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Premier Global Inf (PGIT)

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Thursday 05 March, 2020

Premier Global Inf

Preliminary Announcement of Results

PREMIER GLOBAL INFRASTRUCTURE TRUST PLC

Annual report and accounts for the year ended 31 December 2019

All page references relate to the annual report.

Financial Calendar 2020

Company’s year end 31 December
Annual results announced March
Annual General Meeting 22 April 2020
Company’s half year end 30 June
Half year results announced August
Dividend payments At the end of March, June, September and December

Cover photograph:

China Everbright International Suzhou waste to energy project

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Investment Objectives

The investment objectives of Premier Global Infrastructure Trust PLC are to achieve a high income from, and to realise long term growth in the capital value of its portfolio. The Company seeks 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. 

Company Summary

Group Premier Global Infrastructure Trust PLC (the “Company”) and its wholly- owned subsidiary PGIT Securities 2020 PLC.
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”/ZDP Shares) accrued capital entitlement and payment of all liabilities. 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) Issued by PGIT Securities 2020 PLC 24,073,337
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 from the date of issue of 4.75% per annum, 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 Miton Group plc (“PMI Group”). PMI Group had approximately £11.6 billion of funds under management at 31 December 2019. 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 0.75% per annum of the gross assets under management, charged 40% to revenue and 60% to capital.


Company Highlights
for the year to 31 December 2019

31 December 31 December
2019 2018 % change
Total Return Performance
Total Assets Total Return1# 19.0% (11.0%)
FTSE Global Core Infrastructure 50/50 Total Return Index2 21.2% 2.7%
FTSE All-World Index Total Return2 (GBP) 22.3% (3.5%)
FTSE All-Share Index Total Return2 (GBP) 19.1% (9.5%)
Ongoing charges3# 1.66% 1.74%
Ordinary Share Returns
Net Asset Value per Ordinary Share (cum income)4 144.94p 112.55p 28.8%
Mid-market price per Ordinary Share2 130.00p 102.00p 27.5%
Discount to Net Asset Value# (10.3%) (9.4%)
Revenue return per Ordinary Share 10.81p 10.33p 4.6%
Dividends declared per Ordinary Share 10.20p 10.20p 0.0%
Net Asset Value Total Return5# 38.9% (25.4%)
Share Price Total Return2# 38.3% (23.3%)
Zero Dividend Preference Share Returns
Net Asset Value per Zero Dividend Preference Share4 120.41p 114.95p 4.7%
Mid Market Price per Zero Dividend Preference Share2 121.00p 116.50p 3.9%
Premium to Net Asset Value 0.5% 1.3%
Hurdle Rates6#
Ordinary Shares
Hurdle rate to return the share price of 130.00p at 30 November 2020 (2.4%)
Zero Dividend Preference Shares
Hurdle rate to return the redemption share price for the 2020 ZDPs of 125.6519p at 30 November 2020 (47.7%)
Balance Sheet
Gross Assets less Current Liabilities (excluding Zero Dividend Preference Shares) £55.2m £48.0m 15.0%
Zero Dividend Preference Shares (£29.0m) (£27.7m) 4.7%
Equity Shareholders’ Funds £26.2m £20.4m 28.4%
Gearing7# 110.7% 135.8%
Zero Dividend Preference Share Cover (non-cumulative)8# 1.76x 1.49x

# Alternative performance measure (“APM”). See Glossary of Terms for definitions and Alternative Performance Measures on page 62.

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. Articles of Association basis.

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

6. Source: PFM Ltd.Hurdle rate definition can be found in the Glossary of Terms on page 62.

7. Source: PFM Ltd.Based on Zero Dividend Preference Shares divided by Equity Shareholders’ Funds at the end of each year.

8. Source: PFM Ltd.Non-cumulative cover = Gross assets at year end divided by final repayment of ZDP Shares plus management fees charged to capital.

Dividend and Share Price Performance

Five year dividend chart 2015-2019

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Ordinary Shares five year performance chart (rebased to 100)

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ZDP Shares three year performance chart† (since issuance) (rebased to 100)

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† The 2020 ZDP Shares were issued on 31 December 2015 and performance is shown from the date of issue.

Chairman’s Statement

for the year to 31 December 2019

Performance overview

I am pleased to report that 2019 was a much improved year for the Premier Global Infrastructure Trust (the “Trust”/“Company”).

The total assets total return, measuring the return on the portfolio including all income and costs was 19.0%. The Company’s geared capital structure amplified the gain resulting in a total return on net assets to ordinary shareholders of 38.9%.

The portfolio performed broadly in line with market indices, although under-performed in the first half before out-performing in the second. The FTSE Global Core Infrastructure 50/50 Total Return Index (the “Index”) gained 21.2% in sterling terms.

The distribution of performance followed a similar pattern to recent years, with developed markets out-performing emerging, and larger companies out-performing smaller. The Investment Manager segments the portfolio into three broad categories, and it was notable that the yield equities (being the larger infrastructure companies), and the yieldcos and investment companies (being those companies set up to hold a defined set of assets and pay a high proportion of cash flows as dividend) both reported very strong returns. This was offset by the growth equities segment (those companies with higher growth, tending to be both smaller and operating in emerging markets) which again showed a negative return. More details of the breakdown of the portfolio and relative performance are given in the Managers’ report on pages 6 to 9.

The valuation differential between emerging market infrastruc-ture companies and their developed market peers has again continued to widen over the year.

Macro context & currency movements

Given that the portfolio of the Company is approximately 85% invested in non-sterling assets, it faces a significant currency risk. The Manager seeks to offset this by using currency hedging from time to time.

The portfolio has tended to under-perform the market during periods of US Dollar strength, as a strong US Dollar acts to dampen sentiment in emerging economies (approximately 40% of the portfolio at the year-end). In addition the portfolio has a lower exposure to US Dollar assets than the Index so does not benefit from US Dollar appreciation to the same extent. The portfolio’s relative performance during 2019 showed a degree of negative correlation to movements in the US Dollar.

Conversely a stronger Chinese Renminbi is beneficial for performance, with Chinese shares usually responding favourably to an improvement in the currency. Trade concerns eased during the second half, and the Renminbi strengthened as a result. It appears an uneasy truce between China and the US has taken hold with the signing of a phase one agreement in January. Any further improvements in 2020 would be a positive development for the portfolio, likewise a deterioration in relations would further harm sentiment.

The decisive victory for the Conservatives in December’s UK general election, gave a boost to the portfolio’s UK assets which had weakened during the year on the perceived threat of nationalisation. The result also removed the uncertainty around whether or not Brexit would actually happen, and 2020 will see the negotiation of a new trade relationship. This has the potential to be positive for both sides, however, it could also potentially generate considerable uncertainty and market turbulence over 2020. The principal exposure that the Company has to the trade negotiations is fluctuations that might arise in the value of sterling.

The Manager’s currency hedging strategy was well executed during 2019, with partial hedging in place during the two periods of sterling strength in the first and fourth quarters, but being unhedged during sterling weakness in the middle of the year. Overall, a hedging gain of £1.8 million was made in the year. The Managers feel that the Pound has the potential to rally further in 2020 and will look to protect the portfolio from sterling strength should this be the case.

Portfolio summary

As noted above, the Manager divides the portfolio into three distinct segments. The Manager believes that this provides a more useful analysis than simply classifying the portfolio along sub sectors such as electricity or water, although sub-sector analysis is provided also. (Note, all performance figures sourced from Premier Fund Managers Limited)

The yield equities segment performed very well in 2019, with an average return of 35.1% and generated a 13.5% contribution to the total return on the portfolio. Markets were generally favourable to larger higher yield investments in the year. Particular mention should be made of Brazilian water utility Sanepar, which is one of the Company’s largest holdings, and returned 62.9% to the Company in 2019 (sterling return including dividends).

Yieldcos and investment companies also performed exceptionally well, with an average total return in sterling including dividends of 35.8%. Their lower portfolio weighting meant that their contribution to return was lower than the yield equities however, at 8.3%. Renewable energy investments performed very well for the Company in 2019, with a standout performance from Brookfield Renewables, which returned 83.2% in 2019.

Growth equities, which mainly comprise the Company’s emerging market positions, were very disappointing, although underlying company performance remains strong. On average this segment returned a negative 8.7%, and detracted 3.2% from total performance. We believe this was mainly sentiment driven on macro-economic and geopolitical issues. Most of the Chinese holdings were again weak, as were investments located in other areas such as India, South-East Asia and the Middle-East. Despite the continued poor performance, the Managers believe that in the longer term the value of these holdings will be recognised, meanwhile they value the underlying earnings and dividend growth and intend to retain this exposure.

Income and dividends

Income generation in 2019 was modestly higher than the prior year, with net revenue per share up 5.4% to 10.81p. Your Board has declared a 4th interim dividend of 2.70p (2018: 2.70p) which brings the total dividends declared for the year to 10.20p, unchanged on the dividend declared in respect of 2018. The 4th interim dividend will be paid on 31 March 2020, with the shares to be marked ex-dividend on 5 March 2020.

2020 continuation vote and ZDP Shares

In August 2014, shareholders approved proposals to enable the company to continue with an indefinite life subject to 5 yearly continuation votes starting in 2020. At the forthcoming 2020 annual general meeting in April, the Board will therefore propose an ordinary resolution to continue the life of the Company to 2025.

In addition, the Company’s ZDP Shares will mature on 30 November 2020 at a value of 125.6159p. Subject to the passing of the resolution to extend the Company’s life, the Board will consider the future of the Company bearing in mind the interests of all shareholders, and the maturity of the ZDP Shares.

Since the change of Manager at the end of May 2012, the compound annual return for an Ordinary Shareholder has been a creditable 12.2% per year. The Directors believe that the portfolio is both attractively valued and contains investments which will generate further shareholder value. The Directors encourage shareholders vote in favour of a continuation of the life of the Company.

General meeting to regularise illegally made historic dividends

Towards the end of year the Board became aware of a technical issue in respect of the payment of certain historic dividends by the Company in respect of the financial years ending December 2015, 2016, 2017 and 2018. The Company had made a procedural error in not filing interim accounts in those years such that the relevant dividends had not been paid in accordance with applicable law. As a result, the Company was advised that it may have claims against past and present shareholders who received these dividends and also against persons who were directors at the time the dividends were paid.

The Company therefore convened a general meeting on 15 January 2020 at which a special resolution was approved by shareholders to prevent the Company making any such claims putting all parties in the same position had the dividends been properly made.

Board development

Following the resignation of Kasia Robinski, Melville Trimble was appointed to the Board at the Company’s AGM in April 2019 and was also appointed to chair the Audit Committee, a role for which he is eminently qualified.

Manager

We draw the attention of shareholders to the merger of Premier Asset Management PLC and Miton Group plc in September 2019 to form Premier Miton Group PLC. While the existing management and secretarial arrangements are not affected by the merger the Board is supportive of this move and the additional resource it brings to the Manager.

Shareholder relations

The Company’s AGM will be held on 22 April 2020 at the offices of Premier Fund Managers Limited, Eastgate Court, High Street, Guildford, Surrey, GU1 3DE at 12.15p.m. where a presentation will be given. Attending shareholders will also have the opportunity to meet with the Board and Manager.

Shareholders can find additional details regarding your Company, including factsheets and articles on topics relating to both the infrastructure sector and the Company, on Premier Miton’s website at: www.premiermiton.com.

Environmental, Social, Governance

ESG matters will have an increasing prominence in future financial and regulatory reporting. Whilst the Manager has always considered ESG matters when making investments, the Manager is working to embed ESG considerations into its investment processes.

Premier Miton has recently become a signatory to the Principles for Responsible Investment, an organisation which assists signatory firms develop and maintain responsible investment practices.

The portfolio has high weightings to environmentally beneficial sectors such as renewable energy and waste treatment, and as such compares favourably to many other sectors. The Managers expect that weightings toward these sectors are likely to increase in future.

Regulation

The Packaged Retail and Insurance-based Investment Products (“PRIIPs”) regulations came into effect on 3 January 2018 and since then the Company has published Key Information Documents (“KIDs”) for the ordinary shares and ZDPs which can be viewed on the Company’s website. Since the introduction of PRIIPS KIDs there has been much debate around the effectiveness of these documents and the European Supervisory Authorities (ESAs) are currently consulting on proposed amendments to the main regulatory issues; namely, the presentation of illustrative performance scenarios and the methodologies used to present costs. The Company continues to follow these developments closely. It also continues to track the implications of Brexit to its business.

Outlook

The Company performed well in 2019, with a strong investment performance leading to a higher NAV, reduced gearing, and improved asset cover for the ZDP shares.

