Aquila Euro. Regulatory News (AERS)

AQUILA EUROPEAN RENEWABLES INCOME FUND PLC

LEI No: 213800UKH1TZIC9ZRP41

HALF YEARLY FINANCIAL REPORT

For the six months ended 30 June 2022

Purpose

Aquila European Renewables Income Fund Plc ("AERIF" or the "Company") seeks to generate stable returns, principally in the form of income distributions, by investing in a diversified portfolio of renewable energy infrastructure investments in continental Europe and the Republic of Ireland.

Highlights

Financial Information1

1. This disclosure is considered to represent the Company's alternative performance measures ("APMs"). Definitions of these APMs and other performance measures used, together with how these measures have been calculated, can be found below. All references to cents are in euros, unless stated otherwise.

2. Dividends paid/payable and declared relating to the period.

3. Calculation is based on average NAV over the period and regular recurring annual operating costs of the Company, which can be found below.

4. Calculation is based on NAV per Ordinary Share in euros and includes dividends.

5. Calculation is based on Ordinary Share price in euros and includes dividends.

6. Calculation is based on the operational result at special purpose vehicle ("SPV") level adjusted for fund level expenses during the period.

Highlights

· Total net asset value ("NAV") per Ordinary Share return of 5.3% (including dividends) for the first half of 2022, representing the highest total NAV return per Ordinary Share since the Company's IPO1.

· During the first half of 2022, the Company deployed or committed over EUR 135.0 million in two solar photovoltaic ("PV") assets located in Spain for a total capacity of 130.0 MWp, representing the highest amount of capital deployed over a six-month period since the Company's IPO.

· Further balance in portfolio technology mix achieved, with solar PV and wind energy now representing 50.8% and 45.4% of portfolio fair value respectively, in line with targets2.

· Albeniz, a 50.0 MWp Spanish solar PV project, reached completion, representing AERIF's first construction project to do so.

· Substantial progress achieved at The Rock with 71 out of 72 turbines energised and with the last turbine due to be completed shortly. Final negotiations are progressing for the issuance of the takeover certificates in the fourth quarter of 2022.

· The Company announced a dividend target of 5.25 cents per Ordinary Share for 2022, representing an increase of 5.0% to the 2021 dividend. Dividends were approximately 1.4 times covered3 during the reporting period.

· Despite lower than budgeted production, revenue was 8.1% above budget as a result of elevated power prices across Europe.

· Portfolio well positioned to participate in current pricing and inflation environment given merchant exposure.

· The Company increased the limit of its existing revolving credit facility ("RCF") from EUR 40.0 million to EUR 100.0 million, whilst maintaining the same terms and extending the maturity date by twelve months to April 2024.

1. Opening NAV at IPO after launch expenses: EUR 0.98 per Ordinary Share. Calculation includes dividends.

2. Percentage calculated on a pro-forma basis assuming Greco and The Rock are completed; Greco has been valued at cost.

3. Dividend cover ratio calculation is based on the operational result at SPV level adjusted for fund level expenses during the period.

WHY INVEST

The Company seeks to generate stable returns, principally in the form of income distributions, by investing in a diversified portfolio of renewable energy infrastructure investments.

· Exposure to the European green energy transition, an unparalleled investment opportunity at scale.

· Targeting portfolio diversification by technology and geography to balance the seasonality profile of production and reduce reliance on any single power market.

· Investment Adviser with long track record - 16.4 GW clean energy portfolio, one of the largest in Europe. Supported by strong origination and asset management capabilities.

· Long-term return target of 6.0% to 7.5%. Aim to progressively grow dividends over time1,2.

· Balance sheet well positioned for future growth - leverage under 25% of Gross Asset Value.

· Targeting contracted revenues to minimise price risk and maximise earnings visibility.

· Highly aligned Investment Adviser with 100.0% of advisory fees paid in AERIF shares since IPO3.

1. These are targets only and not forecasts. There can be no assurance that these targets can or will be met and it should not be seen as an indication of Aquila European Renewables Income Fund Plcʼs expected or actual results or returns. Accordingly, investors should not place any reliance on these targets in deciding whether to invest in Ordinary Shares or assume that the Company will make any distributions at all.

2. Net of fees and expenses.

3. Expires in June 2023.

AT A GLANCE

Portfolio Breakdown1

By Technology

Hydropower | 3.8%

Solar PV | 50.8%

Wind energy | 45.4%

By Country

Portugal | 14.4%

Norway | 16.2%

Denmark | 16.3%

Finland | 6.0%

Spain | 40.2%

Greece | 6.9%

By Status

Operating | 100.0%

Diversified Technologies

Hydropower | 18.5 MW | One country

Solar PV | 230.7 MWp | Two countries

Wind energy | 213.7 MW | Four countries

1. Percentage calculated on a pro-forma basis assuming Greco and The Rock are completed; Greco has been valued at cost.

Through the diversification of generation technologies, the seasonal production patterns of these asset types complement each other to balance the cash flow, while the geographic diversification serves to reduce exposure to one single energy market.

CHAIRMAN'S STATEMENT

On behalf of the Board of Directors, I am pleased to present the Interim Report of Aquila European Renewables Income Fund Plc for the six-month period ended 30 June 2022.

Ian Nolan

Chairman

Introduction

The first half of 2022 has proved to be a successful period for the Company. The six-month NAV return of +5.3% is our best result since IPO, and the period also saw us deploy more capital (EUR 135.0 million) than in any previous six-month period. We reached completion of AERIF's first construction project, Albeniz, whilst making substantial progress on The Rock, where we completed energisation on 71 out of 72 turbines with final negotiations progressing for the issuance of the takeover certificates in the fourth quarter of 2022.

The NAV growth has been underpinned by increases in electricity prices and inflation, which have been influenced by the conflict in Ukraine, as well as supply constraints coming out of the COVID-19 pandemic.

The Company's capital deployment continues to follow our diversification strategy. During the period, deployment was focused on solar PV and, as a result, the portfolio has made significant progress in diversification and achieving further balance across the technology mix, with solar PV and wind energy now representing 50.8% (2021: 29.0%) and 45.4% (2021: 66.0%) of the portfolio respectively1, in line with AERIF's targets.

In addition to diversification benefits, the portfolio also retains a high degree of contracted revenue, representing 53.9% of total revenues over the next five years. The remaining 46.1% is subject to merchant power prices which are correlated with inflation. Accordingly, the portfolio remains well positioned in a sustained high inflationary environment.

The benefits of diversification combined with our mix of contracted and merchant revenues ensures the portfolio is well positioned in the current market climate.

First Half 2022 Performance

Our NAV increased by 3.2% to EUR 430.6 million as at 30 June 2022, underpinned by increases in forecast power prices and inflation across the portfolio. During the first half of 2022, lower than expected wind production in Greece and severe droughts in Portugal led to production of the portfolio being 8.1% below budget, despite high technical availability across the portfolio. However, due to high electricity prices across the regions in which the Company operates, revenue was 8.1% above budget. This strong performance also translated to a high dividend coverage, with the Company reporting dividend cover of 1.4x during the reporting period.

As at 31 August 2022, 71 out of 72 wind turbines at The Rock have been fully energized and are producing electricity, with the Company receiving 50% of the revenues generated from the sale of electricity since January 2022.

