Half-year Report

PREMIER ENERGY AND

WATER TRUST PLC

2017

Half Year Report

for the six months

to 30 June 2017

Investment Objectives

The Company’s investment objectives are to achieve a high income and to realise long term growth in the capital value of its portfolio. The Company will seek to achieve these objectives by investing principally in the equity and equity-related securities of companies operating primarily in the energy and water sectors, as well as other infrastructure investments.

Contents
Investment Objectives	1
Company Highlights	2-3
Chairman’s Statement	4-5
Investment Managers’ Report	6-8
Investment Portfolio	9
Group Income Statement	10-11
Consolidated and Company
Balance Sheets	12
Consolidated and Company
Statement of Changes in Equity	13
Consolidated and Company
Cashflow Statements	14
Notes to the Half Year Report	15-17
Interim Management Report	18-19
Directors and Advisers	20

Company Highlights

for the six months to 30 June 2017

	Six months to	Year ended
	30 June	31 December
	2017	2016
Total Return Performance
Total Assets Total Return 1	2.1%	17.9%
FTSE All-World Utilities Index Total Return (GBP) 2	5.5%	28.7%
FTSE All-World Index Total Return (GBP) 2	6.0%	29.6%
FTSE All-Share Index Total Return (GBP) 2	5.5%	16.8%
Ongoing charges 3	1.8%	1.9%

	Six months to	Year ended
	30 June	31 December
	2017	2016	% change
Ordinary Share Returns
Net Asset Value per Ordinary share (cum income) 4	173.59p	175.86p	(1.3)%
Mid-market price per Ordinary share	159.75p	162.00p	(1.4)%
Discount to Net Asset Value	(8.0)%	(7.9)%
Net Asset Value Total Return 5	1.9%	28.7%
Share Price Total Return 2	2.1%	33.9%

	Six months to	Six months to
	30 June	30 June
	2017	2016	% change
Returns and Dividends
Revenue Return per Ordinary share	6.64p	7.35p	(9.7)%
Net Dividends declared per Ordinary share	3.80p	3.80p	–

Historic Full Year Dividends

Dividends paid in respect of the year to:	31 December	31 December
	2016	2015
Dividend	9.70p	9.70p
Additional dividend	–	3.00p
Total dividends	9.70p	12.70p

Pursuant to an announcement made in August 2013 that the Premier Energy and Water Trust PLC would pay additional dividends of 0.75p per quarter in order to run down the Company’s revenue reserves, additional dividends of 3.00p were paid in the year to 31 December 2015. Having achieved this objective, no further additional dividends were declared in 2016.      

	Six months to	Year ended
	30 June	31 December
	2017	2016	% change
Zero Dividend Preference Share Returns
Net Asset Value per Zero Dividend Preference share 4	107.20p	104.75p	2.3%
Mid-market price per Zero Dividend Preference share	113.50p	113.00p	0.4%
Premium to Net Asset Value	5.9%	7.9%

	As at
	30 June
	2017
Hurdle Rates
Ordinary shares
Hurdle rate to return the 30 June 2017 share price of 159.75p
at 30 November 2020  6	2.5%
Zero Dividend Preference shares
Hurdle rate to return the redemption entitlement
for the 2020 ZDPs of 125.6519p at 30 November 2020  7	(15.1)%

	Six months to	Year ended
	30 June	31 December
	2017	2016	% change
Balance Sheet
Gross Assets less Current Liabilities
(excluding Zero Dividend Preference shares)	£57.2m	£57.0m	3.5%
Zero Dividend Preference shares	(£25.8m)	(£25.2m)	(2.3)%
Equity shareholders’ funds	£31.4m	£31.8m	(1.3)%
Gearing on Ordinary shares8	1.82x	1.79 x
Zero Dividend Preference share cover (non-cumulative) 9	1.76x	1.74 x

1 Based on opening and closing total assets plus dividends marked “ex-dividend” within the period. Source: Premier Fund Managers Limited (“PFM Ltd”).

2 Source: Bloomberg.

3 Ongoing charges have been based on the Company’s management fees and other operating expenses as a percentage of average gross assets less current liabilities over the period (excluding the ZDPs accrued capital entitlement).

4 Articles of Association basis.

5 Based on opening and closing NAVs with dividends marked

“ex-dividend” within the period reinvested. Source: PFM Ltd.

6 The Hurdle Rate is the compound rate of growth of the total assets required each year to meet the Ordinary share price at 30 June 2017. Source: JP Morgan Cazenove.

7 The Hurdle Rate is the compound rate that the total assets could decline each year until the predetermined redemption date, for shareholders still to receive the predetermined redemption price. Source: JP Morgan Cazenove.

8 Based on Gross Assets less Current Liabilities divided by Equity Shareholders’ Funds at the end of each year.

9 Non-cumulative cover = Gross assets at period end less estimated wind up costs less management charges to capital divided by final repayment value of the ZDP shares. Source: JP Morgan Cazenove.

