RNS Number : 7326R
Utilico Finance Limited
16 September 2014
 



                                                                         

Utilico Finance Limited

                                                               

Report and accounts for the year to 30 June 2014

 

 



 

Utilico Finance Limited

 

Report and accounts

for the year to 30 June 2014

 

 

Contents                                                                                                              

Page

                                                                                                                           

 

                                                                                                                           

 

Company Directory

2

                                                                                                                           

 

                                                                                                                           

 

Strategic Report

 

 

Directors' Report

3

 

 

4

                                                                                                                           

 

                                                                                                                           

 

Directors' Statement of Responsibilities

7

                                                                                                                           

 

                                                                                                                           

 

Income Statement

8

                                                                                                                           

 

                                                                                                                           

 

Balance Sheet

9

                                                                                                                           

 

                                                                                                                           

 

Notes to the Accounts

10

 

 

 

 

 

 

Independent Auditor's Report                                                                                  

17

                                                                                                                            

 



 

Utilico Finance Limited


 

 

Company Directory






 

 

Registered Office

19 Par-la-Ville Road

 

Hamilton HM 11

 

Bermuda

 

 

 

 

Directors

Dr Roger J Urwin, CBE (Chairman)

 

Peter I Burrows, AO

 

Graham Cole (appointed 11 September 2014)

 

J. Michael Collier (retired 11 September 2014)

 

Warren McLeland

 

Eric St C Stobart

 

 

 

 

Company Number

39479

 

 

 

 

Auditor

KPMG LLP

 

15 Canada Square

Canary Wharf

London E14 5GL

 

 

 

Date of Formation

17 January 2007

 

 

 

 

Nature of Business

Closed end investment company

 

 

 

 

Ordinary Shareholder and Parent Company

Utilico Investments Limited

 

 

 



Utilico Finance Limited

 

Strategic Review

The Strategic Review is designed to provide shareholders with an insight into the operations of the Company during the year. In particular, it gives information on:

 

• the Company's objective and investment policy;

• the regulatory and competitive environment within which the Company operates;

• the Board's strategy for achieving its stated objectives;

• principal risks and risk management; and

• key performance indicators.

 

Objective

The Company's investment objective is to finance and fund the final capital entitlements of the ZDP shares.

 

Investment policy

The Company seeks to fund the final capital entitlements of the ZDP shares by lending current asset funds to its parent company, Utilico Investments Limited. 

 

Regulatory and Competitive Environment

The Company is obliged to comply with Bermuda law, the rules of the UK Listing Authority and International Financial Reporting Standards ("IFRS") as adopted by the European Union. The Company is exempt from taxation, except insofar as it is withheld from income received. Under Bermuda law, the Company may not distribute income by way of a dividend unless, after distribution of the dividend, the realisable value of the Company's assets would be greater than the aggregate of its liabilities.

 

Strategy for Achieving Objectives

The Company's performance in pursuing its objective is based on the ability of its parent company to repay the intra-group loan to the Company. Utilico Investments Limited has provided an undertaking to provide sufficient funds to the Company to meet each redemption as it falls due.

Subsequent to the year end, on 2 July 2014, the Company published a prospectus containing details of proposals to, inter alia, offer the holders of 2014 ZDP Shares the opportunity to elect to roll part of their investment into a new 2020 ZDP Share and the issue of up to 25 million 2020 ZDP Shares pursuant to a placing.  As detailed in the Report of the Directors, the Company issued a total of 25 million new 2020 ZDP on 31 July 2014.

Principal Risks

The principal underlying risk of the Company continues to relate to its ability to repay the ZDP shares when they fall due. This is dependent on the asset performance of the parent company. At 30 June 2014, the parent company had net assets of £164,455,000 (2013: £147,245,000) after providing for amounts due to ZDP shareholders. Details of the ZDP shares are set out in note 7 to the accounts.

