RNS Number : 8015B
Utilico Investments Limited
24 February 2011

Date:                24 February 2011


Contact:           Charles Jillings                                              

                        Utilico Investments Limited                             

                        01372 271 486                                               




Utilico Investments Limited

Unaudited Statement of Results

for the six months to 31 December 2010










Financial Highlights




·      Net Asset Value per ordinary share increased 42.3% to 236.75p

·      Earnings per ordinary share of 3.92p

·      Interim dividend of 3.25p in respect of the first half and a special dividend of 1.75p

·      Average annual compound total return of 13.9%



I am pleased to report that the Company's net asset value ("NAV") per ordinary share increased by 42.3% to 236.75p. This represented a strong performance over the six months and an outperformance against the FTSE All-Share Index which rose by 20.4%.


I am also pleased to report that the resolutions to amend the investment policy, acquire the assets of Eclectic Investment Company plc, acquire further ordinary shares in Resolute Mining Ltd ("Resolute"), from General Provincial Life Pension Fund, cancel the share premium account, increase the Company's authorised share capital and amend the Company's name were all passed, post the half year end on 7 January 2011. As a result of these proposals being passed we have a wider investment mandate, an increased asset base, the ability to pay dividends, and a new name, Utilico Investments Limited ("Utilico").


Following these proposals we have increased our position in our top five investments. We now hold 18.8% of Infratil Ltd ("Infratil"), 10.7% of Resolute (19.4% on a fully diluted basis), 27.1% of Utilico Emerging Markets Limited ("UEM"), 17.5% of Jersey Electricity Company ("JEL") and 35.6% of Bermuda Commercial Bank ("BCB"). These substantial holdings offer us a position of strength when in discussions with these companies.


Utilico's investment activity remained relatively modest with investments of £33.8m and disposals of £31.0m. Portfolio gains were £74.8m, resulting in a closing portfolio of £399.3m. The most significant investments were £8.5m invested in Resolute ordinary shares as a result of the exercise of 25.0m Resolute options and £7.5m invested in UEM as a result of the exercise of UEM 2010 warrants.


Revenue returns have been lower over the period, mainly due to the timing of the Infratil dividend. Last year the Infratil interim dividend was paid in July. This year the dividend of £2.1m was received in June.


The net result is a profit for the period of £3.4m and earnings per share ("EPS") of 3.92p (based on the average number of ordinary shares in issue in the period of 86,373, 863). We are now in a position to pay a dividend and based on 99,925,394 ordinary shares in issue at the date of this report, the current period revenue return equivalent is 3.38p with brought forward reserves of 4.14p.


The Directors wish to retain a proportion of reserves to enable them to sustain dividend payments looking forward. However, they do recognise that shareholders were not fully rewarded in prior years. Given this, the Directors have declared an interim dividend of 3.25p in respect of the first half and a special dividend of 1.75p from brought forward reserves.


Utilico has appointed Westhouse Securities ("Westhouse") as its financial adviser and stockbroker. Bermuda Commercial Bank Limited has taken a strategic stake in Westhouse by way of a convertible loan note.


The discount to the ordinary shares remains stubbornly high and has been some 30.0% for most of the six months. The Board wishes to reduce this substantially, and will be considering possible options to achieve this.


Markets are distorted by long-term interest rates which remain low, market intervention by governments which remains high and sovereign debt which continues to be excessive. As a result of this distortion we are seeing rising inflation and significant movements in exchange rates. To date equity markets have weathered this process well. We remain vigilant to these distortions.

J. Michael Collier
24 February 2011



Utilico has performed well in the six months to 31 December 2010 with the net asset value ("NAV") up 42.3% to 236.75p, outperforming the FTSE All-Share Index which was up 20.4% over the same period. Since inception of Utilico's predecessor UIT, in August 2003, Utilico's NAV per share is up 138.0% or 160.0% on a total return basis. The average annual compound total return since inception is 13.9%.



The top ten investments on a look through basis have seen changes as a result of strong performance by the underlying portfolio, in particular Resolute, Infratil and UEM. Resolute is now our largest investment, at £89.2m on a look through basis.


