Annual Financial Report

PREMIER MITON GLOBAL RENEWABLES TRUST PLC

Annual Financial Report for the year ended to 31 December 2022

The Directors present the Annual Financial Report of Premier Miton Global Renewables Trust PLC (the "Company") for the year ended 31 December 2022 (the "Annual Report").

It has also been submitted in full unedited text to the Financial Conduct Authority's National Storage Mechanism and is available for inspection at data.fca.org.uk/#/nsm/nationalstoragemechanism in accordance with DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules. The Annual Report is also available to view and download from the Company's website, www.globalrenewablestrust.com/documents. References to page numbers are to those in the Annual Report and Accounts, available to view at the link above. Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into or forms part of this announcement.

The information set out below does not constitute the Company's statutory accounts for the year ended 31 December 2022 but is derived from those accounts. Statutory accounts for the year ended 31 December 2022 will be delivered to the Registrar of Companies in due course. The Auditors have reported on those accounts: their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

The following text is copied from the Annual Report & Accounts:

Investment Objectives

The investment objectives of the Premier Miton Global Renewables Trust PLC are to achieve a high income from, and to realise long term growth in the capital value of its portfolio. The Company seeks to achieve these objectives by investing principally in the equity and equity-related securities of companies operating primarily in the renewable energy sector, as well as other sustainable infrastructure investments.

Company Summary

Group

Premier Miton Global Renewables Trust PLC (the “Company”) (formerly Premier Global Infrastructure Trust PLC), and its wholly-owned subsidiary, PMGR Securities 2025 PLC.

Capital Structure
Ordinary Shares (1p each)	18,238,480 (as at 14  March 2023)
The Ordinary Shares are entitled to all of the Company’s net income available for distribution by way of dividends. On a winding-up, they will be entitled to any undistributed revenue reserves and any surplus assets of the Company after the Zero Dividend Preference Shares (“ZDPs”/”ZDP Shares”) accrued capital entitlement and payment of all liabilities. The Ordinary Shareholders have the right to receive notice of, to attend and to vote at all general meetings of the Company. The Ordinary Shares are qualifying investments for ISAs.
Zero Dividend Preference Shares (1p each)
Issued by PMGR Securities 2025 PLC	14,217,339
The 2025 ZDP Shares (“2025 ZDPs”) will have a final capital entitlement of 127.6111p on 28 November 2025, equivalent to a gross redemption yield# from the date of issue of 5.0% per annum, subject to there being sufficient capital in the Company. The 2025 ZDPs are qualifying investments for ISAs.

Company Details

Investment Manager

Premier Fund Managers Limited (“PFM Limited”), is a subsidiary of Premier Miton Group plc (“PMI Group”). PMI Group had £13.9 billion of funds under management at 31 December 2022. PFM Limited is authorised and regulated by the Financial Conduct Authority (“FCA”). The Company’s portfolio is managed by James Smith with support from PFM Limited’s global equity team. Premier Portfolio Managers Limited (“PPM”) is the Company’s Alternative Investment Fund Manager. PPM has delegated the portfolio management of the Company’s portfolio of assets to PFM Limited.

Management Fee

0.75% per annum of the gross assets under management, charged 40% to revenue and 60% to capital.

Company Highlights

for the year to 31 December 2022

	31 December 2022	31 December 2021	% change
Total Return Performance
Total Assets Total Return(1)#	(7.3%)	19.8%
S&P Global Clean Energy Index(2) (GBP)	6.6%	(22.5%)
Ongoing charges(3)#	1.70%	1.65%
Ordinary Share Returns
Net Asset Value per Ordinary Share (cum income)(4)#	178.44p	210.60p	(15.3%)
Mid-market price per Ordinary Share(2)	155.50p	196.50p	(20.9%)
Discount to Net Asset Value#	(12.9%)	(6.7%)
Revenue return per Ordinary Share	7.29p	7.43p	(1.9%)
Net dividends declared per Ordinary Share	7.00p	7.00p	0.0%
Net Asset Value Total Return(5)#	(12.1%)	26.5%
Share Price Total Return(2)#	(17.7%)	30.7%
2025 Zero Dividend Preference Share Returns
Net Asset Value per Zero Dividend Preference Share(4)	110.71p	105.44p	5.0%
Mid-market Price per Zero Dividend Preference Share(2)	108.50p	107.50p	0.9%
(Discount)/Premium	(2.0%)	2.0%
Hurdle Rates(6)#
Ordinary Shares
Hurdle rate to return the share price of 155.50p (2021: 196.50p) at 28 November 2025(2)	(0.8%)	0.7%
Zero Dividend Preference Shares
Hurdle rate to return the redemption share price for the 2025 ZDPs of 127.6111p at 28 November 2025	(27.7%)	(23.1%)
Balance Sheet
Gross Assets less Current Liabilities (excluding Zero Dividend Preference Shares)	£48.3m	£53.4m	(9.6%)
Zero Dividend Preference Shares	(£15.7m)	(£15.0m)	(5.0%)
Equity Shareholders’ Funds	£32.5m	£38.4m	(15.2%)
Gearing(7)#	48.4%	39.0%
Zero Dividend Preference Share Cover (non-cumulative)(8)#	2.51x	2.74x

# Alternative Performance Measure (“APM”). See Glossary of Terms for definitions and Alternative Performance Measures on page 76.

(1) Source: PFM Limited. Based on opening and closing total assets plus dividends marked “ex-dividend” within the period.

(2) Source: Bloomberg.

(3) Ongoing charges have been based on the Company’s management fees and other operating expenses as a percentage of average gross assets less current liabilities over the year (excluding the ZDPs accrued capital entitlement).

