Annual Financial Report

RNS Number : 1687Z

Utilico Limited

16 September 2009

Date: 16 September 2009

Contact: Charles Jillings

Utilico Limited

01372 271 486

Utilico Limited

Audited Statement of Results

for the year to 30 June 2009

Financial Highlights

Capital loss representing 16.8% on opening Gross Assets
Diluted NAV per ordinary share reduced by 34.8%
Bank debt reduced from £69.2m to £17.0m
Compound annual growth rate of 7.5% per annum since inception of UIT in 2003

CHAIRMAN'S STATEMENT

In last year's Chairman's statement, I noted that there had been a deterioration in the health of both markets and the global economy in the second six months of the financial year to June 2008. Unfortunately, as is now known, this was the beginning of a far more serious downturn in global financial markets, the full effect of which has been felt in the 12 months to June 2009.

The year to June 2009 has seen the collapse of several large banks and investment houses, which had previously been seen as stalwarts of the financial economy. Several institutions were taken over by other, better capitalised, competitors; others survive as shadows of their former selves reliant on government financial life support. There has been a realisation that risks that had been thought to have been transferred and mitigated via financial instruments, rested with the entire market. In addition, much of what had been thought of as growth, was, to a certain extent, simply an expansion of credit. This process culminated in banks withdrawing credit for both companies and individuals, and a consequent sharp downturn in corporate activity.

Against this backdrop, it is unsurprising that markets have recorded one of the worst performances in living memory, and Utilico was not immune from these pressures. The loss for the year of £69.5m represents a loss on opening gross assets of 16.8%. This was compounded by Utilico's gearing on equity funds, which started the year at 2.0x, resulting in a decline in NAV per ordinary share of 34.8%. In contrast, the FTSE All-Share Index fell by 23.9% in the year, and as such, Utilico's NAV underperformance can be attributed to capital structure rather than the performance of the portfolio.

During the year, the Investment Manager took steps to reduce debt levels in order to keep gearing within acceptable levels as markets declined. This took the form of repayment of bank loans, which decreased from £69.2m in June 2008, to close the year at £17.0m, with the gearing on equity funds being only marginally higher than at the start of the year, at 2.3x.

As previously announced, despite having positive revenue earnings in the year, plus revenue reserves brought forward, under Bermuda law, Utilico is unable to pay a dividend to shareholders as a result of having negative capital reserves. As soon as investment returns create a positive balance of capital reserves, Utilico intends to recommence dividend payments.

The year under review was characterised by many challenges, and has culminated in a world where banks, governments, corporates, investors, and individuals are likely to be more cautious in approach than was previously the case. The common view is that this will lead to a prolonged period of lower growth, less reliance on credit, and more on retained equity and savings. It will be harder for equity investors to achieve the gains that have been seen in the past, and a more selective approach will be required. Despite this, during the second calendar quarter, and continuing beyond Utilico's year end, markets have begun to stage a modest recovery, which has been more pronounced in the emerging rather than developed markets.

Western governments will struggle to reconcile the competing demands of reducing unemployment while at the same time seeking to reduce borrowing to more manageable levels, all the while keeping taxation to competitive levels. It looks increasingly the case that the balance of world economic power is shifting slowly but surely eastwards toward the Asian economies, particularly China. Demographic patterns will only serve to exacerbate the contrasts between East and West.

At Utilico we remain confident that utility and infrastructure sectors will remain at the forefront of world development, and should continue to be an attractive investment proposition for the long term investor.

Despite the losses seen within Utilico over the past two financial periods, we remain cautiously optimistic over the underlying performance of the companies Utilico is invested in. The Investment Manager will use the current environment to find attractively priced new investments, while seeking to increase efforts to realise value and capital from the existing portfolio.

J. Michael Collier
16 September 2009

INVESTMENT MANAGER'S REPORT

The past two years have been very difficult for markets generally and Utilico's assets have endured a second year of declines in valuation. The NAV for the year to June 2009 fell by 34.8% to 146.87p, this coming after the 35.7% fall seen in the period to June 2008. From a peak of 350.29p achieved at June 2007, the NAV has fallen by a cumulative 58.1%.

