River and Mercantile UK Micro Cap Investment : Half-Yearly Financial Report for the six months ended 31 March 2024

RIVER UK MICRO CAP LIMITED

(FORMERLY RIVER AND MERCANTILE UK MICRO CAP INVESTMENT COMPANY LIMITED)

HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2024

THE COMPANY AT A GLANCE

Purpose

River UK Micro Cap Limited (formerly River UK Micro Cap Limited River and Mercantile UK Micro Cap Investment Company Limited) (the "Company") is a closed-ended investment company. Its purpose is to deliver high and sustainable returns to investors by delivering the investment objective detailed below.

Investment objective

The Company aims to achieve long term capital growth from investment in a diversified portfolio of UK micro- cap companies, typically comprising companies with a free float market capitalisation of less than £100 million at the time of purchase.

Investment strategy and policy

The Company's investment strategy is to take advantage of the illiquidity risk premium inherent in UK micro- cap companies and exploit fully the underlying investment opportunities in that area of the market to deliver high and sustainable returns to Shareholders, in the form of capital gains. It is expected that the majority of the Company's investible universe will comprise companies whose securities are admitted to trading on the Alternative Investment Market of the London Stock Exchange. While it is intended that the Company will be fully invested in normal market conditions, the Company may hold cash or similar instruments.

About the Alternative Investment Fund Manager ("AIFM")

The AIFM of the Company, for the purposes of the AIFM Directive, is Carne Global AIFM Solutions (C.I.) Limited ("Carne" or the "AIFM") which is authorised and regulated by the Jersey Financial Services Commission. The AIFM provides an oversight and risk management function but delegates portfolio management to River Global Investors LLP (formerly "River and Mercantile Asset Management LLP"). The AIFM is independent and has no legal ownership connection with River Global Investors LLP.

About River Global Investors LLP (formerly River & Mercantile Asset Management LLP) (the "Portfolio Manager")

The Portfolio Manager is an active equity manager, specialising in UK and global equity strategies since its launch in 2006. Since 2014, it has been part of River and Mercantile Group Limited (formerly River and Mercantile Group PLC) (the "Group"). The Group was acquired by AssetCo PLC on 15 June 2022. The Portfolio Manager is authorised and regulated by the Financial Conduct Authority.

George Ensor, the appointed fund manager, has been responsible for the Company's portfolio since February 2018. Please refer to page 18 for George's biography.

Capital redemptions and dividend policy

The Company is committed to achieving long term capital growth and, where possible, returning such growth to Shareholders throughout the life of the Company. Furthermore, the Board believes that a Net Asset Value ("NAV") in the region of £100 million will best position the Company to maximise returns from a portfolio of micro-cap companies. Accordingly, the Directors operate a Capital Redemption Mechanism under which a portion of the Company's share capital is redeemed compulsorily at the discretion of the Company, to return the NAV back to around £100 million in order to:

• enable the Company to exploit fully the underlying investment opportunity and to deliver high and sustainable returns to Shareholders, principally in the form of capital gains;
• enable portfolio holdings to have a meaningful impact on the Company's performance, which might otherwise be marginal within the context of a larger fund; and
• ensure that the Company can continually take advantage of the illiquidity risk premium inherent in micro- cap companies.

The Company does not expect to pay dividends.

Management of your Company

The Board of the Company comprises a majority of independent non-executive Directors with extensive knowledge of investment matters, the regulatory and legal framework within which the Company operates, as well as the various roles played by investment companies in Shareholders' portfolios. The Board provides oversight of the Company's activities and ensures that the appropriate financial resources and controls are in place to deliver the investment strategy and manage the risks associated with such activities. The Board actively supervises both the AIFM and the Portfolio Manager in the performance of their respective functions.

