EcofinGlobal U&I Tst - Half-year Report
24/05/2024 09:37
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RNS Number : 8368P Ecofin Global Utilities Inf Tst PLC 24 May 2024
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 As at or year to
31 March 2024 30 September 2023
Net assets attributable to shareholders (£000) 223,905 211,977
Net asset value ("NAV") per share(1) 196.15p 183.54p
Share price (mid-market) 165.00p 164.00p
Discount to NAV(1) (15.9)% (10.6%)
Revenue return per share 2.25p 7.01p
Dividends paid per share 4.00p 7.70p
Dividend yield(1,2) 4.9% 4.7%
Gearing on net assets(1,3) 12.6% 11.2%
Ongoing charges ratio(1,4) 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 6 months 1 year 3 years 5 years Since admission(5) Since admission
(all total return in £) % % % % % % per annum
%
NAV per share(6) 9.0 -3.8 19.4 54.9 88.8 8.8
Share price(6) 3.2 -19.0 1.9 55.6 102.2 9.8
Indices(6, 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 Year ended
Six months ended
30 September 2023 (audited)
31 March 2024 (unaudited) 31 March 2023 (unaudited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'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 2 4,209 - 4,209 3,799 - 3,799 11,822 - 11,822
Income
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 3,418 16,382 19,800 2,869 6,660 9,529 10,083 (27,593) (17,510)
costs and taxation
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 As at
30 September 2023 (audited)
31 March 2024 31 March £'000
2023
(unaudited) (unaudited)
Notes £'000
£'000
Non-current assets 251,254 268,709 227,513
Equity securities at fair value through profit or loss
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' 223,905 242,560 211,977
funds
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 Share Special Capital Revenue Total
reserve(1)
reserve
reserve
£'000 premium account
£'000
£'000 £'000 £'000
£'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 Special Capital Revenue Total
reserve(1)
reserve
reserve
£'000 Share premium account £'000
£'000
£'000 £'000 £'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 Special Capital Revenue Total
reserve(1)
reserve
reserve
£'000 Share premium account
£'000
£'000 £'000 £'000
£'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) (634) (1,397) (1,774)
12
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 (4,604) (4,282) (8,789)
paid
8
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 Six months ended Year ended
31 March 2024 31 March 2023 30 September 2023
p p 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 Six months ended Year ended
31 March 2024 31 March 2023 30 September 2023
£'000 £'000 £'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)
114,886,798 112,886,269 1114,418,153
Weighted average number of ordinary shares in issue
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 As at As at
31 March 2024 31 March 2023 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 Six months ended Year ended
31 March 2024 31 March 2023 30 September 2023
£'000 £'000 £'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 Six months ended Year ended
31 March 2024 31 March 2023 30 September 2023
£'000 £'000 £'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 Level 2 Level 3 Total
£'000 £'000 £'000 £'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 Level 2 Level 3 Total
£'000 £'000 £'000 £'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 Level 2 Level 3 Total
£'000 £'000 £'000 £'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 Currency Cash flows As at
30 September 2022 differences £'000 31 March 2023
£'000 £'000 £'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/eg (http://www.ecofininvest.com/egl) l
(http://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
(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
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