Annual Financial Report, 30 Apr 2024 15:04

30 April 2024, 15:04

Source - LSE Regulatory

RNS Number : 6613M

Aquila Energy Efficiency Trust PLC

30 April 2024

LEGAL ENTITY IDENTIFIER ('LEI'): 213800AJ3TY3OJCQQC53

AQUILA ENERGY EFFICIENCY TRUST PLC

Aquila Energy Efficiency Trust Plc (the "Company" or "AEET") is pleased to announce its audited results for the year ended 31 December 2023.

Investment Objective

Further to the adoption of a new investment policy at the 2023 AGM, Aquila Energy Efficiency Trust Plc is being managed with the intention of realising all remaining assets in the portfolio in a prudent manner consistent with the principles of good investment management and with a view to returning cash to shareholders in an orderly manner.

Highlights (Consolidated figures)

	As at	As at
	31 December	31 December
Financial information	2023	2022
NAV per Ordinary Share (pence)¹	94.28	95.23
Ordinary Share price (pence)	57.25	71.00
Ordinary Share price discount to NAV¹ (%)	(39.3)	(25.4)
Dividends per Ordinary Share (pence)²	-	3.5
Net assets (in £ million)	94.28	95.23
Ongoing charges¹ (%)	3.5	2.6

Performance summary	% change	% change
NAV total return per Ordinary Share²	0.3	0.1
Share price total return per Ordinary Share^1,2	(17.6)	(23.5)

1 These are Alternative Performance Measures (''APMs'') for the year ended 31 December 2023. Definitions of these APMs and other performance measures used, together with how these measures have been calculated can be found at the end of this announcement.

2 Including dividends declared relating to the year under review.

CHAIR'S STATEMENT

On behalf of the Board, I am pleased to present the annual report (the "Annual Report") for Aquila Energy Efficiency Trust Plc, for the year ended 31 December 2023.

Investment Performance

The Company's NAV at 31 December 2023 was £94.28 million (£95.23 million as at 31 December 2022). The principal change in the NAV was caused by the payment of a dividend of £1.25 million on 20 March 2023 in respect of the quarter ended 31 December 2022. The Company declared no dividends in respect of the quarter periods in 2023 and the Company's share price, in the context of the failure of the Continuation Vote on 28 February 2023 and the subsequent successful combined Continuation Managed Run-Off Resolution on 14 June 2023, traded at a significant discount to NAV over the year to 31 December 2023 resulting in a share price total return of minus 17.6%.

As at 31 December 2023, the Company had investments of £65.48 million and legal contractual obligations to fund committed investments of £5.58 million. During the year, due to the Managed Run-Off status of the Company, relationships have become strained with some of the Energy Services Companies ("ESCOs") which have been the intermediaries to the Company's investments. If these relationships deteriorate further there may need to be additional impairment to the value of some of the Company's investments. Meanwhile, the Investment Adviser continues to monitor the performance of the Company's investments closely.

In light of the successful Continuation Managed Run-Off Resolution, the Board has been working with its financial advisers to ensure that the Company is in a position to present Shareholders with a proposal to return cash. This has been a complex process and I will discuss this in some detail later in my letter. We have, however, operated during the year with the principal intention to preserve cash. This has resulted in decisions not to proceed (where it was legally possible) with £14.6 million of potential investments. This has left only £5.58 million to be invested, the majority of which was deployed by the end of April 2024.

The difficulty of ensuring a return of capital from assets that are individually small in size, geographically spread, contractually complex and in many instances of a long maturity should not be underestimated. Our advisers have run an extensive process to seek offers from market participants for the portfolio of assets which would deliver value to Shareholders in a shorter time frame than a Managed Run-Off. The Board has also been open to entertaining structural proposals which would address the Company's size and liquidity, mindful always of the Shareholders' desire to see a full return of capital. However, it has not yet proved possible to find an asset sale or a structural solution that provides sufficient value in comparison with the Managed Run-Off. The Board, with the support of its advisers, continues to seek alternatives to increase the value returned to Shareholders via the Managed Run-Off. As announced on 6 March 2024 and detailed fully in the notice of General Meeting dated 19 April 2024, the first successful return of capital under the Managed Run-Off is to be achieved by way of a tender offer at a fixed price of 94.28 pence per share, subject to the approval of Shareholders at the General Meeting to be held on 13 May 2024.

As mentioned, the Company has been managed over the year with the principal objective to preserve cash and, accordingly, we will now, as part of the Managed Run-Off process, return £17.5 million to Shareholders under the tender offer. We have decided to return capital to Shareholders by way of a tender offer as we believe it is in the interests of the majority of Shareholders and provides an equitable distribution. We will, however, continue to keep under review the method of distribution, including the payment of dividends. Whilst further distributions will be made as unrestricted cash becomes available, I wish to stress that a significant part of the portfolio may take a considerable time to realise.

Costs

I am very mindful of the significant annual additional costs incurred in the running of the Company. In part, these costs are a consequence of the substantial processes involved in working towards a return of capital to shareholders. Whilst a first tender offer was announced on 19 April, this only reflects one outcome from the work to return capital and the Board continues to work with its advisers to identify other means of delivering greater value to shareholders. In addition, a further significant operational cost element derived from the financial statement preparation process for the year to 31 December 2022 on the part of the Company's service providers which was not as efficient as the Board had anticipated, which remains under review and for which the Company may seek an element of cost recovery at the appropriate time. The Board is mindful of the ongoing risks and costs of managing the run-off process, and is working to find ways to mitigate these risks.

Dividends

Following the failure of the Continuation Vote in February 2023 we announced that future dividends will only be paid from net income, and after reviewing cash flow forecasts, only in respect of six-month periods. The Board announced on 6 March 2024 that, subject to Shareholder approval, it will return capital to Shareholders by way of a tender offer. As a result, no dividend has been declared in respect of the year ended 31 December 2023. The Board will continue its policy on future dividends, while also mindful of the regulations regarding the retention of Investment Trust status which impact the declaration and payment of annual dividends.

Miriam Greenwood OBE DL

Chair of the Board

30 April 2024

INVESTMENT ADVISER'S REPORT

Investment Adviser's Background

The Company's AIFM, FundRock Management Company (Guernsey) Limited (formerly Sanne Fund Management (Guernsey) Limited), has appointed Aquila Capital Investmentgesellschaft mbH as the Investment Adviser to the AIFM in respect of the Company.

The Investment Adviser offers advice on potential Energy Efficiency Investments in line with the Company's Investment Policy as approved by the Continuation Managed Run-Off Resolution. Aquila Capital Investmentgesellschaft mbH is part of Aquila Group, an investment and asset development company focused on generating and managing essential assets on behalf of its clients. Founded in 2001 by Dieter Rentsch and Roman Rosslenbroich, Aquila Group currently manages and/or advises assets worth around €14.6 billion on behalf of institutional investors worldwide (as at 31 December 2023). Daiwa, one of Asia's largest investors, is a minority shareholder in the Aquila Group.

By investing in clean energy and sustainable infrastructure, Aquila Group contributes to the global energy transition and strengthens the world's infrastructure backbone. The Company initiates, develops and manages essential assets along their entire value chain and lifetime. Aquila Group's primary objective is to generate performance for its clients by managing the complexity of essential assets.

Currently, Aquila Group manages wind energy, solar photovoltaic ("PV") and hydropower assets of 19.8 gigawatts ("GWs"). Additionally, 2.2 million square metres of sustainable real estate and green logistics projects have been completed or are under development. Aquila Group also invests in energy efficiency, carbon forestry and data centres. Aquila Group has been committed to climate change for more than 15 years. Sustainability has always been part of the company's value system and is an integral part of its investment strategies, processes and management of its assets. The company has around 750 employees from 60 nations, operating in 19 offices in 17 countries worldwide.

Investment Advisory Team

Alex Betts - Senior Investment Manager: Alex Betts has over 30 years' experience in private equity and over 15 years in resource efficiency and has invested in a range of industries, geographies and stages. Based in London, he joined Aquila Capital from Adaxia Capital Partners ("Adaxia"). Prior to Adaxia Alex was a member of the private equity team at Climate Change Capital ("CCC"), which span out into Adaxia. Prior to CCC he was Head of Royal Dutch Shell's corporate venture capital unit and a former partner of Montagu Private Equity. He is British and graduated in Classics from Oxford University.

Franco Hauri - Senior Investment Manager: Franco Hauri has over 20 years' experience in private equity with over 15 years in resource efficiency, of which the last six years have been focused on investing in energy efficiency projects. Based in Zurich, he joined Aquila Capital from Adaxia. Franco is a former member of the private equity team at CCC, an Investment Adviser at NanoDimension, a venture capital firm investing in nanotechnology, and a consultant with Bain & Company. Franco holds an MBA from Harvard Business School and a master's degree in finance, accounting and controlling from the University of St. Gallen (HSG). He is Swiss and speaks English, German, Italian, Spanish and French.

Investment Activity

At the start of 2023, the Investment Adviser was focused on achieving full deployment of the Company's capital. However, after the failure of the Continuation Vote on 28 February 2023 and following the success of the Continuation Managed Run-Off Resolution on 14 June 2023, the Investment Adviser has supported the managed run-off of the Company's portfolio and preparations for a potential sale of the Company's assets announced on 16 August 2023. While pre-existing legally binding commitments are being honoured, the Investment Adviser has taken opportunities where possible to withdraw the Company from £14.6 million of commitments extant as at 31 December 2022 to invest into three Spanish projects. In addition, in October 2023 an agreement was reached to withdraw from a partially invested Solar PV investment, which was valued at £2.1 million at 31 December 2022 and had an unfunded commitment of £4.5 million (see "Investments in Spain" section below), and receive repayment of the original investment of £1.5 million plus interest.

During 2023, £21.8 million was deployed, taking total invested capital, before redemptions and value adjustments, to £69.5 million. £14.4 million was deployed in 13 commitments which had already been made as at 31 December 2022 and the balance of £7.4 million to nine new commitments that were concluded by 28 February 2023, the date of the failed Continuation Vote. These new investments comprised:

· three Spanish Solar PV investments with three new ESCOs for a total commitment of £4.7 million, of which £4.2 million was deployed as at 31 December 2023;

· two additional rooftop Solar PV projects in Italy, with a total investment of £1.3 million; these projects are with Noleggio Energia with whom a further deployment of £0.7 million, committed to in 2022, was made during 2023 with the final deployment of £0.5 million completed in January 2024. The Company has completed seven projects with this ESCO involving total deployment of £4.2 million.

· three lighting investments in the UK with two new ESCOs involving total commitments of £1.8 million, of which £1.6 million was deployed as at 31 December 2023; and

· a third UK wind power project involving an additional £0.3 million investment, taking total commitments with this ESCO to £2.0 million.

The Company now forecasts a further £5.6 million (including expected transaction costs) will be invested into existing commitments after 31 December 2023. The majority of this capital was deployed by the end of April 2024, leaving only £1.2 million to be deployed through the remainder of 2024.

Overall, the remaining investments have been performing satisfactorily with only a small number of exceptions, which have required significant provisions, including:

· a full provision of £1.4 million against a Solar PV investment, which was being developed in Spain due to the insolvency of the ESCO developing the project and refusal of the ESCO's client to proceed with the project which had been partly funded by the Company;

· a provision of £1.1 million, equal to 82% of the investment value, prior to the provision, as at 31 December 2023, against the sub-metering investment in Germany due to the insolvency of the company servicing the contracts which were financed by the Company; and

· an additional provision against the EGA Energy investment of £0.4 million, taking the total provision to 50% of the investment cost.

Two of the provisions were caused by the insolvency of the ESCO as opposed to the counterparty making payments under the contracts financed by the Company. The Investment Adviser continues to monitor closely not only the receipt of payments due under contracts and the financial status of the counterparties making the payments but also the status of the ESCOs which developed or which are developing and managing the Company's investments in those particular projects. This oversight of ESCOs and the maintenance of relationships with the ESCOs remains an important activity since the ESCOs in many cases had been expecting, before the failure of the Continuation Vote, that the Company would finance multiple other projects.

As at 31 December 2023, the Company's cash position, including cash held as collateral for foreign exchange hedging, was £29.1 million. Notwithstanding the remaining investment commitments, the cash position is forecast to increase significantly due to the expected realisations of Superbonus investments, which were valued at £30.9 million as at 31 December 2023 and which are forecast to be realised in full by 31 December 2024. Realisations of Superbonus investments continue to be subject to timing uncertainties due to the bureaucracy inherent in the schemes - see further below under "Investments in Italian "Superbonus" projects".

Portfolio Overview

As at 31 December 2023, the Company's portfolio of 35 Energy Efficiency Investments was diversified across geographies (Italy, Spain, Germany and the United Kingdom), technologies, counterparties and ESCO partnerships. The Company's portfolio is characterised by projects with (i) a low technology risk through the use of proven technologies; (ii) medium to long-term contracts providing for predictable cash flows; and (iii) counterparties with good creditworthiness.

Approximately 72% of the Company's investments by value at the year end had investment grade counterparties, as assessed using either the Investment Adviser's credit analysis or external agencies. For projects which are non-investment grade, there are typically additional protections. These protections include the ability to export power to the grid, and to extend the maturity of a contract with the ESCO and the underlying counterparty to recover missed payments. The latter is possible because the Company's financing agreements are of a shorter duration than the useful life of equipment installed and, in many cases, of a shorter duration than the contract between the ESCO and the counterparty. The credit quality and performance of the Company's portfolio is discussed further below in respect of valuations and expected credit loss provisions.

The Company's portfolio also benefits from a combination of fixed and variable return cash flows. While approximately 84% of the total investment value provides a fixed rate of return from contractual cash flows, approximately 16% by investment value has variable cash flows linked to power production and power prices, or inflation indexation. In many cases, these variable return investments have significant fixed income elements, for example feed-in tariffs or fixed power prices in Power Purchase Agreements. In addition, certain investments have downside protections, for example, minimum contractual returns in order to reduce the risk of lower than forecast cash flows. The Company's portfolio of investments is expected to achieve an unleveraged average return of 8.6% per annum, an increase from the yield of 8% per annum reported in the audited Annual Report and Accounts for the year ended 31 December 2022.

Investments in Italy (£34.9 million value at year end)

In the year ended 31 December 2023, the Company committed £1.3 million to two new rooftop Solar PV projects developed by Noleggio Energia, with which the Company has now made seven investments. During the year, £13.0 million was deployed to both these new investments and other existing commitments in Italy, the majority of which, £10.9 million, was deployed into Superbonus projects.

As at 31 December 2023, total investment value in Italy was £34.9 million across a total of 13 investments and there was £0.5 million of outstanding commitments, which was deployed in January 2024.

1) Investments in Italian "Superbonus" projects (£30.9 million value at year end)

The net cash deployed in Superbonus projects increased from £18.1 million as at 31 December 2022 to £29.0 million as at 31 December 2023. Significant progress has been made on the 109 individual projects within the five clusters such that construction has been completed on 105 of these projects to date, with the remaining four projects forecast to be completed by the end of June 2024. Fourteen projects have been fully completed with payments totalling £2.9 million for those tax credits received, of which £0.9 million was received in 2023 and £2.0 million in January, February and April 2024. Regarding the remaining projects, the ESCOs are experiencing delays in receiving certification of the tax credits although as at the end of April 2024 a large majority of the 109 projects had secured tax
credit certification, significant progress from the position as at the end of September 2023. The ESCOs are also experiencing delays with final payments from the buyers of the tax credits, which is understood to be primarily due to the large number of tax credits which buyers are processing. As a result of the delays, the ESCOs are expecting the majority of the capital deployed to be redeemed by the end of 2024. The Investment Adviser has considered whether these delays represent a significant increase in the credit risk of these investments and, following detailed enquiries with the ESCOs managing these projects, has concluded that at this stage there has been no significant change in credit risk. See note 4 to the financial statements for further information regarding the assessment of Superbonus projects.

"Superbonus" is an incentive measure introduced by the Italian Government through Decree "Rilancio Nr. 34" on 19 May 2020, which aims to make residential buildings (condominiums and single houses) more energy efficient through improvements to thermal insulation and heating systems. When qualifying measures are completed, ESCOs delivering the measures are awarded a tax credit equal to 110% of the cost of the measures. These tax credits can then be sold to banks, insurance companies and other corporations and, thus, projects can be financed without the need for a financial contribution from landlords. The projects which the Company committed to finance are being managed by three ESCOs: Enerstreet, Enerqos Energy Solutions and Sol Lucet. The projects involve a range of energy efficiency measures including insulation, the replacement of heating systems with more efficient solutions and energy efficient windows.

2) Solar PV investments for self-consumption in Italy (£4.0 million value at year end)

As at 31 December 2023, the Company had invested £4.6 million in eight rooftop Solar PV projects with an aggregate capacity of 5.1 MWp. Following completion of the final project in January 2024 with an investment of £0.5 million, all of these projects are operational and cash paying such that as at 31 December 2023, £0.5 million of capital had been redeemed. These projects enable companies to reduce their energy expenses and CO₂ emissions and avoid grid losses through the self-consumption of the electricity produced.

