Final Results

PREMIER ENERGY AND WATER TRUST PLC

2016
Annual report & accounts
for the year ended
31 December 2016

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	3
Company Highlights	4
Dividend Progression	5
Share Price Performance	5
Chairman’s Statement	6-7
Investment Managers’ Report	8-11
Investment Portfolio	12-13
Review of Top Ten Holdings	14-15
Directors	16
Investment Managers	16
Directors and Advisers	17
Strategic Report	18-23
Directors’ Report	24-27
Statement of Corporate Governance	28-31
Directors’ Remuneration Report	32-34
Audit Committee Report	35-36
Statement of Directors’ Responsibilities in Respect of the
Annual Report and the Financial Statements	37
Independent Auditor’s Report	38-41
Group Income Statement	42
Consolidated and Company Balance Sheets	43
Consolidated Statement of Changes in Equity	44
Company Statement of Changes in Equity	45
Consolidated and Company Cashflow Statements	46
Notes to the Financial Statements	47-64
Glossary of Terms	65
Shareholder Information	66
AIFMD Disclosures & Remuneration Disclosure	67-68
Notice of Annual General Meeting	69-71
Notes to the Notice of Annual General Meeting	72-73

Company Summary

History

The Company, a UK investment trust listed on the Main Market 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. 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 with an indefinite 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 £1,361,931 (after expenses) through the placing of 310,000 Ordinary Shares and 384,681 ZDP Shares (issued by PEWT Securities PLC).

During 2015 the Company raised £3,153,302 (after expenses) through the placing of 710,000 Ordinary Shares and 881,045 ZDP Shares (issued by PEWT Securities PLC).

On 14 December 2015 it was announced that elections by ZDP Shareholders to participate in the Rollover Option exceeded the Maximum Issue Size, meaning that such Elections were scaled back on a pro-rata basis. Each ZDP Shareholder who made a valid Election to receive New ZDP Shares of PEWT Securities 2020 PLC (“new ZDP Shares”) received approximately 1,871 New ZDP Shares and £346.80 in cash for every 1,000 Existing ZDP Shares held on the Effective Date and for which they made a valid Election. On 31 December 2015 PEWT Securities PLC was placed into members’ voluntary liquidation and 24,073,337 New ZDP Shares in PEWT Securities 2020 PLC were issued to satisfy ZDP Shareholders who had elected to rollover their investment. The New ZDP Shares of PEWT Securities 2020 PLC were admitted to the standard listing segment of the Official List and to trading on the Main Market of the London Stock Exchange and dealings commenced on 4 January 2016.

Capital Structure

Ordinary Shares (1p each)

18,088,480

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 Zero Dividend Preference Shares (“ZDPs”) accrued capital entitlement. 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.

Zero Dividend Preference Shares (1p each)	24,073,337
Issued by PEWT Securities 2020 PLC	The 2020 ZDP Shares (“2020 ZDPs/ZDPs”) will have a final capital entitlement of 125.6519p on 30 November 2020, equivalent to a gross redemption yield of 4.75%, subject to there being sufficient capital in the Company. The 2020 ZDPs are qualifying investments for ISAs.

Company Details

Investment Manager	Premier Fund Managers Ltd (“PFM Ltd”), is a subsidiary of Premier Asset Management PLC (“PAM PLC”). PAM PLC had approximately £5.2bn of funds under management at 31 December 2016. PFM Ltd is authorised and regulated by the Financial Conduct Authority (“FCA”). 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 Portfolio Managers 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.)

Financial Calendar 2017

Company’s year end	31 December
Annual results announced	March
Annual General Meeting	25 April 2017
Company’s half year end	30 June
Half year results announced	August
Dividend payments	At the end of March, June, September and December

Company Highlights

for the year to 31 December 2016

	31 December	31 December
	2016	2015	% change
Total Return Performance
Total Assets Total Return1	17.9%	(4.3%)
FTSE All-World Utilities Index Total Return2 (GBP)	28.7%	(2.7%)
FTSE All-World Index Total Return2 (GBP)	29.6%	4.0%
FTSE All-Share Index Total Return2 (GBP)	16.8%	0.9%
Ongoing charges3	1.9%	1.6%
Ordinary Share Returns
Net Asset Value per Ordinary Share (cum income)	175.86p	145.83p	20.6%
Mid-market price per Ordinary Share2	162.00p	130.50p	24.1%
Discount to Net Asset Value	(7.9%)	(10.5%)
Revenue Return per Ordinary Share	10.91p	9.38p	16.3%
Net dividends declared per Ordinary Share	9.70p	9.70p
Additional net dividends per Ordinary Share	–	3.00p
Net Asset Value Total Return5	28.7%	(19.6%)
Share Price Total Return2	33.9%	(26.5%)
Zero Dividend Preference Share Returns
Net Asset Value per Zero Dividend Preference Share	104.75p	100.00p4	+4.8%
Mid Market Price per Zero Dividend Preference Share2	113.00p	100.00p4	+13.0%
Premium to Net Asset Value	7.9%	–
Hurdle Ratesâ€
Ordinary Shares
Hurdle rate to return the share price of 162.00p at 30 November 20206	2.40%
Zero Dividend Preference Shares
Hurdle rate to return the redemption share price for the 2020 ZDPs
of 125.6519p at 30 November 20206	(13.1%)
Balance Sheet
Gross Assets less Current Liabilities (excluding Zero Dividend Preference Shares)7	£57.0m	£76.2m	(25.2%)
Zero Dividend Preference Shares7	(£25.2m)	(£49.8m)	(49.4%)
Equity Shareholders’ Funds	£31.8m	£26.4m	20.5%
Gearing on Ordinary Shares8	1.79x	2.89x
Zero Dividend Preference Share Cover (non-cumulative)6	1.74x	1.45x

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 (excluding the ZDPs accrued capital entitlement).

4. The initial NAV and issue price of the ZDPs.

5. Based on opening and closing NAVs with dividends marked “ex-dividend”.

6. 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 of ZDPs.

7. The decline in Gross Assets and in the size of the ZDP liability was due to £24.6 million of ZDP shares being redeemed and not refinanced immediately following the year end in 2015.

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

†Hurdle rate definition can be found in the Glossary of Terms on page 65.

Dividend Progression

2004-2016

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Share Price Performance

ZDP Shares 1 year performance chart1

(rebased to 100)

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Ordinary Shares 5 year performance chart

(rebased to 100)

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Chairman’s Statement

for the year to 31 December 2016

Performance

2016 was a much improved year for the Premier Energy and Water Trust PLC (“PEWT” / “the Company”). The gross assets total return, which measures the total return of the Company’s portfolio, including income received and taking into account fees and costs, was 17.9%. This was ahead of the FTSE All-Share Index, but behind the total return seen by the FTSE All-World Utilities Index, which returned 28.7% in GBP terms.

The return seen by ordinary shareholders was above that of the portfolio as a result of the gearing effect of PEWT’s capital structure. The cum-income Ordinary Share Net Asset Value (“NAV”) gained 20.6% from 145.83p at 31 December 2015, to 175.86p at 31 December 2016. Adding back dividends paid, the Ordinary Share NAV recorded a total return of 28.7%. The discount at which PEWT’s shares trade compared to their NAV, reduced from 10.5% at the end of 2015 to 7.9% at December 2016, and as such the actual return seen by an ordinary shareholder based on movement in share price plus dividends received was 33.9%.

Following the management and portfolio changes in June 2012, performance has been strong, with positive returns in all years except 2015. Since that date, an ordinary shareholder has seen a total return of 135.9%, or 20.6% per year. This is approximately twice the performance seen in the FTSE All-World Utilities and the FTSE All-Share Indices, which have returned 66.7% and 64.2% respectively, equivalent to 11.8% and 11.4% per year, over the same period. (31 May 2012 to 31 December 2016, source Bloomberg).

Portfolio overview

Investors will be aware that the Company’s portfolio is not constructed by reference to any particular index, and we consider absolute performance over the long term to be more important than short term relative performance. Given this, from time to time, the performance of the portfolio can be expected to diverge from the utilities sector as a whole, and 2016 was one such year. Our objective is for the portfolio to deliver a superior total return over the longer term as compared to the utilities index/sector.

Furthermore, we also believe that underlying operational and financial performance of investee companies is more important than shorter term stock exchange performance. Markets can often be inefficient, and positive developments in individual companies can sometimes take time to find their way into valuations. 2016 saw some underlying performance not reflected in share prices and should in effect store up future value.

In this regard, in 2016 the portfolio was particularly impacted by continued relative share price weakness of some of its Indian and Chinese investments, despite these companies performing exceptionally well operationally. Further detail on this can be found in the Investment Managers’ Report and review of Top Ten Holdings. Therefore, with earnings rising faster than share prices in many cases, overall the valuation of the portfolio became more attractive.

2016 will, of course, be remembered for two significant events; the EU membership referendum in June, and the election of Donald Trump as US President Elect in November.

The first of these had an immediate effect on the value of sterling, and this had a positive impact on the NAV given the international nature of the portfolio. Future income generation from foreign currency denominated assets will also be higher in sterling terms which should be a positive influence on PEWT’s income generation in coming years. Towards the end of the year, the management team took steps to lock in at least part of the currency gain; further detail is provided in their report.

Utilities, being in the main domestically focussed businesses, should not in our estimation be materially impacted by Brexit, and in any event with some three quarters of the portfolio being located outside Europe, we do not expect the portfolio to be particularly exposed.

Donald Trump’s victory in the US Presidential Election, with his proposed fiscal expansion, caused the market to reassess near term growth and the pace of interest rate increases. Neither of these would be particularly positive for the sector in the short term as the market rather lazily considers the sector to be a “bond proxy”, and the sector did close the year on a rather weak note. However, the US fiscal situation is already stretched, and we would question the room for manoeuvre that the new President in fact has.

ZDP Shares and gearing

2016 was the first year of trading of the new ZDP Share issue, which replaced the prior issue that matured at the end of 2015. The new 2020 ZDP Share traded well, closing at a 7.9% premium to underlying NAV, and had an asset cover of 1.74x at the year end.

The 2020 ZDP will mature in November 2020 at a price of 125.6519 pence, equivalent to an annual accrual rate of 4.75%. The 2020 issue is smaller than the one it replaced, having a value of £25.2 million at the end of 2016, compared to the £49.8 million maturity value of the 2015 issue. Ordinary share gearing is therefore much lower at 1.79x as compared to 2.89x at the end of 2015, which has reduced risk inherent within the capital structure.

Income and dividends

The portfolio was reduced in size by over 30% at the end of 2015 as £25.7 million was raised in order to repay those 2015 ZDP Shares which were not being rolled into the new 2020 issue. This could reasonably be expected to have a material negative effect on revenue earnings, and so in February 2016 the Directors, together with the investment team, conducted a review of the income generation capacity of the portfolio in order to provide ordinary shareholders with more clarity on future dividends. As a result of this review, the Directors announced that, subject to unforeseen circumstances, they expected a dividend for 2016 of at least 8.0p per share.

In the event, income generation has been materially higher than originally expected with a revenue return per ordinary share of 10.91p.

There are three main reasons for the higher than expected income; firstly a high level of natural dividend growth within the portfolio, secondly some attractive investment opportunities taken in the first half of the year which contained a high level of income as a part of the return, and lastly the translation benefit arising from the lower level of sterling seen in the second half. Further detail on each of these is provided in the Investment Managers’ Report.

Your Board has declared a 4th interim dividend of 4.00p which will be paid on 31 March 2017 to shareholders on the register at the close of business on 10 March 2017.

Including the first three interim dividends paid during the year, each of 1.90p, the total dividend to be paid in respect of 2016 is therefore 9.70p per Ordinary Share, in line with the base dividend also of 9.70p paid in respect of 2015. This excludes the effect of the 3.00p of additional dividends paid in 2015 in order substantially to run down PEWT’s revenue reserves, a policy which was completed at the end of 2015.

Board development

As I reported last year, Gillian Nott OBE was appointed to the Board, with effect from 1 March 2016. Gillian has made an outstanding contribution in her first year of office. Gillian replaced Michael Wigley who stepped down from the Board in April. I would again like to put on record my thanks to Michael for his many years of valuable service.

Charles Wilkinson has indicated his intention to retire from the Board at the forthcoming AGM. Charles was chairman of Premier Renewable Energy Fund and joined us from that company at the time of our merger. His combination of a deep knowledge of corporate law, and of investment trusts, has been invaluable to your Board, particularly during the restructuring of the Company in 2014, and roll forward of the ZDP Share issue at the end of 2015. We shall miss his strong contribution to our deliberations. .

Lastly, I am very pleased to welcome Kasia Robinski, who was appointed to the Board on 28 February 2017. Kasia has investment trust and audit committee experience as well as an extensive private equity and board level management background covering real estate, private equity, and with particular relevance to PEWT, gas distribution. I am sure she will be a great asset both to the Board and to the Company.

We will continue this process of board ‘refreshment’ in the coming years.

Shareholder relations

The Board and Investment Managers welcome contact with existing and potential shareholders. The Company’s AGM will be held on Tuesday, 25 April 2017 at the offices of Premier Fund Managers Limited, Eastgate Court, High Street, Guildford, Surrey, GU1 3DE where a presentation will be given, 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

Following a difficult year in 2015, in my last statement I encouraged shareholders to stand firm and wait for a recovery of value. In the event 2016 was a successful year for PEWT, with our portfolio companies generally performing very well, reporting higher earnings and consequently dividends to PEWT. Investors who have continued to hold their investment for the long term have seen a solid return, despite some volatility.

We look to 2017 with markets testing new highs, and the monetary environment beginning its long road back to normality. While some market valuations appear stretched, particularly in the US, we can take some comfort from the fact that the Company’s portfolio remains attractively valued, and exposed to companies experiencing a long term underlying growth dynamic.

