REG-Strategic Equity Capital Plc: Half-year Report
26/02/2025 07:15
26 February 2025
Strategic Equity Capital plc (‘SEC’)
Legal Entity Identifier: 2138003R5GB8QZU2G577
Report & Financial Statements for the half-year ended 31 December 2024
FINANCIAL SUMMARY
Capital Return As at 31 December 2024 As at 30 June 2024 As at 31 December 2023 Six months % change to 31 December 2024
Net asset value (“NAV”) per Ordinary share ǂ 358.41p 396.87p 345.83p (9.7)%
Ordinary share price 331.00p 365.50p 320.50p (9.4)%
Comparative index* 5,863.19 5,687.19 5,353.66 3.1%
Discount 1 of Ordinary share price to NAV (7.6)% (7.9)% (7.3)%
Average discount of Ordinary share price to NAV for the period 1 (7.8)% (7.6)% (8.0)%
Total assets (£’000) 167,072 191,683 169,447 (12.8)%
Equity shareholders’ funds (£’000) 166,733 189,965 168,512 (12.2)%
Ordinary shares in issue with voting rights 46,520,577 47,865,450 48,726,211
Performance Six month period to 31 December 2024 Year ended 30 June 2024 Six month period to 31 December 2023
NAV total return for the period 1 (8.8)% 16.6% 1.7%
Share price total return for the period 1 (8.5)% 19.2% 4.6%
Comparative index total return for the period * 5.2% 18.5% 9.6%
Ongoing charges - annualised 1 1.20% 1.20% 1.19%
Ongoing charges (including performance fee) - annualised 1 1.20% 2.03% 1.41%
Revenue return per Ordinary share 3.70p 4.15p 2.74p
Dividend yield n/a 0.96% n/a
Proposed final dividend for the period n/a 3.50p n/a
ǂ Net asset value or NAV, the value of total assets less current liabilities.
The net asset value divided by the number of shares in issue produces the net
asset value per share.
* FTSE SmallCap (ex Investment Trusts) Index.
1 Alternative Performance Measure.
Interim period’s Highs/Lows High Low
NAV per Ordinary share 407.44p 326.54p
Ordinary share price 379.00p 307.00p
The Report & Financial Statements for the six months ended 31 December 2024
can be accessed via the Company’s website at: www.strategicequitycapital.com
or by contacting the Company Secretary as below.
Copies of this announcement, annual and half-year reports, quarterly update
presentations and other corporate information can be found on the Company’s
website at:
www.strategicequitycapital.com
For further information, please contact:
Strategic Equity Capital plc William Barlow (Chairman) (via Juniper Partners) +44 (0)131 378 0500
Liberum Capital Limited (Corporate Broker) Chris Clarke Darren Vickers Owen Matthews +44 (0)20 3100 2000
Juniper Partners Limited (Company Secretary) Steven Davidson +44 (0)131 378 0500
KL Communications (PR Adviser) gh@kl-communications.com +44 (0)20 3995 6673
Charles Gorman
Adam Westall Charlotte Francis
Chairman’s Statement
In a challenging economic backdrop, the Company’s NAV per share (on a total
return basis) decreased by 8.8% during the six months to 31 December 2024. The
FTSE Small Cap (ex Investment Trusts) Index (“FTSE Small Cap Index”) total
return, against which the Company’s performance can be compared, rose by
5.2%. Over the same period, the Company’s share price total return decreased
by 8.5%. The underperformance relative to the reference index was primarily
due to the portfolio’s exposure to AIM quoted companies, accounting for
c.65% of NAV as at 31 December 2024, which experienced broad valuation
de-rating during the period due to negative sentiment around the 2024 Autumn
Budget. While the returns for the six-months to 31 December 2024 are
disappointing, the concentrated nature of the Company’ portfolio can result
in uneven performance. To illustrate this point, in the year to 30 June 2024,
the Company’s share price total return was 19.2% versus the FTSE Small Cap
Index of 18.5% over the same period. And for the year ended 30 June 2023 the
figures were 11.2% and (0.4)% respectively. Despite this volatility of returns
over specific short-term timeframes, and the challenging performance in the
six months to 31 December 2024, the longer term performance of the Company
compares more favourably to its reference index.