We are disappointed that the Sami Appraisal Case has been delayed until May 2023. However, the project company remains committed to finding a satisfactory solution for all stakeholders involved.

Community engagement and integration is becoming an increasingly important area of focus within the renewables industry and we are pleased to announce that the Company's other wind farm in Norway, Tesla, recently received the Community Builder 2022 award, recognising its proactive role in engaging with the local community.

We are also pleased to report that Albeniz, a solar PV project located in Spain, finished construction and recorded its first revenue during June 2022, achieving final commissioning during August 2022. Albeniz represents the Company's largest single investment and first completed construction project, which is a fantastic milestone for the Company.

The Board is conscious that despite several secondary fund raises that have helped broaden the ownership of the Company, it remains relatively tightly held across a number of institutional Shareholders. The Board is also aware that greater liquidity in the Company's shares would improve their marketability. In response, we are actively working with Aquila Capital and Numis to explore various initiatives to potentially enhance the liquidity of AERIF's shares.

Capital Deployment and Balance Sheet

We are very pleased with the acquisitions of Greco and Tiza, two solar PV projects located in Spain with a combined capacity of 130.0 MWp, which has allowed us to deploy and commit the majority of the excess cash carried over from the previous period. Our efforts to expand the portfolio's allocation to solar PV not only provides further technological diversification but also lowers overall production volatility given irradiation is generally a less volatile resource compared to wind energy. AERIF is well positioned for future growth given its conservative gearing position and unutilised revolving credit facility (EUR 100.0 million capacity).

Following the two new acquisitions, the Company exercised the accordion and extension option on its revolving credit facility ("RCF"), increasing it from EUR 40.0 million to EUR 100.0 million and extending the maturity date by a further twelve months from April 2023 to April 2024. The increased RCF positions the Company favourably in the context of future investment opportunities. AERIF remains conservatively geared at 24.6% of gross asset value, with total debt outstanding of EUR 140.3 million comprised of non-recourse debt at the asset level which is largely fully hedged and amortising.

Conclusion and Outlook

Whilst the invasion of Ukraine brings volatility to the commodities market and wreaks havoc on already constrained supply chains, the Company and its portfolio have no direct exposure to Ukraine or Russia. The portfolio's operating costs are governed by long-term operations and maintenance ("O&M") contracts which mitigates any cost pressures. In addition, the Company's construction projects benefit from fixed price engineering, procurement and construction ("EPC") contracts which provides further insulation from rising commodity costs.

The current geopolitical situation and the high electricity price environment underline the necessity to move away from oil and gas and accelerate the decarbonisation of energy supply.

During COP26 held in November 2021 one of the goals set by the nearly 200 countries present was to mobilise at least USD 100.0 billion in climate finance per year. This represents an unparalleled investment opportunity for participants in the sector, such as AERIF.

Energy security has become a new theme which has emerged from the conflict in Ukraine. A transition towards renewable energy systems is no longer only a question of combating climate change but could also lead to greater energy independence if designed with care. AERIF's investment activity enables us to directly contribute towards Europe's energy transition and also facilitate energy independence.

The Company's Investment Adviser has over 20 years of experience in alternative investments and currently manages a 16.4 GW portfolio of renewables from development through to operations, representing one of Europe's largest clean energy portfolios but also a significant growth opportunity for AERIF. AERIF remains well positioned in expanding its portfolio as well as in the current climate to generate attractive returns whilst also contributing further to the energy transition.

1. Pro-forma post completion of Greco.

Ian Nolan

Chairman

26 September 2022

INVESTMENT ADVISER'S REPORT

Leader in Investment and Asset Management in European Renewables

AQUILA CAPITAL

Aquila Capital is one of the leading investment and industrial development companies, managing over EUR 13.2 billion on behalf of institutional investors worldwide and managing one of the largest clean energy portfolios in Europe. Over the past two decades, Aquila Capital and its subsidiaries have committed to support the green energy transition and creating a more sustainable world. As of 30 June 2022, the company manages wind energy, solar PV, hydropower energy assets and battery storage with a capacity of more than 16.4 GW. Additionally, it has projects in sustainable real estate and green logistics either completed or under development. Aquila Capital also invests in energy efficiency, carbon forestry and data centres.

The Investment Adviser currently has a significant pipeline of over 8.0 GW of development and construction assets, primarily in solar PV located in Southern Europe. This represents an attractive source of growth opportunities for AERIF.

Aquila Capital's in-house Market Management Group ("MMG"), a team of experts dedicated to sourcing and structuring power purchase agreements ("PPAs"), market analysis, trading & origination and FX & interest rates and other hedge products, has facilitated the Company's proactive approach to hedging.

The Investment Adviser oversees and monitors the Asset Management of renewable energy investments in the Company's portfolio. Aquila Capital's specialist Asset Management expertise offers the opportunity to optimise asset performance.

The Company's Alternative Investment Fund Manager ("AIFM"), Sanne Fund Management (Guernsey) Limited, has appointed Aquila Capital as its Investment Adviser in respect of the Company. Aquila Capital's key responsibilities are to originate, analyse and assess suitable renewable energy infrastructure investments and advise the AIFM accordingly.

31 December 20211:

Overall reduction of CO2 emissions

36.6 million tonnes

Green energy produced

431.9 TWh

Households supplied

118.7 million

1. Data based on the lifetime of the current portfolio.

Current global clean energy portfolio of Aquila Capital:

Portfolio capacity1

Hydropower

938 MW

264 plants

Solar PV

11,398 MWp

334 PV parks

Wind energy

3,686 MW

892 WTGs

Energy storage systems

391 MW

9 projects

Energy efficiency

20 projects

16 Offices

1. Includes all asset acquisitions and sell-offs. Data as at 30 June 2022

INVESTMENT PORTFOLIO

1. Installed capacity at 100% ownership.

2. COD = Commissioning date.

3. PPA = Power Purchase Agreement, FiT = Feed-in tariff, FiP = Feed‑in premium, CfD = Contract for Difference, TBD = to be determined.

4. Leverage level calculated as a percentage of debt plus fair value as at 30 June 2022.

5. Majority of remaining shares are held by entities managed and/or advised by Aquila Capital.

6. 21 individual assets. Approximately ten years' remaining asset life when calculated using net full load years.

7. Represents voting interest. Economic interest is approximately 93.2%.

8. Calculation based on voting interest.

INVESTMENT ACTIVITY

Greco

Solar PV

Country: Spain

Date Acquired: March 2022

Status: Construction

Capacity: 100.0 MWp

Greco will be the portfolio's largest project when completed, both in invested capital and production capacity. The Company acquired a 100.0% interest in Greco, which consists of two assets (Jaén and Guillena) with a total capacity of 100.0 MWp (each asset has a capacity of 50.0 MWp). Greco is a solar PV project located in the region of Andalucía, in southern Spain, which benefits from attractive solar irradiation yields. Completion of Jaén is expected between late 2022 and early 2023, while completion of Guillena is expected during the second quarter of 2023. The project operating life is conservatively estimated as 30 years. The Investment Adviser is currently in discussion with PPA offtakers in order to secure a PPA in 2022.

The project is expected to provide 184 GWh of renewable electricity annually over its lifetime, equivalent to approximately 93 kt of CO2 avoidance in its lifetime. The acquisition has been structured to be paid in two tranches; the first undisclosed amount was paid at closing under the SPA and a deferred consideration of approximately EUR 90.0 million will be paid proportionally when each project achieves completion.

