Company Announcements

ECOFIN GLOBAL UTILITIES AND INFRASTRUCTURE TRUST PLC

Interim Financial Results for the six months ended 31 March, 2019

Announcement of Unaudited Results

This announcement contains regulated information.

Ecofin Global Utilities and Infrastructure Trust plc (the "Company") is an authorised UK investment trust whose objectives are to achieve a high, secure dividend yield on a portfolio invested primarily in the equities of utility and infrastructure companies in developed countries and long-term growth in the capital value of the portfolio while preserving shareholders' capital in adverse market conditions.

·      During the six months ended 31 March, 2019, the Company's net asset value ("NAV") per share increased by 8.5% on a total return basis (assuming the reinvestment of dividends).  The price of an ordinary share increased by 6.3% on a total return basis over the six months;

·      Two quarterly dividends of 1.6p each, totalling 3.2p, were paid, providing a dividend yield (annualised) of 5.0% on 129.0p, the price of the Company's shares as at 31 March, 2019;

·      The discount to NAV at which the shares traded was 15.6% as at 31 March, 2019 and is currently 11.3% based on a NAV per share of 153.12p as at 20 May, 2019;

·      The performance of the NAV since inception is on track to meet our total return target of 6-12% per annum over the long-term;

·      The fundamentals for businesses operating in the Company's sectors are strong and the Board shares the Investment Manager's confidence in our investment universe as companies deliver the anticipated growth in free cash flow and dividends.

Financial Highlights

as at 31 March, 2019

1. Dividends paid (annualised) as a percentage of share price.

2. Gearing is the Company's borrowings (including the net amounts due from brokers) less cash divided by net assets attributable to shareholders.

3. The ongoing charges ratio is calculated in accordance with guidance issued by the Association of Investment Companies as the operating costs (annualised) divided by the average NAV (with income) throughout the year. The ratio for 31 March, 2019 is based on forecast ongoing charges for the year ending 30 September, 2019.

4. The Company was incorporated on 27 June, 2016 and its investment activities began on 13 September, 2016 when the liquid assets of Ecofin Water & Power Opportunities plc ("EWPO") were transferred to it. The formal inception date for the measurement of the Company's performance is 26 September, 2016, the date its shares were listed on the London Stock Exchange.

5. Total return includes dividends paid and reinvested immediately. Please also refer to the Alternative Performance Measures on page 22 of the Interim Report.

Chairman's Statement

Performance

Equity markets declined sharply in the last quarter of 2018 but, despite continuing economic and political uncertainty, recovered strongly in the first quarter of 2019. Amidst this volatility, your Company's net asset value (NAV) made good progress during the six months to 31 March, 2019, helped by the postponement of central banks' planned policy rate rises and a significant decline in bond yields. Of at least equal importance, improved fundamentals and good results for companies in EGL's portfolio assisted the Company's performance.

During the half-year, the NAV per share increased by 6.1% and, assuming a reinvestment of quarterly dividends paid, the total return was 8.5%. Over the same period, the price of the Company's shares rose by 3.6% and the total return on the shares was 6.3% while world equity markets declined (the MSCI World Index fell by 2.0%) and the total return on the MSCI World Utilities Index was 11.5%. The S&P Global Infrastructure Index, which lagged the performance of its largest constituents - utilities - by a significant margin until the turn of the year, returned 8.6% in Sterling.

The discount to NAV narrowed to less than 8% during December's equity market downturn but averaged 12.2% during the half-year, even though the Company's sectors outperformed the broader market and the NAV reached a new high on 21 March, 2019. At the end of the half-year, the discount was a disappointing 15.6% but has narrowed subsequently. We continue to work hard to raise the profile of the Company and reduce its cost base while the expertise of the Investment Manager and the merits of the investment universe are evident in the NAV's performance. Our efforts will continue and we expect the Company's share price will catch up further with the NAV's progression.

Tortoise/Ecofin

It was announced in December that the Company's Investment Manager, Ecofin Limited, had been acquired by Tortoise Investments LLC ("Tortoise"), a privately-owned firm based in Kansas City. Tortoise is a specialist investor in essential assets and an experienced manager of closed-end funds, and therefore a highly suitable owner of Ecofin Ltd. It is moving quickly to integrate Ecofin, whose name was changed to Tortoise Advisors UK Limited ("Tortoise UK"). Though fully owned by Tortoise, Tortoise UK remains a separate legal entity which is regulated by the Financial Conduct Authority ("FCA") and U.S. Securities and Exchange Commission ("SEC"). We are impressed by the two entities' complementary cultures and with Tortoise's support for the Company while the additional investment research expertise should also be valuable.

