2024
Report and Accounts
Report and Accounts for the Year to 31 March 2024 | 1
Emerging Cities | Emerging Wealth | Emerging Opportunities
Trusted
A closed end fund
focused on long term
total return
Diversified
A diverse portfolio of
operational cash
generative investments
Proven
Strong management team
with a long term record
of outperformance
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, primarily
in emerging markets.
Why Utilico Emerging Markets Trust plc?
Unique Exposure
UEM offers a diverse portfolio of high conviction, bottom-
up investments in infrastructure and utilities, providing
unique exposure to megatrends in emerging markets
(“EM”).
Real Assets Driving Compelling Returns
UEM's portfolio of primarily listed operational
infrastructure assets typically offers attractive growth
and yields at a compelling valuation. As a result of
long term cash flows, which are often underpinned
by established regulatory frameworks, the portfolio
provides predictable, sustainable and growing income.
Experienced Management
Since UEM’s inception in 2005, the portfolio has been
managed by a dedicated, active investment team with
a long track record of investing successfully in this
highly specialised asset class.
Strong Performance
As at 31 March 2024, UEM has delivered a 9.5%
annualised NAV total return over 18 years; it has
outperformed the MSCI Emerging Markets total return
Index over the last one, three, five and ten years, and
since inception; and has a 3.9% dividend yield.
Utilico Emerging Markets Trust plc is a UK listed
fund uniquely focused on infrastructure and
utilities in emerging markets, where structural
growth drivers are accelerated by global
infrastructure megatrends.
Rumo S.A. (Brazil)
2 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 3
Contents
Financial Calendar
Year End
31 March
Annual General Meeting
17 September 2024
Half Year
30 September
Dividends Payable
March, June, September
and December
The business of Utilico Emerging
Markets Trust plc ("UEM" or
the "Company") consists of
investing the pooled funds of
its shareholders in accordance
with its investment objective and
policy, with the aim of spreading
investment risk and generating
a return for shareholders. The
joint portfolio managers of the
Company are ICM Investment
Management Limited (“ICMIM”)
and ICM Limited (“ICM”),
together referred to as the
“Investment Managers”.
Performance
3
Current Year Performance
4
UEM Company Overview
5
Performance Summary
6
Chairman’s Statement
9
Geographical Investment Exposure
12
Top Thirty Companies
14 Performance Since Inception (20 July 2005)
15 Ten Year Performance
Strategic Report And Investments
18 Investment Managers’ Report
23
Our Investment Approach
25
ESG Spotlight
26
Largest Holdings Overview
32
Strategic Report
41
Investment Managers and Team
Governance
43
Directors
44 Directors’ Report
50
Corporate Governance Statement
56
Directors’ Remuneration Report
59
Audit & Risk Committee Report
62
Directors’ Statement of Responsibilities
Financial Statements
63
Independent Auditor’s Report
69
Accounts
73
Notes to the Accounts
Additional Information
92
Notice of Annual General Meeting
96
Company Information
97
Alternative Performance Measures
99
Historical Performance
Current Year Performance
Total Return Comparative Performance (Pence)
from 31 March 2023 to 31 March 2024
Source: ICM and Bloomberg
Share price total return per share
NAV total return per share
Mar 24
Feb 24
Jan 24
Dec 23
Nov 23
Oct 23
Sep 23
Aug 23
Jul 23
Jun 23
May 23
Apr 23
Mar 23
95
100
105
110
115
MSCI Emerging Markets total return Index (GBP adjusted)
Rebased to 100 as at 31 March 2023
Dividends of 8.60p
Per Share
1.8%
(2023: 5.6%)
Dividends Paid
£16.9m
(2023: £17.2m)
Invested
£80.2m
(2023: £108.9m)
Realised
£155.5m
(2023: £126.6m)
Net Asset Value ("NAV")
Total Return Per Share *
12.8%
(2023: 2.1%)
Share Price Total
Return Per Share*
5.8%
(2023: 0.8%)
NAV of 274.01p
Per Share
9.2%
(2023: 1.3%)
Share Price
of 221.00p
1.8%
(2023: 3.1%)
11.4m Shares
Bought Back
£25.4m
(2023: £27.2m)
Total Revenue
Return Income
£23.1m
(2023: £24.3m)
Ongoing Charges*
1.5%
(2023: 1.4%)
Net Cash
£5.8m
(2023: Net Debt £36.1m)
* See Alternative Performance Measures on pages 97 and 98
International Container Terminal Services, Inc.
(The Philippines)
4 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 5
UEM Company Overview
UEM was founded in 2005 when Charles Jillings
recognised that there was significant interest
specifically in infrastructure and utilities assets in
emerging markets following investor presentations
some 20 years ago for Utilico Investment Trust plc,
now UIL Limited, which held a number of these
investments.
UEM is a UK listed closed-ended investment trust. It
is uniquely focused on investing in infrastructure and
utilities assets in emerging markets where structural
growth drivers are accelerated by global infrastructure
megatrends, helping to deliver attractive long term
total returns. UEM is a differentiated, benchmark
agnostic investment trust that has underlying
exposure primarily to listed operational infrastructure
assets, that typically offer attractive growth and yields
at currently compelling valuations. These real assets
often are underpinned by established regulatory
frameworks that provide predictable, sustainable
and growing income managed by experienced
management teams.
The structural growth drivers within emerging markets
of positive demographics, increase in urbanisation,
rising middle class and strong GDP growth, underpin
the investment opportunities that UEM is currently
witnessing. These drivers are being further accelerated
by global infrastructure megatrends of energy growth
and transition, social infra, digital infra and global
trade, which are contributing to UEM’s investment
objective of providing long term total returns and
driving UEM’s outperformance of the MSCI EM Index
over the last one, three and five years and since
inception.
UEM’s diversified portfolio currently has around 70
stocks, derived from UEM’s bottom-up investment
approach incorporating ESG considerations. UEM
holds an award winning record of outperformance, it
is included in Interactive Investor’s “Super 60” range of
funds and is Morningstar “5 star” rated.
Centrais Eletricas Brasileiras S.A. (Brazil)
Performance Summary
31 March
2024
31 March
2023
% change
2024/23
NAV total return per share1 (annual) (%)
12.8
2.1
n/a
Share price total return per share1 (annual) (%)
5.8
0.8
n/a
Annual compound NAV total return1 (since inception - 20 July 20052) (%)
9.5
9.3
n/a
NAV per share (pence)
274.01
250.91
9.2
Share price (pence)
221.00
217.00
1.8
Discount1 (%)
(19.3)
(13.5)
n/a
Earnings per share (basic)
- Capital (pence)
20.48
(6.61)
409.8
- Revenue (pence)
8.83
9.40
(6.1)
Total (pence)
29.31
2.79
950.5
Dividends per share
- 1st quarter (pence)
2.15
2.00
7.5
- 2nd quarter (pence)
2.15
2.15
0.0
- 3rd quarter (pence)
2.15
2.15
0.0
- 4th quarter (pence)
2.153
2.15
0.0
Total (pence)
8.60
8.45
1.8
Gross assets1 (£m)
522.9
542.5
(3.6)
Equity holders’ funds (£m)
522.9
507.4
3.1
Shares bought back (£m)
25.4
27.2
(6.6)
Net cash/(overdraft) (£m)
5.8
(1.0)
680.0
Bank loans (£m)
–
(35.1)
100.0
Net cash/(debt) (£m)
5.8
(36.1)
116.1
Net cash/(gearing)1 (%)
1.1
(7.1)
n/a
Management and administration fees and other expenses (£m)
7.7
7.4
4.1
Ongoing charges figure1 (%)
1.5
1.4
n/a
1 See Alternative Performance Measures on pages 97 and 98
2 All performance data relating to periods prior to 3 April 2018 are in respect of Utilico Emerging Markets Limited (“UEM Limited”), UEM's predecessor
3 The fourth quarterly dividend has not been included as a liability in the accounts
3 year rating out of 2,924
Global Emerging Market Equity
funds as of 31 March 2024
6 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 7
JOHN RENNOCKS
Chairman
UEM delivered a strong
performance with a positive
NAV total return of 12.8% for
the year to 31 March 2024. This
was once again significantly
ahead of the MSCI Emerging
Markets total return Index
which was up 5.8% over the
same period.
The year to 31 March 2024
has again been challenging.
The eruption of the war in Israel and Gaza has been
devastating for those involved and adds to the rising
geopolitical frictions from the war in Ukraine through
to the US-China tensions. Volatility in most markets
remains elevated as uncertainty has dominated, with
inflation and sharply higher central bank interest rates
adding to the challenges on climate change and natural
disasters.
UEM measures its performance on a total return basis
over the long term and the Investment Managers are
seeking long term outperformance. Despite difficult
markets, over one, three, five and ten years and since
inception, UEM has outperformed the MSCI EM Index
and the long term annual compound NAV total return
since inception to 31 March 2024 of 9.5% exceeded the
MSCI EM total return Index of 7.5%.
Global Economy
There remain numerous challenges faced by the
markets, each of which is difficult in its own right. We
have historically highlighted a number of these, and
they largely remain unresolved as we continue to see
a significant rise in nationalism, wealth inequality and
global migration.
Last year we witnessed the sharply higher inflationary
environment and the response by the central banks to
increase interest rates to bring inflation under control.
The year to 31 March 2024 has seen inflation fall and
the surprising part has been the continued strength of
the economies, especially in the United States, despite
higher interest rates. This is evidenced by resilience in
the labour market which, in most western countries,
unemployment levels are at record lows. This is good
for workers but ultimately negative for the inflation
outlook, as wage demands continue to keep inflation
elevated.
Equity markets have broadly moved to the upside
as they anticipate central banks' rate cuts, although
the higher for longer interest rate expectation has
surprised many economic commentators.
Emerging Markets
Most EM stock markets recovered strongly this year,
reversing last year’s weakness and reflecting global
Chairman’s Statement
Source: ICM and Bloomberg
Energy
Information
technology
Utilities
UEM NAV total
return per share
Financials
Industrials
Healthcare
Consumer
staples
Consumer
discretionary
Materials Communication
services
33.1%
24.0%
15.4%
12.8%
12.6%
2.3%
(3.1)%
(4.7)%
(7.3)%
(7.4)%
(13.4)%
MSCI EM Sector Index total returns (GBP adjusted)
from 31 March 2023 to 31 March 2024
expectations of lower interest rates. Brazil’s Bovespa
Index was up 25.7%, the Indian Sensex up 24.9% and
the Philippine PSEI Index up 6.2%. The two outliers
were Hong Kong's Hang Seng Index which was down
18.9% and China's Shanghai Composite Index down
7.1%.
In comparison, all currencies in the portfolio were
down against Sterling except for the Mexican Peso
which was up 6.3% over the year to 31 March 2024.
The high interest rates and improved outlook for
Sterling has seen it recover strongly over the year,
reversing last year’s Sterling weakness. Of note was the
weak Chilean Peso, down 21.1% against Sterling.
Most commodities have moved lower during the
period under review as supply chains have adjusted,
with wheat down by 19.1%, soybean down by 20.9%
and copper down by 2.1% while Brent crude oil
increased by 9.7%, driven by a number of factors from
stronger economies and geopolitical pressures.
Unlisted Investments (Level 3 Investments)
UEM has, over the years, invested in unlisted
businesses at a modest level. As at 31 March 2023
the value of the unlisted portfolio had risen to 10.8%
of the total portfolio, which was driven primarily by
the revaluation of Petalite Limited ("Petalite"). In the
year to 31 March 2024 the carrying value of Petalite
was reduced by 70.0% reflecting the challenges in
the electric vehicle ("EV") space which resulted in a
number of listed EV companies' share prices marked
down significantly. This reduction, together with some
realisations, saw the unlisted investments reduce in
value and as a percentage of the total portfolio. As at
31 March 2024 the unlisted investments represented
4.5% of the total portfolio.
Revenue Earnings and Dividend
While UEM’s revenue earnings per share (“EPS”)
decreased by 6.1% to 8.83p as at 31 March 2024,
dividends remain covered by the EPS.
UEM has declared four quarterly dividends of 2.15p
each, totalling 8.60p per share, a 1.8% increase over
the previous year. The retained earnings revenue
reserves increased by £0.5m in the year to £10.1m as at
31 March 2024, equal to 5.29p per share.
Ongoing Charges
Ongoing charges were 1.5% for the year to 31 March
2024 (2023: 1.4%), reflecting increases in marketing
expenditure, audit and custody fees.
Share Buybacks
UEM’s share price discount continued to widen over
the year from 13.5% as at 31 March 2023 to 19.3% as
at 31 March 2024. This remains well above the level
that the Board would wish to see over the medium
term. The Company has therefore continued buying
back shares for cancellation, with 11.4m shares bought
Rebased to 100 as at 31 March 2023
Source: Bloomberg
Hang Seng Index
PSEi - Philippene SE Index
Bucharest Exchange Trading Index
Jun 23
Sep 23
Dec 23
Mar 24
Brazil Ibovespa Index
Mar 23
Sensex Index
Shanghai SE Composite Index
70
80
90
100
110
120
130
140
150
Indices Movements
from 31 March 2023 to 31 March 2024
8 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 9
back during the year to 31 March 2024, at an average
price of 223.36p and total cost of £25.4m. The share
buybacks have contributed 1.0% to UEM's total returns
during the year to 31 March 2024.
While the Board is keen to see the discount narrow, any
share buyback remains an independent investment
decision. Historically the Company has bought back
shares if the discount widens in normal market
conditions to over 10.0%. Since inception, UEM has
bought back 86.2m ordinary shares totalling £164.2m.
The buybacks now represent significantly more than
the initial IPO capitalisation of UEM Limited when it
came to market in July 2005.
Board
As reported last year, Susan Hansen stepped down
from the Board following the 2023 Annual General
Meeting (“AGM”) and the Board continues to comprise
four Directors. Having joined the Board in 2015 and
served for a period approaching nine years, I intend
to retire from the Board on 31 December 2024. I
am pleased to report that Mark Bridgeman, who is
currently the Company’s Senior Independent Director,
has agreed to replace me as Chairman with Isabel Liu
taking on the role of Senior Independent Director.
As part of the Company’s succession planning, we
engaged an independent search consultancy to find
a suitably qualified Director to join the Board. After a
thorough selection process, the Board is pleased to
appoint Nadya Wells as a non executive Director with
effect from 1 September 2024. Nadya has over 25
years' experience in emerging markets, having spent
13 years with the Capital Group as a portfolio manager
and prior to that was a portfolio manager at Invesco
Asset Management investing in Eastern Europe.
Outlook
The structural growth and global infrastructure
megatrends in EM continue to drive growth within EM
economies. Our investee companies continue to make
good progress and we remain optimistic that UEM
offers significant value to its shareholders.
John Rennocks
Chairman
14 June 2024
Rebased to 100 as at 31 March 2023
Source: Bloomberg
Hong Kong Dollar
Philippine Peso
Romanian Leu
Jun 23
Sep 23
Dec 23
Mar 24
Brazilian Real
Mar 23
Indian Rupee
Chinese Renminbi
90
95
100
105
Currency Movements vs Sterling
from 31 March 2023 to 31 March 2024
Chairman’s Statement (continued)
Geographical Investment Exposure
as at 31 March 2024
Source: ICM
Figures in brackets as at 31 March 2023
Mexico
3.2%
(5.4%)
Chile
4.8%
(3.7%)
Brazil
25.8%
(20.9%)
Colombia
2.6%
(2.2%)
Other Europe
10.2%
(5.9%)
China
(including Hong Kong)
11.0%
(15.8%)
South Korea
2.8%
(4.1%)
The Philippines
6.8%
(4.9%)
India
7.7%
(10.7%)
Middle East/
Africa
6.0%
(5.8%)
Other Asia
3.3%
(4.8%)
Vietnam
9.3%
(7.0%)
UK
2.8%
(6.2%)
Poland
3.7%
(2.6%)
Ports and Logistics
20.0% (17.0%)
Electricity
19.8% (17.4%)
Data Services and Digital
Infrastructure
11.7% (13.1%)
Water and Waste
9.5% (6.6%)
Renewables
9.4% (12.7%)
Airports
6.2% (7.4%)
Telecommunications
5.1% (6.7%)
Road and Rail
4.9% (3.4%)
Gas
4.8% (7.5%)
Infrastructure Investment Funds
4.7% (3.7%)
Other
3.9% (4.5%)
Sector Distribution of Total Assets
10 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 11
Megatrends Driving Upside in Emerging Markets
Energy
Growth and
Transition
Decarbonisation and investment in energy to support strong economic growth
• Rapid economic development requires significant investment in energy infrastructure.
• Lower or net zero emissions targets to combat climate change require decarbonisation of the
energy matrix.
• Geopolitical concerns driving energy security higher up the agenda look to cut reliance on
imported oil and gas.
• Huge investment in renewables assets and supporting grid infrastructure across EM.
Social Infra
Urbanisation and rise of the middle class driving demand for better social
infrastructure
• Most emerging markets countries lack adequate essential social infrastructure.
• The growth of the middle class is increasing demand for better quality services and
infrastructure.
• Rapid urbanisation is creating a need for huge investments in infrastructure, transportation,
communication and internet services creating exciting opportunities for portfolio companies.
Digital Infra
Rapid digital adoption accelerating demand for digital infrastructure
• Advantageous demographics of young EM populations typically are more tech savvy driving
demand for digital infra.
• Affordable information technology drives innovation, knowledge and accountability driving
social benefits and commercial returns.
• A more capable and connected digital infrastructure is empowering companies in emerging
markets to deliver goods and services to a domestic and global customer base.
• New and disruptive applications developed in emerging markets are facilitating new business
models and efficiencies.
Global
Trade
Trade being fuelled by structural growth drivers, geopolitical dynamics and shifting
supply chains
• Emerging market economies offering strong GDP growth increasing their importance in the
share of world trade.
• Supply chain disruptions, geopolitical tensions and increasing export restrictions has led
companies to reconsider their supply chains.
• The increasingly multi-polar world and the reshaping of the competitive environment are
presenting new investment opportunities - new manufacturing hubs are being created as
there has been an increase in “shoring” (onshoring, nearshoring and friendshoring) and the
need to diversify supply chains.
Resilient Portfolio in the Current Macro and
Geopolitical Environment
Digital Infra
Rapid digital adoption
accelerating demand for
digital infrastructure
21.8%
of total
investments
Energy Growth and
Transition
Decarbonisation and
investment in energy to
support strong economic
growth
31.8%
of total
investments
Global Trade
Trade being fuelled by
structural growth drivers,
geopolitical dynamics and
shifting supply chains
21.5%
of total
investments
Social Infra
Urbanisation and rise of
the middle class driving
demand for better social
infrastructure
24.9%
of total
investments
UEM portfolio benefitting from structural growth
drivers accelerated by global infrastructure
megatrends
Inflation
Energy Prices
• A number of UEM’s investee
companies have concession
contracts linked to inflation
• Given monopolistic nature or
strong market position of majority
of investments, able to pass
through price increases
Interest Rates
Average net debt / EBITDA within the
portfolio of 1.9x (2023: 2.0x), enabling
companies to cope in a higher rate
environment
Reduced FX risk with the majority of
companies' debt matching income
streams
• Energy generation assets
benefitting from current volatile
fuel prices
• Most of investee companies are
able to pass through fuel price
increases
Geopolitical Tensions
• Increasingly multi-polar world and
the reshaping of the competitive
environment providing new
investment opportunities
• More diverse supply chains
benefitting well located assets in
the portfolio
12 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 13
31 March
2024
Company (Country)
Description and Megatrends
Value
£’000s
% of total
investment
11
Serena Energia S.A. (Brazil)
Renewable energy
12,595
2.4
12
Umeme Limited (Uganda)
Electricity distributor
11,948
2.3
13
Rumo S.A. (Brazil)
Rail-based logistics operator
11,495
2.2
14
Petalite Limited (UK) - Unlisted
EV charging technology company
10,082
2.0
15
Ocean Wilsons Holdings Limited (Brazil)
Port operator and investment
company
10,040
1.9
16
Manila Water Company, Inc (The
Philippines)
Water distributor and sanitation
9,958
1.9
17
KunLun Energy Company Limited (China)
Gas transmission and distributor
9,907
1.9
18
Cia de Saneamento Basico do Estado de
Sao Paulo (Brazil)
Water distributor and sanitation
9,769
1.9
19
Citic Telecom International Holdings
Limited (Hong Kong)
Telecommunications provider
9,686
1.9
20
Aguas Andinas S.A. (Chile)
Water distributor and sanitation
9,519
1.8
21
JSL S.A. (Brazil)
Logistics operator
9,219
1.8
22
Holding Bursatil Regional S.A. (Chile)
Stock Exchange
8,787
1.7
23
TTS (Transport Trade Services) S.A.
(Romania)
Freight forwarding company
8,504
1.7
24
Powergrid Infrastructure Investment
Trust (India)
Infrastructure investment trust
8,355
1.6
25
TAV Havalimanlari Holding A.S. (Turkey)
Airport operator
7,501
1.5
26
Grupo Traxion S.A.B. de C.V. (Mexico)
Logistics operator
7,439
1.4
27
Power Grid Corporation of India Limited
(India)
Electricity distributor
7,371
1.4
28
Shanghai International Airport Co., Ltd
(China)
Airport operator
7,264
1.4
29
China Gas Holdings Limited (China)
Gas distributor
7,141
1.4
30
Societe Nationale des
Telecommunications du Senegal (Senegal)
Telecommunications provider
6,981
1.4
Other investments
150,728
29.1
Total portfolio
517,195
100.0
Top Thirty Companies
1
4.9%
International
Container Terminal
Services, Inc.
Global
Trade
Ports and Logistics
Global container
port operator
headquartered in The
Philippines
25,309
Value £’000s
5
3.9%
Orizon Valorizacao
de Residuos S.A.
Social
Infra
Water and Waste
Waste treatment
operator in Brazil
19,995
Value £’000s
3
4.0%
Santos Brasil
Participacoes S.A.
Global
Trade
Ports and Logistics
Brazilian port
operator
20,550
Value £’000s
2
4.7%
Alupar Investimento
S.A.
Energy
Growth and
Transition
Electricity
Brazilian holding
company for
electricity
transmission and
renewable assets
24,200
Value £’000s
4
3.9%
FPT Corporation
Digital
Infra
Data Services and
Digital Infrastructure
Information
technology and
telecommunications
service company in
Vietnam
20,457
Value £’000s
6
3.0%
InPost S.A.
