Final Results

PREMIER ENERGY AND WATER TRUST PLC Annual report & accounts for the year ended 31 December 2014 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 Summary 2 Financial Calendar 2 Company Highlights 4 Dividend Progression 5 Share Price Performance 5 Chairman's Statement 6 Investment Managers' Report 8 Twenty Largest Holdings 12 Review of Top Ten Holdings 13 Directors 15 Investment Managers 15 Strategic Report 16 Directors' Report 22 Statement of Corporate Governance 26 Directors' Remuneration Report 29 Audit Committee Report 32 Statement of Directors' Responsibilities in Respect of the Financial Statements 34 Independent Auditor's Report 35 Consolidated Statement of Comprehensive 37 Income Consolidated and Company Balance Sheets 38 Consolidated Statement of Changes in 39 Equity Company Statement of Changes in Equity 40 Consolidated and Company Cash Flow 41 Statements Notes to the Financial Statements 42 Glossary of Terms 61 Shareholder Information 62 Notice of Annual General Meeting 63 Notes to the Notice of Annual General 65 Meeting Directors and Advisers 67 Company Summary History The Company, a UK investment trust listed on the main list of the London Stock Exchange, was incorporated on 12 September 2003 and commenced its activities on 4 November 2003. The Company was established in connection with the scheme of reconstruction of Legg Mason Investors International Utilities Trust PLC, with 18,143,433 Ordinary Shares and 19,143,433 Zero Dividend Preference Shares being allotted at launch. On 18 December 2009 shareholders approved special resolutions to implement tender offers for Ordinary Shares and Zero Dividend Preference ("ZDP") Shares, to extend the life of the Company until 31 December 2015 and to amend the final entitlement per ZDP Share to 221.78p on 31 December 2015 (a gross redemption yield of 6.53% on the ZDP Net Asset Value of 151.39p at 17 December 2009). On 15 December 2010 shareholders approved proposals to issue new shares in connection with the reconstruction of Premier Renewable Energy Fund Limited. On 27 August 2014 shareholders approved proposals to extend the life of the Company and to implement a reorganisation of the Company through a scheme of arrangement. The existing ZDP Shares were replaced with New ZDP Shares issued by a newly incorporated subsidiary of the Company, PEWT Securities PLC and the Articles were amended to allow the Company to continue without a fixed life whilst including a provision to allow holders of ordinary shares an opportunity to vote on the continued existence of the Company every five years from 2020. In December 2014 the Company raised Â£1,361,931 (after expenses) through the placing of 310,000 Ordinary Shares and 384,681 ZDP Shares (issued by PEWT Securities PLC). Financial Calendar Company's year end 31 December Annual results announced February Annual General Meeting 21 April 2015 Company's half year end 30 June Half year results announced August Dividend payments - 2015 At the end of March, June, September and December Capital Structure Zero Dividend Preference Shares (1p each) issued by PEWT Securities PLC 21,565,054 The ZDP Shares ("ZDPs") will have a final capital entitlement of 221.78p on 31 December 2015 subject to there being sufficient capital in the Company. The ZDPs are not entitled to any dividends. The ZDPs are qualifying investments for Individual Savings Accounts ("ISAs") under the NEW ISA ("NISA") regime which commenced on 1 July 2014. Ordinary Shares (1p each) 17,378,480 The Ordinary Shares are entitled to all of the Company's net income available for distribution by way of dividends. On a winding-up, they will be entitled to any undistributed revenue reserves and any surplus assets of the Company after the ZDPs have been paid in full. The Ordinary shareholders have the right to receive notice of, to attend and to vote at all general meetings of the Company. The Ordinary Shares are qualifying investments for ISAs. Company Details Investment Manager Premier Fund Managers Ltd ("PFM Ltd"), is a subsidiary of Premier Asset Management Ltd ("PAM Ltd"). PAM Ltd had approximately Â£3.2bn of funds under management at 31 December 2014. PFM Ltd is authorised and regulated by the Financial Conduct Authority. The Company's portfolio is managed by James Smith and Claire Long. On 20 January 2015 the Company appointed Premier Portfolio Managers Limited ("PPM") as its Alternative Investment Fund Manager. PPM has delegated the portfolio management of the Company's portfolio of assets to PFM Ltd. Secretary Premier Asset Management Ltd provides the company secretarial and administrative services. Management Fee 1.0% per annum, charged 40% to revenue and 60% to capital, plus performance fee, allocated between capital and revenue based on the outperformance attributable to the capital and revenue respectively. (See note 3 to the accounts for full details.) Company Highlights for the year to 31 December 2014 31 December 31 December 2014 2013 % change Total Return Performance Total Assets Total 14.7% 24.5% Returnâ€‰1 FTSE All-World 20.5% 9.0% Utilities Index Total Returnâ€‰2 (GBP) FTSE All-World 11.3% 20.8% Index Total Returnâ€‰ 2 (GBP) FTSE All-Share 1.2% 20.8% Index Total Returnâ€‰ 2 (GBP) Ongoing chargesâ€‰3 1.5% 1.4% Ordinary Share Returns Net Asset Value per 196.23p 167.55p 17.1% Ordinary Share (cum income)â€‰4 Mid-market price 192.50p 157.25p 22.4% per Ordinary Shareâ€‰ 2 Discount (1.9%) (6.1%) Revenue return per 10.11p 11.25p (10.1%) Ordinary Share Net dividends 13.40p 12.25p 9.4% declared per Ordinary Share Net Asset Value 26.6% 58.5% Total Returnâ€‰5 Share Price Total 31.6% 71.8% Return 2 Zero Dividend Preference Share Returns Net Asset Value per 208.18p 195.42p 6.5% Zero Dividend Preference Share4 Mid Market Price 215.00p 206.00p 4.4% per Zero Dividend Preference Shareâ€‰2 Premium 3.3% 5.4% Hurdle Ratesâ€ Ordinary Shares Hurdle rate to 4.5% return the share price of 192.50p at 31 December 2014â€‰6 Zero Dividend Preference Shares Hurdle rate to (36.6%) return the redemption share price of 221.78p at 31 December 2015â€‰6 Balance Sheet Gross Assets less Â£79.0m Â£70.0m 12.9% Current Liabilities (excluding Zero Dividend Preference Shares) Zero Dividend (Â£45.0m) (Â£41.5m) 8.3% Preference Shares Equity Â£34.0m Â£28.5m 19.6% Shareholders' Funds Gearing on Ordinary 2.32x 2.46x Shares7 Zero Dividend 1.61x 1.42x Preference Share Cover (non-cumulative)â€‰8 1 Based on opening and closing total assets plus dividends marked "ex-dividend" within the period. Source: 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 liabili-ties over the year. 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 Source: JP Morgan Cazenove. 7 Based on Gross Assets less Current Liabilities divided by Equity Shareholders' Funds at the end of each year. 8 Source: JP Morgan Cazenove and PFM Ltd. Non-cumulative cover = Gross assets at year end less estimated wind up costs less management charges to capital divided by final repayment value of ZDPs. â€ Hurdle rate definition can be found in the Glossary of Terms on page 54. Dividend Progression 2004-2014 Graphic removed Share Price Performance 2009-2014 ZDP Shares 5 year performance chart (rebased to 100) Graphic removed Ordinary Shares 5 year performance chart (rebased to 100) Graphic removed Chairman's Statement for the year to 31 December 2014 Performance 2014 has been another successful year for the Premier Energy and Water Trust ("PEWT"/"Company"). The portfolio performed well, recording a gross assets total return of 14.7%. This was behind the FTSE All-World Utility Index's total return in Sterling of 20.5%, but ahead of the FTSE All-World Index which returned 11.3% on the same basis. It is worth mentioning that 2014 was definitely a year in which it paid to be a global investor. In contrast to the strong returns seen in the global indices, the FTSE All-Share index actually fell by 2.1% in 2014, and returned only 1.2% when dividends are added in. The Company's cum-income NAV per Ordinary Share increased from 167.55p at 31 December 2013 to 196.23p at 31 December 2014, a gain of 17.1%. Pleasingly, PEWT's Ordinary Shares continued to trade at a tight discount to Net Asset Value ("NAV"), from 6.1% at 31 December 2013 to just 1.9% at 31 December 2014. As a result of both the growth in NAV and also a tightening discount, PEWT's share price increased by 22.4%, reaching 192.50p by the end of the year. When combined with dividends paid, an Ordinary Shareholder saw a total return of 31.6% in 2014, this coming on the back of a 71.8% return seen in 2013. In fact, since the management and portfolio changed in June 2012, Ordinary Shareholders have seen a total return of 139.9% to December 2014 (source: Bloomberg, from 31 May 2012 to 31 December 2014). PEWT's Zero Dividend Preference Shares ("ZDP Shares") continued to trade at a premium to their accrued NAV. The ZDPs' mid-market price was 215.00p at 31 December 2014 offering at that date a yield to maturity of 3.2% to their 221.78p final entitlement scheduled for 31 December 2015. Overview 2014 was an eventful year for global equity markets and also your Company. Most of the action came in the second half of the year as the US Federal Reserve began to unwind its programme of quantitative easing. The Dollar strengthened against developed and emerging currencies alike amid a widespread flight to quality; with US utilities performing particularly well as investors sought out safe havens. At the same time as the US was beginning to look more attractive, the emerging economies of Asia and South America were looking less promising. China's GDP growth is now on a firm downward trend, and the result of Brazil's election was not one which markets would have chosen. Commodity prices also pulled back sharply, the oil price falling by over 50% in the second half of the year due to a combination of growing supply and soft demand. With hindsight your Company was a little too exposed to Latin America, and could have done with larger weightings in the US, particularly in the second half of the year. However, the portfolio performed exceptionally well in China and India, and avoided the problems of the oil exposed economies such as Russia, leading to a satisfactory performance overall. Extension of life and renewal of ZDP Shares Shareholders will be aware that at Shareholder meetings in August, subsequently ratified by the High Court, proposals were approved to enable the Company to continue with an indefinite life, subject to 5 yearly Shareholder continuation votes, the first of which will be held in 2020. The respective economic rights of each class of share remain unaltered. I would like again to take this opportunity to thank Shareholders for their support in approving the proposals. Removing the possibility of having to liquidate the portfolio, as could have been the case with the previous fixed wind up date of 31 December 2015, allows the manager to continue with the successful portfolio strategy employed since 2012. The Company's ZDP Shares mature on 31 December 2015 at which point their final capital entitlement will become payable. Your Board will be considering the options for refinancing the ZDP Shares having regard to investor demand, prevailing required rates of return, the size of PEWT's capital base, and timing. As the Company now has a wholly owned subsidiary it is required to prepare consolidated accounts under International Financial Reporting Standards (IFRS) rather than individual company accounts under UK Generally Accepted Accounting Principles (UK GAAP). There were however, no changes to the Company's other accounting policies. Income and dividends Revenue from investments held increased by 12.8% to Â£3.1 million as a result of both increased levels of dividend from portfolio investments and also the recycling of capital gains into income producing assets. This performance was especially encouraging after taking into account the fact that Sterling was stronger against the US Dollar over the year, by some 5% on average. This reduces the Sterling value of dividends paid by US companies, and by companies operating in countries whose currencies are pegged to the US Dollar, such as Hong Kong. Likewise the weakness of Sterling against the US Dollar seen in the early part of 2015 should have a positive effect on PEWT's income in 2015. The revenue return per Ordinary Share fell by 10.1% from 11.25p to 10.11p. However this is entirely due to the costs incurred during the year in extending the life of the Company and associated legal and transactional costs. These totalled Â£417,000, or 2.44p per ordinary share, and are essentially one off in nature. Adding these costs back to calculate a normalised or underlying position, revenue return per Ordinary Share would have been 12.55p, a gain of 11.6% on 2013 and more reflective of the underlying strength of earnings within the Company. Your Board has declared a 4th interim dividend for the year ended 31 December 2014 of 5.45p per ordinary share which comprises a base dividend of 4.70p plus a further 0.75p additional dividend paid in accordance with the policy to distribute accumulated revenue reserves as previously announced. Excluding the additional dividends, the total base dividend in respect of the year is therefore 10.4p per Ordinary Share, an increase of 4.0% over the 10.0p per Ordinary Share in respect of the year ended 31 December 2013. This fourth interim dividend will be paid on 31 March 2015 to members on the register at the close of business on 6 March 2015. The Ordinary shares will be marked ex-dividend on 5 March 2015. Share issue In December PEWT issued a package of Ordinary and ZDP Shares, raising Â£1.3 million of fresh capital for the Company. Shares were issued at a price calculated to avoid dilution to existing shareholders. The issue was made in order to satisfy market demand for both classes of Shares. The Board will consider issuing further shares, subject to Shareholder and regulatory consents during 2015 should market demand be sufficient. Your Board believes that existing Shareholders will benefit from growing the Company in this way, which will allow for a more efficient cost base and improved trading liquidity. Regulatory Matters - the Alternative Investment Fund Managers Directive (the "AIFMD"). The Alternative Investment Fund Managers Directive ("AIFMD") came into effect during 2014. The Company initially entered into the register of small registered UK Alternative Investment Fund Managers with the Board acting as the Alternative Investment Fund Manager ("AIFM"). At that time the Company's total assets were under the â‚¬100 million threshold which enabled the Company to take advantage of the lighter touch regulatory regime for small funds with beneficial cost savings to shareholders. However as a result of good performance, weakness in the euro and the issue of new shares the Company's total assets breached the â‚¬100 million threshold on 23 December 2014. At the year-end total assets were valued at â‚¬102 million. The obligation and reporting requirements for a full scope (over threshold) AIFM are considerable and certainly more than can be managed by a non-executive Board. The directors therefore appointed Premier Portfolio Managers Limited ("PPM") to act as its AIFM with effect from 20 January 2015. This involved the transfer of the management contract from Premier Fund Managers Limited ("PFM") to PPM, a sister company within the same group that is authorised by the Financial Conduct Authority ("FCA") to act as an AIFM. PPM has delegated investment management to PFM so the management of the portfolio remains unchanged and there are no changes in the fees charged for investment management. PPM will take on the risk monitoring and reporting obligations of the AIFMD and the Board have agreed to a fee of Â£20,000 per annum for the provision of this service. One of the consequences of falling into the full scope of the AIFMD is the requirement to appoint a depositary. A depositary takes all the functions of a custodian but also has a broader role with regard to risk monitoring. The Board have terminated the custody agreement with Northern Trust Global Services Ltd ("NT") and entered into a new agreement appointing NT as depositary. The custody functions are supplied on broadly the same terms but the depositary functions involve an additional charge of 0.02% per annum on the total value of assets subject to a minimum of Â£25,000. Compliance with the AIFMD will therefore involve some additional recurring annual costs to shareholders and have involved one-off legal costs in terminating existing agreements and redrafting new agreements with PPM and NT. Shareholder relations The Board and Investment Managers welcome contact with existing and potential shareholders. The Company's AGM will be held on Tuesday, 21 April 2015, at 12: 15 p.m., at the offices of Premier Fund Managers Limited, Eastgate Court, High Street, Guildford, Surrey GU1 3DE, where a presentation will be given followed by light refreshments, and it is hoped that Shareholders will be able to attend on this date. Shareholders can find additional details regarding your Company including factsheets and articles on topics relating to both the utility sector and the Company on Premier's website at: www.premierfunds.co.uk. Outlook The general consensus indicates that 2015 will likely be a tougher year for equity investment than 2014. However, our manager does find some reasons for optimism amongst the uncertainty. Firstly, we are yet to see the beneficial impacts of a lower oil price filter through into the real economy although markets have reacted swiftly in identifying those companies and countries which will be the losers on this trade. Secondly, our Sterling denominated portfolio has benefited from the recent pullback in the value of Sterling. Our manager believes that the structural weakness of the UK economy should see this trend continue, particularly if the UK election is inconclusive in May. Europe remains the odd man out among developed economies, as the European Central Bank has arrived late to the money printing party. How the power struggle between the Bundesbank and the ECB plays out during 2015 will be both of general interest and also significant to equity market performance not only in Europe but also in the UK and globally. Shareholders can take some comfort from the excellent operational performances seen in many of PEWT's larger investments during 2014, and the fact that our manager expects this trend to continue enabling share prices to make further progress. Geoffrey Burns Chairman 24 February 2015 Investment Managers' Report for the year to 31 December 2014 Performance 2014 was, as they say, a year of two halves with the first half being considerably more comfortable than the second. In this respect it bore many similarities to 2013. PEWT's cum income NAV began the year at 167.55p, gained over 20% to reach 202.05p by June, before falling back slightly during the second half to close the year at 195.80p, an increase of 16.9% over the year. Volatility increased sharply in the second half as markets digested the actions of central banks and the implications for a slowing global economy. In last year's annual report we noted how the utility sector had under-performed the wider equity market in every year from 2009. We also said that the sector's outlook was improving and that we would be surprised to see it continue to under-perform as a result of utility companies taking steps to improve their balance sheets and cost bases, and rationalise their business models. In the event, 2014 proved to be a year of strong out-performance for the sector. This was particularly the case for US utilities which gained 37.1% when adjusted into Sterling and taking dividends into account. It is worth noting that the bulk of this gain in the US sector occurred in the 4th quarter of the year, and we believe is largely technical in nature as US based investors pulled money out of emerging markets and sought low risk high yield assets in their domestic market. Utilities out-performed parent market indices in most major markets. We felt that investors had become over-pessimistic regarding prospects for the utility sector, and with utilities being relatively under-owned a reversal was always a possibility. Utilities ended 2014 trading on similar earnings multiple to the wider market, although paying a higher yield. With global growth prospects diminishing, the more modest yet steady growth of the sector, combined with a yield that looks attractive compared to alternatives, means the sector could well out-perform again in 2015. We would be surprised however to see a level of performance in line with that seen in 2014. PEWT has been comparatively underweight US utilities on valuation grounds, and this was a headwind to relative performance during the year. Likewise the portfolio remains underweight European utilities, which performed well in the first half but were fairly poor in the second half as concerns over the Euro area resurfaced. Individual stock selection was again a positive, particularly in China. During 2013 we had favoured Chinese renewable energy and also waste companies, a strategy which paid off handsomely. In 2014 we switched much of the Chinese exposure to coal fired energy generation companies, a move which worked well. In India our investment in thermal electricity production performed even better than in 2013, more of which below. A clear negative, however, was the exposure to Latin America, which suffered from a weak currency, particularly the Brazilian Real, an adverse Brazilian election result, and also a prolonged and on-going drought. In local currency terms the Brazilian Electric Energy Companies Index gained 3.5% in 2014, although lost 2.1% when translated into Sterling. We do however feel that these issues will ultimately be resolved, and as the sector looks attractively priced it should recover in time. Portfolio Investment activity was at a similar level to 2013, with investment purchases and sales of approximately Â£27 million representing some 40% of the opening portfolio. The portfolio retained a similar character to the end of 2013, although the geographic weightings changed a little. Chinese exposure was reduced from 28.1% at 31 December 2013 to 23.4% at the end of 2014. China had been a stand out sector for the Company in 2013, and some of these gains were recycled elsewhere in 2014. Asia (ex-China) increased from 15.9% at the end of 2013 to 17.7% by December 2014, largely due to the excellent performance of OPG Power Ventures. North American exposure also increased, to 12.7%, on both performance grounds and