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 Index Total Return (GBP) 2 |
5.5% |
28.7% |
| FTSE All-World Index
Total Return (GBP) 2 |
6.0% |
29.6% |
| FTSE All-Share Index
Total Return (GBP) 2 |
5.5% |
16.8% |
| 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
Ordinary share (cum income) 4 |
173.59p |
175.86p |
(1.3)% |
| Mid-market price per
Ordinary share |
159.75p |
162.00p |
(1.4)% |
| Discount to Net Asset
Value |
(8.0)% |
(7.9)% |
|
| Net Asset Value Total
Return 5 |
1.9% |
28.7% |
|
| Share Price Total
Return 2 |
2.1% |
33.9% |
|
|
Six
months to |
Six
months to |
|
|
30
June |
30
June |
|
|
2017 |
2016 |
%
change |
| Returns and
Dividends |
|
|
|
| Revenue Return per
Ordinary share |
6.64p |
7.35p |
(9.7)% |
| Net Dividends declared
per Ordinary share |
3.80p |
3.80p |
– |
|
|
|
|
Historic Full Year Dividends
| Dividends paid in
respect of the year to: |
31
December |
31
December |
|
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
Zero Dividend Preference share 4 |
107.20p |
104.75p |
2.3% |
| Mid-market price per
Zero Dividend Preference share |
113.50p |
113.00p |
0.4% |
| Premium to Net Asset
Value |
5.9% |
7.9% |
|
|
|
|
|
|
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 November 2020 7 |
(15.1)% |
|
|
|
Six
months to |
Year
ended |
|
|
30
June |
31
December |
|
|
2017 |
2016 |
%
change |
| Balance Sheet |
|
|
|
| Gross Assets less
Current Liabilities |
|
|
|
| (excluding Zero
Dividend Preference shares) |
£57.2m |
£57.0m |
3.5% |
| Zero Dividend
Preference shares |
(£25.8m) |
(£25.2m) |
(2.3)% |
| Equity shareholders’
funds |
£31.4m |
£31.8m |
(1.3)% |
| Gearing on Ordinary
shares8 |
1.82x |
1.79
x |
|
| Zero Dividend
Preference share cover (non-cumulative) 9 |
1.76x |
1.74
x |
|
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 Ventures |
Electricity |
India |
3,440 |
6.2 |
1 |
1 |
| SSE |
Electricity |
United Kingdom |
3,247 |
5.8 |
2 |
2 |
| Beijing Enterprises
Holdings |
Gas |
China |
2,933 |
5.2 |
3 |
5 |
| Cia de Saneamento do
Paraná |
Water & Waste |
Latin America |
2,867 |
5.1 |
4 |
7 |
| First Trust MLP and
Energy Income Fund |
Multi Utilities |
North America |
2,742 |
4.9 |
5 |
4 |
| China Everbright
Intl. |
Water & Waste |
China |
2,681 |
4.8 |
6 |
9 |
| Huaneng Renewables |
Renewable Energy |
China |
2,614 |
4.7 |
7 |
13 |
| Avangrid |
Multi Utilities |
North America |
2,277 |
4.1 |
8 |
10 |
| Pennon Group |
Water & Waste |
United Kingdom |
2,244 |
4.0 |
9 |
11 |
| Saeta Yield |
Renewable Energy |
Europe (excluding
UK) |
1,582 |
2.8 |
10 |
32 |
| Transelectrica |
Electricity |
Eastern Europe |
1,555 |
2.8 |
11 |
14 |
| Qatar Electricity &
Water Co. |
Multi Utilities |
Middle East |
1,408 |
2.5 |
12 |
12 |
| Keppel Infrastructure
Trust |
Multi Utilities |
Asia (excluding
China) |
1,406 |
2.5 |
13 |
20 |
| Edison
International |
Electricity |
North America |
1,400 |
2.5 |
14 |
19 |
| Iberdrola |
Electricity |
Europe (excluding
UK) |
1,358 |
2.4 |
15 |
35 |
| Transgaz |
Gas |
Eastern Europe |
1,301 |
2.3 |
16 |
22 |
| Nextera Energy |
Electricity |
North America |
1,295 |
2.3 |
17 |
17 |
| Engie |
Multi Utilities |
Global |
1,288 |
2.3 |
18 |
18 |
| Cia Paranaense
Energia |
Electricity |
Latin America |
1,253 |
2.2 |
19 |
15 |
| NRG Yield* |
Renewable Energy |
North America |
1,251 |
2.2 |
20 |
21 |
| Mytrah Energy |
Renewable Energy |
India |
1,174 |
2.1 |
21 |
44 |
| Enbridge |
Gas |
North America |
1,117 |
2.0 |
22 |
34 |
| China Power Intl.
