Annual Financial Report

PREMIER MITON GLOBAL RENEWABLES TRUST PLC

Annual Financial Report for the year ended to 31 December 2021

The Directors present the Annual Financial Report of Premier Miton Global Renewables Trust PLC (the "Company") for the year ended 31 December 2021 (the "Annual Report").

A copy of the Annual Report will shortly be submitted to the National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

The Annual Report is also available to view and download from the Company's website, www.globalrenewablestrust.com/documents. Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into or forms part of this announcement.

The information set out below does not constitute the Company's statutory accounts for the year ended 31 December 2021 but is derived from those accounts. Statutory accounts for the year ended 31 December 2021 will be delivered to the Registrar of Companies in due course. The Auditors have reported on those accounts: their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

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

Company Summary

Group Premier Miton Global Renewables Trust PLC (the “Company”) (formerly Premier Global Infrastructure Trust PLC), and its wholly-owned subsidiaries PGIT Securities 2020 PLC (in voluntary liquidation) and PMGR Securities 2025 PLC.
Capital Structure
Ordinary Shares (1p each) 18,238,480 (as at 7 March 2022)
The Ordinary Shares are entitled to all of the Company’s net income available for distribution by way of dividends. On a winding-up, they will be entitled to any undistributed revenue reserves and any surplus assets of the Company after the Zero Dividend Preference Shares (“ZDPs”/”ZDP Shares”) accrued capital entitlement and payment of all liabilities. The Ordinary Shareholders have the right to receive notice of, to attend and to vote at all general meetings of the Company. The Ordinary Shares are qualifying investments for ISAs.
Zero Dividend Preference Shares (1p each) Issued by PMGR Securities 2025 PLC 14,217,339
The 2025 ZDP Shares (“2025 ZDPs”) will have a final capital entitlement of 127.6111p on 28 November 2025, equivalent to a gross redemption yield from the date of issue of 5.0% per annum, subject to there being sufficient capital in the Company. The 2025 ZDPs are qualifying investments for ISAs.
Company Details
Investment Manager Premier Fund Managers Limited (“PFM Limited”), is a subsidiary of Premier Miton Group plc (“PMI Group”). PMI Group had £13.9 billion of funds under management at 31 December 2021. PFM Limited is authorised and regulated by the Financial Conduct Authority (“FCA”). The Company’s portfolio is managed by James Smith. Premier Portfolio Managers Limited (“PPM”) is the Company’s Alternative Investment Fund Manager. PPM has delegated the portfolio management of the Company’s portfolio of assets to PFM Limited.
Management Fee 0.75% per annum of the gross assets under management, charged 40% to revenue and 60% to capital.

Company Highlights

for the year to 31 December 2021

31 December 31 December
2021 2020 % change
Total Return Performance
Total Assets Total Return(1)# 19.8% 16.5%
S&P Global Clean Energy Index(2) (GBP) (22.5%) 135.3%
Ongoing charges(3)# 1.65% 1.76%
Ordinary Share Returns
Net Asset Value per Ordinary Share (cum income)(4) 210.60p 173.48p 21.4%
Mid-market price per Ordinary Share(2) 196.50p 157.50p 24.8%
Discount to Net Asset Value# (6.7%) (9.2%)
Revenue return per Ordinary Share 7.43p 9.32p (20.3%)
Net dividends declared per Ordinary Share 7.00p 10.20p (31.4%)
Net Asset Value Total Return(5)# 26.5% 29.5%
Share Price Total Return(2)# 30.7% 31.0%
2025 Zero Dividend Preference Share Returns
Net Asset Value per Zero Dividend Preference Share(4) 105.44p 100.43p 5.0%
Mid Market Price per Zero Dividend Preference Share(2) 107.50p 103.50p 3.9%
Premium 2.0% 3.1%
Hurdle Rates(6)#
Ordinary Shares
Hurdle rate to return the share price of 196.50p (2020: 157.50p) at 28 November 2025 0.7% 0.9%
Zero Dividend Preference Shares
Hurdle rate to return the redemption share price for the 2025 ZDPs of 127.6111p at 28 November 2025 (23.1%) (16.2%)
Balance Sheet
Gross Assets less Current Liabilities £53.4m £45.7m 17.0%
Zero Dividend Preference Shares (£15.0m) (£14.3m) (5.0%)
Equity Shareholders’ Funds £38.4m £31.4m 22.4%
Gearing(7)# 39.0% 45.5%
Zero Dividend Preference Share Cover (non-cumulative)(8)# 2.74x 2.32x

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

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

(2) Source: Bloomberg.

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

(4) Articles of Association basis.

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

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

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

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

Chairman’s Statement

for the year to 31 December 2021

Introduction

2021 was a year of consolidation for the Premier Miton Global Renewables Trust PLC (the “Trust” / “PMGR”) following the change of investment policy, change of name, and the refinancing of ZDP shares in late 2020. I am pleased to report that performance has remained strong in this first full year of the new renewable energy focused portfolio, with shareholders receiving a high return, at a similar level to that in 2020. The total return on net assets to ordinary shareholders, including dividends, was 26.5% (2020: 29.5%). The NAV per Ordinary Share increased by 21.4% to close the year at 210.60p. Based on the share price, ordinary shareholders saw a total return including dividends of 30.7% (2020: 31.0%).

ZDP shareholders have likewise benefitted from improved asset cover.

The global economy remains under a degree of restriction, although this is less stringent than that seen in 2020. However, while Covid risks have diminished, geopolitical risks increased sharply in the early part of 2022, with the Russian invasion of Ukraine. I am sure all shareholders will share my horror at this unjustified attack on a sovereign nation state, and the resulting humanitarian crisis. Our thoughts are with the people of Ukraine, and we hope for a swift resolution to this needless conflict.

The portfolio has no direct Russian investments, although it has one investment, Finnish nuclear and hydro generator Fortum, which has material assets in Russia. Fortum’s share price fell heavily in response to the invasion, and the Manager has reacted by reducing the holding substantially.

It is difficult to assess the full economic impacts at this stage, however unless there is a negotiated and peaceful resolution, these are likely to be with us for many years. We anticipate heightened volatility in both equity and commodity markets, with the possibility of substantially higher energy prices. Further, we believe that the war in Ukraine will increase global inflationary pressures.

It is clear that current levels of inflation are entirely inconsistent with existing levels of interest rates. The financial markets expect inflation to moderate in 2022, and consistent with this, central banks have signalled a very gradual normalisation of monetary policy. Should this scenario prove to be optimistic, with inflation remaining at higher than targeted levels, it is likely that interest rates will need to be increased at a faster pace than currently indicated. The reaction of bond markets and the potential for higher yields is thus perhaps the key economic risk faced by equity markets in 2022. This may also change the pattern of returns within equity markets, with value sectors likely to out-perform growth in such a scenario.

Performance

The total assets total return, measuring the return on the portfolio including all income and costs, was 19.8% (2020: 16.5%).

Whilst the portfolio performance measured at the total assets level was ahead of that achieved in 2020, the net asset return was slightly below. This results from the refinancing in November 2020 of the Trust’s ZDP shares, on a substantially smaller scale, and consequent lower level of gearing during 2021 within PMGR’s structure.

As noted, in October 2020, shareholders approved a change in the Trust’s investment policy whereby the previous focus on energy and water, as well as other infrastructure sectors, was replaced by the new policy to invest in the renewable energy and other sustainable infrastructure sectors. Consequently, following a review, the Board has decided to change the Trust’s performance benchmark from the FTSE Global Core Infrastructure 50/50 Index to the S&P Global Clean Energy Index (the “Index”). In future we will also refrain from directly quoting or disclosing any indices other than the S&P Clean Energy Index in order to be as cost efficient as possible. Whist far from an exact match to PMGR’s portfolio, as explained below, we feel that this index is, for the moment, the best we can use to compare how we are performing within the “green economy”. We will keep this matter under review.

PMGR’s portfolio is differentiated from the Index, as the Trust remains primarily an infrastructure investor, with an emphasis on contracted and regulated underlying revenues. PMGR focusses its investments on companies that own renewable energy generation facilities, and other associated infrastructures such as energy storage and electricity transmission grids. The Index, while also containing these companies, has exposure to industrial sectors such as companies manufacturing renewable energy equipment, for instance wind turbines and solar panels. The Index also has material weightings to more “tech” oriented areas such as semiconductors and hydrogen. The Trust has only marginal exposure to these companies.

PMGR’s performance can therefore be expected to be rather different from that of the Index in any given year. In 2021, the first year of comparison to the new Index, I am pleased to report that PMGR’s total assets total return was over 40% ahead of the Index, which recorded a negative return in sterling of 22.5%.

This out-performance is a result of several factors. Firstly, while approximately half of holdings fell in value during the year, in what was a generally weak market for renewable energy shares, this was more than offset by very strong performances among some of the portfolio’s larger holdings. In particular, the larger Chinese investments recorded very strong gains, as did a number of the UK and European investments. The Manager’s stock selection, particularly among the portfolio’s larger positions, worked well in the year. Secondly, as noted above, the Index has high weightings to technology and equipment manufacturing, neither of which performed particularly well. This may be a hangover from an exceptional 2020, as well as from cost pressures on raw materials acting to reduce margins. Thirdly, the out-performance in the final quarter was particularly marked, and we can attribute much of this to the market rotating out of more highly rated growth and into more value-oriented investments. This move favoured the Trust but was to the detriment of the Index.

Comparing to markets more generally, the portfolio was approximately in line with the global equity market. This is a solid result considering the very sharp under-performance of the renewable and clean energy sector.

Portfolio positioning

Investment activity in 2021 was substantially lower than in the prior year, which was led by 2020’s portfolio and capital structure changes.

During the year, the Manager partially divested from US yield companies (renewable companies which buy constructed assets and then hold them for the long term paying out the majority of cash-flow to investors as a dividend), which typically have very long fixed price contracts making their valuations more sensitive to changes in interest rates. Investment in the UK, which is now the portfolio’s largest geographic exposure, has increased as the Manager sought to take advantage of the high power price environment; – UK renewable companies have higher than average exposure to power prices.

Emerging market exposure remains modest, and is focused mainly on China, which benefits from a combination of high growth, a stable regulatory environment, and attractive valuations. Exposure to China increased in the year, as investment gains more than offset any disposals from the portfolio.

The portfolio retains a small exposure to Indian coal generator OPG Power Ventures, although at a much reduced level following ongoing sales throughout the year as well as a lower share price. This is classed as “Liquidation Portfolio” within the segmental allocation, which will be disposed of over time whenever it is opportune to do so.

Capital structure, Gearing, and ZDP Shares

Following the good performance, Gearing fell from 45.5% at December 2020 to 39.0% at December 2021. Also having a beneficial effect on Gearing was the issuance of 150,000 new Ordinary Shares in February and April, accounting for 0.8% of the enlarged number of shares in issue. The Ordinary Shares were issued at a premium to their Net Asset Value, avoiding dilution to existing shareholders.

The Trust’s ZDP Shares continued to trade at a slight premium to their accrued Net Asset Value, benefitting from increased Cover, which rose from 2.32x at December 2020 to 2.74x at December 2021. No new ZDP Shares were issued during the year. Note that “Gearing” and “Zero Dividend Preference Share Cover” are Alternative Performance Measures; please see pages 76 to 80 for definitions and calculations.

Income and dividends

As a result of the new 2025 ZDP Share issue being substantially smaller than the ZDP Share that matured in November 2020, a net repayment of £16.0 million was made in November 2020. As explained in last year’s annual report, this reduced the overall size of the Company and hence the income generating capacity, so leading to reduced net income during 2021.

Revenue Return per Ordinary Share in 2021 was 7.43p, a reduction of 20.3% on 2020, and is broadly consistent with the reduction in portfolio size offset to a smaller extent by underlying dividend growth.

In February 2021, following a review, the Board indicated that it expected sufficient 2021 revenue earnings to support a dividend of at least 7.0p per share. In line with this, your Board declared three interim dividends for 2021 of 1.75p per Ordinary Share during the year. The Board has now declared a fourth interim dividend of 1.75p, to bring the total dividend for the year to 7.0p, fully covered by revenue earnings. This represents a reduction of 3.20p, or 31.4% on the 10.20p dividend paid in respect of 2020. The fourth interim dividend will be paid on 31 March 2022 with the shares to be marked ex-dividend on 10 March 2022.

While we understand that shareholders may be disappointed with a lower dividend, it should be understood that this is offset by lower financing charges from a reduced ZDP issue size, equivalent to a saving of £0.61 million or 3.3p per Ordinary Share in 2021 as compared to 2020. ZDP finance costs are taken against capital, so of themselves, do not affect the level of revenue earnings. Underlying income from the portfolio remains healthy.

Shareholder relations

The Company’s AGM will be held on 28 April 2022 at the offices of Premier Fund Managers Limited, Eastgate Court, High Street, Guildford, Surrey, GU1 3DE, at 12.15p.m. when a presentation will be given. Attending shareholders will also have the opportunity to meet the Board and Manager.

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

Environmental, Social, Governance

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

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

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

As I have mentioned above, there is one remaining legacy holding which does not comply with the new investment policy, Indian coal fired power generator OPG Power Ventures. This represented 1.3% of the portfolio at December 2021. The Manager will seek to exit this position over time, subject to market trading volumes.

Outlook

Your Company’s portfolio faces a combination of both tailwinds and headwinds in coming years.

On the positive side are the established long-term trends working in its favour, in particular the electrification of the global economy whereby electricity increasingly displaces the use of fossil fuels in heating, transportation and industrial processes. In addition, a combination of policy and cost factors should ensure that renewably-generated electricity continues to increase its market share over electricity generated using fossil fuels.

2021 has seen a significant increase in the cost of fossil fuels used to generate electricity. Of most concern to Europeans is the significant increase in the price of gas, which has in turn driven up electricity prices, and thereby further increased the cost advantages of renewable generation. The cost of carbon emissions has also risen, and carbon pricing is being mandated in new locations including the US and China. While fossil fuel prices may pull back over the next few years, we believe carbon pricing will become the main tool by which the external cost of fossil fuels is recognised, and this has positive implications for growth in the renewable energy sector.

The main headwinds we expect in 2022, in common with the rest of the market, are the ending of ultra-accommodating monetary policy, and increasing interest rates. Markets already assume higher rates, but in the event that rates are required to increase at a faster pace on the back of stubbornly higher inflation, then it is possible that both equity and bond markets could face difficulties.

Having said this, given the very high levels of government debt around the world, we think central banks will have little option but to ensure that real yields remain negative, with inflation ahead of nominal rates. This will be a positive background for equity investment.

Politically and economically, China looks to be a higher risk than it has been for some time. The property sector is over-extended and its domestic economy appears to be slowing. In addition, its underlying environmental problem of an over-reliance on fossil fuels could become a future financial headache as its export destinations begin to impose carbon border adjustment tariffs on its exports. We expect therefore that China’s renewable energy sector will remain attractive; however, this is an area your Board and Manager will keep under review.

The Russian invasion of Ukraine has caused a sharp increase in market volatility. Despite this, I believe that the portfolio is relatively well placed in comparison to equity markets generally. Renewable energy should see political goodwill as, being a domestic source of energy, it enhances security of supply. However, should energy prices become uncomfortably high, there is a danger of direct political intervention. The Manager and Board are monitoring the situation with the aim of keeping risk within appropriate levels, while at the same time being responsive to investment opportunities.

Overall, we feel that the number of attractive investment opportunities in the renewable energy sector will continue to grow, and that prospects for the Company therefore remain encouraging.

Gillian Nott OBE

Chairman

8 March 2022

Investment Manager’s Report

for the year to 31 December 2021

Performance overview

PMGR’s portfolio performed very well in 2021, producing a strong return for shareholders. The Total Assets Total Return was 19.8%, taking into account all operating and trading costs.

Notwithstanding the Trust’s performance, it was not a good year for renewable and clean energy investment. The euphoria seen in the second half of 2020 gave way to concerns over increased interest rates and bond yields, which hurt the more richly valued clean technology areas. Higher commodity prices pushed up costs for equipment manufacturers, such as the wind turbine companies, putting pressure on margins.

Fortunately, your Company has relatively little exposure to these issues, and the portfolio remains predominantly based on infrastructure rather than capital goods or technology. Performance was strong as the portfolio benefitted from continued underlying growth, together with higher energy prices giving a boost to those generators having market exposure for their electricity generation.

