PGIT SECUPREF
PREMIER ENERGY AND
WATER TRUST PLC
2017
Half Year Report
for the six months
to 30 June 2017
Investment Objectives
The Company's investment objectives are to achieve a high income and to realise
long term growth in the capital value of its portfolio. The Company will seek
to achieve these objectives by investing principally in the equity and
equity-related securities of companies operating primarily in the energy and
water sectors, as well as other infrastructure investments.
Contents
Investment Objectives 1
Company Highlights 2-3
Chairman's Statement 4-5
Investment Managers' Report 6-8
Investment Portfolio 9
Group Income Statement 10-11
Consolidated and Company
Balance Sheets 12
Consolidated and Company
Statement of Changes in Equity 13
Consolidated and Company
Cashflow Statements 14
Notes to the Half Year Report 15-17
Interim Management Report 18-19
Directors and Advisers 20
Company Highlights
for the six months to 30 June 2017
Six months to Year ended
30 June 31 December
2017 2016
Total Return Performance
Total Assets Total Return 1 2.1% 17.9%
FTSE All-World Utilities 5.5% 28.7%
Index Total Return (GBP) 2
FTSE All-World Index Total 6.0% 29.6%
Return (GBP) 2
FTSE All-Share Index Total 5.5% 16.8%
Return (GBP) 2
Ongoing charges 3 1.8% 1.9%
Six months to Year ended
30 June 31 December
2017 2016 % change
Ordinary Share
Returns
Net Asset Value per 173.59p 175.86p (1.3)%
Ordinary share (cum
income) 4
Mid-market price per 159.75p 162.00p (1.4)%
Ordinary share
Discount to Net Asset (8.0)% (7.9)%
Value
Net Asset Value Total 1.9% 28.7%
Return 5
Share Price Total 2.1% 33.9%
Return 2
Six months to Six months to
30 June 30 June
2017 2016 % change
Returns and Dividends
Revenue Return per 6.64p 7.35p (9.7)%
Ordinary share
Net Dividends 3.80p 3.80p -
declared per Ordinary
share
Historic Full Year Dividends
Dividends paid in respect of 31 December 31 December
the year to:
2016 2015
Dividend 9.70p 9.70p
Additional dividend - 3.00p
Total dividends 9.70p 12.70p
Pursuant to an announcement made in August 2013 that the Premier Energy and
Water Trust PLC would pay additional dividends of 0.75p per quarter in order to
run down the Company's revenue reserves, additional dividends of 3.00p were
paid in the year to 31 December 2015. Having achieved this objective, no
further additional dividends were declared in 2016.
Six months to Year ended
30 June 31 December
2017 2016 % change
Zero Dividend
Preference Share
Returns
Net Asset Value per 107.20p 104.75p 2.3%
Zero Dividend
Preference share 4
Mid-market price per 113.50p 113.00p 0.4%
Zero Dividend
Preference share
Premium to Net Asset 5.9% 7.9%
Value
As at
30 June
2017
Hurdle Rates
Ordinary shares
Hurdle rate to return the 30 June 2017
share price of 159.75p
at 30 November 2020 6 2.5%
Zero Dividend Preference shares
Hurdle rate to return the redemption
entitlement
for the 2020 ZDPs of 125.6519p at 30 (15.1)%
November 2020 7
Six months to Year ended
30 June 31 December
2017 2016 % change
Balance Sheet
Gross Assets less
Current Liabilities
(excluding Zero £57.2m £57.0m 3.5%
Dividend Preference
shares)
Zero Dividend (£25.8m) (£25.2m) (2.3)%
Preference shares
Equity shareholders' £31.4m £31.8m (1.3)%
funds
Gearing on Ordinary 1.82x 1.79 x
shares8
Zero Dividend 1.76x 1.74 x
Preference share
cover
(non-cumulative) 9
1 Based on opening and closing total assets plus dividends marked "ex-dividend"
within the period. Source: Premier Fund Managers Limited ("PFM Ltd").
2 Source: Bloomberg.
3 Ongoing charges have been based on the Company's management fees and other
operating expenses as a percentage of average gross assets less current
liabilities over the period (excluding the ZDPs accrued capital entitlement).
4 Articles of Association basis.
5 Based on opening and closing NAVs with dividends marked
"ex-dividend" within the period reinvested. Source: PFM Ltd.
6 The Hurdle Rate is the compound rate of growth of the total assets required
each year to meet the Ordinary share price at 30 June 2017. Source: JP Morgan
Cazenove.
7 The Hurdle Rate is the compound rate that the total assets could decline each
year until the predetermined redemption date, for shareholders still to receive
the predetermined redemption price. Source: JP Morgan Cazenove.
8 Based on Gross Assets less Current Liabilities divided by Equity
Shareholders' Funds at the end of each year.
9 Non-cumulative cover = Gross assets at period end less estimated wind up
costs less management charges to capital divided by final repayment value of
the ZDP shares. Source: JP Morgan Cazenove.
