Annual Financial Report

RNS Number : 8253O

Utilico Investments Limited

23 September 2011

 



Date:                23 September 2011

Contact:           Charles Jillings                                              

                        Utilico Investments Limited                             

                        01372 271 486                                               

Utilico Investments Limited

Audited Statement of Results

for the year to 30 June 2011

Financial Highlights

·     Revenue return per ordinary share 7.65p (10.49p)

·     Capital return per ordinary share 26.05p (21.13p)

·     Total return per ordinary share 33.70p (31.62p)

·     Ordinary dividend per share 6.50p (nil)

·     Special dividend per share 1.75p (12.00p)(1)

·     Share price increase of 30.75p, up 26.4%

(1) 2010 paid as a cash distribution.

Figures in brackets are for the prior year

CHAIRMAN'S STATEMENT

I am very pleased to report that Utilico Investments Limited ("Utilico" or "the Company") achieved a total return per ordinary share of 24.2% in the year to 30 June 2011. This is a good performance in challenging markets. The performance was broadly in line with the FTSE All-Share index which rose 25.6% over the year.

Since August 2003 Utilico's net asset value ("NAV") per ordinary share plus cumulative dividends of 21.70p has gained 124.5%, resulting in an average annual compound total return per ordinary share of 11.2%. The FTSE All-Share total return index achieved 8.8% compound growth during this period. The increase in Utilico's NAV was driven by the continuing gains on the portfolio which amounted to £50.2m in the year to 30 June 2011. The revenue earnings per share reduced to 7.65p mainly as a result of lower total income.

The Board is declaring a final dividend of 3.25p making a total ordinary dividend of 6.50p. By adding the special dividend paid in April 2011, the total dividend rises to 8.25p for the year to June 2011. The 6.50p represents a yield of 4.4% on the 30 June 2011 ordinary share price.

During the year Utilico acquired the assets of Eclectic Investment Company, adopted a wider investment mandate and changed its name to Utilico Investments Limited. These steps increased our asset base, ability to pay dividends and provided wider flexibility to invest. Today we have 22% of our assets in a gold-mining company, Resolute Mining Limited ("Resolute"), 29% of our assets in Australasia and 22% in emerging markets. On balance and in the current market this is considered a good position to be in.

The redemption date for the 2012 zero dividend preference ("ZDP") shares arises in October 2012. The Company is finalising proposals to offer the holders of these 2012 ZDP shares the opportunity to elect to roll part of their investment into a new 2018 ZDP share.  Any 2012 ZDP shares not rolled over will be redeemed on their redemption date for cash. To provide funds for this redemption, the Company proposes to put in place arrangements to enable the issue of additional 2014 ZDP shares, 2016 ZDP shares and 2018 ZDP shares to raise cash in advance of the redemption. Details of these proposals will be set out in a prospectus which is expected to be published in due course.

In view of the increased time commitments and escalating demands placed on the Board, the remuneration committee has resolved to increase the directors' fees by £2,500 to £27,500 per annum and the Chairman's fee by £3,500 to £38,500 per annum.

Utilico was pleased to be part of the consortium that acquired control of Bermuda Commercial Bank Limited ("BCB"). Utilico today holds an equity interest of 34.0% in BCB. Over the course of the year I have taken on the Executive Chairmanship of BCB and the Investment Manager has deepened its relationship with the bank. I have been encouraged by the bank's progress but the changes may result in ongoing issues as regards your Board's independence. To appropriately address any concern, I am today stepping down as Chairman of this Board so that I can fully support BCB. I am delighted that Roger Urwin, a long standing and extremely well qualified Board member, has agreed to become Chairman of Utilico's Board with immediate effect. I will continue to be a Director and for my part remain fully committed to Utilico.

It is my pleasure to welcome Peter Burrows to the Board as an independent Director. Peter has had an impressive stockbroking career in Australia. He founded his own independent specialist private client firm which was taken over by Merrill Lynch in 1997. Since 2001 he has been a director of Bell Potter Securities Ltd and is a former director of the Australian Stock Exchange and Eclectic Investment Company.