2.i) Projects with Noleggio Energia

Of these eight Solar PV projects which the Company has committed to finance, seven projects have been developed by the ESCO Noleggio Energia, which was established in 2017 and is an Italian company that specialises in providing operating leases for energy efficiency and renewable energy projects for commercial and industrial clients in Italy. These projects are all structured as the purchase of receivables from operating leases with maturities of seven or ten years, with a weighted average maturity of eight and a half years outstanding, and all use very similar documentation. Noleggio Energia has transferred to the SPV the monthly receivables from these operating lease agreements, which provide for fixed rates of return with a weighted average return of 7.9% per annum.The projects with Noleggio Energia at year end are summarised below:

Counterparty	Description	Investment Value £k	Capacity kWp	Credit Rating	Initial Term Yrs
Acetificio Galletti	Producer of vinegars, dressings, pickles and other food products	208	238	BB-	7
Enofrigo	Manufacturer of wine cabinets and hot and cold food display units	89	127	BBB+ - BBB-	7
Tecnocryo	Manufacturer of machines for handling cryogenic fluids	1,130	1,000	BB+ - BB	10
Ali Group	Manufacturer of food service equipment	294	443	BBB+ - BBB-	7
Orlandi	Manufacturer of non-woven products for a range of applications	355	876	BB+ - BB	10
Marangoni	Manufacturer of tyre retreading systems and products	809	1,000	BB+ - BB	10
Carpigiani	Manufacturer of machinery to produce ice cream	427	479	BBB+ - BBB-	5
Total		3,312	4,163

2.ii) Project with CO-VER Power Technologies

In January 2022, the Company refinanced the acquisition of an existing rooftop Solar PV plant in Ascoli Piceno (Central Italy) with a generating capacity of 902 kWp. The investment, with an original cost of £0.7 million, is based on the purchase of receivables generated by an energy service contract between the leading Italian engineering firm CO-VER Power Technologies ("CO-VER") and its subsidiary Futura APV S.r.l. ("Futura"). The contract governs the management of an operating roof-mounted Solar PV plant until April 2028. Thereafter, the investment is based on a feed-in tariff for an additional six years, aggregating to a twelve-year tenor. The investment, which generated total cash receipts of £0.2 million in the period from inception of the investment until the year end, is forecast to generate a return of 6.5% per annum based on the year end valuation of £0.7 million. The valuation remains equal to the original cost due to the discount rate used for the valuation at the year end being lower than the forecast return at the time of the original investment.

CO-VER has a successful 20-year history in developing industrial projects in the areas of energy storage systems, co/tri-generation plants and renewable energies. Futura is the owner of the PV plant which benefits from feed-in tariffs payable by Gestore dei Servizi Energetici ("GSE"). GSE is a joint stock company managed by the Italian Government which is responsible for promoting and developing the growth of renewable assets in Italy. GSE currently has a credit rating of BBB+ from the Italian Government.

Investments in Spain (£8.6 million value at year end)

In the year ended 31 December 2023, the Company deployed £6.8 million into projects in Spain, to complete five projects which were committed as at 31 December 2022 and to finance a further three Solar PV projects in Spain with three new project developers. The largest of these projects was a £3.4 million project at the site of a Spanish agricultural company. At the year end there were unfunded commitments to investments in Spain of £1.2 million. £0.6 million is forecast to be deployed before the end of the third quarter of 2024 to complete a building energy efficiency investment programme, which received investment of £2.1 million in the year ended 31 December 2023. The balance of £0.5 million will complete the financing of Solar PV projects for an ESCO with whom the Company completed on the first tranche of its commitment in March 2023.

1) Solar PV investments in Spain (£6.3 million value at year end)

The Company has committed capital to finance the development of ten Solar PV installation projects throughout Spain with nine project developers. Two of the projects have been structured to provide fixed rates of return while the remaining eight projects have been structured under Power Purchase Agreements ("PPAs") with maturities of up to 18 years and have variable revenues, often subject to a combination of production fluctuations, power price changes and inflation. In addition, excess production beyond the on-site demand may be injected into the grid.

These variable revenue risks are mitigated by conducting technical due diligence prior to making commitments and by contracted prices within the PPAs.

Seven of these investments are now fully operational while one project is operating at one site and the Company has an outstanding commitment of £0.5 million to another site. This commitment is payable at completion of the project provided that certain conditions are met. As referred to in the Investment Activity section above, one project has been realised and one project will not proceed and it has been necessary to take a £1.4 million provision, equal to 100% of the cost, against this investment. The developer of this project filed for insolvency protection in November 2023 having received £1.4 million as a down payment on the estimated full project cost of £2.8 million.

2) Building Energy Efficiency Investments in Spain (£2.3 million value at year end)

The Spanish Government has established incentive schemes to promote energy efficiency measures in buildings, including the "Programa de Rehabilitacion Energetica de Edificios" ("PREE"). PREE is a €402.5 million incentive scheme in Spain which is designed to promote and reward energy efficiency improvements for condominiums and other buildings, improving their energy rating by at least one energy class. Under this scheme, the Company has committed £2.8 million to fund the refurbishment of condominiums, which is being managed by a leading ESCO specialised in designing and implementing energy efficiency and renewable energy projects in Spain. The investment cash flows are based on the purchase of receivables generated by the underlying energy saving contracts between the ESCO and the "Comunidad de Proprietarios"; the legal entities which represent each of the owners of the apartments in a residential building. The receivables have been rated with the S&P equivalent of A+/A. £2.2 million has been deployed as at 31 December 2023 and the balance is forecast to be deployed in full by the end of June 2024.

Investments in Germany (£17.3 million value at year end)

In the year ended 31 December 2023, no further investments were made in Germany except for the settlement of £0.1 million of transaction costs. The Company has four investments in Germany, across four distinct technologies including sub-metering technologies, water management solutions, heat pumps and Bio-LNG. There remained an outstanding legal commitment at the Year End to invest £3.7 million to finance the installation of liquefaction equipment at a biogas plant in Northern Germany. This amount was deployed in April 2024 following receipt of all necessary permits.

Three of the investments in Germany provide for fixed rates of return while the other, a biogas investment, has a variable return above a fixed rate of 5% per annum, which is equivalent to 8% of revenue generated by the project, capped at £1.1 million across eight years. This arrangement results in an overall forecast return from this project of 7.6% per annum based on the year end valuation of £4.8 million.

Three of the investments are performing in line with the contracts. However, the sub-metering investment, which had a book value of £1.5 million as at 30 June 2023, before the receipt of £0.2 million in July 2023, required a significant provision of £1.1 million to reduce the holding value to £0.2 million following the insolvency of the service provider in October 2023. While the Company's investment is through a special purpose subsidiary of the service provider ("SPV"), which owns sub-metering and other services contracts with various landlords and which is not in insolvency, the insolvency requires the SPV to secure an alternative company to service the contracts. This search is in progress with the support of an industry expert. Unfortunately, it is likely that a new servicer will not wish to take on one of the major contracts, as a result of which the SPV is likely to lose c.35% of the contractual income stream due to the difficulties of servicing the contract, reducing total future revenue to £1.1 million. In addition, an alternative servicer is likely to require a higher percentage of revenues than the service provider required, which combined with the likely loss of income requires a provision against the investment.

Investments in the United Kingdom (£4.7 million value at year end)

In the year ended 31 December 2023, the Company committed £2.0 million to four new investments. The four new investments, developed by two new and one existing ESCO relationship, comprised:

· two groups of lighting investments for an industrial company and schools, totalling £1.2 million, of which £0.1 million remains to be deployed;

· another group of 17 lighting investments for a range of schools and industrial companies, totalling £0.5 million, which has been fully deployed; and

· an investment of £0.3 million into a fifth operating wind power project.

As at 31 December 2023, total cash deployed to investments in the UK was £5.3 million, with £0.1 million of commitments outstanding for lighting investments. Deployment is expected in the first half of 2024.

The CHP investment for a food producer, Vale of Mowbray, to which £0.9 million had been deployed and, as previously reported in the Half-Yearly Financial Report for the six months to 30 June 2023 and in the 2022 Annual Report, this investment remains on hold because Vale of Mowbray was placed into administration. Discussions continue between Ega Energy, the developer of the original project, and the new owner of the site, a cold store logistics business. However, the new owner of the site has not yet decided whether or how to proceed with the CHP investment. Ega Energy remains confident that it will be able to deploy the CHP equipment either at this site or at the sites of other potential clients in the UK. Nevertheless, the Company has increased the provision against this investment from £0.06 million as at 31 December 2022 to £0.48 million at the year end and the Company is forecasting that no further capital will be deployed to this investment.

The UK investments in the wind power projects are variable return investments due to the variability of power production and export tariffs, which are renewed each year, although a significant percentage of revenue is based on feed-in tariffs which benefit from annual inflation adjustments. The other UK investments which are in CHP and lighting projects are all fixed return investments albeit the lighting projects with one of the ESCOs have annual inflation adjustments.

Valuations and Expected Credit Loss Provisions as at 31 December 2023

As at 31 December 2023, the Company's investments had a book value of £65.5 million, with investments held at amortised cost valued at £55.0 million and investments held at fair value through profit or loss valued at £10.5 million (see Note 3 of the Accounts).

The investments held at amortised cost are net of expected credit loss provisions of £1.9 million, which increased by £1.8 million from £0.1 million as at 31 December 2023. The principal reasons for the increase were the provision of £1.1 million made against the sub-metering investment in Germany, and a provision of £0.5 million against the Ega Energy Vale of Mowbray investment. Apart from these projects, the Company has not experienced payment issues of material significance on the receivables due to be paid to it in the year.

The change in valuation of the investments held at fair value through profit or loss was impacted primarily by: (i) the realisation of a partially completed investment in a Spanish Solar PV project; and (ii) a full provision of £1.4 million against another Solar PV investment in Spain.

In October 2023, the Company received repayment in full plus interest of an investment in a partially completed investment in a Spanish Solar PV project. This investment had involved an initial investment of £1.5 million in August 2022, which was part of a total commitment of £6.3 million as at 31 December 2022. The valuation as at 31 December 2022 was marked up from its cost of £1.5 million to £2.1 million but as at 30 June 2023 was marked down to £0.8 million, primarily due to lower forecast power prices. The repayment of the cost of the investment plus interest, totalling £1.7 million, has resulted in a capital loss over the year but a capital gain from the position as at 30 June 2023 of £0.8 million.

The Company has taken a full provision of £1.4 million against a Solar PV investment, which was being developed in Spain due to the insolvency of the ESCO developing the project and refusal of the ESCO's client to proceed with the project which had been partly funded by the Company.

At the year end the remaining ten fair value investments comprised:

· the Bio-LNG investment in Germany with a value of £4.8 million;

· six Solar PV projects in Spain with an aggregate value of £3.1 million;

· two wind projects in the United Kingdom with an aggregate value of £1.9 million; and

· a Solar PV project in Italy with a value of £0.7 million.

The performance of these remaining ten fair value investments with a value as at year end of £10.5 million resulted in an increase in fair value of 2.1%.

The valuation increase was driven primarily by:

· valuation timing, which is the time value of money effect between the two valuation dates, which had a positive effect of +7.4%; and

· an overall reduction in the discount rates applied to the valuations, which had a positive effect of +2.3%.

Lower discount rates were primarily due to the completion of construction of Solar PV projects in Spain and thus a reduction in construction risk, together with reductions in risk-free rates.

Offsetting these factors were:

· distributions from these investments, -3.3%;

· FX effects, -1.4%; and

· business plan updates, -3.0%.

Business plan updates comprise changes to power price, inflation and production forecasts. The principal change was lower forecast power prices in the short term, which reversed a positive increase in valuations as at 31 December 2022. The impact of this was softened by the relatively low exposure of the Company's projects to power prices due to PPA terms and FiTs.

Summary of Investments as at 31 March 2024

Description	Receivables Weighted Avg. Credit Rating	Term Years	Technology	Status	Country	Value £k	Commitment o/s £k
Receivables (fixed) from a 238 kWp rooftop Solar PV project installed on the production facilities of a food manufacturer in Lombardy.	BB-	7	Solar PV	Operating	Italy	208	0
Receivables (fixed) from a 127 kWp Solar PV project installed on the production facilities of a manufacturer in Veneto.	BBB+ / BBB-	7	Solar PV	Operating	Italy	89	0
Receivables (fixed) from sales of tax credits generated under the Italian Superbonus, which supports energy efficiency retrofits (insulation, more efficient heating etc) of residential buildings.	BB+ / BB	2	Building Retrofit	Construction	Italy	5,326	0
Receivables (fixed) from sales of tax credits generated under the Italian Superbonus, which supports energy efficiency retrofits (insulation, more efficient heating etc) of residential buildings.	BBB+ / BBB-	2	Building Retrofit	Construction	Italy	9,846	0
Receivables (fixed with RPI) from lighting as a service contracts with six UK companies.	BBB+ / BBB-	5	Lighting	Operating	United Kingdom	232	0
Receivables (fixed/variable) from a 901.6 kWp rooftop Solar PV project at a site in Ascoli Piceno, Central Italy.	BBB+ / BBB-	12	Solar PV	Operating	Italy	694	0
Receivables (fixed) from sales of tax credits generated under the Italian Superbonus, which supports energy efficiency retrofits (insulation, more efficient heating etc) of residential buildings.	A+ / A	2	Building Retrofit	Construction	Italy	1,332	0
Receivables (fixed) from a 1,000 kWp rooftop Solar PV project to be installed at a manufacturer's production facility in Lombardy.	BB+ / BB	10	Solar PV	Operating	Italy	1,130	0
Receivables (fixed) from sub-metering hardware and services contracts with landlords of multi-occupancy buildings.	Default	9	Sub-meters	Operating	Germany	245	107
Receivables (fixed) from CHP Energy Services Agreement with a major conference centre in Wales.	BBB+ / BBB-	6	CHP	Operating	United Kingdom	139	0
Receivables (fixed) from CHP Energy Services Agreement with a food manufacturer in North East England.	Default	7	CHP	Construction	United Kingdom	475	0
Receivables (fixed) from sales of tax credits generated under the Italian Superbonus, which supports energy efficiency retrofits (insulation, more efficient heating etc) of residential buildings.	BB+ / BB	2	Building Retrofit	Construction	Italy	7,402	0
Receivable from a PPA with a poultry producer for three Solar PV Plants around Zaragoza, Northern Spain, with a total capacity of c. 400 kWp.	BB+ / BB	15	Solar PV	Construction	Spain	319	0
Receivables (fixed) from CHP Energy Services Agreement with a hotel near Birmingham.	BB+ / BB	8	CHP	Operating	United Kingdom	429	0
Receivables (fixed) from sales of tax credits generated under the Italian Superbonus, which supports energy efficiency retrofits (insulation, more efficient heating etc) of residential buildings.	BBB+ / BBB-	2	Building Retrofit	Construction	Italy	6,965	0
Receivables from PPAs with a manufacturer of irrigation products and a manufacturer of doors and kitchen cabinets for 3 solar PV plants with a total capacity of c.950 kWp in Valladolid and Toledo.	BBB+ / BBB-	18	Solar PV	Operating	Spain	652	0
Receivables (fixed) from two solar PV plants around Barcelona, Spain, with a total capacity of c.210 kWp, between a Spanish developer and a manufacturer of bread and pastry products and a provider of IT services to universities.	BB+ / BB	10 & 12	Solar PV	Operating	Spain	133	0
Receivables (fixed) from a 443 kWp rooftop Solar PV project installed on the production facilities of a food service equipment manufacturer in Veneto, Northern Italy.	BBB+ / BBB-	7	Solar PV	Operating	Italy	294	0
Purchase of receivables generated by PPA form a Solar PV plant with a capacity of c.1,600 kWp between a Spanish developer and a Spanish ceramic tiles manufacturer near Valencia.	BBB+ / BBB-	15	Solar PV	Operating	Spain	1,000	0
Receivables of FiTs and export tariffs generated from three operating wind turbines in the UK with a total capacity of 166 kWp, of which the generated energy is used for self-consumption and for export to the grid.	BBB+ / BBB-	10.6	Wind	Operating	United Kingdom	410	0
Subscription for a Note for the refinancing of an operating biogas plant in north-eastern Germany and an upgrade to a Bio-LNG facility. The Note provides for a fixed return plus an agreed share of revenues from the facility.	A-	8.25	Biogas / Bio-LNG	Operating (Phase 2 construction)	Germany	4,770	3,704
Receivables (PPA with fixed price) from a rooftop Solar PV project with a capacity of c.350 kWp for an agricultural cooperative specialised in the production and marketing of extra virgin olive oils in Granada.	BB-	15	Solar PV	Operating	Spain	311	0
Receivables (fixed) from Solar PV plant in self-consumption for a total installed capacity of 875.6 kWp located at the site of a non-wovens manufacturer in Lombardy, Northern Italy.	BB+ / BB	10	Solar PV	Operating	Italy	799	0
Receivables from service agreements related to the water management between the developer and condominiums and multi-family homes, mainly managed by large property managers via a Note structure.	BBB+ / BBB-	10	Water management	Operating	Germany	10,044	0
Receivables generated by two energy saving contracts between the developer and five Spanish condominiums located in the proximity of Madrid, Guadalajara and Gerona, as well as subsidies generated under the incentive scheme.	A+ / A	15	Building Retrofit	Construction	Spain	2,306	584
Acquisition of receivables of FiTs and export tariffs generated from 4 operating wind turbines in Scotland, with a total capacity of c.250 kWp.	A-	14	Wind	Operating	United Kingdom	1,531	0
Subscription for a Junior Note issued by the largest heating installer in Germany, entitling the Noteholder to receivables generated through service and maintenance contracts for heat pump systems for the residential sector throughout Germany.	AAA / AA-	15	Heating	Operating	Germany	2,233	0
Receivables (fixed) from Solar PV installations for a leading agricultural business engaged in the cultivation of grapevines, cereals, onions, olives, almonds and peas with a total capacity of c.4,000 kWp near Valencia.	BBB+ / BBB-	10	Solar PV	Operating	Spain	3,044	67
Receivables from PPAs with a manufacturer of acoustical insulation products and a manufacturer of textiles for two Solar PV plants in self-consumption for a total installed capacity of c.870 kWp located around Alicante.	BB+ / BB	14 & 15	Solar PV	Operating	Spain	659	0
Purchase of receivables generated from PPA and grid sales agreement for a Solar PV plant with a capacity of c.200 kWp for a perfume retailer in Malaga.	BB+ / BB	18	Solar PV	Operating	Spain	145	509
Receivables (fixed) generated from the installation and operation of metering and LED projects with eleven different counterparties in the UK.	BB+ / BB	5 to 7	Various	Operating	United Kingdom	716	41
Receivables (fixed payments indexed to CPI) from a roof-mounted Solar PV plant with a total capacity of c.1,000 kWp for a developer and distributor of materials and technologies for tyre re-treading in Central Italy.	BB+ / BB	10	Solar PV	Operating	Italy	809	7
Receivables (fixed) from a roof- mounted Solar PV plant with a total capacity of c.480 kWp for an ice cream machine manufacturer in Northern Italy.	BBB+ / BBB-	5	Solar PV	Operating	Italy	427	7
Receivables (fixed) generated from refinancing the installation of LED lighting projects for 17 different clients in the UK. The various operating lease agreements range from five to ten years.	BBB+ / BBB-	10	Lighting	Operating	United Kingdom	407	0
Receivables (fixed) generated from refinancing the installation of a LED lighting project for a UK logistics business. The lease agreement has a five-year maturity.	BBB+ / BBB-	5	Lighting	Operating	United Kingdom	411	0

Notes:

The values in the table above are as at 31 December 2023 plus, where applicable, the cost of investment made in the period from 1 January 2024 to 31 March 2024 using the foreign exchange rate as at 31 December 2023 of EUR1.1535:£1.

