TIDMAEIT TIDMAEIP
RNS Number : 5609W
Asian Energy Impact Trust PLC
13 December 2023
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT MAY
CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE UK'S MARKET
ABUSE REGULATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, SUCH
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
LEI: 254900V23329JCBR9G82
13 December 2023
Asian Energy Impact Trust plc
(the "Company" or "AEIT")
30 September 2023 unaudited Net Asset Value
and COMPANY UPDATE
Asian Energy Impact Trust plc, the renewable energy investment
trust providing direct access to sustainable energy infrastructure
in fast-growing and emerging economies in Asia, announces an update
on its financial position and portfolio.
As previously announced, the Company and Octopus Energy
Generation (the "Transitional Investment Manager") are working to
complete and publish the 2022 Annual Report and 2023 Interim Report
and restore share trading as soon as possible. A further update on
this process is provided below. In the meantime, the Company is now
publishing its net asset value ("NAV") at 30 September 2023 in
order to provide investors with the most recent information at the
earliest possible time.
key points
-- Net assets at 30 September 2023 of US$88.5 million (NAV of
50.4 cents per share), underpinned by a robust independent
valuation process.
IPO
30 September 30 September (14 December
2023 2022[1] 2021)
------------------------- ------------ ------------ -------------
Net assets - US$ million 88.5 142.5 113.1
NAV per share - cents 50.4 100.8 98.0
NAV total return per
share [2] -47.5% 3.8% n/a
------------------------- ------------ ------------ -------------
-- NAV as at 30 September 2023 (relative to 30 September 2022)
reflects the significant reduction of US$78.9 million in the fair
value of the Company's investment portfolio, in particular driven
by: (i) the negative net present value ("NPV") associated with
completing the 200 MW DC solar construction project in Rewa Ultra
Mega Solar Park in India (the "RUMS Project"); (ii) a reduction in
the Philippines wholesale electricity spot market ( " WESM " )
price forecasts; (iii) updated generation, operating cost and tax
assumptions; (iv) methodology and modelling updates; (v) removal of
carbon credits; and (vi) higher discount rates across the
portfolio. Further details of the movement in the fair value of the
investment portfolio and of the valuation process are set out
below.
-- In the nine months ended 30 September 2023, afte r adjusting
for weather-related underperformance, the operating assets held by
the Company's Indian investment platform ("SolarArise") and the
Company's Philippines investment platform ("NISPI") performed
broadly in line with the revised generation expectations reflected
in the updated valuation models. One of the recently acquired
Vietnamese solar rooftop assets is significantly underperforming
against expectations. Where specific asset issues exist,
remediation and optimisation plans are being developed by the
Transitional Investment Manager to seek to create value within the
portfolios.
-- At 30 September 2023, the Company had cash balances of
US$63.6 million and held US$1.7 million in its UK subsidiary, AEIT
Holdings Limited ("AEIT Holdings"), which is included within the
fair value of the Company's investment portfolio. Since 30
September 2023, the Company has invested a further US$20.0 million
in SolarArise to fund the equity required for constructing the RUMS
Project (as announced on 11 October 2023).
-- As at 30 September 2023, gearing in AEIT's investment
portfolio represented 54.6% of the Group's Adjusted GAV. Gearing is
not used at the Company level.
-- The audit of the Company's financial statements for the
financial period ended 31 December 2022 is progressing and the
Company now expects to publish its 2022 Annual Report and 2023
Interim Report by 19 January 2024 and to apply to the FCA for the
restoration of its listing as soon as possible thereafter.
Unless otherwise noted, the information provided in this
announcement is unaudited.
NET ASSETS
Net assets as at 30 September 2023 were US$ 88.5 million, with a
NAV total return since IPO of
- 47.5 %. NAV per share decreased to 50.4 cents at 30 September
2023. The following tables reconcile the movements from IPO and
from the last published NAV as at 30 September 2022.
