Utilico Emerging Market : Half-Yearly Financial Report for the six months to 30 September 2020

EMERGING CITIES EMERGING WEALTH EMERGING OPPORTUNITIES

The Cottage, Ridge Court

The Ridge, Epsom Surrey

KT18 7EP

Telephone: [phone]

www.uemtrust.co.uk

HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS TO 30 SEPTEMBER 2020

UEM/Int/20

EMERGING CITIES

EMERGING WEALTH

EMERGING OPPORTUNITIES

Utilico Emerging Markets Trust plc's ("UEM" or the "Company") investment objective is to provide long-term total return through a flexible investment policy that permits UEM to make investments predominantly in infrastructure, utility and related sectors, mainly in emerging markets ("EM").

SIX MONTHS TO 30 SEPTEMBER 2020
NET ASSET VALUE ("NAV")	NAV OF 200.56P
TOTAL RETURN PER SHARE*	PER SHARE*
12.3% ↑	10.3% ↑
REVENUE EARNINGS	DIVIDENDS
PER SHARE OF	PER SHARE OF
5.59p	3.85p

* See Alternative Performance Measures on pages 41 to 43

TRUSTED	DIVERSIFIED	PROVEN
An established closed end	A diverse portfolio of	Strong management team
fund focussed on long-term	operational cash generative	with an award winning
total return	investments	record of outperformance

International Container Terminal Services, Inc (Philippines)

UEM is an award winning specialist fund focused on long-term total return predominantly in infrastructure and utility investments.

On 3 April 2018, as a result of the proposals to redomicile Utilico Emerging Markets Limited ("UEM Bermuda") to the United Kingdom, the shareholders of UEM Bermuda exchanged all their shares in UEM Bermuda for shares in UEM on a one for one basis and UEM Bermuda became a wholly owned subsidiary of UEM. All performance data relating to periods prior to 3 April 2018 are in respect of UEM Bermuda.

Front cover image - India Grid Trust (India)

Half-yearly financial report for the six months to 30 September 2020

1

CHAIRMAN'S STATEMENT

The half-year to 30 September 2020 has been truly challenging for all stakeholders. The coronavirus ("Covid-19") pandemic has seen both a demand and supply shock and impacted most stakeholders in all economies. UEM has seen its NAV total return recover 12.3% in difficult

markets over the half-year to 30 September

2020. This has lagged behind the MSCI Emerging Markets Index as investors globally have driven digital investments higher, while generally ignoring infrastructure and utility investments. The MSCI Emerging Markets Utilities total return Index ("MSCI Utilities") for the half-year was up 1.5% while the MSCI Emerging Markets total return Index ("MSCI") was up 24.2%. Despite UEM's portfolio being largely value-based utilities and infrastructure assets, UEM's outperformance of the MSCI Utilities is a significant positive.

Globally investors have essentially sought out technology growth over value. The other key headwind for UEM has been the weakness of the Brazilian Real. At the start of the half-year UEM's exposure to the Brazilian markets was 29.1%.

interest rates in nearly all economies from Brazil, to India and China. This will see improved earnings for investee companies as the cost of finance falls and should see asset values rise as discount rates fall.

The world has become more divided and polarised in its views. This has manifested itself in protests from Hong Kong, Minsk, Moscow, Beirut, London, Portland, Paris through to Santiago, although each has had different drivers. For example, independence for Hong Kong, the wealth gap in Santiago, climate change in London and Black Lives Matter in Portland. The focus is on a rebalance of social and political priorities and resources. Questions are being asked

and headwinds rising. Some of this anger has developed into riots, caused significant disruption and is generating sharp policy changes. Most countries are seeing a rise in nationalism. The US election is itself a strong expression of these social and political divides - often overridden by fake news and social agendas.

There is also an accelerating expectation that businesses address questions around their approach to Environmental, Social and Governance ("ESG") outcomes. ESG continues to be a focus for us. UEM's Investment Managers have a good record on governance, given their

Covid-19 has become a global pandemic that severely challenges us all, and the impact worldwide cannot be emphasised enough. It has inflicted huge damage to underlying economies and has disrupted health services, education, business and social activities. Governments have struggled to keep up with a rapidly changing situation and the optimal medical, economic and social solutions to tackling the pandemic. Covid-19 has impacted every continent and every community. More than this, it has exposed the stresses and weaknesses in our economies, politics, and social fabric. The vulnerable have borne and continue to bear the greatest burden directly and indirectly from Covid-19.