(4) Articles of Association basis.

(5) Source: PFM Limited. Based on opening and closing NAVs with dividends marked “ex-dividend”.

(6) Source: PFM Limited. Hurdle rate definition can be found in the Glossary of Terms and Alternative Performance Measures on page 77.

(7) Source: PFM Ltd. Based on Zero Dividend Preference Shares divided by Equity attributable to Ordinary Shareholders at the end of each year.

(8) Source: PFM Limited. Non-cumulative cover = Gross assets at year end divided by final repayment of ZDPs plus management charges to capital.

Chairman’s Statement

for the year to 31 December 2022

Introduction

Following strong performances over recent years, 2022 saw a reversal of fortunes for the portfolio with the Trust experiencing a fall in asset values and a negative investment return to shareholders. The underlying portfolio return, while approximately in line with global equity markets, lagged the global clean energy sector.

In my letter in last year’s report, I noted that markets appeared to be relatively sanguine over the prospects for higher inflation. In the event, inflation in the advanced economies reached higher levels than expected, necessitating a steeper path of interest rate increases.

There are several underlying reasons for higher inflation. Energy costs have remained at elevated levels, exacerbated by the war in Ukraine. Supply chains have taken longer to return to normal post Covid-19 lockdowns, and China’s retention of lockdown policies over most of 2022 has been a headwind to global supply.

On top of these issues, has been the exceptionally loose monetary policy over recent years, which has created an environment where inflation has been allowed to take root. The risk now is that central banks over-tighten, causing a sharp recession.

Higher interest rates have been a headwind for equity markets, as markets discount future corporate earnings to current values at higher rates. However, the Trust is fortunate that most of its underlying earnings, the revenues earned by portfolio companies, are generated from selling electricity. Electricity prices have been substantially higher in 2022 than in 2021, particularly in the UK and Europe. However, as yet this has not been fully reflected in market valuations.

Performance

The Trust’s performance over 2022 was disappointing. The total assets total return, measuring the return on the portfolio including all income and costs, was a negative 7.3% (2021: positive 19.8%). This was consistent with returns seen in the leading global equity indices. The Trust’s gearing, through the fixed return Zero Dividend Preference Shares (“ZDP”), means that returns to Ordinary Shareholders are amplified, with the net asset value (“NAV”) total return being negative 12.1% (2021: positive 26.5%). The NAV per ordinary share fell by 15.3% to close the year at 178.44p.

Further, and in common with other investment trusts, the discount at which the shares trade compared to the published NAV increased in the year, closing 2022 at 12.9% (2021: 6.7%). For this reason, the share price total return, based on share price movement plus dividends received, was negative 17.7% (2021: positive 30.7%).

Since the Trust’s change of investment policy in October 2020, the S&P Global Clean Energy Index (the “Index”) has been used as its performance comparator. However, as has been pointed out before, the Trust’s portfolio is substantially different to the composition of the index, with a far greater weighting to renewable energy generators than the index which has higher exposure to technology, renewable equipment manufacturers and utilities. Also, the Trust’s portfolio is currently more focussed on the UK and Europe, whereas the Index has a higher weighting to North America. PMGR’s performance can, therefore, be expected to be materially different from that of the Index in any given year.

In 2022, the Index returned a positive 6.6% (GBP adjusted), substantially better than the Trust. However, since the policy change on 9 October 2020, shareholders have seen a return, measured on share price plus dividends, of 25.3%, or an average of 10.7% per year. The index has returned 3.7%, or 1.7% per year on average. Despite the difficult year, the Trust’s recent performance remains well ahead of its performance comparator.

There were some specific negative performance factors, discussed in more detail in the Investment Manager’s report, which require mention here.

Firstly, the Trust’s Chinese investments, which performed so well in 2021, were very poor in 2022. This was mainly for macro-economic and political reasons rather than any fundamental issues with the companies themselves. A combination of negative performance and sales of holdings means that the weighting to China is now substantially reduced. Secondly, Finnish hydro and nuclear generator Fortum, a 4.3% weighting at the start of the year, was caught out by the Russian invasion of Ukraine. Fortum had substantial investments in Russia, representing about 20% of its total profits, and its share price fell sharply in response. We sold this investment because of its Russian exposure with a resulting loss. Thirdly, holdings owning operational North American renewable energy assets were relatively weak. Renewable energy tends to be sold on long term pre-determined prices in North America, with relatively little inflation linkage. Share prices therefore fell in response to higher interest rates.

Offsetting this was a generally positive performance in the UK, although the modest gains look set to lag well behind the growth in underlying earnings driven by high power prices, even considering the new windfall tax, or “energy generation levy”. Likewise, aside from Fortum as noted above, there were some good performances among European investments, with the high power price environment being a performance driver.

The US dollar was strong in the year, and the Trust saw a translation gain on dollar holdings as a result.

Despite the difficult year, the prospects for long term performance remain encouraging. For instance, the EU is committed to expanding its renewable energy production, aiming for renewables to represent at least 45% of the overall energy mix by 2030 (from 22.1% in 2020). Likewise, the US Inflation Reduction Act has set clear targets and incentives for renewable investment in the US and should stimulate and reward investment for the foreseeable future.

Portfolio positioning

The Trust invests in renewable energy companies, and also other sustainable infrastructure companies, being those that are essential to the construction of renewable assets and delivery of renewable energy to customers. These currently include electricity networks, energy storage facilities, and offshore wind turbine installation vessels.

The most significant portfolio change during the year has been the reduction in weighting to China, from 19% to 3%. We are concerned about China’s economic and political situation, and China is likely to remain at a low level within the portfolio while this uncertainty persists. The funds released have been reinvested into Europe and the UK to take advantage of the favourable electricity pricing environment.

