VH GLOBAL ENERGY INFRASTRUCTURE PLC

(the "Company")

 

Annual results for the period ended 31 December 2024

 

 

The Board of VH Global Energy Infrastructure plc (ticker: ENRG) is pleased to report its annual results for the year ended 31 December 2024.

 

The Annual Report and Accounts for the year ended 31 December 2024 will be made available on the Company's website at https://www.globalenergyinfrastructure.com.  

 

HIGHLIGHTS

Financial (as at 31 December 2024)

Net Asset Value

£408.5m

31 Dec 2023: £483.8m

NAV per share*

103.21p

31 Dec 2023: 116.46p

Total Leverage of ENRG as a % of NAV*

6.6%

31 Dec 2023: 1.9%

Dividend Coverage*

0.96x

31 Dec 2023: 1.15x

Dividend per share declared for FY 2024

5.71p

31 Dec 2023: 5.56p

Dividend target per share for FY 2025

5.80p

31 Dec 2023: 5.68p

Dividend yield, based on share price on 31 December 2024*

8.7%

31 Dec 2023: 7.2%

% of underlying revenues contracted and inflation‑linked

>90%

31 Dec 2023: >90%

Impact (for the full year ended 31 December 2024)

Clean energy generated
and injected into the grid

856,666MWh

31 Dec 2023: 844,464MWh

Approximate equivalent UK homes
powered annually by clean energy

317,284

31 Dec 2023: 312,750

Tonnes of carbon dioxide
equivalent avoided

262,501t

31 Dec 2023: 122,530t

Tonnes of sulfur
oxides displaced

22,402t

31 Dec 2023: 19,332t

 

Portfolio

-  Key highlight was the addition of the renewable energy programme in Spain, Portugal and Sweden for a total equity commitment of EUR53m with 9.7MW of assets already in operation and 30.3MW in advanced construction stage.

-    Key construction milestone was achieved for the UK flexible power plant with the production of the first stream of liquefied CO2. The integrated plant is expected to be commissioned in H1 2025.

-    In Australia, the first hybrid assets commenced operations, achieving captured margins above expectations.

-    The hydro plant in Brazil received the prestigious gold award by the Hydropower Sustainability Alliance. Only five plants have received the gold certification globally. 

-    Post period-end, two additional sites were energised in Brazil. A third solar site is expected to be energized in Q2 2025.

 

Bernard Bulkin, OBE, Chair of VH Global Energy Infrastructure plc, commented:

"This has been another challenging year for the renewable energy investment trust sector. The Board continues to closely monitor the Company's share price and shares the deep frustration over its prolonged discount to NAV. The Board and I firmly believe such a discount is unjustified, as it does not reflect the intrinsic value of the underlying portfolio and has largely been influenced by broader macroeconomic factors which has resulted in a material reduction in demand for the listed infrastructure and renewables sector. The Board is examining all options for repaying the trust that shareholders have placed in the Company over the past four years, while continuing the work to bring the portion of the portfolio that is still under construction into a fully operational state.  During 2025, the Board will announce concrete steps it will be proposing to shareholders to deal with the share price discount to NAV. We look forward to continuing our constructive and collaborative dialogue with shareholders."

 

The Company's LEI is 213800RFHAOF372UU580.

 

For further information, please contact:

 

Edelman Smithfield (PR Adviser)

Ged Brumby                             +44 (0)7540 412 301

Hamza Ali                                +44 (0)7976 308 914

 

Victory Hill Capital Partners LLP (Investment Manager)

Navin Chauhan                          [email protected]

 

 

Deutsche Numis (Corporate Broker)

Hugh Jonathan                             +44 (0)20 7260 1000

Matt Goss

 

 

Ocorian Administration (UK) Limited (Company Secretary)

[email protected] 

 

 

About Victory Hill Capital Partners LLP

Victory Hill Capital Partners LLP ("Victory Hill") is authorised and regulated by the Financial Conduct Authority (FRN 961570).

 

Victory Hill is based in London and was founded in May 2020 by an experienced team of energy financiers that spun-out of a large established global project finance banking group. The team has participated in more than $200bn in transaction values across 91 conventional and renewable energy-related transactions in over 30 jurisdictions worldwide. Victory Hill is the investment manager of the Company.

 

The Victory Hill team deploys its experience across different financial disciplines in order to assess investments holistically from multiple points of view. The firm pursues operational stability and well-designed corporate governance to generate sustainable positive returns for investors. It focuses on supporting and accelerating the energy transition and the attainment of the UN sustainable development goals.

 

Victory Hill is a signatory of the United Nations Principles for Responsible Investing (UN PRI), the United Nations Global Compact (UN GC), Net Zero Asset Managers Initiative (NZAMI), a member of the Global Impact Investing Network (GIIN) and is a formal supporter of the Financial Stability Board's Task-Force on Climate-related Disclosures (TCFD).

 

Annual General Meeting

The Company's Annual General Meeting will be held at the offices of Victory Hill Capital Partners LLP at 21-22 Warwick Street, London, W1B 5NE on Wednesday, 21 May 2025 at 12:00 pm

 

The Notice of the Annual General Meeting is set out in the Annual Report and Accounts for the year ended 31 December 2024.

 

National Storage Mechanism

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

 

CHAIR'S STATEMENT

"ENRG remains the most diversified trust in the sector tackling the energy transition. Its highly contracted operational portfolio continues to generate predictable cash flows to support the Company's attractive dividend."

Bernard Bulkin
Chair

I am pleased to present the fourth Annual Report for VH Global Energy Infrastructure plc (the "Company" or "ENRG") for the year ended 31 December 2024.

The broader renewable energy investment trust sector has continued to navigate a challenging market environment, which has contributed to an exacerbation of the Company's share price discount to net asset value ("NAV"). In response, the Company has remained proactive and focused on narrowing the discount with the deployment of its buyback programme and disciplined capital allocation approach. The Board has also been proactive in discussing the ongoing discount to NAV with its shareholders and considering what actions are open to it going forward.

Despite these challenges, ENRG has demonstrated resilience, delivering robust operational and financial performance from its underlying portfolio, including an almost fully covered dividend on a currency unadjusted basis, with 29% of the portfolio under construction as at 31 December 2024. The Company has also successfully deployed capital into a new portfolio of European wind and solar assets during the period, and the Investment Manager remains fully confident about the sector's future prospects.

Given the current share price discount to NAV of 36.1% as at 31 December 2024, ENRG offers an attractive entry point for both new and existing investors, offering a dividend yield of 8.7% at the period-end, which is greater than the yield of UK government bonds. The yield is backed by long-term and inflation-linked cashflows that will continue to strengthen as more of the portfolio becomes operational over the course of 2025. Furthermore, ENRG continues to present a unique investment opportunity, with a technologically and geographically diversified portfolio aimed at accelerating the global energy transition, funded entirely without public subsidy or government support, and supported by the lowest gearing in its peer group.

Financial Performance

The Company's NAV per share was 103.21p as at 31 December 2024, a decrease of 11.4% from the previous year. This decrease was primarily driven by unfavourable foreign currency exchange rates.

Net cash flows from the underlying projects remain robust, resulting in a dividend coverage ratio of 0.96x. As GBP has strengthened in the year against the basket of currencies, on a currency adjusted basis, dividend coverage is 1.24x as at 31 December 2024. Details on the Company's overall financial and operational performance can be found in the Investment Manager's Report.

As at 31 December 2024, the Company remains one of the lowest geared investment trusts in its sector with total leverage at 6.6% of NAV, offering greater flexibility on future funding requirements.

Dividend

The Company has a progressive dividend policy, and is proud to have increased its dividend for a fourth consecutive time since IPO in 2021.

The Company announced a dividend of 1.45p per share with respect to the period from 1 October 2024 to 31 December 2024, an increase of 2.1% vs. the prior quarter. This brings the total dividend declared for the financial year ending 31 December 2024 to 5.71p per share, exceeding the dividend target of 5.68p per share. The Company is targeting a dividend of 5.80p in total for 2025, 2.1% higher than the dividend target for FY2024.

When combined with the share buyback programme, the Company has returned £37.5 million to shareholders in 2024.

Investment Activity and Portfolio Performance

In 2024, three new assets came online, while seven new assets were acquired in Europe and two in Australia, significantly enhancing the diversification of the portfolio, bringing the total number of assets to 34 across 6 technologies and 7 geographies. Two additional assets were energised post-period. As at 31 December 2024, the portfolio is 69% operational, and is expected to be almost fully operational by the end of 2025.

Investment activity included:

•        The commitment to acquire and construct a 59.8MW portfolio of five-operating, ready-to-build ("RTB") and under construction solar and onshore wind generation assets in Spain, Portugal and Sweden. In addition, the Company acquired the project rights for an additional 188.6MW of four RTB solar PV assets in Spain. Due to interconnection delays encountered on two of these RTB assets, pushing completion to 2027, the Investment Manager has taken the prudent approach to return the project rights of these two assets, which doesn't alter the target returns for the investment. Post-period, a 10.3MW solar PV site in Spain reached mechanical completion, and is expected to be fully energised by H1 2025. The 20MW solar PV site in Portugal is expected to reach operational status in H2 2025.

•        The completion of the three solar assets and co-located battery energy storage systems ("BESS") in New South Wales ("NSW"), Australia. Furthermore, an agreement to acquire and build two new fully-permitted solar PV sites with co-located BESS in NSW was signed in March 2024 and the construction phase started as planned in the first half of the year, with completion expected in 2025.

•        The successful completion of a series of hot commissioning tests of the four Rolls Royce 16V engines of the UK flexible power with carbon capture and reuse ("CCR") asset. Post period-end, a significant milestone was reached with the successful commissioning of its first stream of purified CO2.

•        Post period-end, the energisation of two solar distributed generation sites in Brazil. A third site is expected to be energised in Q2 2025. Implementation of the construction for the final three sites of the programme is under review.

Please refer to the Investment Manager's Report for further details on the investment activity.

Corporate Governance

On 2 December 2024, the Company announced the change of its name from VH Global Sustainable Energy Opportunities plc to VH Global Energy Infrastructure plc. The Company's ticker symbol for the London Stock Exchange was changed to 'ENRG', while the ISIN and SEDOL remained unchanged. This change was implemented to align with new regulatory requirements for fund names established by the European Securities and Markets Authority ("ESMA").

The Company's sustainable investment objective- to "make an impact by supporting the attainment and pursuit of key SDGs, where energy and energy infrastructure investments directly contribute to accelerating the energy transition"- remains unchanged.

Post period-end, the Company appointed Mr Patrick Firth as an independent non-executive director with effect from 20 February 2025. Mr Firth has also been appointed to each of the Company's established committees with effect from the same date. ENRG announced that Ms Margaret Stephens does not intend to stand for re-election at the upcoming annual general meeting due to personal reasons and, as such, subject to shareholder elections, Mr Patrick Firth will take over the position of chair of the Audit Committee as of the date of the 2025 Annual General Meeting ("AGM").

At the May 2024 AGM, the Board was pleased to announce that all the ordinary resolutions and special resolutions, as set out in the Notice of AGM, were approved by shareholders.

In Q4 2024, the Company appointed Ocorian Administration (UK) Limited as its third-party administrator and company secretary, replacing Apex Fund and Corporate Services (UK) Limited.

Sustainability

ENRG's commitment to sustainability remains at the forefront of its strategy and purpose.

In conjunction with the name change mentioned above, the Company was among the first investment trusts to announce its adoption of the 'Sustainability Impact' label under the Financial Conduct Authority's Sustainability Disclosure Requirements ("SDR"). This label identifies investment products that aim to achieve a predefined measurable impact in relation to an environmental and/or social outcome. The adoption of the 'Sustainability Impact' label brings more clarity and accountability and reflects the Company's continued commitment to achieving its sustainability investment objective, while continuing to target a 10% net return.

Furthermore, ENRG continues to disclose as an Article 9 Fund under the EU's Sustainable Finance Disclosure Regulation and reports voluntarily its practice under the Task Force on Climate-Related Financial Disclosures ("TCFD") recommendations and requirements.

Discount Management

The Board continues to closely monitor the Company's share price and shares the deep frustration of its shareholders over its prolonged discount to NAV. The Board and I firmly believe such a discount is unjustified, as it does not reflect the intrinsic value of the underlying portfolio and has largely been influenced by broader macroeconomic factors.

Both the Board and the Investment Manager remain fully committed to narrowing the discount to NAV, with a focus on balancing the short-term and long- term value to shareholders.

The Company initiated a £10 million share buyback programme in 2023, which was further increased by £10 million in February 2024, bringing the total share buyback programme to £20 million. By Q4 2024, the full buyback budget had been utilised. Additionally, the Board and the Investment Manager have remained focused on the careful management of gearing, successfully maintaining a minimal level of gearing. As a result, ENRG does not need to sell assets to repay debt.

In addition to the above initiatives, the Board has engaged with major shareholders to better understand their perspectives. As anticipated, investor sentiment has been mixed - while some shareholders continue to support the Company's existing strategy, others have raised concerns about the challenges facing the broader sector and expressed a preference for alternative methods of returning capital to shareholders.

As a result of these discussions, the Board, in collaboration with the Investment Manager and the Company's broker, is carefully evaluating strategic alternatives to reduce the discount and enhance shareholder value.

The Board is committed to exploring all options and will keep shareholders informed as these discussions progress.

Shareholder Engagement

The Investment Manager and the Board remain committed to enhancing the marketability and liquidity of ENRG's shares by actively engaging with and attracting both institutional and retail investors to the shareholder register.

As part of these efforts, the Company has undertaken a comprehensive revamp of its online website (www.globalenergyinfrastructure.co.uk) in order to enhance shareholder disclosure and detail of communication. This revamped platform is designed to provide clearer, more detailed information, with a particular focus on facilitating better information dissemination to retail investors. In addition, the Investment Manager has partnered with third-party research providers and share trading platforms to broaden outreach and increase accessibility for retail investors.

Continuation Vote

The Articles of Association of the Company require a continuation vote at every fifth AGM, which would take place in May 2026. Shareholders will be consulted on this topic, together with the Company's broker.

Outlook

The Board understands that the persistent deep discount of ENRG's shares to its NAV is not something that will be easily corrected by market forces or the economic climate. We believe that we have good assets, that are performing well once they are operational. This is reflected in the strong covered dividends that the Company has been able to pay throughout its life.

The Board is examining all options for repaying the trust that shareholders have placed in the Company over the past four years, while continuing the work to bring the portion of the portfolio that is still under construction into a fully operational state. During 2025, the Board will announce concrete steps it will be proposing to shareholders to deal with the share price discount.

Bernard Bulkin, OBE
Chair

2 April 2025.

INVESTMENT MANAGER'S REPORT

"In markets where renewable energy is highly saturated, a differentiated investment strategy is needed to sustain progress."

Richard Lum

Co-Chief Investment Officer

Market Backdrop & Outlook

As we reflect on the prior twelve months of our operating environment, it is clear that the pace of the energy transition to net zero has not slowed pace. According to BNEF, 2024 saw global solar PV installations up by 35% y-o-y, wind up by 5%, energy storage installations up by 76% and EV sales up by 26%.

Yet, even with this historic growth in clean energy investments, it is clear that the sustained and accelerated growth in investments is still well below the level required to get investment on track to achieve net zero by 2050. Further investment is required to decarbonise our world, whilst feeding an increase in electrical energy demand globally. The International Energy Agency (IEA) comments in their Net Zero Roadmap to 2050 on investments in clean energy needing to rise to around US$4.5tn per year by 2030. Yet investments in global energy as a whole are likely to exceed US$3tn in total, with clean energy accounting for around US$2tn and oil and gas for US$1tn.

Investments located in the developed world have far outstripped those elsewhere and much can be attributed to the success of government underwriting via subsidies of renewable technologies overall. However, we are starting to see a decline in growth rates. The earliest implementers and adopters of clean energy in the richer energy markets have tended to snap up the best sites with the cheapest grid connections, in the most economically stable markets, and have played a key role in bringing down the cost of clean energy technologies. However, achieving scale has come at the cost of declining growth rates. It is expected that annual solar installations will recede from impressive growth rates of 35% in 2024 (more than quadrupled since 2020) to a more modest 11% in 2025.

Separately, the competitive approach adopted by developed countries to offshore wind projects led to a surge in interest globally, with government auctions being won by the most aggressive bidders. This delivered lower clean energy prices, but, also created fundamental issues for investors to achieve an adequate risk adjusted return on these projects, as evidenced by failed auctions and cancelled projects in various countries including the US. Among other issues, this has led large integrated energy companies to reframe their exposures to offshore wind.

The next phase in the energy transition, however, will not focus purely on driving greater investment in clean energy generation alone. New issues have emerged in global energy systems, which require investment in order for a holistic sustainable energy world to emerge: Unlocking energy storage and power generation flexibility in mature renewables markets where intermittency is a key concern; implementing clean energy in markets which lack proper technical and commercial arrangements; and driving demand for clean energy in the hard to decarbonise industrial sectors such as automotive and truck fleet operators, fuels for aviation, shipping and heavy industry. Government policy will have a role to play in leading such transformation but we firmly believe that the implementation of liberalised energy markets, where private commercial agreements are possible, will stimulate private capital inflows to help meet the demand for investment.

During 2024, we understood that a holistic approach to the energy transition was imperative. In markets where renewable energy is highly saturated, a differentiated investment strategy is needed to sustain progress. While high solar penetration drove down Spain's mid-day power prices, and many historic projects were witnessing a cannibalisation of the market pricing, we saw an opportunity to participate in the next phase of Spain's energy transition. As a relatively constrained energy market, with limited interconnection to the rest of Europe's power grids, and a baseload power source in nuclear which the Government legislated to be replaced by renewables by 2035, we anticipate the emergence of supply/demand tension in the power system. Combined with the entrance of highly energy intensive digital infrastructure in the country such as AI-driven data centres, we estimated that conditions were right to make an impact by investing in a portfolio of ready-to‑build and operating renewable assets, which once built have the potential to be commercialised via private power purchase agreements (PPAs) or left partially unhedged to access market margin opportunities. Furthermore, drawing on our experience in Australia, we concluded that these assets have optionality to be hybridised with co-located battery storage in the next phase of investment, thereby allowing consumers to have access to firm power capacity in a constrained power market.

AI-driven data centres are likely to feature prominently in the demand side dynamics of many energy systems throughout the world. The sheer magnitude of the requirement to feed this new energy demand is yet to be fully witnessed but there is circumstantial evidence of what is ahead of us.

Investment updates

The portfolio has continued to progress towards its full potential during the period under review, reaching 69% operational status at the end of 2024, up from 58% in December 2023.

As at 31 December 2024, the dividend was 0.96x covered by the strong underlying cash generation from the operating assets. GBP has strengthened in the year against the basket of currencies. On a currency adjusted basis, dividend coverage is 1.24x. As construction assets achieve operational status, the dividend coverage is expected to strengthen in 2025 and 2026. The excess cash flow will provide the flexibility to reinvest in the existing portfolio as well as enable the Investment Manager to address the share price discount to NAV.

A key highlight for the year was the addition of a renewable energy programme for Spain, Portugal and Sweden. Our total commitment was EUR53m with 9.7 MW of the assets already in operation and 30.3 MW in advanced construction stage. This investment offers the fund an opportunity to capture buoyant energy markets with the potential to upscale returns with batteries in order to capture high power prices at peak hours. Spain in particular is seeing a rapid transition away from fossil fuels and towards renewable energy, while demand continues to outpace supply causing power price spikes in certain regions.

Furthermore, key construction milestones were achieved for both the UK flexible power plant and the Brazilian solar PV programme during the period, putting behind us the main issues that had previously caused construction delays. In the U.S., the terminal storage assets have operated close to their full cash generation capacity under the contracted 24/7 terms, highlighting their reliability with stable cash flows. In Australia, the first hybrid assets commenced operations, achieving captured margins well above expectations.

The year also highlighted the ENRG model's operational excellence, with the Brazilian hydro plant receiving certification under the Hydropower Sustainability Alliance's Hydropower Sustainability Standard. The plant was awarded the prestigious gold level, which is a testament to the Investment Manager's commitment to community engagement and the gold certification has only been awarded to five other hydro plants worldwide since its formal introduction in 2021.

Australian solar PV with battery storage assets

This programme aims at capturing the opportunities arising from Australia's disorderly energy transition. With a predominance of power plants fuelled by locally produced coal in its energy mix, Australia is navigating a challenging process to realise its natural renewable energy potential, made possible by its high solar irradiation levels and vast land availability.

Year-on-Year EBITDA increased by 170% in 2024 due to three new assets coming online and generating revenues during the period.

At the end of the period, the assets captured margins significantly above expectations, driven by market volatility in electricity supply - which was partly due to increased cycles of maintenance and downtime from mature coal fired power plants. These margins not only exceeded budget levels but also surpassed the projections provided by several market consultants the Company uses to value these assets. Nevertheless, we have decided not to alter our long-term power curves, which we use in asset valuations, until we have built-up a sufficient period of accruing real time margin data which reflects stronger price conditions.

Work on the hybridisation of the three solar farms constructed in New South Wales with BESS was successfully completed in 2024.

Furthermore, two additional solar sites were acquired in 2024, with construction progressing on time and on budget to construct them as fully integrated solar PV and BESS projects. We anticipate enhancing the cash generation capacity of the five operational assets during the course of 2025.

UK flexible power with CCR asset

This flexible power plant helps to ensure the delivery of dependable power in the UK amidst increasing penetration of intermittent renewable energy. Furthermore, by incorporating carbon capture technology into the gas‑fired power generation component, the project captures and purifies CO2 exhaust to a food-grade standard. This project therefore not only provides reliable, high-efficiency, low carbon flexible power into the grid, but also addresses the critical structural shortage in the industrial gases market by enabling the commercial sale of purified CO2 for food and beverage applications. This unique combination is believed to be the first of its kind and paves the way for further low carbon flexible power generation assets to support the evolving UK electricity grid.

This asset is in the final stage of commissioning, with the power unit having come online in Q4 2024. The first stream of purified C02 was produced into holding tanks in February 2025, and it is our expectation that the integrated plant will be fully commissioned inH1 2025.

Brazilian solar PV assets

This programme seeks to leverage the unique framework of the Brazilian distributed generation market, which allows sub-5MW power plants to access retail tariffs for end users connected to the utility network where the asset injects power.

ENRG was one of the first listed companies in this sector to enter this nascent segment in Brazil. This early-mover advantage allowed the Company to secure low connection charges to the distribution network, which are no longer accessible to new entrants. Furthermore, as one of the first investors in the market, ENRG was able to successfully lock-in premium PPAs with advantageous terms compared to those currently available to new market entrants.

Year-on-Year EBITDA increased by 155% due to a combination of projects transitioning from the ramp-up phase to full production, along with a new project that benefited from a full year of revenue generation in 2024.

In January 2025, two solar distributed generation sites were energised, increasing the Company's total operational solar DG projects in the country to 12 sites, with a capacity of 34.3MWdc. The two newly energised assets have offtake agreements between 10 and 20 years and are supporting clients to meet their decarbonisation targets and reduce their energy bills.

A third solar site is expected to be energized in Q2 2025, adding a further 6.25MWdc of new capacity. Implementation of the construction for the final three sites of the programme is under review.

Brazilian hydro facility

The primary appeal of this investment lies in the opportunity to enter one of the world's largest hydroelectric parks through an asset that delivers reliable and stable cash flows.

The Mascarenhas plant is part of the Mecanismo de Realocacao de Energia (MRE) or Energy Reallocation Mechanism, which means it is not exposed to single-basin hydrological risk. The MRE is a consortium that includes all major hydro plants in Brazil, including Itaipu which used to be the second-largest hydro plant in the world after China's Three Gorges. This consortium pools the plants' hydrological resources and sells the total assured capacity through long-term PPAs. If a member of the consortium falls short of its allocated assured capacity but the consortium as a whole meets the established target, the MRE compensatory mechanism ensures that the underperforming plant can still generate revenue in line with its assured energy. This structure provides more stable cash flows compared to other hydro plants that are exposed to the variability of resources from a specific river.

This plant has secured long-term PPAs for all of its assured capacity for both 2025 and 2026, as well as nearly 30% of its capacity through to 2037. The programme's operating partner and the Investment Manager monitor the market for opportunities to strike new PPAs for the uncontracted capacity at attractive terms, given the high level of volatility in the PPA market caused by changing weather patterns. Over the past five years, Brazil experienced three of its worst hydrological years in history, alongside two years of above-average conditions. This volatility in the spot market creates periodic windows of opportunity for securing favourable PPAs.

Operationally, post period-end this asset achieved the gold standard seal of excellence from the Hydropower Sustainability Alliance, and remains one of the top ranked plants in the country.

US terminal storage assets

This programme aims to reduce the environmental and health threats of high sulfur fuels in Mexico, by reducing the availability of high sulfur fuel oil for domestic consumption and displacing it with cleaner less pollutive products, reducing PM10, SO2, and NO2 emissions. The US terminal assets provide an aggregation point and facilitate the transfer of high sulfur oil currently produced at a surplus in the Mexican fuel market.

The main tenant is Mexico's national oil company, Pemex, which is responsible for transporting the Mexican high sulfur heavy products to the US to get it further processed and imported back as safer, cleaner products.

During the period under review, the assets operated near their full cash-generation capacity under its contracted 24/7 terms. This performance underscored the asset's robust cash generation capacity, which has been fully optimised following its acquisition by ENRG, through further investments in capacity expansion and contract renegotiations.

On 1 February 2025, President Trump issued three executive orders directing the U.S. to impose tariffs on imports from Mexico, Canada and China. Initial analysis led the Investment Manager, alongside its operating partner in Texas, to conclude that the imposition of the tariff should not have an impact on the northbound flow of product from Mexico into the Company's terminals in the Port of Brownsville. From the information available at time of the announcement of these tariffs, it is considered that the potential financial impact of the tariff on customer revenues and business of the Company's terminal assets is low. Furthermore, customer contracts have been designed to manage downside risk and include minimum volume commitments regardless of throughput through the terminals.

In January 2025, the Company refinanced the existing loan facilities to the asset, upsizing the facility from US$16 million to US$30 million, consisting of a US$15 million term loan and a US$15 million revolving credit facility.

Iberian and Swedish solar and onshore wind portfolio

The acquisition of the solar and wind portfolio across Spain, Portugal, and Sweden marks our first investment in continental Europe, targeting opportunities in liberalised energy markets that have potential for higher captured prices. These higher captured prices are primarily driven by the retirement of baseload generation combined with the lack of flexible power generation. These markets offer further upside potential from greater than expected energy demand from data centres driven by artificial intelligence growth.

