Annual Financial Report

RNS Number : 3258N

Utilico Emerging Markets Limited

09 June 2010

 



Date:                9 June 2010

Contact:           Charles Jillings                                              

Utilico Emerging Markets Limited                    

01372 271 486                                               

Alastair Moreton

Arbuthnot Securities Limited

020 7012 2000

Utilico Emerging Markets Limited

Statement of Results

for the year to 31 March 2010

Highlights of results

·   Diluted net asset value increased to 148.37p, up 39.3%

·   Gains on the investment portfolio of £112.5m

·   Dividends per ordinary share maintained at 4.80p (final 1.05p)

·   Bank debt reduced to £24.7m

·   Group revenue account earnings per ordinary share of 4.67p

·   Final dividend represents a yield of 3.6%

Chairman's Statement

I am pleased to report that Utilico Emerging Markets Limited's ("UEM") fully diluted net asset value ("NAV") continued the recovery started last year and ended the year at 148.37p, up 39.3% and well above the low point of 93.00p on 28 October 2008. The year to 31 March 2010 saw the emerging equity markets recover strongly as gross domestic product ("GDP") growth within the emerging markets gained traction and the equity markets regained their confidence.

The strength and breadth of the recovery has continued to be surprising. As this recovery has gained momentum in the second half of the year our confidence has grown in the corporate recovery and market valuations. Corporate profitability has expanded sharply on the back of tighter cost controls and improved productivity combined with real GDP growth in the emerging markets. While we firmly believe the recovery in a number of markets is well grounded, the world's economies are developing a three stage recovery. The emerging markets have, for the main part, recovered and are facing concerns over asset bubbles and inflation. The developed markets can be divided between commodity based economies like Canada and Australia, who are experiencing strong recoveries and Europe and the USA weighed down by sovereign debt, a weak recovery, rising debt, unemployment and low confidence.

The utilities sector continues to find little support within the investment community. This is best illustrated in the Index Performance set out on page 12. As can be seen the Bloomberg World Utilities Index was up 23.4% versus the Bloomberg World Index which was up 49.0%. Nearly all markets reflect this bias to an extent. In the emerging markets the MSCI Emerging Markets Utilities Index was up 45.9% (sterling adjusted) as compared to the MSCI Emerging Markets Index which was up 66.9% (sterling adjusted). Against this background the performance of UEM's fully diluted NAV has been respectable at 39.3%.

While there were concerns over the ability to maintain last year's dividends, the recovery in earnings in the second half has been strong. The earnings per share ("EPS") for the full year was 4.67p versus 5.08p last year. Given this outcome the Board has declared a final dividend of 1.05p resulting in a maintained total dividend for the year of 4.80p representing a dividend yield of 3.6%.

In order to pay these dividends, which exceed the revenue earned during the year, we will draw £135,000 from retained earnings brought forward (based on the number of shares in issue at the date of the report).

As markets have recovered there has been a growing shift to wider discounts in the closed end fund sector. UEM has been caught up in this and has seen its discount widen. Against this, the Investment Manager has bought back 12.6m ordinary shares at an average price of 126.98p as an investment opportunity. However, the discount has failed to narrow as shareholders are increasingly concerned about market valuations and are seeking comfort from wider discounts.

The focus on a strong revenue return and a low total expense ratio, including the capitalisation of 70% of the management and finance costs, continues to enable the Company to maintain an attractive dividend payout to shareholders. In light of this focus, the Board has considered it appropriate to amend the terms of the high watermark, as set out in the performance fee calculation within the investment management agreement, to take account of dividends paid following the period in respect of which a performance fee was last paid. This change removes the anomaly that higher levels of dividends reduce the ability of the investment manager to earn a performance fee. Further details of the performance fee are set out in note 4 of the Report and Accounts.

The final exercise date for UEM's warrants and S shares is 2 August 2010. These are exercisable at 100.0p and are in the money compared to the current share price of 132.25p (as at 7 June 2010). There are 29.1m warrants and 8.6m S shares outstanding which will result in £37.7m being received by UEM, should they be exercised in full.

Outlook

We remain optimistic about the long-term performance of the emerging markets. The key drivers of economic growth and the emergence of a growing middle class are central to this view. We believe that the emerging markets will continue to offer attractive valuations and investment opportunities.

