Annual Financial Report

RNS Number : 5230H

Utilico Emerging Markets Limited

20 June 2013

 



Date:                20 June 2013

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 2013

Highlights of results

·      Revenue earnings per ordinary share of 5.20p

·      Net asset value of 205.49p per ordinary share

·      Net asset value total return equal to 20.5%

·      Dividends per ordinary share of 5.80p, up 5.5%

·      Dividends per ordinary share represent a yield of 3.0% on ordinary share price

·      Share price increase of 27.20p, up 16.6% to 191.20p

Chairman's Statement

I am very pleased to report that Utilico Emerging Markets Limited's ("UEM" or the "Company") net asset value ("NAV") total return per ordinary share was 20.5% in the year to 31 March 2013. This is significantly ahead of the MSCI Emerging Markets Total Return Index (GBP adjusted) which was up 7.6%.

Since inception UEM has reported a positive return in seven out of eight years and the average annual compound total return per ordinary share was 14.2% including the return on warrants converted on 2 August 2010.

This strong NAV performance record has been acknowledged by recent industry awards. UEM won Investment Week's Emerging Markets category Investment Company of the year at the 2012 awards and in June 2013 won the Money Observer Best Emerging Markets Trust Award. Credit for this performance goes to ICM Limited, our Investment Manager, and their team led by Charles Jillings.

The revenue earnings per ordinary share ("EPS") improved substantially over the prior period which was impacted by several one-off costs. This resulted in the revenue EPS increasing to 5.20p from 4.12p.

The management and administration fees payable to the Investment Manager for the year increased mainly as a result of the performance fee of £9.5m.

As a Bermuda company, UEM is able to distribute both capital and income returns as dividends. The Board has declared four quarterly dividends amounting to 5.80p versus 5.50p last year, an increase of 5.5%. The final quarterly dividend of 1.525p was paid from UEM's capital reserves. UEM has a Dividend Reinvestment Plan ("DRIP") which shareholders can elect to join. Further details are available on the Company's website.

The share price discount remained at similar levels to last year so UEM did not buy back any ordinary shares during the year to 31 March 2013.

As you may be aware there are several regulatory changes impending which will impact on UEM, the two most significant being the Alternative Investment Fund Managers Directive ("AIFMD") and US Foreign Account Tax Compliance Act ("FATCA"). In order to comply with these regulatory requirements, changes will need to be made by UEM and/or its service providers. On AIFMD the key decision is who should act as alternative investment fund manager of the Company for the purposes of AIFMD, UEM itself or its external investment manager, ICM. UEM and ICM are both taking advice in this regard. FATCA is a US led regulatory requirement introduced to reduce US tax avoidance. The penalty for non-compliance with the US regulations is the imposition of a 30% withholding tax on any US source payments, which in our case would include some of our South American investments, which we might buy through American Depositary Receipts. In order to meet this requirement, UEM will need to collect information on its shareholders. In this regard a resolution will be proposed at the Annual General Meeting to amend UEM's Byelaws so that it has the right to request information from its shareholders to enable UEM to meet this new regulatory requirement.

OUTLOOK

There are currently a number of challenges for global stock markets, the most significant being the potential impact from the normalising of Quantitative Easing. The emerging markets' economies have been resilient during the Quantitative Easing cycle and are forecast to continue to grow over the coming year. The Investment Manager expects to be able to continue to identify attractive investment opportunities in the utility and infrastructure sectors in these markets.

Alexander Zagoreos
Chairman
20 June 2013

Investment Manager's Report

The year to 31 March 2013 has been challenging but rewarding. Equity markets overall were divergent and this was certainly the case in the emerging economies. The Brazilian Bovespa was down 12.6% as its economy weakened while the Philippine PSEi gained 34.1% as its economy continued to respond to economic reforms. In the developed markets the US looks to be improving, the UK is stabilising, whilst Europe continues to face significant challenges. Japan has embarked on significant Quantitative Easing ("QE"). The response from most major developed economy governments is still interventionist and QE remains the preferred policy response. There have been a number of changes in governments across countries to which we are exposed, including China.

