Annual Financial Report

PREMIER MITON GLOBAL RENEWABLES TRUST PLC

Annual Financial Report for the year ended to 31 December 2023

The Directors present the Annual Financial Report of Premier Miton Global Renewables Trust PLC (the "Company") for the year ended 31 December 2023 (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 2023 but is derived from those accounts. Statutory accounts for the year ended 31 December 2023 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
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 £10.1 billion of funds under management at 31 December 2023. 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.

# See Glossary of Terms for definitions and Alternative Performance Measures within the full Annual Report and Accounts.

Company Highlights

for the year to 31 December 2023

	31 December2023	31 December2022	% change
Total Return Performance
Total Assets Total Return (1)#	(7.5%)	(7.3%)
S&P Global Clean Energy Index (2) (GBP)	(20.1%)	6.6%
Ongoing charges (3)#	1.81%	1.70%

Ordinary Share Returns
Net Asset Value per Ordinary Share (cum income) (4)#	146.86p	178.44p	(17.7%)
Mid-market price per Ordinary Share (2)	118.50p	155.50p	(23.8%)
Discount to Net Asset Value#	(19.3%)	(12.9%)
Revenue return per Ordinary Share	8.11p	7.29p	11.2%
Net dividends declared per Ordinary Share	7.40p	7.00p	5.7%
Net Asset Value Total Return (5)#	(13.5%)	(12.1%)
Share Price Total Return (2)#	(19.2%)	(17.7%)

2025 Zero Dividend Preference Share Returns
Net Asset Value per Zero Dividend Preference Share (4)	116.24p	110.71p	5.0%
Mid-market Price per Zero Dividend Preference Share (2)	110.00p	108.50p	1.4%
Discount	6.2%	2.0%

Hurdle Rates (6)#
Ordinary Shares
Hurdle rate to return the share price of 118.50p (2022: 155.50p) at 28 November 2025 (2)	(3.9%)	(0.8%)
Zero Dividend Preference Shares
Hurdle rate to return the redemption share price for the 2025 ZDPs of 127.6111p at 28 November 2025	(35.9%)	(27.7%)

Balance Sheet
Gross Assets less Current Liabilities	£43.3m	£48.3m	(10.3%)
Zero Dividend Preference Shares	(£16.5m)	(£15.7m)	(5.0%)
Equity Shareholders’ Funds	£26.8m	£32.5m	(17.7%)
Gearing (7)#	61.7%	48.4%
Zero Dividend Preference Share Cover (non-cumulative) (8)#	2.26x	2.51x

# Alternative Performance Measure (“APM”). See Glossary of Terms for definitions and Alternative Performance Measures within the full Annual Report and Accounts.

(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 within the full Annual Report and Accounts.

(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.

Chair’s Statement

for the year to 31 December 2023

Introduction

2023 has seen a continuation of the difficult markets experienced in 2022, with the Company’s portfolio recording another fall in underlying share prices despite good business performance. In this sense, markets have again focussed on the global economic backdrop while seeming to give little weight to fundamental results at the company level.

Many of the Company’s holdings showed a high degree of correlation to bond prices, with their share prices falling as interest rates and bond yields increased. The market often views cash flows from renewable energy companies as relatively static, and thereby assumes valuations are particularly sensitive to higher discount rates (in market parlance, they are a “bond-proxy”).

This analysis ignores the other factors which should influence the share price of a renewable energy company, and from which the portfolio benefitted during the year. These include business growth, power prices, the benefits of inflation on various incentive schemes or tariffs, and exogenous factors such as government policy. I believe this has resulted in the types of investments held by the Company trading below what many would consider to be fair value.

Given this perception, the economic backdrop was generally unfavourable for renewable energy companies. Bond yields rose steadily over the first 10 months of the year as markets realised that inflation was less transient than originally thought, with expectations of the eventual commencement of interest rate cuts being further pushed back into 2024. However, over November and December bond yields fell back sharply, to such an extent that, for the most part, they ended the year slightly lower than they started. Likewise, the portfolio staged a sharp recovery over the final two months, albeit not sufficient to recover fully the falls seen over January to October.

Looking longer-term however, the continued switch to renewable power generation within the global electricity sector will have benefits not only for the environment, but also for energy security, by generating more of the energy we need through domestic sources. The scale of the opportunity is illustrated by the agreement at COP 28 held in early December in Dubai, that participants will work to treble global installed renewable energy capacity by 2030.

Trading environment

European power prices moderated during 2023; a largely healthy development when seen against the very high and exceptionally volatile conditions of 2022. European gas and power prices have, however, settled at levels materially above their “pre-Ukraine” prices as markets adjust to higher volumes of seaborne Liquified Natural Gas (“LNG”) and much lower volumes of piped gas from Russia.

The situation in Ukraine appears no closer to being resolved than when I wrote my letter for the 2022 annual report. In addition, the situation in the Middle East is very worrying and could have important ramifications for energy markets in 2024.

