Aquila European Renewables (AERI) announced its annual results for the year-end December 2022. The company added +184.7 MW of operating capacity during the year, an increase of 80.7%. NAV increased 12.7%, the largest growth since IPO while revenue came in 20.4% ahead of expectations thanks to favourable energy pricing during the period. The results cap off a successful post-IPO period for the company which has achieved an annualised total NAV return of 7.1% since 2019, at the top end of the long-term target range of 6.0 to 7.5%.
Notable events for the year include a €20.0m share buyback, in addition to a 5.0% increase in target dividend for 2023, and €150.5m of capital deployed or committed during 2022 in unlevered solar PV, increasing solar portfolio exposure to 51.5%. Despite the strong year, shares trade at a discount of around 15%.
Commenting on the results, chairman Ian Nolan noted:
“Since undergoing rapid growth in 2022, AER now offers a fully invested balance sheet and a resilient and diversified portfolio which the board believes deserves to be significantly more valuable than is implied by the recent share price discount to NAV. As illustrated in our short and medium-term dividend cover guidance, the portfolio is expected to generate significant surplus cash flow over time, supporting our progressive dividend policy. It is the board’s view that there remains an attractive and sizeable opportunity to deploy incremental capital to help fund the build-out of the very substantial construction pipeline (over 10 GW in European geographies) developed by Aquila Capital, our Investment adviser.”
Regarding the outlook, he continued:
“The Board remains of the view that the market outlook for renewable energy generation in Europe is strong, reinforced by a combination of geopolitical and macro-economic factors, along with the ever-more urgent need to decarbonise Europe’s energy supply. We expect this to ensure a continuing favourable regulatory backdrop at the European level.
“It is the ambition of the Board to build a larger-scale portfolio to further enhance the investment proposition for our current and future shareholders. Clearly, our share price needs to regain a premium to our NAV to enable us to fund the investment opportunities provided by the investment adviser. We hope that the company’s continued strong operational performance, combined with clear and consistent communication of our strengths and opportunities, can set us back onto that path. The first stage on this journey involves the inaugural shareholder continuation vote, which will be tabled at the AGM in June 2023, and which the board is recommending that shareholders should support. I am pleased to confirm that Aquila, who hold approximately 2.1% of the issued share capital, will not be voting their shares in respect of the continuation vote, given the inherent conflict of interest were they to do so.”
AERI : Strong year despite discount for Aquila European Renewables