 Power Prices (-/+10%) -11 11 Year Over Asset Life (5 years) (10 years) 2 Production (P90/P10) -8 8 Power Prices +10.0% +3 +5 +11 Discount Rate (+/-0.5%) -5 6 -10
Slide 25: Table of Contents
TABLE OF CONTENTS 1. Introduction 2. Portfolio 3. Financial and Operating Performance 4. Valuation and Power Prices 5. Capital Allocation and Conclusion 6. Appendix © 2024 Aquila Capital 25
Slide 26: Modest Gearing Levels Provide Flexibility
MODEST GEARING LEVELS PROVIDE FLEXIBILITY Debt Metrics − Modest gearing of 34.3% at low cost 2023 2022 Variance (31 Dec 2023, EUR million)1 − Significant headroom vs. debt restrictions (50% of GAV) NAV 372.5 451.7 (17.5%) − EUR 11.1 million5 of project level debt repaid in 2023 from operating cash f
Slide 27: Capital Allocation
CAPITAL ALLOCATION 1 2 Dividends Share Buybacks 2023 Capital Allocation − Objective to − Completed EUR 27.8 progressively grow million share buyback the dividend over the programme in June medium term 971.9 GWh 464 MW Portfolio Clean energy produced in 2023 − 2024 dividend target: 5.79 cents per sha
Slide 28: Conclusion
CONCLUSION Performance Portfolio − Solid 2023 performance despite power price − Fully operating and diversified portfolio which movements. Dividend fully covered supports a progressive dividend − 1.3x dividend cover expected over the next − Various portfolio initiatives being explored to five years
Slide 29: Table of Contents
TABLE OF CONTENTS 1. Introduction 2. Portfolio 3. Financial and Operating Performance 4. Valuation and Power Prices 5. Capital Allocation and Conclusion 6. Appendix © 2024 Aquila Capital 29
Slide 30: Portfolio Summary
PORTFOLIO SUMMARY Asset Life Equipment Energy Ownership Project Technology Country Capacity1 Status COD2 Offtaker Leverage4 Acquisition Date from COD Manufacturer Offtaker3 in Asset Tesla Wind energy Norway 150.0 MW Operational 2013, 2018 25y Nordex PPA Statkraft 25.9%6 24.2% July 2019 Sagres Hydrop
Slide 31: Portfolio Allocation
PORTFOLIO ALLOCATION 1 Technology Geography Asset Status Asset Age 19.2% 24.2% 19.2% 19.2% 100% 28.0% 2019 (IPO Year) 28.0% 80.8% 28.7% 52.9% Portugal Wind Finland < 5 years Hydro Denmark Operating 5 –10 years Solar PV Norway > 10 years Spain 4.6% Greece 6.0% 17.5% 15.2% 100% 42.2% 2023 42.6% 14.5%
Slide 32: Counterparty Exposure
COUNTERPARTY EXPOSURE 2024 Counterparty Exposure by Contracted Revenue Counterparty Exposure by Contracted Revenue 2024 – 2028 (AER Share, %) (AER Share, %) 100% 90% 9.9% 18.9% 80% 7.9% 70% 60% 6.7% 50% 8.2% 40% 28.5% 30% 8.5% 20% 10% 11.4% 0% 2024 2025 2026 2027 2028 © 2024 © 2023 Aquila Aquila Cap
Slide 33: Modelling Approach to Power Prices
MODELLING APPROACH TO POWER PRICES Overview Inputs into Curve Provider Forecasts − Power price forecasts are specific to each country, technology and pricing zone, where applicable − Technology mix: Electricity demand & − Wind and solar PV → average of real power prices sourced from two analyst curv
Slide 34: Valuation Assumptions
VALUATION ASSUMPTIONS 10-Year Government Bond % of Portfolio Fair Metric 2023 2022 Yield (%)4 Yield Value3 Levered discount rate 14.5% 3.3% Weighted average 7.2% 7.2% Norway (asset level) Wind energy 22 years 22 years Denmark 14.7% 2.2% Remaining asset life Solar PV 36 years 29 years Finland 7.0% 2.