Over the course of the year, PMGR’s performance, noted above, was 42.3% ahead of the S&P Global Clean Energy Index which returned a negative 22.5% (Source: Bloomberg, GBP adjusted).

Market review

While the sector’s performance may have been weak, the underlying growth drivers for clean and renewable energy remain very strong.

However, perhaps the most significant development over 2021 was the sharp increase in energy prices, and in particular natural gas. International gas prices rose as the global economy re-opened, combined with higher demand in Asia and especially China. Further, European gas imports during summer were insufficient to replenish storage to desired levels for winter. The UK imports approximately half its natural gas needs, exposing it to movements in international prices therefore.

Not only does this increase costs for users of gas, it also leads to higher electricity prices as in many places, and in particular Europe, gas generation is predominantly responsible for setting the price of electricity.

This was seen clearly in the UK, where wholesale electricity prices increased by 210.0% from £67.75/MWh in December 2020 to £210.00/MWh in December 2021 (Source Bloomberg, baseload forward one month). Europe experienced similar increases, but the US much less so as it has abundant domestic gas resources.

Power market forecasters assume that the low cost of generating electricity from renewable sources will lead to lower electricity prices over the long-term. However, in the short term at least, the revenues available to those renewable generators with power market exposure have increased. Those that sell under long-term fixed price contracts, which is in fact the most common model for selling renewably generated power, will not see much of a benefit.

Another positive development in the year is the increase in the price of carbon emissions. European carbon allowances rose 144.8% from Euro 32.94/tonne at December 2020 to Euro 80.65/tonne by December 2021. Fossil fuel generators pay for the carbon emitted when generating electricity and electricity prices therefore reflect higher carbon prices. Renewable generators are able to benefit from the higher price of carbon without bearing the higher emission cost.

The costs of generating renewable energy have fallen steadily over recent years. Unfortunately increased commodity prices, plus higher shipping and construction costs, mean that this trend will, in all probability, prove to have stalled in 2021. However, we expect that stronger electricity prices will enable new installations to offset higher capital costs and maintain targeted investment returns.

Finally, renewable energy remains well placed politically. The COP26 conference, held in November, resulted in 90% of global GDP now being covered by a commitment to net zero carbon emissions. The associated policies to accelerate the transition away from the use of fossil fuels, and toward increased electricity use (either directly or indirectly through an energy carrier such as hydrogen), implies a substantial increase in renewable electricity generation for years to come.

Portfolio segmentation

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

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

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

Renewable energy developers offer potentially higher returns as they take on development and construction risk. Yieldcos prefer to remove these by acquiring recently constructed projects and then financing and operating them as efficiently as possible. They forgo developer margin in return for greater visibility and the benefit of having their entire capital invested in productive assets.

PORTFOLIO SECTOR CLASSIFICATION 2021

2021 2020
Renewable energy developers 28.64% 20.11%
Yieldcos & funds 25.69% 31.89%
Renewable focused utilities 14.58% 11.90%
Biomass generation and production 7.30% 10.46%
Energy storage 6.90% 4.72%
Waste to energy 6.55% 5.33%
Electricity networks 5.03% 4.21%
Renewable technology and service 2.79% 4.66%
Liquidation portfolio 1.32% 3.15%
Carbon markets 1.20% 0.52%
Renewable financing and energy efficiency 0.00% 3.04%

Renewable Energy Developers

The Trust’s investment in renewable energy developers was successful in the year, and at the end of the year was the portfolio’s largest segmental exposure. In particular, the Chinese renewable companies were exceptionally strong. China Suntien Green Energy increased its renewable output by 36.5% during 2021, and recorded a 67.2% increase in attributable earnings for the first six months of the year. Suntien’s share price responded well, gaining 155.5%, and was the Trust’s largest holding by the year end. Likewise, China Longyuan Power, which is a larger, more mature business, recorded strong, if less spectacular, growth in wind energy generation of 17.4% in 2021 with an increase in attributable earnings of 36.3% recorded for the first half. Its share price gained 134.2% in 2021.

We would be surprised to see such strong share price movements repeated in 2022, but we expect to see continued growth. Declining capital costs mean that Chinese renewable investment is now made on a subsidy free basis, and with China still heavily reliant on coal, we expect policy to remain supportive. Industry consultant Bloomberg New Energy Finance believes that by 2030 China will have cumulative wind capacity more than three times the size of the USA, being the next largest market.

In Europe, RWE has made excellent progress on its transmission from an operator of mainly fossil fuel plants, to being a high growth renewables company. In November, RWE announced an intention to invest Euro 50 bn. (pre any divestments of assets) on new renewable energy assets out to 2030, giving investors a highly visible growth path. RWE’s shares gained 3.3% during the year.

Spain-based global renewables developer Acciona completed the separate listing of a minority stake in renewable energy business, Acciona Energia. We elected to remain invested in the parent given the valuation discount implied by the renewables subsidiary. Renewables still account for the vast majority of Acciona’s value, with the remainder made up of infrastructure concessions plus a minority stake in wind turbine manufacturer Nordex. Like RWE, Acciona has ambitious growth plans, aiming to grow its generation capacity threefold by 2030. Acciona’s shares gained 44.0% in 2021.

Following an exceptional 2020, global renewable developer Northland Power’s shares fell 16.9% with the company seeing lower wind speeds and reduced output. Northland has several large European and Asian offshore wind projects under development, which should drive strong growth over next few years. During the year, we built a new position in Spanish-listed global solar developer Grenergy, which has a substantial growth pipeline in Europe and Latin America. Grenergy’s shares fell by 25.3% in 2021, although the timing of the investment meant PMGR’s stake was only 3.6% below book value at the year-end.

Yieldcos and Funds

The Trust’s investments in renewable energy yield companies, so successful in 2020, were far weaker in 2021. Their highly contracted and visible revenues makes them, in market parlance, “bond-proxies”, and they were out of favour from the prospect of rising inflation and higher interest rates. Weaker performance coupled with net divestment meant that the portfolio’s exposure to yieldcos fell from almost 32% at December 2020 to a little under 26% by the end of 2021.

In light of the changing economic circumstances during the year, we sold down US-listed investments and re-invested the proceeds into the UK. The revenue structure of most UK renewable yield companies is different from those of their US counterparts. In the UK, most on-shore assets receive an index-linked renewable obligation certificate, commonly known as a “ROC”, but are free to sell their power generation however they see fit. Most contract for a few years in advance, but retain an underlying exposure to future pricing, and also nearer-term if their offtake contracts are of a shorter duration. In the US and much of Europe, renewable assets usually sell all their power at pre-determined long-term prices. This may be to a local utility in the US or via a government feed in tariff in Europe, or more commonly of late, through a long-term contract with a corporate purchaser.

Thus, the UK renewable energy funds have an attractive inflation linkage, which should work well in the current environment. They also have a higher than average exposure to power markets, which have increased sharply as noted above. We believe that higher prices may last longer than anticipated. However, the UK funds, which produce regular net asset values on a per share basis, continue to reflect expectations of substantially lower long-term electricity prices.

Greencoat UK Wind, which invests in both on and offshore wind projects, became the largest holding in the segment by the end of the year. Its sales contracts are short-term in duration, and it should therefore benefit from higher electricity pricing. However, given subdued long-term electricity forecasts, its NAV and share price, were relatively muted, with the shares gaining 4.9%. Also in the UK, the positon in the NextEnergy Solar Fund, which yields 7%, was increased as we believe it will also benefit from higher than forecast long-term electricity prices.

In the US, Atlantica Sustainable Infrastructure’s shares fell 5.8%, offset by a Clearway Energy (A) shares, which gained 13.3%. Asset growth at Clearway made up for relatively weak US renewable generation on lower wind speeds in 2021. We reduced substantially the position in Transalta Renewables, which was the Trust’s second largest holding at December 2020. Transalta’s shares fell by 13.8% on a combination of weaker output and the prospect of higher yields.

PORTFOLIO GEOGRAPHICAL ALLOCATION

2021 2020
United Kingdom 27.92% 20.73%
China 19.11% 14.12%
Global 19.10% 17.59%
Europe (excluding UK) 17.74% 16.52%
North America 12.66% 26.22%
Latin America 2.14% 1.68%
India 1.33% 3.15%

PORTFOLIO MARKET CLASSIFICATION PROFILE

2021 2020
Large Cap (> £10bn) 24.9% 17.4%
Medium Cap (£2bn to £10bn) 44.6% 40.9%
Small Cap (£250m to £2bn) 20.9% 23.1%
Micro Cap (< £250m) 9.6% 18.6%

Other segments

Within Renewable Focused Utilities, Finnish nuclear and hydro utility Fortum performed well. Fortum’s shares gained 37.0% on the back of higher electricity and carbon prices. SSE’s share price increased by 9.9% as it was the subject of speculation regarding a break up of its regulated utility and renewable divisions (a move we believe would be detrimental at the present time). In North America, Algonquin Power & Utilities’ share price fell 12.8% despite encouraging financial results.

In the biomass segment, Drax Power delivered an exceptional 61.3% gain in its share price. Drax expanded its upstream pellet business with the acquisition of Canadian biomass pellet producer Pinnacle Renewable Energy, which was also owned in the fund. Drax should be another beneficiary of higher power prices. Further Drax has the prospect of “negative carbon emissions” through its plans for carbon capture and storage. Within the energy transmission segment, National Grid’s shares gained 22.5%. The company is in the process of divesting gas transportation assets, and expanding into electricity distribution, a move that we support.

Long-term holding, Chinese waste to energy company China Everbright Environment, again recorded exceptional growth and strong earnings. Unlike previous years, its shares responded positively, gaining 42.9%.

The Energy Storage segment performed well delivering a combination of capital growth and a high level of income. The largest holding, the Gresham House Energy Storage Fund, saw its shares gain 16.0%.

Finally, the Trust’s technology shares, Ocean Sun, which has a floating solar technology, and Fusion Fuels, which produces hydrogen directly from solar, after delivering strong returns in 2020, performed poorly. Their shares fell 67.0% and 55.1% respectively. We believe this reflects market trends rather than the businesses themselves, both appear to be on track with their respective development plans.

PORTFOLIO CONCENTRATION

2021 2020
10 largest investments 52.53% 49.81%
11th to 20th 27.88% 30.95%
21st to 30th 12.56% 13.56%
30th onwards 7.03% 5.68%

Currency and hedging

The Trust made currency hedging gains of £0.4 million over the year. With Euro area monetary policy likely to remain loose compared to the UK and the US, we believe the main currency risk in the early part of 2022 is the Euro. We aim to have sterling exposure, through either investment or hedging back FX denominated assets into sterling, of at least equal to the size of the ZDP share issue, such that the Trust does not run a geared short sterling position. No equity market hedging was undertaken in the year.

Outlook

The portfolio has now seen three consecutive years of very strong returns. We believe the move to a dedicated renewable energy strategy has opened up new investment opportunities, having the potential to offer further performance in coming years.

As ever, we seek balanced returns including both income and growth oriented investments. While the majority of underlying portfolio revenue will remain generated from contracted and regulated investments, opportunities now exist, we believe, to generate additional returns through accepting some merchant pricing risks through a limited number of holdings.

Higher interest rates remain a risk. However, recent share price movements seen in several holdings already appear to have discounted substantially higher yields. Earnings growth remains robust, and this should in turn lead to higher dividend income over time.

James Smith

Premier Fund Managers Limited

8 March 2022

Investment Portfolio

at 31 December 2021

Company Activity Country Value
£000
% total
investments
Ranking
2021
Ranking
2020
China Suntien Green Energy Renewable energy developers China  4,024 7.6 1 6
China Everbright Environment Waste to energy China  3,454 6.5 2 3
Drax Group Biomass generation and production United Kingdom  3,146 6.0 3 4
RWE Renewable energy developers Europe (ex. UK)  2,849 5.4 4 13
National Grid Electricity networks Global  2,650 5.0 5 9
Greencoat UK Wind Yieldcos & funds United Kingdom  2,611 4.9 6 23
NextEnergy Solar Fund Yieldcos & funds United Kingdom  2,434 4.6 7 21
Fortum Renewable focused utilities Europe (ex. UK)  2,266 4.3 8 12
Algonquin Power and Utilities Renewable focused utilities North America  2,135 4.0 9 5
Atlantica Sustainable Infrastructure Yieldcos & funds Global  2,112 4.0 10 1
China Longyuan Power Renewable energy developers China  2,066 3.9 11 15
Gresham House Energy Storage Fund Energy storage United Kingdom  1,943 3.7 12 10
Clearway Energy ‘A’ Yieldcos & funds North America  1,730 3.3 13 8
Acciona Renewable energy developers Europe (ex. UK)  1,623 3.1 14 17
SSE Renewable focused utilities United Kingdom  1,483 2.8 15 7
Grenergy Renovables Renewable energy developers Global  1,261 2.4 16
TransAlta Renewables Yieldcos & funds North America  1,182 2.2 17 2
Foresight Solar Fund Yieldcos & funds United Kingdom  1,166 2.2 18
Iberdrola Renewable focused utilities Global  1,136 2.2 19
Northland Power Income Fund Renewable energy developers Global  1,105 2.1 20 19
Harmony Energy Income Trust Energy storage United Kingdom  990 1.9 21
New Energy Solar Yieldcos & funds North America  801 1.5 22 5
MPC Energy Solutions Yieldcos & funds Latin America  768 1.5 23
Gore Street Energy Storage Fund Energy storage United Kingdom  705 1.3 24 33
OPG Power Ventures Liquidation portfolio India  693 1.3 25 14
Avangrid Renewable focused utilities North America  662 1.3 26 30
Greencoat Renewable Yieldcos & funds Europe (ex. UK)  559 1.1 27 27
China Everbright Greentech Biomass generation and production China  528 1.0 28 26
Eneti Renewable technology and service Global  474 0.9 29
7C Solarparken Renewable energy developers Europe (ex. UK)  435 0.8 30 38
Seaway 7 Renewable technology and service Global  392 0.7 31 34
Omega Energia Renewable energy developers Latin America  360 0.7 32 25
Fusion Fuel Green (incl. warrants) Renewable technology and service Europe (ex. UK)  356 0.7 33 28
SparkChange Physical Carbon Carbon markets Europe (ex. UK)  333 0.6 34
Enefit Green Renewable energy developers Europe (ex. UK)  331 0.6 35
KS Global Carbon Strategy Carbon markets Global  301 0.6 36 37
Ocean Sun Renewable technology and service Global  247 0.5 37 18
Solaria Energía y Medio Ambiente Renewable energy developers Europe (ex. UK)  244 0.5 38 24
Atrato Onsite Energy Renewable energy developers United Kingdom  236 0.4 39
Scatec Renewable energy developers Global  217 0.4 40
Bonheur Renewable energy developers Europe (ex. UK)  181 0.4 41
Pacifico Renewables Yieldcos & funds Europe (ex. UK)  172 0.3 42 35
Albioma Biomass generation and production Global  171 0.3 43
Innergex Renewable Renewable energy developers North America  162 0.3 44 36
52,694 99.8%
Unquoteds Activity Country Value
£000
% total
investments
PMGR Securities 2025 PLC ZDP subsidiary United Kingdom 50 0.1
PGIT Securities 2020 PLC (in liquidation) ZDP subsidiary United Kingdom 50 0.1
Total investments 52,794 100.0%

Review of Top Ten Holdings

at 31 December 2021

1. China Suntien Green Energy
Market cap: £5.1 billion
www.suntien.com
China Suntien develops and owns renewable energy assets and operates a natural gas distribution business, both centred on its home region of Hebei in Northern China. It has, however, expanded its renewables business nationally over recent years. In the first half of 2021, Suntien recorded a net profit increase of 67.2%, with 81.2% of earnings coming from renewable energy. Growth has been strong in recent years, with wind power generation increasing by 11.9% in 2020 and by 36.5% in 2021. Growth in 2021 was higher than would normally be expected, resulting from high wind speeds and the build out of new assets in 2020 to take advantage of the final qualification year for China’s renewable energy tariffs. This reflects the fact that renewables are now at, or below, cost parity with other forms of electricity generation in China, and new assets now sell power based on local grid and market pricing. We expect growth to moderate but remain high. Gas volumes have also been very strong, up 8.9% in 2020 and 13.6% in the first half of 2021. Suntien’s share price increased by 155.5% in 2021.

