18 Apr 2011 18:21
Ecofin Water & Power Opportunities Plc
March 2011 Review
Performance (1) | |||||
As at31 March, 2011 | 1 month | 3 months | 12 months | SinceLaunch (2) | |
Total Net Assets | £435,066,942 | 1.4% | 2.1% | -3.1% | 177.1% |
of ZDP Shares | £66,359,392 | ||||
of Ordinary Shares | £368,707,550 | ||||
Ordinary Shares (3) | |||||
Ordinary Share Price | 122.00p | -4.9% | -9.1% | -14.7% | 22.0% |
Ordinary Share NAV(4) | 175.28p | 1.5% | 2.2% | -3.0% | 68.0% |
Premium / (Discount) | (30.40%) | ||||
Dividend Yield (5) | 6.45% |
The net assets, NAVs per share and shareholders' funds shown above have been prepared valuing the Company's investment portfolio on the basis of bid-prices. The share prices shown for the Company's Ordinary Shares are mid-prices. | |
1 | Adjusted for a £50 million capital increase in June 2005, a £108.2 million capital increase in January 2007, tender offers in July 2007 and April 2009 and the launch of £60 million nominal value of Zero Dividend Preference shares (ZDP shares) in July 2009 |
2 | Company launched on 28 February, 2002. Ordinary Shares since 29 June, 2005. |
3 | First issued on 29 June, 2005 at 100p per share and an initial NAV per share of 104.91p. |
4 | Not fully diluted |
5 | Total dividends paid over last 12 months ÷ share price. |
Capital Structure as at 31 March, 2011 | As reported (£) | As adjusted (£) |
Total Assets (less cash at bank) | 584,156,000 | 564,151,000 |
Cash at bank | 3,936,000 | 23,941,000 |
Total Assets | 588,092,000 | 588,092,000 |
Bank Debt | 74,143,000 | 74,143,000 |
Convertible Unsecured Loan Stock | 78,882,000 | 78,882,000 |
Zero Dividend Preference Shares | 66,359,000 | 66,359,000 |
Net Assets attributable to Ordinary Shares | 368,708,000 | 368,708,000 |
£588,092,000 | £588,092,000 | |
Gearing (net debt/ordinary shareholders funds) | 58.4% | 53.0% |
The total assets of the Company include an equity investment of £20.6million in EIH Cyprus Group which is a joint venture between the Company and other funds managed by the Investment Manager, Ecofin Limited. 96.9% of the assets of EIH Cyprus are in cash which represents the proceeds of the sale of one of the Company's investments, Solel Limited. The figures in the 'as adjusted' column of the table above have been adjusted to include the Company's share of this cash in the cash at bank figure. Net Debt is Bank Debt, the Convertible Unsecured Loan Stock and the Zero Dividend Preference Shares, less cash at bank. The assets of the company include approximately £77.3m in bonds, and put options representing approximately £2.3m on a delta adjusted basis. Adjusting the total assets less cash at bank ('as adjusted') for these two components, the total equity exposure of the Company was 132.7% of Ordinary Shareholders' net assets. |
Analysis by Sector | % of portfolio | Analysis by Country | % ofportfolio | ||||
Power | 30.5% | United Kingdom | 15.2% | ||||
Oil & Gas | 19.7% | Other Europe | 24.7% | ||||
Utility-Related | 19.3% | France | 7.3% | ||||
Alternative Energy | 7.5% | Italy | 4.0% | ||||
Water | 6.9% | Germany | 3.6% | ||||
Infrastructure | 4.8% | Finland | 1.5% | ||||
Bonds | 11.3% | Belgium | 1.0% | ||||
Spain | 1.5% | ||||||
100.0% | Other | 5.8% | |||||
North America | 43.6% | ||||||
Other Developed | 3.3% | ||||||
Emerging Markets | 13.2% | ||||||
China | 8.5% | ||||||
Other Emerging Markets | 4.7% | ||||||
100.0% | |||||||
Analysis by Market Capitalisation of Companies in Portfolio | % of Portfolio | |
Less than £ 200 million | 11.4% | |
£200 to £1,000 million | 9.6% | |
£1,000 million to £5,000 million | 20.8% | |
£5,000 million to £10,000 million | 8.1% | |
Above £10,000 million | 24.8% | |
Bonds | 11.3% | |
Unquoted | 14.1% | |
100.0% |
Top Ten Investments | % ofportfolio | Sector | Country |
Ecofin Energy Resources | 6.4% | Gas | United States |
Ecofin China Power & Infrastructure Fund | 5.6% | Utility-Related | China |
Hansen Transmissions | 4.2% | Renewables | United Kingdom |
EIH Cyprus A | 3.4% | Renewables | Cyprus |
ITC Holdings Corp | 3.2% | Power | United States |
Northumbrian Water Group | 2.5% | Water | United Kingdom |