Chairman's Statement
for the six months to 30 June 2017
Performance
The Premier Energy & Water Trust PLC ("PEWT"/the "Company") had a fairly stable
six months, although the portfolio under-performed equity markets. PEWT's total
assets total return, which measures the total return of the Company's
portfolio, including income received and taking into account fees and costs,
was 2.1%. This was below the FTSE All-World Utilities Index which delivered a
total return in sterling of 5.5%. The wider market, represented by the FTSE
ALL-World Index returned 6.0% in Sterling.
PEWT's Net Asset Value per Ordinary share ("NAV") fell 1.3%. However, dividends
paid in the period resulted in a positive total return to an Ordinary
shareholder of 2.1% despite the fall in the NAV.
The discount at which PEWT's Ordinary shares trade compared to their NAV was
8.0% at the end of June 2017, a similar level to which it started the year.
Overview of the period
The major macro event was perhaps the surprise UK general election, which was
supposed to provide additional clarity on the Brexit process, but which appears
to have muddied the waters still further. Sterling seems to have largely taken
the resulting hung parliament in its stride, focusing instead on the
possibility of a softer Brexit as a result of the Government's weakened
position.
Staying in the UK, there has been a noticeable stepping up in the anti-utility
rhetoric engaged in by politicians and the press. The portfolio is invested in
those companies with economically regulated assets, which are in theory
therefore less politically exposed. However, we are concerned that the
worsening environment could colour the regulators' thinking over the long term.
President Trump's campaign promises of infrastructure spending and tax cuts
look increasingly unlikely, given the realities of the US fiscal situation.
Undaunted, the US stock market continues to set new records. US utilities also
performed well, despite the Federal Reserve implementing two interest rate
rises in the period.
European utilities have performed well, with key elections in France and the
Netherlands favouring the status quo, with anti-Euro parties gaining support,
but ultimately failing to take power. Greece remains a perennial thorn in the
side of the EU establishment, seemingly now a problem to be managed rather than
solved.
We have seen further turbulence in South America, notably in Brazil, where
President Temer is fighting to remain in office against corruption allegations.
He has been a key driver of fiscal prudence, and the markets would not take
kindly to a return to a more populist approach to policy.
In terms of China and India, both important markets for PEWT, the first half of
2017 has continued the theme which we saw in 2016, that of strong performances
by investee companies not necessarily being reflected in their share prices.
While this is frustrating over the short term, over the long term we believe
that earnings growth will be reflected in portfolio gains.
Dividends
On 25 April 2016 the Company announced its first quarterly dividend of 1.90p
per ordinary share in respect of 2017, unchanged on the dividend paid on the
equivalent period in 2016, which was paid on 30 June.
On 27 July 2017 the Company declared a second interim dividend for the 2017
financial year of 1.90p, again unchanged on the dividend paid for the
equivalent period of 2016.
PEWT's revenue and income return has been a little behind the first half of
2016. The main reason for this is the sale of most of the high yield bonds
which were purchased in 2016. These provided a high income in that year, and
have now been sold given their re-rating back to a fair level. They have been
excellent investments, particularly on a risk adjusted basis; further detail
can be found in the Investment Managers' report.
Board Development
Towards the end of 2017 Ms Kasia Robinski will take over the role of audit
committee chair from Ian Graham, as part of the ongoing process of board
succession and development.
Auditor
The Company's auditor, Ernst & Young, has has been in post since 2003. In
accordance with best practice the Directors put the audit contract out to
tender during the period. Due to the longevity of the existing appointment,
Ernst & Young chose not to re-tender and the Directors selected KPMG, who are
due to take over as the Company's auditor in the second half of the year
following the resignation of Ernst & Young. In accordance with Section 519 of
the Companies Act 2006 ("the Act") Ernst & Young has provided a statement of
circumstances as required by law, a copy of which is enclosed with the half
year report as required by Section 520 of the Act.
Outlook
We are pleased to see many of PEWT's holdings performing well operationally.
The portfolio remains invested in businesses with solid growth prospects,
owning high quality assets. Furthermore, these companies are trading at
attractive valuations, particularly when compared to wider markets.
While we cannot predict the future, some equity markets look to be increasingly
reliant on accommodative monetary policy. We are concerned how this might play
out in coming years, particularly for emerging markets and their currencies, as
the stance of central banks changes. In the meantime, we believe the focus on
value is correct, even if that means being underweight markets such as the US.
Geoffrey Burns
Chairman
3 August 2017
Investment Managers' Report
for the six months to 30 June 2017
Market review
2017 has been an eventful year so far. There have been major elections in
Europe, including an unplanned one in the UK. These have been generally market
positive, with the status quo being largely preserved.
The US Dollar has shown some weakness over summer, with political unrest and
several changes in senior White House administration staff.
The Brexit process has now begun, and has the potential to cause volatility as
each side tries to pressure the other, inevitably through the media. Longer
term we are hopeful that the importance of establishing a sensible working
relationship between the UK and Europe wins through, however this is by no
means a certainty.