Digital
Infra
Ports and Logistics
European logistics
operator
15,435
Value £’000s
10
2.6%
VinaCapital Vietnam
Opportunity Fund Ltd
Social
Infra
Infrastructure
Investment Funds
Investment company
in Vietnam
13,364
Value £’000s
8
2.8%
Korean Internet
Neutral Exchange Inc.
Digital
Infra
Data Services and
Digital Infrastructure
South Korean data
centre operator
14,511
Value £’000s
7
2.9%
Centrais Eletricas
Brasileiras S.A.
Energy
Growth and
Transition
Electricity
Electricity generation
and transmission
company in Brazil
14,797
Value £’000s
9
2.7%
India Grid Trust
Energy
Growth and
Transition
Electricity
An infrastructure
investment trust
with electricity
transmission and
solar assets in India
14,288
Value £’000s
Note: % of total investments
For more information on the top ten companies, see the holdings review starting on page 27.
14 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 15
Ten Year Performance
to 31 March 2024
2022
2021
2020
2019
2018
2017
2016
2015
Source: ICM
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
2023
2024
Source: ICM
0.0
2.0
4.0
6.0
8.0
10.0
2022
2021
2020
2019
2018
2017
2016
2015
2023
2024
Dividends Per Share (Pence)
Revenue Earnings Per Ordinary Share (Pence)
Source: ICM
Purchases
Realisations
0
50
100
150
200
250
300
2022
2021
2020
2019
2018
2017
2016
2015
2023
2024
Source: ICM
Largest investment
Value of 2–10
Value of 11–20
Value of 21–40
Value of 41 and over
0
100
200
300
400
500
600
700
84
86
92
87
92
81
88
79
81
72
2022
2021
2020
2019
2018
2017
2016
2015
2023
2024
Investment Purchases and Realisations (£m)
Portfolio Progression (£m) and Number
of Holdings
UEM invests primarily in companies and sectors
displaying the characteristics of essential services
or monopolies, benefitting from EM structural
growth drivers accelerated by global infrastructure
and utilities megatrends.
Performance Since Inception
(20 July 2005)
NAV Annual Compound
Total Return*
9.5%
NAV Total Return
Per Share*
443.1%
Share Price Total Return
Per Share*
354.7%
Source: ICM and Bloomberg
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Share price total return
per share1
MSCI Emerging Markets
total return Index
(GBP adjusted)
NAV total return
per share1
50
100
150
200
250
300
350
400
450
500
550
2024
2020
MSCI Emerging Markets
Utilities total return Index
(GBP adjusted)
2021
2022
2023
Rebased to 100 as at 20 July 2005
1 Adjusted for the exercise of warrants and subscription shares
NAV and Share Price Performance Since Inception (Pence)
from 20 July 2005 to 31 March 2024
86.2m Shares
Bought Back
£164.2m
Dividends Per Share Increased
from 1.50p to
8.60p
Dividends Paid
Cumulative
£237.5m
* See Alternative Performance Measures on pages 97 and 98
16 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 17
Santos Brasil Participacoes S.A.
Santos Brasil Participacoes S.A. is a port and
logistics operators in Brazil, with its main asset
being the container terminal Tecon Santos
located in Porto de Santos, the largest port in
South America. Porto de Santos handles over
25% of Brazilian trade. UEM invested in 2018.
In the year to 31 December 2023, revenues increased
10.5%
and EBITDA 23.5%
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 145,000
students enrolled in its private schools, colleges and university.
UEM first invested in 2019.
In the year to 31 December 2023, revenues increased
19.6%
and EBITDA 21.0%
Manila Water Company, Inc
Manila Water Company, Inc is the concessionaire for water
supply, wastewater and sanitation services in the East Zone of
Metro Manila in the Philippines. It serves a population of over
7m people. UEM first invested in its current stake in November
2023.
In the year to 31 December 2023, revenues increased
34.7%
and EBITDA 61.9%
18 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 19
demands for better quality of life assets such
as road connectivity, air travel and faster data
connectivity. EM are also witnessing on average
stronger GDP growth than developed markets,
with EM becoming more important within the
global economy.
ii.
The emergence of global infrastructure
megatrends: the structural growth drivers
are being accelerated by global infrastructure
megatrends that we are witnessing. Within
“Energy Growth and Transition” significant energy
investment is required to help support the strong
GDP growth within EM with a focus on cleaner
energy solution as countries drive to achieve lower
or net zero emission targets. As EM countries are
also witnessing higher urbanisation and a rise of
the middle class, demand for better “Social Infra”
is also required, providing UEM with a number
of investment opportunities in the energy,
transportation and communication sectors.
Further, new and affordable digital technology
is driving rapid digital adoption and is increasing
demand for digital infrastructure. Digital Infra is
becoming increasingly essential in all markets
driving economic and social change. UEM is
focused on infrastructure investments that are
helping to deliver this digital transformation. As EM
global GDP increases, EM importance in “Global
Trade” increases. This, alongside supply chain
disruptions, geopolitical tensions and increasing
exports restrictions is changing the global trade
environment providing again more compelling
investment opportunities.
iii.
Government support: Nearly all governments in
emerging markets have extensive infrastructure
plans. From Brazil, to India, The Philippines,
Indonesia and Mexico, the level of ambition
is significant. Again providing investment
opportunities.
iv.
Country attributes: Many emerging economies
have additional individual strengths. For example,
Mexico with its more affordable and hard working
labour force, Brazil with its rich commodities base
and Vietnam with its proximity to China. These
economies are starting to reach a tipping point.
Taking Brazil as an example, its trade surplus in
2022 was USD 62bn and in 2023 it rose to USD
99bn – no wonder investments in UEM’s portfolio
such as Santos Brasil Porticipacoes S.A. ("Santos")
are outperforming. It is hard to convey just
how high we see the levels of energy, drive and
momentum underway in the emerging markets.
I would urge readers to follow us, on LinkedIn and on
the UEM website, to see more about these trends we
are witnessing and hear the opportunity which UEM
offers.
Portfolio
UEM’s gross assets (less liabilities excluding loans)
decreased to £522.9m as at 31 March 2024 from
£542.5m as at 31 March 2023. This reflects portfolio
valuation uplifts of £46.8m offset by net realisations to
fund, in part, both the share buybacks of £25.4m and
the reduction in bank debt of £35.1m in the year.
At the year end the top thirty holdings accounted for
70.9% of the total portfolio (31 March 2023: 67.7%). As
with last year there have been nine new entrants into
the top thirty over the year. UEM purchased £8.4m
of shares in Manila Water Company, Inc. UEM nearly
doubled its investment in Serena Energia S.A. (£5.4m),
increased its investment in Cia de Saneamento Basico
do Estado de Sao Paulo (£2.0m) which also benefitted
from its share price rise of 67.8% and increased its
investment in JSL S.A. (£4.3m) by 137.3%, its share price
rise was also impressive at 88.8%. Holding Bursatil
Regional S.A. was an investment from the merger of
Bolsa de Valores de Colombia with the Peru and Chile
stock exchanges. TTS (Transport Trade Services) S.A.’s
("TTS") share price rose 126.1% and UEM reduced its
holding by 40.6%, receiving £5.3m. TAV Havalimanlari
Holding A.S.’s investment increased by 49.7% (£1.8m)
and its share price rose 140.7%. Finally, UEM’s holding
in Societe Nationale des Telecommunications du
Senegal (“Sonatel”) was unchanged, but its share price
Manila Water Company, Inc. (The Philippines)
Investment Managers’ Report
It is pleasing to see UEM
report another NAV gain, with
a NAV total return for the year
to 31 March 2024 of 12.8%,
building on last year’s 2.1%
uplift and the prior two year’s
14.9% and 30.2% returns.
This performance was again
significantly ahead of the MSCI
EM total return Index which
increased 5.8% during the year.
UEM’s NAV performance over
one year, three, five and ten years and since inception
are all ahead of the MSCI EM total return Index. UEM
has achieved this together with a rising dividend
payout; lower volatility (as at 31 March 2024, UEM’s
five year Beta was 0.81x); and with a portfolio which is
significantly different from the MSCI Index. This should
be compelling to investors who want exposure to
emerging markets, top performance and comparatively
low levels of volatility.
The world is still faced with a number of unresolved
deep-seated issues. As noted in the Chairman’s
Statement these range from inflation to climate
change. To this, we can add the tragic events in Israel
and Gaza and the risk that the Middle East descends
further into conflict. Given that we have highlighted
a number of these issues before we will focus on two
topics in particular to discuss in more detail. Finding
consensus on these concerns has been and continues
to be difficult.
Inflation and Interest Rates
As we have outlined before, inflation has risen sharply
and remains elevated in the developed economies.
One of the undoubted drivers of this has been tight
labour markets which has led to wage inflation as
buying power shifts to the wider workforce. Last year
we noted that to address the rising inflationary outlook
in the developed world, central banks had 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”.
Over the past year many commodities have seen prices
fall as supply chains stabilise and efficiencies emerge,
and this has led to much lower inflationary pressures.
However, inflation remains above levels most central
banks wish to see before cutting their rates.
We continue to be surprised by the tightness of labour
markets. Unemployment levels remain 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. In addition, we are of the
view that nearshoring (Global Trade megatrend),
renewables (Energy Growth and Transition megatrend)
and other global infrastructure megatrends are driving
investment in the developed world and emerging
markets at above average trends and inflation could
remain elevated for some time. This certainly looks to
be the case in the United States.
A stark point to note is most central banks reference
their interest rates off the US Federal Reserve.
Decreasing rates at a time when the US is holding
rates is seen as high risk for smaller economies. It is
not surprising therefore to see the Chilean Peso fall
by 21.1% given its central bank cut rates from 11.25%
to 7.25% in the year to 31 March 2024. Certainly, the
emerging economies have more room to cut rates, but
are looking for the US Federal Reserve to move first.
Despite elevated central bank rates, UEM's portfolio of
investments exceeded our expectations. The strength
of the businesses and management teams’ discipline
is admirable. The portfolio investee gearing remains
modest at under 2.0x and we believe valuations
continue to be attractive.
Emerging Markets Structural Growth Drivers
and Megatrends
The ICM team travels a significant amount to EM
countries and it is very evident to us that EM offers
huge opportunities.
i.
Structural growth drivers remain fundamental: the
key drivers of positive demographics, increase in
urbanisation, rise of the middle class and strong
GDP growth remain. Typically, EM have a young,
growing, increasingly better educated working
age population. This coupled with increasing rates
of urbanisation, is resulting in the need for EM
countries to invest in robust infrastructure such
as energy, water and transportation to support
this urban growth, providing UEM with numerous
interesting and attractive opportunities. Further,
the rise of the middle class that has growing
discretionary income is driving an increase in
consumption of goods and services but also
CHARLES JILLINGS
Investment Manager
20 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 21
rose 13.1% and Ocean Wilsons Holdings Limited’s share
price rose 55.3% during the year to 31 March 2024.
UEM exited from Vamos Locacao de Caminhoes
Maquinas e Equipamentos S.A. ("Vamos"), receiving
£5.9m and Grupo Aeroportuario del Pacifico, S.A.B de
C.V., realising £7.5m. UEM also reduced its investment
in Gujarat State Petronet Limited, Grupo Aeroportuario
del Centro Norte, S.A.B de C.V. and Engie Energia Chile
S.A., all of which fell outside the top thirty holdings
giving a total realisation of £29.6m. China Datang
Corporation Renewable Power Co., Limited ("China
Datang") and Telelink Business Services Group both fell
out of the top thirty due to relative performance.
On a total return contribution basis, the top performer
in the portfolio was International Container Terminal
Services, Inc. (“ICT”) which contributed to 2.2% of
UEM’s performance as its share price over the period
appreciated 49.2% and ICT continues to deliver
strong financial and operational results. Power Grid
Corporation of India Limited (“Power Grid”) and Santos
both added 1.7% to UEM’s performance, Power Grid
sustaining strong operational results in a buoyant
Indian stock market, whilst Santos also benefitted
from the positive Brazilian market momentum as well
as improved market position of its main asset Tecon
Santos within the Port of Santos. FPT Corporation
(“FPT”) contributed 1.6% due to strong growth in net
profits of 21.2% and improved investor confidence
in Vietnam. TTS contributed 1.5% witnessing an
improvement in pricing with volumes helping to drive it
share price up 126.1% over the period.
The bottom performers over the twelve months to
31 March 2024 were Vamos with a negative 0.7%
contribution, affected by market concerns relating to
its dealership business. China Gas Holdings Limited
also contributed a minus 0.7% as its share price
fell 36.2% over the year, reflecting weakness in the
Chinese property market driving concerns around
new gas connections and demand. China Datang also
contributed a negative return of 0.9% as there have
been concerns over China Datang’s investment in new
projects offering lower returns, with its share price
falling 42.7% over the year. Conversant Solutions Pte
Ltd and Petalite, two unlisted investments also reduced
UEM’s performance by 1.1% and 4.1% respectively.
Purchases in the portfolio decreased to £80.2m in the
year ended 31 March 2024 (31 March 2023: £108.9m)
and realisations increased to £155.5m (31 March 2023:
£126.6m). This reflects both the reduction in debt by
£35.1m as UEM repaid its loan facility and the decision
to maintain a high level of buybacks to take advantage
of the wide discount.
There have been some small sector shifts during the
year to 31 March 2024 and more detail is set out on
page 20. On a geographical basis, again there were
modest changes and more detail is set out on page 9.
It is worth noting that Brazil remains our top country
exposure and grew to 25.8% from 20.9% in the prior
Investment Managers’ Report (continued)
Brazil Remains UEM's Largest
Country Exposure
25.8%
(20.9%)
China Remains UEM's Second
Largest Country Exposure
11.0%
(15.8%)
Other Europe is UEM's Third
Largest Exposure
10.2%
(5.9%)
Latam's Exposure
36.4%
(32.2%)
Asia’s Exposure
40.9%
(47.3%)
Rest of the World
22.7%
(20.5%)
In the Year to 31 March 2024
See page 9 for the full geographic exposure
Sector Split of Investments
Ports and Logistics
20.0%
(17.0%)
Electricity
19.8%
(17.4%)
Data Services and
Digital Infrastructure
11.7%
(13.1%)
Water and Waste
9.5%
(6.6%)
Renewables
9.4%
(12.7%)
Airports
6.2%
(7.4%)
Telecommunications
5.1%
(6.7%)
Road and Rail
4.9%
(3.4%)
Gas
4.8%
(7.5%)
Infrastructure
Investment Funds
4.7%
(3.7%)
Other
3.9%
(4.5%)
Source: ICM
Figures in brackets as at 31 March 2023
Total Return Contribution to NAV
Source: ICM
2.2%
1.7%
1.6%
1.5%
1.7%
(0.7)%
(0.7)%
(0.9)%
(1.1)%
(4.1)%
International Container Terminal Services, Inc.
Power Grid Corporation of India Limited
Santos Brasil Participacoes S.A.
FPT Corporation
TTS (Transport Trade Services) S.A.
Vamos Locacao de Caminhoes Maquinas e Equipamentos S.A.
China Gas Holdings Limited
China Datang Corporation Renewable Power Co., Limited
Conversant Solutions Pte Ltd
Petalite Limited
22 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 23
year, mainly due to valuation uplifts. China remains the
second biggest country exposure, but it reduced to
11.0% from 15.8% in the prior year on realisations and
valuation weakness.
Level 3 Investments
UEM ended the year with level 3 investments totalling
£23.1m (31 March 2023: £58.7m), representing 4.5%
of total investments (31 March 2023: 10.8%). UEM’s
level 3 investments reduced mainly as a result of the
devaluation of Petalite by £20.0m and the £5.0m
realisation from CGN Capital Partners Infra Fund 3
(“CGN”).
Pleasingly we realised the majority of our holding in
CGN, a private Chinese onshore wind developer and
received 40% of the proceeds during the year to 31
March 2024. We are expecting to realise the balance
of this investment and make a positive return. Further
we exited from an Indian solar farm developer and
operator at an internal rate of return of close to 28%.
UEM’s investment in Petalite continues to make
progress on its product development path and it is
seeking to raise up to £20.0m in a Series A fund raising.
However, the comparable listed entities in this space
have had a difficult time and many have seen their
valuations reduce by over 70%. UEM has reduced
its investment valuation in line with this and as at 31
March 2024 its equity was valued at £8.6m. Since then,
Petalite has continued its Series A fund raising efforts
but market conditions have continued to be weak and
UEM reduced Petalite’s equity valuation to £3.5m as
at 12 June 2024. Attention is drawn to note 26(d) of
the accounts which provides more information on
Petalite’s valuation methodology.
Bank Debt
UEM’s net debt, being bank loans and net overdrafts,
decreased from £36.1m as at 31 March 2023 to nil as
at 31 March 2024. UEM repaid its bank debt in March
2024 when the loan facility matured. The Company
is currently in discussions regarding a replacement
revolving facility and a further announcement will be
made in due course.
Revenue Return
Revenue income decreased to £23.1m in the year to
31 March 2024, from £24.3m in the prior year,
reflecting the fewer dividends received from investee
companies due to the changes in the portfolio. The
revenue yield on the closing portfolio was unchanged
at 4.5% for both years.
Management fees and other expenses having been flat
in 2023 rose to £3.4m in the year to 31 March 2024,
(31 March 2023: £3.0m). While disappointing, this
reflects the increases in marketing expenditure,
audit and custody fees. Finance costs rose to £0.3m
reflecting the higher interest rate environment (31
March 2023: £0.2m). Taxation rose to £2.0m during
the year ended 31 March 2024 (31 March 2023: £1.6m)
reflecting increased dividends received from countries
with higher withholding tax rates.
As a result of the above, profit for the year decreased
by 10.3% to £17.5m from £19.5m for 31 March 2023.
EPS decreased by 6.1% to 8.83p compared to the prior
year of 9.40p, reflecting the decrease in profit and the
reduced average number of shares in issue following
the buybacks. Dividends per share ("DPS") of 8.60p
were fully covered by earnings.
Retained revenue reserves rose to £10.1m as at
31 March 2024, equal to 5.29p per share.
Capital Return
The portfolio gains were £46.8m on the capital
account during the year to 31 March 2024 (31 March
2023: losses of £8.4m). The highest returns were from
ICT with £9.5m, and Power Grid and FPT at £7.5m
each. Gains on foreign exchange were £0.6m and the
resultant total income on the capital account was
£47.4m against prior year losses of £8.9m.
Management and administration fees were almost flat
for the second year in a row at £4.4m (31 March 2023:
£4.3m).
Finance costs increased to £1.3m from £0.7m as a
result of higher interest rates. There was a taxation
charge of £1.4m (31 March 2023: credit of £0.2m) which
arose from Indian capital gains tax. The net effect
of the above was a gain on capital return of £40.4m
compared to a loss of £13.7m for 31 March 2023.
Charles Jillings
ICM Investment Management Limited
and ICM Limited
14 June 2024
Investment Managers’ Report (continued)
Our Investment Approach
ICM is a long term investor and typically operates
focused portfolios with narrow investment remits.
ICM has several dedicated research teams who have
deep knowledge and understanding in their specific
sectors, which improves the ability to source and
make compelling investments. ICM has approximately
USD 1.9bn of assets directly under management and
is responsible indirectly for a further USD 24.5bn of
assets in subsidiary investments.
ICM looks to exploit market and pricing opportunities
and concentrates on absolute performance. The
investments are not market index driven and the
investment portfolio comprises a series of bottom-up
decisions. ICM typically does not participate in either
an IPO or an auction unless there is compelling value.
UEM seeks to leverage ICM’s investment abilities to
both identify and make investments across a range
of industries within the EM sector. New investments
usually offer an attractive valuation with strong risk/
return expectations at the time of investment.
When reviewing investment opportunities, as part of
the investment process ICM will look to understand the
material ESG factors.
In-depth analysis of the key
issues that face potential and
current holdings, as well as a
deep understanding of the
industry in which they operate.
Incorporate the output of the
‘Understanding’ component
into the full company analysis to
ensure a clear and complete
picture of the investment
opportunity is obtained.
Engage with investee
companies on the key issues on
a regular basis, both virtually and
on location, where possible, to
discuss and identify any gaps
in their ESG policies to further
develop and improve their ESG
disclosure and implementation.
Understanding
Engagement
Integration
ICM incorporates ESG factors into the
investment process in
three key ways:
24 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 25
Values
Team
Investment Practices
Financial
Platforms
Communities
ICM works to create value by harnessing our experience and
expertise to generate and grow strong relationships with
our stakeholders
We are focused on creating sustainable long term value for our shareholders and supporting the broader
community through our:
We are proud of our diverse and inclusive environment for our teams to work in, which reflects the
diversity of our communities.
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 a signatory to the
United Nations-supported Principles of Responsible Investment emphasises our commitment to
integrating ESG factors into our investment decision making process.
Strong balance sheet and disciplined capital allocation to drive sustainable growth and shareholder
value.
Technology, digital and analytics enable our investment platforms to deliver growth for our
shareholders.
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 17.6m to not-for-profit and community
organisations.
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
Our Investment Approach (continued)
The largest independent renewable
energy company in Brazil with a
portfolio of wind, solar and hydro
assets.
ESG Analysis:
Serena Energia (“Serena”) plays a crucial role in
decarbonising Brazil's energy sector. Since Serena's
IPO in 2017, it has helped avoid 2.3m kiloton of CO2
emissions. At supply capacity, Sernea can provide
4.2m households with clean energy. Serena manages
adverse weather risk due to its geographically
diversified asset base with multiple sources of energy
putting Serena in a strong position to generate the
best possible returns.
ICM ESG Conclusion:
Alongside Serena's green credentials, it has good
disclosure and a strong framework of enforced ESG-
related policies and procedures, putting it in a strong
position to capitalise on an increase in demand for green
energy.
Sonatel is the leading telecoms operator
in five countries in West Africa (including
Senegal, Mali and Guinea) offering fixed,
mobile, internet, television, payment
and IT services.
ESG Analysis:
Sonatel creates a large amount of social value in West
Africa through its digital development strategy. It has
a strong Corporate Social Responsibility (CSR) policy
that supports its corporate goals toward greater social
and financial inclusion. Since its inception, Sonatel has
enabled more than 38,000 young men and women to
benefit from various training programmes.
ICM ESG Conclusion:
Social benefits will continue to be achieved through
Sonatel's commitment to digital transformation and
its social and economic inclusion goals. Sonatel is well
placed to contribute to the growth occurring in West
Africa.
