The Hardman & Co Monthly: June 2023
Feature article: UK Water – making wavesOver the past year, UK utility share prices have been volatile, especially within the electricity sub-sector. The combination of the war in Ukraine and the associated impact of fluctuating gas prices, along with sharply higher inflation and the consequential rise in interest rates, have destabilised much of the sector. Indeed, most sector constituents have seen their share pieces fall (although not seriously), while Centrica, the UK’s leading gas company, has bucked the trend, with a near 50% rise over the past year, albeit from a very low base.
The two largest quoted water companies have announced their full-year results in recent days (the announcement of Pennon’s full-year results post-dates the compilation of this publication). The results of the two leading water stocks, Severn Trent and United Utilities, contained few surprises; but the latter’s revenues fell by over 2%. The impact of surging inflation has seen a sharp spike in those interest payments associated with index-linked bonds, a funding mechanism to which United Utilities, in particular, is exposed; consequently, its adjusted EPS for 2022/23 was negative.
Advanced Oncotherapy is focused on providing radiotherapy systems for cancer treatment through the use of a proton therapy technology. Co. operates in two business segments: proton therapy and healthcare related properties. The healthcare related property U.K. segment relates to Co.'s property in Folkestone, which is being marketed for sale.
Apax Global Alpha is a closed-ended investment company that invests in a diversified portfolio of private equity funds and derived investments in debt and equities. As of Dec 21 2017, Co. targeted an annualized Total Net Asset Value Return across economic cycles of 12-15%, net of fees and expenses. Co.'s investment activities are managed by Apax Guernsey Managers Limited (the Investment Manager) under a discretionary investment management agreement. The Investment Manager obtains investment advice from Apax Partners LLP (Apax Partners). Apax Partners advises on investments globally in companies across four sectors: Tech & Telco, Services, Healthcare and Consumer.
Chesnara is a holding company, engaged in the management of life assurance and pension policies. Co.'s segment are CA, S&P, Movestic, and Waard Group. The CA segment is part of Co.'s U.K. life insurance and pensions run-off portfolio. The S&P segment is responsible for conducting both unit-linked and non-linked business, including a with-profits portfolio. The Movestic segment is responsible for conducting both unit-linked and pensions and savings business and providing some life and health product offerings. The Waard Group segment provides life policies, although also includes unit-linked policies and some non-life policies, covering risks such as occupational disability and unemployment.
City of London Investment Group is the holding company for a number of subsidiaries. The principal operating subsidiary is City of London Investment Management Company Limited, which acts as an investment manager on 38 accounts with a total of £3.58 billion under management as at June 30 2017. Co. is an asset management group with an institutional client focus specializing in Emerging Market closed-end fund investments. Co.'s range also include Developed, Frontier and Global Tactical Asset Allocation closed-end fund strategies.
H&T Group is a holding company. Through its subsidiary, Harvey & Thompson Limited, Co. is engaged in pawnbroking, gold purchasing, retail of jewellery, cheque cashing, unsecured lending and other related services.
ICG Enterprise Trust is an investment trust. Co. is a private equity investment company focused on buyouts in developed markets. Co. invests in private equity funds and also directly in private companies. As of Jan 31 2017, Co.'s total investment portfolio amounted to £594.3 million.
Pantheon International is an investment trust company. Co. invests in a diversified portfolio of private equity assets managed by third party managers across the world. Co. manages its portfolio by creating primary and secondary investments in private equity funds as well as co-investing directly in companies alongside private equity managers. Co. is engaged in the single segment of business, being an investment business. As of May 31 2017, the market value of Co.'s investment portfolio was £1,224,000,000.
Shield Therapeutics is a specialty pharmaceutical company focused on the development and commercialization of late stage, hospital-focused pharmaceuticals which address areas of high unmet medical need. Co.'s key products are Feraccru®, commercially available for the treatment of Iron Deficiency Anaemia, and PT20, for the treatment of systemic phosphate accumulation (otherwise known as hyperphosphatemia). Co. has an additional pipeline of three prescription pharmaceutical assets (PT20, PT30 and PT40) with commercial synergies.
United Utilities Group is a water company. Through its subsidiary, United Utilities Water Limited, Co. provides water and wastewater services to peoples in the North West of England.
Volta Finance is a closed-ended investment company with the objective of investing, among other asset types, in the following main asset classes: Collateralized Loan Obligation, Synthetic Corporate Credit, Cash Corporate Credit and ABS. Co. has appointed AXA Investment Managers Paris S.A., as its Alternative Investment Fund Manager to manage the investments of Co.
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