Annual Financial Report

RNS Number : 0338F

Utilico Emerging Markets Limited

11 June 2012

 



Date:                11 June 2012

Contact:           Charles Jillings                                              

Utilico Emerging Markets Limited                    

01372 271 486                                               

Alastair Moreton

Westhouse Securities Limited

0207 601 6100

Utilico Emerging Markets Limited

Statement of Results

for the year to 31 March 2012

Highlights of results

·      Revenue earnings per share of 4.12p

·      Net asset value of 175.60p

·      Net asset value total return equal to 3.1%

·      Dividends per ordinary share of 5.50p, up 5.8%

·      Dividends per share represent a yield of 3.4% on ordinary share price

·      Share price increase of 6.25p, up 4.0% to 164.00p

Chairman's Statement

I am pleased to report that Utilico Emerging Markets Limited ("UEM" or the "Company") achieved a positive net asset value ("NAV") total return per ordinary share of 3.1% in the year to 31 March 2012. This is a good performance in difficult markets. The performance outstripped the MSCI Emerging Markets Total Return Index (GBP adjusted), which fell by 8.2%.

Since inception UEM has reported a positive return in six out of seven years, resulting in an average annual compound total return per ordinary share of 12.3%.

The revenue earnings per share ("EPS") have been reduced by several factors, including one-off costs of migration of UEM's listing to the Main Market (£0.5m) and the reduction and deferral of a number of dividends due from companies in our investment portfolio, including Eastern Water Resources PCL dividend deferral of £1.0m. This resulted in our revenue EPS reducing from 5.61p to 4.12p.

The management and administration fees fell sharply in the year to £1.8m, down 78.7%, as no performance fee was earned by the Investment Manager. The performance hurdle for future performance fees stands at 175.60p as at 31 March 2012.

As a Bermuda company, UEM is able to distribute both capital and income returns as dividends today. Given the change in the UK investment trust rules with effect from 1 April 2012 which allows investment trusts to distribute realised capital profits, the Board has decided to allow for the distribution of capital reserves by way of dividends.

The Board has declared an increased final dividend of 1.75p bringing the total for the year to 5.50p versus 5.20p last year, an increase of 5.8%. This includes an element of capital following the policy change described above. UEM has a Dividend Reinvestment Plan ("DRIP") which shareholders can elect to join if they wish. Further details are available on the Company's website.

The Board is aware of the increasing emphasis investors are placing on dividend income and intends to commence paying dividends in the current financial year on a quarterly basis. It is expected that the first quarterly dividend will be declared in August and paid in September 2012.

The Company bought back 3,068,441 ordinary shares over the year at an average share price of 160.00p per ordinary share. This represented 1.4% of the ordinary shares outstanding on 1 April 2011. We have emphasised in the past that buybacks are an investment decision and there is little empirical evidence that they reduce the share price to NAV discount.

During the year we migrated UEM's stock market listing from AIM to the Main Market. This is a positive step for the Company. While AIM has served us well, the size and interest in UEM is such that a Main Market listing is appropriate. Following this migration it is good to see that UEM has been included in the FTSE All Share Index and is being admitted to the FTSE 250 Index and FTSE 350 Index with effect from 18 June 2012. In addition, Charles Jillings stood down from the Board. Charles has contributed significantly to the Board since inception and I would like to acknowledge his substantial contribution to the formation and development of UEM. However, it does strengthen our corporate governance position by clearly separating the 'investment manager' from the 'Board'. Charles remains as committed to UEM as before and his advice will always be available to and valued by the Board.

OUTLOOK

As expected, the investment environment is and continues to be challenging, especially in the European Union. While the long term refinancing operation ("LTRO") undertaken by the ECB has stabilised the liquidity concerns for the European banks, very substantial market distortions now exist in Europe.

The emerging economies continue to do well and whilst there have been some concerns and significant comment over the hard or soft landing in China, growth remains reasonable. Across the emerging markets GDP continues to grow. In this environment we are able to identify a portfolio of investments which we believe are attractive over the longer term. We remain convinced the utility and infrastructure sectors offer a balanced, logical, growth orientated exposure to the GDP of emerging markets.