also modest net investment. Eastern Europe is an area that looks attractive, particularly compared to Western Europe, hence we increased exposure to 4.9% by the year-end. The portfolio's exposure to Latin America fell slightly to 8.3% as it under-performed the rest of the portfolio. China The previous year saw strong gains in the Company's Chinese waste to energy and renewable energy companies. China Everbright International and China Suntien Green Energy, which recorded share price gains of 164.8% and 72.2% respectively during 2013, were the Company's second and third largest investments by the end of 2013. In addition, gas company Kunlun Energy stood at number 4 in the portfolio. During the first half of 2014 we cut the China Everbright position by 50% as we felt it had reached fair value, sold all of Kunlun, and reduced Suntien by 17%. This has proved to be a correct decision (although with hindsight we should have sold some more of the Suntien stake) as of these three only Everbright remained in modest positive territory during 2014, Kunlun and Suntien both losing value in the year. Kunlun, which has some upstream gas exposure, has been hit by the fall in the international oil and gas price, while Suntien, a wind farm developer, suffered from project delays and low wind speeds. The cash raised was re-invested into the Chinese thermal power generation sector, and at the close of 2014 two of these companies featured in PEWT's top 10 investments, China Power International Development and Huaneng Power International. These companies are benefiting from having a largely fixed tariff while their coal costs are falling, and as such they are seeing strong growth in margins and earnings. By the end of 2014 PEWT was recording a gain on book cost of 41.5% for China Power and 52.6% for Huaneng. In addition the relatively high dividends paid by these companies have had a positive impact on PEWTs income account. We should also mention the stake in Fortune Oil, a company operating in the gas distribution segment. This was held for its low valuation compared to the fair value of its underlying investments. In December the major shareholder group made an offer for the company at a level which we feel substantially under-values the shares, but which (at the time of writing) looks almost certain to succeed. Should the offer go through, PEWT will exit with a net gain of at least 43% (there is an element of contingent consideration which may increase the return), well below what we originally hoped for but still a success. India The election of Narendra Modi as Indian Prime Minister in May 2014 has given the country renewed hope for reform and growth. India is also now benefiting from a favourable backdrop of declining commodity prices, particularly oil, which should help the country's trade balance and budget. PEWT's largest investment both at the end of 2013 and 2014 was OPG Power Ventures, an Indian thermal power producer, listed on the AIM market in London. OPG's share price gained 71.6% during 2014 as they made further progress on their pipeline of new projects; their generation capacity should increase almost threefold in the first half of 2015. OPG is benefiting from the continued deficit of power generation capacity in India, which when coupled with declining coal prices presents a favourable investment backdrop. We are optimistic that the shares will make further upward progress during 2015 as their new capacity is commissioned. In May PEWT sold its investment in Essar Energy Convertible Bonds. The bonds had become "puttable" back to the company as a result of the Essar Group making an offer for the Essar Energy PLC minority interests. These bonds were a very successful investment for your Company, not only paying a high coupon, but also returning a capital gain (in US Dollars) of approximately 60%. United Kingdom Investors continue to be concerned by the potential impact of the Labour Party's ill thought through plans for a 2 year energy price freeze should they gain power in May's general election. There is no doubt that the very threat of such a policy has caused companies to increase their forward hedging books, particularly at SSE which implemented its own energy price freeze. This has meant that the fall in gas prices seen in the second half of 2014 and early 2015 has not led to as great a reduction in tariffs as otherwise might have been the case. Labour has hastily reformulated its policy as a "price cap" rather than a "price freeze". Should they not wish to expose their supply businesses to the risk of bankruptcy, energy suppliers could only live with a price cap policy if they could offset adverse commodity risks through complex and expensive derivatives. Again this would add to the overall costs of energy supply, and would inevitably mean higher tariffs overall. Amidst the political positioning, the Competition and Markets Authority is investigating the industry and should report preliminary findings shortly after the election. More importantly for PEWT, the completion of the electricity distribution and water reviews, to be implemented in 2015, has removed two elements of uncertainty. Together with the electricity and gas transmission reviews, and gas distribution reviews in 2013, mean that the UK's regulated utilities now have tariff certainty through to at least 2020, taking them to the other side of the next Government and reducing the scope for politically induced volatility. We discussed last year that we had taken the decision in late 2013 to sell the holding in Centrica but to retain SSE, which remains a substantial investment. This has proved to be a sound decision with SSE's shares rising by 18.4% in 2014, whereas Centrica's shares fell by 19.8%. National Grid performed well as the market reacted to the visibility of its earnings stream and the fact it sits apart from the political debate. Its shares gained 16.5% during the year. United States US Utilities were a standout performer during 2014, the S&P 500 Utilities Index gaining 24.3% during the year, although it is difficult to point to any fundamental reason why this should have been the case. In fact the majority of this gain came in the final third of the year, and we believe was more an investor reaction to tightening monetary policy than to any investor reassessment of the fundamental attractions of the sector. PEWT's US investments performed well, although we continue to retain a relative underweight position on valuation grounds. Europe PEWT's Continental European exposure remained focused on Italian utilities where we feel the value on offer outweighs the difficult macro situation. This is in contrast to France, Germany, and Spain, where valuations look stretched and the investing environment is difficult. Modest gains were made on these investments during the year, with the smaller municipal utilities out-performing the larger companies. Those investments we do hold are almost exclusively regulated in nature, the Italian regulator having a reputation for a sensible and pragmatic regulatory approach. Although Paris listed, our segmental analysis treats GDF Suez as "Global" given its extensive global operations. Despite continued problems in its Belgian nuclear business, and relatively high exposure to poorly performing Brazil, GDF managed to record a creditable 13.7% share price gain in the year. Currency PEWT was unhedged through 2014, which hurt performance in the first half as Sterling gained on the US Dollar, but was a positive when this situation reversed in the second half. Sterling had started the year at $1.656, gained 3.3% during the first half, before losing 8.9% in the second half to close the year at $1.558. Sterling was however strong against the Euro, the Euro losing almost 7% against Sterling over 2014, and also the Brazilian real, which lost almost 6% against Sterling. Balance sheet The gearing of the Ordinary Shares to the market has again fallen as assets have risen, falling to 2.32x at December 2014 from 2.46x at 31 December 2013. For the same reason the cover on the ZDP Shares, based on final redemption value, improved to 1.61x from 1.42x at 31 December 2013. Outlook 2014 was a relatively tough year; currency swings were rapid and equity volatility increased as we moved through the year. Our instincts are, as ever, to select companies which we expect to perform well irrespective of short term swings in commodities, interest rates, or other decisions by central banks. Very often this leads us to favour regulated utilities rather than unregulated utilities, particularly in developed markets. However, the Company does hold unregulated power generation stocks operating in China and India. Conventional wisdom might suggest that such investments sit towards the more risky end of the investment spectrum. However, as we have shown above, for specific reasons these companies have been excellent performers in 2014, and we believe that conditions should remain favourable for these companies in 2015. James Smith Claire Long Premier Fund Managers Limited 24 February 2015 INDEX RETURNS, GBP ADJUSTED , TOTAL RETURN INCLUDING DIVIDENDS Graphic removed GEOGRAPHIC ALLOCATION 2014 Graphic removed SECTOR ALLOCATION 2014 Graphic removed MARKET CAP DISTRIBUTION 2014 Graphic removed PORTFOLIO CONCENTRATION 2014 Graphic removed Twenty Largest Holdings at 31 December 2014 Value % total Company Activity Country Â£000 investments 2014 2013 OPG Power Multi Utility India 7,401 9.6 1 (1) Ventures Renewable Energy Renewable Energy UK 4,666 6.0 2 (19) Generation China Power Intl Electricity Generation China 3,903 5.0 3 (16) Huaneng Power Electricity Generation China 3,460 4.5 4 - Intl Fortune Oil Gas Transmission China 2,722 3.5 5 (8) Ecofin Water & Investment Company UK 2,625 3.4 6 (6) Power * GDF Suez Multi Utility France 2,563 3.3 7 (9) Enersis Electricity Integrated Chile 2,475 3.2 8 (11) China Everbright Water & Waste China 2,434 3.2 9 (2) Intl SSE Multi Utility UK 2,336 3.0 10 (7) Qatar Electricity Multi Utility Qatar 2,312 3.0 11 (13) and Water First Trust MLP & Multi Utility USA 2,211 2.9 12 - Energy EDP - Energias Do Electricity Generation Brazil 2,176 2.8 13 - Brasil & Transmission Tenaga Nasional Electricity Generation Malaysia 2,101 2.7 14 (10) National Grid Electricity & Gas UK 2,019 2.6 15 (5) Transmission Greenko Group Renewable Energy India 1,734 2.2 16 - Snam Gas Transmission Italy 1,730 2.2 17 (14) Nextera Energy Electricity Generation USA 1,704 2.2 18 (20) China Suntien Renewable Energy China 1,680 2.1 19 (3) Green Energy Huaneng Renewable Energy China 1,647 2.1 20 (15) Renewables 53,899 69.5% Other investments 23,487 30.5% Total investments 77,386 100.0% * Holding in convertible bonds Review of Top Ten Holdings at 31 December 2014 1. OPG Power Ventures Market cap Â£325m www.opgpower.com OPG is a London listed developer of small to medium sized power stations in the southern Indian state of Tamil Nadu, and also the north-western state of Gujarat. Although 2014 did not see the commissioning of any new units, the company reported excellent financial results throughout the year as a result of the capacity brought online during 2013. 2015 will see an almost trebling of capacity as they complete their current construction projects. Continued coal price weakness, a chronic Indian power shortage, and a new reform minded government proved a sound backdrop for OPG in the year, its shares gaining 71.6%. 2. Renewable Energy Generation Market cap Â£67m www.renewableenergygeneration.co.uk Renewable Energy Generation ("REG") is a developer and owner of wind farms and also electricity generation from recycled cooking oil. 2014 was a successful year for REG, as they began to win planning permissions following several years of effort preparing applications. Consents for over 30 MW of new wind capacity were received in the year, although 8 MW of this was subsequently called in by the Secretary of State for Communities for further consideration. In addition REG sold 18 MW of completed projects for an excellent price, and built their first large scale cooking oil generation facility. Despite this, REG's shares fell by 9.1% during the year. 3.â€‚China Power International Development Market cap Â£2.3bn www.chinapower.hk China Power International ("CPI") is an electricity generator utilising both thermal coal and also hydro technology, profits being split approximately equally between both. The company reported excellent results throughout 2014, with 2013's earnings almost doubling, followed by a further 15% increase in the first half of 2014 despite lower rainfall weighing on the hydro power business. CPI, like other Chinese power companies, is benefiting from the surplus of coal in China, which when set against a relatively static wholesale electricity tariff, has had a beneficial effect on margins. CPI's shares gained 42.4% during 2014. 4. Huaneng Power International Market cap Â£12.5bn www.hpi.com.cn Huaneng Power is primarily a Chinese coal fired power generator, although it has recently been building up a substantial renewables business. 2014 saw the company report excellent 2013 results, with a doubling of earnings, followed by growth of over 20% in the first half of 2014. As China's economy slows, the Chinese coal surplus will continue to weigh on coal prices and form a positive backdrop for the generation companies. Huaneng is one of the world's largest power companies, its output of some 300 TWh per year being on a par with the electricity demand for the entire United Kingdom. Huaneng's shares gained 49.5% during 2014. 5. Fortune Oil Market cap Â£247m www.fortune-oil.com Fortune Oil ("FTO") is a UK listed holding company with interests in Chinese gas distribution, aviation refuelling, and oil terminal infrastructure. The majority of its value is represented by its holding in China Gas Holdings Limited ("CGH"), a Hong Kong listed gas distribution company operating in mainland China. 2014 saw FTO's shares performing poorly until an offer to take the company private was received towards the end of the year from FTO's major shareholding group. In the event the offer is approved, PEWT will receive Â£2.8 million in March 2015, being a 43% gain on book cost. Should FTO subsequently realise its stake in CGH in the 12 months following the completion of the FTO offer, further consideration of up to 50% of the offer price could become payable. 6. Ecofin Water & Power Opportunities Â£80m 6% Convertible Loan Note www.ecofin.co.uk Ecofin is a UK listed investment trust that invests in both listed and unlisted stocks in the global utility and energy sectors. North American exposure, including Lonestar resources, its shale gas and liquids business in Texas, remains the largest of the trust's exposures. Ecofin's portfolio has relatively little overlap with PEWT's. The Convertible Loan Notes are well covered by assets, and have a conversion price of 172.64p with a maturity of July 2016. Ecofin's ordinary shares closed 2014 with a NAV of 189.22p, a gain of 12.2% in the year, and being above the Loan Notes' conversion price. 7. GDF Suez Market cap Â£35.6bn www.gdfsuez.com GDF is a French multinational gas and electric utility company with operations in almost 70 countries. It is the largest independent power producer in the world and has almost 150,000 employees worldwide. 2014 was a relatively difficult year for the company with the shutdown of two nuclear reactors in Belgium pending safety related repairs and modifications, mild European winter weather reducing demand in the early part of the year, and a continuing severe drought in Brazil where GDF owns several hydroelectric dams. Having said this, the company has made strides over recent years to diversify away from Europe and towards higher growth locations, and has also now completed a substantial disposal programme aimed at strengthening its balance sheet. GDF's shares gained 13.7% during 2014. 8. Enersis Market cap: Â£10.3bn www.enersis.cl Enersis is one of South America's largest electricity companies. It is diversified geographically, having operations in Colombia, Chile, Brazil, Peru and Argentina, the latter being a relatively small part of the whole. The company generates electricity using a mixture of thermal and hydro technology, and also owns regulated electricity distribution businesses. In 2014 Enersis recorded excellent results in its Colombian and Peruvian electricity generation businesses, offset to an extent by the continued drought in Brazil with reduced hydro generation there. Enersis' shares gained 26.1% during 2014, although it should be noted that the Chilean Peso lost 8.5% of its value against Sterling in the year, so not all of the share price gain translated into a gain for PEWT. 9. China Everbright International Market cap Â£4.4bn www.ebchinaintl.com China Everbright International ("CEI") is a leading waste to energy and waste water treatment company operating in mainland China. The company has seen strong and consistent business growth over several years as the Chinese Government prioritises the proper handling and disposal of waste. 2013 results continued the trend with new projects driving an increase in waste volumes of 19.2% and a consequent improvement in earnings of 17.9%. Earnings increased by a further 23.3% in the first half of 2014 following further expansion. CEI's share price increased by 11.2% during 2014, having increased by 164.8% in 2013. 10. SSE PLC Market cap Â£16.2bn www.sse.com SSE is involved in the generation, transmission and supply of electricity, and the production, storage and supply of gas, to over 9 million customers. Almost 60% of its earnings base derives from regulated electricity and gas networks. While recent results have shown that competitive UK utility activities such as electricity generation and supply have been under pressure; SSE has managed to offset much of this through strong growth in regulated network activities. Energy supply has become a politically sensitive business in the UK since mid 2013, however in the financial year to March 2014, SSE derived only 17% of its operating profit from this activity, and is regarded as having a leading customer service position. SSE's shares gained 18.4% during 2014. Directors Geoffrey Burns - Chairman Geoffrey Burns has worked in the investment fund industry for over thirty years. From 1997 to 2000 he was a director of and head of investment trusts at Murray Johnstone Ltd. Mr Burns is an adviser to a number of government and multilateral agencies who make investments in private equity funds in emerging markets including the Asian Development Bank. Mr Burns is a director of the Swiss Investment Fund for Emerging Markets AG and Chairman of City Natural Resources High Yield Trust PLC. Mr Burns was appointed as a non-executive director of the Company on 12 September 2003 and was appointed Chairman on 26 April 2005. Ian Graham - Chairman of the Audit Committee Ian Graham has over twenty years' experience as an investment analyst, more than half of which were spent covering utilities, having worked at Scrimgeour Kemp-Gee, Simon & Coates, Nat West Securities and Merrill Lynch until 2001. Mr Graham was appointed as a non-executive director of the Company on 12 September 2003 and was appointed the Chairman of the Audit Committee on 1 August 2012. Michael Wigley Michael Wigley is a director of The Conygar Investment Company plc. He was formerly a director of Matheson Investment Ltd and a non-executive director of Development Securities PLC. He was deputy chairman of Legg Mason Investors International Utilities Investment Trust, the predecessor company. Mr Wigley was appointed as a non-executive director of the Company on 12 September 2003. Charles Wilkinson Charles Wilkinson is a solicitor and a resident of Guernsey. Until March 2005 he was a partner of Lawrence Graham LLP specialising in investment trusts and funds. He is a non-executive director of Landore Resources Ltd, which is quoted on the AIM Market of the London Stock Exchange and of Doric Nimrod Air One Ltd, Doric Nimrod Air Two Ltd and Doric Nimrod Air Three Ltd, all three of these are listed on the Specialist Funds Market of the London Stock Exchange. Mr Wilkinson was appointed as a non-executive director of the Company on 23 February 2011. Investment Managers James Smith James joined Premier in June 2012, after spending fourteen years at Utilico, specialising in the global utilities, transportation infrastructure, and renewable energy sectors. During this time he gained extensive experience in both developed and emerging markets. He was previously a director at Renewable Energy Holdings PLC and Indian Energy Ltd. James is a Chartered Accountant and Barrister. Claire Long Claire joined Premier in December 2008. Previously she ran a UK smaller companies fund at Rothschild Asset Management after spending four years at Foreign and Colonial where she covered a range of markets, including the UK and Japan. She is an Associate of the CFA UK. Strategic Report for the year ended 31 December 2014 The Directors submit to the shareholders their Strategic Report, Director's Report and the Audited Financial Statements of the Company for the year ended 31 December 2014. Business Model and Strategy Business and tax status The Company is an investment trust and its principal activity is portfolio investment. In the opinion of the Directors, the Company has conducted its affairs during the period under review, and subsequently, so as to maintain its status as an investment trust for the purposes of Chapter 4 of Part 24 of the Corporation Tax Act 2010. The Company has obtained written approval as an investment trust from HM Revenue & Customs for all accounting periods up to the year ended 31 December 2012, and has made a successful application under Regulation 5 of the Investment Trust (Approved Company) (Tax) Regulations 2011 for investment trust status to apply to all accounting periods starting on or after 1 January 2012 subject to the Company continuing to meet the eligibility conditions contained in Section 1158 of the Corporation Tax Act 2010 and the ongoing requirements outlined in Chapter 3 of Part 2 of the Regulations. The Company is an investment company as defined in Section 833 of the Companies Act 2006. The Company is not a close company for taxation purposes. The Company's status as an investment trust allows it to obtain an exemption from paying taxes on the profits made from the sale of its investments. Investment trusts offer a number of other advantages for investors, including access to investment opportunities that might not be open to private investors and to professional stock selection skills at low cost. Following the