Clearly, we must be vigilant to the issues facing the sovereign debt markets. They have the ability to severely disrupt the operation of the world's debt markets and capital flows. While these issues are painful for a number of countries, we do not see them materially disrupting the emerging markets' long-term growth.

However, markets are susceptible to correction and we will remain alert to the issues in sovereign debt markets, especially in Europe.

Alexander Zagoreos
Chairman
June 2010

Investment Report

The twelve months to 31 March 2010 have been positive with most asset classes reversing the severe peak to trough conditions of the prior year. The emerging markets led by China have seen a strong expansion of their GDP resulting in a strong demand for commodities and currencies. The major developed economies have needed unprecedented support in the form of continued quantitative easing throughout the year and the maintenance of abnormally low interest rates. These factors have combined to see a flow of capital away from fixed interest investments and into higher risk assets, especially the emerging markets.

UEM has benefited from this positive trend and seen its fully diluted NAV rise by 39.3% to 148.37p.

UEM's long term performance since inception in 2005 has resulted in an average annual compound return of 12.4%, including dividends paid.

Portfolio

UEM's portfolio has increased to £342.5m at 31 March 2010, up £97.0m from £245.5m at 31 March 2009. There has been a significant level of investment activity in the year with gross purchases of £99.6m and gross disposals of £115.2m.

The top ten investments have changed over the year with Comanche Clean Energy ("Comanche") (3rd last year), POS Malaysia ("POSM") (5th last year), and Companhia de Gas de Sao Paulo ("Comgas") (8th last year) no longer in the top ten. They were replaced by Companhia de Concessoes Rodoviarias ("CCR") (8th), Sichuan Expressway ("Sichuan") (9th), Xinao Gas Holdings (10th).

Comanche has been written down as a result of its poor operating performance. The Company invested heavily in its asset base, however it has been unable to take full advantage of its position due to severe working capital constraints. As at 31 March 2010, the investment stood at £4.7m, down from £16.5m last year.

POSM fell out of the top ten due to a realisation of 75% of our holding. We were increasingly convinced that the long awaited tariff increase would not come through. Without this it was difficult to see the required major changes being delivered. It has been very frustrating to see the tariff increase come through after the year end. The shares have risen strongly and we have reduced our holding further into strength after the year-end.

Comgas reduced as a result of significant realisations. While we continue to like Comgas it did not warrant its position in

the top ten.

CCR has previously been in the top ten. The company has had a strong performance driven by returns on its asset base and increasing investment opportunities. CCR is expected to benefit in the medium term from the 2014 Football World Cup being held in Brazil and the Olympic Games awarded to Rio de Janeiro for 2016. CCR's shares rose 89.4% over the year.

We significantly increased our investment in Sichuan during the year. We are increasingly convinced the toll road sector in China offers attractive long-term growth especially in the inland provinces. We invested £4.6m in Sichuan in addition to the £0.5m invested last year. At year end this had risen in value to £9.3m. Its share price rose 217.2% during the year.

Xinao Gas has risen strongly in the year and as a result is included in the top ten. Its results were ahead of expectations and in response its share price rose 154.4% in the year. We reduced our holding by £6.2m into strength.

We noted in earlier years that our reason for investing in Malaysia was that it offered the opportunity for growth plus structural change. This remains our view and this has been reinforced by the strong political leadership of the current government and in particular the Prime Minister, Najib Tun Razak.

Last year Malaysia Airport Holdings Berhad ("MAHB") benefited from restructuring and moved up to the top of our portfolio. This year it has extended its gains as the restructuring delivers results. Its share price rose 93.6% in the year. We sold 10.0% of our position during the year, amounting to £4.4m.

Puncak Niaga Holdings Berhad ("Puncak") remains frustrating. Malaysia at the federal level has declared its intent to restructure the water industry, taking ownership of water networks while employing the private sector to operate those assets. This is sensible but the delay in its implementation is causing concern. Puncak was the only position in the top ten to see its share price decline in the year, down 10.6%. During the year we sold £3.2m into strength.

Brazil remains a long term investment conviction. While the election later this year will take attention away from the economy we continue to believe Brazil's long term outlook is strong. This is underpinned by the very significant economic activity around the offshore oil exploration, the robust commodity prices, the award of the Olympic Games and the 2014 World Cup which should see a significant investment in infrastructure in Rio de Janeiro and Sao Paulo.