Spain and Portugal, where over 95% of this programme is located, offer a particularly attractive investment opportunity. The rapid phase-out of coal and nuclear in Spain, coupled with the increasing risk of droughts, is reducing its baseload energy capacity rapidly. Additionally, Spain's energy mix remains heavily reliant on gas-fired power plants, making the market more dependent on global LNG supply and therefore their energy markets are more sensitive to fluctuations in the gas markets. Furthermore, Spain and Portugal are constrained markets due to their limited interconnection with the rest of Europe and any disruption in its baseload supply results immediately in a sharp increase in energy prices.

These dynamics create a unique market dislocation, opening up arbitrage opportunities for hybridised assets that combine different energy sources and battery storage systems. Spain is progressing rapidly in approving a capacity market, which further enhances the attractiveness of investing in hybrid assets. Once our portfolio is fully operational on the power generation side, we intend to begin hybridising these assets. This next value creation phase will consist of adding co-located Lithium-Ion BESS, to serve the nascent capacity market, to capture the intraday market volatility and decrease the risk of curtailment.

The Company acquired this portfolio in Q3 2024, consisting of five solar PV and wind assets across Spain, Portugal, and Sweden, as well as the project rights to four ready-to-build ("RTB") solar PV assets in Spain. However, due to interconnection delays encountered on two of these RTB assets, pushing completion to 2027, the Investment Manager has taken the prudent step of returning the project rights of these two assets, at no cost. Consequently, there is no longer a need for a co-investor and the Company can complete construction of the entire programme with its initial equity investment and project finance debt, whilst maintaining its 80% ownership of the entire portfolio (the remaining 20% will be owned by the operating partner in Spain). The programme now consists of seven assets with a total capacity of 158.1MW:

•        3.7MW operational solar PV in Spain;

•        6MW operational onshore wind in Sweden;

•        20MW solar PV under construction in Portugal;

•        10.3MW solar PV under construction in Spain;

•        19.8MW RTB onshore wind in Spain; and

•        98.3MW RTB solar PV in Spain across two sites

The leverage in the programme is expected to be approximately 50% LTV.

The 10.3MW solar site in Spain is mechanically complete and is expected to be energised in H1 2025. The 20MW solar PV site in Portugal is expected to reach operational status in H2 2025.

Once the seven sites are fully operational, the levered expected returns remain unchanged and are in line with the Company's target return. The Investment Manager also expects the mid-teen target returns following the implementation of the value creation initiatives to remain unchanged.

During the remainder of the first half of 2025, we will focus on working with the bank syndicate to achieve financial closing and commence construction of both the solar sites in Spain and the 19.8MW RTB onshore wind in Spain.

2024   Portfolio Operational & Financial Performance

		Output
Programme	2024	2023	Change
US terminal storage assets	13,069,960 bbls	12,831,553 bbls	+1.86%
Australian solar PV with BESS	36,182 MWh	22,919 MWh	+57.87%
Brazilian solar PV	39,665 MWh	41,161 MWh	-3.63%
Brazilian hydro facility	780,542 MWh	781,482 MWh	-0.12%
		Revenue
Programme	2024	2023	Change
US terminal storage assets	US$24.7m	US$23.7m	+3.99%
Australian solar PV with BESS	AUD 6.4m	AUD 2.6m	+143.45%
Brazilian solar PV	BRL 23.7m	BRL 12.8m	+85.67%
Brazilian hydro facility	BRL 179.2m	BRL 159.2m	+12.58%
		EBITDA
Programme	2024	2023	Change
US terminal storage assets	US$13.9m	US$13.5m	+2.93%
Australian solar PV with BESS	AUD 4.7m	AUD 1.7m	+169.96%
Brazilian solar PV	BRL 14.0m	BRL 5.5m	+155.06%
Brazilian hydro facility	BRL 110.5m	BRL 112.9m	-2.07%

 

Note: The output, net revenue, and EBITDA figures reflect assets under operation as at 31 December 2024. The energy output figure for the Brazilian solar PV assets represents the total generation that was invoiced to the clients; it is directly related to the revenue generated by the assets. The energy output figure for the Brazilian hydro facility represents total net generation.

The NAV of the Company decreased from £483.8m at 31 December 2023 to £408.5m at 31 December 2024. The key NAV drivers for the period under review were:

•        Unfavorable foreign exchange rates resulting in a £41m reduction in the NAV.

•        Discount rates increasing during the period under review mainly driven by an increase in risk free rate from 4.19% to 4.86% and an increase in country risk premium for Brazil from 2.43% to 3.80%.

Value Input Sensitivies

			31-Dec-24	31-Dec-23
Discount rate	Weighted Average	US terminal storage assets	6.94%	6.91%
	Weighted Average	Australian solar PV with battery storage assets	7.77%	7.74%
	Weighted Average	Brazilian solar PV assets	10.33%	9.67%
	Weighted Average	Brazilian hydro facility	10.16%	9.54%
	Weighted Average	Iberian and Swedish solar PV and wind assets	9.15%	n/a
Long-term inflation	United States	US terminal storage assets	2.15%	1.62%
	Australia	Australian solar PV with battery storage assets	2.47%	2.42%
	Brazil	Brazilian solar PV assets & Brazilian hydro facility	2.97%	3.03%
	Spain	Spanish solar PV asset	2%	n/a
	Sweden	Swedish onshore wind asset	2%	n/a
Total asset life	Years	US terminal storage assets	30 years	30 years
	Years	Australian solar PV with battery storage assets	25 years	25 years
	Years	Brazilian solar PV assets	25 years	25 years
	Years	Brazilian hydro facility	25 years	25 years
	Years	Iberian and Swedish solar PV and wind assets	25 years	n/a
Exchange rate	GBP:USD	US terminal storage assets	1:1.2527	1:1.2732
	GBP:BRL	Brazilian solar PV assets & Brazilian hydro facility	1:7.7486	1:6.1771
	GBP:AUD	Australian solar PV with battery storage assets	1:2.0235	1:1.8689
	GBP:EUR	Iberian and Swedish solar PV and wind assets	1:1.2098	n/a

Key Sensitivities

The above chart illustrates the sensitivity of the Company's NAV per share to changes in key input assumptions for assets in operation as at the year end. In performing the sensitivity analysis, it is assumed that potential changes occur independently of each other with no effect on any other assumption, and that the number of investments in the portfolio remains static throughout the modelled life.

Discount rate

A range of discount rates are applied in calculating the fair value of the investments, considering risk free rates, country-specific and asset-specific risk premia and betas. Discount rates for operational assets at 31 December 2024 are 6.9% in the US (31 December 2023: 6.9%), 7.8% in Australia (31 December 2023: 7.7%), 10.2% for the Brazilian hydro facility (31 December 2023: 9.5%), 9.1% for the Iberian and Swedish portfolio and 10.3% for the Brazilian solar PV assets (31 December 2023: 9.7%). A 1.5% increase (decrease) in discount rates across the portfolio decreases (increases) NAV by 8.33p (10.31p).

Inflation

The sensitivity assumes a 1% increase or decrease in long-term inflation relative to the base case of 2.2% for the US assets, 2.5% for the Australian assets, 3.0% for the Brazilian assets, and 2.0% for the Iberian and Swedish operational assets for each year of asset life. A 1.0% increase (decrease) in inflation rates across the portfolio increases (decreases) NAV by 6.61p (5.94p).

Operating expenses

The sensitivity assumes a 5% increase or decrease in operating expense relative to respective contracts and budgets for each asset. A 5% increase (decrease) in operating expenses across the portfolio decreases (increases) NAV by 1.99p (2.02p).

Foreign exchange

The sensitivity assumes a 10% increase or decrease in foreign exchange movements against the sterling. The Company seeks to manage its exposure to foreign exchange movements by hedging short-term distributions from non-sterling investments to maintain a healthy dividend cover but, due to long-term inflation-linked revenues stemming from these investments, the Company does not hedge the principal value of the investments. A 10% increase (decrease) in foreign exchange rates across the portfolio decreases (increases) NAV by 8.01p (9.80p).

Asset life

The sensitivity assumes a 1 year increase or decrease in asset life relative to the base cases of 30 years for the US terminal storage assets, 25 years for the Australian solar PV with battery storage assets, Brazilian solar PV assets, Brazilian hydro facility, and the Iberian and Swedish solar PV and onshore wind assets. A 1 year increase (decrease) in asset lives across the portfolio increases (decreases) NAV by 1.23p (1.23p).

Resource sensitivity

The portfolio has little resource risk sensitivity given the availability based nature of the US terminal storage assets, the base load generation profile of the Brazilian hydro facility, the UK flexible power with CCR assets, and the addition of battery storage to the Australian solar PV assets to mitigate solar intermittency risk.

ENRG STRUCTURE & INVESTMENT POLICY

The Company seeks to achieve its investment objective by making sustainable energy infrastructure investments across the EU and OECD group of nations predominantly, including but not limited to OECD Key Partner countries and OECD Accession countries. The Company's investments in global sustainable energy infrastructure must be:

i.        investments that support the pursuit and attainment of the United Nations Sustainable Development Goals (the "SDGs") where energy and energy infrastructure investments are a direct contributor to the acceleration of the energy transition towards a net zero carbon world; and

ii.       investments that can be categorised into one or more of the four investment pathways that guide the Company's investment strategy. These investment pathways are (1) Addressing Climate Change, (2) Energy Access, (3) Energy Efficiency, and (4) Market Liberalisation,

and must also fall into one or a combination of the following categories:

i.        power, heat and green gas producing assets reliant on, but not limited to, wind, solar, biomass, natural gas and hydropower technologies;

ii.       production and refinement of fuels derived from biomass sources;

iii.      energy storage infrastructure such as containment and non‑processing facilities for liquid and gas fuel sources, power storage utilising battery or gravity‑based technologies;

iv.      energy transportation infrastructure such as pipelines, interconnectors and micro‑distribution grids;

v.       distributed energy sources (heat, power, gas and steam) which are produced close to where it will be used, rather than at a large centralised plant elsewhere, delivered through a centralised grid infrastructure; and/or

vi.      equipment that is installed at the premises or on site, directly connected to the premises including, but not limited to, CHP units, CCHP plant schemes, HVAC units, lighting equipment, biomass boilers and steam raising boilers (including intermediate pressure (IP) steam processors), in each case, either already operating, in construction or ready-to-build ("Sustainable Energy Infrastructure Investments").

The Company looks to achieve NAV growth by investing in higher yielding Sustainable Energy Infrastructure Investments that are operational, in construction or "ready-to-build" but does not invest in assets that are under development (that is assets that do not have in place required grid access rights, land consents, planning and regulatory consents and commercial arrangements).

The Company acquires a mix of controlling and non-controlling interests in Sustainable Energy Infrastructure Investments that are held within SPEs which the Company invests through equity and/or shareholder loan instruments. In certain instances, the SPE may hold one or more Sustainable Energy Infrastructure Investments of a similar type.

The Company invests in SPEs structured as joint venture investments (JVs) or co-investments, including through minority stakes, where this approach is the only viable approach. Where the Company participates in a JV or a co-investment, it seeks to secure its rights through obtaining protective provisions in shareholders' agreements, joint venture agreements, co-investment agreements or other transactional documents, as well as board representation for the Investment Manager, and with the aim of trying to ensure that the investment is managed in a manner that is consistent with the Investment Policy.

Diversification

The Company aims to achieve diversification principally by making a range of Sustainable Energy Infrastructure Investments across a number of distinct geographies and a mix of proven technologies that facilitate the achievement of the SDGs.

Investment restrictions

The Company can invest (calculated at the time of investment) up to:

•        25% of Gross Asset Value in any one Sustainable Energy Infrastructure Investment;

•        40% of Gross Asset Value in a single technology;

•        35% of Gross Asset Value in assets that are in construction or "ready-to-build";

•        40% of Gross Asset Value in assets that are located in any one country;

•        30% of Gross Asset Value in assets that are owned or operated by a single developer;

•        10% of Gross Asset Value in assets that are located in countries that are not members of the EU, OECD, OECD Key Partner countries or OECD Accession countries; and

•        10% of Gross Asset Value in other closed-ended investment funds which are listed on the Official List.

No investments are made in extraction projects for fossil fuel or minerals.

Non-compliance resulting from changes in the price or value of investments following investment will not be considered as a breach of the investment restrictions.

The Company holds its investments through one or more SPEs and the investment restrictions are applied on a look-through basis.

In the event of any breach of the investment restrictions applicable to the Company, shareholders will be informed of the remedial actions to be taken by the Company through an RNS announcement.

Cash management

Whilst it is the intention of the Company to be fully or near fully invested in normal market conditions, uninvested cash or surplus capital or assets may be invested on a temporary basis in:

•        cash or cash equivalents, namely money market funds (as defined in the 'Guidelines on a Common Definition of European Money Market Funds' published by the Committee of European Securities Regulators (CESR) and adopted by the ESMA and other money market instruments (including certificates of deposit, floating rate notes and fixed rate commercial paper of banks or other counterparties having a "single A" or higher credit rating as determined by any internationally recognised rating agency selected by the Board which, may or may not be registered in the EU); and

•        any "government and public securities" as defined for the purposes of the FCA Rules,

provided that not more than 20% of the Gross Asset Value, calculated at the time of investment, may be so invested, following the deployment of the Company's net issue proceeds.

Borrowing policy

The Company may make use of long-term limited recourse debt for Sustainable Energy Infrastructure Investments to provide leverage for those specific investments. Such long-term limited recourse debt will not, in aggregate (calculated at the time of entering into or acquiring any new long-term limited recourse debt), exceed 60% of the prevailing Gross Asset Value.

In addition, the Company may make use of short-term debt, such as a revolving credit facility, to assist with the acquisition of suitable opportunities as and when they become available. Such short-term debt will be subject to a separate gearing limit so as not to exceed 30% of the Gross Asset Value at the time of entering into (or acquiring) any such short-term debt.

In circumstances where these aforementioned limits are exceeded as a result of gearing of one or more Sustainable Energy Infrastructure Investments in which the Company has a non-controlling interest, the borrowing restrictions will not be deemed to be breached. However, in such circumstances, the matter will be brought to the attention of the Board who will determine the appropriate course of action.

Use of derivatives

The Company may enter into hedging transactions for the purposes of efficient portfolio management, which may include (as relevant) short-term currency hedging (as described in the last published prospectus of the Company), interest rate hedging and power price hedging. The Company does not intend to use hedging or derivatives for investment purposes but may from time to time use risk management instruments such as forward contracts and swaps (collectively "Derivatives") to protect the Company from any fluctuations in the relative value of currencies against Pound Sterling, as well as to hedge against interest rates and power prices. The Derivatives must be traded by private agreements entered into with financial institutions or reputable entities specialising in this type of transaction and will be limited to maturities no longer than 12 months. The Company will target investments that provide sufficient asset-level returns to compensate for longer term fluctuations in exchange rates. Furthermore, asset level returns where possible will be linked to local inflation rates.

Derivatives may be employed either at the level of the Company, at the level of the relevant SPE or at the level of any intermediate wholly owned subsidiary of the Company.

All hedging policies of the Company will be reviewed by the Board and the Investment Manager on a regular basis to ensure that the risks associated with the Company's investments are being appropriately managed. Any derivative transactions carried out will only be for the purpose of efficient portfolio management and will not be carried out for speculative purposes.

Amendment to investment policy

As required by the Listing Rules, any material change to the investment policy of the Company will be made only with the approval of the FCA and shareholders, by ordinary resolution and will be notified to HMRC. If a change to the investment policy is material for the purposes of the AIFM Rules, the Investment Manager will need to notify the FCA prior to the implementation of such change and the change may not be implemented until the period of time prescribed in the AIFM Rules has elapsed without the FCA having objected to the change.

Status of the Company

The Company was incorporated on 30 October 2020. It is registered as a public limited company and is an investment company within the terms of section 833 of the Companies Act 2006. It has been approved by HMRC as an investment trust company in accordance with sections 1158/1159 of the Corporation Tax Act 2010. The Directors are of the opinion that the Company has conducted its affairs in compliance with sections 1158/1159 during the year ended 31 December 2024 and intends to continue to do so.

The Company's shares trade on the premium segment of the Main Market of the London Stock Exchange. It is a member of the Association of Investment Companies (the "AIC"). The Company and the Board are governed by its Articles of Association (the "Articles"). Any amendments to the Articles must be approved by shareholders by way of a special resolution.

Employees, human rights, social and community issues

The Board recognises the requirement under Companies Act 2006 to detail information about human rights, employees and community issues, including information about any policies it has in relation to these matters and the effectiveness of these policies. These requirements, which may apply to the Company's investments, do not apply to the Company as it has no employees, all the Directors are non-executive and it has outsourced all its functions to third party service providers. The Company has therefore not reported further in respect of these provisions.

The Company is not within the scope of the Modern Slavery Act 2015 because it has not exceeded the turnover threshold and therefore no further disclosure is required in this regard. The Directors are satisfied that, to the best of their knowledge, the Company's principal suppliers comply with the provisions of the Modern Slavery Act 2015 and maintain adequate safeguards in keeping with the provisions of the Bribery Act 2010 and Criminal Finances Act 2017.

Details about the Company's approach to sustainability are set out on pages 52 to 68.

Diversity

As at 31 December 2024, the Board comprised three female and two male Directors.

It is the Company's aim to have an appropriate level of diversity on the Board. The Board welcomes the recommendations from the FTSE Women Leaders Review on gender diversity on boards and the Parker Review about ethnic representation on boards. The Company conformed with the gender and ethnic diversity targets during the year under review. See pages 108 to 109 for further details of the Board's diversity policy and compliance with the recommended diversity targets.

As the Company has no employees, there is nothing further to report in respect of gender representation within the Company.

 

Financial KPIs

NAV per share growth

-11.4%

Definition

NAV divided by number of shares outstanding as at 31 December 2024.

Commentary

The NAV has decreased to 103.21p since 31 December 2023 (31 December 2023: 116.46p). Alternative performance per share measures are defined on pages 147 to 148.

Dividend per share

5.71p

Definition

Aggregate dividends declared per share in respect of the financial year.

Commentary

The Company's target was to pay a dividend of 5.68p per share in respect of the year to 31 December 2024 (31 December 2023: 5.56p). With the declaration of the interim dividend of 1.45p per share on 21 February 2025, the total dividend for 2024 is 5.71p per share.

Total NAV return for the year

-4.3%

Definition

A measure of performance that includes both income and capital returns. This takes into account capital gains and any dividends paid out by the Company during the year.

Commentary

Total return reflects continued underlying delivery to shareholders (31 December 2023: 14.5%). Alternative performance measures are defined on pages 147 to 148.

Ongoing Charges Ratio

1.5%

Definition

Annualised ongoing charges (i.e. excluding investment costs and other irregular costs) divided by the average published undiluted NAV in the period, calculated in accordance with AIC guidelines.

Commentary

The Company's ongoing charges ratio was slightly higher than the previous year (31 December 2023: 1.4%). Alternative performance measures are defined on pages 147 to 148.

Largest three investment programmes as a proportion of NAV

63.3%

Definition

Value of the three largest investment programmes divided by the NAV at period end.

Commentary

The three largest investment programmes are the US terminal storage assets, the Brazilian hydro facility and the UK Flexible Power with CCR facility (31 December 2023: 59.8%).

Largest investment programme as a proportion of NAV

29.3%

Definition

Value of largest investment programme divided by NAV at period end.

Commentary

The largest investment programme within the Company's portfolio is the US terminal storage assets (31 December 2023: 24.9%).

Total renewable energy generated and injected into the grid (MWh)

856,666

Definition

Underlying portfolio energy generated from renewable assets in MWh.

Commentary

The portfolio's generation for 2024 in MWh (31 December 2023: 844,434), equivalent of the annual electricity use of approximately 317,284 (31 December 2023: 312,750 ) UK homes.

Total avoided carbon emissions (tonnes CO₂e)

262,501

Definition

A measure of our success in investing in projects that have a positive environmental impact.

Commentary

The portfolio's total GHG emissions avoided in tCO₂e from displacing fossil fuel derived electricity (31 December 2023: 252,671 (recalculated)),

equivalent to removing about 163,500 (31 December 2023: 157,455 (recalculated)) average sized cars from UK roads.

Weighted average carbon intensity per $1m revenue (tonnes CO₂e / $m)

60

Definition

Portfolio's exposure to carbon-intensive companies, expressed in tonnes CO₂e/$m revenue.

Commentary

The calculation covers operational scope 1 and 2 emissions (31 December 2023: 42). Emissions from assets under construction are not factored into the calculations.

STAKEHOLDER ENGAGEMENT

Overview

This section of the annual report covers the Board's considerations and activities in discharging their duties under section 172 of the Companies Act 2006, in promoting the success of the Company for the benefit of the members as a whole.

Stakeholders are integral to the long-term success of the Company. The Directors recognise that, both individually and collectively as the Board, their overarching duty is to act in good faith and in a way that is most likely to promote the success of the Company. As set out in section 172 of the Companies Act 2006, the Directors act for the benefit of shareholders and in the interests of stakeholders as a whole, having regard, amongst other matters, to:

•        the likely consequences of any decision in the long term;

•        the need to foster the Company's business relationships with suppliers, customers and others;

•        the impact of the Company's operations on the community and the environment;

•        the desirability of the Company maintaining a reputation for high standards of business conduct; and

•        the need to act fairly between shareholders of the Company.

All Board discussions include consideration of the longer-term consequences of any key decisions and their implications for the relevant stakeholders.

Stakeholders

A company's stakeholders are normally considered to comprise its shareholders, employees, customers, suppliers, as well as the wider community in which the company operates and impacts. The Company is different in that as an investment trust it has no employees and, in terms of suppliers, it receives professional services from a number of different providers, principal amongst them being the Investment Manager.

Through regular engagement with its stakeholders, the Board aims to gain a rounded and balanced understanding of the impact of its decisions.

The Company recognises the importance of maintaining high standards of business conduct and seeks to ensure that these are applied in all of its business dealings and in its engagement with stakeholders. These engagement mechanisms are kept under review by the Directors and are discussed on a regular basis at Board meetings to ensure that they remain effective. The importance of stakeholders is taken into account at every Board meeting, with discussions involving careful consideration of the longer-term consequences of any decisions and their implications for stakeholders. Details of how the Board seeks to understand the needs and priorities of the Company's stakeholders and how these are taken into account during all its discussions and as part of its decision-making are set out below.

Key decisions made during the year

Share buyback programme

The Board continually evaluates the optimum capital allocation strategy for the Company balancing the need to maintain a strong balance sheet in order to support existing portfolio assets alongside further investment opportunities and returning capital to shareholders via dividends or share buybacks. In recognition of the discount at which the Company's share price was trading relative to its NAV per share and its impact on shareholder returns, on 15 September 2023 the Company announced a share buyback programme (the "buyback programme") for up to £10m. On 22 February 2024 the Company announced an increase in the buyback programme by an additional £10m bringing the total buyback programme to £20m. The buyback programme ended on 8 November 2024. Details of the shares repurchased under the buyback programme are set out on page 144.

Board changes

Mr Firth was appointed as a non-executive Director of the Company on 20 February 2025.

As announced by the Company on 20 February 2025, Ms Stephens does not intend to stand for re-election at the upcoming AGM due to personal reasons and, as such, Mr Firth will take over the position of the Chair of the Audit Committee as of the date of the AGM.

Stakeholder	Importance	How the Company engages
Shareholders	Continued shareholder support and engagement are critical to the existence of the Company and the delivery of its long-term strategy. The Board and the Investment Manager give a high priority to ensuring that shareholders understand the Company's strategy and goals and can monitor its performance through the robust corporate governance processes established by the Company.	The Board welcomes shareholders' views and is committed to maintaining open and transparent channels of communications with them. The Board is responsible for the content of communication regarding corporate issues and for conveying its views to shareholders. It aims to ensure that shareholders are provided with sufficient information to understand the risk/reward balance to which they are exposed by investing in the Company. The methods of engaging with shareholders include: The Annual and Interim Reports are made available on the Company's website. These reports provide shareholders with a clear understanding of the Company's portfolio and financial position. In addition to the Annual and Interim Reports, the investor presentations made by the Investment Manager and any prospectuses and circulars issued by the Company are also available on the Company's website. The Company provides regular updates on portfolio acquisitions, capital raises, share buybacks and any other relevant matter by way of market announcements. All shareholders are encouraged to attend and vote at the AGM and at any general meetings of the Company, during which the Board and the Investment Manager are available to discuss issues affecting the Company and answer any questions. The Company values any feedback and questions it may receive from shareholders ahead of and during the AGM and takes action, as appropriate. The Investment Manager, along with the Broker, regularly meets with the Company's shareholders to provide Company updates and to foster regular dialogue. Feedback from all shareholder meetings and investors' views are shared with the Board on a regular basis. The Chair and the Senior Independent Director regularly meet with shareholders. Shareholders wishing to communicate directly with the Board or the Investment Manager to raise any issues or concerns, should contact the Company Secretary at the registered office address. The Chair, Senior Independent Director and the other Directors are available throughout the year to meet with shareholders to understand their views on the Company's performance and governance where they wish to do so. Relations with shareholders are also considered as part of the annual Board evaluation process. The Board regularly monitors the shareholder profile of the Company. With the majority of shareholders being a combination of institutional investors and private client brokers, the Board receives regular updates on investors' views and attitudes from the Company's Broker and the Investment Manager. The results of these meetings are reported to the Board as part of the formal reporting undertaken by both the Investment Manager and the Broker. The details of substantial shareholdings in the Company are included in the Directors' Report on page 87.
Investment Manager	The Investment Manager's performance is critical for the Company to achieve positive and consistent long-term returns in line with its investment objective.	The Board believes that maintaining a close and constructive working relationship with the Investment Manager is crucial to promoting the long-term success of the Company in an effective and responsible way. Representatives of the Investment Manager attend Board meetings and provide reports on the current and future activities, portfolio investments, performance, operational and administrative matters. An open discussion regarding such matters is encouraged, both at Board meetings and by way of ongoing communication between the Board and the Investment Manager, facilitating a positive environment for constructive challenge and cooperative development of solutions. Board members are encouraged to share their knowledge and experience with the Investment Manager and they recognise that the long-term health of the Investment Manager is in the interests of shareholders as a whole. The Board, through the Management Engagement Committee, keeps the ongoing performance of the Investment Manager under continual review and conducts an annual appraisal to consider its terms of engagement. Details regarding the continuing appointment of the Investment Manager are set out on page 110.
Other key service providers	As an investment company, all services are outsourced to third party service providers. The Board is conscious that it is critical to foster good working relationships with them.	The Board believes that strong relationships with its other key service providers, namely the Company Secretary, the Administrator, the Depositary, the Broker and the Registrar, are important for the long-term success of the Company. The Board maintains regular contact with its key external providers and receives regular reporting from them, both through the Board and Committee meetings, as well as outside of the regular meeting cycle. Their advice, as well as their needs and views, are routinely taken into account. Through its Management Engagement Committee, the Board formally assesses their performance, fees and continuing appointment at least annually to ensure that the key service providers continue to function at an acceptable level and are appropriately remunerated to deliver the expected level of service. The Audit Committee also reviews and evaluates the control environment in place at each key service provider.
Lenders	Availability of funding and liquidity are crucial to the Company's ability to take advantage of investment opportunities as they arise.	The Company does not make use of structural debt in order to achieve its yield and total return targets. To date, the portfolio has been equity funded allowing for efficient asset acquisition. Once assets have been acquired and are operational, the Investment Manager, through its extensive international network of funding partners, may seek the most efficient debt funding on a non-recourse basis.
Society and the environment	It is of utmost importance to the Company that it positively impacts local communities through its sustainable environmental initiatives, investment in areas undergoing regeneration and local employment practices.	As an investor in sustainable energy, the Company's assets have an impact on the environment. The Company has a Sustainability Framework which is published on the Company's website and our approach to sustainability is set out in the Sustainability section of the report.

