ECOFIN GLOBAL UTILITIES AND INFRASTRUCTURE TRUST
PLC
Interim Financial Results for the
six months ended 31 March 2024
Announcement of Unaudited
Results
LEI: 2138005JQTYKU92QOF30
This announcement contains
regulated information.
Ecofin Global Utilities and
Infrastructure Trust plc (the "Company" or "EGL") is an authorised
UK investment trust whose objectives are to achieve a high, secure
dividend yield on a portfolio invested primarily in the equities of
utility and infrastructure companies in developed countries
and long-term
growth in
the capital
value of
the portfolio
while preserving shareholders' capital
in adverse
market conditions.
• During the half-year ended 31 March 2024, the Company's net asset value ("NAV") per share increased by 9.0% on a total return basis. The
Company's share price decreased by 3.2% on a total return basis
over the 6 months
• Two
quarterly dividends were paid during the period totalling 4.00p per
share. With effect from the dividend paid in February 2024, the
quarterly dividend was increased by 5.1% to 2.05p per share (8.2p
per share per annum)
• The
Company continues to buy back shares while the share price is at a
significant discount to the NAV; your board considers this to be
in
the best interests of
shareholders
• Continuing growth in earnings and dividends from companies in
the portfolio suggests compelling value and is at odds with
currently low
valuation multiples for these
essential assets businesses
Financial Highlights
as at 31 March 2024
Summary
|
As at or six months
to
31 March
2024
|
As at or
year to
30
September 2023
|
Net assets attributable to
shareholders (£000)
|
223,905
|
211,977
|
Net asset value ("NAV") per
share1
|
196.15p
|
183.54p
|
Share price
(mid-market)
|
165.00p
|
164.00p
|
Discount to
NAV1
|
(15.9)%
|
(10.6%)
|
Revenue return per
share
|
2.25p
|
7.01p
|
Dividends paid per
share
|
4.00p
|
7.70p
|
Dividend
yield1,2
|
4.9%
|
4.7%
|
Gearing on net
assets1,3
|
12.6%
|
11.2%
|
Ongoing charges
ratio1,4
|
1.35%
|
1.27%
|
1. Please refer to Alternative
Performance Measures in the Interim Report.
2. Dividends paid (annualised) as
a percentage of share price.
3. Gearing is the Company's
borrowings (including the net amounts due from/to brokers) less
cash divided by net assets attributable to shareholders.
4. The ongoing charges figure is
calculated in accordance with guidance issued by the Association of
Investment Companies ("AIC") as the
operating costs (annualised)
divided by the average NAV (with income) throughout the
period.
Performance for periods to 31 March 2024
(all total return in £)
|
6 months
%
|
1
year
%
|
3
years
%
|
5
years
%
|
Since
admission5
%
|
Since
admission
% per
annum
%
|
NAV per
share6
|
9.0
|
-3.8
|
19.4
|
54.9
|
88.8
|
8.8
|
Share price6
|
3.2
|
-19.0
|
1.9
|
55.6
|
102.2
|
9.8
|
Indices6, 7:
|
|
|
|
|
|
|
S&P Global Infrastructure
Index
|
8.2
|
0.9
|
24.9
|
25.3
|
44.1
|
5.0
|
MSCI World Utilities
Index
|
8.2
|
-1.2
|
15.7
|
27.7
|
54.1
|
5.9
|
|
|
|
|
|
|
|
MSCI World Index
|
17.6
|
23.0
|
42.0
|
86.5
|
141.2
|
12.4
|
FTSE All-Share Index
|
6.9
|
8.2
|
25.7
|
20.9
|
50.9
|
5.6
|
FTSE ASX Utilities
Index
|
5.7
|
0.3
|
39.7
|
62.6
|
39.0
|
4.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5. The Company was incorporated on
27 June 2016 and its investment activities began on 13 September
2016 when the liquid assets of Ecofin Water & Power
Opportunities plc ("EWPO") were transferred to it. The formal
inception date for the measurement of the Company's performance is
26 September 2016, the date its shares were listed on the London
Stock Exchange.
6. Total return includes dividends
paid and reinvested immediately. Please also refer to the
Alternative Performance Measures in the Interim Report.
7. The S&P Global
Infrastructure Index and MSCI World Utilities Index are the global
sector indices deemed the most appropriate for performance
comparison purposes. The Company does not have a formal benchmark
index. The other indices are provided for general
interest.
Chairman's Statement
Performance
I am pleased to report that your
Company's net asset value (NAV) increased by 9.0% over the six
months to 31 March 2024, including the reinvestment of dividends.
This exceeded the comparative global sector indices, the S&P
Global Infrastructure Index and the MSCI World Utilities Index,
which both increased by 8.2% (total return in sterling). The share
price total return was more modest at 3.2% because the discount
widened, averaging 14.2% during the six months. Investment trusts
generally continued to be out of favour, as evidenced by
unusually
large share price discounts to
NAV.