The term is the original maturity of the investment.

Status and commitment outstanding are the positions as at 31 March 2024.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG")

Introduction

The Company's goal is to generate attractive returns for investors by reducing Primary Energy Consumption ("PEC"). The Company seeks to achieve this through investing principally in a diversified portfolio of energy efficiency projects with high-quality counterparties. The Company investments positively impact the environment by reducing the amount of carbon dioxide produced, by decreasing PEC and by increasing the amount of renewable energy used. The synergies¹ generated by the reduction of PEC and simultaneously using renewable energy sources further decrease CO₂ emissions.

This is reflected across the investment philosophy and approach of both the Company and its Investment Adviser, Aquila Capital, who are both of which dedicated to the green energy transition. The Company is committed to being a responsible investor, ensuring that environmental, social and governance criteria are incorporated into day-to-day investment decisions as well as generating a positive impact for society. By reducing PEC, the Company often improves life standards for end users; for example, better lights, easier maintenance, reduced danger, security of supply and, very importantly, the reduction of emissions like Nitrogen Oxides.

Over the year ended 31 December 2023, the portfolio performed as follows²:

· 6,566 tonnes of avoided CO₂ emissions ("tCO₂e"); and

· 23,639 MWh of energy saved,

· for total emission savings equivalent to 2,873 passenger flights around the world.

Method of Calculation for Energy Savings (kWh) and Avoided CO₂ Emissions (tCO₂e)

The energy savings (in kWh) and avoided CO₂ emissions (in tCO₂e) are reported to Aquila Capital by third parties, including the development companies, ESCOs and other third parties. These reports are supported by asset-level documentation of individual methodologies. Aquila Capital has reviewed the individual methodologies for technical consistency and reconciled the reported values for plausibility. Where quantification of likely energy savings and avoided CO₂ emissions is not clear, for example, with the Superbonus projects in Italy and the Bio-LNG, water metering and heat pump projects in Germany, no estimations are included in the avoided CO₂ emissions and energy savings statistics above.

Only energy savings and avoided CO₂ emissions for operational projects are considered on a pro-rata basis for the time of operation during the reporting period. Avoided CO₂ emissions are estimated in gross terms and derived from energy savings in kWh using a conversion factor (except CHP, see below) which measures the grid's emission intensity. Emissions incurred during the life cycle of the light bulbs such as materials sourcing, manufacturing, installation, maintenance etc. are not available. The reported metrics are estimations based on assumptions. For technical reasons, it is not possible or feasible to observe or measure actual energy or emission avoidance in real‑time.

· LED/Lighting: Savings estimates are derived based on technical, product-specific attributes provided by the product manufacturer. Lighting assets are typically not connected to a distinct circuit. These solutions are designed according to the requirements of a given functional unit, i.e. office, street or space, which varies on asset level. Changes in the number of light bulbs or lumen are not considered.

· Solar PV: Electricity production is translated into emissions avoidance with a conversion factor (see above). Production estimates for Solar PV assets are evaluated during technical due diligence processes.

· CHP: Avoided CO₂ emissions are calculated directly by comparing the asset's emissions based on the feedstock used for a specific plant with a reference co-generation unit's emission factor.

· Metering: Metering solutions are being applied to a large portfolio of individual households. Annual average household consumption is estimated, and a developer's specific savings estimate is applied to the average household consumption.

ESG Approach

The Company has adopted Aquila Capital's ESG Integration Policy³, ensuring that environmental, social and governance criteria were incorporated into day-to-day investment decisions as well as generating a positive contribution for society. The Company investment approach is focused on investments in energy efficiency projects located primarily in Europe. These investments are predominantly into proven technologies that deliver energy savings for commercial, industrial and public sector buildings. Prior to the adoption of the New Investment Policy, the Company sought to invest in projects for the long term with a focus on optimising and improving the assets' PEC (and, of course, the Company's investments continue to meet this initial objective). Technologies include:

· LED Lighting Systems;

· Solar PV;

· HVAC/Buildings;

· Smart Metering/Sub-metering; and

· Bio LNG.

Environmental Contribution

The Company's investments are focused on reducing PEC, which should lead to significant reductions in greenhouse gas emissions. In addition, local production of energy (CHP, biomass boilers, Solar PV) reduces transportation energy losses and grid over-utilisation. Smart meters and other control technologies enable a better visibility and management of energy and therefore represent a basis for energy savings.

Social Contribution

Energy efficiency measures not only reduce PEC, but typically also have a positive impact on health and quality of life for different stakeholders, such as employees and users of public facilities. This is largely achieved through the installation of advanced solutions for lighting, heating, cooling, ventilation and the associated control units. All project developers are required to adhere to local, regional and national health and safety laws, to train and educate employees accordingly, to make sure casualties and injuries are avoided. Aquila Capital's ESG Integration Policy, as adopted by the Company, has sought to exclude suppliers and manufacturers that do not meet Aquila Capital's criteria (exclusion of certain sectors/subsectors, or companies that, for example, use unfavourable labour conditions). For all counterparties a rating has been performed (in collaboration with a third-party rating agency) assessing the creditworthiness of the relevant counterparty as well as a "Know Your Client" check for the relevant parties involved to increase transparency of the counterparties' activities.

Governmental Contribution

The Company's business partners are required to adhere to the requirements of the relevant social security and tax authorities. The Company's business partners are required to provide evidence that they adhere to anti-bribery and corruption laws.

Due Diligence

The Investment Adviser performed detailed ESG due diligence for each asset prior to investment. The investment management team followed a structured screening, due diligence and investment process designed to ensure that investments are reviewed and compared on a consistent basis. Execution of this process was facilitated by the team's deep experience in energy efficiency project investing. As part of this process, the Investment Adviser, as relevant for each investment, considered:

· total PEC reduction, and implied CO₂ emissions reduced and/or avoided; and/or

· total energy production from renewable and non-renewable sources.

Governance Framework

The Company has an independent Board of Directors, with FundRock Management Company (Guernsey) Limited (formerly Sanne Fund Management (Guernsey) Limited) as the AIFM. The Board of Directors supervises the AIFM, which is responsible for making recommendations in relation to any investment proposals put forward by the Investment Adviser. The Investment Adviser is fully regulated and supervised by BaFin in Germany. The Company maintains a comprehensive risk register which is regularly updated and reviewed by the AIFM and the Board of Directors. The Company has established procedures to deal with any potential conflicts of interest in circumstances where Aquila Capital (or any affiliate) is advising both the AIFM (for the Company) and other Aquila Capital managed funds. In the context of an investment decision, these procedures may include a fairness opinion in relation to the valuation of an investment, which is obtained from an independent expert.

Monitoring of ESG

The Company's commitment to and compliance with the Company's established ESG approach is monitored on a continuous basis throughout the lifecycle of investments, as they become operational. This includes:

· ongoing monitoring of the PEC based on the energy consumption and deriving from that the CO₂ savings, where appropriate, monitoring additional environment and ESG relevant developments both at the portfolio and asset level; and

· annual reporting, including ESG aspects, to relevant stakeholders including ad-hoc reporting of any material and urgent issues identified in the monitoring process.

The Company has been awarded the Green Economy Mark from the London Stock Exchange. The Green Economy Mark identifies London-listed companies and funds that generate between 50% and 100% of total annual revenues from products and services that contribute to the global green economy.

1 International Renewable Energy Agency (Irena), "Synergies between renewable energy and energy efficiency" (2017), available at: https://www.irena.org/ publications/2017/ Aug/Synergies-between-renewable-energy-and-energy-efficiency#:~:text=Renewables%20would%20account%20for%20 about,country%2C%20sector%20and%20 technology%20levels

2 Passenger flights around the world: This number is derived from passenger flight emissions data retrieved on 4 April 2023 from the International Civil Aviation Organization; https://applications.icao.int/icec/Home/Index. The total emissions associated with a passenger flight around the world based on a standard itinerary from New York to Dubai, Bangkok, Sydney, Los Angeles and back to New York in the economy class is 2,285.80 kg CO₂.

3 For details please refer to: https://www.aquila-capital.de/fileadmin/user_upload/ ESG_report/Aquila_Group_ESG_Integration_Policy.pdf

INVESTMENT POLICY

As at the date of this Annual Report, the Company's Investment Policy (including defined terms) is as adopted at the June 2023 AGM pursuant to the Continuation Managed Run-Off Resolution, which replaced the previous investment objective and policy in its entirety and is set out below.

The Company will be managed with the intention of realising all remaining assets in the portfolio in a prudent manner consistent with the principles of good investment management and with a view to returning cash to Shareholders in an orderly manner.

The Company will pursue its investment objective by effecting an orderly realisation of its assets in a manner that seeks to achieve the best balance for Shareholders between maximising the value received from those assets and making timely returns of capital to Shareholders. This process might include sales of individual assets, mainly structured as loans/receivables, or groups of assets, or running off the portfolio in accordance with the existing terms of the assets, or a combination.

The Company will cease to make any new investments or to undertake capital expenditure except where, in the opinion of both the Board and the Investment Adviser (or, where relevant, the Investment Adviser's successors):

· the investment is a follow-on investment made in connection with an existing asset in order to comply with the Company's pre-existing obligations; or

· failure to make the follow-on investment may result in a breach of contract or applicable law or regulation by the Company; or

· the investment is considered necessary to protect or enhance the value of any existing investments or to facilitate orderly disposals,

and in these circumstances the Company will observe the following restrictions when making any such investments:

· no more than 20 per cent. of its Gross Asset Value will be invested in any single asset;

· no more than 20 per cent. of its Gross Asset Value will be invested in Energy Efficiency Investments with the same counterparty;

· no investments will be made outside of Europe; and

· no more than 7.5 per cent. of its Gross Asset Value, in aggregate, will be invested in Equity Investments, and at all times such investments will only be made with appropriate Shareholder protections in place.

Any cash received by the Company as part of the realisation process prior to its distribution to Shareholders will be held by the Company as cash on deposit and/or as cash equivalents.

The Company will not undertake new borrowing.

As required by the Listing Rules, any material change to the Investment Policy of the Company will be made only with the approval of Shareholders by way of ordinary resolution.

Currency and Hedging

The Company does not use hedging or derivatives for investment purposes. The functional currency of the Company is Sterling. With many of its investment assets in euros the Company uses a series of regular forward foreign exchange contracts to provide protection against movements in the Sterling exchange rate. Under these arrangements the Company is required to provide £2.5 million in cash as collateral for these forward foreign exchange contracts.

Cash Management

Cash held pending investment in Energy Efficiency Investments or for working capital purposes will either be held in cash or invested in cash, cash equivalents, near cash instruments, bearer bonds and/or money market instruments ("Cash and Cash Equivalents"). There is no restriction on the amount of Cash and Cash Equivalents that the Company may hold and there may be times when it is appropriate for the Company to have a significant Cash and Cash Equivalents position. For the avoidance of doubt, the restrictions set out above in relation to investing in UK listed closed-ended investment companies do not apply to money market type funds.

Changes To and Compliance With the Investment Policy

As required by the Listing Rules, any material changes to the Company's Investment Policy as set out above will require the approval of Shareholders by way of an ordinary resolution at a General Meeting and the approval of the FCA.

Compliance with the above restrictions will be measured at the time of investment and non-compliance resulting from changes in the price or value of assets following investment will not be considered as a breach of the investment restrictions.

In the event of a breach of the investment guidelines and the investment restrictions set out above, the AIFM shall inform the Board upon becoming aware of the same and if the Board considers the breach to be material, notification will be made to a Regulatory Information Service.

KEY PERFORMANCE INDICATORS

The Board measures the Company's success in achieving its investment objective by reference to the Key Performance Indicators ("KPIs") described below:

Efficient Return of Capital

In line with the Managed Run-Off status of the Group, the Board is focused on the efficient return of capital to Shareholders.

As announced on 6 March 2024, the Board proposes to return no less than £17.5 million to Shareholders by way of a tender offer at a fixed price of 94.28 pence per share which is the Company's last published NAV per share (the "Tender Offer"). Eligible Shareholders will each be able to elect to tender that proportion of their holding, at the time, as is represented by their entitlement under the Tender Offer, or such lower number as they wish.

On 19 April 2024, the Board published a circular, which includes further details of the Tender Offer (including the amount to be returned to Shareholders in the Tender Offer and the maximum number of shares to be acquired). A General Meeting will be convened on 13 May 2024 to approve the Tender Offer.

As and when sufficient cash has been accumulated, the Board's current intention is there will be further tender offers to Shareholders.

Discount of Share Price to NAV

The Board monitors the price of the Company's shares in relation to their NAV and the premium or discount at which they trade. The share price closed at a 39.3% discount to the NAV as at 31 December 2023.

Following the failed Continuation Vote in February 2023, a new Investment Policy to reflect the managed run-off of the Company was put to Shareholders at the AGM in June. Following the approval of the Continuation Managed Run-Off Resolution, the Board continued to review the strategic options for the portfolio. On 16 August 2023, the Company announced a process to market-test a portfolio sale which was conducted by Stifel Nicolaus Europe Limited ("Stifel"). As announced on 6 March 2024, despite interest from a number of parties who entered into the sale process, the Board has not received a definitive proposal which it believes could deliver greater value to Shareholders than the Managed Run-Off. Given the complexity and the very long-dated nature of some of the investments, the Board is continuing to seek and evaluate any other strategic proposals which would deliver greater value to its Shareholders than would otherwise be achieved under the Managed Run-Off.

Maintenance of a Reasonable Level of Ongoing Charges

The expenses of managing the Group are carefully monitored by the Board. The Board receives and reviews management accounts which contain an analysis of expenditure which are reviewed at quarterly Board meetings. The Board reviews the ongoing charges on a quarterly basis. Expenses were higher in 2023 due to the cost of the market-testing process announced on 16 August 2023 and the ongoing significant involvement of advisers following the failure of the Continuation Vote in February 2023. Based on the Group's average net assets during the year ended 31 December 2023, the Group's ongoing charges figure calculated in accordance with the AIC methodology was 3.5% (31 December 2022: 2.6%).

RISK MANAGEMENT

Principal Risks and Uncertainties

During the year under review, the Company has carried out a robust assessment of its principal and emerging risks and the procedures in place to identify any emerging risks are described below.

Procedures to identify principal or emerging risks:

The Board regularly reviews the Company's risk matrix, with a focus on ensuring that the appropriate controls are in place to mitigate each risk. The experience and knowledge of the Board is important, as is advice received from the Board's service providers, specifically the AIFM, which is responsible for the risk and portfolio management services and outsources the portfolio management to the Investment Adviser. Each service provider has a role with respect to the identification of risks:

1. Investment Adviser: the Investment Adviser submits a quarterly report on the investment portfolio to the Board which includes risks faced by the projects in the portfolio, plus an update on hedging;

2. Alternative Investment Fund Manager: following advice from the Investment Adviser and other service providers, the AIFM maintains a register of identified risks including emerging risks likely to impact the Company;

3. Broker: provides advice periodically specific to the Company on the Company's sector, competitors and the investment company market whilst working with the Board and Investment Adviser to communicate with Shareholders;

4. Company Secretary: briefs the Board on forthcoming legislation/regulatory change that might impact on the Company; and

5. Association of Investment Companies (''AIC''): the Company is a member of the AIC, which provides regular technical updates as well as drawing members' attention to forthcoming industry and regulatory issues.

Procedure for oversight

The Audit and Risk Committee undertakes a review at least twice a year of the Company's risk matrix and a formal review of the risk procedures and controls in place at the AIFM and other key service providers to ensure that emerging (as well as known) risks are adequately identified and, so far as is practicable, mitigated.

Principal Risks

The Board considers the following to be the principal risks faced by the Company along with the potential impact of these risks and the steps taken to mitigate them.