Continuation vote and reduction in management fee

The continuation vote put to shareholders at the Company's Annual General Meeting on 5 March, 2019 passed with 97.5% of proxy votes lodged in favour. With effect from the passing of the vote, the investment management fee was reduced to 1% of net assets per annum and the Company is no longer paying a contribution towards Tortoise UK's research costs. Your Board continues to keep a keen eye on costs with a view to increasing the dividend coverage ratio and continuing to reduce the ongoing charges ratio.

Outlook

Between the end of the half-year and 20 May, the NAV total return has been 1.3% and the shares have returned 6.5%. The discount to NAV has narrowed to 11.3%. The Investment Manager's Report outlines the strong fundamentals in the Company's sectors and the strategic shifts transforming the power sector. We are pleased to note that the performance of the NAV since inception has met our total return target of 6-12% per annum and expect it to continue to do so over the long-term.

David Simpson

Chairman

22 May, 2019

Investment Manager's Report

The economy and markets

The final quarter of 2018 was uncomfortable for equity markets which succumbed to apprehensions about a deceleration in global activity, particularly in Asia and Europe, and the protracted trade dispute between the United States and China.  Equity markets rallied enthusiastically in the first quarter of 2019, however, as long-term bond yields declined and central banks signalled more accommodative monetary policies.  The MSCI World Index, which had declined by 11.3% in the final quarter of 2018, recovered considerable ground in the opening months of 2019.  Over the six months which ended on 31 March, 2019, the MSCI World Index fell by 2.0% (all total returns in Sterling).  Sterling was volatile reflecting the lack of consensus in Parliament about the strategy for Brexit but it closed the half-year almost unchanged against the US dollar and approximately 3.5% stronger against the Euro.

Utilities and listed economic infrastructure shares performed well against this backdrop of moderate growth, flattening yield curves and risk aversion.  The MSCI World Utilities Index rose by 11.5% and the S&P Global Infrastructure Index, comprising 75 listed infrastructure companies (utilities, energy infrastructure and industrials), increased by 8.6% during the half-year (total returns in Sterling).  Utilities outperformed the broad averages in every region and by the largest margin in Continental Europe.  Reported earnings lived up to, and in many cases exceeded, expectations, justifying the rising valuations.  Infrastructure share prices were more closely correlated with broad market averages than with utilities for much of 2018 but recovered smartly in recent months and outperformed the advance of utilities and the MSCI World Index in 2019's first calendar quarter.

Performance

Over the half-year, the Company's NAV increased by 8.5% on a total return basis.  Given that the Company's portfolio is diversified beyond utilities, we were not surprised to see the NAV lag behind the strong advance in the global utilities index.  Sterling's strength against the Euro was also a factor.  The S&P Global Infrastructure Index rose by 8.6% over the same period after a significant recovery in non-utility infrastructure shares in the three months to the end of March 2019. 

The ten best performing stocks in the Company's portfolio over the half-year were utilities - regulated utilities, integrated names and yieldcos - and by region the best contribution to NAV performance came from the North American allocation.  The Company's collection of American names, led by utilities NextEra Energy, Terraform Power, Exelon, Public Service Enterprise and American Electric Power, outperformed the local index.  Equally importantly we had decided not to hold shares in Pacific Gas & Electric, California's largest utility, which filed for bankruptcy in January 2019, and exited in a timely manner from two of the groups potentially most exposed to that event, Atlantica Yield and Clearway Energy.  The Italian utility Enel and Spain's Iberdrola were the largest individual contributors to NAV performance over the six months (their shares rose 32% and 26%, respectively) and RWE, a relative newcomer to the high conviction largest holdings list, also performed strongly.  EDF's shares, on the other hand, after their strong gains during the Company's last financial year, were pulled lower during the six months to the end of March as power and CO₂ prices moderated and reflecting concern that a possible nationalisation of the company might be sub-optimal for investors.  The small 'rest of the world' portfolio, i.e. other OECD (Australia) and emerging markets (Hong Kong and Thailand currently), detracted from portfolio performance in absolute terms.  