Finally I would like to thank Warren McLeland for his substantial and valuable contribution to the Board of Utilico. Warren, who is vice Chairman of BCB is regarded as a non-independent board member of Utilico. He stepped down from the Board as a Director on 16 September 2011 to facilitate the appointment of Peter Burrows as an independent Director but will still remain involved with Utilico as he has been appointed an alternate director to Susan Hansen.

It is with deep sadness I must report that Rupert Stevenson, of Westhouse Securities, passed away earlier this year. Rupert was an outstanding broker to Utilico and a true friend. We will all miss his ability, energy, enthusiasm and drive.

Most of our investee companies made good progress in the year to 30 June 2011 and delivered improving results. Clearly there remain a number of significant economic challenges in global markets which are unresolved. These include unsustainably high sovereign debt, artificially low interest rates, the prospect of inflation and weakening economic activity. However, our portfolio looks well positioned to meet these challenges and deliver value for the longer-term.

J. Michael Collier
23 September 2011

INVESTMENT MANAGER'S REPORT

Over the twelve month period under review, investors have been focused on the debt markets and in particular sovereign debt, the prospects for growth in the developed markets and inflation and asset bubbles in the developing markets. While we have seen some progress on all these issues, concerns have escalated over these continuing issues, especially in recent months.

Against all this, Utilico has performed well, achieving a total return of 24.2% in the year to 30 June 2011.

Since inception of Utilico Investment Trust plc in August 2003, Utilico's total return (NAV per share adding back dividends and other distributions) has increased by 124.5%. This equates to an average annual compound return of 11.2% per annum. This compares well with the FTSE All-Share total return index which has increased by 94.3% over the same period.

Portfolio

While the portfolio continues to reflect a strong bias towards infrastructure and utilities, it has shifted in the year. Gold mining has increased and we have added to our investment in banking. Over time and in line with the widened investment mandate this shift to greater diversity is expected to continue.

During the year we invested £85.1m which includes the portfolio acquired from Eclectic of £14.7m and the asset injection of £17.5m in the form of Resolute ordinary shares from our majority shareholder General Provincial Life Pension Fund ("GPLPF") in return for new shares. The two key cash investments during the year were Resolute £32.3m and BCB £6.5m.

Disposals in the year amounted to £49.5m, the two largest being Infratil Limited ("Infratil") at £6.6m and further returns from Vix Technology Pty Ltd of £5.1m.

The geographic allocation moved as a result of the above. Gold mining has increased to 22% up from 15% due to both investment and performance. The UK and Channel Islands reduced from 16% to 13% with the main mover being a realisation of part of our Jersey Electricity plc holding combined with neutral performances by our other UK investments.

Sectoral exposure changed as well. As noted above gold mining increased to 22% from 15%. Airports decreased by 2% to 7% mainly as a result of the reduced holding in Infratil.

At the year endUtilico held unlisted and untraded investments of £30.7m, equal to 7.5% of gross assets, down from £39.2m, 12.2% last year end and £49.8m or 17.7% the previous year.

Major Investments

Utilico's three major investments Infratil, Utilico Emerging Markets Limited ("UEM") and Resolute accounted for 71.8% of the portfolio, up from 65.0% last year. This increase results from further investment combined with strong gains in valuations. These three investments rose by £57.6m in valuation terms, a gain of 27.7% on opening values.

Infratil performed well during the year with its share price appreciating from $1.61 to $1.80, an increase of 11.8% or £10.5m in Sterling terms. Add to this the stronger New Zealand Dollar and those gains rose to £22.2m in our portfolio. Against this strengthening background we raised £6.6m through disposals of Infratil shares in the market. Since the year end we have exited a further £28.2m of our holding through a placing with a US institution and a placing with

Infratil's investment manager. The £28.2m is based on year end exchange rates of NZ$1.9439 to £1.00 Sterling and average placing prices of $1.825.

UEM outperformed during the twelve months, gaining £19.5m, a rise of 27.0% on the opening position of £72.1m. This gain, together with further net investment of £5.8m on the exercise of Warrants and S Shares, took Utilico's holding in UEM to £97.3m at year end. UEM's performance was underpinned by good performance by its underlying investments. UEM's earnings per share rose 20.1% and total return was 21.4% in the year to 31 March 2011.