The shift overnight from working in offices to working at home has been experienced by many first-hand. This has disrupted and challenged professional, social and personal lives. Our Investment Managers have rightly focused on three issues. First, people; their employees, investee boards and stakeholders, ensuring the right processes and decisions were adopted and made. Second, ensuring that UEM and its investee companies focused on short term cashflow needs and that they had adequate funding.

Third, ensuring that UEM and its investees could

thrive where opportunities arise. While Covid-19 has challenged business vulnerability, it has also accelerated change. The shift to working from home has no doubt augmented the adoption of digital platforms. We believe that UEM's management team has risen to the challenges and emerged stronger. No doubt there are further challenges to come and UEM will address those in a similar manner.

The pandemic has exposed social and political fault lines and we have witnessed unprecedented responses from governments and central banks to support their economies. Interest rates have been lowered to near nil and negative in some instances. Borrowings have soared beyond what was considered already an over- leveraged position. We have seen social tensions rise

as communities hit hardest by Covid-19 are often among the poorest and most vulnerable. Where these issues have combined with historic unresolved racial tensions, significant demonstrations in the USA and Europe have occurred.

A sense of urgency to address economic weakness created by Covid-19 has been a big positive. The growth of digital consumption has accelerated

Over the half-year the Brazilian Real weakened 11.7% which in itself reduced UEM's GBP NAV by an estimated 3.5%.

On top of Covid-19, we continue to experience two broad opposing forces at work in global markets at the moment; social and political tensions, and central bank intervention. Central banks are focused on reflationary policies, providing liquidity, lowering interest rates and now decreasing average inflation targets. The prolonged effect of negative interest rates is

a concern. We see negative interest rates as eroding value for savers and pension funds, while increasing the long-term risk to global security. As EM investors, we are reassured by the lower

active approach to investee companies and they have taken steps to strengthen the ESG approach to investing. For example, decarbonisation offers UEM more opportunities than challenges. Our investment in China Everbright Greentech Limited, China's leading biomass and hazardous waste treatment business, and other investments offer significant opportunities for UEM over the long- term. UEM has a robust policy on ESG against which investee companies are measured.

In the UK, Brexit and Covid-19 has crowded out discussions on most topics in the first half of the financial year and its outcome remains uncertain. Over the half-year to 30 September 2020, Sterling weakened 4.1% against the US Dollar, partially reflecting this uncertainty.

TOTAL RETURN COMPARATIVE PERFORMANCE (pence)*

from 31 March 2020 to 30 September 2020

125

120

115

110

105

100

95
Mar 20	Apr 20	May 20		Jun 20	Jul 20	Aug 20	Sep 20
			NAV total return per share			MSCI Emerging Markets total return Index (GBP adjusted)
			MSCI Emerging Markets Utilities total return Index (GBP adjusted)
*Rebased to 100 as at 31 March 2020				Source: ICM and Bloomberg

2

Utilico Emerging Markets Trust plc

Half-yearly financial report for the six months to 30 September 2020

3

CHAIRMAN'S STATEMENT (continued)

DIVIDENDS PER SHARE (pence)

from 31 March 2012 to 30 September 2020

8.00							7.000p	7.200p	7.575p
7.00					6.400p	6.650p
	5.800p	6.100p	6.100p
6.00	5.500p
5.00										3.850p
4.00
3.00
2.00
1.00
0.00	2012	2013	2014	2015	2016	2017	2018	2019	2020	HY2021

Source: ICM

EARNINGS AND DIVIDEND

The profile of UEM's existing investments remains largely the same. These businesses are predominantly profitable, cash generative and dividend paying. They offer attractive long-term total returns. Notwithstanding the shift of some 11.6% of the portfolio to Data Services and Infrastructure which are high growth, low earnings yielding opportunities, it is pleasing to see the revenue account earnings per share ("EPS") only reduce by 12.5%. Implicitly the utilities portfolio is delivering returns in line with last year. Given the global headwinds to cashflows and reduction in dividends in most markets, this result is very pleasing.

