RNS Number : 8554F
Utilico Investments Limited
04 May 2011
 



 

Utilico Investments Limited

Interim Management Statement

31 March 2011

 

Quarterly Management Review

Utilico Investments Limited ("Utilico") published its interim report and accounts for the period to 31 December 2010 on 24 February 2011.  Utilico has also published monthly fact sheets on its website, www.utilico.co.uk.

 

Set out below is the interim management statement ("IMS") for the period from 1 January 2011 to 31 March 2011 containing information that covers this period, and up to the date of publication of this IMS.

 

Performance

The equity markets moved marginally during the three months under review, the FTSE All-Share Index rose by 0.2%, the S&P Index (GBP adjusted) rose by 2.3% and the MSCI EMF (GBP adjusted) Index fell by 1.3%.  Utilico's NAV underperformed the markets, falling in value by 12.6%.

 

Dividends

An interim dividend of 3.25p and a special cash dividend of 1.75p announced in February, were paid on 26 April 2011.

 

Special General Meeting Resolutions

At an SGM on 7 January 2011 the resolutions to change Utilico's investment mandate, acquire the assets of Eclectic Investment Company, acquire further Resolute Mining Ordinary Shares and change the name of the fund to Utilico Investments Limited were passed. As a result, on 17 January 2011, the Resolute Mining and Eclectic assets were transferred into Utilico's portfolio and 13.5m Utilico ordinary shares were issued. Utilico's amended investment policy is to maximise shareholder returns by identifying and investing in investments where the underlying value is not reflected in the market price.

 

Portfolio

Utilico's gross assets less current liabilities (excluding debt) began the quarter at £402.5m and ended the quarter at £407.5m an increase of 1.2%. Ordinary Shareholders' funds increased by £1.9m from £204.5m at 31 December 2010 to £206.7m at 31 March 2011.

 

The ten largest holdings have remained the same over the quarter although there have been changes in the weighting. The three largest share price movements during the period were Renewable Energy Generation shares up by 27.3%, Bermuda Commercial Bank up by 9.1% and Resolute Mining ordinary shares down 12.9%.

 

Infratil continues to be Utilico's largest investment. It fell as a percentage of gross assets due to the performance of the ordinary share price combined with the appreciation of the New Zealand Dollar against Sterling and as a result of the new investments acquired in January.

 

Resolute Mining's share price fell by 12.9% over the three months, however, the acquisition of the additional Resolute assets resulted in the position increasing in absolute terms to 22.8% of the gross assets.

 

UEM's NAV and share price fell by 2.8% and 4.2% respectively during the quarter.

 

The three months under review have been a difficult period with political unrest and violence in the Middle East and North Africa ("MENA") and the tsunami in Japan. The  unrest in MENA has resulted in the price of oil rising, up 16.8% over the three months, and general uncertainty leading to falling prices in the equity markets. In addition, the crisis at the Fukushima Nuclear Plant and the possibility that Japan will have to rely more heavily on fossil fuel electricity generation going forwards have affected the rising oil prices. However, a knock on effect from this appears to be a stronger commitment to the renewable energy sector, with a 27.3% rise in the share price of Renewable Energy Generation.

 

Other movements in the top ten include Jersey Electricity down 3.4%, Keytech down 5.7%, and Ascendant Group down 6.4%.

 

 

Debt and Cash

During the period under review, Utilico entered into a new multicurrency revolving banking facility of up to £30m with ScotiaBank Europe PLC. Utilico's debt was drawn in full entirely in New Zealand Dollars at the end of March 2011. Utilico's cash balance reduced over the period, from £3.8m at 31 December 2010 to £1.8m at 31 March 2011.

 

Hedging

Options. Utilico has reduced its equity market option positions to nil over the three month period.

Currency Hedging. At the end of March 2011 Utilico held currency hedges in New Zealand Dollars, Australian Dollars, Euros and US Dollars.

 

The New Zealand Dollar contracts of NZ$53.8m and NZ$12.5m covered approximately £25.6m of Sterling assets and $9.5m of US Dollar assets. The US Dollar contracts cover £25.0m of Sterling assets, the Euro contracts cover £7.5m of Sterling assets and the Australian Dollar contracts cover £26.7m of Sterling assets. In total £101.4m of assets are covered by these currency hedges. The NZ$65.0m of bank borrowings increase this further to £131.4m of assets.

 

 

ZDP Shares

Over the quarter, the traded price of Utilico's 2012 ZDP shares increased to 166.0p up 1.1%, the 2014 ZDP shares rose 3.7% to 140.5p and the 2016 ZDP shares fell by 4.1% to 127.75p.

