TIDMPEW TIDMPEZ 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 GBP57.2m GBP57.0m 3.5% Dividend Preference shares) Zero Dividend (GBP25.8m) (GBP25.2m) (2.3)% Preference shares Equity shareholders' GBP31.4m GBP31.8m (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.
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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 GBP11 million. Save for one remaining holding, the bond holdings acquired in late 2015/early 2016 have now been sold. GBP3.1 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, GBP2.3 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, GBP0.6 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 GBP1.8 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 GBP 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
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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 GBP24.3 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 GBP000 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 Paranáe; 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
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2017 2017 2017 2016 2016 2016 December December December 2016 2016 2016 Revenue Capital Total Revenue Capital Total Revenue Capital Total Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 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 GBP656,000. 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 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 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 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 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 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 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 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 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 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 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
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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 GBP2,345,000 (2016: GBP2,735,000) of cash inflow from dividends from securities, GBP331,000 (2016: GBP89,000) of interest from securities, and GBP8,000 (2016: GBP13,000) 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 GBP656,000 (six months ended 30 June 2016: GBP4,199,000; year ended 31 December 2016: GBP 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 GBP000 Pence GBP000 18,088,480 173.59p 31,399 175.86p 31,810 Ordinary shares of GBP0.01 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 GBP0.01 each in issue* (2016: 24,073,337) *Classified as a liability. 5. Taxation charge The taxation charge of GBP70,000 (30 June 2016: GBP30,000 and 31 December 2016: GBP 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 GBP000 GBP000 GBP000 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
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August 03, 2017 05:23 ET (09:23 GMT)
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 GBP44,000 (six months ended 30 June 2016: GBP43,000 and year to 31 December 2016: GBP84,400). 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. END
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