ESG Spotlight
The Board believes that it is in shareholders’ interests to consider ESG factors when
selecting and retaining investments and accordingly these form a key part of the
process when investing.
Details of how ESG forms part of the integrated research analysis, decision-making and ongoing monitoring are set
out on page 39. Where companies in the portfolio are assessed as having minimal ESG disclosure, ICM’s approach is
to engage with the companies directly to further understand the ESG profile of the company. Below are examples of
two of UEM’s investments that have robust ESG credentials within the portfolio.
26 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 27
Largest Holdings Overview
The Value of the
Ten Largest Holdings
Represents
35.4%
of Total Investments
(2023: 32.6%)
The Value of the
Twenty Largest
Holdings Represents
55.6%
of Total Investments
(2023: 52.3%)
The Value of the Thirty
Largest Holdings
Represents
70.9%
of Total Investments
(2023: 67.7%)
The Total Number
of Companies Included
on the Portfolio is
72
(2023: 81)
The value of convertible securities represents 0.0% (2023: 0.0%) of the portfolio. The value of fixed income securities represents 2.6% (2023: 3.4%) of
the portfolio.
Cia de Saneamento Basico do Estado de Sao Paulo (Brazil)
International Container Terminal Services, Inc. (“ICT”) is a Philippines listed
global port management company in the business of acquiring, developing,
managing and operating container ports and terminals worldwide. ICT operates
32 terminals in 19 countries across six continents, handling 12.8m containers in
2023.
In the year to 31 December 2023, ICT saw another solid year of performance,
despite the ongoing disruptions to global trade. Volume growth for the year
increased by 4.4% and revenue increased by 6.5% as management saw
improvements in container handling tariffs and volume mix, as well as benefitting
from the consolidation of a newly acquired terminal. EBITDA for the year was up
by 6.8% as ICT continued to remain focused on cost control, with EBITDA margin
creeping up to 63.0%. Adjusted net income increased by 6.7% with the dividend
increasing by 10.0% to PHP 11.00 (including a special dividend of PHP 1.65), as
ICT’s cash flow position continued to improve.
In July 2023, ICT announced that it was the preferred operator for South Africa’s
largest container terminal, Durban Container Terminal Pier 2, which ICT should
commence operating in the second half of 2024 and will add an estimated
additional 2.0m TEU (twenty-foot equivalent unit) of capacity.
ICT’s share price increased by 49.2% in the year to 31 March 2024. UEM
decreased its position in ICT by 32.6%.
Country
The Philippines
Sector
Ports and Logistics
Megatrend
Global Trade
Value £’000s
25,309
% of total
investments
4.9%
Country
Brazil
Sector
Electricity
Megatrend
Energy Growth
and Transition
Value £’000s
24,200
% of total
investments
4.7%
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 35 transmission projects totalling 8,805km of electricity lines
of which 7,139km are operational, and 822MW of renewable energy generation
assets.
After a significant investment program during 2019-2022 which saw Alupar
expanding its transmission network kilometres by 40% and commissioning a
new 94MW hydro plant in Peru, 2023 was a year of consolidation. The only new
project to come online was the 63MW Agreste Potiguar wind farm in Brazil. The
operational transmission lines have fixed revenue concession contracts which
benefit from annual inflation adjustments. In July 2023 indexation increases
of 3.94% for IPCA-linked concessions and -4.47% for IGPM-linked concessions
were applied. These inflation adjustments, combined with the contribution of
new projects resulted in underlying group revenue growth of 8.8% and EBITDA
growth of 7.0% in its financial year to 31 December 2023. Dividends per share
increased by 32%.
Alupar’s share price was up 13.7% in the year to 31 March 2024. UEM’s
shareholding in Alupar (adjusted for a stock bonus issue) was unchanged over
the period.
Ten Largest Holdings Review
1
2
Andre S Prietsch
28 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 29
Santos Brasil Participacoes S.A. (“Santos”) is a Brazilian listed port and
logistics operator that owns ten terminals on the Brazilian coast, with Tecon
Santos, its main asset (86% of Santos’s volumes) located at the largest port in
South America, Porto de Santos, which handles over 25% of Brazilian trade
balance.
During 2023, Santos’ neighbouring competitors within the port continued to
operate at near to full capacity. Therefore, despite Santos’ 6.2% reduction in
container units handled during the year, Santos was able to report a 10.5%
increase in net revenues, due to its strong strategic position helping to
drive tariff increases and improve volume mix. EBITDA for the full year to 31
December 2023 increased by 23.5% as it benefitted from operational leverage
with EBITDA margin continuing to improve, reaching 46.8% for the year. Given
Santos’ strong cash flow generation, Santos was able to achieve a 95% payout
ratio.
Santos’ share price increased by 64.0% in the year to 31 March 2024. UEM’s
shareholding in Santos increased 31.5% over the period.
Country
Brazil
Sector
Ports and Logistics
Megatrend
Global Trade
Value £’000s
20,550
% of total
investments
4.0%
Country
Vietnam
Sector
Data Services and
Digital Infrastructure
Megatrend
Digital Infra
Value £’000s
20,457
% of total
investments
3.9%
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.
It was another very strong year for FPT in 2023, with the group reporting strong
revenue growth in each of its three business segments: Technology (+22.1%),
Telecoms (+7.3%) and Education, Investment and others (+52.5%). Group
revenues in the year to 31 December 2023 rose by 19.6% and net profits per
share increased by 21.2%. Cash dividends increased by 18.1%.
FPT met its target of achieving USD 1.0bn in international revenues in 2023 for
its IT services unit, with sales up 28.4% in VND terms compared to the previous
year. FPT has set a target of achieving USD 5.0bn in international IT services
revenues by 2030.
FPT’s telecom segment reported solid growth. Fibre broadband subscribers
exceeded 4m, driving a 5.9% growth in broadband internet revenues. Data
centre demand is strong, with revenues up over 20% in 2023 and new facilities
coming online in 2024. FPT’s education segment continues to report exceptional
growth, with 145,000 FTE students across its system of schools, colleges and
universities, a growth of 34% for 2023.
FPT’s share price rose by 69.4% for the year to 31 March 2024, adjusted for the
15.0% bonus issue in June 2023. UEM’s position in FPT (adjusted for the bonus
issue) was unchanged during the year.
3
4
Andre S Prietsch
Ten Largest Holdings Review (continued)
Orizon Valorizacao de Residuos S.A. (“Orizon”) is Brazil's leader in waste
management and operates 16 sanitary landfill sites. Referred to as "ecoparks"
by Orizon, these sites are sophisticated complexes which require specialised
infrastructure to safely process waste.
In 2023, Orizon announced two long term contracts for the supply of
biomethane. The first was with Copergas, securing a 10-year contract for
most of the potential installed biomethane production capacity for Ecopark
Jaboatão dos Guararapes. The second was a partnership with Compass,
Brazil’s leading player in natural gas for final consumers. These support
Orizon's strategy for biomethane production commencing in 2025.
Orizon delivered strong results in the year to 31 December 2023. Revenues
increased by 24.0%, due to new landfills acquired in 2022 and a solid
performance in energy, biogas and waste processing segments. Energy sales
volumes increased by 29.5% and biogas volumes by 28.8%. Notably, carbon
credit generation rose by 27.6%, although no sales occurred during the year
to 31 December 2023 as Orizon waited for its carbon credit gold standard
certification. Adjusted EBITDA increased by 47.7%, with margins expanding
from 33.9% to 40.4%, due to improved operational efficiencies.
UEM’s position in Orizon increased 6.1% in the year to 31 March 2024.
Orizon’s share price was up by 3.2% during the period.
Country
Brazil
Sector
Water and Waste
Megatrend
Social Infra
Value £’000s
19,995
% of total
investments
3.9%
Country
Poland
Sector
Ports and Logistics
Megatrend
Digital Infra
Value £’000s
15,435
% of total
investments
3.0%
InPost S.A. (“InPost”) is a leading e-commerce logistics infrastructure player
in Poland, listed on Euronext Amsterdam, that is focused on last mile parcel
delivery operating automated parcel machine (APM) delivery, to-door delivery
and fulfilment services. InPost also has a growing pan-European presence in
particular in France, the UK and Italy. As at 31 December 2023, InPost handled
892m parcels and had 4.4m lockers installed across its network of over
35,000 APMs and 30,615 pick-up-drop-off points.
2023 was another strong year for InPost. Revenues increased by 25.2% with
Polish operations, which contributed to 60.4% of revenues, seeing strong
revenue growth of 27.5%. Adjusted EBITDA also saw strong growth, increasing
39.3% with EBITDA margin reaching 30.8% as profitability within the
international business improved as the volume of parcels handled increased.
During the year, InPost also acquired a 30% stake in a UK logistics provider
helping to improve its delivery network.
InPost’s share price increased by 69.8% in the year to 31 March 2024 and
UEM’s position in InPost remained the same.
5
6
30 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 31
Centrais Eletricas Brasileiras S.A. (“Eletrobras”) is the largest utility
company in Latin America and produces and transmits energy in Brazil. It
has an installed capacity of 44.6 GW, with 94.8% hydroelectric, 3.6% thermal,
and 1.6% solar and wind, representing 22% of Brazil's total installed capacity.
On the transmission front, Eletrobras operates over 73,000 km of lines,
accounting for 38% of Brazil’s total.
2023 marked a continuation of Eletrobras' turnaround phase following
its privatisation in June 2022. Efforts were focused on simplifying its
administrative structure, enhancing asset management, internal restructuring
and boosting investment capacity.
Revenues in the year to 31 December 2023 were up 9.1%, driven by higher
average sales price in the generation segment and higher regulated revenues
for its transmission business that increased by 28.3%. Meanwhile, Eletrobras’
adjusted EBITDA rose by 8.4%, supported by a 8.2% reduction in expenses,
largely due to a 9.8% decrease in personnel expenses as part of Eletrobras’
turnaround process. Dividends were down 7.4% YoY.
UEM’s position in Eletrobras increased 20.7% in the year to 31 March 2024.
Eletrobras’ share price was up by 28.5% during the period.
Country
Brazil
Sector
Electricity
Megatrend
Energy Growth
and Transition
Value £’000s
14,797
% of total
investments
2.9%
Country
South Korea
Sector
Data Services and
Digital Infrastructure
Megatrend
Digital Infra
Value £’000s
14,511
% of total
investments
2.8%
Korean Internet Neutral Exchange Inc. (“Kinx”) is a leading provider
of neutral internet infrastructure services in South Korea. It operates
Korea’s leading internet exchange as well as a number of interconnection
data centres. Kinx provides facilities for the leading global and domestic
telecommunications, internet and cloud services companies to provide
services locally and to connect directly to their customers in South Korea.
Kinx reported revenue growth of 10.6% but EBITDA improved marginally on
the very strong result recorded in 2022. After several years of planning and
construction, Kinx’s new 10MW data centre in Gwacheon (Seoul metropolitan
area) is due to open to clients in the second half of 2024. This facility will add
significant incremental capacity which should drive strong revenue and profit
growth in the coming years. Unlike many of Kinx’s other current facilities
which are leased, it owns a share of the freehold on this site. The expansion
has primarily been funded by strong cashflows generated in recent years
and Kinx had net cash on the balance sheet at the end of 2023. However, it
is expected to draw down on its debt facility by the time the data centre is
completed.
Kinx’s share price increased by 58.8% during the year to 31 March 2024 and
UEM took some profit on its investment, with its shareholding reducing by
5.1%.
7
8
Ten Largest Holdings Review (continued)
India Grid Trust (“Indigrid”) is an infrastructure investment trust listed on
the Bombay Stock Exchange which owns power transmission assets in India.
It has 46 lines totalling 8,468km and 13 substations, with the transmission
assets having an average of 26 years remaining contract life. The trust is
managed by KKR, which is also a 21% shareholder.
In August 2023, Indigrid completed the acquisition of Virescent Renewable
Energy Trust (“Virescent”) for INR 40bn. This increased Indigrid’s renewable
portfolio five-fold to 676MW and bolstered the AUM of the trust by 18% to
INR 269bn (USD 3.2bn). In the nine months to 31 December 2023, revenue
and EBITDA grew by 28% and 27% respectively, aided by a full quarter’s
contribution from Virescent. The trust is required to pay out at least 90%
of cash flows, which is paid in quarterly dividends, and over the nine month
period the aggregate dividends per unit were increased by 6.6%.
UEM’s shareholding in Indigrid was unchanged during the year to 31 March
2024 and Indigrid’s share price declined by 1.6%.
Country
India
Sector
Electricity
Megatrend
Energy Growth
and Transition
Value £’000s
14,288
% of total
investments
2.7%
Country
Vietnam
Sector
Infrastructure
Investment Funds
Megatrend
Social Infra
Value £’000s
13,364
% of total
investments
2.6%
VinaCapital Vietnam Opportunity Fund Ltd (“VOF”) is a closed-end
investment company, headquartered in Ho Chi Minh City, Vietnam, listed
on the main market of the London Stock Exchange. VOF is focused on long
term investing in Vietnamese companies across a range of industries and
asset classes. As at 31 March 2024, VOF had USD 1,164.5m (£706.4m) assets
under management, of which 74.8% were invested in listed equity and 19.5%
invested in private equity. By sector, as at 31 March 2024, VOF’s largest
exposure was real estate at 23.3%, financials at 21.8% and materials at 12.7%.
For the twelve months to 31 March 2024, VOF’s NAV increased by 21.2%,
outperforming the Vietnam Ho Chi Minh total return Index (“VN Index”) which
was up by 16.1% in US Dollar terms over the same period. On a three- and-
five-years basis, VOF also outperformed the VN Index, up by 21.5% and by
59.7% respectively compared to the index which was up by 4.1% and 33.0%
respectively. VOF discount to NAV as at 31 March 2024 was 23.5%.
VOF’s share price increased by 6.7% in the year to 31 March 2024 and UEM’s
position increased by 3.6%.
9
10
32 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 33
Strategic Report
Principal Activity
UEM carries on business as an investment trust and its
principal activity is portfolio investment.
Investment Objective
UEM’s objective is to provide long term total return
through a flexible investment policy that permits it to
make investments predominantly in infrastructure,
utility and related sectors, mainly in EM.
Strategy And Business Model
UEM invests in accordance with the objective set
out above. The Board is collectively responsible
to shareholders for the long term success of the
Company. Since the Company has no employees
it outsources its activities to third party service
providers, including the appointment of external
investment managers to deliver investment
performance. The Board oversees and monitors the
activities of the service providers with the Board
setting investment policy and risk guidelines, together
with investment limits.
ICMIM, an English incorporated company authorised
and regulated by the Financial Conduct Authority
(“FCA”) as an alternative investment fund manager
(“AIFM”) pursuant to the AIFM Regulations, is the
Company’s AIFM and joint portfolio manager alongside
ICM. The investment team responsible for the
management of the portfolio is headed by Charles
Jillings.
ICMIM and ICM, operating under guidelines
determined by the Board, have direct responsibility
for the decisions relating to the day to day running of
the Company and are accountable to the Board for
the investment, financial and operating performance
of the Company. Other service providers include
JPMorgan Chase Bank N.A. – London Branch which
provides administration and custodial services, JP
Morgan Europe Limited (“JPMEL”) which acts as the
Company’s Depositary under the AIFM Directive
and Computershare Investor Services which acts as
registrar. ICMIM has also been appointed Company
Secretary.
Investment Policy
UEM’s investment policy is flexible and its investments
include (but are not limited to) water, sewerage,
waste, electricity, gas, telecommunications, ports,
airports, service companies, rail, roads, any business
with essential service or monopolistic characteristics
and any new infrastructure or utilities which may
arise mainly in emerging markets. The Company may
also invest in businesses which supply services to,
or otherwise support, the infrastructure, utility and
related sectors.
The Company focuses on the under-developed and
developing markets of Asia, Latin America, Emerging
Europe and Africa but has the flexibility to invest in
markets worldwide. The Company generally seeks
to invest in emerging market countries where the
Directors believe that there are attributes such
as political stability, economic development, an
acceptable legal framework and an encouraging
attitude to foreign investment.
The Company has the flexibility to invest in shares,
bonds, convertibles and other types of securities,
including non-investment grade bonds and to invest in
unlisted securities.
The Company may also use derivative instruments
such as American Depository Receipts, promissory
notes, foreign currency hedges, interest rate hedges,
contracts for difference, financial futures, call and
put options, warrants and similar instruments
for investment purposes and efficient portfolio
management, including protecting the Company’s
portfolio and Statement of Financial Position from
major corrections and reducing, transferring or
eliminating investment risks in its investments. These
investments will be long term in nature.
Investment Restrictions
The Board has prescribed the following limits on
the investment policy, all of which are at the time of
investment unless otherwise stated:
•
Investments in unquoted and untraded
investments in aggregate must not exceed 10.0%
of gross assets at the time of investment;
•
No single investment may exceed 20.0% of gross
assets at the time of investment;
•
Investments other than in infrastructure, utility
and related companies must not exceed 20.0% of
gross assets at the time of investment;
•
Investments in a single country must not exceed
50.0% of gross assets at the time of investment
(and for these purposes investments will be
considered to have been made in the countries
where the relevant investee company reports
that it carries out its business operations, as
determined on a look-through basis);
•
Not more than 10.0% in aggregate of the value
of the total assets of the Company at the time
the investment is made will be invested in other
closed-ended investment funds which are listed
on the Official List (except to the extent that those
investment funds have stated investment policies
to invest no more than 15.0% of their total assets
in other investment companies which are listed on
the Official List); and
•
Regardless of the investment policy of other
closed-ended investment funds listed on the
Official List and which are invested in by the
Company, the Company shall not invest in such
funds more than 15.0% in aggregate of the value
of the total assets of the Company at the time the
investment is made.
The above limits only apply at the time the investment
is made and the Company will not be required to
realise any assets or rebalance the portfolio where
any limit is exceeded as a result of any increases or
decreases in the valuation of the particular assets
which occurs after the investment is made, but no
further relevant assets may be acquired or loans made
by the Company until the relevant limit can again be
complied with.
Borrowing and Gearing Policy
UEM may use bank borrowings for short term
liquidity purposes. In addition, the Board may gear
the Company by borrowing on a longer-term basis for
investment purposes.
The Board has set a current limit on gearing (being
total borrowings measured against gross assets) not
exceeding 25% at the time of drawdown. Borrowings
34 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 35
may be drawn down in Sterling, US Dollars or any
currency for which there are corresponding assets
within the portfolio (at the time of drawdown the value
drawn must not exceed the value of the relevant assets
in the portfolio).
On 13 March 2024, the Company announced that it
had repaid all the amounts outstanding under the
£50.0m committed multicurrency revolving facility
with The Bank of Nova Scotia, London Branch ahead
of its maturity date on 15 March 2024. The Company
is currently in discussions regarding a replacement
revolving facility.
Investment Approach
UEM seeks to identify and invest in undervalued
investments predominantly in the infrastructure and
utility sectors, mainly in EM. The Investment Managers
aim to identify securities where underlying value and
growth prospects are not reflected in the market
price. This is often as a result of strong growth drivers,
but can include changes in regulation, technology,
market motivation, potential for financial engineering,
competition or shareholder indifference.
The Company seeks to minimise risk by investing
mainly in companies and sectors displaying the
characteristics of essential services or monopolies
such as utilities, transportation infrastructure,
communications or companies with a unique product
or market position. Most investee companies are asset
backed, have good cash flows and offer good dividend
yields. UEM generally seeks to invest in companies with
strong management who have the potential to grow
their business and who have an appreciation of, and
ability to manage, risk.
UEM believes it is generally appropriate to support
investee companies with their capital requirements
while at the same time maintaining an active
and constructive shareholder approach through
encouraging a review of capital structures and
business efficiencies. The Investment Managers
maintain regular contact with the investee companies
and UEM is often among the largest international
shareholders.
The Company aims to maximise value for shareholders
by holding a relatively concentrated portfolio of
securities and investing through instruments
appropriate to the particular situation. UEM is
prepared to hold investments in unlisted securities
when the attractiveness of the investment justifies
the risks and lower liquidity associated with unlisted
investments. ICMIM, as the Company’s AIFM,
controls stock-specific, sector and geographic risk by
continuously monitoring the exposures in the portfolio.
In depth continual analysis of the fundamentals
of investee companies allows ICMIM to assess the
financial risks associated with any particular stock. The
portfolio is typically made up of 60 to 90 stocks.
Dividend Policy
The Board’s objective is to maintain or increase the
total annual dividend. Dividends are expected to be
paid quarterly each year in September, December,
March and June. In determining dividend payments,
the Board will take account of factors such as
income forecasts, retained revenue reserves and
the Company’s dividend payment record. However,
in order to maintain its approval as an investment
trust, the Company will distribute at least 85.0% of
its distributable income earned in each financial year
by way of dividends. The Board also has the flexibility
to pay dividends from capital reserves and special
reserve.
Results and Dividends
Details of the Company’s performance are set out in
the Investment Managers’ Report. The results for the
year ended 31 March 2024 are set out in the attached
accounts. The dividends in respect of the year, which
total 8.60p per share, have been declared by way of
four interim dividends.
Key Performance Indicators
Delivery of shareholder value is achieved through the
increase in capital value of the Company’s shares and
by its income return. The Board reviews performance
by reference to a number of Key Performance
Indicators (“KPIs”) that include the following:
•
NAV total return relative to the MSCI EM total
return Index
•
Share price
•
Discount to NAV
•
Revenue earnings
•
Ongoing charges figure
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 97 and 98.
Year ended 31 March
2024
2023
NAV total return per share (%)
12.8
2.1
MSCI EM total return Index
(GBP adjusted) (%)
5.8
(5.0)
Share price (pence)
221.00
217.00
Discount to NAV (%)
(19.3)
(13.5)
Percentage of issued shares bought
back during the year (based on opening
share capital) (%)
5.6
5.8
Revenue earnings per share (pence)
8.83
9.40
Dividends per share (pence)
8.60
8.45
Ongoing charges figure (%)
1.5
1.4
A graph showing the NAV total return performance
compared to the MSCI EM total return Index, can be
found on page 3. The ten-year record on page 99 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 12.4% to 20.5% and an average discount of 15.2%.
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
11,369,753 shares were bought back and cancelled
during the year, representing 5.6% 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 four quarterly dividends, each of
2.15p per share, in respect of the year ended 31 March
2024. The fourth quarterly dividend will be paid on 28
June 2024 to shareholders on the register on 7 June
2024. The total dividend for the year was 8.60p per
share (2023: 8.45p 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 2024 was
1.5% (2023: 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 2024, ICMIM 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
36 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 37
not currently sufficiently material to be categorised as
separate key risks and are considered within investment
risk and market risk below.