What concerned markets in 2023, however, is that the long-term decline in renewable energy costs largely came to a stop as a result of higher project financing and capital goods costs. While the capital costs for solar projects have continued to fall on manufacturing over-capacity, the cost of wind turbines increased due to higher commodity costs (steel, copper etc) and the efforts by manufacturers to restore their financial health through improved margins.

High profile project cancellations, such as those by market-leading offshore wind developer Orsted (not owned in PMGR’s portfolio during 2023), acted to “spook” the markets, and the share prices of those companies in the portfolio with substantial offshore development businesses fell in sympathy. Likewise, the UK’s 2023 renewable energy auction failed to attract bidders for new offshore wind installations, as the maximum permitted price was viewed as too low in the current environment, this also being seen as a negative development by the market.

Against this, it appears that governments have now recognised the issue, with higher prices being achieved in German onshore and US offshore renewable energy auctions toward the end of the year, and the UK government now having indicated a far more realistic maximum bid price for the upcoming auction in 2024 for new offshore wind contracts. In addition, commercial power sales contracts are being struck at levels reflecting the current cost environment. This demonstrates that realism is starting to prevail in the renewable energy market. Importantly, renewable energy remains cost competitive against other forms of electricity generation.

Performance

Performance was disappointing, particularly given the fact that, generally speaking, holdings in the Trust recorded good business growth and financial results, with many paying higher dividends.

The total assets total return, measuring the return on the portfolio including all income and costs, was a negative 7.5%. This was, however, substantially better than the Company’s performance comparator, the S&P Global Clean Energy Index, which recorded a negative total return of 20.1% in sterling terms.

The extent of the sector’s under-performance can be illustrated by the fact that equities in general enjoyed a good year with positive performances seen in the major markets of the US and Europe.

The Company’s gearing, through the fixed return Zero Dividend Preference (“ZDP”) Shares, means that returns to Ordinary Shareholders are amplified, (or “geared”), with the net asset value (“NAV”) total return, including dividends paid to shareholders, being a negative 13.5%. The NAV per ordinary share fell by 17.7% to close the year at 146.86p.

In common with 2022, investment trust discounts, being the difference between the share price and the reported NAV per share, generally widened, and PMGR was no exception with the share price standing at a 19.3% discount to the NAV at the end of the year (2022: 12.9% discount). For this reason, the share price total return, based on share price movement plus dividends received, was negative 19.2%.

As mentioned above, the year finished well, with a gain in the ordinary share NAV of 28.4% over the final two months of the year. However, the Company has seen a difficult start to 2024 on weakening energy markets, combined with an uptick in bond yields.

Portfolio positioning

Both the geographical and sectorial composition of your Company’s portfolio remained largely unchanged.

The portfolio continues to be highly weighted to the UK and Europe to benefit from the fundamental and structural shift in those energy markets away from gas and toward renewables. Power prices remain strong historically and corporate buyers are keen to source their energy requirements responsibly. As a result, there has also been a substantial increase in the price of “renewable certificates of origin”, a useful addition to renewable energy companies’ revenues.

In the US, corporate demand to sign renewable energy purchase contracts is also high. There is strong demand growth among environmentally conscious, but power-hungry energy users, for example increased demand from datacentres. 2024 will see a presidential election, however, we believe that renewable energy demand growth from the corporate sector will continue irrespective of its outcome, and with much renewable energy policy being set at state level, we expect renewable development to continue to be strong.

The Federal Government does have the major role in tax policy, however, and there is potential for changes in the Inflation Reduction Act, which contains several tax incentives for renewables and has positively influenced the US renewables market.

Capital structure, gearing, and ZDP Shares

Following the weaker performance in the year, gearing increased from 48.4% at December 2022 to 61.7% at December 2023 (gearing being calculated as the ZDP Share liability divided by the equity attributable to Ordinary Shareholders).

The nature of the ZDP Shares means that the gearing is, for the time being, relatively fixed. The Board will review the Company’s capital structure in advance of both the Company’s upcoming continuation vote, due to be held at the 2025 AGM, and the maturity of the ZDP Shares in November 2025.

The share price of the ZDP Shares rose only slightly in the year, from 108.50p at the start of the year to 110.00p by the close of 2023. Their NAV increased at their accrual rate of 5%, to reach 116.24p at the close of the year. As such the ZDP Shares stood at a 5.4% discount to their accrued value. The ZDP Share Cover fell to 2.26x from 2.51x reflecting the fall in assets. Note that “Gearing” and “Zero Dividend Preference Share Cover” are Alternative Performance Measures; please see within the full Annual Report and Accounts for definitions and calculations.

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

Income and dividends

The net revenue return per Ordinary Share in 2023 was 8.11p, an increase of 11.2% on the 7.29p achieved in 2022. Revenue generation improved, with many holdings increasing their dividends in the year. Gross revenue received increased by 5.7% to £2.15 million. Total operating costs charged through the revenue account fell by 6.3% to £0.60 million, with lower gross assets meaning reduced investment management fees, together with modest savings in other operating costs.

