Date:                      22 November 2022

Contact:                 Charles Jillings     

                                Utilico Emerging Markets Trust plc  

                                01372 271 486   

Gay Collins/Pippa Bailey

Montfort Communications

0203 770 7913

[email protected]

UTILICO EMERGING MARKETS TRUST PLC

UNAUDITED HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS TO 30 SEPTEMBER 2022

Utilico Emerging Markets Trust plc ("UEM" or the "Company") today announced its unaudited financial results for the six months to 30 September 2022.

Highlights of results for the six months to 30 September 2022:

·      Net asset value ("NAV") total return per share of -2.8%*

·      NAV per share of 243.29p, down 4.3%*

·      Gross assets of £521.8m, down from £569.6m

·      Annual compound NAV total return since inception of 9.3%*

·      Dividends per share of 4.15p, up 3.8%. Dividends were fully covered by earnings

·      Revenue earnings per share ("EPS") increased 13.1% to 6.83p

·      Revenue income increased to £16.9m, an 6.3% increase

*See Alternate Performance Measures on pages 43 to 45 of the Half-Yearly Financial Report for the six months to 30 September 2022

The Half-Yearly Financial Report for the six months to 30 September 2022 will be posted to shareholders in early December 2022. A copy will shortly be available to view and download from the Company's website at www.uemtrust.co.uk and the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.  Please click on the following link to view the document: http://www.rns-pdf.londonstockexchange.com/rns/2034H_1-2022-11-22.pdf

John Rennocks, Chairman of UEM said: "UEM has delivered a credible performance against what has been a challenging environment, with its NAV total return of negative 2.8% over the six months being significantly better than the MSCI Emerging Markets total return index ("MSCI") which was down 7.6%. Since inception, UEM has continued to outperform and as at 30 September 2022, UEM's NAV total return was 358.7%, ahead of the MSCI, standing at 251.0%. It is also pleasing to see UEM's revenue earnings per share rise by 13.1% over the comparable six months to 30 September 2021 which has enabled the Board to recommend an increase in the quarterly dividend going forward of 7.5% to 2.15p a quarter. While short term challenges are numerous and volatility remains elevated, we remain optimistic that the opportunities to invest for the long term are good. Our investee companies remain well managed and well positioned to respond to the challenges and emerge stronger from them."

Charles Jillings, Investment Manager of UEM added: "Despite the half year having been one of the most challenging for investors since the inception of UEM, with a number of escalating concerns and market contagion in certain jurisdictions, UEM's NAV total return for the half year was a strong performance against weak markets. It is also pleasing to see the underlying investee companies deliver rising earnings, reflected in UEM's EPS increase of 13.1% from 6.04p to 6.83p. Within the portfolio UEM's gross assets (less liabilities excluding loans) decreased to £521.8m from £569.6m. There have also been six new entries into UEM's top thirty holdings and the portfolio's percentage in the electricity sector has increased from 15.5% to 19.6%, mainly as a result of further investment in Eletrobras. There was little change to the overall portfolio country exposures apart from Brazil which rose to 22.4% from 20.9% and India which rose from 11.3% to 13.8% both mainly on market performance. The world continues to be faced with a number of unresolved deep-seated challenges; however, UEM's portfolio is invested in relatively liquid, cash-generative companies which have long-duration assets that we believe are structurally undervalued and offer excellent total returns."

PERFORMANCE SUMMARY

(1)      See Alternative Performance Measures on pages 43 to 45 of the Half-Yearly Financial Report for the six months to 30 September 2022

(2)      The second quarterly dividend declared has not been included as a liability in the accounts

(3)      Gross assets less liabilities excluding loans

(4)      Percentage change based on comparable six month period to 30 September 2021

(5)      For comparative purposes the figures have been annualised

CHAIRMAN'S STATEMENT

The half year to 30 September 2022 has again continued to be difficult for everybody, including investors. Against this challenging environment UEM delivered a credible performance with its NAV total return of negative 2.8% over the six months being significantly better than the MSCI Emerging Markets total return Index ("MSCI") which was down 7.6%.

UEM measures its performance on a total return basis and the long-term annual compound NAV total return since inception was 9.3%. The Investment Managers are seeking long-term performance to be above 10.0% including a rising dividend.

Since inception, UEM has continued to outperform and as at 30 September 2022, UEM's NAV total return was 358.7%, ahead of the MSCI, standing at 251.0%.

