TIDMAEET
RNS Number : 7465N
Aquila Energy Efficiency Trust PLC
27 September 2023
LEI No: 213800AJ3TY3OJCQQC53
AQUILA ENERGY EFFICIENCY TRUST PLC
HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS TO 30 JUNE
2023
Consolidated Financial Highlights
At 30 June At 31 Dec
Financial information 2023 2022
Net asset value ("NAV") per Ordinary Share (pence) 93.54 95.23
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Ordinary Share price (pence) 62.00 71.00
--------------------------------------------------- ---------- ---------
Ordinary Share price discount to NAV (1) (33.7%) (25.4%)
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Net assets (in GBP million) 93.54 95.23
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Ongoing charges (1) 3.5% 2.6%
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Performance summary % change % change
------------------------------------------------ -------- --------
NAV total return per Ordinary Share (1) (0.5) 0.1
------------------------------------------------ -------- --------
Share price total return per Ordinary Share (1) (11.2) (23.5)
------------------------------------------------ -------- --------
1 These are Alternative Performance Measures ("APMs") for the
period ended 30 June 2023. Definitions of these APMs and other
performance measures used by the Company, together with how these
measures have been calculated, can be found further below in this
Half-yearly Report.
STRATEGIC REPORT
CHAIR'S STATEMENT
I am presenting my Chair's Statement for the Company's
Half-yearly Financial Report (the "Half-yearly Report") which
covers the six months to 30 June 2023 (the "Period"). The Company's
2022 Annual Report for the year ended 31 December 2022 was
published on 2 May 2023 (the "2022 Annual Report and Accounts")
and, therefore, there is some duplication in the content of the
2022 Chair's Statement and this Statement.
Investment Performance
The Company's unaudited NAV as at 30 June 2023 on a cum-income
basis was 93.54 pence per ordinary share (95.23 pence as at 31
December 2022), representing a decrease of only 1.8%. The Company's
share price traded at a significant discount to NAV over the period
to 30 June 2023, resulting in a total return of minus 33.7%.
Contractual obligations and Deployment
As at 30 June 2023, the Company had investments of GBP65.7
million and contractual obligations to fund committed investments
equivalent to GBP23.4 million. Following the failure of the
February 2023 Continuation Vote on 28 February 2023, which was
followed by a successful combined Continuation Managed Run-Off
Resolution on 14 June 2023 (the "Continuation Votes"), the Company
has been operated with the primary intention of preserving cash to
be returned to shareholders. As a result, it was decided, after the
Period end, not to proceed with one investment of GBP4.5 million
which, therefore, reduces the Company's contractual obligations to
fund investments to GBP18.9 million. The Investment Adviser expects
that the majority of this amount will be deployed by the end of
January 2024, leaving only GBP1.7 million to be invested in the
subsequent months of 2024. These funding obligations and deployment
are covered in full detail in the Investment Adviser's Report.
By 31 March 2024, as a result of the expected run-off of certain
investments, in particular the Superbonus projects, the Investment
Adviser expects the Company and its immediate investment holding
entities, to have no less than GBP24.0 million of cash (prior to
any dividend or return of capital to shareholders). It should be
noted that the nature of the Company's investments in Superbonus
projects is such that it is difficult to be sure when the
investments will be realised. They will, however, continue to be
income producing if actual redemption is later than forecast.
Continuation Managed Run-Off and next steps
As noted above, the successful vote in favour of the
Continuation and Managed Run-Off Resolution in June 2023 has
resulted in a fundamental change to the governance of the Company,
ensuring that the shareholders' instruction to see that a return of
their investment capital is effected in an orderly manner. However,
as we have highlighted on a number of occasions, the 37 assets that
comprised the Company's portfolio as at 30 June 2023 are complex in
structure, spanning several geographies and include many
investments with long maturities (some as long as 18 years). A
return of capital is, therefore, a complicated process. The Board,
together with its advisers, has been fully engaged in ensuring that
the realisation process and maximisation of return is conducted
effectively. The Board continues to review strategic options for
the portfolio, which include the sale of all of the Company's
assets as well as other proposals to address the Company's size and
liquidity. On 16 August 2023, we provided shareholders with an
update on the process to market test the portfolio sale which is
being conducted by Stifel Nicolaus Europe Limited. That process is
underway - albeit, it may not result in a sale - and the Board will
keep shareholders updated on progress, as appropriate.
I cannot conclude this brief statement without some comment on
the costs associated with the production of the Company's 2022
Annual Report and Accounts, two Continuation Votes in a six-month
period and preparation for a possible complex sale process. The
results for the six months ended 30 June 2023 include Investment
Adviser's fees which have been based on the level of committed
assets. This was agreed with the Investment Adviser in the course
of the Investment Strategy Review conducted in early 2022 and
resulted in relatively low Investment Adviser fees in 2022. The
results for the Period also include exceptional costs relating to
the two Continuation Votes conducted in the Period, and the actions
initiated by the Board following those votes, as well as costs for
the preparation of the 2022 Annual Report and Accounts. The latter
included the increased costs resulting from the necessary
assessment and implementation of a revised accounting approach for
the valuation of some of the Company's investments. The Board will
be further considering whether there is scope to recoup these
increased costs from its service providers.
Dividends
Following the failure of the February 2023 Continuation Vote the
Board announced that future dividends will only be paid from net
income, and after reviewing cash flow forecasts, only in respect of
six-month periods, not quarterly periods. The Board has decided
that in the current circumstances, a dividend will not be paid in
respect of the Period.
Outlook
We are now exploring a portfolio sale process which inevitably
will take some time given the complexity of the asset portfolio and
the Board's intention to carefully consider the potential options
for realising value for shareholders. As such, it is not possible,
at this early stage, to provide further clarity on the timescale
for realisation.
Miriam Greenwood OBE DL
Chair of the Board
26 September 2023
INVESTMENT ADVISER'S REPORT
At the start of 2023, the Investment Adviser was focused on
achieving full deployment of the Company's capital. However, after
the failure of the Continuation Vote on 28 February 2023 and
following the success of the Continuation Managed Run-Off
Resolution on 14 June 2023, the Investment Adviser has supported
the managed run-off of the Company's portfolio and preparations for
a potential sale of the Company's assets as announced on 16 August
2023. While pre-existing contractual commitments are being
honoured, the Investment Adviser has taken opportunities to
withdraw the Company from commitments of GBP5.4 million as at 31
December 2022 to invest into two Spanish projects. In addition,
since 30 June 2023 an agreement in principle has been reached to
withdraw from a partially invested Solar PV investment which was
valued at GBP0.7 million at 30 June 2023 and had an unfunded
commitment of GBP4.5 million (see "Investments in Spain" section
below). Repayment to the Company of the initial funding and accrued
interest is expected in October which would take the number of
projects to 36.
During the first six months of 2023, GBP19.7 million was
deployed taking total invested capital, before redemptions and
value adjustments, to GBP68.0 million. GBP12.8 million was deployed
into nine commitments which had already been made as at 31 December
2022 and the balance of GBP6.9 million to nine new commitments.
These new investments comprised:
-- Three Spanish Solar PV investments with three new ESCOs for a
total commitment of GBP4.8 million of which GBP4.2 million was
deployed as at 30 June 2023;
-- Two additional rooftop Solar PV projects in Italy, with a
total commitment of GBP1.3 million of which GBP0.8 million was
deployed as at 30 June 2023; these projects are with Noleggio
Energia and take the total number of projects with this ESCO to
seven and the total committed capital to GBP4.2 million;
-- Three lighting investments in the UK with two new ESCOs
involving total commitments of GBP1.8 million of which GBP1.6
million was deployed as at 30 June 2023; and
-- A third UK wind power project involving an additional GBP0.3
million investment, taking total commitments with this ESCO to
GBP2.0 million.
As a result of the agreement to withdraw from a partially
invested Solar PV investment, in principle, to sell the investment
with an unfunded commitment of GBP4.5 million, as referred to in
the Chair's Statement, the Company now forecasts a further GBP18.9
million will be invested into existing commitments following 30
June 2023 (including expected transaction costs). The majority of
this capital is forecast to be deployed by the end of January 2024,
of which GBP0.4 million has been deployed since the Period end,
leaving only GBP1.7 million to be deployed through the remainder of
2024.
By 31 March 2024, as a result of the expected run-off of certain
investments, in particular the Superbonus projects, the Investment
Adviser expects the Company and its immediate investment holding
entities to have no less than GBP24.0 million of cash (prior to any
dividend or return of capital to shareholders).
PORTFOLIO OVERVIEW
As at 30 June 2023, the Company's portfolio of 37 energy
efficiency investments was diversified across geographies (Italy,
Spain, Germany and the United Kingdom), technologies,
counterparties and ESCO partnerships. The Company's portfolio is
characterised by projects with (i) a low technology risk through
the use of proven technologies; (ii) medium to long term contracts
providing for predictable cash flows; and (iii) counterparties with
good creditworthiness.
Approximately 77% of the Company's forecast project cash flows
are investment grade, as assessed using either the Investment
Adviser's credit analysis or external agencies. For projects which
are non-investment grade, there are typically additional
protections. These protections include the ability to export power
to the grid, and to extend the maturity of a contract with the ESCO
and the underlying counterparty to recover missed payments. The
latter is possible because the Company's financing agreements are
of a shorter duration than the useful life of equipment installed
and, in many cases, of a shorter duration than the contract between
the ESCO and the counterparty. The credit quality and performance
of the Company's portfolio is discussed further below in respect of
valuations and expected credit loss provisions.
The Company's portfolio also benefits from a combination of
fixed and variable return cash flows. While approximately 83% of
the total investment value provides a fixed rate of return from
contractual cash flows, approximately 17% by investment value has
variable cash flows linked to power production and power prices, or
inflation indexation. In many cases, these variable return
investments have significant fixed income elements, for example,
feed in tariffs or fixed power prices in power purchase agreements.
In addition, certain investments have downside protections, for
example, minimum contractual returns in order to reduce the risk of
lower than forecast cash flows. The Company's portfolio of
investments is expected to achieve an unleveraged, average yield of
8% per annum, in line with the figure reported in the Audited
Annual Report and Accounts for the year ended 31 December 2022.
Investments in Italy (GBP37.4m committed; GBP32.7m deployed at
Period end)
In the six months to 30 June 2023, the Company committed GBP1.3
million to two new rooftop Solar PV projects developed by Noleggio
Energia, with whom the Company has now made seven investments.
During the Period, GBP11.7 million was deployed to both these new
investments and other existing commitments in Italy, the majority
of which was deployed into Superbonus projects.
As at 30 June 2023, total cash deployed into investments in
Italy was GBP32.7 million with GBP4.7 million of outstanding
commitments across a total of 13 investments. The Investment
Adviser forecasts that only GBP1.5 million of these outstanding
commitments will be deployed, primarily to two rooftop Solar PV
investments because it expects that only a further GBP0.2 million
(instead of GBP3.4 million) will be deployed to Superbonus projects
due to the expected timings of cash inflows versus cash outflows on
individual projects. The full commitment of GBP4.7 million may be
required if the timings of cash receipts from completing projects
are later than expected.