 

A further risk faced by the Company is that of a regulatory nature. A regulatory or legal breach could lead to financial penalties or a qualified audit report.  The Company uses all reasonable efforts to ensure that the Company adheres to the relevant statutory and regulatory requirements.

 

Key Performance Indicators

The Board assesses the Company's success in pursuing its objectives in the ability to provide for the amounts due to the ZDP shareholders.

 

This Strategic Review was approved by the Board of Directors on 15 September 2014.

 

ICM Limited

Company Secretary



 

Utilico Finance Limited 

 

Report of the Directors'

The Directors present their report and the financial statements of the Company for the year ended 30 June 2014.

 

Principal activity and status

Utilico Finance Limited (the "Company") is a Bermuda exempted, closed ended investment company with company registration number 39479. The Company's issued zero dividend preference ("ZDP") shares are traded on the standard segment of the main market of the London Stock Exchange.

 

Corporate Governance

Bermuda does not have its own corporate governance code and, as a Bermuda incorporated company, the Company is not required to comply with the UK Corporate Governance Code issued by the Financial Reporting Council in June 2010 (the "Code").  However, it is the Company's policy to comply with best practice on good corporate governance and maintain the same level of governance as UK listed investment companies.  The Board has therefore considered the principles set out in the AIC Code of Corporate Governance revised in October 2010 (the "AIC Code") and the relevant provisions of the Code.

 

Except as disclosed below, the Company complied throughout the year with the recommendations of the AIC Code and the relevant provisions of the Code.  The provisions of the Code regarding the role of chief executive and on Directors' remuneration are not relevant to the Company and are not reported on further.

 

In view of the requirement of the Bye-Laws that all Directors retire by rotation, the Board considers that it is not appropriate for the Directors to be appointed for specified terms as recommended by provision B.2.3 of the Code. However, in accordance with provision B.7.1 of the Code and principle 3 of the AIC Code, all Directors are subject to election by shareholders at the first annual general meeting following their appointment, and to re-election thereafter at intervals of no more than three years. Any Director serving beyond nine years is required to seek annual re-election. The Board of Directors does not consider it appropriate to appoint a Senior Independent Director as recommended by principle 1 of the AIC Code and provision A.4.1 of the Code.

 

Results and Dividends

The results for the year are set out in the attached accounts.

 

The Company has not declared a dividend in respect of the year ended 30 June 2014 as it has no profit to distribute.

 

Issue of new 2020 ZDP shares

Since the year end, the Company has created a new class of ZDP, which is repayable on 31 October 2020.

Pursuant to a rollover offer made to the holders of the 2014 ZDPs and to a placing, it issued 25 million new 2020 ZDPs on 31 July 2014, as follows:

 

Rollover Offer

Further to the Rollover Offer, valid elections were received from holders of a total of 9,382,718 2014 ZDP Shares (representing approximately 19.8 per cent. of the total number of 2014 ZDP Shares in issue). In accordance with the terms and conditions of the Rollover Offer, UFL has issued 15,504,888 new 2020 ZDP Shares, on the basis of each 2014 ZDP Share converting into 1.6525 2020 ZDP Shares.

 

Initial Placing

UFL has placed 9,495,112 new 2020 ZDP Shares at 100p per share with certain institutional and other investors raising gross proceeds of approximately £9.5 million.

 

Share capital

As at 31 July 2014, the Company's issued share capital comprised 10 Ordinary Shares, 38,117,282 2014 ZDP Shares, 47,500,000 2016 ZDP Shares, 49,842,413 2018 ZDP Shares and 25,000,000 2020 ZDP Shares.

 



 

Utilico Finance Limited 

 

Directors' Report (continued)

 

Directors

The following Directors held office throughout the year, unless otherwise stated:

Dr Roger Urwin (Chairman)

Peter Burrows

J. Michael Collier

Susan Hansen (resigned 17 September 2013)

Warren McLeland (appointed 17 September 2013)

Eric Stobart

 

Since the year end, Mr Collier has retired from the Board on 11 September 2014 and the Board has appointed Mr Graham Cole as a Director in his place with effect from the same date.