Of particular note were the increased dividends received from UK renewable energy investment companies, where larger asset bases and inflation linked revenue streams generated improved cash-flows and enabled higher dividends to be paid to shareholders (standing in sharp contrast to their lacklustre share prices).

During the year, the Board declared three interim dividends in respect of the 2023 financial year, each of 1.85p per Ordinary Share. The Board has now declared a fourth interim dividend of 1.85p, to bring the total dividend for the year to 7.40p, fully covered by net revenue earnings. This represents an increase of 5.7% on the dividends paid in respect of 2022. The fourth interim dividend will be paid on 28 March 2024 with the shares to be marked ex-dividend on 7 March 2024.

Shareholder relations

The Company’s AGM will be held on 25 April 2024 at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London EC2M 7SH, at 12.30 p.m. where 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 renewable energy sector and the Company, on the Company’s website, located at www.globalrenewablestrust.com.

During the year, the Manager presented directly to investors via the “Investor Meet Company” platform, and with further events planned for 2024, I encourage shareholders wishing to hear more from the Manager to sign up to this free service. Please find further details at www.investormeetcompany.com.

The Board and the Manager remain committed to increasing the size of the Trust and were active in marketing the Trust’s shares to potential new investors during the year.

Environmental, Social and Governance (‘ESG’)

Given the change of investment policy in 2020, adopting a policy dedicated to renewable energy investment, consideration of ESG factors is an important part of the Manager’s approach to running the portfolio and the Company is proud to carry the London Stock Exchange’s “Green Economy” mark. Further, Premier Miton is a signatory to the Principles for Responsible Investment, an organisation which assists participating firms to develop and maintain responsible investment practices.

The Company’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 portfolio has strong environmental credentials, mainly consisting of companies generating renewable electricity in the form of wind, solar, biomass, and hydro. It also contains companies operating infrastructure such as electricity transmission and battery storage, essential for the delivery and management of renewably-generated power.

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

Audit and broker relationships

Following a review of the Company’s audit provision, Haysmacintyre LLP was appointed as the Company’s Auditor in July 2023 replacing KPMG LLP. I would like to thank KPMG for their audit work over past years, and we welcome Haysmacintyre as our new auditor.

In September, the Company’s broker, finnCap Capital Markets, joined with Cenkos Securities, to form Cavendish. The merged group has increased resources to service the Company and institutional shareholders. The Board looks forward to working with Cavendish in 2024.

Outlook

It is disappointing to record successive years of a falling NAV. However, there are several reasons to believe that 2024 will present a more positive investment environment.

Firstly, the interest rate cycle looks to have peaked, and market interest rates, or bond yields, are now heading lower. Higher rates have been a headwind which has exerted downward pressure on valuation metrics, and by implication, performance.

Secondly, the underlying operating performances of investee companies have been robust, and the development of both asset bases and financial earnings has been encouraging. The reduction in the valuation of the portfolio reflects the divergence of share prices from individual company performance metrics, as referred to in my opening remarks above.

Thirdly, the global political will to increase renewable energy volumes, has been reaffirmed. Planning laws have been adjusted to encourage faster development, tax incentives have been granted, and we expect various government sponsored renewable energy tariff auctions in 2024 to be struck at prices which account for the changed economics of new-build projects.

We expect growth and financial returns within the renewables sector to continue to be healthy, and we are optimistic that in time this will be recognised by markets, to the benefit of the Trust.

Gillian Nott OBE

Chair

6 March 2024

Investment Manager’s Report

for the year to 31 December 2023

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 7.5%. The performance was, however, ahead of the Trust’s comparator benchmark, the S&P Global Clean Energy Index, which returned a negative 20.1% in GBP terms.

Central banks responded to persistently high inflation with higher interest rates, and this had a dampening effect on the renewable sector. There is a debate as to whether central banks have over-tightened monetary policy, possibly leading to a recessionary environment in 2024, but markets are currently assuming a “soft-landing” with major equity indices recording a positive performance. Large US technology companies, or the so called “magnificent seven”, continue to drive the performance of the US market upwards.

As outlined in the Chair’s statement, the unfavourable macro-economic environment had a negative effect on valuations in the renewable and clean energy sector, together with other sectors viewed as “bond-proxies”, such as property. While there were some positive performances within the portfolio, there were a larger number of companies where positive business development was rewarded with a falling share price.

This has led to many companies trading at low valuations. Perhaps uncoincidentally, the year saw two companies in the portfolio receive takeover offers, although this was not sufficient to offset wider share price falls. Further details on these can be read below, and I would not be surprised to see further corporate activity in 2024.

Market review

For the generalist investor, and this was certainly the market’s take for the year, the sector presented an unattractive proposition in 2023. European power prices fell, while capital costs for new projects increased, so in theory, returns on new projects should be lower at a time when increased interest rates meant investors demanded higher returns. In addition, higher interest rates could be expected to have a negative effect on the net earnings of renewable energy companies which tend to have higher than average levels of financial gearing.

Looking more closely however, an alternative narrative can be presented. Power prices did indeed fall from their exceptional levels in 2022. However, they remain well above their “pre-Ukraine” levels, and a pull back to a more rational environment can only be viewed as healthy.

