Half Yearly Report

RNS Number : 2819F

Utilico Investments Limited

19 February 2015

 



Date:                18 February 2015

Contact:           Charles Jillings                                              

                        Utilico Investments Limited                             

                        01372 271 486                                               

Utilico Investments Limited

Unaudited Statement of Results

for the six months to 31 December 2014

Financial Highlights

·      Revenue return  per ordinary share 2.58p (2.29p)

·      Capital return per ordinary share -5.89p (3.87p)

·      Total return per ordinary share -3.31p (6.16p)

·      Dividends per ordinary share 3.75p (3.75p)

·      Annualised dividend yield 6.8% (6.6%)

·      2014 ZDP shares redeemed and 2020 ZDP shares issued

Figures in brackets are 31 December 2013

CHAIRMAN'S STATEMENT

Utilico's NAV total return decreased by 2.0% over the six months to 31 December 2014, marginally underperforming the FTSE All Share Total Return Index, which was down by 0.4% over the same period.

A feature of the past six months has been rising volatility as the markets adjust to the end of quantitative easiing ("QE") in the US. There have been significant movements in the US Dollar which strengthened and commodity prices which weakened. Following on from this, some currencies have been significantly impacted. Generally commodity and energy exporters have weakened and importers have strengthened.

Of note, gold declined 10.8% and oil declined 49.4% in US Dollar terms and Sterling declined 8.8% versus the US Dollar over the six months to 31 December 2014.

These factors were significant for Utilico's portfolio. In Sterling terms over the six months to 31 December 2014, Zeta Resources Limited ("Zeta") and Resolute Mining Limited ("Resolute") were down 35.2% and 59.0% respectively. This reduced Utilico's listed portfolio value by some £33.8m.

A further feature of the six months has been the rising valuation of Utilico's unlisted investments. A number of these companies continue to post strong gains in revenues and EBITDA and the valuations of technology companies generally have improved. This has resulted in a significant upward valuation of some of Utilico's unlisted portfolio.

The combined effect of sharply lower valuations for the resource investments and higher values for the technology investments has seen the investments in unlisted companies rise to 17.6% of the portfolio. In addition, Utilico has made loans to Zeta of £19.8m; these loans are not regarded as an investment in an unlisted company as Zeta is listed. Going forward Utilico will report the loans to listed investments separately and will manage the investments in unlisted companies within the 20.0% limit prescribed by the Company's investment policy.

The 2014 ZDP shares were redeemed in full on 31 October 2014 at a redemption value of £62.2m financed through a combination of asset sales, bank debt and 2020 ZDP issuance. It has been pleasing to see the new 2020 ZDP shares trade at a premium.

Revenue earnings have risen, mainly as a result of significantly lower management fees. Revenue earnings per share ("EPS") rose to 2.58p, up from 2.29p. The revenue reserves carried forward are £10.1m, some 10.19p per share. Against this background the Directors have maintained the quarterly dividends at 1.875p per share, representing an annualised return of 6.8% based on the year end share price of 110.50p. The Directors have declared a second quarterly dividend of 1.875p, payable in March 2015.

The Company is reviewing its position under the Alternative Investment Fund Managers ("AIFM") Directive. If it decides to appoint a UK AIFM, as joint portfolio manager alongside ICM Limited, the investment management fee will remain the same. Any such appointment would bring it more into line with UK investment companies and would also involve the appointment of a Depositary over the Company's assets. An announcement will be made if a UK AIFM and Depositary are appointed and formal arrangements are entered into.

Outlook

The Board believes this could be a difficult year for investors. Market volatility has risen sharply and seems set to continue as the world economies decouple and face differing outlooks. The US leads the way in terms of recovery and the path towards normalisation, whilst the Eurozone is going in the opposite direction with the introduction of QE. This combination may create additional stresses on various economies and challenging inter-currency relationships. We are anticipating a continued positive operating performance from our investee companies which should place Utilico in a good position to weather the expected market volatility.

Dr Roger Urwin

18 February 2015

INVESTMENT manager's REPORT

Utilico's NAV total return decreased 2.0% over the six months to 31 December 2014, marginally underperforming the FTSE All-Share Index total return, which was down 0.4% over the same period.