   

2. China Everbright Environment
Market cap: £3.7 billion
www.cebenvironment.com
China Everbright Environment is a leading waste-to-energy and wastewater treatment company operating in mainland China, which has delivered strong growth over several years as China seeks to reduce waste volumes being sent to landfill. During 2020, it managed to increase waste volumes treated by 36.1% and electricity production by 41.7%. During the first half of 2021, it recorded a further 37.0% growth in waste volumes, and 42.4% growth in electricity generated. In addition to its core waste treatment business, it also controls separately-listed subsidiaries specialising in wastewater treatment and biomass electricity generation. The increased business volumes allowed the company to deliver improved profits, with net earnings increasing by 28.4% in the first half of 2021. China Everbright Environment’s share price increased by 42.9% in 2021.

   

3. Drax Group
Market cap: £2.4 billion
www.drax.com
Drax Group operates the UK’s largest renewable energy facility, the Drax power station in Yorkshire, which it converted from burning coal to biomass pellets manufactured from sustainable wood waste. The facility benefits from UK subsidy schemes lasting through to 2027. Drax is also one of the world’s largest producers of biomass pellets from its facilities in the US, and following the acquisition of pellet business Pinnacle Renewable Energy in 2021, in Canada. This has diversified its upstream business, and increased Drax’s self-sufficiency in fuel. Further, the company is developing carbon capture and storage technology, which would enable the Drax power station to operate with negative carbon emissions. Drax’s shares rose by 61.3% in 2021.

   

4. RWE
Market cap: £20.3 billion
www.rwe.com
RWE is a German multi-national energy company, which is transitioning from fossil fuels to renewable energy. It has expanded rapidly in renewables over recent years, and has set out a capital programme to spend Euro 50 billion on green growth to 2030. RWE is one of the world’s largest developers of offshore wind. RWE has closed 12 GW of coal-fired power stations since 2012, and has agreed the progressive phase out of its remaining coal generation in coming years. RWE expects that earnings from its legacy coal and nuclear businesses should decline to a negligible level by 2023. RWE’s shares gained 3.3% in 2021.

   

5. National Grid
Market cap: £38.6 billion
www.nationalgrid.com
National Grid is the owner and operator of the UK’s high-tension electricity and gas transmission networks. Electricity transmission assets are increasingly important and complex infrastructure systems, essential to the delivery and growth of renewable energy. Grid is also taking the lead on issues such as high voltage rapid vehicle charging and offshore wind farm transmission. Grid’s US business has grown steadily over recent years, accounting for 27.6% of underlying operating profits in the six-month period to September 2021. Grid acquired UK electricity distribution company WPD during 2021, while at the same time announcing the intended disposal of its UK gas assets. This pivots the company more towards electricity and away from gas, in line with the long-term direction of the energy market, we believe. Grid’s share price increased by 22.5% in the year.

   

6. Greencoat UK Wind
Market cap: £3.3 billion
www.greencoat-ukwind.com
Greencoat UK Wind (“UKW”) is a UK-listed renewable energy investment company, owning both on and offshore wind farms. It operates as a yield company, buying constructed assets rather than taking development risk. UKW was active in issuing new equity capital during the year, raising gross proceeds of £648m and using these to expand its portfolio. UK renewable investment companies report financial statements as “investment entities” such that they do not consolidate their investments held through subsidiary companies. Instead, they account for investments on a fair value, rather than on a historic cost basis, and produce a net asset value figure reflecting current valuation. UKW’s NAV benefited from an improving electricity price, with a 9.2% increase in the NAV over 2021. UKW’s shares rose by 4.9% over the year, as well as paying a high dividend.

   

7. NextEnergy Solar Fund
Market cap: £598 million
www.nextenergysolarfund.com
NextEnergy (“NESF”) is a UK-listed renewable energy investment company, owning large-scale solar assets. During 2021, NESF diversified its investments, making its first investment into battery storage. It also made investments into a fund sponsored by NESF’s investment manager, NextEnergy Capital, which will expose NESF to international and earlier stage solar investments, and allows for potential co-investment and possibly enhanced returns for NESF. NESF’s share price fell by 4.9%, although the company’s high dividend yield resulted in a small, but positive, total return.

   

8. Fortum
Market cap: £20.2 billion
www.fortum.com
Fortum is a Finnish utility with large-scale hydro and nuclear generation. In addition, Fortum has a majority stake in German electricity generator Uniper. Fortum disposed of several large district heating businesses during the year, realising attractive prices. Capital is being reinvested into the renewables business. Fortum also has a sizable Russian business focused on gas fired generation and renewables, with Uniper also having a shareholding in the Nordstream 2 pipeline. Russia accounted for approximately 20% of group operating profit in 2021. Given the Russian exposure, Fortum’s shares fell sharply in February and March 2022, and in conjunction with sales of the position, the size of the holding has now been reduced substantially.

   

9. Algonquin Power & Utilities
Market cap: £7.2 billion
www.algonquinpower.com
Algonquin owns small to medium sized utilities in the Americas, and has a sizable and growing renewable business focused on North America. The company is executing a plan to spend $3.1bn on renewable investments and $6.3bn on utility investment over 2021-2025. The utility investment includes regulated “rate base” renewable energy investments within utility businesses, allowing for the closure of fossil fuel generation. Financial results were strong during 2021, benefitting from recent acquisitions of a water utility in Chile, and the electricity distribution company in Bermuda. In addition, Algonquin completed substantial new renewable assets, such as the 492 MW Maverick Creek wind farm in Texas. Despite this, Algonquin’s shares fell by 12.8% during the year.

   

10. Atlantica Sustainable Infrastructure
Market cap: £2.9 billion
www.atlantica.com
Atlantica Yield operates renewable energy plus some conventional thermal generation and electricity transmission assets. It operates as a yield company, its sponsor being Algonquin Power and Utilities Corp., a company also owned within the portfolio. Atlantica has a commitment to maintain at least 80% of gross earnings from low-carbon assets, and it sits in the first percentile of the Sustainalytics ESG rankings. Their assets are located in the US, Europe, South Africa and Latin America, and have a weighted average remaining contract length of 16 years, offering exceptional visibility. Strong cash flows have allowed the company to pay down project level debt and fund new investments. 2021 was an active year for the company, with the acquisition of a sizable US wind farm portfolio and a geothermal power plant in California. Despite reporting improved earnings and cash flows during the year, Atlantica’s share price fell by 5.8%.

Directors

Gillian Nott OBE – Chairman

Gillian Nott worked for 20 years in the energy sector including 13 years with BP. She went on to be CEO of ProShare, deputy chairman of the Association of Investment Companies and a non-executive director of the Financial Services Authority. She has also sat on the board of a number of investment and venture capital trusts. She is currently Chairman of Gresham House Renewable Energy VCT 1 PLC and the US Solar Fund plc. Mrs Nott was appointed as a non-executive director of the Company on 1 March 2016 and was appointed Chairman on 27 July 2018.

Melville Trimble – Chairman of the Audit Committee

Melville Trimble is a qualified accountant and a member of the Institute of Chartered Accountants in England and Wales, a fellow of the Chartered Institute of Securities and Investment and has spent much of his career as a corporate financier specialising in the financial sector. Through roles at Cazenove, Merrill Lynch and PwC, Mr Trimble was principal corporate adviser to more than 90 investment companies. He has been a director of three investment companies and also served on the board of the Association of Investment Companies for nine years, including as deputy chairman for three years, as chair of the audit committee for eight years and as a member of their technical committee. Mr Trimble was appointed non-executive director of the Company on 25 April 2019.

Victoria Muir – Chairman of the Remuneration Committee

Victoria Muir is a Chartered Director and a Fellow of the Institute of Directors. She is a distribution specialist and has worked in financial services, with a focus on asset management, for over 25 years. She was Global Head of Investor Relations at BlueBay Asset Management and Head of Client Account Management at Royal London Asset Management, where she held four executive directorships. She is a non-executive director of Schroder Income Growth Fund plc and chairman at Invesco Select Trust plc, as well as holding chair or non-executive director roles on other limited companies in the financial services sector. She was appointed non-executive director of the Company on 14 March 2018.

Investment Manager 

James Smith

James joined Premier Miton in June 2012, after spending fourteen years at Utilico, specialising in the global utilities, transportation infrastructure, and renewable energy sectors. During this time he gained extensive experience in both developed and emerging markets. He was previously a director at Renewable Energy Holdings PLC and Indian Energy Ltd. James is a Chartered Accountant and Barrister. James is supported by Premier Miton’s Global Equity team and the firm’s head of Responsible Investing.

Head of Investment Trusts

Claire Long

Claire joined Premier Miton in December 2008, and until the end of 2019 was co-manager of the Trust. Previously she ran a UK smaller companies fund at Rothschild Asset Management after spending four years at Foreign and Colonial where she covered a range of markets, including the UK and Japan. In January 2020 she assumed the role of head of Investment Trusts at Premier Miton, where she oversees the group’s closed end funds business. She is an Associate of the CFA UK.

Strategic Report

for the year ended 31 December 2021

The Directors submit to the shareholders their Strategic Report, Directors’ Report and the Audited Financial Statements of the Company for the year ended 31 December 2021.

Business Model and Strategy

Business and tax status

The Company is an investment trust and its principal activity is portfolio investment. In the opinion of the Directors, the Company has conducted its affairs during the period under review, and subsequently, so as to maintain its status as an investment trust (see page 18 for tax description). This allows the Company to obtain an exemption from paying taxes on the profits made from the sale of its investments. Investment trusts offer a number of other advantages for investors, including access to investment opportunities that might not be open to private investors and to professional stock selection skills at low cost.

The Company is an investment company as defined in Section 833 of the Companies Act 2006. The Company is not a close company for taxation purposes.

High income

The full year dividend for 2021 totalled 7.0p (10.2p for 2020) representing a yield of 3.56% on the year end share price.

The chart on page 3 shows the annual dividends paid by the Company over the past five years.

Long term growth in capital value

The asset value of the Company’s portfolio will be heavily influenced by performance of the renewable energy sector, other sustainable infrastructure sectors and global stock markets.

At a General Meeting held on 9 October 2020, an ordinary resolution was passed to amend and restate the Company’s investment objective and policy to read as follows:

Investment objective

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

Investment policy

The investment policy of the Company is that, in normal market conditions, the portfolio of the Company should consist primarily of a diversified portfolio of equity and equity-related securities of companies operating in the renewable energy sector, as well as other sustainable infrastructure investments. There are no restrictions on the proportion of the portfolio of the Company which may be invested in any one geographical area or asset class. The Company may also invest in investment companies provided they themselves invest in renewable energy and other sustainable infrastructure, subject to the investment restrictions below.

There are no borrowings under financial instruments or the equivalent of financial instruments but investors should be aware of the gearing effect of ZDP shares within the Group’s capital structure. The Company’s policy is not to employ any gearing through long-term bank borrowing. The Group can, however, employ gearing through the issue of ZDP shares by PMGR Securities 2025 PLC. The Group is not subject to a maximum level of such gearing save that the number of ZDP shares that may be issued is limited by the applicable cover test in respect of those ZDP shares.

The Company will not:

(a) invest more than 15 per cent. of the Company’s assets, at the time of acquisition, in securities issued by any investee company;

(b) invest more than 10 per cent., in aggregate, of the value of its gross assets at the time the investment is made in other listed closed-ended funds, provided that this restriction does not apply to investments in any such closed-ended funds which themselves have stated investment policies to invest no more than 15 per cent. of their total assets in other listed closed-ended funds;

(c) invest more than 15 per cent. of its gross assets in listed closed-ended funds, except that this restriction will not apply to listed closed-ended funds that invest predominantly in physical assets;

(d) invest in open ended collective investment schemes, except that this restriction will not apply to exchange traded funds, open ended money market funds or other funds investing exclusively in shortdated fixed income securities;

(e) invest more than 15 per cent. of its gross assets in unquoted securities;

(f) expose more than 20 per cent. of its gross assets to the creditworthiness or solvency of any one counterparty (including the counterparty’s subsidiaries or affiliates);

(g) invest in physical commodities;

(h) cross-finance between the businesses forming part of its investment portfolio including provision of undertakings or security for borrowings by such businesses for the benefit of another;

(i) operate common treasury functions as between the Company and an investee company; or

(j) conduct any significant trading activity.

In addition to the above restriction on investment in a single company the Board seeks to achieve a spread of risk in the portfolio through monitoring the country and sector weightings of the portfolio.

There will be a minimum of twenty stocks in the portfolio.

The Directors meet with the Investment Manager regularly to discuss the portfolio. The Investment Manager prepares monthly investment updates for the Directors’ consideration, together with other ad-hoc reports as requested by the Board.

Viability statement

The Directors have assessed the viability of the Company over a three year period, taking into account the Company’s position at 31 December 2021.

A period of three years has been chosen for the purposes of the assessment of viability as the Board believes that this reflects a suitable time horizon for reviewing the Company’s circumstances and strategy, taking into account the investment policy, liquidity of investments, potential impact of economic cycles, nature of operating costs, dividends and the availability of funding. In its assessment of the viability of the Company, the Directors have carried out a robust assessment of the Company’s emerging and principal risks detailed on pages 18 to 20 and in particular:

(i) The potential for a fall in value of the investment portfolio.

(ii) Potential changes in either the Company’s investment or operating environment.

(iii) The Company’s ability to represent an attractive investment, including the potential for Company’s shares to trade at a level close to Net Asset Value, to pay an attractive level of dividend, and maintain acceptable levels of Gearing and Zero Dividend Preference Share Cover.

(iv) The operational resilience of service providers and their ability to fulfil their obligations to the Company as many shift from the working from home model whilst lockdown measures applied to more hybrid operations.

(v) Looking beyond the three-year horizon, the Board is conscious that there will be a ZDP maturity and a continuation vote in 2025. Therefore, testing calculations performed by the Fund Manager illustrating the effects on Gearing and Zero Dividend Preference Share Cover given specified reductions in value of the portfolio included:

a) the Company’s ability to repay the final capital entitlement of the ZDP Shares on 28 November 2025;

b) the potential for a fall in the value of the investment portfolio; and

c) the impact on the Company should the shareholders vote not to pass the continuation vote scheduled to take place at the 2025 annual general meeting of the Company, which would oblige the Directors to follow the provisions in the Articles of Association and put forward proposals to the effect that the Company would be wound up, liquidated, reorganised, unitised or to find some other suitable solution that would be satisfactory to the shareholders.

The Directors also considered the Company’s income and expenditure projections and took into account the fact that the Company’s investments principally comprise liquid securities listed on recognised stock exchanges.

Based on the assessment undertaken as outlined above, the Directors confirm that they have a reasonable expectation that the Company will be able to continue in operation and to meet its liabilities as they fall due over the three year period to December 2024.

Return per share – basic

Total return per Ordinary Share is based on the net total gain on ordinary activities after taxation of £8,216,000 (31 December 2020: net total gain £7,006,000).

These calculations are based on the weighted average number of 18,202,903 Ordinary Shares in issue during the year to 31 December 2021 (2020: 18,088,480).

The return per Ordinary Share can be further analysed between revenue and capital as below:

Year ended
31 December
2021
Pence per
Ordinary Share
Year ended
31 December
2021
£000
Year ended
31 December
2020
Pence per
Ordinary Share
Year ended
31 December
2020
£000
Net revenue return 7.43p 1,352 9.32p 1,685
Net capital gain 37.71p 6,864 29.41p 5,321
Net total gain 45.14p 8,216 38.73p 7,006

The basic returns per share are equivalent to the fully diluted returns per share. Full details can be found in note 18 on page 68.

Dividends

The following dividends were paid during the year:

Payment date Dividend pence
(net per share)
Fourth Interim for the year ended 31 December 2020 31 March 2021 2.70p
First Interim for the year ended 31 December 2021 30 June 2021 1.75p
Second Interim for the year ended 31 December 2021 30 September 2021 1.75p
Third Interim for the year ended 31 December 2021 31 December 2021 1.75p

Subsequent to the year end but in respect of the year ended 31 December 2021 the Directors have declared a fourth interim dividend of 1.75p, payable on 31 March 2022 to members on the register at the close of business on 11 March 2022. The shares will be marked ex-dividend on 10 March 2022. This dividend relates to the year ended 31 December 2021 but in accordance with International Financial Reporting Standards, it is recognised in the period in which it is paid. Further dividend details can be found in note 7 on page 63.