Tiza

Solar PV

Country: Spain

Date Acquired: June 2022

Status: Operational

Capacity: 30.0 MWp

During June 2022, the Company acquired a 100.0% interest in Tiza, an operating solar PV asset with 30 MWp capacity, located in the region of Almeria, Southern Spain. The asset recently became operational in March 2022. The project benefits from a recently signed, 6.5-year fixed price PPA with Axpo Iberia, a subsidiary of Axpo Solutions, which covers 70% of P50 production. Together with Greco, both assets provide further balance to the existing portfolio, which is largely oriented towards wind. Given Tiza is operational, this asset will immediately contribute to dividend cover in 2022.

Tiza is expected to provide 54 GWh of renewable electricity annually over its lifetime, representing approximately 62 kt of CO2 equivalent avoidance over its lifetime. The construction of Tiza, which was managed by Aquila Capital, is also a testament to the benefits of environmental integration. During construction a series of environmental benefits were implemented, such as restoration and relocation of olive trees, over ten rabbit refuges built and the introduction of a natural barrier of plants around the perimeter as a mechanism to protect the local fauna.

Capital Deployment

During the first half of 2022, the Company has successfully deployed or committed over EUR 135.0 million on new acquisitions, increasing its total capital deployment since IPO to EUR 425.5 million1. In addition, the Company has deployed a further EUR 1.8 million in relation to capital expenditure for project Albeniz, whilst the remaining construction payments for The Rock are being funded from surplus capital at the project company level.

As at 30 June 2022, the Company had remaining commitments of approximately EUR 94.4 million2, predominantly related to deferred Greco consideration and, to a lesser extent, Albeniz. Remaining capital commitments are expected to be funded from AERIF's existing surplus liquidity comprising cash on hand and the RCF.

As at 30 June 2022, the Company, together with its wholly owned subsidiary Tesseract Holdings Limited ("THL" or "HoldCo") had an available liquidity of EUR 59.1 million (excluding surplus cash at asset level) in addition to the RCF which has a facility limit of EUR 100.0 million and remains undrawn.

1. Includes Greco EUR 90.0 million deferred consideration.

2. Note this excludes earn-out payments related to Greco, and working capital adjustments related to Ourique and Tiza.

PORTFOLIO CONSTRUCTION - AS AT 30 JUNE 2022

Current Portfolio Allocation1

By Technology

Hydropower | 4.7%

Solar PV | 39.0%

Wind energy | 56.3%

By Country

Portugal | 17.8%

Norway | 20.1%

Denmark | 20.2%

Finland | 7.4%

Spain | 25.9%

Greece | 8.6%

By Status

Operating | 85.5%

Under construction | 14.5%

Pro Forma Portfolio Allocation Assuming Completion of Greco and The Rock2

By Technology

Hydropower | 3.8%

Solar PV | 50.8%

Wind energy | 45.4%

By Country

Portugal | 14.4%

Norway | 16.2%

Denmark | 16.3%

Finland | 6.0%

Spain | 40.2%

Greece | 6.9%

By Status

Operating | 100.0%

1. Allocation is based on fair value of the assets.

2. Calculated on a pro forma basis assuming Greco and The Rock are completed, Greco project has been valued at cost.

Contracted Revenue Position

Present Value of Revenues1,2 (Five Years)

Market | 46.1%

Fixed price PPA | 29.4%

Government regulated tariff | 24.5%

53.9%

Contracted revenue over the next five years

EUR 277.8m3

Contracted revenue (net present value)

EUR 403.1m4

Contracted revenue (aggregate over asset life)

7.8 years5

Weighted average contracted revenue life

The portfolio maintains a strong visibility of future cashflows with a weighted average contract life of approximately 7.8 years for revenues contracted (31 December 2021: 8.8 years). Furthermore, the Company contracts its revenues with investment grade counterparties. As at 30 June 2022, approximately 53.9% of the present value of revenues (31 December 2021: 68.5%) has been contracted over the following five years, the decrease in contracted revenues corresponds to the uplift in short-term forecasted power prices curves from independent market analysts.

1. Asset revenues are discounted by the weighted average portfolio discount rate as of 30 June 2022 and are taken from 1 July 2022 onwards.

2. Includes replacement PPA assumed to be secured for Olhava once the FiT runs out from 2025 for a tenor of three years, as well as Greco PPAs expected to be secured closer to completion of the assets.

3. Contracted revenue as at 30 June 2022, discounted by the weighted average portfolio discount rate.

4. Aggregate contracted revenue over entire asset life (not discounted).

5. Weighted based on investment value and based on production hedged. Greco and Olhava future PPA have been excluded as they have not been secured.

FINANCIAL PERFORMANCE

Performance

Production by Technology (AERIF share)

1. Region refers to 1H22 only.

2. Tiza economic transfer took place in March 2022.

3. Average technical availability based on weighted installed capacity (AERIF share).

The Company's portfolio increased production by 13.5% during 1H22 compared to 1H21, with electricity produced amounting to 303.4 GWh (1H21: 267.2 GWh), mainly due to high electricity production in Norway and Denmark compared to 1H21, the acquisition of Tiza, with an economic transfer date of mid-March and production in Albeniz after construction was completed.

Electricity production was 8.1% below the P50 budget, mainly due to lower than expected wind levels in Greece as well as lower hydropower production due to a severe drought in Portugal. In contrast, solar PV production in Iberia and wind energy production in Denmark and Finland performed broadly in line with budget.

Revenues were 8.1% above budget as a result of increasing power prices across Europe. Electricity prices have been rising since the second half of 2021, driven by the heatwaves across the summer months and a harsh winter, the significant increase in CO2 prices and low European gas reserves, further exacerbated by the war in Ukraine, which has reduced the gas supply in Europe.

Construction Projects Progress

· The Rock: As at 31 August 2022, 71 out of 72 turbines have now completed energisation. The Rock has received 50.0% of the revenues generated from the sale of electricity from these turbines since January 2022 and will continue to do so, plus any additional revenues from other turbines entering operation, until the date of completion. Final negotiations are progressing for the issuance of the takeover certificates in the fourth quarter of 2022.

The appraisal case concerning the local reindeer district and The Rock is scheduled to be heard before the Helgeland District Court in May 2023. Lawyers advise that such proceedings are common in this region in relation to infrastructure projects. With appeals, they can continue for extended periods, but that there is a low likelihood of The Rock being materially impacted either operationally or financially.

· Greco: At the end of July 2022, engineering work in Jaén was 76% advanced. Work on the drainage system and internal roads was almost complete. The construction of low and medium voltage trenches and the laying of cables, ramming work, erection of the structure and installation of the modules were fully completed.

The grid connection process has been initiated and the permit for Administration Authorization for Exploitation has been applied for. Completion of Jaén is expected between late 2022 and early 2023.

At Guillena, construction was 48% advanced at the end of July 2022. Almost all materials have been delivered to the site. The assembly of the structures and the equipment erection were 90% advanced. Commissioning is expected during the second quarter of 2023.

· Albeniz: The 50.0 MWp Spanish solar PV project, in which the Company acquired 100.0% interest, achieved completion during June 2022 and has been producing revenues since then. Additionally, during July 2022, the project received its Provisional Acceptance Certificate ("PAC"), indicating the asset operates according to plan and no incident has been found.