The six-month period to 31 December 2024 was characterised by a combination of
domestic and global political uncertainty which adversely affected UK equity
markets, with a particularly acute impact for UK smaller companies. Many
policies announced in the Autumn budget were received negatively by investors,
not least the reduced inheritance tax relief on AIM and the higher corporate
costs precipitated by changes to national minimum wage and national insurance
legislation. Whilst such uncertainty poses a short-term headwind to equity
valuations (and, by extension, the Company’s investment performance), it
will also present opportunities for your Investment Manager to capitalise on
increasingly attractive investment opportunities over the longer term.
The Company’s investment portfolio remains highly concentrated with
approximately 78% of the Company’s Net Asset Value (“NAV”) made up of
the top ten holdings at 31 December 2024. As in prior periods, the Investment
Manager has undertaken a detailed review of the valuations of these key assets
including benchmarking them against the valuations applied to private market
transactions for comparable businesses. This analysis, which indicates a
substantial margin of safety across the portfolio, was partially corroborated
during this six-month period when one portfolio holding (Alpha Financial
Markets Consulting) was acquired by Private Equity firm Bridgepoint. The
reported transaction multiple of approximately 15x EBITDA reflected a
significant premium to the company’s quoted market valuation, and was
consistent with the private market transaction valuation precedents considered
by the Investment Manager at the time of its investment.
The Company is positioned as a high conviction concentrated portfolio of
high-quality businesses at attractive valuations that have the potential to be
strategically valuable. As such, corporate activity continues to be an
important source of investment returns in a challenging equity market backdrop
with depressed valuation multiples. This, together with the underlying
financial health of the portfolio, provides the Board with confidence that our
investment management team will be able to generate good long-term returns for
shareholders in the Company.
Despite a challenging market backdrop for UK small cap equities and the
Investment Trust sector, the Board notes the progress made in the following
key areas in the last three years:
* Reduction in the Company’s discount to NAV – average discount reduced
from 15.3% (30 September 2020, the date of the appointment of Ken Wotton as
Investment Manager, to 9 February 2022) to 8.1% (9 February 2022 to 31
December 2024) and a period end discount of 7.6%. The peer group average
discount over the same period increased from 11.6% to 13.5%.
* Greater alignment with the Investment Manager – Gresham House shareholding
increased from 5.4% (February 2022) to 10.2% (December 2024).
* Diversification of the shareholder register – percentage of share capital
held outside the two largest shareholders increased from c.60% to c.74%, with
a number of new retail and wealth management investors.
As announced by the Company on 9 February 2022 and reiterated in subsequent
publications, shareholders will be provided with a 100% realisation
opportunity in 2025 (the “2025 Realisation Opportunity”).
The structure and timing of the 2025 Realisation Opportunity will be
communicated by the Board in due course, having given careful consideration to
the various options available to maximise shareholder value and having
consulted the Company’s major shareholders. In particular, given the
concentrated and less liquid nature of the Company’s investment portfolio,
any mechanism to realise liquidity would require striking a balance between
the pace of realisation and value protection for all shareholders.
An overview of the reporting period, performance, and portfolio is discussed
in detail in the Investment Manager’s Report.
The Investment Manager’s differentiated “private equity” style
investment process, outlined in more detail in the Investment Manager’s
Report, aims to provide attractive medium to long term returns that are less
correlated to UK equity market performance.
As a direct result of our deliberate and distinctive investment process, the
Company provides notable benefits for investors:
* Performance
Since the appointment of Ken Wotton as the Lead Fund Manager of the portfolio
in September 2020, the Company’s shares have produced a total return of
77.1% which compares to the total return from the FTSE Small Cap Index of
78.1% over the same period. This performance, broadly matching the index, is a
result of both the portfolio’s NAV performance (which was below the
benchmark) and the narrowing of the discount following the Board’s measures
to target this metric. The portfolio has been carefully constructed with the
objective of delivering real returns. There continues to be clear and
significant M&A interest in UK equities due to attractive valuations, with
several portfolio companies attracting takeover interest during the calendar
year. However, it is worth noting that the top four of the Company’s
performance contributors during the period were not influenced by takeover
activity. This highlights that, while takeover activity can enhance portfolio
performance, significant organic shareholder returns can also be achieved
through diligent stock selection and a focus on high-quality businesses.
* Risk Management
For investors looking for high quality small cap UK equity exposure, the
Company offers low correlations and a low beta to the broader market. When
combined with valuation discipline and a fundamentals based approach to stock
selection, this provides a strong margin of safety to underpin the long-term
upside potential of the portfolio.