In this period of high inflation, it is important to be exposed to revenue streams that reflect inflation, such as some government tariff and subsidy schemes. UK renewable assets score well in this regard. As noted above, US renewable companies have less inflation linkage, so are currently held at a relatively low portfolio weighting.

In terms of sectors, the weighting to yield companies (renewable companies which buy operational assets and then hold them for the long term, paying out the majority of cash-flow to investors), has risen as the Manager increases exposure to core UK and European operational assets benefitting from higher power prices and inflation.

Weightings in the waste to energy sector and renewable-focussed utilities sector (i.e. utilities having substantial renewable energy businesses) have fallen on poor relative performance and the Manager focussing on core “pure-play” renewable energy generators.

Capital structure, Gearing, and ZDP Shares

Following the weaker performance in the year, gearing increased from 39.0% at December 2021 to 48.4% at December 2022 (gearing being calculated as the ZDP share liability over the equity attributable to Ordinary Shareholders). The nature of the ZDP shares means that the gearing is, for the time being, “semi-permanent”. The Board will review the Company’s capital structure on the maturity of the ZDP shares in 2025.

The share price of the ZDP Shares rose only slightly in the year, from 107.50p at the start of the year to 108.50p by the close of 2022. Their NAV increased at their accrual rate of 5%, to reach 110.71p at the close of the year. As such the ZDP Shares stood at a modest discount to their accrued value. The ZDP Share Cover fell to 2.51x from 2.74x reflecting the fall in assets. Note that “Gearing” and “Zero Dividend Preference Share Cover” are Alternative Performance Measures; please see pages 76 to 80 for definitions and calculations.

No Ordinary or ZDP shares were either issued or redeemed in the year.

Income and dividends

Net revenue return per Ordinary Share in 2022 was 7.24p, a reduction of 2.6% on the 7.43p recorded in 2021.  Underlying revenue generation remained healthy, with dividends paid to Ordinary Shareholders being fully covered by net revenue earnings.

It should be noted that 2021 saw the recovery of a historic tax reclaim of £104,000, or 0.57p per Ordinary share, a receipt not repeated in 2022.

During the year, the Board declared three interim dividends in respect of the 2022 financial year, each of 1.75p per Ordinary Share. The Board has now declared a fourth interim dividend of 1.75p, to bring the total dividend for the year to 7.00p, fully covered by revenue earnings, and in line with dividends paid in respect of 2021. The fourth interim dividend will be paid on 31 March 2023 with the shares to be marked ex-dividend on 9 March 2023.

Shareholder relations

The Company’s AGM will be held on Wednesday, 26 April 2023, at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London EC2M 7SH, at 12.15p.m. when a presentation will be given. Attending shareholders will have the opportunity to meet the Board and Manager and ask questions.

Shareholders can find additional details regarding your Company, including factsheets and articles on topics relating to both the renewables sector and the Company, on the Company’s website, www.globalrenewablestrust.com.

Environmental, Social and Governance (‘ESG’)

Given the change of investment policy in 2020, ESG measures are an integral part of the Manager’s approach to running the portfolio. Further, Premier Miton is a signatory to the Principles for Responsible Investment, an organisation which assists signatory firms to develop and maintain responsible investment practices.

The Trust’s portfolio is given additional consideration by Premier Miton’s Responsible Investing Oversight Committee, with the aim of ensuring that investee companies adhere to high standards of governance, and that the portfolio’s composition is consistent with its investment policy.

By its nature the Trust’s portfolio has strong environmental credentials. The portfolio mainly consists of companies generating renewable electricity in the form of wind, solar, biomass, and hydro, together with other technologies which have positive environmental outcomes, such as waste to energy. It also contains companies operating infrastructure such as electricity transmission and battery storage, essential for the delivery and management of renewably-generated power.

The Trust’s Manager engages with investee companies to promote good governance and encourage responsible social policies. The Manager always votes at shareholder meetings of investee companies.

I am pleased to report that the one remaining holding not consistent with the renewable energy investment policy adopted in October 2020, the Indian coal-fired power generator OPG Power Ventures, was sold during the year. This completed the portfolio’s transition from a generalist infrastructure investor to specialist renewable energy.

Change of brokership

Following a review of the Company’s brokership arrangements, in March the directors appointed finnCap Capital Markets (“finnCap”) as the Company’s stockbroker, replacing Singer Capital Markets. The Directors are pleased with finnCap’s performance since appointment.

The Board and the Manager remain committed to increasing the size of the Trust and have been active in marketing the Trust’s shares to potential new investors during the year. I hope that this will help to achieve a lower discount to NAV, and consequent improved share price, during 2023.

Outlook

The macro-economic environment has been against the Company over the past year, and equity markets have been weak. While developed market interest rates are expected to reach their peaks in 2023, financial markets are likely to remain turbulent as historic monetary stimulus is withdrawn.

China faces a difficult situation as Covid-19 runs through the country. As a result, its government could see its domestic popularity fall, and it may be tempted into ill-advised actions both at home and abroad, which have the potential to destabilise its economy and the region. Further, it is at this stage difficult to envisage a near term resolution to the conflict in Ukraine.

However, despite this troubling backdrop, the underlying earnings performance of the majority of the portfolio’s holdings has been strong, and we expect this to continue in the short to medium term. We expect European power prices should remain elevated as the EU withdraws from its dependence on Russian natural gas.