 

PRINCIPAL RISKS & UNCERTAINTIES

The Board, through delegation to the Audit Committee, has undertaken a robust assessment and review of the emerging and principal risks facing the Company, together with a review of any new risks which may have arisen during the year, including those that would threaten its business model, future performance, solvency or liquidity. These risks are formalised within the Company's risk matrix, which is regularly reviewed by the Audit Committee. As part of its risk management process, the Audit Committee seeks to identify emerging risks to ensure that they are effectively managed as they develop and are recorded in the risk matrix.

The Directors are focussed on the risk presented to the Company by the discount to NAV being high for reasons not under the Company's control. Given the market conditions, the Company has not been unable to raise additional funds for investments to drive further growth and diversification in the portfolio. The result is the actual return to shareholders may be materially lower than the total target return. At the same time the Directors are focussed on the Investment Manager managing the Company's liquidity.

The risk of Compliance with Disclosure Regulation, including anti-greenwashing rules and climate related disclosures has increased and is therefore included in the list below for this year.

Some risks in relation to current investments have been considered by the Directors to be relatively low and well managed: demand, usage and throughput, and meteorology, reliance on third party service providers, physical and transition risks. These have been removed from the list below this year.

Information about the Company's internal control and risk management procedures are detailed in the Corporate Governance Statement on pages 92 to 97.

The principal financial risks and the Company's policies for managing these risks, and the policy and practice with regard to the financial instruments, are summarised in note 12 to the financial statements.

Risk	Description of Risk	Risk Impact	Mitigation
1. Risks relating to the Company
Reliance on Investment Manager	The Company relies on the Investment Manager for the achievement of its investment objective.	The departure of some or all of Victory Hill's investment professionals could prevent the Company from achieving its investment objective. There can be no assurance that the Directors will be able to find a replacement manager if Victory Hill resigns. If a successor cannot be found, the Company may not have the resources it considers necessary to manage the Portfolio or to make investments appropriately and, as a result there may be a material adverse effect on the performance of the Company's NAV, revenues and returns to shareholders.	The Investment Manager consists of five managing partners supported by five investment professionals. The total Investment Manager personnel is 15, which includes the Investment, Finance, Sustainability, Compliance, Data Analytics and Investor Relations teams. A collegiate approach is taken to investment management activities with the team having a broad range of skills to support the pursuance of the Company's investment objective. The performance of the Company's Investment Manager is closely monitored by the Board. In addition, at least once a year the Management Engagement Committee performs a formal review process to consider the ongoing performance of the Investment Manager and makes a recommendation on the continuing appointment of the Investment Manager to the Board. The initial term of the investment management agreement is 5 years (ending in February 2026).
Target Total Return	The Target Total Return is based on estimates and assumptions that are inherently subject to significant commercial, economic and market uncertainties and contingencies, and the actual return to Shareholders may be materially lower than the Target Total Return.	Target Total Return requires access to capital to maintain and enhance asset returns. Should access to capital become restricted, asset returns may be impacted.	The Investment Manager has prepared a model of returns and performs extensive due diligence on investments. Furthermore, investment performance is monitored regularly against expected returns. The Board regularly reviews the Company's investment performance against its stated objective.
Currency risks	The Company will make investments which are based in countries whose local currency may not be Sterling and the Company may make and/or receive payments that are denominated in currencies other than Sterling.	When foreign currencies are translated into Sterling there could be a material adverse effect on the Company's profitability, the NAV and the price of the shares.	Investments are held for the long-term. The Company enters into hedging arrangements for periods up to 12 months to hedge against short-term currency movements. Currency risk is taken into consideration at time of investment. The movement in NAV attributable to currency movements is disclosed to investors each quarter with the NAV update.
Liquidity risks	Risk that sufficient cash funds are not in place in order to meet commitments for investment, dividends, buy‑backs of shares and ongoing fund costs.	Risk that unexpected calls are made on investments.	The fund is investing in a mixture of operating and construction assets. Operating assets have the benefit of providing cash flows. The Investment Manager provides an annual budget to the Board for approval. Performance vs budget is monitored on a quarterly basis by the Investment Manager and the Board. 'The Investment Manager monitors liquidity of the Company vs forecast investment, dividend and share buyback commitments. Liquidity is represented in cash, money market investments and fixed term deposits. In the case of share buybacks to manage share price discount vs. NAV, the ultimate buyback is subject to sufficient funds to pay dividends, market conditions and Board discretion. Liquidity constraints will be considered before share buy-backs and/or return of capital to shareholders is executed.
2. Risks relating to the portfolio investment strategy
Illiquidity of investments	The Company's investments in Sustainable Energy Infrastructure Investments are illiquid and may be difficult to realise at a particular time and/or at the prevailing valuation.	Shareholder returns could be materially negatively impacted should the Company be required to realise them in the near term (requirement for early liquidity).	The Company is expected to hold most of its investments on a long-term basis. A continuation vote is set for the AGM in 2026 which, if not passed, could ultimately result in the discontinuation of the Company. The Investment Manager and the Board will monitor the position on a regular basis.
Market conditions	Market conditions may delay or prevent the Company from making appropriate investments that generate attractive returns.	The actual return to shareholders may be materially lower than the target total return.	The Investment Manager monitors returns on investments including capital requirements for portfolio to maintain or enhance portfolio returns. The senior management team at the Investment Manager have extensive experience in executing strategies similar to that of the Company. The Company is invested across a number of investment programmes and assets that generate returns in line with the fund projected returns.
Concentration risk	Concentration risk in relation to exposure to individual Sustainable Energy Infrastructure Investments, technology and geography.	Targeted returns may be materially negatively impacted if those Sustainable Energy Infrastructure Investments, geographies and/or technologies, do not deliver the returns anticipated by Victory Hill.	Limits are set out in the Investment Policy to mitigate concentration risk. At the time of making investments, concentration risk is taken into consideration. The Investment Manager will monitor exposures and the position will be regularly reviewed by the Board.
3. Risks relating to investments
Construction risks	Construction project risks associated with the risk of inaccurate assessment of a construction opportunity, delays or disruptions which are outside the Company's control, changes in market conditions, and the inability of contractors to perform their contractual commitments.	Failure to complete projects in accordance with expectations could adversely impact the Company's performance and shareholder returns.	The Investment Manager undertakes extensive due diligence on construction opportunities and seeks to have appropriate insurances in place to mitigate any costs relating to delays. In addition, the Investment Manager seeks to utilise EPC contractors that can provide single point, lump sum turnkey arrangements wherever possible. The Investment Manager monitors construction carefully and reports frequently to the Board where issues with contractors arise, the Investment Manager has the experience and expertise to identify and contract with alternative contractors. The fund is fully invested. The overall construction weighting of the portfolio is reducing as the portfolio moves from the construction to operational phase.
Due diligence	Due diligence may not identify all risks and liabilities in respect of an investment.	Failure to identify risks and liabilities may impact the profitability or valuation of the investment.	The senior management team at the Investment Manager have extensive experience in executing strategies similar to that of the Company. Where appropriate, due diligence conducted by the Investment Manager is supplemented, for example, by independent legal, tax, accounting, commercial and technical advisers.
Counterparty risks	Counterparties defaulting on their contractual obligations or suffering an insolvency event.	The failure by a counterparty to make contractual payments or perform other contractual obligations or the early termination of the relevant contract due to the insolvency of a counterparty may have an adverse effect on the Company's NAV, revenues and returns to shareholders.	Due diligence on counterparty risk is performed before entering into projects and counterparty risk is monitored on a regular basis.
Uninsured loss and damage	The risk that an investment may be destroyed or suffer material damage, and the existing insurances may not be sufficient to cover all the losses and damages.	The actual return to shareholders may be materially lower than the target total returns.	An independent insurance adviser is appointed for each project to review project risks in conjunction with the Investment Manager and to ensure that appropriate insurance arrangements are in place. Insurance requirements are reviewed on an ongoing basis.
Curtailment risks	Investments may be subject to the risk of interruption in grid connection or irregularities in overall power supply.	In such cases, affected investments may not receive any compensation or only limited compensation.	Extensive due diligence is performed on each project before investment. The Investment Manager constantly reviews curtailment risks.
Commodity price risks	The operation and cash flows of certain investments may depend on prevailing market prices for electricity and fuel, and particularly natural gas.	The actual return to shareholders may be materially lower than the target total return.	The Company mitigates these risks by entering into (i) hedging arrangements; (ii) extendable short, medium and long-term contracts; and (iii) fixed price or availability-based asset-level commercial contracts.
ESG risks	Material ESG risks may arise such as health and safety, unfair advantage, bribery, corruption and environmental damage including climate related risks.	If the Company fails to adhere to its ESG commitments this could result in shareholder dissatisfaction and adversely affect the reputation of the Company	ESG is embedded in the investment cycle with a formal ESG matrix including a minimum target ESG score required for approval of any new investments. Ongoing operational and construction ESG risk management is reviewed periodically by the Investment Manager, who work closely with service providers on ESG and impact standards reporting.
4. Risks relating to the Company's shares
Discount to NAV	The share price may not reflect the underlying NAV. Discount management provisions being unable to be satisfied may result in a significant share price discount to NAV.	Lack of liquidity in the Company's shares could negatively impact on shareholder returns.	The Board, Broker and Investment Manager monitor the discount or premium to NAV at which the shares trade. However share buyback activities to date have had little impact on narrowing the discount between the NAV and the share price.
5. Risks relating to regulation
Regulation	The Company is exposed to the risk that the competent authorities may pass legislation that might hinder or invalidate rights under existing contracts as well as hinder or impair the obtaining of the necessary permits or licences necessary for Sustainable Energy Infrastructure Investments in the construction phase.	The actual return to shareholders may be lower than the target total return.	The Company aims to hold a diversified portfolio of Sustainable Energy Infrastructure Investments and so it is unlikely that all assets will be impacted equally by a single change in legislation. The Investment Manager ensures that contracts are not exposed to government subsidies, thus mitigating exposure to policy risks linked to contract pricing. There is also strong public demand for support of the renewables market to hit 'net-zero' carbon emission targets. The Investment Manager monitors the position and provides regular reports to the Board on the wider macro environment.
Disclosure Regulation	Compliance with the terms of the Disclosure Regulation, including anti-greenwashing rules and climate related disclosures, may create significant additional compliance costs for the Company.	Non-compliance could result in damage in reputation, fines, and reduced investor confidence.	The Investment Manager actively monitors compliance with the Disclosure Regulation.
6. Operational risks
Operation and management risks of the portfolio assets	Poor management or operational performance of an asset by the Company's operating partners and selected operations and maintenance providers.	The actual return from single portfolio assets may be lower than the target total return for the asset.	Operating partners operate to an annual budget and a series of key performance indicators. The Investment Manager monitors the performance vs. annual budget and KPIs on a monthly and quarterly basis. On an annual basis the Operating partners are subject to an annual performance review across operational, ESG and financial KPIs. The Investment Manager provides quarterly reports to the Board on asset-level performance.
Valuation risk	Valuation of the portfolio of assets is based on financial projections and estimations of future results.	Actual results may vary significantly from the projections, which may reduce the profitability of the Company leading to reduced returns to shareholders and a fall in the Company's NAV.	The Company has adopted a valuation policy which was disclosed in the Company's prospectus. Fair value for each investment is calculated by the Investment Manager. However, if considered necessary and appropriate, the Board may appoint an independent valuer. The Investment Manager has significant experience in the valuation of energy assets. The Investment Manager has a valuation working group to perform and challenge valuations. In addition, the Investment Manager Portfolio Risk and Valuation Committee ("PRV") reviews and challenges valuations. The PRV Committee members are functionally independent from the team performing valuations. The Board reviews the valuations provided quarterly by the Investment Manager. As part of the annual audit, the Auditor reviews the valuations. To the extent possible, assumptions are supported by independent data sources.

GOING CONCERN AND VIABILITY STATEMENT

Going concern

The Directors have reviewed the financial position of the Company and its future cash flow requirements, taking into consideration current and potential funding sources, investment into existing and near-term projects and the Company's working capital requirements.

Please refer to page 51 for detailed description on the Director's considerations in forming their view on going concern.

Based on its assessment, the Directors have a reasonable expectation that the Company has sufficient resources to continue in operational existence for at least 12 months from the date of the approval of these financial statements. The Directors are not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Viability statement

In accordance with the Company's articles of association, a continuation vote is required every fifth AGM. The next continuation vote is expected to take place during the AGM around May 2026. The Directors have assessed the prospects of the Company over a period longer than 12 months required by the relevant "Going Concern" provisions. The Directors have considered the nature of the Company's assets and liabilities, and associated cash flows, and have determined that three years, up to 30 June 2028, is the timescale over which the performance of the Company can be forecast with a material degree of accuracy and therefore is the appropriate period over which to consider the Company's viability.

The Investment Manager has considered the sensitivity of the financial projections to a range of key assumptions, such as the portfolio companies being owned by the Company until 30 June 2028, reduction in cash flows from portfolio companies, no debt availability, and the inability of the Company to raise additional equity. The results of this stress testing showed that the Company would be able to withstand the impact of these scenarios occurring over the three‑year period.

The Directors confirm they have carried out an assessment of the emerging and principal risks facing the Company, including those that would threaten its business model, future performance, solvency, liquidity, and dividend cover for a three-year period. The Directors' assessment has been made with reference to the principal risks and uncertainties and emerging risks summarised on pages 45 to 50 and how they could impact the prospects of the Company. In particular, the Board has taken into account the current market conditions, and the discount of the share price to net asset value. This discount, ahead of the continuation vote in May 2026 may result in an uncertain outcome. Should the shareholders of the Company fail to vote in favour of the continuation of the Company in May 2026, the basis of preparation of the viability statement may change.

Notwithstanding the uncertain outcome of the continuation vote in May 2026, the Directors have a reasonable expectation that the Company will be able to continue to operate and meet its liabilities as they fall due for a period of at least three years.

Approval of the Strategic Report

The Strategic Report was approved by the Board of Directors and signed on its behalf by:

Bernard Bulkin
Chair

ESG REGULATION & FRAMEWORK ALIGNMENT

The adoption of the 'Sustainability Impact' label reflects the Company's continued commitment to achieving its sustainability investment objective: to make an impact by supporting the attainment and pursuit of key SDGs where energy and energy infrastructure investments are a direct contributor to the acceleration of the energy transition.

Eleanor Fraser-Smith
Head of Sustainability

The environmental, social and governance ("ESG") and sustainability regulatory environment continued to evolve in 2024. ENRG took steps to ensure alignment with new regulatory requirements. This included the European Securities and Markets Authority ("ESMA") guidelines on fund names using ESG or sustainability-related terms and the Financial Conduct Authority's ("FCA") Sustainability Disclosure Requirements ("SDR") and investment labels.

ENRG announced the adoption of 'Sustainability Impact' label under the SDR. This label identifies investment products that aim to achieve a pre‑defined measurable impact in relation to an environmental and/or social outcome. ENRG was one of the first investment trusts to adopt the impact label which sets a high standard for process, transparency and disclosure.

Sustainability Goal

The adoption of the 'Sustainability Impact' label reflects the Company's continued commitment to achieving its sustainability investment objective. ENRG's investments in sustainable energy infrastructure seek to make an impact by supporting the attainment and pursuit of key Sustainable Development Goals ("SDGs") where energy and energy infrastructure investments are a direct contributor to the acceleration of the energy transition.

ENRG performance against this sustainability objective is measured by reference to key performance indicators (KPIs), see pages 54 to 55.

APPROACH TO SUSTAINABILITY

The Company's investments aim to create positive environmental impact by addressing climate change and air pollution challenges.

The Company seeks to achieve this impact through implementing the investment strategy described on page 32 and the investment in, and management of, a diversified portfolio of sustainable energy infrastructure assets that support reduction or displacement of air emissions from conventional energy sources.

The Company's investments must fall into categories under its 'Investment Universe'. The asset categories in the Investment Universe have been chosen as they directly contribute to the acceleration of the energy transition, and therefore support the reduction or displacement of air emissions. All (100%) of the investments entered into by the Company must be aligned with this Sustainability Objective. If a potential investment does not fall within the Investment Universe, then the Company will not invest.

If a potential investment meets the Investment Universe requirements it is further interrogated to assess alignment with additional Company investment criteria. This includes third party verification of contribution to core SDGs using a proprietary scorecard.

Governance

The Company's governance structure and composition is described in the governance section of this report. The highest governance bodies have responsibility for overseeing sustainability risks and opportunities and assessing effectiveness of related actions. The independent Board of Directors has ultimate oversight for ESG aspects and sustainability objectives of investments and has a dedicated board member with responsibility for ESG and sustainability issues.

They have responsibility for ensuring the reasonable expectations of shareholders are met and ensuring where responsibilities are delegated that objectives are achieved. The Investment Manager has been appointed by the Board to advise on investments and perform asset management activities. Delegated responsibilities include development and implementation of sustainability policies and processes and ensuring necessary resourcing. Oversight is achieved through several Investment Manager administered subcommittees which include the Investment Manager's Head of Sustainability as a member. The Investment Manager subcommittees all have a role in embedding sustainability into decision making.

Investment Manager Sub-Committees

Investment Committee evaluates investment opportunities and ensures alignment with the SDG investment policy and inclusion of ESG due diligence and risk analysis in the investment process. The committee also provides oversight for investment stewardship activities, monitors investment ESG performance, and ensures actions and priorities are executed.

Risk, Operations and Compliance Committee ensures ESG risks, including climate related physical and transition risks, are identified and corresponding controls are considered and implemented. The management of environmental and social related risks and opportunities is integrated into the Company's risk management framework.

Sustainability Committee advises on ESG strategy, emerging ESG issues and provides recommendations on ESG integration into investment and asset management processes. This includes target setting, monitoring and reporting.

The Investment Manager leadership team are permanent members of the three subcommittees. Decisions and programme updates are reported to the Board and Board committees.

If an investment opportunity meets ENRG's Investment Universe and the opportunity is cleared by Victory Hill's investment committee, in depth investment due diligence is then conducted to understand the full impact of the opportunity. The investment memorandum with supporting commercial, project, sustainability and financial information is then submitted to the Board for feedback. The proposed acquisition is then submitted for approval by Victory Hill's Investment Committee, with the Board having an opportunity to provide feedback on the investment decision before it is implemented.

Stewardship

The Company's sustainable energy infrastructure assets are managed through active engagement and stewardship activities with asset operating partners. A key focus of engagement is implementing governance and reporting mechanisms with the operators to ensure transparency and accountability. Continuous performance improvement to drive risk management and sustainable value creation and impact is also a priority. An annually agreed sustainability action plan for each asset establishes main objectives. This document supports several aims: the monitoring of asset operators' compliance with their sustainability linked contractual arrangements; alignment of investments with global sustainability frameworks; creating consistency with the Investment Manager's sustainability and investment policies; and supporting an ESG risk and opportunity management approach to operation and activity management. KPIs and other performance metrics are collected from the asset operators monthly with regular meetings with operating partners to track progress against performance metrics.

The Investment Manager has established processes to monitor the performance of each asset and its operator to ensure alignment with strategic and operational objectives, as well as escalation procedures for assets that underperform. Engagement with operators to discuss remediation and improvements is the Investment Manager's preferred action. There were no actions taken under the escalation procedures during the financial year.

These engagement and stewardship activities support the Company's achievement of the Sustainability Objective and delivery of the Impact.

Stakeholder engagement

The Company's investment strategy includes alignment with SDG 17 'Partnership for the Goals' recognising that the SDGs can only be met if all stakeholders work together to mobilise financial resources globally. This is the Company's approach to investment. The values of honesty and integrity, transparency and partnership are integral to stakeholder engagements.

To enable ENRG's sustainability objectives there are key stakeholder engagements:

•        Investors

•        Operating Partners and their employees

•        Investment management employees

•        Engineering, procurement and construction contractors (EPC)

•        Communities

•        Offtakers, customers and clients

•        Local regulatory bodies

The Environment is also a key stakeholder, and the Company measures the environmental footprint of its investments and seeks to make a positive contribution in the operating regions.

The operating partners have responsibility for implementing a stakeholder engagement plan commensurate with operations. The Investment Manager has developed guidance and tools to assist operations in stakeholder mapping and engagement strategies. This approach recognises the interconnected systems and impacts in different energy value chains. Investment impacts on the Company's stakeholders are not always limited to the operational footprint. Taking a value chain view is therefore an important element of the Investment Manager's ESG risk analysis process and its efforts to mitigate risks in business relationships. ESG opportunities, risks and impacts on both the Company and from the Company's activities on stakeholders are in scope. These are communicated in the asset sustainability action plan which is informed by the external SDG assessment, due diligence and materiality analysis.

The flow chart below identifies the sustainability inputs into the Company's investment process for risk and opportunity management.

Sustainability and ESG risk analysis

Origination sustainability analysis
Fund mandate, SDG and EU Taxonomy eligibility analysis internal evaluation (Stage: Preliminary Deal Analysis)	Due diligence questionnaire covering ESG red flags, do no harm criteria & ESG risk management and practices (Stage: Screening)	External SDG and EU Taxonomy eligibility evaluation Investment SDG alignment, life cycle and value chain analysis (Stage: Screening)

 

Sustainability action plan (SAP)
Sustainability materiality analysis and ESG risk and opportunity assessment informed by sector and geographic risks, project specific impacts and stakeholder mapping (Stage: Onboarding)	The asset sustainability action plan addressing priority sustainability risks and opportunities with the aim to create additional sustainable value through environmental and community engagement (Stage: Onboarding)

 

Monitoring, evaluation & reporting
Data collection and analysis of KPIs and targets to track SAP progress (Stage: Asset Management)	Annual and periodic sustainability reports - KPIs and metrics assured externally (Stage: Asset Management)

Materiality

The principal risk and uncertainties table on page 45 includes those financially material environmental and social issues which are identified through the Company's risk management process.

The Company also conducts a dedicated ESG materiality assessment for each asset programme in the portfolio which is reviewed annually or as required. There are several frameworks and standards that inform this process supporting a sector specific view. This includes the International Sustainability Standards Board ("ISSB"); Sustainability Accounting Standards Board ("SASB"); Global Reporting Initiative ("GRI"); the Global ESG Benchmark for Real Assets; International Finance Corporation performance standards; Sustainable Finance Disclosure regulation ("SFDR") principle adverse impacts ("PAI"); Task Force On Climate Related Financial Disclosures ("TCFD") and additionally in 2024 the European Sustainability Reporting Standards ("ESRS") and the FCA SDR.

The regional and geographic risks considered include those identified by Transparency International Corruption Perception Index, Freedom House Freedom in The World Index, Fund for Peace Fragile States Index, Global Slavery Index, Social Progress Index and ILO Labour Rights as well as individual country climate pledges.

Investment specific attributes considered include the operational proximity to local communities, indigenous peoples, cultural heritage, ecological and biodiversity habitats, and operational activities such as noise, light, water use, discharge and waste that may impact external stakeholders and the environment.

The stakeholders interacting with the operations including employees, communities, contractors, suppliers and customers are considered along with the operating partner company's resourcing and ESG management policies and procedures. Risk and significance of material issues are assessed on this basis, accounting for the probability and severity of impacts and the quality of controls that the operating partner has in place.

The diverse nature of the portfolio is reflected in varied range of operational priorities. The glossary on page 160 identifies some of the key issues assessed in the different asset materiality analyses. They were reviewed for likelihood, severity, time frame and control effectiveness.

With new regulation there has been an increased focus on the concept of double materiality which considers these two dimensions of impact materiality and financial materiality, taking a value chain and life cycle view of impact.

Financial materiality

A material issue for the Company is physical climate change such as extreme weather, which could present financial risk to the portfolio. This is a systemic issue for the energy sector which includes climate risks and opportunities, energy generation and operational emissions. These issues and the Company's management approach are explored in more detail in the TCFD section on page 70. The Company recognises that sustainability topics are naturally interconnected.

Impact materiality

Systemic risks such as climate change can also impact Company stakeholders. There are also local idiosyncratic risks at the operational level that may affect stakeholders including:

•        Environmental impacts: The Company is committed to not developing or operating assets on ecologically sensitive, protected or conservation areas. However, there is recognition that construction and operational activities could contribute to nature loss. Mitigating and managing these impacts form part of the sustainability action plans. No severe impacts have been identified to date. More detail of active management is included in the environmental section of this report (page 65).

•        Social impacts: Suppliers in the cobalt and polysilicon supply chains that includes silicon components of solar cells have been implicated in forced labour practices and human rights abuses. The majority of solar cells contain Chinese origin silicon components so the likelihood of impact is high. Regulatory interventions and Company enhanced due diligence help reduce the risk.

These potential impacts are discussed in the performance section below together with core operational social and environmental risk management.

Collaboration with other organisations, industry peers and stakeholders is crucial to address sustainability topics. The Investment Manager therefore is signatory, supporter and member of organisations that seek to drive change through disclosure and partnership. These frameworks and guidelines also inform the Company's investment process and stewardship activities.

The Company is committed to transparency and accountability and driving continuous performance improvement aligned with the highest standards for sustainability. To build confidence in data reported, the Company engaged Bureau Veritas to independently assure selected environmental and social metrics reported through a limited assurance engagement in accordance with the International Standard on Assurance Engagements ("ISAE") 3000 "Assurance Engagements Other than Audits or Reviews of Historical Financial Information," and ISAE 3410, "Assurance Engagements on Greenhouse Gas Statements." These standards provide a framework for assessing the completeness, accuracy, and reliability of the selected social and environmental disclosures. Social and environmental metrics annotated with ‡ have been covered in the assurance process. The assurance engagement data collection processes and methodologies were examined through the assurance process, and an opinion was provided on the disclosed information.

The full independent Assurance Report including Bureau Veritas' assurance conclusion, assessment standard, scope of work, summary of work, and exclusions and limitations can be found on the Company website: https://www.globalenergyinfrastructure.co.uk. The basis of reporting and assurance opinion can also be found on the ENRG website. The basis of reporting provides detail of assets within scope of reporting and assurance. ESG data reported covers operational assets with more than six months of data. For 2024 that did not include any UK investments. All data is attributed to overseas entities.