The principal risks and uncertainties currently faced by
the Company and the controls and actions to mitigate
those risks, are described below. There have been no
significant changes to the principal risks during the year.
Key Risk Factors
Investment Risk:
The risk that the investment
strategy does not achieve long-
term positive total returns for the
Company’s shareholders.
Insufficient consideration of
ESG factors could lead to poor
performance and/or a reduction
in demand for the Company’s
shares.
The Board monitors the performance of the Company and has established guidelines
to ensure that the approved investment policy is pursued by the Investment Managers.
These guidelines 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 of listed securities and
its principal risks are therefore
market related and adverse
market conditions could lead to a
fall in NAV.
The Company’s portfolio is exposed to equity market risk and foreign currency risk.
Adverse market conditions may result from factors such as economic conditions, political
change, geo-political confrontations, climate change, natural disasters and 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
of key staff could affect
investment returns.
The quality of the investment management team is a crucial factor in delivering good
performance. There are training and 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.
Discount Risk:
The Company’s shares may
trade at a discount to their NAV
and a widening discount may
undermine investor confidence in
the Company.
The Board monitors the price of the Company’s shares in relation to their NAV and is
focussed on reducing the discount at which they trade. The Board generally buys back
shares for cancellation in normal 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.
Strategic Report (continued)
Operational Risk:
Failure by any service provider
to carry out its obligations to the
Company in accordance with the
terms of its appointment could
have a materially detrimental
impact on the operation of
the Company and could affect
the ability of the Company
to successfully pursue its
investment policy.
The Company’s main service providers are listed on page 96. The Audit & Risk Committee
monitors the performance and controls (including business continuity procedures) of the
service providers at regular intervals.
All listed and a number of unlisted investments are held in custody for the Company
by JPMorgan Chase Bank N.A. – London Branch. JPMEL, the Company’s depositary
services provider, also monitors the movement of cash and assets across the Company’s
accounts. The Audit & Risk Committee reviews the JP Morgan system and organisation
controls 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 key service providers on the preventative steps that they are taking to reduce
this risk.
Gearing Risk:
Whilst the use of borrowings
should enhance total return
where the return on the
Company’s underlying securities
is rising and exceeds the cost
of borrowing, it will have the
opposite effect where the
underlying return is falling.
Gearing levels may change from time to time in accordance with the Board and
Investment Managers’ assessment of risk and reward. As at 31 March 2024, since the
Company’s bank facility has been repaid, UEM had net cash. In the event of a new facility
being put in place, ICMIM will continue to monitor compliance with the banking covenants
when each drawdown is made and at the end of each month. The Board will review
compliance with the banking covenants at each Board meeting.
Regulatory Risk:
Failure to comply with
applicable legal and regulatory
requirements such as the tax
rules for investment companies,
the FCA’s Listing Rules and 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.
The Investment Managers and the Company’s professional advisers monitor
developments in relevant laws and regulations and provide regular reports to the Board
in respect of the Company’s compliance.
Viability Statement
The Board makes an assessment of the longer-term
prospects of the Company beyond the timeframe
envisaged under the going concern basis of accounting,
having regard to the Company’s current position and
the principal risks it faces. The Company is a long term
investment vehicle and the Board believes that it is
appropriate to assess the Company’s viability over a
long term horizon. For the purposes of assessing the
Company’s prospects in accordance with provision
31 of the UK Corporate Governance Code, the Board
considers that assessing the Company’s prospects over
a period of five years is appropriate given the nature of
the Company, reflecting the long term strategy of the
Company and is in line with the five-yearly cycle of the
Company's continuation vote.
In its assessment of the viability of the Company, the
Board has considered each of the Company’s principal
risks and uncertainties detailed above, as well as the
impact of a significant fall in the EM equity markets on
the value of the Company’s investment portfolio. All
of the key operations required by the Company are
outsourced to third party providers and it is considered
that alternative providers could be engaged at relatively
38 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 39
short notice, if necessary. The Directors have also
considered the Company’s income and expenditure
projections and the fact that the Company’s operating
expenses comprise a very small percentage of net
assets while the majority of the Company’s investments
comprise readily realisable securities which can be
sold to meet funding requirements, if necessary.
The next opportunity for shareholders to vote on
the continuation of the Company will be at the AGM
expected to be held in September 2026.
As part of this assessment the Board considered a
number of stress tests and scenarios which considered
the impact of severe stock market and currency
volatility on shareholders’ funds over a five-year
period. Initially, the Company’s projections were
adjusted to reflect a material reduction in the value of
its investments in line with that experienced during
the emergence of the Covid-19 pandemic in the first
quarter of 2020. The first stress test considered a fall
in markets of 30% in the first year with recovery of 10%
per annum thereafter. A second test considered a fall
in markets of 30% and adverse Sterling movement,
the Company’s reporting currency, of 10% in the
first year with a further fall in markets of 20% in the
second year and no movement thereafter. The results
demonstrated the impact on the Company’s NAV,
its expenses, and its ability to meet its liabilities over
that period. As a result of this analysis, the Board has
concluded that there is a reasonable expectation that
the Company will be able to continue in operation and
meet its liabilities as they fall due over the next five
years.
Section 172 Statement
Under Section 172 of the Companies Act 2006, the
Directors have a duty to promote the success of
the Company for the benefit of its members as a
whole. This includes having regard (amongst other
matters) to fostering relationships with the Company’s
stakeholders and maintaining a reputation for high
standards of business conduct.
As an externally managed investment trust, the
Company has no employees, customers, operations or
premises. Therefore, the Company’s key stakeholders
(other than its shareholders) are considered to be
its service providers, including lenders. The need
to promote business relationships with the service
providers and maintain a reputation for high standards
of business conduct is central to the Directors’
decision-making. The Directors believe that fostering
constructive and collaborative relationships with
the Company’s service providers will assist in their
promotion of the success of the Company for the
benefit of all shareholders and their performance
is monitored by the Board and its committees. The
principal service provider is the Investment Managers,
who are responsible for managing the Company’s
assets in order to achieve its stated investment
objective, and the Board maintains a good working
relationship with them. Whilst strong long term
investment performance is essential, the Board
recognises that to provide an investment vehicle that
is sustainable over the long term, both it and the
Investment Managers must have regard to ethical and
environmental issues that impact society. Accordingly,
ESG considerations are an important part of the
Investment Managers’ investment process as explained
more fully below.
The Board seeks to engage with its Investment
Managers and other service providers in a collaborative
and collegiate manner, whilst also ensuring that
appropriate and regular challenge is brought and
evaluation conducted. The aim of this approach is to
enhance service levels and strengthen relationships
with a view to ensuring the interests of the Company’s
shareholders are best served by keeping cost levels
proportionate and competitive, and by maintaining the
highest standards of business conduct.
The Directors aim to act fairly as between the
Company’s shareholders and the approach to
shareholder relations is summarised in the Corporate
Governance Statement on pages 50 to 55. As part of
this, the AGM provides a key forum for the Board and
Investment Managers to present to shareholders on the
performance of UEM and its future prospects. It also
allows shareholders the opportunity to meet with the
Board and Investment Managers and to raise questions
and concerns. The Chairman is available to meet with
shareholders as appropriate and the Investment
Managers meet regularly with shareholders and their
respective representatives, reporting back on views
to the Board. Shareholders may also communicate
with the Company at any time by writing to the Board
at the Company’s registered office or contacting the
Company’s broker. These communication opportunities
help inform the Board when considering how best to
Strategic Report (continued)
promote the success of the Company for the benefit of
all shareholders over the long term.
In addition to ensuring that the Company’s stated
investment objective was being pursued, the Directors
confirm that they have considered Section 172 factors
when making decisions, including in relation to:
•
the repayment of the Company’s multicurrency
revolving facility in March 2024;
•
the repurchase of the Company’s shares, in line
with the Board’s policy to buy back shares for
cancellation in normal market conditions if they are
trading at a discount in excess of 10%;
•
the recommendation that shareholders vote in
favour of the Company’s dividend policy at the
forthcoming AGM; and
•
the recommendation that shareholders vote in
favour of the renewal of the buyback and allotment
authorities as set out in the notice of AGM.
Responsible Investment Policy
The Board believes that it is in the shareholders’
interests to consider ESG factors when selecting and
retaining investments, and has asked the Investment
Managers to take these into account when investing.
The concept of responsible investing has always been
a core component of the investment process and the
Investment Managers employ a disciplined investment
process that seeks to both uncover opportunities
and evaluate potential risks, while striving for the
best possible return outcomes. When reviewing any
investment opportunity, the Investment Managers look
to understand the relevant ESG issues in conjunction
with the financial, macro and political drivers as part of
their investment process, populating an internally built
ESG framework due to lack of appropriate coverage
from external providers. Relevant and material ESG
opportunities and risks can meaningfully affect
investment performance, therefore the consideration
of ESG issues forms part of the integrated research
analysis, decision-making and ongoing monitoring.
The Investment Managers believe that “G” is the
core foundation on which all else is built, as strong
governance within a company ensures that minority
shareholder interests are aligned with other
shareholders, management and stakeholders. The
Investment Managers’ “G” assessment therefore
includes questions covering shareholders’ rights,
transparency and related parties, as well as audit and
accounting, board composition and effectiveness,
executive oversight and compensation. Each area is
assessed and weighted, and the Investment Managers
then apply an aggregated weighting towards “G” in
line with the strong empirical evidence linking robust
corporate governance and performance.
The “E” and “S” are also focal points for the Investment
Managers, as assessing key environmental and social
risks are essential to a long term sustainable business
model. The Investment Managers identify the most
material “E” and “S” risks that are believed to affect
each sector and companies are then assessed against
each risk. The results from this analysis feed into an
“E” and “S” score for each company reflecting, for each
material risk, whether suitable/sustainable plans are in
place, how clear the company has been in disclosing its
approach and how well it is doing against its objective
to manage such risk.
Where a portfolio company is assessed as having a
relatively low “E”, “S” and/or “G” score, ICM’s approach
is to engage with the company to see improvements
over time. ESG considerations provide a way to identify
and review the long term drivers of an investment that
are not found within the financial accounts, thereby
enabling the Investment Managers to fully question
a company’s investment potential from a number
of perspectives. Examples of ESG progress on two
portfolio companies are set out on page 25.
Where possible, the Investment Managers aim to
visit companies to access an in-person opportunity
to ask management teams what they perceive to
be the key operational, social and environmental
issues, as well as a chance to see assets operating
first-hand. ESG disclosures are not always easy to
understand given they may not be openly reported
or consistently disclosed. The Investment Managers
believe that engaging with companies directly is the
best first step. Where necessary, the Investment
Managers will question and challenge an investee
company’s management team directly to ensure a full
understanding of any challenges and opportunities.
Given the Investment Managers are long term
investors, engagement with management teams is and
will remain paramount to the investment approach.
On behalf of UEM as shareholder, the Investment
40 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 41
Managers work actively with investee companies to
incorporate stronger ESG principles and vote in a
considered manner (including against resolutions)
to drive positive change. As referred to above, the
Investment Managers believe that governance factors
are fundamental to an investment.
ICM is a signatory to the United Nations-supported
Principles for Responsible Investment, which is an
international network of investors working together to
implement its six aspirational principles. The Investment
Managers believe that good stewardship is essential
and these principles align with their philosophy to
protect and increase the value of their investments.
Modern Slavery Act
Due to the nature of the Company’s business, being
a company that does not offer goods and services to
customers, the Board considers that it is not within the
scope of the Modern Slavery Act 2015 because it has
no turnover. The Company is therefore not required
to make a slavery and human trafficking statement.
In any event, the Board considers the Company’s
supply chains, dealing predominantly with professional
advisers and service providers in the financial services
industry, to be low risk in relation to this matter.
Gender Diversity
The Board currently consists of three male directors
and one female director and announced the
appointment of a further female director with effect
from 1 September 2024. The Company has no
employees and therefore there is nothing further to
report in respect of gender representation within the
Company. The Company’s policy on diversity is detailed
in the Corporate Governance Statement on pages 53
and 54.
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.
Bribery Act
The Company has a zero tolerance policy towards
bribery and is committed to carrying out business fairly,
honestly and openly. The Investment Managers also
adopt a zero tolerance approach and have policies and
procedures in place to prevent bribery.
Criminal Finances Act
The Company has a commitment to zero tolerance
towards the criminal facilitation of tax evasion.
Social, Human Rights And Community Matters
As an externally managed investment trust, the
Company does not have any employees or maintain any
premises. It therefore has no material, direct impact on
the environment or any particular community and the
Company itself has no environmental, human rights,
social or community policies. The Board however notes
the Investment Managers’ policy statement in respect of
responsible investing, as outlined on page 39.
Outlook
The Board’s main focus is on the achievement of the
Company’s objective of delivering a long term total
return and the future of the Company is dependent
upon the success of its investment strategy. The
outlook for the Company is discussed in the Chairman’s
Statement and the main trends and factors likely to
affect the future development, performance and
position of the Company’s business can be found in the
Investment Managers’ Report.
This Strategic Report was approved by the Board of
Directors on 14 June 2024.
By order of the Board
ICM Investment Management Limited
Company Secretary
14 June 2024
Strategic Report (continued)
Investment Managers and Team
ICMIM, a company authorised and regulated by
the FCA, was the Company’s AIFM during the year
ended 31 March 2024 with sole responsibility for
risk management, subject to the overall policies,
supervision, review and control of the Board and is
joint portfolio manager of the Company, alongside ICM.
The Investment Managers are focused on finding
investments at valuations that do not reflect their true
long term value. Their investment approach is to have
a deep understanding of the business fundamentals
of each investment and its environment versus its
intrinsic value. The Investment Managers are long term
investors.
ICM manages over USD 1.9bn in funds directly and is responsible indirectly for
a further USD 24.5bn 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 Australian Securities
Exchange listed Resimac Group Limited, Somers Limited and H.R.L. Morrison & Co
Limited.
42 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 43
Senior core team assisting on UEM include:
Company Secretary – ICM Investment Management Limited
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.
The Investment Managers’ approach is to
have a deep understanding of the business
fundamentals of each investment and its
environment versus its intrinsic value.
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.
Investment Managers and Team (continued)
Directors
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 has
served on the board of several investment trusts since leaving Schroders and is currently on the
investment committee of the Leverhulme Trust.
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 the Asia Pacific investment business of John Laing plc. More recently she was a board member of an
infrastructure fund manager backed by UK pension funds and of passenger champions for Heathrow
Airport and UK public transport. She is currently a non-executive director of Schroder Oriental Income
Fund Limited and Gresham House Energy Storage Fund plc. Isabel is a graduate of the Ohio State
University with a masters from Harvard University and an MBA from the University of Chicago.
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 companies (including Smith & Nephew plc, PowerGen plc, British
Steel plc and Corus Group plc) and as a non-executive chairman or director of several funds,
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.
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 deputy chair of the trustee
board of three pension schemes with combined assets of some £2.3bn. Mr Stobart is a chartered
accountant with an MBA from London Business School.
All the Directors are independent and are members of the Audit & Risk Committee, Remuneration Committee and Management Engagement Committee
* As at the date of this report, Ms Nadya Wells is not yet a Director but the Board has approved her appointment as a Director with effect from 1 September 2024.
Nadya Wells*
Nadya Wells will join the Board on 1 September 2024. She has over 25 years’ emerging and frontier
markets experience as a long term investor and governance specialist. She spent 13 years with the
Capital Group as a portfolio manager and analyst with a focus on global emerging markets. Prior to
that she was a portfolio manager at Invesco Asset Management investing in public and private equity.
She is currently a non-executive director of Hansa Investment Company Limited and Barings Emerging
EMEA Opportunities plc as well as unlisted SICAVs in Luxembourg, managed by abrdn and M&G. She
has an MBA from INSEAD.
44 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 45
The Directors present the Annual Report and Accounts
of the Company for the year ended 31 March 2024.
Status of the Company
UEM was incorporated on 7 December 2017. On 3 April
2018, as a result of the proposals to redomicile 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 for its services of
2.0bps of the Company’s NAV up to £500m and 1.5bps
thereafter, 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 and 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.
Directors’ Report
Administration
The provision of accounting and administration services
has been outsourced to JPMorgan Chase Bank N.A. –
London Branch (the “Administrator”). The Administrator
provides financial and general administrative services to
the Company for an annual fee based on the Company’s
month end NAV (5 bps on the first £100m NAV, 3bps on
the next £150m NAV, 2bps on the next £250m NAV and
1.5bps on the next £500m NAV). The Administrator and
any of its delegates are also entitled to reimbursement
of certain expenses incurred by it in connection with
its duties. In addition, ICMIM has appointed Waverton
Investment Management Limited (“Waverton”) to
provide certain support services (including middle
office, market dealing and information technology
support services). Waverton is entitled to receive an
annual fee of 3bps of the Company’s NAV and the
Company reimburses ICMIM for its costs and expenses
incurred in relation to this agreement.
Annually, the Management Engagement Committee
considers the ongoing administrative requirements of
the Company and assesses the services provided.
Safe Custody Of Assets
During the year ended 31 March 2024, all listed and a
number of unlisted investments were held in custody
for the Company by JPMorgan Chase Bank N.A. –
London Branch (the “Custodian”). Operational matters
with the Custodian are carried out on the Company’s
behalf by ICMIM and the Administrator in accordance
with the IMA and the Administration Agreement. The
Custodian is paid a variable fee dependent on the
number of trades transacted and the location of the
securities held.
Financial Instruments
The Company’s financial instruments comprise its
investment portfolio, cash balances, bank borrowings
and debtors and creditors which arise directly from
its operations such as sales and purchases awaiting
settlement, and accrued income. The financial risk
management objectives and policies arising from its
financial instruments and the exposure of the Company
to risk are disclosed in note 26 to the accounts.
Dividends
A dividend of 2.15p per share was paid on 22 September
2023, 15 December 2023 and 28 March 2024. A
dividend of 2.15p per share was declared on 24 May
2024 and will be paid on 28 June 2024.
ISA and NMPI
UEM remains a qualifying investment under the
Individual Savings Account (ISA) regulations and it
is the intention of the Board to continue to satisfy
these regulations. Furthermore, the Company
currently conducts its affairs so that its shares can
be recommended by IFAs to ordinary retail investors
in accordance with the FCA’s rules in relation to non-
mainstream pooled investments and intends to
continue to do so for the foreseeable future.
Going Concern
The Board has reviewed the going concern basis
of accounting for the Company. The Company’s
assets consist substantially of equity shares in listed
companies and in most circumstances are realisable
within a short timescale. The Board has performed
a detailed assessment of the Company’s operational
risk and resources including its ability to meet its
liabilities as they fall due, by conducting stress tests and
scenarios which considered the impact of severe stock
market and currency volatility. This is set out in note 25
to the accounts. In light of this work and there being no
material uncertainties related to events or conditions
that may cast significant doubt about the ability of the
Company to continue as a going concern, the Board
has a reasonable expectation that the Company
has adequate resources to continue in operational
existence for a period of at least the next twelve months
from the date of approval of these financial statements.
Accordingly, the Board considers it appropriate to
continue to adopt the going concern basis in preparing
the accounts.
Directors
UEM currently has a Board of four non-executive
directors who oversee and monitor the activities of
the Investment Managers and other service providers
and ensure that the Company’s investment policy is
adhered to. The Board is supported by an Audit & Risk
Committee, a Management Engagement Committee
and a Remuneration Committee, which deal with
specific aspects of the Company’s affairs. The Corporate
Governance Statement, which is set out on pages 50 to
55, forms part of this Directors’ Report.
46 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 47
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 43. All the Directors are independent.
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. Accordingly, an ordinary resolution to
elect Ms Nadya Wells (whose appointment to the Board
as a Director will take effect on 1 September 2024) will
be put to shareholders at the next AGM to be held on
17 September 2024.
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 58.
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 2024 the issued share capital of the
Company and the total voting rights were 190,842,503
shares. As at the date of this report, the share capital of
the Company and total voting rights were 189,275,034
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 2024 the Company purchased 11,369,753 shares
for cancellation. The current authority to repurchase
shares was granted to Directors on 19 September 2023
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.
Directors’ Report (continued)
Continuation of the Company
UEM 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
28,672,553
15.2
Lazard Asset Management
LLC
18,737,825
9.9
Rathbone Investment
Management Limited
10,728,364
5.7
1607 Capital Partners, LLC
10,589,512
5.6
Ameriprise Financial, Inc.
10,127,839
5.4
UIL Limited
9,273,087
4.9
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 13 resolutions.
Resolutions 1 to 11 (inclusive) will be proposed as
ordinary resolutions and resolutions 12 and 13 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 2024 and the auditor’s report
thereon.
48 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 49
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
shareholders, the Board has decided to seek express
approval from shareholders of its dividend policy to pay
four interim dividends per year. If this resolution is not
passed, it is the intention of the Board to refrain from
authorising any further interim dividends until such
time as the Company’s dividend policy is approved by
its shareholders.
Ordinary Resolutions 4 to 8 (inclusive) – Re-election
and election of the Directors
The biographies of the Directors are set out on page 43
and are incorporated into this report by reference.
Resolution 4 relates to the re-election of Mr John
Rennocks. Mr Rennocks’ leadership of the Board as
Chairman draws on his long and varied experience
on the boards of many public limited companies
and investment companies. His focus is on long-
term strategic issues, which are key topics of Board
discussion.
Resolution 5 relates to the re-election of Mr Mark
Bridgeman. Mr Bridgeman’s experience in the
investment management industry and with other
investment funds means that he brings significant
expertise in investment matters to his role on the
Board.
Resolution 6 relates to the re-election of Ms Isabel Liu.
Ms Liu’s long career in infrastructure investing brings
in-depth knowledge and expertise in such matters to
her role as Director.
Resolution 7 relates to the re-election of Mr Eric
Stobart. Mr Stobart has extensive accounting
knowledge and many years of experience of audit
and risk committees in the financial services sector.
He therefore brings this strong background and skills
to his role as the Company’s Audit & Risk Committee
Chairman.
Resolution 8 relates to the election of Ms Nadya Wells.
As referred to in the Chairman’s Statement, Ms Wells
has been appointed a Director with effect from
1 September 2024. Ms Wells brings to the Board a
wealth of experience in investment management,
emerging markets and investment companies.
