## Enabling ## the energy ## transition ### VH GLOBAL SUSTAINABLE ### ENERGY OPPORTUNITIES PLC ### Annual Report and Accounts ### For the year ended 31 December 2023 Annual Report and Accounts 2023 2 | 4 Overview | 122 Financial Statements | | --- | --- | | 4 About GSEO | 123 Independent Auditor’s Report | | 6 Introducing the Investment Manager | 130 Statement of Comprehensive Income | | 7 Highlights | 131 Statement of Financial Position | | 8 Portfolio at a Glance | 132 Statement of Change in Shareholders’ Equity | | 10 Timeline of Key Milestones | 133 Statement of Cash Flows | 134 Notes to the Financial Statements ### 12 Strategic Report 156 Alternative Performance Measures 12 Chair’s Statement ### 158 Additional Information 16 Investment Manager’s Report | 26 GSEO Business Model & Strategy | 159 SFDR – Annex V | | --- | --- | | 32 GSEO Structure & Investment Policy | 168 Glossary | | 36 GSEO Investments | 170 Shareholder Information | | 44 Key Performance Indicators | 172 Notice of Annual General Meeting | | 46 Stakeholder Engagement | 178 Company Information | 49 Principal Risks & Uncertainties 57 Going Concern and Viability Statement ### 58 Sustainability 58 Approach to Sustainability 67 2023 Sustainability Highlights | 68 | 2023 Sustainability Impact & Performance | | --- | --- | | 76 | Community Engagement Case Study | | 78 | Climate Related Financial Disclosures | ### 94 Governance 94 Introduction 95 Meet the Board 96 Directors' Report 102 Corporate Governance Statement 108 Report of the Audit Committee 112 Directors' Remuneration Report 117 Report of the Nomination Committee 120 Management Engagement Committee Report 121 Statement of Directors' Responsibilities 3 Annual Report and Accounts 2023 | Overview ### ABOUT GSEO ## Investment ## company with a ## specialist mandate ## to support the ## global energy ## transition ### VH Global Sustainable Energy Opportunities plc (“GSEO” or the ### “Company”) is an investment company that provides exposure to ### a globally and technologically diversied portfolio of sustainable ### energy infrastructure assets that support the UN Sustainable ### Development Goals (“SDGs”) and are essential for the global ### transition towards net zero. 4 STRATEGIC REPORT SUSTAINABILITY GOVERNANCEOVERVIEW FINANCIAL STATEMENTS ### The Company aims to achieve diversication principally ### by making a range of sustainable energy infrastructure ### investments across (1) a number of distinct geographies ### and (2) a mix of proven technologies, that align with the ### UN SDGs, where the investments are a direct contributor ### to the acceleration of the energy transition towards a net ### zero carbon world. ### The Company’s investments in proven technologies ### may include exposure to power generation (renewable ### and conventional), biomass, transmission, distribution, ### storage and waste-to-energy. These investments are in ### operational, construction or ‘ready-to-build’ assets but ### will not include assets that are in the development phase. ### No investment is made in projects involving the ### extraction of fossil fuels or minerals. ### GSEO is a closed-ended investment company and an ### approved UK investment trust, launched in February ### 2021 by way of listing on the premium segment of the ### London Stock Exchange’s Main Market. GSEO is classied ### as an SFDR Article 9 Fund. ### The Company is overseen by an independent Board of ### non-executive Directors and managed by Victory Hill ### Capital Partners LLP (“Victory Hill”). 5 Annual Report and Accounts 2023 | Overview ### INTRODUCING THE INVESTMENT MANAGER ## Experienced and ## focused leadership ### Victory Hill’s experienced team brings decades of knowledge ### and practice dedicated to energy nance and investment. ### The Investment Manager is 100% owned by its ve ### co-founders, who have focused on shaping the business in ### pursuit of long term value for their clients. With a multitude ### of nationalities and languages spoken within the wider team, ### Victory Hill has a highly skilled and diverse team focused ### on taking the necessary approach to sustainable energy ### investing, with localised insight and understanding. Image from left to right: Eduardo Monteiro (Chief Investment Ocer), Michael Egan (Chief Financial Ocer & Head of Risk Management), Lawrence Bucknell (General Counsel & Chief Compliance Ocer), Navin Chauhan (Chief Commercial Ocer), Richard Lum (Chief Investment Ocer). 6 STRATEGIC REPORT SUSTAINABILITY GOVERNANCEOVERVIEW FINANCIAL STATEMENTS ### HIGHLIGHTS ### Financial (for the full year ended 31 December 2023) Net Asset Value as at NAV per share as at Total leverage of GSEO 31 December 2023 31 December 2023* as a % of NAV as at 31December 2023 ## £483.8m 116.46p ## 1.9% 31 Dec 22: £457.2m 31 Dec 22: 108.20p 31 Dec 22: 3.0% | Dividend per share | Dividend target | Dividend coverage as at | | --- | --- | --- | | declared for FY 2023 | for FY 2024 | 31 December 2023* | | 5.56p | 5.68p | 1.1x | | 31 Dec 22: 5.13p | 31 Dec 22: 5.52p | 31 Dec 22: 1.4x | | Total annualised NAV | Total annualised NAV | % of revenues contracted | | --- | --- | --- | | return since IPO (Feb 2021)* | return for FY 2023* | and ination-linked | | 10.0% | 14.5% | >90% | | 31 Dec 22: 7.8% | 31 Dec 22: 7.6% | 31 Dec 22: >90% | ### Sustainability | 844,434 MWh | 312,750 | | --- | --- | | Clean energy generated | Approximate equivalent UK | | and injected into the grid | homes powered annually by | clean energy 31 Dec 22: 35,117 MWh 31 Dec 22: 9,000 | 122,530t | | 19,332t | | | --- | --- | --- | --- | | Tonnes of carbon dioxide | | Tonnes of sulfur | | | equivalent avoided | | oxides displaced | | | 31 Dec 22: 14,349 | t | 31 Dec 22: 20,613 | t | *Alternative performance measures are dened on pages 156 and 157. 7 Annual Report and Accounts 2023 | Overview ### PORTFOLIO AT A GLANCE ## 26 assets, 5 technologies, ## 4 jurisdictions UK flexible power with carbon capture and reuse assets CASE STUDY P.38 US terminal storage assets CASE STUDY P.36 Brazilian Brazilian solar hydro facility PV assets CASE STUDY P.40 CASE STUDY P.40 Australian solar PV and battery storage assets CASE STUDY P.42 8 STRATEGIC REPORT SUSTAINABILITY GOVERNANCEOVERVIEW FINANCIAL STATEMENTS Portfolio by geography and deployment Portfolio by geography and technology UK flexible power with carbon capture and reuse assets CASE STUDY P.38 US terminal storage assets Portfolio status by deployment and currency CASE STUDY P.36 Cash 5.7% Cash Cash 5.7% 5.7% USA Australian solar 24.9% USA | UK | | | Operational | | --- | --- | --- | --- | | | PV and battery | 24.9% | | | 21.9% | | | 58.0% | Committed, UK storage assets 5.7% not deployed 21.9% 5.7% 20.5% 5.7% 2.9% 24.9% Brazilian | Brazilian solar | | | | | 1.9% | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | CASE STUDY P.42 | 21.9% | | 24.9% | 24.9% | | | | hydro facility | | 15.7% | | | | | | PV assets | | | | 15.7% | | | | | | | | 6.2% | | | 12.2% | CASE STUDY P.40 CASE STUDY P.40 2.9% 4.5% 10.6% | | 7.7% | 6.2% | | | | --- | --- | --- | --- | --- | | | | | 24.7% | 29.9% | | AU | 2.0% | | 32.9% | | 5.1% 10.6% 1.9% 3.2% AU Brazil 10.6% 36.9% Construction 15.8% Brazil 36.9% as at 31 December 2023 US terminal storage assets Solar PV & battery storage 9 Brazilian solar PV assets Deployed USD UK flexible power with CCR assets Delayed BRL Brazilian hydro facility Cash Committed, not deployed AUD Cash GBP Annual Report and Accounts 2023 | Overview ### TIMELINE OF KEY MILESTONES April 2021 Commitment to operational US terminal storage programme ## £ % ## 2021 August 2021 December 2021 Commitment Share placing (£70m) to Australian solar PV | February 2021 | | May 2021 | | | | --- | --- | --- | --- | --- | | | | | with BESS programme | Commitment to expansion | | IPO (£243m) | Commitment to | | | | of US terminal storage Brazilian solar PV programme programme (site 2) September 2021 December 2022 Commitment to UK flexible Acquisition of a 198MW operational power with CCR programme Brazilian hydro facility ## 2022 | | September 2022 | | May 2022 | | --- | --- | --- | --- | | Completion of construction | | Completion of construction | | | of three assets within the | | of six Brazilian solar PV assets | | October 2022 Brazilian solar PV programme 15-year CO 2 offtake agreement Commitment to a second UK flexible ## signed for UK flexible power plant % power with CCR asset February 2023 Agreement to acquire & build three solar PV sites Declaration of interim dividend of 1.38p per in New South Wales, Australia ordinary share with respect to the period June 2022 from 1 October 2022 to 31 December 2022, an increase of over 10% vs. the prior quarter Share placing (£122m) July 2023 ## 2023 Completion of construction October 2023 of the first hybrid solar and storage project in Australia, Mechanical completion of within the Australian solar PV the solar farm component March 2023 with battery storage of the 3 New South Wales Completion of construction of programme sites in Australia one Brazilian solar PV asset £ September 2023 10 Share buyback programme announcement (up to £10m) STRATEGIC REPORT SUSTAINABILITY GOVERNANCEOVERVIEW FINANCIAL STATEMENTS ## % August 2021 December 2021 Commitment Share placing (£70m) to Australian solar PV with BESS programme Commitment to expansion of US terminal storage programme (site 2) April 2021 Commitment to operational US terminal storage programme September 2021 Commitment to UK flexible ## £ power with CCR programme ## 2021 | February 2021 | | May 2021 | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | | | September 2022 | | May 2022 | | IPO (£243m) | Commitment to | | | | | | | | | | Completion of construction | | Completion of construction | | Brazilian solar PV programme of three assets within the of six Brazilian solar PV assets Brazilian solar PV programme Commitment to a second UK flexible ## % power with CCR asset December 2022 Acquisition of a 198MW operational Brazilian hydro facility June 2022 Share placing (£122m) ## 2022 July 2023 Completion of construction October 2022 October 2023 of the first hybrid solar and | | 15-year CO | | 2 offtake agreement | storage project in Australia, | | | Mechanical completion of | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | signed for UK flexible power plant | | | within the Australian solar PV | | | the solar farm component | | | | | | | | with battery storage | | of the 3 New South Wales | | | February 2023 | | Agreement to acquire | | | | | | | | | | | | | | programme | | sites in Australia | & build three solar PV sites Declaration of interim dividend of 1.38p per in New South Wales, Australia £ ordinary share with respect to the period from 1 October 2022 to 31 December 2022, an increase of over 10% vs. the prior quarter September 2023 Share buyback programme announcement (up to £10m) ## 2023 March 2023 Completion of construction of 11 one Brazilian solar PV asset Annual Report and Accounts 2023 | Strategic Report ### CHAIR’S STATEMENT ## “In the midst of all these ## challenges that 2023 has ## brought, the Company's ## unique strengths and ### Bernard Bulkin ### Chair ## market‑enduring features ## enabled its cash ow ## generation to remain robust” ### Bernard Bulkin ### On behalf of the Board, I am pleased to present ### the Company’s Annual Report for the year ended ### 31 December 2023. The year under review has been dened by macroeconomic, regulatory, and political uncertainties. Rising interest rates, persistent ination, and conict in the Middle East and Ukraine shaped the turbulent market backdrop in 2023. However, this challenging market backdrop has reinforced the diversication attributes of GSEO. The Company's portfolio oers investors access to a diversity of technologies and geographies, which provide an inbuilt hedge against overreliance on single energy market declining trends or technology supply chain issues. Furthermore, over 90% of the assets in the portfolio are underpinned by ination -linked, private revenue contracts providing the portfolio with high visibility of returns supporting the progressive dividend for shareholders. In the midst of all these challenges that 2023 has brought, the Company’s unique strengths and market-enduring features enabled its cash ow generation to remain robust, leading to dividends being fully covered. 12 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Financial performance Dividend The Company has achieved robust nancial The Company has a progressive dividend policy, performance throughout the period under review. and is proud to have increased its dividend again, This has been a year of building value in the while remaining fully covered. The Company portfolio. The portfolio is now 58% operational and announced a dividend of 1.42pper share with by early 2025, this current portfolio is expected respect to the period from 1October 2023 to to be fully operational. As additional assets under 31December 2023, an increase of 2.9% vs. the prior construction become operational, GSEO should quarter. This brings the total dividend declared benet from further capital growth and cash ow for the nancial year ending 31December 2023 to generation from investments. 5.56p per share, exceeding the dividend target of The Company’s net asset value (NAV) per share was 5.52pper share. 116.46p as at 31 December 2023, an increase of The Company is targeting a dividend of 5.68p in 7.6% from the previous year. As at 31 December total for 2024, 2.9% higher than the dividend target 2023, the Company has achieved a 10% annualised for FY2023. NAV total return since IPO including dividends, which is in line with the Company’s target total ### Investment activity and portfolio return. ### performance Cash received from the portfolio assets by way of distributions, which includes interest and dividends The Company continues to focus on taking paid to VH GSEO UK Holdings Limited (“GSEO advantage of the energy transition by investing Holdings”), the Company’s holding company, in a diverse range of projects across the energy was £29.3m during the year (2022: £28.8m). The value chain, including energy infrastructure such as Company’s prot before tax for the year was £55.3m renewable energy, transmission and distribution, (2022: £28.2m), resulting in earnings per share and energy storage. of 13.14p (2022: 7.67p per share). The Company During the year under review, the Company’s generated during the period returns of 14.5% of investment activities and updates included: opening NAV when taking into account dividends and capital growth. Australian solar and battery storage As at 31December 2023, the Company remains one programme: of the lowest geared investment trusts in its sector ## with total leverage at 1.9% of NAV. • The completion of the construction of the rst solar and storage hybrid system in Australia, The Board rmly believes the discount to NAV at through the addition of a two hour 4.95MW which GSEO’s shares trade materially undervalues battery energy storage system (“BESS”). the Company. As part of an active capital allocation policy, buybacks represent an attractive investment The commissioning of the solar farm component ## • opportunity and the Board announced a £10m of the three New South Wales sites. Installation buyback on 15 September 2023. The Board works for the co-located BESS have commenced consistently considers the Company’s capital and the sites are expected to be hybridised allocation policy in relation to the discount that within the year. GSEO shares trade on, noting that buybacks are NAV per share accretive at wide discounts. The Brazilian solar PV assets: discount persisted post-period which we believe | is largely due to investor sentiment towards the | • | The completion of the tenth solar site, which | | --- | --- | --- | | sector as a whole following the reversal of low | | brought the total operational capacity of the | | interest rates. As such, post period end, the Board | | Brazilian sites to 27.3MW. | extended the programme by a further £10m to a ## • The construction of three of the remaining six total of £20m as it believes this to be in the best sites is progressing well, with commissioning interest of shareholders whilst also balancing the expected within H12024. Construction of the need to maintain a strong balance sheet. As the remaining three sites will commence upon interest rate environment becomes clearer and completion of the three sites currently under rates start to fall, we expect investor interest to construction. return to the sector, and, specically to GSEO, due to the strong fundamentals and compelling long- Brazilian hydro facility: term investment strategy GSEO oers. ## • The Brazilian facility outperformed expectations in the period. 13 Annual Report and Accounts 2023 | Strategic Report ### CHAIR’S STATEMENT CONTINUED | • | Furthermore, SUDENE (Superintendency for | Committee and a member of the Audit, Nomination | | --- | --- | --- | | | Development of the Northeastern Region) tax | and Remuneration Committees. Richard has had | | | incentives were secured for a further eight years | a long and distinguished career in the investment | | | to 2032. | management industry holding executive roles in | a number of global nancial institutions as well as United Kingdom exible power and carbon being a seasoned board member in the closed-end capture and reuse programme: listed funds sector. ## • The project successfully won the UK’s Capacity ### Sustainability and ESG Market Auction T-4 at a price of £63/kW/year indexed to ination. GSEO qualies as an Article 9 fund under SFDR. Following the issues faced by the project’s As at 31 December 2023, 51.2% of the Company’s ## • incumbent EPC contractor in Q2 2023, the investments were aligned with EU Taxonomy Company hired a new EPC contractor to economic activities. The disclosures related to TCFD, complete construction, and the need to complete SFDR and the EU taxonomy can be found on pages the civil works at the project site resulted in 78 and 159 of this report. a payment of additional premia, leading to The fund is a leader in sustainable investing. It is an overall increase in CAPEX of £16m for the unique in selecting investments on sustainability project. Despite this increase, the Investment criteria which meet target returns, and Manager still expects returns to be in line with diversication both in geography and technology. original expectations, due to rmer expectations Threeyears following the IPO of GSEO, thanks for additional revenue streams of the project. to our shareholders, we are already making a My fellow Board member Margaret and I visited real dierence to communities in Brazil, bringing ## • the site in November 2023, and we were highly cleaner fuel for Mexico, and enhancing grid stability pleased with the progress. All equipment was on in Australia. site and the works were advancing well towards As a stronger focus is put on supply chain the expected commissioning of the integrated transparency and traceability, as well as plant with CCR slated for the summer. transparent reporting, the Investment Manager has sophisticated data infrastructure tools allowing United States terminal storage programme: ecient monitoring of the sustainable impact of The assets continued their strong performance its investments and the ability to report accurately ## • since acquisition in April 2021, through execution on metrics such as carbon emissions avoided, of the buy, expand and optimise strategy. renewable energy generated and life cycleanalysis. ### Shareholder engagement and Outlook ### corporate governance We are witnessing early signs that nancial markets are entering a new phase with ination The Board and the Company constantly aim to cooling and an easing interest rate outlook. These improve the dialogue with shareholders and macroeconomic green shoots, coupled with the steps have been taken to enhance disclosure underlying strengths of the Company, lead the Board and detail of communication, as well as support to look forward to the year ahead with condence. marketability and liquidity of the shares, through active engagement with existing and prospective GSEO is well-positioned to capitalise on these investors. The Board, the Investment Manager and positive developments, with a strong pipeline of the Company’s broker remain available to engage investment opportunities already identied by the with shareholders as appropriate. Investment Manager. The Board and I were delighted to welcome Daniella The Investment Manager is actively pursuing Carneiro to the Board of GSEO in January 2023 as activities to maximise shareholder returns, and an independent non-executive Director, bringing the Board continues to monitor the share price extensive experience advising governments and discount to NAV. companies on how to integrate ESG principles into I and my fellow Directors would like to thank all business practice. shareholders for their continued support. The Board was pleased to announce the appointment of Richard Horlick as the Senior Independent Director Bernard Bulkin with eect from 1 January 2024. Richard joined the Chair Board as a non-executive Director in October 2020, and is the Chair of the Management Engagement 4April 2024 14 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS 15 Annual Report and Accounts 2023 | Strategic Report ### INVESTMENT MANAGER’S REPORT ## “e Victory Hill approach to investing ## relies on the belief that the energy ## transition to net zero is a global ## phenomenon much akin to the industrial ## revolution in its scale, depth and wide ## ranging signicance.” ### Richard Lum ### Market backdrop and outlook The outlook for sustainable energy investment remains very robust with attractive opportunities widely available, despite the challenging macro environment in 2023. Over 2023, we have witnessed a recovery from the pandemic slump in economic activity, and constraints to energy systems caused by the global energy crisis precipitated by the invasion of Ukraine by Russia. The recovery has provided a signicant boost to the ongoing electrication of our energy systems globally, and to investments in clean energy as a key subset of this shift. According to the estimates of the IEA in their World Energy Investment 2023 report, annual clean energy investment is expected to have risen much faster than investment in fossil fuels over the period since 2021. Eduardo Monteiro Richard Lum Co-Chief Investment Ocers 16 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS The IEA estimates that full year investments in the energy sector will account for US$2.8 trillion in 2023, of which more than US$1.7 trillion will be invested in clean energy, including renewable power, nuclear, grids, storage, low carbon fuels, energy efficiency schemes and electrification. Such investments will be bolstered by a range of factors including the introduction of the Inflation Reduction Act in the US and improved economics for clean energy projects. Despite benign conditions for sustainable energy, globally the wider infrastructure sector did get affected by a higher interest rate environment in 2023 which impacted reported NAVs and also added pressure on cash flows available for distribution in investment companies with high leverage in their portfolios. This has seen knock on effects on the investability of some large-scale projects in the clean energy space, particularly those backed by long term government related tariffs and subsidies. Inflationary pressures were indeed a major factor in 2023, however it seems clear that we have now witnessed a topping out of inflation with UK inflation down to 4% in December 2023, falling from its height of 11% in October 2022. Whilst not completely out of the system, it is fair to say that there may be greater optimism that the higher-for-longer mantra may be overstating the medium-term picture. We anticipate this will likely lead to greater investor confidence in the infrastructure space during the course of 2024, with further capital able to be raised for deserving clean energy projects globally. ### The approach The Victory Hill approach to investing relies on the belief that the energy transition to net zero is a global phenomenon much akin to the industrial revolution in its scale, depth and wide-ranging significance. Such a shift creates dislocations in each energy market throughout the world. We term this dislocation a structural demand gap in that energy market, which we aim to fill through our asset investments, consequently achieving a differentiated return and making an impact. During the course of 2023, we witnessed several energy markets in which GSEO is invested demonstrating behaviours which point to structural demand gaps. In Australia, the first of our hybridised solar plus battery storage assets came onstream in Q3 2023, and set about capturing attractive pricing in peak demand hours in the evening in South Australia. At the heart of the Company's strategy is the motivation to provide investors with access to long term infrastructure cash flows underpinned by an array of diversified technologies and geographies. This provides shareholders with embedded downside risk protection, as well as the ability to achieve differentiated returns by targeting structural demand gaps in some of the world's most liberalised energy markets. To enable this, the Company enters into joint-venture agreements with local energy developers or operating partners, each of whom have unique insights into local energy markets as well as proven technical and commercial experience of developing, constructing and operating sustainable energy projects. Furthermore, all operating partners dedicate their professionals, comprising a headcount of over 100 globally, to managing GSEO's projects. GSEO's portfolio was designed to ensure minimal exposure to interest rates through involving no structural debt at fund level, and minimal gearing at the assets themselves. Currently, aggregate gearing of 1.9% at fund level (via 7.5% gearing at our US terminal storage asset) has ensured that the higher interest rate environmental has had no discernible impact on our portfolio performance. Furthermore, as all of the revenue contracts of our assets are inflation-linked, the higher inflationary environment has flowed into higher revenues for our assets, ensuring that our portfolio as a whole has not been negatively impacted. As a result of this unique approach, the higher inflation environment was positive for the portfolio as all the long-term contracted cash flows in the portfolio are linked to local inflation, with no caps or collars. Such long-term revenues and the strong cash flow generation underpin the GSEO portfolio. GSEO's transparent valuation methodology relies on inputs extracted from independent and publicly available sources, such as the risk-free rate, inflation assumptions and country risk premia, which ultimately result in accurately reflecting the current market environment. The Company has also not changed its asset life assumptions in its valuation of assets since IPO. 17 Annual Report and Accounts 2023 | Strategic Report ### INVESTMENT MANAGER’S REPORT CONTINUED ### The treasury function was also eectively managed Outlook with interest on deposits helping mitigate any cash Moving forward into 2024, our outlook is shaped drag during the period. by the consequential abatement of the higher inationary conditions of the last 18 months and ### Performance summary greater policy support for clean energy investment, | Active asset management, robust operational | combined with the continuing occurrence of | | --- | --- | | performance and the persistent supply-demand | structural gaps we have already identied in | | imbalance in some of the key underlying | liberalised energy markets as they undertake the | | geographies were key themes throughout the year | transition. In the rst few months of 2024, we have | | which drove the upward NAV revision in 2023. | already witnessed greater openness in the cross- | border trade between the US and Mexico, driven by 2023 has been a year of building value in the the upcoming elections in both countries, which has portfolio. Construction challenges in Brazilian solar had a positive eect on volumes received by our US PV assets and the UK exible power plant have terminal storage assets. We expect greater impetus been overcome and despite some higher costs to be given to opportunities for our midstream suered, future returns are expected to be in line presence in the US with the Ination Reduction Act’s with the original target. This is a result of careful support for low-carbon fuels such as biofuels and investment processes and built-in contingencies, for sustainable aviation fuels, each of which requires example, performance bonds and a well-resourced the buildout and repurposing of fuels storage and and experienced team with strong in -house legal transportation infrastructure. and nancial capability. The portfolio is now 58% operational and by early 2025, this current vintage In the UK, the 2023 winter has demonstrated the of investments will be fully operational. continuing requirement for exible forms of power generation, as often renewable power supply at In Brazil the Company’s operational hydro and peak hours is hampered by lower wind and solar distributed solar sites captured a segment in the yields, resulting in the continuing need for the market requiring further investment to ensure system operator to call on conventional sources of that Brazil’s need for exible power and upgraded power such as gas, and indeed coal. We foresee this remote generation is best served. In the UK, we are trend continuing well into other seasons in 2024, making headway in the construction of our rst and being present for our UK investment to harness exible gas-red power plant with carbon capture as it comes onstream later in the year. and reuse, ensuring that the demands for exible | power in the UK system, as well as the structural | | We rmly believe the opportunity to create value | | --- | --- | --- | | short supply for puried food grade CO | 2 , can be | and impact through investments in sustainable | | met. | | energy infrastructure globally has not diminished | over time. Indeed the Company’s pipeline of new opportunities remains robust and is only constrained by its ability to raise further capital to deploy into new investment programmes. 18 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### INVESTMENT UPDATES ## Investment updates | Brazilian solar PV assets: | | Brazilian hydro facility: | | US terminal storage assets: | | | --- | --- | --- | --- | --- | --- | | • | During the period under review, | • | During the period, the operating | • | The Company continued to perform | | | the construction of the tenth site | | partner, Paraty, successfully | | operational optimisation initiatives | | | was completed bringing the total | | completed the full transition of | | during the period such as reducing | | | operational capacity to 27.3MW. | | operations from the vendor, EDP, at | | overtime expenses and enhancing | | | These ten sites supply energy | | a lower cost than anticipated and in a | | operational software and equipment | | | to creditworthy commercial and | | shorter than expected time frame. | | to automate the terminals’ | | | industrial energy users and large | | | | operations: | | | | • | The Company successfully | | | multinational corporations with ## implemented value creation eorts – Temporary workers were operations in Brazil. The average and was notably able to secure tax contracted as permanent sta, length of these contracts is 20 years incentives for a further eight years, as resulting in lower overtime worked and linked to local ination. well as optimise operating costs. and better labour conditions. ## • One of the project’s EPC contractors ## • The Investment Manager continues to – New oces were added to one of faced nancial diculties during assess the market to implement our the sites to enhance management, the period, which required the value-creating commercial strategy training operations, and safety Company to halt delivery of two of for the uncontracted volumes from oversight. the sites that were initially intended 2027 onwards. The volatility of the ## to be relocated. As a result of this, a • The programme’s operating partner, PPA market in Brazil oers windows provision had been recognised for Motus, has initiated the process to of opportunity to secure attractive these assets for £4.5m. obtain ISO 45001 health and safety terms in the long-run. Victory Hill management system certication ## • Together with the operating partner, is seeing positive signs with recent as well as ISO 14001 environmental Victory Hill acted decisively in nding improvements in PPA prices that management certication on its a replacement EPC contractor to have been low due to unusual high operations, leading to safer and nalise the six remaining projects levels of rain in the Southeast region improved operational practices. in an orderly manner – three of of the country. which are expected to be completed ## • On the sustainability front, in H1 2024, bringing the portfolio community engagement initiatives total installed capacity to 40.5MW. were conducted in preparation to Construction for the last three sites obtain the International Hydropower will commence upon completion Association Sustainability Standard of the three sites that are currently certication in 2024. Events such as under construction. sh monitoring and a transportation study were conducted, awareness ## • The programme remains on track to workshops as well as environmental deliver returns above the Company’s education events were held for the target total NAV return of 10% once local community and employees. fully completed. The ISO 45001 health and safety management system certication, as well as the ISO 14001 environmental management certication and ISO 9001 quality management system certication, were successfully renewed. 19 Annual Report and Accounts 2023 | Strategic Report ### INVESTMENT MANAGER’S REPORT CONTINUED | Australian solar PV with battery storage assets: | | UK exible power with CCR asset: | | | --- | --- | --- | --- | | • | The Australian programme is comprised of ve | • | During the period under review, construction | | | sites. In Q3 2023, the Company delivered on time | | continued on this asset with all equipment | | | and on budget one of the rst hybrid solar and | | already on site. Key project partners include Rolls | | | battery energy storage systems (“BESS”) in South | | Royce, Mitsubishi Turboden, Climeon, Asco, Axpo | | | Australia, by adding a two hour 4.95MW BESS. | | and Buse Group. | | • | Following the completion of this project, the | • | As part of our commercialisation strategy | | | solar and storage hybrid system captured | | of securing long-term contracted cash ows | | | attractive power prices in the intraday market. | | pre-completion, the project successfully won the | | | In November 2023, the average captured price | | UK’s Capacity Market Auction T-4 at a price of | | | for BESS was over A$200/MWh, which is 4 times | | £63/kW/year indexed to ination. | higher than the average captured prices for solar ## • As previously highlighted, the incumbent EPC during the same period. contractor faced nancial diculties last year ## • The programme was further expanded with as a result of the challenging macroeconomic three new assets in New South Wales (NSW). conditions for the construction industry, notably The solar farm component of these three sites high ination, high interest rates and supply completed commissioning post-period and chain disruptions. Following such issues, Victory became operational. Hill alongside the operating partner acted quickly to identify and hire a new EPC contractor to ## • Installation works for the co-located BESS, on complete construction. The situation with the the three new assets in NSW, commenced incumbent EPC contractor has also served as a post-period and the sites are expected to be good test of Victory Hill’s joint-venture model, hybridised within the next 12 months. It is with local operating partners on-the-ground expected that the assets will be able to derive able to proactively identify potential issues and further value from the structural supply-demand mitigate further project delays. gap Australia is facing as it transitions to a ## cleaner energy system. • The replacement contractor needed to complete the civil works at the project site resulting in a payment of additional premia and led to an overall increase in CAPEX of £16m for the project. However, the Investment Manager still expects returns to be in line with original expectations despite this increase, due to rmer expectations for additional revenue streams of the project. 20 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ## Portfolio operational and nancial performance The performance of the portfolio has largely been The operational performance of the two operational dened by its operating assets in the period. Australian sites has been impacted due to the implementation of the BESS on the Mobilong site The acquisition of the Brazilian hydro facility was and substation works on the Dunblane site which completed in December 2022. The period ended resulted in a network outage for 1month. 31 December 2023 has seen the rst full year The US terminal storage expansion was completed of operations under the Company’s ownership. in December 2022. The period ending 31December With the successful transition of the asset by the 2023 saw the rst full year of operation at operating partner, nancial performance in the the expanded site. These assets benet from period has exceeded expectations. ination -linked availability contracts and are The rst full year of operations of the Brazilian solar situated in a key aggregation hub in South Texas for PV assets is reected in an increased generation in Mexico-US cross-border product movements. the period. Energy production has however come in behind expectation as the assets ramp up to full production. Summary of operational & nancial performance ### 31December 2023 | | | | | | | Australian solar | | | UK exible | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Brazilian | | Brazilian solar PV | | | | US terminal | | | Programme: | | | | | | PV with battery | | | power with | | | hydro facility | | | | assets | | storage assets | | | | | | | | | | storage assets | | | CCR assets | | Number of | | | 1 10 2 2 0 | | | | | | | operational assets Number of assets 0 6 3 0 1 under construction Production/throughput 789,654 MWh 41,602 MWh 19,227 MWh 12,831,553 bbls N/A Revenues 28.59 2.07 1.46 18.64 N/A (GBPm) Average revenue 36.20 49.65 75.79 1.45 N/A per production unit (expressed in GBP) Note: The production, revenues, and average revenue per production unit reect assets under operation as at 31 December 2023 only. The FX rate used for revenues is as at 31 December 2023. The energy production gure 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 production gure for the Brazilian hydro facility represents the total gross generation. Portfolio outlook to achieve dierentiated returns by targeting structural demand gaps in some of the world's Based on the underlying free cash ow generation most liberalised energy markets. of the portfolio programmes, dividend coverage is expected to be 1.1 to 1.2 times in 2024 rising and Revenue contracts in the portfolio have been strengthening further in subsequent years. entered into with long tenors, often over 15 years, with creditworthy otakers. As demonstrated in At the heart of the Company's strategy is the the graph below, contracted revenues account for motivation to provide investors with access to long over 90% of the total revenues in the portfolio, term infrastructure cashows underpinned by an with uncontracted revenues relating mostly to the array of diversied technologies and geographies. Australian solar and battery storage programme, This provides shareholders with embedded where we seek to benet from market dynamics downside risk protection, as well as the ability related to a disorderly market transition to net zero. 21 Annual Report and Accounts 2023 | Strategic Report # INVESTMENT MANAGER'S REPORT CONTINUED Expected revenue analysis ![img-0.jpeg](img-0.jpeg) ![img-1.jpeg](img-1.jpeg) 22 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Highly contracted portfolio with credit-worthy counterparties ### Programme Key Otaker(s) PPA Term Asset Life Brazilian 20 years 25 years solar PV assets More than 30 PPAs with Brazilian blue-chip utilities counterparties up to 15 years 25 years hydro facility – e.g. EDP US terminal 3 years rolling 30 years storage assets UK exible power 15 years 25 years with CCR assets Targeting contracted revenues Australian solar of up to 50% – the remainder is Local Australian utilities – | PV with battery | | | intentionally left as merchant | 25 years | | --- | --- | --- | --- | --- | | | e.g. | Diamond Energy | | | | storage assets | | | to capture the peak margin | | opportunity in Australia Note: Asset Lives: since acquisition/commercial operational date (“COD”) PMI is a 100% subsidiary of PEMEX 23 Annual Report and Accounts 2023 | Strategic Report # INVESTMENT MANAGER'S REPORT CONTINUED # Net Asset Value NAV Bridge for the year ended 31 December 2023 (£'m) ![img-2.jpeg](img-2.jpeg) The NAV of the Company increased from £457.2m at 31 December 2022 to £483.8m at 31 December 2023. The total NAV return including reinvestment of dividends in the financial year is 14.5%. Since IPO, the total NAV return at 31 December 2023 is 10.0%. The key NAV drivers for the period under review were: - A net increase in the fair value of investments and distributions from investments of £64.3m. - Discount rates dropping during the period under review, driven by lower risk-free rates, inclusion outlook, and lower Brazil country risk premium. # Key sensitivities The below 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 2023 are 6.9% in the US, 7.7% in Australia, 9.5% for the Brazilian hydro facility and 9.7% for the Brazilian solar PV assets. A 1.5% increase (decrease) in discount rates across the portfolio decreases (increases) NAV by 10.42p (8.34p). 24 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS # NAV per share sensitivity ![img-3.jpeg](img-3.jpeg) # Inflation The sensitivity assumes a 1% increase or decrease in long-term inflation relative to the base case of 1.6% for the US assets, 2.4% for the Australian assets and 3.0% for the Brazilian assets for each year of asset life. A 1.0% increase (decrease) in inflation rates across the portfolio increases (decreases) NAV by 7.31p (6.25p). # Operating expense 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 1.95p (1.94p). # 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 7.15p (8.74p). # 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 and Brazilian hydro facility. A 1 year increase (decrease) in asset lives across the portfolio increases (decreases) NAV by 1.18p (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. 25 Annual Report and Accounts 2023 | Strategic Report ### GSEO BUSINESS MODEL & STRATEGY ## Business model at ## a glance ## 1 2 ### A unique investment model… …that supports the energy ### transition from all angles… ### — We don’t aim to tie investments ### to sustainability; rather we start ### — Geography: The energy transition ### with sustainability and look for ### is a global phenomenon that ### investments ### needs to be tackled globally. ### GSEO invests across jurisdictions ### — Our investments always meet ### around the world, creating a highly ### a structural demand gap in the ### diversied portfolio ### local energy markets ### — Technology: GSEO’s investments ### — We create value for shareholders ### go beyond just core renewables ### and a clear impact for the ### and target a diverse range of ### environment and society by ### proven sustainable energy ### targeting assets that can be ### technologies in order to play ### optimised and/or expanded ### a part in the global transition ### towards net zero ### — Investment Stage: To accelerate ### the transition, the Company ### focuses on both the construction ### of new assets as well as the ### acquisition of operational assets 26 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ## 3 4 | …creating a clear | | …while generating | | | --- | --- | --- | --- | | environmental and | | sustainable and attractive | | | social impact… | | nancial returns | | | | — The UN SDGs are the blueprint | | — NAV target return of 10% | | | for driving GSEO’s sustainability- | | unlevered and net of the | | | focused investment strategy, and | | Company’s costs and expenses | ### creating a positive environmental ### — Consistent annual dividend ### and social impact as one of the ### growth since IPO, supported ### core investment decision criteria ### by a progressive dividend policy | — Auditable monitoring framework | which aims at increasing dividends | | --- | --- | | to assess such impact | each year | | — GSEO is classied as an Article 9 | — Portfolio revenues oer | | fund under the EU Sustainable | predictability, with more than | | Finance Disclosure Regulation | 90% of revenues contracted | ### (“SFDR”) ### — Assets in the portfolio have ### a signicantly high degree of ### ination linkage, protecting ### real returns 27 Annual Report and Accounts 2023 | Strategic Report ### GSEO BUSINESS MODEL & STRATEGY CONTINUED ## GSEO investment model ## Opportunity-specic UN SDGs ## Investment pathways 1 2 | | | | 3 | | £ | | --- | --- | --- | --- | --- | --- | | Climate | Energy | Energy eciency Market | | | | | change | access | | | liberalisation | | ## Investment decision gates | | | Gate 1 | | Gate 2 | | Gate 3 | | --- | --- | --- | --- | --- | --- | --- | | | Assessment of opportunity | | Assessment of whether there is any | | Assessment of the | | | and relevance to the Company’s | | | material breach of non-core UN SDGs | | investment itself | | investment pathways ## ree core criteria | | 1 | | 2 | | | 3 | | --- | --- | --- | --- | --- | --- | --- | | Meet a structural | | Ability to optimise and/ | | Positive environmental | | | | demand gap | | or expand the asset | | | and social impact | | OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ## • Deep expertise of energy ### Meet a structural market dynamics ## demand gap • Ability to relativise markets globally and regionally ## • Developers with specic insight into demand gaps ### THREE CORE PRINCIPLES ### FOR INVESTMENT ### DECISIONS ### Positive environmental Ability to optimise ### and social impact and/or expand the asset ## • In-house sustainability expertise • Long term asset commercialisation strategy ## • Independent sustainability ## due diligence • Value creation adapting to changing market environment ## • Auditable monitoring framework ## to assess impact • Programmatic approach with developers 29 Annual Report and Accounts 2023 | Strategic Report ### GSEO BUSINESS MODEL & STRATEGY CONTINUED $ ### + ### Investors Operating partners Benet from both income Opportunity to bring and capital growth additional projects to an existing programme ## Benets ### Communities Environment Immediate social benets Immediate positive within the communities where environmental impact, assets are located – such helping to accelerate the as job creation energy transition VH’s strategy and business activities result in: ## 10% p.a. ## 5.56p per share Target total NAV return 2023 dividend, p.a. unlevered and net of costs progressive for and expenses, for GSEO GSEO shareholders shareholders ## 844,434 MWh ## 122,530 tonnes Clean energy generated and CO 2 e avoided equivalent to injected into the grid equivalent removing c.63,000 average sized to c.312,750 UK homes powered UK cars from the road per year annually approximately 30 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ## GSEO ## joint-venture model ### Joint-venture model which levers multiple local operating partners ### with unique insights in local energy markets ### Operating partners 5 established operating partners Local presence >100 people dedicated to operating GSEO’s assets ### Addressed global energy markets ### Key advantages ## • Long-term alignment of incentives with the • Ecient deployment over a tangible pipeline Operating Partner reducing cash drag ## • Partnership with highly skilled developers with • No upfront development premium but conversion specic insights into an energy market and institutional of development costs in a stake in the JV execution abilities ## • Reduced operational risk with dedicated ## • Access to pipeline of projects developed by those partners on-the-ground attention to the assets enabling a thorough value creation process 31 Annual Report and Accounts 2023 | Strategic Report ### GSEO STRUCTURE & INVESTMENT POLICY The Company seeks to achieve its investment in each case, either already operating, in objective by making sustainable energy construction or ready-to-build (‘‘Sustainable Energy infrastructure investments across the EU and OECD Infrastructure Investments’’). group of nations predominantly, including but not The Company looks to achieve NAV growth by limited to OECD Key Partner countries and OECD investing in higher yielding Sustainable Energy Accession countries. The Company’s investments in Infrastructure Investments that are operational, in global sustainable energy infrastructure must be: construction or “ready-to-build” but does not invest i. investments that support the pursuit and in assets that are under development (that is assets attainment of the United Nations Sustainable that do not have in place required grid access Development Goals (the “SDGs”) where energy rights, land consents, planning and regulatory and energy infrastructure investments are a consents and commercial arrangements). direct contributor to the acceleration of the The Company acquires a mix of controlling and energy transition towards a net zero carbon non-controlling interests in Sustainable Energy world; and Infrastructure Investments that are held within SPEs ii. investments that can be categorised into one which the Company invests through equity and/or | or more of the four investment pathways that | shareholder loan instruments. In certain instances, | | --- | --- | | guide the Company’s investment strategy. | the SPE may hold one or more Sustainable Energy | | These investment pathways are (1) Addressing | Infrastructure Investments of a similar type. | Climate Change, (2) Energy Access, (3) Energy The Company invests in SPEs structured as joint Eciency, and (4) Market Liberalisation, venture investments (JVs) or co-investments, and must also fall into one or a combination of the including through minority stakes, where this following categories: approach is the only viable approach. Where the Company participates in a JV or a co-investment, i. power, heat and green gas producing assets it seeks to secure its rights through obtaining reliant on, but not limited to, wind, solar, protective provisions in shareholders’ agreements, biomass, natural gas and hydropower joint venture agreements, co-investment technologies; agreements or other transactional documents, as ii. production and renement of fuels derived well as board representation for the Investment from biomass sources; Manager, and with the aim of trying to ensure that the investment is managed in a manner that is iii. energy storage infrastructure such as consistent with the Investment Policy. containment and non-processing facilities for liquid and gas fuel sources, power storage Diversication utilising battery or gravity-based technologies; The Company aims to achieve diversication iv. energy transportation infrastructure principally by making a range of Sustainable Energy such as pipelines, interconnectors and Infrastructure Investments across a number micro-distribution grids; of distinct geographies and a mix of proven v. distributed energy sources (heat, power, technologies that facilitate the achievement of the gas and steam) which are produced close to SDGs. where it will be used, rather than at a large centralised plant elsewhere, delivered through Investment restrictions a centralised grid infrastructure; and/or The Company can invest (calculated at the time of vi. equipment that is installed at the premises investment) up to: or on site, directly connected to the premises ## • 25% of Gross Asset Value in any one Sustainable including, but not limited to, CHP units, CCHP Energy Infrastructure Investment; plant schemes, HVAC units, lighting equipment, ## biomass boilers and steam raising boilers • 40% of Gross Asset Value in a single technology; (including intermediate pressure (IP) steam ## • 35% of Gross Asset Value in assets that are in processors), construction or “ready-to-build”; ## • 40% of Gross Asset Value in assets that are located in any one country; 32 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ## • 30% of Gross Asset Value in assets that are Borrowing policy owned or operated by a single developer; The Company may make use of long-term limited | • | 10% of Gross Asset Value in assets that are | recourse debt for Sustainable Energy Infrastructure | | --- | --- | --- | | | located in countries that are not members of the | Investments to provide leverage for those specic | | | EU, OECD, OECD Key Partner countries or OECD | investments. Such long-term limited recourse | | | Accession countries; and | debt will not, in aggregate (calculated at the time | of entering into or acquiring any new long-term ## • 10% of Gross Asset Value in other closed-ended limited recourse debt), exceed 60% of the prevailing investment funds which are listed on the Ocial Gross Asset Value. List. In addition, the Company may make use of short- No investments are made in extraction projects for term debt, such as a revolving credit facility, to fossil fuel or minerals. assist with the acquisition of suitable opportunities Non-compliance resulting from changes in the price as and when they become available. Such short- or value of investments following investment will term debt will be subject to a separate gearing limit not be considered as a breach of the investment so as not to exceed 30% of the Gross Asset Value restrictions. at the time of entering into (or acquiring) any such short-term debt. The Company holds its investments through one or more SPEs and the investment restrictions are In circumstances where these aforementioned applied on a look-through basis. limits are exceeded as a result of gearing of one or more Sustainable Energy Infrastructure In the event of any breach of the investment Investments in which the Company has a non- restrictions applicable to the Company, controlling interest, the borrowing restrictions shareholders will be informed of the remedial will not be deemed to be breached. However, in actions to be taken by the Company through an such circumstances, the matter will be brought to RNS announcement. the attention of the Board who will determine the appropriate course of action. Cash management Whilst it is the intention of the Company to be fully Use of derivatives or near fully invested in normal market conditions, The Company may enter into hedging transactions uninvested cash or surplus capital or assets may be for the purposes of ecient portfolio management, invested on a temporary basis in: which may include (as relevant) short-term ## • cash or cash equivalents, namely money currency hedging (as described in the last published market funds (as dened in the ‘Guidelines prospectus of the Company), interest rate hedging on a Common Denition of European Money and power price hedging. The Company does Market Funds’ published by the Committee not intend to use hedging or derivatives for of European Securities Regulators (CESR) and investment purposes but may from time to time adopted by the European Securities and Markets use risk management instruments such as forward Authority (ESMA)) and other money market contracts and swaps (collectively ‘‘Derivatives’’) to instruments (including certicates of deposit, protect the Company from any uctuations in the oating rate notes and xed rate commercial relative value of currencies against Pound Sterling, paper of banks or other counterparties having a as well as to hedge against interest rates and power “single A” or higher credit rating as determined prices. The Derivatives must be traded by private by any internationally recognised rating agency agreements entered into with nancial institutions selected by the Board which, may or may not be or reputable entities specialising in this type of registered in the EU); and transaction and will be limited to maturities no longer than 12 months. The Company will target ## • any “government and public securities” as investments that provide sucient asset-level dened for the purposes of the FCA Rules, returns to compensate for longer term uctuations provided that not more than 20% of the Gross Asset in exchange rates. Furthermore, asset level returns Value, calculated at the time of investment, may where possible will be linked to local ination rates. be so invested, following the deployment of the Company's net issue proceeds. 