REG - VH Global Energy Inf - Annual results for the period ended 31 Dec 2024
03/04/2025 07:00
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RNS Number : 4356D VH Global Energy Infrastructure PLC 03 April 2025
VH GLOBAL ENERGY INFRASTRUCTURE PLC
(the "Company")
Annual results for the period ended 31 December 2024
The Board of VH Global Energy Infrastructure plc (ticker: ENRG) is pleased
to report its annual results for the year ended 31 December 2024.
The Annual Report and Accounts for the year ended 31 December 2024 will be
made available on the Company's website
at https://www.globalenergyinfrastructure.com
(https://www.globalenergyinfrastructure.com) .
HIGHLIGHTS
Financial (as at 31 December 2024)
Net Asset Value
£408.5m
31 Dec 2023: £483.8m
NAV per share*
103.21p
31 Dec 2023: 116.46p
Total Leverage of ENRG as a % of NAV*
6.6%
31 Dec 2023: 1.9%
Dividend Coverage*
0.96x
31 Dec 2023: 1.15x
Dividend per share declared for FY 2024
5.71p
31 Dec 2023: 5.56p
Dividend target per share for FY 2025
5.80p
31 Dec 2023: 5.68p
Dividend yield, based on share price on 31 December 2024*
8.7%
31 Dec 2023: 7.2%
% of underlying revenues contracted and inflation‑linked
>90%
31 Dec 2023: >90%
Impact (for the full year ended 31 December 2024)
Clean energy generated
and injected into the grid
856,666MWh
31 Dec 2023: 844,464MWh
Approximate equivalent UK homes
powered annually by clean energy
317,284
31 Dec 2023: 312,750
Tonnes of carbon dioxide
equivalent avoided
262,501t
31 Dec 2023: 122,530t
Tonnes of sulfur
oxides displaced
22,402t
31 Dec 2023: 19,332t
Portfolio
- Key highlight was the addition of the renewable energy programme in Spain,
Portugal and Sweden for a total equity commitment of EUR53m with 9.7MW of
assets already in operation and 30.3MW in advanced construction stage.
- Key construction milestone was achieved for the UK flexible power plant
with the production of the first stream of liquefied CO2. The integrated plant
is expected to be commissioned in H1 2025.
- In Australia, the first hybrid assets commenced operations, achieving
captured margins above expectations.
- The hydro plant in Brazil received the prestigious gold award by the
Hydropower Sustainability Alliance. Only five plants have received the gold
certification globally.
- Post period-end, two additional sites were energised in Brazil. A
third solar site is expected to be energized in Q2 2025.
Bernard Bulkin, OBE, Chair of VH Global Energy Infrastructure plc, commented:
"This has been another challenging year for the renewable energy investment
trust sector. The Board continues to closely monitor the Company's share price
and shares the deep frustration over its prolonged discount to NAV. The Board
and I firmly believe such a discount is unjustified, as it does not reflect
the intrinsic value of the underlying portfolio and has largely been
influenced by broader macroeconomic factors which has resulted in a material
reduction in demand for the listed infrastructure and renewables sector. The
Board is examining all options for repaying the trust that shareholders have
placed in the Company over the past four years, while continuing the work to
bring the portion of the portfolio that is still under construction into a
fully operational state. During 2025, the Board will announce concrete steps
it will be proposing to shareholders to deal with the share price discount to
NAV. We look forward to continuing our constructive and collaborative dialogue
with shareholders."
The Company's LEI is 213800RFHAOF372UU580.
For further information, please contact:
Edelman Smithfield (PR Adviser)
Ged Brumby +44 (0)7540
412 301
Hamza Ali +44
(0)7976 308 914
Victory Hill Capital Partners LLP (Investment Manager)
Navin Chauhan
info@victory-hill.com (mailto:info@victory-hill.com)
Deutsche Numis (Corporate Broker)
Hugh Jonathan +44
(0)20 7260 1000
Matt Goss
Ocorian Administration (UK) Limited (Company Secretary)
oaukcosecteam@ocorian.com (mailto:oaukcosecteam@ocorian.com)
About Victory Hill Capital Partners LLP
Victory Hill Capital Partners LLP ("Victory Hill") is authorised and
regulated by the Financial Conduct Authority (FRN 961570).
Victory Hill is based in London and was founded in May 2020 by an
experienced team of energy financiers that spun-out of a large established
global project finance banking group. The team has participated in more
than $200bn in transaction values across 91 conventional and renewable
energy-related transactions in over 30 jurisdictions worldwide. Victory Hill
is the investment manager of the Company.
The Victory Hill team deploys its experience across different financial
disciplines in order to assess investments holistically from multiple points
of view. The firm pursues operational stability and well-designed corporate
governance to generate sustainable positive returns for investors. It focuses
on supporting and accelerating the energy transition and the attainment of the
UN sustainable development goals.
Victory Hill is a signatory of the United Nations Principles for Responsible
Investing (UN PRI), the United Nations Global Compact (UN GC), Net Zero Asset
Managers Initiative (NZAMI), a member of the Global Impact Investing Network
(GIIN) and is a formal supporter of the Financial Stability Board's Task-Force
on Climate-related Disclosures (TCFD).
Annual General Meeting
The Company's Annual General Meeting will be held at the offices of Victory
Hill Capital Partners LLP at 21-22 Warwick Street, London, W1B 5NE on
Wednesday, 21 May 2025 at 12:00 pm
The Notice of the Annual General Meeting is set out in the Annual Report and
Accounts for the year ended 31 December 2024.
National Storage Mechanism
A copy of the Annual Report and Accounts will be submitted to the National
Storage Mechanism and will shortly be available for inspection
at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
CHAIR'S STATEMENT
"ENRG remains the most diversified trust in the sector tackling the energy
transition. Its highly contracted operational portfolio continues to generate
predictable cash flows to support the Company's attractive dividend."
Bernard Bulkin
Chair
I am pleased to present the fourth Annual Report for VH Global Energy
Infrastructure plc (the "Company" or "ENRG") for the year ended 31 December
2024.
The broader renewable energy investment trust sector has continued to navigate
a challenging market environment, which has contributed to an exacerbation of
the Company's share price discount to net asset value ("NAV"). In response,
the Company has remained proactive and focused on narrowing the discount with
the deployment of its buyback programme and disciplined capital allocation
approach. The Board has also been proactive in discussing the ongoing discount
to NAV with its shareholders and considering what actions are open to it going
forward.
Despite these challenges, ENRG has demonstrated resilience, delivering robust
operational and financial performance from its underlying portfolio, including
an almost fully covered dividend on a currency unadjusted basis, with 29% of
the portfolio under construction as at 31 December 2024. The Company has also
successfully deployed capital into a new portfolio of European wind and solar
assets during the period, and the Investment Manager remains fully confident
about the sector's future prospects.
Given the current share price discount to NAV of 36.1% as at 31 December
2024, ENRG offers an attractive entry point for both new and existing
investors, offering a dividend yield of 8.7% at the period-end, which is
greater than the yield of UK government bonds. The yield is backed by
long-term and inflation-linked cashflows that will continue to strengthen as
more of the portfolio becomes operational over the course of 2025.
Furthermore, ENRG continues to present a unique investment opportunity, with a
technologically and geographically diversified portfolio aimed at accelerating
the global energy transition, funded entirely without public subsidy or
government support, and supported by the lowest gearing in its peer group.
Financial Performance
The Company's NAV per share was 103.21p as at 31 December 2024, a decrease of
11.4% from the previous year. This decrease was primarily driven by
unfavourable foreign currency exchange rates.
Net cash flows from the underlying projects remain robust, resulting in a
dividend coverage ratio of 0.96x. As GBP has strengthened in the year against
the basket of currencies, on a currency adjusted basis, dividend coverage is
1.24x as at 31 December 2024. Details on the Company's overall financial and
operational performance can be found in the Investment Manager's Report.
As at 31 December 2024, the Company remains one of the lowest geared
investment trusts in its sector with total leverage at 6.6% of NAV, offering
greater flexibility on future funding requirements.
Dividend
The Company has a progressive dividend policy, and is proud to have increased
its dividend for a fourth consecutive time since IPO in 2021.
The Company announced a dividend of 1.45p per share with respect to the period
from 1 October 2024 to 31 December 2024, an increase of 2.1% vs. the prior
quarter. This brings the total dividend declared for the financial year ending
31 December 2024 to 5.71p per share, exceeding the dividend target of 5.68p
per share. The Company is targeting a dividend of 5.80p in total for 2025,
2.1% higher than the dividend target for FY2024.
When combined with the share buyback programme, the Company has returned
£37.5 million to shareholders in 2024.
Investment Activity and Portfolio Performance
In 2024, three new assets came online, while seven new assets were acquired in
Europe and two in Australia, significantly enhancing the diversification of
the portfolio, bringing the total number of assets to 34 across 6 technologies
and 7 geographies. Two additional assets were energised post-period. As at
31 December 2024, the portfolio is 69% operational, and is expected to be
almost fully operational by the end of 2025.
Investment activity included:
• The commitment to acquire and construct a 59.8MW portfolio
of five-operating, ready-to-build ("RTB") and under construction solar and
onshore wind generation assets in Spain, Portugal and Sweden. In addition, the
Company acquired the project rights for an additional 188.6MW of four RTB
solar PV assets in Spain. Due to interconnection delays encountered on two of
these RTB assets, pushing completion to 2027, the Investment Manager has taken
the prudent approach to return the project rights of these two assets, which
doesn't alter the target returns for the investment. Post-period, a 10.3MW
solar PV site in Spain reached mechanical completion, and is expected to be
fully energised by H1 2025. The 20MW solar PV site in Portugal is expected to
reach operational status in H2 2025.
• The completion of the three solar assets and co-located
battery energy storage systems ("BESS") in New South Wales ("NSW"), Australia.
Furthermore, an agreement to acquire and build two new fully-permitted solar
PV sites with co-located BESS in NSW was signed in March 2024 and the
construction phase started as planned in the first half of the year, with
completion expected in 2025.
• The successful completion of a series of hot commissioning
tests of the four Rolls Royce 16V engines of the UK flexible power with carbon
capture and reuse ("CCR") asset. Post period-end, a significant milestone was
reached with the successful commissioning of its first stream of purified CO2.
• Post period-end, the energisation of two solar distributed
generation sites in Brazil. A third site is expected to be energised in Q2
2025. Implementation of the construction for the final three sites of the
programme is under review.
Please refer to the Investment Manager's Report for further details on the
investment activity.
Corporate Governance
On 2 December 2024, the Company announced the change of its name from VH
Global Sustainable Energy Opportunities plc to VH Global Energy
Infrastructure plc. The Company's ticker symbol for the London Stock Exchange
was changed to 'ENRG', while the ISIN and SEDOL remained unchanged. This
change was implemented to align with new regulatory requirements for fund
names established by the European Securities and Markets Authority ("ESMA").
The Company's sustainable investment objective- to "make an impact by
supporting the attainment and pursuit of key SDGs, where energy and energy
infrastructure investments directly contribute to accelerating the energy
transition"- remains unchanged.
Post period-end, the Company appointed Mr Patrick Firth as an independent
non-executive director with effect from 20 February 2025. Mr Firth has also
been appointed to each of the Company's established committees with effect
from the same date. ENRG announced that Ms Margaret Stephens does not intend
to stand for re-election at the upcoming annual general meeting due to
personal reasons and, as such, subject to shareholder elections, Mr Patrick
Firth will take over the position of chair of the Audit Committee as of the
date of the 2025 Annual General Meeting ("AGM").
At the May 2024 AGM, the Board was pleased to announce that all the ordinary
resolutions and special resolutions, as set out in the Notice of AGM, were
approved by shareholders.
In Q4 2024, the Company appointed Ocorian Administration (UK) Limited as its
third-party administrator and company secretary, replacing Apex Fund and
Corporate Services (UK) Limited.
Sustainability
ENRG's commitment to sustainability remains at the forefront of its strategy
and purpose.
In conjunction with the name change mentioned above, the Company was among the
first investment trusts to announce its adoption of the 'Sustainability
Impact' label under the Financial Conduct Authority's Sustainability
Disclosure Requirements ("SDR"). This label identifies investment products
that aim to achieve a predefined measurable impact in relation to an
environmental and/or social outcome. The adoption of the 'Sustainability
Impact' label brings more clarity and accountability and reflects the
Company's continued commitment to achieving its sustainability investment
objective, while continuing to target a 10% net return.
Furthermore, ENRG continues to disclose as an Article 9 Fund under the EU's
Sustainable Finance Disclosure Regulation and reports voluntarily its practice
under the Task Force on Climate-Related Financial Disclosures ("TCFD")
recommendations and requirements.
Discount Management
The Board continues to closely monitor the Company's share price and shares
the deep frustration of its shareholders over its prolonged discount to NAV.
The Board and I firmly believe such a discount is unjustified, as it does not
reflect the intrinsic value of the underlying portfolio and has largely been
influenced by broader macroeconomic factors.
Both the Board and the Investment Manager remain fully committed to narrowing
the discount to NAV, with a focus on balancing the short-term and long- term
value to shareholders.
The Company initiated a £10 million share buyback programme in 2023, which
was further increased by £10 million in February 2024, bringing the total
share buyback programme to £20 million. By Q4 2024, the full buyback budget
had been utilised. Additionally, the Board and the Investment Manager have
remained focused on the careful management of gearing, successfully
maintaining a minimal level of gearing. As a result, ENRG does not need to
sell assets to repay debt.
In addition to the above initiatives, the Board has engaged with major
shareholders to better understand their perspectives. As anticipated, investor
sentiment has been mixed - while some shareholders continue to support the
Company's existing strategy, others have raised concerns about the challenges
facing the broader sector and expressed a preference for alternative methods
of returning capital to shareholders.
As a result of these discussions, the Board, in collaboration with the
Investment Manager and the Company's broker, is carefully evaluating strategic
alternatives to reduce the discount and enhance shareholder value.
The Board is committed to exploring all options and will keep shareholders
informed as these discussions progress.
Shareholder Engagement
The Investment Manager and the Board remain committed to enhancing the
marketability and liquidity of ENRG's shares by actively engaging with and
attracting both institutional and retail investors to the shareholder
register.
As part of these efforts, the Company has undertaken a comprehensive revamp of
its online website (www.globalenergyinfrastructure.co.uk) in order to enhance
shareholder disclosure and detail of communication. This revamped platform is
designed to provide clearer, more detailed information, with a particular
focus on facilitating better information dissemination to retail investors. In
addition, the Investment Manager has partnered with third-party research
providers and share trading platforms to broaden outreach and increase
accessibility for retail investors.
Continuation Vote
The Articles of Association of the Company require a continuation vote at
every fifth AGM, which would take place in May 2026. Shareholders will be
consulted on this topic, together with the Company's broker.
Outlook
The Board understands that the persistent deep discount of ENRG's shares to
its NAV is not something that will be easily corrected by market forces or the
economic climate. We believe that we have good assets, that are performing
well once they are operational. This is reflected in the strong covered
dividends that the Company has been able to pay throughout its life.
The Board is examining all options for repaying the trust that shareholders
have placed in the Company over the past four years, while continuing the work
to bring the portion of the portfolio that is still under construction into a
fully operational state. During 2025, the Board will announce concrete steps
it will be proposing to shareholders to deal with the share price discount.
Bernard Bulkin, OBE
Chair
2 April 2025.
INVESTMENT MANAGER'S REPORT
"In markets where renewable energy is highly saturated, a differentiated
investment strategy is needed to sustain progress."
Richard Lum
Co-Chief Investment Officer
Market Backdrop & Outlook
As we reflect on the prior twelve months of our operating environment, it is
clear that the pace of the energy transition to net zero has not slowed pace.
According to BNEF, 2024 saw global solar PV installations up by 35% y-o-y,
wind up by 5%, energy storage installations up by 76% and EV sales up by 26%.
Yet, even with this historic growth in clean energy investments, it is clear
that the sustained and accelerated growth in investments is still well below
the level required to get investment on track to achieve net zero by 2050.
Further investment is required to decarbonise our world, whilst feeding an
increase in electrical energy demand globally. The International Energy Agency
(IEA) comments in their Net Zero Roadmap to 2050 on investments in clean
energy needing to rise to around US$4.5tn per year by 2030. Yet investments in
global energy as a whole are likely to exceed US$3tn in total, with clean
energy accounting for around US$2tn and oil and gas for US$1tn.
Investments located in the developed world have far outstripped those
elsewhere and much can be attributed to the success of government underwriting
via subsidies of renewable technologies overall. However, we are starting to
see a decline in growth rates. The earliest implementers and adopters of clean
energy in the richer energy markets have tended to snap up the best sites with
the cheapest grid connections, in the most economically stable markets, and
have played a key role in bringing down the cost of clean energy technologies.
However, achieving scale has come at the cost of declining growth rates. It is
expected that annual solar installations will recede from impressive growth
rates of 35% in 2024 (more than quadrupled since 2020) to a more modest 11% in
2025.
Separately, the competitive approach adopted by developed countries to
offshore wind projects led to a surge in interest globally, with government
auctions being won by the most aggressive bidders. This delivered lower clean
energy prices, but, also created fundamental issues for investors to achieve
an adequate risk adjusted return on these projects, as evidenced by failed
auctions and cancelled projects in various countries including the US. Among
other issues, this has led large integrated energy companies to reframe their
exposures to offshore wind.
The next phase in the energy transition, however, will not focus purely on
driving greater investment in clean energy generation alone. New issues have
emerged in global energy systems, which require investment in order for a
holistic sustainable energy world to emerge: Unlocking energy storage and
power generation flexibility in mature renewables markets where intermittency
is a key concern; implementing clean energy in markets which lack proper
technical and commercial arrangements; and driving demand for clean energy in
the hard to decarbonise industrial sectors such as automotive and truck fleet
operators, fuels for aviation, shipping and heavy industry. Government policy
will have a role to play in leading such transformation but we firmly believe
that the implementation of liberalised energy markets, where private
commercial agreements are possible, will stimulate private capital inflows to
help meet the demand for investment.
During 2024, we understood that a holistic approach to the energy transition
was imperative. In markets where renewable energy is highly saturated, a
differentiated investment strategy is needed to sustain progress. While high
solar penetration drove down Spain's mid-day power prices, and many historic
projects were witnessing a cannibalisation of the market pricing, we saw an
opportunity to participate in the next phase of Spain's energy transition. As
a relatively constrained energy market, with limited interconnection to the
rest of Europe's power grids, and a baseload power source in nuclear which the
Government legislated to be replaced by renewables by 2035, we anticipate the
emergence of supply/demand tension in the power system. Combined with the
entrance of highly energy intensive digital infrastructure in the country such
as AI-driven data centres, we estimated that conditions were right to make an
impact by investing in a portfolio of ready-to‑build and operating renewable
assets, which once built have the potential to be commercialised via private
power purchase agreements (PPAs) or left partially unhedged to access market
margin opportunities. Furthermore, drawing on our experience in Australia, we
concluded that these assets have optionality to be hybridised with co-located
battery storage in the next phase of investment, thereby allowing consumers to
have access to firm power capacity in a constrained power market.
AI-driven data centres are likely to feature prominently in the demand side
dynamics of many energy systems throughout the world. The sheer magnitude of
the requirement to feed this new energy demand is yet to be fully witnessed
but there is circumstantial evidence of what is ahead of us.
Investment updates
The portfolio has continued to progress towards its full potential during the
period under review, reaching 69% operational status at the end of 2024, up
from 58% in December 2023.
As at 31 December 2024, the dividend was 0.96x covered by the strong
underlying cash generation from the operating assets. GBP has strengthened in
the year against the basket of currencies. On a currency adjusted basis,
dividend coverage is 1.24x. As construction assets achieve operational status,
the dividend coverage is expected to strengthen in 2025 and 2026. The excess
cash flow will provide the flexibility to reinvest in the existing portfolio
as well as enable the Investment Manager to address the share price discount
to NAV.
A key highlight for the year was the addition of a renewable energy programme
for Spain, Portugal and Sweden. Our total commitment was EUR53m with 9.7 MW of
the assets already in operation and 30.3 MW in advanced construction stage.
This investment offers the fund an opportunity to capture buoyant energy
markets with the potential to upscale returns with batteries in order to
capture high power prices at peak hours. Spain in particular is seeing a rapid
transition away from fossil fuels and towards renewable energy, while demand
continues to outpace supply causing power price spikes in certain regions.
Furthermore, key construction milestones were achieved for both the UK
flexible power plant and the Brazilian solar PV programme during the period,
putting behind us the main issues that had previously caused construction
delays. In the U.S., the terminal storage assets have operated close to their
full cash generation capacity under the contracted 24/7 terms, highlighting
their reliability with stable cash flows. In Australia, the first hybrid
assets commenced operations, achieving captured margins well above
expectations.
The year also highlighted the ENRG model's operational excellence, with the
Brazilian hydro plant receiving certification under the Hydropower
Sustainability Alliance's Hydropower Sustainability Standard. The plant was
awarded the prestigious gold level, which is a testament to the Investment
Manager's commitment to community engagement and the gold certification has
only been awarded to five other hydro plants worldwide since its formal
introduction in 2021.
Australian solar PV with battery storage assets
This programme aims at capturing the opportunities arising from Australia's
disorderly energy transition. With a predominance of power plants fuelled by
locally produced coal in its energy mix, Australia is navigating a challenging
process to realise its natural renewable energy potential, made possible by
its high solar irradiation levels and vast land availability.
Year-on-Year EBITDA increased by 170% in 2024 due to three new assets coming
online and generating revenues during the period.
At the end of the period, the assets captured margins significantly above
expectations, driven by market volatility in electricity supply - which was
partly due to increased cycles of maintenance and downtime from mature coal
fired power plants. These margins not only exceeded budget levels but also
surpassed the projections provided by several market consultants the Company
uses to value these assets. Nevertheless, we have decided not to alter our
long-term power curves, which we use in asset valuations, until we have
built-up a sufficient period of accruing real time margin data which reflects
stronger price conditions.
Work on the hybridisation of the three solar farms constructed in New South
Wales with BESS was successfully completed in 2024.
Furthermore, two additional solar sites were acquired in 2024, with
construction progressing on time and on budget to construct them as fully
integrated solar PV and BESS projects. We anticipate enhancing the cash
generation capacity of the five operational assets during the course of 2025.
UK flexible power with CCR asset
This flexible power plant helps to ensure the delivery of dependable power in
the UK amidst increasing penetration of intermittent renewable energy.
Furthermore, by incorporating carbon capture technology into the gas‑fired
power generation component, the project captures and purifies CO2 exhaust to a
food-grade standard. This project therefore not only provides reliable,
high-efficiency, low carbon flexible power into the grid, but also addresses
the critical structural shortage in the industrial gases market by enabling
the commercial sale of purified CO2 for food and beverage applications. This
unique combination is believed to be the first of its kind and paves the way
for further low carbon flexible power generation assets to support the
evolving UK electricity grid.
This asset is in the final stage of commissioning, with the power unit having
come online in Q4 2024. The first stream of purified C02 was produced into
holding tanks in February 2025, and it is our expectation that the integrated
plant will be fully commissioned inH1 2025.
Brazilian solar PV assets
This programme seeks to leverage the unique framework of the Brazilian
distributed generation market, which allows sub-5MW power plants to access
retail tariffs for end users connected to the utility network where the asset
injects power.
ENRG was one of the first listed companies in this sector to enter this
nascent segment in Brazil. This early-mover advantage allowed the Company to
secure low connection charges to the distribution network, which are no longer
accessible to new entrants. Furthermore, as one of the first investors in the
market, ENRG was able to successfully lock-in premium PPAs with advantageous
terms compared to those currently available to new market entrants.
Year-on-Year EBITDA increased by 155% due to a combination of projects
transitioning from the ramp-up phase to full production, along with a new
project that benefited from a full year of revenue generation in 2024.
In January 2025, two solar distributed generation sites were energised,
increasing the Company's total operational solar DG projects in the country to
12 sites, with a capacity of 34.3MWdc. The two newly energised assets have
offtake agreements between 10 and 20 years and are supporting clients to meet
their decarbonisation targets and reduce their energy bills.
A third solar site is expected to be energized in Q2 2025, adding a further
6.25MWdc of new capacity. Implementation of the construction for the final
three sites of the programme is under review.
Brazilian hydro facility
The primary appeal of this investment lies in the opportunity to enter one of
the world's largest hydroelectric parks through an asset that delivers
reliable and stable cash flows.
The Mascarenhas plant is part of the Mecanismo de Realocacao de Energia (MRE)
or Energy Reallocation Mechanism, which means it is not exposed to
single-basin hydrological risk. The MRE is a consortium that includes all
major hydro plants in Brazil, including Itaipu which used to be the
second-largest hydro plant in the world after China's Three Gorges. This
consortium pools the plants' hydrological resources and sells the total
assured capacity through long-term PPAs. If a member of the consortium falls
short of its allocated assured capacity but the consortium as a whole meets
the established target, the MRE compensatory mechanism ensures that the
underperforming plant can still generate revenue in line with its assured
energy. This structure provides more stable cash flows compared to other hydro
plants that are exposed to the variability of resources from a specific river.
This plant has secured long-term PPAs for all of its assured capacity for both
2025 and 2026, as well as nearly 30% of its capacity through to 2037. The
programme's operating partner and the Investment Manager monitor the market
for opportunities to strike new PPAs for the uncontracted capacity at
attractive terms, given the high level of volatility in the PPA market caused
by changing weather patterns. Over the past five years, Brazil experienced
three of its worst hydrological years in history, alongside two years of
above-average conditions. This volatility in the spot market creates periodic
windows of opportunity for securing favourable PPAs.
Operationally, post period-end this asset achieved the gold standard seal of
excellence from the Hydropower Sustainability Alliance, and remains one of the
top ranked plants in the country.
US terminal storage assets
This programme aims to reduce the environmental and health threats of high
sulfur fuels in Mexico, by reducing the availability of high sulfur fuel oil
for domestic consumption and displacing it with cleaner less pollutive
products, reducing PM10, SO2, and NO2 emissions. The US terminal assets
provide an aggregation point and facilitate the transfer of high sulfur oil
currently produced at a surplus in the Mexican fuel market.
The main tenant is Mexico's national oil company, Pemex, which is responsible
for transporting the Mexican high sulfur heavy products to the US to get it
further processed and imported back as safer, cleaner products.
During the period under review, the assets operated near their full
cash-generation capacity under its contracted 24/7 terms. This performance
underscored the asset's robust cash generation capacity, which has been fully
optimised following its acquisition by ENRG, through further investments in
capacity expansion and contract renegotiations.
On 1 February 2025, President Trump issued three executive orders directing
the U.S. to impose tariffs on imports from Mexico, Canada and China. Initial
analysis led the Investment Manager, alongside its operating partner in Texas,
to conclude that the imposition of the tariff should not have an impact on the
northbound flow of product from Mexico into the Company's terminals in the
Port of Brownsville. From the information available at time of the
announcement of these tariffs, it is considered that the potential financial
impact of the tariff on customer revenues and business of the Company's
terminal assets is low. Furthermore, customer contracts have been designed to
manage downside risk and include minimum volume commitments regardless of
throughput through the terminals.
In January 2025, the Company refinanced the existing loan facilities to the
asset, upsizing the facility from US$16 million to US$30 million, consisting
of a US$15 million term loan and a US$15 million revolving credit facility.
Iberian and Swedish solar and onshore wind portfolio
The acquisition of the solar and wind portfolio across Spain, Portugal, and
Sweden marks our first investment in continental Europe, targeting
opportunities in liberalised energy markets that have potential for higher
captured prices. These higher captured prices are primarily driven by the
retirement of baseload generation combined with the lack of flexible power
generation. These markets offer further upside potential from greater than
expected energy demand from data centres driven by artificial intelligence
growth.