UEM has performed well in this challenging environment with the net asset value per ordinary share ("NAV") achieving a total return of 20.5%, significantly ahead of the MSCI Emerging Markets Total Return Index (GBP adjusted) which was up 7.6%.

The investment team has continued to travel extensively and the knowledge gained has resulted in good country and sector decisions and stock selection. During the year members of the management team visited China, Brazil, Mexico, Indonesia, Malaysia, Thailand, Hong Kong, Singapore, Philippines, Romania, Lithuania and Ukraine.

UEM's investment focus continues to be on the listed markets in companies which for the most part are established and profitable. The majority of these companies are dividend paying and this is reflected in the total revenue income of £13.9m, which was up 9.7% on the prior year and represents a return on the opening investment portfolio of 3.7%.

PORTFOLIO

UEM's gross assets (less liabilities excluding loans) increased from £382.9m to £452.1m over the twelve months to 31 March 2013.

The top ten investments have seen some change, with two new entrants, China Gas Holdings ("China Gas") and Gasco. The two companies that have dropped out of the top ten but still remain portfolio investments are Infrastructure India ("IIP") and Tractebel Energia ("Tractebel").

China Gas' share price increased by 105.9% over the period under review, reflecting its underlying operational performance and a re-rating by the market. China Gas owns and operates natural gas and liquefied petroleum gas ("LPG") infrastructure assets throughout China. With 172 city gas concessions it is well positioned to deliver rapid growth due to China's shift in energy mix towards natural gas. Being a relatively cheap and clean fuel, the natural gas market is benefitting from a combination of positive economics and supportive political policy.

In the six months to end-September 2012 this growth was evident, with China Gas' piped gas volume increasing by 27.6%, and connections up by 18.1%. At the group level this growth was diluted by the LPG business, which is in a highly competitive, declining market. Nonetheless, group turnover increased by 8.3% and normalised net profit grew by 94.1%; the company also announced a maiden interim dividend.

In December 2011 a consortium consisting of China Petroleum & Chemical Corporation ("Sinopec") and ENN Energy Holdings made an offer for China Gas at HK$3.50 per share. This was rejected by the China Gas Board. In October 2012 the bidding consortium withdrew its offer and Sinopec instead entered into a strategic cooperation agreement to expand China Gas' natural gas and LPG operations. In the months following this announcement China Gas' shares were significantly re-rated, reaching HK$7.74 as of end-March 2013.

UEM has been invested in China Gas since 2009, and we increased our investment in this company modestly during the year.

Gasco also operates in the natural gas and LPG markets, but its assets are focused on Chile, Colombia and Argentina. While the company's history stretches back over 150 years in the gas markets, it is a relatively under researched company owing to the low free float. Grupo CGE, an integrated electricity and gas company, owns 56.6% of Gasco, and another 21.2% is closely held by three Chilean families. UEM holds 1.1% of Gasco, a position which was acquired at the start of 2012 with further additional investments made through the year.

Gasco holds several natural gas assets, the most significant of which is its 51.8% stake in Metrogas, the city gas distribution company in Santiago.

With little domestic growth in the LPG market, Gasco recently expanded its LPG operations in Colombia through the acquisition of a 70%-owned subsidiary. It has a 23% market share in Colombia, which is a more fragmented market than Chile (where Gasco has a 27% market share). This relatively new operation offers good growth potential over and above Gasco's Chilean business.

One of the key attractions of Gasco is that it is operating in an unregulated market and has recently seen its liquefied natural gas ("LNG") import pricing rebased from Brent oil-linked to much cheaper Henry Hub-linked. This is a significant development, dramatically reducing the cost of gas to the company and customers alike. We believe this bodes well for future volume growth and margins at Gasco, and is evident in its financial results to 31 December 2012 with revenue growth of 11.1% and EBITDA growth of 39.1%. Gasco pays dividends six times a year and the outlook for 2013 looks promising as the first two dividends are 75% higher than last year. In the year to 31 March 2013 Gasco's share price increased by 39.5%.