33 Annual Report and Accounts 2023 | Strategic Report # GSEO STRUCTURE & INVESTMENT POLICY CONTINUED 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 2023 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 58 to 66. ## Diversity As at 31 December 2023, 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 118 and 119 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. 34 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS 35 Annual Report and Accounts 2023 | Strategic Report ### GSEO INVESTMENTS ## e case for sustainable ## liquid storage assets in ## the US 36 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Programme overview In conversation with Richard Lum, ### Victory Hill Managing Partner and co-CIO In April 2021, GSEO completed the acquisition of two operating liquid storage terminals with Q: Why did you decide to invest in these assets and how do they a total combined capacity of 525,000 barrels in contribute to support the energy transition? the Port of Brownsville on the Texas gulf coast, for a total purchase price of US$63m. The sites Fundamentally, this investment seeks to make a positive sustainability have a useful life of at least 30 years, and the impact on the Mexican fuels value chain. We decided to invest in the operating partner is Motus Energy LLC, which US terminals as their location provides a fuel aggregation point that combines the team that built and operated facilitates the transfer of high sulfur oil currently produced at a surplus the assets for the previous owner and an in the Mexican fuel market. As a result of the terminals’ proximity, established cross-border fuel exporter. Since northbound ows are destined for more abundant and technologically acquisition, the capacity of the terminal has advanced rening capacity in the United States, which can turn the been expanded to 895,000 barrels. “dirty” fuels from Mexican reneries into cleaner products. It is important to remember that Mexico still burns high sulfur content ### Operating partner overview fuels in its transportation sector and for its energy generation industry, resulting in the creation of signicant Particulate Matter (PM) 2.5 air Motus Energy LLC is a US midstream specialist pollution and causing respiratory and health problems, particularly company formed by a team which combines in conurbation areas such as Mexico City. The US terminal assets aim the team that built and operated the VH liquid to reduce the environmental and health threats that high sulfur fuels storage assets for the previous owner that have on human health by reducing the availability of high sulfur fuel oil have 25 years’ average experience in investing, for domestic consumption in Mexico and displacing it with cleaner, less constructing and operating midstream pollutive products, reducing PM2.5, SO2, and NO2 emissions. infrastructure assets globally. Motus support the energy transition by participating in the Q: Since acquisition, what have you done to create additional decarbonising process of high sulfur fuels by value? facilitating its storage to be then processed into We have expanded the storage capacity by 370,000 bbls, increased lighter and cleaner fuels by modern reneries the volume throughput by adding capabilities to oer 24/7 operations, in the US and by developing new midstream extended existing tenants’ contracts at higher rates, optimised ancillary infrastructure with the intention to store and services revenues, reduced costs by modernising the operations’ distribute transition fuels such as renewable hardware and software, improved internal controls and procedures, diesel and sustainable aviation fuel. and added asset-based leverage, among other initiatives. Q: What are the expected returns for this programme and what is this number conditional upon achieving? Based on the current contractual arrangements, we expect the returns from this project to remain in excess of GSEO’s target total NAV return. We expect to see additional uplift by culminating the terminals expansion and further optimising the commercial terms and operations of the terminals. Q: What is the future of this asset? First we would like to use the available land within the terminals to add more storage capacity. We would also like to improve the operation capabilities to speed up the loading and unloading operations and increase the volume throughput. In the longer term, the tanks we hold can be retrotted to store greener fuels such as renewable diesel, and sustainable aviation fuel (SAF). Q: Are investors exposed to hydrocarbons by having this asset in the portfolio? No, there is no commodity exposure. The terminal benets from availability-based otake agreements. 37 Annual Report and Accounts 2023 | Strategic Report ### GSEO INVESTMENTS CONTINUED ## e case for exible power ## with carbon capture and ## reuse (CCR) in the UK 38 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Programme overview In conversation with Richard Lum, ### Victory Hill Managing Partner and co-CIO In the UK, we have chosen to contribute to the energy transition by supplying reliable baseload Q: Could you explain how this program contributes to the energy power without adding to carbon emissions. transition in the UK and why such technologies instead of wind or In 2021, GSEO completed its acquisition of a solar? 10MW exible power project under construction in Nottinghamshire, uniquely combined with This exible power and carbon capture and re-use programme carbon capture and reuse (“CCR”) technology. allows us to supply reliable exible power into the grid, solving for Commissioning of the integrated plant with intermittency issues that come with renewable power generation (such CCR is expected over the summer. Since as solar and wind) in a net zero manner. acquisition, a 15-year power otake and gas Q: What is so unique about this project? supply agreement was signed with Axpo and a rst batch of sparkspread hedges were secured, The project is uniquely positioned to solve for two issues facing the locking in healthy margins for the project. decarbonisation of industry in the UK. Firstly, the gas red generators In addition, a 15-year otake agreement for are able to provide exible power into the grid to help rm the grid food-grade CO 2 was also signed on attractive in a net zero way, as its CO 2 emissions are captured and repurposed. terms with an industrial gas specialist group. The provision of exible power services is important in the UK given Additional revenues can be sourced from grid the success of renewable power penetration in the energy mix from ancillary services such as balancing mechanism the rollout of wind and solar projects. This has resulted in the fact that and capacity market; and additional margin can intermittency and grid frequency stabilisation are becoming much be captured via private wire to local industrial more of an issue for the system operator. When the wind doesn’t blow users. This programme is being funded without or the sun doesn’t shine, the system’s supply and demand dynamics public subsidy or government support. fall out of kilter, which may result in price spikes and the potential for curtailed supply and indeed trips on the system. ### Operating partner overview Secondly, the captured CO 2 is scrubbed into puried food grade CO 2 , which can then be commercialised via sales to the industrial gases Landmark Power Holdings (LMPH) was market, where CO 2 is seen as a precious industrial commodity, used established in 2019 by UK power industry in the food and beverage manufacturing chain. Currently, there is a veterans with the purpose to help to structural shortage of food grade CO 2 produced locally in the UK, as we build a circular economy, by applying new have seen the closure of major producers of ammonia in the country. methodologies to proven technologies in energy The project therefore provides a replacement supply, and one that is production. LMPH supports the transition produced with a much smaller emissions footprint than the traditional to net zero by supplying dispatchable, low manner of production. carbon energy that enables more renewable energy production while contributing to a Q: How could this asset be repurposed in the future if needed? circular economy, by eliminating ineciencies The project utilises gas red power generation units, which can in production, ensuring that every input is transition to utilising net zero biomethane fuel sources and potentially used to its maximum potential and treating hydrogen fuel sources in the future. all production waste as a protable resource. LMPH develops, builds and operates decarbonised exible power plants, that helps bridge the gap between conventional and greener energy solutions by providing essential support for increasing levels of renewable power. 39 Annual Report and Accounts 2023 | Strategic Report ### GSEO INVESTMENTS CONTINUED ## e case for the Brazilian ## renewable energy market – ## hydropower and distributed ## generation (DG) solar plants 40 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Programme overview In conversation with Eduardo Monteiro, ### Victory Hill Managing Partner and co-CIO I –A Brazilian hydro facility In 2022, GSEO acquired a 198MW run-of-river hydropower plant from EDP Group. The facility Q: What are the attractions of investing in the Brazilian renewable is located in the state of Espírito Santo, has been energy market? operational since 1974 and went through a Brazil is a growing economy that needs energy to enable the country to major repowering in 2011. The plant ownership full its potential. Previous Brazilian administrations have successfully was awarded under a concession framework implemented a robust regulatory framework that attracts private with four years remaining from previous cycle investors who continue to fund the expansion of Brazil’s power, which and renewal for another 20 years thereafter. is crucial in enabling the country’s economic growth. With a unique Since it was rst commissioned, the hydro characteristic of having a very wide and diverse hydropower network, facility has been maintained and managed to Brazil stands out as a market with great potential for renewable energy. a very high standard. The energy regulator in Hydropower has natural storage properties enabling intermittent Brazil ranks over 140 hydro plants across the sources such as renewable energy to be eciently added to the grid. country to assess their quality of operation and has recently ranked this facility as a top Q: What are the risks in Brazil and how do you mitigate them? 10 hydro plant in Brazil. This facility benets As an emerging market, Brazil is more exposed to volatile economic from a portfolio of over 30 long-term ination- cycles, with potential for high ination and political instability. As linked PPAs with creditworthy counterparts in foreign investors, we need to also consider the volatility of the the regulated utilities market. It also has the Brazilian currency versus the GBP. We believe that these risks are potential to commercialise power with large largely mitigated by: i) our focus on energy investments, as energy energy consumers in the self-consumption consumption tends to be robust regardless of cycles, ii) ination segment of the energy market. linkage on all otake contracts providing protection against high II – 16 Brazilian solar PV assets ination and also against depreciation of the Brazilian currency, and iii) Brazil’s long track record as a recognised democracy with strong In 2021, GSEO committed $63m to fund the independent institutions. construction of remote distributed solar generation projects across 10 Brazilian states. Q: How do you expect the share of Brazil in your total portfolio to The investments stem from long-term PPAs evolve? with investment grade corporates such as We are satised with the current share and we will seek to maintain or a large multinational telecommunication reduce our exposure to Brazil as we continue to pursue opportunities company. On average, these contracts have in other markets. a maturity over 20 years, are ination-linked, and are not dependent on any government Q: What makes the Brazilian hydro market so unique? subsidies. Three further sites are expected to Brazil has one of the world’s largest hydrological resources and become operational by H1 2024, bringing the hydropower generation continues to have systemic importance total number of operational sites to 13. The in the country’s energy mix. Hydropower plants provide a reliable construction of the remaining three sites are and continuous source of clean energy for a power system with a expected to be completed by the end of 2024. continuously growing demand and rapid penetration of intermittent renewables. The hydropower sector in Brazil is underpinned by a ### Operating partners' overview unique regulatory framework which seeks to mitigate hydrological Paraty Energia, the operating partner for the resource risk for individual hydropower generators. The framework Brazilian hydro facility, is an energy developer pools hydrological resources into a nationwide consortium of eligible specialised in the Brazilian power market, hydropower generators of systemic importance. Members of the combining years of project nance experience hydropower consortium benet from the output of the whole pool of with strong capabilities in operations, energy eligible hydropower generation irrespective of an individual member's trading and regulatory advisory services. They actual production. Therefore, the idiosyncratic risk of a single hydro have a team of engineers, and traders that plant is mitigated by the output of the pool. oversee the operation of GSEO’s hydro facility. Q: Can you tell us more about the programme of remote Energea, the operating partner of the Brazilian distributed power generation in Brazil? solar PV assets, is a global developer of Brazil has the largest power market in Latin America, with total distributed solar PV assets. Its founders have installed capacity of 225 GW in 2023. The country’s size, plentiful accumulated years of experience in the solar resources and conducive policies have made Brazil the region’s segment, rst by developing distributed main renewable energy market and one of the top ten in the world. generation sites in the US for large retail Brazil’s renewable energy potential is still in its infancy. With regards players. They have entered the Brazilian to distributed generation, the Brazilian government implemented a market, attracted by the unique regulatory regulatory framework favouring smaller scale power generation assets framework enabling the construction of by allowing them to directly contract with end users that are captive to distributed generation solar PV assets that can the local utilities and pay the much higher retail taris. This is done via commercialise the power at retail taris, with any a contractual arrangement between private parties. Distributed power otaker connected to the local utilities’ networks. plants can be located remotely within an entire distribution network, Energea has a team of experienced project and they can provide full credits to end users in their energy bills. managers on the ground that oversee GSEO’s solar PV assets and provide O&M services. 41 Annual Report and Accounts 2023 | Strategic Report ### GSEO INVESTMENTS CONTINUED ## e case for distributed ## solar PV and battery ## energy storage systems ## (BESS) in Australia 42 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Programme overview In conversation with Richard Lum, ### Victory Hill Managing Partner and co-CIO In 2021, GSEO committed £50m in Australia to implement distributed solar PV and battery Q: What is so unique about the Australian energy market and how energy storage system (BESS) hybrid projects does this represent an opportunity for GSEO and its shareholders? with the Company's operating partner, Birdwood Energy, a team of energy specialists There is a structural supply/demand gap in Australia that needs to be with an experienced track record of delivering addressed to solve the grid’s issues of balancing supply and demand renewable power generation and battery for dependable and clean power throughout the day. projects globally. GSEO acquired two operating The rst wave of renewable power generation in Australia was distributed solar PV generation assets in South focused on the need to achieve scale and reducing the cost of energy Australia and Queensland, totalling 17MW, production. The extent to which these have been successfully achieved and subsequently added in Q3 2023 a 2-hour in a relatively short space of time has conversely created additional BESS to hybridise one of the assets in order to issues for the transmission network, including the fact that the grid is enhance its commercial potential. The Company struggling to accommodate a large volume of intermittent generation also acquired three ready to build sites in New entering the system, and consequently this has slowed the follow-on South Wales of 4.95MW each and reached growth of renewable energy deployment at the point when the country mechanical completion of the sites’ solar farm needs it to increase in order to further displace coal. component in Q3 2023. A 2-hour BESS addition to each of the three sites is expected to be As the country is going through a disruptive transition, there is an completed by Q4 2024. opportunity for GSEO to capture value by providing clean energy though distributed solar PV and BESS hybrid assets. ### Operating partner overview Q: Why invest in c.5 MW projects and not larger scale projects? Birdwood Energy is an Australian specialist The portfolio is aggregating distribution network-connected assets developer and manager in the renewable sector which represent the best value for investment, avoiding curtailment which works to scale projects for investment, risk from the congestion on the already stressed high voltage network accelerate deployment and integrate batteries, and providing further relief in a system already stressed. The operating as well as investing into businesses supporting partner also implements a portfolio enhancement/commercialisation the sector. Birdwood has developed a strategy to take advantage of the price volatility. A$2billion portfolio. Birdwood was founded With a 2-hour BESS, the assets can take advantage of the market by energy storage and renewables experts volatility from time shifting of the solar PV output as well as capturing who over the last 25 years have built and led upside through energy arbitrage and other grid service revenues. investments and energy businesses across Australia, Europe, US, Asia and Africa. Its team Q: How is the operating partner for this asset incentivised? comprises decades of investment, technical, For all our programmes, construction, operation and maintenance is development, construction and operating overseen by a specialist local operating partner and the value creation experience in the local market. Distributed incentives are aligned with them through a prot share which is paid energy is dicult for investors to access, with out in the event the project meets a certain hurdle rate. lots of small developers and companies. This sector however requires signicant investment at scale in order to achieve our net zero targets. Distributed energy should be able to full ~60% of the world's future energy supply. It will be the lowest cost, most secure and cleanest energy system. 43 Annual Report and Accounts 2023 | Strategic Report ### KEY PERFORMANCE INDICATORS ## Financial KPIs ### NAV per share growth Ongoing Charges Ratio | +7.6% | 1.4% | | --- | --- | | Denition | Denition | | NAV divided by number of shares outstanding as at | Annualised ongoing charges (i.e. excluding investment costs | | 31 December 2023. | and other irregular costs) divided by the average published | undiluted NAV in the period, calculated in accordance with Commentary AIC guidelines. The NAV has increased to 116.46p since 31 December 2022 (31 December 2022: 108.2p). Alternative performance Commentary pershare measures are dened on pages 156 to 157. The Company's ongoing charge ratio was in line with the previous year (31 December 2022: 1.30%). Alternative performance measures are dened on pages 156 to 157. ### Dividend per share Annualised total NAV return since IPO ### (February 2021) ## 5.56p ## 10.0% Denition Aggregate dividends declared per share in respect of the Denition nancial year. A measure of performance that includes both income and capital returns. This takes into account capital gains and any Commentary dividends paid out by the Company since IPO in February 2021 The Company’s target was to pay a dividend of 5.52p on an annualised basis. per share in respect of the year to 31 December 2023 (31 December 2022: 5.13p). With the declaration of the interim Commentary dividend of 1.42p per share on 22 February 2023, the total Total return reects continued underlying delivery to dividend for 2023 is 5.56p per ordinary share. shareholders (31 December 2022: 7.8%). Alternative performance measures are dened on pages 156 to 157. ### Total NAV return for the year ## 14.5% Denition 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 reects continued underlying delivery to shareholders (31 December 2022: 7.60%). Alternative performance measures are dened on pages 156 to 157. 44 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ## Operational KPIs Climate-related KPIs ### Largest three investment programmes Total renewable energy generated and ### as a proportion of NAV injected into the grid (MWh) | 59.8% | 844,434 | | --- | --- | | Denition | Denition | | Value of the three largest investment programmes divided by | Underlying portfolio energy generated from renewable assets | | the NAV at period end. | in MWh. | | Commentary | Commentary | | The three largest investment programmes are the US terminal | The portfolio’s generation for 2023 in MWh (31 December | | storage assets, Brazilian solar PV and the Brazilian hydro facility | 2022: 35,117), equivalent of the annual electricity use of | | (31 December 2022: 54.50%). | approximately 312,750 (31 December 2022: 9,000) UK homes. | ### Largest investment programme Total avoided carbon emissions ### as a proportion of NAV (tonnes CO 2 e) | 24.9% | 122,530 | | | --- | --- | --- | | Denition | Denition | | | Value of largest investment programme divided by NAV | A measure of our success in investing in projects that have a | | | at period end. | positive environmental impact and reduce energy usage. | | | Commentary | Commentary | | | The largest investment programme within the | The portfolio’s total avoided emissions in tCO | 2 e from displacing | | Company’s portfolio is the US terminal storage assets | fossil fuel derived electricity (31 December 2022: 14,349), | | | (31 December 2022: 23.20%). | equivalent to removing about 63,000 (31 December 2022: 7,000) | | average sized cars from UK roads. ### Weighted average carbon intensity ### per $1m invested (tonnes CO 2 e / $m) ## 42 Denition Portfolio’s exposure to carbon-intensive companies, expressed in tonnes CO 2 e/$m revenue. Commentary The calculation covers operational scope 1 and 2 emissions (31December 2022: 65). Emissions from assets under construction are not factored into the calculations. 45 Annual Report and Accounts 2023 | Strategic Report # 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. Post period end, 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 is expected to be accretive to NAV per share, as well as other additional liquidity for the Company's underlying shares. Details of the shares repurchased under the buyback programme are set out on page 97. # Board changes Ms Carneiro was appointed as a non-executive Director of the Company on 18 January 2023. Details of her appointment were included in the Company's 2022 Annual Report. As announced by the Company on 11 December 2023, the Board appointed Mr Horlick as the Senior Independent Director of the Company with effect from 1 January 2024. In line with the AIC Code of Corporate Governance, the Board considers that this appointment would provide a sounding board for the Chair, serve as an intermediary for the other Directors and shareholders, and also act as an alternative engagement channel to the shareholders and other key stakeholders. # Change of Alternative Investment Fund Manager During the year under review, the Board replaced G10 Capital Limited, the AIFM of the Company since the IPO, with Victory Hill Capital Partners LLP. Further disclosures regarding the new AIFM Agreement with Victory Hill are included on page 98. 46 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Stakeholder Importance How the Company engages Shareholders Continued shareholder The Board welcomes shareholders’ views and is committed to maintaining support and open and transparent channels of communications with them. The Board engagement are critical is responsible for the content of communication regarding corporate to the existence of issues and for conveying its views to shareholders. It aims to ensure that the Company and the shareholders are provided with sucient information to understand delivery of its long-term the risk/reward balance to which they are exposed by investing in the strategy. The Board Company. The methods of engaging with shareholders include: and the Investment Manager give a high Publications priority to ensuring The Annual and Interim Reports are made available on the Company’s that shareholders website. These reports provide shareholders with a clear understanding of understand the the Company’s portfolio and nancial position. In addition to the Annual Company’s strategy and and Interim Reports, the investor presentations made by the Investment goals and can monitor Manager and any prospectuses and circulars issued by the Company are its performance through also available on the Company’s website. The Company provides regular the robust corporate updates on portfolio acquisitions, capital raises, share buybacks and any governance processes other relevant matter by way of market announcements. established by the Company. Annual General Meeting 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 aecting 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. Shareholder meetings 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. Shareholder concerns 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 oce 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. Investor relations updates The Board regularly monitors the shareholder prole 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 97. 47 Annual Report and Accounts 2023 | Strategic Report ### STAKEHOLDER ENGAGEMENT CONTINUED ### Stakeholder Importance How the Company engages Investment The Investment The Board believes that maintaining a close and constructive working Manager Manager’s performance relationship with the Investment Manager is crucial to promoting the is critical for the long-term success of the Company in an eective and responsible way. Company to achieve Representatives of the Investment Manager attend Board meetings and positive and consistent provide reports on the current and future activities, portfolio investments, long-term returns in performance, operational and administrative matters. An open discussion line with its investment regarding such matters is encouraged, both at Board meetings and by objective. 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 pages 99 and 120. Other key As an investment The Board believes that strong relationships with its other key service service company, all services are providers, namely the Company Secretary, the Administrator, the providers outsourced to third party Depositary, the Broker and the Registrar, are important for the long-term service providers. The success of the Company. The Board maintains regular contact with its Board is conscious that it key external providers and receives regular reporting from them, both is critical to foster good through the Board and Committee meetings, as well as outside of the working relationships regular meeting cycle. Their advice, as well as their needs and views, are with them. 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 The Company does not make use of structural debt in order to achieve and liquidity are crucial its yield and total return targets. To date, the portfolio has been equity to the Company’s ability funded allowing for ecient asset acquisition. Once assets have been to take advantage of acquired and are operational, the Investment Manager, through its investment opportunities extensive international network of funding partners, may seek the most as they arise. ecient debt funding on a non-recourse basis. Society and the It is of utmost As an investor in sustainable energy, the Company’s assets have an impact environment importance to the on the environment. The Company has a Sustainability Framework which Company that it is published on the Company’s website and our approach to sustainability positively impacts is set out in the Sustainability section of the report. local communities through its sustainable environmental initiatives, investment in areas undergoing regeneration and local employment practices. 48 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### 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 eectively managed as they develop and 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 been unable to raise additional funds for investments to drive further growth and diversication in the portfolio. At the same time the Directors are focussed on the Investment Manager managing the Company's liquidity. 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. These have been removed from the list below this year. A great deal of work has been completed on climate change scenarios and more detail is given on physical and transition risks below. Information about the Company’s internal control and risk management procedures are detailed in the Corporate Governance Statement on pages 106 and 107. The principal nancial risks and the Company’s policies for managing these risks, and the policy and practice with regard to the nancial instruments, are summarised in note 12 to the nancial statements. ### Risk Description of Risk Risk Impact Mitigation 1. Risks relating to the Company Reliance on Investment The Company relies on the The Company relies on the The Investment Manager consists of Manager Investment Manager for the Investment Manager for the ve managing partners supported achievement of its investment achievement of its investment by ve investment professionals. The objective. objective. total Investment Manager personnel is 15, which includes the Investment, The departure of some or all Finance, Sustainability, Compliance Data of Victory Hill’s investment Analytics and Investor Relations teams. A professionals could prevent collegiate approach is taken to investment the Company from achieving management activities with the team its investment objective. having a broad range of skills to support There can be no assurance the pursuance of the Company’s investment that the Directors will be objective. able to nd a replacement The performance of the Company’s manager if Victory Hill Investment Manager is closely monitored by resigns. the Board. If a successor cannot be In addition, at least once a year the found, the Company may Management Engagement Committee not have the resources performs a formal review process to it considers necessary consider the ongoing performance of to manage the Portfolio the Investment Manager and makes or to make investments a recommendation on the continuing appropriately and, as a appointment of the Investment Manager to result there may be a the Board. material adverse eect on | the performance of the | The initial term of the investment | | --- | --- | | Company’s NAV, revenues | management agreement is 5 years (ending | | and returns to shareholders. | in February 2026). | 49 Annual Report and Accounts 2023 | Strategic Report ### PRINCIPAL RISKS & UNCERTAINTIES CONTINUED ### Risk Description of Risk Risk Impact Mitigation Reliance on third party The Company has no Service provider control The Investment Manager and the Board service providers employees and the Directors failures may result in oversees and keeps under review the have all been appointed operational and/or provision of services by each of the on a non-executive basis. reputational problems and Company’s service providers on an ongoing Therefore, the Company is may have an adverse eect basis. reliant upon its third party on the Company’s NAV, The Management Engagement Committee service providers for the revenues and returns to performs a formal review process to performance of certain shareholders. consider the ongoing performance of its functions. service providers. Currency risks The Company will make When foreign currencies are Investments are held for the long-term. investments which are based translated into Sterling there The Company enters into hedging in countries whose local could be a material adverse arrangements for periods up to 12 months currency may not be Sterling eect on the Company’s to hedge against short-term currency and the Company may make protability, the NAV and the movements. and/or receive payments price of the shares. that are denominated Currency risk is taken into consideration at in currencies other than time of investment. Sterling. The movement in NAV attributable to currency movements is disclosed to investors each quarter with the NAV update. Liquidity risks Risk that sucient cash funds Risk that unexpected calls are The fund is investing in a mixture of are not in place in order made on investments. operating and construction assets. to meet commitments for Operating assets have the benet of investment, dividends, buy- providing cash ows. backs of shares and ongoing The Investment Manager provides an fund costs. 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 buy-back commitments. Liquidity is represented in cash, money market investments and xed term deposits. The Investment Manager is exploring options for project level debt facilities and fund level debt facilities. Until the Company is fully deployed into a diversied pool of assets, fund level debt facilities are limited. At this early stage in the Company’s life it has cash reserves originating from the proceeds of equity issuances. Therefore, given the investment pipeline, investment limits and dividend considerations, liquidity is not constrained. In the case of share buy-backs to manage share price discount vs. NAV, the ultimate buy-back is subject to sucient funds to pay dividends, market conditions and Board discretion. Liquidity constraints will be considered before share buy-backs are undertaken. 50 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Risk Description of Risk Risk Impact Mitigation 2. Risks relating to the portfolio investment strategy Illiquidity of The Company’s investments Shareholder returns could The Company is expected to hold most of its investments in Sustainable Energy be materially negatively investments on a long-term basis. Infrastructure Investments impacted should the The Investment Manager and the Board will are illiquid and may be Company be required to monitor the position on a regular basis. dicult to realise at a realise them in the near particular time and/or at the term (requirement for early prevailing valuation. liquidity). Market conditions Market conditions may delay The actual return to A pipeline of investments has been or prevent the Company shareholders may be identied and is constantly being from making appropriate materially lower than the refreshed. The senior management team investments that generate target total return. at the Investment Manager have extensive attractive returns. 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 Targeted returns may Limits are set out in the Investment Policy to relation to exposure to be materially negatively mitigate concentration risk. individual sustainable energy impacted if those sustainable The Company has a very broad mandate. infrastructure investments, energy infrastructure technology and geography. investments, geographies This risk should be mitigated as the and/or technologies, do Company increases in size. not deliver the returns At the time of making investments, anticipated by Victory Hill. 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 Failure to complete The Investment Manager undertakes associated with the risk of projects in accordance with extensive due diligence on construction inaccurate assessment of a expectations could adversely opportunities and seeks to have appropriate construction opportunity, impact the Company’s insurances in place to mitigate any delays or disruptions which performance and shareholder costs relating to delays. In addition, the are outside the Company’s returns. Investment Manager seeks to utilise EPC control, changes in market contractors that can provide single point, conditions, and the inability of lump sum turnkey arrangements wherever contractors to perform their possible. contractual commitments. 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. 51 Annual Report and Accounts 2023 | Strategic Report ### PRINCIPAL RISKS & UNCERTAINTIES CONTINUED ### Risk Description of Risk Risk Impact Mitigation Due diligence Due diligence may not Failure to identify risks and The senior management team at the identify all risks and liabilities liabilities may impact the Investment Manager have extensive in respect of an investment. protability or valuation of experience in executing strategies similar to the investment. 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 The failure by a counterparty Due diligence on counterparty risk is their contractual obligations to make contractual performed before entering into projects and or suering an insolvency payments or perform other counterparty risk is monitored on a regular event. contractual obligations or basis. the early termination of the relevant contract due to the insolvency of a counterparty may have an adverse eect on the Company’s NAV, revenues and returns to shareholders. Uninsured loss The risk that an investment The actual return to An independent insurance adviser is and damage may be destroyed or suer shareholders may be appointed for each project to review project material damage, and the materially lower than the risks in conjunction with the Investment existing insurances may not target total returns. Manager and to ensure that appropriate be sucient to cover all the insurance arrangements are in place. losses and damages. Insurance requirements are reviewed on an ongoing basis. Curtailment risks Investments may be subject In such cases, aected Extensive due diligence is performed on to the risk of interruption investments may not receive each project before investment. in grid connection or any compensation or only The Investment Manager constantly reviews irregularities in overall power limited compensation. curtailment risks. supply. Commodity The operation and cash ows The actual return to The Company mitigates these risks by price risks of certain investments may shareholders may be entering into (i) hedging arrangements; (ii) depend prevailing market materially lower than the extendable short, medium and long-term prices for electricity and fuel, target total return. contracts; and (iii) xed price or availability and particularly based asset-level commercial contracts. natural gas. ESG risks Material ESG risks may arise If the Company fails to adhere ESG is embedded in the investment cycle such as health and safety, to its ESG commitments this with a formal ESG matrix including a unfair advantage, bribery, could result in shareholder minimum target ESG score required for corruption and environmental dissatisfaction and adversely approval of any new investments. damage including climate aect the reputation of the Ongoing operational and construction ESG related risks. Company. risk management is reviewed periodically by the Investment Manager, who work closely with service providers on ESG and impact standards reporting. 52 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Risk Description of Risk Risk Impact Mitigation 4. Risks relating to the Company’s shares Discount to NAV The share price may not Lack of liquidity in the The Board, Broker and Investment Manager reect the underlying NAV. Company’s shares could monitor the discount or premium to NAV at negatively impact on which the shares trade. Discount management shareholder returns. provisions being unable The Board, Broker and Investment Manager to be satised may result actively consider whether share buybacks in a signicant share price can assist with discount management. In discount to NAV. addition, corporate strategies are actively considered as and when they arise. 5. Risks relating to regulation Regulation The Company is exposed to The actual return to The Company aims to hold a diversied the risk that the competent shareholders may be lower portfolio of Sustainable Energy authorities may pass than the target total return. Infrastructure Investments and so it is legislation that might hinder unlikely that all assets will be impacted or invalidate rights under equally by a single change in legislation. existing contracts as well The Investment Manager ensures that as hinder or impair the contracts are not exposed to government obtaining of the necessary subsidies, thus mitigating exposure to policy permits or licences necessary risks linked to contract pricing. for Sustainable Energy Infrastructure Investments in There is also strong public demand for the construction phase. 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. 6. Operational risks Operation and Poor management or The actual return from single Operating partners operate to an annual management risks of operational performance of portfolio assets may be lower budget and a series of key performance the portfolio assets an asset by the Company’s than the target total return indicators. operating partners and for The Investment Manager monitors the selected operations and the asset. performance vs. annual budget and KPIs on maintenance providers. a monthly and quarterly basis. On an annual basis the Operating partners are subject to an annual performance review across operational, ESG and nancial KPIs. The Investment Manager provides quarterly reports to the Board on asset-level performance. 53 Annual Report and Accounts 2023 | Strategic Report ### PRINCIPAL RISKS & UNCERTAINTIES CONTINUED ### Risk Description of Risk Risk Impact Mitigation Valuation risk Valuation of the portfolio of Actual results may vary The Company has adopted a valuation assets is based on nancial signicantly from the policy which was disclosed in the Company’s projections and estimations projections, which may prospectus. of future results. reduce the protability of the Fair value for each investment is calculated Company leading to reduced by the Investment Manager. However, if returns to shareholders and a considered necessary and appropriate, the fall in the Company’s NAV. Board may appoint an independent valuer. The Investment Manager has signicant 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’s Portfolio Risk and Valuation Committee (“PRV”) reviews and challenges valuations. The PRV 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 External Auditor reviews the valuations. 