RIVER UK MICRO CAP LIMITED

FOR THE SIX MONTHS ENDED 31 MARCH 2024

CONTENTS	PAGE
Financial Highlights and Performance Summary	2
Chairman's Statement	4
Executive Summary	6
Board Members	10
Portfolio Manager's Report	12
Directors' Statement of Responsibilities	19
Independent Auditor's Review Report	20
Unaudited Condensed Interim Statement of Comprehensive Income	22
Unaudited Condensed Interim Statement of Financial Position	23
Unaudited Condensed Interim Statement of Changes in Shareholders' Equity	24
Unaudited Condensed Interim Statement of Cash Flows	25
Notes to the Unaudited Condensed Interim Financial Statements	26
Company Information	34

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RIVER UK MICRO CAP LIMITED

FOR THE SIX MONTHS ENDED 31 MARCH 2024

FINANCIAL HIGHLIGHTS AND PERFORMANCE SUMMARY

Key Performance Indicators

Performance for the six months ended 31 March 2024

During the six months ended 31 March 2024, the NAV total return of the Company outperformed the Numis Smaller Companies plus Alternative Investment Market ("AIM") (excluding Investment Companies) Index (the "Comparative Index") by 0.22%, delivering a NAV total return of 6.23%, compared to 6.01% posted by the Comparative Index.

NAV and Share price			As at	As at
			31 March	30 September
			2024	2023
NAV per Ordinary Share1			£1.8818	£1.7714
Ordinary Share price (bid price)2			£1.5000	£1.4200
Share price discount to NAV3			(20.29)%	(19.84)%
Period highs and lows	Six months	Six months	Year ended	Year ended
	ended 31	ended 31	30 September	30 September
	March 2024	March 2024	2023	2023
	High	Low	High	Low
NAV per Ordinary Share1	£1.9074	£1.6185	£1.9226	£1.6836
Ordinary Share price (bid price)2	£1.5800	£1.3100	£1.5900	£1.3200

Performance since inception

NAV total return4 from inception (net of all fees) was 7.25% on an annualised basis, outperforming the Comparative Index total return5 of 4.85%. Refer to the chart below showing the NAV total return versus the Comparative Index from inception:

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RIVER UK MICRO CAP LIMITED

FOR THE SIX MONTHS ENDED 31 MARCH 2024

Capital redemptions

Since inception to 31 March 2024, the Company has exercised its Capital Redemption Mechanism on five separate occasions, as detailed below, redeeming a total of 34,609,615 Ordinary Shares and returning a total of £76,924,351 to Shareholders.

Redemption Date	Redemption price per	Number of Ordinary	Amount returned to
			Ordinary Share6	Shares Redeemed	Shareholders
9	June 2017	£1.7217	8,712,240	£14,999,864
1	December 2017	£1.9124	7,843,469	£14,999,850
27	July 2018	£2.1659	5,506,817	£11,927,215
29	January 2021	£2.5335	5,921,631	£15,002,452
7	May 2021	£3.0179	6,625,458	£19,994,970

Refer to note 8 for full details of the Company's redemption mechanism, including the conditions required for the Company to be able to operate the Capital redemption mechanism.

Dividend history

In accordance with the Company's stated policy, no dividend was declared or paid during the period (31 March 2023: none declared or paid).

1. -TheNAV per Ordinary Share is the value of all the Company's assets, less any liabilities it has, divided by the total number of Ordinary Shares.
2. - Source: Bloomberg.
3. - As the Company's Ordinary Shares are traded on the London Stock Exchange's Main Market, the share price may be higher or lower than the NAV. The Company's discount / premium to NAV is the difference between the Ordinary Share price (bid price) and the NAV per Ordinary Share on the same day. This comparison is expressed as a percentage.
4. - The NAV total return measures how the NAV per Ordinary Share has performed on an annualised basis from the initial issuance of Ordinary Shares to 31 March 2024, taking into account capital returns. The Board monitors the Company's NAV total return against the Numis Smaller Companies plus AIM (excluding Investment Companies Index).
5. - Source: Numis Securities Limited.
6. - Excludes the cost of each redemption; amounting to a total of £33,008 across all redemptions.

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RIVER UK MICRO CAP LIMITED

FOR THE SIX MONTHS ENDED 31 MARCH 2024

CHAIRMAN'S STATEMENT

Introduction

It seems that the markets don't get long before another crisis comes along and dampens growth prospects. Macroeconomic factors have continued to be an issue during the last 6 months.

