Half-yearly Report

Premier Energy and Water Trust PLC Half year report 30 June 2010 In accordance with DTR6.3 the Company releases the full text of its Interim Report for the six months ended 30 June 2010 (unaudited). The interim report will be available shortly on the website www.premierassetmanagement.co.uk Investment objectives The Company's investment objectives are to achieve a high income from its portfolio and to realise long-term growth in the capital value of the 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 Company highlights 1 Company summary 2 Financial calendar 2 Chairman's statement 3 Investment manager's report 5 Investment portfolio 8 Financial summary 9 Income statement 10 Balance sheet 12 Reconciliation of movements in 13 shareholders' funds Cashflow statement 14 Reconcilliation of net cashflow to 14 movements in net debt Notes to the financial statements 15 Interim management report 17 Shareholder information 18 Directors and advisers 19 Registered in England No. 4897881 A member of the Association of Investment Companies Company highlights Total return performance Six months to 30 June 2010 % change Total assets[1] -3.3% FTSE Global Utilities Total Return -7.2% Index (Â£)[2] FTSE All World Total Return Index (Â£) -1.9% [2] FTSE 100 Total Return Index[2] -7.4% Share price and NAV[3] returns 30 June 31 December 2010 2009 % change Zero Dividend NAV 156.57p 151.73p +3.2% Preference share Mid price 159.75p 156.25p +2.2% Ordinary share NAV 167.70p 192.87p -13.1% Mid price 157.25p 187.25p -16.0% Net revenue per 6.34p 9.63p Ordinary share Net dividend Base 3.10p 7.70p per Ordinary share Special - 1.70p Total 3.10p 9.40p Zero Dividend Preference shares[4] 5 Year Performance to 30 June 2010(rebased to 100) Graph removed Ordinary shares[4] 5 Year Performance to 30 June 2010 (rebased to 100) Graph removed Further information can be found in the Financial Summary on page 9. [1] Total return performance, adjusted for any dividends distributed. [2] Source: Bloomberg. [3] Calculated in accordance with FRS21. [4] Source: AIC using Morningstar. Company summary Launch Date 4 November 2003 Domiciled UK Year-end 31 December Shareholders' Funds Â£47.6 million Market Capitalisation Â£46.7 million Bank Loan Nil Zero Dividend Preference 16,336,396: aiming to be shares redeemed at 221.78p on 31 December 2015 Ordinary shares 13,103,065 Dividends Paid on Ordinary shares Dividend History In respect of year Total dividends declared ended 31 December 2009 9.40p# 2008 7.35p 2007 7.00p 2006 6.90p 2005 6.75p 2004 7.875p* Investment Manager Premier Fund Managers Limited 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 out-performance attributable to capital and revenue respectively AIC Member of the Association of Investment Companies # Includes a special dividend of 1.70p. * This dividend was for the 14 month period from launch, representing an annualised dividend of 6.75p. Financial calendar Company's year-end 31 December Annual results announced early March Annual General Meeting late April Company's half-year end 30 June Half-year results announced early August Dividend payments quarterly 31 March, 30 June, 30 September and 31 December Chairman's statement Overview of Period The global economy rebounded strongly during 2009, a result of massive government stimulus packages and recovering inventory cycles. However, recent data does point to a period of consolidation for the recovery as pressure grows on governments to rein in expenditure and public spending. Thus economic growth may fall short of expectations, exacerbated by government borrowing that looks, at best, excessive. The economic outlook therefore appears uncertain with growth slowing against a backdrop of major imbalances. Sovereign debt levels have soared, in no small part due to the government bank bail outs, while consumer debt remains stubbornly high. Notwithstanding this the banking sector does appear to be recovering slowly and with balance sheets generally in much better health the outlook for lending is better than during 2009. The need to rein in public finances has had an impact on the utility sector which has not enjoyed the general improvement seen in other areas of the equity market. Tariff reductions, nuclear taxes in Germany and a squeeze on balance sheets have led the sector to underperform against other areas of the stockmarket. However, the outlook for the sector is becoming clearer and valuations appear sound. Against a backcloth of uncertainty the energy and water