Net assets bridge - US$'000s except as IPO to
noted 30 September 2023
-------------------------------------------------- ------------------
IPO cash proceeds 115,393
IPO expenses (2,308)
-------------------------------------------------- ------------------
Net assets at IPO 113,085
Shares issued for acquisition of 43% interest
in SolarArise 30,186
Gross proceeds raised in November 2022 placing 35,306
Consideration share issue and placing expenses (1,310)
-------------------------------------------------- ------------------
Net assets following IPO, share issuance
and subsequent placing 177,267
Change in fair value of investment portfolio (76,236)
Dividends paid to shareholders (5,522)
Investment management fees (2,296)
Other PLC costs (net) (1,121)
Additional professional fees following suspension (3,634)
-------------------------------------------------- ------------------
Net assets at 30 September 2023 88,458
-------------------------------------------------- ------------------
Number of shares in issue 175,684,705
-------------------------------------------------- ------------------
NAV per share - cents 50.4
Decrease in NAV per share since IPO[3] 48.6%
-------------------------------------------------- ------------------
30 September 2022
Net assets bridge - US$'000s to 30 September 2023
-------------------------------------------------- ---------------------
Net assets at 30 September 2022 142,541
-------------------------------------------------- ---------------------
Gross proceeds raised in November 2022 placing 35,306
Placing expenses (706)
Change in fair value of investment portfolio (78,850)
Dividends paid to shareholders (4,392)
Investment management fees (1,103)
Other PLC costs (net) (704)
Additional professional fees following suspension (3,634)
-------------------------------------------------- ---------------------
Net assets at 30 September 2023 88,458
-------------------------------------------------- ---------------------
Capital Raised
In November 2022, the Company raised US$35.3 million of
additional capital from both existing and new investors. When
combined with the IPO proceeds and the seed asset share capital
issued, total capital raised to date is US$180.9 million.
Asset Acquisitions
Acquisitions to date total US$99.8 million comprising:
NISPI : The acquisition of a 40% economic interest in seed asset
NISPI, the 80 MW Philippines investment platform with three
operating solar plants, completed for a cash consideration of
US$25.4 million on 17 December 2021.
SolarArise : The 43% acquisition of SolarArise, the other seed
asset, completed in August 2022 for a total consideration of
US$32.9 million. This comprised a cash tax payment of US$2.7
million and US$30.2 million settled through the issue of AEIT
consideration shares. On 20 June 2022 the Company committed to
acquire the remaining 57% interest in SolarArise from the remaining
shareholders, including the founders of SolarArise, for a cash
consideration of US$38.5 million. This acquisition completed on 13
January 2023 and, at 30 September 2023, the Company owned 100% of
SolarArise, which comprises six operating assets with an aggregate
generating capacity of 234MW, the 200 MW DC RUMS Project and a 150
MW DC solar development project with a signed PPA (the "TT8
Project").
Vietnam : On 1 November 2022, the Company, through its
subsidiary AEIT Holdings, made its first investment in Vietnam
through a contractual agreement to acquire for US$4.6 million Viet
Solar System Company Limited ("VSS"), a privately-owned company
which holds 6.12 MW of rooftop solar assets. This reported price
was the total value of the investment, including the debt, and
represented a net US$3.0 million equity investment. The acquisition
completed on 31 May 2023 and represents a 99.8% interest in
VSS.
Fair Value of Investment Portfolio
The most significant movements in the fair value from 30
September 2022 to 30 September 2023 are summarised in the table
below.
30 September 2022
to 30 September
Fair value of investments bridge - US$'000s 2023
Fair value of investments at 30 September 2022 60,496
Acquisition of 57% of SolarArise 38,494
Acquisition of 99.8% of VSS 3,093
----------------------------------------------- -----------------------
Fair value of investments at 30 September 2022
and subsequent acquisitions 102,083
Inflation, FX and discount rate unwind 7,278
RUMS Project (24,737)
Adjustments to modelling methodology (19,361)
Power prices (23,143)
Generation (5,858)
Discount rates (2,275)
Carbon credits (4,728)
Other adjustments (3,765)
Fair value at 30 September 2023 25,494
----------------------------------------------- -----------------------
Inflation, FX and discount rate unwind: For inflation, the
approach is to blend two inflation forecasts from reputable
third-party sources and apply this consistently to assumptions. For
FX, valuations are converted from local currency at the relevant
spot rate. The discount rate unwind includes the NPV of future
cashflows being brought forward from the valuation date to 30
September 2023 as well as the inclusion of actual performance
figures during the period.
RUMS Project: Based on the updated model, the negative NPV
associated with completing the project was US$14.6 million as at 30
September 2023. The total negative movement of US$24.7 million
represents the movement from the positive value attributed to the
project in the 30 September 2022 valuation of US$4.9 million plus
the additional paid in capital over the period. In total, as at 30
September 2023, US$10.1 million has been invested into the RUMS
Project funded from surplus cash and operational cashflow recycling
within SolarArise.