China is now our biggest country investment at 26.7%, up from 19.9%. This is mainly driven by investment performance by China Gas (noted above), Asia Satellite Telecommunications Holdings ("AsiaSat"), and others.

AsiaSat had a strong share price performance over the period, with the share price increasing by 47.4%. At the beginning of the period, an offer was made for the shares by the majority owners at HK$22.00 (later revised to HK$23.50), which was rejected by the minority shareholders.

The bid highlighted the underlying value in the stock, which had been relatively under-researched and the share price continued to appreciate, even after the bid had been rejected, ending the period at HK$28.22. This was despite underlying growth for the year being weak, after three years of strong gains, primarily due to capacity constraints. Two new satellites are due to be launched in 2014, and the incremental capacity that they will provide should result in strong demand.

We have been critical in the past of AsiaSat's inefficient balance sheet structure (high cash balances, no debt) and low dividend payouts. We are encouraged by the company's decision to pay a special dividend of HK$1.00 and an increased final dividend of HK$0.80 in June 2013. These payments together represent a return of around one-third of the company's cash balances to shareholders.

Brazil country investments have reduced to 24.5% from 32.0% last year. This is mainly as a result of realisations but also weaker market performance.

Ocean Wilsons Holdings' ("Ocean Wilsons") share price declined by 11.5% in the year. However, it remains attractive on valuation grounds. The operating company, Wilson Sons, continues to lead the Brazilian towage market (>50% market share) and to enjoy a successful offshore joint-venture with Ultratug. However, the port operations have struggled with Rio Grande posting a 0.5% decline in throughput for 2012 and Salvador only managing 3.9% growth. Wilson Sons' share price has reflected this weakness by falling 5.0% in the year. Our belief that the holding company is undervalued is strengthened when the US$237.7m investment portfolio held by Ocean Wilsons is taken into account.

Companhia de Saneamento de Minas Gerais ("Copasa") share price increased by 15.9% in the year to 31 March 2013. Copasa continued to deliver steady operational progress in the full year to December 2012, with water and wastewater treatment volumes growing by 2.7% and 6.4% respectively. With wastewater treatment attracting increased weightings and thereby higher effective tariffs, group revenue growth of 10.3% outpaced volume growth. However increased operating costs, mostly relating to the additional investments that Copasa has made in its network, meant that underlying net profits declined by 11.1%.

Companhia de Concessoes Rodoviarias' ("CCR") share price jumped 38.9% during the year. The company, which manages eight toll road concessions in Brazil, has continued to apply its operational expertise in areas such as ferry transportation, airports and urban mobility. We believe the management can deliver on these often higher return projects. This was reflected by the expansion in EBITDA margin to 64.3%, allowing the company to continue paying out a high level of dividends to shareholders.

Santos Brasil Participacoes ("Santos") shares were down 7.6% reflecting uncertainties over the regulatory environment for ports in Brazil, together with rising concerns over competition. Santos continued to deliver good operational results during 2012 driven by Tecon Santos. The terminal handled 1.1m Twenty Foot Equivalent Units, or TEU, an increase of 13.6% and further asserted itself as the destination of choice within Santos, São Paulo. Net profit for the year was up 9.6%.

Our Thailand country exposure has increased from 6.8% to 11.2%, principally driven by UEM's biggest investment, Eastern Water Resources Development and Management PCL ("Eastwater"). This makes Thailand our third biggest country investment just ahead of the Philippines and Malaysia.

Eastwater's share price performance was exceptional, up 101.3% in the year to 31 March 2013. This was underpinned by Eastwater's 2012 results which were excellent, with revenues up 12.6% driven by raw water volume growth of 6.6% and the implementation of the first tariff increases in three years. This resulted in EBITDA increasing by 9.6% and normalised earnings by 22.9%. With further tariff increases set to be implemented in 2013 and 2014, and volume growth underpinned by robust domestic economic activity, the operational outlook looks positive.