Net asset value

The net asset value per Ordinary Share, including revenue reserve, at 31 December 2021 was 210.60p based on net assets as at 31 December 2021 of £38,410,000 divided by number of Ordinary Shares in issue of 18,238,480 (31 December 2020: 173.48p). The net asset value of a ZDP Share at 31 December 2021 was 105.44p based on the accrued capital entitlement as at 31 December 2021 of £14,990,000 divided by the number of ZDP shares in issue of 14,217,339.

Alternative Investment Fund Management Directive (“AIFMD”)

The Company appointed Premier Portfolio Managers Limited (“PPM”) to act as its Alternative Investment Fund Manager (“AIFM”) pursuant to an Alternative Investment Fund Management Agreement entered into by the Company and the AIFM on 20 January 2015 (the “AIFM Agreement”) as amended and restated from time to time.

Up to and throughout 2020, the Manager has been entitled to receive a fixed fee of £20,000 per annum in respect of its appointment as AIFM. From 2021 the Manager provides AIFM services within the management fee.

The Company and PPM also entered into a depositary agreement with Northern Trust Investor Services Limited (“NTISL”) pursuant to which NTISL was appointed as the Company’s depositary for the purposes of AIFMD. Details of the change in depositary can be found on page 26.

In accordance with AIFMD regulations the Company has published a pre investment disclosure document which can be found on the Company’s area on Premier Miton’s website at: www.globalrenewablestrust.com.

PRIIPs KIDs

The Company has published a Key Information Document (“KID”) in compliance with the Packaged Retail and Insurance-based Investment Products (“PRIIPs”) Regulation. KIDs for the Ordinary and the ZDP Shares can be found on the Company’s area on Premier Miton’s website at: www.globalrenewablestrust.com.

The Company is not responsible for the information contained in the KID. The process for calculating the risks, costs and potential returns are prescribed by regulation. The figures in the KID may not reflect the expected returns for the Company and anticipated returns cannot be guaranteed.

Foreign Account Tax Compliance Act (“FATCA“)

The Company has registered with the US Internal Revenue Service as a Reporting Financial Institution under the FATCA legislation.

Investment trust tax status

The Company has been approved by HM Revenue & Customs (“HMRC”) as an investment trust in accordance with Sections 1158 and 1159 of The Corporation Tax Act 2010, subject to the Company continuing to meet the eligibility conditions. In the opinion of the Directors, the Company has conducted its affairs during the period under review, and subsequently, so as to maintain its status as an investment trust and satisfy the conditions for continued approval.

Principal and emerging risks associated with the Company

Structure of the Group and gearing

The Board, in conjunction with the Audit Committee, undertakes a robust assessment and review of the principal risks facing the Company, together with a review of any new and emerging risks which may have arisen during the year. These risks are formalised within the Company’s risk register. Information regarding the Company’s internal control and risk management procedures can be found in the Corporate Governance Statement on page 36.

The principal financial risks and the Company’s policies for managing these risks, and the policy and practice with regard to the portfolio are summarised in note 21 to the financial statements.

Listed below is a summary of the principal and emerging risks identified by the Board and actions taken to mitigate those risks.

The Ordinary Shares issued by the Company and the ZDP Shares issued by its subsidiary, PMGR Securities 2025 PLC have different characteristics. Returns generated by the Company’s underlying portfolio are apportioned in accordance with the respective entitlements of each class of share. As the Ordinary Shares and ZDP Shares have different rights both during the life of the Company and on a winding-up, shareholders and prospective investors are advised to give careful consideration to their choice of class or classes of share (see page 1 for details of these entitlements).

The Company employs no gearing in the form of bank loans or bonds. The Ordinary Shares are geared by the prior ranking entitlement ZDP Shares issued by its subsidiary.

Dividend levels

Dividends paid on the Company’s Ordinary Shares principally rely on receipt of dividends and interest payments from the securities in which the Company invests. The Board monitors the income of the Company and reviews an income forecast for the current financial year at its regular quarterly Board meetings.

Currency risk

The Company invests in overseas securities and its assets are therefore subject to currency exchange rate fluctuations. The Company may hedge against foreign currency movements affecting the value of the investment portfolio where adverse movements are anticipated but otherwise takes account of this risk when making investment decisions.

Liquidity risk

The Company invests principally in liquid securities listed on recognised stock exchanges. The Company may invest up to 15% of its gross assets in unquoted securities. These securities may have limited liquidity and be difficult to realise. The investment limits set are monitored at each Board meeting. The Company held no unquoted securities during the year.

Market price risk

Since the Company invests in financial instruments, market price risk is inherent in these investments. In order to minimise this risk, a detailed analysis of the risk/reward relationship of each investee company is undertaken by the Investment Manager. The Board regularly reviews reports on the portfolio produced by the Investment Manager. The Investment Manager has the ability to utilise financial derivatives for efficient portfolio management purposes.

Discount volatility

Being a closed-ended company, the Company’s shares may trade at a premium or discount to their net asset value. The magnitude of this premium or discount fluctuates daily and can vary significantly. Thus, for a given period of time, it is possible that the market price could decrease despite an increase in the net asset value of the Company’s shares. The Directors review the discount levels regularly. The Investment Manager actively communicates with the Company’s major shareholders and potential new investors, with the aim of managing discount levels.

Operational

Like most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent on the control systems of the Investment Manager and the Company’s other service providers. The security, for example, of the Company’s assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems. The Board reviews, at least annually, the performance of all the Company’s third party service providers, as well as reviewing service providers’ anti-bribery and corruption policies to address the provision of the Bribery Act 2010. The Board and Audit Committee regularly review statements on internal controls and procedures provided by Premier Fund Managers Ltd and other third parties and also subject the books and records of the Company to an annual external audit.

Accounting, legal and regulatory

In order to continue to qualify as an investment trust, the Company must comply with Section 1158 of the Corporation Tax Act 2010. A breach of Section 1158 could lead to the Company being subject to capital gains tax on gains within the Company’s portfolio. Section 1158 qualification criteria are continually monitored by the Investment Manager and the results reported to the Board at its regular meetings. The Company must also comply with the Companies Act, the Listing Rules and the Market Abuse Regulation. The Board relies on the services of the administrator, Premier Portfolio Managers Limited and its professional advisers to ensure compliance with the Companies Act and the Listing Rules. The Company is also required to comply with the AIFMD and has appointed Premier Portfolio Managers Limited (“PPM”) as its Alternative Investment Fund Manager and PPM is responsible for ensuring compliance with the AIFMD (see page 18).

Political and regulatory risk

The Company invests in regulated businesses which may be subject to political or regulatory interference, and may be required to set pricing levels, or take investment decisions, for political rather than commercial reasons. In some less developed economies, including those in which the Company invests, there are increased political and economic risks as compared to more developed economies. These risks include the possibility of various forms of punitive government intervention together with reduced levels of regulation, higher brokerage commissions, less reliable settlement and custody practices, higher market volatility and less reliable financial reporting. Such factors are out of the control of the Board and the Investment Manager, and the Board monitors the performance of its investments at each Board meeting.

Geopolitical risk

The Company operates across global equity markets, and may be subject to adverse effects resulting from war, political disputes, sanctions, and banking restrictions. These may lead to adverse movements in commodity prices, confiscation of assets, and restrictions on the movement of capital. Most of these risks are outside the control of the Board, but care is taken to avoid investment in countries where such risks are more likely to occur.

Climate risk

Climate change has the potential to affect weather patterns and may have an adverse impact on renewable energy production from hydro and wind plants in particular. Higher temperatures may have other, as yet unforeseen, negative consequence on the operations of portfolio companies.

Covid-19 risks

The global Covid-19 pandemic has presented the Company with portfolio risks arising from market volatility, and also operational risks arising from Government policy which has necessitated changes to methods of working for both the Company Manager and also the Company’s service providers. The Company invests in renewable energy businesses which provide an essential product and which the Directors believe have a below average exposure to reductions in levels of economic activity. The Board of Directors, the Investment Manager, and the Company’s service providers, when required by law or regulation, have switched to remote working methods with no material loss of efficiency or functionality noted.

Directors’ duties - s172 statement

The Directors’ overarching duty is to act in good faith and in a way that is the most likely to promote the success of the Company as set out in Section 172 of the Companies Act 2006. In doing so, the Directors must take into consideration the interests of the various stakeholders of the Company, the impact the Company has on the community and the environment, take a long-term view on consequences of the decisions they make as well as aim to maintain a reputation for high standards of business conduct and fair treatment between the members of the Company.

Fulfilling this duty helps to ensure that all decisions are made in a responsible and sustainable way. In accordance with the requirements of the Companies (Miscellaneous Reporting) Regulations 2018, the Company explains how the Directors have discharged their duty under Section 172 below.

To ensure that the Directors are aware of, and understand, their duties they are provided with the pertinent information when they first join the Board as well as receive regular and ongoing updates and training on the relevant matters. They also have continued access to the advice and services of the Company Secretary, and when deemed necessary, the Directors can seek independent professional advice.

As well as the Terms of Reference of its committees, the Schedule of Matters Reserved for the Board are reviewed on at least an annual basis and further describe the Directors’ responsibilities and obligations, and include any statutory and regulatory duties. The Audit Committee has the responsibility for the ongoing review of the Company’s risk management systems and internal controls and, to the extent that they are applicable, risks related to the matters set out in Section 172 are included in the Company’s risk register and are subject to periodic and regular reviews and monitoring.

Decision-making

The importance of the stakeholder considerations, in particular in the context of decision-making, is taken into account at every Board and Committee meeting. All discussions involve careful consideration of the longer-term consequences of any decisions and their implications for stakeholders to ensure that any decision will promote the long-term success of the Company whether this is in relation to new investment opportunities, future fundraisings or dividends. By way of illustration, principal decisions made by the Board in 2021, related to the review of the expected revenue earnings and dividend for the financial year 2021; the change of the Trust’s performance benchmark from the FTSE Global Core Infrastructure 50/50 Index to the S&P Global Clean Energy Index and the issuance of shares to satisfy market demand.

Stakeholders

The Board seeks to understand the needs and priorities of the Company’s stakeholders, and these are considered during all its discussions and as part of its decision-making. As the Company is an externally managed investment company it does not have any employees or customers, nor does it have a direct impact on the community or environment in the conventional sense. Further explanation on environmental, social and governance issues can be found on pages 24 and 25. The Board has considered which parties should be deemed to be the Company’s stakeholders and the section below sets out these key stakeholders and why they are considered of importance to the Company together with the actions taken to ensure that their interests are accounted for appropriately.

Shareholders Communication with shareholders is given a high priority by both the Board and the Investment Manager and all Directors are available to enter into dialogue with shareholders. Continued shareholder support and engagement are critical to existence of the business and the delivery of the long-term strategy of the business.
The Company understands the need to effectively communicate with existing and potential shareholders, briefing them on strategic and financial progress and obtaining feedback. The Board is committed to maintaining open channels of communication and to engage with shareholders in a manner which they find most meaningful, in order to gain an understanding of the views of shareholders. Most of the contact with shareholders is with the Investment Manager and the Company’s Broker, and the Investment Manager met with all the Company’s major shareholders during the year, together with other investors not owning shares in the Company. The Board receives regular reports about such meetings and any issues raised are considered carefully.
The Board engagement includes:
• Annual General Meeting
The Company welcomes engagement from shareholders at the AGM as it sees it as an important opportunity for all shareholders to engage directly with the Board and the Investment Manager. The Company will hold its AGM on 28 April 2022 at the offices of Premier Miton, in Guildford. For further details please refer to the Notice of the AGM set out from page 85. The Board values any feedback and questions it may receive from shareholders ahead of, and during, the AGM and will take action or make changes, when and as appropriate. Where possible, all directors will attend the AGM. All voting at general meetings of the Company is conducted by way of a poll. All shareholders have the opportunity to cast their votes in respect of proposed resolutions by proxy, either electronically or by post. Following the AGM, the voting results for each resolution are published and made available on the Company’s website;
• Publications
The Annual Report and Half-Yearly results are made available on the Company’s website and the Annual Report is circulated to shareholders. These reports provide shareholders with a clear understanding of the underlying portfolio and the financial position of the Company. The Company also publishes a monthly factsheet and portfolio update which are available on the website and the publication of which is announced via the London Stock Exchange. The monthly factsheet contains details on investment performance, both within the month and historic, together with the Investment Manager’s commentary on performance and events for the month;
• Shareholder concerns
In the event shareholders wish to raise issues or concerns with the Directors, they are welcome to do so at any time by writing to the Chairman at the registered office. The Company always responds to letters from individual shareholders. Other members of the Board are also available to shareholders if they have concerns that have not been addressed through the normal channels. Feedback can also be gained via the Company’s corporate brokers, which is communicated to the Board and Investment Manager; and
• Working with external partners
The Investment Manager and the Company’s Broker maintain an active dialogue with shareholders and potential investors at scheduled meetings or analyst briefings particularly following financial results and provide the Board with regular reports and feedback on key market issues and shareholder concerns. This includes market dynamics and corporate perception.
The Investment Manager The Investment Manager’s performance is critical for the Company to successfully deliver its investment strategy and meet its objective to achieve high income from, and to realise long-term growth in the capital value of its portfolio.
Maintaining a close and constructive working relationship with the Investment Manager is crucial as the Board and the Investment Manager both aim to continue to achieve consistent, long-term returns in line with its investment objective. Important components in the collaboration with the Investment Manager, representative of the Company’s culture are:

• Encouraging open discussion with the Investment Manager;
• Adopting a tone of constructive challenge when appropriate;
• Drawing on Board Members’ individual experience and knowledge to support the Investment Manager in its monitoring of the portfolio; and
• That the Board and the Investment Manager should act within the agreed investment restrictions and risk appetite statement and not seek to add further investment risk.
The Company Secretary;
the Registrar;
the Auditor;
the Investment Manager;
the Fund Administrator;
and the Custodian
and Depositary.
In order to function as an investment trust the Company relies on a diverse range of advisors for support with meeting all relevant legal and regulatory obligations. Advisor contact details can be found on page 91.

• The Company Secretary – Link Company Matters Limited;
• The Registrar – Link Group;
• The Auditor – KPMG LLP;
• The Broker – Singer Capital Markets;
• The Investment Manager – Premier Fund Managers Limited;
• The Fund Administrator – Premier Portfolio Managers Limited;
• The Custodian – The Northern Trust Company; and
• The Depositary – Northern Trust Investor Services Limited.

The Board maintains regular contact with its key external providers, primarily at Board and committee meetings, as well as through the Investment Manager from its own interactions with the external providers outside of the regular meeting cycle. In addition, the Management Engagement Committee is tasked with periodic reviews of the external service providers, assessing 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 levels of service required of them.
Regulators The Company operates in accordance with laws and regulations issued by relevant regulators, authorities and government agencies, including the London Stock Exchange, the Financial Conduct Authority, the Financial Reporting Council and HMRC, who have a legitimate interest in how the Group operates in the market and treats its shareholders. We have an open and transparent relationship with all such authorities.

The Group regularly considers how it meets various regulatory and statutory obligations and follows voluntary and best-practice guidance, and how any governance decisions it makes can have an impact on its stakeholders, both in the shorter and in the longer-term.

Culture

The Directors are of the opinion that establishing and maintaining a healthy corporate culture amongst the Board and in its interaction with the Investment Manager, shareholders and other stakeholders will support the delivery of its purpose, values and strategy. The Board seeks to promote a culture of openness, transparency and integrity through ongoing dialogue and engagement with its stakeholders, principally the Investment Manager.

The Board strives to ensure that its culture is in line with the Company’s purpose, values and strategy and will consider this through its annual evaluation processes. There are also policies and procedures in place to assist with maintaining a culture of good governance that include those relating to Directors’ dealings in the Company’s Shares, conflicts of interest, bribery and tax evasion.

The Board seeks to appoint appropriate third-party service providers and evaluates their services on a regular basis as described on page 22. Their ongoing appointments are not only reflective of their performance by reference to their contractual and service level obligations, but also take into account the extent to which their individual corporate cultures align with those of the Company. The Board considers the culture of the Investment Manager and other stakeholders, including their policies, practices and behaviour, through regular reporting from these stakeholders and in particular during the annual review of the performance and continuing appointment of all service providers.

Key performance indicators

The Company’s Directors meet regularly to review the performance of the Company and its shares. The key performance indicators (“KPIs”) used to measure the progress and performance of the Company over time are as follows:

1) The performance against a set of reference points. The Investment Manager’s performance is not assessed against a formal benchmark but rather against a set of reference points which are more general in nature and intended to be representative of the broad spread of assets in which the portfolio invests. These references include the Company’s performance benchmark index, the S&P Global Clean Energy Index, (see Company Highlights on page 2). Internally, and not published within this report, performance is also measured against other global, regional, and sector based indices.