Investments in Italian "Superbonus" projects (GBP32.5m
committed; GBP29.0m deployed at Period end)
The Company had committed GBP32.5 million to five clusters of
Superbonus projects, as at 30 June 2023, a small increase in base
currency terms compared with the position as at 31 December 2022 of
GBP33.0 million. The net cash deployed increased from GBP18.1
million as at 31 December 2022 to GBP29.0 million as at 30 June
2023. Significant progress has been made on the 109 individual
projects within the five clusters such that construction has been
completed on 84 of these projects to date. 40 of these 84 projects
have secured their final tax credit accreditation and 9 projects
have been fully completed, with payments totalling GBP0.9 million
for those tax credits received. However, the ESCOs are experiencing
delays in receiving certification that the projects qualify for tax
credits and the buyers of the tax credits are taking time to make
the payments due. As a result of this, the projects now have a
longer maturity than originally forecast. This results in
additional interest, currently at the rate of 10% per annum, being
earned by the Company on the capital committed and deployed. As a
result of the delays, the ESCOs are expecting the majority of the
capital deployed to be redeemed by the end of the second quarter of
2024 with final payments expected in September 2024. This compares
with their earlier expectation of the majority of capital deployed
being redeemed by the end of January 2024.
"Superbonus" is an incentive measure introduced by the Italian
government through Decree "Rilancio Nr. 34" on 19 May 2020, which
aims to make residential buildings (condominiums and single houses)
more energy efficient through improvements to thermal insulation
and heating systems. When qualifying measures are completed, ESCOs
delivering the measures are awarded a tax credit equal to 110% of
the cost of the measures. These tax credits can then be sold to
banks, insurance companies and other corporations and, thus,
projects can be financed without the need for a financial
contribution from landlords.
The projects which the Company committed to finance are being
managed by three ESCOs: Enerstreet, Enerqos Energy Solutions and
Sol Lucet. The projects involve a range of energy efficiency
measures including insulation, the replacement of heating systems
with more efficient solutions and energy efficient windows.
Solar PV Investments for self-consumption in Italy (GBP4.9m
committed; GBP3.7m deployed)
As at 30 June 2023, the Company had committed GBP4.9 million to
eight rooftop Solar PV projects with an aggregate capacity of
5.1MWp. As at 30 June 2023, GBP3.7 million had been deployed into
seven operational projects with one project under construction. The
balance of the commitments is expected to be deployed by the end of
September 2023. These projects enable companies to reduce their
energy expenses and CO2 emissions and avoid grid losses through the
self-consumption of the electricity produced.
Projects with Noleggio Energia
Of these eight projects which the Company has committed to
finance, seven projects have been developed by the ESCO Noleggio
Energia, which was established in 2017 and is an Italian company
that specialises in providing operating leases for energy
efficiency and renewable energy projects for commercial and
industrial clients in Italy. These projects are all structured as
the purchase of receivables from operating leases with maturities
of seven or ten years, with a weighted average maturity of eight
and a half years outstanding, and all use very similar
documentation. Noleggio Energia has transferred to the SPV the
monthly receivables from these operating lease agreements, which
provide for fixed rates of return with a weighted average return of
7.9% p.a.
The projects with Noleggio Energia are summarised below at
Period end:
Commitment Capacity Credit Term
Counterparty Description GBPk kWp Rating Yrs
-------------------- --------------------------------- ---------- -------- ----------- ----
Producer of vinegars, dressings,
Acetificio Galletti pickles, and other food
SNC products 312 238 B 7
-------------------- --------------------------------- ---------- -------- ----------- ----
Manufacturer of wine cabinets
and hot and cold food display
Enofrigo units 116 127 BBB+ / BBB- 7
-------------------- --------------------------------- ---------- -------- ----------- ----
Manufacturer of machines
for handling cryogenic
Tecnocryo fluids 1,285 1,000 BB+ / BB 10
-------------------- --------------------------------- ---------- -------- ----------- ----
Manufacturer of food service
Ali Group equipment 335 443 A- 7
-------------------- --------------------------------- ---------- -------- ----------- ----
Manufacturer of non-woven
fabric products for a range
Orlandi of applications 796 876 BB+ / BB 10
-------------------- --------------------------------- ---------- -------- ----------- ----
Manufacturer of tyre retreading
Marangoni systems and products 829 1,000 BB+ / BB 10
-------------------- --------------------------------- ---------- -------- ----------- ----
Manufacturer of machinery
Carpigiani to produce ice cream 498 479 A- 5
-------------------- --------------------------------- ---------- -------- ----------- ----
Total 4,171 4,163
------------------------------------------------------- ---------- -------- ----------- ----
Project with CO-VER Power Technologies
In January 2022, the Company refinanced the acquisition of an
existing rooftop Solar PV plant in Ascoli Piceno (Central Italy)
with a generating capacity of 902 kWp. The investment is based on
the purchase of receivables generated by an energy service contract
between the leading Italian engineering firm CO-VER Power
Technologies ("CO-VER") and its subsidiary Futura APV S.r.l.
("Futura"). The contract governs the management of an operating
roof-mounted solar PV plant through until April 2028. Thereafter,
the investment is based on a feed-in tariff for an additional six
years, aggregating to a 12-year tenor. The investment is forecast
to generate a return of 7.2% p.a.. CO--VER has a successful 20-year
history in developing industrial projects in the areas of energy
storage systems, co/tri-generation plants and renewable energies.
Futura is the owner of the PV plant which benefits from feed in
tariffs payable by Gestore dei Servizi Energetici ("GSE"). GSE is a
joint stock company managed by the Italian government which is
responsible for promoting and developing the growth of renewable
assets in Italy. GSE has a credit rating of BBB+ from the Italian
government.
Investments in Spain (GBP28.7m committed; GBP10.8m deployed)
In the six months to 30 June 2023, the Company committed GBP4.5
million to a further three Solar PV projects in Spain with three
new project developers, including a GBP3.4 million project at the
site of a Spanish agricultural company and two smaller commitments
of GBP0.7 million and GBP0.6 million to finance groups of projects
across Spain.
During the Period, GBP6.1 million was deployed to these
investments and existing commitments.
As at 30 June 2023, the Company had made total commitments of
GBP28.7 million to 11 investments in Spain. Ten of these
investments, with total commitments of GBP24.5 million, are Solar
PV investments for self-consumption and a GBP4.2 million commitment
to a building energy efficiency investment.
As at 30 June 2023, cash deployed into these investments was
GBP10.8 million with GBP17.9 million of commitments outstanding.
The Investment Adviser expects that the majority of these
commitments will be deployed by the end of January 2024, primarily
to complete Solar PV projects, leaving GBP1.7 million to be
invested in the subsequent months of 2024 to complete the building
energy efficiency investment programme. The reduction in forecast
deployment is primarily due to the decision to not proceed with one
Solar PV project due to the project not satisfying the conditions
precedent contractually agreed for the release of the subsequent
tranche. This is expected to result in the repayment of the initial
tranche and accrued interest by the project developer.
Solar PV investments in Spain (GBP24.6m committed; GBP9.3m
deployed)
The Company has committed capital to finance the development of
ten solar PV installation projects throughout Spain with nine
project developers. Two of the projects have been structured to
provide fixed rates of return while the remaining eight projects
have been structured under Power Purchase Agreements ("PPAs") with
maturities of up to 18 years and have variable revenues, often
subject to a combination of production fluctuations, power price
changes and inflation. In addition, excess production beyond the
on-site demand may be injected into the grid. These variable
revenue risks are mitigated by conducting technical due diligence
prior to making commitments and by contracted prices within the
PPAs.
Six of these investments are now operating while four projects
remain to be constructed and/or financed, including a single large
project of GBP8.7 million, which requires certain conditions
precedent to be fulfilled.
Buildings Energy Efficiency investments in Spain (GBP4.2m
committed; GBP1.5m deployed)
The Spanish Government has established incentive schemes to
promote buildings energy efficiency measures, including the
"Programa de Rehabilitacion Energetica de Edificios" ("PREE"). PREE
is a EUR402.5 million incentive scheme in Spain which is designed
to promote and reward energy efficiency improvements for
condominiums and buildings, improving their energy rating by at
least one energy class. Under this scheme, the Company has
committed GBP4.2 million to fund the refurbishment of condominiums,
which is being managed by a leading ESCO specialised in designing
and implementing energy efficiency and renewable energy projects in
Spain. The investment cash flows are based on the purchase of
receivables generated by the underlying energy saving contracts
between the ESCO and the "Comunidad de Proprietarios"; the legal
entities which represent each of the owners of the apartments in a
residential building. The receivables have been rated at the
S&P equivalent of A+/A. GBP1.5 million has been deployed as at
30 June 2023 and the balance is forecast to be deployed in full by
the end of 2024.
Investments in Germany (GBP22.7m committed; GBP19.1m
deployed)
In the Period, no further investments were made in Germany. The
Company has four investments in Germany, across four distinct
technologies including smart metering technologies, water
management solutions, heat pumps and Bio-LNG, with total
commitments of GBP22.7 million, of which GBP19.1 million has been
deployed. GBP3.7 million of the outstanding commitments of GBP3.8
million is expected to be deployed in the fourth quarter of 2023 or
in the first quarter of 2024, following receipt of all necessary
permits, to finance the installation of liquefaction equipment at a
biogas plant in Northern Germany.
Three of the investments in Germany provide for fixed rates of
return while the other, a biogas investment, has a variable return
above a fixed rate of 5% p.a., which is equivalent to 8% of revenue
generated by the asset company, capped at GBP1.1 million across
eight years. This arrangement results in an overall forecast return
from this project of 9.0% p.a.
Investments in the United Kingdom (GBP6.2m committed; GBP5.3m
deployed)
In the Period, the Company committed GBP2.1 million to four new
investments taking total commitments to investments in the UK to
GBP6.2 million across ten investments with seven ESCOs. The four
new investments, developed by two new and one existing ESCO
relationship, comprised:
-- Two groups of lighting investments for an industrial company
and schools, totalling GBP1.3 million of which GBP0.2 million
remains to be deployed;
-- Another group of 17 lighting investments for a range of
schools and industrial companies, totalling GBP0.5 million, which
has been fully deployed; and
-- An investment of GBP0.3 million into a fifth operating wind power project.
As at 30 June 2023, total cash deployed to investments in the UK
was GBP5.3 million with GBP0.7 million of commitments outstanding
including GBP0.2 million for lighting investments to be deployed in
Q4 2023. The remaining outstanding commitment of GBP0.5 million is
to a CHP investment, for a food producer, Vale of Mowbray, to which
GBP0.9 million has been previously deployed. As previously
reported, this project remains on hold because Vale of Mowbray has
been placed into administration. Discussions continue between Ega
Energy, the developer of the original project, and the new owner of
the site, a cold store logistics business. However, the new owner
of the site has been focused on repurposing the site to cold store
operations and has not yet decided whether or how to proceed with
the CHP investment. Ega Energy remains confident that it will be
able to deploy the CHP equipment either at this site or at the
sites of other potential clients in the UK. Nevertheless, the
Company has made an ECL provision of GBP0.24 million against this
investment and the Company is forecasting that no further capital
will be deployed to this investment.