Three new entries in the top ten are Ocean Wilsons Holdings ("Ocean Wilsons"), Malaysia Airports Holdings ("MAHB"), both of which are held via Utilico's investment in UEM, and Greenstone Energy, held through Utilico's investment in Infratil.


Permanent Investments Limited ("PIL") has moved out of the top ten as its holdings were transferred out of PIL and into Utilico. As a result Utilico now holds ordinary shares of BCB directly. BCB is now at number 12 in the portfolio.


Resolute continues to do well. The 12% convertible loans notes that Utilico has invested in have increased from A$1.11 to A$1.45, and the ordinary share is up 35.5% to A$1.43 during the period under review. This resulted in gains of £35.4m in the six months to 31 December 2010. In October 2010 we converted most of our listed options into ordinary shares at a cost of £10.1m. Interest on the 12% convertible loan note has been paid in ordinary shares in the period.


The share price performance of Infratil (which holds the investments in Trustpower, Wellington Airport, Infratil Energy Australia and Greenstone Energy) has been strong, gaining 20.5% over the six months. The value of Utilico's investment has in turn increased by £25.8m, driven by the rising share price. During the six months we realised £6.6m from the sale of ordinary shares.


UEM has benefited from the strong growth in many of the emerging markets. Its NAV per share increased by 8.4% to 179.96p. UEM's portfolio and strategy remained broadly unchanged over the six months under review.


TrustPower Ltd's ("TPW") September 2010 interim result was relatively weak due to high levels of rainfall which depressed NZ power prices. This benefited its generation volumes, which increased by 16% in New Zealand, but was insufficient to offset the lower prices. In addition wind speeds in Australia were lower than prior year, which reduced generation at their Australian wind farm. Despite this, the shares gained 2.2% in the six months to December 2010, with the stock benefiting from the permitting of some of TPW's key generation growth projects, amounting to 560MW of clean energy generation.


Jersey Electricity ("JEL") reported excellent full year results for September 2010, with strong profit growth in all areas, but particularly in its core electricity business. Lower wholesale power prices in France, where the company sources most of its electricity requirements, allowed JEL to reduce tariffs in January 2010 and keep them unchanged in 2011. JEL's shares have responded well, increasing in price by 7.4% during the six months.


Infratil Energy Australia ("IAE") is Infratil's Australian energy business and consists of peak load generation assets and an energy retailing business, Lumo Energy. This business has begun to substantially step up its performance, showing healthy supply margins, customer growth, volumes, and profit in the six months to September 2010. In addition, the commissioning of a new 120MW power station at Kwinana, more than doubling the generation capacity, should enable future growth balanced between generation and retailing.


Wellington International Airport ("Wellington") has seen an increase in passenger numbers of 1.8% in the six month period to September 2010 as the economy slowly emerged from recession and positive steps were taken by key airlines to increase their capacity. The completion of Wellington's international terminal expansion, The Rock, has also helped to enhance the quality and efficiency of the airport which going forward should improve Wellington's prospects as a gateway to Asia.


Vix Technology Pty Ltd ("Vix") had a promising six months to 31 December 2010 acquiring ACIS Ltd, a UK based transport solutions company. ACIS Ltd is the dominant supplier of real time passenger information systems to public transport authorities. ACIS and Vix are currently tendering for projects with a combined value of £50.0m. During the period Vix returned £4.6m to Utilico while £1.4m was advanced in two new loans.


Ocean Wilsons is a new entrant into the top 10 after the ordinary share price rose 53.6% over the period. The Group's principal activities are provision of towage, port operations and ship agency services in Brazil, via its 58.3% share holding of Wilsons Sons Ltd, one of Brazil's largest providers of integrated port and maritime logistics and supply chain solutions. The Group also holds a portfolio of internationally listed investments and equity funds. The company has reported strong results with revenue for the first half of the year to 30 June 2010 up 20.0%, driven by increases in all business areas.


Greenstone Energy ("GE") is Infratil's 50% owned joint venture with the Guardians of the New Zealand Superannuation Fund, set up to purchase and operate Shell NZ's downstream New Zealand business, including 220 service stations, refining, port infrastructure, and pipelines. 2010 is the first year of Infratil's ownership of this business, but has started positively, winning new commercial supply contracts and strengthening its refining margins.