As noted in the Chairman's Statement this has been a challenging six months as volatility has risen across a number of asset classes. The end of QE in the US and the ongoing QE in Japan and now the Eurozone has resulted in significant movements as markets respond. Switzerland has decoupled the Franc from the Euro, Mario Draghi has introduced QE in Europe and a number of central banks have reduced their interest rates to mute the impact of these movements on their economies.

Over the six months to 31 December 2014 the US Dollar has strengthened significantly, up 9.7% against Sterling, oil has declined by 49.4% and gold weakened by 10.8%. Given Utilico's exposure to resource stocks and its structural exposure to Sterling denominated ZDP shares and assets largely in other currencies, this has resulted in significant movements in the valuation of a number of investments. In Sterling terms the investments in Zeta and Resolute were down 35.2% and 59.0% respectively over the six months to 31 December 2014. This reduced Utilico's listed portfolio by some £33.8m.

Historically, to reduce the exchange rate risk Utilico has hedged over NZ$100m of its New Zealand positions into Sterling through a mixture of bank borrowings and FX contracts. The cost of rolling these positions into a rising New Zealand Dollar has required additional funding.

More positively, during the last six months Utilico's unlisted valuations have risen strongly. This has been the result of continued good progress at an operating level with rising EBITDA. When combined with higher market valuations for listed technology companies, the uplift has been significant. In addition, there have been several significant investment events which have underpinned some of the gains.

During the six months DTI (a surveillance solutions business) had an initial public offering ("IPO") in Australia. The IPO valued Utilico's investment in DTI at A$3.7m versus an investment cost of A$1.8m and a valuation at 30 June 2014 of A$2.3m. As at 31 December 2014 the position was valued at A$3.9m. DTI was held by Vix Limited at 30 June 2014 and it was included in the unlisted portfolio by Utilico. DTI was transferred to Utilico in November 2014 and included in Utilico's listed portfolio from the time of the IPO in December 2014. Vix Technology realised an investment it held in CCRTT, a Hong Kong listed company for A$24.5m; of which A$12.0m was returned to shareholders, including A$4.8m to Utilico. Coldharbour Marine ("CHM"), which is awaiting final certification for its ballast water treatment system, has raised significant funding at values substantially above Utilico's cost of investment. These events have driven the unlisted valuation for CHM significantly higher.

Unlisted policy

The combined effect of lower valuations for the listed resource investments and higher values for the unlisted technology investments has seen the investments in unlisted companies rise to 17.6% of the portfolio. In addition, Utilico has made loans to Zeta totalling £19.8m and since Zeta is listed, these are not regarded as an investment in an unlisted company. Going forward Utilico will report loans to listed companies separately and will manage the unlisted investments within the 20% limit as prescribed by the Company's investment policy. As at 31 December 2014 investments in unlisted companies were 17.6% (30 June 2014: 13.9%) and loans to listed companies were 5.2% (30 June 2014: 2.1%).

Portfolio

Over the six months there have been significant movements in the portfolio. Some 25% of the Utilico Emerging Markets Limited ("UEM") holding was placed out in the market raising £24.8m and a further £10.6m has been lent to Zeta, the resources platform, enabling it to continue to invest in opportunities in the resource sector. Mainly as a result of the UEM disposal proceeds being used to retire 2014 ZDP shares, gross assets declined from £399.1m at 30 June 2014 to £373.9m at 31 December 2014. The top ten investments account for 85.5% (30 June 2014: 88.2%) of the portfolio.

Major platform investments

The major platform investments continue to develop well.

UEMperformed well against a backdrop of weak emerging equity markets in the six months to 31 December 2014. UEM's total return for the six month period to December 2014 was 2.4%. The weakening of Sterling against the US Dollar in the period had a positive effect on NAV, reversing some of the currency losses reported in recent published reports.

Market sentiment remains weak in many markets, particularly those that are net exporters of commodities, although there is increased optimism in some markets such as India and Indonesia following elections during 2014. Generally, UEM's investee companies continue to report good results.

Over the six months to 31 December 2014, the UEM share price declined from 183.50p to 182.00p and the discount widened as investors' confidence in emerging markets reduced. During the six months 3.05p was paid in dividends, equal to an annualised return of 3.4% based on the year end share price.