The UK investments in the wind power projects are variable
return investments due to the variability of export tariffs, which
are renewed each year, although a significant percentage of
revenues are based on feed in tariffs which benefit from annual
inflation adjustments. The other investments in CHP and lighting
projects are all fixed return investments although the lighting
projects with Lumenstream have annual inflation adjustments.
Valuations and Expected Credit Loss Provisions as at 30 June
2023
As at 30 June 2023, the Company's investments had a book value
of GBP65.7 million with investments held at amortised cost valued
at GBP54.1 million and investments held at fair value through
profit or loss valued at GBP11.6 million (see Note 3 of the Interim
Accounts).
The investments held at amortised cost are net of expected
credit loss provisions of GBP0.36 million, which increased by
GBP0.22 million from GBP0.14 million as at 31 December 2022. The
principal reason for the increase is the provision made against the
Ega Energy Vale of Mowbray investment, referred to above, for which
the provision increased to GBP0.24 million. Apart from this
project, the Company has not experienced significant payment issues
on the receivables due to be paid to it in the Period.
The half year valuation of the investments held at fair value
through profit or loss resulted in a loss of GBP1.7 million, a
change of minus 7.3%.
While there were relatively minor upwards adjustments to the
Company's investments held at fair value in Germany and the UK,
there was an overall downwards valuation adjustment in the Period,
mainly due to the Spanish Solar PV investments. This downwards
adjustment in Spanish Solar is due mainly to a reduction in
forecast power prices, after CPI inflation adjustments. Further
downward adjustments have resulted from foreign exchange effects
and an increase in discount rates of c. 20bps compared with those
used at 31 December 2022. The discount rate increase is
attributable to interest rate rises.
The downwards valuation adjustment to the Spanish Solar PV
investments seen in this Period is greater than the positive
valuation adjustment reported for the year ended 31 December 2022.
This means that these investments held at fair value are currently
valued at GBP4.4 million, which is lower than cost of GBP5.8
million. A significant part of this negative valuation, compared
with cost, is expected to be recovered in October when one of the
investments, as referred to in the Chair's Statement, is expected
to be realised. This investment will be realised at cost, plus a
holding interest rate of 8.5% p.a., in accordance with the
agreement in principle, which has been reached with the relevant
ESCO.
Summary of Investments as at 30 June 2023
Deployed,
June
Committed, Committed, Deployed, 23
Dec 22 June 23 Dec 22 (FX
(FX rate (FX rate (FX rate rate
Receivables at 1.1295 at 1.1647 at 1.1295 at 1.1647
Weighted Contract EUR to EUR to EUR to EUR to
Avg. Credit term GBP) GBP) GBP) GBP)
Description rating years Technology Status Country GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
238 kWp Solar
PV plant at
food
manufacturer
in Lombardy; Solar
fixed income BB- 7 PV Operating Italy 314 312 310 301
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
127 kWp Solar
PV plant
installed
at manufacturer
in Veneto; BBB+ / Solar
fixed income BBB- 7 PV Operating Italy 120 116 120 116
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Superbonus
scheme; fixed
income from
sales of tax Building
credits BB- 1 - 2 Retrofit Construction Italy 5,498 5,952 5,498 5,146
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Superbonus
scheme; fixed
income from
sales of tax BBB+ / Building
credits BBB- 1 - 2 Retrofit Construction Italy 10,793 10,346 10,539 10,048
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
LED lighting
contracts with
6 UK companies;
fixed income BBB+ / United
with RPI BBB- 5 Lighting Operating Kingdom 390 390 362 362
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
901.6 kWp Solar
PV plant at
site in Ascoli
Piceno (Central
Italy); fixed
& variable BBB+ / Solar
income BBB- 12 PV Operating Italy 740 718 730 708
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Superbonus
scheme; fixed
income from
sales of tax AAA / Building
credits AA- 1 - 2 Retrofit Operating Italy 1,609 1,552 1,600 1,552
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
1,000 kWp Solar
PV plant at
manufacturer
in Lombardy; BBB+ / Solar
fixed income BBB- 10 PV Operating Italy 1,325 1,285 1,316 1,275
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Sub-metering
contracts with
landlords of
multi-occupancy
buildings;
fixed income A- 9 Sub-meters Operating Germany 1,821 1,768 1,787 1,733
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
CHP energy
services for
major
conference
centre in
Wales; BBB+ / United
fixed income BBB- 6 CHP Operating Kingdom 200 200 171 171
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
CHP energy
services for
food
manufacturer; CCC / United
fixed income CC 7 CHP Construction Kingdom 1,396 1,395 907 907
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Superbonus
scheme; fixed
income from
sales of tax BBB+ / Building
credits BBB- 1 - 2 Retrofit Construction Italy 8,722 8,450 7,099 6,641
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
3,830 kWp Solar
PV plant at
facility in
Tarragona,
Northern Spain;
variable income BBB+ / Solar
from PPA BBB- 15 PV Construction Spain 2,947 2,851 1,467 1,423
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Three Solar
PV plants for
poultry
producer;
variable income Solar
from PPA BB- 15 PV Operating Spain 286 273 134 260
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
CHP energy
services for
a hotel in
the Midlands; BB+ / United
fixed income BB 8 CHP Operating Kingdom 433 433 407 407
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Superbonus
scheme; fixed
income from
sales of tax BB+ / Building
credits BB 2 Retrofit Construction Italy 6,356 6,164 6,347 6,155
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Five Solar
PV plants in
Spain; variable
income from
PPAs with
multiple BBB+ / Solar
counterparties BBB- 15-18 PV Construction Spain 9,888 9,342 639 623
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
8,800 kWp Solar
PV plant in
Zaragoza;
variable
income from
PPAs with
multiple BB+ / Solar
counterparties BB 15 PV Construction Spain 6,321 6,138 1,549 1,503
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Two Solar PV
plants at two
businesses
in Spain; fixed Solar
income BB- 10 & 12 PV Operating Spain 155 150 153 148
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
443 kWp Solar
PV plant at
foodservice
equipment
manufacturer
in Veneto; BBB+ / Solar
fixed income BBB- 7 PV Operating Italy 345 335 -- 335
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
745.5 kWp Solar
PV project
at Spanish
ceramic tiles
manufacturer;
variable income BBB+ / Solar
from PPA BBB- 15 PV Operating Spain 966 918 733 888
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Three operating
wind turbines
in the UK;
variable income
from FiTs and BBB+ / United
export tariffs BBB- 10.6 Wind Operating Kingdom 484 484 400 400
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Operating
bio-gas
plant in
Northern
Germany with
planned upgrade
to a Bio-LNG1 Operational
facility; fixed (Phase
& variable Biogas 2
income A- 8.25 / BioLNG construction) Germany 8,282 8,036 4,429 4,295
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Solar PV for
agricultural
company in
Cordoba;
variable
income from Solar
PPA BB- 15 PV Operating Spain 677 303 -- 296
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
875.6 kWp Solar
PV plant at
non-woven
fabrics
manufacturer
in Lombardy; Solar
fixed income BB- 10 PV Construction Italy 821 796 -- --
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Water management
services for
condominiums
and
multi-family
homes; fixed BBB+ / Water
income BBB- 10 management Operating Germany 11,067 10,698 10,978 10,647
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Two energy
saving
contracts
for five
Spanish
condominiums
located around
Madrid,
Guadalajara
and Gerona; Building
fixed income A+ / A 15 Retrofit Construction Spain 5,959 4,164 211 1,472
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Two operating
wind turbines
in Scotland;
variable income
from FiTs and BBB+ / United
export tariffs BBB- 13 Wind Operating Kingdom 1,162 1,494 1,132 1,447
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Heat pump
service
and maintenance
contracts for
the residential
sector
throughout
Germany; fixed AAA / Construction&
income AA- 15 Heating Operational Germany 2,240 2,173 2,213 2,146
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
4,000 kWp Solar
PV plants for
leading
agricultural
business; fixed BB+ / Solar
income BB 10 PV Operating Spain -- 3,378 -- 3,306
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
869 kWp Solar
PV plants at
two sites
around
Alicante,
Spain;
variable income BB+ / Solar
from PPAs BB 14 & 15 PV Operating Spain -- 598 -- 581
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
1,300 kWp Solar
PV plants at
four sites
in Spain;
variable
income from
PPAs and grid BBB+ / Solar
sales BBB- 18 PV Construction Spain -- 607 -- 138
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
Metering and
LED contracts
with eleven
different
counterparties
in the UK;
fixed income BBB+ / United
with RPI BBB- 5 to 7 Various Construction Kingdom -- 875 -- 662
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
1,000 kWp Solar
PV plant at
leading tyre
retreading
business in
Central Italy;
fixed income BB+ / Solar
with RPI BB 10 PV Construction Italy -- 829 -- 343
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
478.8 kWp Solar
PV plant at
ice cream
equipment
manufacturer
in Northern
Italy; fixed BBB+ / Solar
income BBB 5 PV Operating Italy -- 498 -- 491
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
LED lighting
contracts for
17 different
clients in
the UK; fixed BBB+ / United
income BBB- 10 Lighting Operating Kingdom -- 456 -- 456
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
LED lighting
contract for
UK logistics
business; fixed BBB+ / United
income BBB- 5 Lighting Operating Kingdom -- 432 -- 411
---------------- ------------ -------- ---------- ------------- ------- ---------- ---------- --------- ---------
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Investment Approach and ESG Approach
Prior to the New Investment Policy (as adopted consequent to the
passage of the Continuation Managed Run-Off Resolution), the
Company's goal was to generate attractive returns for investors by
reducing Primary Energy Consumption ("PEC"). AEET's investments
positively contribute to the environment by reducing carbon dioxide
emissions, by decreasing PEC and by increasing the amount of
renewable energy used. The synergies generated by the reduction of
PEC and simultaneously using renewable energy sources to further
support global energy decarbonization (1) . This is reflected
across the investment philosophy and approach, including the
Company's Investment Adviser, which has a strong focus on the
energy transition.
Over the Period, the portfolio performed as follows (2) :
-- 7,883.1 tonnes of avoided CO2 emissions; and
-- 24,544.9 MWh of energy saved,
-- For total emission savings equivalent to 3,449 passenger flights around the world (3) .
The Company has adopted Aquila Capital's ESG policy, ensuring
that environmental, social and governance criteria which are
incorporated into day-to-day investment decisions as well as
generating a positive contribution for society. AEET's investment
approach is focused on investments in energy efficiency projects
located primarily in Europe. These investments are predominantly
into proven technologies that deliver energy savings for
commercial, industrial, and public sector buildings. Prior to the
New Investment Policy, the Company sought to invest in projects for
the long term with a focus on optimising and improving the assets'
PEC (and, of course, the Company's investments continue to meet
this initial objective). Technologies typically include:
-- LED Lighting System;
-- LED Street Lighting System;
-- Solar PV;
-- Biomass Boilers;
-- HVAC/Buildings;
-- Smart Metering/Submetering; and
-- Electrification of transportation vehicles (batteries).