* Valuation
The Company currently offers investors an attractive discount at four
different levels:
* UK equities stand at a substantial discount to global markets, currently at
levels last seen in the 1990s;
* Within the UK market, smaller capitalisation stocks trade at a notable
discount to large caps;
* The Company’s portfolio of underlying companies trade at a discount
relative to history and the wider smaller companies universe despite higher
quality financial characteristics; and
* Investors are today able to purchase the Company’s shares at a discount to
NAV.
Discount and Discount Management
The average discount to NAV of the Company’s shares during the period was
7.8%, compared to the equivalent 8.0% figure from the prior year. The discount
range was 4.1% to 10.3%. The peer group average discount was 12.0% over the
same period.
Encouraging progress continues to be made to address the persistent share
price discount to NAV experienced by the Company. Some of the measures adopted
include: a buy back policy to return up to 50 per cent. of proceeds from
profitable realisations, at greater than a 5 per cent. discount on an ongoing
basis, in each financial year; an ongoing commitment by Gresham House to
reinvest 50 per cent. of its management fee per quarter in shares if the
Company’s shares trade at an average discount of greater than 5 per cent.
for the quarter; and the deferral of an annual continuation resolution in
favour of the implementation of a 100 per cent. realisation opportunity for
shareholders in 2025.
Since 9 February 2022, the date on which the Company announced a series of
measures designed to reduce the discount to NAV, the Company has bought back
(via Tender Offer and on-market buybacks) £52.8m of share capital, equating
to 27.1% of shares outstanding as at 9 February 2022.
Marketing
Presenting a clear, consistent and distinctive message to the market has been
the focus of our efforts, as the Board continues to oversee the implementation
of the marketing plan and strategy to broaden the shareholder base against a
challenging market backdrop.
Communicating differentiation through a range of marketing activities has
included a retail-focused advertising campaign, an extensive PR campaign and
content creation throughout the period. There have also been regular
commentaries and webinars to keep shareholders and prospective investors up to
date with portfolio developments and performance.
All these activities have provided the opportunity to highlight the Investment
Manager’s distinctive and highly disciplined investment approach, coupled
with constructive, active corporate engagement.
This messaging is reflected in all communications including on the Company’s
webpage (www.strategicequitycapital.com).
The Board values the importance of marketing and distribution more broadly, to
build the profile and positioning of the Company over time.
Gearing and Cash Management
The Company has maintained its policy of operating without a banking loan
facility. This policy is periodically reviewed by the Board in conjunction
with the Investment Manager and remains under review.
Dividend
The Directors continue to expect that returns for shareholders will derive
primarily from the capital appreciation of the shares rather than from
dividends. In line with previous years, the Board does not intend to propose
an interim dividend.
Outlook
Global and domestic macroeconomic uncertainty have been a common theme of the
six-month period to 31 December 2024, supplemented by ongoing geopolitical
uncertainty. Domestically, sentiment has been dominated by the policy
announcements in the 2024 Autumn Budget, which have led to widespread
uncertainty around corporate earnings sustainability, particularly in
labour-intensive industries, in addition to questions around the long-term
outlook for the AIM market given the reduction in inheritance tax (“IHT”)
relief and implications for asset allocation and flows into that market.
Notwithstanding the recent sentiment towards the AIM market, which has
translated into short-term selling pressure and de-rating across AIM quoted
companies, the Investment Manager believes that this is a transitory
phenomenon and that AIM should continue to thrive in the medium to long term
as an attractive source of growth capital and investment opportunities. The
Investment Manager draws confidence from the relative resilience of its
investment portfolio, and notwithstanding short-term market sentiment it does
not believe that recent political developments have materially impacted the
long-term expected returns of the portfolio companies.
The Investment Manager is encouraged by the positive news flow from the
portfolio companies, with the majority of news releases demonstrating in-line
to positive developments. Valuations across the portfolio are highly
attractive versus history, large-cap UK equities, overseas comparable
equities, and recent comparable M&A transaction multiples. In contrast to the
strong long term portfolio performance since the Investment Manager’s
appointment, the relative weakness during this six-month period was driven by
negative sentiment across a small number of holdings.
Two key strands of the Investment Manager’s investment approach support its
ability to actively manage the portfolio towards outperformance in 2025.