Chairman’s Statement

for the six months to 30 June 2017

Performance

The Premier Energy & Water Trust PLC (“PEWT”/the “Company”) had a fairly stable six months, although the portfolio under-performed equity markets. PEWT’s total assets total return, which measures the total return of the Company’s portfolio, including income received and taking into account fees and costs, was 2.1%. This was below the FTSE All-World Utilities Index which delivered a total return in sterling of 5.5%. The wider market, represented by the FTSE ALL-World Index returned 6.0% in Sterling.

PEWT’s Net Asset Value per Ordinary share (“NAV”) fell 1.3%. However, dividends paid in the period resulted in a positive total return to an Ordinary shareholder of 2.1% despite the fall in the NAV.

The discount at which PEWT’s Ordinary shares trade compared to their NAV was 8.0% at the end of June 2017, a similar level to which it started the year.

Overview of the period

The major macro event was perhaps the surprise UK general election, which was supposed to provide additional clarity on the Brexit process, but which appears to have muddied the waters still further. Sterling seems to have largely taken the resulting hung parliament in its stride, focusing instead on the possibility of a softer Brexit as a result of the Government’s weakened position.

Staying in the UK, there has been a noticeable stepping up in the anti-utility rhetoric engaged in by politicians and the press. The portfolio is invested in those companies with economically regulated assets, which are in theory therefore less politically exposed. However, we are concerned that the worsening environment could colour the regulators’ thinking over the long term.

President Trump’s campaign promises of infrastructure spending and tax cuts look increasingly unlikely, given the realities of the US fiscal situation. Undaunted, the US stock market continues to set new records. US utilities also performed well, despite the Federal Reserve implementing two interest rate rises in the period.

European utilities have performed well, with key elections in France and the Netherlands favouring the status quo, with anti-Euro parties gaining support, but ultimately failing to take power. Greece remains a perennial thorn in the side of the EU establishment, seemingly now a problem to be managed rather than solved.

We have seen further turbulence in South America, notably in Brazil, where President Temer is fighting to remain in office against corruption allegations. He has been a key driver of fiscal prudence, and the markets would not take kindly to a return to a more populist approach to policy.

In terms of China and India, both important markets for PEWT, the first half of 2017 has continued the theme which we saw in 2016, that of strong performances by investee companies not necessarily being reflected in their share prices. While this is frustrating over the short term, over the long term we believe that earnings growth will be reflected in portfolio gains.

Dividends

On 25 April 2016 the Company announced its first quarterly dividend of 1.90p per ordinary share in respect of 2017, unchanged on the dividend paid on the equivalent period in 2016, which was paid on 30 June.

On 27 July 2017 the Company declared a second interim dividend for the 2017 financial year of 1.90p, again unchanged on the dividend paid for the equivalent period of 2016.

PEWT’s revenue and income return has been a little behind the first half of 2016. The main reason for this is the sale of most of the high yield bonds which were purchased in 2016. These provided a high income in that year, and have now been sold given their re-rating back to a fair level. They have been excellent investments, particularly on a risk adjusted basis; further detail can be found in the Investment Managers’ report.

Board Development

Towards the end of 2017 Ms Kasia Robinski will take over the role of audit committee chair from Ian Graham, as part of the ongoing process of board succession and development.

Auditor

The Company’s auditor, Ernst & Young, has has been in post since 2003. In accordance with best practice the Directors put the audit contract out to tender during the period. Due to the longevity of the existing appointment, Ernst & Young chose not to re-tender and the Directors selected KPMG, who are due to take over as the Company’s auditor in the second half of the year following the resignation of Ernst & Young. In accordance with Section 519 of the Companies Act 2006 (“the Act”) Ernst & Young has provided a statement of circumstances as required by law, a copy of which is enclosed with the half year report as required by Section 520 of the Act.

Outlook

We are pleased to see many of PEWT’s holdings performing well operationally. The portfolio remains invested in businesses with solid growth prospects, owning high quality assets. Furthermore, these companies are trading at attractive valuations, particularly when compared to wider markets.

While we cannot predict the future, some equity markets look to be increasingly reliant on accommodative monetary policy. We are concerned how this might play out in coming years, particularly for emerging markets and their currencies, as the stance of central banks changes. In the meantime, we believe the focus on value is correct, even if that means being underweight markets such as the US.

Geoffrey Burns

Chairman

3 August 2017

Investment Managers’ Report

for the six months to 30 June 2017

Market review

2017 has been an eventful year so far. There have been major elections in Europe, including an unplanned one in the UK. These have been generally market positive, with the status quo being largely preserved.

The US Dollar has shown some weakness over summer, with political unrest and several changes in senior White House administration staff.

The Brexit process has now begun, and has the potential to cause volatility as each side tries to pressure the other, inevitably through the media. Longer term we are hopeful that the importance of establishing a sensible working relationship between the UK and Europe wins through, however this is by no means a certainty.