Geopolitical concerns remain, notably in Korea and the Middle East. Brazil
seems to be on the right track long term, finally tackling corruption in areas
that were previously untouchable. However, this is bound to cause negative
headlines and political uncertainty while it happens.
Economic problems remain with us and debt continues to increase. Despite this
the global economy is still on an overall growth trajectory, and while it is,
investors remain happy to buy equities.
Against this background, markets have had a modestly positive start to the
year. The US managed a small but positive return, taking the market to new
highs. Market momentum does however appear to have slowed after the very strong
2016. Likewise the FTSE All-Share also produced a creditable mid-single digit
return. Emerging markets tended to outperform developed, although unfortunately
Emerging Utilities did not.
PEWT's performance was slightly disappointing in the context of the very strong
results reported by underlying companies. However, as ever, we are prepared to
tolerate weak share prices in the short term provided the investments are
performing well on a fundamental basis.
PEWT's portfolio performed well in Western Europe, with a favourable political
backdrop. In Eastern Europe, the Company's Romanian investments were also
strong. The Global allocation, this being made up of investments with
operations around the world, also made a very positive contribution. North
America continued to do well.
Less favourable areas included China and India, where again very strong
earnings growth was met with falling share prices for our investments. The UK
and South America were both weak, largely we feel due to political reasons.
Portfolio Activity
The first half of 2017 was fairly busy from an investment point of view, the
fund making investment purchases and sales of approximately £11 million.
Save for one remaining holding, the bond holdings acquired in late 2015/early
2016 have now been sold. £3.1 million was realised from the sale of the
Terraform Global 9.75% 2022 bonds, which had delivered a total return to PEWT
of 84.7% since first acquisition in October 2015. Similarly, £2.3 million was
realised from the sale of Pattern Energy 4% 2020 convertible bonds, which have
returned a total of 43.4% since they were first acquired in February 2016.
Further down the portfolio, £0.6 million was realised from the sale of Kinder
Morgan 7.5% 2040 bonds, which have returned 68.8% since acquisition in
February 2016.
Two other major sales were made in the half. Firstly the sale of the Hafslund
shares realised £1.8 million, being a total return including dividends of
115.9% and 111.8% for Hafslund B and A shares respectively, since first
purchased in November 2014. Secondly, we substantially sold down the position
in China Power International, realising £ 1.4 million. This has been a
successful long term investment, and the Company has for the time being
retained a more modest holding while our investment direction in China is
targeted more at environmental utilities.
We have increased the investments in Chinese environmental companies such as
Huaneng Renewables and China Everbright International, as a result of their
strong growth being under-appreciated and under-valued.
Weightings to European utilities such as Iberdrola, Enel, Gas Natural, and
Saeta Yield, have been increased on valuation grounds, which proved to be
correct as these companies subsequently performed well in the half.
We added to the holding in Enbridge, its shares having over-reacted to the
lower oil price seen in the half. (Pipeline companies such as Enbridge act as
transporters rather than producers of oil and gas.)
The position in Indian renewable energy developer Mytrah Energy has been
increased, as it appears that the market has not valued the company's strong
growth sufficiently.
GEOGRAPHIC ALLOCATION 2017
30 June 2017
June 2017 December 2016
North America 23.35% 24.58%
China 18.40% 17.82%
Europe (excluding UK) 12.39% 7.65%
Latin America 10.73% 10.33%
United Kingdom 10.40% 10.03%
India 8.25% 8.39%
Eastern Europe 5.11% 4.63%
Asia (excluding China) 4.78% 4.83%
Global 4.07% 8.54%
Middle East 2.52% 3.19%
SECTOR ALLOCATION 2017
30 June 2017
June 2017 December 2016
Electricity 32.41% 37.64%
Multi Utilities 24.43% 24.60%
Water & Waste 15.91% 12.77%
Renewable Energy 14.32% 16.14%
Gas 12.15% 8.85%
Toll roads 0.77% 0%
Results highlights
As we make reference to above, many of the Fund's larger positions continue to
report excellent results, without necessarily receiving any credit in their
share prices. PEWT's largest investment, Indian power generator OPG Power
Ventures, saw its shares fall by 24.0% in the half, despite reporting very
strong 9 month trading figures to December 2016. The company had already
reported September 2016 interim earnings growth of 40.8%, and management has
indicated that full year March 2017 results will be in line with market
expectation.
Similarly in China, China Everbright International grew its 2016 earnings by
33.6%, and processed 9.0 million tonnes of waste, up 30.0% on 2015's figure of
6.9 million tonnes. The company's 2015 earnings had also been strong, up 22.4%,
and it has recently announced a positive profit alert, in that it anticipates
first half 2017 earnings will be increased by approximately 40% on the first
half of 2016. Unfortunately, its shares have failed to respond to the excellent
operational performance, and between December 2014 and June 2017 have in fact
fallen by 15.6%.