Firstly, the Investment Manager’s portfolio construction is focused on
defensive characteristics including structural growth trends, non-cyclical
markets, and high-quality financials (including c.20% average EBITDA margins,
strong cash generation, and very low financial leverage), affording greater
resilience than the wider UK economy to external shocks. Secondly, the
Investment Manager’s consistent and repeatable private equity approach to UK
public market investing, leveraging a high-quality expert network to
independently validate key investment judgements, provides a sustainable
‘edge’ over the wider market in terms of investment appraisal and
portfolio monitoring. The Investment Manager’s ‘Strategic Public Equity’
constructive engagement approach is a cornerstone of this strategy, enabling
us to support companies in delivering enhanced shareholder value.
Encouragingly, early indications from 2025 are positive for the portfolio’s
worst detractors in the six-month period to 31 December 2024, with the
majority of those detractors demonstrating a positive contribution to returns
in the year to date. Furthermore, the Investment Manager is confident in the
significant growth potential across the remaining portfolio, believing that
the resilient positioning of the Company’s holdings should enable it to
perform strongly in the medium to long term.
The Board, once again, thanks you for your continued support.
William Barlow
Chairman
25 February 2025
Investment Manager’s Report – Introduction
Why Strategic Equity Capital?
Expertise and Proven Track Record
Strategic Equity Capital benefits from the specialist expertise of fund
manager Ken Wotton and his team, who excel in identifying compelling
investment opportunities within UK smaller companies. With a demonstrable
long-term track record, the team focuses on companies that operate in sectors
or niche markets offering potential for structural growth or opportunities to
gain market share.
A Distinctive Approach
The Investment Manager applies Gresham House’s highly disciplined private
equity methodology in the public markets, combining constructive corporate
engagement with rigorous due diligence. This approach has proven effective in
generating strong returns. The Investment Manager can invest strategically to
support companies in various ways, including:
* providing primary capital;
* facilitating strategic shifts or operational improvements; and
* acting as a catalyst for mergers and acquisitions.
Powerful Network
The Investment Manager’s network of advisers and connections provides
challenge, validation and insight to the investment team, which in turn drives
better decision-making, stock-selection and ultimately, value to shareholders.
The network and advisers can also be connected to portfolio companies to
support their growth.
Active and Engaged
SEC maintains a highly concentrated portfolio of 15-25 companies, allowing the
investment team to engage actively with investee companies to build superior
shareholder value. The investment trust structure further enables the team to
take a long-term approach, focusing on high-conviction investments.
Our investment approach is built on fundamental analysis, prioritising
business quality, downside risk mitigation, and long-term value creation.
Through targeted due diligence, we focus on critical judgements and key risk
areas, using our proprietary network to gain deeper insights. This disciplined
approach enables us to objectively compare investments, ensuring informed
decision-making that strengthens portfolio construction and overall risk
management.
Our Strategic Public Equity Strategy
The appointment of Gresham House as Investment Manager in May 2020, and Ken
Wotton as Lead Fund Manager in September 2020, marked a strategic refocus,
ensuring the investment strategy is rigorously applied and effectively
leverages the extensive resources of the Gresham House Strategic Equity team,
the broader Group platform, and its network. This strategy is detailed in the
Company’s 2024 Annual Report.
Strong fundamentals:
Investments are made in companies that demonstrate a profitable business
model, strong cash generation, attractive returns on capital, and superior
operating margins.
Investment Focus
Our investment focus is to invest into high quality, publicly listed companies
which we believe can materially increase their value over the medium to long
term through strategic, operational or management change. To select suitable
investments and to assist in this process we apply our proprietary Strategic
Public Equity (“SPE”) investment strategy. This includes a much higher
level of engagement with management than most investment managers adopt and is
closer in this respect to a private equity approach to investing in public
markets companies. Our path to achieving this involves constructing a high
conviction, concentrated portfolio; focusing on quality business fundamentals;
undertaking deep due diligence including engaging our proprietary network of
experts and assessing ESG risks and opportunities through the completion of
the ESG decision tool; and maintaining active stewardship of our investments.
Through constructive, active engagement with the management teams and boards
of directors, we seek to ensure alignment with shareholder objectives and to
provide support and access to other resource and expertise to augment a
company’s value creation strategy. We are long-term investors and typically
aim to hold companies for three-to-five years to back a thesis that includes
an entry and exit strategy and a clearly identified route to value creation.