sectors offer a high yield allied to sound growth prospects. Performance The gross total assets return of your Company over the six months to 30 June 2010 was -3.3%. During the same period the FTSE All World Total Return Index fell by 1.9% and the FTSE Global Utilities Total Return Index fell by 7.2%. The Company does not have any formal investment benchmarks but rather considers performance against a range of stockmarket indices. The Company's Ordinary shares are geared through the capital structure, the Zero Dividend Preference ("ZDP") shares having a predetermined entitlement to capital. The accrual rate on the ZDP shares is 6.35% and thus the return to the Ordinary shareholders is magnified by this prior charge. As a consequence and after allowing for the accrual to the ZDP shares during the period net asset value per Ordinary share fell by 13.1% from 192.87p to 167.70p, which represents a decrease of 10.5% on a total return basis (source: AIC using Morningstar). The Ordinary share price fell by 16.0% from 187.25p to 157.25p, which represents a fall of 13.0% on a total return basis (source: AIC using Morningstar). The overall percentage package of Ordinary and ZDP shares has gone from a premium of 0.1% to a discount of 4.2%. Dividends Income generation over the period was strong and net revenue per Ordinary share was 6.34p compared to 5.27p in the same period last year. Net revenues for the half year ended 30 June 2010 were Â£0.8m and in the light of this your Board has declared a second interim dividend of 1.6p per Ordinary share which represents an increase of 6.7% over the interim dividend that was paid for the equivalent period in 2009. This will be paid on 30 September 2010 to shareholders on the register on 27 August 2010. The Ordinary shares will be marked ex-dividend on 25 August 2010. Shareholder Relations The Board and the Company's Investment Manager welcome contact not only with the Company's existing investors but also potential investors. The Investment Manager has met many of the Company's major investors over the period as well as a number of potential new investors. Outlook Your Company not only provides an opportunity to participate in the growth of the energy and water sectors in the more mature economies of the world but also in higher growth emerging markets. The rapid urbanisation being experienced in places like China, India and South America is providing some exciting opportunities for growth and with this in mind, and notwithstanding the global economic uncertainties, your Board remains positive over the longer term outlook for the Company. Geoffrey Burns Chairman 11 August 2010 Investment manager's report for the period 31 December 2009 to 30 June 2010 Overview Utilities continued to underperform the UK market in the first quarter of 2010, in large part due to investor focus on the recovery of cyclical stocks. In the second quarter the return on the FTSE100 was, among other factors, impacted by the sharp fall in BP shares, showing the global utilities index in a relatively more favourable light, so over the period as a whole the performance of the two was very similar (-7.4% and -7.2% respectively). Against this background the Company's total assets fell by 3.3%. The utilities universe now looks good value, both at the defensive, highly regulated end and the cyclical power generators. Downgrades to forecasts appear to have come to an end and we expect to see upgrades starting to come through gradually from here. With power prices rising by up to 15%, clean generators, such as the Finnish nuclear/hydro operator, Fortum - that have relatively fixed cost bases as a result of no exposure to rising coal prices - are starting to see an improvement in their margins that we are seeking to capture. Premier Energy and Water Trust PLC Sector Breakdown 30 June 2010 Portfolio Activity The geographic and sector exposure of the Company has not changed significantly over the past six months, other than a gradual shift in emphasis from the developed markets to Asia, given the perceived relative growth prospects for those regions. The pace of economic recovery continues to be highly differentiated between them, with most emerging markets forecast to continue to outperform (around 8% in Asia, compared with 3% in the US and1% in the Eurozone). Reflecting this, additions to the portfolio have primarily been in Asia: India remains an attractive market for power, given the supply-demand imbalance there, so to increase exposure to the ongoing