2020 will see many challenges, not least the progress of trade discussions between the UK and the EU, the US/China trade dispute, and the US presidential election. Already in 2020 we have had to contend with a flare up in tensions between the US and Iran, and also the Coronavirus outbreak in China. The virus has now spread beyond China, but at the time of writing the extent of its spread, and its consequent impact on the global economy, remains to be seen.

Your Board is particularly conscious of the maturity of the ZDP Shares in November 2020, and together with the Manager, will ensure the investment approach is appropriate for all shareholders with this in mind.

Despite the ever challenging geo-political backdrop, your Company’s portfolio is attractively valued and holds high quality asset-backed companies with growing earnings. In addition the portfolio contains several pockets of deep value in emerging markets. As such we remain optimistic about the continued performance of the Company.

Gillian Nott OBE Chairman

4 March 2020

Investment Managers’ Report

for the year to 31 December 2019

Performance overview

The portfolio delivered a solid performance in 2019, with a Total Assets total return of 19.0%. Most of the return came in the first half, which saw a return of 12.4%, but on a relative basis against the FTSE Global Core Infrastructure 50/50 Index (the “Index”) the portfolio performed better in the second half than the first.

2018 was a difficult year which had left the portfolio trading at a low valuation. A pick up in equity market sentiment in the early part of 2019, also helped by falling yields, saw much of 2018’s losses quickly recovered.

During the year as a whole, many of the Company’s larger investments performed exceptionally well, and on average the investments in the yield equities and yieldcos and investment companies segments (see below) substantially out-performed the Index.

However, the portfolio was again held back, with some exceptions, by emerging market investments; these mainly falling within our growth equities classification. Emerging economies were subject to some strong macro influences in 2019. Firstly, the China/US trade dispute dragged on throughout the year, although the situation improved towards the year end as a preliminary deal came into sight. This caused increased volatility of the Chinese renminbi and weighed on share prices. Secondly, the US dollar was strong for much of the year, before falling back sharply in the fourth quarter. On a relative basis, emerging market investments tend to perform better during period of US dollar weakness.

Despite this, the Company’s investments in China, Asia and other developing areas performed well fundamentally, with improved earnings and dividends, and consequently falling valuations.

At the end of the year the portfolio received a welcome boost from the UK general election result, which delivered a decisive victory for the Conservatives, and put an end to concerns over nationalisation. Although a portion of the UK exposure had been sold down on this threat earlier in the year, the majority of the holdings had been retained and benefitted from the market reaction.

Portfolio segmentation

As previously discussed, we continue to segment the portfolio into three investment types: yield equities, growth equities and yieldcos and investment companies.

By way of reminder, yield equities are those companies held primarily for their yield, typically above 3.5%, represented by larger, more mature businesses, usually in developed markets. Growth equities are held primarily for capital rather than income returns, and are typically smaller companies located in emerging markets. The third group is that of yield companies (“yieldcos”), which are companies set up to own a portfolio of cash producing assets, and pay out a high proportion of their cash-flow as a dividend to shareholders. The Company may also invest in other investment companies in order to take advantage of a discount, or to access a particular specialist area.

The yield equities element of the portfolio performed very strongly in 2019, accounting for a substantial portion of the portfolio’s return. Yieldcos also performed well, making up almost all of the remainder, with both groups being predominantly drawn from developed markets.

Growth equities in emerging markets, had another difficult year, although underlying performance remains strong. Largely as a result of their strong relative performance, yield equities and yieldcos grew as a proportion of the total portfolio from 66% to over 70%, while growth equities fell. The prospects for growth equities nonetheless remain attractive.

Yield equities

Brazilian water utility, Sanepar, made a very strong contribution to portfolio return over the year, and despite a gradual reduction in the position to maintain risk weightings, remains one of the Company’s largest holdings at over 6%. Its shares recovered from some short term uncertainty regarding the implementation of a portion of its annual tariff increase, rebounding strongly once this was resolved, and ending the year up 64.9% in local currency terms, at an all-time share price high.

PORTFOLIO CLASSIFICATION BY INVESTMENT TYPE

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The Company substantially increased its position in global renewables business Northland Power, which finished the year as the third largest holding with a weight of 5.9%. Northland is in the final stages of commissioning its third offshore wind farm in the North Sea, and will then focus its attention on offshore Taiwan where it is developing three large offshore wind farms over the next few years. Despite its share price gaining 25.3% in 2019, the company trades at a substantial valuation discount to other renewable energy companies developing offshore wind assets.

Pennon, which operates the South West Water utility business together with its Viridor waste subsidiary, was held back by political uncertainty for much of 2019. However, boosted by the election in December, its shares ended the year up 48.0%. In early 2020 the company has received an offer for Viridor causing the shares to rally further. Likewise, SSE, was also hit by political risks before rallying in December. It has now sold its customer facing business to concentrate solely on its regulated networks and renewable energy businesses.

Other major holdings in the yield equities performed well, including North American pipeline operator Enbridge, whose shares gained 21.7%, and Rome-based multi utility Acea, with a share price gain of 53.5%. Finnish utility, Fortum is a new investment in the year and generates the majority of its power from zero carbon energy sources such as hydro, nuclear and wind. We expect it will be a beneficiary of long term rising European carbon and electricity prices.

PORTFOLIO CLASSIFICATION BY SECTOR

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PORTFOLIO MARKET CLASSIFICATION PROFILE

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Growth equities

In contrast, the performance from the majority of the stocks in the growth equities segment of the portfolio was disappointing. The main area of under-performance was China, despite the Chinese investments’ encouraging operational performances.

Despite reporting half year attributable earnings growth of 19.5%, together with a steady stream of new contracts, the share price performance of waste to energy operator China Everbright International was again disappointing in 2019, falling by 11.0%. Likewise gas company Beijing Enterprises Holdings increased its first half 2019 earnings by 11.2%, with an accompanying dividend increase of 25.0%, while its shares fell by 13.9% over the year.

China Longyuan Power, a wind energy developer, reported flat interim 2019 earnings, with its shares falling by 7.5% during the year. The company is expected to have a year of strong growth in 2020 prior to the phasing out of subsidies for new wind farms in 2021 as costs have now fallen to the level of thermal generation, reaching “grid parity”.

Shares in the Philippines infrastructure conglomerate, Metro Pacific, flat for the first 11 months of the year, fell sharply in December on the news that the government was seeking to renegotiate its water concession which serves the western half of Manila, ending the year down 25.0%. We consider this to be an over-reaction, as we believe that their water business comprises only 13% of the total value of the group, with its electricity and toll roads businesses set to grow earnings at a far faster pace than the more mature water business.

OPG Power Ventures remains the Company’s only Indian investment. Its half year results to September were strong, with earnings up 26.2% on higher electricity tariffs, flat coal costs and lower debt costs. Despite the positive market reaction to the results, the shares still ended the year down 25.0%. We remain comfortable with the underlying prospects for the business however, as robust underlying cash flow is enabling the group to pay down its debt rapidly which should drive growth in future earnings and equity value.

In November we participated in the initial public offering of Helios Towers, a sub-Saharan telecoms towers business operating around 7,000 towers in five African countries (most notably Tanzania) where rapidly growing mobile data penetration is driving increased demand for telecommunications infrastructure. Lastly, global port operator DP World saw its shares decline by 23.4% despite steady volumes, and solid earnings performance in the year.

PORTFOLIO CONCENTRATION

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Yieldcos and investment companies

Just as increasing US interest rates were a drag on performance for this area of the portfolio in 2018, so the three reductions in the Fed Funds rate in 2019, from 2.50% in July to 1.75% by the end of the year, gave a boost to US yieldcos. Lower interest rates pushed down bond yields, which provided a valuation tailwind to yieldcos, with their largely fixed bond-like returns emanating from long term contracts with creditworthy counterparties.

We invested further into US listed global renewables operator Atlantica Yield, which was the Company’s largest investment at the year-end. Atlantica posted a solid operational performance throughout the year, and increased its dividend steadily. It was rewarded with an increase in its share price of 34.6%. Canadian-listed Brookfield Renewable Partners, which also operates a global renewables portfolio but with an emphasis on North American hydro assets, performed even better with a share price gain of 70.6%. Transalta Renewables, mainly focused on the Canadian renewables market but also owning gas-fired generation in Australia, saw its shares increase by 49.7% during 2019. Pattern Energy, a North American renewables business, now developing new assets further afield in South America and Japan, performed similarly well, with its shares gaining 43.7%.

Despite the strong gains seen in these companies during the year, at the end of 2019 they still offered attractive dividend yields in a range of approximately 4.5% to 6.5%.

The partial exception to these stellar returns was Clearway Energy whose share price gained a relatively modest 13.0%, substantially under-performing its peer group. Several of Clearway’s operating subsidiaries own renewable energy facilities holding power sales agreements with bankrupt Californian utility PG&E. To date, the PG&E bankruptcy proceedings have not sought to renegotiate any of the utility’s renewable energy purchase contracts, but while the bankruptcy process is ongoing, banking covenants restrict Clearway from accessing the cash flows from the affected subsidiary companies. It was therefore forced to cut its dividend, hopefully on a temporary basis, as a result.

The underlying energy infrastructure holdings owned by the two US pipeline funds in the portfolio, First Trust MLP and Energy Income Fund (“FEI”) and Center Coast Brookfield MLP & Energy Infrastructure Fund (“CEN”), saw an improved performance in 2019, producing double digit earnings growth in each of the three quarterly periods so far reported. FEI’s shares gained 21.7% in the year while CEN saw its shares fall 7.6%, although it still managed a positive return if its very high yield is taken into account.

Geographical segmentation

In addition to the shift in the balance of asset type held, there have been some modest changes to the geographical make-up of the portfolio.

Most notably, the allocation to Global stocks (those companies whose businesses span more than one geographical region) has increased from 11.7% at December 2018 to 18.4% at the end of 2019. This mainly reflects increased positions in Northland Power and Atlantica Yield, together with the re-establishment of a holding in French listed global energy company Engie.

European exposure, which had fallen below 3% at the end of last year, rose to 7.0% with the addition of Fortum as noted above.

These increases have been offset by a reduction in investment in the UK. Despite believing that regulatory and particularly political risks in the UK were over-stated, we recognised the potential danger that the sector would face a period of increased uncertainty in the context of a possible Labour government or hung parliament. We also exited UK renewable holdings Greencoat UK Wind, Bluefield Solar and Foresight Solar (all on valuation grounds) and Severn Trent Water (to concentrate exposure solely on Pennon).

The weighting to Latin America, being entirely Brazil, fell due to sales of toll road operator EcoRodovias and water company Cia Saneamento Minas Gerais.

PORTFOLIO GEOGRAPHICAL ALLOCATION

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Currency and hedging

The value of the pound remains a key risk to the portfolio, particularly in light of the Company’s structural short sterling position caused by the sterling liability of the ZDP shares.

The highs and lows of the Brexit negotiations dominated the domestic agenda during 2019, and were a key driver of the price of sterling. We put partial hedges in place in the early part of the year against the US Dollar, Hong Kong Dollar, Canadian Dollar and the Euro. This shielded the portfolio from sterling strength over the first quarter.

We did so again in the final quarter, as sterling rose in expectation that a post-election deal might be reached between the UK and Europe. The NAV was therefore partially shielded during periods of sterling strength, which contributed to performance.

Toward the end of the year, and into 2020, the US dollar weakened as the Federal Reserve again expanded its balance sheet through restarting monetary easing. History teaches that it is usually unwise to bet against the US dollar; however a sharp fall in the dollar would be a material risk for the portfolio.

Given these risks, we expect to continue to adopt a safety first approach when it comes to currency, with the portfolio being partly hedged in the early part of 2020.

Outlook

2019 was a much better year for developed markets, while emerging markets continued to lag, despite their continued strong earnings growth. As a result we continue to see significant areas of value within the portfolio, and are hopeful that the combination of a weaker dollar and a more amicable trading relationship between the US and China will enable this value to be realised in 2020 and beyond.