Geopolitical concerns remain, notably in Korea and the Middle East. Brazil seems to be on the right track long term, finally tackling corruption in areas that were previously untouchable. However, this is bound to cause negative headlines and political uncertainty while it happens.

Economic problems remain with us and debt continues to increase. Despite this the global economy is still on an overall growth trajectory, and while it is, investors remain happy to buy equities.

Against this background, markets have had a modestly positive start to the year. The US managed a small but positive return, taking the market to new highs. Market momentum does however appear to have slowed after the very strong 2016. Likewise the FTSE All-Share also produced a creditable mid-single digit return. Emerging markets tended to outperform developed, although unfortunately Emerging Utilities did not.

PEWT’s performance was slightly disappointing in the context of the very strong results reported by underlying companies. However, as ever, we are prepared to tolerate weak share prices in the short term provided the investments are performing well on a fundamental basis.

PEWT’s portfolio performed well in Western Europe, with a favourable political backdrop. In Eastern Europe, the Company’s Romanian investments were also strong. The Global allocation, this being made up of investments with operations around the world, also made a very positive contribution. North America continued to do well.

Less favourable areas included China and India, where again very strong earnings growth was met with falling share prices for our investments. The UK and South America were both weak, largely we feel due to political reasons.

Portfolio Activity

The first half of 2017 was fairly busy from an investment point of view, the fund making investment purchases and sales of approximately £11 million.

Save for one remaining holding, the bond holdings acquired in late 2015/early 2016 have now been sold. £3.1 million was realised from the sale of the Terraform Global 9.75% 2022 bonds, which had delivered a total return to PEWT of 84.7% since first acquisition in October 2015. Similarly, £2.3 million was realised from the sale of Pattern Energy 4% 2020 convertible bonds, which have returned a total of 43.4% since they were first acquired in February 2016. Further down the portfolio, £0.6 million was realised from the sale of Kinder Morgan 7.5% 2040 bonds, which have returned 68.8% since acquisition in February 2016.

Two other major sales were made in the half. Firstly the sale of the Hafslund shares realised £1.8 million, being a total return including dividends of 115.9% and 111.8% for Hafslund B and A shares respectively, since first purchased in November 2014. Secondly, we substantially sold down the position in China Power International, realising £ 1.4 million. This has been a successful long term investment, and the Company has for the time being retained a more modest holding while our investment direction in China is targeted more at environmental utilities.

We have increased the investments in Chinese environmental companies such as Huaneng Renewables and China Everbright International, as a result of their strong growth being under-appreciated and under-valued.

Weightings to European utilities such as Iberdrola, Enel, Gas Natural, and Saeta Yield, have been increased on valuation grounds, which proved to be correct as these companies subsequently performed well in the half.

We added to the holding in Enbridge, its shares having over-reacted to the lower oil price seen in the half. (Pipeline companies such as Enbridge act as transporters rather than producers of oil and gas.)

The position in Indian renewable energy developer Mytrah Energy has been increased, as it appears that the market has not valued the company’s strong growth sufficiently.

GEOGRAPHIC ALLOCATION 2017

30 June 2017

	June 2017	December 2016
North America	23.35%	24.58%
China	18.40%	17.82%
Europe (excluding UK)	12.39%	7.65%
Latin America	10.73%	10.33%
United Kingdom	10.40%	10.03%
India	8.25%	8.39%
Eastern Europe	5.11%	4.63%
Asia (excluding China)	4.78%	4.83%
Global	4.07%	8.54%
Middle East	2.52%	3.19%

SECTOR ALLOCATION 2017

30 June 2017

	June 2017	December 2016
Electricity	32.41%	37.64%
Multi Utilities	24.43%	24.60%
Water & Waste	15.91%	12.77%
Renewable Energy	14.32%	16.14%
Gas	12.15%	8.85%
Toll roads	0.77%	0%

Results highlights

As we make reference to above, many of the Fund’s larger positions continue to report excellent results, without necessarily receiving any credit in their share prices. PEWT’s largest investment, Indian power generator OPG Power Ventures, saw its shares fall by 24.0% in the half, despite reporting very strong 9 month trading figures to December 2016. The company had already reported September 2016 interim earnings growth of 40.8%, and management has indicated that full year March 2017 results will be in line with market expectation.

Similarly in China, China Everbright International grew its 2016 earnings by 33.6%, and processed 9.0 million tonnes of waste, up 30.0% on 2015’s figure of 6.9 million tonnes. The company’s 2015 earnings had also been strong, up 22.4%, and it has recently announced a positive profit alert, in that it anticipates first half 2017 earnings will be increased by approximately 40% on the first half of 2016. Unfortunately, its shares have failed to respond to the excellent operational performance, and between December 2014 and June 2017 have in fact fallen by 15.6%.