Streamlined energy and carbon reporting (SECR)⁴

	Energy use (MWh)		GHG emissions (tonnes CO2e)
Year	Energy 2024	Energy 2023	GHG 2024	GHG 2023
Scope 1	16,453‡	17,905	2,985‡	3,271
Scope 2 (location)	4,656‡	1,783	1,119‡	518
Scope 2 (market) - onsite generation	7,393‡	8,172	-	-
Total Scope 1 & 2	28,502	27,860	4,105	3,789
Scope 3	-	-	44,960‡	29,013
Total (all scopes)	28,502	27,860	49,064	32,802
GHG emissions avoided (solar only)	-	-	40,827	17,663
GHG emissions avoided (location based)	-	-		122,530
GHG emissions avoided (operating margin based)	-	-	262,501‡	252,6715

 

⁴           GHG emissions scope definitions and methodology: The Company collects GHG emission data monthly from its operational assets and reports totals annually. The Company uses the following standards to report its GHG emissions: the World Business Council for Sustainable Development ("WBCSD") and the World Resources Institute ("WRI") GHG Protocol as of 31 December 2014, the GHG Protocol Scope 2 Guidance, and the Carbon Disclosure Standards Board. The Company defines its emissions boundary as those under majority ownership (+50%). 100% of emissions reported are under the Company's financial control. The operational carbon footprint of assets is calculated from absolute energy consumption reported by the assets. Scope 1 comprises direct emissions from Company owned and controlled plant and equipment, including natural gas, propane, diesel and automotive fuel. Scope 2 comprises indirect emissions from purchased renewable and non-renewable electricity using location based calculation method. Scope 3 comprises indirect emissions from non-Company owned and controlled plant and equipment, including freight in and outbound to the storage terminal, waste, water use and fuel and energy related activities not included in scope 1 and 2. Regional and country specific emission factors are used to calculate GHG emissions included IEA, IFI, UK BEIS, US EPA and Australian National Greenhouse Accounting factors.

⁵           In the 2023 annual report and accounts GHG emissions avoided were calculated using the location based grid mix emission factors to estimate emissions displaced from renewable energy generation. In 2024 an updated methodology has been used. Emissions avoided are determined by comparing the emissions from the renewable energy project to the emissions that would have been generated without the project (baseline emissions) using operating margin emission factor data. Baseline emissions represent the emissions that would have occurred under a business-as-usual scenario, typically from fossil fuel power plants. The Partnership for Carbon Accounting Financials ("PCAF") recommends using the operating margin ("OM") emission factor for reporting the emissions avoided from renewable power project portfolios. The methodology for these factors is aligned with the International Finance Institution ("IFI")-harmonized GHG accounting standards, which are calculated by the IFI Technical Working Group on Greenhouse Gas Accounting.

Carbon footprint

The Company investment objective supports climate action by accelerating the energy transition through its investments in climate resilient energy infrastructure. The management of investment impacts, including measuring an asset's carbon footprint and taking action to decarbonise, is an important element in the Company's climate action approach. The table below covers the Company's scope 1, 2 and 3 emissions from the operational assets including the Australian solar PV with battery storage assets, Brazilian solar PV assets operational in 2024, Brazilian hydro facility, and US terminal storage assets. All sites provide operational data, however gaps remain in calculating scope 3 emissions due to difficulties sourcing data from the asset value chains, for example destinations of inbound and outbound freight for the US terminal storage assets. In this case an estimate was used based on industry knowledge. For the solar PV assets, the scope 3 emissions from transmission and distribution are accounted for.

2024 saw an increase in carbon emissions from electricity use. This is attributed to the maintenance activities at a Solar PV and battery storage asset in South Australia which resulted in less solar generation and increased import of electricity for storage in the battery. The emissions calculations use the average grid mix for the region, however it is worth noting that the BESS imports electricity at lowest daily cost when renewable generation is high and exports at the operating margin when costs are high and generation is likely from high cost more pollutive fossil sources. Accurately reflecting the source of electricity procured from a grid is a challenge.

	2024		2023
GHG emission	Emissions	% Total	Emissions	% Total
Scope 1
Subtotal	2,985‡	6%	3,271	10%
Mobile combustion - owned fleet	82‡	0.2%	50	0.2%
Stationary combustion (natural gas, diesel, propane)	2,903‡	6%	3,220	10%
Fugitive emissions	0	0%	0.52	0.002%
Scope 2
Subtotal	1,119‡	2%	518	1.6%
Purchased and used electricity	1,119‡	2%	518	1.6%
Scope 3
Subtotal	44,960‡	92%	29,013	88%
Category 1: Purchased goods and services	4‡	0.01%	4	0.0%
Category 3: Fuel- and energy-related activities	864‡	2%	739	2%
Category 4: Upstream transport and distribution	7,938‡	16%	6,853	21%
Category 5: Waste	14‡	0.03%	3.00	0.01%
Category 7: Employee commuting	16‡	0.03%	19	0.06%
Category 9: Downstream transport and distribution	36,123‡	74%	21,395	65%
Total emissions	49,064		32,802

 

Programme embodied carbon - life cycle analysis

	Units	Australia	Brazil (Hydro)	Brazil (Solar)	UK	Iberian and Swedish assets	Portfolio
Life time embodied emissions	tonnes CO2e	132,871	175,382	114,276	1,321	12,370	436,220
Life time operational emissions	tonnes CO2e	6,561	1,866	12,868	93,210	130	236,823
Total life cycle emissions	tonnes CO2e	141,308	177,248	127,144	94,531	12,501	675,385
Life time emissions avoided	tonnes CO2e	496,344	8,980,587	69,905	152,027	31,351	9,730,213
Average emissions avoided per annum	tonnes CO2e	25,506	91,578	7,882	9,862	1,254	133,894
Emissions payback	years	5.54	1.9	16.1	9.6	10.0	5.0
Emissions avoided since acquisition	tonnes CO2e	48,995	155,914	10,058	In construction	no data in 2024	214,955
Remaining emissions	tonnes CO2e	92,312	Complete	117,085			460,430
Remaining payback	Years	3.6	Complete	14.9	-		3.4

 

The Company takes a life cycle approach to understand carbon impact and footprint of each of the renewable power generation investments and the future carbon capture project. The Company conducted a life cycle assessment ("LCA") of embodied emissions of the energy generation assets in the portfolio. This data was first published in the 2021 annual report. This analysis was updated with the acquisition of the Mascarenhas Brazilian hydro facility at the end of 2022 and the commissioning of the BESS system in the Australian solar PV sites and this year to account for the acquisition of a wind asset in Sweden and solar PV site in Gran Canarias, Spain. This analysis was completed by a third-party sustainability expert with the methodology described below. This is also a requirement for some assets under the EU SFDR regulation. The data was calculated on an average 25-year life cycle (longer for hydro) and includes import and export data that is indicative of full life emissions avoided. The LCA process for each asset was completed using actual and predicted asset data as far as possible, supported with data derived from the EcoInvent database. This approach enabled the embodied tCO2e emissions within each asset to be calculated. These include emissions associated with raw material extraction, manufacture, transport, construction, operations and decommissioning and recycling. The objective was to understand more completely the emissions avoided for each asset and account for emissions associated with the development of each asset. The emissions avoided calculations within the LCA take into account local factors such as carbon intensity of the energy type being replaced at a local level and local irradiance levels. The expected decarbonisation of traditional baseload energy supply aligned with country commitments towards net zero by 2050 was also factored in. The calculations therefore accounted for expected decarbonisation trajectory of grid supplied energy and the tonnes CO₂e avoided figures at all phases of the asset life cycle for each country in which assets are located. However, a declining grid carbon intensity has not been carried through for Brazil as the grid has established low carbon intensity. The Brazilian calculations therefore do not account for the type and carbon intensity of electricity generation being displaced by the solar PV assets, nor the benefits of distributed power generation. A reduction in electricity losses along transmission and distribution lines means the remote distributed solar PV assets in Brazil will provide a more efficient and cleaner source of energy locally, supporting future growth and energy access.

The Company is tracking progress on carbon emission "payback" as calculated in the LCA, considering the estimated and actual energy generation and associated emissions avoided. The clean electricity generated is starting to payback that emitted and estimated in the asset lifetime. The Brazilian hydro facility was commissioned in 1974 and has a short "payback" period for its embodied emissions which means the facility is notionally providing zero emission electricity into the grid. Similarly, the Swedish wind asset acquired in 2024 has historically generated enough clean energy to notionally "payback" embodied lifetime emissions.

Environment

The Company's investments aim to create positive environmental impact by addressing climate change and air pollution challenges. The assets support the decarbonisation of electricity grids in countries of operation and facilitate cleaner energy value chains through provision of strategic energy infrastructure. This impact is measured by the displacement of more carbon intensive electricity in grids or pollutive fuels in value chains.

Environmental metrics (strategic impact)	Unit	2024	2023 (Grid)	2023 (OM6)
Renewable energy generated	MWh	856,666‡	844,434
Renewable energy generated (solar only)	MWh	76,124‡	62,952
Nitrous Oxides (NOx) avoided	Tonnes	2,226‡	1,921
Sulfur Oxides (SOx) avoided	Tonnes	22,402‡	19,332
Particulate Matter (PM) 10 avoided	Tonnes	1,140‡	984
Particulate Matter (PM) 2.5 avoided	Tonnes	837‡	722
Emissions avoided (solar only)	Tonnes CO2e	40,827‡	17,663	30,730
Emissions avoided	Tonnes CO2e	262,501‡	122,530	252,671

 

 

In 2024 BESS was deployed on three solar PV sites in New South Wales, Australia supporting the sustainability investment objective. Solar PV sites generate low emission electricity and reduce GHG emissions by displacing more expensive and polluting fossil-fuel-based electricity generation at the operating margin, reducing reliance on carbon-intensive energy production. However, solar PV generates electricity during daylight hours, and power demand often peaks in the evening. By integrating battery storage, excess electricity generated during the day can be stored and released when demand is high, addressing the intermittency challenge and displacing more emitting conventional power sources. Batteries therefore enable a temporal shift in electricity supply, allowing solar energy to meet peak demand that would otherwise be supplied by carbon-intensive sources like coal-fired power plants. This shift reduces the reliance on fossil fuels, particularly in coal-heavy states like Queensland and New South Wales.

Active management of investments is important for ensuring the operational efficiency and maximising the emissions reduction potential of the portfolio. From an environmental management perspective this includes operations and maintenance activities such as routine equipment testing, predictive maintenance, vegetation control and landscaping, firebreak installation and maintenance, panel cleaning, flood management, weather monitoring, thermal management, operational and emergency response and preparedness planning. These all contribute to protecting the portfolio and ensuring high availability and performance of the assets and therefore optimal renewable generation by the assets and emission reduction.

The Investment Manager's sustainability criteria which is informed by the UN Principles of Responsible Investment, UN Global Compact and the EU taxonomy do no significant harm ("DNSH") criteria require operating partners not to contribute to environmental degradation and to take proactive measures to improve the environment around the operations.

There were no delays to projects in 2024 due to environmental concerns. The operational environmental metrics table below provides absolute metrics with a comparison to 2023 metrics where available. This covers 100% of operational assets under management that have been operational for at least six months during the financial reporting year.

⁶           Recalculated 2023 GHG emissions avoided using operating margin emission factor published by IFI using PCAF methodology.

Environmental metrics (operational impact)	Units	2024	2023
Water use including consumed	Cubic Meters	28,716‡	24,274
Water quality	WQI	Good‡	Good
Waste produced	Tonnes	37‡	75
Renewable energy consumed	MWh	7,393‡	8,172
Renewable energy certificates	MWh	1,161	-

 

The renewable energy consumed is in reference to the Brazilian hydro facility which consumes some of the electricity generated by its turbines in the facility's operations. This electricity is zero carbon and is reported in the emissions table on page 62. The renewable energy certificates were purchased by the US terminal storage facility operator to cover electricity use by the assets which are currently unable to procure renewable energy through on site or private wire generation.

There was an increase in water use in 2024 this was attributed to additional measurements of irrigation water at the hydro facility and slight increase in use at the US terminal storage asset.

•        Water is a material issue for the Brazilian hydro facility. Water quality which is monitored by a third party and reported to regulators, was rated as good according to the Water Quality Index. However, a reduction in water quality was observed at the upstream locations. This reduction was judged to be caused by upstream activities such as agriculture and beyond the asset's control. Downstream measurements, taken after the water passed through the turbines, remained good. In 2025 the asset is developing plans to improve the reservoir. Purchased water volumes reduced during the year as a direct result of fewer contractors on site. Water withdrawn from the river for irrigation was tracked for the first time in 2024 and is reflected in the increased water use reported.

•        At the US terminal storage asset water use is correlated with the volume of fuel processed. An increase in water use was directly linked to increase in HSFO flows. The benefits of the renovated steam generation system are evident however, as it drives water efficiencies. There has been a 21% efficiency improvement measured overall. This is an important initiative for the terminal which is located in an area of high-water stress. Brownsville continues to suffer from drought conditions in 2024 with the public utilities board urging water conservation from businesses and residents.

There was a decrease in waste reported in 2024 attributed to the conclusion of construction work at the terminal storage asset in 2023. Normal operations saw monthly removal of waste by a contracted recycling company.

Social

The Company has no employees. The social data reported and assured below is related to operating partner employees who interact with site operations and/or work directly on site. This is reported as full time equivalent ("FTE") for the financial year 2024. This does not include operating partner management employees working at head office or elsewhere.

There was an increase in operating partner workers across the sites in 2024 with a slight increase in employment at the US terminal storage asset. Staff turnover remains a challenge in the US where the workforce is transient, and the local labour market is competitive. The operator is continuing to implement policies to support labour retention. The Brazilian hydro facility also saw some turnover in Q2 following a period of workforce stability.

Improving diversity for small mid-market operators remains a challenge particularly in female representation. Recruitment pipelines continue to draw from local talent pools that lack diversity and the operators often lack resources for robust diversity initiatives. The Company is committed to working with the operators to overcome challenges and create a more diverse workforce.

Employee metrics		Units	2024	2023
Total number of operating asset employees	FTE	#	68.5‡	58
Gender Diversity	Male	%	97%‡	98%
	Female	%	3%‡	2%
	Other	%	0%	0%
Employee turnover	%	%	35%‡	14%
Total number of asset employees all*	FTE	#	71.5	58
Total number of operator partner employees	FTE	#	197.5	-

 

* Employee numbers include construction assets or operating partners with assets in development.

Health and safety

Health and Safety metrics	Unit	2024	2023
Total recordable injuries	#	2‡	0
Total number of incidents	#	2	4

 

The Company is pleased that health and safety continues to be a focus for operating partners. Root cause review of two traffic related incidents in the Brazilian solar PV programme has led to improved practices by the operating partner and the Company continues to monitor progress.

The US terminal storage assets and Brazilian hydro facility had the highest number of workers on site and recorded no worker accidents or injuries in 2024.

Other safety incidents reported during the year included a fire at one of the Brazilian Solar PV assets with wind blowing sparks from neighbouring land. The fire was dealt with quickly through emergency response procedures and onsite firefighting equipment with little damage caused and no injuries. A small oil leak from a solar transformer was also reported. This was below the volume for official reporting and the oil was cleared and transformer repaired.

Operations: policy and procedures	Unit	2024
Operating partners with H&S safety policy	%	100%
ISO 45001 certified	%	40%
Environmental management policy and system	%	100%
ISO 14001 certified	%	40%
ILO aligned employee handbook	%	60%
Supplier code of conduct or equivalent	%	80%
Non compliance with environmental regulations	£	0
No of grievances received	#	2

Supply chain

Suppliers in the cobalt and polysilicon supply chains that include silicon components of solar cells have been implicated in forced labour practices and human rights abuses. Companies implicated have been blacklisted by various governments including the United States and Australia. However, other downstream suppliers, particularly in the photovoltaic supply chain may be unwillingly complicit by procuring silicon from these suppliers. Enhanced due diligence is one way of mitigating this risk. The Company's operating partner in Australia, through the construction contractor, engaged with suppliers for two construction sites during 2024 to understand their environmental and social operating practices as well as supply chain engagement practices. The solar panel supplier was contractually required to provide traceability data for all components purchased which included sub supplier and location including Chinese city and province if applicable. For the construction assets in the newly acquired Iberian portfolio this provenance data was also collected. No solar components have been procured from the Chinese region of Xinjiang which has been implicated in forced labour abuses of the Uyghur ethnic group.

Community

In 2024 the Brazil solar PV operating partner initiated a community engagement programme. This focussed on engaging local communities around priority sites to educate on the operating partner, create open dialogue and manage issues to better understand impact on the investments.

The US terminal storage facility is in Brownsville on the Texas-Mexico border. The city has one of the highest poverty rates in the US and high unemployment rates, with many young people living in poverty. The terminal storage facility provides job opportunities and benefits to the local community. In addition, local community engagement is focussed on giving back to communities where employees live and work through volunteer hours and philanthropic activities at local elementary schools and food banks to support those in need.

Under Brazilian regulatory requirements the hydro facility operator partner organised several community engagement programmes in 2024 which included environmental education and supporting local waste management charities. An important milestone in 2024 for both the hydro facility and the Company was the achievement of Gold certification under the Hydropower Sustainability Standard. This certification covered the full breadth of sustainability issues and was a recognition of the operating partners' efforts to strengthen community outreach and engagement as well as labour relations, continuous improvement around health and safety, and improving aquatic and terrestrial habitats upstream and downstream.

CLIMATE RELATED FINANCIAL DISCLOSURES

The Company is voluntarily disclosing its current practice in its annual financial report in accordance with the TCFD recommendations and requirements. The Company is committed to strengthening climate-related financial disclosures over time.

Pillar 1: Governance

Disclose the organization's governance around climate related risks and opportunities

An orderly energy transition towards climate change goals is the key opportunity for the Company. The Company's strategy is to target direct investments in energy infrastructure assets that support the SDGs, specifically those that address themes that include climate change, energy access, energy efficiency and market liberalisation. Climate change issues are therefore intrinsically considered by both the Board and the Investment Manager.

The management of climate related risks and opportunities is integrated into the Company's risk management framework. This looks at the likelihood of a risk and the severity of impact with and without controls. It enables the Board and the Investment Manager to prioritise material risks for additional mitigation (see principal risk section on page 45.

a) Describe the board's oversight of climate related risks and opportunities

The ENRG Board has oversight of the business model and strategy. It meets at least four times a year and is responsible for the ongoing process of identifying, carrying out a robust assessment of, and managing and mitigating the principal risks which include climate-related risks faced by the Company.

The Board's Audit Committee, which is comprised of three independent Directors and chair, meet at least twice a year, and has responsibility for reviewing the Company's risk management systems. The committee reviews and updates the Company's risk register which includes climate-related risks. Louise Kingham, CBE, is a Board member with strong industry expertise and is responsible for ESG and sustainability related matters for the Company. The Board and Board committees monitor and oversee climate-related issues when reviewing and guiding ENRG strategies, important plans of action and risk management policies. They also track implementation and performance progress against goals and targets for addressing climate-related issues through its periodic committee meetings and the oversight of the Investment Manager. The experience and background of Board members are disclosed on page 85.

b) Describe management's role in assessing and managing climate-related risks and opportunities

The Investment Manager has responsibility for implementing the Company's investment strategy, managing the Company investments, and reporting to the Board and Board committees. There are three relevant subcommittees at the Investment Manager level which address climate-related issues and report to the Investment Manager leadership team:

•        The Investment Committee evaluates investment opportunities aligned with the SDGs and with the purpose of accelerating the energy transition towards a net zero carbon world before making any investment decisions. An external assurance consultant is used to advise on project selection following a robust SDG validation due diligence process. The Investment Manager's Head of Sustainability is a member of the Investment Committee informing about climate-related issues.

•        The Sustainability Committee provides recommendations on ESG integration into the investment strategy and ongoing asset life cycle management. This includes appropriate ESG target setting, periodic monitoring, and reporting.

•        Risk, Operations and Compliance Committee ensures risks are identified and control measures are put in place to mitigate the risk, which includes climate-related issues.

The Investment Manager leadership team are deeply involved in these three subcommittees; they then aggregate, consolidate, and report investment decisions and program updates periodically to the Board and Board committees.

The Investment Manager's Head of Sustainability is responsible for the climate-related programme management which includes monitoring climate issues, adopting ESG and climate-related practices into the Company, improving investment-level resilience to climate-related risks and reaping climate-related opportunities aligned with the Company's strategy. The Head of Sustainability reports to the Investment Manager's Head of Risk Management on climate-related risk issues and metrics to respective committees and leadership team.

The Investment Manager also works closely with operating partners through regular meetings and monthly reports to review and monitor climate-related issues.

Operational carbon footprints are calculated including life cycle analysis of energy generation projects to understand their contribution to the Company's net zero target (see page 83). Actions are put in place to reduce operation emissions and other environmental impacts, including understanding supply chain and value chain impacts. Operating partners periodically affirm their compliance with relevant policies.

For construction assets, operating partners are engaged to ensure ESG management practices are aligned with the Investment Manager's sustainable development culture. The Company's governance structure is presented on page 93 where associated subcommittees are included.

Pillar 2: Strategy

Disclose the actual and potential impacts of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning where such information is material.

a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term

The average asset life in the Company portfolio exceeds 25 years, therefore the Company generally takes a long-term time horizon approach. This is also aligned with the portfolio net zero target timeframe. The Investment Manager is a signatory to the Net Zero Asset Managers Initiative ("NZAMI") which supports the goal of net zero GHG emissions by 2050. With rapid changes in market movements, regulatory trends, and weather patterns, the Company also assesses material climate-related risk in shorter time horizons.

The Company considers climate related risks and opportunities within the following time horizons:

•        Short term: 0-5 years

•        Medium term: 5-10 years

•        Long term: 10+ years

The Company's process of assessing climate-related risks and opportunities is integrated into its ESG materiality and ESG risks analysis process which is described on page 59. It covers the investment process ranging from investment decision-making to ongoing deployment monitoring. Potential risks can also be raised by operating partners and investment team members to the Head of Sustainability. The material climate-related risks and opportunities of the Company are identified and listed in tables below. This is based on the Company's business strategy, geographical exposure and type of energy technology. It considers the Company's financial materiality threshold, which is above 3% of NAV for residual climate related risks after considering risk mitigations. This is consistent with financial market norms.

Climate-related Risk	Risk assessment and mitigation
Risk category: Physical risk - Chronic Longer term gradual changes in climate patterns, e.g., reduction or increase in wind levels, decrease in solar optimal days impacting renewable output and associated earnings. Increased occurrence of extreme weather events such as cyclones, storms, flooding, and heatwaves causing damage to assets, disruption to feedstocks, value chain, outputs and associated earnings.	Time horizon: medium-term, long-term Impact area: business, strategy, and financial planning Potential impact: reduction in output from assets leading to reduced income stream. This risk may increase over the long term in the absence of climate mitigation. Risk mitigation: The Company invests in a portfolio of energy transition infrastructure assets, diversified by geography, technology, and capability. These investments follow the thesis of energy transition to achieve net zero goals. Such diversification provides a buffer against variable weather patterns across the portfolio. The Company also mitigates risk through project revenues being contracted for the medium- and long-term. At the asset level, meteorology due diligence is undertaken before investment, weather conditions are monitored and some of the assets have battery storage capabilities to optimise energy input to the grid. All assets have crisis management and business continuity plans to respond to disruptions. The assets are required to have continuous improvement management systems to build capability and capacity in local teams and operations.
Risk category: Physical risk - Acute Abrupt disruptive climate impacts such as impacts from flooding, wildfire, drought, extreme heat, or sudden regulatory actions increasing over time.	Time horizon: short-term, medium-term, long-term Impact area: business, financial planning Potential impact: Increase operating expenditure to recover asset damage caused by natural disasters and increase insurance premium for assets in high-risk locations. Risk mitigation: Throughout the investment decision-making process, the due diligence process accounts for climate change risk and impacts. The Investment Manager employs an insurance specialist when making investments and seeks to have appropriate contractual warranties, indemnities and insurance provisions in place to mitigate any costs relating to delays or operation disruption. Insurance requirements are reviewed on an ongoing basis.
Risk category:  Transition risks - Market Uncertainty in market signals manifests as lower-than-expected power prices, driven by an imbalance between an abundant intermittent power supply and market demand. Lower than expected volume throughput for conventional fuel storage asset driven by increased demand for alternative fuels.	Time horizon: medium-term, long-term Impact area: business, strategy, and financial planning Potential impact: Increase in market volatility and abrupt and unexpected shifts in power prices make financial forecasts less reliable on intermittent renewable energy solutions. Reduced throughput for conventional fuels longer-term with expected shift to clearer and alternative fuels impacting existing fuel storage asset revenue flows. Risk mitigation: The Company manages this risk through its diverse portfolio of energy transition infrastructure assets such as the battery energy storage systems and hydro facility, as well as signing fixed price offtaker agreements. The Company is assessing its longer-term strategy to invest in storage assets to accommodate alternative fuels required for hard to abate transportation including sustainable aviation fuel, renewable diesel, marine e-methanol and hydrogen as the market shifts.
Risk category:  Transition risks - Technology, Market Market shifts such as changing customer behaviour and substitution of existing products and services with lower emissions options or new technologies may dampen ability to engage European investors on a traditional European focused renewable portfolio and often shift strategy towards a broader portfolio of energy transition projects that cover various regions and include new technologies such as biofuels and carbon capture and reuse.	Time horizon: medium-term, long-term Impact area: business, strategy, and financial planning Potential impact: Increase costs to adopt/deploy new practices to transition to lower emissions technologies, reduction in the availability of capital to invest in some local and/or mature technology energy transition projects. Risk mitigation: There is strong public demand for support of the renewable energy market towards "net zero" carbon emission targets. The senior management team of the Investment Manager has extensive experience in executing a wide variety of strategies in the energy sector, the team monitors market shifts and tailor investment strategies accordingly. The Company is expected to hold most of its investments on a long-term basis and the Board and the Investment Manager monitor the position on a regular basis.
Risk category:  Transition risks - policy and legal, reputation Policy shift may introduce regulation around climate change e.g., increased disclosure, taxes etc. Stakeholders' increasing concerns on business practice (e.g. supply chain management, workforce management and planning) need to be addressed.	Time horizon: short-term, medium-term, long-term Impact area: business, and financial planning Potential impact: Increase cost of doing business (e.g., higher compliance costs, increased insurance premiums, workforce management and planning). Reduction in the availability of capital to invest in energy transition projects. Risk mitigation: The Company is supportive of the policy aims of the Disclosure Regulation and will comply with it and monitor changes. The Company, via the Investment Manager, engages with partners and stakeholders to gather data and drive action to improve ESG management and support disclosure and policy requirements. This includes monthly metric reporting on climate related KPIs such as energy used and generated, mitigation actions for risks and impacts, as well as any energy reduction projects. The Company investment strategy targeting the energy transition is aligned with global policy movements on climate change.

