Aquila European Renewables 2022 Results – 80.7% operating capacity growth
Aquila European Renewables Plc (the “Company”, the “Fund” or “AER”) seeks to generate stable returns, principally in the form of income distributions, by investing in a diversified portfolio of renewable energy infrastructure investments.
Highlights
· 80.7% growth in portfolio operating capacity (+184.7 MW1) during 2022, resulting in a step‑change in earnings capacity
· 2022 total NAV return of 12.9%2, the highest one-year return since IPO
· 2022 revenue of the portfolio 24.2% ahead of budget, driven by favourable electricity pricing environment
· Robust dividend cover: 1.4x in 2022. 1.8x expected in 2023 and 1.6x4 on average over the next five years
· Electricity production during 2022 increased by 27.6% compared to 2021 to 666.4 GWh (2021: 522.3 GWh)
· Annualised total NAV return of 7.1%2 since IPO, at the top end of long-term target range of 6.0 to 7.5%
· EUR 150.5 million of capital deployed or committed during 2022 in unlevered solar PV, increasing solar portfolio exposure to 51.5%3
Subsequent events
· EUR 20.0 million share buyback announced on 3 February 2023, in addition to a 5.0% increase in target dividend for 20235
· In April 2023, the Company extended the maturity date of the Revolving Credit Facility (“RCF”) by twelve months to April 2025
· Completion of the construction project Guillena and The Rock EPCM takeover declared in April 2023
· Members of the Board of Directors and Investment Adviser announced their commitment to acquire AER Ordinary Shares
1. Includes the investments in and the completion of The Rock and the Spanish solar PV Assets in 2022.
2. Calculation is based on NAV per Ordinary Share in euros, includes dividends and assumes no reinvestment of dividends.
3. Percentage calculated on a pro-forma basis assuming the final payments for Greco are completed.
4. As announced in February 2023 based on forward-looking assumptions as at 31 December 2022. Dividend cover presented is net of existing project debt repayments, excludes the impact of the share buyback and assumes the 2023 target dividend is paid in 2023 to 2027. No reinvestment of surplus cash flow or interest received is assumed. There can be no assurance that these targets can or will be met and it should not be seen as an indication of the Company’s expected or actual results or returns.
5. Subject to the portfolio performing in line with expectations.
CHAIRMAN’S STATEMENT
I am pleased to present the 2022 Annual Report and Financial Statements for Aquila European Renewables Plc (“AER” or the “Company”) on behalf of the Board of Directors.
Introduction
In my statement last year, I expressed the hope that our Company was now close to achieving the goals of its initial stage of development, namely to have an efficiently invested balance sheet, with a diversified and resilient portfolio offering strong cash flow cover for a progressive dividend. The transformation of both our portfolio and our technological balance is now evident, as we managed to achieve these objectives during the 2022 calendar year and our initial goal has therefore been achieved.
With the completion of our first three construction projects, Albeniz, The Rock and Jaén (part of the Greco portfolio), our total portfolio operating capacity increased by approximately 80.7% in 2022. The Company also successfully deployed and committed an incremental EUR 150.5 million of our available balance sheet resources, representing our largest year on record for capital deployment.
In combination, these two events have led to a step-change in the earnings capacity of our portfolio, with strong cash flow capabilities and dividend cover to support a progressive dividend policy.
Our announcement on 3 February 2023 highlighted the positive outlook for the Company and this is also reflected in our dividend cover guidance in the short to medium term. More details of this outlook were provided in that announcement and are also available later in this report. I would also refer our Shareholders to the investor presentation of 6 February 2023 on our website (https://www.aquilaeuropean-renewables.com/investorrelations/reports-publications#submenu), which sets out in detail the assumptions behind this analysis and models numerous sensitivities in relation to both power prices and production levels.
Dividend
The Board also announced on 3 February 2023 an increase in the target dividend by 5.0% to 5.51 cents per Ordinary Share for 2023, subject to the portfolio performing in line with expectations.
In 2023, the Company is expecting dividend cover of 1.8x1 and over the next five years is expected to generate an average cover of 1.6x1, reflecting both our fully invested balance sheet, and our robust and resilient portfolio.
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