REG-Premier Miton Global Renewables Trust Plc: Annual Financial Report
06/03/2025 07:15
PREMIER MITON GLOBAL RENEWABLES TRUST PLC
Annual Financial Report for the year ended to 31 December 2024
The Directors present the Annual Financial Report of Premier Miton Global
Renewables Trust PLC (the "Company") for the year ended 31 December 2024 (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
(https://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. 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 2024 but is derived from those
accounts. Statutory accounts for the year ended 31 December 2024 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 similar
infrastructure investments.
Company Summary
The Company received London Stock Exchange’s Green Economy Mark, a
classification which is awarded to companies and funds that are driving the
global green economy, in January 2021. To qualify for the Green Economy Mark,
companies and funds must generate 50% or more of their total annual revenues
from products and services that contribute to the global green economy.
Group
Premier Miton Global Renewables Trust PLC (the “Company”) (formerly Premier Global Infrastructure Trust PLC), and its wholly-owned subsidiary, PMGR Securities 2025 PLC (“PMGZ”).
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.
ZDP 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 £10.7 billion of funds under management at 31 December 2024. 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” or the “Investment Manager”) 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 (“APM”) within the full Annual Report and Accounts.
Company Highlights
for the year to 31 December 2024
31 December 31 December
2024 2023 % change
Total Return Performance
Total Assets Total Return (1)# (14.0%) (7.5%)
S&P Global Clean Energy Index (2) (GBP) (24.1%) (20.1%)
Ongoing charges (3)# 2.06% 1.81%
Ordinary Share Returns
Net Asset Value per Ordinary Share (cum income) (4)# 101.61p 146.86p (30.8%)
Mid-market price per Ordinary Share (2) 93.00p 118.50p (21.5%)
Discount to Net Asset Value# (8.5%) (19.3%)
Revenue return per Ordinary Share 7.55p 8.11p (6.9%)
Net dividends declared per Ordinary Share 8.00p 7.40p 8.1%
Net Asset Value Total Return (5)# (26.1%) (13.5%)
Share Price Total Return (2)# (15.2%) (19.2%)
2025 ZDP Share Returns
Net Asset Value per ZDP Share (4) 122.07p 116.24p 5.0%
Mid-market Price per ZDP Share (2) 118.00p 110.00p 7.3%
Discount (3.3%) (5.4%)
Hurdle Rates (6)#
Ordinary Shares
Hurdle rate to return the share price of 93.00p (2023: 118.50p) at 28 November 2025(2) (1.9%) (3.9%)
ZDP Shares
Hurdle rate to return the redemption share price for the 2025 ZDPs of 127.6111p at 28 November 2025 (52.3%) (35.9%)
Balance Sheet
Gross Assets less Current Liabilities £35.9m £43.3m (17.1%)
ZDP Shares (£17.4m) (£16.5m) 5.0%
Equity Shareholders’ Funds £18.5m £26.8m (30.8%)
Gearing (7)# 93.6% 61.7%
ZDP Share Cover (non-cumulative) (8)# 1.89x 2.26x
# APM. See Glossary of Terms for definitions and APMs 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 net asset values with dividends marked “ex-dividend”.
(6) Source: PFM Limited. Hurdle rate definition can be found in the Glossary of Terms and APMs within the full Annual Report and Accounts.
(7) Source: PFM Ltd. Based on ZDP 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 2024
Introduction
It is disappointing to report that 2024 saw a further deterioration in the
investment environment for the renewable energy sector. Equity markets, with
some exceptions, made good gains, shrugging off higher yields on government
bonds. Despite this background, renewable energy companies again remained out
of favour among investors.
In theory, higher yields should have a negative valuation effect on equity
markets. This applies particularly to technology companies, as positive
cashflows are often far into the future, and using a higher discount rate to
calculate their value today should therefore have an outsized effect on their
share prices. This has not, however, applied in practice, with US technology
companies continuing their upward march.
Inflation in the UK and US has remained higher than original expectations, and
core inflation remains above targets set by central banks. The Federal Reserve
made three cuts to rates in the second half of the year, taking their
benchmark rate from 5.50% to 4.50%. Likewise, the Bank of England cut rates
from 5.25% to 4.75%. However, markets anticipate above-target inflation
continuing into 2025, and consequently anticipate fewer rate cuts than
previously expected.
Given the inflationary backdrop, government bond yields have continued to move
upwards. 10-year US government bond yields increased from 3.88% at the end of
2023, reaching 4.57% at the end of 2024. UK 10-year Gilt yields likewise
climbed from 3.54% to 4.57%. Sentiment toward those equity sectors considered
to be ‘bond-proxies’ - those deemed to have relatively fixed revenue
streams, which includes renewable energy companies – has been weak.