As our Investment Manager explains
in more detail, performance was encouragingly strong in the North
American part of the portfolio. Exposure to select US utilities had
already been increased, stock selection was beneficial, and utility
valuations finally began to recover. Despite falling European
natural gas and power prices for much of the half-year, the
portfolio's diversified pan-European group of shares, spanning
utilities, transportation infrastructure and environmental
services, also contributed positively to the NAV. Our modest level
of gearing enhanced the NAV as well, helped by the fact that the
cost of borrowings was once again lower than the portfolio's
dividend yield.
Continuation vote
Shareholders demonstrated their
support for the Company by voting
overwhelmingly in favour of the continuation vote put to
shareholders at the recent Annual General Meeting (AGM). The next
continuation vote will be at the AGM in 5 years' time.
Dividends
In light of growth in investment
income and earnings per share, we were pleased to announce in
December a 5.1% increase in the quarterly
dividend to 2.05p per share (8.20p per annum) with effect from the
dividend paid in February 2024. Growth in our portfolio's income
continued during the half-year to 31 March: compared with the same
period last year, investment income and
revenue per
share increased
by 10.8%
and 11.4%
respectively. At the current share price
and increased dividend rate, the Company's shares yield
4.4%.
Share price and buybacks
When our shares were trading at a
premium to net asset value, we issued over 12 million new shares to
investors. Subsequently, and alongside much of the rest of the
investment trust sector, our share price sank to a double digit
percentage discount. We think it is right to balance our
willingness to issue at a premium with a willingness to buy back
shares. Accordingly, during the half-year we used the authority
granted by shareholders to repurchase a total of 1.3 million shares
(£2.1 million), with an additional 3.3
million shares repurchased since 31 March. This
has enhanced NAV to the benefit of shareholders.
Your board
At the AGM, Iain McLaren retired
from the board and Joanna Santinon succeeded him as chair of the
audit committee. Susannah Nicklin was appointed Senior Independent
Director.
Outlook
Continuing growth in earnings and
dividends is expected from companies in the portfolio. The
currently low valuation multiples for many of these essential
assets businesses in both absolute terms and relative to broader
markets strongly suggest that these companies are significantly
undervalued relative to their prospects for growth, earnings and
cash generation.
In the current economic
environment, we believe that the portfolio has some significant
strengths.
First, a high proportion of
portfolio companies have revenues which are inflation-linked and
based on long term contracts.
Secondly, your Company's utility
exposure includes leading power generators and owners of major
transmission and distribution grids. These network operators are as
fundamental to the delivery of the energy transition as renewable
energy sources, and they are stepping up capital investments
meaningfully.
Your Investment Manager expects
attractive returns will be earned on these investments.
Thirdly, portfolio companies
providing transportation infrastructure
and environmental services have attractive and growing dividend
yields based on long term earnings growth derived from demand and
strong pricing power.
After a difficult 18 months, we
are confident that we passed a turning point in February and that
the prospect for shareholders has become much brighter. Since then,
the share price has appreciated by 21%
(11% since the end of
March) and we have declared a second quarterly dividend of
2.05p.
David Simpson
Chairman
24 May 2024
Investment Manager's Report
After sharp declines in August and
September last year as interest rates spiked, EGL's NAV and share
price recovered in the final calendar quarter of 2023. This proved
to be a false dawn with both falling back to their 2023 lows by
February 2024 while equity market momentum was centred around
technology sectors and expectations for interest rate cuts were
scaled back. February has proved to have been a decisive turning
point though with a marked improvement in EGL's performance since
then.
During the half-year we remained
focussed on the underlying performance of portfolio companies
which, on both sides of the Atlantic, were mostly delivering good
results, eye-catching dividend growth and return-enhancing capital
expenditure plans. In the US, power demand dynamics strengthened
(due to the economy generally as well as GenAI, datacentres,
re-shoring, EVs) and utility valuations stabilised, helped by a
renaissance for nuclear power and positive news from bellwether
NextEra Energy. These factors, along with a notable improvement in
forward power prices since February, resulted in a strong rally in
the NAV in the half-year's final month, March. Over the six months
to 31 March, the NAV increased by 9.0%.
Performance summary
Returns were strong and ahead of
local sector indices in the US and European parts of the portfolio,
and overall performance benefitted from
last year's exercise to increase the US allocation in view of
depressed utility valuations. The lion's share of the NAV advance
during the half-year was attributable to large US utilities NextEra
Energy, American Electric Power, Constellation Energy, Edison
International and Vistra, together over 22% of the portfolio.
Non-OECD holdings in Australia and Hong Kong-listed Chinese names,
notably Xinyi Energy, continued to be weak.
By sub-sector, the brightest spots
were nuclear power producers (net cashflow positive nuclear
specialists Constellation and Vistra), transportation
infrastructure (ENAV, Ferrovial, Vinci), and network infrastructure
owner/operators with a growth acceleration underway (E.ON, National
Grid, American Electric Power, Public Service Enterprise Group).
Although it didn't perform as well during the half-year, we include
SSE in this high growth power transmission group where networks
comprise a large proportion of cash flow and capital investment.
Some European power generators and integrated utilities lagged,
principally RWE. RWE cautioned in January that lower commodity
prices could impact 2024 earnings, causing weakness in the European
utility sector more widely, even though many integrated utilities -
EDP, Enel, Iberdrola - would benefit near term as buyers of
power.