Gearing

During the first half of 2022, the Company's gearing ratio reduced from 25.7% to 24.6% of GAV as a result of ongoing debt amortisation (approximately EUR 4.0 million4) and further growth in NAV by 3.2%. Gearing levels remain well below the investment restriction that allows a maximum of 50.0% of GAV. Furthermore, on 20 April 2022, the Company increased its RCF limit from EUR 40.0 million to EUR 100.0 million, with the maturity date extended by twelve months until April 2024. The RCF as of 30 June 2022 remains undrawn. RCF capacity is expected to be used to support Greco and fund other pipeline opportunities.

Debt Summary as at 30 June 2022

1. Foreign currency values converted to EUR as at 30 June 2022. Data represents AERIF's share of debt. AERIF share of Desfina debt based on voting interest.

2. Weighted average all in interest rate for EUR denominated debt. DKK denominated debt has an average weighted interest rate of 2.6%. Excludes RCF.

3. Margin over EURIBOR.

4. Includes changes in FX over the period.

Valuation

Fair Value (unaudited, EUR million)1

1. Includes capital contributions related to construction assets (Albeniz: EUR 1.75 million) and new investments (Greco, Tiza combined EUR 46.6 million).

· The Company's NAV as at 30 June 2022 was EUR 430.6 million or 105.5 cents per Ordinary Share (31 December 2021: EUR 417.4 million or 102.6 cents per Ordinary Share). This represents a total NAV return of 5.3% per Ordinary Share (including dividend).

· The main drivers of NAV movements throughout the reporting period include:

· Forecast power prices: Increase in short-term electricity prices forecast across the majority of the portfolio, resulting in an increase of 6.2 cents per Ordinary Share; the methodology continues to assume an average of two power price curves from independent market analysts over the life of each asset, each asset. No forward or futures curves are used.

· Inflation: Increase in short-term CPI forecasts1 increased the NAV per Ordinary Share by 2.6 cents, whilst medium and long-term assumptions remain unchanged.

· Discount rate: The Company's discount rate has increased by 10 bps to 6.6% (31 December 2021: 6.5%), following the increase in risk-free rates across the portfolio.

· Others:

· Norway introduced a production tax on wind farms with a cost of NOK 0.01 per KWh produced.

· Lower than expected hydropower production in Portugal.

· The Rock valuation has decreased due to the introduction of the production tax in Norway, completion being delayed and a decrease in forecast electricity prices in the NO4 region. Northern Norwegian zones typically show lower power prices due to: (a) relatively lower demand, (b) more wind penetration, and (c) interconnection with wind-abundant Sweden.

· The valuation of the assets located in the southern part of the Nordics with higher interconnection to continental Europe (Tesla - Southern Norway, Holmen II and Svindbaek - Denmark, Olhava - Finland) have significantly increased due to substantial increase in short-term power forecasts.

· Desfina's valuation decrease corresponds to the significant distributions that occurred during the reported period (EUR 7.7 million).

· Following the acquisition of the project company on 29 March 2022, Greco recorded an uplift in NAV of 5.0% in its valuation as at 30 June 2022 mainly driven by positive power price movement and increase in CPI forecasts.

· Tiza has been valued at cost due to its recent acquisition. The asset will be valued at fair value from the next quarter onwards.

1. Short-term data source from Bloomberg, with medium-term data calculated via interpolation and long-term data obtained from the European Bank target.

Valuation Methodology

The Company owns 100% of its subsidiary Tesseract Holding Limited. The Company meets the definition of an investment entity as described by IFRS 10. As such, the Company's investment in the HoldCo is valued at fair value. The Company has acquired underlying investments in special purpose vehicles ("SPVs") through its investment in the HoldCo.

The Company's Investment Adviser has carried out fair market valuations of the SPV investments as at 30 June 2022 and the Directors have satisfied themselves as to the methodology used, the discount rates and key assumptions applied and the valuation. All the Company's investments are recorded at fair value, with any movements in fair value reflected through the profit and loss statement. Valuations utilise the IFRS 13 framework for fair value measurement. The following economic assumptions were used in the valuation of the SPVs.

Portfolio Valuation - Key Assumptions

There were no significant changes in the key valuation assumptions compared to the previous reporting period.

1. Remaining asset life based on net full load years. Does not consider any potential asset life extensions. Includes Greco deferred consideration payment.

2. Asset life assumption from date of commissioning.

MARKET COMMENTARY AND OUTLOOK

Market Prices

During the first half of 2022, the increase in fuel and CO2 prices were the key drivers of the bullish trend experienced in Europe since the middle of the year 2021. The historically high prices in commodity markets, notably for gas and coal were further intensified by the major supply disruptions triggered by the conflict in Ukraine and have led to the continuation of the bullish trend of power prices due to the reliance of the European Union on thermal power generation.

Nord Pool

Although power prices in the Nordic region are generally at a discount when compared to continental Europe, there is an ongoing trend towards increasing convergence between the Nordics and the continental power markets due to a tighter hydrological balance and the impact of the new interconnection link with Germany and the United Kingdom; thus, increasing demand in the region as the demand in continental Europe is expected to increase.

Additionally, due to the different patterns for southern and northern price areas in Norway, the impact of higher commodities differs widely among the zones.

Northern regions (NO3 and NO4) are less affected by fluctuations in power prices due to lower demand and abundant wind resources. By contract, the southern zones (NO1, NO2 and NO5) undergo a stronger price impact from Continental Europe via existing interconnection.

In 2022, the Norwegian government introduced an onshore wind production tax, applicable to all wind power plants with a capacity of over 1 MW or more than 5 wind turbines on the surface, at a tax rate of NOK 0.01 per generated KWh. 

Iberia

Power prices in Iberia experienced a more significant price impact from higher commodity prices due to the high proportion of hours during which gas-fired generation sets the price in the wholesales markets. During the past six months, Spain has introduced several regulatory developments in an attempt to hinder the upside effect of gas prices on wholesale power prices, such as the electricity tax reductions, creation of a clawback' on merchant revenues and the introduction of a cap for the gas price to be accounted in bids of electricity generators.

The impact of these regulations to the Company's assets located in Spain is limited given the high percentage of contracted revenues, with Tiza and Albeniz having 70.0% and 80.0% of its P50 production hedged and Greco expecting to secure PPAs for both of its assets closer to completion.

Greece

As in Iberia, power prices in Greece underwent a higher increase from elevated fuel prices due to the higher proportion of hours in which not only gas-fired generation, but also coal, sets the marginal price in the wholesale market. However, Desfina the (only Greek project currently in the portfolio) does not participate in these developments as the asset benefits from a 20-year Feed-in Premium, which is structured as a contract for difference to EUR 98.0 MWh, for 100% of the energy produced.

European Commission

On 14 September 2022, the European Commission presented a proposal for an emergency intervention in Europe's energy markets in order to address the dramatic rise in power prices, largely as a result of gas supply disruptions. The proposal provides a range of measures that, if approved, will be automatically applied on EU Member States, most notably (a) reduction of electricity demand and (b) clawback on revenues on 'inframarginal' electricity producers (including renewables) setting a threshold of EUR 180 MWh of electricity produced, from which "excess" profits could be claimed back by individual Member States. The measures are expected to entry into force as of 1 December 2022 and remain in place until 31 March 2023.