In the EU, weak economic conditions caused inflation to moderate faster,
allowing the European Central Bank to cut policy rates from 4.50% to 3.15%,
although renewable energy companies still performed poorly.
More modest inflationary pressures in the EU mean government bonds trade at
lower yields to US and UK counterparts. However, an issue to watch in 2025
will be the extent to which spreads between yields in the core economies
diverge, and how the ECB manages any increase.
Trading environment
Despite the considerable pessimism affecting the share prices of renewable
energy companies, the fundamental trading environment has been relatively
robust.
Renewable energy has continued to grow market share over other forms of
energy, and power prices have strengthened still further, driven by higher
prices for natural gas.
Renewable energy remains in demand from corporate buyers, keen to reduce their
carbon emissions. A welcome trend for power generators is increased power
demand from data centres, particularly in the US, but also Europe. The use of
artificial intelligence will further increase data centre power demand.
Following many years of declining demand, most energy consultancies now expect
electricity demand in western markets to begin to grow once more. In addition,
renewables are expected to continue to increase their share of the power
market at the expense of higher cost forms of power generation such as natural
gas and new nuclear. Issues remain such as balancing weather-dependant flows
of electricity on the grid, and substantial investment in electricity
transmission and energy storage will be required to facilitate the transition
to a lower carbon grid, leading to investment opportunities in those areas.
The new UK government is pressing ahead with plans to de-carbonise the UK
power system by 2030. And while this looks to be exceptionally ambitious, the
direction of travel is clear. The UK will conduct another renewable energy
auction in 2025, awarding competitively priced contracts for differences, or
“CFDs”, guaranteeing operators an effective fixed power price underwritten
by the government. We await details of maximum pricing and volume of contracts
to be offered.
Much has been made of the US presidential election. However, I would note that
renewable electricity has the lowest cost of generation in the US, benefitting
from economies of scale that come from the large size of US renewable energy
installations. I expect demand for renewable energy to increase irrespective
of who is in the White House, as indeed it did during President Trump’s
first term of office. His election is potentially negative for offshore wind
development in the US; however, this is of only peripheral relevance to your
Company’s portfolio.
Renewable energy should also continue to see a supportive political
environment in Europe, despite somewhat difficult politics at times. Europe
remains a substantial importer of energy, and renewable energy represents both
a domestic source and one in which the costs are not subject to volatile
commodity pricing.
Performance
It is very disappointing to report a third consecutive year of negative
performance, particularly given the solid underlying trading, with a few
isolated exceptions, across the portfolio.
The total assets total return, measuring the return on the portfolio including
all income received and costs paid, was a negative 14.0%. In common with 2023
however, this was substantially ahead of the Company’s performance
comparator, the S&P Global Clean Energy Index, which recorded a negative total
return of 24.1% in sterling terms.
Your Company’s capital structure, which employs gearing in the form of the
Zero Dividend Preference Shares (“ZDPs”), acts to amplify underlying
returns within the net asset value (“NAV”). As such the NAV total return
including dividends paid to shareholders, was a negative 26.1%. The NAV per
Ordinary share fell by 30.8% to close the year at 101.61p.
The discount at which the Ordinary share price traded by reference to the NAV,
reduced, and stood at 8.5% at the year end, a narrowing from 19.3% at the end
of 2023. The Ordinary share price total return was therefore a little better
than the NAV return, at a negative 15.2%.
Portfolio positioning
Although the portfolio remains largely unchanged, the allocation to renewable
energy investment companies has reduced. Weightings in companies with higher
growth prospects have been increased, including further investment in offshore
wind turbine installation vessels, electricity transmission, and a first
investment in electric vehicle charging.
The portfolio’s UK weighting has been reduced, reflecting lower investment
in renewable energy investment companies. The holdings in companies classified
as “global” – those operating in multiple geographies – have been
increased, mainly because of stock selection rather than as a tactical trade.
The North American weighting remains modest, although several “global”
investments have substantial North American exposure. Further details of the
portfolio are contained within the Investment Manager’s Report.
Capital structure, gearing, and ZDP Shares
Following the weaker performance of the portfolio in the year, gearing
increased from 61.7% at December 2023 to 93.6% at December 2024 (gearing being
calculated as the ZDP share liability divided by the equity attributable to
Ordinary Shareholders).
The share price of the ZDP Shares rose by 7.3% in 2024, from 110.00p to
118.00p. Their NAV increased at their accrual rate of 5%, to reach 122.07p at
the close of the year. As such the ZDP Shares stood at a 3.3% discount to
their accrued value. The ZDP Share Cover fell to 1.89x from 2.26x, reflecting
the fall in assets. Note that “Gearing” and “ZDP Share Cover” are
Alternative Performance Measures; please see pages 78 to 82 within the full
Annual Report and Accounts for definitions and calculations.