Geoffrey Burns

Chairman

13 March 2017

Investment Managers’ Report

for the year to 31 December 2016

Performance

Utilities performed in line with global equity markets in 2016, following the sector weakness seen in 2015. It was another year in which it paid to be a global investor, particularly in light of the weakness of sterling.

Given the market’s strong performance for the year, it is easy to forget that 2016 started badly, with sharp falls seen in January. However markets soon recovered, and taking the global utilities sector in isolation, the first half of the year was actually far better than the second. For 2016 as a whole, the sector returned 28.7% (total return in GBP), all of which came in the first half. The utility sector ended the year on a rather lower note, being sold down on the victory of Donald Trump in the US Presidential election. It is assumed that a Trump Presidency will speed up the rate at which interest rates increase, which the market sees as bad for utilities.

PEWT’s performance was respectable, with a total return on gross assets of 17.9% translating into a return of 33.9% for ordinary shareholders. Unlike in 2015, PEWT’s geared capital structure was a benefit to ordinary shareholders. In contrast to the utilities sector, PEWT’s ordinary shareholders saw a stronger performance in the second half than the first.

Portfolio Summary

The sector benefitted from another excellent performance in US utilities, in which PEWT is relatively under-weight. In sterling terms, the US utility sector returned some 38.8% including dividends. PEWT did however benefit from a strong showing in its South American investments, and fixed income investments also performed very well.

£25.7 million was realised from the portfolio towards the end of 2015 in order partially to repay the maturing 2015 ZDP issue. All else equal this should reduce the Company’s level of income available to ordinary shareholders given the smaller asset base from which to generate income. However, income turned out to be stronger than we initially anticipated. One main reason was several new investments made towards the end of 2015 and also in early 2016, particularly in the US pipeline and renewable energy sectors. These produced strong returns, of which high income was a key component.

Investments in China and India, both important regions for PEWT, were disappointing. Although portfolio investments in these locations performed exceptionally well both financially and operationally, sentiment remains weak and share prices did not follow earnings. As such, underlying value has in many cases improved significantly.

Europe remains relatively unattractive, we feel, for utility investors. Regulated utilities in our opinion look to be fairly valued by the market, and competitive utilities with generation assets are weighed down by over-capacity and hence low margins. We did however see a very strong result in Norway, more of which below, while weakness in UK regulated utilities towards the end of the year opened up an attractive entry point into the UK water sector.

North America

A combination of new investments made in the early part of the year, and excellent performance has meant that North America became the largest geographical weighting, with 24.6% (2015: 17.0%) of the portfolio invested there by the end of the year.

Investors will recall that oil prices fell to a 10 year low in the early part of the year, spending all of January and February below $35/barrel. This led to a sharp selloff in the US pipeline infrastructure sector, despite the fact that pipelines do not usually have any meaningful commodity risk within their business models, given they tend to act as a transporter rather than owner of the oil or gas being shipped. We were able to increase the investment in closed end pipeline fund, the First Trust Energy Income Fund (“FEI”), buying at a yield of over 16% at its low point in January. As the oil price recovered, so did shares in pipeline stocks, with the result that for the year as a whole FEI’s shares gained 22.1%, and taking into account its high dividend and the fall in sterling, the total return to a UK investor over the year was 60.7%.

On the same theme, but further down the portfolio, in February we bought the Kinder Morgan 7.7% 2040 bond at a very attractive level, which delivered a total return to the portfolio of 62.4% in the year.

Likewise the US renewable energy sector was sharply lower in the early part of the year, again driven by the oil price. The market tends to sell renewable stocks when the oil price is low, seeing fixed price renewables as a competitor for fossil fuel based generation, and hence being worth less when oil (being used as a proxy for other fossil fuels) is low. However this ignores the fact that renewable assets tend to have long term fixed price power sales agreements in place, and are not in reality particularly sensitive to commodity pricing. As such we were able to buy some high quality investments at attractive prices. One such position, and a new investment in the year, is the Pattern Energy 4% 2020 bond. This is a convertible bond issued by US renewable energy company Pattern Energy, which delivered a total return to PEWT since initial purchase in February of 39.5% for the year.

Mainstream US regulated utilities again performed well. PEWT focuses on those businesses with high levels of asset growth based in attractive locations, often also having expanding renewable energy businesses existing outside the regulatory envelope. NextEra Energy and Edison International are two of the larger holdings, and their shares gained 15.0% and 21.6% respectively over the year. Share prices of US utilities were very strong in the first half, before falling back in the second as the market priced in a faster pace of interest rate increases than originally anticipated. However we feel these concerns are over-done, and in the longer term, higher rates tend to be reflected in higher tariffs, thus countering their negative effect on valuation.

A new investment made towards the end of the year is Avangrid, again largely a regulated electricity distribution business, but also with a sizable renewable energy portfolio. Donald Trump’s position on renewables is at best ambivalent, but the low cost of renewables in the US means it is an increasingly cost competitive technology, and should therefore continue to expand market share.

China

In sharp contrast to the strong gains in North America, the performance of the majority of the Chinese investments within the portfolio was disappointing. Largely as a result, the weighting to China within the portfolio fell from 19.2% at the end of 2015, to 17.8% by December 2016.

Gas distribution company, Beijing Enterprises Holdings (“BEH”), saw its shares decline by 21.9%. This was despite the fact that it reported increased earnings for both 2015 (up 17.3%) and in the first half of 2016 (up 10.3%). BEH is a large regulated gas distributor, benefitting from the switch from coal to gas in Beijing, a trend which has many years to run.

PEWT has prioritised environmental and renewable energy investment in China. China Everbright International (“CEI”) has been a long term holding to which we have increased exposure over the year. CEI is one of China’s leading developers and owners of “waste to energy” incineration plants, a technology which is increasing its market share at the expense of less environmentally-friendly landfill disposal. In this, China is following the long term trend seen in Europe. Despite reporting 2015 earnings up 22.4% and first half 2016 earnings up 20.8%, CEI’s shares fell by 11.7% in 2016.

Similarly we have increased exposure to renewable energy company, Huaneng Renewables (“HNR”). HNR is a leading owner of both wind farms and solar generation. Growth has been strong, and the Chinese Government offers long term fixed tariffs for production, aiming to reduce the country’s reliance on fossil fuels and improve the environment. Despite reporting 2015 earnings up 65.9%, and first half 2016 earnings up 59.4%, HNR’s shares managed a gain of only 8.6% in 2016.

Chinese thermal power generation is an area which has produced strong gains for the Company in the past. PEWT’s one remaining investment in this area, China Power International (“CPI”) fared poorly in the year however, as the long term decline in coal prices went into reverse, with government action to help the mining sector boosting coal prices, and having the effect of cutting margins in the thermal generation sector. CPI has fared far better than many other traditional power producers as a result of its sizable hydro generation business which has performed very well. However, this didn’t prevent the shares from falling by 37% in the year. We substantially sold down this investment in January 2017, although it should be noted that the position was still in profit at the end of 2016, despite the fall in the year. This investment has also paid sizable dividends in recent years.

Latin America

The prize for most improved region should surely go to Latin America, in which the weighting increased to 10.3% at the end of 2016 (2015: 6.5%).

Much of PEWT’s exposure is to Brazil, in which there were positive developments in 2016. Firstly, following a prolonged drought, 2016 was a much wetter year, easing pressure on both water companies and the predominantly hydro based generation sector. Secondly the impeachment of (former) President Dilma Rousseff was well received by markets.

PEWT’s largest holding in Latin America is now Companhia de Saneamento do Paraná, or “Sanepar”. Sanepar is the water and sewerage company in the state of Paraná in Brazil. During the year Sanepar reported strong earnings growth and increased its dividends, and is developing a new regulatory model to bring it into line with international norms of utility regulation. The state government sold some of its shares in December, substantially improving liquidity. As a result of these positive developments, combined with a low starting valuation, Sanepar’s shares gained 220.9% during 2016. However, a UK investor would have received a total return over the year of 438.2% taking into account both dividends and the fall in sterling against the Brazilian Real. Sanepar represented 4.6% of the portfolio at December 2016, up from just 0.8% at December 2015, and was a major contributor of PEWT’s performance in the year.

United Kingdom

The portfolio weighting to the UK fell from 13.3% at the end of 2015, to 10.0% at December 2016 as we sold down positions, such as National Grid, which had reached a fair price.

SSE remains the Company’s largest UK based investment. SSE is now predominantly an owner of regulated transmission and distribution assets, and a renewable energy generator. These businesses continue to perform well. Its competitive businesses, mainly energy supply and thermal power generation, have been weaker, and more subject to political scrutiny. 2016 saw the finalisation of a report by the UK Competition and Markets Authority or “CMA”, into the sector. Various remedies have now been implemented to increase competition in retail supply, and the larger companies have gradually lost market share to new entrants. Working in SSE’s favour however is the relatively tight balance between UK electricity supply and demand, which should increase both generation margins and electricity prices in future. Larger supply companies which can afford to buy forward a greater share of their supply requirements should perform better than the more recent market entrants in this environment. SSE’s shares gained 1.6% in the year.

UK water companies have suffered in the “post-Trump” environment. Pennon was weak towards the end of the year, but should in fact benefit from sterling’s devaluation to the extent that inflation is increased as the asset bases of regulated UK utilities are linked to Retail Price Index. The market appears to focus on macro themes (albeit with an incorrect interpretation on the impact of interest rates and inflation in our view), while ignoring the fundamentals of the business, a 19.9% increase in Pennon’s underlying pre-tax profit for the six months to September, together with a 6% increase in dividend. Pennon’s share price fell by 3.9% in 2016.

Global

This geographical classification is used for those investments which operate globally, preventing categorisation into any one individual location. By far the largest investment position is the Terraform Global 9.75% 2022 Bonds, acquired in late 2015/ early 2016. The bonds were issued by Terraform Global (“GLBL”), a closed-end renewable energy investment company sponsored by US renewable energy developer SunEdison. SunEdison is now in bankruptcy protection, and this had a knock-on effect both on GLBL’s share price and on its bonds, which fell sharply. However, the assets in GLBL are ring-fenced and we therefore felt the low price was an opportunity, especially as the bonds were well covered by cash and assets. In the event the bonds performed very well, returning a total of 77.6% over the year when measured in GBP, a function of their 34.7% increase in price over the year, their high coupon, and also the weakness in sterling.

The other sizable investment in the global category is Engie, which was again a disappointment as it strives to divest legacy non-core energy assets and reinvest into renewables. Its share price fell by 25.8% over the year, and we took steps to reduce the size of this position in early 2017.

India

PEWT’s largest investment, OPG Power Ventures (“OPG”), performed exceptionally well operationally, fully commissioning its second coal fired power station in Gujarat. As such interim results for the six months to September were strong, with a 40.8% increase in earnings, together with the declaration of a maiden dividend. OPG’s next investments will be in solar power, which should provide highly visible long term earnings. Despite the company’s positive development, its share price fell by 24.7% over the year.

Other Regions

Although opportunities in Europe remain sparse, PEWT’s investment in Norwegian power and heat distribution company Hafslund performed exceptionally well, its shares gaining 61.7% in the year.

PEWT’s two Romanian utilities, Transelectrica and Transgaz both performed well operationally, and each paid their customary high level of dividend.

European utilities offer relatively little value for the most part we believe, despite there being some new investment opportunities in Germany as the incumbent utilities separated their activities into regulated and unregulated elements. PEWT’s Italian utility ACEA, which operates in Rome, and is majority owned by the municipal government, fell by 18.7% as the city elected a mayor from the radical “5 Star Movement”. However, this has yet to translate into any particular policy or action which is to the detriment of the company and its financial results have been exceptionally strong.

Currency

The “Brexit” vote was a catalyst for a sharp devaluation of sterling, which fell by 16.3% against the US Dollar, all of which occurred in the second half. Similar movements were seen in other currencies in which PEWT invests. For instance sterling fell by 16.2% against the Hong Kong Dollar which is (of course) pegged to the US Dollar, 31.2% against the Brazilian Real, and 13.6% against the Euro. Interestingly the 14.8% fall against the Indian Rupee did not help OPG’s share price, although it should over time increase the value of its earnings stream by a like amount when translated into sterling.

In order to crystallise some of the currency gain, we decided to hedge out a proportion of the portfolio’s currency risk in the final quarter of the year. By the year end currency hedging positions were held for a value of £23.7 million, equivalent to 42.3% of the portfolio. Currencies covered were US Dollars, Hong Kong Dollars, Euros, and Norwegian Krone.

Balance sheet

As a result of the partial redemption of ZDP Shares at the end of 2015, the Company’s balance sheet is less geared than in previous years, with gearing of the ordinary share of 1.79x at December 2016 compared to 2.89x at December 2016. This reduces risk to the ordinary shareholder, making the NAV less sensitive to movements in the value of the portfolio.

In addition, as a result of the lower ZDP issue size, combined with portfolio performance, the asset cover of the ZDP Shares improved to 1.74x against 1.45x at December 2015.

Outlook

2016 contained many notable successes, particularly in some of the more recent fixed income and renewable energy investments. The performance of some of the investments in Emerging Markets was disappointing, given higher earnings did not translate into gains in share prices. This has however stored up value which should be realised within the portfolio in future years.

The value of sterling remains important to the Company, particularly in light of the large ZDP Share liability, which makes PEWT structurally short sterling. As such the currency hedging position will remain under close review through 2017, with the objective of locking in currency gains already seen, and providing some protection should sterling recover lost value.

2017 will see interest rate increases in the US, and possibly in the UK. This could lead to some short term pressure, although we believe this is largely priced into valuations. However, with portfolio holdings delivering continued earnings growth, the Company’s overall investment environment remains attractive.