7. Climate-related risks Physical risks Longer-term changes in These factors could result in The Company is investing in a diversied climate patterns, e.g., the reduction of output from portfolio of energy transition infrastructure reduction or increase in wind assets leading to reduced by geography, technology and capability. levels, decrease solar optimal income stream. This risk may These investments are targeted at the days in impacting renewable increase over the long term energy transition to net zero. This will output and associated in the absence of climate provide a buer against variable weather earnings. mitigation. patterns across the portfolio. Increased occurrence of The Company also mitigates risk through extreme weather events such project revenues being contracted for the as cyclones, storms, ooding, medium and long term. droughts and heatwaves At the asset level, weather conditions are causing damage to assets, monitored and many of the renewable disruption to feedstocks, projects have battery storage capabilities value chain, outputs and to optimise energy input to the grid. associated earnings. Meteorology and feedback due diligence is undertaken before investment and reviewed regularly. All assets have crisis management and business continuity plans to respond to disruptions. The assets are also required to have continuous improvement management systems to build capability and capacity in the local teams and operations. 54 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Risk Description of Risk Risk Impact Mitigation Abrupt disruptive climate Increase operating Throughout the investment decision-making impacts such as impacts from expenditure to recover asset process, the due diligence process accounts ooding, wildre, drought, damage caused by natural for climate change risk and impacts. extreme heat, or sudden disasters and increase The Investment Manager employs regulatory actions increasing insurance premium for assets an insurance specialist when making over time. in high-risk locations. 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. Uncertainty in market Increase in market volatility The Company manages this risk through signals take forms in lower- and abrupt and unexpected its diverse portfolio of energy transition than-expected power price shifts in power prices make infrastructure assets such as the battery reected from imbalance nancial forecasts less energy storage systems and its enduring in abundant intermittent reliable on intermittent hydro facility, as well as signing xed price power supply and market renewable energy solutions. otaker agreements. demand as well as lower than Reduced throughput for The Company is assessing its longer- expected volume throughput conventional fuels longer- term strategy to adapt storage assets to for conventional fuel storage term with expected shifts accommodate alternative fuels required assets with increased to cleaner and alternative for hard to abate transportation including demand for alternative fuels. fuels impacting existing fuel sustainable aviation fuel, renewable diesel, storage asset revenue ows. marine e-methanol and hydrogen as the market shifts. Transition risks Market shifts such as Increase costs to adopt/ There is strong public demand for support changing customer behaviour deploy new practices to of the renewables market towards net zero and substitution of existing transition to lower emissions carbon emission targets. products and services with technologies, reduction in the The Company is expected to hold most of lower emissions options availability of market capital its investments on a long term basis and the or new technologies may to invest in some local energy Board and Investment Manager monitor the dampen ability to engage transition projects. position on a regular basis. investors on a broader portfolio of energy transition The senior management team at the projects than a traditional Investment Manager has extensive renewable focus including experience in executing a wide range of dierent geographies. strategies in the energy sector, the team The Investment Manager monitors market shifts and tailor investment monitors changes in climate strategies accordingly. change policy and assesses the potential impact and mitigation strategies. 55 Annual Report and Accounts 2023 | Strategic Report ### PRINCIPAL RISKS & UNCERTAINTIES CONTINUED ### Risk Description of Risk Risk Impact Mitigation Policy shift may introduce This could increase The Company is supportive of the policy regulation around climate cost of doing business aims of the Disclosure Regulation and will change, e.g., increased (e.g., higher compliance comply and monitor changes. disclosure, taxes etc. costs, increased insurance The Investment Manager engages with premiums, workforce Stakeholders' increasing partners and stakeholders on behalf of the management and planning), concerns on business Company to gather data and drive action and practice (e.g., supply chain to improve ESG management and support result in reduction in management, workforce disclosure and policy requirements. This the availability of capital to management and planning) includes monthly metric reporting on invest in energy transition need to be addressed. climate related KPIs, including energy used projects. and generated, mitigation actions for risks and impacts, as well as any energy reduction projects. The Company’s investment strategy targeting the energy transition is aligned with global policy movements on climate change which would limit impact. 56 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### GOING CONCERN AND VIABILITY STATEMENT ### Going concern The Investment Manager has considered the sensitivity of the nancial projections to a range of key assumptions, such as The Directors, in their consideration of going concern, have a reduction in cash ows from portfolio companies, delays reviewed the nancial position and comprehensive future cash in construction, cost overruns, no debt availability, and an ow models for the Company prepared by the Company’s inability for the Company to raise additional equity. The results Investment Manager, taking into consideration current of this stress testing showed that the Company would be able and potential funding sources, investment into existing to withstand the impact of these scenarios occurring over the and near-term projects and the Company’s working capital ve-year period. requirements. Furthermore, the Directors have considered a worst case scenario in which the Company is assumed to The Directors conrm they have carried out a robust meet all of its remaining investment commitments within assessment of the emerging and principal risks facing the the next 12 months, in addition to dividend payments and Company, including those that would threaten its business ongoing operating expenses. Even in this unlikely scenario, model, future performance, solvency, liquidity, and dividend the Company has sucient headroom to meet all expected cover for a ve-year period. The Directors’ assessment cash outows with its existing cash balances. Based on these has been made with reference to the principal risks and forecasts and the assessment of principal risks described uncertainties and emerging risks summarised on pages 49 to in this report, that it is appropriate to prepare the nancial 56 and how they could impact the prospects of the Company. statements of the Company on the going concern basis. As an Investment Company, part of the Company’s objective The Directors believe that there are currently no material is to produce stable dividends while preserving the capital uncertainties in relation to the Company’s ability to continue value of its investment portfolio. Following regular pipeline for a period of at least 12 months from the date of the updates from the Investment Manager, the Directors believe approval of the nancial statements and, therefore, has that the Company is well placed to manage its business risks adopted the going concern basis in the preparation of the successfully over both the short and long term period, the nancial statements. Directors have a reasonable expectation that the Company will be able to continue in operation and to meet its liabilities as they fall due for a period of at least ve years. ### Viability statement In accordance with Principle 21 of the AIC Code, the Directors ### Approval of the Strategic Report have assessed the prospects of the Company over a period longer than 12 months required by the relevant “Going The Strategic Report was approved by the Board of Directors Concern” provisions. The Directors have considered the nature and signed on its behalf by: of the Company’s assets and liabilities, and associated cash ows, and have determined that ve years, up to 31 December 2028, is the timescale over which the performance of the Bernard Bulkin Company can be forecast with a material degree of accuracy Chair and therefore is the appropriate period over which to consider 4April 2024 the viability. 57 Annual Report and Accounts 2023 | Sustainability ### APPROACH TO SUSTAINABILITY ## In 2023 the Company ## continued to drive its energy ## transition investment strategy ## achieving a signicant increase ## in renewable energy generation, ### Eleanor Smith ## Head of displacing more pollutive ### Sustainability ## (Victory Hill) energy sources and supplying ## clean energy to the grid for ## communities and companies ## globally. is strategic impact ## was coupled with operational ## improvements to create ## local environmental and ## social value. ### Sustainability approach The Company’s sustainable energy infrastructure investments aim to support and accelerate the energy transition towards a net zero carbon world. The investment process uses the UN SDGs as the framework to achieve these objectives (see page 28). The SDGs recognise that social and environmental sustainability are interconnected and mutually reinforcing. They guide the Company’s asset management actions as much as its investment decision making. The Company has also committed to implement the UN Global Compact principles in investment management further aligning actions with the SDGs. 58 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Sustainability is embedded in the Company’s Portfolio investments committed to investment life cycle which brings together a strong positively contributing to the UN SDGs: governance framework, rigorous due diligence processes, third party objectivity, continuous operational improvement expectations and a commitment to transparency and accountability. An external assurance rm is used to verify that investments are aligned with the six core SDGs and energy transition objectives. The external assurance rm also assesses whether the investment “does no signicant harm” to the other eleven SDGs. They use a proprietary SDG analysis tool to assess the investment against underlying SDG indicators. The external assurance rm also evaluates eligibility, and completes the technical screening, under the EU Taxonomy of sustainable economic activities to achieve alignment. The Company invests in diverse geographies and technologies to deliver energy transition strategies in dierent contexts and with a range of operational priorities. The Company’s principle-based approach guides in identifying and managing the positive and negative changes that result from the Company’s investments and from its business relationships. ### Sustainability governance The Company’s governance structure and composition is described in the governance section of this report (page 103). The highest governance bodies have responsibility for overseeing sustainability risks and opportunities and assessing eectiveness of related actions. The Independent Company 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 Independent 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. 59 Annual Report and Accounts 2023 | Sustainability ### APPROACH TO SUSTAINABILITY CONTINUED | • | Investment Committee evaluates investment | The Company has committed to independent | | --- | --- | --- | | | opportunities and ensures alignment with the | third-party assurance on key ESG metrics that | | | SDG investment policy and inclusion of ESG due | demonstrate the strategic impact of investments | | | diligence and risk analysis in the investment | as well as operational performance. The assurance | | | process. The committee also provides oversight | scope is described on page 68. | for investment stewardship activities, monitors The Investment Manager has responsibility for investment ESG performance, and ensures ensuring appropriate resourcing. The Head of actions and priorities are executed. Sustainability supports the investment and asset ## • Risk, Operations and Compliance Committee management teams in embedding sustainability ensures ESG risks, including climate related factors in investment decision making processes. physical and transition risks, are identied All Investment Manager employees have and corresponding controls are considered responsibility to ensure the sustainability policy and implemented. The management of and the investment decision making process are environmental and social related risks and implemented and this is reected in individual opportunities is integrated into the Company’s performance reviews and remuneration decisions. risk management framework. ### Sustainability investment ## • Sustainability Committee advises on ESG ### strategy, emerging ESG issues and provides management recommendations on ESG integration into The Investment Manager aims to create additional investment and asset management processes. environmental and social value through active This includes target setting, monitoring and management of the investments. Operating reporting. partners are required to have SPE level ESG policies, The Investment Manager leadership team are associated processes and action plans to manage permanent members of the three subcommittees. and mitigate material operational and value Decisions and programme updates are reported to chain related environmental and social issues. the Board and Board committees. Actions are identied in an investment specic sustainable action plan (SAP) which may include expectations for ESG resourcing, management ### Sustainability policy commitments system implementation and certication, The Investment Manager’s sustainability policy stakeholder and community engagement, supply and investment policy underlie the Company’s chain management, target setting and reporting commitment to sustainable energy investments. requirements. Progress against these plans is reviewed regularly and the plans are updated The investment criteria within the sustainability annually. Performance against the plan is formally policy require investments to align operations assessed annually. with universal principles on human rights, labour standards, environment and anti-corruption to ### advance action on global sustainability goals as Stakeholder engagement described in the SDGs and UN Global Compact. The Company’s investment strategy includes Additionally, specic actions on material alignment with SDG 17 ‘Partnership for the Goals’ environmental and social aspects are identied recognising that the SDGs can only be met if all through a risk-based approach. Sustainable energy stakeholders work together to mobilise nancial infrastructure operating partners are required resources globally. This is the Company’s approach to report progress monthly on key performance to investment. The values of honesty and integrity, indicators on material environmental and social transparency and partnership are integral to aspects. stakeholder engagements. 60 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Company stakeholders and The operating partners have responsibility for implementing a stakeholder engagement plan ### business relationships commensurate with operations. The Investment Manager has developed guidance and tools to Investors assist operations in stakeholder mapping and ## • The Company invests capital to deliver engagement strategies. This approach recognises projects that facilitate the energy the interconnected systems and impacts in dierent transition to net zero while managing energy value chains. ESG impacts. Investment impacts on the Company’s stakeholders can be broader than operations. Taking a value Partners chain view is therefore an important element of the ## • The Company collaborates closely with Investment Manager's ESG risk analysis process and operating partners and suppliers to its eorts to mitigate risks in business relationships. ensure quality, reliable and sustainable ESG opportunities, risks and impacts on both assets that deliver on the energy the Company and from the Company’s activities transition to net zero. on stakeholders are in scope. Key performance indicators and the requisite focus on sustainable Communities and customers value creation are communicated to operating partners through contractual requirements and ## • The Company’s energy infrastructure instructed in the investment SAP. The SAP is investments support aordable informed by the external SDG assessment, due energy access. diligence and materiality analysis. ## • The Company measures and manages project economic, environmental and social impacts. ## • The Company is committed to acting with cultural and local awareness and integrity. Employees ## • The commitment, quality and integrity of Investment Manager sta drives the Company’s success. ## • The Investment Manager's sustainable development culture ensures a diverse and inclusive workplace focused on health and wellbeing with continual investment in capabilities through training, learning and development. Environment ## • The Company drives responsible business practices beyond commercial objectives across its geographic footprint focused on the SDGs. ## • The Company measures the carbon and environmental footprint of its investments. ## • The Company seeks to make a positive contribution in operating regions. 61 Annual Report and Accounts 2023 | Sustainability ### APPROACH TO SUSTAINABILITY CONTINUED ### Sustainability and ESG risk analysis ### Origination sustainability analysis Fund mandate, SDG and Due diligence questionnaire External SDG and EU EU Taxonomy eligibility analysis covering ESG red ags, do no harm Taxonomy eligibility evaluation internal evaluation criteria & ESG risk management and Investment SDG alignment, life cycle practices and value chain analysis (Stage: Preliminary Deal Analysis) (Stage: Screening) (Stage: Screening) ### Sustainability action plan (SAP) Sustainability materiality analysis and ESG risk The asset sustainability action plan addressing priority and opportunity assessment informed by sector sustainability risks and opportunities with the aim to create and geographic risks, project specic impacts and additional sustainable value through environmental and stakeholder mapping community engagement (Stage: Onboarding) (Stage: Onboarding) ### Monitoring, evaluation & reporting Data collection and analysis of KPIs and targets Annual and periodic sustainability reports to track SAP progress – KPIs and metrics assured externally (Stage: Asset Management) (Stage: Asset Management) 62 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS * Risk and signicance of material issues are ### Materiality analysis assessed on this basis, accounting for the Material and systemic issues are assessed to probability of impacts and the quality of controls prioritise ESG risks and impacts related to the that the operating partner has in place. The diverse sector of operation, the region and country of nature of the portfolio is reected in varied range of operation as well as specic project attributes. operational priorities. All assets under management are assessed through this process. Systemic issues for the sector include climate risk and opportunities, energy generation and Material issues relevant for the energy sector and operational emissions produced and displaced. infrastructure are informed by the International The Company’s approach to these is addressed Finance Corporation performance standards, the in the TCFD report on page 78. The Company Global ESG Benchmark for Real Assets and the recognises that sustainability topics are naturally Sustainability Accounting Standards Board and interconnected. Global Reporting Initiative standards. ### The regional and geographic risks considered Material topics by asset class include those identied by Transparency The following table lists the topics and metrics International Corruption Perception Index, Freedom identied as material by these standards for the House Freedom in The World Index, Fund for Peace Company’s diverse operations. These have been Fragile States Index, Global Slavery Index, Social adapted following the Company’s analysis of Progress Index and ILO Labour Rights as well as individual project’s ESG footprint. individual country climate pledges. This year, the Company also considered the new Investment specic attributes considered include IFRS International Sustainability Standards Board the operational proximity to local communities, standards in completing this report and included indigenous peoples, cultural heritage, ecological relevant indicators. and biodiversity habitats, and operational activities such as noise, light, water use, discharge and waste. 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. * SASB sustainability topics applicable for midstream, electricity power generators, solar project developers and BESS were considered for the materiality analysis and not those relevant for manufacturing, grid or non-renewable metrics. 63 Annual Report and Accounts 2023 | Sustainability ### APPROACH TO SUSTAINABILITY CONTINUED Topic Metric Unit Materiality standard by asset class Page GHG emissions Scope 1 tCO 2 e ISSB/SASB 68 & 69 and targets | Scope 2 | | | GRI 305 | | --- | --- | --- | --- | | Scope 3 | | | SFDR indicators | | Emissions associated | tCO | 2 e SASB – power generators 68 | | with power delivery (avoided) Performance against Qualitative SASB 68 targets analysis GRI 305 Climate risks and Implications, risks and Qualitative GRI 201 78 resilience opportunities due to analysis TCFD climate change ISSB Air quality GSEO investments to NA SASB – midstream 71 not emit pollutants Reported avoided for Tonnes GRI 305 71 terminal storage Energy management Total energy purchased MWh SASB 68 Total energy consumed MWh GRI 304 % SFDR indicators ISSB Total electricity MWh SASB – power generators 71 delivered Waste management Volume of Tonnes GRI 306 72 waste generated SFDR indicators Volume diverted NA from landll Water management Total water withdrawn Litres SASB – power generators 72 and consumed GRI 303 % sited in water stress % SASB – power generators 72 areas ISSB Water quality g/litres GSEO analysis – hydro 72 SASB – power generators | Noncompliance with | # | | | --- | --- | --- | | water regulations | | SFDR indicators | | Water management | Qualitative SASB – power generators 72 | | practices Workforce health Total case injury rate Rate SASB 73 and safety (TCIR) GRI 403 Fatality rate Operational safety Reportable incidents # SASB – midstream 73 including accidental GSEO analysis – hydro releases GRI 306 64 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Topic Metric Unit Materiality standard by asset class Page Emergency Management systems Qualitative SASB- midstream 73 preparedness and discussion GSEO analysis – hydro response Ecological impacts of Number and duration # and days SASB- solar project developers 71 project development of project delays due to ecological impacts Environmental Qualitative SASB 71 & 72 management plans and SFDR indicators practices % land operated within % by HA SASB 71 protected conservation GRI 304 areas Land protected or HA SASB 71 restored GRI 304 Number and volume Barrels SASB- midstream 72 of chemical or hydrocarbon spills Community Description of eorts Qualitative SASB – all 74 relationships to address community GRI 414 and ecological impacts | Management of | Description of risks | Qualitative SASB- solar project developers 52 | | --- | --- | --- | | energy infrastructure | associated with | | | integration | integration of solar | | energy into existing energy infrastructure and discussion on risk management Description of risks and Qualitative SASB – power generators 53 opportunities of energy policy and eect on energy infrastructure integration End of life Not applicable yet for SASB – power generators NA management the portfolio. All solar PV + BESS sites are under construction or in rst 5 years of operation Material sourcing Description of the Qualitative SASB – power generators 74 management of risks associated with the use of critical materials Description of Qualitative SASB – power generators 74 management of GRI 414 environmental and social risks associate with the polysilicon supply chain 65 Annual Report and Accounts 2023 | Sustainability ### APPROACH TO SUSTAINABILITY CONTINUED The Company does not have employees; however, the operating partners do have operations and maintenance employees that work directly on investment assets. Employee data included in this report covers those operating partner employees. The Brazilian hydro facility and U.S. terminal storage assets have permanent operational employees on site. The solar sites are generally unmanned, and maintenance sta visit periodically. The following additional metrics and topics have therefore been identied as material for operating partners and data is collected. The Company does not make payments to governments or contributions to political parties. Workforce management Employee turnover % GRI 401 73 Training hours (not reported) Avg hrs GRI 404 Employment practices Qualitative GRI 401/402/403/407 73 Gender diversity and equal opportunity % GRI 405 73 SFDR indicators Anti corruption Risks, communication and actions Qualitative GRI 205 60 ### Membership and associations 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. Task Force on Climate-related Global Impact Investor EU Sustainable Finance Net Zero target Financial Disclosures Network (GIIN) Disclosure Reporting published in (SFDR) Reporting Article 9 supporter since member since 2022 May 2023 Disclosures September 2020 since June 2022 ### 2020 2022 2023 UNPRI Signatory to the Signatory to the Net Signatory to the UK UN Global Compact Zero Asset Managers Stewardship Code joined Autumn 2020 Initiative since November 2020 since September 2022 since April 2022 66 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### 2023 SUSTAINABILITY HIGHLIGHTS The equivalent of powering over Solar ## 844,434MWh ## 312,750 62,952 MWh clean energy generated and average size homes injected into the grid* in the UK The electricity generated in Brazil is the equivalent of providing the average person’s ‡ annual power needs for over Hydro ## 122,530 ## 781,482MWh ## 47,000 tonnes CO 2 e emissions avoided by displacing 1 Brazilians grid emissions Zero health and safety The equivalent incidents on sites ## 19,332 of removing over Portfolio net zero | | tonnes of sulfur oxides | | target published on the | | | --- | --- | --- | --- | --- | | 63,000 | | displaced from the | net zero asset managers | | | | Mexican fuel value chain | | | initiative website | average sized cars from UK roads 1 References for equivalency calculations: UK energy use – Average gas and electricity usage: Ofgem https://www.ofgem.gov.uk/information- consumers/energy-advice-households/average-gas-and-electricity-use-explained Brazilian per capita energy use: https://ourworldindata.org/energy/country/brazil Brazil: Energy Country Prole – Our World in Data UK average mileage: https://maps.dft.gov.uk/transport-statistics-nder/index.html Transport Statistics Finder: interactive dashboard (dft.gov.uk) * The generation represents the total generation of the assets exported to the grid recorded through onside meter readings. For the Brazilian Solar PV assets total generation is generation invoiced to the clients. Where invoices were not available meter readings were used. 67 Annual Report and Accounts 2023 | Sustainability ### 2023 SUSTAINABILITY IMPACT & PERFORMANCE The Company is committed to transparency and “Assurance Engagements on Greenhouse Gas accountability and drives continuous performance Statements.” These standards provide a framework improvement aligned with the highest standards for for assessing the completeness, accuracy, and sustainability. To build condence in data reported, reliability of the selected social and environmental the Company engaged BDO to independently disclosures. Social and environmental metrics assure selected environmental and social metrics annotated with ‡ have been covered in the reported through a limited assurance engagement assurance process. in accordance with the International Standard on The assurance engagement data collection Assurance Engagements (ISAE) 3000 “Assurance processes and methodologies were examined Engagements Other than Audits or Reviews of through the assurance process, and an opinion was Historical Financial Information,” and ISAE 3410, provided on the disclosed information. 2 Portfolio energy use and GHG emissions | |  Energy use (MWh) GHG emissions (tonnes CO | | | 2 e) | | --- | --- | --- | --- | --- | | Year 2022 2023 Energy % | | | 2022 2023 GHG % | | | | | change | | change | ‡ | Scope 1 21,729 17,905 -18% 3,950 3,271 | | | | | -17% | | --- | --- | --- | --- | --- | --- | | | | 3‡ | | ‡ | | | Scope 2 (location) 1,436 1,783 24% 470 | | | 518 | 10% | | | Scope 2 (market) – | - 8,172 - 0 - | | | | | onsite generation ‡ Total Scope 1 & 2 23,165 27,860 20% 4,420 3,789 -14% ‡ Scope 3 (all 6,967 29,013 316% logistics) ‡ Scope 3 (2022 6,967 7,618 9% logistics) Avoided emissions 14,349 17,663 23% (without hydro) ‡ Avoided emissions 14,349 122,530 754% 2 GHG emissions scope denitions 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 denes its emissions boundary as those under majority ownership (+50%). 100% of emissions reported are under the Company’s nancial 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 specic emission factors are used to calculate GHG emissions provided through the data collection software Diligent (previously Accuvio). These factors can be accessed on the Diligent ESG reporting system and included IEA, UK BEIS, US EPA and Australian National Greenhouse Accounting factors. Avoided emissions from renewable energy generated by solar PV assets are calculated using WRI/WBCSD guidelines for quantifying GHG reductions from grid-connected electricity projects accounting for T&D losses. 3 Restated from 2022 as error discovered in terminal storage electricity reporting leading to overstatement of electricity consumed. 68 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS The Company strategy is focused on supporting 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 above 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 2023, Brazilian hydro facility, and US terminal storage assets. Data collection and calculations were completed in line with the Company's basis of ESG reporting document which is informed by the GHG protocol and Global Reporting Initiative guidance. Assets under construction or acquired with fewer than 6 months data were not included in the reporting scope for assurance. 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 (T&D) are accounted for. With the acquisition of the Brazilian hydro facility and additional solar PV operational assets the baseline has been reset as 2023. However, a comparison of performance against 2022 is provided. Despite the addition of the hydro facility the trajectory of operational GHG emissions is decreasing. This can be attributed both to a reduction in operational activity at the US terminal storage assets as well as operational efficiencies. Scope 3 data collection has broadened in 2023 covering more categories and notably the accounting for upstream and downstream transport and distribution at the US terminal storage assets. This has led to the increase in scope 3 emissions attributed to calculating barge and truck logistics at the US terminal storage asset in addition to rail. Scope 3 data collection is a challenge and estimates have been used where actual data is not available. Carbon footprint | | 2022 | | 2023 | | | --- | --- | --- | --- | --- | | GHG emission | Emissions | % Total | Emissions | % Total | | **Scope 1** | | | | | | Subtotal | 3,950 | 35% | 3,271^{1} | 10% | | Mobile Combustion – Owned Fleet | 28 | 0.2% | 50 | 0.2% | | Stationary Combustion (natural gas, diesel, propane) | 3,922 | 34% | 3,220 | 10% | | Fugitive Emissions | - | - | 0.52 | 0.002% | | **Scope 2** | | | | | | Subtotal | 470^{2} | 4% | 518^{3} | 1.7% | | Purchased and Used Electricity | 470 | 4% | 518 | 1.7% | | **Scope 3** | | | | | | Subtotal | 6,967^{4} | 61% | 29,013^{5} | 88% | | Category 1: Purchased goods and services | 7 | 0.1% | 4 | 0.0% | | Category 3: Fuel- and Energy-Related Activities | 838^{6} | 7% | 739 | 2% | | Category 4: Upstream Transport and Distribution | 6,121 | 54% | 6,853 | 22% | | Category 5: Waste | 0.03 | 0% | 3 | 0.01% | | Category 7: Employee Commuting | - | - | 19 | 0.06% | | Category 9: Downstream Transport and Distribution | - | - | 21,395 | 65% | | **Total Emissions** | **11,387** | | **32,802** | ***** | $^{1}$ 2022 scope 2 and scope 3 emissions have been restated following correction of electricity use reporting at the US terminal storage asset. 69 Annual Report and Accounts 2023 | Sustainability ### 2023 SUSTAINABILITY IMPACT & PERFORMANCE CONTINUED Life cycle analysis (LCA) of embodied carbon by programme Units Australia Brazil (hydro) Brazil (solar) UK Portfolio Life time embodied kg CO 2 e 132,871,331 175,381,510 114,276,353 1,321,045 423,850,239 emissions Life time operational kg CO 2 e 6,560,974 1,865,990 12,867,804 93,210,017 114,504,785 emissions Total life cycle emissions kg CO 2 e 141,307,607 177,247,500 127,144,157 94,531,062 540,230,326 Life time emissions kg CO 2 e 637,651,331 9,157,834,560 197,048,974 246,557,717 10,239,092,582 avoided Life time net emissions kg CO 2 e 496,343,724 8,980,587,060 69,904,817 152,026,655 9,698,862,256 avoided Average emissions kg CO 2 e 25,506,053 91,578,346 7,881,959 9,862,309 134,828,667 avoided per annum Emissions payback years 5.5 1.9 16.1 9.6 4.0 | Avoided emissions since | kg CO | 2 e 25,035,373 104,866,963 6,976,839 In | | 136,879,175 | | | --- | --- | --- | --- | --- | --- | | GSEO acquisition | | | construction | | | | Remaining emissions kg CO | | 2 e 116,272,234 Complete* 120,167,318 409,777,295 | | | | | Remaining payback Years 4.6 Complete* 15.2 - | | | | | 3 | The Company takes a life cycle approach to was to understand the true avoided emissions for understand carbon impact and footprint of each each asset and account for emissions associated of the renewable power generation investments with the development of each asset. and the future carbon capture project. The The avoided emissions calculations within the Company conducted a life cycle assessment LCA take into account local factors such as carbon (LCA) of embodied emissions of the energy intensity of the energy type being replaced at generation assets in the portfolio. This data was a local level and local irradiance levels. The rst published in the 2021 annual report. This expected decarbonisation of traditional baseload analysis was updated with the acquisition of the energy supply aligned with country commitments Mascarenhas Brazilian hydro facility at the end of towards net zero by 2050 was also factored in. 2022 and the commissioning of the BESS system The calculations therefore accounted for expected in the Australian solar PV sites. This analysis was decarbonisation trajectory of grid supplied energy completed by a third-party sustainability expert and the tCO 2 e avoided gures at all phases of the with the methodology described below. This is asset life cycle for each country in which assets are also a requirement for some assets under the located. However, a declining grid carbon intensity EU SFDR regulation. has not been carried through for Brazil as the grid The data was calculated on an average 25-year has established low carbon intensity and Brazil is life cycle (longer for hydro) and includes import not considered aligned to net zero by 2050. The and export data that is indicative of full life Brazilian calculations therefore do not account emissions avoided. The LCA process for each for the type and carbon intensity of electricity asset was completed using actual and predicted generation being displaced by the solar PV assets, asset data as far as possible, supported with data nor the benets of distributed power generation. derived from the EcoInvent 3.8 database. This A reduction in electricity losses along transmission approach enabled the embodied tCO 2 e emissions and distribution lines means the remote distributed within each asset to be calculated. These include solar PV assets in Brazil will provide a more ecient emissions associated with raw material extraction, and cleaner source of energy locally, supporting manufacture, transport, construction, operations future growth and energy access. and decommissioning and recycling. The objective 70 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS The Company is tracking progress on carbon emission “payback” as calculated in the LCA, considering the estimated and actual energy generation and associated avoided emission calculations the ‘payback’ period for the assets. The clean electricity generated is starting to payback that emitted and estimated in their 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. ## Environmental The Company contributes to two categories of environmental impact. The **D**est is strategic, achieved through its investment intention. The energy transition focus on creating opportunity to 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. The addition of the 198MW hydro facility had a notable impact on the portfolio in 2023 both in terms of avoided emissions and renewable energy generated. Energy generated is tracked against targeted budgets for each asset. There was a 79% increase in solar generation in the portfolio with the completion of several construction assets in the Brazil solar PV programme. Australian Solar PV with battery storage assets and the Brazilian hydro facility report electricity generated through on site meters. Brazilian Solar PV assets report electricity generated through utility invoices. Where these are not available on site meter readings are used in lieu. There was 6% decrease in avoided pollutants in the portfolio in 2023 directly linked to the reduction in fuel flows through the US terminal storage asset. | Environmental metrics (strategic impact) | Unit | 2022 | 2023 | % Change | | --- | --- | --- | --- | --- | | Renewable energy generated* | MWh | 35,117 | 844,434^{1} | - | | Renewable energy generated (solar only) | MWh | 35,117 | 62,952 | 79% ▲ | | Nitrous Oxides (NOx) avoided | Tonnes | 2,048 | 1,921^{1} | | | Sulfur Oxides (SOx) avoided | Tonnes | 20,613 | 19,332^{1} | -6% ▼ | | Particulate Matter (PM) 10 avoided | Tonnes | 1,049 | 984^{1} | | | Particulate Matter (PM) 2.5 avoided | Tonnes | 770 | 722^{1} | | | GHG emissions avoided (Solar only) | Tonnes CO_{2}e | 14,349 | 17,663 | 21% ▲ | | GHG emissions avoided | Tonnes CO_{2}e | 14,349 | 122,530^{1} | | The second category of environmental impact is operational and achieved through proactive environmental management and emissions reduction at the facilities and construction sites. Investments will not be developed or operate in ecologically sensitive, protected or conservation areas and the Investment Manager’s sustainability criteria require operating partners not to contribute to environmental degradation and to take proactive measures to improve the environment around the operations. This includes choosing contractors who meet due diligence criteria for environmental management and reducing direct and indirect operational emissions to achieve a net zero target aligned with the Paris Agreement goal. Expected measures could include implementing a robust and appropriate environmental management system for operations e.g., ISO 14001, assessing and mitigating environmental and social impacts for new construction, taking a life cycle and value chain approach, ensuring responsible water use particularly in areas of water stress, and ensuring no negative land use change that impacts local food security or soil carbon. All construction assets included in the portfolio are ready-to-build with all environmental permitting and statements completed. No delays to projects were due to environmental concerns. The operational environmental metrics table below provides absolute metrics with a comparison to 2022 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. \* The generation represents the total generation of the assets exported to the grid recorded through on-site meter readings. For the Brazilian Solar PV assets total generation is generation invoiced to the clients. Where invoices were not available meter readings were used. 71 Annual Report and Accounts 2023 | Sustainability ### 2023 SUSTAINABILITY IMPACT & PERFORMANCE CONTINUED Environmental metrics (operational impact) Unit 2022 2023 % Change Water use including consumed Litres 44,793,795 24,274,056 -46% Water consumed Litres No data 15,700 ‡ Water quality (BOD) kg/litre 0.000002 Waste produced Tonnes 31 75 141% Renewable energy consumed MWh 0 8,172 The renewable energy consumed is in reference to oxygen to break down organic material in the the Brazilian hydro facility which consumes some water. The water is tested at four sites around the of the electricity generated by its turbines in the dam and was found to have low BOD (< 2.0 mg/L), facilities operations. This electricity is zero carbon indicating a low organic load in the monitored and is reported in the emissions table on page68. stretch when tested during 2023. The limits are dened by the National Water Agency Resolution There was a reduction in water use in 2023; this was “CONAMA N° 357 – 2005” which provides guidelines predominantly due to eciencies at the USterminal for each classication of bodies of water. storage assets. The site does not consume water but uses water in operations. The operating The standards used in Brazil were adapted from partner renovated the steam generation system the Water Quality Index (WQI) of the United States enabling it to capture more condensate allowing National Sanitation Foundation. The hydro facility the same water to be used multiple times for steam testing results meant it was ranked good on the generation. Additionally, the lower rail car volumes WQI in 2023. decreased steam requirements and consequently The tonnes of waste produced from the sites the water use. This was an important initiative increased in 2023 partly due to the addition of for the terminals which is the only investment the Brazilian hydro facility, which during planned in an area of high water stress. According to the maintenance replaced several heavy batteries World Resources Institute online water risk tool, on site, and partly the disposal of contaminated the local aquifer system is under extremely high- materials at the USterminal storage assets following water stress, has high baseline water depletion an accidental spill of fuel oil. and medium to high interannual variability. This is mitigated in the Brownsville area as a portion This was the one environmental and safety incident of water supply is produced from desalination reported at the USterminal storage assets in and water is drawn from the Rio Grande River. 2023 with 8bbls (approximately 1tonne) of fuel However, water reports from Brownsville Public oil released from a faulty rail car. The operating Utilities Board in June 2023 conrmed that in 2022 partner immediately initiated its emergency they initiated a drought plan with a request for response procedures and contained the spillage. user water conservation. As weather extremes are The authorities were informed but due to the small predicted to increase with climate change, water volume and following remediation, no further management risk is a material issue for the asset. action was required. The operating partner has revised training and operation manuals in the event Water is also a material issue at the Brazilian another faulty rail car is received in the future. hydro facility which monitors water quality every There were no injuries reported. six months at the site. The facility is located downstream of numerous towns and industrial ### Social activities and so there is a risk of cumulative environmental impacts. Monitoring water quality The Company has no employees. The social and biodiversity, and managing impacts is data reported and assured below is related to therefore important for the local environment and operating partner employees who interact with communities that rely on the resource. Thirty-one site operations and/or work directly on site. This water metrics are tested including pH, biochemical is reported as full time equivalent (FTE) for the | oxygen demand (BOD), chemical oxygen demand | nancial year 2023. This does not include operating | | --- | --- | | (COD), fecal coliforms, temperature, nitrogen | partner management employees working at head | | compounds, and heavy metals such as manganese, | oce or elsewhere. | chromium, mercury, and copper. Water with low The number of workers on sites increased in concentration of dissolved oxygen or high BOD are 2023 due to the acquisition of the hydro facility considered polluted as aerobic organisms need 72 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS and increased operations and maintenance team managing the Brazil solar PV sites. The operating partners saw a decrease in the percentage of female workers in 2023 due to the increase in workforce being predominantly male. Operating partners are required to have a diversity, equality and inclusion policy and plan with an aim to improve these metrics. The Company board had 60% female and 40% male gender split during 2023. The Company saw increased stability in the operating partner's workforce with 30 employees leaving in 2023 and a turnover rate of 14% which is above the 10% target, however an improvement on 2022. | Employee metrics | | 2022 | 2023 | % Change | | --- | --- | --- | --- | --- | | Total number of employees | FTE | 22.5 | 58 | 158% | | Gender diversity | Male | 93% | 98%^{1} | 5% | | | Female | 7% | 2%^{1} | -5% | | | Other | 0% | 0%^{1} | - | | Employee turnover | % | 27% | 14%^{1} | -13% | ## Health and safety | Operations: policy and procedures | 2023 | | --- | --- | | Operating partners with H&S safety policy | 100% | | ISO 45001 certified | 50% | | Environmental management policy and system | 75% | | ISO 14001 certified | 50% | | ILO aligned employee handbook | 100% | | Supplier code of conduct or equivalent | 100% | | Non compliance with environmental regulations | 0 | Health and safety of asset workers continues to be a priority for the Company. The Company expects all sites to have policies and management systems in place to drive continuous improvement in health, safety and environmental management. In 2023, 100% of assets had health and safety policies in place. The Brazilian hydro facility and US$^{2}$terminal storage assets both achieved certification on ISO 45001 health and safety management systems as well as ISO 14001 environmental management systems. The total case injury rate (TCIR) for the operational assets was zero. Health and safety data is reported monthly, and material incidents are reported within 24 hours of the event. The US$^{2}$terminal storage assets and Brazilian hydro facility had the highest number of workers on site and recorded no worker accidents or injuries in 2023. Incidents reported during the year in addition to the spill described above, but not recorded as near miss as no employees were involved, included small fires at one of the Australian Solar PV with battery storage assets due to a faulty component and at a Brazilian Solar PV asset with wind blowing sparks from neighbouring land. The fires were dealt with quickly through emergency response procedures and onsite freighting equipment with little damage caused and no injuries. Strong winds in Brazil also caused a temporary shut down and damaged modules to one site. A root cause investigation was completed and the construction contractor took remedial action with additional resilience measures implemented to mitigate this from happening in the future. There were no accidents in the construction assets, these fall outside the scope of the limited assurance. | Health and safety metrics | 2022 | 2023 | | --- | --- | --- | | Total number of incidents | 1 | 4 | | Total number of injuries | 0 | 0 | | Total case injury rate | 0 | 0^{1} | 73 Annual Report and Accounts 2023 | Sustainability ### 2023 SUSTAINABILITY IMPACT & PERFORMANCE CONTINUED ### Supply chain Community During 2023, the Company constructed three solar The Company shared guidance and tools with PV sites in New South Wales, Australia and deployed the operating partners in 2023 to support their BESS at one of its Australian operational sites. development of stakeholder engagement plans Suppliers in the cobalt and polysilicon supply chains and strategies. The objective was to support the that includes silicon components of solar cells establishment of meaningful and constructive have been implicated in forced labour practices relationships and dialogues and to improve and human rights abuses. Companies implicated transparency and identication of opportunities, have been blacklisted by various governments challenges and risks to the businesses. including the United States and Australia. However, All sites have mechanisms for receiving reports other downstream suppliers, particularly in the from the community, which are investigated and photovoltaic supply chain may be unwillingly mitigating actions implemented if required. During complicit by procuring silicon from these suppliers. 