ANIREP records loss in first six months

ANIREP was created to provide a bridge for capital markets into infrastructural renewable energy projects.

03 December 2020 | Business

ANIREP is well placed to raise and further deploy the additional capital and raise project finance required for solar PV capacity expansion. - Alpha Namibia Industries Renewable Power

Alpha Namibia Industries Renewable Power (ANIREP) suffered a loss of N$2.5 million in the six months ended 31 August 2020 compared to a profit of N$3 337 recorded in the same half-year in 2019.

In December last year, ANIREP became the first alternative electricity company and the second capital pool company to list on the Namibian Stock Exchange (NSX). The company raised N$167 million and is the first listed strategic investor in infrastructural renewable energy projects in Namibia.

No dividends were declared for the past half-year. Headline earnings per share (HEPS), a profitability gauge, were recorded at -13c in the period under review compared to 0.02 cents the previous period, according to their financial statements released on the NSX.

The company's net asset value (NAV), however, rose from 351c per share to 984c per share.



Figures

Anirep reported maiden revenue of nearly N$19.97 million. Cost of sales came in at around N$7.2 million, resulting in a gross profit of about N$12.7 million.

Operating expenses totalled more than N$10 million. The company's earnings before interest, taxes, depreciation, and amortisation (EBITDA) amounted to nearly N$2.9 million.

Depreciation of more than N$1.9 million, finance costs of nearly N$3.4 million and tax of nearly N$2.8 million dragged Anirep's bottom-line into a comprehensive loss.

“The current pandemic is negatively affecting business locally and worldwide, and as power remains a basic need, the sales have not been affected by the pandemic at this stage,” Anirep said.

“However, Covid-19 mitigation measures will increase costs, which will impact margins. The lockdown also delayed the financial close of the acquisitions, which increased some of the cost linked to the acquisitions,” the company said.

As a result, the group experienced a loss due to the related additional acquisition costs. At a company level, both subsidiaries in their individual interim reports have reported a profit, Anirep added.



Acquisition

ANIREP was created to provide a bridge for capital markets into infrastructural renewable energy projects. The company intends to provide investors with good, predictable, and long-term yielding investments generating a consistent return on equity over the long term, whilst the listing facilitates liquidity for investors to further invest or exit.

ANIREP completed the acquisition of 70% of HopSol Power Generation and 80% of HopSol Africa for a combined equity consideration of N$144.6 million during the period under review.

On completion of the acquisitions, ANIREP's CPC listing was moved from the development board of the NSX to the main board on 1 October 2020.

In addition, ANIREP will be included in the FTSE NSX Index Series as of the third week of December in accordance with standard policy.

At the end of August, the company's total assets exceeded N$361.6 million. Cash and cash equivalents amounted to nearly N$39.2 million.



Markets

A series of progressive reforms in the power sector in Namibia created an enabling environment that ANIREP believe is possibly the most conducive in the Southern African Development Community (SADC) region for mobilising private sector investment into power projects, the company said.

“These reforms in Namibia are well ahead of its peers in the SADC region and include the introduction of cost reflective tariffs, an independent and functional regulator, and significant steps towards a competitive market structure, including the ability to purchase power from any producer, other than NamPower under approved Modified Single Buyer Market (MSBM),” ANIREP said.

The company said green and clean energy considerations are a crucial component of responsible investment towards optimisation of environmental, social and governance (ESG) factors.

“Institutional and retail investors allocation to clean energy projects remain inadequate, particularly when it comes to the types of direct investment which can help close the financing gap. This as investors require suitable investment vehicles providing the risk/return profile these investors with a need to weigh the risks specific to clean energy projects,” it said.

ANIREP elaborated: “Today renewables have become a compelling investment proposition globally with investments in new renewable power have grown from less than US$50 billion per year in 2004 to around US$300 billion per year in recent years, eclipsing investments in new fossil fuel power by a factor of three in 2018.”

More remains to be done with a significant shortfall of the overall financing of US$1.3 to US$1.4 trillion per year until 2030 required to meet UN adopted Sustainable Development Goal for renewable, clean efficiency and universal access energy, ANIREP said.



Outlook

ANIREP's prospects are “as abundant as the universe of transiting capital of local and regional retail and institutional investors, from fossil fuel to a sustainable low-carbon economy”, the company said.

“Yet this can only happen through appropriate investment vehicles that do not increase volatility, or lower expected returns, to help channel capital into renewable assets,” it added.

Within nine months of listing, ANIREP has concluded transactions that provide a sustainable platform from which to pursue an expansion of the acquired grid connected 10 MW solar PV capacity.

“As a bridge for capital markets into the infrastructural renewable energy projects, ANIREP is well placed to raise and further deploy the additional capital and raise project finance required for solar PV capacity expansion,” the company said. “This is underpinned by its sustainable long-term cash flows unlocking a higher allocation to infrastructure investments by investors. These acquisitions undoubtedly differentiate and distinguish ANIREP on its journey to becoming a significant utility with solid sustainable cash flows, thereby meeting institutional and retail investors' quest for real asset classes for delivery of steady, preferably inflation-linked, income streams with low correlations to the returns of other investments,” it elaborated.

“We believe clean energy infrastructural projects do hold prospects of combining these sought-after characteristics, often resulting in a reduced lower equity beta than some other forms of economic infrastructure,” ANIREP concluded.

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