RNS Number : 5731A
Utilico Investments Limited
20 February 2014
 



Date:                20 February 2014

 

Contact:           Charles Jillings                                              

                        Utilico Investments Limited                             

                        01372 271 486                                               

 

 

 

Utilico Investments Limited

Unaudited Statement of Results

for the six months to 31 December 2013

 

 

 

 

 

 

 

 

 

Financial Highlights

 

 

 

 

·      Revenue return  per ordinary share 2.29p (7.34p)

·      Capital return per ordinary share 3.87p (17.41p)

·      Total return per ordinary share 6.16p (24.75p)

·      Dividends per ordinary share 3.75p (3.75p)

·      Annualised dividend yield 6.6% (4.6%)

 

 

Figures in brackets are 31 December 2012

 

             

CHAIRMAN'S STATEMENT

Over the six months to 31 December 2013, Utilico achieved a positive net asset value ("NAV") total return per ordinary share of 4.1%, which is still behind the FTSE All Share Total Return Index which rose by 11.4%.

 

Utilico was held back by currency movements in the six months. Had exchange rates remained unchanged over the period, Utilico's NAV would have been some £16.1m or 10.9% higher. In addition, Utilico Emerging Markets Limited ("UEM"), our largest investment, which is denominated in Sterling, has performed well in the six months to 31 December 2013 against strong headwinds, both in terms of weak emerging equity markets and more particularly weak emerging market currencies.

 

On a positive note, Utilico has made strong progress in establishing a number of "platforms" and diversifying its risks. During the six months Utilico invested further in Zeta Resources Limited ("Zeta") and exercised its warrants in Somers Limited ("Somers") (previously named Bermuda National Limited) to support its acquisition of Waverton Investment Management Limited ("Waverton") (previously named JO Hambro Investment Management Limited). Infratil Limited ("Infratil") had a successful IPO of Z Energy Limited ("Z Energy") and Vix Technology returned to profit. Most investee companies reported stronger operational numbers in the six months and Utilico is undoubtedly in a stronger position than it was at 30 June 2013.

 

The repositioning of Utilico as a broader based platform investor has seen a gap develop between underlying valuations and reported NAV. While this is a perennial challenge for the investment sector, the discrepancy between the two must be highlighted. The Board and Investment Manager will focus on communicating this value gap.

 

Income has reduced significantly following Resolute not declaring a dividend in the half year; in the prior year Resolute had paid a dividend of A$0.05 per share amounting to A$6.1m to Utilico. In addition, weaker exchange rates have resulted in lower pound Sterling dividend receipts by Utilico. While costs have reduced, the revenue earnings per share ("EPS") have fallen by 68.8% to 2.29p for the six months. Looking forward EPS may fall short of the dividend per share for last year. Notwithstanding this, the Directors are currently of the view the dividend should be maintained in view of the substantial revenue reserves available for distribution.

 

The Directors have paid the first quarterly dividend of 1.875p, representing an annualised dividend of 6.6%. The Directors have declared a further quarterly dividend of 1.875p payable in March 2014.

 

ICM, Utilico's Investment Manager, has offered to reduce the management fee to 0.25% from 1 January 2014 until the high watermark is regained. The Board is pleased to accept this very welcome offer. It will in a full year result in savings of some £0.6m. The high watermark is 284.81p.

 

The 2014 ZDP shares are due for redemption on 31 October 2014. The Board is currently working on proposals to fund this redemption, which is expected to include the creation of a new class of 2020 ZDP shares and further details will be announced in due course.

 

Accounting

Utilico has early adopted the amendments to the reporting standards for Investment Entities (amendments to IFRS 10, IFRS 12 and IAS 27), with a date of initial application of 1 July 2013. Before adoption of the amendments, Utilico consolidated Zeta and BFIC. In accordance with the transitional provisions of the amendments, Utilico has applied the new accounting policy retrospectively and restated the comparative information. This has resulted in a decrease in the restated consolidated NAV of 157.44p to 148.33p. This is in line with the Company's NAV as reported at 30 June 2013 of 148.50p.

 

Outlook

The Board continues to focus closely on the imbalances in the global markets and the associated risks. The transition back to "normal" may be both volatile and challenging in relation to both equity markets and currencies. Progress is being made and tapering is a welcome step. In this environment the Board is optimistic about the prospects for the portfolio.

 

Dr Roger Urwin
20 February 2014

INVESTMENT manager's REPORT

 

Utilico's NAV total return increased 4.1% over the six months to 31 December 2013, underperforming the FTSE All-Share Index total return, which was up 11.4% over the same period.

 

Over the six months shareholders' funds increased marginally from £147.1m (restated) to £147.6m. Adding back dividends paid of £5.6m (annualised 6.6% yield) the increase in shareholders' funds would have been £6.1m. This increase masked a number of factors. The gains and losses on investments of £9.5m comprised a market gain of £25.6m offset by currency losses on translation of £16.1m. To this can be added gains from derivatives of £1.2m and revenue account income of £4.1m offset by expenses of £1.3m and financing costs of £7.6m.

 

Portfolio

More pleasing to note is that Utilico continues to make progress on a number of fronts and we are hopeful for further progress over the next twelve months. At a reporting level the net assets were marginally up at £147.6m (30 June 2013 £147.1m (restated)). However, if we exclude the currency impact then the portfolio would be up £25.6m.