The temporary revenue cap is not intended to be applied to revenue earned below the cap which is derived from PPAs or Government regulated tariffs. Furthermore, the clawback should not apply to producers whose revenues are already capped as a result of State measures, as it is the case of Spain. Importantly, as part of its press release, the European Commission has also reaffirmed its commitment towards renewable energy as a means to achieve its long-term climate and energy targets.

The Investment Adviser is continuing to review the initial announcement from the European Commission and is waiting for further details to be announced, including the measure to be adopted by each Member State to reduce electricity demand and further details of the revenue cap, noting that Europe is not homogenous and different regions exhibit vastly different power prices, largely influenced by differences in power generation mix, interconnectivity and weather conditions. It is also worth noting that Spain already introduced a clawback mechanism which will remain in place until 31 December 2022.

Despite these regulatory changes, expectations for wholesale power prices in AERIF's key markets such as the Nordics and Iberia remain high in the short to medium term. Regulatory developments such as these highlight the importance of AERIF's pan-European strategy targeting geographic diversification and high contracted revenues, maximizing earnings visibility and reducing our reliance on any single power market.

Fuel Prices Evolution

Europe's surging demand for Liquefied Natural Gas ("LNG") to replace the Russian pipeline gas supply and increase in its imports has led to an exceptionally tight global market, pressuring supply. In June 2022, Gazprom's reduction of natural gas supply to several European countries led to a new uplift in gas prices.

The coal market has undergone an upward trend, as coal demand increased in line with the tightening in the gas market.

This trend was further enhanced by the Russian invasion of Ukraine, as markets sought alternatives to Russian fossil fuels and EU planned an embargo on Russian coal imports.

Furthermore, carbon prices have oscillated between EUR 58.3 and EUR 96.0 tCO2 in the first half of 2022. European Union Allowances ("EUA") prices had risen since 2021 due to the following factors: a) the 'gas-to-coal switching effect' which has increased demand for EUAs from (relatively more emissive) coal units; and (b) generally more pronounced political momentum for decarbonisation across the EU, associated with the 2030 targets and net-zero discussions.

With the start of the conflict in Ukraine, EUAs prices fell from an average of EUR 90.0 MWh to nearly EUR 58.0 MWh in just over a week due to the expectations that funds and speculative buyers would abandon the market as a consequence of the conflict. Following that period, EUA prices started to recover as the market has rebalanced and remained relatively stable at roughly EUR 85.0 tCO2.

Inflation

Investments in renewable energies represent an effective protection against inflation. Renewable energies benefit from rising electricity prices with no burden on the cost side in relation to the use of resources. Over the last 20 or more years, European electricity prices have typically outperformed European consumer prices indices, as a result inflation is expected to have a positive impact on the earnings potential of renewable electricity generation plants.

Conclusion

A key pillar to the investment philosophy is diversification, which the Company has set out to achieve by further investing in solar PV, resulting in a more balanced portfolio between solar PV and wind technologies, in-line with the Company's targets. In addition, the portfolio is constructed to minimise risk whilst optimising revenues by maintaining a conservative gearing level and a high degree of contracted revenues with investment grade counterparties. These characteristics not only increase earnings visibility but also reduce volatility and minimise exposure to any single asset or market. As a result, the Company and its investment portfolio is well positioned in the current market climate.

Russia's invasion of Ukraine has led to higher volatility in electricity prices, driven by the increased energy and non-energy commodity related costs, inflation is expected to continue to rise. In this regard, energy and power markets will receive higher levels of scrutiny and future interventions in markets. Energy independence will become an important driver and local support for renewables and non-fossil fuel energy sources will most likely increase.

Furthermore, the battle against climate change remains at the forefront of the world agenda with COP27 due to take place in November 2022 in Egypt, with the revision of current targets and with promises of revised action plans to steepen the rate of decarbonisation. One of the Company's goals is to contribute directly to the green energy transformation; in order to do so, the Company together with its Investment Adviser aims to grow the portfolio to provide higher amounts of green energy into the grid. The Investment Adviser continues to work with the AERIF Board on a number of investment opportunities which meet the Company's strict investment criteria.

Aquila Capital Investmentgesellschaft mbH

26 September 2022

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

ENVIRONMENTAL

In 2015, the UN launched its 17 Sustainable Development Goals ("SDGs"), aiming to end poverty, improve health and education, reduce inequality, spur economic growth and tackle climate change. These goals are set to stimulate action for people, the planet and prosperity, and aim to transform the world by 2030.

The Company aims to invest in a diversified portfolio of renewable energy infrastructure investments, such as hydropower plants, onshore wind and solar parks, across continental Europe and Ireland. With the objective of providing investors with a truly diversified portfolio of renewable assets, AERIF is able to achieve on its investment objectives as well as contribute towards the green economy. AERIF contributes to the following three SDGs:

AERIFʼs Contribution to the UN Sustainable Development Goals

Following the successful GRESB assessment undertaken the previous year, where it received 84 points, above the industry average of 77 points, the Company has commenced the GRESB assessment for the current year and has submitted all of the required information. The results of the assessment are expected to be published in October 2022.

1. Expected AERIF contribution for the year 2022, based on the portfolio as at 30 June 2022. The CO2 equivalent avoidance, the average European households supplied and household emissions are approximations and do not necessarily reflect the exact impact of the renewable energy projects. The cited sources of information are believed to be reliable and accurate, however, the completeness, accuracy, validity and timeliness of the information provided cannot be guaranteed and Aquila Capital accepts no liability for any damages that may arise directly or indirectly from the use of this information.

SOCIAL

Renewable energy projects have an inherent major positive impact on the environment with their ability to decarbonise the energy sector, aiding us in the transition to a low carbon economy. With the European Green Deal boosting renewable energy projects, investment into clean energy assets has accelerated over recent years.

With the increase in renewable energy deployment, the pressure on land is growing, as the need to expand carbon sinks and protecting biodiversity is in direct conflict with agricultural and renewable energy production. Conflicts can arise when new renewable projects compete against other types of land usage, such as residential housing, recreational areas, agriculture and nature conservation, or when they cause landscape disruptions.

Engagement with local communities is an integral part of the Company's investment philosophy. The assets continue to support communities through contracting local service providers, payment of local taxes, as well as lease payments for utilisation of the land.

Tesla Engagement with Local Community

In March 2022, Midtfjellet Wind Farm (Tesla) was awarded Norweaʼs membership award. This prize is given to a member who has excelled in positive engagement with the community, for example through social or environmental sustainability.

Norwea writes: "The prize goes to Midtfjellet Wind Farm for its many years of work for outdoor life and activities in and around the facility.

At Midtfjellet, past and future meet in a spectacular way. The landscape is wild and beautiful, at the same time as it houses the production of clean and renewable energy. The wind farm is a popular destination: cycling, downhill skiing, skiing, fishing and family trips. The surroundings with the fantastic turbines make the whole experience unique and special.

Since the start in 2011, about 17,000 have been on a guided tour of the area. There have been people from nursing homes, kindergartens, schools, universities and other institutions, as well as companies and politicians. Congratulations to Midtfjellet Vindpark, all employees in the company and partners who have contributed to the success".