Yet, it was a satisfying period for the Company, culminating in a decent period of growth plus a resounding shareholder vote for continuation in March's AGM.

The markets

UK markets have proved stubborn over the last 6 months, weighed heavily by persistent inflation and wars in both Ukraine and the Middle East.

US markets have been attractive for many investors globally, with specific mention of the performance of the 'Magnificent 7' companies; firms like Microsoft, Apple and NVIDIA, casting a shadow over the UK economy.

Returns

Index/RMMC1	Total Return1	% Change1
FTSE 100	6.38%	+4.53%
FTSE AIM	3.26%	+2.35%
RMMC share price	5.44%	+5.44%
Comparative Index	6.01%	+6.01%

1Source: Bloomberg.

The Company has delivered strong results over the period, primarily due to holding some recovery stocks and positive merger and acquisition ("M&A") activity. Our fund manager, George Ensor, will discuss this further in his report.

Fees and expenses

The Board aims to keep a tight rein on costs but the Company has been under significant pressure from suppliers. We are assessing the market to ensure we are paying fair market prices for the services we receive.

Material events and transactions

The most notable event in the first half was the AGM and Continuation Vote (held every 5 years), with all resolutions approved by over 99% of Shareholders.

Board changes

At the AGM in March 2024, Andrew Chapman, the Chairman of the Company, stepped down after 9 years at the helm. On behalf of all stakeholders in the Company, the Board thanks Andrew for his diligent service.

Charlotte Denton resigned and left the Board on 1 May 2024. Ted Holmes, an existing independent non-executive director, has assumed her duties as Chair of the Audit Committee.

We welcome Serena Tremlett to the Board. She is an experienced fund administrator, with highly complementary skills.

Outlook

The Board and the Portfolio Manager believe that there are strong reasons for growth once the interest rate reduction cycle commences and confidence spreads through the UK economy.

The UK market is offered at bargain basement prices at the moment, no more apparent than in the smaller 'micro cap' company level (valued at less than £100m) in which the Company invests.

It has been tough over the last couple of years - we acknowledge that - but it has given our fund manager the chance to acquire a portfolio of holdings at attractive valuations.

We look forward to demonstrating the Company's unique capital redemption mechanism again (already deployed five times since launch), when growth materially above our £100m fund target size is paid to you, the investor.

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RIVER UK MICRO CAP LIMITED

FOR THE SIX MONTHS ENDED 31 MARCH 2024

To celebrate our 10th anniversary this December we will be investing wisely in marketing, particularly as we are poised to outperform the market during the economic recovery and to tell the Company's story of how it provides access to the UK's micro-cap firms.

We're bullish, not just for the remainder of this year, but for the next 10 years and beyond.

John Blowers

Chairman

18 June 2024

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RIVER UK MICRO CAP LIMITED

FOR THE SIX MONTHS ENDED 31 MARCH 2024

EXECUTIVE SUMMARY

This Executive Summary is designed to provide information about the Company's operation and results for the six months ended 31 March 2024. It should be read in conjunction with the Chairman's Statement and the Portfolio Manager's Report which provides a detailed review of investment activities for the period and an outlook for the future.

Corporate summary

The Company was incorporated in Guernsey on 2 October 2014, with registered number 59106, as a non-cellular company with liability limited by shares. The Company is registered by the Guernsey Financial Services Commission ("GFSC") as a registered closed-ended collective investment scheme pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 2020, as amended, and the Registered Collective Investment Scheme Rules and Guidance 2021("RCIS Rules").

The Company has no fixed life. The Directors shall propose one or more ordinary resolutions at every fifth AGM that the Company continues as a closed-ended investment company (the "Continuation Resolution"). The last Continuation Resolution was proposed at the AGM on 12 March 2024 and was passed by the Company's Shareholders. The next Continuation Resolution will be proposed at the AGM in 2029.

The Company's share capital is denominated in Sterling and each share carries equal voting rights.