2) The performance against the peer group. The assessment of the Investment Manager’s performance against companies which invest in similar, but not necessarily the same, securities allows the Board to evaluate the effectiveness of the Company’s investment strategy. This is an internal review only, and not published within this report.

3) The performance of the Company at the gross asset level. This shows how the assets attributable to shareholders as a whole have performed (see Company Highlights Total Assets Total Return).

4) The performance of the Ordinary Shares, both in terms of share price total return (i.e. accounting for dividends received) and in terms of net asset value total return. The share price performance is the measure of the return that shareholders have actually received and will reflect the impact of widening or narrowing of discounts to NAV (see graphs on page 3).

5) Ongoing charges. The annualised ongoing charges figure for the year was 1.65% (2020: 1.76%). This figure represents the annual percentage reduction in total assets total return as a result of recurring operational expenses.

The Board reviews each year an analysis of the Company’s ongoing charges figure and a comparison with its peers. The Company also calculates summary cost indicators for publication in the KID, available on the Company’s website.

All of these areas were examined throughout the year and the table below summarises the key indicators:

As at or year to:
31 December
2021
As at or year to:
31 December
2020
% change
Total Return Performance
Total Assets Total Return(1)# 19.8% 16.5%
S&P Global Clean Energy Index(2) (GBP) (22.5%) 135.3%
Ongoing charges(3)# 1.65% 1.76%
Ordinary Share Performance
Net Asset Value per Ordinary Share (cum income)(4) 210.60p 173.48p 21.4%
Revenue return per Ordinary Share 7.43p 9.32p (20.3%)
Net dividends declared per Ordinary Share 7.00p 10.20p (31.4%)
Discount to Net Asset Value# (6.7%) (9.2%)

# Alternative performance measure (“APM”). See Glossary of Terms for definitions and Alternative Performance Measures on pages 76 to 80.

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

(2) Source: Bloomberg.

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

(4.) Articles of Association basis.

Future prospects

The Board’s main focus is the achievement of a high income from the portfolio together with the generation of long-term capital growth. The future of the Company is dependent upon the success of the investment strategy. The investment outlook and future developments of the Company are discussed in both the Chairman’s statement on pages 4 to 6 and the Investment Manager’s report on pages 7 to 10.

Board diversity policy

The Nomination Committee considers diversity, including the balance of skills, knowledge, including gender and experience, amongst other factors when reviewing the composition of the Board and appointing new directors, but does not consider it appropriate to establish targets or quotas in this regard. As at the end of 2021, the Board comprised two female non-executive directors and one male non-executive director. The Company has no employees.

Environmental, social and governance (“ESG”) issues

The Company has no employees, property or activities other than investments, so its direct environmental impact is minimal. In carrying out its activities and in its relationships with service providers and their employees, the Company aims to conduct itself responsibly, ethically and fairly. Under Listing Rule 15.4.29(R), the Company, as a closed-ended investment fund, is exempt from complying with the Task Force on Climate-related Financial Disclosures.

United Nations Sustainable Development Goals

The Company invests primarily in companies operating renewable energy assets, or facilitating the delivery of renewable energy to customers. As such its portfolio is primarily exposed to those companies which aim to address the following Sustainable Development Goals, as adopted by the United Nations:

• Affordable and clean energy:

Ensure access to affordable, reliable, sustainable and modern energy for all.

• Industry, innovation and infrastructure:

Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation.

• Climate Action:

Take urgent action to combat climate change and its impacts.

London Stock Exchange Green Economy Mark

In January 2021 the Company received the London Stock Exchange’s Green Economy Mark, a classification which is awarded to companies and funds that are driving the global green economy. To qualify for the Green Economy Mark, companies and funds must generate at least 50% of their total annual revenues from products and services that contribute to the global green economy.

Principles for Responsible Investment

The Investment Manager integrates Governance and Social responsibility into its investment process, and actively engages with investee companies in order deliver improved outcomes for all stakeholders. The Investment Manager has a dedicated team which assesses the relevant ESG metrics across all investments held by the Investment Manager. Given the nature of the Company’s portfolio, environmental performance is given particular emphasis. The Fund Manager takes an active approach to voting on company resolutions at annual general meetings of investee companies. Premier Miton is a signatory to the Principles for Responsible Investment, an organisation which encourages and supports its signatories to incorporate environmental, social, and governance factors into their investment and ownership decisions.

Prevention of the facilitation of tax evasion

In response to the implementation of the Criminal Finances Act 2017, the Board has adopted a zero-tolerance approach to the criminal facilitation of tax evasion. A copy of the Company’s policy on preventing the facilitation of tax evasion can be found on the Company’s website: www.globalrenewablestrust.com. The policy is reviewed annually by the Audit Committee.

Social, community and human rights

The Company does not have any specific policies on social, community or human rights issues as it is an investment company which does not have any physical assets, property, employees or operations of its own.

For and on behalf of the Board

Gillian Nott OBE

Chairman

8 March 2022

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

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

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

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

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable, relevant and reliable;

• state whether they have been prepared in accordance with UK-adopted international accounting standards;

• assess the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

• use the going concern basis of accounting unless they either intend to liquidate the Group or the Parent Company or to cease operations or have no realistic alternative but to do so.

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

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

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

Responsibility of the Directors in respect of the annual financial report

We confirm to the best of our knowledge:

• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

• the strategic report includes a fair review of the development and performance of the business and the position of the issuer, and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

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

For and on behalf of the Board

Gillian Nott OBE

Chairman

8 March 2022

Group Income Statement

for the financial year ended 31 December 2021

Year ended Year ended Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December 31 December 31 December
2021 2021 2021 2020 2020 2020
Revenue Capital Total Revenue Capital Total
Notes £000 £000 £000 £000 £000 £000
Gains on investments held at fair value through profit or loss 8 7,469 7,469 5,028 5,028
Gains on derivative financial instruments 2,894 2,894
Gains/(losses) on forward currency contracts 13 405 405 (541) (541)
Losses on foreign exchange (2) (42) (44) (1) (94) (95)
Income 2 1,969 1,969 2,471 2,471
Investment management fee 3 (141) (211) (352) (160) (240) (400)
Other expenses 4 (456) (456) (532) (532)
Reconstruction costs 4 (43) (43) (406) (406)
Profit before finance costs and taxation 1,370 7,578 8,948 1,778 6,641 8,419
Finance costs 5 (714) (714) (5) (1,320) (1,325)
Profit before taxation 1,370 6,864 8,234 1,773 5,321 7,094
Taxation 6 (18) (18) (88) (88)
Profit for the year 1,352 6,864 8,216 1,685 5,321 7,006
Return per Ordinary Share (pence) – basic 18 7.43  37.71  45.14  9.32  29.41  38.73

The total column of this statement represents the Group’s profit or loss, prepared in accordance with International Financial Reporting Standards (IFRSs).

As the Parent of the Group, the Company has taken advantage of the exemption not to publish its own separate Income Statement as permitted by the Companies Act 2006. The Company’s total comprehensive profit for the year ended 31 December 2021 was £8,216,000 (2020: profit of £7,006,000).

The supplementary revenue and capital columns are prepared under guidance published by the Association of Investment Companies (“AIC”).

All items derive from continuing operations; the Group does not have any other recognised gains or losses.

All income is attributable to the equity holders of the Company. There are no minority interests.

The notes on pages 57 to 75 form part of these financial statements.

Consolidated and Company Balance Sheets

as at 31 December 2021

Group Company Group Company
2021 2021 2020 2020
Notes £000 £000 £000 £000
Non current assets
Investments held at fair value through profit or loss 8 52,694 52,794 45,152 45,252
Current assets
Debtors 10 189 189 141 141
Forward foreign exchange contracts 13 117 117 194 194
Cash at bank 562 562 361 361
868 868 696 696
Total assets 53,562 53,662 45,848 45,948
Current liabilities
Other creditors 11 (162) (162) (193) (193)
Intercompany payable 11 (50) (50)
(162) (212) (193) (243)
Total assets less current liabilities 53,400 53,450 45,655 45,705
Non–current liabilities:
amounts falling due after more than one year
Zero Dividend Preference Shares 12 (14,990) (14,276)
Intercompany payable 12 (15,040) (14,326)
Net assets 38,410 38,410 31,379 31,379
Equity attributable to Ordinary Shareholders
Share capital 14 183 183 181 181
Share premium 15 8,961 8,961 8,701 8,701
Redemption reserve 88 88 88 88
Capital reserve 16 20,528 20,528 13,664 13,664
Special reserve 7,472 7,472 7,472 7,472
Revenue reserve 1,178 1,178 1,273 1,273
Total equity attributable to Ordinary Shareholders 38,410 38,410 31,379 31,379
Net asset value per Ordinary Share (pence) 19  210.60  210.60  173.48  173.48

The financial statements on pages 52 to 75 of Premier Miton Global Renewables Trust PLC, company number 04897881, were approved by the Board and authorised for issue on 8 March 2022 and were signed on its behalf by:

Gillian Nott OBE

Chairman

The notes on pages 57 to 75 form part of these financial statements.

Consolidated Statement of Changes in Equity

for the financial year ended 31 December 2021

Ordinary
share
capital
Share
premium
reserve
Redemption
reserve
Capital
reserve*
Special
reserve**
Revenue
reserve**
Total
Notes £000 £000 £000 £000 £000 £000 £000
For the year ended 31 December 2021
Balance at 31 December 2020 181 8,701 88 13,664 7,472 1,273 31,379
Issue of Ordinary shares 2 260 262
Profit for the year 6,864 1,352 8,216
Ordinary dividends paid 7 (1,447) (1,447)
Balance at 31 December 2021 183 8,961 88 20,528 7,472 1,178 38,410

   

Ordinary
share
capital
Share
premium
reserve
Redemption
reserve
Capital
reserve*
Special
reserve**
Revenue
reserve**
Total
Notes £000 £000 £000 £000 £000 £000 £000
For the year ended 31 December 2020
Balance at 31 December 2019 181 8,701 88 8,343 7,472 1,432 26,217
Profit for the year 5,321 1,685 7,006
Ordinary dividends paid 7 (1,844) (1,844)
Balance at 31 December 2020 181 8,701 88 13,664 7,472 1,273 31,379

* Distributable for the purpose of redemption of shares.

** Distributable reserves.

The notes on pages 57 to 75 form part of these financial statements.

Company Statement of Changes in Equity

for the financial year ended 31 December 2021

Ordinary
share
capital
Share
premium
reserve
Redemption
reserve
Capital
reserve*
Special
reserve**
Revenue
reserve**
Total
Notes £000 £000 £000 £000 £000 £000 £000
For the year ended 31 December 2021
Balance at 31 December 2020 181 8,701 88 13,664 7,472 1,273 31,379
Issue of Ordinary shares 2 260 262
Profit for the year 6,864 1,352 8,216
Ordinary dividends paid 7 (1,447) (1,447)
Balance at 31 December 2021 183 8,961 88 20,528 7,472 1,178 38,410

   

Ordinary
share
capital
Share
premium
reserve
Redemption
reserve
Capital
reserve*
Special
reserve**
Revenue
reserve**
Total
Notes £000 £000 £000 £000 £000 £000 £000
For the year ended 31 December 2020
Balance at 31 December 2019 181 8,701 88 8,343 7,472 1,432 26,217
Profit for the year 5,321 1,685 7,006
Ordinary dividends paid 7 (1,844) (1,844)
Balance at 31 December 2020 181 8,701 88 13,664 7,472 1,273 31,379

* Distributable for the purpose of redemption of shares.

** Distributable reserves.

The notes on pages 57 to 75 form part of these financial statements.

Consolidated and Company Cashflow Statements

for the financial year ended 31 December 2021

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2021 2020 2020
£000 £000 £000 £000
Profit before taxation 8,234 8,234 7,094 7,094
Adjustments for
Finance costs 714 714 1,325 1,325
Gains on investments held at fair value through profit or loss (7,469) (7,469) (5,028) (5,028)
Gains on derivatives financial instruments (2,894) (2,894)
(Gains)/losses on forward foreign exchange contracts (405) (405) 541 541
Losses on foreign exchange 44 44 95 95
(Increase)/decrease in other receivables (5) (5) 94 94
(Decrease)/increase in other payables (31) (31) (14) 36
Overseas taxation paid (61) (61) (107) (107)
Net cash flow from operating activities 1,021 1,021 1,106 1,156
Investing activities
Purchases of investments (18,371) (18,371) (39,358) (39,408)
Proceeds from sales of investments 18,298 18,298 52,863 52,863
Cash flows from derivatives 2,894 2,894
Cash flows from forward foreign exchange contracts 482 482 (216) (216)
Net cash flow from investing activities 409 409 16,183 16,133
Financing activities
Proceeds from issue of Ordinary Shares 262 262
Payment to 2020 ZDP Shareholders with "B" rights (19,381)
Issue of 2025 Zero Dividend Preference Shares 3,349
Movement in intercompany financing balances (16,032)
Dividends paid (1,447) (1,447) (1,844) (1,844)
Bank interest paid (6) (6)
Net cash flow from financing activities (1,185) (1,185) (17,882) (17,882)
Increase/(decrease) in cash and cash equivalents 245 245 (593) (593)
Losses on foreign exchange (44) (44) (95) (95)
Cash and cash equivalents, beginning of the year 361 361 1,049 1,049
Cash and cash equivalents at end of the year 562 562 361 361

The notes on pages 57 to 75 form part of these financial statements.

Notes to the Financial Statements

for the financial year ended 31 December 2021

1. ACCOUNTING POLICIES

1.1 Principal accounting policies adopted by the Company

(a) Basis of preparation

The financial statements of the Group and Company have been prepared in accordance with UK-adopted International Accounting Standards. These comprise standards and interpretations of the International Accounting Standards and Standing Interpretations Committee as approved by the International Accounting Standards Committee (“IASC”) that remain in effect.

The Directors believe that having considered the Company’s investment objectives (shown on page 1), risk management policies and procedures (pages 69 to 75), nature of portfolio and income and expense projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for a period of at least 12 months from the date these financial statements were approved.

Specifically the Directors have taken into account:

• The shareholder approval at the AGM held in April 2021 to continue the Company’s life until 2025

• The refinancing of the ZDP Shares to November 2025

• The reduction in gearing seen over the past two years resulting from positive investment performance and a smaller ZDP Shares issue from November 2020

• That aside from ZDP Shares, the Company has no significant liabilities

• The Company’s assets consist of readily realisable securities

• The Company’s operating costs are well covered by revenue income

• Cash flows are closely matched to income and the company carries no material receivable balances

• There is no litigation or other disputes outstanding against the Company

• The Company maintains an adequate cash balance to manage its affairs in an orderly manner. The Portfolio consists of liquid securities which can be realised to generate additional cash balances if required

• The Company, its Fund Manager, and all main service providers have switched, when required by law or regulation, to working from home during the lockdown conditions existing during 2021 and into 2022. No significant operational impacts have been noted resulting from this change of working practice.

• The Company’s investment policy is to invest in renewable energy and other sustainable infrastructure. The Directors believe this is a relatively low risk area of equity investment with highly contracted revenue streams and policy support from Governments.

In taking these considerations into account, the Directors have also considered plausible downside scenarios as set out below:

• A material fall in equity markets caused by increases in interest rates. The Company’s investments may be subject to higher financial costs and adverse movements in valuation metrics as a result.

• The impact of higher inflation on the ability of investments held to maintain their earnings in real terms.

• The volatility of energy and other relevant commodity prices which may result in changes to revenues in portfolio companies.

For these reasons, the Directors consider that the use of the going concern basis is appropriate.

The financial statements have also been prepared in accordance with the Companies Act 2006, the Statement of Recommended Practice (“SORP”) Financial Statements of Investment Trust Companies and Venture Capital Trusts issued by the Association of Investment Companies (“AIC”) in November 2014 (and updated in April 2021) where the SORP is consistent with International Financial Reporting Standards (IFRSs).

In the current financial period the Company has applied to the following amendment to standards:

IFRS 9, IAS 39, IFRS 7, IFRS 16 and IFRS 4: Interest Rate Benchmark Reform – phase 2 (amended) (effective for accounting periods on or after 1 January 2021).