The implementation of European windfall taxes has been a notable headwind over the year. However, with the relevant taxes now published and in operation, the market again hopefully has some clarity. Generally speaking, windfall taxes have been set at a level which, while providing some compensation to governments that can be used to subsidise tariffs, still allow generators to make good returns from the high pricing environment.

Over the long term, the issues of natural gas supply and high commodity prices further reinforce the benefits of moving to renewable energy. In addition to being much more environmentally friendly than traditional power sources, renewables have the advantage of generating electricity closer to where it is consumed, together with the potential for a less volatile pricing environment. The Board believes that the Company’s investment policy remains very relevant and is one from which attractive long term investment returns can continue to be made.

Gillian Nott OBE

Chairman

14 March 2023

Investment Manager’s Report

for the year to 31 December 2022

Performance overview

The Premier Miton Global Renewables Trust’s (“PMGR”) portfolio experienced a fall in value over the year, with a negative total assets total return performance, including all operating and trading costs, of 7.3%. The performance was below that of the Trust’s comparator benchmark, but performance does remain comfortably ahead of that index since the investment policy change in October 2020.

Under normal conditions, I would have hoped for another good year for PMGR. The build out of renewable energy continues apace, power prices are strong, and there is a considerable level of political goodwill.

However, higher interest rates, political intervention, additional taxes, the ongoing uncertainty from the war in Ukraine, and economic and political risks in China meant that it turned out to be a rather difficult year. In addition, there have been some stock-specific losses, detailed below.

Higher power prices have been a double-edged sword in that they have driven greater political intervention through windfall taxes. Asymmetric taxes, whereby Governments help themselves to gains in good times without committing to helping companies should the situation reverse, may make for good politics but have caused investor uncertainty and are likely to increase companies’ required future returns to compensate for greater political risks.

Reversing the trend of recent years, capital costs of renewable projects were increased by higher logistics and component costs, although these are now showing signs of moderating. Finance costs within the sector are largely fixed, but higher interest rates will contribute to higher financing costs for new projects. Fortunately, the power price environment is such that available investment returns remain healthy.

Market review

Perhaps the most significant market development during the year has been the unprecedented increase in European power prices. Prices began to increase in mid-2021 on the back of higher prices for carbon emission permits (which make fossil fuel generation more expensive), increasing further over the early part of 2022 on concerns over low European gas storage levels, followed by a surge in both price and volatility on the Russian invasion of Ukraine in February.

Approximately one third of European gas is sourced from Russia, and although trade has not completely stopped, volumes are much reduced. Further, in September, both Nord Stream 1 and 2 pipelines, which connect Germany to Russian supplies through the Baltic Sea, were damaged by explosions. Although those responsible and their motivations are unconfirmed, neither pipeline will be in use for the foreseeable future. Gas is an important component of the European electricity generation mix, and the resulting higher gas prices have fed directly into higher electricity prices.

With the aim of ending its dependence on Russian fossil fuels, the EU through its “REPowerEU” plan, aims to expand renewable energy generation capacity substantially with streamlined approval processes, diversify its gas supplies including new investments in LNG capacity, and improve energy efficiency. Newer technologies that directly substitute gas usage, such as biomethane, hydrogen, and heat pumps will also be encouraged.

Adding to the European energy shortage has been the decline in output from French nuclear reactors, expected to be over 20% lower in 2022 than in 2021. France went from a position of being an electricity exporter, to being an importer, with a consequent tightening of neighbouring power markets such as Germany and the UK.

Power prices in the US have increased, although to a lesser extent than seen in Europe. In any case, renewable energy companies in the US tend to be less exposed to merchant power pricing than their European counterparts, with renewable power usually being sold on long term contracts at relatively fixed prices. This has made them vulnerable to higher inflation and interest rates. On the plus side, the passing of the of the Inflation Reduction Act aims to stimulate almost $370 billion of clean energy investment over the next 10 years, and gives the sector an improved growth outlook.

Portfolio segmentation and allocation

The Trust seeks to offer investors a diversified global exposure to renewable energy and sustainable infrastructure. This differentiates PMGR from many other clean energy investment funds, including exchange-traded funds, which often have a more technology-oriented profile. I believe that focussing on mainly contracted and regulated infrastructure investments offers an attractive risk / reward dynamic for long term investment, offering high visibility of earnings and dividends.

The portfolio has a wide exposure to differing sub-sectors, aiming to invest not just in wind and solar assets, but in the full energy production and delivery value chain, including energy storage, electricity transmission networks and utilities that own high quality renewable energy businesses.

One important distinction we make is to segment renewable energy companies into two broad categories. Renewable energy developers plan, construct, and then own and operate renewable assets. Alternatively, yield companies (“yieldcos”), usually acquire existing renewable assets. Developers typically pay a modest dividend, retaining a high portion of cash flows for reinvestment, sometimes recycling capital through asset sales. Yieldcos by contrast, pay out the majority of cash flows, raising new capital to acquire assets as required.

Renewable energy developers offer potentially higher returns as they take on development and construction risk. Yieldcos prefer to remove these by acquiring recently constructed projects (or occasionally at the “pre-construction” stage) and then financing and operating them as efficiently as possible. They forego developer profits in return for greater visibility and the benefit of having a higher proportion of their capital invested in productive assets.

It is notable this year that the weighting to small cap companies, which we define as companies with a market capitalisation between £250 million and £2.0 billion, has increased at the expense of the midcaps, being companies capitalised between £2.0 and £10.0 billion. This is a result of the sell down of midcap Chinese holdings, and reinvestment into smaller European and UK companies. At the year end, the simple average market capitalisation of portfolio was £4.9 billion (2021: £5.4 billion).