Develop |
Electricity |
China |
1,093 |
2.0 |
23 |
6 |
| Sempra Energy |
Multi Utilities |
North America |
955 |
1.7 |
24 |
23 |
| Enel Americas |
Electricity |
Latin America |
870 |
1.6 |
25 |
26 |
| ACEA |
Multi Utilities |
Europe (excluding
UK) |
816 |
1.5 |
26 |
31 |
| CMS Energy |
Multi Utilities |
North America |
783 |
1.4 |
27 |
25 |
| Metro Pacific
Investments |
Multi Utilities |
Asia (excluding
China) |
777 |
1.4 |
28 |
24 |
| Gas Natural |
Gas |
Europe (excluding
UK) |
756 |
1.4 |
29 |
– |
| Alliant Energy |
Electricity |
North America |
742 |
1.3 |
30 |
29 |
| Macquarie 1st Trust
Global Infrastructure |
|
|
|
|
|
|
| Utility Dividend &
Income |
Multi Utilities |
Global |
702 |
1.3 |
31 |
33 |
| Enagas |
Gas |
Europe (excluding
UK) |
690 |
1.2 |
32 |
28 |
| Enel |
Electricity |
Europe (excluding
UK) |
577 |
1.0 |
33 |
– |
| Atlantia |
Toll roads |
Europe (excluding
UK) |
433 |
0.8 |
34 |
– |
| EDP - Energias do
Brasil |
Electricity |
Latin America |
394 |
0.7 |
35 |
36 |
| Enel Chile |
Electricity |
Latin America |
380 |
0.7 |
36 |
39 |
| ERG |
Renewable Energy |
Europe (excluding
UK) |
378 |
0.7 |
37 |
48 |
| Beijing Enterprises
Water |
Water & Waste |
China |
358 |
0.6 |
38 |
40 |
| Hera |
Multi Utilities |
Europe (excluding
UK) |
341 |
0.6 |
39 |
41 |
| Pattern Energy
Group |
Renewable Energy |
North America |
330 |
0.6 |
40 |
– |
| Severn Trent |
Water & Waste |
United Kingdom |
327 |
0.6 |
41 |
– |
| Atlantica Yield |
Renewable Energy |
Global |
287 |
0.5 |
42 |
47 |
| Banpu Power |
Electricity |
Asia (excluding
China) |
286 |
0.5 |
43 |
42 |
| AES Tiete Energia |
Electricity |
Latin America |
238 |
0.4 |
44 |
43 |
| TPI Polene Power |
Renewable Energy |
Asia (excluding
China) |
203 |
0.4 |
45 |
– |
| China Everbright
Greentech |
Renewable Energy |
China |
189 |
0.3 |
46 |
– |
| Centre Coast MLP &
Infrastructure Fund |
Multi Utilities |
North America |
168 |
0.3 |
47 |
– |
| Kangda
International |
Water & Waste |
China |
153 |
0.3 |
48 |
45 |
| China Water Affairs
Group |
Water & Waste |
China |
138 |
0.2 |
49 |
46 |
| Beijing Enterprise
Environment |
Water & Waste |
China |
129 |
0.2 |
50 |
– |
|
|
|
55,926 |
99.9% |
|
|
| Unquoteds |
|
|
|
|
|
|
| PEWT Securities 2020
PLC |
ZDP subsidiary |
United Kingdom |
50 |
0.1 |
|
|
| Freepower |
In liquidation |
United Kingdom |
– |
– |
|
|
| ITI Energy |
In liquidation |
United Kingdom |
– |
– |
|
|
| Total investments |
|
|
55,976 |
100.0% |
|
|
* 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
to 30 June 2017 |
Six months
to 30 June 2017 |
Six months
to 30 June 2017 |
Six months
to 30 June 2016 |
Six months
to 30 June 2016 |
Six months
to 30 June 2016 |
Year ended
31 December 2016 |
Year ended
31 December 2016 |
Year ended
31 December 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 or
loss |
|
– |
222 |