2023, two sites received complaints from the local Enhanced due diligence is one way of mitigating this community. One in Australia at one of the solar risk. The Company’s operating partner in Australia, PV construction sites from a neighbour who was through the construction contractor, engaged with concerned about dust. The contractor implemented suppliers for the new sites to understand their enhanced dust suppression activities to alleviate environmental and social operating practices as concerns. The second at the Brazilian hydro well as supply chain engagement practices. Data facility from the local community representatives was also collected on supplier audits and processes concerned about a siren which was accidentally for understanding the provenance of dierent sounded. components. This latter event led to enhanced engagement Due diligence found low risk in battery procurement with the community to share dam safety as the favoured battery chemistry requires and emergency response procedures including signicantly less cobalt, and the preferred suppliers a safety drill in September which involved the were found to have no record of exploitative whole community and emergency response practices. agencies. The asset also oered psychological services to local community members who All suppliers are required to have a supply chain wanted additional support. code of conduct. 74 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS 75 Annual Report and Accounts 2023 | Sustainability ### COMMUNITY ENGAGEMENT CASE STUDY ### In 2023, the Brazilian hydro facility ### operating partner engaged a third- ### party expert to complete a gap ### analysis and baseline study using the ### Hydropower Sustainability ESG Gap ### Analysis Tool. This is in anticipation ### of achieving the Hydropower ### Sustainability Standard. This analysis ### found robust programmes and ### projects to manage environmental ### issues with no signicant gaps in ### avoiding, minimising and mitigating ### environmental and social impacts. 76 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Hydro facility programmes Three ndings have led to enhanced community engagement around the facility. ## • Environmental licensing identication program These have included: ## • Organic residue composting project ## • Education days for school children at the plant ## • Log boom material collection and ## • Community training and simulation for disposal program dam safety and emergency action plan Water resources management program coordinated with local agency including ## • police and re departments ## • Water quality monitoring program ## • Stakeholder mapping and engagement plan ## • Sedimentological management program The site will continue strengthening stakeholder ## • Sediment metric monitoring program engagement and communication into 2024 aiming Ichthyofauna monitoring program to build trust and foster better collaboration with ## • the facilities' neighbours. ## • Reservoir surroundings zoning program ## • Environmental inspection program ## • Environmental education and social communication program Biodiversity and Indigenous invasive species peoples Resettlement Cultural heritage Community Governance impacts and and procurement infrastructure saftey Water quality Communications and sediments and consultation Hydrological Labour and resource working conditions Environmental and Climate change social assessment mitigation and and management resilience 77 Annual Report and Accounts 2023 | Sustainability ### CLIMATE RELATED FINANCIAL DISCLOSURES The Company is voluntarily disclosing its current Louise Kingham, CBE, is a Board member with practice in its annual nancial report in accordance strong industry expertise and is responsible for ESG with the Task Force on Climate-Related Financial and sustainability related matters for the Company. Disclosures (TCFD) recommendations and The Board and Board committees monitor and requirements. The Company is committed to oversee climate-related issues when reviewing and strengthening climate-related nancial disclosures guiding GSEO strategies, important plans of action over time. Additional reporting in 2023 include net and risk management policies. They also track zero targets published through the Net Zero Asset implementation and performance progress against Managers Initiative (NZAMI) covering 100% AUM, goals and targets for addressing climate-related as well as quantitative analysis of climate related issues through its periodic committee meetings and impacts to the portfolio. the oversight of the Investment Manager. The experience and background of Board members ### Pillar 1: Governance are disclosed on page95. Disclose the organization’s governance around b) Describe management’s role in assessing climate related risks and opportunities and managing climate-related risks and An orderly energy transition towards climate opportunities change goals is the key opportunity for the The Investment Manager has responsibility for Company. The Company’s strategy is to target direct implementing the Company’s investment strategy, investments in energy infrastructure assets that managing the Company investments, and reporting support the SDGs, specically those that address to the Board and Board committees. There are themes that include climate change, energy access, three relevant subcommittees at the Investment energy eciency and market liberalisation. Climate Manager level which address climate-related issues change issues are therefore intrinsically considered and report to the Investment Manager leadership by both the Board and the Investment Manager. team: The management of climate related risks and ## • The Investment Committee evaluates opportunities is integrated into the Company’s investment opportunities aligned with the risk management framework. This looks at the SDGs and with the purpose of accelerating likelihood of a risk and the severity of impact with the energy transition towards a net zero and without controls. It enables the Board and the carbon world before making any investment Investment Manager to prioritise material risks for decisions. An external assurance consultant is additional mitigation (see principal risk section on used to advise on project selection following page50). a robust SDG validation due diligence process. The Investment Manager’s Head of a) Describe the board’s oversight of climate- Sustainability is a member of the Investment related risks and opportunities Committee informing about climate-related The GSEO Board has oversight of the business issues. model and strategy. It meets at least four times a ## • The Sustainability Committee provides year and is responsible for the ongoing process of recommendations on ESG integration into the identifying, carrying out a robust assessment of, investment strategy and ongoing asset life and managing and mitigating the principal risks cycle management. This includes appropriate which includes climate-related risks faced by the ESG target setting, periodic monitoring, and Company. reporting. The Board’s Audit Committee, which is comprised ## • Risk, Operations and Compliance of three independent Directors and chair, meet Committee ensures risks are identied and at least twice a year, and has responsibility for control measures are put in place to mitigate reviewing the Company's risk management the risk, which includes climate-related issues. systems. The committee reviews and updates the Company's risk register which includes climate-related risks. 78 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### The Investment Manager leadership team are Pillar 2: Strategy deeply involved in these three subcommittees; they Disclose the actual and potential impacts of then aggregate, consolidate, and report investment climate-related risks and opportunities on decisions and program updates periodically to the the organization’s businesses, strategy, and Board and Board committees. nancial planning where such information is The Investment Manager’s Head of Sustainability material. is responsible for the climate-related program management which includes monitoring climate a) Describe the climate-related risks and issues, adopting ESG and climate-related practices opportunities the organization has identied into the Company, improving investment-level over the short, medium, and long term resilience to climate-related risks and reaping The average asset life in the Company portfolio climate-related opportunities aligned with the exceeds 25 years, therefore the Company generally Company's strategy. The Head of Sustainability takes a long-term time horizon approach. This reports to the Investment Manager’s Head of is also aligned with the portfolio net zero target Risk Management on climate-related risk issues timeframe. The Investment Manager is a signatory and metrics to respective committees and to the Net Zero Asset Managers Initiative (NZAMI) leadership team. which supports the goal of net zero GHG emissions The Investment Manager also works closely with by 2050. With rapid changes in market movements, operating partners through regular meetings regulatory trends, and weather patterns, the and monthly reports to review and monitor Company also assesses material climate-related risk climate-related issues. in shorter time horizons. Operational carbon footprints are calculated The Company considers climate related risks and including life cycle analysis of energy generation opportunities within the following time horizons: projects to understand their contribution to the ## • Short term: 0-5 years Company’s net zero target (see page 92). Actions are put in place to reduce operation emissions Medium term: 5-10 years ## • and other environmental impacts, including ## • Long term: 10+ years understanding supply chain and value chain impacts. Operating partners periodically arm their The Company’s process of assessing climate-related compliance with relevant policies. risks and opportunities is integrated into its ESG materiality and ESG risks analysis process which For construction assets, operating partners are is described on page 63. It covers the investment engaged to ensure ESG management practices are process ranging from investment decision-making aligned with the Investment Manager’s sustainable to ongoing deployment monitoring. Potential development culture. risks can also be raised by operating partners The Company’s governance structure is presented and investment team members to the Head of on page 103 where associated subcommittees Sustainability. The material climate-related risks are included. and opportunities of the Company are identied 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 nancial materiality threshold, which is above 3% of NAV for residual climate related risks after considering risk mitigations. This is consistent with nancial market norms. 79 Annual Report and Accounts 2023 | Sustainability ### CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED Climate-related Risk Risk Assessment and Mitigation Risk category: Time horizon: medium-term, long-term Physical risk – Chronic Impact area: business, strategy, and nancial planning Longer term gradual changes in Potential impact: reduction in output from assets leading to reduced income stream. This climate patterns, e.g., reduction risk may increase over the long term in the absence of climate mitigation. or increase in wind levels, decrease in solar optimal days Risk mitigation: The Company invests in a portfolio of energy transition infrastructure impacting renewable output and assets, diversied by geography, technology, and capability. These investments follow the associated earnings. Increased thesis of energy transition to achieve net zero goals. Such diversication provides a buer occurrence of extreme weather against variable weather patterns across the portfolio. events such as cyclones, storms, The Company also mitigates risk through project revenues being contracted for the ooding, and heatwaves causing medium- and long-term. damage to assets, disruption to feedstocks, value chain, outputs At the asset level, meteorology due diligence is undertaken before investment, weather and associated earnings. conditions are monitored and some of the assets have battery storage capabilities to optimise energy input to the grid. All assets have crisis management and business continuity plans to respond to disruptions. The assets are required to have continuous improvement management systems to build capability and capacity in local teams and operations. Risk category: Time horizon: short-term, medium-term, long-term Physical risk – Acute Impact area: business, nancial planning Abrupt disruptive climate impacts Potential impact: Increase operating expenditure to recover asset damage caused by such as impacts from ooding, natural disasters and increase insurance premium for assets in high-risk locations. wildre, drought, extreme heat, or sudden regulatory actions Risk mitigation: Throughout the investment decision-making process, the due diligence increasing over time. 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. 80 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Climate-related Risk Risk Assessment and Mitigation Risk category: Time horizon: medium-term, long-term Transition risks – Market Impact area: business, strategy, and nancial planning Uncertainty in market signals Potential impact: Increase in market volatility and abrupt and unexpected shifts in power manifests as lower-than-expected prices make nancial forecasts less reliable on intermittent renewable energy solutions. power prices, driven by an imbalance between an abundant Reduced throughput for conventional fuels longer-term with expected shift to clearer and intermittent power supply and alternative fuels impacting existing fuel storage asset revenue ows. market demand. Lower than Risk mitigation: The Company manages this risk through its diverse portfolio of energy expected volume throughput for transition infrastructure assets such as the battery energy storage systems and enduring conventional fuel storage asset hydro facility, as well as signing xed price otaker agreements. driven by increased demand for alternative fuels. The Company is assessing its longer-term strategy to invest in storage assets to accommodate alternative fuels required for hard to abate transportation including sustainable aviation fuel, renewable diesel, marine e-methanol and hydrogen as the market shifts. Risk category: Time horizon: medium-term, long-term Transition risks – Impact area: business, strategy, and nancial planning Technology, Market Potential impact: Increase costs to adopt/deploy new practices to transition to lower Market shifts such as changing emissions technologies, reduction in the availability of capital to invest in some local and/ customer behaviour and or mature technology energy transition projects. substitution of existing products and services with lower emissions Risk mitigation: There is strong public demand for support of the renewable energy options or new technologies market towards net zero carbon emission targets. may dampen ability to engage The senior management team of the Investment Manager has extensive experience in European investors on a executing a wide variety of strategies in the energy sector, the team monitors market shifts traditional European focused and tailor investment strategies accordingly. renewable portfolio and often shift strategy towards a broader The Company is expected to hold most of its investments on a long-term basis and the portfolio of energy transition Board and the Investment Manager monitor the position on a regular basis. projects that cover various regions and include new technologies such as biofuel, carbon capture and reuse, and etc. Risk category: Time horizon: short-term, medium-term, long-term Transition risks – Impact area: business, and nancial planning policy and legal, reputation Potential impact: Increase cost of doing business (e.g., higher compliance costs, Policy shift may introduce increased insurance premiums, workforce management and planning). Reduction in the regulation around climate availability of capital to invest in energy transition projects. change e.g., increased disclosure, taxes etc. Risk mitigation: The Company is supportive of the policy aims of the Disclosure Regulation and will comply with it and monitor changes. Stakeholders' increasing concerns on business practice (e.g. supply The Company, via the Investment Manager, engages with partners and stakeholders to chain management, workforce gather data and drive action to improve ESG management and support disclosure and management and planning) need policy requirements. This includes monthly metric reporting on climate related KPIs such to be addressed. 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. 81 Annual Report and Accounts 2023 | Sustainability ### CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED Climate-related Opportunities Opportunity Assessment and Response Opportunity category: Time horizon: medium-term, long-term Energy Source, Resilience Impact area: business, strategy, and nancial planning Decarbonisation policy and Potential impact: market shifts will drive new renewable energy, new fuels and • Creates more deal origination opportunities in support of energy transition which aligns energy storage opportunities. with Company’s investment strategy. This is aligned with the Company’s ## • Increases capital availability as more investors favour lower-emissions programs. 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. Opportunity category: Time horizon: short-term, medium-term, long-term Resource Eciency, Energy Impact area: business, strategy Source, and Products and Services Potential impact: Volatile power price movements ## support an increase in energy • Provides additional revenue sources in marketplaces with abundant intermittent power eciency grid infrastructure supply through harvesting merchant pricing. investing which leads to increased ## • Supports in energy eciency and energy security reinforces intangible benets such source of revenue. as reputation, brand and goodwill, together with employee, partner and stakeholder engagement. Opportunity category: Time horizon: short-term, medium-term, long-term Energy Source, Markets, and Impact area: business, strategy, and nancial planning Resilience Potential impact: Market liberalisation in developed ## and developing economies • Access to new markets leads to an enhanced competitive position through addressing is creating opportunity for shifting consumer preferences, resulting in increased revenues. market share in renewable and ## • Increases availability and diversication of nancial assets such as green bonds. alternative energy opportunities ## in new geographies. • Improves resource eciency and reduces operating costs. ## • The Investment Manager has engaged and will continue to reach out globally with various companies and investors to support expansion of the Company and sustainable energy infrastructure investments. Opportunity category: Time horizon: short-term, medium-term, long-term Resource Eciency, Markets, Impact area: business, strategy, and nancial planning and Resilience Potential impact: Decentralisation of energy ## generation creating new • Enhances competitiveness and increases revenues through new solutions, access to opportunities for investment in new markets, diversication, resilience planning and relationships. renewable and other sustainable ## • Increases reliability of supply chain and ability to operate under various conditions. energy infrastructure. ## • A pipeline of investments is constantly being identied, with the Investment Manager regularly reporting to the Board on this pipeline. 82 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS | b) Describe the impact of climate related | The Company also supports the goal and has set a | | --- | --- | | risks and opportunities on the organization’s | target of reaching net zero carbon emissions in its | | businesses, strategy, and nancial planning. | portfolio by 2050. | | Impact on existing businesses | Energy security is a principal concern for country | leaders and is driving a focus on reducing reliance The Company invests in a diverse range of on energy imports and building out domestic sustainable energy infrastructure investments such renewable and low carbon energy capacity. This as renewable energy generation, transmission, represents an opportunity for the Company to distribution, and storage that drive the global further expand into new markets supported by the transition towards cleaner and more sustainable existing cross-continental exposure and the energy sources of power. The Company’s investment sector expertise of the Investment Manager. strategy therefore sees opportunity in the current and growing transition to a low-carbon economy. As the public consensus and attention on sustainability grows, and countries and The Company’s investments inherently improve organisations strive to achieve the goal of a net environmental performance; for example, in zero carbon world, investment ow towards the Brazil, investment in a portfolio of solar PV assets energy transition is continuing to grow. This is will accelerate the growth of a sustainable energy both an opportunity and a risk. As capital ows system by improving and securing localised access align with the Company’s investment objective, to clean energy and helping to lower Brazilian this can enable increased access to investment energy prices. The UK exible power with CCR funds; however, as more investors pursue the assets will use a less pollutive fuel in natural gas, as same sustainable energy infrastructure investment well as reduce emissions through ecient carbon theme, the market may become increasingly capture and reuse technologies. competitive and therefore sourcing investments The Company’s investments are exposed to on attractive terms will become more dicult. The physical climate risk such as potential damage to Investment Manager’s industry expertise and ability asset infrastructure as well as osite transmission to source exclusive transactions is invaluable in and distribution systems. This risk arises from mitigating this risk. extreme weather conditions that are becoming Impact on nancial planning more common and frequent in the locations of operation. The Investment Manager reduces impact Climate-related issues are both opportunities and by diversifying technology, nding synergies such risks for the Company’s nancial planning. as co-locating generation and storage, and building The Company benets from its strong ESG a global portfolio with investments in multiple credentials which reect both in positive impact continents experiencing dierent weather patterns on climate change and stable long-term income and conditions. It also conducts climate risk and distributions to meet investor requirements on vulnerability assessments (CRVA) for each asset to sustainability and return. It provides the Company identify opportunities to build resilient assets. with the opportunity to leverage sustainability- Increased power price volatility because of more linked credit facilities at a lower cost of borrowing intermittent renewable power generation in the if required. The Company’s TCFD voluntary market has become increasingly prominent. The disclosures and transparency to the market are nancial impact of this market trend will become praised by existing shareholders and attractive to relevant and benecial as the Investment Manager sustainability-driven prospective investors. builds out its co-location of solar PV and battery The Company’s investment valuation and nancial energy storage solution in volatile markets such as projections rely on various assumptions. Increased Australia. power price volatility is one such factor identied Impact on strategy and discussed in the climate related risks and opportunities on page 80 that brings uncertainty The Investment Manager continues to observe to the Company's investment revenue streams. globally favourable government policies to support The Company reduces this risk exposure through decarbonising goals and low carbon renewable entering into xed power price agreements energy investment. This aligns with the Company’s with otakers in the short to medium term. The investment objective to generate stable returns Company continues to invest in battery storage by investing in a diversied portfolio of global development, as there is an opportunity to capture sustainable energy infrastructure investments value given the market price volatility. to facilitate the transition to a low carbon energy world. 83 Annual Report and Accounts 2023 | Sustainability ### CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED The Company uses external expert advisors to produce and validate its nancial assumptions to increase accuracy, yet the Company’s nancial forecasts and budgets are still subject to climate-related issues related to projection accuracy. A materiality analysis of the climate-related risks and opportunities identied on page 80 was completed following the asset specic CRVA and review of the nancial 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 nancial impact as described on page 85. Risk Risk category Description and potential Impact Likelihood and likely time horizon Physical – Acute Flood In several asset locations, the Likely – Inter-governmental Panel on Climate Medium to Long Change (IPCC) Sixth Assessment Report (AR6) models predict an increase in frequency of extreme rainfall which can result in river and surface water ooding damage to infrastructure and shut down of operations. Physical – Acute Wildre In several asset locations, the IPCC Likely – AR6 models suggest an increase in Medium to Long the re season with increased severity and frequency of wildres which can lead to infrastructure damage and shutdowns. Physical – Acute Extreme Heat An increase in mean air temperature Likely – consistent with global trends across Medium to Long the portfolio with predictions of an increase in air temperature extremes can lead to increased drought, wildre and heat stress which further result in infrastructure damage and/or curtailment of electricity generation and labour shortages. Transition – Markets Power price NGFS scenarios predict volatility and Likely – volatility reduction in the power price as more Medium to Long renewables and low carbon power generators export to the grid. Transition – Markets Fuel market NGFS scenarios predict a reduction Highly likely – transitions in demand for conventional fuels in Medium to Long 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. 84 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS c) Describe the resilience of the organization’s processes. The energy transition is the focus of the | strategy, taking into consideration dierent | Company’s investment strategy. It is the Company’s | | --- | --- | | climate-related scenarios, including a 2°C or | objective to accelerate an orderly transition | | lower scenario | via its investments. It is also expected that the | investments would be resilient in case of a failure to The analysis of the Company’s business strategy achieve the energy transition. under dierent scenarios took into consideration the current geographic locations of assets and The Company’s scenario analysis for TCFD has critical Tier 1 supply chain companies such as produced a range of possible nancial impacts solar panel manufacturers. The Company’s under three dierent scenarios for each asset business strategy supports a transition scenario. unique to each geography and predicted changes. Commitments made internationally at the UN There is uncertainty in terms of how climate change climate change conferences and nationally will impact individual operations as well as the demonstrate policy and market momentum, impact of global eorts to achieve an orderly energy towards energy transition and in support of the transition and so this data should be regarded as Company’s investment policy. indicative rather than absolute predictions. The Company considers a bottom-up approach Generally, the Company’s nancial materiality to perform scenario analysis, given the portfolio’s threshold for climate related risks and diversied geographic locations and technologies. opportunities is 3% of NAV after considering risk When assessing the impact of climate risks and mitigation. Due to the unpredictability of climate opportunities on the portfolio, the Company related weather events, the Company takes a more distinguishes between transition risk and cautious approach to manage and secure insurance physical risk. policies in order to mitigate this uncertainty in the longer term. The Company’s diverse energy infrastructure investments are considered under the following Scenario analysis is split into physical and transition scenarios including: risks. The Company performed the scenario analysis on operational assets only and quanties ## • NGFS climate scenarios the resilience of the portfolio to climate-related ## • IPCC Representative Concentration Pathways (RCP) scenarios by assessing the impact on NAV per share. The NGFS transition risk models use integrated assessment models that derive the impacts of Transition Risk dierent policy ambitions on the energy transition Transition risk is comprehensively considered relevant sectors with granular information on and embedded in the investment nancial implications for 184 countries. The physical risk models, including sensitivity analysis, to allow the models include acute and chronic risk based on Investment Manager to proactively make decisions global temperature paths. The NGFS models were to mitigate, transfer, accept, or control those risks assessed by the IPCC working group III as part of where appropriate. AR6 and although they cover a smaller range of model assumptions, they have a higher sectoral The Company’s investment process selects projects and regional granularity. The NGFS scenarios are that align to the energy transition to net zero. also well aligned with the IEA scenarios on several Various standard parameters are considered in 5 dimensions. Given the portfolio's geographical the Investment Manager’s nancial and valuation and technological diversication, and given the models including policy and regulatory changes Company's bottom-up approach in performing and stringency, technology and energy mix, scenario analysis, the Company selected NGFS energy demand and future mix, capacity changes, 5 scenarios for transition risk as relevant scenarios. key commodity changes and associated costs or prots to the business. The nancial and valuation The nancial impact and resilience of the models are geographically tailored, and take into Company’s investment business strategy to consideration the national mandated targets for dierent climate scenarios is inherent in the renewable and other energy source penetration Investment Manager’s nancial modelling in the energy mix. Carbon reduction policies of the investment country and region are also critical considerations in understanding investment impact and suitability. 5 https://www.ngfs.net/sites/default/les/medias/documents/ngfs_climate_scenarios for_central_banks_and_supervisors_phase_iv.pdf Scenario Design and Analysis 85 Annual Report and Accounts 2023 | Sustainability ### CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED For this scenario analysis exercise, the Company The Company used country and market specic focused on the Global Change Analysis Model scenario data when available. Particularly when (GCAM) modelling suite, part of the NGFS, given the considering Latin American markets, scenario model's data availability and geographic granularity results varied signicantly between countries in 6 in line with the Fund assets. The Company includes the region, so local predictions were used for Brazil the following scenarios under each category: and Mexico. Similarly, the Company focused on the Australia/New Zealand region for the scenario ## • Current Policies/BAU: Current Policies, analysis of the Australian solar PV with battery Nationally Determined Contributions (NDCs) storage assets. ## • Paris Aligned Well-Below 2C: Below 2C, By considering a bottom-up approach to conduct Delayed Transition scenario analysis, the Company shocked the ## • Paris Ambitious 1.5C: Net Zero 2050, aforementioned factors in the asset valuation Low Demand models and assessed the impact on the life-time dividends by discounting them to present value. The Company identied one key variable as The Company assessed the impact on valuation at the main driver for each programme to assess both programme level and portfolio level. the impact of transition risk on the value of the portfolio. The Company selected power price as The portfolio level results are highlighted below the main driver for the Brazilian hydro facility, the in a NAV per share impact range. The Company Australian solar PV with battery storage assets, and benets from both technology and geography the Brazilian solar PV assets. For the US terminal diversication, demonstrating the inherent focus storage assets, the Company selected volume on the energy transition in the Company's throughput, taking into account the change in investment strategy. demand for oil and the transition to alternative fuel sources such as hydrogen and biofuels. ### Estimated NAV per share impact under transition risk scenarios | 116.46p | | +1.5p/share to | | | | | --- | --- | --- | --- | --- | --- | | | | | +1.9p/ | | share | | | Q4 NAV per share | | | Current Policies/BAU | | | +1.6p/share to | | | -1.6p/share to | | | | | --- | --- | --- | --- | --- | --- | --- | | | +1.9p/ | share | | -1.1p/ | | share | | | Paris Aligned Well-Below 2C | | | | Paris Ambitious 1.5C | | 6 https://gcims.pnnl.gov/modeling/gcam-global-change-analysis-model 86 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Among the operational programmes, Portfolio and programme valuation the US terminal storage programme ### impact under transition risk scenarios show the highest impact to transition risk. This is driven by the change Paris ambitious 1.5c – valuation impact in oil demand and the transition Q4 valuation to other fuels such as biofuels and hydrogen observed in Mexico. The Portfolio Brazilian hydro facility and the Brazilian solarPV assets benet US terminal storage from higher power prices in the Paris Ambitious 1.5C and Paris Aligned Well-Below 2C scenarios. Brazilian hydro facility The Australian solar PV with battery storage assets experiences minimal Brazilian solar PV impact which does not register on the impact graphs given power price assumptions in the Australian/ Australian solar PV and battery storage New Zealand region as well as the portfolio composition of which the -5.00% 0.00% 5.00% Australian programme contributes 3%. Paris aligned well-below 2c – valuation impact The Company is committed in Q4 valuation developing and employing the best available data, scenarios Portfolio and methodology. The Company selected the most relevant variable US terminal storage when performing the scenario analysis. However, the Company recognises there are high levels Brazilian hydro facility of uncertainty and limitations in the climate models, scenarios Brazilian solar PV and methodology. Therefore, the gures reported should be seen as indicative of potential impact and not Australian solar PV and battery storage performance forecasts. -5.00% 0.00% 5.00% Current policies/BAU – valuation impact Q4 valuation Portfolio US terminal storage Brazilian hydro facility Brazilian solar PV Australian solar PV and battery storage -5.00% 0.00% 5.00% Note: the blue line represents the portfolio valuation as at 31st December 2023. The orange boxes represent the % range of impact on the portfolio and programme valuation under the dierent scenarios. 87 Annual Report and Accounts 2023 | Sustainability ### CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED Physical Risk estimates the capital expenditures required to build additional measures to cater for an increased The Company identies physical risks in the maximum river ow was considered more relevant asset specic CRVAs and proactively takes steps and appropriate. to mitigate climate-related risks and build asset resilience. Acute physical risks including but Under the RCP 2.6 scenario, the NAV per share not limited to hurricanes, wildres, oods and impact is -0.30p/share, while under the RCP 8.5 heatwaves are mitigated through insurance scenario the NAV/share impact is -0.42p/share. The policies, while chronic physical risks such as higher subdued impact highlights the inherent risk analysis average temperatures and changes in precipitation and considerations that the Company uses in its patterns are mitigated through the asset design and investment strategy. operational management. The Company focused on one key variable or factor The IPCC AR6 report quanties the insured when performing the physical risk scenario analysis, damages projected impact under the RCP 2.6 while keeping all other model inputs constant. Due 7 scenario and RCP 8.5 scenario for Australasia. The to the complexity of variable interactions and model Company uses the percentage increase in insurance impacts, the Company is aware that limitations to premiums as a proxy for the insured damages the scenario analysis remain and is fully committed projected impact. The Company applies this shock to develop the methodology further. Therefore, the to assess the impact on the programme level and gures reported should be seen as indicative of portfolio level valuations as follows: 7% under RCP potential impact and not performance forecasts. 2.6 scenario, 7.5% under RCP 4.5 scenario, 8% Given that the energy transition is the focus of under RCP 8.5 scenario. The shocks are applied the Company's investment strategy, the Company across the three operational programmes: US inherently considers both transition and physical terminal storage assets, Brazilian solar PV assets, risks and opportunities in its investment decision and Australian solar PV with battery storage process and asset life cycle management. Thus, the assets. In the case of the Brazilian hydro facility, results and scenario analysis are in line with the performing a hydrological risk assessment that Company's strategy. 7 https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter11.pdf 88 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Estimated NAV per share impact under physical risk scenarios RCP 2.6 ## -0.30p/share116.46p Q4 NAV per share RCP 2.6 ## -0.36p/share -0.42p/share RCP 4.5 RCP 8.5 ### Pillar 3 – Risk Management The operating partners may also do asset specic analysis to support insurance or environmental a) Describe the organization’s processes for management practices. For example, the Brazilian identifying and assessing climate-related risks hydro facility completed a hydrological study and ood risk analysis in 2023 to understand the dual The Sustainability and ESG risk analysis process is impact of ood and drought on the asset and local described on page62 of this report. Climate related communities. risks and opportunities are identied through this process. Climate-related risks are considered These identied risks are reported to the at the asset level within the screening and due Investment Manager’s Investment Committee diligence processes of energy infrastructure and rolled up to the Company risk register which investments prior to any investment decisions. The is reviewed by the Board Audit Committee as risk management process considers the type of described in the governance section on page50 and infrastructure and geographic risks. Local partners principle risks section on page50. are engaged to assess environmental management practices and processes, and to broaden b) Describe the organization’s processes for understanding of stakeholder perspectives. This managing climate-related risks investment management process is described on The material climate-related risks have been page63. identied and corresponding risk management As described on page70, the Company takes a life strategies have been considered and described on cycle approach in calculating the embodied carbon pages 80 and 81. in the energy generating assets and conducting a As discussed in the Sustainability section above, CRVA for each asset. This identies the material an expert third party sustainability consultant climate physical risks and opportunities for the continued to deliver physical CRVA reports for asset and recommendations to mitigate the risk each of the Company’s new assets in 2023. The and build asset resilience. This is described in more CRVA identied material investment-specic detail below. physical risks and corresponding risk mitigation recommendations. 89 Annual Report and Accounts 2023 | Sustainability ### CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED The Investment Manager’s Head of Sustainability c) Describe how processes for identifying, analyses the assessment report and discusses assessing, and managing climate-related risks appropriate specic risk mitigation business are integrated into the organization’s overall practices with the operating partners and risk management investment management team. Where there is an The Company’s process of identifying, assessing, acute physical risk such as severe natural disaster, and managing climate-related risks is fully for construction projects the asset design considers integrated into its investment process ranging from infrastructure toleration maximums, and the investment decision-making to post-investment Investment Manager seeks insurance coverage to ongoing monitoring. Material climate-related transfer the risk. risks identied are included in the Company’s risk The CRVA was conducted in accordance with the register and the ongoing risk management process. criteria of the EU Commission Delegated Regulation After assessing the likelihood and the severity (EU) 2021/2139 which form the Technical Screening of impact of climate-related risks, the material Criteria of the EU Taxonomy. Specically, the CRVA risks are disclosed in the principal risk section was conducted to accord with the requirements of on page 49. Appendix A of the above regulation, the Generic More detail on the sustainability and ESG risk Criteria for Do No Signicant Harm to Climate analysis process is on page 62. Change Adaptation. The CRVA was carried out using climate projections Section 4 – Metrics and Targets across dierent RCPs used by the IPCC fth assessment report (AR5) and AR6. a) Disclose the metrics used by the organization to assess climate related risks and opportunities Climate modelling of regional impacts on the in line with its strategy and risk management locations where each of the Company’s assets are process situated was used. The impacts of these changes were interpreted to understand the physical Metrics used to assess and monitor transition risks hazards the assets might experience over their and opportunities: lifetime. The sustainable energy infrastructure ## • £m Capital invested and committed to investments considered under the CRVA have sustainable energy infrastructure assets expected lifespans greater than 10 years. ## • Growth in investment portfolio Vulnerability of the assets to projected climate ## related hazards was considered based on asset • MWh of energy produced by the portfolio a year design standards, site locations and risk to climate ## • Volume throughput at the terminal storage related impacts as well as historic climate related assets issues which may have been experienced in the ## region. The Company also considers the type of • % Investments aligned to the EU Taxonomy asset and whether it will be impacted by changes Metrics used to assess and monitor physical risks in weather (e.g., wind and solar power), supply and opportunities: chain disruption (e.g., energy supply), and market ## demands. • At a fund level, current portfolio diversication ## Implementation of adaptation solutions identied • At an asset level, annual performance within the CRVA are reviewed with the operating against budget partners and the gap is lled if necessary. These ## • CapEx / repairs and maintenance costs adaptations show how the resilience of the asset is improved to withstand vulnerabilities. The Other related metrics such as GHG emissions and most common hazard identied was the potential investment weighted average carbon intensity for wildre or ood. All assets have appropriate are also reported on page 91. Environmental drainage designed and, in some cases, enhanced metrics used such as water, energy, and waste to move excess water away from sites. All sites also management are reported in the Sustainability have appropriate reghting equipment installed section on page 72, which includes comparison and operators, crisis and emergency response with previous operational years and are used to procedures. calculate the portfolio’s total carbon footprint. 90 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Operating partners, as part of their environmental b) Disclose Scope 1, Scope 2, and, if appropriate, management practices, look to reduce impact from Scope 3 greenhouse gas (GHG) emissions, and these metrics. These activities are reported in the the related risks ESG section of this report on page58. Portfolio GHG emissions for 2023, comparison | Physical risks are considered throughout the | with the previous year 2022 and discussion on | | --- | --- | | investment acquisition process and ongoing | trends and risks are included in the sustainability | | monitoring. Through CRVA reports, investment- | section on page68. | specic physical risks are contemplated and The Company reports on energy generation, addressed early in the acquisition process. If consumption and associated carbon emissions. the climate risk highlighted has no immediate The carbon intensity of the Company’s portfolio is mitigation solution, insurance policies and further low. The Company predicts most emissions that will discussion at the Investment Manager Investment require reduction by 2050 will be Scope 3. Committee is required. Under the TCFD recommendation, asset managers Metrics used to assess and monitor physical risks are required to provide the weighted average and opportunities: carbon intensity for the investment strategy. This ## • At a fund level, current portfolio diversication metric with other carbon footprinting metrics using formulas provided by the TCFD are included in the ## • At an asset level, annual performance against table below. budget The source of operational emissions includes ## • CapEx / repairs and maintenance costs imported electricity from the grid, fuel used in asset owned vehicles and natural gas for heating and operations. 8, 9 10 TCFD carbon footprinting and exposure metrics Unit 2022 2023 ‡ | Portfolio's exposure to carbon-intensive companies, | | | t CO | 2 e/$M 65 42 | | | --- | --- | --- | --- | --- | --- | | expressed in tonnes CO | 2 e/$M revenue | | | | | | The absolute greenhouse gas emissions associated with | | | | t CO | 2 e 3,636 3,199‡ | | a portfolio, expressed in tonnes CO | | 2 e | | | | ‡ Total carbon emissions for a portfolio normalized by t CO 2 e/$M 6 5 the market value of the portfolio, expressed in tonnes CO 2 e/$M invested ‡ Volume of carbon emissions by million dollar t CO 2 e/$M 273 192 of revenues 8 Underlying revenue metrics are unaudited. Figures may change once metrics are audited in 2024. 9 Market capitalisation calculated using prot rather than equity share to more accurately reect value of investments. 10 2022 gures restated per updated methodology and restated scope 2 emissions. 91 Annual Report and Accounts 2023 | Sustainability # CLIMATE-RELATED FINANCIAL DISCLOSURES CONTINUED # 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 under the Net Zero Asset Managers Initiative (NZAMI). The Company uses various metrics at asset level and portfolio level, disclosed on page 68, 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 adviser 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. | Methodology | Year | Target | | --- | --- | --- | | Science Based Target initiative for Financial Institutions: Sectoral Decarbonisation approach | Baseline 2023 | 0.0710229 tonnes CO_{2}e / MWh | | | Near term 2030 | 0.0260654 tonnes CO_{2}e / MWh | | | Long term 2050 | 0.0035511 tonnes CO_{2}e / MWh | 92 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS 93 Annual Report and Accounts 2023 | Governance ### INTRODUCTION The Board acknowledges that good governance is ### The Board is responsible for the overall integral to ensuring the Company’s success and ### governance of the Company. As an sustainability. It always works towards ensuring ### investment company, the Company’s purpose that its decisions are in the best interests of the shareholders and other stakeholders. This is ### is expressed in its investment objective. Its achieved by eectively utilising the diversity of skills, ### investment policy describes the strategy expertise and experience on the Board. The Board aims to follow high standards of governance and ### adopted by the Company to achieve its establish a culture based upon openness, integrity, ### objective. The investment objective and trust, mutual respect and constructive challenge. This culture of openness and constructive challenge ### policy stated below should be considered in extends to the Board’s interaction with the ### conjunction with the Chair’s statement, the Company’s third party service providers, particularly the Investment Manager. ### Investment Manager’s report and the other ### disclosures within this Strategic Report which The Company has put in place a number of policies and procedures which assist with maintaining a ### provide an in-depth review of the Company’s culture of good governance. These include policies ### performance and strategy. relating to Directors’ share dealings, Directors’ conicts of interest, anti-money laundering, anti-bribery and corruption, and prevention of facilitation of tax evasion. Compliance with these policies is monitored regularly through Board meetings and an annual evaluation process. 