 

Two years ago Utilico set out to reduce the concentration evident in the portfolio and to establish a series of "platforms" and core investments. The key attractions of the platforms are seen as:

·    Increased portfolio of assets delivering diversity

·    Sharper focus from dedicated investment teams

·    Ability to source undervalued investments in selected sectors

·    Lower volatility

 

As at 31 December 2011, Utilico's top three direct investments accounted for 71.9% of the portfolio; by 31 December 2013 the top three were down to 55.5%. Since the period end Utilico has sold a further 25.7% of its holding in Infratil, which will reduce the concentration to around 50.0%.

 

Looking back over the last two years the changes in the investment portfolio can be summarised as follows:

·    Reduction of the Infratil shareholding.

·    Establishment of Somers, a financial services investment company which acquired Bermuda Commercial Bank Limited ("BCB") and Waverton, and other financial businesses.

·    Reduction of the holding in Jersey Electricity ("JEL") from 3.7% to 1.9% (outside the top ten at the period end).

·    Sale of the holdings in Keytech Limited ("Keytech") and Ascendant Group Limited ("Ascendant") to BFIC for shares and loan notes.

·    Establishment of Zeta, the reversal of a number of holdings into it and the establishment of a US$15.0m loan facility.

·    Technology based investments, including ticketing and payment service investments, all now held by Vix Limited, in which the Company has a 39.8% investment.

 

Key steps over the last six months have included investing further into both Somers and Zeta. Both of these platforms have added to their asset base and as a result are stronger, with improved critical mass. Further details are set out below.

 

We have split the review below into "platform" holdings and other direct investments. Given the recent changes we have discontinued the look through top ten portfolio and commentary, although we have continued to include the sector and geographical weightings on a look through basis.

 

Platform holdings

UEM has performed well in the six months to 31 December 2013 against strong headwinds, both in terms of weak emerging equity markets and more particularly weak emerging market currencies.

 

UEM suffered currency losses of some £40.0m for the six months to 30 September 2013, of which approximately £11.0m would be Utilico's share of these losses. UEM's total return over the six months was 2.0% compared with the MSCI Emerging Markets index which was down 1.2%. For the second year running UEM won the Investment Company of the Year award 2013 for the Investment Week's Emerging Markets category. UEM also won the Money Observer Best Emerging Market Trust award and has been included in the Investors Chronicle top 100 recommended funds.

 

Market sentiment and currency weakness are expected to remain headwinds in the foreseeable future. Against this at an operational level UEM's underlying investee companies are reporting good results.

 

Over the six months to 31 December 2013 UEM's share price was up 9.9% at 189.00p representing a gain of £9.9m. UEM has paid two quarterly dividends of 1.525p for an annualised dividend yield of 3.2%.

 

Infratil Limited's ("Infratil") share price rose 3.2% during the period to NZ$2.27. This gain of £3.0m was offset by currency losses of £1.9m on the position.

 

Shares in Infratil's largest holding, Trustpower, fell by 8.3% during the period, as a mild winter in New Zealand reduced electricity demand and there was concern over potential changes to regulation in New Zealand's electricity market.

 

On the plus side, Infratil successfully sold 60% of its holding in Z Energy in an IPO. Proceeds from this partial exit materially exceeded the original investment made by Infratil when Z Energy was acquired from Shell in 2010. Passenger numbers at Wellington Airport were up 6% in the six months to September 2013.

 

Utilico reduced its holding in Infratil by 9.1% through participation in Infratil's tender offer in November 2013, generating proceeds of £7.9m. Since 31 December 2013, Utilico has sold a further 25.7% of its remaining holding, generating proceeds of £19.8m.

 

Somers (formerly Bermuda National Limited) is an investment holding company listed on the Bermuda Stock Exchange, with a number of investments in the financial services sector.

 

Somers' two main investments are BCB (one of Bermuda's four licensed banks) which is a wholly owned subsidiary, and a 62.5% interest in Waverton, a UK private wealth manager with £4.5 billion of assets under management. For its year ended 30 September 2013, Somers reported net income of US$12.1m on equity attributable to Somers' equity holders of US$160.1m. Somers' diluted NAV per share was US$14.97 as at 30 September 2013. As Waverton's results were only included for two months, results for 2014 should significantly improve.

 

Vix Limited is an unlisted Bermuda technology holding company in which Utilico has a 39.8% shareholding interest and holds loans amounting to US$15.7m. Vix Limited has two investments, Vix Technology and Vix Investments, which are valued at A$62.5m and A$27.4m respectively.

 

Vix Technology is a global operating business with strengths in transport ticketing solutions. Its ticketing systems underpin a significant number of ticketing systems worldwide ranging from Beijing through to Seattle and include payment solutions for rail and bus at their core. Vix Technology recently won the MasterCard Transport Ticketing Technology award for its innovative contactless payment technologies which were originally designed by Vix Technology for Salt Lake City. Vix Technology has made good progress at an operating level and is forecasting revenues of A$154.0m and EBITDA of A$9.2m for the year end June 2014. Its website is www.vixtechnology.com

 

Following Zeta's successful listing on the Australian Stock Exchange on 12 June 2013, Zeta has moved quickly to invest its funds under management in a core portfolio of undervalued resource stocks. Over the six months ended December 2013, the WTI oil price rose 1.9% to US$98.17 per barrel, while the gold price was down by 2.7% to US$1,202. During the period, Zeta's net assets per share rose by 10.2% to A$0.85 per share. Zeta's shares closed at A$0.52 on 31 December 2013, representing a discount to net tangible assets of 38.5%.