 

Climate-related opportunity	Opportunity description
Opportunity category: Energy Source, Resilience Decarbonisation policy and market shifts will drive new renewable energy, new fuels and energy storage opportunities. This is aligned with the Company's strategy to invest in energy transition infrastructure. Increased need for global energy access from a mix of sources as developing countries expand grid access to populations.	Time horizon: medium-term, long-term Impact area: business, strategy, and financial planning Potential impact: •        Creates more deal origination opportunities in support of energy transition which aligns with Company's investment strategy. •        Increases capital availability as more investors favour lower-emissions programs.
Opportunity category: Resource Efficiency, Energy Source, and Products and Services Volatile power price movements support an increase in energy efficiency grid infrastructure investing which leads to increased source of revenue.	Time horizon: short-term, medium-term, long-term Impact area: business, strategy Potential impact:  •        Provides additional revenue sources in marketplaces with abundant intermittent power supply through harvesting merchant pricing. •        Supports in energy efficiency and energy security reinforces intangible benefits such as reputation, brand and goodwill, together with employee, partner and stakeholder engagement.
Opportunity category: Energy Source, Markets, and Resilience Market liberalisation in developed and developing economies is creating opportunity for market share in renewable and alternative energy opportunities in new geographies.	Time horizon: short-term, medium-term, long-term Impact area: business, strategy, and financial planning Potential impact:  •        Access to new markets leads to an enhanced competitive position through addressing shifting consumer preferences, resulting in increased revenues. •        Increases availability and diversification of financial assets such as green bonds. •        Improves resource efficiency and reduces operating costs. The Investment Manager has engaged and will continue to reach out globally with various companies and investors to support expansion of the Company and sustainable energy infrastructure investments.
Opportunity category: Resource Efficiency, Markets, and Resilience Decentralisation of energy generation creating new opportunities for investment in renewable and other sustainable energy infrastructure.	Time horizon: short-term, medium-term, long-term Impact area: business, strategy, and financial planning Potential impact:  •        Enhances competitiveness and increases revenues through new solutions, access to new markets, diversification, resilience planning and relationships. •        Increases reliability of supply chain and ability to operate under various conditions. A pipeline of investments is constantly being identified, with the Investment Manager regularly reporting to the Board on this pipeline.

 

b) Describe the impact of climate related risks and opportunities on the organization's businesses, strategy, and financial planning

Impact on existing businesses

The Company invests in a diverse range of sustainable energy infrastructure investments such as renewable energy generation, transmission, distribution, and storage that drive the global transition towards cleaner and more sustainable sources of power. The Company's investment strategy therefore sees opportunity in the current and growing transition to a low-carbon economy.

The Company's investments inherently improve environmental performance; for example, in Brazil, investment in a portfolio of solar PV assets will accelerate the growth of a sustainable energy system by improving and securing localised access to clean energy and helping to lower Brazilian energy prices. The UK flexible power with CCR assets will use a less pollutive fuel in natural gas, as well as displace emissions through carbon capture and reuse technologies.

The Company's investments are exposed to physical climate risk such as potential damage to asset infrastructure as well as offsite transmission and distribution systems. This risk arises from extreme weather conditions that are becoming more common and frequent in the locations of operation. The Investment Manager reduces impact by diversifying technology, finding synergies such as co-locating generation and storage, and building a global portfolio with investments in multiple continents experiencing different weather patterns and conditions. It also conducts climate risk and vulnerability assessments ("CRVA") for each asset to identify opportunities to build resilient assets.

Increased power price volatility because of more intermittent renewable power generation in the market has become increasingly prominent. The financial impact of this market trend will become relevant and beneficial as the Investment Manager builds out its co-location of solar PV and battery energy storage solution in volatile markets such as Australia.

Impact on strategy

The Investment Manager continues to observe globally favourable government policies to support decarbonising goals and low carbon renewable energy investment. This aligns with the Company's investment objective to generate stable returns by investing in a diversified portfolio of global sustainable energy infrastructure investments to facilitate the transition to a low carbon energy world.

The Company also supports the goal and has set a target of reaching net zero carbon emissions in its portfolio by 2050.

Energy security is a principal concern for country leaders and is driving a focus on reducing reliance on energy imports and building out domestic renewable and low carbon energy capacity. The increasing use of artificial intelligence technologies is also increasing energy demand. This represents an opportunity for the Company to further expand into new markets supported by the existing cross-continental exposure and the energy sector expertise of the Investment Manager.

As the public consensus and attention on sustainability grows, and countries and organisations strive to achieve the goal of a net zero carbon world, investment flow towards the energy transition is continuing to grow. This is both an opportunity and a risk. As capital flows align with the Company's investment objective, this can enable increased access to investment funds; however, as more investors pursue the same sustainable energy infrastructure investment theme, the market may become increasingly competitive and therefore sourcing investments on attractive terms will become more difficult. The Investment Manager's industry expertise and ability to source exclusive transactions is invaluable in mitigating this risk.

Impact on financial planning

Climate-related issues are both opportunities and risks for the Company's financial planning. The Company benefits from its strong ESG credentials which reflect both in positive impact on climate change and stable long-term income distributions to meet investor requirements on sustainability and return. It provides the Company with the opportunity to leverage sustainability linked credit facilities at a lower cost of borrowing if required. The Company's TCFD voluntary disclosures and transparency to the market are praised by existing shareholders and attractive to sustainability-driven prospective investors.

The Company's investment valuation and financial projections rely on various assumptions. Increased power price volatility is one such factor identified and discussed in the climate related risks and opportunities on page 72 that brings uncertainty to the Company's investment revenue streams. The Company reduces this risk exposure through entering into fixed power price agreements with offtakers in the short to medium term. The Company continues to invest in battery storage development, as there is an opportunity to capture value given the market price volatility.

The Company uses external expert advisors to produce and validate its financial assumptions to increase accuracy, yet the Company's financial forecasts and budgets are still subject to limitations related to projected accuracy of climate impacts. A materiality analysis of the climate-related risks and opportunities identified on page 72 was completed following the asset specific CRVA and review of the financial models, market trends and Network for Greening the Financial System ("NGFS") climate transition scenarios. The table below lists the material risks, assessment of probability and time horizon. These material risks were evaluated at the individual asset level and considered in the quantitative scenario analysis to calculate potential financial impact as described on page 78.

Risk	Risk category	Description and potential Impact	Likelihood and likely time horizon
Physical - Acute	Flood	In several asset locations, the Inter‑governmental Panel on Climate Change ("IPCC") Sixth Assessment Report ("AR6") models predict an increase in frequency of extreme rainfall which can result in river and surface water flooding damage to infrastructure and shut down of operations.	Likely - Medium to Long
Physical - Acute	Wildfire	In several asset locations, the IPCC AR6 models suggest an increase in the fire season with increased severity and frequency of wildfires which can lead to infrastructure damage and shutdowns.	Likely - Medium to Long
Physical - Acute	Extreme Heat	An increase in mean air temperature consistent with global trends across the portfolio with predictions of an increase in air temperature extremes can lead to increased drought, wildfire and heat stress which further result in infrastructure damage and/or curtailment of electricity generation and labour shortages.	Likely - Medium to Long
Transition - Markets	Power price volatility	NGFS scenarios predict volatility and reduction in the power price as more renewables and low carbon power generators export to the grid.	Likely - Medium to Long
Transition - Markets	Fuel market transitions	NGFS scenarios predict a reduction in demand for conventional fuels in the Mexican fuel supply chain as the economy transitions to cleaner and alternative fuels indicated by a trend of increase investment in biofuel, hydrogen, and other alternative fuels.	Highly likely - Medium to Long

 

c) Describe the resilience of the organization's strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario

The analysis of the Company's business strategy under different scenarios took into consideration the current geographic locations of assets and critical Tier 1 supply chain companies such as solar panel manufacturers. The Company's business strategy supports a transition scenario. Commitments made internationally at the UN climate change conferences and nationally demonstrate policy and market momentum, towards energy transition and in support of the Company's investment policy.

The Company considers a bottom-up approach to perform scenario analysis, given the portfolio's diversified geographic locations and technologies. When assessing the impact of climate risks and opportunities on the portfolio, the Company distinguishes between transition risk and physical risk. The Company's diverse energy infrastructure investments are considered under the following scenarios including:

•        NGFS climate scenarios

•        IPCC Representative Concentration Pathways ("RCP")

The NGFS transition risk models use integrated assessment models that derive the impacts of different policy ambitions on the energy transition relevant sectors with granular information on implications for 184 countries. The physical risk models include acute and chronic risk based on global temperature paths. The NGFS models were assessed by the IPCC working group III as part of AR6 and although they cover a smaller range of model assumptions, they have a higher sectoral and regional granularity. The NGFS scenarios are also well aligned with the IEA scenarios on several dimensions.⁷ 2024 NGFS updated scenarios were used to reflect latest economic and climate data and policy commitments as well as technology trends. A new damage function was also implemented by NGFS this year.

Given the portfolio's geographical and technological diversification, and given the Company's bottom-up approach in performing scenario analysis, the Company selected NGFS scenarios for transition risk as relevant scenarios.⁷

The financial impact and resilience of the Company's investment business strategy to different climate scenarios is inherent in the Investment Manager's financial modelling processes. The energy transition is the focus of the Company's investment strategy. It is the Company's objective to accelerate an orderly transition via its investments. It is also expected that the investments would be resilient in case of a failure to achieve the energy transition.

The Company's scenario analysis for TCFD has produced a range of possible financial impacts under three different scenarios for each asset unique to each geography and predicted changes. There is uncertainty in terms of how climate change will impact individual operations as well as the impact of global efforts to achieve an orderly energy transition and so this data should be regarded as indicative rather than absolute predictions. The NGFS also cautions on using its results due to uncertainty.

Generally, the Company's financial materiality threshold for climate related risks and opportunities is 3% of NAV after considering risk mitigation. Due to the unpredictability of climate related weather events, the Company takes a more cautious approach to manage and secure insurance policies in order to mitigate this uncertainty in the longer term.

Scenario analysis is split into physical and transition risks. The Company performed the scenario analysis on operational assets only and quantifies the resilience of the portfolio to climate-related scenarios by assessing the impact on NAV per share.

Transition Risk

Transition risk is comprehensively considered and embedded in the investment financial models, including sensitivity analysis, to allow the Investment Manager to proactively make decisions to mitigate, transfer, accept, or control those risks where appropriate. The Company's investment process selects projects that align to the energy transition to net zero. Various standard parameters are considered in the Investment Manager's financial and valuation models including policy and regulatory changes and stringency, technology and energy mix, energy demand and future mix, capacity changes, key commodity changes and associated costs or profits to the business. The financial and valuation models are geographically tailored, and take into consideration the national mandated targets for renewable and other energy source penetration in the energy mix. Carbon reduction policies of the investment country and region are also critical considerations in understanding investment impact and suitability.

⁷           https://www.ngfs.net/en/publications-and-statistics/publications/ngfs-climate-scenarios-central-banks-and-supervisors-phase-v

For this scenario analysis exercise, the Company focused on the Global Change Analysis Model ("GCAM") modelling suite, part of the NGFS, given the model's data availability and geographic granularity in line with the Fund assets. The Company includes the following scenarios under each category:

•        Current Policies/BAU: Current Policies, Nationally Determined Contributions ("NDCs")

•        Paris Aligned Well-Below 2C: Below 2C,
Delayed Transition

•        Paris Ambitious 1.5C: Net Zero 2050,
Low Demand

The Company identified one key variable as the main driver for each programme to assess the impact of transition risk on the value of the portfolio. The Company selected power price as the main driver for the Brazilian hydro facility, the Australian solar PV with battery storage assets, and the Brazilian solar PV assets. For the US terminal storage assets, the Company selected volume throughput, taking into account the change in demand for oil and the transition to alternative fuel sources such as hydrogen and biofuels.

The Company used country and market specific scenario data when available. Particularly when considering Latin American markets, scenario results varied significantly between countries in the region, so local predictions were used for Brazil and Mexico. Similarly, the Company focused on the Australia/New Zealand region for the scenario analysis of the Australian solar PV with battery storage assets.

By considering a bottom-up approach to conduct scenario analysis, the Company shocked the aforementioned factors in the asset valuation models and assessed the impact on the life-time dividends by discounting them to present value. The Company assessed the impact on valuation at both programme level and portfolio level.

The portfolio level results are highlighted below in a NAV per share impact range. The Company benefits from both technology and geography diversification, demonstrating the inherent focus on the energy transition in the Company's investment strategy.

103.21p NAV per share as at 31 December 2024	-0.4p/share to +0.9p/share Current Policies/BAU
-2.0p/share to -0.9p/share Paris Aligned Well-Below 2C	-4.5p/share to -4.4p/share Paris Ambitious 1.5C

Estimated NAV per share impact under transition risk scenarios

Among the operational programmes, the US terminal storage programme show the highest impact to transition risk. This is driven by the change in oil demand and the transition to other fuels such as biofuels and hydrogen observed in Mexico. The Brazilian hydro facility and the Brazilian solar PV assets benefit from higher power prices across all scenarios. The Australian solar PV with battery storage assets experiences minimal impact which does not register on the impact graphs given power price assumptions in the Australian/ New Zealand region as well as the portfolio composition of which the Australian programme contributes 13%.

The Company is committed in developing and employing the best available data, scenarios and methodology. The Company selected the most relevant variable when performing the scenario analysis. However, the Company recognises there are high levels of uncertainty and limitations in the climate models, scenarios and methodology. Therefore, the figures reported should be seen as indicative of potential impact and not performance forecasts.

Portfolio and programme valuation impact under transition risk scenarios

Physical Risk

The Company identifies physical risks in the asset specific CRVAs and proactively takes steps to mitigate climate-related risks and build asset resilience. Acute physical risks including but not limited to hurricanes, wildfires, floods and heatwaves are mitigated through insurance policies, while chronic physical risks such as higher average temperatures and changes in precipitation patterns are mitigated through the asset design and operational management.

The IPCC AR6 report quantifies the insured damages projected impact under the RCP 2.6 scenario and RCP 8.5 scenario for Australasia. The Company uses the percentage increase in insurance premiums as a proxy for the insured damages projected impact. The Company applies this shock to assess the impact on the programme level and portfolio level valuations as follows: 7% under RCP 2.6 scenario, 7.5% under RCP 4.5 scenario, 8% under RCP 8.5 scenario. The shocks are applied across the three operational programmes: US terminal storage assets, Brazilian solar PV assets, and Australian solar PV with battery storage assets. In the case of the Brazilian hydro facility, performing a hydrological risk assessment that estimates the capital expenditures required to build additional measures to cater for an increased maximum river flow was considered more relevant and appropriate.

Under the RCP 2.6 scenario, the NAV per share impact is -0.42p/share, while under the RCP 8.5 scenario the NAV/share impact is -0.63p/share. The subdued impact highlights the inherent risk analysis and considerations that the Company uses in its investment strategy.

The Company focused on one key variable or factor when performing the physical risk scenario analysis, while keeping all other model inputs constant. Due to the complexity of variable interactions and model impacts, the Company is aware that limitations to the scenario analysis remain and is fully committed to develop the methodology further. Therefore, the figures reported should be seen as indicative of potential impact and not performance forecasts.

Given that the energy transition is the focus of the Company's investment strategy, the Company inherently considers both transition and physical risks and opportunities in its investment decision process and asset life cycle management. Thus, the results and scenario analysis are in line with the Company's strategy.

Estimated NAV per share impact under physical risk scenarios

103.21p NAV per share as at 31 December 2024	-0.42p/share RCP 2.6
-0.52p/share RCP 4.5	-0.63p/share RCP 8.5

Pillar 3 - Risk Management

a) Describe the organization's processes for identifying and assessing climate-related risks

The Sustainability and ESG risk analysis process is described on page 59 of this report. Climate related risks and opportunities are identified through this process. Climate-related risks are considered at the asset level within the screening and due diligence processes of energy infrastructure investments prior to any investment decisions. The risk management process considers the type of infrastructure and geographic risks. Local partners are engaged to assess environmental management practices and processes, and to broaden understanding of stakeholder perspectives. This investment management process is described on page 60.

As described on page 64, the Company takes a life cycle approach in calculating the embodied carbon in the energy generating assets and conducting a CRVA for each asset. This identifies the material climate physical risks and opportunities for the asset and recommendations to mitigate the risk and build asset resilience. This is described in more detail below.

The operating partners may also do asset specific analysis to support insurance or environmental management practices. For example, the Brazilian hydro facility completed a hydrological study and flood risk analysis in 2023 to understand the dual impact of flood and drought on the asset and local communities.

These identified risks are reported to the Investment Manager's Investment Committee and rolled up to the Company risk register which is reviewed by the Board Audit Committee as described in the governance section on page 84 and principle risks section on page 45.

b) Describe the organization's processes for managing climate-related risks

The material climate-related risks have been identified and corresponding risk management strategies have been considered and described on pages 72 and 73. An expert third party sustainability consultant continued to deliver physical CRVA reports for each of the Company's new operating assets in 2024 including the new European portfolio acquisition. The CRVA identified material investment-specific physical risks and corresponding risk mitigation recommendations.

The Investment Manager's Head of Sustainability analyses the assessment report and discusses appropriate specific risk mitigation business practices with the operating partners and investment management team. Where there is an acute physical risk such as severe natural disaster, for construction projects the asset design considers infrastructure toleration maximums, and the Investment Manager seeks insurance coverage to transfer the risk.

The CRVA was conducted in accordance with the criteria of the EU Commission Delegated Regulation (EU) 2021/2139 which form the Technical Screening Criteria of the EU Taxonomy. Specifically, the CRVA was conducted to accord with the requirements of Appendix A of the above regulation, the Generic Criteria for Do No Significant Harm to Climate Change Adaptation.

The CRVA was carried out using climate projections across different RCPs used by the IPCC fifth assessment report ("AR5") and IPCC sixth assessment report ("AR6").

Climate modelling of regional impacts on the locations where each of the Company's assets are situated was used. The impacts of these changes were interpreted to understand the physical hazards the assets might experience over their lifetime. The sustainable energy infrastructure investments considered under the CRVA have expected lifespans greater than 10 years. Vulnerability of the assets to projected climate related hazards was considered based on asset design standards, site locations and risk to climate related impacts as well as historic climate related issues which may have been experienced in the region. The Company also considers the type of asset and whether it will be impacted by changes in weather (e.g., wind and solar power), supply chain disruption (e.g., energy supply), and market demands.

Implementation of adaptation solutions identified within the CRVA are reviewed with the operating partners and the gap is filled if necessary. These adaptations show how the resilience of the asset is improved to withstand vulnerabilities. The most common hazard identified was the potential for wildfire or flood. All assets have appropriate drainage designed and, in some cases, enhanced to move excess water away from sites. All sites also have appropriate firefighting equipment installed and operators, crisis and emergency response procedures.

c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization's overall risk management

The Company's process of identifying, assessing, and managing climate-related risks is fully integrated into its investment process ranging from investment decision-making to post-investment ongoing monitoring. Material climate-related risks identified are included in the Company's risk register and the ongoing risk management process. After assessing the likelihood and the severity of impact of climate-related risks, the material risks are disclosed in the principal risk section on page 45. More detail on the sustainability and ESG risk analysis process is on page 59.

Pillar 4 - Metrics and Targets

a) Disclose the metrics used by the organization to assess climate related risks and opportunities in line with its strategy and risk management process

Metrics used to assess and monitor transition risks and opportunities:

•        £m Capital invested and committed to sustainable energy infrastructure assets

•        Growth in investment portfolio

•        MWh of energy produced by the portfolio a year

•        Volume throughput at the terminal storage assets

•        % Investments aligned to the EU Taxonomy

Metrics used to assess and monitor physical risks and opportunities:

•        At a fund level, current portfolio diversification

•        At an asset level, annual performance against budget

•        CapEx / repairs and maintenance costs

Other related metrics such as GHG emissions and investment weighted average carbon intensity are also reported on page 83. Environmental metrics used such as water, energy, and waste management are reported in the Sustainability section on page 63, which includes comparison with previous operational years and are used to calculate the portfolio's total carbon footprint.

Operating partners, as part of their environmental management practices, look to reduce impact from these metrics. These activities are reported in the ESG section of this report on page 64.

Physical risks are considered throughout the investment acquisition process and ongoing monitoring. Through CRVA reports, investments specific physical risks are contemplated and addressed early in the acquisition process. If the climate risk highlighted has no immediate mitigation solution, insurance policies and further discussion at the Investment Manager Investment Committee is required. Metrics used to assess and monitor physical risks and opportunities:

•        At a fund level, current portfolio diversification

•        At an asset level, annual performance against budget

•        CapEx / repairs and maintenance costs

b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks

Portfolio GHG emissions for 2024, comparison with the previous year 2023 and discussion on trends and risks are included in the sustainability section on page 62.

The Company reports on energy generation, consumption and associated carbon emissions. The carbon intensity of the Company's portfolio is low. The Company predicts most emissions that will require reduction by 2050 will be Scope 3.

Under the TCFD recommendation, asset managers are required to provide the weighted average carbon intensity for the investment strategy. This metric with other carbon footprinting metrics using formulas provided by the TCFD are included in the table below.

The source of operational emissions includes imported electricity from the grid, fuel used in asset owned vehicles and natural gas for heating and operations.

TCFD carbon footprinting and exposure metrics8, 9	Unit	2022	2023	2024
Portfolio's exposure to carbon-intensive companies, expressed in tonnes CO2e/$M revenue	t CO2e/$M	65	42	60‡
The absolute greenhouse gas emissions associated with a portfolio, expressed in tonnes CO2e	t CO2e	3,636	3,199	3,513‡
Total carbon emissions for a portfolio normalized by the market value of the portfolio, expressed in tonnes CO2e/$M invested	t CO2e/$M	6	5	7‡
Volume of carbon emissions by million dollar of revenues	t CO2e/$M	273	192	307‡

 

c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets

The Company aims to meet the Paris Agreement target and achieve net zero carbon emissions in its portfolio by 2050. The Company uses various metrics at asset level and portfolio level, disclosed on page 54, which feed into the portfolio goal to meet the decarbonisation target.

In 2022, the Investment Manager became signatory to the NZAMI and commissioned an external advisor to develop a road map towards 2050 net zero goal with a target for the Company portfolio which was published in 2023 through the Net Zero Asset Managers Initiative and in the Company interim report.

The target covers 100% of the portfolio including assets under construction. The target will be recalculated replacing estimated emission data with actual once the construction assets are operational. The underlying science-based net zero pathway from which the targets are derived is the Sectoral Decarbonisation approach methodology and largely based on 'power' sector for most of the assets. This requires a 65% reduction within a maximum 10- year time frame of Scope 1 and 2 emissions as the near-term target which includes Scope 3 emissions. The long-term target will see emissions reduced by 95% with residual emissions offset. The slight increase in emissions per MWh was attributed to the increase in scope 2 emissions reported as explained on page 63. The scope 2 emissions are expected to normalise in 2025. The operating partners continue to look for opportunities to decrease asset related emissions.

Methodology	Year	Target	Performance against the target
			2023	2024
Science Based Target initiative for Financial Institutions: Sectoral Decarbonisation approach	Baseline 2023	0.0710229 tonnes CO2e / MWh
	Near term 2030	0.0260654 tonnes CO2e / MWh	0.0388453	0.05727
	Long term 2050	0.0035511 tonnes CO2e / MWh

 

⁸           Underlying revenue metrics are unaudited. Figures may change once metrics are audited in 2024.

⁹           Market capitalisation calculated using profit rather than equity share to more accurately reflect value of investments.

DIRECTORS' REPORT

The Directors are pleased to present their report for the year ended 31 December 2024. In accordance with the Companies Act 2006 (as amended) (the "Act"), the Listing Rules and the Disclosure Guidance and Transparency Rules, the Corporate Governance Statement, Directors' Remuneration Report, Reports from the Audit Committee, Nomination Committee and Management Engagement Committee, and the Statement of Directors' Responsibilities should be read in conjunction with one another, and the Strategic Report. As permitted by legislation, some of the matters normally included in the Directors' Report have instead been included in the Strategic Report, as the Board considers them to be of strategic importance.

Directors

The Directors in office at the date of this report are as shown on page 85. Details of the Directors' terms of appointment can be found in the Corporate Governance Statement and the Directors' Remuneration Report.

Corporate governance

The Corporate Governance Statement on pages 92 to 97 forms part of this Directors' report.

Dividends

On 23 May 2024, the Company declared an interim dividend of 1.42p per ordinary share in respect of the period from 1 January 2024 to 31 March 2024, which was paid on 28 June 2024 to shareholders on the register as at 7 June 2024.

On 8 August 2024, the Company declared an interim dividend of 1.42p per ordinary share in respect of the period from 1 April 2024 to 30 June 2024, which was paid on 13 September 2024 to shareholders on the register as at 16 August 2024.

On 1 November 2024, the Company declared an interim dividend of 1.42p per ordinary share in respect of the period from 1 July 2024 to 30 September 2024, which was paid on 23 December 2024 to shareholders on the register as at 6 November 2024. Of this amount, 1.42p per share was designated as an interest distribution.

Post year end, on 20 February 2025, the Company declared an interim dividend of 1.45p per ordinary share in respect of the period from 1 October 2024 to 31 December 2024, which will be paid on 27 March 2025 to shareholders on the register as at 7 March 2025.

Therefore, the total dividends paid by the Company in respect of the year ended 31 December 2024 were 5.71p per ordinary share, exceeding the dividend target of 5.68p per share.

Dividend policy

The Board expects that dividends will constitute the principal element of the return to the holders of ordinary shares. The Company is targeting quarterly dividend payments of at least 5.80p in total per ordinary share for the financial year ending 31 December 2025, in line with its progressive dividend policy.

Subject to market conditions and the level of the Company's net income, it is intended that dividends on the shares will be payable quarterly, all in the form of interim dividends (the Company does not intend to pay any final dividends). Subject to satisfying the requirements for investment trust status, the Board reserves the right to retain within a revenue reserve a proportion of the Company's net income in any financial year, such reserve then being available at the Board's absolute discretion for subsequent distribution to shareholders, subject to the requirements of the IT Regulations. The dividend policy is subject to an annual vote at each AGM. The Company may, at the discretion of the Board, and to the extent possible, pay all or part of any future dividend out of capital reserves.

The Company may offer with the prior authority of shareholders and subject to such terms and conditions as the Board may determine, shareholders (excluding any holder of treasury shares) the opportunity to elect to receive ordinary shares, credited as fully paid, instead of the whole, or some part, of any dividend. The ability to issue ordinary shares in lieu of cash would provide the Company with the flexibility to retain cash where to do so would benefit the Company.