Environmental Contribution
The Company's investment approach is focused on reducing PEC,
which should lead to significant reductions in carbon dioxide
emissions. In addition, local production of energy (CHP, Biomass
Boilers, Solar PV) reduces transportation energy losses and grid
over-utilisation. Smart Meters and other control technologies
enable a better visibility and management of energy and therefore
represent a basis for energy savings.
Aquila Capital ensures all required regulations and
corresponding approvals are completed prior to the acquisition of
the assets, for example, planning permissions.
1 International Renewable Energy Agency (Irena), "Synergies
between renewable energy and energy efficiency" (2017), available
at: https://www.irena.org/publications/2017/
Aug/Synergies-between-renewable-energy-and-energy-efficiency#::text=Renewables%20would%20account%20for%20about,
country%2C%20sector%20and%20 technology%20levels
2 The energy (in kWh) and avoided emission (in t CO2e) are
reported to Aquila Capital by third parties, including the
development companies, ESCO, and other third parties. These reports
are supported by asset-level documentation of individual
methodologies. Aquila Capital has reviewed the individual
methodologies for technical consistency and reconciles the reported
values for plausibility. Only energy savings and avoided emissions
for operational projects are considered on a pro-rata basis for the
time of operation during the reporting period. Avoided CO2e
emissions are estimated in gross terms and derived from energy
savings in kWh using a conversion factor (except CHP) which
measures the grid's emission intensity. Emissions incurred during
the life cycle of the light bulbs such as materials sourcing,
manufacturing, installation, maintenance etc. are not available.
The reported metrics are estimations based on assumptions. For
technical reasons, it is not possible or feasible to observe or
measure actual energy or emission avoidance in real-time.
3 Passenger flights around the world: This number is derived
from passenger flight emissions data retrieved on April 4th 2023
from the International Civil Aviation Organization;
https://applications.icao.int/icec/Home/Index. The total emissions
associated with a passenger flight around the world based on a
standard itinerary from New York to Dubai, Bangkok, Sydney, Los
Angeles and back to New York in the economy class is 2,285.80 kg
CO2.
Social Contribution
Energy efficiency measures not only reduce PEC, but typically
also have a positive impact on health and quality of life for
different stakeholders, such as employees and users of public
facilities. This is largely achieved through the installation of
advanced solutions for lighting, heating, cooling, ventilation and
the associated control units. All project developers are required
to adhere to local, regional, and national health and safety laws,
to train and educate employees accordingly in order to make sure
casualties and injuries are avoided. Aquila Capital's ESG policy,
as adopted by the Company, excludes suppliers and manufacturers
that do not meet Aquila Capital's criteria (exclusion of certain
sectors/ subsectors, or companies that, for example, use
unfavourable labour conditions). For all counterparties a rating is
performed (in collaboration with a third-party rating agency)
assessing the creditworthiness of the relevant counterparty as well
as a 'Know Your Client' check for the relevant parties involved to
increase transparency of the counterparties' activities.
Governmental Contribution
The Company's business partners are required to adhere to the
requirements of the relevant social security and tax authorities.
The Company's partners are required to provide evidence that they
adhere to anti-bribery and corruption laws.
Due Diligence
The Investment Advisor performs detailed ESG due diligence for
each asset prior to investment. The investment management team
follows a structured screening, due diligence and investment
process which is designed to ensure that investments are reviewed
and compared on a consistent basis. Execution of this process is
facilitated by the team's deep experience in energy efficiency
project investing. As part of this process, the Investment Adviser,
as relevant for each investment, considers:
-- Total PEC reduction, and implied CO2 emissions reduced and/or avoided; and/or
-- Total energy production from renewable and non-renewable sources.
Governance Framework
AEET has an independent Board of Directors, with FundRock
Management Company (Guernsey) Limited (formerly Sanne Fund
Management (Guernsey) Limited) as the Alternative Investment Fund
Manager ("AIFM"). The Board of Directors supervise the AIFM, which
is responsible for making recommendations in relation to any
investment proposals put forward by the Investment Adviser. The
Investment Adviser is fully regulated and supervised by BaFin in
Germany. The Company maintains a comprehensive risk register which
is regularly updated and reviewed by the AIFM and the Board of
Directors to inform the implementation of appropriate controls and
processes. The Company has established procedures to deal with any
potential conflicts of interest in circumstances where Aquila
Capital (or any affiliate) is advising both the AIFM (for the
Company) and other Aquila Capital managed funds. In the context of
an investment decision, these procedures may include a fairness
opinion in relation to the valuation of an investment, which is
obtained from an independent expert.
Monitoring of ESG:
The Company's commitment to and compliance with the Company's
established ESG approach is monitored on a continuous basis
throughout the lifecycle of investments, as they become
operational. This includes:
-- Ongoing monitoring of the PEC based on the energy consumption
and deriving from that the CO2 savings, where appropriate,
monitoring additional environment and ESG relevant developments
both at the portfolio and asset level;
-- Annual reporting, including ESG aspects, to relevant
stakeholders including ad-hoc reporting of any material and urgent
issues identified in the monitoring process; and
-- A semi-annual ESG risk report to the Board will be implemented later in 2023.
AEET has been awarded the Green Economy Mark from the London
Stock Exchange. The Green Economy Mark identifies London-listed
companies and funds that generate between 50% and 100% of total
annual revenues from products and services that contribute to the
global green economy.
Aquila Capital Investmentgesellschaft mbH
26 September 2023
INTERIM MANAGEMENT REPORT
The Directors are required to provide an Interim Management
Report in accordance with the Financial Conduct Authority's ("FCA")
Disclosure Guidance and Transparency Rules ("DTR"). The Directors
consider that the Chair's Statement and the Investment Adviser's
Report in this Half-yearly Report, provide details of the important
events which have occurred during the six months ended 30 June 2023
(the "Period") and their impact on the financial statements. The
statement on related party transactions and the Directors'
Statement of Responsibility (below), the Chair's Statement and the
Investment Adviser's Report together constitute the Interim
Management Report of the Company for the Period. The outlook for
the Company for the remaining six months of the year ending 31
December 2023 is discussed in the Chair's Statement and the
Investment Adviser's Report.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company are
summarised below:
(i) The consequences of the shareholder vote not to continue the Company
(ii) Service provider risk
(iii) Counterparty / credit risk
(iv) Inappropriate investment advice
(v) Portfolio valuation
(vi) Interest rate / inflation
(vii) Liquidity / discount risk
(viii) Political risk
(ix) Investment performance
(x) IT security
(xi) Act of war / sanctions
(xii) ESG
(xiii) Exchange rates
Since the end of the financial year ended 31 December 2022, the
decision by shareholders on 28 February 2023 not to continue the
Company and the subsequent approval at the Annual General Meeting
on 14 June 2023 of the Continuation and Managed Run-Off Resolution,
the Board has paid and continues to pay particular attention to the
first two risks in the above list and is reviewing on a regular
basis the performance of its service providers, in particular in
terms of level of resource deployed in delivering services to the
Company and the standard of performance of those services.
The Company's Annual Report for the period ended 31 December
2022 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 Annual Report can be
found on the Company's website.
Related Party Transactions
Details of the investment advisory arrangements were provided in
the Annual Report. There have been no changes to the related party
transactions described in the Annual Report that could have a
material effect on the financial position or performance of the
Company. Amounts payable to the Investment Adviser in the Period
are detailed in the unaudited Statement of Profit or Loss and
Comprehensive Income.
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 Group and
Company.
The Group and Company continue to meet day-to-day liquidity
needs through their cash resources. The Directors have a reasonable
expectation that the Group and Company have adequate resources to
continue in operational existence for at least twelve months from
the date of this document.
In reaching this conclusion, the Directors have considered the
Group's investment commitments, cash position, income and expense
flows. As at 31 August 2023, the latest practicable date before
publication of this report, the total commitments were GBP94.6
million and income generating capital deployed since IPO was
GBP68.1 million. As at 31 August 2023, the Group had cash of
GBP28.56 million (including the GBP2.5 million held as collateral
for FX hedging). The Directors are also satisfied that the Group
and Company would continue to remain viable under downside
scenarios. Total expenses for the Period were GBP1.65 million
(excluding impairment losses) (from the period from incorporation
to 30 June 2022: GBP1.4 million annualised), which, when
annualised, represented approximately 3.5% of average net assets
during the Period (period from incorporation to 30 June 2022:
1.44%). At the date of approval of this document, based on the
aggregate of investments and cash held, the Group and Company has
substantial operating expenses cover.
At the Annual General Meeting of the Company (the "AGM") held on
14 June 2023, Shareholders voted in favour of the Company's change
of investment policy (the "New Investment Policy"). Following the
AGM, and in accordance with the New Investment Policy, the Company
entered a continuation and managed run-off of its portfolio,
meaning that it is not making any new investments (save for the
limited circumstances as set out in the New Investment Policy) and
its investing activity is solely in respect of funding legal
commitments to existing investments (the "Continuation Managed
Run-Off").
The Continuation and Managed Run-Off Resolution was put forward
as a resolution to Shareholders in response to the outcome of the
Company's continuation vote held in February 2023, which did not
pass.
The Board continues to review the strategic options for the
portfolio, including a sale of all of the Company's assets, and
other proposals that address the Company's size and liquidity.
Accordingly, the process to market test the portfolio sale
commenced on 16 August 2023 and is being conducted by Stifel
Nicolaus Europe Limited on behalf of the Company.
The Directors recognise that these conditions indicate the
existence of material uncertainty which may cast significant doubt
about the Group and Company's ability to continue as a going
concern.
However, based on the assessment and considerations above, the
Directors have concluded that the financial statements of the Group
and the Company should be prepared on a going concern basis. The
financial statements do not include the adjustments that would
result if the Group and the Company were unable to continue on a
going concern basis.
Directors' Statement of Responsibility
The Directors confirm to the best of their knowledge that:
-- the condensed set of financial statements contained within
the Interim Financial Report has been prepared in accordance with
IAS 34 Interim Financial Reporting and gives a true and fair view
of the assets, liabilities, financial position and return of the
Company;
-- the Interim Management Report includes a fair review of the
information required by Disclosure and Transparency Rule 4.2.7R;
and
-- the Interim Financial Report includes a fair review of the
information required by Disclosure and Transparency Rule
4.2.8R.
Miriam Greenwood OBE DL
Chair of the Board of Directors
26 September 2023
David Fletcher
Chair of the Audit & Risk Committee
26 September 2023
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE
INCOME
FOR THE SIX MONTHS TO 30 JUNE 2023
For the six months to For the six months to
30 June 2023 30 June 2022
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ----- -------- -------- -------- -------- -------- --------
Unrealised (loss)/gain
on investments - (3,277) (3,277) - 555 555
Unrealised (loss)/gain
on derivatives - (300) (300) - 81 81
Realised gains on derivatives - 2,515 2,515 - - -
Net foreign exchange
(loss)/gain - (87) (87) - 21 21
Investment Income 4 2,584 - 2,584 667 - 667
Investment Advisory
fees 5 (447) - (447) (112) - (112)
Impairment loss 3 (224) - (224) - - -
Other expenses (1,202) - (1,202) (837) - (837)
------------------------------ ----- -------- -------- -------- -------- -------- --------
(Loss)/profit on ordinary
activities before taxation 711 (1,149) (438) (282) 657 375
Taxation 6 - - - - - -
------------------------------ ----- -------- -------- -------- -------- -------- --------
(Loss)/profit on ordinary
activities after taxation 711 (1,149) (438) (282) 657 375
Return per Ordinary
Share 7 0.71p (1.15p) (0.44p) (0.28p) 0.66p 0.38p
------------------------------ ----- -------- -------- -------- -------- -------- --------
The total column of the Consolidated Statement of Profit or Loss
and Comprehensive Income is the profit and loss account of the
Group.