James Smith

Claire Long

Premier Fund Managers Limited

13 March 2017

GEOGRAPHIC ALLOCATION

[GRAPHIC REMOVED]

SECTOR ALLOCATION

[GRAPHIC REMOVED]

MARKET CAP DISTRIBUTION 2016

[GRAPHIC REMOVED]

PORTFOLIO CONCENTRATION 2016

[GRAPHIC REMOVED]

Investment Portfolio

at 31 December 2016

			Value	% total	Ranking	Ranking
Company	Activity	Country	£000	investments	2016	2015
OPG Power Ventures	Electricity	India	4,475	8.0	1	1
SSE	Electricity	United Kingdom	3,362	6.0	2	3
TerraForm Global*	Renewable Energy	Global	3,024	5.4	3	5
First Trust MLP and Energy
Income Fund	Multi Utilities	North America	3,015	5.4	4	4
Beijing Enterprises Holdings	Gas	China	2,930	5.2	5	7
China Power Intl. Develop	Electricity	China	2,572	4.6	6	2
Cia de Saneamento do Paraná	Water & Waste	Latin America	2,568	4.6	7	39
Pattern Energy**	Renewable Energy	North America	2,341	4.2	8	–
China Everbright Intl.	Water & Waste	China	2,016	3.6	9	15
Avangrid	Multi Utilities	North America	1,931	3.5	10	–
Pennon Group	Water & Waste	United Kingdom	1,869	3.3	11	9
Qatar Electricity & Water Co.	Multi Utilities	Middle East	1,786	3.2	12	12
Huaneng Renewables	Renewable Energy	China	1,758	3.1	13	42
Transelectrica	Electricity	Eastern Europe	1,619	2.9	14	13
Cia Paranaense Energia	Electricity	Latin America	1,524	2.7	15	23
Hafslund	Electricity	Europe (excluding UK)	1,428	2.6	16	31
Nextera Energy	Electricity	North America	1,160	2.1	17	8
Engie	Multi Utilities	Global	1,148	2.0	18	6
Edison International	Electricity	North America	1,122	2.0	19	25
Keppel Infrastructure Trust	Multi Utilities	Asia (excluding China)	985	1.8	20	18
NRG Yield***	Renewable Energy	North America	955	1.7	21	–
Transgaz	Gas	Eastern Europe	921	1.6	22	20
Sempra Energy	Multi Utilities	North America	855	1.5	23	38
Metro Pacific Investments	Multi Utilities	Asia (excluding China)	757	1.4	24	35
CMS Energy	Multi Utilities	North America	741	1.3	25	29
Enel Americas	Electricity	Latin America	698	1.2	26	21
Sembcorp Industries	Multi Utilities	Asia (excluding China)	696	1.2	27	22
Enagas	Gas	Europe (excluding UK)	659	1.1	28	41
Alliant Energy	Electricity	North America	613	1.0	29	32
Kinder Morgan*	Multi Utilities	North America	574	1.0	30	–
ACEA	Multi Utilities	Europe (excluding UK)	515	0.9	31	16
Saeta Yield	Renewable Energy	Europe (excluding UK)	500	0.9	32	–
Macquarie 1st Trust Global Infrastructure Utility Dividend & Income	Multi Utilities	Global	490	0.9	33	46
Enbridge	Gas	North America	443	0.8	34	–
Iberdrola	Electricity	Europe (excluding UK)	425	0.8	35	–
EDP - Energias do Brasil	Electricity	Latin America	399	0.7	36	11
National Grid	Electricity	United Kingdom	380	0.7	37	19
EDP - Energias de Portugal	Electricity	Europe (excluding UK)	371	0.7	38	–
Enel Chile	Electricity	Latin America	331	0.6	39	–
Beijing Enterprises Water	Water & Waste	China	322	0.6	40	–
Hera	Multi Utilities	Europe (excluding UK)	271	0.5	41	36
Banpu Power	Electricity	Asia (excluding China)	265	0.5	42	–
AES Tiete Energia	Electricity	Latin America	261	0.5	43	–
Mytrah Energy	Renewable Energy	India	219	0.4	44	–
Kangda International	Water & Waste	China	211	0.4	45	45
China Water Affairs Group	Water & Waste	China	158	0.3	46	–
Abengoa Yield	Renewable Energy	Global	117	0.2	47	–
ERG	Renewable Energy	Europe (excluding UK)	113	0.2	48	–
Polenergia	Electricity	Eastern Europe	53	0.1	49	47
			55,946	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			55,996	100.0%

* Holding in bonds

** Holding in convertible bonds

*** Holding in convertible bonds and ordinary shares

Review of Top Ten Holdings

at 31 December 2016

1.	OPG Power Ventures PLC
	Market cap £220m
	www.opgpower.com
	OPG, an Indian power generator listed in London, completed its current thermal investment programme early in the year with the result that its operating capacity, spread between the two Indian states of Gujarat and Tamil Nadu, now stands at 750MW. The company is now moving forward with a series of solar projects in the state of Karnataka, as the next stage of its development. OPG’s interim results to September reflected the impact of the full commissioning of its coal fired capacity, with earnings up 41%, despite gradually rising coal costs. It also confirmed the payment of a maiden dividend of 0.26p, based on a near term target pay-out ratio of 15%. However, despite a strong operational performance for a second year in a row, its shares fell 24.7%.
2.	SSE PLC
	Market cap £15.7bn
	www.sse.com
	SSE is involved in the generation, transmission, distribution and supply of electricity, and the production, storage, distribution and supply of gas, to over 9 million customers. Almost two-thirds of its earnings base derives from regulated electricity and gas networks, which produced a steady performance at the interim results in September. By contrast its wholesale generation business suffered from falling output and lower prices, while its retail arm saw the consequences of increased competition in the supply sector. Its customer base fell by 3.3% over the year as a result. Towards the end of the year, SSE announced that it is to reduce its 50% stake in Scotia Gas Networks, which distributes gas to 6m homes in Scotland and southern England, selling a 16.7% stake for £600m, with the majority of the proceeds to be returned to shareholders by means of a share buyback. SSE’s shares rose 1.6% during 2016.
3.	Terraform Global 9.75% 2022 bond
	$760m in issue
	www.terraformglobal.com
	Terraform Global (“GLBL”) is a US listed income focused investment company or “yieldco”, established by US renewable energy developer SunEdison to provide a high income to investors. Its mandate is to invest in operational renewable energy projects in emerging markets. Ongoing problems at its manager and sponsor, SunEdison, resulted in that company filing for bankruptcy protection in April. This reflected unfairly on GLBL, which should be able to exist as a standalone entity with its own balance sheet, ring-fenced from its manager. Its portfolio consists of 947MW of international wind and solar capacity, together with cash of $770m (at October 2016) against total debt of $1.1bn. PEWT sold its equity holding in the second half of the year at a modest book loss, but retained the bonds. These were acquired at an average price of $88.32, with an average yield to maturity of 12.42%, since when they have produced a total return 69.9%.
4.	First Trust MLP and Energy Income Fund
	Market cap £596m
	www.ftportfolios.com
	First Trust MLP and Energy Income fund (“FEI”) is a US listed closed end fund investing in North American oil and gas pipelines and related infrastructure via an asset class known as Master Limited Partnerships or MLPs. It also invests in North American utilities. The MLP spectrum encompasses upstream oil and gas producers as well as infrastructure, so while FEI’s focus has been on MLPs which have little or no exposure to the oil price or volume, the perceived association with the wider energy sector, which caused its shares to fall in 2015, led them to rise 22.1% last year as the oil price staged a modest recovery. Meanwhile improved sentiment resulted in the fund’s shares moving from an 8% discount to its net asset value at the start of the year, to a modest premium at the close, with a prospective dividend yield of 8.3%.
5.	Beijing Enterprises Holdings
	Market cap £4.8bn
	www.behl.com.hk/en
	Beijing Enterprises Holdings (“BEH”) is a utility conglomerate which comprises the gas distribution and supply network in Beijing, together with stakes in a series of Chinese gas transmission pipelines and other gas distribution concessions, a national water treatment company and a nascent waste treatment business. Key to the Chinese government’s drive to clean up China’s air and water quality is a switch from coal to gas as the primary source of both electricity generation and heating in the capital. BEH reported normalised earnings growth of 10% in the first half of 2016, which reflected, among other things, an increase in gas distribution volumes of 21% during the period. However, despite this continued operational strength, after a steady recovery in the middle part of the year, the shares then reversed direction, ending the year down 21.5%.
6.	China Power International Development Ltd
	Market cap £2.2bn
	www.chinapower.hk
	China Power International (“CPI”) generates power from coal and through hydro technology, and has total installed capacity of 15.5GW. After 2 years of falling coal prices, which had significantly boosted CPI’s margins, at the end of 2015 the Chinese government announced a cut in coal fired power tariffs to take account of these lower fuel costs, but importantly also established a clearer framework for future tariff adjustments. In its interim results to June 2016, while the hydro division produced very strong results on the back of substantially increased volumes, the 13% average reduction in coal fired tariffs, combined with a fall in utilisation of its coal fired fleet held back CPI’s profit growth. Reflecting this, its shares were down 36.2% during 2016.
7.	Cia de Saneamento do Paraná
	Market cap £899m
	www.sanepar.com.br
	Companhia de Saneamento do Paraná, or “Sanepar” is the water and sewerage company in the state of Paraná in Brazil. During the year Sanepar reported strong earnings growth and increased its dividends, and is in conjunction with its regulator developing a new regulatory model to bring it into line with international norms of utility regulation. The state government sold some of its shares in December, substantially improving liquidity. As a result of these positive developments, combined with a low starting valuation, Sanepar’s shares gained 220.9% during 2016. Sanepar represented 4.6% of the portfolio at December 2016, up from just 0.8% at December 2015, and was a major part of PEWT’s performance in the year.
8.	Pattern Energy 4% 2020 convertible bond
	$350m in issue
	www.patternenergy.com
	Pattern Energy (“PEGI”) owns 18 wind farms comprising 2.6GW of capacity primarily in the US, Canada and Chile, and a pipeline which includes solar assets in Chile and Japan. It came to the market in September 2013, with just over 1GW of capacity, since when it has issued equity to fund expansion. In common with other renewable stocks, PEGI suffered from the misplaced assumption that renewable energy is less profitable when the oil price falls, despite the fact that the majority of its output is secured under long term fixed price contracts. First purchased in February, very close to their low point, the average price and average yield achieved on the convertible bonds were $88 and 7.3% respectively. They had produced a total return of 39.5% by the year end.
9.	China Everbright International Limited
	Market cap £4.1bn
	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. 2015 earnings continued this trend, rising 22%, which was followed by a further 21% growth in profits at the interim stage. At the same time the company reported that it had secured a further 18 new projects with a construction value of HKD9.5bn during the previous 6 months, compared to the HKD10.3bn currently under construction, underpinning future growth. Despite this, CEI’s share price fell by 11.1% during 2016.
10.	Avangrid
	Market cap £9.5bn
	www.avangrid.com
	Avangrid, 81.5% owned by Spanish utility Iberdrola, was formed from the merger of the Spanish company’s US regulated and renewable assets with those of New England regulated utility, UIL Holdings, at the end of 2015. The combined networks business forms approximately 70% of group earnings. The remainder is from its renewable energy business, one of the largest in the United States with an installed capacity of 5.7GW, together with a development pipeline of 5.9GW. Its renewable assets, mainly wind but also solar, are contracted on a long term basis with high levels of future earnings visibility. The shares were first purchased in late October, having fallen previously in response to adjustments to earnings guidance by the company.

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.

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.

Gillian Nott OBE

Gillian Nott worked for 12 years early in her career in the energy business including positions with BP. She went on to be CEO of ProShare, deputy chairman of the Association of Investment Companies and a non-executive director of the Financial Services Authority. She has also sat on the board of a number of investment and venture capital trusts. She is currently Chairman of JP Morgan Russian Securities plc. Mrs Nott was appointed as a non-executive director of the Company on 1 March 2016.

Kasia Robinski

Kasia Robinski has over 25 years experience in private equity and investment banking including with Hanover Investors, Prospect Investment Management, the Sutton Company (now Sutton Trust) and Goldman Sachs. She has served on numerous international boards and has undertaken various operating roles, including CFO and CEO, in a broad range of sectors from media through to oil and gas. Ms Robinski holds an MSc degree in Engineering/Economics from Cambridge University and an MBA from the Stanford Business School. She is currently a non-executive director of Gabelli Value Plus + Trust PLC. Ms Robinski was appointed as a non-executive director of the Company on 28 February 2017.

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.

Directors and Advisers

Directors

Geoffrey Burns (Chairman)
Ian Graham (Chairman of the Audit Committee)
Michael Wigley (retired on 19 April 2016)
Charles Wilkinson
Gillian Nott OBE (appointed on 1 March 2016)
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

Strategic Report

for the year ended 31 December 2016

The Directors submit to the shareholders their Strategic Report, Directors’ Report and the Audited Financial Statements of the Company for the year ended 31 December 2016.

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 (see page 21 for tax description). This allows the Company 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.

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.

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.

High income

The full year dividend for 2016 totalled 9.70p in line with the base dividend also of 9.70p paid for 2015. This has been possible despite the reduction in gearing which was highlighted in the Report and Accounts for 2015. This occurred as a consequence of the lower ZDP issue which arose during the reconstruction of the Company. It is the aim of the Directors to progress this dividend as far as is prudent.

The chart on page 5 shows the annual dividends paid by the Company since 2004, its first full year, highlighting special dividends that were paid in each year.

Long term growth in Capital Value

The asset value of the Company’s portfolio will be heavily influenced by performance of the Utility Sector and Global Stock Markets.  In addition, seeking to grow the assets of the Company over the long term can mean that in any year, it may be appropriate to allow the assets to fall in order to maintain holdings in companies that the Investment Manager considers to be undervalued. The Directors meet with the Investment Manager regularly to discuss the portfolio.