Malaysia Airports ("MAHB") is also a new entrant into the top 10 after the ordinary share price rose 25.6% in the period. MAHB has been held in UEM's portfolio since September 2005. The company is the sole operator of civilian airports in Malaysia and operates 39 airports, the largest of which is Kuala Lumpur. Over the period, the stock performed well, encouraged by strong passenger growth of 15.1% and revenue growth of 13.6% over the financial year to September 2010 relative to the corresponding period last year.


Renewable Energy Generation Limited ("REG") has managed to complete major repowering exercises at existing wind farms, and has received planning permission for new projects in Lancashire, Cambridgeshire, and Yorkshire. The share price, however, did not reflect this positive performance, falling by 14.4% as the renewable energy sector continued to be out of favour with investors. Despite this, we believe that REG's recent and forthcoming investments will generate value for shareholders.


During the six months Utilico invested £33.8m and realised £31.0m. The majority of these transactions were conversions and exercise of existing holdings. £8.5m was invested into Resolute ordinary shares as a result of the exercise of Resolute Mining options, £8.0m was transferred out of PIL and invested directly into BCB ordinary shares and Utilico partially exercised its UEM 2010 warrants at a cost of £7.5m. Notable realisations were the sale of £6.6m Infratil ordinary shares and the return of £4.5m cash from Vix Technology.


The top ten has become more concentrated and has risen from 58.6% to 59.7% of the total portfolio.


The geographic and sectoral weightings have remained broadly in line with the position at June 2010 with the exception of Gold, which increased from 15% to 22% both geographically and sectorally as a result of the strong performance of Resolute together with the exercise of most of Utilico's options position.


Bank Debt

Bank debt increased from £29.3m to £31.1m and Utilico remains fully invested. This reflects full utilisation of the bank facility. As at 31 December 2010 this was drawn in New Zealand Dollars. This facility was due to expire on 30 November 2010 and has been extended to 31 March 2011. Utilico is currently negotiating a new facility to commence at that date.



The derivative position of S&P500 Index options has been greatly reduced over the six months under review, ending December 2010 with a value of £581k. This position remains modest.


Utilico has maintained currency hedges to partially protect the Sterling value of certain investments. At the period end, forward currency sale contracts were in place for a nominal NZ$64.0m, US$32.2m, €20.4m and A$23.3m. This level of protection reflects the investment manager's view that Sterling is likely to be stronger rather than weaker against certain currencies of Utilico's investments.


Revenue Return

The Revenue returns are down in the six months to 31 December 2010 compared to the prior year, as a result of the timing of the 2009 Infratil dividend which fell into the interim period to December 2009, flattering the revenue income total last year. Other dividends remained strong, with UEM maintaining its 3.75p interim dividend. Management and administration fees increased as a result of higher gross assets and finance costs were up due to increased debt. The combined effect of the above resulted in the revenue EPS falling 39.2% to 3.92p.


Capital Return

Capital returns were up significantly to £58.1m versus £30.9m in the six months to December 2009 due mostly to gains on investments of £74.8m, compared to £46.7m in the same period in 2009. Losses on derivatives remained broadly in line with the previous period and exchange losses were increased as Sterling strengthened against the Australian and New Zealand Dollar. Finance costs were up marginally. The resulting EPS on the capital return was 67.24p, up from 35.72p in the same period in 2009.


Way Forward

The investment policy was widened at the special general meeting held on 7 January 2011. While the policy today enables the investment manager to invest in any asset class the expectation is that utility and infrastructure assets will remain core to the portfolio over the shorter term. There is unlikely to be an immediate shift. As investments are realised in the normal course re-investments are likely to broaden the asset base.


Full details of the investment objective can be found on the Utilico's website.






The Group's assets consist mainly of quoted equity securities and its principal risks are therefore market related. The large number of investments held, together with the geographic and sector diversity of the portfolio, enables the Company to spread its risk with regard to liquidity, market volatility, currency movements and revenue streams. 


Other key risks faced by the Group relate to investment strategy, external events, management and resources, regulatory issues, operational matters and financial controls.