Post period-end we were disappointed to note that CEO Praphant Asava-Aree, the chief architect of Eastwater's successes and a strong defender of minority rights, has stepped down from the board of directors. We have made, and continue to make, strong representations to the board to protect our rights and sustain the financial strength of Eastwater. In the year to March 2013 we reduced our holding in Eastwater by 11.0% to bring it back under 10.0% of UEM's portfolio at that time.

The Philippines is our fourth biggest country investment at 10.8%, marginally down on last year's 11.7%. Much of this reduction has come from investment realisations in the Philippines, including from International Container Terminal Services ("ICT").

ICT's share price rose by 42.0% in the year and hit a record high of PHP100.5 on 10 May 2013. The company announced its full year 2012 revenue and profit figures, both up 9.7%. ICT has added six new terminals during the past two years and we continue to support the company as it executes on improving operational efficiency at these (typically) brownfield ports. President Enrique K. Razon recently confirmed management are looking at potential opportunities in Myanmar, Cambodia and Vietnam.

Malaysia is our fifth largest country exposure but it reduced in the year to 10.0% from 12.0% last year as a result of investment realisations and lower stock market performance as the elections in May 2013 started to take centre stage in investors' considerations. It has been pleasing to see the strong positive jump in the markets on the outcome of the elections. Most of our investments have responded positively.

Malaysia Airports Holdings' ("Malaysia Airports") share price was down 0.5% in the year as shareholders' attention was focused on the company's ability to complete the new terminal and runway on time and on budget. While there have been both delays and cost overruns, Malaysia Airports is expected to perform strongly in 2013 as it delivers on the opening of KLIA2, the world's first dedicated low cost carrier hub, which will house Air Asia and Malindo. Notably Air Asia is to rebase its Singapore slots to KLIA2. Legacy airlines have recently announced their return to the main terminal building, such as Air France (returning after 30 years), Turkish Airlines and Philippines Airlines (both returning after 10 years).

Investment activity has remained high but in line with last year. We invested £90.7m (2012: £84.7m) and realised £92.0m (2012: £123.0m) from sales. In the top ten we invested £1.3m in Malaysia Airports, £1.5m in Ocean Wilsons, £0.5m in China Gas, £0.25m in CCR, £0.25m in Santos and £2.0m in Gasco. Realisations in the top ten were £4.5m from Eastwater, £7.2m from ICT, £2.3m from Malaysia Airports and £0.6m from Ocean Wilsons.

Changes in the geographic split have reflected the realisations plus relative market performance. As a result, Brazil has moved down significantly and China has risen significantly.

Sectoral changes have also reflected the realisations and investment performance, with gas up strongly and electricity down.

CURRENCY

Currency remains a feature for UEM. However, in the year under review it was benign.

BANK DEBT

Bank debt has remained modest with net debt increasing from £6.2m to £6.6m over the twelve months. The Scotiabank facility expires next year. We will seek to extend the facility later this year.

REVENUE RETURN

Revenue income increased by 9.4% from £12.7m to £13.9m. This reflects a yield on the opening investment portfolio of 3.7%. We expect further improvements in revenue income in the coming year.

The normal management and administrative fees were largely unchanged. However, other expenses reduced as one-off cost items last year were not repeated.

Finance costs this year are lower mainly as an historic interest rate swap agreement matured in March 2012 and in part to lower bank borrowings over the year compared to the prior year. Taxation remained broadly in line with last year.

The net impact of the increased income and lower costs is a much improved profitability of £11.2m up from £8.9m, or up 26.0% on last year.

CAPITAL RETURN

The portfolio gains in the year of £83.0m reflect the strong stock selection and is a pleasing outcome. The loss on derivative instruments, of £5.2m, arose from the strong equity markets which eroded the value of the put option positions.

Management and administrative fees were much higher as a result of the £9.4m performance fee.

Finance costs were lower due to the interest rate swap agreement maturing in March 2012 and to lower usage of bank debt and taxation was lower due to fewer realisations from taxable positions.

The net effect of the above was a profit for the year on a capital return of £66.2m, up from £2.6m last year.