The Board may designate part of each dividend paid by the Company insofar as it represents "qualifying interest income" received by the Company as interest distributions for UK tax purposes. It is expected that a variable proportion of the Company's distributions will take the form of interest distributions. Prospective investors should note that the UK tax treatment of the Company's distributions may vary for a shareholder depending upon the classification of such distributions. Prospective investors who are unsure about the tax treatment that will apply in respect of any distributions made by the Company should consult their own tax advisers.

Share capital structure

Issue of shares

No shares were issued during the year under review or since the year end.

Purchase of shares

At the AGM held on 22 May 2024, the Company was granted authority to purchase up to 14.99% of its ordinary share capital in issue, amounting to 61,043,540 ordinary shares. During the year ended 31 December 2024, the Company purchased in the stock market 19,668,147 ordinary shares (with a nominal value of £196,681.47) to be held in treasury, at a total cost of £14,619,440. This represented 4.66% of the issued share capital at 31 December 2024.No shares were purchased for cancellation during the year. The share purchases were made with a view to reducing discount volatility.

Shares held in treasury

Holding shares in treasury enables a company to cost-effectively issue shares that might otherwise have been cancelled. The total number of shares held in treasury as at 31 December 2024 was 26,695,468 shares (with a nominal value of £266,954.68). This represents 6.32% of the issued share capital as at the year end.

Current share capital

As at 31 December 2024, the Company's issued share capital comprised 422,498,890 ordinary shares, each of £0.01 nominal value, of which 26,695,468 shares were held in treasury.

At general meetings of the Company, ordinary shareholders are entitled to one vote on a show of hands and, on a poll, to one vote for every ordinary share held. Shares held in treasury do not carry voting rights.

At 2 April 2025, the total voting rights in the Company were 395,803,422.

Significant shareholders

As at 31 December 2024, the Company had been notified of the following disclosable interests in the share capital of the Company:

	Number of shares	% of total voting rights
Quilter plc	50,726,210	12.82%
Alliance Witan plc	48,550,000	12.27%
Newton Investment Management Limited	24,923,657	6.30%
KBI Global Investors	24,806,944	6.27%
Vermeer Partners	22,060,439	5.57%
Evelyn Partners	14,523,099	3.67%

 

The Company has not been informed of any other changes to the notifiable interests between 31 December 2024 and 2 April 2025, being the last practicable date prior to the publication of this report.

Shareholder rights

The following information is disclosed in accordance with The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and DTR 7.2.6 of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules:

•        the Company's capital structure and voting rights and details of the substantial shareholders in the Company are set out above;

•        an amendment to the Company's articles of association and the giving of powers to issue or buy back the Company's shares requires an appropriate resolution to be passed by shareholders. Proposals to grant powers to the Board to issue and buy back shares are set out in the Notice of AGM; and

•        there are no restrictions concerning the transfer of securities in the Company; no restrictions on voting rights; no special rights with regard to control attached to securities; no agreements between holders of securities that may restrict their transfer or voting rights, as known to the Company; and no agreements which the Company is party to that might affect its control following a successful takeover bid.

Requirements of the listing rules

Listing Rule 6.6.4 requires the Company to include specified information in a single identifiable section of the Annual Report or a cross reference table indicating where the information is set out. The Directors confirm that no disclosures are required in relation to Listing Rule 6.6.4.

Independent professional advice, insurance and indemnity

Details regarding independent professional advice, insurance and indemnity are set out in the Corporate Governance Statement on pages 92 to 97.

Energy and carbon reporting, including greenhouse gas emissions

The Company's environmental statements are set out in the Sustainability section of the report.

Management arrangements

Victory Hill Capital Partners LLP is the Company's AIFM. Prior to that Victory Hill was the Company's Investment Adviser.

Victory Hill is, for the purposes of the Alternative Investment Fund Manager Directive (AIFMD) and the rules of the FCA, authorised and regulated by the FCA as a 'full scope' UK alternative investment fund manager with a permission pursuant to Part 4A of the Financial Services and Markets Act 2000 for managing AIFs, such as the Company.

The Company and the AIFM have entered into an investment management agreement (the "Investment Management Agreement") under which the AIFM has agreed to provide the Company with portfolio management, risk management, consultancy, advisory and general management services, and comply with the obligations and performing the duties and functions of an alternative investment fund manager contained in the UK AIFMD Rules.

Under the terms of the AIFM Agreement, the AIFM  will be paid:

a.       a fixed fee of £70,000 per annum, payable monthly in advance;

b.       an annual fee to be calculated as percentages of the Company's net assets and payable monthly in arrears as follows:

i.        1% on the first £250m of net asset value;

ii.       0.9% on net asset value in excess of £250m and up to and including £500m; and

iii.      0.8% on net asset value in excess of £500m.

c.       a fee of £18,000 per annum for preparing and maintaining the Company's key information document.

If, in any fee period, the annual fee paid to the AIFM exceeds:

a.       £3.5m, the AIFM shall apply 8% of the annual fee (net of any applicable taxes), subject to a maximum amount of £400,000, to subscribe for or acquire ordinary shares of £0.01 each in the capital of the Company.

b.       £2.5m, the AIFM shall apply 2% of the annual fee (net of any applicable taxes) to be paid as a charitable donation to a registered charity aimed at promoting sustainable energy/ the SDGs, as selected by the AIFM, provided that if, following the AIFM's reasonable endeavours, a suitable charity cannot be found, this 2% portion of the annual fee (net of any applicable taxes) will be applied to the subscription for or acquisition of ordinary shares.

No performance fee is payable to the AIFM.

The AIFM Agreement may be terminated on 12 months' written notice, provided that such notice may not be served before 2 February 2025. This Agreement may be terminated with immediate effect on the occurrence of certain events, including insolvency or in the event of a material or persistent breach.

Other service providers

Details of the terms of engagement between the Company and its other key service providers are set out in the Prospectus issued by the Company on 9 June 2022, which is available on the Company's website. The Company appointed Ocorian Administration (UK) Limited as Administrator and Company Secretary on 1 November 2024.

Continuing appointment of Victory Hill

The Board keeps the performance of Victory Hill, as the Company's Investment Manager under continual review. The Management Engagement Committee conducts an annual review of the Victory Hill's performance and makes a recommendation to the Board about its continuing appointment. It is considered that Victory Hill has executed the Company's investment strategy according to the Board's expectations. Accordingly, the Directors believe that the continuing appointment of Victory Hill as the Investment Manager of the Company, on the terms agreed, is in the best interests of the Company and its shareholders as a whole. Further details are set out in the Report from the Management Engagement Committee on page 110.

Financial risk management

Information about the Company's financial risk management objectives and policies is set out in note 12 to the financial statements.

Going concern

The going concern statement can be found on page 51.

Auditor

The Directors confirm that, so far as they are each aware, there is no relevant audit information of which the Company's Auditor is unaware; and each Director has taken all the steps that ought to have been taken as a Director to make themselves aware of any relevant audit information and to establish that the Auditor is aware of that information.

BDO LLP has expressed its willingness to continue in office as the Auditor and resolutions for its re- appointment and to authorise the Audit Committee to determine its remuneration will be put to shareholders at the forthcoming Annual General Meeting.

Post balance sheet events

The post balance sheet events can be found in note 19 to the financial statements.

Annual General Meeting

The Notice of the AGM to be held on 21 May 2025 (the "Notice") is set out on pages 168 to 173. Shareholders are being asked to vote on the following matters:

•        the receipt and adoption of the Strategic Report, Directors' Report, Auditor's Report and the audited Financial Statements for the year ended 31 December 2024;

•        the approval of the Directors' Remuneration Report;

•        the approval of the Company's dividend policy and authorisation of the Directors to declare and pay all dividends of the Company as interim dividends;

•        the re-election of Directors;

•        the re-appointment of BDO LLP as the Company's Auditor and authorisation of the Audit Committee to determine the remuneration of the Auditor;

•        the granting of authorities in relation to the allotment of shares;

•        the dis-application of pre-emption rights for certain issues of shares;

•        the purchase by the Company of its own shares; and

•        holding of general meetings on 14 clear days' notice.

Resolutions 1 to 12 will be proposed as Ordinary resolutions and Resolutions 13 to 16 will be proposed as Special resolutions.

Authority to issue shares

Resolutions 11 and 12, ordinary resolutions as set out in the Notice, if passed, will renew the Directors' authority to allot shares in accordance with statutory pre-emption rights. These resolutions will authorise the Board to allot:

•        ordinary shares generally and unconditionally in accordance with section 551 of the Act up to an aggregate nominal value of £395,803.42, representing approximately 10% of the Company's issued share capital (excluding treasury shares) as at the date of the Notice of AGM or, if changed, the number representing 10% of the issued share capital of the Company at the date at which this resolution is passed (Resolution 11); and

•        further ordinary shares generally and unconditionally in accordance with section 551 of the Act up to an additional aggregate nominal value of £395,803.42, representing approximately 10% of the Company's issued share capital (excluding treasury shares) as at the date of the Notice of AGM or, if changed, the number representing 10% of the issued share capital of the Company at the date at which this resolution is passed (Resolution 12).

If both these resolutions are passed, shareholders will be granting the Directors authority to allot up to 20% of the Company's issued share capital. The Board believes that passing of Resolutions 11 and 12 is in the shareholders' interests as the authority is intended to be used for funding investment opportunities sourced by the Investment Manager, thereby mitigating any potential dilution of investment returns for existing shareholders, and the Directors will only issue new ordinary shares at a price above the prevailing NAV per ordinary share. If only Resolution 11 is passed and Resolution 12 is not passed, Directors will only be granted authority to allot up to 10% of the existing issued ordinary share capital of the Company. These authorities, if given, will lapse at the conclusion of the 2026 AGM of the Company, or 15 months from the passing of these resolutions, whichever is earlier.

The Directors do not currently intend to allot shares other than to take advantage of opportunities in the market as they arise and only if they believe it would be advantageous to the Company's shareholders to do so.

Authority to disapply pre-emption rights

Resolution 13, a special resolution, is being proposed to authorise the Directors to disapply the statutory pre-emption rights of existing shareholders in relation to the issue of shares under Resolution 11, for cash or the sale of shares out of treasury up to an aggregate nominal amount of £395,803.42, being approximately 10% of the Company's issued share capital (excluding treasury shares) as at the date of the Notice of AGM or, if changed, 10% of the issued share capital immediately upon the passing of this resolution.

Resolution 14, a special resolution, is being proposed to authorise the Directors to disapply the statutory pre-emption rights of existing shareholders in relation to the further issue of shares under Resolution 12, for cash or the sale of shares out of treasury up to an aggregate nominal amount of £395,803.42, being approximately 10% of the Company's issued share capital (excluding treasury shares) as at the date of the Notice of AGM or, if changed, 10% of the issued share capital immediately upon the passing of this resolution.

In respect of any authority granted under Resolutions 13 and 14, shares would only be issued at a price above the prevailing NAV per share, intended to at least cover the costs and expenses of the relevant issuance of shares. The Directors will only issue shares on a non-pre- emptive basis if they believe it would be in the best interests of the Company's shareholders. If both these resolutions are passed, shareholders will be granting the Directors authority to allot up to 20% of the Company's issued share capital on a non- pre-emptive basis. The Board believes that in order to have the maximum flexibility to raise finance to enable the Company to take advantage of suitable opportunities, the passing of Resolutions 13 and 14 is in the shareholders' interests. These authorities, if given, will lapse at the 2026 AGM of the Company, or 15 months from the passing of these resolutions, whichever is earlier.

There were 26,695,469 shares held in treasury at the year end. As at 2 April 2025, 26,695,469 shares were held in treasury.

Authority to purchase the Company's own shares

The Act allows companies to hold shares acquired by way of market purchases as treasury shares, rather than having to cancel them. This gives the Company the ability to re-sell shares quickly and effectively thereby improving liquidity and providing the Company with additional flexibility in the management of its capital base.

At the Annual General Meeting held on 22 May 2024, the Company was granted authority to purchase up to 14.99% of the Company's shares in issue amounting to 61,043,540 shares. During the year under review, 19,768,147 shares were bought back pursuant to this authority.

Resolution 15, a special resolution, as set out in the Notice, if passed, will renew the Directors' authority to purchase up to 61,418,290 shares (being 14.99% of the issued share capital as at 2 April 2025), or if less, 14.99% of the issued share capital immediately following the passing of the resolution. In accordance with the Listing Rules of the FCA, the price paid for shares will be not less than £0.01 per share, and not more than the higher of: (i) 105% of the average of the mid-market quotations of the shares for the five business days before the shares are purchased; and (ii) the higher of the price of the last independent trade and the highest current independent bid for the shares on the trading venue where the purchase is carried out.

The Company may use this authority to address any significant imbalance between the supply and demand for the Company's shares and to manage the discount at which the ordinary shares trade, and where the Directors consider it to be in the best interests of shareholders and the Company. Shares will be repurchased only at prices below the prevailing NAV per ordinary share and will be cancelled or placed into treasury at the determination of the Directors. The authority, if given, will lapse at the conclusion of the Company's next AGM after the passing of this resolution or, if earlier, on the expiry of 15 months from the date of the passing of this resolution.

Shareholders should note that the purchase of ordinary shares by the Company is at the absolute discretion of the Directors and is subject to the working capital requirements of the Company and the amount of uncommitted cash resources available to the Company to fund such purchases. Accordingly, no expectation or reliance should be placed on the Directors exercising such discretion on any one or more occasions. However, the Directors believe that the flexibility for the Company to be able to make such purchases may be beneficial to shareholders in certain circumstances and, accordingly, is seeking authority for the Company to make market purchases of its own shares.

Notice period for general meetings

Under the Act, the notice period of general meetings (other than an AGM) is 21 clear days' notice unless the Company: (i) has gained shareholder approval for the holding of general meetings on 14 clear days' notice by passing a special resolution at the most recent AGM; and (ii) offers the facility for all shareholders to vote by electronic means. The Company would like to preserve its ability to call general meetings (other than an AGM) on less than 21 clear days' notice.

The shorter notice period proposed by Resolution 16, a special resolution, would not be used as a matter of routine, but only where the flexibility is merited by the business of the meeting and is thought to be in the interests of shareholders as a whole. The approval will be effective until the date of the AGM to be held in 2026 resolution or, if earlier, on the expiry of 15 months from the date of the passing of this resolution.

Board recommendation

The Directors consider each resolution being proposed at the AGM to be in the best interests of the Company and shareholders as a whole and they unanimously recommend that all shareholders vote in favour of them, as they intend to do in respect of their own shareholdings.

By order of the Board

Ocorian Administration (UK) Limited
Company Secretary

2 April 2025

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the annual report and the financial statements in accordance with UK adopted international accounting standards and applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, they are required to prepare the Company financial statements in accordance with UK adopted international accounting standards. Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss for the Company for that period.

In preparing these financial statements, the Directors are required to:

•        select suitable accounting policies and then apply them consistently;

•        make judgements and accounting estimates that are reasonable and prudent;

•        state whether they have been prepared in accordance with UK adopted international accounting standards, subject to any material departures disclosed and explained in the financial statements;

•        prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

•        prepare a Directors' report, a Strategic report and Directors' remuneration report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced, and understandable and provides the information necessary for shareholders to assess the Group's performance, business model and strategy.

Website publication

The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors and has been delegated to the Investment Manager. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors' responsibilities pursuant to DTR4

The Directors, to the best of their knowledge, confirm that:

•        the financial statements have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

•        the annual report includes a fair review of the development and performance of the business and the financial position of the Company, together with a description of the principal risks and uncertainties that it faces.

The Directors consider that the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Approval

This Directors' responsibilities statement was approved by the Board of Directors and signed on its behalf by:

Bernard Bulkin
Chair
2 April 2025

 

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the year ended 31 December 2024 or the year ended 31 December 2023 but is derived from those accounts. Statutory accounts for the period ended 31 December 2023 have been delivered to the Registrar of Companies and those for the year ended 31 December 2024 will be delivered in due course. The Auditor has reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor's report can be found in the Company's full Annual Report and Accounts for the year ended 31 December 2024 at https://www.globalenergyinfrastructure.co.uk.

 

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2024

	For the year ended 31 December 2024				For the year ended 31 December 2023
	Note	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Income
(Loss)/gain on investments	7	-	(53,665)	(53,665)	-	32,517	32,517
Investment income	4	22,427	-	22,427	29,326	-	29,326
Total income and gains		22,427	(53,665)	(31,238)	29,326	32,517	61,843
Investment management fees	15	(4,374)	-	(4,374)	(4,372)	-	(4,372)
Other expenses	5	(2,176)	-	(2,176)	(2,132)	-	(2,132)
Gain/(loss) for the year before taxation		15,877	(53,665)	(37,788)	22,822	32,517	55,339
Taxation	6	-	-	-	-	-	-
Gain/(loss) for the year after taxation		15,877	(53,665)	(37,788)	22,822	32,517	55,339
Profit and total comprehensive income attributable to:
Equity holders of the Company		15,877	(53,665)	(37,788)	22,822	32,517	55,339
Gain/(loss) per share - basic and diluted (p)	17	3.92	(13.25)	(9.33)	5.42	7.72	13.14

 

The total column of the Statement of Comprehensive Income is the profit and loss account of the Company. The supplementary revenue return and capital columns have been prepared in accordance with the Association of Investment Companies Statement of Recommended Practice (AIC SORP).

All revenue and capital items in the above statement derive from continuing operations.

The above Statement of Comprehensive Income includes all recognised gains and losses.

The notes on pages 125 to 147 form part of these financial statements.

STATEMENT OF FINANCIAL POSITION

As at 31 December 2024

	Note	As at 31 December 2024 £'000	As at 31 December 2023 £'000
Non-current assets
Investments at fair value through profit or loss	7	397,895	369,047
Total non-current assets		397,895	369,047
Current assets
Cash and cash equivalents	10	10,947	74,258
Cash receivable	9	-	40,367
Other receivables	9	201	441
Total current assets		11,148	115,066
Total assets		409,043	484,113
Current liabilities
Accounts payable and accrued expenses	11	(536)	(270)
Total current liabilities		(536)	(270)
Total liabilities		(536)	(270)
Net assets	18	408,507	483,843
Capital and reserves
Share capital	13	4,225	4,225
Share premium	13	186,368	186,368
Special distributable reserve	13	211,994	227,067
Capital reserve		5,029	58,694
Revenue reserve		891	7,489
Total capital and reserves attributable to equity holders of the Company		408,507	483,843
Net asset value per ordinary share (p)	18	103.21	116.46

 

The financial statements were approved and authorised for issue by the Board of Directors on 2 April 2025 and signed on its behalf by:

Bernard Bulkin
Chair

Company Registration Number 12986255

The notes on pages 125 to 147 form part of these financial statements.

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the year ended 31 December 2024

For the year ended 31 December 2024	Note	Share capital £'000	Share premium account £'000	Special distributable reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
Opening balance		4,225	186,368	227,067	58,694	7,489	483,843
Shares bought back	13	-	-	(14,621)	-	-	(14,621)
Total comprehensive income/(loss) for the year		-	-	-	(53,665)	15,877	(37,788)
Interim dividends paid during the year	14	-	-	(452)	-	(22,475)	(22,927)
Balance at 31 December 2024		4,225	186,368	211,994	5,029	891	408,507

 

For the year ended 31 December 2023	Note	Share capital £'000	Share premium account £'000	Special distributable reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
Opening balance		4,225	186,368	232,467	26,177	7,936	457,173
Shares bought back	13	-	-	(5,400)	-	-	(5,400)
Total comprehensive income for the year		-	-	-	32,517	22,822	55,339
Interim dividends paid during the year	14	-	-	-	-	(23,269)	(23,269)
Balance at 31 December 2023		4,225	186,368	227,067	58,694	7,489	483,843

 

A total of 422,498,890 ordinary shares were issued since the Company's date of incorporation to 31 December 2024. During the year, the Company purchased for treasury a total of 19,668,147 ordinary shares.

The capital reserve represents the unrealised gains or losses on the revaluation of investments. The unrealised element of the capital reserve is not distributable.

The special distributable and revenue reserves are distributable to shareholders of the Company.

The notes on pages 125 to 147 form part of these financial statements.

STATEMENT OF CASH FLOWS

For the year ended 31 December 2024

	Note	For the year ended 31 December 2024 £'000	For the year ended 31 December 2023 £'000
Cash flows from operating activities
(Loss)/profit before tax		(37,788)	55,339
Adjustments for:
Movement in fair value of investments	7	53,665	(31,095)
Interest on cash deposits	4	(1,999)	(5,865)
Operating result before working capital changes		13,878	18,379
Decrease/(increase) in other receivables	9	40,607	(40,068)
Increase/(decrease) in accounts payable and accrued expenses	11	266	(221)
Net cash (used in)/generated from operating activities		54,751	(21,910)
Cash flows from investing activities
Purchase of investments	7	(82,513)	(22,819)
Interest on cash deposits	4	1,999	5,865
Net cash used in investing activities		(80,514)	(16,954)
Cash flows from financing activities
Proceeds from issue of shares		-	-
Share buybacks		(14,621)	(5,400)
Payment of share issue costs		-	-
Dividends paid in the year	14	(22,927)	(23,269)
Net cash (used in)/generated from financing activities		(37,548)	(28,669)
Net decrease in cash and cash equivalents		(63,311)	(67,533)
Cash and cash equivalents at beginning of the year		74,258	141,791
Cash and cash equivalents at end of the year	10	10,947	74,258

 

The notes on pages 125 to 147 form part of these financial statements.

Notes to the financial statements

1.       General information

VH Global Energy Infrastructure plc (the "Company") is a closed-ended investment company, incorporated in England and Wales on 30 October 2020 as a public limited company under the Companies Act 2006 with registered number 12986255. The Company commenced operations on 2 February 2021 when its shares commenced trading on the London Stock Exchange.

The Company has appointed Victory Hill Capital Partners LLP as the Investment Manager & AIFM pursuant to the Investment Management Agreement dated 3 May 2023.

The Company has registered, and intends to carry on business, as an investment trust with an investment objective to generate stable returns, principally in the form of income distributions, by investing in a diversified portfolio of global sustainable energy infrastructure assets, predominantly in countries that are members of the EU, OECD, OECD Key Partner and OECD Accession Countries.

The financial statements comprise only the results of the Company, as its investment in VH ENRG UK Holdings Limited is measured at fair value through profit or loss in line with IFRS 10 as explained in note 2.

2.       Material accounting policy information

2.1     Basis of preparation

The financial statements have been prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

The financial statements are prepared on the historical cost basis, except for revaluation of certain financial investments at fair value through profit or loss. The principal accounting policies adopted are set out below and consistently applied, subject to changes in accordance with any amendments in IFRS.

The financial statements have also been prepared, as far as is consistent with adopted IFRS and relevant and applicable to the Company in accordance with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (SORP) issued in April 2021 by the Association of Investment Companies (AIC).

The financial statements incorporate the financial statements of the Company only. The primary objective of the Company is to generate returns in Sterling. The Company's performance is measured in Sterling terms and its ordinary shares are issued in Sterling. Therefore, the Company has adopted Sterling as the presentation and functional currency for its financial statements. These financial statements are presented in pounds sterling and are rounded to the nearest thousand, unless otherwise stated.

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates it also requires the Company's management to exercise judgment in applying the Company's accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed in note 3.

2.2     Investment entity and basis of non-consolidation of subsidiaries

The sole objective of the Company, through its subsidiary ENRG Holdings, is to make investments, via individual corporate entities. The Company typically will subscribe for equity in or issue loans to ENRG Holdings in order for it to finance its investments.

The Directors have concluded that the Company has all the elements of control as prescribed by IFRS 10 "Consolidated Financial Statements" in relation to all its subsidiaries and that the Company satisfies the three essential criteria to be regarded as an investment entity as defined in IFRS 10.

There are three key conditions to be met by the Company for it to meet the definition of an investment entity. The three essential criteria are that the entity must:

1.       Obtain funds from one or more investors for the purpose of providing these investors with professional investment management services;

2.       Commit to its investors that its business purpose is to invest its funds solely for returns from capital appreciation, investment income or both; and

3.       Measure and evaluate the performance of substantially all of its investments on a fair value basis.

In satisfying the second criteria, the notion of an investment time frame is critical. An investment entity should not hold its investments indefinitely but should have an exit strategy for their realisation.

In this regard, ENRG Holdings is itself an investment entity. Consequently, the Company need not have an exit strategy for its investment in ENRG Holdings.

The Company intends to sell its interest in an investment before the end of its project life and the Directors consider that this demonstrates a clear exit strategy from these investments.

Subsidiaries are therefore measured at fair value through profit or loss, in accordance with IFRS 13 "Fair Value Measurement", IFRS 10 "Consolidated Financial Statements" and IFRS 9 "Financial Instruments".

Further detail on the significant judgements in the basis of non-consolidation of the subsidiaries of the Company is disclosed in note 3.

2.3     Going concern

The Directors have reviewed the financial position of the Company and its future cash flow requirements, taking into consideration current and potential funding sources, investment into existing and near-term projects and the Company's working capital requirements.

The Company faces a number of risks and uncertainties, as set out in the Strategic Report above. The financial risk management objectives and policies of the Company, including exposure to price risk, interest rate risk, credit risk and liquidity risk are discussed in note 12 to the financial statements.

The Company continues to meet day-to-day liquidity needs through its cash resources. As at 31 December 2024, the Company had net current assets of £10.6m (2023: £114.8m) and cash balances of £10.9m (2023: £74.3m) and cash receivables of £nil (2023: £40.4m), which are sufficient to meet current obligations as they fall due. There is no external debt at the Company as at year end.

The major cash outflows of the Company are the payment of dividends and costs relating to the acquisition of new assets, both of which are discretionary.

The Directors have reviewed Company forecasts which cover a period of at least 12 months from the date of approval of this report, considering foreseeable changes in investment, which show that the Company has sufficient financial resources to continue in operation for at least the next 12 months from the date of approval of this report. Furthermore, the Directors have considered a worst case scenario in which the Company is assumed to meet all of its remaining investment commitments within the next 12 months, in addition to dividend payments, ongoing operating expenses, and a reduction in distributions received from investments. Even in this unlikely scenario, the Company has sufficient headroom to meet all expected cash outflows with its existing cash balances.

The Directors have considered factors relating to the wider global macroeconomic environment in 2024, in particular changes in inflation and interest rates. As the Company's income is primarily inflation-linked, a rise in inflation would have a positive impact on cashflows from operating assets and an uplift in valuation of the investment portfolio. An increase in interest rates may result in an increase in risk-free rates, therefore negatively impacting valuation of investments. Furthermore, the Company has no physical assets in Ukraine, Russia, the Middle East or Eastern Europe and therefore, regional geopolitical factors have an immaterial impact on the Company.