We should reiterate that the portfolio's construction does not pay attention to index allocations.  The average geographical allocations during the half-year are a good illustration of the balance we would expect to maintain between North American (40%), pan-European (54%, including on average approximately 14% in the UK) and 'rest of the world' (6%) exposures in pursuit of income, capital gains and capital preservation.  There is certainly latitude to take advantage of geographic allocation opportunities but we would not expect to have 60% of the portfolio invested in any single market (the MSCI World Utilities Index is comprised 60% of US utilities).

Gearing and yield

Gearing reached a high of 16% of net assets in December 2018 when equity markets were rattled by concerns for global growth.  It averaged 12% of net assets over the half-year and was only moved deliberately lower in February, to closer to 10%, in view of the very strong rises in equity markets and the Company's NAV during the first few months of this year.  The historic yield on the portfolio was 4.6% as at 31 March, 2019.

Outlook

The fundamentals for businesses operating in the Company's sectors have improved materially and valuations are increasing as investors notice the growth in free cash flows and dividends.  Especially in Europe, wholesale power prices should continue to be supported by tight reserve margins - due to the ongoing decommissioning of nuclear and coal capacity - and firm CO₂ prices.  The delayed benefits of the improvements in pricing are expected to continue to feed through to earnings and our confidence in our own forecasts for company cash flows is being reinforced.  Corporate restructuring abounds and balance sheets continue to be deleveraged.  We expect above market average free cash flow and dividend per share growth for utilities in North America and Europe (including the UK) over the next 2 years, barring a dramatic upswing in economic momentum.  In Europe, utilities such as RWE have made profound strategic shifts to drive forward the transformation of the power sector required to provide low carbon electricity; their shares have been performing well but valuations remain modest and in the UK still reflect regulatory and political unease.  Energy infrastructure (Williams Companies) and transportation services companies (Zurich Airport and Ferrovial) provide growth potential and diversification in the portfolio.  Against a background of moderate economic growth, these sectors are offering attractive earnings growth, often from regulated or contracted activities (networks, renewables), and relatively high and sustainable dividend yields - on an absolute basis and relative to government bonds.  The potential reward-to-risk profile is attractive.       

Tortoise Advisors UK Limited

Investment Manager

22 May, 2019

Condensed Statement of Comprehensive Income

The total column of the Condensed Statement of Comprehensive Income is the profit and loss account of the Company.

The revenue and capital columns are supplementary to this and are published under guidance from the Association of Investment Companies.

All revenue and capital returns in the above statement derive from continuing operations. No operations were acquired or discontinued during the six months ended 31 March, 2019.

The Company has no recognised gains or losses other than those recognised in the Condensed Statement of Comprehensive Income and Condensed Statement of Changes in Equity.

Condensed Statement of Financial Position

Condensed Statement of Changes in Equity

1. The share premium account was cancelled on 9 November, 2016. The resultant special reserve may be used, where the Board considers it appropriate, by the Company for the purposes of paying dividends to shareholders and, in particular, smoothing payments of dividends to shareholders.

Condensed Statement of Cash Flows

Notes to the Condensed Financial Statements

for the six months ended 31 March, 2019

1. Accounting policies

(a) Basis of preparation

The Condensed Financial Statements have been prepared in accordance with Financial Reporting Standard ("FRS") 104 Interim Financial Reporting and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in November 2014 and updated in February 2018 with consequential amendments. The Condensed Financial Statements are prepared in Sterling which is the functional currency of the Company and rounded to the nearest £'000. They have also been prepared on a going concern basis and approval as an investment trust has been granted.

The Condensed Financial Statements have been prepared using the same accounting policies as the preceding Financial Statements which were prepared in accordance with Financial Reporting Standard 102.

The financial information contained in this Interim Report does not constitute statutory accounts as defined in Sections 434-436 of the Companies Act 2006. The financial information for the periods ended 31 March, 2019 and 31 March, 2018 has not been audited.

The information for the year ended 30 September, 2018 has been extracted from the latest published audited Financial Statements which have been filed with the Registrar of Companies. The report of the Auditor on those accounts contained no qualification or statement under Section 498 of the Companies Act 2006.

(b) Income

Income from investments, including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are credited to capital or revenue, according to the circumstances. The fixed returns on debt securities are recognised on a time apportionment basis so as to reflect the effective yield on the debt securities. Interest receivable from cash and short-term deposits is treated on an accruals basis.

(c) Expenses

All expenses are accounted for on an accruals basis. Expenses are charged to the revenue account except where they directly relate to the acquisition or disposal of an investment, in which case they are charged to the capital account; in addition, expenses are charged to the capital account where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect, the management fee, research expenses and finance costs have been allocated 50% to the capital account and 50% to the revenue account.