Resolute is our third largest holding and on a look through basis our top investment at £90.4m. This has arisen as a result of net investments of £27.8m and gains of £15.9m. Resolute continues to make significant progress and looks well placed to deliver further gains to investors.

Resolute was at the outset a classic, deep discounted, structured investment by Utilico. This was part driven by the desire to hold gold but much more importantly by the fundamental investment attractions of Resolute itself. Today, given the hedge gold offers against market turmoil, this investment is increasingly a part corporate recovery, part hedge investment.

Following the format established in prior years, we review the major sectors to which Utilico is exposed, and the major holdings therein. In order to provide a better understanding of Utilico's underlying investments, the ten largest holdings and the sector and geographical analysis are presented on a 'look through' basis as though investments held indirectly through Infratil and UEM were held directly by Utilico itself. We have only looked at subsectors in which one of the top ten is included. Further details on the top ten are set out on pages 12 to 15.

Gold mining - 22%

Our sole investment in gold mining is in Resolute. As noted above Resolute continues to make strong progress at an operational level. For the year to 30 June 2011 Resolute reported increased gold sales up 30% to A$445.1m and saw net profit rise to A$61.4m versus a loss of A$54.2m in the previous year. The average cost of production was A$908 per ounce and the average revenue per ounce was A$1,337. During the year Resolute unhedged its gold position and reduced its bank debt. Resolute also expanded its gold reserves significantly by 80% to 5.24m ounces. In July 2011, Resolute forecast that production would rise to 410,000 ounces at an average net cost of A$730 per ounce for the year to 30 June 2012. Based on the current gold price of A$1,750 this equals a gross profit of A$426.4m for one year.

Resolute's total market capitalisation is A$849.3m and its debt is A$120.8m. We regard Resolute as being fundamentally undervalued.

Renewables - 19%

Renewables remains a desirable asset class and investments in this sector continue to be made. The political will, especially in regard to nuclear energy has wavered or in the case of Germany reversed. This is to be expected as politicians wrestle with both a lack of capital and in some cases an anti-nuclear electorate. As a result we envisage continued major developments of wind and solar power and enhanced value for existing hydro power.

Utilico's main exposure to renewables is through TrustPower Limited ("TrustPower") and Renewable Energy Generation Limited ("REG").

TrustPower continues to make sound progress with further power generation set to be added to the existing capacity. We expect continued steady progress by TrustPower. Over the last five years TrustPower has increased its electricity generation volume by 46% to 2,615 GW and has seen its earnings grow by a compound annual growth rate of 6.6%. All of TrustPower's generation capacity is hydro or wind. This is a good position to be in over the longer term.

REG continues to make substantial progress. During the year to 30 June 2011 REG doubled its generation capacity to 41.2MW. This is expected to generate some 106,000 MWh per year and, more significantly, to have substantially moved REG to a positive EBITDA and cash generation position in its second half to June 2011. REG continues to add to its consented portfolio and has 28.0MW in procurement or awaiting construction which will add to its generation capacity this year. REG also expects to submit a further 140MW for planning permission over the next twelve months.

REG has successfully financed 13.9MW of existing capacity with the Co-operative Bank releasing £12.0m at an all-in rate of 6.038%. REG expects to release a further £20.0m from similar financings this year taking REG's reinvestment capacity to £40.0m. REG's current market capitalisation is only £46.5m. This substantially undervalues the business.

Despite the obvious progress being made, plus the rejection of an indicative takeover approach received in March 2011 at 65.0p, the shares fell in value by 9.3% in the year, to end the year at 46.25p.

Electricity - 12%

Jersey Electricity plc ("JEL") reported good bottom line results with an increase in normalised earnings of 17.0% in the year to September 2010 and 9.0% in the six months to March 2011. However, we remain concerned about the proposals to build a third electricity interconnector to France at a cost of £60.0m and more importantly the ability to reward shareholders with an appropriate return on this investment.

On a fundamental valuation basis this investment remains stubbornly undervalued with EV/EBITDA of only 4.1x. JEL's market cap is £105.7m.

Infratil Energy Australia Pty Ltd ("IEA") The management team at Infratil have delivered a strong performance at IEA during the year. Customers were about level with the previous year at 410,000, but generation capacity increased by 177% from 99MW to 275MW. This outstanding achievement was rewarded with profits rising strongly from A$9.0m to A$43.0m, up 377.8%. A good result.