94 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### MEET THE BOARD ### Bernard Bulkin, PHD, OBE Margaret Stephens ### Chair of the Board and Chair Chair of the Audit Committee ### of the Nomination Committee Qualied Chartered Accountant and a 28-year career with KPMG. 16 years as a Over 35 years in the energy industry. partner focused on global infrastructure Experienced board member and chair. and international M&A. Currently, a Currently a director of ATN International non-executive director and Chair of Inc., a NASDAQ-listed company. the Remuneration Committee of AVI Business and commercial roles including Japan Opportunity Trust plc and a non- chief scientist of BP, former member executive director of Sequoia Economic of the UK Sustainable Development Infrastructure Income Fund Limited. Commission and Chair of The Oce of Formerly, a Trustee Director and Chair of Renewable Energy of UK Government. Audit Committee of the Nuclear Liabilities Fund Limited, and a non-executive board member and Chair of the Audit and Risk Committee at the Department for Exiting the European Union. ### Louise Kingham, CBE Richard Horlick ### Non-executive Director Senior Independent Director ### and Chair of the Management Over 30 years' experience in the ### energy sector. Currently, BP's UK Head Engagement Committee of Country and Senior Vice President Over 40 years' experience in the for Europe. Prior to this, Louise was investment management industry. CEO of the Energy Institute. She was Currently, the Chair of CCLA Investment previously a non-executive board Management, Chair of BH Macro Ltd member of the Energy Saving Trust and Chair of Riverstone Energy Limited. and Chair of its charitable Foundation. Former roles at Newton Investment She is also an Ambassador for the Management, Fidelity International, POWERful Women and 25x25 gender including CEO of Fidelity Management diversity initiatives and Chair of Trust Company and main board Business in the Community's Climate member, Global Head of Investments at Action leadership team. Schroders plc. ### Daniella Carneiro ### Chair of the Remuneration ### Committee Over 30 years of global experience in project development, governance, strategy, tax and M&A with major companies including KPMG and Shell. A non-executive director and Chair of the Energy & Decarbonisation Committee of the Brazilian Chamber of Commerce in Great Britain. She is also Chair of the UK Trade Wing of the global gender equality network G100 and a specialist advisor at the Department for Business and Trade. 95 Annual Report and Accounts 2023 | Governance ### DIRECTORS' REPORT The Directors are pleased to present their report for Therefore, the total dividends paid by the Company | the year ended 31 December 2023. In accordance | in respect of the year ended 31 December 2023 | | --- | --- | | with the Companies Act 2006 (as amended) (the | were 5.56p per ordinary share, exceeding the | | “Act”), the Listing Rules and the Disclosure Guidance | dividend target of 5.52p per share. | and Transparency Rules, the Corporate Governance Statement, Directors’ Remuneration Report, Reports ### Dividend policy from the Audit Committee, Nomination Committee The Board expects that dividends will constitute the and Management Engagement Committee, and principal element of the return to the holders of the Statement of Directors’ Responsibilities should ordinary shares. The Company is targeting quarterly be read in conjunction with one another, and the dividend payments of at least 1.42p or 5.68p in total Strategic Report. As permitted by legislation, some per ordinary share for the nancial year ending of the matters normally included in the Directors’ 31December 2023, in line with its progressive Report have instead been included in the Strategic dividend policy. Report, as the Board considers them to be of strategic importance. Subject to market conditions and the level of the Company’s net income, it is intended that dividends ### Directors on the shares will be payable quarterly, all in the form of interim dividends (the Company does The Directors in oce at the date of this report not intend to pay any nal dividends). Subject to are as shown on page 95. Details of the Directors’ satisfying the requirements for investment trust terms of appointment can be found in the status, the Board reserves the right to retain within Corporate Governance Statement and the Directors’ a revenue reserve a proportion of the Company’s Remuneration Report. net income in any nancial year, such reserve then being available at the Board’s absolute discretion ### Corporate governance for subsequent distribution to shareholders, subject to the requirements of the IT Regulations. The The Corporate Governance Statement on pages 102 dividend policy is subject to an annual vote at each to 107 forms part of this Directors’ report. AGM. The Company may, at the discretion of the Board, and to the extent possible, pay all or part of ### Dividends any future dividend out of capital reserves. On 25 May 2023, the Company declared an interim The Company may oer with the prior authority dividend of 1.38p per ordinary share in respect of of shareholders and subject to such terms the period from 1 January 2023 to 31 March 2023, and conditions as the Board may determine, which was paid on 30 June 2023 to shareholders on shareholders (excluding any holder of treasury the register as at 2 June 2023. shares) the opportunity to elect to receive ordinary On 2 August 2023, the Company declared an shares, credited as fully paid, instead of the whole, interim dividend of 1.38p per ordinary share in or some part, of any dividend. The ability to issue respect of the period from 1 April 2023 to 30 June ordinary shares in lieu of cash would provide the | 2023, which was paid on 14 September 2023 to | Company with the exibility to retain cash where to | | --- | --- | | shareholders on the register as at 11 August 2023. | do so would benet the Company. | | On 1 November 2023, the Company declared | The Board may designate part of each dividend | | an interim dividend of 1.38p per ordinary share | paid by the Company insofar as it represents | | in respect of the period from 1 July 2023 to 30 | “qualifying interest income” received by the | | September 2023, which was paid on 8 December | Company as interest distributions for UK tax | | 2023 to shareholders on the register as at 10 | purposes. It is expected that a variable proportion | | November 2023. Of this amount, 1.03p per share | of the Company’s distributions will take the form of | | was designated as an interest distribution. | interest distributions. Prospective investors should | note that the UK tax treatment of the Company’s Post year end, on 22 February 2024, the Company distributions may vary for a shareholder depending declared an interim dividend of 1.42p per ordinary upon the classication of such distributions. share in respect of the period from 1 October 2023 Prospective investors who are unsure about the to 31 December 2023, which will be paid on 28 tax treatment that will apply in respect of any March 2024 to shareholders on the register as at distributions made by the Company should consult 29 February 2024. their own tax advisers. 96 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Share capital structure shares held in treasury as at 31 December 2023 was 7,027,321 shares (with a nominal value of Issue of shares £70,273.21). This represents 1.66% of the issued share capital as at the year end. No shares were issued during the year under review or since the year end. Current share capital Purchase of shares As at 31 December 2023, the Company’s issued share capital comprised 422,498,890 ordinary At the AGM held on 25 April 2023, the Company shares, each of £0.01 nominal value, of which was granted authority to purchase up to 14.99% 7,027,321 shares were held in treasury. of its ordinary share capital in issue, amounting to 63,332,583 ordinary shares. During the year ended At general meetings of the Company, ordinary 31 December 2023, the Company purchased in shareholders are entitled to one vote on a show of the stock market 7,027,321 ordinary shares (with a hands and, on a poll, to one vote for every ordinary nominal value of £70,273.21) to be held in treasury, share held. Shares held in treasury do not carry at a total cost of £5,399,770. This represented 1.66% voting rights. of the issued share capital at 31 December 2022. At 4 April 2024, the total voting rights in the No shares were purchased for cancellation during Company were 409,728,422. the year. The share purchases were made with a view to reducing discount volatility. ### Signicant shareholders Shares held in treasury As at 31 December 2023, the Company had been notied of the following disclosable interests in the Holding shares in treasury enables a company to share capital of the Company: cost-eectively issue shares that might otherwise have been cancelled. The total number of Shareholder Number of shares % of total voting rights Witan Investment Trust plc 54,575,752 13.14 Quilter Plc 48,198,710 11.60 Newton Investment Management Limited 24,262,428 5.84 Courtiers Asset Management Limited 20,045,000 4.82 Waverton Investment Management Limited 13,167,009 3.17 Stichting Juridisch Eigendom Privium Sustainable Impact Fund 12,842,602 3.09 | Since the year end, the Company has been notied | • | an amendment to the Company’s articles of | | --- | --- | --- | | by Witan Investment Trust plc that its holding has | | association and the giving of powers to issue | | decreased to 53,000,000 shares, representing | | or buy back the Company’s shares requires | | 12.94% of voting rights as at the date of this report. | | an appropriate resolution to be passed by | | The Company has not been informed of any | | shareholders. Proposals to grant powers to the | | other changes to the notiable interests between | | Board to issue and buy back shares are set out in | | 31December 2023 and 4 April 2024, being the last | | the Notice of AGM; and | practicable date prior to the publication of this ## • there are no restrictions concerning the transfer report. of securities in the Company; no restrictions on voting rights; no special rights with regard to ### Shareholder rights control attached to securities; no agreements between holders of securities that may restrict The following information is disclosed in accordance their transfer or voting rights, as known to with The Large and Medium-sized Companies and the Company; and no agreements which the Groups (Accounts and Reports) Regulations 2008 Company is party to that might aect its control and DTR 7.2.6 of the Financial Conduct Authority’s following a successful takeover bid. 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; 97 Annual Report and Accounts 2023 | Governance # DIRECTORS' REPORT CONTINUED # Requirements of the listing rules Listing Rule 9.8.4 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 9.8.4. # Independent professional advice, insurance and indemnity Details regarding independent professional advice, insurance and indemnity are set out in the Corporate Governance Statement on page 106. # 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, replacing G10 Capital Limited on 3 May 2023. 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 agreement (the "AIFM 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. 98 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Continuing appointment Annual General Meeting ### of Victory Hill The Notice of the AGM to be held on 22 May 2024 (the “Notice”) is set out on pages 172 to The Board keeps the performance of Victory Hill, 177. Shareholders are being asked to vote on the as the Company’s Investment Manager under following matters: continual review. The Management Engagement Committee conducts an annual review of the Victory ## • the receipt and adoption of the Strategic Report, Hill’s performance and makes a recommendation Directors’ Report, Auditor’s Report and the to the Board about its continuing appointment. audited Financial Statements for the year ended It is considered that Victory Hill has executed the 31 December 2023; Company’s investment strategy according to the ## • the approval of the Directors’ Remuneration Board’s expectations. Accordingly, the Directors Report; believe that the continuing appointment of Victory Hill as the Investment Manager of the Company, ## • the approval of the Company’s dividend policy on the terms agreed, is in the best interests of and authorisation of the Directors to declare the Company and its shareholders as a whole. and pay all dividends of the Company as interim Further details are set out in the Report from the dividends; Management Engagement Committee on page120. ## • the re-election of Directors; ### Financial risk management the re-appointment of BDO LLP as the ## • Company’s Auditor and authorisation of the Information about the Company’s nancial risk Audit Committee to determine the remuneration management objectives and policies is set out in of the Auditor; note12 to the nancial statements. | | • | the granting of authorities in relation to the | | --- | --- | --- | | Going concern | | allotment of shares; | | The going concern statement can be found | • | the dis-application of pre-emption rights | | on page57. | | for certain issues of shares; | | | • | the purchase by the Company of its own | | Auditor | | shares; and | | The Directors conrm that, so far as they are each | | holding of general meetings on 14 clear | ## • aware, there is no relevant audit information of days’ notice. which the Company’s Auditor is unaware; and each Resolutions 1 to 12 will be proposed as Ordinary Director has taken all the steps that ought to have resolutions and Resolutions 13 to 16 will be been taken as a Director to make themselves aware proposed as Special resolutions. of any relevant audit information and to establish that the Auditor is aware of that information. Authority to issue shares BDO LLP has expressed its willingness to continue Resolutions 11 and 12, ordinary resolutions as set in oce as the Auditor and resolutions for its re- out in the Notice, if passed, will renew the Directors’ appointment and to authorise the Audit Committee authority to allot shares in accordance with to determine its remuneration will be put to statutory pre-emption rights. These resolutions will shareholders at the forthcoming Annual General authorise the Board to allot: Meeting. ## • ordinary shares generally and unconditionally ### Post balance sheet events in accordance with section 551 of the Act up to an aggregate nominal value of £409,728.42, The post balance sheet events can be found in representing approximately 10% of the note19 to the nancial statements. 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 99 Annual Report and Accounts 2023 | Governance ### DIRECTORS' REPORT CONTINUED ## • further ordinary shares generally and Resolution 14, a special resolution, is being unconditionally in accordance with section proposed to authorise the Directors to disapply 551 of the Act up to an additional aggregate the statutory pre-emption rights of existing nominal value of £409,728.42, representing shareholders in relation to the further issue of approximately 10% of the Company’s issued shares under Resolution 12, for cash or the sale of share capital (excluding treasury shares) as at shares out of treasury up to an aggregate nominal the date of the Notice of AGM or, if changed, the amount of £409,728.42, being approximately 10% number representing 10% of the issued share of the Company’s issued share capital (excluding capital of the Company at the date at which this treasury shares) as at the date of the Notice of resolution is passed (Resolution 12). AGM or, if changed, 10% of the issued share capital immediately upon the passing of this resolution. If both these resolutions are passed, shareholders will be granting the Directors authority to allot up In respect of any authority granted under to 20% of the Company’s issued share capital. The Resolutions 13 and 14, shares would only be Board believes that passing of Resolutions 11 and issued at a price above the prevailing NAV per 12 is in the shareholders’ interests as the authority share, intended to at least cover the costs and is intended to be used for funding investment expenses of the relevant issuance of shares. The opportunities sourced by the Investment Manager, Directors will only issue shares on a non-pre- thereby mitigating any potential dilution of emptive basis if they believe it would be in the best investment returns for existing shareholders, and interests of the Company’s shareholders. If both the Directors will only issue new ordinary shares at these resolutions are passed, shareholders will be a price above the prevailing NAV per ordinary share. granting the Directors authority to allot up to 20% If only Resolution 11 is passed and Resolution 12 is of the Company’s issued share capital on a non- not passed, Directors will only be granted authority pre-emptive basis. The Board believes that in order to allot up to 10% of the existing issued ordinary to have the maximum exibility to raise nance to share capital of the Company. These authorities, if enable the Company to take advantage of suitable given, will lapse at the conclusion of the 2025 AGM opportunities, the passing of Resolutions 13 and 14 of the Company, or 15 months from the passing of is in the shareholders’ interests. These authorities, these resolutions, whichever is earlier. if given, will lapse at the 2025 AGM of the Company, or 15 months from the passing of these resolutions, The Directors do not currently intend to allot shares whichever is earlier. other than to take advantage of opportunities in | the market as they arise and only if they believe | There were 7,027,321 shares held in treasury at the | | --- | --- | | it would be advantageous to the Company’s | year end. As at 4 April 2024, 12,770,468 shares were | | shareholders to do so. | held in treasury. | | Authority to dis-apply pre-emption rights | Authority to purchase the Company’s | own shares Resolution 13, a special resolution, is being proposed to authorise the Directors to disapply The Act allows companies to hold shares acquired the statutory pre-emption rights of existing by way of market purchases as treasury shares, shareholders in relation to the issue of shares rather than having to cancel them. This gives the under Resolution 11, for cash or the sale of Company the ability to re-sell shares quickly and shares out of treasury up to an aggregate nominal eectively thereby improving liquidity and providing amount of £409,728.42, being approximately 10% the Company with additional exibility in the of the Company’s issued share capital (excluding management of its capital base. treasury shares) as at the date of the Notice of At the Annual General Meeting held on 25 April AGM or, if changed, 10% of the issued share capital 2023, the Company was granted authority to immediately upon the passing of this resolution. purchase up to 14.99% of the Company’s shares in issue amounting to 63,332,583 shares. During the year under review, 7,027,321 shares were bought back pursuant to this authority. 100 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Resolution 15, a special resolution, as set out in the Notice period for general meetings Notice, if passed, will renew the Directors’ authority Under the Act, the notice period of general to purchase up to 61,418,290 shares (being meetings (other than an AGM) is 21 clear days’ 14.99% of the issued share capital as at 4 April notice unless the Company: (i) has gained 2024), or if less, 14.99% of the issued share capital shareholder approval for the holding of general immediately following the passing of the resolution. meetings on 14 clear days’ notice by passing a In accordance with the Listing Rules of the FCA, the special resolution at the most recent AGM; and price paid for shares will be not less than £0.01 per (ii) oers the facility for all shareholders to vote share, and not more than the higher of: (i) 105% of by electronic means. The Company would like to the average of the mid-market quotations of the preserve its ability to call general meetings (other shares for the ve business days before the shares than an AGM) on less than 21 clear days’ notice. are purchased; and (ii) the higher of the price of the last independent trade and the highest current The shorter notice period proposed by Resolution independent bid for the shares on the trading 16, a special resolution, would not be used as a venue where the purchase is carried out. matter of routine, but only where the exibility is merited by the business of the meeting and is The Company may use this authority to address thought to be in the interests of shareholders as any signicant imbalance between the supply a whole. The approval will be eective until the and demand for the Company’s shares and to date of the AGM to be held in 2025 resolution or, if manage the discount at which the ordinary shares earlier, on the expiry of 15 months from the date of trade, and where the Directors consider it to be the passing of this resolution. in the best interests of shareholders and the Company. Shares will be repurchased only at prices ### Board recommendation below the prevailing NAV per ordinary share and will be cancelled or placed into treasury at the The Directors consider each resolution being determination of the Directors. The authority, if proposed at the AGM to be in the best interests of given, will lapse at the conclusion of the Company’s the Company and shareholders as a whole and they next AGM after the passing of this resolution or, if unanimously recommend that all shareholders vote | earlier, on the expiry of 15 months from the date of | in favour of them, as they intend to do in respect of | | --- | --- | | the passing of this resolution. | their own shareholdings. | | Shareholders should note that the purchase of | By order of the Board | ordinary shares by the Company is at the absolute discretion of the Directors and is subject to the working capital requirements of the Company Apex Fund and Corporate Services (UK) Limited and the amount of uncommitted cash resources Company Secretary available to the Company to fund such purchases. 4 April 2024 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 exibility for the Company to be able to make such purchases may be benecial to shareholders in certain circumstances and, accordingly, is seeking authority for the Company to make market purchases of its own shares. 101 Annual Report and Accounts 2023 | Governance ### CORPORATE GOVERNANCE STATEMENT ### This Corporate Governance Statement forms part Statement of compliance of the Directors’ Report. Pursuant to the Listing Rules of the FCA, the Company is required to provide shareholders ### Introduction with a statement on how the main and supporting In this Corporate Governance Statement, the principles set out in the AIC Code have been applied Company reports on its compliance with the AIC and whether the Company has complied with the Code of Corporate Governance (the “AIC Code”), provisions of the AIC Code. The Board recognises sets out how the Board and its Committees have the importance of a strong corporate governance operated during the past year and describes culture and has established a framework for how the Board exercises eective stewardship corporate governance which it considers to be over the Company’s activities in the interests appropriate to the business of the Company as an of shareholders. The Board is accountable to investment trust. shareholders for the governance of the Company’s The UK Code includes provisions relating to: aairs and is committed to maintaining the highest ## standard of corporate governance for the long-term • the role of the chief executive; success of the Company. ## • executive directors’ remuneration; and The Company reviews its standards of governance ## • the need for an internal audit function. against the principles and recommendations of the AIC Code, as published in 2019. The Board The Board considers that the rst two provisions considers that reporting against the principles and are not relevant as the Company is an externally recommendations of the AIC Code provides better managed investment company with all its day-to- information to shareholders as it addresses all day management and administrative functions the principles set out in the UK Code of Corporate outsourced to third parties. As a result, the Governance (the “UK Code”), as well as setting out Company has no executive directors, employees additional principles and recommendations on or internal operations. The Company has therefore issues that are of specic relevance to investment not reported further in respect of these provisions. companies, and is endorsed by the FRC. The terms The Company does not have an internal audit of the FRC’s endorsement mean that AIC members function. The need for this is reviewed annually who report against the AIC Code fully meet their by the Audit Committee, as explained in the Audit obligations under the UK Code and the related Committee report on page109. disclosure requirements contained in the Listing Rules of the FCA. A copy of the AIC Code can be The Board has reviewed the principles and found at www.theaic.co.uk. A copy of the UK Code recommendations of the AIC Code and considers can be obtained at www.frc.org.uk. that it has complied throughout the year. A senior independent director was not appointed during the year. Following the year end, on 1 January 2024, Richard Horlick was appointed as the Senior Independent Director of the Company to provide a sounding board for the Chair, serve as an intermediary for the other Directors and shareholders, and also act as an alternative engagement channel to the shareholders and other key stakeholders. 102 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Governance structure ### The VH Global Sustainable Energy Opportunities plc Board Ultimately responsible for the eectiveness of the Company’s governance and the system of internal controls Audit Committee Management Nomination Committee Remuneration Committee Engagement Committee Review of annual and Advise the Board Review remuneration half year reports, audit Regular review of major on succession planning, policy, annual remuneration results, internal controls, service provider agreements Board mix balance and ad hoc payment and risk assessment and performances to Directors ### Victory Hill Capital Partners LLP, (Victory Hill), Investment Manager Ensures the Company operates in an eective and ethical manner through creating, developing and implementing its strategy; Victory Hill driving operational and nancial performance, and assessing and monitoring internal control practices Investment Risk, Operations Portfolio Risk Sustainability Sales and Marketing Committee and Compliance and Valuations Committee Committee Committee Committee Review and decide Responsible Review and evaluate on investment Provide oversight Review valuations of for developing sales and marketing opportunities, to the Victory Hill investments against sustainability strategy performance, relevant policies, as risk management the Company’s considering climate propose and approve well as investment framework including valuation procedure related risks and marketing budgets reasonableness its eectiveness and methodology opportunities; review and resource and investment risk to investment, and determine and challenge Victory allocation monitoring operational, reasonability of Hill’s existing practice regulatory and valuation processes legal risk and procedures ### Leadership At the date of this report, the Board consisted of ve non-executive Directors. The Board The Board of Directors believes that its composition is appropriate for an investment company of the Company’s nature Under the leadership of the Chair, the Board and size. All of the Directors are independent of is collectively responsible for the eective the Investment Manager and are able to allocate stewardship of the Company’s aairs and the long- sucient time to the Company to discharge their term success of the Company, generating value for responsibilities eectively. shareholders and contributing to the wider society. It establishes the purpose, values and strategic aims The Directors possess a wide range of business and of the Company and satises itself that these and nancial expertise relevant to the direction of the its culture are aligned. The Board ensures that the Company and consider that they commit sucient necessary resources are in place for the Company time to the aairs of the Company. All Directors to meet its objectives and fulll its obligations to act in a non-executive capacity. Brief biographical shareholders within a framework of high standards details of the Directors, including details of their of corporate governance and eective internal signicant commitments, can be found on page95. controls. The Directors are required to act with integrity, lead by example and promote this culture within the Company. 103 Annual Report and Accounts 2023 | Governance ### CORPORATE GOVERNANCE STATEMENT CONTINUED The Directors have appointment letters which in the annual evaluation of the Chair by the other do not provide for any specic term. Other than Directors. In the event the Company experiences a their letters of appointment as Directors, none period of stress, the Senior Independent Director of the Directors has a contract of service with the would work with the Chair, the other Directors Company nor has there been any other contract and/or shareholders to resolve any issues. The role or arrangement between the Company and any description of the Senior Independent Director is Director at any time during the year. available on the Company’s website. The Board has agreed a procedure for the induction Matters reserved for the Board and training of new Board appointees and training requirements are dealt with as required. The Company’s investment policy and strategy are determined by the Board. The Board is responsible Information regarding the annual evaluation of the for investment decisions, other than to the extent Board, its Committees, the individual Directors and delegated to the Investment Manager, and the the Chair; composition of the Board; tenure of the appointment, supervision and monitoring of the Directors; and the Directors’ re-election is set out Company’s service providers, including amongst in the Report from the Nomination Committee on others, the Investment Manager. The Board pages 117to119. establishes the Company’s borrowing policy, dividend policy, approves public documents such The Chair as the annual and interim reports and nancial Bernard Bulkin, as the Chair, leads the Board in statements, and corporate governance matters. A determining its governance framework, culture formal schedule of matters reserved for decision and values and is responsible for its overall by the Board has been adopted. This is available on eectiveness in directing the Company. He the Company’s website. demonstrates objective judgement, promotes a culture of openness and debate, and facilitates Board Committees eective contributions by all Directors. The Chair During the year, the Company had four Committees leads the Board’s relationship and engagement with in operation, namely, the Audit Committee, shareholders and other stakeholders, and manages the Management Engagement Committee, the the relationship with the Investment Manager. In Nomination Committee and the Remuneration liaison with the Company Secretary, he ensures Committee. The terms of reference of the that the Directors receive accurate, timely and clear Committees are available on the Company’s information. website. The Chair was independent of the Investment Manager at the time of his appointment and is Audit Committee deemed by his fellow Board members to continue The Company has established an Audit Committee to be independent in character and judgement and which is chaired by Margaret Stephens and consists to have no conicting relationships. He considers of Richard Horlick, Louise Kingham and Daniella himself to have sucient time to commit to the Carneiro. The Board considers that the members of Company’s aairs. The role and responsibilities of the Audit Committee have the recent and relevant the Chair of the Board are clearly dened and set nancial experience and the Committee as a whole out in writing, a copy of which is available on the has competence relevant to the sector in which Company’s website. the Company operates. The Audit Committee includes individuals with substantial experience of Senior Independent Director the nancial matters of listed companies and the Richard Horlick is the Senior Independent Director energy infrastructure sector. This blend of skills of the Company. He acts as a sounding board and experience enables the Committee to full its for the Chair, meets with major shareholders as responsibilities eectively. appropriate, provides a channel for any shareholder concerns regarding the Chair and takes the lead 104 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS | The report of the Audit Committee is set out on | The report of the Nomination Committee is | | --- | --- | | pages108to111. | included on pages117to119. | | Management Engagement Committee | Remuneration Committee | | The Management Engagement Committee is | The Remuneration Committee is chaired by Daniella | | chaired by Richard Horlick and consists of Bernard | Carneiro and consists of all Directors. Its principal | | Bulkin, Margaret Stephens, Louise Kingham | duties are to consider the levels of Directors’ fees | | and Daniella Carneiro. Margaret Stephens was | and to make recommendations in respect of the | | appointed as a member of the Committee with | Directors’ remuneration policy and implementation | | eect from 14 March 2023. The Committee meets | thereof. | at least once a year to review the performance The Directors’ Remuneration Report is set out on of the Investment Manager, the terms of their pages112to116. engagement and to consider the appropriateness of their fees. In addition, the Management ### Meetings held during the year Engagement Committee reviews the performance, terms of appointment and fees payable to the other The Company has six scheduled Board meetings key service providers of the Company, and makes a year, with additional meetings arranged as recommendations to the Board regarding the necessary. continuing appointment of the Investment Manager At each Board meeting, the Directors follow a and the other service providers. formal agenda which is circulated in advance by the The report of the Management Engagement Company Secretary. The Investment Manager, the Committee is set out on page120. Administrator and the Company Secretary regularly provide the Board with nancial information, Nomination Committee including an annual expenses budget, together with brieng notes and papers in relation to The Company has established a Nomination changes in the Company’s economic and nancial Committee which is chaired by Bernard Bulkin and environment, statutory and regulatory changes and comprises all Directors. The Committee reviews corporate governance best practice. the Company’s succession plan, and identies and nominates candidates for the oce of director The number of scheduled Board and Committee of the Company. It also reviews the results of meetings held during the year ended 31 December the annual evaluation process of the Board, its 2023 and the attendance of the individual Directors Committees, the Directors and the Chair, and is shown below: makes recommendations to the Board in respect of the re-election of the Directors. Management Audit Engagement Nomination Remuneration Board Committee Committee Committee Committee Number Number Number Number Number entitled Number entitled Number entitled Number entitled Number entitled Number to attend attended to attend attended to attend attended to attend attended to attend attended 1 Bernard Bulkin 6 6 – – 2 2 2 2 1 1 2 Daniella Carneiro 6 6 3 3 2 2 2 2 1 1 Richard Horlick 6 6 3 3 2 2 2 2 1 1 Louise Kingham 6 5 3 3 2 2 2 1 1 1 3 Margaret Stephens 6 6 3 3 1 1 2 2 1 1 In addition to the above, eight ad hoc meetings of the Board or its committees, and one ad hoc meeting of the Audit Committee and the Remuneration Committee each were held to deal with approval of documentation and administrative matters in respect of the quarterly interim dividends, annual and interim reports, and Directors' remuneration. 1 not a member of the Audit Committee 2 appointed as the Chair of the Remuneration Committee and as a member of the Audit, Management Engagement and Nomination Committees with eect from 21 February 2023 3 appointed as a member of the Management Engagement Committee with eect from 14 March 2023 105 Annual Report and Accounts 2023 | Governance ### CORPORATE GOVERNANCE STATEMENT CONTINUED ### Independent professional advice, The Company Secretary maintains the Register of Directors’ Conicts of Interests which is reviewed ### insurance and indemnity at each Board meeting, to ensure that authorised The Board has formalised arrangements under conicts remain appropriate. The Directors advise which the Directors, in the furtherance of their the Company Secretary and the Board as soon as duties, may seek independent professional advice they become aware of any conicts of interest. at the expense of the Company. The Company also Directors who have conicts of interest do not maintains directors’ and ocers’ liability insurance, take part in discussions which relate to any of their which includes cover of defence expenses. The conicts. Company’s Articles of Association provide the Directors of the Company, subject to the provisions ### Risk management and internal of UK legislation, with an indemnity in respect ### control review of liabilities which they may sustain or incur in connection with their appointment. Apart from Overview this, there are no qualifying third party indemnity provisions in force. The Directors acknowledge that they have overall responsibility for the Company’s risk management ### Conicts of interest and internal control systems and for reviewing their eectiveness. It is the responsibility of each individual Director to avoid an unauthorised conict arising. Directors An ongoing process, in accordance with the FRC must request authorisation from the Board as Guidance on Risk Management, Internal Control soon as they become aware of the possibility of an and Related Financial and Business Reporting, has interest that conicts, or might possibly conict, been implemented for identifying, evaluating and with the interests of the Company (a “situational managing the principal and emerging risks faced conict”). The Company’s Articles of Association by the Company. This process has been in place authorise the Board to approve such situations, throughout the year ended 31 December 2023 where deemed appropriate. and up to the date the nancial statements were approved and is regularly reviewed by the Board, The Board is responsible for considering Directors’ through the Audit Committee. Key procedures requests for authorisation of conicts and for established with a view to providing eective deciding whether or not the situational conict nancial control have also been in place for the should be authorised. The factors to be considered year under review and up to the date the nancial include: whether the situational conict could statements were approved. prevent the Director from properly performing their duties; whether it has, or could have, any impact on The risk management process and systems of the Company; and whether it could be regarded as internal control are designed to manage rather likely to aect the judgement and/or actions of the than eliminate the risk of failure to achieve the Director in question. When the Board is deciding Company’s investment objective. It should be whether to authorise a situational conict, only recognised that such systems can only provide Directors who have no interest in the matter being reasonable, not absolute, assurance against considered are able to take the relevant decision, material misstatement or loss. and in taking the decision, the Directors must act in a way they consider, in good faith, will be most Financial and other aspects of internal control likely to promote the Company’s success. The Board The Company has contractually delegated the is able to impose limits or conditions when giving management of the investment portfolio, the authorisation if it thinks this is appropriate in the registration services, administration services and circumstances. The Directors must also comply other services to third party service providers and with the statutory rules requiring the Directors reliance is therefore placed on the internal controls to declare any interest in an actual or proposed of those service providers. The internal nancial transaction or arrangement with the Company. control systems aim to ensure the maintenance 106 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS of proper accounting records, the reliability of In arriving at its judgement of what risks the the nancial information upon which business Company faces, the Board has considered the decisions are taken, reports are published and Company’s operations in the light of the following the assets of the Company are safeguarded. The factors: key procedures include review of management ## • the nature and extent of risks which it regards accounts, monitoring of performance at quarterly as acceptable for the Company to bear within its Board meetings, segregation of the administrative overall business objective; function from investment management, ## maintenance of appropriate insurance and • the threat of such risks becoming reality; adherence to physical and computer security ## • the Company’s ability to reduce the incidence procedures. The internal controls at the service and impact of risk on its performance; and providers are reviewed by the Audit Committee. ## • the cost to the Company and benets related to The Board has undertaken a review of the the review of risk and associated controls of the eectiveness of the Company’s risk management Company. and internal control systems as they have operated over the year and up to the date of the approval of A risk matrix is in place against which the risks the Annual Report. There were no matters arising identied and the controls to mitigate those risks from this review that required further investigation can be monitored. The risks are assessed on the and no signicant failings or weaknesses were basis of the likelihood of them happening, the identied. impact on the business if they were to occur and the eectiveness of the controls in place to mitigate them. This risk register is reviewed at least every six ### Internal control assessment months by the Audit Committee and at other times ### process as necessary. Robust risk assessments and reviews of internal The majority of the day-to-day management controls are undertaken regularly in the context functions of the Company are sub-contracted, and of the Company’s overall investment objective. the Directors therefore obtain regular assurances The Board, through the Audit Committee, has and information from key third party suppliers categorised risk management controls under regarding the internal systems and controls the following key headings: risks relating to the operating in their organisations. In addition, each Company (including reliance on third party service of the third parties is requested to provide a providers); portfolio investment strategy; risks copy of its report on internal controls each year, relating to making investments; risks relating to where available, which is reviewed by the Audit the Company’s shares; risks relating to regulation; Committee. accounting, operational and nancial reporting; governance; and climate-related risks. ### Relations with shareholders Details regarding the Company’s engagement with its shareholders are set out on page47. 107 Annual Report and Accounts 2023 | Governance ### REPORT OF THE AUDIT COMMITTEE | I am pleased to present the report of the Audit | • | developing and implementing policy on the | | --- | --- | --- | | Committee (the “Committee”) for the year ended 31 | | engagement of the external auditor to supply | | December 2023. | | non-audit services, ensuring there is prior | approval of non-audit services, considering the impact this may have on independence, taking ### Composition into account the relevant regulations and ethical The composition of the Committee is set out guidance in this regard, and reporting to the above in the Corporate Governance Statement Board on any improvement or action required. and details of how its performance evaluation has been conducted are included in the report of the ### Activities of the Audit Committee Nomination Committee on pages117and118. During the year under review, the Audit Committee: ### Meetings ## • conducted a review of the internal controls and risk management systems of the Company and The Committee held three scheduled meetings its third party service providers; during the year under review. The Directors’ attendance is set out on page105 in the Corporate ## • conducted regular reviews of the Company’s risk Governance Statement. register; ## • reviewed the interim and annual valuation ### Role of the Audit Committee reports of the Company’s portfolio prepared by The primary responsibilities of the Committee are: the Investment Manager. In doing so, the Audit Committee monitored the eectiveness of the ## • monitoring the integrity of the nancial Company’s valuation policies and methods; statements of the Company, any formal announcements relating to the Company’s reviewed the disclosures made in the annual and ## • nancial performance, and reviewing signicant interim reports in relation to internal controls nancial reporting judgements contained and risk management, viability, going concern therein; and related parties; ## • advising the Board on whether the annual report reviewed the Company’s annual and interim ## • and nancial statements, taken as a whole, are nancial statements and recommended these to fair, balanced and understandable, and provide the Board. In particular, the Committee advised the information necessary for shareholders to the Board that taken as a whole, the Annual assess the Company’s position and performance, Report is fair, balanced and understandable, business model and strategy; and provides the information necessary for shareholders to assess the Company’s position ## • reviewing the Company’s internal nancial and performance, business model and strategy; controls and internal control and risk management systems, and monitoring their agreed the plan with the Auditor in respect of ## • ongoing eectiveness; the review of the Interim Report for the period ended 30 June 2023 and the statutory audit ## • considering reports from any independent of the Annual Report for the year ended 31 valuer appointed by the Company to value its December 2023, including the principal areas of investments; focus; ## • reviewing and monitoring the external auditor’s ## • reviewed and agreed the audit fees for the independence and objectivity; statutory audit of the Company and for the ## • reviewing the eectiveness of the external audit interim review for 2023; process, taking into consideration relevant UK ## • received and discussed with the Auditor its professional and regulatory requirements; report on the results of the review of the interim ## • conducting the tender process and making nancial statements and the year-end audit; recommendations to the Board about the appointment, re-appointment and removal of the external auditor, and approving the remuneration and terms of engagement of the external auditor; and 108 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ## • reviewed and approved the proposal from engaged a Big 4 advisory rm to perform a review the Auditor in respect of providing non-audit of the Investment Manager's valuation methodology services relating to ESG Assurance Review for the which conrmed the appropriateness of the year ended 31 December 2023. The Committee application of the methodology. The Committee considers that the provision of this service by considered the subjectivity and appropriateness of BDO LLP does not compromise its independence the assumptions used to determine the valuation and objectivity in carrying out the statutory audit; of investments, held through GSEO Holdings, which could aect the NAV of the Company. These were ## • discussed and considered the Auditor’s discussed with the Investment Manager and the performance, objectivity and independence and Auditor. The Committee reviewed the valuation the eectiveness of the external audit; and reports from the Investment Manager, including the ## • reviewed whether an internal audit function underlying assumptions, and concluded that the would be of value and concluded that this would valuation of the Company’s portfolio at the year end provide minimal added comfort at considerable was appropriate. extra cost to the Company. The existing system of monitoring and reporting by third-party Going concern and viability statement service providers remains appropriate. The The Committee considered the Company’s Committee keeps the need for an internal audit nancial requirements for the next 12 months function under periodic review. and concluded that it had sucient resources to meet its commitments. Consequently, the nancial ### Financial statements and statements have been prepared on a going ### signicant accounting matters concern basis. The Committee also considered the longer-term viability statement within the The Audit Committee has taken into account the Annual Report, covering a ve-year period, and most signicant risks and issues, both operational the underlying factors and assumptions which and nancial, which are likely to impact the contributed to the Committee deciding that ve Company’s nancial statements. It considered the years was an appropriate length of time to consider following key issues in relation to the Company’s the Company’s long-term viability. The Company’s nancial statements during the year and post year Going Concern and Viability Statements can be end: found on page57. Valuation of investments Internal controls The Audit Committee monitored the integrity of the The Audit Committee carefully considered the nancial information published in the Interim and internal control systems by monitoring the services Annual Reports and considered whether suitable and controls of its third party service providers. and appropriate estimates had been made in It reviewed and, where appropriate, updated the respect of areas which could have a material impact risk matrix in respect of the signicant risks facing on the nancial statements. It actively engaged with the Company and the controls in place to mitigate the Investment Manager and the Administrator to those risks. The Company received reports on assess these signicant estimates and the systems internal controls from key service providers during and processes in place to form these estimates. the year, when available, and no signicant matters The Committee considered the valuation of of concern have been identied. investments to be a risk which could materially impact the nancial statements for the year ended ESG assurance review 31 December 2023. In respect of the Annual Report and nancial Assumptions applied to derive the valuation of statements for the year ended 31 December 2023, investments are selected and recommended by the Audit Committee received the ESG assurance the Investment Manager. These include discount report from BDO LLP, as a form of non-audit rates, power prices, energy yield, ination rates, service, which is detailed on page110. The asset life, operating expenses, taxation rates and Committee also reviewed the Investment Manager’s capital expenditure. Valuation methodology and ESG and Sustainability Impact Report which assumptions are discussed in detail within note7 provided an overview of Victory Hill’s ESG activities. to the nancial statements, furthermore, the Board 109 Annual Report and Accounts 2023 | Governance ### REPORT OF THE AUDIT COMMITTEE CONTINUED ### Audit fees and non-audit services The Audit Committee has considered the non-audit work of the Auditor during the period and does not The Audit Committee reviewed the audit plan and consider that this compromises its independence. fees presented by the Auditor and considered its The Committee periodically monitors the ratio of report on the nancial statements. Total audit non-audit to audit services to ensure that any fees fees for the Company in respect of the year under for permissible non-audit services do not exceed review amounted to £223,000 (period ended 31 70% of the average audit fees paid in the last three December 2022: £170,000). years. The Committee notes that this ratio has not The Audit Committee has put a policy in place on been breached given this is the third year of audit the supply of any non-audit services provided by and the threshold would apply to subsequent the Auditor. Such services are considered on a audits. Details of the Auditor’s remuneration are set case-by-case basis and may only be provided to the out in note 5 to the nancial statements. Company if approved by the Audit Committee, the ### provision of such services is at a reasonable and Eectiveness of external audit competitive cost, and does not constitute a conict The Audit Committee reviews the eectiveness of interest or potential conict of interest which of the external audit process on an annual basis. would prevent the Auditor from remaining objective During the year, the Committee met key members and independent. BDO LLP was paid fees in respect of the senior audit team at BDO LLP as part of the of the following non-audit services in the year: annual reporting process. It received a presentation of the audit plan from the Auditor in respect of the Year Year year under review and a presentation of the results ended 31 ended 31 of the audit following completion of the main audit | | December | | December | | | | --- | --- | --- | --- | --- | --- | | Non-audit service provided | | 2023 | | 2022 | testing. | | Review of Interim Report £70,000 £50,000 | | | | | The Chair of the Committee liaises with the lead | audit partner, to discuss any issues arising from ESG Assurance Review £83,700 £47,500 the audit as well as its cost eectiveness. The Committee also met with the lead audit partner and Where non-audit services are provided by the the key individuals of the senior audit team prior Auditor, full consideration of the nancial and other to the nalisation of the audit of the Annual Report implications on the independence of the Auditor and nancial statements for the year ended 31 arising from any such engagement are considered December 2023, without the Investment Manager before proceeding. During the year, the Committee being present, to discuss how the external audit approved the provision of ESG Assurance Review was carried out, the ndings from such audit and services to be provided by BDO LLP. While this is a whether any issues had arisen from the Auditor’s non-audit service, the Audit Committee considered interaction with the Company’s various service that given BDO LLP’s comprehensive knowledge providers. about the Company being its statutory Auditor, they The process for assessing the eectiveness of the were best placed to provide this assurance to the external audit also involved receiving feedback from Company in respect of its reporting on ESG matters. the Company’s other service providers involved in This was in line with the approach adopted on the the audit, primarily the Investment Manager, on the matter in the previous year. performance of the Auditor. Following its review, the Audit Committee concluded that the Auditor has demonstrated a good understanding of the structure and operations of the Company and had identied and focused on the areas of signicant nancial reporting risk. The external audit process was considered to have been eective. 