## 2023 ## REPORT AND ACCOUNTS ### EMERGING CITIES | EMERGING WEALTH | EMERGING OPPORTUNITIES International Container Terminal Services, Inc. (The Philippines) ## Utilico Emerging Markets Trust plc’s investment ## objective is to provide long-term total return ## through a flexible investment policy that permits ## UEM to make investments predominantly in ## infrastructure, utility and related sectors, mainly in ## emerging markets. TRUSTED DIVERSIFIED PROVEN A closed end fund A diverse portfolio of Strong management team focused on long-term operational cash with a long-term record total return generative investments of outperformance ## WHY UTILICO EMERGING MARKETS TRUST PLC? ## Utilico Emerging Markets Trust plc is a unique ## UK listed fund focused on global infrastructure ## megatrends in emerging markets. UNIQUE EXPOSURE EXPERIENCED MANAGEMENT UEM offers a diverse portfolio of high conviction, bottom- Since UEM’s inception in 2005, the portfolio has been up investments in utilities and infrastructure, providing managed by a dedicated, active investment team with unique exposure to emerging markets megatrends. a long track record of investing successfully in this highly specialised asset class. REAL ASSETS DRIVING COMPELLING RETURNS STRONG PERFORMANCE The portfolio of operational infrastructure assets benefitting from megatrends typically offers attractive As at 31 March 2023, UEM has delivered a 9.3% growth and yields. As a result of long term cash flows, annualised NAV total return over 17 years with a 3.8% which are often underpinned by established regulatory dividend yield and has outperformed the MSCI Emerging frameworks, the portfolio provides predictable, Markets Index over the last one, three, and five years and sustainable and growing income. since inception. Report and Accounts for the year to 31 March 2023 1 ## CONTENTS PERFORMANCE 4 Current Year Performance 5 Performance Summary 6 Chairman’s Statement 10 Geographical Investment Exposure 11 Top Thirty Companies 13 Performance Since Inception (20 July 2005) 14 Ten Year Performance China Gas Holdings Limited (China) STRATEGIC REPORT AND INVESTMENTS FINANCIAL CALENDAR 15 Investment Managers’ Report Year End 19 Megatrends Driving Upside in Emerging Markets 31 March 22 Our Investment Approach Annual General Meeting 24 ESG Spotlight 19 September 2023 25 Largest Holdings Overview 31 Strategic Report Half Year 30 September 40 Investment Managers and Team Dividends Payable GOVERNANCE March, June, September and December 42 Directors 43 Directors’ Report The business of Utilico Emerging Markets Trust plc ( UEM or 49 Corporate Governance Statement the Company ) consists of 55 Directors’ Remuneration Report investing the pooled funds of 58 Audit & Risk Committee Report its shareholders in accordance 61 Directors’ Statement of Responsibilities with its investment objective and policy, with the aim of spreading FINANCIAL STATEMENTS investment risk and generating a return for shareholders. The 62 Independent Auditor’s Report joint portfolio managers of the 68 Accounts Company are ICM Investment 72 Notes to the Accounts Management Limited (“ICMIM”) and ICM Limited (“ICM”), together ADDITIONAL INFORMATION referred to as the “Investment Managers”. 91 Notice of Annual General Meeting 95 Company Information 96 Alternative Performance Measures Front cover image – Alupar Investimento S.A. 98 Historical Performance (Brazil) – Andre S Prietsch 2 Utilico Emerging Markets Trust plc ## FINANCIAL HIGHLIGHTS ![img-0.jpeg](img-0.jpeg) Details Limited (UK) NET ASSET VALUE ('NAV') TOTAL RETURN PER SHARE* **2.1%** (2022: 14.9%) SHARE PRICE TOTAL RETURN PER SHARE* **0.8%** (2022: 17.6%) REVENUE EARNINGS OF 9.40P PER SHARE **↑ 15.1%** (2022: ↑0.5%) DIVIDENDS OF 8.45P PER SHARE **↑ 5.6%** (2022: ↑2.9%) * See Alternative Performance Measures on pages 16 and 17 UEM turned in a strong performance in the second half of the year and delivered a positive NAV total return of 2.1% for the year to 31 March 2023. Report and Accounts for the year to 31 March 2023 3 ## CURRENT YEAR PERFORMANCE | NAV TOTAL RETURN PER SHARE* | SHARE PRICE TOTAL RETURN PER SHARE* | NAV OF 250.91P PER SHARE* | SHARE PRICE OF 217.00P | | --- | --- | --- | --- | | **2.1%** (2022: 14.9%) | **0.8%** (2022: 17.6%) | **↓1.3%** (2022: ↑11.2%) | **↓3.1%** (2022: ↑13.4%) | | DIVIDENDS OF 8.45P PER SHARE | DIVIDENDS PAID | INVESTED | REALISED | | **↑5.6%** (2022: ↑2.9%) | **£17.2m** (2022: £17.5m) | **£108.9m** (2022: £124.5m) | **£126.6m** (2022: £176.9m) | | 12.5M SHARES BOUGHT BACK | TOTAL REVENUE RETURN INCOME | ONGOING CHARGES* | NET DEBT INCREASED TO | | **£27.2m** (2022: £13.9m) | **£24.3m** (2022: £22.6m) | **1.4%** (2022: 1.4%) | **£36.1m** (2022: £23.2m) | * See Alternative Performance Measures on pages 96 and 97 ### TOTAL RETURN COMPARATIVE PERFORMANCE ^ from 31 March 2022 to 31 March 2023 ![img-1.jpeg](img-1.jpeg) ^ Released to 100 as at 31 March 2022 Source: IOM and Bloomberg 4 Utilico Emerging Markets Trust plc ## PERFORMANCE SUMMARY | | 31 March 2023 | 31 March 2022 | % change 2023/22 | | --- | --- | --- | --- | | NAV total return per share^{1)} (annual) (%) | 2.1 | 14.9 | n/a | | Share price total return per share^{2)} (annual) (%) | 0.8 | 17.6 | n/a | | Annual compound NAV total return^{3)} (since inception - 20 July 2005) (%) | 9.3 | 9.7 | n/a | | NAV per share^{4)} (pence) | 250.91 | 254.22 | (1.3) | | Share price (pence) | 217.00 | 224.00 | (3.1) | | Discount^{5)} (%) | (13.5) | (11.9) | n/a | | **Earnings per share (basic)** | | | | | - Capital (pence) | (6.61) | 24.49 | (127.0) | | - Revenue (pence) | 9.40 | 8.17 | 15.1 | | Total (pence) | 2.79 | 32.66 | (91.5) | | **Dividends per share** | | | | | - 1st quarter (pence) | 2.00 | 2.00 | 0.0 | | - 2nd quarter (pence) | 2.15 | 2.00 | 7.5 | | - 3rd quarter (pence) | 2.15 | 2.00 | 7.5 | | - 4th quarter (pence) | 2.15^{6)} | 2.00 | 7.5 | | Total (pence) | 8.45 | 8.00 | 5.6 | | Gross assets^{7)} (£m) | 542.5 | 569.6 | (4.8) | | Equity holders' funds (£m) | 507.4 | 545.9 | (7.1) | | Shares bought back (£m) | 27.2 | 13.9 | 95.7 | | Net (overdraft)/cash (£m) | (1.0) | 0.5 | (300.0) | | Bank loans (£m) | (35.1) | (23.7) | 48.1 | | Net debt (£m) | (36.1) | (23.2) | 55.6 | | Gearing^{8)} (%) | (7.1) | (4.3) | n/a | | Management and administration fees and other expenses | 7.4 | 7.3 | 1.4 | | Ongoing charges figure^{9)} | 1.4 | 1.4 | n/a | $^{1)}$ See Alternative Performance Measures on pages 96 and 97 $^{2)}$ The fourth quarterly dividend has not been included as a liability in the accounts $^{3)}$ Gross assets less liabilities excluding loans On 3 April 2018, as a result of the proposals to redomicile Utilco Emerging Markets Limited ("UEM Limited") from Bermuda to the United Kingdom, the shareholders of UEM Limited exchanged all their shares in UEM Limited for shares in UEM on a one for one basis and UEM Limited became a wholly owned subsidiary of UEM. All performance data relating to periods prior to 3 April 2018 are in respect of UEM Limited. Report and Accounts for the year to 31 March 2023 5 ## CHAIRMAN’S STATEMENT The year to 31 March 2023 GLOBAL ECONOMY has continued to be truly As referred to earlier, there are numerous headwinds challenging for all, including currently faced by the markets, each of which is investors. From the war in challenging in its own right. We have historically Ukraine through to inflation discussed a number of these and they largely remain and sharply higher central unresolved. We continue to witness a significant rise in bank interest rates; to rising nationalism, wealth inequality and global immigration. geopolitical friction; and to All of these issues and challenges no doubt tear at the the challenges on climate fabric of our societies and institutions. change and significant natural JOHN RENNOCKS One positive is that Covid looks to be behind us. The disasters. Understandably, Chairman World Health Organisation finally declared the Covid volatility in most markets has emergency over in May 2023. At the time of publishing been elevated as uncertainty has dominated. UEM’s half yearly report in November 2022, we were UEM turned in a strong performance in the second deeply concerned about the challenges faced by half of the year and importantly delivered a positive China given their zero Covid policy. The about-turn by NAV total return of 2.1% for the year to 31 March 2023. China on Covid was a surprise in both its timing and This was once again significantly ahead of the MSCI EM approach. We had expected China to vaccinate its total return Index which was down 5.0% over the same population and slowly lift restrictions in the summer period. this year. Faced with the highly infectious Omicron variant already penetrating the wider Chinese UEM measures its performance on a total return basis population and the heavy burden of ineffective over the long term and the Investment Managers are lockdowns, the decision to go from zero Covid seeking long term performance to be above 10.0% per tolerance to total tolerance was bold. Certainly, at an annum including a rising dividend. Over one, three and investee level, it has had very limited impact on the five years and since inception, UEM has outperformed ability of corporates to run their businesses today. the MSCI EM Index. It is pleasing to highlight the long term annual compound NAV total return since Unfortunately the same cannot be said of the war in inception to 31 March 2023 of 9.3% exceeding the Ukraine. It remains devastating on a number of levels. MSCI EM total return Index of 7.6%. The harshness of the Russian army will be a wound on MSCI EMERGING MARKETS SECTOR INDEX TOTAL RETURNS (GBP ADJUSTED) from 31 March 2022 to 31 March 2023 5 8% 2 3% 2 1% 1 3% (0 3)% (1 5)% (8 0)% (8 4)% (8 9)% | | | | | | | | | | (10 0)% | (10 2)% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Consumer | | Consumer | UEM NAV | Energy Industrials Communication | | Financials Information | | Utilities Healthcare Materials | | | | | 6 | Utilico Emerging Markets Trust plc | | | | | | | | | | staples | | discretionary | total return | | services | | technology | | | | per share Source Bloomberg INDICES MOVEMENTS from 31 March 2022 to 31 March 2023 110 100 90 80 70 60 | Mar | | Jun | | Sep | | Dec | | Mar | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2022 | | 2022 | | 2022 | | 2022 | | 2023 | | | NIFTY 50 Index | | Hang Seng Index | | Shanghai SE Composite Index | | | | | | PSEi – Philippine SE Index | | Brazil Ibovespa Index | | | | | | | Rebased to 100 as at 31 March 2022 | | | | | | | Source Bloomberg | | liberal societies for decades to come. The need to have in Latam and Eastern Europe and weakening property resilient and diversified supply chains, energy security, markets in Asia. Of note is the volatility – at its low green energy and increased defence capabilities will the Hang Seng Index was down over 30.0% and the see resources diverted and reinvested with an urgency Philippine PSEI was down over 20.0%. and scale not witnessed in our lifetime. This shift will In comparison most currencies were up against UK give rise to new opportunities for investors, including Sterling although for UEM notably the Brazilian Real, UEM. Chinese Renminbi and Indian Rupee were all down The legacy of Covid and the West’s response to it has 0.2%, 1.7% and 1.8% respectively. Again, volatility was undoubtedly led to higher debt and higher inflation, high. The Hong Kong Dollar was at one point during the and the Russian war in Ukraine has seen sharply higher year up over 20.0% and the Indian Rupee was up by commodity prices and accelerating inflation. The 15.0% against Sterling. response by the Central Banks to higher inflation has Most commodities have moved lower during the been to rapidly raise interest rates to bring inflation period under review as supply chains have adjusted, under control. The surprising part has been the with oil down by 26.1%, wheat down by 31.2% and resilience in the labour market where in most Western soybean down by 12.6%. Although copper moved countries, unemployment levels are at record lows. higher, up by 16.0%. But most remain elevated This is good for workers but ultimately negative for the compared to historic levels which is feeding through inflation outlook if it persists, as wage demands will into inflation. keep inflation high. UNLISTED INVESTMENTS (LEVEL 3 INVESTMENTS) EMERGING MARKETS UEM has over the years invested in unlisted businesses Most EM markets were down over the year reflecting at a modest level. This remains true today. As at local headwinds, higher interest rates and lower 31 March 2023 the value of the unlisted portfolio has valuations. Brazil’s Bovespa Index was down 15.1%, the risen to 10.8% which has been driven primarily by Philippine PSEI Index was down 9.8% and the Hong the revaluation of Petalite Limited ( Petalite ). UEM is Kong Hang Seng Index was down 7.3%. Some markets unable to invest further in unlisted investments while have held up, most notably India’s Sensex which was the valuation of its unlisted portfolio is over 10.0% of up by 0.7%. A common theme has been rising inflation gross assets. Petalite is a disruptive technology start Report and Accounts for the year to 31 March 2023 7 ## CHAIRMAN’S STATEMENT (continued) up business and gives UEM exposure to the electric SHARE BUYBACKS vehicles revolution through charging infrastructure. Disappointingly UEM’s share price discount widened UEM invested a modest amount, some £1.5m for an over the year from 11.9% as at 31 March 2022 to 13.5% interest of approximately 30.0%. Following external as at 31 March 2023. This remains above the level that fund raising, in which UEM invested a further £1.25m, the Board would wish to see over the medium term. and significant progress, our holding in Petalite was The Company has continued buying back shares for valued upwards in the year to £28.6m. cancellation, with 12.5m shares bought back in the year to 31 March 2023, at an average price of 215.45p and REVENUE EARNINGS AND DIVIDEND total cost of £27.2m. It is excellent to see UEM’s revenue earnings per share While the Board is keen to see the discount narrow, any (“EPS”) increase by 15.1% to 9.40p given the wider share buyback remains an independent investment market challenges as inflation and interest rates have decision. Historically the Company has bought back risen sharply during the year to 31 March 2023. shares if the discount widens in normal market UEM has declared one quarterly dividend of 2.00p and conditions to over 10.0%. Since inception, UEM has three quarterly dividends of 2.15p each, totalling 8.45p bought back 75.1m ordinary shares totalling £138.8m. per share, a 5.6% increase over the previous year. The buybacks now represent significantly more than Dividends remain fully covered by income. The retained the initial IPO capitalisation of UEM Limited when it earnings revenue reserves increased by £2.3m in the came to market in July 2005. The share buybacks have year to £9.6m as at 31 March 2023, equal to 4.74p per contributed 0.8% to UEM's total returns. share. ONGOING CHARGES The Board would like to re-emphasise that UEM’s Ongoing charges were unchanged at 1.4% for the year portfolio is predominantly invested in relatively liquid, to 31 March 2023, a good result especially given the cash-generative companies which have long-duration wider inflationary environment. operational, infrastructure and utility assets that the Company’s Investment Managers believe are structurally undervalued and offer the potential for excellent total returns. CURRENCY MOVEMENTS vs STERLING from 31 March 2022 to 31 March 2023 130 120 110 100 90 | Mar | | | Jun | Sep | | Dec | | | Mar | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2022 | | | 2022 | 2022 | | 2022 | | | 2023 | | | Brazilian Real 8 | Utilico Emerging Markets Trust plc | Romanian Leu | Indian Rupee | Hong Kong Dollar | | | Philippine Peso | | | Rebased to 100 as at 31 March 2022 | | | | | | | Source: Bloomberg | | | BOARD We announced plans for board refreshment in 2021, which included the appointments of Mark Bridgeman and Isabel Liu later that year and after the 2022 Annual General Meeting (“AGM”) Anthony Muh stepped down from the Board. Continuing with these initiatives, Susan Hansen has confirmed her intention to retire from the Board following the conclusion of UEM’s next AGM in September 2023. Susan has brought significant insight, experience and challenge to the Board since she joined in 2013. As noted in the half yearly report, the Directors have reviewed the composition of the Board and the current intention is to continue as a Board of four Directors. Santos Brasil Participacoes S.A. (Brazil) This will be kept under review as part of the annual Board evaluation process. ADVISER AND INVESTOR COMMUNICATION DIVIDEND PER SHARE OF 8.45P, UP BY We referred to proposals for increased investor communication in the half yearly report and the ## 5.6% continued focus on marketing UEM to the wider investment community. As part of these initiatives FOR THE YEAR TO 31 MARCH 2023 we were pleased to announce, after a competitive pitch process, the appointments of Barclays as joint corporate broker alongside Shore Capital, and RMS OUTLOOK Partners to help lead investor engagement with The megatrends driving much of the global growth regional institutions and private client fund managers. in emerging markets are strengthening. We see We also draw investors’ attention to UEM’s website UEM’s portfolio as well placed to benefit from these which has extended its content significantly, providing megatrends. comprehensive insights from the Investment Managers The investee company’s management teams have on areas such as individual EM countries and portfolio demonstrated an enviable ability to seize the stocks. opportunity even in these challenging markets. We UEM is working with its advisers to rejuvenate the remain optimistic for UEM. marketing presentation and draw attention to a number of megatrend tailwinds benefitting UEM, see page 19. Our drive is to improve investor knowledge John Rennocks and broaden its investor base, especially retail. Chairman 16 June 2023 Report and Accounts for the year to 31 March 2023 9 ## GEOGRAPHICAL INVESTMENT EXPOSURE ## AS AT 31 MARCH 2023 | Other Europe | | Poland | | Other Asia | | | | --- | --- | --- | --- | --- | --- | --- | | | 5.9% | | 2.6% | | 4.8% | | | | (6.9%) | | (1.8%) | | (7 2%) | China | (including Hong Kong) ### 15.8% (15.9%) | UK | South Korea | | | --- | --- | --- | | 6.2% | | 4.1% | | (3.8%) | | (5.4%) | ### Vietnam ### Middle East/ ### 7.0% ### Africa (7.1%) ### 5.8% ### (5.6%) The Philippines ### Mexico | | India | 4.9% | | --- | --- | --- | | 5.4% | | (4.6%) | | (4 2%) | 10.7% | | (11.3%) ### Brazil ### 20.9% ### Colombia (20.9%) ### 2.2% (3.5%) ### Chile ### 3.7% (1 8%) Figures in brackets as at 31 March 2022. Source: ICM 10 Utilico Emerging Markets Trust plc ## TOP THIRTY COMPANIES ### 1 2 3 4 5 | | 5.2% | | 4.9% | | 3.8% | | 3.4% | | 3.1% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Petalite Limited | | | International | | Alupar | Orizon Valorizacao | | Gujarat State | | | | | Container Terminal | | Investimento S.A. | | de Residuos S.A. | | Petronet Limited | | Services, Inc. Renewables Ports and Logistics Electricity Water and Waste Gas An electric A global port A Brazilian A waste treatment A natural gas vehicle charging management holding company operator in Brazil. transmission and infrastructure company for electricity distribution company company based in headquartered in the transmission and in India. the UK. Philippines. renewable assets. ## 28,607 26,584 20,643 18,432 17,085 Fair value £’000s Fair value £’000s Fair value £’000s Fair value £’000s Fair value £’000s ### 6 7 8 9 10 | | 2.8% | | 2.4% | | 2.4% | | 2.3% | | 2.3% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | India Grid Trust | | | Grupo | FPT Corporation | | | Power Grid | Citic Telecom | | | | | Aeroportuario del | | | | Corporation of India | | International | | | | | Centro Norte, S.A.B. | | | | | Limited | Holdings Limited | | de C.V. Electricity Airports Data Services Electricity Telecommunications and Digital Infrastructure An infrastructure A Mexican airport An information An electricity A investment trust operator. technology and transmission telecommunications with electricity telecommunications company in India. service provider in transmission and service company in Asia. solar assets in India. Vietnam. ## 15,057 13,146 12,983 12,755 12,489 Fair value £’000s Fair value £’000s Fair value £’000s Fair value £’000s Fair value £’000s Note: % of total investments For more information on the top ten companies, see the holdings review starting on page 26. Report and Accounts for the year to 31 March 2023 11 ## TOP THIRTY COMPANIES (continued) | 31 March | | | Fair value | | % of total | | --- | --- | --- | --- | --- | --- | | | 2023 Company (Country) Description | | | £’000s | investment | | | 11 VinaCapital Vietnam Opportunity Fund Ltd | Investment trust 12,092 2.2 | | | | (Vietnam) 12 CGN Capital Partners Infra Fund 3 Renewable assets fund 11,615 2.1 (Hong Kong) 13 China Gas Holdings Limited (China) Gas distributor 11,395 2.1 14 Rumo S.A. (Brazil) Rail-based logistics operator 10,939 2.0 15 China Datang Corporation Renewable Electricity generation 10,857 2.0 Power Co., Limited (China) 16 Engie Energia Chile S.A. (Chile) Electricity generation and transmission 10,745 2.0 17 Korean Internet Neutral Exchange Inc. Data centre operator 10,388 1.9 (South Korea) 18 Aguas Andinas S.A. (Chile) Water distributor and sanitation 9,708 1.8 19 Umeme Limited (Uganda) Electricity distributor 9,637 1.8 20 Centrais Eletricas Brasileiras S.A. (Brazil) Electricity generation and transmission 9,621 1.8 21 Santos Brasil Participacoes S.A. (Brazil) Port operator 9,612 1.8 22 KunLun Energy Company Limited (China) Gas transmission and distributor 9,473 1.7 23 InPost S.A. (Poland) Logistics operator 9,345 1.7 24 Grupo Aeroportuario del Pacifico, S.A.B. de Airport operator 8,901 1.6 C.V. (Mexico) | 25 Vamos Locacao de Caminhoes Maquinas e | | Trucks and machinery leasing and | 8,875 1.6 | | --- | --- | --- | --- | | | Equipamentos S.A. (Brazil) | sales | | | 26 Powergrid Infrastructure Investment Trust | | Infrastructure investment trust 8,181 1.5 | | (India) 27 Conversant Solutions Pte Ltd (Singapore) Technology company 7,877 1.4 28 Telelink Business Services Group (Bulgaria) Information technology service 7,726 1.4 provider 29 Shanghai International Airport Co., Ltd Airport operator 7,508 1.4 (China) 30 Grupo Traxion S.A.B. de C.V. (Mexico) Logistics operator 7,220 1.3 Other investments 176,161 32.3 Total portfolio 545,657 100.0 12 Utilico Emerging Markets Trust plc ## PERFORMANCE SINCE INCEPTION (20 JULY 2005) NAV ANNUAL NAV TOTAL RETURN SHARE PRICE TOTAL COMPOUND TOTAL PER SHARE* RETURN PER SHARE* RETURN* ## 9.3% 381.6% 329.7% 75.1M SHARES DIVIDENDS PER SHARE DIVIDENDS PAID BOUGHT BACK INCREASED FROM CUMULATIVE 1.50P TO ## £138.8m 8.45p £220.6m * See Alternative Performance Measures on pages 96 and 97 (1) HISTORIC NAV AND SHARE PRICE PERFORMANCE (pence) from 20 July 2005 to 31 March 2023 500 450 400 350 300 250 200 150 100 50 | Jul | Mar | Mar | Mar | Mar | | Mar | Mar | Mar | Mar | Mar | Mar | | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 05 | 06 | 07 | 08 | 09 | | 10 | 11 | 12 | 13 | 14 | 15 | | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | | | | | | | (2) | | | | | (2) | | | | | | | | | | | | | NAV total return per share | | | | | | Share price total return | | | | | MSCI Emerging Markets | | | | | MSCI Emerging Markets | | | | | | | | | | | | | | | | | total return | | | | | Utilities total return | | | | (1) Rebased to 100 as at 20 July 2005 Index (GBP adjusted) Index (GBP adjusted) (2) Adjusted for the exercise of warrants and subscription shares Source: ICM and Bloomberg Report and Accounts for the year to 31 March 2023 13 ## TEN YEAR PERFORMANCE DIVIDENDS PER SHARE (pence) REVENUE EARNINGS PER ORDINARY SHARE (pence) from March 2013 to March 2023 from March 2013 to March 2023 8.5 10 0 8.0 8 0 7.5 7.0 6 0 6.5 6.0 4 0 5.5 5.0 2 0 4.5 | 4.0 | | | 0 0 | | | | --- | --- | --- | --- | --- | --- | | | 202120202019201820172016201520142013 | 2022 2023 | | 202120202019201820172016201520142013 | 2022 2023 | | | | Source: ICM | | | Source ICM | INVESTMENT PURCHASES AND REALISATIONS (£m) PORTFOLIO PROGRESSION (£m) AND NUMBER OFHOLDINGS from March 2013 to March 2023 from March 2013 to March 2023 300 700 92 87 92 88 79 600 250 81 84 500 80 86 200 79 81 400 150 300 100 200 50 100 0 0 202120202019201820172016201520142013 2022 2023 20202019201820172016201520142013 2021 2022 2023 Realisations Source: ICMPurchases Largest investment Value of 2–10 Value of 11–20 Value of 21–40 Value of 41 and over Source: ICM ## UEM invests primarily in companies and sectors ## displaying the characteristics of essential services ## or monopolies, benefitting from global megatrends. 14 Utilico Emerging Markets Trust plc INVESTMENT MANAGERS' REPORT ![img-2.jpeg](img-2.jpeg) CHARLES JILLINGS Investment Manager It is pleasing to see UEM deliver another positive NAV gain, with a NAV total return for the year of 2.1%, building on last year's 14.9% uplift and the prior year's 30.2% return. This performance was again significantly ahead of the MSCI EM total return index which was down by 5.0% during the year to 31 March 2023 and down by 6.9% in the year to 31 March 2022. As previously noted, UEM's asset sector class was largely overlooked by the markets early in the pandemic, which focused on the shift to working from home. This led to markets rewarding the technology sector shares, but since the approval of the Covid-19 vaccines, the market has shifted and now the embedded value in UEM's portfolio is being increasingly recognised. UEM's one year, three years, five years and since inception performance is ahead of the MSCI Index. UEM has delivered this together with a rising dividend: a low Beta (as at 31 March 2023, UEM's five year Beta was 0.3%), and with a portfolio which is very different from the MSCI Index (UEM's active share is over 95.0%). This should be compelling to investors who want exposure to emerging markets, top performance and comparatively low levels of volatility. We were surprised by China's decision to go from zero Covid tolerance to total tolerance. We assumed China would vaccinate then exit their zero Covid policy in the summer of 2023. It has been very pleasing to see that globally the focus on Covid has evaporated and in our travels to India, Poland, Mexico, Chile and Brazil this year, Covid was hardly mentioned. However, the world is still faced with a number of unresolved deep-seated challenges. As noted in the Chairman's Statement these range from inflation to climate change. Given we have highlighted a number of these issues before we will focus on four topics in particular that we discuss at length as an investment team. Finding consensus on these issues has been and continues to be challenging. # INFLATION AND INTEREST RATES Inflation has risen sharply and remained elevated in the developed economies. An undoubted driver of this has been tight labour markets which has led to wage inflation as buying power shifts to the wider workforce. If left unaddressed this will cause further inflationary pressures and may become embedded in economies. We have been surprised by the tightness of labour markets. Unemployment levels are at record lows in many countries. Our view is that the combination of workers suffering from long Covid and increased social care falling on families, together with early retirement has all contributed to the reduction in the available labour force. Inflation has also been exacerbated by changes in supply chains. The drive for food security, energy independence and the shift to nearshoring however will all have likely added to the cost of supply chains. The lowest cost of production is no longer the sole driver of decisions. Commodities have also played a part in inflation reflecting an imbalance as demand exceeds supply in certain products. This is likely to continue as decades of under-investment cannot be redressed overnight. Further, the response to the Ukraine war will see an increased drive for energy security, supply chain security and military security. These three challenges are likely to be pursued at a significant pace and will result in heightened demand for commodities. Structurally we therefore see commodity demand rising and pricing to remain on the upside. To address the rising inflationary outlook in the developed world, Central Banks have raised interest rates at a rapid pace. We expect we are at the point where interest rates plateau before declining. The 'lower for longer' mantra has been replaced by 'higher for longer'. A point to note is that Latam has seen inflationary pressures well ahead of the developed world and its Central Banks have responded firmly and early. Most Latam countries have Central Bank interest rates of over 10.0%. Correspondingly we are seeing inflation in Latam firmly roll over. Our expectation is that a number of Central Banks are now in a position to lower interest rates. Report and Accounts for the year to 31 March 2023 15 INVESTMENT MANAGERS' REPORT (continued) ![img-3.jpeg](img-3.jpeg) Inflation has not been as much of a challenge in Asia. We suspect this results from higher unemployment levels at the start of Covid. As a consequence, wage pressures are lower, as is inflation. It is worth noting China's inflation is running at under 2.0%. UKRAINE The war in Ukraine has gone on longer than we expected but has had less of a long-term impact on energy and wheat markets than we thought. Both these commodities have seen their prices fall significantly over the year. As such, inflationary pressures are much reduced for these two commodities. However, the wider global inflationary legacy is expected to persist. The threat from energy supply and supply chain security will require significant investment to address these two concerns and inflationary pressures will remain. ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") Climate change remains at the forefront of global debate, heightened by the increased impact of climate disaster's worldwide. ICM has committed to measuring and reducing its own carbon emissions through a range of initiatives. As an investor who expects our investees to consider their impact on the environment, it is therefore important to lead by example. Energy transition is a megatrend which is the catalyst that will enable nations to reach their net zero commitments. As the transition intensifies attention will turn to new technologies within supply chains. Production will face increased scrutiny from downstream industries, investors and the public over ESG issues. The transition will need to be carefully managed to ensure that the impact generated from clean technologies is maximised. ICM's approach therefore encompasses the need to understand the upstream supply chains of investees' products. CLIMATE CHANGE The war in Ukraine has been a true setback for the globally supported aim of reducing carbon emissions. However, the best way to address the energy shortfall may be to invest in green technologies and electric vehicles, thereby achieving two ambitions at once, energy security and green energy supply. The past year has provided a stark reminder of the devastation that can arise from climate change-related disasters. Climate-driven events are becoming more frequent and severe. China featured twice in the ten most costly climate change-related disasters in 2022. Climate change risk is monitored across the portfolio, however predicting the likelihood and impact of events remains a difficult task. Currently, we see geographical diversification as the best way to mitigate the risk posed by climate-related disasters. PORTFOLIO UEM's gross assets (less liabilities excluding loans) decreased to £542.5m as at 31 March 2023 from £569.6m as at 31 March 2022. This reflects valuation uplifts offset by net realisations to fund, in part, the share buybacks of £27.2m in the year. At the year end the top thirty holdings accounted for 67.7% of the total portfolio (31 March 2022: 65.6%). There have been nine new entrants into the top thirty holdings over the year. UEM increased its investment in China Gas Holdings Limited ("China Gas") by 42.9%, Aguas Andinas S.A. ("Aguas Andinas") by 203.1%, Centrais Eletricas Brasileiras S.A. ("Eletrobras") by 73.6%, InPost S.A. ("InPost") by 53.2% and Vamos Loracao de Caminhoes Macquinas e Equipamentos S.A. ("Vamos") by 93.6%. Shanghai International Airport Co., Ltd ("SHIA") is a new investment in the year. This together with some strong share price performances from China Gas up by 10.4%, Aguas Andinas up 38.6%, InPost up 46.0% and SHIA up 13.3% moved them all into the top thirty holdings. Umeme Limited saw its share price recover by 74.2% and is now in nineteenth position in our portfolio. Grupo Traxion S.A.B. de C.V. rose into the top thirty as we reduced other holdings. 16 Utilizo Emerging Markets Trust plc SECTOR SPLIT OF INVESTMENTS | Electricity | | | P orts and Logistics | D | ata Services and | | --- | --- | --- | --- | --- | --- | | | | | | | D igital Infrastructure | | 17.4% | | | 17.0% | | 13.1% | | (15 . 