Portfolio
Principal Risks	Potential Impact/Description	Mitigation
Counterparty/ credit	The risk that the Company has allocated funds to a counterparty that defaults on its obligations. This could impact the financial performance of the Company and its ability to meet dividends as well as achieving its intended goals and returns for its investors.	The Company has sought to invest mostly, although not exclusively, in projects where the counterparties have an investment grade or near investment grade rating. The Investment Adviser uses third party credit rating service providers to support its credit risk assessments. Continued monitoring of the investments and the associated counterparties/service providers, including the use of credit rating data providers, allows the Investment Adviser to identify and address these risks early. The Investment Adviser has sought to mitigate credit risks, for example, in the case of Solar PV investments, by the counterparty having the opportunity to sell electricity to the grid or other customers where possible. The Investment Adviser has also sought to structure investments whereby contracts can be adapted/extended to accommodate periods of payment defaults. Diversification of counterparties and service providers reduces the potential impact is limited. In addition, a diversified portfolio provides further mitigation.
Concentration risk	The risk that the concentration of investments in a limited number of countries, counterparties, geographical markets, tenure and currencies could expose the Company to unnecessary fluctuations in a narrow range of markets. This risk could negatively impact the Company's performance and ability to meet strategic targets.	The AIFM and the Investment Adviser continuously monitor the existing portfolio and any proposed investments (in advance of completion) against the Company's portfolio concentration limits and Investment Policy. This mitigates the risk by ensuring that concentration limits and asset diversification limits are observed.
Environmental/ Social/ Governance ("ESG")	Failure to adequately consider ESG implications when making and monitoring investments could lead to reputational risk: exposure to greenwashing claims and potentially have an adverse impact on the portfolio's ability to achieve its targeted returns.	The Investment Adviser has performed detailed due diligence on ESG for each asset prior to recommendation and continues to capture and monitor ESG data relating to the operation of the assets. General standards including IFS Performance Standards, IFC Environmental Health and Safety Guidelines (''EHS'') and Equator Principles as well as local health and safety and social laws are reviewed on a regular basis for all assets depending on the location and development status of each asset.

Economic and Markets
Principal Risks	Potential Impact/Description	Mitigation
Discount management	Market sentiment has moved the share price to a persistent discount to Net Asset Value. There is a risk that the Company will not be able to find ways to bring the share price back to NAV, leading to Shareholders being unable to realise their investments through the secondary market at Net Asset Value or at market price. Loss of market confidence in the Board/Investment Adviser.	The Company's Broker monitors the market for the Company's shares and reports at quarterly Board meetings. The Company has the authority, if appropriate, to purchase Ordinary Shares in the market with the result of, amongst other things, enhancing the Net Asset Value per Ordinary Share. The Board and Broker maintain engagement with Shareholders and ensure good market information is available to investors. Following the successful continuation and managed run-off vote in June 2023, the Board, with its advisers, is considering strategic options to maximise value for Shareholders. For more information regarding the continuation and managed run-off of the Company, please see the Chair's Statement in the Annual Report.
Interest rates/ inflation	Changes to interest rates may impact the valuation of the investment portfolio by impacting the valuation discount rate. This in turn may have an adverse impact on the attractiveness of returns. Although energy prices have fallen from the heights they reached in mid-2022, the current geopolitical environment uncertainty in Europe could in turn lead to increased price volatility again in the future.	The Company's investments, which provide in many cases for fixed returns, are not significantly exposed to inflation and interest rate movements because the income streams from investments are not subject to significant deductions for operating costs associated with the investments. While there may be O&M costs these are not a high percentage of revenues and so any inflationary pressures on such costs are not expected to have a significant impact. Furthermore, the Company has not taken on indebtedness to finance its investments and so there is no risk of the costs of indebtedness negatively impacting the revenues from investments. Were the Company to take on indebtedness it may use derivative instruments such as futures, options and swaps to protect the Company from fluctuations in interest rates. The Investment Adviser manages the correlation of cash flows to inflation and resilience to the economic environment. The Investment Adviser has sought to incorporate RPI adjustments in investment documentation where possible. In addition, investing in energy efficiency assets can in some cases provide an effective protection against inflation, as many such assets benefit from rising electricity prices with no burden on the cost side in relation to the use of resources.
Changes to subsidies or other support mechanisms for the Company's investments	The value of the Company's investments may be adversely affected if subsidies or other support mechanisms, on which such investments may depend, are changed negatively.	Diversification of investments by technology and geography mitigates the impact of any such risks. Many of the investments which the Investment Adviser seeks do not rely on subsidies or other support mechanisms.
Act of war/ sanctions	As evidenced with conflict in the Ukraine and the Middle East, various sanctions may be imposed. There is a possibility that there could be supply delays for Operations and Maintenance ("O&M"), sanction considerations, volatile markets and general uncertainty. More difficult energy markets are expected along with inflationary pressures on inputs. It has also led to short-term price increases and more focus on renewable energy infrastructure. Possible change to the world order and globalisation. Conflict brings uncertainty to the commodities market and how price levels of modules and other hardware will be impacted directly or indirectly.	The Company does not have any direct exposure in Ukraine, Russia or the Middle East, there are also no direct business relationships with counterparties from these countries; therefore assessments lead the Company to the conclusion that its investments in Europe are not impacted directly at this time.

Operational
Principal Risks	Potential Impact/Description	Mitigation
Service provider risk	Risks that the Company's third party service providers do not perform to the appropriate standards. Potential lack of resource, experience or depth in the Investment Adviser's team to manage the Company's investments. This may be exacerbated by the Managed Run-Off status of the Company which will lead, in time, to reduced fees for the Investment Adviser. Possible conflicts with other private Aquila clients and private investing vehicles which Aquila cannot disclose to the Board or the AIFM. The Investment Adviser is dependent on key people to identify, acquire and manage the Company's investments.	The Board continues to monitor the quality of services provided by all of its service providers, and in particular the Investment Adviser. Where it is deemed that work carried out by any service provider is of insufficient quality, the Board will procure additional services from other service providers with a view to ensuring the required standard of portfolio management and reporting is maintained. The Board will reserve its right to recover the cost of such additional services from the current service providers. Additionally, through the Management Engagement Committee, the Board conducts a formal assessment of each key service provider's performance once a year. To assist its ability to properly oversee the Company's service providers, the Board requires each service provider to notify it as soon as reasonably practicable following any material breach of its contract with the Company. The Investment Adviser has substantial resources. The Company and AIFM are made aware of and review potential conflicts of interest at the time of each investment being made. Conflicts of interest and investment allocation policies are in place and agreed with the Board. The strength and depth of the Investment Adviser's resources mitigate the risk of a key person departure and provides the ability to draw skills from other areas if needed.
IT security	A hacker or third party could obtain access to the Investment Adviser or any other service provider and destroy data or use it for malicious purposes resulting in reputational damage and possible GDPR concern. Data records could be destroyed, resulting in an inability to make investment decisions and/or monitor investments.	Service providers have been carefully selected for their expertise and reputation in the sector. Each service provider has provided assurances to both the AIFM and the Company on their cyber policies and business continuity plans along with external audit reviews of their procedures where applicable. The AIFM, Administrator and Board include Cyber Risk in their reviews of counterparties.

Financial

Principal Risks

Potential Impact/Description

Mitigation

Portfolio valuation

The principal component of the Company's balance sheet is its portfolio of energy efficiency assets. The Investment Adviser is responsible for preparing a fair market value of the investments where such investments have variable returns. Fair value calculations rely on projections, which involve estimates of the future, which are inherently judgemental.

There is a risk that these valuations and underlying assumptions such as discount rates being applied are not a fair reflection of an open market valuation, therefore the investment portfolio could be over or under valued.

Investments with fixed returns are measured at amortised cost and subject to expected credit loss provisions, which are based on numerous assumptions and judgements.

The Investment Adviser has experience in undertaking valuations of renewable sustainability/energy transition assets.

The AIFM and the Board review and interrogate the valuations and underlying assumptions provided by the Investment Adviser.

It should be noted that valuations are held at fair value and at amortised cost and not at net realisable value.

Emerging Risks
Principal Risks	Potential Impact/Description	Mitigation
Capital Preservation	During the run-off, there is a risk that overdistribution of cash will leave the Company short of sufficient liquidity to meet ongoing expenditure.	The Board, Investment Adviser and AIFM will review the ongoing liquidity requirements and cashflow forecasts of the Company prior to making distributions to ensure that sufficient funds are maintained throughout the run-off process.
Relations with ESCOs during managed run-off	Entering a managed run-off has strained relations with some ESCOs who may have expected further business from AEET over time, giving rise to further counterparty/credit risk for the Company.	Communications with the ESCOs from the Investment Adviser take into account these considerations and professional advice has been sought by the Company where needed. The Board and Investment Adviser will continue to monitor relations with ESCOs as the run-off progresses.

Viability Statement

In accordance with the UK Corporate Governance Code ("UK Code") and the Listing Rules, the Directors have assessed the prospects of the Company over a longer period than the 12 months required by the 'Going Concern' provision.

In reviewing the Company's viability, the Directors have assessed the viability of the Company for the period to 31 December 2026 (the "Look-forward Period").

Following the AGM held in June 2023, and in accordance with the New Investment Policy, the Company entered a managed run-off of its portfolio, meaning that it is not making any new investments (save for in limited circumstances as set out in the New Investment Policy) and its investing activity is solely in respect of funding legal commitments to existing investments (the "Managed Run-Off"). The Board has continued and will continue to review strategic options in respect of the Company's assets to realise the maximum value for Shareholders in the shortest possible time, recognising the inherent difficulties in the construction of the portfolio, including the number of individual investments, multiple geographies and long tenors. On 16 August 2023, the Company announced a process to market-test a portfolio sale which was conducted by Stifel Nicolaus Europe Limited ("Stifel"). An extensive number of UK and international investors were approached through this process which completed in early February. As announced on 6 March 2024, despite interest from a number of parties who entered into the sale process, the Board did not receive a definitive proposal which it believed could deliver greater value to shareholders than the Managed Run-Off. As announced on 6 March 2024 and 19 April 2024, the Board has proposed to return £17.5 million to shareholders by way of a tender offer at a fixed price of 94.28 pence per share (the "Tender Offer"). This is subject to the approval of Shareholders at the General Meeting on 13 May 2024.

As referred to above, the Company is operating currently under a Managed Run-Off with the term of some of the Company's assets being several years. While the Company is continuing to explore other strategic options, there remains no certainty that any of these options will materialise and be put to Shareholders for consideration. Accordingly, the Directors recognise that these conditions indicate the existence of material uncertainty which may cast significant doubt about the Group and Company's viability over the look forward period.

Notwithstanding the above, the Board believes that the Look-forward Period, being approximately three years, is an appropriate time horizon over which to assess the viability of the Company, particularly when taking into account the long-term nature of the maturity of the Company's assets, which is modelled over three years and the principal risks outlined above. In considering the prospects of the Company, the Directors looked at the key risks facing the Company, focusing on the likelihood and impact of each risk as well as any key contracts, future events or timescales that may be assigned to each key risk.

The Directors have a reasonable expectation that the Company has adequate resources to: continue in operation; realise the Company's assets in an orderly manner; and meet its liabilities as they fall due, over the Look-forward Period.

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 Group and Company.

The Group and Company continue to meet day-to-day liquidity needs through their cash resources. The Directors have a reasonable expectation that the Group and Company have 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 Group's investment commitments, cash position, income and expense flows. As at 31 March 2024, the latest practicable date before publication of this report, the total commitments were £4.92 million. The value of investments as at 31 December 2023 was £65.5 million and has not changed materially since that date. The investments are mostly fully operational and income producing. As at 31 March 2024, the Group had cash of £31.2 million (including the £2.5 million held as collateral for FX hedging). The Directors reviewed downside scenarios which assumed some delay in cash receipts and are satisfied that the Group and the Company would continue to meet its obligations as they fall due. Total expenses for the year were £3.30 million (excluding impairment losses) (2022: £2.4 million), which represented approximately 3.49% of average net assets during the year (2022: 2.63%). At the date of approval of this document, based on the aggregate of investments and cash held, the Group and Company have substantial operating expenses cover.

At the Annual General Meeting of the Company (the "AGM") held on 14 June 2023, Shareholders voted in favour of the Company's change of investment policy (the "New Investment Policy"). Following the AGM, and in accordance with the New Investment Policy, the Company entered a continuation and managed run-off of its portfolio ("Managed Run-Off"), meaning that it is not making any new investments (save for the limited circumstances as set out in the New Investment Policy) and its investing activity is solely in respect of funding legal commitments to existing investments.

The Continuation and Managed Run-Off Resolution was put forward as a resolution to Shareholders in response to the outcome of the Company's Continuation Vote held in February 2023, which did not pass.

On 6 March 2024, the Company announced, subject to the approval of Shareholders, a return of capital to Shareholders by way of a tender offer of not less than £17.5 million.

Accordingly, while the Directors recognise that these conditions indicate the existence of material uncertainty which may cast significant doubt about the Group and Company's ability to continue as a going concern. Based on the assessment and considerations above, the Directors have concluded that the financial statements of the Group and the Company should be prepared on a going concern basis. The financial statements do not include the adjustments that would result if the Group and the Company were unable to continue on a going concern basis.

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group's and the Company's financial statements in accordance with UK-adopted international financial reporting standards in conformity with the requirements of the Companies Act 2006.

Under company law, Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group and the Company for that year. In preparing the financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· state whether applicable UK-adopted international financial reporting standards in conformity with the requirements of the Companies Act 2006 have been followed, subject to any material departures disclosed and explained in the financial statements;

· make judgements and accounting estimates that are reasonable and prudent; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.

The Directors are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006.

The Directors have delegated responsibility to the Investment Adviser for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' Confirmations

The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Group's and the Company's position and performance, business model and strategy.

Each of the Directors, whose names and functions are listed in the Corporate Governance section, confirm that, to the best of their knowledge:

· the Group's and the Company's financial statements, which have been prepared in accordance with UK-adopted international financial reporting standards in conformity with the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and loss of the Group and the Company; and

· the Strategic Report includes a fair review of the development and performance of the business and the position of the Group and the Company, together with a description of the principal risks and uncertainties that it faces.

In the case of each Director in office at the date the Directors' report is approved:

· so far as the Director is aware, there is no relevant audit information of which the Group's and Company's auditors are unaware; and

· they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Group's and the Company's auditors are aware of that information.

For and on behalf of the Board

Miriam Greenwood OBE DL

Chair of the Board
30 April 2024

Financial Statements
Aquila Energy Efficiency Trust Plc

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2023

		For the year ended 31 December 2023			For the year ended 31 December 2022
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Unrealised (loss)/gain on investments	4	-	(2,380)	(2,380)	-	1,211	1,211
Unrealised gain/(loss) on derivatives		-	122	122	-	(1,016)	(1,016)
Realised gain on derivatives		-	1,713	1,713	-	-	-
Net foreign exchange (loss)/gain		-	(64)	(64)	-	282	282
Investment income	5	5,948	-	5,948	2,197	-	2,197
Investment advisory fees	6	(808)	-	(808)	(615)	-	(615)
Impairment loss	4	(1,735)	-	(1,735)	(136)	-	(136)
Other expenses	7	(2,492)	-	(2,492)	(1,786)	-	(1,786)
Profit/(loss) on ordinary activities before taxation		913	(609)	304	(340)	477	137
Taxation	8	-	-	-	-	-	-
Profit/(loss) on ordinary activities after taxation		913	(609)	304	(340)	477	137
Return per Ordinary Share	9	0.91p	(0.61p)	0.30p	(0.34p)	0.48p	0.14p

The total column of the Consolidated Statement of Profit or Loss and Comprehensive Income is the profit and loss account of the Group.

All revenue and capital items in the above consolidated statement derive from continuing operations. No operations were discontinued during the year.

Profit/(loss) on ordinary activities after taxation is also the "Total comprehensive income/(expense) for the year".

The notes are an integral part of these financial statements.

COMPANY STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2023

		For the year ended 31 December 2023			For the year ended 31 December 2022
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Unrealised gain on investments	4	-	961	961	-	2,144	2,144
Net foreign exchange loss		-	(37)	(37)	-	(99)	(99)
Investment income	5	4,080	-	4,080	697	-	697
Investment advisory fees	6	(808)	-	(808)	(615)	-	(615)
Other expenses	7	(1,912)	-	(1,912)	(1,375)	-	(1,375)
Impairment loss		(2,041)	-	(2,041)	-	-	-
(Loss)/profit on ordinary activities before taxation		(681)	924	243	(1,293)	2,045	752
Taxation	8	-	-	-	-	-	-
(Loss)/profit on ordinary activities after taxation		(681)	924	243	(1,293)	2,045	752
Return per Ordinary Share	9	(0.68p)	0.92p	0.24p	(1.29p)	2.05p	0.75p

The total column of the Company Statement of Profit or Loss and 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 year.

Profit/(loss) on ordinary activities after taxation is also the "Total comprehensive income/(expense) for the year".

The notes are an integral part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2023

		2023	2022
	Notes	£'000	£'000
Fixed assets
Investments at fair value through profit or loss	4	10,492	11,742
Investments at amortised cost	4	54,990	38,550
		65,482	50,292
Current assets
Trade and other receivables	10	652	70
Derivative financial instrument	4	122	-
Cash and cash equivalents		29,082	46,625
		29,856	46,695
Creditors: amounts falling due within one year	11	(1,057)	(904)
Derivative financial instrument		-	(856)
Net current assets		28,799	44,935
Net assets		94,281	95,227
Capital and reserves: equity
Share capital	12	1,000	1,000
Special reserve	13	93,500	94,750
Capital reserve		(178)	431
Revenue reserve		(41)	(954)
Shareholders' funds		94,281	95,227
Net assets per Ordinary Share	14	94.28p	95.23p
No. of Ordinary Shares in issue		100,000,000	100,000,000

Approved by the Board of Directors and authorised for issue on 30 April 2024.

Signed on behalf of the Board of Directors

Miriam Greenwood OBE DL

Aquila Energy Efficiency Trust Plc is incorporated in England and Wales with Company number 13324616.

The notes are an integral part of these financial statements.

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2023

		2023	2022
	Notes	£'000	£'000
Fixed assets
Investment in subsidiaries	4	45,654	31,220
Current assets
Cash and cash equivalents		22,548	32,714
Intercompany receivable	10	-	32,966
Shareholder loan receivable	17	27,293	-
Trade and other receivables	10	255	33
		50,096	65,713
Creditors: amounts falling due within one year	11	(874)	(1,050)
Net current assets		49,222	64,663
Net assets		94,876	95,883
Capital and reserves: equity
Share capital	12	1,000	1,000
Special reserve	13	93,500	94,750
Capital reserve		2,923	1,999
Revenue reserve		(2,547)	(1,866)
Shareholders' funds		94,876	95,883

Approved by the Board of Directors and authorised for issue on 30 April 2024.