No Ordinary nor ZDP shares were either issued or redeemed in the year.
Continuation Vote and Future of your Company
Based on the market situation and valuations existing at the date of this
report, the Board does not believe it will be cost effective to issue new ZDP
Shares at the maturity of the existing ZDP issue in November this year. This
would leave the size of the Company, measured by gross assets, at a level
which the Board believes would be too small to be viable.
Further, a lack of demand from investors for smaller sized investment trusts
indicates that increasing the size of the Company through an Ordinary Share
issue is unlikely to be possible.
Your Board will therefore explore other options which may include the wind up
of the Company with a distribution of cash, with a potential option for
shareholders to roll-over into a similar open-ended fund. The Board will
consult with shareholders and advisers to reach the optimal outcome.
With this in mind, having consulted with advisers and Premier Miton, the Board
recommends shareholders vote in favour of the continuation resolution at the
2025 AGM to be held in April. This will allow the Board maximum flexibility to
bring forward proposals to wind up or otherwise reconstruct the Company, or
should market conditions improve substantially, to continue as an Investment
Trust. Voting in favour of continuation does not, of itself, mean that the
Company will continue in existence after the repayment of the ZDP shares in
November this year.
Income and dividends
The net revenue return per Ordinary Share in 2024 was 7.55p, a decrease of
6.9% from 8.11p achieved in 2023. This was partly a result of dividend cuts in
the UK energy storage sector, and a greater focus on growth investments in the
portfolio. Most companies within the portfolio managed either to hold or to
increase their dividends, and with the exception of the UK energy storage
sector, the income environment is robust.
During the year, the Board declared three interim dividends in respect of the
2024 financial year, each of 2.00p per Ordinary Share. The Board has now
declared a fourth interim dividend of 2.00p, to bring the total dividend for
the year to 8.00p, necessitating a modest transfer from revenue reserves given
the full year dividend is higher than net revenue return. The fourth interim
dividend will be paid on 28 March 2025 with the shares to be marked
ex-dividend on 6 March 2025.
Shareholder relations
Your Company’s AGM will be held on 24 April 2025 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 Investment 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
2025, I encourage shareholders wishing to hear more from the Manager to sign
up to this free service. Further details may be found at
www.investormeetcompany.com.
Environmental, Social and Governance (“ESG”)
Given the change of investment policy in 2020 to one dedicated to renewable
energy investment, consideration of ESG factors is an important part of the
Investment 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 in developing
and maintaining responsible investment practices.
Reviews of your Company’s portfolio are also undertaken 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, battery storage, and vehicle charging,
essential for the delivery and management of renewably generated power.
Your Company’s Investment Manager engages with investee companies to promote
good governance and encourage responsible social policies. The Investment
Manager always votes at the shareholder meetings of investee companies.
In September the Company announced that it would not seek to adopt a label for
its products under the FCA’s Sustainability Disclosure Requirements
(“SDR”). In light of this, a non-material change to the investment policy
was made. The previous policy referred to “sustainable infrastructure
investments”, which was changed to “similar infrastructure investments”.
No changes were made to the portfolio because of this technical change.
Outlook
It is frustrating to experience a further year of difficult performance,
despite your Company’s portfolio again outperforming its comparator index.
The Board believes, however, that share price declines have left investments
in the portfolio trading at attractive levels. While this may well make for
profitable long-term investment, short-term performance will likely continue
to be dictated by macro-economic factors.
In my statement in the 2023 annual report, I expressed a belief, in line with
market expectations at that time, that bond yields would be heading lower.
Unfortunately, this turned out not to be the case. Whether 2025 is the year in
which inflation is tamed, and interest rates fall, must now be open to some
doubt. I am confident, however, in saying that a great deal of ‘bad news’
looks to be built into the share prices of renewable energy companies, and
that should macro conditions improve, shareholders may finally be rewarded
following several difficult years for the sector.
While 2025 will undoubtedly bring further challenges, your Board remain
hopeful for improved performance. The Board and Investment Manager are mindful
of the need to realise investments from the portfolio to repay the 2025 ZDP
Shares in November, while also considering proposals for the future of the
Company in the interest of the Ordinary Shareholders.
Gillian Nott OBE
Chair
5 March 2025
Investment Manager’s Report
for the year to 31 December 2024
Performance overview
It is very disappointing to report another negative performance in 2024, with
renewable and clean energy companies remaining out of favour with investors.
The total assets total return performance, including costs, was -14.0%. This
was however, in common with 2023, an out-performance of your Company’s
benchmark performance comparator, the S&P Global Clean Energy Index, which
returned -24.1% in GBP terms.
