Good afternoon, ladies and gentlemen. Welcome to the Premier Miton Global Renewables Trust plc investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please just simply type in your questions and press Send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, as usual, we would just like to submit the following poll, and if you could give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to James Smith. James, good afternoon, sir.
Good afternoon. Thank you, Jake. Thank you, everyone, for attending this annual general meeting presentation. This is a presentation we have given this morning at the AGM. I'm joined today by Premier Miton's Head of Investment Trusts, Claire Long. Without further ado, I would be grateful if you could spend a moment or two looking at this risk slide. Okay. Thank you. A few key messages from the year. Firstly, investors will, I assume, be aware this is a split capital investment trust. We have two classes share. We have the ordinary share and the zero dividend preference share. We look at performance in two ways.
Firstly, based on the total assets return, so the return effectively on the portfolio, and then also the return to ordinary shareholders. The total assets total returns, so including dividends and inclusive of all costs in 2024 was -14%. A very disappointing figure, of course, and that is following on from negative 7.5% for 2023. However, this is in the context of a very difficult performance period for global renewable energy. If we compare those figures to our performance comparator, that's the S&P Global Clean Energy Transition Index, that returned in sterling terms -24.1% in 2024 and -20.1% in 2023. Last year we outperformed by approximately 10%.
In 2023, we outperformed by around 12.5%-13%. Now because of the geared capital structure within the trust, any movements either up or down are amplified in the net asset value total return to ordinary shareholders. You can see there that 14% negative total return on gross assets translated into a negative 26% on the net assets. In terms of earnings and revenue return, last year, the earnings per share, so that's the dividend income into the trust less all costs charged through the revenue account, was GBP 0.0755, which was down a little on 2023.
The biggest factor within that decrease was the fact that two of our holdings in the battery energy storage sector ceased to pay dividends on a temporary basis. That's Harmony Energy and Gresham House Energy Storage, and that took about GBP 0.005 off our income. The board declared a GBP 0.08 dividend for the full year, so that's four quarterly dividends, each of GBP 0.02, which was 8.1% up on 2023. I think the message is that the underlying dividend income remains quite robust apart from those isolated factors such as the battery energy storage companies, which no doubt we can come onto shortly. A mixed operating environment, some positives, some negatives.
We'll come onto that in a little more detail right now. I think really the most important thing, and we've had this for a few years now, is the higher interest rate environment. The market sees renewable energy as a bond proxy sector. I guess in a similar way to property, for instance. The market views the revenues within the sector as being relatively fixed or bond-like, and therefore, when interest rates go up, those future cash flows are discounted at a higher rate into current values and ergo are worth less in current value or share price terms. The market was very fixated on that, I would say, last year.
A number of our holdings, they traded very closely, in terms of correlation to things like gilts, for example. That was certainly negative. On the positive side of the ledger, power prices, although lower than they have been in 2022 and 2023, of course, power prices were very high during that period because of the issues in Ukraine. We did see an increasing trend for power prices and gas prices, throughout the year, although they have been rather weak over the past month, as the market is rather concerned, of course, about global growth. We have seen a strengthening power price environment. That's a positive. Inflation continues above targets. Effectively, that's a positive for us.
We have many companies within the trust that have revenues explicitly linked to inflation. Interest rates and inflation, a bit of a double-edged sword really. We benefit from inflation, but we lose on the interest rates. The market really has really ignored the positives of inflation for these stocks, but certainly over-focused, I would say, on interest rates. The market's also been concerned about renewable construction costs following a period of many years when costs have continually fallen. We've seen a bit of a hiatus in that over the past 12 months. Now, partly that is because of higher capital costs or higher financing costs, rather, higher costs of capital.
Of course, when you build any renewable energy plant, a lot of the costs are incurred up front in terms of actually building it, which is then expensed over time through depreciation. Yeah, I mean, your cost of capital is a major influence on what it costs to build a renewable energy facility. That's been negative. Offsetting that, solar, the cost of actually constructing solar for the panels, inverters, et cetera, and also battery storage have continued to fall. On the wind side, onshore's slightly gone up and offshore maybe gone up slightly more. You know, with various commodities having gone up in price a little, we're seeing higher costs in wind and lower costs in solar.