110 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Independence and objectivity of the Re-appointment of the Auditor ### Auditor Following consideration of the performance of the Auditor, the services provided during the year BDO LLP was selected as the Company’s external and a review of its independence and objectivity, independent Auditor at the time of the Company’s the Committee has recommended to the Board launch in 2021 following a formal tender the re-appointment of BDO LLP as the Auditor process and review of the Auditor’s credentials. to the Company. The Auditor has indicated their The continuing appointment of the Auditor is willingness to continue in oce. Accordingly, reviewed annually by the Audit Committee, which resolutions to re-appoint BDO LLP as Auditor to the gives consideration to the Auditor’s fees and Company and authorising the Audit Committee to independence, along with the matters raised during determine their remuneration will be proposed at each audit. the Annual General Meeting. The Audit Committee has considered the independence and objectivity of the Auditor and ### Fair, balanced and understandable has conducted a review of non-audit services which the Auditor has provided during the year The Audit Committee has concluded that the under review. The Committee receives an annual Annual Report for the year ended 31 December assurance from the Auditor that its independence 2023, taken as a whole, is fair, balanced and is not compromised by the provision of such understandable and provides the information non-audit services. The Committee is satised necessary for shareholders to assess the that the Auditor’s objectivity and independence is Company’s position and performance, business not impaired by the performance of these non- model and strategy. It reached this conclusion audit services and that the Auditor has fullled its through a process of review of the Annual Report obligations to the Company and its shareholders. and enquiries to the various parties involved in the production of the Annual Report. The Audit In accordance with the statutory requirements Committee reported its conclusions to the Board. relating to the appointment of auditors, the audit will be put out to tender within 10 years of the initial appointment of BDO LLP. Margaret Stephens Chair of the Audit Committee 4 April 2024 111 Annual Report and Accounts 2023 | Governance ### DIRECTORS' REMUNERATION REPORT The law requires the Company’s Auditor to audit additional fee of £3,000 to the Senior Independent certain disclosures provided in the Annual Report Director. The premium applied to the remuneration on Directors’ remuneration. Where disclosures are of the Chair of Audit Committee and the Senior audited, they are indicated as such. The Auditor’s Independent Director has been introduced from opinion is given in their report on pages 123 to 129. the current nancial year. The Board believes that this updated fee structure appropriately reects the increase in the size and operations of the Company ### Statement from the Chair of the during the year, the enhanced workload of the ### Remuneration Committee Directors and the additional time commitment I am pleased to present the Directors’ remuneration required from them, particularly in view of the report for the year ended 31 December 2023. Company’s distinctive position in the infrastructure sector with its portfolio assets located in a wide The Remuneration Committee (the “Committee”) range of geographical areas and using a number assists the Board in developing a fair and of dierent technologies, and the ever-evolving transparent framework for setting the levels regulatory and corporate governance landscape. of Directors’ remuneration while having | regard to the Company’s nancial position and | The fees payable to the Directors will be reviewed | | --- | --- | | performance, remuneration in other companies | annually, as detailed in the Directors’ Remuneration | | of comparable scale and complexity and market | Policy on page116. | statistics generally. It also reviews the ongoing The Company is required to obtain formal approval appropriateness and relevance of the Directors’ from shareholders of the Directors’ Remuneration remuneration policy. No Director is involved in Policy once every three years and in any year if determining their own remuneration. there are any changes proposed to the policy. The Committee held one scheduled meeting during Shareholders are requested to approve the the year. The Directors’ attendance at this meeting Directors’ Remuneration Report on an annual basis. and the composition of the Committee are set The Directors’ Remuneration Policy is subject to out in the Corporate Governance Statement and a binding vote, while the vote on the Directors’ details of how its performance evaluation has Remuneration Report is an advisory vote. been conducted are included in the report of the The Directors’ Remuneration Policy was approved by Nomination Committee on pages117and118. shareholders at the AGM held on 27 April 2022. No For the year ended 31 December 2023, the annual signicant changes are proposed to the way in which fees were set at the rate of £81,500 for the Chair of this current, approved Directors’ Remuneration the Board and £58,500 for the other Directors. The Policy will be implemented during the course of the Directors’ fees are xed with no variable element. next nancial year. An ordinary resolution will be put to shareholders at the forthcoming AGM of the The Remuneration Committee reviews Directors’ Company to be held on 22 May 2024 to receive and fees on an annual basis. During the year, the approve the Directors’ Remuneration Report. Committee engaged Trust Associates, a board advisory rm with no connection to the Company or ### Performance of the Company the Directors, to provide a benchmark review of the Directors’ remuneration. The Committee received Due to the positioning of the Company in the the report from Trust Associates following the market as a listed investment trust that invests in completion of their review, following which it met to sustainable energy infrastructure to produce stable review Directors’ remuneration levels in the context and inating dividends for investors while aiming to of the scale of the Company’s operations, the level preserve capital value, the Directors consider that of involvement and time commitment required of the Company has characteristics of both an equity the Directors and the wider investment trust sector, index and a bond index. The graph on the following and to make recommendations to the Board. As a page compares the total shareholder return of the result of the benchmarking exercise performed by Company relative to a return on a hypothetical Trust Associates, the Committee agreed that, with holding over the same period in the FTSE All- eect from 1 January 2024, the Directors’ annual Share Index and the Bloomberg Barclays Sterling fees be adjusted by UK RPI as at 31 December Corporate Bond Index, from IPO on 2 February 2021 2023, rounded to the nearest £500. Accordingly, the to 31 December 2023. Total shareholder return is annual fees for the year ending 31 December 2024 the measure of returns provided by a company to are as follows: £84,500 for the Chair of the Board; shareholders reecting share price movements and £61,500 for the other Directors; an additional fee of assuming reinvestment of dividends. £10,000 to the Chair of the Audit Committee; and an 112 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS 140 130 120 110 100 90 80 70 60 Feb 21 Apr 21 Jun 21 Aug 21 Oct 21 Feb 23 Apr 23 Jun 23 Aug 23 Oct 23Dec 21 Feb 22 Apr 22 Oct 22Jun 22 Aug 22 Dec 22 Dec 23 GSEO FTSE – Share Bloomberg GBP Corporate TR Bonds ### Directors’ remuneration (audited) The Directors who served during the year received the following emoluments: Fees Expenses Total | | For the year | | | For the period | | | For the year | | | For the period | | | For the year | | | For the period | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | ended | | | ended | | | ended | | | ended | | | ended | | | ended | | | | 31 December | | | 31 December | | | 31 December | | | 31 December | | | 31 December | | | 31 December | | | | | | 2023 | | | 2022 | | | 2023 | | | 2022 | | | 2023 | | | 2022 | | | Directors | | | £ | | | £ | | | £ | | | £ | | | £ | | | £ | Bernard Bulkin 81,500 70,000 – – 81,500 70,000 Richard Horlick 58,500 50,000 2,765 518 61,265 50,518 Louise Kingham 58,500 50,000 – – 58,500 50,000 Margaret Stephens 58,500 50,000 – – 58,500 50,000 * Daniella Carneiro 55,869 – – – 55,869 – Total 312,869 220,000 2,765 518 315,634 220,518 * Appointed on 18 January 2023 There are no other taxable benets payable by the Company other than certain expenses which may be deemed to be taxable. None of the above fees was paid to third parties. Expenses are reimbursements for costs incurred which are not taxable. 113 Annual Report and Accounts 2023 | Governance ### DIRECTORS' REMUNERATION REPORT CONTINUED Year to 31 December Year to 31 December Period to ### Annual change in Directors’ remuneration 1 2 2 Director 2023 % 2022 % 31December 2021 % Bernard Bulkin 16.4 9.4 0.0 Richard Horlick 17.0 8.7 0.0 Louise Kingham 17.0 8.7 0.0 Margaret Stephens 17.0 8.7 0.0 3 Daniella Carneiro – – – 1 Directors' fees for the year ended 31 December 2023 were increased in line with UK RPI from 1 January 2021 to 31 December 2022. 2 The fees for the period ended 31 December 2021 accrued from the Company’s IPO on 2 February 2021. On a year-on-year basis, there was no change to the Directors’ fees between this period and the year ended 31 December 2022. 3 Appointed on 18 January 2023 ### Relative importance of spend on pay The following table sets out: | • | the remuneration paid to the Directors; | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | • | the distributions to shareholders by way of dividends; | | | | | | | | • | the distributions to shareholders by way of share buybacks; and | | | | | | | | • | the investment management fees and other expenses incurred by the Company. | | | | | | | | | | Year ended 31 December 2023 | | Year ended 31 December 2022 | | Change | | | | | | £’000 | | £’000 | | % | 1 Directors’ remuneration 313 220 42.2 Investment Manager’s fee 4,372 3,810 14.8 Other expenses 1,819 647 181.1 Distributions to shareholders by way of: ## • Dividends paid and proposed 23,269 14,457 61.0 2 ## • Share buybacks 5,470 – 100.0 1 25% of the increase relates to the appointment of an additional Director during 2023. 2 Share buyback programme commenced on 15 September 2023 ### Directors’ shareholdings (audited) There is no requirement under the Company’s Articles of Association, or the terms of their appointment, for Directors to hold shares in the Company. The Directors had the following shareholdings in the Company as at 31 December, and as at the date of this report, all of which are benecially owned. Director 4 April 2024 31 December 2023 31 December 2022 1 Bernard Bulkin 68,101 46,362 46,362 Richard Horlick 300,000 300,000 300,000 Louise Kingham 26,753 20,000 20,000 Margaret Stephens 56,960 28,181 28,181 Daniella Carneiro – – – 1 The gure reported in the 2022 Annual Report has been restated to take into account the announcement released by the Company on 27 February 2024. 114 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS None of the Directors or any persons connected with them had a material interest in the Company's transactions, arrangements or agreements during the year. ### Voting at AGM The Directors' Remuneration Report for the year ended 31 December 2022 was approved by shareholders at the AGM held on 25 April 2023. The Directors' Remuneration Policy was last approved by shareholders at the AGM held on 27 April 2022. The votes cast by proxy were as follows: | | Directors' Remuneration Report (AGM 2023) | | Directors' Remuneration Policy (AGM 2022) | | | --- | --- | --- | --- | --- | | | Number of votes | % of votes cast | Number of votes | % of votes cast | | For | 280,032,586 | 93.3 | 185,096,834 | 99.97 | | Against | 20,124,775 | 6.7 | 55,022 | 0.03 | | Total votes cast | 300,157,361 | 100.0 | 185,151,856 | 100.0 | | Number of votes withheld | 871,329 | – | 14,277 | – | ## DIRECTORS' REMUNERATION POLICY ### Overview The Directors' Remuneration Policy is put to a shareholders' vote every three years and in any year if there is to be a change in the policy. A resolution to approve this Remuneration Policy was proposed at the Company's AGM held on 27 April 2022. The resolution was passed, and the Remuneration Policy provisions set out below will apply until they are next put to shareholders for renewal of that approval. ### Policy #### Fees The Directors' fees are determined within the limits set out in the Company's Articles of Association and they are not eligible for bonuses, pension benefits, share benefits, share options, long-term incentive schemes or other benefits. The Directors' fees are paid at annual rates and do not have any variable or performance-related elements. The Board may determine that additional remuneration may be paid, from time to time, to any one or more Directors in the event such Director or Directors are requested by the Board to perform extra or special services on behalf of the Company. The Directors shall be entitled to fees at such rates as determined by the Board subject to the maximum aggregate fee limit of £500,000 set out in the Company's Articles of Association. The Directors shall also be entitled to be reimbursed for all expenses incurred in performance of their duties. These expenses are unlikely to be of a significant amount. Fees are payable from the date of appointment as a Director of the Company and cease on date of termination of appointment. The Board will not pay any incentive fees to any person to encourage them to become a Director of the Company. The Board may, however, pay fees to external agencies to assist the Board in the search and selection of Directors. 115 Annual Report and Accounts 2023 | Governance ### DIRECTORS' REMUNERATION REPORT CONTINUED Current and future policy Component Director Purpose of reward Operation Annual fee Chair of Board Fees for services as Determined by the Board chair of a plc Annual fee Other Directors Fees for services as non- Determined by the Board executive directors of a plc Expenses All Directors Reimbursement of expenses Submission of appropriate incurred in the performance supporting documentation of duties Statement of consideration of conditions elsewhere in the Company The Company has no employees. Therefore, the process of consulting with employees on the setting of the remuneration policy is not applicable. Review The Directors’ remuneration will be reviewed on an annual basis by the Board and any changes are subject to approval by the Board. The remuneration payable to the Directors will take into account a number of factors, inter alia, the experience of the Directors, the complexity of the Company and prevailing market rates. Directors’ service contracts The Directors do not have service contracts with the Company. The Directors are not entitled to compensation on loss of oce. The Directors have appointment letters which do not provide for any specic term. However, in accordance with the AIC Code, they are subject to annual re-election. Statement of consideration of shareholders’ views The Company is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. If there are substantial votes against resolutions in relation to Directors’ remuneration, the Company will seek the reasons for any such vote and will detail any resulting actions in the next Directors’ remuneration report. ### Approval The Directors’ Remuneration Report was approved by the Remuneration Committee and signed on its behalf by: Daniella Carneiro Chair of the Remuneration Committee 4 April 2024 116 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### REPORT OF THE NOMINATION COMMITTEE ### I am pleased to present the report of the Activities Nomination Committee (the “Committee”) for the During the year, the Nomination Committee: year ended 31 December 2023. ## • led the recruitment process for the appointment ### Composition of Ms Carneiro on 18 January 2023. As noted in the Company’s 2022 Annual Report, in order The composition of the Committee is set out in the to conduct a formal, rigorous and transparent Corporate Governance Statement above. Details search process, the Committee had engaged Trust of how its performance evaluation has been Associates, an independent search consultancy conducted are included below and on page118. with no connection to the Company or its Directors, to assist with the recruitment process. ### Meetings ## • recommended to the Board the appointment of There have been two meetings of the Committee Ms Carneiro as the Chair of the Remuneration during the year. The Directors’ attendance at these Committee and her appointment to various meetings is included in the Corporate Governance committees of the Board; Statement on page105. ## • considered the results of the evaluation of the Board, its Committees, the individual Directors ### Role of the Nomination Committee and the Chair; The main responsibilities of the Committee include: ## • as part of the evaluation process, considered the ## • reviewing the structure, size and composition of Board’s composition with reference to the mix of the Board and its Committees; skills, diversity, knowledge and experience, and how these aligned with the Company’s strategic ## • ensuring plans are in place for orderly objectives and the opportunities and challenges succession to the Board and ensuring that such faced by it; plans promote diversity of gender, social and ethnic backgrounds, cognitive and personal updated the Company’s policies regarding ## • strengths; the tenure of the Chair and the other Board members, and diversity and inclusion, to make ## • leading the process for appointments to these more robust and better aligned with the the Board and considering the use of open recommendations of the AIC Code and other advertising and/or an external search relevant regulatory framework; consultancy for each appointment; ## • reviewed its terms of reference and considered ## • considering job specications and whether the whether these remained appropriate; candidates have the necessary skills and time available to devote to the Company; reviewed the signicant commitments of the ## • Directors and the time dedicated by them to the ## • arranging for any new Directors to be provided aairs of the Company; and with training and induction; ## • made recommendations to the Board regarding ## • making recommendations to the Board the Directors’ annual re-election by shareholders regarding the Company’s policy on the tenure of at the AGM. the Chair of the Company; ## • reviewing the length of service of each Director ### Performance evaluation and assessing if this impacts their independence; A formal performance evaluation process is ## • making recommendations to the Board undertaken annually for the Board, its Committees, regarding the Company’s policy on diversity and the individual Directors and the Chair. The Directors inclusion; and are aware that they continually need to monitor and improve Board performance and recognise ## • performing a formal and rigorous evaluation of that this can be achieved through regular Board the Board, its committees, the Chair of the Board evaluation, which provides a valuable feedback and the individual Directors on at least an annual mechanism for improving Board eectiveness. basis, including, if appropriate, considering engagement of an external evaluator to facilitate The Directors have undertaken an internal the evaluation. performance evaluation by way of completing written questionnaires, led by the Chair, specically designed to assess the strengths and independence of the Board and the performance 117 Annual Report and Accounts 2023 | Governance ### REPORT OF THE NOMINATION COMMITTEE CONTINUED of its Committees, the Chair and the individual are subject to election by shareholders at the rst Directors. The questionnaires are also intended to annual general meeting after their appointment analyse the focus of Board meetings and assess and to annual re-election at the Company’s annual whether they are appropriate, or if any additional general meetings thereafter. information may be required to facilitate Board Following formal performance evaluation, the Board discussions. Any training needs identied as part of strongly recommends the re-election of all Directors the evaluation process are also considered by the on the basis of their knowledge and understanding Board. The evaluation of the Chair was carried out of the Company’s business model, their experience by the other Directors of the Company, led by Mr and expertise in investment matters, their Horlick. The results of the Board evaluation process independence and continuing eectiveness and were reviewed and discussed by the Nomination commitment to the Company. The Directors’ Committee. The recommendations made as biographical details are set out on page95. part of the evaluation process were discussed by the Directors to ensure that all points were ### Induction of new Directors addressed appropriately and to enable continuous improvement of the Board. The Company has an established process in place for the induction of new Directors. An induction The Committee’s deliberations concluded that: pack is provided to new Directors by the Company ## • as a whole, the Board functions eectively Secretary, containing relevant information about and the current Committee structure remains the Company, its constitutional documents and appropriate; its processes and procedures. New appointees meet with relevant persons at the Investment ## • the Chair leads the Board eectively and Manager and the Company’s Broker. Directors’ promotes a culture of openness and debate, training is also provided to each new Director by and facilitates constructive Board relations and the Company’s legal adviser. During the year, the eective contribution of all Directors. In liaison induction process was carried out in respect of Ms with the Company Secretary, he ensures that Carneiro's appointment to the Board. the Directors receive accurate, timely and clear information; ### Diversity and inclusion ## • each Director provides constructive challenge, The Board’s diversity policy is based on its belief strategic guidance, oers specialist advice and that the Board should have a diverse range of holds third party service providers to account; experience, skills and backgrounds. When making | • | all Directors are considered to be independent | recommendations for new appointments to the | | --- | --- | --- | | | of the Investment Manager in both character | Board and planning for Board succession, the | | | and judgement. None of the Directors sit on the | Nomination Committee will take into consideration | | | boards of any other companies managed by the | the recommendations of the AIC Code and other | | | Investment Manager; and | guidance on boardroom diversity and inclusion. | | • | all of the current Directors make an eective | The Board supports the recommendations of the | | | contribution to the Company’s operations which | FTSE Women Leaders Review on gender diversity | | | is important to its long-term sustainable success. | and its voluntary target for FTSE 350 boards to | | | They have the requisite skills and experience | have a minimum of 40% of women on boards. | | | to continue to provide able leadership and | The Company also supports the Parker review’s | | | direction for the Company. | recommendations to increase ethnic and cultural | diversity on company boards. Whilst the Board does The Nomination Committee of the Company aims not consider it appropriate to use specic diversity to follow best governance practices, where possible, targets given its small size, it acknowledges that and accordingly, regularly considers the merits of diversity is important to ensure that the Company having an external performance evaluation in line can draw on a broad range of perspectives, skills, with the recommendation of the AIC Code for FTSE experience, knowledge and backgrounds to 350 companies. eectively lead the Company. ### Re-election of Directors As at 31 December 2023, three out of ve Directors (60%) were women. The Board is also meeting the In accordance with the AIC Code, the Committee recommendation that at least one Director is from annually considers the re-election of the Directors an ethnic minority background. The following tables with reference to their performance over the course set out the gender and ethnic diversity of the Board of the nancial year and ability to commit adequate as at 31 December 2023: amount of time to the Company’s aairs. Directors 118 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Number of Percentage Number of senior 1 Gender diversity Board members of the Board positions on the Board Men 2 40 1 Women 3 60 1 Other – – – Not specied/prefer not to say – – – Number of Percentage Number of senior 1 Ethnic diversity Board members of the Board positions on the Board White British or other White 4 80 2 (including minority-white groups) Mixed/Multiple Ethnic Groups – – – Asia/Asian British – – – Black/African/Caribbean/ – – – Black British 2 Other ethnic groups, 1 20 – including Arab Not specied/prefer not to say – – – 1 Senior positions include Chair of the Board and Chair of the Audit Committee. The Company did not have a Senior Independent Director as at 31 December 2023 2 Latin American As an externally managed investment company with that the tenure should balance the need to provide solely independent, non-executive Directors, the and maintain continuity, knowledge, experience Company does not have a Chief Executive or a Chief and independence, against the need to periodically Financial Ocer and has no employees or internal refresh the Board composition, in order to operations. Accordingly, there are no disclosures maintain an appropriate mix of the required skills, about executive management positions to be experience, knowledge and length of service. included. The role of the Audit Committee Chair is As the Company was launched in 2021, the considered to be a senior position and has been Nomination Committee considers that it will be included in the above tables. The information in the appropriate to initiate formal succession planning above tables was provided by individual Directors in in the Company’s third year of existence. At response to a request from the Company. that time, the Committee will ensure that the succession plan is based on merit and objective ### Tenure and succession planning criteria and promotes diversity of gender, social and ethnic backgrounds, cognitive and personal The Company has no employees, and the strengths, whilst taking into account the challenges Investment Manager is external to the Company, and opportunities facing the Company and the therefore the Board’s oversight of succession Board and the balance of skills and expertise planning is restricted to the Board level. The Board that are required in the future. Accordingly, the will, from time to time and where appropriate, formal succession planning will be initiated by the discuss the succession plans of the Investment Nomination Committee in 2024. Manager through its Management Engagement Committee. The Board’s succession plan is guided by its policy Bernard Bulkin on tenure. The Board has agreed on a limit of nine Chair of the Nomination Committee years on the tenure of the Directors, in line with 4 April 2024 the recommendations of the AIC Code. It believes 119 Annual Report and Accounts 2023 | Governance ### MANAGEMENT ENGAGEMENT COMMITTEE REPORT ### I am pleased to present the report of Activities during the year the Management Engagement Committee The Committee has conducted a comprehensive (the “Committee”) for the year ended review of the performance of the AIFM, the 31 December 2023. Investment Manager and the Company’s other key service providers. This included an assessment of ### Composition the services provided as well as the fees paid for The composition of the Committee is set out in the the provision of such services. Corporate Governance Statement on page105. On 3 May 2023, Victory Hill Capital Partners LLP was Details of how its performance evaluation has been appointed as the Company's new AIFM, replacing conducted are included on pages117 and118 in G10 Capital Limited. the report of the Nomination Committee. Following its review, the Committee is satised that Victory Hill, as the Investment Manager and ### Meetings the AIFM, has diligently invested the available The Committee met twice during the year under funds during the year, in line with the investment review. The Directors’ attendance at the Committee policy, which should provide stable returns to meetings held during the year is set out in the the Company’s shareholders. The Directors are Corporate Governance Statement on page105. satised that the collective skillset of the Investment Manager’s team contains all the necessary skills ### Role of the Management and experience to best serve the interests of ### Engagement Committee GSEO shareholders in performing its delegated responsibilities. Details of the Investment Manager’s The key responsibilities of the Committee include: activities during the year and the Company’s overall monitoring and evaluating the AIFM and the performance are included in the Strategic Report. ## • Investment Manager’s investment performance The key elements of the fees paid to Victory Hill are and, if necessary, providing appropriate set out on page98. guidance; As a whole, the Committee is satised that Victory reviewing, at least annually, the performance Hill has the suitable skills and experience to advise ## • of the AIFM and the Investment Manager and upon and manage, respectively, the Company’s considering their continued appointment on the investments, and believes that their continuing terms set out in their respective agreements with appointment as the Investment Manager and the the Company; AIFM of the Company is in the best interests of shareholders. ## • reviewing the level and method of remuneration, the basis of performance fees (if any) and the The performance of the Company’s other service notice period of the AIFM and the Investment providers is also closely monitored by the Board, Manager to ensure that these remain in the best through the Committee. The Committee’s review interests of the shareholders; of the key service providers comprised open and closed-ended questions and included a review of ## • ensuring that processes have been put in place the quality of their services and fees to ensure they to review the Company’s risk management and remained eective and competitive. This process internal control systems designed to safeguard also included reviewing each service provider’s shareholders’ investment and the Company’s policies and procedures to ensure that they had assets; and adequate controls and procedures in place. ## • monitoring and evaluating the performance of Following a comprehensive review, the the other key service providers of the Company Committee concluded that the performance of to ensure their continued competitiveness and all the Company’s key service providers had been eectiveness. satisfactory and recommended their continuing appointment on the current terms. Richard Horlick Chair of the Management Engagement Committee 4 April 2024 120 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### STATEMENT OF DIRECTORS' RESPONSIBILITIES ### The Directors are responsible for preparing Website publication the annual report and the nancial statements The Directors are responsible for ensuring the in accordance with UK adopted international annual report and the nancial statements are accounting standards and applicable law and made available on a website. Financial statements regulations. are published on the Company’s website in Company law requires the Directors to prepare accordance with legislation in the United Kingdom nancial statements for each nancial year. Under governing the preparation and dissemination that law, they are required to prepare the Company of nancial statements, which may vary from nancial statements in accordance with UK adopted legislation in other jurisdictions. The maintenance international accounting standards. Under company and integrity of the Company’s website is the law, the Directors must not approve the nancial responsibility of the Directors and has been statements unless they are satised that they give delegated to the Investment Manager. The a true and fair view of the state of aairs of the Directors’ responsibility also extends to the ongoing Group and Company and of the prot or loss for integrity of the nancial statements contained the Company for that period. therein. In preparing these nancial statements, the ### Directors are required to: Directors’ responsibilities pursuant ### to DTR4 ## • select suitable accounting policies and then apply them consistently; The Directors, to the best of their knowledge, conrm that: ## • make judgements and accounting estimates that are reasonable and prudent; the nancial statements have been prepared in ## • accordance with the applicable set of accounting ## • state whether they have been prepared in standards, give a true and fair view of the assets, accordance with UK adopted international liabilities, nancial position and prot of the accounting standards, subject to any material Company; and departures disclosed and explained in the nancial statements; the annual report includes a fair review of the ## • development and performance of the business ## • prepare the nancial statements on the going and the nancial position of the Company, concern basis unless it is inappropriate to together with a description of the principal risks presume that the Company will continue in and uncertainties that it faces. business; and The Directors consider that the annual report and ## • prepare a Directors’ report, a Strategic report nancial statements, taken as a whole, are fair, and Directors’ remuneration report which balanced and understandable and provide the comply with the requirements of the Companies information necessary for shareholders to assess Act 2006. the Company’s position and performance, business The Directors are responsible for keeping adequate model and strategy. accounting records that are sucient to show and explain the Company’s transactions and disclose ### Approval with reasonable accuracy at any time the nancial position of the Company and enable them to This Directors’ responsibilities statement was ensure that the nancial statements comply with approved by the Board of Directors and signed on the Companies Act 2006. its behalf by: They are also responsible for safeguarding the assets of the Company and hence for taking Bernard Bulkin reasonable steps for the prevention and detection Chair of fraud and other irregularities. The Directors are 4 April 2024 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. 121 Annual Report and Accounts 2023 | Financial Statements ### FINANCIAL STATEMENTS Independent Auditor’s report 123 Statement of comprehensive income 130 Statement of nancial position 131 Statement of changes in shareholders’ equity 132 Statement of cash ows 133 Notes to the nancial statements 134 Alternative performance measures 156 122 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### INDEPENDENT AUDITOR’S REPORT ### Independent Auditor’s report to the members of VH Global Sustainable Energy ### Opportunities PLC ### Opinion on the nancial statements In our opinion the nancial statements: • give a true and fair view of the state of the Company’s aairs as at 31 December 2023 and of its prot for the year then ended; ## • have been properly prepared in accordance with UK adopted international accounting standards; ## • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the nancial statements of VH Global Sustainable Energy Opportunities PLC (the ‘Company’) for the year ended 31 December 2023 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Shareholders’ Equity, the Statement of cash ows and notes to the nancial statements, including a summary of material accounting policies. The nancial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards. ### Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the nancial statements section of our report. We believe that the audit evidence we have obtained is sucient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the Audit Committee. ### Independence Following the recommendation of the Audit Committee, we were appointed by the Board of Directors in the year of incorporation to audit the nancial statements for the year ended 31 December 2021 and subsequent nancial periods. The period of total uninterrupted engagement including retenders and reappointments is 3 years, covering the years ended 31 December 2021 to 31 December 2023. We remain independent of the Company in accordance with the ethical requirements that are relevant to our audit of the nancial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fullled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Company. ### Conclusions relating to going concern In auditing the nancial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the nancial statements is appropriate. Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included: ## • Assessing and challenging the inputs in the cashow forecast prepared by the Directors against existing contractual commitments, including performing stress testing considering downside scenarios and assessing the impact on the Company’s liquidity position; ## • Assessing assumptions used within the valuation models to supporting documentation per the key audit matter noted below and considering how these impact on the ability of the portfolio companies to make distributions to the Company and therefore on the Company’s ability to meet its commitments as they fall due; • Reviewing the future commitments of the Company and checking they have been appropriately incorporated into the forecast; and ## • Reviewing the amount of headroom in the forecasts of both the base case and downside scenarios. Based on the work we have performed, we have not identied any material uncertainties relating to events or conditions that, individually or collectively, may cast signicant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the nancial statements are authorised for issue. 123 Annual Report and Accounts 2023 | Financial Statements # INDEPENDENT AUDITOR'S REPORT CONTINUED In relation to the Company's reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors' statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. ## An overview of the scope of our Audit | Key audit matters | Valuation of Investments | 2023 | 2022 | | --- | --- | --- | --- | | Materiality | Financial statements as a whole £7.258m (2022: £6.860m) based on 1.5% (2022: 1.5%) of net assets. | Yes | Yes | | | Specific Materiality Materiality for items impacting on the realised return was £1.141m (2022: £1.206m) based on 5% (2022: 5%) of profit before tax, excluding the unrealised valuation movements. | | | ## Scope of our audit Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company's system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. ## Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 124 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Key audit matter How the scope of our audit addressed the key audit matter Valuation of investments 100% of the underlying investment In respect of the investments valued using discounted portfolio is represented by dividend models, we performed the following specic (See note 7, and accounting unquoted equity and loan procedures: policy on pages 134) investments. ## • Utilised spreadsheet analysis tools to assess the The valuation of investments integrity of the model. is calculated using discounted ## • Assessed the reasonableness of forecasted cashows dividend models. This is a highly against supporting documentation such as revenue subjective accounting estimate contracts. where there is an inherent risk of ## bias arising from the investment • Challenged the appropriateness of the key valuations being prepared by assumptions including discount factors, ination the Investment Manager who is and asset life applied by benchmarking to available remunerated based on the net asset industry data and with the assistance of our value of the company. valuations experts where appropriate, considering each assumption within a reasonable range. These estimates include judgements ## including discount rates, useful • Reviewed the corporation tax workings within the economic lives of assets, power valuation model and considered whether these had generation and pricing forecasts, tax been calculated accurately in the context of current and ination. corporation tax legislation and rates in relevant jurisdictions. Assets in construction were valued ## using the cost approach. • Vouched cash to bank statements and other net assets to investee entity management accounts. Investments at fair value through ## prot or loss is the most signicant • Considered the accuracy of forecasting by comparing balance in the nancial statements previous and future forecasts to actual results and and is the key driver of performance challenged the reasons for signicant variances and therefore we determined this to be whether these have been adequately factored into a key audit matter. future modelling. ## • Vouched loans to loan agreements, veried the terms of the loans and recalculated interest income and compared to that recorded. For each of the key assumptions in the valuation models, including in relation to the inputs used in the build up of discount rates, we challenged the appropriateness of the assumption and whether alternative reasonable assumptions could have been applied. We considered each assumption in isolation as well as in conjunction with other assumptions and the valuation as a whole, in order to derive a reasonable range of valuations and assess whether the company’s valuation was within that range. For those investments whose fair value is akin to cost, we agreed the cost of the investments to supporting documentation and obtained progress reports from the developers in order to assess the appropriateness of the valuation. Key observations Based on our procedures performed we did not identify any matters to suggest the valuation of the investments was not appropriate. 125 Annual Report and Accounts 2023 | Financial Statements # INDEPENDENT AUDITOR'S REPORT CONTINUED ## Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: | | Company financial statements | | | --- | --- | --- | | | 2023 | 2022 | | Materiality | £7.258m | £6.860m | | Basis for determining materiality | 1.5% of Net assets | | | Rationale for the benchmark applied | Net Asset Value is a key indicator of performance and as such the most relevant benchmark on which to base materiality for the users of the financial statements. | | | Performance materiality | £5.080m | £4.802m | | Basis for determining performance materiality | 70% of Materiality | | | Rationale for the percentage applied for performance materiality | The level of performance materiality applied was set after having considered a number of factors including our assessment of the Company's overall control environment and the expected total value of known and likely misstatements and the level of transactions in the year. | | ## Specific materiality We also determined that for those items impacting on realised returns, a misstatement of less than materiality for the financial statements as a whole, specific materiality, could influence the economic decisions of users. As a result, we determined materiality for these items to be £1.141m (2022: £1.206m) based on 5% (2022: 5%) of profit before tax excluding unrealised valuation movements. We further applied a performance materiality level of 70% (2022: 70%) of specific materiality of £0.799m (2022: £0.844m) to ensure that the risk of errors exceeding specific materiality was appropriately mitigated. ## Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £145k (2022: £137k) and for those items impacting realised return £22.8k (2022: 24k). We also agreed to report differences below these thresholds that, in our view, warranted reporting on qualitative grounds. ## Other information The Directors are responsible for the other information. The other information comprises the information included in the annual report and accounts other than the financial statements and our Auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 126 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### Corporate governance statement The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specied for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the nancial statements or our knowledge obtained during the audit. ## Going concern and longer-term • The Directors’ statement with regards to the appropriateness of adopting the going viability concern basis of accounting and any material uncertainties identied set out on page57; and ## • The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate set out on page 57. ## Other Code provisions • Directors’ statement on fair, balanced and understandable set out on page 108; ## • Board’s conrmation that it has carried out a robust assessment of the emerging and principal risks set out on page 49; ## • The section of the annual report that describes the review of eectiveness of risk management and internal control systems set out on page 107; and ## • The section describing the work of the Audit Committee set out on page 108. ### Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Strategic report and Directors’ In our opinion, based on the work undertaken in the course of the audit: report ## • the information given in the Strategic report and the Directors’ report for the nancial year for which the nancial statements are prepared is consistent with the nancial statements; and ## • the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identied material misstatements in the strategic report or the Directors’ report. Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. Matters on which we are We have nothing to report in respect of the following matters in relation to which the required to report by exception Companies Act 2006 requires us to report to you if, in our opinion: ## • adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or ## • the nancial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or ## • certain disclosures of Directors’ remuneration specied by law are not made; or ## • we have not received all the information and explanations we require for our audit. ### Responsibilities of Directors As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the preparation of the nancial statements and for being satised that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of nancial statements that are free from material misstatement, whether due to fraud or error. 127 Annual Report and Accounts 2023 | Financial Statements ### INDEPENDENT AUDITOR’S REPORT CONTINUED In preparing the nancial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. ### Auditor’s responsibilities for the audit of the nancial statements Our objectives are to obtain reasonable assurance about whether the nancial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to inuence the economic decisions of users taken on the basis of these nancial statements. ### Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Non-compliance with laws and regulations We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud. These included but were not limited to compliance with Companies Act 2006, the FCA listing and DTR rules, the principles of the UK Corporate Governance Code, the requirements of s.1158 of the Corporation Tax Act, and applicable accounting standards. Our tests included, but were not limited to: ## • Obtaining an understanding of the control environment in monitoring compliance with laws and regulations; ## • Agreement of the nancial statement disclosures to underlying supporting documentation; ## • Enquiries of management and those charged with governance regarding any instances of non-compliance with laws and regulations; and ## • Review of minutes of Board meetings throughout the period regarding any instances of non-compliance with laws and regulations. ### Fraud We assessed the susceptibility of the nancial statements to material misstatement including fraud. Our risk assessment procedures included: ## • Enquiry with management, Audit Committee and those charged with governance regarding any known or suspected instances of fraud; ## • Obtaining an understanding of the Company’s policies and procedures relating to: — Detecting and responding to the risks of fraud; and — Internal controls established to mitigate risks related to fraud. ## • Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud; ## • Discussion amongst the engagement team as to how and where fraud might occur in the nancial statements; and • Considering remuneration incentive schemes and performance targets and the related nancial statement areas impacted by these. Based on our risk assessment, we considered the areas most susceptible to fraud to be the valuation of investments and management override of controls. 128 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Our procedures in response to the above included: ## • The procedures set out in the Key Audit Matters section above; ## • Testing journals posted in the preparation of the nancial statements • Evaluating whether there was evidence of bias by the Investment Manager and Directors that represented a risk of material misstatement due to fraud ## • Incorporating an element of unpredictability by testing a judgemental sample of smaller expense items that would not otherwise be selected for testing. We also communicated relevant identied laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the nancial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reected in the nancial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/ auditorsresponsibilities. This description forms part of our Auditor’s report. ### Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an Auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Vanessa-Jayne Bradley (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London, United Kingdom 4April 2024 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 129 Annual Report and Accounts 2023 | Financial Statements ### STATEMENT OF COMPREHENSIVE INCOME ### For the year ended 31 December 2023 | | | | | For the year ended | | | | | For the year ended | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 31 December 2023 | | | | | 31 December 2022 | | | | Revenue | | Capital | | Total | Revenue | | Capital | | Total | | Note | | £’000 | £’000 | | £’000 | | £’000 | £’000 | | £’000 | Income Gains on investments 7 – 32,517 32,517 – 4,131 4,131 Investment income 4 29,326 – 29,326 28,823 – 28,823 Total income and gains 29,326 32,517 61,843 28,823 4,131 32,954 Investment management fees 15 (4,372) – (4,372) (3,810) – (3,810) Other expenses 5 (2,132) – (2,132) (940) – (940) Prot/(loss) for the year before taxation 22,822 32,517 55,339 24,073 4,131 28,204 Taxation 6 – – – – – – Prot/(loss) for the year after taxation 22,822 32,517 55,339 24,073 4,131 28,204 Prot and total comprehensive income attributable to: Equity holders of the Company 22,822 32,517 55,339 24,073 4,131 28,204 Earnings/(loss) per share – basic and diluted (p) 17 5.42 7.72 13.14 6.55 1.12 7.67 The total column of the Statement of Comprehensive Income is the prot 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 134 to 155 form part of these nancial statements. 130 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### STATEMENT OF FINANCIAL POSITION ### As at 31 December 2023 | | | As at | | As at | | --- | --- | --- | --- | --- | | | 31 December | | 31 December | | | | | 2023 | | 2022 | | Note | | £’000 | | £’000 | Non-current assets Investments at fair value through prot or loss 7 369,047 315,133 Total non-current assets 369,047 315,133 Current assets Cash and cash equivalents 10 74,258 141,791 Cash receivable 9 40,367 – Other receivables 9 441 740 Total current assets 115,066 142,531 Total assets 484,113 457,664 Current liabilities Accounts payable and accrued expenses 11 (270) (491) Total current liabilities (270) (491) Total liabilities (270) (491) Net assets 18 483,843 457,173 Capital and reserves Share capital 13 4,225 4,225 Share premium 13 186,368 186,368 Special distributable reserve 13 227,067 232,467 Capital reserve 58,694 26,177 Revenue reserve 7,489 7,936 Total capital and reserves attributable to equity holders of the Company 483,843 457,173 Net asset value per ordinary share (p) 18 116.46 108.21 The nancial statements were approved and authorised for issue by the Board of Directors on 4April 2024 and signed on its behalf by: Bernard Bulkin Chair Company Registration Number 12986255 The notes on pages 134 to 155 form part of these nancial statements. 131 Annual Report and Accounts 2023 | Financial Statements ### STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY ### For the year ended 31December 2023 | | | | Share | | Special | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | premium | | distributable | | Capital | Revenue | | | | | capital | account | | | reserve | reserve | reserve | | Total | | For the year ended 31 December 2023 Note | £’000 | | £’000 | | £’000 | £’000 | | £’000 | £’000 | Opening balance 4,225 186,368 232,467 26,177 7,936 457,173 Shares bought back 13 – – (5,400) – – (5,400) Total comprehensive income forthe year – – – 32,517 22,822 55,339 Interim dividends paid during the year 14 – – – – (23,269) (23,269) Balance at 31 December 2023 4,225 186,368 227,067 58,694 7,489 483,843 | | | | Share | | Special | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | premium | | distributable | | Capital | Revenue | | | | | capital | account | | | reserve | reserve | reserve | | Total | | For the year ended 31 December 2022 Note | £’000 | | £’000 | | £’000 | £’000 | | £’000 | £’000 | Opening balance 3,116 67,949 232,467 22,046 (1,680) 323,898 Issue of share capital 13 1,109 120,891 – – – 122,000 Cost of issue of shares 13 – (2,472) – – – (2,472) Total comprehensive income for the year – – – 4,131 24,073 28,204 Interim dividends paid during the year – – – – (14,457) (14,457) Balance at 31 December 2022 4,225 186,368 232,467 26,177 7,936 457,173 A total of 422,498,890 ordinary shares were issued since the Company’s date of incorporation to 31 December 2023. During the year, the Company purchased for treasury a total of 7,027,321 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 134 to 155 form part of these nancial statements. 132 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### STATEMENT OF CASH FLOWS ### For the year ended 31 December 2023 | | For the year | | For the year | | | --- | --- | --- | --- | --- | | | | ended | | ended | | | 31 December | | 31 December | | | | | 2023 | | 2022 | | Note | | £’000 | | £’000 | Cash ows from operating activities Prot before tax 55,339 28,204 Adjustments for: Movement in fair value of investments 7 (31,095) (4,148) Interest on cash deposits 4 (5,865) (2,310) Operating result before working capital changes 18,379 21,746 (Increase)/decrease in other receivables 9 (40,068) 71 Increase/(decrease) in accounts payable and accrued expenses 11 (221) 151 Net cash (used in)/generated from operating activities (21,910) 21,968 Cash ows from investing activities Purchase of investments 7 (22,819 ) (151,367) Interest on cash deposits 4 5,865 2,310 Net cash used in investing activities (16,954) (149,057) Cash ows from nancing activities Proceeds from issue of shares – 122,000 Share buybacks 13 (5,400) – Payment of share issue costs – (2,472) Dividends paid in the year 14 (23,269) (14,457) Net cash (used in)/generated from nancing activities (28,669) 105,071 Net decrease in cash and cash equivalents (67,533) (22,019) Cash and cash equivalents at beginning of the year 141,791 163,810 Cash and cash equivalents at end of the year 10 74,258 141,791 The notes on pages 134 to 155 form part of these nancial statements. 133 Annual Report and Accounts 2023 | Financial Statements # NOTES TO THE FINANCIAL STATEMENTS # 1. General information VH Global Sustainable Energy Opportunities™ (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 30 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 GSEO 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 of 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 GSEO Holdings, is to make investments, via individual corporate entities. The Company typically will subscribe for equity in or issue loans to GSEO 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. 134 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS In this regard, GSEO Holdings is itself an investment entity. Consequently, the Company need not have an exit strategy for its investment in GSEO Holdings. As for investments in subsidiaries, the Company intends to hold each investment until the end of its life, at which point the assets are expected to have no residual value. The Directors consider that this demonstrates a clear exit strategy from these investments. The Company may choose to sell its interest in an investment before the end of its project life if an attractive offer is received from a potential purchaser 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 13. ### 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 2023, the Company had net current assets of £114.8m (2022: £142m) and cash balances of £74.3m (2022: £141.8m) and cash receivables of £40.4m (2022: £0), 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 and pipeline projections which cover a period of at least 12 months from the date of approval of this report, considering foreseeable changes in investment and the wider pipeline, 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 and ongoing operating expenses. 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 2023, 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. 135 Annual Report and Accounts 2023 | Financial Statements ### NOTES TO THE FINANCIAL STATEMENTS CONTINUED 2.4 Financial Instruments Financial assets and nancial liabilities are recognised in the Company’s statement of nancial position when the Company becomes a party to the contractual provisions of the instrument. Financial assets The classication of nancial assets at initial recognition depends on the purpose for which the nancial asset was acquired and its characteristics. All nancial assets are initially recognised at fair value plus transaction cost except for those designated as fair value through prot or loss, which are recognised at fair value only. All purchases of nancial assets are recorded at the date on which the Company became party to the contractual requirements of the nancial asset. The Company’s nancial assets principally comprise of investments held at fair value through prot or loss and at amortised cost. Investments held at fair value through prot or loss The Company accounts for its investment in its wholly owned direct subsidiary GSEO Holdings at fair value through prot and loss in accordance with IFRS9. At initial recognition, investments in sustainable energy infrastructure projects in GSEO Holdings are measured at fair value through prot 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 GSEO Holdings are investment entities under IFRS, the Company includes its investment in GSEO Holdings at fair value through prot 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 nancial 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 dened 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 nancial 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 cashow 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 insignicant risk of changes in value. 136 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS 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 dierences arising on translation to the functional currency are recognised in the Statement of Comprehensive Income, within other expenses or other income. Foreign exchange dierences relating to investments held at fair value through prot 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 nancial 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 GSEO 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 eective 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 GSEO 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. Share issue expenses of the Company directly attributable to the issue and listing of shares are charged to the share premium account. 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 classied 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. 137 Annual Report and Accounts 2023 | Financial Statements ### NOTES TO THE FINANCIAL STATEMENTS CONTINUED 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 nancial 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 eciency assets. The nancial 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 mandatorily eective 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 nancial position of the Company. • IFRS17 Insurance Contracts (including the June2020 and December2021 Amendments to IFRS17). The Company does not have any contracts that meet the denition of an insurance contract under IFRS17. • Amendments to IAS1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements– Disclosure of Accounting Policies • Amendments to IAS12 Income Taxes–Deferred Tax related to Assets and Liabilities arising from a Single Transaction • Amendments to IAS12 Income Taxes– International Tax Reform–Pillar Two Model Rules • Amendments to IAS8 Accounting Policies, Changes in Accounting Estimates and Errors–Denition of Accounting Estimates The table below shows a number of standards and interpretations which had been published but not yet eective. Description Eective Date Amendments to the following standards: Periods beginning on or after 1January 2024 • IFRS10 and IAS28 Leases (Sale or Contribution of Assets between an Investor and its Associate or Joint Venture) • IAS1 Presentation of Financial Statements (Classication of Liabilities as Current or Non-Current) • IAS1 Presentation of Financial Statements (Non-current Liabilities with Covenants) • IAS7 and IFRS7 (Supplier Finance Arrangements) • IAS16 (Lease Liability in a Sale and Leaseback) The Directors do not expect that the adoption of the Standards listed above will have a material impact on the nancial statements of the Company in future periods. 138 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### 3. Critical accounting estimates, judgements, and assumptions The preparation of nancial statements requires the Directors of the Company to make judgements, estimates and assumptions that aect the reported amounts recognised in the nancial 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 aected. Signicant 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, GSEO Holdings, meet the denition 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 GSEO 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 GSEO 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 ow (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 ows to the Company’s intermediate holdings i.e.GSEO 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 specic factors and an appropriate discount rate. Changes in assumptions about these factors could aect 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 knowledge of the market, taking into account market intelligence gained from publicly available information, bidding activities, discussions with nancial advisers, consultants, accountants and lawyers. The discount rates are reviewed quarterly and updated, where appropriate, to reect changes in the market and in the project risk characteristics. 139 Annual Report and Accounts 2023 | Financial Statements ### NOTES TO THE FINANCIAL STATEMENTS CONTINUED 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 reect various factors including gas prices, carbon prices and renewables deployment. Short to medium term ination assumptions used in the valuations are based on third party forecasts. In the longer term, an assumption is made that ination will increase at a long-term rate. 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 GSEO Holdings The Company classies its investments based on its business model for managing those nancial assets and the contractual cash ow characteristics of the nancial assets. The portfolio of investments is managed, and performance is evaluated on a fair value basis. The contractual cash ows 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 ows. The collection of contractual cash ows is only incidental to achieving the Company’s business model’s objective. Consequently, in applying their judgement, the Directors have satised themselves that the equity and debt investments into its direct wholly owned subsidiary, GSEO Holdings, share the same investment characteristics and, as such, constitute a single asset class for IFRS7 disclosure purposes. ### 4. Investment income | | | | For the year ended | | | | | For the year ended | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 31December 2023 | | | | | 31December 2022 | | | Revenue | | Capital | | Total | Revenue | | Capital | | Total | | | £’000 | £’000 | | £’000 | | £’000 | £’000 | | £’000 | Interest on cash deposits 5,865 – 5,865 2,310 – 2,310 Interest income from investments 6,260 – 6,260 4,906 – 4,906 Dividend income 17,200 – 17,200 21,607 – 21,607 Investment income 29,325 – 29,325 28,823 – 28,823 140 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### 5. Operating expenses | For the year | | For the year | | | --- | --- | --- | --- | | | ended | | ended | | 31December | | 31December | | | | 2023 | | 2022 | | | £’000 | | £’000 | Fees to the Company’s Auditor: Statutory audit of the year-end nancial statements 223 170 Assurance related services for the interim report 70 50 Other non-audit services 84 48 Tax advisory fees 14 10 AIFM fees 66 74 Directors’ fees 345 220 Due diligence fees 349 2 Administration and depositary fees 227 188 Professional fees 70 104 Other expenses 684 74 Total operating expenses 2,132 940 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 2023 For the year ended 31December 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Corporation tax – – – – – – 141 Annual Report and Accounts 2023 | Financial Statements # NOTES TO THE FINANCIAL STATEMENTS CONTINUED # b. Factors affecting total tax charge for the year The effective UK corporation tax rate applicable to the Company for the year is 23.52% (2022: 19%). 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 2023 | | | For the year ended 31 December 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | Profit for the year before taxation | 22,822 | 32,517 | 55,339 | 24,073 | 4,131 | 28,204 | | Corporation tax at 23.52% | 5,368 | 7,648 | 13,016 | 4,574 | 785 | 5,359 | | Effect of: | | | | | | | | Capital (gains) / losses not taxable | – | (7,648) | (7,648) | – | (785) | (785) | | Expenditure not deductible | 1 | – | 1 | (96) | – | (96) | | Non-taxable UK dividends | (4,046) | – | (4,046) | (4,105) | – | (4,105) | | Management expenses not utilised/ recognised | 161 | – | 161 | (180) | – | (180) | | Interest distributions | (1,014) | – | (1,014) | | | | | Proposed Interest distributions | (470) | – | (470) | (193) | – | (193) | | 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 GSEO Holdings is held at fair value. GSEO Holdings is subject to taxation in the United Kingdom. # c. Deferred taxation The Company has excess management expenses of £945,780 (2021: £262,400) that are available for offset against future profits. A deferred tax asset of £236,445 (2021: £65,600) 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. The Company has not provided for deferred tax on any capital gains or losses arising on the revaluation of investments. 142 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### 7. Investments at fair value through prot or loss As set out in note2.2, the Company designates its interest in its wholly owned direct subsidiary GSEO Holdings as an investment at fair value through prot 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. Specically: 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 signicant to the fair value measurement is directly or indirectly observable. Level 3:Valuation techniques for which the lowest level input that is signicant to the fair value measurement is unobservable. For assets and liabilities that are recognised in the nancial 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 classies all assets measured at fair value as below: Fair value hierarchy | | | Quoted prices | | | Signicant | | | Signicant | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | in active | | Observable | | unobservable | | | | | | | markets | | | inputs | | | inputs | | | Total | | (level 1) | | | (level 2) | | | (level 3) | | As at 31December 2023 | £’000 | | | £’000 | | £’000 | | | £’000 | Assets measured at fair value: Non-current assets Investments held at fair value through prot or loss 369,047 – – 369,047 | | | Quoted prices | | | Signicant | | | Signicant | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | in active | | observable | | unobservable | | | | | | | markets | | | inputs | | | inputs | | | Total | | (level 1) | | | (level 2) | | | (level 3) | | As at 31December 2022 | £’000 | | | £’000 | | £’000 | | | £’000 | Assets measured at fair value: Non-current assets Investments held at fair value through prot or loss 315,133 – – 315,133 All of the Company’s investments have been classied as Level 3 and there have been no transfers between levels during the year ended 31December 2023. 143 Annual Report and Accounts 2023 | Financial Statements ### NOTES TO THE FINANCIAL STATEMENTS CONTINUED The movement on the level 3 unquoted investment during the year is shown below: | | As at | | As at | | --- | --- | --- | --- | | 31December | | 31December | | | | 2023 | | 2022 | | | £’000 | | £’000 | Opening balance at beginning of the year 315,133 159,618 Additions during the year at cost 22,819 151,367 337,952 310,985 Fair value movement on investments: 1 Change in fair value of equity investments 32,649 4,144 2 Interest on loan investments (1,554) 4 Total fair value movement on investments 31,095 4,148 Closing balance 369,047 315,133 1 The £32,517k in the Statement of Comprehensive Income within other expenses/income and Statement of Changes in Equity is made up of unrealised gains of £32,649k per this noteand a realised foreign exchange loss of £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 nancial statements. Valuation methodology As set out in note2.2, the Company meets the denition of an investment entity as described by IFRS10, as such the Company’s investment in the GSEO Holdings is valued at fair value. The Company holds underlying investments in special purpose entities (SPEs) through its equity and debt investments in GSEO Holdings, as detailed in note8. The Investment Manager has carried out fair market valuations of the SPE investments as at 31December 2023. IFRS13 requires the Company to classify its investments in a fair value hierarchy that reects the signicance 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 | Level 2: fair value measurements are | Level 3: fair value measurements are | | --- | --- | --- | | those derived from quoted prices | those derived from inputs other than | those derived from valuation techniques | | (unadjusted) in active markets for | quoted prices included within Level 1 | that include inputs to the asset or | | identical assets or liabilities | that ore observable for the asset or | liability that ore not based on observable | | | liability, either directly (i.e., as prices) or | market data (unobservable inputs) | indirectly (i.e., derived from prices) There were no Level 1 or Level 2 assets or liabilities during the year. There were no transfers between Level 1 and 2, Level 1 and 3 or Level 2 and 3 during the year. The Company records the net asset value of GSEO 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 classied as level 3 as they are not traded and contain unobservable inputs. The Directors have satised 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 prot or loss using the DCF methodology in line with the IFRS13 framework for fair value measurement. As at 31December 2023, the US terminal storage assets, two of the ve 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 exible 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. 144 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS The total movement in the value of the investments in GSEO 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 terms. | | Capital expenditure | Based on the contractual arrangements (e.g. EPIC agreement), where applicable. | #### Key assumptions | | | | 1st December 2023 | 1st December 2022 | | --- | --- | --- | --- | --- | | Discount rate | Weighted Average | US terminal storage assets | 6.91% | 8.43% | | | Weighted Average | Australian solar PV with battery storage assets | 7.74% | 8.55% | | | Weighted Average | Brazilian solar PV assets | 9.67% | 13.09% | | | Weighted Average | Brazilian hydro facility | 9.54% | 10.48% | | Long-term inflation ^{1} | United States | US terminal storage assets | 1.62% | 2.0% | | | Australia | Australian solar PV with battery storage assets | 2.42% | 2.5% | | | Brazil | Brazilian solar PV assets & Brazilian hydro facility | 3.03% | 3.0% | | 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 | | Exchange rate | GBP:USD | US terminal storage assets | 1:1.2732 | 1:1.210 | | | GBP:BRL | Brazilian solar PV assets & Brazilian hydro facility | 1:6.1771 | 1:6.386 | | | GBP:AUD | Australian solar PV with battery storage assets | 1:1.8689 | 1:1.775 | $^{1}$ Source: IMF. Inflation rates have been taken from IMF published on 14 Oct 2023 (data is published biannually), which provides yearly forecasted inflation up to 2028. Long-term inflation rate refers to the 2028 projected rate. Short-term inflation volatility of up to 2028 has been accounted for in the valuation of operating assets. 145 Annual Report and Accounts 2023 | Financial Statements ### NOTES TO THE FINANCIAL STATEMENTS CONTINUED 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 ination, 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 ination 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 ination. For assets in construction, the Company has only sensitised the impact of foreign exchange uctuations. 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. For the annual report Changes in fair value of investments Change in NAV per As at 31December 2023 Change in input (£’000) share (p) -1.50% 22,034 5.30 Discount rate – US terminal storage assets 1.50% (17,339) -4.17 -1.50% 1,973 0.47 Discount rate – Australian solar PV with battery storage assets 1.50% (1,616) -0.39 -1.50% 3,327 0.80 Discount rate – Brazilian solar PV assets 1.50% (2,734) -0.66 -1.50% 15,976 3.85 Discount rate – Brazilian hydro facility 1.50% (12,981) -3.12 -1.50% 43,310 10.42 Discount rate – All 1.50% (34,670) -8.34 Changes in fair value of investments Change in NAV per As at 31December 2023 Change in input (£’000) share (p) -1.00% (10,833) -2.61 Ination – US terminal storage assets 1.00% 12,451 3.00 -1.00% (1,144) -0.28 Ination – Australian solar PV with battery storage assets 1.00% 1,458 0.35 -1.00% (2,011) -0.48 Ination – Brazilian solar PV assets 1.00% 2,295 0.55 -1.00% (11,997) -2.89 Ination – Brazilian hydro facility 1.00% 14,176 3.41 -1.00% (25,984) -6.25 Long-term Ination – All 1.00% 30,380 7.31 Changes in fair value of investments Change in NAV per As at 31December 2023 Change in input (£’000) share (p) -1year (1,888) -0.45 Asset life – US terminal storage assets +1year 1,782 0.43 -1year (333) -0.08 Asset life – Australian solar PV with battery storage assets +1year 306 0.07 -1year (395) -0.10 Asset life – Brazilian solar PV assets +1year 370 0.09 -1year (2,496) -0.60 Asset life – Brazilian hydro facility +1year 2,426 0.58 -1year (5,112) -1.23 Asset life – All +1year 4,883 1.18 146 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Changes in fair value of investments Change in NAV per As at 31December 2023 Change in input (£’000) share (p) -5.00% 4,224 1.02 Operating expenses – US terminal storage assets 5.00% (4,224 ) -1.02 -5.00% 275 0.07 Operating expenses – Australian solar PV with battery storage assets 5.00% (2 66) -0.06 -5.00% 828 0.20 Operating expenses – Brazilian solar PV assets 5.00% (8 16) -0.20 -5.00% 2,771 0.67 Operating expenses – Brazilian hydro facility 5.00% (2,772) -0.67 -5.00% 8,097 1.95 Operating expenses – All 5.00% (8,0 79) -1.95 Changes in fair value of investments Change in NAV per As at 31December 2023 Change in input (£’000) share (p) -10.00% 13,366 3.22 FX (GBP:USD) 10.00% (10,936) -2.63 -10.00% 18,787 4.73 FX (GBP:BRL) 10.00% (15,372) -3.70 -10.00% 4,140 1.00 FX (GBP:AUD) 10.00% (3,387) -0.82 -10.00% 36,293 8.74 FX – All 10.00% (29,694) -7.15 The sensitivities above are assumed to be independent of each other. Combined sensitivities are not presented. 147 Annual Report and Accounts 2023 | Financial Statements ### NOTES TO THE FINANCIAL STATEMENTS CONTINUED ### 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 nancial statements. Ownership interests as Investments Place of Business at 31December 2023 VH GSEO UK Holdings Limited United Kingdom 100% Victory Hill Distributed Energy Investments Limited United Kingdom 100% Victory Hill Flexible Power Limited United Kingdom 100% Rhodesia Power Limited United Kingdom 100% Victory Hill USA Holdings LLC United States 100% Victory Hill Midstream Investments LLC United States 100% Victory Hill Midstream Energy LLC United States 100% Motus T1 LLC United States 100% Motus T2 LLC United States 100% Victory Hill Australia Investments PtyLtd Australia 100% Victory Hill Distributed Power PtyLtd Australia 100% Mobilong Solar Farm PtyLtd Australia 100% Dunblane Solar PtyLtd Australia 100% Dubbo Solar Project PtyLtd Australia 100% Narrandera Solar Project PtyLtd Australia 100% Coleambally East Solar Farm PtyLtd Australia 100% VH Participacoes Hidreletricas do BrasilLTDA Brazil 98.25% VH Hydro Brasil HoldingS.A. Brazil 100% EnergestS.A. Brazil 100% Victory Hill Holdings BrasilS.A. Brazil 99.99% Energea Itaguaí I Ltda. * Brazil 100% Energea Itaguaí IILtda. * Brazil 100% Energea Itaguaí IIILtda. * Brazil 100% Energea Nova FriburgoLtda. * Brazil 100% Energea ItabaianaLtda. * Brazil 100% Energea RedençãoLtda. * Brazil 100% Energea ItaporangaLtda. * Brazil 100% Energea BataguassuLtda. * Brazil 100% Energea PalmasS.A. * Brazil 100% Energea ItacarambiLtda. * Brazil 100% Energea Vassouras ILtda. * Brazil 100% Energea SeropédicaLtda. * Brazil 100% Energea Paraíba do SulLtda. * Brazil 100% Energea TaquaritingaLtda. * Brazil 100% Energea Nova CruzLtda. * Brazil 100% 148 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS At 31December 2023, the Company has one direct subsidiary and owns 100% of GSEO Holdings. The Company owns investments in the other entities per the table above through its ownership of GSEO Holdings. GSEO Holdings owns 100% of Victory Hill USA HoldingsLLC, Victory Hill Australia Investments PtyLtd, Victory Hill Distributed Energy Investments Limited and Victory Hill Flexible Power Limited 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 unconsolidated 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, 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 Rhodesia Power Limited is held through Victory Hill Flexible Power Limited. These relate to the UK exible power with CCR assets. ### 9. Receivables | | As at | | As at | | --- | --- | --- | --- | | 31December | | 31December | | | | 2023 | | 2022 | | | £’000 | | £’000 | Other receivables 93 96 Interest receivable on cash and cash equivalents 317 270 Receivable from aliates – 355 Prepayments 31 19 Total other receivables 441 740 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 2023 and 31December 2022. Cash of £40,367k is held on behalf of the Company by VH GSEO UK Holdings Limited. ### 10. Cash and cash equivalents | | As at | | As at | | --- | --- | --- | --- | | 31December | | 31December | | | | 2023 | | 2022 | | | £’000 | | £’000 | Cash at bank 30,542 48,075 Cash on deposit 43,716 93,716 1 Total cash at bank 74,258 141,791 1 Cash at bank includes money market investments of £26.4m (31 December 2022: £93.7m) 149 Annual Report and Accounts 2023 | Financial Statements ### NOTES TO THE FINANCIAL STATEMENTS CONTINUED ### 11. Accounts payable and accrued expenses | | As at | | As at | | --- | --- | --- | --- | | 31December | | 31December | | | | 2023 | | 2022 | | | £’000 | | £’000 | Accrued expenses 270 491 Accounts payable – – Accounts payable and accrued expenses 270 491 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 nancial 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 identication, impact assessment, and monitoring and subject to risk limits and other controls. The principal nancial 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 eect on the Company’s protability 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 GSEO 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$40,290,000, representing a total of 15.0% 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 nancial assets is limited to interest earned on cash or cash equivalents. The Board considers that, because shareholder loan investments bear interest at a xed 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. 150 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS The Company’s interest and non-interest bearing assets and liabilities as at 31December 2023 and 31December 2022 are summarised as below: For the year ended 31December 2023 For the year ended 31December 2022 | Interest | | Non-interest | | | | Interest | | Non-interest | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | bearing | | | bearing | | Total | bearing | | | bearing | Total | | | £’000 | | | £’000 | £’000 | | £’000 | | £’000 | £’000 | Cash and cash equivalents 114,625 – 114,625 141,791 – 141,791 Prepayments and other receivables – 124 124 – 470 470 Interest receivable 317 – 317 270 – 270 Investments at fair value through prot or loss 93,347 275,700 369,047 89,047 226,086 315,133 Total assets 208,289 275,824 484,113 231,108 226,556 457,664 Liabilities Accounts payable and accrued expenses – (270) (270) – (491) (491) Total liabilities – (270) (270) – (491) (491) Price risk The operation and cash ows 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)xed 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 prots. Credit risk Credit risk is the risk that a counterparty will cause nancial 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 nancial 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 | | As at | | --- | --- | --- | --- | | 31December | | 31December | | | | 2023 | | 2022 | | | £’000 | | £’000 | Cash and cash equivalents 114,625 141,791 Investments at fair value through prot or loss 93,347 89,047 Other receivables (Note9) 441 740 208,413 231,578 Liquidity risk The Company manages its liquidity and funding risks by considering cash ow forecasts and ensuring sucient cash balances are held within the Company to meet future needs. Prudent liquidity risk management implies maintaining sucient cash and marketable securities, the availability of nancing 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. 151 Annual Report and Accounts 2023 | Financial Statements ### NOTES TO THE FINANCIAL STATEMENTS CONTINUED The following table details the Company’s liquidity analysis in respect of its nancial liabilities on contractual undiscounted payments: | | | <3 | | 3-12 | 1-5 | | >5 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Months | | Months | | Years | Years | | Total | | As at 31December 2023 | £’000 | | | £’000 | £’000 | £’000 | | £’000 | Accounts payable and accrued expenses 270 – – – 270 270 – – – 270 | | | <3 | | 3-12 | 1-5 | | >5 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Months | | Months | | Years | Years | | Total | | As at 31December 2022 | £’000 | | | £’000 | £’000 | £’000 | | £’000 | Accounts payable and accrued expenses 491 – – – 491 491 – – – 491 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 nancial obligations and allow for growth opportunities. Generally, acquisitions are anticipated to be funded with a combination of cash, debt and equity. ### 13. Share capital Special | | | | | Share | | | Share | | Distributable | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Capital | | premium | | | | Reserve | | Total | | | Issued and | Number of | | | (A) | | | (B) | | | (C) | (A+B+C) | | Date | fully paid | | shares | £’000 | | | £’000 | | | | £’000 | £’000 | Opening balance  311,589,799 3,116 67,949 232,467 303,532 Ordinary shares  110,909,091 1,109 120,891 – 122,000 Share issue costs  – – (2,472) – (2,472) At 31 December 2022 422,498,890 4,225 186,368 232,467 423,060 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 During the period under review, the Company purchased for treasury a total of 7,027,321 ordinary shares at an aggregate cost of £5,399,769 (including stamp duty and other fees) at an average price per ordinary share of 76.3p. 152 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ## 14. Dividends The Company paid the below dividends during the year. | Period | Price per ordinary share | Total dividend | Date paid | | --- | --- | --- | --- | | 1 October 2022 – 31 December 2022 | 1.38p | £5.8m | 31 March 2023 | | 1 January 2023 – 31 March 2023 | 1.38p | £5.8m | 30 June 2023 | | 1 April 2023 to 30 June 2023 | 1.38p | £5.8m | 14 September 2023 | | 1 July 2023 to 30 September 2023 | 1.38p | £5.8m | 8 December 2023 | ## 15. Transactions with AIFM, Investment Manager and related parties ### AIFM On 30 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, 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 20 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 2023 amounted to £4,371,947 (2022: £3,809,615) (including VAT) of which £0 (2022: £167,623) 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. 153 Annual Report and Accounts 2023 | Financial Statements ### NOTES TO THE FINANCIAL STATEMENTS CONTINUED Directors The Directors have been entitled to aggregate annual remuneration (excluding expenses payable) as follows: | For the year | | For the year | | | --- | --- | --- | --- | | | ended | | ended | | 31December | | 31December | | | | 2023 | | 2022 | | | £’000 | | £’000 | Bernard Bulkin OBE 81.5 70 Margaret Stephens 58.5 50 Richard Horlick 58.5 50 Louise Kingham CBE 58.5 50 1 Daniella Carneiro 55.9 – 312.9 220 1 Daniella Carneiro joined the Board of Directors on 18 January 2023. The Directors are not eligible for bonuses, pension benets, share options, long-term incentive schemes or other benets. There is no amount set aside or accrued by the Company in respect of contingent or deferred compensation payments or any benets in kind payable to the Directors. During the year ended 31December 2023, Directors’ fees of £313,000 (2022:£220,000) were paid of which none was payable at the year end. The Directors held the following benecial interests in the ordinary shares of the Company as at 31December 2023. As at 31December 2023 Number of % of ordinary ordinary shares in shares held issue Bernard Bulkin OBE 46,362 0.009 Margaret Stephens 28,181 0.007 Richard Horlick 300,000 0.071 Louise Kingham CBE 20,000 0.005 Daniella Carneiro – – Other balances with related parties The Company entered into intercompany loan agreements with GSEO Holdings, which entered into further intercompany loan agreements with the following subsidiary companies: • Victory Hill Flexible PowerLtd (£6,060,000) (31December 2022:£14,924,400) • Victory Hill Australia Investments PtyLtd A$4,890,000 (31December 2022:A$35,400,000) • Victory Hill USA HoldingsLLC US$1,021,290.60 (31December 2022:63,665,000) As at the year-end, the Company held a receivable from VH GSEO UK Holdings Limited of £40,366,849.32 (31 December 2022: Nil). ### 16. Contingent liabilities and commitments As at 31 December 2023, the Company had no contingencies or commitments. 154 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS ### 17. Earnings per share Earnings per share (EPS) is calculated by dividing prot for the period attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue on 1January 2021 to 31December 2023. 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 2023 For the year ended 31December 2022 Revenue Capital Total Revenue Capital Total Earnings (£’000) 22,822 32,517 55,339 24,073 4,131 28,204 Weighted average number of ordinary shares 421,086,053 421,086,053 421,086,053 367,500,135 367,500,135 367,500,135 EPS (p) 5.42 7.72 13.14 6.55 1.12 7.67 ### 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 | | Year ended | | | --- | --- | --- | --- | | 31December | | 31December | | | | 2023 | | 2022 | NAV (£’000) 483,843 457,173 Number of ordinary shares 415,471,569* 422,498,890 NAV per share (p) 116.46 108.21 * excluding the shares held in treasury. ### 19. Post balance sheet events On 22February 2024, the Board of Directors announced an interim dividend of £5.8m equivalent to 1.42p per ordinary share with respect to the period 1October 2023 to 31December 2023 which will be paid on 28March 2024. Post year end, the Company had announced cumulative buybacks of 5,743,147 shares between 1 January 2024 and 4 April 2024. ### 20. Controlling parties There is no ultimate controlling party of the Company. 155 Annual Report and Accounts 2023 | Financial Statements # ALTERNATIVE PERFORMANCE MEASURES 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. | NAV as at 31 December 2023 | 483,843,373 | | --- | --- | | Total number of outstanding shares as at 31 December 2023 | 415,471,569 | | NAV per share | 116.46p | ## 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. | Average undiluted NAV (in £’m) | 467,373,829 | | --- | --- | | Recurring costs in the year to date | 6,496,623 | | Ongoing charges | 1.39% | ## Premium / (discount) to NAV The amount, expressed as a percentage, by which the share price is more than the NAV per ordinary share. | NAV per ordinary share (pence per share) | 116.46 | | --- | --- | | Ordinary share price (pence per share) | 77.20 | | Premium / (discount) to NAV as at 31 December 2023 | -33.71% | 156 OVERVIEW STRATEGIC REPORT SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS # 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. | Year ended 31 December 2023 | | NAV | | --- | --- | --- | | Opening as at 1 January 2023 | a | 108.21p | | Closing as at 31 December 2023 | b | 116.46p | | Dividends paid during the period | | 5.52 p | | Dividend adjustment factor | c | 1.06389 | | Adjusted closing | d = b x c | 123.90p | | Total return for the year (%) | d / a - 1 | 14.50% | | From IPO to 31 December 2023 | | NAV | | --- | --- | --- | | Opening as at 2 February 2021 | | 98.00p | | Closing as at 31 December 2023 | b | 116.46p | | Dividends paid to date since IPO | | 10.52p | | Dividend adjustment factor | c | 1.11 | | Adjusted closing | d = b x c | 129.23p | | Total return since IPO (%) | e = d/a - 1 | 31.9% | | Number of years since IPO | f | 2.91 | | Total annualised NAV return since IPO (%) | (1 + e)^(1/f)-1 | 9.97% | # 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 2023. | Profit for the period at VH Global Sustainable Energy Opportunities plc | £22,821,360 | | --- | --- | | Net distributions withheld at VH GSEO UK Holdings Limited | £2,958,471 | | Total new distributions received from underlying investments | £25,779,831 | | Dividend declared for financial year 2023 (5.52p per ordinary share x number of shares outstanding as at 31 December 2023 of 415,471,569) | £23,333,733 | | Dividend cover | 1.1x | 157 Annual Report and Accounts 2023 | Financial Statements ### ADDITIONAL INFORMATION SFDR – Annex V 159 Glossary 168 Shareholder Information 170 Notice of Annual General Meeting 172 Company Information 178 158 ### SFDR ANNEX V (UNAUDITED) Template periodic disclosure for the financial products referred to in Article 9, paragraphs 1 to 4a, of Regulation (EU) 2019/2088 and Article 5, first paragraph, of Regulation (EU) 2020/852 Product name: VH Global Sustainable Energy Opportunities plc (the “Company ”) Sustainable Legal entity identifier: 213800RFHAOF372UU580 investment means an investment in an economic activity ## that contributes to Sustainable investment objective an environmental or social objective, provided that the Did this financial product have a sustainable investment objective? investment does not signicantly harm X Yes No any environmental | or social objective | | | | It promoted Environmental/Social (E/S) | | --- | --- | --- | --- | --- | | and that the investee | | | | characteristics and while it did not have | | companies follow | | | | as its objective a sustainable investment, it | | good governance | | It made sustainable investments with an | | had a proportion of | | practices. | X | | 1 | | | | | environmental objective: 100% | | __________% of sustainable investments | with an environmental objective in in economic activities that qualify as economic activities that qualify as The EU Taxonomy X environmentally sustainable under environmentally sustainable under is a classication the EU Taxonomy the EU Taxonomy system laid down in Regulation with an environmental objective in (EU) 2020/852 in economic activities that do not economic activities that do not qualify establishing a list of X qualify as environmentally sustainable as environmentally sustainable under environmentally under the EU Taxonomy the EU Taxonomy sustainable economic activities. with a social objective That Regulation does not lay down a list of socially It made sustainable investments with an It promoted E/S characteristics, but did sustainable economic social objective: _________% not make any sustainable investments activities. Sustainable investments with an environmental objective might be aligned with the Taxonomy or not. To what extent was the sustainable investment objective of this financial product met? The Company’s Sustainable Energy Infrastructure Investments are aligned with the SDGs with the specific objective of facilitating the energy transition from the current fossil fuel system to a low carbon system. The Company’s energy transition pathways address climate change, energy access, energy efficiency and market liberalisation, therefore a selection of the Company’s Sustainability investments is aligned with the objective climate change mitigation under the EU Taxonomy. indicators measure The Company infrastructure investments also seek to have significant impact on the local how the sustainable communities they serve. For more information on the investment policy and strategy see objectives of this page28. nancial product are attained. 1 Undeployed cash is held in short-term deposits, 100% of investments are made in sustainable investments. 