Ocean Wilsons Holdings Ltd ("Ocean Wilsons") has remained our second largest holding with a share price gain of 73.6%. Their largest investment, Wilson Sons, is benefiting from increased offshore oil activity. However, Ocean Wilsons as a whole continues to fall well short of its full value based on a sum of the parts, with the discount to NAV standing at 51.0% at 31 December 2009. We are less than convinced of the merits of maintaining Ocean Wilsons' corporate structure and will continue to push for change and the demerger of Wilson Sons.

AES Tiete SA ("AES") offers a defensive outlook. This "mature" company continues to deliver good results and dividend growth. It paid out dividends equal to 13.0% of its opening share price and its shares ended the year up 9.7%.

Companhia de Saneamento de Minas Gerais ("Copasa") continues to offer steady growth. Its progress this year was held back by a disappointing tariff increase, ascribed by the market to difficulties in an election year. Not withstanding this, the shares rose 32.3% in the year. We have reduced our holding by a net £3.7m (32.5%) in the year.

International Container Terminal Services Inc ("ICT") has made substantial progress. During the year the share price rose 93.8% and it has extended this strong run post the year end. The recovery in container volumes is gaining momentum and driving companies such as ICT forward strongly.

Eastern Water Resources has reported progress in the year and its outlook is promising. Its share price has risen 69.2%.

A key thrust of our investment approach over the year has been to build up the investments in toll roads. This combined with a strong performance by the existing toll road investments has seen this sector increase in value. Toll roads offer us exposure to rising economic activity and increased car ownership in the emerging countries and also offer protection against inflation via index-linked tariffs.

As a result of this activity we have seen significant movement in UEM's sector and geographic split. Brazil remains top at 31.7% but has reduced from 37.1%. Malaysia has just held onto the number two spot at 21.8% (27.0%), China has risen to 21.6% (13.8%), and the Philippines has almost doubled to 8.0%.

On a sector basis ports is now our biggest sector at 19.8% (14.6%), toll roads have increased to 15.2% (6.3%) and renewables has reduced to 2.8% (8.4%). water and waste, our second largest sector at 19.0% (20.6%) has largely stood still as a result of realisations.

UEM has four unlisted and untraded investments, which account for 3.4% of the portfolio down from 9.3% last year, largely due to the write down of Comanche Clean Energy.

Market Hedging

The role of market hedging in our portfolio has reduced as markets have risen. We have held some modest hedging in place, but its maintenance is difficult. The losses of £4.4m are a reflection of the costs of hedging in this environment.

Over the four years to 31 March 2010 the hedging strategy has delivered a cumulative profit of £9.1m. This gain reflects the ability of the Investment Manager to make money through a hedge position during a rising market.

We will keep the hedging strategy under constant review.

Bank Debt

UEM started the year with bank debt of £41.8m and reduced this to nil by 30 September 2009. In the second half we utilised our remaining facility of £25.0m to both invest in the portfolio and to buy back shares. The facility was drawn £20.0m in Sterling and £5.0m in US Dollars at 31 March 2010. The interest rate on the facility is LIBOR plus 1.5% and it matures in March 2012.

Cash at the start of the year was £24.1m which reduced to £18.9m on 30 September 2009 and has reduced further to £2.0m at 31 March 2010. This reflects investments in the second half as confidence in the markets recovery has grown.

Revenue Return

The revenue return remains a key feature of UEM. Total revenue income earned was £13.7m versus £14.3m last year. This is a pleasing outcome, given the economic slowdown going into the year to 31 March 2010 and the weakness in the first half.

Fees and expenses were lower and we continue to maintain focus on the Company's costs. Finance costs reduced as a result of lower bank debt.

Taxation has increased and we will look at ways to reduce this cost going forward.

The resultant revenue return for the year decreased to £10.0m down 8.3% on the £10.9m last year. The EPS reduced by 8.1% to 4.67p.

Capital Return

The gains on the investment portfolio of £112.5m more than offset the losses last year of £102.0m. This was a very pleasing outcome. The loss in derivatives of £4.4m was expected given that rising markets should result in a loss in the hedge position put in place to protect against falling markets.

The exchange gains of £1.5m represent gains on bank and other financial instruments. Exchange gains on positions held in the portfolio are included in the investment gains.