Constellation (pure nuclear) and
Vistra (nuclear and other baseload power)
performed remarkably well - Vistra +99% since its addition to the
portfolio in November and Constellation +70% over the six months to
31 March - capturing investors' interest as direct plays on power
demand growth from GenAI and datacentres. Nuclear power offers 24/7
year-round decarbonised electricity, the Production Tax Credit in
the IRA provides a floor tariff for nuclear electricity, and these
two companies' results were starting to beat earnings
forecasts.
NextEra Energy delivered two
strong earnings reports during the period to which the shares
barely reacted. It took until the company's analysts' day in March,
devoted to renewables development expertise and competitive
advantages, for the shares to gather positive momentum. The
shelving of a federal investigation into a complaint alleging the
company's Florida utility had violated
political campaign fundraising laws also lifted an overhang for the
shares.
Purchases &
sales
Along with Vistra, Snam, a
regulated natural gas transportation and storage infrastructure
company in Europe, was added to the portfolio and the positions in
E.ON, Edison International, Vinci and
Veolia were increased significantly. These purchases further
increased the portfolio's exposure to energy transmission and
distribution (regulated growth), baseload nuclear power provision
(unregulated growth) and transportation and environmental services
(inflation-linked growth). Power price exposure was lowered via
partial sales of Drax, AES, EDP and Iberdrola. Endesa and APA Group
were exited. In the sector allocation table, E.ON was reclassified
as regulated (from integrated).
Income and gearing
Income from investments continues
to grow. Compared with last year, dividend
receipts increased by 10.8% and the revenue return per share
increased by 11.4%.
Gearing averaged 11% during the
half-year. Borrowings, which had been significantly reduced by
December 2023, were built back up by the end of March, not least
because the positive spread between dividend yields and the cost of
borrowings had been reestablished.
Outlook
The upswing in portfolio
performance that began in March has persisted. We expect that
valuation multiples in EGL's listed infrastructure sectors, which
remain near historic lows relative to broad market averages, will
continue to expand. There are plenty of compelling investment
opportunities with the earnings momentum we're seeing and dividends
yields in the region of 3-8%. Utilities in the portfolio will
continue to grow their earnings, almost irrespective of the
economic backdrop due to the proportions of revenues which are
fully contracted or regulated. The adoption of artificial
intelligence and datacentres are supporting our expectation for
power demand growth in the US and, moreover, datacentre owners are
showing a willingness to pay a premium for reliable and clean
electricity, recognising that electricity is not plentiful and that
uninterrupted clean energy is not a commodity. The growth the
sector should experience globally will also reflect the quantum
increase in investments in electricity networks we are seeing. A
pronounced acceleration in capex growth by power grid operators is
underway, motivated by the ever increasing installed base of
renewables capacity for which new transmission and distribution
connections are required, the electrification of economies and the
associated need for grid upgrades. Investment need and allowed
returns for these regulated activities are usually highly
correlated.
Beyond power utilities, we
continue to like the opportunities amongst companies operating and
investing to upgrade environmental services and transportation
infrastructure. These parts of the portfolio contribute growth, a
degree of cyclicality, inflation protection (airports and toll
roads, for example, have long term pricing power in relation to
inflation) and provide diversification. Very large sums have been
raised by private equity since December 2023 to devote to
infrastructure investment globally, adding to already record levels
of available cash. In view of the significant gap in valuations
between listed and private infrastructure, merger and acquisition
activity is returning to this strategy's sectors and should provide
support for a re-rating of the growth
opportunity.
Ecofin Advisors Limited
Investment Manager
24 May 2024
Condensed Statement of Comprehensive Income
|
Notes
|
Six months
ended
Six months ended
31 March 2024
(unaudited)
31 March 2023 (unaudited)
|
Year
ended
30
September 2023 (audited)
|
Revenue
£'000
|
Capital
£'000
|
Total
Revenue
£'000
£'000
|
Capital
£'000
|
Total
£'000
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Gains/(losses) on investments held
at
|
|
|
|
|
|
|
|
|
|
|
fair value through profit or
loss
|
|
- 16,401
|
16,401
|
-
|
5,961
|
5,961
|
-
|
(28,012)
|
(28,012)
|
Foreign exchange gains
|
|
-
|
634
|
634
|
-
|
1,397
|
1,397
|
-
|
1,774
|
1,774
|
Investment
Income
|
2
|
4,209
|
-
|
4,209
|
3,799
|
-
|
3,799
|
11,822
|
-
|
11,822
|
Investment management
fees
|
|
(435)
|
(653)
|
(1,088)
|
(466)
|
(698)
|
(1,164)
|
(904)
|
(1,355)
|
(2,259)
|
Administration expenses
|
|
(356)
|
-
|
(356)
|
(464)
|
-
|
(464)
|
(835)
|
-
|
(835)
|
Net return before finance costs and
taxation
|
|
3,418
|
16,382
|
19,800
|
2,869
|
6,660
|
9,529
|
10,083
|
(27,593)
|
(17,510)
|
Finance costs
|
|
(228)
|
(342)
|
(570)
|
(200)
|
(300)
|
(500)
|
(458)
|
(686)
|
(1,144)
|
Net return before taxation
|
|
3,190
|
16,040
|
19,230
|
2,277
|
6,360
|
9,029
|
9,625
|
(28,279)
|
(18,654)
|
Taxation
|
3
|
(602)
|
-
|
(602)
|
(392)
|
-
|
(392)
|
(1,606)
|
-
|
(1,606)
|
Net return after taxation
|
|
2,588
|
16,040
|
18,628
|
2,277
|
6,360
|
8,637
|
8,019
|
(28,279)
|
(20,260)
|
|
|
|
|
|
|
|
|
|
|
|
Return per ordinary share (pence)
|
4
|
2.25
|
13.96
|
16.21
|
2.02
|
5.63
|
7.65
|
7.01
|
(24.72)
|
(17.71)
|
The total column of the Condensed
Statement of Comprehensive Income is the profit and loss account of
the Company.