Williams Ord | 2.2% | Gas | United States |
Groupe Eurotunnel | 2.1% | Infrastructure | France |
Origo Partners | 2.0% | Utility-Related | China |
International Power | 2.0% | Power | United Kingdom |
33.6% | |||
REVIEW OF MARCH
In March, the net assets attributable to the Company's Ordinary Shares rose by 1.5% and the total net assets of the Company, including those attributable to its Zero Dividend Preference Shares, rose by 1.4%. In comparison, the FTSE All Share index declined by 1.3%, the Euro Stoxx index rose by 1.3% and the US S&P 500 index rose by 1.3%, all in sterling terms. In the utilities sector, the FTSE Utilities index declined by 0.3%, the Euro Stoxx Utilities index rose by 1.0% and the US S&P 500 Utilities index rose by 1.2%, all in sterling terms. Over the course of the month, sterling declined by 1.4% against the US dollar and declined by 3.9% against the Euro.
EUROPE
Pan-European utilities were down 3.3% for the month and the European market was down 3.7% in March. Nuclear stocks were severely affected by the Fukushima accident in Japan. Our positions in regulated utilities proved defensive in such a context. We remain exposed to commodity strength through names with a high fixed cost base that are able to pass through power price increases to their customer base. The French environmental groups have suffered from the announcement that they would pay their dividends partly in scrip, however, we still believe in such business models. We continue to play Infrastructure groups which benefit from the relative strength in the Northern European economies.
NORTH AMERICA
The S&P 500 Utilities index was slightly down in March, as was the broad S&P 500 index. The relatively flat performance of the broader markets belies the volatility experienced following the earthquake and subsequent nuclear crisis in Japan as well as the conflict in Libya. Utilities underperformed again in March, while energy continues to outperform the general market. Local distribution companies, small/mid cap utilities and water utilities were the better performers in March while integrated utilities lagged given the combination of nuclear concerns and proposed EPA air regulations which were perceived to be less onerous on coal plants than previously anticipated. We maintain a cautious pro-cyclical bias in North America although Middle Eastern political unrest and high oil prices remain issues, as do higher interest rate concerns. In terms of the utility sector, the Fukushima Daiichi crisis has increased the re-licensing risk for some US nuclear facilities as the Nuclear Regulatory Commission is conducting a thorough safety review. Natural gas still has short term issues given the abundance of shale supply, but the long-term outlook is supported by several promising demand trends (coal plant retirements, export opportunities, pressure on nuclear facilities and increased petrochemical demand). We are constructive on natural gas and natural gas liquids infrastructure as a result.
CHINA
Chinese March Purchasing Managers' Index (PMI) rose to 53.4 from 52.2 in February and 52.9 in January. Both manufacturing and non-manufacturing PMIs point to a recovery of growth momentum and an easing of inflationary pressure. Pressure for monetary tightening should taper off in the coming months. China trade data was generally positive for the equity markets in the first quarter.
Premier WEN Jiapao hosted a State Council meeting to review China's nuclear policy after the Fukushima accident in Japan. The meeting decided to suspend the approval of all new nuclear power plants and to start a comprehensive safety review of all nuclear plants under construction. Apparently the nuclear target for 2020 is also under discussion for possible revision. This news resulted in a sell off in power equipment manufacturers. We are increasingly confident about wind and solar, however, as their outlook should improve due to concerns regarding nuclear macro risks.
Ecofin Water & Power Opportunities plc. Registered in England, Number 4134479. Registered Office: Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW, United Kingdom.