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. 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:

1)	invest more than 10%, in aggregate, of the value of its gross assets at the time the investment is made in other UK 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;
2)	invest more than 15% of its gross assets in listed closed-ended funds;
3)	invest more than 15% of the Company’s assets, at the time of acquisition, in a single security;
4)	invest more than 15% of its gross assets in unquoted securities;
5)	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);
6)	expose more than 20% of its gross assets to the creditworthiness or solvency of any one counterparty (including the counterparty’s subsidiaries or affiliates);
7)	invest in physical commodities;
8)	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;
9)	operate common treasury functions as between the Company and an investee company; or
10)	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.

Viability statement

In accordance with provision C.2.2 of the Code, the Directors have assessed the prospects of the Company over a longer period than the 12 months required by the “Going Concern” provision. The Board conducted this review for a period of three years which was selected because it was considered to be a reasonable time horizon over which to assess the viability of an investment company. In determining the appropriate period of assessment the Directors had regard to the general advice that equity investment should be made on a medium to longer term view (perhaps 3 to 10 years) but also to evidence that the average holding time for an equity investment is under 3 years. The Directors consider that 3 years is a sufficient investment time horizon to be relevant to shareholders and that choosing a longer time period can present difficulties given the lack of longer term economic visibility. The Board also regularly considers the strategic position of the Company including investor demand for the Company’s shares and a three year period is considered to be a reasonable time horizon for this.

The refinancing of the ZDPs in January 2016 has put in place structural gearing for the next 4 years but with a reduced level of leverage on the ordinary shares compared to the level prior to the refinancing. As the new ZDPs were issued with a lower accrual rate there will be a lower cost to the ordinary shares. Taken together these factors, in the opinion of the Board, improve the viability of the Company.

The Directors have carried out a robust assessment of the Company’s principal risks and its current position. The principal risks relating to the viability of the Company and the procedures in place to monitor and mitigate them are included in the summary of principal risks set out on pages 21 and 22 below. As the Company’s portfolio consists of shares which are listed on regulated markets, many of which are highly liquid, funds can be raised to meet the Company’s liabilities as they fall due. The Company has no long-term debt other than the ZDP Shares entitlement. On the basis of the current portfolio yield, the Directors expect the Company to continue to generate a revenue surplus.

Based on the above assessment the Directors confirm that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities over the three year period to March 2020.

Return per share – basic

Total return per Ordinary Share is based on the net total return on ordinary activities after taxation of £7,321,000 (31 December 2015: net total loss £6,537,000).

These calculations are based on the number of 18,088,480 Ordinary Shares in issue during the year to 31 December 2016 (2015: 17,746,480 the weighted average number of Ordinary Shares).

The return per Ordinary Share can be further analysed between revenue and capital as below:

	Year ended		Year ended
	31 December	Year ended	31 December	Year ended
	2016	31 December	2015	31 December
	Pence per	2016	Pence per	2015
	Ordinary Share	£000	Ordinary Share	£000
Net revenue return	10.91p	1,973	9.38p	1,665
Net capital return /(loss)	29.56p	5,348	(46.22)p	(8,202)
Net total return/(loss)	40.47p	7,321	(36.84)p	(6,537)

Accordingly the basic returns per share are equivalent to the dilutive returns per share. Full details can be found in note 18 on page 57.

Dividends

During the year the following dividends were paid:

	Payment date	Dividend pence
(net per share)
Fourth Interim for the year ended 31 December 2015	31 March 2016	4.00p
Additional interim dividend for the year ended 31 December 2015	31 March 2016	0.75p
First Interim for the year ended 31 December 2016	30 June 2016	1.90p
Second Interim for the year ended 31 December 2016	30 September 2016	1.90p
Third Interim for the year ended 31 December 2016	30 December 2016	1.90p

Subsequent to the year end but in respect of the year ended 31 December 2016 the Directors have declared a fourth interim dividend of 4.00p, payable on 31 March 2017 to members on the register at the close of business on 10 March 2017. The shares were marked ex-dividend on 9 March 2017. This dividend relates to the year ended 31 December 2016 but in accordance with the International Financial Reporting Standards, it is recognised in the period in which it is paid. Further dividend details can be found in note 7 on page 53.

Net asset value

The net asset value per Ordinary Share, including revenue reserve, at 31 December 2016 was 175.86p (31 December 2015: 145.83p). The net asset value of a Zero Dividend Preference Share at 31 December 2016 was 104.75p (1 January 2016: 100.00p).

Alternative Investment Fund Management Directive (“AIFMD”)

The Company appointed Premier Portfolio Managers Limited (“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”) was terminated although PPM has now delegated the portfolio management of the Company’s portfolio of assets to PFM on substantially the same terms as those previously in place. 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 £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 trust tax status

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.

Principal risks associated with the Company (also see note 21 on pages 58 to 64)

Structure of the Group 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 or bonds. The Ordinary Shares are geared by the prior ranking entitlement Zero Dividend Preference Shares issued by its subsidiary.

Dividend levels

Dividends paid on the Company’s Ordinary Shares principally 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. The Board regularly reviews reports on the portfolio produced by the Investment Manager.

Discount volatility

Being a closed-ended company, the Company’s shares may trade at a premium or discount to their net asset value. The magnitude of this premium or 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, the UKLA Listing Rules and the EU Market Abuse Regulation. The Board relies on the services of the administrator, Premier Portfolio Managers 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 2015. 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 20).

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 gross 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 1.9% (2015: 1.6%). 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 2016 (2015: 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 key indicators:

	As at or year to:	As at or year to:
	31 December	31 December
	2016	2015	% change
Total Return Performance
Total Assets Total Return1	17.9%	(4.3%)
FTSE All-World Utilities Index Total Return2 (GBP)	28.7%	(2.7%)
Ordinary Share Performance
Net Asset Value per Ordinary Share (cum income)	175.86p	145.83p	20.6%
Revenue return per Ordinary Share	10.91p	9.38p	16.3%
Net dividends declared per Ordinary Share	9.70p	9.70p
Additional net dividends per Ordinary Share	–	3.00p
Discount to Net Asset Value	(7.9%)	(10.5%)
Ongoing charges3	1.9%	1.6%

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 (excluding the ZDPs accrued capital entitlement).

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 of five non-executive directors, two females and three males. 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
13 March 2017

Directors’ Report
for the year ended 31 December 2016

Directors

The present Directors are listed below and on page 16. They are all non-executive and have served throughout the year, apart from Gillian Nott who was appointed on 1 March 2016 and Kasia Robinski who was appointed on 28 February 2017.

Geoffrey Burns – Chairman

Ian Graham – Chairman of the Audit Committee

Charles Wilkinson

Gillian Nott (appointed 1 March 2016)

Kasia Robinski (appointed 28 February 2017)

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 28 to 31, 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 2016

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 shares at 10 March 2017â€	% of total voting rights	Number of shares at 31 December 2016	% of total voting rights
Premier Fund Managers Limited*	3,877,299	21.4	3,881,482	21.5
Philip J Milton & Company Plc	1,093,871	6.0	1,093,871	6.0

† The latest practicable date prior to the publication of this report.

* This includes 2,320,454 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 58 to 64), 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, being a period of at least 12 months from the date these financial statements were approved. 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.

Financial Instruments

The Company invests in financial instruments which are valued at fair value. An analysis of the portfolio is provided in note 8 on page 54. Further information about financial instruments and capital disclosures is provided in note 21 on pages 58 to 64.

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 8, 9 and 10: Authority to allot Ordinary 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 Annual General Meeting held in April 2016.

Pursuant to RESOLUTION 8 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 £18,088, representing approximately 10 per cent. of the issued Ordinary Share capital of the Company as at the date of this document.

RESOLUTION 9 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 by PEWT Securities 2020 PLC at a premium to Net Asset Value per New ZDP Share, at or around the time of the Ordinary Share issue, is that the Net Asset Value per Ordinary Share is increased.

RESOLUTION 10 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, or to sell shares from treasury, on a non-pre-emptive basis up to an aggregate nominal value of £18,088, 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 the Company.

RESOLUTION 11: Purchase by the Company of its own shares

At the Annual General Meeting held on 19 April 2016 a special resolution was passed, giving the Directors authority until the conclusion of the earlier of the 2017 Annual General Meeting and 18 October 2017, to make market purchases of up to a maximum of 2,711,463 Ordinary Shares. During the year to 31 December 2016 no Ordinary Shares were purchased (during the year ended 31 December 2015 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 provisions set out below. Resolution 11 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 2,711,463 Ordinary Shares (representing 14.99% of the Company’s issued share capital as at 10 March 2017) provided that:

(a)   Ordinary Shares may only be purchased at prices below their prevailing net asset value per Ordinary Share (as determined by the Directors in accordance with the Articles as at a date falling no more than 10 days before the date of the relevant repurchase and taking into account the costs of the repurchase) and where:

      (i)   the Cover of the ZDP Shares issued by PEWT securities 2020 PLC (“ZDP Shares”) would not be reduced below 1.8 times; or

      (ii)  the Cover of the ZDP Shares would not be less than the Cover of the ZDP Shares in issue immediately prior to the repurchase, in each case as determined by the Directors as at a date falling not more than 10 days before the date of repurchase and taking account of any purchases of ZDP Shares proposed to be made at or about the same time; or

(b)   Ordinary Shares and ZDP Shares may be purchased in such proportions and at such prices so as to effect an increase in the net asset value per Ordinary Share (as determined by the Directors in accordance with the Articles as at a date falling no more than 10 days before the date of the relevant repurchases and taking into account the costs of the repurchases) and where:

      (i)   the Cover of the ZDP Shares would not be reduced below 1.8 times; or

      (ii)  the Cover of the ZDP Shares would not be less than the Cover of the ZDP Shares in issue immediately prior to the repurchases, in each case as determined by the Directors as at a date falling not more than 10 days before the date of repurchases.

Repurchases of Ordinary 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.

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) that stipulated by the regulatory technical standards adopted by the EU pursuant to the Market Abuse Regulation from time to time.

The authority to purchase shares will last until the Annual General Meeting of the Company in 2018, or 24 October 2018, whichever is the earlier.

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 133,666 Ordinary Shares.

Companies Act 2006 Disclosures

In accordance with Section 992 of the Companies Act 2006 the Directors disclose the following information:

• 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;

• there exist no securities carrying special rights with regard to the control of the Company;

• details of the substantial shareholders in the Company are listed on page 24;

• the Company does not have an employees’ share scheme;

• 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;

• there exist no agreements to which the Company is party that may affect its control following a takeover bid; and

• 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

The financial statements have been prepared under International Financial Reporting Standards as adopted by the European Union (“IFRS”) for groups of companies.

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
13 March 2017

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 2014 UK Corporate Governance Code (“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

During the financial year under review, the Board consisted of four non-executive Directors all of whom are independent of the Investment Manager. Their biographies are set out on page 16. Collectively the Board believes it 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 in the year	4	2	1
Geoffrey Burns	4	2	1
Ian Graham	4	2	1
Michael Wigley (retired 19 April 2016)	2	1	0
Charles Wilkinson	4	2	1
Gillian Nott (appointed 1 March 2016)	4	2	1
Kasia Robinski (appointed 28 February 2017)	N/A	N/A	N/A

All of the Directors attended the Annual General Meeting held in April 2016 (apart from Kasia Robinski who was appointed on 28 February 2017).

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 at least 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 and Mrr Ian Graham and election of Ms Kasia Robinski following her appointment to the Board on 28 February 2017. Mr Charles Wilkinson has decided to retire from the Board and will not seek re-election at the AGM.

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 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:

• the consistency of, and any changes to, accounting policies both on a year on year basis and across the Company;

• the methods used to account for significant or unusual transactions where different approaches are possible;

• whether the Company has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor;

• the clarity of disclosure in the Company’s financial reports and the context in which statements are made; and

• 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.

The Board appointed one new Director, Kasia Robinski on 28 February 2017, upon the recommendation of the Committee. This followed the appointment of an external search agency (“Nurole Ltd”) for the purpose of finding a Director. The Committee considered an extensive list of candidates put forward by the search company and interviewed a short list of individuals for the position. A recommendation was then made to the Board and following acceptance by the Board as a whole, the appointment was confirmed. Ms Kasia Robinski is required to stand for election at the Annual General Meeting on 25 April 2017 and the Nomination Committee supports her election.

Mr Charles Wilkinson has decided to retire from the Board and will not seek re-election at the AGM.

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 33.

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 Portfolio Managers Limited. Details of the agreement with the Investment Manager is given in note 3. The custodian is Northern Trust Company Limited.

The risk map has been considered at all regular meetings of the Board and Audit Committee, the risk map sets out the principal risks identified by the Board, together with the actions taken to mitigate these risks. 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, which are reviewed by their auditors and give assurance regarding the effective operation of controls.

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:

• performance compared with relevant indices;

• investment resources dedicated to the Company;

• investment management fee arrangements and notice period compared with the peer group; and

• 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 Portfolio Managers 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 to cover any legal actions brought against its Directors.

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 17. 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 Portfolio Managers 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. Due to the small size of the Board and nature of the business it did not, however, comply with the following provisions:

• a separate remuneration committee has not been established;

• a senior non-executive Director has not been identified; and

• our own internal audit function has not been established.

The Board has adhered to the principles of the AIC Code in all material respects.

By Order of the Board
Ian Graham
Director
13 March 2017

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 2015 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 pages 38 to 41.

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 Portfolio Managers 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 10 March 2017â€	Ordinary Shares at 31 December 2016	Ordinary Shares at 1 January 2016
Geoffrey Burns	80,411	80,411	80,411
Ian Graham	22,032	22,032	22,032
Charles Wilkinson	31,223	31,223	31,223
Gillian Nott (appointed 1 March 2016)	–	–	–
Kasia Robinski (appointed 28 February 2017)	–	–	–

† The latest practicable date prior to the publication of this report.