Spain and Portugal, where over 95% of this programme is located, offer a
particularly attractive investment opportunity. The rapid phase-out of coal
and nuclear in Spain, coupled with the increasing risk of droughts, is
reducing its baseload energy capacity rapidly. Additionally, Spain's energy
mix remains heavily reliant on gas-fired power plants, making the market more
dependent on global LNG supply and therefore their energy markets are more
sensitive to fluctuations in the gas markets. Furthermore, Spain and Portugal
are constrained markets due to their limited interconnection with the rest of
Europe and any disruption in its baseload supply results immediately in a
sharp increase in energy prices.
These dynamics create a unique market dislocation, opening up arbitrage
opportunities for hybridised assets that combine different energy sources and
battery storage systems. Spain is progressing rapidly in approving a capacity
market, which further enhances the attractiveness of investing in hybrid
assets. Once our portfolio is fully operational on the power generation side,
we intend to begin hybridising these assets. This next value creation phase
will consist of adding co-located Lithium-Ion BESS, to serve the nascent
capacity market, to capture the intraday market volatility and decrease the
risk of curtailment.
The Company acquired this portfolio in Q3 2024, consisting of five solar PV
and wind assets across Spain, Portugal, and Sweden, as well as the project
rights to four ready-to-build ("RTB") solar PV assets in Spain. However, due
to interconnection delays encountered on two of these RTB assets, pushing
completion to 2027, the Investment Manager has taken the prudent step of
returning the project rights of these two assets, at no cost. Consequently,
there is no longer a need for a co-investor and the Company can complete
construction of the entire programme with its initial equity investment and
project finance debt, whilst maintaining its 80% ownership of the entire
portfolio (the remaining 20% will be owned by the operating partner in Spain).
The programme now consists of seven assets with a total capacity of 158.1MW:
• 3.7MW operational solar PV in Spain;
• 6MW operational onshore wind in Sweden;
• 20MW solar PV under construction in Portugal;
• 10.3MW solar PV under construction in Spain;
• 19.8MW RTB onshore wind in Spain; and
• 98.3MW RTB solar PV in Spain across two sites
The leverage in the programme is expected to be approximately 50% LTV.
The 10.3MW solar site in Spain is mechanically complete and is expected to be
energised in H1 2025. The 20MW solar PV site in Portugal is expected to reach
operational status in H2 2025.
Once the seven sites are fully operational, the levered expected returns
remain unchanged and are in line with the Company's target return. The
Investment Manager also expects the mid-teen target returns following the
implementation of the value creation initiatives to remain unchanged.
During the remainder of the first half of 2025, we will focus on working with
the bank syndicate to achieve financial closing and commence construction of
both the solar sites in Spain and the 19.8MW RTB onshore wind in Spain.
2024 Portfolio Operational & Financial Performance
Output
Programme 2024 2023 Change
US terminal storage assets 13,069,960 bbls 12,831,553 bbls +1.86%
Australian solar PV with BESS 36,182 MWh 22,919 MWh +57.87%
Brazilian solar PV 39,665 MWh 41,161 MWh -3.63%
Brazilian hydro facility 780,542 MWh 781,482 MWh -0.12%
Revenue
Programme 2024 2023 Change
US terminal storage assets US$24.7m US$23.7m +3.99%
Australian solar PV with BESS AUD 6.4m AUD 2.6m +143.45%
Brazilian solar PV BRL 23.7m BRL 12.8m +85.67%
Brazilian hydro facility BRL 179.2m BRL 159.2m +12.58%
EBITDA
Programme 2024 2023 Change
US terminal storage assets US$13.9m US$13.5m +2.93%
Australian solar PV with BESS AUD 4.7m AUD 1.7m +169.96%
Brazilian solar PV BRL 14.0m BRL 5.5m +155.06%
Brazilian hydro facility BRL 110.5m BRL 112.9m -2.07%
Note: The output, net revenue, and EBITDA figures reflect assets under
operation as at 31 December 2024. The energy output figure for the Brazilian
solar PV assets represents the total generation that was invoiced to the
clients; it is directly related to the revenue generated by the assets. The
energy output figure for the Brazilian hydro facility represents total net
generation.
The NAV of the Company decreased from £483.8m at 31 December 2023 to
£408.5m at 31 December 2024. The key NAV drivers for the period under review
were:
• Unfavorable foreign exchange rates resulting in a £41m
reduction in the NAV.
• Discount rates increasing during the period under review
mainly driven by an increase in risk free rate from 4.19% to 4.86% and an
increase in country risk premium for Brazil from 2.43% to 3.80%.
Value Input Sensitivies
31-Dec-24 31-Dec-23
Discount rate Weighted Average US terminal storage assets 6.94% 6.91%
Weighted Average Australian solar PV with battery storage assets 7.77% 7.74%
Weighted Average Brazilian solar PV assets 10.33% 9.67%
Weighted Average Brazilian hydro facility 10.16% 9.54%
Weighted Average Iberian and Swedish solar PV and wind assets 9.15% n/a
Long-term inflation United States US terminal storage assets 2.15% 1.62%
Australia Australian solar PV with battery storage assets 2.47% 2.42%
Brazil Brazilian solar PV assets & Brazilian hydro facility 2.97% 3.03%
Spain Spanish solar PV asset 2% n/a
Sweden Swedish onshore wind asset 2% n/a
Total asset life Years US terminal storage assets 30 years 30 years
Years Australian solar PV with battery storage assets 25 years 25 years
Years Brazilian solar PV assets 25 years 25 years
Years Brazilian hydro facility 25 years 25 years
Years Iberian and Swedish solar PV and wind assets 25 years n/a
Exchange rate GBP:USD US terminal storage assets 1:1.2527 1:1.2732
GBP:BRL Brazilian solar PV assets & Brazilian hydro facility 1:7.7486 1:6.1771
GBP:AUD Australian solar PV with battery storage assets 1:2.0235 1:1.8689
GBP:EUR Iberian and Swedish solar PV and wind assets 1:1.2098 n/a
Key Sensitivities
The above chart illustrates the sensitivity of the Company's NAV per share to
changes in key input assumptions for assets in operation as at the year end.
In performing the sensitivity analysis, it is assumed that potential changes
occur independently of each other with no effect on any other assumption, and
that the number of investments in the portfolio remains static throughout the
modelled life.
Discount rate
A range of discount rates are applied in calculating the fair value of the
investments, considering risk free rates, country-specific and asset-specific
risk premia and betas. Discount rates for operational assets at 31 December
2024 are 6.9% in the US (31 December 2023: 6.9%), 7.8% in Australia
(31 December 2023: 7.7%), 10.2% for the Brazilian hydro facility
(31 December 2023: 9.5%), 9.1% for the Iberian and Swedish portfolio and
10.3% for the Brazilian solar PV assets (31 December 2023: 9.7%). A 1.5%
increase (decrease) in discount rates across the portfolio decreases
(increases) NAV by 8.33p (10.31p).
Inflation
The sensitivity assumes a 1% increase or decrease in long-term inflation
relative to the base case of 2.2% for the US assets, 2.5% for the Australian
assets, 3.0% for the Brazilian assets, and 2.0% for the Iberian and Swedish
operational assets for each year of asset life. A 1.0% increase (decrease) in
inflation rates across the portfolio increases (decreases) NAV by 6.61p
(5.94p).
Operating expenses
The sensitivity assumes a 5% increase or decrease in operating expense
relative to respective contracts and budgets for each asset. A 5% increase
(decrease) in operating expenses across the portfolio decreases (increases)
NAV by 1.99p (2.02p).
Foreign exchange
The sensitivity assumes a 10% increase or decrease in foreign exchange
movements against the sterling. The Company seeks to manage its exposure to
foreign exchange movements by hedging short-term distributions from
non-sterling investments to maintain a healthy dividend cover but, due to
long-term inflation-linked revenues stemming from these investments, the
Company does not hedge the principal value of the investments. A 10% increase
(decrease) in foreign exchange rates across the portfolio decreases
(increases) NAV by 8.01p (9.80p).
Asset life
The sensitivity assumes a 1 year increase or decrease in asset life relative
to the base cases of 30 years for the US terminal storage assets, 25 years
for the Australian solar PV with battery storage assets, Brazilian solar PV
assets, Brazilian hydro facility, and the Iberian and Swedish solar PV and
onshore wind assets. A 1 year increase (decrease) in asset lives across the
portfolio increases (decreases) NAV by 1.23p (1.23p).
Resource sensitivity
The portfolio has little resource risk sensitivity given the availability
based nature of the US terminal storage assets, the base load generation
profile of the Brazilian hydro facility, the UK flexible power with CCR
assets, and the addition of battery storage to the Australian solar PV assets
to mitigate solar intermittency risk.
ENRG STRUCTURE & INVESTMENT POLICY
The Company seeks to achieve its investment objective by making sustainable
energy infrastructure investments across the EU and OECD group of nations
predominantly, including but not limited to OECD Key Partner countries and
OECD Accession countries. The Company's investments in global sustainable
energy infrastructure must be:
i. investments that support the pursuit and attainment of the
United Nations Sustainable Development Goals (the "SDGs") where energy and
energy infrastructure investments are a direct contributor to the acceleration
of the energy transition towards a net zero carbon world; and
ii. investments that can be categorised into one or more of the
four investment pathways that guide the Company's investment strategy. These
investment pathways are (1) Addressing Climate Change, (2) Energy Access,
(3) Energy Efficiency, and (4) Market Liberalisation,
and must also fall into one or a combination of the following categories:
i. power, heat and green gas producing assets reliant on, but
not limited to, wind, solar, biomass, natural gas and hydropower technologies;
ii. production and refinement of fuels derived from biomass
sources;
iii. energy storage infrastructure such as containment and
non‑processing facilities for liquid and gas fuel sources, power storage
utilising battery or gravity‑based technologies;
iv. energy transportation infrastructure such as pipelines,
interconnectors and micro‑distribution grids;
v. distributed energy sources (heat, power, gas and steam) which
are produced close to where it will be used, rather than at a large
centralised plant elsewhere, delivered through a centralised grid
infrastructure; and/or
vi. equipment that is installed at the premises or on site, directly
connected to the premises including, but not limited to, CHP units, CCHP plant
schemes, HVAC units, lighting equipment, biomass boilers and steam raising
boilers (including intermediate pressure (IP) steam processors), in each case,
either already operating, in construction or ready-to-build ("Sustainable
Energy Infrastructure Investments").
The Company looks to achieve NAV growth by investing in higher yielding
Sustainable Energy Infrastructure Investments that are operational, in
construction or "ready-to-build" but does not invest in assets that are under
development (that is assets that do not have in place required grid access
rights, land consents, planning and regulatory consents and commercial
arrangements).
The Company acquires a mix of controlling and non-controlling interests in
Sustainable Energy Infrastructure Investments that are held within SPEs which
the Company invests through equity and/or shareholder loan instruments. In
certain instances, the SPE may hold one or more Sustainable Energy
Infrastructure Investments of a similar type.
The Company invests in SPEs structured as joint venture investments (JVs) or
co-investments, including through minority stakes, where this approach is the
only viable approach. Where the Company participates in a JV or a
co-investment, it seeks to secure its rights through obtaining protective
provisions in shareholders' agreements, joint venture agreements,
co-investment agreements or other transactional documents, as well as board
representation for the Investment Manager, and with the aim of trying to
ensure that the investment is managed in a manner that is consistent with the
Investment Policy.
Diversification
The Company aims to achieve diversification principally by making a range of
Sustainable Energy Infrastructure Investments across a number of distinct
geographies and a mix of proven technologies that facilitate the achievement
of the SDGs.
Investment restrictions
The Company can invest (calculated at the time of investment) up to:
• 25% of Gross Asset Value in any one Sustainable Energy
Infrastructure Investment;
• 40% of Gross Asset Value in a single technology;
• 35% of Gross Asset Value in assets that are in construction
or "ready-to-build";
• 40% of Gross Asset Value in assets that are located in any
one country;
• 30% of Gross Asset Value in assets that are owned or
operated by a single developer;
• 10% of Gross Asset Value in assets that are located in
countries that are not members of the EU, OECD, OECD Key Partner countries or
OECD Accession countries; and
• 10% of Gross Asset Value in other closed-ended investment
funds which are listed on the Official List.
No investments are made in extraction projects for fossil fuel or minerals.
Non-compliance resulting from changes in the price or value of investments
following investment will not be considered as a breach of the investment
restrictions.
The Company holds its investments through one or more SPEs and the investment
restrictions are applied on a look-through basis.
In the event of any breach of the investment restrictions applicable to the
Company, shareholders will be informed of the remedial actions to be taken by
the Company through an RNS announcement.
Cash management
Whilst it is the intention of the Company to be fully or near fully invested
in normal market conditions, uninvested cash or surplus capital or assets may
be invested on a temporary basis in:
• cash or cash equivalents, namely money market funds (as
defined in the 'Guidelines on a Common Definition of European Money Market
Funds' published by the Committee of European Securities Regulators (CESR) and
adopted by the ESMA and other money market instruments (including certificates
of deposit, floating rate notes and fixed rate commercial paper of banks or
other counterparties having a "single A" or higher credit rating as determined
by any internationally recognised rating agency selected by the Board which,
may or may not be registered in the EU); and
• any "government and public securities" as defined for the
purposes of the FCA Rules,
provided that not more than 20% of the Gross Asset Value, calculated at the
time of investment, may be so invested, following the deployment of the
Company's net issue proceeds.
Borrowing policy
The Company may make use of long-term limited recourse debt for Sustainable
Energy Infrastructure Investments to provide leverage for those specific
investments. Such long-term limited recourse debt will not, in aggregate
(calculated at the time of entering into or acquiring any new long-term
limited recourse debt), exceed 60% of the prevailing Gross Asset Value.
In addition, the Company may make use of short-term debt, such as a revolving
credit facility, to assist with the acquisition of suitable opportunities as
and when they become available. Such short-term debt will be subject to a
separate gearing limit so as not to exceed 30% of the Gross Asset Value at the
time of entering into (or acquiring) any such short-term debt.
In circumstances where these aforementioned limits are exceeded as a result of
gearing of one or more Sustainable Energy Infrastructure Investments in which
the Company has a non-controlling interest, the borrowing restrictions will
not be deemed to be breached. However, in such circumstances, the matter will
be brought to the attention of the Board who will determine the appropriate
course of action.
Use of derivatives
The Company may enter into hedging transactions for the purposes of efficient
portfolio management, which may include (as relevant) short-term currency
hedging (as described in the last published prospectus of the Company),
interest rate hedging and power price hedging. The Company does not intend to
use hedging or derivatives for investment purposes but may from time to time
use risk management instruments such as forward contracts and swaps
(collectively "Derivatives") to protect the Company from any fluctuations in
the relative value of currencies against Pound Sterling, as well as to hedge
against interest rates and power prices. The Derivatives must be traded by
private agreements entered into with financial institutions or reputable
entities specialising in this type of transaction and will be limited to
maturities no longer than 12 months. The Company will target investments that
provide sufficient asset-level returns to compensate for longer term
fluctuations in exchange rates. Furthermore, asset level returns where
possible will be linked to local inflation rates.
Derivatives may be employed either at the level of the Company, at the level
of the relevant SPE or at the level of any intermediate wholly owned
subsidiary of the Company.
All hedging policies of the Company will be reviewed by the Board and the
Investment Manager on a regular basis to ensure that the risks associated with
the Company's investments are being appropriately managed. Any derivative
transactions carried out will only be for the purpose of efficient portfolio
management and will not be carried out for speculative purposes.
Amendment to investment policy
As required by the Listing Rules, any material change to the investment policy
of the Company will be made only with the approval of the FCA and
shareholders, by ordinary resolution and will be notified to HMRC. If a change
to the investment policy is material for the purposes of the AIFM Rules, the
Investment Manager will need to notify the FCA prior to the implementation of
such change and the change may not be implemented until the period of time
prescribed in the AIFM Rules has elapsed without the FCA having objected to
the change.
Status of the Company
The Company was incorporated on 30 October 2020. It is registered as a public
limited company and is an investment company within the terms of section 833
of the Companies Act 2006. It has been approved by HMRC as an investment
trust company in accordance with sections 1158/1159 of the Corporation Tax
Act 2010. The Directors are of the opinion that the Company has conducted its
affairs in compliance with sections 1158/1159 during the year ended
31 December 2024 and intends to continue to do so.
The Company's shares trade on the premium segment of the Main Market of the
London Stock Exchange. It is a member of the Association of Investment
Companies (the "AIC"). The Company and the Board are governed by its Articles
of Association (the "Articles"). Any amendments to the Articles must be
approved by shareholders by way of a special resolution.
Employees, human rights, social and community issues
The Board recognises the requirement under Companies Act 2006 to detail
information about human rights, employees and community issues, including
information about any policies it has in relation to these matters and the
effectiveness of these policies. These requirements, which may apply to the
Company's investments, do not apply to the Company as it has no employees, all
the Directors are non-executive and it has outsourced all its functions to
third party service providers. The Company has therefore not reported further
in respect of these provisions.
The Company is not within the scope of the Modern Slavery Act 2015 because it
has not exceeded the turnover threshold and therefore no further disclosure is
required in this regard. The Directors are satisfied that, to the best of
their knowledge, the Company's principal suppliers comply with the provisions
of the Modern Slavery Act 2015 and maintain adequate safeguards in keeping
with the provisions of the Bribery Act 2010 and Criminal Finances Act 2017.
Details about the Company's approach to sustainability are set out on
pages 52 to 68.
Diversity
As at 31 December 2024, the Board comprised three female and two male
Directors.
It is the Company's aim to have an appropriate level of diversity on the
Board. The Board welcomes the recommendations from the FTSE Women Leaders
Review on gender diversity on boards and the Parker Review about ethnic
representation on boards. The Company conformed with the gender and ethnic
diversity targets during the year under review. See pages 108 to 109 for
further details of the Board's diversity policy and compliance with the
recommended diversity targets.
As the Company has no employees, there is nothing further to report in respect
of gender representation within the Company.
Financial KPIs
NAV per share growth
-11.4%
Definition
NAV divided by number of shares outstanding as at 31 December 2024.
Commentary
The NAV has decreased to 103.21p since 31 December 2023 (31 December 2023:
116.46p). Alternative performance per share measures are defined on pages 147
to 148.
Dividend per share
5.71p
Definition
Aggregate dividends declared per share in respect of the financial year.
Commentary
The Company's target was to pay a dividend of 5.68p per share in respect of
the year to 31 December 2024 (31 December 2023: 5.56p). With the declaration
of the interim dividend of 1.45p per share on 21 February 2025, the total
dividend for 2024 is 5.71p per share.
Total NAV return for the year
-4.3%
Definition
A measure of performance that includes both income and capital returns. This
takes into account capital gains and any dividends paid out by the Company
during the year.
Commentary
Total return reflects continued underlying delivery to shareholders (31
December 2023: 14.5%). Alternative performance measures are defined on pages
147 to 148.
Ongoing Charges Ratio
1.5%
Definition
Annualised ongoing charges (i.e. excluding investment costs and other
irregular costs) divided by the average published undiluted NAV in the period,
calculated in accordance with AIC guidelines.
Commentary
The Company's ongoing charges ratio was slightly higher than the previous year
(31 December 2023: 1.4%). Alternative performance measures are defined on
pages 147 to 148.
Largest three investment programmes as a proportion of NAV
63.3%
Definition
Value of the three largest investment programmes divided by the NAV at period
end.
Commentary
The three largest investment programmes are the US terminal storage assets,
the Brazilian hydro facility and the UK Flexible Power with CCR facility
(31 December 2023: 59.8%).
Largest investment programme as a proportion of NAV
29.3%
Definition
Value of largest investment programme divided by NAV at period end.
Commentary
The largest investment programme within the Company's portfolio is the US
terminal storage assets (31 December 2023: 24.9%).
Total renewable energy generated and injected into the grid (MWh)
856,666
Definition
Underlying portfolio energy generated from renewable assets in MWh.
Commentary
The portfolio's generation for 2024 in MWh (31 December 2023: 844,434),
equivalent of the annual electricity use of approximately 317,284
(31 December 2023: 312,750 ) UK homes.
Total avoided carbon emissions (tonnes CO(2)e)
262,501
Definition
A measure of our success in investing in projects that have a positive
environmental impact.
Commentary
The portfolio's total GHG emissions avoided in tCO(2)e from displacing fossil
fuel derived electricity (31 December 2023: 252,671 (recalculated)),
equivalent to removing about 163,500 (31 December 2023: 157,455
(recalculated)) average sized cars from UK roads.
Weighted average carbon intensity per $1m revenue (tonnes CO(2)e / $m)
60
Definition
Portfolio's exposure to carbon-intensive companies, expressed in tonnes
CO(2)e/$m revenue.
Commentary
The calculation covers operational scope 1 and 2 emissions (31 December
2023: 42). Emissions from assets under construction are not factored into the
calculations.
STAKEHOLDER ENGAGEMENT
Overview
This section of the annual report covers the Board's considerations and
activities in discharging their duties under section 172 of the Companies
Act 2006, in promoting the success of the Company for the benefit of the
members as a whole.
Stakeholders are integral to the long-term success of the Company. The
Directors recognise that, both individually and collectively as the Board,
their overarching duty is to act in good faith and in a way that is most
likely to promote the success of the Company. As set out in section 172 of the
Companies Act 2006, the Directors act for the benefit of shareholders and in
the interests of stakeholders as a whole, having regard, amongst other
matters, to:
• the likely consequences of any decision in the long term;
• the need to foster the Company's business relationships with
suppliers, customers and others;
• the impact of the Company's operations on the community and
the environment;
• the desirability of the Company maintaining a reputation for
high standards of business conduct; and
• the need to act fairly between shareholders of the Company.
All Board discussions include consideration of the longer-term consequences of
any key decisions and their implications for the relevant stakeholders.
Stakeholders
A company's stakeholders are normally considered to comprise its shareholders,
employees, customers, suppliers, as well as the wider community in which the
company operates and impacts. The Company is different in that as an
investment trust it has no employees and, in terms of suppliers, it receives
professional services from a number of different providers, principal amongst
them being the Investment Manager.
Through regular engagement with its stakeholders, the Board aims to gain a
rounded and balanced understanding of the impact of its decisions.
The Company recognises the importance of maintaining high standards of
business conduct and seeks to ensure that these are applied in all of its
business dealings and in its engagement with stakeholders. These engagement
mechanisms are kept under review by the Directors and are discussed on a
regular basis at Board meetings to ensure that they remain effective. The
importance of stakeholders is taken into account at every Board meeting, with
discussions involving careful consideration of the longer-term consequences of
any decisions and their implications for stakeholders. Details of how the
Board seeks to understand the needs and priorities of the Company's
stakeholders and how these are taken into account during all its discussions
and as part of its decision-making are set out below.
Key decisions made during the year
Share buyback programme
The Board continually evaluates the optimum capital allocation strategy for
the Company balancing the need to maintain a strong balance sheet in order to
support existing portfolio assets alongside further investment opportunities
and returning capital to shareholders via dividends or share buybacks. In
recognition of the discount at which the Company's share price was trading
relative to its NAV per share and its impact on shareholder returns, on
15 September 2023 the Company announced a share buyback programme (the
"buyback programme") for up to £10m. On 22 February 2024 the Company
announced an increase in the buyback programme by an additional £10m bringing
the total buyback programme to £20m. The buyback programme ended on
8 November 2024. Details of the shares repurchased under the buyback
programme are set out on page 144.
Board changes
Mr Firth was appointed as a non-executive Director of the Company on
20 February 2025.
As announced by the Company on 20 February 2025, Ms Stephens does not intend
to stand for re-election at the upcoming AGM due to personal reasons and, as
such, Mr Firth will take over the position of the Chair of the Audit
Committee as of the date of the AGM.
Stakeholder Importance How the Company engages
Shareholders Continued shareholder support and engagement are critical to the existence of The Board welcomes shareholders' views and is committed to maintaining open
the Company and the delivery of its long-term strategy. The Board and the and transparent channels of communications with them. The Board is responsible
Investment Manager give a high priority to ensuring that shareholders for the content of communication regarding corporate issues and for conveying
understand the Company's strategy and goals and can monitor its performance its views to shareholders. It aims to ensure that shareholders are provided
through the robust corporate governance processes established by the Company. with sufficient information to understand the risk/reward balance to which
they are exposed by investing in the Company. The methods of engaging with
shareholders include:
The Annual and Interim Reports are made available on the Company's website.
These reports provide shareholders with a clear understanding of the Company's
portfolio and financial position. In addition to the Annual and Interim
Reports, the investor presentations made by the Investment Manager and any
prospectuses and circulars issued by the Company are also available on the
Company's website. The Company provides regular updates on portfolio
acquisitions, capital raises, share buybacks and any other relevant matter by
way of market announcements.
All shareholders are encouraged to attend and vote at the AGM and at any
general meetings of the Company, during which the Board and the Investment
Manager are available to discuss issues affecting the Company and answer any
questions. The Company values any feedback and questions it may receive from
shareholders ahead of and during the AGM and takes action, as appropriate.
The Investment Manager, along with the Broker, regularly meets with the
Company's shareholders to provide Company updates and to foster regular
dialogue. Feedback from all shareholder meetings and investors' views are
shared with the Board on a regular basis. The Chair and the Senior Independent
Director regularly meet with shareholders.
Shareholders wishing to communicate directly with the Board or the Investment
Manager to raise any issues or concerns, should contact the Company Secretary
at the registered office address. The Chair, Senior Independent Director and
the other Directors are available throughout the year to meet with
shareholders to understand their views on the Company's performance and
governance where they wish to do so. Relations with shareholders are also
considered as part of the annual Board evaluation process.
The Board regularly monitors the shareholder profile of the Company. With the
majority of shareholders being a combination of institutional investors and
private client brokers, the Board receives regular updates on investors' views
and attitudes from the Company's Broker and the Investment Manager. The
results of these meetings are reported to the Board as part of the formal
reporting undertaken by both the Investment Manager and the Broker. The
details of substantial shareholdings in the Company are included in the
Directors' Report on page 87.
Investment Manager The Investment Manager's performance is critical for the Company to achieve The Board believes that maintaining a close and constructive working
positive and consistent long-term returns in line with its investment relationship with the Investment Manager is crucial to promoting the long-term
objective. success of the Company in an effective and responsible way. Representatives of
the Investment Manager attend Board meetings and provide reports on the
current and future activities, portfolio investments, performance, operational
and administrative matters. An open discussion regarding such matters is
encouraged, both at Board meetings and by way of ongoing communication between
the Board and the Investment Manager, facilitating a positive environment for
constructive challenge and cooperative development of solutions. Board members
are encouraged to share their knowledge and experience with the Investment
Manager and they recognise that the long-term health of the Investment Manager
is in the interests of shareholders as a whole.
The Board, through the Management Engagement Committee, keeps the ongoing
performance of the Investment Manager under continual review and conducts an
annual appraisal to consider its terms of engagement. Details regarding the
continuing appointment of the Investment Manager are set out on page 110.
Other key service providers As an investment company, all services are outsourced to third party service The Board believes that strong relationships with its other key service
providers. The Board is conscious that it is critical to foster good working providers, namely the Company Secretary, the Administrator, the Depositary,
relationships with them. the Broker and the Registrar, are important for the long-term success of the
Company. The Board maintains regular contact with its key external providers
and receives regular reporting from them, both through the Board and Committee
meetings, as well as outside of the regular meeting cycle. Their advice, as
well as their needs and views, are routinely taken into account.
Through its Management Engagement Committee, the Board formally assesses their
performance, fees and continuing appointment at least annually to ensure that
the key service providers continue to function at an acceptable level and are
appropriately remunerated to deliver the expected level of service. The Audit
Committee also reviews and evaluates the control environment in place at each
key service provider.