Sustainability in Iberia

The Investment Adviser has implemented its Sustainability Plan for Project Delivery ("SPPD") for the clean energy operations in southern Europe. The framework sets out the minimum mandatory sustainability requirements to be considered from early-stage development and throughout the life cycle of projects, including the construction, operation and end-of-life phases. By focusing on managing sustainability risks and opportunities at a project level, the SPPD structures and sets out the right processes and tools needed to address differing local stakeholder needs and the main environmental issues. Aquila Capital's SPPD therefore includes five main working lines: local value, environmental commitment, sustainability promotion, alliances, reputation and positioning.

Local value is one of the main working lines included in Aquila Capital's SPPD and it defines the Stakeholder Engagement Procedure ("SEP") for the projects. When engaging with local stakeholders, it seeks to avoid social risks through an early identification of key issues. Additionally, next to social risks, it also identifies social opportunities, which can enhance the value to the community.

The SEP strives for proactive rather than reactive stakeholder management and commits to create long-term relationships with local stakeholders, beyond the development phase, which will add value to society and local communities.

The SEP starts with an initial identification of social risk at project level. This is carried out on the entire portfolio and integrated into the due diligence phase of the investment process. If risks are identified, it may result in the inclusion of a social budget in the financials of a project and the size thereof will depend on the social risks inherent as well as on the capacity, with the social budget risks being managed to mitigate possible negative impacts of a project, as well as fund social investments to enhance a project's intrinsic benefits.

To identify the best possible application of the funds, a social impact study is commissioned from renowned external service providers which assesses and defines the following:

· A baseline characterising the local context and stakeholders.

· The project's impact on the local community and stakeholders.

· A strategy to address social risks and opportunities.

· A ʼshared value proposalʼ defined in conjunction with Aquila Capital and local interest groups.

For example, during 2021, a total of 27 social impact studies were commissioned with an external services provider for Spanish and Portuguese clean energy projects, all of which are currently under development. Building on the results from a social impact study, it was proposed a social management plan to the local stakeholders and community and defined a shared value proposal. Including the expectations of project stakeholders at a very early stage of the project is crucial, partly because it establishes constant communication and dialogue. Once the management plan is implemented, a constant dialogue with the stakeholders will continue, even beyond the development and construction stages of a project, if necessary.

GOVERNANCE

The independent Board of Directors has the responsibility for AERIFʼs sustainability policy and its implementation, with the daily operations being delegated to its independent AIFM, Sanne Fund Management, which monitors environmental, social and governance risks, which are fully integrated across every single stage of its investment process. Aquila Capital publishes its own ESG report; in it, it describes the Investment Adviserʼs approach to sustainability into the investment process. Aquila Capital regards integrity and diversity as key pillars in their governance and they have been vital for the growth and success of the Company. The Investment Adviser is fully regulated and supervised by the Federal Financial Supervisory Authority (ʼBaFinʼ) in Germany.

Diversity

The Board of Directors is appointed based on expertise and merit, being mindful of the benefits generated by diversity, such as gender diversity. The goal is to maintain a consistent Board over time, comprised of members with different skills and experiences. The current Board comprises three men and one woman, all non-executive Directors who have a significant number of years of experience in the relevant fields.

Additionally, the Investment Adviser is also mindful of the benefits provided by diversification, both in culture with having employees coming from 43 different nationalities, and in gender, having a gender ratio of 55% men and 45% women, with 30% of people in leadership positions being female. Two of the female leaders, Susanne Wermter (CEO Aquila Clean Energy) and Christine Brockwell (CPO Aquila Clean Energy), are ranked in the Top 100 Women's Green Fund Power List, honouring women working in wind power worldwide.

AERIF Board:

3 men

1 woman

Investment Adviser:

55% men

45% women

43 different nationalities

INTERIM MANAGEMENT REPORT

The Directors are required to provide an Interim Management Report in accordance with the Financial Conduct Authority ("FCA") Disclosure Guidance and Transparency Rules ("DTR"). The Chairman's Statement and the Investment Adviser's Report in this interim report provide details of the important events which have occurred during the period and their impact on the financial statements. The following statements on related party transactions, going concern, the Directors' Responsibility Statement, the Chairman's Statement and Investment Adviser's Review, together constitute the Interim Management Report for the Company for the six months ended 30 June 2022. The outlook for the Company for the remaining six months of the year ending 31 December 2022 is discussed in the Chairman's Statement and the Investment Adviser's Report.

Principal Risks and Uncertainties

The principal risks and uncertainties facing the Company are detailed in the Company's most recent Annual Report for the year ended 31 December 2021, which can be found on the Company's website at www.aquila-european-renewables-income-fund.com. These remain unchanged during the period under review. The key risks are summarised below:

· Economic and Political Risk - The revenue and value of the Company's investments may be affected by future changes in the economic and political situation;

· Operational Risks - The risk that the portfolio underperforms and, as a result, the target returns are not met over the longer term. The risk that service providers to the Company underperform and as a result impacts on the Company performance, reporting or reputation;

· Financial Risks - The risk that the valuations and underlying assumptions used to value the investment portfolio are not a fair reflection of the market, resulting in the investment portfolio being over or under-valued;

· Compliance, Tax and Legal Risks - The failure to comply with the relevant regulatory changes, tax rules and obligations may result in reputational damage or create a financial loss to the Company; and

· Emerging Risk - As evidenced with the ensuing war in Ukraine and the various sanctions and restrictions imposed, there is a possibility there could be supply delays for operation and maintenance, sanction considerations, volatile markets and general uncertainty. More difficult energy markets expected along with inflationary pressures in various construction and operational areas.

Principal risks, including emerging risks, are mitigated and managed by the Board through continual review, policy setting and regular reviews of the Company's risk matrix by the Audit Committee to ensure that procedures are in place with the intention of minimising the impact of the above mentioned risks. The Board relies on periodic reports provided by the Alternative Investment Fund Manager, Investment Adviser and Administrator regarding risks that the Company faces. When required, experts will be employed to gather information, including legal advisers, and environmental advisers.

The Board also identified 'Act of War/Sanctions' as an emerging risk to the Company.

The Company's Annual Report for the period ended 31 December 2021 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.

The Board is of the opinion that these principal risks are equally applicable to the remaining six months of the financial year as they were to the six months being reported on.

Related Party Transactions

The Company's Investment Adviser, Aquila Capital Investmentgesellschaft mbH is considered a related party under the Listing Rules. Details of the amounts paid to the Company's Investment Adviser and the Directors during the period are detailed in the note 11 to this Interim Report.

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 Company.

The Directors have a reasonable expectation that the Company has 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 liquidity of the Company's portfolio of investments as well as its cash position, income and expense flows. The Company's net assets as at 30 June 2022 were EUR 430.63 million (31 December 2021: EUR 417.4 million). As at 30 June 2022, the Company held EUR 58.3 million (31 December 2021: EUR 94.3 million) in cash. The total expenses for the period ended 30 June 2022 was EUR 2.3 million (30 June 2021: EUR 1.9 million). At the date of approval of this document, based on the aggregate of investments and cash held, the Company has substantial operating expenses cover.

As at 30 June 2022, the Company had approximately EUR 140.3 million of non-recourse debt (on a proportional basis) at the SPV level and the directors are satisfied that all key financial covenants are forecast to continue to be complied with for at least the forthcoming twelve-month period from the date of this document.