Over this same period the FTSE All-Share Index fell by 36.2%, so it can be said that Utilico's recent performance has been below that of wider markets. However, it is worth highlighting two points:

Firstly, during this two year period of downturn, Utilico has carried a level of gearing through the use of bank debt and ZDP shares. Utilico's ordinary shareholders' equity was 1.6x geared to gross assets at June 2007, closing at 30 June 2009 with shareholders' equity 2.3x geared. This gearing, which improves net returns when the portfolio is increasing in value, acts to exacerbate losses when assets are falling in value. The Investment Manager's continue to believe that Utilico's portfolio is robust, and that long term returns can be enhanced through an appropriate level of gearing.

Secondly, Utilico's longer term track record is good. Since inception of Utilico Investment Trust plc ('UIT') in August 2003, Utilico's NAV per share has increased by 47.6%, this equates to a compound average growth of 7.5% per annum. This compares well to the FTSE All-Share Index which has increased by just 5.3% over this period, being a compound growth of just 1.0% per annum. This out-performance is calculated after all fees and expenses, including performance related fees, have been taken into account. If one looks back further, to the inception of The Special Utilities Investment Trust PLC in 1993, this out-performance is even more pronounced.

Investment Approach

Our basic approach to investment remains unchanged. The Investment Manager will continue to look for asset backed companies, operating in stable environments, with sound management. The primary investment driver will continue to be one of value. In house resources and systems are continually examined and improved upon where possible, in order to give the Investment Manager the greatest potential to select profitable investments.

The Investment Manager will continue to invest in new sectors such as renewable energy. However, it is noticeable that the strategy of investing in smaller companies, where there is often greater opportunity to both acquire and add value to an investment, has not served Utilico well over the past 12 months. We do, however, continue to believe that this strategy will be beneficial over the longer term.

Investment Activity

Investment activity was broadly similar to the previous period, although weighted toward sales rather than purchases as assets were sold in order to repay bank borrowings.

During the year Utilico realised £89.1m from the portfolio, reinvesting £51.6m, with the balance being mainly utilised to repay debt.

Major sales included £26.7m realised from the Ecofin Water and Power Opportunities Ltd ('Ecofin') investment, including £16.0m realised on the final tender by Ecofin at maturity of the capital shares. £11.2m was received early in the year from the sale of the investment in Cegedel which, as previously reported, had yielded a gain of 100% on cost in just two years. £10.8m was received on the sale of the entire stake held in Flughafen Wien AG ('Vienna Airport'), plus £8.4m on the partial sale of the shares held in Unique Flughafen Zurich AG ('Zurich Airport').

Purchases made included £16.3m into Resolute Mining Ltd ('Resolute') mainly in the form, of 12% 3 year convertible bonds, a further £6.3m into Infratil for their warrant conversion and £4.5m into Renewable Energy Holdings Limited ('REH'), plus investments in holdings outside of the top 10.

The geographic allocation has moved towards Australasia which increased to 42% from 25% as a result of investments in Resolute and Infratil. Europe excluding UK has fallen from 28% to 18%, due to the sale of the Cegedel stake. North America (including Bermuda) has fallen from 13% to 8% as a result of the sale of the Ecofin stake, which had a substantial weighting towards the US.

Sectoral exposure remains broadly unchanged. Renewable energy is now the largest sector partly as a result of investment into REH and partly due to continued exposure to TrustPower which has outperformed. The airports sector has fallen from 15% to 11% due to the sales of Vienna and Zurich Airports as noted above. A new sector, gold, has been established, at 10% as at June 2009. This arises from the investment in Resolute, and is considered in further detail below.

Major Investments

47.2% of Utilico's portfolio is represented by just two investments, Infratil and UEM. However, these offer a diverse underlying exposure.

Infratil invests in electricity and transportation sectors, primarily in New Zealand and Australia. UEM offers a more diverse exposure to emerging market utilities and investment in transportation infrastructure.

The investment in Infratil stood at some £71.0m as at the year end, with Utilico holding 19.7% of Infratil's outstanding ordinary shares at that date. Infratil's share price outperformed wider markets during the year, with a fall in value of 4.9%, and was Utilico's largest investment at June 2009, representing 25.3% of the portfolio. £6.3m was invested in Infratil in the year, this being the second instalment of Infratil's partly paid share issue which closed in July 2008. Shortly after the year end Utilico invested a further £4.1m to partly exercise Infratil's July 2009 warrant issue. Assuming the warrant holding does not change in the meantime, and it remains economic to do so, a further instalment of £8.5m will be paid to finally exercise the warrants on or before May 2010. The Infratil share trades at a discount of over 20% to underlying consensus value, and we would expect this discount to close in the future as the recent share issues and warrant conversions are digested by the market. Infratil's assets have, for the most part, traded well during the year.