Signed on behalf of the Board of Directors

Miriam Greenwood OBE DL

Aquila Energy Efficiency Trust Plc is incorporated in England and Wales with Company number 13324616.

The notes are an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

		Share	Special	Capital	Revenue
		capital	reserve	reserve	reserve	Total
For the year ended 31 December 2023	Notes	£'000	£'000	£'000	£'000	£'000
Opening equity as at 1 January 2023		1,000	94,750	431	(954)	95,227
Dividends paid	15	-	(1,250)	-	-	(1,250)
(Loss)/profit for the year		-	-	(609)	913	304
Closing equity as at 31 December 2023		1,000	93,500	(178)	(41)	94,281

		Share	Special	Capital	Revenue
		capital	reserve	reserve	reserve	Total
For the year ended 31 December 2022	Notes	£'000	£'000	£'000	£'000	£'000
Opening equity as at 1 January 2022		1,000	97,000	(46)	(573)	97,381
Impact of the acquisition of subsidiaries on 1 January 2022		-	-	-	(41)	(41)
Dividends paid	15	-	(2,250)	-	-	(2,250)
Profit/(loss) for the year		-	-	477	(340)	137
Closing equity as at 31 December 2022		1,000	94,750	431	(954)	95,227

The notes are an integral part of these financial statements.

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

		Share	Special	Capital	Revenue
		capital	reserve	reserve	reserve	Total
For the year ended 31 December 2023	Notes	£'000	£'000	£'000	£'000	£'000
Opening equity as at 1 January 2023		1,000	94,750	1,999	(1,866)	95,883
Dividends paid	15	-	(1,250)	-	-	(1,250)
Profit/(loss) for the year		-	-	924	(681)	243
Closing equity as at 31 December 2023		1,000	93,500	2,923	(2,547)	94,876

		Share	Special	Capital	Revenue
		capital	reserve	reserve	reserve	Total
For the year ended 31 December 2022	Notes	£'000	£'000	£'000	£'000	£'000
Opening equity as at 1 January 2022		1,000	97,000	(46)	(573)	97,381
Dividends paid	15	-	(2,250)	-	-	(2,250)
Profit/(loss) for the year		-	-	2,045	(1,293)	752
Closing equity as at 31 December 2022		1,000	94,750	1,999	(1,866)	95,883

The notes are an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2023

	Notes	For the year ended 31 December 2023 £'000	For the year ended 31 December 2022 £'000
Operating activities
Profit on ordinary activities before taxation		304	137
Adjustments for:
Unrealised loss/(gain) on investments	4	2,380	(1,211)
Unrealised loss/(gain) on derivative instruments	4	(122)	1,016
Realised gains on derivative instruments		(108)	-
Impairment loss		1,735	136
Net foreign exchange loss		116	-
(Increase)/decrease in trade and other receivables		(310)	34
Increase in creditors: amounts falling due within one year		968	570
Interest receivable from amortised cost investments		(2,420)	(1,349)
Net cash flow from/(used in) operating activities		2,543	(667)
Investing activities
Purchase of investments	4	(21,834)	(47,602)
Repayment of investments	4	3,050	264
Net cash received on acquisition of Attika Holdings Ltd.		-	5,000
Net cash received on acquisition of SPV Project 2013 S.r.l.		-	11,751
Net cash flow used in investing activities		(18,784)	(30,587)
Financing activities
Dividends paid	15	(1,250)	(2,250)
Net cash flow used in financing activities		(1,250)	(2,250)
Decrease in cash and cash equivalents		(17,491)	(33,504)
Cash and cash equivalents at start of year		46,625	80,129
Effect of foreign currency exchange translation		(52)	-
Cash and cash equivalents at end of year		29,082	46,625

The notes are an integral part of these financial statements.

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2023

		For the year	For the year
		ended	ended
		31 December	31 December
		2023	2022
	Notes	£'000	£'000
Operating activities
Profit on ordinary activities before taxation		243	752
Adjustments for:
Unrealised gain on investments	4	(961)	(2,144)
Net foreign exchange loss		(17)	-
Shareholder loan interest income		(1,912)	-
Impairment loss		2,041	-
Increase in intercompany receivables		(1,901)	(27,796)
(Increase)/Decrease in trade and other receivables		(91)	71
(Decrease)/Increase in creditors		(175)	544
Net cash flow used in operating activities*		(2,773)	(28,573)
Investing activities
Purchase of investments	4	(4,808)	(16,592)
Repayment of investments		1,306	-
Net cash flow used in investing activities		(3,502)	(16,592)
Financing activities
Loan to subsidiary	10	(4,437)	-
Shareholder loan interest income received		1,782	-
Dividends paid	15	(1,250)	(2,250)
Net cash flow used in financing activities		(3,905)	(2,250)
Decrease in cash and cash equivalents		(10,180)	(47,415)
Cash and cash equivalents at start of year		32,714	80,129
Effect of foreign currency exchange translation		14	-
Cash and cash equivalents at end of year		22,548	32,714
*Cash flows from operating activities were presented after the below non-cash
transactions:
Conversion of intercompany receivables to investment in subsidiary		11,791	-
Conversion of intercompany receivable to shareholder loan		23,076	-
		34,867	-

The notes are an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

1. GENERAL INFORMATION

Aquila Energy Efficiency Trust Plc (the "Company") is a public company limited by shares incorporated in England and Wales on 9 April 2021 with registered number 13324616. 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 2 June 2021 when the Company's 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 Company owns 100% of its subsidiary, Attika Holdings Limited (the "HoldCo" or ''AHL'') and 100% of the notes issued by one compartment of SPV Project 2013 S.r.l. (the ''SPV'' or ''Italian SPV'') issued to the Company, which entitles the Company to a 100% economic interest in the receivables purchased through the proceeds of these notes, together the ''Group''.

The registered office address of the Company is 6th Floor, 125 London Wall, London, EC2Y 5AS.

Further to the adoption of a new investment policy at the 2023 AGM, the Company is being managed with the intention of realising all remaining assets in the Portfolio in a prudent manner consistent with the principles of good investment management and with a view to returning cash to Shareholders in an orderly manner.

FundRock Management Company (Guernsey) Limited (formerly Sanne Fund Management (Guernsey) Limited) acts as the Company's Alternative Investment Fund Manager (the "AIFM") for the purposes of Directive 2011/61/EU on alternative investment fund managers ("AIFMD").

The Group's Investment Adviser is Aquila Capital Investmentgesellschaft mbH, authorised and regulated by the German Federal Financial Supervisory Authority.

Apex Listed Companies Services (UK) Limited (the "Administrator") (formerly Sanne Fund Services (UK) Limited) provides administrative and company secretarial services to the Group under the terms of an administration agreement between the Company and the Administrator. The Italian SPV is administered by Zenith Service S.p.A.

2. BASIS OF PREPARATION

Group financial statements

The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

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

The consolidated financial statements are prepared on the historical cost basis, except for the revaluation of certain financial instruments at fair value through profit or loss. The principal accounting policies adopted are set out below. These policies are consistently applied.

The financial statements are presented in Sterling rounded to the nearest thousand. They have been prepared on the basis of the accounting policies, significant judgements, key assumptions and estimates as set out below.

Company financial statements

The financial statements have been prepared in accordance with the UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

The 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 AIC in July 2022.

The financial statements are prepared on the historical cost basis, except for the revaluation of certain financial instruments at fair value through profit or loss. The principal accounting policies adopted are set out below. These policies are consistently applied.

The functional currency of the Company is Sterling. The capital of the Company was raised in Sterling and the majority of its expenses are in Sterling. The liquidity of the Company is managed in Sterling as the Company's performance is evaluated in that currency. Accordingly, the financial statements are presented in Sterling, rounded to the nearest thousand. They have been prepared on the basis of the accounting policies, significant judgements, key assumptions and estimates as set out below.

Basis of consolidation

The Group's financial statements consolidate those of the Company and of its subsidiaries at 31 December 2023. The subsidiaries have a reporting date of 31 December. AHL's functional currency is Sterling. The Italian SPV's functional currency is Euro. However, to align with the Group's functional currency, the balances of the Italian SPV have been converted to Sterling at a year-end rate for the Statement of Financial Position accounts and at an average rate during the year for the Statement of Profit or Loss and Comprehensive Income accounts.

All transactions and balances between Group companies are eliminated on consolidation. The accounting policies adopted by the Group are consistent with those adopted by the Company and the subsidiaries.

Characteristics of an investment entity

Under the definition of an investment entity, the Company should satisfy all three of the following tests:

I. the Company obtains funds from one or more investors for the purpose of providing those investors with investment management services;

II. the Company commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and

III. the Company measures and evaluates the performance of substantially all of its investments on a fair value basis.

Investment entity status

The Directors determined that the Company does not meet the characteristics of an investment entity for the following reasons:

I. the Company is in full control of its subsidiary AHL and the notes in the Italian SPV;

II. the majority of the investments held and added to during the year for the Italian SPV are valued at amortised cost rather than on a fair value basis; and

III. the majority of the investments held and purchased during the year in AHL are valued at amortised cost rather than on a fair value basis.

The financial statements are presented on a consolidated basis of the Company, AHL and the Italian SPV.

Accounting for wholly owned entities

AHL

The Company owns 100% of its subsidiary, AHL. The registered office address of AHL is Leaf B, 20th Floor, Tower 42, Old Broad Street, London, England, EC2N 1HQ. The Company has acquired Energy Efficiency Investments through its investment in the subsidiary. The Company will finance the subsidiary through a mix of equity and debt instruments. The Company consolidates the subsidiary.

Italian SPV

The Italian SPV is a company established under the laws of Italy to hold securitised receivables. The Company does not hold any equity in the SPV. However, it does own 100% of the notes issued by one compartment of the SPV which entitles the Company to a 100% economic interest in the receivables purchased through the proceeds of this notes. The Company does not have an economic interest in any of the other securities receivables issuances by the Italian SPV. The notes subscribed by the Company, issued by the Italian SPV, and the receivables purchased from the proceeds of these notes, together with all associated assets and liabilities and income and costs, are ring-fenced from other assets and liabilities of the Italian SPV and thus the Company's holdings have been deemed a silo under IFRS 10 paragraph b 77. The Company consolidates the results of the Italian SPV in respect of the performance of the receivables in the silo.

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 Group and Company.

In reaching this conclusion, the Directors have considered the Group's investment commitments, cash position, income and expense flows. As at 31 March 2024, the latest practicable date before publication of this report, the total commitments were £4.92 million. The value of investments as at 31 December 2023 was £65.5 million and has not changed materially since that date. The investments are mostly fully operational and income producing. As at 31 March 2024, the Group had cash of £31.2 million (including the £2.5 million held as collateral for FX hedging). The Directors reviewed downside scenarios which assumed some delay in cash receipts and are satisfied that the Group and the Company would continue to meet its obligations as they fall due. Total expenses for the year were £3.30 million (excluding impairment losses) (2022: £2.4 million), which represented approximately 3.49% of average net assets during the year (2022: 2.63%). At the date of approval of these financial statements, based on the aggregate of investments and cash held, the Group and Company have substantial operating expenses cover.

At the Annual General Meeting of the Company (the "AGM") held on 14 June 2023, Shareholders voted in favour of the Group's change of investment policy (the "New Investment Policy"). Following the AGM, and in accordance with the New Investment Policy, the Company entered a continuation and managed run-off of its portfolio ("Managed Run-Off"), meaning that it is not making any new investments (save for the limited circumstances as set out in the New Investment Policy) and its investing activity is solely in respect of funding legal commitments to existing investments.

On 6 March 2024, the Company announced, subject to the approval of Shareholders, a return of capital to Shareholders by way of a tender offer of not less than £17.5 million.

As referred to above, the Group is operating currently under a Managed Run-Off with the term of some of the Group's assets being several years. The Company is continuing to explore other strategic options, such as an asset sale or structural solution. There remains no certainty that any of these options will materialise and be put to Shareholders for consideration, or on the potential timing of other strategic options.

Accordingly, the Directors recognise that these conditions indicate the existence of material uncertainty which may cast significant doubt about the Group and Company's ability to continue as a going concern. Based on the assessment and considerations above, the Directors have concluded that the financial statements of the Group and the Company should be prepared on a going concern basis. The financial statements do not include the adjustments that would result if the Group and the Company were unable to continue on a going concern basis.

Critical accounting judgements, estimates and assumptions

The preparation of the consolidated financial statements requires the application of estimates and assumptions which may affect the results reported in the consolidated 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 and expected credit loss as disclosed in Note 4 to the consolidated financial statements.

Investment fair value

The key assumptions that have a significant impact on the value of the Group's investments are discount rates, energy yield, power prices and capital expenditure factors, the price at which the power and associated benefits can be sold and the energy yield are expected to produce. The impact of risks associated with climate change is assessed on an investment-by-investment basis and factored into the underlying cash flows where relevant.

The discount factors are subjective and therefore it is feasible that a reasonable alternative assumption may be used resulting in a different value. The discount factors applied to the cash flows are reviewed semi-annually by the Investment Adviser to ensure they are at the appropriate level. The Investment Adviser will take into consideration market transactions, where they are of similar nature, when considering changes to the discount factors used.

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 values of Energy Efficiency Investments are not significantly sensitive to fluctuations in future revenues if a fixed indexation clause is applied to its cash flow schedule.

Expected credit loss (''ECL'') allowance for financial assets measured at amortised cost

The calculation of the Group's ECL allowances and provisions against receivable purchase agreements under IFRS 9 is complex and involves the use of significant judgement and estimation. Loan impairment provisions represent an estimate of the losses incurred in the loan portfolios at the balance sheet date. Individual impairment losses are determined as the difference between the carrying value and the present value of estimated future cash flows, discounted at the loans' original EIR. The calculation involves the formulation and incorporation of multiple conditions into ECL to meet the measurement objective of IFRS 9. Refer to Note 4 for more details.

Investment entity status assessment

Refer to the assessment within this note above.

Adoption of new IFRS standards from 1 January 2023

A number of new standards and amendments to standards are effective for the annual periods beginning after 1 January 2023. None of these have a significant effect on the measurement of the amounts recognised in the financial statements of the Group.

New standards and amendments issued but not yet effective or adopted early by the Group

The relevant new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements are disclosed below. These standards are not expected to have a material impact on the entity in future reporting periods and on foreseeable future transactions.

Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or Non‑current

The amendments to IAS 1 clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of 'settlement' to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. The amendments are applied retrospectively for annual periods beginning on or after 1 January 2024, with early application permitted.

Amendments to IAS 1 Presentation of Financial Statements - Non‑current Liabilities with Covenants

The amendments specify that only covenants that an entity is required to comply with on or before the end of the reporting period affect the entity's right to defer settlement of a liability for at least twelve months after the reporting date (and therefore must be considered in assessing the classification of the liability as current or non-current). Such covenants affect whether the right exists at the end of the reporting period, even if compliance with the covenant is assessed only after the reporting date (e.g. a covenant based on the entity's financial position at the reporting date that is assessed for compliance only after the reporting date). The amendments are applied retrospectively for annual reporting periods beginning on or after 1 January 2024. Earlier application of the amendments is permitted.

Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures - Supplier Finance Arrangements

The amendments add a disclosure objective to IAS 7 stating that an entity is required to disclose information about its supplier finance arrangements that enables users of financial statements to assess the effects of those arrangements on the entity's liabilities and cash flows. In addition, IFRS 7 was amended to add supplier finance arrangements as an example within the requirements to disclose information about an entity's exposure to concentration of liquidity risk. The amendments, which contain specific transition reliefs for the first annual reporting period in which an entity applies the amendments, are applicable for annual reporting periods beginning on or after 1 January 2024. Earlier application is permitted.

3. MATERIAL ACCOUNTING POLICIES

Financial instruments

Financial assets

The Group's financial assets principally comprise of cash and cash equivalents, investments held at fair value through profit and loss, investments held at amortised cost, derivative financial instruments, interest income receivables, shareholder loan receivables and other receivables.

Interest income receivables, prepayments and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method.

The Group's investments are debt instruments held at fair value through profit or loss and debt instruments at amortised cost. Gains or losses resulting from the movements in the fair value are recognised in the Group's Consolidated Statement of Profit or Loss and Comprehensive Income under capital column. Debt instruments at amortised cost are revalued with the functional currency exchange rate at each valuation point and recognised in the Group's Consolidated Statement of Profit or Loss and Comprehensive Income and are subject to ECL.

Derivatives comprise of currency forward transactions used to hedge the Group's foreign currency exposure. The fair value of the currency forward transactions is the difference between the spot rate and the forward rate at the date of the Consolidated Statement of Financial Position.

Derivatives

Derivatives comprise of foreign currency swaps used to hedge the Group's foreign currency exposure. The fair value of the foreign currency swaps is the difference between the spot rate and the forward rate that were applied at the date of the Statement of Financial Position. Realised gains/(losses) on derivatives relates to actual cash received/(paid) at the end of the term of foreign currency swaps and are recognised upon settlement.

Investment in subsidiaries

The Company's investment in its subsidiary, AHL, is composed of equity shares. The Company's investments in AHL is held at cost less impairment in the Company's Statement of Financial Position. Impairment charge has been determined to be the net liability amount of AHL less any impairment associated with the shareholder loan receivable.

The Company's investment in its subsidiary, SPV, is composed of loan notes receivables. The Company's investments in the SPV is held at fair value through profit or loss. The fair value of SPV as at 31 December 2023 has been determined through an aggregation of the fair value of SPV's individual investments adjusted for the cash and liabilities of SPV as at 31 December 2023. The fair values of SPV's individual investments take account of projections of future cash flows and discount rates which seek to take account of the risk profile of the counterparty, and other areas of judgement.