It is also pleasing to see UEM's revenue earnings per share ("EPS") rise by 13.1% over the comparable six months to 30 September 2021. This has enabled the Board to recommend an increase in the quarterly dividend going forward of 7.5% to 2.15p a quarter.

GLOBAL ECONOMY

As previously noted there are numerous headwinds currently faced by the markets, including rising inflation; increasing interest rates; the Ukraine war; shift to green energy; US and China trade friction; zero-Covid policy in China; cyber security; shortage of commodities; and leveraged economies. A number of these headwinds remain largely unresolved and highly intertwined, making it difficult to resolve in the near term.

Further, we are witnessing a rise in nationalism and wealth inequality which in turn is seeing countries focusing increasingly inwards for a solution to the challenges they face.

EMERGING MARKETS

There are four trends to highlight in the EM. Inflation is absolutely a key focus in the western economies, but for Asia this is not yet a challenge. By way of example, Vietnamese inflation is running at 3.2% and GDP growth for the full year to 31 December 2022 is expected to be some 7.7%. Latin America has seen strong inflationary pressures, but central banks have been ahead of the curve. Brazil's interest rates are at 13.75% and inflation, having peaked at 12.0%, is down at 8.7%, with the expectations of falling to 5.0% in the next twelve months. Eastern Europe on the other hand faces some of the highest inflationary rates, unsurprising due to their proximity to Russia and Ukraine and the ensuing supply disruption. Poland's core inflation is running at around 11.0%. This has meant different approaches by each of the monetary authorities in the EM regions.

China has elected Xi Jinping as its President for the foreseeable future. China's zero-Covid policy remains a concern, and it is a clear headwind for economic activity and particularly the consumer in China. Much of China's growth is driven by the housing market which relies on a confident consumer.

Russia's invasion of Ukraine driven by Putin has been devastating to watch and it has turned into a shockingly destructive war. Today, as the Russian military is found wanting, the response from Putin has been to take the war to the people of Ukraine, destroying infrastructure and even whole cities. Putin is prepared to weaponise every element he can. Sadly, going forward, we expect more of this policy as increasingly the Russian army finds it difficult to repel a highly motivated Ukraine army. This war has put strain on already tight global energy markets.

Brazil's elections should be seen as a positive and they were closely fought, but the transition to Lula has been peaceful. That is a big endorsement for Brazil's institutions.

We would note the following; interest rates are likely to fall in EM benefiting UEM's portfolio as the cost of capital reduces; China's policies are likely to see a rising of "near shoring" to the benefit of countries such as Vietnam and India; the war in Ukraine is likely to see Latin America benefit from heightened commodity pricing and the increased focus on "supply chain security".

One key event to come is the reversal of the Chinese zero-Covid policy. This is expected to happen at some point. China is rapidly eroding much of the economic and social gains it has made over recent years due to the zero-Covid policy which is socially unsustainable. When it reverses, we expect a very significant surge in demand, and a sharp rise in commodities and trade. UEM's portfolio should benefit from this.

LEVEL 3 INVESTMENTS

The level 3 investments as at 30 September 2022 stand at £49.5m representing 9.4% of the total portfolio, largely unchanged from the £48.1m as at 31 March 2022 which represented 8.4% of the total portfolio. Further details are set out in the Investment Managers' report.

BOARD

We announced plans for board refreshment last year, which included the appointments of Mark Bridgeman and Isabel Liu and after the 2022 Annual General Meeting ("AGM") Anthony Muh stepped down from the Board. Continuing with these initiatives, Susan Hansen has indicated 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. The Directors have reviewed the composition of the Board and the current intention is to continue as a Board of four Directors. This will be kept under review as part of the annual Board evaluation process.

SHARE BUYBACKS

It is disappointing to see UEM's share price discount widen over the half year from 11.9% as at 31 March 2022 to 13.3% as at 30 September 2022. This remains above levels that the Board would wish to see over the medium term. The Company has continued buying back shares for cancellation with 8.6m shares bought back in the six months to 30 September 2022, at an average price of 216.91p, and total cost of £18.7m.

UEM has now invested over £130.0m in ordinary share buybacks since inception. While the Board is keen to see the discount narrow, any share buyback remains an investment decision. Traditionally the Company has bought back shares if the discount widens in normal market conditions to over 10.0%.

REVENUE EARNINGS AND DIVIDEND

It is pleasing to report UEM's revenue EPS increased by 13.1% compared to the half year to 30 September 2021, given the ongoing challenges faced by investee businesses.