As we note above, some of PEWT's better returns in the half have come from
Europe. In terms of actual contribution to return, the strongest performer was
Romanian gas transmission company Transgaz, whose shares gained 21.7%. Aside
from being attractively valued, the Romanian Government requested that the
company move its dividend pay-out ratio from 75% to 90%. Spanish renewable
energy company, Saeta Yield, also deserves mention, its shares gaining 21.8% in
the half. It has made its first investment outside of Spain, buying wind assets
in Uruguay.
Currency
As we discussed in the December 2016 report, throughout the period a proportion
of the portfolio's currency risk was hedged out. At the end of the half,
forward currency contracts with a book value of £24.3 million were in place,
covering some 44% of the portfolio. These contracts covered US Dollars, Hong
Kong Dollars, Euros, and Norwegian Krone.
Outlook
While economic and political issues remain a challenge, the underlying
investments in the portfolio continue to perform well. We are therefore
optimistic that PEWT will perform well over the medium to long term.
James Smith
Claire Long
Premier Fund Managers Limited
3 August 2017
Investment Portfolio
at 30 June 2017
Ranking Ranking
Value % total June December
Company Activity Country £000 investments 2017 2016
OPG Power Electricity India 3,440 6.2 1 1
Ventures
SSE Electricity United 3,247 5.8 2 2
Kingdom
Beijing Gas China 2,933 5.2 3 5
Enterprises
Holdings
Cia de Water & Latin 2,867 5.1 4 7
Saneamento do Waste America
Paraná
First Trust Multi North 2,742 4.9 5 4
MLP and Energy Utilities America
Income Fund
China Water & China 2,681 4.8 6 9
Everbright Waste
Intl.
Huaneng Renewable China 2,614 4.7 7 13
Renewables Energy
Avangrid Multi North 2,277 4.1 8 10
Utilities America
Pennon Group Water & United 2,244 4.0 9 11
Waste Kingdom
Saeta Yield Renewable Europe 1,582 2.8 10 32
Energy (excluding
UK)
Transelectrica Electricity Eastern 1,555 2.8 11 14
Europe
Qatar Multi Middle East 1,408 2.5 12 12
Electricity & Utilities
Water Co.
Keppel Multi Asia 1,406 2.5 13 20
Infrastructure Utilities (excluding
Trust China)
Edison Electricity North 1,400 2.5 14 19
International America
Iberdrola Electricity Europe 1,358 2.4 15 35
(excluding
UK)
Transgaz Gas Eastern 1,301 2.3 16 22
Europe
Nextera Energy Electricity North 1,295 2.3 17 17
America
Engie Multi Global 1,288 2.3 18 18
Utilities
Cia Paranaense Electricity Latin 1,253 2.2 19 15
Energia America
NRG Yield* Renewable North 1,251 2.2 20 21
Energy America
Mytrah Energy Renewable India 1,174 2.1 21 44
Energy
Enbridge Gas North 1,117 2.0 22 34
America
China Power Electricity China 1,093 2.0 23 6
Intl. Develop
Sempra Energy Multi North 955 1.7 24 23
Utilities America
Enel Americas Electricity Latin 870 1.6 25 26
America
ACEA Multi Europe 816 1.5 26 31
Utilities (excluding
UK)
CMS Energy Multi North 783 1.4 27 25
Utilities America
Metro Pacific Multi Asia 777 1.4 28 24
Investments Utilities (excluding
China)
Gas Natural Gas Europe 756 1.4 29 -
(excluding
UK)
Alliant Energy Electricity North 742 1.3 30 29
America
Macquarie 1st
Trust Global
Infrastructure
Utility Multi Global 702 1.3 31 33
Dividend & Utilities
Income
Enagas Gas Europe 690 1.2 32 28
(excluding
UK)
Enel Electricity Europe 577 1.0 33 -
(excluding
UK)
Atlantia Toll roads Europe 433 0.8 34 -
(excluding
UK)
EDP - Energias Electricity Latin 394 0.7 35 36
do Brasil America
Enel Chile Electricity Latin 380 0.7 36 39
America
ERG Renewable Europe 378 0.7 37 48
Energy (excluding
UK)
Beijing Water & China 358 0.6 38 40
Enterprises Waste
Water
Hera Multi Europe 341 0.6 39 41
Utilities (excluding
UK)
Pattern Energy Renewable North 330 0.6 40 -
Group Energy America
Severn Trent Water & United 327 0.6 41 -
Waste Kingdom
Atlantica Renewable Global 287 0.5 42 47
Yield Energy
Banpu Power Electricity Asia 286 0.5 43 42
(excluding
China)
AES Tiete Electricity Latin 238 0.4 44 43
Energia America
TPI Polene Renewable Asia 203 0.4 45 -
Power Energy (excluding
China)
China Renewable China 189 0.3 46 -
Everbright Energy
Greentech
Centre Coast Multi North 168 0.3 47 -
MLP & Utilities America
Infrastructure
Fund
Kangda Water & China 153 0.3 48 45
International Waste
China Water Water & China 138 0.2 49 46
Affairs Group Waste
Beijing Water & China 129 0.2 50 -
Enterprise Waste
Environment
55,926 99.9%
Unquoteds
PEWT ZDP United 50 0.1
Securities subsidiary Kingdom
2020 PLC