 

Directors' Disclosures

At 30 June 2014, no Director had any interest in the Company's shares (2013: none).  No Director acquired or disposed of any interest in the shares in the Company during the year or since the year end.

 

Re-election of Directors

Mr Cole, who was appointed to the Board on 11 September 2014, will stand for election as a Director at the forthcoming Annual General Meeting (Resolution 3).

 

Dr Urwin will retire by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election (Resolution 4). Mr McLeland retires annually and will do so at the forthcoming Annual General Meeting and, being eligible, offer himself for re-election (Resolution 5).

 

The Board has considered the re-election of Dr Urwin and Mr McLeland and the election of Mr Cole and has reviewed the composition of the Board as a whole and borne in mind the need for a proper balance of skills and experience. Following an appraisal of the performance of each of the Directors, the Board believes that these Directors make a valuable contribution based on their individual skills, knowledge and experience. They have commitment to their roles and the Board believes that their re-election would be in the best interests of the Company.

 

Each Director has signed a letter of appointment setting out the terms of their engagement as a Director, but does not have a service agreement with the Company.

 

Board Meetings

The Board meets at least twice a year to consider strategic affairs and to approve the interim report and the annual report and accounts. In view of the nature of the Company's business the Board does not consider it necessary to appoint a separate audit committee or nominations committee.

 

Directors' Remuneration

No Director received or is entitled to receive any remuneration from the Company.

 

Statement of Changes in Equity

There were no movements in equity attributable to equity holders and a statement of changes in equity has therefore not been prepared.

 

Cash Flow

There were no cash flows in the period and therefore a cash flow statement has not been prepared.

 

Going Concern

The Directors believe that it is appropriate to adopt the going concern basis in preparing the accounts as the Company can continue to operate due to the support of the parent company.



 

 

Utilico Finance Limited 

 

Directors' Report (continued)

 

Share Capital

Full details of the changes to the Company's authorised and issued ordinary share capital during the year can be found in note 8 to the accounts.

 

Ordinary shares of Utilico Investments Limited

Ordinary shares of Utilico Investments Limited rank behind the ZDP shares on a winding up of the Company and Utilico Investments Limited, together referred to as the Group (save for any undistributed revenue reserves of Utilico Investments Limited on a winding up).

 

Auditor

KPMG LLP ("KPMG") was the Company's auditor for the year ended 30 June 2014 and was responsible for the audit of these accounts.

 

Audit fees relating to the year amounted to £7,000 (2013: £7,000) and were settled by the parent company, Utilico Investments Limited.

 

No fees were paid or payable to KPMG for non-audit work for the year under review (2013: £nil).

 

 

 

 

By order of the Board

ICM Limited, Secretary

15 September 2014

 



 

 

Utilico Finance Limited

 

DIRECTORS' STATEMENT OF RESPONSIBILITIES

 

The Directors are responsible for preparing the Report of the Directors and the financial statements in accordance with applicable Bermuda law and IFRS, as adopted by the European Union.

 

The Directors must not approve the Company's financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit and loss of the Company for that period. In preparing these financial statements, the Directors are required to:

 

•    select suitable accounting policies and then apply them consistently;

•    present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

•    make judgements and estimates that are reasonable and prudent;

•    provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance;

•    state that the Company has complied with IFRS, subject to any material departures disclosed and explained in the financial statements; and

•    prepare the accounts on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

 

The Directors are responsible for keeping proper accounting records which are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with IFRS.  They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for prevention and detection of fraud and other irregularities.

 

To the best of the knowledge of the Directors: (i) the accounts which have been prepared in accordance with IFRS, as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company; (ii) the Directors' Report includes a fair review of development and performance of the business and a description of the principal risks and uncertainties that the Company faces. The financial risks are also provided in note 12 to the accounts.