Lenders Availability of funding and liquidity are crucial to the Company's ability to The Company does not make use of structural debt in order to achieve its yield
take advantage of investment opportunities as they arise. and total return targets. To date, the portfolio has been equity funded
allowing for efficient asset acquisition. Once assets have been acquired and
are operational, the Investment Manager, through its extensive international
network of funding partners, may seek the most efficient debt funding on a
non-recourse basis.
Society and the environment It is of utmost importance to the Company that it positively impacts local As an investor in sustainable energy, the Company's assets have an impact on
communities through its sustainable environmental initiatives, investment in the environment. The Company has a Sustainability Framework which is published
areas undergoing regeneration and local employment practices. on the Company's website and our approach to sustainability is set out in the
Sustainability section of the report.
PRINCIPAL RISKS & UNCERTAINTIES
The Board, through delegation to the Audit Committee, has undertaken a robust
assessment and review of the emerging and principal risks facing the Company,
together with a review of any new risks which may have arisen during the year,
including those that would threaten its business model, future performance,
solvency or liquidity. These risks are formalised within the Company's risk
matrix, which is regularly reviewed by the Audit Committee. As part of its
risk management process, the Audit Committee seeks to identify emerging risks
to ensure that they are effectively managed as they develop and are recorded
in the risk matrix.
The Directors are focussed on the risk presented to the Company by the
discount to NAV being high for reasons not under the Company's control. Given
the market conditions, the Company has not been unable to raise additional
funds for investments to drive further growth and diversification in the
portfolio. The result is the actual return to shareholders may be materially
lower than the total target return. At the same time the Directors are
focussed on the Investment Manager managing the Company's liquidity.
The risk of Compliance with Disclosure Regulation, including anti-greenwashing
rules and climate related disclosures has increased and is therefore included
in the list below for this year.
Some risks in relation to current investments have been considered by the
Directors to be relatively low and well managed: demand, usage and
throughput, and meteorology, reliance on third party service providers,
physical and transition risks. These have been removed from the list below
this year.
Information about the Company's internal control and risk management
procedures are detailed in the Corporate Governance Statement on pages 92 to
97.
The principal financial risks and the Company's policies for managing these
risks, and the policy and practice with regard to the financial instruments,
are summarised in note 12 to the financial statements.
Risk Description of Risk Risk Impact Mitigation
1. Risks relating to the Company
Reliance on Investment Manager The Company relies on the Investment Manager for the achievement of its The departure of some or all of Victory Hill's investment professionals could The Investment Manager consists of five managing partners supported by five
investment objective. prevent the Company from achieving its investment objective. investment professionals. The total Investment Manager personnel is 15, which
includes the Investment, Finance, Sustainability, Compliance, Data Analytics
There can be no assurance that the Directors will be able to find a and Investor Relations teams. A collegiate approach is taken to investment
replacement manager if Victory Hill resigns. management activities with the team having a broad range of skills to support
the pursuance of the Company's investment objective.
If a successor cannot be found, the Company may not have the resources it
considers necessary to manage the Portfolio or to make investments The performance of the Company's Investment Manager is closely monitored by
appropriately and, as a result there may be a material adverse effect on the the Board.
performance of the Company's NAV, revenues and returns to shareholders.
In addition, at least once a year the Management Engagement Committee performs
a formal review process to consider the ongoing performance of the Investment
Manager and makes a recommendation on the continuing appointment of the
Investment Manager to the Board.
The initial term of the investment management agreement is 5 years (ending in
February 2026).
Target Total Return The Target Total Return is based on estimates and assumptions that are Target Total Return requires access to capital to maintain and enhance asset The Investment Manager has prepared a model of returns and performs extensive
inherently subject to significant commercial, economic and market returns. Should access to capital become restricted, asset returns may be due diligence on investments.
uncertainties and contingencies, and the actual return to Shareholders may be impacted.
materially lower than the Target Total Return. Furthermore, investment performance is monitored regularly against expected
returns.
The Board regularly reviews the Company's investment performance against its
stated objective.
Currency risks The Company will make investments which are based in countries whose local When foreign currencies are translated into Sterling there could be a material Investments are held for the long-term.
currency may not be Sterling and the Company may make and/or receive payments adverse effect on the Company's profitability, the NAV and the price of the
that are denominated in currencies other than Sterling. shares. The Company enters into hedging arrangements for periods up to 12 months to
hedge against short-term currency movements.
Currency risk is taken into consideration at time of investment.
The movement in NAV attributable to currency movements is disclosed to
investors each quarter with the NAV update.
Liquidity risks Risk that sufficient cash funds are not in place in order to meet commitments Risk that unexpected calls are made on investments. The fund is investing in a mixture of operating and construction assets.
for investment, dividends, buy‑backs of shares and ongoing fund costs. Operating assets have the benefit of providing cash flows.
The Investment Manager provides an annual budget to the Board for approval.
Performance vs budget is monitored on a quarterly basis by the Investment
Manager and the Board.
'The Investment Manager monitors liquidity of the Company vs forecast
investment, dividend and share buyback commitments. Liquidity is represented
in cash, money market investments and fixed term deposits.
In the case of share buybacks to manage share price discount vs. NAV, the
ultimate buyback is subject to sufficient funds to pay dividends, market
conditions and Board discretion. Liquidity constraints will be considered
before share buy-backs and/or return of capital to shareholders is executed.
2. Risks relating to the portfolio investment strategy
Illiquidity of investments The Company's investments in Sustainable Energy Infrastructure Investments are Shareholder returns could be materially negatively impacted should the Company The Company is expected to hold most of its investments on a long-term basis.
illiquid and may be difficult to realise at a particular time and/or at the be required to realise them in the near term (requirement for early A continuation vote is set for the AGM in 2026 which, if not passed, could
prevailing valuation. liquidity). ultimately result in the discontinuation of the Company.
The Investment Manager and the Board will monitor the position on a regular
basis.
Market conditions Market conditions may delay or prevent the Company from making appropriate The actual return to shareholders may be materially lower than the target The Investment Manager monitors returns on investments including capital
investments that generate attractive returns. total return. requirements for portfolio to maintain or enhance portfolio returns.
The senior management team at the Investment Manager have extensive experience
in executing strategies similar to that of the Company.
The Company is invested across a number of investment programmes and assets
that generate returns in line with the fund projected returns.
Concentration risk Concentration risk in relation to exposure to individual Sustainable Energy Targeted returns may be materially negatively impacted if those Sustainable Limits are set out in the Investment Policy to mitigate concentration risk.
Infrastructure Investments, technology and geography. Energy Infrastructure Investments, geographies and/or technologies, do not
deliver the returns anticipated by Victory Hill. At the time of making investments, concentration risk is taken into
consideration.
The Investment Manager will monitor exposures and the position will be
regularly reviewed by the Board.
3. Risks relating to investments
Construction risks Construction project risks associated with the risk of inaccurate assessment Failure to complete projects The Investment Manager undertakes extensive due diligence on construction
of a construction opportunity, delays or disruptions which are outside the
in accordance with opportunities and seeks to have appropriate insurances in place to mitigate
Company's control, changes in market conditions, and the inability of
expectations could adversely impact the Company's performance and shareholder any costs relating to delays. In addition, the Investment Manager seeks to
contractors to perform their contractual commitments. returns. utilise EPC contractors that can provide single point, lump sum turnkey
arrangements wherever possible.
The Investment Manager monitors construction carefully and reports frequently
to the Board where issues with contractors arise, the Investment Manager has
the experience and expertise to identify and contract with alternative
contractors.
The fund is fully invested. The overall construction weighting of the
portfolio is reducing as the portfolio moves from the construction to
operational phase.
Due diligence Due diligence may not identify all risks and liabilities in respect of an Failure to identify risks and liabilities may impact the profitability or The senior management team at the Investment Manager have extensive experience
investment. valuation of the investment. in executing strategies similar to that of the Company.
Where appropriate, due diligence conducted by the Investment Manager is
supplemented, for example, by independent legal, tax, accounting, commercial
and technical advisers.
Counterparty risks Counterparties defaulting on their contractual obligations or suffering an The failure by a counterparty to make contractual payments or perform other Due diligence on counterparty risk is performed before entering into projects
insolvency event. contractual obligations or the early termination of the relevant contract due and counterparty risk is monitored on a regular basis.
to the insolvency of a counterparty may have an adverse effect on the
Company's NAV, revenues and returns to shareholders.
Uninsured loss and damage The risk that an investment may be destroyed or suffer material damage, and The actual return to shareholders may be materially lower than the target An independent insurance adviser is appointed for each project to review
the existing insurances may not be sufficient to cover all the losses and total returns. project risks in conjunction with the Investment Manager and to ensure that
damages. appropriate insurance arrangements are in place.
Insurance requirements are reviewed on an ongoing basis.
Curtailment risks Investments may be subject to the risk of interruption in grid connection or In such cases, affected investments may not receive any compensation or only Extensive due diligence is performed on each project before investment.
irregularities in overall power supply. limited compensation.
The Investment Manager constantly reviews curtailment risks.
Commodity price risks The operation and cash flows of certain investments may depend on prevailing The actual return to shareholders may be materially lower than the target The Company mitigates these risks by entering into (i) hedging arrangements;
market prices for electricity and fuel, and particularly natural gas. total return. (ii) extendable short, medium and long-term contracts; and (iii) fixed price
or availability-based asset-level commercial contracts.
ESG risks Material ESG risks may arise such as health and safety, unfair advantage, If the Company fails to adhere to its ESG commitments this could result in ESG is embedded in the investment cycle with a formal ESG matrix including a
bribery, corruption and environmental damage including climate related risks. shareholder dissatisfaction and adversely affect the reputation of the Company minimum target ESG score required for approval of any new investments.
Ongoing operational and construction ESG risk management is reviewed
periodically by the Investment Manager, who work closely with service
providers on ESG and impact standards reporting.
4. Risks relating to the Company's shares
Discount to NAV The share price may not reflect the underlying NAV. Lack of liquidity in the Company's shares could negatively impact on The Board, Broker and Investment Manager monitor the discount or premium to
Discount management provisions being unable to be satisfied may result in a shareholder returns. NAV at which the shares trade. However share buyback activities to date have
significant share price discount to NAV. had little impact on narrowing the discount between the NAV and the share
price.
5. Risks relating to regulation
Regulation The Company is exposed to the risk that the competent authorities may pass The actual return to shareholders may be lower than the target total return. The Company aims to hold a diversified portfolio of Sustainable Energy
legislation that might hinder or invalidate rights under existing contracts as Infrastructure Investments and so it is unlikely that all assets will be
well as hinder or impair the obtaining of the necessary permits or licences impacted equally by a single change in legislation.
necessary for Sustainable Energy Infrastructure Investments in the
construction phase. The Investment Manager ensures that contracts are not exposed to government
subsidies, thus mitigating exposure to policy risks linked to contract
pricing.
There is also strong public demand for support of the renewables market to hit
'net-zero' carbon emission targets.
The Investment Manager monitors the position and provides regular reports to
the Board on the wider macro environment.
Disclosure Regulation Compliance with the terms of the Disclosure Regulation, including Non-compliance could result in damage in reputation, fines, and reduced The Investment Manager actively monitors compliance with the Disclosure
anti-greenwashing rules and climate related disclosures, may create investor confidence. Regulation.
significant additional compliance costs for the Company.
6. Operational risks
Operation and management risks of the portfolio assets Poor management or operational performance of an asset by the Company's The actual return from single portfolio assets may be lower than the target Operating partners operate to an annual budget and a series of key performance
operating partners and selected operations and maintenance providers. total return for the asset. indicators.
The Investment Manager monitors the performance vs. annual budget and KPIs on
a monthly and quarterly basis. On an annual basis the Operating partners are
subject to an annual performance review across operational, ESG and financial
KPIs.
The Investment Manager provides quarterly reports to the Board on asset-level
performance.
Valuation risk Valuation of the portfolio of assets is based on financial projections and Actual results may vary significantly from the projections, which may reduce The Company has adopted a valuation policy which was disclosed in the
estimations of future results. the profitability of the Company leading to reduced returns to shareholders Company's prospectus.
and a fall in the Company's NAV.
Fair value for each investment is calculated by the Investment Manager.
However, if considered necessary and appropriate, the Board may appoint an
independent valuer.
The Investment Manager has significant experience in the valuation of energy
assets.
The Investment Manager has a valuation working group to perform and challenge
valuations. In addition, the Investment Manager Portfolio Risk and Valuation
Committee ("PRV") reviews and challenges valuations.
The PRV Committee members are functionally independent from the team
performing valuations.
The Board reviews the valuations provided quarterly by the Investment Manager.
As part of the annual audit, the Auditor reviews the valuations.
To the extent possible, assumptions are supported by independent data sources.
GOING CONCERN AND VIABILITY STATEMENT
Going concern
The Directors have reviewed the financial position of the Company and its
future cash flow requirements, taking into consideration current and potential
funding sources, investment into existing and near-term projects and the
Company's working capital requirements.
Please refer to page 51 for detailed description on the Director's
considerations in forming their view on going concern.
Based on its assessment, the Directors have a reasonable expectation that the
Company has sufficient resources to continue in operational existence for at
least 12 months from the date of the approval of these financial statements.
The Directors are not aware of any material uncertainties that may cast
significant doubt upon the Company's ability to continue as a going concern.
Accordingly, they continue to adopt the going concern basis in preparing the
financial statements.
Viability statement
In accordance with the Company's articles of association, a continuation vote
is required every fifth AGM. The next continuation vote is expected to take
place during the AGM around May 2026. The Directors have assessed the
prospects of the Company over a period longer than 12 months required by the
relevant "Going Concern" provisions. The Directors have considered the nature
of the Company's assets and liabilities, and associated cash flows, and have
determined that three years, up to 30 June 2028, is the timescale over which
the performance of the Company can be forecast with a material degree of
accuracy and therefore is the appropriate period over which to consider the
Company's viability.
The Investment Manager has considered the sensitivity of the financial
projections to a range of key assumptions, such as the portfolio companies
being owned by the Company until 30 June 2028, reduction in cash flows from
portfolio companies, no debt availability, and the inability of the Company to
raise additional equity. The results of this stress testing showed that the
Company would be able to withstand the impact of these scenarios occurring
over the three‑year period.
The Directors confirm they have carried out an assessment of the emerging and
principal risks facing the Company, including those that would threaten its
business model, future performance, solvency, liquidity, and dividend cover
for a three-year period. The Directors' assessment has been made with
reference to the principal risks and uncertainties and emerging risks
summarised on pages 45 to 50 and how they could impact the prospects of the
Company. In particular, the Board has taken into account the current market
conditions, and the discount of the share price to net asset value. This
discount, ahead of the continuation vote in May 2026 may result in an
uncertain outcome. Should the shareholders of the Company fail to vote in
favour of the continuation of the Company in May 2026, the basis of
preparation of the viability statement may change.
Notwithstanding the uncertain outcome of the continuation vote in May 2026,
the Directors have a reasonable expectation that the Company will be able to
continue to operate and meet its liabilities as they fall due for a period of
at least three years.
Approval of the Strategic Report
The Strategic Report was approved by the Board of Directors and signed on its
behalf by:
Bernard Bulkin
Chair
ESG REGULATION & FRAMEWORK ALIGNMENT
The adoption of the 'Sustainability Impact' label reflects the Company's
continued commitment to achieving its sustainability investment objective: to
make an impact by supporting the attainment and pursuit of key SDGs where
energy and energy infrastructure investments are a direct contributor to the
acceleration of the energy transition.
Eleanor Fraser-Smith
Head of Sustainability
The environmental, social and governance ("ESG") and sustainability regulatory
environment continued to evolve in 2024. ENRG took steps to ensure alignment
with new regulatory requirements. This included the European Securities and
Markets Authority ("ESMA") guidelines on fund names using ESG or
sustainability-related terms and the Financial Conduct Authority's ("FCA")
Sustainability Disclosure Requirements ("SDR") and investment labels.
ENRG announced the adoption of 'Sustainability Impact' label under the SDR.
This label identifies investment products that aim to achieve a pre‑defined
measurable impact in relation to an environmental and/or social outcome. ENRG
was one of the first investment trusts to adopt the impact label which sets a
high standard for process, transparency and disclosure.
Sustainability Goal
The adoption of the 'Sustainability Impact' label reflects the Company's
continued commitment to achieving its sustainability investment objective.
ENRG's investments in sustainable energy infrastructure seek to make an impact
by supporting the attainment and pursuit of key Sustainable Development Goals
("SDGs") where energy and energy infrastructure investments are a direct
contributor to the acceleration of the energy transition.
ENRG performance against this sustainability objective is measured by
reference to key performance indicators (KPIs), see pages 54 to 55.
APPROACH TO SUSTAINABILITY
The Company's investments aim to create positive environmental impact by
addressing climate change and air pollution challenges.
The Company seeks to achieve this impact through implementing the investment
strategy described on page 32 and the investment in, and management of, a
diversified portfolio of sustainable energy infrastructure assets that support
reduction or displacement of air emissions from conventional energy sources.
The Company's investments must fall into categories under its 'Investment
Universe'. The asset categories in the Investment Universe have been chosen as
they directly contribute to the acceleration of the energy transition, and
therefore support the reduction or displacement of air emissions. All (100%)
of the investments entered into by the Company must be aligned with this
Sustainability Objective. If a potential investment does not fall within the
Investment Universe, then the Company will not invest.
If a potential investment meets the Investment Universe requirements it is
further interrogated to assess alignment with additional Company investment
criteria. This includes third party verification of contribution to core SDGs
using a proprietary scorecard.
Governance
The Company's governance structure and composition is described in the
governance section of this report. The highest governance bodies have
responsibility for overseeing sustainability risks and opportunities and
assessing effectiveness of related actions. The independent Board of Directors
has ultimate oversight for ESG aspects and sustainability objectives of
investments and has a dedicated board member with responsibility for ESG and
sustainability issues.
They have responsibility for ensuring the reasonable expectations of
shareholders are met and ensuring where responsibilities are delegated that
objectives are achieved. The Investment Manager has been appointed by the
Board to advise on investments and perform asset management activities.
Delegated responsibilities include development and implementation of
sustainability policies and processes and ensuring necessary resourcing.
Oversight is achieved through several Investment Manager administered
subcommittees which include the Investment Manager's Head of Sustainability as
a member. The Investment Manager subcommittees all have a role in embedding
sustainability into decision making.
Investment Manager Sub-Committees
Investment Committee evaluates investment opportunities and ensures alignment
with the SDG investment policy and inclusion of ESG due diligence and risk
analysis in the investment process. The committee also provides oversight for
investment stewardship activities, monitors investment ESG performance, and
ensures actions and priorities are executed.
Risk, Operations and Compliance Committee ensures ESG risks, including climate
related physical and transition risks, are identified and corresponding
controls are considered and implemented. The management of environmental and
social related risks and opportunities is integrated into the Company's risk
management framework.
Sustainability Committee advises on ESG strategy, emerging ESG issues and
provides recommendations on ESG integration into investment and asset
management processes. This includes target setting, monitoring and reporting.
The Investment Manager leadership team are permanent members of the three
subcommittees. Decisions and programme updates are reported to the Board and
Board committees.
If an investment opportunity meets ENRG's Investment Universe and the
opportunity is cleared by Victory Hill's investment committee, in depth
investment due diligence is then conducted to understand the full impact of
the opportunity. The investment memorandum with supporting commercial,
project, sustainability and financial information is then submitted to the
Board for feedback. The proposed acquisition is then submitted for approval by
Victory Hill's Investment Committee, with the Board having an opportunity to
provide feedback on the investment decision before it is implemented.
Stewardship
The Company's sustainable energy infrastructure assets are managed through
active engagement and stewardship activities with asset operating partners. A
key focus of engagement is implementing governance and reporting mechanisms
with the operators to ensure transparency and accountability. Continuous
performance improvement to drive risk management and sustainable value
creation and impact is also a priority. An annually agreed sustainability
action plan for each asset establishes main objectives. This document supports
several aims: the monitoring of asset operators' compliance with their
sustainability linked contractual arrangements; alignment of investments with
global sustainability frameworks; creating consistency with the Investment
Manager's sustainability and investment policies; and supporting an ESG risk
and opportunity management approach to operation and activity management. KPIs
and other performance metrics are collected from the asset operators monthly
with regular meetings with operating partners to track progress against
performance metrics.
The Investment Manager has established processes to monitor the performance of
each asset and its operator to ensure alignment with strategic and operational
objectives, as well as escalation procedures for assets that underperform.
Engagement with operators to discuss remediation and improvements is the
Investment Manager's preferred action. There were no actions taken under the
escalation procedures during the financial year.
These engagement and stewardship activities support the Company's achievement
of the Sustainability Objective and delivery of the Impact.
Stakeholder engagement
The Company's investment strategy includes alignment with SDG 17 'Partnership
for the Goals' recognising that the SDGs can only be met if all stakeholders
work together to mobilise financial resources globally. This is the Company's
approach to investment. The values of honesty and integrity, transparency and
partnership are integral to stakeholder engagements.
To enable ENRG's sustainability objectives there are key stakeholder
engagements:
• Investors
• Operating Partners and their employees
• Investment management employees
• Engineering, procurement and construction contractors (EPC)
• Communities
• Offtakers, customers and clients
• Local regulatory bodies
The Environment is also a key stakeholder, and the Company measures the
environmental footprint of its investments and seeks to make a positive
contribution in the operating regions.
The operating partners have responsibility for implementing a stakeholder
engagement plan commensurate with operations. The Investment Manager has
developed guidance and tools to assist operations in stakeholder mapping and
engagement strategies. This approach recognises the interconnected systems and
impacts in different energy value chains. Investment impacts on the Company's
stakeholders are not always limited to the operational footprint. Taking a
value chain view is therefore an important element of the Investment Manager's
ESG risk analysis process and its efforts to mitigate risks in business
relationships. ESG opportunities, risks and impacts on both the Company and
from the Company's activities on stakeholders are in scope. These are
communicated in the asset sustainability action plan which is informed by the
external SDG assessment, due diligence and materiality analysis.
The flow chart below identifies the sustainability inputs into the Company's
investment process for risk and opportunity management.
Sustainability and ESG risk analysis
Origination sustainability analysis
Fund mandate, SDG and Due diligence questionnaire covering ESG red flags, do no harm criteria & External SDG and EU
EU Taxonomy eligibility analysis internal evaluation ESG risk management and practices
Taxonomy eligibility evaluation Investment SDG alignment, life cycle and value
chain analysis
(Stage: Preliminary Deal Analysis)
(Stage: Screening)
(Stage: Screening)
Sustainability action plan (SAP)
Sustainability materiality analysis and ESG risk The asset sustainability action plan addressing priority sustainability risks
and opportunity assessment informed by sector and geographic risks, project and opportunities with the aim to create additional sustainable value through
specific impacts and stakeholder mapping environmental and community engagement
(Stage: Onboarding)
(Stage: Onboarding)
Monitoring, evaluation & reporting
Data collection and analysis of KPIs and targets to track SAP progress Annual and periodic sustainability reports
(Stage: Asset Management)
- KPIs and metrics assured externally
(Stage: Asset Management)
Materiality
The principal risk and uncertainties table on page 45 includes those
financially material environmental and social issues which are identified
through the Company's risk management process.
The Company also conducts a dedicated ESG materiality assessment for each
asset programme in the portfolio which is reviewed annually or as required.
There are several frameworks and standards that inform this process supporting
a sector specific view. This includes the International Sustainability
Standards Board ("ISSB"); Sustainability Accounting Standards Board ("SASB");
Global Reporting Initiative ("GRI"); the Global ESG Benchmark for Real Assets;
International Finance Corporation performance standards; Sustainable Finance
Disclosure regulation ("SFDR") principle adverse impacts ("PAI"); Task Force
On Climate Related Financial Disclosures ("TCFD") and additionally in 2024 the
European Sustainability Reporting Standards ("ESRS") and the FCA SDR.
The regional and geographic risks considered include those identified by
Transparency International Corruption Perception Index, Freedom House Freedom
in The World Index, Fund for Peace Fragile States Index, Global Slavery Index,
Social Progress Index and ILO Labour Rights as well as individual country
climate pledges.
Investment specific attributes considered include the operational proximity to
local communities, indigenous peoples, cultural heritage, ecological and
biodiversity habitats, and operational activities such as noise, light, water
use, discharge and waste that may impact external stakeholders and the
environment.
The stakeholders interacting with the operations including employees,
communities, contractors, suppliers and customers are considered along with
the operating partner company's resourcing and ESG management policies and
procedures. Risk and significance of material issues are assessed on this
basis, accounting for the probability and severity of impacts and the quality
of controls that the operating partner has in place.
The diverse nature of the portfolio is reflected in varied range of
operational priorities. The glossary on page 160 identifies some of the key
issues assessed in the different asset materiality analyses. They were
reviewed for likelihood, severity, time frame and control effectiveness.
With new regulation there has been an increased focus on the concept of double
materiality which considers these two dimensions of impact materiality and
financial materiality, taking a value chain and life cycle view of impact.
Financial materiality
A material issue for the Company is physical climate change such as extreme
weather, which could present financial risk to the portfolio. This is a
systemic issue for the energy sector which includes climate risks and
opportunities, energy generation and operational emissions. These issues and
the Company's management approach are explored in more detail in the TCFD
section on page 70. The Company recognises that sustainability topics are
naturally interconnected.
Impact materiality
Systemic risks such as climate change can also impact Company stakeholders.
There are also local idiosyncratic risks at the operational level that may
affect stakeholders including:
• Environmental impacts: The Company is committed to not
developing or operating assets on ecologically sensitive, protected or
conservation areas. However, there is recognition that construction and
operational activities could contribute to nature loss. Mitigating and
managing these impacts form part of the sustainability action plans. No severe
impacts have been identified to date. More detail of active management is
included in the environmental section of this report (page 65).
• Social impacts: Suppliers in the cobalt and polysilicon
supply chains that includes silicon components of solar cells have been
implicated in forced labour practices and human rights abuses. The majority of
solar cells contain Chinese origin silicon components so the likelihood of
impact is high. Regulatory interventions and Company enhanced due diligence
help reduce the risk.
These potential impacts are discussed in the performance section below
together with core operational social and environmental risk management.
Collaboration with other organisations, industry peers and stakeholders is
crucial to address sustainability topics. The Investment Manager therefore is
signatory, supporter and member of organisations that seek to drive change
through disclosure and partnership. These frameworks and guidelines also
inform the Company's investment process and stewardship activities.
The Company is committed to transparency and accountability and driving
continuous performance improvement aligned with the highest standards for
sustainability. To build confidence in data reported, the Company engaged
Bureau Veritas to independently assure selected environmental and social
metrics reported through a limited assurance engagement in accordance with the
International Standard on Assurance Engagements ("ISAE") 3000 "Assurance
Engagements Other than Audits or Reviews of Historical Financial Information,"
and ISAE 3410, "Assurance Engagements on Greenhouse Gas Statements." These
standards provide a framework for assessing the completeness, accuracy, and
reliability of the selected social and environmental disclosures. Social and
environmental metrics annotated with ‡ have been covered in the assurance
process. The assurance engagement data collection processes and methodologies
were examined through the assurance process, and an opinion was provided on
the disclosed information.
The full independent Assurance Report including Bureau Veritas' assurance
conclusion, assessment standard, scope of work, summary of work, and
exclusions and limitations can be found on the Company
website: https://www.globalenergyinfrastructure.co.uk
(https://www.globalenergyinfrastructure.co.uk) . The basis of reporting and
assurance opinion can also be found on the ENRG website. The basis of
reporting provides detail of assets within scope of reporting and assurance.
ESG data reported covers operational assets with more than six months of data.
For 2024 that did not include any UK investments. All data is attributed to
overseas entities.