Infrastructure IT - 8%

Vix Technology Pty Ltd ("Vix") has made progress both in reducing its working capital book and returning cash to shareholders. Utilico received £5.1m in cash from Vix. We have encouraged the formation of a technology business in Bermuda under the Vix umbrella. As such Vix was established in Bermuda and a number of operating entities in which Utilico was an investor, were transferred in under common ownership. This will give our technology investments strong focus and support. We are excited about the improving outlook for this business and its world class technologies.

Airports - 7%

Wellington International Airport Ltd ("WIAL") WIAL made modest progress. During the year WIAL opened a new international terminal "The Rock" and despite a challenging environment passenger numbers improved by 0.3%. This investment is mature in nature and it is difficult to see a step change. We would encourage Infratil to seek an exit from WIAL.

Ports - 6%

This is an exciting sector underpinned by strong global growth. The only exposure is through UEM which as at 30 June 2011 has 25.9% of its assets invested in ports. These include Ocean Wilsons Holdings Limited ("Ocean Wilsons"), International Container Terminals Services, Inc. and Santos Brazil Participacoes S.A. all disclosed in UEM's top ten. On a look through basis Ocean Wilsons is in our top ten.

As at 30 June 2011 Ocean Wilsons represented 10.4% of the UEM's portfolio. Ocean Wilsons is a long standing investment of UEM which has performed well; in the twelve months to 30 June 2011 the shares were up 53.3% to £13.65. While revenue in its last reported full year was up 20.4% to US$575.5m the results were held back by the strong Brazilian Real. Most of Ocean Wilsons's income is based in US Dollars.

Since the year-end UEM has sold 25.7% of its investment in Ocean Wilsons at £14.35 per share, well above the year-end share price of £13.65. We remain excited about Wilson Sons Ltd ("Wilson Sons"), a 58.3% owned listed Brazilian maritime services provider, and their substantial exposure to the Brazilian offshore oil and gas markets.

We are not convinced that Ocean Wilsons has the appropriate corporate structure and will continue to push for change and the demerger of Wilson Sons. The net asset value of Ocean Wilsons is £18.73 per ordinary share. Ocean Wilsons ordinary shares trade at a discount of over 27%, a frustrating position.

Banks - 4%

BCB is one of four Bermuda based banks. The BCB investment was made late last year and increased through the acquisition of Eclectic this year. Today Utilico holds 34.0% of BCB's ordinary shares. BCB has made good progress this year in an extremely challenging environment. This includes returning to a profit in the half year to 31 March 2011 of $1.35m. This was achieved by a reallocation of the $64.0m of the bank's balance sheet into a liquid investment portfolio. In addition significant steps have been taken to strengthen the operating environment and capabilities of the bank, including new software systems.

BCB has an enviable balance sheet and strong capital ratios. The Tier 1 capital adequacy ratio stands at circa 20.0%. The bank is well placed to benefit from the continuing turbulence in the wider markets.

Other - 7%

Z Energy Limited ("Z Energy")is the company that owns and manages the acquired Shell New Zealand downstream assets and is a new investment by Infratil. Infratil continues to demonstrate their ability to buy well and this looks to fit their investment approach well. They were able to bid aggressively for a business out of favour with the wider industry. As a result we expect Z Energy to achieve above average returns over the coming few years.

Derivatives

Over the years there have been two parts to Utilico's hedging. First, hedging the portfolio against losses, mainly through S&P put options. Second, hedging the currency within Utilico's portfolio.

Utilico's market hedging was greatly reduced in the first six months under review and has remained that way in the second half. Utilico has maintained significant currency hedges to partly protect the Sterling value of certain investments. At the period end, forward currency sale contracts were in place for nominal NZ$89.3m, A$33.1m, US$32.2m and €11.9m.

Debt

The level of bank debt utilised by Utilico remained broadly unchanged ending the year at £30.9m, up £1.6m. Utilico established a new £30.0m bank facility with ScotiaBank Europe PLC which expires in March 2013. The facility was fully drawn in New Zealand dollars at year end.