5%) | | (19.3%) | | (15.6%) | | | Renewables | | Gas | | Airports | | | 12.7% | | 7.5% | | 7.4% | | | (9.7%) | | (8.4%) | | (4.8%) | | | Telecommunications | | Water and Waste | | Other | | | 6.7% | | 6.6% | | 4.5% | | | | (8.6%) | (4.0%) | | (5.6%) | | | Infrastructure | | Road and Rail | | | | Investment Funds ## 3.7% 3.4% (4.9%) (3.6%) Figures in brackets as at 31 March 2022 IN THE YEAR TO 31 MARCH 2023 | BRAZIL REMAINS UEM’S LARGEST | CHINA REMAINS UEM’S SECOND | INDIA REMAINS UEM'S THIRD | | --- | --- | --- | | COUNTRY EXPOSURE | LARGEST COUNTRY EXPOSURE | LARGEST COUNTRY EXPOSURE | | 20.9% | 15.8% | 10.7% | | (2022: 20.9%) | (2022: 15.9%) | (2022: 11.3%) | See page 10 for the full geographic exposure | LATAM’S EXPOSURE | ASIA’S EXPOSURE | REST OF THE WORLD | | --- | --- | --- | | 32.2% | 47.3% | 20.5% | | (2022: 30.4%) | (2022: 51.5%) | (2022: 18.1%) | Source ICM Report and Accounts for the year to 31 March 2023 17 ## INVESTMENT MANAGERS' REPORT (continued) UEM exited from PT Link Net Tbk following an offer for the business at a premium. UEM reduced its investment in Simpar S.A., My E.G. Services Berhad, Ocean Wilsons Holdings Limited, Corporacion Financiera Colombiana S.A., China Everbright Greentech Limited, Societe Nationale des Telecommunications du Senegal, Naver Corporation Limited and KT Corporation, all of which fell outside the top thirty holdings. Purchases in the portfolio decreased again to £108.9m in the year ended 31 March 2023 (31 March 2022: £124.5m) and realisations decreased to £126.6m (31 March 2022: £176.9m). This reflects investment activity more in line with long term averages. An active decision was taken to slowly increase UEM's debt as confidence in investee companies grew. UEM ended the year with its bank loans drawn to £35.1m, 70.2% of the available £50.0m facility. There have been some small sector shifts during the year to 31 March 2023 and more detail is set out on page 17. On a geographical basis there were some small changes again and more detail is set out on page 10. ### LEVEL 3 INVESTMENTS UEM ended the year with level 3 investments totalling £58.7m (31 March 2022: £48.1m), representing 10.8% of total investments (31 March 2022: 8.4%). UEM's level 3 investments increased mainly as a result of the revaluation of Petalite. UEM first invested in Petalite in March 2020, since which time the electric vehicle charging technology company has won several UK government innovation grants, and further developed, patented and certified its core SDC technology. SDC, or Sinusoidal Direct Current, is a revolutionary method of converting AC to DC more efficiently and with a higher degree of reliability than existing 'full bridge' technology used in electric vehicle chargers. In June 2022 Petalite received investment from AM Impact Partners, a strategic investor, in a funding round in which UEM also participated. The funding round was completed at a premium to the carrying valuation as reported in the March 2022 annual accounts, which resulted in an uplift of £9.9m to NAV during the period ended 31 March 2023. Attention is drawn to note 26(6) of the accounts which provides more information on Petalite's valuation methodology and the 50% level of sensitivity to its fair value which has been applied. UEM is a 28.6% shareholder in Petalite. ### BANK DEBT UEM's net debt, being bank loans and net overdrafts, increased from £23.2m as at 31 March 2022 to £36.1m as at 31 March 2023, as UEM actively increased its investment positions. UEM's £50.0m committed multicarry loan facility is with The Bank of Nova Scotia, London Branch, and matures in March 2024. ### REVENUE RETURN Revenue income increased by 7.7% to £24.3m in the year to 31 March 2023, from £22.6m in the prior year. This is a good outcome given the uncertain markets. Management fees and other expenses were flat at £3.0m in the year to 31 March 2023, unchanged from the year to 31 March 2022. This is a positive given the inflationary pressures in the wider market. Finance costs remained modest at £0.2m (31 March 2022: £0.1m). Taxation remained largely unchanged at £1.6m during the year ended 31 March 2023 (31 March 2022: £1.5m). Profit for the year increased by 8.6% to £19.5m from £17.9m for the prior year. EPS was higher, increasing by 15.1% to 9.40p compared to the prior year of 8.17p due to the higher earnings and reduced average number of shares in issue following the buybacks. Dividends per share (DPS) of 8.45p were fully covered by earnings. Retained revenue reserves rose to £9.6m as at 31 March 2023, equal to 4.74p per share. ### CAPITAL RETURN The portfolio losses were £8.4m on the capital account during the year to 31 March 2023. Losses on foreign exchange were £0.5m and therefore the resultant total income loss on the capital account was £8.9m against prior year gains of £59.6m. Management and administration fees were almost flat at £4.3m (31 March 2022: £4.2m). Finance costs increased to £0.7m from £0.5m as a result of higher interest costs. There was a taxation gain of £0.2m (31 March 2022: loss of £1.2m) which arose mainly from Indian capital gains tax reductions. The net effect of the above was a loss on capital return of £13.7m (31 March 2022: a gain of £53.7m). Charles Jillings ICM Investment Management Limited and ICM Limited 16 June 2023 18 Utilico Emerging Markets Trust plc ## MEGATRENDS DRIVING UPSIDE IN EMERGING MARKETS ENERGY TRANSITION • Lower or net zero emissions targets to combat climate change requires decarbonisation of the energy matrix. • Geopolitical concerns are driving energy security higher up the agenda as countries look to cut reliance on imported oil/gas. • Huge investment in wind/solar assets and supporting grid and battery storage infrastructure across EM. • Displacement of dirty coal- and oil-fired assets with cleaner and more flexible gas- fired facilities. SOCIAL INFRA • Most emerging market countries lack adequate essential social infrastructure. • The growing middle class is demanding better quality services and infrastructure. • Rapid urbanisation is driving the need for huge investments in infrastructure, transportation, communication and internet services, creating exciting opportunities for portfolio companies. GLOBAL TRADE • Emerging market economies offer strong domestically-driven growth, as well as a growing share of world exports driving international trade. • The increasingly multi-polar world and the reshaping of the competitive environment will provide EM countries with new opportunities. • As a result of Covid-19 and recent geopolitical pressures, there has been an increase in nearshoring and the need to diversify supply chains. DIGITAL INFRA • Data drives innovation, enables personalisation and enhances decision making driving social and commercial returns. • Technology facilitates EM companies to market and deliver goods and services to a potentially global customer base. • New innovative and disruptive applications developed in EM are driving new business models and efficiencies Report and Accounts for the year to 31 March 2023 19 ALUPAR INVESTIMENTO S.A. Alupar Investimento S.A. is a holding company for electricity generation and transmission assets in Brazil, Peru and Colombia. It has 30 transmission projects, with 6,974km of operational electricity lines and 822MW renewable energy generation assets. UEM first invested in 2013. IN THE YEAR TO 31 DECEMBER 2022, REVENUES INCREASED ## 15.5% AND EBITDA 17.1% Andre S Prietsch 20 Utilico Emerging Markets Trust plc ![img-4.jpeg](img-4.jpeg) ![img-5.jpeg](img-5.jpeg) # **GRUPO AEROPORTUARIO DEL CENTRO NORTE, S.A.B. DE C.V.** Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. is a Mexican airport operator. It operates thirteen international airports in central and northern states of Mexico, including Monterrey, one of Mexico's largest business and industrial areas. In 2022, it served over 23.0m passengers. UEM first invested in 2019. **IN THE YEAR TO 31 DECEMBER 2022,** **REVENUES INCREASED** **34.0%** **AND EBITDA 43.9%** ![img-6.jpeg](img-6.jpeg) # **FPT CORPORATION** FPT Corporation is the largest information technology service company in Vietnam. It also provides fibre broadband and data centre services. Its education division has over 100,000 students enrolled in its private schools, colleges and university. UEM first invested in 2019. **IN THE YEAR TO 31 DECEMBER 2022,** **REVENUES INCREASED** **23.4%** **AND EBITDA 16.6%** Report and Accounts for the year to 31 March 2023 21 ## OUR INVESTMENT APPROACH ICM is a long-term investor and typically operates focused does not participate in either an IPO or an auction unless portfolios with narrow investment remits. ICM has several there is compelling value. dedicated research teams who have deep knowledge and UEM seeks to leverage ICM’s investment abilities to understanding in their specific sectors, which improves both identify and make investments across a range of the ability to source and make compelling investments. industries within the EM sector. New investments usually ICM has approximately USD 1.8bn of assets directly offer an attractive valuation with strong risk/return under management and is responsible indirectly for a expectations at the time of investment. further USD 22.5bn of assets in subsidiary investments. When reviewing investment opportunities, as part of ICM looks to exploit market and pricing opportunities and the investment process ICM will look to understand the concentrates on absolute performance. The investments material ESG factors. are not market index driven and the investment portfolio comprises a series of bottom-up decisions. ICM typically ### ICM incorporates ESG factors into the investment process in three key ways: | 01 | 02 | 03 | | --- | --- | --- | | UNDERSTANDING | INTEGRATION | ENGAGEMENT | | In-depth analysis of the key issues that | Incorporate the output of the | Engage with investee companies on | | face potential and current holdings, as | ‘Understanding’ component into the | the key issues on a regular basis, | | well as a deep understanding of the | full company analysis to ensure a clear | both virtually and on location, where | | industry in which they operate. | and complete picture of the investment | possible, to discuss and identify any | | | opportunity is obtained. | gaps in their ESG policy to further | develop and improve their ESG disclosure and implementation. ### We seek out and make compelling investments SUPERIOR, CONSISTENT PERFORMANCE Long Term Deep Value Operational Cash Generative INDEPENDENCE & INTEGRITY ACTIVE Bottom Up Approach Investee Relationships INVESTORS Detailed Company Knowledge Infrastructure Sector FocusedExtensive Industry Experience STABLE & SUPPORTIVE FRAMEWORK DEEP SECTOR KNOWLEDGE 22 Utilico Emerging Markets Trust plc VALUES ICM’s origins date back to 1988 and our organisation has evolved with offices now spanning the globe. We are focused on our values of: • Independence and Integrity • Excellence • Creativity and Innovation • Accountability TEAM We are proud of our diverse and inclusive environment for our teams to work in, which reflects the diversity of our communities. INVESTMENT PRACTICES Our deep and extensive research and understanding of the companies, sectors and markets we invest in moderates our risk and creates value for our investors. Our status as ### We are focused a signatory of the United Nations-supported ### on creating Principles of Responsible Investment emphasises ### ICM works to create ### sustainable our commitment to integrating ESG factors into ### value by harnessing ### long-term our investment decision making process. ### our experience and ### value for our ### expertise to generate ### shareholders, ### and grow strong ### team and FINANCIAL ### relationships with ### the broader Strong balance sheet and disciplined ### our stakeholders ### community capital allocation to drive sustainable growth and shareholder value. ### through our: PLATFORMS Technology, and digital and analytics enable our investment platforms to deliver growth for our shareholders. COMMUNITIES ICM supports the ICM Foundation, which has identified sustainable, effective and focused education where the biggest impact can be made on individuals and in communities. Over the past decade ICM and its stakeholders have contributed over USD 16.5m to not-for-profit and community organisations. Report and Accounts for the year to 31 March 2023 23 ## ESG SPOTLIGHT The Board believes that it is in shareholders’ interests to consider ESG factors when selecting and retaining investments and has asked the Investment Managers to take these into account when investing. Details of how ESG forms part of the integrated research analysis, decision-making and ongoing monitoring are set out on page 38. Where companies in the portfolio are assessed as having a relatively low ESG score ICM’s approach is to engage with the companies directly with the objective of seeing improvements over time. Set out below are examples of the approach taken with two of UEM’s investments. | A leader in Brazil offering a | A leading e-commerce logistics | | --- | --- | | comprehensive range of waste | infrastructure player primarily | | management and value recovery | in Poland operating automated | | solutions, from recycling through | parcel machines, with a growing | | biogas and power generation. | presence in France and the UK. | | ESG ANALYSIS: | ESG ANALYSIS: | | Orizon has strong environmental credentials and its | InPost continues to be focused on its ESG | | core business plays a crucial role in reducing greenhouse | commitments and has a comprehensive ESG | | gas emissions. Orizon was the first company in Brazil | approach. Although having an aggressive expansion | | to implement clean power generation systems at its | policy, InPost has and continues to make good steps to | | ecoparks. The facilities can capture and treat the methane | reach its target of becoming climate neutral by 2025 in | | gas produced by decomposing waste, either for sale or for | scope 1 and 2 emissions and the entire supply chain | | on-site use. The ecoparks handle approximately 10% of all | (including scope 3) by 2040. | compliantly treated waste volumes in Brazil, with this figure due to grow as capacity increases. On-site biogas power ICM ESG CONCLUSION: plants at two of Orizon's ecoparks have a generation Only a year after InPost released its ESG strategy capacity greater than 190,000 MWh per year, enough to there is evidence of the strategy taking shape with the supply power to 290,000 people. most significant achievement being the development of InPost’s decarbonisation strategy. There is a clear ICM ESG CONCLUSION: path to implementation which will enable InPost to As a company that promotes the circular economy, Orizon efficiently continue its ESG journey. is well placed to benefit from the opportunities that arise from climate change and the energy transition. 24 Utilico Emerging Markets Trust plc ## LARGEST HOLDINGS OVERVIEW Rumo SA (Brazil) THE VALUE OF THE TEN THE VALUE OF THE THE VALUE OF THE THE TOTAL NUMBER LARGEST HOLDINGS TWENTY LARGEST THIRTY LARGEST OF COMPANIES REPRESENTS HOLDINGS REPRESENTS HOLDINGS REPRESENTS INCLUDED IN THE PORTFOLIO IS | 32.6% | 52.3% | 67.7% | 81 | | --- | --- | --- | --- | | (2022: 31.0%) OF | (2022: 50.3%) OF | (2022: 65.6%) OF | (2022: 79) | | TOTAL INVESTMENTS | TOTAL INVESTMENTS | TOTAL INVESTMENTS | | The value of convertible securities represents 0.0% (2022: 1 8%) of the portfolio. The value of fixed income securities represents 3.4% (2022: 2.6%) of the portfolio. Report and Accounts for the year to 31 March 2023 25 TEN LARGEST HOLDINGS REVIEW # 1 petalite | Country | UK | | --- | --- | | Sector | Renewables | | Fair Value £'000s | 28,607 | | % of total investments | 5.2% | ![img-7.jpeg](img-7.jpeg) **PETALITE LIMITED ("PETALITE")** is an unlisted early-stage company based in the UK. Petalite has developed an innovative electric vehicle charging technology called SDC which offers greater reliability and efficiency than is currently available in the market, filing its first patent application in 2016. UEM first invested in Petalite in March 2020, enabling it to validate the technology with certification of the Power Core modular unit. UEM's funding was augmented by Innovate UK awards, and to date Petalite has won seven grants totalling over £12.0m to support the UK's transition to net zero. This includes a £1.4m grant won in November 2022 for developing charging infrastructure for electric vertical take-off and landing aircraft. In June 2022 strategic investor AM Impact Partners ("AMIP") invested in a funding round alongside UEM, which also converted its convertible loan note into equity as part of the transaction. AMIP co-founder Ashley Unwin was subsequently appointed Chairman of the Board, and Petalite has now established a go-to-market strategy to commercialise its technology in the coming year. At the end of March 2023, the carrying value of Petalite was increased to the valuation of the June 2022 fundraise. # 2 International Container Terminal Services, Inc. | Country | The Philippines | | --- | --- | | Sector | Ports and Logistics | | Fair Value £'000s | 26,584 | | % of total investments | 4.9% | ![img-8.jpeg](img-8.jpeg) **INTERNATIONAL CONTAINER TERMINAL SERVICES, INC. ("ICT")** is a global port management company in the business of acquiring, developing, managing and operating container ports and terminals worldwide. ICT operates 33 terminals in 20 countries across six continents, handling 12.2m containers in 2022. During 2022, ICT continued to benefit from the improvement in trade activities and easing of Covid-19 lock down restrictions, resulting in volumes for the full year 2022 increasing by 9.4%. Volume growth coupled with management's continued focus on improving container tariff rates and container mix, resulted in yields increasing 9.0% and gross revenues for FY22 increasing by 20.3%. Despite the inflationary pressures witnessed during the year, management's ongoing stringent cost control ensured that EBITDA for 2022 increased by 23.7% and EBITDA margin expanded to 62.8%, another record high. Adjusted net income was up by 43.3% with the dividend again increasing by 15.0% to PHP 10.0, which includes a special dividend of PHP 1.44, payable as ICT continues to experience an increasing free cash flow position. ICT's share price decreased by 5.1% in the year to 31 March 2023. UEM increased its position in ICT by 4.2%. 26 UKiso Emerging Markets Trust plc ### 3 Alupar | Country | Brazil | | --- | --- | | Sector | Electricity | | Fair Value £'000s | 20,643 | | % of total investments | 3.8% | ![img-9.jpeg](img-9.jpeg) **ALUPAR INVESTIMENTO S.A. ("ALUPAR")** is a holding company for assets focused on the electricity transmission and generation sectors in Brazil, Peru and Colombia. It has 30 transmission projects totalling 7,964km of electricity lines of which 6,974km are operational, and 822MW of renewable energy generation assets. Over the past three years Alupar has been investing heavily in several new projects, expanding its transmission network kilometres by over 40% and commissioning a new 94MW hydro plant in Peru. All operational transmission lines are in Brazil with fixed revenue concession contracts which benefit from annual inflation adjustments. In July 2022 indexation increases of 11.7% for IPCA-linked concessions and 10.7% for IGPM-linked concessions were applied. These inflation adjustments, combined with the contribution of new projects resulted in underlying group revenue growth of 15.5% and EBITDA growth of 17.1% in its financial year to 31 December 2022. Dividends per share increased by 46%. Alupar's share price decreased by 2.5% in the year to 31 March 2023. UEM's shareholding in Alupar was unchanged over the period. ### 4 ORIZON | Country | Brazil | | --- | --- | | Sector | Water and Waste | | Fair Value £'000s | 18,432 | | % of total investments | 3.4% | ![img-10.jpeg](img-10.jpeg) **ORIZON VALORIZACAO DE RESIDUOS S.A. ("ORIZON")** is Brazil's leader in waste management and operates 15 sanitary landfill sites. Referred to as ecoparks by Orizon, these sites are sophisticated complexes which require specialised infrastructure to safely process waste. This includes sorting facilities to remove recyclable materials such as metals, plastics and cardboard; leachate collection and treatment; biogas extraction; and waste-to-energy services. With over 8.0m tons of waste processed in 2022, Orizon is the market leader in a highly fragmented market with 10.2% market share. The UN recognises the collection and use of biogas as directly reducing emissions, thereby qualifying Orizon's activities for carbon credits. In 2022, Orizon acquired Estrin's landfill assets, a milestone acquisition which almost doubled its processed volume. This acquisition will also increase significantly Orizon's capacity in value-added activities, like biogas extraction. In the financial year to 31 December 2022, Orizon delivered 65.0% and 76.0% pro forma revenue and EBITDA growth, respectively. UEM's position in Orizon increased 68.7% in the year to 31 March 2023. Orizon's share price was up by 18.2% during the period. Report and Accounts for the year to 31 March 2023 27 TEN LARGEST HOLDINGS REVIEW (continued) # 5 Gujarat State Petronet Limited The Energy Union of Gujarat | Country | India | | --- | --- | | Sector | Gas | | Fair Value £'000s | 17,085 | | % of total investments | 3.1% | ![img-11.jpeg](img-11.jpeg) **GUJARAT STATE PETRONET LIMITED ("GSPL")** is the main gas transmission company in Gujarat State in India, controlled by Gujarat State Petronet, a government entity. GSPL has 2,700km of gas pipelines connected to domestic gas fields and LNG terminals. GSPL also has a 54% stake in Gujarat Gas, a listed city gas distribution company. Elevated LNG prices have resulted in an extremely challenging operating environment for GSPL. In the twelve months to 31 March 2023, gas transmission volumes declined by 25.0% as the economic impact of high prices stifled demand and encouraged customers to switch to alternate fuel sources. Demand from the power sector plummeted by almost 75% as gas-fired electricity was uneconomic. However, several successive tariff increases offset this and preserved margins, with revenues and EBITDA increasing by 1.9% and 3.6% respectively. DPS relating to March 2023 year end was up by 150% on the prior year. In the twelve months to 31 March 2023 GSPL's share price increased by 2.1%; UEM's shareholding in GSPL was unchanged over the period. # 6 IndiGrid | Country | India | | --- | --- | | Sector | Electricity | | Fair Value £'000s | 15,057 | | % of total investments | 2.8% | ![img-12.jpeg](img-12.jpeg) **INDIA GRID TRUST ("INDIGRID")** is an infrastructure investment trust listed on the Bombay Stock Exchange which owns power transmission assets in India. It has 42 lines totalling 7,790km and 12 substations, with the assets having an average of 29 years' remaining contract life. The trust is managed by KKR, which is also a 24% shareholder. In November 2022, Indigrid completed the acquisition of the 208km Raichur Sholapur transmission project and subsequently signed an agreement with Sterlite to acquire the 626km KTL project. These two projects increase the AUM of the trust by 8.0% to INR228bn (USD 2.8bn). In the twelve months to 31 March 2023, revenue and EBITDA grew by 5.1% and 4.3% respectively. The trust is required to pay out at least 90% of cash flows, which is paid in quarterly dividends, and over the twelve-month period the aggregate dividends per unit were increased by 4.7%. UEM's position in Indigrid was reduced by 8.4% in the period and during the year Indigrid's share price declined by 8.8%. 28 UEMco Emerging Markets Trust plc 7 | Country | Mexico | | --- | --- | | Sector | Airports | | Fair Value £'000s | 15,146 | | % of total investments | 2.4% | ![img-13.jpeg](img-13.jpeg) # GRUPO AEROPORTUARIO DEL CENTRO NORTE, S.A.B. DE C.V. ("OMA") is one of the three listed airport operators in Mexico that has a 50-year concession ending in 2048 to operate, manage and develop 13 international airports in central and northern Mexico. OMA's concession includes Monterrey International Airport, located in Mexico's second largest business and industrial centre, and contributes to 47.1% of total traffic. Of the 23.3m passengers handled by OMA in 2022, 88.3% were domestic and 11.7% international, with around two thirds of passengers travelling for corporate purposes rather than visiting family and friends or for leisure. FY22 passenger volumes were higher than pre-pandemic levels illustrating the robust recovery OMA has witnessed, which is reflected in the strong financial results, with full year 2022 revenues up by 34.0% YoY and up by 22.6% compared to pre-Covid-19 levels in 2019. Given the high operational leverage of an airport, EBITDA for FY22 was up 43.9% YoY and increased by 25.5% versus FY19 with EBITDA margin in FY22 reaching 71.2%. Net income was up by 26.5% for the year with dividends increasing 233.1%. OMA's share price increased by 35.9% in the year to 31 March 2023, with UEM maintaining its position in OMA. 8 | Country | Vietnam | | --- | --- | | Sector | Data Services and Digital Infrastructure | | Fair Value £'000s | 12,983 | | % of total investments | 2.4% | ![img-14.jpeg](img-14.jpeg) FPT CORPORATION ("FPT") is a Vietnamese technology and telecommunications company. FPT provides IT services to large multinationals globally, and to the public sector and enterprise customers domestically. Additionally, FPT is a major provider of fixed line broadband, internet, data centre and cloud services in Vietnam though its FPT Telecom subsidiary. 2022 was another good year for FPT with strong growth reported in each of its three primary segments. The global IT services segment reported revenues growing by 30.1% to over USD 800m, and profit before tax ("PBT") up 22.9% in the year to 31 December 2022. Domestic IT services also reported impressive PBT growth of 19.2% on an 8.1% increase in sales. FPT Telecom reported revenue growth of 16.1% for the year and PBT advanced by 17.6% driven by a 9.0% increase in broadband subscribers and Pay TV customer growth of over 20.0%, as well as strong demand for its data centres. FPT continues to expand its broadband network into new districts and is investing in new long distance and undersea fibre to meet customers' increasing data demands. Overall, FPT reported consolidated revenue growth of 23.4% and a 22.2% growth in net profit attributable to shareholders. FPT's share price declined by 11.3% for the year to 31 March 2023 (adjusted for the 20.0% bonus issue in June 2022). The MSCI Vietnam Index declined by 35.2% over the same period. UEM's position in FPT increased 6.5% during the year. Report and Accounts for the year to 31 March 2023 29 TEN LARGEST HOLDINGS REVIEW (continued) # 9 **पावरबिड POWERGRID** | Country | India | | --- | --- | | Sector | Electricity | | Fair Value (£'000s) | 12,755 | | % of total investments | 2.3% | ![img-15.jpeg](img-15.jpeg) **POWER GRID CORPORATION OF INDIA ("POWERGRID")** is the national electricity grid operator in India and is 51% owned by the Indian government. Powergrid transmits 45% of the country's power through 174,000km of transmission lines and 270 substations. Tariffs for most of its transmission lines are regulated and are calculated on a return on asset base. With the rapid rollout of new renewable assets in India, there is a significant need for additional grid connectivity and capacity. As the dominant player, Powergrid has been in a strong position to win several Tariff Based Competitive Bidding auctions for new projects. In the twelve months to 31 March 2023, Powergrid reported INR 92bn in capital expenditure investing in new transmission line projects, with revenue growth of 9.5% and EBITDA increasing by 7.5%. Total dividends per share were flat even though the special dividend in the prior period was not repeated. During the year Powergrid's share price increased by 4.0% and UEM's shareholding in Powergrid was unchanged. # 10 **中信國際電訊** | Country | China | | --- | --- | | Sector | Telecommunications | | Fair Value (£'000s) | 12,489 | | % of total investments | 2.3% | ![img-16.jpeg](img-16.jpeg) **CITIC TELECOM INTERNATIONAL HOLDINGS LIMITED ("CITIC")** is a telecommunications and IT services provider principally operating in and connecting Hong Kong, Macau and mainland China to the rest of the world with international voice, text message and secure data connections. Citic also provides data centre, cloud computing, cyber security and related services. Citic controls CTM, the dominant telecoms operator in Macau and Acdivis, a Singapore based IT services provider. Despite the headwinds of low visitor numbers to Hong Kong and Macau and suppressed business confidence, especially in Macau, Citic reported pleasing results for the full year to 31 December 2022. Revenues grew by 6.6% in the year to 31 December 2022 and reported net profit was 10.7% higher than 2021. Citic raised dividends by 8.9%. Citic continues to report very strong growth of 52.4% for its corporate messaging services, driven by SMS notifications (e.g. for passcodes, payment verification and marketing applications). These services generated over HKD 2.5bn (USD 325m) in 2022, over a quarter of Citic's revenue. Citic's share price rose by 11.1% in the year to 31 March 2023 and additionally Citic's shareholders received significant dividends during the period equating to 8.0% of the share price on 31 March 2022. UEM's position in Citic decreased 11.3% during the year. 30 Utilico Emerging Markets Trust plc ## STRATEGIC REPORT PRINCIPAL ACTIVITY activities of the service providers with the Board setting investment policy and risk guidelines, together UEM carries on business as an investment trust and its principal activity is portfolio investment. with investment limits. ICMIM, an English incorporated company authorised INVESTMENT OBJECTIVE and regulated by the Financial Conduct Authority UEM’s objective is to provide long-term total return (“FCA”) as an alternative investment fund manager through a flexible investment policy that permits it to (“AIFM”) pursuant to the AIFM Regulations, is the make investments predominantly in infrastructure, Company’s AIFM and joint portfolio manager alongside utility and related sectors, mainly in EM. ICM. The investment team responsible for the management of the portfolio is headed by Charles STRATEGY AND BUSINESS MODEL Jillings. UEM invests in accordance with the objective set out above. The Board is collectively responsible ICMIM and ICM, operating under guidelines to shareholders for the long-term success of the determined by the Board, have direct responsibility Company. Since the Company has no employees for the decisions relating to the day to day running of it outsources its activities to third party service the Company and are accountable to the Board for providers, including the appointment of external the investment, financial and operating performance investment managers to deliver investment of the Company. Other service providers include performance. The Board oversees and monitors the JPMorgan Chase Bank N.A. – London Branch which Report and Accounts for the year to 31 March 2023 31 ## STRATEGIC REPORT (continued) provides administration and custodial services, JP • Investments in unquoted and untraded Morgan Europe Limited (“JPMEL”) which acts as the investments in aggregate must not exceed 10.0% Company’s Depositary under the AIFM Directive of gross assets at the time of investment; and Computershare Investor Services which acts as • No single investment may exceed 20.0% of gross registrar. ICMIM has also been appointed Company assets at the time of investment; Secretary. • Investments other than in infrastructure, utility INVESTMENT POLICY and related companies must not exceed 20.0% of gross assets at the time of investment; UEM’s investment policy is flexible and its investments include (but are not limited to) water, sewerage, • Investments in a single country must not exceed waste, electricity, gas, telecommunications, ports, 50.0% of gross assets at the time of investment airports, service companies, rail, roads, any business (and for these purposes investments will be with essential service or monopolistic characteristics considered to have been made in the countries and any new infrastructure or utilities which may where the relevant investee company reports arise mainly in emerging markets. The Company may that it carries out its business operations, as also invest in businesses which supply services to, determined on a look-through basis); or otherwise support, the infrastructure, utility and • Not more than 10.0% in aggregate of the value related sectors. of the total assets of the Company at the time The Company focuses on the under-developed and the investment is made will be invested in other developing markets of Asia, Latin America, Emerging closed-ended investment funds which are listed Europe and Africa but has the flexibility to invest in on the Official List (except to the extent that those markets worldwide. The Company generally seeks investment funds have stated investment policies to invest in emerging market countries where the to invest no more than 15.0% of their total assets Directors believe that there are attributes such in other investment companies which are listed on as political stability, economic development, an the Official List); and acceptable legal framework and an encouraging • Regardless of the investment policy of other attitude to foreign investment. closed-ended investment funds listed on the The Company has the flexibility to invest in shares, Official List and which are invested in by the bonds, convertibles and other types of securities, Company, the Company shall not invest in such including non-investment grade bonds and to invest in funds more than 15.0% in aggregate of the value unlisted securities. of the total assets of the Company at the time the investment is made. The Company may also use derivative instruments such as American Depository Receipts, promissory The above limits only apply at the time the investment notes, foreign currency hedges, interest rate hedges, is made and the Company will not be required to contracts for difference, financial futures, call and realise any assets or rebalance the portfolio where put options, warrants and similar instruments any limit is exceeded as a result of any increases or for investment purposes and efficient portfolio decreases in the valuation of the particular assets management, including protecting the Company’s which occurs after the investment is made, but no portfolio and Statement of Financial Position from further relevant assets may be acquired or loans made major corrections and reducing, transferring or by the Company until the relevant limit can again be eliminating investment risks in its investments. These complied with. investments will be long term in nature. BORROWING AND GEARING POLICY INVESTMENT RESTRICTIONS UEM may use bank borrowings for short-term The Board has prescribed the following limits on liquidity purposes. In addition, the Board may gear | | the investment policy, all of which are at the time of | the Company by borrowing on a longer-term basis for | | --- | --- | --- | | | investment unless otherwise stated: | investment purposes. | | 32 | Utilico Emerging Markets Trust plc | | The Board has set a current limit on gearing (being to hold investments in unlisted securities when the total borrowings measured against gross assets) not attractiveness of the investment justifies the risks and exceeding 25% at the time of drawdown. Borrowings lower liquidity associated with unlisted investments. may be drawn down in Sterling, US Dollars or any ICMIM, as the Company’s AIFM, controls stock-specific, currency for which there are corresponding assets sector and geographic risk by continuously monitoring within the portfolio (at the time of drawdown the value the exposures in the portfolio. In depth continual drawn must not exceed the value of the relevant assets analysis of the fundamentals of investee companies in the portfolio). allows ICMIM to assess the financial risks associated with any particular stock. The portfolio is typically made The Company has a £50.0m committed multicurrency up of 60 to 90 stocks. revolving facility with The Bank of Nova Scotia, London Branch until 15 March 2024. Further details on the DIVIDEND POLICY Company’s loan facility are set out in note 13 to the The Board’s objective is to maintain or increase the accounts. total annual dividend. Dividends are expected to be paid quarterly each year in September, December, INVESTMENT APPROACH March and June. In determining dividend payments, UEM seeks to identify and invest in undervalued the Board will take account of factors such as investments predominantly in the infrastructure and income forecasts, retained revenue reserves and utility sectors, mainly in EM. The Investment Managers the Company’s dividend payment record. However, aim to identify securities where underlying value and in order to maintain its approval as an investment growth prospects are not reflected in the market trust, the Company will distribute at least 85.0% of price. This is often as a result of strong growth drivers, its distributable income earned in each financial year but can include changes in regulation, technology, by way of dividends. The Board also has the flexibility market motivation, potential for financial engineering, to pay dividends from capital reserves and special competition or shareholder indifference. reserve. The Company seeks to minimise risk by investing mainly in companies and sectors displaying the characteristics RESULTS AND DIVIDENDS of essential services or monopolies such as utilities, Details of the Company’s performance are set out in transportation infrastructure, communications or the Investment Managers’ Report. The results for the companies with a unique product or market position. year ended 31 March 2023 are set out in the attached Most investee companies are asset backed, have accounts. The dividends in respect of the year, which good cash flows and offer good dividend yields. UEM total 8.45p per share, have been declared by way of generally seeks to invest in companies with strong four interim dividends. management who have the potential to grow their business and who have an appreciation of, and ability KEY PERFORMANCE INDICATORS to manage, risk. Delivery of shareholder value is achieved through the UEM believes it is generally appropriate to support increase in capital value of the Company’s shares and investee companies with their capital requirements by its income return. The Board reviews performance while at the same time maintaining an active by reference to a number of Key Performance and constructive shareholder approach through Indicators (“KPIs”) that include the following: encouraging a review of capital structures and business • NAV total return relative to the MSCI EM total efficiencies. The Investment Managers maintain regular return Index contact with the investee companies and UEM is often • Share price among the largest international shareholders. • Discount to NAV The Company aims to maximise value for shareholders by holding a relatively concentrated portfolio of • Revenue earnings securities and investing through instruments • Ongoing charges figure appropriate to the particular situation. UEM is prepared Report and Accounts for the year to 31 March 2023 33 ## STRATEGIC REPORT (continued) While some elements of performance against KPIs are beyond management control, they provide measures of the Company's absolute and relative performance