Streamlined energy and carbon reporting (SECR)(4)
Energy use (MWh) GHG emissions (tonnes CO(2)e)
Year Energy 2024 Energy 2023 GHG 2024 GHG 2023
Scope 1 16,453(‡) 17,905 2,985(‡) 3,271
Scope 2 (location) 4,656(‡) 1,783 1,119(‡) 518
Scope 2 (market) - onsite generation 7,393(‡) 8,172 - -
Total Scope 1 & 2 28,502 27,860 4,105 3,789
Scope 3 - - 44,960(‡) 29,013
Total (all scopes) 28,502 27,860 49,064 32,802
GHG emissions avoided (solar only) - - 40,827 17,663
GHG emissions avoided (location based) - - 122,530
GHG emissions avoided (operating margin based) - - 262,501(‡) 252,671(5)
(4) GHG emissions scope definitions and methodology: The
Company collects GHG emission data monthly from its operational assets and
reports totals annually. The Company uses the following standards to report
its GHG emissions: the World Business Council for Sustainable Development
("WBCSD") and the World Resources Institute ("WRI") GHG Protocol as of
31 December 2014, the GHG Protocol Scope 2 Guidance, and the Carbon
Disclosure Standards Board. The Company defines its emissions boundary as
those under majority ownership (+50%). 100% of emissions reported are under
the Company's financial control. The operational carbon footprint of assets is
calculated from absolute energy consumption reported by the assets. Scope 1
comprises direct emissions from Company owned and controlled plant and
equipment, including natural gas, propane, diesel and automotive fuel. Scope 2
comprises indirect emissions from purchased renewable and non-renewable
electricity using location based calculation method. Scope 3 comprises
indirect emissions from non-Company owned and controlled plant and equipment,
including freight in and outbound to the storage terminal, waste, water use
and fuel and energy related activities not included in scope 1 and 2. Regional
and country specific emission factors are used to calculate GHG emissions
included IEA, IFI, UK BEIS, US EPA and Australian National Greenhouse
Accounting factors.
(5) In the 2023 annual report and accounts GHG emissions
avoided were calculated using the location based grid mix emission factors to
estimate emissions displaced from renewable energy generation. In 2024 an
updated methodology has been used. Emissions avoided are determined by
comparing the emissions from the renewable energy project to the emissions
that would have been generated without the project (baseline emissions) using
operating margin emission factor data. Baseline emissions represent the
emissions that would have occurred under a business-as-usual scenario,
typically from fossil fuel power plants. The Partnership for Carbon Accounting
Financials ("PCAF") recommends using the operating margin ("OM") emission
factor for reporting the emissions avoided from renewable power project
portfolios. The methodology for these factors is aligned with the
International Finance Institution ("IFI")-harmonized GHG accounting standards,
which are calculated by the IFI Technical Working Group on Greenhouse Gas
Accounting.
Carbon footprint
The Company investment objective supports climate action by accelerating the
energy transition through its investments in climate resilient energy
infrastructure. The management of investment impacts, including measuring an
asset's carbon footprint and taking action to decarbonise, is an important
element in the Company's climate action approach. The table below covers the
Company's scope 1, 2 and 3 emissions from the operational assets including the
Australian solar PV with battery storage assets, Brazilian solar PV assets
operational in 2024, Brazilian hydro facility, and US terminal storage assets.
All sites provide operational data, however gaps remain in calculating scope 3
emissions due to difficulties sourcing data from the asset value chains, for
example destinations of inbound and outbound freight for the US terminal
storage assets. In this case an estimate was used based on industry knowledge.
For the solar PV assets, the scope 3 emissions from transmission and
distribution are accounted for.
2024 saw an increase in carbon emissions from electricity use. This is
attributed to the maintenance activities at a Solar PV and battery storage
asset in South Australia which resulted in less solar generation and increased
import of electricity for storage in the battery. The emissions calculations
use the average grid mix for the region, however it is worth noting that the
BESS imports electricity at lowest daily cost when renewable generation is
high and exports at the operating margin when costs are high and generation is
likely from high cost more pollutive fossil sources. Accurately reflecting the
source of electricity procured from a grid is a challenge.
2024 2023
GHG emission Emissions % Total Emissions % Total
Scope 1
Subtotal 2,985(‡) 6% 3,271 10%
Mobile combustion - owned fleet 82(‡) 0.2% 50 0.2%
Stationary combustion (natural gas, diesel, propane) 2,903(‡) 6% 3,220 10%
Fugitive emissions 0 0% 0.52 0.002%
Scope 2
Subtotal 1,119(‡) 2% 518 1.6%
Purchased and used electricity 1,119(‡) 2% 518 1.6%
Scope 3
Subtotal 44,960(‡) 92% 29,013 88%
Category 1: Purchased goods and services 4(‡) 0.01% 4 0.0%
Category 3: Fuel- and energy-related activities 864(‡) 2% 739 2%
Category 4: Upstream transport and distribution 7,938(‡) 16% 6,853 21%
Category 5: Waste 14(‡) 0.03% 3.00 0.01%
Category 7: Employee commuting 16(‡) 0.03% 19 0.06%
Category 9: Downstream transport and distribution 36,123(‡) 74% 21,395 65%
Total emissions 49,064 32,802
Programme embodied carbon - life cycle analysis
Units Australia Brazil (Hydro) Brazil (Solar) UK Iberian and Portfolio
Swedish
assets
Life time embodied emissions tonnes CO(2)e 132,871 175,382 114,276 1,321 12,370 436,220
Life time operational emissions tonnes CO(2)e 6,561 1,866 12,868 93,210 130 236,823
Total life cycle emissions tonnes CO(2)e 141,308 177,248 127,144 94,531 12,501 675,385
Life time emissions avoided tonnes CO(2)e 496,344 8,980,587 69,905 152,027 31,351 9,730,213
Average emissions avoided per annum tonnes CO(2)e 25,506 91,578 7,882 9,862 1,254 133,894
Emissions payback years 5.54 1.9 16.1 9.6 10.0 5.0
Emissions avoided since acquisition tonnes CO(2)e 48,995 155,914 10,058 In construction no data in 2024 214,955
Remaining emissions tonnes CO(2)e 92,312 Complete 117,085 460,430
Remaining payback Years 3.6 Complete 14.9 - 3.4
The Company takes a life cycle approach to understand carbon impact and
footprint of each of the renewable power generation investments and the future
carbon capture project. The Company conducted a life cycle assessment ("LCA")
of embodied emissions of the energy generation assets in the portfolio. This
data was first published in the 2021 annual report. This analysis was updated
with the acquisition of the Mascarenhas Brazilian hydro facility at the end of
2022 and the commissioning of the BESS system in the Australian solar PV sites
and this year to account for the acquisition of a wind asset in Sweden and
solar PV site in Gran Canarias, Spain. This analysis was completed by a
third-party sustainability expert with the methodology described below. This
is also a requirement for some assets under the EU SFDR regulation. The data
was calculated on an average 25-year life cycle (longer for hydro) and
includes import and export data that is indicative of full life emissions
avoided. The LCA process for each asset was completed using actual and
predicted asset data as far as possible, supported with data derived from the
EcoInvent database. This approach enabled the embodied tCO2e emissions within
each asset to be calculated. These include emissions associated with raw
material extraction, manufacture, transport, construction, operations and
decommissioning and recycling. The objective was to understand more completely
the emissions avoided for each asset and account for emissions associated with
the development of each asset. The emissions avoided calculations within the
LCA take into account local factors such as carbon intensity of the energy
type being replaced at a local level and local irradiance levels. The expected
decarbonisation of traditional baseload energy supply aligned with country
commitments towards net zero by 2050 was also factored in. The calculations
therefore accounted for expected decarbonisation trajectory of grid supplied
energy and the tonnes CO(2)e avoided figures at all phases of the asset life
cycle for each country in which assets are located. However, a declining grid
carbon intensity has not been carried through for Brazil as the grid has
established low carbon intensity. The Brazilian calculations therefore do not
account for the type and carbon intensity of electricity generation being
displaced by the solar PV assets, nor the benefits of distributed power
generation. A reduction in electricity losses along transmission and
distribution lines means the remote distributed solar PV assets in Brazil will
provide a more efficient and cleaner source of energy locally, supporting
future growth and energy access.
The Company is tracking progress on carbon emission "payback" as calculated in
the LCA, considering the estimated and actual energy generation and associated
emissions avoided. The clean electricity generated is starting to payback that
emitted and estimated in the asset lifetime. The Brazilian hydro facility was
commissioned in 1974 and has a short "payback" period for its embodied
emissions which means the facility is notionally providing zero emission
electricity into the grid. Similarly, the Swedish wind asset acquired in 2024
has historically generated enough clean energy to notionally "payback"
embodied lifetime emissions.
Environment
The Company's investments aim to create positive environmental impact by
addressing climate change and air pollution challenges. The assets support the
decarbonisation of electricity grids in countries of operation and facilitate
cleaner energy value chains through provision of strategic energy
infrastructure. This impact is measured by the displacement of more carbon
intensive electricity in grids or pollutive fuels in value chains.
Environmental metrics (strategic impact) Unit 2024 2023 (Grid) 2023 (OM(6))
Renewable energy generated MWh 856,666(‡) 844,434
Renewable energy generated (solar only) MWh 76,124(‡) 62,952
Nitrous Oxides (NOx) avoided Tonnes 2,226(‡) 1,921
Sulfur Oxides (SOx) avoided Tonnes 22,402(‡) 19,332
Particulate Matter (PM) 10 avoided Tonnes 1,140(‡) 984
Particulate Matter (PM) 2.5 avoided Tonnes 837(‡) 722
Emissions avoided (solar only) Tonnes CO(2)e 40,827(‡) 17,663 30,730
Emissions avoided Tonnes CO(2)e 262,501(‡) 122,530 252,671
In 2024 BESS was deployed on three solar PV sites in New South Wales,
Australia supporting the sustainability investment objective. Solar PV sites
generate low emission electricity and reduce GHG emissions by displacing more
expensive and polluting fossil-fuel-based electricity generation at the
operating margin, reducing reliance on carbon-intensive energy production.
However, solar PV generates electricity during daylight hours, and power
demand often peaks in the evening. By integrating battery storage, excess
electricity generated during the day can be stored and released when demand is
high, addressing the intermittency challenge and displacing more emitting
conventional power sources. Batteries therefore enable a temporal shift in
electricity supply, allowing solar energy to meet peak demand that would
otherwise be supplied by carbon-intensive sources like coal-fired power
plants. This shift reduces the reliance on fossil fuels, particularly in
coal-heavy states like Queensland and New South Wales.
Active management of investments is important for ensuring the operational
efficiency and maximising the emissions reduction potential of the portfolio.
From an environmental management perspective this includes operations and
maintenance activities such as routine equipment testing, predictive
maintenance, vegetation control and landscaping, firebreak installation and
maintenance, panel cleaning, flood management, weather monitoring, thermal
management, operational and emergency response and preparedness planning.
These all contribute to protecting the portfolio and ensuring high
availability and performance of the assets and therefore optimal renewable
generation by the assets and emission reduction.
The Investment Manager's sustainability criteria which is informed by the UN
Principles of Responsible Investment, UN Global Compact and the EU taxonomy do
no significant harm ("DNSH") criteria require operating partners not to
contribute to environmental degradation and to take proactive measures to
improve the environment around the operations.
There were no delays to projects in 2024 due to environmental concerns. The
operational environmental metrics table below provides absolute metrics with a
comparison to 2023 metrics where available. This covers 100% of operational
assets under management that have been operational for at least six months
during the financial reporting year.
(6) Recalculated 2023 GHG emissions avoided using
operating margin emission factor published by IFI using PCAF methodology.
Environmental metrics (operational impact) Units 2024 2023
Water use including consumed Cubic Meters 28,716(‡) 24,274
Water quality WQI Good(‡) Good
Waste produced Tonnes 37(‡) 75
Renewable energy consumed MWh 7,393(‡) 8,172
Renewable energy certificates MWh 1,161 -
The renewable energy consumed is in reference to the Brazilian hydro facility
which consumes some of the electricity generated by its turbines in the
facility's operations. This electricity is zero carbon and is reported in the
emissions table on page 62. The renewable energy certificates were purchased
by the US terminal storage facility operator to cover electricity use by the
assets which are currently unable to procure renewable energy through on site
or private wire generation.
There was an increase in water use in 2024 this was attributed to additional
measurements of irrigation water at the hydro facility and slight increase in
use at the US terminal storage asset.
• Water is a material issue for the Brazilian hydro facility.
Water quality which is monitored by a third party and reported to regulators,
was rated as good according to the Water Quality Index. However, a reduction
in water quality was observed at the upstream locations. This reduction was
judged to be caused by upstream activities such as agriculture and beyond the
asset's control. Downstream measurements, taken after the water passed through
the turbines, remained good. In 2025 the asset is developing plans to improve
the reservoir. Purchased water volumes reduced during the year as a direct
result of fewer contractors on site. Water withdrawn from the river for
irrigation was tracked for the first time in 2024 and is reflected in the
increased water use reported.
• At the US terminal storage asset water use is correlated
with the volume of fuel processed. An increase in water use was directly
linked to increase in HSFO flows. The benefits of the renovated steam
generation system are evident however, as it drives water efficiencies. There
has been a 21% efficiency improvement measured overall. This is an important
initiative for the terminal which is located in an area of high-water stress.
Brownsville continues to suffer from drought conditions in 2024 with the
public utilities board urging water conservation from businesses and
residents.
There was a decrease in waste reported in 2024 attributed to the conclusion of
construction work at the terminal storage asset in 2023. Normal operations saw
monthly removal of waste by a contracted recycling company.
Social
The Company has no employees. The social data reported and assured below is
related to operating partner employees who interact with site operations
and/or work directly on site. This is reported as full time equivalent ("FTE")
for the financial year 2024. This does not include operating partner
management employees working at head office or elsewhere.
There was an increase in operating partner workers across the sites in 2024
with a slight increase in employment at the US terminal storage asset. Staff
turnover remains a challenge in the US where the workforce is transient, and
the local labour market is competitive. The operator is continuing to
implement policies to support labour retention. The Brazilian hydro facility
also saw some turnover in Q2 following a period of workforce stability.
Improving diversity for small mid-market operators remains a challenge
particularly in female representation. Recruitment pipelines continue to draw
from local talent pools that lack diversity and the operators often lack
resources for robust diversity initiatives. The Company is committed to
working with the operators to overcome challenges and create a more diverse
workforce.
Employee metrics Units 2024 2023
Total number of operating asset employees FTE # 68.5(‡) 58
Gender Diversity Male % 97%(‡) 98%
Female % 3%(‡) 2%
Other % 0% 0%
Employee turnover % % 35%(‡) 14%
Total number of asset employees all* FTE # 71.5 58
Total number of operator partner employees FTE # 197.5 -
* Employee numbers include construction assets or operating partners with
assets in development.
Health and safety
Health and Safety metrics Unit 2024 2023
Total recordable injuries # 2(‡) 0
Total number of incidents # 2 4
The Company is pleased that health and safety continues to be a focus for
operating partners. Root cause review of two traffic related incidents in the
Brazilian solar PV programme has led to improved practices by the operating
partner and the Company continues to monitor progress.
The US terminal storage assets and Brazilian hydro facility had the highest
number of workers on site and recorded no worker accidents or injuries in
2024.
Other safety incidents reported during the year included a fire at one of the
Brazilian Solar PV assets with wind blowing sparks from neighbouring land. The
fire was dealt with quickly through emergency response procedures and onsite
firefighting equipment with little damage caused and no injuries. A small oil
leak from a solar transformer was also reported. This was below the volume for
official reporting and the oil was cleared and transformer repaired.
Operations: policy and procedures Unit 2024
Operating partners with H&S safety policy % 100%
ISO 45001 certified % 40%
Environmental management policy and system % 100%
ISO 14001 certified % 40%
ILO aligned employee handbook % 60%
Supplier code of conduct or equivalent % 80%
Non compliance with environmental regulations £ 0
No of grievances received # 2
Supply chain
Suppliers in the cobalt and polysilicon supply chains that include silicon
components of solar cells have been implicated in forced labour practices and
human rights abuses. Companies implicated have been blacklisted by various
governments including the United States and Australia. However, other
downstream suppliers, particularly in the photovoltaic supply chain may be
unwillingly complicit by procuring silicon from these suppliers. Enhanced due
diligence is one way of mitigating this risk. The Company's operating partner
in Australia, through the construction contractor, engaged with suppliers for
two construction sites during 2024 to understand their environmental and
social operating practices as well as supply chain engagement practices. The
solar panel supplier was contractually required to provide traceability data
for all components purchased which included sub supplier and location
including Chinese city and province if applicable. For the construction assets
in the newly acquired Iberian portfolio this provenance data was also
collected. No solar components have been procured from the Chinese region of
Xinjiang which has been implicated in forced labour abuses of the Uyghur
ethnic group.
Community
In 2024 the Brazil solar PV operating partner initiated a community engagement
programme. This focussed on engaging local communities around priority sites
to educate on the operating partner, create open dialogue and manage issues to
better understand impact on the investments.
The US terminal storage facility is in Brownsville on the Texas-Mexico border.
The city has one of the highest poverty rates in the US and high unemployment
rates, with many young people living in poverty. The terminal storage facility
provides job opportunities and benefits to the local community. In addition,
local community engagement is focussed on giving back to communities where
employees live and work through volunteer hours and philanthropic activities
at local elementary schools and food banks to support those in need.
Under Brazilian regulatory requirements the hydro facility operator partner
organised several community engagement programmes in 2024 which included
environmental education and supporting local waste management charities. An
important milestone in 2024 for both the hydro facility and the Company was
the achievement of Gold certification under the Hydropower Sustainability
Standard. This certification covered the full breadth of sustainability issues
and was a recognition of the operating partners' efforts to strengthen
community outreach and engagement as well as labour relations, continuous
improvement around health and safety, and improving aquatic and terrestrial
habitats upstream and downstream.
CLIMATE RELATED FINANCIAL DISCLOSURES
The Company is voluntarily disclosing its current practice in its annual
financial report in accordance with the TCFD recommendations and requirements.
The Company is committed to strengthening climate-related financial
disclosures over time.
Pillar 1: Governance
Disclose the organization's governance around climate related risks and
opportunities
An orderly energy transition towards climate change goals is the key
opportunity for the Company. The Company's strategy is to target direct
investments in energy infrastructure assets that support the SDGs,
specifically those that address themes that include climate change, energy
access, energy efficiency and market liberalisation. Climate change issues are
therefore intrinsically considered by both the Board and the Investment
Manager.
The management of climate related risks and opportunities is integrated into
the Company's risk management framework. This looks at the likelihood of a
risk and the severity of impact with and without controls. It enables the
Board and the Investment Manager to prioritise material risks for additional
mitigation (see principal risk section on page 45.
a) Describe the board's oversight of climate related risks and opportunities
The ENRG Board has oversight of the business model and strategy. It meets at
least four times a year and is responsible for the ongoing process of
identifying, carrying out a robust assessment of, and managing and mitigating
the principal risks which include climate-related risks faced by the Company.
The Board's Audit Committee, which is comprised of three independent Directors
and chair, meet at least twice a year, and has responsibility for reviewing
the Company's risk management systems. The committee reviews and updates the
Company's risk register which includes climate-related risks. Louise Kingham,
CBE, is a Board member with strong industry expertise and is responsible for
ESG and sustainability related matters for the Company. The Board and Board
committees monitor and oversee climate-related issues when reviewing and
guiding ENRG strategies, important plans of action and risk management
policies. They also track implementation and performance progress against
goals and targets for addressing climate-related issues through its periodic
committee meetings and the oversight of the Investment Manager. The experience
and background of Board members are disclosed on page 85.
b) Describe management's role in assessing and managing climate-related risks
and opportunities
The Investment Manager has responsibility for implementing the Company's
investment strategy, managing the Company investments, and reporting to the
Board and Board committees. There are three relevant subcommittees at the
Investment Manager level which address climate-related issues and report to
the Investment Manager leadership team:
• The Investment Committee evaluates investment opportunities
aligned with the SDGs and with the purpose of accelerating the energy
transition towards a net zero carbon world before making any investment
decisions. An external assurance consultant is used to advise on project
selection following a robust SDG validation due diligence process. The
Investment Manager's Head of Sustainability is a member of the Investment
Committee informing about climate-related issues.
• The Sustainability Committee provides recommendations on ESG
integration into the investment strategy and ongoing asset life cycle
management. This includes appropriate ESG target setting, periodic monitoring,
and reporting.
• Risk, Operations and Compliance Committee ensures risks are
identified and control measures are put in place to mitigate the risk, which
includes climate-related issues.
The Investment Manager leadership team are deeply involved in these three
subcommittees; they then aggregate, consolidate, and report investment
decisions and program updates periodically to the Board and Board committees.
The Investment Manager's Head of Sustainability is responsible for the
climate-related programme management which includes monitoring climate issues,
adopting ESG and climate-related practices into the Company, improving
investment-level resilience to climate-related risks and reaping
climate-related opportunities aligned with the Company's strategy. The Head of
Sustainability reports to the Investment Manager's Head of Risk Management on
climate-related risk issues and metrics to respective committees and
leadership team.
The Investment Manager also works closely with operating partners through
regular meetings and monthly reports to review and monitor climate-related
issues.
Operational carbon footprints are calculated including life cycle analysis of
energy generation projects to understand their contribution to the Company's
net zero target (see page 83). Actions are put in place to reduce operation
emissions and other environmental impacts, including understanding supply
chain and value chain impacts. Operating partners periodically affirm their
compliance with relevant policies.
For construction assets, operating partners are engaged to ensure ESG
management practices are aligned with the Investment Manager's sustainable
development culture. The Company's governance structure is presented on
page 93 where associated subcommittees are included.
Pillar 2: Strategy
Disclose the actual and potential impacts of climate-related risks and
opportunities on the organization's businesses, strategy, and financial
planning where such information is material.
a) Describe the climate-related risks and opportunities the organization has
identified over the short, medium, and long term
The average asset life in the Company portfolio exceeds 25 years, therefore
the Company generally takes a long-term time horizon approach. This is also
aligned with the portfolio net zero target timeframe. The Investment Manager
is a signatory to the Net Zero Asset Managers Initiative ("NZAMI") which
supports the goal of net zero GHG emissions by 2050. With rapid changes in
market movements, regulatory trends, and weather patterns, the Company also
assesses material climate-related risk in shorter time horizons.
The Company considers climate related risks and opportunities within the
following time horizons:
• Short term: 0-5 years
• Medium term: 5-10 years
• Long term: 10+ years
The Company's process of assessing climate-related risks and opportunities is
integrated into its ESG materiality and ESG risks analysis process which is
described on page 59. It covers the investment process ranging from
investment decision-making to ongoing deployment monitoring. Potential risks
can also be raised by operating partners and investment team members to the
Head of Sustainability. The material climate-related risks and opportunities
of the Company are identified and listed in tables below. This is based on the
Company's business strategy, geographical exposure and type of energy
technology. It considers the Company's financial materiality threshold, which
is above 3% of NAV for residual climate related risks after considering risk
mitigations. This is consistent with financial market norms.
Climate-related Risk Risk assessment and mitigation
Risk category: Time horizon: medium-term, long-term
Physical risk - Chronic
Impact area: business, strategy, and financial planning
Longer term gradual changes in climate patterns, e.g., reduction or increase
Potential impact: reduction in output from assets leading to reduced income
in wind levels, decrease in solar optimal days impacting renewable output and stream. This risk may increase over the long term in the absence of climate
associated earnings. Increased occurrence of extreme weather events such as mitigation.
cyclones, storms, flooding, and heatwaves causing damage to assets, disruption
Risk mitigation: The Company invests in a portfolio of energy transition
to feedstocks, value chain, outputs and associated earnings. infrastructure assets, diversified by geography, technology, and capability.
These investments follow the thesis of energy transition to achieve net zero
goals. Such diversification provides a buffer against variable weather
patterns across the portfolio.
The Company also mitigates risk through project revenues being contracted for
the medium- and long-term.
At the asset level, meteorology due diligence is undertaken before investment,
weather conditions are monitored and some of the assets have battery storage
capabilities to optimise energy input to the grid.
All assets have crisis management and business continuity plans to respond to
disruptions. The assets are required to have continuous improvement management
systems to build capability and capacity in local teams and operations.
Risk category: Time horizon: short-term, medium-term, long-term
Physical risk - Acute
Impact area: business, financial planning
Abrupt disruptive climate impacts such as impacts from flooding, wildfire,
Potential impact: Increase operating expenditure to recover asset damage
drought, extreme heat, or sudden regulatory actions increasing over time. caused by natural disasters and increase insurance premium for assets in
high-risk locations.
Risk mitigation: Throughout the investment decision-making process, the due
diligence process accounts for climate change risk and impacts.
The Investment Manager employs an insurance specialist when making investments
and seeks to have appropriate contractual warranties, indemnities and
insurance provisions in place to mitigate any costs relating to delays or
operation disruption. Insurance requirements are reviewed on an ongoing basis.
Risk category: Time horizon: medium-term, long-term
Transition risks - Market
Impact area: business, strategy, and financial planning
Uncertainty in market signals manifests as lower-than-expected power prices,
Potential impact: Increase in market volatility and abrupt and unexpected
driven by an imbalance between an abundant intermittent power supply and shifts in power prices make financial forecasts less reliable on intermittent
market demand. Lower than expected volume throughput for conventional fuel renewable energy solutions.
storage asset driven by increased demand for alternative fuels.
Reduced throughput for conventional fuels longer-term with expected shift to
clearer and alternative fuels impacting existing fuel storage asset revenue
flows.
Risk mitigation: The Company manages this risk through its diverse portfolio
of energy transition infrastructure assets such as the battery energy storage
systems and hydro facility, as well as signing fixed price offtaker
agreements.
The Company is assessing its longer-term strategy to invest in storage assets
to accommodate alternative fuels required for hard to abate transportation
including sustainable aviation fuel, renewable diesel, marine e-methanol and
hydrogen as the market shifts.
Risk category: Time horizon: medium-term, long-term
Transition risks -
Impact area: business, strategy, and financial planning
Technology, Market
Potential impact: Increase costs to adopt/deploy new practices to transition
Market shifts such as changing customer behaviour and substitution of existing to lower emissions technologies, reduction in the availability of capital to
products and services with lower emissions options or new technologies may invest in some local and/or mature technology energy transition projects.
dampen ability to engage European investors on a traditional European focused
Risk mitigation: There is strong public demand for support of the renewable
renewable portfolio and often shift strategy towards a broader portfolio of energy market towards "net zero" carbon emission targets.
energy transition projects that cover various regions and include new
The senior management team of the Investment Manager has extensive experience
technologies such as biofuels and carbon capture and reuse. in executing a wide variety of strategies in the energy sector, the team
monitors market shifts and tailor investment strategies accordingly.
The Company is expected to hold most of its investments on a long-term basis
and the Board and the Investment Manager monitor the position on a regular
basis.
Risk category: Time horizon: short-term, medium-term, long-term
Transition risks -
Impact area: business, and financial planning
policy and legal, reputation
Potential impact: Increase cost of doing business (e.g., higher compliance
Policy shift may introduce regulation around climate costs, increased insurance premiums, workforce management and planning).
change e.g., increased disclosure, taxes etc. Reduction in the availability of capital to invest in energy transition
Stakeholders' increasing concerns on business practice (e.g. supply chain projects.
management, workforce management and planning) need to be addressed.
Risk mitigation: The Company is supportive of the policy aims of the
Disclosure Regulation and will comply with it and monitor changes.
The Company, via the Investment Manager, engages with partners and
stakeholders to gather data and drive action to improve ESG management and
support disclosure and policy requirements. This includes monthly metric
reporting on climate related KPIs such as energy used and generated,
mitigation actions for risks and impacts, as well as any energy reduction
projects.