incorporation of the Company's wholly-owned subsidiary, PEWT Securities PLC, the Company is now required to prepare consolidated accounts under IFRS (previously the accounts were prepared under UK GAAP). Investment objectives The Company's investment objectives are to achieve a high income from, 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 equity and equity related securities of companies operating primarily in the energy and water sectors, as well as other infrastructure investments. Reorganisation and extension of life The Company was launched in 2003 with a planned winding-up date in 2010. In 2009 the Company's shareholders approved proposals, amongst other things, to extend the life of the Company to 31 December 2015. Under the Company's then structure the entitlement of the holders of Zero Dividend Preference Shares ("ZDP Shares") to receive their final capital entitlement of 221.78p in cash per ZDP Share on the ZDP share repayment date could only be satisfied by way of a winding up of the Company. The Company's articles of association ("Articles") required the Board to put forward a resolution to the Company's shareholders on 31 December 2015 that the Company be wound up voluntarily. In June 2012, the Company's Manager recruited and appointed James Smith to take over management of the Company's portfolio, assisted by co-manager Claire Long. Following a review and consequent changes to the Company's investment portfolio undertaken by Mr Smith, performance has been strong with significant growth in gross assets, a consequential improvement in cover on the ZDP Shares and a significant increase in net asset value per ordinary share. In the light of the strong performance of the Company, and after consulting shareholders the Board put forward proposals on 25 July 2014 to the Company's Shareholders by which the holders of ZDP Shares would continue to be entitled to receive their final capital entitlement on 31 December 2015 but the Company would continue without having to be wound up. Specifically the Proposals envisaged: â€¢ replacing the ZDP Shares with New ZDP Shares issued by a newly incorporated subsidiary of the Company, PEWT Securities PLC; â€¢ the rights of the New ZDP Shares being substantially similar to the rights attached to the ZDP Shares; â€¢ amending the Articles to allow the Company to continue without a fixed life whilst including a provision to allow holders of Ordinary Shares an opportunity to vote on the continued existence of the Company every five years (from 2020); and â€¢ the renewal of the Board's authority to issue new Ordinary Shares in the Company on a non-pre-emptive basis, subject to certain parameters, to replace the authorities granted by Shareholders at the Company's annual general meeting held in May 2014. The resolutions to implement the Proposals were duly passed at a Court Meeting, ZDP Class Meeting, Ordinary Class Meeting and General Meeting ("the Meetings"), all on 27 August 2014. On 16 September 2014 the Company announced that the Court had approved the Scheme and Reduction of Capital and had issued Court Orders confirming the same. The Scheme and Reduction of Capital became effective on 17 September 2014. Issue of Ordinary and Zero Dividend Preference Shares The Company announced that it had allotted and issued, on 17 December 2014, by way of a tap issue in response to market demand, 310,000 New Ordinary Shares of 1 pence each par value for cash, at a price of 178.25 pence per share (the "New Shares"). The New Shares ranked pari passu with the existing Ordinary Shares. On the same day the Company's subsidiary, PEWT Securities PLC announced that it had allotted and issued, by way of a tap issue in response to market demand, 384,681 New Zero Dividend Preference Shares of 1 pence each par value for cash, at a price of 214 pence per share (the "New Shares"), a premium to the current net entitlement. The New Shares ranked pari passu with the existing Zero Dividend Preferences Shares. The above shares were issued pursuant to a resolution approved at a General Meeting of Premier Energy and Water Trust PLC held on 27 August 2014 which permitted the allotment provided that (i) such issue is simultaneous with an issue of New Zero Dividend Preference Shares by PEWT Securities PLC ("New ZDP Shares") and (ii) the combined effect of the issue of Ordinary Shares at a discount to the prevailing net asset value per Ordinary Share and the issue of New ZDP Shares at a premium to net asset value per New ZDP Share is that the net asset value per Ordinary Share is thereby increased. Following the issue of the Ordinary Shares, the issued share capital consists of 17,378,480 Ordinary Shares. Alternative Investment Fund Management Directive ("AIFMD") The Company was entered in the register of small registered UK AIFMs with effect from 23 June 2014, under the Alternative Investment Fund Managers Regulations 2013 ("AIFMRs"). On 30 December 2014 the Company advised the Financial Conduct Authority that the value of its assets under management had exceeded the 100 million Euro threshold for the first time on 23 December 2014 and therefore it was the intention that the Company would be appointing Premier Portfolio Managers Limited ("PPM") as its Alternative Investment Fund Manager ("AIFM") within 30 days commencing 23 December 2014. On 20 January 2015 the Company announced that it had appointed PPM to act as its Alternative Investment Fund Manager ("AIFM") pursuant to an Alternative Investment Fund Management Agreement entered into by the Company and the AIFM on 20 January 2015 (the "AIFM Agreement"). PPM has been approved as an AIFM by the UK's Financial Conduct Authority. The investment management agreement entered into by the Company and Premier Fund Managers Limited ("PFM") on 3 August 2011 (the "IMA") has been terminated although PPM has delegated the portfolio management of the Company's portfolio of assets to PFM. The AIFM Agreement is based on the IMA and differs to the extent necessary to ensure that the relationship between the Company and PPM is compliant with the requirements of AIFMD. The fees payable to PPM for acting as the Investment Manager and the notice period under the AIFM Agreement are unchanged from the IMA. PPM will receive a fixed fee of Â£20,000 per annum in respect of its appointment as the AIFM. The Company and PPM have also entered into a depositary agreement with Northern Trust Global Services Limited ("NT") pursuant to which NT has been appointed as the Company's depositary for the purposes of AIFMD. In accordance with AIFMD regulations the Company has published a pre investment disclosure document which can be found on the Company's website at https://www.premierfunds.co.uk/media/59009/premier-energy-and-water-trust-pre-investment-disclosure-document-aifmd-.pdf Foreign Account Tax Compliance Act ("FATCA") The Company has registered with the US Internal Revenue Service as a Reporting Financial Institution under the FATCA legislation and has been issued with a Global Intermediary Identification Number ("GIIN") which is W6S9MG.00000.LE.826. Investment policy The policy of the Directors is that, in normal market conditions, the portfolio of the Company should consist primarily of a diversified portfolio of equity and equity-related securities of companies operating in the energy and water sectors, as well as other infrastructure investments. There are no restrictions on the proportion of the portfolio of the Company which may be invested in any one geographical area or asset class but no more than 15% of the Company's assets, at the time of acquisition, will be invested in a single security. The Company may also invest up to 15% of its gross assets in investment companies provided they themselves invest in utilities and infrastructure. However, not more than 10% of the Company's gross assets may be invested in other UK listed closed-ended investment funds unless such funds themselves have published investment policies to invest not more than 15% of their total assets in other UK listed closed-ended investment funds (provided they themselves invest in utilities and infrastructure). The Company may invest up to 15% of its gross assets in unquoted securities. There are no borrowings under financial instruments or the equivalent of financial instruments but investors should be aware of the gearing effect of the ZDP Shares within the capital structure. The Company's policy is not to employ any gearing through long-term bank borrowing. The Company can, however, employ gearing through the issue of ZDP Shares. The Company will manage and invest its assets in accordance with its published investment policy. Any material change to this policy will only be made with the approval of Shareholders by ordinary resolution unless otherwise permitted by the Listing Rules. Investment Restrictions The Company will not: (i) invest more than 10%, in aggregate, of the value of its gross assets at the time the investment is made in other listed closed-ended funds, provided that this restriction does not apply to investments in any such closed-ended funds which themselves have stated investment policies to invest no more than 15% of their total assets in other listed closed-ended funds; (ii) invest more than 15% of its gross assets in listed closed-ended funds; (iii) invest more than 20% (calculated at the time of any relevant investment) of its gross assets in other collective investment undertakings (open-ended or closed-ended); (iv) expose more than 20% of its gross assets to the creditworthiness or solvency of any one counterparty (including the counterparty's subsidiaries or affiliates); (v) invest in physical commodities; (vi) cross-finance between the businesses forming part of its investment portfolio including provision of undertakings or security for borrowings by such businesses for the benefit of another; (vii) operate common treasury functions as between the Company and an investee company; or (viii) conduct any significant trading activity. In addition to the above restriction on investment in a single company the Board seeks to achieve a spread of risk in the portfolio through monitoring the country and sector weightings of the portfolio. There will be a minimum of twenty stocks in the portfolio. The Company is geared through zero dividend preference shares but does not use other gearing on a long-term basis. Return per share - basic Total return per Ordinary Share is based on the net total return on ordinary activities after taxation of Â£7,264,000 (31 December 2013: Â£11,358,000). These calculations are based on the weighted average number of 17,080,370 Ordinary Shares in issue during the year to 31 December 2014 (2013: 17,068,480 number of Ordinary Shares). The return per Ordinary Share can be further analysed between revenue and capital as below: Year ended 31 Year ended 31 Year ended 31 Year ended 31 December 2014 December 2014 December 2013 December 2013 Pence per Â£000 Pence per Â£000 Ordinary Share Ordinary Share Net revenue 10.11p 1,727 11.25p 1,921 return Net capital 32.42p 5,537 55.29p 9,437 return Net total 42.53p 7,264 66.54p 11,358 return The Company does not have any dilutive securities. Dividends During the year the following dividends were paid: Payment date Dividend pence (net per share) Fourth Interim for the 31 March 2014 4.50p year ended 31 December 2013 Additional interim 31 March 2014 0.75p dividend for the year ended 31 December 2013 First Interim for the year 30 June 2014 1.90p ended 31 December 2014 Additional interim 30 June 2014 0.75p dividend for the year ended 31 December 2014 Second Interim for the 30 September 2014 1.90p year ended 31 December 2014 Additional interim 30 September 2014 0.75p dividend for the year ended 31 December 2014 Third Interim for the year 31 December 2014 1.90p ended 31 December 2014 Additional interim 31 December 2014 0.75p dividend for the year ended 31 December 2014 Subsequent to the year end but in respect of the year ended 31 December 2014 the Directors have declared a fourth interim dividend of 4.70p and an additional interim dividend of 0.75p, payable on 31 March 2015 to members on the register at the close of business on 6 March 2015. The shares will be marked ex-dividend on 5 March 2015. This dividend relates to the year ended 31 December 2014 but in accordance with the International Financial Reporting Standards, it is recognised in the period in which it is paid. Net asset value The net asset value per Ordinary Share, including revenue reserve, at 31 December 2014 was 196.23pâ€ (31 December 2013: 167.55pâ€ ). The net asset value of a Zero Dividend Preference Share at 31 December 2014 was 208.18pâ€ (31 December 2013: 195.42pâ€ ). â€ Net asset values calculated in accordance with Articles of Association (see note 18 on pages 52 to 53). Principal risks associated with the Company (also see note 20 on pages 53 to 60) Structure of the Company and gearing The Company is a split-capital investment trust with two separate classes of share, each with different characteristics. Returns generated by the Company's underlying portfolio are apportioned in accordance with the respective entitlements of each class of share. As the Ordinary Shares and Zero Dividend Preference Shares have different rights both during the life of the Company and on a winding-up, shareholders and prospective investors are advised to give careful consideration to their choice of class or classes of share (see page 3 for details of these entitlements). The Company employs no gearing in the form of bank loans. The Ordinary Shares are geared by the entitlement of the prior ranking Zero Dividend Preference Shares issued by PEWT Securities PLC, its subsidiary. Dividend levels Dividends paid on the Company's Ordinary Shares rely on receipt of dividends and interest payments from the securities in which the Company invests. The Board monitors the income of the Company and reviews an income forecast for the current financial year at its regular quarterly Board meetings. Currency risk The Company invests in overseas securities and its assets are therefore subject to currency exchange rate fluctuations. The Company may hedge against foreign currency movements affecting the value of the investment portfolio where adverse movements are anticipated but otherwise takes account of this risk when making investment decisions. Liquidity risk The Company invests principally in highly liquid securities listed on recognised stock exchanges. The Company may invest up to 15% of its gross assets in unquoted securities. These securities may have limited liquidity and be difficult to realise. The investment limits set are monitored at each Board meeting. Market price risk Since the Company invests in financial instruments, market price risk is inherent in these investments. In order to minimise this risk, a detailed analysis of the risk/reward relationship of each investee company is undertaken by the Investment Manager prior to making investments. Discount volatility Being a closed-ended company, the Company's shares may trade at a discount to their net asset value. The magnitude of this discount fluctuates daily and can vary significantly. Thus, for a given period of time, it is possible that the market price could decrease despite an increase in the net asset value of the Company's shares. The Directors review the discount levels regularly. The Investment Manager actively communicates with the Company's major shareholders and potential new investors, with the aim of managing discount levels. Operational Like most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent on the control systems of the Investment Manager and the Company's other service providers. The security, for example, of the Company's assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems. The Board reviews, at least annually, the performance of all the Company's third party service providers, as well as reviewing service providers' anti-bribery and corruption policies to address the provision of the Bribery Act 2010. The Board and Audit Committee regularly review statements on internal controls and procedures provided by Premier Fund Managers Ltd and other third parties and also subject the books and records of the Company to an annual external audit. Accounting, legal and regulatory In order to qualify as an investment trust, the Company must comply with Section 1158 of the Corporation Tax Act 2010. A breach of Section 1158 could lead to the Company being subject to capital gains tax on gains within the Company's portfolio. Section 1158 qualification criteria are continually monitored by the Investment Manager and the results reported to the Board at its regular meetings. The Company must also comply with the Companies Act and the UKLA Listing Rules. The Board relies on the services of the administrator, Premier Asset Management Limited and its professional advisers to ensure compliance with the Companies Act and the UKLA Listing Rules. The Company is also required to comply with the Alternative Investment Fund Management Directive ("AIFMD") and was entered in to the register of small registered UK AIFA's with effect from 23 June 2014. On 20 January 2015 however, the Company announced that it had appointed Premier Portfolio Managers Limited ("PPM") as its Alternative Investment Fund Manager and PPM is responsible for ensuring compliance with AIFMD (see page 17). Political and regulatory risk The Company invests in regulated businesses which may be subject to political or regulatory interference, and may be required to set pricing levels, or take investment decisions, for political rather than commercial reasons. In some less developed economies, including those in which the Company invests, there are increased political and economic risks as compared to more developed economies. These risks include the possibility of various forms of punitive government intervention together with reduced levels of regulation, higher brokerage commissions, less reliable settlement and custody practices, higher market volatility and less reliable financial reporting. Such factors are out of the control of the Board and the Investment Manager, the Board monitors the performance of its investments at each Board meeting. Key performance indicators The Company's Directors meet regularly to review the performance of the Company and its shares. The key performance indicators ("KPIs") used to measure the progress and performance of the Company over time are as follows: 1) The performance against a set of reference points. The Investment Managers' performance is not assessed against a formal benchmark but rather against a set of reference points which are more general in nature and intended to be representative of the broad spread of assets in which the portfolio invests. These references include the FTSE All-World Utilities Total Return Index, FTSE All-World Total Return Index and FTSE All-Share Total Return Index (see Company highlights on page 4). 2) The performance against the peer group. The assessment of the Investment Managers' performance against companies which invest in similar, but not necessarily the same, securities allows the Board to evaluate the effectiveness of the Company's investment strategy. 3) The performance of the Company at the net asset level. This shows how the assets attributable to shareholders as a whole have performed. 4) The performance of the individual share classes, both in terms of share price total return (i.e. accounting for dividends received) and in terms of net asset value total return. The share price performance is the measure of the return that shareholders have actually received and will reflect the impact of widening or narrowing of discounts to NAV (see graphs on page 5). 