The second largest holding is UEM representing 21.9% of Utilico's portfolio, with Utilico holding 24.5% of UEM's outstanding ordinary shares as at the year end. The holding in UEM is the means by which Utilico obtains its exposure to emerging market utility and infrastructure sectors. UEM's NAV fell by 25.3% during the year, with the shares falling in value by 24.2%. UEM's portfolio is more diverse than Infratil, and as such, none of UEM's largest investments feature in Utilico's look through top 10 holdings. The largest investment is Malaysia Airport Holdings Berhad which is Utilico's 13th largest holding on a look through basis, representing 2.2% of the portfolio. Like Utilico, over the past year UEM has focused on reducing risk by way of a reduction in gearing, reducing exposures to higher risk areas such as unregulated electricity generation, and concentrating investment activity in lower risk jurisdictions.

Following the format established last year, we review the major sectors to which Utilico is exposed, and the major holdings therein. In order to aid the better understanding of Utilico's underlying investments, the ten largest holdings and the sector and geographical analysis are presented on a 'look though' basis as though investments held indirectly through Infratil and UEM were held directly by Utilico itself.

Renewable energy

It is becoming increasingly apparent that energy generation of the future will be less carbon intensive than that of the past. This will be achieved through a combination of new nuclear power, particularly in the UK, both small and large scale hydro developments, in Brazil and India, plus on and off-shore wind energy. These forms of energy have two principal drawbacks, a high capital cost and a relatively long lead time for development. However, there is a growing emphasis not only on environmental factors, but also security of supply, and these both count in favour of renewables.

In addition renewable energy is not subject to the high degree of volatility seen in the prices of fuel commodities and will become increasingly competitive in a high fuel cost environment.

Renewable energy has become Utilico's largest sector exposure, with the main holdings being TrustPower, Renewable Energy Generation Limited, and outside the top 10, Renewable Energy Holdings Limited.

TrustPower has enjoyed a very successful period, completing substantial investments in wind farms within their budget, and is now very well positioned with a combination of further growth in renewable generation, coupled with an established New Zealand based energy supply business providing an element of both stability and hedging.

Renewable Energy Generation Ltd ('REG') has had a difficult year in some respects, having received approaches from interested parties which did not materialise into full offers to acquire all or part of the company. Given the resulting uncertainty, it is unsurprising that the shares therefore performed poorly, falling in value by 65.2%. REG is now no longer in bid discussions, and as such can now concentrate on investment into its core wind energy business. Like many small companies, access to capital is less easy than it was, and this may act as a brake on the development of their project pipeline. Current markets are unwilling to ascribe any value to possible future value creation inherent within the pipeline, and we would only expect the shares to recover as value is extracted through delivery of projects.

Utilico has invested into a similarly named company during the year, REH, owning both ordinary shares plus a secured convertible loan note. REH offers a similar profile to REG, but has exposure to Germany, Poland and the UK, plus interests in wave energy technology.

Electricity

The electricity sector remains a substantial sector for Utilico at 15%, having fallen from 22% at the prior period end due to the sale of Cegedel as noted above. Within the top 10, Utilico held both Jersey Electricity Limited and Ascendant Group Limited.

Jersey Electricity Limited ('JEL') continues to trade soundly, and the island of Jersey has performed well during the current downturn. JEL's main issue over the past year has been the devaluation of Sterling against the Euro, given that they buy their power from France in Euros, to supply to clients in Sterling. Sterling fell by a further 7.3% against the Euro in the 12 months to June 2009. Despite the strong share price appreciation of 29.0%, seen during the year, the Investment Manager is of the view that JEL remains substantially undervalued, with a less efficient balance sheet than would otherwise be expected for a mature utility company. This does however give the company a greater degree of financial flexibility over how it finances future investments.

Ascendant Group Limited ('AGL') is the new name for Belco Holdings, a long term investment for Utilico, which re-entered the top 10 holdings during the year. AGL faces similar issues to JEL passing increased input costs to its client base. Like Jersey, Bermuda has proved relatively resilient to the global downturn, and continues to be an attractive destination for investment. Again, like JEL, AGL is largely ungeared and is able to fund the substantial majority of its investments out of cash flow, together with a continuing attractive yield.