James Smith
Claire Long
Premier Fund Managers Limited

4 March 2020


Investment Portfolio
at 31 December 2019

Company Activity Country Value £000 % total investments Ranking 2019 Ranking 2018
Atlantica Yield Renewable Energy Global 3,448 6.4 1 10
Cia de Saneamento do Paraná Water & Waste Latin America 3,379 6.3 2 1
Northland Power Income Fund Renewable Energy Global 3,187 5.9 3 26
China Everbright International Water & Waste China 2,758 5.1 4 2
First Trust MLP and Energy Income Fund Multi Utilities North America 2,632 4.9 5 8
Pennon Group Water & Waste United Kingdom 2,359 4.4 6 4
Enbridge Gas North America 2,307 4.3 7 6
Beijing Enterprises Holdings Gas China 2,106 3.9 8 5
Fortum Electricity Europe (ex. UK) 1,864 3.5 9
Jasmine Broadband Internet Infrastructure Fund Telecoms Infrastructure Asia (ex. China) 1,786 3.3 10 16
China Longyuan Power Renewable Energy China 1,772 3.3 11 9
National Grid Multi Utilities United Kingdom 1,700 3.2 12 3
Centre Coast MLP & Infrastructure Fund Multi Utilities North America 1,691 3.2 13 14
Metro Pacific Investments Multi Utilities Asia (ex. China) 1,535 2.9 14 12
TransAlta Renewables Renewable Energy North America 1,534 2.9 15 22
Engie Multi Utilities Global 1,525 2.8 16
OPG Power Ventures Electricity India 1,444 2.7 17 7
SSE PLC Electricity United Kingdom 1,439 2.7 19 15
Pattern Energy Group Renewable Energy North America 1,439 2.7 18 18
Clearway Energy ‘A’ Renewable Energy North America 1,379 2.6 20 17
Kunlun Energy Gas Asia (ex. China) 1,227 2.3 21 31
ACEA Multi Utilities Europe (ex. UK) 1,047 2.0 22 25
DP World Ports Middle East 1,025 1.9 23 19
Brookfield Renewable Energy Partners Renewable Energy North America 990 1.8 24 23
Yuexiu Transport Infrastructure Roads & Rail Asia (ex. China) 869 1.6 25 35
China Everbright Greentech Renewable Energy China 784 1.5 26 21
China Suntien Green Energy Renewable Energy China 744 1.4 27
Edison International Electricity North America 705 1.3 28 24
Helios Towers Telecoms Infrastructure Middle East 687 1.3 29
Omega Geracao Renewable Energy Latin America 670 1.2 30 29
Vinci Roads & Rail Europe (ex. UK) 670 1.2 31 34
China Resources Gas Group Gas China 538 1.0 32 36
Drax Group Renewable Energy United Kingdom 534 1.0 33 20
Gresham House Energy Storage Fund Electricity United Kingdom 428 0.8 34
GCP Infrastructure Investments Renewable Energy United Kingdom 395 0.7 35
Acciona Renewable Energy Europe (ex. UK) 317 0.6 36
Globaltrans Roads & Rail Eastern Europe 259 0.5 37
Sarana Menara Nusantara Telecoms Infrastructure Asia (ex. China) 230 0.4 38 37
China Water Affairs Group Water & Waste China 226 0.4 39
 53,629 99.9%

   

Unquoteds Activity Country Value £000 % total investments
PGIT Securities 2020 PLC ZDP subsidiary United Kingdom 50 0.1
ITI Energy In liquidation United Kingdom
Total investments 53,679 100.0%

Review of Top Ten Holdings

at 31 December 2019

1. Atlantica Yield
Market cap: £2.0bn
www.atlanticayield.com
Atlantica Yield operates renewable and some conventional thermal generation capacity in the US, Europe, South Africa and Latin America. It also has some electricity transmission lines and water treatment capacity. Atlantica’s businesses have contracts at fixed or regulated prices into the 2030s, with a weighted average contract life extending to 2036. Strong cash flows have allowed the company to pay down project level debt and to increase distributions to shareholders, which the company pays out quarterly. For first three quarters of 2019 dividends rose 17.6% compared to the equivalent 2018 period. Atlantica’s share price increased by 34.6% during 2019.
2. Cia de Saneamento do Paraná
Market cap: £1.9bn
www.sanepar.com.br
“Sanepar” is the partially privatised water and sewerage company covering the state of Paraná, Brazil. The company was subject to a comprehensive regulatory review in 2017 designed to encourage increased investment, particularly in their wastewater treatment business. This resulted in the award of a 25.6% real terms tariff increase, which the regulator is phasing in gradually over 8 years. It was concerning therefore when in May 2019 the regulatory settlement was challenged by the Paraná Court of Auditors as excessive, with the Court reducing the company’s proposed 2019 tariff increase – which included the usual inflationary pass through – from 12.1% to 8.4%. However, following a full investigation, in October the Court concluded that the company’s tariff settlement was valid and reinstated the tariff increase in full, together with compensation for the delayed implementation. Continued positive underlying trading and greater clarity on the enforcement of its regulatory model helped drive Sanepar’s share price up by 64.9% over 2019.
3. Northland Power Income Fund
Market cap: £2.8bn
www.northlandpower.ca
Northland Power was originally an owner of Canadian combined heat and power thermal generation assets, before diversifying into solar and onshore wind energy in Canada. More recently it has expanded into offshore wind energy in the Dutch and German sectors of the North Sea, where it owns three large scale wind farms, two operational and one, Deutsche Bucht, which was in the final stages of being commissioned at the end of 2019. In 2018, Northland won contracts to build sizable new offshore wind farms in Taiwan, which the company expects to complete over 2024 and 2025, and which will have 20-year power offtake contracts. In 2019 it expanded into the utility sector with the purchase of electricity distribution company Energia de Boyaca in Colombia. 2020 will see the completion of a large new solar generation asset, La Lucha, in Mexico. Northland’s share price reacted well to its rapid development, gaining 25.3% over 2019.
4. China Everbright International
Market cap: £3.7bn
www.ebchinaintl.com
China Everbright International (“CEI”) is a leading waste to energy and wastewater treatment company operating in mainland China. Its waste to energy volumes have grown by an average of 30% a year since 2010. In 2018, in order to help finance its high level of growth, it undertook a rights issue to raise HKD10bn (approximately £1bn), a third of its existing share capital at that time. 2019 was another strong year operationally, with interim results to June showing a 19.5% increase in earnings on a 24.5% increase in waste volume and a 23.3% increase in electricity production. The company won several new projects over 2019, typically 25- or 30-year contracts with the awarding local authority, which will be built over coming years. Despite the healthy results and business prospects, CEI’s shares declined by 11.0% over 2019.
5. First Trust MLP and Energy Income Fund
Market cap: £423m
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, plus other energy infrastructure such as utilities. FEI’s focus is on businesses with little to no commodity risk exposure and regulated or long term contracted revenue streams. US oil and gas production growth remains strong, and this has led to high demand for new infrastructure to service the increasing volumes. However, we believe that infrastructure companies have now passed their peak capital expenditure, and as such, cash flows and balance sheets should begin to improve. 2019 was a better year for asset values, with the shares increasing in price by 21.7% in addition to an average 10.5% dividend yield over the year.
6. Pennon
Market cap: £4.3bn
www.pennon-group.co.uk
Pennon is the holding company owning South West Water (“SWW”), which supplies water and sewerage to 1.7 million customers in the South West of England. SWW remains one of the UK’s most efficient water utilities and has customer service metrics towards the top of the peer group. SWW has achieved “fast track” status in respect of the new 5-year tariff period from April 2020, the only water company to achieve this for two successive regulatory periods. We expect that SWW will generate further efficiencies and continue to earn attractive rates of return in the new period. Pennon also owns Viridor, a leading UK waste treatment company. Over recent years, Viridor has built a portfolio of 11 incineration plants, operating under long-term contracts, which should deliver a reliable revenue stream in future years. It is also developing new plastics recycling facilities, an area in which the UK is lacking in capacity. The threat of nationalisation had acted to dampen share price performance, but the outcome of the UK general election in December ensured a strong finish to the year; the share price gaining 48.0% over 2019. In January 2020, Pennon received a bid for Viridor, and we therefore expect Pennon to sell this business at some point during the year.
7. Enbridge
Market cap: £60.6bn
www.enbridge.com
Enbridge operates the longest crude oil and liquids transportation system in North America, totalling over 46,000km. It is also Canada’s largest natural gas distribution utility, operating in the eastern provinces. Enbridge is currently building its “line 3 replacement” pipeline, a new 1,030 mile transmission pipeline costing approximately £5.3 billion, connecting the hydrocarbon resources of Western Canada with the Superior oil terminal in Wisconsin, US. This replacement of an older pipeline will allow the company to offer increased capacity with an improved environmental risk profile. Aside from pipelines, Enbridge is also investing in European offshore wind farms. 2019 was a successful year for the group, with good progress made on constructing their new assets, funded by sales of non-core businesses. Enbridge’s shares rose by 21.7% in the year.
8. Beijing Enterprises Holdings
Market cap: £4.4bn
www.behl.com.hk
Beijing Enterprises Holdings (“BEH”) is a utility holding company that comprises 100% ownership of the gas distribution network in Beijing, a 40.0% stake in China’s main “East to West” high-pressure gas transmission pipelines, and a 24.4% stake in China Gas Holdings, a separately listed gas distribution business operating across China. Gas usage has grown strongly in China as the government seeks to replace coal and oil with cleaner natural gas. BEH reported a first half increase in earnings of 11.2% and an increase in its interim dividend of 25%. BEH’s share price continues to be a disappointment however, falling 13.9% in the year.
9. Fortum
Market cap: £16.5bn
www.fortum.com
Fortum, a new investment in the year, is a Finnish power company with its main assets focused on nuclear and hydro generation. It also operates other businesses such as district heating, energy supply, and power generation in Russia. Fortum has also recently moved to take control of Uniper, a listed German power generator with a variety of power assets across Europe. We anticipate a continued increase in the price of European carbon allowances, as the current price of approximately Euro 25/tonne, which has already increased fivefold since 2017, is still insufficient to encourage the switch away from coal to cleaner forms of generation. We believe this will push up European wholesale electricity prices to the benefit of Fortum’s power business but given its low carbon portfolio, this will not have a material effect on its cost base. Fortum’s share price gained 15.2% during 2019.
10. Jasmine Broadband Internet Infrastructure Fund
Market cap: £2.0bn
www.jas-if.com
Jasmine Broadband (“JASIF”) is an owner and operator of broadband fibre networks in Thailand. It was spun out of Thai telecoms company Jasmine International in 2015, in order to allow regulated competitive access to broadband networks. The bulk of revenue however continues to be generated under a long-term contract with Jasmine International. In 2019 JASIF undertook a rights issue to raise THB22.5bn (£570 million), to acquire further fibre assets from Jasmine International. Its shares were steady during the year, rising 2.1%, although the main attraction for the portfolio is the high level of revenue visibility and the dividend yield of almost 10%.

Directors

Gillian Nott OBE – Chairman

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, the US Solar Fund PLC and Gresham House Renewable Energy VCT1 plc. Mrs Nott was appointed as a non-executive director of the Company on 1 March 2016.

Melville Trimble – Chairman of the Audit Committee

Melville Trimble is a qualified accountant and a member of the Institute of Chartered Accountants in England and Wales, a fellow of the Chartered Institute of Securities and Investment, and has spent much of his career as a corporate financier specialising in the financial sector. Through roles at Cazenove, Merrill Lynch and PWC, Melville was principal corporate adviser to more than ninety investment companies. He has been a director for three investment companies and also served on the board of the Association of Investment Companies for three years as deputy chairman and chaired the audit committee of the AIC for eight years. Mr Trimble was appointed as a non-executive director of the Company on 25 April 2019.

Victoria Muir

Victoria Muir is a Chartered Director and a Fellow of the Institute of Directors. She is a distribution specialist and has worked in financial services, with a focus on asset management, for over 25 years. She was Global Head of Investor Relations at BlueBay Asset Management and Head of Client Account Management at Royal London Asset Management, where she held four executive directorships She is a non-executive director of Christie Group plc, Invesco Perpetual Select Trust plc, Schroder Income Growth Fund plc, Smith & Williamson Fund Adminis-tration Limited and State Street Trustees Limited. Ms Muir is also chair of State Street Managed Accounts Services Ltd. Ms Muir was appointed as a non-executive director of the Company on 14 March 2018.

Investment Managers

James Smith

James joined Premier in June 2012, after spending fourteen years at Utilico, specialising in the global utilities, transportation infrastructure, and renewable energy sectors. During this time he gained extensive experience in both developed and emerging markets. He was previously a director at Renewable Energy Holdings PLC and Indian Energy Ltd.James is a Chartered Accountant and Barrister.

Claire Long

Claire joined Premier in December 2008. Previously she ran a UK smaller companies fund at Rothschild Asset Management after spending four years at Foreign and Colonial where she covered a range of markets, including the UK and Japan. She is an Associate of the CFA UK.

Strategic Report

for the year ended 31 December 2019

The Directors submit to the shareholders their Strategic Report, Directors’ Report and the Financial Statements of the Company for the year ended 31 December 2019.