Inflation has proved to be more persistent than originally anticipated,
particularly in the US and the UK. Fiscal policy has remained loose, with
Governments running sizable budget deficits, which hasn’t helped contain
price rises. Monetary policy has therefore been tighter than it might
otherwise have been, although rate cuts did commence in the second half.
The share price performances of renewable energy companies were again
correlated to bond yields. Higher bond yields indicate a risk that inflation
will remain above target in coming years, and that the interest rate cycle
will be both longer and shallower than originally expected.
The market views this scenario as being particularly negative for renewable
energy companies, seeing them as having relatively fixed, or ‘bond-like’,
revenue streams. Higher interest rates reduce the present value of these cash
flows as they are discounted at higher rates. In addition, some energy sales
contracts, particularly in the US and Europe, are based on long-term fixed
prices, and higher inflation acts to reduce their real value.
Toward the end of the year performance was also affected by the result of the
US election, with the assumption that President Trump may reverse the Biden
Administration’s Inflation Reduction Act, which grants tax credits and other
incentives to renewable and clean energy investments. This remains to be seen,
however the basic facts that renewable energy is a cost competitive form of
new energy in the US, and that demand is driven by large scale corporate power
users focussed on reducing their carbon emissions, indicate that renewable
energy facilities will continue to be built.
Market review
Despite the difficult economic backdrop, renewable energy companies enjoyed a
positive trading environment in 2024.
In Europe, after some initial weakness in the first quarter, power prices rose
consistently from spring onwards driven by higher gas prices, with Europe now
being a market that imports large quantities of liquified natural gas or
“LNG”, and therefore subject to international pricing.
For those generators with exposure to power markets, i.e. with capacity not
operating under long term government set tariffs, or under long term corporate
power sales contracts, this was a positive development. This might prove to be
temporary however, with additional global LNG capacity expected to be
available in coming years. An opposing view is that any additional LNG supply
will be absorbed by latent demand in Asia.
The war in Ukraine remains ongoing which has forced European politicians to
prioritise energy security. Renewable energy is by its nature a form of energy
that is generated relatively close to where it is used, while at the same time
having the benefit of reducing a country’s exposure to international
commodity prices.
The UK is subject to the same dynamics and remains a substantial energy
importer. Within that, it is also a net electricity importer via various
interconnectors to continental Europe and Scandinavia. This is a potential
strategic weakness, and the new Government’s target to have a carbon free
electricity grid by 2030 should help address not only carbon emissions, but
also energy security.
Given the backdrop of insufficient domestic electricity supply in the UK,
together with a need for substantial new renewable energy capacity, it might
reasonably be expected that electricity prices will remain relatively high.
Further, the impact of gas prices on electricity pricing should reduce over
time, as gas fired generators are displaced by lower cost renewables, and
increasingly operate only at peak times or as standby capacity.
Most new renewable capacity in the UK is expected to come from offshore wind,
which although relatively competitive against fossil fuels, is generally more
costly than other forms of renewable generation. These are exceptionally large
capital projects, which require government support through price guarantees
(the contracts for difference system). Higher interest rates have also added
to the finance costs required to be recovered through electricity prices. The
UK’s Auction Round 7 (“AR7”) auction to be held in 2025 will be a key
test of the government’s ambitions.
The costs of solar generation and battery storage have continued to fall. The
addition of storage to solar projects allows the generator to sell power at
peak times and obtain higher prices. It also allows countries with good solar
resources to replace fossil fuels with low cost, clean and reliable solar.
Spain, for instance, looks set to take the lead in the development of data
centres. Northern Chile is another key location to which the portfolio has
material solar plus storage exposure.
In the US, many generators have reported strong demand for new renewable
projects, particularly from the major technology companies. Data centre
demand, especially those focussed on power hungry artificial intelligence
processors, is driving power demand upwards, creating a positive operating
environment for renewable generators.
Grid connected electricity storage is also expected to grow strongly in the
US, as utilities switch away from fossil fuel generation toward renewables.
This is an area to which the portfolio has increased exposure over 2024.
PORTFOLIO SECTOR CLASSIFICATION 2024
2024 2023
Renewable energy developers 34.2% 33.7%
Yieldcos and Investment Companies 33.2% 40.7%
Renewable focused utilities 6.9% 7.8%
Biomass generation and production 5.5% 5.1%
Energy storage 5.0% 5.9%
Renewable technology and service 4.9% 2.0%
Renewable financing and energy efficiency 4.1% 2.0%
Electricity networks 3.9% 2.8%
Renewable fuels and charging 2.2% 0.0%
Portfolio segmentation and allocation
The Trust seeks to offer investors diversified global exposure to renewable
energy and similar infrastructure. Focussing on contracted and regulated
assets offers an attractive risk / reward dynamic for long-term investment,
with high visibility of earnings and dividends.