Adjustments to modelling methodology: There has been a change in
the SolarArise holding company valuation methodology which now uses
a discounted cashflow ( "DCF" ) methodology to reflect the ongoing
liabilities and asset management fees required to operate the
underlying assets which are paid from the holding company, taxation
on distributions from the operating portfolio and other model
corrections. Additionally, the capital structure and lack of
distributable reserves in NISPI, SolarArise and VSS result in a
requirement to undertake capital restructurings before cash can be
extracted, negatively impacting their valuations which are based on
free cashflows. These are now modelled with assumptions that action
is taken to mitigate the restrictions within the next year.
Power prices: In determining the forecast for power prices, the
approach taken is to blend at least two price curves as prepared by
third-party independent market forecasters that are reputable in
the relevant markets. Prior period valuations relied on the
assumptions of the Company's former investment manager (the "Former
Investment Manager"), which were not based on independent market
forecasts. The Former Investment Manager's assumed price curve as
at 31 December 2022 was materially higher than independent market
forecasters' forecasted prices utilised, particularly in the long
term. In addition, during 2023 significant further reductions in
the WESM forecasts, particularly in the short term, have been
observed with the independent market forecasters highlighting
sharply falling commodity prices (with delivered coal and LNG being
two of these major commodities) as the key drivers for the forecast
decrease.
Generation: Each asset's valuation assumes a "P50" level of
electricity output based on yield assessments prepared by technical
advisors and is the market standard assumption to utilise in
valuation models. There is observed historical underperformance of
the Company's operational assets when compared with the level of
generation assumed at the time of acquisition. A technical advisor
has been appointed to provide updated P50 yield assessments which
are expected to be lower than these original assumptions. In lieu
of receiving these, an estimated reduction has been applied.
Discount rates: To determine the reasonable ranges, the
applicable cost of equity for the solar market was estimated
considering data points from transactional and other valuation
benchmarks, disclosures in broker reports, other public disclosures
and broader market experience of investors in the market. The
Transitional Investment Manager compared the range to its own
risk-adjusted discount rate analysis and determined the appropriate
discount rates to apply. The discount rates applied are in the
range of 10.0% - 12.5% (30 September 2022: range of 10.0% -
11.2%).
Carbon credits: For the SolarArise portfolio, carbon credit
revenue was previously included in the base case. These revenues
are now treated as an upside as opposed to a base case assumption
and, therefore, have been removed.
Other adjustments: This refers to the balance of valuation
movements in the period excluding the factors noted above. In
addition, a number of other assumptions that were either
inaccurate, or incongruent with standard market practice for the
Company's assets, have been adjusted. These include updating lease
and other operational costs to reflect contractual terms and
inclusion of capex for inverter replacements.
Dividends
The Board has already declared a third interim dividend in
respect of the year ending 31 December 2023 (the "Q3 2023
Dividend") of 0.44 cents per ordinary share in respect of the
quarter ended 30 September 2023 (total cost: US$0.8 million). The
Q3 2023 Dividend was paid on 11 December 2023 to shareholders on
the register at the close of business on 17 November 2023. The Q3
2023 Dividend was funded out of the Company's distributable capital
reserves and this outflow will be reflected in the 31 December 2023
NAV.
Total dividends declared since September 2022 through to 30
September 2023, being the dividends declared for Q3 2022, Q4 2022,
Q1 2023 and Q2 2023 which were also funded out of the Company's
distributable capital reserves, reduced the NAV by US$4.4
million.
Expenses
In the 12-month period ended 30 September 2023, based on the
updated quarter end NAVs, fees which may be claimed by the Former
Investment Manager were US$1.1 million, of which US$0.5 million had
been paid in respect to the quarter ending 30 December 2022.
Accrued unpaid fees are not being paid whilst the Board evaluates
all available options. No fees were paid during the period to the
Transitional Investment Manager, which was appointed with effect
from 1 November 2023.
Since the material uncertainty arose during the preparation of
the December 2022 accounts and audit, additional professional fees
have been incurred to provide an in-depth examination of the
valuations, to audit and validate the valuation models, to
undertake an extensive review into the tax and cash extraction
positions, to undertake a comprehensive review of the RUMS Project
and seek advice with regard to the likely abort liabilities and to
provide advice associated with the share suspension, shareholder
meeting requisitions by funds managed by the Former Investment
Manager, the changes to the investment policy, effecting the change
in investment manager and the Board's ongoing strategic review.
Additional professional fees incurred since suspension of listing
in the Company's shares total US$3.6 million. The Board is
intending to investigate the Company's right to seek compensation
for these additional professional fees whilst reserving all the
Company's other rights.