 

In December, Zeta announced a rights issue enabling existing shareholders to purchase one new share at A$0.50 for every existing one share held. The issue expects to raise A$25.3m. Utilico took up its holding in full and subscribed A$19.0m. Zeta has used the proceeds to repay the loan from Utilico in full.

 

Zeta's share price gain of £2.0m in market value was offset by currency losses in translation of £1.9m.

 

BFIC's shares and loan notes are listed on the Bermuda Stock Exchange ("BSX"). BFIC is a Bermudian investment company which has a number of investments in local Bermudian BSX listed companies. Its largest investments are in Keytech (valued at US$23.5m as at 31 December 2013) and Ascendant (valued at US$11.2m as at 31 December 2013).

 

BFIC's policy is to build strategic investments in local Bermudian companies whilst working closely, where appropriate, with the board and senior management of its investments to increase the long term value of these holdings and to encourage the introduction of shareholder friendly initiatives. For the six months ended 31 December 2013, BFIC reported profit of US$0.8m (before unrealised gains and losses) on gross assets of US$40.6m.

 

BFIC was unchanged in value terms but lost £1.3m on currency translation.

 

Direct holdings

Resolute's gold production in the six months from June to December 2013 was down on previous production at 182,406 oz. The main reason for the decrease in production is due to Golden Pride, which has come to the end of its operational life. Production ceased on 28 December 2013. There was also planned maintenance at Syama in the period, reducing output.

 

Cash costs during the six months to December 2013 averaged A$938/oz, an increase on the previous period due to lower throughput. In the year to June 2014 Resolute has forecast production of 345,000 oz at an average cash cost of A$890/oz.

 

In the six months to December 2013 Resolute sold 202,965 oz of gold at an average price of A$1,407/oz. The  net operating cashflow for the six months was A$44.0m. Cash and bullion on hand and liquid investments were A$50.0m as at 31 December 2013. Total borrowings  were A$116.0m The company's previous minority shareholding in Noble has resulted in Resolute taking 100% direct ownership and operation of the Bibiani gold project in Ghana following Noble's receivership.

 

During the six months to December 2013 the price of gold was down by 2.7% from US$1,235 to US$1,202. The share price of Resolute fell 6.7% from A$0.60 at the end of June to A$0.56 at the end of December 2013, recording a loss of £2.0m. This was exacerbated by a currency loss on translation of £4.9m.

 

Renewable Energy Generation Limited ("REG") has continued to demonstrate the intrinsic value of its assets with the disposal of its 12MW Goonhilly Downs wind farm in the period for total consideration of £25.1m. Following the disposal, at end-December 2013 REG had 39.2MW of operational wind farm sites, 18.5MW under construction, 31.2MW consented and around 140MW planning applications submitted. In the six months under review wind farm generation fell 23.4% YoY to 48GWh due to the disposal, while bio-power output nearly doubled to 2.4GWh. Revenues fell 12.5% YoY, but the £9.4m profit on disposal boosted net income to £6.5m, allowing the company to increase its interim dividend by 10%. In the six months to December 2013 REG's share price increased by 7.6%.

 

Augean plc ("Augean") has continued to make progress in restructuring its business away from low-margin activities, particularly relating to waste treatment operations. During the year the company announced the closure of the loss-making Waste Networks business and is undergoing a sale process for two waste transfer sites. In the year to December landfill volumes fell 7.8% year-on-year as low-value remediation work was replaced by higher-value incinerator ash and low level radioactive wastes. Augean North Sea Services and the Oil & Gas Services divisions both reported encouraging improvements in profitability. Overall group revenues increased 12.7% in the year to December 2013. In the six months to December 2013 Augean's share price increased by 34.3%.

 

RHJ International ("RHJ") is an undervalued financial services group listed on Euronext Brussels with principal activities in wealth management, asset management and merchant banking. It is the parent company of the Kleinwort Benson Group and its wealth management operations are conducted through Kleinwort Benson, an independent private bank with £5.8 billion of assets under management and its asset management operations are carried out by Kleinwort Benson Investors, a Dublin-based institutional asset manager with £4.6 billion of client assets. A concern is its substantial overhead structure.

 

RHJ is looking to transform itself from a diversified holding company with a portfolio of industrial assets into a focused financial services company.

 

For the six months ended 30 June 2013, RHJ reported a loss before tax of €32.1m, including a write down on one of its assets of €11.8m, on total assets of €2.8bn.

 

RHJ's share price rose 3.7% from €3.55 as at 30 June 2013 to €3.68 at the end of December 2013. The currency loss on this holding was £0.2m.

 

Portfolio activity

During the six months Utilico invested £45.4m. This included investments in the following top ten holdings: £10.5m into Somers, £8.4m into RHJ, £7.6m into Zeta and £2.4m into Vix Limited. Realisations were £25.6m, including from the top ten, sales of £7.9m from Infratil, £1.2m from REG and £0.7m from Vix Limited.

 

The geographic weightings have moved as a result of three factors. First, the investment activity as mentioned above, second, the asset valuations and third, the investee companies shift of their underlying portfolios. Investment activity has reduced the exposure to New Zealand (Infratil reduction) and increased the investment in Bermuda (Somers investment). Asset valuations have seen gold mining decrease (Resolute decline). Shifts in the portfolio have seen Asia and Far East increase and Latin America ("Latam") decrease (UEM has seen increased valuation in the Far East and a reduction for Latam).

 

The above has led to bigger sector changes, with financial services being the largest sector (including the investments in Somers and RHJ); oil and gas increased through investment in Zeta, and its direct exposure in oil & gas; gold mining reduced on valuation as noted above; electricity was down (including our reduced holding in Infratil and a further reduction in JEL).