 

Insofar as the Directors are aware:

 

• there is no relevant audit information of which the Company's auditor is unaware; and

• the Directors have taken all reasonable steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

 

The annual report and accounts are published on Utilico Investments Limited website, www.utilico.bm, the maintenance and integrity of which is the responsibility of the Company. The work carried out by the auditor does not involve consideration of the maintenance and integrity of the website and accordingly, the auditor accepts no responsibility for any changes that have occurred in the financial statements since they were originally presented on the website. Visitors to the website need to be aware that the legislation governing the preparation and dissemination of the accounts may differ from legislation in their jurisdiction.

 

 

Approved by the Board on 15 September 2014 and signed on its behalf by:

 

 

Dr R J Urwin

Chairman

 

 

 



 

Utilico Finance Limited

 

 

Income Statement

 


Year to

Year to

 

 

 

30 June

30 June

 

 

 

2014

2013

 

 

Note

£'000s

£'000s

 

 


 

 

Interest income

 

2

14,380

14,333

Total income

 


14,380

14,333

Other expenses

 


-

-

Profit before finance costs and taxation


14,380

14,333

Finance costs

 

3

(14,380)

(14,333)

Profit before tax

 


-

-

Taxation

 


-

-

Profit for the year

 


-

-

 

 


 

 

 

 


 

 

Earnings per share - pence

 


-

-

 

 


 

 

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

 

All items in the above statement are derived from continuing operations.

 


 

 

 

 



 

 

Utilico Finance Limited

 

 

 


 

 

 

Balance Sheet




At 30 June


2014

2013


Note

£'000s



 

 

Current assets


 

 

Other receivables

6

199,784

Total assets less current liabilities


214,164

199,784

Current liabilities


 

 

Zero dividend preference shares

7

-

Net current assets


136,355

199,784

Non-current liabilities


 

 

Zero dividend preference shares

7

(199,784)

Net assets


-  

-  

 


 

 

Equity attributable to equity holders


 

 

Ordinary share capital

8

-  

-  

 


 

 

 


 

 

 


 

 

 


 

 

 


 

 

Approved by the Board on 15 September 2014 and signed on its behalf by:

 

 

 

 

 

 

 

 

 

 

 

 

Dr R J Urwin

E St C Stobart

 

 

 

 

 



 

Utilico Finance Limited

 

Notes to the Accounts

for the year to 30 June 2014

 

1.     Accounting policies

The Company is an investment company incorporated in Bermuda on 17 January 2007. The accounting policies below are unchanged from the previous year.

                       

(a) Basis of accounting

The financial statements of the Company have been prepared on a going concern basis in accordance with International Financial Reporting Standards as adopted by the European Union, which comprise standards and interpretations approved by the International Accounting Standards Board and International Accounting Standards Committee that remain in effect.

 

The financial statements have been prepared on a historical cost basis.

 

A Statement of Changes in Equity has not been presented as there is no movement in the current or prior period.

 

At the date of authorisation of these Accounts, the following standards and interpretations have not been applied in these Accounts since they were in issue but not yet effective:

 

International Accounting Standards (IAS/IFRS)

Effective date for accounting

periods starting on or after

IFRS 9 Financial Instruments

1 January 2018

 

 

 

The Directors have chosen not to early adopt these standards and interpretations as they do not anticipate that they would have a material impact on the Company's Accounts in the period of initial application.

 

(b) Zero dividend preference shares

The ZDP shares, due to be redeemed on 31 October 2014, 2016 and 2018, at a redemption value of 167.60 pence per share, 192.78 pence per share and 160.52 pence per share respectively, have been classified as liabilities, as they represent an obligation on behalf of the Company to deliver to their holders a fixed and determinable amount at the redemption date. They are accordingly accounted for at amortised cost, using the effective interest method. Under Bermuda company law ZDP shares are recognised as share capital in the Company.

                       

(c) Cash flow statement

There were no cash flows in the period or in the prior year and therefore a cash flow statement has not been prepared. All transaction movements were through the intra-group loan account.