We have clear parameters for what we will invest in and areas which we will
deliberately avoid.
Smaller Company Focus
We believe that UK Smaller Companies represent a structurally attractive part
of the public markets. Academic research demonstrates that smaller companies
in the UK have delivered substantial outperformance over the long term. This
is partially because there are a large number of under-researched and
under-owned businesses that typically trade at a valuation discount to larger
companies and relative to their prospects. A highly selective investor with
the resources and experience to navigate successfully this part of the market
can find exceptional long-term investment opportunities.
Key Attractions of Smaller Companies:
Inefficient Markets: Smaller companies are often under-researched, presenting
opportunities for those willing to devote time and resources.
Large Universe: Most UK-listed companies fall into the smaller companies
category, with two-thirds having a market capitalisation below £500m,
offering a wide array of opportunities.
Valuation Discounts: These discounts present attractive entry points where the
intrinsic value of a company’s long-term prospects is undervalued.
M&A Activity: Smaller companies often offer strategic opportunities within
their niche markets and can become attractive acquisition targets for both
trade and private equity buyers.
Portfolio Construction
We maintain a concentrated portfolio of 15-25 high conviction holdings with
prospects for attractive absolute returns over our investment holding period.
The majority of portfolio value is likely to be concentrated in the top 10
holdings, with other positions representing smaller initial “toehold”
investments where we are awaiting a catalyst to increase our stake to an
influential, strategic level. Bottom up stock picking determines SEC’s
sector weightings, which are not explicitly managed relative to a target
benchmark weighting. The absence of certain sectors such as oil & gas, mining,
and banks, as well as limited exposure to overtly cyclical parts of the
market, typically result in a portfolio weighted towards businesses with
sustainable profit and cash generation characteristics. This is further
reinforced by the absence of early stage or pre-profit businesses from the
portfolio.
As a result, whilst the portfolio’s sector composition may vary between
reporting periods, over the long term it is expected to comprise primarily
technology, healthcare, business services, financials and industrials
businesses.
The underlying value drivers are typically company specific and they exhibit
limited correlation even within the same broad sectors. Our smaller company
focus and specialist expertise leads us to prioritise companies with a market
capitalisation between £100m and £300m at the point of investment. This
focus, in combination with the size of the Company and its concentrated
portfolio approach, provides the potential to build a strategic and
influential stake in the highest conviction holdings. In turn this provides a
platform to maximise the likelihood that our constructive active engagement
approach will be effective and ultimately successfully contribute to
shareholder value creation. Once purchased there is no upper limit restriction
on the market capitalisation of an individual investment. We will run active
positions regardless of market capitalisation provided they continue to
deliver the expected contribution to overall portfolio returns and subject to
exposure limits and portfolio construction considerations.
Constructive Active Engagement Approach
SEC strives to build consensus with stakeholders, aiming to unlock shareholder
value and create stronger businesses in the long term. Our objective is to
foster a constructive dialogue with management, positioning the Gresham House
Asset Management (‘GHAM’) team and its network as trusted advisers. With a
highly focused portfolio, SEC’s management team can develop a deep
understanding of its portfolio companies and their potential.
Where appropriate the GHAM team is able to leverage its combined interest in
an SEC portfolio company, where additional shareholdings are held within other
GHAM-managed investment vehicles, in order to maximise its engagement efficacy
with the portfolio company.
The team engages with company management and boards in several areas,
including:
* Strategy: Ensuring that business strategy and operations align with
long-term value creation and focus on building strategic value within a
company’s market.
* Corporate Activity: Supporting acquisition and divestment activities through
advice, network introductions, and cornerstone capital.
* Capital Allocation: Optimising capital allocation by prioritising the
highest return and value-added projects.
* Board Composition: Ensuring boards are appropriately balanced and
introducing high-quality candidates as needed.
* Management Incentivisation: Aligning management incentives with long-term
shareholder value.
* ESG: Leveraging GHAM’s sustainable investing framework to identify,
understand, and monitor key ESG risks and opportunities, with a particular
focus on corporate governance.
* Investor Relations: Assisting management teams in refining their equity
story and targeting investor relations activities to ensure market
understanding and value creation.