The Company investment strategy targeting the energy transition is aligned
with global policy movements on climate change.
Climate-related opportunity Opportunity description
Opportunity category: Time horizon: medium-term, long-term
Energy Source, Resilience
Impact area: business, strategy, and financial planning
Decarbonisation policy and market shifts will drive new renewable energy, new
Potential impact:
fuels and energy storage opportunities. This is aligned with the Company's
strategy to invest in energy transition infrastructure. Increased need for • Creates more deal origination opportunities in support of
global energy access from a mix of sources as developing countries expand grid energy transition which aligns with Company's investment strategy.
access to populations.
• Increases capital availability as more investors favour
lower-emissions programs.
Opportunity category: Time horizon: short-term, medium-term, long-term
Resource Efficiency, Energy Source, and Products and Services
Impact area: business, strategy
Volatile power price movements support an increase in energy efficiency grid
Potential impact:
infrastructure investing which leads to increased source of revenue.
• Provides additional revenue sources in marketplaces with
abundant intermittent power supply through harvesting merchant pricing.
• Supports in energy efficiency and energy security reinforces
intangible benefits such as reputation, brand and goodwill, together with
employee, partner and stakeholder engagement.
Opportunity category: Time horizon: short-term, medium-term, long-term
Energy Source, Markets, and Resilience
Impact area: business, strategy, and financial planning
Market liberalisation in developed and developing economies is creating
Potential impact:
opportunity for market share in renewable and alternative energy opportunities
in new geographies. • Access to new markets leads to an enhanced competitive
position through addressing shifting consumer preferences, resulting in
increased revenues.
• Increases availability and diversification of financial
assets such as green bonds.
• Improves resource efficiency and reduces operating costs.
The Investment Manager has engaged and will continue to reach out globally
with various companies and investors to support expansion of the Company and
sustainable energy infrastructure investments.
Opportunity category: Time horizon: short-term, medium-term, long-term
Resource Efficiency, Markets,
Impact area: business, strategy, and financial planning
and Resilience
Potential impact:
Decentralisation of energy generation creating new opportunities for
investment in renewable and other sustainable energy infrastructure. • Enhances competitiveness and increases revenues through new
solutions, access to new markets, diversification, resilience planning and
relationships.
• Increases reliability of supply chain and ability to operate
under various conditions.
A pipeline of investments is constantly being identified, with the Investment
Manager regularly reporting to the Board on this pipeline.
b) Describe the impact of climate related risks and opportunities on the
organization's businesses, strategy, and financial planning
Impact on existing businesses
The Company invests in a diverse range of sustainable energy infrastructure
investments such as renewable energy generation, transmission, distribution,
and storage that drive the global transition towards cleaner and more
sustainable sources of power. The Company's investment strategy therefore sees
opportunity in the current and growing transition to a low-carbon economy.
The Company's investments inherently improve environmental performance; for
example, in Brazil, investment in a portfolio of solar PV assets will
accelerate the growth of a sustainable energy system by improving and securing
localised access to clean energy and helping to lower Brazilian energy prices.
The UK flexible power with CCR assets will use a less pollutive fuel in
natural gas, as well as displace emissions through carbon capture and reuse
technologies.
The Company's investments are exposed to physical climate risk such as
potential damage to asset infrastructure as well as offsite transmission and
distribution systems. This risk arises from extreme weather conditions that
are becoming more common and frequent in the locations of operation. The
Investment Manager reduces impact by diversifying technology, finding
synergies such as co-locating generation and storage, and building a global
portfolio with investments in multiple continents experiencing different
weather patterns and conditions. It also conducts climate risk and
vulnerability assessments ("CRVA") for each asset to identify opportunities to
build resilient assets.
Increased power price volatility because of more intermittent renewable power
generation in the market has become increasingly prominent. The financial
impact of this market trend will become relevant and beneficial as the
Investment Manager builds out its co-location of solar PV and battery energy
storage solution in volatile markets such as Australia.
Impact on strategy
The Investment Manager continues to observe globally favourable government
policies to support decarbonising goals and low carbon renewable energy
investment. This aligns with the Company's investment objective to generate
stable returns by investing in a diversified portfolio of global sustainable
energy infrastructure investments to facilitate the transition to a low carbon
energy world.
The Company also supports the goal and has set a target of reaching net zero
carbon emissions in its portfolio by 2050.
Energy security is a principal concern for country leaders and is driving a
focus on reducing reliance on energy imports and building out domestic
renewable and low carbon energy capacity. The increasing use of artificial
intelligence technologies is also increasing energy demand. This represents an
opportunity for the Company to further expand into new markets supported by
the existing cross-continental exposure and the energy sector expertise of the
Investment Manager.
As the public consensus and attention on sustainability grows, and countries
and organisations strive to achieve the goal of a net zero carbon world,
investment flow towards the energy transition is continuing to grow. This is
both an opportunity and a risk. As capital flows align with the Company's
investment objective, this can enable increased access to investment funds;
however, as more investors pursue the same sustainable energy infrastructure
investment theme, the market may become increasingly competitive and therefore
sourcing investments on attractive terms will become more difficult. The
Investment Manager's industry expertise and ability to source exclusive
transactions is invaluable in mitigating this risk.
Impact on financial planning
Climate-related issues are both opportunities and risks for the Company's
financial planning. The Company benefits from its strong ESG credentials which
reflect both in positive impact on climate change and stable long-term income
distributions to meet investor requirements on sustainability and return. It
provides the Company with the opportunity to leverage sustainability linked
credit facilities at a lower cost of borrowing if required. The Company's TCFD
voluntary disclosures and transparency to the market are praised by existing
shareholders and attractive to sustainability-driven prospective investors.
The Company's investment valuation and financial projections rely on various
assumptions. Increased power price volatility is one such factor identified
and discussed in the climate related risks and opportunities on page 72 that
brings uncertainty to the Company's investment revenue streams. The Company
reduces this risk exposure through entering into fixed power price agreements
with offtakers in the short to medium term. The Company continues to invest in
battery storage development, as there is an opportunity to capture value given
the market price volatility.
The Company uses external expert advisors to produce and validate its
financial assumptions to increase accuracy, yet the Company's financial
forecasts and budgets are still subject to limitations related to projected
accuracy of climate impacts. A materiality analysis of the climate-related
risks and opportunities identified on page 72 was completed following the
asset specific CRVA and review of the financial models, market trends and
Network for Greening the Financial System ("NGFS") climate transition
scenarios. The table below lists the material risks, assessment of probability
and time horizon. These material risks were evaluated at the individual asset
level and considered in the quantitative scenario analysis to calculate
potential financial impact as described on page 78.
Risk Risk category Description and potential Impact Likelihood and likely time horizon
Physical - Acute Flood In several asset locations, the Inter‑governmental Panel on Climate Change Likely -
("IPCC") Sixth Assessment Report ("AR6") models predict an increase in
Medium to Long
frequency of extreme rainfall which can result in river and surface water
flooding damage to infrastructure and shut down of operations.
Physical - Acute Wildfire In several asset locations, the IPCC AR6 models suggest an increase in the Likely -
fire season with increased severity and frequency of wildfires which can lead
Medium to Long
to infrastructure damage and shutdowns.
Physical - Acute Extreme Heat An increase in mean air temperature consistent with global trends across the Likely -
portfolio with predictions of an increase in air temperature extremes can lead
Medium to Long
to increased drought, wildfire and heat stress which further result in
infrastructure damage and/or curtailment of electricity generation and labour
shortages.
Transition - Markets Power price volatility NGFS scenarios predict volatility and reduction in the power price as more Likely -
renewables and low carbon power generators export to the grid.
Medium to Long
Transition - Markets Fuel market transitions NGFS scenarios predict a reduction in demand for conventional fuels in the Highly likely -
Mexican fuel supply chain as the economy transitions to cleaner and
Medium to Long
alternative fuels indicated by a trend of increase investment in biofuel,
hydrogen, and other alternative fuels.
c) Describe the resilience of the organization's strategy, taking into
consideration different climate-related scenarios, including a 2°C or lower
scenario
The analysis of the Company's business strategy under different scenarios took
into consideration the current geographic locations of assets and critical
Tier 1 supply chain companies such as solar panel manufacturers. The Company's
business strategy supports a transition scenario. Commitments made
internationally at the UN climate change conferences and nationally
demonstrate policy and market momentum, towards energy transition and in
support of the Company's investment policy.
The Company considers a bottom-up approach to perform scenario analysis, given
the portfolio's diversified geographic locations and technologies. When
assessing the impact of climate risks and opportunities on the portfolio, the
Company distinguishes between transition risk and physical risk. The Company's
diverse energy infrastructure investments are considered under the following
scenarios including:
• NGFS climate scenarios
• IPCC Representative Concentration Pathways ("RCP")
The NGFS transition risk models use integrated assessment models that derive
the impacts of different policy ambitions on the energy transition relevant
sectors with granular information on implications for 184 countries. The
physical risk models include acute and chronic risk based on global
temperature paths. The NGFS models were assessed by the IPCC working group III
as part of AR6 and although they cover a smaller range of model assumptions,
they have a higher sectoral and regional granularity. The NGFS scenarios are
also well aligned with the IEA scenarios on several dimensions.(7) 2024 NGFS
updated scenarios were used to reflect latest economic and climate data and
policy commitments as well as technology trends. A new damage function was
also implemented by NGFS this year.
Given the portfolio's geographical and technological diversification, and
given the Company's bottom-up approach in performing scenario analysis, the
Company selected NGFS scenarios for transition risk as relevant scenarios.(7)
The financial impact and resilience of the Company's investment business
strategy to different climate scenarios is inherent in the Investment
Manager's financial modelling processes. The energy transition is the focus of
the Company's investment strategy. It is the Company's objective to accelerate
an orderly transition via its investments. It is also expected that the
investments would be resilient in case of a failure to achieve the energy
transition.
The Company's scenario analysis for TCFD has produced a range of possible
financial impacts under three different scenarios for each asset unique to
each geography and predicted changes. There is uncertainty in terms of how
climate change will impact individual operations as well as the impact of
global efforts to achieve an orderly energy transition and so this data should
be regarded as indicative rather than absolute predictions. The NGFS also
cautions on using its results due to uncertainty.
Generally, the Company's financial materiality threshold for climate related
risks and opportunities is 3% of NAV after considering risk mitigation. Due to
the unpredictability of climate related weather events, the Company takes a
more cautious approach to manage and secure insurance policies in order to
mitigate this uncertainty in the longer term.
Scenario analysis is split into physical and transition risks. The Company
performed the scenario analysis on operational assets only and quantifies the
resilience of the portfolio to climate-related scenarios by assessing the
impact on NAV per share.
Transition Risk
Transition risk is comprehensively considered and embedded in the investment
financial models, including sensitivity analysis, to allow the Investment
Manager to proactively make decisions to mitigate, transfer, accept, or
control those risks where appropriate. The Company's investment process
selects projects that align to the energy transition to net zero. Various
standard parameters are considered in the Investment Manager's financial and
valuation models including policy and regulatory changes and stringency,
technology and energy mix, energy demand and future mix, capacity changes, key
commodity changes and associated costs or profits to the business. The
financial and valuation models are geographically tailored, and take into
consideration the national mandated targets for renewable and other energy
source penetration in the energy mix. Carbon reduction policies of the
investment country and region are also critical considerations in
understanding investment impact and suitability.
(7)
https://www.ngfs.net/en/publications-and-statistics/publications/ngfs-climate-scenarios-central-banks-and-supervisors-phase-v
(https://www.ngfs.net/en/publications-and-statistics/publications/ngfs-climate-scenarios-central-banks-and-supervisors-phase-v)
For this scenario analysis exercise, the Company focused on the Global Change
Analysis Model ("GCAM") modelling suite, part of the NGFS, given the model's
data availability and geographic granularity in line with the Fund assets. The
Company includes the following scenarios under each category:
• Current Policies/BAU: Current Policies, Nationally
Determined Contributions ("NDCs")
• Paris Aligned Well-Below 2C: Below 2C,
Delayed Transition
• Paris Ambitious 1.5C: Net Zero 2050,
Low Demand
The Company identified one key variable as the main driver for each programme
to assess the impact of transition risk on the value of the portfolio. The
Company selected power price as the main driver for the Brazilian hydro
facility, the Australian solar PV with battery storage assets, and the
Brazilian solar PV assets. For the US terminal storage assets, the Company
selected volume throughput, taking into account the change in demand for oil
and the transition to alternative fuel sources such as hydrogen and biofuels.
The Company used country and market specific scenario data when available.
Particularly when considering Latin American markets, scenario results varied
significantly between countries in the region, so local predictions were used
for Brazil and Mexico. Similarly, the Company focused on the Australia/New
Zealand region for the scenario analysis of the Australian solar PV with
battery storage assets.
By considering a bottom-up approach to conduct scenario analysis, the Company
shocked the aforementioned factors in the asset valuation models and assessed
the impact on the life-time dividends by discounting them to present value.
The Company assessed the impact on valuation at both programme level and
portfolio level.
The portfolio level results are highlighted below in a NAV per share impact
range. The Company benefits from both technology and geography
diversification, demonstrating the inherent focus on the energy transition in
the Company's investment strategy.
103.21p -0.4p/share to
NAV per share as at 31 December 2024
+0.9p/share
Current Policies/BAU
-2.0p/share to -4.5p/share to
-0.9p/share
-4.4p/share
Paris Aligned Well-Below 2C
Paris Ambitious 1.5C
Estimated NAV per share impact under transition risk scenarios
Among the operational programmes, the US terminal storage programme show the
highest impact to transition risk. This is driven by the change in oil demand
and the transition to other fuels such as biofuels and hydrogen observed in
Mexico. The Brazilian hydro facility and the Brazilian solar PV assets benefit
from higher power prices across all scenarios. The Australian solar PV with
battery storage assets experiences minimal impact which does not register on
the impact graphs given power price assumptions in the Australian/ New Zealand
region as well as the portfolio composition of which the Australian programme
contributes 13%.
The Company is committed in developing and employing the best available data,
scenarios and methodology. The Company selected the most relevant variable
when performing the scenario analysis. However, the Company recognises there
are high levels of uncertainty and limitations in the climate models,
scenarios and methodology. Therefore, the figures reported should be seen as
indicative of potential impact and not performance forecasts.
Portfolio and programme valuation impact under transition risk scenarios
Physical Risk
The Company identifies physical risks in the asset specific CRVAs and
proactively takes steps to mitigate climate-related risks and build asset
resilience. Acute physical risks including but not limited to hurricanes,
wildfires, floods and heatwaves are mitigated through insurance policies,
while chronic physical risks such as higher average temperatures and changes
in precipitation patterns are mitigated through the asset design and
operational management.
The IPCC AR6 report quantifies the insured damages projected impact under the
RCP 2.6 scenario and RCP 8.5 scenario for Australasia. The Company uses the
percentage increase in insurance premiums as a proxy for the insured damages
projected impact. The Company applies this shock to assess the impact on the
programme level and portfolio level valuations as follows: 7% under RCP 2.6
scenario, 7.5% under RCP 4.5 scenario, 8% under RCP 8.5 scenario. The shocks
are applied across the three operational programmes: US terminal storage
assets, Brazilian solar PV assets, and Australian solar PV with battery
storage assets. In the case of the Brazilian hydro facility, performing a
hydrological risk assessment that estimates the capital expenditures required
to build additional measures to cater for an increased maximum river flow was
considered more relevant and appropriate.
Under the RCP 2.6 scenario, the NAV per share impact is -0.42p/share, while
under the RCP 8.5 scenario the NAV/share impact is -0.63p/share. The subdued
impact highlights the inherent risk analysis and considerations that the
Company uses in its investment strategy.
The Company focused on one key variable or factor when performing the physical
risk scenario analysis, while keeping all other model inputs constant. Due to
the complexity of variable interactions and model impacts, the Company is
aware that limitations to the scenario analysis remain and is fully committed
to develop the methodology further. Therefore, the figures reported should be
seen as indicative of potential impact and not performance forecasts.
Given that the energy transition is the focus of the Company's investment
strategy, the Company inherently considers both transition and physical risks
and opportunities in its investment decision process and asset life cycle
management. Thus, the results and scenario analysis are in line with the
Company's strategy.
Estimated NAV per share impact under physical risk scenarios
103.21p -0.42p/share
NAV per share as at 31 December 2024
RCP 2.6
-0.52p/share -0.63p/share
RCP 4.5
RCP 8.5
Pillar 3 - Risk Management
a) Describe the organization's processes for identifying and assessing
climate-related risks
The Sustainability and ESG risk analysis process is described on page 59 of
this report. Climate related risks and opportunities are identified through
this process. Climate-related risks are considered at the asset level within
the screening and due diligence processes of energy infrastructure investments
prior to any investment decisions. The risk management process considers the
type of infrastructure and geographic risks. Local partners are engaged to
assess environmental management practices and processes, and to broaden
understanding of stakeholder perspectives. This investment management process
is described on page 60.
As described on page 64, the Company takes a life cycle approach in
calculating the embodied carbon in the energy generating assets and conducting
a CRVA for each asset. This identifies the material climate physical risks and
opportunities for the asset and recommendations to mitigate the risk and build
asset resilience. This is described in more detail below.
The operating partners may also do asset specific analysis to support
insurance or environmental management practices. For example, the Brazilian
hydro facility completed a hydrological study and flood risk analysis in 2023
to understand the dual impact of flood and drought on the asset and local
communities.
These identified risks are reported to the Investment Manager's Investment
Committee and rolled up to the Company risk register which is reviewed by the
Board Audit Committee as described in the governance section on page 84 and
principle risks section on page 45.
b) Describe the organization's processes for managing climate-related risks
The material climate-related risks have been identified and corresponding risk
management strategies have been considered and described on pages 72 and 73.
An expert third party sustainability consultant continued to deliver physical
CRVA reports for each of the Company's new operating assets in 2024 including
the new European portfolio acquisition. The CRVA identified material
investment-specific physical risks and corresponding risk mitigation
recommendations.
The Investment Manager's Head of Sustainability analyses the assessment report
and discusses appropriate specific risk mitigation business practices with the
operating partners and investment management team. Where there is an acute
physical risk such as severe natural disaster, for construction projects the
asset design considers infrastructure toleration maximums, and the Investment
Manager seeks insurance coverage to transfer the risk.
The CRVA was conducted in accordance with the criteria of the EU Commission
Delegated Regulation (EU) 2021/2139 which form the Technical Screening
Criteria of the EU Taxonomy. Specifically, the CRVA was conducted to accord
with the requirements of Appendix A of the above regulation, the Generic
Criteria for Do No Significant Harm to Climate Change Adaptation.
The CRVA was carried out using climate projections across different RCPs used
by the IPCC fifth assessment report ("AR5") and IPCC sixth assessment report
("AR6").
Climate modelling of regional impacts on the locations where each of the
Company's assets are situated was used. The impacts of these changes were
interpreted to understand the physical hazards the assets might experience
over their lifetime. The sustainable energy infrastructure investments
considered under the CRVA have expected lifespans greater than 10 years.
Vulnerability of the assets to projected climate related hazards was
considered based on asset design standards, site locations and risk to climate
related impacts as well as historic climate related issues which may have been
experienced in the region. The Company also considers the type of asset and
whether it will be impacted by changes in weather (e.g., wind and solar
power), supply chain disruption (e.g., energy supply), and market demands.
Implementation of adaptation solutions identified within the CRVA are reviewed
with the operating partners and the gap is filled if necessary. These
adaptations show how the resilience of the asset is improved to withstand
vulnerabilities. The most common hazard identified was the potential for
wildfire or flood. All assets have appropriate drainage designed and, in some
cases, enhanced to move excess water away from sites. All sites also have
appropriate firefighting equipment installed and operators, crisis and
emergency response procedures.
c) Describe how processes for identifying, assessing, and managing
climate-related risks are integrated into the organization's overall risk
management
The Company's process of identifying, assessing, and managing climate-related
risks is fully integrated into its investment process ranging from investment
decision-making to post-investment ongoing monitoring. Material
climate-related risks identified are included in the Company's risk register
and the ongoing risk management process. After assessing the likelihood and
the severity of impact of climate-related risks, the material risks are
disclosed in the principal risk section on page 45. More detail on the
sustainability and ESG risk analysis process is on page 59.
Pillar 4 - Metrics and Targets
a) Disclose the metrics used by the organization to assess climate related
risks and opportunities in line with its strategy and risk management process
Metrics used to assess and monitor transition risks and opportunities:
• £m Capital invested and committed to sustainable energy
infrastructure assets
• Growth in investment portfolio
• MWh of energy produced by the portfolio a year
• Volume throughput at the terminal storage assets
• % Investments aligned to the EU Taxonomy
Metrics used to assess and monitor physical risks and opportunities:
• At a fund level, current portfolio diversification
• At an asset level, annual performance against budget
• CapEx / repairs and maintenance costs
Other related metrics such as GHG emissions and investment weighted average
carbon intensity are also reported on page 83. Environmental metrics used
such as water, energy, and waste management are reported in the Sustainability
section on page 63, which includes comparison with previous operational years
and are used to calculate the portfolio's total carbon footprint.
Operating partners, as part of their environmental management practices, look
to reduce impact from these metrics. These activities are reported in the ESG
section of this report on page 64.
Physical risks are considered throughout the investment acquisition process
and ongoing monitoring. Through CRVA reports, investments specific physical
risks are contemplated and addressed early in the acquisition process. If the
climate risk highlighted has no immediate mitigation solution, insurance
policies and further discussion at the Investment Manager Investment Committee
is required. Metrics used to assess and monitor physical risks and
opportunities:
• At a fund level, current portfolio diversification
• At an asset level, annual performance against budget
• CapEx / repairs and maintenance costs
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas
(GHG) emissions, and the related risks
Portfolio GHG emissions for 2024, comparison with the previous year 2023 and
discussion on trends and risks are included in the sustainability section on
page 62.
The Company reports on energy generation, consumption and associated carbon
emissions. The carbon intensity of the Company's portfolio is low. The Company
predicts most emissions that will require reduction by 2050 will be Scope 3.
Under the TCFD recommendation, asset managers are required to provide the
weighted average carbon intensity for the investment strategy. This metric
with other carbon footprinting metrics using formulas provided by the TCFD are
included in the table below.
The source of operational emissions includes imported electricity from the
grid, fuel used in asset owned vehicles and natural gas for heating and
operations.
TCFD carbon footprinting and exposure metrics(8, 9) Unit 2022 2023 2024
Portfolio's exposure to carbon-intensive companies, expressed in tonnes t CO(2)e/$M 65 42 60(‡)
CO2e/$M revenue
The absolute greenhouse gas emissions associated with t CO(2)e 3,636 3,199 3,513(‡)
a portfolio, expressed in tonnes CO2e
Total carbon emissions for a portfolio normalized t CO(2)e/$M 6 5 7(‡)
by the market value of the portfolio, expressed in tonnes CO2e/$M invested
Volume of carbon emissions by million dollar of revenues t CO(2)e/$M 273 192 307(‡)
c) Describe the targets used by the organization to manage climate-related
risks and opportunities and performance against targets
The Company aims to meet the Paris Agreement target and achieve net zero
carbon emissions in its portfolio by 2050. The Company uses various metrics at
asset level and portfolio level, disclosed on page 54, which feed into the
portfolio goal to meet the decarbonisation target.
In 2022, the Investment Manager became signatory to the NZAMI and commissioned
an external advisor to develop a road map towards 2050 net zero goal with a
target for the Company portfolio which was published in 2023 through the Net
Zero Asset Managers Initiative and in the Company interim report.
The target covers 100% of the portfolio including assets under construction.
The target will be recalculated replacing estimated emission data with actual
once the construction assets are operational. The underlying science-based net
zero pathway from which the targets are derived is the Sectoral
Decarbonisation approach methodology and largely based on 'power' sector for
most of the assets. This requires a 65% reduction within a maximum 10- year
time frame of Scope 1 and 2 emissions as the near-term target which includes
Scope 3 emissions. The long-term target will see emissions reduced by 95% with
residual emissions offset. The slight increase in emissions per MWh was
attributed to the increase in scope 2 emissions reported as explained on
page 63. The scope 2 emissions are expected to normalise in 2025. The
operating partners continue to look for opportunities to decrease asset
related emissions.
Methodology Year Target Performance against the target
2023 2024
Science Based Target initiative for Financial Institutions: Sectoral Baseline 2023 0.0710229 tonnes CO(2)e / MWh
Decarbonisation approach
Near term 2030 0.0260654 tonnes CO(2)e / MWh 0.0388453 0.05727
Long term 2050 0.0035511 tonnes CO(2)e / MWh
(8) Underlying revenue metrics are unaudited. Figures may
change once metrics are audited in 2024.
(9) Market capitalisation calculated using profit rather
than equity share to more accurately reflect value of investments.
DIRECTORS' REPORT
The Directors are pleased to present their report for the year ended
31 December 2024. In accordance with the Companies Act 2006 (as amended)
(the "Act"), the Listing Rules and the Disclosure Guidance and Transparency
Rules, the Corporate Governance Statement, Directors' Remuneration Report,
Reports from the Audit Committee, Nomination Committee and Management
Engagement Committee, and the Statement of Directors' Responsibilities should
be read in conjunction with one another, and the Strategic Report. As
permitted by legislation, some of the matters normally included in the
Directors' Report have instead been included in the Strategic Report, as the
Board considers them to be of strategic importance.
Directors
The Directors in office at the date of this report are as shown on page 85.
Details of the Directors' terms of appointment can be found in the Corporate
Governance Statement and the Directors' Remuneration Report.
Corporate governance
The Corporate Governance Statement on pages 92 to 97 forms part of this
Directors' report.
Dividends
On 23 May 2024, the Company declared an interim dividend of 1.42p per
ordinary share in respect of the period from 1 January 2024 to 31 March
2024, which was paid on 28 June 2024 to shareholders on the register as at
7 June 2024.
On 8 August 2024, the Company declared an interim dividend of 1.42p per
ordinary share in respect of the period from 1 April 2024 to 30 June 2024,
which was paid on 13 September 2024 to shareholders on the register as at
16 August 2024.
On 1 November 2024, the Company declared an interim dividend of 1.42p per
ordinary share in respect of the period from 1 July 2024 to 30 September
2024, which was paid on 23 December 2024 to shareholders on the register as
at 6 November 2024. Of this amount, 1.42p per share was designated as an
interest distribution.
Post year end, on 20 February 2025, the Company declared an interim dividend
of 1.45p per ordinary share in respect of the period from 1 October 2024 to
31 December 2024, which will be paid on 27 March 2025 to shareholders on the
register as at 7 March 2025.
Therefore, the total dividends paid by the Company in respect of the year
ended 31 December 2024 were 5.71p per ordinary share, exceeding the dividend
target of 5.68p per share.
Dividend policy
The Board expects that dividends will constitute the principal element of the
return to the holders of ordinary shares. The Company is targeting quarterly
dividend payments of at least 5.80p in total per ordinary share for the
financial year ending 31 December 2025, in line with its progressive dividend
policy.
Subject to market conditions and the level of the Company's net income, it is
intended that dividends on the shares will be payable quarterly, all in the
form of interim dividends (the Company does not intend to pay any final
dividends). Subject to satisfying the requirements for investment trust
status, the Board reserves the right to retain within a revenue reserve a
proportion of the Company's net income in any financial year, such reserve
then being available at the Board's absolute discretion for subsequent
distribution to shareholders, subject to the requirements of the IT
Regulations. The dividend policy is subject to an annual vote at each AGM. The
Company may, at the discretion of the Board, and to the extent possible, pay
all or part of any future dividend out of capital reserves.