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 18 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 seeks 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 2019 totalled 10.2p (10.2p for 2018) representing a yield of 7.8% on the year end share price.

The chart on page 3 shows the annual dividends paid by the Company over the past five years, including additional dividends that were paid in 2015.

Long term growth in capital value

The asset value of the Company’s portfolio will be heavily influenced by performance of the Utility and Infrastructure Sectors and global stock markets. 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 does, 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 ZDP Shares but does not use other gearing on a long-term basis.

Viability statement

The Directors have assessed the viability of the Company over a three year period, taking into account the Company’s position at 31 December 2019.

A period of three years has been chosen for the purposes of the assessment of viability as the Board believes that this reflects a suitable time horizon for reviewing the Company’s circumstances and strategy, taking into account the investment policy, liquidity of investments, potential impact of economic cycles, nature of operating costs, dividends and the availability of funding. In its assessment of the viability of the Company, the Directors have considered the Company’s principal risks and uncertainties detailed on pages 18 and 19 and in particular:

(i)  the Company’s ability to repay the final capital entitlement of the ZDP Shares on 30 November 2020;

(ii)  the potential for a fall in the value of the investment portfolio;

(iii)  the potential impact on the Company of the current trade negotiations between the UK and the EU and the potential effect on the value of sterling; and

(iv)  the impact on the Company should the shareholders vote not to pass the continuation vote scheduled to take place at the 2020 annual general meeting of the Company, which would oblige the Directors to follow the provisions in the Articles of Association and put forward proposals to the effect that the Company would be wound up, liquidated, reorganised, unitised or to find some other suitable solution that would be satisfactory to the shareholders.

The Directors also considered the Company’s income and expenditure projections and took into account the fact that the Company’s investments principally comprise liquid securities listed on recognised stock exchanges.

Based on the assessment undertaken as outlined above, the Directors confirm that they have a reasonable expectation that the Company will be able to continue in operation and to meet its liabilities as they fall due over the three year period to December 2022.

Return per share – basic

Total return per Ordinary Share is based on the net total gain on ordinary activities after taxation of £7,702,000 (31 December 2018: net total loss £7,366,000).

These calculations are based on the number of 18,088,480 Ordinary Shares in issue during the year to 31 December 2019 (2018: 18,088,480).

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

Year ended
31 December 2019
Pence per Ordinary Share
 Year ended
 31 December 2019
£000
Year ended
31 December 2018
Pence per Ordinary Share
 Year ended
 31 December 2018
£000
Net revenue return 10.81p 1,955 10.33p 1,868
Net capital gain/(loss) 31.77p 5,747 (51.05)p (9,234)
Net total gain/(loss) 42.58p 7,702 (40.72)p (7,366)

The basic returns per share are equivalent to the fully diluted returns per share. Full details can be found in note 18 on page 54.

Dividends

During the year the following dividends were paid:

Payment date Dividend pence (net per share)
Fourth Interim for the year ended 31 December 2018 29 March 2019 2.70p
First Interim for the year ended 31 December 2019 28 June 2019 2.50p
Second Interim for the year ended 31 December 2019 27 September 2019 2.50p
Third Interim for the year ended 31 December 2019 27 December 2019 2.50p

Subsequent to the year end but in respect of the year ended 31 December 2019 the Directors have declared a fourth interim dividend of 2.70p, payable on 31 March 2020 to members on the register at the close of business on 6 March 2020. The shares will be marked ex-dividend on 5 March 2020. This dividend relates to the year ended 31 December 2019 but in accordance with 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 50.

Net asset value

The net asset value per Ordinary Share, including revenue reserve, at 31 December 2019 was 144.94p based on net assets as at 31 December 2019 of £26,217,000 divided by number of ordinary shares in issue of 18,088,480 (31 December 2018: 112.55p). The net asset value of a ZDP Share at 31 December 2019 was 120.41p based on the accrued capital entitlement as at 31 December 2019 of £28,987,000 divided by the number of ZDP shares in issue of 24,073,337 (31 December 2018: 114.95p).

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”) as amended and restated from time to time.

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 SE (“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 area on Premier’s website at

https://www.premiermiton.com/media/5007/premier-global-infrastructure-trust-pre-investment-disclosure-document-aifmd.pdf

PRIIPs KIDs

The Company has published a Key Information Document (“KID”) on 28 February 2020 in compliance with the Packaged Retail and Insurance-based Investment Products (“PRIIPs”) Regulation. KIDs for the Ordinary and the ZDP Shares can be found on the Company’s area on Premier’s website at:

https://www.premiermiton.com/investors/investments/investment-trusts/premier-global-infrastructure-trust

The Company is not responsible for the information contained in the KID. The process for calculating the risks, costs and potential returns are prescribed by regulation. The figures in the KID may not reflect the expected returns for the Company and anticipated returns cannot be guaranteed.

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 55 to 61)

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 ZDP 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 1 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 ZDP 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 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. 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 Alternative Investment Fund Managers with effect from 23 June 2014. On 20 January 2015 however, the Company announced that it had appointed Premier Portfolio Managers Limited (“PPM”) as its Alternative Investment Fund Manager and PPM is responsible for ensuring compliance with AIFMD (see page 17).

Political and regulatory risk

The Company invests in regulated businesses which may be subject to political or regulatory interference, and may be required to set pricing levels, or take investment decisions, for political rather than commercial reasons. In some less developed economies, including those in which the Company invests, there are increased political and economic risks as compared to more developed economies. These risks include the possibility of various forms of punitive government intervention together with reduced levels of regulation, higher brokerage commissions, less reliable settlement and custody practices, higher market volatility and less reliable financial reporting. Such factors are out of the control of the Board and the Investment Manager, and 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 Global Core Infrastructure 50/50 Total Return Index, FTSE All-World Total Return Index and FTSE All-Share Total Return Index (see Company highlights on page 2).
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 (see Company Highlights Total Assets Total Return).
4) The performance of the ordinary shares, 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 3).
5) Ongoing charges. The annualised ongoing charges figure for the year was 1.66% (2018: 1.74%). 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.

The Board reviews each year an analysis of the Company’s ongoing charges figure and a comparison with its peers. The Company also calculates summary cost indicators for publication in the KID, available on the Company’s website.

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
2019 2018 % change
Total Return Performance
Total Assets Total Return1 19.0% (11.0%)
FTSE Global Core Infrastructure 50/50 Index Total Return2 (GBP) 21.2% 2.7%
Ordinary Share Performance
Net Asset Value per Ordinary Share (cum income) 144.94p 112.55p 28.8%
Revenue Return per Ordinary Share 10.81p 10.33p 4.6%
Net dividends declared per Ordinary Share 10.20p 10.20p 0.0%
Discount to Net Asset Value (10.3%) (9.4%)
Ongoing charges3 1.66% 1.74%

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 and future developments of the Company are discussed in both the Chairman’s statement on pages 4 and 5 and the Investment Managers’ report on pages 6 to 9.

Board diversity

The Nomination Committee considers diversity, including the balance of skills, knowledge, 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. As at the end of 2019, the Board comprised of two female non-executive directors and one male non-executive director. The Company has no employees.

Prevention of the facilitation of tax evasion

In response to the implementation of the Criminal Finances Act 2017, the Board have adopted a zero-tolerance approach to the criminal facilitation of tax evasion. A copy of the Company’s policy on preventing the facilitation of tax evasion can be found on the Company’s website: www.premiermiton.com. The policy is reviewed annually by the Audit Committee.

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

Gillian Nott OBE

Chairman

4 March 2020

Directors’ Report

for the year ended 31 December 2019

Directors

The present Directors are listed below and on page 14. They are all non-executive and have served throughout the year, apart from Melville Trimble who was appointed to the Board on 25 April 2019 and Kasia Robinski who resigned from the Board on 25 April 2019.

Gillian Nott OBE – Chairman

Melville Trimble – Chairman of the Audit Committee (appointed 25 April 2019)

Victoria Muir

Kasia Robinski (resigned 25 April 2019)

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. The Board reviews all notified situations on a quarterly basis.

Corporate governance

The statement of Corporate Governance, as shown on pages 25 to 28, is incorporated by cross reference into this report.

Bribery prevention policy

The provision of bribes of any nature to third parties in order to gain a commercial advantage is prohibited and is a criminal offence. The Board has a zero tolerance policy towards bribery and a commitment to carry out business fairly, honestly and openly. The Board takes its responsibility to prevent bribery by the Company’s Manager on its behalf very seriously and the Investment Manager has anti-bribery policies and procedures in place. The Company’s other key service providers have also been contacted in respect of their anti-bribery policies.

Global greenhouse gas emissions for the year ended 31 December 2019

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.

Modern slavery act

The Company is an investment vehicle and does not provide goods or services in the normal course of its business, or have customers. Accordingly, the Directors consider that the Company is not within the scope of the Modern Slavery Act 2015.

Substantial shareholdings

As at the date of this report the Company had received the following declarations of interest in the voting rights of the Company in accordance with the FCA Disclosure and Transparency Rules.

Ordinary Shares Number of shares at 2 March 2020† % of total voting rights Number of shares at 31 December 2019 % of total  voting rights
Premier Fund Managers Limited 1,725,921 9.5 1,725,921 9.5
Philip J Milton & Company Plc 1,645,747 9.1 1,645,747 9.1

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

Going concern

The Directors believe that having considered the Company’s investment objectives (shown on page 1), risk management policies and procedures (pages 55 to 61), 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. The risks that the Directors considered most likely to adversely affect the Company’s available resources over this period was a significant fall in the valuation or a reduction in the liquidity of the Company’s investment portfolio. In their considerations, the Directors also took into account the continuation vote which is to be held at the annual general meeting of the Company on 22 April 2020.

If the shareholders vote not to pass the continuation vote scheduled to take place at the 2020 annual general meeting of the Company, this would oblige the Directors to follow the provisions in the Articles of Association and put forward proposals to the effect that the Company would be wound up, liquidated, reorganised, unitised or to find some other suitable solution that would be satisfactory to the shareholders.

The Company is due to provide final capital settlement of the ZDP shares on 30 November 2020. There is currently no reason to believe funds will not be available at that date.

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 51. Further information about financial instruments and capital disclosures is provided in note 21 on pages 55 to 61.

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 Global Infrastructure 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 on pages 71 to 74 inclusive 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.

RESOLUTIONS 8 and 9: 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 2019.

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 PGIT 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.

These authorities, if granted, will expire at the conclusion of the next Annual General Meeting of the Company.

RESOLUTION 10: Continuation Vote

In August 2014, shareholders approved proposals to enable the Company to continue with an indefinite life subject to five yearly continuation votes starting in 2020.

Resolution 10 to be proposed at the Annual General Meeting, which will be proposed as an Ordinary Resolution, will, if passed, enable the Company to continue in existence as an investment trust until the Annual General Meeting in 2025.

RESOLUTION 11: Authority to disapply pre-emption rights

RESOLUTION 11 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.

This authority, if granted, will expire at the conclusion of the next Annual General Meeting of the Company.

RESOLUTION 12: Purchase by the Company of its own shares

At the Annual General Meeting held on 25 April 2019 a special resolution was passed, giving the Directors authority until the conclusion of the earlier of the 2021 Annual General Meeting and 22 October 2021, to make market purchases of up to a maximum of 2,711,463 Ordinary Shares. During the year to 31 December 2019 no Ordinary Shares were purchased (during the year ended 31 December 2018 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 2 March 2020) 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 PGIT 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 2021, or 22 October 2021, 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 17,500 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 1, 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 21;

• 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

KPMG LLP were appointed as Auditor on 13 November 2017 and a resolution confirming 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

Gillian Nott OBE

Chairman

4 March 2020

Statement of Corporate Governance

Introduction

The Board of Premier Global Infrastructure Trust PLC (the “Company”) has considered the Principles and Provisions of the AIC Code of Corporate Governance (“AIC Code”). The AIC Code addresses the Principles and Provisions set out in the UK Corporate Governance Code (the “UK Code”), as well as setting out additional Provisions on issues that are of specific relevance to the Company.

The Board considers that reporting against the Principles and Provisions of the AIC Code, which has been endorsed by the Financial Reporting Council provides more relevant information to shareholders.

The Company has complied with the Principles and Provisions of the AIC Code apart from the following provisions:

• a senior non-executive Director has not been identified due to the small size of the Board; and

• the Company did not establish its Remuneration Committee until 25 February 2020.

The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the AIC Code adapts the Principles and Provisions set out in the UK Code to make them relevant for investment companies.