power shortage, the Company added Reliance Infrastructure. With current operating assets centred on the densely populated and fast growing Mumbai suburbs, the company also has a gas fired 7460MW Ultra Mega Power Project (UMPP) under construction in northern India which is expected to solve much of the power shortage there. Its total project pipeline, which includes coal and hydro, amounts to over 32,000MW. Another addition was Adani Power, which has two projects under construction totalling 6600MW, and a further 4600MW pipeline, all coal fired, and where asset growth appears to have been undervalued by the market in the light of the good project execution shown to date. A further addition in Asia has been that of the Chinese sanitary ware company, Joyou, which came to the market at the end of March. Earnings growth for Joyou should be driven by urbanisation and the resulting growth in water use in China, an ongoing theme for the Company. China Water Affairs, a new addition at the end of the period under review, has seen a pick up in its core earnings from tap water supply, as a result of the successful turnaround of a number of distressed water assets acquired last year, combined with significant (20%+) tariff hikes. The primary growth driver for the US water treatment company, Calgon Carbon, will be environmental legislation in its domestic market, but longer term there are also opportunities in the UV-based disinfection market and water treatment markets in China, segments that currently account for c.10% of total revenues. In the US, the Company's position in North East Utilities was sold at an all time high in sterling terms following good results. Another strong performer - ITC - was also sold, given the risk that the company would fall short of expectations because of the increasing difficulties in obtaining planning permission for transmission lines. UIL (transmission and distribution in and around Connecticut) was reduced towards the end of the period following the announcement of a very substantial acquisition that is likely to lead to a period of uncertainty for the stock. In line with the policy of increasing exposure to generation, we have added Calpine, the largest and lowest cost gas generator in North America with a strong position in geothermal energy and an attractive debt profile. We have also added First Energy (Ohio) and, just after the period end, Duke Energy (North Carolina), both of which had been weak due to perceived regulatory pressure, and now yield in excess of 6%. Meanwhile, we have reduced the Company's weighting in Canada quite significantly on valuation grounds following the strong upwards move in that market in response to an increasingly favourable regulatory regime. With nuclear remaining a key part of future global energy supply, we continue to look for holdings in this area, and have added Uranium One, a Canadian-based eponymous mining company with operations in Australia, Canada, Kazakhstan, South Africa and the United States. Uranium One concluded a number of strategic alliances and acquisitions which significantly raise its production potential. It has net cash and, unlike the majority of its competitors, its shares are trading at a discount to NAV. It should be a beneficiary of the long term growth in nuclear power and therefore demand for uranium. The addition of Fortum brings exposure to nuclear (as well as hydro) power against a background of rising power prices, while that of SCANA, a regulated US utility that has good earnings growth visibility from its nuclear capital expenditure programme in South Carolina, increases exposure to the theme in the longer term. KEPCO, the sole nuclear provider in South Korea, is forecast to generate around half of its total power from nuclear plants by 2020. The company is also expanding internationally through leading consortia bidding for overseas nuclear power projects, most recently in the United Arab Emirates. Premier Energy and Water Trust PLC Geographical Allocation at 30 June 2010 Outlook With a cash/net current assets position at the end of the period of 1.9%, the Company was more fully invested than at any point over the past twelve months, reflecting our view that markets are now more accurately reflecting the drop in corporate earnings that is the consequence of the global economic downturn. Whilst budget deficits will hold back government spending in many major economies, we expect a focus on infrastructure investment to aid the industries in which the Company invests for several years. We welcome contact with existing and potential new investors and further details of the Company may be found at www.premierassetmanagement.co.uk Kevin Scutt Andrew Whalley Claire Burgess Premier Fund Managers Limited 11 August 2010 Investment portfolio at 30 June 2010 Holdings in descending order as at 30 June 2010. 