Capital costs increased for wind projects (although remain on a downward trend for solar), to the benefit of the long-term health of the turbine manufacturing sector, which has experienced widely reported trading difficulties over recent years. In response, PPA prices (power purchase agreements, where corporate energy buyers purchase long term power at a pre-agreed price) have flexed upwards to account for the higher costs. Further, government sponsored renewable energy auctions have cleared at higher levels and this should continue into 2024. In short, there is no evidence that returns on new projects have suffered a permanent reduction, and companies should be able to continue to invest at or above their cost of capital.

Despite the movements in capital costs, it is worth noting that renewable energy remains cost competitive against fossil fuel technologies.

Finally, renewable projects are, for the most part, financed with long term fixed price debt, protecting returns on existing projects from higher rates. Higher financing costs for new projects will, all else equal, be accounted for in the pricing of the power produced.

Gas prices remain the key price determinant in European power markets, and the gas market has undergone what is likely to be a permanent structural shift. Russia’s invasion of Ukraine has led to Europe switching from piped Russian gas - previously satisfying approximately one third of Europe’s gas demand - to liquified natural gas, (“LNG”).

European gas prices averaged Euro 41.2/MWh in 2023, well below the Euro 132.4/MWh average in 2022. However, these prices remain high by historical standards, at over twice the level seen in 2019 and 2020 (these prices being for a one-month forward contract traded at the Netherlands Title Transfer Facility, source Bloomberg).

European gas prices were held in check by lower demand, about 15% below “pre-Ukraine” levels, on the higher prices and warmer weather. Improved LNG availability, combined with weak Asian demand, particularly from China, allowed Europe to replace Russian gas while also filling storage for winter 2023/2024.

As such it was no surprise to see lower power prices, with German baseload prices averaging Euro 104.3/MWh, down from Euro 284.6/MWh in 2022, with the UK showing a similar trend. Mirroring the gas price, European 2023 wholesale electricity prices were approximately double their historic levels although were well below the exceptional levels of 2022 (prices quoted being for one-month forward baseload futures contracts, source Bloomberg). A recovery in French nuclear output also put downward pressure on power prices. With the exception of the UK, this has enabled European windfall taxes, imposed in 2022 to be removed.

The US energy market is relatively stable in comparison to Europe, with the US being largely self-sufficient in fossil fuels. Neither does it have a functioning nationwide carbon market, with only the state of California introducing one so far. Fortunately, the US has the space to construct very large-scale renewable energy projects benefiting from economies of scale, without having to resort to higher-cost options such as offshore wind development. Renewable energy is cost competitive despite the low costs of fossil fuel energy.

To speed up development, the US has implemented a series of incentives through the “Inflation Reduction Act”, which extended the life of existing tax credits while also offering several new valuable benefits to incentivise local supply chains.

In common with the past few years, North American renewable output per unit of capacity, was again below its long-term average, and there is some evidence that investors are beginning to price this into shares as a permanent reduction. Furthermore, renewable energy output tends to be sold on relatively long duration, fixed price contracts, which while reducing risk, do not protect the investor from movements in inflation. A return of both inflation and wind speeds to more normal levels in 2024 would be of benefit to the sector in North America.

Portfolio segmentation and allocation

The Trust seeks to offer investors diversified global exposure to renewable energy and sustainable infrastructure. Focussing on highly contracted and regulated listed infrastructure offers an attractive risk / reward dynamic for long-term investment, with high visibility of earnings and dividends.

In addition to electricity generation assets, the portfolio invests in related infrastructure such as energy storage, electricity transmission networks and utilities with large renewable energy businesses. The portfolio’s segmental allocation was almost unchanged over the year, as, on a fundamental basis at least, most holdings performed in line with our expectation. Additionally, the relative attractions of regional markets remained largely consistent with the previous year.

PORTFOLIO SECTOR CLASSIFICATION 2023
	2023	2022
Yieldcos and Investment Companies	40.7%	38.9%
Renewable energy developers	33.7%	29.9%
Renewable focused utilities	7.8%	9.5%
Energy storage	5.9%	9.0%
Biomass generation and production	5.1%	6.8%
Electricity networks	2.8%	2.3%
Renewable technology and service	2.0%	2.2%
Waste to energy	0.0%	1.3%

Renewable Energy Developers

As noted above, the share prices of many of the Trust’s renewable energy developer holdings, companies that develop projects from inception, fell during 2023, although, business wise, most investments performed well.

Starting with the positives, in Europe, Spanish listed Grenergy recorded a share price gain of 23.5%. Grenergy is primarily a solar developer, having a strategy to “sell some, keep some”. The company sold several Spanish projects at very attractive prices, which was well received by the market. Profits from asset sales are being utilised to build sizable new solar-plus-battery storage assets in the attractive Chilean market.