5) Ongoing charges. The annualised ongoing charges figure for the year was 1.5% (2013: 1.4%). This figure, which has been prepared in accordance with the recommended methodology of the Association of Investment Companies represents the annual percentage reduction in shareholder returns as a result of recurring operational expenses excluding performance fee. No performance fee is payable in respect of the year ended 31 December 2014 (2013: no performance fee was paid). The Board reviews each year an analysis of the Company's ongoing charges figure and a comparison with its peers. All of these areas were examined throughout the year and the table below summarises the results: As at or year to: As at or year to: 31 December 31 December 2014 2013 % change Total Return Performance Total Assets Total 14.7% 24.5% Returnâ€‰1 FTSE All-World 20.5% 9.0% Utilities Index Total Returnâ€‰2 (GBP) Ordinary Share Performance Net Asset Value per 196.23p 167.55p 17.1% Ordinary Share (cum income)â€‰4 Revenue return per 10.11p 11.25p (10.1%) Ordinary Share Net dividends 13.40p 12.25p 9.4% declared per Ordinary Share Discount (1.9%) (6.1%) Zero Dividend Preference Share Performance Premium 3.3% 5.4% Ongoing chargesâ€‰3 1.5% 1.4% 1 Based on opening and closing total assets plus dividends marked "ex-dividend" within the period. Source: 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 year. 4 Articles of Association basis. Future prospects The Board's main focus is the achievement of a high income from the portfolio together with the generation of long-term capital growth. The future of the Company is dependent upon the success of the investment strategy. The investment outlook is discussed in both the Chairman's statement on page 7 and the Investment Managers' report on page 11. Board diversity The Nomination Committee considers diversity, including the balance of skills, knowledge, diversity (including gender) and experience, amongst other factors when reviewing the composition of the Board and appointing new directors, but does not consider it appropriate to establish targets or quotas in this regard. The Board comprises four non-executive directors all of whom are male. The Company has no employees. Social, community and human rights The Company does not have any specific policies on social, community or human rights issues as it is an investment company which does not have any physical assets, property, employees or operations of its own. For and on behalf of the Board Ian Graham Director 24 February 2015 Directors The present Directors are listed below and on page 15. They are all non-executive and have served throughout the year, the Board consists of four males: Geoffrey Burns - Chairman Ian Graham - Chairman of the Audit Committee Michael Wigley Charles Wilkinson None of the Directors, nor any persons connected with them, had a material interest in any of the Company's transactions, arrangements or agreements during the year. None of the Directors has, or has had, any interest in any transaction which is, or was, unusual in its nature or conditions or significant to the business of the Company, and which was effected by the Company during the current financial year. At the date of this report, there are no outstanding loans or guarantees between the Company and any Director. Conflicts of interest The Board has put in place a framework for Directors to report conflicts of interest or potential conflicts of interest which it believes has worked effectively during the year. All Directors are required to notify the Company Secretary of any situations where they consider that they have a direct or indirect interest, or duty that would conflict, or possibly conflict, with the interests of the Company. No such situations however, have been identified. There remains a continuing obligation to notify the Company Secretary of any new situation that may arise, or any change to a situation previously notified. It is the Board's intention to review all notified situations on a quarterly basis. Corporate governance The statement of Corporate Governance, as shown on pages 26 to 28, is incorporated by cross reference into this report. Bribery prevention policy The provision of bribes of any nature to third parties in order to gain a commercial advantage is prohibited and is a criminal offence. The Board has a zero tolerance policy towards bribery and a commitment to carry out business fairly, honestly and openly. The Board takes its responsibility to prevent bribery by the Company's Manager on its behalf very seriously and the Investment Manager has anti-bribery policies and procedures in place. The Company's other key service providers have also been contacted in respect of their anti-bribery policies. Global greenhouse gas emissions for the year ended 31 December 2014 The Company has no greenhouse gas emissions to report from the operations of the Company, nor does it have responsibility for any other emission producing sources under the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013. Substantial shareholdings As at the date of this report the Company had been notified of the following substantial interests in the Ordinary share capital of the Company. Number of % of total Number of % of total shares at 23 voting rights shares at 31 voting rights February 2015â€ December 2014 Premier Fund 3,999,796 23.0 3,999,796 23.0 Managers Limited* Philip J Milton 1,129,894 6.5 1,455,787 8.4 & Company Plc â€ The latest practicable date prior to the publication of this report. * This includes 2,411,579 Ordinary Shares that are held in the ISA scheme that is administered by Premier Fund Managers Limited on behalf of individual shareholders. Going concern The Directors believe that having considered the Company's investment objectives (shown on page 1) risk management policies and procedures (pages 53 to 60), nature of portfolio and income and expense 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 that the use of the going concern basis is appropriate. Performance An outline of the performance, market background, investment activity and portfolio strategy during the period under review, as well as the investment outlook, is provided in the Chairman's Statement and Investment Managers' report. Proxy voting as an institutional investor Responsibility for actively monitoring the activities of companies in which the Company is invested has been delegated by the Board to the Investment Manager. The Investment Manager is responsible for reviewing, on a regular basis, the annual reports, circulars and other publications produced by the investee companies. The Investment Manager, in the absence of explicit instructions from the Board, is empowered to exercise discretion in the use of the Company's voting rights. Wherever practicable, the Investment Managers' policy is to vote all shares held by the Company. Annual General Meeting THIS SECTION IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action you should take or about the contents of this document, you should immediately consult an independent financial adviser authorised under the Financial Services and Markets Act 2000 (or in the case of recipients outside the United Kingdom, a stockbroker, bank manager, solicitor, accountant or other independent financial adviser). If you have sold or otherwise transferred all of your shares in Premier Energy and Water Trust PLC, please pass this document, together with the accompanying Form of Proxy, as soon as possible to the purchaser or transferee or to the stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. The notice of the Annual General Meeting sets out the ordinary business and special business to be conducted at the Meeting. The following explains the resolutions to be considered at the Meeting as special business. RESOLUTION 7, 8 and 9: Authority to allot shares At the Annual General Meeting, the Company is seeking approval from Shareholders to renew the Board's authority to issue new Ordinary Shares on a non-pre-emptive basis, subject to certain parameters. These authorities are intended to replace the authorities granted by Shareholders at the Company's General Meeting held in August 2014. Until the ZDP Repayment Date, any new issue of Ordinary Shares may be made in conjunction with a new issue of New ZDP Shares by the Company's subsidiary, PEWT Securities PLC, in such numbers so as to retain the prevailing ratio of Ordinary Shares and New ZDP Shares in issue and thereby maintain the level of gearing utilised by the Group. Where the Board considers it in the best interests of Shareholders to do so, Ordinary Shares and/or New ZDP Shares may be issued on other bases. PEWT Securities PLC has been incorporated with the necessary shareholder authorities to allow it to issue New ZDP Shares. Without the previous sanction of a special resolution of the holders of New ZDP Shares passed at a separate meeting of such holders, neither the Company nor PEWT Securities PLC shall issue any further shares which would rank in priority to, or pari passu with, the New ZDP Shares unless (i) the New ZDP Shares would have a Cover of not less than 1.5 times immediately following the issue of the new shares; or (ii) those New ZDP Shares in issue immediately thereafter would have a Cover of not less than the Cover of the New ZDP Shares in issue prior to the issue of new shares. The Board does not currently intend to issue an additional zero dividend preference share class prior to the ZDP Repayment Date. Pursuant to RESOLUTION 7 to be proposed at the Annual General Meeting, which will be proposed as an ordinary resolution, the Board is seeking a general power from Shareholders to allot new Ordinary Shares up to an aggregate nominal value of Â£17,068.40, representing approximately 10 per cent. of the issued Ordinary Share capital of the Company as at the date of this document. RESOLUTION 8 to be proposed at the Annual General Meeting, which will be proposed as an ordinary resolution, will, if passed, permit the Board to allot Ordinary Shares at a discount to the then prevailing Net Asset Value per Ordinary Share. The Board will only utilise this authority to issue new Ordinary Shares provided that the combined effect of the issue of both Ordinary Shares at a discount to Net Asset Value per Ordinary Share and the issue of New ZDP Shares at a premium to Net Asset Value per New ZDP Share is that the Net Asset Value per Ordinary Share is increased. RESOLUTION 9 to be proposed at the Annual General Meeting, which will be proposed as a special resolution, will, if passed, empower the Board to make allotments of Ordinary Shares for cash on a non-pre-emptive basis up to an aggregate nominal value of Â£17,378, representing approximately 10 per cent. of the issued Ordinary Share capital of the Company as at the date of this document. These authorities, if granted, will expire at the conclusion of the next Annual General Meeting of each of the Company. RESOLUTION 10: Purchase by the Company of its own shares At the Annual General Meeting held on 8 May 2014 a special resolution was passed, giving the Directors authority until the conclusion of the earlier of the 2015 Annual General Meeting and 7 November 2015, to make market purchases of up to a maximum of 2,558,565 Ordinary Shares and 3,174,937 Zero Dividend Preference Shares. During the year to 31 December 2014 no shares were purchased (during the year ended 31 December 2013 no shares were purchased). The Board proposes that the Company should be given renewed general authority to purchase Ordinary Shares in the market for cancellation in accordance with the Companies Act 2006 but subject to the provisos set out below. Resolution 10 of the AGM, which is a special resolution, is being proposed for this purpose. It is proposed that the Company be authorised to purchase on the London Stock Exchange up to 2,605,034 Ordinary Shares (representing 14.99% of the Company's issued share capital as at 23 February 2015) provided that: (a) Ordinary Shares will only be repurchased at a purchase price which is below the prevailing Net Asset Value per Ordinary Share and where the cover on the Zero Dividend Preference Shares (issued by PEWT Securities PLC) is 1.5 times or above and, as a consequence of the proposed repurchase, the cover on the Zero Dividend Preference Shares will not reduce to below 1.5 times (having taking account of any Zero Dividend Preference Shares to be purchased at or about the same time); and/or (b) Ordinary Shares and Zero Dividend Preference Shares (issued by PEWT Securities PLC) are only repurchased in the ratio of Ordinary Shares to Zero Dividend Preference Shares of 0.802:1; and/or (c) Zero Dividend Preference Shares (issued by PEWT Securities PLC) are purchased at a purchase price which is below their prevailing accrued capital entitlement (as at the business day immediately preceding the day on which the Zero Dividend Preference Share is purchased). Repurchases of shares will be made at the discretion of the Board within guidelines set from time to time by the Board and only when market conditions are considered by the Board to be appropriate and in accordance with the Listing Rules. Repurchases will only be made when they result in an increase in the fully diluted Net Asset Value per Ordinary Share. The Board remains committed to exploring methods by which shareholder value can be enhanced. The purchase for cancellation by the Company of its shares at a cost below the net asset value of those shares enhances the net asset value of the remaining shares. This additional demand for shares may reduce the discount at which the shares trade. Any shares repurchased by the Company will be cancelled and will not be held in treasury for resale. Under London Stock Exchange rules, the maximum price to be paid on any exercise of the authority in respect of Ordinary Shares must not exceed the higher of (i) 105% of the average of the middle market quotations for a share for the five business days immediately preceding the date of purchase and (ii) the higher of the price of the last independent trade and the highest current bid. Separately we have chosen to restrict our authority to purchase Zero Dividend Preference Shares (issued by PEWT Securities PLC) to a maximum price equivalent to their accrued capital entitlement at the time of purchase. The minimum price paid for an Ordinary Share or Zero Dividend Preference Share may not be below 1p per share. The authority to purchase shares will last until the Annual General Meeting of the Company in 2016, or 7 November 2016, whichever is the earlier. The authority may be renewed by shareholders at a General Meeting. Purchases will be funded either by using available cash resources or by selling investments. As the Zero Dividend Preference Shares are now issued by the Company's subsidiary, PEWT Securities PLC, the authority to make market purchases of those shares is dealt with by the subsidiary. Recommendation Your Board considers that the above resolutions are in the best interests of the Company and its members as a whole and are likely to promote the success of the Company for the benefit of its members as a whole. Accordingly, your Board unanimously recommends that shareholders should vote in favour of the resolutions as they intend to do in respect of their own beneficial shareholdings amounting to 258,816 Ordinary Shares. Companies Act 2006 Disclosures In accordance with Section 992 of the Companies Act 2006 the Directors disclose the following information: â€¢ the Company's capital structure and voting rights are summarised on page 3, and there are no restrictions on voting rights nor any agreement between holders of securities that result in restrictions on the transfer of securities or on voting rights; â€¢ there exist no securities carrying special rights with regard to the control of the Company; â€¢ details of the substantial shareholders in the Company are listed on page 22; â€¢ the Company does not have an employees' share scheme; â€¢ the rules concerning the appointment and replacement of Directors, amendment of the Articles of Association and powers to issue or buy back the Company's shares are contained in the Articles of Association of the Company and the Companies Act 2006; â€¢ there exist no agreements to which the Company is party that may affect its control following a takeover bid; and â€¢ there exist no agreements between the Company and its Directors providing for compensation for loss of office that may occur because of a takeover bid. Auditor Ernst & Young LLP have expressed their willingness to continue in office as Auditor and a resolution proposing their reappointment and to authorise the Board to determine their remuneration will be submitted at the Annual General Meeting. Financial statements On 25 July 2014 PEWT Securities PLC, a wholly-owned subsidiary, was incorporated. Therefore these financial statements have been prepared under International Financial Reporting Standards as adopted by the European Union ("IFRS") for groups of companies. Previous financial statements were prepared under UK GAAP. The Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's Auditor is unaware; and each Director has taken all the steps that they ought to have taken as Directors to make themselves aware of any relevant audit information and to establish that the Company's Auditor is aware of that information. By Order of the Board Ian Graham Director 24 February 2015 Statement of Corporate Governance Introduction The Board is accountable to the Company's shareholders for the governance of the Company's affairs and this statement describes how the principles of the Financial Reporting Council's UK Corporate Governance Code issued in 2012 ("the Code") have been applied to the affairs of the Company. In applying the principles of the Code, the Directors have also taken account of the Code of Corporate Governance published by the Association of Investment Companies ("the AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies ("the AIC Guide") issued in November 2014, which has established a framework of best practice specifically for the boards of investment trust companies. There is some overlap in the principles laid down by the two Codes and there are some areas where the AIC Code is more flexible for investment trust companies. Board of Directors The Board currently consists of four non-executive Directors all of whom are independent of the Investment Manager. Their biographies are set out on page 15. Collectively the Board has the requisite range of business and financial experience which enables it to provide clear and effective leadership and proper stewardship of the Company. The number of meetings of the Board, the Audit Committee and the Nomination Committee held during the financial year and the attendance of individual Directors are shown below: Board Audit Committee Nomination Committee Number of meetings 4 2 1 in the year Geoffrey Burns 4 2 1 Ian Graham 4 2 1 Michael Wigley 4 2 1 Charles Wilkinson 3 2 1 All of the Directors attended the Annual General Meeting held in April 2014. The Board deals with the Company's affairs, including the setting of gearing and investment policy parameters, the monitoring of gearing and investment policy and the review of investment performance. The Investment Manager takes decisions as to asset allocation and the purchase and sale of individual investments. The Board papers circulated before each meeting contain full information on the financial condition of the Company. Key representatives of the Investment Manager attend the Board meetings, enabling Directors to probe further or seek clarification on matters of concern. Matters specifically reserved for discussion by the full Board have been defined and a procedure adopted for the Directors to take independent professional advice if necessary at the Company's expense. The Chairman of the Company was independent of the Investment Manager at the time of his appointment as an independent non-executive Director and is deemed to be independent by the other Board members. A senior non-executive Director has not been identified as the Board is comprised entirely of non-executive Directors. In accordance with the Articles of Association, new Directors stand for election at the first Annual General Meeting following their appointment. The Articles require that one third of the Directors retire by rotation each year and seek re-election at the Annual General Meeting. In addition, all Directors are required to submit themselves for re-election at least every three years and will seek annual re-election if they have already served for more than nine years. Performance evaluation/re-election of Directors An appraisal process has been established in order to review the effectiveness of the Board, the Committees and individual Directors. This process involves the consideration by the Chairman and the Board of responses from individual Directors to a questionnaire which is completed on an annual basis. In addition, the other Directors meet collectively once a year to evaluate the performance of the Chairman. As a result of this appraisal process the Nomination Committee recommends the re-election of Mr Geoffrey Burns, Mr Michael Wigley and Mr Ian Graham. Committees The Board believes that the interests of shareholders in an investment trust company are best served by limiting the size of the Board such that all Directors are able to participate fully in all the activities of the Board. It is for this reason that the membership of the Audit and Nomination Committees is the same as that for the Board as a whole. Audit Committee Mr Ian Graham is the Chairman of the Audit Committee. The Audit Committee reviews audit matters within clearly-defined written terms of reference (copies of which are available upon request from the Company Secretary). In particular, the Committee shall review and challenge where necessary: â€¢ the consistency of, and any changes to, accounting policies both on a year on year basis and across the Company; â€¢ the methods used to account for significant or unusual transactions where different approaches are possible; â€¢ whether the Company has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor; â€¢ the clarity of disclosure in the Company's financial reports and the context in which statements are made; and â€¢ all material information presented with the financial statements, such as the Strategic Report and the Statement of Corporate Governance (insofar as it relates to the audit and risk management). As the Company has no employees, section C.3.4 of the Code, which deals with arrangements for staff to raise concerns in confidence about possible improprieties in respect of financial reporting or other matters, is not directly relevant to it. The Audit Committee has however, confirmed with the Investment Manager and the administrator that they do have "whistle blowing" policies in place for their staff. Nomination Committee Mr Burns is the Chairman of the Nomination Committee which operates within defined terms of reference available from the Company Secretary, which is responsible for the Board appraisal process, and reviews the Board's size and structure and is responsible for succession planning. The Board has due regard for the benefits of diversity in its membership and seeks to ensure that it's structure, size and composition, including the skills, knowledge, diversity (including gender) and experience of Directors, is sufficient for the effective direction and control of the Company. In particular, the Board believes that the Company benefits from a balance of Board members with different tenures. The Board has not set any measurable objectives in respect of this policy. The Nomination Committee meets at least annually and comprises all the non-executive directors of the Board. Remuneration Committee The Board as a whole considers Directors' remuneration and therefore has not appointed a separate remuneration committee. As the Company is an investment trust and all Directors are non-executive the Company is not required to comply with the Code in respect of executive Directors' remuneration. Directors' fees are detailed in the Directors' Remuneration Report on page 30. Risk management and internal control The UK Corporate Governance Code requires the Directors, at least annually, to review the effectiveness of the Company's system of risk management and internal control and to report to shareholders that they have done so. This encompasses a review of all controls, which the Board has identified as including business, financial, operational, compliance and risk management. The Directors are responsible for the Company's system of risk management and internal control which is designed to safeguard the Company's assets, maintain proper accounting records and ensure that financial information used within the business, or published, is reliable. However, such a system can only be designed to manage rather than eliminate the risk of failure to achieve business objectives and therefore can only provide reasonable, but not absolute, assurance against fraud, material misstatement or loss. The Board as a whole is primarily responsible for the monitoring and review of risks associated with investment matters and the Audit Committee is primarily responsible for other risks. As the Board has contractually delegated to other companies the investment management, the custodial services and the day-to-day accounting and company secretarial requirements, the Company relies significantly upon the system of risk management