ICM Limited
Investment Manager
20 June 2013

GROUP PERFORMANCE SUMMARY

	31 March 2013	31 March 2012	Change %
Total return (1) (annual)	20.5%	3.1%	n/a
Annual compound total return (since inception)(2)	14.2%	13.5%	n/a
Net asset value per ordinary share	205.49p	175.60p	17.0
Ordinary share price	191.20p	164.00p	16.6
Discount	(7.0%)	(6.6%)	n/a
Earnings per ordinary share
- Capital	30.71p	1.19p	2480.7
- Revenue	5.20p	4.12p	26.2
- Total	35.91p	5.31p	576.3
Dividends per ordinary share
- 1st Quarter	1.375p	-	n/a
- 2nd Quarter	1.375p	3.750p	n/a
- 3rd Quarter	1.525p	-	n/a
- 4th Quarter(3)	1.525p	1.750p	n/a
- Total	5.800p	5.500p	5.5
Equity holders' funds (£m)	442.9	378.5	17.0
Gross assets (£m)(4)	452.1	382.9	18.1
Ordinary shares bought back (£m)	-	4.9	n/a
Cash/(overdraft) (£m)	2.6	(1.8)	n/a
Bank debt (£m)	(9.2)	(4.4)	109.1
Net Debt (£m)	(6.6)	(6.2)	6.5
Net debt gearing on gross assets	1.5%	1.6%	n/a
Management and administration fees  and other expenses (£m)
- excluding performance fee	3.4	3.9	(12.8)
- including performance fee	12.9	3.6	258.3
Ongoing charges figure (5)
- excluding performance fee	0.8%	0.9%	n/a
- including performance fee	3.2%	0.9%	n/a

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

(2)   Annual total return based on diluted NAV per ordinary share return, plus dividends reinvested from the payment date and return on warrants converted on 2 August 2010

(3)   The fourth quarterly dividend (2012, final) declared on 24 April 2013 and paid on 5 June 2013 has not been included as a liability in the accounts

(4)   Gross assets less liabilities excluding loans

(5)   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 AND APPROACH

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, mainly in emerging markets.

The Company seeks to minimise risk by investing mainly in companies and sectors displaying the characteristics of essential services or monopolies such as utilities, transportation infrastructure, communications or companies with a unique product or market position.

The Company's investment policy is flexible and permits it to make investments, predominantly in infrastructure, utility and related sectors, mainly in emerging markets 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 flexibility to invest in markets world-wide. The Company generally seeks to invest in emerging market countries where the Directors believe there are positive investment attributes such as political stability, economic development, an acceptable legal framework and an encouraging attitude to foreign investment.

The Company has the flexibility to invest in shares, bonds, convertibles and other types of securities, including noninvestment grade bonds and to invest in unlisted securities. The Company may also use derivative instruments such as American Depository Receipts ("ADR") promissory notes, contracts for difference ("CFD"), financial futures, call and put options, and warrants.

The Company may, from time to time, actively seek to protect the Company's portfolio and balance sheet from major corrections. This would include foreign currency hedges, interest rate hedges, stock market index put and call options, and similar instruments.

UEM seeks to identify and invest in undervalued investments in the fast growing infrastructure and utility sectors mainly in emerging markets. The Company aims to identify securities where underlying values and growth prospects are not reflected in the market price. This is often as a result of strong growth drivers, but can include changes in regulation, technology, market motivation, potential for financial engineering, competition or shareholder indifference.

The Company seeks to minimise risk by investing mainly in companies and sectors displaying the characteristics of essential services or monopolies such as utilities, transportation infrastructure, communications or companies with a unique product or market position. Most investee companies are asset backed, have good cash flows and offer good dividend yields. UEM generally seeks to invest in companies with strong management who have the potential to grow their business and who have an appreciation of and ability to manage risk.

UEM believes it is generally appropriate to support investee companies with their capital requirements while at the same time maintaining an active and constructive shareholder approach, including encouraging the optimisation of capital structures and business efficiencies. The investment team maintains regular contact with investee companies and UEM is often among its investee companies' largest international shareholders.