and are therefore monitored by the Board on a regular basis. These KPIs fall within the definition of Alternative Performance Measures under guidance issued by the European Securities and Markets Authority and additional information explaining how these are calculated is set out on pages 96 and 97. | Year ended 31 March | 2023 | 2022 | | --- | --- | --- | | NAV total return per share (%) | 2.1 | 14.9 | | MSCI EM total return Index (GBP adjusted) (%) | (5.0) | (6.9) | | Share price (pence) | 217.00 | 224.00 | | Discount to NAV (%) | (13.5) | (11.9) | | Percentage of issued shares bought back during the year (based on opening share capital) (%) | 5.8 | 3.0 | | Revenue earnings per share (pence) | 9.40 | 8.17 | | Ongoing charges figure (%) | 1.4 | 1.4 | A graph showing the NAV total return performance compared to the MSCI EM total return Index, can be found on page 4. The ten-year record on page 98 shows historic data for the Company and its predecessor, UEM Limited. **Discount to NAV:** The Board monitors the premium/discount at which the Company's shares trade in relation to its NAV. During the year the Company's shares traded at a discount relative to NAV in a range of 10.8% to 17.2% and an average discount of 13.8%. The Board and Investment Managers closely monitor both movements in the Company's share price and significant dealings in the shares. The Board believes that the best way of addressing the discount over the long term is to continue to generate good performance and to create natural demand for the Company's shares in the secondary market through increasing awareness of the Company, its philosophy and management style. The Board has maintained expenditure on marketing the Company. The Board continues to seek authority from shareholders to buyback and issue shares which can assist in the management of the discount and/or any premium at which the shares trade to their NAV. A total of 12,531,811 shares were bought back and cancelled during the year, representing 5.8% of the Company's opening issued share capital. **Earnings and dividends per share:** As referred to in "Dividend Policy" above, the Board's objective is to maintain or increase the total annual dividend. The Board and the Investment Managers attach great importance to maintaining dividends per share since dividends form a key component of the total return to shareholders. The Board declared one quarterly dividend of 2.00p per share and three quarterly dividends, each of 2.15p per share, in respect of the year ended 31 March 2023. The fourth quarterly dividend will be paid on 23 June 2023 to shareholders on the register on 2 June 2023. The total dividend for the year was 8.45p per share (2022: 8.00p per share). **Ongoing charges:** These are calculated in accordance with the industry measure of costs as a percentage of NAV. The expenses of the Company are reviewed at every Board meeting, with the aim of managing costs incurred and their impact on performance. The ongoing charges figure for the year ended 31 March 2023 was 1.4% (2022: 1.4%). This ratio is sensitive to the size of the Company, as well as the level of costs. ### PRINCIPAL RISKS AND RISK MITIGATION During the year ended 31 March 2023, ICMM was the Company's AIFM and had sole responsibility for risk management, subject to the overall policies, supervision, review and control of the Board. As required by the Association of Investment Companies ("AIC") Code of Corporate Governance, the Board has undertaken a robust assessment of the principal risks facing the Company. It seeks to mitigate these risks through regular review by the Audit & Risk Committee of the Company's risk register which identifies the risks facing the Company and the likelihood and potential impact of each risk, together with the controls established for mitigation. During the year the Audit & Risk Committee also discussed and monitored a number of emerging risks that could potentially impact the Company, the principal ones being geopolitical risk and climate change risk. The Audit & Risk Committee has determined that they are not currently sufficiently material to be categorised as 34 Utilico Emerging Markets Trust plc separate key risks and are considered within investment The principal risks and uncertainties currently faced by risk and market risk below. The Covid-19 pandemic, the Company and the controls and actions to mitigate which emerged in 2020, gave rise to significant those risks, are described below. There have been no challenges for businesses worldwide and this was also significant changes to the principal risks during the year. taken into account as part of the assessment of risks to the Company. KEY RISK FACTORS INVESTMENT The risk that the investment strategy The Board monitors the performance of the Company and has RISK: does not achieve long-term positive established guidelines to ensure that the approved investment total returns for the Company’s policy is pursued by the Investment Managers. These guidelines shareholders. include sector and market exposure limits. The investment process employed by the Investment Managers combines assessment of economic and market conditions in the relevant countries with stock selection. Fundamental analysis forms the basis of the Company’s stock selection process, with an emphasis on sound balance sheets, good cash flows, the ability to pay and sustain dividends, good asset bases and market conditions. In addition, ESG factors are also considered when selecting and retaining investments and political risks associated with investing in EM are also assessed. The Investment Managers try to reduce risk by ensuring that the Company’s portfolio is always appropriately diversified. Overall, the investment process aims to achieve absolute returns through an active fund management approach and the Board monitors the implementation and results of the investment process with the Investment Managers. MARKET RISK: The Company’s assets consist mainly The Company’s portfolio is exposed to equity market risk and of listed securities and its principal foreign currency risk. Adverse market conditions may result risks are therefore market related and from factors such as economic conditions, political change, geo- adverse market conditions could lead political confrontations, climate change, natural disasters and to a fall in NAV. health epidemics. At each Board meeting the Board reviews the diversification of the portfolio, asset allocation, stock selection, unquoted investments and levels of gearing and has set investment restrictions and guidelines which are monitored and reported on by the Investment Managers. The Company’s results are reported in Sterling, although the majority of its assets are priced in foreign currencies and therefore any rise or fall in Sterling will lead, respectively, to a fall or rise in the Company’s reported NAV. Such factors are out of the control of the Board and the Investment Managers and may give rise to distortions in the reported returns to shareholders. It is difficult and expensive to hedge EM currencies. KEY STAFF RISK: Loss by the Investment Managers The quality of the investment management team is a crucial of key staff could affect investment factor in delivering good performance. There are training and returns. development programmes in place for employees and the remuneration packages have been developed in order to retain key staff. Any material changes to the management team are considered by the Board at its next meeting; the Board discusses succession planning with the Investment Managers at regular intervals. Report and Accounts for the year to 31 March 2023 35 ## STRATEGIC REPORT (continued) DISCOUNT RISK: The Company’s shares may trade at a The Board monitors the price of the Company’s shares in relation discount to their NAV and a widening to their NAV and the premium/discount at which they trade. discount may undermine investor The Board generally buys back shares for cancellation in normal confidence in the Company. market conditions if they are trading at a discount in excess of 10% and the Investment Managers agree that it is a good investment decision. | OPERATIONAL | Failure by any service provider to carry | The Company’s main service providers are listed on page 95. | | --- | --- | --- | | RISK: | out its obligations to the Company | The Audit & Risk Committee monitors the performance and | | | in accordance with the terms of its | controls (including business continuity procedures) of the service | | | appointment could have a materially | providers at regular intervals. | detrimental impact on the operation All listed and a number of unlisted investments are held in of the Company and could affect the custody for the Company by JPMorgan Chase Bank N.A. – London ability of the Company to successfully Branch. JPMEL, the Company’s depositary services provider, pursue its investment policy. also monitors the movement of cash and assets across the Company’s accounts. The Audit & Risk Committee reviews the JP Morgan SOC1 reports, which are reported on by Independent Service Auditors, in relation to its administration, custodial and information technology services. The Board reviews the overall performance of the Investment Managers and all the other service providers on a regular basis. The risk of cybercrime is high, as it is with most organisations, but the Board regularly seeks assurances from the Investment Managers and other service providers on the preventative steps that they are taking to reduce this risk. | GEARING RISK: Whilst the use of borrowings should | | Gearing levels may change from time to time in accordance with | | --- | --- | --- | | | enhance total return where the | the Board and Investment Managers’ assessment of risk and | | | return on the Company’s underlying | reward. As at 31 March 2023, UEM had net gearing on net assets | | | securities is rising and exceeds the | of 7.1%. ICMIM monitors compliance with the banking covenants | | | cost of borrowing, it will have the | when each drawdown is made and at the end of each month. | | | opposite effect where the underlying | The Board reviews compliance with the banking covenants at | | | return is falling. | each Board meeting. | | REGULATORY | Failure to comply with applicable | The Investment Managers and the Company’s professional | | RISK: | legal and regulatory requirements | advisers monitor developments in relevant laws and regulations | | | such as the tax rules for investment | and provide regular reports to the Board in respect of the | | | companies, the FCA’s Listing Rules and | Company’s compliance. | the Companies Act 2006 could lead to suspension of the Company’s Stock Exchange listing, financial penalties, a qualified audit report or the Company being subject to tax on capital gains. VIABILITY STATEMENT 31 of the UK Corporate Governance Code, the Board considers that assessing the Company’s prospects over The Board makes an assessment of the longer-term a period of five years is appropriate given the nature of prospects of the Company beyond the timeframe the Company, reflecting the long-term strategy of the envisaged under the going concern basis of accounting, Company and is in line with the five-yearly cycle of the having regard to the Company’s current position and Company's continuation vote. the principal risks it faces. The Company is a long-term investment vehicle and the Board believes that it is In its assessment of the viability of the Company, the appropriate to assess the Company’s viability over a Board has considered each of the Company’s principal long-term horizon. For the purposes of assessing the risks and uncertainties detailed above, as well as the Company’s prospects in accordance with provision impact of a significant fall in the EM equity markets on 36 Utilico Emerging Markets Trust plc the value of the Company’s investment portfolio. All (other than its shareholders) are considered to be of the key operations required by the Company are its service providers, including lenders. The need outsourced to third party providers and it is considered to promote business relationships with the service that alternative providers could be engaged at relatively providers and maintain a reputation for high standards short notice if necessary. The Directors have also of business conduct is central to the Directors’ considered the Company’s income and expenditure decision-making. The Directors believe that fostering projections and the fact that the Company’s operating constructive and collaborative relationships with expenses comprise a very small percentage of net the Company’s service providers will assist in their assets while the majority of the Company’s investments promotion of the success of the Company for the comprise readily realisable securities which can be benefit of all shareholders and their performance sold to meet funding requirements if necessary. is monitored by the Board and its committees. The The next opportunity for shareholders to vote on principal service provider is the Investment Managers, the continuation of the Company is at the AGM in who are responsible for managing the Company’s September 2026. assets in order to achieve its stated investment objective, and the Board maintains a good working As part of this assessment the Board considered a relationship with them. Whilst strong long term number of stress tests, including short term reverse investment performance is essential, the Board stress testing, and scenarios which considered the recognises that to provide an investment vehicle that impact of severe stock market and currency volatility is sustainable over the long term, both it and the on shareholders’ funds over a five-year period. Initially, Investment Managers must have regard to ethical and the Company’s projections were adjusted to reflect a environmental issues that impact society. Accordingly, material reduction in the value of its investments in ESG considerations are an important part of the line with that experienced during the emergence of the Investment Managers’ investment process as explained Covid-19 pandemic in the first quarter of 2020. The first more fully below. stress test considered a fall in markets of 30% in the first year with recovery of 10% per annum thereafter. The Board seeks to engage with its Investment A second test considered a fall in markets of 30% and Managers and other service providers in a collaborative adverse sterling movement, the Company’s reporting and collegiate manner, whilst also ensuring that currency, of 10% in the first year with a further fall in appropriate and regular challenge is brought and markets of 20% in the second year and no movement evaluation conducted. The aim of this approach is to thereafter. The results demonstrated the impact on the enhance service levels and strengthen relationships Company’s NAV, its expenses, and its ability to meet its with a view to ensuring the interests of the Company’s liabilities over that period. As a result of this analysis, shareholders are best served by keeping cost levels the Board has concluded that there is a reasonable proportionate and competitive, and by maintaining the expectation that the Company will be able to continue highest standards of business conduct. in operation and meet its liabilities as they fall due over The Directors aim to act fairly as between the the next five years. Company’s shareholders and the approach to shareholder relations is summarised in the Corporate SECTION 172 STATEMENT Governance Statement on pages 49 to 54. As part of Under Section 172 of the Companies Act 2006, the this, the AGM provides a key forum for the Board and Directors have a duty to promote the success of Investment Managers to present to shareholders on the the Company for the benefit of its members as a performance of UEM and its future prospects. It also whole. This includes having regard (amongst other allows shareholders the opportunity to meet with the matters) to fostering relationships with the Company’s Board and Investment Managers and to raise questions stakeholders and maintaining a reputation for high and concerns. The Chairman is available to meet with standards of business conduct. shareholders as appropriate and the Investment As an externally managed investment trust, the Managers meet regularly with shareholders and their Company has no employees, customers, operations or respective representatives, reporting back on views premises. Therefore, the Company’s key stakeholders to the Board. Shareholders may also communicate Report and Accounts for the year to 31 March 2023 37 ## STRATEGIC REPORT (continued) with the Company at any time by writing to the Board The Investment Managers believe that “G” is the at the Company’s registered office or contacting the core foundation on which all else is built, as strong Company’s broker. These communication opportunities governance within a company ensures that minority help inform the Board when considering how best to shareholder interests are aligned with other promote the success of the Company for the benefit of shareholders, management and stakeholders. The all shareholders over the long term. Investment Managers’ “G” assessment therefore includes questions covering shareholders’ rights, In addition to ensuring that the Company’s stated transparency and related parties, as well as audit and investment objective was being pursued, the Directors accounting, board composition and effectiveness, confirm that they have considered Section 172 factors executive oversight and compensation. Each area is when making decisions, including in relation to: assessed and weighted, and the Investment Managers • the appointment of a joint broker and a regional then apply an aggregated weighting towards “G” in marketing adviser, following a competitive pitch line with the strong empirical evidence linking robust process; corporate governance and performance. • the repurchase of the Company’s shares, in line The “E” and “S” are also focal points for the Investment with the Board’s policy to buy back shares for Managers, as assessing key environmental and social cancellation in normal market conditions if they are risks are essential to a long-term sustainable business trading at a discount in excess of 10%; model. The Investment Managers identify the most material “E” and “S” risks that are believed to affect • the recommendation that shareholders vote in each sector and companies are then assessed against favour of the Company’s dividend policy at the each risk. The results from this analysis feed into an forthcoming AGM; and “E” and “S” score for each company reflecting, for each • the recommendation that shareholders vote in material risk, whether suitable/sustainable plans are in favour of the renewal of the buyback and allotment place, how clear the company has been in disclosing its authorities as set out in the notice of AGM. approach and how well it is doing against its objective to manage such risk. ENVIRONMENTAL, SOCIAL AND GOVERNANCE Where a portfolio company is assessed as having a POLICY relatively low “E”, “S” and/or “G” score, ICM’s approach The Board believes that it is in the shareholders’ is to engage with the company to see improvements interests to consider ESG factors when selecting and over time. ESG considerations provide a way to identify retaining investments, and has asked the Investment and review the long-term drivers of an investment that Managers to take these into account when investing. are not found within the financial accounts, thereby The concept of responsible investing has always been enabling the Investment Managers to fully question a core component of the investment process and the a company’s investment potential from a number Investment Managers employ a disciplined investment of perspectives. Examples of ESG progress on two process that seeks to both uncover opportunities portfolio companies are set out on page 24. and evaluate potential risks, while striving for the best possible return outcomes. When reviewing any Where possible, the Investment Managers aim to investment opportunity, the Investment Managers look visit companies to access an in-person opportunity to understand the relevant ESG issues in conjunction to ask management teams what they perceive to with the financial, macro and political drivers as part of be the key operational, social, and environmental its investment process, populating an internally built issues, as well as a chance to see assets operating ESG framework due to lack of appropriate coverage first-hand. ESG disclosures are not always easy to from external providers. Relevant and material ESG understand given they may not be openly reported opportunities and risks can meaningfully affect or consistently disclosed. The Investment Managers investment performance, therefore the consideration believe that engaging with companies directly is the of ESG issues forms part of the integrated research best first step. Where necessary, the Investment analysis, decision-making and ongoing monitoring. Managers will question and challenge an investee 38 Utilico Emerging Markets Trust plc company’s management team directly to ensure a full BRIBERY ACT understanding of any challenges and opportunities. The Company has a zero-tolerance policy towards bribery and is committed to carrying out business fairly, Given the Investment Managers are long term investors, honestly and openly. The Investment Managers also engagement with management teams is and will remain adopt a zero-tolerance approach and have policies and paramount to the investment approach. On behalf procedures in place to prevent bribery. of UEM as shareholder, the Investment Managers work actively with investee companies to incorporate CRIMINAL FINANCES ACT stronger ESG principles and vote in a considered manner (including against resolutions) to drive positive The Company has a commitment to zero tolerance change. As referred to above, the Investment Managers towards the criminal facilitation of tax evasion. believe that governance factors are fundamental to an SOCIAL, HUMAN RIGHTS AND COMMUNITY MATTERS investment. As an externally managed investment trust, the ICM is a signatory to the United Nations-supported Company does not have any employees or maintain any Principles for Responsible Investment, which is an premises. It therefore has no material, direct impact on international network of investors working together to the environment or any particular community and the implement its six aspirational principles. The Investment Company itself has no environmental, human rights, Managers believe that good stewardship is essential social or community policies. The Board however notes and these principles align with its philosophy to protect the Investment Managers’ policy statement in respect of and increase the value of its investments. ESG issues, as outlined on page 38. MODERN SLAVERY ACT OUTLOOK Due to the nature of the Company’s business, being The Board’s main focus is on the achievement of the a company that does not offer goods and services to Company’s objective of delivering a long-term total customers, the Board considers that it is not within the return and the future of the Company is dependent scope of the Modern Slavery Act 2015 because it has upon the success of its investment strategy. The no turnover. The Company is therefore not required outlook for the Company is discussed in the Chairman’s to make a slavery and human trafficking statement. Statement and the main trends and factors likely to In any event, the Board considers the Company’s affect the future development, performance and supply chains, dealing predominantly with professional position of the Company’s business can be found in the advisers and service providers in the financial services Investment Managers’ Report. industry, to be low risk in relation to this matter. This Strategic Report was approved by the Board of GENDER DIVERSITY Directors on 16 June 2023. The Board consists of three male directors and two female directors. The Company has no employees By order of the Board and therefore there is nothing further to report in ICM Investment Management Limited respect of gender representation within the Company. Company Secretary The Company’s policy on diversity is detailed in the Corporate Governance Statement on pages 52 and 53. 16 June 2023 GREENHOUSE GAS EMISSIONS AND STREAMLINED ENERGY AND CARBON REPORTING ("SECR") All the Company’s activities are outsourced to third parties. The Company therefore has no greenhouse gas emissions to report from its operations. In addition, the Company considers itself to be a low energy user under the SECR regulations and therefore is not required to disclose energy and carbon information. Report and Accounts for the year to 31 March 2023 39 ## INVESTMENT MANAGERS AND TEAM ICMIM, a company authorised and regulated by The Investment Managers are focused on finding the FCA, was the Company’s AIFM during the year investments at valuations that do not reflect their true ended 31 March 2023 with sole responsibility for long-term value. Their investment approach is to have risk management, subject to the overall policies, a deep understanding of the business fundamentals supervision, review and control of the Board and is of each investment and its environment versus its joint portfolio manager of the Company, alongside ICM. intrinsic value. The Investment Managers are long term investors and see markets as a place to exchange assets. ICM MANAGES OVER ## USD 1.8bn IN FUNDS DIRECTLY AND IS RESPONSIBLE INDIRECTLY FOR A FURTHER USD 22.5BN OF ASSETS IN SUBSIDIARY INVESTMENTS. ICM HAS OVER 80 STAFF BASED IN OFFICES IN BERMUDA, CAPE TOWN, DUBLIN, LONDON, SEOUL, SINGAPORE, SYDNEY, VANCOUVER AND WELLINGTON. The investment teams are led by Charles Jillings and Duncan Saville. CHARLES JILLINGS Charles Jillings, a director of ICM and chief executive of ICMIM, is responsible for the day-to-day running of UEM and the investment portfolio. He qualified as a chartered accountant and has extensive experience in corporate finance and asset management. He is an experienced director having previously been a non-executive director in the financial services, water and waste sectors. He is currently a director of Somers Limited and Waverton Investment Management Limited. DUNCAN SAVILLE Duncan Saville, a director of ICM, is a chartered accountant with experience in corporate finance and asset management. He was formerly a non-executive director of Utilico Investment Trust plc and is an experienced non-executive director having been a director in multiple companies in the financial services, utility, mining and technology sectors. He is currently a non-executive director of ASX listed Resimac Group Limited and H.R.L Morrison & Co Limited. 40 Utilico Emerging Markets Trust plc SENIOR CORE TEAM ASSISTING ON UEM INCLUDE: Jacqueline Broers, deputy portfolio manager, has been involved in the running of UEM since September 2010. Mrs Broers is focused on the transport sector worldwide with particular emphasis on emerging markets. Prior to joining the investment team, Mrs Broers worked in the corporate finance team at Lehman Brothers and Nomura. Mrs Broers is a qualified chartered accountant. Jonathan Groocock, deputy portfolio manager, has been involved in the running of UEM since February 2011. Mr Groocock is focused on the utilities sector worldwide with particular emphasis on emerging markets. Prior to joining the investment team Mr Groocock had nine years of experience in sell side equity research. Mr Groocock qualified as a CFA charterholder in 2005 and is a non executive director of Petalite Limited. Mark Lebbell has been involved in the running of UEM since its inception and before that was involved with Utilico Investment Trust plc and The Special Utilities Investment Trust PLC since 2000. Mr Lebbell is focused on the communications sector worldwide with particular emphasis on emerging markets. Mr Lebbell is an associate member of the Institute of Engineering and Technology. COMPANY SECRETARY – ICM INVESTMENT MANAGEMENT LIMITED Alastair Moreton, a chartered accountant, joined the team in 2017 to provide company secretarial services to UEM and UIL Limited. Mr Moreton has over thirty years’ experience in corporate finance with Samuel Montagu, HSBC, Arbuthnot Securities and, prior to joining ICM, Stockdale Securities, where he was responsible for the company’s closed end fund corporate clients. ## The Investment Managers’ approach is to ## have a deep understanding of the business ## fundamentals of each investment and its ## environment versus its intrinsic value. Report and Accounts for the year to 31 March 2023 41 ## DIRECTORS JOHN RENNOCKS (CHAIRMAN)* John Rennocks joined the Board in 2015 and was appointed Chairman in 2016. He previously served as deputy chairman and senior independent director of Inmarsat plc and as finance director of a number of public limited companies (including Smith and Nephew plc, PowerGen plc, British Steel plc and Corus Group plc) and as a non-executive chairman or director of several companies, including Foreign & Colonial Investment Trust plc and JP Morgan Overseas Investment Trust plc. He is a Fellow of the Institute of Chartered Accountants of England and Wales. MARK BRIDGEMAN* Mark Bridgeman joined the Board in 2021. He is UEM’s Senior Independent Director and Chairman of the Remuneration Committee. His background is in fund management spending 19 years with Schroders plc with various roles including Emerging Markets Fund Manager and Global Head of Research. He left Schroders in 2009 to manage a rural estate and farming business in Northumberland and was formerly President of the Country Land & Business Association. He is currently a non-executive director of abrdn China Investment Company Limited. SUSAN HANSEN Susan Hansen joined the Board in 2013. She is a chartered accountant and MBA graduate and has worked in financial services since 1980. She is currently a director of Resimac Group Limited (see page 45) a non-bank lending company listed on the Australian Securities Exchange and the principal of a financial training organisation in New Zealand. She is a member of the Institute of Chartered Accountants of Australia and New Zealand and a graduate of the Australian Institute of Company Directors. ISABEL LIU* Isabel Liu joined the Board in 2021. She has over 25 years' global experience investing equity in infrastructure, including the AIG Asian Infrastructure Fund, the ABN AMRO Global Infrastructure Fund and was managing director of the Asia Pacific investment business of John Laing plc. More recently Isabel served as a non-executive director of Pensions Infrastructure Platform. She has been a board member of Transport Focus, the consumer watchdog for public transport and England's highways, and Heathrow Airport’s Consumer Challenge Board. She is currently a non-executive director of Schroder Oriental Income Fund Limited and Gresham House Energy Storage Fund plc. ERIC STOBART* Eric Stobart joined the Board in 2019 and is Chairman of UEM’s Audit & Risk Committee. He has spent most of his career in merchant and commercial banking, latterly as a senior executive at Lloyds Banking Group. He was for 12 years chair of the investment committee of the £25.0bn Lloyds Bank Pension Scheme as well as having been chair of the audit and risk committee of a substantial investment management group. Currently he chairs or is a member of the trustee board of three pension schemes with combined assets of some £2.7bn. Mr Stobart is a chartered accountant with an MBA from London Business School. *Independent director and member of the Audit & Risk Committee, Remuneration Committee and Management Engagement Committee 42 Utilico Emerging Markets Trust plc # DIRECTORS' REPORT The Directors present the Annual Report and Accounts of the Company for the year ended 31 March 2023. ## STATUS OF THE COMPANY UEM was incorporated on 7 December 2017. On 3 April 2018, as a result of the proposals to redomicle UEM Limited to the United Kingdom, the shareholders of UEM Limited exchanged all their shares in UEM Limited for shares in the Company on a one for one basis and UEM Limited became a wholly owned subsidiary of the Company. All the assets of UEM Limited were transferred to the Company and UEM Limited was dissolved on 7 March 2019. UEM's shares are listed on the premium segment of the Official List of the Financial Conduct Authority and traded on the main market of the London Stock Exchange. UEM carries on business as an investment trust. It has been approved by HM Revenue & Customs as an investment trust in accordance with sections 1158 and 1159 of the Corporation Tax Act 2010, subject to the Company continuing to meet the eligibility conditions. The Directors are of the opinion that the Company has conducted its affairs in a manner which will satisfy the conditions for continued approval. UEM is domiciled in the UK as an investment company within the meaning of section 833 of the Companies Act 2006. It is not a close company and has no employees. UEM is a member of the AIC in the UK. ## THE ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE ("AIFMD") The Company is an Alternative Investment Fund ("AIF") falling within the scope of, and subject to, the requirements of the AIFMD. The Company has appointed ICMIM, an English incorporated company which is regulated by the FCA, as its AIFM, with sole responsibility for risk management and ICM and ICMIM jointly to provide portfolio management services. The AIFMD requires certain information to be made available to investors in AIFs before they invest and requires that material changes to this information be disclosed in the annual report of each AIF. An Investor Disclosure Document, which sets out information on the Company's investment strategy and policies, leverage, risk, liquidity, administration, management, fees, conflicts of interest and other shareholder information, is available on the Company's website at www.uemtrust.co.uk. UEM also appointed JPMEL as its depositary service provider. JPMEL's responsibilities include general oversight over the issue and cancellation of the Company's shares, the calculation of the NAV, cash monitoring and asset verification and record keeping. JPMEL receives an ad-valorem fee of 2.5bps of the Company's NAV for its services, subject to a minimum fee of £25,000 per annum, payable monthly in arrears. ## FUND MANAGEMENT ARRANGEMENTS In accordance with the Investment Management Agreement ("IMA"), the Company pays to ICMIM and ICM a management fee based on a tiered structure comprising 1.0% of NAV up to £500m; 0.9% of NAV above £500m up to £750m; 0.85% of NAV above £750m up to £1,000m; and 0.75% of NAV above £1,000m. This structure has been in place since 1 April 2021 and replaced the previous arrangement which comprised a management fee of 0.65% per annum of NAV together with a performance related fee. The management fee is payable quarterly in arrears, with such fee apportioned between ICMIM and ICM as agreed by them. The IMA may be terminated on not less than six months' notice in writing and further details of the amounts payable to ICMIM and ICM are disclosed in note 4 to the accounts. Under the IMA, ICMIM has been appointed as Company Secretary. The Board continually reviews the policies and performance of the Investment Managers. The Board's philosophy and the Investment Managers' approach are that the portfolio should consist of shares considered attractive irrespective of their inclusion or weighting in any index. The portfolio's composition and performance are likely, therefore, to be very different, for example, from those of the MSCI EM total return Index. Over the short term, there may be periods of sharp underperformance or outperformance compared with the index. Over the long term, the Board expects the combination of the Company's and Investment Managers' approach to result in a significant degree of outperformance compared with the index. The Board continues to believe that the appointment of ICMIM and ICM on the terms agreed is in the interests of shareholders as a whole. Report and Accounts for the year to 31 March 2023 43 ## DIRECTORS’ REPORT (continued) ADMINISTRATION was paid on 16 December 2022 and 24 March 2023. A dividend of 2.15p per share was declared on 22 May The provision of accounting and administration services 2023 and will be paid on 23 June 2023. has been outsourced to JPMorgan Chase Bank