The Board is pleased to announce an increase in the second quarterly dividend in respect of the year to 31 March 2023 from 2.00p to 2.15p, an increase of 7.5%. UEM has now declared two quarterly dividends totalling 4.15p per share, a 3.8% improvement over the previous half-year. Dividends remain fully covered by income. In the absence of unforeseen circumstances, the Board remains confident the increased quarterly rate will be maintained for the next two quarters. The retained revenue reserves increased by £6.0m to £13.2m in the six months to 30 September 2022.

The Board would like to re-emphasise that UEM's portfolio is predominantly invested in relatively liquid, cash-generative companies. The Company's Investment Managers believe these long-duration assets are structurally undervalued and offer excellent total returns.

OUTLOOK

While short term challenges are numerous, and volatility remains elevated we remain optimistic that the opportunities to invest for the long-term are good.

Our investee companies remain well managed and well positioned to respond to the challenges and have the potential to emerge stronger from them.

John Rennocks

Chairman

22 November 2022

INVESTMENT MANAGERS' REPORT

The half year has been one of the most challenging for investors since the inception of UEM, with a number of escalating concerns and market contagion in certain jurisdictions. Despite this, UEM's NAV total return for the half year of negative 2.8% was a strong performance against weak markets. It was pleasing to see the underlying investee companies deliver rising earnings, reflected in UEM's EPS increase of 13.1% from 6.04p to 6.83p as at 30 September 2022.

In the report and accounts for the year to 31 March 2022 we highlighted a number of concerns for investors. We have updated these below although sadly they still remain significant issues.

INFLATION AND INTEREST RATES

An ongoing surprise to us has been the tight labour market conditions across the world which has led to wage inflation as buying power shifts to the wider labour markets. This has led to unemployment rates in many markets being stubbornly low. It would appear to us that the workforce has reduced, partly owing to retirement, partly higher death rates and partly due to long Covid. This is in turn driving wage inflation and therefore core inflationary pressures. Furthermore, there appears to be high churn in the labour force which in certain sectors has reduced productivity as training is required. These factors may well cause further inflationary pressures and may become embedded in economies.

We see commodities markets as potentially being at an imbalance as demand exceeds supply in certain products. This is likely to continue as decades of underinvestment cannot be redressed overnight.

Further, the response to the Ukraine war will see increased drive for energy security, food security, supply chain security and military security. These four challenges are likely to be pursued at significant pace. The result will be heightened demand for commodities.

Structurally we therefore see commodity demand rising and pricing to remain to the upside.

To address the rising inflationary outlook, central banks have begun and will continue to raise interest rates. As such we expect to see interest rates rise further over the coming months, but we do expect that, after significant interest rate increases, the rate of rises over the next six months will likely moderate.

We would note two points on inflation. First, Asia has been largely immune and this may be due to the younger workforce having lower impacts from Covid-19. Second, Latin America has seen strong inflationary pressures but the central banks have been aggressive in their response and as a result inflation in some of the regions' economies is now falling.

UKRAINE

The war in Ukraine has disrupted a number of commodity supplies which have accelerated inflationary pressures to levels not seen in decades. We expect this to persist for at least the next six months. However, the imbalance will in time be addressed and supply led inflationary pressures will reduce.

It is disappointing to note that after six months the war looks set to go deep into the winter. This means the wider inflationary legacy will persist. Neither side looks capable of winning the war in the coming months. The threat to energy supply and supply chain security will drive significant investment to address these two concerns and the inflationary pressures will continue to be to the upside.

Of course, the big unknown is the reaction of Putin. Does he choose to escalate the conflict in an uncontrollable way in his frustration at the lack of meaningful progress?

CHINA

China's zero-Covid policy is an ongoing matter. China continues to have two fundamental choices; either drive the economy or contain Covid-19. It is difficult to see how it can maintain both. As the world's biggest importer of commodities this is a real concern.

However, we expect that if China shifts away from its zero-Covid policy then there will be a surge in demand. This in itself could drive commodities significantly higher.

The appointment of Xi for a further presidential term is a concern for the medium and longer term. We fear that China may become less flexible in its approach, more focused on political goals and that the economy will, as a result, underperform.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG")

It is worrying to note that Covid-19 clearly setback social gains. It is a rising concern that the need for energy security will see environmental setbacks as well.