Management and administration fees were lower due to a lower level of gross assets over the year and we remain focused on this aspect of the Company's costs. Finance costs fell by 16.7% to £2.7m, reflecting the lower debt levels during the year.

Taxation has risen from a positive £1.7m last year to a cost of £2.3m this year. This arises in the main from capital gains tax in Brazil. We will focus in the coming year on neutralising this cost where possible.

The net result is a gain on the capital account of £103.6m versus a loss of £128.9m last year.

Share Buy Backs

We have bought back 12.6m ordinary shares in the year at a cost of £16.0m and an average price of 126.98p. We continue to believe that buybacks are an investment decision. Evidence in the wider market suggests it has modest impact on the discount. We will strive to ensure there is a liquid market for UEM's shares where possible.

Current Trading

Not only did most of our investments report strongly improved performances during 2009, but this has also continued into the first quarter of 2010. This underpins our belief that well managed corporates will benefit from rising economic activity in China, India and Brazil, reinforced by an improving US economy.

We continue to believe that the emerging economies will offer strong growth in the current environment, with China recording growth of over 10%, that the US will surprise on the upside and that Europe will disappoint. Commodity based economies will benefit in this environment. As ever currencies will be tested as they try to rebalance market confidence. The next twelve months are going to see a testing of the expectation that quantitative easing can end without any significant economic impact; that sovereign debt can be re-financed; and that asset bubbles can be contained.

 

GROUP PERFORMANCE SUMMARY

	31 March 2010	31 March 2009	Change %
Undiluted net asset value per ordinary share	157.33p	107.76p	46.0
Diluted net asset value per ordinary share	148.37p	106.51p	39.3
Ordinary share price	132.00p	95.50p	38.2
(Discount)/premium (1)	(11.0%)	(10.3%)	n/a
Warrant and S share price	30.50p	11.50p	165.2
Earnings per ordinary share (basic)
- Capital	48.57p	(60.28p)	n/a
- Revenue	4.67p	5.08p	(8.1)
- Total	53.24p	(55.20p)	n/a
Dividends per ordinary share
- Interim	3.75p	4.00p	(6.3)
- Final	1.05p(2)	0.80p(2)	31.3
- Total	4.80p	4.80p	-
Equity holders' funds (£m)	319.9	230.7	38.7
Gross assets (£m)(3)	344.5	272.5	26.4
Cash (£m)	2.0	24.1	(91.7)
Bank debt (£m)	(24.7)	(41.8)	(40.9)
Net Debt (£m)	(22.7)	(17.7)	28.2
Net debt gearing on gross assets	6.6%	6.5%	n/a
Management and administration fees (4)	2.5	2.7	(7.4)
Total expense ratio (5)	0.8%	0.7%	n/a

(1)   Based on diluted net asset value

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

(3)   Gross assets less liabilities excluding loans

(4)   Excluding performance fee, including other expenses

(5)   Management and administration fees over monthly average gross assets

Investing Policy

The Company's investing policy is to provide long-term capital appreciation by investing predominantly in infrastructure, utility and related sectors (including other investment companies investing in those companies) mainly in emerging markets. The Company's investing policy is flexible and 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 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 worldwide. The Company generally seeks to invest in emerging market countries where the Directors believe that there are 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 investing 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 25.0%. 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).

Unquoted investments

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

Single investment

No single investment may exceed 20.0% of the gross assets at the time of investment. Investments other than in infrastructure, utility and related companies (including GERP) are limited in total to 20.0% of the gross assets. Investments in a single country must not exceed 50.0% of the gross assets at the time the investment is made.

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 these accounts.

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 2010. 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 that 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, the Accounts give a true and fair view of the assets, liabilities, financial position and profit of the Company and its special purpose entity included in the consolidation, and the Corporate Governance Statement includes a description of the principal risks and uncertainties that the Group and the Company faces. The financial risks are also provided in Note 29 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 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