A new entrant to the top 10 this year is Infratil Energy Australia, ('IEA'), a business which Infratil has been developing since 2005 to exploit the deregulating Australian energy supply markets. The rate of client, revenue, and profit growth has been very encouraging, and the energy expertise within the Infratil group of companies should ensure this business continues to develop at a fast pace.

Road and Rail (including related technology)

The road and rail sector accounted for 12% of gross assets at June 2009, and includes Vix Technology Pty Ltd, which is Utilico's fourth largest holding on a look through basis. This sector also includes emerging market toll road exposure via UEM. The increase in weighting into this sector is down to out-performance rather than further investment.

Vix Technology Pty Ltd ('Vix') is a new company which has acquired the operating business and assets of ERG Limited (Vix-ERG Ltd). This transaction was completed in order to protect the interest of ERG creditors regarding the on-going litigation with an associated company of the New South Wales Government regarding the cancelled smart card installation contract in Sydney. The largest of Vix projects are essentially complete and will move from negative to positive cash flows, and this should enable returns of capital to be made. £3.8m was received by Utilico in the year, and we expect substantial releases of capital in the current year.

Airports

Airports accounted for 11% of Utilico's gross assets at June 2009, down from 15% at June 2008. The largest airport exposure is Wellington Airport, held via Infratil. Zurich Airport, Vienna Airport, and Infratil Airports Europe ('IAE') have all fallen out of the top ten this year. IAE has fallen out of the top 10 due to relative performance, whereas Utilico has realised much of the position in Zurich Airport and has sold the entire stake in Vienna Airport, realising £19.2m in proceeds from the two, and retaining a £5.5m interest in Zurich Airport at the year end.

As could be expected in the current economic climate, airports across the world have experienced falling passenger levels. Zurich Airport managed to grow passenger numbers by 6.5% during 2008, but experienced a 3.8% decline in the first six months of 2009. Infratil Airports Europe fared less well with an 8.5% fall in passenger numbers in its financial year to March 2009. Freight traffic fell even more, by 34.7%. This decline in activity had a predictable and substantial impact on profitability.

Utilico's largest airport exposure is to Wellington Airport ('Wellington') in New Zealand, held indirectly via Infratil's 66% interest in this company. Pleasingly, Wellington has continued to perform well as a result of a programme of investment, plus increased competition between the airlines which has lowered fares. Passenger numbers increased by 4.7% during its financial year to March 2009, and this has led to improved profitability, which has seen it re-enter Utilico's top 10 investments.

Telecoms

Telecoms declined marginally in weighting, from 11% to 10% during the year. The two largest investments in this sector are Keytech Limited and Newtel Holdings Limited ('Newtel').

Keytech had a difficult year with a combination of reduced business activity, coupled with a substantial investment programme, leading to a fall in profits. It will take some time for the investment programme to deliver value, but the business now has a modern infrastructure platform which should enable it to take advantage of the future development of the Bermuda telecoms market.

Newtel has continued to make progress in the Channel Islands deregulated telecoms sector. Utilico is continuing to work to extract value and capital from this investment, and in August 2009 Newtel announced that it had agreed to sell its Guernsey operations, which will result in a partial but significant return of Utilico's investment.

Gold

Gold is a new sector for Utilico, and while not fitting into the definition of a utility, it is felt that a counter cyclical diversification will be of merit to portfolio management during the current period of economic turbulence. The entry into this sector was principally made through an opportunistic 12% 3 year convertible note investment in Resolute Mining, a company headquartered in Australia but with assets in both Africa and Australia. Utilico has invested a total of £16.3m into this investment, which was pleasingly showing a substantial profit at the year end. The Investment Manager's believe that this investment remains undervalued and has potential for significant upside.

Currency and currency hedging

Currency fluctuations have continued to feature in the year to 30 June 2009. Currency losses of £8.1m were recorded which related to loans which were, at times during the period, partly drawn in US Dollars, Euros and Swiss Francs. Sterling fell in value by 17.4%, 7.3% and 12.1% against the US Dollar, Euro and Swiss Franc respectively. The weakness of Sterling against these currencies also generated translation gains on investments held in those currencies, which is taken into account in the losses on investments of £60.2m. Sterling held relatively steadily against the New Zealand Dollar and Australian Dollar during the year.