In addition to electricity generation, the portfolio invests in related
infrastructure such as energy storage, electricity transmission networks, and
offshore installation vessels. A new segment for 2024 is renewable fuels and
charging, encompassing renewable natural gas and electric vehicle charging
infrastructure.
Segmental allocations were relatively unchanged over the year, however, the
allocation to yieldcos and investment companies was reduced with the proceeds
reallocated into renewable technology and service (offshore installation
vessels), renewable fuels and charging (primarily an electric vehicle charging
company), and also renewable financing and energy efficiency.
The geographic weightings remained relatively unchanged, although with a
slightly lower investment in the UK, and increased investment in companies
operating in across several jurisdictions, classified as Global.
Renewable energy developers
Renewable energy developers are companies that develop renewable projects from
first initiation, through to construction and operation. This contrasts to the
investment companies, which tend to invest in built projects, developed by
third parties.
Spanish listed Grenergy Renovables had another good year, although its share
price fell by 4.5%. It has continued to develop its very large solar plus
storage asset in Chile, ‘Oasis Atacama’, which has 2,000 MW of solar
capacity and 11,000 MWh of battery storage capacity. In December it sold the
first three phases of the project, equal to a little over 20% of the total
project size, all of which scheduled for commissioning by the end of 2025 for
an excellent price. This should provide the company with the equity capital
required to fund the remainder of the project.
Oslo listed Bonheur was one of the few holdings to post a share price increase
in 2024, its shares gaining 8.4%. It operates a wind energy business (Fred
Olsen Renewables) in the UK and Scandinavia, together with offshore wind
installation vessels (Fred Olsen Windcarrier), plus a cruise line (Fred Olsen
Cruises). Although the renewables business has seen lower earnings in the
year, given the fall in power pricing from 2023 to 2024, profitability in
installations vessels and cruise lines has shown good growth.
The shareholding in Northland Power was increased substantially toward the end
of the year, to take advantage of share price weakness. The company has large
investments in offshore wind in the North Sea, and is in the latter stages of
constructing projects off Poland and Taiwan. We believe the shares, which fell
by 25.5% in the year, have been sold down on sentiment arising from the US
presidential election, despite the company only owning operational contracted
onshore assets in North America.
Likewise, RWE had a disappointing year, its shares falling 30.4%, and has, we
believe, lost value on sentiment surrounding its US investments, and also from
reporting lower earnings during 2024 as a result of power price declines from
the exceptional levels seen in 2023. RWE has now commenced a Euro 1.5 billion
share buyback programme, indicating an improved commitment to shareholder
value.
The shareholding in Enefit Green has been increased. The company is the
largest renewable energy owner in the Baltic region and has an ambitious
growth plan to more than double operating capacity over 2025 and 2026. Its
share price fell by 22.4% in 2024.
During the year, the final Chinese investment, China Suntien Green, was sold,
removing the small residual Chinese exposure. European renewables developer
Greenvolt, was also sold in the year, having received a takeover offer.
A new position, in global offshore wind developer Orsted, was started toward
the end of the year. Its share price, we believe, having over-reacted to the
US election.
PORTFOLIO GEOGRAPHICAL ALLOCATION
2024 2023
Europe (excluding UK) 33.67% 33.78%
United Kingdom 29.30% 35.49%
Global 23.29% 14.71%
North America 10.67% 11.48%
Latin America 3.07% 3.18%
China 0.00% 1.36%
PORTFOLIO MARKET CAPITALISATION PROFILE
2024 2023
Large Cap (> £10bn) 13.6% 14.0%
Medium Cap (£2bn to £10bn) 33.5% 23.2%
Small Cap (£250m to £2bn) 38.7% 57.4%
Micro Cap (< £250m) 14.1% 5.5%
Yieldcos and Investment Companies
Like the renewable energy developers, renewable energy investment companies
(in US terminology “yieldcos”), performed poorly in 2024, largely on the
back of higher bond yields we believe.
In terms of the portfolio’s larger London-listed holdings, Greencoat UK
Wind, Octopus Renewables Infrastructure, NextEnergy Solar, and Foresight Solar
Fund, saw share price declines of 15.7%, 24.4%, 29.1%, and 24.7% respectively.
Reported net asset values (“NAV”) declined by mid-single digits on average
over the first three quarters of 2024, and hence, share prices have moved to
substantial discounts when measured against NAV. NAV weakness has been caused,
in the main, by lower long term power price assumptions, with higher interest
rate assumptions being offset by the benefits of higher inflation.
Markets are concerned about sustainability of dividends, which I believe is
misplaced. Cashflows have been good, and with power prices strengthening over
the year, this should remain the case. Indeed, many companies in the sector
are now using excess cashflows to buy back shares, taking advantage of
depressed share prices.