Directors’ duties - s172 statement

Under the new AIC Code, the Directors must now explain more fully how they have discharged their duties under s172 of the Companies Act 2006 in promoting the success of the Company for the benefit of the members as a whole. These duties are detailed in Section 172 of the Companies Act 2006 which is summarised as follows:

“A director of a company must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole and, in doing so, have regard (amongst other matters) to:

• The likely consequence of any decisions in the long-term;

• The need to foster the company’s business relationships with suppliers, customers and others;

• The impact of the company’s operations on the community and environment;

• The desirability of the company maintaining a reputation for high standards and business conduct; and

• The need to act fairly as between shareholders of the company.”

The key issues that the Board has focussed on during the year have been investment performance and income generation, the forthcoming continuation vote at the AGM in April 2020 and the repayment of the Zero Dividend Preference shares in November 2020.

As an externally managed investment trust, the Company has no employees, customers, operations or premises. Therefore, the Company’s key stakeholders (other than its shareholders) are considered to be its service suppliers. The key suppliers are Premier Fund Managers, Premier Portfolio Managers, KPMG, Link Asset Services, Northern Trust Global Services, Crowe UK and N+1 Singer Advisory.

There is a good working relationship between the Board and the Investment Manager and investment performance is reviewed at each regular Board meeting at which representatives of the Investment Manager attend. The Board also meets annually to review investment strategy. As a split capital investment trust the interests of the Ordinary and Zero Dividend Preference shareholders are carefully monitored. An overview of investment performance and Income and Dividends for the year is contained within the Chairman’s Statement on pages 4 and 5.

The Company’s continuation vote is also covered in the Chairman’s Statement on page 5. Investment performance since the change of Manager at the end of May 2012 has been good and the Directors encourage shareholders to vote in favour of continuing the life of the Company.

Whilst planning for the repayment of the Zero Dividend Preference shares in November 2020 is underway it is too early for any detailed discussions to be undertaken.

The Management Engagement Committee monitors and evaluates the performance of the Company’s other key service providers, including the Company Secretary, Depositary, Registrar and Broker. At the most recent review in October 2019, the Committee concluded that all the service providers were performing well which is an important aspect of ensuring the Company maintains high standards.

The Board has delegated authority to the Investment Manager to engage with companies held in the portfolio and to vote the shares owned by the Company. The Board has instructed the Investment Manager to submit votes for such shares wherever possible. Environmental, Social and Governance matters take a high priority and are covered in the Chairman’s Statement on page 5.

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. Most of the contact with shareholders is with the Investment Manager and the Company’s stockbroker and the Board receives regular reports about such meetings and any issues raised are carefully considered. The substantial shareholdings of Ordinary shares in the Company are disclosed in the Directors’ Report on page 21.

Board of Directors

The Board currently consists of three non-executive Directors at the date of this report all of whom are independent of the Investment Manager. Their biographies are set out on page 14. 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 Management Engagement Committee
Number of meetings in the year 5 4 1 1
Gillian Nott OBE 5 4 1 1
Melville Trimble (appointed 25 April 2019) 3 2
Victoria Muir 5 4 1 1
Kasia Robinski (resigned 25 April 2019) 2 1 1 1

All of the Directors attended the Annual General Meeting held in April 2019.

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 her 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 due to the small size of the Board.

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. However, the Board has taken the decision to adopt corporate governance best practice resulting in annual re-election for all Directors.

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 Mrs Gillian Nott, Mr  Melville Trimble and Ms Victoria Muir.

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 Committees is the same as that for the Board as a whole.

Audit Committee

Mr Melville Trimble 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). Further information on the Audit Committee is given in the Audit Committee Report on pages 32 to 33.

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 it does not need to deal with arrangements for staff to raise concerns in confidence about possible improprieties in respect of financial reporting or other matters. 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

Mrs Nott 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 its 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, Melville Trimble on 25 April 2019, upon the recommendation of the Committee. The Committee considered an extensive list of candidates and interviewed a short list of individuals for the position. A recommendation was then made to the Board and the appointment was confirmed. Mr Melville Trimble was elected as a Director of the Company by its shareholders at the AGM held on 25 April 2019.

Management Engagement Committee

Mrs Nott is the Chairman of the Management Engagement Committee which operates within defined terms of reference. These new terms of reference were approved by the Board on 27 July 2017, and are available from the Company Secretary. The Management Engagement Committee is responsible for reviewing the performance of the Investment Manager and all of the other service providers, their terms of appointment and remuneration. The Committee meets annually.

Remuneration Committee

Ms Muir is the Chairman of the Remuneration Committee which operates within defined terms of reference. As the Company is an investment trust and all Directors are non-executive the Company is not required to comply with the Code in respect of executive Directors’ remuneration. Directors’ fees are detailed in the Directors’ Remuneration Report on page 30.

Risk management and internal control

The UK Corporate Governance Code requires the Directors, at least annually, to review the effectiveness of the Company’s system of risk management and internal control and to report to shareholders that they have done so. This encompasses a review of all controls, which the Board has identified as including business, financial, operational, compliance and risk management.

The Directors are responsible for the Company’s system of risk management and internal control which is designed to safeguard the Company’s assets, maintain proper accounting records and ensure that financial information used within the business, or published, is reliable. However, such a system can only be designed to manage rather than eliminate the risk of failure to achieve business objectives and therefore can only provide reasonable, but not absolute, assurance against fraud, material misstatement or loss.

The Board as a whole is primarily responsible for the monitoring and review of risks associated with investment matters and the Audit Committee is primarily responsible for other risks.

As the Board has contractually delegated to other companies the investment management, the depositary 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 on page 48. The depositary 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 depositary 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 contract.

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 representatives of 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 75. 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.premiermiton.com

A monthly fact sheet is produced by the Investment Manager and is also available via the website, www.premiermiton.com. If a shareholder would like to contact the Board directly, they should write to the Chairman, Premier Global Infrastructure Trust PLC, c/o Premier Portfolio Managers Limited, Eastgate Court, High Street, Guildford, Surrey GU1 3DE, marking their letter “Private and confidential”.

By Order of the Board

Melville Trimble

Director

4 March 2020

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 25 April 2017 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 2020.

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.

Remuneration Committee

Ms Muir is the Chairman of the Remuneration Committee which operates within defined terms of reference. 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.

Directors’ beneficial and family interests

The interests of the Directors and their families in the Ordinary Shares of the Company were as follows:

Ordinary Shares at
2 March 2020†
Ordinary Shares at
31 December 2019
Ordinary Shares at
1 January 2019
Gillian Nott OBE 15,000 15,000 15,000
Melville Trimble (appointed 25 April 2019)
Victoria Muir 2,500 2,500 2,500

The interests of the Directors and their families in the Zero Dividend Preference Shares of the subsidiary were as follows:

ZDP Shares at
2 March 2020†
ZDP Shares at
31 December 2019
ZDP Shares at
1 January 2019
Gillian Nott OBE
Melville Trimble (appointed 25 April 2019)
Victoria Muir 2,500 2,500 2,500

† 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 2023.

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, general and committee meetings.

No Director has a service contract. However, Directors have a Letter of Appointment. Directors do not receive exit payments and are not provided with any compensation for loss of 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 Global Core Infrastructure 50/50 Index.

The graph below shows the ten year total return (assuming all dividends are reinvested) to Ordinary Shareholders against the FTSE Global Core Infrastructure 50/50 Index on a total return basis, restated in GBP, from 31 December 2009 to 31 December 2019.

Ten year total return share price performance (rebased to 100)

[GRAPHIC REMOVED]

Annual Report on Remuneration

Directors’ emoluments for the year

The Directors who served in the year received the following emoluments in the form of fees and expenses:

Fees Year ended
31 December 2019
£
Expenses Year ended
31 December 2019
£
Total Year ended
31 December 2019
£
Fees Year ended
31 December 2018
£
Expenses Year ended
31 December 2018
£
Total Year ended
31 December 2018
£
Gillian Nott OBE 26,000 458 26,458 21,333 250 21,583
Melville Trimble (appointed 25 April 2019) 13,642 189 13,831
Victoria Muir 18,000 294 18,294 14,400 148 14,548
Kasia Robinski (resigned on 25 April 2019) 6,462 147 6,609 20,333 82 20,415
Ian Graham (retired on 24 April 2018) 5,413 537 5,950
Geoffrey Burns (retired on 27 July 2018) 15,167 1,110 16,277
Total 64,104 1,088 65,192 76,646 2,127 78,773

During the year ended 31 December 2019 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.

Expected fees for the year to
31 December 2020
£
Chairman 26,000
Chairman of the Audit Committee 20,000
Non-executive Director 18,000

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 25 April 2019 an ordinary resolution was put to shareholders to approve the Remuneration Report set out in the 2018 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 2,323,397 99.03 22,829 0.97 2,465

Approval

Resolution for the approval of the Directors Remuneration Report for the year ended 31 December 2019 will be proposed at the Annual General Meeting.

By Order of the Board

Gillian Nott OBE

Chairman

Signed on behalf of the Board of Directors

4 March 2020

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 2019.

Composition

The composition and summary terms of reference of the Audit Committee are set out on page 26. The Audit Committee comprises the whole Board, all of whom are independent.

Activities

The Audit Committee met in July 2019 and considered the form and content of the Company’s half year report to 30 June 2019 and met again in October 2019 to review the audit planning proposal from KPMG LLP for 2019.

The Audit Committee met again in February 2020 and reviewed the outcome of the audit work and the final draft of the financial statements for the year ended 31 December 2019. 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.

During the year, the Audit Committee reviewed the Company’s withholding taxation charges and regulatory issues with the Company’s tax advisers, Crowe U.K. LLP.

The Audit Committee also reviewed the key risks of the Company and the internal control framework operating to control risk. The Audit Committee examined the risks to the Company, and analysed 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 Audit Committee also reviewed the terms of engagement of the audit firm and its proposed programme for the year-end audit.

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. 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 KPMG LLP amounted to £nil (31 December 2018: £nil).

Audit tender

In June 2016 the UK adopted the EU Audit Framework requiring companies to tender their auditor every 10 years and to rotate their auditors every 20 years. The Committee undertook a tendering process during 2017 with a view to appointing (or reappointing) the auditor for the year ended 31 December 2017. Following a competitive tender process KPMG LLP were appointed as the Company’s new external auditor for the year ended 31 December 2017.

The Company will put the external audit out to tender at least every ten years, and change auditors at least every twenty years. The Company will put the audit out to tender for the 2027 year end. The Committee will, however, continue to consider annually the need to go to tender for audit quality or independence reasons.

Cyber security

Cyber security is an increasing threat to all businesses and the finance sector was cybercrime’s biggest victim. 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 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 Committee concluded that suitable 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, the Committee’s main responsibilities during the year were:

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 47 at the year ended 31 December 2019 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 investment together with the wholly-owned subsidiary, PGIT Securities 2020 PLC, currently valued at £50,000 at 31 December 2019, 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 is calculated in accordance with the contractual terms in the investment management agreement by the administrator.
3. The Board regularly reviews income forecasts and receives explanations from the Investment Manager and administrator for any variations or significant movements from previous forecasts and prior year figures.
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.

Financial statements

These financial statements have been prepared under International Financial Reporting Standards (“IFRSs”) as adopted by the European Union 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 KPMG 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 their reappointment at the Annual General Meeting. 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 Manager’s 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 depositary 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 22), 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 34, Statement of Directors’ Responsibilities in respect of the Annual Report and the financial statements.

Melville Trimble

Chairman of the Audit Committee

4 March 2020

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 Group and parent Company financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law and have elected to prepare the parent Company financial statements on the same basis.

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 parent Company and of their profit or loss for that period. In preparing each of the Group and parent Company financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable, relevant and reliable;

• state whether they have been prepared in accordance with IFRSs as adopted by the EU;

• assess the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

• use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect 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 Corporate Governance Statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility of the Directors in respect of the annual financial report

We confirm to the best of our knowledge:

• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

• the strategic report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We 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 Group’s position and performance, business model and strategy.

For and on behalf of the Board

Gillian Nott OBE

Chairman

4 March 2020


Group Income Statement
for the financial year ended 31 December 2019

Year ended 31 December 2019 Year ended 31 December 2019 Year ended 31 December 2019 Year ended 31 December 2018 Year ended 31 December 2018 Year ended 31 December 2018
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 5,810 5,810 (5,233) (5,233)
Gains/(losses) on forward currency contracts 1,831 1,831 (2,352) (2,352)
Losses on foreign exchange (335) (335) (166) (166)
Income 2 2,764 2,764 2,695 2,695
Investment management fee 3 (164) (245) (409) (152) (228) (380)
Other expenses 4 (473) (473) (515) (515)
Profit/(loss) before finance costs and taxation 2,127 7,061 9,188 2,028 (7,979) (5,951)
Finance costs 5 (1) (1,314) (1,315) (1,255) (1,255)
Profit/(loss) before taxation 2,126 5,747 7,873 2,028 (9,234) (7,206)
Taxation 6 (171) (171) (160) (160)
Profit/(loss) for the year 1,955 5,747 7,702 1,868 (9,234) (7,366)
Return per Ordinary Share (pence) – basic 18  10.81  31.77  42.58 10.33 (51.05) (40.72)

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 the Companies Act 2006. The Company’s total comprehensive profit for the year ended 31 December 2019 was £7,702,000 (2018: loss of £7,366,000).