2010					2009
		Revenue	Capital	Total	Revenue	Capital	Total
		return	return	return	return	return	return
		£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Gains and losses on investments		-	112,515	112,515	-	(102,012)	(102,012)
Gains and losses on derivative instruments		-	(4,426)	(4,426)	-	(4,201)	(4,201)
Exchange gains and losses		-	1,544	1,544	-	(20,055)	(20,055)
Investment and other income		13,671	-	13,671	14,267	-	14,267
Total income		13,671	109,633	123,304	14,267	(126,268)	(112,001)
Income not receivable		(261)	-	(261)	-	-	-
Management and administration fees		(654)	(1,037)	(1,691)	(727)	(1,181)	(1,908)
Other expenses		(788)	(22)	(810)	(762)	(24)	(786)
Profit/(loss) before finance costs and taxation		11,968	108,574	120,542	12,778	(127,473)	(114,695)
Finance costs		(1,150)	(2,683)	(3,833)	(1,381)	(3,222)	(4,603)
Profit/(loss) before taxation		10,818	105,891	116,709	11,397	(130,695)	(119,298)
Taxation		(866)	(2,331)	(3,197)	(544)	1,774	1,230
Profit/(loss) for the year		9,952	103,560	113,512	10,853	(128,921)	(118,068)
Earnings per share (basic) - pence		4.67	48.57	53.24	5.08	(60.28)	(55.20)
Earnings per share (diluted) - pence		4.53	47.13	51.66	4.91	n/a	n/a

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

2010					2009
		Revenue	Capital	Total	Revenue	Capital	Total
		return	return	return	return	return	return
		£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Gains and losses on investments		-	105,824	105,824	-	(104,364)	(104,364)
Gains and losses on derivative instruments		-	2,243	2,243	-	(2,171)	(2,171)
Exchange gains and losses		-	1,529	1,529	-	(19,774)	(19,774)
Investment and other income		13,671	-	13,671	14,261	-	14,261
Total income		13,671	109,596	123,267	14,261	(126,309)	(112,048)
Income not receivable		(261)	-	(261)	-	-	-
Management and administration fees		(654)	(1,037)	(1,691)	(727)	(1,181)	(1,908)
Other expenses		(751)	(22)	(773)	(725)	(24)	(749)
Profit/(loss) before finance costs and taxation		12,005	108,537	120,542	12,809	(127,514)	(114,705)
Finance costs		(1,150)	(2,683)	(3,833)	(1,378)	(3,215)	(4,593)
Profit/(loss) before taxation		10,855	105,854	116,709	11,431	(130,729)	(119,298)
Taxation		(866)	(2,331)	(3,197)	(544)	1,774	1,230
Profit/(loss) for the year		9,989	103,523	113,512	10,887	(128,955)	(118,068)
Earnings per share (basic) - pence		4.68	48.56	53.24	5.09	(60.29)	(55.20)
Earnings per share (diluted) - pence		4.54	47.12	51.66	4.92	n/a	n/a

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 2010
	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 2009	21,412	56	219,500	8,897	9,285	319	(31,451)	2,715	230,733
Profit for the year	-	-	-	-	-	-	103,560	9,952	113,512
Ordinary dividends paid	-	-	-	-	-	-	-	(9,700)	(9,700)
Conversion of warrants and S shares	177	1,594	-	(423)	(252)	675	-	-	1,771
Shares and warrants purchased by the Company	(1,258)	(1,650)	(13,106)	(385)	(304)	-	269	-	(16,434)
Balance at 31 March 2010	20,331	-	206,394	8,089	8,729	994	72,378	2,967	319,882

for the year to 31 March 2009
	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 2008	21,351	219,008	-	9,048	9,350	103	97,470	3,200	359,530
(Loss)/profit for the year	-	-	-	-	-	-	(128,921)	10,853	(118,068)
Ordinary dividends paid	-	-	-	-	-	-	-	(11,338)	(11,338)
Conversion of warrants and S shares	61	548	-	(151)	(65)	216	-	-	609
Transfer to special reserve	-	(219,500)	219,500	-	-	-	-	-	-
Balance at 31 March 2009	21,412	56	219,500	8,897	9,285	319	(31,451)	2,715	230,733