Engagement is undertaken privately, leveraging the resources of the Gresham
House group. We also seek to introduce portfolio companies to our network,
supporting initiatives to create shareholder value. In summary, we follow a
practice of constructive corporate engagement, working collaboratively with
management teams and like minded co-investors to enhance shareholder value.
Investment Manager’s Report for the half-year ended 31 December 2024
1) Overview
Over the six months to 31 December 2024, the FTSE Smaller Companies (ex
Investment Trusts) Index increased by 5.2% on a total return basis,
outperforming both the FTSE All Share (+0.4%) and the FTSE AIM All Share
(-5.9%). The AIM market in particular has faced a combination of headwinds,
with the broader UK equity allocation and net flows dynamic being exacerbated
by AIM-specific concerns following the 2024 UK Autumn Budget, notably the
reduction of IHT relief. This has led to substantial selling pressure on AIM
quoted companies, even where the operating fundamentals of those companies
have evolved positively during the period. As a bellwether of sentiment
towards the AIM market, in several recent instances (both inside and outside
the Company’s portfolio), AIM quoted companies have opted to migrate to the
LSE Main Market, notwithstanding that a material proportion of their
respective shareholders bases would become “forced sellers” following
their departure from AIM. Whilst the Investment Manager remains optimistic
regarding the long term future of the AIM market as a source of growth capital
for smaller companies and of attractive investment opportunities, the recent
headwinds and sentiment shift experienced by the AIM market have had a
negative impact on performance of the company’s portfolio in the six month
period, with c.65% of NAV at 31 December 2024 comprising AIM quoted companies.
We continue to focus on bottom-up stock selection and on opportunities where
structural growth themes and/or self-help levers dilute the impact of broader
economic and market fluctuations. Our consistent investment philosophy, strong
relationships with company management teams, and extensive specialist network
continue to underpin our confidence in the portfolio. We remain committed to
high-quality businesses with clear value creation strategies, long-term demand
drivers, and durable competitive advantages.
Looking forwards, however, the value opportunity for UK small cap equities
appears to be compelling, with many companies trading at substantially
discounted valuations versus their own histories, versus international quoted
peers, and versus comparable private M&A transactions. However, bottom-up
fundamental analysis is critical to exploit areas of undervaluation and avoid
investing in so called “value traps”, which suits the private equity
investing approach taken by the Investment Manager.
2) Portfolio Overview
The portfolio remained highly focused with a total of 16 holdings and the top
10 accounted for approximately 78% of the NAV at the end of the period. 1.4%
of the NAV was held in cash at period end.
Two new holdings were established during the period; Diaceutics, an outsourced
provider of data analytics and services to the pharmaceutical sector, and Next
15 Group, a digital marketing agency specifically focused on technology
companies. Both companies were well known to the Investment Manager prior to
investment, and were subject to additional due diligence in conjunction with
the Investment Manager’s network of sector experts.
One holding was exited during the period, Alpha Financial Markets Consulting
(annualised IRR of 155.3%), pursuant to its Recommended Cash Offer from
Bridgepoint Group.
In addition, whilst not a full exit, a partial divestment of XPS Pensions
Group (“XPS”) was made during the period, realising £31m in proceeds, and
reducing the holding from 22.9% of NAV at 30 June 2024 to 9.5% of NAV at 31
December 2024. XPS has been a core investment within the portfolio for a
number of years, and a strong contributor to performance, with the realised
proceeds generating a multiple on investment of 2.4x1. XPS was included in the
FTSE 250 Index from June 2024 onwards, which allowed the Investment Manager to
capitalise on a significant liquidity pool to reduce its position. Following
further share price appreciation by period end, as at 31 December 2024 XPS’
realised and unrealised value in aggregate represented a multiple on
investment of 2.7x1.
SEC currently has a number of key holdings that we believe trade at material
valuation discounts to comparable private market transaction values, which
provides a strong margin of safety underpinning the long term upside potential
of the portfolio. Towards the latter end of the period in particular, the
portfolio experienced valuation de-rating in spite of broadly positive
operational performance and outlook. For example, from September 2024 to
December 2024, portfolio forecast EBITDA growth rose from 9% to over 10%, and
leverage fell from 0.2x EBITDA to 0x EBITDA, whilst portfolio EV/EBITDA fell
from 8.2x to 7.6x. This reflects broad-based selling pressure across the
market, particularly for AIM quoted stocks following the 2024 Autumn Budget.