All revenue and capital items in the above consolidated
statement derive from continuing operations. The acquisition of
Attika Holdings Limited and SPV Project 2013 S.r.l. effective 1
January 2022 has been reflected in the above statement for the
Period. No operations were discontinued during the Period.
Profit/(loss) on ordinary activities after taxation is also the
"Total comprehensive income/(expense) for the Period".
The accompanying notes form part of these financial
statements.
COMPANY STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS TO 30 JUNE 2023
For the six months to For the six months to
30 June 2023 30 June 2022
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ----- -------- -------- -------- -------- -------- --------
Unrealised (loss)/gain
on investments - (800) (800) - 946 946
Net foreign exchange (loss)/gain - (549) (549) - 61 61
Investment income 4 2,082 - 2,082 314 - 314
Investment Advisory fees 5 (447) - (447) (112) - (112)
Other expenses (953) - (953) (694) - (694)
--------------------------------- ----- -------- -------- -------- -------- -------- --------
(Loss)/profit on ordinary
activities before taxation 682 (1,349) (667) (492) 1,007 515
Taxation 6 - - - - - -
--------------------------------- ----- -------- -------- -------- -------- -------- --------
(Loss)/profit on ordinary
activities after taxation 682 (1,349) (667) (492) 1,007 515
Return per Ordinary Share 7 0.68p (1.35p) (0.67p) (0.49p) 1.01p 0.52p
--------------------------------- ----- -------- -------- -------- -------- -------- --------
The total column of the Company Statement of Profit or Loss and
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.
(Loss)/profit on ordinary activities after taxation is also the
"Total comprehensive (expense)/income for the Period".
The accompanying notes form part of these financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
As at As at
30 June 31 December
2023 2022
Notes GBP'000 GBP'000
------------------------------------------ ----- ----------- -----------
Fixed assets
Investments at fair value through profit
or loss 3 11,625 11,742
Investments at amortised cost 3 54,048 38,550
------------------------------------------ ----- ----------- -----------
65,673 50,292
------------------------------------------ ----- ----------- -----------
Current assets
Trade and other receivables 606 70
Cash and cash equivalents 28,687 46,625
------------------------------------------ ----- ----------- -----------
29,293 46,695
------------------------------------------ ----- ----------- -----------
Creditors: amounts falling due within one
year (1,127) (904)
------------------------------------------ ----- ----------- -----------
Derivative financial instrument 3 (300) (856)
------------------------------------------ ----- ----------- -----------
Net current assets 27,866 44,935
------------------------------------------ ----- ----------- -----------
Net assets 93,539 95,227
------------------------------------------ ----- ----------- -----------
Capital and reserves: equity
Share capital 8 1,000 1,000
Special reserve 9 93,500 94,750
Capital reserve (718) 431
Revenue reserve (243) (954)
------------------------------------------ ----- ----------- -----------
Shareholders' funds 93,539 95,227
------------------------------------------ ----- ----------- -----------
Net assets per Ordinary Share 10 93.54 95.23p
------------------------------------------ ----- ----------- -----------
No. of ordinary shares in issue 100,000,000 100,000,000
------------------------------------------ ----- ----------- -----------
Approved by the Board of directors and authorised for issue on
26 September 2023.
Signed on behalf of the Board of Directors
Miriam Greenwood OBE DL
Chair of the Board of Directors
David Fletcher
Chair of the Audit & Risk Committee
Aquila Energy Efficiency Trust Plc is incorporated in England
and Wales with Company number 13324616.
The accompanying notes form part of these financial
statements.
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
As at As at
30 June 31 December
2023 2022
Notes GBP'000 GBP'000
--------------------------------------------- ----- ------- -----------
Fixed assets
Investment in subsidiaries 3 33,660 31,220
Loans to subsidiary 3 27,514 -
--------------------------------------------- ----- ------- -----------
61,174 31,220
--------------------------------------------- ----- ------- -----------
Current assets
Cash and cash equivalents 20,930 32,714
Intercompany receivable 11,791 32,966
Interest Income Receivable from a subsidiary 967 -
Trade and other receivables 110 33
--------------------------------------------- ----- ------- -----------
33,798 65,713
--------------------------------------------- ----- ------- -----------
Creditors: amounts falling due within one
year (1,006) (1,050)
--------------------------------------------- ----- ------- -----------
Net current assets 32,792 64,663
--------------------------------------------- ----- ------- -----------
Net assets 93,966 95,883
--------------------------------------------- ----- ------- -----------
Capital and reserves: equity
Share capital 8 1,000 1,000
Special reserve 9 93,500 94,750
Capital reserve 650 1,999
Revenue reserve (1,184) (1,866)
--------------------------------------------- ----- ------- -----------
Shareholders' funds 93,966 95,883
--------------------------------------------- ----- ------- -----------
The prior period comparison figures for the period from 1
January 2022 to 30 June 2022 consolidated financial statements have
been restated as a result of the acquisition of AHL and the Italian
SPV on 1 January 2022.
Approved by the Board of directors and authorised for issue on
26 September 2023.
Signed on behalf of the Board of Directors
Miriam Greenwood OBE DL
Chair of the Board of Directors
David Fletcher
Chair of the Audit & Risk Committee
Aquila Energy Efficiency Trust Plc is incorporated in England
and Wales with Company number 13324616.
The accompanying notes form part of these financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS TO 30 JUNE 2023
Share Special Capital Revenue
capital reserve reserve reserve Total
For the six months to 30 June 2023 Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ----- ------- ------- ------- ------- -------
Opening equity as at 1 January 2023 1,000 94,750 431 (954) 95,227
Dividends paid 11 - (1,250) - - (1,250)
Loss for the Period - - (1,149) 711 (438)
------------------------------------ ----- ------- ------- ------- ------- -------
Closing equity as at 30 June 2023 1,000 93,500 (718) (243) 93,539
------------------------------------ ----- ------- ------- ------- ------- -------
Share Special Capital Revenue
capital reserve reserve reserve Total
For the six months to 30 June 2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ ------- ------- ------- ------- -------
Opening equity as at 1 January 2022 1,000 97,000 (46) (573) 97,381
Impact of the acquisition of subsidiaries
on 1 January 2022 - - - (41) (41)
Profit for the Period - - 657 (282) 375
------------------------------------------- ------- ------- ------- ------- -------
Closing equity as at 30 June 2022 1,000 97,000 611 (896) 97,715
------------------------------------------- ------- ------- ------- ------- -------
The prior period comparison figures for the period from 1
January 2022 to 30 June 2022 consolidated financial statements have
been restated as a result of the acquisition of AHL and the Italian
SPV on 1 January 2022.
The accompanying notes form part of these financial
statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS TO 30 JUNE 2023
Share Special Capital Revenue
capital reserve reserve reserve Total
For the six months to 30
June 2023 Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----- ------- ------- ------- ------- -------
Opening equity as at 1 January
2023 1,000 94,750 1,999 (1,866) 95,883
Dividends paid 11 - (1,250) - - (1,250)
Loss for the Period - - (1,349) 682 (667)
------------------------------- ----- ------- ------- ------- ------- -------
Closing equity as at 30
June 2023 1,000 93,500 650 (1,184) 93,966
------------------------------- ----- ------- ------- ------- ------- -------
Share Special Capital Revenue
capital reserve reserve reserve Total
For the six months to 30
June 2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------- ------- ------- ------- -------
Opening equity as at 1 January
2022 1,000 97,000 (46) (573) 97,381
Profit for the Period - - 1,007 (492) 515
-------------------------------- ------- ------- ------- ------- -------
Closing equity as at 30
June 2022 1,000 97,000 961 (1,065) 97,896
-------------------------------- ------- ------- ------- ------- -------
The accompanying notes form part of these financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS TO 30 JUNE 2023
For the For the
six months six months
to to
30 June 2023 30 June 2022
Notes GBP'000 GBP'000
------------------------------------------------------------ ----- ------------ ------------
Operating activities
(Loss)/profit on ordinary activities before taxation (438) 375
Adjustments for:
Unrealised loss/(gain) on investments 3,277 (555)
Unrealised loss/(gain) on derivative instruments 300 (81)
Impairment loss 224 -
Non-cash currency (gains)/loss (718) 51
(Increase)/decrease in trade and other receivables (536) 498
Increase/(decrease) in creditors: amounts falling due
within one year 223 (858)
------------------------------------------------------------ ----- ------------ ------------
Net cash flow from/(used in) operating activities 2,332 (570)
------------------------------------------------------------ ----- ------------ ------------
Investing activities
Net cash received on acquisition of Attika Holdings Ltd. - 5,000
Net cash received on acquisition of SPV Project 2013 S.r.l. - 11,751
Purchase of investments (19,658) (9,556)
Repayment of investments 638 47
------------------------------------------------------------ ----- ------------ ------------
Net cash flow (used in)/from investing activities (19,020) 7,242
------------------------------------------------------------ ----- ------------ ------------
Financing activities
Dividends paid 11 (1,250) -
------------------------------------------------------------ ----- ------------ ------------
Net cash flow used in financing activities (1,250) -
(Decrease)/Increase in cash and cash equivalents (17,938) 6,672
Cash and cash equivalents at start of Period 46,625 80,129
------------------------------------------------------------ ----- ------------ ------------
Cash and Cash equivalents at end of Period 28,687 86,801
------------------------------------------------------------ ----- ------------ ------------
The prior period comparison figures for the period from 1
January 2022 to 30 June 2022 consolidated financial statements have
been restated as a result of the acquisition of AHL and the Italian
SPV on 1 January 2022.
The accompanying notes form part of these financial
statements.
