3 Month Review

Premier Utilities Trust PLC
08 December 2004


                                     Premier Utilities Trust

3 month review (unaudited) to end November 2004


                                      30.11.04   1 month    3 months   6 months  12 months  Since launch*

   PUT Total Assets (£m)               44.85       1.4%       8.9%      12.7%      19.8%      21.2%

   PUT Ords Price                      103.00      5.1%      24.9%      24.1%      23.0%      3.0%

   PUT Ords NAV                        132.18      2.1%      15.9%      22.0%      33.4%      35.8%

   PUT ZDP Price                       115.50      6.2%      11.3%      10.3%      13.0%      15.5%

   PUT ZDP NAV                         107.61      0.6%       1.7%       3.5%       7.0%      7.6%

   FTSE 100 Index                     4703.20      1.7%       5.5%       6.2%       8.3%      9.7%

   FTSE World Index GBP                283.15      1.8%       5.6%       6.3%       8.6%      9.8%

   FTSE Utilities Index               4012.74     -1.8%       3.5%      11.2%      23.3%      27.1%

   FTSE Global Utilities GBP          2316.12     -0.4%       5.0%      11.8%      16.9%      18.3%

   PUT Unit** Price                    109.42      5.7%      17.9%      17.0%      17.8%      9.4%

   PUT Unit** NAV                      119.57

   PUT Ords Shares                     -22.1%              discount

   PUT ZDP Shares                       7.3%               premium

   PUT Units**                         -8.5%               discount

                                        Hurdle Rate***              Terminal Cover

   PUT Ords                             1.8%                   -

   PUT ZDP                             -5.8%                 1.44x

   PUT Ords                          6.6% yield

   *launch: 03.11.03

   **Unit calculated as weighted average of Ords + ZDP shares in
     issue

   ***Rate at which company's gross assets must rise to repay stated mid-market share
      price on wind-up


UK water and electricity regulation has been a prominent feature of the period
as continued disclosure for the 2005-2010 reviews affected investor sentiment.
OFGEM announced their final distribution price controls for the electricity
sector on the 29th November. The outcome provides for a 1% price increase next
year and the rate of inflation thereafter, together with an allowed return of
4.8% (post tax) on investment expenditure. This was toward the top end of
expectations. These provisions are to help fund the £5.7bn cost of modernizing
the UK's ageing electricity network.


For domestic customers, distribution charges account for around 25% of their
electricity bill. Whilst the review overall was deemed fair, the impact on
valuations is much less than the concurrent water review being conducted by
OFWAT. This is due to a higher proportion of water sector group values being
affected by their determination due on December 2nd.


During October a private equity bid for South Staffordshire Water at a 30%
premium to its regulated asset base caused a further speculation within the
sector. However, as valuations began to look stretched, they suffered profit
taking throughout November with only AWG held by the Trust, improving further to
finish up 18.6% since the end of August.



In Europe the Italian electricity monopoly Enel undertook a EUR 840m bid to
acquire Slovakian utility Slovenske Elektrarne, together with a special cash
distribution resulting from the 50% divestment of network operator Terna, and
the undertaking of an international equity offering. The share offering on
October 25th proved the largest global issue year-to-date and reduced the
Italian governments' stake from over 50% to 34%. On the expectation that this
would remove an overhang of Enel's shares, we increased our holding whilst also
subscribing to the issue itself. The share issue was 3x over subscribed and
pursuant to the issue the shares rose.



Macquarie Airport shares have performed well showing a local currency gain of
over 73.5% since the start of the year. The shares were further boosted by a
successful bid in early November for Brussels International Airport which will
see Macquarie acquire a 52% stake. It is widely assumed their model of
extracting capital efficiencies from assets together with airport management
experience will prove significantly value accretive. It has however surprised us
that purchase multiples of 12.5x EV/EBITDA paid for this purchase, (or the
higher multiple offered by Abertis for UK airport operator TBI) are being
applied to a sector that typically trades at below 10x this value. This perhaps
highlights the attraction of similar infrastructure stocks such as BAA (UK) and
Fraport (Frankfurt Airport) held within the portfolio.



We continued to be wary of US utilities and sold our holdings here during
September. The Presidential victory for Bush and Congressional gains for the
Republicans proved a short lived boost to the sector as a result of a more
relaxed environmental stance and favourable tax treatment to dividends. However,
with limited improvement in generation margins, low yield spreads and P/E
multiples that are at or above historical averages, the sector appears to offer
little value especially when coupled to a weakening dollar.



As the year draws to a close, we are mindful that the Dow Jones Euro-Stoxx
Utility Index has enjoyed a tremendous re-rating as a result of an improvement
in energy prices and greater concessions to shareholder value. European utility
valuations now showing signs of generally reaching fair value. In this context,
we believe European telecoms look increasingly attractive. This is evidenced
from P/E ratios relative to utilities that are at all time lows. With
possibilities for increased dividend payments and greater shareholder returns
resulting from improvements in free cash-flow generation, there appears some
value in the sector. To this end we continued to increase exposure to the sector
with additional purchases of France Telecom and a new holding in Danish operator
TDC.


8th December 2004

Premier Fund Managers  source: Premier Fund Managers Ltd as at 30/11/04. MAF3385


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