Changes in sector weightings have seen our Technology exposure increase from
25.1% to 31.5%, with Consumer exposure increasing from 1.0% to 5.0%. The
largest change has been the decrease in exposure to Industrial Goods and
Services from 11.4% to 3.1%, which reflects the reclassification of Ricardo
from Industrial Goods and Services to Business Services. This follows
Ricardo’s announced disposal of its defence business, and acquisition of an
environmental consulting business, which pivot’s the group’s offering more
towards business services.
1 Based on a 30 September 2020 starting point, when Ken Wotton became
Investment Manager of the Company.
3) Detailed Performance Overview
Following a prior period of strong investment performance, the NAV decreased
by 8.8%, on a total return basis, over the six months to 31 December 2024,
closing at 358.4p per share. The Company underperformed the FTSE Smaller
Companies (ex Investment Trusts) index which increased by 5.2%. Encouragingly,
none of the portfolio’s five largest detractors during the period (all of
which are AIM quoted) have led the Investment Manager to change its long term
investment thesis. AIM quoted companies both within the portfolio and across
the AIM index have suffered from negative sentiment during the six months to
31 December 2024. Prior to the 2024 Autumn Budget this was driven by market
uncertainty and speculative commentary around potential changes to IHT relief
for AIM quoted companies, which saw widespread selling ahead of the Budget
announcement. Following the Autumn Budget, which halved the IHT relief
applicable to AIM quoted companies, sentiment has remained negative driven by
the view that future asset allocation (and therefore investment flows) towards
AIM will be less favourable than historic levels. Furthermore, recent newsflow
from a number of AIM companies confirming (or contemplating) their intentions
to migrate from AIM to the Main Market has weighed on sentiment towards the
AIM market.
Whilst the Investment Manager does not place material emphasis on short term
trading performance, it is notable that the majority of these detractors have
delivered positive contributions post period end2, with three of the five
in-period detractors – Fintel, Everplay Group (formerly named Team17 Group)
and Inspired contributing an aggregate +342bps of performance in the year to
date2.
Despite the market volatility experienced over the year, we remain confident
about the resilient underlying fundamentals of the portfolio companies and
their ability to withstand the macroeconomic headwinds that look set to
persist through the current financial year.
2 As at 14 February 2025.
Top Five Absolute Contributors to Performance
Security Valuation 31 December 2024 £’000 Period Contribution to return (basis points)
XPS Pensions Group 15,896 213
Netcall 11,018 89
Costain Group 12,904 82
Trufin 10,135 76
Alpha Financial Markets Consulting - 7
XPS Pensions Group, a pensions consulting, advisory and administration
services provider, which reported interim results demonstrating further
trading momentum with double-digit growth across all divisions and operating
margin expansion; Netcall, a provider of AI-driven process automation and
customer engagement solutions, following full-year results which showed
exceptional 58% growth in profit before tax and relayed a confident outlook;
Costain Group, a specialist infrastructure construction, consultancy and
engineering business, which continues to demonstrate positive orderbook
momentum particularly in the water sector with a number of AMP8 framework
wins; Trufin, a provider of financing, payment and video game publishing
software and services, following two unscheduled trading updates which both
materially increased already upgraded full-year earnings guidance due to the
continued sales momentum of two games within the games label division,
Playstack; and Alpha Financial Markets Consulting, a specialist financial
services focused consultancy business, following its Recommended Cash Offer
from Bridgepoint Group.
