Aquila Energy Efficiency Trust PLC Result of Investment Strategy Review (8206I)

TIDMAEET

RNS Number : 8206I

Aquila Energy Efficiency Trust PLC

21 April 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU NO. 596/2014) AS IT FORMS PART OF THE DOMESTIC LAW OF THE UNITED KINGDOM BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED)

21 April 2022

Aquila Energy Efficiency Trust PLC

("AEET" or the "Company")

Result of Investment Strategy Review

The Company announced on 31 January 2022 that given slower investment deployment than originally anticipated, the Board was undertaking a comprehensive review of the Company's investment strategy (the "Review") with a view to ascertaining how best to accelerate deployment, whilst maintaining the Company's prudent credit criteria and return objectives.

The Board, which has been assisted by Complete Strategy Ltd, and having consulted widely with Shareholders, has now finalised the Review and has concluded that, whilst certain changes are required to enable the Investment Adviser to execute on the Company's investment strategy, the market opportunity for Energy Efficiency Investments located in Europe remains attractive, particularly in the context of high energy prices. The Investment Adviser is confident that deployment will materially increase over the remainder of this year, targeting full deployment of the IPO proceeds by the end of December 2022.

The Review recommended a number of actions to improve execution of the Company's investment strategy and the following steps have been agreed with the Investment Adviser:

- Initial Continuation Resolution: at the time of its IPO (and as set out in the Company's prospectus dated 10 May 2021), the Company proposed to hold a vote (as an ordinary resolution) on the continuation of the Company at the AGM to be held in 2025. This initial continuation resolution will now be brought forward and is expected to be voted on by Shareholders during February 2023. Should deployment not improve materially in the next three months, the Board will consider bringing the date of the Initial Continuation Resolution forward;

- Advisory Fees: under the Investment Advisory Agreement, the Investment Adviser is entitled to an advisory fee based on the Company's NAV. The Investment Adviser has agreed to amend the current Investment Advisory Agreement such that any advisory fees payable are charged only on committed capital (being the sum of funds actually invested and funds committed for investment in Energy Efficiency Investments), with this amendment to be applied retrospectively from the time of the Company's IPO;

- Resource: the Investment Adviser is prepared to increase its dedicated investment team with further new team members in addition to the resources it has already brought to the team since the IPO, to further assist in the Investment Adviser's target of full deployment of the IPO proceeds by the end of December 2022; and

- Complete Strategy Ltd will be engaged by the Company for an initial period of six months to provide the Board with a detailed analysis of monthly deployment performance, with the costs to be borne by the Investment Adviser.

The Board are of the opinion that a combination of the re-forecasting provided by the Investment Adviser (as reviewed by Complete Strategy Ltd), actions to be taken to improve the execution of the investment strategy, proposed amendments to the advisory fee, revised timing of the Initial Continuation Resolution and the additional resources outlined in this announcement provide a basis for the Company to execute on its stated Investment Objective in the near-term.

The fundamental importance to society of reducing primary energy consumption is clear and the benefits of doing so remain highly attractive, including lower energy costs, energy security, household savings, productivity and carbon emission reductions.

Alongside the Review, the Board has been active in its search to recruit additional Directors. High quality candidates have been identified and the Company intends to provide an update on Board recruitment in the near-term.

Update on deployment & dividends

At the last update on 31 January 2022, the Company had agreed to invest a total of approximately EUR17.6m, of which it had deployed a total of approximately EUR11.9m. Since that time, the Company has deployed a further EUR6.3m and committed EUR5.5m, taking total commitments to approximately EUR23.1m, and deployment to approximately EUR18.2m. In addition, the Company has approved a further EUR4m of investments which have not yet contractually completed.

In light of slower than anticipated deployment to date and the current expectation that the IPO proceeds will not be significantly deployed within twelve months of Admission, the Company does not expect that its stated dividend target of 3.5 pence per Ordinary Share for the financial year ending 31 December 2022 will be covered by earnings. The Board will review the position in respect of any dividend which may be declared for the financial year ending 31 December 2022 in light of the deployment of the IPO proceeds as the year progresses.

Other matters

As a result of the Review and specifically the proposed amendments to the Investment Advisory Agreement in respect of the advisory fee, the Company expects to publish its audited report and accounts for the year ended 31 December 2021 by no later than 30 June 2022, in accordance with the temporary forbearance granted by the FCA in respect of DTR 4.1.3 pursuant to the Statement of Policy dated 26 March 2020.

The Company put in place a Placing Programme in its prospectus published at IPO, which is scheduled to conclude on 9 May 2022. The Company will not be issuing new Ordinary Shares and/or C Shares under that Placing Programme and the Board has concluded to end that Placing Programme with immediate effect. As a result, the Company will not be publishing a supplementary prospectus in relation to this announcement.

Any terms used in this announcement, unless otherwise defined, will have the same meaning as given to them in the prospectus issued by the Company on 10 May 2021.

For further information please contact:

Peel Hunt (Broker) 020 7418 8900

Luke Simpson, Huw Jeremy (Investment Banking)

Buchanan (Financial PR) 020 7466 5000

Charles Ryland, Henry Wilson, George Beale

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

MSCBCGDSXSDDGDG

(END) Dow Jones Newswires

April 21, 2022 02:01 ET (06:01 GMT)