and internal controls operated by those companies. Therefore, the Directors have concluded that the Company should not establish its own internal audit function, but will review this decision annually. Investment management is performed by Premier Fund Managers Limited and administration services by Premier Asset Management Limited. Details of the agreement with the Investment Manager and the administrator are given in notes 3 and 19 to the financial statements. The custodian is Northern Trust Company Limited.The risk map has been considered at all regular meetings of the Board and Audit Committee. As part of the risk review process, regular reports are received from the Investment Manager on all investment related matters including compliance with the investment mandate, the performance of the portfolio compared with relevant indices and compliance with investment trust status requirements. The Board also receives and reviews reports from the custodian on its internal controls and their operation. The Board as a whole regularly reviews the terms of the management and secretarial contracts. The Board confirms that appropriate procedures to review the effectiveness of the Company's system of risk management and internal control have been in place, throughout the year and up to the date of this report, which cover all controls including financial, operational and compliance controls and risk management. An assessment of risk management and internal control, which includes a review of the Company's risk map, an assessment of the quality of reports on internal control from the service providers and the effectiveness of the Company's reporting process, is carried out on an annual basis. Evaluation of the Investment Managers' performance The investment performance is reviewed at each regular Board meeting at which representatives of the Investment Manager are required to provide answers to any questions raised by the Board. The Board has instigated an annual formal review of the Investment Manager which includes consideration of: â€¢ performance compared with relevant indices; â€¢ investment resources dedicated to the Company; â€¢ investment management fee arrangements and notice period compared with the peer group; and â€¢ the marketing effort and resources provided to the Company. The Board believes that the Investment Manager has served the Company well in terms of investment performance and has no hesitation in continuing its appointment. The Company Secretary The Board has direct access to the advice and services of the Company Secretary, Premier Asset Management Limited, which is responsible for ensuring that Board and Committee procedures are followed and that applicable regulations are complied with. The Secretary is also responsible to the Board for ensuring timely delivery of information and reports and that statutory obligations of the Company are met. Individual Directors may take independent professional advice on any matter concerning them in the furtherance of their duties at the Company's expense. The Company also maintains Directors' and Officers' liability insurance to cover legal defence costs. Relations with shareholders Communication with shareholders is given a high priority by both the Board and the Investment Manager and all Directors are available to enter into dialogue with shareholders. Major shareholders of the Company are offered the opportunity to meet with the Board. The Board regularly reviews any contact with the Company's shareholders and monitors its shareholder register. All shareholders are encouraged to attend and vote at the Annual General Meeting, during which the Board and the Investment Manager are available to discuss issues affecting the Company and shareholders have the opportunity to address questions to the Investment Manager, the Board and the Chairmen of the Board's standing committees. Any shareholder who would like to lodge questions in advance of the Annual General Meeting is invited to do so in writing to the Company Secretary at the address detailed on page 67. The Company always responds to letters from individual shareholders. The Annual and Interim Reports of the Company present a full and readily understandable review of the Company's performance. Copies are dispatched to shareholders by mail and are also available for download from the Investment Managers' website: www.premierfunds.co.uk . A monthly fact sheet is produced by the Investment Manager and is also available via it's website. If a shareholder would like to contact the Board directly, they should write to the Chairman at c/o Premier Asset Management Limited, Eastgate Court, High Street, Guildford, Surrey GU1 3DE, marking their letter "Private and confidential". Statement of compliance The Board believes that it has complied with all the material provisions, in so far as they apply to the Company's business, of the Code throughout the year under review. It did not, however, comply with the following provisions, as explained previously: â€¢ due to the small size of the Board and nature of the business a separate remuneration committee has not been established; and â€¢ a senior non-executive Director has not been identified. The Board has adhered to the principles of the AIC Code in all material respects. By Order of the Board Ian Graham Director 24 February 2015 Directors' Remuneration Report Introduction This report is prepared in accordance with Schedule 8 to The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 and in accordance with the Listing Rules of the Financial Conduct Authority and the Companies Act 2006. An ordinary resolution for the approval of this report will be put to the shareholders at the forthcoming Annual General Meeting. The Company's Remuneration Policy was put to shareholders and approved by ordinary resolution at the Annual General Meeting held on 8 May 2014 under Section 439 of the Companies Act 2006. There have been no changes to this policy and it is expected to continue in force until the Annual General Meeting in 2017. The Company is not able to make remuneration payments to a Director, or loss of office payments to a current or past director, unless the payment is consistent with the approved policy or has otherwise been approved by the shareholders. The law requires your Company's Auditor to audit certain of the disclosures provided. Where disclosures have been audited, they are indicated as such. The Auditor's opinion is included in their report on page 36. Remuneration Committee The Board as a whole fulfils the function of a Remuneration Committee. All Directors are non-executive, appointed under the terms of Letters of Appointment, and none has a service contract. The Company has no employees. The Company Secretary, Premier Asset Management Limited, will be asked to provide advice when the Directors consider the level of Directors' fees. No professional adviser was consulted in the year for setting the level of Directors' fees and no services of recruitment consultants were used in the year. Directors' beneficial and family interests (audited) The interests of the Directors and their families in the Ordinary Shares of the Company were as follows: Ordinary Shares at Ordinary Shares at Ordinary Shares at 23 February 2015â€ 31 December 2014 1 January 2014 Geoffrey Burns 80,411 80,411 80,411 Ian Graham 22,032 22,032 22,032 Michael Wigley 125,150 125,150 125,150 Charles Wilkinson 31,223 31,223 31,223 â€ The latest practicable date prior to the publication of this report. Directors' remuneration policy The Board's policy is that the remuneration of non-executive Directors should reflect the experience of the Board as a whole and be fair and comparable to that of other investment trusts that are similar in size, have a similar capital structure and have similar investment objectives. It is intended that this policy will continue in subsequent years. The fees for the non-executive Directors are determined within the limits of Â£ 150,000 set out in the Company's Articles of Association. The Directors are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits. Directors are entitled to be reimbursed for any reasonable expenses properly incurred by them in connection with the performance of their duties and attendance at Board and general meetings and committees. Directors' service contracts It is the Board's policy that none of the Directors has a service contract. Letters confirming the terms of their appointment provide that a Director shall retire and be subject to re-election at the first Annual General Meeting after his/her appointment, and at least every three years and will seek annual re-election if they have already served for more than nine years. The terms also provide that a Director may be removed without notice and that compensation will not be due on leaving office. Copies of the Letters of Appointment are available for inspection at the registered office of the Company. Directors and officers insurance is maintained and paid for by the Company on behalf of the Directors. Your Company's performance For the purposes of this report the Board is required to select an index against which the Company's performance can be measured. The Board has decided it should be the FTSE All-World Utilities Total Return Index. Prior to 2013, the Board compared the Company's performance against the Bloomberg World Utilities (total return) Index. The graph below shows the ten year total return (assuming all dividends are reinvested) to Ordinary Shareholders against the FTSE All-World Utilities Index on a total return basis, restated in GBP, from 31 December 2004 to 31 December 2014. Ten year share price performance (rebased to 100) Graphic removed Annual Report on Remuneration Directors' emoluments for the year (audited) The Directors who served in the year received the following emoluments in the form of fees: Fees Year Expenses Total Year Fees Year Expenses Total Year ended Year ended ended ended Year ended ended 31 31 December 31 31 31 December 31 December 2014 December December 2013 December 2014 2014 2013 2013 Â£ Â£ Â£ Â£ Â£ Â£ Geoffrey 26,000 2,111 28,111 26,000 507 26,507 Burns Ian Graham 20,000 2,056 22,056 20,000 514 20,514 Michael 18,000 368 18,368 18,000 385 18,385 Wigley Charles 18,000 979 18,979 18,000 723 18,723 Wilkinson Total 82,000 5,514 87,514 82,000 2,129 84,129 During the year ended 31 December 2014 the Chairman received a fee of Â£26,000 per annum, the Chairman of the Audit Committee received a fee of Â£20,000 per annum and other Directors Â£18,000 per annum. Relative importance of spend on pay The following table compares the remuneration paid to the Directors with aggregate distributions to shareholders in the year to 31 December 2014 and the prior year. This disclosure is a statutory requirement, however, the Directors consider that comparison of Directors' remuneration with annual dividends does not provide a meaningful measure relative to the Company's overall performance as an investment trust with an objective of providing shareholders with both a high income and long term capital growth. Year ended Year ended Change 31 December 2014 31 December 2013 Â£000 Â£000 Â£000 Aggregate 88 84 5 Directors' emoluments plus expenses Aggregate 2,303 2,092 211 shareholder distributions in respect of the year Voting at last Annual General Meeting At the Annual General Meeting of the Company held on 8 May 2014 an advisory resolution was put to shareholders to approve the remuneration report set out in the 2013 annual financial report. This resolution was passed on a show of hands. The proxy votes registered in respect of the resolution were: For % Against % Withheld % Number of proxy votes 12,707,967 99.8 21,173 0.2 2,662 0 At the Annual General Meeting of the Company held on 8 May 2014 a binding resolution was put to shareholders to approve the Directors' remuneration policy set out in the 2013 annual financial report. This resolution was passed on a show of hands. The proxy votes registered in respect of the binding resolution were: For % Against % Withheld % Number of proxy votes 12,679,191 99.6 50,565 0.4 2,046 0 Approval A resolution for the approval of the Directors' Remuneration Report for the year ended 31 December 2014 will be proposed at the Annual General Meeting. By Order of the Board Ian Graham Director Signed on behalf of the Board of Directors 24 February 2015 Audit Committee Report The composition and summary terms of reference of the Audit Committee are set out on page 27. The Audit Committee comprises the whole Board, all of whom are independent. The Audit Committee met in July 2014 and considered the form and content of the Company's half year report to 30 June 2014. The Committee also reviewed the key risks of the Company and the Internal control framework operating to control risk. The Committee also reviewed the terms of engagement of the audit firm and its proposed programme for the year end audit. The Committee met again and reviewed the outcome of the audit work and the final draft of the financial statements for the year ended 31 December 2014. During this review the Audit Committee met with representatives of both the Investment Manager and the Administrator and sought assurances where necessary. The external Auditor attended the year end Audit Committee meeting and presented a report on the audit findings which did not include any significant matters of concern in relation to the financial statements. Contracts for non-audit services must be notified to the Audit Committee who consider any such engagement in the light of the requirement to maintain audit independence. The Committee believes that all such appointments for non-audit work were appropriate and unlikely to influence the audit independence. The Auditor is responsible for the annual statutory audit and for certain corporation tax compliance services which the Committee believes they are best placed to undertake due to their position as Auditor. No other services are provided by the Auditor and it is the Company's policy not to seek substantial non-audit services from its Auditor. During the year the value of non-audit services provided by Ernst & Young LLP amounted to Â£6,000 (31 December 2013: Â£6,000). Whilst non-audit services as a proportion of audit services amount to approximately 21%, the overall quantum of non-audit services is not considered to be material and all of the non-audit services provided relate to the provision of corporation tax compliance work. Significant issues for the Audit Committee The Audit Committee identified the following significant issues: 1. The accuracy of the valuation of the investment portfolio. 2. The accuracy of the calculation of management and performance fees. 3. The risk that income is overstated, incomplete or inaccurate through failure to recognise proper income entitlements or to apply the appropriate accounting treatment for recognition of income. 4. Management Override of Controls. The external audit plan was reviewed with the external auditor, and the Committee concluded that suitable audit procedures had been implemented to obtain reasonable assurance that the Financial Statements as a whole would be free of material misstatements. Specifically with reference to the highlighted issues: 1. The Committee was satisfied that the procedures put in place by the external auditors allowed them to value independently the investment portfolio. 2. The investment management fee and any performance fee are calculated in accordance with the contractual terms in the investment management agreement by the administrator and are reviewed in detail by the Investment Manager and are also subject to an analytical review by the Board. The external audit also includes checks on the calculation of the investment management fee and any performance fee to ensure that they are correctly calculated. Because the high water mark test was not passed, no performance fee was paid for 2014. 3. The Board regularly reviews income forecasts, including special dividends, and receives explanations from the Investment Manager and administrator for any variations or significant movements from previous forecasts and prior year figures. The audit includes checks on the completeness and accuracy of income, and also checks that this has been recognised in accordance with stated accounting policies. 4. The external auditor reviews terms of agreement with service providers, Premier Fund Managers Limited*, Premier Asset Management Limited and Northern Trust, to confirm their independence from the Company. They assess the ability of any member of the Manager or Board to circumvent controls to fraudulently alter company financial results or undertake fraudulent transactions. Financial statements On 25 July 2014, PEWT Securities PLC, a wholly-owned subsidiary, was incorporated. Therefore these financial statements have been prepared under International Financial Reporting Standards as adopted by the European Union ("IFRS") for groups of companies. Previous financial statements were prepared under UK GAAP. Restatement of opening balances relating to equity values, assets and liabilities and profits and losses of the Group and Company between UK GAAP as previously reported and under IFRS as restated have not been presented as there have been no required changes to these reported amounts. Therefore restatement tables have not been prepared for any of the primary statements. The Audit Committee meets at least twice a year and is responsible for reviewing the annual and interim reports, the nature and scope of the external audit and the findings thereon, and the terms of appointment of the Auditor, including their remuneration and the provision of any non-audit services by them. The Audit Committee has considered the independence of the Auditor and the objectivity of the audit process and is satisfied that Ernst & Young LLP is independent and has fulfilled its obligations to shareholders. The audit partner has been rotated in compliance with prevailing audit guidance and the Audit Committee has satisfied itself as to the Auditor's effectiveness, objectivity, independence and the competitiveness of its fees before recommending re-appointment each year. Ernst & Young LLP has been the Company's Auditor for the last eleven years and there has been no re-tendering of the Audit in that time although there has to be a re-tender by 2022. To comply with the provision in the Code the Company will review the option to re-tender the external audit on a regular basis. The Audit Committee meets representatives of the Investment Manager and its Compliance Officer who report as to the proper conduct of business in accordance with the regulatory environment in which both the Company and the Investment Manager operate and reviews the Investment Managers' internal controls. The Company's external Auditor also attends this Committee at its request and report on their findings in relation to the Company's statutory audit. As part of the day to day controls of the Company there are regular reconciliations between the accounting records and the records kept by the custodian of the assets they safeguard which are owned by the Company. During the year and at the year-end there were no matters brought to light which call in to question that the key controls in this area were not working, or that the existence of assets recorded in the books of account are not held in safe custody. As more fully explained in note 1 (h) on page 44 at the year ended 31 December 2014 the Committee agreed that the fair value of investments is the bid market price for listed investments and the unquoted investments together with the wholly-owned subsidiary, PEWT Securities PLC, currently valued at Â£50,000 at 31 December 2014, is appropriate. All unquoted investments are subject to review both by the Investment Manager, the Audit Committee and the Auditor. In finalising the financial statements for recommendation to the Board for approval the Committee has considered whether the going concern principle is appropriate (as described on page 23), and concluded that it is. The Audit Committee has also satisfied itself that the Annual Report and financial statements taken as a whole are fair, balanced and understandable, and provide the information necessary for shareholders to assess the Company's performance, business model and strategy. All of the above were satisfactorily addressed through consideration of reports provided by, and discussed with, the Investment Manager and the Auditor. The Board as a whole have approved the conclusions arrived at by the Audit Committee as disclosed on page 32, Statement of Directors' Responsibilities in respect of the Annual Report and the financial statements. Ian Graham Chairman of the Audit Committee 24 February 2015 *On 20 January 2015 the Company appointed Premier Portfolio Managers Limited as its Alternative Investment Fund Manager. Premier Portfolio Managers Limited has delegated the portfolio management of the Company's portfolio of assets to Premier Fund Managers Limited. Statement of Directors' Responsibilities in Respect of the Annual Report and the Financial Statements The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. In preparing these financial statements, the Directors are required to: â€¢ select suitable accounting policies and then apply them consistently; â€¢ make judgements and estimates that are reasonable and prudent; and â€¢ state whether International Financial Reporting Standards have been followed, subject to any material departures disclosed and explained in the financial statements. The Directors are responsible for keeping adequate accounting records which are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and which enable them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulations. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that complies with that law and those regulations. The financial statements are published on the www.premierfunds.co.uk website, which is maintained by the Company's Investment Manager. The maintenance and integrity of the website maintained by Premier Asset Management Limited is, so far as it relates to the Company, the responsibility of Premier Asset Management Limited. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and, accordingly, the Auditor accepts no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. Statement under the Disclosure & Transparency Rules 4.1.12 The Directors each confirm to the best of their knowledge that: a)â€ˆ the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and Company; b)â€ˆ this Annual Report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces; and c) the Annual Report and financial statements, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company's performance, business model and strategy. For and on behalf of the Board Ian Graham Director 24 February 2015 Independent Auditor's Report to the members of Premier Energy and Water Trust PLC Opinion on financial statements In our opinion the financial statements: â€¢ give a true and fair view of the state of the Group's and the Company's affairs as at 31 December 2014 and of its return for the year then ended; â€¢ have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union; and â€¢ have been prepared in accordance with the requirements of the Companies Act 2006. Overview of the scope of our audit We have audited the financial statements of Premier Energy and Water Trust Plc for the year ended 31 December 2014 which comprise the Consolidated Statement of Comprehensive Income, Consolidated and Company Balance Sheets, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated and Company Cash Flow Statements, Reconciliation of Net Cash Flow to Movement of Net Debt and the related notes 1 to 21. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards as adopted by the European Union. This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of Directors and auditor As explained more fully in the Directors' Responsibilities Statement set out on page 34 the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Our assessment of risks of material misstatement We identified the following risks of material misstatement that had the greatest effect on the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. The table also includes our response to the risks: Risk Identified Our Response The valuation of the assets held in the â€¢ We agreed the year end prices of the investment portfolio is the key driver investments to an independent source. of the company's investment return. Incorrect asset pricing or a failure to â€¢ We agreed the number of shares held maintain proper legal title of the in each security to a confirmation of assets held by the company could have a legal title received from the Company's significant impact on portfolio custodian. valuation and, therefore, the return generated for shareholders. The fees payable by the company for â€¢ We used the terms contained in the investment management services are a investment management agreement to significant component of the company's perform a recalculation of the fees cost base and, therefore, impact the payable. company's total return. If the management and performance fees are not â€¢ We agreed the inputs for the calculated in accordance with the calculations to source data and agreed methodology prescribed in the the cash payments made to bank investment management agreement this statements. could have a significant impact on both costs and overall performance. The investment income receivable by the â€¢ We agreed a sample of dividends to company during the period directly the corresponding announcement made by drives the company's ability to make a the investee company and agreed cash dividend payment to shareholders. If received to bank statements. the company is not entitled to receive the dividend income recognised in the â€¢ For a sample of dividends accrued at financial statements or the income year end, we reviewed the investee recognised does not relate to the company announcements to assess whether current financial year, this will the dividend obligation arose prior to impact the extent of the profits 31 December 2014. available to fund dividend distributions to shareholders. â€¢ We agreed a sample of accrued dividends to post year end bank statements to assess the recoverability of these amounts. Our application of materiality We determined planning materiality for the Company to be Â£340,000 which is 1% of total equity. This provided a basis for determining the nature, timing and extent of our risk assessment procedures, identifying and assessing the risk of material misstatement and determining the nature, timing and extent of further audit procedures. We have derived our materiality calculation based on a proportion of total equity as we consider it to be the most important financial metric on which shareholders would judge the performance of the Company. On the basis of our risk assessments, together with our assessment of the Company's overall control environment, our judgment was that overall performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the Company should be 75% of planning materiality, namely Â£255,000. Our objective in adopting this approach was to ensure that total detected and undetected audit differences in all accounts did not exceed our planning materiality level. Given the importance of the distinction between revenue and capital for the Company we have also applied a separate performance materiality of Â£97,000 for the Income Statement, being 5% of the return on ordinary activities before taxation. We have reported to the Committee all audit differences in excess of Â£17,000 as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. Opinion on other matters prescribed by the Companies Act 2006 In our opinion: â€¢ the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and â€¢ the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following: Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the Annual Report is: â€¢ materially inconsistent with the information in the audited financial statements; or â€¢ apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Company acquired in the course of performing our audit; or â€¢ otherwise misleading. In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the Directors' statement that they consider the Annual Report is fair, balanced and understandable and whether the Annual Report appropriately discloses those matters that we communicated to the Audit Committee which we consider should have been disclosed. Under the Companies Act 2006 we are required to report to you if, in our opinion: â€¢ adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or â€¢ the financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or â€¢ certain disclosures of Directors' remuneration specified by law are not made; or â€¢ we have not received all the information and explanations we require for our audit. Under the Listing Rules we are required to review: â€¢ the Directors' statement, set out on page 22 in relation to going concern; and â€¢ the part of the Corporate Governance Statement relating to the Company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review. Amarjit Singh (Senior Statutory Auditor) For and on behalf of Ernst & Young LLP, Statutory Auditor London 24 February 2015 Consolidated Statement of Comprehensive Income for the financial year ended 31 December 2014 Year Year Year Year Year Year ended 31 ended 31 ended 31 ended 31 ended 31 ended 31 December December December December December December 2014 2014 2014 2013 2013 2013 Revenue Capital Total Revenue Capital Total Notes Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Gains on investments held at fair value 8 - 8,627 8,627 - 12,306 12,306 through profit or loss Income 2 3,067 - 3,067 2,719 - 2,719 Investment 3 (301) (455) (756) (268) (398) (666) management fee Other 4 (817) - (817) (375) - (375) expenses Profit before 1,949 8,172 10,121 2,076 11,908 13,984 finance costs and taxation Finance costs 5 - (2,635) (2,635) - (2,471) (2,471) Profit before 1,949 5,537 7,486 2,076 9,437 11,513 taxation Taxation 6 (222) - (222) (155) - (155) Total 1,727 5,537 7,264 1,921 9,437 11,358 comprehensive income for the year Return per Ordinary Share (pence) - basic 17 10.11 32.42 42.53 11.25 55.29 66.54 The notes on pages 42 to 60 form part of these financial statements. The total column 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 Statement of Comprehensive Income. The Company's total comprehensive income for the year ended 31 December 2014 was Â£ 7,264,000. 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. Consolidated and Company Balance Sheets for the financial year ended 31 December 2014 Group Company Company 2014 2014 2013 Notes Â£000 Â£000 Â£000 Non current assets Investments at 8 77,336 77,386 68,369 fair value through profit or loss Current assets Debtors 10 1,658 1,658 258 Cash at bank 268 268 1,529 1,926 1,926 1,787 Total assets 79,262 79,312 70,156 Current liabilities Creditors: 11 (265) (315) (167) amounts falling due within one year Zero Dividend 11 (44,970) (44,970) - Preference shares (45,235) (45,285) (167) Total assets 34,027 34,027 69,989 less current liabilities Non-current 12 - - (41,536) liabilities: Zero Dividend Preference shares Net assets 34,027 34,027 28,453 Equity attributable to Ordinary Shareholders Share capital 13 174 174 171 Share premium 14 7,444 7,444 6,884 Redemption 88 88 88 reserve Capital reserve 15 16,976 16,976 11,439 Special reserve 7,472 7,472 7,472 Revenue reserve 1,873 1,873 2,399 Total equity 34,027 34,027 28,453 attributable to Ordinary Shareholders Net asset value per Ordinary Share (pence) - International 18 195.80 195.80 166.70 Financial Reporting Standards basis Net asset value per Ordinary Share (pence) - Articles of 18 196.23 196.23 167.55 Association basis The financial statements on pages 37 to 60 of Premier Energy and Water Trust PLC, company number 4897881, were approved by the Board and authorised for issue on 24 February 2015 and were signed on its behalf by: Ian Graham Director The notes on pages 42 to 60 form part of these financial statements. Consolidated Statement of Changes in Equity for the financial year ended 31 December 2014 Ordinary Share share premium Redemption Capital Special Revenue capital reserve reserve reserve reserve reserve Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 For the year ended 31 December 2014 Balance at 31 171 6,884 88 11,439 7,472 2,399 28,453 December 2013 Total comprehensive - - - 5,537 - 1,727 7,264 income for the period Tap issue of 3 560 - - - - 563 Ordinary Shares during the year Ordinary dividends - - - - - (2,253) (2,253) paid Balance at 31 174 7,444 88 16,976 7,472 1,873 34,027 December 2014 The notes on pages 42 to 60 form part of these financial statements. Company Statement of Changes in Equity for the financial year ended 31 December 2014 Ordinary Share share premium Redemption Capital Special Revenue capital reserve reserve reserve reserve reserve Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 For the year ended 31 December 2014 Balance at 31 171 6,884 88 11,439 7,472 2,399 28,453 December 2013 Total comprehensive - - - 5,537 - 1,727 7,264 income for the period Tap issue of 3 560 - - - - 563 Ordinary Shares during the year Ordinary dividends - - - - - (2,253) (2,253) paid Balance at 31 174 7,444 88 16,976 7,472 1,873 34,027 December 2014 Ordinary Share Share premium Redemption Capital Special Revenue capital reserve reserve reserve reserve reserve Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 For the year ended 31 December 2013 Balance at 31 171 6,884 88 2,002 7,472 2,390 19,007 December 2012 Total comprehensive - - - 9,437 - 1,921 11,358 income for the period Ordinary dividends - - - - - (1,912) (1,912) paid Balance at 31 171 6,884 88 11,439 7,472 2,399 28,453 December 2013 The notes on pages 42 to 60 form part of these financial statements. Consolidated and Company Cashflow Statements for the financial year ended 31 December 2014 Group Company Company Year ended Year ended Year ended 31 December 31 December 31 December 2014 2014 2013 Â£000 Â£000 Â£000 Profit before finance costs and 10,121 10,121 13,984 taxation Adjustments for Movement in investments held at (8,627) (8,627) (12,306) fair value through profit or loss (Increase)/decrease in trade and (28) (28) 15 other receivables Increase/(decrease) in trade and 84 84 (17) other payables Net cash flows from operating 1,550 1,550 1,676 activities Overseas taxation paid (217) (217) (105) Investing activities Purchases of investments (27,582) (27,582) (25,929) Proceeds from sales of 27,241 27,241 26,319 investments Net cash flows from investing (341) (341) 390 activities Financing activities Dividends paid (2,253) (2,253) (1,912) Net cash used in financing (2,253) (2,253) (1,912) activities (Decrease)/increase in cash and (1,261) (1,261) 49 cash equivalents Cash and cash equivalents, 1,529 1,529 1,480 beginning of period Cash and cash equivalents at end 268 268 1,529 of period The notes on pages 42 to 60 form part of these financial statements. Notes to the Financial Statements for the financial year ended 31 December 2014 1.â€„ACCOUNTING POLICIES 1.1 Principal accounting policies adopted by the Company (a) Basis of preparation Following the incorporation of the Company's wholly-owned subsidiary, PEWT Securities PLC, on 25 July 2014 the financial statements of the Group and Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, and as applied in accordance with the provisions of the Companies Act 2006. These comprise standards and interpretations of the International Accounting Standards and Standing Interpretations Committee as approved by the International Accounting Standards Committee ("IASC") that remain in effect, to the extent that IFRS have been adopted by the European Union. Previously, the financial statements were prepared in accordance with UK Generally Accepted Accounting Practice ("UK GAAP"). The transition to IFRS did not result in any significant changes to the accounting polices. The financial statements have also been prepared in accordance with the Statement of Recommended Practice ("SORP") for investment trusts issued by the Association of Investment Companies ("AIC") in November, 2014, where the SORP is not inconsistent with IFRS. The financial information for the year ended 31 December 2013 included in this report has been taken from the Company's full accounts, as restated to comply with IFRS from the transition date of 1 January 2013. Restatement of opening balances relating to equity values, assets and liabilities and profits and losses of the Group and Company between UK GAAP as previously reported and under IFRS as restated have not been presented as there have been no required changes to these reported amounts. Therefore restatement tables have not been prepared for any of the primary statements. The functional currency of the Group is UK pounds Sterling as this is the currency of the primary economic environment in which the Group operates. Accordingly, the financial statements are presented in UK pounds Sterling rounded to the nearest thousand pounds. (b) Basis of consolidation IFRS 10 Consolidated Financial Statements (effective for periods beginning on or after 1 January, 2014) The financial statements presented in these accounts for the financial year to 31 December, 2014 reflect the adoption of IFRS 10 (including the Investment Entities amendment, now adopted by the EU) 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. IFRS 10 (and the Investment Entities amendment) is effective for financial years beginning on or after 1 January, 2014. The consolidated financial statements are made up to 31 December each year and incorporate the financial statements of the Company and its wholly-owned subsidiary, PEWT Securities PLC. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of subsidiaries used in the preparation of the Consolidated Financial Statements are based on consistent accounting policies. All intra-group balances and transactions, including unrealised profits arising therefrom, are eliminated. PEWT Securities PLC, the Company's wholly-owned subsidiary, incorporated on 25 July 2014, is being consolidated in the accounts for the first time in 31 December 2014 as it provides investment-related services. Assessment of an investment entity Entities that meet the definition of an investment entity within IFRS 10 are permitted to measure their subsidiaries at fair value through profit or loss rather than consolidate them. The criteria which define an investment entity are as follows: â€¢ an entity that obtains funds from one or more investors for the purpose of providing those investors with investment services. â€¢ an entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both. â€¢ an entity that measures and evaluates the performance of substantially all of its investments on a fair value basis. The Board has agreed with the recommendation of the Audit Committee that the Company meets the definition of an investment entity as it satisfies each of the criteria above and that this accounting treatment better reflects the Company's activities as an investment trust. Specifically, as an investment trust, the Company's principal activity is portfolio investment and the investment objectives of the Company (stated in the Strategic Report on page 16) 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. The Group's investments have been designated as fair value through profit or loss, and are evaluated on a fair value basis by the Board. (c) 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 Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Consolidated Statement of Comprehensive Income. In accordance with the Company's Articles of Association, net capital returns can be distributed by way of dividend. Additionally, net revenue is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 1158 of the Corporation Tax Act 2010. As permitted by Section 408 of the Companies Act 2006, no Company Statement of Comprehensive Income has been prepared. The profit dealt with in the accounts of the parent Company was Â£1,727,000 (31 December, 2013: profit Â£1,921,000). (d) Use of estimates The preparation of financial statements requires the Company to make estimates and assumptions that affect items reported in the Balance Sheet and Statement of Comprehensive Income 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 significantly. The investments in the equity and fixed interest stocks of unquoted companies that the Group 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 as described in note 1.1 (h). Please also refer to note 9 regarding investments in subsidiaries. (e) Income Dividend income from investments is taken into account by reference to the date the security becomes ex-dividend. Interest from short-term deposits is accounted for on an accruals basis. The fixed return on a debt security is recognised on a time apportionment basis so as to reflect the effective interest rate on the debt security. Special dividends are credited to capital or revenue in the Consolidated Statement of Comprehensive Income, according to the circumstances surrounding the payment of the dividend. UK dividends are accounted for net of any tax credits. Overseas dividends and other income that are subject to withholding tax are grossed up. Interest receivable on deposits is accounted for on an accruals basis. (f) Expenses All expenses are accounted for on an accruals basis and are charged as follows: â€¢ the basic investment management fee, is charged 40% to revenue and 60% to capital; â€¢ any performance fee earned is allocated between capital and revenue based on the out-performance attributable to capital and revenue respectively; â€¢ the finance costs representing the accrued capital entitlement of the Zero Dividend Preference Shares is allocated to capital; â€¢ investment transaction costs are allocated to capital; and â€¢ other expenses are charged wholly to revenue. (g) Taxation The charge for taxation is based upon the net revenue for the year. The tax charge is allocated to the revenue and capital accounts according to the marginal basis whereby revenue expenses are first matched against taxable income arising in the revenue account; the effect of this for the year ended 31 December 2014 was that all the deductions for tax purposes went to the revenue account. Deferred taxation will be recognised as an asset or a liability if transactions have occurred at the balance sheet date that give rise to an obligation to pay more taxation in the future, or a right to pay less taxation in the future. An asset will not be recognised to the extent that the transfer of economic benefit is uncertain. Due to the Company's status as an Investment Trust, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. (h) Investments held at fair value through profit or loss Upon initial recognition investments are designated by the Company "at fair value through profit or loss". They are accounted for on the date they are traded and are included initially at fair value which is taken to be their cost. Subsequently investments are valued at fair value which is the bid market price for listed investments. Unquoted investments are valued at fair value by the Board which is established with regard to the International Private Equity and Venture Capital Valuation Guidelines by using, where appropriate, latest dealing prices, valuations from reliable sources and other relevant factors. Changes in the fair value of investments held at fair value through profit or loss and gains or losses on disposal are included in the capital column of the Consolidated Statement of Comprehensive Income within "gains/(losses) on investments held at fair value through profit or loss". The investment in the Company's subsidiary, PEWT Securities PLC, is held at fair value. (i) Dividends Interim and final dividends are recognised in the year in which they are paid. (j) Foreign currency Transactions denominated in foreign currencies are translated into Sterling at actual exchange rates as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the year end are reported at the rates of exchange prevailing at the year end. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss to capital or revenue in the Consolidated Statement of Comprehensive Income as appropriate. Foreign exchange movements on investments are included in the Consolidated Statement of Comprehensive Income within gains on investments. (k) Zero Dividend Preference Shares The Zero Dividend Preference Shares are classified as a financial liability and shown as a liability in the Group balance sheet. The provision for compound growth entitlement of the Zero Dividend Preference Shares is recognised through the Consolidated Statement of Comprehensive Income and analysed under the capital column as a finance cost (as shown in note 5). The premium (net of expenses) arising on the issue of the Zero Dividend Preference Shares will be amortised over the life of the Zero Dividend Preference Shares and allocated 100% to capital. (l) Special reserve The special reserve is available for the repurchase by the Company of its own Ordinary Shares. 