How does UEM position itself? Given the wide range of assets, geographies and governments involved in UEM's portfolio, discussions are varied. A number of our investee companies do have a key role to play in reducing carbon emissions, from wind farms to rail and from hydro to enabling businesses to work remotely. ICM's approach is therefore driven by the need to see improvements over time by each investee company.

CLIMATE CHANGE

The war in Ukraine has been a true setback for the global energy ambitions of reducing carbon emissions. Many countries have reversed their approach to energy with the overriding need to be energy secure. Even if that means tearing down a windfarm and mining the land for coal.

However, the best way to address the energy shortfall over time is likely to be to invest in green technologies, thereby achieving two ambitions at once, energy security and green energy supply. This will take time but may offer opportunities for investors if governments continue to support the essential green investments.

PORTFOLIO

UEM's gross assets (less liabilities excluding loans) decreased to £521.8m as at 30 September 2022 from £569.6m as at 31 March 2022.

There have been six new entries into UEM's top thirty holdings over the half year to 30 September 2022: Centrais Eletricas Brasileiras S.A. ("Eletrobras"), China Gas Holdings Limited, Conversant Solutions Pte Ltd, Adani Ports and Special Economic Zone Limited, Engie Brasil Energia S.A., and InPost S.A. The most significant entry into the top thirty was Eletrobras. UEM invested further into Eletrobras as it made its way through the privatisation process in Brazil, this together with its strong share price gains saw it rise to fifth position in the portfolio.

During the half year to 30 September 2022, Corporacion Financiera Colombiana S.A. fell out of the top thirty due to poor share price performance. China Everbright Greentech Limited was reduced as China's lockdowns continued to impair operations. Societe Nationale des Telecommunications du Senegal and KT Corporation were sold down following a rally in their share prices. Naver Corporation Limited fell out of the top thirty due to poor share price performance and PT Link Net Tbk. was exited following an offer for the minority shareholders at a premium to the market price.

Purchases in the portfolio were £52.6m in the half year ended 30 September 2022 and realisations were £67.3m. UEM ended the year fully invested with its bank loans partly drawn.

During the half year to 30 September 2022, the electricity sector increased from 15.5% to 19.6% mainly as a result of the investment in Eletrobras. The ports and logistics sector was down mainly on sector weakness from 19.3% as at 31 March 2022 to 17.9% as at 30 September 2022. Most of the other sectors saw small shifts.

There was little change to the overall portfolio country exposures apart from Brazil which rose to 22.4% from 20.9% as at 31 March 2022 and India, which rose from 11.3% to 13.8%, both mainly on market performance.

LEVEL 3 INVESTMENTS

UEM's level 3 investments as at 30 September 2022 were £49.5m (31 March 2022: £48.1m), representing 9.4% of total investments.

UEM has over the years invested in unlisted businesses at a modest level. One investment, Petalite Limited ("Petalite") has performed exceptionally well and now accounts for 3.5% of UEM's portfolio. Petalite is an early-stage company based in the UK which has developed an innovative electric vehicle charging technology which offers greater reliability and efficiency than is currently available in the market. In June Petalite welcomed new investors A&M Impact Partners ("AMIP"), a venture established by Ashley Unwin, TPG Senior Advisor, and Michael Macdougall, former private equity partner of TPG. The equity raise, which was also supported by UEM, seeks to accelerate commercialisation with the strategic involvement of AMIP with Ashley Unwin being appointed as Non-Executive Chairman of Petalite.

UEM expects the balance of the unlisted investments to reduce. In particular CGN Capital Partners Infra Fund 3 ("CGN"), the Chinese wind farm investment, has sold its assets and is in the process of returning capital to its shareholders, including UEM. CGN accounts for 2.3% of the total portfolio.

SHARE BUYBACKS

UEM has been actively buying back its shares. In the year to 31 March 2022 UEM bought back 6.5m shares at a cost of £13.9m and in the six months to 30 September 2022 UEM bought back 8.6m shares at £18.7m. This clearly reduces our asset base and therefore in reviewing the metrics below is a drag on year-on-year comparison, except EPS. The average price paid over the 18 months to 30 September 2022 was 214.74p per share. This was enhancing to NAV per share which was 243.29p as at 30 September 2022.

Since inception UEM has bought back 71.1m shares at a cost of £130.1m and an average price of 183.03p.

BANK DEBT

UEM's net debt, being bank loans and overdrafts less cash, increased marginally from £23.2m as at 31 March 2022 to £23.7m as at 30 September 2022. UEM's £50.0m committed multicurrency loan facility matures in March 2024.