Valuation procedure
The Company's valuation process follows International Private
Equity Valuation Guidelines, typically using a DCF methodology. In
a DCF analysis, the fair value of the investee companies is the
present value of the expected future cash flows, based on a range
of operating assumptions for revenues, costs, leverage and any
distributions, before applying an appropriate discount rate. The
assets held in the Company's UK subsidiary, AEIT Holdings,
substantially comprise cash and working capital balances and
therefore the Directors consider the fair value of AEIT Holdings to
be equal to its book value.
Following the material uncertainty surrounding the portfolio
valuations as at 31 December 2022, the Board, the Transitional
Investment Manager and the Company's AIFM, Adepa Asset Management
S.A., have undertaken various steps to arrive at the 30 September
2023 valuation, including the following:
-- PricewaterhouseCoopers LLP ("PwC") was appointed to assist
the Company with a detailed review of models for the Company's
operational assets in India and the Philippines which had been
prepared by the Former Investment Manager for the purpose of the 31
December 2022 valuation. As previously announced, following this
review, the Company identified several areas for concern, including
assumptions regarding revenues, operating costs, tax projections
and cash extraction which were either inaccurate or considered to
be unrealistically optimistic.
-- PwC was also appointed to provide tax advice on cash repatriation.
-- Following the PwC review and tax report, the operational
asset models have been re-worked by the Transitional Investment
Manager. This included updating the basis of the macro assumptions
in the models, utilising leading third-party market forecasters for
power prices in the Philippines and Vietnam and a number of other
material changes based on the Transitional Investment Manager's
experience.
-- The Transitional Investment Manager reviewed and updated the
new model for the in-construction RUMS Project which had been built
subsequent to the share listing suspension by an external
specialist modelling firm and audited by a model audit company, all
under the supervision of the Former Investment Manager.
-- The holding company model was revised to accurately reflect
asset management costs, cash extraction and tax assumptions in
respect of SolarArise.
-- An updated valuation policy reflecting the change in
assumption methodologies and review process has been adopted.
PwC was engaged to provide a private independent opinion on the
reasonableness of the valuations of SolarArise, NISPI and VSS as at
30 September 2023 which were prepared by the Transitional
Investment Manager, and adopted by the Board and AIFM when they
approved the 30 September 2023 valuations.
A similar process has been adopted in the preparation of the
unreleased valuation of the Company's underlying portfolio as at 30
June 2023 and as at 31 December 2022, the latter of which is
currently being audited by Deloitte LLP (audit in progress) as part
of its audit of financial statements for the financial period ended
31 December 2022 .
CASH BALANCE
At 30 September 2023, the Company and its UK subsidiary, AEIT
Holdings, had cash balances of US$65.3 million. Since 30 September
2023, the Company has invested a further US$ 20.0 million in
SolarArise to fund the equity required for constructing the RUMS
Project.
GEARING
Gearing is not used at the Company level. As at 30 September
2023, SolarArise had external borrowings of US$102.8 million and
VSS had external borrowings of US$1.3 million, whilst NISPI was
ungeared. At 30 September 2023, gearing in the investment portfolio
represented 54.6% of the Group's Adjusted GAV. Since 30 September
2023, there have been no amounts drawn under the US$54.9 million
project finance facility for construction of the RUMS Project.
UPDATE ON OPERATING ASSETS
The Transitional Investment Manager has commenced its review of
the Company's portfolio as part of the strategic review being
undertaken by the Board. Operational performance data of the assets
from 1 January 2023 to 30 September 2023 has been examined.
Adjusting for weather-related underperformance, the SolarArise
and NISPI portfolios performed broadly in line with the revised
generation expectations reflected in the valuation models used to
calculate the NAV as at 30 September 2023. This supports the
assumed generation reduction against the P50 yield assumptions.
Where specific asset issues exist, remediation and optimisation
plans are being developed to seek to create value within the
portfolios.
With respect to the newly acquired VSS portfolio, one of the
assets is significantly underperforming against expectations. The
Transitional Investment Manager is undertaking an investigation to
understand the key drivers behind the underperformance and will
identify strategies to be adopted for additional value recovery.
Further information will be provided as part of the Board's
strategic review.
UPDATE ON CONSTRUCTION AND DEVELOPMENT PROJECTS
Construction of the RUMS Project is underway, and the first
shipment of modules has arrived in India. A further update will be
provided in the coming weeks.