Ordinary Resolutions 9 and 10 – Appointment of the
external Auditor and the Auditor’s Remuneration
These resolutions relate to the appointment and
remuneration of the Company’s auditor. The Company,
through its Audit & Risk Committee, has considered
the independence and objectivity of the external
auditor and is satisfied that the proposed auditor is
independent. Further information in relation to the
assessment of the existing auditor’s independence can
be found in the report of the Audit & Risk Committee.
Resolutions relating to the following items of special
business will be proposed at the forthcoming AGM:
Ordinary Resolution 11 – Authority to allot shares
The Directors may only allot shares for cash if
authorised to do so by shareholders in a general
meeting. This resolution seeks authority for the
Directors to allot shares for cash up to an aggregate
nominal amount of £189,275 per annum, which is
equivalent to 18,927,500 ordinary shares of 1p each and
Directors’ Report (continued)
represents approximately 10% of the Company’s issued
ordinary share capital (excluding treasury shares) as
at the date of the Notice of the AGM. This resolution
will expire at the conclusion of the next AGM of the
Company to be held in 2025 unless renewed prior to
that date at an earlier general meeting.
Special Resolution 12 – Authority to disapply pre-
emption rights
By law, Directors require specific authority from
shareholders before allotting new shares or selling
shares out of treasury for cash without first offering
them to existing shareholders in proportion to their
holdings. This resolution empowers the Directors
to allot new shares for cash or to sell shares held by
the Company in treasury, otherwise than to existing
shareholders on a pro rata basis, up to an aggregate
nominal amount of £189,275 which is equivalent to
18,927,500 ordinary shares of 1p each and represents
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 2025
unless renewed prior to that date at an earlier general
meeting.
Special Resolution 13 – 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 28,370,000 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 2025.
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.
Recommendation
The Board considers that each of the resolutions to be
proposed at the AGM is likely to promote the success
of the Company for the benefit of its members as a
whole and is in the best interests of the Company and
its shareholders as a whole. The Directors unanimously
recommend that shareholders vote in favour of all the
resolutions as they intend to do in respect of their own
beneficial holdings.
By order of the Board
Alastair Moreton
For and on behalf of
ICM Investment Management Limited
Company Secretary
14 June 2024
50 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 51
All independent NEDs
Chairman:
Eric Stobart
All independent NEDs
Chairman:
John Rennocks
The Board as a whole
performs this function
All independent NEDs
Chairman:
Mark Bridgeman
The Company‘s Corporate Governance
Framework
Corporate Governance is the process by which the
board of directors of a company protects shareholders’
interests and by which it seeks to enhance shareholder
value. Shareholders hold the directors responsible
for the stewardship of a company’s affairs, delegating
authority and responsibility to the directors to
manage the company on their behalf and holding
them accountable for its performance. Responsibility
for good governance lies with the Board. The Board
considers the practice of good governance to be an
integral part of the way it manages the Company and
is committed to maintaining high standards of financial
reporting, transparency and business integrity.
The governance framework of the Company reflects
the fact that, as an investment company, it has no full-
time employees and outsources its activities to third
party service providers.
Corporate Governance Statement
Four Non-Executive Directors (NEDS)
Chairman: John Rennocks
Senior Independent Director: Mark Bridgeman
Audit & Risk
Committee
Management
Engagement
Committee
Nomination
Committee
Remuneration
Committee
Key Objective:
• To oversee the financial
reporting and control
environment.
Key Objectives:
• To review the
performance of the
Investment Managers
and the Administrator;
and
• To review the
performance of other
service providers.
Key Objectives:
• To regularly review the
Board’s structure and
composition; and
• To consider any new
appointments.
Key Objective:
• To set the remuneration
policy for the Directors of
the Company.
The Board
Key Objectives:
• To set strategy, values
and standards;
• To provide leadership within
a framework of prudent
and effective controls which
enable risk to be assessed
and managed; and
• To constructively challenge
and scrutinise performance
of all outsourced activities.
The AIC Code of Corporate Governance
As a UK-listed investment trust the Board’s principal
governance reporting obligation is in relation to the UK
Corporate Governance Code (the “UK Code”) issued
by the Financial Reporting Council (“FRC”) in July 2018.
However, it is recognised that investment companies
have special circumstances which have an impact
on their governance arrangements. An investment
company typically has no employees and the roles of
portfolio management, administration, accounting
and company secretarial tend to be outsourced to a
third party. The AIC has therefore drawn up its own
set of guidelines known as the AIC Code of Corporate
Governance (the “AIC Code”) issued in February 2019,
which recognises the nature of investment companies
by focusing on matters such as board independence
and the review of management and other third party
contracts. The FRC has endorsed the AIC Code and
confirmed that companies which report against the
AIC Code will be meeting their obligations in relation to
the UK Code and paragraph LR9.8.6 of the FCA’s Listing
Rules. The Board believes that reporting against the
principles and recommendations of the AIC Code will
provide better information to shareholders.
The UK Code is available from the FRC’s website at
www.frc.org.uk. The AIC Code is available from the
Association of Investment Companies’ website at
www.theaic.co.uk.
Compliance with the AIC Code
During the year ended 31 March 2024, the Company
complied with the recommendations of the AIC Code
and the relevant provisions of the UK Code, except
those relating to:
•
the role of the chief executive;
•
executive directors’ remuneration;
•
the need for an internal audit function; and
•
membership of the Audit & Risk Committee by the
Chairman of the Board.
For the reasons set out in the AIC Code and as
explained in the UK Code, the Board considers these
provisions are not relevant to the position of the
Company, being an externally managed investment
company. As explained in the Audit & Risk Committee
Report, the Chairman of the Board is also a member
of the Audit & Risk Committee, as permitted by the AIC
Code.
Information on how the Company has applied the
principles of the AIC Code and the UK Code is set out
below.
The Board
The Board is responsible to shareholders for the
overall stewardship of the Company. A formal schedule
of matters reserved for the decision of the Board has
been adopted. Investment policy and strategy are
determined by the Board and it is also responsible for
the gearing policy, dividend policy, public documents,
such as the Annual Report and Financial Statements,
the buy-back policy and corporate governance
matters. In order to enable the Directors to discharge
their responsibilities effectively, the Board has full and
timely access to relevant information.
The Board meets at least quarterly, with additional
Board and Committee meetings being held on an ad
hoc basis to consider particular issues as they arise.
Key representatives of the Investment Managers
attend each meeting and between these meetings
there is regular contact with the Investment Managers.
Two board meetings a year are usually held in
countries where the Company holds investments
and, as part of its monitoring and risk management
responsibilities, the Board will meet with investee
companies and local experts.
The Board has direct access to the advice and
services of the company secretary, who is an
employee of ICMIM. The company secretary, with
advice from the Company’s lawyers and financial
advisers, is responsible for ensuring that the Board
and Committee procedures are followed and that
applicable rules and regulations are complied with.
The company secretary is also responsible to the
Board for ensuring timely delivery of information
and reports and that the statutory obligations of
the Company are met. The company secretary is
responsible for advising the Board, through the
Chairman, on all governance matters.
There is an agreed procedure for Directors, in the
furtherance of their duties, to take legal advice at the
Company’s expense, having first consulted with the
Chairman.
52 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 53
During the year, none of the Directors took on any significant new commitments or appointments. All of the
Directors consider that they have sufficient time to discharge their duties.
There were four Board meetings, three Audit & Risk Committee meetings, one Management Engagement
Committee meeting and one Remuneration Committee meeting held during the year ended 31 March 2024 and the
attendance by the Directors was as follows:
Board
Audit & Risk
Committee
Management
Engagement
Committee
Remuneration
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
2/2
n/a
n/a
n/a
Isabel Liu
3
2
1
1
Eric Stobart
4
3
1
1
Apart from the meetings detailed above, there were a
number of meetings held by committees of the Board
to approve the declaration of quarterly dividends and
other ad hoc items.
Audit & Risk Committee
The Audit & Risk Committee comprises all the
independent Directors of the Company and is chaired
by Mr Stobart. Further details of the Audit & Risk
Committee are provided in its report starting on
page 59.
Management Engagement Committee
The Management Engagement Committee, which
is chaired by Mr Rennocks, comprises all the
independent Directors of the Company and meets at
least once a year.
The Investment Managers’ performance is considered
by the Board at every meeting, with a formal evaluation
by the Management Engagement Committee annually.
The Board received detailed reports and views from
the Investment Managers on investment policy, asset
allocation, gearing and risk at each Board meeting in
the year ended 31 March 2024, with ad hoc market/
company updates if there were significant movements
in the intervening period.
The Management Engagement Committee also
considers the effectiveness of the administration
services provided by the Investment Managers and
Administrator and the performance of other third
party service providers. In this regard the Committee
assessed the services provided by the Investment
Managers, the Administrator and the other service
providers to be good.
Remuneration Committee
The Remuneration Committee, which is chaired by Mr
Bridgeman, comprises all the independent Directors
of the Company. Further details are provided in the
Directors’ Remuneration Report on page 56.
Internal Controls
The Directors acknowledge that they are responsible
for ensuring that the Company maintains a sound
system of internal financial and non-financial controls
(“internal controls”) to safeguard shareholders’
investments and the Company’s assets.
The Company’s system of internal control is designed
to manage rather than eliminate risk of failure to
achieve the Company’s investment objective and/
or adhere to the Company’s investment policy and/
or investment limits. The system can therefore only
provide reasonable and not absolute assurance
against material misstatement or loss.
The Investment Managers, Administrator and
Custodian maintain their own systems of internal
controls and the Board and the Audit & Risk
Committee receive regular reports from these service
providers.
Corporate Governance Statement (continued)
The Board meets regularly, at least four times a year.
It reviews financial reports and performance against
relevant stock market criteria and the Company’s peer
group, amongst other things.
The effectiveness of the Company’s system of
internal controls, including financial, operational and
compliance and risk management systems is reviewed
at least bi-annually against risk parameters approved
by the Board.
The Board confirms that the necessary actions are
taken to remedy any significant failings or weaknesses
identified from its review. No significant failings or
weaknesses occurred during the year ended 31 March
2024 or subsequently up to the date of this report.
Board Diversity, Appointment, Re-Election and
Tenure
The Board as a whole undertakes the responsibilities
which would otherwise be assumed by a nomination
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, Senior
Independent Director ("SID") and CFO) is held by a
woman; and
(iii) at least one individual on the board is from a
minority ethnic background
As at 31 March 2024, UEM complies with target (iii).
As referred to in the Chairman’s Statement, following
the appointment of Ms Nadya Wells to the Board, UEM
will also comply with target (i) from 1 September 2024.
The Company only has two of the senior roles specified
by the Listing Rules, that is the position of chair and
SID. Both these roles were occupied by men as at
31 March 2024. However, as set out in the Chairman's
Statement, with Isabel Liu taking on the role of SID at
the end of 2024, UEM will comply with target (ii) from
1 January 2025.
The Board has chosen to align its diversity reporting
reference date with the Company’s financial year end.
As required by the Listing Rules, further details in
relation to the three diversity targets are set out in
the tables on page 54. The information was obtained
by asking each of the Directors how they wished to be
categorised for the purposes of these disclosures:
54 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 55
The Board is of the view that length of service does
not necessarily compromise the independence or
contribution of directors of an investment company,
where continuity and experience can add significantly
to the strength of the Board. This is supported by the
views on independence expressed in the AIC Code.
No limit on the overall length of service of any of the
Company’s Directors has been imposed. All Directors
are subject to annual re-election.
The Board reviews succession planning at least
annually. Appointments of new Directors will be made
on a formalised basis with the Chairman agreeing, in
conjunction with his colleagues, a job specification
and other relevant selection criteria and the methods
of recruitment (where appropriate using an external
recruitment agency), selection and appointment. The
potential Director would meet with Board members
prior to formal appointment.
An induction process will be undertaken, with new
appointees to the Board being given a full briefing on
the workings and processes of the Company and the
management of the Company by the Chairman, the
Investment Managers, the company secretary and
other appropriate persons.
All appointments are subject to subsequent
confirmation by shareholders in general meeting.
Board, Committee and Directors’ Performance
Appraisal
The Directors recognise the importance of the AIC
Code’s recommendations in respect of evaluating
the performance of the Board, the Committees
and individual Directors. This encompasses both
quantitative and qualitative measures of performance
including:
•
attendance at meetings;
•
the independence of individual Directors;
•
the ability of Directors to make an effective
contribution to the Board and Committees
through the range and diversity of skills and
experience each Director brings to their role; and
•
the Board’s ability to challenge the Investment
Managers’ recommendations, suggest areas
of debate and set the future strategy of the
Company.
The Board opted to conduct performance evaluation
through questionnaires and discussion between
the Directors, the Chairman and the chairmen
31 March 2024
Number of
Board Members
Percentage of
the Board
Number of senior positions
on the Board (CEO, CFO,
SID, Chair)
Men
3
75%
2
Women
1
25%1
02
1 This percentage will be 40% from 1 September 2024 - see page 53
2 This number will be 1 from 1 January 2025 - see page 53
31 March 2024
Number of
Board Members
Percentage of
the Board
Number of Senior
Positions on the Board
(CEO, CFO, SID, Chair)
White British or other White (including
minority-white groups)
2
50%
2
Mixed/Multiple Ethnic Groups
–
–
–
Asian/Asian British
1
25%
01
Black/African/Caribbean/Black British
–
–
–
Other ethnic group, including Arab
–
–
–
Not specified/prefer not to say
1
25%
–
1 This number will be 1 from 1 January 2025 - see page 53
Corporate Governance Statement (continued)
of the Committees. This process is conducted by
the Chairman reviewing individually with each of
the Directors their performance, contribution and
commitment to the Company and the possible
further development of skills. In addition, the Senior
Independent Director reviews the performance of the
Chairman with the other Directors, taking into account
the views of the Investment Managers. The relevant
points arising from these meetings are then reported
to, and discussed by, the Board as a whole.
This process has been carried out in respect of the
period under review and will be conducted on an
annual basis. The result of this period’s performance
evaluation process was that the Board, the Committees
of the Board and the Directors individually were all
assessed to have performed satisfactorily. No follow-
up actions were required.
It is not felt appropriate currently to employ the
services of, or to incur the additional expense of, an
external third party to conduct the evaluation process
as an appropriate process is in place; this will, however,
be kept under review.
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
annual results. All meetings between the Investment
Managers and institutional and other shareholders are
reported to the Board.
The Chairman, Senior Independent Director and
other Directors are available to discuss any concerns
with shareholders if required and shareholders may
communicate with the Company at any time by writing
to the Board at the Company’s registered office or
contacting the Company’s broker.
By order of the Board
ICM Investment Management Limited
Company Secretary
14 June 2024
56 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 57
Directors’ Remuneration Report
Statement of
the Chairman
As Chairman of the
Remuneration Committee,
I am pleased to present the
Directors’ Remuneration Report
to shareholders. The report
comprises a remuneration
policy, which is subject to a
triennial binding shareholder
vote, or sooner if an alteration
to the policy is proposed, and a
report on remuneration, which is
subject to an annual advisory vote. An ordinary resolution
for the approval of this report will therefore be put to
shareholders at the Company’s forthcoming AGM.
The law requires the Company’s auditor to audit certain
parts of the disclosures provided. Where disclosures
have been audited, they are indicated as such. The
auditor’s opinion is included in their report starting on
page 63.
The Remuneration Committee is responsible for
reviewing and making recommendations to the Board in
respect of the fees of Directors. In line with the AIC Code,
it reviews the ongoing appropriateness of the Company’s
remuneration policy and the individual remuneration of
Directors by reference to the activities of the Company
and in comparison with other companies of a similar
structure and size. Any views expressed by shareholders
on the fees being paid to Directors will also be taken into
consideration. Following recommendations from the
Remuneration Committee, the Board reviews the fees
payable to the Chairman and Directors annually. There
were no changes to the remuneration policy during the
year.
All the Directors invest the full amount of their fees (net of
tax) in the shares of the Company. The review in respect
of the year ending 31 March 2025 has resulted in the
increases being applied to the annual fees as detailed in
the table below.
Year ending 31 March
2025
£’000s
2024*
£’000s
Chairman
54.0
52.5
Chairman of the Audit & Risk
Committee
50.5
49.1
Directors
40.0
38.9
*Actual
Directors’ Remuneration Policy
The Board, on the recommendation of its Remuneration
Committee, considers the level of the Directors' fees
at least annually. The Board determines the level of
Directors’ fees within the limit currently set by the
Company’s Articles, which limit the aggregate fees
payable to the Board of Directors to a total of £250,000
per annum.
The Board’s policy is to set Directors’ remuneration at
a level commensurate with the skills and experience
necessary for the effective stewardship of the Company
and the expected contribution of the Board as a whole
in continuing to achieve the investment objective. Time
committed to the Company’s business and the specific
responsibilities of the Chairman, Directors and the
chairman of the Audit & Risk Committee are taken into
account. The policy aims to be fair and reasonable in
relation to comparable investment companies.
The fees are fixed and the monetary amount (net of
tax) is used by the Directors to purchase shares in the
Company quarterly in arrears. Directors are entitled to
be reimbursed for any reasonable expenses properly
incurred by them in connection with the performance
of their duties and attendance at Board and general
meetings and Committee meetings. Directors are not
eligible for bonuses, pension benefits, share options,
long term incentive schemes or other benefits.
Directors are provided with a letter of appointment
when they join the Board. There is no provision for
compensation upon early termination of appointment.
The letters of appointment are available on request at
the Company’s registered office during business hours.
Voting at Annual General Meeting
A resolution to approve the Remuneration Report was
put to shareholders at the AGM of the Company held
on 19 September 2023. Of the votes cast, 99.94% were
in favour and 0.06% were against; this resolution will be
put to shareholders again this year. In accordance with
the Companies Act 2006, the Company is required to
seek shareholder approval for its remuneration policy
on a triennial basis and a binding resolution was last put
to shareholders at the AGM held on 20 September 2022.
Of the votes cast, 99.94% were in favour and 0.06%
were against. A resolution to approve the remuneration
policy will be put to shareholders at the AGM in 2025.
Mark Bridgeman
Chairman of the
Remuneration Committee
Director
2023/24
Shares
purchased
1
2023/24
Entitlement
£2
2023/24
Taxable
benefits
£
3
2023/24
Total
£
2022/23
Shares
purchased
1
2022/23
Entitlement
£
2
2022/23
Taxable
benefits
£
3
2022/23
Total
£
John Rennocks
(Chairman)
12,862
52,500
–
52,500
12,982
50,000
–
50,000
Mark Bridgeman
10,181
38,900
176
39,076
9,819
37,000
451
37,451
Susan Hansen4
8,029
18,153
1,000
19,153
17,340
37,000
1,000
38,000
Isabel Liu
12,491
38,900
–
38,900
12,432
37,000
–
37,000
Anthony Muh5
–
–
–
–
8,191
17,409
1,000
18,409
Eric Stobart
11,808
49,100
–
49,100
11,933
46,725
–
46,725
Totals
55,371
197,553
1,176
198,729
72,697
225,134
2,451
227,585
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 19 September 2023
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.
Directors’ Annual Report on Remuneration (Audited)
A single figure for the total remuneration of each Director who served during the year ended 31 March 2024 is set out
in the table below.
Relative Importance of Spend on Pay
The following table compares the remuneration
paid to the Directors with aggregate distributions to
shareholders relating to the year ended 31 March
2024 and the prior year. Although this disclosure is
a statutory requirement, the Directors consider that
comparison of Directors’ remuneration with annual
dividends and share buybacks does not provide a
meaningful measure relative to the Company’s overall
performance as an investment company with an
objective of providing shareholders with long term
total return.
Year ended 31 March
2024
£’000s
2023
£’000s
Change
£’000s
Aggregate Directors’
emoluments
198
225
(27)
Aggregate dividends
16,673
17,239
(566)
Aggregate share buybacks
25,397
27,159
(1,762)
Annual Percentage Change in Directors’
Remuneration
The following table sets out the annual percentage
change in Directors’ remuneration compared to the
previous year.
Year ended
31 March
2024
Fees
%
2023
Fees
%
2022
Fees
%
2021
Fees
%
John Rennocks
5.0
5.0
3.5
0.0
Mark Bridgeman
5.1
5.1
n/a
n/a
Susan Hansen
5.1
5.1
3.5
0.0
Isabel Liu
5.1
5.1
n/a
n/a
Eric Stobart
5.1
5.0
3.5
0.0
58 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 59
Total Return Comparative Performance
from 31 March 2014 to 31 March 2024
Source: ICM and Bloomberg
Rebased to 100 as at 31 March 2014
MSCI Emerging Markets total return Index (GBP adjusted)
UEM ordinary share price total return adjusted
for the exercise of subscription shares
Mar 24
Mar 23
Mar 22
Mar 21
Mar 20
Mar 19
Mar 18
Mar 17
Mar 16
Mar 15
Mar 14
80
100
120
140
160
180
200
220
Directors’ Beneficial Share Interests (Audited)
The beneficial shareholdings of the Directors who
served during the year are set out below:
As at 31 March
14 June
2024
31 March
2024
31 March
2023
John Rennocks
1
169,808
166,537
208,227
Mark Bridgeman
26,074
22,744
15,019
Susan Hansen
n/a
166,4293
162,150
Isabel Liu
2
35,721
35,721
20,348
Eric Stobart
4
73,000
69,750
60,000
1 Including 5,882 shares held by Mrs Rennocks
2 The shares are held by Ms Liu's husband, Mak Lo Chiu
3 As at 19 September 2023, the date Ms Hansen 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 2024,
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.
On behalf of the Board
Mark Bridgeman
Chairman of the Remuneration Committee
14 June 2024
Directors’ Remuneration Report (continued)
As Chairman of the Audit & Risk
Committee, I am pleased to
present the Committee’s report
to shareholders for the year
ended 31 March 2024.
Role and Responsibilities
UEM has established a
separately chaired Audit &
Risk Committee whose duties
include considering and
recommending to the Board
for approval the contents of
the half yearly and annual financial statements and
providing an opinion as to whether the annual report
and accounts, taken as a whole, are fair, balanced
and understandable and provide the information
necessary for shareholders to assess the Company’s
performance, business model and strategy. The
Committee also reviews the external auditors’
report on the annual financial statements and is
responsible for reviewing and forming an opinion
on the effectiveness of the external audit process
and audit quality. Other duties include reviewing the
appropriateness of the Company’s accounting policies
and ensuring the adequacy of the internal control
systems and standards.