222 |
– |
3,660 |
3,660 |
– |
6,905 |
6,905 |
| Income |
|
1,638 |
– |
1,638 |
1,804 |
– |
1,804 |
2,901 |
– |
2,901 |
| Investment management
fee |
|
(118) |
(177) |
(295) |
(98) |
(147) |
(245) |
(215) |
(322) |
(537) |
| Other expenses |
|
(249) |
– |
(249) |
(347) |
(79) |
(426) |
(605) |
(81) |
(686) |
| Reconstruction
costs |
|
– |
– |
– |
– |
– |
– |
– |
(11) |
(11) |
| Profit before finance
costs and taxation |
|
1,271 |
45 |
1,316 |
1,359 |
3,434 |
4,793 |
2,081 |
6,491 |
8,572 |
| Finance costs |
|
– |
(590) |
(590) |
– |
(564) |
(564) |
– |
(1,143) |
(1,143) |
| Profit/(loss) before
taxation |
|
1,271 |
(545) |
726 |
1,359 |
2,870 |
4,229 |
2,801 |
5,348 |
7,429 |
| Taxation |
5 |
(70) |
– |
(70) |
(30) |
– |
(30) |
(108) |
– |
(108) |
| Profit/(loss) for the
period |
|
1,201 |
(545) |
656 |
1,329 |
2,870 |
4,199 |
1,973 |
5,348 |
7,321 |
| 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
December |
31
December |
|
|
2017 |
2017 |
2016 |
2016 |
2016 |
2016 |
|
Notes |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
| Non current assets |
|
|
|
|
|
|
|
| Investments at fair
value through profit or loss |
|
55,926 |
55,976 |
52,565 |
52,665 |
55,946 |
55,996 |
| Current assets |
|
|
|
|
|
|
|
| Debtors |
|
497 |
497 |
813 |
813 |
362 |
362 |
| Derivative financial
instruments |
|
463 |
463 |
– |
– |
67 |
67 |
| 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: amounts
falling due within one year |
|
(177) |
(227) |
(1,059) |
(1,159) |
(185) |
(235) |
| Other financial
liabilities |
|
– |
– |
– |
– |
– |
– |
| Derivative financial
instruments |
|
(145) |
(145) |
– |
– |
(98) |
(98) |
|
|
(322) |
(372) |
(1,059) |
(1,159) |
(283) |
(333) |
| Total assets less
current liabilities |
|
57,206 |
57,206 |
54,010 |
54,010 |
57,027 |
57,027 |
| Non-current
liabilities |
|
|
|
|
|
|
|
| Zero Dividend Preference
shares |
|
(25,807) |
– |
(24,637) |
– |
(25,217) |
– |
| Intercompany
payable |
|
– |
(25,807) |
– |
(24,637) |
– |
(25,217) |
| 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 reserve |
|
88 |
88 |
88 |
88 |
88 |
88 |
| Capital reserve |
|
13,576 |
13,576 |
11,644 |
11,644 |
14,122 |
14,122 |
| Special reserve |
|
7,472 |
7,472 |
7,472 |
7,472 |
7,472 |
7,472 |
| Revenue reserve |
|
1,381 |
1,381 |
1,289 |
1,289 |
1,246 |
1,246 |
| Total equity
attributable to Ordinary Shareholders |
|
31,399 |
31,399 |
29,373 |
29,373 |
31,810 |
31,810 |
| Net asset value per
Ordinary share (pence) |
4 |
173.59 |
173.59 |
162.39 |
162.39 |
175.86 |
175.86 |
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 31 December
2016 |
181 |
8,701 |
88 |
14,122 |
7,472 |
1,246 |
31,810 |
| Profit for the
period |
– |
– |
– |
(546) |
– |
1,202 |
656 |
| Ordinary dividends
paid |
– |
– |
– |
– |
– |
(1,067) |
(1,067) |
| Balance at 30 June
2017 |
181 |
8,701 |
88 |