The Company may offer with the prior authority of shareholders and subject to
such terms and conditions as the Board may determine, shareholders (excluding
any holder of treasury shares) the opportunity to elect to receive ordinary
shares, credited as fully paid, instead of the whole, or some part, of any
dividend. The ability to issue ordinary shares in lieu of cash would provide
the Company with the flexibility to retain cash where to do so would benefit
the Company.
The Board may designate part of each dividend paid by the Company insofar as
it represents "qualifying interest income" received by the Company as interest
distributions for UK tax purposes. It is expected that a variable proportion
of the Company's distributions will take the form of interest distributions.
Prospective investors should note that the UK tax treatment of the Company's
distributions may vary for a shareholder depending upon the classification of
such distributions. Prospective investors who are unsure about the tax
treatment that will apply in respect of any distributions made by the Company
should consult their own tax advisers.
Share capital structure
Issue of shares
No shares were issued during the year under review or since the year end.
Purchase of shares
At the AGM held on 22 May 2024, the Company was granted authority to purchase
up to 14.99% of its ordinary share capital in issue, amounting to 61,043,540
ordinary shares. During the year ended 31 December 2024, the Company
purchased in the stock market 19,668,147 ordinary shares (with a nominal value
of £196,681.47) to be held in treasury, at a total cost of £14,619,440. This
represented 4.66% of the issued share capital at 31 December 2024.No shares
were purchased for cancellation during the year. The share purchases were made
with a view to reducing discount volatility.
Shares held in treasury
Holding shares in treasury enables a company to cost-effectively issue shares
that might otherwise have been cancelled. The total number of shares held in
treasury as at 31 December 2024 was 26,695,468 shares (with a nominal value
of £266,954.68). This represents 6.32% of the issued share capital as at the
year end.
Current share capital
As at 31 December 2024, the Company's issued share capital comprised
422,498,890 ordinary shares, each of £0.01 nominal value, of which 26,695,468
shares were held in treasury.
At general meetings of the Company, ordinary shareholders are entitled to one
vote on a show of hands and, on a poll, to one vote for every ordinary share
held. Shares held in treasury do not carry voting rights.
At 2 April 2025, the total voting rights in the Company were 395,803,422.
Significant shareholders
As at 31 December 2024, the Company had been notified of the following
disclosable interests in the share capital of the Company:
Number of shares % of total voting rights
Quilter plc 50,726,210 12.82%
Alliance Witan plc 48,550,000 12.27%
Newton Investment Management Limited 24,923,657 6.30%
KBI Global Investors 24,806,944 6.27%
Vermeer Partners 22,060,439 5.57%
Evelyn Partners 14,523,099 3.67%
The Company has not been informed of any other changes to the notifiable
interests between 31 December 2024 and 2 April 2025, being the last
practicable date prior to the publication of this report.
Shareholder rights
The following information is disclosed in accordance with The Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and
DTR 7.2.6 of the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules:
• the Company's capital structure and voting rights and
details of the substantial shareholders in the Company are set out above;
• an amendment to the Company's articles of association and
the giving of powers to issue or buy back the Company's shares requires an
appropriate resolution to be passed by shareholders. Proposals to grant powers
to the Board to issue and buy back shares are set out in the Notice of AGM;
and
• there are no restrictions concerning the transfer of
securities in the Company; no restrictions on voting rights; no special rights
with regard to control attached to securities; no agreements between holders
of securities that may restrict their transfer or voting rights, as known to
the Company; and no agreements which the Company is party to that might affect
its control following a successful takeover bid.
Requirements of the listing rules
Listing Rule 6.6.4 requires the Company to include specified information in a
single identifiable section of the Annual Report or a cross reference table
indicating where the information is set out. The Directors confirm that no
disclosures are required in relation to Listing Rule 6.6.4.
Independent professional advice, insurance and indemnity
Details regarding independent professional advice, insurance and indemnity are
set out in the Corporate Governance Statement on pages 92 to 97.
Energy and carbon reporting, including greenhouse gas emissions
The Company's environmental statements are set out in the Sustainability
section of the report.
Management arrangements
Victory Hill Capital Partners LLP is the Company's AIFM. Prior to that
Victory Hill was the Company's Investment Adviser.
Victory Hill is, for the purposes of the Alternative Investment Fund Manager
Directive (AIFMD) and the rules of the FCA, authorised and regulated by the
FCA as a 'full scope' UK alternative investment fund manager with a permission
pursuant to Part 4A of the Financial Services and Markets Act 2000 for
managing AIFs, such as the Company.
The Company and the AIFM have entered into an investment management agreement
(the "Investment Management Agreement") under which the AIFM has agreed to
provide the Company with portfolio management, risk management, consultancy,
advisory and general management services, and comply with the obligations and
performing the duties and functions of an alternative investment fund manager
contained in the UK AIFMD Rules.
Under the terms of the AIFM Agreement, the AIFM will be paid:
a. a fixed fee of £70,000 per annum, payable monthly in advance;
b. an annual fee to be calculated as percentages of the Company's
net assets and payable monthly in arrears as follows:
i. 1% on the first £250m of net asset value;
ii. 0.9% on net asset value in excess of £250m and up to and
including £500m; and
iii. 0.8% on net asset value in excess of £500m.
c. a fee of £18,000 per annum for preparing and maintaining the
Company's key information document.
If, in any fee period, the annual fee paid to the AIFM exceeds:
a. £3.5m, the AIFM shall apply 8% of the annual fee (net of any
applicable taxes), subject to a maximum amount of £400,000, to subscribe for
or acquire ordinary shares of £0.01 each in the capital of the Company.
b. £2.5m, the AIFM shall apply 2% of the annual fee (net of any
applicable taxes) to be paid as a charitable donation to a registered charity
aimed at promoting sustainable energy/ the SDGs, as selected by the AIFM,
provided that if, following the AIFM's reasonable endeavours, a suitable
charity cannot be found, this 2% portion of the annual fee (net of any
applicable taxes) will be applied to the subscription for or acquisition of
ordinary shares.
No performance fee is payable to the AIFM.
The AIFM Agreement may be terminated on 12 months' written notice, provided
that such notice may not be served before 2 February 2025. This Agreement may
be terminated with immediate effect on the occurrence of certain events,
including insolvency or in the event of a material or persistent breach.
Other service providers
Details of the terms of engagement between the Company and its other key
service providers are set out in the Prospectus issued by the Company on
9 June 2022, which is available on the Company's website. The Company
appointed Ocorian Administration (UK) Limited as Administrator and Company
Secretary on 1 November 2024.
Continuing appointment of Victory Hill
The Board keeps the performance of Victory Hill, as the Company's Investment
Manager under continual review. The Management Engagement Committee conducts
an annual review of the Victory Hill's performance and makes a recommendation
to the Board about its continuing appointment. It is considered that Victory
Hill has executed the Company's investment strategy according to the Board's
expectations. Accordingly, the Directors believe that the continuing
appointment of Victory Hill as the Investment Manager of the Company, on the
terms agreed, is in the best interests of the Company and its shareholders as
a whole. Further details are set out in the Report from the Management
Engagement Committee on page 110.
Financial risk management
Information about the Company's financial risk management objectives and
policies is set out in note 12 to the financial statements.
Going concern
The going concern statement can be found on page 51.
Auditor
The Directors confirm that, so far as they are each aware, there is no
relevant audit information of which the Company's Auditor is unaware; and each
Director has taken all the steps that ought to have been taken as a Director
to make themselves aware of any relevant audit information and to establish
that the Auditor is aware of that information.
BDO LLP has expressed its willingness to continue in office as the Auditor
and resolutions for its re- appointment and to authorise the Audit Committee
to determine its remuneration will be put to shareholders at the forthcoming
Annual General Meeting.
Post balance sheet events
The post balance sheet events can be found in note 19 to the financial
statements.
Annual General Meeting
The Notice of the AGM to be held on 21 May 2025 (the "Notice") is set out on
pages 168 to 173. Shareholders are being asked to vote on the following
matters:
• the receipt and adoption of the Strategic Report, Directors'
Report, Auditor's Report and the audited Financial Statements for the year
ended 31 December 2024;
• the approval of the Directors' Remuneration Report;
• the approval of the Company's dividend policy and
authorisation of the Directors to declare and pay all dividends of the Company
as interim dividends;
• the re-election of Directors;
• the re-appointment of BDO LLP as the Company's Auditor and
authorisation of the Audit Committee to determine the remuneration of the
Auditor;
• the granting of authorities in relation to the allotment of
shares;
• the dis-application of pre-emption rights for certain issues
of shares;
• the purchase by the Company of its own shares; and
• holding of general meetings on 14 clear days' notice.
Resolutions 1 to 12 will be proposed as Ordinary resolutions and
Resolutions 13 to 16 will be proposed as Special resolutions.
Authority to issue shares
Resolutions 11 and 12, ordinary resolutions as set out in the Notice, if
passed, will renew the Directors' authority to allot shares in accordance with
statutory pre-emption rights. These resolutions will authorise the Board to
allot:
• ordinary shares generally and unconditionally in accordance
with section 551 of the Act up to an aggregate nominal value of £395,803.42,
representing approximately 10% of the Company's issued share capital
(excluding treasury shares) as at the date of the Notice of AGM or, if
changed, the number representing 10% of the issued share capital of the
Company at the date at which this resolution is passed (Resolution 11); and
• further ordinary shares generally and unconditionally in
accordance with section 551 of the Act up to an additional aggregate nominal
value of £395,803.42, representing approximately 10% of the Company's issued
share capital (excluding treasury shares) as at the date of the Notice of AGM
or, if changed, the number representing 10% of the issued share capital of the
Company at the date at which this resolution is passed (Resolution 12).
If both these resolutions are passed, shareholders will be granting the
Directors authority to allot up to 20% of the Company's issued share capital.
The Board believes that passing of Resolutions 11 and 12 is in the
shareholders' interests as the authority is intended to be used for funding
investment opportunities sourced by the Investment Manager, thereby mitigating
any potential dilution of investment returns for existing shareholders, and
the Directors will only issue new ordinary shares at a price above the
prevailing NAV per ordinary share. If only Resolution 11 is passed and
Resolution 12 is not passed, Directors will only be granted authority to
allot up to 10% of the existing issued ordinary share capital of the Company.
These authorities, if given, will lapse at the conclusion of the 2026 AGM of
the Company, or 15 months from the passing of these resolutions, whichever is
earlier.
The Directors do not currently intend to allot shares other than to take
advantage of opportunities in the market as they arise and only if they
believe it would be advantageous to the Company's shareholders to do so.
Authority to disapply pre-emption rights
Resolution 13, a special resolution, is being proposed to authorise the
Directors to disapply the statutory pre-emption rights of existing
shareholders in relation to the issue of shares under Resolution 11, for cash
or the sale of shares out of treasury up to an aggregate nominal amount of
£395,803.42, being approximately 10% of the Company's issued share capital
(excluding treasury shares) as at the date of the Notice of AGM or, if
changed, 10% of the issued share capital immediately upon the passing of this
resolution.
Resolution 14, a special resolution, is being proposed to authorise the
Directors to disapply the statutory pre-emption rights of existing
shareholders in relation to the further issue of shares under Resolution 12,
for cash or the sale of shares out of treasury up to an aggregate nominal
amount of £395,803.42, being approximately 10% of the Company's issued share
capital (excluding treasury shares) as at the date of the Notice of AGM or, if
changed, 10% of the issued share capital immediately upon the passing of this
resolution.
In respect of any authority granted under Resolutions 13 and 14, shares would
only be issued at a price above the prevailing NAV per share, intended to at
least cover the costs and expenses of the relevant issuance of shares. The
Directors will only issue shares on a non-pre- emptive basis if they believe
it would be in the best interests of the Company's shareholders. If both these
resolutions are passed, shareholders will be granting the Directors authority
to allot up to 20% of the Company's issued share capital on a non- pre-emptive
basis. The Board believes that in order to have the maximum flexibility to
raise finance to enable the Company to take advantage of suitable
opportunities, the passing of Resolutions 13 and 14 is in the shareholders'
interests. These authorities, if given, will lapse at the 2026 AGM of the
Company, or 15 months from the passing of these resolutions, whichever is
earlier.
There were 26,695,469 shares held in treasury at the year end. As at 2 April
2025, 26,695,469 shares were held in treasury.
Authority to purchase the Company's own shares
The Act allows companies to hold shares acquired by way of market purchases as
treasury shares, rather than having to cancel them. This gives the Company the
ability to re-sell shares quickly and effectively thereby improving liquidity
and providing the Company with additional flexibility in the management of its
capital base.
At the Annual General Meeting held on 22 May 2024, the Company was granted
authority to purchase up to 14.99% of the Company's shares in issue amounting
to 61,043,540 shares. During the year under review, 19,768,147 shares were
bought back pursuant to this authority.
Resolution 15, a special resolution, as set out in the Notice, if passed,
will renew the Directors' authority to purchase up to 61,418,290 shares (being
14.99% of the issued share capital as at 2 April 2025), or if less, 14.99% of
the issued share capital immediately following the passing of the resolution.
In accordance with the Listing Rules of the FCA, the price paid for shares
will be not less than £0.01 per share, and not more than the higher
of: (i) 105% of the average of the mid-market quotations of the shares for
the five business days before the shares are purchased; and (ii) the higher
of the price of the last independent trade and the highest current independent
bid for the shares on the trading venue where the purchase is carried out.
The Company may use this authority to address any significant imbalance
between the supply and demand for the Company's shares and to manage the
discount at which the ordinary shares trade, and where the Directors consider
it to be in the best interests of shareholders and the Company. Shares will be
repurchased only at prices below the prevailing NAV per ordinary share and
will be cancelled or placed into treasury at the determination of the
Directors. The authority, if given, will lapse at the conclusion of the
Company's next AGM after the passing of this resolution or, if earlier, on the
expiry of 15 months from the date of the passing of this resolution.
Shareholders should note that the purchase of ordinary shares by the Company
is at the absolute discretion of the Directors and is subject to the working
capital requirements of the Company and the amount of uncommitted cash
resources available to the Company to fund such purchases. Accordingly, no
expectation or reliance should be placed on the Directors exercising such
discretion on any one or more occasions. However, the Directors believe that
the flexibility for the Company to be able to make such purchases may be
beneficial to shareholders in certain circumstances and, accordingly, is
seeking authority for the Company to make market purchases of its own shares.
Notice period for general meetings
Under the Act, the notice period of general meetings (other than an AGM) is 21
clear days' notice unless the Company: (i) has gained shareholder approval
for the holding of general meetings on 14 clear days' notice by passing a
special resolution at the most recent AGM; and (ii) offers the facility for
all shareholders to vote by electronic means. The Company would like to
preserve its ability to call general meetings (other than an AGM) on less than
21 clear days' notice.
The shorter notice period proposed by Resolution 16, a special resolution,
would not be used as a matter of routine, but only where the flexibility is
merited by the business of the meeting and is thought to be in the interests
of shareholders as a whole. The approval will be effective until the date of
the AGM to be held in 2026 resolution or, if earlier, on the expiry of
15 months from the date of the passing of this resolution.
Board recommendation
The Directors consider each resolution being proposed at the AGM to be in the
best interests of the Company and shareholders as a whole and they unanimously
recommend that all shareholders vote in favour of them, as they intend to do
in respect of their own shareholdings.
By order of the Board
Ocorian Administration (UK) Limited
Company Secretary
2 April 2025
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual report and the
financial statements in accordance with UK adopted international accounting
standards and 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 Company
financial statements in accordance with UK adopted international accounting
standards. 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 Company and of the profit or loss for
the Company for that period.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are reasonable
and prudent;
• state whether they have been prepared in accordance with UK
adopted international accounting standards, subject to any material departures
disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business; and
• prepare a Directors' report, a Strategic report and
Directors' remuneration report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006.
They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for ensuring that the
annual report and accounts, taken as a whole, are fair, balanced, and
understandable and provides the information necessary for shareholders to
assess the Group's performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are published
on the Company's website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the Company's website is the responsibility of the Directors and has been
delegated to the Investment Manager. The Directors' responsibility also
extends to the ongoing integrity of the financial statements contained
therein.
Directors' responsibilities pursuant to DTR4
The Directors, to the best of their knowledge, confirm that:
• the financial statements have been prepared in accordance
with the applicable set of accounting standards, give a true and fair view of
the assets, liabilities, financial position and profit of the Company; and
• the annual report includes a fair review of the development
and performance of the business and the financial position of the Company,
together with a description of the principal risks and uncertainties that it
faces.
The Directors consider that the annual report and financial statements, taken
as a whole, are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's position and performance,
business model and strategy.
Approval
This Directors' responsibilities statement was approved by the Board of
Directors and signed on its behalf by:
Bernard Bulkin
Chair
2 April 2025
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the Company's
statutory accounts for the year ended 31 December 2024 or the year ended 31
December 2023 but is derived from those accounts. Statutory accounts for the
period ended 31 December 2023 have been delivered to the Registrar of
Companies and those for the year ended 31 December 2024 will be delivered in
due course. The Auditor has reported on those accounts; their report was (i)
unqualified, (ii) did not include a reference to any matters to which the
Auditor 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 text of the Auditor's report can be found in the
Company's full Annual Report and Accounts for the year ended 31 December 2024
at https://www.globalenergyinfrastructure.co.uk
(https://urldefense.proofpoint.com/v2/url?u=https-3A__www.globalenergyinfrastructure.co.uk_&d=DwMGaQ&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=M78u5WPTFHfCCue8vE3XzW9rEdzfKu0NgfE39u5QxV8&m=gUKQVFLHvAA8WBSZ5tu6Cvr0QqJGNreWCWQIoO7lmkw3EjOp19wvbhPFEioNU9rD&s=xzkUgbs49f6CdIT7yZo7ZNs3G41IkD1w6lgj37eT0ac&e=)
.
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2024
For the year ended For the year ended
31 December 2024
31 December 2023
Note Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Income
(Loss)/gain on investments 7 - (53,665) (53,665) - 32,517 32,517
Investment income 4 22,427 - 22,427 29,326 - 29,326
Total income and gains 22,427 (53,665) (31,238) 29,326 32,517 61,843
Investment management fees 15 (4,374) - (4,374) (4,372) - (4,372)
Other expenses 5 (2,176) - (2,176) (2,132) - (2,132)
Gain/(loss) for the year 15,877 (53,665) (37,788) 22,822 32,517 55,339
before taxation
Taxation 6 - - - - - -
Gain/(loss) for the year after taxation 15,877 (53,665) (37,788) 22,822 32,517 55,339
Profit and total comprehensive income attributable to:
Equity holders of the Company 15,877 (53,665) (37,788) 22,822 32,517 55,339
Gain/(loss) per share - basic and diluted (p) 17 3.92 (13.25) (9.33) 5.42 7.72 13.14
The total column of the Statement of Comprehensive Income is the profit and
loss account of the Company. The supplementary revenue return and capital
columns have been prepared in accordance with the Association of Investment
Companies Statement of Recommended Practice (AIC SORP).
All revenue and capital items in the above statement derive from continuing
operations.
The above Statement of Comprehensive Income includes all recognised gains and
losses.
The notes on pages 125 to 147 form part of these financial statements.
STATEMENT OF FINANCIAL POSITION
As at 31 December 2024
Note As at As at
31 December 2024
31 December 2023
£'000
£'000
Non-current assets
Investments at fair value through profit or loss 7 397,895 369,047
Total non-current assets 397,895 369,047
Current assets
Cash and cash equivalents 10 10,947 74,258
Cash receivable 9 - 40,367
Other receivables 9 201 441
Total current assets 11,148 115,066
Total assets 409,043 484,113
Current liabilities
Accounts payable and accrued expenses 11 (536) (270)
Total current liabilities (536) (270)
Total liabilities (536) (270)
Net assets 18 408,507 483,843
Capital and reserves
Share capital 13 4,225 4,225
Share premium 13 186,368 186,368
Special distributable reserve 13 211,994 227,067
Capital reserve 5,029 58,694
Revenue reserve 891 7,489
Total capital and reserves attributable to equity holders of the Company 408,507 483,843
Net asset value per ordinary share (p) 18 103.21 116.46
The financial statements were approved and authorised for issue by the Board
of Directors on 2 April 2025 and signed on its behalf by:
Bernard Bulkin
Chair
Company Registration Number 12986255
The notes on pages 125 to 147 form part of these financial statements.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 December 2024
For the year ended 31 December 2024 Note Share capital Share premium account Special distributable reserve Capital reserve Revenue reserve Total
£'000
£'000
£'000
£'000
£'000
£'000
Opening balance 4,225 186,368 227,067 58,694 7,489 483,843
Shares bought back 13 - - (14,621) - - (14,621)
Total comprehensive income/(loss) for the year - - - (53,665) 15,877 (37,788)
Interim dividends paid during the year 14 - - (452) - (22,475) (22,927)
Balance at 31 December 2024 4,225 186,368 211,994 5,029 891 408,507
For the year ended 31 December 2023 Note Share capital Share premium account Special distributable reserve Capital reserve Revenue reserve Total
£'000
£'000
£'000
£'000
£'000
£'000
Opening balance 4,225 186,368 232,467 26,177 7,936 457,173
Shares bought back 13 - - (5,400) - - (5,400)
Total comprehensive income for the year - - - 32,517 22,822 55,339
Interim dividends paid during the year 14 - - - - (23,269) (23,269)
Balance at 31 December 2023 4,225 186,368 227,067 58,694 7,489 483,843
A total of 422,498,890 ordinary shares were issued since the Company's date of
incorporation to 31 December 2024. During the year, the Company purchased for
treasury a total of 19,668,147 ordinary shares.
The capital reserve represents the unrealised gains or losses on the
revaluation of investments. The unrealised element of the capital reserve is
not distributable.
The special distributable and revenue reserves are distributable to
shareholders of the Company.
The notes on pages 125 to 147 form part of these financial statements.
STATEMENT OF CASH FLOWS
For the year ended 31 December 2024
Note For the year ended 31 December For the year
2024
ended 31 December
£'000
2023
£'000
Cash flows from operating activities
(Loss)/profit before tax (37,788) 55,339
Adjustments for:
Movement in fair value of investments 7 53,665 (31,095)
Interest on cash deposits 4 (1,999) (5,865)
Operating result before working capital changes 13,878 18,379
Decrease/(increase) in other receivables 9 40,607 (40,068)
Increase/(decrease) in accounts payable and accrued expenses 11 266 (221)
Net cash (used in)/generated from operating activities 54,751 (21,910)
Cash flows from investing activities
Purchase of investments 7 (82,513) (22,819)
Interest on cash deposits 4 1,999 5,865
Net cash used in investing activities (80,514) (16,954)
Cash flows from financing activities
Proceeds from issue of shares - -
Share buybacks (14,621) (5,400)
Payment of share issue costs - -
Dividends paid in the year 14 (22,927) (23,269)
Net cash (used in)/generated from financing activities (37,548) (28,669)
Net decrease in cash and cash equivalents (63,311) (67,533)
Cash and cash equivalents at beginning of the year 74,258 141,791
Cash and cash equivalents at end of the year 10 10,947 74,258
The notes on pages 125 to 147 form part of these financial statements.
Notes to the financial statements
1. General information
VH Global Energy Infrastructure plc (the "Company") is a closed-ended
investment company, incorporated in England and Wales on 30 October 2020 as a
public limited company under the Companies Act 2006 with registered number
12986255. The Company commenced operations on 2 February 2021 when its shares
commenced trading on the London Stock Exchange.
The Company has appointed Victory Hill Capital Partners LLP as the Investment
Manager & AIFM pursuant to the Investment Management Agreement dated
3 May 2023.
The Company has registered, and intends to carry on business, as an investment
trust with an investment objective to generate stable returns, principally in
the form of income distributions, by investing in a diversified portfolio of
global sustainable energy infrastructure assets, predominantly in countries
that are members of the EU, OECD, OECD Key Partner and OECD Accession
Countries.
The financial statements comprise only the results of the Company, as its
investment in VH ENRG UK Holdings Limited is measured at fair value through
profit or loss in line with IFRS 10 as explained in note 2.
2. Material accounting policy information
2.1 Basis of preparation
The financial statements have been prepared in accordance with UK-adopted
international accounting standards and with the requirements of the Companies
Act 2006 as applicable to companies reporting under those standards.
The financial statements are prepared on the historical cost basis, except for
revaluation of certain financial investments at fair value through profit or
loss. The principal accounting policies adopted are set out below and
consistently applied, subject to changes in accordance with any amendments in
IFRS.
The financial statements have also been prepared, as far as is consistent with
adopted IFRS and relevant and applicable to the Company in accordance with the
Statement of Recommended Practice: Financial Statements of Investment Trust
Companies and Venture Capital Trusts (SORP) issued in April 2021 by the
Association of Investment Companies (AIC).
The financial statements incorporate the financial statements of the Company
only. The primary objective of the Company is to generate returns in Sterling.
The Company's performance is measured in Sterling terms and its ordinary
shares are issued in Sterling. Therefore, the Company has adopted Sterling as
the presentation and functional currency for its financial statements. These
financial statements are presented in pounds sterling and are rounded to the
nearest thousand, unless otherwise stated.
The preparation of financial statements in compliance with adopted IFRS
requires the use of certain critical accounting estimates it also requires the
Company's management to exercise judgment in applying the Company's accounting
policies. The areas where significant judgments and estimates have been made
in preparing the financial statements and their effect are disclosed in
note 3.
2.2 Investment entity and basis of non-consolidation of subsidiaries
The sole objective of the Company, through its subsidiary ENRG Holdings, is to
make investments, via individual corporate entities. The Company typically
will subscribe for equity in or issue loans to ENRG Holdings in order for it
to finance its investments.
The Directors have concluded that the Company has all the elements of control
as prescribed by IFRS 10 "Consolidated Financial Statements" in relation to
all its subsidiaries and that the Company satisfies the three essential
criteria to be regarded as an investment entity as defined in IFRS 10.
There are three key conditions to be met by the Company for it to meet the
definition of an investment entity. The three essential criteria are that the
entity must:
1. Obtain funds from one or more investors for the purpose of
providing these investors with professional investment management services;
2. Commit to its investors that its business purpose is to invest
its funds solely for returns from capital appreciation, investment income or
both; and
3. Measure and evaluate the performance of substantially all of
its investments on a fair value basis.
In satisfying the second criteria, the notion of an investment time frame is
critical. An investment entity should not hold its investments indefinitely
but should have an exit strategy for their realisation.
In this regard, ENRG Holdings is itself an investment entity. Consequently,
the Company need not have an exit strategy for its investment in ENRG
Holdings.
The Company intends to sell its interest in an investment before the end of
its project life and the Directors consider that this demonstrates a clear
exit strategy from these investments.
Subsidiaries are therefore measured at fair value through profit or loss, in
accordance with IFRS 13 "Fair Value Measurement", IFRS 10 "Consolidated
Financial Statements" and IFRS 9 "Financial Instruments".
Further detail on the significant judgements in the basis of non-consolidation
of the subsidiaries of the Company is disclosed in note 3.
2.3 Going concern
The Directors have reviewed the financial position of the Company and its
future cash flow requirements, taking into consideration current and potential
funding sources, investment into existing and near-term projects and the
Company's working capital requirements.
The Company faces a number of risks and uncertainties, as set out in the
Strategic Report above. The financial risk management objectives and policies
of the Company, including exposure to price risk, interest rate risk, credit
risk and liquidity risk are discussed in note 12 to the financial statements.
The Company continues to meet day-to-day liquidity needs through its cash
resources. As at 31 December 2024, the Company had net current assets of
£10.6m (2023: £114.8m) and cash balances of £10.9m (2023: £74.3m) and
cash receivables of £nil (2023: £40.4m), which are sufficient to meet
current obligations as they fall due. There is no external debt at the Company
as at year end.
The major cash outflows of the Company are the payment of dividends and costs
relating to the acquisition of new assets, both of which are discretionary.