 

The utilities and infrastructure investments are down to 60.6% of the portfolio from 69.4% as at 30 June 2013.

 

Unlisted

The unlisted portfolio comprises 13 investments accounting for £57.4m of the portfolio. Since 31 December 2013 this has reduced to 12 investments accounting for £47.3m, as a result of the Zeta loan being repaid in early February 2014.

 

Vix Limited, in which Utilico has a 39.8% interest, accounts for some £24.3m of the unlisted investments held by Utilico. Vix Limited is reviewed above.

 

The second largest unlisted investment is Seacrest Limited ("Seacrest"), accounting for £6.0m.  Seacrest is an unlisted private equity fund which, through its partial ownership of Azimuth Limited ("Azimuth"), entered into a joint venture in 2011 with Petroleum Geo-Services ("PGS") an Oslo Stock Exchange listed company and one of the world's leading oil and gas seismic companies. Azimuth was formed essentially to monetise PGS' multi billion dollar database by using the information therein to better understand regional seismic patterns in oil and gas basins. Azimuth has incorporated a number of regionally focused companies with significant assets in areas such as the North Sea, offshore Namibia and the Celtic Sea. Azimuth is anticipating a number of exploration wells will be drilled on its licences in 2014, which will be funded by third parties. If one of these prospective licences produces meaningful oil, the value uplift of Seacrest would be significant.

 

The next largest unlisted investment is Renewable Energy Holdings plc ("REH"), where Utilico has £4.6m invested in unlisted loan notes. REH's key asset is the Sweetlamb Welsh wind farm application. Should this be successful, the upside is likely to be substantial.

 

A more recent investment is Coldharbour Marine ("Coldharbour"), a ballast water treatment company, that has made substantial progress over the last six months. Coldharbour has passed six land based tests and has on the back of these positive results raised £2.6m in early February 2014 (including £1.0m from Utilico) at a valuation significantly above Utilico's carrying value.

 

The potential uplifts in REH and Coldharbour are not currently reflected in Utilico's net asset values.

 

Bank debt

Bank debt was increased from £42.5m to £49.0m during the six months, mainly to support the investment in Somers. This was drawn down in £39.4m and US$16.0m.

 

In January 2014 the bank debt was reduced by £19.0m following the sale of part of the Infratil holding.

 

The facility with Scotiabank was extended in October 2013 to March 2015.

 

Accounting

Utilico has early adopted the amendments to the reporting standards for Investment Entities (amendments to IFRS 10, IFRS 12 and IAS 27), with a date of initial application of 1 July 2013. Utilico meets the definition of an investment entity and as a result, Utilico has changed its accounting policy on accounting for its investments in Zeta and BFIC, to measure them at fair value through the profit or loss accounts (see note 1). Before adoption of the amendments, Utilico consolidated Zeta and BFIC. In accordance with the transitional provisions of the amendments, Utilico has applied the new accounting policy retrospectively and restated the comparative information. This has resulted in a decrease in the restated consolidated NAV from 157.44p to 148.33p. This is in line with the Company's NAV as reported at 30 June 2013 of 148.50p.

 

ZDPs

The 2014 ZDP shares are due for redemption on 31 October 2014. The Board is currently working on proposals to fund this redemption, which is expected to include the creation of a new class of 2020 ZDP shares.

 

Derivatives

Over the six months there have been two parts to Utilico's derivative position. First, portfolio market derivatives, mainly through S&P500 Index options. Second, currency positions within Utilico's portfolio.

 

The market derivatives activity has remained modest through the six months. Given the strong performance by US markets in particular, modest positions were taken.

 

Utilico has maintained significant currency positions in part to protect the Sterling value of certain investments. At the period end, forward currency sales were in place for nominal NZ$141.0m, €11.9m and A$21.3m.

 

Revenue return

Total income fell by 56.8% to £4.1m mainly as a result of Resolute's maiden dividend not being repeated this year and currency strength of Sterling resulting in lower receipts from overseas assets in Sterling.

 

Management fees were lower as a result of certain investments being deducted as they are managed by ICM and other expenses reduced from £0.7m to £0.5m, reflecting lower average asset values.

 

ICM has offered to reduce its management fee from 0.5% to 0.25% per annum with effect from 1 January 2014 until the high watermark net asset value of 284.81p is regained.

 

Finance costs increased due to higher average bank borrowings. The combined effect of the above resulted in the revenue EPS falling 68.8% to 2.29p.

 

Capital return

Gains on investment of £9.5m were driven by most investments. Derivative gains were positive reflecting, in the main, gains on forward exchange contracts. This contributed to a capital EPS for the six months of 3.87p.

 

Expense Ratio

The ongoing charges ratio was 1.7%. This was lower due to the reduction in management fees.

 

 

 

 

ICM Limited
20 February 2014



 

 

INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT

 

The Chairman's Statement and the Investment Manager's Report give details of the important events which have occurred during the period and their impact on the financial statements.

 

Principal risks and uncertainties

The principal risks faced by the Company include:

• Inappropriate long-term investment strategy

• Asset allocation

• Excessive gearing

• Loss of management personnel

 

The Board reported on the principal risks and uncertainties faced by the Company and the way they are mitigated are described in more detail under the heading "Internal Controls and Management of Risk" in the Corporate Governance section of the Annual Report and Accounts for the year ended 30 June 2013. In the view of the Board, there have not been any changes to the fundamental nature of these risks since the previous report and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review.