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 45 to 61 form part of these financial statements.

Consolidated and Company Balance Sheets

as at 31 December 2019

Group Company Group Company
2019 2019 2018 2018
Notes £000 £000 £000 £000
Non current assets
Investments at fair value through profit or loss 8 53,629 53,679 46,363 46,413
Current assets
Debtors 10 216 216 247 247
Forward foreign exchange contracts 13 519 519 258 258
Cash at bank 1,049 1,049 1,293 1,293
1,784 1,784 1,798 1,798
Total assets 55,413 55,463 48,161 48,211
Current liabilities
Creditors: amounts falling due within one year 11 (29,196) (29,246) (129) (129)
(29,196) (29,246) (129) (129)
Total assets less current liabilities 26,217 26,217 48,032 48,082
Non-current liabilities: amounts falling due aftermore than one year ZDP Shares 12 (27,673)
Intercompany payable 12 (27,723)
Net assets 20,359 20,359
Equity attributable to Ordinary Shareholders
Share capital 14 181 181 181 181
Share premium 15 8,701 8,701 8,701 8,701
Redemption reserve 88 88 88 88
Capital reserve 16 8,343 8,343 2,596 2,596
Special reserve 7,472 7,472 7,472 7,472
Revenue reserve 1,432 1,432 1,321 1,321
Total equity attributable to Ordinary Shareholders 26,217 26,217 20,359 20,359
Net asset value per Ordinary Share (pence) 19 144.94p 144.94p 112.55 112.55

The financial statements on pages 40 to 61 of Premier Global Infrastructure Trust PLC, company number 4897881, were approved by the Board and authorised for issue on 4 March 2020 and were signed on its behalf by:

Gillian Nott OBE

Chairman

The notes on pages 45 to 61 form part of these financial statements.


Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2019

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 2019
Balance at 31 December 2018 181 8,701 88 2,596 7,472 1,321 20,359
Profit for the year 5,747 1,955 7,702
Ordinary dividends paid 7 (1,844) (1,844)
Balance at 31 December 2019 181 8,701 88 8,343 7,472 1,432 26,217

   

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 2018
Balance at 31 December 2017 181 8,701 88 11,830 7,472 1,587 29,859
(Loss)/profit for the year (9,234) 1,868 (7,366)
Ordinary dividends paid 7 (2,134) (2,134)
Balance at 31 December 2018 181 8,701 88 2,596 7,472 1,321 20,359

* Distributable for the purpose of redemption of shares.

** Distributable reserves.

The notes on pages 45 to 61 form part of these financial statements.

Company Statement of Changes in Equity
for the financial year ended 31 December 2019

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 2019
Balance at 31 December 2018 181 8,701 88 2,596 7,472 1,321 20,359
Profit for the year 5,747 1,955 7,702
Ordinary dividends paid 7 (1,844) (1,844)
Balance at 31 December 2019 181 8,701 88 8,343 7,472 1,432 26,217

   

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 2018
Balance at 31 December 2017 181 8,701 88 11,830 7,472 1,587 29,859
(Loss)/profit for the year (9,234) 1,868 (7,366)
Ordinary dividends paid 7 (2,134) (2,134)
Balance at 31 December 2018 181 8,701 88 2,596 7,472 1,321 20,359

* Distributable for the purpose of redemption of shares.

** Distributable reserves.

The notes on pages 45 to 61 form part of these financial statements.

Consolidated and Company Cashflow Statements
for the financial year ended 31 December 2019

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2019 2019 2018 2018
£000 £000 £000 £000
Profit/(loss) before taxation 7,873 7,873 (7,206) (7,206)
Adjustments for
Finance costs 1,315 1,315 1,255 1,255
(Gains)/losses on investments held at fair value through profit or loss (5,810) (5,810) 5,233 5,233
(Gains)/losses on forward foreign exchange contracts (1,831) (1,831) 2,352 2,352
Losses on foreign exchange 335 335 166 166
(Increase)/decrease in trade and other receivables (6) (6) 2 2
Increase/(decrease) in trade and other payables 80 80 (83) (83)
Overseas taxation paid (135) (135) (185) (185)
Net cash flows from operating activities 1,821 1,821 1,534 1,534
Investing activities
Purchases of investments (16,587) (16,587) (22,223) (22,223)
Proceeds from sales of investments 15,131 15,131 25,726 25,726
Cash flows from forward foreign exchange contracts 1,570 1,570 (2,610) (2,610)
Net cash flows from investing activities 114 114 893 893
Financing activities
Dividends paid (1,844) (1,844) (2,134) (2,134)
Net cash flows from financing activities (1,844) (1,844) (2,134) (2,134)
Increase in cash and cash equivalents 91 91 293 293
Losses on foreign exchange (335) (335) (166) (166)
Cash and cash equivalents, beginning of period 1,293 1,293 1,166 1,166
Cash and cash equivalents at end of the year 1,049 1,049 1,293 1,293

The notes on pages 45 to 61 form part of these financial statements.

Notes to the Financial Statements

for the financial year ended 31 December 2018

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 as adopted by the European Union (“IFRS”), 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 Directors believe that having considered the Company’s investment objectives (shown on page 1), risk management policies and procedures (pages 55 to 61), 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. The risks that the Directors considered most likely to adversely affect the Company’s available resources over this period was a significant fall in the valuation or a reduction in the liquidity of the Company’s investment portfolio. In their consideration of these risks the Directors considered the potential impact on the Company of the current trade negotiations between the UK and the EU and the potential effect on the value of sterling. In their considerations, the Directors also took into account the continuation vote which is to be held at the annual general meeting of the Company in 2020.

If the shareholders vote not to pass the continuation vote scheduled to take place at the 2020 annual general meeting of the Company, this would oblige the Directors to follow the provisions in the Articles of Association and put forward proposals to the effect that the Company would be wound up, liquidated, reorganised, unitised or to find some other suitable solution that would be satisfactory to the shareholders.

The Company is due to provide final capital settlement of the ZDP shares on 30 November 2020. There is currently no reason to believe funds will not be available at that date. Hence, it is appropriate to prepare the accounts as a going concern.

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 October 2019) where the SORP is consistent with IFRSs.

In the current financial year the Company has applied a number of new standards, amendments to standards and interpretations.

IFRS 16 ‘Leases’ specifies accounting for leases and removes the distinction between operating and finance leases. This standard is not applicable to the company as it has no leases.

IFRIC 23 ‘Uncertainty over Income Tax’ provides guidance on uncertain income tax treatments and specifies that an entity must consider whether it is probable that the relevant tax authority will accept each tax treatment or group of tax treatments, that it plans to use in its income tax filing. Where deemed to be more than probable, uncertain tax positions should be disclosed in the financial statements of the company. There is no material impact on the company in relation to the adoption of this standard.

The Directors believe that there is one key judgement, being the functional currency of the Company. Although the Company invests in investments denominated in various jurisdictions with various currencies, it has been determined that the functional currency is sterling as the entity is listed on a sterling stock exchange in the UK, and its investment manager is also UK based. 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, PGIT 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.

It is the Company’s judgement that it 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.

Assessment of an investment entity

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 15) 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.

PGIT 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.

(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 and judgements

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 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;

• the finance costs representing the accrued capital entitlement of the ZDP 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 2019 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, PGIT 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) Derivatives

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 ZDP Shares are classified as a financial liability and shown as a liability in the Group balance sheet. The ZDP 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 ZDP 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 was created by the Court cancellation of the share premium account on 12 November 2003 and is a distributable reserve to be used for all purposes permitted under the Companies Act 2006 (as amended) including the buyback of shares and the payment of dividends.

1.2 Accounting standards issued but not yet effective

At the date of authorisation of these financial statements the following standards and amendments to standards, which have not been applied in these financial statements, were in issue but not yet effective.

Amendments to IFRS 3 ‘Definition of Business’ (effective for accounting periods on or after 1 January 2020)

Amendments to IAS 1 & IAS 8 ‘Definition of Material’ (effective for accounting periods on or after 1 January 2020)

IFRS 17, ‘Insurance contracts’ (effective for accounting periods on or after 1 January 2021)

The Company does not believe that there will be a material impact on the financial statements or the amounts reported from the adoption of these standards.

2. INCOME

Year ended Year ended
31 December 31 December
2019 2018
£000 £000
Income from investments:
UK dividends 560 642
Overseas dividends 2,201 2,051
Bank interest 3 2
Total income 2,764 2,695

3. INVESTMENT MANAGEMENT FEE

Year ended Year ended
31 December 31 December
2019 2018
£000 £000
Charged to Revenue:
Investment management fee (40%) 164 152
Charged to Capital:
Investment management fee (60%) 245 228
409 380

The Company’s AIFM is Premier Portfolio Managers Limited (“PPM”) under an agreement terminable by giving not less than six months written notice. Under the AIFM agreement, PPM is entitled to receive from the Company a management fee, payable monthly in arrears, of 0.75% 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.

4. OTHER EXPENSES

Year ended Year ended
31 December 31 December
2019 2018
£000 £000
Charged to Revenue:
Secretarial services 75 75
Administration expenses 275 307
Depositary fees 24 25
Auditor’s remuneration – audit services 25 23
– audit services for subsidiary 8 6
Directors’ fees and expenses 65 79
473 515

5. FINANCE COSTS

Year ended
31 December 2019
Year ended
31 December 2019
Year ended
31 December 2019
Year ended
31 December 2018
Year ended
31 December 2018
Year ended
31 December 2018
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Provision for compound growth entitlement of the ZDP Shares 1 1,314 1,315 1,255 1,255
1 1,314 1,315 1,255 1,255

6. TAXATION

(a) ANALYSIS OF CHARGE IN THE YEAR:

Year ended
31 December 2019
Year ended
31 December 2019
Year ended
31 December 2019
Year ended
31 December 2018
Year ended
31 December 2018
Year ended
31 December 2018
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Overseas tax 171 171 160 160
Total tax charge for the year (see note 6 (b)) 171 171 160 160

(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 19.00% (31 December 2018: 19.00%). The differences are explained below:

Year ended Year ended
31 December 31 December
2019 2018
£000 £000
Total profit/(loss) before taxation 7,873 (7,206)
UK corporation tax at 19.00% (31 December 2018: 19.00%) 1,496 (1,369)
Effects of:
Capital (gains)/losses not subject to corporation tax (1,104) 994
(Gains)/losses on foreign exchange derivatives not subject to corporation tax (348) 447
Losses on foreign exchange not subject to corporation tax 64 32
Finance costs of ZDP Shares not deductible 250 238
UK dividends which are not taxable (106) (122)
Overseas tax suffered 171 160
Overseas dividends not taxable in the UK (263) (249)
Movement in unutilised management expenses 11 29
Total tax charge 171 160

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 unrecognised deferred tax assets of approximately £1,303,000 (31 December 2018: £1,294,000) relating to excess expenses of £7,674,000 (31 December 2018: £7,612,000). 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. DIVIDENDS

Dividends relating to the year ended 31 December 2019 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 2019
Per Ordinary Share £000
First interim dividend – paid on 28 June 2019 2.50p 452
Second interim dividend – paid on 27 September 2019 2.50p 452
Third interim dividend – paid on 27 December 2019 2.50p 452
Fourth interim dividend – payable on 31 March 2020* 2.70p 488
10.20p 1,844

*Not included as a liability in the year ended 31 December 2019 accounts.

The fourth interim dividend will be paid on 31 March 2020 to members on the register at the close of business on 6 March 2020. The shares will be marked ex-dividend on 5 March 2020.

Dividends relating to the year ended 31 December 2018 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 2018
Per Ordinary Share £000
First interim dividend – paid on 29 June 2018 2.00p 362
Second interim dividend – paid on 28 September 2018 3.00p** 542
Third interim dividend – paid on 28 December 2018 2.50p 452
Fourth interim dividend – payable on 29 March 2019* 2.70p 488
10.20p 1,844

*Not included as a liability in the year ended 31 December 2018 accounts.