The Directors have reviewed Company forecasts which cover a period of at least
12 months from the date of approval of this report, considering foreseeable
changes in investment, which show that the Company has sufficient financial
resources to continue in operation for at least the next 12 months from the
date of approval of this report. Furthermore, the Directors have considered a
worst case scenario in which the Company is assumed to meet all of its
remaining investment commitments within the next 12 months, in addition to
dividend payments, ongoing operating expenses, and a reduction in
distributions received from investments. Even in this unlikely scenario, the
Company has sufficient headroom to meet all expected cash outflows with its
existing cash balances.
The Directors have considered factors relating to the wider global
macroeconomic environment in 2024, in particular changes in inflation and
interest rates. As the Company's income is primarily inflation-linked, a rise
in inflation would have a positive impact on cashflows from operating assets
and an uplift in valuation of the investment portfolio. An increase in
interest rates may result in an increase in risk-free rates, therefore
negatively impacting valuation of investments. Furthermore, the Company has no
physical assets in Ukraine, Russia, the Middle East or Eastern Europe and
therefore, regional geopolitical factors have an immaterial impact on the
Company.
Based on its assessment above, the Directors have a reasonable expectation
that the Company has sufficient resources to continue in operational existence
for at least 12 months from the date of the approval of these financial
statements. The Directors are not aware of any material uncertainties that may
cast significant doubt upon the Company's ability to continue as a going
concern. Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
2.4 Financial Instruments
Financial assets and financial liabilities are recognised in the Company's
statement of financial position when the Company becomes a party to the
contractual provisions of the instrument.
Financial assets
The classification of financial assets at initial recognition depends on the
purpose for which the financial asset was acquired and its characteristics.
All financial assets are initially recognised at fair value plus transaction
cost except for those designated as fair value through profit or loss, which
are recognised at fair value only. All purchases of financial assets are
recorded at the date on which the Company became party to the contractual
requirements of the financial asset.
The Company's financial assets principally comprise of investments held at
fair value through profit or loss and at amortised cost.
Investments held at fair value through profit or loss
The Company accounts for its investment in its wholly owned direct subsidiary
ENRG Holdings at fair value through profit and loss in accordance with
IFRS 9. At initial recognition, investments in energy infrastructure projects
in ENRG Holdings are measured at fair value through profit or loss.
Subsequently, gains or losses resulting from the movement in fair value are
recognised in the Statement of Comprehensive Income at each valuation point.
As both the Company and ENRG Holdings are investment entities under IFRS, the
Company includes its investment in ENRG Holdings at fair value through profit
or loss.
As shareholder loan investments form part of a managed portfolio of assets
whose performance is evaluated on a fair value basis, loan investments are
designated at fair value in line with equity investments. The Company measures
its investment as a single class of financial asset at fair value in
accordance with IFRS 13 Fair Value Measurement.
Gains or losses resulting from the movement in fair value are recognised in
the Statement of Comprehensive Income at each valuation point and are
allocated to the capital column of the Statement of Comprehensive Income.
Refer to note 7 for details regarding the valuation methodology of
investments.
Financial assets are recognised/derecognised at the date of the
purchase/disposal. Investments are initially recognised at cost, being the
fair value of consideration given.
Transaction costs are recognised as incurred and allocated to the capital
column of the statement of comprehensive income.
Fair value is defined as the amount for which an asset could be exchanged
between knowledgeable willing parties in an arm's length transaction. The
Board will consider any observable market transactions and will measure fair
value using assumptions that market participants would use when pricing the
asset, including any assumptions regarding risk surrounding the transaction.
A financial asset (in whole or in part) is derecognised either:
• when the Company has transferred substantially all the risks
and rewards of ownership; or
• when it has neither transferred or retained substantially
all the risks and rewards and when it no longer has control over the assets or
a portion of the asset; or
• when the contractual right to receive cashflow has expired.
2.5 Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held on call with
banks and other short-term highly liquid deposits with original maturities of
3 months or less, that are readily convertible to a known amount of cash and
are subject to an insignificant risk of changes in value.
2.6 Foreign currencies
Transactions entered into by the Company in a currency other than its
functional currency are recorded at the rates ruling when the transactions
occur.
Foreign currency monetary assets and liabilities are translated to the
functional currency at the exchange rate ruling at the balance sheet date.
Foreign exchange differences arising on translation to the functional currency
are recognised in the Statement of Comprehensive Income, within other expenses
or other income. Foreign exchange differences relating to investments held at
fair value through profit or loss are shown within gains/losses on investments
within the Statement of Financial Position.
2.7 Dividends
Dividends payable to the Company's shareholders are recognised as
distributions in the financial statements when the Company's obligation to
make payment has been established.
2.8 Income recognition
Investment income comprises interest income on shareholder loan investments
and dividend income from ENRG Holdings, which are recognised when the
Company's entitlement to receive payment is established. Interest income from
cash deposits is recognised in the statement of comprehensive income using the
effective interest method. Investment income and interest income are allocated
to the revenue column of the Company's statement of comprehensive income
unless such income is of a capital nature.
Gains and losses on fair value of investments in the income statement
represent gains or losses that arise from the movement in the fair value of
the Company's investment in ENRG Holdings. Movements in relation to the fair
value of investments are allocated to the capital column of the Company's
statement of comprehensive income at each valuation point.
2.9 Expenses
Expenses are accounted for on an accruals basis. Expenses include AIFM,
investment management fees and other expenses which are allocated to the
revenue column of the Statement of Comprehensive Income. 100% of the
investment management fees are charged as an expense item within the Statement
of Comprehensive Income. Fees relating to the AIFM and Investment Manager are
detailed in note 15.
2.10 Share capital and share premium
Financial instruments issued by the Company are treated as equity if the
holder has only a residual interest in the assets of the Company after the
deduction of all liabilities. The Company's ordinary shares are classified as
equity instruments.
Costs associated, or directly attributable to the issue of new equity shares
are recognised as a deduction in equity and are charged from the share premium
account. Incremental costs include those incurred in connection with the
placing and admission which include fees payable under a placing agreement,
legal costs, and any other applicable expenses.
2.11 Taxation
Investment trusts which have approval under Section 1158 of the Corporation
Tax Act 2010 are not liable for taxation on capital gains. The Company has
successfully applied and has been granted approval as an Investment Trust by
HMRC.
The underlying intermediate holding companies and project companies in which
the Company invests provide for and pay taxation at the appropriate rates in
the countries in which they operate. This is taken into account when assessing
the value of the subsidiaries.
2.12 Segmental reporting
The Board of Directors, being the Chief Operating Decision Maker (the "CODM"),
is of the opinion that the Company is engaged in a single segment of business,
being investment in global sustainable energy opportunities.
The Company has no single major customer. The internal financial information
to be used by the CODM on a quarterly basis to allocate resources, assess
performance and manage the Company will present the business as a single
segment comprising the portfolio of investments in energy efficiency assets.
The financial information used by the Board to manage the Company presents the
business as a single segment.
2.13 Changes to accounting standards and interpretations
In the current year, the Company has applied a number of amendments to IFRS
Accounting Standards issued by the International Accounting Standards Board
(IASB) that are effective for an accounting period that begins on or after
1 January 2023.
The impact of these standards is not expected to be material to the reported
results and financial position of the Company.
• Amendments to IAS 1 Non-current liabilities with covenants
and Classification of liabilities as current or non-current.
The Company does not have any non-current liabilities.
• Amendments to IAS 1 Presentation of Financial Statements
and IFRS Practice Statement 2 Making Materiality Judgements- Disclosure of
Accounting Policies.
The table below shows a number of standards and interpretations which had been
published but not yet effective.
Description Effective Date
Amendments to the following standards: Periods beginning on or after 1 January 2025
• IFRS 18 (Presentation and Disclosures in Financial
Statements)
• IFRS 19 (Subsidiaries without Public Accountability)
The Directors do not expect that the adoption of the Standards listed above
will have a material impact on the financial statements of the Company in
future periods.
3. Critical accounting estimates, judgements, and assumptions
The preparation of financial statements requires the Directors of the Company
to make judgements, estimates and assumptions that affect the reported amounts
recognised in the financial statements. However, uncertainty about these
assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability in the future.
The estimates and underlying assumptions underpinning our investments are
reviewed on an ongoing basis by both the Directors and the Investment Manager.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
Significant estimates, judgements and assumptions for the year are set out as
follows:
Key judgement: Investment entity and basis of non-consolidation
As detailed in note 2.2, the Directors have concluded that the Company and
its wholly owned direct subsidiary, ENRG Holdings, meet the definition of an
investment entity by satisfying the three key conditions as set out in
IFRS 10. This assessment involves an element of judgement as to whether the
company continues to meet the criteria outlined in the accounting standards.
Being investment entities, the Company's investment in ENRG Holdings is
measured at fair value as opposed to being consolidated on a line-by-line
basis, meaning their balance sheet is included in the fair value of
investments rather than in the Company's balance sheet.
The Directors believe the treatment outlined above provides the most relevant
information to investors.
Key estimation and uncertainty: Fair value estimation for investments at fair
value
Fair value for each investment held through ENRG Holdings is calculated by the
Investment Manager as investments are not traded in active markets. Fair value
for operational sustainable energy infrastructure investments will typically
be derived from a discounted cash flow (DCF) methodology and the results will
be benchmarked against appropriate multiples and key performance indicators,
where available for the relevant sector/industry. The fair value of
investments that are in construction as at year end are measured on a cost
basis, as the most appropriate proxy of their fair value.
In a DCF analysis the fair value is derived from the present value of the
investment's expected future cash flows to the Company's intermediate holdings
i.e. ENRG Holdings, from investments in both equity (dividends) and
shareholder loans (interest and repayments). The DCF models use observable
data, to the extent practicable, and apply reasonable assumptions and
forecasts for revenues, operating costs, macro-level factors, project specific
factors and an appropriate discount rate. Changes in assumptions about these
factors could affect the reported fair value of investments, which is detailed
in note 7 which considers the sensitivity of key modelling assumptions on the
Company's net asset value.
The Investment Manager exercises their judgement in assessing the discount
rate applied in the valuation of each investment. This is based on a build up
of the discount rate based on the capital asset pricing model. The capital
asset pricing model inputs are sourced from publicly available information.
Additional project specific premia are added to the discount rate. The
discount rates are reviewed quarterly and updated, where appropriate, to
reflect changes in the market and in the project risk characteristics.
The risk of climate change has been considered in the valuation of
investments, where applicable. Future power prices are estimated using
forecast data from third-party specialist consultancy reports, which reflect
various factors including gas prices, carbon prices and renewables deployment.
Short to medium term inflation assumptions used in the valuations are based on
third party forecasts. In the longer term, an assumption is made that
inflation will increase at a long-term rate based on IMF forecasts.
The estimates and assumptions that are used in the calculation of the fair
value of investments is disclosed in note 7.
Key judgement: Equity and debt investment in ENRG Holdings
The Company classifies its investments based on its business model for
managing those financial assets and the contractual cash flow characteristics
of the financial assets. The portfolio of investments is managed, and
performance is evaluated on a fair value basis.
The contractual cash flows of the Company's shareholder loans (debt
investments) are solely principal and interest, however, these are not held
for the purpose of collecting contractual cash flows. The collection of
contractual cash flows is only incidental to achieving the Company's business
model's objective.
Consequently, in applying their judgement, the Directors have satisfied
themselves that the equity and debt investments into its direct wholly owned
subsidiary, ENRG Holdings, share the same investment characteristics and, as
such, constitute a single asset class for IFRS 7 disclosure purposes.
4. Investment income
For the year ended For the year ended
31 December 2024
31 December 2023
Revenue Capital Total Revenue Capital Total
£'000
£'000
£'000
£'000
£'000
£'000
Interest on cash deposits 1,999 - 1,999 5,865 - 5,865
Interest income from investments 9,176 - 9,176 6,260 - 6,260
Dividend Income 11,252 - 11,252 17,200 - 17,200
Investment income 22,427 - 22,427 29,325 - 29,325
5. Operating expenses
For the year For the year
ended 31 December
ended 31 December
2024
2023
£'000
£'000
Fees to the Company's Auditor:
-Statutory audit of the year-end financial statements 270 223
-Assurance related services for the interim report 73 70
-Other non-audit services - 84
Tax advisory fees 22 14
AIFM fees 74 66
Directors' fees 387 345
Due diligence fees - 349
Administration and depositary fees 250 227
Professional fees 167 70
Other expenses 933 684
Total operating expenses 2,176 2,132
Fees with respect to the Investment Management and AIFM services are set out
in note 15.
The Company had no employees during the year. Full detail on Directors' fees
is provided in the Directors' Remuneration Report. There were no other
emoluments during the year.
6. Taxation
a. Analysis of charge in the year
For the year ended 31 December 2024 For the year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
£'000
£'000
£'000
£'000
£'000
£'000
Corporation tax - - - - - -
b. Factors affecting total tax charge for the year
The effective UK corporation tax rate applicable to the Company for the year
is 25% (2023: 23.52%). The tax charge differs from the charge resulting from
applying the standard rate of UK corporation tax for an investment trust
company.
For the year ended 31 December 2024 For the year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
£'000
£'000
£'000
£'000
£'000
£'000
Profit for the year before taxation 15,877 (53,665) (37,788) 22,822 32,517 55,339
Corporation tax at 25% 3,969 (13,416) (9,447) 5,368 7,648 13,016
Effect of:
Capital (gains)/losses not taxable - 12,799 12,799 - (7,648) (7,648)
Foreign exchange loss not deductible - 617 617 - - -
Expenditure not deductible - - - 1 - 1
Non-taxable UK dividends (2,813) - (2,813) (4,046) - (4,046)
Management expenses not utilised/recognised 2 - 2 161 - 161
Interest distributions (1,158) - (1,158) (1,014) - (1,014)
Proposed Interest distributions - - - (470) - (470)
Total tax charge for the year - - - - - -
Investment companies which have been approved by HM Revenue & Customs
under section 1158 of the Corporation Tax Act 2010 are exempt from tax on
capital gains. The Directors are of the opinion that the Company has complied
with the requirements for maintaining investment trust status for the purposes
of section 1158 of the Corporation Tax Act 2010.
Additionally, the Company may utilise the interest streaming election which
allows the Company to designate dividends wholly or partly as interest
distributions for UK tax purposes. Interest distributions are treated as tax
deductions against taxable income of the Company so that investors do not
suffer double taxation on their returns.
The financial statements do not directly include the tax charges for the
Company's intermediate holding company, as ENRG Holdings is held at fair
value. ENRG Holdings is subject to taxation in the United Kingdom.
c. Deferred taxation
The Company has excess management expenses of £671,922 (2023: £664,380)
that are available for offset against future profits. A deferred tax asset of
£167,980 (2023: £166,095) has not been recognised in respect of these
losses as they will be recoverable only to the extent that the Company has
sufficient future taxable profits and it is not anticipated that the Company
will have such profits in future.
The Company has not provided for deferred tax on any capital gains or losses
arising on the revaluation of investments.
7. Investments at fair value through profit or loss
As set out in note 2.2, the Company designates its interest in its wholly
owned direct subsidiary ENRG Holdings as an investment at fair value through
profit or loss at each balance sheet date in accordance with IFRS 13, which
recognises a variety of fair value inputs depending upon the nature of the
investment. Specifically:
Level 1: Quoted (unadjusted) market prices in active markets for identical
assets or liabilities.
Level 2: Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly
observable.
Level 3: Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on
a recurring basis, the Company determines whether transfers have occurred
between levels in the hierarchy by reassessing categorisation at the end of
each reporting period.
The Company classifies all assets measured at fair value as below:
Fair value hierarchy
As at 31 December 2024 Total Quoted prices Significant Observable Significant unobservable
£'000
in active markets (level 1)
inputs
inputs
£'000
(level 2)
(level 3)
£'000
£'000
Assets measured at fair value:
Non-current assets
Investments held at fair value through profit or loss 397,895 - - 397,895
As at 31 December 2023 Total Quoted prices Significant Observable Significant unobservable
£'000
in active markets (level 1)
inputs
inputs
£'000
(level 2)
(level 3)
£'000
£'000
Assets measured at fair value:
Non-current assets
Investments held at fair value through profit or loss 369,047 - - 369,047
All of the Company's investments have been classified as Level 3 and there
have been no transfers between levels during the year ended 31 December 2024.
The movement on the level 3 unquoted investment during the year is shown
below:
As at 31 December As at 31 December
2024
2023
£'000
£'000
Opening balance at beginning of the year 369,047 315,133
Additions during the year at cost 82,513 22,819
Fair value movement on investments: 451,560 337,952
Change in fair value of equity investments(1) (53,665) 32,649
Interest on loan investments(2) - (1,554)
Total fair value movement on investments (53,665) 31,095
Closing balance 397,895 369,047
1 The £53,665k (2023: £32,517k) in the Statement of
Comprehensive Income and Statement of Changes in Equity is made up of
unrealised losses of £53,665k (2023: £32,649k gains) per this note and a
realised foreign exchange loss of £nil (2023: £132k) during the year.
2 This is the amount related to the movement in accrued
interest on shareholder loans.
Further information on the basis of valuation is detailed in note 3 to the
financial statements.
Valuation methodology
As set out in note 2.2, the Company meets the definition of an investment
entity as described by IFRS 10, as such the Company's investment in the ENRG
Holdings is valued at fair value.
The Company holds underlying investments in special purpose entities (SPEs)
through its equity and debt investments in ENRG Holdings, as detailed in
note 8. The Investment Manager has carried out fair market valuations of the
SPE investments as at 31 December 2024.
IFRS 13 requires the Company to classify its investments in a fair value
hierarchy that reflects the significance of the inputs used in making the
measurements. IFRS 13 establishes a fair value hierarchy that prioritises the
inputs to valuation techniques used to measure fair value. The three levels of
fair value hierarchy under IFRS 13 are as follows:
Level 1: fair value measurements are those derived from quoted prices Level 2: fair value measurements are those derived from inputs other than Level 3: fair value measurements are those derived from valuation techniques
(unadjusted) in active markets for identical assets or liabilities quoted prices included within Level 1 that ore observable for the asset or that include inputs to the asset or liability that ore not based on observable
liability, either directly (i.e., as prices) or indirectly (i.e., derived from market data (unobservable inputs)
prices)
There were no Level 1 or Level 2 assets or liabilities during the year. There
were no transfers between Level 1 and 2, Level 1 and 3 or Level 2 and 3 during
the year.
The Company records the net asset value of ENRG Holdings by calculating and
aggregating the fair value of each of the individual investments in which the
Company holds an indirect investment. Due to their nature, such investments
are expected to be classified as level 3 as they are not traded and contain
unobservable inputs. The Directors have satisfied themselves as to the
methodology used, the discount rates and key assumptions applied, and the
valuation.
The fair value of investments that are operational as at year end are measured
at fair value through profit or loss using the DCF methodology in line with
the IFRS 13 framework for fair value measurement. As at 31 December 2024,
the US terminal storage assets, two of the five Australian solar PV with
battery storage assets, the Brazilian hydro facility and 10 of the 16
Brazilian solar PV assets are being measured at fair value, using the DCF
valuation.
Fair value of investments that are in construction as at year end is measured
on a cost basis, as the most appropriate proxy of their fair value. At year
end, the remaining Australian solar PV with battery storage assets, remaining
Brazilian solar PV assets, and the UK flexible power with CCR assets are in
construction. The cost basis of those assets under construction is regularly
reviewed to determine if the cost basis is the most appropriate basis of
valuation as assets approach their operational phase.
The total movement in the value of the investments in ENRG Holdings is
recorded through profit and loss in the Statement of Comprehensive Income
Statement of the Company.
Valuation assumptions
The following economic assumptions were used in the valuation of operating
assets.
Discount rates The discount rate used in the valuations is derived according to
internationally recognised methods.
Typical components of the discount rate are risk free rates, country-specific
and asset-specific risk premia. The latter comprise the risks inherent to the
respective asset class as well as specific premia for other risks such as
construction.
Power price Power prices are based on power price forecasts from leading market
consultants adjusted for expected deployment of energy transition assets.
Energy yield Estimated based on energy yield assessments from leading technical consultants
as well as operational performance data (where applicable).
Inflation rates Long-term inflation is based on International Monetary Fund (IMF) forecasts
for the respective jurisdiction.
Asset life Refer to the table below for details. In individual cases a longer operating
life may be assumed where the contractual set-up supports such assumption.
Operating expenses The operating expenses are primarily based on the respective contracts and
budgets.
Taxation rates The underlying country-specific tax rates are derived from leading tax
consulting firms.
Capital expenditure Based on the contractual arrangements (e.g. EPC agreement), where applicable.
Key assumptions
31 December 31 December
2024
2023
Discount rate Weighted Average US terminal storage assets 6.94% 6.91%
Weighted Average Australian solar PV with battery storage assets 7.77% 7.74%
Weighted Average Brazilian solar PV assets 10.33% 9.67%
Weighted Average Brazilian hydro facility 10.16% 9.54%
Weighted Average Iberian and Swedish solar PV and wind assets 9.15% n/a
Long-term inflation(1) United States US terminal storage assets 2.15% 1.62%
Australia Australian solar PV with battery storage assets 2.47% 2.42%
Brazil Brazilian solar PV assets & Brazilian hydro facility 2.97% 3.03%
Spain Spanish solar PV asset 2.00% n/a
Sweden Swedish onshore wind asset 2.00% n/a
Total asset life Years US terminal storage assets 30 years 30 years
Years Australian solar PV with battery storage assets 25 years 25 years
Years Brazilian solar PV assets 25 years 25 years
Years Brazilian hydro facility 25 years 25 years
Years Iberian and Swedish solar PV and wind assets 25 years 25 years
Exchange rate GBP:USD US terminal storage assets 1:1.2527 1:1.2732
GBP:BRL Brazilian solar PV assets & Brazilian hydro facility 1:7.7486 1:6.1771
GBP:AUD Australian solar PV with battery storage assets 1:2.0235 1:1.8689
GBP:EUR Iberian and Swedish solar PV and wind assets 1:1.2098 n/a
1 Source: IMF. Inflation rates have been taken from IMF
published on 22 Oct 2024 (data is published biannually), which provides yearly
forecasted inflation up to 2029. Long-term inflation rate refers to the 2029
projected rate. Short-term inflation volatility of up to 2029 has been
accounted for in the valuation of operating assets.
Valuation sensitivity
The key sensitivities in the DCF valuation are considered to be the discount
rate used in the DCF valuation and long-term assumptions in relation to
inflation, operating expenses and asset life.
The discount rate applied in the valuation of the operating assets are as per
the table above, which is considered to be an appropriate base case for
sensitivity analysis. A variance of +/-1.5% is considered to be a reasonable
range of alternative assumptions for discount rate given the volatility of
discount rates used during the year.
The base case long term inflation rate assumption depends on the geographical
location for assets in operation. These are disclosed in the table above. A
variance of +/-1% is considered to be a reasonable range of alternative
assumptions for inflation.
For assets in construction, the Company has only sensitised the impact of
foreign exchange fluctuations. A variance of +/- 10% is considered to be a
reasonable range of alternative assumptions for foreign exchange.
The analysis below shows the sensitivity of the investments value (and impact
on NAV) to changes in key assumptions. All sensitivity calculations have been
performed on the basis that each of the other assumptions remains constant and
unchanged.
As at 31 December 2024 Change in input Changes in fair value of investments Change in NAV per
(£'000)
share (p)
Discount rate - US terminal storage assets -1.50% 21,212 5.36
1.50% (16,811) (4.25)
Discount rate - Australian solar PV with battery storage assets -1.50% 4,461 1.13
1.50% (3,690) (0.93)
Discount rate - Brazilian solar PV assets -1.50% 3,496 0.88
1.50% (2,877) (0.73)
Discount rate - Brazilian hydro facility -1.50% 11,395 2.88
1.50% (9,374) (2.37)
Discount rate - Iberian and Swedish solar PV and wind assets -1.50% 255 0.06
1.50% (208) (0.05)
Discount rate - All -1.50% 40,818 10.31
1.50% (32,960) (8.33)
As at 31 December 2024 Change in input Changes in fair value of investments Change in NAV per
(£'000)
share (p)
Inflation - US terminal storage assets -1.00% (10,858) (2.74)
1.00% 12,504 3.16
Inflation - Australian solar PV with battery storage assets -1.00% (795) (0.20)
1.00% 861 0.22
Inflation - Brazilian solar PV assets -1.00% (1,696) (0.43)
1.00% 2,130 0.54
Inflation - Brazilian hydro facility -1.00% (9,947) (2.51)
1.00% 10,401 2.63
Inflation - Iberian and Swedish solar PV and wind assets -1.00% (223) (0.06)
1.00% 253 0.06
Inflation - All -1.00% (23,520) (5.94)
1.00% 26,149 6.61
As at 31 December 2024 Change in input Changes in fair value of investments Change in NAV per
(£'000)
share (p)
Asset life - US terminal storage assets -1 year (2,120) (0.54)
+1 year 2,329 0.59
Asset life - Australian solar PV with battery storage assets -1 year (411) (0.10)
+1 year 210 0.05
Asset life - Brazilian solar PV assets -1 year (435) (0.11)
+1 year 408 0.10
Asset life - Brazilian hydro facility -1 year (1,797) (0.45)
+1 year 1,819 0.46
Asset life - Iberian and Swedish solar PV and wind assets -1 year (120) (0.03)
+1 year 115 0.03
Asset life - All -1 year (4,884) (1.23)
+1 year 4,881 1.23
As at 31 December 2024 Change in input Changes in fair value of investments Change in NAV per
(£'000)
share (p)
Operating expenses - US terminal storage assets -5.00% 4,548 1.15
5.00% (4,538) (1.15)
Operating expenses - Australian solar PV with battery storage assets -5.00% 339 0.09
5.00% (235) (0.06)
Operating expenses - Brazilian solar PV assets -5.00% 637 0.16
5.00% (609) (0.15)
Operating expenses - Brazilian hydro facility -5.00% 2,378 0.60
5.00% (2,407) (0.61)
Operating expenses - Iberian and Swedish solar PV and wind assets -5.00% 82 0.02
5.00% (81) (0.02)
Operating expenses - All -5.00% 7,984 2.02
5.00% (7,869) (1.99)
As at 31 December 2024 Change in input Changes in fair value of investments Change in NAV per
(£'000)
share (p)
FX (GBP:USD) -10.00% 14,152 3.58
10.00% (11,579) (2.93)
FX (GBP:BRL) -10.00% 14,750 3.73
10.00% (12,068) (3.05)
FX (GBP:AUD) -10.00% 5,158 1.30
10.00% (4,220) (1.07)
FX (GBP:EUR) -10.00% 4,712 1.19
10.00% (3,856) (0.97)
FX - All -10.00% 38,772 9.80
10.00% (31,723) (8.01)
The sensitivities above are assumed to be independent of each other. Combined
sensitivities are not presented.