Markets are also concerned about gearing; the debt levels carried by some of
the companies. This is being addressed through asset sales, with both
NextEnergy Solar and Octopus Renewables managing to sell assets during the
year at valuation levels above that included within their NAVs, illustrating
the divergence in valuations between private and public markets. Further
progress should be made in 2025.
US listed “Yieldcos” fared better although still saw share price declines.
Clearway Energy’s share price (class A shares) fell by 4.4%. The position in
Atlantica Sustainable Infrastructure was sold in the year into an offer for
the company.
PORTFOLIO CONCENTRATION
2024 2023
10 largest investments 55.07% 55.95%
11th to 20th 28.73% 25.23%
21st to 30th 13.68% 13.20%
30th onwards 2.51% 5.63%
Other segments
Drax Group’s (biomass generation and production) share price increased by
32.2% on continued excellent financial results and the prospect of operating
the Drax power station beyond the expiration in 2027 of existing power sales
arrangements, utilising carbon capture technology.
London listed battery storage funds were a disappointment with the trading
environment of UK assets having deteriorated. Dividends were suspended at both
Gresham House Energy Storage Fund and Harmony Energy, and the entire holding
in the former was sold in the year. We have focussed investment on Gore Street
Energy Storage Fund, which is internationally diversified, and will commission
two large projects in the US in early 2025. Harmony, which owns premium
quality sites, is now evaluating offers for its assets, and we expect news on
this in the first half of 2025. Gore Street’s share price fell by 45.6% in
the year, and Harmony by 17.8%.
National Grid (electricity networks) carried out a £7 billion rights issue in
the first half of the year, to help fund its substantial capital expenditure
budget through to the end of the decade. Its shares fell by 3.3% in the year.
SSE (renewable focussed utilities) is also undertaking large scale investments
in electricity transmission, together with the construction of new offshore
wind farms in the North Sea. Its shares fell by 13.4% in the year.
The holding in Cadeler (renewable technology and service), which operates a
fleet of offshore wind turbine installation vessels, was increased. It is
undertaking a major fleet expansion, and its first new vessel was delivered at
the end of the year, taking the operational fleet to five, with a further six
on order. Its share price increased by 42.2% in 2024. Market participants
believe there is likely to be a shortage of the very large vessels capable of
installing the new generation of offshore turbines, and the company has signed
contracts for future work at attractive prices.
Investment Activity
The portfolio was relatively stable during 2024, with investment activity
being lower than 2023. Investment purchases totalled £7.5 million and sales
£7.3 million.
Outlook
Another year of valuation declines in the renewable sector has left many
companies trading at, what I believe to be, exceptional levels. Positive
company results, asset growth, and stronger power prices, have often played
second fiddle to macro-economic factors, and this has been frustrating to see.
I would therefore be hopeful of a recovery, although the timing is largely
dependent on improved economic conditions, notably a stabilisation and
subsequent reduction of bond yields and indications that inflation is being
brought under control.
In the meantime, power prices look supported, which bodes well for the
dividend coverage of renewable investment companies, and should enable new
renewable assets to be built by developers at attractive investment returns.
Early figures show that power demand in Western markets increased in 2024,
marking a turnaround from recent years of falling power consumption. Likely
further demand growth from data centres and transportation applications would
be positive for the sector.