The revenue and capital columns
are supplementary to this and are published under guidance from the
AIC.
All revenue and capital returns in
the above statement derive from continuing operations. No
operations were acquired or discontinued during the six months
ended 31 March 2024.
The Company has no other
comprehensive income and therefore the net return on ordinary
activities after taxation is also the total comprehensive income
for the period.
Condensed Statement of Financial Position
|
As
at
As at
31 March 2024 31 March 2023
(unaudited)
(unaudited)
Notes
£'000
£'000
|
As
at
30 September
2023
(audited)
£'000
|
Non-current assets Equity
securities at fair value through profit or loss
|
|
251,254
|
268,709
|
227,513
|
Current assets
|
|
|
|
|
Debtors and prepayments
|
|
2,101
|
2,388
|
8,432
|
|
|
|
|
|
Creditors: amounts falling due within one
year
|
|
|
|
|
Prime brokerage
borrowings
|
|
(28,108)
|
(24,419)
|
(20,002)
|
Other creditors
|
|
(1,342)
|
(4,118)
|
(3,966)
|
|
|
(29,450)
|
(28,537)
|
(23,968)
|
Net current liabilities
|
|
(27,349)
|
(26,149)
|
(15,536)
|
Net assets
|
|
223,905
|
242,560
|
211,977
|
Share capital and reserves
|
|
|
|
|
Called-up share capital
|
5
|
1,141
|
1,143
|
1,154
|
Share premium
|
|
50,548
|
45,930
|
50,548
|
Special reserve
|
|
110,306
|
114,971
|
114,398
|
Capital reserve
|
6
|
61,910
|
80,516
|
45,877
|
Revenue reserve
|
|
-
|
-
|
-
|
Total shareholders'
funds
|
|
223,905
|
242,560
|
211,977
|
Net asset value per ordinary share (pence)
|
7
|
196.15
|
212.07
|
183.54
|
Condensed Statement of Changes in Equity
|
|
Six months ended 31 March
2024 (unaudited)
|
|
Share capital
£'000
|
Share
premium
account
£'000
|
Special
reserve1
£'000
|
Capital
reserve
£'000
|
Revenue
reserve
£'000
|
Total
£'000
|
|
|
Balance at 1 October
2023
|
1,154
|
50,548
|
114,398
|
45,877
|
-
|
211,977
|
|
|
Return after taxation
|
-
|
-
|
-
|
16,040
|
2,588
|
18,628
|
|
|
Buyback of ordinary
shares
|
(13)
|
-
|
(2,076)
|
(7)
|
-
|
(2,096)
|
|
|
Dividends paid (see note
8)
|
-
|
-
|
(2,016)
|
-
|
(2,588)
|
(4,604)
|
|
|
Balance at 31 March 2024
|
1,141
|
50,548
|
110,306
|
61,910
|
-
|
223,905
|
|
|
|
Six
months ended 31 March 2023 (unaudited)
|
|
|
Share capital
£'000
|
Share
premium account
£'000
|
Special
reserve1
£'000
|
Capital
reserve
£'000
|
Revenue
reserve
£'000
|
Total
£'000
|
|
|
Balance at 1 October
2022
|
1,119
|
40,801
|
116,976
|
74,156
|
-
|
233,052
|
|
|
Return after taxation
|
-
|
-
|
-
|
6,360
|
2,277
|
8,637
|
|
|
Issue of ordinary
shares
|
24
|
5,129
|
-
|
-
|
-
|
5,153
|
|
|
Dividends paid (see note
8)
|
-
|
-
|
(2,005)
|
-
|
(2,277)
|
(4,282)
|
|
|
Balance at 31 March
2023
|
1,143
|
45,930
|
114,971
|
80,516
|
-
|
242,560
|
|
|
|
Year
ended 30 September 2023 (audited)
|
|
|
Share capital
£'000
|
Share
premium account
£'000
|
Special
reserve1
£'000
|
Capital
reserve
£'000
|
Revenue
reserve
£'000
|
Total
£'000
|
|
|
Balance at 1 October
2022
|
1,119
|
40,801
|
116,976
|
74,156
|
-
|
233,052
|
|
|
Return after taxation
|
-
|
-
|
-
|
(28,279)
|
8,019
|
(20,260)
|
|
|
Issue of ordinary
shares
|
46
|
9,747
|
-
|
-
|
-
|
9,793
|
|
|
Buyback of ordinary
shares
|
(11)
|
-
|
(1,808)
|
-
|
-
|
(1,819)
|
|
|
Dividends paid (see note
8)
|
-
|
-
|
(770)
|
-
|
(8,019)
|
(8,789)
|
|
|
Balance at 30 September
2023
|
1,154
|
50,548
|
114,398
|
45,877
|
-
|
211,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. The special reserve may be
used, where the board considers it appropriate, by the Company for
the purposes of paying dividends to
shareholders and, in particular,
smoothing payments of dividends to shareholders.