N.A. – London Branch (the “Administrator”). The Administrator ISA AND NMPI provides financial and general administrative services to the Company for an annual fee based on the Company’s UEM remains a qualifying investment under the month end NAV (5 bps on the first £100m NAV, 3bps on Individual Savings Account (ISA) regulations and it is the intention of the Board to continue to satisfy the next £150m NAV, 2bps on the next £250m NAV and these regulations. Furthermore, the Company 1.5bps on the next £500m NAV). The Administrator and currently conducts its affairs so that its shares can any of its delegates are also entitled to reimbursement be recommended by IFAs to ordinary retail investors of certain expenses incurred by it in connection with in accordance with the FCA’s rules in relation to non- its duties. In addition, ICMIM has appointed Waverton mainstream pooled investments and intends to Investment Management Limited (“Waverton”) to continue to do so for the foreseeable future. provide certain support services (including middle office, market dealing and information technology GOING CONCERN support services). Waverton is entitled to receive an annual fee of 3bps of the Company’s NAV and the The Board has reviewed the going concern basis Company reimburses ICMIM for its costs and expenses of accounting for the Company. The Company’s incurred in relation to this agreement. assets consist substantially of equity shares in listed companies and in most circumstances are realisable Annually, the Management Engagement Committee within a short timescale. The Board has performed considers the ongoing administrative requirements of a detailed assessment of the Company’s operational the Company and assesses the services provided. risk and resources including its ability to meet its liabilities as they fall due, by conducting stress tests and SAFE CUSTODY OF ASSETS scenarios which considered the impact of severe stock During the year ended 31 March 2023, all listed and a market and currency volatility. This is set out in note 25 number of unlisted investments were held in custody to the accounts. In light of this work and there being no for the Company by JPMorgan Chase Bank N.A. – material uncertainties related to events or conditions London Branch (the “Custodian”). Operational matters that may cast significant doubt about the ability of the with the Custodian are carried out on the Company’s Company to continue as a going concern, the Board behalf by ICMIM and the Administrator in accordance has a reasonable expectation that the Company with the IMA and the Administration Agreement. The has adequate resources to continue in operational Custodian is paid a variable fee dependent on the existence for a period of at least the next twelve months number of trades transacted and the location of the from the date of approval of these financial statements. securities held. Accordingly, the Board considers it appropriate to continue to adopt the going concern basis in preparing FINANCIAL INSTRUMENTS the accounts. The Company’s financial instruments comprise its investment portfolio, cash balances, bank borrowings DIRECTORS and debtors and creditors which arise directly from UEM currently has a Board of five non-executive its operations such as sales and purchases awaiting directors who oversee and monitor the activities of settlement, and accrued income. The financial risk the Investment Managers and other service providers management objectives and policies arising from its and ensure that the Company’s investment policy is financial instruments and the exposure of the Company adhered to. The Board is supported by an Audit & Risk to risk are disclosed in note 26 to the accounts. Committee, a Management Engagement Committee and a Remuneration Committee, which deal with DIVIDENDS specific aspects of the Company’s affairs. The Corporate | | A dividend of 2.00p per share was paid on | Governance Statement, which is set out on pages 49 to | | --- | --- | --- | | | 23 September 2022 and a dividend of 2.15p per share | 54, forms part of this Directors’ Report. | | 44 | Utilico Emerging Markets Trust plc | | The Directors have a range of business, financial and asset management skills, as well as experience relevant to the direction and control of the Company. Brief biographical details of the members of the Board are shown on page 42. All the Directors are independent other than Ms Hansen who is also a director of Resimac Group Limited, a company associated with the Investment Managers. All appointments to the Board and re-elections of Directors are carried out in accordance with the Companies Act 2006 and the Company's Articles of Association. The Company's Articles of Association provide that all the Directors retire each year. The Board may also appoint Directors but any Director so appointed must stand for election by the shareholders at the next AGM. # DIRECTORS' INDEMNITY AND INSURANCE As at the date of this report, a deed of indemnity has been entered into by the Company and each of the Directors under which the Company has agreed to indemnify each Director, to the extent permitted by law, in respect of certain liabilities incurred as a result of carrying out his/her role as a Director of the Company. Each Director is indemnified against the costs of defending any criminal or civil proceedings or any claim by the Company or a regulator as they are incurred provided that where the defence is unsuccessful the Director must repay those defence costs to the Company. The indemnities are qualifying third party indemnity provisions for the purposes of the Companies Act 2006. UEM also maintains Directors' and Officers' liability insurance which provides appropriate cover for any legal action brought against the Directors. # DIRECTORS' INTERESTS The Directors' interests in the share capital of the Company are disclosed in the Directors' Remuneration Report on page 57. No Director was a party to, or had any interests in, any contract or arrangement with the Company at any time during the year or at the year end. There are no agreements between the Company and the Directors concerning compensation for loss of office. A Director must avoid a situation where he/she has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the Company's interests. The Directors have declared any potential conflicts of interest to the Company, which are reviewed regularly by the Board. The Directors have undertaken to advise the Company Secretary and/or Chairman as soon as they become aware of any potential conflicts of interest. # SHARE CAPITAL As at 31 March 2023 the issued share capital of the Company and the total voting rights were 202,212,256 shares. As at the date of this report, the share capital of the Company and total voting rights were 201,471,467 shares. There are no restrictions on the transfer of securities in the Company and there are no special rights attached to any of the shares. # SHARE ISSUES AND REPURCHASES UEM has the authority to purchase shares in the market to be held in treasury or for cancellation and to issue new shares for cash. During the year ended 31 March 2023 the Company purchased 12,531,811 shares for cancellation. The current authority to repurchase shares was granted to Directors on 20 September 2022 and expires at the conclusion of the next AGM. The Directors are proposing that their authority to buy back up to 14.99% of the Company's shares for cancellation or to be held in treasury and to issue new shares or sell shares from treasury be renewed at the forthcoming AGM. # TENDER FACILITY At the Directors' discretion, the Company can operate a tender facility subject to certain limitations. The tender facility is not expected to be made available in circumstances where the annual compound growth rate of the Company's gross assets exceeds 10% or where the Company's net assets total return performance exceeds 10% in the relevant period. The maximum number of shares which may be tendered pursuant to the tender facility in any financial year would be limited to 12.5% of the shares in issue at the commencement of the relevant financial year, with any excess tender requests being scaled back pro-rata. The tender facility has not been operated to date by the Company or previously by its predecessor, UEM Limited. Report and Accounts for the year to 31 March 2023 45 ## DIRECTORS' REPORT (continued) ### CONTINUATION OF THE COMPANY UBM has been established with an unlimited life although the Company's Articles of Association provide for a continuation vote to be put to shareholders every five years. The continuation vote was passed at the AGM held in 2021 and shareholders will therefore have further opportunities to vote on the continuation of the Company in 2026 and every fifth AGM thereafter. ### SUBSTANTIAL SHARE INTERESTS As at the date of this report, the Company had received notification of the following holdings of voting rights: | | Number of shares held | % held | | --- | --- | --- | | City of London Investment Management Company Limited | 34,425,869 | 17.1 | | UIL Limited | 20,126,014 | 10.0 | | Lazard Asset Management LLC | 18,737,825 | 9.3 | | Rathbone Investment Management Limited | 10,728,364 | 5.3 | | Ameriprise Financial, Inc. | 10,127,839 | 5.0 | ### THE COMMON REPORTING STANDARD Tax legislation under The OECD (Organisation for Economic Co-operation and Development) Common Reporting Standard for Automatic Exchange of Financial Account Information (the "Common Reporting Standard") was introduced on 1 January 2016. The legislation requires an investment trust company to provide personal information to HMRC about investors who purchase shares. The Company is required to provide information annually on the tax residences of a number of non-UK based certificated shareholders. HMRC may in turn exchange the information with the tax authorities of another country or countries in which the shareholder may be tax resident, where those countries (or tax authorities in those countries) have entered into agreements to exchange financial account information. All new shareholders entered onto the share register, excluding those whose shares are held in CREST, will be sent a certification form for the purposes of collecting this information. ### AUDIT INFORMATION AND AUDITOR As required by section 418 of the Companies Act 2006, the Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are aware, there is no relevant audit information of which the Company's auditor is unaware, and each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information. ### LISTING RULE 9.8.4R There are no instances where the Company is required to make disclosures in respect of Listing Rule 9.8.4R (information to be included in annual report and accounts). ### ARTICLES OF ASSOCIATION Any amendments to the Company's Articles of Association must be made by special resolution. ### ANNUAL GENERAL MEETING The following information to be discussed at the forthcoming AGM is important and requires your immediate attention. If you are in any doubt about the action you should take, you should seek advice from your stockbroker, bank manager, solicitor, accountant or other financial adviser authorised under the Financial Services and Markets Act 2000 (as amended). If you have sold or transferred all of your shares in the Company, you should pass this document, together with any other accompanying documents including the form of proxy, at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for onward transmission to the purchaser or transferee. The business of the AGM consists of 12 resolutions. Resolutions 1 to 10 (inclusive) will be proposed as ordinary resolutions and resolutions 11 and 12 will be proposed as special resolutions. ### Ordinary Resolution 1 – Annual Report and Financial Statements This resolution seeks shareholder approval to receive the report of the Directors and financial statements for the year ended 31 March 2023 and the Auditor's report thereon. 46 | Ullco Emerging Markets Trust plc Ordinary Resolution 2 – Approval of the Directors’ Remuneration Report This resolution is an advisory vote on the Directors’ Remuneration Report. Ordinary Resolution 3 – Approval of the Company’s dividend policy This resolution seeks shareholder approval of the Company’s dividend policy to pay four interim dividends per year. Under the Company’s Articles of Association, the Board is authorised to approve the payment of interim dividends without the need for the prior approval of the Company’s shareholders. Having regard to corporate governance best practice relating to the payment of interim dividends without the approval of a final dividend by a company’s knowledge and many years of experience of audit shareholders, the Board has decided to seek express and risk committees in the financial services sector. approval from shareholders of its dividend policy to pay He therefore brings this strong background and skills four interim dividends per year. If this resolution is not to his role as the Company’s Audit & Risk Committee passed, it is the intention of the Board to refrain from Chairman. authorising any further interim dividends until such time as the Company’s dividend policy is approved by Ordinary Resolutions 8 and 9 – Appointment of the its shareholders. external Auditor and the Auditor’s Remuneration Ordinary Resolutions 4 to 7 (inclusive) – Re-election These resolutions relate to the appointment and of the Directors remuneration of the Company’s auditor. The Company, through its Audit & Risk Committee, has considered The biographies of the Directors are set out on page 42 the independence and objectivity of the external and are incorporated into this report by reference. auditor and is satisfied that the proposed Auditor is Resolution 4 relates to the re-election of Mr John independent. Further information in relation to the Rennocks. Mr Rennocks’ leadership of the Board as assessment of the existing Auditor’s independence can Chairman draws on his long and varied experience be found in the report of the Audit & Risk Committee. on the boards of many public limited companies Resolutions relating to the following items of special and investment companies. His focus is on long- business will be proposed at the forthcoming AGM: term strategic issues, which are key topics of Board discussion. Ordinary Resolution 10 – Authority to allot shares The Directors may only allot shares for cash if Resolution 5 relates to the re-election of Mr Mark authorised to do so by shareholders in a general Bridgeman. Mr Bridgeman’s experience in the meeting. This resolution seeks authority for the investment management industry and with other Directors to allot shares for cash up to an aggregate investment funds means that he brings significant nominal amount of £201,470 per annum, which is expertise in investment matters to his role on the equivalent to 20,147,000 ordinary shares of 1p each and Board. represents approximately 10% of the Company’s issued Resolution 6 relates to the re-election of Ms Isabel Liu. ordinary share capital (excluding treasury shares) as Ms Liu’s long career in infrastructure investing brings at the date of the Notice of the AGM. This resolution in-depth knowledge and expertise in such matters to will expire at the conclusion of the next AGM of the her role as Director. Company to be held in 2024 unless renewed prior to Resolution 7 relates to the re-election of Mr Eric that date at an earlier general meeting. Stobart. Mr Stobart has extensive accounting Report and Accounts for the year to 31 March 2023 47 ## DIRECTORS’ REPORT (continued) Special Resolution 11 – Authority to disapply pre- RECOMMENDATION emption rights The Board considers that each of the resolutions to be proposed at the AGM is likely to promote the success By law, Directors require specific authority from of the Company for the benefit of its members as a shareholders before allotting new shares or selling whole and is in the best interests of the Company and shares out of treasury for cash without first offering its shareholders as a whole. The Directors unanimously them to existing shareholders in proportion to their recommend that shareholders vote in favour of all the holdings. This resolution empowers the Directors resolutions as they intend to do in respect of their own to allot new shares for cash or to sell shares held by beneficial holdings. the Company in treasury, otherwise than to existing shareholders on a pro rata basis, up to an aggregate By order of the Board nominal amount of £201,470 which is equivalent to ICM Investment Management Limited, Secretary 20,147,000 ordinary shares of 1p each and represents 16 June 2023 approximately 10% of the Company’s issued ordinary share capital (excluding treasury shares) as at the date of the Notice of the AGM. Any such sale of shares would only be made at prices greater than NAV and would therefore increase the assets underlying each share. This resolution will expire at the conclusion of the next AGM of the Company to be held in 2024 unless renewed prior to that date at an earlier general meeting. Special Resolution 12 – Authority to buy back shares This resolution seeks to renew the authority granted to the Directors enabling the Company to purchase its own shares. The Directors will only consider repurchasing shares in the market if they believe it to be in shareholders’ interests and as a means of correcting any imbalance between supply and demand for the Company’s shares. The Directors are seeking authority to purchase up to 30,200,000 ordinary shares (being approximately 14.99% of the issued ordinary share capital excluding treasury shares as at the date of the Notice of the AGM). This authority, unless renewed at an earlier general meeting, will expire at the conclusion of the next AGM of the Company to be held in 2024. Any shares purchased pursuant to this resolution shall be cancelled immediately upon completion of the purchase or held, sold, transferred or otherwise dealt with as treasury shares in accordance with the provisions of the Companies Act 2006. 48 Utilico Emerging Markets Trust plc ## CORPORATE GOVERNANCE STATEMENT THE COMPANY‘S CORPORATE GOVERNANCE for good governance lies with the Board. The Board FRAMEWORK considers the practice of good governance to be an integral part of the way it manages the Company and Corporate Governance is the process by which the is committed to maintaining high standards of financial board of directors of a company protects shareholders’ reporting, transparency and business integrity. interests and by which it seeks to enhance shareholder value. Shareholders hold the directors responsible The governance framework of the Company reflects for the stewardship of a company’s affairs, delegating the fact that, as an investment company, it has no full- authority and responsibility to the directors to time employees and outsources its activities to third manage the company on their behalf and holding party service providers. them accountable for its performance. Responsibility ### THE BOARD Five non-executive directors (NEDs) CHAIRMAN: John Rennocks SENIOR INDEPENDENT DIRECTOR: Mark Bridgeman KEY OBJECTIVES: • to set strategy, values • to provide leadership within • to constructively challenge and standards; a framework of prudent and scrutinise performance and effective controls which of all outsourced activities. enable risk to be assessed and managed; and MANAGEMENT AUDIT & RISK NOMINATION REMUNERATION ENGAGEMENT COMMITTEE COMMITTEE COMMITTEE COMMITTEE All independent NEDs All independent NEDs The Board as a whole All independent NEDs performs this function CHAIRMAN: CHAIRMAN: CHAIRMAN: Eric Stobart John Rennocks Mark Bridgeman KEY OBJECTIVE: KEY OBJECTIVES: KEY OBJECTIVES: KEY OBJECTIVE: • to oversee the • to review the • to regularly review • to set the financial reporting and performance of the Board’s structure remuneration policy control environment. the Investment and composition; and for the Directors of Managers and the the Company. • to consider any new Administrator; and appointments. • to review the performance of other service providers. Report and Accounts for the year to 31 March 2023 49 ## CORPORATE GOVERNANCE STATEMENT (continued) THE AIC CODE OF CORPORATE GOVERNANCE of the Audit & Risk Committee, as permitted by the AIC Code. As a UK-listed investment trust the Board’s principal governance reporting obligation is in relation to the UK Information on how the Company has applied the Corporate Governance Code (the “UK Code”) issued principles of the AIC Code and the UK Code is set out by the Financial Reporting Council (“FRC”) in July 2018. below. However, it is recognised that investment companies have special circumstances which have an impact THE BOARD on their governance arrangements. An investment The Board is responsible to shareholders for the company typically has no employees and the roles of overall stewardship of the Company. A formal schedule portfolio management, administration, accounting of matters reserved for the decision of the Board has and company secretarial tend to be outsourced to a been adopted. Investment policy and strategy are third party. The AIC has therefore drawn up its own determined by the Board and it is also responsible for set of guidelines known as the AIC Code of Corporate the gearing policy, dividend policy, public documents, Governance (the “AIC Code”) issued in February 2019, such as the Annual Report and Financial Statements, which recognises the nature of investment companies the buy-back policy and corporate governance by focusing on matters such as board independence matters. In order to enable the Directors to discharge and the review of management and other third party their responsibilities effectively the Board has full and contracts. The FRC has endorsed the AIC Code and timely access to relevant information. confirmed that companies which report against the The Board meets at least quarterly, with additional AIC Code will be meeting their obligations in relation to Board and Committee meetings being held on an ad the UK Code and paragraph LR9.8.6 of the FCA’s Listing hoc basis to consider particular issues as they arise. Rules. The Board believes that reporting against the Key representatives of the Investment Managers principles and recommendations of the AIC Code will attend each meeting and between these meetings provide better information to shareholders. there is regular contact with the Investment Managers. The UK Code is available from the FRC’s website at Two board meetings a year are usually held in www.frc.org.uk. The AIC Code is available from the countries where the Company holds investments Association of Investment Companies’ website at www. and, as part of its monitoring and risk management theaic.co.uk. responsibilities, the Board will meet with investee companies and local experts. COMPLIANCE WITH THE AIC CODE The Board has direct access to the advice and During the year ended 31 March 2023, the Company services of the company secretary, who is an complied with the recommendations of the AIC Code employee of ICMIM. The company secretary, with and the relevant provisions of the UK Code, except advice from the Company’s lawyers and financial those relating to: advisers, is responsible for ensuring that the Board • the role of the chief executive and Committee procedures are followed and that applicable rules and regulations are complied with. • executive directors’ remuneration The company secretary is also responsible to the • the need for an internal audit function Board for ensuring timely delivery of information • membership of the Audit & Risk Committee by the and reports and that the statutory obligations of Chairman of the Board the Company are met. The company secretary is For the reasons set out in the AIC Code and as responsible for advising the Board, through the explained in the UK Code, the Board considers these Chairman, on all governance matters. provisions are not relevant to the position of the There is an agreed procedure for Directors, in the Company, being an externally managed investment furtherance of their duties, to take legal advice at the company. As explained in the Audit & Risk Committee Company’s expense, having first consulted with the Report, the Chairman of the Board is also a member Chairman. 50 Utilico Emerging Markets Trust plc During the year, none of the Directors took on any There were four Board meetings, three Audit & Risk significant new commitments or appointments. All of Committee meetings, one Management Engagement the Directors consider that they have sufficient time to Committee meeting and one Remuneration Committee discharge their duties. meeting held during the year ended 31 March 2023 and the attendance by the Directors was as follows: Management Audit & Risk Engagement Remuneration Board Committee Committee Committee Number of meetings held during the year 4 3 1 1 John Rennocks 4 3 1 1 Mark Bridgeman 4 3 1 1 Susan Hansen 4 n/a n/a n/a Isabel Liu 4 3 1 1 Anthony Muh (retired 20 September 2022) 2/2 1/1 1 1 Eric Stobart 4 3 1 1 Apart from the meetings detailed above, there were a Administrator and the performance of other third number of meetings held by committees of the Board party service providers. In this regard the Committee to approve the declaration of quarterly dividends and assessed the services provided by the Investment other ad hoc items. Managers, the Administrator and the other service providers to be good. AUDIT & RISK COMMITTEE The Audit & Risk Committee comprises all the REMUNERATION COMMITTEE independent Directors of the Company and is chaired The Remuneration Committee, which is chaired by Mr by Mr Stobart. Further details of the Audit & Risk Bridgeman, comprises all the independent Directors Committee are provided in its report starting on of the Company. Further details are provided in the page 58. Directors’ Remuneration Report on page 55. MANAGEMENT ENGAGEMENT COMMITTEE INTERNAL CONTROLS The Management Engagement Committee, which The Directors acknowledge that they are responsible is chaired by Mr Rennocks, comprises all the for ensuring that the Company maintains a sound independent Directors of the Company and meets at system of internal financial and non-financial controls least once a year. (“internal controls”) to safeguard shareholders’ The Investment Managers’ performance is considered investments and the Company’s assets. by the Board at every meeting, with a formal evaluation The Company’s system of internal control is designed by the Management Engagement Committee annually. to manage rather than eliminate risk of failure to The Board received detailed reports and views from achieve the Company’s investment objective and/ the Investment Managers on investment policy, asset or adhere to the Company’s investment policy and/ allocation, gearing and risk at each Board meeting in or investment limits. The system can therefore only the year ended 31 March 2023, with ad hoc market/ company updates if there were significant movements provide reasonable and not absolute assurance in the intervening period. against material misstatement or loss. The Management Engagement Committee also The Investment Managers, Administrator and considers the effectiveness of the administration Custodian maintain their own systems of internal services provided by the Investment Managers and controls and the Board and the Audit & Risk Report and Accounts for the year to 31 March 2023 51 ## CORPORATE GOVERNANCE STATEMENT (continued) committee. It considers the size and structure of the Board, including the balance of expertise and skills brought by individual Directors. It supports the principles of boardroom diversity, including gender and ethnicity, progressive refreshing and succession planning and such matters are discussed by the Board as a whole at least annually. The Company’s policy is that the Board should be comprised of directors with a diverse range of skills, knowledge and experience and that any new appointments should be made on the basis of merit, against objective criteria including diversity. The Listing Rules, requires companies to report against the following three diversity targets: (i) At least 40% of individuals on the board are women; (ii) At least one of the senior board positions (defined in the Listing Rules as the chair, CEO, SID and CFO) is held by a woman; and Committee receive regular reports from these service (iii) At least one individual on the board is from a providers. minority ethnic background The Board meets regularly, at least four times a year. As at 31 March 2023, UEM complies with targets (i) and It reviews financial reports and performance against (iii). As provided for in the Listing Rules, investment relevant stock market criteria and the Company’s peer companies do not need to report against target (ii) if group, amongst other things. The effectiveness of it is inapplicable. The Board believes that, since UEM the Company’s system of internal controls, including is an externally managed investment company which financial, operational and compliance and risk does not have executive management functions, management systems is reviewed at least bi-annually including the roles of CEO or CFO, this target is not against risk parameters approved by the Board. The applicable. Board confirms that the necessary actions are taken to remedy any significant failings or weaknesses identified The Board has chosen to align its diversity reporting from its review. No significant failings or weaknesses reference date with the Company’s financial year occurred during the year ended 31 March 2023 or end. As required by the Listing Rules, further details subsequently up to the date of this report. in relation to the three diversity targets are set out in the tables below. The information was obtained by BOARD DIVERSITY, APPOINTMENT, RE-ELECTION asking each of the Directors how they wished to be AND TENURE categorised for the purposes of these disclosures: The Board as a whole undertakes the responsibilities which would otherwise be assumed by a nomination Number of senior positions on the Board (CEO, CFO, SID, 31 March 2023 Number of Board members Percentage of the Board Chair) Men 3 60% Women 2 40% Not applicable Other – – See above Not specified/prefer not to say – – 52 Utilico Emerging Markets Trust plc Number of senior positions Number of Board on the Board (CEO, CFO, 31 March 2023 members Percentage of the Board SID, Chair) White British or other White (including minority-white groups) 4 80% Mixed/Multiple Ethnic Groups - - Asian/Asian British 1 20% Not applicable Black/African/Caribbean/Black British - - See above Other ethnic group, including Arab - - Not specified/prefer not to say - - The Board currently consists of three men and two the company secretary and other appropriate women. As referred to in the Chairman’s statement, persons. All appointments are subject to subsequent Ms Hansen has indicated her intention to retire from confirmation by shareholders in general meeting. the Board at this year’s AGM and the current intention is to continue as a Board of four Directors. This will BOARD, COMMITTEE AND DIRECTORS’ mean that target (i) will not be complied with following PERFORMANCE APPRAISAL 19 September 2023. Given the relatively small size of The Directors recognise the importance of the AIC UEM’s Board, any change in membership has a much Code’s recommendations in respect of evaluating greater impact on the representation of a particular the performance of the Board, the Committees group. The Board will continue to have regard to and individual Directors. This encompasses both boardroom diversity, including gender and ethnicity, quantitative and qualitative measures of performance during its consideration of succession planning and including: future Board appointments. • attendance at meetings; The Board is of the view that length of service does • the independence of individual Directors; not necessarily compromise the independence or contribution of directors of an investment company, • the ability of Directors to make an effective where continuity and experience can add significantly contribution to the Board and Committees to the strength of the Board. This is supported by the through the range and diversity of skills and views on independence expressed in the AIC Code. experience each Director brings to their role; and No limit on the overall length of service of any of the • the Board’s ability to challenge the Investment Company’s Directors has been imposed. All Directors Managers’ recommendations, suggest areas are subject to annual re-election. of debate and set the future strategy of the The Board reviews succession planning at least Company. annually. Appointments of new Directors will be made The Board opted to conduct performance evaluation on a formalised basis with the Chairman agreeing, in through questionnaires and discussion between conjunction with his colleagues, a job specification the Directors, the Chairman and the chairmen and other relevant selection criteria and the methods of the Committees. This process is conducted by of recruitment (where appropriate using an external the Chairman reviewing individually with each of recruitment agency), selection and appointment. The the Directors their performance, contribution and potential Director would meet with Board members commitment to the Company and the possible prior to formal appointment. An induction process further development of skills. In addition, the Senior will be undertaken, with new appointees to the Independent Director reviews the performance of Board being given a full briefing on the workings and the Chairman with the other Directors, taking into processes of the Company and the management of the account the views of the Investment Managers. The Company by the Chairman, the Investment Managers, relevant points arising from these meetings are then Report and Accounts for the year to 31 March 2023 53 ## CORPORATE GOVERNANCE STATEMENT (continued) reported to, and discussed by, the Board as a whole. annual results. All meetings between the Investment This process has been carried out in respect of the Managers and institutional and other shareholders period under review and will be conducted on an are reported to the Board. The Chairman, Senior annual basis. The result of this period’s performance Independent Director and other Directors are available evaluation process was that the Board, the Committees to discuss any concerns with shareholders if required of the Board and the Directors individually were all and shareholders may communicate with the Company assessed to have performed satisfactorily. No follow- at any time by writing to the Board at the Company’s up actions were required. registered office or contacting the Company’s broker. It is not felt appropriate currently to employ the services of, or to incur the additional expense of, an By order of the Board external third party to conduct the evaluation process ICM Investment Management Limited as an appropriate process is in place; this will, however, Company Secretary be kept under review. 