As referred to above, some holdings were subject to corporate activity during the year. One such was another Spanish-listed developer, OPD Energy which received a takeover offer from a private equity buyer. While the offer process had not completed by the end of the year, the holding was sold into the higher post-offer market price, realising a price 48.2% higher than the level at which the shares started the year. Further down the portfolio, another Iberian developer to receive a bid was Portuguese listed Greenvolt, although the holding was still held in the portfolio as at December 2023, its shares having risen by 4.9% in 2023.

Sentiment towards the offshore wind sector soured in the year due to problems at sector leader, Orsted (not held in the portfolio during the year), which was caught out by increased costs on development projects in the US.

This may be part of the reason why offshore wind specialist, Northland Power performed poorly, its shares losing 35.2% over the year despite good business development and solid financial results.

Another company whose share price did not match its fundamental performance was Bonheur. It operates a wind energy business (Fred Olsen Renewables) in the UK and Scandinavia, together with offshore wind installation vessels, plus a cruise line (Fred Olsen Cruises). The renewable energy business recorded reduced earnings on lower power pricing, but its cruise business experienced a sharp rebound from the COVID induced losses of 2021 and 2022. Its shares fell by 15.7% in the year.

RWE is now one of the world’s largest renewable companies. It undertook a large US acquisition in the year, and substantially increased its long-term growth forecasts at its Capital Markets Day held in November. Its financial results have been exceptionally strong through the year, benefitting from its ownership of flexible electricity generation (such as gas turbines and hydro-electricity) plus a very profitable trading business. Despite this, its share price fell by 1.0% in the year.

The share price of the other large cap developer held, Acciona Energias, lost 22.3% as very high 2022 earnings presented a difficult comparator.

Other smaller European developers, held further down the portfolio, generally performed well operationally. These tend to be held more for growth than yield. Across many investments, high power prices in 2022 gave a difficult financial comparator for 2023, disguising underling growth.

7C Solarparken, which owns smaller solar projects including commercial rooftop generation in Germany and Belgium, is a good example. Despite growing its operational portfolio capacity by over 10%, its shares fell by 15.1%. Likewise Baltic renewable developer Enefit Green, recorded a share price fall of 18.8%. It is on track to grow its operating capacity fourfold by 2026 and commissioned several new solar and wind assets in the year.

PORTFOLIO GEOGRAPHICAL ALLOCATION
	2023	2022
United Kingdom	35.49%	36.26%
Europe (excluding UK)	33.78%	30.72%
Global	14.71%	18.86%
North America	11.48%	9.16%
China	1.36%	3.11%
Latin America	3.18%	1.90%

PORTFOLIO MARKET CAPITALISATION PROFILE
	2023	2022
Large Cap (> £10bn)	14.0%	19.5%
Medium Cap (£2bn to £10bn)	23.2%	30.1%
Small Cap (£250m to £2bn)	57.4%	46.4%
Micro Cap (< £250m)	5.5%	4.0%

Yieldcos and Investment Companies

2023 was a difficult year for the Trust’s holdings in renewable energy investment companies, many of which traded with a high degree of correlation to government bonds.

In terms of the portfolio’s larger London-listed holdings, Greencoat UK Wind, NextEnergy Solar, Octopus Renewables Infrastructure, Aquila European Renewables, Foresight Solar Fund and Greencoat Renewables saw share price declines of 0.4%, 17.1%, 10.5%, 14.9%, 13.5%, and 12.2% respectively.

Published NAVs held up relatively well, with the negative effect of higher discount rates used in valuation calculations being mainly offset through higher inflation assumptions, the acquisition or commissioning of new assets, and solid operational performance.

Shares traded at higher discounts to their NAVs as markets focussed on the interest rate environment (despite this already being considered in the NAV calculation). While discounts persist, it is impossible for funds to issue new equity to acquire further renewable projects. Instead, cash flows generated in excess of dividend payments are being directed to buying back shares and the repayment of debt.

Longer term, I expect to see some consolidation in the sector, and in December, Octopus revealed it has approached Aquila with a view to a consolidation. The logic of a tie up between the two seems strong.

US-listed holdings fared no better, hampered by low wind speeds and higher interest rates. Clearway Energy (A Shares) and Atlantica Sustainable Infrastructure’s shares fell by 14.5% and 17.0% respectively. The holding size of the latter was cut back as Atlantica appears to be struggling to identify a long-term growth strategy.

PORTFOLIO CONCENTRATION
	2023	2022
10 largest investments	55.95%	51.74%
11th to 20th	25.23%	28.08%
21st to 30th	13.20%	12.37%
30th onwards	5.63%	7.81%

Other segments

Drax Group’s (biomass generation and production) share price fell by 30.3% despite excellent financial results as Drax locked into the high 2022 power price environment through forward sales at high prices. The weak share price may be partly attributable to continued scepticism regarding biomass, much of the commentary being ill-informed in my view.

The UK battery storage funds also performed poorly, with available frequency market revenues falling on higher capacity in the market. National Grid’s system upgrades to allow batteries access to the balancing market should, however, provide improved revenue potential. Gore Street Energy Storage Fund has emerged as the Trust’s preferred holding as it benefits from international diversification, including substantial growth projects in the US. Despite good execution on its growth pipeline, its shares fell by 20.6% in 2023.

