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