As we note above, some of PEWT’s better returns in the half have come from Europe. In terms of actual contribution to return, the strongest performer was Romanian gas transmission company Transgaz, whose shares gained 21.7%. Aside from being attractively valued, the Romanian Government requested that the company move its dividend pay-out ratio from 75% to 90%. Spanish renewable energy company, Saeta Yield, also deserves mention, its shares gaining 21.8% in the half. It has made its first investment outside of Spain, buying wind assets in Uruguay.

Currency

As we discussed in the December 2016 report, throughout the period a proportion of the portfolio’s currency risk was hedged out. At the end of the half, forward currency contracts with a book value of £24.3 million were in place, covering some 44% of the portfolio. These contracts covered US Dollars, Hong Kong Dollars, Euros, and Norwegian Krone.

Outlook

While economic and political issues remain a challenge, the underlying investments in the portfolio continue to perform well. We are therefore optimistic that PEWT will perform well over the medium to long term.

James Smith

Claire Long

Premier Fund Managers Limited

3 August 2017

Investment Portfolio

at 30 June 2017

					Ranking	Ranking
			Value	% total	June	December
Company	Activity	Country	£000	investments	2017	2016
OPG Power Ventures	Electricity	India	3,440	6.2	1	1
SSE	Electricity	United Kingdom	3,247	5.8	2	2
Beijing Enterprises Holdings	Gas	China	2,933	5.2	3	5
Cia de Saneamento do Paraná	Water & Waste	Latin America	2,867	5.1	4	7
First Trust MLP and Energy Income Fund	Multi Utilities	North America	2,742	4.9	5	4
China Everbright Intl.	Water & Waste	China	2,681	4.8	6	9
Huaneng Renewables	Renewable Energy	China	2,614	4.7	7	13
Avangrid	Multi Utilities	North America	2,277	4.1	8	10
Pennon Group	Water & Waste	United Kingdom	2,244	4.0	9	11
Saeta Yield	Renewable Energy	Europe (excluding UK)	1,582	2.8	10	32
Transelectrica	Electricity	Eastern Europe	1,555	2.8	11	14
Qatar Electricity & Water Co.	Multi Utilities	Middle East	1,408	2.5	12	12
Keppel Infrastructure Trust	Multi Utilities	Asia (excluding China)	1,406	2.5	13	20
Edison International	Electricity	North America	1,400	2.5	14	19
Iberdrola	Electricity	Europe (excluding UK)	1,358	2.4	15	35
Transgaz	Gas	Eastern Europe	1,301	2.3	16	22
Nextera Energy	Electricity	North America	1,295	2.3	17	17
Engie	Multi Utilities	Global	1,288	2.3	18	18
Cia Paranaense Energia	Electricity	Latin America	1,253	2.2	19	15
NRG Yield*	Renewable Energy	North America	1,251	2.2	20	21
Mytrah Energy	Renewable Energy	India	1,174	2.1	21	44
Enbridge	Gas	North America	1,117	2.0	22	34
China Power Intl. Develop	Electricity	China	1,093	2.0	23	6
Sempra Energy	Multi Utilities	North America	955	1.7	24	23
Enel Americas	Electricity	Latin America	870	1.6	25	26
ACEA	Multi Utilities	Europe (excluding UK)	816	1.5	26	31
CMS Energy	Multi Utilities	North America	783	1.4	27	25
Metro Pacific Investments	Multi Utilities	Asia (excluding China)	777	1.4	28	24
Gas Natural	Gas	Europe (excluding UK)	756	1.4	29	–
Alliant Energy	Electricity	North America	742	1.3	30	29
Macquarie 1st Trust Global Infrastructure
Utility Dividend & Income	Multi Utilities	Global	702	1.3	31	33
Enagas	Gas	Europe (excluding UK)	690	1.2	32	28
Enel	Electricity	Europe (excluding UK)	577	1.0	33	–
Atlantia	Toll roads	Europe (excluding UK)	433	0.8	34	–
EDP - Energias do Brasil	Electricity	Latin America	394	0.7	35	36
Enel Chile	Electricity	Latin America	380	0.7	36	39
ERG	Renewable Energy	Europe (excluding UK)	378	0.7	37	48
Beijing Enterprises Water	Water & Waste	China	358	0.6	38	40
Hera	Multi Utilities	Europe (excluding UK)	341	0.6	39	41
Pattern Energy Group	Renewable Energy	North America	330	0.6	40	–
Severn Trent	Water & Waste	United Kingdom	327	0.6	41	–
Atlantica Yield	Renewable Energy	Global	287	0.5	42	47
Banpu Power	Electricity	Asia (excluding China)	286	0.5	43	42
AES Tiete Energia	Electricity	Latin America	238	0.4	44	43
TPI Polene Power	Renewable Energy	Asia (excluding China)	203	0.4	45	–
China Everbright Greentech	Renewable Energy	China	189	0.3	46	–
Centre Coast MLP & Infrastructure Fund	Multi Utilities	North America	168	0.3	47	–
Kangda International	Water & Waste	China	153	0.3	48	45
China Water Affairs Group	Water & Waste	China	138	0.2	49	46
Beijing Enterprise Environment	Water & Waste	China	129	0.2	50	–
			55,926	99.9%
Unquoteds
PEWT Securities 2020 PLC	ZDP subsidiary	United Kingdom	50	0.1
Freepower	In liquidation	United Kingdom	–	–
ITI Energy	In liquidation	United Kingdom	–	–
Total investments			55,976	100.0%