Renewable Energy Developers

The performance of the Trust’s renewable energy developers was mixed in 2022. Going into the year, two Chinese developers, China Suntien Green Energy and China Longyuan Power represented a combined 11.5% of the portfolio, both having performed exceptionally well in 2021, with share price increases of 155.5% and 134.2% respectively. I am concerned about both the economic and political situation in China, and therefore cut the Suntien holding back sharply over the year (to 1.8% by the year end) and sold Longyuan in its entirety. Despite both companies performing perfectly well on a fundamental basis, Suntien’s share price fell 46.5% and Longyuan 47.6% in 2022 as investors divested from Chinese stocks. With hindsight, it would have been better to have reduced exposure at an earlier stage.

European renewable developers fared better. RWE remained at the top end of the portfolio and performed well on excellent financial results through the year, helped by high power prices and an excellent result in its trading division. Its proposed acquisition of the Con Edison renewables business in the US represents a step change in RWE’s international renewables business. RWE’s share price increased by 16.4% over the year.

The position in Spanish listed solar developer, Grenergy, was increased during the year. Grenergy has made good progress with its development portfolio, and 2023 looks set to be a milestone year for the company as it completes several large solar projects in Spain, Chile and Peru. Grenergy’s shares fell by 4.4% in the year.

Despite sometimes excellent financial results, smaller companies were often out of favour. A good example would be Norwegian listed Bonheur, better known for its ownership of Fred Olsen Renewables. It has targeted an almost 30% increase in renewable production for 2022 and reported sharply higher financial results through the year. Bonheur has ambitious plans for offshore wind development, and the position was increased steadily over the year. However, despite the strong business fundamentals, its shares fell by 19.2% in the year.

Northland Power’s shares were relatively flat. This was disappointing given strong financial results and continued progress with their development portfolio.

We sold the holding in Acciona, re-investing in the newly listed Acciona Energias, which owns the group’s renewable energy activities and was spun out as a separately listed company to improve visibility for the group. Acciona Energias’s shares gained 10.9% in 2022.

Further down the portfolio, the position in Enefit Green was increased. Enefit develops renewable projects in the Baltic states and recorded strong results during the year. It was rewarded with a share price increase of 8.3%. 7C Solarparken, which focusses on German and Belgian solar, also saw strong figures driven by power pricing. Its shares fell by 1.4% however.

Yieldcos and Funds

The exposure to yieldcos increased in the year, from 25.7% at December 2021, to 38.9% by the end of 2022. Some new positions were added, taking advantage of share price weakness in the second half of the year. I believe that UK and European yieldcos could benefit from a “higher for longer” power price environment.

Greencoat UK Wind remains a key holding for the Trust. Its strategy to sell power at market rates served it well as UK power prices increased. Its published NAV per share has increased over the year, and given the conservative basis on which it had been calculated, the UK windfall tax was absorbed without a significant detriment to the NAV. Greencoat’s share price increased by 8.3% in 2022.

NextEnergy Solar Fund’s shares gained 9.5% as it made good progress in its diversification strategy, with new battery storage developments acquired during the year. The position in Foresight Solar was increased, and its shares rose by 16.2%.

In the second half of the year, the Trust took advantage of share price falls to increase the position in Octopus Renewable Infrastructure and start a new holding in Aquilla European Renewables. Both these companies should benefit from higher power pricing and the completion of assets currently in construction (acquired at the pre-construction stage). They both trade at attractive discounts to their published NAVs.

North American positions were less successful than those in the UK. We attribute this to the lack of power price and inflation linkages in their revenues, with power tending to be sold on pre-determined long term prices. In a rising interest rate environment, their shares were marked down accordingly.

Clearway Energy (A) shares fell by 10.6%, Atlantica Sustainable Infrastructure by 27.6%, and Transalta Renewables by 40.0%. Transalta fell sharply in the final quarter as it gave lower cash flow guidance on the back of expected higher tax payments and higher maintenance expenditure. On the plus side, following another year of largely negative performance, North American yieldcos now offer very attractive yields, and operate in what should be a high growth environment.

Renewable focussed utilities

As mentioned in the Chairman’s letter, the holding in Fortum was sold following the Russian invasion of Ukraine. Fortum had not only some direct Russian power generation investments, but also a far larger liability through its ownership of German power and gas business Uniper. With Uniper’s upstream gas purchases from Russia severely curtailed, they were forced to buy more expensive gas elsewhere to fulfil sales contracts. The Fortum stake was sold over the second quarter, at an average price approximately 40% below the price at which it closed 2021.

The other major disappointment within this segment was Algonquin Power & Utilities, whose shares fell by 51.5% over the year. The fall took place almost entirely in the final quarter in response to a poor third quarter financial result. The company has now released a new strategy based on internally funded growth, with a rebased dividend. We believe that the company’s business of North American renewable energy and smaller utilities is fundamentally sound, and that there is scope for the shares to recover well in 2023.

The two other constituents of this category, SSE and Iberdrola both performed well, their shares increasing over the year by 3.8% and 5.0% respectively. Both have sizable and growing renewable businesses.

Other segments

Drax Group, Biomass generation and production sector has remained at the top end of the portfolio and delivered excellent financial results. 2023 should see a decision from the UK Government on whether to approve the company’s carbon capture plans. Drax’s shares gained 16.2% in 2022.

Also in the UK, the portfolio’s exposure to energy storage companies increased. Batteries are a key component in grid balancing and managing short term power volatility. Following additional investment and a 24.1% increase in share price, Harmony Energy Income Trust became the Trust’s largest battery storage investment. Likewise, Gresham House Energy Storage Fund also performed well, its share price recording an increase of 24.7%.