The Company also holds two smaller loans. An on-demand loan of £0.6m with Newtel Holdings Limited and a £3.0m interest bearing loan with OneLink Holdings Pty. Ltd. which is repayable on 7 April 2012.

Revenue Returns

The revenue returns are down in the twelve months to 30 June 2011 compared to 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 increasing its dividend to Utilico by 8.3% to 5.2p per UEM share.

Management and administration fees and other expenses increased as a result of higher gross assets. Finance costs increased as a result of higher interest on the new debt facility together with costs of establishing the facility.

The combined effect of the above resulted in the revenue EPS falling by 27.1% to 7.65p.

Capital Return

Capital returns were up significantly to £24.1m versus £18.3m in the year to June 2010 due mostly to gains on investments of £50.2m, compared to £36.9m in the year to June 2010. Losses on derivatives at £13.0m were high in the main due to losses on currency hedges. The resulting capital EPS return was 26.05p, up from 21.13p last year.

Way forward

We will continue to broaden the asset base and take advantage of the opportunities to invest in the markets. As part of this process we would expect the concentration in our portfolio to reduce. The sale of 20.0% of our position in Infratil was a good first step.

We will look to provide the 2012 ZDP holders with the opportunity to roll a substantial proportion of their investment into a new series of 2018 ZDP shares and maintain a resilient leveraged basis from which we can invest longer term.

While the current investment climate is a challenge it presents a good opportunity to build a longer term portfolio based on fundamental values.

PRINCIPAL RISKS AND RISK MITIGATION 

The Company's assets consist mainly of listed and quoted securities and its principal risks are therefore market related or currency 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, counter party and revenue streams. 

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

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 2011. The Annual Report and Accounts is published on the Company's website, www.utilico.bm.

STATEMENT OF DIRECTOR'S RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and Accounts of the Group and Company in accordance with applicable Bermuda law and IFRSs.

The Directors are required to prepare Group and Company accounts for each financial period which present fairly the financial position of the Group and the Company and the financial performance and cash flows of the Group and the Company for that period. In preparing those Group and Company accounts the Directors are required to:

·      select suitable accounting policies in accordance with IAS 8: Accounting policies, Changes in Accounting Estimates and Errors and then apply them consistently;

·      make judgements and estimates that are reasonable and prudent;

·      state whether IFRSs have been followed; and

·      prepare the accounts on a going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the Group and Company accounts comply with Bermuda Law. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for prevention and detection of fraud and other irregularities.

To the best of the knowledge of the Directors: the accounts give a true and fair view of the assets, liabilities, the financial position and profit of the Group and of the Company, in accordance with IFRSs; the Chairman's Statement and, and the Investment Manager's report includes a fair review of development and performance of the business; and the Report of Directors contains a description of the principal risks and uncertainties that the Group and the Company face.

In so far as the Directors are aware:

·      there is no relevant audit information which the Company's auditor is unaware; and

·      the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors is aware of that information.

The accounts are published on the Company's website, www.utilico.bm, the maintenance and integrity of

which is the responsibility of the Company. The work carried out by the auditor does not involve consideration of the

maintenance and integrity of the website and accordingly, the auditor accepts no responsibility for any changes that have occurred to the accounts since they were originally presented on the website. Visitors to the website need to be aware that the legislation governing the preparation and dissemination of the accounts may differ from legislation in their jurisdiction.