COVID-19

The Covid-19 impact on UEM's portfolio is set out in the Investment Managers' Report starting on page 7. In response to the pandemic, the Board has suspended all travel and physical meetings, and has moved to holding regular video conference meetings to receive portfolio updates and performance reviews from the Investment Managers. All interactions with UEM's service providers have been by video conference, where needed.

OUTLOOK

By any "normal" metric the global economies face unprecedented challenges today. The war on

under Covid-19 as more people are working from home and more businesses are operating online. As a result, technology-orientated businesses have significantly jumped in value, a trend we noticed before and one that we continue to see accelerating.

The social issues, from nationalism to the pandemic, remain unresolved. However, communities have pulled together and the human spirit has risen above this upheaval. Let us hope our leaders can deliver on these challenges.

In the EM world, Jair Bolsonaro's government is leading Brazil in the right direction on tackling excessive government costs. Pension reforms have been passed and his government continues to pursue policies to open up the economy and privatise state-owned enterprises. In India, Narendra Modi has been re-elected with a stronger mandate and China's President Xi is committed to growth, especially in technology. It is noteworthy that at a time when the US is turning away from an open economy, China is opening up its economy. These three EM economies account for 51.4% of UEM's portfolio and should respond positively to these policies.

Volatility has reduced over the half-year. Most currencies have followed a narrower band. The exception in UEM's portfolio is the Brazilian Real which was down by 11.7% against Sterling

over the half-year. Commodities have moved significantly higher. Oil was caught up in the pandemic demand shock and a power struggle between oil suppliers. Oil famously traded on the Houston exchange at negative values as oversupply, shortage of storage and limited demand resulted in surplus oil. Oil ended the half- year to 30 September 2020 up 80.1%.

China remains a key driver of the EM economies and there is no doubt that Trump's relentless focus on China trade has had a negative impact on China to date. Biden is likely to be less abrasive and there is hope the two nations can build a high level of trust and support on climate change, world trade and open economies.

It is noteworthy that China's economy from Covid-19 has seen a strong recovery in the third quarter and that China's external trade continues to expand. Their trade with Europe now exceeds the US.

China's desire to pivot away from a capital investment-driven and export led economy towards an economy focused on leadership in technology, health and green base, will result in China being a more balanced economy. For now we see China's gross domestic product ("GDP") expanding and currency strengthening.

In August 2020, the Board declared the first quarterly dividend of 1.925p per share in respect of the year ending 31 March 2021 and has recently announced a second quarterly dividend of 1.925p per share. The Board expects to maintain the third and fourth quarter dividends at this level, which would result in dividends for the full year to 31 March 2021 of 7.70p, an uplift of 1.7% over the year to 31 March 2020.

Dividends remain fully covered by income at the half-year and if needed the Board will use its revenue reserves or substantial capital reserves to maintain the dividend payments. As at 30 September 2020, UEM has revenue reserves of £9.8m, some 4.38p per share.

SHARE BUYBACKS

UEM's share price discount widened from 11.2% as at 31 March 2020 to 13.2% as at 30 September 2020 and remains above discount levels the Board would wish to see. The Investment Managers have continued buying back UEM's shares for cancellation with 4.0m shares bought back in the six months to 30 September 2020, at an average price of 177.80p. While the Board would prefer to see the discount narrow even more, any share buyback remains an investment decision. Traditionally the Investment Managers have bought back shares if the discount widens to over 10.0%. Since inception, the Company has bought back 53.5m ordinary shares totalling £92.9m.

Covid-19 has taken its toll and is ongoing. Few countries have re-opened their borders to travel and most have ongoing local shutdown responses to Covid-19 flareups, thereby limiting full recovery. Many nations have seen borrowings balloon to over 100% of GDP, interest rates trending to zero and unemployment jump. Given this outlook the Board remains cautious.

It is pleasing to see most of UEM's portfolio companies performing well in the circumstances. It is worth re-emphasising that UEM's performance continues to be driven by bottom- up stock selection. The portfolio is predominantly invested in relatively liquid, cash-generative companies with long-duration assets that the Investment Managers believe are structurally undervalued and offer excellent total returns. Since inception over 15 years ago, UEM's track record of performance has been reassuring and the Board has every confidence that the Investment Managers will continue to identify investments offering attractive, long-term returns for UEM.

John Rennocks

Chairman

25 November 2020

4

Utilico Emerging Markets Trust plc

Half-yearly financial report for the six months to 30 September 2020

5