1.2 Accounting standards issued but not yet effective At the date of authorisation of these Financial Statements, the following standards were in issue but were not yet effective (and in some cases had not yet been adopted by the EU) and therefore they have not been applied in these Financial Statements. Effective for periods International Accounting beginning on or after Standards (IAS/IFRSs) IFRS 9 Financial Instruments 1 January, 2018 (early adoption permitted) IFRS 14 Regulatory Deferral 1 January, 2016 Accounts IFRS 15 Revenue from Contracts 1 January, 2017 with Customers Amendments to standards IFRS 11 Accounting for 1 January, 2016 Acquisitions of Interests in Joint Operations IAS 16 & IAS 38 Sale or Contribution of 1 January, 2016 Assets between an Investor and its Associate or Joint Venture IAS 24 Related Party Disclosures 1 July, 2014 The Directors do not anticipate that the adoption of these standards will have a material impact on the Financial Statements in the period of initial application and have decided not to early adopt. 2.â€„INCOME Year ended 31 December Year ended 31 December 2014 2013 Â£000 Â£000 Income from investments: UK franked investment income 502 448 UK bond interest 151 128 Overseas dividends 2,271 1,729 Overseas interest 138 410 Bank interest 5 4 Total income 3,067 2,719 3.â€„INVESTMENT MANAGEMENT FEE Year ended 31 December Year ended 31 December 2014 2013 Â£000 Â£000 Charged to Revenue: Investment management fee 301 268 (40%) Charged to Capital: Investment management fee 455 398 (60%) 756 666 The Company's Investment Manager is Premier Fund Managers Limitedâ€ under an agreement terminable by either party giving not less than 12 months written notice. Under the investment management agreement, the Investment Manager is entitled to receive from the Company a management fee, payable monthly in arrears, of 1% per annum of the gross assets of the Company. In addition, the Investment Manager is entitled to a performance fee in respect of each accounting year of the Company commencing with the period ended 31 December 2004 if (i) the dividends paid or proposed to be paid on each Ordinary Share in respect of that accounting year (on an annualised basis in respect of the first accounting period) equals at least 6.75p and (ii) the gross assets at the end of the year exceed the highest level of gross assets at the end of any previous accounting year or (if higher) the initial gross assets adjusted for share buybacks or share issuance by more than 7.5%, subject to appropriate adjustments for changes in capital and other conditions. In that event, the performance fee will be equal to 15% of the excess. Any performance fee earned is allocated between capital and revenue based on the out-performance attributable to capital and revenue respectively. No performance fee is payable in respect of the year ended 31 December 2014 (2013: nil). â€ On 20 January 2015 the Company appointed Premier Portfolio Managers Limited as its Alternative Investment Fund Manager. Premier Portfolio Managers Limited has delegated the portfolio management of the Company's portfolio of assets to Premier Fund Managers Limited. 4.â€„OTHER EXPENSES Year ended 31 December Year ended 31 December 2014 2013 Â£000 Â£000 Charged to Revenue: Secretarial services 94 83 Administration expenses 184 178 Reorganisation costs (see 417 - page 16) Auditor's remuneration - 28 24 audit services# - other services relating 6 6 to taxation* Directors' fees plus 88 84 expenses 817 375 #The charge for audit services for 2014 includes Â£2,000 of non-recurring charges. *Auditor other services includes Â£6,000 for corporation tax compliance work (2013: Â£6,000 for corporation tax compliance work). 5.â€„FINANCEâ€ˆCOSTS Year ended Year ended Year ended Year ended Year ended Year ended 31 31 31 31 31 31 December December December December December December 2014 2014 2014 2013 2013 2013 Revenue Capital Total Revenue Capital Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Provision for compound growth entitlement of the Zero - 2,635 2,635 - 2,471 2,471 Dividend Preference Shares - 2,635 2,635 - 2,471 2,471 6.â€„TAXATION (a)â€„ANALYSIS OF CHARGE IN THE YEAR: Year Year Year Year Year Year ended 31 ended 31 ended 31 ended 31 ended 31 ended 31 December December December December December December 2014 2014 2014 2013 2013 2013 Revenue Capital Total Revenue Capital Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Overseas tax 222 - 222 155 - 155 Total tax charge 222 - 222 155 - 155 for the year (see note 6 (b)) (b)â€„FACTORS AFFECTING THEâ€ˆCURRENT TAX CHARGE FOR THE YEAR: The tax assessed for the year is lower than the standard rate of corporation tax in the UK for a large company of 21.50% (31 December 2013: 23.25%). The differences are explained below: Year ended 31 Year ended 31 December 2014 December 2013 Â£000 Â£000 Total return before taxation 7,486 11,513 UK corporation tax at 21.50% (31 1,609 2,677 December 2013: 23.25%) Effects of: Capital (gains)/losses not subject (1,854) (2,861) to corporation tax Finance costs of Zero Dividend 566 575 Preference Shares UK dividends which are not taxable (108) (104) Overseas tax suffered 222 155 Non-taxable overseas dividends (488) (402) Movement in unutilised management 275 115 expenses Total tax charge 222 155 The Company is not liable to tax on capital gains due to its status as an investment trust. Due to the Company's status as an investment trust, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. After claiming relief against accrued income taxable on receipt, the Company has a deferred tax asset of approximately Â£1,040,000 (31 December 2013: Â£ 823,000) relating to excess expenses of Â£5,200,000 (31 December 2013: Â£ 3,922,000). It is unlikely that the Company will generate sufficient taxable profits in the future to utilise these expenses and therefore no deferred tax asset in respect of these expenses has been recognised. 7.â€„DIVIDEND Dividends relating to the year ended 31 December 2014 which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered are detailed below: Year ended 31 December 2014 Per Ordinary Share Â£000 First interim dividend - paid 1.90p 324 on 30 June 2014 Additional interim dividend - 0.75p 128 paid on 30 June 2014 Second interim dividend - 1.90p 324 paid on 30 September 2014 Additional interim dividend - 0.75p 128 paid on 30 September 2014 Third interim dividend - paid 1.90p 324 on 31 December 2014 Additional interim dividend - 0.75p 128 paid on 31 December 2014 Fourth interim dividend - 4.70p 817 payable on 31 March 2015* Additional interim dividend - 0.75p 130 payable on 31 March 2015* 13.40p 2,303 * Not included as a liability in the year ended 31 December 2014 accounts. The fourth interim dividend and the additional dividend will be paid on 31 March 2015 to members on the register at the close of business on 6 March 2015. The shares will be marked ex-dividend on 5 March 2015. Dividends relating to the year ended 31 December 2013 which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered are detailed below: Year ended 31 December 2013 Per Ordinary Share Â£000 First interim dividend - paid 1.70p 291 on 28 June 2013 Second interim dividend - 1.90p 324 paid on 30 September 2013 Additional interim dividend - 0.75p 128 paid on 30 September 2013 Third interim dividend - paid 1.90p 324 on 31 December 2013 Additional interim dividend - 0.75p 128 paid on 31 December 2013 Fourth interim dividend - 4.50p 769 paid on 31 March 2014* Additional interim dividend - 0.75p 128 paid on 31 March 2014* 12.25p 2,092 * Not included as a liability in the year ended 31 December 2013 accounts. Amounts recognised as distributions to equity holders in the year: Year ended 31 December Year ended 31 December 2014 2013 Â£000 Â£000 Fourth interim dividend 769 717 for the year ended 31 December 2013 of 4.50p (2012: 4.20p) per ordinary share Additional interim 128 - dividend for the year ended 31 December 2014 of 0.75p (2013: nil) per ordinary share First interim dividend for 324 291 the year ended 31 December 2014 of 1.90p (2013: 1.70p) per ordinary share Additional interim 128 - dividend for the year ended 31 December 2014 of 0.75p (2013: nil) per ordinary share Second interim dividend 324 324 for the year ended 31 December 2014 of 1.90p (2013: 1.90p) per ordinary share Additional interim 128 128 dividend for the year ended 31 December 2014 of 0.75p (2013: 0.75p) per ordinary share Third interim dividend for 324 324 the year ended 31 December 2014 of 1.90p (2013: 1.90p) per ordinary share Additional interim 128 128 dividend for the year ended 31 December 2014 of 0.75p (2013: 0.75p) per ordinary share 2,253 1,912 8.â€„INVESTMENTS Group Company Company Year ended 31 Year ended 31 Year ended 31 December 2014 December 2014 December 2013 Â£000 Â£000 Â£000 Investments listed on a 77,336 77,336 68,369 recognised investment exchange Investments in subsidiaries - 50 - Valuation at period end 77,336 77,386 68,369 Opening book cost 59,852 59,852 56,309 Opening investment holding 8,517 8,517 143 gains/(losses) Opening valuation 68,369 68,369 56,452 Movements in the period: Purchases at cost 27,583 27,633 25,929 Sales - proceeds (27,243) (27,243) (26,318) - gains on sales 5,090 5,090 3,932 Movement in investment 3,537 3,537 8,374 holding gains/(losses) for the period Closing valuation 77,336 77,386 68,369 Closing book cost 65,282 65,332 59,852 Closing investment holding 12,054 12,054 8,517 gains/(losses) Closing valuation 77,336 77,386 68,369 Gains on sales based on 5,090 5,090 3,932 historical cost Movement in holding gains/ 3,537 3,537 8,374 (losses) for the period Net gains on investments 8,627 8,627 12,306 attributable to Ordinary Shareholders Classification of assets Group Company Company Year ended 31 Year ended 31 Year ended 31 December 2014 December 2014 December 2013 Â£000 Â£000 Â£000 Equities 74,711 74,761 64,024 Corporate bonds 2,625 2,625 4,345 Total investments 77,336 77,386 68,369 9.â€„INVESTMENTS IN SUBSIDIARIES As at 31 December 2014 Country of % incorporation Capital and Ordinary and reserves Profit & Share loss Entity Principal capital held registration Â£000 Â£000 activity Investment in subsidiaries: PEWT Financing 100% England 50 - Securities PLC The Company owns the whole of the ordinary share capital (Â£50,000) of PEWT Securities PLC a company which has issued the Group's New Zero Dividend Preference Shares. The subsidiary is held at fair value of Â£50,000 (2013: nil). 10.â€„RECEIVABLES AND OTHER FINANCIAL ASSETS Group Company Company Year ended 31 Year ended 31 Year ended 31 December 2014 December 2014 December 2013 Â£000 Â£000 Â£000 Accrued income and 248 248 219 prepayments Overseas 35 35 39 withholding tax recoverable Other debtors 1,375 1,375 - 1,658 1,658 258 11.â€„OTHER FINANCIAL LIABILITIES Group Company Company Year ended 31 Year ended 31 Year ended 31 December 2014 December 2014 December 2013 Â£000 Â£000 Â£000 Other creditors 265 315 167 21,565,054 Zero 44,970 44,970* - Dividend Preference Shares of Â£0.01 (2013: 21,180,373) 45,235 45,285 167 On 17 December 2014, by way of a tap issue in response to market demand, PEWT Securities PLC allotted and issued 384,681 New Zero Dividend Preference Shares of 1 pence each par value for cash, at a price of 214 pence per share. The accrued capital entitlement at that date was 207.68 pence per share. The final capital entitlement of all the Zero Dividend Preference Shares in issue will be 221.78 pence per share (total of Â£47,826,000), which will be payable on 31 December 2015. *The Zero Dividend Preference Shares, are issued by the Company's wholly-owned subsidiary, PEWT Securities PLC. The Company has entered into an undertaking Agreement with PEWT Securities PLC to meet the repayment entitlement of the ZDP Shares on 31 December 2015. The proposals to reorganise and extend the life of the Company that were approved by shareholders on 25 July 2014 resulted in the replacement of the existing ZDP Shares with New ZDP Shares issued by PEWT Securities PLC (see page 16). 12.â€„NON-CURRENT LIABILITIES Group Company Company Year ended 31 Year ended 31 Year ended 31 December 2014 December 2014 December 2013 Â£000 Â£000 Â£000 21,565,054 Zero - - 41,536 Dividend Preference Shares of Â£0.01 (2013: 21,180,373) The Zero Dividend Preference Shares of the Company at 31 December 2014 are now shown in note 11. 13.â€„SHARE CAPITAL Group and Group and Company Company Company Company Year ended Year ended Year ended Year ended 31 December 31 December 31 December 31 December 2014 2014 2013 2013 Number of Â£000 Number of Â£000 shares shares Allotted, issued and fully paid: Opening balance 17,068,480 171 17,068,480 171 Ordinary Shares of Â£0.01 Issued in year 310,000 3 - - 17,378,480 174 17,068,480 171 The allotted issued and fully paid Zero Dividend Preference Shares of the Company at 31 December 2014 are disclosed in note 11. 14.â€„SHAREâ€ˆPREMIUM Group Company Company Year ended 31 Year ended 31 Year ended 31 December 2014 December 2014 December 2013 Â£000 Â£000 Â£000 Opening balance 6,884 6,884 6,884 Movement in year 560 560 - Closing balance 7,444 7,444 6,884 15.â€„CAPITAL RESERVE Group Company Company Year ended 31 Year ended 31 Year ended 31 December 2014 December 2014 December 2013 Â£000 Â£000 Â£000 Opening balance 11,439 11,439 2,002 Gains on 8,627 8,627 12,306 investments - held at fair value through profit or loss Provision for (2,635) (2,635) (2,471) compound growth entitlement of Zero Dividend Preference Shares Investment (455) (455) (398) management fee charged to capital Closing balance 16,976 16,976 11,439 16.â€„FINANCIAL COMMITMENTS At 31 December 2014 there were no commitments in respect of unpaid calls and underwritings (31 December 2013: nil). 17.â€„RETURN PER SHARE - BASIC Total return per Ordinary Share is based on the total comprehensive income for the year after taxation of Â£7,264,000 (31â€ˆDecember 2013: Â£11,358,000). These calculations are based on the weighted average number of 17,080,370 Ordinary Shares in issue during the year to 31 December 2014 (2013: 17,068,480 number of Ordinary Shares). The return per Ordinary Share can be further analysed between revenue and capital as below: Year ended 31 Year ended 31 Year ended 31 Year ended 31 December 2014 December 2014 December 2013 December 2013 Pence per Â£000 Pence per Â£000 Ordinary Share Ordinary Share Net revenue 10.11p 1,727 11.25p 1,921 return Net capital 32.42p 5,537 55.29p 9,437 return Net total 42.53p 7,264 66.54p 11,358 return The Company does not have any dilutive securities. 18.â€„NET ASSET VALUE PER SHARE The difference between the figures reported below arises from the treatment of the premium (net of expenses) from the issue of Zero Dividend Preference ("ZDP") shares in December 2010 of Â£330,000. In accordance with International Financial Reporting Standards the unamortised portion of the premium has been included with the ZDP liability and will be amortised over the life of the Zero Dividend Preference Shares. In accordance with the Articles of Association the premium has been included with shareholders equity and the ZDP liability reflects their accrued capital entitlement at 31 December 2014 and 31 December 2013. 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 31 December 31 December 31 December 31 December 2014 2014 2013 2013 Pence Â£000 Pence Â£000 17,378,480 195.80 34,027 166.70 28,453 Ordinary Shares in issue (2013: 17,068,480) 21,565,054 Zero 208.53 44,970 196.11 41,536 Dividend Preference Shares* in issue (2013: 21,180,373) *â€‰Classified as a liability. The net asset value per share and the net assets available to each class of share calculated in accordance with the Articles of Association, are as follows: Net asset value Net assets Net asset value Net assets per share available per share available 31 December 31 December 31 December 31 December 2014 2014 2013 2013 Pence Â£000 Pence Â£000 17,378,480 196.23 34,102 167.55 28,598 Ordinary Shares in issue (2013: 17,068,480) 21,565,054 Zero 208.18 44,895 195.42 41,391 Dividend Preference Shares* in issue (2013: 21,180,373) *â€‰Classified as a liability. 19.â€„RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH THE INVESTMENT MANAGER Details of the investment management fee charged by Premier Fund Managers Limited is set out in note 3. In addition, Premier Asset Management Limited acts as Company Secretary and the fee for secretarial services is set out in note 4. At 31 December 2014â€„Â£149,200 (31 December 2013: Â£63,014) of these fees remained outstanding. Fees paid to the Directors are disclosed in the Directors' Remuneration Report on page 30. Full details of Directors' interests are set out in the Directors' Remuneration Report on page 29. 20.â€„FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES Risk Management Policies and Procedures As an investment trust the Company invests in equities and other investments for the long-term so as to secure its investment objectives stated on page 16. In pursuing its investment objectives, the Company is exposed to a variety of risks that could result in either a reduction in the Company's net assets or a reduction of the profits available for dividends. These risks, include market risk (comprising currency risk, interest rate risk, and other price risk), liquidity risk, and credit risk, and the Directors' approach to the management of them are set out below. The objectives, policies and processes for managing the risks, and the methods used to measure the risks, that are set out below, have not changed from the previous accounting period. (a)â€„MARKET RISK The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - currency risk (see (b) below), interest rate risk (see (c) below) and other price risk (see (d) below). The Board of Directors reviews and agrees policies for managing these risks, which have remained substantially unchanged from those applying in the year ended 31 December 2013. The Company's Investment Manager assesses the exposure to market risk when making each investment decision, and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis. (b)â€„CURRENCY RISK Certain of the Company's assets, liabilities, and income, are denominated in currencies other than Sterling (the Company's functional currency, in which it reports its results). As a result, movements in exchange rates may affect the Sterling value of those items. Management of the risk The Investment Manager monitors the Company's exposure and reports to the Board on a regular basis. When appropriate the Investment Manager deploys active hedging against exchange rate fluctuations where adverse movements are anticipated. This was not used in the year. Income denominated in foreign currencies is converted to Sterling on receipt. The Company does not use financial instruments to mitigate the currency exposure in the period between the time that income is includedâ€ˆin the financial statements and its receipt. Foreign currency exposures An analysis of the Company's equity investments that are priced in a foreign currency is: As at As at 31 December 31 December 2014 2013 Investments Investments Â£000 Â£000 Australian Dollar 907 605 Brazilian Real 3,204 2,361 Chinese Yuan - 990 Euro 6,593 9,497 Hong Kong Dollar 15,862 15,663 Indonesian Rupiah - 441 Malaysian Ringgit 2,101 2,200 Norwegian Krone 355 - Philippine Peso 773 307 Polish Zloty 2,354 1,614 Qatari Riyal 2,312 2,111 Romanian Leu 1,450 - Singapore Dollar 935 525 US Dollar 13,040 10,825 49,886 47,139 (b)â€„CURRENCY RISK continued Foreign currency sensitivity The following table illustrates the sensitivity of the return on ordinary activities after taxation for the year and the equity in regard to the Company's non-monetary financial assets to changes in the exchange rates for the portfolio's significant currency exposures, these being Sterling/US Dollar, Sterling/Euro and Sterling/Hong Kong Dollar. It assumes the following changes in exchange rates: Sterling/US Dollar +/- 1% (2013: 4%) Sterling/Euro +/- 4% (2013: 5%) Sterling/Hong Kong Dollar +/- 1% (2013: 4%) These percentages have been determined based on the average market volatility in exchange rates, in the previous 12 months. If Sterling had strengthened against the currencies shown, this would have had the following effect: 2014 2014 2014 2013 2013 2013 US Euro HK US Euro HK Dollar Dollar Dollar Dollar Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Projected change 1% 4% 1% 4% 5% 4% Impact on revenue return (3) (13) (6) (9) (31) (11) Impact on capital return (130) (264) (159) (433) (475) (627) Total return after taxation for (133) (277) (165) (442) (506) (638) the year Equity (133) (277) (165) (442) (506) (638) If Sterling had weakened against the currencies shown, this would have had the following effect: 2014 2014 2014 2013 2013 2013 US Euro HK US Euro HK Dollar Dollar Dollar Dollar Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Projected change 1% 4% 1% 4% 5% 4% Impact on revenue return 3 13 6 9 31 11 Impact on capital return 130 264 159 433 475 627 Total return after taxation for 133 277 165 442 506 638 the year Equity 133 277 165 442 506 638 In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the currency risk management process used to meet the Company's objectives. (c)â€„INTEREST RATE RISK Interest rate movements may affect the level of income receivable on cash deposits. The Company has no direct exposure to investments exposed to interest rate fluctuations. Interest rate movements may affect the fair value of investments in fixed-interest rate securities. Cash at bank at 31 December 2014 (and 31 December 2013) was held at floating interest rates, linked to current short term market rates. Due to the insignificant impact of fluctuations in interest rates no sensitivity analysis is shown. (d)â€„OTHER PRICE RISK Other price risks (i.e. changes in market prices other than those arising from interest rate risk or currency risk) may affect the value of the quoted and unquoted equity investments. Management of the risk The Board of Directors manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Investment Manager. The Board meets regularly and at each meeting reviews investment performance. The Board monitors the Investment Managers' compliance with the Company's objectives. When appropriate, the Company manages its exposure to risk by using futures contracts or by buying put options on indices and on quoted equity investments in its portfolio. This was not used in the year. Concentration of exposure to other price risks A sector breakdown and geographical allocation of the portfolio is contained in the Investment Managers' Report on page 9. Other price risk sensitivity The following table illustrates the sensitivity of the return after taxation for the year and the equity to an increase or decrease of 