* Holding in convertible bonds and ordinary shares  

Group Income Statement

for the six months to 30 June 2017

		(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Audited)	(Audited)	(Audited)
		Six months to 30 June 2017	Six months to 30 June 2017	Six months to 30 June 2017	Six months to 30 June 2016	Six months to 30 June 2016	Six months to 30 June 2016	Year ended 31 December 2016	Year ended 31 December 2016	Year ended 31 December 2016
		Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£000	£000	£000	£000	£000	£000	£000	£000	£000
Gains/(losses) on investments held at fair value
through profit or loss		–	222	222	–	3,660	3,660	–	6,905	6,905
Income		1,638	–	1,638	1,804	–	1,804	2,901	–	2,901
Investment management fee		(118)	(177)	(295)	(98)	(147)	(245)	(215)	(322)	(537)
Other expenses		(249)	–	(249)	(347)	(79)	(426)	(605)	(81)	(686)
Reconstruction costs		–	–	–	–	–	–	–	(11)	(11)
Profit before finance costs and taxation		1,271	45	1,316	1,359	3,434	4,793	2,081	6,491	8,572
Finance costs		–	(590)	(590)	–	(564)	(564)	–	(1,143)	(1,143)
Profit/(loss) before taxation		1,271	(545)	726	1,359	2,870	4,229	2,801	5,348	7,429
Taxation	5	(70)	–	(70)	(30)	–	(30)	(108)	–	(108)
Profit/(loss) for the period		1,201	(545)	656	1,329	2,870	4,199	1,973	5,348	7,321
Return per Ordinary share (pence)
- basic	3	6.64	(3.02)	3.62	7.35	15.87	23.22	10.91	29.56	40.47

The total columns of this statement represents the Group’s profit or loss, prepared in accordance with IFRS.

As the parent of the Group, the Company has taken advantage of the exemption not to publish its own separate Income Statement as permitted by Section 408 of the Companies Act 2006. The Company’s total comprehensive income for the half year ended 30 June 2017 was £656,000.

The supplementary revenue and capital columns are prepared under guidance published by the Association of Investment Companies (“AIC”).

All items derive from continuing operations; the Group does not have any other recognised gains or losses.

All income is attributable to the equity holders of the Company. There are no minority interests.

Consolidated and Company Balance Sheets

as at 30 June 2017

		(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Audited)	(Audited)
		Group	Company	Group	Company	Group	Company
		30 June	30 June	30 June	30 June	31 December	31 December
		2017	2017	2016	2016	2016	2016
	Notes	£000	£000	£000	£000	£000	£000
Non current assets
Investments at fair value through profit or loss		55,926	55,976	52,565	52,665	55,946	55,996
Current assets
Debtors		497	497	813	813	362	362
Derivative financial instruments		463	463	–	–	67	67
Cash at bank		642	642	1,691	1,691	935	935
		1,602	1,602	2,504	2,504	1,364	1,364
Total assets		57,528	57,578	55,069	55,169	57,310	57,360
Current liabilities
Creditors: amounts falling due within one year		(177)	(227)	(1,059)	(1,159)	(185)	(235)
Other financial liabilities		–	–	–	–	–	–
Derivative financial instruments		(145)	(145)	–	–	(98)	(98)
		(322)	(372)	(1,059)	(1,159)	(283)	(333)
Total assets less current liabilities		57,206	57,206	54,010	54,010	57,027	57,027
Non-current liabilities
Zero Dividend Preference shares		(25,807)	–	(24,637)	–	(25,217)	–
Intercompany payable		–	(25,807)	–	(24,637)	–	(25,217)
Net assets		31,399	31,399	29,373	29,373	31,810	31,810
Equity attributable to Ordinary Shareholders
Share capital		181	181	181	181	181	181
Share premium		8,701	8,701	8,699	8,699	8,701	8,701
Redemption reserve		88	88	88	88	88	88
Capital reserve		13,576	13,576	11,644	11,644	14,122	14,122
Special reserve		7,472	7,472	7,472	7,472	7,472	7,472
Revenue reserve		1,381	1,381	1,289	1,289	1,246	1,246
Total equity attributable  to Ordinary Shareholders		31,399	31,399	29,373	29,373	31,810	31,810
Net asset value per Ordinary share (pence)	4	173.59	173.59	162.39	162.39	175.86	175.86

Consolidated and Company Statement of Changes in Equity

For the six months to 30 June 2017 (unaudited)

