Interim Management Statement

Utilico Limited 17 October 2007 Utilico Limited 16 October 2007 Interim Management Statement Utilico Limited ('Utilico') announced and published on 17 September 2007 an investment update to 30 June 2007. Further Utilico has published on its website monthly fact sheets for June, July, August and September 2007. Set out below is the quarterly review for the period 1 July 2007 to 30 September 2007. PERFORMANCE Global stock markets endured losses and high levels of volatility in July and August before recovering in September to end the three months largely unchanged. The market weakness was prompted variously by concerns over sub-prime lending and its impact on the banking sector, tightening of the credit markets, carry trades and weakness in the US economy. The recovery followed the decision by the Federal Reserve to cut its benchmark lending rate for the first time in four years. The federal funds rate was reduced by 0.5% during September and in the accompanying statement the Federal Reserve also pledged to act as needed to prevent a broader weakening of the economy due to the crisis in the US sub-prime mortgage market. The FTSE All-Share Index ended the quarter down 2.6%, and the S&P 500 Index increased by 1.6%. Utilico performed broadly in line with markets, entering the quarter with an undiluted net asset value (cum income) ('NAV') of 350.29p per share, and closing the quarter with an NAV of 343.44p, a decline of 2.0%. However, it should be noted that the NAV has increased since the end of the quarter, reaching 352.76p as at 9 October 2007. PORTFOLIO The ten largest holdings remained relatively unchanged over the period. Vienna Airport rose from being the 10th largest investment at the end of June to being the 6th largest at the end of September as a result of Utilico taking advantage of weakness to increase exposure to this company. Keytech moved down to number 10 due to share price weakness. Utilico's investment activity was fairly modest over the period, and was mostly focussed on positions outside the top ten. The underlying geographic and sectoral exposures of the portfolio, on a look through basis, were broadly in line throughout the period. Utilico's largest investment, Infratil Limited, announced a one for five rights issue in June, and this caused some weakness in Infratil's share price during the period. This share issue progressed to its completion during October, with Utilico subscribing for its entitlement for new shares at a cost of £6.6 million in October. The underlying trading performance of investments within the portfolio continued to be encouraging. DEBT & CASH At the end of September, Utilico held cash of £9 million, the majority of which was utilised in October to follow our rights in Infratil's share issue. The bank facility of £45 million remained fully utilised throughout the quarter. HEDGING During the three months Utilico increased its New Zealand Dollar hedge to NZ$142m at an average exchange rate of NZ$2.68 to £1.00. Following the strengthening of the NZ$ Utilico reversed NZ$29m and allowed NZ$39m to expire recording gains of GBP £1.0m. At 30 September 2007 Utilico had outstanding forward currency sale contracts against the New Zealand Dollar of NZ$ 74 million which provides downside protection in the event of the New Zealand Dollar falling again. The unrealised gain on this position was £2.3 million. The strategy to sell forward the New Zealand Dollar recognises both the importance of New Zealand Dollar based assets within the portfolio and the perceived risk of the currency. As part of Utilico's risk management strategy, Utilico has continued to invest in long dated index put options, mainly over the S&P 500 Index. In addition while there were short dated put options sold against part of the long dated position at 30 June 2007, these expired out of the money and no short dated positions were outstanding as at 30 September 2007. Whilst remaining confident about the long-term prospects for equity markets, the strong performance over recent months and particularly in September has lead us to maintain a higher level of puts in place. At 30 September 2007 Utilico had a net long position in 2,700 S&P 500 Put Options, which provide downside protection for approximately £200 million of assets based on the month end index value and exchange rate. In addition to S&P Put