Alexander Zagoreos
Chairman
8 June 2012

Investment Manager's Report

The year to 31 March 2012 has been challenging. Most markets retreated over the nine months to 31 December 2011 and then recovered in the three months to 31 March 2012. These movements were driven by concerns over sovereign and bank funding in Europe and the future of Greece's membership of the Euro was brought into question. This, together with concerns over budget limits in the US, the Arab Spring uprisings, the earthquake in Japan and the resultant tsunami, the earthquake in New Zealand, floods in Thailand and volcanic eruption in Iceland has tested the resolve of markets. We have seen significant changes in a number of governments with resultant policy changes. Responses from governments and central banks have been interventionist and generally reactive rather than proactive. All of these contributed to a changing and challenging investment environment.

Against this UEM's net asset value ("NAV") has held up well, achieving a total return of 3.1%, well ahead of the MSCI Emerging Markets Total Return Index (GBP adjusted) which was down by 8.2%. Looked at over the 12 months, the market volatility is illustrated by UEM's returns. In the first half UEM's total return was down by 11.9%. This reversed in the second half which saw a positive total return of 17.4%. It was pleasing to see UEM's NAV outperform both on the way down and on the way up.

As mentioned in the last report and accounts, UEM is about stock selection. The investment analysts travel extensively to review different economies and companies to achieve the optimal allocation and selection. In the last two years, the investment analysts visited China, Malaysia, Thailand, the Philippines, Singapore, Romania, Bulgaria, Egypt, Brazil, Mexico, Peru, Colombia, Chile, India, Romania and Poland.

UEM's investment focus remains mainly on listed companies which are established and profitable. We believe this gives us a better governance environment and a higher visibility on investee companies' management activities. We continue to maintain extensive databases which enable us to compare performance by individual companies against their international peer groups.

PORTFOLIO

UEM's gross assets (less liabilities excluding loans) decreased from £393.4m to £382.9m over the 12 months to 31 March 2012. This reflects in part lower debt levels and in part the shares bought back.

The Company's top ten investments have seen some change, both positionally and with new entrants. The three new entrants are Asia Satellite Telecommunications Holdings Limited ("AsiaSat"), Tractebel Energia S.A. ("Tractebel") and Infrastructure India plc ("IIP"). Details on each company can be found in the Review of the Top Ten on pages 12 to 16.

AsiaSat is an owner and operator of telecommunications satellites and is a typical UEM investment. It has been a relatively under researched company as the free float is small. The two joint major shareholders, CITIC Group Corporation and General Electric Company hold 74.4% through a 50/50 owned joint venture company. Aberdeen Asset Management holds 4.0% and UEM holds 1.9%. The reduced liquidity means a reduced interest by the wider markets.

AsiaSat has been a constituent of the UEM portfolio since 2005. It broadcasts over 500 TV and Radio stations across the Asia Pacific region. The company has seen increasing demand for its capacity in recent years, particularly from India, where changes in regulation are driving exponential growth in pay-tv subscribers.

AsiaSat has performed extremely well during 2011 and has seen its transponder utilisation rate rise from 73% to 82%. Revenues increased by 18% and net profit for the year also rose 18% to HK$822.6m. This was despite HK$105.5m of pre-tax operating and impairment losses in a joint venture in Taiwan that the company has agreed to divest. The company successfully launched a new satellite at the end of 2011, and has ordered two further satellites to be launched in 2014. The company is debt free and has considerable cash balances.

AsiaSat's share price rose 31.0% to HK$19.00 at 31 March 2012. In early April, AsiaSat announced a proposal to privatise the company, at HK$22.00 versus the price at 31 March 2012 of HK$19.00, a 15.8% uplift. This offer was increased to HK$ 23.50 following representations from shareholders, including UEM. We believe this still undervalues AsiaSat as at HK$23.50 the historic EV/EBITDA is 5.2x and the PE ratio is 11.2x. These ratios are not reflective of a company that grew its EPS by an average of 19.3% per annum over the last three years.

Tractebel is a Brazilian hydroelectric operator and is another company which is well positioned to grow its activities in the Brazilian generation and transmissions sectors.

Tractebel's share price increased 18.6% in the year to 31 March 2012. While energy volumes sold were flat in the year to December 2011, improving tariffs and strong hydro production saw revenue growth of 5.5% and core EPS growth of 20.7%. Significantly, the company paid out 100% of earnings as dividends, resulting in a 115.0% uplift in payout. We increased our investment in this company during the year.