There is no material impact on the financial statements or the amounts reported from the adoption of this amendment to the standards.

(b) Basis of consolidation

The consolidated financial statements are made up to 31 December each year and incorporate the financial statements of the Company and its wholly-owned subsidiaries, PMGR Securities 2025 PLC, and PGIT Securities 2020 PLC (in members’ voluntary liquidation). Subsidiaries are consolidated from the date of their acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of subsidiaries used in the preparation of the Consolidated Financial Statements are based on consistent accounting policies. All intra-group balances and transactions, including unrealised profits arising therefrom, are eliminated.

It is the Company’s judgement that it meets the definition of an investment entity within IFRS 10. The criteria which define an investment entity are as follows:

• an entity that obtains funds from one or more investors for the purpose of providing those investors with investment services.

• an entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both.

• an entity that measures and evaluates the performance of substantially all of its investments on a fair value basis.

Assessment of an investment entity

The Board has agreed with the recommendation of the Audit Committee that the Company meets the definition of an investment entity as it satisfies each of the criteria above and that this accounting treatment better reflects the Company’s activities as an investment trust. Specifically, as an investment trust, the Company’s principal activity is portfolio investment and the investment objectives of the Company (stated in the Strategic Report on page 15) are to achieve a high income and to realise long term growth in the capital value of its portfolio. The Company will seek to achieve these objectives by investing principally in the equity and equity-related securities of companies operating primarily in the energy and water sectors, as well as other infrastructure investments.

PMGR Securities 2025 PLC, the Company’s wholly-owned subsidiary, incorporated on 21 October 2021, is being consolidated in the accounts as it is not in itself an investment entity.

(c) Presentation of Statement of Comprehensive Income

In order to better reflect the activities of the Company as an investment trust company, and in accordance with guidance issued by the AIC, supplementary information which analyses the Consolidated Income Statement between items of a revenue and capital nature has been presented alongside the Consolidated Income Statement. In accordance with the Company’s Articles of Association, dividends can only be distributed from net revenue income, and the distribution of surpluses from realisations of investments is prohibited. Additionally, net revenue is the measure the Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Section 1158 of the Corporation Tax Act 2010.

(d) Use of estimates and judgements

The preparation of these financial statements did not require the use of any key estimates.

The Directors believe that there is one key judgement, being the functional currency of the Company. Although the Company invests in investments denominated in various jurisdictions with various currencies, it has been determined that the functional currency is sterling as the entity is listed on a sterling stock exchange in the UK, and its investment manager is also UK based and its dividends and expenses are paid in sterling. Accordingly, the financial statements are presented in UK pounds sterling rounded to the nearest thousand pounds.

(e) Income

Dividend income from investments is taken into account by reference to the date the security becomes ex-dividend. Special dividends are credited to capital or revenue in the Consolidated Income Statement, according to the circumstances surrounding the payment of the dividend. UK dividends are accounted for net of any tax credits.

Overseas dividends and other income that are subject to withholding tax are grossed up.

Interest receivable on deposits is accounted for on an accruals basis. The fixed return on a debt security is recognised on a time apportionment basis so as to reflect the effective interest rate on the debt security.

(f) Expenses

All expenses are accounted for on an accruals basis and are charged as follows:

• the investment management fee is charged 40% to revenue and 60% to capital;

• the finance costs representing the annual accrual for capital entitlement of the ZDP Shares is allocated to capital;

• investment transaction costs are allocated to capital;

• other expenses are charged wholly to revenue; and

•reconstruction costs relating to repayment and issuance of ZDP Shares are charged wholly to capital.

(g) Taxation

The charge for taxation is based upon the net revenue for the year. The tax charge is allocated to the revenue and capital accounts according to the marginal basis whereby revenue expenses are first matched against taxable income arising in the revenue account; the effect of this for the year ended 31 December 2021 was that all the deductions for tax purposes went to the revenue account.

Deferred taxation will be recognised as an asset or a liability if transactions have occurred at the balance sheet date that give rise to an obligation to pay more taxation in the future, or a right to pay less taxation in the future. An asset will not be recognised to the extent that the transfer of economic benefit is uncertain.

Due to the Company’s status as an Investment Trust, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

(h) Investments held at fair value through profit or loss

Upon initial recognition investments are designated by the Company “at fair value through profit or loss”. They are accounted for on the date they are traded and are included initially at fair value which is taken to be their cost. Subsequently investments are valued at fair value which is the bid market price for listed investments. Unquoted investments are valued at fair value by the Board which is established with regard to the International Private Equity and Venture Capital Valuation Guidelines by using, where appropriate, latest dealing prices, valuations from reliable sources and other relevant factors.

Changes in the fair value of investments held at fair value through profit or loss and gains or losses on disposal are included in the capital column of the Consolidated Income Statement within “gains/(losses) on investments held at fair value through profit or loss”.

The investments in the Company’s subsidiaries, PMGR Securities 2025 PLC, and PGIT Securities 2020 PLC (in members’ voluntary liquidation), are held at fair value, considered to be equal to the net asset value of each.

(i) Dividends

Interim and final dividends are recognised in the year in which they are paid.

(j) Foreign currency

Transactions denominated in foreign currencies are translated into sterling at actual exchange rates as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the year end are reported at the rates of exchange prevailing at the year end. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss to capital or revenue in the Consolidated Income Statement as appropriate. Foreign exchange movements on investments are included in the Consolidated Income Statement within gains on investments.

(k) Derivatives

Forward currency contracts entered into for hedging purposes are held at fair value through profit or loss and changes in fair value are recognised in the capital column of the Consolidated Income Statement.

(l) Zero Dividend Preference Shares

The ZDP Shares are classified as a financial liability and shown as a liability in the Group balance sheet. The ZDP Shares are initially measured at fair value being the proceeds of issue less transaction costs and are subsequently measured at amortised cost under the effective interest rate method.

The provision for compound growth entitlement of the ZDP Shares is recognised through the Consolidated Income Statement and analysed under the capital column as a finance cost (as shown in note 5).

(m) Special reserve

The Special Reserve was created by the Court cancellation of the share premium account on 12 November 2003 and is a distributable reserve to be used for all purposes permitted under the Companies Act 2006 (as amended) including the buyback of shares and the payment of dividends.

1.2 Accounting standards issued but not yet effective

At the date of authorisation of these financial statements the following relevant standards and amendments to standards, which have not been applied in these financial statements, were in issue, but not yet effective:

IFRS 17, ‘Insurance contracts’ (effective for accounting periods on or after 1 January 2023).

Amendments to IAS1 ‘Classification of liabilities as current or non-current’ (effective for accounting periods on or after 1 January 2023).

Amendments to IAS 8 ‘Definition of Accounting Estimates’ (effective for accounting periods on or after 1 January 2023).

Amendments to IAS 1 and IFRS Practice Statement 2 ‘Disclosure of Accounting Policies’ (effective for accounting periods on or after 1 January 2023).

Amendments to IAS 12 ‘Deferred Tax related to Assets and Liabilities arising from a Single Transaction’ (effective for accounting periods on or after 1 January 2023).

The Company does not believe that there will be a material impact on the financial statements or the amounts reported from the adoption of these standards.

2. INCOME

Year ended 31 December Year ended 31 December
2021 2020
£000 £000
Income from investments:
UK dividends 679 751
Overseas dividends 1,290 1,717
Bank interest 3
Total income 1,969 2,471

3. INVESTMENT MANAGEMENT FEE

Year ended 31 December Year ended 31 December
2021 2020
£000 £000
Charged to Revenue:
Investment management fee (40%) 141 160
Charged to Capital:
Investment management fee (60%) 211 240
352 400

The Company’s AIFM is Premier Portfolio Managers Limited (“PPM”) under an agreement terminable by giving not less than six months written notice. Under the AIFM agreement, PPM is entitled to receive a management fee from the Company, payable monthly in arrears, of 0.75% per annum of the gross assets of the Company.

PPM has delegated the management of the Company’s portfolio of assets to PFM Limited.

4. OTHER EXPENSES

Year ended Year ended
31 December 31 December
2021 2020
£000 £000
Charged to Revenue:
Secretarial services 104 79
Administration expenses 208 332
Depositary fees 25 25
Auditor’s remuneration – audit services 40 32
– audit services for subsidiary 9
Directors’ fees and expenses 70 64
456 532
Charged to Capital:
Reconstruction costs 43 406
43 406

Reconstruction costs represent costs relating to the refinancing of the 2020 ZDP Shares and issue of the 2025 ZDP Shares.

5. FINANCE COSTS

Year ended Year ended Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December 31 December 31 December
2021 2021 2021 2020 2020 2020
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Bank Interest        5   5
Provision for accrued capital entitlement
of the ZDP Shares    714  714    1,320  1,320
   714  714  5  1,320  1,325

6. TAXATION

(a) ANALYSIS OF CHARGE IN THE YEAR:

Year ended Year ended Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December 31 December 31 December
2021 2021 2021 2020 2020 2020
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Overseas tax  122  122  88    88
Overseas tax reclaims  (104)    (104)      
Total tax charge for the year (see note 6 (b))  18    18  88    88

(b) FACTORS AFFECTING THE TOTAL TAX CHARGE FOR THE YEAR:

The tax assessed for the year is lower than the standard rate of corporation tax in the UK for a large company of 19.0% (31 December 2020: 19.0%). The differences are explained below:

Year ended Year ended
31 December 31 December
2021 2020
£000 £000
Total profit before taxation  8,234  7,094
UK corporation tax at 19.0% (31 December 2020: 19.0%)  1,564  1,348
Effects of:
Capital gains subject to corporation tax 9
Capital gains not subject to corporation tax  (1,419) (955)
(Gains)/losses on forward currency contracts not subject to corporation tax (77) 103
Gains on derivatives not subject to corporation tax (550)
Losses on foreign exchange not subject to corporation tax  8  18
Finance costs of ZDP Shares not deductible  136  252
Restructuring costs of ZDP Shares not deductible  8  76
UK dividends which are not taxable  (129)  (143)
Overseas tax suffered  18  88
Overseas dividends not taxable in the UK  (214) (242)
Movement in unutilised management expenses  114 93
Total tax charge 18 88

The Company is not liable to tax on capital gains due to its status as an investment trust.

Due to the Company’s status as an investment trust, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

As at 31 December 2021, the Company had a potential deferred tax asset of £2,189,000 (2020: £1,550,000) in respect of tax losses which are available to be carried forward and offset against future taxable profits. It is unlikely that the Company will generate sufficient taxable profits in the future to utilise these expenses and therefore no deferred tax asset in respect of these expenses has been recognised.

7. DIVIDENDS

Dividends relating to the year ended 31 December 2021 which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered are detailed below:

Per Ordinary Share Year ended 31 December 2021
First interim dividend – paid on 30 June 2021 1.75p  319
Second interim dividend – paid on 30 September 2021 1.75p  319
Third interim dividend – paid on 31 December 2021 1.75p  319
Fourth interim dividend – payable on 31 March 2022 1.75p  319
7.00p  1,276

*Not included as a liability in the year ended 31 December 2021 accounts.

The fourth interim dividend will be paid on 31 March 2022 to members on the register at the close of business on 11 March 2022. The shares will be marked ex-dividend on 10 March 2022.

Per Ordinary Share Year ended 31 December 2020
First interim dividend – paid on 30 June 2020 2.50p  452
Second interim dividend – paid on 30 September 2020 2.50p  452
Third interim dividend – paid on 30 December 2020 2.50p  452
Fourth interim dividend – paid on 31 March 2021* 2.70p  490
10.20p 1,846

*Not included as a liability in the year ended 31 December 2020 accounts.

Amounts recognised as distributions to equity holders in the year:

Year ended Year ended
31 December 31 December
2021 2020
£000 £000
Fourth interim dividend for the year ended 31 December 2020 of 2.70p (2019: 2.70p) per ordinary share  490  488
First interim dividend for the year ended 31 December 2021 of 1.75p (2020: 2.50p) per ordinary share  319  452
Second interim dividend for the year ended 31 December 2021 of 1.75p (2020: 2.50p) per ordinary share  319  452
Third interim dividend for the year ended 31 December 2021 of 1.75p (2020: 2.50p) per ordinary share  319  452
 1,447  1,844

8. INVESTMENTS

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2021 2020 2020
£000 £000 £000 £000
Investments listed on a recognised investment exchange 52,694 52,694 45,152 45,152
Investments in subsidiaries - 100 - 100
Valuation at year end 52,694 52,794 45,152 45,252
Opening book cost 40,686 40,786 55,258 55,308
Opening investment holding gains/(losses) 4,466 4,466 (1,629) (1,629)
Opening valuation 45,152 45,252 53,629 53,679
Movements in the year:
Purchases at cost 18,371 18,371 39,358 39,408
Sales – proceeds (18,298) (18,298) (52,863) (52,863)
Gains in investment holdings for the year 7,469 7,469 5,028 5,028
Closing valuation 52,694 52,794 45,152 45,252
Closing book cost 45,694 45,794 40,686 40,786
Closing investment holding gains 7,000 7,000 4,466 4,466
Closing valuation 52,694 52,794 45,152 45,252

The Company received £18,298,000 from investments sold in the year (2020: £52,863,000). The book cost of the investments when they were purchased was £13,363,000 (2020: £53,930,000). These investments have been revalued over time until they were sold and unrealised gains/losses were included in the fair value of the investments.

Classification of assets

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2021 2020 2020
£000 £000 £000 £000
Quoted securities 52,694 52,694 45,152 45,152
Subsidiaries 100 100
Total investments 52,694 52,794 45,152 45,252

Transaction costs on purchases for the year ended 31 December 2021 amounted to £23,000 (2020: £50,000) and transaction costs on sales amounted to £9,000 (2020: £39,000). The higher level of transaction costs incurred during 2020 reflects the higher than usual level of portfolio activity during that year, arising from both the change of investment policy and the liquidation of portfolio assets to meet the 2020 ZDP Shares redemption.

9. INVESTMENTS IN SUBSIDIARIES

Country of
% incorporation Capital and
Ordinary Share and reserves Profit & loss
Entity Principal activity capital held registration £000 £000
As at 31 December 2021
Investment in subsidiaries:
PMGR Securities 2025 PLC Financing 100% England 50 (714)
PGIT Securities 2020 PLC (in liquidation) Financing 100% England 50

   

Country of
% incorporation Capital and
Ordinary Share and reserves Profit & loss
Entity Principal activity capital held registration £000 £000
As at 31 December 2020
Investment in subsidiaries:
PMGR Securities 2025 PLC Financing 100% England 50 (58)
PGIT Securities 2020 PLC (in liquidation) Financing 100% England 50 (1,262)

The Company owns the whole of the ordinary share capital (£50,000) of PGIT Securities 2020 PLC a company which issued the Group’s 2020 ZDP Shares. The ZDPs were repaid on maturity on 30 November 2020 and the subsidiary has since been placed in liquidation. The subsidiary is held at fair value of £50,000 (2020: £50,000).

The Company owns the whole of the ordinary share capital (£50,000) of PMGR Securities 2025 PLC, a company which was incorporated on 21 October 2020 which issued the Group’s New Zero Dividend Preference Shares. The subsidiary is held at fair value of £50,000 (2020: £50,000).

10. RECEIVABLES AND OTHER FINANCIAL ASSETS

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2021 2020 2020
£000 £000 £000 £000
Accrued income and prepayments 113 113 108 108
Overseas withholding tax recoverable 76 76 33 33
189 189 141 141

Receivables do not carry any interest and are short term in nature and are accordingly stated at their amortised cost, which is the same as fair value.

11. OTHER FINANCIAL LIABILITIES

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2021 2020 2020
£000 £000 £000 £000
Other creditors 162 162 193 193
Intercompany payable 50 50
162 212 193 243

12. NON-CURRENT LIABILITIES

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2021 2020 2020
£000 £000 £000 £000
14,217,339 ZDP Shares of £0.01 (2020: 14,217,339) 14,990 14,276
Intercompany payable 15,040 14,326
14,990 15,040 14,276 14,326

On 3 November 2020, PGIT Securities 2020 PLC (“PGIT Securities 2020”), a wholly owned subsidiary of the Company, published a circular containing details of a scheme of reconstruction of PGIT Securities 2020 (in liquidation) and proposals to offer the holders of Existing ZDP Shares in PGIT Securities 2020 (in liquidation) the opportunity to elect to roll their investment into New ZDP Shares in PMGR Securities 2025 PLC.