Financial liabilities

The Group's financial liabilities include trade and other payables and other short-term monetary liabilities which are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method. The Group's financial liabilities also include derivative financial instruments.

Recognition and derecognition

Financial assets and financial liabilities are recognised in the Group's Consolidated Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value.

At initial recognition, financial instruments classified at fair value through profit or loss are measured at fair value which is normally the transaction price. Other financial instruments not classified at fair value through profit or loss are measured initially at fair value but are adjusted for incremental and directly attributable transaction costs.

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

A financial liability (in whole or in part) is recognised when the Group has extinguished its contractual obligations, it expires or is cancelled. Financial assets are recognised when the rights to receive cash flows from the investments have expired or the Group has transferred substantially all risks and rewards of ownership.

Classification and measurement of financial assets

IFRS 9 contains a classification and measurement approach for debt instruments that reflects the business model in which assets are managed and their cash flow characteristics. For debt instruments two criteria are used to determine how financial assets should be classified and measured:

· the entity's business model (i.e. how an entity manages its debt instruments in order to generate cash flows by collecting contractual cash flows, selling financial assets or both); and

· the contractual cash flow characteristics of the financial asset (i.e. whether the contractual cash flows are solely payments of principal and interest).

A debt instrument is measured at amortised cost if it meets both of the following conditions and is not designated as at fair value through profit and loss ("FVTPL"):

(a) it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

(b) its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt instrument is measured at fair value through other comprehensive income ("FVOCI") if it meets both of the following conditions and is not designated as at FVTPL:

(a) it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

(b) its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

In assessing whether the contractual cash flows are solely payments of principal and interest, the contractual terms of the instrument are considered. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

Subsequent to initial recognition, financial assets that are classified as measured at fair value through profit or loss are measured at fair value in the Consolidated Statement of Financial Position (with no deduction for sale or disposal costs). Gains and losses resulting from the movement in fair value are recognised in the Consolidated Statement of Profit or Loss and Comprehensive Income.

Subsequent to initial recognition, financial assets that are measured at amortised cost require the use of the effective interest method and are subject to expected credit loss.

Taxation

Investment trusts which have approval under section 1158 of the Corporation Tax Act 2010 are not liable for taxation on capital gains. Shortly after listing the Company received approval as an investment trust by HMRC. Current tax is the expected tax payable on the taxable income for the year, using tax rates that have been enacted or substantively enacted at the date of the Consolidated Statement of Financial Position.

Taxation of subsidiary entities

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax payable is based on taxable profit for the year. There is no tax payable at 31 December 2023 due to the subsidiaries being in a loss position. Taxable profit differs from profit as reported in the Statement of Profit or Loss and Comprehensive Income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company's liability for current taxes is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred taxation

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the statement of financial position liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be recognised.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is recognised. Deferred tax is charged or credited to the Consolidated Statement of Profit or Loss and Comprehensive Income except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Segmental reporting

The Chief Operating Decision Maker ("CODM"), which is the Board, is of the opinion that the Group is engaged in a single segment of business, being investment in energy efficiency assets to generate investment returns whilst preserving capital. The financial information used by the CODM to manage the Group presents the business as a single segment.

Income

Income includes investment interest income from financial assets at amortised cost, dividend income and bank interest income.

Investment interest income for the year is recognised in the Consolidated Statement of Profit or Loss and Comprehensive Income using the effective interest method calculation.

Dividend income is recognised when the right to receive it is established and is reflected in the Consolidated Statement of Profit or Loss and Comprehensive Income as investment income.

Bank interest income is recognised for the year in the Consolidated Statement of Profit or Loss and Comprehensive Income on an accruals basis.

Expenses

All expenses are accounted for on an accrual basis. In respect of the analysis between revenue and capital items presented within the Consolidated Statement of Profit or Loss and Comprehensive Income, all expenses are presented as revenue as it is directly attributable to the operations of the Group. Details of the Group's fee payments to the Investment Adviser are disclosed in Note 6 to the consolidated financial statements. Details of the Group's other expenses are disclosed in Note 7 to the consolidated financial statements. These fees are presented under the revenue column in the Consolidated Statement of Profit or Loss and Comprehensive Income.

Foreign currency

Transactions denominated in foreign currencies are translated into Sterling at actual exchange rates as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at year end are reported at the rates of exchange prevailing at the year end. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss to capital or revenue in the Consolidated Statement of Profit or Loss and Comprehensive Income as appropriate. Foreign exchange movements on investments are included in the capital account of the Consolidated Statement of Profit or Loss and Comprehensive Income.

Cash and cash equivalents

Cash and cash equivalents include deposits held at call with banks and other short-term deposits with original maturities of three months or less.

Trade and other payables

Trade and other payables are initially recognised at fair value, and subsequently re-measured at amortised cost using the effective interest method where necessary.

Share capital and share premium

Ordinary Shares are classified as equity. Costs directly attributable to the issue of new shares (that would have been avoided if there had not been a new issue of new shares) are recognised against the value of the Ordinary Share premium account.

Repurchases of the Company's own shares are recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments.

Expected credit loss allowance for financial assets measured at amortised cost

Many of the Group's investments are financial assets measured at amortised cost. These investments are structured as purchases of receivables or purchases of notes which have the right to receivables. The purchased receivables derive from energy services agreements for the provision of energy efficiency and/or renewable energy solutions provided by ESCOs to their corporate clients and these receivables provide a fixed return for the Group. The receivables are due to be received over a range of maturities from less than twelve months to more than fifteen years. Individual agreements provide for the receivables to be paid mostly on a monthly or quarterly basis.

In addition to past events and current conditions, reasonable and supportable forecasts affecting collectability are also considered when determining the amount of impairment in accordance with IFRS 9. Under the IFRS 9 expected credit loss model, expected credit losses are recognised at each reporting period, even if no actual loss events have taken place. In addition to past events and current conditions, reasonable and supportable forward-looking information that is available without undue cost or effort is considered in determining impairment, with the model applied to all financial instruments subject to impairment testing.

At initial recognition, allowance is made for expected credit losses resulting from default events that are possible within the next 12 months (twelve-month expected credit losses). In the event of a significant increase in credit risk, allowance (or provision) is made for expected credit losses resulting from all possible default events over the expected life of the financial instrument (lifetime expected credit losses).

Financial assets where twelve month expected credit losses are recognised are Stage 1; financial assets which are considered to have experienced a significant increase in credit risk are in Stage 2; and financial assets which have defaulted or are otherwise considered to be credit-impaired are allocated to Stage 3. Stage 2 and Stage 3 are based on lifetime expected credit losses.

The measurement of expected credit loss, referred to as "ECL", is primarily based on the product of the instrument's probability of default ("PD"), loss given default ("LGD"), and exposure at default ("EAD"), taking into account the value of any collateral held or other mitigants of loss and including the impact of discounting using the EIR.

· The PD represents the likelihood of a borrower defaulting on its financial obligation, either over the next twelve months ("12M PD"), or over the remaining lifetime ("Lifetime PD") of the obligation. This has been calculated by an external third-party credit rating agency using a wide range of parameters such as the company's financial statements and the macroeconomic environment. The external credit rating company has also designed a downside and upside scenario based on historic data. Company financials are modified to reflect various factors leading to a deterioration in performance.

· In each of the scenarios, various macro and financial variables are flexed and applied in the calculation. The macro variables are GDP growth, inflation, unemployment rate and interest rate. The financial variables are turnover, net debt, shareholder equity, working capital, tangible assets, interest expense, EBITDA, EBIT and net income. A base, optimistic and pessimistic scenario is applied for each of these above variables to calculate the corresponding expected credit loss.

The probability weighting of the scenarios was based on an analysis of the level of severity. It was determined that a weighting of 50% for the base case and 25% for each of the other scenarios was appropriate. The resulting forecasts are thus neither overly optimistic nor unduly conservative for IFRS 9 purposes.

	Optimistic	Base case	Pessimistic
IFRS 9 probability weighting	25%	50%	25%

· The EAD represents the amounts the Group expects to be owed at the time of default.

· LGD represents the Group's expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty, type and seniority of claim and availability of collateral or other credit support. LGD is expressed as a percentage loss per unit of EAD. LGD is calculated on a twelve month or lifetime basis, where twelve month LGD is the percentage of loss expected to be made if the default occurs in the next twelve months and lifetime LGD is the percentage of loss expected to be made if the default occurs over the remaining expected lifetime of the loan ("Lifetime LGD").

The ECL is determined by estimating the PD, LGD and EAD for each individual exposure or collective segment. These three components are multiplied together and adjusted for the likelihood of survival (i.e. the exposure has not prepaid or defaulted in an earlier month). This effectively calculates an ECL.

Management is aware that there is a high level of judgement in calculating the scenarios and the inputs given the assets are relatively recent with minimal historic data.

The main difference between Stage 1 and Stage 2 is the respective PD horizon. Stage 1 estimates use a maximum of a twelve month PD, while Stage 2 estimates use a lifetime PD. The main difference between Stage 2 and Stage 3 is that Stage 3 is effectively the point at which there has been a default event.

Movements between Stage 1 and Stage 2 are based on whether an instrument's credit risk as at the reporting date has increased significantly relative to the date it was initially recognised. Where the credit risk subsequently improves such that it no longer represents a significant increase in credit risk since origination, the asset is transferred back to Stage 1.

In assessing whether a counterparty has had a significant increase in credit risk, the following indicators are considered:

1. Early signs of cash flow/liquidity problems such as an ongoing delay in servicing of payables;

2. Significant increase in PD;

3. Actual or expected late payments or restructuring of payments due;

4. Actual or expected significant adverse change in operating results of the borrower, where this information is available; and

5. Significant adverse changes in business, financial and/or economic conditions in which the counterparty operates.

Movements between Stage 2 and Stage 3 are based on whether financial assets are credit-impaired as at the reporting date. The Group uses a rebuttable presumption that a credit deterioration (i.e. Stage 1 to Stage 2) occurs no later than when a payment is 90 days past due. The Group uses this 90-day backstop for all its assets. Assets can move in both directions through the stages of the impairment model. The Directors do not believe that being 30 days overdue is considered a credit deterioration given the nature and payment profile of some of its small counterparties. Payments are different from consumer loan payments and often comprise of a very large quantity of payments each of a very small amount. There is also significant evidence of catch-up payments where a counterparty has just passed the 30 days and very rarely have these counterparties missed the payment completely.

We recognise that individual credit exposures, which define the Company's investments, are different from, for example, consumer mortgage or consumer car loan portfolios. Late payments can arise due to the corporate counterparties refusing to utilise direct debit or standing order payment processes with the result that payment chasing can be required for relatively small amounts, e.g., lighting service contracts. Accordingly, we do expect that in certain cases 90 days late payments may not lead to movements through the ECL stages.

4. INVESTMENTS

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 that is 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 are unobservable (i.e. for which market data is unavailable) for the asset or liability.

The classification of the Group's investments held is detailed in the table below:

		31 December 2023				31 December 2022
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Group	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Investments at fair value through profit and loss	-	-	10,492	10,492	-	-	11,742	11,742
Derivative financial instrument	-	122	-	122	-	(856)	-	(856)
	-	122	10,492	10,614	-	(856)	11,742	10,886

There were no transfers between investment levels for the Group during the year.

The classification of the Company's investments held is detailed in the table below:

		31 December 2023				31 December 2022
	Level 1	Level 2	Level 3	Total	Level 1		Level 2	Level 3	Total
Company	£'000	£'000	£'000	£'000	£'000		£'000	£'000	£'000
Investment in SPV, at fair value through profit or loss	-	-	35,683	35,683	-		-	31,220	31,220
	-	-	35,683	35,683	-		-	31,220	31,220

There were no transfers between investment levels for the Company during the year.

The movement on the Level 3 unquoted investments of the Group during the year is shown below:

	31 December	31 December
	2023	2022
	£'000	£'000
Opening balance	11,742	-
Additions during the year	1,675	10,926
Disposals during the year	(1,551)	(43)
Unrealised (loss)/gain on investments	(1,374)	859
Closing balance	10,492	11,742

The movement on the Level 3 unquoted investments of the Company (Investment in SPV, at fair value through profit or loss) during the year is shown below:

	31 December	31 December
	2023	2022
	Company	Company
	£'000	£'000
Opening balance	31,220	12,307
Additions during the year	4,808	16,769
Repayments during the year	(1,306)	-
Unrealised gain on investments	961	2,144
Closing balance	35,683	31,220

Assets and liabilities not carried at fair value but for which fair value is disclosed

The following table presents the fair value of the Group's assets and liabilities not measured at fair value through profit and loss at 31 December 2023 but for which fair value is disclosed:

	31 December 2023		31 December 2022
		Fair market		Fair market
	Carrying value	value	Carrying value	value
	£'000	£'000	£'000	£'000
Assets
Investments at amortised cost	54,990	57,221	38,550	38,755
Total	54,990	57,221	38,550	38,755

For all other assets and liabilities not carried at fair value, the carrying value is a reasonable approximation of fair value.

Valuation methodology

Debt instruments at fair value through profit or loss

The Group through its subsidiary (AHL) and its notes in the Italian SPV has continued to acquire debt instruments at fair value through profit or loss. The Investment Adviser has determined the fair value of debt investments as at 31 December 2023. The Directors have satisfied themselves as to the fair value of the debt instrument investments as at 31 December 2023.

Valuation assumptions

The Investment Adviser has carried out fair market valuations on some of the debt instruments held by the subsidiaries as at 31 December 2023 and the Directors have satisfied themselves as to the methodology used, the discount rates and key assumptions applied, and the valuation. Investments that are valued at fair value through profit or loss are valued using the IFRS 13 framework for fair value measurement. The following economic assumptions were used in the valuation of the investments.

Valuation assumptions

Discount rates	The discount rate used in the valuations is derived according to internationally recognised methods. Typical components of the discount rate are risk-free rates, country-specific and asset-specific risk premia. The latter comprise the risks inherent to the respective asset class as well as specific premia for other risks such as development and construction.
Power price	Power prices are based on power price forecasts from leading market analysts. The forecasts are independently sourced from a provider with coverage in almost all European markets as well as providers with regional expertise.
Energy yield	Estimated based on third party energy yield assessments campaigns as well as operational performance data (where applicable) by taking into account regional expertise of a second analyst.
Inflation rates	Long-term inflation is based on central bank targets for the respective jurisdiction.
Capital expenditure	Based on the contractual position (e.g., engineering, procurement and construction agreement), where applicable.

Valuation sensitivities

For each of the sensitivities, it is assumed that potential changes occur independently of each other with no effect on any other base case assumption, and that the number of investments remains static throughout the modelled life.

The Net Asset Value impacts from each sensitivity are shown below.

Discount rates

The Discounted Cash Flow (''DCF'') valuation of the investments which are held at fair value represents one component of the Net Asset Value of the Group and the key sensitivities are considered to be the discount rate used in the DCF valuation and assumptions.

The weighted average valuation discount rate applied to calculate the investment valuation is 7.7% at 31 December 2023. An increase or decrease in this rate by 0.5% at investment level has the following effect on valuation.

	31 December 2023		31 December 2022
	+0.5%	-0.5%	-0.5%	+0.5%
	Change	Change	Change	Change
Discount rate	£'000	£'000	£'000	£'000
Valuation	(242)	250	(488)	512

Power price

Long-term power price forecasts are provided by leading market consultants and are updated quarterly. The sensitivity below assumes a 10% increase or decrease in merchant power prices relative to the base case for every year of the asset life. The sensitivity considers a flat 10% movement in power prices for all years, i.e. the effect of adjusting the forecast electricity price assumptions in each of the jurisdictions applicable to the investments down by 10% and up by 10% from the base case assumptions for each year throughout the operating life of the investment.

A change in the forecast electricity price assumptions by plus or minus 10% has the following effect on valuation.

	31 December 2023		31 December 2022
	-10.0%	+10.0%	-10.0%	+10.0%
	Change	Change	Change	Change
Power price	£'000	£'000	£'000	£'000
Valuation	(64)	66	(542)	547

Energy yield

The base case assumes a ''P50'' level of output. The P50 output is the estimated annual amount of electricity generation (in MWh) that has a 50% probability of being exceeded both in any single year and over the long term and a 50% probability of being under-achieved. Hence the P50 is the expected level of generation over the long term. The sensitivity illustrates the effect of a 10% lower annual production (a downside case) and a 10% higher annual production (upside case). The sensitivity is applied throughout the whole term of the projects.

The table below shows the sensitivity of the project values to changes in the energy yield applied to cash flows from projects as explained above.

	31 December 2023		31 December 2022
	-10.0%	+10.0%	-10.0%	+10.0%
	Change	Change	Change	Change
Energy yield	£'000	£'000	£'000	£'000
Valuation	(555)	533	(1,570)	1,866

Inflation rates

As most payments are fixed and not linked to the inflation rate, a sensitivity of the inflation rate has only a negligible impact on the NAV.

Capital expenditure

The Company has contractual protections if capex is delayed (i.e. reduce the capex or increase receivables due) and the Company is not obliged to fund the overrun costs. Therefore, capex sensitivities are not appropriate for the Company's type of investments.

Investments at amortised cost

a) Investments at amortised cost

The disclosure below presents the gross carrying value of financial instruments to which the impairment requirements in IFRS 9 are applied and the associated allowance for ECL. Please see Note 3 for more detail on the allowance for expected credit loss (''ECL'') where the Group has classified the investment portfolio according to stages.