IIP is an Isle of Man investment fund investing in Indian infrastructure assets. UEM acquired its original holding in September 2010 and then contributed its investment in Indian Energy to IIP in exchange for shares. This transaction resulted in a substantial increase in our investment in IIP. Today we hold 7.6% of the enlarged group.

Brazil continues to be our top country of investment. We remain of the view that significant investment in the offshore oil and gas industry, firm commodity prices, new infrastructure, recent (and further) privatisations and the football World Cup in 2014 and Olympics in 2016 will provide a positive backdrop to the Brazilian economy. No doubt there are challenges but there are opportunities too.

Ocean Wilsons Holdings ("Ocean Wilson") share price performance over the period was fairly flat, increasing by 3.5%. Wilson Sons results at the operational level were encouraging with an increase in revenues of 21.3% driven by higher yielding imports, as well as increased activity from the towage business. However, the investment portfolio performance over the period was disappointing, leading to an overall drag on net profit which was down to US$8.7m. As a result the dividend was down 21.0%.

We remain frustrated by the compromised corporate structure of Ocean Wilson and the weak corporate governance. We have drawn both these deficiencies to the attention of the board of Ocean Wilson.

Companhia de Saneamento de Minas Gerais ("Copasa") share price performance was impressive, increasing 54.8% in the year to 31 March 2012. Full year results to December 2011 were solid, with water and wastewater treatment volumes growing by 3.5% and 5.3% respectively, driving group revenue growth of 4.5% and core EPS up 11.0%. Thus far, operational trends in 2012 are robust and with ongoing expansion opportunities in sewage treatment we continue to view Copasa as a good investment.

Santos Brasil Participacoes S.A. ("Santos") share price performance was encouraging over the period, up 21.9%. In 2011, Santos' volumes increased by 30.2%, resulting in a 29.9% increase in revenues and a 47.3% increase in EBITDA. Net income for the period was up 120.7%. Santos is one of the only operating port terminals in the Port of Santos at present to have capacity, ensuring that Santos is well positioned to capitalise on the expected continued strong export and import market currently being experienced in Brazil. The shares therefore are expected to continue to do well in the near term.

Companhia de Concessoes Rodoviarias S.A. ("CCR") share price was up 24.7% over the period. The company's full year results to December 2011 were solid with revenues increasing by 21.2%, driven by a 10.8% increase in traffic volumes, and EBITDA increasing by 29.9% and net income by 33.9%. Given the strong cash generative nature of CCR's business, it has an 89% dividend pay out ratio. CCR's management team over the course of 2011 continued to illustrate their control and restraint as they did not overbid for any of the three airport concessions that came to market, which as a shareholder was encouraging.

AES Tiete S.A., previously number six in the top ten, performed well in the year. However, with increasing tariff risks the decision was taken to sell down our holding.

China represents some 20.0% of our portfolio. However we do spread our risk over a wider number of investments than in other countries. As such only one company, AsiaSat, is in our top ten. We hold a number of toll road investments in China. Their performance has been very weak in the year to 31 March 2012. This was caused mainly by the Chinese government launching a nationwide review of all toll road returns. This resulted in share price reductions across the sector which clearly caught the markets by surprise and was a disappointment. The share price of our toll road investments in China were down between 13.9% and 44.4% over the 12 months. Sichuan Expressway Co. Limited, which was tenth last year, saw its share price decrease by 44.4% over the 12 months. China remains a challenging opportunity.

Malaysia has reduced from 17.2% to 12.0% of our portfolio mainly as a result of a reduction in our investment in Malaysia's airport operator Malaysia Airport Holdings Berhad ("MAHB") and in Puncak Niaga Holdings Berhad ("Puncak").

MAHB's share price performance over the period has been disappointing, decreasing by 4.4%. We foresaw this weakness and exited 23.2% of our shareholding at an average of MYR6.16 per share when markets were firmer. MAHB's share price ended the year at MYR5.81.

MAHB's full year results to December 2011 were solid with a 6.7% increase in revenues, driven by a 10.7% increase in passenger numbers to 64.0m. EBITDA and net income marginally increased as well, up by 5.2% and 9.4% respectively. However the announced delay and increase in costs of MAHB's new low cost carrier terminal KLIA2 and third runway held the shares back. KLIA2 is now expected to be completed in April 2013. To fund the increased costs MAHB placed new shares in the market at MYR5.60 in February this year.