2010 Valuation Company Activity Country Â£000 % of total 1 National Grid Electricity & UK 2,210 4.8% gas distribution 2 Aqua America Water & waste USA 2,124 4.6% services 3 E.ON Electricity Germany 1,921 4.2% generation & supply 4 China Power New Electricity Hong Kong 1,803 3.9% Energy generation 5 Entergy Electricity USA 1,771 3.8% generation & supply 6 Calpine Gas production USA 1,700 3.7% and transmission 7 PG&E Electricity & USA 1,373 3.0% gas generation & supply 8 Gaz de France Gas production France 1,346 2.9% and transmission 9 Huaneng Power Electricity Hong Kong 1,345 2.9% International generation & supply 10 Snam Rete Gas Gas production Italy 1,339 2.9% and transmission 11 Sabesp Water supply & USA 1,325 2.9% water treatment facilities 12 Public Power Electricity Greece 1,279 2.8% generation & supply 13 Guangdong Water supply Hong Kong 1,253 2.7% Investment 14 UIL Holdings Electricity USA 1,171 2.5% generation & supply 15 Sound Global Water treatment Singapore 1,106 2.4% 16 Electricity Electricity Thailand 1,093 2.4% Generating generation & supply 17 EDF Electricity France 1,029 2.2% generation & supply 18 Suez Water & waste France 1,023 2.2% services and electricity generation 19 Severn Trent Water & waste UK 1,009 2.2% services 20 PPL Electricity USA 1,001 2.2% generation & supply 21 SCANA Gas production USA 956 2.1% and transmission 22 York Water Water & waste USA 948 2.1% services 23 First Energy Electricity USA 941 2.0% generation & supply 24 Thai Tap Water Water treatment Thailand 916 2.0% 25 Exelon Electricity USA 913 2.0% generation & supply 26 Greenko Group Renewable UK 906 2.0% electricity generation 27 Datang Electricity China 816 1.8% International generation & Power supply Generation 28 Zhejiang Toll roads China 812 1.8% Expressway 29 Hong Kong Electricity Hong Kong 794 1.7% Electric generation & supply 30 Gas Natural Gas production Spain 779 1.7% and transmission 31 Reliance Energy Electricity India 701 1.5% generation & supply 32 Fortum Electricity Finland 666 1.4% generation & supply 33 Indian Energy Renewable India 657 1.4% electricity generation 34 KEPCO Electricity USA 645 1.4% generation & supply 35 ITI Energy* Renewable UK 591 1.3% electricity generation 36 A2A Electricity & Italy 550 1.2% gas distribution 37 Adani Power Electricity India 545 1.2% generation & supply 38 Hopewell Toll roads Hong Kong 466 1.0% Highway 39 Uranium One Uranium Canada 464 1.0% production 40 China Water Water & waste Hong Kong 451 1.0% Affairs services 41 Veolia Water & waste France 443 1.0% Environnement services 42 Enel Electricity Italy 427 0.9% generation & supply 43 Freepower* Renewable UK 420 0.9% electricity generation 44 Calgon Carbon Water treatment USA 398 0.9% 45 Joyou Producer of China 387 0.8% sanitary ware 46 Independent Gas storage UK 368 0.8% Resources 47 Premier Renewable UK 347 0.8% Renewable electricity generation 48 New Renewable Hong Kong 329 0.7% Environmental electricity Energy generation 49 Bangkok Toll roads Thailand 250 0.4% Expressway Total 46,107 100.0% Portfolio *Unquoted investment. Financial summary CAPITAL Premium/ (discount) % 30 June 31 December % 30 June 2010 2009 change 2010 Net Asset Value 156.57p 151.73p +3.2% - per Zero Dividend Preference share* Mid-market price 159.75p 156.25p +2.2% 2.0% per Zero Dividend Preference share Net Asset Value 167.70p 192.87p -13.1% - per Ordinary share* Mid-market price 157.25p 187.25p -16.0% (6.2)% per Ordinary share * Net asset values calculated in accordance with Articles of Association. REVENUE 30 June 30 June % 2010 2009 change Net revenue per 6.34p 5.27p +20.3% Ordinary share Net dividend per 3.10p 3.00p +3.3% Ordinary share HURDLE RATESâ€ 30 June 2010 Zero Dividend Preference shares: Hurdle rate to redemption -4.3% price of 221.78p on 31 December 2015 Ordinary shares: Hurdle rate return to +3.6% current share price of 157.25p â€ The compound rate of growth of the total assets required each year until the wind-up date for shareholders to receive either a predetermined redemption price, or in some cases, a return of the amount originally invested. Source: J.P. Morgan Cazenove. TOTAL RETURN PERFORMANCE Six months to Year to 