In common with previous years, Utilico has maintained currency hedges to partially protect the Sterling value of certain investments. At the year end, forward currency sale contracts were maintained for a nominal NZ$92.5m, and USD10.0m. This is below the level maintained in previous years, and reflects the Investment Manager's view that Sterling is likely to be, on balance, weaker rather than stronger against Utilico's main currencies of investment.

Derivatives

For some time Utilico has operated a strategic hedge via the purchase and sale of equity index options, principally on the S&P 500 Index. These options had a positive net value of £2.3m at June 2009.

The level of put protection is kept under constant review, and will depend upon several factors including the relative position of markets, the price of options as compared to the market, and the Investment Manager's view of likely future volatility and market movements.

Debt

As noted, the level of Utilico's bank debt has fallen during the year, from £69.2m at the start of the year, to £17.0m at the end of the year. This has been done in order to firstly maintain gearing at comfortable levels in a falling market, and secondly to ensure that Utilico continues to operate well within its financial covenants.

The year end bank debt balance was drawn entirely in Sterling, although amounts through the year had also been drawn in US Dollars, Swiss Francs, and Euros

At the year end, Utilico had total banking facilities of £45.0m, with £25.0m available until November 2009, and £20.0m available to November 2010. A £25.0m facility expired in November 2008 which was not renewed. A decision regarding the November 2009 facility will be taken nearer the time based on interest rate spreads available and also Utilico's borrowing requirements.

Throughout the year, Utilico has carried interest rate swap contracts, which were entered into in order to protect against rising interest rates. Unfortunately, these contracts were entered into when interest rates were at higher levels than presently, and as such these contracts are loss making. At the year end, Utilico held two interest rate swap contracts which were carried at a negative value of USD1.0m. The total nominal values of these contracts are USD53.0m and as such are above the current level of bank borrowing. Given the relative small size of these contracts it has not been thought worthwhile to terminate these contracts early, and as such they will terminate on their original expiry dates of November 2009 (USD33.0m) and November 2010 (USD20.0m). Their expiry will reduce Utilico's finance costs, assuming no change in current interest rates.

Cash balances at the year end were broadly unchanged from 30 June 2008 at £4.5m.

Revenue Income

Gross revenue from investments held fell by 18.7% to £8.5m. This was partly a result of sales of investments in order to repay bank debt. It should also be noted that Infratil's final dividend, which was unchanged on previous years, went ex-dividend in July rather than June as it did in 2008, and as such will fall into the current financial year to June 2010 rather than into the June 2009 year. The net effect of this is a reduction in income of some £1.5m, which will be recouped in the year to June 2010. The income not receivable of £0.8m refers to interest accrued in Newtel which has been re-valued to zero as there is some doubt as to whether this interest will be received.

Elsewhere we remain encouraged by dividend payments, particularly in the emerging markets, with UEM maintaining its dividend despite the difficult economic environment. Dividend increases were seen in some investments such as JEL and Zurich Airport, offset by reductions elsewhere including REG. The revenue yield on gross assets increased from 2.3% to 2.6% mainly reflecting the greater proportionate fall in gross assets than revenue.

Expenses

Management, administration, and other expenses fell to £2.4m from £3.1m in the previous period. This reflects management fees which are linked to the level of gross assets. Other costs, such as administration fees, are fixed, and as such the total expense ratio increased marginally from 0.7% to 0.8% in the year.

Finance costs charged through the revenue return fell from £3.6m to £2.6m as a result of the reduction in bank debt.

The bulk of finance costs arise from the three tranches of ZDP shares in issue, these costs being charged against capital return. It should be noted that these costs are fixed and are not affected by movements in interest rates.

Buybacks

Utilico has bought back 4,745,660 ordinary shares for cancellation during the year at a cost of £8.8m, plus it has acquired ZDP shares for investment purposes, which are effectively cancelled on preparing the group consolidated balance sheet. No specific policy exists relating to buy-back of shares, but the Directors will continue to buy back shares if it is felt appropriate. Consideration will be given to the demand for Utilico's shares by market participants, the level of discount between the share price and the NAV, the availability of shares to repurchase, and also other investment opportunities. The Board will renew the authority to buy back up to 14.99% of the ordinary shares in order to preserve its flexibility. It should be noted however, that no shares will be repurchased if, following such purchases, the ZDP share cover on any class of ZDP share would be below 1.4x. At the year end the cover on the 2016 ZDP shares was 1.29x.