(d) Taxation

The charge for taxation is based on the profit for the period to date and takes into account, if applicable, taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred taxation is provided using the liability method on all timing differences, calculated at the rate at which it is anticipated the timing differences will reverse. Deferred tax assets are recognised only when, on the basis of available evidence, it is more likely than not that there will be taxable profits in future against which the deferred tax asset can be offset.

Due to the Company's status as an investment trust company and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue within the Condensed Statement of Comprehensive Income on the same basis as the particular item to which it relates using the Company's effective rate of tax for the period, based on the marginal basis.

(e) Valuation of investments

For the purposes of preparing the Condensed Financial Statements, the Company has applied Sections 11 and 12 of FRS 102 in respect of financial instruments. All investments are designated upon initial recognition as held at fair value through profit or loss. Investment transactions are accounted for on a trade date basis. Proceeds are measured at fair value, which is regarded as the proceeds of sale less any transaction costs. The fair value of the financial instruments in the Condensed Statement of Financial Position is based on their quoted bid price at the reporting date, without deduction of the estimated future selling costs. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Condensed Statement of Comprehensive Income as "Gains on investments held at fair value through profit or loss". Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase.

(f) Cash and cash equivalents

Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to insignificant risk of change in value.

(g) Borrowings

Short-term borrowings, which comprise of prime brokerage borrowings, are recognised initially at the fair value of the consideration received, net of any issue expenses, and subsequently at amortised cost using the effective interest method. The finance costs, being the difference between the net proceeds of borrowings and the total amount of payments that require to be made in respect of those borrowings, accrue evenly over the life of the borrowings and are allocated 50% to revenue and 50% to capital.

(h) Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business activity, being investment business. Consequently, no business segmental analysis is provided.

(i) Nature and purpose of reserves

Special reserve

The special reserve arose following court approval in November 2016 to transfer the £123,609,000 from the share premium account. This reserve is distributable and may be used, where the Board considers it appropriate, by the Company for the purposes of paying dividends to shareholders and, in particular, augmenting or smoothing payments of dividends to shareholders. There is no guarantee that the Board will in fact make use of this reserve for the purpose of paying dividends to shareholders. The special reserve can also be used to fund the cost of share buy-backs.

Capital reserve

Gains and losses on disposal of investments and changes in fair values of investments are transferred to the capital reserve. Foreign exchange differences of a capital nature are also transferred to the capital reserve. The capital element of the management fee and relevant research and finance costs are charged to this reserve. Any associated tax relief is also credited to this reserve.

Revenue reserve

This reserve reflects all income and costs which are recognised in the revenue column of the Condensed Statement of Comprehensive Income.

The Company's special reserve, capital reserve and revenue reserve may be distributed by way of a dividend.

(j) Foreign currency

Monetary assets and liabilities and non-monetary assets held at fair value in foreign currencies are translated into Sterling at the rates of exchange ruling at the Condensed Statement of Financial Position date. Transactions involving foreign currencies are converted at the rate ruling on the date of the transaction. Gains and losses on the translation of foreign currencies are recognised in the revenue or capital account of the Condensed Statement of Comprehensive Income depending on the nature of the underlying item.

(k) Dividends payable

Dividends are recognised in the period in which they are paid.

2. Income

During the six months ended 31 March, 2019, the Company received no special dividends (31 March, 2018: nil and 30 September, 2018: £224,000 of which £195,000 was recognised as revenue and is included within the income from investments figure above, and £29,000 was recognised as capital dividends and is included in the capital column of the Condensed Statement of Comprehensive Income).

3. Taxation

The taxation expense reflected in the Condensed Statement of Comprehensive Income is based on the estimated annual tax rate expected for the full financial year. The estimated annual corporation tax rate used for the year ending 30 September, 2019 is 19% (2018: 19%).

4. Return/(loss) per ordinary share

5. Ordinary share capital

The Company was admitted to the Main Market of the London Stock Exchange on 26 September, 2016. The total number of ordinary shares in the Company in issue immediately following admission was 91,872,247, each with equal voting rights.

6. Capital reserve

The capital reserve reflected in the Condensed Statement of Financial Position at 31 March, 2019 includes gains of £17,652,000 (31 March, 2018: losses of £2,006,000 and 30 September, 2018: gain of £217,000) which relate to the revaluation of investments held at the reporting date.