The Audit & Risk Committee meets at least three times
a year. Two of the planned meetings are held prior to
the Board meetings to approve the half yearly and
annual results. Representatives of the Investment
Managers attend all meetings.
Composition
During the year ended 31 March 2024, the Audit & Risk
Committee consisted of all the independent Directors
of the Company. It is considered that there is a range of
recent and relevant financial experience amongst the
members of the Audit & Risk Committee together with
experience of the investment trust sector.
In light of the Chairman of the Board’s relevant
financial experience, his continued independence and
his valued contributions in Committee meetings, the
Audit & Risk Committee considers it appropriate that
he is a member.
Responsibilities and Review of the External
Audit
During the year the principal activities of the Audit &
Risk Committee included:
•
considering and recommending to the Board for
approval the contents of the half yearly and annual
financial statements and reviewing the external
auditor’s report;
•
management of the relationship with the external
auditor, including its appointment and the
evaluation of scope, execution, cost effectiveness,
independence and objectivity;
•
reviewing and approving the external auditors’
plan for the financial year, with a focus on
the identification of areas of audit risk, and
consideration of the appropriateness of the level
of audit materiality adopted;
•
reviewing and recommending to the Board for
approval the audit and non-audit fees payable
to the external auditor and the terms of its
engagement;
•
evaluation of reports received from the external
auditor with respect to the annual financial
statements and its review of the half-yearly report;
•
reviewing the efficacy of the external audit process
and making a recommendation to the Board with
respect to the reappointment of the external
auditor;
•
evaluation of the effectiveness of the internal
control and risk management systems including
reports received on the operational controls of the
Company’s service providers and reports from the
Company’s depositary;
•
reviewing the appropriateness of the Company’s
accounting policies; and
•
monitoring developments in accounting and
reporting requirements that impact on the
Company’s compliance with relevant statutory and
listing requirements.
Audit & Risk Committee Report
Eric Stobart, FCA
Chairman of the Audit &
Risk Committee
60 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 61
Significant Area
How Addressed
Value of the level 1
investments
Actively traded level 1 investments are valued using stock exchange prices provided by third party
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
Investments that are classified as level 3 are valued using a variety of techniques to determine a
fair 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.
Auditor and Audit Tenure
KPMG LLP has been the auditor of the Company since
2018 and prior to that, auditor of UEM Limited since
2012. Listed companies are required to tender the
external audit at least every ten years and change
auditor at least every twenty years. The Company will
be required to tender the external audit no later than
for the year ending 31 March 2028. The audit partner
has rotated regularly. Ms Bano Sheikh was appointed
the lead audit partner this year and her predecessor,
Mr John Waterson, acted as audit partner since 2020.
The Audit & Risk Committee has considered the
independence of the auditor and the objectivity of the
audit process and is satisfied that KPMG has fulfilled its
obligations to shareholders as independent auditor to
the Company.
It is the Company’s policy not to seek substantial non-
audit services from its auditor, unless they relate to a
review of the half-yearly report as the Board considers
the auditor is best placed to provide this work. If the
provision of significant non-audit services were to
be considered, the Committee would procure such
services from an accountancy firm other than the
auditor. Non-audit fees paid to KPMG amounted to £nil
for the year ended 31 March 2024 (2023: £nil).
The partner and manager of the audit team at
KPMG presented their audit plan to the Audit & Risk
Committee in advance of the financial year end. Items
of audit focus were discussed, agreed and given
particular attention during the audit process. KPMG
reported to the Audit & Risk Committee on these
items, their independence and other matters. This
report was considered by the Audit & Risk Committee
and discussed with KPMG and the Investment
Managers prior to approval of the annual financial
report.
Members of the Audit & Risk Committee meet in
camera with the external auditor at least annually.
Accounting Matters and Significant Areas
For the year ended 31 March 2024 the accounting
matters that were subject to specific consideration by
the Audit & Risk Committee were as follows:
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 2024 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.
Audit & Risk Committee Report (continued)
External Audit, Review of its Effectiveness and
Auditor Reappointment
The Audit & Risk Committee advises the Board on the
appointment of the external auditor, its remuneration
for audit and non-audit work and its cost effectiveness,
independence and objectivity.
As part of the review of the effectiveness of the audit
process, a formal evaluation process incorporating
views from the members of the Audit & Risk
Committee and relevant personnel at the Investment
Managers is followed and feedback is provided to
KPMG. Areas covered by this review include:
•
the calibre of the audit firm, including reputation
and industry presence;
•
the extent of quality controls including review
processes, second director oversight and annual
reports from its regulator;
•
the performance of the audit team, including
skills of individuals, specialist knowledge, partner
involvement, team member continuity and quality
and timeliness of audit planning and execution;
•
audit communication including planning, relevant
accounting and regulatory developments,
approach to significant accounting risks,
communication of audit results and
recommendations on corporate reporting;
•
ethical standards including independence and
integrity of the audit team, lines of communication
to the Audit & Risk Committee and partner
rotation; and
•
reasonableness of the audit fees.
For the year ended 31 March 2024, the Audit & Risk
Committee is satisfied that the audit process was
effective.
Resolutions proposing the reappointment of KPMG as
the Company’s auditor and authorising the Directors
to determine its remuneration will be put to the
shareholders at the forthcoming AGM.
Internal Controls and Risk Management
UEM’s risk assessment procedures and the way in
which significant risks are managed is a key area of
focus for the Audit & Risk Committee. Work here was
driven by the Audit & Risk Committee’s assessment
of the risks arising in the Company’s operations and
identification of the controls exercised by the Board
and its delegates, the Investment Managers, the
Administrator and other service providers. These
are recorded in risk matrices produced by ICMIM,
as the Company’s AIFM with responsibility for risk
management, which continue to serve as an effective
tool to highlight and monitor the principal risks, details
of which are provided in the Strategic Report on pages
35 to 37. It also received and considered, together with
representatives of the Investment Managers, reports in
relation to the operational controls of the Investment
Managers, Administrator and Custodian. These reviews
identified no issues of significance.
Whistleblowing Policy
The Committee has also reviewed and accepted the
‘whistleblowing’ policy that has been put in place by
the Investment Managers under which their staff,
in confidence, can raise concerns about possible
improprieties in matters of financial reporting or other
matters, in so far as they affect the Company.
Internal Audit
Due to the nature of the Company, being an externally
managed investment company with no executive
employees, the Company does not have its own
internal audit function. The Committee and the Board
have concluded that there is no current need for such
a function, based on the satisfactory operation of
controls within the Company’s service providers.
Eric Stobart
Chairman of the Audit & Risk Committee
14 June 2024
62 | Utilico Emerging Markets Trust plc
The Directors are responsible for preparing the Annual
Report and financial statements in accordance with
applicable United Kingdom law and regulations.
Company law requires the Directors to prepare
financial statements for each financial year. Under
that law, they are required to prepare the financial
statements in accordance with UK adopted
International Accounting Standards and the Companies
Act 2006.
Under company law the Directors must not approve
the financial statements unless they are satisfied that
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
preparing these financial statements, the Directors are
required to:
•
select suitable accounting policies and then apply
them consistently;
•
make judgements and estimates that are
reasonable, relevant and reliable;
•
state whether they have been prepared in
accordance with UK adopted International
Accounting Standards and of the Companies Act
2006;
•
assess the Company’s ability to continue as a
going concern, disclosing, as applicable, matters
related to going concern; and
•
use the going concern basis of accounting unless
they either intend to liquidate the Company or to
cease operations, or have no realistic alternative
but to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the Company and enable them to ensure that the
financial statements comply with the Companies Act
2006. They are responsible for such internal controls
as they determine are necessary to enable the
preparation of financial statements that are free from
material misstatement, whether due to fraud or error,
and have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets
of the Company and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Strategic Report,
Directors’ Report, Directors’ Remuneration Report and
Corporate Governance Statement that complies with
that law and those regulations.
In accordance with Disclosure Guidance and
Transparency Rule 4.1.14R, the financial statements
will form part of the annual financial report prepared
using the single electronic reporting format under
the TD ESEF Regulation. The auditor’s report on these
financial statements provides no assurance over the
ESEF format.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website, which is
maintained by the Company’s Investment Managers.
Legislation in the UK governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Responsibility Statement of the Directors in
Respect of the Annual Financial Report
We confirm that to the best of our knowledge:
•
the financial statements, prepared in accordance
with the applicable set of accounting standards,
give a true and fair view of the assets, liabilities,
financial position and profit or loss of the
Company; and
•
the Strategic Report and Directors’ Report include
a fair review of the development and performance
of the business and the position of the Company,
together with a description of the principal risks
and uncertainties that it faces.
We consider the annual report and accounts, taken
as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders
to assess the Company’s position and performance,
business model and strategy.
Approved by the Board on 14 June 2024 and signed on
its behalf by:
John Rennocks
Chairman
Directors’ Statement of Responsibilities
in respect of the Annual Report and Financial Statements
Report and Accounts for the Year to 31 March 2024 | 63
1. Our opinion is unmodified
We have audited the financial statements of Utilico
Emerging Markets Trust plc (“the Company”) for the
year ended 31 March 2024 which comprise the
Statement of Comprehensive Income, Statement of
Changes in Equity, Statement of Financial Position,
Statement of Cash Flows and the related notes,
including the accounting policies in note 1.
In our opinion the financial statements:
— give a true and fair view of the state of Company’s
affairs as at 31 March 2024 and of its return for the
year then ended;
— have been properly prepared in accordance with UK-
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 the Directors on 7
February 2018. The period of total uninterrupted
engagement is for the six financial years ended 31
March 2024. 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.
Independent
auditor’s report
to the members of Utilico Emerging Markets Trust plc
Overview
Materiality:
financial
statements as a
whole
£5.2m (2023:£5.5m)
1% (2023: 1%) of total assets
Key audit matters vs 2023
Recurring risks
Valuation of certain
Level 3 Investments
◄►
Carrying amount of non
– derivative Level 1
Investments
◄►
64 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 65
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 2023), 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
investments
(Certain specific investments within the
total of level 3 investments of £23.1
million; 2023: £58.7million)
Refer to page 59 (Audit Committee
Report), page 73 (accounting policy),
pages 78 to 80 and 87 to 90 (financial
disclosures).
Subjective Valuation
4.4% (2023: 10.7%) of the Company’s
total assets (by value) is held in
investments where no quoted market
price is available. Level 3 investments
are measured at fair value, which is
established in accordance with the
International Private Equity and
Venture Capital Valuation Guidelines
by using measurements of value such
as prices of recent orderly
transactions, milestone analysis,
revenue multiples and valuing fund
interest by reference to their reported
Net Asset Value.
There is a significant risk over the
judgements and estimates inherent in
the valuation of certain unlisted
investments and therefore this is one
of the key areas that our audit has
focused on. The effect of this matter is
that, as part of our risk assessment, we
determined that certain level 3
investment valuations have a high
degree of estimation uncertainty, with
a potential range of reasonable
outcomes greater than our materiality
for the financial statements as a whole.
The factors considered in assessing
which unlisted investments were
subject to significant risk included the
quantum of the individual investment,
performance of the investment,
nature of the asset held as well as the
estimation uncertainty of the
methodology and inputs used.
We assessed that the level of risk
associated with this matter has
decreased in the year as the quantum
of the balance has decreased from
prior year.
The quantum of the investments
subject to the significant risk is
£10.08m out of a total unlisted
investment balance of £23.1m.
The financial statements note 26(d)
discloses the range/sensitivity
estimated by the Company.
We performed the detailed tests below rather than seeking to
rely on controls, because the nature of the balance is such that
we would expect to obtain audit evidence primarily through
the detailed procedures described below:
Our procedures included:
— Methodology choice: In the context of observed industry
best practice and the provisions of the International
Private Equity and Venture Capital Valuation Guidelines,
we challenged the appropriateness of the valuation basis
selected;
— Our valuation experience: We challenged the investment
manager on key judgements affecting investee company
valuations, such as discount factors and the basket of peer
group multiples. We compared key underlying financial
and operational data inputs to external sources and
management information as applicable. We challenged
the assumptions around sustainability of revenue based
on the plans of the investee company and whether these
are achievable. We also obtained an understanding of
existing and prospective investee company cash flows. For
the valuation of the loan balance, we reviewed the
underlying agreements and assessed the recoverability of
the loan. Our work included consideration of events which
occurred subsequent to the year end up until the date of
the audit report.
— Comparing valuations: Where a recent transaction has
been used to value a holding, we obtained an
understanding of the circumstances surrounding the
transaction and vouched the price to supporting
documentation. We also assessed whether subsequent
changes or events such as market or entity specific factors
would imply a change in value;
— Assessing transparency: We considered the
appropriateness, in accordance with relevant accounting
standards, of the disclosures in respect of certain Level 3
investments and the effect of changing one or more inputs
to reasonably possible alternative valuation assumptions
Our results:
— We found the Company’s valuation of certain Level 3
investments to be acceptable (2023: acceptable).
3. Our application of materiality and an overview of
the scope of our audit
Materiality for the financial statements as a whole was
set at £5.2m (2023: £5.5m), determined with reference
to a benchmark of total assets, of which it represents 1%
(2023: 1%).
In line with our audit methodology, our procedures on
individual account balances and disclosures were
performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the
risk that individually immaterial misstatements in
individual account balances add up to a material amount
across the financial statements as a whole. Performance
materiality was set at 75% (2023 : 75%) of materiality for
the financial statements as a whole, which equates to
£3.9m (2023 : £4.1m). We applied this percentage in our
determination of performance materiality because we
did not identify any factors indicating an elevated level
of risk.
In addition, we applied materiality of £0.9m (2023:
£1.0m) and performance materiality of £0.7m (2023:
£0.8m) 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
exceeding £0.26m (2023: £0.27m), or £0.05m in relation
to investment and other income (2023: £0.1m) in
addition to other identified misstatements that
warranted reporting on 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.
Total Assets
£529.0m (2023: £547.5m)
Materiality
£5.2m (2023: £5.5m)
£5.2m
Whole financial
statements materiality (2023:
£5.5m)
£3.9m
Whole financial
statements performance
materiality (2023: £4.1m)
£0.9m
Investment and other income
materiality
(2023: £1.0m)
£0.26m
Misstatements reported to the
Audit and Risk committee (2023:
£0.27m)
2. Key audit matters: our assessment of risks of material misstatement (continued)
The risk
Our response
Carrying amount of non-derivative
Level 1 investments
(£487.6m; 2023: £483.1m)
Refer to page 59 (Audit Committee
Report), page 73 (accounting policy),
pages 78 to 80 and 90 (financial
disclosures).
Low risk, high value:
The Company’s portfolio of non-derivative
Level 1 investments makes up 92.2% (2023:
88.2%) of the Company’s total assets by
value and is considered to be one of the key
drivers of results. We do not consider these
investments to be at a high risk of significant
misstatement, or to be subject to a
significant level of judgement because they
comprise liquid, quoted investments.
However, due to their materiality in the
context of the financial statements as a
whole, they are considered to be one of the
areas which had the greatest effect on our
overall audit strategy and allocation of
resources in planning and completing our
audit.
We performed the detailed tests below rather than
seeking to rely on controls, because the nature of
the balance is such that detailed testing is
determined to be the most effective manner of
obtaining audit evidence.
Our procedures included:
— Tests of detail: Agreed the valuation of 100% of
non-derivative Level 1 investments in the
portfolio to externally quoted prices; and
— Enquiry of custodians: All investments in non-
derivative level 1 investments were agreed to
independently received third party
confirmations from investment custodians.
Our results
— We found the carrying amount of non-derivative
Level 1 investments to be acceptable (2023:
acceptable).
Total Assets
Materiality
66 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 67
4. Going concern
The directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the
Company or to cease its operations, and as they have concluded
that the Company’s financial position means that this is realistic.
They have also concluded that there are no material
uncertainties that could have cast significant doubt over its
ability to continue as a going concern for at least a year from the
date of approval of the financial statements (“the going concern
period”).
We used our knowledge of the Company, its industry, and the
general economic environment to identify the inherent risks to
its business model and analysed how those risks might affect the
Company’s financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to adversely affect the Company’s available financial
resources and its ability to operate over this period were:
— The impact of a significant reduction in the valuation of
investments;
— The liquidity of the investment portfolio and its ability to
meet the liabilities of the Company as and when they fall due;
— The operational resilience of key service organisations.
We considered whether these risks could plausibly affect the
liquidity in the going concern period by assessing the degree of
downside assumption that, individually and collectively, could
result in a liquidity issue, taking into account the Company’s
liquid investment position (and the results of their stress testing).
We considered whether the going concern disclosure in note 1
and 25 of the financial statements gives a full and accurate
description of the Directors’ assessment of going concern,
including the identified risks and related sensitivities.
Our conclusions based on this work:
— we consider that the Directors’ use of the going concern basis
of accounting in the preparation of the financial statements is
appropriate;
— we have not identified, and concur with the Directors’
assessment that there is not, a material uncertainty related
to events or conditions that, individually or collectively, may
cast significant doubt on the Company's ability to continue as
a going concern for the going concern period;
— we have nothing material to add or draw attention to in
relation to the Directors’ statement in note 1 and note 25 to
the financial statements on the use of the going concern
basis of accounting with no material uncertainties that may
cast significant doubt over the Company’s use of that basis
for the going concern period, and we found the going
concern disclosure in note 1 and note 25 to be acceptable;
and
— the related statement under the Listing Rules set out on page
45 is materially consistent with the financial statements and
our audit knowledge.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time
they were made, the above conclusions are not a guarantee that
the Company will continue in operation.
5. Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to
fraud
To identify risks of material misstatement due to fraud (“fraud risks”)
we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
—
Enquiring of Directors as to the Company’s high-level policies and
procedures to prevent and detect fraud, as well as whether they
have knowledge of any actual, suspected or alleged fraud;
—
Assessing the segregation of duties in place between the
Directors, the Administrator and the Company’s Investment
Manager; and
—
Reading Board and Audit and Risk Committee minutes.
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the audit.
As required by auditing standards, we perform procedures to address
the risk of management override of controls, in particular to the risk
that management may be in a position to make inappropriate
accounting entries and the risk of bias in accounting estimates and
judgements such as the valuation of level 3 investments. We evaluated
the design and implementation of the relevant controls over journal
entries and other adjustments and made inquiries of the Administrator
about inappropriate or unusual activity relating to the processing of
journal entries and other adjustments. Based on these procedures, we
selected journal entries for testing, which included material post-
closing journal entries.
On this audit we have rebutted the fraud risk related to revenue
recognition because the revenue is non-judgemental and
straightforward, with limited opportunity for manipulation. We did not
identify any significant unusual transactions or additional fraud risks.
Identifying and responding to risks of material misstatement due to
non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be
expected to have a material effect on the financial statements from our
general commercial and sector experience and through discussion with
the Directors, the Investment Manager and the Administrator (as
required by auditing standards), and discussed with the Directors the
policies and procedures regarding compliance with laws and
regulations. As the Company is regulated, our assessment of risks
involved gaining an understanding of the control environment
including the entity’s procedures for complying with regulatory
requirements.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit .
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Company is subject to laws and regulations that directly
affect the financial statements including financial reporting legislation
(including related companies legislation), distributable profits
legislation, and its qualification as an Investment Trust under UK
taxation legislation, any breach of which could lead to the Company
losing various deductions and exemptions from UK corporation tax,
and we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial
statement items.
6. We have nothing to report on the other information in the
Annual Report
The directors are responsible for the other information presented in
the Annual Report together with the financial statements. Our
opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or,
except as explicitly stated below, any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the
financial statements or our audit knowledge. Based solely on that
work we have not identified material misstatements in the other
information.
Strategic report and directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the strategic
report and the directors’ report;
— in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
— in our opinion those reports have been prepared in accordance
with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and longer-term
viability
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ disclosures in respect of
emerging and principal risks and the viability statement, and the
financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw
attention to in relation to:
— the directors’ confirmation within the Strategic Report on page 35
they have carried out a robust assessment of the emerging and
principal risks facing the Company, including those that would
threaten its business model, future performance, solvency and
liquidity;
— the Principal Risks and Risk mitigation disclosures describing these
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.
5. Fraud and breaches of laws and regulations – ability to
detect (continued)
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations (continued)
Secondly, the Company is subject to many other laws and
regulations where the consequences of non-compliance could
have a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely
to have such an effect: money laundering, data protection,
bribery and corruption legislation and certain aspects of company
legislation recognising the financial and regulated nature of the
Company’s activities and its legal form. Auditing standards limit
the required audit procedures to identify non-compliance with
these laws and regulations to enquiry of the Directors and the
Administrator and inspection of regulatory and legal
correspondence, if any. Therefore if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
Report and Accounts for the Year to 31 March 2024 | 69
68 | Utilico Emerging Markets Trust plc
9. The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and
the Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
Bano Sheikh (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
14 June 2024
8. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 62, the
directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error; assessing the
Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going
concern basis of accounting unless they either intend to liquidate the
Company or to cease operations, or have no realistic alternative but
to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue our opinion in an
auditor’s report. Reasonable assurance is a high level of assurance,
but does not guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
The Company will be including these financial statements in an
annual financial report prepared using the single electronic reporting
format specified in the TD ESEF Regulation. This auditor’s report
provides no assurance over whether the annual financial report has
been prepared in accordance with that format
6. We have nothing to report on the other information in the
Annual Report (continued)
We are also required to review the viability statement, set out on
page 37 and 38 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures are
materially consistent with the financial statements and our audit
knowledge.
Our work is limited to assessing these matters in the context of
only the knowledge acquired during our financial statements
audit. As we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were
made, the absence of anything to report on these statements is
not a guarantee as to the Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
corporate governance disclosures and the financial statements
and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements
and our audit knowledge:
— the directors’ statement that they consider that the annual
report and financial statements taken as a whole is fair,
balanced and understandable, and provides the information
necessary for shareholders to assess the Company’s position
and performance, business model and strategy;
— the section of the annual report describing the work of the
Audit Committee, including the significant issues that the
audit committee considered in relation to the financial
statements, and how these issues were addressed; and
— the section of the annual report that describes the review of
the effectiveness of the Company’s risk management and
internal control systems.
We are required to review the part of the Corporate Governance
Statement relating to the Company’s compliance with the
provisions of the UK Corporate Governance Code specified by the
Listing Rules for our review. We have nothing to report in this
respect.
7.
