Svindbaek, Denmark

AQUILA EUROPEAN

RENEWABLES PLC

ANNUAL REPORT

FOR THE YEAR ENDED 31 DECEMBER 2023

AQUILA EUROPEAN RENEWABLES PLC|ANNUAL REPORT 2023

For more information

please visit ourwebsite

www.aquila-european-renewables.com

Tesla, Norway

Diversified

Portfolio

Overview

Update on

Initiatives

Market

Commentary

and Outlook

Read more on page 17

HydropowerSolar PVWind energy

Sagres, PortugalTiza, SpainTesla, Norway

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

HIGHLIGHTS

Financial Information

as at 31 December 2023

Net assets

(EUR million)

372.5

2022: 451.7

NAV per Ordinary

Share (cents)

98.5

2022: 110.6

Total NAV return per

Ordinary Share

1,2

(6.0%)

2022: 12.9%

Dividends per Ordinary

Share (cents)

5.51

2022: 5.25

Ordinary Share

price (cents)

78.5

2022: 92.3

1. This disclosure is considered to represent the Company’s alternative performance measures (“APMs”). Definitions of these APMs and other

performance measures used, together with how these measures have been calculated, can be found on page 111. All references to cents are in

euros, unless stated otherwise.

2. Calculation based on NAV per Ordinary Share in euros, includes dividends and assumes no reinvestment of dividends.

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

4. Calculation based on average NAV over the period and regular recurring annual operating costs of the Company, further details can be found

on page 111.

5. Dividend yield is calculated by dividing the target dividend of 5.79 cents per Ordinary Share for 2024 by the market share price as at

31December2023.

6. Calculation based on the operational result at special purpose vehicle (“SPV”) level. Refer to page 20 for further details.

Ourique, Portugal

Ongoing

charges

1,4

1.1%

2022: 1.1%

Dividend

yield

7.4%

2022: 5.7%

Dividend

cover

1,6

1.1x

2022: 1.4x

Ordinary Share price

discount to NAV

(20.3%)

2022: (16.6%)

Aquila European Renewables Plc|Annual Report 2023

Dividend cover of 1.1x (1.6x before debt

amortisation). Robust dividend cover of

1.3x expected over the next five years

Active portfolio management delivered

4.6 cents per Ordinary Share in

valuation uplift.

2024 target dividend guidance of

5.79cents (5.0% increase on 2023)

In April 2023, the Company extended

the maturity date of the Revolving

Credit Facility (“RCF”) by twelve months

to April 2025.

Attractive dividend yield of 7.4%

Completion of 154.8 MW of

construction assets, resulting in a fully

operational portfolio.

EUR 49.0 million of capital returned to

shareholders in the form of dividends

and share buybacks over 2023, reducing

total Ordinary Shares in issue by 7.4%.

Members of the Board of Directors and

the Investment Adviser acquired AER

Ordinary Shares.

In December 2023, the Board

responded to the receipt of unsolicited

proposals from Octopus Renewables

Infrastructure Trust plc (“ORIT”) in

relation to a possible combination under

section 110 of the Insolvency Act 1986

and confirmed it would consider the

combination proposed by ORIT as part

of a review of broader options already

underway.

On 1 September 2023, Myrtle Dawes

was appointed as an additional Board

member of the Company. Ms Dawes

has over 30 years of experience in the

energy sector.

Highlights

1. Dividend cover presented is net of project debt repayments, excludes the impact of any future share buybacks and assumes the 2024 target

dividend is paid in 2024 to 2028. No re-investment of surplus cash flow or interest received is assumed. There can be no assurance that these

targets can or will be met and it should not be seen as an indication of the Company’s expected or actual results or returns.

2. Subject to the portfolio performing in line with expectations. These are targets only and not forecasts. There can be no assurance that these

targets can or will be met and it should not be seen as an indication of the Company’s expected or actual results or returns.

3. Dividend yield is calculated by dividing the target dividend of 5.79 cents per Ordinary Share for 2024 by the market share price as at

31December 2023.

4. Excludes any ancillary debt facilities (debt service reserve and letter of credit facilities). Refer to page 22 for more details.

5. Refer to page 13 for more details.

In October 2023, the Company

completed a secondary listing on

the Euronext Growth Dublin stock

exchange, further enhancing its

marketability in Europe.

Subsequent Events

On 11 January 2024, AER entered into

a EUR 50 million

five-year debt facility

with ING Bank N.V. Sucursal en España,

secured by its 180 MWp Spanish solar

PV operating portfolio. Net proceeds

were used to repay part of the Revolving

Credit Facility (“RCF”).

On 15 January 2024, the Company’s

inaugural ESG Report was released on

the Company’s website, highlighting

key metrics, environmental and social

initiatives.

On 18 January 2024, the Investment

Adviser, Aquila Capital, announced a

strategic partnership with Commerzbank

AG aimed at significantly accelerating

its growth into one of the leading asset

managers for sustainable investment

strategies in Europe

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

Market Opportunity

— Participation in Europe’s clean energy transition.

— Highly experienced Investment Adviser:

— Managing a 25.7 GW clean energy portfolio

— EUR 24.8 billion development and construction pipeline¹.

— 2030 Aquila Capital target of avoiding 1.5 billion tonnes of CO

during its lifetime

OVERVIEW

AER seeks to generate stable

returns, principally in the form of

income distributions, by investing in

a diversified portfolio of renewable

energy infrastructure investments.

Positioning

— European focused (excl. UK), diversified by geography and technology.

— Strong dividend cover supported by contracted revenues (PPAs,

Government regulated tariffs) to ensure earnings visibility and a diversified

operating portfolio.

— Modest gearing levels (approx. 34.3%) provides flexibility

Returns

— Target investment return of 6.0% to 7.5%, net of fees and expenses, over

the longer term.

— Portfolio levered discount rate of 7.2% excluding fund level leverage

— Trading at a 20.3% discount to NAV

— Disciplined capital allocation: EUR 27.8 million

returned in share

buybacks over 2023.

— Attractive dividend yield of 7.4%

— NAV total return since IPO of 20.8%

1. Data as at 31 December 2023, including historical divestments.

2. According to the ‘GHG Accounting for Grid Connected Renewable Energy Projects’ of the ‘International Financial Institution’s Technical

Working Group on Greenhouse Gas Accounting’, the feed-in of electricity produced by renewable energies leads to a theoretical avoidance

ofCO2 emissions from fossil fuels, available at: link.

3. This disclosure is considered to represent the Company’s alternative performance measures (“APMs”). Definitions of these APMs and other

performance measures used, together with how these measures have been calculated, can be found on pages 111 to 113. All references to

cents are in euros, unless stated otherwise.

4. Fund level leverage assumes drawn RCF debt of EUR 74.7 million. Discount rate excludes the impact of the solar PV financing which closed

inJanuary 2024.

5. Based on the share price as at 31 December 2023 (78.5 cents) and the NAV per Ordinary Share as at 31 December 2023 (98.5 cents).

6. Excluding fees and stamp duty.

7. Dividend yield is calculated by dividing the target dividend of 5.79 cents per Ordinary Share for 2024 by the market share price as at

31December 2023.

8. Based on an opening NAV after launch expenses of EUR 0.98 per Ordinary Share. Calculation includes dividends paid during the period.

Sagres, Portugal

Aquila European Renewables Plc|Annual Report 2023

AT A GLANCE

Portfolio Breakdown

By Technology By Country By Status

100.0%

14.7%

15.2%

14.5%

6.0%

42.6%

7.0%

53.2%

42.2%

4.6%

Wind energy

Solar PV

Hydropower

Portugal Norway

Denmark Finland

Spain Greece

Operating

Diversified Technologies

Hydropower

19.4 MW

Solar PV

230.7 MWp

Wind energy

213.7 MW

One

country

Two

countries

Four

countries

Sagres, PortugalThe Rock, Norway

Tiza, Spain

1. Based on fair values as at 31 December 2023. Totals may not add up to 100.0% due to rounding differences.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

AT A GLANCE CONTINUED

As a result of the diversification of energy generation

technologies, the seasonal production patterns of these asset

types complement each other, providing a balanced cash flow

profile, while the geographic diversification serves to reduce

exposure to any one single energy market.

Hydropower | 19.4 MW

SAGRES

107.6 MW

Ownership: 18.0%

Solar PV | 230.7 MWp

BENFICA III

19.7 MWp

ALBENIZ

50.0 MWp

OURIQUE

62.1 MWp

Ownership: 100.0% Ownership: 100.0% Ownership: 50.0%

GRECO

100.0 MWp

TIZA

30.0 MWp

Ownership: 100.0% Ownership: 100.0%

Wind energy | 213.7 MW

TESLA

150.0 MW

HOLMEN II

18.0 MW

OLHAVA

34.6 MW

Ownership: 25.9% Ownership: 100.0% Ownership: 100.0%

SVINDBAEK

32.0 MW

THE ROCK

400.0 MW

DESFINA

40.0 MW

Ownership: 99.9% Ownership: 13.7% Ownership: 89.0%¹

1. Voting interest. Economic interest: 91.5%.

Aquila European Renewables Plc|Annual Report 2023

Wind energy

Solar PV

Hydropower

The Rock

Olhava

Tiza

Greco

Tesla

Holmen II

Svindbaek

Sagres

Benfica III

Albeniz

Desfina

Ourique

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

CHAIRMAN’S STATEMENT

Ian Nolan|Chairman

On behalf of the Board of

Directors, I am pleased to

present the Annual Report

and Financial Statements of

Aquila European Renewables

Plc, our fourth full set of

accounts since listing.

Introduction

Despite a challenging macro-economic environment, marked

by a convergence of high inflation, substantial interest rate

increases, supply chain disruptions and falling commodity

and electricity prices, the Company’s diversified operating

portfolio continued to deliver strong cash flows to cover a

progressive dividend.

Nonetheless, the deteriorating macro-economic conditions

in 2023 widened the Company’s share price discount to NAV,

a problem that is shared by our peer group of renewable

energy investment trusts. Against this backdrop, in May 2023,

the Board and the Investment Adviser commenced a series of

initiatives designed to secure greater appreciation of the value

inherent in the portfolio. Since then, I am pleased to note that

AER has made significant progress in implementing many of

these initiatives.

Key Initiatives

One of the initiatives outlined in May 2023 was a further

programme of share buybacks, where the Company was

able to return EUR 27.8 million¹ to shareholders at an average

price of 92.3 cents per Ordinary Share, representing an

average discount of 15.8%, reducing total Ordinary Shares in

issue by 7.4% and resulting in NAV accretion of 1.4 cents per

share. The implementation of this programme is a sign of our

confidence in the underlying value of the existing portfolio

and recognition that buying back at a discount offered a better

return on capital than was achievable on new investment

opportunities in 2023, whilst also providing additional

short-term liquidity to investors. Share buybacks continue

to remain a tactical, rather than a strategic, response to the

Company’s valuation discount, given the timing of a rebound

in sector share prices remains unknown.

On 2 October 2023, AER was admitted to trading on the

Euronext Growth Dublin stock exchange, achieving another

key initiative of securing a secondary listing. Under the ticker

AERI, the listing is intended to further enhance the Company's

marketability in Europe, given its euro currency denomination

and European-focused investment strategy.

Another key objective was the rollout of asset life extensions

following the completion of due diligence by the Company’s

advisers across the portfolio

, resulting in a NAV uplift of

4.6cents per Ordinary Share during the reporting period.

Theaverage asset, life assumptions for the solar portfolio were

increased from 30 years to 40 years, and those of the wind

portfolio from 25 years to an average of 28 years, in line with

industry standards and a reflection of the quality of the asset

portfolio.

Subsequent to the year end, the Company, via its wholly

owned subsidiaries, also secured a EUR 50.0 million five-year

debt financing for its 180 MWp unlevered Spanish solar PV

operating portfolio. We are pleased the debt financing was

secured at attractive terms, with an all-in interest rate below

that of the existing RCF. Net proceeds from the debt financing,

which was drawn in January 2024, were used to repay the

RCF, resulting in available capacity under the RCF of circa

EUR 68.2million (current facility limit: EUR 100.0 million).

Consequently, the Company’s overall gearing level remains

unchanged at approximately 34.3% of its GAV

Notwithstanding the progress achieved with these initiatives,

the share price continues to trade at a significant discount

to NAV. Your Board has previously announced that it was

committed to reviewing broader options if the underlying

value of the portfolio failed to be reflected in the share price.

1. Excluding fees and stamp duty.

2. Refer to page 22 for more details.

3. Refer to page 24 for more details.

Aquila European Renewables Plc|Annual Report 2023

In December 2023, the Board responded to the receipt of

unsolicited proposals from Octopus Renewables Infrastructure

Trust plc (“ORIT”) in relation to a possible combination under

section 110 of the Insolvency Act 1986 and confirmed it would

consider the combination proposed by ORIT as part of a

review of broader options which was already underway.

In support of the Board’s evaluation of options for the future

of the Company, I have had the opportunity to engage with

a number of our shareholders. Whilst feedback in relation to

the quality of the portfolio and the Investment Adviser has

been positive, a number of shareholders feel that the status

quo is undesirable in the current macro environment, as the

Company is limited in its ability to grow and improve the

underlying liquidity of its shares.

The Board’s review of broader options, including consideration

of a variety of proposals that have been received fora

combination with the Company under section 110 of the

Insolvency Act 1986, is underway and it expects to be able

toupdate shareholders regarding progress before the end

ofJune 2024.

Performance

During the reporting period, total revenue was below

budget due to declining short-term electricity spot market

prices across most of the portfolio’s markets, reflecting

the fall in commodity prices, lower demand due to

milder-than-expectedtemperatures in Europe and elevated

filling levels of gas storage reservoirs. The portfolio’s

production was 9.4% below budget, primarily as a result

of below-average wind speeds in the Nordics, despite the

Company’s solar PV and hydropower assets performing in line

with or above expectations during the period.

The dividend paid in 2023 amounted to EUR 21.2 million

and was fully covered at 1.1x. When combined with the EUR

27.8 million

share buyback, the Company has returned

EUR 49.0 million to shareholders over 2023. Since the IPO

in June 2019, the Company has returned EUR 94.9 million to

shareholders in the form of dividends and share buybacks.

The Company’s NAV per Ordinary Share was 98.5 cents as

at 31December2023, resulting in a total NAV return per

Ordinary Share of -6.0%, including dividends during the

period. Movement in the NAV was primarily the result of

a combination of the development of power price curves,

buybacks and the introduction of the resource rent tax ("RRT")

in Norway

. AER’s annualised total NAV return per Ordinary

Share (including dividends paid) from IPO to 31 December

2023 was 4.3%.

In 2024, the Board set a target dividend of 5.79 cents per

Ordinary Share, equivalent to a 5.0% increase compared to the

dividend target set for 2023, on the basis that the operating

performance and cash flow of the Company is in line with

expectations. The target dividend is expected to be fully

covered.

ESG

The Company contributes to the UN Sustainable Development

Goals to ensure access to affordable, reliable, sustainable and

modern energy for all. In October 2023, we announced our

third GRESB (Global Real Estate Sustainability Benchmark)

assessment results for the year, with a score of 92 out of 100,

representing an improvement compared with last year’s result,

which is also higher than the GRESB average of 88 points

amongst the Company’s peer group. The Company’s GRESB

rating also increased from three out of five stars to four out of

five stars as a result of improvements in categories such as ESG

reporting, risk management and stakeholder engagement.

We look forward to keeping shareholders updated on further

progress throughout the year.

The Board was pleased to release the Company’s inaugural

ESG Report in January 2024, highlighting key metrics,

environmental and social initiatives that illustrate the breadth

of action that the Company has taken across its portfolio. Full

details of the Company’s approach to combatting climate

change, enhancing biodiversity of flora and fauna, boosting

regional and local community engagement, ensuring

sustainable supply chain management and best-practice

labour standards, as well as other environmental and social

topics, can be found in this dedicated report.

Director Appointment

As announced in this year’s Interim Results, Myrtle Dawes

joined the Board of Directors on 1 September 2023 as our

newest non-executive Director, serving as a member of the

Remuneration and Nomination Committee and the Audit and

Risk Committee. Ms Dawes, a chartered chemical engineer,

has over 30 years’ experience in the energy sector, both in the

UK and overseas, covering leadership roles in engineering,

project management, technology and digital transformation.

Currently, she is CEO of the Net Zero Technology Centre and

anon-executive Director at FirstGroup plc.

Investment Adviser

The Board is pleased to note the Investment Adviser

announced a strategic partnership with Commerzbank AG

on 18 January 2024 aimed at significantly accelerating the

Investment Adviser’s growth into one of the leading asset

managers for sustainable investment strategies in Europe

Post the year end, Lars Meisinger, Head of International Sales

and Business Development, has left the Investment Adviser

to take up a senior role in the property sector; his duties have

been reassigned internally and the Board would like to thank

him for his service.

1. Excluding fees and stamp duty.

2. Refer to pages 26 to 29 for more details.

3. Refer to page 13 for more details.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

CHAIRMAN’S STATEMENT CONTINUED

Regulatory Changes

2023 saw sustained efforts from the European Union

(“EU”) to accelerate the deployment of renewables, with an

agreement to reform the bloc’s electricity market design,

plans to enhance the competitiveness of the Eurozone’s wind

industry, the raising of renewable energy targets for 2030

to 42.5% of the overall electricity mix, the Net Zero Industry

Act for EU manufacturing and continued emphasis on the

implementation of ten-year National Energy and Climate Plans

(“NECPs”) by all member states.

It is expected that these proposals will incentivise further

expansion of renewables in Europe. As the EU pursues

its goal of energy independence and its net zero targets,

we remain optimistic for the future of the sector and see

further opportunities for investment as more renewable

energy infrastructure developers ramp up capital recycling

programmes.

In contrast to the EU’s pro-renewables policies, the Norwegian

Parliament passed a series of legislative changes to taxes

applicable to existing and new onshore wind farms, effective

from 1 January 2024, including a resource rent tax of 25%

on all onshore wind farms, which was disappointing from an

environmental perspective. These tax changes were reflected

in the fourth quarter valuations of the Company’s Norwegian

wind farms, The Rock and Tesla¹. Note the analyst power price

forecasts used to support the Q4 valuations of The Rock and

Tesla do not include any potential impact of Norway’s resource

rent tax on the country’s medium and long-term power price

forecasts, which may need to reflect the likely outcome of the

tax on future build-out of much-needed renewable energy

capacity in the country.

Outlook

We expect the macro-economic environment for 2024 to

benefit from several positive cyclical catalysts, with the core

assumption being that inflation in the European Union will

continue to recede in the coming months. The easing of

significant price increases across the board witnessed in 2022

and 2023 should lead to a further fall in inflation towards the

European Central Bank’s inflation target of 2.0%. However,

many trends including ageing demographics in the labour

market, de-globalisation, energy shortages, disrupted

supply chains, and higher defence spending as a result of the

continued conflict in Ukraine, will ensure that inflation remains

elevated compared to the last decade. Against this backdrop,

in the absence of any exogenous events that could derail

assumptions on inflation or the global economic situation,

the market consensus is that central banks should begin to

cut interest rates this year, reversing the steepest tightening

cycle in over 40 years. Lower interest rates have the effect of

reducing the discount rate applied to the DCF valuation of

assets, thus increasing value – all other things being equal.

The past year also saw accelerated European and national

deployment plans for renewables across most countries

the Company is invested in, as governments recognise the

urgency of renewable energy developments as a source

of energy security and environmental progress, while also

signalling increased stability and visibility over the regulatory

landscape. Combined with a more favourable interest rate

outlook, we expect this to bode well for the renewable energy

sector.

Your feedback as shareholders is highly valued and we hope

our actions since the Annual General Meeting (“AGM”) in

June 2023, including the announced review of broader

options, demonstrate we are listening and will continue to act

decisively in the interests of all shareholders. Finally, following

the inaugural continuation vote put to shareholders at the

last AGM, your Board committed to providing shareholders,

notwithstanding the outcome of the ongoing review of

broader options, with a further opportunity to vote on the

future of the Company by September 2024.

Ian Nolan

Chairman

24 April 2024

1. Refer to pages 29 and 32 for more details on key regulatory changes.

Aquila European Renewables Plc|Annual Report 2023

Tiza, Spain

Other InformationFinancialsStrategic Report Governance

Aquila European Renewables Plc|Annual Report 2023

What’s in this Section

Investment Adviser Background 12

Investment Portfolio 14

Portfolio Updates 15

Contracted Revenue Position 17

Financial Performance 18

Market Commentary and Outlook 30

INVESTMENT ADVISER’S REPORT

Leader in Investment and Asset Management

in European Renewables

Overall CO

emissionsavoided

2.4 million tonnes

Clean energy produced

8.2 TWh

Households supplied

2.3 million

1. Figures presented in this section refer to Aquila Group.

2. Data as at 31 December 2023 for the year 2023, based on

current portfolio of the Aquila Group. For details on the

methodology for avoided emissions, refer to: link.

3. Data as at 31 December 2023, including historical

divestments.

Aquila Capital Investmentgesellschaft mbH (‘Aquila Capital’)

is one of the leading investment and industrial development

company, managing over EUR 14.6 billion on behalf of

institutional investors worldwide and running one of the

largest clean energy portfolios in Europe. Over the past two

decades, Aquila Capital and its subsidiaries have committed

themselves to supporting the clean energy transition and

creating a more sustainable world. As at 31 December 2023,

the Investment Adviser manages wind energy, solar PV,

hydropower energy and battery storage assets with a capacity

of approximately 25.7 GW

. Additionally, it has projects in

sustainable real estate and green logistics, either completed

or under development. Aquila Capital also invests in energy

efficiency, carbon forestry and data centres.

The Investment Adviser’s expert investment teams comprise

750 employees worldwide. Moreover, the strategic

partnership entered into in 2019 with Japan’s Daiwa Energy

& Infrastructure draws on its sector networks and experience

to screen, develop, finance, manage and operate investments

along the entire value chain. As this business model requires

local management teams, Aquila Capital is represented across

19 investment offices. The Investment Adviser currently has

a significant pipeline of over 17.5 GW³ of development and

construction assets in the EMEA region, primarily in solar

PV located in southern Europe. This represents an attractive

source of growth opportunities forAER.

Aquila Capital’s in-house Markets Management Group

(“MMG”), a team of experts dedicated to sourcing and

structuring Power Purchase Agreements (“PPAs”), market

analysis, trading, origination, FX, interest rates and other

hedging products, has facilitated the Company’s proactive

approach to hedging and risk management. Since its

inception, the team has structured, negotiated and put

in place more than 32 PPAs and has created an extensive

network of offtakers, being recognised as one of the most

important players in the European landscape. The ultimate aim

is to secure stable revenues whilst always ensuring the best

possible risk-adjusted return. MMG also supports the rest of

the teams within Aquila by providing market insights, analysis,

research and regulatory knowledge. It also undertakes regular

reporting on market evolution and events and ad hoc research

to identify emerging market trends.

The Company’s Alternative Investment Fund Manager

(“AIFM”), FundRock Management Company (Guernsey)

Limited, has appointed Aquila Capital as its Investment

Adviser for the Company. Aquila Capital’s key responsibilities

are to originate, analyse and assess suitable renewable energy

infrastructure investments and advise the AIFM accordingly, as

well as to provide Asset Management services.

Investment Adviser

Background

Olhava, Finland

Aquila European Renewables Plc|Annual Report 2023

1. Aquila Capital, ‘Aquila Capital Investmentgesellschaft and Commerzbank join forces: Aim to create a leading European asset manager for

sustainable investment strategies’ (2024), available at: link.

2. Map is shown for illustrative purposes only. Exact locations of offices and assets might deviate. Points indicate one or more assets and are not

indicative of size.

3. Data as at 31 December 2023, including historical divestments.

Current Renewables Portfolio of Aquila Group

Portfolio Capacity

Wind energy Solar PV Hydropower Energy storage

systems

19 Offices

4,702 MW

1,010 WTGs

15,733 MWp

370 PV parks

1,050 MW

295 plants

4,190 MW

15 projects

The Investment Adviser announced a strategic partnership with

Commerzbank AG on 18 January 2024 aimed at significantly

accelerating the Investment Adviser’s growth into one of the

leading asset managers for sustainable investment strategies

in Europe. Commerzbank is a major listed European banking

institution serving a diverse client base of around 26,000

corporate client groups and nearly 11 million private and

corporate clients, with a global presence in more than 40

countries. As part of this partnership, Commerzbank will

acquire a 74.9% stake in the Investment Adviser, whilst ensuring

the continued managerial independence of the Investment

Adviser, which will remain autonomous in terms of operations,

investment decisions, product development and brand

representation. The parent company of the Investment Adviser,

Aquila Group, will remain engaged as a shareholder with its

remaining 25.1% shareholding. The existing Asset Management

team responsible for AER will remain unchanged. The

transaction is subject to the required regulatory approvals and

is expected to close in the second quarter of 2024

. Post the year

end, Lars Meisinger, Head of International Sales and Business

Development, has left the Company to take up a senior role in

the property sector. His duties have been reassigned internally

and the Company thanks him for his service.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

INVESTMENT

ADVISER’S REPORT CONTINUED

Investment Portfolio

Project Country Capacity

Status COD

AssetLife

from COD

Equipment

Manufacturer

Energy

Offtaker

Ownership

in Asset Leverage

Acquisition

Date

Wind Energy

Tesla

Norway 150.0 MW

Operational

2013,

2018

25y Nordex PPA Statkraft 25.9%

24.2% Jul-19

Holmen II

Denmark

18.0 MW

Operational

2018 25y Vestas FiP Energie.dk 100.0% 30.7% Jul-19

Olhava

Finland

34.6 MW

Operational

2013-

2015

30y Vestas FiT Finnish

Energy

100.0% 31.8% Sep-19

Svindbaek

Denmark

32.0 MW

Operational

2018 29y Siemens FiP Energie.dk 99.9% 15.7% Dec-19 &

Mar-20

The Rock

Norway 400.0 MW

Operational

2022 30y Nordex PPA Alcoa 13.7%

52.8% Jun-20

Desfina

Greece

40.0 MW

Operational

2020 25y Enercon FiP DAPEEP 89.0%

53.9%

Dec-20

Solar PV

Benfica III Portugal

19.7 MW

Operational

2017,

2020

40y AstroNova PPA Axpo 100.0% 0.0% Oct-20

Albeniz Spain

50.0 MW

Operational

2022 40y Canadian Solar PPA Statkraft 100.0% 0.0% Dec-20

Ourique Portugal

62.1 MW

Operational

2019 40y Suntec CfD ENI 50.0%

0.0% Jun-21

Greco Spain

100.0 MW

Operational

2023 40y Jinko PPA Statkraft 100.0% 0.0% Mar-22

Tiza Spain

30.0 MW

Operational

2022 40y Canadian Solar PPA Axpo 100.0% 0.0% Jun-22

Hydropower

Sagres Portugal

107.6 MW

Operational

1951-

2006

n.a.

Various FiT EDP/Renta 18.0%

22.9% Jul-19

Total (AER Share)

463.8 MW

1. Installed capacity at 100% ownership.

2. COD = Commissioning date.

3. PPA = Power Purchase Agreement, FiT = Feed-in tariff. FiP = Feed-in premium, CfD = Contract for Difference. Further information on the

contracted revenue position can be found on page 17.

4. Leverage level calculated as a percentage of debt plus fair value as at 31 December 2023. Leverage figures exclude the solar PV debt financing

which closed in January 2024.

5. 21 individual assets. Approximately ten years remaining asset life when calculated using net full load years.

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

7. Represents voting interest. Economic interest is approximately 91.5%.

8. Calculation based on voting interest.

Sagres, Portugal

Aquila European Renewables Plc|Annual Report 2023

1. AER share.

2. Q4 2023 net asset value minus acquisition costs, capital expenditure, plus distributions paid up to 31 December 2023.

Portfolio Updates as at 31 December 2023

154.8 MW

of construction projects completed in 2023

The Rock

Country: Norway

Date acquired: June 2020

Status: Operational

Capacity: 400.0 MW

Interest: 13.7%

In March 2023, a takeover under the Engineering, Procurement

and Construction (“EPC”) management agreement was achieved,

representing the final milestone for completion of the project. The

asset has been in production since November 2022 and provides

Alcoa’s aluminium smelter in Mosjøen with renewable energy under

a 14-year PPA. Alcoa’s aluminium smelter is a key contributor to

employment and growth in Mosjøen.

As of January 2024, The Rock’s anti-icing system has been

operational at 69 out of 72 turbines. The anti-icing system of the

remaining three turbines is expected to be installed before the next

winter season commences.

The Sami appraisal case is expected to be heard before the

Helgeland District Court on 27 May 2024. In March 2024, the

Norwegian Ministry of Energy made a final decision with regard

to the mitigating measures for The Rock that must be undertaken

by the project company to facilitate reindeer migration. Further

details of the mitigating measures can be found in the Company's

Regulatory News Service issued on 22 March 2024. The Ministry

noted in its decision that for several seasons, reindeer have been

migrated through the site during the operational phase of The Rock,

supporting the Ministry’s view that (i) the migration path cannot

be considered closed; and (ii) the implementation of mitigating

measures will have a positive contribution to the migration of

reindeer through the site.

The Investment Adviser welcomes the decision by the Ministry,

which it believes will be an important factor in the upcoming

appraisal case. As communicated with shareholders previously,

Eolus, the developer of The Rock, remains responsible for handling

the appraisal case and for the economic impact on the project

company associated with the outcome of that case, as well as the

economic impact associated with the mitigation measures noted

above. The Company will continue to keep shareholders updated

regarding any key developments.

The project company, the developer and the turbine supplier

continue to be involved in an arbitration process to settle

outstanding claims related to construction delays and extensions

of time under the turbine supply agreement. The project company

does not expect the arbitration case to negatively affect its financial

position. A ruling on this arbitration case is expected in the fourth

quarter of 2024.

Jaén and Guillena

Country: Spain

Date acquired: March 2022

Status: Operational

Capacity: 100.0 MWp

Interest: 100.0%

A key milestone has been the commissioning of Guillena,

thesecond solar PV asset of the Greco portfolio, in April 2023.

Thefirst asset, Jaén, has been operational since November 2022.

Both assets received their Provisional Acceptance Certificate

(“PAC”) in 2023, representing the final milestone for completion.

Both Jaén and Guillena benefit from long-term PPAs signed during

favourable market conditions in 2022.

The contracts commenced in April 2023 and August2023,

respectively.

Completion of Guillena and The Rock has resulted in a valuation

uplift of 3.7% (EUR 5.3 million, 1.4 cents per Ordinary Share)

versuscost as at 31 December 2023². Following the completion

of this project, the Company has no further construction

projectswithin its portfolio.

The Rock, Norway

Jaén, Spain

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

As at 31 December 2023, the Company had no material outstanding commitments. The Company did not have any new

investments and capital commitments in 2023 and continues to maintain investment discipline when assessing new investment

opportunities. The Company deemed that repurchasing shares at a discount over the course of 2023 offered a higher return on

capital than was achievable by investing in new assets, whilst also signalling confidence in the underlying value of the existing

portfolio.

Capital Deployment Profile Since IPO

450.0

300.0

150.0

100.0

2019 2020 2021 2022 2023

400.0

200.0

0.0

50.0

250.0

350.0

EUR million

INVESTMENT

ADVISER’S REPORT CONTINUED

Investment Portfolio continued

Guillena, Spain

1. Data shows invested capital as at 31 December of each year.

Aquila European Renewables Plc|Annual Report 2023

Contracted Revenue Position

Contracted revenue

net present value

EUR 225.8m

Contracted revenue

over the next five years

52.0%

Contracted revenue

(aggregate over asset life)

EUR 335.2m

Weighted average

contracted revenue life

10.2 years

The Company is diversified across six countries and six different price zones, in Norway (NO2 and NO4 regions), Iberia (Spain and

Portugal), Finland, Denmark and Greece, allowing it to benefit from a diversified portfolio of offtake structures, including subsidy

schemes as well as PPAs from a wide variety of counterparties.

Contracted revenues expected over the next five years, on a present value basis, have remained constant at 52.0%

(31 December 2022: 51.9%), noting that a number of existing contracts are expected to progressively expire over this timeperiod.

The Company and its Investment Adviser intend to replace these expiring contracts with new PPAs over time, subject to prevailing

market conditions.

During 2023, two new PPAs became active within the Greco portfolio (Jaén and Guillena) following their signing in 2022, coinciding

with the operational status of both projects. The Company will continue to focus on maintaining a sufficient degree of contracted

revenues to mitigate its exposure to power price volatility. The Company’s contracted revenue position also provides flexibility to

capitalise on periods of higher power prices.

The portfolio has good visibility of future cash flows, with a weighted average contracted revenue life of approximately 10.2years

(31 December 2022: 10.8 years

). The Company contracts its revenues with investment grade counterparties, consisting

ofgovernment entities, utilities and corporate entities.

1. Net present value of contracted revenue as at 31 December 2023 over the entire asset life, discounted by the weighted average portfolio

discount rate.

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

3. Forecast asset revenue from 1 January 2024 to 31 December 2028 which is discounted by the weighted average portfolio discount rate as at

31 December 2023, includes Guarantees of Origin (“GoOs”) and Electricity Certificates (“El-Certs”).

4. New weighting methodology based on hedged production.

100.0%

90.0%

70.0%

50.0%

2024 2026

2028 2030

2034 20362032 2042

80.0%

60.0%

0.0%

20.0%

10.0%

40.0%

30.0%

2038 2040

Revenue Mix – Existing Contracts Present Value of Revenues

(Five Years)

Market Fixed price PPA Government regulated tariff

48.0%

25.9%

26.1%

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

INVESTMENT

ADVISER’S REPORT CONTINUED

Financial Performance¹

Performance

Electricity Production (GWh)

2023 2022 Variance (%)

Variance 2023

against

P50 BudgetTechnology Region

Wind energy Denmark, Finland, Norway, Greece 508.5 440.8 15.4% (16.2%)

Solar PV Portugal, Spain 402.6 187. 5 114.8% (1.7%)

Hydropower Portugal 60.8 38.2 59.3% 7.1%

Total 971.9 666.4 45.8% (9.4%)

Load Factors

Technology 2023 2022

Wind energy 26.3% 31.9%

Solar PV 20.7% 18.9%

Hydropower 35.8% 22.5%

Total 25.9% 27.1%

Technical Availability

Technology 2023 2022

Wind energy 94.0% 96.6%

Solar PV 99.8% 99.9%

Hydropower 98.3% 99.2%

Total 97.0% 97.5%

Revenues

(EUR million)

Technology 2023 2022 Variance (%)

Wind energy 32.0 46.2 (30.6%)

Solar PV 23.7 12.2 94.4%

Hydropower 6.1 4.8 27.0 %

Total 61.8 63.2 (2.1%)

The Company’s portfolio increased production by 45.8% over 2023 compared to 2022, with electricity produced amounting to

971.9 GWh (2022: 666.4 GWh), primarily due to added production from The Rock (400.0 MW) and Jaén (50.0 MWp) becoming

operational in November 2022. It also benefited from the latest construction project Guillena (50.0 MWp), which became

operational in April 2023. These additional assets contributed 285.9 GWh of production to the portfolio in the period and

represent approximately 29.4% of total production in 2023.

Over 2023, revenue was 15.1% below budget due to falling electricity spot market prices across the portfolio’s markets. This

reflected the decline in commodity prices, milder-than-expected temperatures in Europe and elevated filling levels of gas storage

reservoirs. Prices in the Nordics were also affected due to increased interconnection links to Germany and the United Kingdom,

placing further downward pressure on prices in the region.

1. Some totals may not add up due to rounding differences.

2. 2023 data: includes Guillena from April 2023; Desfina data based on economic share (91.5% as at 31 December 2023). 2022 data: includes Tiza

from March 2022, Albeniz from June 2022 and The Rock and Jaén from November 2022. Desfina data based on voting share (89.0%), except for

revenues, which were based on economic share (93.0% as at 31 December 2022).

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

4. Includes merchant revenue, contracted revenue and other revenue (e.g. Guarantees of Origin, Electricity Certificates).

Aquila European Renewables Plc|Annual Report 2023

The Rock, Norway

2023 Monthly Production Performance vs. Budget (AER Share)

60.0

40.0

January February March May June July August September October November December

80.0

0.0

20.0

100.0

April

Wind energy Solar PV Hydropower Budget

Production performance during the reporting period was

9.4% below budget, due to below-average wind speeds in

the Nordics and underperformance at the Norwegian wind

farm The Rock (performance -5.3% excluding the impact of

The Rock), especially between June and October 2023. The

solar PV portfolio’s production was broadly in line with budget

over the year. Production at the Company’s hydropower asset,

Sagres, benefited from high water availability throughout the

second half of the year and ended the year above budget.

Average portfolio technical availability fell marginally from

97.5% in 2022 to 97.0% in 2023, primarily as a result of gearbox

replacements, icing losses and substantial repairs of the

Anti-Icing System (“AIS”) at The Rock. As of January 2024,

The Rock’s anti-icing system has been operational at 69 out

of 72 turbines, whereas all ten damaged gearboxes have

been replaced. The AIS of the remaining three turbines is

expected to be installed before the next winter season will

commence. One turbine saw its rotor fall off in January 2024

due to storm-related wind speeds surpassing the maximum

operational limit of 26 m/s for wind farms and will be replaced

before the next winter season commences.