The share price performance of Puncak, a Malaysian water treatment and supply company and previously number eight in the top ten, was disappointing, decreasing by 38.9% in the year to March 2012. This reflects uncertainty on unfulfilled contractual obligations by the State of Selangor over tariff increases and ineffective action by the Federal government to implement wider industry restructuring. Puncak has begun to diversify into the Oil & Gas sector while legal action against the State is on-going. The share price has been volatile and UEM has taken advantage of this to reduce exposure by selling into market peaks.

Over the coming year we will follow the elections in Malaysia with a keen interest.

Our Philippines country exposure has increased from 9.9% to 11.7%, principally driven by UEM's biggest investment, International Container Terminal Services Inc. ("ICT"). ICT's share price performance was outstanding, up 55.6% in the year to 31 March 2012. ICT's 2011 full year results were excellent with revenues up 26.6% driven by strong TEU (twenty foot equivalent unit) growth over the period of 24.5%, whilst EBITDA increased by 13.6% and net income by 32.7%. With three new terminals expected to come on line over the next two years, and ICT actively looking for additional terminals within the emerging markets to add to its current portfolio, further upside is expected as the growth prospects for ICT remain sound. We reduced the holding in ICT to both realise gains and more importantly to bring it back under 10.0% of UEM's portfolio at that time.

Thailand remains our fifth largest country of investment at 6.8%. Thailand has faced significant challenges following the devastating floods that began in July 2011 and persisted until January 2012. However, the ability of Thailand to recover has been remarkable. Eastern Water Resources PCL ("Eastwater") is one of our top ten investments. Its share price rose 26.3% over the 12 months, a significant performance in challenging conditions and, given the 31.0% performance last year, is impressive.

Eastwater's full year results to December 2011 were encouraging, with raw water sales growth of 6.2%, underlying revenue up 6.2%, and core EPS up 18.6%. With tariff increases being implemented through 2012 and industrial activity rebounding in Thailand after the floods in 2011, we believe that there is further substantial upside.

Over the year we invested £84.7m and realised £123.0m from sales. In the top ten we invested £2.8m in Santos and realised investments in ICT, Ocean Wilson and MAHB of £13.8m, £11.7m and £9.4m respectively.

The geographic split of investments has not seen any major movements with the exception of the reduction in Malaysia. This reflects weaker share prices and portfolio realisations of MAHB and Puncak.

Sectoral changes have been minimal. The toll road investments reduced from 14.5% to 10.7% mainly as a result of very poor performances by the Chinese toll road operators. The airport sector reduced due to weaker share prices, together with our sales of MAHB.

CURRENCY

Currency has been a factor in the year to 31 March 2012 with the Brazilian Real depreciating by 11.8%. As Brazil is the largest geographical weighting in the portfolio, this has had a negative effect in Sterling terms.

BANK DEBT

UEM successfully secured a new increased £50.0m bank facility with Scotiabank Europe plc. Having reduced bank debt to nil at 31 January 2012 we have modestly increased usage to £4.4m at 31 March 2012. We expect bank debt usage to increase further, especially if markets weaken and allow us to buy long term strategic investments.

REVENUE RETURN

Revenue income reduced from £15.2m to £12.7m. This is disappointing and has arisen due to reduced and deferred dividend payments. Within the top ten, EastWater's final dividend of £1.0m was delayed into our next financial year. This should balance out over time.

The normal management and administration fees were unchanged. However, other expenses were substantially higher, up 82.6% at £1.8m. The increase of £0.8m arose mainly as a result of the migration costs to the Main Market of £0.5m and the £0.1m costs of establishing the new two year bank facility.

Finance costs were unchanged at £0.6m and arose out of an historic interest rate swap agreement which expired on 31 March 2012.

Taxation reduced to £0.7m, down 24.0%, mainly due to delayed and reduced dividends and associated withholding tax.

The net impact of the reduced income and higher costs is a lower profit for the year of £8.9m, down from £12.0m last year.