16 June 2023 RELATIONS WITH SHAREHOLDERS UEM welcomes the views of shareholders and places great importance on communication with shareholders. All shareholders have the opportunity to attend and vote at the Company’s AGM. The Notice of AGM sets out the business of the meeting and each resolution is explained in the Directors’ Report. In addition, the Investment Managers will review the Company’s portfolio and performance at the AGM, where the Directors and representatives of the Investment Managers will be available to answer shareholders’ questions. The prime medium by which the Company communicates with shareholders is through the half-yearly and annual financial reports, which aim to provide shareholders with a full understanding of the Company’s activities and its results. This information is supplemented by the calculation and publication, via a Regulatory Information Service, of the NAV of the Company’s shares and by monthly factsheets produced by the Investment Managers. Shareholders can visit the Company’s website: www.uemtrust. co.uk in order to access copies of half-yearly and annual financial reports, factsheets and regulatory announcements. There is a regular dialogue between the Investment Managers and institutional shareholders, including private client wealth managers, to discuss aspects of investment performance, governance and strategy and to listen to shareholder views in order to help develop an understanding of their issues and concerns. General presentations to institutional shareholders and analysts follow the publication of the 54 Utilico Emerging Markets Trust plc ## DIRECTORS’ REMUNERATION REPORT STATEMENT OF THE DIRECTORS’ REMUNERATION POLICY CHAIRMAN The Board, on the recommendation of its Remuneration | As Chairman of the | Committee, considers the level of the Directors fees | | --- | --- | | Remuneration Committee, | at least annually. The Board determines the level of | | I am pleased to present the | Directors’ fees within the limit currently set by the | | Directors’ Remuneration Report | Company’s Articles, which limit the aggregate fees | | to shareholders. The report | payable to the Board of Directors to a total of £250,000 | | comprises a remuneration | per annum. | policy, which is subject to a The Board’s policy is to set Directors’ remuneration at triennial binding shareholder MARK BRIDGEMAN a level commensurate with the skills and experience vote, or sooner if an alteration Chairman of the necessary for the effective stewardship of the Company Remuneration Committee to the policy is proposed, and and the expected contribution of the Board as a whole a report on remuneration, in continuing to achieve the investment objective. Time which is subject to an annual advisory vote. An ordinary committed to the Company’s business and the specific resolution for the approval of this report will therefore be responsibilities of the Chairman, Directors and the put to shareholders at the Company’s forthcoming AGM. chairman of the Audit & Risk Committee are taken into The law requires the Company’s auditor to audit certain account. The policy aims to be fair and reasonable in parts of the disclosures provided. Where disclosures relation to comparable investment companies. have been audited, they are indicated as such. The The fees are fixed and the monetary amount (net of auditor’s opinion is included in their report starting on tax) is used by the Directors to purchase shares in the page 62. Company quarterly in arrears. Directors are entitled to The Remuneration Committee is responsible for be reimbursed for any reasonable expenses properly reviewing and making recommendations to the Board in incurred by them in connection with the performance respect of the fees of Directors. In line with the AIC Code, of their duties and attendance at Board and general it reviews the ongoing appropriateness of the Company’s meetings and Committee meetings. Directors are not remuneration policy and the individual remuneration of eligible for bonuses, pension benefits, share options, Directors by reference to the activities of the Company long-term incentive schemes or other benefits. and in comparison with other companies of a similar Directors are provided with a letter of appointment structure and size. Any views expressed by shareholders when they join the Board. There is no provision for on the fees being paid to Directors will also be taken into compensation upon early termination of appointment. consideration. Following recommendations from the The letters of appointment are available on request at Remuneration Committee, the Board reviews the fees the Company’s registered office during business hours. payable to the Chairman and Directors annually. There were no changes to the remuneration policy during the VOTING AT ANNUAL GENERAL MEETING year. A resolution to approve the Remuneration Report was All the Directors invest the full amount of their fees put to shareholders at the AGM of the Company held on (net of tax) in the shares of the Company. The review in 20 September 2022. Of the votes cast, 99.95% were in respect of the year ending 31 March 2024 has resulted favour and 0.05% were against; this resolution will be put in the increases being applied to the annual fees as to shareholders again this year. In accordance with the detailed in the table below. Companies Act 2006, the Company is required to seek shareholder approval for its remuneration policy on a | | 2024 | 2023* | triennial basis and a binding resolution was last put to | | --- | --- | --- | --- | | Year ending 31 March | £’000s | £’000s | shareholders at the AGM held on 20 September 2022. | | Chairman 52.5 50.0 | | | Of the votes cast, 99.94% were in favour and 0.06% were | against. A resolution to approve the remuneration policy Chairman of the Audit & Risk Committee 49.1 46.7 will be put to shareholders at the AGM in 2025. Directors 38.9 37.0 *Actual Report and Accounts for the year to 31 March 2023 55 ## DIRECTORS’ REMUNERATION REPORT (continued) DIRECTORS’ ANNUAL REPORT ON REMUNERATION (AUDITED) A single figure for the total remuneration of each Director who served during the year ended 31 March 2023 is set out in the table below. | | | | | | | | 2022/23 | | | | | | | | | | | 2021/22 | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2022/23 | | | 2022/23 | | Taxable | | 2022/23 | | | | 2021/22 | | | 2021/22 | | Taxable | | 2021/22 | | | | | | Shares | | Entitlement | | | benefits | | | Total | | | Shares | | Entitlement | | | benefits | | | Total | | | | | | (1) | | | (2) | | (3) | | | | | | (1) | | | (2) | | (3) | | | | | Director | purchased | | | | | £ | | £ | | | £ | purchased | | | | | £ | | £ | | | £ | John Rennocks (Chairman) 12,982 50,000 – 50,000 11,855 47,600 – 47,600 Mark Bridgeman 9,819 37,000 451 37,451 5,200 18,548 413 18,961 Susan Hansen 17,340 37,000 1,000 38,000 15,721 35,200 850 36,050 Isabel Liu 12,432 37,000 – 37,000 4,129 12,681 18 12,699 (4) Gareth Milne – – – – 4,050 16,697 – 16,697 (5) Anthony Muh 8,191 17,409 1,000 18,409 15,721 35,200 850 36,050 Eric Stobart 11,933 46,725 – 46,725 10,841 44,500 – 44,500 Totals 72,697 225,134 2,451 227,585 67,517 210,426 2,131 212,557 (1) All the shares were purchased in the market, using the net fee entitlement after applicable tax deductions of each director, as set out in note 1(j) to the accounts (2) The Directors’ entitlement to fees is calculated in arrears (3) Taxable benefits comprise amounts reimbursed for expenses incurred in carrying out business for the Company (4) Retired 21 September 2021 (5) Retired 20 September 2022 (6) There were no payments to third parties included in the fees referred to in the table above. There are no further fees to disclose as the Company has no employees, chief executive or executive directors. RELATIVE IMPORTANCE OF SPEND ON PAY ANNUAL PERCENTAGE CHANGE IN DIRECTORS’ REMUNERATION The following table compares the remuneration paid to the Directors with aggregate distributions to The following table sets out the annual percentage shareholders relating to the year ended 31 March change in Directors’ remuneration compared to the 2023 and the prior year. Although this disclosure is previous year. a statutory requirement, the Directors consider that comparison of Directors’ remuneration with annual 2023 2022 2021 Fees Fees Fees dividends and share buybacks does not provide a Year ended 31 March % % % meaningful measure relative to the Company’s overall John Rennocks 5.0 3.5 0.0 performance as an investment company with an objective of providing shareholders with long-term Mark Bridgeman 5.1 n/a n/a total return. Susan Hansen 5.1 3.5 0.0 Isabel Liu 5.1 n/a n/a 2023 2022 Change Anthony Muh 5.1 3.5 0.0 Year ended 31 March £’000s £’000s £’000s Eric Stobart 5.0 3.5 0.0 Aggregate Directors’ emoluments 225 210 15 Aggregate dividends 17,239 17,379 (140) Aggregate share buybacks 27,159 13,898 13,261 56 Utilico Emerging Markets Trust plc ## DIRECTORS' BENEFICIAL SHARE INTERESTS (AUDITED) The beneficial shareholdings of the Directors who served during the year are set out below: | As at 31 March | 16 June 2023 | 31 March 2023 | 31 March 2022 | | --- | --- | --- | --- | | John Rennocks^{1} | 208,227 | 208,227 | 192,343 | | Mark Bridgeman | 15,019 | 15,019 | 3,337 | | Susan Hansen | 162,150 | 162,150 | 140,921 | | Isabel Liu^{2} | 23,230 | 20,348 | 10,931 | | Anthony Muh | n/a | 250,069^{3} | 239,998 | | Eric Stobart^{4} | 60,000 | 60,000 | 43,000 | $^{1}$ Including 2,645 shares held by Mrs Rennocks $^{2}$ The shares are held by Ms Liu's husband, Mak Lo Chiu $^{3}$ As at 20 September 2022, the date Mr Muh retired from the Board $^{4}$ Including 5,500 shares held by Mrs Stobart ## COMPANY PERFORMANCE Including the performance of UEM Limited, the graph below compares, for the ten years ended 31 March 2023, the share price total return (assuming all dividends are reinvested and adjusted for the exercise of warrants and subscription shares) to shareholders with the MSCI EM total return Index. The MSCI EM total return Index has been used as the Company invests across a broad spread of emerging markets. ## TOTAL RETURN COMPARATIVE PERFORMANCE from 31 March 2013 to 31 March 2023 ![img-17.jpeg](img-17.jpeg) On behalf of the Board **Mark Bridgeman** Chairman of the Remuneration Committee 16 June 2023 Report and Accounts for the year to 31 March 2023 57 ## AUDIT & RISK COMMITTEE REPORT As Chairman of the Audit & Risk RESPONSIBILITIES AND REVIEW OF THE EXTERNAL Committee, I am pleased to AUDIT present the Committee’s report During the year the principal activities of the Audit & to shareholders for the year Risk Committee included: ended 31 March 2023. • considering and recommending to the Board for ROLE AND RESPONSIBILITIES approval the contents of the half yearly and annual UEM has established a financial statements and reviewing the external separately chaired Audit & auditor’s report; Risk Committee whose duties ERIC STOBART, FCA include considering and • management of the relationship with the external Chairman of the Audit & Risk Committee auditor, including its appointment and the recommending to the Board for approval the contents of evaluation of scope, execution, cost effectiveness, the half yearly and annual financial statements and independence and objectivity; providing an opinion as to whether the annual report • reviewing and approving the external auditors’ and accounts, taken as a whole, are fair, balanced plan for the financial year, with a focus on and understandable and provide the information the identification of areas of audit risk, and necessary for shareholders to assess the Company’s consideration of the appropriateness of the level performance, business model and strategy. The of audit materiality adopted; Committee also reviews the external Auditors’ report on the annual financial statements and is • reviewing and recommending to the Board for responsible for reviewing and forming an opinion approval the audit and non-audit fees payable on the effectiveness of the external audit process to the external auditor and the terms of its and audit quality. Other duties include reviewing the engagement; appropriateness of the Company’s accounting policies and ensuring the adequacy of the internal control • evaluation of reports received from the external systems and standards. auditor with respect to the annual financial statements and its review of the half-yearly report; The Audit & Risk Committee meets at least three times a year. Two of the planned meetings are held prior to • reviewing the efficacy of the external audit process the Board meetings to approve the half yearly and and making a recommendation to the Board with annual results. Representatives of the Investment respect to the reappointment of the external Managers attend all meetings. auditors; COMPOSITION • evaluation of the effectiveness of the internal During the year ended 31 March 2023, the Audit & Risk control and risk management systems including Committee consisted of all the independent Directors reports received on the operational controls of the of the Company. It is considered that there is a range of Company’s service providers and reports from the recent and relevant financial experience amongst the Company’s depositary; members of the Audit & Risk Committee together with • reviewing the appropriateness of the Company’s experience of the investment trust sector. accounting policies; and In light of the Chairman of the Board’s relevant financial experience, his continued independence and • monitoring developments in accounting and his valued contributions in Committee meetings, the reporting requirements that impact on the Audit & Risk Committee considers it appropriate that Company’s compliance with relevant statutory and he is a member. listing requirements. 58 Utilico Emerging Markets Trust plc AUDITOR AND AUDIT TENURE auditor. Non-audit fees paid to KPMG amounted to £nil for the year ended 31 March 2023 (2022: £nil). KPMG LLP has been the auditor of the Company since 2018 and prior to that, auditor of UEM Limited since The partner and manager of the audit team at 2012. Listed companies are required to tender the KPMG presented their audit plan to the Audit & Risk external audit at least every ten years and change Committee in advance of the financial year end. Items auditor at least every twenty years. The Company of audit focus were discussed, agreed and given will be required to tender the external audit no later particular attention during the audit process. KPMG than for the year ending 31 March 2028. The audit reported to the Audit & Risk Committee on these partner has rotated regularly. Mr John Waterson was items, their independence and other matters. This appointed the lead audit partner in 2020. The Audit report was considered by the Audit & Risk Committee & Risk Committee has considered the independence and discussed with KPMG and the Investment of the auditor and the objectivity of the audit process Managers prior to approval of the annual financial and is satisfied that KPMG has fulfilled its obligations to report. shareholders as independent auditor to the Company. Members of the Audit & Risk Committee meet in It is the Company’s policy not to seek substantial non- camera with the external auditor at least annually. audit services from its auditor, unless they relate to a review of the half-yearly report as the Board considers ACCOUNTING MATTERS AND SIGNIFICANT AREAS the auditor is best placed to provide this work. If the For the year ended 31 March 2023 the accounting provision of significant non-audit services were to matters that were subject to specific consideration by be considered, the Committee would procure such the Audit & Risk Committee were as follows: services from an accountancy firm other than the SIGNIFICANT AREA HOW ADDRESSED Value of the level 1 Actively traded level 1 investments are valued using stock exchange prices provided by third party investments pricing vendors. The Audit & Risk Committee regularly reviews the portfolio. The Audit & Risk Committee reviews the annual internal control reports produced by the Investment Managers and Administrator which detail the systems, processes and controls around the daily pricing of the securities. Value of the level 3 Investments that are classified as level 3 are valued using a variety of techniques to determine a fair investments value, as set out in note 1(c) to the accounts, and all such valuations are carefully reviewed by the Audit & Risk Committee with the Investment Managers. The Audit & Risk Committee receives detailed information on all level 3 investments and it discusses and challenges the valuations with the Investment Managers. It considers market comparables and discusses any proposed revaluations with the Investment Managers. The Audit & Risk Committee reviewed the external audit plan at an early stage and concluded that the appropriate areas of audit risk relevant to the Company had been identified and that suitable audit procedures had been put in place to obtain reasonable assurance that the financial statements as a whole would be free of material misstatements. As a result, and following a thorough review process, the Audit & Risk Committee advised the Board it is satisfied that, taken as a whole, the annual financial report for the year to 31 March 2023 is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy. In reaching this conclusion, the Audit & Risk Committee has assumed that the reader of the report would have a reasonable level of knowledge of the investment company industry. Report and Accounts for the year to 31 March 2023 59 ## AUDIT & RISK COMMITTEE REPORT (continued) EXTERNAL AUDIT, REVIEW OF ITS EFFECTIVENESS driven by the Audit & Risk Committee’s assessment AND AUDITOR REAPPOINTMENT of the risks arising in the Company’s operations and The Audit & Risk Committee advises the Board on the identification of the controls exercised by the Board appointment of the external auditor, its remuneration and its delegates, the Investment Managers, the for audit and non-audit work and its cost effectiveness, Administrator and other service providers. These independence and objectivity. are recorded in risk matrices produced by ICMIM, as the Company’s AIFM with responsibility for risk As part of the review of the effectiveness of the audit management, which continue to serve as an effective process, a formal evaluation process incorporating tool to highlight and monitor the principal risks, details views from the members of the Audit & Risk of which are provided in the Strategic Report on pages Committee and relevant personnel at the Investment 34 to 36. It also received and considered, together with Managers is followed and feedback is provided to representatives of the Investment Managers, reports in KPMG. Areas covered by this review include: relation to the operational controls of the Investment • the calibre of the audit firm, including reputation Managers, Administrator and Custodian. These reviews and industry presence; identified no issues of significance. • the extent of quality controls including review WHISTLEBLOWING POLICY processes, second director oversight and annual The Committee has also reviewed and accepted the reports from its regulator; ‘whistleblowing’ policy that has been put in place by • the performance of the audit team, including the Investment Managers under which their staff, skills of individuals, specialist knowledge, partner in confidence, can raise concerns about possible involvement, team member continuity and quality improprieties in matters of financial reporting or other and timeliness of audit planning and execution; matters, in so far as they affect the Company. • audit communication including planning, relevant INTERNAL AUDIT accounting and regulatory developments, Due to the nature of the Company, being an externally approach to significant accounting risks, managed investment company with no executive communication of audit results and employees, the Company does not have its own recommendations on corporate reporting; internal audit function. The Committee and the Board • ethical standards including independence and have concluded that there is no current need for such integrity of the audit team, lines of communication a function, based on the satisfactory operation of to the Audit & Risk Committee and partner controls within the Company’s service providers. rotation; and • reasonableness of the audit fees. For the year ended 31 March 2023, the Audit & Risk Committee is satisfied that the audit process was effective. Eric Stobart Chairman of the Audit & Risk Committee Resolutions proposing the reappointment of KPMG as the Company’s auditor and authorising the Directors 16 June 2023 to determine its remuneration will be put to the shareholders at the forthcoming AGM. INTERNAL CONTROLS AND RISK MANAGEMENT UEM’s risk assessment focus and the way in which significant risks are managed is a key area of focus for the Audit & Risk Committee. Work here was 60 Utilico Emerging Markets Trust plc ## DIRECTORS’ STATEMENT OF RESPONSIBILITIES ## in respect of the Annual Report and the Financial Statements The Directors are responsible for preparing the Annual Under applicable law and regulations, the Directors Report and financial statements in accordance with are also responsible for preparing a Strategic Report, applicable United Kingdom law and regulations. Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with Company law requires the Directors to prepare that law and those regulations. financial statements for each financial year. Under that law, they are required to prepare the financial In accordance with Disclosure Guidance and statements in accordance with UK adopted Transparency Rule 4.1.14R, the financial statements International Accounting Standards and the Companies will form part of the annual financial report prepared Act 2006. using the single electronic reporting format under the TD ESEF Regulation. The auditor’s report on these Under company law the Directors must not approve financial statements provides no assurance over the the financial statements unless they are satisfied that ESEF format. they give a true and fair view of the state of affairs of the Company and of its profit or loss for that period. In The Directors are responsible for the maintenance and preparing these financial statements, the Directors are integrity of the corporate and financial information required to: included on the Company’s website, which is maintained by the Company’s Investment Managers. • select suitable accounting policies and then apply Legislation in the UK governing the preparation and them consistently; dissemination of financial statements may differ from • make judgements and estimates that are reasonable, legislation in other jurisdictions. relevant and reliable; RESPONSIBILITY STATEMENT OF THE DIRECTORS IN • state whether they have been prepared in RESPECT OF THE ANNUAL FINANCIAL REPORT accordance with UK adopted International We confirm that to the best of our knowledge: Accounting Standards and of the Companies Act 2006; • the financial statements, prepared in accordance with the applicable set of accounting standards, give • assess the Company’s ability to continue as a going a true and fair view of the assets, liabilities, financial concern, disclosing, as applicable, matters related to position and profit or loss of the Company; and going concern; and • the Strategic Report and Directors’ Report include • use the going concern basis of accounting unless a fair review of the development and performance they either intend to liquidate the Company or to of the business and the position of the Company, cease operations, or have no realistic alternative but together with a description of the principal risks and to do so. uncertainties that it faces. The Directors are responsible for keeping adequate We consider the annual report and accounts, taken accounting records that are sufficient to show and as a whole, is fair, balanced and understandable and explain the Company’s transactions and disclose with provides the information necessary for shareholders reasonable accuracy at any time the financial position to assess the Company’s position and performance, of the Company and enable them to ensure that the business model and strategy. financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material Approved by the Board on 16 June 2023 and signed on misstatement, whether due to fraud or error, and its behalf by: have general responsibility for taking such steps as are reasonably open to them to safeguard the assets John Rennocks of the Company and to prevent and detect fraud and Chairman other irregularities. Report and Accounts for the year to 31 March 2023 61 ## Independent ## auditor’s report ## to the members of Utilico Emerging Markets Trust plc 1. Our opinion is unmodified Overview We have audited the financial statements of Utilico Materiality: £5.5m (2022:£5.7m) Emerging Markets Trust plc (“the Company”) for the financial year ended 31 March 2023 which comprise the 1% (2022: 1%) of total assets statements as a Statement of Comprehensive Income, Statement of whole Changes in Equity, Statement of Financial Position, Statement of Cash Flows and the related notes, Key audit matters vs 2022 including the accounting policies in note 1. In our opinion the financial statements: Recurring risks Valuation of certain ▲ Level 3 Investments — give a true and fair view of the state of Company’s affairs as at 31 March 2023 and of its return for the Carrying amount of non ◄► year then ended; – derivative level 1 — have been properly prepared in accordance with UK- investments adopted international accounting standards; and — have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the Audit and Risk Committee. We were first appointed as auditor by Directors on 7 February 2018. The period of total uninterrupted engagement is for the five financial years ended 31 March 2023. We have fulfilled our ethical responsibilities under, and we remain independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited by that standard were provided. 62 2. Key audit matters: our assessment of risks of material misstatement Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matters (unchanged from 2022), in decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters. The risk Our response Valuation of certain level 3 Subjective Valuation We performed the detailed tests below rather than seeking to investments rely on controls, because the nature of the balance is such that 10.7% (2022: 8.4%) of the Company’s we would expect to obtain audit evidence primarily through (Certain specific investments within the total assets (by value) is held in the detailed procedures described below: total of level 3 investments of £58.7 investments where no quoted market million; 2022: £48.1million) price is available. Level 3 investments Our procedures included: are measured at fair value, which is — Methodology choice: In the context of observed industry Refer to page 59 (Audit Committee established in accordance with the best practice and the provisions of the International Private Report), page 72 (accounting policy), International Private Equity and Equity and Venture Capital Valuation Guidelines, we pages 77 to 78 and 86 to 89 (financial Venture Capital Valuation Guidelines challenged the appropriateness of the valuation basis disclosures). by using measurements of value such selected; as prices of recent orderly transactions, milestone analysis, — Our valuation experience: We challenged the investment revenue multiples and valuing fund manager on key judgements affecting investee company interest by reference to their reported valuations, such as discount factors and the choice of Net Asset Value. benchmark for multiples. We compared key underlying operational and financial data inputs to external sources, There is a significant risk over the accounts and management information as applicable. We judgements and estimates inherent in challenged the assumptions around sustainability of the valuation and therefore this is one revenue based on the plans of the investee companies and of the key areas that our audit has whether these are achievable and we obtained focused on. The effect of this matter is understanding of milestones completed during the year. that, as part of our risk assessment, we We also obtained an understanding of existing and determined that certain level 3 prospective investee company cash flows to understand investment valuations have a high whether refinancing may be required. Our work included degree of estimation uncertainty, with consideration of events which occurred subsequent to the a potential range of reasonable year end up until the date of this audit report; outcomes greater than our materiality for the financial statements as a whole — Comparing valuations: Where a recent transaction has been used to value a holding, we obtained an The factors considered in assessing understanding of the circumstances surrounding the which unlisted investments were transaction and vouched the price to supporting subject to significant risk included the documentation. We also assessed whether subsequent quantum of the individual investment, changes or events such as market or entity specific factors performance of the investment, nature would imply a change in value; of the asset held as well as the estimation uncertainty of the — Our Corporate Finance Expertise: Through the use of our methodology and inputs used. Corporate Finance specialists, we assessed the valuation methodology and the completeness and accuracy of peer We assessed that the level of risk group comparable companies, as well as relevant associated with this matter has benchmarks or multiples based on their knowledge and increased in the year as both the experience of the industry; and quantum of the balance, and the level of judgement associated with certain — Assessing transparency: We considered the unobservable inputs have increased. appropriateness, in accordance with relevant accounting standards, of the disclosures in respect of certain Level 3 The quantum of the investments investments and the effect of changing one or more inputs subject to the significant risk is £28.6m to reasonably possible alternative valuation assumptions out of a total unlisted investment | balance of £58.7m. | Our results: | | | --- | --- | --- | | The financial statements note 26(d) | — We found the Company’s valuation of certain Level 3 | | | discloses the range/sensitivity | | investments to be acceptable (2022: acceptable). | estimated by the Company. 63 2. Key audit matters: our assessment of risks of material misstatement (continued) The risk Our response Carrying amount of non-derivative Low risk, high value: We performed the detailed tests below rather than Level 1 investments seeking to rely on controls, because the nature of The Company’s portfolio of non-derivative the balance is such that detailed testing is (£483.1m; 2022: £519.9m) Level 1 investments makes up 88.2% (2022: determined to be the most effective manner of 90.5%) of the Company’s total assets by obtaining audit evidence. Refer to page 59 (Audit Committee value and is considered to be one of the key Report), page 72 (accounting policy), drivers of results. We do not consider these Our procedures included: | pages 77 to 78 and 89 (financial | investments to be at a high risk of significant | | | | --- | --- | --- | --- | | disclosures). | misstatement, or to be subject to a | — Tests of detail: Agreed the valuation of 100% of | | | | significant level of judgement because they | | non-derivative Level 1 investments in the | | | comprise liquid, quoted investments. | | portfolio to externally quoted prices; and | However, due to their materiality in the — Enquiry of custodians: All investments in non- context of the financial statements as a derivative level 1 investments were agreed to whole, they are considered to be one of the independently received third party areas which had the greatest effect on our confirmations from investment custodians. overall audit strategy and allocation of resources in planning and completing our Our results audit. — We found the carrying amount of non-derivative Level 1 investments to be acceptable (2022: acceptable). 3. Our application of materiality and an overview of the Total Assets Materiality scope of our audit £547.5m (2022 £574.2m) £5.5m (2022: £5.7m) Materiality for the financial statements as a whole was set at £5.5m (2022: £5.7m), determined with reference to a £5.4m Whole financial benchmark of total assets, of which it represents 1% (2022: statements materiality 1%). (2022: £5.7m) In line with our audit methodology, our procedures on individual account balances and disclosures were £4.1m Whole financial statements performed to a lower threshold, performance materiality, performance materiality (2022: so as to reduce to an acceptable level the risk that £4.3m) individually immaterial misstatements in individual account balances add up to a material amount across the financial £1.0m statements as a whole. Performance materiality was set at Investment and other income 75% (2022 : 75%) of materiality for the financial statements materiality as a whole, which equates to £4.1m (2022 : £4.3m). We (2022: £0.9m) applied this percentage in our determination of Total Assets Materiality performance materiality because we did not identify any factors indicating an elevated level of risk. (2022: In addition, we applied materiality of £1.0m (2022: £0.9m) and performance materiality of £0.8m (2022: £0.7m) to investment and other income, for which we believe misstatements of lesser amounts than materiality for the financial statements as a whole could reasonably be expected to influence the Company’s members’ assessment of the financial performance of the Company. We agreed to report to the Audit and Risk Committee any corrected or uncorrected identified misstatements £0.27m exceeding £0.27m (2022: £0.28m), or £0.1m in relation to Misstatements reported to the investment and other income (2022: £0.09m) in addition to Audit and Risk Committee other identified misstatements that warranted reporting on £0.28m) qualitative grounds. Our audit of the Company was undertaken to the materiality and performance materiality levels specified above and was performed by a single audit team. The scope of the audit work performed was fully substantive as we did not rely upon the Company’s internal control over financial reporting. 64 4. Going concern 5. Fraud and breaches of laws and regulations – ability to detect The directors have prepared the financial statements on the Identifying and responding to risks of material misstatement due to going concern basis as they do not intend to liquidate the fraud Company or to cease its operations, and as they have concluded that the Company’s financial position means that this is realistic. To identify risks of material misstatement due to fraud (“fraud risks”) They have also concluded that there are no material we assessed events or conditions that could indicate an incentive or uncertainties that could have cast significant doubt over its pressure to commit fraud or provide an opportunity to commit fraud. ability to continue as a going concern for at least a year from the Our risk assessment procedures included: date of approval of the financial statements (“the going concern — Enquiring of Directors as to the Company’s high-level policies and period”). procedures to prevent and detect fraud, as well as whether they We used our knowledge of the Company, its industry, and the have knowledge of any actual, suspected or alleged fraud; general economic environment to identify the inherent risks to — Assessing the segregation of duties in place between the Directors, its business model and analysed how those risks might affect the the Administrator and the Company’s Investment Manager; and Company’s financial resources or ability to continue operations over the going concern period. The risks that we considered most — Reading Board and Audit and Risk Committee minutes. likely to adversely affect the Company’s available financial resources and its ability to operate over this period were: We communicated identified fraud risks throughout the audit team and — The impact of a significant reduction in the valuation of remained alert to any indications of fraud throughout the audit. investments and the implications for the Company’s debt As required by auditing standards, we perform procedures to address covenants; the risk of management override of controls, in particular to the risk — The liquidity of the investment portfolio and its ability to that management may be in a position to make inappropriate meet the liabilities of the Company as and when they fall due; accounting entries and the risk of bias in accounting estimates and judgements such as the valuation of level 3 investments. We evaluated — The operational resilience of key service organisations. the design and implementation of the relevant controls over journal We considered whether these risks could plausibly affect the entries and other adjustments and made inquiries of the Administrator liquidity in the going concern period by assessing the degree of about inappropriate or unusual activity relating to the processing of downside assumption that, individually and collectively, could journal entries and other adjustments. Based on these procedures, we result in a liquidity issue, taking into account the Company’s selected journal entries for testing, which included material post- liquid investment position (and the results of their stress testing). closing journal entries. We considered whether the going concern disclosure in note 1 and 25 of the financial statements gives a full and accurate On this audit we have rebutted the fraud risk related to revenue description of the Directors’ assessment of going concern, recognition because the revenue is non-judgemental and including the identified risks and related sensitivities. straightforward, with limited opportunity for manipulation. We did not identify any significant unusual transactions or additional fraud risks. Our conclusions based on this work: Identifying and responding to risks of material misstatement due to — we consider that the Directors’ use of the going concern basis non-compliance with laws and regulations of accounting in the preparation of the financial statements is appropriate; We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our — we have not identified, and concur with the Directors’ general commercial and sector experience and through discussion with assessment that there is not, a material uncertainty related the Directors, the Investment Manager and the Administrator (as to events or conditions that, individually or collectively, may required by auditing standards), and discussed with the Directors the cast significant doubt on the Company's ability to continue as policies and procedures regarding compliance with laws and a going concern for the going concern period; regulations. As the Company is regulated, our assessment of risks — we have nothing material to add or draw attention to in involved gaining an understanding of the control environment including relation to the Directors’ statement in note 1 and note 25 to the entity’s procedures for complying with regulatory requirements. the financial statements on the use of the going concern basis of accounting with no material uncertainties that may We communicated identified laws and regulations throughout our team cast significant doubt over the Company’s use of that basis and remained alert to any indications of non-compliance throughout for the going concern period, and we found the going the audit . concern disclosure in note 1 and note 25 to be acceptable; and The potential effect of these laws and regulations on the financial — the related statement under the Listing Rules set out on page statements varies considerably. 