**Second interim base dividend of 2.50p and in line with the change of dividend profile announced on 27 July 2018, an additional amount of 0.50p was paid to bring the cumulative dividend paid to date to the level it would have been had this change been in place from the start of the year.

Amounts recognised as distributions to equity holders in the year:

Year ended Year ended
31 December 31 December
2019 2018
£000 £000
Fourth interim dividend for the year ended 31 December 2018 of 2.70p (2017: 4.30p) per ordinary share 488 778
First interim dividend for the year ended 31 December 2019 of 2.50p (2018: 2.00p) per ordinary share 452 362
Second interim dividend for the year ended 31 December 2019 of 2.50p (2018: 3.00p) per ordinary share 452 542
Third interim dividend for the year ended 31 December 2019 of 2.50p (2018: 2.50p) per ordinary share 452 452
1,844 2,134

8. INVESTMENTS

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2019 2019 2018 2018
£000 £000 £000 £000
Investments listed on a recognised investment exchange 53,629 53,629 46,363 46,363
Investments in subsidiaries 50 50
Valuation at year end 53,629 53,679 46,363 46,413
Opening book cost 52,639 52,689 54,918 54,968
Opening investment holding (losses)/gains (6,276) (6,276) 181 181
Opening valuation 46,363 46,413 55,099 55,149
Movements in the year:
Purchases at cost 16,587 16,587 22,223 22,223
Sales – proceeds (15,131) (15,131) (25,726) (25,726)
Gains/(losses) in investment holdings for the year 5,810 5,810 (5,233) (5,233)
Closing valuation 53,629 53,679 46,363 46,413
Closing book cost 55,258 55,308 52,639 52,689
Closing investment holding losses (1,629) (1,629) (6,276) (6,276)
Closing valuation 53,629 53,679 46,363 46,413

The Company received £15,131,000 from investments sold in the year (2018: £25,726,000). The book cost of the investments when they were purchased was £13,968,000 (2018: £24,502,000). These investments have been revalued over time until they were sold and unrealised gains/losses were included in the fair value of the investments.

Classification of assets

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2019 2019 2018 2018
£000 £000 £000 £000
Quoted securities 53,629 53,629 46,363 46,363
Subsidiary 50 50
Total investments 53,629 53,679 46,363 46,413

Transaction costs on purchases for the year ended 31 December 2019 amounted to £24,000 (2018: £73,000) and transaction costs on sales amounted to £11,000 (2018: £42,000).

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 2019
Investment in subsidiaries:
PGIT Securities 2020 PLC Financing 100% England 50 (1,314)

   

Country of
% incorporation Capital and
Ordinary Share and reserves Profit & loss
Entity Principal activity capital held registration £000 £000
As at 31 December 2018
Investment in subsidiaries:
PGIT Securities 2020 PLC Financing 100% England 50 (1,255)

The Company owns the whole of the ordinary share capital (£50,000) of PGIT Securities 2020 PLC a company which issued the Group’s ZDP Shares. The subsidiary is held at fair value of £50,000 (2018: £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
2019 2019 2018 2018
£000 £000 £000 £000
Accrued income and prepayments 202 202 196 196
Overseas withholding tax recoverable 14 14 51 51
216 216 247 247

Receivables do not carry any interest and are short term in nature and are accordingly stated at their amortised cost, which is the same as fair value.

11. OTHER FINANCIAL LIABILITIES

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2019 2019 2018 2018
£000 £000 £000 £000
Other creditors 209 209 129 129
24,073,337 ZDP Shares of £0.01 (2018: 24,073,337) 28,987
Intercompany payable 29,037
29,196 29,246 129 129

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

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

12. NON-CURRENT LIABILITIES

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2019 2019 2018 2018
£000 £000 £000 £000
24,073,337 ZDP Shares of £0.01 (2018: 24,073,337) 27,673
Intercompany payable 27,723
27,673 27,723

13. FORWARD FOREIGN EXCHANGE CONTRACTS

2019 2018
2019 2019 Net current 2018 2018 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/HKD 180 180 69 69
Forward foreign exchange contracts – GBP/CAD 55 55 120 120
Forward foreign exchange contracts – GBP/USD 225 225 69 69
Forward foreign exchange contracts – GBP/EUR 59 59
Total forward foreign exchange contracts 519 519 258 258

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
2019 2019 2018 2018
Number of shares £000 Number of shares £000
Allotted, issued and fully paid:
Ordinary Shares of £0.01 18,088,480 181 18,088,480 181
18,088,480 181 18,088,480 181

The allotted issued and fully paid ZDP Shares of the Group at 31 December 2019 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
2019 2019 2018 2018
£000 £000 £000 £000
Opening balance 8,701 8,701 8,701 8,701
Movement in year
Closing balance 8,701 8,701 8,701 8,701

16. CAPITAL RESERVE

Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2019 2019 2018 2018
£000 £000 £000 £000
Opening balance 2,596 2,596 11,830 11,830
Gains/(losses) on investments – held at fair value through profit or loss 5,810 5,810 (5,233) (5,233)
Gains/(losses) on investments on forward foreign exchange contracts 1,831 1,831 (2,352) (2,352)
Losses on foreign exchange (335) (335) (166) (166)
Provision for growth redemption yield of 4.75% on ZDP Shares (1,314) (1,314) (1,255) (1,255)
Investment management fee charged to capital (245) (245) (228) (228)
Closing balance 8,343 8,343 2,596 2,596

17. FINANCIAL COMMITMENTS

At 31 December 2018 there were no commitments in respect of unpaid calls and underwritings (31 December 2018: nil).

18. RETURN PER SHARE – BASIC

Total return per Ordinary Share is based on the total comprehensive gain for the year after taxation of £7,702,000 (31 December 2018: loss £7,366,000).

These calculations are based on the number of 18,088,480 Ordinary Shares in issue during the year to 31 December 2018 (2018: 18,088,480 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
2019 31 December 2018 31 December
Pence per 2019 Pence per 2018
Ordinary Share £000 Ordinary Share £000
Net revenue return 10.81p 1,955 10.33p 1,868
Net capital return 31.77p 5,747 (51.05)p (9,234)
Net total return 42.58p 7,702 (40.72)p (7,366)

The Company does not have any dilutive securities.

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
2019 2019 2018 2018
Pence £000 Pence £000
18,088,480 Ordinary Shares in issue (2018: 18,088,480) 144.94p 26,217 112.55p 20,359

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 2019 £91,000 (31 December 2018: £42,500) of these fees remained outstanding.

Fees paid to the Directors are disclosed in the Directors’ Remuneration Report on page 30.

Full details of Directors’ interests are set out in the Directors’ Remuneration Report on page 29.

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 15. 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 2018. 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 included in the financial statements and its receipt.

Foreign currency exposures

An analysis of the Company’s equity investments and liabilities at 31 December 2019 (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 2019 As at 31 December 2019 As at 31 December 2019 As at 31 December 2019 As at 31 December 2019 As at 31 December 2018
Derivative financial instruments assets/(liabilities) Investments Cash Receivables Net financial assets Net financial assets
£000 £000 £000 £000 £000 £000
Sterling 25,372 8,985 762 109 35,228 34,817
Brazilian Real 4,049 55 4,104 5,729
Canadian Dollar (5,816) 8,019 12 13 2,228 337
Euro (4,242) 5,422 48 1 1,229 1,120
Hong Kong Dollar (7,255) 11,024 25 5 3,799 853
Indonesian Rupiah 230 230 198
Norwegain Krone 9 9
Phillipine Peso 1,535 1,535 1,417
Thai Baht 1,786 1,786 1,743
US Dollar (7,540) 12,579 202 24 5,265 457
Total 519 53,629 1,049 216 55,413 46,671

Foreign currency sensitivity

The following tables illustrate 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/Brazilian Real and sterling/Hong Kong Dollar.

They assume the following changes in exchange rates:

Sterling/US Dollar +/- 0.4% (2018: 2%)

Sterling/Brazilian Real +/- 0.8% (2018: 1%)

Sterling/Hong Kong Dollar +/- 0.4% (2018: 1%)

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:

2019 2019 2019 2018 2018 2018
US Dollar BR Real HK Dollar US Dollar BR Real HK Dollar
£000 £000 £000 £000 £000 £000
Projected change 0.4% 0.8% 0.4% 2% 1% 1%
Impact on revenue return (4) (1) (2) (20) (2) (2)
Impact on capital return (54) (31) (48) (197) (48) (99)
Total return after taxation for the year (58) (32) (50) (217) (50) (101)
Equity (58) (32) (50) (217) (50) (101)

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

2019 2019 2019 2018 2018 2018
US Dollar BR Real HK Dollar US Dollar BR Real HK Dollar
£000 £000 £000 £000 £000 £000
Projected change 0.4% 0.8% 0.4% 2% 1% 1%
Impact on revenue return 4 1 2 20 2 2
Impact on capital return 54 31 48 197 48 99
Total return after taxation for the year 58 32 50 217 50 101
Equity 58 32 50 217 50 101

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 2019 (and 31 December 2018) 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 8.

Other price risk sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and the equity to an increase or decrease of 10% in the fair values of the Company’s equities. This level of change is considered to be reasonably possible based on observation of current market conditions. The sensitivity analysis is based on the Company’s equities at each balance sheet date, with all other variables held constant.

Increase in Decrease in Increase in Decrease in
fair value fair value fair value fair value
2019 2019 2018 2018
£000 £000 £000 £000
Consolidated Income Statement – return after taxation:
Capital return – increase/(decrease) 5,363 (5,363) 4,636 (4,636)
Total return after taxation – increase/(decrease) 5,363 (5,363) 4,636 (4,636)
Equity 5,363 (5,363) 4,636 (4,636)

(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 securities 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 31 December 2019 the unquoted securities are valued at £50,000 which relates to the wholly-owned subsidiary PGIT Securities 2020 PLC and one unquoted security which is in liquidation, ITI Energy Ltd, (31 December 2018 the unquoted security was valued at £50,000 consisting of PGIT Securities 2020 PLC and one unquoted security which was in liquidation, 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 may be used to manage short term cash requirements. The Board will monitor the level of liquidity required to fund the repayment of the ZDP Shares and the impact of the issue of any new ZDP Shares.

The contractual maturities of the Group’s financial liabilities at 31 December 2019, based on the earliest date on which payment can be required, were as follows:

Between
3 months Not more one and five
or less than one year years Total
At 31 December 2019 £000 £000 £000 £000
Payables and other financial liabilities (209) (209)
ZDP Shares (30,249) (30,249)

The contractual maturities of the Group’s financial liabilities at 31 December 2018, based on the earliest date on which payment can be required, were as follows:

Between
3 months Not more one and five
or less than one year years Total
At 31 December 2018 £000 £000 £000 £000
Payables and other financial liabilities (129) (129)
ZDP Shares (30,249) (30,249)

(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 2019 (comprising of current assets and cash at bank) was £1,784,000 (2018: £1,798,000). The calculation is based on the Company’s credit exposure as at 31 December 2019 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 2019

Level 1 Level 2 Level 3 Total
Notes £000 £000 £000 £000
Equity investments 51,843 1,786 53,629
Investments in subsidiaries 50 50
Forward foreign exchange contracts 13 519 519
Total 51,843 2,305 50 54,198

Jasmine Broadband Internet Infrastructure Fund is considered to be Level 2 due to low volumes of trade. In the previous year it was considered to be Level 1.

Financial assets at fair value through profit or loss at 31 December 2018

Level 1 Level 2 Level 3 Total
Notes £000 £000 £000 £000
Equity investments 46,363 46,363
Investments in subsidiaries 50 50
Forward foreign exchange contracts 13 258 258
Total 46,363 258 50 46,671

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.

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 2019, the Company’s Level 3 investments related to the one wholly-owned subsidiary, PGIT Securities 2020 PLC (the net asset value of the subsidiary is considered to be the fair value) and one unquoted security which is in liquidation, ITI Energy Ltd, which is valued at nil.

The valuation techniques used by the Company are explained in the accounting policies note on page 47.

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
2019
£000
Opening fair value – PGIT Securities 2020 PLC and ITI Energy Ltd 50
Closing fair value – PGIT Securities 2020 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 ZDP Shares as at 31 December 2019:

As at 31 December 2019 As at 31 December 2019 As at 31 December 2018 As at 31 December 2018
Fair value Fair value
Book value Level 2 Book value Level 2
£000 £000 £000 £000
ZDP Shares 28,987 28,647 27,673 27,684

The ZDP Shares are considered to be Level 2 (2018: Level 2), due to low volumes of trade.

