Half Yearly Financial Report -2-
July 22 2010 - 12:38PM
UK Regulatory
Throughout the US and Europe the pressure is on governments to rein in
expenditure and public spending will be the first casualty of this. Thus,
economic growth is likely to fall short of expectations, amplified by government
borrowing that looks, at best, excessive.
So the outlook for the global economy is uncertain. Growth appears to be slowing
against a backdrop of major imbalances, sovereign debt levels have soared, in no
small part due to the government bank bail outs, while consumer debt remains
stubbornly high. In addition, despite the bail outs, the banking sector is
fragile, with the IMF expecting a further $800billion of loan losses.
The banking crisis brought lending to the renewable industry to a virtual
standstill during the latter part of 2008 and through 2009. Projects stalled as
a result of a lack not only of debt capital but also of equity, which had
suddenly become much more expensive. So far in 2010 capital has flowed more
freely, although equity for the sector is still very expensive, as is evident in
the very poor performance of smaller renewable stocks.
The outlook for the sector remains uncertain. The decision by the Spanish and
German governments to reduce renewable tariffs has created uncertainty in the
sector as investors anticipate reductions by other governments. So far the green
lobby has held sway but, given the overwhelming pressure on the public purse,
there must be some risk to other renewable subsidies. Until the outlook for
economic growth at least stabilises this risk will remain.
+-------------------------------------------------------------------+
| |
| |
| |
| Premier Renewable Energy Fund Limited |
| |
+-------------------------------------------------------------------+
| CHAIRMAN'S STATEMENT AND INTERIM MANAGEMENT REPORT (continued) |
| For the six months ended 31 May 2010 |
+-------------------------------------------------------------------+
Performance
Over the six months to 31 May 2010 the gross assets of the Company have fallen
by 11.06% to GBP14.41m. The Company's Ordinary shares are geared through the
capital structure, the Zero Coupon Preference ("ZCP") shares having a
predetermined entitlement to capital. The accrual rate on the ZCP shares is
7.2585% and thus the return to the Ordinary shareholders is magnified by this
prior charge. As a consequence and after allowing for the accrual to the ZCP
shares during the period net asset value per Ordinary share fell from 89.65p to
74.93p, an decrease of 16.42%. The Ordinary share mid price was virtually
unchanged over the period, opening at 72.00p, and closing at 71.50p while the
mid price of the ZCP shares increased from 374.75p to 381.50p (1.8%). The
discount on the package of Ordinary and ZCP shares decreased from 13.41% to
2.24%.
The Company does not have any formal investment benchmarks but rather considers
performance against a range of stock market indices including the Dresdner
Renewable Energy Index. As explained above, gross assets fell by 11.06% whilst
the Dresdner Renewable Energy Index fell by 17.16%. By contrast the FTSE 100
index rose marginally over the period by 1.74%.
Despite the fall in assets over the period, performance against the renewable
index remains outstanding, the Company's gross assets adjusted for the share buy
backs, have outperformed the Dresdner Renewable Energy Index since launch by
just over 38%.
Dividends
In the prospectus issued when the Company was launched the Directors proposed
paying substantially all revenue accrued over an accounting period by way of
dividend. In this regard revenue accrued in the half year to 31 May 2010 totals
GBP40,836 but after costs net revenue is -GBP179,881 and so no dividend is
proposed in respect of this period.
+-------------------------------------------------------------------+
| |
| |
| |
| |
| |
| |
| |
| |
| Premier Renewable Energy Fund Limited |
| |
+-------------------------------------------------------------------+
| CHAIRMAN'S STATEMENT AND INTERIM MANAGEMENT REPORT (continued) |
| For the six months ended 31 May 2010 |
+-------------------------------------------------------------------+
Going Concern
Given that the Company's ZCP shares are due to be redeemed on 31 December 2010,
the Board is reviewing proposals for increasing assets under management which
should lead to an overall improvement in liquidity and hence the discount to net
assets at which the Company's shares trade.
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future. Thus
they continue to adopt the going concern basis of accounting in preparing the
half year financial statements and that they have been prepared in accordance
with Going Concern and Liquidity Risk: Guidance for Directors of UK Companies
2009, published by the Financial Reporting Council.
Shareholder relations
The Board and theInvestment Adviser welcome contact not only with the
Company's existing investors but also potential investors.
The Investment Adviser has been in contact with some of the
Company's major investors over the period as well as anumber of potential new
investors.
Outlook
The Company continues to adopt a defensive stance. Despite some improvement in
conditions for the sector, the general recovery is likely to be more protracted
than anticipated in my last report to you. The parlous state of government
finances will continue to put downward pressure on renewable energy tariffs.
Nonetheless, equity valuations for the sector appear to discount much of the
negative outlook whilst global demand for energy derived from renewable sources
remain robust. Thus while the immediate global economic backdrop is hardly
accommodating, the Directors believe that the renewable sector's long term
growth prospects remain intact.
CharlesWilkinson
Chairman
22 July 2010
+-------------------------------------------------------------------+
| Premier Renewable Energy Fund Limited |
| |
+-------------------------------------------------------------------+
| RESPONSIBILITY STATEMENT |
| For the six months ended 31 May 2010 |
+-------------------------------------------------------------------+
The Directors confirm that, to the best of their knowledge the half-yearly
financial report for the period ended 31 May 2010, which is unaudited, has been
prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by
the European Union, and gives a true and fair view of the assets, liabilities,
financial position, and profits and losses of the Company. The half-yearly
financial report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the financial
year and their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the remaining six
months of the year, and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the financial year
and that have materially affected the financial position or performance of the
Company during the period, and any changes in the related party transactions
described in the last annual report that could do so.
By order of the Board
David Staples
Director
22 July 2010
+-------------------------------------------------------------------+
| Premier Renewable Energy Fund Limited |
| |
+-------------------------------------------------------------------+
| INVESTMENT ADVISER'S REPORT |
| For the six months ended 31 May 2010 |
+-------------------------------------------------------------------+
Over the last 6 months the gross assets of the Company have fallen by 11.06% to
GBP14.41m. Adjusting for the gearing impact of the ZCP shares, this has led to a
fall in the net asset value of the Company's Ordinary shares of 16.42% to
74.93p. This compares to a drop in the Dresdner Renewable Energy Index of
17.16%, in Sterling terms. The FTSE 100 Index has risen 1.74% over the same
period. Since launch on 4 February 2008 this Index has fallen by 4.71% and the
Dresdner Renewable Energy Index by 46.14%. The total assets of the Company are
down by 8.08% over the same period.
The recession has somewhat dampened enthusiasm for tightening carbon markets in
Europe, while the prospects for climate and energy legislation in the US in the
run up to the mid term congressional elections remain difficult to read. Both
factors have undoubtedly held back the sector in the context of the wider
Prf A (LSE:PRF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Prf A (LSE:PRF)
Historical Stock Chart
From Jul 2023 to Jul 2024