44 is materially consistent with the financial statements and Firstly, the Company is subject to laws and regulations that directly our audit knowledge. affect the financial statements including financial reporting legislation However, as we cannot predict all future events or conditions (including related companies legislation), distributable profits and as subsequent events may result in outcomes that are legislation, and its qualification as an Investment Trust under UK inconsistent with judgements that were reasonable at the time taxation legislation, any breach of which could lead to the Company they were made, the above conclusions are not a guarantee that losing various deductions and exemptions from UK corporation tax, and the Company will continue in operation. we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. 65 5. Fraud and breaches of laws and regulations – ability to 6. We have nothing to report on the other information in the Annual detect (continued) Report The directors are responsible for the other information presented in the Identifying and responding to risks of material misstatement Annual Report together with the financial statements. Our opinion on due to non-compliance with laws and regulations (continued) the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly Secondly, the Company is subject to many other laws and stated below, any form of assurance conclusion thereon. regulations where the consequences of non-compliance could Our responsibility is to read the other information and, in doing so, have a material effect on amounts or disclosures in the financial consider whether, based on our financial statements audit work, the statements, for instance through the imposition of fines or information therein is materially misstated or inconsistent with the litigation. We identified the following areas as those most likely financial statements or our audit knowledge. Based solely on that work to have such an effect: money laundering, data protection, we have not identified material misstatements in the other information. bribery and corruption legislation and certain aspects of company legislation recognising the financial and regulated nature of the Strategic report and directors’ report Company’s activities and its legal form. Auditing standards limit Based solely on our work on the other information: the required audit procedures to identify non-compliance with — we have not identified material misstatements in the strategic these laws and regulations to enquiry of the Directors and the report and the directors’ report; Administrator and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational — in our opinion the information given in those reports for the regulations is not disclosed to us or evident from relevant financial year is consistent with the financial statements; and correspondence, an audit will not detect that breach. — in our opinion those reports have been prepared in accordance with the Companies Act 2006. Directors’ remuneration report Context of the ability of the audit to detect fraud or breaches of law or regulation In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Owing to the inherent limitations of an audit, there is an Act 2006. unavoidable risk that we may not have detected some material Disclosures of emerging and principal risks and longer-term viability misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with We are required to perform procedures to identify whether there is a auditing standards. For example, the further removed non- material inconsistency between the directors’ disclosures in respect of compliance with laws and regulations is from the events and emerging and principal risks and the viability statement, and the transactions reflected in the financial statements, the less likely financial statements and our audit knowledge. the inherently limited procedures required by auditing standards Based on those procedures, we have nothing material to add or draw would identify it. attention to in relation to: In addition, as with any audit, there remained a higher risk of — the directors’ confirmation within the Strategic Report on page 34 non-detection of fraud, as these may involve collusion, forgery, they have carried out a robust assessment of the emerging and intentional omissions, misrepresentations, or the override of principal risks facing the Company, including those that would internal controls. Our audit procedures are designed to detect threaten its business model, future performance, solvency and material misstatement. We are not responsible for preventing liquidity; non-compliance or fraud and cannot be expected to detect non- — the Principal Risks and Risk mitigation disclosures describing these compliance with all laws and regulations. risks and how emerging risks are identified, and explaining how they are being managed and mitigated; and — the directors’ explanation in the viability statement of how they have assessed the prospects of the Company, over what period they have done so and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. 66 8. Respective responsibilities 6. We have nothing to report on the other information in the Annual Report (continued) Directors’ responsibilities We are also required to review the viability statement, set out on As explained more fully in their statement set out on page 61, page 36 and 37 under the Listing Rules. Based on the above the directors are responsible for: the preparation of the financial procedures, we have concluded that the above disclosures are statements including being satisfied that they give a true and fair materially consistent with the financial statements and our audit view; such internal control as they determine is necessary to knowledge. enable the preparation of financial statements that are free from Our work is limited to assessing these matters in the context of material misstatement, whether due to fraud or error; assessing only the knowledge acquired during our financial statements the Company’s ability to continue as a going concern, disclosing, audit. As we cannot predict all future events or conditions and as as applicable, matters related to going concern; and using the subsequent events may result in outcomes that are inconsistent going concern basis of accounting unless they either intend to with judgements that were reasonable at the time they were liquidate the Company or to cease operations, or have no made, the absence of anything to report on these statements is realistic alternative but to do so. not a guarantee as to the Company’s longer-term viability. Auditor’s responsibilities Corporate governance disclosures Our objectives are to obtain reasonable assurance about whether We are required to perform procedures to identify whether the financial statements as a whole are free from material there is a material inconsistency between the directors’ misstatement, whether due to fraud or error, and to issue our corporate governance disclosures and the financial statements opinion in an auditor’s report. Reasonable assurance is a high and our audit knowledge. level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a Based on those procedures, we have concluded that each of the material misstatement when it exists. Misstatements can arise following is materially consistent with the financial statements from fraud or error and are considered material if, individually or and our audit knowledge: in aggregate, they could reasonably be expected to influence the — the directors’ statement that they consider that the annual economic decisions of users taken on the basis of the financial report and financial statements taken as a whole is fair, statements. balanced and understandable, and provides the information A fuller description of our responsibilities is provided on the necessary for shareholders to assess the Company’s position FRC’s website at www.frc.org.uk/auditorsresponsibilities . and performance, business model and strategy; — the section of the annual report describing the work of the The Company will be including these financial statements in an Audit Committee, including the significant issues that the annual financial report prepared using the single electronic audit committee considered in relation to the financial reporting format specified in the TD ESEF Regulation. This statements, and how these issues were addressed; and auditor’s report provides no assurance over whether the annual — the section of the annual report that describes the review of financial report has been prepared in accordance with that the effectiveness of the Company’s risk management and format internal control systems. We are required to review the part of the Corporate Governance 9. The purpose of our audit work and to whom we owe our Statement relating to the Company’s compliance with the responsibilities provisions of the UK Corporate Governance Code specified by the This report is made solely to the Company’s members, as a body, Listing Rules for our review. We have nothing to report in this in accordance with Chapter 3 of Part 16 of the Companies Act respect. 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required 7. We have nothing to report on the other matters on which to state to them in an auditor’s report and for no other purpose. we are required to report by exception To the fullest extent permitted by law, we do not accept or Under the Companies Act 2006, we are required to report to you assume responsibility to anyone other than the Company and the if, in our opinion: Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed. — adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or — the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement John Waterson (Senior Statutory Auditor) with the accounting records and for and on behalf of KPMG LLP, Statutory Auditor returns; or Chartered Accountants — certain disclosures of directors’ remuneration specified by law are not made; or Saltire Court — we have not received all the information and explanations 20 Castle Terrace we require for our audit. Edinburgh We have nothing to report in these respects. EH1 2EG 16 June 2023 67 ## STATEMENT OF COMPREHENSIVE INCOME | | | | | | for the year to | | | | for the year to | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | 31 March 2023 | | | | 31 March 2022 | | | | | Revenue | | Capital | | Total | Revenue | Capital | | Total | | | | | return | return | | return | return | return | | return | | Notes | | | £’000s | £’000s | | £’000s | £’000s | £’000s | | £’000s | | 10 | (Losses)/gains on investments – (8,389) (8,389) – 58,293 58,293 | | | | | | | | | | | 20 | Foreign exchange (losses)/gains – (515) (515) – 1,333 1,333 | | | | | | | | | | | | 3 Investment and other income 24,326 – 24,326 22,593 – 22,593 | | | | | | | | | | Total income/(loss) 24,326 (8,904) 15,422 22,593 59,626 82,219 4 Management and administration fees (1,394) (4,336) (5,730) (1,451) (4,240) (5,691) 5 Other expenses (1,651) – (1,651) (1,590) – (1,590) Profit/(loss) before finance costs and taxation 21,281 (13,240) 8,041 19,552 55,386 74,938 6 Finance costs (169) (674) (843) (119) (469) (588) Profit/(loss) before taxation 21,112 (13,914) 7,198 19,433 54,917 74,350 7 Taxation (1,638) 212 (1,426) (1,500) (1,188) (2,688) Profit/(loss) for the year 19,474 (13,702) 5,772 17,933 53,729 71,662 8 Earnings per share (basic) – pence 9.40 (6.61) 2.79 8.17 24.49 32.66 All items in the above statement derive from continuing operations. The ‘Total’ column of this statement is the profit and loss account of the Company and the ‘Revenue’ and ‘Capital’ columns represent supplementary information prepared under guidance issued by the Association of Investment Companies. 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 income is attributable to the equity holders of the Company. The notes on pages 72 to 89 form part of these financial statements. 68 Utilico Emerging Markets Trust plc ## STATEMENT OF CHANGES IN EQUITY for the year to 31 March 2023 Retained earnings | | Ordinary | | | | Capital | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Notes | | share | Merger | redemption | | Special | Capital | Revenue | | | | | | capital | reserve | | reserve | reserve | reserves | reserve | | Total | | | | £’000s | £’000s | | £’000s | £’000s | £’000s | | £’000s | £’000s | Balance as at 31 March 2022 2,148 76,706 197 459,736 (139) 7,268 545,916 | 16, 18, | | Shares purchased by the | | --- | --- | --- | | | 19 | Company and cancelled (125) – 125 (27,159) – – (27,159) | | 20,21 | | (Loss)/profit for the year – – – – (13,702) 19,474 5,772 | | | 9 | Dividends paid in the year – – – – – (17,155) (17,155) | Balance as at 31 March 2023 2,023 76,706 322 432,577 (13,841) 9,587 507,374 for the year to 31 March 2022 Retained earnings | | Ordinary | | | | Capital | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Notes | | share | Merger | redemption | | Special | Capital | Revenue | | | | | capital | reserve | | reserve | reserve | reserves | reserve | Total | | | £’000s | | £’000s | | £’000s | £’000s | £’000s | £’000s | £’000s | Balance as at 31 March 2021 2,213 76,706 132 473,634 (53,868) 6,879 505,696 | 16, 18, | | Shares purchased by the | | --- | --- | --- | | | 19 | Company and cancelled (65) – 65 (13,898) – – (13,898) | | 20,21 | | Profit for the year – – – – 53,729 17,933 71,662 | | | 9 | Dividends paid in the year – – – – – (17,544) (17,544) | Balance as at 31 March 2022 2,148 76,706 197 459,736 (139) 7,268 545,916 The notes on pages 72 to 89 form part of these financial statements. Report and Accounts for the period to 31 March 2023 69 ## STATEMENT OF FINANCIAL POSITION | | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | Notes as at 31 March | | | | **Non-current assets** | | | | 10 Investments | 545,657 | 571,686 | | **Current assets** | | | | 11 Other receivables | 1,444 | 1,477 | | Cash and cash equivalents | 456 | 1,104 | | | 1,900 | 2,581 | | **Current liabilities** | | | | 12 Other payables | (3,461) | (2,799) | | 13 Bank loans | (35,102) | - | | | (38,563) | (2,799) | | **Net current liabilities** | (36,663) | (218) | | **Total assets less current liabilities** | 508,994 | 571,468 | | **Non-current liabilities** | | | | 14 Bank loans | - | (23,662) | | 15 Provision for capital gains tax | (1,620) | (1,890) | | **Net assets** | 507,374 | 545,916 | | **Equity attributable to equity holders** | | | | 16 Ordinary share capital | 2,023 | 2,148 | | 17 Merger reserve | 76,706 | 76,706 | | 18 Capital redemption reserve | 322 | 197 | | 19 Special reserve | 432,577 | 459,736 | | 20 Capital reserves | (13,841) | (139) | | 21 Revenue reserve | 9,587 | 7,268 | | **Total attributable to equity holders** | 507,374 | 545,916 | | **Net asset value per share** | | | | **Basic - pence** | 250.91 | 254.22 | The notes on pages 72 to 89 form part of these financial statements. Approved by the Board on 16 June 2023 and signed on its behalf by **John Rennocks** Chairman Utilico Emerging Markets Trust plc Registered in England, No 11102129 70 Utilico Emerging Markets Trust plc ## STATEMENT OF CASH FLOWS | Year to 31 March | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | **Operating activities** | | | | Profit before taxation | 7,198 | 74,350 | | Deduct investment income – dividends | (22,671) | (21,604) | | Deduct investment income – interest | (1,627) | (988) | | Deduct bank interest received | (28) | (1) | | Add back interest charged | 843 | 588 | | Add back losses/(gains) on investments | 8,389 | (58,293) | | Add back foreign exchange losses/(gains) | 515 | (1,333) | | Increase in other receivables | (31) | (16) | | Decrease in other payables | (88) | (4,701) | | **Net cash outflow from operating activities before dividends and interest** | **(7,500)** | **(11,998)** | | Interest paid | (646) | (600) | | Dividends received | 22,417 | 21,556 | | Investment income – interest | 475 | 190 | | Bank interest received | 28 | 1 | | Taxation paid | (1,691) | (2,465) | | **Net cash inflow from operating activities** | **13,083** | **6,684** | | **Investing activities** | | | | Purchase of investments | (106,821) | (122,600) | | Sales of investments | 125,649 | 176,372 | | **Net cash inflow from investing activities** | **18,828** | **53,772** | | **Financing activities** | | | | Repurchase of shares for cancellation | (27,159) | (13,898) | | Dividends paid | (17,155) | (17,544) | | Drawdown of bank loans | 35,385 | 52,101 | | Repayment of bank loans | (24,440) | (77,576) | | **Net cash outflow from financing activities** | **(33,369)** | **(56,917)** | | **(Decrease)/increase in cash and cash equivalents** | **(1,458)** | **3,539** | | Cash and cash equivalents at the start of the year | 452 | (3,184) | | Effect of movement in foreign exchange | (20) | 97 | | **Cash and cash equivalents as at the end of the year** | **(1,026)** | **452** | | **Comprised of:** | | | | Cash | 456 | 1,104 | | Bank overdraft | (1,482) | (652) | | **Total** | **(1,026)** | **452** | The notes on pages 72 to 89 form part of these financial statements. Report and Accounts for the period to 31 March 2023 71 ## NOTES TO THE ACCOUNTS 1. ACCOUNTING POLICIES The Company is an investment company incorporated in the United Kingdom with a premium listing on the London Stock Exchange. (a) Basis of accounting The accounts have been prepared on a going concern basis (see note 25) in accordance with UK adopted International Accounting Standards, which comprise standards and interpretations approved by the IASB and International Accounting Standards and Standing Interpretations Committee interpretations approved by the IASC that remain in effect and the Companies Act 2006. The accounts have been prepared on a historical cost basis, except for the measurement at fair value of investments and derivative financial instruments. The Board has determined by having regard to the currency of the Company’s share capital and the predominant currency in which its shareholders operate, that Sterling is the functional and reporting currency. Where presentational recommendations set out in the Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (“SORP”), issued in the UK by the AIC in July 2022, do not conflict with the requirements of International Financial Reporting Standards ( IFRS ), the Directors have prepared the accounts on a basis consistent with the recommendations of the SORP. In accordance with the SORP, the Statement of Comprehensive Income has been analysed between a revenue return (dealing with items of a revenue nature) and a capital return (relating to items of a capital nature). Revenue returns include, but are not limited to, dividend income, operating expenses, finance costs and taxation (insofar as they are not allocated to capital, as described in notes 1(h), 1(i), 1(k) and 1(l) below). Net revenue returns are allocated via the revenue return to the Revenue Reserve. Capital returns include, but are not limited to, profits and losses on the disposal and the valuation of non-current investments, derivative instruments and on cash and borrowings, operating costs and finance costs (insofar as they are not allocated to revenue as described in notes 1(i) and 1(k) below). Net capital returns are allocated via the capital return to Capital Reserves. Dividends on shares may be paid out of Special Reserve, Capital Reserves and Revenue Reserve. A number of new standards and amendments to standards and interpretations, which have not been applied in preparing these accounts, were in issue but not effective. None of these are expected to have a material effect on the accounts of the Company. (b) Financial instruments Financial Instruments include fixed asset investments, derivative assets and liabilities and long-term debt instruments. Accounting Standards recognise a hierarchy of fair value measurements for Financial Instruments which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The classification of instruments depends on the lowest significant applicable input. (c) Valuation of investments and derivative instruments Investment purchases and sales are accounted for on the trade date, inclusive of transaction costs. Investments, including both equity and loans, used for efficient portfolio management are classified as being at fair value through profit or loss. As the Company’s business is investing in financial assets with a view to profiting from their total return in the form of dividends, interest or increases in fair value, its investments (including those ordinarily classified as subsidiaries under IFRS 10 but exempted by that financial reporting standard from requirement to be consolidated) are designated as being at fair value through profit or loss on initial recognition. Derivatives comprising forward foreign exchange contracts, options and credit default swaps are accounted for as a financial asset/liability at fair value through profit or loss. The Company manages and evaluates the performance of these investments and derivatives on a fair value basis in accordance with its investment strategy and information about the Company is provided internally on this basis to the Company’s Directors and key management personnel. Gains and losses on investments and on derivatives are analysed within the Statement of Comprehensive Income as capital return. Quoted investments are shown at fair value using market bid prices. The fair value of unquoted investments is determined by the Board in accordance with IFRS and International Private Equity and Venture Capital Valuation Guidelines. In exercising its judgement over the value of these investments, the Board uses valuation techniques which take into account, where appropriate, latest dealing prices, valuations from reliable sources, net asset values, earnings multiples, recently orderly transactions in similar securities, time to expected repayment and other relevant factors (see key valuation techniques on pages 86 to 88). (d) Subsidiary undertakings Subsidiary undertakings of the Company, which are held as part of the investment portfolio (see note 1(c) above), are accounted for as investments at fair value through profit and loss. 72 Utilico Emerging Markets Trust plc (e) Cash and cash equivalents Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and short term deposits with an original maturity of three months or less. Bank overdrafts are included as a component of cash and cash equivalents for the purpose of the cash flow statement only. (f) Debt instruments The Company’s debt instruments can include short-term and long-term bank borrowings and overdrafts, initially measured at fair value and subsequently measured at amortised cost using the effective interest method. No debt instruments held during the year required hierarchical classification. (g) Foreign currency Foreign currency assets and liabilities are expressed in Sterling at rates of exchange ruling at the Statement of Financial Position date. Foreign currency transactions are translated at the rates of exchange ruling at the dates of those transactions. Exchange profits and losses on currency balances are credited or charged to the Statement of Comprehensive Income and analysed as capital or revenue as appropriate. Forward foreign exchange contracts are valued in accordance with quoted market rates. (h) Investment and other income Dividends receivable are shown gross of withholding tax and are analysed as revenue return within the Statement of Comprehensive Income (except where, in the opinion of the Directors, their nature indicates they should be recognised as capital return) on the ex-dividend date or, where no ex-dividend date is quoted, when the Company’s right to receive payment is established. Where the Company has elected to receive its dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is allocated as revenue in the Statement of Comprehensive Income. Any excess in the value of the shares received over the amount of the cash dividend foregone is allocated as capital in the Statement of Comprehensive Income. Interest on debt securities is accrued on a time basis using the effective interest rate method. Bank and short-term deposit interest is recognised on an accruals basis. (i) Expenses All expenses are accounted for on an accruals basis. Expenses are charged through the Statement of Comprehensive Income and analysed under revenue return except as stated below: – the management fees, company secretarial fees and research fees payable to ICM and ICMIM are allocated 80% to capital return and 20% to revenue return. – expenses incidental to the acquisition or disposal of Investments are allocated to capital return. (j) Directors’ fees Directors’ fees are charged quarterly through the revenue column of the Statement of Comprehensive Income. The net fee entitlement after any applicable tax deductions of each Director is satisfied in shares of the Company, by either purchasing shares in the market around each quarter end or, if the shares are trading at a premium to the net asset value, allotting new shares by dividing the net fee entitlement by the net asset value on the date of allotment. (k) Finance costs Finance costs are accounted for using the effective interest method, recognised through the Statement of Comprehensive Income. Finance costs are allocated 80% to capital return and 20% to revenue return. (l) Taxation Taxation currently payable is calculated using tax rules and rates in force at the year end, based on taxable profit for the year, which differs from the net return before tax. Note 7(b) sets out those items which are not subject to UK Corporation Tax. Deferred tax is provided on an undiscounted basis on all timing differences that have originated but not reversed by the Statement of Financial Position date, based on the tax rates that have been enacted at the Statement of Financial Position date and that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax assets are only recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of timing differences can be deducted. In line with the recommendations of the SORP, the allocation method used to calculate the tax relief on expenses charged to capital is the “marginal” basis. Under this basis, if taxable income is capable of being offset entirely by expenses charged through the revenue account, then no tax relief is transferred to the capital account. Report and Accounts for the year to 31 March 2023 73 ## NOTES TO THE ACCOUNTS (continued) ### (m) Dividends payable Dividends paid by the Company are accounted for in the period in which the Company is liable to pay them and are reflected in the Statement of Changes in Equity. ### (n) Merger reserve The surplus of the net assets of UEM Limited received from the issue of new ordinary shares over the nominal value of such shares was credited to this account which is non-distributable. The nominal value of the shares issued is recognised in called up share capital. ### (o) Capital reserves Capital reserves are distributable reserves to the extent gains arising from investments held are from liquid holdings. The following items are accounted for through the Statement of Comprehensive Income as capital returns and transferred to capital reserves: #### Capital reserve – arising on investments sold - gains and losses on disposal of investments and derivative instruments - exchange differences of a capital nature - expenses allocated in accordance with notes 1(i) and 1(k) #### Capital reserve – arising on investments held - increases and decreases in the valuation of investments and derivative instruments held at the year end. ### 2. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The presentation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Estimates and judgements are continually evaluated and are based on perceived risks, historical experience, expectations of plausible future events and other factors. Actual results may differ from these estimates. The area requiring the most significant judgement and estimation in the preparation of the financial statements is the accounting for the value of unquoted investments. The policy for valuation of unquoted securities is set out in note 1(c) to the accounts and further information on Board procedures is contained in the Audit & Risk Committee Report and note 26(d) to the accounts. The fair value of unquoted (level 3) investments, as disclosed in note 27 to the accounts, represented 10.8% of total investments as at 31 March 2022 (8.4% of total investments as at 31 March 2022). ### 3. INVESTMENT AND OTHER INCOME | Year to 31 March | 2023 | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | **Investment income** | | | | | | | | Dividends* | 22,671 | - | 22,671 | 21,604 | - | 21,604 | | Interest | 1,627 | - | 1,627 | 988 | - | 988 | | Total investment income | 24,298 | - | 24,298 | 22,592 | - | 22,592 | | **Other income** | | | | | | | | Bank interest | 28 | - | 28 | 1 | - | 1 | | Total income | 24,326 | - | 24,326 | 22,593 | - | 22,593 | *Includes scrip dividends of £346,000 (2022: £948,000) 74 Utilico Emerging Markets Trust plc #### 4. MANAGEMENT AND ADMINISTRATION FEES | Year to 31 March | 2023 | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | Payable to: ICM/ICMIM | | | | | | | | - management, secretarial and research fees | 1,084 | 4,336 | 5,420 | 1,124 | 4,496 | 5,620 | | - performance fee adjustment in respect of prior year | - | - | - | - | (256) | (256) | | Administration fees | 310 | - | 310 | 327 | - | 327 | | | **1,394** | **4,336** | **5,730** | **1,451** | **4,240** | **5,691** | The Company has appointed ICMIM as its Alternative Investment Fund Manager and joint portfolio manager with ICM, for which they are entitled to a management fee. The aggregate fees payable by the Company are apportioned between the Investment Managers as agreed by them. The relationship between ICMIM and ICM is compliant with the requirements of the UK version of the EU Alternative Investment Fund Managers Directive as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended and also such other requirements applicable to ICMIM by virtue of its regulation by the Financial Conduct Authority. The annual management fee is a tiered structure as follows: 1.0% of NAV up to and including £500m; 0.9% of NAV exceeding £500m up to and including £750m; 0.85% of NAV exceeding £750m up to and including £1,000m; and 0.75% of NAV exceeding £1,000m, payable quarterly in arrears. The management fee is allocated 80% to capital return and 20% to revenue return. The investment management agreement may be terminated upon six months' notice. ICMIM also provides company secretarial services to the Company, with the Company paying £70,000 (31 March 2022: £70,000) equivalent to 45% of the costs associated with this office and recharges research fees to the Company based on a budget of £0.3m per annum, paid quarterly in arrears. These charges are allocated 80% to capital return and 20% to revenue return. JPMorgan Chase Bank N.A. - London Branch has been appointed Administrator and ICMIM has appointed Waverton to provide certain support services (including middle office, market dealing and information technology support services). #### 5. OTHER EXPENSES | Year to 31 March | 2023 | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | Auditor's remuneration: | | | | | | | | for audit services^{1} | 111 | - | 111 | 86 | - | 86 | | Broker and consultancy fees | 109 | - | 109 | 128 | - | 128 | | Custody fees | 549 | - | 549 | 648 | - | 648 | | Depository fees | 129 | - | 129 | 138 | - | 138 | | Directors' fees for services to the Company | | | | | | | | (see Directors' Remuneration Report on pages 55 to 57) | 225 | - | 225 | 210 | - | 210 | | Travel expenses | 215 | - | 215 | 5 | - | 5 | | Professional fees | 48 | - | 48 | 118 | - | 118 | | Sundry expenses | 265 | - | 265 | 257 | - | 257 | | | **1,651** | **-** | **1,651** | **1,590** | **-** | **1,590** | All expenses are stated gross of irrecoverable VAT, where applicable. $^{1}$ Total auditor's remuneration for audit services, exclusive of VAT, amounted to £110,000, £100,000 for the year to 31 March 2023 and £10,000 for additional audit costs for the year to 31 March 2022 (2022: £85,000, £75,000 for the year to 31 March 2022 and £10,000 for additional audit costs for the year to 31 March 2021). Report and Accounts for the year to 31 March 2023 75 ## NOTES TO THE ACCOUNTS (continued) ### 6. FINANCE COSTS | Year to 31 March | 2023 | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | On loans and bank overdrafts | 169 | 674 | 843 | 119 | 469 | 588 | ### 7. TAXATION #### (a) Analysis of charge in the year : | Year to 31 March | 2023 | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | Tax on ordinary activities | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | UK corporation tax at 19.0% (2022: 19.0%) | - | - | - | - | - | - | | Overseas tax suffered | 1,638 | - | 1,638 | 1,500 | - | 1,500 | | Capital gains tax | - | 58 | 58 | - | 822 | 822 | | Deferred tax (see note 14) | - | (270) | (270) | - | 366 | 366 | | Total tax charge for the year | 1,638 | (212) | 1,426 | 1,500 | 1,188 | 2,688 | The Company is liable to Indian capital gains tax and the deferred tax in the capital account is in respect of capital gains tax on Indian investment holding gains that will be taxed in future years on realisations of the investments. #### (b) Factors affecting current tax charge for the year The tax assessed for the year can be reconciled to the profit per the Statement of Comprehensive Income as follows: | Year to 31 March | 2023 | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | Net profit/(loss) before taxation | 21,112 | (13,914) | 7,198 | 19,433 | 54,917 | 74,350 | | Corporation tax at 19.0% | 4,011 | (2,644) | 1,367 | 3,692 | 10,434 | 14,126 | | **Effects of:** | | | | | | | | Non taxable dividend income | (3,607) | - | (3,607) | (3,476) | - | (3,476) | | Non taxable capital returns | - | 1,692 | 1,692 | - | (11,329) | (11,329) | | Overseas tax suffered | 1,638 | - | 1,638 | 1,500 | - | 1,500 | | Excess expenses not utilised in the year | - | - | - | 694 | - | 694 | | Tax attributable to expenses and finance costs charged to capital | - | - | - | (895) | 895 | - | | Double taxation relief | (265) | 187 | (78) | (15) | - | (15) | | Movement in tax losses that no deferred tax asset is recognised on | (139) | 765 | 626 | - | - | - | | Capital gains tax | - | (212) | (212) | - | 1,188 | 1,188 | | **Total tax charge for the year** | **1,638** | **(212)** | **1,426** | **1,500** | **1,188** | **2,688** | As at 31 March 2023, the Company had net surplus management expenses of £23,253,000 (2022: £19,957,000) and a non-trade loan relationship deficit of £299,000 (2022: £299,000), giving total unutilised tax losses of £23,552,000 (2022: £20,256,000). A deferred tax asset has not been recognised in respect of these tax losses because the Company is not expected to generate taxable income in the future in excess of the deductible expenses of those future periods and, accordingly, it is unlikely that the Company will be able to reduce future tax liabilities through the use of the existing management expenses and non-trade loan relationship deficit. The Company has an unrecognised deferred tax asset of £5.9m as at 31 March 2023 (2022: £5.0m) based on the corporation tax rate of 25% which took effect from 1 April 2023. 