The new ZDP Shares, were issued by the Company’s wholly-owned subsidiary, PMGR Securities 2025 PLC. The Company entered into an Undertaking Agreement with PMGR Securities 2025 PLC to meet the repayment entitlement of the ZDP Shares on 28 November 2025. The amounts shown above are due to PMGR Securities 2025 PLC.

The final capital entitlement of the ZDP Shares in issue is 127.6111p per share (total of £18,143,000) which is payable on 28 November 2025.

13. DERIVATIVES

2021 2021 2021 2020 2020 2020
Net current Net current
Current Current assets/ Current Current assets/
assets liabilities (liabilities) assets liabilities (liabilities)
£000 £000 £000 £000 £000 £000
Forward foreign exchange contracts – GBP/EUR 117 117 36 36
Forward foreign exchange contracts – GBP/HKD 58 58
Forward foreign exchange contracts – GBP/CAD 56 56
Forward foreign exchange contracts – GBP/USD 44 44
Total forward foreign exchange contracts 117 117 194 194

The above derivatives are classified as Level 2 as defined in note 21(g).

No index futures and options were held during 2021. In 2020, gains on derivative financial futures instruments amounted to £2,894,000 and is mainly composed of gains on short positions taken on equity index futures of £2,976,000. Short positions were held to mitigate against market falls during the year, and were held against the major indices on markets in which the Company invests. In addition, during 2020, losses on index option contracts, also held to mitigate against market falls, amounted to £82,000.

Foreign exchange forwards contracts were held to hedge currency movements, and resulted in gains of £405,000 (2020: losses of £541,000).

14. SHARE CAPITAL

Group and Group and Group and Group and
Company Company Company Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2021 2020 2020
Number of shares £000 Number of shares £000
Allotted, issued and fully paid:
Ordinary Shares of £0.01 18,238,480 183 18,088,480 181
18,238,480 183 18,088,480 181

The allotted issued and fully paid ZDP Shares of the Group at 31 December 2021 are disclosed in note 12.

During the year ended 31 December 2021, the Company issued 150,000 (2020: nil) shares of £0.01 each for a net consideration of £262,000 (2020: £nil). Details of the shareholder authorities granted to Directors to issue and buy back shares during the year are provided on pages 31 to 32.

15. SHARE PREMIUM

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2021 2020 2020
£000 £000 £000 £000
Opening balance 8,701 8,701 8,701 8,701
Issue of Ordinary Shares 274 274
Costs on issue of Ordinary shares (14) (14)
Closing balance 8,961 8,961 8,701 8,701

16. CAPITAL RESERVE

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2021 2020 2020
£000 £000 £000 £000
Opening balance 13,664 13,664 8,343 8,343
Gains on investments – held at fair value through profit or loss 7,469 7,469 5,028 5,028
Gains on derivative financial instruments 2,894 2,894
Gains/(losses) on investments on forward foreign exchange contracts 405 405 (541) (541)
Losses on foreign exchange (42) (42) (94) (94)
Provision for compound growth redemption yield on ZDP Shares (714) (714) (1,320) (1,320)
Investment management fee charged to capital (211) (211) (240) (240)
Reconstruction costs* (43) (43) (406) (406)
Closing balance 20,528 20,528 13,664 13,664

*These costs were incurred in connection with the reconstruction of the Company as set out in pages 52 and 61.

17. FINANCIAL COMMITMENTS

At 31 December 2021 there were no commitments in respect of unpaid calls and underwritings (31 December 2020: nil).

18. RETURN PER SHARE – BASIC

Total return per Ordinary Share is based on the total comprehensive gain for the year after taxation of £8,216,000 (31 December 2020: £7,006,000).

These calculations are based on the weighted average number of 18,202,903 Ordinary Shares in issue during the year to 31 December 2021 (2020: 18,088,480 Ordinary Shares).

The return per Ordinary Share can be further analysed between revenue and capital as below:

Year ended Year ended
31 December Year ended 31 December Year ended
2021 31 December 2020 31 December
Pence per 2021 Pence per 2020
Ordinary Share £000 Ordinary Share £000
Net revenue return 7.43p  1,352 9.32p  1,685
Net capital return 37.71p  6,864 29.41p  5,321
Net total return 45.14p  8,216 38.73p  7,006

The Company does not have any dilutive securities.

19. NET ASSET VALUE PER SHARE

The net asset value per share and the net assets available to each class of share calculated in accordance with International Financial Reporting Standards (IFRSs), are as follows:

Net asset value Net assets Net asset value Net assets
per share available per share available
31 December 31 December 31 December 31 December
2021 2021 2020 2020
Pence £000 Pence £000
18,238,480 Ordinary Shares in issue (2020: 18,088,480) 210.60p 38,410 173.48p 31,379

20. RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH THE INVESTMENT MANAGER

Details of the investment management fee charged by Premier Portfolio Managers Limited is set out in note 3. At 31 December 2021, £62,000 (31 December 2020: £75,000) of these fees remained outstanding.

In addition, Link Company Matters Limited acts as Company Secretary and the fee for secretarial services is set out in note 4. At 31 December 2021, £nil (31 December 2020: £nil) of these fees remained outstanding.

Fees paid to the Directors are disclosed in the Directors’ Remuneration Report on page 40.

Full details of Directors’ interests are set out in the Directors’ Remuneration Report on page 38.

21.FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES

(a) MARKET RISK

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements – currency risk (see (b) below), interest rate risk (see (c) below) and other price risk (see (d) below). The Board of Directors reviews and agrees policies for managing these risks, which have remained substantially unchanged from those applying in the year ended 31 December 2020. The Company’s Investment Manager assesses the exposure to market risk when making each investment decision, and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

(b) CURRENCY RISK

Certain of the Company’s assets, liabilities, and income, are denominated in currencies other than sterling (the Company’s functional currency, in which it reports its results). As a result, movements in exchange rates may affect the sterling value of those items.

Management of the risk

The Investment Manager monitors the Company’s exposure and reports to the Board on a regular basis.

When appropriate the Investment Manager deploys active hedging against exchange rate fluctuations where adverse movements are anticipated.

Income denominated in foreign currencies is converted to sterling on receipt. The Company does not use financial instruments to mitigate the currency exposure in the period between the time that income is included in the financial statements and its receipt.

Foreign currency exposures

An analysis of the Company’s equity investments and liabilities at 31 December 2021 (shown at fair value, except derivatives at gross exposure value) that are priced in a foreign currency based on the country of primary exposure are shown below:

As at 31 December As at 31 December As at 31 December As at 31 December As at 31 December As at 31 December
2021 2021 2021 2021 2021 2020
Derivative financial instruments assets/(liabilities) Investments Cash Receivables Net financial assets Net financial assets
£000 £000 £000 £000 £000 £000
Sterling 8,527 18,390 551 83 27,551 20,757
Australian Dollar 801 801 2,055
Brazilian Real 361 361 630
Canadian Dollar 4,583 2 35 4,620 5,995
Danish Krone 195
Euro (8,410) 11,047 3 66 2,706 4,966
Hong Kong Dollar 10,071 10,071 4,488
Norwegian Krone 1,805 1,805 1,561
US Dollar 5,636 6 5 5,647 5,201
Total 117 52,694 562 189 53,562 45,848

Foreign currency sensitivity

The following tables illustrate the sensitivity of the return on ordinary activities after taxation for the year and the equity in regard to the Company’s non monetary financial assets to changes in the exchange rates for the portfolio’s significant currency exposures, these being sterling/Hong Kong Dollar, sterling/US Dollar and sterling/Euro.

They assume the following changes in exchange rates:

Sterling/Hong Kong Dollar +/- 0.3% (2020: 0.6%)

Sterling/US Dollar +/- 0.3% (2020: 0.6%)

Sterling/Euro +/- 0.3% (2020: 0.5%)

These percentages have been determined based on the average market volatility in exchange rates, in the previous 12 months.

If sterling had strengthened against the currencies shown assuming there was no currency hedge in place, this would have had the following effect:

2021 2021 2021 2020 2020 2020
Hong Kong Dollar US Dollar Euro Hong Kong Dollar US Dollar Euro
£000 £000 £000 £000 £000 £000
Projected change 0.3% 0.3% 0.3% 0.6% 0.6% 0.5%
Impact on revenue return (1) (1) (1) (2) (4) (1)
Impact on capital return (34) (19) (31) (38) (39) (32)
Total return after taxation for the year (35) (20) (32) (40) (43) (33)
Equity (35) (20) (32) (40) (43) (33)

If sterling had weakened against the currencies shown assuming there was no currency hedge in place, this would have had the following effect:

2021 2021 2021 2020 2020 2020
Hong Kong Dollar US Dollar Euro Hong Kong Dollar US Dollar Euro
£000 £000 £000 £000 £000 £000
Projected change 0.3% 0.3% 0.3% 0.6% 0.6% 0.5%
Impact on revenue return 1 1 1 2 4 1
Impact on capital return 34 19 31 38 39 32
Total return after taxation for the year 35 20 32 40 43 33
Equity 35 20 32 40 43 33

In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the currency risk management process used to meet the Company’s objectives.

(c) INTEREST RATE RISK

Interest rate movements may affect the level of income receivable on cash deposits. Interest rate movements may affect the fair value of investments in fixed-interest rate securities.

Cash at bank at 31 December 2021 (and 31 December 2020) was held at floating interest rates, linked to current short-term market rates.

Due to the insignificant impact of fluctuations in interest rates no sensitivity analysis is shown.

(d) OTHER PRICE RISK

Management of the risk

The Board of Directors manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Investment Manager. The Board meets regularly and at each meeting reviews investment performance. The Board monitors the Investment Manager’s compliance with the Company’s objectives.

When appropriate, the Company manages its exposure to risk by using futures contracts or by buying put options on indices and on quoted equity investments in its portfolio.

Concentration of exposure to other price risks

A sector breakdown and geographical allocation of the portfolio is contained in the Investment Manager’s Report on page 11.

Other price risk sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and the equity to an increase or decrease of 10% in the fair values of the Company’s equities. This level of change is considered to be reasonably possible based on observation of current market conditions. The sensitivity analysis is based on the Company’s equities at each balance sheet date, with all other variables held constant.

Increase in Decrease in Increase in Decrease in
fair value fair value fair value fair value
2021 2021 2020 2020
£000 £000 £000 £000
Consolidated Income Statement – return after taxation:
Capital return – increase/(decrease)  5,269 (5,269)  4,515 (4,515)
Total return after taxation – increase/(decrease)  5,269 (5,269)  4,515 (4,515)
Equity  5,269 (5,269)  4,515 (4,515)

(e) LIQUIDITY RISK

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Management of the risk

The Directors believe that liquidity risk is not significant as the majority of the Company’s assets are investments in quoted securities that are readily realisable. The Company does not have any borrowing facilities.

The investments in unquoted securities may have limited liquidity and be difficult to realise. At 31 December 2021 and 31 December 2020, the unquoted securities are valued at £100,000 which relates to the two wholly-owned subsidiaries, PMGR Securities 2025 PLC and PGIT Securities 2020 PLC (in liquidation). The Company may invest up to 15% of its gross assets in unquoted securities.

The Board gives guidance to the Investment Manager as to the maximum amount of the Company’s resources that should be invested in any one holding. The policy is that the Company should remain fully invested in normal market conditions and that portfolio liquidity may be used to manage short term cash requirements. The Board will monitor the level of liquidity required to fund the repayment of the ZDP Shares and the impact of the issue of any new ZDP Shares.

The contractual maturities of the Group’s financial liabilities at 31 December 2021, based on the earliest date on which payment can be required, were as follows:

Between
3 months Not more one and five
or less than one year years Total
At 31 December 2021 £000 £000 £000 £000
Payables and other financial liabilities (162) (162)
ZDP Shares (18,143) (18,143)

The contractual maturities of the Group’s financial liabilities at 31 December 2020, based on the earliest date on which payment can be required, were as follows:

Between
3 months Not more one and five
or less than one year years Total
At 31 December 2020 £000 £000 £000 £000
Payables and other financial liabilities (193) (193)
ZDP Shares (18,143) (18,143)

(f) CREDIT RISK

The failure of the counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. The maximum exposure to credit risk at 31 December 2021 (comprising of current assets and cash at bank) was £868,000 (31 December 2020: £696,000). The calculation is based on the Company’s credit exposure as at 31 December 2021 and may not be representative of the year as a whole.

(g) FAIR VALUE MEASUREMENTS OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

The financial assets and liabilities are either carried in the balance sheet at their fair value, or the balance sheet amount is a reasonable approximation of fair value (due from brokers, dividends receivable, accrued income, due to brokers, accruals and cash balances).

The tables below set out fair value measurements using fair value hierarchy, where Level 1, Level 2 and total figures apply to both Group and Company and Level 3 figures apply only to Company.

Financial assets at fair value through profit or loss at 31 December 2021

Level 1 Level 2 Level 3 Total
Notes £000 £000 £000 £000
Equity investments 52,694 52,694
Investments in subsidiaries 100 100
Forward foreign exchange contracts 13 117 117
Total 52,694 117 100 52,911

Financial assets at fair value through profit or loss at 31 December 2020

Level 1 Level 2 Level 3 Total
Notes £000 £000 £000 £000
Equity investments 45,152 45,152
Investments in subsidiaries 100 100
Forward foreign exchange contracts 13 194 194
Total 45,152 194 100 45,446

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 – valued using quoted prices in active markets for identical assets.

Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1. Level 2 investments include the Company’s forward currency contracts, these are valued using the Prime Broker contracts which uses spot foreign exchange rates in the respective currencies.

Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.

Level 3 fair values are determined by the Directors using valuation methodologies in accordance with the IPEV Guidelines and as detailed in note 1.1 (h). Significant inputs include investment cost, the value of the most recent capital raising and the adjusted net asset value of funds. In accordance with IPEV Guidelines, new investments are carried at cost, the price of the most recent investment being a good indication of fair value. Thereafter, fair value is the amount deemed to be the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. At 31 December 2021, the Company’s Level 3 investments related to the two wholly-owned subsidiaries, PMGR Securities 2025 PLC and PGIT Securities 2020 PLC (in liquidation). The net asset value of the subsidiaries are considered to be the fair value.

The valuation techniques used by the Company are explained in the accounting policies note on pages 59 and 60.

A reconciliation of fair value measurements in Level 3 is set out below.

Level 3 financial assets at fair value through profit or loss

As at
31 December
2021
£000
Opening fair value – PGIT Securities 2020 PLC (in liquidation) and PMGR Securities 2025 PLC 100
Closing fair value – PGIT Securities 2020 PLC (in liquidation) and PMGR Securities 2025 PLC 100

The listed bid price was used to determine the fair value of the ZDP Shares as at 31 December 2021:

As at 31 December 2021 As at 31 December 2021 As at 31 December 2020 As at 31 December 2020
Fair value Fair value
Book value Level 2 Book value Level 2
£000 £000 £000 £000
ZDP Shares 14,990 15,141 14,276 14,644

The ZDP Shares are considered to be Level 2 (2020: Level 2), due to low volumes of trade.

(h) CAPITAL MANAGEMENT POLICIES AND PROCEDURES

The Company’s capital management objectives are:

• to ensure that the Company will be able to continue as a going concern; and

• to achieve a high income from its portfolio and to realise long-term growth in the capital value of the portfolio.

The Company’s capital at 31 December comprises:

2021 2020
£000 £000
Total assets 53,562 45,848
Debt:
ZDP Shares (14,990) (14,276)
Equity:
Equity share capital 183 181
Retained earnings and other reserves 38,227 31,198
38,410 31,379
Debt as a percentage of total capital 27.99% 31.14%

The Company’s objectives, policies and processes for managing capital are unchanged from the preceding accounting period.

• As a public company, the Company has to have a minimum share capital of £50,000.

• In order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has to be able to meet one of the two capital restriction tests imposed on investment companies by company law.

These requirements are unchanged since last year and the Company has complied with them.

22. SEGMENTAL REPORTING

The chief operating decision maker has been identified as the Board of Premier Miton Global Renewables Trust PLC. The Board reviews the Company’s internal management accounts in order to analyse performance.

The Directors are of the opinion that the Company is engaged in one segment of business, being the investment business.

Geographical segmental analysis pertaining to the Company has not been disclosed because the Directors are of the opinion that as an investment company the geographical sources of revenues received by the Company are incidental to its investment activity.