CAPITAL RETURN

The portfolio gains in the second half of the year of £61.3m reversed the losses in the first half of £51.9m and resulted in a year on year gain of £9.4m. This was a pleasing outcome for the year. The gains on the options strategy of £0.6m in the first half were reversed in the second half as the market recovered strongly resulting in losses for the year of £3.2m.

The Investment Manager has operated a strategic market position via the purchase and sale of equity index put and call options, principally on the S&P500 Index. The level of the position is kept under constant review, and will depend upon several factors including the relative performance of markets, the price of options as compared to the market, and the Investment Manager's view of likely future volatility and market movements. As at 31 March 2012 UEM's net position was 600 S&P put options. In addition UEM had sold 400 call options. The total position was valued at £12.4m at year end.

Exchange losses, other expenses, finance costs and taxation were in line with the prior year. The management and administration fees were sharply lower as a performance fee was not earned in the year to 31 March 2012.

The net effect of the above was a profit for the year on the capital return of £2.6m.

BUYBACK AND DISCOUNT

UEM bought back 3.1m ordinary shares at a cost of £4.9m during the year, at an average share price of 160.00p.

We continue to believe that buybacks are a standalone investment decision. This is evidenced in the wider market which suggests they have a modest impact only on the discount to NAV. However, following the migration to the Main Market the discount has narrowed which is pleasing. At times of weakness buying back shares is an attractive way to increase exposure to markets if we use the committed £50m debt facility that is available to us.

ICM Limited
Investment Manager
8 June 2012

GROUP PERFORMANCE SUMMARY

	31 March 2012	31 March 2011	Change %
Total return (1) (annual)	3.1%	21.4%	n/a
Annual compound total return (since inception)	12.3%	13.8%	n/a
Net asset value per ordinary share	175.60p	175.28p	0.2
Ordinary share price	164.00p	157.75p	4.0
Discount	(6.6%)	(10.0%)	n/a
Earnings per ordinary share (basic)
- Capital	1.19p	25.63p	(95.4)
- Revenue	4.12p	5.61p	(26.6)
- Total	5.31p	31.24p	(83.0)
Dividends per ordinary share
- Interim	3.75p	3.75p	-
- Final	1.75p(2)	1.45p	20.7
- Total	5.50p	5.20p	5.8
Equity holders' funds (£m)	378.5	383.2	(1.2)
Gross assets (£m)(3)	382.9	393.4	(2.7)
Ordinary shares bought back (£m)	4.9	11.5	n/a
Cash/(overdraft) (£m)	(1.8)	(0.7)	n/a
Bank debt (£m)	(4.4)	(10.2)	(56.9)
Net Debt (£m)	(6.2)	(10.9)	(43.1)
Net debt gearing on gross assets	1.6%	2.8%	n/a
Management and administration fees  and other expenses (£m)
- excluding performance fee	3.9	3.1	25.8
- including performance fee	3.6	9.6	n/a
Ongoing charges figure (4)
- excluding performance fee	0.9%	0.8%	n/a
- including performance fee	0.9%	2.5%	n/a

(1)   Total return is calculated based on NAV per share return plus dividends reinvested from the ex-dividend date

(2)   The final dividend declared has not been included as a liability in these accounts

(3)   Gross assets less liabilities excluding loans

(4)   Expressed as percentage of average net assets, ongoing charges comprise all operational, recurring costs that are payable by the Company or suffered within underlying investee funds, in the absence of any purchases or sales of investments.

Investment Policy

The Company's investment objective is to provide long-term total return through a flexible investment policy that permits it to make investments predominantly in infrastructure, utility and related sectors, including (but not limited to) water, sewerage, waste, electricity, gas, telecommunications, ports, airports, service companies, rail, roads, any business with essential service and/or monopolistic characteristics and in any new infrastructure or utilities which may arise mainly in emerging markets. The Company may also invest in businesses which supply services to, or otherwise support, the infrastructure, utilities and related sectors.

The Company focuses on the undeveloped and developing markets of Asia, Latin America, Emerging Europe and Africa but has the flexibility to invest in markets world-wide. The Company generally seeks to invest in emerging market countries where the Directors believe that there are positive investment attributes such as political stability, economic development, an acceptable legal framework and an encouraging attitude to foreign investment.

The Board and Investment Manager review the risk profile of the Company every six months. Agreed risk parameters are established and compliance is reviewed at the quarterly board meetings.