Condensed Statement of Cash Flows
Six
months
Six
months Year
ended
ended
ended 30
September
Notes 31
March 2024 31 March
2023
2023
(unaudited)
(unaudited)
(audited)
£'000
£'000
£'000
|
Net return before finance costs
and taxation
|
19,800
|
9,529
(17,510)
|
Increase/(decrease) in accrued
expenses
|
242
|
(29)
(134)
|
Overseas withholding
tax
|
(639)
|
(489)
(1,417)
|
Deposit interest income
|
(14)
|
(3)
(4)
|
Dividend income
|
(4,195)
|
(3,796)
(11,818)
|
Foreign exchange
(gains)
12
|
(634)
|
(1,397)
(1,774)
|
Dividends received
|
4,250
|
3,589
11,307
|
Deposit interest
received
|
14
|
3
4
|
Interest paid
|
(570)
|
(500)
(1,055)
|
(Gains)/losses on
investments
|
(16,401)
|
(5,961)
28,012
|
Increase/(decrease) in other
debtors
|
13
|
1
(8)
|
Net cash flow from operating activities
|
1,866
|
947
5,603
|
Investing activities
|
|
|
Purchases of
investments
|
(45,605)
|
(46,338)
(88,966)
|
Sales of investments
|
42,101
|
44,317
88,153
|
Net cash used in investing activities
|
(3,504)
|
(2,021)
(813)
|
Financing activities
|
|
|
Movement in prime brokerage
borrowings
|
8,106
|
203
(5,611)
|
Dividends
paid
8
|
(4,604)
|
(4,282)
(8,789)
|
Share issue proceeds
|
-
|
5,153
9,793
|
Share buyback costs
|
(2,181)
|
-
(1,659)
|
Net cash (used in)/generated from financing
activities
|
1,321
|
1,074
(6,266)
|
Decrease in cash
|
(317)
|
-
(1,476)
|
Analysis of changes in cash during the
year
12
12
|
|
|
Opening balance
|
-
|
-
-
|
Foreign exchange
movement
|
317
|
-
1,476
|
Decrease in cash as
above
|
(317)
|
-
(1,476)
|
Closing balances
|
-
|
-
-
|
Notes to the Condensed Financial Statements
for the six months ended 31 March
2024
1. Accounting policies
(a) Basis of
preparation
The Condensed Financial Statements
have been prepared in accordance with Financial Reporting Standard
("FRS") 104 Interim Financial Reporting and with the Statement of
Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' issued in July 2022. The
Condensed Financial Statements are prepared in Sterling which is
the functional currency of the Company and rounded to the nearest
£'000. They have also been prepared on a going concern basis and
approval as an investment trust has been granted by
HMRC.
The Condensed Financial Statements
have been prepared using the same accounting policies as the
preceding Financial Statements which were prepared in accordance
with Financial Reporting Standard 102.
The financial information
contained in this Interim Report does not constitute statutory
accounts as defined in Sections 434-436 of the Companies Act 2006.
The financial information for the periods ended 31 March 2024 and
31 March 2023 has not been audited.
The information for the year ended
30 September 2023 has been extracted from the latest published
audited Financial Statements which have been filed with the
Registrar of Companies. The report of the Auditor on those accounts
contained no qualification or statement under Section 498 of
the Companies Act 2006.
(b) Income
Income from investments, including
taxes deducted at source, is included in revenue by reference to
the date on which the investment is quoted ex-dividend. Special
dividends are credited to capital or revenue, according to the
circumstances. The fixed returns on debt securities are recognised
on a time apportionment basis so as to reflect the effective yield
on the debt securities. Interest receivable from cash and
short-term deposits is treated on an accruals basis.
(c) Expenses
All expenses are accounted for on
an accruals basis. Expenses are charged to the revenue account
except where they directly relate to the acquisition or disposal of
an investment, in which case they are charged to the capital
account; in addition, expenses are charged to the capital account
where a connection with the maintenance or enhancement of the value
of the investments can be demonstrated. In this
respect, since 1
October 2022 the management fee and overdraft interest have been
allocated 60% to the capital account and
40% to the revenue account (previously 50% to the capital account
and 50% to the revenue account).
(d) Taxation
The charge for taxation is based
on the profit for the year to date and takes into account, if
applicable, taxation deferred because of timing differences between
the treatment of certain items for taxation and accounting
purposes. Deferred taxation is provided using the liability method
on all timing differences, calculated at the rate at which it is
anticipated the timing differences will reverse. Deferred tax
assets are recognised only when, on the basis of available
evidence, it is more likely than not that there will be taxable
profits in future against which the deferred tax asset can be
offset.