                       

(d) Foreign currency

The functional and reporting currency is pounds sterling because the Company's ZDP share capital was raised, and will be repaid, in pounds sterling, and has been lent to, and will be repaid, by the parent company, in that currency.

                       

(e) Interest income

Interest on debt is accrued on a time basis using the effective interest method.        

 

(f)  Expenses

The Company incurs no expenses other than finance costs. The Directors are not entitled to receive any remuneration and all other expenses relating to the Company are paid in full by the parent company.

 

(g) Finance costs

Finance costs are accounted for on an effective interest method.

 

 



 

Utilico Finance Limited

 

Notes to the Accounts (continued)

 

(h) Intra company loan

Utilico Investments Limited has agreed to place the Company in sufficient funds to enable the Company to pay the capital entitlement of each class of ZDP share on their respective redemption dates. The amount owed in the accounts is based on the entitlements of the ZDP shareholders at the relevant date.

 

 

2      Interest income

 

 



2014

2013



£'000s

£'000s

Loan to parent company - interest receivable


14,380

14,333

 

 

 

 

3      Finance costs

 



2014

2013



£'000s

£'000s

ZDP shares


14,380

14,333

 

 

 

4.     Earnings per share

 

The calculation of earnings per share is based on a profit after tax for the period of £nil (2013: £nil) and a weighted average number of 10 ordinary shares in issue during the year (2013: 10 ordinary shares in issue during the year).

 

 

5.     Dividends

 

There were no dividends paid or declared in respect of the year.

 

 

6.     Other receivables

 



2014

2013



£'000s

£'000s

Loan to parent company - Utilico Investments Limited   


214,164

199,784

 

The loan is repayable on demand.

 

 



Utilico Finance Limited

 

Notes to the Accounts (continued)

 

7.     Zero dividend preference shares

 


2014

2013



£'000s

£'000s

ZDP shares - current liabilities


 

 

2014 ZDP shares   


77,809

-

ZDP shares - non-current liabilities


 

 

2014 ZDP shares   


-

72,705

2016 ZDP shares   


77,928

72,734

2018 ZDP shares   


58,427

54,345

 


136,355

199,784

Total ZDP shares liabilities


214,164

199,784

 

Authorised ZDP shares of the Company at 30 June 2014 and 30 June 2013 are as follows:

 



Number

£'000s

ZDP shares of 10p each


 

 

2012 ZDP shares   


60,592,190

6,059

2014 ZDP shares   


50,000,000

5,000

2016 ZDP shares   


50,000,000

5,000

ZDP shares of 5.9319p each


 

 

2018 ZDP shares   


49,842,413

2,956

 

ZDP shares issued by the Company are as follows:

 


2014

2016

2018

Total

 2014

Number

£'000s

Number

£'000s

Number

£'000s

£'000s

Balance at 30 June 2013

47,500,000

72,705

47,500,000

72,734

49,842,413

54,345

199,784

Finance costs

-

5,104

-

5,194

-

4,082

14,380

Balance at

30 June 2014

 

47,500,000

 

77,809

 

47,500,000

 

77,928

49,842,413

58,427

 

214,164

 

 


2012

2014

2016

2018

Total

 2013

Number

£'000s

Number

£'000s

Number

£'000s

Number

£'000s

£'000s

Balance at   30 June 2012

 

39,342,809

 

68,269

 

47,500,000

 

67,938

 

47,500,000

 

67,888

22,250,000

22,295

 

226,390

Issue of ZDP shares

-

-

-

-

-

-

27,592,413

29,074

29,074

Issue costs of ZDP shares

-

-

-

-

-

-

-

(171)

(171)

Redemption of 2012 ZDP shares

(39,342,809)

(69,842)

-

-

-

-

-

-

(69,842)

Finance costs

-

1,573

-

4,767

-

4,846

 

-

3,147

14,333

Balance at

30 June 2013

 

-

 

-

 

47,500,000

 

72,705

 

47,500,000

 

72,734

49,842,413

54,345

 

199,784

 



 

Utilico Finance Limited

 

Notes to the Accounts (continued)

 

7.     Zero dividend preference shares (continued)

 

2014 ZDP shares

 

Based on the initial entitlement of a 2014 ZDP share of 100p on 15 June 2007, a 2014 ZDP share will have a final capital entitlement at the end of its life on 31 October 2014 of 167.60p equating to a 7.25 per cent. per annum gross redemption yield. The capital entitlement (excluding issue costs) per 2014 ZDP share at 30 June 2014 was 163.70p (30 June 2013: 152.64p).