James Smith
Premier Fund Managers Limited
5 March 2025
Investment Portfolio
as at 31 December 2024
Company Activity Principal location of operation Value £000 % total investments Ranking 2024 Ranking 2023
Greencoat UK Wind Yieldcos and Investment Companies United Kingdom 2,682 7.6 1 1
Grenergy Renovables Renewable energy developers Global 2,160 6.2 2 5
Clearway Energy ‘A’ Yieldcos and Investment Companies North America 2,148 6.1 3 3
Bonheur Renewable energy developers Europe (ex. UK) 1,991 5.7 4 9
Drax Group Biomass generation and production United Kingdom 1,943 5.5 5 6
Octopus Renewable Infrastructure Yieldcos and Investment Companies Europe (ex. UK) 1,876 5.3 6 4
Cadeler Renewable technology and service Europe (ex. UK) 1,721 4.9 7 19
Northland Power Renewable energy developers Global 1,687 4.8 8 15
NextEnergy Solar Fund Yieldcos and Investment Companies United Kingdom 1,539 4.4 9 2
RWE Renewable energy developers Europe (ex. UK) 1,537 4.4 10 8
SSE Renewable focused utilities United Kingdom 1,444 4.1 11 10
National Grid Electricity networks Global 1,349 3.8 12 14
Foresight Solar Fund Yieldcos and Investment Companies United Kingdom 1,307 3.7 13 11
Gore Street Energy Storage Fund Energy storage Global 1,049 3.0 14 12
AES Corporation Renewable focused utilities North America 976 2.8 15 16
Aquila European Renewables Yieldcos and Investment Companies Europe (ex. UK) 863 2.5 16 7
Enefit Green Renewable energy developers Europe (ex. UK) 844 2.4 17 20
SDCL Energy Efficiency Income Trust Renewable financing and energy efficiency Global 818 2.3 18 33
Harmony Energy Income Trust (incl. ‘C’ Shares) Energy storage United Kingdom 715 2.0 19 23
Cloudberry Clean Energy Renewable energy developers Europe (ex. UK) 697 2.0 20 21
Greencoat Renewables Yieldcos and Investment Companies Europe (ex. UK) 671 1.9 21 18
Fastned Renewable fuels and charging Europe (ex. UK) 670 1.9 22 –
GCP Infrastructure Renewable financing and energy efficiency United Kingdom 630 1.8 23 30
Corp. Acciona Energias Renovables Renewable energy developers Europe (ex. UK) 589 1.7 24 13
Polaris Renewable Energy Renewable energy developers Latin America 550 1.6 25 27
Orsted Renewable energy developers Global 449 1.3 26 –
MPC Energy Solutions Renewable energy developers Latin America 348 1.0 27 32
7C Solarparken Renewable energy developers Europe (ex. UK) 330 0.9 28 25
US Solar Fund Yieldcos and Investment Companies North America 294 0.8 29 29
VH Global Sustainable Energy Yieldcos and Investment Companies Global 260 0.7 30 –
Scatec Renewable energy developers Global 196 0.6 31 –
Boralex Renewable energy developers Global 191 0.5 32 35
Serena Energia Renewable energy developers Latin America 178 0.5 33 34
Innergex Renewable Renewable energy developers North America 133 0.5 34 37
Westbridge Renewable Renewable energy developers North America 102 0.4 35 –
Clean Energy Fuels Renewable fuels and charging North America 79 0.3 36 –
35,016 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 35,066 100.0%
Review of Top Ten Holdings
at 31 December 2024
1. Greencoat UK Wind
Market cap: £2.9 billion
www.greencoat-ukwind.com
Greencoat UK Wind (“UKW”) is a UK focused renewable energy investment company, its portfolio containing both onshore (55% at June 2024) and offshore (45%) wind farms. It operates as an investment company, acquiring newly completed assets rather than
developing projects in-house. Greencoat demonstrated its commitment to shareholder value in the year by progressing a £100 million share buyback programme. It has also changed its management fee structure to base the fee on the lower of share price and
NAV, as opposed to NAV. During 2024, Greencoat’s NAV per share fell by 7.9% to 151.20p, with its share price falling by 15.7% to 127.70p, standing at a discount of 15.5% to the year end NAV. However, strong cash flows have allowed the company to increase
dividends, with the quarterly 2.50p dividend paid during 2024, being some 14% higher than the equivalent quarterly dividend paid during 2023.
2. Grenergy Renovables
Market cap: £792 million
www.grenergy.eu
Grenergy is a Spain listed international solar developer, focussing on Spain and Chile. The company has grown steadily, now having 950 MW of operational solar capacity plus a further 1,326 MW solar and 3,624 MWh of battery storage capacity under
construction. The construction is mainly focussed on Chile where the company is developing its ‘Oasis Atacama’ solar plus storage project, totalling 2,000 MW of solar generation and 1,820 MW / 11,000 MWh battery storage capacity. The storage capacity
enables the company to offer power sales contracts covering peak hours, receiving a premium price. In December the company sold the first three stages of the project for almost $1 billion, providing both a substantial profit over development cost and
sufficient equity funding for the company to build and retain subsequent stages. Grenergy’s share price fell 4.5% during 2024.
3. Clearway Energy
Market cap: £2.3 billion
www.investor.clearwayenergy.com
Clearway Energy (“Clearway”) is a US listed yield, or investment, company (“yieldco”), operating 3.8 GW of US wind energy, 2.5 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. Clearway Energy has committed to purchasing a further 1.3 GW of renewable energy capacity from its sponsor. Clearway’s A Shares held by PMGR fell by 4.4% in
2024 despite paying a 7.3% higher dividend than for 2023.
4. Bonheur
Market cap: £782 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 2024, the renewables business operated 805 MW of wind farms, mainly in Scotland, but also in Sweden and Norway, with 49 MW under construction, 506 MW consented awaiting construction start, and 4,075 MW under longer term development.
Its offshore installation vessels are highly contracted for coming years, and the cruise business has now recovered the loss of profitability incurred during the Covid pandemic. Bonheur’s share price gained 8.4% in 2024.