Due to the Company's status as an
investment trust company and the intention to continue meeting the
conditions required to obtain approval in the foreseeable future,
the Company has not provided deferred tax on any capital gains and
losses arising on the revaluation or disposal of
investments.
The tax effect of different items
of income/gain and expenditure/loss is allocated between capital
and revenue within the Condensed Statement of Comprehensive Income
on the same basis as the particular item to which it relates using
the Company's effective rate of tax for the year, based on the
marginal basis.
(e) Valuation of
investments
For the purposes of preparing the
Condensed Financial Statements, the Company has applied Sections 11
and 12 of FRS 102 in respect of financial instruments. All
investments are measured initially and subsequently at fair value
and transaction costs are expensed immediately. Investment
transactions are accounted for on a trade date basis. The fair
value of the financial instruments in the Condensed Statement of
Financial Position is based on their quoted bid price at the
reporting date, without deduction of the estimated future selling
costs. Changes in the fair value of investments held at fair value
through profit or loss and gains and losses on disposal are
recognised in the Condensed Statement of Comprehensive Income as
"Gains on investments held at fair value through profit or loss".
Also included within this caption are transaction costs in relation
to the purchase or sale of investments, including the difference
between the purchase price of an investment and its bid price at
the date of purchase.
(f) Cash and cash
equivalents
Cash comprises cash in hand and
demand deposits. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash
and that are subject to insignificant risk of change in
value.
(g) Borrowings
Short-term borrowings, which
comprise of prime brokerage borrowings, are recognised initially at
the fair value of the consideration received, net of any issue
expenses, and subsequently at amortised cost using the effective
interest method. The finance costs, being the difference between
the net proceeds of borrowings and the total amount of payments
required to be made in respect of those borrowings, accrue evenly
over the life of the borrowings and are allocated 40% to revenue
and 60% to capital.
(h) Segmental reporting
The directors are of the opinion
that the Company is engaged in a single segment of business
activity, being investment business.
Consequently, no business
segmental analysis is provided.
(i) Nature and purpose of
reserves
Share premium account
The balance classified as share
premium includes the premium above nominal value received by the
Company on issuing shares net
of issue costs.
Special reserve
The special reserve arose
following court approval in November 2016 to transfer £123,609,000
from the share premium account. This reserve is distributable and
may be used, where the board considers it appropriate, by the
Company for the purposes of paying dividends to shareholders and,
in particular, augmenting or smoothing payments of dividends to
shareholders. There is no guarantee that the board will in fact
make use of this reserve for the purpose of the payment of
dividends to shareholders. The special reserve can also be used to
fund the cost of share buy-backs.
Capital reserve
Gains and losses on disposal of
investments and changes in fair values of investments are
transferred to the capital account. Foreign exchange differences of
a capital nature are also transferred to the capital account. The
capital element of the management fee and relevant finance costs
are charged to this account. Any associated tax relief is also
credited to this account.
Revenue reserve
This reserve reflects all income
and costs which are recognised in the revenue column of the
Statement of Comprehensive Income.
The Company's special reserve,
capital reserve and revenue reserve may be distributed by way of
dividend.
(j) Foreign currency
Monetary assets and liabilities
and non-monetary assets held at fair value in foreign currencies
are translated into sterling at the rates of exchange ruling at the
Condensed Statement of Financial Position date. Transactions
involving foreign currencies are converted at the rate ruling on
the date of the transaction. Gains and losses on the translation of
foreign currencies are recognised in the revenue or capital account
of the Condensed Statement of Comprehensive Income depending on the
nature of the underlying item.
(k) Dividends payable
Dividends are recognised in the
period in which they are paid.
2. Income
Six months
ended
Six months
ended
Year ended
31 March
2024
31 March 2023
30 September 2023
£'000
£'000
£'000
|
Income from investments (revenue account)
|
|
|
UK dividends
|
484
|
470
1,715
|
Overseas dividends
|
3,610
|
3,214
9,991
|
Stock dividends
|
101
|
112
112
|
|
4,195
|
3,796
11,818
|
Other income (revenue account)
|
|
|
Deposit interest
|
14
|
3
4
|
Total income
|
4,209
|
3,799
11,822
|
During the six months ended 31
March 2024, the Company received no special dividends (31 March
2023: £nil and 30 September 2023: £83,000).
3. Taxation
During the period the Company
suffered withholding tax on overseas dividend income of £602,000
(31 March 2023: £392,000).