COMPANY STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS TO 30 JUNE 2023
For the For the
six months six months
to to
30 June 2023 30 June 2022
Notes GBP'000 GBP'000
----------------------------------------------------- ----- ------------ ------------
Operating activities
(Loss)/profit on ordinary activities before taxation (667) 515
Adjustments for:
Unrealised loss/(gain) on investments 800 (946)
Non-cash currency exchange gain (88) -
Decrease/(increase) in intercompany receivables 21,175 (7,685)
Increase in interest income receivable from a
subsidiary (967) -
(Increase)/decrease in trade and other receivables (77) 4,825
Increase in creditors: amounts falling due within
one year 44 176
----------------------------------------------------- ----- ------------ ------------
Net cash flow from/(used in) operating activities 20,220 (3,115)
----------------------------------------------------- ----- ------------ ------------
Investing activities
Purchase of investments 3 (3,851) (61)
Repayment of investments 3 611 -
Loans to subsidiary 3 (27,514) -
----------------------------------------------------- ----- ------------ ------------
Net cash flow used in investing activities (30,754) (61)
----------------------------------------------------- ----- ------------ ------------
Financing activities
Dividends paid 11 (1,250) -
----------------------------------------------------- ----- ------------ ------------
Net cash flow used in financing activities (1,250) -
Decrease in cash and cash equivalents (11,784) (3,176)
Cash and cash equivalents at start of Period 32,714 80,129
----------------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at end of Period 20,930 76,953
----------------------------------------------------- ----- ------------ ------------
The accompanying notes form part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS TO 30 JUNE 2023
1. GENERAL INFORMATION
Aquila Energy Efficiency Trust Plc (the "Company") is a public
Company limited by shares incorporated in England and Wales on 9
April 2021 with registered number 13324616. 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 2 June 2021 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 Company owns 100% of its subsidiary, Attika Holdings Limited
(the "HoldCo" or "AHL") and 100% of the notes issued by one
compartment of SPV Project 2013 S.r.l. (the "SPV" or "Italian SPV")
issued to the Company, which entitles the Company to a 100%
economic interest in the receivables purchased through the proceeds
of these notes, together the "Group".
The registered office address of the Company is 6th Floor, 125
London Wall, London, EC2Y 5AS.
The Company's New Investment Policy Objective is to realise all
the remaining assets in the Portfolio in a prudent manner
consistent with the principles of good investment management with a
view to returning cash to Shareholders in an orderly manner.
The Company will pursue its investment objective by effecting an
orderly realisation of its assets in a manner that seeks to achieve
the best balance for Shareholders between maximising the value
received from those assets and making timely returns of capital to
Shareholders. This process might include sales of individual
assets, mainly structured as loans/receivables, or groups of
assets, or running off the Portfolio in accordance with the
existing terms of the assets, or a combination.
FundRock Management Company (Guernsey) Limited acts as the
Company's Alternative Investment Fund Manager (the "AIFM") for the
purposes of Directive 2011/61/EU on alternative investment fund
managers ("AIFMD").
The Group's Investment Adviser is Aquila Capital
Investmentgesellschaft mbH authorised and regulated by the German
Federal Financial Supervisory Authority.
Apex Listed Companies Services (UK) Limited (the
"Administrator") provides administrative and company secretarial
services to the Group under the terms of an administration
agreement between the Company and the Administrator. The Italian
SPV is administered by Zenith Service S.p.A.
2. BASIS OF PREPARATION
Group Financial Statements
The consolidated financial statements included in this Interim
Report have been prepared in accordance with IAS 34 "Interim
Financial Reporting". The accounting policies, critical accounting
judgements, estimates and assumptions are consistent with those
used in the latest audited consolidated financial statements to 31
December 2022 and should be read in conjunction with the Group's
annual audited consolidated financial statements for the year ended
31 December 2022. The consolidated financial statements are
prepared on the historical cost basis, except for the revaluation
of certain financial instruments at fair value through profit or
loss. The consolidated financial statements for the year ended 31
December 2022 have been prepared in accordance with the UK adopted
international accounting standards in conformity with the
requirements of the Companies Act 2006.
The interim consolidated financial statements have also been
prepared as far as is relevant and applicable to the Group in
accordance with the Statement of Recommended Practice ("SORP")
issued by the Association of Investment Companies ("AIC") issued in
July 2022.
These consolidated financial statements do not include all
information and disclosures required in the annual consolidated
financial statements and should be read in conjunction with the
Group's annual consolidated financial statements as of 31 December
2022. The audited consolidated annual accounts for the year ended
31 December 2022 have been delivered to Companies House. The audit
report thereon was unmodified.
The financial statements are presented in Sterling rounded to
the nearest thousand.
Company Financial Statements
The financial statements included in this Interim Report have
been prepared in accordance with IAS 34 "Interim Financial
Reporting". The accounting policies, critical accounting
judgements, estimates and assumptions are consistent with those
used in the latest audited financial statements to 31 December 2022
and should be read in conjunction with the Company's annual audited
financial statements for the year ended 31 December 2022. The
financial statements are prepared on the historical cost basis,
except for the revaluation of certain financial instruments at fair
value through profit or loss. The financial statements for the year
ended 31 December 2022 have been prepared in accordance with the UK
adopted international accounting standards in conformity with the
requirements of the Companies Act 2006.
The interim financial statements have also been prepared as far
as is relevant and applicable to the Company in accordance with the
SORP issued by the AIC in July 2022.
These 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 as of 31 December 2022. The audited annual accounts for
the year ended 31 December 2022 have been delivered to the
Companies House. The audit report thereon was unmodified.
The functional currency of the Company is Sterling. The capital
of the Company was raised in Sterling and the majority of its
expenses are in Sterling. The liquidity of the Company is managed
in Sterling as the Company's performance is evaluated in that
currency. Accordingly, the financial statements are presented in
Sterling rounded to the nearest thousand.
Basis of consolidation
The Group's financial statements consolidate those of the
Company and of its subsidiaries at 30 June 2023. AHL's functional
currency is Sterling. The Italian SPV's functional currency is
Euro. However, to align with the Group's functional currency, the
balances of the Italian SPV have been converted to Sterling at a
Period-end rate for the Statement of Financial Position accounts
and at an average rate during the Period for the Statement of
Profit or Loss and Comprehensive Income accounts.
All transactions and balances between Group companies are
eliminated on consolidation. The accounting policies adopted by the
Group are consistent with those adopted by the Company and the
subsidiaries.
Restatement of six-month period ended 30 June 2022
comparatives
During the year 2022, as a result of the development of the
portfolio of investments, the actual investments made and the
structure of those investments, many of which were receivables
purchase investments with fixed rates of return, the Directors
determined that this required judgement and re-assessment of the
Company's investment entity status in the year 2022. As a result of
this re-assessment, which identified that fixed rate of return
investments constituted a substantial proportion of the pipeline of
investments and resultant actual investments, the Directors
determined that as from 1 January 2022 the Company does not meet
the characteristic of an investment entity for the following
reasons:
I. The Company is in full control of its subsidiary AHL and the notes in the Italian SPV;
II. The majority of the investments held and added to during the
year for the Italian SPV are valued at amortised cost rather than
on a fair value basis; and
III. The majority of the investments held and purchased during
the year in AHL are valued at amortised cost rather than on a fair
value basis.
For the Period, the financial statements are presented on a
consolidated basis of the Company, AHL and the Italian SPV. The
prior period comparative figures for the period from 1 January 2022
to 30 June 2022 consolidated financial statements have been
restated as a result of the acquisition of AHL and the Italian SPV
on 1 January 2022. The net impact on the consolidated NAV as at 30
June 2022 in comparison to the Company's NAV as at 30 June 2022 is
to reduce the NAV by GBP181,000, mainly due to the valuation of the
Italian SPV compared to consolidating the Italian SPV within the
Group. At the Company level, the NAV of the Company as at 30 June
2022 remained the same. The comparative figures as at 31 December
2022 are as stated in the audited Annual Report and reflect the
acquisition of AHL and Italian SPV.
Acquisition of AHL
The Net Assets acquired by the Company from AHL on 1 January
2022 amounted to GBP153,000. The amount of assets and liabilities
as at 1 January 2022 of AHL have been consolidated by the Company
at the acquisition date. The opening assets, liabilities, equity
and reserves of the Company remained the same due to the
acquisition of the subsidiary.
The cost of acquisition of AHL is the deemed valuation at 1
January 2022 which was GBP153,000. No additional consideration was
paid and since the acquisition of the subsidiary is not considered
to constitute a business under IFRS 3, no goodwill arises.
Acquisition of the Italian SPV
The amount of assets and liabilities as at 1 January 2022 of the
Italian SPV have been consolidated by the Company at the
acquisition date. The opening assets, liabilities, equity and
reserves of the Company remained the same due to the acquisition of
this wholly owned compartment.
The cost of acquisition of the Italian SPV is the deemed
valuation at 1 January 2022 which was (GBP170,000). No additional
consideration was paid and since the acquisition of the subsidiary
is not considered to constitute a business under IFRS 3, no
goodwill arises.
Accounting for wholly owned entities
AHL
The Company owns 100% of its subsidiary, AHL. The registered
office address of AHL is Leaf B, 20th Floor, Tower 42, Old Broad
Street, London, England, EC2N 1HQ. The Company has acquired Energy
Efficiency Investments through its investment in the subsidiary.
The Company finances its subsidiary, AHL, under the terms of an
intercompany loan agreement effective as of 1 January 2023 and AHL
finances Energy Efficiency Investments through a mix of equity and
debt instruments. The Company consolidates the subsidiary.
Italian SPV
The Italian SPV is a Company established under the laws of Italy
to hold securitised receivables. The Company does not hold any
equity in the SPV. However, it does own 100% of the notes issued by
one compartment of the SPV which entitles the Company to a 100%
economic interest in the receivables purchased through the proceeds
of the notes. The Company does not have an economic interest in any
of the other securities receivables issuances by other compartments
of the Italian SPV. The notes subscribed by the Company, issued by
the Italian SPV, and the receivables purchased from the proceeds of
these notes, together with all associated assets and liabilities
and income and costs, are ring-fenced from other assets and
liabilities of the Italian SPV and thus the Company's holdings have
been deemed a silo under IFRS 10 paragraph b 77. The Company
consolidates the results of the Italian SPV in respect of the
performance of the receivables in the silo.
Going concern
The Directors have adopted the going concern basis in preparing
the financial statements. The Group and Company continue to meet
day-to-day liquidity needs through their cash resources. The
Directors have a reasonable expectation that the Group and Company
have adequate resources to continue in operational existence for at
least twelve months from the date of this document.
Critical accounting judgements, estimates and assumptions
The preparation of the consolidated financial statements
requires the application of estimates and assumptions which may
affect the results reported in the consolidated financial
statements. Estimates, by their nature, are based on judgement and
available information.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying value of assets and
liabilities are those used to determine the fair value of the
investments and expected credit loss as disclosed in Note 3 to the
consolidated financial statements for the Period.
Investment fair value
The key assumptions that have a significant impact on the value
of the Group's investments are discount rates, energy yield, power
prices and capital expenditure factors, the price at which the
power and associated benefits can be sold and the energy yield are
expected to produce. The impact of risks associated with climate
change is assessed on an investment by investment basis and
factored into the underlying cash flows where relevant.
The discount factors are subjective and therefore it is feasible
that a reasonable alternative assumption may be used resulting in a
different value. The discount factors applied to the cashflows are
reviewed semi-annually by the Investment Adviser to ensure they are
at the appropriate level. The Investment Adviser will take into
consideration market transactions, where they are of similar
nature, when considering changes to the discount factors used.
The operating costs of the operating companies are frequently
partly or wholly subject to indexation and an assumption is made
that inflation will increase at a long-term rate.
The values of energy efficiency investments are not
significantly sensitive to fluctuations in future revenues if a
fixed indexation clause is applied to its cash flow schedule.
Expected Credit Loss ("ECL") allowance for financial assets
measured at amortised cost
The calculation of the Group's ECL allowances and provisions
against receivable purchase agreements under IFRS 9 is complex and
involves the use of significant judgement and estimation. Fixed
interest investment provisions represent an estimate of the losses
incurred in the loan portfolios at the balance sheet date.