23. SUBSEQUENT EVENTS

There were no subsequent events.

Glossary of Terms and Alternative Performance Measures

ALTERNATIVE PERFORMANCE MEASURES (“APMS”)

The European Securities and Markets Authority defines an Alternative Performance Measure (“APM”) as being a financial measure of historical or future financial performance, financial position or cash flow, other than a financial measure defined or specified in the applicable accounting framework. The APMs used may not be directly comparable with those used by other companies. In selecting these Alternative Performance Measures, the Directors considered the key objectives and expectations of typical investors in an investment trust such as the Company. In particular the Directors have selected APMS which allow the user to gain a better understanding of the Company’s capital structure and the risks inherent within the Company’s structure. The following APM’s have been used:

DISCOUNT/PREMIUM (APM)

If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, the shares are said to be trading at a premium. The Board monitors the level of discount or premium and consideration is given to ways in which share price performance may be enhanced, including the effectiveness of marketing and share buy-backs, where appropriate. The discount/premium is shown on page 2.

As at As at
31 December 31 December
2021 2020
Net Asset Value per Ordinary Share (cum income) a 210.60p 173.48p
Mid-market price per Ordinary Share b 196.50p 157.50p
Discount (b-a)/a 6.7% 9.2%

GEARING (APM)

Gearing, or leverage, is introduced when a company borrows money or issues prior ranking share classes such as Zero Dividend Preference (“ZDP”) shares, to buy additional investments. The objective is to enhance returns to shareholders but there is the risk of the opposite effect if the additional investments fall in value.

Gearing has been calculated by dividing the Zero Dividend Preference Shares over the Equity attributable to Ordinary Shareholders.

As at As at
31 December 31 December
2021 2020
Zero Dividend Preference Shares £15.0m £14.3m
Equity attributable to Ordinary Shareholders £38.4m £31.4m
Gearing 39.0% 45.5%

GROSS REDEMPTION YIELD

The return on a fixed-interest security, or any investment with a known life, expressed as an annual percentage and without any deduction for tax. Redemption yield measures the capital as well as income return on investments with a fixed life.

HURDLE RATES (APM)

The compound rate of growth or decline of the total assets required each year until the redemption date for shareholders to receive the predetermined redemption price on a Zero Dividend Preference Share or the current share price on an Ordinary Share.

Year ended Year ended
31 December 31 December
Hurdle Rate – Ordinary Shares 2021 2020
Gross assets less current liabilities a £53.4m £45.7m
Less management fees to be charged to capital until ZDP redemption date b (£0.9m) (£1.0m)
c = a+b £52.5m £44.7m
Redemption value of Zero Dividend Preference Shares d (£18.1m) (£18.1m)
Expected equity attributable to Ordinary Shareholders
at ZDP redemption date 28 November 2025 e = c+d £34.3m £26.6m
31 December 2021 market capitalisation based on mid share price
of 196.50p (2020: 157.50p) x number of shares in issue f £35.8m £28.5m
Difference between year-end market capitalisation and
expected market capitalisation at ZDP redemption date g = f-e £1.5m £1.9m
Annualised change in year-end gross assets required to return current market
capitalisation at ZDP redemption date h = g/a 2.9% 4.4%
Ordinary Shares Hurdle to Return
the 31 December 2021/31 December 2020
share price at 28 November 2025 = (1+h)^(1/((number of days to redemption)/365))-1 0.7% 0.9%

Numbers have been rounded.

Year ended Year ended
31 December 31 December
Hurdle Rate – Zero Dividend Preference Shares 2021 2020
Gross assets less current liabilities a £53.4m £45.7m
Redemption value of Zero Dividend Preference Shares b £18.1m £18.1m
Management fees to be charged to capital until ZDP redemption date c £0.9m £1.0m
d = b+c £19.1m £19.1m
Percentage to fall before Zero Dividend Preference Shares not fully covered e = (d-a)/a (64.3%) (58.2%)
Zero Dividend Preference Shares Hurdle to Return
the redemption price of 127.6111p
at 28 November 2025 = (1+e)^(1/((number of days to redemption)/365))-1 (23.1%) (16.2%)

Numbers have been rounded.

NET ASSET VALUE (“NAV”) (CUM INCOME)

The NAV is the assets attributable to shareholders expressed as an amount per individual share. PMGR’s Ordinary Share NAV is calculated as the total value of all its assets, at current market value, having deducted all prior charges at their par value (or at their asset value). “Cum income” referred to the inclusion of current year net revenue accrued but not yet paid as a dividend.

NAV TOTAL RETURN (APM)

The combined effect of any dividends paid, together with the rise or fall in the share price or NAV. Total return statistics enable the investor to make performance comparisons between companies with different dividend policies. Any dividends (after tax) received by a shareholder are assumed to have been reinvested in either additional shares of the company at the time the shares go ex-dividend (the share price total return) or in the assets of the company at its NAV per share (the NAV total return). The total return, the NAV total return and the share price total return figures are shown on page 2.

Year ended Year ended
31 December 31 December
2021 2020
Opening NAV 173.48p 144.94p
Increase in NAV 37.12p 28.54p
Closing NAV 210.60p 173.48p
% increase in NAV 21.4% 19.7%
Impact of reinvested dividends 5.1% 9.8%
NAV Total Return 26.5% 29.5%

ONGOING CHARGES (APM)

The ongoing charges represent the Company’s management fee and all other operating expenses, excluding finance costs, expressed as a percentage of the average of the daily Total Assets during the year (see page 2). The Board continues to be conscious of expenses and works hard to maintain a sensible balance between good quality service and cost.

Year ended 31 December 2021 2021 2020 2020
£000 £000 £000 £000
Average Total Assets a  48,828 53,056
Investment mangement fee 352 400
Other operating expenses 456 532
Total expenses excluding finance costs b 808 932
Ongoing charges (b÷a) 1.65% 1.76%

SHARE PRICE TOTAL RETURN (APM)

The return to the investor, on a mid price to mid price basis, assuming that all dividends paid were reinvested, without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend.

Year ended Year ended
31 December 31 December
2021 2020
Opening share price 157.50p 130.00p
Increase in share price 39.00p 27.50p
Closing share price 196.50p 157.50p
% increase in share price 24.8% 21.2%
Impact of reinvested dividends 5.9% 9.8%
Share Price Total Return 30.7% 31.0%

TOTAL ASSETS

Total assets less current liabilities, before deduction of all borrowings.

TOTAL ASSETS TOTAL RETURN (APM)

The total assets total return compares the closing assets to the opening assets plus the dividends that have gone ex-dividend during the year.

Year ended Year ended
31 December 31 December
2021 2020
£000 £000
Opening Total Assets 45,655 55,204
Closing Total Assets 53,400 45,655
Increase/(decrease) 7,745 (9,549)
Zero Dividend Preference net refinancing 16,031
Dividends marked “ex-dividend” in the period 1,447 1,844
Total assets total return (£000) 9,192 8,326
Total assets total return (%) 19.8% 16.5%

Total assets total return expressed as a percentage, takes into account timing of dividends and other capital returns during the year, and also assumes dividends are reinvested. The disclosures provided above are illustrative of the major components of the calculation, and cannot of themselves be used to replicate the calculation.

ZERO DIVIDEND PREFERENCE SHARE COVER (NON CUMULATIVE) (APM)

The non cumulative cover measures the amount by which the final redemption value of the Zero Dividend Preference Shares are secured by the total assets of the Group allowing for all prior ranking liabilities and the accrual of expenses to capital over the remaining period to the redemption of the Zero Dividend Preference Shares.

Year ended Year ended
31 December 31 December
2021 2020
Gross assets less current liabilities (excluding Zero Dividend Preference Shares) £53.4m £45.7m
Less December revenue reserve (£1.2m) (£1.3m)
Gross assets for Zero Dividend Preference Cover a £52.2m £44.4m
Redemption value of Zero Dividend Preference Shares b £18.1m £18.1m
Management fees charged to capital c £0.2m £0.2m
Years left d 3.91 4.91
Zero Dividend Preference Share Cover (non cumulative) a/(b+(c*d)) 2.74x 2.32x

Company History

The Company, a UK investment trust listed on the Main Market of the London Stock Exchange, was incorporated on 12 September 2003 and commenced its activities on 4 November 2003. The Company was established in connection with the scheme of reconstruction of Legg Mason Investors International Utilities Trust PLC, with 18,143,433 Ordinary Shares and 19,143,433 Zero Dividend Preference Shares being allotted at launch. On 18 December 2009 shareholders approved special resolutions to implement tender offers for Ordinary Shares and Zero Dividend Preference (“ZDP”) Shares, to extend the life of the Company until 31 December 2015 and to amend the final entitlement per ZDP Share to 221.78p on 31 December 2015. On 15 December 2010 shareholders approved proposals to issue new shares in connection with the reconstruction of Premier Renewable Energy Fund Limited.

On 27 August 2014 shareholders approved proposals to extend the life of the Company and to implement a reorganisation of the Company through a scheme of arrangement. The existing ZDP Shares were replaced with New ZDP Shares issued by a newly incorporated subsidiary of the Company, PEWT Securities PLC and the Articles were amended to allow the Company to continue with an indefinite life whilst including a provision to allow holders of ordinary shares an opportunity to vote on the continued existence of the Company every five years from 2020. In December 2014 the Company raised £1,361,931 (after expenses) through the placing of 310,000 Ordinary Shares and 384,681 ZDP Shares (issued by PEWT Securities PLC).

During 2015 the Company raised £3,153,000 (after expenses) through the placing of 710,000 Ordinary Shares and 881,045 ZDP Shares (issued by PEWT Securities PLC).

On 14 December 2015 it was announced that elections by ZDP Shareholders to participate in the Rollover Option exceeded the Maximum Issue Size, meaning that such Elections were scaled back on a pro-rata basis. Each ZDP Shareholder who made a valid Election to receive new ZDP Shares of PEWT Securities 2020 PLC received approximately 1,871 new ZDP Shares and £346.80 in cash for every 1,000 existing ZDP Shares held on the Effective Date and for which they made a valid Election. On 31 December 2015, PEWT Securities PLC was placed into members’ voluntary liquidation and 24,073,337 new ZDP Shares in PEWT Securities 2020 PLC, with a final capital entitlement per ZDP Share of 125.6519 pence on 30 November 2020, were issued to satisfy ZDP Shareholders who had elected to roll over their investment.

On 1 November 2017, the Board of Premier Energy and Water Trust PLC announced that the name of the Company changed to Premier Global Infrastructure Trust PLC and simultaneously the name of the Company’s subsidiary, PEWT Securities 2020 PLC, was changed to PGIT Securities 2020 PLC.

At the Company’s Annual General Meeting held on 22 April 2020, shareholders approved a resolution that the company continue in existence as an Investment Trust until the Annual General Meeting in 2025.

At a General Meeting held on 9 October 2020, shareholders approved a resolution to amend the Company’s investment policy so that the portfolio consists primarily of investments in companies operating in the renewable energy sector as well as other sustainable infrastructure investments. On 16 November 2020 the Company changed its name to Premier Miton Global Renewables Trust PLC.

On 23 November 2020 the Company announced that valid Elections to participate in a new ZDP share to be issued by PMGR Securities 2025 PLC were received in respect of 8,648,877 existing ZDP Shares issued by PGIT Securities 2020 PLC, resulting in an entitlement to 10,867,439 new ZDP Shares. In addition PMGR Securities 2025 PLC placed a further 3,349,900 new ZDP Shares with new investors. On 30 November 2020, PGIT Securities 2020 PLC was placed into members’ voluntary liquidation and existing ZDP Shares, which had not made a valid Election to receive new ZDP Shares, received their final capital entitlement of 125.6519 pence per ZDP share. On the same day, PMGR Securities 2025 PLC issued 14,217,339 new ZDP Shares with a final capital entitlement of 126.6111 pence on 28 November 2025.

During 2021 the Company raised £262,000 (after expenses) through the placing of 150,000 Ordinary Shares.

Shareholder Information

SHARE PRICE AND PERFORMANCE INFORMATION

The Ordinary Shares and ZDP Shares are listed on the London Stock Exchange. Information about the Company and that of the other investment companies managed by Premier Miton Group plc, namely, the Diverse Income Trust plc, Miton UK MicroCap Trust plc and Miton Global Opportunities plc, including current share prices can be obtained directly from:

www.globalrenewablestrust.com

Contact Premier Miton on 0333 456 1122, or by e-mail to investorservices@premiermiton.com

SHARE DEALING

Shares can be purchased through a stockbroker, or on a variety of retail investor platforms.

SHARE REGISTER ENQUIRIES

The register for the Ordinary Shares and ZDP Shares is maintained by Link Group. In the event of queries regarding your holding, please contact the Registrar on 0371 664 0300 or, if calling from overseas, on +44 (0) 371 664 0391. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. We are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales. You can also contact the registrar by email at shareholderenquiries@linkgroup.co.uk. Changes of name and/or address must be notified in writing to the Registrar.

STATEMENT REGARDING NON-MAINSTREAM INVESTMENT PRODUCTS

The Company currently conducts its affairs so that both the Ordinary Shares issued by the Company and the ZDP Shares issued by the Company’s wholly-owned subsidiary PMGR Securities 2025 PLC can be recommended by IFAs to retail investors in accordance with the FCA’s rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future.

The Ordinary Shares and the ZDP Shares fall outside the restrictions which apply to non-mainstream investment products because they are excluded securities.

A member of the Association of Investment Companies.

AIFMD Disclosures and Remuneration Disclosure

AIFMD DISCLOSURES

The provisions of the Alternative Investment Fund Managers Directive (“AIFMD”) took effect on 22 July 2014. The Alternative Investment Fund Manager (“AIFM”) of the Company is Premier Portfolio Managers Limited (“PPM”), authorised by the FCA as an Alternative Investment Fund Manager (“AIFM”) under the AIFMD.

Pre-Investment Disclosures

The AIFM is required to make certain disclosures available to investors in accordance with the AIFMD. Those disclosures that are required to be made pre-investment can be found at https://www.premierfunds.co.uk/media/820971/premier-miton-global-renewables-trust-pre-investment-disclosure-document-aifmd.pdf. The document was updated in November 2021 and there have been no material changes to the disclosures contained within the document since that date.

AIFMD Leverage limits

The maximum level of leverage which the Investment Manager may employ on behalf of the Company and the levels as at 31 December 2021 are set out below:

Note that a leverage or commitment exposure level of 100% represents no leverage. Leverage arises from the ZDP Shares and forward currency contracts.

Maximum gross leverage (calculated as specified by the AIFM Directive): 1,000% Level as at 31 December 2021: 160%
Maximum commitment exposure (calculated as specified by the AIFM Directive): 800%. Level as at 31 December 2021: 140%

Remuneration Disclosure

The provisions of the AIFMD require the AIFM to establish and maintain remuneration policies for its staff which are consistent with and promote sound and effective risk management.

The AIFM is part of a larger group of companies within which remuneration policies are the responsibility of a remuneration committee comprised entirely of non-executive directors. That committee has established a remuneration policy which sets out a framework for determining the level of fixed and variable remuneration of staff, including maintaining an appropriate balance between the two.

Arrangements for variable remuneration within the AIFM’s group are calculated primarily by reference to the performance of each individual and the profitability of the relevant business unit. The policies are designed to reward long term performance and long term profitability.

Within the Group, all staff are employed by a subsidiary of the parent Company with none employed directly by the AIFM. The costs of a number of individuals are allocated between the entities within the AIFM’s group based on the expected amount of time devoted to each.

The total remuneration of those individuals who are fully or partly involved in the activities of the AIFM in relation to Alternative Investment Funds (‘AIFs’), including the Company and including those whose time is allocated between group entities, for the AIFM’s financial year ending 30 September 2021, is analysed below:

2021
Fixed remuneration £3,831,752
Variable remuneration £2,270,527
Total £6,102,279
Weighted FTE Headcount 50

The table below provides an alternative analysis of the remuneration data.

Aggregate remuneration of:
Significant Influence Functions £1,766,180
Senior Management Functions £83,439
Other staff £4,252,660
Total £6,102,279

The staff members included in the above analysis support all the funds managed by the AIFM. It is not considered feasible or useful to attempt to apportion these figures to individual AIFs.

The AIFM’s management have reviewed the general principles of the remuneration policy and its application in the last year which has resulted in no material changes to the policy.

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

LEI Number: 2138004SR19RBRGX6T68

UK 100

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