The Company's Ordinary Shares are listed on the Official List as maintained by the FCA and admitted to trading on the Main Market of the London Stock Exchange. As at 31 March 2024, the Company's issued share capital comprised 33,897,954 Ordinary Shares (30 September 2023: 33,897,954 Ordinary Shares).

The Company has appointed BNP Paribas S.A., Guernsey Branch (the "Administrator") to provide administration, custodian and company secretarial services.

The Company is a member of the Association of Investment Companies (the "AIC").

Significant events during the six months ended 31 March 2024

Annual General Meeting held on 12 March 2024

On 12 March 2024, the Annual General Meeting was held. All resolutions proposed at the meeting were duly passed. This included the passing of the five-year Continuation Vote and appointing Grant Thornton Limited as the Company's auditor.

Board and Committee changes

On 11 March 2024, Andrew Chapman retired from the Board. John Blowers took over the role of Chairman of the Board upon Andrew Chapman's retirement.

On 13 March 2024, it was announced that Charlotte Denton had resigned from the Board effective 1 May 2024, also on 1 May 2024, Serena Tremlett was appointed to the Board and Ted Holmes replaced Charlotte Denton as Chair of the Audit Committee.

Company investment objective

The Company aims to achieve long term capital growth from investment in a diversified portfolio of UK micro-cap companies, typically comprising companies with a free float market capitalisation of less than £100 million at the time of purchase.

Company investment policy

The Company invests in a diversified portfolio of UK micro-cap companies. It is expected that the majority of the Company's investible universe will comprise companies whose securities are admitted to trading on AIM.

While it is intended that the Company will be fully invested in normal market conditions, the Company may hold cash on deposit or invest on a temporary basis in a range of high quality debt securities and cash equivalent instruments. There is no restriction on the amount of cash or cash equivalent instruments that the Company may hold and there may be times when it is appropriate for the Company to have a significant cash position instead of being fully or near fully invested.

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RIVER UK MICRO CAP LIMITED

FOR THE SIX MONTHS ENDED 31 MARCH 2024

The Company is not benchmark-driven in its asset allocation.

Diversification

The number of holdings in the portfolio will usually range between 30 and 50.

The portfolio is expected to be broadly diversified across sectors and, while there are no specific limits placed on exposure to any sector, the Company will invest and manage the portfolio in a manner consistent with spreading investment risk.

Investment restrictions

No exposure to any investee company will exceed 10% of NAV at the time of investment.

The Company may from time to time take sizeable positions in portfolio companies. However, in such circumstances, the Company would not normally intend to hold more than 25% of the capital of a single investee company at the time of investment.

Although the Company would not normally expect to hold investments in securities that are unquoted, it may do so from time to time but such investments will be limited in aggregate to 10% of NAV.

The Company may invest in other investment funds, including listed closed-ended investment funds, to gain investment exposure to UK micro-cap companies but such exposure will be limited, in aggregate, to 10% of NAV at the time of investment.

Further information can be found in the Portfolio Manager's Report.

Investment strategy and approach

The Company's investment strategy is to take advantage of the illiquidity risk premium inherent in UK micro-cap companies and exploit fully the underlying investment opportunity in the UK micro-cap market to deliver high and sustainable returns to Shareholders, principally in the form of capital gains in line with the Company investment objective and policy.

The Company pursues its investment strategy through the appointment of Carne as AIFM, whereby the AIFM has been given responsibility, subject to the supervision of the Board, for the management of the Company in accordance with the Company's investment objective and policy. In conjunction with the Board, the AIFM has engaged the Portfolio Manager to manage the portfolio. The Company depends on the diligence, skill, judgement and business contacts of the Portfolio Manager's investment professionals, in particular George Ensor, in identifying investment opportunities which are in line with the investment objective and policy of the Company. The Portfolio Manager attends all Board meetings at which the investment strategy and performance of the Company are discussed.