 

The Annual Report and Accounts is published on the Company's website, www.utilico.bm

 

Related Party Transactions

Details of related party transactions in the six months to 31 December 2013 are set out in Note 12 to the Report and Accounts for the six months to 31 December 2013, and details of the fees paid to the Investment Manager are set out in Note 2 to the Report and Accounts.

 

On 17 September 2013 Susan Hansen resigned as a Director of the Company and Warren McLeland was appointed in her place; the current Directors of the Company are listed on page 34 of the Report and Accounts. With effect from 1 July 2013 the fees paid to the Directors have been increased by £1,000 to £28,500, fee paid to the Chairman of the audit committee has been increased by £1,500 to £36,500 and the fee paid to the chairman has been increased by £1,000 to £39,500 per annum.

 

Directors' responsibility statement

The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.

 

The Directors confirm to the best of their knowledge that:

• the condensed set of financial statements contained within the report for the six months to 31 December 2013 has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and gives a true and fair view of the assets, liabilities, financial position and return of the Group;

• the interim management report, together with the Chairman's Statement and Investment Manager's Report, include a fair review of the information required by 4.2.7R and 4.2.8R of the FCA's Disclosure and Transparency Rules.

 

The half yearly financial report was approved by the Board on 20 February 2014 and the above Directors' responsibility statement was signed on its behalf by the Chairman,

 

 

Dr Roger Urwin

for and on behalf of the Board

 

UNAUDITED CONSOLIDATED PERFORMANCE SUMMARY

 

31 Dec

2013

31 Dec

2012

30 Jun

2013

Half year change

Ordinary shares

 

 

 

 

Total return(1)

4.1%(2)

11.8%(2)

(24.6%)

n/a

Annual compound total return (since inception) (3)

7.1%

11.4%

7.0%

n/a

Net asset value per ordinary share

148.86p

230.91p(4)

148.33p(4)

0.4%

Share prices and indices

 

 

 

 

Ordinary share price

114.50p

162.75p

130.00p

(11.9%)

Discount

23.1%

29.5%

12.4%(4)

n/a

FTSE All-Share Total Return Index

5,386

4,458

4,837

11.4%

Zero dividend preference (ZDP) shares (5)

 

 

 

 

2014 ZDP shares

 

 

 

 

Capital entitlement per ZDP share

158.12p

147.44p

152.64p

3.6%

ZDP share price

162.00p

157.50p

158.50p

2.3%

2016 ZDP shares

 

 

 

 

Capital entitlement per ZDP share

158.12p

147.44p

152.64p

3.6%

ZDP share price

169.75p

161.38p

165.50p

8.7%

2018 ZDP shares

 

 

 

 

Capital entitlement per ZDP share

114.46p

106.73p

110.50p

3.6%

ZDP share price

117.00p

111.00p

113.38p

6.7%

Equity attributable to Group (£m)

 

 

 

 

Gross assets (6)

403.5

464.5(4)

383.0(4)

5.4%

Bank debt

49.0

50.0

42.5

15.3%

ZDP shares

206.9

180.8

193.4

3.6%

Other debt

-

3.6(4)

-

n/a

Equity holders' funds

147.6

230.1(4)

147.1(4)

0.3%

Revenue account (£m)

 

 

 

 

Income

4.1

9.5(4)

16.2(4)

n/a

Costs (management and other expenses)

1.3

1.7(4)

3.2(4)

n/a

Finance costs

0.6

0.3

0.8(4)

n/a

Financial ratios of the Group (7)

 

 

 

 

Revenue yield on average gross assets

2.0%

4.1%

3.8%

n/a

Ongoing charges figure(8) on average gross

assets

 

2.1%

 

2.0%

 

2.1%

 

n/a

Bank loans, other loans and ZDP shares

gearing on net assets

 

173.4%

 

101.9%

 

160.4%(4)

 

n/a

Returns and dividends (2)

 

 

 

 

Revenue return per ordinary share

2.29p

7.34p(4)

 

 

Capital return per ordinary share

3.87p

17.41p(4)

 

 

Total return per ordinary share

6.16p

24.75p(4)

 

 

Dividends per ordinary share

3.75p(9)

3.75p

 

 

Special dividend per ordinary share

-

2.50p

 

 

Ordinary annualised dividend yield

6.6%

4.6%

 

 

(1)  Total return is calculated as change in NAV per ordinary share, plus dividends reinvested.

(2)  For the six months to 31 December.

(3)  Since inception includes data relating to Utilico Investment Trust plc, Utilico's predecessor, which started trading in August 2003.

(4)  Restated figures, see note 1 to the Accounts.

(5)  Issued by Utilico Finance Limited, a wholly owned subsidiary of Utilico Investments Limited.

(6)  Gross assets less current liabilities excluding loans and ZDP shares.

(7)  For comparative purposes the figures have been annualised.

(8)  Expressed as a percentage of average net assets. Ongoing charges comprise all operational, recurring costs that are payable by the Group or

suffered within underlying investee funds, in the absence of any purchases or sales of investments.

(9)  The second quarterly ordinary dividend declared has not been included as a liability in the accounts.