 

2016 ZDP shares

 

Based on the initial entitlement of a 2016 ZDP share of 100p on 15 June 2007, a 2016 ZDP share will have a final capital entitlement at the end of its life on 31 October 2016 of 192.78p equating to a 7.25 per cent. per annum gross redemption yield. The capital entitlement (excluding issue costs) per 2016 ZDP share at 30 June 2014 was 163.70p (30 June 2013: 152.64p).

 

2018 ZDP shares

 

Based on the initial entitlement of a 2018 ZDP share of 100p on 26 January 2012, a 2018 ZDP share will have a final capital entitlement at the end of its life on 31 October 2018 of 160.52p equating to a 7.25% per annum gross redemption yield. The capital entitlement (excluding issue costs) per 2018 ZDP share at 30 June 2014 was 118.50p (30 June 2013: 110.50p).

 

All the ZDP shares are admitted to the Official List and to trading on the London Stock Exchange and are stated at amortised cost using the effective interest method. The ZDP shares carry no entitlement to income however they have a pre-determined final capital entitlement which ranks behind all other liabilities and creditors of the Company and Utilico Investments Limited but in priority to the ordinary shares of the Company and Utilico Investments Limited save in respect of certain winding up revenue profits of Utilico Investments Limited.

 

The growth of each ZDP share accrues daily and is reflected in the return and net asset value per ZDP share on an effective interest method.

 

The ZDP shares do not carry any voting rights at general meetings of the Company. However the Company will not be able to carry out certain corporate actions unless it obtains the separate approval of the ZDP shareholders (treated as a single class) at a separate meeting. Separate approval of each class of ZDP shareholders must be obtained in respect of any proposals which would affect their respective rights, including any resolution to wind up the Company. In addition the approval of ZDP shareholders by the passing of a special resolution at separate class meetings of the ZDP shareholders is required in relation to any proposal to modify, alter or abrogate the rights attaching to any class of the ZDP shares and in relation to any proposal by the Company or its parent company which would reduce the Group's cover of the existing ZDP shares below 1.5 times.

 

On a liquidation of Utilico Investments Limited and/or the Company, to the extent that the relevant classes of ZDP shares have not already been redeemed, the shares shall rank in the following order of priority in relation to the repayment of their accrued capital entitlement as at the date of liquidation:

 

(i) the 2014 ZDP shares shall rank in priority to the 2016 ZDP Shares and the 2018 ZDP shares; and

(ii) the 2016 ZDP shares shall rank in priority to the 2018 ZDP shares.

 

The entitlement of ZDP Shareholders of a particular class shall be determined in proportion to their holdings of ZDP shares of that class.



 

 

Utilico Finance Limited

 

Notes to the Accounts (continued)

 

8.     Ordinary share capital 

 

Number

£

Authorised

 

 

Ordinary shares of 10p each

     10

1

Issued and nil paid

 

 

Balance at 30 June 2014 and 30 June 2013

10

-  

 

In addition to receiving any income distributed by way of dividend, the ordinary shareholders will be entitled to all surplus assets after payment of all debts, including ZDP shares.

 

Net asset value per ordinary share is £nil (30 June 2013: £nil) based on 10 shares in issue.

 

9.     Parent company

 

Utilico Investments Limited, incorporated in Bermuda, is the parent company of the Company, holding 100% of the nil paid ordinary shares.

 

In the opinion of the Directors, the ultimate holding undertaking is General Provincial Life Pension Fund (L) Limited which is incorporated in Malaysia, holding 57.2% of the ordinary shares in Utilico Investments Limited.