4. Return per ordinary share
|
Six months
ended
31 March
2024
p
|
Six
months ended
31 March
2023
p
|
Year
ended
30
September 2023
p
|
Revenue return
|
2.25
|
2.02
|
7.01
|
Capital return
|
13.96
|
5.63
|
(24.72)
|
Total return
|
16.21
|
7.65
|
(17.71)
|
The returns per share are based on
the following:
|
|
|
|
|
Six months
ended
31 March
2024
£'000
|
Six
months ended
31 March
2023
£'000
|
Year
ended
30
September 2023
£'000
|
Revenue return
|
2,588
|
2,277
|
8,019
|
Capital return
|
16,040
|
6,360
|
(28,279)
|
Total return
|
18,628
|
8,637
|
(20,260)
|
Weighted average number of
ordinary shares in issue
|
114,886,798
|
112,886,269
|
1114,418,153
|
5. Ordinary share capital
At 31 March 2024 there were
114,920,697 ordinary shares of 1p each in issue of which 770,179
were held in treasury (with no voting rights) (31 March 2023:
101,363,423 of which nil were held in treasury; 30 September 2023:
115,495,663 of which nil were held in treasury). During the
half-year ended 31 March 2024, 544,966 shares were bought back for
cancellation and 770,179 were bought back to treasury at a total
cost of £2,083,000 (31 March 2023: 2,411,000 shares were issued for
net proceeds of £5,153,000 and 30 September 2023: 4,581,577 shares
were issued for net proceeds of £9,793,000 and 1,054,337 shares
were bought back for cancellation for a net payment of
£1,819,000).
Since 31 March 2024 the Company has
bought back 3,298,488 ordinary shares to treasury for a net cost of
£5,713,246.
6. Capital reserve
31 March
2024
31 March 2023
30 September 2023
£'000
£'000
£'000
|
Opening balance
|
45,877
|
74,156
74,156
|
Movement in investment holding
gains
|
17,451
|
(1,518)
(40,574)
|
(Losses)/gains on realisation of
investments at fair value
|
(1,050)
|
7,479
12,562
|
Foreign exchange
(losses)/gains
|
634
|
1,397
(1,355)
|
Investment management
fees
|
(653)
|
(698)
(1,089)
|
Finance costs
|
(342)
|
(300)
(686)
|
Buyback costs
|
(7)
|
-
-
|
|
61,910
|
80,516
45,877
|
The capital reserve reflected in
the Condensed Statement of Financial Position at 31 March 2024
includes gains of £16,226,000 (31 March 2023: gains of £37,832,000
and 30 September 2023: losses of £1,225,000) which relate to the
revaluation of investments held at the reporting date.
7. NAV per ordinary share
|
As at
31 March
2024
|
As
at
31 March
2023
|
As
at
30
September 2023
|
Net asset value attributable
(£'000)
|
223,905
|
242,560
|
211,977
|
Number of ordinary shares in
issue
|
114,150,518
|
114,379,423
|
115,495,663
|
NAV per share
|
196.15p
|
212.07p
|
183.54p
|
8. Dividends on ordinary shares
|
Six months
ended
31 March
2024
£'000
|
Six
months ended
31 March
2023
£'000
|
Year
ended
30
September 2023
£'000
|
Fourth interim for 2022 of 1.85p
(paid 30 November 2022)
|
-
|
2,082
|
2,082
|
First interim for 2023 of 1.95p
(paid 26 February 2023)
|
-
|
2,200
|
2,200
|
Second interim for 2023 of 1.95p
(paid 31 May 2023)
|
-
|
-
|
2,234
|
Third interim for 2023 of 1.95p
(paid 31 August 2023)
|
-
|
-
|
2,273
|
Fourth interim dividend for 2023
of 1.95p (paid on 30 November 2023)
|
2,248
|
-
|
-
|
First interim dividend for 2024 of
2.05p (paid on 29 February 2024)
|
2,356
|
-
|
-
|
|
4,604
|
4,282
|
8,789
|
A second interim dividend for 2024
of 2.05p will be paid on 31 May 2024 to shareholders on the
register on 3 May 2024. The ex-dividend date was 2 May
2024.
9. Transaction costs
During the period expenses were
incurred in acquiring or disposing of investments classified as
fair value through profit or loss. These have been expensed through
capital and are included within gains on investments in the
Condensed Statement of Comprehensive Income. The total costs were
as follows:
|
Six months
ended
31 March
2024
£'000
|
Six
months ended
31 March
2023
£'000
|
Year
ended
30
September 2023
£'000
|
Purchases
|
71
|
104
|
142
|
Sales
|
17
|
18
|
45
|
|
88
|
122
|
187
|
The above transaction costs are
calculated in line with AIC's Statement of Recommended Practice
(SORP). The transaction costs in the Company's Key Information
Document are calculated on a different basis and in line with the
EU's Packaged Retail Investment and Insurance-based Products
(PRIIPs) regulations.
10. Fair value hierarchy
FRS 102 requires 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: unadjusted quoted prices
in an active market for identical assets or liabilities that the
entity can access at the measurement date;
Level 2: inputs other than quoted
prices included within Level 1 that are observable (i.e. developed
using market data) for the asset or liability, either directly or
indirectly; and
Level 3: inputs are unobservable
(i.e. for which market data is unavailable) for the asset or
liability.