	Ordinary	Share
	share	premium	Redemption	Capital	Special	Revenue
	capital	reserve	reserve	reserve	reserve	reserve	Total
	£000	£000	£000	£000	£000	£000	£000
Balance at 31 December 2016	181	8,701	88	14,122	7,472	1,246	31,810
Profit for the period	–	–	–	(546)	–	1,202	656
Ordinary dividends paid	–	–	–	–	–	(1,067)	(1,067)
Balance at 30 June 2017	181	8,701	88	13,576	7,472	1,381	31,399

For the six months to 30 June 2016 (unaudited)

	Ordinary	Share
	share	premium	Redemption	Capital	Special	Revenue
	capital	reserve	reserve	reserve	reserve	reserve	Total
	£000	£000	£000	£000	£000	£000	£000
Balance at 31 December 2015	181	8,699	88	8,774	7,472	1,163	26,377
Profit for the period	–	–	–	2,870	–	1,329	4,199
Ordinary dividends paid	–	–	–	–	–	(1,203)	(1,203)
Balance at 30 June 2016	181	8,699	88	11,644	7,472	1,289	29,373

For the financial year ended 31 December 2016 (audited)

	Ordinary	Share
	share	premium	Redemption	Capital	Special	Revenue
	capital	reserve	reserve	reserve	reserve	reserve	Total
	£000	£000	£000	£000	£000	£000	£000
Balance at 31 December 2015	181	8,699	88	8,774	7,472	1,163	26,377
Profit for the year	–	–	–	5,348	–	1,973	7,321
Write back of tap issue costs	–	2	–	–	–	–	2
Ordinary dividends paid	–	–	–	–	–	(1,890)	(1,890)
Balance at 31 December 2016	181	8,701	88	14,122	7,472	1,246	31,810

Consolidated and Company Cashflow Statements

for the six months ended 30 June 2017

	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Audited)	(Audited)
	Group	Company	Group	Company	Group	Company
	Six months	Six months	Six months	Six months	Year	Year
	ended	ended	ended	ended	ended	ended
	30 June	30 June	30 June	30 June	31 December	31 December
	2017	2017	2016	2016	2016	2016
	£000	£000	£000	£000	£000	£000
Profit before finance costs and taxation*	1,316	1,316	4,793	4,793	8,572	8,572
Adjustments for
Gains on investments held at fair value through profit or loss	(222)	(222)	(3,434)	(3,434)	(6,905)	(6,905)
Increase/(decrease) in trade and other receivables	134	134	(286)	(286)	(319)	(319)
Decrease in trade and other payables	(8)	(8)	(1,090)	(1,090)	(537)	(537)
Overseas taxation paid	(72)	(72)	(47)	(47)	(126)	(126)
Net cash flows from operating activities	1,148	1,148	(64)	(64)	685	685
Investing activities
Purchases of investments	(11,687)	(11,687)	(10,118)	(10,118)	(19,189)	(19,189)
Proceeds from sales of investments	11,313	11,313	11,023	11,023	19,276	19,276
Net cash flows from investing activities	(374)	(374)	905	905	87	87
Financing activities
Payment to ZDP shareholders with “B” rights	–	–	(25,708)	(25,708)	(25,708)	(25,708)
Dividends paid	(1,067)	(1,067)	(1,203)	(1,203)	(1,890)	(1,890)
Net cash used in financing activities	(1,067)	(1,067)	(26,911)	(26,911)	(27,598)	(27,598)
Decrease in cash and cash equivalents	(293)	(293)	(26,070)	(26,070)	(26,826)	(26,826)
Cash and cash equivalents, beginning of period	935	935	27,761	27,761	27,761	27,761
Cash and cash equivalents at end of period	642	642	1,691	1,691	935	935

*This includes £2,345,000 (2016: £2,735,000) of cash inflow from dividends from securities, £331,000 (2016: £89,000) of interest from securities, and £8,000 (2016: £13,000) of cash inflow from bank interest.

Notes to the Half Year Report

ACCOUNTING POLICIES

1.1  Basis of preparation

The Half-year Financial Statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 “Interim Financial Reporting” and in accordance with the Statement of Recommended Practice (“SORP”) “Financial Statements of Investment Trust Companies and Venture Capital Trusts” issued by the Association of Investment Companies (“AIC”) in November 2014 (and updated in January 2017), where the SORP is not inconsistent with IFRS.

The financial information contained in this Half-year Report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the periods ended 30 June, 2017 and 30 June, 2016 have not been audited. The financial information for the year ended 31 December, 2016 has been extracted from the latest published audited accounts. Those accounts have been filed with the Registrar of Companies and included the Independent Auditor’s Report which, in respect of both sets of accounts, was unqualified, did not contain an emphasis of matter reference, and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006. Those statutory accounts were prepared in accordance with IFRS, as adopted by the European Union.