Individual impairment losses are determined as the difference
between the carrying value and the present value of estimated
future cash flows, discounted at the loans' original effective
interest rate. The calculation involves the formulation and
incorporation of multiple conditions into ECL to meet the
measurement objective of IFRS 9. Refer to Note 3 to the
consolidated financial statements for the Period for more
details.
3. INVESTMENTS
Investments at fair value through profit and loss
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 that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in their
entirety into only one of the following 3 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 are unobservable (i.e. for which market data is
unavailable) for the asset or liability.
The classification of the Group's investments held is detailed
in the table below:
30 June 2023 31 December 2022
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
Investments at fair value
through profit and loss - - 11,625 11,625 - - 11,742 11,742
Derivative financial instrument - (300) - (300) - (856) - (856)
-------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
- (300) 11,625 11,325 - (856) 11,742 10,886
-------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
There are no transfers between investment levels for the Group
during the Period/year.
The classification of the Company's investments held is detailed
in the table below:
30 June 2023 31 December 2022
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------- ------- ------- ------- ------- ------- ------- -------
Investments in subsidiaries - - 33,660 33,660 - - 31,220 31,220
Loans to subsidiary - - 27,514 27,514 - - - -
---------------------------- ------- ------- ------- ------- ------- ------- ------- -------
- - 61,174 61,174 - - 31,220 31,220
---------------------------- ------- ------- ------- ------- ------- ------- ------- -------
There were no transfers between investment levels for the
Company during the Period/year.
The movement on the Level 3 unquoted investments of the Group
during the Period/year is shown below:
30 June 31 December
2023 2022
GBP'000 GBP'000
-------------------------------------- ------- -----------
Opening balance 11,742 -
Additions during the Period/year 1,675 10,926
Disposals during the Period/year (92) (43)
Unrealised (loss)/gain on investments (1,700) 859
-------------------------------------- ------- -----------
Closing balance 11,625 11,742
-------------------------------------- ------- -----------
The movement on the Level 3 unquoted investments of the Company
during the Period/year is shown below:
30 June 31 December
2023 2022
Company Company
GBP'000 GBP'000
------------------------------------------------------ ------- -----------
Opening balance 31,220 12,307
Additions for investment in subsidiaries during the
Period/year 3,851 16,769
Disposals for investment in subsidiaries during the
Period/year (611) -
Unrealised (loss)/gain on investments in subsidiaries (800) 2,144
Additions for loans to subsidiary* 27,514 -
------------------------------------------------------ ------- -----------
Closing balance 61,174 31,220
------------------------------------------------------ ------- -----------
* On 27 July 2023, Aquila Energy Efficiency Trust Plc (the
'Lender') and Attika Holdings Limited (the 'Borrower') entered and
signed a Shareholder loan agreement effective 1 January 2023. By
way of a non-interest intercompany transaction, the Lender has
provided to the Borrower an amount of GBP32,966,000 of which a
portion of GBP23,076,000 as the advanced amount was transformed
into a loan under the facility. The Lender and the Borrower
verbally agreed in January 2023 that the Lender would provide a
loan facility to the Borrower in the amount of up to GBP70,000,000
to be made available to the Borrower by the Lender in whole or in
partial amounts. Interest rate on the loan outstanding is at 7.9%.
As of 30 June 2023, the outstanding balance of the loan from the
Lender to the Borrower is GBP27,514,000.
Assets and liabilities not carried at fair value but for which
fair value is disclosed
The following table presents the fair value of the Group's
assets and liabilities not measured at fair value through profit
and loss at 30 June 2023 but for which fair value is disclosed:
30 June 30 June 31 December 31 December
2023 2023 2022 2022
Carrying Fair Carrying Fair
Value Market Value Value Market Value
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- ------------ ----------- ------------
Assets
Investments at amortised cost 54,048 55,506 38,550 38,755
------------------------------ -------- ------------ ----------- ------------
Total 54,048 55,506 38,550 38,755
------------------------------ -------- ------------ ----------- ------------
For all other assets and liabilities not carried at fair value,
the carrying value is a reasonable approximation of fair value.
Valuation Methodology
Debt instruments at fair value through profit or loss
The Group through its subsidiary (AHL) and its notes in the
Italian SPV has continued to acquire debt instruments at fair value
through profit or loss. The Investment Adviser has determined the
fair value of debt investments as at 30 June 2023. The Directors
have satisfied themselves as to the fair value of the debt
instrument investments as at 30 June 2023.
Valuation Assumptions
The Investment Adviser has carried out fair market valuations on
some of the debt instruments held by the subsidiaries as at 30 June
2023 and the Directors have satisfied themselves as to the
methodology used, the discount rates and key assumptions applied,
and the valuation. Investments that are valued at fair value
through profit or loss are valued using the IFRS 13 framework for
fair value measurement. The following economic assumptions were
used in the valuation of the investments.
Valuation Assumptions
Discount rates The discount rate used in the valuations is derived
according to internationally recognised methods. Typical
components of the discount rate are risk free rates,
country-specific and asset-specific risk premia.
The latter comprise the risks inherent to the respective
asset class as well as specific premia for other risks
such as development and construction.
Power price Power prices are based on power price forecasts from
leading market analysts. The forecasts are independently
sourced from a provider with coverage in almost all
European markets as well as providers with regional
expertise.
Energy yield Estimated based on third party energy yield assessments
as well as operational performance data (where applicable)
by taking into account regional expertise of a second
analyst.
Inflation rates Long-term inflation is based on central bank targets
for the respective jurisdiction.
Capital expenditure Based on the contractual position (e.g. engineering,
procurement and construction agreement), where applicable.
Valuation Sensitivities
For each of the sensitivities, it is assumed that potential
changes occur independently of each other with no effect on any
other base case assumption, and that the number of investments
remains static throughout the modelled life.
The Net Asset Value impacts from each sensitivity is shown
below.
Discount rate:
30 June 2023 31 December 2022
-0.5% +0.5% -0.5% +0.5%
Change Change Change Change
Discount rate (GBP'000) (GBP'000) (GBP'000) (GBP'000)
---------------- --------- --------- --------- ---------
Net Asset Value (645) 674 (488) 512
---------------- --------- --------- --------- ---------
The weighted average valuation discount rate applied to
calculate the investment valuation is 8.2% as at 30 June 2023 (31
December 2022: 8.3%).
Power price:
30 June 2023 31 December 2022
-10.0% +10.0% -10.0% +10.0%
Change Change Change Change
Power price (GBP'000) (GBP'000) (GBP'000) (GBP'000)
------------ --------- --------- --------- ---------
Valuation (426) 439 (542) 547
------------ --------- --------- --------- ---------
Energy yield:
30 June 2023 31 December 2022
-10.0% +10.0% -10.0% +10.0%
Change Change Change Change
Energy yield (GBP'000) (GBP'000) (GBP'000) (GBP'000)
------------- --------- --------- --------- ---------
Valuation (2,009) 2,027 (1,570) 1,866
------------- --------- --------- --------- ---------
Inflation rates
As most payments are fixed and not linked to the inflation rate,
a sensitivity of the inflation rate has only a negligible impact on
the NAV.
Capital expenditure
The Company has contractual protections if capex is delayed
(i.e. reduce the capex or increase receivables due) and the Company
is not obliged to fund the overrun costs. Therefore, capex
sensitivities are not appropriate for the Company's type of
investments.
Investments at Amortised Cost
a) Investments at amortised cost
The disclosure below presents the gross carrying value of
financial instruments to which the impairment requirements in IFRS
9 are applied and the associated allowance for ECL.
The following table analyses loans by Stages for the Group as at
30 June 2023:
30 June 2023 31 December 2022
Gross Gross
Carrying Allowance Net Carrying Carrying Allowance Net Carrying
Amount for ECL Amount Amount for ECL Amount
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- --------- ------------ -------- --------- ------------
Fixed Value Investments
at amortised cost
Stage 1 53,458 (123) 53,335 37,735 (77) 37,658
Stage 2 950 (237) 713 951 (59) 892
------------------------ -------- --------- ------------ -------- --------- ------------
Total Assets 54,408 (360) 54,048 38,686 (136) 38,550
------------------------ -------- --------- ------------ -------- --------- ------------
b) Expected Credit Loss allowance for IFRS 9
Impairment provisions are driven by changes in the credit risk
of instruments, with a provision for lifetime expected credit
losses recognised where the risk of default of an instrument has
increased significantly since initial recognition.
The following table analyses Group ECL by Stage.
30 June 31 December
2023 2022
Group GBP'000 GBP'000
-------------------------------- ------- -----------
Opening Balance 136 -
Charge for the Period - Stage 1 46 77
Charge for the Period - Stage 2 178 59
-------------------------------- ------- -----------
Impairment loss 224 136
-------------------------------- ------- -----------
Ending Balance 360 136
-------------------------------- ------- -----------
Measurement uncertainty and sensitivity analysis of ECL
The recognition and measurement of ECL is complex and involves
the use of judgement and estimation. This includes the formulation
and incorporation of multiple forward-looking economic conditions
into ECL to meet the measurement objective of IFRS 9.
The ECL recognised in the financial statements reflect the
effect on expected credit losses of a range of two possible
outcomes, calculated on a probability-weighted basis, based on the
economic scenarios described in Note 2 of the 2022 annual financial
statements, including management overlays where required. The
probability-weighted amount is typically a higher number than would
result from using only the Base (most likely) economic scenario.
ECLs typically have a non-linear relationship to the many factors
which influence credit losses, such that more favourable
macroeconomic factors do not reduce defaults as much as less
favourable macroeconomic factors increase defaults. The ECL
calculated for each of the scenarios represents two outcomes that
have been evaluated to estimate the ECL. As a result, the ECL
calculated for the upside and downside scenarios should not be
taken to represent the upper and lower limits of possible actual
ECL outcomes. There is a high degree of estimation uncertainty in
numbers representing tail risk scenarios when assigned a 100%
weight. A wider range of possible ECL outcomes reflects uncertainty
about the distribution of economic conditions and does not
necessarily mean that credit risk on the associated loans is higher
than for loans where the distribution of possible future economic
conditions is narrower.
In the base case scenario, the ECL at Period end is GBP254,413.
Under the downside scenario the ECL increases to GBP677,647. Giving
the base case a 75% weighting and the downside scenario a 25%
weighting, this results in an ECL provision in the accounts of
GBP360,222.
Furthermore, if the Investment Adviser assumes that in the
downside scenario loss given default ("LGD") increased to 100%,
this would increase the provision to GBP1,171,578. Finally, using
an LGD of 100% even in the base case scenario, the maximum ECL
would total GBP2,514,358.