Freepower In United - -
liquidation Kingdom
ITI Energy In United - -
liquidation Kingdom
Total 55,976 100.0%
investments
* Holding in convertible bonds and ordinary shares
Group Income Statement
for the six months to 30 June 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) (Audited)
Six months Six months Six months Six months Six months Six months Year Year Year
to 30 June to 30 June to 30 June to 30 June to 30 June to 30 June ended 31 ended 31 ended 31
2017 2017 2017 2016 2016 2016 December December December
2016 2016 2016
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes £000 £000 £000 £000 £000 £000 £000 £000 £000
Gains/(losses)
on investments
held at fair
value
through profit - 222 222 - 3,660 3,660 - 6,905 6,905
or loss
Income 1,638 - 1,638 1,804 - 1,804 2,901 - 2,901
Investment (118) (177) (295) (98) (147) (245) (215) (322) (537)
management fee
Other expenses (249) - (249) (347) (79) (426) (605) (81) (686)
Reconstruction - - - - - - - (11) (11)
costs
Profit before 1,271 45 1,316 1,359 3,434 4,793 2,081 6,491 8,572
finance costs
and taxation
Finance costs - (590) (590) - (564) (564) - (1,143) (1,143)
Profit/(loss) 1,271 (545) 726 1,359 2,870 4,229 2,801 5,348 7,429
before
taxation
Taxation 5 (70) - (70) (30) - (30) (108) - (108)
Profit/(loss) 1,201 (545) 656 1,329 2,870 4,199 1,973 5,348 7,321
for the period
Return per
Ordinary share
(pence)
- basic 3 6.64 (3.02) 3.62 7.35 15.87 23.22 10.91 29.56 40.47
The total columns of this statement represents the Group's profit or loss,
prepared in accordance with IFRS.
As the parent of the Group, the Company has taken advantage of the exemption
not to publish its own separate Income Statement as permitted by Section 408 of
the Companies Act 2006. The Company's total comprehensive income for the half
year ended 30 June 2017 was £656,000.
The supplementary revenue and capital columns are prepared under guidance
published by the Association of Investment Companies ("AIC").
All items derive from continuing operations; the Group does not have any other
recognised gains or losses.
All income is attributable to the equity holders of the Company. There are no
minority interests.
Consolidated and Company Balance Sheets
as at 30 June 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited)
Group Company Group Company Group Company
30 June 30 June 30 June 30 June 31 31
December December
2017 2017 2016 2016 2016 2016
Notes £000 £000 £000 £000 £000 £000
Non current
assets
Investments 55,926 55,976 52,565 52,665 55,946 55,996
at fair value
through
profit or
loss
Current
assets
Debtors 497 497 813 813 362 362
Derivative 463 463 - - 67 67
financial
instruments
Cash at bank 642 642 1,691 1,691 935 935
1,602 1,602 2,504 2,504 1,364 1,364
Total assets 57,528 57,578 55,069 55,169 57,310 57,360
Current
liabilities
Creditors: (177) (227) (1,059) (1,159) (185) (235)
amounts
falling due
within one
year
Other - - - - - -
financial
liabilities
Derivative (145) (145) - - (98) (98)
financial
instruments
(322) (372) (1,059) (1,159) (283) (333)
Total assets 57,206 57,206 54,010 54,010 57,027 57,027
less current
liabilities
Non-current
liabilities
Zero Dividend (25,807) - (24,637) - (25,217) -
Preference
shares
Intercompany - (25,807) - (24,637) - (25,217)
payable
Net assets 31,399 31,399 29,373 29,373 31,810 31,810
Equity
attributable
to Ordinary
Shareholders
Share capital 181 181 181 181 181 181
Share premium 8,701 8,701 8,699 8,699 8,701 8,701
Redemption 88 88 88 88 88 88
reserve
Capital 13,576 13,576 11,644 11,644 14,122 14,122
reserve
Special 7,472 7,472 7,472 7,472 7,472 7,472
reserve
Revenue 1,381 1,381 1,289 1,289 1,246 1,246
reserve
Total equity 31,399 31,399 29,373 29,373 31,810 31,810
attributable
to Ordinary
Shareholders
Net asset 4 173.59 173.59 162.39 162.39 175.86 175.86
value per
Ordinary
share (pence)
Consolidated and Company Statement of Changes in Equity
For the six months to 30 June 2017 (unaudited)
Ordinary Share
share premium Redemption Capital Special Revenue
capital reserve reserve reserve reserve reserve Total
£000 £000 £000 £000 £000 £000 £000
Balance at 181 8,701 88 14,122 7,472 1,246 31,810
31 December
2016
Profit for - - - (546) - 1,202 656
the period
Ordinary - - - - - (1,067) (1,067)
dividends
paid
Balance at 181 8,701 88 13,576 7,472 1,381 31,399
30 June
2017
For the six months to 30 June 2016 (unaudited)
Ordinary Share
share premium Redemption Capital Special Revenue