Infratil Limited ("Infratil") shares were exceptionally strong, rising 22.4% during the period to NZ$2.98. The total return to Utilico over this period was even higher, at 37.1%, following an increased interim dividend, the announcement of a NZ$0.15 special dividend and the stronger New Zealand Dollar. The increased share price primarily reflected recent asset disposals, including the sale of Lumo Energy and Direct Connect to Snowy Hydro Ltd for gross proceeds of NZ$646m, more than twice the NZ$275m carrying value of the businesses as of March 2014.

Shares in Infratil's largest holding, TrustPower, gained 10.5% during the period, reflecting robust growth in energy sales and profitability. For the six months to 30 September 2014 total electricity volumes sold increased by 12.0%, while EBITDA increased by 13.1%. Pleasingly the 270MW Snowtown Stage 2 wind farm was delivered below budget in July 2014, with the result that output during the period was doubled.

Performance at Wellington Airport has been more subdued, with international passenger numbers increasing 2.2% in the six months to 30 September 2014 and domestic passengers declining 2.3% due to reduced capacity on the Auckland and Queenstown routes. With lower aeronautical charges EBITDA declined 4.8% on the previous year.

Since 31 December 2014, Utilico has sold a further 21.1% of its remaining holding in Infratil, generating proceeds of £15.6m.

Somers Limited ("Somers") is a financial services sector investment holding company listed on the Bermuda Stock Exchange. Somers' two main investments are Bermuda Commercial Bank ("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 £5.0 billion of assets under management. For the year ended 30 September 2014, Somers reported net income of US$32.2m on total equity of US$215.1m. Somers' diluted NAV per share was US$18.96 as at 30 September 2014 (September 2013: US$16.81). The increase in NAV was driven by a fair revaluation of Waverton following the adoption of IFRS 10.

Zeta is a resource-focused investment company which is listed on the Australian Stock Exchange. Over the six months to 31 December 2014 Zeta's share price fell by 31.8% to A$0.45.

During the six month period, commodity prices fell significantly. Most notably, oil prices halved, with the WTI crude oil price down 49.4% to US$53.45 per barrel. The gold price was down 10.8% to US$1,184/oz, while the nickel price was down 20.3% to US$6.77/lb. As a result, the share prices of most of Zeta's investments fell. Zeta's net assets per share fell 44.7% during the period to A$0.53 per share. Zeta's shares closed at A$0.45 on 31 December 2014, representing a discount to net tangible assets of 14.8%.

During the six months Utilico lent a further £10.6m to Zeta mostly to enable it to continue its investment strategy.

Bermuda First Investment Company Limited's ("BFIC") shares and loan notes are listed on the Bermuda Stock Exchange. BFIC is a Bermudan investment company which has a number of investments in Bermudan listed companies. Its largest investments are in Keytech Limited ("Keytech") (valued at US$17.2m as at 31 December 2014) and Ascendant (valued at US$6.9m as at 31 December 2014). BFIC's policy is to build strategic investments in local Bermudan companies whilst working closely, where appropriate, with the board and senior management of those companies to increase the long term value of these investments and to encourage the introduction of shareholder friendly initiatives. BFIC was unchanged in value terms but gained £1.5m on currency translation.

During the six months Keytech undertook a major strategic step by divesting its legacy fixed line business, Bermuda Telecom Company and buying Cablevision. Cablevision brings a stronger more modern fibre based business from which Keytech can compete more effectively in Bermuda. At the same time Keytech acquired Cayman based Weststar, a complementary business to Keytech's Cayman Logic. The combined Cayman businesses are profitable and well positioned to capitalise on their market opportunities.

Vix Limited is an unlisted holding company, whose wholly-owned subsidiary, Vix Investments Limited, maintains a portfolio of technology investments valued at US$40.6m as at 31 December 2014. The two key investments are Optal Limited ("Optal", formerly PSP International Limited) and Touchcorp Limited ("Touchcorp"). Optal processes travel industry B2B payments globally, primarily through the issuance of "virtual" cards in partnership with eNett International ("eNett"), in which it has a 20% holding. Optal paid its maiden dividend in the past six months (due largely to proceeds from an earlier sell-down of its stake in eNett). Strong revenue and EBITDA growth is expected to provide for ongoing dividend payments. As Utilico holds a direct stake in Touchcorp, further details on Touchcorp are provided under direct holdings.

Major direct holdings

Gold production by Resolute in the six months to 31 December 2014 was 137,563oz, down substantially from the previous year primarily because the Golden Pride mine in Tanzania ceased production in early 2014. Heavy rains at the company's Syama mine in Mali also reduced production during the period. Production cash costs during the period averaged A$912/oz. For the year to June 2015 Resolute has forecast production of 315,000oz at an average cash cost of A$890/oz.