There will be no material change to the Company's investment policy without prior shareholder approval.

Borrowings

Borrowings at the time of draw down must not result in gearing (being total borrowings measured against gross assets) exceeding 25%. Borrowings will be drawn down in Sterling, US Dollars or any currency for which there is a corresponding asset within the portfolio (at the time of drawing down the value drawn must not exceed the value of the corresponding asset in the portfolio).

Investment restrictions

·      Unquoted investments

Unquoted and untraded investments (excluding GERP and Utilico Emerging Markets (Mauritius)) must not exceed 10% of the gross assets at the time the investment is made.

·      Single investment

No single investment may exceed 20% of the gross assets at the time of investment. Investments other than in infrastructure, utility and related companies (including GERP and Utilico Emerging Markets (Mauritius)) are limited in total to 20% of the gross assets.

·      Single country

Investments in a single country must not exceed 50% of gross assets at the time of investment;

·      Investment in other funds

Not more than 10% in aggregate of the value of the total assets of the Company at the time the investment is made will be invested in closed-end investment funds which are listed on the Official Listing maintained by the UK Listing Authority (except to the extent that those investment funds have stated investment policies to invest no more than 15% of their total assets in other investment funds which are listed on the Official List); the Company shall not invest more than 15% in aggregate value of the total assets of the Company at the time the investment is made in such funds.

Hedging

The Investment Manager may follow a policy of actively hedging the market and balance sheet risks faced by UEM.

A review of the investment portfolio, borrowings and hedging is included in the Investment Manager's Report within this statement.

DIRECTORS' STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES

Risks material to the Company, which have been identified and are monitored as part of the control process, include excessive gearing, inappropriate long-term investment strategy, asset allocation and loss of management personnel. Control of the risks identified cover financial, operational, compliance and overall risk management.

These risks and the way they are mitigated are described in more detail under the heading Internal Controls and Management of Risk in the Corporate Governance section of the Company's Annual Report for the year ended 31 March 2012. The Annual Report is published on the Company's website, www.uem.bm.

DIRECTORS' STATEMENT OF RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and accounts in accordance with applicable Bermuda law and IFRSs, as adopted by the European Union.

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

·      select suitable accounting policies and then apply them consistently;

·      make judgements and estimates that are reasonable and prudent;

·      state whether IFRSs have been followed, subject to any material departure disclosed and explained in the accounts; and

·      prepare the accounts on the going concern basis unless it is inappropriate to presume that the Company 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 Company and enable them to ensure that the accounts comply with Bermuda law. They are also responsible for safeguarding the assets of the 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: (i) the accounts which have been prepared in accordance with IFRSs, as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company, its Mauritian subsidiary and its special purpose entity included in the consolidation; (ii) the Chairman's Statement and Investment Manager's report includes a fair review of the development and performance of the Company and the Report of the Directors contains a description of the principal risks and uncertainties that the Group and the Company faces. The financial risks are also provided in Note 28 to the Accounts.

Insofar as the Directors are aware:

·      there is no relevant audit information of which the Company's auditors are unaware; and

·      the Directors have taken all reasonable 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 Annual Report and Accounts are published on the Company's website, www.uem.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 in 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 STATEMENT OF COMPREHENSIVE INCOME

2012					2011
		Revenue	Capital	Total	Revenue	Capital	Total
		return	return	Return	return	return	Return
		£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Gains and losses on investments		-	9,404	9,404	-	70,427	70,427
Gains and losses on derivative instruments		-	(3,248)	(3,248)	-	(5,461)	(5,461)
Exchange gains and losses		-	(475)	(475)	-	(433)	(433)
Investment and other income		12,710	-	12,710	15,190	-	15,190
Total income		12,710	5,681	18,391	15,190	64,533	79,723
Management and administration fees		(777)	(1,049)	(1,826)	(773)	(7,790)	(8,563)
Other expenses		(1,758)	(29)	(1,787)	(963)	(26)	(989)
Profit before finance costs and taxation		10,175	4,603	14,778	13,454	56,717	70,171
Finance costs		(560)	(1,307)	(1,867)	(547)	(1,277)	(1,824)
Profit before taxation		9,615	3,296	12,911	12,907	55,440	68,347
Taxation		(723)	(729)	(1,452)	(951)	(805)	(1,756)
Profit for the year		8,892	2,567	11,459	11,956	54,635	66,591
Earnings per share (basic) - pence		4.12	1.19	5.31	5.61	25.63	31.24
Earnings per share (diluted) - pence		n/a	n/a	n/a	5.50	25.13	30.63