Icing-related availability losses are not expected to re-occur

in the next winter season. Compensation from the Operations

and Maintenance (“O&M”) provider, Nordex, under the

existing availability guarantee is expected in the second

quarter of 2024.

The Company’s Spanish solar PV portfolio and in particular

Jaén (part of the Greco portfolio), was affected by technical

curtailments at the request of the transmission agent and

operator (“TSO”), occurring primarily over the summer season

due to oversaturation of the grid. Approximately 5.1 GWh of

production was curtailed over the year, equivalent to a loss

of circa EUR 0.4 million. Compliance software was installed in

late September 2023 to partially mitigate the impact of future

technical curtailments.

The Company is currently certifying its Spanish solar PV

assets with the country’s TSO, with the intention of evaluating

the option of participating in ancillary markets to generate

additional revenue. An O&M tender process for AER's Spanish

solar PV portfolio is also ongoing, with the expectation that it

may result in a meaningful reduction in the Spanish portfolio’s

operating expenditure.

As shown in the bar chart above, the addition of solar PV assets to the portfolio has significantly improved the stability of

production across the portfolio month-to-month and has subsequently reduced the portfolio’s reliance on wind production.

This is consistent with the investment philosophy of the Company, which is seeking to diversify across different technologies and

provide a balanced portfolio mix between wind energy and solar PV.

Aquila European Renewables Plc|Annual Report 2023

Strategic Report Other InformationFinancialsGovernance

INVESTMENT

ADVISER’S REPORT CONTINUED

Financial Performance and Dividend Cover

Dividend Cover

EUR million² 2023 2022 Variance (%)

Asset Income 62.5 63.2 (1.1%)

Asset operating costs (14.9) (12.3) 20.3%

Interest and tax (6.2) (6.0) 4.0%

Asset underlying earnings 41.4 44.9 (7.7%)

Asset debt amortisation (11.0) (10.9) 1.0%

Company and HoldCo

expenses

(4.7) (4.3) 8.6%

RCF interest and fees (3.4) (0.6) 4 87.7%

Total underlying earnings 22.3 29.1 (23.2%)

Dividends paid 21.2 21.2 0.4%

Dividend cover after debt amortisation (x) 1.1x 1.4x nmf

Dividend cover before debt amortisation (x) 1.6x 1.9x nmf

Reconciliation to Company Cash Flow Statement

EUR million

2023 2022 Variance (%)

Total underlying earnings 22.3 29.1 (23.2%)

SPVs

Distributions to HoldCo (38.2) (31.3) 22.2%

Movement in working capital 7.8 (2.7) (389.3%)

HoldCo

Expenses (excluding investment expenses) 3.6 1.6 130.3%

Company

Investment advisory fee funded by share issuance

— (1.3) n.a.

Interest and dividend income 16.5 17.1 (3.6%)

Movement in working capital 4.5 4.5 (0.4%)

Other

(3.0) (0.1) 179.8%

Company net cash flow from operating activities 16.3 16.9 (3.8%)

The first table calculates dividend cover based on the underlying earnings of its investment portfolio, taken from the profit & loss

(“P&L”) statements from each of the Company’s investments, with the exception of debt amortisation which is taken from the cash

flow statement. Each of the Company’s investments is held through special purpose vehicles (“SPVs”)

. The SPV, Company and

HoldCo financial statements are audited.

Financial Performance continued

1. This disclosure is considered to represent the Company’s alternative performance measures (“APMs”). Definitions of these APMs and other

performance measures used, together with how these measures have been calculated, can be found on page 111. Numbers and percentages

may vary due to rounding differences.

2. Non-euro currencies converted to EUR as at 31 December 2023. Desfina contribution reflects AER’s economic interest (91.5%) rather than

voting interest (89.0%), whereas asset debt amortisation reflects the voting interest of all assets throughout the report.

3. Tesseract Holdings Limited.

4. Expenses reflect recurring ordinary costs and expenses at AER and THL level. Legal fees, investment expenses and amortised one-off cost of

the Revolving Credit Facility (“RCF”) is not included. Expenses are reduced by interest income on cash at banks.

5. Not meaningful.

6. Investment advisory fee funded by share issuance treated as a cash flow expense for Company net cash flow from operating activities.

7. Deduction of legal costs and currency losses, addition of financing costs.

8. References to SPVs in this section also includes holding companies, where applicable.

Aquila European Renewables Plc|Annual Report 2023

Total underlying asset earnings are calculated by aggregating the P&L of the Company’s SPVs (adjusted for AER’s share),

less any repayments of project level debt at the SPV level (adjusted for AER’s share), less fund level costs at the Company

andHoldColevel.

The Company reported dividend cover of 1.1x during 2023. The decrease compared to 1.4x reported in 2022 was driven by a

7.7% decrease in asset underlying earnings, which was primarily the result of a significant decrease of electricity spot market

prices, partially offset by the contribution of new assets to the portfolio, as well as higher funding costs commensurate with

increased RCF utilisation. Dividends paid remained flat, reflecting the net effect of dividend per share growth of 5%, combined

with share buyback activities.

Cash Dividend Cover

2023 2022 Variance (%)EUR million

Company

Net cash flow from operating activities 16.3 16.9 (3.8%)

Investment advisory fee funded by share issuance — 1.3 n/a

HoldCo

Net cash flow from operating activities 9.6 (2.7) (459.7%)

Adjustments

Shareholder loan and equity repayments

9.5 10.6 (10.1%)

RCF interest and fees (4.2) (1.3) 217.4%

Acquisition of accrued interest from shareholder loan — 1.5 n/a

Asset cash flow used for investment activities

1.6 — n/a

Consolidation adjustments (1.2) (2.6) (54.3%)

Other

(0.5) 0.3 (259.3%)

Adjusted net cash flow 31.2 24.0 24.5%

Dividends paid (21.2) (21.2) 0.4%

Cash dividend cover (x) 1.5x 1.1x

nmf

The table above provides an alternative dividend cover calculation based on actual cash distributions received by the Company

and HoldCo from the investment portfolio or SPVs. Cash distributions are paid in the form of dividends, shareholder loan

payments (interest or principal) or equity repayments.

Adjusted net cash flow is calculated by consolidating net cash flow from operating activities at the Company and HoldCo, subject

to certain adjustments (as shown in the table above), the most notable being distributions from the Company’s assets in the form

of shareholder loan repayments.

Cash dividend cover increased from 1.1x

to 1.5x in 2023 as a result of the further expansion of the operating portfolio and timing

effects of distributions. The assets Tiza, Jaén and The Rock contributed a full year to the performance of the portfolio, with a

partial contribution from the Guillena project which became operational in April 2023.

1. Non-euro currencies converted to EUR as at 31 December 2023. Desfina contribution reflects AER’s economic interest rather than voting

interest (91.5%).

2. Distributions from operating activities in the form of shareholder loan and equity repayments (Olhava EUR 2.2 million, Benfica III EUR 0.5

million, Desfina EUR 4.3 million, Ourique EUR 0.6 million, Greco EUR 1.1 million, Tiza EUR 0.2 million).

3. Part of Jaén and Guillena PAC payment made by the operating company (EUR 1.6 million).

4. Capitalisation of shareholder loan interest.

5. The deviation in the cash dividend cover for 2022 compared to the Annual Report 2022 is due to the inclusion of RCF interest and fees.

6. Not meaningful.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

Update on Initiatives

The Company (via its wholly owned subsidiaries) has entered into

a EUR 50.0 million¹, five-year non-recourse debt facility (“Debt

Facility”) with ING Bank N.V. Sucursal en España. The Debt Facility

is secured by AER's wholly owned Spanish solar PV portfolio, which

consists of 180 MWp of unlevered operating assets supported by

long-term contracted Power Purchase Agreements.

The Debt Facility implies a conservative gearing level of

approximately 21.1% for the Spanish solar PV portfolio, based on

fair values as at 31 December 2023. The Company has been able to

secure the loan at attractive terms, with an all-in interest rate below

the existing Revolving Credit Facility ("RCF"). Pricing terms of the

Debt Facility remain confidential. The Debt Facility is 90% hedged

via an interest rate swap over the life of the loan and is also partially

amortising, with a balloon repayment at maturity. The Debt Facility

also benefits from an accordion option (EUR 18.0 million), as well as

two twelve-month extension options, both of which are subject to

lender consent.

Net proceeds from the Debt Facility, which was fully drawn in January

2024, were used to repay the RCF, reducing its drawn balance to

EUR 26.1 million (excluding bank guarantees, current facility limit:

EUR 100.0 million). As a result, the Company's overall gearing level

remains unchanged at approximately 34.3% of its GAV.

The Company and the Investment Adviser have been undertaking

an asset life extension programme in 2023 in consultation with

external technical advisers. Following the conclusion of due

diligence, the Company implemented the following changes (where

applicable) in asset life assumptions across the portfolio:

— Albeniz, Greco, Tiza (Solar PV, 180.0 MW): increased from

30to 40 years (+10 years)

— Benfica III, Ourique (Solar PV, 81.8 MW): increased from

30to40 years (+10 years)

— Holmen II (Wind, 18.0 MW): unchanged at 25 years

— Svindbaek (Wind, 32.0 MW): increased from 25 to 29 years

(+4 years)

— Tesla (Wind, 150.0 MW): unchanged at 25 years

— Olhava (Wind, 34.6 MW): increased from 27.5 to 30 years

(+2.5 years)

— Desfina (Wind, 40.0 MW): the Investment Adviser is currently

undertaking due diligence in relation to a potential asset life

extension

The above changes in aggregate generated a value uplift of

4.6cents per Ordinary Share (+4.2%) as at 31 December 2023.

Albeniz, Spain

Desfina, Greece

Spanish Solar PV

Financing

Asset Life

Extensions

INVESTMENT

ADVISER’S REPORT

CONTINUED

1. Excludes any ancillary debt facilities (debt service reserve and letter of credit facilities).

Aquila European Renewables Plc|Annual Report 2023

A research project, partially funded by the Investment Adviser

and the German Ministry for Economic Affairs and Climate Action

(“BMWK”), is collecting data from the Company’s Portuguese solar

PV asset Benfica III. The Investment Adviser’s research partner,

a German company called SunSniffer, has developed sensors

for photovoltaic modules that can be inserted into the module

strings, and a research institute called Forschungszentrum Jülich

has developed machine learning tools for data analysis and failure

detection, allowing for an in-depth analysis of any underperforming

modules.

Currently, the Investment Adviser, as per the industry standard,

monitors and operates at the string level. However, the

underperformance of one module can affect its entire string, and

a technician cannot identify which module in particular is affected

without checking every module of the affected string. The research

project is currently analysing the health status of the solar PV park

to determine where to incorporate the new sensors, which would

improve asset technical availability and, consequently, production.

The Company was successfully admitted to trading on the Euronext

Growth Dublin stock exchange on 2 October 2023. The secondary

listing, under the ticker AERI, is expected to further enhance

the Company's marketability in Europe, given its euro currency

denomination and European-focused investment strategy, and

thereby also potentially boost the liquidity of the underlying shares

over time.

Benfica III, Portugal

Benfica III

Research Project

Euronext

Secondary Listing

Euronext Growth, Dublin, Ireland

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

INVESTMENT

ADVISER’S REPORT CONTINUED

Gearing

As at

31 December

2023

As at

31 December

2022 Variance (%)EUR million

NAV 372.5 451.7 (17.5%)

Debt

194.8 155.2 25.5%

GAV 567.4 606.9 (6.5%)

Debt (% of GAV)

34.3 25.6 8.8 bps

Project debt weighted average maturity (years) 13.9 14.6 (0.7) years

Project debt weighted average interest rate (%)

2.6 2.5 7 bps

RCF interest rate (%)

5.7 3.5 217 bps

The portfolio remains modestly levered with the Company operating at a gearing ratio of 34.3% of GAV (31 December 2022:

25.6%)

The Company’s prospectus allows it to operate with a maximum gearing level of 50.0% of GAV

. The Company’s asset level debt

is largely fully amortising with fixed interest rates. Approximately EUR 11.0 million of asset level debt (AER share) was repaid from

operating cash flow at the asset level during 2023.

As at 31 December 2023, the RCF was drawn to EUR 80.4 million (31 December 2022: EUR 34.9 million), including bank

guarantees, with an undrawn limit of EUR 19.6 million. The RCF has been primarily used to fund the Company’s commitments

related to the Greco project (EUR 74.7 million in total) whilst the bank guarantees (EUR 5.7 million) have been primarily issued

in relation to dismantling and PPA guarantees required for the Company’s operating assets in Spain. The RCF is a floating rate

facility which expires in April 2025, following the Company exercising its twelve-month extension option in 2023. In January 2024,

net proceeds from the Company’s recently announced EUR 50.0 million Spanish solar PV debt facility were used to repay the RCF,

reducing its drawn balance to approximately EUR 26.1 million (excluding bank guarantees).

All AER’s levered investments are performing above minimum bank covenant levels, with the exception of Olhava (7.0% of

portfolio fair value as at 31 December 2023) which breached its Debt Service Coverage Ratio on 31 December 2023 as a result

of a combination of low power prices, low production and high debt amortisation levels. The Company does not expect any

material consequences as a result of the breach.

Sagres, Portugal

1. Foreign currency values converted to EUR as at 31 December 2023. Data represents AER’s share of debt. AER share of Desfina debt based on

voting interest. Totals may not add up due to rounding differences.

2. Debt corresponds to senior debt secured at project level and RCF at HoldCo level.

3. This disclosure is considered to represent the Company’s alternative performance measures (“APMs”). Definitions of these APMs and other

performance measures used, together with how these measures have been calculated, can be found on page 111. All references to cents are in

euros, unless stated otherwise.

4. Weighted average all-in interest rate for EUR denominated debt (excl. RCF). DKK denominated debt has an average weighted interest rate of

2.7% (31 December 2022: 2.8%).

5. Consists of 1M EURIBOR plus a margin of 1.85%.

6. Excludes bank guarantees of EUR 5.7 million (31 December 2022: EUR 10.9 million).

7. The Company may take on long-term structural debt provided that, at the time of entering into such debt, it does not exceed 50% of the

prevailing Gross Asset Value. Any short-term debt, such as a Revolving Credit Facility, will be subject to a separate gearing limit so as not to

exceed 25% of the Gross Asset Value at the time of entering into such debt.

Financial Performance continued

Aquila European Renewables Plc|Annual Report 2023

Debt Summary as at 31 December 2023

Project AER share

Drawn debt

(EUR million) Currency Bullet/amortising Maturity

Hedged

proportion Type

Tesla 25.9% 8.2 EUR Partly amortising Mar-29 100.0% Bank Debt

Sagres 18.0% 6.0 EUR Fully amortising Jun-33 70.0% Bank Debt

Olhava 100.0% 14.4 EUR Fully amortising Dec-30/Sep-31 100.0% Bank Debt

Holmen II 100.0% 11.8 DKK Fully amortising Dec-37 100.0% Bank Debt

Svindbaek 99.9% 7.0 DKK Fully amortising Dec-37 100.0% Bank Debt

The Rock:

USPP Bond

13.7% 31.2 EUR Fully amortising Sep-45 100.0% Debt Capital

Markets

The Rock:

Green Bond

13.7% 11.0 EUR Bullet Sep-26 100.0% Debt Capital

Markets

Desfina 89.0% 30.5 EUR Fully amortising Dec-39 100.0% Bank Debt

Subtotal 120.1 98.5%

RCF 100.0% 74.7 EUR Bullet Apr-25 0.0% Bank Debt

Total 194.8 60.7%

Valuation

Fair Value

The table below shows the fair values of the investments held by Tesseract Holdings Limited (‘HoldCo’), the Company's wholly

owned subsidiary, as well as the reconciliation to the respective item on the Company’s balance sheet.

As at

31 December

2023

As at

31 December

2022

Variance

(%)EUR million

Tesla 25.8 35.5 (27. 2%)

Sagres 20.1 23.0 (12.4%)

Holmen II 26.5 39.5 (32.9%)

Olhava 30.8 27.2 13.5%

Svindbaek 37.7 46.9 (19.6%)

The Rock 37.7 41.7 (9.5%)

Benfica III 16.1 17.1 (5.6%)

Albeniz 50.5 55.1 (8.4%)

Desfina 26.1 28.5 (8.3%)

Ourique 30.5 36.4 (16.1%)

Greco 103.4 66.5 55.5%

Tiza 32.5 34.1 (4.9%)

Fair Value of Investments (HoldCo)² 438.0 451.5 (3.0%)

Cash and other current assets of HoldCo 9.6 6.4 49.6%

Revolving Credit Facility drawn by HoldCo (74.7) (24.0) 211.3%

Elimination of intercompany shareholder loan, other (0.5) (5.3) (91.2%)

Investments at fair value through profit or loss 372.4 428.6 (13.1%)

1. Foreign currency values converted to EUR as at 31 December 2023. Data represents AER’s share of debt. AER share of Desfina’s debt based on

voting interest.

2. 2023 includes new investments in Greco (EUR 45.3 million) and other (EUR 0.3 million). 2022 data includes capital contributions related to

construction assets (Albeniz: EUR 6.3 million), new investments (Greco, Tiza combined: EUR 94.3 million), capital injection (Sagres: EUR 2.2

million) and other (EUR 0.3 million).

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

INVESTMENT

ADVISER’S REPORT CONTINUED

Valuation continued

NAV Bridge (EUR million)¹

Portfolio Valuation Bridge (EUR million)¹

2022 2023TizaGrecoOuriqueDesﬁnaAlbenizBenﬁca IIIThe RockSvindbaekOlhavaHolmen IISagresTeslaAcquisition

costs of new

investments

451.5

438.0

46.4

(4.0)

3.7

(2.4)

(9.6)

(2.8)

(13.0)

(1.2)

(4.9)

(6.5)

(8.4)

(1.7)

(9.2)

1. Totals may not add up due to rounding differences.

2. Excluding fees and stamp duty.

3. Excludes the impact of capital contributions.

4. Includes stamp duty for share buybacks (EUR 0.1 million) and FX losses (EUR 0.0 million).

5. Includes new investments in Greco (EUR 45.3 million) and other (EUR 1.1 million).

2022

110.6 cents

NAV per

Ordinary Share

Buybacks

Movement in

valuation

of investments

Net proﬁt/

(loss) (THL)

Net proﬁt/

(loss) (AER)

Other

Dividends paid 2023

98.5 cents

NAV per

Ordinary Share

372.5

451.7

(27.8)

(59.9)

18.3

11.8

(21.2)

(0.1)

Financial Performance continued

Aquila European Renewables Plc|Annual Report 2023

The Company’s NAV as at 31 December 2023 was EUR 372.5

million or 98.5 cents per Ordinary Share (31 December 2022:

EUR 451.7 million or 110.6 cents per Ordinary Share). This

represents a NAV total return of -6.0% per Ordinary Share

(31 December 2022: 12.9%) including dividends.

A dividend of EUR 21.2 million (5.445 cents per Ordinary

Share) was paid during the reporting period, with respect to

the last quarter of 2022 to the third quarter of 2023.

The main drivers of NAV movements throughout the full-year

2023 reporting period include:

— forecast power prices: a decline in short-term electricity

price forecasts across the portfolio resulted in a decrease of

11.0 cents per Ordinary Share. The methodology continues

to assume an average of two power price curves from

independent market analysts over the life of each asset,

with the hydropower asset Sagres utilising an average of

three power curves. No forward or futures curves are used;

— inflation: lower short-term CPI forecasts resulted in a

decrease of 0.4 cents per Ordinary Share;

— discount rate: the Company’s discount rate has remained

unchanged at 7.2% compared to 2022;

— share buyback programme: EUR 27.8 million

of capital

returned to shareholders in the form of share buybacks

over 2023, reducing total Ordinary Shares in issue by 7.4%,

increased the NAV per Ordinary Share by 1.4 cents;

— asset life extensions: increasing the average asset life

assumptions for the solar portfolio from 30 years to 40

years, and those of the wind portfolio from 25 years to an

average of 28 years, boosted the NAV per Ordinary Share

by 4.6 cents; and

— Norwegian resource rent tax for Tesla and The Rock

(-4.4cents)

Since IPO, AER has achieved an annualised total NAV return of

4.3% over 4.5 years (excluding any reinvestment of dividends),

which is below the Company’s long-term target of 6.0% to

7.5%. The lower-than-targeted return is primarily attributable

to the Company’s NAV performance in 2023, which recorded

the first negative total NAV return in the Company’s short

operating history at -6.0% including dividends as a result of

the drivers described above.

Valuation Methodology

The Company owns 100.0% of its subsidiary Tesseract

Holdings Limited (“HoldCo” or “THL”). The Company meets the

definition of an investment entity as described by IFRS 10.

As such, the Company’s investment in the HoldCo is valued

atfair value.

The Company has acquired underlying investments in SPVs

through its investment in the HoldCo. The Investment Adviser

has carried out fair market valuations of the SPV investments as

at 31 December 2023 and the Directors are satisfied with the

methodology, the discount rates and key assumptions applied,

and the valuations.

All SPV investments are at fair value through profit or loss

and are valued using the IFRS 13 framework for fair value

measurement. The economic assumptions shown on page 28

were used in the valuation of the SPVs.

Svindbaek, Denmark

1. Excluding fees and stamp duty.

2. Refer to page 29 for more details.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

INVESTMENT

ADVISER’S REPORT CONTINUED

Valuation Assumptions

As at 31 December 2023

Discount rates The discount rate used in the valuations is calculated 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 providers with coverage in almost all European markets as well as

providers with regional expertise. The approach applied to all asset classes (wind, solar PV and

hydropower) remains unchanged with the first two using a blend of two power price curve providers

and the third using a blend of three power price curve providers.

Energy yield/load factors Estimates are based on third-party energy yield assessments, which consider historic production

data (where applicable) and other relevant factors.

Inflation rates Long-term inflation is based on the monetary policy of the European Central Bank. Short-term

inflation assumptions are based on the first three years being sourced from Refinitiv and an

interpolation for another two years to the long-term rate.

Asset life In general, an operating life of 25 to 30 years for onshore wind and 40 years for solar PV is assumed.

The operating lives of hydropower assets are estimated in accordance with their expected

concession terms.

Operating expenses Operating expenses are primarily based on respective contracts and, where not contracted, on the

assessment of a technical adviser.

Taxation rates Underlying country-specific tax rates are derived from due diligence reports from leading tax

consulting firms.

Portfolio Valuation – Key Assumptions

As at

31 December 2023

As at

31 December 2022Metric

Discount rate Weighted average 7.2% 7.2%

Long-term inflation Weighted average 2.0% 2.0%

Remaining asset life

Wind energy (years) 22 22

Solar PV (years) 36 29

Hydropower (years) 9 10

Operating life assumption

Wind energy (years) 28

Solar PV (years) 40 30

Hydropower (years) n/a n/a

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

1. Remaining asset life based on net full load years. Does not consider any impact from the Greek wind farm Desfina’s potential asset life

extension.

2. Asset life assumption from date of commissioning.

3. Assumes an asset life of 25 to 30 years.

Financial Performance continued

Aquila European Renewables Plc|Annual Report 2023

Electricity Price Forecasts – All Assets (Weighted Average)

150.0

100.0

2024 2050

0.0

50.0

2026 2029 2032 2035

Q4 2023

Q4 2022

Futures adjusted for capture effect

2038 2041 2044 2047

EUR per MWh

Valuation Sensitivities

Production (P90/P10)

Inﬂation (-/+0.5%)

-15c -10c -5c +10c +15c

Discount rate (+/-0.5%)

Asset life (-/+1 year)

Power prices (-/+10%)

0c +5c

Cents per share

Impact on NAV per Ordinary Share

Opex (+/-10%)

Norwegian Tax Changes

On 19 December 2023, following an extensive consultation process that received input from the Investment Adviser, other

industry players and the Renewables Norway organisation, the Norwegian Parliament passed a series of legislative changes

to taxes applicable to existing and new onshore wind farms, effective from 1 January 2024. A resource rent tax of 25% on all

onshore wind farms has been introduced, lower than the 40% initially proposed. An increased base for tax depreciation (up to a

maximum 85% of the historical investment cost) was also included. A natural resource tax and a high-price contribution tax have

been discontinued, whereas a production tax on wind farms was only marginally increased from 0.02 NOK per kWh to 0.023 NOK

per kWh. These tax changes were reflected in the Q4 valuations of the Company’s Norwegian wind farms The Rock and Tesla (the

assets account for 14.5% of the Q4 total portfolio fair value). Analyst power price forecasts used to support the Q4 valuations of

The Rock and Tesla do not include any potential impact of Norway’s resource rent tax on the country’s medium and long-term

power price forecasts, which may need to reflect the likely outcome of the tax on future build-out of much-needed renewable

energy capacity in the country.

1. Data reflects latest pricing forecast as at 31 December 2023. All power prices are in nominal terms as at 31 December 2023 and reflect the

captured price.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

INVESTMENT

ADVISER’S REPORT CONTINUED

Market Commentary and Outlook

2023 Average Daily Power Price Chart

EUR per MWh

600.0

400.0

January

2022

March

2022

May

2022

July

2022

September

2022

November

2022

January

2023

March

2023

May

2023

July

2023

September

2023

November

2023

January

2024

500.0

300.0

200.0

100.0

800.0

700.0

Greece Iberia Nordics

Market Power Prices

In 2023, power prices across European regions were

characterised by persistent volatility, driven by the downward

trajectory of commodity prices, most notably gas and carbon

prices during the last quarter of the year. This trend reflected a

reduction in demand spurred by mild temperatures in Europe,

elevated filling levels of gas storage reservoirs and greater

renewable generation feeding into national grids. Overall,

near-term power price forecasts are significantly lower

year-on-year, but remain above long-term averages. Medium

to long-term power price forecasts have not changed

materially in the year.

In response to the prolonged period of high energy prices

in 2022, national governments across Europe sought to

intervene in electricity markets by either altering the price

set by the market or more commonly by introducing windfall

taxes and price caps. Against a backdrop of declining gas and

power prices, the European Commission did not recommend

extending emergency measures beyond June 2023 and no

European country in which the Company is invested in decided

to extend windfall tax measures into 2024.

Nordics

In 2023, power prices in the Nordics saw an increasing

convergence with prices in continental Europe, catalysed by

increased interconnection links with Germany and the UK, and

thus a greater correlation to European commodity prices, most

notably gas. In the second half of the year, specifically from

July to October, high hydro output and renewable generation

further depressed power prices. The Nordic electricity system

spot price averaged EUR 56.4 per MWh in 2023 (2022: EUR

135.9 per MWh).

However, due to the different patterns for southern and

northern price zones in Norway, the impact of higher

commodity prices differs widely. The southern price zones

(NO1, NO2 and NO5) were significantly affected by continental

Europe due to the existing interconnections. In contrast,

northern regions (NO3 and NO4) were less affected by

fluctuations in power prices due to the lower local demand

and abundant wind Resources. Conversely, the higher

interconnection to the southern zones is now reducing this

disparity. Aquila European Renewables has exposure to NO2

and NO4 price zones in Norway via its interest in Tesla and The

Rock respectively.

Iberia

Average electricity spot market prices in Iberia traded at a

discount compared to other European regions. This was due

to a temporary gas price cap mechanism introduced by the

Spanish and Portuguese governments in mid-June 2022, which

held back the impact of escalating fuel prices on power prices.

1. Source: European Network of Transmission System Operators for Electricity (“ENTSO-E”), ‘Nordics’ reflects the Nord Pool system price.

Aquila European Renewables Plc|Annual Report 2023

The cap was in force up to 31 December 2023, having stopped

applying since March 2023 due to the steep decline in gas

prices. Power demand also remained depressed, decreasing

2.5% from 2022, and high renewable output, especially in the

last quarter of the year, also contributed to the downward

trajectory in power prices. In Iberia, spot prices traded at an

average of EUR 87.2 per MWh in 2023 (2022: EUR 167.5 per

MWh).

A Spanish windfall revenue clawback tax for renewable

generators, which expired in December 2023, was not

extended for 2024. The impact of the clawback has been to

restrict captured market revenue to prices in the approximate

range of EUR 85.0 and EUR 100.0 per MWh. The impact on the

Company’s Spanish portfolio was minimised given relatively

high hedging ratios as a proportion of total production and

the exemption of PPA revenues below EUR 67.0 per MWh from

the windfall tax. A generation tax was re-introduced in 2024,

gradually rising from 3.5% over the first quarter, to 5.25% in the

second quarter, and increasing to 7.0% over the second half

of the year. The impact of the tax, including its effect on spot

market power prices, is expected to be reflected in the first

quarter 2024 valuation of the Spanish solar PV portfolio.

Greece

Power prices in Greece were more elevated than other

European countries due to the higher proportion of hours

in which gas-fired generation sets the marginal price in the

country’s wholesale market. However, the downward trajectory

in commodity prices still resulted in a substantial decrease

in the average power price for 2023 to EUR 119.2 per MWh

(2022: EUR 279.9 per MWh). A windfall tax with a threshold of

EUR 85.0 per MWh, applying to the revenues in the day-ahead

market of renewable generators, expired on 1 June 2023.

However, given the revenues of the Company’s Greek wind

farm, Desfina, are 100% hedged by a feed-in tariff, the windfall

tax had no impact on the asset’s revenue.

Fuel Price Evolution

The downward trend of commodity prices (notably gas and

coal) contributed to the continuation of the bearish trend in

European power price levels since the start of the year. The

predominant marginal price setter for power prices in the

markets the Company is invested in is European natural gas.

Throughout 2023, low demand and a robust gas supply saw

gas storage levels reach the upper bounds of the ten-year

range for most of the year, primarily due to the higher volume

of liquefied natural gas (“LNG”) imports and two consecutive

mild winters across Europe. Industrial electricity demand also

recovered at a slower rate than anticipated from the significant

falls of 2022 as industries lowered production to deal with the

higher power price environment. Both of these factors applied

a downward pressure on near-term power prices.

European Union Emissions Allowance (“EUA”) prices traded on

the EU’s Emissions Trading System increased marginally from

an average price of EUR 81.2 per MWh in 2022 to an average

price of EUR 85.5 per MWh in 2023, despite low buying

interest in the second half of the year.

Gas forward prices steadily declined over the reporting period

due to the reduction in demand caused by mild temperatures

in Europe, elevated filling levels of gas storage reservoirs and

high levels of LNG imports. On average, gas prices in 2023

plunged by roughly 69% from 2022 prices, dropping from

an average of EUR 132.5 per MWh in 2022 to an average of

EUR41.0 per MWh in 2023.

Coal prices fell from an average of USD 285.2 per tonne in

2022 to an average of USD 124.7 per tonne in 2023, in line

with the trend of gas prices, due to weak fundamentals for

thesector and a negative macro-economic outlook.

1. Source: European Energy Exchange (“EEX”) from 1 January 2022 to 31 December 2023.

500

100

400

200

300

January

2022

March

2022

May

2022

July

2022

September

2022

November

2022

January

2023

March

2023

May

2023

July

2023

September

2023

November

2023

January

2024

2023 Daily Commodity Forward Prices

EUAs (in EUR per tonne CO

)

Natural Gas (in EUR per MWh) Coal (in USD per tonne)

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

INVESTMENT

ADVISER’S REPORT CONTINUED

Regulatory Developments

Overall, 2023 was a year of considerable progress for the

renewable energy sector, with an electricity market reform

and other EU legislation aimed at materialising increasingly

ambitious decarbonisation targets.

EU Market Design

On 14 December, the European Parliament and Council

reached an agreement to reform the European Union’s

(“EU”) electricity market design. The agreement was

formally adopted in April 2024. The outcome of this reform

is positive as it does not envisage a fundamental change

inthe pay-as-clear market design and should incentivise the

deployment of renewables. The reform will support long-term

contracts such as PPAs, boosting their uptake by smaller

market participants through guarantee schemes to reduce

risks associated with offtaker payment default, facilities to pool

demand, annual assessments of the PPA marker at an EU and

Member State level, and voluntary standardised PPA contracts.

The agreement will further improve liquidity in forward

markets by creating virtual hubs, similar to the Nordic

forward market hub, for Europe's various price zones and

accelerate the build-out of renewables by mandating

two-way contracts for difference for new publicly financed

investments in renewable generation. The reform will also

boost the electricity market’s flexibility by adapting capacity

mechanisms to further promote the participation of renewable

technologies, such as demand response and storage.

An acceleration of grid development and more-flexible

connection arrangements are also included, along with

quantifiable national targets for demand response and

storage. The Company expects this reform to the electricity

market design to further incentivise the expansion of

renewable generation in Europe.

The Green Deal Industrial Plan: Placing Europe’s

Net-Zero Industry in the Lead

The European Council and the European Parliament reached

a provisional agreement on the Net-Zero Industry Act

(“NZIA”) on 6 February 2024, aimed at bolstering Europe’s

renewable sector and achieving the EU’s climate goals. This

agreement entails measures such as establishing a single

list of net-zero technologies, simplifying permit-granting

procedures for manufacturing projects, fostering innovation

through regulatory sandboxes, and enhancing workforce

skills. Key targets also include sourcing 40% of annual solar

PV deployment from EU manufacturing and achieving an

annual CO

carbon capture and storage capacity of at least

50 million tonnes by 2030. Additionally, the agreement

includes the streamlining of construction permit procedures,

the creation of net-zero industrial valleys, and greater clarity

on public procurement criteria. Furthermore, rules on public

procurement will ensure transparency and diversification of

technology supply, with at least 30% of the volume auctioned

annually per member state. After the provisional agreement

reached on 6 February, the NZIA awaits formal adoption by

both institutions later in 2024. It is expected the reform will

expedite the build-out of renewable capacity whilst also

boosting the competitiveness of Europe’s renewable energy

sector.

A revised Renewable Energy Directive entered into force

in all EU countries on 20 November 2023, raising the EU’s

renewable energy target to 42.5% of final energy consumption

by 2030, up from the original goal of 32%. Implementation

of the Directive will lead to considerable fluctuations in the

bloc’s electricity market throughout this transition, given the

underlying assumption that renewable capacity will need to

triple by 2030 to 1.3 TW, in line with the global goal set at the

2023 United Nations Climate Change Conference (“COP28”).

Solutions to stabilise the electricity grid’s supply and demand

are thus indispensable considering the scale of these targets,

requiring greater investment in battery storage systems to

improve grid efficiency, greater interconnection between

European countries, and an expansion in grid capacity

build-out. This urgency is exemplified in the fact that installed

interconnection capacity equalled less than one-fifth of Spain’s

peak demand, already one of the most decarbonised, with

renewables accounting for 62% of installed capacity in 2023,

highlighting the need to significantly boost interconnection

with the rest of the European power market.

Wind Power Action Plan

In October, the European Commission proposed a Wind Power

Action Plan that is expected to enhance the competitiveness

of the Eurozone’s wind industry. The proposal will accelerate

permitting, improve auction designs, ensure fair competition

from foreign manufacturers, expand access to finance to the

EU wind supply chain and facilitate grid build-out, including

cross-border grid projects.

Market Commentary and Outlook continued

Aquila European Renewables Plc|Annual Report 2023

Outlook

2023 saw heightened volatility in the global economy

as most major markets transitioned from more than a

decade of historically low interest rates to the sharpest and

steepest tightening cycle by central banks in the developed

world since 1979, contributing to sluggish aggregate and

industrial demand across the EU. A more volatile geopolitical

environment is also expected in 2024, marked by high volatility

in commodity prices and supply disruptions from the ongoing

conflict in Ukraine, the crisis in the Near East and attacks on

shipping in the Red Sea. Disruptions in shipping in the Red

Sea have already resulted in lead time and transportation cost

increases across all renewable supply chains as shipping lanes

from Asia to Europe increasingly transition to circumnavigating

Africa rather than passing through the Suez Canal. Concerns

over an escalation to a wider Middle Eastern conflict and

increased competition with Asia over liquefied natural gas

supply could have a material impact on commodity and

powerprices.

Despite this volatile backdrop, narrowing contributions from

food and energy prices have brought annual headline inflation

downwards over the year, with Eurozone headline inflation

falling from a peak of 11.5% in October 2022 to 2.9% year

on year in December 2023, trending down to the European

Central Bank’s target of 2.0%. The Company’s exclusive

exposure to European markets is thus a key differentiator

from its UK-centric peer group, where headline inflation has

decreased from a peak of 11.1% to 4.6% year on year over

the same period. Conversely, European core inflation has

remained harder to bring down, trending at more than double

the European Central Bank’s targets across the developed

world due to the much higher concentration of services

inflation, the latter boosted by strong wage growth resulting

from tight labour markets. Nevertheless, it is expected that

both headline and core inflation should continue to recede

in 2024 and that the interest rate cycle has peaked across

developed markets, given the already significant drop in

inflation since the 2022 highs. Thus, in the absence of any

exogenous events that could derail assumptions on inflation

or the global economic situation, the market consensus is that

central banks should begin to cut interest rates later this year,

a promising tailwind for asset valuations that it is hoped should

narrow the disconnect between private and public market

valuations for renewable infrastructure.

Electricity prices in most of the Company’s key markets are

also forecast to continue to fall over time, reflecting the

downward trend of commodity prices witnessed in the second

half of 2023, the latter spurred by elevated filling levels of gas

storage reservoirs amid milder seasonal weather conditions.

These forecasts are reflected in the Company’s power price

curves as at year end 2023 for most price zones, showcasing

a continued drop in prices in the short to medium term,

plateauing in the long term.