In light of the secondary effects of the COVID-19 pandemic and the war in Ukraine, the Directors have considered each of the Company's investments. The Directors do not foresee any immediate material risk to the Company's investment portfolio and income from underlying SPVs. A prolonged and deep market decline could lead to falling values to the underlying business or interruptions to cashflow, however the Company currently has more than sufficient liquidity available to meet any future obligations. The Directors are also satisfied and are comfortable that the Company would continue to remain viable under downside scenarios, including decreasing government regulated tariffs and a decline in long-term power price forecasts.

The market and operational risks and financial impact as a result of the COVID-19 pandemic and the war in Ukraine, and measures introduced to combat its spread, were discussed by the Board, with updates on operational resilience received from the Investment Adviser, Administrator and other key service providers. The Board was satisfied that the key service providers have the ability to continue to operate.

STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE INTERIM REPORT

We confirm that to the best of our knowledge:

· these Condensed Interim Financial Statements have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" as required by DTR 4.2.4R of the Disclosure Guidance and Transparency Rules ("DTR") of the UK's FCA; and

· the Chairman's Statement, the Investment Adviser's Report and the Statement of Principal Risks and Uncertainties, together with the Condensed Financial Statements, meet the requirements of an interim management report, and include a fair review of the information required by:

(a) DTR 4.2.7R of the DTR of the UK's FCA, being an indication of important events that have occurred during the six month period ended 30 June 2022 and their impact on the Condensed Financial Statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the DTR of the UK's FCA, being related party transactions that have taken place during the six month period ended 30 June 2022 and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Ian Nolan

Chairman

26 September 2022

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2022

The total column of the Condensed Statement of 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.

Return on ordinary activities after taxation is also the 'Total comprehensive income for the periodʼ.

The notes below form part of these financial statements.

CONDENSED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2022

Approved by the Board of Directors and authorised for issue on 26 September 2022.

Ian Nolan

Chairman

Aquila European Renewables Income Fund Plc is incorporated in England and Wales with Company number 11932433.

The notes below form part of these financial statements.

CONDENSED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2022

The notes below form part of these financial statements.

CONDENSED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2022

The notes below form part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2022

1. GENERAL INFORMATION

Aquila European Renewables Income Fund Plc is a public company limited by shares incorporated in England and Wales on 8 April 2019, with registered number 11932433. 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 5 June 2019 when its Ordinary Shares were admitted to trading on the London Stock Exchange. The Directors intend, at all times, to conduct the affairs of the Company 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 registered office and principal business address of the Company is 6th Floor, 125 London Wall, London, England, EC2Y 5AS.

The Companyʼs investment objective is to generate stable returns, principally in the form of income distributions, by investing in a diversified portfolio of renewable energy infrastructure investments.

2. BASIS OF PREPARATION

The condensed 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 2021 and should be read in conjunction with the Companyʼs annual audited financial statements for the period ended 31 December 2021. The financial statements for the year ended 31 December 2021 have been prepared in accordance with the UK adopted international accounting standards in conformity with the requirements of the Companies Act 2006. The financial statements have been prepared on the historical cost basis, as modified for the measurement of certain financial instruments at fair value through profit or loss.

The interim financial statements have also been prepared as far as is relevant and applicable to the Company in accordance with the Statement of Recommended Practice (""SORP"") issued by the Association of Investment Companies (""AIC"") in July 2022.

These condensed financial statements do not include all information and disclosures required in the annual financial statements and should be read in conjunction with the Companyʼs annual financial statements of 31 December 2021. The audited annual accounts for the year ended 31 December 2021 have been delivered to Companies House. The audit report thereon was unmodified.

These financial statements are presented in euro (EUR), which is the currency of the primary economic environment the Group operates in, and are rounded to the nearest thousand, unless otherwise stated.

Accounting for Subsidiary

The Company owns 100.0% of its subsidiary Tesseract Holdings Limited (""THL""), whose registered office and principal place of business is Leaf B, 20th Floor, Tower 42, Old Broad Street, London, England, EC2N 1HQ. The Company has acquired Renewable Energy Infrastructure Investments (the SPVs) through its investment in the HoldCo. The Company finances the HoldCo through a mix of loan investments and equity. The loan investment finance represents shareholder loans (the "Shareholder loans") provided by the Company to HoldCo. The Company meets the definition of an investment entity as described by IFRS 10. Under IFRS 10 an investment entity is required to hold subsidiaries at fair value through profit or loss and therefore does not consolidate the subsidiary.

The HoldCo Is also an investment entity and as described under IFRS 10, values its SPVsʼ investments at fair value through profit or loss.

Going Concern

The Directors have adopted the going concern basis in preparing the financial statements. Details of the Directorsʼ assessment of the going concern status of the Company, which considered the adequacy of the Companyʼs resources and the impacts of the COVID-19 pandemic, are given under Interim Management Report above.

Segmental Reporting

The chief operating decision-maker, which is the Board, is of the opinion that the Company is engaged in a single segment of business, being investment in renewable energy infrastructure assets to generate investment returns while preserving capital. The financial information used by the Board to manage the Company presents the business as a single segment.

Critical Accounting Judgements, Estimates and Assumptions

The preparation of the financial statements requires the application of estimates and assumptions which may affect the results reported in the 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, as disclosed in note 3 to the financial statements.

The Directors have concluded that the Company meets the definition of an investment entity as defined in IFRS 10.

This conclusion involved a degree of judgement and assessment as to whether the Company met the criteria outlined in the accounting standards.

The key assumptions that have a significant impact on the carrying value of the Companyʼs underlying investments in the SPVs are the discount rates, useful life of the assets, the rate of inflation, the price at which the power and associated benefits can be sold, the amount of electricity the assets are expected to produce, and operating costs of the SPVs.

3. INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS

Fair Value Investments

The Investment Adviser has carried out fair-market valuations of the SPV investments at 30 June 2022 and the Directors have satisfied themselves as to the methodology used, the discount rates and key assumptions applied, and the valuation. All SPV investments are at fair value through profit or loss, and are valued using the IFRS 13 framework for fair value measurement.

The key assumptions that have a significant impact on the carrying value of the Companyʼs underlying investments in SPVs are the discount rates, useful life of the assets, the rate of inflation, the price at which the power and associated benefits can be sold, the amount of electricity the assets are expected to produce, and operating costs of the SPVs.

The discount factors applied to the cash flows are reviewed annually by the Investment Adviser to ensure they are at the appropriate level. The weighted average valuation discount rate applied to calculate the SPV valuation is 6.6% as at 30 June 2022 (31 December 2021: 6.5%).

Useful lives are based on the Investment Adviserʼs estimates of the period over which the assets will generate revenue, which are periodically reviewed for continued appropriateness. The assumption generally used for the useful life of the wind farms is 25 years and solar PV is 30 years. The actual useful life may be a shorter or longer period depending on the actual operating conditions experienced by the asset.

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 SPV's valuation assumes long-term inflation rates according to long-term central bank targets.

The price at which the output from the generating assets is sold is a factor of both wholesale electricity prices and the revenue received from the Government support regime. Future power prices are estimated using external third-party forecasts which take the form of specialist consultancy reports. The future power price assumptions are reviewed as and when these forecasts are updated. There is an inherent uncertainty in future wholesale electricity price projection. Power prices used in the valuation are based on market forward pricing, and then a rolling average of capture rates.