 

10.   Related party transactions

 

Utilico Investments Limited, General Provincial Life Pension Fund (L) Limited and the Board of the Company are considered related parties. Amounts owing from related parties are disclosed in the financial statements in note 6 and interest receivable from related parties is disclosed in note 2.

 

11.   Operating Segments

 

The Directors are of the opinion that the Company's activities comprise a single business segment of financing the Company's ZDP shares debt by lending current asset funds to its parent company and therefore no segmental reporting is provided.

 

12.   Financial Risk Management

 

The Board of Directors is responsible for the Company's risk management. The Directors' policies and processes for managing the financial risks are set out in the interest rate exposure and credit risk management sections below.

 

The accounting policies which govern the reported Balance Sheet carrying values of the underlying financial assets and liabilities, as well as the related income and expenditure, are set out in note 1 to the accounts. The policies are in compliance with International Financial Reporting Standards as adopted by the European Union and best practice, and include the valuation of financial assets at fair value and liabilities at amortised cost.

 



Utilico Finance Limited

 

Notes to the Accounts (continued)

 

12.   Financial Risk Management (continued)

 

Interest Rate exposure

The exposure of the financial assets and liabilities to interest risks is shown below:

 

 

 

Within

More than

 

Total

one year

one year

30 June 2014

£'000s

£'000s

£'000s

Exposure to fixed rates

 

 

 

Zero dividend preference shares

(214,164)

(77,809)

(136,355)

Intra-group loan

214,164

214,164

 -

Net exposures

 

 

 

At period end

 -

136,355

(136,355)

Maximum in period

 -

204,159

(204,159)

Minimum in period

 -

130,888

(130,888)

 

 

 

Within

More than

 

Total

one year

one year

30 June 2013

£'000s

£'000s

£'000s

Exposure to fixed rates

 

 

 

Zero dividend preference shares

(199,784)

-

(199,784)

Intra-group loan

199,784

199,784

 -

Net exposures

 

 

 

At period end

 -

199,784

(199,784)

Maximum in period

 -

260,804

(260,804)

Minimum in period

 -

191,015

(191,015)

 

Credit Risk exposure

The Company is exposed to potential failure by its parent company to settle the ZDP share liability on behalf of the Company on the respective repayment dates. The Board assesses this risk at each Board meeting.

 

2014 ZDP shares

Based on their final entitlement of 167.60p per share, the final entitlement of the 2014 ZDP shares were covered 3.96 times by Utilico Investments Limited's gross assets on 30 June 2014. Should gross assets fall by 74.7% over the remaining life of the 2014 ZDP shares, then the 2014 ZDP shares would not receive their final entitlements in full. Should gross assets fall by 100%, equivalent to an annual fall of 100%, the 2014 ZDP shares would receive no payment at the end of their life.

 

2016 ZDP shares

Based on their final entitlement of 192.78p per share, the final entitlement of the 2016 ZDP shares were covered 2.08 times by Utilico Investments Limited's gross assets on 30 June 2014. Should gross assets fall by 52.0% over the remaining life of the 2016 ZDP shares, then the 2016 ZDP shares would not receive their final entitlements in full. Should gross assets fall by 74.7%, equivalent to an annual fall of 44.5%, the 2016 ZDP shares would receive no payment at the end of their life.

 

2018 ZDP shares

Based on their final entitlement of 160.52p per share, the final entitlement of the 2018 ZDP shares were covered 1.47 times by Utilico Investments Limited's gross assets on 30 June 2014. Should the gross assets falls by 32.1% over the remaining life of the 2018 ZDP shares, then the 2018 ZDP shares would not receive their final entitlements in full. Should gross assets fall by 52.0%, equivalent to an annual fall of 15.6%, the 2018 ZDP shares would receive no payment at the end of their life.