The functional currency of the Group is UK pounds Sterling as this is the currency of the primary economic environment in which the Company operates. Accordingly, the Financial Statements are presented in UK pounds Sterling rounded to the nearest thousand pounds.

The same accounting policies, presentation and methods of computation have been followed in these Financial Statements as were applied in the preparation of the Group’s Financial Statements for the previous accounting periods.

IFRS 10 Consolidated Financial Statements

The Financial Statements in these accounts reflect the adoption of IFRS 10 (including the Investment Entities amendment) which requires investment companies to value subsidiaries (except for those providing investment related services) at fair value through profit and loss rather than consolidate them. The Directors, having assessed the criteria, believe that the Group meets the criteria to be an investment entity under IFRS 10 and that this accounting treatment better reflects the Company’s activities as an investment trust.

PEWT Securities 2020 PLC, which is controlled by the Company, holds the ZDP shares and has lent the proceeds to the Company. It is considered to provide investment related services to the Group and is therefore required to be consolidated under the IFRS 10 Investment Entities amendment. PEWT Securities 2020 PLC has been consolidated in these Financial Statements using consistent accounting policies to those applied by the Company.

1.2  Presentation of Statement of Comprehensive Income

In order to better reflect the activities of the Company as an investment trust company, and in accordance with guidance issued by the AIC, supplementary information which analyses the Consolidated Income Statement between items of a revenue and capital nature has been presented alongside the Consolidated Income Statement.

1.3  Use of estimates

The preparation of Financial Statements requires the Company to make estimates and assumptions that affect the items reported in the Balance Sheet and Income Statement and the disclosure of contingent assets and liabilities at the date of the Financial Statements. Although these estimates are based on management’s best knowledge of current facts, circumstances and, to some extent, future events and actions, the Company’s actual results may ultimately differ from those estimates, possibly by a significant amount. The investments in the equity of unquoted companies that the Company holds are not traded and as such the prices are more uncertain than those of more widely traded securities. The unquoted investments are valued by reference to valuation techniques approved by the Directors and in accordance with the International Private Equity and Venture Capital Valuation (“IPEV”) Guidelines and IFRS 13.

1.4  Segmental reporting

The chief operating decision maker has been identified as the Board of the Company. The Board reviews the Company’s internal management accounts in order to analyse performance. The Directors are of the opinion that the Company is engaged in one segment of business, being the investment business. Geographical segmental analysis has not been disclosed because the Directors are of the opinion that as an investment company the geographical sources of revenues received by the Company are incidental to its investment activity. The geographical allocation of the investments from which income is received and to which non-current assets relate is given on page 7.

2.   Dividend

On 27 July 2017 the Directors declared a second interim dividend of 1.90p per Ordinary share for the year ending 31 December 2017 to holders of Ordinary shares on the register on 1 September 2017. The Ordinary shares will be marked ex-dividend on 31 August 2017 and the dividend will be paid on 29 September 2017.

3.   Total return per Ordinary share

The total return per Ordinary share is based on the profit for the half year after taxation of £656,000

(six months ended 30 June 2016: £4,199,000; year ended 31 December 2016: £7,321,000) and on 18,088,480 Ordinary shares in issue during the six months ended 30 June 2017 (six months ended 30 June 2016: 18,088,480 Ordinary shares; year ended 31 December 2016: 18,088,480 Ordinary shares).

4.   Net Asset Value

The net asset value per share and the net assets available to each class of share calculated in accordance with International Financial Reporting Standards, are as follows:

	Net asset value	Net assets	Net asset value	Net assets
	per share	available	per share	available
	30 June	30 June	31 December	31 December
	2017	2017	2016	2016
	Pence	£000	Pence	£000
18,088,480 Ordinary shares of £0.01 each in issue (2016: 18,088,480)	173.59p	31,399	175.86p	31,810
24,073,337 PEWT Securities 2020 PLC Zero Dividend Preference shares of £0.01 each in issue* (2016: 24,073,337)	107.20p	25,807	104.75p	25,217

*Classified as a liability.

5.   Taxation charge

The taxation charge of £70,000 (30 June 2016: £30,000 and 31 December 2016: £108,000) relates to irrecoverable overseas taxation.

6.   Investment management fee charged by Premier Fund Managers Limited

	(Unaudited)	(Unaudited)	(Audited)
	Six months to	Six months to	Year ended
	30 June	30 June	31 December
	2017	2016	2016
	£000	£000	£000
Basic fee:
40% charged to revenue	118	98	215
60% charged to capital	177	147	322
	295	245	537

7.   Section 1158 of the Income and Corporation Tax Act 2010

It is the intention of the Directors to conduct the affairs of the Company so that they satisfy the conditions for approval as an investment trust company set out in section 1158 of the Corporation Tax Act 2010.