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 and capital return columns are both 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

2012					2011
		Revenue	Capital	Total	Revenue	Capital	Total
		return	return	return	return	return	return
		£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Gains and losses on investments		-	4,445	4,445	-	63,852	63,852
Gains and losses on derivative instruments		-	1,437	1,437	-	1,078	1,078
Exchange gains and losses		-	(273)	(273)	-	(418)	(418)
Investment and other income		12,710	-	12,710	15,190	-	15,190
Total income		12,710	5,609	18,319	15,190	64,512	79,702
Management and administration fees		(777)	(1,049)	(1,826)	(773)	(7,790)	(8,563)
Other expenses		(1,686)	(29)	(1,715)	(942)	(26)	(968)
Profit before finance costs and taxation		10,247	4,531	14,778	13,475	56,696	70,171
Finance costs		(560)	(1,307)	(1,867)	(547)	(1,277)	(1,824)
Profit before taxation		9,687	3,224	12,911	12,928	55,419	68,347
Taxation		(723)	(729)	(1,452)	(951)	(805)	(1,756)
Profit for the year		8,964	2,495	11,459	11,977	54,614	66,591
Earnings per share (basic) - pence		4.15	1.16	5.31	5.62	25.62	31.24
Earnings per share (diluted) - pence		n/a	n/a	n/a	5.51	25.12	30.63

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 and capital return columns are both 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 31 March 2012
	Ordinary	Share		Other non-	Retained earnings
	share	premium	Special	distributable	Capital	Revenue
	capital	account	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 31 March 2011	21,860	12,136	204,587	11,093	128,906	4,569	383,151
Profit for the year	-	-	-	-	2,567	8,892	11,459
Ordinary dividends paid	-	-	-	-	-	(11,207)	(11,207)
Shares purchased by the Company	(307)	(4,626)	-	-	-	-	(4,933)
Balance at 31 March 2012	21,553	7,510	204,587	11,093	131,473	2,254	378,470

for the year to 31 March 2011
	Ordinary	Share			S	Other non-	Retained earnings
	share	premium	Special	Warrant	share	distributable	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 31 March 2010	20,331	-	206,394	8,089	8,729	994	72,378	2,967	319,882
Profit for the year	-	-	-	-	-	-	54,635	11,956	66,591
Ordinary dividends paid	-	-	-	-	-	-	-	(10,354)	(10,354)
Conversion of warrants and S shares	2,339	21,044	-	(5,144)	(4,955)	10,099	-	-	23,383
Shares and warrants purchased by the Company	(810)	(8,908)	(1,807)	(2,945)	(3,774)	-	1,893	-	(16,351)
Balance at 31 March 2011	21,860	12,136	204,587	-	-	11,093	128,906	4,569	383,151

COMPANY STATEMENT OF CHANGES IN EQUITY

for the year to 31 March 2012
	Ordinary	Share		Other non-	Retained earnings
	share	premium	Special	distributable	Capital	Revenue
	capital	account	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 31 March 2011	21,860	12,136	204,587	11,093	128,812	4,663	383,151
Profit for the Year	-	-	-	-	2,495	8,964	11,459
Ordinary dividends paid	-	-	-	-	-	(11,207)	(11,207)
Shares purchased by the Company	(307)	(4,626)	-	-	-	-	(4,933)
Balance at 31 March 2012	21,553	7,510	204,587	11,093	131,307	2,420	378,470

for the year to 31 March 2011
	Ordinary	Share			S	Other non-	Retained earnings
	share	premium	Special	Warrant	share	distributable	Capital	Revenue
	capital	account	reserve	reserve	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 31 March 2010	20,331	-	206,394	8,089	8,729	994	72,305	3,040	319,882
Profit for the year	-	-	-	-	-	-	54,614	11,977	66,591
Ordinary dividends paid	-	-	-	-	-	-	-	(10,354)	(10,354)
Conversion of warrants and S shares	2,339	21,044	-	(5,144)	(4,955)	10,099	-	-	23,383
Shares and warrants purchased by the Company	(810)	(8,908)	(1,807)	(2,945)	(3,774)	-	1,893	-	(16,351)
Balance at 31 March 2011	21,860	12,136	204,587	-	-	11,093	128,812	4,663	383,151