30 June 31 December 2010 2009 Total return on gross -3.3% +12.7% assets* FTSE Global Utilities -7.2% -1.8% Total Return Index (Â£)** FTSE All World Total -1.9% +21.2% Return Index (Â£)** FTSE 100 Total Return -7.4% +27.3% Index** At At 30 June 31 December 2010 2009 Â£/$ exchange rate 1.4961 1.6148 Â£/â‚¬ exchange rate 1.2214 1.1255 *Total return performance calculated, adjusted for any dividends distributed. **Source: Bloomberg. Income statement for the six months ended 30 June 2010 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) (Audited) Six months Six months Six months Six months Six months Six months Year Year Year ended ended ended ended ended ended ended ended ended 30 June 30 June 30 June 30 June 30 June 30 June 31 31 31 2010 2010 2010 2009 2009 2009 December December December 2009 2009 2009 Revenue Capital Total Revenue Capital Total Revenue Capital Total Notes Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 (Losses)/ - (2,351) (2,351) - (3,588) (3,588) - 3,691 3,691 gains on investments - held at fair value through profit or loss Income: 1,191 - 1,191 1,602 - 1,602 2,611 - 2,611 Dividends Income: - - - 15 - 15 68 - 68 Dividends Investment (99) (149) (248) (276) - (276) (561) - (561) management and performance fee VAT - - - - - - 247 284 531 recovered from HMRC on management and performance fees Other (156) - (156) (135) - (135) (297) - (297) expenses Return 936 (2,500) (1,564) 1,206 (3,588) (2,382) 2,068 3,975 6,043 before finance costs and taxation Finance (1) (790) (791) - (927) (927) (1) (2,005) (2,006) costs Return on 935 (3,290) (2,355) 1,206 (4,515) (3,309) 2,067 1,970 4,037 ordinary activities before taxation Taxation on (105) - (105) (249) 100 (149) (238) - (238) ordinary activities Return on 830 (3,290) (2,460) 957 (4,415) (3,458) 1,829 1,970 3,799 ordinary activities after taxation attributable to equity shares Total Total Total Return per 4 (18.77) (19.06) 21.16 Ordinary share (pence) - basic The total column of this statement is the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies. A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement. Balance sheet as at 30 June 2010 (Unaudited) (Unaudited) (Audited) 30 June 30 June 31 December 2010 2009 2009 Â£000 Â£000 Â£000 Non current assets Investments held at 46,107 54,003 47,159 fair value through profit or loss Current assets Debtors 780 1,255 244 Cash and cash 1,753 2,394 6,001 equivalents 2,533 3,649 6,245 Current liabilities Creditors - amounts (1,089) (1,017) (3,345) falling due within one year Net current assets 1,444 2,632 2,900 Total assets less 47,551 56,635 50,059 current liabilities Creditors - amounts falling due after more than one year Zero Dividend (25,577) (28,083) (24,787) Preference shares Total net assets 21,974 28,552 25,272 Capital and reserves Equity share capital 131 181 131 Redemption reserve 88 10 88 Capital reserve 12,817 9,722 16,107 Special reserve 7,454 17,474 7,454 Revenue reserve 1,484 1,165 1,492 Total equity 21,974 28,552 25,272 shareholders' funds NAV per share - 167.70 157.37 192.87 Ordinary shares (pence) - ZDP shares (pence)â€ 156.57 146.70 151.73 â€ Zero Dividend Preference shares are classified as financial liabilities. Reconciliation of movements in shareholders' funds for the six months ended 30 June 2010 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Share Redemption Capital Special Revenue Total capital reserve reserve reserve reserve Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 For the six months ended30 June 2010 Balance at 1 131 88 16,107 7,454 1,492 25,272 January 2010 Return on - - (3,290) - 830 (2,460) ordinary activities after taxation Dividends paid - - - - (838) (838) Balance at 30 131 88 12,817 7,454 1,484 21,974 June 2010 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Share Redemption Capital Special Revenue Total capital reserve reserve reserve reserve Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 For the six months ended30 June 2009 Balance at 1 181 10 14,137 17,474 997 32,799 January 2009 Return on - - (4,415) - 957 (3,458) ordinary activities after taxation Dividends paid - - - - (789) (789) Balance at 30 181 10 9,722 17,474 1,165 28,552 June 2009 (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) Share Redemption Capital Special Revenue Total capital reserve reserve reserve reserve Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 For the year ended 31 December 2009 Balance at 1 181 10 14,137 17,474 997 32,799 January 2009 Return on - - 1,970 - 1,829 3,799 ordinary