consolidated PERFORMANCE SUMMARY

	30 June 2011	30 June 2010	Change 2010/11
Ordinary shares
Total return (annual) (1)	24.2%	21.5%	n/a
Annual compound total return (since inception)	11.2%	9.5%	n/a
Net asset value per ordinary share	201.63p	166.39p	21.2%
Share prices and indices
Ordinary share price	147.25p	116.50p	26.4%
Discount	27.0%	30.0%	n/a
FTSE All-Share Index	3,097	2,543	21.8%
Returns and dividends
Revenue return per ordinary share	7.65p	10.49p	(27.1%)
Capital return per ordinary share	26.05p	21.13p	23.3%
Total return per ordinary share	33.70p	31.62p	6.6%
Dividend per ordinary share (includes special dividend of 1.75p)	8.25p	-	n/a
Cash distribution per ordinary share	-	12.00p	n/a
Zero dividend preference (ZDP) shares (2)
2012 ZDP Shares
Capital entitlement per ZDP share	162.15p	151.55p	7.0%
ZDP share price	168.50p	159.75p	5.5%
2014 ZDP Shares
Capital entitlement per ZDP share	132.69p	123.72p	7.3%
ZDP share price	142.75p	129.50p	10.2%
2016 ZDP Shares
Capital entitlement per ZDP share	132.69p	123.72p	7.3%
ZDP share price	133.50p	108.75p	22.8%
Warrants
2012 warrant price	0.55p	2.00p	(72.5%)
Equity holders funds (£m)
Gross Assets (3)	408.7	334.2	22.3%
Bank debt	30.9	29.3	5.5%
ZDP debt	172.8	161.2	7.2%
Other debt	3.5	-	n/a
Equity holders' funds	201.5	143.7	40.2%
Revenue account (£m)
Income	11.9	13.8	(13.8%)
Costs (management and other expenses)	2.9	2.4	20.8%
Finance costs	2.0	1.4	42.9%
Financial ratios of the Group
Revenue yield on average Gross Assets	3.1%	4.2%	n/a
Total expense ratio (4) on average Gross Assets	0.8%	0.7%	n/a
Bank loans, other loans and ZDP shares gearing on Gross  Assets	50.7%	57.0%	n/a

(1) Total return is calculated as change in NAV per ordinary share plus dividends re-invested.

(2) 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.

(3) Gross assets less current liabilities excluding loans.

(4) Excluding performance fee.

GROUP STATEMENT of comprehensive income

	Year to 30 June 2011			Year to 30 June 2010
	Revenue	Capital	Total	Revenue	Capital	Total
	return	return	return	return	return	return
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Gains on investments	-	50,200	50,200	-	36,852	36,852
Losses on derivative instruments	-	(12,960)	(12,960)	-	(8,510)	(8,510)
Exchange (losses)/gains	(1)	(1,594)	(1,595)	23	1,068	1,091
Investment and other income	11,935	43	11,978	13,758	-	13,758
Total income	11,934	35,689	47,623	13,781	29,410	43,191
Management and administration fees	(1,796)	-	(1,796)	(1,573)	-	(1,573)
Other expenses	(1,085)	(13)	(1,098)	(819)	(22)	(841)
Profit before finance costs and taxation	9,053	35,676	44,729	11,389	29,388	40,777
Finance costs	(1,962)	(11,602)	(13,564)	(1,356)	(10,764)	(12,120)
Loss on ZDP shares	-	-	-	-	(374)	(374)
Profit before taxation	7,091	24,074	31,165	10,033	18,250	28,283
Taxation	(18)	-	(18)	(971)	-	(971)
Profit for the year	7,073	24,074	31,147	9,062	18,250	27,312
Earnings per ordinary share (basic) - pence	7.65	26.05	33.70	10.49	21.13	31.62
Earnings per ordinary share (diluted) - pence	7.65	26.05	33.70	10.49	21.13	31.62

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

The supplementary revenue return and capital return 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 year, and therefore the 'profit for the year' is also the 'total comprehensive income for the year', 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.

COMPANY STATEMENT of comprehensive income

	Year to 30 June 2011			Year to 30 June 2010
	Revenue	Capital	Total	Revenue	Capital	Total
	return	return	return	return	return	return
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Gains on investments	-	45,113	45,113	-	35,362	35,362
Losses on derivative instruments	-	(7,810)	(7,810)	-	(6,706)	(6,706)
Exchange (losses)/gains	-	(1,626)	(1,626)	-	1,039	1,039
Investment and other income	11,928	43	11,971	13,756	-	13,756
Total income	11,928	35,720	47,648	13,756	29,695	43,451
Management and administration fees	(1,796)	-	(1,796)	(1,573)	-	(1,573)
Other expenses	(1,053)	(13)	(1,066)	(772)	(22)	(794)
Profit before finance costs and taxation	9,079	35,707	44,786	11,411	29,673	41,084
Finance costs	(2,028)	(11,602)	(13,630)	(1,356)	(10,838)	(12,194)
Profit before taxation	7,051	24,105	31,156	10,055	18,835	28,890
Taxation	(9)	-	(9)	(972)	-	(972)
Profit for the year	7,042	24,105	31,147	9,083	18,835	27,918
Earnings per ordinary share (basic) - pence	7.62	26.08	33.70	10.51	21.81	32.32
Earnings per ordinary share (diluted) - pence	7.62	26.08	33.70	10.51	21.81	32.32

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

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

The Company does not have any income or expense that is not included in the profit for the year, and therefore the 'profit for the year' is also the 'total comprehensive income for the year', 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.