Options, Utilico held a net 600 long position in FTSE 100 Put Options as at 30 September 2007 which provides downside protection for approximately £40 million of assets based on the month end index value. Taken together, our Put Options provide a hedge for 53% of Utilico's gross assets at the end of September. Utilico began the quarter with coverage of 29% at the end of June. ZDPS Over the quarter, Utilico's ZDP shares fell in price by 0.6%, 3.4%, and 3.9% for the 2012, 2014, and 2016 maturities respectively, as a result of which, at the period end the three tranches offered increased yields to maturity of 7.0%, 7.6%, and 7.6% again for the 2012, 2014, and 2016 maturities respectively. This performance reflects an increased interest rate environment over the period. The cover of all three tranches remains healthy OTHER Utilico's ordinary share price fell by 8.9% from 299.00p to close the period at 272.50p, an 11.0% discount to diluted NAV at the period end. A combination of all Utilico's traded instruments ended September with a 10.2% discount to their underlying asset value. OUTLOOK Looking forward, the outlook in the short term is challenging and markets have continued to experience high levels of volatility, although global markets appear to be moving ahead despite a rather more uncertain economic outlook. Exchange rates, interest rates, debt liquidity, inflation, oil prices and global growth remain important issues that will test the resolve of the markets. Our investments, in the main, continue to make progress and we remain optimistic for the remainder of the financial year to June 2008. Information Further information on the Company, including monthly factsheets, can be found at the Company's website on www.utilico.co.uk Capital Structure 30 Sept 2007 30 June 2007 £m £m Gross assets less current liabilities 451.2 454.6 Bank debt 44.5 44.8 ZDP shares 2012 57.2 56.4 ZDP shares 2014 37.9 37.2 ZDP shares 2016 37.9 37.2 Shareholders' funds (ordinary shares) 273.7 279.0 451.2 454.6 Effective gearing on ordinary shares 1.65x 1.63x Ordinary Shares 30 Sept 2007 30 June 2007 NAV at launch * 99.47p 99.47p NAV (undiluted, cum income) 343.44p 350.29p NAV (diluted, cum income) 306.35p 312.06p Share price 272.50p 299.00p Discount to diluted NAV 11.0% 4.2% Annual average compound return (including 39.5% 39.2% dividends) ** Historic dividend yield 0.3% 0.3% Shares in issue 79,656,782 79,656,782 * Being NAV at launch of Utilico Investment Trust plc (the company's predecessor) ** Proforma based on existing capital structure at launch of Utilico Investment Trust plc Warrants 2008 2012 Expiry date April 2008 April 2012 Price 205.00p 90.50p Warrants in issue 12,329,479 3,601,877 Exercise terms 1 ordinary 1 ordinary share share per warrant at per warrant at subscription subscription price price of 64.2p of 315p ZDP Shares 2012 2014 2016 Accrued capital entitlement 125.84p 102.07p 102.07p Share price 126.00p 99.75p 99.00p (Discount)/premium to NAV 0.1% (2.3%) (3.0%) ZDP cover* 3.60x 2.40x 1.73x Yield to redemption* 7.0% 7.6% 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 Performance 30 Sept 2007 30 June % change 2007 Utilico NAV (undiluted, cum income) 343.44p 350.29p (2.0%) FTSE All-Share 3317 3404 (2.6%) Dow Jones World Utilities (GBP) 127.1 125.6 1.2% Sectoral Split of Investments * 30 Sept 2007 30 June 2007 Electricity 34.7% 37.8% Airports 17.3% 17.8% Other 14.5% 9.1% Telecoms 9.1% 10.1% Renewable Energy 5.7% 5.5% Water 4.6% 4.4% Road & Rail 4.5% 5.1% Ports 3.5% 2.6% Investment Funds 3.3% 2.8% Gas 1.9% 1.9% Postal 0.6% 2.0% Satellites 0.3% 0.9% Geographical Split of Investments * 30 Sept 07 30 June 07 Europe (excluding UK) 31.2% 30.6% Australasia 29.2% 31.5% North America 11.7% 9.4% Asia & Far East 11.5% 10.0% UK 8.5% 10.2% Latin America 7.8% 8.3% North Africa 0.1% - % Top 10 Holdings * % of gross assets 1. TrustPower 13.3% 2. Unique Flughafen Zurich AG 6.1% 3. ERG Limited 4.9% 4. Jersey Electricity Company Limited 3.0% 5. Infratil Airports Europe 3.0% 6. Flughafen Wien AG 2.9% 7. NZ Bus 2.7% 8. Renewable Energy Generation 2.5% 9. Wellington Aiport 2.4% 10.Keytech Limited 2.3% Total Top 10 43.1% * on a look through basis Enquiries Charles Jillings Utilico Limited +44 1372 271 486 Alistair Moreton Arbuthnot Securities +44 207 012 2000 This information is provided by RNS The company news service from the London Stock Exchange
UK 100