In the six months to 31 December 2014, Resolute sold 150,545oz of gold at an average price of A$1,401/oz, generating a gross operating cash flow of A$46.1m. Cash and bullion on hand and liquid investments were A$23m as at 31 December 2014 (2013:A$50m); total borrowings were A$122m (2013:A$116m). In December 2014 the company issued A$15m of convertible notes with a three year term and a 10% coupon; Utilico subscribed for A$7.2m of this issue.

As a result of the fall in the gold price (down 10.8%) during the six months to 31 December 2014 and a rerating of gold producers, the share price of Resolute fell 56.9% from A$0.62 at the end of June 2014 to A$0.27 at the end of December 2014.

Vix Technology is an unlisted company that improves the way customers travel and digitally connect with their communities. Integrated planning, booking, ticketing, access and e-money services are some of the features that are provided to customers. During the six months to 31 December 2014, the company has continued to evolve its product base and transform its underlying business both in transit and non-transit markets. The group continues to invest in its R&D programs and platforms.

Group revenue for the six months ended 31 December 2014 was A$62.9m (prior year: A$65.7m) but with a strong order book is expected to grow to A$150.0m for the twelve months ending 30 June 2015 (FY 2014 A$146.0m).

Augean plc ("Augean") shares performed strongly in the six months ended 31 December 2014, up 21.1%. The company has demonstrated excellent progress in turning around its operations following the closure of the loss-making Waste Networks business. In its interim results to end-June 2014 Augean's total landfill volumes rose 8.3% and low-level radioactive waste volumes increased by 22.3%. This growth, combined with the disposal of the Waste Network business, resulted in group EBITDA more than doubling on the previous year.

Touchcorp provides a number of payment processing services predominantly through agent and mobile channels, both in the Asia Pacific region and Europe.Touchcorp and its subsidiary companies have designed and built, and now own and operate a software platform that enables the electronic delivery of non-physical products, services and entitlements to the end-users through multiple service points, whether in-store or through self-service methods.

For the year to 31 December 2014, Touchcorp revenues increased by 30% to A$24.8m (2013: A$19.1m) and profit before tax by 61% to A$6.7m (2013: A$4.1m), with improved margins reflecting scale benefits as the business consolidates relationships with retailers and mobile network operators in Australia, whilst expanding rapidly in Europe. Utilico holds 22.0m shares in Touchcorp.

Portfolio activity

During the six months to 31 December 2014 Utilico invested £39.9m, including a loan of £10.6m to Zeta, £3.9m in Resolute's convertible loan notes and £4.6m into Somers.

Utilico realised £57.8m, including £24.8m from UEM, £2.9m from Infratil's special dividend and loan repayments of £4.6m from Vix Limited and £2.5m from Somers.

The geographical split on a look-through basis, saw New Zealand increase to 23% of gross assets (June 2014: 17%) as a result of increased investment into Zeta and the rise in the valuation of Infratil. Bermuda rose to 18% (June 2014: 15%) as result of investment and the stronger US Dollar. Asia & Far East and Latin America reduced to 15% (June 2014: 19%) and 4% (June 2014: 6%) respectively as a result of the sale of £24.8m of UEM. Gold mining fell to 6% (June 2014: 11%) as the share price of Resolute declined.

In the sector split, infrastructure IT was up to 12% (June 2014: 8%) mainly due to Infratil's strength offset by the reduction of the holding in UEM and gold mining fell to 6% (June 2014: 11%).

Investments in unlisted companies

The unlisted portfolio comprises investments accounting for £67.6m as at 31 December 2014 (June 2014: £56.3m) representing 17.6% of the portfolio. Utilico's investment policy limits investments in unlisted companies to 20%.

Loans to listed companies

Loans to listed companies will be separately disclosed in the future. As at 31 December 2014 loans to listed companies were £19.8m, which was lent to 84% owned subsidiary, Zeta (30 June 2014: loans to listed companies amounted to £8.3m).

Gearing

Gearing has reduced slightly over the six months to 143.1%. In January 2015 £15.6m of the investment in Infratil was sold down and used to retire debt. This plus the improved market valuation for Resolute in particular, has seen the gearing reduce to 122.0% as at 31 January 2015, bringing it closer to the target of 100.0%.