5. Drax Group
Market cap: £2.4 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. Its shares gained 32.2% during the year.
6. Octopus Renewables Infrastructure Trust
Market cap: £378 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 808 MW with a value of £1.1 billion, together with investments in
renewable development platforms. ORIT has also created value by selling mature assets, recycling the capital released into new developments. In 2024 it completed the sale of a Swedish wind farm, and reinvested capital into Irish solar projects. During the
year, ORIT’s NAV per share fell by 3.3% to 102.65p, although the share price fell by 24.4% to 68.00p, and therefore stood at a discount of 33.8% to the year end NAV.
7. Cadeler
Market cap: £378 million
www.cadeler.com
Cadeler operates a fleet of five offshore wind turbine and foundation installation vessels, with a further six under construction, scheduled to be delivered over 2025 to 2027. Cadeler specialises in large vessels with the ability to install the new
generation of large-scale turbines. Its new build programme is said to be progressing on time and budget. It is anticipated that there will be a shortage of the large vessels in future, and Cadeler has been active in signing contracts for work to be
completed over coming years at attractive rates. Cadeler’s share price gained 42.2% in 2024.
8. Northland Power
Market cap: £2.6 billion
www.northlandpower.com
Northland Power is a Canada listed global renewable energy developer and operator. Its business includes offshore wind assets in the North Sea, plus onshore wind and solar assets in North America and Europe (Spain). Northland’s assets are highly contracted
or regulated, leading to relatively stable revenues. The company also owns some natural gas generation facilities in Canada under contract to utility companies. It is currently constructing offshore wind farms off Poland in the Baltic Sea and off Taiwan,
and a large battery storage project in Canada. These will be completed over 2025 to 2027, generating meaningful revenue growth for the company. Northland’s share price fell by 25.5% during 2024.
9. NextEnergy Solar Fund
Market cap: £380 million
www.nextenergysolarfund.com
NextEnergy (“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. The company has sold forward much of its expected power
generation over coming years, with the result that the company has a high level of fixed revenues together with inflation linked renewable energy incentive payments, which have an average remaining life of over ten years. The company identified five assets
that it would seek to find buyers for, and by the end of 2024 had managed to sell three, all of which were sold at valuations above that included in the NAV calculation. However, lower long-term power price assumptions meant that the NAV per share fell by
9.2% to 97.40p over the first 9 months of 2024, and the Company’s share price fell by 29.1% to 65.50p, a discount of 32.8% to the year end NAV. The share price decline has left the shares trading on a high yield of 12.8% based on the year end share price
and 2024 dividend and the quarterly dividends paid by the company in 2024.
10. RWE
Market cap: £17.6 billion
www.rwe.com
RWE is a German multi-national electricity generation company, which is transitioning from fossil fuels to clean energy. It has expanded rapidly in renewables, and financial results over recent years have been exceptionally strong, despite the company
having closed several fossil fuel and nuclear plants. 2024 has seen a dip in group profitability resulting from lower electricity and gas prices as they normalise following the energy shock resulting from the Ukraine war. However, within this, profits in
its renewable energy division have continued to grow. RWE is expanding its renewable energy generation fleet, and has approximately 11 GW under construction, including 4.4 GW of offshore wind, 3.4 GW of solar, and 1.5 GW of onshore wind (for context, total
renewable capacity at the end of the 2023 year was 17.4 GW). This is translating into higher renewable generation volumes, which were up 19.1% in the first half of 2024 as compared to the prior year. RWE’s share price fell by 30.4% in 2024.
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
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.
So far as each Director is aware at the time the report is approved:
• there is no relevant audit information of which the Group’s Auditor is unaware; and
• the Directors have taken all steps required of a Company Director to make themselves aware of any relevant audit information and to establish that the Group’s Auditor has been made aware of that information.
For and on behalf of the Board
Gillian Nott OBE
Chair
5 March 2025
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: 01483 306 090
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: 01483 306 090
www.premiermiton.com
Authorised and regulated by the Financial Conduct Authority
Secretary and Registered Office
MUFG Corporate Governance Limited
Central Square
29 Wellington Street
Leeds LS1 4DL
Registrar
MUFG Corporate Markets
Central Square
29 Wellington Street
Leeds LS1 4DL
Telephone: 0371 664 0300
Overseas: +44 (0) 371 664 0300
E-mail: shareholderenquiries@cm.mpms.mufg.com
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 SE
50 Bank Street
Canary Wharf
London E14 5NT
Auditor
HaysMac LLP
10 Queen Street Place
London EC4R 1AG
Stockbroker
Cavendish Capital Markets Limited
One Bartholomew Close
London EC1A 7BL
Telephone: 0207 220 0500
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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