REVENUE RETURN

Revenue income increased 6.3% to £16.9m for the six months to 30 September 2022, from £15.9m in the six months to 30 September 2021.

Management fees and other expenses decreased by 5.4% to £1.5m compared to the prior half-year. Finance costs remained modest at £0.1m given the low interest rate environment in the period. Taxation remained in line with the prior half year at £0.9m for the period to 30 September 2022.

Arising from the above, profit for the half-year increased by 8.0% to £14.4m from £13.3m at the prior half-year. EPS was higher, a rise of 13.1% to 6.83p compared to the prior half-year of 6.04p due to the increase in profit and reduced average number of shares in issue following buybacks. Dividends per share of 4.15p were fully covered by earnings.

Retained revenue reserves rose to £13.2m as at 30 September 2022, equating to 6.42p per share.

CAPITAL RETURN

The portfolio lost £28.6m during the half year to 30 September 2022 (30 September 2021: gains of £44.1m). There were losses on foreign exchange of £0.6m (30 September 2021: gains of £0.7m). The resultant total income loss on the capital return was £29.3m against prior half-year gains of £44.8m.

Management and administration fees were marginally higher at £2.2m (30 September 2021: £2.0m). Finance costs were reduced at £0.2m versus £0.3m at the prior half-year. Taxation was a positive at £0.1m (30 September 2021: -£1.0m) which arose mainly from Indian deferred capital gains tax reductions on reduced gains. The net effect of the above was a loss on capital return of £31.6m (30 September 2021: a gain of £41.5m).

INVESTOR COMMUNICATION

We have been increasing the marketing of UEM to the wider investment community, including retail investors, through a number of initiatives.  These include more frequent publications of research notes from UEM's broker, Shore Capital and Corporate Limited, and Edison Investment Research Limited; utilising the Investor Meet Company platform which provides an excellent recorded video platform for communicating to individual investors; and increasing the content on UEM's website via our 'insights' page. We also draw investors' attention to other areas of UEM's website including the comprehensive Investor Relations and News sections.  We intend to continue to increase our focus on this important area.

Charles Jillings

ICM Investment Management Limited and ICM Limited

22 November 2022

HALF-YEARLY FINANCIAL REPORT AND RESPONSIBILITY STATEMENT

The Chairman's Statement and the Investment Managers' Report give details of the important events which have occurred during the period and their impact on the financial statements.

PRINCIPAL RISKS AND UNCERTAINTIES

Most of UEM's principal risks and uncertainties are market related and are similar to those of other investment companies investing mainly in listed equities in emerging markets.

The principal risks and uncertainties were described in more detail under the heading "Principal Risks and Risk Mitigation" within the Strategic Report section of the Annual Report and Accounts for the year ended 31 March 2022 and have not changed materially since the date of that document.

The principal risks faced by UEM include not achieving long-term total returns for its shareholders, adverse market conditions leading to a fall in NAV, loss of key management, its shares trading at a discount to NAV, losses due to inadequate controls of third party service providers, gearing risk and regulatory risk. In addition, the emergence and monitoring of geopolitical risk and climate risk, and the continued ongoing risk of the Covid-19 pandemic.

The Annual Report and Accounts is available on the Company's website, www.uemtrust.co.uk

RELATED PARTY TRANSACTIONS

Details of related party transactions in the six months to 30 September 2022 are set out in note 9 to the accounts and details of the fees paid to the Investment Managers are set out in note 2 to the accounts. Directors' fees were increased by approximately 5.0% with effect from 1 April 2022 to: Chairman £50,000 per annum; Chair of Audit & Risk Committee £46,725 per annum; and other Directors £37,000 per annum.

The net fee entitlement of each Director is satisfied in shares of the Company, purchased in the market by each Director at around each quarter end.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with Chapter 4 of the Disclosure Guidance and Transparency Rules, the Directors confirm that to the best of their knowledge:

•    the condensed set of financial statements contained within the report for the six months to 30 September 2022 has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" on a going concern basis and gives a true and fair view of the assets, liabilities, financial position and return of the Company;

•    the half-yearly report, together with the Chairman's Statement and Investment Managers' Report, includes a fair review of the important events that have occurred during the first six months of the financial year and their impact on the financial statements as required by DTR 4.2.7R;

•    the Directors' statement of principal risks and uncertainties above is a fair review of the principal risks and uncertainties for the remainder of the year as required by DTR 4.2.7R; and

•    the half-yearly report includes a fair review of the related party transactions that have taken place in the first six months of the financial year as required by DTR 4.2.8R.