 

Utilico Finance Limited

 

Notes to the Accounts (continued)

 

12.   Financial Risk Management (continued)

 

None of the Company's financial liabilities is past due or impaired.

 

Fair Values of financial assets and liabilities

The assets and liabilities of the Company are, in the opinion of the Directors, reflected in the Balance Sheet at fair value except for ZDP shares which are carried at amortised cost using effective interest method in accordance with IAS39, or at a reasonable approximation thereof.

 

The fair values of the ZDP shares based on their quoted market value at 30 June were:

 


2014

2013


£'000s

£'000s

2014 ZDP shares

77,273

75,288

2016 ZDP shares

84,137

78,613

2018 ZDP shares

63,923

56,511

 

 

Capital risk management

The objective of the Company is to finance and fund the redemption value of the ZDP shares. The Board has a responsibility for ensuring the Company's ability to continue as a going concern and to meet the redemption of the ZDP shares.

 

13.   Post Balance Sheet Events

 

On 1 July 2014 the Company adopted revised Bye-Laws, and increased its authorised share capital to £22,121,862.10 divided into:

 

(a)  10 ordinary shares of par value £0.10 each (Ordinary Shares);

(b)  60,592,190 redeemable zero dividend preference shares of £0.10 each (2012 ZDP Shares);

(c)  50,000,000 redeemable zero dividend preference shares of £0.10 each (2014 ZDP Shares);

(d)  60,000,000 redeemable zero dividend preference shares of £0.10 each (2016 ZDP Shares);

(e)  59,842,413 redeemable zero dividend preference shares of £0.059319 each (2018 ZDP Shares); and

(f)   25,000,000 redeemable zero dividend preference shares of £0.060514 each (2020 ZDP Shares).

 

On 2 July 2014, the Company published a prospectus containing details of proposals to, inter alia, offer the holders of 2014 ZDP Shares the opportunity to elect to roll part of their investment into a new 2020 ZDP Share and the issue of up to 25,000,000 2020 ZDP Shares pursuant to an Initial Placing.

 

Further to the Rollover Offer, shareholders in respect of a total of 9,382,718 2014 ZDP Shares elected to rollover to 2020 ZDP shares. Pursuant to the terms of the Rollover Offer, 15,504,888 new 2020 ZDP Shares were issued, on 31 July 2014 on the basis of each 2014 ZDP Share converting into 1.6525 2020 ZDP Shares.

 

Following the closing of the Initial Placing, UFL placed 9,495,112 new 2020 ZDP Shares at 100p per share on 31 July 2014.

 

Following admission on 31 July 2014, the Company's issued share capital comprises of 10 Ordinary Shares, 38,117,282 2014 ZDP Shares, 47,500,000 2016 ZDP Shares, 49,842,413 2018 ZDP Shares and 25,000,000 2020 ZDP Shares.

 

The Board has decided to close the Placing Programme as described in the Prospectus dated 2 July 2014 with immediate effect.

 



 

Independent Auditor's Report To The Members Of Utilico Finance Limited 

 

We have audited the financial statements of Utilico Finance Limited for the year ended 30 June 2014 set out on pages 8 to 16. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards ("IFRS") as adopted by the EU.

 

This report is made solely to the Company's members, as a body, in accordance with Section 90(2) of the Companies Act 1981 of Bermuda.  Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed. 

 

Respective responsibilities of directors and auditor 

As explained more fully in the Directors' Statement of Responsibilities set out on page 7, the Directors are responsible for the preparation of financial statements which give a true and fair view.  Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).  Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. 

 

Scope of the audit of the financial statements 

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.   In addition we read all the financial and non-financial information in the Report and Accounts 2014 to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

 

Opinion on financial statements 

In our opinion: 

·    the financial statements give a true and fair view of the state of the Company's affairs as at 30 June 2014 and of the Company's profit for the year then ended;  and

·    the financial statements have been properly prepared in accordance with IFRS as adopted by the EU.

 

 

 

 

Gareth Horner

For and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

15 Canada Square London E14 5GL

 

15 September 2014


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