ZDP Shares

During the six months shareholders approved the creation of 25.0m 2020 ZDP shares. Proposals were made to the 2014 ZDP shareholders to roll up to £25.0m of their 2014 ZDP shares into 2020 ZDP shares. Holders of 9.4m of the 2014 ZDP shares elected to roll their holdings into 15.5m 2020 ZDP shares. A further 9.5m 2020 ZDP shares were placed into the market at £1.00 per share. Together this resulted in 25.0m 2020 ZDP shares being issued.

On 31 October 2014 the outstanding 2014 ZDP shares were redeemed for cash using the £50.0m undrawn bank facility and funds generated from realisations in the portfolio.

Total debt, being bank debt, overdraft and ZDP shares, reduced by £12.1m over the six months to £225.3m. By the end of January 2015 it had reduced a further £10.9m to £214.4m.

Debt

Bank debt rose from nil at 30 June 2014 to £50.0m at 31 December 2014, substantially to fund the redemption of the 2014 ZDP shares.

At 31 December 2014 the Scotiabank facility was drawn down as €6.5m, NZ$21.5m and £34.2m.

The term of the bank facility with Scotiabank is until 22 March 2016.

Derivatives

During the six months to 31 December 2014 there was no investment in the S&P put position. There continued to be significant currency hedges with NZ$107.5m, €11.9m and A$20.0m. These generated a gain on the Capital Account of some £1.1m (prior year gain £1.2m).

Revenue return

Revenue total income was in line with the prior year despite a reduced investment portfolio, in particular, the reduced investment in UEM. Management fees were significantly lower as a result of ICM Limited voluntarily halving its fee to 0.25% until such time as the high water mark is regained. Revenue EPS in the six months rose to 2.58p from 2.29p at 31 December 2013. The revenue reserves carried forward are £10.1m, some 10.19p per share. Against this background the Directors have maintained the quarterly dividends at 1.875p per share, representing an annualised return of 6.8% based on the year end share price of 110.50p.

Capital return

Capital total income was £1.4m (prior year £10.8m). This represented losses on investments of £1.0m offset by derivative gains of £1.1m and exchange gains of £1.3m.

The finance costs were £7.2m (prior year £7.0m).

The resultant loss for the six months to 31 December 2014 on the Capital return was £5.8m (prior year gain of £3.9m) and the EPS loss was 5.89p (prior year gain 3.87p)

Expense ratio

The ongoing charges figure rose to 3.4% as a result of performance fees paid in respect of performance by Zeta in the prior year. Excluding performance fees the ongoing charges were 2.3%.

ICM Limited

Investment Manager

18 February 2015

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

Most of the Company's principal risks and uncertainties are market related and are similar to those of other investment companies investing mainly in listed equities.

The principal risks and uncertainties faced by the Group and the way they are mitigated are described in more detail under the heading "Principal Risks and Risk Mitigation" on pages 17 to 19 of the Business Review section of the Annual Report and Accounts for the year ended 30 June 2014 and have not changed materially since the date of that report.

The principal risks faced by the Group include pursuing inappropriate long-term investment strategy, inappropriate asset allocation, poor stock selection, excessive gearing, currency risk and loss of management personnel.

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

Related party transactions

Details of related party transactions in the six months to 31 December 2014 are set out in Note 12 to the Report and Accounts for the six months to 31 December 2014, and details of the fees paid to the Investment Manager are set out in Note 2 to the Report and Accounts.

Directors' fees were increased with effect from 1 July 2014 to:

Chairman £40,500 per annum

Chair of Audit Committee £38,500 per annum

Directors £30,000 per annum

Directors' responsibility statement

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

• The condensed set of financial statements contained within the report for the six months to 31 December 2014 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 half-yearly financial report, together with the Chairman's Statement and Investment Manager's 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 as required by DTR 4.2.7R;

• The Directors' statement of principal risks and uncertainties above is a fair review of the principal risks and uncertainties for the remainder of the year as required by DTR 4.2.7R;

• The half-yearly report includes a fair review of the related party transactions that have taken place in the first six months of the financial year as required by DTR 4.2.8R; and

• In the light of the controls and monitoring processes that are in place, the Company has adequate resources and arrangements to continue operating within its stated objective and policy for the foreseeable future. Accordingly the accounts continue to be drawn up on the basis that the Company is a going concern.