GROUP STATEMENT OF CHANGES IN EQUITY

for the year to 30 June 2011
	Ordinary	Share			Non-
	share	premium	Special	Warrant	distributable	Capital	Revenue
	capital	account	Reserve	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 30 June 2010	8,637	223,501	10,365	3,050	32,068	(138,218)	4,317	143,720
Profit for the year	-	-	-	-	-	24,074	7,073	31,147
Ordinary dividends paid	-	-	-	-	-	-	(4,996)	(4,996)
Conversion of warrants	-	2	-	(1)	1	-	-	2
Transfer to special reserve	-	(223,501)	223,501	-	-	-	-	-
Issue of ordinary shares	1,356	30,867	-	-	-	-	-	32,223
Issue costs of ordinary share capital	-	(619)	-	-	-	-	-	(619)
Transfer on loss of control of subsidiary	-	-	-	-	-	311	(311)	-
Balance at 30 June 2011	9,993	30,250	233,866	3,049	32,069	(113,833)	6,083	201,477

for the year to 30 June 2010
	Ordinary	Share			Non-
	share	premium	Special	Warrant	distributable	Capital	Revenue
	capital	account	Reserve	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 30 June 2009	8,637	233,951	-	3,051	32,067	(156,168)	5,320	126,858
Profit for the year	-	-	-	-	-	18,250	9,062	27,312
Conversion of warrants	-	3	-	(1)	1	-	-	3
Bonus issue of ordinary shares	785	(785)	-	-	-	-	-	-
Ordinary shares repurchased by the Company	(785)	(9,580)	-	-	-	-	-	(10,365)
Transfer on share issue and buyback	-	-	10,365	-	-	-	(10,365)	-
Issue costs of ordinary share capital	-	(88)	-	-	-	-	-	(88)
Transfer on loss of control of subsidiary	-	-	-	-	-	(300)	300	-
Balance at 30 June 2010	8,637	223,501	10,365	3,050	32,068	(138,218)	4,317	143,720

COMPANY STATEMENT OF CHANGES IN EQUITY

for the year to 30 June 2011
	Ordinary	Share			Non-
	share	premium	Special	Warrant	distributable	Capital	Revenue
	capital	account	Reserve	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 30 June 2010	8,637	223,501	10,365	3,050	32,068	(138,043)	4,142	143,720
Profit for the year	-	-	-	-	-	24,105	7,042	31,147
Ordinary dividends paid	-	-	-	-	-	-	(4,996)	(4,996)
Conversion of warrants	-	2	-	(1)	1	-	-	2
Transfer to special reserve	-	(223,501)	223,501	-	-	-	-	-
Issue of ordinary shares	1,356	30,867	-	-	-	-	-	32,223
Issue costs of ordinary share capital	-	(619)	-	-	-	-	-	(619)
Balance at 30 June 2011	9,993	30,250	233,866	3,049	32,069	(113,938)	6,188	201,477

for the year to 30 June 2010
	Ordinary	Share			Non-
	share	premium	Special	Warrant	distributable	Capital	Revenue
	capital	account	Reserve	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 30 June 2009	8,637	233,951	-	3,051	32,067	(156,878)	5,424	126,252
Profit for the year	-	-	-	-	-	18,835	9,083	27,918
Conversion of warrants	-	3	-	(1)	1	-	-	3
Bonus issue of ordinary shares	785	(785)	-	-	-	-	-	-
Ordinary shares repurchased by the Company	(785)	(9,580)	-	-	-	-	-	(10,365)
Transfer on share issue and buyback	-	-	10,365	-	-	-	(10,365)	-
Issue costs of ordinary share capital	-	(88)	-	-	-	-	-	(88)
Balance at 30 June 2010	8,637	223,501	10,365	3,050	32,068	(138,043)	4,142	143,720