Most commentators think that solar will extend its advantage over wind, and we'll see more solar being built, and perhaps not quite so much wind. Solar will certainly be the technology of choice. Toward the end of the year, President Trump was elected, and of course, has said a great deal about renewable energy. As we move into 2025, has started to try and make moves to sort of restrict offshore renewables, I think mostly offshore wind. We haven't seen much of an effect on onshore yet.
Perhaps we can come onto this in more detail, but it's certainly been a major negative for sentiment, particularly for U.S. renewable energy companies, and those U.K. and European companies which have investments in the States. That's been another negative. Translating that into specific stocks held within the trust. Drax had another very good year. Earnings growth, strong earnings growth, probably ahead of market expectation. Volatility within the U.K. power market has been relatively high, particularly in the second half, and that has enabled the pumped storage business in Scotland to perform very well. That's been a positive. We did quite well in a company called Cadeler, which owns a fleet of vessels which install offshore wind turbines, and that's been very strong.
We believe that the market is particularly underserved, and there are relatively few vessels capable of installing the 15 MW class of offshore wind turbine. We lost a couple of stocks to M&A. In fact, actually already this year, we've lost two more and may be about to lose a third. That's certainly an ongoing positive feature. I think given that where we believe valuations are, I'd expect to see that continuing, as we go through 2025. Okay, that's on the positive side. On the negative side, things hurting performance certainly were the battery storage companies. There are three in the U.K., Gore Street, Gresham, and Harmony. Our largest investment was in Gore Street and remains the case.
Gore Street is the only one of those three that is internationally diversified, and its NAV has held up better than the other two. However, sentiment has been weak in that sector, so its share price was relatively poor. To update this slide slightly, we've now seen two companies put in bids for Harmony Energy, Foresight and Drax. That is an ongoing situation and we retain our Harmony Energy shares as that process develops. Renewable developers, so companies like RWE, for example, developing projects were relatively poor. I think that comes down to concerns over the financing costs and new build costs for wind, for example. Also political risk in the States, specifically and especially in regard to offshore wind.
They were relatively weak. Thirdly, the UK-listed renewable energy investment companies. Companies like Greencoat UK Wind, Octopus Renewables, and I think really interest rates were the key driver there. Now, those companies tend to be relatively well indexed to inflation, so that was a positive. The market was rather ignoring that and focusing on interest rates. If you look at NAVs within that sector, they haven't come down particularly. What we've seen is the companies move from a modest discount to a rather large discount to NAV, typically about 30%-35%, as we sit here today. A few factual slides looking at our total returns.
Investors will recall that in the back end of 2020, the trust made the decision to concentrate purely on renewable energy companies. We can talk about the background to this later on if you wish. That worked very well in 2021. We had a very strong return against a very negative return for the index. Since then, we are the pink bars there. We've had three negative years. Overall, since we've taken that decision, we have outperformed the index quite substantially. Which you know is good to see, but you know it's still rather disappointing.
What I would say is that the companies we've invested in have largely performed as we expect, aside from maybe the battery energy storage companies. Earnings have been relatively good, sector growth has been good, dividends have been good. Yes, we've had these negative share price returns as sentiment toward the sector has soured. Looking at share price total return, so on the share price on the ordinary shares, and this is largely the period of full year periods, while I've been the manager, lead manager of the trust, which happened in 2012. You can see it's been rather cyclical. We tend to have strong periods followed by weak periods.
As I'm sat here today, looking at the level that some of the shares are, you have to be careful what I say here. Looking at valuations in the sector, I would be optimistic that we'd be heading into a period of positive returns following this three year period of negative returns. Again, I would read the risk disclaimers quite carefully when you listen to me say that sort of thing. Just looking back, that is the kind of pattern that we've seen in the past. Since I've been the manager, we've had a total return of 131% or 7% per year averaged. In terms of the balance sheets, now, shareholders will be aware that we have a ZDP redemption in November this year.
As of today, the gross assets are around about GBP 36.5 million. ZDP is a little higher, and equity shareholders' funds just over GBP 18 million. The ZDPs are almost 2x covered. Strong coverage for the ZDPs, given there's only just over six months to go now, I think. Yeah, relatively high gearing still. We are obliged under the regulations to give annualized calendar share price and ordinary share performance versus the index. These are 12 months to November for each respective year. February. Sorry. I do apologize. February. A reconciliation of our net asset movement over the year. Net asset value movement. We started the year with an NAV of GBP 1.47. And then the various positives, negatives.