10% in the fair values of the Company's equities. This level of change is considered to be reasonably possible based on observation of current market conditions. The sensitivity analysis is based on the Company's equities at each balance sheet date, with all other variables held constant. Increase in Decrease in Increase in Decrease in fair value fair value fair value fair value 2014 2014 2013 2013 Â£000 Â£000 Â£000 Â£000 Consolidated Statement of Comprehensive Income - return after taxation: Revenue return - increase/ 30 (30) 27 (27) (decrease) Capital return - increase/ 7,734 (7,734) 6,837 (6,837) (decrease) Total return after 7,764 (7,764) 6,864 (6,864) taxation - increase/ (decrease) Equity 7,764 (7,764) 6,864 (6,864) (e)â€„LIQUIDITY RISK This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Management of the risk Liquidity risk is not significant as the majority of the Company's assets are investments in quoted equities that are readily realisable. The Company does not have any borrowing facilities. The investments in unquoted securities may have limited liquidity and be difficult to realise. At 31â€ˆDecember 2014 the unquoted securities are valued at Â£50,000 which relates to the wholly-owned subsidiary, PEWT Securities PLC (31â€ˆ December 2013 the unquoted securities were valued at nil). The Board gives guidance to the Investment Manager as to the maximum amount of the Company's resources that should be invested in any one holding. The policy is that the Company should remain fully invested in normal market conditions and that short-term borrowing be used to manage short-term cash requirements. The Board will monitor the level of liquidity required to fund the repayment of the Zero Dividend Preference Shares due on 31 December 2015. The contractual maturities of the Group's financial liabilities at 31 December 2014, based on the earliest date on which payment can be required, were as follows: More than 3â€‰months but no 3â€‰months more than or less one year Total At 31 December 2014 Â£000 Â£000 Â£000 Payables and other (265) - (265) financial liabilities Zero Dividend Preference - (47,826) (47,826) Shares (f)â€„CREDIT RISK The failure of the counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. The maximum exposure to credit risk at 31 December 2014 (comprising of convertible bonds, current assets and cash at bank) was Â£4,819,000 (2013: Â£8,651,000). The calculation is based on the Company's credit exposure as at 31 December 2014 and may not be representative of the year as a whole. Management of the risk This risk is not significant, and is managed as follows: â€¢ investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the Investment Manager, and limits are set on the amount that may be due from any one broker; and â€¢ cash at bank is held only with reputable banks with high quality external credit ratings. The Company does not generally hold significant cash balances, but when it does it seeks to limit exposure to any one bank to 10% of net assets. None of the Company's financial assets are secured by collateral or other credit enhancements. (g)â€„FAIR VALUE MEASUREMENTS OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES The financial assets and liabilities are either carried in the balance sheet at their fair value, or the balance sheet amount is a reasonable approximation of fair value (due from brokers, dividends receivable, accrued income, due to brokers, accruals and cash balances). The table below sets out fair value measurements using fair value hierarchy. Financial assets at fair value through profit or loss at 31 December 2014 Level 1 Level 3 Total Â£000 Â£000 Â£000 Equity investments 74,711 50 74,761 Fixed interest 2,625 - 2,625 bearing securities Total 77,336 50 77,386 Financial assets at fair value through profit or loss at 31 December 2013 Level 1 Total Â£000 Â£000 Equity investments 63,034 63,034 Fixed interest bearing 5,335 5,335 securities Total 68,369 68,369 Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows: Level 1 - valued using quoted prices in active markets for identical assets. Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1 (there were no Level 2 investments at 31 December 2014 and at 31 December 2013). Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data (there were no Level 3 investments at 31 December 2013 with a market value). Level 3 fair values are determined by the Directors using valuation methodologies in accordance with the IPEV Guidelines and as detailed in note 1.1 (h). Significant inputs include investment cost, the value of the most recent capital raising, the adjusted net asset value of funds and the Pricing Committee's valuations. In accordance with IPEV Guidelines, new investments are carried at cost, the price of the most recent investment being a good indication of fair value. Thereafter, fair value is the amount deemed to be the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. At 31 December 2014, the Company's Level 3 investments related to the wholly-owned subsidiary, PEWT Securities PLC. The valuation techniques used by the Company are explained in the accounting policies note on page 44. A reconciliation of fair value measurements in Level 3 is set out below. Level 3 financial assets at fair value through profit or loss As at 31 December 2014 Â£000 Opening fair value - Investment in subsidiary 50 Closing fair value 50 Financial liabilities at fair value through profit or loss The listed bid price has been used to determine the fair value of the Zero Dividend Preference Shares: As at 31 As at 31 As at 31 As at 31 December 2014 December 2014 December 2013 December 2013 Book value Level 1 Book value Level 1 Â£m Â£m Â£m Â£m Zero Dividend 45.0 46.2 41.5 43.6 Preference Shares 20.â€„FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURES continued (h)â€„CAPITAL MANAGEMENT POLICIES AND PROCEDURES The Company's capital management objectives are: â€¢ to ensure that the Company will be able to continue as a going concern; and â€¢ to achieve a high income from its portfolio and to realise long-term growth in the capital value of the portfolio. The Company's capital at 31 December comprises: 2014 2013 Â£000 Â£000 Debt: Zero Dividend Preference (44,970) (41,536) Shares Equity: Equity share capital 174 171 Retained earnings and 33,853 28,282 other reserves 34,027 28,453 Total Capital 79,262 69,989 Debt as a percentage of 56.74% 59.35% total capital Contractual maturities of the financial liabilities at the year end, based on the earliest date on which payment can be required are as follows: As at 31 As at 31 As at 31 As at 31 As at 31 As at 31 As at 31 As at 31 December December December December December December December December 2014 2014 2014 2014 2013 2013 2013 2013 More More than than 3 months 3â€‰months but no but no 3 months more More 3â€‰months more More than than than than or less one year one year Total or less one year one year Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Creditors: amounts falling due within one year Other 265 - - 265 167 - - 167 creditors Accrued capital entitlement of the Zero - 47,826 - 47,826 - - - - Dividend Preference Shares Premium (net of expenses on placing of Zero - 75 - 75 - - - - Dividend Preference Shares) Creditors: amounts falling due after more than one year Accrued capital entitlement of the Zero - - - - - - 46,974 46,974 Dividend Preference Shares Premium (net of expenses on placing of Zero - - - - - - 145 145 Dividend Preference Shares) 265 47,901 - 48,166 167 - 47,119 47,286 The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period. The Company is subject to several externally imposed capital requirements: â€¢ As a public company, the Company has to have a minimum share capital of Â£ 50,000. â€¢ In order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has to be able to meet one of the two capital restriction tests imposed on investment companies by company law. These requirements are unchanged since last year and the Company has complied with them. 21.â€„SEGMENTAL REPORTING The chief operating decision maker has been identified as the Board of Premier Energy and Water Trust plc. 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 pertaining to the Company 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 54. Glossary of Terms DISCOUNT/PREMIUM If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, the shares are said to be trading at a premium. GEARING Also known as leverage, particularly in the USA. Gearing is introduced when a company borrows money or issues prior ranking share classes such as Zero Dividend Preference ("ZDP") shares, to buy additional investments. The objective is to enhance returns to shareholders but there is the risk of the opposite effect if the additional investments fall in value. GROSS REDEMPTION YIELD The return on a fixed-interest security, or any investment with a known life, expressed as an annual percentage and without any deduction for tax. Redemption yield measures the capital as well as income return on investments with a fixed life. HURDLE RATE The compound rate of growth of the total assets required each year until the wind-up date for shareholders to receive either a predetermined redemption price or, in some cases, a return of the amount originally invested. Any class of share ranking for prior payment should be taken into account in this calculation. NET ASSET VALUE ("NAV") The NAV is the assets attributable to shareholders expressed as an amount per individual share. PEWT's Ordinary Share NAV is calculated as the total value of all its assets, at current market value, having deducted all prior charges at their par value (or at their asset value). The difference between the two NAV figures reported on the Balance Sheet arises from the treatment of the premium (net of expenses) from the issue of ZDP Shares in December 2010 of Â£330,000. In accordance with International Financial Reporting Standards the unamortised portion of the premium has been included with the ZDP liability and will be amortised over the life of the Company. In accordance with the Articles of Association the premium has been included with shareholders equity and the ZDP liability reflects their accrued capital entitlement at 31 December 2014 and 31 December 2013. SPLIT CAPITAL INVESTMENT TRUST An investment trust with two or more classes of share in issue, each class having specified entitlements to income or capital. Typical classes of share include ordinary shares, capital shares, zero dividend preference shares and income and residual capital (or geared ordinary) shares. TOTAL RETURN The combined effect of any dividends paid, together with the rise or fall in the share price or NAV. Total return statistics enable the investor to make performance comparisons between companies with different dividend policies. Any dividends (after tax) received by a shareholder are assumed to have been reinvested in either additional shares of the company at the time the shares go ex-dividend (the share price total return) or in the assets of the company at its NAV per share (the NAV total return). 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. Information on the Premier ISA can be obtained by contacting Premier on 01483 400 400. SHARE REGISTER ENQUIRIES The register for the Ordinary Shares and Zero Dividend Preference Shares is maintained by Capita Asset Services. 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. A member of the Association of Investment Companies. Notice of Annual General Meeting to the members of Premier Energy and Water Trust PLC Notice is hereby given that the Annual General Meeting of the Company will be held at the offices of Premier Fund Managers Limited, Eastgate Court, High Street, Guildford, Surrey GU1 3DE on Tuesday, 21 April 2015, at 12:15 p.m. to consider and, if thought fit, pass the following resolutions, which will be proposed as to resolutions 1, 2, 3, 4, 5, 6, 7 and 8 as ordinary resolutions and as to resolutions 9 and 10 as special resolutions: ORDINARY RESOLUTIONS 1. To receive the Directors' Report and Financial Statements for the year ended 31 December 2014. 2. To approve the Directors' Remuneration Report, other than the part containing the Directors' Remuneration Policy, for the financial year ended 31 December 2014. 3. To re-elect Mr Geoffrey Burns as a Director of the Company. 4. To re-elect Mr Ian Graham as a Director of the Company. 5. To re-elect Mr Michael Wigley as a Director of the Company. 6. To re-appoint Ernst & Young LLP as Auditor of the Company and to authorise the Board to determine their remuneration. 7. Authority to allot new shares: THAT the Directors be and are hereby generally and unconditionally authorised, in accordance with section 551 of the Companies Act 2006 (the "Act"), to allot Ordinary Shares in the Company and to grant rights ("relevant rights") to subscribe for or to convert any security into Ordinary Shares in the Company up to an aggregate nominal amount of Â£17,378, representing 1,737,800 Ordinary Shares of 1p each, (being approximately 10 per cent. of the issued Ordinary Share capital of the Company as at the date of this notice) provided that this authority shall expire at the conclusion of the next annual general meeting of the Company after the passing of this resolution, save that the Company may, at any time prior to the expiry of such authority, make an offer or agreement which would or might require shares to be allotted or relevant rights to be granted after the expiry of such authority and the Directors may allot shares or grant relevant rights in pursuance of such an offer or agreement as if such authority had not expired. 8. Authority to allot Ordinary Shares at a discount: THAT, subject to and conditional upon the passing of resolution 7 above, the Directors be and are hereby generally and unconditionally authorised, in accordance with LR 15.4.11 of the United Kingdom Listing Rules to allot Ordinary Shares for cash pursuant to that resolution at a price which represents a discount to the net asset value attributable to the Ordinary Shares as at the date of such issue provided that (i) such issue is simultaneous with an issue of New Zero Dividend Preference Shares by PEWT Securities PLC ("New ZDP Shares") and (ii) the combined effect of the issue of Ordinary Shares at a discount to the prevailing net asset value per Ordinary Share and the issue of New ZDP Shares at a premium to net asset value per New ZDP Share is that the net asset value per Ordinary Share is thereby increased. SPECIAL RESOLUTIONS 9. Authority to disapply pre-emption rights: THAT, subject to the passing of resolution numbered 7 above, the Directors of the Company be empowered pursuant to section 570 of the Act to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to that resolution as if section 561(1) of the Act did not apply to such allotment, provided that this power shall be limited to: (a) the allotment of equity securities (otherwise than pursuant to sub-paragraph (b) below) up to an aggregate nominal amount of Â£17,378; and (b) the allotment of equity securities to (i) all holders of Ordinary Shares of 1p each in the capital of the Company in proportion (as nearly as may be) to the respective numbers of such Ordinary Shares held by them and (b) to holders of other equity securities as required by the rights of those securities (but subject to such exclusions, limits or restrictions or other arrangements as the Directors of the Company may consider necessary or appropriate to deal with fractional entitlements, record dates or legal, regulatory or practical problems in or under the laws of, or requirements of, any regulatory body or any stock exchange in any territory or otherwise howsoever); and such power shall expire at the conclusion of the next annual general meeting of the Company to be held in 2016, but so that this power shall enable the Company to make an offer or agreement before such expiry which would or might require equity securities to be allotted after such expiry and the Directors of the Company may allot equity securities in pursuance of any such offer or agreement as if such expiry had not occurred. 10. Authority to repurchase the Company's shares: THAT, the Company be and is hereby generally and unconditionally authorised in accordance with Section 701 of the Companies Act 2006 ("the Act") to make market purchases (within the meaning of Section 693(4) of the Act) of Ordinary Shares of 1p each and of Zero Dividend Preference Shares of 1p each in the capital of the Company (together the "Shares"), provided that: (a) the maximum number of Shares hereby authorised to be purchased shall be 2,605,034 Ordinary Shares; (b) the minimum price which may be paid for a Share is 1 pence; (c) the maximum price which may be paid for an Ordinary Share is an amount equal to the highest of (i) 105% of the average of the middle market quotation for an Ordinary Share taken from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the Ordinary Share is purchased and (ii) the higher of the price of the last independent trade and the highest current bid; (d) the authority hereby conferred shall expire at the earlier of the conclusion of the Annual General Meeting of the Company in 2016 or 20 October 2016 unless such authority is renewed prior to such time; and (e) the Company may make a contract to purchase Shares under the authority hereby conferred prior to expiry of such authority which will be or may be executed wholly or partly after the expiration of such authority and may make a purchase of Shares pursuant to any such contract. Any shares so purchased will be cancelled in accordance with the provisions of the Act. By order of the Board Premier Asset Management Limited Secretary 24 February 2015 Notes to the Notice of Annual General Meeting 1. Members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at the meeting. A shareholder may appoint more than one proxy in relation to the Annual General Meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. A shareholder may notappoint more than one proxy to exercise the rights attached to any one share. A proxy need not be a shareholder of the Company. A proxy form which may be used to make such appointment and give proxy instructions accompanies this notice. If you do not have a proxy form and believe that you should have one, or if you require additional forms, please contact the Company's registrars, Capita Asset Services (contact details can be found on page 67). 2. To be valid any proxy form or other instrument appointing a proxy must be received by post to Capita Asset Services, DXS1, 34 Beckenham Road, Beckenham, Kent, BR3 42F or (during normal business hours only) by hand at the offices of the Company's registrars, Capita Asset Services, 34 Beckenham Road, Beckenham, Kent, BR3 4TU no later than 12:15 p.m. on Friday, 17 April 2015. 3. The return of a completed proxy form, other such instrument or any CREST Proxy Instruction (as described in paragraph 9 below) will not prevent a shareholder attending the Annual General Meeting and voting in person if he/she wishes to do so. 4. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy information rights (a "Nominated Person") may, under an agreement between him/her and the shareholder by whom he /she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. 5. The statement of the rights of shareholders in relation to the appointment of proxies in paragraphs 1 and 2 above does not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by shareholders of the Company. 6. To be entitled to attend and vote at the Annual General Meeting (and for the purpose of the determination by the Company of the votes they may cast), shareholders must be registered in the Register of Members of the Company at 6: 00 p.m. on Friday, 17 April 2015 (or, in the event of any adjournment, on the date which is two days before the time of the adjourned meeting for the purposes of which no account is to be taken of any part of a day that is not a working day). Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting. 7. As at 23 February 2015 (being the last business day prior to the publication of this Notice) the Company's issued share capital consisted of 17,378,480 Ordinary Shares, carrying one vote each. Therefore, the total voting rights in the Company as at 23 February 2015 are 17,378,480. 8. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. 9. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications, and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com/CREST). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer's agent (ID RA10) by 6:00 p.m. on Friday, 17 April 2015. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. 10. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. 11. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 12. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares. 13. Under section 527 of the Companies Act 2006 members meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company's accounts (including the Auditor's report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an Auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the Companies Act 2006. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under section 527 of the Companies Act 2006, it must forward the statement to the Company's Auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the Company has been required under section 527 of the Companies Act 2006 to publish on a website. 14. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. 15. A copy of this notice, and other information required by s311A of the Companies Act 2006, is available at the Investment Managers' website: www.premierfunds.co.uk Directors and Advisers Directors Geoffrey Burns (Chairman) Ian Graham (Chairman of the Audit Committee) Michael Wigley Charles Wilkinson 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 Asset Management Limited Eastgate Court High Street Guildford Surrey GU1 3DE Telephone: Mike Nokes 0207 982 1260 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 Auditor Ernst & Young LLP 1 More London Place London SE1 2AF Stockbroker N+1 Singer Advisory LLP One Bartholomew Lane London EC2N 2AX Telephone: 0207 496 3000 Ordinary Shares SEDOL 3353790GB LSE PEW.L GIIN W6S9MG.00000.LE.826 ZDP Shares (issued by PEWT Securities PLC) SEDOL BPYP384GB LSE PEWZ.L GIIN W6S9MG.00001.LE.826 *On 20 January 2015 the Company appointed Premier Portfolio Managers Limited as its Alternative Investment Fund Manager. Premier Portfolio Managers Limited has delegated the portfolio management of the Company's portfolio of assets to Premier Fund Managers Limited.

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