Based on its assessment above, the Directors have a reasonable expectation that the Company has sufficient resources to continue in operational existence for at least 12 months from the date of the approval of these financial statements. The Directors are not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

2.4     Financial Instruments

Financial assets and financial liabilities are recognised in the Company's statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

Financial assets

The classification of financial assets at initial recognition depends on the purpose for which the financial asset was acquired and its characteristics.

All financial assets are initially recognised at fair value plus transaction cost except for those designated as fair value through profit or loss, which are recognised at fair value only. All purchases of financial assets are recorded at the date on which the Company became party to the contractual requirements of the financial asset.

The Company's financial assets principally comprise of investments held at fair value through profit or loss and at amortised cost.

Investments held at fair value through profit or loss

The Company accounts for its investment in its wholly owned direct subsidiary ENRG Holdings at fair value through profit and loss in accordance with IFRS 9. At initial recognition, investments in energy infrastructure projects in ENRG Holdings are measured at fair value through profit or loss. Subsequently, gains or losses resulting from the movement in fair value are recognised in the Statement of Comprehensive Income at each valuation point. As both the Company and ENRG Holdings are investment entities under IFRS, the Company includes its investment in ENRG Holdings at fair value through profit or loss.

As shareholder loan investments form part of a managed portfolio of assets whose performance is evaluated on a fair value basis, loan investments are designated at fair value in line with equity investments. The Company measures its investment as a single class of financial asset at fair value in accordance with IFRS 13 Fair Value Measurement.

Gains or losses resulting from the movement in fair value are recognised in the Statement of Comprehensive Income at each valuation point and are allocated to the capital column of the Statement of Comprehensive Income.

Refer to note 7 for details regarding the valuation methodology of investments.

Financial assets are recognised/derecognised at the date of the purchase/disposal. Investments are initially recognised at cost, being the fair value of consideration given.

Transaction costs are recognised as incurred and allocated to the capital column of the statement of comprehensive income.

Fair value is defined as the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. The Board will consider any observable market transactions and will measure fair value using assumptions that market participants would use when pricing the asset, including any assumptions regarding risk surrounding the transaction.

A financial asset (in whole or in part) is derecognised either:

•        when the Company has transferred substantially all the risks and rewards of ownership; or

•        when it has neither transferred or retained substantially all the risks and rewards and when it no longer has control over the assets or a portion of the asset; or

•        when the contractual right to receive cashflow has expired.

2.5     Cash and cash equivalents

Cash and cash equivalents comprise cash balances, deposits held on call with banks and other short-term highly liquid deposits with original maturities of 3 months or less, that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

2.6     Foreign currencies

Transactions entered into by the Company in a currency other than its functional currency are recorded at the rates ruling when the transactions occur.

Foreign currency monetary assets and liabilities are translated to the functional currency at the exchange rate ruling at the balance sheet date. Foreign exchange differences arising on translation to the functional currency are recognised in the Statement of Comprehensive Income, within other expenses or other income. Foreign exchange differences relating to investments held at fair value through profit or loss are shown within gains/losses on investments within the Statement of Financial Position.

2.7     Dividends

Dividends payable to the Company's shareholders are recognised as distributions in the financial statements when the Company's obligation to make payment has been established.

2.8     Income recognition

Investment income comprises interest income on shareholder loan investments and dividend income from ENRG Holdings, which are recognised when the Company's entitlement to receive payment is established. Interest income from cash deposits is recognised in the statement of comprehensive income using the effective interest method. Investment income and interest income are allocated to the revenue column of the Company's statement of comprehensive income unless such income is of a capital nature.

Gains and losses on fair value of investments in the income statement represent gains or losses that arise from the movement in the fair value of the Company's investment in ENRG Holdings. Movements in relation to the fair value of investments are allocated to the capital column of the Company's statement of comprehensive income at each valuation point.

2.9     Expenses

Expenses are accounted for on an accruals basis. Expenses include AIFM, investment management fees and other expenses which are allocated to the revenue column of the Statement of Comprehensive Income. 100% of the investment management fees are charged as an expense item within the Statement of Comprehensive Income. Fees relating to the AIFM and Investment Manager are detailed in note 15.

2.10   Share capital and share premium

Financial instruments issued by the Company are treated as equity if the holder has only a residual interest in the assets of the Company after the deduction of all liabilities. The Company's ordinary shares are classified as equity instruments.

Costs associated, or directly attributable to the issue of new equity shares are recognised as a deduction in equity and are charged from the share premium account. Incremental costs include those incurred in connection with the placing and admission which include fees payable under a placing agreement, legal costs, and any other applicable expenses.

2.11   Taxation

Investment trusts which have approval under Section 1158 of the Corporation Tax Act 2010 are not liable for taxation on capital gains. The Company has successfully applied and has been granted approval as an Investment Trust by HMRC.

The underlying intermediate holding companies and project companies in which the Company invests provide for and pay taxation at the appropriate rates in the countries in which they operate. This is taken into account when assessing the value of the subsidiaries.

2.12   Segmental reporting

The Board of Directors, being the Chief Operating Decision Maker (the "CODM"), is of the opinion that the Company is engaged in a single segment of business, being investment in global sustainable energy opportunities.

The Company has no single major customer. The internal financial information to be used by the CODM on a quarterly basis to allocate resources, assess performance and manage the Company will present the business as a single segment comprising the portfolio of investments in energy efficiency assets.

The financial information used by the Board to manage the Company presents the business as a single segment.

2.13   Changes to accounting standards and interpretations

In the current year, the Company has applied a number of amendments to IFRS Accounting Standards issued by the International Accounting Standards Board (IASB) that are effective for an accounting period that begins on or after 1 January 2023.

The impact of these standards is not expected to be material to the reported results and financial position of the Company.

•        Amendments to IAS 1 Non-current liabilities with covenants and Classification of liabilities as current or non-current.

The Company does not have any non-current liabilities.

•        Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements- Disclosure of Accounting Policies.

The table below shows a number of standards and interpretations which had been published but not yet effective.

Description	Effective Date
Amendments to the following standards:	Periods beginning on or after 1 January 2025
•        IFRS 18 (Presentation and Disclosures in Financial Statements)
•        IFRS 19 (Subsidiaries without Public Accountability)

 

The Directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Company in future periods.

3.       Critical accounting estimates, judgements, and assumptions

The preparation of financial statements requires the Directors of the Company to make judgements, estimates and assumptions that affect the reported amounts recognised in the financial statements. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability in the future.

The estimates and underlying assumptions underpinning our investments are reviewed on an ongoing basis by both the Directors and the Investment Manager. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Significant estimates, judgements and assumptions for the year are set out as follows:

Key judgement: Investment entity and basis of non-consolidation

As detailed in note 2.2, the Directors have concluded that the Company and its wholly owned direct subsidiary, ENRG Holdings, meet the definition of an investment entity by satisfying the three key conditions as set out in IFRS 10. This assessment involves an element of judgement as to whether the company continues to meet the criteria outlined in the accounting standards.

Being investment entities, the Company's investment in ENRG Holdings is measured at fair value as opposed to being consolidated on a line-by-line basis, meaning their balance sheet is included in the fair value of investments rather than in the Company's balance sheet.

The Directors believe the treatment outlined above provides the most relevant information to investors.

Key estimation and uncertainty: Fair value estimation for investments at fair value

Fair value for each investment held through ENRG Holdings is calculated by the Investment Manager as investments are not traded in active markets. Fair value for operational sustainable energy infrastructure investments will typically be derived from a discounted cash flow (DCF) methodology and the results will be benchmarked against appropriate multiples and key performance indicators, where available for the relevant sector/industry. The fair value of investments that are in construction as at year end are measured on a cost basis, as the most appropriate proxy of their fair value.

In a DCF analysis the fair value is derived from the present value of the investment's expected future cash flows to the Company's intermediate holdings i.e. ENRG Holdings, from investments in both equity (dividends) and shareholder loans (interest and repayments). The DCF models use observable data, to the extent practicable, and apply reasonable assumptions and forecasts for revenues, operating costs, macro-level factors, project specific factors and an appropriate discount rate. Changes in assumptions about these factors could affect the reported fair value of investments, which is detailed in note 7 which considers the sensitivity of key modelling assumptions on the Company's net asset value.

The Investment Manager exercises their judgement in assessing the discount rate applied in the valuation of each investment. This is based on a build up of the discount rate based on the capital asset pricing model. The capital asset pricing model inputs are sourced from publicly available information. Additional project specific premia are added to the discount rate. The discount rates are reviewed quarterly and updated, where appropriate, to reflect changes in the market and in the project risk characteristics.

The risk of climate change has been considered in the valuation of investments, where applicable. Future power prices are estimated using forecast data from third-party specialist consultancy reports, which reflect various factors including gas prices, carbon prices and renewables deployment.

Short to medium term inflation assumptions used in the valuations are based on third party forecasts. In the longer term, an assumption is made that inflation will increase at a long-term rate based on IMF forecasts.

The estimates and assumptions that are used in the calculation of the fair value of investments is disclosed in note 7.

Key judgement: Equity and debt investment in ENRG Holdings

The Company classifies its investments based on its business model for managing those financial assets and the contractual cash flow characteristics of the financial assets. The portfolio of investments is managed, and performance is evaluated on a fair value basis.

The contractual cash flows of the Company's shareholder loans (debt investments) are solely principal and interest, however, these are not held for the purpose of collecting contractual cash flows. The collection of contractual cash flows is only incidental to achieving the Company's business model's objective.

Consequently, in applying their judgement, the Directors have satisfied themselves that the equity and debt investments into its direct wholly owned subsidiary, ENRG Holdings, share the same investment characteristics and, as such, constitute a single asset class for IFRS 7 disclosure purposes.

4.       Investment income

	For the year ended 31 December 2024			For the year ended 31 December 2023
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Interest on cash deposits	1,999	-	1,999	5,865	-	5,865
Interest income from investments	9,176	-	9,176	6,260	-	6,260
Dividend Income	11,252	-	11,252	17,200	-	17,200
Investment income	22,427	-	22,427	29,325	-	29,325

5.       Operating expenses

	For the year ended 31 December 2024 £'000	For the year ended 31 December 2023 £'000
Fees to the Company's Auditor:
-Statutory audit of the year-end financial statements	270	223
-Assurance related services for the interim report	73	70
-Other non-audit services	-	84
Tax advisory fees	22	14
AIFM fees	74	66
Directors' fees	387	345
Due diligence fees	-	349
Administration and depositary fees	250	227
Professional fees	167	70
Other expenses	933	684
Total operating expenses	2,176	2,132

 

Fees with respect to the Investment Management and AIFM services are set out in note 15.

The Company had no employees during the year. Full detail on Directors' fees is provided in the Directors' Remuneration Report. There were no other emoluments during the year.

6.       Taxation

a.       Analysis of charge in the year

	For the year ended 31 December 2024			For the year ended 31 December 2023
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Corporation tax	-	-	-	-	-	-

b.       Factors affecting total tax charge for the year

The effective UK corporation tax rate applicable to the Company for the year is 25% (2023: 23.52%). The tax charge differs from the charge resulting from applying the standard rate of UK corporation tax for an investment trust company.

	For the year ended 31 December 2024			For the year ended 31 December 2023
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Profit for the year before taxation	15,877	(53,665)	(37,788)	22,822	32,517	55,339
Corporation tax at 25%	3,969	(13,416)	(9,447)	5,368	7,648	13,016
Effect of:
Capital (gains)/losses not taxable	-	12,799	12,799	-	(7,648)	(7,648)
Foreign exchange loss not deductible	-	617	617	-	-	-
Expenditure not deductible	-	-	-	1	-	1
Non-taxable UK dividends	(2,813)	-	(2,813)	(4,046)	-	(4,046)
Management expenses not utilised/recognised	2	-	2	161	-	161
Interest distributions	(1,158)	-	(1,158)	(1,014)	-	(1,014)
Proposed Interest distributions	-	-	-	(470)	-	(470)
Total tax charge for the year	-	-	-	-	-	-

 

Investment companies which have been approved by HM Revenue & Customs under section 1158 of the Corporation Tax Act 2010 are exempt from tax on capital gains. The Directors are of the opinion that the Company has complied with the requirements for maintaining investment trust status for the purposes of section 1158 of the Corporation Tax Act 2010.

Additionally, the Company may utilise the interest streaming election which allows the Company to designate dividends wholly or partly as interest distributions for UK tax purposes. Interest distributions are treated as tax deductions against taxable income of the Company so that investors do not suffer double taxation on their returns.

The financial statements do not directly include the tax charges for the Company's intermediate holding company, as ENRG Holdings is held at fair value. ENRG Holdings is subject to taxation in the United Kingdom.

c.       Deferred taxation

The Company has excess management expenses of £671,922 (2023: £664,380) that are available for offset against future profits. A deferred tax asset of £167,980 (2023: £166,095) has not been recognised in respect of these losses as they will be recoverable only to the extent that the Company has sufficient future taxable profits and it is not anticipated that the Company will have such profits in future.

The Company has not provided for deferred tax on any capital gains or losses arising on the revaluation of investments.

7.       Investments at fair value through profit or loss

As set out in note 2.2, the Company designates its interest in its wholly owned direct subsidiary ENRG Holdings as an investment at fair value through profit or loss at each balance sheet date in accordance with IFRS 13, which recognises a variety of fair value inputs depending upon the nature of the investment. Specifically:

Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each reporting period.

The Company classifies all assets measured at fair value as below:

Fair value hierarchy

As at 31 December 2024	Total £'000	Quoted prices in active markets (level 1) £'000	Significant Observable inputs (level 2) £'000	Significant unobservable inputs (level 3) £'000
Assets measured at fair value:
Non-current assets
Investments held at fair value through profit or loss	397,895	-	-	397,895

 

As at 31 December 2023	Total £'000	Quoted prices in active markets (level 1) £'000	Significant Observable inputs (level 2) £'000	Significant unobservable inputs (level 3) £'000
Assets measured at fair value:
Non-current assets
Investments held at fair value through profit or loss	369,047	-	-	369,047

 

All of the Company's investments have been classified as Level 3 and there have been no transfers between levels during the year ended 31 December 2024.

The movement on the level 3 unquoted investment during the year is shown below:

	As at 31 December 2024 £'000	As at 31 December 2023 £'000
Opening balance at beginning of the year	369,047	315,133
Additions during the year at cost	82,513	22,819
Fair value movement on investments:	451,560	337,952
Change in fair value of equity investments1	(53,665)	32,649
Interest on loan investments2	-	(1,554)
Total fair value movement on investments	(53,665)	31,095
Closing balance	397,895	369,047

 

1           The £53,665k (2023: £32,517k) in the Statement of Comprehensive Income and Statement of Changes in Equity is made up of unrealised losses of £53,665k (2023: £32,649k gains) per this note and a realised foreign exchange loss of £nil (2023: £132k) during the year.

2           This is the amount related to the movement in accrued interest on shareholder loans.

Further information on the basis of valuation is detailed in note 3 to the financial statements.

Valuation methodology

As set out in note 2.2, the Company meets the definition of an investment entity as described by IFRS 10, as such the Company's investment in the ENRG Holdings is valued at fair value.

The Company holds underlying investments in special purpose entities (SPEs) through its equity and debt investments in ENRG Holdings, as detailed in note 8. The Investment Manager has carried out fair market valuations of the SPE investments as at 31 December 2024.

IFRS 13 requires the Company to classify its investments in a fair value hierarchy that reflects the significance of the inputs used in making the measurements. IFRS 13 establishes a fair value hierarchy that prioritises the inputs to valuation techniques used to measure fair value. The three levels of fair value hierarchy under IFRS 13 are as follows:

Level 1: fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: fair value measurements are those derived from inputs other than quoted prices included within Level 1 that ore observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)

Level 3: fair value measurements are those derived from valuation techniques that include inputs to the asset or liability that ore not based on observable market data (unobservable inputs)

 

There were no Level 1 or Level 2 assets or liabilities during the year. There were no transfers between Level 1 and 2, Level 1 and 3 or Level 2 and 3 during the year.

The Company records the net asset value of ENRG Holdings by calculating and aggregating the fair value of each of the individual investments in which the Company holds an indirect investment. Due to their nature, such investments are expected to be classified as level 3 as they are not traded and contain unobservable inputs. The Directors have satisfied themselves as to the methodology used, the discount rates and key assumptions applied, and the valuation.

The fair value of investments that are operational as at year end are measured at fair value through profit or loss using the DCF methodology in line with the IFRS 13 framework for fair value measurement. As at 31 December 2024, the US terminal storage assets, two of the five Australian solar PV with battery storage assets, the Brazilian hydro facility and 10 of the 16 Brazilian solar PV assets are being measured at fair value, using the DCF valuation.

Fair value of investments that are in construction as at year end is measured on a cost basis, as the most appropriate proxy of their fair value. At year end, the remaining Australian solar PV with battery storage assets, remaining Brazilian solar PV assets, and the UK flexible power with CCR assets are in construction. The cost basis of those assets under construction is regularly reviewed to determine if the cost basis is the most appropriate basis of valuation as assets approach their operational phase.

The total movement in the value of the investments in ENRG Holdings is recorded through profit and loss in the Statement of Comprehensive Income Statement of the Company.

Valuation assumptions

The following economic assumptions were used in the valuation of operating assets.

Discount rates	The discount rate used in the valuations is derived according to internationally recognised methods.
	Typical components of the discount rate are risk free rates, country-specific and asset-specific risk premia. The latter comprise the risks inherent to the respective asset class as well as specific premia for other risks such as construction.
Power price	Power prices are based on power price forecasts from leading market consultants adjusted for expected deployment of energy transition assets.
Energy yield	Estimated based on energy yield assessments from leading technical consultants as well as operational performance data (where applicable).
Inflation rates	Long-term inflation is based on International Monetary Fund (IMF) forecasts for the respective jurisdiction.
Asset life	Refer to the table below for details. In individual cases a longer operating life may be assumed where the contractual set-up supports such assumption.
Operating expenses	The operating expenses are primarily based on the respective contracts and budgets.
Taxation rates	The underlying country-specific tax rates are derived from leading tax consulting firms.
Capital expenditure	Based on the contractual arrangements (e.g. EPC agreement), where applicable.

Key assumptions

			31 December 2024	31 December 2023
Discount rate	Weighted Average	US terminal storage assets	6.94%	6.91%
	Weighted Average	Australian solar PV with battery storage assets	7.77%	7.74%
	Weighted Average	Brazilian solar PV assets	10.33%	9.67%
	Weighted Average	Brazilian hydro facility	10.16%	9.54%
	Weighted Average	Iberian and Swedish solar PV and wind assets	9.15%	n/a
Long-term inflation1	United States	US terminal storage assets	2.15%	1.62%
	Australia	Australian solar PV with battery storage assets	2.47%	2.42%
	Brazil	Brazilian solar PV assets & Brazilian hydro facility	2.97%	3.03%
	Spain	Spanish solar PV asset	2.00%	n/a
	Sweden	Swedish onshore wind asset	2.00%	n/a
Total asset life	Years	US terminal storage assets	30 years	30 years
	Years	Australian solar PV with battery storage assets	25 years	25 years
	Years	Brazilian solar PV assets	25 years	25 years
	Years	Brazilian hydro facility	25 years	25 years
	Years	Iberian and Swedish solar PV and wind assets	25 years	25 years
Exchange rate	GBP:USD	US terminal storage assets	1:1.2527	1:1.2732
	GBP:BRL	Brazilian solar PV assets & Brazilian hydro facility	1:7.7486	1:6.1771
	GBP:AUD	Australian solar PV with battery storage assets	1:2.0235	1:1.8689
	GBP:EUR	Iberian and Swedish solar PV and wind assets	1:1.2098	n/a

 

1           Source: IMF. Inflation rates have been taken from IMF published on 22 Oct 2024 (data is published biannually), which provides yearly forecasted inflation up to 2029. Long-term inflation rate refers to the 2029 projected rate. Short-term inflation volatility of up to 2029 has been accounted for in the valuation of operating assets.

Valuation sensitivity

The key sensitivities in the DCF valuation are considered to be the discount rate used in the DCF valuation and long-term assumptions in relation to inflation, operating expenses and asset life.

The discount rate applied in the valuation of the operating assets are as per the table above, which is considered to be an appropriate base case for sensitivity analysis. A variance of +/-1.5% is considered to be a reasonable range of alternative assumptions for discount rate given the volatility of discount rates used during the year.

The base case long term inflation rate assumption depends on the geographical location for assets in operation. These are disclosed in the table above. A variance of +/-1% is considered to be a reasonable range of alternative assumptions for inflation.

For assets in construction, the Company has only sensitised the impact of foreign exchange fluctuations. A variance of +/- 10% is considered to be a reasonable range of alternative assumptions for foreign exchange.

The analysis below shows the sensitivity of the investments value (and impact on NAV) to changes in key assumptions. All sensitivity calculations have been performed on the basis that each of the other assumptions remains constant and unchanged.

As at 31 December 2024	Change in input	Changes in fair value of investments (£'000)	Change in NAV per share (p)
Discount rate - US terminal storage assets	-1.50%	21,212	5.36
	1.50%	(16,811)	(4.25)
Discount rate - Australian solar PV with battery storage assets	-1.50%	4,461	1.13
	1.50%	(3,690)	(0.93)
Discount rate - Brazilian solar PV assets	-1.50%	3,496	0.88
	1.50%	(2,877)	(0.73)
Discount rate - Brazilian hydro facility	-1.50%	11,395	2.88
	1.50%	(9,374)	(2.37)
Discount rate - Iberian and Swedish solar PV and wind assets	-1.50%	255	0.06
	1.50%	(208)	(0.05)
Discount rate - All	-1.50%	40,818	10.31
	1.50%	(32,960)	(8.33)

 

As at 31 December 2024	Change in input	Changes in fair value of investments (£'000)	Change in NAV per share (p)
Inflation - US terminal storage assets	-1.00%	(10,858)	(2.74)
	1.00%	12,504	3.16
Inflation - Australian solar PV with battery storage assets	-1.00%	(795)	(0.20)
	1.00%	861	0.22
Inflation - Brazilian solar PV assets	-1.00%	(1,696)	(0.43)
	1.00%	2,130	0.54
Inflation - Brazilian hydro facility	-1.00%	(9,947)	(2.51)
	1.00%	10,401	2.63
Inflation - Iberian and Swedish solar PV and wind assets	-1.00%	(223)	(0.06)
	1.00%	253	0.06
Inflation - All	-1.00%	(23,520)	(5.94)
	1.00%	26,149	6.61

 

As at 31 December 2024	Change in input	Changes in fair value of investments (£'000)	Change in NAV per share (p)
Asset life - US terminal storage assets	-1 year	(2,120)	(0.54)
	+1 year	2,329	0.59
Asset life - Australian solar PV with battery storage assets	-1 year	(411)	(0.10)
	+1 year	210	0.05
Asset life - Brazilian solar PV assets	-1 year	(435)	(0.11)
	+1 year	408	0.10
Asset life - Brazilian hydro facility	-1 year	(1,797)	(0.45)
	+1 year	1,819	0.46
Asset life - Iberian and Swedish solar PV and wind assets	-1 year	(120)	(0.03)
	+1 year	115	0.03
Asset life - All	-1 year	(4,884)	(1.23)
	+1 year	4,881	1.23

 

As at 31 December 2024	Change in input	Changes in fair value of investments (£'000)	Change in NAV per share (p)
Operating expenses - US terminal storage assets	-5.00%	4,548	1.15
	5.00%	(4,538)	(1.15)
Operating expenses - Australian solar PV with battery storage assets	-5.00%	339	0.09
	5.00%	(235)	(0.06)
Operating expenses - Brazilian solar PV assets	-5.00%	637	0.16
	5.00%	(609)	(0.15)
Operating expenses - Brazilian hydro facility	-5.00%	2,378	0.60
	5.00%	(2,407)	(0.61)
Operating expenses - Iberian and Swedish solar PV and wind assets	-5.00%	82	0.02
	5.00%	(81)	(0.02)
Operating expenses - All	-5.00%	7,984	2.02
	5.00%	(7,869)	(1.99)
As at 31 December 2024	Change in input	Changes in fair value of investments (£'000)	Change in NAV per share (p)
FX (GBP:USD)	-10.00%	14,152	3.58
	10.00%	(11,579)	(2.93)
FX (GBP:BRL)	-10.00%	14,750	3.73
	10.00%	(12,068)	(3.05)
FX (GBP:AUD)	-10.00%	5,158	1.30
	10.00%	(4,220)	(1.07)
FX (GBP:EUR)	-10.00%	4,712	1.19
	10.00%	(3,856)	(0.97)
FX - All	-10.00%	38,772	9.80
	10.00%	(31,723)	(8.01)

 

The sensitivities above are assumed to be independent of each other. Combined sensitivities are not presented.

As at 31 December 2023	Change in input	Changes in fair value of investments (£'000)	Change in NAV per share (p)
Discount rate - US terminal storage assets	-1.50%	22,034	5.30
	1.50%	(17,339)	(4.17)
Discount rate - Australian solar PV with battery storage assets	-1.50%	1,973	0.47
	1.50%	(1,616)	(0.39)
Discount rate - Brazilian solar PV assets	-1.50%	3,327	0.80
	1.50%	(2,734)	(0.66)
Discount rate - Brazilian hydro facility	-1.50%	15,976	3.85
	1.50%	(12,981)	(3.12)
Discount rate - All	-1.50%	43,310	10.42
	1.50%	(34,670)	(8.34)

 

As at 31 December 2023	Change in input	Changes in fair value of investments (£'000)	Change in NAV per share (p)
Inflation - US terminal storage assets	-1.00%	(10,833)	(2.61)
	1.00%	12,451	3.00
Inflation - Australian solar PV with battery storage assets	-1.00%	(1,144)	(0.28)
	1.00%	1,458	0.35
Inflation - Brazilian solar PV assets	-1.00%	(2,011)	(0.48)
	1.00%	2,295	0.55
Inflation - Brazilian hydro facility	-1.00%	(11,997)	(2.89)
	1.00%	14,176	3.41
Long-term Inflation - All	-1.00%	(25,984)	(6.25)
	1.00%	30,380	7.31

 

As at 31 December 2023	Change in input	Changes in fair value of investments (£'000)	Change in NAV per share (p)
Asset life - US terminal storage assets	-1 year	(1,888)	-0.45
	+1 year	1,782	0.43
Asset life - Australian solar PV with battery storage assets	-1 year	(333)	-0.08
	+1 year	306	0.07
Asset life - Brazilian solar PV assets	-1 year	(395)	-0.10
	+1 year	370	0.09
Asset life - Brazilian hydro facility	-1 year	(2,496)	-0.60
	+1 year	2,426	0.58
Asset life - All	-1 year	(5,112)	-1.23
	+1 year	4,883	1.18

 

As at 31 December 2023	Change in input	Changes in fair value of investments (£'000)	Change in NAV per share (p)
Operating expenses - US terminal storage assets	-5.00%	4,224	1.02
	5.00%	(4,224)	-1.02
Operating expenses - Australian solar PV with battery storage assets	-5.00%	275	0.07
	5.00%	(266)	-0.06
Operating expenses - Brazilian solar PV assets	-5.00%	828	0.20
	5.00%	(816)	-0.20
Operating expenses - Brazilian hydro facility	-5.00%	2,771	0.67
	5.00%	(2,772)	-0.67
Operating expenses - All	-5.00%	8,097	1.95
	5.00%	(8,079)	-1.95

 

As at 31 December 2023	Change in input	Changes in fair value of investments (£'000)	Change in NAV per share (p)
FX (GBP:USD)	-10.00%	13,366	3.22
	10.00%	(10,936)	-2.63
FX (GBP:BRL)	-10.00%	18,787	4.73
	10.00%	(15,372)	-3.70
FX (GBP:AUD)	-10.00%	4,140	1.00
	10.00%	(3,387)	-0.82
FX - All	-10.00%	36,293	8.74
	10.00%	(29,694)	-7.15

The sensitivities above are assumed to be independent of each other. Combined sensitivities are not presented.