PRINCIPAL RISKS AND RISK MITIGATION

The Group's assets consist mainly of quoted equity securities and its principal risks are therefore market 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 and revenue streams.

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

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 2009. 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 Company and the financial performance and cash flows of the Group and 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 financial statements on the 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 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 financial statements give a true and fair view of the assets, liabilities,

financial position and loss of the Group and Company, and the Investment Manager's report includes a fair review of

development and performance of the business and a description of the principal risks and uncertainties that they face.

In so far as the Directors are aware:

there is no relevant audit information which the Company's auditors are 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 are 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 auditors does not involve consideration of the

maintenance and integrity of the website and accordingly, the auditors accept 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 financial statements may differ from legislation in their jurisdiction.

GROUP PERFORMANCE SUMMARY

	30 June 2009	30 June 2008(1)	Change
Ordinary shares
Capital value
Net asset value per ordinary share (undiluted)	146.87p	225.20p	(34.8%)
Net asset value per ordinary share (diluted)	146.87p	225.20p	(34.8%)
Share prices and indices
Ordinary share price	117.00p	234.00p	(50.0%)
Discount/(premium) (based on diluted NAV per ordinary share)	20.3%	(3.9%)
FTSE All-Share Index	2,172	2,856	(23.9%)
Returns and dividends
Revenue return per ordinary share (undiluted)	2.77p	3.56p	(22.2%)
Capital return per ordinary share (undiluted)	(82.62p)	(103.32p)	n/a
Total return per ordinary share (undiluted)	(79.85p)	(99.76p)	n/a
Dividend per ordinary share	-	-	n/a
Zero dividend preference (ZDP) shares (2)
2012 ZDP Shares
Capital entitlement per ZDP share	141.65p	132.39p	7.0%
ZDP share price	150.75p	135.50p	11.3%
2014 ZDP Shares
Capital entitlement per ZDP share	115.37p	107.57p	7.3%
ZDP share price	116.50p	108.50p	7.4%
2016 ZDP Shares
Capital entitlement per ZDP share	115.37p	107.57p	7.3%
ZDP share price	102.50p	103.75p	(1.2%)
Warrants
2012 warrant price	3.50p	79.50p	(95.6%)
Equity holders funds (£m)
Gross Assets (3)	288.9	414.6	(30.3%)
Bank debt	17.0	69.2	(75.4%)
ZDP debt	145.1	140.2	3.5%
Equity holders' funds	126.8	205.2	(38.2%)
Revenue account (£m)
Income	8.5	10.5	(19.0%)
Costs (management and other expenses) (4)	2.4	3.1	(22.6%)
Finance costs	2.6	3.6	(27.8%)
Financial ratios of the Group
Revenue yield on average Gross Assets	2.6%	2.3%
Total expense ratio on average Gross Assets	0.8%	0.7%
Bank loans and ZDP shares gearing on Gross Assets	56.1%	50.5%

(1) Restated for consolidation of GERP.

(2) Issued by Utilico Finance Limited, a wholly owned subsidiary of Utilico 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 and income not receivable.

GROUP INCOME STATEMENT

				Period to 30 June 2008
	Year to 30 June 2009			restated
	Revenue	Capital	Total	Revenue	Capital	Total
	return	return	return	return	return	return
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s

Losses on investments	-	(60,202)	(60,202)	-	(88,057)	(88,057)
Gains on derivative instruments	-	2,689	2,689	-	19,140	19,140
Exchange gains/(losses)	20	(8,141)	(8,121)	3	(5,573)	(5,570)
Investment and other income	8,506	2,172	10,678	10,465	-	10,465
Total income	8,526	(63,482)	(54,956)	10,468	(74,490)	(64,022)
Income not receivable	(789)	-	(789)	-	-	-
Management and administration fees	(1,601)	-	(1,601)	(2,291)	111	(2,180)
Other expenses	(811)	(27)	(838)	(795)	(21)	(816)
Profit/(loss) before finance costs and taxation	5,325	(63,509)	(58,184)	7,382	(74,400)	(67,018)
Finance costs	(2,551)	(9,983)	(12,534)	(3,618)	(9,809)	(13,427)
Reduction of ZDP share liability	-	1,533	1,533	-	-	-
Profit/(loss) before taxation	2,774	(71,959)	(69,185)	3,764	(84,209)	(80,445)
Taxation	(358)	-	(358)	(860)	-	(860)
Profit/(loss) for the period	2,416	(71,959)	(69,543)	2,904	(84,209)	(81,305)