(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:

2019 2018
£000 £000
Total assets 55,413 48,161
Debt:
ZDP Shares (28,987) (27,673)
Equity:
Equity share capital 181 181
Retained earnings and other reserves 26,036 20,178
26,217 20,359
Debt as a percentage of total capital 52.31% 57.46%

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 Global Infrastructure 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.

23. SUBSEQUENT EVENTS

There were no subsequent events.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2019 or 2018 but is derived from those accounts. Statutory accounts for 2018 have been delivered to the registrar of companies, and those for 2019 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Glossary of Terms and Alternative Performance Measures

ALTERNATIVE PERFORMANCE MEASURES (“APMS”)

We assess our performance using a variety of measures that are not specifically defined under IFRS and therefore termed APMs. The APMs that we use may not be directly comparable with those used by other companies.

DISCOUNT/PREMIUM (APM)

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. The Board monitors the level of discount or premium and consideration is given to ways in which share price performance may be enhanced, including the effectiveness of marketing and share buy-backs, where appropriate. The discount/premium is shown on page 2.

As at As at
31 December 31 December
2019 2018
Net Asset Value per Ordinary Share (cum income) a 144.94p 112.55p
Mid-market price per Ordinary Share b 130.0p 102.00p
Discount (b-a)/a 10.3% 9.4%

GEARING (APM)

Gearing, or leverage, 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.

Gearing has been calculated by dividing the Zero Dividend Preference Shares over the Equity Shareholders’ Funds.

As at As at
31 December 31 December
2019 2018
Zero Dividend Preference Shares (£29.0m) (£27.7m)
Equity Shareholders’ Funds £26.2m  20.4m
Gearing 110.7% 135.8%

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 RATES (APM)

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 on a Zero Dividend Preference Share or the current share price on an Ordinary Share.

Year ended
31 December
Hurdle Rate - Ordinary Shares 2019
Gross assets less current liabilities (excluding Zero Dividend Preference Shares) a £55.2m
Less management fees to be charged to capital until ZDP redemption date b (£0.2m)
c=a+b £55.0m
Redemption value of Zero Dividend Preference Shares d (£30.2m)
e=c+d £24.8m
31 December 2019 market capitalisation based on mid share price of 130.00p x number of shares in issue f £23.5m
g=e-f £1.2m
h=a/g (2.2%)
Ordinary Shares Hurdle to Return December 2019 share price at 30 November 2020 =(1+h)^(1/((number of days to redemption)/365))-1 (2.4%)

Numbers have been rounded.

Year ended
31 December
Hurdle Rate - Zero Dividend Preference Shares 2019
Gross assets less current liabilities (excluding Zero Dividend Preference Shares) a £55.2m
Redemption value of Zero Dividend Preference Shares b £30.2m
Management fees to be charged to capital until ZDP redemption date c £0.2m
d=b+c £30.4m
Percentage to fall before Zero Dividend Preference Shares not fully covered e=(d-a)/a (44.8%)
Zero Dividend Preference Shares Hurdle to Return the redemption share price of 125.6519p at 30 November 2020  =(1+e)^(1/((number of days to redemption)/365))-1 (47.7%)

Numbers have been rounded.

NET ASSET VALUE (“NAV”) (CUM INCOME)

The NAV is the assets attributable to shareholders expressed as an amount per individual share. PGIT’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). “Cum income” referred to the inclusion of current year net revenue accrued but not yet paid as a dividend.

NAV TOTAL RETURN (APM)

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). The total return, the NAV total return and the share price total return figures are shown on page 2.

Year ended Year ended
31 December 31 December
2019 2018
Opening NAV 112.55p 165.07p
Increase/(decrease) in NAV 32.39p (52.54p)
Closing NAV 144.94p 112.55p
% increase/(decrease) in NAV 28.8% (31.8%)
Impact of reinvested dividends 10.1% 6.4%
NAV Total Return 38.9% (25.4%)

ONGOING CHARGES(APM)

The ongoing charges represent the Company’s management fee and all other operating expenses, excluding finance costs, expressed as a percentage of the average of the daily net assets during the year (see page 2). The Board continues to be conscious of expenses and works hard to maintain a sensible balance between good quality service and cost.

Year ended 31 December 2019 2019 2018 2018
£000 £000 £000 £000
Average NAV a 53,173 51,400
Investment mangement fee 409 380
Other operating expenses 473 515
Total expenses excluding finance costs b 882 895
Ongoing charges (b÷a) 1.66% 1.74%

RETURN PER SHARE

Return per share is calculated using the net return on ordinary activities after finance costs and taxation divided by the weighted average number of shares in issue for the financial year (see note 18, page 54). The Directors also regard return per share to be a key indicator of performance. The return per share is shown on page 2.

SHARE PRICE TOTAL RETURN (APM)

The return to the investor, on a mid price to mid price basis, assuming that all dividends paid were reinvested, without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend.

Year ended Year ended
31 December 31 December
2019 2018
Opening share price 102.00p 146.25p
Increase/(decrease) in share price 28.00p (44.25p)
Closing share price 130.00p 102.00p
% increase/(decrease) in share price 27.5% (30.2%)
Impact of reinvested dividends 10.8% 6.9%
Share Price Total Return 38.3% (23.3%)

SPLIT CAPITAL INVESTMENT TRUST

An investment trust with two or more classes of share in issue, each class having specified entitlements to income and/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 ASSETS

Total assets less current liabilities, before deduction of all borrowings.

TOTAL ASSETS TOTAL RETURN (APM)

The total assets total return compares the closing assets to the opening assets plus the dividends that have gone ex-dividend during the year.

Year ended Year ended
31 December 31 December
2019 2018
£000 £000
Opening assets  48,032  56,277
Closing assets  55,204  48,032
Increase/(decrease)  7,172 (8,245)
Dividends marked “ex-dividend” in the period  1,844  2,134
Total assets total return (£000)  9,016 (6,111)
Total assets total return (%) 19.0% (11.0%)

ZERO DIVIDEND PREFERENCE SHARE COVER (NON CUMULATIVE) (APM)

The non cumulative cover measures the amount by which the final redemption value of the Zero Dividend Preference Shares are secured 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 Zero Dividend Preference Shares.

Year ended
31 December
2019
Gross assets less current liabilities (excluding Zero Dividend Preference Shares) £55.2m
Less December 2019 revenue reserve (£1.4m)
Gross assets for Zero Dividend Preference Cover a £53.8m
Redemption value of Zero Dividend Preference Shares b £30.2m
Management fees charged to capital c £0.2m
Years left d 0.92
Zero Dividend Preference Share Cover (non cumulative) a/(b+(c*d)) 1.76x

Company 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.

On 1 November 2017 the Board of Premier Energy and Water Trust PLC announced that the name of the Company changed to Premier Global Infrastructure Trust PLC and simultaneously the name of the Company’s subsidiary, PEWT Securities 2020 PLC, was changed to PGIT Securities 2020 PLC.

Shareholder Information

SHARE PRICE AND PERFORMANCE INFORMATION

The Ordinary Shares and ZDP 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.premiermiton.com

Contact Premier on 0333 456 1122, or by e-mail to [email protected]

SHARE DEALING

Shares can be purchased through a stockbroker.

SHARE REGISTER ENQUIRIES

The register for the Ordinary Shares and ZDP Shares is maintained by Link Asset Services. In the event of queries regarding your holding, please contact the Registrar on 0371 664 0300 or, if calling from overseas, on +44 (0) 371 664 0391. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. We are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales. You can also contact the registrar by email at [email protected] 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 ZDP Shares issued by the Company’s wholly-owned subsidiary PGIT 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 ZDP 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 and 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.premiermiton.com/media/5007/premier-global-infrastructure-trust-pre-investment-disclosure-document-aifmd.pdf. The document was updated in February 2020 and there have been no material changes to the disclosures contained within the document since that date.

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 2019 are set out below:

Note that a leverage or commitment exposure level of 100% represents no leverage. Leverage arises from the ZDP Shares and forward currency contracts.

Maximum gross leverage (calculated as specified by the AIFM Directive): 1,000%  Level as at 31 December 2019: 308%
Maximum commitment exposure (calculated as specified by the AIFM Directive): 800%. Level as at 31 December 2019: 213%

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 31 December 2019, is analysed below:

Fixed remuneration £1,538,275
Variable remuneration £1,001,672
Total £2,539,947
Weighted FTE Headcount 22

The table below provides an alternative analysis of the remuneration data.

Aggregate remuneration of:

Significant Influence Functions £1,188,718
Senior Management Functions £64,342
Other staff £1,286,887
Total £2,539,947

The staff members included in the above analysis support 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 Global Infrastructure 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 Wednesday, 22 April 2020, 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, 9 and 10 as ordinary resolutions and as to resolutions 11 and 12 as special resolutions, light refreshments will be available after the AGM:

ORDINARY RESOLUTIONS

1. To receive the Directors’ Report and Financial Statements for the year ended 31 December 2019.
2. To approve the Directors’ Remuneration Policy contained in the Directors’ Remuneration Report, for the financial year ended 31 December 2019.
3. To approve the Directors’ Remuneration Report, other than the part containing the Directors’ Remuneration Policy, for the financial year ended 31 December 2019.
4. To re-elect Mrs Gillian Nott as a Director of the Company
Gillian Nott is an experienced Chair of investment trusts having spent over 20 years working in the sector. In addition she has a good understanding of regulatory matters having served on the Board of the Association of Investment Companies and the Financial Services Authority, the predecessor to the Financial Conduct Authority.
5. To re-elect Ms Victoria Muir as a Director of the Company
Ms Muir has over 25 years’ experience in financial services, with a particular focus on the distribution of investment products in the asset management industry. She is a Chartered Director, contributing a strong governance perspective.
6. To re-elect Mr Melville Trimble as a Director of the Company
Melville Trimble has had over 30 years experience of advising Investment Trusts boards and has particular knowledge on the structuring of such companies. He is a qualified chartered accountant and a fellow of the Chartered Institute of Securities and Investments.
7. To reappoint KPMG 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 PGIT 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.
10. Continuation Vote:
THAT, the Company continue in existence as an investment trust until the Annual General Meeting in 2025.

SPECIAL RESOLUTIONS

11. 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 2021, 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.
12. 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 PGIT 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 ten 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 2021 or 22 October 2021 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

4 March 2020

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, Link Asset Services (contact details can be found on pages 65 and 72).
2. To be valid any proxy form or other instrument appointing a proxy must be received by post to Link Asset Services, PXS 1, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF or (during normal business hours only) by hand at the offices of the Company’s registrars, Link Asset Services, 34 Beckenham Road, Beckenham, Kent, BR3 4TU no later than 12:15 p.m. on Monday, 20 April 2020.
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 Monday, 20 April 2020 (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 2 March 2020 (being the latest practicable date 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 2 March 2020 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 12:15 p.m. on Monday, 20 April 2020. 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 Manager’s website: www.premiermiton.com

Directors and Advisers

Directors
Gillian Nott OBE – Chairman
Melville Trimble – Chairman of the Audit Committee (appointed on 25 April 2019)
Victoria Muir

Alternative Investment Fund Manager (“AIFM”)
Premier Portfolio Managers Limited
Eastgate Court  High Street  Guildford  Surrey GU1 3DE
Telephone: 01483 306 090
www.premiermiton.com
Authorised and regulated by the Financial Conduct Authority

Investment Manager
Premier Fund Managers Limited

Eastgate Court  High Street  Guildford  Surrey GU1 3DE
Telephone: 01483 306 090
www.premiermiton.com
Authorised and regulated by the Financial Conduct Authority

Secretary
Premier Portfolio Managers Limited
Registered Office
Eastgate Court
High Street
Guildford
Surrey GU1 3DE

Telephone: 01483 306 090

Company Number
4897881

Website www.premiermiton.com

Registrar
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

Telephone: 0371 664 0300
Overseas: +44 (0) 371 664 0391
E-mail: [email protected]

Custodian and Depositary
Northern Trust Global Services SE
50 Bank Street
Canary Wharf
London E14 5NT
Authorised by the Prudential Regulation Authority (“PRA”) and regulated by the FCA and PRA

Auditor
KPMG LLP
Saltire Court
20 Castle Terrace
Edinburgh EH1 2EG

Tax Advisor
Crowe U.K. LLP
St. Bride’s House
10 Salisbury Square
London EC4Y 8EH

Stockbroker
N+1 Singer Advisory LLP
One Bartholomew Lane
London EC2N 2AX

Telephone: 0207 496 3000

Ordinary Shares
SEDOL 3353790GB
LSE  PGIT

Zero Dividend Preference Shares
SEDOL BYP98L6
LSE  PGIZ

Global Intermediary Identification Number
GIIN  W6S9MG.00000.LE.826


a d v e r t i s e m e n t