activitiesafter taxation Tender for (50) 50 - (9,992) - (9,992) Ordinary sharesfor cancellation Cancellation of - 28 - (28) - - Zero Dividend Preference shares Dividends paid - - - - (1,334) (1,334) Balance at 31 131 88 16,107 7,454 1,492 25,272 December 2009 Cashflow statement for the six months ended 30 June 2010 (Unaudited) (Unaudited) Six months Six months (Audited) ended ended Year ended 30 June 30 June 31 December 2010 2009 2009 Â£000 Â£000 Â£000 Net cash inflow from 475 1,185 2,595 operating activities Servicing of finance Interest paid (1) - (1) Taxation Overseas tax paid (54) (196) (289) Financial investments Purchases of (19,208) (20,921) (40,634) investments Sales of investments 15,378 17,235 54,150 Net cash (outflow)/ (3,830) (3,686) 13,516 inflow from financial investments Equity dividends paid (838) (789) (1,334) Net cash (outflow)/ (4,248) (3,486) 14,487 inflow before financing Financing Tender for Ordinary - - (9,992) shares and associated costs Tender for Zero - - (4,374) Dividend Preference shares Net cash outflow from - - (14,366) financing (Decrease)/increase in (4,248) (3,486) 121 cash Reconciliation of net cashflow to movements in net debt (Unaudited) (Unaudited) Six months Six months (Audited) ended ended Year ended 30 June 30 June 31 December 2010 2009 2009 Â£000 Â£000 Â£000 (Decrease)/increase in (4,248) (3,486) 121 cash as above Net change in debt due (790) (927) 2,369 in more than one year Movement in net debt (5,038) (4,413) 2,490 for year Net debt as at 1 (18,786) (21,276) (21,276) January Net debt as at 30 June (23,824) (25,689) (18,786) Notes to the half year report 1 These financial statements have been prepared in accordance with applicable United Kingdom Accounting Standards and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" (issued in January 2009). The accounting policies applied to this half year report, are consistent with those applied in the accounts for the year ended 31â€ˆDecember 2009, except for the allocation of the basic management fee which from 1 January 2010 has been charged 40% to revenue and 60% to capital (previously charged wholly to revenue). 2. The figures and financial information for the year ended 31 December 2009 are an extract from the latest published accounts and do not constitute statutory accounts. Full accounts for that period have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under section 498 of the Companies Act 2006. The accounts for the six months ended 30 June 2010 and for the six months ended 30â€ˆJune 2009 are unaudited and do not constitute statutory accounts. 3. On 5 August 2010 the Directors declared a second interim dividend of 1.6p per Ordinary share for the year ending 31 December 2010 to holders of Ordinary shares on the register on 27 August 2010. The Ordinary shares will be marked ex-dividend on 25 August 2010 and the dividend will be paid on 30â€ˆSeptember 2010. 4. The total return per Ordinary share is based on the return on ordinary activities after taxation of Â£(2,460,000) (six months ended 30 June 2009: Â£ (3,458,000); year ended 31 December 2009 Â£3,799,000) and on 13,103,065 Ordinary shares in issue during the six months ended 30 June 2010 (six months ended 30â€ˆ June 2009: 18,143,433 shares; year ended 31 December 2009 weighted average: 17,950,104 shares). 5. At 30 June 2010 there were 13,103,065 Ordinary shares of 1p each and 16,336,396 Zero Dividend Preference shares of 1p each in issue. 6. The net asset value per Zero Dividend Preference share of 156.57p at 30 June 2010 (146.70p at 30 June 2009; 151.73p at 31 December 2009) has been calculated in accordance with the Articles of Association. 7. The taxation charge of Â£105,000 (30 June 2009: Â£149,000 and 31 December 2009: Â£238,000) relates to irrecoverable overseas taxation. 8. Reconciliation of total return on ordinary activities before finance costs and taxation to net cash inflow from operating activities: (Unaudited) (Unaudited) Six months Six months (Audited) ended ended Year ended 30 June 30 June 31 December 2010 2009 2009 Â£000 Â£000 Â£000 Total return on (1,564) (2,382) 6,043 ordinary activities before finance costs and taxation Capital return 2,500 3,588 (3,975) before finance costs and taxation Other debtors 5 10 5 Accrued income and (207) 1 130 prepayments Other creditors (259) (32) 108 VAT recovered from - - 284 HMRC in respect of performance fees capitalised Net cash inflow 475 1,185 2,595 from operating activities 9. Investment management fee charged by Premier Fund Managers Limited for the six months to 30 June 2010. Â£000 Basic fee: 40% charged to revenue 99 60% charged to capital 149 248 10. It is the intention of the Directors to conduct the affairs of the Company so that they satisfy the conditions for approval as an investment trust company set out in section 842 of the Income and Corporation Tax Act 1988. 