Earnings per ordinary share (basic) - pence	2.77	(82.62)	(79.85)	3.56	(103.32)	(99.76)
Earnings per ordinary share (diluted) - pence	2.77	(82.62)	(79.85)	3.24	n/a	n/a

The total column of this statement represents the Groups income statement, prepared in accordance with IFRSs.

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

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.

INCOME STATEMENT OF THE COMPANY

	Year to 30 June 2009			Period to 30 June 2008
	Revenue	Capital	Total	Revenue	Capital	Total
	return	return	return	return	return	return
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s

Losses on investments	-	(55,019)	(55,019)	-	(94,251)	(94,251)
(Losses)/gains on derivative instruments	-	(995)	(995)	-	25,364	25,364
Exchange losses	-	(8,610)	(8,610)	-	(5,677)	(5,677)
Investment and other income	8,484	2,172	10,656	10,298	-	10,298
Total income	8,484	(62,452)	(53,968)	10,298	(74,564)	(64,266)
Income not receivable	(789)	-	(789)	-	-	-
Management and administration fees	(1,601)	-	(1,601)	(2,291)	111	(2,180)
Other expenses	(738)	(27)	(765)	(709)	(21)	(730)
Profit/(loss) before finance costs and taxation	5,356	(62,479)	(57,123)	7,298	(74,474)	(67,176)
Finance costs	(2,551)	(10,116)	(12,667)	(3,530)	(9,809)	(13,339)
Profit/(loss) before taxation	2,805	(72,595)	(69,790)	3,768	(84,283)	(80,515)
Taxation	(359)	-	(359)	(790)	-	(790)
Profit/(loss) for the period	2,446	(72,595)	(70,149)	2,978	(84,283)	(81,305)

Earnings per ordinary share (basic) - pence	2.81	(83.36)	(80.55)	3.65	(103.41)	(99.76)
Earnings per ordinary share (diluted) - pence	2.81	(83.36)	(80.55)	3.33	n/a	n/a

The total column of this statement represents the Groups income statement, prepared in accordance with IFRSs.

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

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 2009
	Ordinary	Share		Non-	Retained earnings
	share	premium	Warrant	distributable	Capital	Revenue
	capital	account	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 30 June 2008	9,200	242,188	3,051	32,067	(84,209)	2,904	205,201
(Loss)/profit for the year	-	-	-	-	(71,959)	2,416	(69,543)
Conversion of warrants	-	1	-	-	-	-	1
Ordinary shares repurchased by the Company	(563)	(8,238)	-	-	-	-	(8,801)
Balance at 30 June 2009	8,637	233,951	3,051	32,067	(156,168)	5,320	126,858

for the period to 30 June 2008
	Ordinary	Share		Non-	Retained earnings
	share	premium	Warrant	distributable	Capital	Revenue
	capital	account	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
(Loss)/profit for the period (restated)	-	-	-	-	(84,209)	2,904	(81,305)
Issue of ordinary share capital and warrants	7,966	238,030	35,118	-	-	-	281,114
Issue costs of ordinary share capital	-	(547)	-	-	-	-	(547)
Conversion of warrants	1,234	6,719	(32,067)	32,067	-	-	7,953
Purchase of ordinary shares held in treasury	-	(2,014)	-	-	-	-	(2,014)
Balance at 30 June 2008	9,200	242,188	3,051	32,067	(84,209)	2,904	205,201

STATEMENT OF CHANGES IN EQUITY OF THE COMPANY

for the year to 30 June 2009
	Ordinary	Share		Non-	Retained earnings
	share	premium	Warrant	distributable	Capital	Revenue
	capital	account	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 30 June 2008	9,200	242,188	3,051	32,067	(84,283)	2,978	205,201
(Loss)/profit for the year	-	-	-	-	(72,595)	2,446	(70,149)
Conversion of warrants	-	1	-	-	-	-	1
Ordinary shares repurchased by the Company	(563)	(8,238)	-	-	-	-	(8,801)
Balance at 30 June 2009	8,637	233,951	3,051	32,067	(156,878)	5,424	126,252

for the period to 30 June 2008

	Ordinary	Share		Non-	Retained earnings
	share	premium	Warrant	distributable	Capital	Revenue
	capital	account	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s