On behalf of the Board

John Rennocks

Chairman

22 November 2022

CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

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 net return on ordinary activities after taxation represents the profit for the period and also the total comprehensive Income.

CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)

NOTES TO THE ACCOUNTS (UNAUDITED)

1. ACCOUNTING POLICIES

The Company is an investment company incorporated in the United Kingdom with a premium listing on the London Stock Exchange.

The unaudited condensed accounts have been prepared 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 to the extent that they are in conformity with the requirement of the Companies Act 2006 ("IFRS"), IAS 34 "Interim Financial Reporting" and the accounting policies set out in the audited statutory accounts for the year ended 31 March 2022.

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by the Directors in applying the accounting policies and key sources of uncertainty were the same as those applied to the financial statements as at and for the year ended 31 March 2022.

The condensed Accounts do not include all of the information required for full annual accounts and should be read in conjunction with the accounts of the Company for the year ended 31 March 2022, which were prepared under full IFRS requirements..

2. MANAGEMENT AND ADMINISTRATION FEES

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 £35,000 (30 September 2021: £35,000 and 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).

3. TAXATION

The revenue return taxation charge of £954,000 (30 September 2021: £909,000 and 31 March 2022: £1,500,000) relates to irrecoverable overseas taxation suffered on dividend and interest income.

The capital return taxation income of £85,000 (30 September 2021: expense of £995,000 and 31 March 2022: expense of £1,188,000) relates to capital gains on realised gains on sale of overseas investments and deferred tax in respect of capital gains tax on overseas unrealised investment gains that may be subject to taxation in future years.

4. EARNINGS PER SHARE

Earnings per share is the profit attributable to shareholders and based on the following data:

5. DIVIDENDS PAID

The Directors have declared a second quarterly dividend in respect of the year ending 31 March 2023 of 2.15p per share payable on 16 December 2022 to shareholders on the register at close of business on 2 December 2022. The total cost of the dividend, which has not been accrued in the results for the six months to 30 September 2022, is £4,385,000 based on 203,962,343 shares in issue as at 21 November 2022.

6. BANK LOANS

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

As at 30 September 2022 £20,185,000 (30 September 2021: £21,488,000 and 31 March 2022: £23,662,000) was drawn down.

7. ORDINARY SHARE CAPITAL

A further 2,221,032 ordinary shares have been purchased for cancellation at a total cost of £4,706,000 since the period end.

8. NET ASSET VALUE PER SHARE

The NAV per share is based on the net assets attributable to the equity shareholders of £501,629,000 (30 September 2021: £547,252,000 and 31 March 2022: £545,916,000) and on 206,183,375 ordinary shares, being the number of ordinary shares in issue at the period end (30 September 2021: 219,227,927 and 31 March 2022: 214,744,067).

9. RELATED PARTY TRANSACTIONS

The following are considered related parties of the Company: the subsidiary undertakings (UEM (HK) Limited and UEM Mauritius Holdings Limited), the associates of the Company (East Balkan Properties plc, Petalite Limited ("Petalite") and Pitch Hero Holdings Limited), 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 period, UEM(HK) repaid £2,120,000 and £456,000 loan interest was capitalised and added to the balance of the loan. As at 30 September 2022 the fair value of the loan held with UEM (HK) Limited was £11,871,000 and loan interest accrued was £77,000. During the period the Company did not receive or make payments to UEM Mauritius Holdings Limited.

During the period the Company received £531,000 from East Balkan Properties plc by way of a capital return.

During the period 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. At the period end the Company held 10,725 equity shares and continued to hold 29.4% of the diluted shareholding of Petalite (31 March 2022: 29.4% - the convertible loan note was in the money and treated as converted).

Pursuant to a loan agreement dated 1 March 2021 under which UEM has agreed to loan monies to Pitch Hero and as at 31 March 2022 the balance of the loan and interest outstanding was £158,000. As at 30 September 2022, the balance of the loan and interest outstanding was £162,000. The loan bears interest at an annual rate of 5.0% and is repayable on 1 March 2024.