National Grid (electricity networks) and SSE (renewable focussed utilities) both performed relatively well, with their shares gaining 6.1% and 8.4% respectively. Both benefit from strong inflation linkages in their regulated businesses, while SSE is set to see strong growth from its large North Sea renewable projects over the coming years.

In the US, the portfolio gained a new holding in AES (renewable-focussed utilities), which had a difficult year but looks set to see good long-term growth in its renewable business. The position was showing a small gain at the year end. Also in the US, the Trust added a modest position in renewable finance company Hannon Armstrong in October, selling out in December with an 80.4% total return over the two months of ownership.

Currency and hedging

The Trust made currency hedging gains of £0.6 million over the year. Hedging was carried out against the Euro and Hong Kong dollar, and mainly in the first half of the year. There are no open currency hedging contracts at the year end.

Outlook

Two successive years of share price falls have left many renewable energy companies trading at what appear to be attractive levels. UK renewable investment companies stand at discounts to their NAVs, which I believe are conservatively calculated. The portfolio’s renewable developers have continued to grow their businesses, and this has not been recognised by the market.

The long-term outlook for the sector is undimmed, and I expect to see continued strong underlying growth in 2024. I believe the economic environment remains one in which well-run companies can develop new projects based on unsubsidised market pricing, while making sensible commercial returns. Some individual companies may over-reach themselves and experience trading difficulties, but this does not mean the entire sector should be tarred with the same brush. Renewable energy growth will continue for economic and environmental reasons, irrespective of regulation and tax policy. Encouragingly, Western governments remain committed to helping the process.

James Smith

Premier Fund Managers Limited

6 March 2024

Investment Portfolio

at 31 December 2023

Company	Activity	Principal location of operation	Value £000	% total investments	Ranking 2023	Ranking 2022
Greencoat UK Wind	Yieldcos and Investment Companies	United Kingdom	3,182	7.6	1	2
NextEnergy Solar Fund	Yieldcos and Investment Companies	United Kingdom	2,846	6.8	2	3
Clearway Energy ‘A’	Yieldcos and Investment Companies	North America	2,808	6.7	3	10
Octopus Renewable Infrastructure	Yieldcos and Investment Companies	Europe (ex. UK)	2,425	5.8	4	5
Grenergy Renovables	Renewable energy developers	Global	2,369	5.6	5	11
Drax Group	Biomass generation and production	United Kingdom	2,155	5.1	6	1
Aquila European Renewables	Yieldcos and Investment Companies	Europe (ex. UK)	2,048	4.9	7	6
RWE	Renewable energy developers	Europe (ex. UK)	1,957	4.7	8	4
Bonheur	Renewable energy developers	Europe (ex. UK)	1,865	4.4	9	16
SSE	Renewable focused utilities	United Kingdom	1,856	4.4	10	15
Foresight Solar Fund	Yieldcos and Investment Companies	United Kingdom	1,734	4.1	11	12
Gore Street Energy Storage Fund	Energy storage	United Kingdom	1,326	3.2	12	22
Corp. Acciona Energias Renovables	Renewable energy developers	Europe (ex. UK)	1,216	2.9	13	14
National Grid	Electricity networks	Global	1,164	2.8	14	18
Northland Power	Renewable energy developers	Global	1,144	2.7	15	17
AES Corporation	Renewable focused utilities	North America	906	2.2	16	–
Atlantica Sustainable Infrastructure	Yieldcos and Investment Companies	Global	842	2.0	17	7
Greencoat Renewables	Yieldcos and Investment Companies	Europe (ex. UK)	769	1.8	18	24
Cadeler	Renewable technology and service	Europe (ex. UK)	761	1.8	19	38
Enefit Green	Renewable energy developers	Europe (ex. UK)	740	1.8	20	27
Cloudberry Clean Energy	Renewable energy developers	Europe (ex. UK)	714	1.7	21	29
Solaria Energía y Medio Ambiente	Renewable energy developers	Europe (ex. UK)	645	1.5	22	39
Harmony Energy Income Trust	Energy storage	United Kingdom	638	1.5	23	9
China Suntien Green Energy	Renewable energy developers	China	571	1.4	24	20
7C Solarparken	Renewable energy developers	Europe (ex. UK)	562	1.3	25	25
Gresham House Energy Storage Fund	Energy storage	United Kingdom	535	1.3	26	13
Polaris Renewable Energy	Renewable energy developers	Latin America	507	1.2	27	–
Algonquin Power and Utilities	Renewable focused utilities	North America	497	1.2	28	19
US Solar Fund	Yieldcos and Investment Companies	North America	449	1.1	29	26
GCP Infrastructure	Renewable financing and energy efficiency	United Kingdom	429	1.0	30	–
GreenVolt	Renewable energy developers	Europe (ex. UK)	425	1.0	31	40
MPC Energy Solutions	Renewable energy developers	Latin America	424	1.0	32	28
SDCL Energy Efficiency Income Trust	Renewable financing and energy efficiency	Global	423	1.0	33	–
Serena Energia (1)	Renewable energy developers	Latin America	408	1.0	34	31
Boralex	Renewable energy developers	Global	239	0.6	35	37
Atrato Onsite Energy	Renewable energy developers	United Kingdom	215	0.4	36	33
Innergex Renewable	Renewable energy developers	North America	163	0.3	37	41
Fusion Fuel Green (incl. warrants)	Renewable technology and service	Europe (ex. UK)	66	0.1	38	34
			42,023	99.9