As at 31 December 2023 Change in input Changes in fair value of investments Change in
(£'000)
NAV per
share (p)
Discount rate - US terminal storage assets -1.50% 22,034 5.30
1.50% (17,339) (4.17)
Discount rate - Australian solar PV with battery storage assets -1.50% 1,973 0.47
1.50% (1,616) (0.39)
Discount rate - Brazilian solar PV assets -1.50% 3,327 0.80
1.50% (2,734) (0.66)
Discount rate - Brazilian hydro facility -1.50% 15,976 3.85
1.50% (12,981) (3.12)
Discount rate - All -1.50% 43,310 10.42
1.50% (34,670) (8.34)
As at 31 December 2023 Change in input Changes in fair value of investments Change in
(£'000)
NAV per
share (p)
Inflation - US terminal storage assets -1.00% (10,833) (2.61)
1.00% 12,451 3.00
Inflation - Australian solar PV with battery storage assets -1.00% (1,144) (0.28)
1.00% 1,458 0.35
Inflation - Brazilian solar PV assets -1.00% (2,011) (0.48)
1.00% 2,295 0.55
Inflation - Brazilian hydro facility -1.00% (11,997) (2.89)
1.00% 14,176 3.41
Long-term Inflation - All -1.00% (25,984) (6.25)
1.00% 30,380 7.31
As at 31 December 2023 Change in input Changes in fair value of investments Change in
(£'000)
NAV per
share (p)
Asset life - US terminal storage assets -1 year (1,888) -0.45
+1 year 1,782 0.43
Asset life - Australian solar PV with battery storage assets -1 year (333) -0.08
+1 year 306 0.07
Asset life - Brazilian solar PV assets -1 year (395) -0.10
+1 year 370 0.09
Asset life - Brazilian hydro facility -1 year (2,496) -0.60
+1 year 2,426 0.58
Asset life - All -1 year (5,112) -1.23
+1 year 4,883 1.18
As at 31 December 2023 Change in input Changes in fair value of investments Change in
(£'000)
NAV per
share (p)
Operating expenses - US terminal storage assets -5.00% 4,224 1.02
5.00% (4,224) -1.02
Operating expenses - Australian solar PV with battery storage assets -5.00% 275 0.07
5.00% (266) -0.06
Operating expenses - Brazilian solar PV assets -5.00% 828 0.20
5.00% (816) -0.20
Operating expenses - Brazilian hydro facility -5.00% 2,771 0.67
5.00% (2,772) -0.67
Operating expenses - All -5.00% 8,097 1.95
5.00% (8,079) -1.95
As at 31 December 2023 Change in input Changes in fair value of investments Change in
(£'000)
NAV per
share (p)
FX (GBP:USD) -10.00% 13,366 3.22
10.00% (10,936) -2.63
FX (GBP:BRL) -10.00% 18,787 4.73
10.00% (15,372) -3.70
FX (GBP:AUD) -10.00% 4,140 1.00
10.00% (3,387) -0.82
FX - All -10.00% 36,293 8.74
10.00% (29,694) -7.15
The sensitivities above are assumed to be independent of each other. Combined
sensitivities are not presented.
8. Unconsolidated subsidiaries
The following table shows subsidiaries of the Company. As the Company is
regarded as an investment entity, these subsidiaries have not been
consolidated in the preparation of the financial statements.
Investments Registered Office Address Country of Business Ownership Interests as at 31 December 2024
VH ENRG UK Holdings Limited 5th Floor 20 Fenchurch Street, London, England, EC3M 3BY, United Kingdom United Kingdom 100%
Victory Hill Distributed Energy Investments Limited 5th Floor 20 Fenchurch Street, London, England, EC3M 3BY, United Kingdom United Kingdom 100%
Victory Hill Flexible Power Limited 5th Floor 20 Fenchurch Street, London, England, EC3M 3BY, United Kingdom United Kingdom 100%
Rhodesia Power Limited 5th Floor 20 Fenchurch Street, London, England, EC3M 3BY, United Kingdom United Kingdom 100%
Victory Hill USA Holdings LLC 800 North State Street, Suite 304., Dover Delaware 19901 United States 100%
Victory Hill Midstream Investments LLC 800 North State Street, Suite 304., Dover Delaware 19901 United States 100%
Victory Hill Midstream Energy LLC 800 North State Street, Suite 304., Dover Delaware 19901 United States 100%
Motus T1 LLC 14301 RL Ostos Rd. Brownsville, TX 78521 United States 100%
Motus T2 LLC 16265 RL Ostos Rd. Brownsville, TX 78521 United States 100%
Victory Hill Australia Investments Pty Ltd Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Australia 100%
Melbourne, VIC 3000
Victory Hill Distributed Power Pty Ltd Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Australia 100%
Melbourne, VIC 3000
Mobilong Solar Farm Pty Ltd Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Australia 100%
Melbourne, VIC 3000
Dunblane Solar Pty Ltd Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Australia 100%
Melbourne, VIC 3000
Dubbo Solar Project Pty Ltd Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Australia 100%
Melbourne, VIC 3000
Narrandera Solar Project Pty Ltd Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Australia 100%
Melbourne, VIC 3000
Coleambally East Solar Farm Pty Ltd Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Australia 100%
Melbourne, VIC 3000
Tabbita Solar Farm Pty Ltd Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Australia 100%
Melbourne, VIC 3000
Griffith Solar Pty Ltd Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Australia 100%
Melbourne, VIC 3000
VH Participacoes Hidreletricas do Brasil LTDA Avenida Paulista, nº 1912, 8º andar, Bela Vista, São Paulo, State of São Brazil 98.25%
Paulo, CEP 01310-200
Energest S.A. Rod BR 259, km 92, Piso 8, Sala 1, Bairro Mascarenhas, Baixo Guandu, State of Brazil 100%
Espírito Santo, CEP 29730-000
Victory Hill Holdings Brasil S.A. Rua Barão de Jaguaripe, nº 280, apto. 501, Bairro, Ipanema, Rio de Janeiro, Brazil 99.99%
State of Rio de Janeiro, CEP 22.421-000
Energea Itaguaí I Ltda. * Est RJ-099, No. 704, Piranema, Municipality of Itaguaí, Rio de Janeiro, Brazil 100%
State of Rio de Janeiro, CEP 23825-840
Energea Itaguaí II Ltda. * Est RJ-099, No. 704, Piranema, Municipality of Itaguaí, Rio de Janeiro, Brazil 100%
State of Rio de Janeiro, CEP 23825-840
Energea Itaguaí III Ltda. * Est RJ-099, No. 704, Piranema, Municipality of Itaguaí, Rio de Janeiro, Brazil 100%
State of Rio de Janeiro, CEP 23825-840
Energea Nova Friburgo Ltda. * Rua Barão de Jaguaripe, nº 280, apto 501, Ipanema, Rio de Janeiro - RJ, Brazil 100%
CEP 22.421-000
Energea Itabaiana Ltda. * SIT BR 235 da Queimadas Margem Esquerda, No Number, Zona Rural, Itabaiana, Brazil 100%
State of Sergipem, CEP 49.511-899
Energea Redenção Ltda. * Rod BR 158 KM 18, No Number, Complement: Chácara Temponi, Zona Rural, Brazil 100%
Redenção, State of Pará, CEP 68.554-899
Energea Itaporanga Ltda. * Sítio Catole, No Number, Zona Rural, Itaporanga, Sate of Paraíba, Brazil 100%
CEP: 58.780-000
Energea Bataguassu Ltda. * Rod BR 267 KM 48,5 A Direita - Fazenda Cabeceira, No Number, Zona Rural, Brazil 100%
Bataguassu, Sate of Mato Grosso do Sul, CEP: 79.780-000
Energea Palmas Ltda. * Rod BR-030, KM 93, Fazenda Boa Vista, No Number, Malhada, State of Bahia, Brazil 100%
CEP 46.440-000
Energea Itacarambi Ltda. * Rod BR 135 KM 139, Zona Rural, No Number, Itacarambi, State of Minas Gerais. Brazil 100%
CEP: 39.470-000
Energea Vassouras I Ltda. * Est RJ 127, nº 6300, Zona Rural, Vassouras, State of Rio de Janeiro, Brazil 100%
CEP: 27.700-000
Energea Seropédica Ltda. * Rua Barão de Jaguaripe, nº 280, apto 501, Ipanema, Sate of Rio de Janeiro, Brazil 100%
CEP: 22.421-000
Energea Paraíba do Sul Ltda. * Rua Barão de Jaguaripe, nº 280, apto 501, Ipanema, Rio de Janeiro, State of Brazil 100%
Rio de Janeiro, CEP 22.421‑000
Energea Taquaritinga Ltda. * Est Municipal de Taquaritinga a Monte Alto, No Number, Área Rural de Brazil 100%
Taquaritinga, Taquaritinga, State of São Paulo, CEP 15.909-899
Energea Nova Cruz Ltda. * Est Margem Direita da Estrada de Nova Cruz a Montanhas, No Number, Zona Rural, Brazil 100%
City: Nova Cruz, State of Rio Grande do Norte, CEP 59.215-000
VH Spain Energy Investments SLU Calle Nanclares de Oca 1B, 28022 Madrid Spain 100%
Fusgar Energy SL* Calle Nanclares de Oca 1B, 28022 Madrid Spain 55%
La Marquesa SL* Calle Nanclares de Oca 1B, 28022 Madrid Spain 55%
La Marquesa AZ SL& Calle Nanclares de Oca 1B, 28022 Madrid Spain 55%
Marquesona SL* Calle Nanclares de Oca 1B, 28022 Madrid Spain 55%
Fotoener SL* Calle Doctor Vernau, 1. 35001 Las Palmas de Gran Canaria Spain 55%
Lingbo SPW AB* Athene Tax AB, Textilgatan 31, 120 30 Stockholm Sweden 55%
Elcano Unipessonal LDA* Rua Latino Coelho, nº 87, 1050 - 134 Lisboa, Portugal 55%
Sistemas Energeticos Saturno SL* Calle Nanclares de Oca 1B, 28022 Madrid Spain 55%
Feres Energy SL* Calle Nanclares de Oca 1B, 28022 Madrid Spain 55%
Alfa Lirae PV 7 SL* Calle Nanclares de Oca 1B, 28022 Madrid Spain 55%
Solar Power Cosmo SL* Calle Nanclares de Oca 1B, 28022 Madrid Spain 55%
At 31 December 2024, the Company has one direct subsidiary and owns 100% of
ENRG Holdings. The Company owns investments in the other entities per the
table above through its ownership of ENRG Holdings. ENRG Holdings owns 100% of
Victory Hill USA Holdings LLC, Victory Hill Australia Investments Pty Ltd,
Victory Hill Distributed Energy Investments Limited, Victory Hill Flexible
Power Limited and Victory Hill Spain Energy Investments S.L.U and 98.25% of VH
Participacoes Hidreletricas do Brasil Ltda.
The Company's investments in Victory Hill Midstream Investments LLC, Victory
Hill Midstream Energy LLC, Motus T1 LLC and Motus T2 LLC are held through
Victory Hill USA Holdings LLC. These relate to the US terminal storage
assets.
The Company's investments in Brazilian solar PV assets are held through
Victory Hill Distributed Energy Investments Limited, which holds 99.99% of
Victory Hill Holdings Brasil S.A. The holdings of Victory Hill Holdings
Brasil S.A. are indicated by an asterisk in the list of unconsolidate)d
subsidiaries above.
The Company's investments in VH Hydro Brasil Holding S.A. and Energest S.A.
are held through VH Participacoes Hidreletricas do Brasil LTDA. These relate
to the Brazilian hydro facility.
The Company's investments in Victory Hill Distributed Power Pty Ltd, Mobilong
Solar Farm Pty Ltd, Dubbo Solar Project Pty Ltd, Narrandera Solar Project
Pty Ltd, Tabbita Solar Farm Pty Ltd, Griffith Solar Pty Ltd, Coleambally
East Solar Farm Pty Ltd and Dunblane Solar Pty Ltd are held through Victory
Hill Australia Investments Pty Ltd. These relate to the Australian solar PV
with battery storage assets.
The Company's investments in Fusgar Energy SL in are held through Victory Hill
Spain Energy Investment S.L.U., which holds 80% of the economic and voting
rights of Fusgar Energy SL. The holdings of Fusgar Energy SL are indicated by
an asterisk in the list of unconsolidated subsidiaries above.
The Company's investments in Rhodesia Power Limited are held through Victory
Hill Flexible Power Limited. These relate to the UK flexible power with CCR
assets.
9. Receivables
As at 31 December As at 31 December
2024
2023
£'000
£'000
Other receivables 130 93
Interest receivable on cash and cash equivalents 39 317
Prepayments 32 31
Total other receivables 201 441
The Directors have analysed the expected credit loss in respect of receivables
and concluded there was no material exposure for the year ended 31 December
2024 and 31 December 2023.
Cash of £nil (2023: £40,367k) is held on behalf of the Company by VH ENRG
UK Holdings Limited.
10. Cash and cash equivalents
As at 31 December As at 31 December
2024
2023
£'000
£'000
Cash and cash equivalents(1) 10,731 30,542
Cash on deposit 216 43,716
Total cash and cash equivalents 10,947 74,258
1 Cash and cash equivalents includes money market
investments of £9.5m (31 December 2023: £26.4m)
11. Accounts payable and accrued expenses
As at 31 December As at 31 December
2024
2023
£'000
£'000
Accrued expenses 536 270
Accounts payable and accrued expenses 536 270
The Directors consider that the carrying amount of other payables and accrued
expenses matches their fair value.
12. Financial risk management
The Company's activities expose it to a variety of financial risks: market
risk (including currency risk, interest rate risk and price risk), credit risk
and liquidity risk.
The Investment Manager has risk management procedures and processes in place
which enable them to monitor the risks of the Company. The objective in
managing risk is the creation and protection of shareholder income and value.
Risk is inherent in the Company's activities, but it is managed through a
process of ongoing identification, impact assessment, and monitoring and
subject to risk limits and other controls.
The principal financial risks facing the Company in the management of its
portfolio are as follows:
Currency risk
The Company make investments which are based in countries whose local currency
may not be Sterling and the Company and its investments may make and/or
receive payments that are denominated in currencies other than Sterling.
Therefore, when foreign currencies are translated into Sterling there could be
a material adverse effect on the Company's profitability and its net asset
value.
The Company's investments are held for the long-term and the Company may enter
into hedging arrangements for periods less than 12 months to hedge against
short-term currency movements. Currency risk is taken into consideration at
time of investment and included in the Investment Manager's assessment of
minimum hurdle rate from investments. Hedging policies of the Company will be
reviewed on a regular basis to ensure that the risks associated with the
Company's investments are being appropriately managed.
The Company invests in a portfolio of assets through ENRG Holdings, which pays
dividends in sterling to the Company. Shareholder loan investments and
interest are held and paid in local currencies at the Company, including
US$64,686,291 and A$76,427,230, representing a total of 21.8% of the Company's
NAV at year end.
Note 7 details sensitivity analysis on the impact of changes to the inputs on
the fair value of the Company's investments.
Interest rate risk
The Company's interest rate risk on its financial assets is limited to
interest earned on cash or cash equivalents. The Board considers that, because
shareholder loan investments bear interest at a fixed rate, they do not carry
any interest rate risk.
The Company may use borrowings for multiple purposes, including for investment
purposes. At the year end the Company held no borrowings. Interest rate risk
will be taken into consideration when taking out any such borrowings.
The Company's interest and non-interest bearing assets and liabilities as at
31 December 2024 and 31 December 2023 are summarised as below:
For the year ended 31 December 2024 For the year ended 31 December 2023
Interest bearing Non-interest bearing Total Interest bearing Non-interest bearing Total
£'000 £'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 10,947 - 10,947 114,625 - 114,625
Prepayments and other receivables - 162 162 - 124 124
Interest receivable 39 - 39 317 - 317
Investments at fair value through profit or loss 154,798 243,097 397,895 93,347 275,700 369,047
Total assets 165,784 243,259 409,043 208,289 275,824 484,113
Liabilities
Accounts payable and accrued expenses - (536) (536) - (270) (270)
Total liabilities - (536) (536) - (270) (270)
Price risk
The operation and cash flows of certain investments will depend, in
substantial part, upon prevailing market prices for electricity and fuel, and
particularly natural gas. The Company intends to mitigate these risks by
entering into (i) hedging arrangements; (ii) extendable short, medium and
long-term contracts; and (iii) fixed price or availability based asset-level
commercial contracts, and ensuring that market risk is combined with
non-market risk exposures.
Price risk is limited to the fair value of investments. Note 7 details
sensitivity analysis on the impact of changes to the inputs on the fair value
of the Company's investments and profits.
Credit risk
Credit risk is the risk that a counterparty will cause financial loss to the
Company by failing to meet a commitment it has entered into with the Company.
The Company's credit risk exposure is minimised with its policy to enter into
banking arrangements with reputable financial institutions with a credit
rating of at least 'A/Positive' from Standard and Poor's and making loan
investments which are equity in nature. The Investment Manager monitors the
credit ratings of banks used by the Company on a regular basis.
The table below shows the Company's maximum exposure to credit risk:
As at 31 December As at 31 December
2024
2023
£'000
£'000
Cash and cash equivalents 10,947 114,625
Investments at fair value through profit or loss 154,798 93,347
Other receivables (Note 9) 201 441
165,946 208,413
Liquidity risk
The Company manages its liquidity and funding risks by considering cash flow
forecasts and ensuring sufficient cash balances are held within the Company to
meet future needs. Prudent liquidity risk management implies maintaining
sufficient cash and marketable securities, the availability of financing
through appropriate and adequate credit lines, and the ability of
counterparties to settle obligations. The Company ensures, through forecasting
of capital requirements, that adequate cash is available.
The following table details the Company's liquidity analysis in respect of its
financial liabilities on contractual undiscounted payments:
As at 31 December 2024 <3 3-12 1-5 >5 Total
Months
Months
Years
Years
£'000
£'000
£'000
£'000
£'000
Accounts payable and accrued expenses 536 - - - 536
As at 31 December 2023 <3 3-12 1-5 >5 Total
Months
Months
Years
Years
£'000
£'000
£'000
£'000
£'000
Accounts payable and accrued expenses 270 - - - 270
270 - - - 270
The Board of Directors monitors key risks faced by the Company and has agreed
policies for managing the above risks with the Investment Manager.
Capital management
The Company considers its capital to comprise ordinary share capital,
distributable reserves and retained earnings.
The Company's primary capital management objectives are to ensure the
sustainability of its capital to support continuing operations, meet its
financial obligations and allow for growth opportunities. Generally,
acquisitions are anticipated to be funded with a combination of cash, debt and
equity.
13. Share capital
Date Issued and fully paid Number of shares Share Share premium Special Distributable Reserve Total
Capital
(B)
(C)
(A+B+C)
(A)
£'000
£'000
£'000
£'000
Opening balance 422,498,890 4,225 186,368 232,467 423,060
Buyback of ordinary shares - - - (5,400) (5,400)
At 31 December 2023 422,498,890 4,225 186,368 227,067 417,660
Opening balance 422,498,890 4,225 186,368 227,067 417,660
Buyback of ordinary shares - - - (15,073) (15,073)
Interim dividend paid during the year - - - (452) (452)
At 31 December 2024 422,498,890 4,225 186,368 211,994 402,587
During the period under review, the Company purchased for treasury a total of
19,668,147 ordinary shares at an aggregate cost of £14,619,440 (including
stamp duty and other fees) at an average price per ordinary share of 74.3p.
14. Dividends
The Company paid the below dividends during the year.
Period Pence per ordinary Total Date paid
share
dividend
1 October 2023 - 31 December 2023 1.42p £5.8m 22 March 2024
1 January 2024 - 31 March 2024 1.42p £5.8m 25 June 2024
1 April 2024 to 30 June 2024 1.42p £5.7m 10 September 2024
1 July 2024 to 30 September 2024 1.42p £5.6m 19 December 2024
15. Transactions with AIFM, Investment Manager and related parties
AIFM
On 3 May 2023 the Company entered into an Alternative Investment Fund
Management Agreement ("AIFM Agreement") with Victory Hill Capital
Partners LLP (the "AIFM") replacing G10 Capital Limited. Victory Hill Capital
Partners LLP is acting as the Company's AIFM with overall responsibility for
the risk management and portfolio management of the Company, providing
alternative investment fund management services and ensuring compliance with
the requirements of the AIFM Rules, subject to the overall supervision of the
Board of Directors in accordance with the policies set by the Directors from
time to time and the investment restrictions as set out in the AIFM Agreement.
The AIFM Agreement provides that the Company will pay to the AIFM a fixed
monthly fee of £5,833 (£70,000 per annum), exclusive of VAT. The Company
will also reimburse the AIFM for reasonable expenses properly incurred by the
AIFM in the performance of its obligations under the AIFM Agreement.
The AIFM Agreement may be terminated by the Company or the AIFM giving not
less than twelve months' written notice. The AIFM Agreement may be terminated
with immediate effect on the occurrence of certain events, including
insolvency or in the event of a material and continuing breach.
Investment Manager
The Investment Manager is entitled to receive from the Company an annual fee
to be calculated as percentages of the Company's net assets, 1% on the first
£250m of NAV, 0.9% on NAV in excess of £250m and up to and including £500m
and 0.8% on NAV in excess of £500m exclusive of VAT.
Furthermore, if in any fee period, the annual fee paid to the Investment
Manager exceeds:
a) £3.5m, the Investment Manager shall apply 8% of the annual
fee, subject to a maximum amount of £400,000, to subscribe for or acquire
ordinary shares of £0.01 each in the capital of the Company.
b) £2.5m, the Investment Manager shall apply 2% of the annual fee
to be paid as a charitable donation to O&C Limited, or other suitable
registered charity aimed at promoting sustainable energy, as selected by the
Investment Manager, provided that if, following the Investment Manager's
reasonable endeavours, a suitable charity cannot be found, this 2% portion of
the annual fee (net of any applicable taxes) will be applied to the
subscription for or acquisition of ordinary shares.
The Investment Management Agreement may be terminated on 12 months' written
notice, provided that such notice may not be served before 2 February 2025.
The Investment Management Agreement may be terminated with immediate effect on
the occurrence of certain events, including insolvency or in the event of a
material and continuing breach.
The investment management fees for the year ended 31 December 2024 amounted
to £4,374,442 (2023: £4,371,947) of which £0 (2023: £0) was outstanding
and included in accounts payable and accrued expenses at the end of the year.
No performance fee is payable to the Investment Manager.
Directors
The Directors have been entitled to aggregate annual remuneration (excluding
expenses payable) as follows:
For the year For the year
ended 31 December
ended 31 December
2024
2023
£'000
£'000
Bernard Bulkin OBE 84.5 81.5
Margaret Stephens 71.5 58.5
Richard Horlick 64.5 58.5
Louise Kingham CBE 61.5 58.5
Daniella Carneiro(1) 61.5 55.9
343.5 312.9
1 Daniella Carneiro joined the Board of Directors on
18 January 2023.
The Directors are not eligible for bonuses, pension benefits, share options,
long-term incentive schemes or other benefits. There is no amount set aside or
accrued by the Company in respect of contingent or deferred compensation
payments or any benefits in kind payable to the Directors. During the year
ended 31 December 2024, Directors' fees of £343,500 (2023: £313,000) were
paid of which none was payable at the year end.
The Directors held the following beneficial interests in the ordinary shares
of the Company as at 31 December 2024.
As at 31 December 2024
Number of ordinary shares held % of ordinary shares in issue
Bernard Bulkin OBE 68,101 0.02
Margaret Stephens 56,960 0.01
Richard Horlick 300,000 0.07
Louise Kingham CBE 26,753 0.01
Daniella Carneiro - 0.00
Other balances with related parties
The Company entered into intercompany loan agreements with ENRG Holdings,
which entered into further intercompany loan agreements with the following
subsidiary companies:
• Victory Hill Flexible Power Ltd £8,310,000 (31 December
2023: £6,060,000)
• Victory Hill Australia Investments Pty Ltd A$38,171,257
(31 December 2023: A$4,890,000)
• Victory Hill USA Holdings LLC US$nil (31 December
2023: US$1,021,290.60)
• Victory Hill Spain Energy Investments, S.L.U €42,454,578
(31 December 2023: €nil)
As at the year-end, the Company held a receivable from VH ENRG UK Holdings
Limited of £nil (31 December 2023: £40,366,849.32).
16. Contingent liabilities and commitments
As at 31 December 2024, the Company had no contingencies or commitments.
17. Earnings per share
Earnings per share (EPS) is calculated by dividing profit for the period
attributable to ordinary equity holders of the Company by the weighted average
number of ordinary shares in issue on 1 January 2022 to 31 December 2024.
Amounts shown below are both basic and diluted measures as there were no
dilutive instruments in issue throughout the current year.
For the year ended 31 December 2024 For the year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
Earnings (£'000) 15,877 (53,665) (37,788) 22,822 32,517 55,339
Weighted average number of ordinary shares 405,133,610 405,133,610 405,133,610 421,086,053 421,086,053 421,086,053
EPS (p) 3.92 (13.25) (9.33) 5.42 7.72 13.14
18. Net asset value per share
Net asset value per share is calculated by dividing the net assets
attributable to ordinary equity holders of the Company by the number of
ordinary shares outstanding at the reporting date. Amounts shown below are
both basic and diluted measures as there were no dilutive instruments in issue
throughout the current year.
Year ended 31 December 2024 Year ended 31 December 2023
NAV (£'000) 408,507 483,843
Number of ordinary shares 395,803,422 415,471,569
NAV per share (p) 103.21 116.46
19. Post balance sheet events
On 21 February 2025, the Board of Directors announced an interim dividend of
£5,739,150 equivalent to 1.45p per ordinary share with respect to the period
1 October 2024 to 31 December 2024 which will be paid on 27 March 2025.
20. Controlling parties
There is no ultimate controlling party of the Company.
ALTERNATIVE PERFORMANCE MEASURES (APMS)
Alternative Performance Measures (APMs) are often used to describe the
performance of investment companies although they are not specifically defined
under IFRS. Calculations for APMs used by the Company are shown below.
In reporting financial information, the Company presents alternative
performance measures, "APMs", which are not defined or specified under the
requirements of IFRS. The Company believes that these APMs, which are not
considered to be a substitute for or superior to IFRS measures, provide
stakeholders with additional helpful information on the performance of the
Company.
The APMs presented in this report are shown below:
NAV per share
NAV per share is calculated by dividing the Company's NAV by the total number
of outstanding shares at year end.
As at 31 December 2024
NAV as at 31 December 2024 408,507,030
Total number of outstanding shares as at 31 December 2024 395,803,422
NAV per share 103.21p
Ongoing charges
A measure expressed as a percentage of average net assets, of the regular,
recurring annual costs of running an investment company, calculated in
accordance with the AIC methodology.
As at 31 December 2024
Average undiluted NAV (in £'m) 443,928,649
Recurring costs in the year to date 6,543,169
Ongoing charges 1.5%
Premium / (discount) to NAV
The amount, expressed as a percentage, by which the share price is more than
the NAV per ordinary share.
As at 31 December 2024
NAV per ordinary share (pence per share) 103.21
Ordinary share price (pence per share) 66.00
Premium / (discount) to NAV as at 31 December 2024 -36.1%
Total return
A measure of performance that includes both income and capital returns. This
takes into account capital gains and reinvestment of any dividends paid out by
the Company, with reinvestment on ex-dividend date.
As at 31 December 2024 NAV
Opening as at 1 January 2024 a 116.46
Closing as at 31 December 2024 b 103.21
Dividends paid during the period 5.68
Dividend adjustment factor* c 1.08
Adjusted closing d = b x c 111.47
Total return for the period (%) d / a - 1 -4.3%
Note*: Dividend adjustment factor assumes reinvestment of dividends in shares
of the ENRG on the dividend record date.
As at 31 December 2024 NAV
Opening as at 2 February 2021 a 98.00
Closing as at 31 December 2024 b 103.21
Dividends paid to date since IPO 16.20
Dividend adjustment factor c 1.19
Adjusted closing d = b x c 122.66
Total return since IPO (%) e = d/a - 1 25.2%
Number of years since IPO f 3.91
Total annualised NAV return since IPO (%) (1 + e)^(1/f)-1 5.9%
Dividend cover
The dividend cover ratio is calculated by using the Company's distributable
profits for the year, divided by the amount of dividends paid during the year
ending 31 December 2024.
Cash available for distribution £29,818,403
Asset level debt service cost £1,273,067
Fund expenses £6,545,601
Cash available for distribution £21,999,735
Dividends paid £22,927,382
Dividend cover 0.96
Gearing - Company and Portfolio
Page
Debt (£'k) 26,765,204
Fund NAV (£'k) 147 408,507,030
Leverage 6.55%
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