4. INVESTMENT INCOME
Six months Six months
ended ended
30 June 2023 30 June 2022
Group GBP'000 GBP'000
--------------------------- ------------ ------------
Investment interest income 2,186 518
Bank interest income 398 149
--------------------------- ------------ ------------
Total Investment Income 2,584 667
--------------------------- ------------ ------------
Six months Six months
ended ended
30 June 2023 30 June 2022
Company GBP'000 GBP'000
------------------------------------ ------------ ------------
Investment interest income 851 186
Bank interest income 264 128
Loans to subsidiary interest income 967 -
------------------------------------ ------------ ------------
Total Investment Income 2,082 314
------------------------------------ ------------ ------------
5. INVESTMENT ADVISORY FEES
Six months ended 30 June Six months ended 30 June
2023 2022
Revenue Capital Total Revenue Capital Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- -------- -------- -------- --------
Investment Advisory fees 447 - 447 112 - 112
------------------------- -------- -------- -------- -------- -------- --------
Six months ended 30 June Six months ended 30 June
2023 2022
Revenue Capital Total Revenue Capital Total
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- -------- -------- -------- --------
Investment Advisory fees 447 - 447 112 - 112
------------------------- -------- -------- -------- -------- -------- --------
Under the Investment Advisory Agreement, the following fee is
payable to the Investment Adviser:
(i) 0.95 per cent. per annum of Committed Capital of the Company
up to and including GBP500 million; and
(ii) 0.75 per cent. per annum of Committed Capital of the Company above GBP500 million.
6. TAXATION
Six months ended 30 June Six months ended 30 June
2023 2022
Revenue Capital Total Revenue Capital Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- -------- -------- -------- --------
Corporation tax - - - - - -
--------------- -------- -------- -------- -------- -------- --------
Taxation - - - - - -
--------------- -------- -------- -------- -------- -------- --------
Six months ended 30 June Six months ended 30 June
2023 2022
Revenue Capital Total Revenue Capital Total
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- -------- -------- -------- --------
Corporation tax - - - - - -
--------------- -------- -------- -------- -------- -------- --------
Taxation - - - - - -
--------------- -------- -------- -------- -------- -------- --------
Investment companies which 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 maintain such approval for the foreseeable
future, the Company has not provided for deferred tax on any
capital gains or losses arising on the revaluation of
investments.
7. RETURN PER ORDINARY SHARE
Group
Return per share is based on the consolidated loss for the
Period of GBP438,000 attributable to the weighted average number of
Ordinary Shares in issue of 100,000,000 in the Period (30 June
2022: profit of GBP488,000; weighted average number of Ordinary
Shares in issue 100,000,000). Consolidated revenue profit and
capital loss are GBP711,000 (30 June 2022: revenue loss of
GBP169,000) and GBP1,149,000 (30 June 2022: capital gain of
GBP657,000) respectively.
Company
Return per share is based on the loss for the Period of
GBP667,000 attributable to the weighted average number of Ordinary
Shares in issue of 100,000,000 in the Period (30 June 2022: profit
of GBP628,000; weighted average number of Ordinary Shares in issue
of 100,000,000). Company revenue profit and capital loss are
GBP682,000 (30 June 2022: Company revenue loss of GBP492,000) and
GBP1,349,000 (2021: Company capital gain of GBP1,007,000)
respectively.
8. SHARE CAPITAL
As at 30 June 2023 As at 31 December 2022
No. of shares GBP'000 No. of shares GBP'000
-------------------------------------- ------------- ------- --------------- -------
Allotted, issued and fully paid:
Ordinary Shares of 1p each ('Ordinary
Shares') 100,000,000 1,000 100,000,000 1,000
-------------------------------------- ------------- ------- --------------- -------
Total 100,000,000 1,000 100,000,000 1,000
-------------------------------------- ------------- ------- --------------- -------
On incorporation, the issued share capital of the Company was 1
ordinary share of nominal value GBP0.01 and GBP50,000 represented
by 50,000 Management Shares of nominal value GBP1.00 each, which
were subscribed for by the Investment Adviser. Following admission,
the Management Shares were redeemed by the holder.
On admission of the Ordinary Shares to trading on the London
Stock Exchange on 2 June 2021, 99,999,999 Ordinary Shares were
allotted and issued to Shareholders as part of the placing and
offer for subscription in accordance with the Company's prospectus
dated 10 May 2021.
9. SPECIAL RESERVE
As indicated in the Company's prospectus dated 10 May 2021,
following admission of the Company's Ordinary Shares to trading on
the London Stock Exchange, the Directors applied to the Court and
obtained a judgement on 12 August 2021 to cancel the amount
standing to the credit of the share premium account of the Company.
The amount of the share premium account cancelled and credited to a
special reserve was GBP97,000,000. As at 30 June 2023 the total
special reserves were GBP93,500,000 (31 December 2022:
GBP94,750,000).
10. NET ASSETS PER ORDINARY SHARE
The Group's net assets per ordinary share as at 30 June 2023 is
based on GBP93,539,000 (31 December 2022: GBP95,227,000) of net
assets of the Group attributable to the 100,000,000 Ordinary Shares
in issue as at 30 June 2023 (31 December 2022: 100,000,000).
The Company's net assets per ordinary share as at 30 June 2023
is based on GBP93,966,000 (31 December 2022: GBP95,883,000) of net
assets of the Company attributable to the 100,000,000 Ordinary
Shares in issue as at 30 June 2023 (31 December 2022:
100,000,000).
11. DIVID
The Company has paid the following interim dividends in respect
of the periods under review:
For the period ended For the period ended
30 June 2023 30 June 2022
Pence per Total Pence per Total
Ordinary Ordinary
Total dividends paid in the Period Share GBP'000 Share GBP'000
----------------------------------- ------------ -------- ------------ --------
31 December 2022 interim - Paid
20 March 2023 (2022: Nil) 1.25p 1,250 - -
----------------------------------- ------------ -------- ------------ --------
Total 1.25p 1,250 - -
----------------------------------- ------------ -------- ------------ --------
For the period ended For the period ended
30 June 2023 30 June 2022
Pence per Total Pence per Total
Total dividends declared in the Ordinary Ordinary
Period Share GBP'000 Share GBP'000
--------------------------------- ------------ -------- ------------ --------
30 June 2023: Nil (30 June 2022
interim - paid 31 October 2022) - - 1.00p 1,000
--------------------------------- ------------ -------- ------------ --------
Total - - 1.00p 1,000
--------------------------------- ------------ -------- ------------ --------
12. RELATED PARTY TRANSACTIONS
Fees payable to the Investment Adviser are shown in the
Consolidated Statement of Profit or Loss and Comprehensive Income.
As at 30 June 2023, the fee outstanding to the Investment Adviser
was GBP447,000 (30 June 2022: GBP112,000; 31 December 2022:
GBP463,000).
The Company owns 100% of AHL and 100% of the notes issued by one
compartment of Italian SPV, as disclosed in note 1. All
intercompany transactions between the subsidiaries and the Company
are eliminated at the consolidation level.
Fees payable to the Directors during the Period were based on an
annual rate of GBP60,170 to the Chair, GBP45,948 to the Chair of
the Audit & Risk Committee, GBP45,948 to the Chair of the
Management Engagement Committee and GBP40,478 to the remaining
Director. As set out in the 2022 Annual Report the decision by
Shareholders to vote against continuation of the Company at the end
of February 2023 means that the duties of the Directors going
forward will be beyond those normally expected as part of their
appointment. Therefore, in accordance with the AIC Code, additional
fees of GBP10,000 and GBP7,600 have been paid in the period from 1
March 2023 to 30 June 2023 to the Chair of the Board and the Chair
of Audit and Risk respectively and GBP4,600 and GBP4,040 in the
same period to the Chair of the Management Engagement Committee and
the other Director. These additional fees are paid on a monthly
basis and subject to regular review.
Directors' holdings
At 30 June 2023 and at the date of this report the Directors had
the following holdings in the Company. There is no requirement for
Directors to hold shares in the Company. All holdings were
beneficially owned.
As at 30 June 2023 As at 31 December 2022
Connected Connected
Shares Person Total Shares Person Total
----------------- ------ --------- ------ ------- --------- ------
Miriam Greenwood 24,000 - 24,000 24,000 - 24,000
David Fletcher 42,425 14,181 56,606 41,785 13,951 55,736
Nicholas Bliss 20,000 - 20,000 20,000 - 20,000
Janine Freeman - - - - - -
----------------- ------ --------- ------ ------- --------- ------
The following table shows the subsidiaries of the Company.
Please refer to note 2; these subsidiaries have been consolidated
in the preparation of the financial statements.
Subsidiary entity name and Country of
registered address Effective ownership Investment incorporation
------------------------------ ------------------- ---------------------------- --------------
Attika Holdings Limited
Leaf B, 20th Floor, Tower
42, Old Broad HoldCo subsidiary
Street, London, England, EC2N entity, owns underlying
1HQ 100% investments United Kingdom
------------------------------ ------------------- ---------------------------- --------------
SPV Project 2013 S.r.l.
Via Vittorio Betteloni, 2 100% of the notes Special purpose vehicle,
20131, Milan, Italy of one compartment owns underlying investments Italy
------------------------------ ------------------- ---------------------------- --------------
13. DISTRIBUTABLE RESERVES
The Company's distributable reserves consist of the special
reserve and revenue reserve. Capital reserve represents unrealised
gains and losses on 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. As at
30 June 2023, the Company has no distributable revenue reserves as
the Company is in an accumulated loss position of GBP1,184,000 (31
December 2022: Loss of GBP1,866,000).
The Company's special reserve, which is also distributable, was
GBP93,500,000 as at 30 June 2023 (31 December 2022:
GBP94,750,000).
14. SUBSEQUENT EVENTS
On 16 August 2023, the Company announced the commencement of the
process to market test the sale of all of the Company's assets.
This process is being conducted by Stifel Nicolaus Europe Limited
on behalf of the Company.
OTHER INFORMATION
ALTERNATIVE PERFORMANCE MEASURES OF THE GROUP
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 more than the Net Asset Value per Ordinary Share.
As at
30 June 2023
------------------------------- ------------- ------------
NAV per Ordinary Share (pence) a 93.54
Share price (pence) b 62.00
------------------------------- -------------- ------------
Discount (b÷a)-1 (33.7%)
------------------------------- -------------- ------------
Ongoing charges
A measure, expressed as a percentage of average net assets, of
the regular, recurring annual costs of running an investment
company.
As at
30 June 2023
-------------------- ----------- ------------
Average NAV a 94,383
Annualised expenses b 3,324
-------------------- ------------ ------------
Ongoing charges (b÷a) 3.5%
-------------------- ------------ ------------
Total return
A measure of performance that includes both income and capital
returns. This takes into account capital distributions of dividends
paid out by the Company to the Ordinary Shares of the Company on
the ex-dividend date.
30 June 2023 Share price NAV
---------------------------------- ------------- ----------- ------
Opening at 1 January 2023 (pence) a 71.00 95.23
Closing at 30 June 2023 (pence) b 62.00 93.54
Dividend paid during the Period c 1.25 1.25
Dividend/income adjustment factor
(1) d 0.8384 1.00
Adjusted Closing at 30 June 2023
(pence) (e=b+(c*d)) e 63.05 93.54
---------------------------------- -------------- ----------- ------
Total return (e÷a)-1 (11.2%) (0.5%)
---------------------------------- -------------- ----------- ------
1 The dividend adjustment factor is calculated on the assumption
that the dividends paid out by the Company are reinvested into the
shares of the Company at share price and NAV per share,
respectively.
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END
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