Unquoteds	Activity	Principal location of operation	Value £000	% total investments
PMGR Securities 2025 PLC	ZDP Shares Subsidiary	United Kingdom	50	0.1
Total investments			42,073	100.0%

(1) Serena Energia (formerly Omega Energia).

Review of Top Ten Holdings

at 31 December 2023

1.	Greencoat UK Wind
	Market cap: £3.5 billion
	www.greencoat-ukwind.com
	Greencoat UK Wind (“UKW”) is a UK focussed renewable energy investment company, its portfolio containing both onshore (56% at June 2023) and offshore (44%) wind farms. It operates as an investment company, acquiring newly completed assets rather than developing projects in-house. High recent power prices and inflation have driven strong cash flows, with UKW’s 2022 dividend covered 3.2x in 2022 and by 2.1x in the first half of 2023. This has allowed the company to increase dividends by double digits across 2023 and 2024. As is the case with other UK listed renewable investment companies, higher interest rates had a dampening effect on the published NAV per share, as the rate at which future assumed cash flows are “discounted” back to current values, increased. However, a high level of exposure to inflation linked tariffs and uplifts on new investment acquisitions funded through cash flows, largely offset the higher discount rate such that UKW’s NAV per share of 167.1p at the start of the year fell by 1.8% to 164.10p by December 2023. Its share price also held up well, falling by 0.4% to 151.55p over the year, although remaining at a sizable discount to their NAV.

2.	NextEnergy Solar Fund
	Market cap: £544 million
	www.nextenergysolarfund.com
	NextEnergy Solar Fund (“NESF”) is a UK listed renewable energy investment company, owning large-scale UK solar assets, although has approximately 10% of its portfolio invested in solar assets in Italy. In addition, NESF is investing in battery storage, and expects to commission its first project in the first half of 2024. It also intends to co-locate storage assets on individual solar farms, enabling the individual site to better profile its output and maximise revenues from power sales. In 2024, the company aims to sell certain identified projects, to reinvest into new, ready to build, assets and repay short term borrowing. In this way, the company aims to gain additional returns, reduce financing risks, and demonstrate the robustness of its portfolio valuation. Over the first 9 months of 2023, NESF’s published NAV fell by 11.6% from 120.90p at December 2022 to 108.30p at September 2023 as higher interest rates impacted the valuation. Its share price fell 17.1% to 92.10p, standing at a material discount to NAV therefore.

3.	Clearway Energy
	Market cap: £2.5 billion
	www.investor.clearwayenergy.com
	Clearway Energy (“Clearway”) is a US listed yield, or investment, company (“yieldco”), operating 3.7 GW of US wind energy, 2.0 GW of solar, and 2.5 GW of gas capacity (gas generation operates under contract to utilities for system stability services). US yieldcos usually operate with a sponsor which acts as both the company’s manager while also developing new projects which can be acquired by the yieldco, subject to the consent of independent directors. Clearway’s sponsor, Clearway Group, is also a major investor in the yieldco, and is one of the largest renewable energy developers in North America. In total, Clearway Group is working on a renewable project pipeline totalling 29.1 GW, which will be made available to Clearway as it reaches commercial operation. 2023 saw low wind speeds in North America, dampening Clearway’s financial results reported during the year. However, Clearway made several acquisitions of new assets from its sponsor, and at improved returns reflecting the higher interest rate environment. Clearway’s A Shares held by PMGR fell by 14.5% in 2023.

4.	Octopus Renewables Infrastructure Trust
	Market cap: £568 million
	www.octopusrenewalesinfrastructure.com
	Octopus Renewables Infrastructure (“ORIT”) is a UK listed investment company with assets across Europe. It invests in a balanced portfolio of both wind and solar generation totalling 668 MW, while also having modest equity investments in renewable energy development companies. It completed a 50 MW onshore wind farm in Scotland during the year, having acquired the project at pre-construction stage, and will sell the power produced on a long-term contract to Kimberley Clark, having signed a similar contract on a UK solar asset with Iceland Foods earlier in the year. In October, aiming to demonstrate the robustness of its valuation, and to raise new capital for investment, ORIT sold its Polish wind farm assets at an indicated range of between 14% to 19% above their valuation within the NAV. Over the course of 2023, ORIT’s NAV per share fell 3.1% from 109.40p at December 2022 to 106.04p at December 2023, although its share price fell further, by 10.5% to 89.95p over the year, standing at a 15.2% discount to their NAV.