However, in the short term, greater competition with Asia over

liquefied natural gas supply, at least until a new wave of gas

liquefaction capacity is set to come online between 2026 and

2028, will continue to pressure commodity and thus electricity

prices into the next winter season. Furthermore, the current

slowdown in China’s economy is already lowering prices for

key raw materials, components, equipment and services in

the renewable supply chain, especially solar modules, and

a recovery in the country’s economy may drive prices in an

upward trajectory.

2023 was a significant milestone for Europe’s renewable

energy sector, with the EU committing to more-ambitious

energy transition and decarbonisation targets for 2030 and

beyond, as well as the introduction of reforms aimed at

creating a more favourable regulatory environment for the

sector to ensure energy security and affordability. In addition,

wind and solar PV capacity produced a record 27% of EU

electricity in 2023, up from 23% in 2022, their largest ever

annual capacity additions and a promising development for

the sector as wind power generation surpassed that from

gas for the first time

. The urgency in adopting renewables is

evidenced by forecasts that require a three-fold increase in

global renewable capacity by 2030 to remain on target with

the net zero emissions scenario by 2050 and limiting the global

temperature rise to 1.5°C

Emerging trends, notably the rise of generative artificial

intelligence, the increased adoption of 5G networks and

cloud computing are expected to transform productivity

and economies worldwide. Other notable demand growth

drivers include the rising share of electric vehicles, the wider

introduction of heat pumps, battery storage systems and the

electrification of industrial processes; all these trends are key

to remain on target with Europe’s net zero emissions scenario

by 2050.

Looking ahead, the themes of decarbonisation and energy

security will continue to spur demand for the renewable

energy transition, with expanding the deployment and

operational competitiveness of renewables assets being

a key priority for governments across Europe. Overall, the

Company’s balanced portfolio of fully operational wind, solar

and hydro-electric assets is expected to benefit from these

secular tailwinds and, together with the Investment Adviser,

play a meaningful role in Europe’s energy transition.

Aquila Capital Investmentgesellschaft mbH

24 April 2024

1. Ember, ‘European Electricity Review 2024’, available at: link.

2. International Energy Agency (“IEA”), ‘Keeping the door to 1.5°C open’ (2023), available at: link.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

ENVIRONMENTAL, SOCIAL

AND GOVERNANCE

Aquila Group, the Investment Adviser of the Company, focuses on the investment in, and development of, essential assets.

This includes clean energy (wind energy, solar PV, hydropower and battery storage), sustainable infrastructure and specialty asset

classes, such as carbon forestry and energy efficiency. In 2023, Aquila Group supplied 2.3 million homes with renewable energy,

which cumulatively avoided 2.4 million tonnes of CO

e annually¹.

In 2022, Aquila Group formalised a mission to become one of the world’s leading sustainable investment and development

companies for essential assets by 2030. To show commitment to the mission, it set a Group-wide goal to avoid 1.5 billion tonnes of

e by 2035 in its portfolio’s lifetime, equivalent to 4.0% of CO

emissions world-wide in 2023².

1. Environmental

1. Data as at 31 December 2023 for the year 2023, based on current portfolio of the Aquila Group. For details on the methodology for avoided

emissions, refer to: link. The calculation of the average European household consumption is based on Eurostat data (link). The average EU-27

household electricity consumption per person (in MWh per capita) is multiplied by the average EU-27 household size, resulting in the average

consumption of electricity of the average household size (in MWh per household). The electricity generated by the assets is divided by the

EU-27 average consumption of electricity and household size (in MWh per household) resulting in the final value displayed.

2. Worldwide CO2 emissions in 2023 from energy combustion, industrial processes, and flaring were 37.4 billion tonnes according to the

International Energy Agency (“IEA”), available at: link.

Using the appropriate tools, due-diligence procedures and experts, Aquila Group ensures it identifies, assesses and mitigates

all material ESG factors, to protect investors from potential financial downside, while considering their impact on society and the

environment. In this context, Aquila Capital Investmentgesellschaft mbH (Aquila Capital), a regulated entity, and Investment Adviser

of AER, manages all relevant ESG elements using dedicated subject-matter experts.

Together, we are committed to the UN Sustainable Development Goals, particularly climate action (SDG #13), clean energy (SDG

#7), industry innovation, and infrastructure (SDG #9).

The Company aims to invest in a diversified portfolio of renewable energy infrastructure investments, such as hydropower plants,

wind and solar parks, across continental Europe and Ireland. With the objective of providing investors with a diversified portfolio of

renewable assets, AER is able to deliver on its investment objectives as well as contribute towards the green economy.

40.0%

At least a 40.0%

decline from 1990

levels in greenhouse

gas emissions

32.0%

A 32.0% share for

renewables in the

energy system

32.5%

A 32.5% improvement

in energy efficiency

Tesla, Norway

Angela Wiebeck

Chief Sustainability Officer at Aquila Capital

UN Sustainable Development Goals for Europe

Aquila European Renewables Plc|Annual Report 2023

AER’s Contribution to the UN Sustainable Development Goals

Goal Overview

Contribution

towards

UN Sustainable

Development Goals

Ensure access to

affordable, reliable,

sustainable and

modern energy for

all.

— AER’s portfolio produces renewable energy, which contributes towards

Europe’s electricity mix.

— Renewable energy is a cost-effective source of energy compared to other

options.

— AER’s investments in renewable assets help support and encourage

further investment in the industry.

Build resilient

infrastructure,

promote inclusive

and sustainable

industrialisation and

foster innovation.

— AER targets renewable investments that are supported by high-quality

components and infrastructure, to optimise the energy yield and

subsequent return to investors.

— AER’s investments help support the construction of shared infrastructure

(e.g. substations) which enables the further expansion of renewable

energy sources.

— AER’s Investment Adviser, Aquila Capital, is responsible for monitoring

and optimising the Company’s day-to-day asset performance. This

process also involves exploring how new technologies and other forms of

innovation can be used to enhance asset performance and sustainability

(energy yield, O&M, asset life).

Take urgent action

to combat climate

change and its

impacts.

— The Company’s 463.8 MW portfolio powered approximately 266.4

thousand households and avoided approximately 267.6 thousand tonnes

of CO

emissions over the reporting period¹.

— As a signatory to the UN Principles for Responsible (“UN PRI”), the

Company’s Investment Adviser has integrated ESG criteria all along its

investment process for real assets, which includes considerations of

climate change.

GRESB

GRESB is a global ESG benchmark for real estate and infrastructure which synthesises

Environmental, Social, and Governance (“ESG”) data and provides actionable insights to its

members, partners, and investors.

In its third year of participation in the GRESB assessment, the Company has achieved an

improvement in both its overall GRESB score and rating for the period. AER achieved an

overall GRESB score of 92 out of 100 (assessment performed in 2022 in relation to 2021:

88 out of 100), the highest rating ever achieved by the Company, and higher than the

average of 88 points amongst its peer group. In addition, AER achieved a 4 out of 5-star

GRESB rating (assessment performed in 2022 in relation to 2021: 3 out of 5). While the

GRESB score is an absolute measure, the GRESB rating is an overall relative measure of ESG

management and performance of the Company, highlighting improvement over time.

At the portfolio level, compared to its last GRESB assessment, the results show an

improvement in performance in the categories of Reporting (e.g. ESG investor reporting

and incident management) and Risk Management (e.g. risk-management systems at asset

level, social-risk assessments and incident reporting), while the score in Stakeholder

Engagement was maintained. At the asset level, the ratings upgrade recognises AER’s

strong risk-management framework and improved Stakeholder Engagement, while the

performance in resource and emission management was maintained for AER’s assets.

1. Actual AER contributions at 31 December 2023. The CO2 equivalent avoidance, the average European households supplied and household

emissions are approximations and do not necessarily reflect the exact impact of the renewable energy projects. The cited sources of

information are believed to be reliable and accurate, however, the completeness, accuracy, validity and timeliness of the information

provided cannot be guaranteed and Aquila Capital accepts no liability for any damages that may arise directly or indirectly from the use

ofthisinformation.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

ENVIRONMENTAL, SOCIAL

AND GOVERNANCE CONTINUED

Desfina Wind Farm Reforestation

In May 2023, 2,000 trees were planted in Greece’s Parnassos National Park. The

project company will ensure their maintenance and watering for the following three

years. A wooden cabin was also constructed in 2022 at the entrance of the park, for

the benefit of the local Forestry Authority.

Greco, European Owl

Albeniz, Short-toed Snake-eagle

Parnassos National Park, Greece

Flora

— Translocation of rain-fed olive trees.

— Planting of broom and palmetto trees to promote landscape integration and

the creation of biotopes appropriate for local species.

— Clearing of vegetation through sheep grazing.

— Regular maintenance measures and monitoring.

Albeniz, Translocated olive trees

Fauna

— Drinking troughs, feeding troughs and perches were installed in order to suit

the local fauna.

— A hunting fence was installed to protect wildlife.

— Bird nest boxes were installed, specifically for the nesting of the lesser kestrel,

common kestrel, barn owl and little owl species.

— A study commissioned to analyse the degree of adaptation of bird species to

the presence of the solar PV parks, with special emphasis on the lesser kestrel

and Montagu’s harrier species.

— Stands for wild rabbits built to help the breeding and survival of this species.

Environmental Initiatives

Below is a selection of initiatives implemented across AER’s portfolio to preserve and improve flora and fauna, undertaken over the first

nine months of 2023.

Spanish Solar PV ESG Initiatives

The natural environment around some of the Company’s solar PV parks is the Desierto de Tabernas National Park, situated to the south

east of Spain and representing the only desert in the entire European continent. This constitutes a rich biodiversity of environmental

resources that is of particular geological interest. Specialist advisers have been commissioned to implement environmental measures

tomitigate the impact of the solar PV plants on the environment and create habitats for flora and fauna.

Several visits per month are made to implement the measures, monitor their evolution and make necessary adjustments. Below is

aselection of closely monitored measures implemented across some of the Company’s solar PV parks for local flora and fauna.

1. Environmental continued

Aquila European Renewables Plc|Annual Report 2023

Renewable energy projects can have an inherent major positive impact on the environment with their ability to decarbonise the

energy sector, aiding the Company in the transition to a low-carbon economy. In light of the European Green Deal boosting

renewable energy projects, investment into clean-energy assets has accelerated over recent years. As renewable energy

deployment increases, pressure on land is growing. The need to protect biodiversity may result in conflicts over agricultural and

renewable energy land usage. Conflicts can arise when new renewable projects compete against other types of land usage, such as

residential housing, recreational areas, agriculture and nature conservation, or when they cause landscape disruptions. Engagement

with local communities is an integral part of the Company’s investment philosophy. The assets continue to support communities by

contracting local service providers, paying local taxes, and lease payments for use of the land.

2. Social

Workshop with University Students at Jaén

On 30 November 2023, the Investment Adviser’s

Asset Management team hosted a training session on

solar photovoltaic energy for a group of Electrical and

Industrial Engineering students from Spain’s University

of Jaén at the Company’s 50 MW solar plant located

in the same municipality. The students were given

the opportunity to see first-hand how a solar PV plant

operates and gain technical knowledge of the plant’s

components, as well as learn about the development

and execution of a project of these characteristics. This

initiative is part of the proactive social management

approach carried out at all the Company’s assets, with

the aim of having a positive impact on the regions and

local communities where the assets operate.

Save the Children Telethon at The Rock

The Rock wind park was one of two businesses in the

municipality of Vefsn, Norway, that contributed to a

national telethon called Save the Children. The project

company made a small one-time donation.

The telethon is a national event and a new organisation

is donated money every year. This is positive publicity for

The Rock, since it highlights its contribution to the local

community.

Jaén, Spain

The Rock, Norway

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

ENVIRONMENTAL, SOCIAL

AND GOVERNANCE CONTINUED

Independent Board of Directors

The independent Board of Directors is responsible for AERʼs governance and sustainability

policy and its implementation, with the daily operations being delegated to its independent

AIFM, FundRock Management Company (Guernsey) Limited (“FundRock”). FundRock monitors

environmental, social and governance risks, which are fully integrated across every single stage

of its investment process. The Aquila Group publishes its own Sustainability Report, describing

the Investment Adviser’s approach to sustainability within the investment process. Aquila Capital

regards integrity and diversity as key pillars in its governance and it has been vital for the growth

and success of the Company. The Investment Adviser is fully regulated and supervised by the

Federal Financial Supervisory Authority in Germany.

Appointment of New Non-Executive Director

The Company was pleased to announce the appointment of Myrtle Dawes as a non-executive

Director (“NED”) in September 2023, joining the Board of Directors as a member of the

Remuneration and Nomination Committee and the Audit and Risk Committee. Ms Dawes, a

chartered chemical engineer, has over 30 years’ experience in the energy sector, both in the UK

and overseas, covering leadership roles in engineering, project management, technology and digital transformation. Currently,

she is CEO of the Net Zero Technology Centre and non-executive Director at FirstGroup plc. In 2017, Ms Dawes featured in

Breaking the Glass Ceiling and was selected as one of 100 Women to Watch in the Cranfield FTSE Board Report 2017. In 2021,

she was recognised by TE:100 as one of the Women of the Energy Transition.

Board and Employee Diversity

The Board of Directors is appointed based on expertise and merit, being mindful of the benefits generated by diversity. The

Board comprises members with different skills and experiences, while endeavouring to comply with the Listing Rules on diversity.

The current Board comprises three men and two women, all non-executive Directors who have a significant number of years of

experience in their relevant fields. Additionally, the Investment Adviser is also mindful of the benefits provided by diversification,

both in culture (some 60 nationalities are represented among its employees), and in gender (its gender ratio is 61% male and

39%female).

3. Governance

Sustainable Supply-Chain Management

The Investment Adviser’s membership in associations such

as the Global Infrastructure Investor Association (“GIIA”) and

the Global Listed Infrastructure Organization (“GLIO”) afford

it the opportunity to lobby for human and labour rights along

the value chain of several manufacturers, to prevent trade

disruptions. In addition, membership in the associations is

also beneficial in highlighting the economic interests of the

Investment Adviser to the relevant authorities. The Investment

Adviser has also been a member of SolarPower Europe since

2022, a leading solar PV association influencing regulations and

business landscapes for the sector. The Investment Adviser’s

Head of Procurement is Chair of the Supply Chain Sustainability

Workgroup for SolarPower Europe.

The Investment Adviser takes a multi-faceted approach to

the mitigation of governance risks, limiting exposure to risks

within the supply chain. All Engineering, Procurement and

Construction (“EPC”) and Operations and Maintenance (“O&M”)

contracts are negotiated with contractors operating in a country

adhering to the European Union’s minimum labour standards.

Any sourcing of raw materials, components, equipment or

services from suppliers domiciled in countries linked to the use

of forced labour is made with guarantees that such components

are not associated with human rights violations.

Moreover, an in-house onboarding and screening process

for suppliers is in place to prevent and mitigate any risk

of human-rights violations, including a pre-screening of

counterparties for bad-press risk and a fully fledged Know Your

Customer (“KYC”) process. All counterparties are monitored by

the Investment Adviser according to internal compliance and

procurement policies. Measures include the selection of regions

with strong regulatory frameworks, comprehensive internal

due-diligence processes that examine counterparties and their

governance frameworks, and the use of specialist advisers to

conduct technical and legal due diligence analyses at the project

level. All governance measures are audited by major audit

firmsregularly.

AER Board: Investment Adviser:

Men

Women

3 61%2 39%

Different nationalities

Myrtle Dawes

Aquila European Renewables Plc|Annual Report 2023

INVESTMENT POLICY AND KEY

PERFORMANCE INDICATORS

Investment Policy

The Company will seek to achieve its

investing objective, set out on page1,

through investment in renewable

energy infrastructure in continental

Europe and the Republic of Ireland,

comprising (i) wind, photovoltaic and

hydropower plants that generate

electricity transforming the energy of

the wind, the sunlight and running water

as naturally replenished resources, and

(ii) non-generation-renewable-energy-

related infrastructure associated with

the storage (such as batteries) and

transmission (such as distribution

grids and transmission lines) of

renewable energy, in each case either

already operating or in construction

or development (‘Renewable Energy

Infrastructure Investments’).

The Company will acquire a mix of

controlling and non-controlling interests

in Renewable Energy Infrastructure

Investments and may use a range of

investment instruments to pursue its

investment objective, including, but not

limited to, equity, mezzanine or debt

investments.

In circumstances where the Company

does not hold a controlling interest in

the relevant investment, the Company

will seek, through contractual and other

arrangements, to, inter alia, ensure

the Renewable Energy Infrastructure

Investment is operated and managed in

a manner consistent with its investment

policy, including any borrowing

restrictions.

Investment Restrictions

The Company aims to achieve

diversification principally by investing

in a range of portfolio assets across a

number of distinct regions and a mix of

wind, solar PV and hydro technologies

involved in renewable energy

generation. The Company will observe

the following investment restrictions

when making investments:

— no more than 25 per cent of its Gross

Asset Value (including cash) will be

invested in any single asset;

— the Company’s portfolio will

comprise no fewer than six

Renewable Energy Infrastructure

Investments;

— no more than 20 per cent of its

Gross Asset Value (including cash)

will be invested in non-generation

renewable energy related

infrastructure associated with the

storage (such as batteries) and

transmission (such as distribution

grids and transmission lines) of

renewable energy;

— no more than 30 per cent of its Gross

Asset Value (including cash) will be

invested in assets under development

or construction;

— no more than 50 per cent of the Gross

Asset Value (including cash) will be

invested in assets located in any one

country;

— no investments will be made in assets

located in the UK; and

— no investments will be made in fossil

fuel assets.

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.

The Company will hold its investments

through one or more special purpose

vehicles (“SPVs”) and the investment

restrictions will be applied on a

look-through basis.

Although not forming part of the

investment restrictions or the Investment

Policy, where Renewable Energy

Infrastructure Investments benefit

from a Power Purchase Agreement,

the Company will take reasonable

steps to avoid concentration with a

single counterparty and intends that

no more than 25 per cent of income

revenue received by Renewable Energy

Infrastructure Investments will be

derived from a single off-taker.

Changes to the Investment

Policy

The Directors do not currently intend

to propose any material changes to

the Company’s Investment Policy. Any

material changes to the Company’s

Investment Policy set out above will

only be made with the approval of

shareholders.

Hedging

The Company does not intend to use

hedging or derivatives for investment

purposes but may from time to time

use derivative instruments such as

futures, options, futures contracts and

swaps (collectively ‘Derivatives’) to

protect the Company from fluctuations

of interest rates or electricity prices.

The Derivatives must be traded on

a regulated market or by private

agreement entered into with financial

institutions or reputable entities

specialising in this type of transaction.

Liquidity Management

The AIFM will ensure a liquidity

management system is employed for

monitoring the Company’s liquidity

risks. The AIFM will ensure, on behalf

of the Company, that the Company’s

liquidity position is consistent at all

times with its investment policy, liquidity

profile and distribution policy. Cash

held pending investment in Renewable

Energy Infrastructure Investments or

for working capital purposes will be

invested in cash equivalents, near cash

instruments, bearer bonds and money

market instruments.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

INVESTMENT POLICY AND KEY

PERFORMANCE INDICATORS CONTINUED

Borrowing Limits

The Company may make use of

long-term limited recourse debt for

Renewable Energy Infrastructure

Investments to provide leverage

for those specific investments. The

Company may also take on long-term

structural debt provided that at the time

of entering into (or acquiring) any new

long-term structural debt (including

limited recourse debt), total long-term

structural debt will not exceed 50 per

cent of the prevailing Gross Asset

Value. For the avoidance of doubt, in

calculating gearing, no account will

be taken of any Renewable Energy

Infrastructure Investments that are made

by the Company by way of a debt or a

mezzanine investment. In addition, the

Company may make use of short-term

debt, such as a Revolving Credit Facility,

to assist with the acquisition of suitable

opportunities as and when they become

available. Such short-term debt will be

subject to a separate gearing limit so as

not to exceed 25 per cent of the Gross

Asset Value at the time of entering into

(or acquiring) any such short-term debt.

In circumstances where these

aforementioned limits are exceeded

as a result of gearing of one or more

Renewable Energy Infrastructure

Investments the Company has a

non-controlling interest in, the

borrowing restrictions will not be

deemed to be breached. However, in

such circumstances, the matter will be

brought to the attention of the Board

who will determine the appropriate

course of action.

Dividend Policy

The Company is targeting a progressive

dividend over the medium term with

a minimum dividend of 5 cents per

Ordinary Share, subject to having

sufficient distributable reserves.

Dividends are expected to be paid

quarterly, normally in respect of the

three months to 31 March, 30 June,

30 September and 31 December, and

are expected to be made by way of

interim dividends to be declared in

May, August, November and February.

The Company will declare dividends in

euros and shareholders will, by default,

receive dividend payments in euros.

Shareholders may, by completing

a dividend election form, elect to

receive dividend payments in sterling

(at their own exchange-rate risk). The

date the exchange rate between euro

and sterling is set will be announced

when the dividend is declared.

A further announcement will be made

once the exchange rate has been set.

Dividend election forms will be available

from the Registrar, Computershare

Investor Services PLC, The Pavilions,

Bridgwater Road, Bristol BS99 6ZY

or by telephone 0370 707 1346.

The Company’s target dividend for

2024 was approved by the Board

and is as set out on page 3.

Aquila European Renewables Plc|Annual Report 2023

(i) Achievement of NAV and Share Price

Growth since IPO

(June 2019)

(20.8%) 2023

2022: 27.6%

The Board monitors both the NAV and share price

performance and compares with other similar

investment trusts. A review of performance is

undertaken at each quarterly Board meeting and the

reasons for relative under and over-performance against

various comparators is discussed. The Company’s NAV

total return¹ and total shareholder return since IPO¹

(June 2019) to 31 December 2023 was 20.8% and -1.6%

(2022: 27.6% and 6.7%) respectively. The Company’s

NAV total return¹ and share price total return¹ for the

year to 31 December 2023 was -6.0% and -9.0% (2022:

12.9% and -4.5%) respectively. On an annualised basis,

the NAV total return¹ per Ordinary Share has achieved

4.3% since IPO.

The Chairman’s Statement on pages 8 to 10 incorporates

a review of the highlights during the year. The

Investment Adviser’s Report on pages 12 to 33 highlights

investments made and the Company’s performance

during the year.

Total NAV return

Total shareholder return

2020 2021 2022 2023

6.3%

10.8%

14.1%

11. 3%

27.6%

20.8%

6.7%

-1.6%

(ii) Maintenance of a Reasonable Level

ofPremium or Discount of Share Price

toNAV

(20.3%) 2023

2022: (16.6%)

6.5%

2020 2021 2022 2023

-0.6%

-16.6%

-20.3%

The Company’s broker monitors the premium or

discount on an ongoing basis and keeps the Board

updated as and when appropriate. At quarterly Board

meetings, the Board reviews the premium or discount in

the year since the previous meeting, in comparison with

other investment trusts with a similar mandate. The share

price closed at a 20.3% discount to the NAV as at

31 December 2023 (2022: 16.6% discount).

On 3 February 2023, the Board announced the details

of a Buyback Programme in response to the widening

discount at which the Company’s share price was

trading, as compared with its NAV per Ordinary Share,

as they believed the share price did not accurately

reflect the inherent value in the portfolio. This is part

of a broader package of initiatives seeking to improve

the marketability of the Company’s shares, which has

included a new listing on Euronext Growth Dublin. Since

that date, the Company has bought back for Treasury

a total of 30,103,575 Ordinary Shares for an aggregate

amount of EUR 27.8 million

Key Performance Indicators (“KPIs”)

The Board measures the Company’s success in achieving its investment objective by reference to the following KPIs:

1. This disclosure is considered to represent the Company’s alternative performance measures ("APMs"). Definitions of these APMs and other

performance measures used, together with how these measures have been calculated, can be found on pages 111 to 113. All references to

cents are in euros, unless stated otherwise.

2. Excluding fees and stamp duty.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

Key Performance Indicators (“KPIs”) continued

INVESTMENT POLICY AND KEY

PERFORMANCE INDICATORS CONTINUED

(iii) Maintenance of a Reasonable Level of

Ongoing Charges

1.1% 2023

2022: 1.1%

1.4%

2020 2021 2022 2023

1.1% 1.1% 1.1%

The Board receives management accounts containing an

analysis of expenditure which it reviews at its quarterly

Board meetings. The Board reviews the ongoing

charges¹ quarterly and considers these to be reasonable

in comparison with its peers.

Based on the Company’s average net assets during

the year ended 31 December 2023, the Company’s

ongoing charges figure was 1.1% (2022: 1.1%) calculated

in accordance with the Association of Investment

Companies (“AIC”) methodology.

(iv) To Meet its Target Total Dividend in each

Financial Year (cents per share)

Target:

5.79 Cents for 2024

(2023: 5.51 cents)

4.00

cents

2020

Annual dividend per Ordinary

Share paid since IPO

Target dividend per Ordinary Share in respect

of the year to 31 December 2024

2021 20232022

5.00

cents

5.25

cents

5.51

cents

2024

(forecast)

5.79

cents

(target dividend)

The Board approved a target dividend of 5.79 cents per

Ordinary Share (‘2024 Target Dividend’) in relation to the

year ending 31December2024. The 2024 Target Dividend

is in accordance with the Company’s dividend policy to pay

a progressive dividend over the medium term and is subject

to the portfolio performing in line with expectations. The

2024 Target Dividend represents an increase of 5.0% versus

the prior year and followed a 5.0% increase in the 2023

target dividend announced in February 2023.

The dividend target set for 2023 was for not less than 5.51

cents per Ordinary Share, subject to the performance of the

portfolio. These were paid in four equal interim dividends,

of1.3775 cents.

1. This disclosure is considered to represent the Company’s alternative performance measures ("APMs"). Definitions of these APMs and other

performance measures used, together with how these measures have been calculated, can be found on pages 111 to 113. All references to

cents are in euros, unless stated otherwise.

Aquila European Renewables Plc|Annual Report 2023

SECTION 172

Section 172 of the Companies Act 2006

requires the Board to act in a way it

considers would most likely promote the

success of the Company for the benefit

of all stakeholders, taking into account

the interests of stakeholders and the

environment in its decision-making,

and to share how this duty has been

discharged.

The Board’s values – integrity,

accountability and transparency – mean

that the Board has always worked hard

to communicate effectively with the

Company’s stakeholders.

This is a two-way process and

the feedback received from the

Company’s stakeholders is highly

valued and factored into the Board’s

decision-making process. The Company

has a range of stakeholders, and this

section maps out who they are, what the

Board believes their key interests to be,

how the Company enables engagement

with stakeholders and highlights the key

results that have consequently arisen

during the year.

Company Sustainability and

Stakeholders

As an externally managed investment

company, the Company does not have

any employees. Its main stakeholders are

as set out in the diagram below, which

explains the relationship between the

Company and each of its stakeholders.

Company’s Operating Model

The Company was listed on the main

market of the London Stock Exchange on

5 June 2019 and subsequently listed on

the Euronext Growth Dublin Exchange

on 2 October 2023. The Company’s

investments are held via its sole

subsidiary, Tesseract Holdings Limited,

which, in turn, holds the investment

portfolio via a number of Special

Purpose Vehicles (“SPVs").

Shareholders

Investment

Service Providers

and Company

Advisers

(Company Secretary,

Lawyers, Brokers,

Administrators,

Registrars)

Investment Adviser

Aquila Capital

Investmentgesellschaft

mbH

Alternative Fund

Manager

FundRock Investment

Management Company

(Guernsey) Limited

SPVs

The Company

Subsidiary Investment

Tesseract Holdings

Limited

(Portfolio Holding Company)

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

SECTION 172 CONTINUED

Engagement with

Stakeholders

The Board is aware of the need to foster

the Company’s business relationships

with suppliers, customers and other key

stakeholders through its stakeholder

engagement activities. These activities

include meetings, annual reviews,

presentations and publications and

enable the Board to ensure it fulfils its

strategies and discharge its duties under

section 172 of the Act.

The Board carried out an annual review

of its key service providers, including

the Investment Adviser, to understand

the culture of its service providers, and

to ensure they and the Company can

maintain high standards of business

conduct. The annual review process

involves assessing the service providers’

policies and control environments to

ensure their continued competitiveness

and effectiveness.

Shareholders

As a public company listed on the

London Stock Exchange, the Company

is subject to the Listing Rules and the

Disclosure Guidance and Transparency

Rules. It is a regulatory requirement,

for the Board to act fairly between

shareholders. The Board ensures the

Company complies with the Listing

Rules at all times and seeks the advice

of the Company Secretary, lawyers and

corporate broker in its dealings.

With the support of the Company’s

brokers, the Chairman and key Board

members met many of the Company’s

key investors to gauge their views on

the Company’s progress since IPO and,

more recently, to gauge the appetite

of shareholders for the proposal from

Octopus Renewables Infrastructure Trust

plc to combine with the Company via a

scheme of reconstruction pursuant to

section 110 of the Insolvency Act 1986.

Separately, the Investment Adviser

participated in a roadshow to meet

with the Company’s key investors. The

Board discussed the outcome of these

meetings and, as a consequence of

these meetings, and to better align

the Company with its shareholders,

anumber of initiatives were undertaken

as detailed in the Key Decisions section

on page 46.

At its quarterly Board meetings, the

Board reviews and discusses detailed

reports from the Company’s broker

and media PR consultants in relation

to the Company’s share performance,

trading and liquidity as well as the

composition of, and changes to, the

views are also considered by the Board

at those meetings to assist the Board’s

decision-making process and to ensure

expected returns are achieved and

sufficient capital is available to invest

in appropriate renewable energy

infrastructure investments, and to grow

the business in line with strategy and

expectation. Details of the decisions

taken by the Board during the year can

be found below under ‘Key Decisions

made During the Year’.

The Investment Adviser and Board

believe it is important for the Company’s

continued success, to have the potential

to access equity capital to expand the

Company’s portfolio over time, to further

diversify the investment portfolio, to

create economies of scale and, at times

when the Company’s shares are trading

at a premium against its NAV, as a means

to manage such premium.

The Company may issue shares from

its Treasury account but will only issue

shares at a premium to NAV at the time

of issue.

To help the Board in its aim to act fairly

between the Company’s members, it

seeks to ensure effective communication

is provided to all shareholders. The

Board encourages shareholders to

attend the Annual General Meeting

or General Meetings, where Directors

and representatives of the Investment

Adviser are available to meet

shareholders in person and answer

questions. The Annual Report and

half-yearly accounts are distributed to

the Company’s shareholders and made

available on the Company’s website. The

quarterly factsheet is also available on

the Company’s website.

Aquila European Renewables Plc|Annual Report 2023

The Company’s website –

www.aquila-european-renewables.

com – is considered an essential

communication channel and information

hub for shareholders. As such, it

includes full details of the investment

objective, supporting philosophy and

investment process and performance

along with news, opinions, disclosures,

results and key information documents.

It also presents information about

the Board, its committees and other

governance matters, and shareholders

are encouraged to view the website, to

better understand the Company.

Service Providers

As an externally managed investment

trust, the Company conducts all

its business through its key service

providers. The Board believes that

maintaining positive relationships with

each of the Company’s service providers

is important to support the Company’s

long-term success.

To ensure strong working relationships,

the Company’s key service providers

(the Investment Adviser, AIFM, Company

Secretary, Administrator) are invited

to attend quarterly Board meetings to

present their respective reports.

This enables the Board to exercise

effective oversight of the Company’s

activities. During the year, the Board

spent a considerable amount of time

between Board meetings engaging with

the Company’s key service providers

to continue to develop strong working

relationships and to determine good

working practices, to ensure the smooth

operational function of the Company.

The Board and its advisers seek to

maintain constructive relationships with

the Company’s key service providers

on behalf of the Company through

the annual review process, regular

communications, meetings and the

provision of relevant information.

Alternative Investment Fund

Manager (“AIFM”)

The AIFM is an important service

provider for the Company’s long-term

success. The AIFM has engaged

Aquila Capital to act as the Company’s

Investment Adviser for the purpose of

providing investment advisory services

to the Company. The AIFM is responsible

for reviewing each investment

opportunity before it is presented to

the Board. In addition to the reports

the Board receives from the Investment

Adviser, it also receives quarterly reports

from the AIFM. The Board maintains

regular contact with the AIFM to foster

a constructive working relationship.

Additionally, the AIFM is responsible

for monitoring the risks faced by the

Company, and these are regularly

discussed at meetings of the Audit and

Risk Committee.

Investment Adviser

The Investment Adviser is the most

significant service provider to the

Company and a description of its role

can be found on pages 12 and 13. The

performance of the Investment Adviser

is determined by the quality of the

Investment Adviser management team

and their ability to source high-quality

assets at attractive prices.

The Board monitors the Company’s

investment performance closely in

relation to its objectives, investment

policy and strategy. To assist the

Board, the Investment Adviser provides

monthly reports. Additionally, the

Investment Adviser presents its quarterly

production and operational update

reports at each quarterly Board meeting.

The Board maintains constructive

dialogue with the Investment Adviser

between meetings.

On a periodic basis, the Board visits

the Investment Adviser at its Hamburg

office, the site of one of the portfolio

assets or one of its other offices, so

it can gain a better understanding of

the Investment Adviser, to meet key

members of the team and gain further

insight into the operation of each asset.

The Investment Adviser’s remuneration

is based on the NAV of the Company.

From IPO until 30 June 2023 the

Investment Adviser’s fees were paid in

shares, which aligned the Investment

Adviser’s interests with those of the

Company’s shareholders.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

SECTION 172 CONTINUED

Portfolio Investments

Prior to being presented to the Board

of the HoldCo, the Company’s wholly

owned subsidiary, the Company’s Board

is presented with potential investment

opportunities identified by the

Investment Adviser that have undergone

a process of analysis and challenge

by the AIFM, including considerations

relating to environmental, social and

governance issues.

The Board considers each proposal by

the Company’s investment objective

(on page 1), investment policy and

strategy, as disclosed on pages 39 to

42 and with consideration for the wider

group of stakeholders. In considering

each investment opportunity, the Board

considers the Company’s long-term

success, having particular regard to the

following aspects of each proposal:

— potential revenue forecast to be

generated by each asset;

— the diversity of the Company’s

portfolio;

— any community and environmental

issues associated with each asset;

— geopolitical risk;

— the length of tenure of each asset;

— hedging aspects to limit risk; and

— funding aspects, including the use

ofgearing.

As at 31 December 2023, the Company

and the HoldCo had EUR 29.5 million of

liquidity consisting of EUR 9.9 million in

cash on hand plus EUR 19.6 million in an

undrawn Revolving Credit Facility.

Society and the Environment

The Company is an investor in renewable

energy assets and is acutely aware of

its impact on the environment. The

Company has an ESG policy and climate

risk strategy that ensure it considers

society and the environment when

implementing its investment strategy.

The ESG policy is available on request

from the Company Secretary.

You can find further details of matters

relating to ESG can be found on pages

34 to 38 or on its website at

https://www.aquila-european-

renewables.com.

Key Decisions made During

the Year

Decisions Relating to the

Company’s Portfolio of Assets

No new investment activities were

undertaken as the returns were not

adequate relative to share buybacks.

No new PPA agreements were entered

into during 2023. However two new PPAs

became active during the year in relation

to the Greco assets. The Investment

Adviser monitors pricing developments

in AER’s key markets and has ongoing

dialogue with potential counterparties.

Solar PV Debt Financing

Subsequent to the year end, the

Company, via its wholly owned

subsidiary, entered into a five-year

non-recourse debt facility with ING Bank

N.V. Sucursal en España on 8 January

2024. The debt facility was sought in

order to secure financing at attractive

terms, the proceeds of which were used

to repay the RCF.

Buyback Programme

On 3 February 2023, the Board

agreed to introduce a share Buyback

Programme pursuant to the authority

granted to the Board at the last Annual

General Meeting to purchase up

to 14.99% of the Company's issued

share capital. The Board authorised

the buyback as it believes the current

share price does not accurately reflect

the inherent value in the Company's

portfolio. For the period from

3February2023 until the Buyback

Programme was paused on 12 October

2023, the Company bought back for

Treasury a total of 30,103,575 Ordinary

Shares for an aggregate amount of EUR

27.8 million

at an average discount of

15.8%.

The liquidity in the Company's shares

has markedly improved.

1. Excluding fees and stamp duty.

Aquila European Renewables Plc|Annual Report 2023

Euronext Growth Dublin Listing

During the year, the Board agreed to consider a secondary listing on the Euronext Growth Dublin exchange to help improve the

Company's marketability and appeal in Europe. The Company's shares began trading on the Euronext Growth Dublin exchange

on 2 October 2023.

Investment Adviser’s Fees

The Company’s Supplemental Investment Advisory Agreement, dated 10 May 2019 (‘Supplemental IAA’) stipulated that, for the

quarterly periods until 30 June 2023, the Investment Adviser shall be paid in shares in lieu of fees. The following transactions

were approved by the Board in satisfaction of the Supplemental IAA:

Issue or purchase

of Ordinary Shares

Amount acquired by the

Investment Adviser

Price paid per

Ordinary Share (cents)Date

3 February 2023 Purchased 900,340 90.00

18 May 2023 Purchased 771,695 98.86

7 August 2023 Purchased 831,701 87.0 0

Dividend Guidance

In accordance with AER's investment objective to pay a progressively growing dividend over the medium term, the Company

ispleased to announce a target dividend of 5.79 cents per Ordinary Share ('2024 Target Dividend') in relation to the year ending

31December 2024, subject to the portfolio performing in line with expectations. The 2024 Target Dividend represents an

increase of 5.0% versus the prior year and follows a 5.0% increase in the 2023 dividend announced in February 2023.