Less successful was the holding in waste to energy company China Everbright, which lost value in line with the other Chinese positions. The position was cut back sharply in the year to reduce exposure to China.

Currency and hedging

The Trust made currency hedging losses of £0.7 million (2021: gains of £0.4m) over the year, offsetting equivalent currency gains made on investments held in those currencies. Currency hedge contracts are undertaken to mitigate against currency volatility and to offset potential losses from adverse currency movements.

Outlook

Following a strong period of returns, it is disappointing to record an investment loss in 2022. However, this was concentrated in a limited number of positions, which experienced outsized losses. The majority of other holdings performed relatively well, although share price gains were typically some way behind earnings growth.

While there is much uncertainty in the global economy, and political risk remains an ongoing issue, 2023 should see a peak in inflation and therefore also in interest rates. As such, some of the negative macro headwinds should, I hope, abate.

While recent weeks have seen a welcome moderation in the high fuel commodity price environment, those driving the electricity price, such as natural gas and carbon permits, remain at elevated levels in comparison to recent history. The phase out of both coal and older nuclear capacity in coming years should keep the margin of supply over demand relatively tight in the European electricity market. I therefore believe that European electricity prices could stay higher for longer than anticipated by the market, sustaining a positive backdrop for the portfolio.

James Smith

Premier Fund Managers Limited

14 March 2023

Investment Portfolio

at 31 December 2022

Company	Activity	Country of operation	Value £000	% total investments	Ranking 2022	Ranking 2021
Drax Group	Biomass generation and production	United Kingdom	3,295	6.8	1	3
Greencoat UK Wind	Yieldcos & funds	United Kingdom	3,059	6.4	2	6
NextEnergy Solar Fund	Yieldcos & funds	United Kingdom	2,969	6.2	3	7
RWE	Renewable energy developers	Europe (ex. UK)	2,952	6.1	4	4
Octopus Renewable Infrastructure	Yieldcos & funds	Europe (ex. UK)	2,550	5.3	5	–
Aquila European Renewables	Yieldcos & funds	Europe (ex. UK)	2,273	4.7	6	–
Atlantica Sustainable Infrastructure	Yieldcos & funds	Global	2,150	4.5	7	10
Iberdrola	Renewable focused utilities	Global	1,939	4.0	8	19
Harmony Energy Income Trust (incl. ‘C’ Shares)	Energy storage	United Kingdom	1,899	3.9	9	21
Clearway Energy ‘A’	Yieldcos & funds	North America	1,865	3.9	10	13
Grenergy Renovables	Renewable energy developers	Global	1,845	3.8	11	16
Foresight Solar Fund	Yieldcos & funds	United Kingdom	1,820	3.8	12	18
Gresham House Energy Storage Fund	Energy storage	United Kingdom	1,777	3.7	13	12
Corp. Acciona Energias Renovables	Renewable energy developers	Europe (ex. UK)	1,603	3.3	14	–
SSE	Renewable focused utilities	United Kingdom	1,540	3.2	15	15
Bonheur	Renewable energy developers	Europe (ex. UK)	1,211	2.5	16	41
Northland Power	Renewable energy developers	Global	1,135	2.4	17	20
National Grid	Electricity networks	Global	1,097	2.3	18	5
Algonquin Power and Utilities	Renewable focused utilities	North America	1,080	2.2	19	9
China Suntien Green Energy	Renewable energy developers	China	863	1.8	20	1
TransAlta Renewables	Yieldcos & funds	North America	742	1.5	21	17
Gore Street Energy Storage Fund	Energy storage	United Kingdom	666	1.4	22	24
China Everbright Environment	Waste to energy	China	632	1.3	23	2
Greencoat Renewables	Yieldcos & funds	Europe (ex. UK)	604	1.3	24	27
7C Solarparken	Renewable energy developers	Europe (ex. UK)	596	1.2	25	30
US Solar Fund	Yieldcos & funds	North America	571	1.2	26	–
Enefit Green	Renewable energy developers	Europe (ex. UK)	562	1.2	27	35
MPC Energy Solutions	Renewable energy developers	Latin America	539	1.1	28	23
Cloudberry Clean Energy	Renewable energy developers	Europe (ex. UK)	523	1.1	29	–
Opdenergy	Renewable energy developers	Europe (ex. UK)	504	1.0	30	–
Omega Energia(1)	Renewable energy developers	Latin America	377	0.8	31	32
Eneti	Renewable technology and service	Global	292	0.6	32	29
Atrato Onsite Energy	Renewable energy developers	United Kingdom	287	0.6	33	39
Fusion Fuel Green (incl. warrants)	Renewable technology and service	Europe (ex. UK)	285	0.6	34	33
Orsted	Renewable energy developers	Europe (ex. UK)	264	0.5	35	–
Seaway 7	Renewable technology and service	Global	258	0.5	36	31
Boralex	Renewable energy developers	Global	245	0.5	37	–
Cadeler	Renewable technology and service	Europe (ex. UK)	227	0.5	38	–
Solaria Energía y Medio Ambiente	Renewable energy developers	Europe (ex. UK)	213	0.5	39	38
GreenVolt	Renewable energy developers	Europe (ex. UK)	160	0.3	40	–
Innergex Renewable	Renewable energy developers	North America	148	0.3	41	44
Tion Renewables(2)	Renewable energy developers	Europe (ex. UK)	145	0.3	42	42
Bluefield Solar Income Fund	Yieldcos & funds	United Kingdom	136	0.3	43	–
Scatec	Renewable energy developers	Global	113	0.2	44	40
Clearvise	Renewable energy developers	Europe (ex. UK)	106	0.2	45	–
			48,117	99.9
Unquoteds	Activity	Country	Value £000	% total investments
PMGR Securities 2025 PLC	ZDP subsidiary	United Kingdom	50	0.1
Total investments			48,167	100.0%

(1) Omega Energia (formerly Omega Geracao).