13,576 |
7,472 |
1,381 |
31,399 |
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 31 December
2015 |
181 |
8,699 |
88 |
8,774 |
7,472 |
1,163 |
26,377 |
| Profit for the
period |
– |
– |
– |
2,870 |
– |
1,329 |
4,199 |
| Ordinary dividends
paid |
– |
– |
– |
– |
– |
(1,203) |
(1,203) |
| Balance at 30 June
2016 |
181 |
8,699 |
88 |
11,644 |
7,472 |
1,289 |
29,373 |
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 31 December
2015 |
181 |
8,699 |
88 |
8,774 |
7,472 |
1,163 |
26,377 |
| Profit for the year |
– |
– |
– |
5,348 |
– |
1,973 |
7,321 |
| Write back of tap issue
costs |
– |
2 |
– |
– |
– |
– |
2 |
| Ordinary dividends
paid |
– |
– |
– |
– |
– |
(1,890) |
(1,890) |
| Balance at 31 December
2016 |
181 |
8,701 |
88 |
14,122 |
7,472 |
1,246 |
31,810 |
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 before finance
costs and taxation* |
1,316 |
1,316 |
4,793 |
4,793 |
8,572 |
8,572 |
| Adjustments for |
|
|
|
|
|
|
| Gains on investments
held at fair value through profit or loss |
(222) |
(222) |
(3,434) |
(3,434) |
(6,905) |
(6,905) |
| Increase/(decrease) in
trade and other receivables |
134 |
134 |
(286) |
(286) |
(319) |
(319) |
| Decrease in trade and
other payables |
(8) |
(8) |
(1,090) |
(1,090) |
(537) |
(537) |
| Overseas taxation
paid |
(72) |
(72) |
(47) |
(47) |
(126) |
(126) |
| Net cash flows from
operating activities |
1,148 |
1,148 |
(64) |
(64) |
685 |
685 |
| Investing
activities |
|
|
|
|
|
|
| Purchases of
investments |
(11,687) |
(11,687) |
(10,118) |
(10,118) |
(19,189) |
(19,189) |
| Proceeds from sales of
investments |
11,313 |
11,313 |
11,023 |
11,023 |
19,276 |
19,276 |
| Net cash flows from
investing activities |
(374) |
(374) |
905 |
905 |
87 |
87 |
| Financing
activities |
|
|
|
|
|
|
| Payment to ZDP
shareholders with “B” rights |
– |
– |
(25,708) |
(25,708) |
(25,708) |
(25,708) |
| Dividends paid |
(1,067) |
(1,067) |
(1,203) |
(1,203) |
(1,890) |
(1,890) |
| Net cash used in
financing activities |
(1,067) |
(1,067) |
(26,911) |
(26,911) |
(27,598) |
(27,598) |
| Decrease in cash and
cash equivalents |
(293) |
(293) |
(26,070) |
(26,070) |
(26,826) |
(26,826) |
| Cash and cash
equivalents, beginning of period |
935 |
935 |
27,761 |
27,761 |
27,761 |
27,761 |
| Cash and cash
equivalents at end of period |
642 |
642 |
1,691 |
1,691 |
935 |
935 |
*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 Ordinary
shares of £0.01 each in issue (2016: 18,088,480) |
173.59p |
31,399 |
175.86p |
31,810 |
| 24,073,337 PEWT
Securities 2020 PLC Zero Dividend Preference shares of £0.01 each
in issue* (2016: 24,073,337) |
107.20p |
25,807 |
104.75p |
25,217 |
*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
revenue |
118 |
98 |
215 |
| 60% charged to
capital |
177 |
147 |
322 |
|
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.