Revolving Credit Facility

Through its wholly owned subsidiary, Tesseract Holdings Limited, the Company has access to a Revolving Credit Facility (‘RCF’)

with a maximum limit of EUR 100.0 million.

During the year, the Board authorised the AIFM and the Investment Adviser to extend the term until maturity of the RCF to

April2025.

Board Changes

On 2 February 2023, Dr Patricia Rodrigues replaced Kenneth MacRitchie as Chair of the Remuneration and Nomination

Committee as part of the Board’s ongoing commitment to ensure they maintain suitable diversity and representation within

theBoard structure.

On 1 September 2023, Myrtle Dawes was appointed to the Board as an additional non-executive Director to the Company.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

RISK AND RISK MANAGEMENT

Principal Risks and

Uncertainties

During the year the Company has

carried out a rigorous 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, who is responsible

for the risk and portfolio management

services and outsources the portfolio

management to the Investment Adviser.

1. Investment Adviser: the Investment

Adviser provides a report to the

Board quarterly, or periodically as

required, on industry trends, insight

to future challenges in the renewable

sector including the regulatory,

political and economic changes likely

to affect the renewables sector;

2. Alternative Investment Fund

Manager: following advice from the

Investment Adviser and other service

providers, the AIFM maintains a

emerging risks likely to affect the

Company;

3. Broker: provides advice periodically,

specific to the Company, on the

Company’s sector, competitors and

the investment company market,

while working with the Board and

Investment Adviser to communicate

with shareholders;

4. Company Secretary: briefs the

Board on forthcoming governance

changes that might affect the

Company; and

5. AIC: The Company is a member

of the Association of Investment

Companies, 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 regular review 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

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.

Economic, Political and Market

Risks Potential Impact/Description Mitigation

Electricity Prices

The income and value of the Company’s investments

may be affected by future changes in the market price

of electricity.

While some of the revenues of the Company’s

investments benefit from fixed prices, they are also

partly dependent on the wholesale market price of

electricity, which is volatile and is affected by a variety

of factors, including:

— market demand;

— generation mix of power plants;

— government support for various forms of power

generation;

— fluctuations in the market price of commodities;

and

— foreign exchange.

There is a risk that the actual prices received vary

significantly from the model assumptions, leading to a

shortfall in anticipated revenues by the Company.

Increased EU goals to push green economies will

lead to a ramp up of renewables and capacities, with

potential to lead to grid oversupply issues resulting in

pricing pressures.

The current energy geopolitical crisis in Europe is

increasing energy prices and volatility which is likely to

have an impact on performance.

Windfall taxes, regulation and price caps introduced

across Europe to curb excess profits could affect the

Company’s revenue.

The Company holds a balanced mix of investments that

benefit from government subsidies as well as long-term

fixed price PPAs. Of AER’s forecast revenue for the next

five years (on a present value basis), approximately 52% will

be generated via government tariffs or fixed price PPAs,

protecting the Company’s revenue from volatile electricity

prices.

The Investment Adviser retains the services of market-

leading energy consultants to assist with determining future

power pricing for the respective regions.

The underlying SPV companies may use derivative

instruments such as futures, options, futures contracts and

swaps to protect from fluctuations in future electricity prices.

The Investment Adviser models and monitors power

price curves on an ongoing basis and will recommend

appropriate action. In addition, the Investment Adviser has

a dedicated team which is responsible for the originating,

negotiating and executing of all PPAs.

The Investment Adviser reviews the hedging strategy on

a deal-by-deal basis, both at time of investment and on an

ongoing basis. Should changes be required to the hedging

strategy, these will be recommended to the AIFM and

Board.

Aquila European Renewables Plc|Annual Report 2023

Risks Potential Impact/Description Mitigation

Equity Market

Volatility and

Shareholder

Pressure

Volatility in equity markets may cause the Company’s

shares to rise or fall and therefore to trade at a

premium or a discount to its net asset value. If

volatility causes the shares to trade at a discount, this

could affect the Company’s ability to raise further

equity to allow it to repay debt or to support further

investments.

If the shares trade at a significant discount for a period

of time, the Company could become vulnerable

to a takeover. In addition, loss of confidence by

shareholders may increase the likelihood of attracting

votes against the continuation vote to be put to

shareholders in September 2024.

Volatility can allow significant equity positions to be

built and the risk that a sole shareholder increases its

ownership to such an extent that they are able to exert

significant influence over the Company and decisions

made by the Board.

The Company’s advisers monitor market conditions and

report regularly to the Board. If the Company is unable

to raise new capital, it could defer making any new

investments until the stock market recovers and, in extreme

circumstances, could sell existing investments to reduce

debt and raise liquidity.

The Company’s share price decreased, and remains in

excess of 20% discount to its net asset value. As a result,

theBoard introduced a share buyback programme on

3 February 2023. The Board and its advisers continue

to monitor the share price. Additionally, the Board has

considered broader options for the Company's future,

including a merger via section 110 of the Insolvency Act

1986, which is currently being explored.

Shareholder analysis is obtained regularly enabling

monitoring of the Company’s largest shareholders. The

views of the larger shareholders can be monitored by the

Company and any concerns managed before the influence

becomesoverbearing.

Change in

Political

Sentiment

A change in political direction or regulation in one

of the countries in which the Company targets

investment could lead to changes, reductions, caps

or withdrawals of government support arrangements,

a windfall tax or potentially the nationalisation of

investments. This could have a material impact on the

valuation of the investments and the Company’s net

asset value.

Environmental groups may threaten the Company

with litigation or put pressure on the government

in relation to its renewables ambitions and permits

due to environmental concerns and impact on the

projects.

The AIFM, advised by the Investment Adviser with its 17

offices in 16 countries, continuously monitors all jurisdictions

the Company invests.

Tax, legal and ESG due diligence (“DD”) is undertaken

on each investment and reviewed before signing off any

investment proposal.

Additional due diligence on development and construction

assets is undertaken for new investment opportunities to

avoid or mitigate any potential issues.

The Investment Adviser has significant experience in these

assets and performs ongoing monitoring of these risks.

Regulatory changes at the SPV level are monitored by the

Investment Adviser and reported to the Board/AIFM on an

ongoing basis.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

RISK AND RISK MANAGEMENT CONTINUED

Operational

Risks Potential Impact/Description Mitigation

Environmental

/Social/

Governance

(“ESG”)

Failure to adhere to its ESG Policy and Impact Strategy

could result in the Company being liable for damages

or compensation to the extent that such losses are not

covered by insurance policies. In addition, adverse

publicity or reputational damage could follow.

Significant ESG risks to the portfolio could include:

Environmental – climate change, biodiversity issues or

environmental impairment.

Social – impact on local communities where the

Company’s assets operate, as well as employee

welfare including health and safety incidents.

Governance – lack of a strong governance framework

within the Company could expose it to, among other

things, the negative impact of bribery and corruption.

The Investment Adviser performs detailed due diligence

on ESG factors for each asset prior to acquisition and on a

periodic basis thereafter, taking into consideration each ESG

risk identified by the Board and Investment Adviser. Further

details on how ESG is mitigated, and the wider approach

of the Investment Adviser to ESG matters, can be found on

pages 34 to 38 of the Strategic Report.

Competition

for Assets

With increasing numbers of investors seeking

exposure to renewable assets, it is possible new

competitors will enter the market the Company

operates. This could lead to increased pricing for the

Company’s target investments, with corresponding

lower returns and slower deployment of uninvested

cash.

The record of the Investment Adviser and its market position

and penetration allow it to access potential investments

that newer entrants may not have access to. Through the

Investment Adviser, the Company has access to a number

of assets in the development phase, creating a competitive

advantage for the Company.

The Board is mindful of pricing when it reviews new

investment proposals and the need to achieve the

Company’s target objective and strategy.

Aquila European Renewables Plc|Annual Report 2023

Risks Potential Impact/Description Mitigation

Counterparty

Risk

The majority of the operational risk in the Company’s

investments is retained by the counterparty or its

subcontractors. Failure to properly operate and

maintain assets may result in reduction of revenues

and value of assets. However, some risks will remain

within the investment.

Poor performance by a subcontractor may lead

to the need for a replacement, which could have

cost implications, affecting the performance of

the investment and potentially distributions to the

Company until the issue is resolved.

The value of the Company’s investments and the

income they generate may be affected by the failure

ofcounterparties to comply with their obligations

undera PPA.

Operation and maintenance (“O&M”) of assets are

subcontracted to a counterparty who is responsible for

ensuring effective continuing operation and maintenance

of that asset. The Investment Adviser ensures each such

counterparty has the experience and resources to comply

with its obligations and monitors compliance on an ongoing

basis.

Constant monitoring of the investments and the

counterparties or service providers allows the Investment

Adviser to identify and address risks early. Diversification

ofcounterparties and service providers ensures any impact

is limited.

The Investment Adviser assesses the credit risk of

companies by defined criteria before they become

counterparties toPPAs, EPCs and TSA providers.

Performance of

the Investment

Adviser

The Investment Adviser manages over EUR 14.7 billion

for clients worldwide. There is a risk of conflict when

allocating potential new investments across various

clients including the Company.

The Investment Adviser employs experienced

executives to identify, acquire and manage the

Company’s investments. There is a risk that a key

person leaves the Investment Adviser.

The Company and AIFM are made aware of and review

potential conflicts of interest at the time each investment is

made. The Investment Adviser procures and provides the

Board with an independent fairness valuation opinion, which

mitigates the risk where valuations conflict exists. When

assets are bought along with other funds managed by the

Investment Adviser, the price is externally validated.

In addition, an investment allocation policy has been

implemented by the Investment Adviser and has been agreed

by the Board.

The strength and depth of the Investment Adviser’s resources

mitigate the risk of a key person’s departure.

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. Data

records could be destroyed, resulting in an inability to

make investment decisions and monitor investments.

Risk that the emergence of increasingly advanced AI

will lead to new risks to the Company, including, but

not limited to, decline in human autonomy, increased

cybersecurity vulnerabilities, data loss, impersonation

for the purposes of extracting information or money.

The pandemic and, more recently the Russian and

Ukraine war, has increased IT security concerns

and threats being posed to the Company and

operating structure by hackers that may lead to loss of

information or even a cash loss.

Service providers have been carefully selected for their

expertise and reputation in the sector. Each service provider

has provided assurances to the AIFM and the Company on

their cyber policies and business-continuity plans, along

with external audit reviews of their procedures where

applicable.

The Investment Adviser and key service providers have

information-security policies in place, and have appointed

IT security officers whose tasks are to provide support

for emergency events and crises, the monitoring of the

resumption, and repair of the IT security measures after

completion of a disturbance or incident, and the ongoing

development of improvements to the IT security concept.

The Investment Adviser’s in-house Asset Management

team has reviewed the protective measures taken by the

counterparties and has further increased the vigilance

against cyber-attacks that could affect the performance

and infrastructure of the investments. Insurance is in place

to cover potential losses from direct attacks. For indirect

attacks (e.g. against grid operation or transmission system)

the various administrators, operation and maintenance

providers are required to maintain sufficient insurance

coverage to mitigate possible damages.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

RISK AND RISK MANAGEMENT CONTINUED

Financial

Risks Potential Impact/Description Mitigation

Portfolio

Valuation

There is a risk the Company’s asset valuations and

underlying assumptions, such as future electricity

prices and discount rates, are not a fair reflection of

the market, meaning the investment portfolio could

be over or under-valued.

The principal component of the Company’s balance sheet

is its portfolio of renewable investments. Each quarter,

the AIFM is responsible for preparing a fair market value

of the investments, with input and guidance from the

Investment Adviser. These valuations and the key underlying

assumptions are interrogated by the Board before being

approved.

The Investment Adviser has a strong track record of

undertaking valuations of renewable assets built up over the

years since it was founded in 2001.

In addition, when a conflicted new investment is being

proposed by the Investment Adviser, a fairness valuation

opinion from an independent adviser is procured by the

Investment Adviser for the AIFM and the Board.

The Investment Adviser and broker monitor market

competitors and provide feedback on valuation

methodologies and assumptions to the valuation team.

10.

Leverage Risk/

Interest Risk

The use of leverage creates risks including:

— exposure to interest rates, which can fluctuate;

— covenant breaches;

— liquidity risks;

— enhanced loss on underperforming investments;

and

— the ability to refinance assets impacts asset

returns and cash flows.

Fluctuations in interest rates may affect discount rates

applied to the portfolio valuations, as well as affecting

cost of debt in both the underlying SPVs and the

Company.

The Company’s investment policy restricts the use of

leverageto:

— short-term debt: 25% of the prevailing GAV; and

— long-term structural debt: 50% of the prevailing GAV.

As at 31 December 2023, the Company’s subsidiary, Tesseract

Holdings Limited, had 13.2% of short-term debt and at SPV

level there was 21.2% of long-term structured debt as a

percentage of GAV. The AIFM monitors all debt levels to these

policy restrictions and reports them to the Board quarterly.

The Investment Adviser provides updates of the covenant

compliance to the AIFM and to the Board periodically, and

looks at refinancing as early as possible.

Interest rate risk on bank debt at the asset level is mitigated by

the use of hedging instruments.

Liquidity and forward looking cashflow management is

monitored by the Investment Adviser and AIFM.

The majority of the Company’s long-term structural debt is

non-recourse, largely fixed interest rates and fully amortising.

Aquila European Renewables Plc|Annual Report 2023

Compliance, Tax and Legal

Risks Potential Impact/Description Mitigation

11.

Changes to Tax

Legislation or

Rates

Changes in tax legislation, base erosion and profit

shifting rules, substance, withholding tax rules and

rates, could result in tax increases, resulting in a

decrease in income received from the Company’s

investments.

A windfall tax on profits from an investment levied by

government.

The corporate structure of the Company is reviewed

periodically by the Company and its advisers. The Board

has been kept informed on a timely basis of the recent

introduction of the windfall (and other tax arrangements)

taxes introduced across Europe to curb profits of energy

providers, and has carefully considered the impact on

the Company’s portfolio, which is further discussed in the

Investment Adviser’s Report.

The Investment Adviser works closely with tax and industry

experts before providing structuring recommendations to

the Company prior to investment and on an ongoing basis.

12.

Regulatory and

Compliance

Changes

The Company fails to comply with section 1158 of

the Corporation Tax Act to ensure maintenance

of investment trust status, UK Listing Authority

regulations including Listing Rules, Foreign Account

Tax Compliance Act and Alternative Investment Fund

Managers Directive (“AIFMD”).

The Company fails to comply with relevant ESG rules

and regulations and fails to monitor those such as

the SFDR, changing disclosure requirements and

greenwashing risks.

Failure to comply with the relevant rules and

obligations may result in reputational damage to the

Company or have a negative financial impact.

Possible uncertainty remains with post-Brexit

negotiations and eventual trade deals agreed.

Unfavourable terms can affect withholding taxes,

double tax treaty limitations and various other trading

concerns.

Additionally, the Company operates in multiple

markets throughout Europe, and some have shown

signs of changes or potential changes in regulation as

aresponse to high power prices.

All service providers, including the broker, Company

Secretary, Administrator, Investment Adviser and AIFM, are

experienced in these areas and provide comprehensive

reporting to the Board and on compliance with these

regulations.

The AIFM is experienced in compliance with the AIFMD

reporting obligations and reports at least quarterly to the

Board.

The Investment Adviser monitors changes in regulation across

the markets the Company operates.

The Company complies with article 8 of the SFDR and, as

noted under “ESG”, looks to comply with local requirements,

tomitigate potential risks.

13.

Financial Crises

Risk of bank failure. On 10 March 2023, Silicon Valley

Bank and Signature Bank came close to collapse,

prompting US regulators to take control in an

attempt to prevent contagion. On 19 March 2023,

it was announced that the Swiss government had

successfully negotiated the acquisition of Credit

Suisse by UBS, to prevent its collapse and prevent

contagion. If either the US regulators or the Swiss

Government had been unsuccessful in preventing

contagion, the Company’s bankers could have

been affected, creating difficulties for the Company

tooperate.

The Company’s bankers are carefully chosen based on

their credit rating. Further due diligence is undertaken on

each bank to ensure they are robust before the Company

engagesthem.

The Company’s funds are held by a number of banks,

to diversify counterparty risk. Since the 10 March 2023

announcement, the AIFM has undertaken a review of the

Company’s banking arrangements to identify any exposure

to Silicon Valley, Signature and Credit Suisse banks. Following

this analysis, the AIFM has concluded that the Company’s

exposure is nil.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

RISK AND RISK MANAGEMENT CONTINUED

Emerging Risks

Risks Potential Impact/Description Mitigation

14.

Climate-related

risks

Climate-related risks can be categorised as physical

or transitional risks. Physical risks are those associated

with the physical effects of climate change. They can

be event-based (acute), such as cyclones, hurricanes,

wildfires, heatwaves, pandemics, droughts and

floods; or longer-term (chronic) shifts in climate

patterns, such as sustained higher temperatures with

melting of glaciers and ice sheets causing sea-level

rise, permafrost melting, chronic heatwaves and

desertification, extreme variability in precipitation,

land degradation and changes in air quality.

Transitional risks are those that arise as economies

move towards less-polluting, greener solutions.

These include externally imposed risks such as the

effect of legal and regulatory requirements or policy

changes, changes in societal demands, advances in

technologies, market changes and the consequent

business decisions taken to respond to such changes.

Transitional risks have the potential to crystallise

suddenly, for example as a result of policy changes.

Physical or transitional climate-related risks could

affect the operation of the Company’s assets and

hence the production or revenue generated by the

portfolio assets.

The Company should be sufficiently protected through

hedging of price risks in the event of unforeseen changes in

regulatory requirements related to climate change.

Insurance is usually in place in the event of acute climate

risks such as physical damage due to floods, or wildfires

resulting in production losses.

Financial model forecasts are based on P50 production

(the estimated annual amount of electricity generation

that has a 50% probability of being exceeded – both in any

single year and over the long term – and a 50% probability

of being underachieved) data sourced from energy yield

assessments provided by external service providers.

The Company also mitigates the frequency of both physical

and transitional risks through extensive geographical

diversification of its portfolio.

15.

Act of War/

Sanctions

As evidenced with the ongoing war in Ukraine and the

various restrictions imposed, as well as the conflict

in Gaza, acts of war and resulting sanctions can lead

to O&M supply delays, volatile energy markets and

general uncertainty.

This can also lead to short-term price increases and

more focus on renewable energy infrastructure and

increased competition for assets.

With increasing competition for renewable

investments, new regions may be considered,

potentially introducing additional political and

regulatory risks.

The Investment Adviser, using its extensive

experience, is constantly monitoring geopolitical and

macro-economic developments. Where required, it

undertakes external geopolitical and risk analysis.

The Company does not have any direct exposure to Ukraine,

Russia, Israel or Gaza. There are also no direct business

relations with counterparties from these countries.

The Company has limited exposure to supply chain risk and

a shift in focus to renewable energy and energy efficiency is

a positive.

The Broker, Administrator, AIFM and Company advisers all

monitor and inform the Board as soon as they are aware

of any developments that may impact the Company or its

business.

16.

Continuation

Vote

The risk that through shareholder dissatisfaction

with the Company's performance compared to

their expected returns, there is a vote against

the Company's continuation due to take place in

September 2024.

The broker, Administrator, AIFM and Company advisers all

monitor and inform the Board as soon as they are aware of any

developments that may affect the Company or its business.

The Board regularly assesses the sentiment of shareholders

and, if it considered there was growing discontent the Board

would act accordingly.

Aquila European Renewables Plc|Annual Report 2023

OTHER INFORMATION

Greenhouse Gas Emissions

As the Company has outsourced

operations to third parties, there are no

significant greenhouse gas emissions

to report in relation to the operation of

the Company. The Company qualifies

as a low energy user and is therefore

exempt from disclosures on greenhouse

gas emissions and energy consumption.

Investment trusts are currently exempt

from Task Force on Climate-Related

Financial Disclosures (“TCFD”), but

the Board will continue to monitor the

situation.

In relation to the Company’s

investments, the level of greenhouse

gas emissions arising from the low

volume of electricity imports and from

operation and maintenance activity is

not considered material for disclosure

purposes. Furthermore, as the assets

are renewable energy generators, they

reduce carbon-dioxide emissions on a

net basis.

Anti-Bribery, Corruption and

Tax Evasion

It is the Company’s policy to conduct

all business in an honest and ethical

manner. The Company takes a

zero-tolerance approach to bribery

and corruption and is committed to

acting professionally, fairly and with

integrity in all its business dealings and

relationships wherever it operates. The

Company does not tolerate the criminal

facilitation of tax evasion.

The Company’s AIFM, Investment

Adviser, Company Secretary,

Administrator and Depositary have

confirmed that anti-bribery policies and

procedures are in place, and that they

do not tolerate bribery. The Company’s

policy and the procedures that

implement it are designed to support

that commitment.

Conflicts of Interest

As required by law, a Director must

avoid a situation where he or she

has an interest that conflicts with the

Company’s interests. The Company’s

Articles of Association provide the

Directors authority to authorise potential

conflicts of interest. The Directors

can impose limits or conditions when

giving authorisation if they think this is

appropriate. The procedure observed

by the Board in considering dealing with

conflicted matters is as follows:

— any Board member so conflicted must

excuse themself from the discussion

involving the relevant conflict;

— only Directors who have no interest

in the matter being considered

can debate the matter and take the

relevant decision; and

— in taking the decision, the Directors

must act in a way they consider, in

good faith, will be most likely to

promote the Company’s success.

The Directors have declared any

potential conflicts of interest to the

Company. These are entered into

the Company’s register of potential

conflicts, which is reviewed regularly by

the Board. The Directors are obliged to

advise the Company Secretary as soon

as they become aware of any potential

conflicts of interest.

The Company has established

procedures to deal with any potential

conflicts of interest in circumstances

where the Aquila Group is advising both

the AIFM (for the Company) and Aquila

managed funds who are counterparties

to the Company. These procedures may,

on a case-by-case basis, include:

— separate teams at the Investment

Adviser being established in relation

to any proposed transaction to

represent the Company and the

relevant counterparty;

— a fairness opinion on the value of

the Renewable Energy Infrastructure

Investments to be obtained from an

independent expert;

— a due diligence and reporting

package from relevant professional

advisers on which the Company (or

other applicable vehicles) can place

reliance;

— the AIFM operating its own

risk-management system and

internal-control system, as well

as monitoring approved systems

operated by the Investment Adviser;

and

— any conflict of interest arising during

the transaction being resolved in

accordance with procedures agreed

between the Investment Adviser

and the AIFM, subject to Board

agreement.

Employees

As the Company is an investment

trust, it does not have any employees,

as all functions are carried out by

third-party service providers. As at

31December2023, the Company had

five Directors who are non-executive

and receive a fixed fee remuneration,

of whom three are male and two are

female. The Board’s policy on diversity is

contained in the Corporate Governance

Report (see page 63).

Viability Statement

In accordance with the UK Corporate

Governance Code and the Listing

Rules, the Directors have assessed the

prospects of the Company over a longer

period than the twelve-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 2028 (the ‘Period’).

The Board believes the Period,

being approximately five 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 Company’s

investment strategy and the principal

risks outlined on pages 48 to 54. Based

on this assessment, the Directors

have a reasonable expectation that

the Company will be able to continue

to operate and to meet its liabilities

as they fall due over the period to

31December2028.

In considering the prospects of the

Company, the Directors looked at

the key risks facing the Company,

HoldCo and the SPVs, 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 are

satisfied that the Company would

continue to remain viable under

downside scenarios, including a decline

in long-term production and power

price forecasts. These risks, together

with the mitigating factors of each, are

shown in the Principal Risks section on

pages48to54.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsStrategic Report Governance

Viability Statement continued

As a sector-focused renewable energy

investment company, the Company aims

for a progressively growing dividend

while preserving the capital value of

its investment portfolio. As part of its

analysis, the Board was mindful that

the Company’s portfolio assets, held

via HoldCo, are fully operational with

asset lives of up to 40 years, significantly

in excess of the period under

consideration.

This assessment also included a detailed

review of the issues arising following

the war in Ukraine, and conflict between

Israel and Hamas in Palestine, high

volatility in commodity prices and tax

changes which affect the Company’s

assets (for example, the changes to

Norway’s taxation of onshore wind

farms) that currently face the Company’s

assets as disclosed in the Principal Risks

section on pages 48 to 54 and in the

Investment Adviser’s Report on pages

12 to 33.

The Company and its subsidiaries have

a modest gearing level representing

34.3% as at 31 December 2023 of its

Gross Asset Value, comprised of an RCF

(EUR 74.7 million drawn, excluding bank

guarantees) and non-recourse debt at

the asset level of EUR 120.1 million. The

Company (via its subsidiaries, where

applicable) complies with its covenants

related to the RCF and non-recourse

debt. The Company negotiated an

extension to its RCF in April 2023,

which now expires in April 2025. In

January2024, the Company, via its

wholly owned subsidiaries, entered

into a bank debt financing at its Spanish

solar PV portfolio for EUR 50.0 million,

the proceeds of which were primarily

used to repay the RCF, which is currently

drawn to EUR 26.1 million as of the date

of approval of this document (excluding

bank guarantees), representing

approximately 7.0% of its NAV as at

31December 2023.

The Board, in combination with its

advisers, is evaluating a potential

extension of the RCF in 2024, noting

that such a decision could be influenced

by the outcome of the current section

110 process, given the RCF is subject

to market standard change of control

provisions.

The Company’s Investment Adviser

has already received proposals from

both RCF lenders to extend the facility,

subject to agreeing commercial terms

and credit approval.

The Board has reviewed the covenants of

the RCF and based on stress testing the

Company’s RCF covenants, significant

headroom exists in relation to both the

Interest Coverage Ratio (“ICR”) and

Loan to Value ratios. For example, based

on the Company’s RCF compliance

certificate for Q4 2023 (adjusting for the

recent partial repayment of the RCF),

forecast cash flows would have to reduce

by over 50% to breach the Company’s

ICR. Given the factors outlined above,

the Board has a reasonable expectation

that the RCF maturity in April 2025 does

not jeopardise the Company’s ability to

operate and meet its liabilities over the

period to 31 December 2028.

The Board has also considered the

Company’s counterparty banking

relations to ensure they are sufficiently

robust. Counterparties to the RCF

are ING and RBSI (equal share),

both of which benefit from a strong

investment-grade credit rating, with

S&P assigning a long-term credit

rating of A+ to ING and A to RBSI.

Only counterparties with strong

investment-grade credit ratings are

considered for the Company’s RCF,

reducing the risk that the Company

would be affected by the failure of a

bank or financial institution.

The Directors believe the Company is

well placed to manage its business risks

successfully over both the short and

long term and, accordingly, the Board

has a reasonable expectation that the

Company will be able to continue in

operation and to meet its liabilities as

they fall due for a period of at least five

years.

The internal control framework of the

Company is subject to a formal review

on at least an annual basis. On a regular

basis, the Board reviews the risk report

prepared by the AIFM.

The Directors do not expect there to be

any material increase in the expenses of

the Company over the Period.

The Company’s income from

investments provides substantial cover

to the Company’s operating expenses

and buyback programme, and any other

costs likely to be faced by the Company

over the Period of the assessment.

In May 2023, the Company was subject

to its first continuation vote, which

passed with 74.12% of proxy votes

voting in favour of continuation. The

Board made a commitment that if the

continuation vote in 2023 was passed,

a subsequent continuation vote would

be held in September 2024. The Board

also made a commitment to continue

to explore a number of different

initiatives to address the issues facing

the sector and to secure recognition

in the Company’s share price of the

real underlying value of the Company’s

portfolio. The Company announced

on 26 February 2024 that the process

of identifying a number of broader

options for its future, including the

consideration of a potential combination

of the Company with another listed

investment company by way of section

110 of the Insolvency Act 1986 (‘s110’)

had commenced. Accordingly, the

Directors recognise that the outcome of

the continuation vote and section 110

process is not yet known and creates

material uncertainty around going

concern, and may cast significant doubt

about the Company’s viability.

Outlook

The outlook for the Company,

including the future development

and performance of the Company, is

discussed in the Chairman’s Statement

on pages 8 to 10 and the Investment

Adviser’s Report on pages 12 to 33.

Strategic Report

The Strategic Report, set out on pages

1 to 56 of this Annual Report, was

approved by the Board of Directors on

24 April 2024.

For and on behalf of the Board,

David Maclellan

24 April 2024

OTHER INFORMATION CONTINUED

Aquila European Renewables Plc|Annual Report 2023

GOVERNANCE

Aquila European Renewables Plc|Annual Report 2023

What’s in this Section

Board of Directors 58

Investment Adviser 60

Corporate Governance 61

Audit and Risk Committee Report 65

Directors’ Remuneration Report 68

Directors’ Report 73

Statement of Directors’ Responsibilities 80

Svindbaek, Denmark

FinancialsStrategic Report Other InformationGovernance

BOARD OF DIRECTORS

Non-executive Chairman

Appointed on 8 April 2019

Ian Nolan led the team that was

recruited by the UK Government in 2011

to establish the UK Green Investment

Bank and was its Chief Investment

Officer until 2014. Previously, Mr Nolan

held the position of Chief Investment

Officer at 3i Plc and was a Director of

Telecity Group Plc. He is currently a

Partner and Chairman of the Investment

Committee of Circularity Capital

LLP. Mr Nolan has three decades of

experience in finance, private equity and

investment management. He qualified

as a chartered accountant with Arthur

Andersen and graduated with a BA in

Economics from Cambridge University.

Role

Chairman

Ian Nolan David MacLellanMyrtle Dawes

Key

Remuneration and Nomination

Committee

Audit and Risk Committee

Non-executive Director

Appointed on 8 April 2019

David MacLellan has almost 40 years

experience in private equity first with

Murray Johnstone which he joined

in 1984 and then with RJD Partners

which he founded in 2001. He was a

director of Aberdeen Asset Managers

plc following its acquisition in 2000

of Murray Johnstone where he was

latterly chief executive. Mr MacLellan

has served on the boards of a number

of companies including as Chairman of

John Laing Infrastructure Fund Limited.

He is currently Chairman of Custodian

Income REIT plc, and a director and

Chairman of the audit committees of

The Lindsell Train Investment Trust plc

and J&J Denholm Limited. He is a past

council member of the British Venture

Capital Association and is a member of

the Institute of Chartered Accountants of

Scotland.

Role

Chairman of the Audit and Risk

Committee and member of the

Remuneration and Nomination

Committee.

A R

Non-executive Director

Appointed on 1September 2023

Myrtle Dawes has over 30 years’

experience of the energy sector, both in

the UK and overseas. She is CEO of the

Net Zero Technology Centre, a

non-executive Board member of

FirstGroup, and an advisory Board

member for the Association of Black

and Minority Engineers and sits on the

Technology Leadership Board. Until

recently, she served as a non-executive

Board member of the Centre for Process

Innovation.

Ms Dawes holds a Masters in Chemical

Engineering and Chemical Technology

from Imperial College. She is a Fellow

of the Institute of Chemical Engineers,

Fellow of the Energy Institute, Fellow

of the Forward Institute and Honorary

Fellow of the Association of Project

Managers.

In 2017, Ms Dawes received recognition

for her contribution to business, having

featured in Breaking the Glass Ceiling

and being selected as one of 100 Women

to Watch in the Cranfield FTSE Board

Report 2017. In 2021, she was recognised

by TE:100 as one of the Women of the

Energy Transition.

Role

Member of the Audit and Risk

Committee, and of the Remuneration and

Nomination Committee.

Aquila European Renewables Plc|Annual Report 2023

Kenneth MacRitchie Patricia Rodrigues

Non-executive Director

Appointed on 8 April 2019

Kenneth MacRitchie has over 30

years’ experience of advising on the

financing, development and operation

of independent power projects across

Europe, the Middle East and Africa.

He was a partner at the global law

firm Clifford Chance and, thereafter,

at Shearman & Sterling, where he

served on their Management Board.

Mr MacRitchie also has experience

of advising the UK Government on

renewable energy policy, and he led the

establishment of Low Carbon Contracts

Company Limited, the UK Government-

owned company that provides subsidies

for the UK renewables industry. He is a

graduate of the Universities of Glasgow,

Aberdeen and Manchester.

Role

Mr MacRitchie stepped down as Chair

of the Remuneration and Nomination

Committee on 2 February 2023, but

remains a member. He is also a member

of the Audit and Risk Committee.

Non-executive Director

Appointed on 17 April 2019

Dr Patricia Rodrigues has over two

decades of leadership experience in

infrastructure and real-asset investment

and investment banking. She is a

non-executive Director for several

companies and funds investing in real

assets globally with a focus on ESG,

including Legal & General Assurance

Society Ltd. Dr Rogrigues is also

an Investment Committee member

of GLIL Infrastructure and AIIF4

(Africa Infrastructure). She began her

finance career at Morgan Stanley and

subsequently worked for Macquarie,

including as a Managing Director, where

she led new infrastructure and real-asset

products globally. Dr Rodrigues was

Head of Portfolio Management for

UK Green Investment Bank, before

leading the growth strategy of the

non-real-estate Real Assets business for

Townsend (part of AON). She graduated

with an M Eng-equivalent in Engineering

from the University of Porto and a PhD in

Engineering from Cambridge University.

Role

Dr Rodrigues was appointed Chair of

the Remuneration and Nomination

Committee on 2 February 2023, having

been a member since IPO. She is

also a member of the Audit and Risk

Committee.

Aquila European Renewables Plc|Annual Report 2023

FinancialsStrategic Report Other InformationGovernance

INVESTMENT ADVISER

Michael Anderson Pascal HerrmannNicole Zimmermann

Director, Investment Management

MrAnderson is the lead Investment

Adviser to the Company

Manager, Portfolio Management Associate, Corporate Development &

Strategy

James Branca

Investment Analyst, Investment

Management

Aquila European Renewables Plc|Annual Report 2023

CORPORATE GOVERNANCE

Introduction

This Corporate Governance Statement

forms part of the Directors’ Report.

The Board of the Company has

considered the principles and

provisions of the AIC Code of Corporate

Governance (the 'AIC Code') issued in

February 2019. The AIC Code addresses

the principles and provisions set out in

the UK Corporate Governance Code

(the 'UK Code'), as well as setting out

additional provisions on issues that are

of specific relevance to the Company.

The Board considers that reporting

against the AIC Code, which has been

endorsed by the Financial Reporting

Council, provides more-relevant

information to shareholders.

The AIC Code is available on the

AIC website (www.theaic.co.uk) and

the UKCode can be found on the

Financial Reporting Council’s website

(www.frc.org.uk). The former includes

an explanation of how the AIC Code

adapts the principles and provisions

set out in the UK Code to make them

relevant for investment companies.

Compliance

Throughout the year ended

31December 2023, the Company

complied with the recommendations

of the AIC Code except, as explained

below, where the Company does not

believe it appropriate to comply.

The Board, being small in size and

composed entirely of independent

non-executive Directors, has not

appointed a Management Engagement

Committee.

The engagement of the Investment

Adviser, the AIFM and other service

providers is considered by the Board

as a whole. The Board has also decided

not to appoint a Senior Independent

Director, due to the Board being small

in size.

The UK Code includes provisions

relating to the role of the Chief

Executive, executive Directors’

remuneration and the need for an

internal audit function. For reasons set

out in the AIC Code, the Board considers

these provisions are not relevant to the

Company, as it is an externally managed

investment company. In particular, all of

the Company’s day-to-day management

and administrative functions are

outsourced to third parties. As a result,

the Company has no executive Directors,

employees, or internal operations. The

Company has therefore not reported

further in respect of these provisions.

The Board

At the date of this report, the Board

consists of five independent

non-executive Directors, including

the Chairman.

The Board believes that, during the year

to 31 December 2023, its composition

was appropriate for an investment

company of the Company’s nature and

size. All Directors are independent of

the Investment Adviser and are able to

allocate sufficient time to the Company

to discharge their responsibilities

effectively.

The Directors have a broad range

of relevant experience to meet

the Company’s requirements, and

their biographies are shown on

pages58and59.

In line with the AIC Code, the Board

has decided that each Director should

be subject to annual re-election by

shareholders, although this is not

required by the Company’s Articles of

Association.

The Directors have appointment letters.

Copies of the Directors’ appointment

letters are available on request from

the Company Secretary. Upon joining

the Board, any new Director will receive

an induction, and relevant training is

available to Directors on an ongoing

basis.

The Company maintains a policy

of insurance against Directors’ and

Officers’ liabilities.

A procedure has been adopted for

Directors, in furthering of their duties, to

take independent professional advice at

the expense of the Company.

Aquila European Renewables Plc|Annual Report 2023

FinancialsStrategic Report Other InformationGovernance

CORPORATE GOVERNANCE CONTINUED

Directors’ Indemnities

Subject to the provisions of the

Companies Act 2006 and certain

provisions contained in the deed of

indemnity issued by the Company,

the Company has indemnified each

of the Directors against all liabilities

they may suffer or incur arising out of,

or in connection with, any claim made

or proceedings taken against them, or

any application made under sections

661(3), 661(4) or 1157 of the Companies

Act 2006 by them, on the grounds of

their negligence, default, breach of

duty or breach of trust, in relation to the

Company or any Associated Company.