The Board received aggregate remuneration of £121,000 (30 September 2021: £99,000 and 31 March 2022: £210,000 included within "Other expenses" for services as Directors). As at the period end, £nil (30 September 2021; £1,000 and 31 March 2022: nil) remained outstanding to the Directors. In addition to their fees, the Directors received dividends totalling £26,000 (30 September 2021: £56,000) during the period under review in respect of their shareholdings in the Company. There were no further transactions with the Board during the period.

There were no transactions with ICM, ICMIM, ICM Investment Research Limited or ICM Corporate Services (Pty) Ltd, subsidiaries of ICM, other than investment management costs, company secretarial costs and research fees as set out in note 2 of £2,770,000 (30 September 2021: £2,838,000 and 31 March 2022: £5,620,000) and reimbursed expenses included within Other Expenses of £2,000 (30 September 2021: £10,000 and 31 March 2022: £60,000). As at the period end £1,382,000 (30 September 2021: £1,449,000 and 31 March 2022: £1,393,000) remained outstanding in respect of investment management, company secretarial and research fees.

Mr Jillings received dividends totalling £18,000 (30 September 2021: £14,000 and 31 March 2022: £27,000) and UIL Limited received dividends totalling £1,178,000 (30 September 2021: £1,422,000 and 31 March 2022: £2,831,000).

10. GOING CONCERN

Notwithstanding that the Company has reported net current liabilities of £4,744,000 as at 30 September 2022 (30 September 2021: £846,000 and 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 focussed 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 some of its short term obligations through the sale of listed securities, which represented 90.6% of the Company's total portfolio as at 30 September 2022. 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. 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.

11. 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 and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows:

During the period one stock with a value of £5.5m was transferred from level 1 to level 2 due to the change in the trading liquidity of the investee company. The book cost and fair value was transferred using the 31 March 2022 balances, and all subsequent trades are therefore disclosed in the level 2 column.

A reconciliation of fair value measurements in level 3 is set out in the following table:

12. FINANCIAL RISK MANAGEMENT - 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.

The Directors have satisfied themselves as to the methodology used, the discount rates and key assumptions applied, and the valuations. The methodologies used to determine fair value are described in the 2022 Report and Accounts. The level 3 assets comprise of a number of unlisted investments at various stages of development and each has been 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, listed peer comparison or peer group multiple or milestone analysis, 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 the beginning of 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.

The following table shows the sensitivity of the fair value of level 3 financial investments to changes in key assumptions.

As at 30 September 2022

As at 31 March 2022

Due to the low value and sensitivity of level 3 financial investments as at 30 September 2021, comparative figures have not been provided.

* Valuation of investment in Petalite

UEM has invested £2.8m in the prior three financial years in Petalite. Petalite is an unlisted electric vehicle ("EV") charging infrastructure company based in the UK that has been developing a new technology which enables more reliable and cost effective EV chargers. In the period since UEM's investment, Petalite has achieved significant milestones including initial certification of the Power Core and delivery of test units to a blue-chip customer. Petalite is also now in commercial discussions with several large companies. Reflecting such progress, UEM valued Petalite's ordinary shares at £1,743 per share as at 30 September 2022, a similar value to its 31 March 2022 carrying value. This share price values UEM's investment in Petalite at £18.7m, representing a material uplift on UEM's initial investment.

While the Directors believe that the estimate of Petalite's fair value is appropriate, the Directors consider that this valuation was more challenging and required a higher degree of management judgement and estimation in the determination of its fair value. Petalite remains pre-revenue, has yet to achieve commercial rollout, and the valuation basis was made on assumptions which may not prove to be accurate. It is therefore likely that uncertainty is greater for this investment and, accordingly a higher sensitivity level of 40% has been applied to this valuation.

In June 2022, Petalite received £1.3m of equity funding from a new investor at a subscription price of £2,667 per share. This investment, equating to 1.3% of pre money share capital, valued Petalite at £97.5m. Had UEM valued its holding in Petalite at this share price, the value of UEM's investment would have been £28.6m, an increase of £9.9m on its 30 September 2022 carrying value.

13. RESULTS

The financial information contained in this Half-Yearly Financial Report does not constitute statutory accounts as defined in Sections 434 - 436 of the Companies Act 2006. The financial information for the six months ended 30 September 2022 and 30 September 2021 have neither been audited nor reviewed by the Company's auditors.

The information for the year ended 31 March 2022 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the auditor on those accounts contained no qualification or statement under Section 498(2) or (3) of the Companies Act 2006.

Legal Entity Identifier: 2138005TJMCWR2394O39