On behalf of the Board

Dr Roger Urwin

Chairman

18 February 2015

UNAUDITED CONSOLIDATED PERFORMANCE SUMMARY

	Half-year 31 Dec 2014	Half-year 31 Dec 2013	Year 30 Jun 2014	% change Jun-Dec 2014
Total return(1) (%)	(2.0)(2)	4.1(2)	18.1	n/a
Annual compound total return (since inception)(3) (%)	7.4	7.1%	7.9	n/a
Ordinary shares
Net asset value per ordinary share (pence)	158.78	148.86	165.84	(4.3)
Ordinary share price (pence)	110.50	114.50	128.00	(13.7)
Discount (%)	30.4	23.1	22.8	n/a
FTSE All-Share Total Return Index	5,449	5,386	5,471	(0.4)
Zero dividend preference (ZDP) shares(4) (pence)
2014 ZDP shares (repaid 31 October 2014)
Capital entitlement per ZDP share	n/a	158.12	163.70	n/a
ZDP share price	n/a	162.00	166.25	n/a
2016 ZDP shares
Capital entitlement per ZDP share	169.57	158.12	163.70	3.6
ZDP share price	183.25	169.75	177.13	3.5
2018 ZDP shares
Capital entitlement per ZDP share	122.75	114.46	118.50	3.6
ZDP share price	137.25	117.00	128.25	7.0
2020 ZDP shares
Capital entitlement per ZDP share	102.97	n/a	n/a	n/a
ZDP share price	108.50	n/a	n/a	n/a
Equity holders' funds (£m)
Gross assets(5)	373.9	403.5	399.1	(6.3)
Bank debt	50.0	49.0	22.2	125.2
ZDP shares	166.5	206.9	212.5	(21.6)
Equity holders' funds	157.4	147.6	164.4	(4.3)
Revenue account (£m)
Income	4.1	4.1	10.4	n/a
Costs (management and other expenses)	0.9	1.3	2.1	n/a
Finance costs	0.5	0.6	0.9	n/a
Financial ratios of the Group(6) (%)
Revenue yield on average gross assets	2.1	2.0	2.6	n/a
Ongoing charges figure excluding performance fee(7)	2.3	1.7	2.2	n/a
Bank loans, net bank overdraft and ZDP shares gearing on net assets	143.1	173.4	144.4	n/a
Returns and dividends(2)
Revenue return per ordinary share (pence)	2.58	2.29
Capital return per ordinary share (pence)	(5.89)	3.87
Total return per ordinary share (pence)	(3.31)	6.16
Dividends per ordinary share (pence)	3.75	3.75
Ordinary annualised dividend yield (%)	6.8	6.6

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

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

(6)  For comparative purposes the figures have been annualised

(7)  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

UNAUDITED CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME

for the six months to 31 December			2014			2013
	Revenue	Capital	Total	Revenue	Capital	Total
	return	return	return	return	return	return
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
(Losses)/gains on investments	-	(1,022)	(1,022)	-	9,500	9,500
Gains on derivative instruments	-	1,138	1,138	-	1,177	1,177
Exchange (losses)/gains	(19)	1,280	1,261	28	153	181
Investment and other income	4,126	-	4,126	4,103	-	4,103
Total income	4,107	1,396	5,503	4,131	10,830	14,961
Management and administration fees	(423)	-	(423)	(778)	-	(778)
Other expenses	(450)	(3)	(453)	(484)	(3)	(487)
Profit before finance costs and taxation	3,234	1,393	4,627	2,869	10,827	13,696
Finance costs	(450)	(7,234)	(7,684)	(588)	(6,966)	(7,554)
Profit/(loss) before taxation	2,784	(5,841)	(3,057)	2,281	3,861	6,142
Taxation	(226)	-	(226)	(13)	(21)	(34)
Profit/(loss) for the period	2,558	(5,841)	(3,283)	2,268	3,840	6,108
Earnings per ordinary share  - pence	2.58	(5.89)	(3.31)	2.29	3.87	6.16