Board Committees

The Board decides upon the

membership and chairmanship of its

committees.

Audit and Risk Committee

The report on pages 65 to 67 provides

details of the role, composition

and meetings of the Audit and

Risk Committee, together with a

description of the work of the Audit

and Risk Committee in discharging

its responsibilities. David MacLellan

is the Chairman of the Audit and Risk

Committee, and the other members are

Myrtle Dawes, Kenneth MacRitchie and

Patricia Rodrigues.

Remuneration and Nomination

Committee

The Remuneration and Nomination

Committee will meet at least once

a year, or more often if required. Its

principal duties include identifying and

nominating to the Board new Directors,

and undertaking an annual performance

evaluation of the Board, led by the

Committee Chair. For the year to

31 December 2023, Patricia Rodrigues

was the Chair of the Remuneration and

Nomination Committee. The other

members were Kenneth MacRitchie,

David MacLellan and Myrtle Dawes.

The Committee’s other responsibilities

are to: (i) consider the remuneration

of the Directors; (ii) identify suitable

candidates to fill vacancies on the

Board; (iii) determine Director nominees

for each committee of the Board; (iv)

consider the appropriate composition

of the Board and its committees; (v)

consider succession planning; (vi)

consider the annual Board evaluation

process and results; and (vii) consider

the Company’s Remuneration Policy.

Each committee has adopted formal

terms of reference, which are reviewed

at least annually. Copies of these are

available on the Company’s website or

on request from the Company Secretary.

The Board as a whole also fulfils the

functions of a Management Engagement

Committee. It will annually review and

consider the actions and judgements of

management in relation to the Interim

and Annual Financial Statements, and

the Company’s compliance with the UK

Code, the Listing Rules, the Disclosure

Guidance and Transparency Rules, and

the AIC Code.

The Board will review the role of the

Investment Adviser and the AIFM, and

examine the effectiveness of the internal

control systems of the Company’s key

service providers.

Meeting Attendance

Remuneration

Quarterly Audit and

Board and Risk Nomination

Number of meetings held meetings Committee Committee

Ian Nolan¹ 4/4 — —

David MacLellan 4/4 7/7 1/1

Kenneth MacRitchie 4/4 7/7 1/1

Patricia Rodrigues 4/4 7/7 1/1

Myrtle Dawes² 2/2 2/2 1/1

In addition, a number of ad hoc Board and committee meetings were held during the year to deal with administrative matters

andthe formal approval of documents and investment proposals which were considered time critical. The Board also held two

Strategy Days, one held in January 2023 and one in September 2023, at which each Board member who served on the Board at

thetime of the meeting was in attendance.

1. Ian Nolan is not a member of the Audit and Risk Committee or the Remuneration and Nomination Committee; however, he attended each

committee meeting held during the year via invitation from the Chair of each as his contribution was considered valuable.

2. Myrtle Dawes was appointed to the Board on 1 September 2023.

Aquila European Renewables Plc|Annual Report 2023

The following information has been provided by each Director. There have been no changes since 31 December 2023.

Board Composition as at 31 December 2023

Number

Number of Percentage of positions on

Board members the Board the Board

Men 3 67% 1

Women 2 33% 1

Prefer not to say — — —

Decision Making

The Board is responsible for the overall

stewardship of the Company’s affairs

and has adopted a schedule of matters

specifically reserved for decision by

the Board. Strategic issues, and all

operational matters of a material nature,

are considered at its meetings, including

reviewing the Company’s performance

by reference to the Company’s key

performance indicators. A separate

Strategy Day is also held on at least an

annual basis, at which key operational

and marketing matters are discussed

and views and opinions are considered.

All Board members attend this meeting,

together with key representatives of the

Investment Adviser, brokers, AIFM and

Company Secretary.

The Board has access to independent

advice at the Company’s expense,

where it judges the advice necessary to

discharge its responsibilities properly.

During the year, the Board considered

and recommended for approval to the

Board of the HoldCo each transaction

prior to investment, including, where

deemed appropriate, the need for

gearing, hedging and the overall

structure of each transaction. Prior to

being presented to the Board, each

transaction was considered by the AIFM,

who reviewed it against an agreed set

criteria of items to ensure it was suitable

for the Company’s long-term success

and in shareholders’ best interests.

Division of Responsibilities

The following sets out the division of

responsibilities between the Chair, the

Board and the Committee Chairs.

Role of the Chair includes:

— leadership of the Board;

— ensuring the Board is provided

with sufficient information in order

to ensure it is able to discharge its

duties;

— ensuring each Board member’s views

are considered and appropriate

action is taken;

— ensuring each committee has the

support required to fulfil its duties;

— engaging the Board in assessing and

improving its performance;

— overseeing the induction and

development of Directors;

— supporting the AIFM, Investment

Adviser and other service providers;

— seeking regular engagement

with major shareholders in order

to understand their views on

governance and performance against

the Company’s investment objective

and investment policy;

— ensuring the Board as a whole has a

clear understanding of the views of

shareholders; and

— ensuring regular engagement with

each service provider and keeping up

to date with key developments.

Role of the Board includes:

— reviewing the Board pack ahead of

the meeting;

— providing appropriate opinion,

advice and guidance to the Chairman

and fellow Board members;

— supporting the Board, Chairman and

service providers in fulfilling their

roles; and

— providing appropriate support at the

AGM.

Role of Committee Chairs

includes:

— ensuring appropriate papers are

considered at the meeting;

— ensuring Committee members’

views and opinions are appropriately

considered;

— seeking engagement with

shareholders on significant matters

related to their areas of responsibility;

— maintaining relationships with

advisers; and

— obtaining independent professional

advice where deemed appropriate.

Board Diversity

The Board recognises the benefits

of diversity and supports the

recommendations of the Davies Report.

All Board appointments will be made

on merit and have regard to diversity,

including factors such as gender, skills,

background and experience. As at

31 December 2023, the Company had

five Directors, three of whom are male

and two are female. The Board will take

account of the targets set out in the

FCA’s Listing Rules, which are set out

below. As the Company is an externally

managed investment company, the

Board employs no executive staff,

and therefore does not have a Chief

Executive Officer (“CEO”) or a Chief

Financial Officer (“CFO”) – both of which

are deemed senior Board positions by

the FCA. However, the Board considers

the Chair of the Remuneration and

Nomination Committee to be a senior

Board position, and the following

disclosure is made on this basis. Other

senior Board positions recognised by

the FCA include Chair of the Board. In

addition, the Board has resolved that

the Company’s year-end date is the

most appropriate date for disclosure

purposes.

Aquila European Renewables Plc|Annual Report 2023

FinancialsStrategic Report Other InformationGovernance

senior

CORPORATE GOVERNANCE CONTINUED

Board Composition as at 31 December 2023 continued

Number of Percentage of positions on

Board members the Board the Board

White British or Other White (including minority-white groups) 4 80% 2

Black/African/Caribbean/Black British 1 20% —

Prefer not to say — — —

Board Tenure

The Board recognises the benefits to

the Company of having longer-serving

Directors together with progressive

refreshment of the Board. The Board

does not believe that length of service

in itself necessarily disqualifies a

Director from seeking re-appointment

but, when making a recommendation,

the Board will take into account the

requirements of the AIC Code. The

Directors are mindful that the majority

of them will reach their ninth anniversary

simultaneously in April 2028. In order

to ensure continuity, the Board has

adopted a succession plan that allows

for a gradual refreshment. The Board

may decide to recommend a Director

with more than nine years’ service for

re-election at the Company’s AGM.

In line with corporate governance

best practice, all of the Directors

will retire and offer themselves

for re-election, or in the case of

MyrtleDawes, for election, at the

AGM of the Company to be held on

20June2024. The Board recommends

all the Directors stand for re-election.

Performance Evaluation

During the year, the Board undertook

an internal evaluation of its composition

and that of its committees. The

evaluation required the Directors to

complete detailed questionnaires

on the operation of the Board and its

committees, the individual contribution

of Directors, and the performance

of the Chair. The Remuneration

and Nomination Committee then

met to discuss the results of the

performance evaluation, and the

Board also considered a list of actions

resulting from the evaluation. The

evaluation of the Chair was led by

Patricia Rodrigues. The evaluations

considered, amongst other criteria, the

balance of skills of the Board, training

and development requirements, the

contribution of individual Directors,

and the overall effectiveness of

the Board and its committees.

The results of the most recent

performance evaluation were positive

and demonstrated that the Directors

showed the necessary commitment for

the effective fulfilment of their duties.

Internal Control

The AIC Code requires the Board

to review the effectiveness of the

Company’s system of internal controls.

The Board recognises its ultimate

responsibility for the Company’s system

of internal controls and for monitoring

its effectiveness. The system of internal

controls is designed to manage, rather

than eliminate, the risk of failure to

achieve business objectives. It can

provide only reasonable assurance

against material misstatement or loss.

The Board has undertaken a review of

the aspects covered by the guidance

and has identified risk-management

controls in the key areas of business

objectives accounting, compliance,

operations and secretarial as being

matters of articular importance

upon which it requires reports from

the relevant key service providers.

The Board believes the existing

arrangements represent an appropriate

framework to meet the internal control

requirements. The Directors review

the effectiveness of the internal

control system throughout the year.

Financial Aspects of

Internal Control

These are detailed in the Audit and Risk

Committee Report on pages 65 to 67.

Other Aspects of

Internal Control

The Board holds at least four regular

meetings each year, plus additional

meetings as required. Between these

meetings, there is regular contact with

the Investment Adviser, the AIFM and the

Company Secretary and Administrator.

The Administrator, Apex Listed

Companies Services (UK) Limited,

reports separately in writing to the

Board concerning risks and internal

control matters within its remit, including

internal financial control procedures

and company secretarial matters.

Additional ad hoc reports are received

as required, and Directors have access

at all times to the advice and services

of the Company Secretary, who is

responsible to the Board for ensuring its

procedures are followed and applicable

rules and regulations are complied with.

The contact with the Investment Adviser,

the AIFM and the Administrator enables

the Board to monitor the Company’s

progress towards its objectives and

encompass an analysis of the risks

involved. The effectiveness of the

Company’s risk management and

internal controls systems is monitored

regularly and a formal review, utilising

a detailed risk-assessment programme,

takes place at least annually. This

includes a review of the internal

controls reports of the Administrator,

the AIFM and the Registrar.

Principal Risks

The Directors confirm that they have

carried out a robust assessment

of the principal risks facing the

Company, including those that would

threaten its business model, future

performance, solvency or liquidity.

The principal risks, and how they are

being managed, are set out in the

Strategic Report on pages 48 to 54.

Aquila European Renewables Plc|Annual Report 2023

Number

senior

AUDIT AND RISK

COMMITTEE REPORT

Audit and Risk Committee

(the ‘Committee’)

The AIC Code recommends that

the Board should establish an Audit

Committee comprising at least three

or, in the case of smaller companies,

two independent non-executive

Directors. The Board is required

to satisfy itself that the Audit and

Risk Committee has recent and

relevant financial experience and has

competence relevant to the sector

in which the Company operates.

Composition

David MacLellan, Kenneth MacRitchie,

Patricia Rodrigues and Myrtle Dawes

are members of the Committee,

which is chaired by Mr MacLellan.

TheCommittee has formal written terms

of reference, and copies of these are

available on the Company’s website

or on request from the Company

Secretary. The Committee considers

that at least one of its members has

recent and relevant financial experience

and competence relevant to the sector

in which the Company operates.

Role and Responsibilities

of the Committee

The Committee’s authority and duties

are set out in its terms of reference,

which are available at https://www.

aquila-european-renewables.com.

The Committee carried out the

following activities during the year:

— completed a detailed analysis

of the Company’s quarterly

NAVs, factsheets and underlying

assumptions used in calculating

the fair market valuation of each

renewable energy asset;

— monitored and reviewed the

Company’s emerging and principal

risks and internal controls;

— considered the ongoing assessment

of the Company as a going concern;

— considered the appointment,

independence, objectivity and

remuneration of the auditor;

— reviewed the audit plan, annual

financial statements and

half-yearly financial report; and

— considered the financial and other

implications on the independence

of the auditor arising from the

provision of non-audit services.

Internal Audit

The Committee has considered the

need for an internal audit function and

considers that this is not appropriate,

given the nature and circumstances of

the Company as an externally managed

investment company with external

service providers. The Committee

keeps the need for an internal audit

function under periodic review.

Financial Aspects of Internal

Control

The Directors are responsible for the

internal financial control systems of

the Company and for reviewing its

effectiveness. The aim of the internal

financial control system is to ensure

the maintenance of proper accounting

records, the reliability of the financial

information upon which business

decisions are made and which is used

for publication, and the safeguarding

of the assets of the Company.

The Board has contractually delegated

to external agencies the services the

Company requires, but is fully informed

of the internal control framework

established by each relevant service

provider, who provides reasonable

assurance on the effectiveness

of internal financial controls.

David MacLellan

Audit and Risk Committee Chairman

Aquila European Renewables Plc|Annual Report 2023

FinancialsStrategic Report Other InformationGovernance

AUDIT AND RISK

COMMITTEE REPORT CONTINUED

Internal Audit continued

Financial Aspects of Internal

Control

continued

The Statement of Directors’

Responsibilities in respect of the

financial statements is on page 80 and a

statement of going concern is on pages

91 and 92. The Independent Auditors’

Report is on pages 81 to 85.

Financial Statements and

Significant Accounting Matters

The Committee reviewed the financial

statements and considered the following

significant accounting issues in relation

to the Company’s financial statements

for the year ended 31 December 2023:

Valuation and Existence

of Investments

The Company’s accounting policy is

to designate investments at fair value

through profit or loss. Therefore, the

most significant risk in the Company’s

financial statements is whether its

investments are fairly valued due to the

uncertainty involved in determining the

investment valuations. The Committee

reviewed the procedures in place

for ensuring the accurate valuation

and existence of investments held

by the Company's wholly owned

subsidiary Tesseract Holdings

Limited, and approved the valuation

of the Company’s investments and

their existence at the year end with

the Investment Adviser, the AIFM

and other service providers.

The Board has approved a Valuation

Policy, which sets out the valuation

process. The process includes a

valuation by the Investment Adviser

using fair market valuations of

the SPV companies that hold the

Renewable Energy Infrastructure

Investments on an annual basis as at

31December each year. The valuations

are updated as at 31 March, 30 June

and 30September each year. The

valuation principles used to calculate

the fair value of the assets are based

on International Private Equity and

Venture Capital Valuation Guidelines.

Fair value for each investment is

derived from the present value of the

investment’s expected future cash flows,

using reasonable assumptions and

forecasts for revenues and operating

costs, and an appropriate discount rate.

The Committee has satisfied itself that

the key estimates and assumptions used

in the valuation model are appropriate

and that the investments have been

fairly valued. The key estimates and

assumptions include the useful life

of the assets, the discount rates, the

rate of inflation, the price at which the

power and associated benefits can

be sold, and the amount of electricity

the assets are expected to produce.

Recognition of Income

Income may not be accrued in the

correct period and/or incorrectly

allocated to revenue or capital. The

Committee reviewed the Administrator’s

procedures for recognition of income

and reviewed the treatment of income

receivable in the year under review.

Tax Status

The Company may suffer tax on gains

on the realisation of investments

if investment trust status is not

maintained. The Committee reviewed

the compliance of the Company

during the period with the eligibility

conditions in order for investment

trust status to be maintained.

Going Concern

The Committee reviewed the Company’s

going concern assessment and

concluded that it is appropriate for the

Company’s financial statements to be

prepared on a going concern basis

as described in the Directors’ Report

on pages 77 and 78. The Committee

and the Board observed that material

uncertainty exists as to the Company’s

status as a going concern, which

was discussed at length between

the auditor and the Committee.

Calculation of the Investment

Adviser’s Fees

The Committee reviewed the

Investment Adviser’s fees and

concluded that they have been

correctly calculated. Details of the

Investment Adviser’s fees can be found

in note6 to the financial statements.

Conclusion with Respect

to the Annual Report

The Committee has concluded that the

Annual Report for the year to

31 December 2023, taken as a whole,

is fair, balanced and understandable,

and provides the information necessary

for shareholders to assess the

Company’s business model, strategy

and performance. The Committee

has reported its conclusions to the

Board. The Committee reached this

conclusion through a process of

review of the document and enquiries

to the various parties involved in

producing of the Annual Report.

Audit Arrangements

PricewaterhouseCoopers LLP (‘PwC’)

was selected as the Company’s auditor

at the time of the Company’s launch,

following a competitive process and

review of the auditors’ credentials.

The auditor was formally appointed

in November 2019. The current

audit partner, Richard McGuire, was

appointed on 14 September 2020. The

appointment of the auditor is reviewed

annually by the Committee and the

Board and is subject to approval by

shareholders. In accordance with

the FRC’s guidance, the audit will be

put out to tender within ten years

of the initial appointment of PwC.

Additionally, the audit partner must

be rotated every five years and is

next eligible for rotation in 2025.

The audit plan was presented to the

Committee at its November 2023

Committee meeting, ahead of the

commencement of the Company’s

year-end audit. The audit plan sets

out the audit process, materiality

scope and significant risks.

Aquila European Renewables Plc|Annual Report 2023

Internal Control and Risk

During the year, the Committee,

together with the AIFM and other

service providers, carefully considered

the Company’s matrix of risks and

uncertainties (including emerging

risks) and appropriate mitigating

actions. The procedure for identifying

emerging risks can be found on page

48 and the Company’s principal risks

can be found on pages 48 to 54.

The Committee also considered the

internal control reports of its AIFM,

Administrator and Registrar. The

Committee reviewed these reports

and concluded that there were

no significant control weaknesses

or other issues that needed to be

brought to the Board’s attention.

Auditors’ Independence

The Committee considered the

independence of the auditor and

the objectivity of the audit process,

and is satisfied that PwC has fulfilled

its obligations to shareholders

and as independent auditor to the

Company for the year. After due

consideration, the Committee

recommends the re-appointment

of PwC and its re-appointment will

be put forward to the Company’s

shareholders at the 2024 AGM.

The Committee is satisfied that

there are no issues in respect of the

independence of the auditor.

Effectiveness of External

Audit

The Committee is responsible for

reviewing the effectiveness of the

external audit process. The Committee

received a presentation of the audit

plan from the external auditor before

the start of the audit, and a presentation

of the results of the audit following

completion of the main audit testing.

Additionally, the Committee received

feedback from the Company Secretary,

Administrator and AIFM regarding

the effectiveness of the external audit

process. Following the above review,

the Committee has agreed that the

re-appointment of the auditor should

be recommended to the Board and

the shareholders of the Company.

Provision of Non-Audit

Services

The Committee has reviewed the

FRC’s Guidance on Audit Committees,

which imposes a cap of 70% on non-audit

fees to the average of the audit fees

paid in the last three consecutive

financial years for the statutory audit

payable to the Company's auditor

(the ‘FRC Guidance’). In line with the

FRC Guidance, the Committee has

formulated a policy on the provision of

non-audit services by the Company’s

auditor. The Committee has determined

that the Company’s appointed auditor

will not be considered for the provision

of certain non-audit services, such as

accounting and preparation of the

financial statements, internal audit and

custody. The auditor may, if required,

provide other non-audit services that

are not restricted by the policy, and this

will be judged on a case-by-case basis.

PwC was not engaged to undertake

non-audit services for the year

ended 31 December 2023.

Committee Evaluation

The Committee’s activities were

considered as part of the annual

performance evaluation, which was

completed during the year. Further

details can be found on page 64.

The evaluation process concluded

that the Committee was operating

effectively and had the appropriate

balance of skills and experience.

David MacLellan

Audit and Risk Committee Chairman

24 April 2024

Aquila European Renewables Plc|Annual Report 2023

FinancialsStrategic Report Other InformationGovernance

DIRECTORS’ REMUNERATION

REPORT

Remuneration and Nomination

Committee

The Remuneration and Nomination

Committee is responsible for reviewing

the remuneration payable to the

Directors, taking into account the

relevant circumstances of the Company,

the time commitment and relevant

experience and skills of the Board, and

the average fees paid to the Boards of

the Company’s competitors. For the year

to 31 December 2023, Patricia Rodrigues

was the Chair of the Remuneration

and Nomination Committee. The

other members are David MacLellan,

Kenneth MacRitchie and Myrtle Dawes.

The Remuneration and Nomination

Committee has formal written terms of

reference; copies of these are available

on the Company’s website or on request

from the Company Secretary.

The Remuneration and Nomination

Committee met once during the year

under review.

Annual Chair’s Statement

I am pleased to present the

Remuneration Report for the year to

31 December 2023, which has been

prepared in accordance with sections

420-422 of the Companies Act 2006.

The law requires the Company’s

auditor to audit certain sections of the

Remuneration Report; where this is

the case, the relevant section has been

indicated as such.

Directors’ Remuneration

During the year under review, each of

the Directors were entitled to receive a

fee of EUR 45,150 per annum, except for

the Chairman of the Board who receives

EUR 75,000 and the Chair of the Audit

and Risk Committee who receives a fee

of EUR 52,500 per annum. Each of the

Directors’ fees are in respect of their

appointment as a non-executive Director

of the Company and their appointment

as a non-executive Director of Tesseract

Holdings Limited, and are split between

the Company and Tesseract Holdings

Limited on a 70%/30% basis.

During the year, the Remuneration and

Nomination Committee reviewed the

Directors’ remuneration, and agreed it

remained appropriate. In carrying out its

review, the Committee considered the

remuneration of each Board member,

taking into consideration their individual

role, expected time commitment,

experience and skills, and the market

expectation of the remuneration

paid to the Company’s Board and the

remuneration paid to other comparable

investment trusts.

No commissions or performance-related

payments were awarded or would

be awarded to the Directors by the

Company. The aggregate remuneration

and benefits in kind of the Directors in

respect of the Company’s accounting

period ended 31 December 2023 will

be payable out of the assets of the

Company.

Directors receive fixed fees and do

not receive bonuses or other

performance-related remuneration,

share options, pension contributions

or other benefits apart from the

reimbursement of allowable expenses.

No Director has waived or agreed

to waive any emoluments from the

Company or any subsidiary undertaking.

Dr Patricia Rodrigues

Remuneration and Nomination Committee Chair

Aquila European Renewables Plc|Annual Report 2023

Remuneration Consideration

The table below sets out the Directors’ fees for the past three years.

Annual

Annual Annual fee from

fee from fee from 8 April 2019 to

1 January 2023 1 April 2021 31 March 2021

Role EUR EUR EUR

Chairman 75,000 75,000 75,000

Audit and Risk Committee Chair 52,500 50,000 46,000

Director

45,150

3,000

41,000

AGM Approval of the Remuneration Policy and Remuneration Implementation Report

The Company’s Remuneration Policy was last approved by shareholders at the 2023 AGM and became effective from that date. In

accordance with the requirements of Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports)

Regulations 2008, as amended (the ‘Regulations’), the Remuneration Policy is required to be put to shareholders for approval

every three years, unless a material variation to the Remuneration Policy is proposed and in which case shareholder approval will

be sought to amend the policy. Consequently, the Remuneration Policy will next be put to shareholders at the AGM to be held in

2026.

Remuneration Consultants

Remuneration consultants were not engaged by the Company during the year under review or in respect of the Remuneration

Report.

Loss of Office

There are no agreements in place to compensate the Board for loss of office.

Remuneration Policy

All the Directors are non-executive Directors and the Company has no other employees. The components of the remuneration

package for non-executive Directors, which are contained in the Remuneration Policy, are as detailed below:

Current Remuneration Policy

Component Director Purpose of Reward Operation

Annual fee Chairman of the Board For services as Chairman of the

Company and its subsidiary,

Tesseract Holdings Limited

Determined by the

Remuneration and Nomination

Committee

Annual fee Other Directors For services as non-executive

Directors of the Company

and its subsidiary, Tesseract

Holdings Limited

Determined by the

Remuneration and Nomination

Committee

Additional fee Chair of each committee For additional responsibility and

time commitment, if deemed

appropriate

Determined by the

Remuneration and Nomination

Committee

Expenses All Directors Reimbursement of expenses

incurred in the performance of

their duties

Submission of appropriate

supporting documentation to

the Chairman or a fellow Board

member

Aquila European Renewables Plc|Annual Report 2023

FinancialsStrategic Report Other InformationGovernance

DIRECTORS’ REMUNERATION

REPORT CONTINUED

Directors’ Service Contracts

The Directors do not have service contracts with the Company. They have appointment letters, which provide for an initialterm

ofthree years. In accordance with the AIC Code, the Board will seek annual re-election.

Conflicts of Interest

In accordance with section 439A of the Companies Act 2006, details of the decision-making process for the Board’s

determination,review and implementation, and measures to avoid or manage conflicts of interest, including in considering Board

fees, is set out on page 55.

Statement of Consultations

The Company has no employees. Therefore, the process of consulting with employees on the setting of the Remuneration Policy

isnot applicable.

Fees Payable on Recruitment

The Board will not pay any incentive fees to any person to encourage them to become a Director of the Company. The Board may,

however, pay fees to external agencies to assist the Board in the search and selection of Directors. The Board engaged Longwater

on 23 February 2023 to assist in the search for an additional Board member as part of the Board’s succession plan. With the help

of Longwater, Myrtle Dawes was identified as the most suitable candidate. Ms Dawes was appointed to the Board with effect

from 1 September 2023. Longwater has no links to the Company or to the Board. Fees payable to Longwater are GBP 16,000

onengagement and a further GBP 16,000 once a suitable candidate has been engaged.

Effective Date

The Remuneration Policy was effective from 14 June 2023, when it was last approved by shareholders at the Company’s AGM.

Remuneration Implementation Report (Table only is Audited)

The table below provides a single figure for the total remuneration of each Director for the year ended 31 December 2023,

includingpercentage increase.

Year ended 31 December 2023 Year ended 31 December 2022

Taxable Taxable

Fees benefits Total Fees benefits Total

Percentage increase

Director EUR EUR EUR EUR EUR EUR 2023 2022 2021 2020

Ian Nolan 75,000 — 75,000 75,000 — 75,000 0.0% 0.0% 0.0% 0.0%

David MacLellan 52,500 — 52,500 50,000 — 50,000 5.0% 2.0% 6.5% 0.0%

Kenneth MacRitchie 45,150 — 45,150 43,000 — 43,000 5.0% 1.2% 3.7% 0.0%

Patricia Rodrigues 45,150 — 45,150 43,000 — 43,000 5.0% 1.2% 3.7% 0.0%

Myrtle Dawes

15,040 — 15,040 — — — —

— — —

Total 232,840 — 232,840 211,000 — 211,000 3.0% 0.9 2.8 0.0

In addition to the above, the Company paid a total of EUR 4,731 in expenses to the Directors (2022: EUR 12,080). None of the above

was paid to third parties. There were no taxable benefits claimed during the years ended 31 December 2023 or 31 December 2022.

1. In accordance with The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, these columns

have been included to show the annual percentage change over the preceding financial years in respect of each Director. The Board will

publish this annual percentage change cumulatively each year until there is an annual percentage change over the five financial years

preceding the relevant financial year, in accordance with the new regulation.

2. Appointed to the Board on 1 September 2023.

Aquila European Renewables Plc|Annual Report 2023

Performance

The following chart shows the performance of the Company’s NAV and share price total return (with a starting NAV and share

price of 98 cents and 100 cents respectively) by comparison to the FTSE 250 index over the period since the Company was listed

to the current year end. The Company does not have a specific benchmark, but has deemed the FTSE 250 index to be the most

appropriate comparator for its performance.

Relative Importance of Spend on Pay

The following table sets out the total level of Directors’ remuneration compared to the distributions to shareholders by way of

dividends and share buybacks, and the operating expenses and investment advisory fees incurred by the Company.

Year to

31 December

2023

2022

(EUR ‘000)

Spend on Directors’ fees 233 211

Company’s operating expenses and advisory fees 4,710 4,715

Dividends paid and payable to shareholders 21,247 21,165

Share buybacks

27,964

—

The disclosure of the information in the table above is required under The Large and Medium-sized Companies and Groups

(Accounts and Reports) (Amendment) Regulations 2013, with the exception of investment advisory fees and operating expenses,

which have been included to show the total expenses of the Company.

Jun

2022

Sep

2022

Dec

2022

Mar

2022

-10

Jun

2019

Dec

2019

Sept

2019

Jun

2020

Sep

2020

Dec

2020

Mar

2020

Jun

2021

Sep

2021

Dec

2021

Mar

2021

Jun

2023

Sep

2023

Dec

2023

Mar

2023

-30

-20

Total Return (%)

AER share price AER NAV FTSE 250 index

Aquila European Renewables Plc|Annual Report 2023

FinancialsStrategic Report Other InformationGovernance

DIRECTORS’ REMUNERATION

REPORT CONTINUED

Directors’ Holdings (Audited)

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.

Ordinary

Shares as at Shares as at

31 December

2023

2022

Ian Nolan 150,000 100,000

David MacLellan 125,000 75,000

Kenneth MacRitchie 50,000 50,000

Patricia Rodrigues 50,000 50,000

Myrtle Dawes —

—

There have been no changes to any of the Directors’ holdings in the period from 1 January 2024 to the date of this report.

Voting on Remuneration Matters at the 2023 AGM and in Respect of the Remuneration Policy

Shareholders have not expressed any views on the Company’s Remuneration Policy or Remuneration Report.

Other Disclosures

At the last AGM, held on 14 June 2023, the following resolutions, including Directors’ remuneration, were approved:

Ordinary Resolution 2: To approve the Directors’ Remuneration Policy Report included in the Annual Report.

Shares voted Percentage

In Favour 284,859,027 100.00%

Against 6,206 0.00%

Withheld 80,227—

Ordinary Resolution 3: To approve the Directors’ Remuneration Report included in the Annual Report.

Shares voted Percentage

In Favour 284,859,027 100.00%

Against 6,206 0.00%

Withheld 80,227—

Statement

On behalf of the Board, and in accordance with Part 2 of Schedule 8 of the Large and Medium-sized Companies and Groups

(Accounts and Reports) (Amendment) Regulations 2013, I confirm that the above Remuneration Policy and Remuneration

Implementation Report summarises, as applicable, for the year to 31 December 2023:

— the major decisions on Directors’ remuneration;

— any substantial changes relating to Directors’ remuneration made during the year; and

— the context in which the changes occurred and decisions have been taken.

Dr Patricia Rodrigues

Remuneration and Nomination Committee Chair

24 April 2024

Aquila European Renewables Plc|Annual Report 2023

The Directors present their report and audited financial

statements for the year ended 31 December 2023.

Strategic Report

The Directors’ Report should

be read in conjunction with the

Strategic Report on pages 1 to 56.

Corporate Governance

The Corporate Governance

Statement on pages 61 to 64

forms part of this report.

Risk and Risk Management

The Risk and Risk Management

section on pages 48 to 54forms

part of this report.

Viability Statement

The Viability Statement on pages 55

and 56 forms part of this report.

Legal and Taxation Status

The Company is an investment company

within the meaning of section 833 of

the Companies Act 2006. It conducts

its affairs to meet the requirements for

approval as an investment trust under

section 1158 of the Corporation Tax

Act 2010. The Company received initial

approval as an investment trust and must

meet eligibility conditions and ongoing

requirements for investment trust

status to be maintained. In the opinion

of the Directors, the Company has

met the conditions and requirements

for approval as an investment trust for

the year ended 31 December 2023.

Market Information

The Company’s Ordinary Shares

are listed on the London Stock

Exchange (“LSE”) and Euronext

Growth Dublin. The quarterly NAV per

Ordinary Share is published through

a regulatory information service.

Retail Distribution of

Investment Company Shares

via Financial Advisers and

Other Third-Party Promoters

As a result of the Financial Conduct

Authority (“FCA”) rules determining

which investment products can be

promoted to retail investors, certain

investment products are classified as

“non-mainstream pooled investment

products” and face restrictions on

their promotion to retail investors.

The Company has concluded that the

distribution of its shares, being shares in

an investment trust, is not restricted as a

result of the FCA rules described above.

The Company currently conducts

its affairs so the shares it issues

can be recommended by financial

advisers to retail investors, and

it intends to continue to do so

for the foreseeable future.

Articles of Association

Amendments to the Company’s

Articles of Association require

an Ordinary Resolution to be

passed by shareholders.

Management

The Board

The independent Board is responsible

to shareholders for the overall

management of the Company. The

Board has adopted a Schedule of

Matters Reserved for the Board, which

sets out the division of responsibilities

between the Board and its various

committees, the Chairman and the

Chairs of the various committees,

together with the duties of the Board.

Further details can be found on page 63.

Through the committees and

the use of external independent

advisers, the Board manages risk

and governance of the Company.

Appointment and

Replacement of Board

The rules concerning the appointment

and replacement of Directors are

contained in the Company’s Articles of

Association. They require that a Director

shall be subject to election at the first

Annual General Meeting (“AGM”) after

appointment and re-election at least

every three years thereafter. However,

in accordance with the UK Code of

Corporate Governance, the Board has

resolved that all Directors shall stand

for annual re-election at the AGM.

Alternative Investment

Fund Manager

The Company is classified as an

Alternative Investment Fund under

The Alternative Investment Fund

Managers’ Directive and is therefore

required to have an AIFM. FundRock

Management Company (Guernsey)

Limited is the AIFM of the Company.

DIRECTORS' REPORT

Aquila European Renewables Plc|Annual Report 2023

FinancialsStrategic Report Other InformationGovernance

DIRECTORS' REPORT CONTINUED

Management continued

Alternative Investment Fund

Manager continued

The AIFM is responsible for portfolio

management of the Company,

including the following services:

i. monitoring the Renewable

Energy Infrastructure

Investments in accordance

with the investment policy;

ii. acquiring or disposing of

Renewable Energy Infrastructure

Investments (subject to Board

approval and as recommended

by the Investment Adviser);

iii. evaluating investment opportunities

identified by the Investment

Adviser and making relevant

recommendations to the Board; and

iv. acting upon instructions from the

Board, and executing transactions

on behalf of the Company.

Under the terms of the AIFM Agreement,

the AIFM is required to provide

risk-management services to the

Company, including:

a. assisting the Board with the

establishment of a risk reporting

framework;

b. monitoring the Company’s

compliance with the investment

policy and the investment restrictions

in accordance with the AIFM

risk management policies and

procedures, and providing regular

updates to the Board;

c. carrying out a risk analysis of the

Company’s exposures, leverage,

counterparty and concentration risk;

and

d. analysing market risk and liquidity

risk. The AIFM will be required

to record details of executed

transactions, carry out reporting

obligations to the FCA and prepare

investor reports. In addition, the

AIFM is required to assist the Board

in establishing, maintaining and

reviewing valuation policies for

calculating the NAV.

The AIFM is entitled to:

i. a management fee of EUR 100,000

per annum plus an additional

amount which is equal to 0.015% per

annum of the NAV of the Company

that exceeds EUR 300 million;

ii. an additional fee of EUR 3,000 per

annum in respect of each jurisdiction

in which a marketing notification

has been made in accordance

with the AIFM Directive; and

iii. the reimbursement of the

Investment Adviser fee payable

by the AIFM to the Investment

Adviser as set out below.

An additional fee will be agreed

between the AIFM and the Company

in the event that the AIFM is

requested by, or on behalf of, the

Company to undertake additional

risk and duties outside the scope

of the AIFM Agreement.

The AIFM Agreement is terminable

by either party on not less than six

months’ notice in writing. The AIFM

Agreement may be terminated

earlier by the AIFM with immediate

effect in certain circumstances.

The AIFM has the benefit of an

indemnity from the Company in relation

to liabilities it incurs in the discharge

of its duties other than those arising

by reason of gross negligence, wilful

misconduct, or fraud by the AIFM.

Investment Adviser

The AIFM has appointed Aquila

Capital Investmentgesellschaft mbH

as the Investment Adviser to provide

investment advisory services to the AIFM

in respect of the Company, pursuant to

the Investment Advisory Agreement.

The Investment Adviser is responsible

for certain investment advisory services

to the Company, including sourcing

potential opportunities in which

the Company may invest, as well as

ongoing monitoring of the Renewable

Energy Infrastructure Investments.

The Company will benefit from

the advisory services provided

to the AIFM in respect of the

Company and its Renewable Energy

Infrastructure Investments.

The Investment Advisory Agreement

will continue in force for an initial

period of four years from the date of

admission. The Investment Advisory

Agreement will continue thereafter

on a rolling basis and may be

terminated following the initial period

of twelve months’ notice in writing.

The AIFM has also agreed to indemnify

the Investment Adviser for losses the

Investment Adviser may incur in the

performance of its duties pursuant to

the Investment Advisory Agreement

that are not attributable to the fraud,

gross negligence, or wilful default of

the Investment Adviser, determined

by a court of competent jurisdiction.

Under the Investment Advisory

Agreement, the following fee is

payable to the Investment Adviser:

— 0.75% per annum of NAV (plus VAT)

of the Company up to

EUR 300 million;

— 0.65% per annum of NAV (plus VAT)

of the Company between EUR 300

million and EUR 500 million; and

— 0.55% per annum of NAV (plus VAT)

of the Company above

EUR 500 million.