capital reserve reserve reserve reserve reserve Total
£000 £000 £000 £000 £000 £000 £000
Balance at 181 8,699 88 8,774 7,472 1,163 26,377
31
December
2015
Profit for - - - 2,870 - 1,329 4,199
the period
Ordinary - - - - - (1,203) (1,203)
dividends
paid
Balance at 181 8,699 88 11,644 7,472 1,289 29,373
30 June
2016
For the financial year ended 31 December 2016 (audited)
Ordinary Share
share premium Redemption Capital Special Revenue
capital reserve reserve reserve reserve reserve Total
£000 £000 £000 £000 £000 £000 £000
Balance at 181 8,699 88 8,774 7,472 1,163 26,377
31
December
2015
Profit for - - - 5,348 - 1,973 7,321
the year
Write back - 2 - - - - 2
of tap
issue
costs
Ordinary - - - - - (1,890) (1,890)
dividends
paid
Balance at 181 8,701 88 14,122 7,472 1,246 31,810
31
December
2016
Consolidated and Company Cashflow Statements
for the six months ended 30 June 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited)
Group Company Group Company Group Company
Six months Six months Six months Six months Year Year
ended ended ended ended ended ended
30 June 30 June 30 June 30 June 31 December 31 December
2017 2017 2016 2016 2016 2016
£000 £000 £000 £000 £000 £000
Profit 1,316 1,316 4,793 4,793 8,572 8,572
before
finance
costs and
taxation*
Adjustments
for
Gains on (222) (222) (3,434) (3,434) (6,905) (6,905)
investments
held at fair
value
through
profit or
loss
Increase/ 134 134 (286) (286) (319) (319)
(decrease)
in trade and
other
receivables
Decrease in (8) (8) (1,090) (1,090) (537) (537)
trade and
other
payables
Overseas (72) (72) (47) (47) (126) (126)
taxation
paid
Net cash 1,148 1,148 (64) (64) 685 685
flows from
operating
activities
Investing
activities
Purchases of (11,687) (11,687) (10,118) (10,118) (19,189) (19,189)
investments
Proceeds 11,313 11,313 11,023 11,023 19,276 19,276
from sales
of
investments
Net cash (374) (374) 905 905 87 87
flows from
investing
activities
Financing
activities
Payment to - - (25,708) (25,708) (25,708) (25,708)
ZDP
shareholders
with "B"
rights
Dividends (1,067) (1,067) (1,203) (1,203) (1,890) (1,890)
paid
Net cash (1,067) (1,067) (26,911) (26,911) (27,598) (27,598)
used in
financing
activities
Decrease in (293) (293) (26,070) (26,070) (26,826) (26,826)
cash and
cash
equivalents
Cash and 935 935 27,761 27,761 27,761 27,761
cash
equivalents,
beginning of
period
Cash and 642 642 1,691 1,691 935 935
cash
equivalents
at end of
period
*This includes £2,345,000 (2016: £2,735,000) of cash inflow from dividends from
securities, £331,000 (2016: £89,000) of interest from securities, and £8,000
(2016: £13,000) of cash inflow from bank interest.
Notes to the Half Year Report
ACCOUNTING POLICIES
1.1 Basis of preparation
The Half-year Financial Statements have been prepared in accordance with
International Accounting Standard ("IAS") 34 "Interim Financial Reporting" and
in accordance with the Statement of Recommended Practice ("SORP") "Financial
Statements of Investment Trust Companies and Venture Capital Trusts" issued by
the Association of Investment Companies ("AIC") in November 2014 (and updated
in January 2017), where the SORP is not inconsistent with IFRS.
The financial information contained in this Half-year Report does not
constitute statutory accounts as defined in Section 434 of the Companies Act
2006. The financial information for the periods ended 30 June, 2017 and 30
June, 2016 have not been audited. The financial information for the year ended
31 December, 2016 has been extracted from the latest published audited
accounts. Those accounts have been filed with the Registrar of Companies and
included the Independent Auditor's Report which, in respect of both sets of
accounts, was unqualified, did not contain an emphasis of matter reference, and
did not contain a statement under Section 498(2) or (3) of the Companies Act
2006. Those statutory accounts were prepared in accordance with IFRS, as
adopted by the European Union.
The functional currency of the Group is UK pounds Sterling as this is the
currency of the primary economic environment in which the Company operates.
Accordingly, the Financial Statements are presented in UK pounds Sterling
rounded to the nearest thousand pounds.
The same accounting policies, presentation and methods of computation have been
followed in these Financial Statements as were applied in the preparation of
the Group's Financial Statements for the previous accounting periods.