The Group does not have any income or expense that is not included in the profit/(loss) for the period, and therefore the "profit/(loss) for the period" is also the "total comprehensive income/(expense) 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 2014
	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 2014	9,916	29,020	233,866	32,069	(151,699)	11,268	164,440
(Losses)/profit for the period	-	-	-	-	(5,841)	2,558	(3,283)
Ordinary dividends paid	-	-	-	-	-	(3,718)	(3,718)
Balance at 31 December 2014	9,916	29,020	233,866	32,069	(157,540)	10,108	157,439

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	9,916	29,020	233,866	32,069	(171,382)	13,591	147,080
Profit for the period	-	-	-	-	3,840	2,268	6,108
Ordinary dividends paid	-	-	-	-	-	(5,578)	(5,578)
Balance at 31 December 2013	9,916	29,020	233,866	32,069	(167,542)	10,281	147,610

for the year to 30 June 2014
	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	9,916	29,020	233,866	32,069	(171,382)	13,591	147,080
Profit for the year	-	-	-	-	19,683	6,973	26,656
Ordinary dividends paid	-	-	-	-	-	(9,296)	(9,296)
Balance at 30 June 2014	9,916	29,020	233,866	32,069	(151,699)	11,268	164,440

UNAUDITED CONDENSED GROUP BALANCE SHEET

	31 Dec 2014	31 Dec 2013	30 Jun 2014
	£'000s	£'000s	£'000s
Non-current assets
Investments	383,597	401,895	402,538
Current assets
Other receivables	1,239	195	783
Derivative financial instruments	320	1,693	164
Cash and cash equivalents	138	1,556	721
	1,697	3,444	1,668
Current liabilities
Loans	-	-	(22,239)
Other payables	(10,217)	(1,698)	(4,045)
Derivative financial instruments	(1,159)	(87)	(989)
Zero dividend preference shares	-	(75,235)	(76,138)
	(11,376)	(77,020)	(103,411)
Net current liabilities	(9,679)	(73,576)	(101,743)
Total assets less current liabilities	373,918	328,319	300,795
Non-current liabilities
Loans	(49,999)	(49,036)	-
Zero dividend preference ("ZDP") shares	(166,480)	(131,673)	(136,355)
Net assets	157,439	147,610	164,440
Represented by
Ordinary share capital	9,916	9,916	9,916
Share premium account	29,020	29,020	29,020
Special reserve	233,866	233,866	233,866
Non-distributable reserve	32,069	32,069	32,069
Capital reserves	(157,540)	(167,542)	(151,699)
Revenue reserve	10,108	10,281	11,268
Total attributable to equity holders	157,439	147,610	164,440
Net asset value per ordinary share
Basic - pence	158.78	148.86	165.84

UNAUDITED CONDENSED GROUP STATEMENT OF CASH FLOWS

	Six months to	Six months to	Year  to
	31 December 2014	31 December 2013	30 June 2014
	£'000s	£'000s	£'000s
Cash flows from operating activities	1,300	2,681	5,709
Investing activities
Purchases of investments	(38,952)	(46,045)	(75,521)
Sales of investments	58,254	27,254	84,190
Purchases of derivatives	-	(2,243)	(2,243)
Sales of derivatives	1,152	3,771	2,778
Cash flows from investing activities	20,454	(17,263)	9,204
Cash flows before financing activities	21,754	(14,582)	14,913
Financing activities
Equity dividends paid	(3,718)	(5,578)	(9,296)
Movement on loans	28,191	7,421	(19,251)
Cash flows from issue of ZDP shares	8,993	6,546	6,477
Cash flows from redemption of ZDP shares	(62,172)	-	(1,683)
Cash flows from financing activities	(28,706)	8,389	(23,753)
Net decrease in cash and cash equivalents	(6,952)	(6,193)	(8,840)
Cash and cash equivalents at the beginning of the period	(2,689)	7,644	7,644
Effect of movement in foreign exchange	830	(703)	(1,493)
Cash and cash equivalents at the end of the period	(8,811)	748	(2,689)
Comprised of:
Cash	138	1,556	721
Bank overdraft	(8,949)	(808)	(3,410)
Total	(8,811)	748	(2,689)

NOTES

The Directors have declared a second quarterly dividend in respect of the year ending 30 June 2015 of 1.875p per ordinary share payable on 20 March 2015 to shareholders on the register at close of business on 27 February 2015. The total cost of this dividend, which has not been accrued in the results for the six months to 31 December 2014, is £1,859,000 based on 99,157,214 ordinary shares in issue at the date of this report.

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.

 

END

 

 

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