The following table analyses loans by staging for the Group as at 31 December 2023:

	31 December 2023			31 December 2022
	Gross		Net	Gross		Net
	carrying	Allowance	carrying	carrying	Allowance	carrying
	amount	for ECL	amount	amount	for ECL	amount
Group	£'000	£'000	£'000	£'000	£'000	£'000
Fixed value investments at amortised cost
Stage 1	54,399	(259)	54,140	37,735	(77)	37,658
Stage 2	156	(24)	132	951	(59)	892
Stage 3	2,306	(1,588)	718	-	-	-
Total assets	56,861	(1,871)	54,990	38,686	(136)	38,550

As noted in the Investment Adviser's Report the Superbonus investments, which in total amount to £30.96 million of the gross carrying amount of £54.40 million of Stage I investments, have been experiencing delays with final payments from the buyers of the tax credits generated by these projects. The ECL provisions for Superbonus investments are based on the exposures being considered as remaining in Stage 1. Payments for validated tax credits in certain cases have not been made within 90 days of seeking payment from the buyers of the tax credits. The decision not to move the classification of these investments from Stage 1 to Stage 2 is based on the judgment that
there has been no significant deterioration in the credit risk for the following reasons:

· there has been a significant de-risking of the construction risks in the Superbonus projects;

· the large majority of the 109 projects have now secured tax credit certification, a significant improvement on the position as at the end of September 2023;

· the delays in payment are attributable in large part to bureaucratic delays in processing large volumes of tax credits generated by other projects/ESCOs and not just those financed by the Company;

· payments for tax credits generated by tranches 1 and 2 of relevant projects have been made; and

· £2.9m of final payments have been received of which £2.0m in the year to date.

If the projects identified as experiencing payment delays of over 90 days were moved to Stage 2 there would be no increase in the allowance for ECL since the amounts due are within 12 months. Notwithstanding the comments above, by way of illustration, if the PDs and LGDs were increased by 4 times and 2 times respectively the allowance for ECL would increase by £0.45 million.

b) Expected credit loss allowance for IFRS 9

Impairment provisions are driven by changes in credit risk of instruments, with a provision for lifetime expected credit losses recognised where the risk of default of an instrument has increased significantly since initial recognition.

The following table analyses Group ECL by stage.

	2023	2022
Group	£'000	£'000
At 1 January	136	-
Charge for the year - Stage 1	182	77
Charge for the year - Stage 2	(35)	59
Charge for the year - Stage 3	1,588	-
Allowance for ECL at 31 December	1,871	136

Stage 3 losses

The Stage 3 losses relate to two investments: Ega Energy and the sub-metering investment in Germany.

Ega Energy - (£475,000)

The CHP investment for a food producer, Vale of Mowbray, to which £0.9 million had been deployed, as previously reported, remains on hold because Vale of Mowbray was placed into administration. Discussions continue between Ega Energy, the developer of the original project, and the new owner of the site, a cold store logistics business. However, the new owner of the site has not yet decided whether or how to proceed with the CHP investment. Ega Energy remains confident that it will be able to deploy the CHP equipment either at this site or at the sites of other potential clients in the UK. Nevertheless, the Group has increased the provision against this investment from £0.06 million as at 31 December 2022 to £0.48 million at the period end and the Group is forecasting that no further capital will be deployed to this investment.

Sub-metering investment in Germany - (£1,111,000)

The Company invested a total of £1.7 million in the sub-metering investment in Germany investment in April and June 2022 of which £0.4 million had been redeemed at the year end. The investment was made by way of a subscription for a note issued by a SPV. The SPV is party to a series of contracts with various landlords for the provision of sub-metering, hardware, maintenance and billing services contracts. The SPV appointed an insolvency administrator in October 2023. The provision of £1,111,000 is based on an offer from a potential buyer.

Measurement uncertainty and sensitivity analysis of ECL

The recognition and measurement of ECL is complex and involves the use of judgement and estimation. This includes the formulation and incorporation of multiple forward-looking economic conditions into ECL to meet the measurement objective of IFRS 9.

The ECL recognised in the financial statements reflects the effect on expected credit losses of a range of three possible outcomes, calculated on a probability-weighted basis, based on the economic scenarios described in Note 3 to the financial statements, including management overlays where required. The probability-weighted amount is typically a higher number than would result from using only the base (most likely) economic scenario. ECLs typically have a non-linear relationship to the many factors which influence credit losses, such that more favourable macroeconomic factors do not reduce defaults as much as less favourable macroeconomic factors increase defaults. The ECL calculated for each of the scenarios represents three outcomes that have been evaluated to estimate ECL. As a result, the ECL calculated for the upside and downside scenarios should not be taken to represent the upper and lower limits of possible actual ECL outcomes. There is a high degree of estimation uncertainty in numbers representing tail risk scenarios when assigned a 100% weight. A wider range of possible ECL outcomes reflects uncertainty about the distribution of economic conditions and does not necessarily mean that credit risk on the associated loans is higher than for loans where the distribution of possible future economic conditions is narrower.

In addition to the scenario analysis outlined above, two further extreme downside scenarios were provided as follows: the first scenario is LGD% assumed increased to 100%, in which event we calculate that this would result in an ECL of £2,906,575. A further second, harsher scenario would be to assume that in addition to an LGD% of 100%, the PD% is also increased by 50%. In this case the ECL would be £3,206,722.

Investment in Subsidiaries (Company level)

The Company has two subsidiaries, AHL and in the SPV. The Company's investment in its subsidiary, AHL, is composed of equity shares. The Company's investments in AHL is held at cost less impairment in the Company's Statement of Financial Position. The Company's investment in its subsidiary, SPV, is composed of loan notes receivables. The Company's investments in the SPV is held at fair value through profit or loss.

The composition of the Company's investment in subsidaries is as follows:

	2023	2022
Company	£'000	£'000
Investment in SPV, at fair value through profit or loss	35,683	31,220
Investment in AHL, held at cost less impairment	9,971	-*
Investment in subsidiaries	45,654	31,220

The movement of the Company's investments in AHL are as follows:

	2023	2022
Gross carrying amount	£'000	£'000
Balance 1 January	-	-
Additions during the year	11,791	-*
Balance 31 December	11,791	-*
Accumulated impairment
Balance 1 January	-	-
Impairment loss recognised	(1,820)	-
Balance 31 December	(1,820)	-
Carrying amount at 31 December	9,971	-*

* The investment in AHL for the year ended 31 December 2022 was £1.

5. INVESTMENT INCOME

Group	For the year ended 31 December 2023 £'000	For the year ended 31 December 2022 £'000
Investment interest income	5,027	1,646
Bank interest income	921	551
Total investment income	5,948	2,197

Company	For the year ended 31 December 2023 £'000	For the year ended 31 December 2022 £'000
Investment interest income	3,426	235
Bank interest income	654	462
Total investment income	4,080	697

6. INVESTMENT ADVISORY FEES

	For the year ended 31 December 2023			For the year ended 31 December 2022
	Revenue	Capital	Total	Revenue	Capital	Total
Group	£'000	£'000	£'000	£'000	£'000	£'000
Investment advisory fees	808	-	808	615	-	615

	For the year ended 31 December 2023			For the year ended 31 December 2022
	Revenue	Capital	Total	Revenue	Capital	Total
Company	£'000	£'000	£'000	£'000	£'000	£'000
Investment advisory fees	808	-	808	615	-	615

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

(i) 0.95 per cent. per annum of committed capital of the Company up to and including £500 million; and

(ii) 0.75 per cent. per annum of committed capital of the Company above £500 million.

7. OTHER EXPENSES

	For the year ended 31 December 2023			For the year ended 31 December 2022
	Revenue	Capital	Total	Revenue	Capital	Total
Group	£'000	£'000	£'000	£'000	£'000	£'000
Secretary and administrator fees	281	-	281	319	-	319
Tax compliance	62	-	62	37	-	37
Directors' fees	281	-	281	143	-	143
Broker's fees	182	-	182	61	-	61
Auditors' fees*
- Fees payable to the Company's auditors for
the audit of the Company's annual accounts	590	-	590	211	-	211
- Fees payable to the Company's auditors
and its associates for other services:
Audit of the accounts of subsidiaries	26	-	26	16	-	16
AIFM fees	91	-	91	98	-	98
Registrar's fees	23	-	23	16	-	16
Marketing fees	104	-	104	107	-	107
FCA and listing fees	26	-	26	17	-	17
Investment expenses	332	-	332	222	-	222
Legal fees	235	-	235	365	-	365
Other expenses	259	-	259	174	-	174
Total other expenses	2,492	-	2,492	1,786	-	1,786

	For the year ended 31 December 2023			For the year ended 31 December 2022
	Revenue	Capital	Total	Revenue	Capital		Total
Company	£'000	£'000	£'000	£'000	£'000		£'000
Secretary and administrator fees	199	-	199	233	-		233
Tax compliance	41	-	41	37	-		37
Directors' fees	203	-	203	108	-		108
Broker's fees	182	-	182	61	-		61
Auditors' fees*
- Fees payable to the Company's auditors for
the audit of the Company's annual accounts	590	-	590	211	-		211
- Fees payable to the Company's auditors and its associates for other services:
audit of the accounts of subsidiaries	26	-	26	16		-	16
AIFM fees	91	-	91	98		-	98
Registrar's fees	23	-	23	16		-	16
Marketing fees	104	-	104	107		-	107
FCA and listing fees	26	-	26	17		-	17
Legal fees	235	-	235	351		-	351
Other expenses	192	-	192	120		-	120
Total other expenses	1,912	-	1,912	1,375		-	1,375

* For the year to 31 December 2023, the statutory audit fees to the Company's auditors and its associates for the audit of the Company and consolidated financial statements was £336,000 (2022: £187,000) excluding VAT. The audit fees payable to the Company's auditors and its associates for the audit of the Company's subsidiaries is £21,500 (2022: £16,000) excluding VAT, which was paid for by the Parent entity. Included in the above audit fees are overruns relating to the previous year's audit amounting to £177,500 (2022: £nil), excluding VAT. This is explained further in the Audit and Risk Committee Report.

8. TAXATION

(a) Analysis of charge in the year

	For the year ended 31 December 2023			For the year ended 31 December 2022
	Revenue	Capital	Total	Revenue	Capital	Total
Group	£'000	£'000	£'000	£'000	£'000	£'000
Corporation tax	-	-	-	-	-	-
Taxation	-	-	-	-	-	-

	For the year ended 31 December 2023			For the year ended 31 December 2022
	Revenue	Capital	Total	Revenue	Capital	Total
Company	£'000	£'000	£'000	£'000	£'000	£'000
Corporation tax	-	-	-	-	-	-
Taxation	-	-	-	-	-	-

(b) Factors affecting total tax charge for the year

The effective UK corporation tax rate applicable to the Group for the year is 23.5% (2022: 19%). The tax charge differs from the charge resulting from applying the standard rate of UK corporation tax for an investment trust company.

The differences are explained below:

	For the year ended 31 December 2023			For the year ended 31 December 2022
	Revenue	Capital	Total	Revenue	Capital	Total
Group	£'000	£'000	£'000	£'000	£'000	£'000
Profit/(loss) on ordinary activities before taxation	913	(609)	304	(340)	477	137
Corporation tax at 23.5% (2022: 19%)	215	(143)	72	(65)	91	26
Effects of:
Utilisation of carried forward tax losses/
management expenses	(320)	(35)	(355)	65	-	65
Movement on investments not taxable	(310)	178	(132)	-	-	-
Loss not recognised	415	-	415	-	(91)	(91)
Total tax charge for the year	-	-	-	-	-	-

	For the year ended 31 December 2023			For the year ended 31 December 2022
	Revenue	Capital	Total	Revenue	Capital	Total
Company	£'000	£'000	£'000	£'000	£'000	£'000
(Loss)/Profit on ordinary activities before taxation	(681)	924	243	(1,293)	2,045	752
Corporation tax at 23.5% (2022: 19%)	(160)	217	57	(246)	389	143
Effects of:
Utilisation of carried forward tax losses/
management expenses	(320)	-	(320)	246	-	246
Non-deductible impairment	480	-	480	-	-	-
Gain on investments not taxable	-	(217)	(217)	-	(389)	(389)
Total tax charge for the year	-	-	-	-	-	-

Investment companies which 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 Company's 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.

The Company has not recognised a deferred tax asset of £89,000 (2022: £429,000) on trading losses of £369,000 (2022: £429,000) in the UK. The asset has not been recognised as it is considered unlikely that the Company will generate sufficient future profits against which to utilise the assets. There is no time limit for expiry of the losses. On 3 March 2021, the UK Government announced its intention to increase the rate of UK corporation tax rate from 19% to 25% with effect from 1 April 2023. The increase to 25% was substantively enacted on 24 May 2021 and, accordingly, the unrecognised deferred tax asset has been measured using the 25% tax rate.

9. RETURN PER ORDINARY SHARE

Group

Return per share is based on the consolidated profit for the year of £304,000 (2022: £137,000) attributable to the weighted average number of Ordinary Shares in issue of 100,000,000 in the year to 31 December 2023 (2022: Ordinary Shares in issue 100,000,000). Consolidated revenue profit and capital loss are £913,000 (2022: Consolidated revenue loss of £340,000) and £609,000 (2022: Consolidated capital gains of £477,000) respectively.

Company

Return per share is based on the profit for the year of £243,000 attributable to the weighted average number of Ordinary Shares in issue of 100,000,000 in the year to 31 December 2023 (2022: Company gain of £752,000; weighted average number of Ordinary Shares in issue 100,000,000). Company revenue loss and capital gain are £681,000 (2022: Company revenue loss of £1,293,000) and £924,000 (2022: Company capital gain of £2,045,000) respectively.

10. TRADE AND OTHER RECEIVABLES

	As at 31 December 2023		As at 31 December 2022
	Company	Group	Company	Group
	£'000	£'000	£'000	£'000
Intercompany receivable	-	-	32,966	-
Shareholder loan receivable	27,293	-	-	-
Unsettled trades	-	272	-	-
Trade and other receivables	255	380	33	70
Total	27,548	652	32,999	70

As at 31 December 2023, the Company has an intercompany receivable from AHL in the amount of £nil (2022: £32,966,000).

The amount is non-interest bearing and payable on demand.

As at 31 December 2023, the Company has a shareholder loan receivable from AHL in the amount of £27,293,000 (2022: £nil), which is net of ECL provision of £221,000 (2022: £nil). The initial interest rate was 7.90% per annum which is then being adjusted every fourth quarter of the financial year in order for the Company not to have a gross margin of less than 50bps from its financing activities. The loan is repayable in full on 31 December 2046.

11. CREDITORS: AMOUNTS FALLING DUE IN ONE YEAR

	As at 31 December 2023		As at 31 December 2022
	Company	Group	Company	Group
	£'000	£'000	£'000	£'000
Accrued expenses	874	1,016	867	892
Unsettled payment of notes purchased	-	-	177	-
Unsettled trades	-	41	-	-
Other creditors	-	-	6	12
Total	874	1,057	1,050	904

12. SHARE CAPITAL

	As at 31 December 2023		As at 31 December 2022
	No. of shares	£'000	No. of shares	£'000
Allotted, issued and fully paid:
Ordinary Shares of 1p each ("Ordinary Shares")	100,000,000	1,000	100,000,000	1,000
Total	100,000,000	1,000	100,000,000	1,000

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

On incorporation on 2 June 2021, 99,999,999 Ordinary Shares were allotted and issued to Shareholders as part of the placing and offer for subscription in accordance with the Company's prospectus dated 10 May 2021.

	Shares in issue at		Shares in issue
	the beginning	Shares	at the end of
For the year ended 31 December 2023	of the year	subscribed	the year
Management Shares	-	-	-
Ordinary Shares	100,000,000	-	100,000,000

	Shares in issue at		Shares in issue
	the beginning of	Shares	at the end of
For the year ended 31 December 2022	the year	subscribed	the year
Management Shares	-	-	-
Ordinary Shares	100,000,000	-	100,000,000

13. SPECIAL RESERVE

As indicated in the Company's prospectus dated 10 May 2021, following admission of the Company's Ordinary Shares to trading on the London Stock Exchange, the Directors applied to the Court and obtained a judgement on 12 August 2021 to cancel the amount standing to the credit of the share premium account of the Company. The amount of the share premium account cancelled and credited to a special reserve was £97,000,000. As at 31 December 2023, the total special reserves were £93,500,000 (2022: £94,750,000).

14. NET ASSETS PER ORDINARY SHARE

The Group's net assets per Ordinary Share as at 31 December 2023 is based on £94,281,000 (2022: £95,227,000) of net assets of the Group attributable to the 100,000,000 Ordinary Shares in issue as at 31 December 2023 (2022: 100,000,000).

The Company's net assets per Ordinary Share as at 31 December 2023 is based on £94,876,000 (2022: £95,883,000) of net assets of the Company attributable to the 100,000,000 Ordinary Shares in issue as at 31 December 2023 (2022: 100,000,000).

15. DIVIDEND

The Company has paid the following interim dividends in respect of the year under review:

	For the year ended		For the year ended
	31 December 2023		31 December 2022
	Pence per	Total	Pence per	Total
Total dividends paid in the year	Ordinary Share	£'000	Ordinary Share	£'000
30 June 2022 interim - Paid 31 October 2022	N/A	N/A	1.00p	1,000
30 September 2022 interim - Paid 9 December 2022	N/A	N/A	1.25p	1,250
31 December 2022 interim - Paid 20 March 2023	1.25p	1,250	N/A	N/A
Total	1.25p	1,250	2.25p	2,250

The dividend relating to the year ended 31 December 2023, which is the basis on which the requirements of section 1159 of the Corporation Tax Act 2010 are considered, is detailed below:

	For the year ended		For the year ended
	31 December 2023		31 December 2022
	Pence per	Total	Pence per	Total
Total dividends declared in the year	Ordinary Share	£'000	Ordinary Share	£'000
30 June 2022 interim - Paid 31 October 2022	-	-	1.00p	1,000
30 September 2022 interim - Paid 9 December 2022	-	-	1.25p	1,250
31 December 2022 interim - Paid 20 March 2023	-	-	1.25p	1,250
Total	-	-	3.50p	3,500

16. FINANCIAL RISK MANAGEMENT

The Investment Adviser, AIFM and the Administrator report to the Board on a quarterly basis and provide information to the Board which allows it to monitor and manage financial risks relating to the Group's operations. The Group's activities expose it to a variety of financial risks: market risk (including price risk, interest rate risk and foreign currency risk), credit risk and liquidity risk. These risks are monitored by the AIFM. Each risk and its management are summarised below.