 

As at 31 March 2011 the three ZDP tranches offered yields to maturity of 4.3%, 5.0% and 7.6% for the 2012, 2014, and 2016 maturities respectively. The asset covers at final redemption value stood at 3.65x, 2.33x and 1.65x for the 2012, 2014, and 2016 maturities respectively.

 

Share price and NAV

Utilico's share price rose from 149.75p at 31 December 2010 to 160.00p at 31 March 2011, an increase of 6.8%. Utilico's discount to NAV decreased from 36.7% at 31 December 2010 to 22.7% at 31 March 2011. A combination of all Utilico's traded instruments ended March with a 10.8% discount to underlying asset value.

 

Outlook

We are cautious given the current set of challenges facing the markets. There remain substantial imbalances within the global economy, in particular high levels of sovereign debt in developed economies, inflation in emerging economies, and political change in the Middle East. All these issues are likely to challenge the equity markets over the short term.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Structure



31 March

2011

£m


31 December

2010

£m

Gross assets less current liabilities



£407.5m


£402.5m







Bank debt



£30.9m


£31.1m

ZDP shares



£169.9m


£166.9m

Shareholders' funds (ordinary shares)



£206.7m


£204.5m




£407.5m


£402.5m

Effective gearing on ordinary shares



1.9x


1.9x







Ordinary Shares

 



31 March

2011


31 December

2010

NAV (undiluted, cum income)



206.89p


236.75p

Share price



160.0p


149.75p

Discount to undiluted NAV



22.7%


36.7%

Annual average compound return (including dividends)



11.9%


13.9%

Shares in issue



99,925,394*


86,373,863







Warrants at 31 March 2011

 





2012

Expiry date





April 2012

Price





2.00p

Warrants in issue





3,588,617*

Exercise terms





1.090909 ordinary

Share






per warrant at subscription

price






of 288.75p







ZDP Shares at 31 March 2011

 

2012


2014


2016

Accrued capital entitlement

159.44p


130.39p


130.39p

Share price

166.00p


140.50p


127.75p

(Discount)/premium to NAV

4.1%


7.8%


(2.0%)

ZDP cover*

3.65x


2.33x


1.65x

Yield to redemption*

4.3%


5.0%


7.6%

ZDP redemption value

177.52p


167.60p


192.78p

Shares in issue

45,486,200


37,500,000


37,500,000

*based on final redemption values






 

*On 7 April 2011, 712 Utilico ordinary shares were listed on the Official List and admitted to trading on the London Stock Exchange following the exercise of 653 warrants. As at the date of this IMS there are 99,926,106 ordinary shares and 3,587,964 warrants in issue.

 

 

Performance

 


31 March

2011

31 December

2010


% change

Utilico NAV (undiluted, cum income)


206.89p

236.75p


(12.6%)

FTSE All-Share Index


3068

 

3063


0.2%%

 

 

 

 

 

 

 

Sectoral Split of Investments *

 



31 March 2011


31 December 2010

Gold

Renewable Energy

Electricity

Other

Airports

Infrastructure IT

Toll roads

Water and waste

Ports

Telecoms

Banks

Infrastructure Investment Funds

Other Infrastructure

Gas

Satellites



23%

17%

12%

7%

7%

6%

5%

5%

5%

4%

4%

2%

1%

1%

1%


22%

17%

13%

6%

7%

7%

6%

6%

6%

5%

2%

-%

1%

1%

1%







Geographical Split of Investments *

 



31 March 2011


31 December 2010

Gold

New Zealand

UK and Channel Islands

Asia & Far East

Latin America

Bermuda

Australia

Europe (excluding UK and Switzerland)

North America

 



23%

20%

16%

14%

8%

7%

6%

4%

2%

 


22%

21%

14%

15%

9%

6%

7%

4%

2%

 







* on a look through basis






 

 

Top 10 Holdings as % of Gross Assets

 


31 March

2011


31 December

2010

1(1)

2(3)

3(2)

4(4)

5(7)

6(6)

7(5)

8(8)

9(9)

10(-)

Infratil Limited

Resolute Mining Ltd

Utilico Emerging Markets Limited

Jersey Electricity Company Limited

Bermuda Commercial Bank

Renewable Energy Generation Limited

Vix Technology

KeyTech Limited

Ascendant Group

Renewable Energy Holdings

Total Top 10


24.7%

22.8%

22.5%

4.2%

3.9%

3.0%

2.1%

1.8%

1.6%

1.3%

87.9%


26.6%

21.6%

23.8%

4.6%

2.2%

2.3%

2.6%

2.1%

1.7%

1.4%

88.9%

 

 

 

Enquiries

Charles Jillings

Utilico Investments Limited

+44 1372 271 486


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