 

UNAUDITED CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

 

Restated*

for the six months to 31 December

 

 

2013

 

 

2012

 

Revenue

Capital

Total

Revenue

Capital

Total

 

return

return

return

return

return

return

 

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

 

 

 

 

 

 

 

Gains on investments

-

9,500

9,500

-

27,509

27,509

Gains/(losses) on derivative instruments

-

1,177

1,177

-

(2,713)

(2,713)

Exchange gains/(losses)

28

153

181

70

(39)

31

Investment and other income

4,103

-

4,103

9,451

-

9,451

Total income

4,131

10,830

14,961

9,521

24,757

34,278

Management and administration fees

(778)

-

(778)

(1,076)

-

(1,076)

Other expenses

(484)

(3)

(487)

(650)

(5)

(655)

Profit before finance costs and taxation

2,869

10,827

13,696

7,795

24,752

32,547

Finance costs

(588)

(6,966)

(7,554)

(312)

(7,405)

(7,717)

Profit before taxation

2,281

3,861

6,142

7,483

17,347

24,830

Taxation

(13)

(21)

(34)

(177)

-

(177)

Profit for the period

2,268

3,840

6,108

7,306

17,347

24,653

 

 

 

 

 

 

 

Earnings per ordinary share  - pence

2.29

3.87

6.16

7.34

17.41

24.75

* See note 1 and note 3.

 

The Group does not have any income or expense that is not included in the profit for the period, and therefore the "profit for the period" is also the "total comprehensive income for the period", as defined in International Accounting Standard 1 (revised).

All items in the above statement derive from continuing operations.

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

 



UNAUDITED CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

 

for the six months to 31 December 2013

 

 

 

 

 

Ordinary

Share

 

Non-

 

 

 

share

premium

Special

distributable

Capital

Revenue

 

capital

account

reserve

reserve

reserves

reserve

Total

 

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

Balance at 30 June 2013 -

restated*

 

9,916

 

29,020

 

233,866

 

32,069

 

(171,382)

 

13,591

 

147,080

-

-

-

-

3,840

2,268

6,108

-

-

-

-

-

(5,578)

(5,578)

Balance at 31 December 2013

9,916

29,020

233,866

32,069

(167,542)

10,281

147,610

 

 

 

Restated for the six months to 31 December 2012*

 

 

 

 

 

Ordinary

Share

 

Non-

 

 

 

share

premium

Special

distributable

Capital

Revenue

 

capital

account

reserve

reserve

reserves

reserve

Total

 

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

Balance at 30 June 2012

9,963

29,743

233,866

32,069

(108,055)

11,308

208,894

-

-

-

-

17,347

7,306

24,653

-

-

-

-

-

(3,487)

(3,487)

Balance at 31 December 2012

9,963

29,743

233,866

32,069

(90,708)

15,127

230,060

 

 

 

 

Restated for the year to 30 June 2013*

 

 

 

 

 

 

Ordinary

Share

 

Non-

 

 

 

 

share

premium

Special

distributable

Capital

Revenue

 

 

capital

account

reserve

reserve

reserves

reserve

Total

 

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

Balance at 30 June 2012

9,963

29,743

233,866

32,069

(108,055)

11,308

208,894

(Loss)/profit for the year

-

-

-

-

(63,327)

11,997

(51,330)

Ordinary dividends paid

-

-

-

-

-

(9,714)

(9,714)

Shares purchased by the

Company

 

(47)

 

(723)

 

-

 

-

 

-

 

-

 

(770)

Balance at 30 June 2013

9,916

29,020

233,866

32,069

(171,382)

13,591

147,080

 

* See note 1 and note 3



UNAUDITED CONDENSED GROUP BALANCE SHEET

 

 

As previously reported

 

Restated*

As previously reported

 

Restated*

 

31 Dec 2013

31 Dec 2012

31 Dec 2012

30 Jun 2013

30 Jun 2013

 

£'000s

£'000s

£'000s

£'000s

£'000s

Non-current assets

 

 

 

 

 

Investments

401,895

466,582

460,057

393,830

372,630

Deferred exploration and

evaluation expenditure

-

-

-

 

2,832

 

-

 

401,895

466,582

460,057

396,662

372,630

Current assets

 

 

 

 

 

Other receivables

195

1,762

1,628

3,375

2,742

Derivative financial

instruments

1,693

3,690

3,690

 

2,020

 

2,020

Cash and cash equivalents

1,556

1,106

1,015

8,456

7,644

 

3,444

6,558

6,333

13,851

12,406

Current liabilities

 

 

 

 

 

Loans

-

(3,585)

(3,585)

(42,500)

(42,500)

Other payables

(1,698)

(1,752)

(1,711)

(3,696)

(1,997)

Derivative financial

instruments

(87)

(207)

(207)

 

(63)

 

(63)

Zero dividend preference

shares

(75,235)

-

-

 

-

 

-

 

(77,020)

(5,544)

(5,503)

(46,259)

(44,560)

Net current (liabilities)

/assets

(73,576)

1,014

830

 

(32,408)

 

(32,154)

Total assets less current

liabilities

328,319

467,596

460,887

 

364,254

 

340,476

Non-current liabilities

 

 

 

 

 

Bank loans

(49,036)

(50,000)

(50,000)

-

-

Loan notes

-

(3,457)

-

(3,705)

-

Zero dividend preference

shares

(131,673)

(180,827)

(180,827)

 

(193,396)

 

(193,396)

Net assets

147,610

233,312

230,060

167,153

147,080

 

 

 

 

 

 

Represented by:

 

 

 

 

 

Ordinary share capital

9,916

9,963

9,963

9,916

9,916

Share premium account

29,020

29,743

29,743

29,020

29,020

Special reserve

233,866

233,866

233,866

233,866

233,866

Non-distributable reserve

32,069

32,069

32,069

32,069

32,069

Foreign currency translation

reserve

 

-

 

-

 

-

 

497

 

-

Capital reserves

(167,542)

(90,970)

(90,708)