11. Posting of the interim report The interim report will be posted to shareholders on or around 23 August 2010. It will not be advertised in newspapers, but copies will be available from that date at the Company's Registered Office at Premier Asset Management Limited, Eastgate Court, High Street, Guildford, Surrey GU1 3DE. Interim management report Premier Energy and Water Trust PLC is required to make the following disclosures in its half year report: Principal Risks and Uncertainties The Board believes that the principal risks and uncertainties faced by the Company continue to fall into the following categories: â€¢ Structure of the Company and gearing. â€¢ Dividend levels. â€¢ Currency risk. â€¢ Liquidity risk. â€¢ Market price risk. â€¢ Discount volatility. â€¢ Operational. â€¢ Accounting, legal and regulatory. Information on each of these is given in the Report of the Directors in the Annual Report for the year ended 31 December 2009. Related Party Transactions There have been no related party transactions during the six months ended 30 June 2010. Directors' Responsibility Statement The Directors are responsible for preparing the half year report, in accordance with applicable law and regulations. The Directors confirm that, to the best of their knowledge: â€¢ The condensed set of financial statements within the half year report has been prepared in accordance with the Accounting Standards Board's statement "Half-Yearly Financial Reports"; and â€¢ The Interim Management Report includes a fair review of the information required by 4.2.7R (indication of important events during the first six months of the year) and 4.2.8R (disclosure of related party transactions and changes therein) of the FSA's Disclosure and Transparency Rules. For and on behalf of the Board Geoffrey Burns Chairman 11 August 2010 Shareholder information SHARE PRICE AND PERFORMANCE INFORMATION The Ordinary shares and Zero Dividend Preference shares are listed on the London Stock Exchange. The mid-market prices are quoted daily in the Financial Times and The Daily Telegraph. Information about the Company can be obtained directly via www.premierassetmanagement.co.uk. Any enquiries can also be e-mailed to premier@premierfunds.co.uk. SHARE DEALING Shares can be purchased through your usual stockbroker. Information on the Premier ISA can be obtained by contacting Premier on 01483 400400. SHARE REGISTER ENQUIRIES The register for the Ordinary shares and Zero Dividend Preference shares is maintained by Capita Registrars. In the event of queries regarding your holding, please contact the Registrar on 0871 664 0300 (calls cost 10p per minute plus network extras) overseas: +44 208 639 3399 or visit www.shareholder.services@capitaregistrars.com. Changes of name and/or address must be notified in writing to the Registrar. PREMIER FUND MANAGERS LIMITED Other investment companies managed by Premier are: Acorn Income Fund Limited Premier Renewable Energy Fund Limited Global Special Opportunities Trust PLC Further details of these funds can be obtained from Premier on 01483 400400. E-mail premier@premierfunds.co.uk www.premierassetmanagement.co.uk Directors and advisers Directors Geoffrey Burns (Chairman) Adam Cooke Ian Graham Michael Wigley Investment Manager Premier Fund Managers Limited Eastgate Court High Street Guildford Surrey GU1 3DE Telephone: 01483 306 090 www.premierassetmanagement.co.uk Authorised and regulated by the Financial Services Authority Secretary and Premier Asset Management Limited Registered Office Eastgate Court High Street Guildford Surrey GU1 3DE Telephone: Mike Nokes 020 7982 1260 Company Number 4897881 Website www.premierassetmanagement.co.uk Registrars Capita Registrars Northern House Woodsome Park Fenay Bridge Huddersfield HD8 0LA Telephone: 0871 664 0300 (calls cost 10p per minute plus network extras) Overseas: +44 208 639 3399 Email: shareholder.services@capitaregistrars.com Auditors Ernst & Young LLP 1 More London Place London SE1 2AF Stockbroker and J.P. Morgan Cazenove Financial Adviser 10 Aldermanbury London EC2V 7RF Telephone: 020 7325 1000 www.jpmorgan.com/cazenove

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