Interim Management Report

Premier Energy and Water Trust PLC is required to make the following disclosures in its half year report:

PRINCIPAL RISKS AND UNCERTAINTIES

The Board believes that the principal risks and uncertainties faced by the Company continue to fall into the following categories:

• Structure of the Company and gearing	• Discount volatility
• Dividend levels	• Operational
• Currency risk	• Accounting, legal and regulatory
• Liquidity risk	• Political and regulatory
• Market price risk

Information on each of these is given in the Strategic Report in the Annual Report for the year ended 31 December 2016.

RELATED PARTY TRANSACTIONS

The Directors are recognised as a related party under the Listing Rules and during the six months to 30 June 2017 fees paid to Directors of the Company totalled £44,000 (six months ended 30 June 2016: £43,000 and year to 31 December 2016: £84,400).

GOING CONCERN

The Directors believe, having considered the Company’s investment objectives, risk management policies, capital management policies and procedures, nature of the portfolio and income and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future. For these reasons, they consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts.

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors are responsible for preparing the half year report, in accordance with applicable law and regulations. The Directors confirm that, to the best of their knowledge:

• The condensed set of Financial Statements within the Half-year Report has been prepared in accordance with IAS 34, “Interim Financial Reporting”, as adopted by the European Union; and

• The Interim Management Report includes a fair review of the information required by 4.2.7R (indication of important events during the first six months of the year) and 4.2.8R (disclosure of related party transactions and changes therein) of the FCA’s Disclosure and Transparency Rules.

For and on behalf of the Board.

Geoffrey Burns

Chairman

3 August 2017

Directors and Advisers

DIRECTORS

Geoffrey Burns (Chairman)

Ian Graham (Chairman of the Audit Committee)

Charles Wilkinson (retired on 25 April 2017)

Gillian Nott OBE

Kasia Robinski (appointed on 28 February 2017)

ALTERNATIVE INVESTMENT FUND MANAGER (“AIFM”)

Premier Portfolio Managers Limited

Eastgate Court High Street   Guildford Surrey GU1 3DE

Telephone: [phone]

www.premierfunds.co.uk

Authorised and regulated by the

Financial Conduct Authority

INVESTMENT MANAGER

Premier Fund Managers Limited

Eastgate Court High Street   Guildford Surrey GU1 3DE

Telephone: [phone]

www.premierfunds.co.uk

Authorised and regulated by the

Financial Conduct Authority

SECRETARY AND REGISTERED OFFICE

Premier Portfolio Managers Limited

Eastgate Court

High Street

Guildford

Surrey GU1 3DE

Telephone: Martin Salmon 0207 982 2725

COMPANY NUMBER

4897881

WEBSITE

www.premierfunds.co.uk

REGISTRAR

Capita Asset Services

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

Telephone: [phone]

Overseas: [phone]

E-mail: [e-mail]

CUSTODIAN AND DEPOSITARY

Northern Trust Global Services Limited

50 Bank Street

Canary Wharf

London E14 5NT

Authorised by the Prudential Regulation Authority (“PRA”) and regulated by the FCA and PRA

AUDITOR

Ernst & Young LLP

25 Churchill Place

Canary Wharf

London E14 5EY

STOCKBROKER

N+1 Singer Advisory LLP

One Bartholomew Lane

London EC2N 2AX

Telephone: [phone]

ORDINARY SHARES

SEDOL: 3353790GB   LSE: PEW

ZERO DIVIDEND PREFERENCE SHARES

SEDOL: BYP98L6 LSE: PEZ

GLOBAL INTERMEDIARY IDENTIFICATION NUMBER

GIIN: W6S9MG.00000.LE.826

Shareholder Information

SHARE PRICE AND PERFORMANCE INFORMATION

The Ordinary shares and Zero Dividend Preference shares are listed on the London Stock Exchange. Information about the Company and that of the other investment company managed by Premier, the Acorn Income Fund Limited, including current share prices can be obtained directly from:

www.premierfunds.co.uk

Contact Premier on 01483 400 400, or by e-mail to [e-mail].

SHARE DEALING

Shares can be purchased through a stockbroker.

SHARE REGISTER ENQUIRIES

The register for the Ordinary shares and Zero Dividend Preference shares is maintained by Capita Registrars. In the event of queries regarding your holding, please contact the Registrar on 0871 664 0300 (calls cost 10p per minute plus network extras, lines are open Monday to Friday 9.00 a.m. to 5.30 p.m.); overseas [phone]; or e-mail [e-mail]. Changes of name and/or address must be notified in writing to the Registrar.

STATEMENT REGARDING NON-MAINSTREAM INVESTMENT PRODUCTS

The Company currently conducts its affairs so that both the Ordinary shares issued by the Company and the Zero Dividend Preference shares issued by the Company’s wholly-owned subsidiary PEWT Securities 2020 PLC can be recommended by IFAs to retail investors in accordance with the FCA’s rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future.

The Ordinary shares and the Zero Dividend Preference shares fall outside the restrictions which apply to non-mainstream investment products because they are excluded securities.

A member of the Association of Investment Companies.