(162,952)

(171,382)

Revenue reserve

10,281

15,251

15,127

13,699

13,591

Total attributable to

equity holders

147,610

229,922

230,060

 

156,115

 

147,080

Non-controlling interest

-

3,390

-

11,038

-

Total equity attributable to

Group

147,610

233,312

230,060

 

167,153

 

147,080

 

 

 

 

 

 

Net asset value per

ordinary share

 

 

 

 

 

Basic - pence

148.86

230.77

230.91

157.44

148.33

* See note 1

UNAUDITED CONDENSED GROUP STATEMENT OF CASH FLOWS

 

 

 

Restated*

Restated*

 

Six months to

Six months to

Year  to

 

31 December 2013

31 December 2012

30 June 2013

 

£'000s

£'000s

£'000s

Cash flows from operating activities

2,681

7,971

12,405

Investing activities

 

 

 

Purchases of investments

(46,045)

(50,349)

(46,954)

Sales of investments

27,254

39,992

51,363

Purchases of derivatives

(2,243)

(6,964)

(6,977)

Sales of derivatives

3,771

3,203

3,741

Cash flows on margin accounts

-

3,991

4,035

Cash flows from investing activities

(17,263)

(10,127)

5,208

Cash flows before financing activities

(14,582)

(2,156)

17,613

Financing activities:

 

 

 

Equity dividends paid

(5,578)

(3,487)

(9,714)

Movement on loans

7,421

52,360

41,247

Cash flows from issue of ZDP shares

6,546

16,826

23,209

Cash flows from redemption of ZDP shares

-

(67,801)

(67,801)

Cost of ordinary share buyback

-

-

(770)

Cash flows from financing activities

8,389

(2,102)

(13,829)

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

(6,193)

(4,258)

3,784

Cash and cash equivalents at the beginning of the period

7,644

4,879

4,879

Effect of movement in foreign exchange

(703)

2

(1,019)

Cash and cash equivalents at the end of the period

748

623

7,644

 

 

 

 

Comprised of:

 

 

 

Cash

1,556

1,015

7,644

Bank overdraft

(808)

(392)

-

Total

748

623

7,644

* See note 1 and note 3

 



 

NOTES

 

1. SIGNIFICANT ACCOUNTING POLICIES

 

The Company is an investment company incorporated in Bermuda and quoted on the London Stock Exchange.

 

The unaudited condensed group Accounts have been prepared in accordance with International Financial Reporting

Standards as adopted by the EU ('IFRS'), IAS 34 'Interim Financial Reporting' and except as noted below, the accounting policies set out in the audited statutory accounts of the Group for the year ended 30 June 2013.

 

The Group, from 1 July 2013, has early adopted IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures. The effective date of these standards is 1 January 2014. The EU has permitted early adoption.

 

IFRS 10, IAS 27 and IAS 28 require retrospective application while IFRS 12 is applied prospectively. IFRS 10 replaces the current guidance on consolidation in IAS 27 Consolidated and Separate Financial Statements and SIC-12 Special Purpose Entities. IFRS 10 exempts an investment entity from consolidating its subsidiaries or applying IFRS 3 when it obtains control of another entity. Except in instances where a subsidiary provides services directly related to the parent company's investment activities, IFRS 10 exempts an investment entity from consolidating its subsidiaries. Instead, an investment entity shall measure an investment in a subsidiary at fair value through profit and loss in accordance with IAS 39 Financial Instruments: Recognition and Measurement. Under IFRS 10, an investor controls an investee when it has exposure to the investee's variable returns and has the ability to influence those returns. Utilico Finance Limited ("UFL") and Global Equity Risk Protection Limited ("GERP") continue to be consolidated under IFRS 10. Bermuda First Investment Company Limited ("BFIC") and Zeta Resources Limited ("Zeta"), which were previously consolidated and remain subsidiaries of the Company, are now accounted for as investments at fair value through the profit and loss. The accounts for the year ended 30 June 2013 and the interim accounts for the six months to 31 December 2012 have been restated to reflect this change in accounting policy (see the Balance Sheet and note 3).

 

IFRS 12 prescribes additional disclosures around significant judgements and assumptions made in determining whether one entity controls another and has joint control or significant influence over that other entity. The standard also requires disclosures on the nature and risks associated with interests in unconsolidated structured entities. The Group will present these disclosures, where appropriate, in the Group's 2014 Annual Report and Accounts.

 

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by the Directors in applying the Group's accounting policies and key sources of uncertainty were the same as those applied to the consolidated financial statements as at, and for, the year ended 30 June 2013.

 

The condensed group Accounts do not include all of the information required for full annual accounts and should be read in conjunction with the consolidated Accounts of the Group for the year ended 30 June 2013, which were prepared under full IFRS requirements.

 

The Group Accounts comprise the results of the Company, UFL and GERP.

 

2. DIVIDENDS

 

The Directors have declared a second quarterly dividend in respect of the year ended 30 June 2014 of 1.875p per ordinary share payable on 21 March 2014 to shareholders on the register at close of business on 7 March 2014. The total cost of this dividend, which has not been accrued in the results for the six months to 31 December 2013, is £1,859,000 based on 99,157,214 ordinary shares in issue at the date of this report.