76 Utilico Emerging Markets Trust plc ## 8. EARNINGS PER SHARE | | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | **Year to 31 March** | | | | Revenue return | 19,474 | 17,933 | | Capital return | (13,702) | 53,729 | | **Total return** | **5,772** | **71,662** | | | **Number** | **Number** | | Weighted average number of shares in issue during the year | 207,220,648 | 219,416,396 | | | **Pence** | **Pence** | | Revenue return per share | 9.40 | 8.17 | | Capital return per share | (6.61) | 24.49 | | **Total profit per share** | **2.79** | **32.66** | ## 9. DIVIDENDS | | Record date | Payment date | 2023 £'000s | 2022 £'000s | | --- | --- | --- | --- | --- | | **Year to 31 March** | | | | | | 2021 Fourth quarterly dividend of 2.00p per share | 04-Jun-21 | 23-Jun-21 | - | 4,415 | | 2022 First quarterly dividend of 2.00p per share | 03-Sep-21 | 24-Sep-21 | - | 4,393 | | 2022 Second quarterly dividend of 2.00p per share | 03-Dec-21 | 17-Dec-21 | - | 4,385 | | 2022 Third quarterly dividend of 2.00p per share | 04-Mar-22 | 25-Mar-22 | - | 4,351 | | 2022 Fourth quarterly dividend of 2.00p per share | 06-Jun-22 | 24-Jun-22 | 4,250 | - | | 2023 First quarterly dividend of 2.00p per share | 02-Sep-22 | 23-Sep-22 | 4,164 | - | | 2023 Second quarterly dividend of 2.15p per share | 02-Dec-22 | 16-Dec-22 | 4,384 | - | | 2023 Third quarterly dividend of 2.15p per share | 03-Mar-23 | 24-Mar-23 | 4,357 | - | | | | | **17,155** | **17,544** | The Directors have declared a fourth quarterly dividend in respect of the year ended 31 March 2023 of 2.15p per share payable on 23 June 2023 to shareholders on the register at close of business on 2 June 2023. The total cost of the dividend, which has not been accrued in the results for the year to 31 March 2023, is £4,334,000 based on 201,579,356 shares in issue at the record date, see note 16 for changes in share capital. ## 10. INVESTMENTS | | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | **Year to 31 March** | | | | Cost of investments brought forward | 523,644 | 576,074 | | Net unrealised profits/(losses) brought forward | 48,042 | (10,323) | | Valuation brought forward | 571,686 | 565,751 | | Purchases at cost | 108,938 | 124,508 | | Sales proceeds | (126,638) | (176,916) | | (Losses)/profits on investments | (8,329) | 58,343 | | **Valuation as at 31 March** | **545,657** | **571,686** | | Analysed as at 31 March | | | | Cost of investments | 491,177 | 523,644 | | Net unrealised gains on investments | 54,480 | 48,042 | | **Valuation** | **545,657** | **571,686** | The Company received £126,638,000 (2022: £176,916,000) from investments sold in the year. The book cost of these investments when they were purchased was £141,405,000 (2022: £176,938,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. Report and Accounts for the year to 31 March 2023 77 ## NOTES TO THE ACCOUNTS (continued) Year to 31 March 2023 2022 Gains/(losses) on investments £'000 £'000 Net loss on investments sold (14,767) (22) Other capital charges (60) (50) Movement in unrealised gains 6,438 58,365 Total (losses)/gains on investments (8,389) 58,293 Subsidiary undertakings Under IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosure of Interests in Other Entities, the following are subsidiaries of the Company as at 31 March 2023 and as at 31 March 2022, held as part of the investment portfolio, and are accounted for as investments at fair value through profit and loss. | | | | 2023 | 2022 | | --- | --- | --- | --- | --- | | Country of | | Holding | Fair | Fair | | registration and | Number and class of | and voting | value | value | | incorporation | shares held | rights | £’000s | £’000s | (1) UEM (HK) Limited Hong Kong 1,000 ordinary shares 100 1,498 – (2) UEM Mauritius Holdings Limited Bermuda Loan 100 – – (1) Incorporated on 26 January 2017 and commenced trading on 18 July 2017 to carry on business as an investment company (see note 24 for related party transactions). (2) The terms of the loan agreement with UEM Mauritius Holdings Limited, the parent company of Utilico Emerging Markets (Mauritius), provides that UEM retains effective control of the company since it can only appoint directors with the approval of UEM. Utilico Emerging Markets (Mauritius) is in liquidation and following completion UEM Mauritius Holdings Limited will then be liquidated. The subsidiary undertakings carry on business as investment companies and are considered to be investment entities. Associated undertakings Under IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosure of Interests in Other Entities, the following associated undertakings as at 31 March 2023 and 31 March 2022 are held as part of the investment portfolio and consequently are accounted for as investments at fair value through profit and loss: East Balkan Properties plc Petalite Limited Pitch Hero Holdings Limited Country of incorporation Isle of Man United Kingdom United Kingdom Country of listing Unlisted Unlisted Unlisted Country of operations Bulgaria & Romania United Kingdom United Kingdom Number of ordinary shares held 155 10,725 62,874 Percentage of ordinary shares held 25.3% 28.6% 36.7% Transactions with associated undertaking were as follows: East Balkan Properties plc ("East Balkan") During the year the Company received £1,303,000 from East Balkan Properties plc by way of a capital return. Petalite Limited (“Petalite”) During the year the Company participated in an equity raise in Petalite, in which it invested £1.25m. At that time, the Company also converted its £1,000,000 investment of 10% convertible loan note into equity and the Company received loan interest of £131,000. At the year end the Company held 10,725 equity shares and continued to hold 29.4% of the undiluted shareholding of Petalite (31 March 2022: 29.4%). Factoring in dilutive options the Company's stake in Petalite is 28.6%. Pitch Hero Holdings Limited (“Pitch Hero”) Pursuant to a loan agreement dated 1 March 2021 under which UEM has agreed to loan monies to Pitch Hero, UEM advanced to Pitch Hero a loan of £300,000. As at 31 March 2023, the balance of the loan and interest outstanding was £470,000 (31 March 2022: £158,000). The loan bears interest at an annual rate of 5.0% and is repayable on 1 March 2024. 78 Utilico Emerging Markets Trust plc Significant interests In addition to the above, the Company has a holding of 3% or more of any class of share capital of the following undertakings, which are material in the context of the accounts: | | | | 2023 | | 2022 | | --- | --- | --- | --- | --- | --- | | | | % of class of | | % of class of | | | Country of | Class of | instruments | | instruments | | | registration and incorporation | shares held | | held | | held | Korean Internet Neutral Exchange Inc. South Korea Ordinary shares 5.6 4.8 Orizon Valorizacao De Residuos S A. Brazil Ordinary shares 3.9 2.6 Telelink Business Services Group Bulgaria Ordinary shares 13.9 13.9 Umeme Limited Uganda Ordinary shares 8.4 8.4 11. OTHER RECEIVABLES 2023 2022 £’000s £’000s Accrued income 796 796 Sales for future settlement 548 607 Overseas tax recoverable 24 29 Other debtors 76 45 1,444 1,477 12. OTHER PAYABLES 2023 2022 £’000s £’000s Bank overdraft 1,482 652 Interest payable 221 24 Other creditors and accruals 1,758 1,834 Purchases awaiting settlement – 289 3,461 2,799 13. BANK LOANS – CURRENT LIABILITIES 2023 2022 £’000s £’000s EUR 12.0m repayable March 2024 10,544 – GBP 10.0m repayable March 2024 10,000 – USD 18.0m repayable March 2024 14,558 – 35,102 – – NON-CURRENT LIABILITIES 2023 2022 £’000s £’000s EUR 28.0m repayable March 2024 – 23,662 The Company has an unsecured committed senior multicurrency revolving facility of £50,000,000 with the Bank of Nova Scotia, London Branch expiring on 15 March 2024. Commitment fees are charged on any undrawn amounts at commercial rates. The terms of the loan facility, including those related to accelerated repayment and costs of repayment, are typical of those normally found in facilities of this nature. The existing loan rolls over on a periodic basis subject to usual conditions including a covenant with which the Company is comfortable it can ensure compliance. Report and Accounts for the year to 31 March 2023 79 ## NOTES TO THE ACCOUNTS (continued) ### 14. PROVISION FOR CAPITAL GAINS TAX | | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | Balance brought forward | 1,890 | 1,524 | | (Decrease)/Increase in provision for Indian tax on capital gains | (270) | 366 | | **Balance as at 31 March** | **1,620** | **1,890** | Provision is made for deferred tax in respect of capital gains tax on chargeable investment holding gains in India. ### 15. OPERATING SEGMENTS The Directors are of the opinion that the Company is engaged in a single segment of business of investing in equity and debt securities, issued by companies operating and generating revenue in emerging markets and therefore no segmental reporting is provided. ### 16. ORDINARY SHARE CAPITAL | | Number | 2023 £'000 | Number | 2022 £'000 | | --- | --- | --- | --- | --- | | **Issued, called up and fully paid** | | | | | | **Ordinary shares of 1p each** | | | | | | Balance brought forward | 214,744,067 | 2,148 | 221,273,374 | 2,213 | | Purchased for cancellation by the Company | (12,531,811) | (125) | (6,529,307) | (65) | | **Balance as at 31 March** | **202,212,256** | **2,023** | **214,744,067** | **2,148** | During the year the Company bought back for cancellation 12,531,811 (2022: 6,529,307) ordinary shares at a total cost of £27,159,600 (2022: £13,898,000). A further 740,789 ordinary shares have been purchased for cancellation at a total cost of £1,661,000 since the year end. ### 17. MERGER RESERVE | | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | **Balance brought forward and carried forward** | **76,706** | **76,706** | ### 18. CAPITAL REDEMPTION RESERVE | | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | Balance brought forward | 197 | 132 | | Purchased for cancellation by the Company (see note 16) | 125 | 65 | | **Balance as at 31 March** | **322** | **197** | ### 19. SPECIAL RESERVE | | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | Balance brought forward | 459,736 | 473,634 | | Purchased for cancellation by the Company (see note 16) | (27,159) | (13,898) | | **Balance as at 31 March** | **432,577** | **459,736** | 80 Utilico Emerging Markets Trust plc 20. CAPITAL RESERVES 2023 2022 | | Investment | | | | Investment | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | holding | | | | holding | | | Realised | | gains | Total | Realised | | gains | Total | | £’000s | | £’000s | £’000s | £’000s | | £’000s | £’000s | Realised losses on investments (14,767) – (14,767) (22) – (22) Unrealised gains on investments – 6,438 6,438 – 58,365 58,365 Foreign exchange (losses)/gains (515) – (515) 1,333 – 1,333 Finance costs charged to capital (674) – (674) (469) – (469) Expenses charged to capital (4,336) – (4,336) (4,240) – (4,240) Capital gains tax 212 – 212 (1,188) – (1,188) Other capital charges (60) – (60) (50) – (50) (20,140) 6,438 (13,702) (4,636) 58,365 53,729 Balance brought forward (48,181) 48,042 (139) (43,545) (10,323) (53,868) Balance as at 31 March (68,321) 54,480 (13,841) (48,181) 48,042 (139) Included within the capital reserve movement for the year is £1,303,000 (2022: £3,975,000) of dividend receipts recognised as capital in nature, £189,000 (2022: £169,000) of transaction costs on purchases of investments and £251,000 (2022: £436,000) of transaction costs on sales of investments. 21. REVENUE RESERVE 2023 2022 £’000s £’000s Balance brought forward 7,268 6,879 Revenue profit for the year 19,474 17,933 Dividend paid in the year (17,155) (17,544) Balance as at 31 March 9,587 7,268 22. NET ASSET VALUE PER SHARE The net asset value per share is based on the net assets attributable to the equity shareholders of £507,374,000 (2022: £545,916,000) and on 202,212,256 (2022: 214,744,067) shares, being the number of shares in issue at the year end. 23. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES | 2023 Balance as at | | | Transactions in | | | | Net | | Foreign | Balance as at | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 March 2022 | | | the year | cashflow | | | exchange loss | | 31 March 2023 | | | | | £’000s | | £’000s | | £’000s | | | £’000s | | £’000s | Bank loans 23,662 – 10,945 495 35,102 Repurchase of shares for cancellation – 27,159 (27,159) – – Dividends paid – 17,155 (17,155) – – 23,662 44,314 (33,369) 495 35,102 Report and Accounts for the year to 31 March 2023 81 ## NOTES TO THE ACCOUNTS (continued) | 2022 Balance as at | | | Transactions in | | | Net | | Foreign | Balance as at | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 March 2021 | | | the year | cashflow | | exchange loss | | 31 March 2022 | | | | | £’000s | | £’000s | £’000s | | | £’000s | | £’000s | Bank loans 50,373 – (25,475) (1,236) 23,662 Repurchase of shares for cancellation – 13,898 (13,898) – – Dividends paid – 17,544 (17,544) – – 50,373 31,442 (56,917) (1,236) 23,662 24. RELATED PARTY TRANSACTIONS The following are considered related parties of the Company: the subsidiary undertakings and the associated undertakings of the Company set out under note 10, the Board of UEM, ICM and ICMIM (the Company’s joint portfolio managers), Mr Saville, Mr Jillings (a key management person of ICMIM) and UIL Limited. As at 31 March 2022 the fair value of the loan held with UEM (HK) Limited was £12,543,000 and loan interest accrued was £52,000. In the year, UEM(HK) Limited repaid £2,120,000 and £879,000 loan interest was capitalised and added to the balance of the loan. As at 31 March 2023 the fair value of the loan held with UEM (HK) Limited was £10,118,000 and loan interest accrued was £71,000. As at 31 March 2023, the fair value of the equity holdings held in UEM(HK) Limited was £1,498,000 (2022: £nil). During the year the Company did not receive or make payments to UEM Mauritius Holdings Limited. There were no transactions between the associated undertakings and the Company other than transactions in the ordinary course of UEM’s business and these are set out in note 10. As detailed in the Directors’ Remuneration Report on pages 55 to 57, the Board received aggregate remuneration of £225,000 (31 March 2022: £210,000) included within “other expenses” for services as Directors. As at the year end, £nil (31 March 2022: £nil) remained outstanding to the Directors. In addition to their fees, the Directors received dividends totalling £45,000 (31 March 2022: £80,000) during the year under review in respect of their shareholdings in the Company. There were no further transactions with the Board during the year. There were no transactions with ICM or ICMIM other than investment management, secretarial costs, research fees as set out in note 4 and reimbursed expenses included within Other Expenses of £134,000 (31 March 2022: £60,000). As at the year end £1,330,000 (31 March 2022: £1,393,000) remained outstanding in respect of management, company secretarial and research fees. Mr Jillings received dividends totalling £38,000 (31 March 2022: £27,000) and UIL Limited received dividends totalling £2,051,000 (31 March 2022: £2,831,000). There were no transactions with Mr Saville in the year. 25. GOING CONCERN Notwithstanding that the Company has reported net current liabilities of £36,663,000 as at 31 March 2023 (31 March 2022: £218,000), the financial statements have been prepared on a going concern basis which the Directors consider to be appropriate for the following reasons. The Board’s going concern assessment has focused on the forecast liquidity of the Company for at least twelve months from the date of approval of the financial statements. This analysis assumes that the Company would, if necessary, be able to meet its short-term obligations through the sale of listed securities, which represented 89.2% of the Company’s total portfolio as at 31 March 2023. As part of this assessment the Board has considered a severe but plausible downside that reflects the impact of the Company’s key risks and an assessment of the Company’s ability to meet its liabilities as they fall due assuming a significant reduction in asset values and accompanying currency volatility. The Board also considered reverse stress testing to identify the reduction in the valuation of liquid investments that would cause the Company to be unable to meet its net liabilities, being primarily the bank loan. The Board is confident that the reduction in asset values implied by the reverse stress test is not plausible even in the current volatile environment. As at the year end, the Company had a £50m multicurrency loan facility with Bank of Nova Scotia expiring on 15 March 2024. Drawdowns under the facility are detailed in note 13. The Company will either extend or replace the facility or repay the outstanding debt when due from portfolio realisations. Consequently, the Directors believe that the Company will have sufficient funds to continue to meet its liabilities as they fall due for at least twelve months from the date of approval of the financial statements. Accordingly, the Board considers it appropriate to continue to adopt the going concern basis in preparing the accounts. 82 Utilico Emerging Markets Trust plc # 26. FINANCIAL RISK MANAGEMENT The Company's investment policy is to provide long-term total return by investing predominantly in the infrastructure, utility and related sectors, mainly in emerging markets. The Company seeks to meet its investment policy by investing principally in a diversified portfolio of both listed and unlisted companies. Derivative instruments may be used for purposes of hedging the underlying portfolio of investments. The Company has the power to take out both short and long-term borrowings. In pursuing the investment policy, the Company is exposed to financial risks which could result in a reduction of either or both of the value of the net assets and the profits available for distribution by way of dividend. These financial risks are principally related to the market (currency movements, interest rate changes and security price movements), liquidity and credit and counterparty risk. The Board of Directors, together with the Investment Managers, is responsible for the Company's risk management. The Directors' policies and processes for managing the financial risks are set out in (a), (b) and (c) below. The accounting policies which govern the reported Statement of Financial Position carrying values of the underlying financial assets and liabilities, as well as the related income and expenditure, are set out in note 1 to the accounts. The policies are in compliance with IFRS in conformity with the requirements of Companies Act 2006 and best practice and include the valuation of financial assets and liabilities at fair value. The Company does not make use of hedge accounting rules. # (a) Market risks The fair value of equity and other financial securities held in the Company's portfolio and derivative financial instruments fluctuates with changes in market prices. Prices are themselves affected by movements in currencies and interest rates and by other financial issues, including the market perception of future risks. The Board sets policies for managing these risks within the Company's investment policy and meets regularly to review full, timely and relevant information on investment performance and financial results. ICMIM assesses exposure to market risks when making each investment decision and monitors on-going market risk within the portfolio of investments and derivatives. The Company's other assets and liabilities may be denominated in currencies other than Sterling and may also be exposed to interest rate risks. ICMIM and the Board regularly monitor these risks. The Company does not normally hold significant cash balances. Borrowings are limited to amounts and currencies commensurate with the portfolio's exposure to those currencies, thereby limiting the Company's exposure to future changes in exchange rates. Gearing may be short or long-term, in Sterling and foreign currencies, and enables the Company to take a long term view of the countries and markets in which it is invested without having to be concerned about short-term volatility. The Board regularly monitors the effects on net revenue of interest earned on deposits and paid on gearing. # Currency exposure The principal currencies to which the Company was exposed during the year are set out below (2022: Brazilian Real, Hong Kong Dollar, Indian Rupee, South Korean Won, Philippine Peso and United States Dollar). The exchange rates applying against Sterling as at 31 March, and the average rates during the year, were as follows: | | | 2023 | Average | 2022 | | --- | --- | --- | --- | --- | | BRL | Brazilian Real | 6.2691 | 6.2078 | 6.2567 | | HKD | Hong Kong Dollar | 9.7061 | 9.4513 | 10.3112 | | INR | Indian Rupee | 101.6145 | 96.7972 | 99.7692 | | MXN | Mexican Peso | 22.3253 | 23.7016 | 26.2566 | | PHP | Philippine Peso | 67.2196 | 66.6092 | 68.1301 | | USD | United States Dollar | 1.2364 | 1.2058 | 1.3166 | The Company's assets and liabilities as at 31 March (shown at fair value, except derivatives at gross exposure value), by currency based on the country of primary exposure, are shown below: | 2023 | BRL £'000s | HKD £'000s | INR £'000s | MXN £'000s | PHP £'000s | USD £'000s | Other £'000s | Total £'000s | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Current assets | 141 | - | 165 | - | 21 | (1,060) | 405 | (328) | | Creditors | - | - | (1,621) | - | - | (91) | (35,168) | (36,880) | | Foreign currency exposure on net monetary items | 141 | - | (1,456) | - | 21 | (1,151) | (34,763) | (37,208) | | Investments | 109,417 | 59,737 | 56,669 | 29,267 | 26,584 | 35,623 | 169,234 | 486,531 | | Total net foreign currency exposure | 109,558 | 59,737 | 55,213 | 29,267 | 26,605 | 34,472 | 134,471 | 449,323 | | Percentage of net exposures (%) | 24.4 | 13.3 | 12.3 | 6.5 | 5.9 | 7.7 | 29.9 | 100.0 | Report and Accounts for the year to 31 March 2023 83 ## NOTES TO THE ACCOUNTS (continued) BRL HKD INR KRW PHP USD Other Total 2022 £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s Current assets 179 – 146 445 – 97 1,514 2,381 Creditors – – (9) – – (652) (24,011) (24,672) Foreign currency exposure on net monetary items 179 – 137 445 – (555) (22,497) (22,291) Investments 109,839 69,722 64,347 31,022 26,510 28,054 183,708 513,202 Total net foreign currency exposure 110,018 69,722 64,484 31,467 26,510 27,499 161,211 490,911 Percentage of net exposures (%) 22.4 14.2 13.1 6.4 5.4 5.6 32.9 100.0 Based on the financial assets and liabilities held, and exchange rates applying, at the Statement of Financial Position date, a weakening or strengthening of Sterling against each of these currencies by 10% would have had the following approximate effect on annualised income after tax and on NAV per share: 2023 2022 Weakening of BRL HKD INR MXN PHP USD BRL HKD INR KRW PHP USD Sterling £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s Statement of Comprehensive Income return after tax Revenue return 518 252 432 116 139 – 266 222 441 64 – – Capital return 12,157 6,637 6,297 3,252 2,954 3,958 12,204 7,747 7,150 3,447 2,946 3,117 Total return 12,675 6,889 6,729 3,368 3,093 3,958 12,470 7,969 7,591 3,511 2,946 3,117 NAV per share Basic – pence 6.12 3.32 3.25 1.63 1.49 1.91 5.68 3.63 3.46 1.60 1.40 1.42 Strengthening of BRL HKD INR MXN PHP USD BRL HKD INR KRW PHP USD Sterling £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s Statement of Comprehensive Income return after tax Revenue return (518) (252) (432) (116) (139) – (266) (222) (441) (64) – – Capital return (12,157) (6,637) (6,297) (3,252) (2,954) (3,958) (12,204) (7,747) (7,150) (3,447) (2,946) (3,117) Total return (12,675) (6,889) (6,729) (3,368) (3,093) (3,958) (12,470) (7,969) (7,591) (3,511) (2,946) (3,117) NAV per share Basic – pence (6.12) (3.32) (3.25) (1.63) (1.49) (1.91) (5.68) (3.63) (3.46) (1.60) (1.40) (1.42) Interest rate exposure 2023 2022 | Within | More than | | | Within | More than | | | | --- | --- | --- | --- | --- | --- | --- | --- | | one year | one year | | Total | one year | one year | | Total | | £’000s | | £’000s | £’000s | £’000s | | £’000s | £’000s | Exposure to floating rates Cash 456 – 456 1,104 – 1,104 Bank overdrafts (1,482) – (1,482) (652) – (652) Loans (35,102) – (35,102) – (23,662) (23,662) (36,128) – (36,128) 452 (23,662) (23,210) Exposures vary throughout the year as a consequence of changes in the make-up of the net assets of the Company arising out of the investment and risk management processes. Interest received on cash balances or paid on overdrafts and loans is at ruling market rates. The Company’s total returns and net assets are sensitive to changes in interest rates on cash and borrowings. 84 Utilico Emerging Markets Trust plc Based on the financial assets and liabilities held and the interest rates pertaining at each Statement of Financial Position date, a relative decrease or increase in market interest rates by 2% would have had the following approximate effects on the income statement revenue and capital returns after tax and on the NAV per share. | | | | 2023 | | | | 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | | 2% increase | | 2% decrease | | 2% increase | | 2% decrease | | | | in rate | | in rate | | in rate | | in rate | | | £’000s | | £’000s | | £’000s | | £’000s | Revenue return (161) 161 (86) 86 Capital return (562) 562 (379) 379 Net assets (723) 723 (465) 465 Other market risk exposures The portfolio of investments, valued at £545,657,000 as at 31 March 2023 (2022: £571,686,000) is exposed to market price changes. Based on the portfolio of investments at the Statement of Financial Position date and assuming other factors remain constant, a decrease or increase in the fair values of the portfolio by 20% would have had the following approximate effects on the Statement of Comprehensive Income capital return after tax and on the basic NAV per share: | | | 2023 | | | 2022 | | --- | --- | --- | --- | --- | --- | | Increase | Decrease in | | Increase | Decrease in | | | in value | | value | in value | | value | Statement of Comprehensive Income capital return £’000s 108,564 (108,564) 113,743 (113,743) NAV per share Basic – pence 53.69 (53.69) 52.97 (52.97) (b) Liquidity risk exposure The Company is required to raise funds to meet commitments associated with financial instruments. These funds may be raised either through the realisation of assets or through increased borrowing. The risk of the Company not having sufficient liquidity at any time is not considered by the Board to be significant given the number and value of quoted liquid investments held in the Company’s portfolio (73 valued at £486,694,000 as at 31 March 2023); and the existence of the Bank of Nova Scotia, London Branch loan facility agreement expiring on 15 March 2024. Cash balances are held with reputable banks with high quality external credit ratings. The Investment Managers review liquidity at the time of making each investment decision. The Board reviews liquidity exposure at each meeting. The Company has a loan facility of £50m as set out in note 13. The remaining contractual maturities of the financial liabilities as at 31 March, based on the earliest date on which payment can be required, were as follows: | | Three | More than three | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | months | months but less | | | More than | | | | | or less | | than one year | | one year | | Total | | 2023 | £’000 | | | £’000 | | £’000 | £’000 | Creditors: Bank overdrafts 1,482 – – 1,482 Bank loans and interest 690 36,458 – 37,148 Other payables 428 – – 428 2,600 36,458 – 39,058 Report and Accounts for the year to 31 March 2023 85 ## NOTES TO THE ACCOUNTS (continued) | | Three | More than three | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | months | months but less | | | More than | | | | | or less | | than one year | | one year | | Total | | 2022 | £’000 | | | £’000 | | £’000 | £’000 | Creditors: Bank overdrafts 652 – – 652 Bank loans and interest 112 267 24,002 24,381 Other payables 730 – – 730 1,494 267 24,002 25,763 (c) Credit risk and counterparty exposure The Company is exposed to potential failure by counterparties to deliver securities for which the Company has paid, or to pay for securities which the Company has delivered. The Board approves all counterparties used by the Company in such transactions, which must be settled on the basis of delivery against payment (except where local market conditions do not permit). A list of pre-approved counterparties is maintained and regularly reviewed by ICMIM, by Waverton and by the Board. Broker counterparties are selected based on a combination of criteria, including credit rating, balance sheet strength and membership of a relevant regulatory body. The rate of default in the past has been negligible. Cash and deposits are held with reputable banks with high quality external credit ratings. The Company has an on-going contract with its custodians for the provision of custody services. The contracts are reviewed regularly. Details of securities held in custody on behalf of the Company are received and reconciled monthly. To the extent that the Investment Managers and Waverton carry out duties (or cause similar duties to be carried out by third parties) on the Company’s behalf, the Company is exposed to counterparty risk. The Board assesses this risk continuously through regular meetings with the Investment Managers. None of the Company’s financial assets is past due or impaired. (d) Fair value of financial assets and financial liabilities The assets and liabilities of the Company are, in the opinion of the Directors, reflected in the Statement of Financial Position at fair value, or at a reasonable approximation thereof. Borrowings under the loan facility do not have a value materially different from their capital repayment amounts. Borrowings in foreign currencies are converted into Sterling at exchange rates ruling at each valuation date. Unquoted investments are valued based on professional assumptions and advice that is not wholly supported by prices from current market transactions or by observable market data. The Directors make use of recognised valuation techniques and may take account of recent arms’ length transactions in the same or similar investments. The Directors regularly review the principles applied by the Investment Managers to those valuations to ensure they comply with the Company’s accounting policies and with fair value principles. Level 3 financial instruments Valuation methodology The objective of using valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date. The Company uses proprietary valuation models, which are compliant with IPEV guidelines and IFRS 13 and which are usually developed from recognised valuation techniques. Some or all of the significant inputs into these models may not be observable in the market and are derived from market prices or rates or are estimated based on assumptions. Valuation models that employ significant unobservable inputs require a higher degree of management judgement and estimation in the determination of fair value. Management judgement and estimation are usually required for the selection of the appropriate valuation model to be used, determination of expected future cash flows of the financial instrument being valued, determination of the probability of counterparty default and prepayments, peer group multiple and selection of appropriate discount rates. Fair value estimates obtained from such models are adjusted for any other factors, such as controlling interest, historical and projected financial data, entity specific strengths and weaknesses, or model uncertainties, to the extent that the Company believes that a third party market participant would take them into account in pricing a transaction. The Directors have satisfied themselves as to the methodology used, the discount rates and key assumptions applied, and the valuations. The level 3 assets comprise of a number of unlisted investments at various stages of development and each has been 86 Utilico Emerging Markets Trust plc assessed based on its industry, location and business cycle. The valuation methodologies include net assets, discounted cash flows, cost of recent investment or last funding round, or listed peer comparison or peer group multiple as appropriate. Where applicable, the Directors have considered observable data and events to underpin the valuations. A discount has been applied, where appropriate, to reflect both the unlisted nature of the investments and business risks. #### Sensitivity of level 3 financial investments measured at fair value to changes in key assumptions. Level 3 inputs are sensitive to assumptions made when ascertaining fair value. While the Directors believe that the estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value. The sensitivities shown in the table below give an indication of the effect of applying reasonable and possible alternative assumptions. In assessing the level of reasonably possible outcomes consideration was also given to the impact on valuations of the increased level of volatility in equity markets since early 2022, principally reflecting concerns about increasing rates of inflation, tightening energy supplies, rising interest rates and the Ukraine war. The impact on the valuations has been varied and largely linked to their relevant sectors and this has been reflected in the level of sensitivities applied. For each unlisted holding valued over £5.0m, the significant valuation inputs have been sensitised by a percentage deemed to reflect the relative degree of estimation uncertainty. The following table shows the sensitivity of the fair value of level 3 financial investments to changes in key assumptions. #### As at 31 March 2023 | Investment | Investment type | Valuation methodology | Risk weighting | Sensitivity +/- | Carrying amount £'000s | Sensitivity £'000s | | --- | --- | --- | --- | --- | --- | --- | | Petalite | Equity | Last funding round | High | 50% | 28,607 | 14,304 | | UEM (HK) Limited | Equity/Loan | NAV | Low | 10% | 11,615 | 1,162 | | Conversant Pte Ltd | Equity | Last funding round | Medium | 20% | 7,877 | 1,575 | | Other investments | Equity | Various | Medium | 20% | 5,956 | 1,191 | | Other investments | Equity | Various | Low | 10% | 4,187 | 419 | | Other investments | Loans | Discounted cash flows | Medium | 20% | 450 | 90 | | **Total** | | | | | **58,692** | **18,741** | #### As at 31 March 2022 | Investment | Investment type | Valuation methodology | Risk weighting | Sensitivity +/- | Carrying amount £'000s | Sensitivity £'000s | | --- | --- | --- | --- | --- | --- | --- | | Petalite | Equity | Milestone analysis | High | 40% | 17,621 | 7,048 | | UEM (HK) Limited | Loan | NAV | Low | 10% | 12,543 | 1,254 | | Conversant Pte Ltd | Equity | Last funding round | Medium | 20% | 7,207 | 1,453 | | Other investments | Equity | Various | Medium | 20% | 6,547 | 1,309 | | Other investments | Equity | Various | Low | 10% | 3,632 | 363 | | Other investments | Equity | Last funding round | High | 30% | 350 | 105 | | Other investments | Loans | Various | High | 30% | 150 | 45 | | **Total** | | | | | **48,110** | **11,577** | Report and Accounts for the year to 31 March 2023 87 ## NOTES TO THE ACCOUNTS (continued) ### Petalite UEM holds 10,725 ordinary shares in Petalite and, as at 31 March 2023, carried this investment at £28.6m. The cost of this investment was £2.8m (2022: £1.5m). Valuation Methodology: Petalite has been valued based on the most recent equity fundraising event that occurred in June 2022. Petalite is an unlisted early stage company based in the UK. Petalite has developed an innovative electric vehicle charging technology which offers greater reliability and efficiency than is currently available in the market, filing its first patent application in 2016. Petalite has validated the technology with certification of the Power Core modular unit. In the period since the last fundraising, Petalite has progressed satisfactorily and has established a go-to-market strategy to commercialise its technology in the coming year. While the Directors consider that the last fundraise price remains representative of fair value as at 31 March 2023, Petalite's fair value has been given a sensitivity of 50% (2022: 40%) reflecting the high level of uncertainty due to the length of time since the last fundraise and the fact that the company remains pre-revenue. As Petalite has yet to commercialise its technology and is pre-revenue it remains reliant on external funding. Key valuation inputs: Most recent fundraise price of £2,667 per ordinary share. A triangulation exercise utilising Petalite's peer multiples has been carried out to support this valuation. Sensitivities: Should the value of Petalite move by 50% the gain or loss would be £14.3m. ### UEM (HK) Limited Valuation methodology: UEM (HK) Limited holds CGN Capital Partners Infra Fund 3 (CGN). The Company has used CGN's NAV and carried its investment at £11.6m as at 31 March 2023 (2022: £12.5m). The cost of this investment was £8.7m (2022: £9.4m). CGN is a Chinese wind and solar farm developer and operator in mainland China and its NAV was valued using valuation techniques consistent with IFRS and is subject to annual audit. CGN's financial assets at fair value are all unlisted equity investments, with fair value estimated by the method of discounted cash flow and these investments have been given a sensitivity of 10% (2022: 10%) to reflect a degree of uncertainty over the manager's valuations. Key valuation inputs: Market value for portfolio of investments. Sensitivities: Should the value of UEM (HK) Limited move by 10% the gain or loss would be £1.2m. ### Conversant Pte Ltd ("Conversant") The Company holds 2,158,246 ordinary shares in Conversant and, as at 31 March 2023, carried this investment at £7.9m. The cost of this investment was £4.7m (2022: £4.7m). Valuation Methodology: Conversant has been valued based on the most recent equity fundraising event that occurred in June 2022. Conversant is a Singapore incorporated content delivery network provider primarily for delivery of media as well as security for both websites and media delivery. Conversant has performed satisfactorily and its revenues have increased in the period since the last fundraising. While the Directors consider that the last fundraise price remains representative of fair value as at 31 March 2023, Conversant's fair value has been given a sensitivity of 20% (2022: 20%) to reflect a level of uncertainty due to the length of time since the last fundraise. Key valuation inputs: Most recent fundraise price of SGD 6.00 per ordinary share. Sensitivities: Should the value of Conversant move by 20% the gain or loss would be £1.6m. ### (e) Capital risk management The investment policy of the Company is stated as being 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 capital of the Company comprises ordinary share capital and reserves equivalent to the net assets of the Company. In pursuing the long-term investment policy, the Board has a responsibility for ensuring the Company's ability to continue as a going concern. It must therefore maintain an optimal capital structure through varying market conditions. This involves the ability to: issue and buyback share capital within limits set by the shareholders in general meeting; borrow monies in the short and long term (up to a limit of 25% of gross assets); and pay dividends to shareholders out of reserves. Changes to ordinary share capital are set out in note 16. Dividend payments are set out in note 9. Loans are set out in note 13. 