We have nothing to report on the other matters on which
we are required to report by exception
Under the Companies Act 2006, we are required to report to you
if, in our opinion:
— 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
with the accounting records and returns; or
— certain disclosures of directors’ remuneration specified by
law are not made; or
— we have not received all the information and explanations
we require for our audit.
We have nothing to report in these respects.
Statement of Comprehensive Income
for the year to 31 March 2024
for the year to 31 March 2023
Notes
Revenue
return
£’000s
Capital
return
£’000s
Total
return
£’000s
Revenue
return
£’000s
Capital
return
£’000s
Total
return
£’000s
10
Gains/(losses) on investments
–
46,836
46,836
–
(8,389)
(8,389)
20
Foreign exchange gains/(losses)
–
610
610
–
(515)
(515)
3
Investment and other income
23,079
–
23,079
24,326
–
24,326
Total income/(loss)
23,079
47,446
70,525
24,326
(8,904)
15,422
4
Management and administration fees
(1,445)
(4,368)
(5,813)
(1,394)
(4,336)
(5,730)
5
Other expenses
(1,911)
–
(1,911)
(1,651)
–
(1,651)
Profit/(loss) before finance costs and taxation
19,723
43,078
62,801
21,281
(13,240)
8,041
6
Finance costs
(318)
(1,274)
(1,592)
(169)
(674)
(843)
Profit/(loss) before taxation
19,405
41,804
61,209
21,112
(13,914)
7,198
7
Taxation
(1,958)
(1,360)
(3,318)
(1,638)
212
(1,426)
Profit/(loss) for the year
17,447
40,444
57,891
19,474
(13,702)
5,772
8
Earnings per share (basic) – pence
8.83
20.48
29.31
9.40
(6.61)
2.79
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 73 to 90 form part of these financial statements.
70 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 71
Statement of Changes in Equity
for the year to 31 March 2024
Notes
Ordinary
share
capital
£’000s
Merger
reserve
£’000s
Capital
redemption
reserve
£’000s
Special
reserve
£’000s
Retained earnings
Total
£’000s
Capital
reserves
£’000s
Revenue
reserve
£’000s
Balance as at 31 March 2023
2,023
76,706
322
432,577
(13,841)
9,587
507,374
16, 18,
19
Shares purchased by the
Company and cancelled
(114)
–
114
(25,397)
–
–
(25,397)
20,21 Profit for the year
–
–
–
–
40,444
17,447
57,891
9 Dividends paid in the year
–
–
–
–
–
(16,935)
(16,935)
Balance as at 31 March 2024
1,909
76,706
436
407,180
26,603
10,099
522,933
for the year to 31 March 2023
Notes
Ordinary
share
capital
£’000s
Merger
reserve
£’000s
Capital
redemption
reserve
£’000s
Special
reserve
£’000s
Retained earnings
Total
£’000s
Capital
reserves
£’000s
Revenue
reserve
£’000s
Balance as at 31 March 2022
2,148
76,706
197
459,736
(139)
7,268
545,916
16, 18,
19
Shares purchased by the
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
The notes on pages 73 to 90 form part of these financial statements.
Notes
as at 31 March
2024
£’000s
2023
£’000s
Non-current assets
10
Investments
517,195
545,657
Current assets
11
Other receivables
6,078
1,444
Cash and cash equivalents
5,751
456
11,829
1,900
Current liabilities
12
Other payables
(4,573)
(3,461)
13
Bank loans
–
(35,102)
(4,573)
(38,563)
Net current assets/(liabilities)
7,256
(36,663)
Total assets less current liabilities
524,451
508,994
Non-current liabilities
14
Provision for capital gains tax
(1,518)
(1,620)
Net assets
522,933
507,374
Equity attributable to equity holders
16
Ordinary share capital
1,909
2,023
17
Merger reserve
76,706
76,706
18
Capital redemption reserve
436
322
19
Special reserve
407,180
432,577
20
Capital reserves
26,603
(13,841)
21
Revenue reserve
10,099
9,587
Total attributable to equity holders
522,933
507,374
22
Net asset value per share
Basic – pence
274.01
250.91
The notes on pages 73 to 90 form part of these financial statements.
Approved by the Board on 14 June 2024 and signed on its behalf by
John Rennocks
Chairman
Utilico Emerging Markets Trust plc
Registered in England, No 11102129
Statement of Financial Position
Report and Accounts for the Year to 31 March 2024 | 73
72 | Utilico Emerging Markets Trust plc
Year to 31 March
2024
£’000s
2023
£’000s
Operating activities
Profit before taxation
61,209
7,198
Deduct investment income – dividends
(21,100)
(22,671)
Deduct investment income – interest
(1,932)
(1,627)
Deduct bank Interest received
(47)
(28)
Add back interest charged
1,592
843
Add back (gains)/losses on investments
(46,836)
8,389
Add back foreign exchange (gains)/losses
(610)
515
Increase in other receivables
(30)
(31)
Decrease in other payables
(683)
(88)
Net cash outflow from operating activities before dividends and interest
(8,437)
(7,500)
Interest paid
(1,813)
(646)
Dividends received
20,212
22,417
Investment income – interest
1,125
475
Bank interest received
47
28
Taxation paid
(3,431)
(1,691)
Net cash inflow from operating activities
7,703
13,083
Investing activities
Purchase of investments
(75,544)
(106,821)
Sales of investments
151,442
125,649
Net cash inflow from investing activities
75,898
18,828
Financing activities
Repurchase of shares for cancellation
(25,397)
(27,159)
Dividends paid
(16,935)
(17,155)
Drawdown of bank loans
19,821
35,385
Repayment of bank loans
(53,943)
(24,440)
Net cash outflow from financing activities
(76,454)
(33,369)
Increase/(decrease) in cash and cash equivalents
7,147
(1,458)
Cash and cash equivalents at the start of the year
(1,026)
452
Effect of movement in foreign exchange
(370)
(20)
Cash and cash equivalents as at the end of the year
5,751
(1,026)
Comprised of:
Cash
5,751
456
Bank overdraft
–
(1,482)
Total
5,751
(1,026)
The notes on pages 73 to 90 form part of these financial statements.
Statement of Cash Flows
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 88 and 89).
(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.
Notes to the Accounts
74 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 75
(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.
(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) 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 4.5% of total investments as at 31 March 2024 (10.8% of total
investments as at 31 March 2023).
3. Investment and other income
Year to 31 March
2024
2023
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Investment income
Dividends*
21,100
–
21,100
22,671
–
22,671
Interest
1,932
–
1,932
1,627
–
1,627
Total investment income
23,032
–
23,032
24,298
–
24,298
Other income
Bank interest
47
–
47
28
–
28
Total income
23,079
–
23,079
24,326
–
24,326
* Includes scrip dividends of £237,000 (2023: £346,000)
76 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 77
4. Management and administration fees
Year to 31 March
2024
2023
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Payable to: ICM/ICMIM
– management, secretarial and
research fees
1,092
4,368
5,460
1,084
4,336
5,420
Administration fees
353
–
353
310
–
310
1,445
4,368
5,813
1,394
4,336
5,730
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 2023: £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
2024
2023
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Auditor's remuneration:
for audit services
(1)
180
–
180
111
–
111
Broker and consultancy fees
153
–
153
109
–
109
Custody fees
608
–
608
549
–
549
Depositary fees
110
–
110
129
–
129
Directors’ fees for services to the Company
(see Directors’ Remuneration Report on pages 56 to 58)
198
–
198
225
–
225
Travel expenses
232
–
232
215
–
215
Professional fees
87
–
87
48
–
48
Sundry expenses
343
–
343
265
–
265
1,911
–
1,911
1,651
–
1,651
All expenses are stated gross of irrecoverable VAT, where applicable.
(1) Total auditor’s remuneration for audit services, exclusive of VAT, amounted to £180,000, £147,000 for the year to 31 March 2024 and £33,000 for
additional audit costs for the year to 31 March 2023 (2023: £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).
6. Finance Costs
Year to 31 March
2024
2023
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
On loans and bank overdrafts
318
1,274
1,592
169
674
843
7. Taxation
(a) Analysis of charge in the year :
Year to 31 March
2024
2023
Tax on ordinary activities
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
UK corporation tax at 25.0% (2023: 19.0%)
–
–
–
–
–
–
Overseas tax suffered
1,958
–
1,958
1,638
–
1,638
Capital gains tax
–
1,462
1,462
–
58
58
Deferred tax (see note 14)
–
(102)
(102)
–
(270)
(270)
Total tax charge for the year
1,958
1,360
3,318
1,638
(212)
1,426
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
2024
2023
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Net profit/(loss) before taxation
19,405
41,804
61,209
21,112
(13,914)
7,198
Corporation tax at 25.0% (2023: 19.0%)
4,851
10,451
15,302
4,011
(2,644)
1,367
Effects of:
Non taxable dividend income
(4,561)
–
(4,561)
(3,607)
–
(3,607)
Non taxable capital returns
–
(11,862)
(11,862)
–
1,692
1,692
Overseas tax suffered
1,958
–
1,958
1,638
–
1,638
Double taxation relief
(290)
222
(68)
(265)
187
(78)
Movement in tax losses that no deferred tax asset is
recognised on
–
1,189
1,189
(139)
765
626
Capital gains tax
–
1,360
1,360
–
(212)
(212)
Total tax charge for the year
1,958
1,360
3,318
1,638
(212)
1,426
As at 31 March 2024, the Company had net surplus management expenses of £28,087,000 (2023: £23,253,000) and a non-trade
loan relationship deficit of £299,000 (2023: £299,000), giving total unutilised tax losses of £28,386,000 (2022: £23,552,000). 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 £7.1m as at 31 March 2024 (2023: £5.9m) based on
the corporation tax rate of 25% which took effect from 1 April 2023.
78 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 79
8. Earnings Per Share
Year to 31 March
2024
£’000s
2023
£’000s
Revenue return
17,447
19,474
Capital return
40,444
(13,702)
Total return
57,891
5,772
Number
Number
Weighted average number of shares in issue during the year
197,484,731
207,220,648
Pence
Pence
Revenue return per share
8.83
9.40
Capital return per share
20.48
(6.61)
Total profit per share
29.31
2.79
9. Dividends
Year to 31 March
Record date
Payment date
2024
£’000s
2023
£’000s
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
2023 Fourth quarterly dividend of 2.15p per share
02-Jun-23
23-Jun-23
4,334
–
2024 First quarterly dividend of 2.15p per share
01-Sep-23
22-Sep-23
4,280
–
2024 Second quarterly dividend of 2.15p per share
01-Dec-23
15-Dec-23
4,206
–
2024 Third quarterly dividend of 2.15p per share
08-Mar-24
28-Mar-24
4,115
–
16,935
17,155
The Directors have declared a fourth quarterly dividend in respect of the year ended 31 March 2024 of 2.15p per share payable
on 28 June 2024 to shareholders on the register at close of business on 7 June 2024. The total cost of the dividend, which has not
been accrued in the results for the year to 31 March 2024, is £4,072,000 based on 189,405,062 shares in issue at the record date,
see note 16 for changes in share capital.
10. Investments
Year to 31 March
2024
£’000s
2023
£’000s
Cost of investments brought forward
491,177
523,644
Net unrealised profits brought forward
54,480
48,042
Valuation brought forward
545,657
571,686
Purchases at cost
80,163
108,938
Sales proceeds
(155,498)
(126,638)
Gains/(losses) on investments
46,873
(8,329)
Valuation as at 31 March
517,195
545,657
Analysed as at 31 March
Cost of investments
425,879
491,177
Net unrealised gains on investments
91,316
54,480
Valuation
517,195
545,657
The Company received £155,498,000 (2023: £126,638,000) from investments sold in the year. The book cost of these investments
when they were purchased was £145,461,000 (2023: £141,405,000). 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.
Year to 31 March
2024
2023
Gains/(losses) on investments
£'000
£'000
Net gain/(loss) on investments sold
10,037
(14,767)
Other capital charges
(37)
(60)
Movement in unrealised gains
36,836
6,438
Total gains/(losses) on investments
46,836
(8,389)
Subsidiary undertakings
Under IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosure of Interests in Other Entities, the following is a
subsidiary of the Company as at 31 March 2024 and as at 31 March 2023.
Country of
registration and
incorporation
Number and class of
shares held
Holding
and
voting
rights
2024
Fair
value
£’000s
2023
Fair
value
£’000s
UEM (HK) Limited
Hong Kong
1,000 ordinary shares
100
–
1,498
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).
UEM Mauritius Holdings Limited, a Bermuda registered company was a subsidiary of UEM as at 31 March 2023. UEM held a
loan with UEM Mauritius Holdings Limited, the parent company of Utilico Emerging Markets (Mauritius), and under the terms of
the loan agreement, provided that UEM retained effective control of the company since it could only appoint directors with the
approval of UEM. The fair value of the loan at 31 March 2023 was £nil and was cancelled in the year to 31 March 2024. Utilico
Emerging Markets (Mauritius) was dissolved on 8 November 2023 and UEM Mauritius Holdings Limited was dissolved on
14 December 2023.
The subsidiary undertakings carried on business as investment companies and are considered to be investment entities. They
are held as part of the investment portfolio, and are accounted for as investments at fair value through profit and loss.
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 2024 are held as part of the investment portfolio and consequently are accounted for as
investments at fair value through profit and loss (2023: East Balkan Properties plc, Petalite Limited and Pitch Hero Holdings
Limited):
EBP Holdings
Limited
East Balkan
Properties plc
Petalite Limited
Pitch Hero
Holdings Limited
Country of incorporation
Isle of Man
Isle of Man
United Kingdom
United Kingdom
Country of listing
Unlisted
Unlisted
Unlisted
Unlisted
Country of operations
Bulgaria & Romania
Bulgaria & Romania
United Kingdom
United Kingdom
Number of ordinary shares held
731
155
10,725
62,874
Percentage of ordinary shares held
25.3%
25.3%
28.5%
36.7%
Transactions with associated undertaking were as follows:
EBP Holdings Limited ("EBP") and East Balkan Properties plc ("East Balkan")
During the year East Balkan restructured its business to simplify its capital structure such that shareholders received an in-specie
capital distribution of the shares into its wholly owned subsidiary, EBP. This effected a transfer of value from East Balkan to EBP
with no change in the economic interest of UEM, with EBP replacing East Balkan as the ultimate parent company. Following the
distribution, East Balkan will be dissolved.
Petalite Limited (“Petalite”)
Pursuant to a loan agreement dated 24 October 2023 under which UEM has agreed to loan £2,500,000 to Petalite, UEM advanced
to Petalite £1,500,000. As at 31 March 2024, the balance of the loan and interest outstanding was £1,547,000. The loan bears
80 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 81
interest at an annual rate of 10.0% for the first 6 months, 12.0% for the following 3 months and 14.0% thereafter. The loan is
repayable on 15 July 2024. As part of the loan agreement, UEM received 2 year warrants to subscribe for £2.5m at a valuation to
be determined by a capital raise planned to be effected in 2024 (“Series A raise”). At the year end the Company held 10,725 equity
shares (31 March 2023: 10,725 equity shares) and held 31.2% (31 March 2023: 29.4%) of the undiluted shareholding of Petalite.
Factoring in dilutive options the Company's stake in Petalite is 28.5% (31 March 2023: 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 £150,000. As at 31 March 2024, the balance of the loan and interest outstanding was £657,000 (31 March
2023: £470,000). The loan bears interest at an annual rate of 10.0%, having increased from 5.0% on 24 August 2023. The first
repayment is due on 25 August 2024, with a final repayment date of 25 August 2027.
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:
Country of
registration and incorporation
Class of
shares held
2024
% of class of
instruments
held
2023
% of class of
instruments
held
Korean Internet Neutral Exchange Inc.
South Korea
Ordinary shares
5.3
5.6
Orizon Valorizacao De Residuos S.A.
Brazil
Ordinary shares
4.0
3.9
Umeme Limited
Uganda
Ordinary shares
8.3
8.4
11. Other receivables
2024
£’000s
2023
£’000s
Accrued income
1,373
796
Sales for future settlement
4,563
548
Overseas tax recoverable
36
24
Other debtors
106
76
6,078
1,444
12. Other payables
2024
£’000s
2023
£’000s
Bank overdraft
–
1,482
Interest payable
–
221
Other creditors and accruals
1,071
1,758
Purchases awaiting settlement
3,502
–
4,573
3,461
13. Bank loans
2024
£’000s
2023
£’000s
EUR 12.0m repaid March 2024
–
10,544
GBP 10.0m repaid March 2024
–
10,000
USD 18.0m repaid August 2023
–
14,558
–
35,102
The Company had an unsecured committed senior multicurrency revolving facility of £50,000,000 with the Bank of Nova Scotia,
London Branch that expired on 15 March 2024. Commitment fees were charged on any undrawn amounts at commercial rates.
The terms of the loan facility, including those related to accelerated repayment and costs of repayment, were typical of those
normally found in facilities of this nature.
14. Provision for capital gains tax
2024
£’000s
2023
£’000s
Balance brought forward
1,620
1,890
Decrease in provision for Indian tax on capital gains
(102)
(270)
Balance as at 31 March
1,518
1,620
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
2024
£’000s
Number
2023
£’000s
Issued, called up and fully paid
Ordinary shares of 1p each
Balance brought forward
202,212,256
2,023
214,744,067
2,148
Purchased for cancellation by the Company
(11,369,753)
(114)
(12,531,811)
(125)
Balance as at 31 March
190,842,503
1,909
202,212,256
2,023
During the year the Company bought back for cancellation 11,369,753 (2023: 12,531,811) ordinary shares at a total cost of
£25,397,000 (2023: £27,159,000). A further 1,567,469 ordinary shares have been purchased for cancellation at a total cost of
£3,572,000 since the year end.
17. Merger reserve
2024
£’000s
2023
£’000s
Balance brought forward and carried forward
76,706
76,706
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.
82 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 83
18. Capital redemption reserve
2024
£’000s
2023
£’000s
Balance brought forward
322
197
Purchased for cancellation by the Company (see note 16)
114
125
Balance as at 31 March
436
322
The capital redemption reserve represents the nominal value of ordinary shares repurchased and cancelled. This is non-
distributable.
19. Special reserve
2024
£’000s
2023
£’000s
Balance brought forward
432,577
459,736
Purchased for cancellation by the Company (see note 16)
(25,397)
(27,159)
Balance as at 31 March
407,180
432,577
The special reserve arose from the High Court of England and Wales approving the Company's application in May 2018 to part
cancel the merger reserve and a special reserve created. This is a distributable reserve and can be used to pay dividends and buy
back shares.
20. Capital reserves
2024
2023
Realised
£’000s
Investment
holding
gains
£’000s
Total
£’000s
Realised
£’000s
Investment
holding
gains
£’000s
Total
£’000s
Realised gains/(losses) on
investments
10,037
–
10,037
(14,767)
–
(14,767)
Unrealised gains on
investments
–
36,836
36,836
–
6,438
6,438
Foreign exchange gains/(losses)
610
–
610
(515)
–
(515)
Finance costs charged to capital
(1,274)
–
(1,274)
(674)
–
(674)
Expenses charged to capital
(4,368)
–
(4,368)
(4,336)
–
(4,336)
Capital gains tax
(1,360)
–
(1,360)
212
–
212
Other capital charges
(37)
–
(37)
(60)
–
(60)
3,608
36,836
40,444
(20,140)
6,438
(13,702)
Balance brought forward
(68,321)
54,480
(13,841)
(48,181)
48,042
(139)
Balance as at 31 March
(64,713)
91,316
26,603
(68,321)
54,480
(13,841)
Included within the capital reserve movement for the year is £nil (2023: £1,303,000) of dividend receipts recognised as capital
in nature, £152,000 (2023: £189,000) of transaction costs on purchases of investments and £297,000 (2023: £251,000) of
transaction costs on sales of investments.
21. Revenue reserve
2024
£’000s
2023
£’000s
Balance brought forward
9,587
7,268
Revenue profit for the year
17,447
19,474
Dividend paid in the year
(16,935)
(17,155)
Balance as at 31 March
10,099
9,587
The revenue reserve represents accumulated revenue profits retained by the Company that have not currently been distributed
to shareholders as a dividend
22. Net asset value per share
The net asset value per share is based on the net assets attributable to the equity shareholders of £522,933,000 (2023:
£507,374,000) and on 190,842,503 (2023: 202,212,256) shares, being the number of shares in issue at the year end.
23. Reconciliation of liabilities arising from financing activities
2024
Balance as at
31 March
2023
£’000s
Transactions
in the year
£’000s
Net
cashflow
£’000s
Foreign
exchange
loss
£’000s
Balance as at
31 March
2024
£’000s
Bank loans
35,102
–
(34,122)
(980)
–
Repurchase of shares for cancellation
–
25,397
(25,397)
–
–
Dividends paid
–
16,935
(16,935)
–
–
35,102
42,332
(76,454)
(980)
–
2023
Balance as at
31 March
2022
£’000s
Transactions in
the year
£’000s
Net
cashflow
£’000s
Foreign
exchange
loss
£’000s
Balance as at
31 March
2023
£’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
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.
The following transactions were carried out during the year to 31 March 2024 between the Company and its related parties above:
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. In the
year, UEM (HK) Limited repaid £290,000 of interest and £4,692,000 of capital and £492,000 loan interest was capitalised and added to the
balance of the loan. As at 31 March 2024 the fair value of the loan held with UEM (HK) Limited was £4,711,000 and loan interest accrued
was £43,000.
UEM paid £11,000 fees on behalf of UEM Mauritius Holdings Limited to finalise the liquidation of 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 56 to 58, the Board received
aggregate remuneration of £198,000 (31 March 2023: £225,000) included within “other expenses” for services as Directors. As at the year
end, £nil (31 March 2023: £nil) remained outstanding to the Directors. In addition to their fees, the Directors received dividends totalling
£33,000 (31 March 2023: £44,000) during the year under review in respect of their shareholdings in the Company. There were no further
transactions with the Board during the year.
84 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 85
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 £140,000 (31 March 2023: £134,000). As at the period end £376,000
(31 March 2023: £1,330,000) remained outstanding in respect of management, company secretarial and research fees.
Mr Jillings received dividends totalling £40,000 (31 March 2023: £38,000) and UIL Limited received dividends totalling £1,310,000
(31 March 2023: £2,051,000). There were no transactions with Mr Saville in the year.
25. Going concern
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 95.5% of the Company’s total
portfolio as at 31 March 2024. 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 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.