During the first two years of its

appointment, the Investment Adviser

has undertaken to apply its fee (net

of any applicable tax) in subscribing

for, or acquiring, Ordinary Shares and,

as announced on 6 August 2021, this

arrangement was extended by an

additional two years to 30 June 2023.

If the Ordinary Shares are trading at

a premium to the prevailing NAV, the

Company will issue new Ordinary Shares

to the Investment Adviser. If, however,

the Ordinary Shares are trading at a

discount to the prevailing NAV at the

relevant time, no new Ordinary Shares

will be issued by the Company and

instead the Company will instruct its

broker to acquire Ordinary Shares to

the value of the fee due in the relevant

period. The Investment Management

Agreement is terminable by either the

Investment Adviser or the Company

giving to the other not less than six

months’ written notice. Such notice

would not expire earlier than the

third anniversary of first admission

to the London Stock Exchange.

Aquila European Renewables Plc|Annual Report 2023

In accordance with the Investment Advisory Agreement, the Board agreed to purchase shares on behalf of the Investment

Adviser in relation to fees payable during the year, as detailed below in the section headed ‘Share Capital’.

This arrangement has now lapsed and the Investment Adviser has been paid its quarterly fees in cash from 30 June 2023.

Company Secretary and Administrator

Apex Listed Companies Services (UK) Limited has been appointed to provide company secretarial and administration services

to theCompany.

Alternative Investment Fund Managers Directive ("AIFMD")

In accordance with the AIFMD, the AIFM must ensure that an Annual Report containing certain information on the Company

is madeavailable to investors for each financial year. The investment funds sourcebook of the FCA details the requirements of

the Annual Report. All the information required by those rules is included in this Annual Report or will be made available on the

Company’s website, which can be found at www.aquila-european-renewables.com.

Continuing Appointment of Service Providers

The Board has committed to undertake a review of the continued appointment of these service providers on an annual basis

to ensure these are in the best long-term interests of the Company’s shareholders. It has undertaken a comprehensive service

providerreview during the year ended 31 December 2023. The Board considered the results of the service provider evaluation

andconcluded that each offered a satisfactory service and that their continued appointment was in the best long-term interests

ofthe Company.

Share Capital

Purchase of shares to satisfy the Investment Advisory Agreement

During the year under review, the following shares were purchased on behalf of the Investment Adviser in full satisfaction of the

Investment Advisory Agreement:

Number Price paid

of shares per share

Date purchased (EUR)

3 February 2023 900,340 0.90

18 May 2023 771,695 0.99

7 August 2023 831,701 0.87

Buyback of Shares

During the year under review, a total of 30,103,575 Ordinary Shares were bought back for Treasury at an average price of 92.3

centsper share.

Voting rights

The Company has 30,103,575 Ordinary Shares held in treasury and 378,122,130 Ordinary Shares in circulation with voting rights. The

total number of Ordinary Shares in issue is 408,225,705 (2022: 408,225,705).

Each Ordinary Share held entitles the holder to one vote. All Ordinary Shares carry equal voting rights and there are no

restrictionson those voting rights. Voting deadlines are stated in the Notice of Meeting and Form of Proxy, and are in accordance

with the Companies Act 2006.

Restrictions

There are no restrictions on the transfer of Shares, nor are there any limitations or special rights associated with regard to control

attached to the Ordinary Shares. There are no agreements between holders regarding their transfer known to the Company, no

restrictions on the distribution of dividends and the repayment of capital, and no agreements to which the Company is a party

thatmight affect its control following a successful takeover bid.

Aquila European Renewables Plc|Annual Report 2023

FinancialsStrategic Report Other InformationGovernance

DIRECTORS' REPORT CONTINUED

Management continued

Share Capital

continued

Power to Issue Shares

The Directors had authority to issue up to 500 million Ordinary Shares on a non-pre-emptive basis pursuant to the Placing

Programme which opened on 13 October 2020 and closed on 16 September 2021. Under this authority, the Company issued

87,424,431 shares on 14 September 2021.

At the 2023 AGM, the Company’s shareholders approved a renewal of the authority previously granted at the 2022 AGM to allot

up to a maximum of 33.3% of the Company’s issued shares equating to 130,511,365 Ordinary Shares, and to disapply pre-emption

rights when allotting up to 20% of those Ordinary Shares (equating to 78,314,650 Ordinary Shares). This authority will expire at

theforthcoming AGM, where authority will be sought to renew this authority up to a maximum of 20% of the Ordinary Shares in

issue as at the date of this report, excluding treasury shares. This authority will be renewed at the forthcoming AGM. Details of

theproposed resolutions can be found on pages 78 and 79 and the Notice of AGM on pages 116 and 117.

The authority granted by shareholders to issue Ordinary Shares will provide flexibility to grow the Company and further expand

theCompany’s list of assets. No Ordinary Shares will be issued at a price less than the (cum-income) net asset value per existing

Ordinary Share at the time of their issue. Ordinary Share issues are at the discretion of the Board.

Results and Dividend

The Company’s revenue profit after tax for the year amounted to EUR 11,801,000 (2022: EUR 12,339,000). The Company made a

capital loss after tax of EUR 41,699,000 (2022: capital gain after tax of EUR 41,765,000). Therefore, the total loss after tax for the

Company was EUR 29,898,000 (2022: total gain after tax EUR 54,104,000).

In respect of Dividend amount

the period to per Ordinary Share Pay date Record date Ex-Dividend date

1st interim dividend 31 March 2023 1.3775 23 June 2023 26 May 2023 25 May 2023

2nd interim dividend 30 June 2023 1.3775 8 September 2023 18 August 2023 17 August 2023

3rd interim dividend 30 September 2023 1.3775 8 December 2023 17 November 2023 16 November 2023

4th interim dividend 31 December 2023 1.3775 18 March 2024 16 February 2024 15 March 2024

Notifiable Shareholders

As at 31 December 2023, the Directors have been formally notified of the following interests in the Company’s Ordinary Shares,

comprising 3% or more of the issued share capital of the Company:

Percentage

Shareholder Holding held

Date notified

BlackRock Inc. 53,600,613 14.17 13 October 2023

Insight Investment Management (Global) Limited 18,849,904 4.88 14 July 2023

CCLA Investment Management Limited 20,459,182 5.03 14 December 2021

Baillie Gifford & Co 19,371,961 5.02 1 August 2023

Newton Investment Management Limited 19,099,525 4.98 25 August 2023

Weiss Asset Management LP 19,700,163 5.21 16 November 2023

Liontrust Asset Management plc 16,834,058 4.28 13 September 2021

Schroders plc 16,810,336 4.14 17 September 2021

Stichting Jurisdisch Eigendom Privium Sustainable Impact Fund 14,628,800 4.62 15 October 2020

Since year end, the Directors have been formally notified of the following interests in the Company’s Ordinary Shares:

Percentage

Shareholder Holding held

Date notified

Weiss Asset Management LP 65,339,504 17.28 22 April 2024

BlackRock Inc. 52,502,481 13.88 23 April 2024

Baillie Gifford & Co 18,832,297 4.98 11 April 2024

Barclays PLC 22,156,618 5.86 27 February 2024

1. Based on number of Ordinary Shares in circulation at the time of notification.

Aquila European Renewables Plc|Annual Report 2023

Settlement of Ordinary Share

Transactions

Ordinary Share transactions in the

Company are settled by the CREST

share-settlement system.

Shareholder Engagement

The Board is mindful of the importance

of engaging with the Company’s

shareholders to gauge their views on

topics affecting the Company.

The Board encourages shareholders

toattend the Company’s AGM on

20June 2024 and to exercise their

voting rights. Further details on how

to do this can be found in the Notes

to the Notice of AGM on pages 118

to 120. Proxy voting figures will be

made available shortly after the AGM

on the Company’s website at https://

www.aquila-european-renewables.

com/. Here shareholders can also find

the Company’s annual and half-yearly

accounts, quarterly factsheets,

dividend information and other relevant

information.

Appointment of Auditor

The Company’s auditors,

PricewaterhouseCoopers LLP (‘PwC’),

having expressed their willingness

to continue in office as auditors, will

be put forward for re-appointment at

the Company’s AGM, and the Board

will seek authority to determine their

remuneration for the forthcoming year.

Going Concern

The Directors have adopted the going

concern basis in preparing the financial

statements. The following is a summary

of the Directors’ assessment of the going

concern status of the Company.

The Company continues to meet its

day-to-day liquidity needs through its

cash resources and RCF. In reaching

this conclusion, the Directors have

considered its cash position, income,

expense flows, and compliance with

the RCF covenants. The Company’s net

assets as at 31 December 2023 equated

to EUR 372.5 million (2022: EUR 451.7

million). As at 31 December 2023,

the Company and its wholly owned

subsidiary held EUR 9.9 million (2022:

EUR 24.7 million) in cash, which excludes

any additional cash held within the

Company’s investments.

The Company and its subsidiaries have

a modest level of debt, representing

34.3% of its Gross Asset Value as of

31December 2023, comprised of an

RCF (EUR 74.7 million drawn, excluding

bank guarantees) and non-recourse debt

at the asset level (EUR 120.1 million).

In January 2024, the Company, via its

wholly owned subsidiaries, entered

into a bank debt financing at its Spanish

solar PV portfolio for EUR 50.0 million,

the proceeds of which were primarily

used to repay the RCF, which is currently

drawn to EUR 26.1 million as of the date

of approval of this document (excluding

bank guarantees), representing

approximately 7.0% of its NAV as at

31December2023.

The Company is in compliance with

its covenants related to the RCF. The

Board and its advisers have analysed

the covenants of the RCF, and significant

headroom exists in relation to both the

Interest Coverage Ratio (“ICR”) and

Loan to Value covenant versus actual

ratios based on 31 December 2023.

For example, based on the Company’s

RCF compliance certificate for Q4

2023 (adjusting for the recent partial

repayment of the RCF), forecast cash

flows would have to reduce by over 57%

in order to breach the Company’s ICR.

The Company’s RCF is due to expire in

April 2025 and whilst an extension has

not been agreed, the Company would

expect to extend the facility with the

existing lenders, on the basis that:

— the Company and its Investment

Adviser have a strong relationship

with the RCF lenders;

— RCF lenders have already put forward

proposals to extend the facility,

subject to agreeing commercial terms

and credit approval;

— the Company and its subsidiaries

have a modest level of debt of

approximately 34.3%; and

— the Company is in compliance with

its RCF covenants and benefits

from a significant buffer compared

to the actual ratios observed as at

31December 2023.

Outside of the RCF, the Company and

its HoldCo have no other noteworthy

liabilities.

The Company and its HoldCo’s

total expenses for the year ended

31December 2023 were EUR 10.4

million, inclusive of RCF interest and

fees (2022: EUR 6.4 million), which

represented approximately 2.6% (2022:

1.5%) of average net assets during 2023.

At the date of approval of this document,

based on the aggregate of investments

and cash held, the Company has

substantial operating expenses cover.

The Directors are also satisfied that the

Company would continue to remain

viable under downside scenarios,

including a decline in long-term

production and power price forecasts.

As part of the assessment, the Directors

have reviewed the operating cash flow

forecast prepared by the Investment

Adviser under base case and downside

scenarios. The forecast highlights

that the Company is able to meet its

obligations without running into any

liquidity shortages, noting the Company

also has access to a partially undrawn

RCF (EUR 68.2 million available) and

other sources of liquidity should the

need arise. In addition, the Directors

are satisfied that any refinancing risks

associated with the RCF are low. The

Company’s portfolio benefits from

contracted revenues in the form of

Power Purchase Agreements and

Government-regulated tariffs, which

provide significant visibility of income

and downside protection, with 52%

of revenue contracted over the next

five years. For example, the Company

expects its 2024 target dividend to be

fully covered, even if forecast power

prices decline by 37%.

Aquila European Renewables Plc|Annual Report 2023

FinancialsStrategic Report Other InformationGovernance

DIRECTORS' REPORT CONTINUED

Going Concern continued

As discussed in the Chairman’s

Statement on pages 8 to 10,

the Company announced on

14December2023 that, together with

its advisers, it continues to explore a

number of different initiatives to address

the issues facing the sector and to

secure recognition in the Company’s

share price of the real underlying

value of the Company’s portfolio. On

26February 2024, following the receipt

and review of a number of indications

of interest in a potential combination

of the Company with another listed

investment company by way of section

110 of the Insolvency Act 1986 (“section

110 combination”), the Board instructed

its advisers, Deutsche Numis, to

commence a process of mutual due

diligence with multiple interested

parties. The engagement with parties

interested in a section 110 combination

with the Company is still ongoing and

therefore there can be no certainty that

this process will result in a combination

on terms which the Board considers to

be in the best interests of shareholders

as a whole. Any section 110 combination

would be subject to shareholder

approval.

On 30 May 2023, the Board announced

that shareholders should have a

further opportunity to vote on the

continuation of the Company during

the course of the financial year ending

31 December 2024, expected to be

around September 2024. With the

support of the Company’s brokers, the

Board has consulted with the Company’s

shareholders who have expressed their

high regard for the Investment Adviser

and the Company’s portfolio of assets,

although it is recognised that the

sector as a whole has faced challenges

during recent months as discounts have

widened and liquidity issues persist.

Shareholders have also raised concerns

about the ability for the Company to

grow in the current climate, given the

sustained discount in the share price

versus the NAV. As a result, the Directors

acknowledge that there is uncertainty as

to whether the continuation vote would

pass or fail.

If the continuation vote is not passed,

then according to the Company’s

Articles, the Directors shall within six

months put proposals to shareholders

for the reconstruction, reorganisation or

liquidation of the Company.

Any such proposal would have to take

into consideration the outcome (if any)

of the section 110 process, which was

announced on 26 February 2024. As a

result, the Directors believe that, in the

absence of a section 110 transaction

taking place, the Directors expect that

if the continuation vote is not passed,

formulating and implementing any such

proposals would require the Company

to continue operations for a period

of at least 12 months from the date of

approval of the Company’s financial

statements.

Accordingly, while the Directors

recognise that these conditions indicate

the existence of material uncertainty

which may cast significant doubt about

the 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 Company should be

prepared on a going concern basis.

The financial statements do not include

the adjustments that would result if the

Company were unable to continue on

agoing concern basis.

Auditor Information

Each of the Directors, at the date of the

approval of this report, confirms that:

i. so far as the Director is aware, there is

no relevant audit information of which

the Company’s auditors are unaware;

and

ii. the Director has taken all steps

that he/she ought to have taken as

Director to make himself/herself

aware of any relevant information

and to establish that the Company’s

auditors are aware of that

information.

This confirmation is given and should

be interpreted in accordance with

the provisions of section 418 of the

Companies Act 2006.

Annual General Meeting

The following information is

important and requires your

immediate attention. If you are

in any doubt about the action

you should take, you should seek

advice from your stockbroker, bank

manager, solicitor, accountant or

other financial adviser authorised

under the Financial Services and

Markets Act 2000.

The Company’s AGM will be held

on 20 June 2024 at the offices of the

Company’s lawyers, CMS Cameron

McKenna Nabarro Olswang LLP. Full

details of the AGM, the resolutions

proposed and how to vote by proxy are

described in the Notice of Meeting on

pages 116 and 117 of this Annual Report

and the explanatory notes on pages 118

to 120. Shareholders are welcome at any

time to submit questions they may have

to aquilacosecmailbox@apexfs.group.

Resolutions relating to the following

items of special business will be

proposed at the forthcoming AGM to be

held on 20 June 2024.

Resolutions 11, 12, and 13

Authority to Issue Ordinary

Shares and to Disapply

Pre-emption Rights

At the forthcoming AGM, the Board

is seeking to renew the authority

granted to them at the AGM held on

14 June 2023 to allot up to a maximum

of 33.33% of the Company’s shares

in issue as at the date of the Notice of

AGM (equating to 126,028,106 Ordinary

Shares, excluding treasury shares) and

to disapply pre-emption rights when

allotting up to 20.0% of those Ordinary

Shares (equating to 75,624,426 Ordinary

Shares, excluding treasury shares).

The Directors consider that the higher

aggregate authority is in keeping

with recent revised guidance from the

Investment Association in relation to

a UK investment company and the UK

Pre-Emption Group adapted for the

context of an investment company, and

is justified for the reasons set out below.

However, notwithstanding the change

in guidance, the Directors are aware

that the combined authority to disapply

pre-emption rights in respect of up to

20% of the Company’s issued Ordinary

Share capital sought under Resolutions

12 and 13 is high and, accordingly, are

offering shareholders the opportunity

to grant the usual 10% authority

(Resolution 12) with an option to grant

an additional 10% authority, creating an

aggregate 20% authority (Resolution 13).

The Directors believe that a higher 20%

authority is justified to give the Company

flexibility to grow and further expand its

assets, as well as to lower the Company’s

ongoing charges as expenses are

diluted. Ordinary Shares will only be

issued at a price more than the (cum-

income) NAV per existing Ordinary

Share at the time of issue, after costs.

Aquila European Renewables Plc|Annual Report 2023

Ordinary Shares are issued at the

discretion of the Board when it is

deemed to be in the best interests of

shareholders to do so.

The authority granted under these

resolutions will expire at the conclusion

of the AGM to be held in 2025, unless

renewed prior to this date via a General

Meeting. The full text of resolutions 11,

12 and 13 is set out in the Notice

of Meeting on pages 116 and 117.

Resolution 14 Renewal of

Authority to Purchase own

The Directors were granted authority at

the AGM held on 14 June 2023 to make

market purchases of up to 14.99% of

the Ordinary Shares in issue (excluding

treasury shares) as at the date of the

notice of AGM (25 April 2023) equating

to a maximum of 58,696,830 Ordinary

Shares. During the year ended

31 December 2023, the Company

bought back for treasury a total of

30,103,575 Ordinary Shares at an

average price of 92.3 cents per share.

The authority to make market purchases

will expire at the conclusion of the

Company’s 2024 AGM. The Directors

recommend that a new authority to

purchase up to 56,680,507 Ordinary

Shares (subject to the condition that not

more than 14.99% of the Ordinary Shares

in issue, excluding treasury shares, at the

date of the 2024 AGM, are purchased)

be granted and a resolution to that

effect will be proposed at the AGM. Any

Ordinary Shares purchased will either

be held in treasury or, if the Directors so

determine, cancelled. This authority will

expire at the Company’s AGM to be held

in 2025, unless renewed prior to this

date via a General Meeting.

The Companies Act 2006 permits

companies to hold shares acquired

by way of market purchase as treasury

shares, rather than having to cancel

them. This provides the Company with

the ability to re-issue Ordinary Shares

quickly and cost effectively, thereby

improving liquidity and providing the

Company with additional flexibility in

the management of its capital base.

No Ordinary Shares will be sold from

treasury at a price less than the

(cum-income) NAV per Ordinary Share

at the time of their sale, unless they

are first offered pro rata to existing

shareholders. At the year end, the

Company held 30,103,575 Ordinary

Shares in treasury.

Ordinary Shares are purchased at the

discretion of the Board and when it

is deemed to be in the best interests

of shareholders. Ordinary Shares will

be purchased for cancellation or for

treasury only when the shares are

trading at a discount to the net asset

value.

Resolution 15 Notice of

General Meetings

The Board believes that it is in the

best interests of shareholders of the

Company to have the ability to call

meetings on 14 clear days’ notice,

should a matter require urgency. The

Board will therefore propose resolution

16 at the AGM to approve the reduction

in the minimum notice period from 21 to

14 clear days for all General Meetings,

other than AGMs.

Once approval is granted, the approval

would be effective until the Company’s

next AGM, when it is intended that a

similar resolution will be proposed.

In accordance with the Shareholders’

Rights Directive, the Company will offer

the shareholders the ability to vote by

electronic means. This facility will be

accessible to all shareholders, should

the Board call a General Meeting at 14

clear days’ notice. Short notice will only

be used by the Board under appropriate

circumstances.

Regulatory Disclosures –

Information to be Disclosed in

Accordance with Listing Rule

9.8.4

The Listing Rules require listed

companies to report certain information

in a single identifiable section of their

Annual Report and Financial Statements.

The Company confirms that none of

the 14 clauses of Listing Rule 9.8.4 were

applicable during the year under review.

By order of the Board,

Jenny Thompson

For and on behalf of

Apex Listed Companies Services

(UK) Limited

Company Secretary

24 April 2024

Aquila European Renewables Plc|Annual Report 2023

FinancialsStrategic Report Other InformationGovernance

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

financial statements in accordance with

international accounting standards

in conformity with UK-adopted

international accounting standards and

with the requirements of the Company’s

Act 2006 as applicable to companies

reporting under these standards.

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

Company and of its profit or loss for that

period.

In preparing the financial statements, the

Directors are required to:

— select suitable accounting policies

and then apply them consistently;

— state whether they have been

prepared in accordance with

UK-adopted international accounting

standards, 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

Company will continue in business.

The Directors are also responsible for

safeguarding the assets of the Company

and hence for taking reasonable steps

to prevent and detect 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. The accounting records

should also enable them to ensure the

financial statements and the Directors’

Remuneration Report comply with the

Companies Act 2006 and Article 4 of the

IAS Regulation.

The Directors are responsible for

the maintenance and integrity of 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

Each of the Directors, whose names

andfunctions are listed in the Corporate

Governance section, confirm that, to the

best of their knowledge:

— the Company financial statements,

which have been properly prepared

in accordance with UK-adopted

international accounting standards,

give a true and fair view of the assets,

liabilities, financial position, and profit

of the Company; and

— the Directors’ Report includes a

fair review of the development and

performance of the business and the

position of the Company, together

with a description of the principal

risks and uncertainties it faces.

For and on behalf of the Board

David MacLellan

24 April 2024

Aquila European Renewables Plc|Annual Report 2023

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF AQUILA EUROPEAN RENEWABLES PLC

Report on the audit of the financial statements

Opinion

In our opinion, Aquila European

Renewables Plc’s financial statements:

— give a true and fair view of the

state of the Company’s affairs as at

31December 2023 and of its loss and

cash flows for theyear then ended;

— have been properly prepared

in accordance with UK-adopted

international accounting standards;

and

— have been prepared in accordance

with the requirements of the

Companies Act 2006.

We have audited the financial

statements, included within the Annual

Report, which comprise: the Statement

of Financial Position as at 31 December

2023; the Statement of Comprehensive

Income, the Statement of Changes in

Equity and the Statement of Cash Flows

for the year then ended; and the notes

to the financial statements, comprising

material accounting policy information

and other explanatory information.

Our opinion is consistent with our

reporting to the Audit and Risk

Committee.

Basis for opinion

We conducted our audit in accordance

with International Standards on Auditing

(UK) (“ISAs (UK)”) and applicable law.

Our responsibilities under ISAs (UK)

are further described in the Auditors’

responsibilities for the audit of the

financial statements section of our

report. We believe that the audit

evidence we have obtained is sufficient

and appropriate to provide a basis for

ouropinion.

Independence

We remained independent of the

Company in accordance with the ethical

requirements that are relevant to our

audit of the financial statements in the

UK, which includes the FRC’s Ethical

Standard, as applicable to listed public

interest entities, and wehave fulfilled

our other ethical responsibilities in

accordance with these requirements.

To the best of our knowledge and belief,

we declare that non-audit services

prohibited by the FRC’s Ethical Standard

were notprovided.

We have provided no non-audit services

to the Company or its controlled

undertakings in the period under audit.

Material uncertainty related to

going concern

In forming our opinion on the financial

statements, which is not modified, we

have considered the adequacy of the

disclosure made in note 2 to the financial

statements concerning the Company’s

ability to continue as a going concern.

On 26 February 2024, following the

receipt and review of a number of

indications of interest in a potential

combination of the Company by way

ofsection 110 of the Insolvency Act 1986

(“section 110 combination”), the Board

has instructed its advisers to commence

a process of mutual due diligence

with multiple interested parties. In

addition, on 30 May 2023, the Board

announced that it intends to propose a

further continuation vote by September

2024. These conditions, along with the

other matters explained in note 2 to

the financial statements, indicate the

existence of a material uncertainty which

may cast significant doubt about the

Company’s ability to continue as a going

concern. The financial statements do

not include the adjustments that would

result if the Company were unable to

continue as a going concern.

In auditing the financial statements, we

have concluded that the Directors’ use

of the going concern basis of accounting

in the preparation of the financial

statements is appropriate.

Our evaluation of the Directors’

assessment of the Company’s ability to

continue to adopt the going concern

basis of accounting included:

— Obtained the Directors’ going

concern assessment and

corroborated key assumptions to

underlying documentation and

ensured this was consistent with our

audit work in these areas;

— Assessed the appropriateness of the

key assumptions used both in the

base case and downside scenarios,

including assessing whether we

considered the downside sensitivities

to be appropriately severe;

— Tested the integrity of the underlying

formulae and calculations within the

going concern and cash flow models;

— Considered the appropriateness

of the mitigating actions available

to the Directors in the event of the

downside scenario materialising.

Specifically, we focused on whether

these actions are within the Directors’

control and are achievable; and

— Held discussions with the Investment

Adviser, the Company’s broker, and

members of the Board to understand

their communications with

Shareholders of the Company and

reviewed the Company’s Regulatory

News Service announcements.

In relation to the Directors’ reporting

on how they have applied the UK

Corporate Governance Code, other

than the material uncertainty identified

in note 2 to the financial statements,

we have nothing material to add or

draw attention to in relation to the

Directors’ statement in the financial

statements about whether the Directors

considered it appropriate to adopt the

going concern basis of accounting, or in

respect of the Directors’ identification

in the financial statements of any other

material uncertainties to the Company’s

ability to continue to do so over a period

of at least twelve months from the date

of approval ofthe financial statements.

Our responsibilities and the

responsibilities of the Directors with

respect to going concern are described

in the relevant sections of this report.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsGovernanceStrategic Report

INDEPENDENT AUDITORS’ REPORT CONTINUED

TO THE MEMBERS OF AQUILA EUROPEAN RENEWABLES PLC

Our audit approach

Overview

Audit scope

— The Company invests in renewable energy infrastructure investments through its investment in its wholly-owned subsidiary,

Tesseract Holdings Limited. As the Company meets the definition of an Investment entity and holds its investment at fair value

through profit and loss, it does not prepare consolidated accounts.

— The Company is an Investment Trust Company and has appointed Aquila Capital Investmentgesellschaft mbH (the

“Investment Adviser”) to manage its assets.

— The financial statements are prepared for the Company by Apex Listed Companies Services (UK) Limited (the “Administrator”)

to whom the Directors delegate the provision of certain administrative functions.

Key audit matters

— Material uncertainty related to going concern

— Valuation of investments held at fair value through profit or loss

Materiality

— Overall materiality: EUR 7,451,000 (2022: EUR 9,033,000) based on 2% of net assets.

— Performance materiality: EUR 5,588,000 (2022: EUR 6,774,000).

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial

statements.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement (whether

or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the

allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we

make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole,

and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to going concern, described in the Material uncertainty related to going concern section above, we determined the

matters described below to be the key audit matters to be communicated in our report. This is not a complete list of all risks

identified by our audit.

Material uncertainty related to going concern is a new key audit matter this year. Ability to continue as a going concern

(Continuation Resolution), which was a key audit matter last year, is no longer included because of the fact that there is now

amaterial uncertainty related to going concern. Otherwise, the key audit matters below are consistent with last year.

Key audit matter How our audit addressed the key audit matter

Valuation of investments held at fair value

through profit or loss

Refer to the Report of the Audit and Risk Committee, the

Accounting Policies and Note 4 to the Financial Statements.

The Company has EUR 372 million of investment held

at fair value through profit or loss. The fair value of the

Company’s investment in Tesseract Holdings Limited (“the

HoldCo”) is determined based on the net assets of the

HoldCo and, accordingly, the fair value of the underlying

investments within the HoldCo, for which there is no

liquid market. The fair value of the underlying investments

have principally been valued on a discounted cash flow

basis, which necessitates significant estimates in respect

of the forecasted cash flows and discount rates applied.

Determining the valuation methodology and determining

the inputs and assumptions within the valuations are

subjective and complex. This, combined with the

significance of the investments balance in the statement of

financial position,meant that this was a key audit matter for

our current year audit.

— We planned our audit to critically assess management’s assumptions and the

investment valuation models in which they are applied.

— We have assessed whether the valuation methodology adopted for the

underlying investments within the HoldCo was appropriate and in line with

accounting standards and industry guidelines.

— We tested the mathematical accuracy of the valuation models.

— We engaged our internal valuation experts to provide audit support in

reviewing and concluding on the fair value of a sample of the underlying

investment portfolio. Our experts reviewed the appropriateness of the

valuation methodology and approach.

— Our internal valuations experts developed an independent range to benchmark

against management’s discount rates for each individual investment taking into

account areas such as country risk premia, gearing, and merchant risk exposure

which vary depending on the asset.

— We agreed the key valuation drivers to relevant supporting documentation.

— Specifically, we have agreed a sample of inputs driving the revenue and

expenses in the underlying models to supporting documentation such as

signed contracts.

No material issues were identified in our testing.

Aquila European Renewables Plc|Annual Report 2023

How we tailored the audit scope

We tailored the scope of our audit to

ensure that we performed enough

work to be able to give an opinion on

the financial statements as a whole,

taking into account the structure of the

Company, the accounting processes

and controls, and the industry in which it

operates.

As part of designing our audit, we

determined materiality and assessed

the risks of material misstatement in

the financial statements. In particular,

we looked at where the Directors made

subjective judgements, for example

in respect of significant accounting

estimates that involved making

assumptions and considering future

events that are inherently uncertain.

The impact of climate risk on

our audit

As part of our audit we made enquiries

of management to understand the

extent of the potential impact of

climate risk on the Company’s financial

statements, and we remained alert when

performing our audit procedures for any

indicators of the impact ofclimate risk.

As part of our valuation procedures, we

obtained the third party technical advice

used by management to forecast energy

production. We have reviewed the

appropriateness of disclosures included

in the financial statements and have read

the Annual Report to consider whether

other climate change disclosures are

materially consistent with the financial

statements and our knowledge obtained

in the audit. Based on our procedures

performed, no significant findings have

been noted.

Materiality

The scope of our audit was influenced

by our application of materiality. We

set certain quantitative thresholds

for materiality. These, together with

qualitative considerations, helped us

to determine the scope of our audit

and the nature, timing and extent of

our audit procedures on the individual

financial statement line items and

disclosures and in evaluating the effect

of misstatements, both individually and

in aggregate on the financial statements

as a whole.

Based on our professional judgement,

we determined materiality for the

financial statements as a whole as

follows:

Overall

Company

materiality

EUR 7,451,000 (2022: EUR

9,033,000).

How we

determined it

2% of net assets

Rationale for

benchmark

applied

Net asset value is deemed

the appropriate benchmark

because Investment Trusts

measure their performance

on net asset value.

We use performance materiality to

reduce to an appropriately low level

the probability that the aggregate

of uncorrected and undetected

misstatements exceeds overall

materiality. Specifically, we use

performance materiality in determining

the scope of our audit and the nature

and extent of our testing of account

balances, classes of transactions and

disclosures, for example in determining

sample sizes. Our performance

materiality was 75% (2022: 75%) of

overall materiality, amounting to EUR

5,588,000 (2022: EUR 6,774,000) for the

Company financial statements.

In determining the performance

materiality, we considered a number of

factors - the history of misstatements,

risk assessment and aggregation

risk and the effectiveness of controls

- and concluded that an amount at

the upper end of our normal range

wasappropriate.

In addition, based on our judgement,

we applied a specific materiality of

EUR1,062,000 (2022: EUR 1,058,000)

tothe Revenue column of the Statement

of Comprehensive Income. In arriving

at this judgement, we considered the

fact that Revenue return is asecondary

financial indicator of the Company.

We agreed with the Audit and Risk

Committee that we would report to

them misstatements identified during

our audit above EUR 372,500 (2022: EUR

451,000) as well as misstatements below

that amount that, in our view, warranted

reporting for qualitative reasons.

Reporting on other information

The other information comprises all of

the information in the Annual Report

other than the financial statements

and our auditors’ report thereon.

The Directors are responsible for the

other information. Our opinion on the

financial statements does not cover

the other information and, accordingly,

we do not express an audit opinion

or,except to the extent otherwise

explicitly stated in this report, any form

of assurancethereon.

In connection with our audit of the

financial statements, our responsibility

is to read the other information and, in

doing so, consider whether the other

information is materially inconsistent

with the financial statements or our

knowledge obtained in the audit, or

otherwise appears to be materially

misstated. If we identify an apparent

material inconsistency or material

misstatement, we are required to

perform procedures to conclude

whether there is a material misstatement

of the financial statements or a material

misstatement of the other information. If,

based on the work we have performed,

we conclude that thereis a material

misstatement of this other information,

we are required to report that fact.

We have nothing to report based

ontheseresponsibilities.

With respect to the Strategic Report

andDirectors’ Report, we also

considered whether the disclosures

required by the UK Companies Act 2006

have been included.

Based on our work undertaken in the

course of the audit, the Companies

Act2006 requires us also to report

certain opinions andmatters as

described below.

Strategic Report and Directors’

Report

In our opinion, based on the work

undertaken in the course of the audit,

the information given in the Strategic

Report and Directors’ Report for the year

ended 31 December 2023 is consistent

with the financial statements and has

been prepared in accordance with

applicable legal requirements.

In light of the knowledge and

understanding of the Company and its

environment obtained in the course

of the audit, we did not identify any

material misstatements in the Strategic

Report and Directors’ Report.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsGovernanceStrategic Report

INDEPENDENT AUDITORS’ REPORT CONTINUED

TO THE MEMBERS OF AQUILA EUROPEAN RENEWABLES PLC

Reporting on other information

continued

Directors’ Remuneration

In our opinion, the part of the Directors’

Remuneration Report to be audited has

been properly prepared in accordance

with the Companies Act 2006.

Corporate governance

statement

The Listing Rules require us to review

the Directors’ statements in relation to

going concern, longer-term viability and

that part of the corporate governance

statement relating to the Company’s

compliance with the provisions of

the UK Corporate Governance Code

specified for our review. Our additional

responsibilities with respect to the

corporate governance statement as

other information are described in the

Reporting on other information section

of this report.

Based on the work undertaken as part

of our audit, we have concluded that

each of the following elements of the

corporate governance statement,

included within the Directors’ Report is

materially consistent with the financial

statements and our knowledge obtained

during the audit, and, except for the

matters reported in the section headed

‘Material uncertainty related togoing

concern’, we have nothing material to

add or draw attention to in relation to:

— The Directors’ confirmation that they

have carried out a robust assessment

of the emerging and principal risks;

— The disclosures in the Annual Report

that describe those principal risks,

what procedures are in place to

identify emerging risks and an

explanation of how these are being

managed or mitigated;

— The Directors’ statement in the

financial statements about whether

they considered it appropriate to

adopt the going concern basis of

accounting in preparing them, and

their identification of any material

uncertainties to the Company’s ability

to continue to do so over a period

of at least twelve months from the

date of approval of the financial

statements;

— The Directors’ explanation as to

their assessment of the Company’s

prospects, the period this assessment

covers and why the period is

appropriate; and

— The Directors’ statement as to

whether they have a reasonable

expectation that the Company will

be able to continue in operation and

meet its liabilities as they fall due

over the period of its assessment,

including any related disclosures

drawing attention to any necessary

qualifications or assumptions.

Our review of the Directors’ statement

regarding the longer-term viability of

the Company was substantially less in

scope than anaudit and only consisted

of making inquiries and considering

the Directors’ process supporting

their statement; checking that the

statement is in alignment with the

relevant provisions of the UK Corporate

Governance Code; and considering

whether the statement is consistent

with the financial statements and our

knowledge and understanding of the

Company and its environment obtained

in the course of the audit.

In addition, based on the work

undertaken as part of our audit, we have

concluded that each of the following

elements of the corporate governance

statement is materially consistent

with the financial statements and our

knowledge obtained during the audit:

— The Directors’ statement that they

consider the Annual Report, taken

as a whole, is fair, balanced and

understandable, and provides

the information necessary for the

members to assess the Company’s

position, performance, business

model and strategy;

— The section of the Annual Report that

describes the review of effectiveness

of risk management and internal

control systems; and

— The section of the Annual Report

describing the work of the Audit and

Risk Committee.

We have nothing to report in respect

of our responsibility to report when

the Directors’ statement relating to the

Company’s compliance with the Code

does not properly disclose a departure

from a relevant provision of the Code

specified under the Listing Rules for

review by the auditors.

Responsibilities for the

financial statements and the

audit

Responsibilities of the Directors

for the financial statements

As explained more fully in the Statement

of Directors’ Responsibilities in

Respect of the Financial Statements,

the Directors are responsible for the

preparation of the financial statements

in accordance with the applicable

framework and for being satisfied

that they give a true and fair view. The

Directors are also responsible for such

internal control as they determine is

necessary to enable the preparation of

financial statements that are free from

material misstatement, whether due to

fraud or error.

In preparing the financial statements, the

Directors are responsible for assessing

the Company’s ability to continue as a

going concern, disclosing, as applicable,

matters related to going concern

and using the going concern basis of

accounting unless the Directors either

intend to liquidate the Company or to

cease operations, or have no realistic

alternative but to do so.

Auditors’ responsibilities for the

audit of the financial statements

Our objectives are to obtain reasonable

assurance about whether the financial

statements as a whole are free from

material misstatement, whether due to

fraud or error, and to issue an auditors’

report that includes our opinion.