The financial assets and
liabilities measured at fair value in the Condensed Statement of
Financial Position are grouped into the fair value hierarchy at the
reporting date as follows:
As at 31 March 2024
|
Notes
|
Level 1
£'000
|
Level 2
£'000
|
Level 3
£'000
|
Total
£'000
|
Financial assets at fair value through profit or
loss
|
|
|
|
|
|
Quoted equities
|
a)
|
251,254
|
-
|
-
|
251,254
|
Total
|
|
251,254
|
-
|
-
|
251,254
|
As at 31 March 2023
|
Notes
|
Level
1
£'000
|
Level
2
£'000
|
Level
3
£'000
|
Total
£'000
|
Financial assets at fair value
through profit or loss
|
|
|
|
|
|
Quoted equities
|
a)
|
264,316
|
4,393
|
-
|
268,709
|
Total
|
|
264,316
|
4,393
|
-
|
268,709
|
As at 30 September 2023
|
Notes
|
Level
1
£'000
|
Level
2
£'000
|
Level
3
£'000
|
Total
£'000
|
Financial assets at fair value
through profit or loss
|
|
|
|
|
|
Quoted equities
|
a)
|
227,496
|
17
|
-
|
227,513
|
Total
|
|
227,496
|
17
|
-
|
227,513
|
a) Equities and preference
shares
The fair value of the Company's
investments in equities and preference shares has been determined
by reference to their quoted bid prices at the reporting date.
Equities and preference shares included in Fair Value Level 1 are
actively traded on recognised stock exchanges. Investments categorised as Level 2 are not considered to
trade in active markets.
11. Related party transactions and transactions with the
Investment Manager
Fees payable to the directors and
their interests in shares of the Company are considered to be
related party transactions and are disclosed within the Directors'
Remuneration Report on pages 30 to 31 of the 2023 annual report.
The balance of fees due to directors at the period end was £nil (31
March 2023: £nil and 30 September 2023: £nil).
The Company has an agreement with
Ecofin Advisors Limited for the provision of investment management
services.
The investment management fee is
calculated at 1.00% per annum of the Company's NAV on the first
£200 million and 0.75% per annum of NAV thereafter, payable
quarterly in arrears. The management fee was chargeable 50% to
revenue and 50% to capital until 30 September 2022. With effect
from 1 October 2022 the management fee is chargeable 40% to revenue
and 60% to capital.
During the period £1,088,000 (31
March 2023: £1,164,000 and 30 September 2023: £2,259,000) of
investment management fees were earned by the Manager, with a
balance of £545,000 (31 March 2023: £580,000 and 30 September 2023:
£523,000) being payable to Ecofin Advisors Limited at the period
end.
12. Analysis of changes in net debt
|
|
|
|
|
As at
|
Currency
|
As at
|
|
30 September
2023
|
Differences
|
Cash
flows
31 March 2024
|
|
£'000
|
£'000
|
£'000
£'000
|
Cash and short term
deposits
|
-
|
634
|
(634)
|
-
|
Debt due within one
year
|
(20,002)
|
-
|
(8,106)
|
(28,108)
|
|
(20,002)
|
634
|
(8,740)
|
(28,108)
|
|
As
at
30
September 2022
£'000
|
Currency
differences
£'000
|
Cash
flows
£'000
|
As
at
31 March
2023
£'000
|
Cash and short term
deposits
|
-
|
-
|
-
|
-
|
Debt due within one
year
|
(25,613)
|
1,397
|
(203)
|
(24,419)
|
|
(25,613)
|
1,397
|
(203)
|
(24,419)
|
A statement reconciling the
movement in net funds to the net cash flow has not been presented
as there are no differences from the above analysis.
Interim Management Report
The principal and emerging risks
and uncertainties that could have a material impact on the
Company's performance have not changed from those set out on pages
15 to 18 of the Company's Annual Report for the year ended 30
September 2023.
The directors consider that the
Chairman's Statement and the Investment Manager's Report set out
herein, the above disclosure on related party transactions and the
Directors' Responsibility Statement below, together constitute the
Interim Management Report of the Company for the six months ended
31 March 2024 and satisfy the requirements of Disclosure Guidance
and Transparency Rules 4.2.3 to 4.2.11 of the Financial Conduct
Authority.
The Interim Report has not been
reviewed or audited by the Company's Auditor.
Directors' Responsibility Statement
The directors listed in the
Interim Report confirm that to the best of their
knowledge:
(i) the condensed set of Financial
Statements has been prepared in accordance with FRS 104 (Interim
Financial Reporting) and give
a true and fair review of the
assets, liabilities, financial position and profit and loss of the
Company as required by Disclosure Guidance and Transparency Rule
4.2.4 R;
(ii) the Interim Management Report
includes a fair review, as required by Disclosure Guidance and
Transparency Rule 4.2.7 R, of important events that occurred during
the six months ended 31 March 2024 and their impact on the
condensed set of Financial Statements, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
(iii) the Interim Management
Report includes a fair review of the information concerning related
party transactions as required by Disclosure Guidance and
Transparency Rule 4.2.8 R.
This Interim Report was approved
by the board on 24 May 2024 and the Directors' Responsibility
Statement was signed on its behalf by:
David Simpson
Director
24 May 2024
Interim Report 2024
The Interim Report will be
available on the Investment Manager's website
www.ecofininvest.com/egl.
A copy of the Interim Report for the six months
ended 31 March 2024 will be submitted to the National Storage
Mechanism of the FCA and will shortly be available for inspection
at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
The financial information for the period ending 31
March 2024 comprises non-statutory accounts within the meaning of
Sections 434 - 436 of the Companies Act 2006.
For further information, please
contact:
Faith Pengelly
For and on behalf of
Apex Fund Administration Services
(UK) Limited
Company Secretary
24 May 2024