7. NAV per ordinary share

8. Dividends on ordinary shares

A second interim dividend for 2019 of 1.60p will be paid on 31 May, 2019 to shareholders on the register on 3 May, 2019.

The ex-dividend date was 2 May, 2019.

9. Transaction costs

During the period expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains/(losses) on investments in the Condensed Statement of Comprehensive Income. The total costs were as follows:

In the prior period and until the introduction of MiFID II in January 2018, the cost of research was included along with trade execution expenses in these transaction costs. Further to the introduction of MiFID II, research expenses were invoiced separately and charged 50% to revenue and 50% to capital, and transaction costs refer to trade execution-related expenses only.

Further to the passing of the continuation vote on 5 March, 2019 the Company has ceased to pay a contribution to the Investment Manager's research costs.

10. Fair value hierarchy

FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following levels:

Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date;

Level 2: inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly; and

Level 3: inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.

The financial assets and liabilities measured at fair value in the Condensed Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows:

a) Quoted equities and preference shares

The fair value of the Company's investments in equities and preference shares has been determined by reference to their quoted bid prices at the reporting date. Equities and preference shares included in Fair Value Level 1 are actively traded on recognised stock exchanges.

11. Related party transactions and transactions with the Investment Manager

The Company has an agreement with Tortoise UK for the provision of investment management services.

The management fee for the six months ended 31 March 2019 was calculated, on a quarterly basis, at 1.25% per annum of the net assets of the Company up until 5 March, 2019. Thereafter, the management fee was calculated, on a quarterly basis, at 1.00% per annum of the net assets of the Company. The management fee is chargeable 50% to revenue and 50% to capital. During the six months, the Investment Manager earned fees of £802,000 (half-year ended 31 March, 2018: £792,000 and financial year ended 30 September, 2018: £1,614,000); the balance outstanding and payable to Tortoise UK at the end of the half-year was £402,000 (31 March, 2018: £377,000 and 30 September, 2018: £414,000).  

There were no related party transactions undertaken by the Company in the six months ended 31 March, 2019.

Interim Management Report

The principal risks and uncertainties that could have a material impact on the Company's performance have not changed from those set out in detail on pages 15 to 17 of the Company's Annual Report for the year ended 30 September, 2018.

The Directors consider that the Chairman's Statement and the Investment Manager's Report above, the above disclosure on related party transactions and the Directors' Responsibility Statement below, together constitute the Interim Management Report of the Company for the six months ended 31 March, 2019 and satisfy the requirements of Disclosure Guidance and Transparency Rules 4.2.3 to 4.2.11 of the FCA.

The Interim Report has not been reviewed or audited by the Company's Auditor.

Directors' Responsibility Statement

The Directors listed on page 23 of the Interim Report confirm that to the best of their knowledge:

(i) the condensed set of Financial Statements has been prepared in accordance with FRS 104 (Interim Financial Reporting) and give a true and fair review of the assets, liabilities, financial position and profit and loss of the Company as required by Disclosure Guidance and Transparency Rule 4.2.4 R;

(ii) the Interim Management Report includes a fair review, as required by Disclosure Guidance and Transparency Rule 4.2.7 R, of important events that have occurred during the six months ended 31 March, 2019 and their impact on the condensed set of Financial Statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

(iii) the Interim Management Report includes a fair review of the information concerning related party transactions as required by Disclosure Guidance and Transparency Rule 4.2.8 R.

This Interim Report was approved by the Board on 22 May, 2019 and the Directors' Responsibility Statement was signed on its behalf by:

David Simpson

Chairman

22 May, 2019

Interim Report 2019

The Company's Interim Report for the six months ended 31 March, 2019 will be posted to shareholders in June 2019. Copies of the Interim Report will be available from the Registered Office of the Company at 10 Harewood Avenue, London NW1 6AA and on the website, https://tortoiseadvisors.com, which is a website maintained by Tortoise Investments LLC, the parent company of the Company's Investment Manager, Tortoise Advisors UK Limited. A copy of the Interim Report for the six months ended 31 March, 2019 has been submitted to the National Storage Mechanism of the Financial Conduct Authority and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/nsm. The financial information for the period ending 31 March, 2019 comprises non-statutory accounts within the meaning of Sections 434 - 436 of the Companies Act 2006.

For further information, please contact:

Susan Gledhill

Company Secretary

For and on behalf of

BNP Paribas Secretarial Services Limited

Tel: 020 7410 5971

22 MAY, 2019