IFRS 10 Consolidated Financial Statements
The Financial Statements in these accounts reflect the adoption of IFRS 10
(including the Investment Entities amendment) which requires investment
companies to value subsidiaries (except for those providing investment related
services) at fair value through profit and loss rather than consolidate them.
The Directors, having assessed the criteria, believe that the Group meets the
criteria to be an investment entity under IFRS 10 and that this accounting
treatment better reflects the Company's activities as an investment trust.
PEWT Securities 2020 PLC, which is controlled by the Company, holds the ZDP
shares and has lent the proceeds to the Company. It is considered to provide
investment related services to the Group and is therefore required to be
consolidated under the IFRS 10 Investment Entities amendment. PEWT Securities
2020 PLC has been consolidated in these Financial Statements using consistent
accounting policies to those applied by the Company.
1.2 Presentation of Statement of Comprehensive Income
In order to better reflect the activities of the Company as an investment trust
company, and in accordance with guidance issued by the AIC, supplementary
information which analyses the Consolidated Income Statement between items of a
revenue and capital nature has been presented alongside the Consolidated Income
Statement.
1.3 Use of estimates
The preparation of Financial Statements requires the Company to make estimates
and assumptions that affect the items reported in the Balance Sheet and Income
Statement and the disclosure of contingent assets and liabilities at the date
of the Financial Statements. Although these estimates are based on management's
best knowledge of current facts, circumstances and, to some extent, future
events and actions, the Company's actual results may ultimately differ from
those estimates, possibly by a significant amount. The investments in the
equity of unquoted companies that the Company holds are not traded and as such
the prices are more uncertain than those of more widely traded securities. The
unquoted investments are valued by reference to valuation techniques approved
by the Directors and in accordance with the International Private Equity and
Venture Capital Valuation ("IPEV") Guidelines and IFRS 13.
1.4 Segmental reporting
The chief operating decision maker has been identified as the Board of the
Company. The Board reviews the Company's internal management accounts in order
to analyse performance. The Directors are of the opinion that the Company is
engaged in one segment of business, being the investment business. Geographical
segmental analysis has not been disclosed because the Directors are of the
opinion that as an investment company the geographical sources of revenues
received by the Company are incidental to its investment activity. The
geographical allocation of the investments from which income is received and to
which non-current assets relate is given on page 7.
2. Dividend
On 27 July 2017 the Directors declared a second interim dividend of 1.90p per
Ordinary share for the year ending 31 December 2017 to holders of Ordinary
shares on the register on 1 September 2017. The Ordinary shares will be marked
ex-dividend on 31 August 2017 and the dividend will be paid on 29 September
2017.
3. Total return per Ordinary share
The total return per Ordinary share is based on the profit for the half year
after taxation of £656,000
(six months ended 30 June 2016: £4,199,000; year ended 31 December 2016: £
7,321,000) and on 18,088,480 Ordinary shares in issue during the six months
ended 30 June 2017 (six months ended 30 June 2016: 18,088,480 Ordinary shares;
year ended 31 December 2016: 18,088,480 Ordinary shares).
4. Net Asset Value
The net asset value per share and the net assets available to each class of
share calculated in accordance with International Financial Reporting
Standards, are as follows:
Net asset value Net assets Net asset value Net assets
per share available per share available
30 June 30 June 31 December 31 December
2017 2017 2016 2016
Pence £000 Pence £000
18,088,480 173.59p 31,399 175.86p 31,810
Ordinary shares
of £0.01 each in
issue (2016:
18,088,480)
24,073,337 PEWT 107.20p 25,807 104.75p 25,217
Securities 2020
PLC Zero Dividend
Preference shares
of £0.01 each in
issue* (2016:
24,073,337)
*Classified as a liability.
5. Taxation charge
The taxation charge of £70,000 (30 June 2016: £30,000 and 31 December 2016: £
108,000) relates to irrecoverable overseas taxation.
6. Investment management fee charged by Premier Fund Managers Limited
(Unaudited) (Unaudited) (Audited)
Six months to Six months to Year ended
30 June 30 June 31 December
2017 2016 2016
£000 £000 £000
Basic fee:
40% charged to 118 98 215
revenue
60% charged to 177 147 322
capital
295 245 537
7. Section 1158 of the Income and Corporation Tax Act 2010
It is the intention of the Directors to conduct the affairs of the Company so
that they satisfy the conditions for approval as an investment trust company
set out in section 1158 of the Corporation Tax Act 2010.
Interim Management Report
Premier Energy and Water Trust PLC is required to make the following
disclosures in its half year report:
PRINCIPAL RISKS AND UNCERTAINTIES
The Board believes that the principal risks and uncertainties faced by the
Company continue to fall into the following categories:
• Structure of the Company and gearing • Discount volatility
• Dividend levels • Operational
• Currency risk • Accounting, legal and regulatory
• Liquidity risk • Political and regulatory
• Market price risk
Information on each of these is given in the Strategic Report in the Annual
Report for the year ended 31 December 2016.