(i) Currency risk

Foreign currency risk is defined as the risk that the fair values of future cash flows will fluctuate because of changes in foreign exchange rates. The Group's and the Company's financial assets and liabilities are denominated in GBP and EUR and substantially all of their revenues and expenses are in GBP and EUR. The Group and the Company are therefore exposed to foreign currency risk.

For any non-base currency assets, the Investment Adviser can use forward foreign exchange contracts to seek to hedge up to 100% of non-GBP exposure.

The Company does not intend to use hedging or derivatives for investment purposes but may use derivative instruments such as forwards, options, future contracts and swaps to hedge currency, inflation, interest rates, commodity prices and/or electricity prices.

With many of its investment assets held in Euros, the Group uses a series of regular forward foreign exchange contracts to provide a level of protection against movement in the Sterling exchange rate. Under these arrangements the Group is required to provide £2.5 million in cash as collateral for these forward foreign exchange contracts. Following the failure of the Continuation Vote, the Group is currently reviewing the strategic options for realising value for Shareholders. The Board will consider the appropriateness of the current hedging arrangements and the cash collateral as part of the review of strategic options and in light of the cash requirements of the Group.

The currency profile of the Group as at 31 December 2023 is as follows:

	31 December 2023			31 December 2022
	GBP	EUR	Total	GBP	EUR	Total
Assets	£'000	£'000	£'000	£'000	£'000	£'000
Cash and cash equivalents	23,547	5,535	29,082	37,444	9,181	46,625
Trade and other receivables	159	493	652	33	37	70
Derivative financial instruments	122	-	122	-	-	-
Investments	3,566	61,916	65,482	4,306	45,986	50,292
Total assets	27,394	67,944	95,338	41,783	55,204	96,987
Liabilities
Creditors	(901)	(156)	(1,057)	(900)	(4)	(904)
Derivative financial instruments	-	-	-	(856)	-	(856)
Total liabilities	(901)	(156)	(1,057)	(1,756)	(4)	(1,760)

If the value of Sterling against the Euro increased or decreased by 10% (2022: 10%), if all other variables remained constant, the NAV of the Group would increase or decrease by £6,794,000 (2022: £5,520,000).

The currency profile of the Company as at 31 December 2023 is as follows:

	31 December 2023			31 December 2022
	GBP	EUR	Total	GBP	EUR	Total
Assets	£'000	£'000	£'000	£'000	£'000	£'000
Cash and cash equivalents	19,884	2,664	22,548	32,169	545	32,714
Intercompany balance with Attika Holdings	-	-	-	16,371	16,595	32,966
Shareholder loan receivable	27,293	-	27,293
Trade and other receivables	255	-	255	33	-	33
Investments	9,971	35,683	45,654	-	31,220	31,220
Total assets	57,403	38,347	95,750	48,573	48,360	96,933
Liabilities
Creditors	(874)	-	(874)	(1,050)	-	(1,050)
Total liabilities	(874)	-	(874)	(1,050)	-	(1,050)

If the value of Sterling against the Euro increased or decreased by 10% (2022: 10%), if all other variables remained constant, the NAV of the Group would increase or decrease by £3,835,000 (2022: £4,836,000).

(ii) Interest rate risk

The Group's interest rate risk on interest bearing financial assets is limited to interest earned on cash and investments. The interest rates of investments held at amortised cost are fixed, therefore the interest rate risk is minimal. Investments held at fair value through profit or loss have variable returns based on e.g. power production levels and not on variability in interest rates.

The Group's interest rate risk on interest bearing financial assets is limited to interest earned on cash and investments. The interest rates of investments are fixed, therefore the interest rate risk is minimal.

The Group's interest and non-interest bearing assets and liabilities as at 31 December 2023 are summarised below:

	31 December 2023			31 December 2022
	Interest	Non-interest		Interest	Non-interest
	bearing	bearing	Total	bearing	bearing	Total
Assets	£'000	£'000	£'000	£'000	£'000	£'000
Cash and cash equivalents	27,817	1,265	29,082	44,854	1,771	46,625
Trade and other receivables	-	652	652	-	70	70
Derivative financial instruments	-	122	122	-	-	-
Investments	54,990	10,492	65,482	38,550	11,742	50,292
Total assets	82,807	12,531	95,338	83,404	13,583	96,987
Liabilities
Creditors	-	(1,057)	(1,057)	-	(904)	(904)
Derivative financial instruments	-	-	-	-	(856)	(856)
Total liabilities	-	(1,057)	(1,057)	-	(1,760)	(1,760)

The Company's interest and non-interest bearing assets and liabilities as at 31 December in each reporting year are summarised below:

	31 December 2023			31 December 2022
	Interest	Non-interest		Interest	Non-interest
	bearing	bearing	Total	bearing	bearing	Total
Assets	£'000	£'000	£'000	£'000	£'000	£'000
Cash and cash equivalents	21,606	942	22,548	31,174	1,540	32,714
Trade and other receivables	-	255	255	-	33	33
Intercompany receivable	-	-	-	-	32,966	32,966
Shareholder loan receivable	27,293	-	27,293	-	-	-
Investments	35,683	9,971	45,654	31,220	-	31,220
Total assets	84,582	11,168	95,750	62,394	34,539	96,933
Liabilities
Creditors	-	(874)	(874)	-	(1,050)	(1,050)
Total liabilities	-	(874)	(874)	-	(1,050)	(1,050)

(iii) Price risk

Price risk is defined as the risk that the fair value of a financial instrument held by the Group will fluctuate. As of 31 December 2023, the Group held investments at fair value through profit or loss with an aggregate fair value of £10,492,000 (2022: £11,742,000). All other things being equal, the effect of a 10% increase or decrease in the prices of the investments held at the year end would have been an increase or decrease of £1,049,200 (2022: £1,174,000) in the profit after taxation for the year ended 31 December 2023 and the Group's net assets at 31 December 2023. The sensitivity of the investment valuation due to price risk is shown further in Note 4.

As of 31 December 2023, the Company held investments at fair value through profit or loss with an aggregate fair value of £35,683,000 (2022: £31,220,000). All other things being equal, the effect of a 10% increase or decrease in the prices of the investments held at the year end would have been an increase or decrease of £3,568,300 (2022: £3,122,000) in the profit after taxation for the year ended 31 December 2023 and the Company's net assets at 31 December 2023.

(iv) Credit risk

Credit risk is the risk of loss due to the failure of a borrower or counterparty to fulfil its contractual obligations. The Group and the Company are exposed to credit risk in respect of the investments valued at amortised cost, interest income receivable and other receivables and cash at bank. The Group and the Company's credit risk exposure is minimised by dealing with financial institutions with investment grade credit ratings.

Continued monitoring of the investments and the counterparties/service providers, including the use of credit rating data providers, allows the Investment Adviser to identify and address these risks early. Where possible, the Investment Adviser seeks to mitigate credit risks by the counterparty having the opportunity to sell electricity to the grid or other customers. The Investment Adviser also seeks to structure investments whereby contracts can be adapted/extended to accommodate periods of payment defaults. Diversification of counterparties and service providers ensures any impact is limited. In addition, a diversified portfolio provides further mitigation.

The table below shows the cash balances of the Group and the Company as well as the credit rating for each counterparty:

		As at 31 December 2023		As at 31 December 2022
		Company	Group	Company	Group
	Rating	£'000	£'000	£'000	£'000
Goldman Sachs - Liquid reserve fund	AAA (Fitch Rating)	6,632	6,632	7,752	7,752
EFG Deposit account	A (Fitch Rating)	15,858	19,248	23,904	23,957
Royal Bank of Scotland International	A-1/A (S&P Rating)	58	2,998	1,058	6,314
Bank of New York Mellon	AA (Fitch Rating)	-	204	-	8,602
		22,548	29,082	32,714	46,625

The table below shows the amortised cost investment balances of the Group as well as the credit rating for each counterparty:

	As at	As at
	31 December	31 December
Group	2023	2022
A	5,871	4,138
B	31,890	23,895
C	16,509	10,517
D	720	-
	54,990	38,550

The Group and the Company classified each project using a certain credit risk band. Listed below are the conversion methodologies used:

	Corresponding
Credit risk band	S&P rating range
A	AAA to A-
B	BBB+ to BBB-
C	BB to CC-
D	Default

(v) Liquidity risk

Liquidity risk is the risk that the Company may not be able to meet a demand for cash or fund an obligation when due. The Investment Adviser, AIFM and the Board continuously monitor forecast and actual cash flows from operating, financing and investing activities to consider payment of dividends or further investing activities.

The financial liabilities by maturity of the Group at the year end are shown below:

	31 December 2023				31 December 2022
	Less than				Less than
	1 year	1-2 years	2-5 years	Total	1 year	1-2 years	2-5 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Liabilities
Creditors	(1,057)	-	-	(1,057)	(904)	-	-	(904)
Derivative financial instruments	-	-	-	-	(856)	-	-	(856)
	(1,057)	-	-	(1,057)	(1,760)	-	-	(1,760)

The financial liabilities by maturity of the Company at the year end are shown below:

	31 December 2023				31 December 2022
	Less than				Less than
	1 year	1-2 years	2-5 years	Total	1 year	1-2 years	2-5 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Liabilities
Creditors	(874)	-	-	(874)	(1,050)	-	-	(1,050)
	(874)	-	-	(874)	(1,050)	-	-	(1,050)

As at 31 December 2023, the Group has total commitments of £5.26 million (31 December 2022: £35.45 million) to its investments which are unfunded.

Capital management

The Company considers its capital to comprise Ordinary Share capital, distributable reserves and retained earnings. The Company is not subject to any externally imposed capital requirements.

The Company's primary capital management objectives are to ensure the sustainability of its capital to support continuing operations, meet its financial obligations and allow for growth opportunities. Generally, acquisitions are anticipated to be funded by a combination of current cash and equity.

17. RELATED PARTY TRANSACTIONS

Fees payable to the Investment Adviser are shown in the Consolidated Statement of Profit or Loss and Comprehensive Income. As at 31 December 2023, the fee outstanding to the Investment Adviser was £361,000 (2022: £463,000).

Total Directors' fees paid during the year are as follows:

	Date of appointment to the Board	Fees for the year ended 31 December 2023¹ (£)	Fees for the year ended 31 December 2022¹ (£)
Miriam Greenwood	19 April 2021	92,852	57,585
Nicholas Bliss	9 April 2021	59,794	42,226
Lisa Arnold²	9 April 2021	n/a	3,231
Laura Sandys²	9 April 2021	n/a	3,231
David Fletcher	29 April 2022	71,861	30,557
Janine Freeman	2 November 2022	56,512	6,642
Total		281,019	143,472

There are no outstanding Directors' fees at year end.

¹ Including fees in respect of directorships in AHL.

² Resigned on 28 January 2022.

Directors' holdings

At 31 December 2023 and at the date of this report the Directors had the following holdings in the Company. There is no requirement for Directors to hold shares in the Company. All holdings were beneficially owned.

	As at 31 December 2023			As at 31 December 2022
	Shares	Connected person	Total	Shares	Connected person	Total
Miriam Greenwood	24,000	-	24,000	24,000	-	24,000
David Fletcher	42,425	14,181	56,606	41,785	13,951	55,736
Nicholas Bliss	20,000	-	20,000	20,000	-	20,000
Janine Freeman	-	-	-	-	-	-

The following table shows the subsidiaries of the Company. Please refer to Note 2; these subsidiaries have been consolidated in the preparation of the financial statements.

Subsidiary entity name and registered address	Effective ownership	Investment	Country of incorporation
Attika Holdings Limited Leaf B, 20th Floor, Tower 42, Old Broad Street, London, England, EC2N 1HQ	100%	HoldCo subsidiary entity, owns underlying investments	United Kingdom
SPV Project 2013 S.r.l. Via Vittorio Betteloni, 2 20131, Milan, Italy	100% of the notes of one compartment	Special purpose entity, owns underlying investments	Italy

Company related party transactions

As at 31 December 2023, the Company has an intercompany receivable from AHL in the amount of £nil (2022: £32,966,000). The amount is non-interest bearing and payable on demand.

As at 31 December 2023, the Company has a shareholder loan receivable from AHL in the amount of £27,293,000 (2022: £nil). The initial interest rate was 7.90% per annum which is then being adjusted every fourth quarter of the financial year in order for the Company not to have a gross margin of less than 50bps from its financing activities. The loan is repayable in full on 31 December 2046.

As at 31 December 2023, the Company has a total of £35,683,000 (2022: £31,220,000) notes at fair value through profit or loss in the Italian SPV.

As at 31 December 2023, the Company has a total of £9,971,000 (2022: £1.00) equity investment held at cost less impairment in AHL.

18. DISTRIBUTABLE RESERVES

The Company's distributable reserves consist of the special reserve and revenue reserve. Capital reserve represents unrealised investments and as such is not distributable.

The revenue reserve is distributable. The amount of the revenue reserve that is distributable is not necessarily the full amount of the reserve as disclosed within these financial statements. As at 31 December 2023, the Company has no distributable revenue reserves as the Company is in a loss position of £2,547,000 (2022: loss of £1,866,000).

The Company's special reserve, which is also distributable, was £93,500,000 as at 31 December 2023 (2022: £94,750,000).

19. SUBSEQUENT EVENTS

On 19 April 2024, the Company published a circular in respect of proposals that up to 18,561,732 Ordinary Shares may be purchased under the Tender Offer for a maximum aggregate cash consideration of £17.5 million at a fixed price of 94.28 pence per Ordinary Share. The Company is convening a General Meeting for 11.30 a.m. on 13 May 2024 to consider and, if thought fit, pass the Tender Offer Resolution to authorise and to approve the terms under which the Tender Offer will be effected.

ALTERNATIVE PERFORMANCE MEASURES OF THE GROUP

OTHER INFORMATION (UNAUDITED)

In reporting financial information, the Company presents alternative performance measures ("APMs") which are not defined or specified under the requirements of IFRS. The Company believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the Company. There have been no changes in these APMs from the prior year. The APMs presented in this report are shown below:

(Discount)/premium

The amount, expressed as a percentage, by which the share price is more than the Net Asset Value per Ordinary Share.

		As at	As at
		31 December	31 December
		2023	2022
NAV per Ordinary Share (pence)	a	94.28	95.23
Share price (pence)	b	57.25	71.00
Discount	(b÷a)-1	(39.3%)	(25.4%)

Ongoing charges

A measure, expressed as a percentage of average net assets, of the regular, recurring annual costs of running an investment company. The average net assets has been computed as the average of the published NAV for 31 December 2022, 30 June 2023 and 31 December 2023.

		As at	As at
		31 December	31 December
		2023	2022
Average NAV	a	94,349	96,835
Annualised expenses	b	3,300	2,537¹
Ongoing charges	(b÷a)	3.5%	2.6%

¹ Figure includes investment advisory fees and other expenses as disclosed in the Consolidated Statement of Profit or Loss and Comprehensive Income.

Total return

A measure of performance that includes both income and capital returns. This takes into account capital gains and reinvestment of dividends paid out by the Company into the Ordinary Shares of the Company on the ex- dividend date.

31 December 2023		Share price	NAV
Opening at 1 January 2023 (pence)	a	71.00	95.23
Dividend adjustment	b	1.25	1.25
Closing at 31 December 2023 (pence)	c	57.25	94.28
Total return	((c+b)÷a)-1	(17.6%)	0.3%

31 December 2022		Share price	NAV
Opening at 1 January 2022 (pence)	a	95.75	97.38
Dividend adjustment	b	2.25	2.25
Closing at 31 December 2022 (pence)	c	71.00	95.23
Total return	((c+b)÷a)-1	(25.8%)	(2.2%)

n/a = not applicable

FINANCIAL INFORMATION

Year ended 31 December 2023

The figures and financial information for the year ended 31 December 2023 are extracted from the Company's Annual Financial Statements for that year and do not constitute statutory financial statements for that year. The Company's Annual Financial Statements for the year ended 31 December 2023 have been audited but have not yet been delivered to the Registrar of Companies. The Independent Auditor's Report on the 2023 Financial Statements was unqualified, did not include a reference to any matter to which the Auditors drew attention without qualifying the report, and did not contain any statements under sections 498(2) and 498(3) of the Companies Act 2006.

Year ended 31 December 2022

The figures and financial information for the year ended 31 December 2022 are extracted from the Company's Financial Statements for that year and do not constitute statutory financial statements for that year. The Company's Annual Financial Statements for the year ended 31 December 2022 have been audited and delivered to the Registrar of Companies. The Independent Auditor's Report on the 2022 Financial Statements was unqualified, did not include a reference to any matter to which the Auditors drew attention without qualifying the report, and did not contain any statements under sections 498(2) and 498(3) of the Companies Act 2006.

ANNUAL REPORT

The Annual Report for the year ended 31 December 2023 was approved on 30 April 2024. The Company's AGM will be held on 12 June 2024 at 2.00pm at the offices of CMS Cameron McKenna Nabarro Olswang LLP located at Cannon Place, 78 Cannon Street, London EC4N 6AF. The Company will publish an announcement to confirm when the full Annual Report and the AGM notice are available to access via the Company's website at: https://www.aquila-energy-efficiency-trust.com/ and via the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

This announcement contains regulated information under the Disclosure Guidance and Transparency Rules of the FCA.

30 April 2024

For further information contact:

Company Secretary and registered office:

Apex Listed Companies Services (UK) Limited

6th Floor, 125 London Wall, London, EC2Y 5AS

END

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