Slide 35: Valuation Assumption Benchmarking
VALUATION ASSUMPTION BENCHMARKING Asset life – Wind energy1 Asset life – Solar PV1 Long-term inflation1,2 Discount rate3 35 45 3.00% 10.0% 40 9.0% 30 2.50% 8.0% 35 25 7.0% 30 2.00% 6.0% 20 25 1.50% 5.0% 15 20 4.0% 15 1.00% 10 3.0% 10 2.0% 0.50% 5 5 1.0% 0 0 0.00% 0.0% Peer 1 Peer 2 Peer 3 Peer 4 Pee
Slide 36: Board of Directors
BOARD OF DIRECTORS Ian Nolan Dr. Patricia Rodrigues David MacLellan Kenneth MacRitchie Myrtle Dawes Non- Executive Chairman Chair of the Remuneration and Chair of the Audit and Risk Member of the Remuneration and Member of the Remuneration and Led the team which was recruited by Nomination Committee
Slide 37: Cash Dividend Cover
CASH DIVIDEND COVER Cash Dividend Cover (EUR million)1 2023 2022 Variance (%) Company Net cash flow from operating 16.3 16.9 (3.8%) activities Investment advisory fee funded by - 1.3 n/a share issuance HoldCo Net cash flow from operating 9.6 (2.7) (459.7%) activities Adjustments Shareholder loan and
Slide 38: Summary Income Statement
SUMMARY INCOME STATEMENT 2023 2022 EUR k Revenue Capital Total Revenue Capital Total Unrealised (loss)/gain on investments - (41,675) (41,675) - 41,778 41,778 Net foreign exchange losses - (24) (24) - (13) (13) Interest income 15,312 - 15,312 15,929 - 15,929 Dividend income 1,200 - 1,200 1,200 - 1,2
Slide 39: Summary Cash Flow
SUMMARY CASH FLOW EUR k 2023 2022 Operating activities (Loss)/profit on ordinary activities before finance costs taxation (29,897) 54,179 Adjustment for unrealised losses / (gains) on investments 41,675 (41,778) Working capital adjustments 4,510 4,527 Net cash flow from operating activities 16,288 1
Slide 40: Summary Balance Sheet
SUMMARY BALANCE SHEET EUR k 2023 2022 Assets Cash and cash equivalents 1,532 19,893 Trade and other receivables 96 5,630 Investments at fair value through profit or loss 372,403 428,641 Liabilities Other creditors (1,490) (2,514) Net assets 372,541 451,650 Net assets per share (cents) 98,52 110.64 ©
Slide 41: Reconciliation – Income Statement
RECONCILIATION – INCOME STATEMENT Aquila European Renewables (AER Plc) Income Statement (EUR k) 2023 2022 AER Plc 3 (Losses)/gains on investments (41,675) 41,778 Net foreign exchange losses (24) (13) Shareholder loans 1 Interest income 15,312 15,929 1 Dividends 2 and bank interest 2 Dividend income
Slide 42: Reconciliation – Balance Sheet
RECONCILIATION – BALANCE SHEET Aquila European Renewables (AER Plc) AER Plc Balance Sheet (EUR k) 2023 2022 Assets Shareholder 1 Equity 2 Loans Cash 1,532 19,893 100% Trade and other receivables 96 5,630 Tesseract Holdings 3 Limited 3 Portfolio value 372,403 428,641 Liabilities Shareholder Creditors
Slide 43: Debt Summary
DEBT SUMMARY Drawn Debt Drawn Debt Bullet / Hedged % Project AER Share (EUR m)1 (EUR m)1 Currency Maturity Type Amortisation (April 24) as at 31 Dec 23 as at 11 Apr 24 Tesla 25.9% 8.2 8.0 EUR Partly amortising Mar 2029 100.0% Bank Debt Sagres 18.0% 6.0 6.0 EUR Fully amortising Jun 2033 70.0% Bank De
Slide 44: Structure
STRUCTURE Independent Board of Directors Ownership Shareholders 5 x Non-executive Board of Directors Relationship Service Providers Broker and Placing Agent: Deutsche Numis Investment Adviser: Company AIFM and Secretary: Aquila European FundRock Management Renewables Plc Company (Guernsey) Limited L
Slide 45: 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 46: Performance Summary Since IPO
PERFORMANCE SUMMARY SINCE IPO 2019 2020 2021 2022 2023 Market capitalisation (EUR million) 167 338 415 377 297 NAV (EUR million) 159 317 417 452 373 # investments 5 9 10 12 12 # countries 4 6 6 6 6 MW capacity (AER share) 133 198 229 414 464 Contracted revenue (%) 72.5% 73.9% 68.5% 51.9% 52.1% Total
Slide 47: 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 48: 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 49: Contacts
CONTACTS AQUILA EUROPEAN RENEWABLES PLC Michael Anderson 6th Floor michael.anderson@aquila-capital.com 125 London Wall London EC2Y 5AS Christopher Gook +44 20 3327 9720 christopher.gook-extern@aquila-capital.com © 2024 Aquila Capital 49
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