Directors’ remuneration policy (Resolution 2)

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. This Directors’ Remuneration Policy will continue in force until the Annual General Meeting in 2020.

The fees for the non-executive Directors are determined within the aggregate limits of £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 2014, 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 2006 to 31 December 2016.

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 and expenses:

	Fees Year ended 31 December 2016	Expenses Year ended 31 December 2016	Total Year ended 31 December 2016	Fees Year ended 31 December 2015	Expenses Year ended 31 December 2015	Total Year ended 31 December 2015
	£	£	£	£	£	£
Geoffrey Burns	26,000	1,368	27,368	26,000	1,230	27,230
Ian Graham	20,000	1,047	21,047	20,000	1,416	21,416
Michael Wigley (retired on 19 April 2016)	5,400	442	5,842	18,000	530	18,530
Charles Wilkinson	18,000	657	18,657	18,000	903	18,903
Gillian Nott (appointed on 1 March 2016)	15,000	372	15,372	–	–	–
Total	84,400	3,886	88,286	82,000	4,079	86,079

During the year ended 31 December 2016 the Chairman received a fee of £26,000 per annum, the Chairman of the Audit Committee received a fee of £20,000 per annum and other Directors £18,000 per annum.

Spend on pay

As the Company has no employees, the Directors do not consider it appropriate to present a table comparing remuneration paid to employees with distributions to shareholders. The total fees paid to Directors are shown above.

Voting at last Annual General Meeting

At the Annual General Meeting of the Company held on 19 April 2016 an advisory resolution was put to shareholders to approve the Remuneration Report set out in the 2015 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	5,185,665	99.79	10,846	0.21	3,869	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	99.60	50,565	0.4	2,046	0

Approval

Resolutions for the approval of the Directors Remuneration Policy and the Directors Remuneration Report for the year ended 31 December 2016 will be proposed at the Annual General Meeting.

By Order of the Board

Ian Graham

Director

Signed on behalf of the Board of Directors

13 March 2017

Audit Committee Report

As Chairman of the Audit Committee I am pleased to present the report of the Audit Committee for the year ended 31 December 2016.

Composition

The composition and summary terms of reference of the Audit Committee are set out on pages 28 and 29. The Audit Committee comprises the whole Board, all of whom are independent.

Activities

The Audit Committee met in July 2016 and considered the form and content of the Company’s half year report to 30 June 2016.

The Committee also reviewed the key risks of the Company and the internal control framework operating to control risk. The Committee is currently examining the risks to the Company, and analysing the impact and likelihood of all of those risks. A list has been drawn up of those where the combination of impact and likelihood represents a material threat and those will be monitored closely.

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 in February 2017 and reviewed the outcome of the audit work and the final draft of the financial statements for the year ended 31 December 2016. 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.

Non-audit services

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. 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 £nil (31 December 2015: £6,000 for the provision of corporation tax compliance work).

Audit Retender

In June 2016 the UK adopted the EU Audit Framework. This set out a timetable requiring companies to rotate their auditors every 10 years. There are transitional rules for companies whose current auditors took up that role before June 2003, and after consultation with Ernst & Young we are in the position of having to retender for our auditor no later than the year ending December 2020. The Committee resolved to undertake a tendering process during 2017 with a view to appointing (or reappointing) for next year’s Annual Report and Accounts.

Cyber Security

Cyber Security is an increasing threat to all businesses and the finance sector was Cybercrime’s biggest victim in 2015. The Committee takes this seriously and is in discussions with our service providers to provide as much comfort as possible to this growing threat.

Significant issues for the Audit Committee

The Audit Committee identified the following significant issues:

1.	Risks around the existence and valuation of the investments.
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 Company’s assets are principally invested in listed equities. The Committee reviewed internal control reports from the Investment Manager in the year reporting on the systems and controls around the pricing and valuation of securities. As more fully explained in note 1 (h) on page 49 at the year ended 31 December 2016 the Committee agreed that the fair value of investments is the bid market price for listed investments. The Committee also agreed that the valuation of the unquoted investments together with the wholly-owned subsidiary, PEWT Securities 2020 PLC, currently valued at £50,000 at 31 December 2016, is appropriate. All unquoted investments are subject to review both by the Investment Manager, the Audit Committee and the Auditor.
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 (adjusted for share issues and ZDP redemptions) was not passed, no performance fee was paid for 2016.
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 Audit Committee reviews terms of agreement with service providers, Premier Fund Managers Limited, Premier Portfolio Managers Limited and Northern Trust, to confirm their independence from the Company. They assess the ability of any member of the Investment Manager or Board to circumvent controls to fraudulently alter company financial results or undertake fraudulent transactions. The external audit identified no indicators of management override during the year.

Financial statements

These financial statements have been prepared under International Financial Reporting Standards as adopted by the European Union (“IFRS”) for groups of companies.

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 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 since its formation and audited the predecessor trust. The Committee plans to undertake a re-tendering of the Audit during 2017. To comply with the EU Audit Framework, 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 Group’s external Auditor also attends this Committee at its request and report on their findings in relation to the Group’s statutory audit.

As part of the day to day controls of the Group 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 Group. 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.

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 25), 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 Group’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 36, Statement of Directors’ Responsibilities in respect of the Annual Report and the financial statements.

Ian Graham

Chairman of the Audit Committee

13 March 2017

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:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent; and

• 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 Alternative Investment Fund Manager. The maintenance and integrity of the website maintained by Premier Portfolio Managers Limited is, so far as it relates to the Company, the responsibility of Premier Portfolio Managers 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)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)the 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

13 March 2017

Independent Auditor’s Report to the members of Premier Energy and Water Trust PLC

Our opinion on the financial statements

In our opinion:

• the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 December 2016 and of the Group’s and the parent Company’s loss for the year then ended;

• the financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs)  as adopted by the European Union; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

What we have audited

Premier Energy and Water Trust PLC’s financial statements comprise:

Group	Parent company
Consolidated statement of financial position as at 31 December 2016	Statement of financial position as at 31 December 2016
Consolidated income statement for the year then ended
Consolidated statement of comprehensive income for the year then ended
Consolidated statement of changes in equity for the year then ended	Statement of changes in equity for the year then ended
Consolidated cash flow statement for the year then ended	Cash flow statement for the year then ended
Related notes 1 to 22 to the financial statements	Related notes 1 to 22 to the financial statements

The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

Overview of our audit approach

Risks of material misstatement	•Incomplete or inaccurate income recognition through failure to recognise proper income entitlements or to apply the appropriate accounting treatment for recognition of dividends and fixed interest income.
Audit scope	•We performed an audit of the Group financial statements of Premier Energy and Water Trust Plc and its subsidiaries.
	•Our audit procedures accounted for 100% of Profit before tax, 100% of Revenue and 100% of Total Equity of the Group..
Materiality	•Overall Group materiality of £318,000 represents 1% of net assets.

Our assessment of risk of material misstatement

We identified the risks of material misstatement described below as those that had the greatest effect on our overall audit strategy, the allocation of resources in the audit and the direction of the efforts of the audit team.  In addressing these risks, we have performed the procedures below which were designed in the context of the financial statements as a whole and, consequently, we do not express any opinion on these individual areas.

Risk	Our response to the risk	What we reported to the Audit Committee
Incomplete or inaccurate revenue recognition	We performed the following procedures:	•Based on the work performed we had no matters to report to the Audit Committee.
The Group’s investment income for the year amounted to £2.9 million. The investment income receivable by the Group during the year directly drives the Company’s ability to make dividend payments to shareholders. If the Company is not entitled to receive the income recognised in the financial statements, or the income recognised does not relate to the current financial year this will impact the extent of profits available to fund distributions to shareholders.	We agreed a sample of dividends to the corresponding announcements made by the investee company and agreed cash received to bank statements. We agreed a sample of dividends paid by investee companies from an independent pricing source to the income report to test completeness. For a sample of dividends accrued at year end, we reviewed the investee company announcements to assess whether the dividend obligation arose prior to 31 December 2016. We agreed a sample of dividends to post year end bank statements to assess the recoverability of these amounts.
Incorrect performance fee calculation	We performed the following procedures:	•Based on the work performed we had no matters to report to the Audit Committee.
The Company’s performance fee for the period amounted to £nil (2015: £nil) The performance fee is calculated using a methodology as set out in the methodology as set out in the Investment Management Agreement between the Company and the Manager.  Incorrect calculation of this fee could have a material impact on the return generated for shareholders.	Performed a walkthrough to gain an understanding of the administrators systems and controls in relation to performance fees Recalculated the performance fees and checked the calculations are in line with the Investment Management Agreement. Agreed all key inputs used in the calculations to the accounting records and benchmark data to third party source information.
Incorrect valuation and existence of the investment portfolio.	We performed the following procedures:	The results of our procedures are:
The valuation of the portfolio at 31 December 2016 was £55.9 million, consisting of listed equities. The valuation of the assets held in the investment portfolio is the key driver of the Company’s net asset value and total return. Incorrect asset pricing or a failure to maintain proper legal title of the assets held by the Company could have a significant impact on portfolio valuation and, therefore, the return generated for shareholders.	For all investments in the portfolio, we confirmed the prices to an independent source. We have reviewed the period end reconciliation of investments and have independently obtained confirmations from the Company’s custodian and depositary. We have then performed a reconciliation with the Company’s reported investments to confirm the existence and completeness of the assets held as at 31 December 2016.	For all investments, we noted no material differences in market value or exchange rates. We noted no differences between the custodian and depositary confirmations and the Company’s underlying financial records.

The scope of our audit

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determines our audit scope for the Company.  Taken together, this enables us to form an opinion on the financial statements. We take into account size, risk profile, changes in the business environment, the organisation of the Company and effectiveness of company-wide controls, and other factors such as recent Service Organisation Control (‘SOC’) reporting when assessing the level of work to be performed.

Our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.

Materiality

The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

We determined materiality for the Group to be £318,000 (2015: £264,000), which is 1% (2015: 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 Group.

Performance materiality

The application of materiality at the individual account or balance level.  It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance materiality was 75% (2015: 75%) of our planning materiality, namely £428,000 (2015: £198,000). Our objective in adopting this approach was to ensure that total undetected and uncorrected 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 testing threshold of £78,000 (2015: £96,000) for the revenue column of the Statement of Comprehensive Income, being 5% of the return on ordinary activities before taxation.

As there is only one subsidiary, this was included as full scope. In the current year, the range of performance materiality allocated to the subsidiary was the same as the Group.

Reporting threshold

An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit and Management Engagement Committee that we would report to them all uncorrected audit differences in excess of £29,000 (2015: £13,000), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. 

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.

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 Group’s and 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.

Respective responsibilities of Directors and Auditor

As explained more fully in the Directors’ Responsibilities Statement set out on page 37, 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.

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. 

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

•the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and

•the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

•the information given in the Corporate Governance Statement set out on pages 28 to 31 with respect to internal control and risk management systems in relation to financial reporting processes and about share capital structures is consistent with the financial statements.

Matters on which we are required to report by exception

ISAs (UK and Ireland) reporting	We are required to report to you if, in our opinion, financial and non-financial information in the annual report is:	We have no exceptions to report.
	•materially inconsistent with the information in the audited financial statements; or
	•apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our audit; or
	•otherwise misleading.
	In particular, we are required to report whether we have identified any inconsistencies between our knowledge acquired in the course of performing the audit and the directors’ statement that they consider the annual report and accounts taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the entity’s performance, business model and strategy; and whether the annual report appropriately addresses those matters that we communicated to the audit committee that we consider should have been disclosed.
Companies Act 2006 reporting	We are required to report to you if, in our opinion:	We have no exceptions to report.
	•adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
	•the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or
	•certain disclosures of directors’ remuneration specified by law are not made; or
	•we have not received all the information and explanations we require for our audit.
	•a Corporate Governance Statement has not been prepared by the Company.
Listing Rules review requirements	We are required to review:	We have no exceptions to report.
	•the directors’ statement in relation to going concern set out on page 25, and longer-term viability, set out on page 19; and
	•the part of the Corporate Governance Statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code specified for our review.

Statement on the Directors’ Assessment of the Principal Risks that Would Threaten the Solvency or Liquidity of the Entity

ISAs (UK and Ireland) reporting	We are required to give a statement as to whether we have anything material to add or to draw attention to in relation to:	We have nothing material to add or to draw attention to.
	•the directors’ confirmation in the annual report that they have carried out a robust assessment of the principal risks facing the entity, including those that would threaten its business model, future performance, solvency or liquidity;
	•the disclosures in the annual report that describe those risks and explain how they are being managed or mitigated;
	•the directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the entity’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; and
	•the directors’ explanation in the annual report as to how they have assessed the prospects of the entity, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the entity will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Notes:

1. The maintenance and integrity of the Premier Energy and Water Trust PLC’s web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site.

2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Amarjit Singh (Senior Statutory Auditor)

For and on behalf of Ernst & Young LLP

Statutory Auditor

London

13 March 2017

Group Income Statement

for the financial year ended 31 December 2016

		Year ended 31 December 2016	Year ended 31 December 2016	Year ended 31 December 2016	Year ended 31 December 2015	Year ended 31 December 2015	Year ended 31 December 2015
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£000	£000	£000	£000	£000	£000
Gains/(losses) on investments held at
fair value through profit or loss	8	–	6,905	6,905	–	(4,360)	(4,360)
Income	2	2,901	–	2,901	2,691	–	2,691
Investment management fee	3	(215)	(322)	(537)	(312)	(468)	(780)
Other expenses	4	(605)	(81)	(686)	(487)	–	(487)
Reconstruction costs	16	–	(11)	(11)	–	(470)	(470)
Profit/(loss) before finance costs and taxation		2,081	6,491	8,572	1,892	(5,298)	(3,406)
Finance costs	5	–	(1,143)	(1,143)	–	(2,904)	(2,904)
Profit/(loss) before taxation		2,081	5,348	7,429	1,892	(8,202)	(6,310)
Taxation	6	(108)	–	(108)	(227)	–	(227)
Profit/(loss) for the year		1,973	5,348	7,321	1,665	(8,202)	(6,537)
Return per Ordinary Share (pence)
– basic	18	10.91	29.56	40.47	9.38	(46.22)	(36.84)

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 Income Statement as permitted by Section 408 of the Companies Act 2006. The Company’s total comprehensive profit for the year ended 31 December 2016 was £7,321,000.