8.       Unconsolidated subsidiaries

The following table shows subsidiaries of the Company. As the Company is regarded as an investment entity, these subsidiaries have not been consolidated in the preparation of the financial statements.

Investments	Registered Office Address	Country of Business	Ownership Interests as at 31 December 2024
VH ENRG UK Holdings Limited	5th Floor 20 Fenchurch Street, London, England, EC3M 3BY, United Kingdom	United Kingdom	100%
Victory Hill Distributed Energy Investments Limited	5th Floor 20 Fenchurch Street, London, England, EC3M 3BY, United Kingdom	United Kingdom	100%
Victory Hill Flexible Power Limited	5th Floor 20 Fenchurch Street, London, England, EC3M 3BY, United Kingdom	United Kingdom	100%
Rhodesia Power Limited	5th Floor 20 Fenchurch Street, London, England, EC3M 3BY, United Kingdom	United Kingdom	100%
Victory Hill USA Holdings LLC	800 North State Street, Suite 304., Dover Delaware 19901	United States	100%
Victory Hill Midstream Investments LLC	800 North State Street, Suite 304., Dover Delaware 19901	United States	100%
Victory Hill Midstream Energy LLC	800 North State Street, Suite 304., Dover Delaware 19901	United States	100%
Motus T1 LLC	14301 RL Ostos Rd. Brownsville, TX 78521	United States	100%
Motus T2 LLC	16265 RL Ostos Rd. Brownsville, TX 78521	United States	100%
Victory Hill Australia Investments Pty Ltd	Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Melbourne, VIC 3000	Australia	100%
Victory Hill Distributed Power Pty Ltd	Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Melbourne, VIC 3000	Australia	100%
Mobilong Solar Farm Pty Ltd	Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Melbourne, VIC 3000	Australia	100%
Dunblane Solar Pty Ltd	Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Melbourne, VIC 3000	Australia	100%
Dubbo Solar Project Pty Ltd	Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Melbourne, VIC 3000	Australia	100%
Narrandera Solar Project Pty Ltd	Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Melbourne, VIC 3000	Australia	100%
Coleambally East Solar Farm Pty Ltd	Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Melbourne, VIC 3000	Australia	100%
Tabbita Solar Farm Pty Ltd	Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Melbourne, VIC 3000	Australia	100%
Griffith Solar Pty Ltd	Apex Fund Services (Australia) Pty Ltd, Level 5, 459 Little Collins Street, Melbourne, VIC 3000	Australia	100%
VH Participacoes Hidreletricas do Brasil LTDA	Avenida Paulista, nº 1912, 8º andar, Bela Vista, São Paulo, State of São Paulo, CEP 01310-200	Brazil	98.25%
Energest S.A.	Rod BR 259, km 92, Piso 8, Sala 1, Bairro Mascarenhas, Baixo Guandu, State of Espírito Santo, CEP 29730-000	Brazil	100%
Victory Hill Holdings Brasil S.A.	Rua Barão de Jaguaripe, nº 280, apto. 501, Bairro, Ipanema, Rio de Janeiro, State of Rio de Janeiro, CEP 22.421-000	Brazil	99.99%
Energea Itaguaí I Ltda. *	Est RJ-099, No. 704, Piranema, Municipality of Itaguaí, Rio de Janeiro, State of Rio de Janeiro, CEP 23825-840	Brazil	100%
Energea Itaguaí II Ltda. *	Est RJ-099, No. 704, Piranema, Municipality of Itaguaí, Rio de Janeiro, State of Rio de Janeiro, CEP 23825-840	Brazil	100%
Energea Itaguaí III Ltda. *	Est RJ-099, No. 704, Piranema, Municipality of Itaguaí, Rio de Janeiro, State of Rio de Janeiro, CEP 23825-840	Brazil	100%
Energea Nova Friburgo Ltda. *	Rua Barão de Jaguaripe, nº 280, apto 501, Ipanema, Rio de Janeiro - RJ, CEP 22.421-000	Brazil	100%
Energea Itabaiana Ltda. *	SIT BR 235 da Queimadas Margem Esquerda, No Number, Zona Rural, Itabaiana, State of Sergipem, CEP 49.511-899	Brazil	100%
Energea Redenção Ltda. *	Rod BR 158 KM 18, No Number, Complement: Chácara Temponi, Zona Rural, Redenção, State of Pará, CEP 68.554-899	Brazil	100%
Energea Itaporanga Ltda. *	Sítio Catole, No Number, Zona Rural, Itaporanga, Sate of Paraíba, CEP: 58.780-000	Brazil	100%
Energea Bataguassu Ltda. *	Rod BR 267 KM 48,5 A Direita - Fazenda Cabeceira, No Number, Zona Rural, Bataguassu, Sate of Mato Grosso do Sul, CEP: 79.780-000	Brazil	100%
Energea Palmas Ltda. *	Rod BR-030, KM 93, Fazenda Boa Vista, No Number, Malhada, State of Bahia, CEP 46.440-000	Brazil	100%
Energea Itacarambi Ltda. *	Rod BR 135 KM 139, Zona Rural, No Number, Itacarambi, State of Minas Gerais. CEP: 39.470-000	Brazil	100%
Energea Vassouras I Ltda. *	Est RJ 127, nº 6300, Zona Rural, Vassouras, State of Rio de Janeiro, CEP: 27.700-000	Brazil	100%
Energea Seropédica Ltda. *	Rua Barão de Jaguaripe, nº 280, apto 501, Ipanema, Sate of Rio de Janeiro, CEP: 22.421-000	Brazil	100%
Energea Paraíba do Sul Ltda. *	Rua Barão de Jaguaripe, nº 280, apto 501, Ipanema, Rio de Janeiro, State of Rio de Janeiro, CEP 22.421‑000	Brazil	100%
Energea Taquaritinga Ltda. *	Est Municipal de Taquaritinga a Monte Alto, No Number, Área Rural de Taquaritinga, Taquaritinga, State of São Paulo, CEP 15.909-899	Brazil	100%
Energea Nova Cruz Ltda. *	Est Margem Direita da Estrada de Nova Cruz a Montanhas, No Number, Zona Rural, City: Nova Cruz, State of Rio Grande do Norte, CEP 59.215-000	Brazil	100%
VH Spain Energy Investments SLU	Calle Nanclares de Oca 1B, 28022 Madrid	Spain	100%
Fusgar Energy SL*	Calle Nanclares de Oca 1B, 28022 Madrid	Spain	55%
La Marquesa SL*	Calle Nanclares de Oca 1B, 28022 Madrid	Spain	55%
La Marquesa AZ SL&	Calle Nanclares de Oca 1B, 28022 Madrid	Spain	55%
Marquesona SL*	Calle Nanclares de Oca 1B, 28022 Madrid	Spain	55%
Fotoener SL*	Calle Doctor Vernau, 1. 35001 Las Palmas de Gran Canaria	Spain	55%
Lingbo SPW AB*	Athene Tax AB, Textilgatan 31, 120 30 Stockholm	Sweden	55%
Elcano Unipessonal LDA*	Rua Latino Coelho, nº 87, 1050 - 134 Lisboa,	Portugal	55%
Sistemas Energeticos Saturno SL*	Calle Nanclares de Oca 1B, 28022 Madrid	Spain	55%
Feres Energy SL*	Calle Nanclares de Oca 1B, 28022 Madrid	Spain	55%
Alfa Lirae PV 7 SL*	Calle Nanclares de Oca 1B, 28022 Madrid	Spain	55%
Solar Power Cosmo SL*	Calle Nanclares de Oca 1B, 28022 Madrid	Spain	55%

 

At 31 December 2024, the Company has one direct subsidiary and owns 100% of ENRG Holdings. The Company owns investments in the other entities per the table above through its ownership of ENRG Holdings. ENRG Holdings owns 100% of Victory Hill USA Holdings LLC, Victory Hill Australia Investments Pty Ltd, Victory Hill Distributed Energy Investments Limited, Victory Hill Flexible Power Limited and Victory Hill Spain Energy Investments S.L.U and 98.25% of VH Participacoes Hidreletricas do Brasil Ltda.

The Company's investments in Victory Hill Midstream Investments LLC, Victory Hill Midstream Energy LLC, Motus T1 LLC and Motus T2 LLC are held through Victory Hill USA Holdings LLC. These relate to the US terminal storage assets.

The Company's investments in Brazilian solar PV assets are held through Victory Hill Distributed Energy Investments Limited, which holds 99.99% of Victory Hill Holdings Brasil S.A. The holdings of Victory Hill Holdings Brasil S.A. are indicated by an asterisk in the list of unconsolidate)d subsidiaries above.

The Company's investments in VH Hydro Brasil Holding S.A. and Energest S.A. are held through VH Participacoes Hidreletricas do Brasil LTDA. These relate to the Brazilian hydro facility.

The Company's investments in Victory Hill Distributed Power Pty Ltd, Mobilong Solar Farm Pty Ltd, Dubbo Solar Project Pty Ltd, Narrandera Solar Project Pty Ltd, Tabbita Solar Farm Pty Ltd, Griffith Solar Pty Ltd, Coleambally East Solar Farm Pty Ltd and Dunblane Solar Pty Ltd are held through Victory Hill Australia Investments Pty Ltd. These relate to the Australian solar PV with battery storage assets.

The Company's investments in Fusgar Energy SL in are held through Victory Hill Spain Energy Investment S.L.U., which holds 80% of the economic and voting rights of Fusgar Energy SL. The holdings of Fusgar Energy SL are indicated by an asterisk in the list of unconsolidated subsidiaries above.

The Company's investments in Rhodesia Power Limited are held through Victory Hill Flexible Power Limited. These relate to the UK flexible power with CCR assets.

9.       Receivables

	As at 31 December 2024 £'000	As at 31 December 2023 £'000
Other receivables	130	93
Interest receivable on cash and cash equivalents	39	317
Prepayments	32	31
Total other receivables	201	441

 

The Directors have analysed the expected credit loss in respect of receivables and concluded there was no material exposure for the year ended 31 December 2024 and 31 December 2023.

Cash of £nil (2023: £40,367k) is held on behalf of the Company by VH ENRG UK Holdings Limited.

10.     Cash and cash equivalents

	As at 31 December 2024 £'000	As at 31 December 2023 £'000
Cash and cash equivalents1	10,731	30,542
Cash on deposit	216	43,716
Total cash and cash equivalents	10,947	74,258

 

1           Cash and cash equivalents includes money market investments of £9.5m (31 December 2023: £26.4m)

11.     Accounts payable and accrued expenses

	As at 31 December 2024 £'000	As at 31 December 2023 £'000
Accrued expenses	536	270
Accounts payable and accrued expenses	536	270

 

The Directors consider that the carrying amount of other payables and accrued expenses matches their fair value.

12.     Financial risk management

The Company's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk.

The Investment Manager has risk management procedures and processes in place which enable them to monitor the risks of the Company. The objective in managing risk is the creation and protection of shareholder income and value. Risk is inherent in the Company's activities, but it is managed through a process of ongoing identification, impact assessment, and monitoring and subject to risk limits and other controls.

The principal financial risks facing the Company in the management of its portfolio are as follows:

Currency risk

The Company make investments which are based in countries whose local currency may not be Sterling and the Company and its investments may make and/or receive payments that are denominated in currencies other than Sterling. Therefore, when foreign currencies are translated into Sterling there could be a material adverse effect on the Company's profitability and its net asset value.

The Company's investments are held for the long-term and the Company may enter into hedging arrangements for periods less than 12 months to hedge against short-term currency movements. Currency risk is taken into consideration at time of investment and included in the Investment Manager's assessment of minimum hurdle rate from investments. Hedging policies of the Company will be reviewed on a regular basis to ensure that the risks associated with the Company's investments are being appropriately managed.

The Company invests in a portfolio of assets through ENRG Holdings, which pays dividends in sterling to the Company. Shareholder loan investments and interest are held and paid in local currencies at the Company, including US$64,686,291 and A$76,427,230, representing a total of 21.8% of the Company's NAV at year end.

Note 7 details sensitivity analysis on the impact of changes to the inputs on the fair value of the Company's investments.

Interest rate risk

The Company's interest rate risk on its financial assets is limited to interest earned on cash or cash equivalents. The Board considers that, because shareholder loan investments bear interest at a fixed rate, they do not carry any interest rate risk.

The Company may use borrowings for multiple purposes, including for investment purposes. At the year end the Company held no borrowings. Interest rate risk will be taken into consideration when taking out any such borrowings.

The Company's interest and non-interest bearing assets and liabilities as at 31 December 2024 and 31 December 2023 are summarised as below:

	For the year ended 31 December 2024			For the year ended 31 December 2023
	Interest bearing	Non-interest bearing	Total	Interest bearing	Non-interest bearing	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Cash and cash equivalents	10,947	-	10,947	114,625	-	114,625
Prepayments and other receivables	-	162	162	-	124	124
Interest receivable	39	-	39	317	-	317
Investments at fair value through profit or loss	154,798	243,097	397,895	93,347	275,700	369,047
Total assets	165,784	243,259	409,043	208,289	275,824	484,113
Liabilities
Accounts payable and accrued expenses	-	(536)	(536)	-	(270)	(270)
Total liabilities	-	(536)	(536)	-	(270)	(270)

Price risk

The operation and cash flows of certain investments will depend, in substantial part, upon prevailing market prices for electricity and fuel, and particularly natural gas. The Company intends to mitigate these risks by entering into (i) hedging arrangements; (ii) extendable short, medium and long-term contracts; and (iii) fixed price or availability based asset-level commercial contracts, and ensuring that market risk is combined with non-market risk exposures.

Price risk is limited to the fair value of investments. Note 7 details sensitivity analysis on the impact of changes to the inputs on the fair value of the Company's investments and profits.

Credit risk

Credit risk is the risk that a counterparty will cause financial loss to the Company by failing to meet a commitment it has entered into with the Company. The Company's credit risk exposure is minimised with its policy to enter into banking arrangements with reputable financial institutions with a credit rating of at least 'A/Positive' from Standard and Poor's and making loan investments which are equity in nature. The Investment Manager monitors the credit ratings of banks used by the Company on a regular basis.

The table below shows the Company's maximum exposure to credit risk:

	As at 31 December 2024 £'000	As at 31 December 2023 £'000
Cash and cash equivalents	10,947	114,625
Investments at fair value through profit or loss	154,798	93,347
Other receivables (Note 9)	201	441
	165,946	208,413

Liquidity risk

The Company manages its liquidity and funding risks by considering cash flow forecasts and ensuring sufficient cash balances are held within the Company to meet future needs. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of financing through appropriate and adequate credit lines, and the ability of counterparties to settle obligations. The Company ensures, through forecasting of capital requirements, that adequate cash is available.

The following table details the Company's liquidity analysis in respect of its financial liabilities on contractual undiscounted payments:

As at 31 December 2024	<3 Months £'000	3-12 Months £'000	1-5 Years £'000	>5 Years £'000	Total £'000
Accounts payable and accrued expenses	536	-	-	-	536

 

As at 31 December 2023	<3 Months £'000	3-12 Months £'000	1-5 Years £'000	>5 Years £'000	Total £'000
Accounts payable and accrued expenses	270	-	-	-	270
	270	-	-	-	270

 

The Board of Directors monitors key risks faced by the Company and has agreed policies for managing the above risks with the Investment Manager.

Capital management

The Company considers its capital to comprise ordinary share capital, distributable reserves and retained earnings.

The Company's primary capital management objectives are to ensure the sustainability of its capital to support continuing operations, meet its financial obligations and allow for growth opportunities. Generally, acquisitions are anticipated to be funded with a combination of cash, debt and equity.

13.     Share capital

Date	Issued and fully paid	Number of shares	Share Capital (A) £'000	Share premium (B) £'000	Special Distributable Reserve (C) £'000	Total (A+B+C) £'000
Opening balance		422,498,890	4,225	186,368	232,467	423,060
Buyback of ordinary shares		-	-	-	(5,400)	(5,400)
At 31 December 2023		422,498,890	4,225	186,368	227,067	417,660
Opening balance		422,498,890	4,225	186,368	227,067	417,660
Buyback of ordinary shares		-	-	-	(15,073)	(15,073)
Interim dividend paid during the year		-	-	-	(452)	(452)
At 31 December 2024		422,498,890	4,225	186,368	211,994	402,587

 

During the period under review, the Company purchased for treasury a total of 19,668,147 ordinary shares at an aggregate cost of £14,619,440 (including stamp duty and other fees) at an average price per ordinary share of 74.3p.

14.     Dividends

The Company paid the below dividends during the year.

Period	Pence per ordinary share	Total dividend	Date paid
1 October 2023 - 31 December 2023	1.42p	£5.8m	22 March 2024
1 January 2024 - 31 March 2024	1.42p	£5.8m	25 June 2024
1 April 2024 to 30 June 2024	1.42p	£5.7m	10 September 2024
1 July 2024 to 30 September 2024	1.42p	£5.6m	19 December 2024

15.     Transactions with AIFM, Investment Manager and related parties

AIFM

On 3 May 2023 the Company entered into an Alternative Investment Fund Management Agreement ("AIFM Agreement") with Victory Hill Capital Partners LLP (the "AIFM") replacing G10 Capital Limited. Victory Hill Capital Partners LLP is acting as the Company's AIFM with overall responsibility for the risk management and portfolio management of the Company, providing alternative investment fund management services and ensuring compliance with the requirements of the AIFM Rules, subject to the overall supervision of the Board of Directors in accordance with the policies set by the Directors from time to time and the investment restrictions as set out in the AIFM Agreement.

The AIFM Agreement provides that the Company will pay to the AIFM a fixed monthly fee of £5,833 (£70,000 per annum), exclusive of VAT. The Company will also reimburse the AIFM for reasonable expenses properly incurred by the AIFM in the performance of its obligations under the AIFM Agreement.

The AIFM Agreement may be terminated by the Company or the AIFM giving not less than twelve months' written notice. The AIFM Agreement may be terminated with immediate effect on the occurrence of certain events, including insolvency or in the event of a material and continuing breach.

Investment Manager

The Investment Manager is entitled to receive from the Company an annual fee to be calculated as percentages of the Company's net assets, 1% on the first £250m of NAV, 0.9% on NAV in excess of £250m and up to and including £500m and 0.8% on NAV in excess of £500m exclusive of VAT.

Furthermore, if in any fee period, the annual fee paid to the Investment Manager exceeds:

a)       £3.5m, the Investment Manager shall apply 8% of the annual fee, subject to a maximum amount of £400,000, to subscribe for or acquire ordinary shares of £0.01 each in the capital of the Company.

b)       £2.5m, the Investment Manager shall apply 2% of the annual fee to be paid as a charitable donation to O&C Limited, or other suitable registered charity aimed at promoting sustainable energy, as selected by the Investment Manager, provided that if, following the Investment Manager's reasonable endeavours, a suitable charity cannot be found, this 2% portion of the annual fee (net of any applicable taxes) will be applied to the subscription for or acquisition of ordinary shares.

The Investment Management Agreement may be terminated on 12 months' written notice, provided that such notice may not be served before 2 February 2025. The Investment Management Agreement may be terminated with immediate effect on the occurrence of certain events, including insolvency or in the event of a material and continuing breach.

The investment management fees for the year ended 31 December 2024 amounted to £4,374,442 (2023: £4,371,947) of which £0 (2023: £0) was outstanding and included in accounts payable and accrued expenses at the end of the year.

No performance fee is payable to the Investment Manager.

Directors

The Directors have been entitled to aggregate annual remuneration (excluding expenses payable) as follows:

	For the year ended 31 December 2024 £'000	For the year ended 31 December 2023 £'000
Bernard Bulkin OBE	84.5	81.5
Margaret Stephens	71.5	58.5
Richard Horlick	64.5	58.5
Louise Kingham CBE	61.5	58.5
Daniella Carneiro1	61.5	55.9
	343.5	312.9

 

1           Daniella Carneiro joined the Board of Directors on 18 January 2023.

The Directors are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits. There is no amount set aside or accrued by the Company in respect of contingent or deferred compensation payments or any benefits in kind payable to the Directors. During the year ended 31 December 2024, Directors' fees of £343,500 (2023: £313,000) were paid of which none was payable at the year end.

The Directors held the following beneficial interests in the ordinary shares of the Company as at 31 December 2024.

	As at 31 December 2024
	Number of ordinary shares held	% of ordinary shares in issue
Bernard Bulkin OBE	68,101	0.02
Margaret Stephens	56,960	0.01
Richard Horlick	300,000	0.07
Louise Kingham CBE	26,753	0.01
Daniella Carneiro	-	0.00

Other balances with related parties

The Company entered into intercompany loan agreements with ENRG Holdings, which entered into further intercompany loan agreements with the following subsidiary companies:

•        Victory Hill Flexible Power Ltd £8,310,000 (31 December 2023: £6,060,000)

•        Victory Hill Australia Investments Pty Ltd A$38,171,257 (31 December 2023: A$4,890,000)

•        Victory Hill USA Holdings LLC US$nil (31 December 2023: US$1,021,290.60)

•        Victory Hill Spain Energy Investments, S.L.U €42,454,578 (31 December 2023: €nil)

As at the year-end, the Company held a receivable from VH ENRG UK Holdings Limited of £nil (31 December 2023: £40,366,849.32).

16.     Contingent liabilities and commitments

As at 31 December 2024, the Company had no contingencies or commitments.

17.     Earnings per share

Earnings per share (EPS) is calculated by dividing profit for the period attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue on 1 January 2022 to 31 December 2024. Amounts shown below are both basic and diluted measures as there were no dilutive instruments in issue throughout the current year.

	For the year ended 31 December 2024			For the year ended 31 December 2023
	Revenue	Capital	Total	Revenue	Capital	Total
Earnings (£'000)	15,877	(53,665)	(37,788)	22,822	32,517	55,339
Weighted average number of ordinary shares	405,133,610	405,133,610	405,133,610	421,086,053	421,086,053	421,086,053
EPS (p)	3.92	(13.25)	(9.33)	5.42	7.72	13.14

18.     Net asset value per share

Net asset value per share is calculated by dividing the net assets attributable to ordinary equity holders of the Company by the number of ordinary shares outstanding at the reporting date. Amounts shown below are both basic and diluted measures as there were no dilutive instruments in issue throughout the current year.

	Year ended 31 December 2024	Year ended 31 December 2023
NAV (£'000)	408,507	483,843
Number of ordinary shares	395,803,422	415,471,569
NAV per share (p)	103.21	116.46

19.     Post balance sheet events

On 21 February 2025, the Board of Directors announced an interim dividend of £5,739,150 equivalent to 1.45p per ordinary share with respect to the period 1 October 2024 to 31 December 2024 which will be paid on 27 March 2025.

20.     Controlling parties

There is no ultimate controlling party of the Company.

ALTERNATIVE PERFORMANCE MEASURES (APMS)

Alternative Performance Measures (APMs) are often used to describe the performance of investment companies although they are not specifically defined under IFRS. Calculations for APMs used by the Company are shown below.

In reporting financial information, the Company presents alternative performance measures, "APMs", which are not defined or specified under the requirements of IFRS. The Company believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the Company.

The APMs presented in this report are shown below:

NAV per share

NAV per share is calculated by dividing the Company's NAV by the total number of outstanding shares at year end.

As at 31 December 2024
NAV as at 31 December 2024	408,507,030
Total number of outstanding shares as at 31 December 2024	395,803,422
NAV per share	103.21p

Ongoing charges

A measure expressed as a percentage of average net assets, of the regular, recurring annual costs of running an investment company, calculated in accordance with the AIC methodology.

As at 31 December 2024
Average undiluted NAV (in £'m)	443,928,649
Recurring costs in the year to date	6,543,169
Ongoing charges	1.5%

Premium / (discount) to NAV

The amount, expressed as a percentage, by which the share price is more than the NAV per ordinary share.

As at 31 December 2024
NAV per ordinary share (pence per share)	103.21
Ordinary share price (pence per share)	66.00
Premium / (discount) to NAV as at 31 December 2024	-36.1%

Total return

A measure of performance that includes both income and capital returns. This takes into account capital gains and reinvestment of any dividends paid out by the Company, with reinvestment on ex-dividend date.

As at 31 December 2024		NAV
Opening as at 1 January 2024	a	116.46
Closing as at 31 December 2024	b	103.21
Dividends paid during the period		5.68
Dividend adjustment factor*	c	1.08
Adjusted closing	d = b x c	111.47
Total return for the period (%)	d / a - 1	-4.3%

 

Note*: Dividend adjustment factor assumes reinvestment of dividends in shares of the ENRG on the dividend record date.

As at 31 December 2024		NAV
Opening as at 2 February 2021	a	98.00
Closing as at 31 December 2024	b	103.21
Dividends paid to date since IPO		16.20
Dividend adjustment factor	c	1.19
Adjusted closing	d = b x c	122.66
Total return since IPO (%)	e = d/a - 1	25.2%
Number of years since IPO	f	3.91
Total annualised NAV return since IPO (%)	(1 + e)^(1/f)-1	5.9%

Dividend cover

The dividend cover ratio is calculated by using the Company's distributable profits for the year, divided by the amount of dividends paid during the year ending 31 December 2024.

Cash available for distribution	£29,818,403
Asset level debt service cost	£1,273,067
Fund expenses	£6,545,601
Cash available for distribution	£21,999,735
Dividends paid	£22,927,382
Dividend cover	0.96

Gearing - Company and Portfolio

	Page
Debt (£'k)		26,765,204
Fund NAV (£'k)	147	408,507,030
Leverage		6.55%