The revenue was GBP 7.5p Losses on investments about 39. Then various charges. ZDP finance costs. The ZDPs accrete over time, and that comes off the ordinary share NAV. That was GBP 4.6 last year. Then we paid dividends which falling XD in the year of GBP 7.85 per share. Which brings us to an NAV at the end of December of 101.61. And as of today, we are a couple of p higher than that. The 2025 was so far in positive territory, with the global market having fallen, of course, so far this year, particularly U.S. stocks. Europe having done slightly better. Dividends per share. Five year track record.
Paid GBP 8 for last year. Dividends remain pretty much covered by earnings. We have a very healthy revenue reserve. I think just to clarify, correct me if I'm wrong, but just over GBP 7 per share. Something like that.
Yeah.
The step down in 2021 was when we refinanced the previous ZDP share issue at the end of 2020. So that took, I think it was about GBP 15 million out of gross assets to go forward with a smaller ZDP issue. Then over time, as dividends increased naturally within the portfolio, the directors have been able to increase that quarterly dividend. Looking at the geographic allocation, turning to the portfolio.
One reason we have substantially outperformed, I think, the sector in gross asset terms anyway, has been a relatively modest exposure to North America. That's worked well, particularly over the past few months. We remain, for the most part, largely invested in Europe and the U.K. Now, I mean, just looking at it on a very simplistic basis, we own a portfolio of companies that, for the most part, produce and sell energy. Logically, I always think it's best to be in a market that is short of energy rather than oversupplied. Europe and the U.K. are short of energy, be it gas, electricity, whatever. The U.K. is particularly short of electricity, so we import quite large amounts of electricity these days. In those environments, you would tend to have better pricing and good returns.
That's not to say North America isn't a good market to invest in, but of course, we've seen quite high levels of political risk in North America recently. Although it does remain a very high growth market, and those companies we do own have had a lot of success in selling power to the technology sector, for instance. Yeah, North America still remains an attractive investment, but as long as Donald Trump's in power, I think sentiment is going to be difficult. In terms of sectoral allocation, really, I guess not a great deal has changed. The biggest movement really has been a reduction in the amount we hold in Yieldcos and investment companies. That's really the U.K.-listed renewable energy investment company sector.
That has then been deployed into the more diversifying areas within the portfolio, such as the renewable technology and service, such as Cadeler, for instance, I mentioned earlier, or renewable financing and energy efficiency companies or networks. We also have a couple of investments now into renewable fuels and charging. Actually, just one now. We recently sold one. That's the presentation, so short and sweet. You have our contact details here. As always, please do feel free to be in contact directly with us. I'll turn over to Claire for Q&A.
Thank you very much, James. I've seen some questions coming in. Okay, a couple of questions about the ZDPs. What plans do the company have with regard to the pending repayment of the ZDPs in November this year? Shall I answer that one?
Yeah.
I mean, as James has mentioned, the ZDPs mature at the end of November and they will be paid back. At this point in time, the board is considering what the next steps will be. It's not really appropriate for us to speculate, but they are seeking advice from their advisers and it's fair to say that they will be making further announcements over the next few months. Without wishing to appear evasive, it's difficult to say more than that at this point in time. Second question on the ZDPs. With the recent turmoil in global equity markets, are you taking any defensive moves in order to preserve capital to ensure that the ZDPs can be repaid in full when they expire this November?
Yes. We are mindful of liquidity within the portfolio, and we are mindful of the gearing risk, not just to ZDP, but also as it affects ordinary shareholders. I won't give any specifics out right now, but I think what you can expect as we move toward November is that the portfolio will be increasingly moved into cash-type investments, particularly as we move very close to November, so short-dated bonds. As we invest, even from now, we're paying particularly close attention to liquidity.
I think it's fair to say, isn't it, James, that by and large, the portfolio is pretty liquid.
Yes.
Yeah. Yeah. Okay. Okay. Another question, this is on portfolio holdings. What's the investment case for continuing to hold names like Northland Power and Ørsted, particularly given recent price recovery? Are they still undervalued, or is the bounce largely sentiment driven?