Reasonable assurance is ahigh level

of assurance, but is not a guarantee

that an audit conducted in accordance

with ISAs (UK) will always detect a

material misstatement when it exists.

Misstatements can arise from fraud

or error and are considered material

if, individually or in the aggregate,

they could reasonably be expected

to influence the economic decisions

of users taken on the basis of these

financial statements.

Irregularities, including fraud, are

instances of non-compliance with laws

and regulations. We design procedures

in line with our responsibilities, outlined

above, to detect material misstatements

in respect of irregularities, including

fraud. The extent to which our

procedures are capable of detecting

irregularities, including fraud, is

detailedbelow.

Aquila European Renewables Plc|Annual Report 2023

Based on our understanding of the

Company and industry, we identified

that the principal risks of non-

compliance with laws and regulations

related to UK regulatory principles,

such as those governed by the

Financial Conduct Authority’s Listing

Rules and ongoing qualification as an

Investment Trust under section 1158 of

the Corporation Tax Act 2010, and we

considered the extent to which non-

compliance might have a material effect

on the financial statements. We also

considered those laws and regulations

that have a direct impact on the financial

statements such as the Companies Act

2006. We evaluated management’s

incentives and opportunities for

fraudulent manipulation of the financial

statements (including the risk of

override of controls), and determined

that the principal risks were related to

posting inappropriate journal entries to

increase revenue (interest income and

dividend income) or to increase total

shareholders’ funds, and management

bias in accounting estimates, such

as the valuation of investments held

at fair value through profit or loss.

Audit procedures performed by the

engagement team included:

— Enquiries of the Board of

Directors, Investment Adviser

and the Administrator, including

consideration of known or suspected

instances of non-compliance with

laws and regulation and fraud;

— Challenging assumptions and

judgements made by the Board

of Directors and the Investment

Adviser in their significant accounting

estimates, in particular in relation to

the valuation of investments held at

fair value through profit or loss (see

related key audit matter above);

— Identifying and testing of selected

journal entries;

— Reviewing relevant meeting minutes,

including those of the Board of

Directors and Audit and Risk

Committee;

— Assessment of the Company’s

compliance with the requirements of

Section 1158 of the Corporation Tax

Act 2010;

— Reviewing and agreeing financial

statement disclosures to underlying

supporting documentation; and

— Designing audit procedures to

incorporate unpredictability around

the nature, timing or extent of our

testing.

There are inherent limitations in the audit

procedures described above. We are

less likely to become aware of instances

of non-compliance with laws and

regulations that are not closely related

to events and transactions reflected in

the financial statements. Also, the risk of

not detecting a material misstatement

due to fraud is higher than the risk

of not detecting one resulting from

error, as fraud may involve deliberate

concealment by, for example, forgery

or intentional misrepresentations, or

through collusion.

Our audit testing might include testing

complete populations of certain

transactions and balances, possibly

using data auditing techniques.

However, it typically involves selecting

a limited number of items for

testing, rather than testing complete

populations. We will often seek to target

particular items for testing based on

their size or risk characteristics. In other

cases, we will use audit sampling to

enable us to draw a conclusion about

the population from which the sample

isselected.

A further description of our

responsibilities for the audit of the

financial statements is located on

the FRC’s website at: www.frc.org.

uk/auditorsresponsibilities. This

description forms part of our auditors’

report.

Use of this report

This report, including the opinions,

has been prepared for and only for

the Company’s members as a body in

accordance with Chapter 3 of Part 16

of the Companies Act 2006 and for no

other purpose. We do not, in giving

these opinions, accept or assume

responsibility for any other purpose or to

any other person to whom this report is

shown or into whose hands it may come

save where expressly agreed by our

prior consent in writing.

Other required

reporting

Companies Act 2006

exception reporting

Under the Companies Act 2006 we

are required to report to you if, in our

opinion:

— we have not obtained all the

information and explanations we

require for our audit; or

— adequate accounting records have

not been kept by the Company, or

returns adequate for our audit have

not been received from branches not

visited by us; or

— certain disclosures of Directors’

remuneration specified by law are not

made; or

— the financial statements and the

part of the Directors’ Remuneration

Report to be audited are not in

agreement with the accounting

records and returns.

We have no exceptions to report arising

from this responsibility.

Appointment

Following the recommendation of

the Audit and Risk Committee, we

were appointed by the Directors

on 5November 2019 to audit the

financial statements for the year

ended 31December 2019 and

subsequent financial periods.

The period of total uninterrupted

engagement is 5 years, covering the

years ended 31December2019 to

31December2023.

Other matter

As required by the Financial Conduct

Authority Disclosure Guidance and

Transparency Rule 4.1.14R, these

financial statements form part of the

ESEF-prepared annual financial report

filed on the National Storage Mechanism

of the Financial Conduct Authority in

accordance with the ESEF Regulatory

Technical Standard (‘ESEF RTS’). This

auditors’ report provides no assurance

over whether the annual financial report

has been prepared using the single

electronic format specified in the ESEF

RTS.

Richard McGuire

(Senior Statutory Auditor)

for and on behalf of

PricewaterhouseCoopers LLP

Chartered Accountants and Statutory

Auditors

London

24 April 2024

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsGovernanceStrategic Report

STATEMENT OF 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 (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000)

Unrealised (losses)/gains

on investments 4 — (41,675) (41,675) — 41,778 41,778

Net foreign exchange losses — (24) (24) — (13) (13)

Interest income from shareholder loans 5 15,312 — 15,312 15,929 — 15,929

Dividend income 5 1,200 — 1,200 1,200 — 1,200

Investment advisory fees 6 (2,896) — (2,896) (3,150) — (3,150)

Other expenses 7 (1,814) — (1,814) (1,565) — (1,565)

Profit/(loss) on ordinary activities

before finance costs and taxation 11,802 (41,699) (29,897) 12,414 41,765 54,179

Finance costs 8 (1) — (1) (75) — (75)

Profit/(loss) on ordinary activities

before taxation 11,801 (41,699) (29,898) 12,339 41,765 54,104

Taxation 9 — — — — — —

Profit/(loss) on ordinary activities

after taxation 11,801 (41,699) (29,898) 12,339 41,765 54,104

Return per Ordinary Share

Undiluted – (cents) 10 3.03 (10.72) (7.69) 3.02 10.24 13.26

Return per Ordinary Share

Diluted – (cents) 10 3.03 (10.72) (7.69) 3.02 10.24 13.26

The notes on pages 90 to 110 are an integral part of these financial statements.

The total column of the Statement of Comprehensive Income is the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or

discontinued during the year.

Return on ordinary activities after taxation is also the “Total comprehensive income for the year”.

Aquila European Renewables Plc|Annual Report 2023

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2023

As at

31 December

2023 20

Notes (EUR ’000) (EUR ’000)

Fixed assets

Investments at fair value through profit or loss 4 372,403 428,641

Current assets

Trade and other receivables 11 96 5,630

Cash and cash equivalents 1,532 19,893

1,628

25,523

Current liabilities

Trade and other payables 12 (1,490) (2,514)

(1,490) (2,514)

Net current assets 138 23,009

Net assets 372,541 451,650

Capital and reserves: equity

Share capital 13 4,082 4,082

Share premium 255,643 255,643

Special reserve 14 87,717 125,082

Capital reserve 23,919 65,618

Revenue reserve 1,180 1,225

Total shareholders’ funds 372,541 451,650

Net assets per Ordinary Share (cents)

15 98.52c 110.64c

The notes on pages 90 to 110 are an integral part of these financial statements.

The financial statements were approved by the Board of Directors on 24 April 2024 and signed on its behalf by:

David MacLellan

Director

Company number 11932433

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsGovernanceStrategic Report

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

Share premium Special Capital Revenue

capital account reserve reserve reserve Total

Notes (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000)

Opening equity as at

1 January 2023 4,082 255,643 125,082 65,618 1,225 451,650

Share buybacks 13 — — (27,964) — — (27,964)

Profit/(loss) for the year — — — (41,699) 11,801 (29,898)

Dividend paid 16 — — (9,401) — (11,846) (21,247)

Closing equity as at

31 December 2023 4,082 255,643 87,717 23,919 1,180 372,541

Share premium Special Capital Revenue

capital account reserve reserve reserve Total

Notes (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000)

Opening equity as at

1 January 2022 4,069 254,388 134,393 23,853 740 417,443

Shares issued during the year

13 13 1,313 — — — 1,326

Share issue costs — (58) — — — (58)

Profit for the year — — — 41,765 12,339 54,104

Dividend paid 16 — — (9,311) — (11,854) (21,165)

Closing equity as at

31 December 2022 4,082 255,643 125,082 65,618 1,225 451,650

The notes on pages 90 to 110 are an integral part of these financial statements.

1. During the year, the Company did not issue any new Ordinary Shares (2022: 1,286,293 shares with gross aggregate proceeds of EUR 1.33 million).

Aquila European Renewables Plc|Annual Report 2023

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2023

Year ended

31 December 31 December

2023 20

Notes

E UR

’000)

(EUR ’000)

Operating activities

(Loss)/profit on ordinary activities before finance costs and taxation (29,897) 54,179

Adjustment for:

Unrealised losses/(gains) on investments 41,675 (41,778)

Decrease in trade and other receivables 5,534 3,668

(Decrease)/increase in trade and other payables (1,024) 859

Net cash flow from operating activities 16,288 16,928

Investing activities

Purchase of investments 4 — (71,369)

Repayments during the year 4 14,563 1,459

Payment of contingent consideration — (1,428)

Net cash flow from/(used in) investing activities 14,563 (71,338)

Financing activities

Proceeds of share issues — 1,326

Share issue costs — (58)

Share buybacks 13

(27,964)

—

Dividend paid 16 (21,247) (21,165)

Finance costs 8 (1) (75)

Net cash flow used in financing activities (49,212) (19,972)

Decrease in cash (18,361) (74,382)

Cash and cash equivalents at start of year 19,893 94,275

Cash and cash equivalents at end of year 1,532 19,893

The notes on pages 90 to 110 are an integral part of these financial statements.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsGovernanceStrategic Report

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

1. General Information

Aquila European Renewables Plc

(‘Aquila European Renewables’ or the

‘Company’) is a public company limited

by shares, incorporated in England and

Wales on 8 April 2019 with registered

number 11932433. The Company is

domiciled in England and Wales. The

Company is a closed-ended investment

company with an indefinite life. The

Company commenced its operations on

5 June 2019 when its Ordinary Shares

were admitted to trading on the London

Stock Exchange. The Directors intend,

at all times, to conduct the affairs of the

Company so as to enable it to qualify as

an investment trust for thepurposes of

section 1158 of the Corporation Tax Act

2010, as amended.

The registered office and principal place

of business of the Company is 6th Floor,

125 London Wall, London, EC2Y 5AS.

The Company’s investment objective is

to generate stable returns, principally

in the form of income distributions,

by investing in a diversified portfolio

of renewable energy infrastructure

investments.

The Company’s Investment Adviser is

Aquila Capital Investmentgesellschaft

mbH, authorised and regulated by the

German Federal Financial Supervisory

Authority.

FundRock Management Company

(Guernsey) Limited (formerly Sanne Fund

Management (Guernsey) Limited) acts as

the Company’s Alternative Investment

Fund Manager for the purposes of

Directive 2011/61/EU of the Alternative

Investment Fund ManagersDirective.

Apex Listed Companies Services (UK)

Limited (formerly Sanne Fund Services

(UK) Limited) provides administrative

and company secretarial services to

the Company under the terms of an

administration agreement between the

Company and the Administrator.

2. Basis of Preparation

The 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 financial statements have also

been prepared, as far as is relevant

and applicable to the Company, in

accordance with the Statement of

Recommended Practice issued by the

AIC in April 2021.

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 euros, as this is the currency of the

primary economic environment in which

the Company operates. Accordingly, the

financial statements are presented in

euros, rounded to the nearest thousand

euros, unless otherwise stated. The EUR/

GBP exchange rate as of

31 December 2023 was 0.8669 (2022:

0.8853).

Accounting for Subsidiary

The Company owns 100% of its

subsidiary Tesseract Holdings Limited

(“HoldCo” or “THL”). The Company

has acquired Renewable Energy

Infrastructure Investments through its

investment in the HoldCo. The Company

finances the HoldCo through a mix

of loan investments and equity. The

loan investment finance represents

shareholder loans (the ‘shareholder

loans’ or “SHL”) provided by the

Company to HoldCo. The Company

meets the definition of an investment

entity as described by IFRS 10. Under

IFRS , an investment entity is required to

hold subsidiaries at fair value through

profit or loss, and therefore does not

consolidate the subsidiary.

The HoldCo is an investment entity and,

as described under IFRS 10, values its

SPV investments at fair value through

profit or loss. SPV investments are

investments held at HoldCo. Further

details of the HoldCo and SPV structure

and investments can be found in

note20, on pages 108 to 110.

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

its investments on a fair value basis.

In assessing whether the Company

meets the definition of an investment

entity set out in IFRS 10, the Directors

note that:

i. the Company has multiple investors

and obtains funds from a diverse

group of shareholders who

would otherwise not have access

individually to investing in renewable

energy infrastructure investments

due to high barriers to entry and

capital requirements;

ii. the Company intends to hold these

renewable energy infrastructure

investments, via the HoldCo, for the

remainder of their useful life for the

purpose of capital appreciation and

investment income. The renewable

energy infrastructure investments

are expected to generate renewable

energy output for 25 to 30 years from

their relevant commercial operation

date; the Directors believe the

Company is able to generate returns

to the investors during that period;

and

iii. the Company measures and

evaluates the performance of all

its investments, held via HoldCo,

on a fair value basis, which is the

most relevant for investors in the

Company. Management use fair

value information as a primary

measurement to evaluate the

performance of all the investments

and in decision making.

Aquila European Renewables Plc|Annual Report 2023

The Directors are of the opinion that

the Company meets all the typical

characteristics of an investment entity

and therefore meets the definition set

out in IFRS 10. The Directors are satisfied

that investment entity accounting

treatment appropriately reflects the

Company’s activities as an investment

trust.

The Directors have also satisfied

themselves that Tesseract Holdings

Limited meets the characteristic of an

investment entity. Tesseract Holdings

Limited has one investor, Aquila

European Renewables Plc; however, in

substance Tesseract Holdings Limited

is investing the funds of the investors

of Aquila European Renewables Plc on

its behalf and is effectively performing

investment management services on

behalf of many unrelated beneficiary

investors.

The Directors believe the treatment

outlined above provides the most

relevant information to investors.

Going Concern

The Directors have adopted the going

concern basis in preparing the financial

statements. The following is a summary

of the Directors’ assessment of the going

concern status of the Company.

The Company continues to meet its

day-to-day liquidity needs through its

cash resources and RCF. In reaching

this conclusion, the Directors have

considered its cash position, income,

expense flows, and compliance with

the RCF covenants. The Company’s net

assets as at 31 December 2023 equated

to EUR 372.5 million (2022: EUR 451.7

million). As at 31 December 2023,

the Company and its wholly owned

subsidiary held EUR 9.9 million (2022:

EUR 24.7 million) in cash, which excludes

any additional cash held within the

Company’s investments.

The Company and its subsidiaries have

a modest level of debt, representing

34.3% of its Gross Asset Value as of

31December 2023, comprised of an

RCF (EUR 74.7 million drawn, excluding

bank guarantees) and non-recourse debt

at the asset level (EUR 120.1 million).

In January 2024, the Company, via its

wholly owned subsidiaries, entered

into a bank debt financing at its Spanish

solar PV portfolio for EUR 50.0 million,

the proceeds of which were primarily

used to repay the RCF, which is currently

drawn to EUR 26.1 million as of the date

of approval of this document (excluding

bank guarantees), representing

approximately 7.0% of its NAV as at

31December 2023.

The Company is in compliance with

its covenants related to the RCF. The

Board and its advisers have analysed

the covenants of the RCF, and significant

headroom exists in relation to both the

Interest Coverage Ratio (“ICR”) and

Loan to Value covenant versus actual

ratios based on 31 December 2023.

For example, based on the Company’s

RCF compliance certificate for Q4

2023 (adjusting for the recent partial

repayment of the RCF), forecast cash

flows would have to reduce by over 57%

in order to breach the Company’s ICR.

The Company’s RCF is due to expire in

April 2025 and whilst an extension has

not been agreed, the Company would

expect to extend the facility with the

existing lenders, on the basis that:

— the Company and its Investment

Adviser have a strong relationship

with the RCF lenders;

— RCF lenders have already put forward

proposals to extend the facility,

subject to agreeing commercial terms

and credit approval;

— the Company and its subsidiaries

have a modest level of debt, of

approximately 34.3%; and

— the Company is in compliance with

its RCF covenants and benefits

from a significant buffer compared

to the actual ratios observed as at

31December 2023.

Outside of the RCF, the Company and

its HoldCo have no other noteworthy

liabilities.

The Company and its HoldCo’s total

expenses for the year ended 31

December 2023 were EUR 10.4 million,

inclusive of RCF interest and fees (2022:

EUR 6.4 million), which represented

approximately 2.6% (2022: 1.5%) of

average net assets during 2023. At

the date of approval of this document,

based on the aggregate of investments

and cash held, the Company has

substantial operating expenses cover.

The Directors are also satisfied that the

Company would continue to remain

viable under downside scenarios,

including a decline in long-term

production and power price forecasts.

As part of the assessment, the Directors

have reviewed the operating cash flow

forecast prepared by the Investment

Adviser under base case and downside

scenarios. The forecast highlights

that the Company is able to meet its

obligations without running into any

liquidity shortages, noting it also has

access to a partially undrawn RCF (EUR

68.2 million available) and other sources

of liquidity, should the need arise. In

addition, the Directors are satisfied that

any refinancing risks associated with the

RCF are low. The Company’s portfolio

benefits from contracted revenues in

the form of Power Purchase Agreements

and Government-regulated tariffs,

providing significant visibility of income

and downside protection, with 52.0%

of revenue contracted over the next

five years. For example, the Company

expects its 2024 target dividend to be

fully covered even if forecast power

prices decline by 37%.

Other InformationFinancialsGovernanceStrategic Report

Aquila European Renewables Plc|Annual Report 2023

2. Basis of Preparation

continued

Going Concern

continued

As discussed in the Chairman’s

Statement above, the Company

announced on 14 December 2023 that,

together with its advisers, it continues

to explore a number of different

initiatives to address the issues facing

the sector and to secure recognition,

in the Company’s share price, of the

real underlying value of the Company’s

portfolio. On 26 February 2024,

following the receipt and review of a

number of indications of interest in a

section 110 combination, the Board

instructed its advisers, Deutsche Numis,

to commence a process of mutual

due diligence with multiple interested

parties. The engagement with parties

interested in a section 110 combination

with the Company is still ongoing and

therefore there can be no certainty that

this process will result in a combination

on terms which the Board considers to

be in the best interests of shareholders

as a whole. Any section 110 combination

would be subject to shareholder

approval.

On 30 May 2023, the Board announced

that shareholders should have a

further opportunity to vote on the

continuation of the Company during

the course of the financial year ending

31 December 2024, expected to be

around September 2024. With the

support of the Company’s brokers, the

Board has consulted with the Company’s

shareholders who have expressed their

high regard for the Investment Adviser

and the Company’s portfolio of assets,

although it is recognised that the

sector as a whole has faced challenges

during recent months as discounts have

widened and liquidity issues persist.

Shareholders have also raised concerns

about the ability for the Company to

grow in the current climate, given the

sustained discount in the share price

versus the NAV. As a result, the Directors

acknowledge that there is uncertainty as

to whether the continuation vote would

pass or fail.

If the continuation vote is not passed,

then according to the Company’s

Articles, the Directors shall within six

months put proposals to shareholders

for the reconstruction, reorganisation or

liquidation of the Company.

Any such proposal would have to take

into consideration the outcome (if any)

of the section 110 process, which was

announced on 26 February 2024. As a

result, the Directors believe that, in the

absence of a section 110 transaction

taking place, the Directors expect that

if the continuation vote is not passed,

formulating and implementing any such

proposals would require the Company

to continue operations for a period

of at least 12 months from the date of

approval of the Company’s financial

statements.

Accordingly, while the Directors

recognise that these conditions indicate

the existence of material uncertainty

which may cast significant doubt about

the 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 Company should be

prepared on a going concern basis.

The financial statements do not include

the adjustments that would result if the

Company were unable to continue on a

going concern basis.

Critical Accounting Judgements,

Estimates and Assumptions

The preparation of financial statements

in accordance with IFRS requires

management to make judgements,

estimates and assumptions in certain

circumstances that affect reported

amounts. These are judgements,

estimates and assumptions that have

a significant risk of causing a material

adjustment to the carrying amounts of

assets and liabilities.

Key Judgements

As disclosed above, the Directors

have concluded that the Company

and HoldCo meet the definition of an

investment entity, as defined in IFRS

10. This conclusion involved a degree

of judgement and assessment as to

whether the Company met the criteria

outlined in IFRS 10.

The Company classifies its investments

based on its business model for

managing those financial assets and the

contractual cash flow characteristics of

the financial assets.

The portfolio of assets is managed, and

performance is evaluated, on a fair value

basis.

The Company is primarily focused

on fair value information and uses

that information to assess the assets’

performance and to make decisions.

Thecontractual cash flows of the

Company’s shareholder loans are solely

principal and interest. However these

securities are not held for the purpose

of collecting contractual cash flows.

The collection of contractual cash

flows is only incidental to achieving the

Company’s business model’s objective.

Consequently, all investments are

measured at fair value through profit

or loss. The Company considers the

equity and shareholder loan investments

to share the same investment

characteristics and risks, and they are

therefore treated as a single unit of

account for fair value purposes (IFRS 13)

and a single class for financial instrument

disclosure purposes (IFRS 9).

As a result, the evaluation of the

performance of the Company’s

investments is done for the entire

portfolio on a fair value basis, as is

the reporting to the key management

personnel and investors. In this case, all

equity and shareholder loan investments

form part of the same portfolio, for

which the performance is evaluated on

a fair value basis together and reported

to the key management personnel in its

entirety.

Uncertainty: Investments at Fair

Value Through Profit or Loss

The key assumptions that have a

significant impact on the carrying

value of the Company’s underlying

investments in SPVs are the discount

rates, useful lives of the assets, the rate

of inflation, the price at which the power

and associated benefits can be sold,

the amount of electricity the assets are

expected to produce, and operating

costs of the SPVs.

The discount rates are subjective and

therefore it is feasible that a reasonable

alternative assumption may be used,

resulting in a different value. The

discount rates applied to the cash

flows are reviewed annually by the

Investment Adviser to ensure they are

at the appropriate level. The Investment

Adviser will take into consideration

market transactions, which are of similar

nature, when considering changes to the

discount rates used.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

Aquila European Renewables Plc|Annual Report 2023

The weighted average discount rate

applied in the December 2023 valuation

was 7.2% (2022: 7.2%).

Useful lives are based on the Investment

Adviser’s estimates of the period over

which the assets will generate revenue,

which are periodically reviewed

forcontinued appropriateness.

The assumption used for the useful life

of the wind assets is 25 to 30 years, and

solar PV is 40 years. The actual useful

life may be a shorter or longer period,

depending on the actual operating

conditions experienced by the asset.

Theoperating lives of hydropower

assets are estimated in accordance

withtheir expected concession terms.

The price at which the output from the

generating assets is sold is a factor

of both wholesale electricity prices

and the revenue received from the

government support regime. Future

power prices are estimated using

external third-party forecasts, which

take the form of specialist consultancy

reports. The future power price

assumptions are reviewed as and when

these forecasts are updated. There is an

inherent uncertainty in future wholesale

electricity price projection. Long-term

power price forecasts are provided by

leading market consultants, updated

quarterly.

Specifically commissioned external

reports are used to estimate the

expected electrical output from the

wind and hydropower farm and solar

PV assets, taking into account the

expected average wind speed at each

location and generation data from

historical operation. The actual electrical

output may differ considerably from

that estimated in such a report, mainly

due to the variability of actual wind

to that modelled in any one period.

Assumptions on electrical output will

be reviewed only if there is good reason

to suggest there has been a material

change in this expectation.

The P50 level of output is the estimated

annual amount of electricity generation

(in MW) that has a 50.0% probability of

being exceeded, both in any single year

and over the long term, and a 50.0%

probability of being underachieved.

Climate risks can also affect the carrying

value of the Company’s underlying

investments. The Company relies (via the

HoldCo or relevant SPVs) on third-party

technical advisers to consider the impact

of climate risks when assessing P50

production forecasts.

The operating costs of the SPV

companies are frequently partly or

wholly subject to inflation, and an

assumption is made that inflation will

increase at a long-term rate. The SPVs’

valuation assumes long-term inflation

of 2.0% (2022: 2.0%). The impact of

physical and transition risks associated

with climate change is assessed on a

project-by-project basis and factored

into the underlying cash flows as

appropriate.

The estimates and assumptions that

have a significant risk of causing a

material adjustment to the carrying

value of assets and liabilities are those

used to determine the fair value of the

investments as disclosed in note 4 to the

financial statements under sensitivities.

New Standards, Interpretations

and Amendments Adopted 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 Company.

New Standards and

Amendments Issued but

notyetEffective

The relevant new and amended

standards and interpretations that are

issued, but not yet effective, up to the

date of issuance of the Company’s

financial statements are disclosed below.

These standards are not expected to

have a material impact on the Company

in future reporting periods, or 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. The amendments

also specify that classification is

unaffected by expectations about

whether an entity will exercise its right

to defer settlement of a liability, and

they explain that rights are in existence

if covenants are complied with at the

end of the reporting period. They also

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.

Other InformationFinancialsGovernanceStrategic Report

Aquila European Renewables Plc|Annual Report 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

2. Basis of Preparation

continued

New Standards and

Amendments Issued but not

yet Effective continued

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, or 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 Company’s financial assets

principally comprise of investments held

at fair value through profit (shareholder

loan and equity investments) cash and

trade and other receivables.

The Company’s shareholder loan and

equity investments in HoldCo are held

at fair value through profit or loss. Gains

or losses resulting from the movements

in fair value are recognised in the

Company’s Statement of Comprehensive

Income at each measurement point.

Where there is sufficient value within

HoldCo, the Company’s shareholder

loans are fair valued at their redeemable

amounts and the residual fair value

reflected within the Company’s equity

investments.

Trade and other receivables are

initially recognised at fair value and

subsequently measured at amortised

cost using the effective interest rate

method.

Financial Liabilities

The Company’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.

Recognition, Derecognition

andMeasurement

Financial assets and financial liabilities

are recognised in the Company’s

Statement of Financial Position when

the Company becomes a party to the

contractual provisions of the instrument.

Financial assets and financial liabilities

are initially measured at fair value.

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 fair 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 derecognised when the Company has

extinguished its contractual obligations,

it expires or is cancelled. Financial assets

are derecognised when the rights to

receive cash flows from the investments

have expired or the Company has

transferred substantially all risks and

rewards of ownership.

Subsequent to initial recognition,

financial assets at fair value through

profit or loss are measured at fair value.

Gains and losses resulting from the

movement in fair value are recognised

in the Statement of Comprehensive

Income. Financial liabilities are

subsequently measured at amortised

cost using the effective interest rate

method.

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 an approval as an

investment trust by HMRC. Current tax is

the expected tax payable on the taxable

income for the period, using tax rates

that have been enacted or substantively

enacted at the date of the Statement of

Financial Position.

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 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 utilised.

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 realised. Deferred tax is

charged or credited to the Statement of

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.

Deferred tax assets and liabilities are

offset when there is a legally enforceable

right to set off tax assets against tax

liabilities. They are also offset when

they relate to income taxes levied by

the same taxation authority and the

Company intends to settle its current tax

assets and liabilities on a net basis.

Aquila European Renewables Plc|Annual Report 2023

Segmental Reporting

The Chief Operating Decision Maker

(“CODM”), which is the Board, is of the

opinion that the Company is engaged

in a single segment of business, being

investment in renewable energy

infrastructure assets to generate

investment returns whilst preserving

capital. The financial information used

by the CODM to manage the Company

presents the business as a single

segment.

Income

Income includes investment income

from financial assets at fair value through

profit or loss and finance income.

Investment income from financial

assets at fair value through profit or

loss is recognised in the Statement

of Comprehensive Income within

investment income when the Company’s

right to receive income is established.

Interest earned on shareholder loans is

recognised on an accruals basis.

Dividend income is recognised when

the right to receive it is established,

and is reflected in the Statement of

Comprehensive Income as investment

income.

Expenses

All expenses are accounted for on an

accruals basis. In respect of the analysis

between revenue and capital items

presented within the Statement of

Comprehensive Income, all expenses

are presented as revenue as they are

directly attributable to the operations of

the Company.

Payment of Investment

AdvisoryFees in Shares

During the first two years of its

appointment, the Investment Adviser

has undertaken to apply its fee (net

of any applicable tax) in subscribing

for, or acquiring, Ordinary Shares and,

as announced on 6 August 2021, this

arrangement was extended by an

additional two years to 30 June 2023.

If the Ordinary Shares are trading at

a premium to the prevailing NAV, the

Company will issue new Ordinary Shares

to the Investment Adviser. If, however,

the Ordinary Shares are trading at a

discount to the prevailing NAV at the

relevant time, no new Ordinary Shares

will be issued by the Company and

instead the Company will instruct its

broker to acquire Ordinary Shares to

the value of the fee due in the relevant

period. This arrangement has now

lapsed and the Board has decided

not to extend it further. Where shares

are trading at a premium to NAV,

Ordinary Shares are issued in lieu of the

Investment Adviser’s fees; and the fair

value of the investment advisory services

received in exchange for shares is

recognised as an expense at the time at

which the investment advisory fees are

earned, with a corresponding increase in

equity. The fair value of the investment

advisory services is calculated by

reference to the definition of investment

advisory fees in the Investment Advisory

Agreement. During the year, no shares

were issued to the Investment Adviser in

lieu of its fees (2022: 1,286,293 Ordinary

Shares were issued).

Where the shares have been trading at

adiscount to NAV, the Board will instruct

the Company’s brokers to purchase

shares in the market for the Investment

Adviser in lieu of its fees. Fees paid

by way of a purchase of shares will be

treated as a capital expense at the time

of purchase. During the year, a total

of 2,503,736 Ordinary Shares were

purchased on behalf of the Investment

Adviser in lieu of its fees (2022:

1,788,559 Ordinary Shares).

The Board has decided not to extend

this agreement further.

Further details on the payment of

investment advisory fees in shares

are disclosed in note 6 to the financial

statements.

Foreign Currency

Transactions denominated in foreign

currencies are translated into euros

at actual exchange rates as at the

date of the transaction. Monetary

assets and liabilities denominated in

foreign currencies at the period end

are reported at the rates of exchange

prevailing at the period 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

Statement of Comprehensive Income

as appropriate. Foreign exchange

movements on investments are included

in the Statement of Comprehensive

Income within gains on investments.

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.

Share Capital, Special Reserve

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.

Other InformationFinancialsGovernanceStrategic Report

Aquila European Renewables Plc|Annual Report 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

4. Investments Held at Fair Value Through Profit or Loss

As at 31 December 2022

As at 31 December 2023

Investments at fair value

through profit or loss through profit or loss

(EUR ’000)

(a) Summary of valuation

Analysis of closing balance:

Investments held at fair value through profit or loss 372,403 428,641

Total investments 372,403 428,641

(b) Movements during the year

Opening balance of investments, at cost 362,978 293,068

Purchases at cost — 71,369

Repayments during the year (14,563) (1,459)

Cost of investments 348,415 362,978

Revaluation of investments to fair value:

Unrealised movement in fair value of investments 23,988 65,663

Balance of capital reserve – investments held

23,988

65,663

Fair value of investments 372,403 428,641

Movement in unrealised revaluation of investments held (41,675) 41,778

(Loss)/gains on investments (41,675) 41,778

The fair value of the Company’s equity and the shareholder loans investments in HoldCo are determined by the underlying fair

values of the SPV investments, which are not traded and contain unobservable inputs. As explained in note 2, the Company has

made a judgement to fair value of both the equity and shareholder loan investments together. As such, the Company’s equity

and the shareholder loan investments in HoldCo have been classified as Level 3 in the fair value hierarchy.

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 Company’s investments held at fair value is detailed in the table below:

As at 31 December 2023 As at 31 December 2022

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

(EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000)

Investments at

fair value through

profit or loss — — 372,403 372,403 — — 428,641 428,641

— — 372,403 372,403 — — 428,641 428,641

Aquila European Renewables Plc|Annual Report 2023

Due to the nature of the investments, they are always expected to be classified as Level 3. There have been no transfers between

levels during the year ended 31 December 2023.

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

Year ended

31 December

2023 20

(EUR ’000)

Opening balance 428,641 316,953

Additions during the year — 71,369

Repayments during the year (14,563) (1,459)

Unrealised (losses)/gains on investments adjustments (41,675) 41,778

Closing balance 372,403 428,641

Valuation Methodology

The Company owns 100% of its subsidiary Tesseract Holdings Limited. The Company meets the definition of an investment entity

as described by IFRS 10; as such, its investment in the HoldCo is valued at fair value. HoldCo’s cash, working capital balances and

fair value of investments are included in calculating fair value of the HoldCo.

The Company acquired underlying investments in SPVs through its investment in the HoldCo.

The Investment Adviser has carried out fair market valuations of the SPV investments 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.

All SPV investments are held at fair value through profit or loss and are valued using the IFRS 13 framework for fair value

measurement. The following economic assumptions were used in the valuation of the SPVs.

Valuation Assumptions

As at 31 December 2023

Discount rates The discount rate used in the valuations is calculated 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 captured power price forecasts from leading market analysts.

Theforecasts are independently sourced from providers with coverage in almost all European

markets, as well as providers with regional expertise. The approach applied to all asset classes

(wind energy, solar PV and hydropower) remains unchanged with the first two using a blend of

twopower price curve providers and the third using a blend of three power price curve providers.

Energy yield/load factors Estimates are based on third-party energy yield assessments, which consider historic production

data (where applicable) and other relevant factors.

Inflation rates Long-term inflation is based on the monetary policy of the European Central Bank. Short-term

inflation assumptions are based on the first three years being sourced from Refinitiv and an

interpolation for another two years to the long-term rate.

Asset life Life of 25 to 30 years for onshore wind energy and 40 years for solar PVisassumed. Theoperating

lives of hydropower assets are estimated in accordance with their expected concession terms.

Operating expenses Operating expenses are primarily based on respective contracts and, where not contracted,

onthe assessment of a technical adviser.

Taxation rates Underlying country-specific tax rates are derived from due diligence reports from leading tax

consulting firms.

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsGovernanceStrategic Report

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

4. Investments Held at Fair Value Through Profit or Loss continued

Valuation Sensitivities

The fair value of the Company’s investment in HoldCo is ultimately determined by the underlying fair values of the SPV

investments. As such, sensitivity analysis is produced to show the impact of changes in key assumptions adopted to arrive

attheSPV valuation.

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 in the SPVs remains static throughout the modelled life.

The NAV per share impacts from each sensitivity are shown below:

(i) Discount Rates

The DCF valuation of the SPV investments represents the largest component of the NAV of the Company 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 SPV valuation is 7.2% at 31 December 2023. An increase or

decrease in this rate by 0.5% at project level has the following effect on valuation:

NAV per -0.5% Total NAV +0.5% NAV per

share impact change value change share impact

Discount rate in (EUR cents) (EUR ’000) (EUR ’000) (EUR ’000) in (EUR cents)

Valuation as of 31 December 2023 5.7 394,093 372,541 352,697 (5.2)

(ii) 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 SPV down by 10% and up by 10% from the base case assumptions for

each year throughout the operating life of the SPV.

Note the Company intends to renew power price hedges (e.g. in the form of PPAs or other mechanisms) before the existing

contracts (PPAs and Government regulated tariffs) expire. This rolling hedge strategy is not reflected in the sensitivities

illustrated above. When renewing the existing hedges, the Company’s power price exposure and, therefore, its sensitivity

towards power prices, decreases.

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

NAV per Total NAV NAV per

share impact -10.0% value +10.0% share impact

Power price (EUR cents) (EUR ’000) (EUR ’000) (EUR ’000) (EUR cents)

Valuation as of 31 December 2023 (11.3) 329,931 372,541 415,083 11.2

(iii) Energy Yield

The base case assumes a ‘P50’ level of output. The P50 output is the estimated annual amount of electricity generation (in MW)

that has a 50% probability of being exceeded both in any single year and over the long term and a 50% probability of being

underachieved. Hence the P50 is the expected level of generation over the long term. The sensitivity illustrates the effect of

assuming ‘P90 10 years’ (a downside case) and ‘P10 10 years’ (an upside case) energy production scenarios. A P90 10 years

downside case assumes the average annual level of electricity generation that has a 90% probability of being exceeded over a

ten-year period. A P10 10 years upside case assumes the average annual level of electricity generation that has a 10% probability

of being exceeded over a ten-year period. This means that the SPV aggregate production outcome for any given ten-year period

would be expected to fall somewhere between these P90 and P10 levels with an 80% confidence level, with a 10% probability

of it falling below that range of outcomes and a 10% probability of it exceeding that range. The sensitivity does not include

the portfolio effect which would reduce the variability because of the geographical diversification. The sensitivity is applied

throughout the next ten years.

Aquila European Renewables Plc|Annual Report 2023

The table below shows the sensitivity of the SPV value to changes in the energy yield applied to cash flows from project

companies in the SPV as per the terms P90, P50 and P10 explained above.

