Strong turnaround for Utilico Emerging Markets – Utilico Emerging Markets (UEM) has announced its full-year results for the year to 31 March 2021. During the year, the trust achieved a NAV total return per share of 30.2%, outperforming the MSCI Emerging Markets Utilities Index which was up by 17.2%, and a significant turnaround on last year’s fall for the company of 24.9%. Its
Meanwhile revenue earnings per share also increased by 3.2%, which the board says was a win given the challenges faced by investee businesses and their need to preserve cash flow, especially in the first six months to 30 September 2020. UEM has now declared four quarterly dividends totalling 7.7p per share, a 2.6% increase over the previous year and the fourth quarterly dividend of 2p represents an uplift of 3.9% on the prior quarterly dividend. Dividend income recovered strongly in the second half of the year and dividends remain fully covered by income.
The trust’s share price discount widened over the year from 11.2% to 13.6%, which continues to be above levels that the board would wish to see over the medium term. UEM has therefore continued buying back shares for cancellation and has stepped up its buybacks with 6.6m shares bought back during the year under review, at an average price of 182.81p, and total cost of £12.1m.
While the board is keen to see the discount narrow, any share buyback remains an investment decision. Traditionally UEM has bought back shares if the discount widens in normal market conditions to over 10%. Since inception, UEM has bought back 56m ordinary shares totalling £97.8m. The buybacks now represent significantly more than the initial IPO capitalisation of UEM Bermuda when it came to market in July 2005.
Charles Jillings, manager of UEM, said: “COVID-19 has caused unprecedented challenges for investors. ICM is strongly of the view that due to COVID-19, the shift to working from home and eCommerce has accelerated the digitalisation of governments, businesses and individuals, and this shift will offer new investment opportunities.
UEM’s gross assets (less liabilities excluding loans) increased sharply to £556.1m as at 31 March 2021 from £461.4m as at 31 March 2020. There have been eight new entries into the top twenty holdings of the portfolio over the year, as well as small sector shifts. On a geographic basis, South Korea has increased through investment and performance rising from 1.7% to 6.5% and Brazil saw the biggest reduction from 29.1% to 18.0%.
UEM’s portfolio consists of a diverse range of companies that are often under-represented in the MSCI. The strength of our sector and country knowledge built up over decades has given us an ability to continue to identify these investments, in spite of COVID-19 and global lockdowns. Despite unprecedented challenges due to COVID-19, UEM’s investment objective to provide positive long-term absolute returns has not changed, and we remain optimistic to uncover compelling investments that offer excellent returns.”
UEM : Strong turnaround for Utilico Emerging Markets