5.	Grenergy Renovables
	Market cap: £908 million
	www.grenergy.eu
	Grenergy is a Spain listed international solar developer, focussing on Spain and Chile. The company has grown steadily, now having 860 MW of operational capacity, 873 MW under construction, and 2.6 GW awaiting construction and in advanced development. Much of the equity funding for new assets to be retained in the portfolio comes from selling selected completed projects, and the company managed to sell several Spanish solar farms in the period, generating sales proceeds approximately 50% above invested capital. The company held a capital markets event in November, laying out plans for substantial investment in the Chilean market. Its shares gained 23.5% over 2023.

6.	Drax Group
	Market cap: £1.9 billion
	www.drax.com
	Drax Group operates the UK’s largest renewable energy facility, utilising biomass pellets manufactured from sustainable wood waste. The facility benefits from subsidy schemes to 2027. Drax is also one of the world’s largest producers of biomass pellets from its facilities in North America. Growth options include adding carbon capture facilities at the Drax power station, expanding pellet manufacturing, adding additional capacity at their Cruachan pump storage hydro plant in Scotland, and developing new biomass power stations with carbon capture in the US. Drax has benefitted from locking in high power pricing through its forward hedging programme, delivering improved financial results in 2023. Despite this, its shares fell by 30.3% during the year.

7.	Aquila European Renewables Income Fund
	Market cap: £333 million
	www.aquila-european-renewables.com
	Like ORIT, Aquila European Renewables (“AERI”) is an investment company, focussed on Europe, having a broad spread of both geographic and technology exposures. In December, ORIT announced that it had approached the board of AERI over the course of 2023 with a view to a combination of the two companies. This has logic given AERI’s sub-scale size, and complimentary portfolios with relatively little overlap. AERI’s NAV fell by 10.9% from Euro 110.60c to Euro 98.52c during 2023, partly as a result of tax changes in Norway, with its share price falling by 14.9% to Euro 78.50c, despite the company actively buying back its shares over the year.

8.	RWE
	Market cap: £26.6 billion
	www.rwe.com
	RWE is a German multi-national energy company, which is transitioning from fossil fuels to clean energy. It has expanded rapidly in renewables over recent years, and recent financial results have been exceptionally strong. In a capital markets event held in November, RWE outlined plans to step up spending on renewable energy further still, the company now envisaging spending Euro 55 billion between 2024 and 2030 on clean technologies, having already invested Euro 20 billion over 2021 to 2023, including its purchase of US renewables business, Con. Edison Clean Energy. RWE is particularly strong in offshore wind development. RWE’s share price fell by 1.0% over 2023.

9.	Bonheur
	Market cap: £794 million
	www.bonheur.no
	Bonheur is a Norway listed renewable energy company operating under the Fred Olsen Renewables brand. It also owns three offshore wind turbine installation vessels through the Fred Olsen Windcarrier business and operates four cruise ships through Fred Olsen Cruises. At September 2023 the renewables business operated 788 MW of wind farms, mainly in Scotland, but also in Sweden and Norway, with 17 MW under construction and a further 530 MW consented and awaiting construction start. Its offshore installation vessels are highly contracted for coming years, and the cruise business is recovering well from losses incurred during the Covid pandemic. Despite the encouraging outlook, its shares fell by 15.7% in 2023.

10.	SSE
	Market cap: £20.3 billion
	www.sse.com
	SSE is a vertically integrated utility owning power generation assets together with electricity network infrastructure. SSE’s electricity transmission business is experiencing high growth as it expands capacity to accommodate the growth in renewable electricity. SSE’s thermal energy business primarily operates gas fired power stations, acting as essential flexible capacity to facilitate the energy transition. Finally, SSE is a major investor in UK renewable energy, aiming to double its renewable energy capacity to 9 GW by 2027. It has a strong position in offshore wind, currently building Dogger Bank, the world’s largest offshore wind farm at 3.6 GW. SSE’s share price gained 8.4% in 2023.

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

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

Company law requires the Directors to prepare 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

Chair

6 March 2024

Directors and Advisers

Directors

Gillian Nott OBE – Chair

Melville Trimble – Chair of the Audit Committee

Victoria Muir – Chair 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 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

Tax Advisor  (Tax services are delegated by Premier Portfolio Managers Limited)

Northern Trust Global Services SE50 Bank Street Canary Wharf London E14 5NT

(appointed 28 December 2023)

Crowe U.K. LLP 55 Ludgate Hill London EC4M 7JW

(resigned 27 December 2023)

Auditor

Haysmacintyre LLP 10 Queen Street Place London EC4R 1AG

(appointed 13 July 2023)

KPMG LLP 15 Canada Square London E14 5GL

(resigned 3 July 2023)

Stockbroker

Cavendish Capital Markets Limited One Bartholomew Close London EC1A 7BL

Telephone: [phone]

Ordinary Shares
SEDOL	3353790GB
LSE	PMGR

Zero Dividend Preference Shares
SEDOL	BNG43G3GB
LSE	PMGZ

Global Intermediary Identification Number
GIIN	W6S9MG.00000.LE.826

LEI: 2138004SR19RBRGX6T68

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