NAV per P90 Total NAV P10 NAV per

share impact 10 years value 10 years share impact

Energy yield (EUR cents) (EUR ’000) (EUR ’000) (EUR ’000) (EUR cents)

Valuation as of 31 December 2023 (7.9) 342,743 372,541 402,792 8.0

(iv) Inflation Rates

The projects’ income streams are principally a mix of Government regulated tariffs, fixed-price PPAs and merchant revenues.

Government regulated tariffs and fixed-price PPAs tend not to be inflation linked, whilst merchant revenues are generally

subject to inflation. The current contractual life of Government regulated tariffs and fixed-price PPAs are shorter than their

respective asset lives, meaning, from a valuation perspective, the assets are more exposed to merchant revenues in the late

asset life. Asdescribed earlier, the Company intends to renew power price hedges (e.g. in the form of PPAs or other mechanisms)

before the existing contracts (PPAs and Government regulated tariffs) expire. This rolling hedge strategy is not reflected in the

sensitivities illustrated above. The projects’ management and maintenance expenses typically move with inflation; however,

debt payments are fixed. This results in the SPV returns and valuation being positively correlated to inflation. The SPV’s valuation

assumes long-term inflation of 2.0% p.a.

The sensitivity illustrates the effect of a 0.5% decrease and a 0.5% increase from the assumed annual inflation rates in the

financial model for each year throughout the operating life of the SPV.

NAV per Total NAV NAV per

share impact -0.5% value +0.5% share impact

Inflation rates (EUR cents) (EUR ’000) (EUR ’000) (EUR ’000) (EUR cents)

Valuation as of 31 December 2023 (4.6) 355,169 372,541 391,084 4.9

(v) Asset Life

In general, an operating life of 25 to 30 years for onshore wind energy and 40 years for solar PV is assumed. The operating lives

of hydropower assets are estimated in accordance with their concession term.

The sensitivity below shows the valuation impact from a one-year adjustment to the asset life across the portfolio.

NAV per Total NAV per

share impact -1 year NAV Value +1 year share impact

Asset life (EUR cents) (EUR ’000) (EUR ’000) (EUR ’000) (EUR cents)

Valuation as of 31 December 2023 (1.6) 366,336 372,541 378,100 1.5

(vi) Operating Expenses

The sensitivity shows the effect of a 10.0% decrease and a 10.0% increase to the base case for annual operating costs for the

SPV, in each case assuming that the change to the base case for operating costs occurs with effect from 1 January 2024 and that

change is applied for the remaining life of the assets.

An increase or decrease in operating expenses by 10% at SPV level has the following effect on valuation:

NAV per Total NAV NAV per

share impact -10.0% value +10.0% share impact

Operating expenses (EUR cents) (EUR ’000) (EUR ’000) (EUR ’000) (EUR cents)

Valuation as of 31 December 2023 4.6 389,973 372,541 355,121 (4.6)

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsGovernanceStrategic Report

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

5. Income from Investments

For the year ended

31 December 2023 31 December 2022

Income from investments

(EUR ’000)

Interest income from shareholder loans 15,257 15,929

Dividend income 1,200 1,200

Bank interest income 55

—

Total income 16,512 17,129

6. Investment Advisory Fees

For the year ended 31 December 2022

For the year ended

31 December 2

023

Revenue Capital Total Revenue Capital Total

(EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000)

Investment advisory fees 2,896 — 2,896 3,150 — 3,150

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

a) 0.75% per annum of NAV (plus VAT) of the Company up to EUR 300 million;

b) 0.65% per annum of NAV (plus VAT) of the Company between EUR 300 million and EUR 500 million; and

c) 0.55% per annum of NAV (plus VAT) of the Company above EUR 500 million.

During the first two years of its appointment, the Investment Adviser has undertaken to apply its fee (net of any applicable tax)

in subscribing for, or acquiring, Ordinary Shares. If the Ordinary Shares are trading at a premium to the prevailing NAV, the

Company will issue new Ordinary Shares to the Investment Adviser. If, however, the Ordinary Shares are trading at a discount to

the prevailing NAV at the relevant time, no new Ordinary Shares will be issued by the Company and instead the Company will

instruct its broker to acquire Ordinary Shares to the value of the fee due in respect of the relevant period. The current Investment

Adviser fee arrangement with Aquila Capital Investmentgesellschaft allowed the Investment Adviser fee to be fully paid in the

shares of the Company until 30 June 2023.

The Investment Adviser is also entitled to be reimbursed for certain expenses under the Investment Advisory Agreement. These

include out-of-pocket expenses properly incurred by the Investment Adviser in providing services, including transactional,

organisational, operating and/or travel expenses.

Share-Based Payments

The Company settled investment advisory fees by issuing or purchasing Ordinary Shares. The Company has issued and

purchased the following shares to settle investment advisory fees in respect of the year under review:

Fair value

Investment of issue/

advisory fees purchase price Number of Date of Issued/

In respect of the year ended 31 December 2023 (EUR) (cents) shares transaction Purchased

31 March 2023 767,841 98.86 771,695 18 May 2023 Purchased

30 June 2023 728,290 87.00 831,701 7 August 2023 Purchased

Fair value

Investment of issue/

advisory fees purchase price Number of Date of Issued/

In respect of the year ended 31 December 2022 (EUR) (cents) shares transaction Purchased

31 March 2022 566,465 102.11 554,773 1 June 2022 Issued

31 March 2022 183,233 103.76 176,300 1 June 2022 Purchased

30 June 2022 772,650 101.00 760,053 8 August 2022 Purchased

30 September 2022 812,545 94.73 852,206 9 November 2022 Purchased

31 December 2022 810,308 90.00 900,340 3 February 2023 Purchased

100

Aquila European Renewables Plc|Annual Report 2023

7. Other Expenses

For the year ended

December 2

023 For the year ended 31 December 2022

Revenue Capital Total Revenue Capital

Total

(EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000)

Secretary and administrator fees 218 — 218 254 — 254

Tax compliance 10 — 10 132 — 132

Directors’ fees 181 — 181 169 — 169

Directors’ other employment costs 35 — 35 12 — 12

Broker retainer 68 — 68 87 — 87

Audit fees – statutory

1, 2

385 —

352 — 352

AIFM fees 122 — 122 147 — 147

Registrar’s fees 16 — 16 23 — 23

Marketing fees 106 — 106 67 — 67

FCA and listing fees 215 — 215 61 — 61

Legal fees 202 — 202 162 — 162

ESG rating fees 38 — 38 33 — 33

AIC and other regulatory fees 44 — 44 30 — 30

Other expenses 174 — 174 36 — 36

Total expenses 1,814 — 1,814 1,565 — 1,565

8. Finance Costs

For the year ended 31 December 2023 For the year ended 31 December 2022

Revenue Capital Total Revenue Capital

otal

(EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000)

Interest charges — — — 72 — 72

Bank charges 1 1 2 3 — 3

Total 1 1 2 75 — 75

1. There are no non-audit services in relation to the current year or prior year.

2. The GBP equivalent of the statutory audit fees was GBP 333,700 (2022: GBP 295,200) including VAT of GBP 55,600 (2022: GBP 49,200).

101

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsGovernanceStrategic Report

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

9. Taxation

(a) Analysis of Tax Charge in the Year

For the year ended 31 December 2023 For the year ended 31 December 2022

Revenue Capital Total Revenue Capital Total

(EUR ’000) (EUR ’000) (EUR ’000)

Total tax charge for the year (see note 9(b)) — — — — —

—

(b) Factors Affecting Total Tax Charge for the Year

The effective UK corporation tax rate applicable to the Company 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 2022For the year ended

31 December 2

023

Revenue Capital Total Revenue Capital

Total

(EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000) (EUR ’000)

Profit/(loss) on ordinary activities

before taxation 11,801 (41,699) (29,898) 12,339 41,765 54,104

Corporation tax at 23.52% (2022: 19%) 2,776 (9,808) (7,032) 2,344 7,935 10,279

Effects of:

(Loss)/gain on investments held

at fair value not (taxable)/allowable — 9,802 9,802 — (7,937) (7,937)

Foreign exchange loss not allowable — 6 6 — 2 2

Dividend income not taxable (282) — (282) (228) — (228)

Expenditure not deductible for tax purposes 66 — 66 13 — 13

Movement in management expenses

not utilised/deferred tax not recognised (28) — (28) 19 — 19

Impact of tax-deductible interest distributions (2,532) — (2,532) (2,148) — (2,148)

Total tax charge for the year — — —

— — —

Investment companies that have been approved by HM Revenue & Customs under section 1158 of the Corporation Tax Act 2010

are exempt from tax on capital gains. Due to the 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 unrelieved excess management expenses of EUR 1,157,548 (2022: EUR 1,273,191). It is unlikely that the

Company will generate sufficient taxable profits in the future to utilise these expenses and therefore no deferred tax asset

has been recognised. The unrecognised deferred tax asset calculated using a tax rate of 25% (2022: 25%) amounts to EUR

289,387 (2022: EUR 318,298). The March 2021 Budget announced an increase to the main rate of corporation tax to 25% from

1April2023.

102

Aquila European Renewables Plc|Annual Report 2023

10. Return per Ordinary Share

For the For the

year ended year ended

31 December

Income from investments

2023

2022

Revenue return after taxation (EUR ’000) 11,801 12,339

Capital return after taxation (EUR ’000) (41,699) 41,765

Total net return (EUR ’000) (29,898) 54,104

Weighted average number of Ordinary Shares 388,998,468 407,926 ,535

Number of shares

For the For the

year ended year ended

31 December

Weighted average number of shares used as the denominator

2023

2022

Weighted average number of Ordinary Shares used

as the denominator in calculating basic earnings per share 388,998,468 407,926 ,535

11. Trade and Other Receivables

As at

31 December

2023

2022

(EUR ’000)

Interest due from shareholder loans — 5,542

Pre-paid expenses

Total 96 5,630

12. Trade and Other Payables

As at

31 December

2023

2022

(EUR ’000)

Accrued expenses

1,383

1,291

Intercompany payable — 645

Deferred consideration payable 107 578

Total 1,490 2,514

103

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsGovernanceStrategic Report

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

13. Share Capital

As at 31 December 2023 As at 31 December 2022

No. of shares (EUR ’000) No. of shares (EUR ’000)

Allotted, issued and fully paid:

Ordinary Shares of 1 cent each (‘Ordinary Shares’) 378,122,130 3,781 408,225,705 4,082

Total 378,122,130 3,781 408,225,705 4,082

The Ordinary Shares shall carry the right to receive the profits of the Company available for distribution and determined to be

distributed by way of interim or final dividends at such times as the Directors may determine in accordance with the Articles of

the Company. The holders of Ordinary Shares have the right to receive notice of, and to attend and vote at, General Meetings

ofthe Company.

During the year, the Company did not issue any new Ordinary Shares (2022: 1,286,293 Ordinary Shares with gross aggregate

proceeds of EUR1.33million).

During the year, the Company purchased for treasury a total of 30,103,575 Ordinary Shares at an aggregate cost of

EUR27,964,000 (including stamp duty and other fees). There were no shares purchased for treasury in the prior year.

Shares in issue Shares bought Shares in issue

at the beginning Shares back and held at the end

For the year ended 31 December 2023 of the year subscribed in treasury of the year

Ordinary Shares 408,225,705 — 30,103,575 378,122,130

Shares in issue Shares in issue

at the beginning Shares Shares at the end

For the year ended 31 December 2022 of the year subscribed redeemed of the year

Ordinary Shares 406,939,412 1,286,293 — 408,225,705

During the year to 31 December 2022, the Company issued 1,286,293 new Ordinary Shares with gross proceeds of EUR 1.33

million, relating to the settlement of the Investment Advisers fees. The Company has not issued any further Ordinary Shares to

the Company’s Investment Adviser since the agreement ended on 30 June 2023 (note 6).

14. Special Reserve

As indicated in the Company’s prospectus dated 10 May 2019, following admission of the Company’s Ordinary Shares to

trading on the London Stock Exchange, the Directors applied to the Court and obtained a judgment on 30 July 2019 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 EUR 149,675,608.

15. Net Assets per Ordinary Share

Net assets per Ordinary Share as at 31 December 2023 are based on EUR 372,541,000 (2022: EUR 451,650,000) of net assets of

the Company attributable to the 378,122,130 (2022: 408,225,705) Ordinary Shares in issue as at 31 December 2023.

16. Dividend Paid

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

Cents per Total Cents per Total

Total dividends paid in the year Ordinary Share (EUR ’000) Ordinary Share (EUR ’000)

31 December 2022 interim – paid 17 March 2023 (2022: 11 March 2022) 1.3125c 5,334 1.25c 5,096

31 March 2023 interim – paid 26 May 2023 (2022: 17 June 2022) 1.3775c 5,376 1.3125c 5,351

30 June 2023 interim – paid 18 August 2023 (2022: 2 September 2022) 1.3775c 5,310 1.3125c 5,353

30 September 2023 interim – Paid 17 November 2023 (2022: 2 December 2022) 1.3775c 5,227 1.3125c 5,365

Total 5.4450c 21,247 5.1875c 21,165

104

Aquila European Renewables Plc|Annual Report 2023

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

nts per Total Cents per Total

Total dividends declared in the year Ordinary Share (EUR ’000) Ordinary Share (EUR ’000)

31 March 2023 interim – paid 26 May 2023 (2022: 17 June 2022) 1.3775c 5,376 1.3125c 5,351

30 June 2023 interim – paid 18 August 2023 (2022: 2 September 2022) 1.3775c 5,310 1.3125c 5,353

30 September 2023 interim – paid 17 November 2023 (2022: 2 December 2022) 1.3775c 5,227 1.3125c 5,365

31 December 2023 interim – paid 18 March 2024 (2022: 17 March 2023)

1.3775c 5,211 1.3125c 5,334

Total 5.5100c 21,124 5.2500c 21,403

17. 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 its operations. The Company’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 is summarised below.

Market Risk

The value of the investments will be a function of the discounted value of their expected future cash flows, and as such will vary

with, inter alia, movements in interest rates, market prices and the competition for such assets. The Investment Adviser carries

out a full valuation on a quarterly basis, which takes into account market risks. The sensitivity of the investment valuation due to

market risk is shown in note 4 on pages 96 to 99.

(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 Company’s financial assets and liabilities are denominated in euros and substantially all of its revenues and

expenses are in euros. The Company is not considered to be materially exposed to foreign-currency risk.

(ii) Interest Rate Risk

The Company’s interest rate risk on interest-bearing financial assets is limited to interest earned on shareholder loans. The Board

considers that, as shareholder loan bear interest at a fixed rate, they do not carry any interest-rate risk.

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

Interest Non-interest

bearing bearing Total

Assets (EUR ‘000) (EUR ‘000) (EUR ‘000)

Cash and cash equivalents — 1,532 1,532

Trade and other receivables — 96 96

Investments at fair value through profit or loss 233,888 138,515 372,403

Total assets 233,888 140,143 374,031

Liabilities

Creditors — (1,490) (1,490)

Total liabilities — (1,490) (1,490)

105

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsGovernanceStrategic Report

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

17. Financial Risk Management continued

Market Risk continued

(ii) Interest Rate Risk continued

The Company’s interest and non-interest-bearing assets and liabilities as at 31 December 2022 are summarised below:

Interest Non-interest

bearing bearing Total

Assets (EUR ‘000) (EUR ‘000) (EUR ‘000)

Cash and cash equivalents — 19,893 19,893

Trade and other receivables — 5,630 5,630

Investments at fair value through profit or loss 248,451 180,190 428,641

Total assets 248,451 205,713 454,164

Liabilities

Creditors — (2,514) (2,514)

Total liabilities — (2,514) (2,514)

(iii) Price Risk

Price risk is defined as the risk that the fair value of a financial instrument held by the Company will fluctuate. Investments are

measured at fair value through profit or loss. As of 31 December 2023, the Company held investments with an aggregate fair

value of EUR 372,403,000 (2022: EUR 428,641,000). All other things being equal, the effect of a 10% increase or decrease

in the share prices of the investments held at the year end would have been an increase or decrease of EUR 37,240,000

(2022:EUR42,864,000) in the profit after taxation for the year ended 31 December 2023 and the Company’s net assets at

31December 2023. The sensitivity of the investment valuation due to price risk is shown further in note 4 on pages 96 to 99.

Credit Risk

Credit risk is the risk of loss due to the failure of a borrower or counterparty to fulfil its contractual obligations. The Company is

exposed to credit risk in respect of trade and other receivables, cash at bank and shareholder loan investments. The Company’s

credit-risk exposure is minimised by dealing with financial institutions with investment-grade credit ratings and making

shareholder loan investments which are equity in nature. The Company’s shareholder loan investments in HoldCo are secured by

underlying renewable investments and as such these shareholder loans are not exposed to credit risk. No balances are past due

or impaired.

As at

31 December

2023

2022

(EUR ’000)

Investments at fair value through profit or loss – shareholder loan investments 233,888 248,451

Trade and other receivables 96 5,630

Cash and cash equivalents 1,532 19,893

Total 235,516 273,974

In the table above, the value for investments at fair value through profit or loss relates to the face value of debt investments.

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

As at

31 December

2023

2022

ting

(EUR ’000)

Royal Bank of Scotland A–1/A+ 1,414 2,170

(S&P Rating)

EFG International AG-Daily liquid fund A (Fitch Rating) 115 15,183

Royal Bank of Scotland International A–1/A 3 2,540

(S&P Rating)

Total 1,532 19,893

1. Not included as a liability in the year ended 31 December 2023 financial statements.

106

Aquila European Renewables Plc|Annual Report 2023

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, repayment of the Company’s shareholder loans or further

investingactivities.

Financial assets and liabilities by maturity as at 31 December 2023 are shown below:

Less than

1 year 1-5 years 5+ years Total

(EUR ‘000) (EUR ‘000) (EUR ‘000) (EUR ‘000)

Trade and other payables (1,490) — — (1,490)

Total (1,490) — — (1,490)

Financial assets and liabilities by maturity as at 31 December 2022 are shown below:

Less than

1 year 1-5 years 5+ years Total

(EUR ‘000) (EUR ‘000) (EUR ‘000) (EUR ‘000)

Trade and other payables (2,514) — — (2,514)

Total (2,514) — — (2,514)

As at 31 December 2023, across the Company’s investment portfolio, there is approximately EUR 120.1 million

(2022:EUR131.2million) of non-recourse, project debt (on a proportional basis) at the SPV level. Additionally, the Company’s

subsidiary has a Revolving Credit Facility (“RCF”) with a limit of EUR 100.0 million. At year, EUR 80.4 million was drawn down from

the facility

(31 December 2022: EUR 34.9 million).

Capital and Risk Management

The Company’s capital management objectives are to ensure that the Company will be able to continue as a going concern while

maximising the return to equity shareholders.

In accordance with the Company’s investment policy, the Company’s principal use of cash (including the proceeds of the IPO and

placings) is to invest in a diversified portfolio of Renewable Energy Infrastructure Investments, as well as expenses related to the

share issue when they occur, ongoing operational expenses and payment of dividends and other distributions to shareholders in

accordance with the Company’s dividend policy.

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 share capital and reserves, which

areshown in the Statement of Financial Position, total EUR 372,541,000 (2022: EUR 451,650,000).

The Board, with the assistance of the Investment Adviser, monitors and reviews the Company’s capital on an ongoing basis.

Useof distributable reserves is disclosed in note 19.

Share capital represents the 1 cent nominal value of the issued share capital. The share premium account arose from the net

proceeds of new shares.

The capital reserve reflects any increases and decreases in the fair value of investments which have been recognised in the

capital column of the Statement of Comprehensive Income.

18. Transactions with the Investment Adviser and Related Party Transactions

AIFM fees for the year ended 31 December 2023 amount to EUR 122,000 (2022: EUR 147,000). As at 31 December 2023,

thefeeoutstanding to the AIFM was EUR 8,794 (2022: EUR 30,734).

The Company Secretary and Administrator fees for the year ended 31 December 2023 amount to EUR 218,000

(2022:EUR254,000) and the total fees paid to Apex Group amount to EUR 340,000 (2022: EUR 401,000).

Fees payable to the Investment Adviser are shown in the Statement of Comprehensive Income. As at 31 December 2023,

thefeeoutstanding to the Investment Adviser was EUR 685,971 (2022: EUR 815,581).

1. Includes Letters of Credit.

107

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsGovernanceStrategic Report

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

18. Transactions with the Investment Adviser and Related Party Transactions continued

Fees are payable to the Directors, effective from 1 April 2021, at an annual rate of EUR 75,000 to the Chairman, EUR 50,000

tothe Chair of the Audit and Risk Committee and EUR 43,000 to the other Directors. Directors’ fees paid during the year were

EUR169,000. With effect from 1 January 2023, fees were increased by 5% for Mr MacLellan, Dr Rodrigues and Mr MacRitchie.

Year ended

31 December 31 December

2022

(EUR)

Ian Nolan 75,000 75,000

David MacLellan 52,500 50,000

Kenneth MacRitchie

45,150

43,000

Patricia Rodrigues 45,150 43,000

Myrtle Dawes

15,040

—

During the year, the Company advanced shareholder loans to HoldCo of EUR 233,888,000 (2022: EUR 248,451,000). During the

year, the Company received total dividend income of EUR 1,200,000 (2022: EUR 1,200,000) and total shareholder loan interest

income of EUR 15,257,000 (2022: EUR 15,929,000) from the HoldCo.

Theaccruedinterest and shareholder loans outstanding at the year end were EUR 233,888,000 (2022: EUR 253,993,000).

The Dir

ectors had the following shareholdings in t

he Company, a

ll of which we

re beneficially o

wned.

dinary Shares Ordinary Shares

31 December

2023

2022

Ian Nolan 150,000 100,000

David MacLellan 125,000 75,000

Kenneth MacRitchie 50,000 50,000

Patricia Rodrigues 50,000 50,000

Myrtle Dawes — —

19. 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 of EUR 1,180,000 as at 31 December 2023 (2022: EUR 1,225,000).

20. Unconsolidated Subsidiaries, Joint Venture and Associate

The following tables show subsidiaries, the joint venture and the associate of the Company. As the Company is regarded as

an investment entity, as referred to in note 2, these subsidiaries have not been consolidated in the preparation of the financial

statements.

Profit/(loss) Profit/(loss)

for the year for the year Total assets Total assets

ended

ended balances as at balances as at

Effective

31 December

31 December 31 December 31 December

Subsidiary entity ownership 2022 2023 2022

Name and registered address %

Country of 2023

Investment incorporation (EUR million)

(EUR million) (EUR million) (EUR million)

Tesseract Holdings Limited 100.0 HoldCo United (41.7) 43.0 447.6 458.5

Leaf B, 20th Floor subsidiary Kingdom

Tower 42 entity, owns

Old Broad Street underlying

London EC2N 1HQ SPV

investments

1. Myrtle Dawes was appointed to the Board on 1 September 2023.

108

Aquila European Renewables Plc|Annual Report 2023

The following table shows the investments held via SPVs which are held by Tesseract Holdings Limited, the Company’s wholly

owned subsidiary.

Pro

fit/(loss)

Profit/(loss)

for the year for the year Total assets Total assets

ended

ended balances as at balances as at

Effective 31 December 31 December 31 December 31 December

Subsidiary entity ownership Country of 2023 2022 2023

Name and registered address % Investment incorporation (EUR million) (EUR million) (EUR million) (EUR million)

Holmen II Wind Park ApS 100.0 Subsidiary Denmark 1.5 4.3 23.6 27.2

Københavnsvej 81 entity, owns

4000 Roskilde investment

Denmark in Holmen II

Aalto Wind No 2 Ltd. Oy 100.0 Subsidiary Finland (0.0) (0.0) 45.4 53.0

c/o Intertrust (Finland) Oy entity, owns

Bulevardi 1, 6th floor investment

FI-00100 Helsinki, Finland in Olhava

Prettysource Lda 100.0 Subsidiary Portugal 0.0 0.1 4.1 4.2

Avenida Fontes Pereira entity, owns

de Melo, n.º 14 investment

11.º floor, 1050 121 Lisbon in Benfica III

Astros Irreverentes Unipessoal Lda 100.0 Subsidiary Portugal 0.0 0.1 4.1 4.2

Avenida Fontes Pereira entity, owns

de Melo, n.º 14 investment

11.º floor, 1050 121 Lisbon in Benfica III

Contrate o Sol Unipessoal Lda 100.0 Subsidiary Portugal 0.0 0.2 2.1 2.1

Rua Filipe Folque entity, owns

no. 10J, 2 Dto, 1050-113 investment

Lisbon in Benfica III

Argeo Solar S.L. 100.0 Subsidiary Spain (2.2) (1.7) 37.2 40.2

Paseo de la Castellana entity, owns

259D, 14S-15, Madrid investment

Spain in Albeniz

Vector Aioliki Desfinas S.A. 89.0 Subsidiary Greece 2.5 2.2 53.3 56.7

Salaminos Str. 20 entity, owns

15124 Maroussi equity

Attica, Greece investment in

Desfina

Ega Suria S.L. 100.0 Subsidiary Spain (0.6) 0.4 33.0 24.1

Paseo de la Castellana 259D entity, owns

Floors 14 and 15 investment

28046 Madrid in Tiza

Azalent Investment SL 100.0 Subsidiary Spain 0.6 (0.4) 97. 4 52.4

Paseo de la Castellana 259D entity, owns

Floors 14 and 15 investment

28046 Madrid in Greco

Svindbaek Vindkraft HoldCo ApS 100.0 Subsidiary Denmark (1.4) 2.1 35.9 37.5

Gyngemose Parkvej 50 entity, owns

2860 Søborg investment

Denmark in Svindbaek

Svindbaek Vindkraft GP ApS 100.0 Subsidiary Denmark (0.0) 0.0 0.0 0.0

Gyngemose Parkvej 50 entity,

2860 Søborg General

Denmark partner to

Svindbaek

Vindkraft

HoldCo ApS

109

Aquila European Renewables Plc|Annual Report 2023

Other InformationFinancialsGovernanceStrategic Report

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE YEAR ENDED 31 DECEMBER 2023

20. Unconsolidated Subsidiaries, Joint Venture and Associate continued

The following table shows the joint venture and the associate of the Company. The Company’s investments in associates are held

through HoldCo.

Profit/(loss) Profit/(loss)

for the year

for the year Total assets

Total assets

ended

ended balances as at balances as at

Effective

31 December 31 December 31 December

31 December

Joint venture and associate entities ownership Country of 2023 2022 2023

2022

Name and registered address % Investment incorporation (EUR million) (

EUR million) (EUR m

illion) (EUR million)

Palea Solar Farm Ourique S.A. 50.0 Joint venture Portugal (0.0) (0.4) 42.8 51.3

Avenida Fontes Pereira de Melo, entity, owns

no. 14, 11. Andar equity

1050-121 Lisbon Portugal investment in

Ourique

Midtfjellet Vindkraft AS 25.9 Associate Norway (35.0) NOK 132.0 NOK 905.9 NOK 1,069.7 NOK

Sandvikvågvegen 45 entity, owns

N-5419 Fitjar, Norway equity

investment

in Tesla

As disclosed in note 4, the Company finances the HoldCo through a mix of shareholder loans and equity. During the year, a new

Master Shareholder Loan was agreed between the Company and its subsidiary with an interest rate of 6.2% (2022: range of 2.0%

to 10.375%).

HoldCo finances its SPV investments through a mix of shareholder loans and equity. The shareholder loans accrue at an interest

rate range of 2.5% to 9.75%.

There are no restrictions on the ability of the Company’s subsidiaries, joint venture and associate’s entities to transfer funds in the

form of interest and dividends.

21. Post Balance Sheet Events

Spanish Solar PV Debt Financing

On 8 January 2024, the Company, via its wholly owned subsidiaries, announced that it had entered into a EUR 50.0 million,

five-year non-recourse debt facility with ING Bank N.V. Sucursal en España. The debt facility is secured by AER’s wholly owned

Spanish solar PV portfolio.

110

Aquila European Renewables Plc|Annual Report 2023

ALTERNATIVE PERFORMANCE MEASURES (“APMS”)

In reporting financial information, the Company presents 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. The Company’s APMs are set out

below and are cross-referenced where relevant to the financial inputs used to derive them as contained in other sections ofthe

Annual Report. Additional total return calculations have been added to show how the Company has performed since IPO, in

terms of annualised return and aggregate return.

(Discount)/Premium

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

As at As at

31 December 31 December

Page

2022

NAV per Ordinary Share (cents) a 2 98.5 110.6

Share price (cents) b 2 78.5 92.3

Discount

(b÷a)-1 (20.3%)

(16.6%)

Ongoing Charges

A measure, expressed as a percentage of average net assets (quarterly net assets averaged over the year), of the regular, recurring

annual costs of running an investmentcompany.

Year ended

31 December

Page

2023

2022

Average NAV (EUR ’000) a n/a 399,571 438,421

Annualised expenses (EUR ’000)

b n/a 4,220 4,715

Ongoing charges

(b÷a)

1.1%

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.

As at 31 December 2023 Page Share price NAV

Opening at 1 January 2023 (cents) a 2 92.3 110.6

Dividend adjustment (cents) b 5.4 5.4

Closing at 31 December 2023 (cents) c 2 78.5 98.5

Total return

((c+b)÷a)-1 (9.0%)

(6.0%)

As at 31 December 2022 Page Share price NAV

Opening at 1 January 2022 (cents) a n/a 102.00 102.6

Dividend adjustment (cents) b 5.19 5.2

Closing at 31 December 2022 (cents) c 2 92.25 110.6

Total return

((c+b)÷a)-1 (4.5%)

12.9%

1. Expenses consist of investment advisory fees of EUR 2,896,000 (2022: EUR 3,150,000) and other recurring expenses of EUR 1,814,000 (2022:

EUR1,025,000) in accordance with the AIC methodology.

Other InformationFinancialsGovernanceStrategic Report

111

Aquila European Renewables Plc|Annual Report 2023

ALTERNATIVE PERFORMANCE MEASURES (“APMS”) CONTINUED

As at 31 December 2023 Page Share price NAV

Opening at IPO (cents) a 4 100.0 98.0

Dividend adjustment (cents) b n/a 19.9 19.9

Closing at 31 December 2023 (cents) c 2 78.5 98.5

Total return since IPO ((c+b)÷a)-1 (1.6%) 20.8%

As at 31 December 2022 Page Share price NAV

Opening at IPO (cents) a n/a 100.0 98.0

Dividend adjustment (cents) b n/a 14.4 14.4

Closing at 31 December 2022 (cents) c 2 92.3 110.6

Total return since IPO

((c+b)÷a)-1 6.7%

27.6%

As at 31 December 2023 Page Share price NAV

Opening at IPO (cents) a 4 100.0 98.0

Closing at 31 December 2023 (cents) b 2 78.5 98.5

Dividend adjustment (cents) c n/a 19.9 19.9

Annualised total return since IPO (((b+c)/a)^(1/years since IPO))-1¹ (0.4%) 4.3%

As at 31 December 2022 Page Share price NAV

Opening at IPO (cents) a n/a 100.0 98.0

Closing at 31 December 2022 (cents) b 2 92.3 110.6

Dividend adjustment (cents) c n/a 14.4 14.4

Annualised total return since IPO (((b+c)/a)^(1/years since IPO))-1¹ 1.8% 7.1%

1. Years since IPO: 4.5 in 2023 and 3.5 in 2022.

112

Aquila European Renewables Plc|Annual Report 2023

Dividend Cover

Dividend cover ratio calculation is based on net result generated at the SPVs, adjusted for the Company-level expenses during

theyear.

Year ended

31 December 31 December

Page

2023

2022

Net result generated at the SPVs (EUR ’000) a 20 22,334 29,093

Dividend paid (EUR ’000) b 20 21,247 21,165

Dividend cover ratio a÷b 20 1.1x 1.4x

Dividend cover ratio calculation is based on the revenue account of the Company.

Year ended

31 December

Page

2023

2022

Profit on ordinary activities (EUR’000) a 86 11,801 12,339

Dividend paid (EUR ‘000) b 88 21,247 21,165

Dividend cover ratio

a÷b 0

.6x

Dividend cover ratio calculation based on the consolidated cash flow of the Company and its HoldCo.

Year ended Year ended

31 December

Page 2023 2022

Adjusted net cash flow from operating activities (EUR’000) a 21 31,213 23,999

Dividend paid (EUR ‘000) b 21 21,247 21,165

Dividend cover ratio a÷b 21 1.5x

1.1x

Gross Asset Value

The Company’s gross assets comprise the net asset values of the Company’s Ordinary Shares and the debt at the underlying SPV

level, with the breakdown as follows.

31 December

Page

2023

2022

Net Asset Value (EUR ’000) a 2 372,541 451,650

Debt at the SPV level (EUR ’000) b 25 120,126 131,203

RCF drawn² (EUR ‘000) c 25 74,716 24,000

Gross Asset Value (EUR ’000) a+b+c 567,383 606,853

Gearing

The Company’s gearing is calculated as total debt as a percentage of the Gross Asset Value.

31 December

Page

2023

2022

Gross Asset Value (EUR ’000) a 24 567, 383 606,853

Debt at the SPV level (EUR ’000) b 25 120,126 131,203

RCF drawn

(EUR ‘000) c 25 74,716 24,000

Gearing ratio (b+c)÷a 34.3% 25.6%

1. The deviation in the cash dividend cover ratio for 2022 compared to the Annual Report 2022 is due to the inclusion of RCF interest and fees.

2. Revolving Credit Facility on HoldCo level.

Other InformationFinancialsGovernanceStrategic Report

113

Aquila European Renewables Plc|Annual Report 2023

GLOSSARY

AIC

Association of Investment Companies

Alternative Investment Fund

or “AIF”

An investment vehicle under AIFMD.

Under AIFMD (see below) Aquila

European Renewables Plc is classified as

an AIF.

Alternative Investment

Fund Managers Directive or

“AIFMD”

A European Union directive which came

into force on 22 July 2013 and has been

implemented in the UK.

Annual General Meeting or

“AGM”

A meeting held once a year, which

shareholders can attend and where

they can vote on resolutions to be put

forward at the meeting and ask Directors

questions about the company in which

they are invested.

the Company

Aquila European Renewables Plc

CREST

The central securities depository for

markets in the United Kingdom.

Dividend

Income receivable from an investment

in shares.

EPC

Engineering, procurement and

construction (“EPC”) is an agreement

that provides end-to-end services for

designing the system, procuring the

components and installing the project.

European Union

Ex-dividend date

The date on or after which a security is

traded excluding a recently declared

dividend, set one business day prior

to the relevant record date. If you

purchased shares on or after this date,

you will not receive the dividend to

which the ex-dividend date relates.

Financial Conduct Authority or

“FCA”

The independent body that regulates

the financial services industry in the UK.

Gearing

A term used to describe the extent that

a portfolio has increased in size as a way

to magnify income and capital returns,

but which can also magnify losses.

GWh

Gigawatt hour.

the HoldCo

Tesseract Holdings Limited, the wholly

owned Subsidiary of the Company.

Index

A basket of stocks which is considered

to replicate a particular stock market or

sector.

Investment company

A company formed to invest in a

diversified portfolio of assets.

Investment trust

An investment company, which is based

in the UK and which meets certain tax

conditions that enable it to be exempt

from UK corporation tax on its capital

gains. The Company is an investment

trust.

IPO

Initial Public Offering

Leverage

An alternative word for ‘Gearing’.

Under AIFMD, leverage is any method

by which the exposure of an AIF is

increased through borrowing cash or

securities, or leverage embedded in

derivative positions.

Under AIFMD, leverage is broadly

similar to gearing, but is expressed as

a ratio between the assets (excluding

borrowings) and the net assets (after

taking account of borrowing). Under

the gross method, exposure represents

the sum of a company’s positions after

deduction of cash balances, without

taking account of any hedging or netting

arrangements. Under the commitment

method, exposure is calculated without

the deduction of cash balances and after

certain hedging and netting positions

are offset against each other.

MWh

Megawatt hour

Net assets or net asset value

(“NAV”)

An investment company’s assets less its

liabilities.

NAV per Ordinary Share

Net assets divided by the number of

Ordinary Shares in issue (excluding any

shares held in treasury).

O&M

Operation and Maintenance

Ongoing charges

A measure of the regular, recurring

annual costs of running an investment

company, expressed as a percentage of

average net assets.

Ordinary Shares

The Company’s Ordinary Shares in issue.

Portfolio

A collection of different investments

held in order to deliver returns to

shareholders and to spread risk.

PPAs

Power Purchase Agreements

Premium

The amount, expressed as a percentage,

by which the share price is more than the

net asset value per share.

Photovoltaic

Record date

The cut-off date established by a

company in order to determine which

shareholders are eligible to receive

and dividend or distribution. If you

owned shares in the Company up to and

including this date, you will receive the

dividend through which the record date

relates. If you owned shares after this

date, you will not receive the dividend.

Share buyback

A purchase of a company’s own shares.

Shares can either be bought back for

cancellation or held in treasury.

Share price

The price of a share as determined by a

relevant stock market.

SPV

A Special Purpose Vehicle

Total return

A measure of performance that takes

into account both income and capital

returns. This may include capital gains,

dividends, interests and other realised

variables over a given period of time.

114

Aquila European Renewables Plc|Annual Report 2023