RELATED PARTY TRANSACTIONS
The Directors are recognised as a related party under the Listing Rules and
during the six months to 30 June 2017 fees paid to Directors of the Company
totalled £44,000 (six months ended 30 June 2016: £43,000 and year to 31
December 2016: £84,400).
GOING CONCERN
The Directors believe, having considered the Company's investment objectives,
risk management policies, capital management policies and procedures, nature of
the portfolio and income and expenditure projections, that the Company has
adequate resources, an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the foreseeable
future. For these reasons, they consider there is reasonable evidence to
continue to adopt the going concern basis in preparing the accounts.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the half year report, in accordance
with applicable law and regulations. The Directors confirm that, to the best of
their knowledge:
• The condensed set of Financial Statements within the Half-year Report has
been prepared in accordance with IAS 34, "Interim Financial Reporting", as
adopted by the European Union; and
• The Interim Management Report includes a fair review of the information
required by 4.2.7R (indication of important events during the first six months
of the year) and 4.2.8R (disclosure of related party transactions and changes
therein) of the FCA's Disclosure and Transparency Rules.
For and on behalf of the Board.
Geoffrey Burns
Chairman
3 August 2017
Directors and Advisers
DIRECTORS
Geoffrey Burns (Chairman)
Ian Graham (Chairman of the Audit Committee)
Charles Wilkinson (retired on 25 April 2017)
Gillian Nott OBE
Kasia Robinski (appointed on 28 February 2017)
ALTERNATIVE INVESTMENT FUND MANAGER ("AIFM")
Premier Portfolio Managers Limited
Eastgate Court High Street Guildford Surrey GU1 3DE
Telephone: 01483 306 090
www.premierfunds.co.uk
Authorised and regulated by the
Financial Conduct Authority
INVESTMENT MANAGER
Premier Fund Managers Limited
Eastgate Court High Street Guildford Surrey GU1 3DE
Telephone: 01483 306 090
www.premierfunds.co.uk
Authorised and regulated by the
Financial Conduct Authority
SECRETARY AND REGISTERED OFFICE
Premier Portfolio Managers Limited
Eastgate Court
High Street
Guildford
Surrey GU1 3DE
Telephone: Martin Salmon 0207 982 2725
COMPANY NUMBER
4897881
WEBSITE
www.premierfunds.co.uk
REGISTRAR
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: 0871 664 0300
Overseas: +44 208 639 3399
E-mail: ssd@capitaregistrars.com
CUSTODIAN AND DEPOSITARY
Northern Trust Global Services Limited
50 Bank Street
Canary Wharf
London E14 5NT
Authorised by the Prudential Regulation Authority ("PRA") and regulated by the
FCA and PRA
AUDITOR
Ernst & Young LLP
25 Churchill Place
Canary Wharf
London E14 5EY
STOCKBROKER
N+1 Singer Advisory LLP
One Bartholomew Lane
London EC2N 2AX
Telephone: 0207 496 3000
ORDINARY SHARES
SEDOL: 3353790GB LSE: PEW
ZERO DIVIDEND PREFERENCE SHARES
SEDOL: BYP98L6 LSE: PEZ
GLOBAL INTERMEDIARY IDENTIFICATION NUMBER
GIIN: W6S9MG.00000.LE.826
Shareholder Information
SHARE PRICE AND PERFORMANCE INFORMATION
The Ordinary shares and Zero Dividend Preference shares are listed on the
London Stock Exchange. Information about the Company and that of the other
investment company managed by Premier, the Acorn Income Fund Limited, including
current share prices can be obtained directly from:
www.premierfunds.co.uk
Contact Premier on 01483 400 400, or by e-mail to premier@premierfunds.co.uk.
SHARE DEALING
Shares can be purchased through a stockbroker.
SHARE REGISTER ENQUIRIES
The register for the Ordinary shares and Zero Dividend Preference shares is
maintained by Capita Registrars. In the event of queries regarding your
holding, please contact the Registrar on 0871 664 0300 (calls cost 10p per
minute plus network extras, lines are open Monday to Friday 9.00 a.m. to 5.30
p.m.); overseas +44 208 639 3399; or e-mail ssd@capitaregistrars.com. Changes
of name and/or address must be notified in writing to the Registrar.
STATEMENT REGARDING NON-MAINSTREAM INVESTMENT PRODUCTS
The Company currently conducts its affairs so that both the Ordinary shares
issued by the Company and the Zero Dividend Preference shares issued by the
Company's wholly-owned subsidiary PEWT Securities 2020 PLC can be recommended
by IFAs to retail investors in accordance with the FCA's rules in relation to
non-mainstream investment products and intends to continue to do so for the
foreseeable future.
The Ordinary shares and the Zero Dividend Preference shares fall outside the
restrictions which apply to non-mainstream investment products because they are
excluded securities.
A member of the Association of Investment Companies.
PEWT SECUP : Premier Energy and Water Trust Plc - Half-year Report
August 03, 2017 at 05:24 am EDT
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