Well, I'll just deal with Ørsted first. Ørsted is a very small holding down the bottom of the portfolio. It's really very small. It's something like 0.5%, from memory. That hasn't really recovered. In fact, it's been quite weak recently. Barclays put out a rather negative note on it. Northland is much higher up, although I would question whether it's recovered. I mean, its share price, I think, give or take at the moment, is about CAD 18.5. It hasn't really been much below. I think it's 17-point-something at the low point. It hasn't really recovered. The investment case there is that offshore wind is about half of its value, or slightly more than half of its value.
It also does onshore wind and solar in Spain and North America. It's been very much affected by negative sentiment, particularly from the Trump administration. Although it doesn't have any assets that are affected by what's going on in the States. Its offshore wind assets are in the North Sea. It's currently building one in the Baltic Sea, which is almost finished, and another one off Taiwan again, which is almost completed. Well, I'm not allowed to say that, am I? We believe that there's a lot of negatives in the stock that shouldn't really be there. Let's put it that way.
Okay. Right. Another question. What's behind the recovery in battery storage?
Yeah, the battery storage companies in the U.K., anyway, they make money from well, a few different things, from the short-term balancing market and also general trading. The short-term balancing market has been quite important. Sorry, let me step back. The balancing market is run by the National Energy System Operator, and they are transitioning away from a balancing market whereby they mainly use gas-fired power stations to cover any shortfalls in energy supply, electricity supply, to a more automated process that can also include the battery energy storage facilities. It’s a lot easier to do it with gas because you can just make a quick phone call, and you can turn on 800 MW of power.
If you want to do that with batteries, you know, with batteries being 20, 30 MW or slightly larger these days, you need a more automated system. That is taking some time to accomplish. When that is accomplished, batteries really do make a lot more sense than gas-fired power because they can discharge into the grid with zero marginal cost. They also have the huge advantage over gas in that when there is excess supply, they can absorb that excess supply, whereas at the moment, grids are having to pay wind farms for what we call curtailment when they can't use the power. Really for the country, there will be a big saving when batteries can be more utilized in balancing. Now, we're seeing more of that these days, and that's partly one reason for the recovery.
We're also seeing more general market volatility, so there's more trading revenue available for them as well. Of course, we've had these bids into Harmony Energy, around about NAV now actually. Yeah, the other two still trade on quite substantial discounts to NAV. I'll just say we prefer Gore Street as our preferred investment in the sector on a fundamental basis because of its geographic diversification.
Okay. Just a final question. Somebody's asking if you can say a bit anything about regional pricing in the U.K.
Yeah, not a great deal at the moment because this has been a consultation, so we don't know what the answer is yet. The idea is that by having regional markets, you get better price signals if you can locate more supply in areas that are undersupplied. If you can build more renewable energy in the Southeast, and less in Scotland, then that's best for the country. That's the theory. Personally, I don't believe in it. I think we're better off as a single energy market. I think it's a lot simpler, and I think it's better to encourage renewables to be developed in the areas that they can be best utilized. Wind in Scotland, for instance, solar in the south, and then solve that any discrepancies between regional demand and regional supply by improving the transmission grid and the energy storage availability.
Okay. I think that looks like that's all the questions for now. As James mentioned, if anybody does have specific questions occur to you afterwards, please do get in touch. We'd be happy to try and help. I think now just I'll hand back to Jake. Thank you, Jake.
Perfect. James, Claire, that's great. Thank you very much indeed for being so generous with your time then addressing those questions that came in from investors this afternoon. Of course, if there are any further questions that do come through, we'll make these available to you as well. James, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that'd be great.
Okay. Thank you. I would say we are mindful that the performance of the sector has been quite difficult, and that's of course been reflected in the performance of the trust. We have a portfolio that we believe is fundamentally very attractive, with good earnings growth, and good asset growth, and it's well managed, and we have a track record of outperforming the sector. I know we don't have a great deal of time before the ZDPs come up for repayment, but hopefully, you know, we'll see an improved performance as we move through 2025. I would say actually on that over the past six weeks or so, while we've had all this market turmoil, we've outperformed quite well and have actually managed to grow the NAV during a particularly difficult period for the market.
Perfect, James.
Thank you.
That's great. Thank you, thank you both once again for updating investors this afternoon. Could I please ask investors not to close this session, as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Premier Miton Global Renewables Trust plc, we would like to thank you for attending today's presentation. That now concludes today's session, so good afternoon to you all.