Following its detailed review, the Transitional Investment
Manager has determined that moving forward with the development of
the TT8 Project may not be the best option for the Company at this
particular time in light of the strategic review of the options for
the Company's future. All options for this project, including
offering it for sale , are being considered, subject to the terms
of the signed PPA.
2022 ANNUAL REPORT, 2023 INTERIM REPORT AND LIFTING
SUSPENSION
The audit of the Company's financial statements for the
financial period ended 31 December 2022 is progressing . The
Company now expects to publish its annual report and accounts for
the financial period ended 31 December 2022 and its interim report
and accounts for the six months ended 30 June 2023 by 19 January
2024 and to apply to the FCA for the restoration of its listing as
soon as possible thereafter.
Q3 2023 FACTSHEET
The Company's factsheet for the quarter ended 30 September will
be available shortly on its website, www.asianenergyimpact.com
.
Sue Inglis, Chair of Asian Energy Impact Trust plc, said: "As a
Board we are very disappointed by the results announced today. We
are, however, pleased that, due to the work carried out by the
Transitional Investment Manager since it was appointed, we have
been able to take this step forward in updating our investors.
Focus remains on completing the Company's immediate priorities,
including completing the 2022 audit and publishing our 2022 Annual
Report and 2023 Interim Report to enabling the lifting of the
suspension of the listing of the Company's shares, and developing
plans to optimise value in the Company's portfolio."
The person responsible for arranging the release of this
announcement on behalf of the Company is Uloma Adighibe of JTC (UK)
Limited, the Company Secretary
Enquiries
Asian Energy Impact Trust plc Tel: +44 (0)20 3757 1892
Sue Inglis, Chair
Octopus Energy Generation (Transitional Investment Manager) Tel: +44 (0)20 4530 8369
Press Office aeit@octopusenergygeneration.com
Shore Capital (Joint Corporate Broker) Tel: +44 (0)20 7408 4050
Robert Finlay / Rose Ramsden (Corporate)
Adam Gill / Matthew Kinkead / William Sanderson (Sales)
Fiona Conroy (Corporate Broking)
Peel Hunt LLP (Joint Corporate Broker) Tel: +44 (0)20 7418 8900
Luke Simpson / Huw Jeremy (Investment Banking Division)
Alex Howe / Richard Harris / Michael Bateman / Ed Welsby (Sales)
Smith Square Partners LLP (Financial Advisor) Tel: +44 (0)20 3696 7260
John Craven / Douglas Gilmour
Camarco (PR Advisor) Tel: +44 (0)20 3757 4982
Louise Dolan / Eddie Livingstone-Learmonth / Phoebe Pugh asianenergyimpacttrust@camarco.co.uk
About Asian Energy Impact Trust plc
Asian Energy Impact Trust plc listed on the premium segment of
the main market of the London Stock Exchange in December 2021 and
was awarded the Green Economy Mark upon admission. The Company is
an Article 9 fund under the EU Sustainable Finance Disclosure
Regulation.
With effect from 1 November 2023, the Company appointed Octopus
Energy Generation as its transitional investment manager until 30
April 2024 (the "Transitional Investment Management Period"). The
Transitional Investment Management Period will allow the Board with
its advisers to complete the strategic review of options for the
Company's future.
Further information on the Company can be found on its website
at www.asianenergyimpact.com .
About Octopus Energy Generation
Octopus Energy Generation ("OEGEN") is driving the renewable
energy agenda by building green power for the future. Its
London-based, leading specialist renewable energy fund management
team invests in renewable energy assets and broader projects
helping the energy transition, across operational, construction and
development stages. The team was set up in 2010 based on the belief
that investors can play a vital role in accelerating the shift to a
future powered by renewable energy. It has a 13-year track record
with approximately GBP6 billion of assets under management (AUM)
(as of September 2023) across 16 countries and total 3.2GW. These
renewable projects generate enough green energy to power 2.3
million homes every year, the equivalent of taking over 1.2 million
petrol cars off the road. Octopus Energy Generation is the trading
name of Octopus Renewables Limited.
Further details can be found at
www.octopusenergygeneration.com.
[1] 30 September 2022 is the last published NAV prior to this
announcement.
[2] NAV total return per share represents the total return to
shareholders, being the combined effect of the rise or fall in the
NAV per share over the relevant period and assumes dividends paid
in the relevant period are reinvested immediately in the Company at
the prevailing NAV per share, in comparison to the NAV per share at
the IPO.
[3] Based on opening NAV per share of 98.0 cents, being the IPO
price net of expenses.
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