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 (2023: Brazilian Real, Hong Kong
Dollar, Indian Rupee, Mexican Peso, 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:
2024
Average
2023
BRL
Brazilian Real
6.3233
6.2022
6.2691
EUR
Euro
1.1697
1.1586
1.1381
HKD
Hong Kong Dollar
9.8868
9.8349
9.7061
INR
Indian Rupee
105.3582
104.0566
101.6145
PHP
Philippine Peso
71.0136
70.2503
67.2196
USD
United States Dollar
1.2633
1.2569
1.2364
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:
2024
BRL
£’000s
EUR
£’000s
HKD
£’000s
INR
£’000s
PHP
£’000s
USD
£’000s
Other
£’000s
Total
£’000s
Current assets
2,110
–
232
–
2,320
8,292
875
13,829
Creditors
(1,693)
–
–
–
(1,970)
(2,146)
–
(5,809)
Foreign currency exposure on
net monetary items
417
–
232
–
350
6,146
875
8,020
Investments
126,075
37,174
42,140
38,023
35,267
23,682
169,292
471,653
Total net foreign currency
exposure
126,492
37,174
42,372
38,023
35,617
29,828
170,167
479,673
Percentage of net exposures (%)
26.4
7.8
8.8
7.9
7.4
6.2
35.5
100.0
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
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:
2024
2023
Weakening of
Sterling
BRL
£’000s
EUR
£’000s
HKD
£’000s
INR
£’000s
PHP
£’000s
USD
£’000s
BRL
£’000s
HKD
£’000s
INR
£’000s
MXN
£’000s
PHP
£’000s
USD
£’000s
Statement of Comprehensive Income return after tax
Revenue return
443
–
199
403
168
5
518
252
432
116
139
–
Capital return
14,009
4,131
4,683
4,236
3,926
2,631
12,157
6,637
6,297
3,252
2,954
3,958
Total return
14,452
4,131
4,882
4,639
4,094
2,636
12,675
6,889
6,729
3,368
3,093
3,958
NAV per share
Basic – pence
7.32
2.09
2.47
2.35
2.07
1.33
6.12
3.32
3.25
1.63
1.49
1.91
86 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 87
2024
2023
Strengthening
of Sterling
BRL
£’000s
EUR
£’000s
HKD
£’000s
INR
£’000s
PHP
£’000s
USD
£’000s
BRL
£’000s
HKD
£’000s
INR
£’000s
MXN
£’000s
PHP
£’000s
USD
£’000s
Statement of Comprehensive Income return after tax
Revenue return
(443)
–
(199)
(403)
(168)
(5)
(518)
(252)
(432)
(116)
(139)
–
Capital return
(14,009)
(4,131)
(4,683)
(4,236)
(3,926)
(2,631) (12,157)
(6,637)
(6,297)
(3,252)
(2,954)
(3,958)
Total return
(14,452)
(4,131)
(4,882)
(4,639)
(4,094)
(2,636) (12,675)
(6,889)
(6,729)
(3,368)
(3,093)
(3,958)
NAV per share
Basic – pence
(7.32)
(2.09)
(2.47)
(2.35)
(2.07)
(1.33)
(6.12)
(3.32)
(3.25)
(1.63)
(1.49)
(1.91)
Interest rate exposure
2024
2023
Within
one year
£’000s
More than
one year
£’000s
Total
£’000s
Within
one year
£’000s
More than
one year
£’000s
Total
£’000s
Exposure to floating rates
Cash
5,751
–
5,751
456
–
456
Bank overdrafts
–
–
–
(1,482)
–
(1,482)
Loans
–
–
–
(35,102)
–
(35,102)
5,751
–
5,751
(36,128)
–
(36,128)
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.
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.
2024
2023
2% increase
in rate
£’000s
2% decrease
in rate
£’000s
2% increase
in rate
£’000s
2% decrease
in rate
£’000s
Revenue return
115
(115)
(161)
161
Capital return
–
–
(562)
562
Net assets
115
(115)
(723)
723
Other market risk exposures
The portfolio of investments, valued at £517,195,000 as at 31 March 2024 (2023: £545,657,000) 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:
2024
2023
Increase
in value
Decrease in
value
Increase
in value
Decrease in
value
Statement of Comprehensive Income capital return £’000s
102,901
(102,901)
108,564
(108,564)
NAV per share
Basic – pence
53.92
(53.92)
53.69
(53.69)
(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 (66 valued at £494,081,000 as at 31 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 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:
2024
Three
months
or less
£’000
More than three
months but less
than one year
£’000
More than
one year
£’000
Total
£’000
Creditors:
Securities purchased for future settlement
3,502
–
–
3,502
Other payables
695
–
–
695
4,197
–
–
4,197
2023
Three
months
or less
£’000
More than three
months but less
than one year
£’000
More than
one year
£’000
Total
£’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
(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). 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 did not have a value materially different from
their capital repayment amounts. Borrowings in foreign currencies were 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
88 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 89
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
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 elevated
level of volatility in equity markets during the year, principally reflecting concerns about high rates of inflation, tightening energy
supplies, higher interest rates and the Ukraine and Middle East conflicts. 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. For each
unlisted holding valued over £5.0m, the significant valuation inputs have been detailed below the table.
As at 31 March 2024
Investment
Investment
type
Valuation
methodology
Risk
weighting
Sensitivity
+/-
Carrying
amount
£’000s
Sensitivity
£’000s
Petalite
Equity/Loan
Last funding
round
High
70%
10,082
7,057
UEM (HK) Limited
Loan
NAV
Low
10%
4,711
471
EBP
Equity
Fair Value of
net assets
Medium
20%
3,452
690
Other investments
Equity
Various
Medium
20%
4,212
842
Other investments
Loan
Discounted
cash flows
Medium
20%
657
131
Total
23,114
9,191
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
Solutions 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
Loan
Discounted cash
flows
Medium
20%
450
90
Total
58,692
18,741
Petalite
UEM holds 10,725 ordinary shares in Petalite and, as at 31 March 2024 carried this investment at £8.6m (2023: £28.6m). The cost
of this investment was £2.8m (2023: £2.8m). UEM has also provided a loan of £1.5m to Petalite.
Key valuation inputs: Most recent fundraise price of £2,667 per ordinary share. Peer group value reduction of 70%.
Valuation Methodology: 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. Over the last year, the EV charging
sector, as measured by listed stock prices, has weakened considerably and private capital activity has decreased. The Directors
consider these events would also apply to Petalite and have accordingly reduced the carrying value of Petalite by an amount
equivalent to the average reduction of Petalite’s peer group comparable companies, giving a carrying value of £8.6m as at
31 March 2024. Petalite’s fair value has been given a sensitivity of 70% (2023: 50%) reflecting the high level of uncertainty due to
the length of time since the last fundraise and the fact that Petalite remains pre-revenue. As Petalite has yet to commercialise its
technology and is pre-revenue it remains reliant on external funding. As at 12 June 2024, UEM valued Petalite’s equity at £3.5m
reflecting the most recent price indications from the Series A fund raise which is ongoing.
Sensitivities: Should the value of Petalite move by 70% the gain or loss would be £7.1m.
(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.
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.
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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 2024
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Investments
487,603
6,478
23,114
517,195
During the year three holdings with a value of £9.4m were transferred from level 1 to level 2 due to the investee companies shares
trading irregularly in the year. The book cost and fair value were transferred using the 31 March 2023 balances.
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
A reconciliation of fair value measurements in level 3 is set out in the following table:
2024
£’000
2023
£’000
Balance brought forward
58,693
48,110
Purchases
2,600
3,691
Sales
(9,435)
(4,423)
Gains on investments sold in the year
742
1,760
(Losses)/gains on investments held at end of year
(29,486)
9,555
Balance as at 31 March
23,114
58,693
Analysed as at 31 March
Cost of investments
23,391
29,484
(Losses)/gains on investments
(277)
29,209
Valuation
23,114
58,693
28. Post Balance Sheet Event
Since the year end, UEM advanced to Petalite a further £1.0m, fully utilising the loan agreement (see note 10). As at 12 June 2024,
UEM valued Petalite’s equity at £3.5m reflecting the most recent price indications from the Series A fund raise which is ongoing
and continued weakness in a difficult funding environment for early stage companies.
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,
ICMIM, 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.limited/icm-investment-management.
The Company’s maximum and actual leverage as at 31 March are shown below:
2024
2023
Leverage exposure
Gross
method
Commitment
method
Gross
method
Commitment
method
Maximum permitted limit
300%
300%
300%
300%
Actual
100%
100%
107%
107%
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 2024 and 31 March 2023, 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.
Other Financial Information (Unaudited)
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Report and Accounts for the Year to 31 March 2024 | 93
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, 17 September 2024 at 10.30 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 11, as ordinary resolutions and, in the case of resolutions 12 and 13, 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 2024, together with the report of the auditor thereon.
2.
To approve the Directors’ Remuneration Report for the year ended 31 March 2024.
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 elect Ms Nadya Wells as a Director.
9.
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.
10. To authorise the Directors to determine the auditor’s remuneration.
Special Business
Ordinary Resolution
11. 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 £189,275 (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 2025 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
12. That, in substitution for all existing authorities and subject to the passing of resolution 11, 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 2025, 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;
(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 £189,275 (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
Notice of Annual General Meeting
(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.
13. 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 28,370,000 (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 2025 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
14 June 2024
Registered Office:
The Cottage, Ridge Court
The Ridge
Epsom, Surrey KT18 7EP
94 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 95
Notes:
1. A member entitled to attend and vote at the meeting
convened by the above Notice is entitled to appoint one
or more proxies to exercise all or any of the rights of the
member to attend, speak and vote in his/her place. A
proxy need not be a member of the Company. If a member
appoints more than one proxy to attend the meeting, each
proxy must be appointed to exercise the rights attached to
a different share or shares held by the member.
2. To appoint a proxy, you may use the form of proxy enclosed
with this annual report. To be valid, the form of proxy,
together with the power of attorney or other authority (if
any) under which it is signed or a notarial certified or office
copy of the same, must be completed and returned to the
office of the Company’s registrar in accordance with the
instructions printed thereon as soon as possible and in
any event by not later than 10:30 a.m. on 13 September
2024. Amended instructions must also be received by
the Company’s registrar by the deadline for receipt of
forms of proxy. Alternatively, you can vote or appoint a
proxy electronically by visiting www.investorcentre.co.uk/
eproxy. You will be asked to enter the Control Number, the
Shareholder Reference Number and PIN which are printed
on the form of proxy. The latest time for the submission of
proxy votes electronically is 10:00 a.m. on 13 September
2024. To appoint more than one proxy, an additional proxy
form(s) may be obtained by contacting the Registrar’s
helpline on +44 (0370) 707 1375 or you may photocopy
the form of proxy. Please indicate in the box next to the
proxy holder’s name the number of shares in relation to
which they are authorised to act as your proxy. Please
also indicate by marking the box provided if the proxy
instruction is one of multiple instructions being given. All
forms of proxy must be signed and should be returned
together in the same envelope.
3. Completion and return of the form of proxy will not prevent
you from attending the meeting and voting in person. If you
have appointed a proxy and attend the meeting in person,
your proxy appointment will be automatically terminated.
4. Any person receiving a copy of this Notice as a person
nominated by a member to enjoy information rights under
section 146 of the Companies Act 2006 (a “Nominated
Person”) should note that the provisions in Notes 1 and 2
above concerning the appointment of a proxy or proxies to
attend the meeting in place of a member, do not apply to a
Nominated Person as only ordinary shareholders have the
right to appoint a proxy. However, a Nominated Person may
have a right under an agreement between the Nominated
Person and the member by whom he or she was nominated
to be appointed, or to have someone else appointed, as
proxy for the meeting. If a Nominated Person has no such
proxy appointment right or does not wish to exercise it,
he/she may have a right under such agreement to give
instructions to the member as to the exercise of voting
rights at the meeting.
5. Nominated Persons should also remember that their
main point of contact in terms of their investment in
the Company remains the member who nominated the
Nominated Person to enjoy the information rights (or
perhaps the custodian or broker who administers the
investment on their behalf). Nominated Persons should
continue to contact that member, custodian or broker (and
not the Company) regarding any changes or queries relating
to the Nominated Person’s personal details and interest in
the Company (including any administrative matter). The only
exception to this is where the Company expressly requests
a response from the Nominated Person.
6. Pursuant to Regulation 41 (1) of The Uncertificated
Securities Regulations 2001 and for the purposes of
section 360B of the Companies Act 2006, the Company has
specified that only shareholders registered on the register
of members of the Company by not later than 6.00 p.m.
two days prior to the time fixed for the meeting shall be
entitled to attend and vote at the meeting in respect of the
number of the ordinary shares registered in their name at
such time. If the meeting is adjourned, the time by which a
person must be entered on the register of members of the
Company in order to have the right to attend and vote at the
adjourned meeting is 6.00 p.m. two days prior to the time
of adjournment. Changes to the register of members after
the relevant times shall be disregarded in determining the
rights of any person to attend and vote at the meeting.
7.
In the case of joint holders, the vote of the senior holder
who tenders a vote, whether in person or by proxy, shall
be accepted to the exclusion of the votes of the other joint
holders and, for this purpose, seniority will be determined
by the order in which the names stand in the register of
members of the Company in respect of the relevant joint
holding.
8. Shareholders who hold their shares electronically may
submit their votes through CREST, by submitting the
appropriate and authenticated CREST message so as to
be received by the Company’s registrar not later than
10:00 a.m. on 13 September 2024. Instructions on how to
vote through CREST can be found by accessing the CREST
manual via www.euroclear.com. Shareholders are advised
that CREST and the internet are the only methods by which
completed proxies can be submitted electronically.
9. If you are a CREST system user (including a CREST personal
member) you can appoint one or more proxies or give
an instruction to a proxy by having an appropriate CREST
message transmitted. To appoint one or more proxies
or to give an instruction to a proxy (whether previously
appointed or otherwise) via the CREST system, CREST
messages must be received by Computershare (ID number
3RA50) not later than 10:30 a.m. on 13 September 2024.
For this purpose, the time of receipt will be taken to be
the time (as determined by the timestamp generated by
the CREST system) from which Computershare is able to
retrieve the message. CREST personal members or other
CREST sponsored members should contact their CREST
sponsor for assistance with appointing proxies via CREST.
For further information on CREST procedures, limitations
and system timings please refer to the CREST manual. The
Company may treat as invalid a proxy appointment sent by
CREST in the circumstances set out in Regulation 35(5)(a) of
The Uncertificated Securities Regulations 2001.
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 ceasing 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 13 June 2024 (being the last practicable date prior
to the publication of this Notice of Annual General
Meeting), the Company’s issued share capital consisted of
189,275,034 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 189,275,034.
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.uemtrust.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 (Saturdays, Sundays
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 338 and 338A 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 5 August
2024 (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.
96 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 97
Directors
John Rennocks (Chairman)
Mark Bridgeman
Isabel Liu
Eric Stobart, FCA
Registered Office
The Cottage
Ridge Court
The Ridge
Epsom
Surrey KT18 7EP
Company Registration Number: 11102129
Legal Entity Identifier: 2138005TJMCWR2394O39
AIFM, Joint Portfolio Manager and
Company Secretary
ICM Investment Management Limited
PO Box 208
Epsom
Surrey KT18 7YF
Telephone +44 (0)1372 271486
Authorised and regulated in the UK by the Financial Conduct Authority
Joint Portfolio Manager
ICM Limited
34 Bermudiana Road
Hamilton HM 11
Bermuda
Administrator and custodian
JPMorgan Chase Bank N.A. – London Branch
25 Bank Street
Canary Wharf
London E14 5JP
Authorised and regulated in the UK by the Financial Conduct Authority
Depositary Services Provider
JP Morgan Europe Limited
25 Bank Street
Canary Wharf
London E14 5JP
Authorised by the Prudential Regulation Authority and regulated by the
Financial Conduct Authority and the Prudential Regulation Authority
Brokers
Shore Capital and Corporate Limited
Cassini House, 57 St James’s Street
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
Legal Adviser to the Company
Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
Auditor
KPMG LLP
15 Canada Square
London E14 5GL
Member of the Institute of Chartered Accountants in England and Wales
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
Telephone +44 (0370) 707 1375
Public Relations
Montford Communications Limited
2nd Floor, Berkeley Square House
Berkeley Square
Mayfair
London W1J 6BD
Telephone + 44 (0)20 7887 6287
Company Information
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 2024 the share price
was 221.00p (2023: 217.00p) and the NAV per share was 274.01p (2023: 250.91p), the discount was therefore 19.3%
(2023: 13.5%).
Gearing – represents the ratio of the borrowings less cash of the Company to its net assets.
Year to 31 March
Page
2024
£’000s
2023
£’000s
Bank overdrafts
80
–
1,482
Bank loans
71
–
35,102
Cash
71
(5,751)
(456)
Total cash/(debt)
(5,751)
36,128
Equity holders' funds
71
522,933
507,374
(Net cash)/gearing (%)
(1.1)
7.1
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 2024
Dividend rate
(pence)
NAV
(pence)
Share price
(pence)
31 March 2023
n/a
250.91
217.00
23 June 2023
2.15
261.45
226.00
22 September 2023
2.15
266.05
225.00
15 December 2023
2.15
262.94
223.00
28 March 2024
2.15
274.01
221.00
31 March 2024
n/a
274.01
221.00
12.8
5.8
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
98 | Utilico Emerging Markets Trust plc
Report and Accounts for the Year to 31 March 2024 | 99
NAV/share price total return since inception – the return to shareholders calculated on a per share basis
by adding dividends paid and adjusting for the exercise of warrants and subscription shares to the increase or
decrease in the NAV/share price since inception. 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 2024
Share price
31 March 2024
NAV
31 March 2023
Share price
31 March 2023
NAV/share price 20 July 2005 (pence)
1
98.36
100.00
98.36
100.00
Total dividend, warrants and subscription shares
adjustment factor
1.94953
2.05750
1.88776
1.98031
NAV/share price at year end (pence)
274.01
221.00
250.91
217.00
Adjusted NAV/share price at year end (pence)
534.19
454.71
473.66
429.73
Total return (%)
443.1
354.7
381.6
329.7
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 2024
31 March 2023
Annual compound NAV total return since inception (%)
9.5
9.3
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 shares.
Ongoing charges calculation (excluding and including
performance fees)
Page
31 March 2024
£’000s
31 March 2023
£’000s
Management and administration fees
69
5,813
5,730
Other expenses
69
1,911
1,651
Total expenses for ongoing charges calculation
7,724
7,381
Average net asset values of the Company
516,317
512,080
Ongoing Charges (%)
1.5
1.4
Gross assets – the value of the Group’s assets less liabilities excluding loans.
Page
31 March 2024
£’000s
31 March 2023
£’000s
Investments
71
517,195
545,657
Current assets
71
11,829
1,900
Current liabilities - Other payables
71
(4,573)
(3,461)
Non-current liabilities - Provision for capital gains tax
71
(1,518)
(1,620)
Gross assets
522,933
542,476
Alternative Performance Measures (continued)
as at 31 March
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
NAV total return per ordinary
share1 (annual) (%)
12.8
2.1
14.9
30.2
(24.9)
3.5
6.6
26.2
1.7
12.4
Share price total return per
ordinary share1 (annual) (%)
5.8
0.8
17.6
27.3
(23.2)
5.4
7.1
24.9
(1.8)
8.2
Annual compound NAV
total return1 (since
inception) (%)
9.5
9.3
9.7
9.4
8.1
11.0
11.7
12.1
10.9
11.9
Undiluted NAV per ordinary
share (pence)
274.01
250.91
254.22
228.54
181.84
249.84
247.22
251.72
206.45
209.79
Diluted NAV per ordinary
share (pence)
274.012
250.912
254.222
228.542
181.842
249.842
247.222
241.29
202.52
209.792
Ordinary share price (pence)
221.00
217.00
224.00
197.50
161.50
217.90
212.00
214.50
178.50
188.50
Discount3 (%)
(19.3)
(13.5)
(11.9)
(13.6)
(11.2)
(12.8)
(14.2)
(11.1)
(11.9)
(10.1)
Earnings per ordinary
share (basic)
- Capital (pence)
20.48
(6.61)
24.49
45.73
(68.29)
(0.12)
4.66
44.46
(5.50)
18.53
- Revenue (pence)
8.83
9.40
8.17
8.13
7.88
7.47
9.27
7.80
8.23
4.98
Total (pence)
29.31
2.79
32.66
53.86
(60.41)
7.35
13.93
52.26
2.73
23.51
Dividends per ordinary share
(pence)
8.600
8.450
8.000
7.775
7.575
7.200
7.000
6.650
6.400
6.100
Gross assets1 (£m)
522.9
542.5
569.6
556.1
461.4
581.9
579.8
579.0
455.2
479.2
Equity holders’ funds (£m)
522.9
507.4
545.9
505.7
414.3
574.2
579.8
532.2
436.6
447.4
Ordinary shares bought
back (£m)
25.4
27.2
13.9
12.1
4.8
9.5
21.9
10.0
3.0
–
Net cash/(overdraft) (£m)
5.8
(1.0)
0.5
(3.2)
39.5
11.7
8.1
15.3
12.6
0.5
Bank loans (£m)
–
(35.1)
(23.7)
(50.4)
(47.1)
(7.8)
0.0
(46.8)
(18.7)
(31.9)
Net cash/(debt) (£m)
5.8
(36.1)
(23.2)
(53.6)
(7.6)
3.9
8.1
(31.5)
(6.1)
(31.4)
Net cash/(gearing) on net
assets (%)
1.1
(7.1)
(4.3)
(10.6)
(1.8)
0.7
1.4
(5.9)
(1.4)
(7.0)
Management and
administration fees and
other expenses
- excluding performance fee
(£m)
7.7
7.4
7.3
5.0
6.4
5.9
5.7
5.2
4.5
4.6
- including performance
fee (£m)
7.7
7.4
7.3
10.1
6.4
5.9
5.7
14.3
4.5
7.7
Ongoing charges figure1
- excluding performance
fee (%)
1.54
1.44
1.44
1.1
1.1
1.0
1.0
1.1
1.1
1.1
- including performance
fee (%)
1.54
1.44
1.44
2.1
1.1
1.0
1.0
2.9
1.1
1.8
1 See Alternative Performance Measures on pages 97 and 98
2 There was no dilution
3 Based on diluted NAV
4 Investment Management Agreement was amended on 1 April 2021 and the performance fee discontinued
Historical Performance
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KT18 7YF
Telephone: +44 (0)1372 271486
www.uemtrust.co.uk
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