(Loss)/profit for the period	-	-	-	-	(84,283)	2,978	(81,305)
Issue of ordinary share capital and warrants	7,966	238,030	35,118	-	-	-	281,114
Issue costs of ordinary share capital	-	(547)	-	-	-	-	(547)
Conversion of warrants	1,234	6,719	(32,067)	32,067	-	-	7,953
Purchase of ordinary shares held in treasury	-	(2,014)	-	-	-	-	(2,014)
Balance at 30 June 2008	9,200	242,188	3,051	32,067	(84,283)	2,978	205,201

BALANCE SHEETs

At 30 June		GROUP		COMPANY
	2009	2008 restated	2009	2008
	£'000s	£'000s	£'000s	£'000s
Non current assets
Investments	281,031	378,806	288,399	413,252
Current assets
Other receivables	3,248	2,745	3,248	2,694
Derivative financial instruments	2,444	45,525	-	730
Cash and cash equivalents	4,496	5,423	4,355	3,996
	10,188	53,693	7,603	7,420
Current liabilities
Bank loans	-	(25,000)	-	(25,000)
Other payables	(912)	(2,274)	(151,508)	(146,305)
Derivative financial instruments	(1,375)	(15,652)	(1,242)	-
	(2,287)	(42,926)	(152,750)	(171,305)
Net current assets/(liabilities)	7,901	10,767	(145,147)	(163,885)
Total assets less current liabilities	288,932	389,573	143,252	249,367
Non-current liabilities
Bank loans	(17,000)	(44,166)	(17,000)	(44,166)
Zero dividend preference shares	(145,074)	(140,206)	-	-
Net assets	126,858	205,201	126,252	205,201

Equity attributable to equity holders
Ordinary share capital	8,637	9,200	8,637	9,200
Share premium account	233,951	242,188	233,951	242,188
Warrant reserve	3,051	3,051	3,051	3,051
Non-distributable reserve	32,067	32,067	32,067	32,067
Capital reserves	(156,168)	(84,209)	(156,878)	(84,283)
Revenue reserve	5,320	2,904	5,424	2,978
Total attributable to equity holders	126,858	205,201	126,252	205,201

Net asset value per ordinary share
Basic - pence	146.87	225.20	146.17	225.20

CASH FLOW STATEMENTs

for the period to 30 June		GROUP		COMPANY
	2009	2008 restated	2009	2008
	£'000s	£'000s	£'000s	£'000s
Cash flows from operating activities	68,158	(74,475)	69,970	(86,438)
Cash flows from investing activities	-	-	-	-
Cash flows before financing activities	68,158	(74,475)	69,970	(86,438)
Financing activities
Equity dividends paid	-	-	-	-
Movement on borrowings	(64,754)	80,335	(64,754)	91,996
Proceeds from warrants exercised	1	7,954	1	7,954
Cost of share buy back	(8,801)	(2,014)	(8,801)	(2,014)
Cash flows on issue of ordinary share capital	-	203	-	(667)
Cash flows from financing activities	(73,554)	86,478	(73,554)	97,269

Net increase in cash and cash equivalents	(5,396)	12,003	(3,584)	10,831
Cash and cash equivalents at the beginning of the period	5,423	-	3,996	-
Effect of movement in foreign exchange	4,469	(6,580)	3,943	(6,835)
Cash and cash equivalents at the end of the period	4,496	5,423	4,355	3,996

NOTES

The Company is an investment company incorporated in Bermuda on 17 January 2007 and quoted on The London Stock Exchange. The Company commenced trading on 20 June 2007.

The consolidated Accounts for the year ended 30 June 2009 comprise the results of the Company and its subsidiaries Utilico Finance Limited, Utilico NZ Limited and UEM Holdings Limited and its special purpose entity Global Equity Risk Protection Limited.

This statement was approved by the Board on 16 September 2009. It is not the Company's statutory accounts. The statutory accounts for the financial year ended 30 June 2009 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 2008 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 towards the end of September 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.