Director interests

As at 31 March 2024, the Board comprised of four Directors, three of whom are independent: John Blowers, Ted Holmes and Charlotte Denton; Mark Hodgson is managing director of the AIFM and is therefore not regarded as independent by the 2019 AIC Code of Corporate Governance (the "Code"). Andrew Chapman and Charlotte Denton retired from the Board on 11 March 2024 and 1 May 2024 respectively. Serena Tremlett was appointed to the Board on 1 May 2024. All the independent Directors are also members of the Audit Committee, Management Engagement Committee and Remuneration and Nomination Committee.

As at the date of approval of the Half-Yearly Financial Report, Directors held the following number of Ordinary Shares in the Company:

Director	Ordinary Shares held
John Blowers	5,653
Ted Holmes	22,970
Mark Hodgson	7,721
Serena Tremlett	-

Information on the Directors' remuneration and Ordinary Share holdings as at 31 March 2024 and 30 September 2023 is detailed in note 6.

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RIVER UK MICRO CAP LIMITED

FOR THE SIX MONTHS ENDED 31 MARCH 2024

No Director has any other interest in any contract to which the Company is a party with the exception of Mark Hodgson who acts as the managing director of the AIFM. Information on each Director is shown in the Board Members section of this Half-Yearly Financial Report.

Principal risks and uncertainties

When considering the total return of the Company, the Board takes account of the risk which has been taken in order to achieve that return. The Board do not consider the risk factors described in the Annual Financial Report for the year ended 30 September 2023 have changed and expect them to remain relevant for the remaining six months of the year. The Board looks at the following risk factors as listed below:

Investment (Macroeconomic factors)

The Company is exposed to market factors. The unrealised performance can be affected by the sentiment of the market, supply/demand of asset types, expectations on unemployment, and Gross Domestic Product growth.

High interest rates, an inflationary macroeconomic environment and the threat of global recession may drive down growth stocks especially, which would adversely affect the underlying value of the Company's investment portfolio, leading to an adverse impact on the Company's NAV.

The Company is closed-ended and has no leverage. It is well set up to ride out any short-term dislocations in pricing without being forced to liquidate investments at technically distressed prices.

The skill and expertise of the Portfolio Manager allows the Company to be positioned effectively in the event of macro events which impact the value of the Company's assets.

Liquidity

The Company invests in a diversified portfolio of UK micro-cap companies, typically comprising companies with a free float market capitalisation of less than £100 million at the time of purchase. The relatively small market capitalisation of micro-cap companies can make the market in their shares illiquid. As a result of lower liquidity, prices of micro-cap companies tend to stick at one level but can be at risk of sudden jumps in price when momentum of sentiment is strong enough and certain pools of investors are forced to liquidate. As a consequence, the Company may not necessarily be able to realise its investments within a reasonable period.

Both the liquidity and valuation issues highlighted above may be totally out of sync with the underlying investee company fundamentals. There can therefore be no guarantee that any realisation of an investment will be on a basis which necessarily reflects the valuation of that investment.

Risks within the portfolio are monitored by the AIFM, which holds monthly AIFM Risk Committee meetings with the Portfolio Manager. Portfolio liquidity forms a key part of these monthly discussions. The AIFM provides an update of the Risk Committee meetings to the Board and the risks are discussed accordingly. The Portfolio Manager also undertakes ongoing reviews of the underlying investee companies particularly those whose businesses are impacted by the current macro environment.

Share price discount

The price of the Company's shares may trade at a discount or premium relative to the underlying NAV of the Ordinary Shares.

There is a risk that Shareholders become dissatisfied with a continuing discount to NAV and seek further action.

The Directors note that, in an environment where investment companies are trading at a discount, there has been a growing trend towards activism.

The Board monitors the Company's share price discount or premium to the published NAV and regularly consults with the Company's brokers regarding share trading volumes, significant buyers and sellers, and comparative data from the Company's peer group. In order to further manage the discount, the Board has developed a marketing plan to broaden interest in the Company's Ordinary shares.

Since its inception the Company has operated the Redemption Mechanism to return capital to investors, which the Board understands is still supported by Shareholders. The Redemption Mechanism was not utilised during the period.

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