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.

The notes on pages 47 to 64 form part of these financial statements.

Consolidated and Company Balance Sheets

as at 31 December 2016

		Group	Company	Group	Company
		2016	2016	2015	2015
	Notes	£000	£000	£000	£000
Non current assets
Investments at fair value through profit or loss	8	55,946	55,996	48,786	48,886
Current assets
Debtors	10	362	362	447	447
Derivative financial instruments	13	67	67	507	507
Cash at bank		935	935	27,761	27,761
		1,364	1,364	28,715	28,715
Total assets		57,310	57,360	77,501	77,601
Current liabilities
Creditors: amounts falling due within one year	11	(185)	(235)	(784)	(884)
Other financial liabilities	11	–	–	(49,780)	(49,780)
Derivative financial instruments	13	(98)	(98)	(560)	(560)
		(283)	(333)	(51,124)	(51,224)
Total assets less current liabilities		57,027	57,027	26,377	26,377
Non-current liabilities:
Zero Dividend Preference Shares	12	(25,217)	–	–	–
Intercompany payable	12	–	(25,217)	–	–
Net assets		31,810	31,810	26,377	26,377
Equity attributable to Ordinary Shareholders
Share capital	14	181	181	181	181
Share premium	15	8,701	8,701	8,699	8,699
Redemption reserve		88	88	88	88
Capital reserve	16	14,122	14,122	8,774	8,774
Special reserve		7,472	7,472	7,472	7,472
Revenue reserve		1,246	1,246	1,163	1,163
Total equity attributable to Ordinary Shareholders		31,810	31,810	26,377	26,377
Net asset value per Ordinary Share (pence)	19	175.86	175.86	145.83	145.83

The financial statements on pages 42 to 64 of Premier Energy and Water Trust PLC, company number 4897881, were approved by the Board and authorised for issue on 13 March 2017 and were signed on its behalf by:           

Ian Graham       

Director

As permitted by Section 408 of the Companies Act 2006, no Company Income Statement has been prepared.

The profit dealt with in the accounts of the parent Company was £7,321,000 (31 December 2015: net total loss £6,537,000).

The notes on pages 47 to 64 form part of these financial statements.

Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2016

		Ordinary	Share
		share	premium	Redemption	Capital	Special	Revenue
		capital	reserve	reserve	reserve	reserve	reserve	Total
	Notes	£000	£000	£000	£000	£000	£000	£000
For the year ended
31 December 2016
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	7	–	–	–	–	–	(1,890)	(1,890)
Balance at 31 December 2016		181	8,701	88	14,122	7,472	1,246	31,810

		Ordinary	Share
		share	premium	Redemption	Capital	Special	Revenue
		capital	reserve	reserve	reserve	reserve	reserve	Total
	Notes	£000	£000	£000	£000	£000	£000	£000
For the year ended
31 December 2015
Balance at 31 December 2014		174	7,444	88	16,976	7,472	1,873	34,027
Loss for the year		–	–	–	(8,202)	–	1,665	(6,537)
Tap issue of Shares during the year		7	1,255	–	–	–	–	1,262
Ordinary dividends paid	7	–	–	–	–	–	(2,375)	(2,375)
Balance at 31 December 2015		181	8,699	88	8,774	7,472	1,163	26,377

The notes on pages 47 to 64 form part of these financial statements.

Company Statement of Changes in Equity
for the financial year ended 31 December 2016

		Ordinary	Share
		share	premium	Redemption	Capital	Special	Revenue
		capital	reserve	reserve	reserve	reserve	reserve	Total
	Notes	£000	£000	£000	£000	£000	£000	£000
For the year ended
31 December 2016
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	7	–	–	–	–	–	(1,890)	(1,890)
Balance at 31 December 2016		181	8,701	88	14,122	7,472	1,246	31,810

		Ordinary	Share
		Share	premium	Redemption	Capital	Special	Revenue
		capital	reserve	reserve	reserve	reserve	reserve	Total
	Notes	£000	£000	£000	£000	£000	£000	£000
For the year ended
31 December 2015
Balance at 31 December 2014		174	7,444	88	16,976	7,472	1,873	34,027
Loss for the year		–	–	–	(8,202)	–	1,665	(6,537)
Tap issue of Shares during the year		7	1,255	–	–	–	–	1,262
Ordinary dividends paid	7	–	–	–	–	–	(2,375)	(2,375)
Balance at 31 December 2015		181	8,699	88	8,774	7,472	1,163	26,377

The notes on pages 47 to 64 form part of these financial statements.

Consolidated and Company Cashflow Statements
for the financial year ended 31 December 2016

	Group	Company	Group	Company
	Year ended	Year ended	Year ended	Year ended
	31 December	31 December	31 December	31 December
	2016	2016	2015	2015
	£000	£000	£000	£000
Profit/(loss) before finance costs and taxation*	8,572	8,572	(3,406)	(3,406)
Adjustments for
Gains on investments held at fair value through profit or loss	(6,905)	(6,905)	4,360	4,360
Decrease in trade and other receivables	(319)	(319)	(672)	(672)
(Decrease)/increase in trade and other payables	(537)	(537)	990	990
Overseas taxation paid	(126)	(126)	(226)	(226)
Net cash flows from operating activities	685	685	1,046	1,046
Investing activities
Purchases of investments	(19,189)	(19,189)	(51,916)	(51,916)
Proceeds from sales of investments	19,276	19,276	76,223	76,223
Net cash flows from investing activities	87	87	24,307	24,307
Financing activities
Payment to ZDP Shareholders with “B” rights	(25,708)	(25,708)	–	–
Cashflow from issue of ZDP Shares	–	–	2,731	2,731
Cashflow from issue of Ordinary Shares	–	–	1,784	1,784
Dividends paid	(1,890)	(1,890)	(2,375)	(2,375)
Net cash flows from financing activities	(27,598)	(27,598)	2,140	2,140
(Decrease)/increase in cash and cash equivalents	(26,826)	(26,826)	27,493	27,493
Cash and cash equivalents, beginning of period	27,761	27,761	268	268
Cash and cash equivalents at end of the year	935	935	27,761	27,761

*This includes £2,345,000 (2015: £2,735,000) of cash inflow from dividends from securities, £331,000 (2015: £89,000) of interest from securities, and £8,000 (2015: £13,000) of cash inflow from bank interest.

The notes on pages 47 to 64 form part of these financial statements.

Notes to the Financial Statements

for the financial year ended 31 December 2016

1. ACCOUNTING POLICIES

1.1 Principal accounting policies adopted by the Company

(a) Basis of preparation

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.

The financial statements have been prepared on a going concern basis and on assumption that approval as an investment trust will continue to be granted.

There have been no significant changes to the accounting polices during the year to 31 December 2016.

The financial statements have also been prepared 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 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

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 2020 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.

Assessment of an investment entity

PEWT Securities 2020 PLC, the Company’s wholly-owned subsidiary, incorporated on 9 November 2015, is being consolidated in the accounts as it is not in itself an investment entity and provides investment-related services.

The Company meets the definition of an investment entity within IFRS 10. The criteria which define an investment entity are as follows:

• an entity that obtains funds from one or more investors for the purpose of providing those investors with investment services.

• 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.

• 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 18) 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.

(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 Income Statement between items of a revenue and capital nature has been presented alongside the Consolidated Income Statement. 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.

(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 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 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 (‘Valuation Guidelines’) as described in note 1.1 (h).

(e) Income

Dividend income from investments is taken into account by reference to the date the security becomes ex-dividend. Special dividends are credited to capital or revenue in the Consolidated Income Statement, 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. 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.

(f) Expenses

All expenses are accounted for on an accruals basis and are charged as follows:

• the basic investment management fee, is charged 40% to revenue and 60% to capital;

• any performance fee earned is allocated between capital and revenue based on the out-performance attributable to capital and revenue respectively;

• the finance costs representing the accrued capital entitlement of the Zero Dividend Preference Shares is allocated to capital;

• investment transaction costs are allocated to capital; and

• 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 2016 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 Income Statement within “gains/(losses) on investments held at fair value through profit or loss”.

The investment in the Company’s subsidiary, PEWT Securities 2020 PLC, is held at fair value. The net asset value of the subsidiary is considered to be the Company’s 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 Income Statement as appropriate. Foreign exchange movements on investments are included in the Consolidated Income Statement within gains on investments.

(k) Hedging

Forward currency contracts entered into for hedging purposes are held at fair value through profit or loss and changes in fair value are recognised in the capital column of the Group Income Statement.

(l) 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 Zero Dividend Preference Shares are initially measured at fair value being the proceeds of issue less transaction costs and are subsequently measured at amortised cost under the effective interest rate method.

The provision for compound growth entitlement of the Zero Dividend Preference Shares is recognised through the Consolidated Income Statement and analysed under the capital column as a finance cost (as shown in note 5).

(m) 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 and interpretations have not been applied in these Financial Statements since they were in issue but not yet effective.

IFRS 9 Financial Instruments (2014) (effective 1 January 2018) replaces IAS 39 and deals with a package of improvements including principally a revised model for classification and measurement of financial instruments, a forward looking expected loss impairment model and a revised framework for hedge accounting. In terms of classification and measurement the revised standard is principles based depending on the business model and nature of cash flows. Under this approach instruments are measured at either amortised cost or fair value.

IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018) specifies how and when an entity should recognise revenue and enhances the nature of revenue disclosures.

Given the nature of the Group’s revenue streams from financial instruments the provisions of this standard are not expected to be applicable.

2. INCOME

	Year ended	Year ended
	31 December	31 December
	2016	2015
	£000	£000
Income from investments:
UK franked investment income	328	527
UK bond interest	–	70
Overseas dividends	2,074	2,014
Overseas interest	497	67
Bank interest	2	13
Total income	2,901	2,691

3. INVESTMENT MANAGEMENT FEE

	Year ended	Year ended
	31 December	31 December
	2016	2015
	£000	£000
Charged to Revenue:
Investment management fee (40%)	215	312
Charged to Capital:
Investment management fee (60%)	322	468
	537	780

The Company’s AIFM is Premier Portfolio Managers Limited (“PPM”) under an agreement terminable by giving not less than 12 months written notice. Under the AIFM agreement, PPM 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.

PPM has delegated the management of the Company’s portfolio of assets to Premier Fund Managers Limited.

In addition, PPM is entitled to a performance fee in respect of each accounting year of the Company if (i) the dividends paid or proposed to be paid on each Ordinary Share in respect of that accounting year equal at least 6.75p; and (ii) the Gross Assets at the accounting year end exceed by more than 7.5%, the Gross Assets (adjusted for share buybacks and share issuance) at the end of any previous accounting period in which a performance fee was payable, such level being defined as the Adjusted High Water Mark. In that event the performance fee will be equal to 15% of the excess of the Gross Assets over the Adjusted High Water Mark. 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 2016 (2015: nil).

4. OTHER EXPENSES

		Year ended	Year ended
		31 December	31 December
		2016	2015
		£000	£000
Charged to Revenue:
Secretarial services		75	98
Administration expenses		322	241
Depositary fees		26	23
Prospectus costs		57	–
Auditor’s remuneration	– audit services	26	26
	– audit services for subsidiary	4	–
	– other services relating to taxation*	–	6
Directors’ fees, expenses and employers National Insurance contributions		95	93
		605	487
Charged to Capital:
Prospectus costs		81	–
Reconstruction costs		11	470
		697	957

*Auditor other services includes £nil for corporation tax compliance work (2015: £6,000 for corporation tax compliance work).

5. FINANCE COSTS

	Year ended 31 December 2016	Year ended 31 December 2016	Year ended 31 December 2016	Year ended 31 December 2015	Year ended 31 December 2015	Year ended 31 December 2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£000	£000	£000	£000	£000	£000
Provision for compound growth entitlement
of the Zero Dividend Preference Shares	–	1,143	1,143	–	2,904	2,904
	–	1,143	1,143	–	2,904	2,904

6. TAXATION

(a) ANALYSIS OF CHARGE IN THE YEAR:

	Year ended 31 December 2016	Year ended 31 December 2016	Year ended 31 December 2016	Year ended 31 December 2015	Year ended 31 December 2015	Year ended 31 December 2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£000	£000	£000	£000	£000	£000
Overseas tax	108	–	108	227	–	227
Total tax charge for the year (see note 6 (b))	108	–	108	227	–	227

(b) FACTORS AFFECTING THE TOTAL 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 20.00% (31 December 2015: 20.25%). The differences are explained below:

	Year ended	Year ended
	31 December	31 December
	2016	2015
	£000	£000
Total return/(loss) before taxation	7,429	(6,310)
UK corporation tax at 20.00% (31 December 2015: 20.25%)	1,486	(1,278)
Effects of:
Capital losses/(gains) not subject to corporation tax	(1,381)	883
Finance costs of Zero Dividend Preference Shares	229	588
UK dividends which are not taxable	(66)	(107)
Overseas tax suffered	108	227
Overseas dividends not taxable in the UK	(415)	(408)
Movement in unutilised management expenses	147	322
Total tax charge	108	227

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 £1,279,250 (31 December 2015: £1,256,000) relating to excess expenses of £7,525,000 (31 December 2015: £6,790,000). 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. DIVIDEND

Dividends relating to the year ended 31 December 2016 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 2016
	Per Ordinary Share	£000
First interim dividend – paid on 30 June 2016	1.90p	343
Second interim dividend – paid on 30 September 2016	1.90p	343
Third interim dividend – paid on 30 December 2016	1.90p	343
Fourth interim dividend – payable on 31 March 2017*	4.00p	724
	9.70p	1,753

*Not included as a liability in the year ended 31 December 2016 accounts.