(2) Tion Renewables (formerly Pacifico Renewables).

Review of Top Ten Holdings

at 31 December 2022

1.	Drax Group
	Market cap: £2.8 billion
	www.drax.com
UK listed Drax Group operates the UK’s largest renewable energy facility, the Drax power station in Yorkshire, which it converted from coal to biomass pellets manufactured from sustainable wood waste. The facility benefits from UK subsidy schemes lasting through to 2027. Drax is also one of the world’s largest producers of biomass pellets from its facilities in the US and Canada. Future growth options include developing a carbon capture plant at the Drax power station, expanding their upstream pellet business, adding additional capacity at their Cruachan pump storage hydro plant in Scotland, and developing new biomass power stations in the US. Drax recorded strong earnings for the first half of 2022, with adjusted earnings per share increasing 37.0%. The company has locked in high power prices for a large portion of their output for the next two years, ensuring earnings should remain healthy. Drax’s shares rose by 16.2% in 2022.

2.	Greencoat UK Wind
	Market cap: £3.5 billion
	www.greencoat-ukwind.com
Greencoat UK Wind (“UKW”) is a UK listed renewable energy investment company, owning both on and offshore wind farms. It operates as a yield company, acquiring completed assets rather than taking development risk. UKW’s strategy is to sell power predominantly in the merchant markets rather than hedging output through commercial forward sales contracts or financial derivatives. Higher power prices meant that UKW’s dividend was 3.2x covered by available cash generation in 2022, as compared to 1.9x in 2021. Over the course of 2022, UKW’s published NAV increased by 25.2% to 167.10p per share. The UK energy generator levy or “windfall tax”, applying to revenues from 2023, was incorporated into the December 2022 NAV. However, UKW’s NAV had assumed a substantial discount between forward electricity prices and those expected to be achieved by the company, and the levy was absorbed within this discount. In 2022, UKW’s share price increased by 8.3% to 152.10p, standing at a discount to the December 2022 asset value.

3.	NextEnergy Solar Fund
	Market cap: £655 million
	www.nextenergysolarfund.com
NextEnergy (“NESF”) is a UK listed renewable energy investment company, owning large-scale UK solar assets. NESF has diversified from solar over recent years, and 2022 saw the acquisition, with a partner, of a large (250 MW) battery storage development project, expected to be operational in 2025. NESF’s solar business has continued to perform well, with the company’s most recent projects being awarded 15-year index linked contracts in the UK government’s August 2022 Contracts for Difference auction. NESF’s NAV gained 15.8% over 2022 reaching 120.90p. In common with UKW above, the December 2022 NAV calculation incorporated the UK’s new windfall tax. Also in common with UKW, NESF’s share price failed to keep pace with the increasing NAV, gaining 9.6% over the year to reach 110.10p, and standing at a discount to the NAV at the year end therefore.

4.	RWE
	Market cap: £24.9 billion
	www.rwe.com
RWE is a German listed multi-national energy company, which is transitioning from fossil fuels to renewable energy. It has expanded rapidly in renewables over recent years and has set out a capital programme to spend Euro 50 billion on green growth to 2030. RWE is in the process of transitioning away from fossil fuels, having closed 12 GW of coal-fired power stations since 2012. In 2022 RWE substantially expanded its US renewables business through the acquisition of Co Edison Clean Energy (“CEB”). CEB’s primarily solar based portfolio complements well RWE’s wind focussed US business. Financial performance was strong in 2022, with adjusted earnings per share over the 9 months to September, increasing by 105.9%, and RWE’s share price gaining 16.4% over the year.

5.	Octopus Renewables Infrastructure Trust
	Market cap: £568 million
	www.octopusrenewalesinfrastructure.com
Octopus Renewables Infrastructure (“ORIT”), a new holding acquired during the year, is a UK listed investment company with assets across Europe including the UK, France, Poland, Finland, Ireland, and Sweden. Its investments are approximately equally split between solar and wind. ORIT’s NAV per share increased by 6.9% to 109.40p over 2022. However, despite the higher asset value, its share price fell by 9.2% and trades at a discount to the NAV.

6.	Aquila European Renewables Income Fund
	Market cap: £333 million
	www.aquila-european-renewables.com
Like ORIT, Aquila European Renewables (“AERI”) is another new UK listed yieldco holding, having been acquired in the year. Unlike ORIT, AERI is not present in the UK, with its assets located in Spain, Portugal, Norway, Denmark, Finland, and Greece. Its investments are approximately equally split between wind and solar, with a small amount of hydro capacity. AERI’s NAV per share increased by 7.8% over 2022 to reach Euro 110.64 cents. However, and in common with ORIT, AERI’s shares moved in the opposite direction, falling by 9.6% during the year to close 2022 at a large discount to their NAV.

7.	Atlantica Sustainable Infrastructure
	Market cap: £2.5 billion
	www.atlantica.com
Atlantica Yield is listed in the US and operates as a yield company, with 70% (by cashflow) of assets being renewable energy and the balance being natural gas generation, electricity transmission, and water treatment plants. Atlantica has a commitment to maintain at least 80% of gross earnings from low-carbon assets, and it sits in the first percentile of the Sustainalytics ESG rankings. Their assets are located in the US, Europe, South Africa and Latin America, have a weighted average remaining contract length of 15 years, with 90% of revenues denominated in US dollars. Atlantica had another active year, including the acquisition of a large solar plant in Chile, to which it intends to add a battery storage facility. Despite reporting interim earnings consistent with the prior year, Atlantica’s share price fell by 27.6% in 2022 as it reacted to higher US interest rates.