BALANCE SHEETS

	GROUP		COMPANY
at 31 March	2012	2011	2012	2011
	£'000s	£'000s	£'000s	£'000s
Non-current assets
Investments	374,169	403,026	386,636	403,098
Current assets
Other receivables	9,641	2,418	2,221	2,418
Derivative financial instruments	6,836	1,769	-	-
Cash and cash equivalents	387	211	226	192
	16,864	4,398	2,447	2,610
Current liabilities
Bank loans	-	(10,231)	-	(10,231)
Other payables	(3,849)	(8,612)	(3,824)	(8,612)
Derivative financial instruments	(1,925)	(3,153)	-	(1,437)
	(5,774)	(21,996)	(3,824)	(20,280)
Net current assets/(liabilities)	11,090	(17,598)	(1,377)	(17,670)
Total assets less current liabilities	385,259	385,428	385,259	385,428
Non-current liabilities
Bank loans	(4,381)	-	(4,381)	-
Deferred tax	(2,408)	(2,277)	(2,408)	(2,277)
Net assets	378,470	383,151	378,470	383,151
Equity attributable to equity holders
Ordinary share capital	21,553	21,860	21,553	21,860
Share premium account	7,510	12,136	7,510	12,136
Special reserve	204,587	204,587	204,587	204,587
Other non-distributable reserve	11,093	11,093	11,093	11,093
Capital reserves	131,473	128,906	131,307	128,812
Revenue reserve	2,254	4,569	2,420	4,663
Total attributable to equity holders	378,470	383,151	378,470	383,151
Net asset value per ordinary share
Basic - pence	175.60	175.28	175.60	175.28

STATEMENTS OF CASH FLOWS

	GROUP		COMPANY
for the year to 31 March	2012	2011	2012	2011
	£'000s	£'000s	£'000s	£'000s
Cash flows from operating activities	21,435	15,467	21,090	15,554
Cash flows from investing activities	-	-	-	-
Cash flows before financing activities	21,435	15,467	21,090	15,554
Financing activities: Ordinary dividends paid	(11,207)	(10,354)	(11,207)	(10,354)
Movements from loans	(6,058)	(14,576)	(6,058)	(14,576)
Cost of ordinary shares purchased Proceeds from warrants converted Proceeds from S shares converted Cost of warrants purchased Cost of S shares purchased	(4,933) - - - -	(11,525) 18,497 4,886  (3,612) (1,214)	(4,933) - - - -	(11,525) 18,497 4,886  (3,612) (1,214)
Cash flows from financing activities	(22,198)	(17,898)	(22,198)	(17,898)
Net movement in cash and cash equivalents	(763)	(2,431)	(1,108)	(2,344)
Cash and cash equivalents at the beginning of the year	(742)	1,974	(761)	1,854
Effect of movement in foreign exchange	(268)	(285)	(65)	(271)
Cash and cash equivalents at the end of the year	(1,773)	(742)	(1,934)	(761)

Comprised of:
Cash	387	211	226	192
Bank overdraft	(2,160)	(953)	(2,160)	(953)
Total	(1,773)	(742)	(1,934)	(761)

NOTES

The Directors have declared a final dividend in respect of the year ended 31 March 2012 of 1.75p per ordinary share payable on 6 July 2012 to shareholders on the register at close of business on 22 June 2012. The total cost of the dividend which has not been accrued in the results for the year to 31 March 2012, is £3,772,000 based on 215,528,793 ordinary shares in issue at the date of this statement.

This statement was approved by the Board on 8 June 2012. It is not the Group's or Company's statutory accounts. The statutory accounts for the financial year ended 31 March 2012 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 year ended 31 March 2011 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 for the year ended 31 March 2012 will be posted to shareholders in late June 2012. A copy is available to view and download from the Company's website at www.uem.bm. Copies may also be obtained during normal business hours from Exchange House, Primrose Street, London, EC2A 2NY.

By order of the Board

ICM Limited, Secretary

8 June 2012

 

END

 

 

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