COMPANY STATEMENT OF CHANGES IN EQUITY

for the year to 31 March 2010
	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 2009	21,412	56	219,500	8,897	9,285	319	(31,487)	2,751	230,733
Profit for the year	-	-	-	-	-	-	103,523	9,989	113,512
Ordinary dividends paid	-	-	-	-	-	-	-	(9,700)	(9,700)
Conversion of warrants and S shares	177	1,594	-	(423)	(252)	675	-	-	1,771
Shares and warrants purchased by the Company	(1,258)	(1,650)	(13,106)	(385)	(304)	-	269	-	(16,434)
Balance at 31 March 2010	20,331	-	206,394	8,089	8,729	994	72,305	3,040	319,882

for the year to 31 March 2009
	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 2008	21,351	219,008	-	9,048	9,350	103	97,468	3,202	359,530
(Loss)/profit for the year	-	-	-	-	-	-	(128,955)	10,887	(118,068)
Ordinary dividends paid	-	-	-	-	-	-	-	(11,338)	(11,338)
Conversion of warrants and S shares	61	548	-	(151)	(65)	216	-	-	609
Transfer to special reserve	-	(219,500)	219,500	-	-	-	-	-	-
Balance at 31 March 2009	21,412	56	219,500	8,897	9,285	319	(31,487)	2,751	230,733

BALANCE SHEETS

	GROUP		COMPANY
at 31 March	2010	2009	2010	2009
	£'000s	£'000s	£'000s	£'000s
Non-current assets
Investments	342,451	245,511	344,540	252,689
Current assets
Other receivables	5,408	3,084	5,406	3,084
Derivative financial instruments	1,969	12,090	-	-
Cash and cash equivalents	1,974	24,058	1,854	23,770
	9,351	39,232	7,260	26,854
Current liabilities
Other payables	(3,085)	(2,270)	(3,083)	(2,242)
Derivative financial instruments	(2,515)	(9,930)	(2,515)	(4,758)
	(5,600)	(12,200)	(5,598)	(7,000)
Net current assets	3,751	27,032	1,662	19,854
Total assets less current liabilities	346,202	272,543	346,202	272,543
Non-current liabilities
Bank loans	(24,659)	(41,810)	(24,659)	(41,810)
Deferred tax	(1,661)	-	(1,661)	-
Net assets	319,882	230,733	319,882	230,733
Equity attributable to equity holders
Ordinary share capital	20,331	21,412	20,331	21,412
Share premium account	-	56	-	56
Special reserve	206,394	219,500	206,394	219,500
Warrant reserve	8,089	8,897	8,089	8,897
S share reserve	8,729	9,285	8,729	9,285
Other non-distributable reserve	994	319	994	319
Capital reserves	72,378	(31,451)	72,305	(31,487)
Revenue reserve	2,967	2,715	3,040	2,751
Total attributable to equity holders	319,882	230,733	319,882	230,733
Net asset value per ordinary share
Basic - pence	157.33	107.76	157.33	107.76
Diluted - pence	148.37	106.51	148.37	106.51

STATEMENTS OF CASH FLOWS

	GROUP		COMPANY
for the year to 31 March	2010	2009	2010	2009
	£'000s	£'000s	£'000s	£'000s
Cash flows from operating activities	17,886	81,058	18,069	81,129
Cash flows from investing activities	-	-	-	-
Cash flows before financing activities	17,886	81,058	18,069	81,129
Financing activities: Ordinary dividends paid	(9,700)	(11,338)	(9,700)	(11,338)
Movements from loans	(16,341)	(58,271)	(16,341)	(58,271)
Proceeds from warrants converted Proceeds from S shares converted Cost of ordinary shares purchased Cost of warrants purchased Cost of S shares purchased	1,522 249 (16,014) (330) (90)	545 64 - - -	1,522 249 (16,014) (330) (90)	545 64 - - -
Cash flows from financing activities	(40,704)	(69,000)	(40,704)	(69,000)
Net movement in cash and cash equivalents	(22,818)	12,058	(22,635)	12,129
Cash and cash equivalents at the beginning of the year	24,058	11,876	23,770	11,236
Effect of movement in foreign exchange	734	124	719	405
Cash and cash equivalents at the end of the year	1,974	24,058	1,854	23,770

NOTES

A final dividend in respect of the year ended 31 March 2010 of 1.05p per ordinary share will be paid on 2 July 2010 to shareholders on the register at close of business on 18 June 2010. The total cost of the dividend which has not been accrued in the results for the year to 31 March 2010, is £2,135,000 based on 203,312,819 ordinary shares in issue at the date of this report.

This statement was approved by the Board on 9 June 2010. It is not the Company's statutory accounts. The statutory accounts for the financial year ended 31 March 2010 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 2009 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 2010 will be posted to shareholders in mid June 2010. In accordance with AIM Rule 26, 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

F&C Management Limited, Secretary

9 June 2010

 

END

 

 

FR UKOARRSANRAR