The following assumptions were used in valuations at:

1. Remaining asset life based on net full load years. Does not consider any potential asset life extensions. Includes Greco deferred consideration payment.

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 significant to the fair value measurement. Financial assets and financial liabilities are classified in their entirety into only one of the following three 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 that are unobservable (i.e. for which market data is unavailable) for the asset or liability.

The fair value of the Companyʼs equity and the Shareholder loans investments in HoldCo are determined by the underlying fair values of the SPV investments, which are not traded and contain unobservable inputs. As such, the Companyʼs equity and the Shareholder loans investments in HoldCo have been classified as Level 3.

The classification of the Companyʼs investments held at fair value is detailed in the table below:

Due to the nature of the investments, they are always expected to be classified as Level 3. There have been no transfers between levels during the period ended 30 June 2022 (31 December 2021: nil).

The movement on the Level 3 unquoted investments during the period is shown below:

4. INCOME FROM INVESTMENTS

5. INVESTMENT ADVISORY FEES

Under the Investment Advisory Agreement, the following fee is payable to the Investment Adviser:

a) 0.75 per cent. per annum of NAV (plus VAT) of the Company up to EUR 300.0 million.

b) 0.65 per cent. per annum of NAV (plus VAT) of the Company between EUR 300.0 million and EUR 500.0 million.

c) 0.55 per cent. per annum of NAV (plus VAT) of the Company above EUR 500.0 million.

During the first two years of its appointment, the Investment Adviser has undertaken to apply its fee (net of any applicable tax) in subscribing for, or acquiring, Ordinary Shares. If the Ordinary Shares are trading at a premium to the prevailing NAV, the Company will issue new Ordinary Shares to the Investment Adviser. If, however, the Ordinary Shares are trading at a discount to the prevailing NAV at the relevant time, no new Ordinary Shares will be issued by the Company and instead the Company will instruct its broker to acquire Ordinary Shares to the value of fee due in the relevant period. The current Investment Adviser fee arrangement with Aquila Capital Investmentgesellschaft was extended whereby the Investment Adviser fee is fully paid in the shares of the Company for additional two years until 30 June 2023.

The Investment Adviser is also entitled to be reimbursed for certain expenses under the Investment Advisory Agreement. These include out-of-pocket expenses properly incurred by the Investment Adviser in providing services, including transactional, organisational, operating or travel expenses.

Share-based Payments

The Company settled investment advisory fees by issuing Ordinary Shares and purchasing Ordinary Shares at the market. The Company has issued/purchased the following shares to settle Investment Advisory Fees for the period under review:

6. EARNINGS/(LOSS) PER ORDINARY SHARE

Earnings per share is based on the profit for the period of EUR 22,369,000 (30 June 2021: loss of EUR 6,051,000) attributable to the undiluted weighted average number of Ordinary Shares in issue of 407,601,334 (30 June 2021: 317,656,850) and the diluted weighted average number of Ordinary Shares in issue of 408,887,627 (30 June 2021: 318,240,446) in the period to 30 June 2022. Revenue and capital profits are EUR 5,940,000 (30 June 2021: EUR 2,760,000) and EUR 16,429,000 (30 June 2021: capital loss of EUR 3,291,000) respectively.

Weighted Average Number of Shares Used as the Denominator

7. TAXATION

Investment companies that 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 Companyʼs status as an investment trust, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided for deferred tax on any capital gains or losses arising on the revaluation of investments.

8. SHARE CAPITAL

On incorporation, the issued share capital of the Company was 1 Ordinary Share of EUR 0.01 issued to the subscriber to the Companyʼs memorandum. The Companyʼs issued share capital was increased by EUR 50,000 represented by 50,000 Management Shares of nominal value EUR 1.00 each, which were subscribed for by the Investment Adviser. Following admission, the Management Shares were redeemed by the holder.

On 3 February 2022, the Company issued 731,520 Ordinary Shares to the Companyʼs Investment Adviser in relation to advisory fees payable for the period ended 31 December 2021.

On 9 June 2022, the Company issued 554,773 Ordinary Shares to the Companyʼs Investment Adviser in relation to advisory fees payable for the period ended 31 March 2022.

9. NET ASSETS PER ORDINARY SHARE

Net assets per Ordinary Share as at 30 June 2022 is based on EUR 430,630,000 (31 December 2021: EUR 417,443,000) of net assets of the Company attributable to the 408,225,705 Ordinary Shares in issue as at 30 June 2022 (31 December 2021: 406,939,412).

10. DIVIDEND PAID

The dividend relating to the year ended 31 December 2021, which is the basis on which the requirements of section 1159 of the Corporation Tax Act 2010 are considered, is detailed below:

11. TRANSACTIONS WITH THE MANAGER AND RELATED PARTY TRANSACTIONS

AIFM fees for the period ended 30 June 2022 amount to EUR 63,132 (30 June 2021: EUR 61,600). As at 30 June 2022, the fee outstanding to the AIFM was EUR 9,832 (30 June 2021: EUR 8,400). The AIFM, Company Secretary and Administrator are part of Sanne Group. The Company Secretary and Administrator fees for the period ended 30 June 2022 amount to EUR 134,000 (30 June 2021: EUR 104,000) and the total fees paid to Sanne Group amount to EUR 197,000 (30 June 2021: EUR 165,000).

Fees payable to the Investment Adviser are shown in the Income Statement. As at 30 June 2022, the fee outstanding to the Manager was EUR 772,798 (30 June 2021: EUR 587,156).

Fees are payable to the Directors, effective from their appointment on 1 April 2021, at an annual rate of EUR 75,000 to the Chairman, EUR 50,000 to the Chairman of the Audit Committee and EUR 43,000 to the other Directors. Directorsʼ fees paid during period were EUR 104,000.

During the period, the Company advanced Shareholder loans to HoldCo of EUR 48,350,000 (30 June 2021: EUR 18,786,000). The accrued interest and the Shareholder loans outstanding at the period end were EUR 247,284,518 (30 June 2021: EUR 199,161,000).

The Directors had the following Shareholdings in the Company, all of which were beneficially owned.

12. COMMITMENTS AND CONTINGENCIES

As at 30 June 2022, the Company had future investment obligations relating to two construction projects:

Project Albeniz: Albeniz, a solar PV project located in Spain, finished construction and recorded its first revenue during June 2022, achieving final commissioning during August 2022. As at 30 June 2022, the Company had remaining commitments of approximately EUR 4.4 million related to the project.

Project Greco: The Greco portfolio consists of two assets located in Andalucía, in southern Spain, which benefit from attractive solar irradiation yields. The operating life of the project is conservatively estimated as being 30 years, noting that technical due diligence and existing land leases can support a higher operating life. Construction is currently underway with fencing and earthworks activities, while procurement of all major equipment is now complete (including solar PV modules, trackers and inverters). Completion of Jaén is expected between late 2022 and early 2023, while completion of Guillena is expected during the second quarter of 2023.

13. DISTRIBUTABLE RESERVES

The Companyʼs distributable reserve consists of the Special reserve and Revenue reserve. The Company currently pays dividends from the Special reserve.

Capital reserve represents unrealised investments, and as such is not distributable.