88 Utiliso Emerging Markets Trust plc ## 27. FAIR VALUE HIERARCHY IFRS 13 'Financial Instruments: Disclosures' require an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following levels: Level 1 reflects financial instruments quoted in an active market. Level 2 reflects financial instruments whose fair value is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable markets. Level 3 reflects financial instruments whose fair value is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the same instrument and not based on available observable market data. The financial assets measured at fair value in the Statement of Financial Position are grouped into the fair value hierarchy as follows: | As at 31 March 2023 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | --- | --- | --- | --- | --- | | Investments | 483,146 | 3,818 | 58,693 | 545,657 | | As at 31 March 2022 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | Investments | 519,853 | 3,723 | 48,110 | 571,686 | 2022: During the year one stock with value of £1.7m was transferred from level 1 to level 2 due to the investee company shares trading irregularly, three stocks with value of £8.0m were transferred from level 2 to level 1 due to the investee companies shares resuming regular trading in the year, one stock with value of £0.8m was transferred from level 3 to level 1 due to the investee company shares becoming listed and one stock transferred from level 1 to level 3 at nil value due to the investee company shares being suspended from trading. The book costs and fair values were transferred using the 31 March 2021 balances except for the stock that was suspended, the book cost and fair value transferred at the time of suspension. A reconciliation of fair value measurements in level 3 is set out in the following table: | | 2023 £'000 | 2022 £'000 | | --- | --- | --- | | Balance brought forward | 48,110 | 20,869 | | Transfer to level 1 | - | (828) | | Purchases | 3,691 | 7,205 | | Sales | (4,423) | (255) | | Gains/(losses) on investments sold in the year | 1,760 | (1,764) | | Gains on investments held at end of year | 9,555 | 22,883 | | **Balance as at 31 March** | **58,693** | **48,110** | | **Analysed as at 31 March** | | | | Cost of investments | 29,484 | 28,456 | | Gains on investments | 29,209 | 19,654 | | **Valuation** | **58,693** | **48,110** | Report and Accounts for the year to 31 March 2023 89 ## OTHER FINANCIAL INFORMATION (UNAUDITED) ### ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE ("AIFMD") In accordance with the AIFMD, information in relation to the Company's leverage and the remuneration of the Company's AIFM, ICMM, is required to be made available to investors. Detailed regulatory disclosures including those on the AIFM's remuneration policy are available on ICM's website at https://www.icm.limbed/icm-investment-management. The Company's maximum and actual leverage as at 31 March are shown below | | 2023 | | | --- | --- | --- | | Leverage exposure | Gross method | Commitment method | | Maximum permitted limit | 300% | 300% | | Actual | 107% | 107% | | | | 2022 | | Leverage exposure | Gross method | Commitment method | | Maximum permitted limit | 300% | 300% | | Actual | 105% | 105% | The leverage limits are set by the AIFM and approved by the Board. The AIFM is also required to comply with the gearing parameters set by the Board in relation to borrowings. ### SECURITIES FINANCING TRANSACTIONS ("SFT") The Company has not, in the years to 31 March 2023 and 31 March 2022, participated in any: repurchase transactions; securities lending or borrowing; buy-sell back transactions; margin lending transactions; or total return swap transactions (collectively called SFT). As such, it has no disclosure to make in satisfaction of the UK version of the EU regulation 2015/2365 on transparency of SFT which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended. 90 UKFco Emerging Markets Trust plc # NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Annual General Meeting of Utilico Emerging Markets Trust plc will be held at The Royal Society of Chemistry, Burlington House, Piccadilly, London W1J 0BA on Tuesday, 19 September 2023 at 10.00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions (which will be proposed in the case of resolutions 1 to 10, as ordinary resolutions and, in the case of resolutions 11 and 12, as special resolutions). # ORDINARY BUSINESS 1. To receive and adopt the report of the Directors of the Company and the financial statements for the year ended 31 March 2023, together with the report of the auditor thereon. 2. To approve the Directors' Remuneration Report for the year ended 31 March 2023. 3. To approve the Company's dividend policy to pay four interim dividends per year. 4. To re-elect Mr John Rennocks as a Director. 5. To re-elect Mr Mark Bridgeman as a Director. 6. To re-elect Ms Isabel Liu as a Director. 7. To re-elect Mr Eric Stobart as a Director. 8. To re-appoint KPMG LLP as auditor to the Company to hold office until the conclusion of the next Annual General Meeting of the Company. 9. To authorise the Directors to determine the auditor's remuneration. # SPECIAL BUSINESS # Ordinary resolution 10. That, in substitution for all existing authorities, the Directors of the Company be and they are hereby generally and unconditionally authorised pursuant to section 551 of the Companies Act 2006 (the "Act"), to exercise all the powers of the Company to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company ("Securities") up to an aggregate nominal amount of £201,470 (being 10% of the aggregate nominal amount of the issued share capital excluding treasury shares of the Company as at the date of this Notice) provided that this authority shall expire at the conclusion of the next Annual General Meeting of the Company to be held in 2024 but so that the Company may, at any time before such expiry, make any offer or agreement which would or might require Securities to be allotted after such expiry pursuant to any such offer or agreement as if the authority hereby conferred had not expired. # Special Resolutions 11. That, in substitution for all existing authorities and subject to the passing of resolution 10, the Directors of the Company be and are hereby empowered pursuant to sections 570 and 573 of the Companies Act 2006 (the "Act") to allot equity securities (as defined in section 560 of the Act) pursuant to the authority granted by resolution 10, and to sell equity securities held by the Company as treasury shares (as defined in section 724 of the Act) for cash, as if section 561(1) of the Act did not apply to any such allotments or sales of equity securities, provided that this power: (a) shall expire at the conclusion of the next Annual General Meeting of the Company to be held in 2024, except that the Company may at any time before such expiry make offers or agreements which would or might require equity securities to be allotted or sold after such expiry and notwithstanding such expiry the Directors may allot or sell equity securities in pursuance of such offers or agreements; Report and Accounts for the year to 31 March 2023 91 ## NOTICE OF ANNUAL GENERAL MEETING (continued) (b) shall be limited to the allotment of equity securities and/or sale of equity securities held in treasury for cash up to an aggregate nominal amount of £201,470 (representing 10% of the aggregate nominal amount of the issued share capital, excluding treasury shares of the Company, as at the date of this Notice); and (c) shall be limited to the allotment of equity securities and/or the sale of equity securities held in treasury at a price of not less than the net asset value per share as close as practicable to the relevant allotment or sale. 12. That, in substitution for the Company's existing authority to make market purchases of ordinary shares of 1p in the Company ("Shares"), the Company be and is hereby authorised in accordance with section 701 of the Companies Act 2006 (the "Act") to make market purchases of Shares (within the meaning of section 693 of the Act), provided that: (a) the maximum number of Shares hereby authorised to be purchased is 30,200,000 (being 14.99% of the Company's issued ordinary share capital, excluding treasury shares of the Company, as at the date of this Notice); (b) the minimum price (exclusive of expenses) which may be paid for a Share shall be 1p being the nominal value per share; (c) the maximum price (exclusive of expenses) which may be paid for a Share shall be the higher of: (i) 5% above the average of the market value of a Share for the five business days immediately preceding the date of purchase as derived from the Daily Official List of the London Stock Exchange; and (ii) that stipulated by article 5(6) of the UK version of the EU Market Abuse Regulation (2014/596) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended and supplemented from time to time including by the Market Abuse (Amendment) (EU Exit) Regulations 2019; and (d) unless renewed, the authority hereby conferred shall expire at the conclusion of the next Annual General Meeting of the Company to be held in 2024 save that the Company may, at any time prior to such expiry, enter into a contract to purchase Shares which will or may be completed or executed wholly or partly after such expiry and the Company may purchase Shares pursuant to any such contract or contracts as if the authority conferred hereby had not expired. All Shares purchased pursuant to the above authority shall be either: (i) held, sold, transferred or otherwise dealt with as treasury shares in accordance with the provisions of the Act; or (ii) cancelled immediately upon completion of the purchase. By order of the Board **ICM Investment Management Limited** Company Secretary 16 June 2023 Registered Office: The Cottage, Ridge Court The Ridge Epsom, Surrey KT18 7EP 92 Utilico Emerging Markets Trust plc NOTES: perhaps the custodian or broker who administers the investment on their behalf). Nominated Persons should 1. A member entitled to attend and vote at the meeting continue to contact that member, custodian or broker (and convened by the above Notice is entitled to appoint one not the Company) regarding any changes or queries relating or more proxies to exercise all or any of the rights of the to the Nominated Person’s personal details and interest in member to attend, speak and vote in his/her place. A the Company (including any administrative matter). The only proxy need not be a member of the Company. If a member exception to this is where the Company expressly requests appoints more than one proxy to attend the meeting, each a response from the Nominated Person. proxy must be appointed to exercise the rights attached to a different share or shares held by the member. 6. Pursuant to Regulation 41 (1) of The Uncertificated 2. To appoint a proxy, you may use the form of proxy enclosed Securities Regulations 2001 and for the purposes of with this annual report. To be valid, the form of proxy, section 360B of the Companies Act 2006, the Company has together with the power of attorney or other authority (if specified that only shareholders registered on the register any) under which it is signed or a notarial certified or office of members of the Company by not later than 6.00 p.m. copy of the same, must be completed and returned to the two days prior to the time fixed for the meeting shall be office of the Company’s registrar in accordance with the entitled to attend and vote at the meeting in respect of the instructions printed thereon as soon as possible and in number of the ordinary shares registered in their name at any event by not later than 10:00 a.m. on 15 September such time. If the meeting is adjourned, the time by which a 2023. Amended instructions must also be received by the person must be entered on the register of members of the Company’s registrar by the deadline for receipt of forms Company in order to have the right to attend and vote at the of proxy. Alternatively, you can vote or appoint a proxy adjourned meeting is 6.00 p.m. two days prior to the time electronically by visiting www.eproxyappointment.com/ of adjournment. Changes to the register of members after login. You will be asked to enter the Control Number, the the relevant times shall be disregarded in determining the Shareholder Reference Number and PIN which are printed rights of any person to attend and vote at the meeting. on the form of proxy. The latest time for the submission of 7. In the case of joint holders, the vote of the senior holder proxy votes electronically is 10:00 a.m. on 15 September who tenders a vote, whether in person or by proxy, shall 2023. To appoint more than one proxy, an additional proxy be accepted to the exclusion of the votes of the other joint form(s) may be obtained by contacting the Registrar’s holders and, for this purpose, seniority will be determined helpline on +44 (0370) 707 1375 or you may photocopy by the order in which the names stand in the register of the form of proxy. Please indicate in the box next to the members of the Company in respect of the relevant joint proxy holder’s name the number of shares in relation to holding. which they are authorised to act as your proxy. Please also indicate by marking the box provided if the proxy 8. Shareholders who hold their shares electronically may instruction is one of multiple instructions being given. All submit their votes through CREST, by submitting the forms of proxy must be signed and should be returned appropriate and authenticated CREST message so as to together in the same envelope. be received by the Company’s registrar not later than 3. Completion and return of the form of proxy will not prevent 10:00 a.m. on 15 September 2023. Instructions on how to you from attending the meeting and voting in person. If you vote through CREST can be found by accessing the CREST have appointed a proxy and attend the meeting in person, manual via www.euroclear.com. Shareholders are advised your proxy appointment will be automatically terminated. that CREST and the internet are the only methods by which completed proxies can be submitted electronically. 4. Any person receiving a copy of this Notice as a person nominated by a member to enjoy information rights under 9. If you are a CREST system user (including a CREST personal section 146 of the Companies Act 2006 (a “Nominated member) you can appoint one or more proxies or give Person”) should note that the provisions in Notes 1 and 2 an instruction to a proxy by having an appropriate CREST above concerning the appointment of a proxy or proxies to message transmitted. To appoint one or more proxies attend the meeting in place of a member, do not apply to a or to give an instruction to a proxy (whether previously Nominated Person as only ordinary shareholders have the appointed or otherwise) via the CREST system, CREST right to appoint a proxy. However, a Nominated Person may messages must be received by Computershare (ID number have a right under an agreement between the Nominated 3RA50) not later than 10:00 a.m. on 15 September 2023. Person and the member by whom he or she was nominated For this purpose, the time of receipt will be taken to be to be appointed, or to have someone else appointed, as the time (as determined by the timestamp generated by proxy for the meeting. If a Nominated Person has no such the CREST system) from which Computershare is able to proxy appointment right or does not wish to exercise it, retrieve the message. CREST personal members or other he/she may have a right under such agreement to give CREST sponsored members should contact their CREST instructions to the member as to the exercise of voting sponsor for assistance with appointing proxies via CREST. rights at the meeting. For further information on CREST procedures, limitations 5. Nominated Persons should also remember that their and system timings please refer to the CREST manual. The main point of contact in terms of their investment in Company may treat as invalid a proxy appointment sent by the Company remains the member who nominated the CREST in the circumstances set out in Regulation 35(5)(a) of Nominated Person to enjoy the information rights (or The Uncertificated Securities Regulations 2001. Report and Accounts for the year to 31 March 2023 93 ## NOTICE OF ANNUAL GENERAL MEETING (continued) 10. If the Chairman, as a result of proxy appointments, is given discretion as to how the votes the subject of those proxies are cast and the voting rights in respect of those discretionary proxies, when added to the interests in the Company's securities already held by the Chairman, result in the Chairman holding such number of voting rights that he has a notifiable obligation under the Disclosure Guidance and Transparency Rules, the Chairman will make the necessary notifications to the Company and the Financial Conduct Authority. As a result, any member holding 3% or more of the voting rights in the Company, who grants the Chairman a discretionary proxy in respect of some or all of those voting rights and so would otherwise have a notification obligation under the Disclosure Guidance and Transparency Rules, need not make a separate notification to the Company and Financial Conduct Authority. Any such person holding 3% or more of the voting rights in the Company who appoints a person other than the Chairman as his proxy will need to ensure that both he and such person complies with their respective disclosure obligations under the Disclosure Guidance and Transparency Rules. 11. Any questions relevant to the business of the meeting may be asked at the meeting by anyone permitted to speak at the meeting. A shareholder may alternatively submit a question in advance by a letter addressed to the Company Secretary at the Company's registered office. Under section 319A of the Companies Act 2006, the Company must answer any question a shareholder asks relating to the business being dealt with at the meeting, unless (i) answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; (ii) the answer has already been given on a website in the form of an answer to a question; or (iii) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. 12. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that, if it is appointing more than one corporate representative, it does not do so in relation to the same shares. 13. Under section 527 of the Companies Act 2006, members meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to (i) the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the meeting, or (ii) any circumstance connected with an auditor of the Company seeking to hold office since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the Companies Act 2006. The Company may not require the members requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under section 527 of the Companies Act 2006, it must forward the statement to the Company's auditors not later than the time when it makes the statement available on the website. The business which may be dealt with at the meeting includes any statement that the Company has been required under section 527 of the Companies Act 2006 to publish on a website. 14. As at 16 June 2023 (being the last practicable date prior to the publication of this Notice of Annual General Meetings, the Company's issued share capital consisted of 201,471,467 ordinary shares of 1p each, excluding shares held in treasury. Each ordinary share carries the right to one vote and therefore the total voting rights in the Company as at the date of this Notice are 201,471,467. 15. Further information regarding the meeting which the Company is required by section 311A of the Companies Act 2006 to publish on a website in advance of the meeting, can be accessed at www.uwmtrust.co.uk. 16. No service contracts exist between the Company and any of the Directors, who hold office in accordance with letters of appointment and the Articles of Association. 17. Copies of the letters of the appointment and deeds of indemnity between the Company and the Directors, a copy of the Articles of Association of the Company and the register of the Directors' holdings will be available for inspection at the registered office of the Company during usual business hours on any weekday (Saturday, Sunday and Bank Holidays excluded) until the date of the meeting and also on the date of the meeting from 15 minutes prior to commencement of the meeting until the conclusion thereof. 18. Under sections 33B and 33BA of the Companies Act 2006, members meeting with the threshold requirements in those sections have the right to require the Company: (i) to give, to members of the Company entitled to receive notice of the meeting, notice of a resolution which may properly be moved and is intended to be moved at the meeting, and/or (ii) to include in the business to be dealt with at the meeting any matter (other than a proposed resolution) which may be properly included in the business. A resolution may properly be moved or a matter may properly be included in the business unless: - (a) (in the case of a resolution only), it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company's constitution or otherwise); - (b) it is defamatory of any person; or - (c) it is frivolous or vexatious. Such a request may be in hard copy form or in electronic form, and must identify the resolution of which notice is to be given or the matter to be included in the business, must be authorised by the person or persons making it, must be received by the Company not later than 7 August 2023 (being the date six clear weeks before the meeting) and, in the case of a matter to be included in the business only, must be accompanied by a statement setting out the grounds for the request. 19. Any electronic address provided either in this Notice or in any related documents (including the form of proxy) may not be used to communicate with the Company for any purpose other than those expressly stated. 94 Utilico Emerging Markets Trust plc ## COMPANY INFORMATION | DIRECTORS | LEGAL ADVISER TO THE COMPANY | | --- | --- | | John Rennocks (Chairman) | Norton Rose Fulbright LLP | | Mark Bridgeman | 3 More London Riverside | | Susan Hansen | London SE1 2AQ | Isabel Liu Eric Stobart, FCA AUDITOR KPMG LLP | REGISTERED OFFICE | 15 Canada Square | | --- | --- | | The Cottage | London E14 5GL | | Ridge Court | Member of the Institute of Chartered Accountants in England and Wales | The Ridge Epsom Surrey KT18 7EP DEPOSITARY SERVICES PROVIDER Company Registration Number: 11102129 JP Morgan Europe Limited Legal Entity Identifier: 2138005TJMCWR2394O39 25 Bank Street Canary Wharf London E14 5JP AIFM, JOINT PORTFOLIO MANAGER AND Authorised by the Prudential Regulation Authority and regulated by the COMPANY SECRETARY Financial Conduct Authority and the Prudential Regulation Authority ICM Investment Management Limited PO Box 208 | Epsom | REGISTRAR | | --- | --- | | Surrey KT18 7YF | Computershare Investor Services PLC | | Telephone +44 (0)1372 271486 | The Pavilions | | Authorised and regulated in the UK by the Financial Conduct Authority | Bridgwater Road | Bristol BS13 8AE Telephone +44 (0370) 707 1375 JOINT PORTFOLIO MANAGER ICM Limited | 34 Bermudiana Road | COMPANY BANKER | | --- | --- | | Hamilton HM 11 | The Bank of Nova Scotia, London Branch | | Bermuda | 201 Bishopsgate, 6th Floor | London EC2M 3NS Authorised in the UK by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential ADMINISTRATOR AND CUSTODIAN Regulation Authority JPMorgan Chase Bank N.A. – London Branch 25 Bank Street Canary Wharf PUBLIC RELATIONS London E14 5JP Montford Communications Limited Authorised and regulated in the UK by the Financial Conduct Authority 2nd Floor, Berkeley Square House Berkeley Square Mayfair BROKERS London W1J 6BD Shore Capital and Corporate Limited Cassini House, 57 St James’s Street Telephone + 44 (0)20 7887 6287 London SW1A 1LD Authorised and regulated in the UK by the Financial Conduct Authority Barclays Bank PLC 1 Churchill Place London E14 5HP Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority Report and Accounts for the year to 31 March 2023 95 ## ALTERNATIVE PERFORMANCE MEASURES The European Securities and Markets Authority defines an Alternative Performance Measure as being a financial measure of historical or future financial performance, financial position or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework. The Company uses the following Alternative Performance Measures: **Discount/Premium** – if the share price is lower than the NAV per share, the shares are trading at a discount. Shares trading at a price above NAV per share are said to be at a premium. As at 31 March 2023 the share price was 217.00p (2022: 224.00p) and the NAV per share was 250.91p (2022: 254.22p); the discount was therefore 13.5% (2022: 11.9%). **Gearing** – represents the ratio of the borrowings less cash of the Company to its net assets. | Year to 31 March | Page | 2023 £'000s | 2022 £'000s | | --- | --- | --- | --- | | Bank overdrafts | 79 | 1,482 | 652 | | Bank loans | 70 | 35,102 | 23,662 | | Cash | 70 | (456) | (1,104) | | Total debt | | 36,128 | 23,210 | | Equity holders' funds | 70 | 507,374 | 545,916 | | Gearing (%) | | 7.1 | 4.3 | **NAV per share** – the value of the Company's net assets divided by the number of shares in issue (see note 22 to the accounts). **NAV/share price total return** – the return to shareholders calculated on a per share basis by adding dividends paid in the year to the increase or decrease in the NAV or share price in the year. The dividends are assumed to have been re-invested in the form of net assets or shares, respectively, on the date on which the dividends were paid. | Year to 31 March 2023 | Dividend rate (pence) | NAV (pence) | Share price (pence) | | --- | --- | --- | --- | | 31 March 2022 | n/a | 254.22 | 224.00 | | 24 June 2022 | 2.00 | 238.47 | 208.00 | | 23 September 2022 | 2.00 | 260.38 | 221.00 | | 16 December 2022 | 2.15 | 234.69 | 204.00 | | 24 March 2023 | 2.15 | 246.23 | 210.00 | | 31 March 2023 | n/a | 250.91 | 217.00 | | Total return (%) | | 2.1 | 0.8 | | Year to 31 March 2022 | Dividend rate (pence) | NAV (pence) | Share price (pence) | | --- | --- | --- | --- | | 31 March 2021 | n/a | 228.54 | 197.50 | | 23 June 2021 | 2.000 | 250.93 | 224.00 | | 24 September 2021 | 2.000 | 248.92 | 220.00 | | 17 December 2021 | 2.000 | 243.91 | 216.00 | | 25 March 2022 | 2.000 | 247.03 | 214.00 | | 31 March 2022 | n/a | 254.22 | 224.00 | | Total return (%) | | 14.9 | 17.6 | 96 Lillieo Emerging Markets Trust plc **NAV/share price total return since inception** = the return to shareholders calculated on a per share basis by adding dividends paid in the year and adjusting for the exercise of warrants and subscription shares in the year to the increase or decrease in the NAV/share price in the year. The dividends are assumed to have been re-invested in the form of net assets on the date on which the dividends were paid. The adjustment for the exercise of warrants and subscription shares is made on the date the warrants and subscription shares were exercised. | Total return since inception | NAV 31 March 2023 | Share price 31 March 2023 | NAV 31 March 2022 | Share price 31 March 2022 | | --- | --- | --- | --- | --- | | NAV/Share price 20 July 2005 (pence)^{1} | 98.36 | 100.00 | 98.36 | 100.00 | | Total dividend, warrants and subscription shares adjustment factor | 1.88776 | 1.98031 | 1.82499 | 1.90409 | | NAV/Share price at year end (pence) | 250.91 | 217.00 | 254.22 | 224.00 | | Adjusted NAV/Share price at year end (pence) | 473.66 | 429.73 | 463.95 | 426.52 | | Total return (%) | 381.6 | 329.7 | 371.7 | 326.5 | $^{1}$ Date of admission to trading on the Alternative Investment Market of UEM Limited. **Annual compound NAV total return since inception** = the annual return to shareholders calculated on the same basis as NAV total return, since inception. | Annual compound | 31 March 2023 | 31 March 2022 | | --- | --- | --- | | Annual compound NAV total return since inception (%) | 9.3 | 9.7 | **Ongoing charges** = all operating costs expected to be regularly incurred and that are payable by the Company or suffered within underlying investee funds, expressed as a proportion of the average weekly net asset values of the Company (valued in accordance with its accounting policies) over the reporting period. The costs of buying and selling investments and derivatives are excluded, as are interest costs, taxation, non-recurring costs and the costs of buying back or issuing share. | Ongoing charges calculation (excluding performance fee) | Page | 31 March 2023 £'000s | 31 March 2022 £'000s | | --- | --- | --- | --- | | Management and administration fees | 68 | 5,730 | 5,947 | | Other expenses | 68 | 1,651 | 1,590 | | Total expenses for ongoing charges calculation | | 7,381 | 7,537 | | Average net asset values of the Company | | 512,080 | 532,661 | | Ongoing Charges (%) | | 1.4 | 1.4 | Report and Accounts for the year to 31 March 2023 97 ## HISTORICAL PERFORMANCE | as at 31 March | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | NAV total return per ordinary share^{(1)} (annual) (%) | 2.1 | 14.9 | 30.2 | (24.9) | 3.5 | 6.6 | 26.2 | 1.7 | 12.4 | (3.4) | 20.9 | | Share price total return per ordinary share^{(1)} (annual) (%) | 0.8 | 17.6 | 27.3 | (23.2) | 5.4 | 7.1 | 24.9 | (1.8) | 8.2 | (2.6) | 20.8 | | Annual compound NAV total return^{(1)} (price inception) (%) | 9.3 | 9.7 | 9.4 | 8.1 | 11.0 | 11.7 | 12.1 | 10.9 | 11.9 | 11.8 | 13.9 | | Undiluted NAV per ordinary share^{(1)} (pence) | 250.91 | 254.22 | 228.54 | 181.84 | 249.84 | 247.22 | 251.72 | 206.45 | 209.79 | 192.38 | 205.49 | | Diluted NAV per ordinary share (pence) | 250.91^{(1)} | 254.22^{(1)} | 228.54^{(1)} | 181.84^{(1)} | 249.84^{(1)} | 247.22^{(1)} | 241.29 | 202.52 | 209.79^{(1)} | 192.38^{(1)} | 205.49^{(1)} | | Ordinary share price (pence) | 217.00 | 224.00 | 197.50 | 161.50 | 217.90 | 212.00 | 214.50 | 178.50 | 188.50 | 180.00 | 191.20 | | Discount^{(1)} (%) | (13.5) | (11.9) | (13.6) | (11.2) | (12.8) | (14.2) | (11.1) | (11.9) | (10.1) | (6.4) | (7.0) | | **Earnings per ordinary share (basic)** | | | | | | | | | | | | | - Capital (pence) | (6.61) | 24.49 | 45.73 | (68.29) | (0.12) | 4.66 | 44.46 | (5.50) | 18.53 | (12.13) | 30.71 | | - Revenue (pence) | 9.40 | 8.17 | 8.13 | 7.88 | 7.47 | 9.27 | 7.80 | 8.23 | 4.98 | 4.80 | 5.20 | | Total (pence) | 2.79 | 32.66 | 53.86 | (60.41) | 7.35 | 13.93 | 52.26 | 2.73 | 23.51 | (7.33) | 35.91 | | Dividends per ordinary share (pence) | 8.450 | 8.000 | 7.775 | 7.575 | 7.200 | 7.000 | 6.650 | 6.400 | 6.100 | 6.100 | 5.800 | | Gross assets^{(1)} (£m) | 542.5 | 569.6 | 556.1 | 461.4 | 581.9 | 579.8 | 579.0 | 455.2 | 479.2 | 433.4 | 452.1 | | Equity holders' funds (£m) | 507.4 | 545.9 | 505.7 | 414.3 | 574.2 | 579.8 | 532.2 | 436.6 | 447.4 | 410.2 | 442.9 | | Ordinary shares bought back (£m) | 27.2 | 13.9 | 12.1 | 4.8 | 9.5 | 21.9 | 10.0 | 3.0 | – | 3.9 | – | | Net (overdraft)/cash (£m) | (1.0) | 0.5 | (3.2) | 39.5 | 11.7 | 8.1 | 15.3 | 12.6 | 0.5 | (0.9) | 2.6 | | Bank loans (£m) | (35.1) | (23.7) | (50.4) | (47.1) | (7.8) | 0.0 | (46.8) | (18.7) | (31.9) | (23.1) | (9.2) | | Net (debt)/cash (£m) | (36.1) | (23.2) | (53.6) | (7.6) | 3.9 | 8.1 | (31.5) | (6.1) | (31.4) | (24.0) | (6.6) | | Net (gaining)/cash on net assets (%) | (7.1) | (4.3) | (10.6) | (1.8) | 0.7 | 1.4 | (5.9) | (1.4) | (7.0) | (5.9) | (1.5) | | **Management and administration fees and other expenses** | | | | | | | | | | | | | - excluding performance fee^{(1)} (£m) | 7.4 | 7.3 | 5.0 | 6.4 | 5.9 | 5.7 | 5.2 | 4.5 | 4.6 | 3.7 | 3.4 | | - including performance fee^{(1)} (£m) | 7.4 | 7.3 | 10.1 | 6.4 | 5.9 | 5.7 | 14.3 | 4.5 | 7.7 | 3.7 | 12.9 | | **Ongoing charges figure^{(1)}** | | | | | | | | | | | | | - excluding performance fee (%) | 1.4^{(1)} | 1.4^{(1)} | 1.1 | 1.1 | 1.0 | 1.0 | 1.1 | 1.1 | 1.1 | 0.9 | 0.8 | | - including performance fee (%) | 1.4^{(1)} | 1.4^{(1)} | 2.1 | 1.1 | 1.0 | 1.0 | 2.9 | 1.1 | 1.8 | 0.9 | 3.2 | $^{(1)}$ See Alternative Performance Measures on pages 95 and 97 $^{(1)}$ There was no dilution $^{(1)}$ Based on diluted NAV $^{(1)}$ Gross assets less liabilities excluding loans $^{(1)}$ Investment Management Agreement amended from 1 April 2021 and the performance fee discontinued 98 Utilico Emerging Markets Trust plc ### EMERGING CITIES | EMERGING WEALTH | EMERGING OPPORTUNITIES UK CONTACT PO Box 208 Epsom Surrey KT18 7YF Telephone: +44 (0)1372 271486 www.uemtrust.co.uk