8.	Iberdrola
	Market cap: £61.6 billion
	www.iberdrola.com
Iberdrola is a large Spain listed international utility and renewable energy business. It operates in the UK through its Scottish Power subsidiary, in the US through Avangrid, in Brazil through Neoenergia, plus operations in Mexico and other European countries. Its renewables business is one of the world’s largest, with Iberdrola targeting renewable energy investment of Euro 17 billion over the three years of 2023 to 2025, almost half of which will be in offshore wind. Installed renewable capacity is targeted to increase from 40 GW at the end of 2022, to 52 GW by the end of 2025. Results have been strong in 2022, with nine-month earnings per share to September increasing by 29.2%, and the shares gaining 5.0% over the year.

9.	Harmony Energy Income Trust
	Market cap: £296 million
	www.heitp.co.uk
Harmony Energy Income Trust (“HEIT”) is a UK listed battery storage investor which undertook a £210m share listing in November 2021. HEIT’s sponsor and major investor, Harmony Energy, is a leading UK battery storage developer and is responsible for the management of HEIT. Its first project, a 98 MW, 2-hour duration project, was completed in November 2022, and has the distinction of being Europe’s largest battery storage project. A further four sites are expected to be completed over the course of 2023. In October 2022, Harmony issued further new shares for cash proceeds of £15 million, enabling it to acquire a further three “ready to build” projects from its sponsor. HEIT’s shares increased by 24.1% in 2022.

10.	Clearway Energy
	Market cap: £3.0 billion
	www.investor.clearwayenergy.com
Clearway Energy is a US listed yield company, operating solar and wind generation facilities together with gas generation plants which operate under system reliability contracts to provide peaking / standby capacity. Clearway also owned a thermal energy business providing steam and hot water to commercial and public sector clients. The thermal business was sold in 2021 at an excellent price, which has allowed the company to reinvest proceeds in expanding their renewable energy business, with several new wind, solar, and storage assets acquired during 2022. Financial results reported during 2022 have been good. However, US renewable companies were weak on higher interest rates, with the company’s A shares held by PMGR falling by 10.6%.

Statement of Directors’ Responsibilities in Respect of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report and the Group and Parent Company financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with UK-adopted international accounting standards and applicable law and have elected to prepare the Parent Company financial statements on the same basis.

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

• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant and reliable;
• state whether they have been prepared in accordance with UK-adopted international accounting standards;
• assess the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Group or the Parent Company or to cease operations or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are 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, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors ‘Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

In accordance with Disclosure Guidance and Transparency Rule 4.1.14R, the financial statements will form part of the annual financial report prepared using the single electronic reporting format under the TD ESEF Regulation. The auditor’s report on these financial statements provides no assurance over the ESEF format.

Responsibility of the Directors in respect of the annual financial report

We confirm to the best of our knowledge:

• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
• the strategic report includes a fair review of the development and performance of the business and the position of the issuer, and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced, and understandable and provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy.

For and on behalf of the Board

Gillian Nott OBE

Chairman

14 March 2023

Directors and Advisers

Directors

Gillian Nott OBE – Chairman

Melville Trimble – Chairman of the Audit Committee

Victoria Muir – Chairman of the Remuneration Committee

Alternative Investment Fund Manager (“AIFM”)

Premier Portfolio Managers Limited

Eastgate Court 

High Street 

Guildford 

Surrey GU1 3DE

Telephone: [phone]

www.premiermiton.com

Authorised and regulated by the Financial Conduct Authority

Investment Manager

Premier Fund Managers Limited

Eastgate Court

High Street

Guildford

Surrey GU1 3DE

Telephone: [phone]

www.premiermiton.com

Authorised and regulated by the Financial Conduct Authority

Secretary and Registered Office

Link Company Matters Limited

6th floor

65 Gresham Street

London EC2V 7NQ

Registrar

Link Group

The Registry

10th Floor

Central Square

29 Wellington Street

Leeds LS1 4DL

Telephone: [phone]*

Overseas: [phone]*

E-mail: [e-mail]

www.signalshares.com

Depositary

Northern Trust Investor Services Limited

50 Bank Street

Canary Wharf

London E14 5NT

Authorised by the Prudential Regulation Authority (“PRA”) and regulated by the FCA and PRA

Custodian

The Northern Trust Company

50 Bank Street

Canary Wharf

London E14 5NT

Auditor

KPMG LLP

15 Canada Square

London E14 5GL

Tax Advisor

Crowe U.K. LLP

55 Ludgate Hill

London EC4M 7JW

Stockbroker

finnCap Capital Markets

One Bartholomew Close

London EC1A 7BL

Ordinary Shares

SEDOL 3353790GB

LSE  PMGR

Zero Dividend Preference Shares

SEDOL BNG43G3GB

LSE  PMGZ

Global Intermediary Identification Number

GIIN  W6S9MG.00000.LE.826

*Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The Registrar is open between 09:00 - 17:30 Monday to Friday excluding public holidays in England and Wales

For the purposes of complying with the Disclosure and Transparency Rules ("DTRs") and the requirements imposed on the Company through the DTRs, the Annual Report, as will be submitted to the National Storage Mechanism, contains the full text of the Directors’ Report at page 26, the Statement of Corporate Governance at page 34, the Directors’ Remuneration Report at page 38, the Audit Committee Report at page 42, and the Auditors' Report at page 46, which are excluded from this announcement.

LEI Number: 2138004SR19RBRGX6T68