The Company aims to maximise value for shareholders by holding a relatively concentrated portfolio of securities and invests through instruments appropriate to the particular situation. UEM is prepared to hold investments in unlisted securities when the attractiveness of the investment justifies the risks and lower liquidity associated with unlisted investments.

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 2013. The Annual Report is published on the Company's website, www.uem.bm.

DIRECTORS' STATEMENT OF RESPONSIBILITIES

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

The Directors must not approve the Group financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

•     make judgements and estimates that are reasonable and prudent;

•     provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance;

•     state that the Company has complied with IFRS, subject to any material departures disclosed and explained in the financial statements; 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 are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements 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 IFRS, 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 Company faces. The financial risks are also provided in note 26 to the accounts.

Insofar as the Directors are aware:

•     there is no relevant audit information of which the Company's auditor is 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 auditor is 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 auditor does not involve consideration of the maintenance and integrity of the website and accordingly, the auditor accepts no responsibility for any changes that have occurred in the financial statements 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 accounts may differ from legislation in their jurisdiction.

Approved by the Board on 20 June 2013 and signed on its behalf by:

Alexander Zagoreos

Chairman

GROUP STATEMENT OF COMPREHENSIVE INCOME

for the year to 31 March	2013				2012
		Revenue	Capital	Total	Revenue	Capital	Total
		return	return	return	return	return	return
		£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Gains on investments		-	82,990	82,990	-	9,404	9,404
Losses on derivative instruments		-	(5,240)	(5,240)	-	(3,248)	(3,248)
Exchange gains/(losses)		86	(55)	31	-	(475)	(475)
Investment and other income		13,945	-	13,945	12,710	-	12,710
Total income		14,031	77,695	91,726	12,710	5,681	18,391
Management and administration fees		(853)	(10,927)	(11,780)	(777)	(1,049)	(1,826)
Other expenses		(1,081)	(25)	(1,106)	(1,758)	(29)	(1,787)
Profit before finance costs and taxation		12,097	66,743	78,840	10,175	4,603	14,778
Finance costs		(108)	(253)	(361)	(560)	(1,307)	(1,867)
Profit before taxation		11,989	66,490	78,479	9,615	3,296	12,911
Taxation		(789)	(287)	(1,076)	(723)	(729)	(1,452)
Profit for the year		11,200	66,203	77,403	8,892	2,567	11,459
Earnings per ordinary share - pence		5.20	30.71	35.91	4.12	1.19	5.31

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

for the year to 31 March	2013				2012
		Revenue	Capital	Total	Revenue	Capital	Total
		return	return	return	return	return	return
		£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Gains on investments		-	77,664	77,664	-	4,445	4,445
Gains on derivative instruments		-	-	-	-	1,437	1,437
Exchange gains/(losses)		86	(14)	72	-	(273)	(273)
Investment and other income		13,945	-	13,945	12,710	-	12,710
Total income		14,031	77,650	91,681	12,710	5,609	18,319
Management and administration fees		(853)	(10,927)	(11,780)	(777)	(1,049)	(1,826)
Other expenses		(1,036)	(25)	(1,061)	(1,686)	(29)	(1,715)
Profit before finance costs and taxation		12,142	66,698	78,840	10,247	4,531	14,778
Finance costs		(108)	(253)	(361)	(560)	(1,307)	(1,867)
Profit before taxation		12,034	66,445	78,479	9,687	3,224	12,911
Taxation		(789)	(287)	(1,076)	(723)	(729)	(1,452)
Profit for the year		11,245	66,158	77,403	8,964	2,495	11,459
Earnings per ordinary share - pence		5.22	30.69	35.91	4.15	1.16	5.31

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 2013
	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 2012	21,553	7,510	204,587	11,093	131,473	2,254	378,470
Profit for the year	-	-	-	-	66,203	11,200	77,403
Ordinary dividends paid	-	-	-	-	(1,351)	(11,635)	(12,986)
Balance at 31 March 2013	21,553	7,510	204,587	11,093	196,325	1,819	442,887