These risks, and the way in which they are managed, are described in more detail under the heading "Principal risks and risk mitigation" within the Report of the Directors contained within the Group's Report and Accounts for the year ended 30 June 2010. The Group's principal risks and uncertainties have not changed materially since the date of that report. The Annual Report and Accounts is published on the Company's website, www.utilico.bm.








In accordance with Chapter 4 of the Disclosure and Transparency Rules the Directors confirm that to the best of their knowledge:


i)       the condensed set of financial statements has been prepared in accordance with applicable International Accounting Standards and gives a true and fair view of the assets, liabilities, financial position and return of the Group;


ii)       the half-yearly report includes a fair review of the important events that have occurred during the first six months of the financial year and their impact on the financial statements;


iii)      the Directors' Statement of Principal Risks and Uncertainties shown above is a fair review of the principal risks and uncertainties for the remainder of the financial year; and


iv)      the half-yearly report includes details on related party transactions.



The financial statements are published on the Company's website, www.utilico.bm, the maintenance and integrity of which is the responsibility of the Company.



Signed on behalf of the Board

J.Michael Collier


24 February 2011










31 December


30 June




Ordinary shares




Capital value




Net asset value per ordinary share




Share prices and indices




Ordinary share price








FTSE All-share Index




Zero dividend preference (ZDP) shares (1)




2012 ZDP shares




Capital entitlement per ZDP share




ZDP share price




2014 ZDP shares




Capital entitlement per ZDP share




ZDP share price




2016 ZDP shares




Capital entitlement per ZDP share




ZDP share price








2012 warrant price




Equity holders funds (£m)




Gross assets (2)




Bank debt




ZDP entitlement




Equity holders' funds




Financial ratios of the Group (3)




Revenue yield on average Gross Assets




Total expense ratio (4) on average Gross Assets




Bank loans and ZDP shares gearing on Gross Assets





Six months to

Six months to

Returns and dividends

31 Dec 10

31 Dec 09

Revenue return per ordinary share (undiluted)



Capital return per ordinary share (undiluted)



Total return per ordinary share (undiluted)



Dividend per ordinary share (interim 3.25p; special 1.75p)




(1)  Issued by Utilico Finance Limited, a wholly owned subsidiary of Utilico Investments Limited in June 2007. 2012 ZDP shares previously issued by Utilico Investment Trust plc.

(2)  Gross assets less current liabilities excluding loans.

(3)  For comparative purposes the total expense and revenue figures have been annualised.

(4)  Excluding performance fee.




The total column of this statement represents the Group's Condensed Income Statement and the Group's Condensed Statement of Comprehensive Income, prepared in accordance with IFRS.

The supplementary revenue returns and capital returns are prepared under guidance published by the Association of Investment Companies in the UK.

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.






















Year  to


Six months to

Six months to

30 June


31 December 2010

31 December 2009

2010 restated*





Cash flows from operating activities




Cash flows from investing activities




Cash flows before financing activities




Financing activities:




Movement on loans




Cash flows from ZDP shares




Proceeds from warrants exercised




Cost of share buy back




Cost of issuing ordinary shares




Cash flows from financing activities








Net (decrease)/increase in cash and cash equivalents




Cash and cash equivalents at the beginning of the period




Effect of movement in foreign exchange




Cash and cash equivalents at the end of the period





* The Group cash flows from ZDP shares were classified in the Report and Accounts for the year to 30 June 2010 within Operating Activities as cash flows on investments. These cash flows have been re-classified to Financing Activities as cash flows from ZDP shares.







The Directors have declared an interim dividend in respect of the six months to 31 December 2010 of 3.25p per ordinary share and a special dividend in respect of revenue reserves brought forward of 1.75p per ordinary share. These dividends are payable on 26 April 2011 to shareholders on the register at close of business on 25 March 2011. These dividends have not been accrued in the results for the six months to 31 December 2010.


The half-yearly report is available on the website www.utilico.bm and will be posted to shareholders at the beginning of March 2011. Copies may be obtained during normal business hours from Exchange House, Primrose Street, London, EC2A 2NY.




By order of the Board

F&C Management Limited, Secretary

24 February 2011



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