The fourth interim dividend will be paid on 31 March 2017 to members on the register at the close of business on 10 March 2017. The shares were marked ex-dividend on 9 March 2017.

Dividends relating to the year ended 31 December 2015 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 2015
	Per Ordinary Share	£000
First interim dividend – paid on 30 June 2015	1.90p	336
Additional interim dividend – paid on 30 June 2015	0.75p	134
Second interim dividend – paid on 30 September 2015	1.90p	343
Additional interim dividend – paid on 30 September 2015	0.75p	136
Third interim dividend – paid on 31 December 2015	1.90p	343
Additional interim dividend – paid on 31 December 2015	0.75p	136
Fourth interim dividend – paid on 31 March 2016*	4.00p	724
Additional interim dividend – paid on 31 March 2016*	0.75p	136
	12.70p	2,288

*Not included as a liability in the year ended 31 December 2015 accounts.

Amounts recognised as distributions to equity holders in the year:

	Year ended	Year ended
	31 December	31 December
	2016	2015
	£000	£000
Fourth interim dividend for the year ended 31 December 2015 of 4.00p (2014: 4.50p) per ordinary share	725	817
Additional interim dividend for the year ended 31 December 2015 of 0.75p (2014: 0.75p) per ordinary share	136	130
First interim dividend for the year ended 31 December 2016 of 1.90p (2015: 1.90p) per ordinary share	343	336
Additional interim dividend for the year ended 31 December 2015 of 0.75p per ordinary share	–	134
Second interim dividend for the year ended 31 December 2016 of 1.90p (2015: 1.90p) per ordinary share	343	343
Additional interim dividend for the year ended 31 December 2015 of 0.75p per ordinary share	–	136
Third interim dividend for the year ended 31 December 2016 of 1.90p (2015: 1.90p) per ordinary share	343	343
Additional interim dividend for the year ended 31 December 2015 of 0.75p per ordinary share	–	136
	1,890	2,375

8. INVESTMENTS

	Group	Company	Group	Company
	Year ended	Year ended	Year ended	Year ended
	31 December	31 December	31 December	31 December
	2016	2016	2015	2015
	£000	£000	£000	£000
Investments listed on a recognised investment exchange	55,946	55,946	48,786	48,786
Investments in subsidiaries	–	50	–	100
Valuation at year end	55,946	55,996	48,786	48,886
Opening book cost	48,352	48,402	65,282	65,332
Opening investment holding gains	434	434	12,054	12,054
Opening valuation	48,786	48,836	77,336	77,386
Movements in the year:
Purchases at cost	19,280	19,280	51,959	52,009
Sales – proceeds	(19,276)	(19,276)	(76,149)	(76,149)
– gains on sales	1,017	1,017	7,260	7,260
Movement in investment holding gains/(losses) for the year	6,139	6,139	(11,620)	(11,620)
Closing valuation	55,946	55,996	48,786	48,886
Closing book cost	49,373	49,423	48,352	48,452
Closing investment holding gains	6,573	6,573	434	434
Closing valuation	55,946	55,996	48,786	48,886
Gains on sales based on historical cost	766	766	7,260	7,260
Movement in holding gains/(losses) for the year	6,139	6,139	(11,620)	(11,620)
Net gains/(losses) on investments attributable to Ordinary Shareholders	6,905	6,905	(4,360)	(4,360)

Classification of assets

	Group	Company	Group	Company
	Year ended	Year ended	Year ended	Year ended
	31 December	31 December	31 December	31 December
	2016	2016	2015	2015
	£000	£000	£000	£000
Quoted equities	49,619	49,669	47,077	47,177
Corporate bonds	6,327	6,327	1,709	1,709
Total investments	55,946	55,996	48,786	48,886

Transaction costs and stamp duty on purchases for the year ended 31 December 2016 amounted to £32,000 (2015: £89,000) and transaction costs on sales amounted to £31,000 (2015: £103,000).

9. INVESTMENTS IN SUBSIDIARIES

			Country of
		%	incorporation	Capital and
		Ordinary Share	and	reserves	Profit & loss
Entity	Principal activity	capital held	registration	£000	£000
As at 31 December 2016
Investment in subsidiaries:
PEWT Securities 2020 PLC	Financing	100%	England	50	–

			Country of
		%	incorporation	Capital and
		Ordinary Share	and	reserves	Profit & loss
Entity	Principal activity	capital held	registration	£000	£000
As at 31 December 2015
Investment in subsidiaries:
PEWT Securities PLC (Dissolved on 2 November 2016)	Financing	100%	England	50	–
PEWT Securities 2020 PLC	Financing	100%	England	50	–

The Company owns the whole of the ordinary share capital (£50,000) of PEWT Securities 2020 PLC a company which issued the Group’s Zero Dividend Preference Shares. The subsidiary is held at fair value of £50,000 (2015: £50,000).

10. RECEIVABLES AND OTHER FINANCIAL ASSETS

	Group	Company	Group	Company
	Year ended	Year ended	Year ended	Year ended
	31 December	31 December	31 December	31 December
	2016	2016	2015	2015
	£000	£000	£000	£000
Investment debtors	–	–	224	224
Accrued income and prepayments	310	310	189	189
Overseas withholding tax recoverable	52	52	34	34
	362	362	447	447

11. OTHER FINANCIAL LIABILITIES

	Group	Company	Group	Company
	Year ended	Year ended	Year ended	Year ended
	31 December	31 December	31 December	31 December
	2016	2016	2015	2015
	£000	£000	£000	£000
Other creditors	185	234	784	884
Zero Dividend Preference Shares of £0.01 (2015: 22,446,099)	–	–	49,780	49,780
	185	234	50,564	50,664

12. NON-CURRENT LIABILITIES

	Group	Company	Group	Company
	Year ended	Year ended	Year ended	Year ended
	31 December	31 December	31 December	31 December
	2016	2016	2015	2015
	£000	£000	£000	£000
24,073,337 Zero Dividend Preference Shares of £0.01 (2015: nil)	25,217	–	–	–
Intercompany payable	–	25,217*	–	–
	25,217	25,217*	–	–

The final capital entitlement of the Zero Dividend Preference Shares in issue will be 125.6519p per share (total of £30,248,605) which will be payable on 30 November 2020.

* The Zero Dividend Preference Shares, are issued by the Company’s wholly-owned subsidiary, PEWT Securities 2020 PLC. The Company entered into an Undertaking Agreement with PEWT Securities 2020 PLC to meet the repayment entitlement of the ZDP shares on 30 November 2020. The amounts shown above are due to PEWT Securities 2020 PLC.

13. DERIVATIVE FINANCIAL INSTRUMENTS

	2016	2016	2016	2015	2015	2015
			Net current			Net current
	Current	Current	assets/	Current	Current	assets/
	assets	liabilities	(liabilities)	assets	liabilities	(liabilities)
	£000	£000	£000	£000	£000	£000
Forward foreign exchange contracts – USD/HKD	–	–	–	507	–	507
Forward foreign exchange contracts – GBP/EUR	63	–	63	–	–	–
Forward foreign exchange contracts – GBP/USD	4	–	4	–	–	–
Total derivative financial instruments	67	–	67	507	–	507

The above derivatives are classified as Level 2 as defined in note 21 (g).

	2016	2016	2016	2015	2015	2015
			Net current			Net current
	Current	Current	assets/	Current	Current	assets/
	assets	liabilities	(liabilities)	assets	liabilities	(liabilities)
	£000	£000	£000	£000	£000	£000
Forward foreign exchange contracts – GBP/EUR	–	(6)	(6)	–	(43)	(43)
Forward foreign exchange contracts – HKD/USD	–	–	–	–	(517)	(517)
Forward foreign exchange contracts – GBP/HKD	–	(42)	(42)	–	–	–
Forward foreign exchange contracts – GBP/USD	–	(50)	(50)	–	–	–
Total derivative financial instruments	–	(98)	(98)	–	(560)	(560)

The above derivatives are classified as Level 2 as defined in note 21 (g).

14. SHARE CAPITAL

	Group and	Group and	Group and	Group and
	Company	Company	Company	Company
	Year ended	Year ended	Year ended	Year ended
	31 December	31 December	31 December	31 December
	2016	2016	2015	2015
	Number of shares	£000	Number of shares	£000
Allotted, issued and fully paid:
Opening balance Ordinary Shares of £0.01	18,088,480	181	17,378,480	174
Issued in year	–	–	710,000	7
	18,088,480	181	18,088,480	181

The allotted issued and fully paid Zero Dividend Preference Shares of the Group at 31 December 2016 are disclosed in note 12.

15. SHARE PREMIUM

	Group	Company	Group	Company
	Year ended	Year ended	Year ended	Year ended
	31 December	31 December	31 December	31 December
	2016	2016	2015	2015
	£000	£000	£000	£000
Opening balance	8,699	8,699	7,444	7,444
Movement in year	2	2	1,255	1,255
Closing balance	8,701	8,701	8,699	8,699

16. CAPITAL RESERVE

	Group	Company	Group	Company
	Year ended	Year ended	Year ended	Year ended
	31 December	31 December	31 December	31 December
	2016	2016	2015	2015
	£000	£000	£000	£000
Opening balance	8,774	8,774	16,976	16,976
Gains/(losses) on investments – held at fair value through profit or loss	6,905	6,905	(4,360)	(4,360)
Provision for compound growth entitlement of Zero Dividend Preference Shares	(1,143)	(1,143)	(2,904)	(2,904)
Prospectus costs	(81)	(81)	–	–
Reconstruction costs	(11)	(11)	(470)	(470)
Investment management fee charged to capital	(322)	(322)	(468)	(468)
Closing balance	14,122	14,122	8,774	8,774

17.FINANCIAL COMMITMENTS

At 31 December 2016 there were no commitments in respect of unpaid calls and underwritings (31 December 2015: nil).

18.RETURN PER SHARE – BASIC

Total return per Ordinary Share is based on the total comprehensive profit for the year after taxation of £7,321,000 (31December 2015: net total loss £6,537,000).

These calculations are based on the number of 18,088,480 Ordinary Shares in issue during the year to 31 December 2016 (2015: 17,746,480 the weighted average number of Ordinary Shares).

The return per Ordinary Share can be further analysed between revenue and capital as below:

	Year ended		Year ended
	31 December	Year ended	31 December	Year ended
	2016	31 December	2015	31 December
	Pence per	2016	Pence per	2015
	Ordinary Share	£000	Ordinary Share	£000
Net revenue return	10.91p	1,973	9.38p	1,6657
Net capital return	29.56p	5,348	(46.22)p	(8,202)
Net total return	40.47p	7,321	(36.84)p	(6,537)

Accordingly the basic returns per share are equivalent to the dilutive returns per share.

19.NET ASSET VALUE PER SHARE

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
	2016	2016	2015	2015
	Pence	£000	Pence	£000
18,088,480 Ordinary Shares in issue (2015: 18,088,480)	175.86p	31,810	145.83	26,377
24,073,337 Zero Dividend Preference Shares* in issue (2015: nil)	104.75p	25,217	–	–
22,446,099 Zero Dividend Preference Shares* in issue	–	–	221.78	49,780

*Classified as a liability.

20.RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH THE INVESTMENT MANAGER

Details of the investment management fee charged by Premier Portfolio Managers Limited is set out in note 3. In addition, Premier Portfolio Managers Limited acts as Company Secretary and the fee for secretarial services is set out in note 4. At 31 December 2016£57,500 (31 December 2015: £166,700) of these fees remained outstanding.

Fees paid to the Directors are disclosed in the Directors’ Remuneration Report on page 33.

Full details of Directors’ interests are set out in the Directors’ Remuneration Report on page 32.

21.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 18. 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) 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 2015. 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) 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.

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 includedin the financial statements and its receipt.

Foreign currency exposures

An analysis of the Company’s equity investments and liabilities at 31 December 2016 (shown at fair value, except derivatives at gross exposure value) that are priced in a foreign currency based on the country of primary exposure are shown below:

	As at 31 December 2016	As at 31 December 2016	As at 31 December 2016	As at 31 December 2015
	Derivative financial instruments assets/(liabilities)	Investments	Net financial assets	Investments
	£000	£000	£000	£000
Sterling	23,718	–	23,718	–
Brazilian Real	–	3,228	3,228	1,818
Canadian Dollar	–	443	443	–
Euro	(3,843)	4,002	159	4,406
Hong Kong Dollar	(5,218)	9,967	4,749	9,346
Norwegian Krone	(940)	1,428	488	533
Philippine Peso	–	757	757	506
Polish Zloty	–	53	53	900
Qatari Riyal	–	–	–	1,436
Romanian Leu	–	2,540	2,540	2,152
Singapore Dollar	–	1,681	1,681	1,530
Thai Baht	–	265	265	–
US Dollar	(13,748)	21,277	7,529	13,752
Total	(31)	45,641	45,610	36,379

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 +/- 8% (2015: 2%)

Sterling/Euro +/- 10% (2015: 7%)

Sterling/Hong Kong Dollar +/- 8% (2015: 2%)

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 assuming there was no currency hedge in place, this would have had the following effect:

	2016	2016	2016	2015	2015	2015
	US Dollar	Euro	HK Dollar	US Dollar	Euro	HK Dollar
	£000	£000	£000	£000	£000	£000
Projected change	8%	10%	8%	2%	7%	2%
Impact on revenue return	(47)	(27)	(8)	(17)	(20)	(11)
Impact on capital return	(1,702)	(400)	(759)	(509)	(105)	(47)
Total return after taxation for the year	(1,749)	(427)	(767)	(526)	(125)	(36)
Equity	(1,749)	(427)	(767)	(526)	(125)	(36)

If Sterling had weakened against the currencies shown assuming there was no currency hedge in place, this would have had the following effect:

	2016	2016	2016	2015	2015	2015
	US Dollar	Euro	HK Dollar	US Dollar	Euro	HK Dollar
	£000	£000	£000	£000	£000	£000
Projected change	8%	10%	8%	2%	7%	2%
Impact on revenue return	47	27	8	17	20	11
Impact on capital return	1,702	400	759	509	105	47
Total return after taxation for the year	1,749	427	767	526	125	36
Equity	1,749	427	767	526	125	36

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) INTEREST RATE RISK

Interest rate movements may affect the level of income receivable on cash deposits. Interest rate movements may affect the fair value of investments in fixed-interest rate securities.