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

COMPANY STATEMENT OF CHANGES IN EQUITY

for the year to 31 March 2013
	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 2012	21,553	7,510	204,587	11,093	131,307	2,420	378,470
Profit for the Year	-	-	-	-	66,158	11,245	77,403
Ordinary dividends paid	-	-	-	-	(1,351)	(11,635)	(12,986)
Balance at 31 March 2013	21,553	7,510	204,587	11,093	196,114	2,030	442,887

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

BALANCE SHEETS

	GROUP		COMPANY
at 31 March	2013	2012	2013	2012
	£'000s	£'000s	£'000s	£'000s
Non-current assets
Investments	455,901	374,169	460,948	386,636
Current assets
Other receivables	2,105	9,641	2,103	2,221
Derivative financial instruments	4,702	6,836	-	-
Cash and cash equivalents	2,798	387	2,430	226
	9,605	16,864	4,533	2,447
Current liabilities
Bank loans	(9,228)	-	(9,228)	-
Other payables	(10,723)	(3,849)	(10,698)	(3,824)
Derivative financial instruments	-	(1,925)	-	-
	(19,951)	(5,774)	(19,926)	(3,824)
Net current (liabilities)/assets	(10,346)	11,090	(15,393)	(1,377)
Total assets less current liabilities	445,555	385,259	445,555	385,259
Non-current liabilities
Bank loans	-	(4,381)	-	(4,381)
Deferred tax	(2,668)	(2,408)	(2,668)	(2,408)
Net assets	442,887	378,470	442,887	378,470
Equity attributable to equity holders
Ordinary share capital	21,553	21,553	21,553	21,553
Share premium account	7,510	7,510	7,510	7,510
Special reserve	204,587	204,587	204,587	204,587
Other non-distributable reserve	11,093	11,093	11,093	11,093
Capital reserves	196,325	131,473	196,114	131,307
Revenue reserve	1,819	2,254	2,030	2,420
Total attributable to equity holders	442,887	378,470	442,887	378,470
Net asset value per ordinary share
Basic - pence	205.49	175.60	205.49	175.60

STATEMENTS OF CASH FLOWS

	GROUP		COMPANY
for the year to 31 March	2013	2012	2013	2012
	£'000s	£'000s	£'000s	£'000s
Cash flows from operating activities	15,341	(7,440)	7,968	28
Investing activities:
Purchases of investments	(95,099)	(83,691)	(95,150)	(101,047)
Sales of investments	97,240	122,109	99,384	122,109
Purchases of derivatives	(32,111)	(27,805)	-	-
Sales of derivatives	27,080	18,262	-	-
Cash flows from investing activities	(2,890)	28,875	4,234	21,062
Cash flows before financing activities	12,451	21,435	12,202	21,090
Financing activities: Ordinary dividends paid	(12,986)	(11,207)	(12,986)	(11,207)
Movements from loans	4,634	(6,058)	4,634	(6,058)
Cost of ordinary shares purchased	-	(4,933)	-	(4,933)
Cash flows from financing activities	(8,352)	(22,198)	(8,352)	(22,198)
Net movement in cash and cash equivalents	4,099	(763)	3,850	(1,108)
Cash and cash equivalents at the beginning of the year	(1,773)	(742)	(1,934)	(761)
Effect of movement in foreign exchange	243	(268)	285	(65)
Cash and cash equivalents at the end of the year	2,569	(1,773)	2,201	(1,934)

Comprised of:
Cash	2,798	387	2,430	226
Bank overdraft	(229)	(2,160)	(229)	(2,160)
Total	2,569	(1,773)	2,201	(1,934)

NOTES

The Directors have paid a fourth quarterly dividend in respect of the year ended 31 March 2013 of 1.525p per ordinary share on 5 June 2013 to shareholders on the register at close of business on 17 May 2013. The total cost of the dividend which has not been accrued in the results for the year to 31 March 2013, was £3,287,000.

This statement was approved by the Board on 20 June 2013. It is not the Group's or Company's statutory accounts. The statutory accounts for the financial year ended 31 March 2013 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 2012 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 2013 will be posted to shareholders in early July 2013. 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

20 June 2013

 

END

 

 

FR EADKEASKDEFF