BALANCE SHEETs

At 30 June		GROUP		COMPANY
	2011	2010	2011	2010
	£'000s	£'000s	£'000s	£'000s
Non-current assets
Investments	407,560	321,708	408,005	328,107
Current assets
Other receivables	1,623	1,615	1,623	1,566
Derivative financial instruments	1,625	6,368	1,251	1,235
Cash and cash equivalents	1,293	6,495	1,206	6,362
	4,541	14,478	4,080	9,163
Current liabilities
Loans	(3,555)	(29,320)	(3,555)	(29,320)
Other payables	(1,362)	(1,000)	(174,108)	(163,878)
Derivative financial instruments	(2,002)	(986)	(2,002)	(352)
	(6,919)	(31,306)	(179,665)	(193,550)
Net current liabilities	(2,378)	(16,828)	(175,585)	(184,387)
Total assets less current liabilities	405,182	304,880	232,420	143,720
Non-current liabilities
Bank loans	(30,943)	-	(30,943)	-
Zero dividend preference shares	(172,762)	(161,160)	-	-
Net assets	201,477	143,720	201,477	143,720
Equity attributable to equity holders
Ordinary share capital	9,993	8,637	9,993	8,637
Share premium account	30,250	223,501	30,250	223,501
Special reserve	233,866	10,365	233,866	10,365
Warrant reserve	3,049	3,050	3,049	3,050
Non-distributable reserve	32,069	32,068	32,069	32,068
Capital reserves	(113,833)	(138,218)	(113,938)	(138,043)
Revenue reserve	6,083	4,317	6,188	4,142
Total attributable to equity holders	201,477	143,720	201,477	143,720
Net asset value per ordinary share
Basic - pence	201.63	166.39	201.63	166.39

CASH FLOW STATEMENTs

for the year to 30 June		GROUP		COMPANY
		Restated
	2011	2010	2011	2010
	£'000s	£'000s	£'000s	£'000s
Cash flows from operating activities	(3,919)	(5,909)	(3,874)	(925)
Cash flows from investing activities	-	-	-	-
Cash flows before financing activities	(3,919)	(5,909)	(3,874)	(925)
Financing activities
Equity dividends paid	(4,996)	-	(4,996)	-
Movement on loans	1,758	11,567	1,758	11,567
Cash flow from ZDP shares	-	4,948	-	-
Proceeds from warrants exercised	2	3	2	3
Proceeds from issue of ordinary shares	126	-	126	-
Cost of share buy back	-	(10,452)	-	(10,452)
Cash flows from financing activities	(3,110)	6,066	(3,110)	1,118
Net (decrease)/ increase in cash  and cash equivalents	(7,029)	157	(6,984)	193
Cash and cash equivalents at the beginning of the year	6,495	4,496	6,362	4,355
Effect of movement in foreign exchange	1,827	1,842	1,828	1,814
Cash and cash equivalents at the end of the year	1,293	6,495	1,206	6,362

NOTES

The Directors have declared a final dividend of 3.25p per ordinary share in respect of the year ended 30 June 2011 payable on 28 October 2011 to all ordinary shareholders on the register at close of business on 7 October 2011. The total cost of the dividend which has not been accrued in the results for the year to 30 June 2011, is £3,248,000 based on 99,926,452 ordinary shares in issue at the date of this report.

The Company is an investment company incorporated in Bermuda and quoted on The London Stock Exchange.

The consolidated Accounts for the year ended 30 June 2011 comprise the results of the Company and its subsidiary Utilico Finance Limited and its special purpose entity Global Equity Risk Protection Limited.

This statement was approved by the Board on 23 September 2011. It is not the Company's statutory accounts. The statutory accounts for the financial year ended 30 June 2011 have been approved and audited, and received an audit report which was unqualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report. The statutory accounts for the financial period ended 30 June 2010 received an audit report which was unqualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report.

The Report & Accounts will be posted to shareholders in early October and are made available on the website www.utilico.bm. 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

23 September 2011

 

END

 

 

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