Cash at bank at 31 December 2016 (and 31 December 2015) 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) 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.

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 and corporate bonds. 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
	2016	2016	2015	2015
	£000	£000	£000	£000
Consolidated Income Statement – return after taxation:
Capital return – increase/(decrease)	5,595	(5,595)	4,879	(4,879)
Total return after taxation – increase/(decrease)	5,595	(5,595)	4,879	(4,879)
Equity	5,595	(5,595)	4,879	(4,879)

(e) 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 31December 2016 the unquoted securities are valued at £50,000 which relates to the wholly-owned subsidiary PEWT Securities 2020 PLC and two unquoted securities which are in liquidation, Freepower PLC and ITI Energy Ltd (31December 2015 the unquoted securities were valued at £100,000 consisting of PEWT Securities PLC, PEWT Securities 2020 PLC and two unquoted securities which are in liquidation, Freepower PLC and ITI Energy Ltd). The Company may invest up to 15% of its gross assets in unquoted securities.

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 and the impact of the issue of any new Zero Dividend Preference Shares.

The contractual maturities of the Group’s financial liabilities at 31 December 2016, based on the earliest date on which payment can be required, were as follows:

		Between
	3 months	one and five
	or less	years	Total
At 31 December 2016	£000	£000	£000
Payables and other financial liabilities	(185)	–	(185)
Zero Dividend Preference Shares	–	(30,249)	(30,249)
Derivative financial instruments	(98)	–	(98)

The contractual maturities of the Group’s financial liabilities at 31 December 2015, based on the earliest date on which payment can be required, were as follows:

		Between
	3months	one and five
	or less	years	Total
At 31 December 2015	£000	£000	£000
Payables and other financial liabilities	(784)	–	(784)
Zero Dividend Preference Shares	(49,780)	–	(49,780)
Derivative financial instruments	(560)	–	(560)

(f) 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 2016 (comprising of corporate bonds, current assets and cash at bank) was £7,691,000 (2015: £28,663,000). The calculation is based on the Company’s credit exposure as at 31 December 2016 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:

• 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

• 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. In addition none of these financial assets are either past due or impaired.

(g) 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 tables below set out fair value measurements using fair value hierarchy, where Level 1, Level 2 and total figures apply to both Group and Company and Level 3 figures apply only to Company.

Financial assets at fair value through profit or loss at 31 December 2016

		Level 1	Level 2	Level 3	Total
	Notes	£000	£000	£000	£000
Equity investments		49,619	–	50	49,669
Fixed interest bearing securities		6,327	–	–	6,327
Derivative financial instruments	13	–	67	–	67
Total		55,946	67	50	56,063

Financial assets at fair value through profit or loss at 31 December 2015

		Level 1	Level 2	Level 3	Total
	Notes	£000	£000	£000	£000
Equity investments		47,077	–	100	47,177
Fixed interest bearing securities		1,709	–	–	1,709
Derivative financial instruments	13	–	507	–	507
Total		48,786	507	100	49,393

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. Level 2 investments include the Company’s forward currency contracts, these are valued using the Prime Broker contracts which uses spot foreign exchange rates in the respective currencies.

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 2015 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 and the adjusted net asset value of funds. 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 2016, the Company’s Level 3 investments related to the one wholly-owned subsidiary, PEWT Securities 2020 PLC (the net asset value of the subsidiary is considered to be the fair value) and two unquoted securities which are in liquidation, Freepower PLC and ITI Energy Ltd which are valued at nil.

The valuation techniques used by the Company are explained in the accounting policies note on page 49.

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
	2016
	£000
Opening fair value – PEWT Securities PLC, PEWT Securities 2020 PLC, Freepower PLC and ITI Energy Ltd	100
PEWT Securities PLC  (Dissolved on 2 November 2016)	(50)
Closing fair value – PEWT Securities 2020 PLC, Freepower PLC and ITI Energy Ltd	50

Financial liabilities at fair value through profit or loss

The listed bid price was used to determine the fair value of the Zero Dividend Preference Shares as at 31 December 2016:

	As at 31 December 2016	As at 31 December 2016	As at 31 December 2015	As at 31 December 2015
		Fair value		Fair value
	Book value	Level 1	Book value	Level 3
	£000	£000	£000	£000
Zero Dividend Preference Shares	25,217	26,842	49,780*	49,780*

*Fair value at 31 December 2015 was assessed by reference to the redemption value as there was no listed bid price.

	As at 31 December 2016	As at 31 December 2016	As at 31 December 2016	As at 31 December 2015	As at 31 December 2015
	Level 2	Total	Level 2	Total
	Note	£000	£000	£000	£000
Derivative financial instruments	13	98	98	560	560

(h) CAPITAL MANAGEMENT POLICIES AND PROCEDURES

The Company’s capital management objectives are:

• to ensure that the Company will be able to continue as a going concern; and

• 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:

	2016	2015
	£000	£000
Debt:
Zero Dividend Preference Shares	(25,217)	(49,780)
Equity:
Equity share capital	181	181
Retained earnings and other reserves	31,629	26,196
	31,810	26,377
Total capital	57,310	77,501
Debt as a percentage of total capital	44.00%	64.23%

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:

• As a public company, the Company has to have a minimum share capital of £50,000.

• 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.

22.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.

Glossary of Terms

COVER

The Cover on the ZDP Shares measures the amount by which the final redemption value of the ZDP Shares is covered by the total assets of the Group allowing for all prior ranking liabilities and the accrual of expenses to capital over the remaining period to the redemption of the ZDP Shares. The calculation for Cover as specified in the Group’s prospectus is the ratio of the gross assets of the Group less current period income and the Group’s revenue reserves to the aggregate amount payable to ZDP Shareholders on the repayment date plus any other borrowing plus the cumulative management fee charged to capital over the remaining period to the repayment date and calculated on the assumption of no capital or revenue growth in the Group’s portfolio. This is the definition used when calculating the Cover level to satisfy the requirements for the issue or buy back of shares. The cover figure used on the summary table of this report and on the monthly fact sheets is non-cumulative cover as calculated by JP Morgan Cazenove.

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 OF THE ZERO DIVIDEND PREFERENCE SHARES

The compound rate of growth or decline of the total assets required each year until the redemption date for shareholders to receive the predetermined redemption price.

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).

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 0333 456 1122, or by e-mail to [e-mail].

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 [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.

AIFMD Disclosures & Remuneration Disclosure

AIFMD DISCLOSURES

The provisions of the Alternative Investment Fund Managers Directive (“AIFMD”) took effect on 22 July 2014. The Alternative Investment Fund Manager (“AIFM”) of the Company is Premier Portfolio Managers Limited (“PPM”), authorised by the FCA as an Alternative Investment Fund Manager (“AIFM”) under the AIFMD.

Pre-Investment Disclosures

The AIFM is required to make certain disclosures available to investors in accordance with the AIFMD. Those disclosures that are required to be made pre-investment can be found at https://www.premierfunds.co.uk/media/59009/premier-energy-and-water-trust-pre-investment-disclosure-document-aifmd-.pdf. The document was updated in February 2017 however there have been no material changes to the disclosures contained within the document since publication in November 2015.

AIFMD Leverage limits

The maximum level of leverage which the Investment Manager may employ on behalf of the Company and the levels as at 31 December 2016 are set out below:

Maximum gross leverage (calculated as specified by the  AIFM Directive): 1,000%	Level as at 31 December 2016: 82%
Maximum commitment exposure (calculated as specified by the  AIFM Directive): 800%.	Level as at 31 December 2016: 157%

Remuneration Disclosure

The provisions of the AIFMD require the AIFM to establish and maintain remuneration policies for its staff which are consistent with and promote sound and effective risk management.

The AIFM is part of a larger group of companies within which remuneration policies are the responsibility of a remuneration committee comprised entirely of non-executive directors. That committee has established a remuneration policy which sets out a framework for determining the level of fixed and variable remuneration of staff, including maintaining an appropriate balance between the two.

Arrangements for variable remuneration within the AIFM’s group are calculated primarily by reference to the performance of each individual and the profitability of the relevant business unit. The policies are designed to reward long term performance and long term profitability.

Within the Group, all staff are employed by a subsidiary of the Parent Company with none employed directly by the AIFM. The costs of a number of individuals are allocated between the entities within the AIFM’s group based on the expected amount of time devoted to each.

The total remuneration of those individuals who are fully or partly involved in the activities of the AIFM in relation to Alternative Investment Funds, including the Company (“AIFs”), including those whose time is allocated between group entities, for the financial year ending 30 September 2016 , is analysed below:

Fixed remuneration	£1,488,023
Variable remuneration	£676,750
Total	£2,164,773
FTE Number of staff:	26

15 of the staff members included in the total remuneration figures above are considered to be senior management or others whose actions may have a material impact on the risk profile of the fund. The table below provides an alternative analysis of the remuneration data.

Aggregate remuneration of:

Senior management	£381,460
Staff whose actions may have a material impact on the funds	£504,678
Other	£1,278,635
Total	£2,164,773

The staff members included in the above analysis supports all the funds managed by the AIFM. It is not considered feasible or useful to attempt to apportion these figures to individual AIFs.

The AIFM’s management have reviewed the general principles of the remuneration policy and its application in the last year which has resulted in no material changes to the policy.

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, 25 April 2017, 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, 8 and 9 as ordinary resolutions and as to resolutions 10 and 11 as special resolutions:

ORDINARY RESOLUTIONS

1.	To receive the Directors’ Report and Financial Statements for the year ended 31 December 2016.
2.	To approve the Directors’ Remuneration Policy contained in the Directors’ Remuneration Report, for the financial year ended 31 December 2016.
3.	To approve the Directors’ Remuneration Report, other than the part containing the Directors’ Remuneration Policy, for the financial year ended 31 December 2016.
4.	To re-elect Mr Geoffrey Burns as a Director of the Company.
5.	To re-elect Mr Ian Graham as a Director of the Company.
6.	To elect Ms Kasia Robinski as a Director of the Company.
7.	To re-appoint Ernst & Young LLP as Auditor of the Company and to authorise the Board to determine their remuneration.
8.	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 £18,088, representing 1,808,800 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.
9.	Authority to allot Ordinary Shares at a discount:
	THAT, subject to and conditional upon the passing of resolution 8 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 contemporaneous with an issue of New Zero Dividend Preference Shares by PEWT Securities 2020 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

10.	Authority to disapply pre-emption rights:
	THAT, subject to the passing of resolution numbered 8 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 , or to sell Ordinary Shares from treasury, 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, or sale, of equity securities (otherwise than pursuant to sub-paragraph (b) below) up to an aggregate nominal amount of £18,088; and
	(b) the allotment, or sale, 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 (ii) 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 2018, 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.
11.	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 in the capital of the Company (together the “Shares”), provided that:
	(a) the maximum number of Shares hereby authorised to be purchased shall be 2,711,463 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) that stipulated by the regulatory technical standards adopted by the EU pursuant to the Market Abuse Regulation from time to time;
	(d) Ordinary Shares may only be purchased at prices below their prevailing net asset value per Ordinary Share (as determined by the Directors in accordance with the Articles as at a date falling no more than 10 days before the date of the relevant repurchase and taking into account the costs of the repurchase) and where:
	(i) the Cover of the ZDP Shares issued by PEWT Securities 2020 PLC (“ZDP Shares”) would not be reduced below 1.8 times; or
	(ii) the Cover of the ZDP Shares would not be less than the Cover of the ZDP Shares in issue immediately prior to the repurchase, in each case as determined by the Directors as at a date falling not more than 10 days before the date of repurchase and taking account of any purchases of ZDP Shares proposed to be made at or about the same time;
	(e) Ordinary Shares and ZDP Shares may be purchased in such proportions and at such prices so as to effect an increase in the net asset value per Ordinary Share (as determined by the Directors in accordance with the Articles as at a date falling no more than 10 days before the date of the relevant repurchases and taking into account the costs of the repurchases) and where:
	(i) the Cover of the ZDP Shares would not be reduced below 1.8 times; or
	(ii) the Cover of the ZDP Shares would not be less than the Cover of the ZDP Shares in issue immediately prior to the repurchases, in each case as determined by the Directors as at a date falling not more than 10 days before the date of repurchases;
	(f) the authority hereby conferred shall expire at the earlier of the conclusion of the Annual General Meeting of the Company in 2018 or 24 October 2018 unless such authority is renewed prior to such time; and
	(g) the Company may make a contract to purchase Ordinary 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 Ordinary 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 Portfolio Managers Limited

Secretary

13 March 2017

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 not appoint 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 17).
2.	To be valid any proxy form or other instrument appointing a proxy must be received by post to Capita Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF 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, 21 April 2017.
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 by close of business on Friday, 21 April 2017 (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 10 March 2017 (being the last business day prior to the publication of this Notice) the Company’s issued share capital consisted of 18,088,480 Ordinary Shares, carrying one vote each. Therefore, the total voting rights in the Company as at 10 March 2017 are 18,088,480.
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, 21 April 2017. 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