159 Annual Report and Accounts 2023 | Financial Statements ### SFDR ANNEX V (UNAUDITED) CONTINUED The Company has assessed each investment against sustainability eligibility criteria to verify alignment against the following SDGs: SDG 3, Good health and wellbeing; SDG 7, Energy access; SDG 13, Climate action; SDG 9, Industry, innovation and infrastructure; SDG 8, Decent work and economic growth and SDG 17 partnerships for the goal. The Company has also assessed eligibility and alignment of each of the assets with the EU Taxonomy of environmentally sustainable activities “Do No Significant Harm” and technical screening criteria, described further below. The Company investments contributed to reducing carbon emissions by generating renewable energy, avoiding greenhouse gas emission and displacing harmful air emissions. The Investment Manager is a signatory to the Net Zero Asset Managers Initiative (NZAMI), committing to support the goal of net zero greenhouse gas emissions by 2050, in line with global efforts to limit warming to 1.5°C and has applied this commitment to the Company’s investments. How did the sustainability indicators perform? The Company has committed to reporting against the following indicators to measure the sustainable investment objective: | | | 2022 | 2023 | | | --- | --- | --- | --- | --- | | Figure Explanation | | performance | performance | | | Capital investment into | Victory Hill intends that all the | 381 392 | | | | energy transition focused | Company’s investments are aligned | | | | | infrasturcture (USD$M) | with the energy transition. | | | | | MWh of renewable | This figure represents the renewable | 35,117 844,434 | | ‡ | | energy produced | and net zero electricity generation | | | | which displaces carbon intensive generation, demonstrating contribution to SDG13. | Carbon dioxide | | This figure accounts for renewable | 14,349 122,530 | ‡ | | --- | --- | --- | --- | --- | | equivalent avoided | | energy generation and renewable fuels | | | | (tCO | 2 e) | use displacing fossil fuel generation | | | net of any Scope 1, 2 and available 3 operational emissions. Tonnes of particulate These figures demonstrate the impact 1,049 984 ‡ matter (PM10) avoided of renewable and cleaner fuels produced by a Portfolio Company with a pollution reduction environmental Tonnes of sulfur oxides objective, by reporting the tonnes of 20,613 19,332± (SOx) avoided pollutive compounds removed through use of cleaner fuels. This demonstrates contribution to SDG 3. | Equivalent number of | This figure demonstrates the | 9,000 average | 312,750 | | --- | --- | --- | --- | | homes, businesses and/ | equivalent number of homes, | UK homes | average | | or vehicles served by | businesses and/or vehicles served | powered | UK homes | | renewable energy or fuel | by renewable energy or fuel. This | | powered | | (UK assumptions used) | demonstrates contribution to SDG7. | | | 160 The Annex 1 methodology carbon intensity metrics have been included here for additional disclosure. These have been calculated for 2022 and 2023 for comparison noting the acquisition of the Brazilian hydro facility, the completion of several PV solar sites in Brazil and the improvement in scope 3 data collection with regards to fuel transport at the US terminal storage assets increasing scope 3 quantities. (1) 'GHG emissions' $$\sum_{n}^{i} \left( \frac{\text{current value of investment}}{\text{investee company's enterprise value}} \times \text{investee company's Scope(x) GHG emissions} \right)$$ | Year | Scope 1 | Scope 2 | Scope 3 | | --- | --- | --- | --- | | 2022 (tonnes/€M) | 3,247.6 | 388.1 | 5,728.5 | | 2023 (tonnes/€M) | 2,758.3 ‡ | 440.5 ‡ | 24,462.1 ‡ | (2) 'carbon footprint' $$\sum_{n}^{i} \left( \frac{\text{current value of investment}}{\text{investee company's enterprise value}} \times \text{investee company's Scope 1,2 and 3 GHG emissions} \right)$$ current value of all investments (€M) | Year | Carbon footprint | | --- | --- | | 2022 (tonnes/€M) | 17.8 | | 2023 (tonnes/€M) | 49.6 ‡ | (3) 'GHG intensity of investee companies' $$\sum_{n}^{i} \left( \frac{\text{current value of investment}}{\text{current value of all investments (€M)}} \times \frac{\text{investee company's Scope 1,2 and 3 GHG emissions}}{\text{investee company's €M revenue}} \right)$$ | Year | GHG Intensity | | --- | --- | | 2022 (tonnes/€M) | 150.1 | | 2023 (tonnes/€M) | 382.5 ‡ | 161 Annual Report and Accounts 2023 | Financial Statements ### SFDR ANNEX V (UNAUDITED) CONTINUED …and compared to previous periods? Comparative data is provided in the table above. With the additional acquisition of the Brazilian hydro facility end of 2022 and completion of Brazilian solar PV assets under construction through 2022/23 the quantity of renewable power generated increased significantly in 2023. Therefore the associated emission displacement from the clean power injected into local grids and the number of homes served by energy produced by the portfolio also increased. With below expected throughput of fuel through the US terminal storage assets the quantity of fuel removed from the Mexican value chain was lower resulting in a lower quantity of displaced emissions compared to 2022. How did the sustainable investments not cause significant harm to any sustainable investment Principal adverse objective? impacts are the most signicant How have the indicators for adverse impacts on sustainability factors been taken into account? negative impacts of investment decisions on sustainability The Company takes into account principle adverse indicators (PAI) through the due diligence and factors relating to risk-based analysis approach described in the “How did this financial product consider principal environmental, social adverse impacts on sustainability factors” section below. The Company reported on the 14PAIs and employee matters, and selected additional indicators on its website in 2023 https://victory-hill.com. This is updated respect for human annually. rights, anti-corruption The greenhouse gas emissions sustainability indicators are used to measure the Company’s and anti-bribery progress against its net zero target. These are also key indicators in demonstrating progress matters. towards the Company’s energy transition investment objective. Other social and environmental indicators are used to monitor asset and operating partner activities and progress on responsible business practices. More information on this approach is provided below in the “How did this financial product consider principal adverse impacts on sustainability factors” section. Were sustainable investments aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights? Details: Continuing from 2022, in 2023 all newly acquired and operational assets were assessed for appropriate policies for diversity and inclusion, employee rights including health and safety, stakeholder engagement and grievance management, if there were gaps identified action to fill these were captured in the asset specific Sustainability Action Plan (SAP) for 2023 agreed with the operating partner. The Company’s strategic focus on the SDGs supports the OECD Guidelines. A core aim is to contribute to economic, social and environmental progress priorities as identified in the SDGs. Operating partners are also required to identify risks in their value chain and the SAP includes actions to implement a supplier code of conduct and due diligence process to identify and mitigate risks. This has included environmental impact, labour rights or material sourcing. The Investment Manager is a signatory to the UN Global Compact and supports the 10 principles including human rights, labour, the environment and anti-corruption and enacted those principles when acting for the Company. No reports of non-compliance with the OECD guidelines and UN Guiding Principles on Business and Human Rights were made in 2023. 162 How did this financial product consider principal adverse impacts on sustainability factors? The Company considers the PAIs on principal adverse impacts on sustainability factors through internal and external due diligence of its investments taking a risk-based approach. Ex ante the Company obtains external assurance opinions on an investment’s alignment with the SDGs described above. This assessment also covers whether the investment may do “significant harm” to the other SDGs. It also considers the impact on the SDGs through the asset’s operations, such as reducing inequalities, including gender equality (SDG 5 and 10) and sustainable production and consumption (SDG 12). The International Finance Corporation performance standards, the Global ESG Benchmark for Real Assets and the Sustainability Accounting Standards Board, have identified material energy sector and infrastructure risks and impacts. The Company assessed each investment against these specific risks and impacts, as well as regional and geographic risks to identify the environmental, social and governance (ESG) issues most relevant for the investment. This analysis also considers the SFDR PAI. This risk and opportunity-based approach to ESG management as described on page63 is used to identify material impacts. The Company’s scope of ESG risk and impact assessment for assets is as follows: • Assessment of ESG risks and impacts related to the sector of operation. • Assessment of ESG risks and impacts related to the region and country of operation. • Assessment of ESG risks and impacts related to the operational proximity to local communities, indigenous peoples, cultural heritage and ecological and biodiversity habitats. • Assessment of ESG risks and impacts related to operational activities such as noise, light, water use, discharge and waste. • Assessment of ESG risks and impacts related to number of people interacting with the operation including employees, contractors and customers. • Assessment of ESG risks and impacts related to internal operating partner resourcing and policies for ESG management. In 2023 all assets were risk assessed on this basis accounting for the probability of impacts and the quality of controls that the operating partner and asset had in place. The Investment Adviser worked with the operating partners to close gaps in management practices and identified opportunities for improvement. This is described in the ESG progress section on this annual report on page 68. Key performance indicators on material aspects are collected from the operating partners monthly to track performance and progress. Certified environmental and health and safety systems are required of operations with high risks in these aspects. 163 Annual Report and Accounts 2023 | Financial Statements ### SFDR ANNEX V (UNAUDITED) CONTINUED What were the top investments of this financial product? The top GSEO investments based on value are as follows. Largest investments Sector % Assets Country The list includes the investments Brazilian hydro facility Energy 27.4% Brazil constituting the US terminal storage Energy 25.9% USA greatest proportion UK flexible power with CCR 1 Energy 22.8% UK of investments of the financial Brazilian solar PV Energy 12.8% Brazil product during the Australian solar PV with battery storage Energy 11.1% Australia reference period 1 included assets under construction in 2023 which is 2023: What was the proportion of sustainability-related investments? What was the asset allocation? All (100%) of the Company’s investments were sustainable investments with an environmental objective, of which 51% were EU Taxonomy-aligned investments and 49% of the investments with Asset allocation other environmental objective (not EU Taxonomy aligned). Undeployed cash is held in short-term describes the share deposits. of investments in specific assets. #1 Sustainable covers sustainable investments with Taxonomy-aligned environmental or Investments #1 Sustainable Environmental social objectives Other In which economic sectors were the investments made? All assets are energy infrastructure assets including renewable (solar PV and hydro), flexible power plus carbon capture and reuse, storage (terminal storage) and battery energy storage systems. 164 Taxonomy-aligned To what extent were the sustainable investments with an environmental activities are objective aligned with the EU Taxonomy? expressed as a share of: During the reference period, 51% of the sustainable investments with an environmental objective – turnover were aligned with the EU Taxonomy, an increase from 24% in 2022. Further information is reflecting the share provided in “How did the percentage of investments aligned with the EU Taxonomy compare of revenue from with previous reference periods?” section below. The Australian solar PV with battery storage green activities assets, Brazilian solar PV assets, and the Brazilian hydro facility have been assessed under the of investee EU Taxonomy technical screening criteria by a third-party assurance firm. This assessment has companies included assessment of asset life cycle emissions, physical climate risk and vulnerability and – capital assessment against the relevant do no significant harm (DNSH) criteria. The conclusion of this expenditure assessment is that those assets are compliant with the EU Taxonomy criteria for their respective (CapEx) showing activity types. the green investments Terminal storage is not an activity included in the EU Taxonomy and is therefore not EU made by investee Taxonomy aligned. Flexible power with carbon capture is an activity type which is included in the companies, e.g. for EU Taxonomy but until the introduction of carbon capture and storage (CCS) technology with the a transition to a ability to permanently store carbon in geological formations, it is not EU Taxonomy aligned. green economy. – operational | expenditure | Did the financial product invest in fossil gas and/or nuclear energy related activities | | | | --- | --- | --- | --- | | (OpEx) reflecting | | | 2 | | | | complying with the EU Taxonomy | ? | green operational activitiesof Yes: investee companies. In fossil gas       In nuclear energy X No The graphs below show in green the percentage of investments that were aligned with the EU Taxonomy. As there is no appropriate methodology to determine the taxonomy-alignment of sovereign bonds*, the first graph shows the Taxonomy alignment in relation to all the investments of the financial product including sovereign bonds, while the second graph shows the Taxonomy alignment only in relation to the investments of the financial product other than sovereign bonds. 1. Taxonomy-alignment of investments 2. Taxonomy-alignment of investments including sovereign bonds* excluding sovereign bonds* * For the purpose of these graphs, ‘sovereign bonds’ consist of all sovereign exposures | Turnover Turnover | | | | 65% 35% 65% 35% | | | --- | --- | --- | --- | --- | --- | | | CapEx CapEx | 28% 72% 28% 72% | | | | | | | | | | 2 Fossil gas and/or nuclear related activities will only comply with the EU Taxonomy where they contribute to limiting | | | OpEx OpEx | | 47% 47% | | 53% 53% climate change (“climate change mitigation”) and do no signicant harm to any EU Taxonomy objective - see | explanatory note in the left hand margin. The full criteria for fossil gas and nuclear energy economic activities that 0% 50% 100% 0% 50% 100% comply with the EU Taxonomy are laid down in Commission Delegated Regulation (EU) 2022/1214. Taxonomy aligned (no gas and nuclear) Taxonomy aligned (no gas and nuclear) Non Taxonomy-aligned Non Taxonomy-aligned 165 Annual Report and Accounts 2023 | Financial Statements ### SFDR ANNEX V (UNAUDITED) CONTINUED What was the share of investments made in transitional and enabling activities? Enabling activities directly enable Out of the sustainable investments with an environmental objective that were aligned with the EU other activities to Taxonomy, 100% of the investments were made in transitional or enabling activities. make a substantial Asset Sector Activity type contribution to an environmental Brazilian solar PV assets Energy Enabling objective. Australian solar PV with battery storage Energy Enabling Transitional Brazilian Hydro facility Energy Enabling activities are economic activities for which low-carbon How did the percentage of investments that were aligned with the EU Taxonomy compare with alternatives are not previous reference periods? yet available and that have greenhouse The EU Taxonomy alignment by value increased from 24% in 2022 to 51% in 2023. The increase gas emission levels is due to completion of the technical screening and alignment validation for the Brazilian hydro corresponding to the facility. This asset was acquired in December 2022 and was an eligible economic activity under the best performance. EU Taxonomy with technical screening for alignment completed in 2023. The Australian solar PV with battery storage programme was expanded in 2023 with the construction of three new solar PV sites and BESS expansion at an existing site. This also contributed to the increase in investment alignment. What was the share of sustainable investments with an environmental objective not aligned with the EU Taxonomy? are sustainable investments During the reference period 49% of the sustainable investments with an environmental objective were with an not aligned with the EU Taxonomy. environmental Investment objective that do not Asset Sector Share take into account the criteria for US terminal storage assets Energy 26% environmentally UK exible power with CCR assets Energy 23% sustainable economic activities under the The UK flexible power with CCR asset is under construction and due to commission in 2024. Under article EU Taxonomy. 10, paragraph e, of regulation EU 2020/853 this project will increase the use of environmentally safe carbon capture and utilisation to deliver a reduction in greenhouse gas emissions and, under Article 10 paragraph g, will establish energy infrastructure required for enabling the decarbonisation of energy systems by providing baseload and grid stabilisation for renewable penetration. The predicted operational carbon footprint means the plant will be eligible under the EU taxonomy if the carbon dioxide captured is permanently sequestered. The carbon dioxide will be reused in the food and beverage sector. The objective of the US terminal storage asset is to enable the displacement of high sulfur fuel oil (HSFO) from the Mexican market. Reducing the impact of air pollution (SDG3.9) is a priority of the energy industry and an important element of the energy transition. Air pollution poses a major risk to health and economies globally. The displacement of HSFO reduces PM2.5, PM10, SOx, NOx emissions in Mexico. The reduction of PM is a core part of Mexico’s nationally determined contribution on climate action. The US terminal storage assets provide an aggregation point and facilitate the transfer of HSFO to more efficient refining capacity in the United States and the transfer of cleaner fuels back into the Mexican market. 166 What investments were included under “not sustainable”, what was their purpose and were there any minimum environmental or social safeguards? No investments were included under “not sustainable”, all investments (excluding cash) were made under the sustainable investment objective. What actions have been taken to attain the sustainable investment objective during the reference period? The sustainable investment objective of facilitating the energy transition through investing in sustainable energy infrastructure investments aligned with the sustainable development goals is achieved through the investment decision making process. To further this objective the investments are actively managed and operating partners engaged in sustainable management practices. Actions taken by the Company are covered in this report in the Sustainability section on page 68. The Company has an engagement policy and routinely engages with the asset operating partners. This includes fortnightly or monthly video calls, monthly ESG key performance indicator submission for performance measurement, and monitoring of the SAP implementation. As described above, the Company influences its operating partners through requiring the implementation of an SAP which includes actions identified through the due diligence and risk analysis process. In 2023 under the SAP a priority for operating partners was to continue to provide operating environmental and social key performance data to develop targets to drive improvement, start implementing the asset contribution to the portfolio net zero road map and strengthening the governance framework for operating the assets which included developing management systems, obtaining certification, action gap analysis and stakeholder engagement. Some specific Company actions: • Completed nancial climate risk and opportunity analysis for all investments to understand potential risks to value under dierent transition scenarios. • Completed technical screening including physical climate risk analysis and life cycle analysis for all newly acquired and constructed assets including the run of river hydro facility. • Collected renewable energy generation monthly and calculated associated avoided emissions using grid emissions factors to support climate mitigation. • Measured ows of HSFO from Mexico to the storage terminal and calculated associated avoided air emissions to support environmental and health impact through pollution reduction. • Calculated operational greenhouse gas footprint from operating assets to support target setting for climate change mitigation, this included several scope 3 categories including emissions from water use, waste disposal and freight transport. • Pre-emptively engaged construction programme operating partners to ensure operational procedures to support best practice environmental and social management will be implemented. • Engaged larger operational programmes on obtaining management system certication on health, safety and the environment, and where applicable more broadly sustainability standards. 167 Annual Report and Accounts 2023 | Financial Statements ### GLOSSARY AIC Association of Investment Companies AIFM Alternative Investment Fund Manager Annual General Meeting A meeting held once a year which shareholders can attend and where they can vote on or AGM resolutions to be put forward at the meeting and ask directors questions about the company in which they are invested COD Commercial Operational Date Company VH Global Sustainable Energy Opportunities plc Decentralised energy Energy which is produced close to where it will be used, rather than at a large centralised plant elsewhere, delivered through a centralised grid infrastructure Discount The amount, expressed as a percentage, by which the share price is less than the net asset value per share Dividend Income receivable from an investment in shares EPC Engineering, procurement and construction ESG Environmental, social and governance EU European Union Ex-dividend date The date from which you are not entitled to receive a dividend which has been declared and is due to be paid to shareholders Financial Conduct The independent body that regulates the nancial services industry in the UK Authority or FCA FiT Feed-in Tari GAV Gross Asset Value Gearing A way to magnify income and capital returns, but which can also magnify losses GHG Greenhouse Gases Investment / Victory Hill Victory Hill Capital Partners LLP Investment Company A company formed to invest in a diversied portfolio of assets Investment Trust An investment company which is based in the UK and which meets certain tax conditions which enables it to be exempt from UK corporation tax on its capital gains. The Company is an investment trust IPO Initial Public Oering MW Megawatt MWh Megawatt Hour NAV per ordinary share NAV divided by the number of ordinary shares in issue (excluding any shares held in treasury) Net asset value or NAV An investment company’s assets less its liabilities OECD Organisation for Economic Co-operation and Development Ongoing charge The ‘ongoing charges’ ratio is an indicator of the costs incurred in the day-to-day management of the Company, expressed as a percentage of average net assets. This ratio calculation is based on Association of Investment Companies (‘AIC’) recommended methodology Ordinary shares The Company’s ordinary shares in issue of £0.01 each O&M Operation and Maintenance PPA Power Purchase Agreement Premium The amount, expressed as a percentage, by which the share price is more than the net asset value per share PV Photovoltaic ROC Renewable Obligation Certicates SDG UN Sustainable Development Goals SFDR Sustainable Finance Disclosure Regulation 168 Share price The price of a share as determined by a relevant stock market SPE Special Purpose Entity TCFD Task Force on Climate-Related Financial Disclosures Total return Total return statistics enable the investor to make performance comparisons between investment trusts with dierent dividend policies. The total return measures the combined eect of any dividends paid, together with the rise or fall in the share price or NAV. This is calculated by the movement in the share price or NAV plus the dividends paid by the Company assuming these are reinvested in the Company at the prevailing NAV/share price WACC Weighted Average Cost of Capital 169 Annual Report and Accounts 2023 | Financial Statements ### SHAREHOLDER INFORMATION ### Shareholder information The Company’s ordinary shares of 1p each are quoted on the Ocial List of the FCA and traded on the premium segment of the Main Market of the London Stock Exchange. SEDOL number BNKVP75 ISIN GB00BNKVP754 Ticker/TIDM GSEO LEI 213800RFHAOF372UU580 ### Frequency of NAV publication The Company’s NAV is released via RNS to the London Stock Exchange on a quarterly basis and is published on the Company’s website. ### Sources of further information Copies of the Company’s annual and interim reports, stock exchange announcements and further information on the Company can be obtained from the Company’s website: www.vh-gseo.com. ### Financial calendar March Annual results announced Payment of rst interim dividend April/May Annual General Meeting June Payment of second interim dividend Company’s half-year end September Interim results announced Payment of third interim dividend December Payment of fourth interim dividend Company’s year end ### Share register enquiries Computershare Investor Services PLC maintains the share register on behalf of the Company. In the event of queries regarding shares registered in your own name, please contact the Registrar on 0370 703 0333. This helpline also oers an automated self- service functionality (available 24 hours a day, 7 days a week) which allows you to: • hear the latest share price; • conrm your current shareholding balance; • conrm your payment history; and • order Change of Address, Dividend Bank Mandate and Stock Transfer forms. By quoting the reference number on your share certicate, you can check your holding on the Registrar’s website at www.investorcentre.co.uk. They also oer a free, secure share management website service which allows you to: • view your share portfolio and see the latest market price of your shares; • calculate the total market value of each shareholding; • view price histories and trading graphs; • register to receive communications from the Company, including the Annual Report and Financial Statements, in electronic format; 170 • update bank mandates and change address details; • use online dealing services; and • pay dividends directly into your overseas bank account in your chosen local currency. To take advantage of this service, please log in at www.investorcentre.co.uk and enter your Shareholder Reference Number and Company Code (this information can be found on the last dividend voucher or your share certicate). ### Electronic Communications and Proxy Voting If you hold stock in your own name, you can choose to receive communications from the Company, and vote, in electronic format. This has environmental benets in the reduction of paper, printing, energy and water usage, as well as reducing costs to the Company. The paragraphs below explain how you can use these services. Electronic Communications If you would like to take advantage of this service, please visit the Registrar’s website at www.investorcentre.co.uk and register. You will need your Shareholder Reference Number (which is on your share certicate and tax voucher) to hand. If you then agree to the terms and conditions, in future, on the day that documents are sent to shareholders by post, you will receive an e-mail providing the website address link to the documents. After you register, paper documents will be available on request. Electronic Proxy Voting You can also return proxies electronically at www.eproxyappointment.com. If you have registered for electronic communications, you will be issued a PIN number to use when returning proxies to the Registrar’s secure website. You do not need to register for electronic communications to use electronic proxy voting, paper proxy forms will contain a PIN number to allow you to return proxies electronically. If you have any questions about this service, please contact Computershare on 03707030333. ### Association of Investment Companies The Company is a member of the AIC, which publishes statistical information in respect of member companies. The AIC can be contacted on 020 7282 5555, [email protected] or visit the website: www.theaic.co.uk. 171 Annual Report and Accounts 2023 | Financial Statements # NOTICE OF ANNUAL GENERAL MEETING # Notice of Annual General Meeting THIS NOTICE OF ANNUAL GENERAL MEETING IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action you should take or the contents of this document, you are recommended to seek your own financial advice from your stockbroker, bank, solicitor, accountant or other appropriately qualified independent adviser authorised under the Financial Services and Markets Act 2000 immediately if you are in the United Kingdom, or from another appropriately qualified independent financial adviser if you are in a territory outside the United Kingdom. If you have sold or otherwise transferred all of your shares in VH Global Sustainable Energy Opportunities plc (the "Company"), please forward this document as soon as possible to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. Notice is hereby given that the Annual General Meeting of VH Global Sustainable Energy Opportunities plc will be held at the offices of Victory Hill Capital Partners LLP, 4 Albermarle Street, London W1S 4GA on Wednesday, 22 May 2024 at 2:00pm to transact the business set out below: To consider and, if thought to, pass the following resolutions. Resolutions 1 to 12 (inclusive) will be proposed as Ordinary Resolutions which require more than 50% of the votes cast to be in favour in order for the resolutions to be passed. Resolutions 13 to 16 (inclusive) will be proposed as Special Resolutions which require at least 75% of the votes cast to be in favour in order for the resolutions to be passed. For further information on the resolutions, please refer to pages 99 to 101. # Ordinary resolutions 1. To receive and adopt the Company's Annual Report and Financial Statements for the year ended 31 December 2023, with the reports of the Directors and Auditor thereon. 2. To approve the Directors' Remuneration Report included in the Annual Report for the year ended 31 December 2023. 3. To approve the Company's dividend policy as set out in the Annual Report for the year ended 31 December 2023 and authorise the Directors to declare and pay all dividends of the Company as interim dividends. 4. To re-elect Bernard Bulkin as a Director of the Company. 5. To re-elect Daniella Carneiro as a Director of the Company. 6. To re-elect Richard Horlick as a Director of the Company. 7. To re-elect Louise Kingham as a Director of the Company. 8. To re-elect Margaret Stephens as a Director of the Company. 9. To re-appoint BDO LLP as Auditor to the Company to hold office from the conclusion of the Annual General Meeting until the next meeting at which financial statements are laid before the Company. 10. To authorise the Audit Committee to determine the remuneration of the Auditor of the Company. 11. That the Directors be and are hereby generally and unconditionally authorised in accordance with Section 551 of the Companies Act 2006 (the "Act"), to exercise all the powers of the Company to allot relevant securities (within the meaning of Section 551 of the Act) up to a maximum aggregate nominal amount of £409,728.42, (being 10% of the issued share capital as at 4 April 2024 comprising 40,972,842 ordinary shares of £0.01 each in the Company (excluding treasury shares)), or if changed, the amount that represents 10% of the aggregate nominal value of the Company's issued share capital (excluding treasury shares) at the date of the passing of this resolution, such authority to expire at the conclusion of the next annual general meeting of the Company to be held after the date of the passing of this resolution or 15 months from the date of passing this resolution, whichever is earlier, unless previously revoked, varied or renewed by the Company in a general meeting, save that the Company may, at any time prior to the expiry of such authority, make an offer or enter into an agreement which would or might require the relevant securities to be allotted after such expiry and the Directors may allot relevant securities in pursuance of such an offer or agreement as if such authority conferred by this resolution had not expired. 12. That, subject to the passing of Resolution 11 and in addition to the authority conferred by Resolution 11 above, the Directors be and are hereby generally and unconditionally authorised in accordance with Section 551 of the Companies Act 2006 (the "Act"), to exercise all the powers of the Company to allot relevant securities (within the meaning of Section 551 of the Act) up to a maximum aggregate nominal amount of £409,728.42, (being 10% of the issued share capital as at 4 April 2024 comprising 40,972,842 ordinary shares of £0.01 each in the Company (excluding treasury shares)), or if changed, the amount that represents 10% of the aggregate nominal value of the Company's issued share capital (excluding treasury shares) at the date 172 of the passing of this resolution, such authority to expire at the conclusion of the next annual general meeting of the Company to be held after the date of the passing of this resolution or 15 months from the date of passing this resolution, whichever is earlier, unless previously revoked, varied or renewed by the Company in a general meeting, save that the Company may, at any time prior to the expiry of such authority, make an offer or enter into an agreement which would or might require the relevant securities to be allotted after such expiry and the Directors may allot relevant securities in pursuance of such an offer or agreement as if such authority conferred by this resolution had not expired. # Special resolutions 13. That, subject to the passing of Resolution 11, the Directors be and are hereby generally empowered (pursuant to Sections 570 and 573 of the Companies Act 2006 (the "Act")) to allot equity securities (within the meaning of Section 560 of the Act) for cash pursuant to the authority conferred on them in Resolution 11 above and/or to sell ordinary shares held by the Company as treasury shares (as defined in Section 724 of the Act) for cash as if Section 561(1) of the Act did not apply to any such allotment or sale, such power shall: a) be limited to the allotment or sale of equity securities up to an aggregate nominal amount of £409,728.42 (being 10% of the issued share capital of the Company as at 4 April 2024 comprising 40,972,842 ordinary shares of £0.01 each in the Company (excluding treasury shares)) or, if changed, the amount that represents 10% of the aggregate nominal value of the Company's issued share capital (excluding treasury shares) at the date of the passing of this resolution; and b) expire at the conclusion of the next annual general meeting of the Company to be held after the date of the passing of this resolution or 15 months from the date of passing this resolution, whichever is earlier, unless previously revoked, varied or renewed by the Company in general meeting, save that the Company may, at any time prior to the expiry of such power, make an offer or enter into an agreement which would or might require equity securities to be allotted or sold from treasury after the expiry of such power, and the Directors may allot or sell from treasury equity securities in pursuance of such an offer or an agreement as if such power had not expired. 14. That, in addition to the authority conferred by Resolution 13 above, but subject to the passing of resolutions 11, 12 and 13, the Directors be and are hereby generally empowered (pursuant to Sections 570 and 573 of the Companies Act 2006 (the "Act")) to allot equity securities (within the meaning of Section 560 of the Act) for cash pursuant to the authority conferred on them in Resolution 12 above and/or to sell ordinary shares held by the Company as treasury shares (as defined in Section 724 of the Act) for cash as if Section 561(1) of the Act did not apply to any such allotment or sale, such power shall: a) be limited to the allotment or sale of equity securities up to an aggregate nominal amount of £409,728.42 (being 10% of the issued share capital of the Company as at 4 April 2024 comprising 40,972,842 ordinary shares of £0.01 each in the Company (excluding treasury shares)) or if changed, the amount that represents 10% of the aggregate nominal value of the Company's issued share capital (excluding treasury shares) at the date of the passing of this resolution; and b) expire at the conclusion of the next annual general meeting of the Company to be held after the date of the passing of this resolution or 15 months from the date of passing this resolution, whichever is earlier, unless previously revoked, varied or renewed by the Company in general meeting, save that the Company may, at any time prior to the expiry of such power, make an offer or enter into an agreement which would or might require equity securities to be allotted or sold from treasury after the expiry of such power, and the Directors may allot or sell from treasury equity securities in pursuance of such an offer or an agreement as if such power had not expired. 15. That the Company be and is generally and unconditionally authorised in accordance with Section 701 of the Companies Act 2006 (the "Act") to make one or more market purchases (within the meaning of Section 693(4) of the Act) of its ordinary shares on such terms and in such manner as the Directors of the Company may from time to time determine, provided that: a) the maximum aggregate number of ordinary shares that may be purchased is 61,418,290 ordinary shares or, if changed, the number representing 14.99% of the Company's issued share capital (excluding treasury shares) at the date of the meeting of the Company at which this resolution is passed; b) the minimum price (exclusive of any expenses) which may be paid for an ordinary share is £0.01; c) the maximum price (exclusive of expenses) which may be paid for an ordinary share shall be the higher of: (i) 105% of the average of the middle market quotations for an ordinary share (as derived from the London Stock Exchange Daily Official List) for the five business days prior to the date of the market purchase; and (ii) the higher of the price of the last independent trade of an ordinary share and the highest current independent bid for the ordinary share on the trading venue where the purchase is carried out; 173 Annual Report and Accounts 2023 | Financial Statements ### NOTICE OF ANNUAL GENERAL MEETING CONTINUED d) this authority shall expire at the conclusion of the next annual general meeting of the Company to be held after the date of the passing of this resolution or, if earlier, on the expiry of 15 months from the date of the passing of this resolution, unless such authority is revoked, varied or renewed prior to that time; and e) the Company may make a contract to purchase ordinary shares under the authority, which will or may be executed wholly or partly after the expiration of such authority and may make a purchase of ordinary shares pursuant to any such contract. 16. THAT, a general meeting of the Company (other than an annual general meeting) may be called on not less than 14 clear days’ notice, provided that this authority shall expire at the conclusion of the next annual general meeting of the Company to be held after the date of the passing of this resolution or, if earlier, on the expiry of 15 months from the date of the passing of this resolution. By Order of the Board Apex Fund and Corporate Services (UK) Limited Company Secretary 4April 2024 Registered Oce: 6th Floor 125 London Wall London EC2Y 5AS Company number: 12986255 174 ### NOTES FOR THE ANNUAL GENERAL MEETING ### Notes for the Annual General Meeting 1. A member entitled to attend and vote may appoint a proxy or proxies to attend, speak and vote instead of him or her. A proxy need not be a member of the Company but must attend the meeting in person for the member’s vote to be counted. The appointment of a proxy will not preclude a shareholder from attending and voting in person at the Annual General Meeting or at any adjournment thereof. A form of proxy is enclosed which, if used, must be lodged at the Company’s Registrar, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY not less than 48 hours (excluding non-working days) before the Annual General Meeting. Alternatively, you can appoint a proxy electronically by visiting www.eproxyappointment.com. You will be asked to enter the Control Number, the Shareholder Reference Number and PIN which are printed on the form of proxy or contained within the email sent to you. To appoint more than one proxy, you may photocopy this form. You may appoint a person other than the Chair as your proxy. Please indicate the proxy holder’s name and the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the proxy instruction is one of multiple instructions being given. All forms must be signed and should be returned together with any power of attorney or other authority under which it is signed, or a notarially certied or oce copy of such power of attorney in the same envelope. Members who wish to revoke or change their proxy instructions should submit a new proxy appointment using the methods set out in these Notes. Any amended proxy appointment or revocation received after the relevant cut-o time for receipt of proxy appointments may be disregarded. If a member submits more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence. 2. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s Register of Members in respect of the joint holding (the rst named being the most senior). 3. Pursuant to Regulation 41 of the Uncerticated Securities Regulations 2001, the Company species that to be entitled to attend and vote at the Annual General Meeting (and for the purpose of the determination by the Company of the number of votes they may cast), members must be entered on the Company’s Register of Members at close of business on 20May 2024. If the meeting is adjourned then, to be so entitled, members must be entered on the Company’s Register of Members at the time which is 48 hours (excluding non-working days) prior to the adjourned meeting or, if the Company gives notice of the adjourned meeting, at the time specied in that notice. Changes to entries on the Company’s Register of Members after that time shall be disregarded in determining the rights of any person to attend and vote at the Annual General Meeting. 4. A “vote withheld” option is provided on the proxy form to enable a shareholder to instruct their proxy not to vote on any particular resolution. It should be noted that a vote withheld in this way is not a vote in law and will not be counted in the calculation of the proportion of the votes “For” or “Against” a resolution. 5. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Annual General Meeting to be held on 22May 2024 and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. 6. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK and Ireland Limited (“CRESTCo’s”) specications and must contain the information required for such instructions, as described in the CREST Manual. The message, in order to be valid and regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy, must be transmitted so as to be received by the Company’s agent ID (3RA50) by the latest time for receipt of proxy appointments specied above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers should note that CRESTCo does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a 175 Annual Report and Accounts 2023 | Financial Statements # NOTES FOR THE ANNUAL GENERAL MEETING CONTINUED message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 7. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 2:00pm on 20May 2024 in order to be considered valid. Before you can appoint a proxy via this process, you will need to have agreed to Proxymity's associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy. 8. Any person to whom this Notice is sent who is a person nominated under Section 146 of the Companies Act 2006 (the "Act") to enjoy information rights (a "Nominated Person") may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. The statements of the rights of shareholders in relation to the appointment of proxies in the Notes above do not apply to a Nominated Person. The rights described in those Notes can only be exercised by registered shareholders of the Company. 9. As at 4April 2024, being the latest practicable date prior to the publication of this notice, the Company's issued share capital was 422,498,890 ordinary shares carrying one vote each, of which, 12,770,468 ordinary shares were held in treasury. Therefore, the total voting rights in the Company on that date was 409,728,422. 10. In accordance with section 319A of the Act, the Company must cause any question relating to the business being dealt with at the meeting put by a shareholder attending the meeting to be answered. No such answer need be given if (i) to do so would interfere unduly with the preparation for the meeting, or involve the disclosure of confidential information; (ii) the answer has already been given on a website in the form of an answer to a question; or (iii) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. 11. A person authorised by a corporation is entitled to exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an individual shareholder of the Company. On a vote on a resolution on a poll, if more than one authorised person purports to exercise a power in respect of the same shares: (i) if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way; or (ii) if they do not purport to exercise the power in the same way as each other, the power is treated as not exercised. To be able to attend and vote at the meeting, corporate representatives will be required to produce prior to their entry to the meeting evidence satisfactory to the Company of their appointment. Corporate shareholders can also appoint one or more proxies in accordance with Note 1. 12. Shareholders should note that it is possible that, pursuant to requests made by shareholders of the Company under section 527 of the Act, the Company may be required to publish on a website a statement setting out any matter relating to: (i) the audit of the Company's accounts (including the Auditor's report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstances connected with an Auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the Act. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Act. Where the Company is required to place a statement on a website under section 527 of the Act, it must forward the statement to the Company's Auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the Company has been required under section 527 of the Act to publish on a website. 13. Any person holding 3% or more of the total voting rights of the Company who appoints a person other than the Chair of the meeting as their proxy is to ensure that both they and their proxy comply with their respective disclosure obligations under the UK Disclosure Guidance and Transparency Rules. 14. Copies of the letters of appointment of the Directors of the Company and existing Articles of Association will be available for inspection from the Company Secretary during normal business hours (excluding weekends and public holidays) until the date of the Annual General Meeting and, on the date of the Annual General Meeting, at the location of the meeting from 11.45 am until the conclusion of the meeting. The Company Secretary can be contacted at [email protected]. 176 15. The Annual Report incorporating this Notice of Annual General Meeting, the information required by section 311A of the Act and, if applicable, any members’ statements, members’ resolutions or members’ matters of business received by the Company after the date of this notice, will be available on the Company’s website at www.vh-gseo.com/investors. 16. Members may not use any electronic address provided either in the Notice of Annual General Meeting or any related documents to communicate with the Company for any purpose other than those expressly stated. 177 Annual Report and Accounts 2023 | Financial Statements ### COMPANY INFORMATION Non-executive Directors Administrator and Company Secretary Bernard Bulkin OBE (Chair) Apex Fund and Corporate Services (UK) Limited th | Daniella Carneiro | 6 | Floor | | --- | --- | --- | | Richard Horlick | 125 London Wall | | | Louise Kingham CBE | London | | | Margaret Stephens | EC2Y 5AS | | | Registered oce | Depositary | | th 6 Floor Apex Depositary (UK) Limited th | 125 London Wall | 6 | Floor | | --- | --- | --- | | London | 125 London Wall | | | EC2Y 5AS | London | | EC2Y 5AS Investment Manager and AIFM Registrar Victory Hill Capital Partners LLP | 4 Albemarle Street | Computershare Investor Services PLC | | --- | --- | | London | The Pavilions | | W1S 4GA | Bridgwater Road | Bristol BS99 6ZY Corporate Broker Deutsche Numis Securities Limited 45 Gresham Street London Auditor EC2V 7BF BDO LLP 55 Baker Street Legal Adviser London W1U 7EU Eversheds Sutherland (International) LLP One Wood Street London EC2V 7WS Company number: 12986255 Country of incorporation: England and Wales 178 Designed and produced ® b y Black&Callow www.blackandcallow.com london@blackandcallow.com www.blackandcallow.com Printed by Printed on FSC 020 3794 1720 certified paper.