 



 

3. RESTATEMENT OF PRIOR PERIODS

 

The effects of these changes are shown on the Balance Sheet. The impact on the Condensed Group Income Statement, Condensed Group Statement of Comprehensive Income and Condensed Group Cash Flow Statement are as follows:

 

CONDENSED GROUP INCOME STATEMENT

 


Previously reported

Effect of restatement


Restated


Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total

Six months to

return

return

return

return

return

return

return

return

return

31 December 2012

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s











Gains on investments

-

27,042

27,042

-

467

467

-

27,509

27,509

Losses on derivative instruments

-

(2,713)

(2,713)

-

-

-

-

(2,713)

(2,713)

Exchange gains/(losses)

69

(1)

68

1

(38)

(37)

70

(39)

31

Investment and other income

9,724

-

9,724

(273)

-

(273)

9,451

-

9,451

Total income

9,793

24,328

34,121

(272)

429

157

9,521

24,757

34,278

Management and administration

fees

(1,103)

-

(1,103)

27

-

27

(1,076)

-

(1,076)

Other expenses

(710)

(5)

(715)

60

-

60

(650)

(5)

(655)

Profit before finance costs and

taxation

7,980

24,323

32,303

(185)

429

244

7,795

24,752

32,547

Finance costs

(312)

(7,405)

(7,717)

-

-

-

(312)

(7,405)

(7,717)

Profit before taxation

7,668

16,918

24,586

(185)

429

244

7,483

17,347

24,830

Taxation

(177)

-

(177)

-

-

-

(177)

-

(177)

Profit for the period

7,491

16,918

24,409

(185)

429

244

7,306

17,347

24,653











Profit/(loss) for the period

attributable to:










Equity holders of the Parent

Company

7,430

17,085

24,515

(124)

262

138

7,306

17,347

24,653

Non-controlling interests

61

(167)

(106)

(61)

167

106

-

-

-


7,491

16,918

24,409

(185)

429

244

7,306

17,347

24,653











Earnings per ordinary share

(basic) - pence

7.46

17.15

24.61

(0.12)

0.26

0.14

7.34

17.41

24.75

 

The Group does not have any income or expense that is not included in the profit for the period to 31 December 2012, and therefore the "profit for the period" is also the "total comprehensive income for the period", as defined in International Accounting Standard 1 (revised).

 

 

FAIR VALUE OF BFIC AND ZETA

The Group has re-presented certain balances in the consolidated balance sheet to reflect the effect of adopting IFRS10 (see note 1). This change has required BFIC and Zeta to be valued at fair value through profit and loss (prior year consolidated disclosure included BFIC and Zeta at net asset value).

 

 

 


31 Dec

2013

31 Dec

2012

30 Jun

2013

Fair value of holdings


£'000s

£'000s

£'000s

BFIC


15,183

14,179

15,196

Zeta


19,396

n/a

11,680

 

 



 

3. RESTATEMENT OF PRIOR PERIODS (continued)

 

CONDENSED GROUP CASH FLOW STATEMENT

 

 

Six months to 31 December 2012

Year to 30 June 2013

 

Previously

Effect of

 

Previously

Effect of

 

 

reported

restatement

Restated

reported

restatement

Restated

 

£'000s

£'000s

£'000s

£'000s

£'000s

£'000s

Cash flows from operating

activities

 

8,063

 

(92)

 

7,971

 

12,779

 

(374)

 

12,405

Investing activities

 

 

 

 

 

 

Purchases of investments

(50,349)

-

(50,349)

(50,573)

3,619

(46,954)

Sales of investments

39,992

-

39,992

51,363

-

51,363

Purchases of derivatives

(6,964)

-

(6,964)

(6,977)

-

(6,977)

Sales of derivatives

3,203

-

3,203

3,741

-

3,741

Exploration and evaluation

expenditure

-

-

-

(139)

139

-

Cash from acquisition of

subsidiary

-

-

-

3,766

(3,766)

-

Cash flows on margin accounts

3,991

-

3,991

4,035

-

4,035

Cash flows from investing

activities

(10,127)

-

(10,127)

5,216

(8)

5,208

Cash flows before financing

activities

(2,064)

(92)

(2,156)

17,995

(382)

17,613

Financing activities:

 

 

 

 

 

 

Equity dividends paid

(3,487)

-

(3,487)

(9,714)

-

(9,714)

Movement on loans

52,360

-

52,360

41,247

-

41,247

Cash flows from issue of

ZDP shares

16,826

-

16,826

23,209

-

23,209

Cash flows from redemption of

ZDP shares

(67,801)

-

(67,801)

(67,801)

-

(67,801)

Issue of share capital in

subsidiary

-

-

-

2

(2)

-

Cost of ordinary share buyback

-

-

-

(770)

-

(770)

Cash flows from financing

activities

(2,102)

-

(2,102)

(13,827)

(2)

(13,829)

Net (decrease)/increase in cash

and cash equivalents

(4,166)

(92)

(4,258)

4,168

(384)

3,784

Cash and cash equivalents at the

beginning of the period

4,879

-

4,879

4,879

-

4,879

Effect of movement in foreign

exchange

1

1

2

(823)

(196)

(1,019)

Cash and cash equivalents at

the end of the period

714

(91)

623

(8,224)

(580)

7,644

 

 

 

 

 

 

 

Comprised of:

 

 

 

 

 

 

Cash

1,106

(91)

1,015

8,456

(812)

7,644

Bank overdraft

(392)

-

(392)

(232)

232

-

Total

714

(91)

623

8,224

(580)

7,644

 

 

 

 

 

 

 

 

 

The half-yearly report is available on the website www.utilico.bm and will be posted to shareholders at the beginning of March 2014. Copies may be obtained during normal business hours from Exchange House, Primrose Street, London, EC2A 2NY.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR ZMGZZDGGGDZM