Bottom Five Absolute Contributors to Performance
Security Valuation 31 December 2024 £’000 Period Contribution to return (basis points)
Iomart Group 12,589 (436)
Inspired 4,168 (168)
Brooks Macdonald 16,346 (124)
Everplay Group (formally Team17 Group) 10,886 (113)
Fintel 12,686 (102)
In challenging equity market conditions (particularly for AIM quoted
investments), certain portfolio holdings suffered from share price weakness
during the period, despite the absence of any fundamental developments that
have changed the Investment Manager’s view of the respective long term
investment theses. Iomart Group, a datacentre and hybrid cloud managed
services provider, saw share price weakness following the simultaneous
announcement of elevated churn in its legacy self managed infrastructure
offering, in conjunction with a material acquisition which increased near-term
leverage but, which the Investment Manager believes, should accelerate
Iomart’s previously stated strategy of becoming a leading UK hybrid cloud
specialist particularly across the Microsoft Azure platform; Inspired, a
technology-enabled provider of energy and sustainability solutions, which
experienced a small number of material contract delays from Q4 2024 into H1
2025, resulting in its senior lenders providing a temporary covenant reprieve
to March 2025. Post-period end the company announced a substantial
recapitalisation, led by Gresham House, to de-gear the balance sheet and
provide it with adequate working capital to execute on a strong orderbook,
which has led the shares to rally c.28% post-period end; Brooks Macdonald, an
investment management services provider, which announced a disposal of its
non-core international business and two bolt-on acquisitions and, post
period-end, its intention to migrate from AIM to the LSE Main Market; Everplay
Group (formally Team17 Group), an independent video game developer and
publisher, which announced the appointment of a new CFO/COO (ex. Codemasters),
which we view as positive to the investment case; and Fintel, an outsourced
services provider to the UK IFA sector, which derated despite no significant
newsflow during the period.
4) Outlook – Year Ahead
Looking ahead to 2025, we see a number of short-to-medium-term catalysts for a
potential material performance recovery and believe that our companies remain
well-positioned to offset external headwinds such as high interest rates, low
economic growth, and UK government-driven cost inflation. We take confidence
from the resilient fundamentals across the portfolio which, in aggregate, was
subject to sentiment-driven de-rating, contrary to the underlying performances
and future expectations for the majority of our portfolio companies.
The current macroeconomic and geopolitical volatility is driving mispricing
opportunities across UK equity markets, particularly in the field of smaller
companies. UK small caps across multiple sectors are trading at a steep
discount compared to both global markets and historical M&A transaction
precedents. This valuation discount underpins our expectations of sustained
corporate takeover activity as we enter 2025. Buyers paid on average a 44%
premium for UK companies in 2024, highlighting the appetite for undervalued
assets despite elevated deal funding costs amidst higher interest rates. From
conversations with our private equity network, we understand that corporate
and private equity buyers are actively assessing UK deal-flow opportunities.
We believe they will seek to compensate for elevated debt costs by
capitalising on depressed UK equity valuations. Additionally, we anticipate
that multi-sector arbitrage between UK trading multiples and precedent M&A
transaction multiples may catalyse a re-rating of small-cap stocks.
We believe that continued mitigation of current headwinds combined with
another year of resilient portfolio earnings growth and cash generation can
lead to a correction of prior-period de-ratings, driving portfolio
outperformance in 2025.
We also see upside potential to Fund performance from elevated takeover
activity across UK equity markets heading into 2025. While the uncertainty
around the Autumn budget led to an M&A slowdown in Q3 2024, we observed an
uptick in activity during Q4 and anticipate deal momentum continuing into this
year. With significant amounts of private equity ‘dry powder’ yet to be
deployed, we expect that takeover activity will continue to offer attractive
returns for the portfolio in 2025.
We highlight an emerging nuance to this theme across UK listed businesses:
carve-outs, where a parent company sells a subsidiary or business unit. There
have been 20 meaningful carve-out instances through 2024, with several
examples where businesses sold off divisions at valuations higher than their
prevailing group valuation – sometimes exceeding the entire market cap. We
believe that carve-outs represent an underrated but powerful tool for UK
companies to unlock value and overcome market discounts, creating significant
shareholder value, and have actively engaged with a number of portfolio
companies where we see this as a potential value creation lever.
More broadly, we welcome calls for government reforms in 2025 to encourage UK
pension fund participation in domestic equity markets, where they are
materially under-penetrated today compared to other developed western nations.
Any incremental liquidity as a result of supportive policies would aid
marginal buying of UK shares and, in turn, help bridge the stark valuation
arbitrage between UK equity markets and global benchmarks. Against this
backdrop, we believe there is a compelling investment opportunity driven by
resilient fundamentals, steep discounts, and multiple catalysts for re-rating
over the short-to-medium term.
The investment process and private equity lens across public markets enables
the identification of investment opportunities with potential strategic value,
that could be attractive acquisitions for both corporate and financial buyers.
5) Final Thoughts
Despite a downturn in recent UK macroeconomic green shoots, with rising Gilt
yields and concerns around UK corporate earnings following the 2024 Autumn
Budget, we believe that the portfolio holdings are well positioned to weather
short term economic noise, through a combination of pricing power, self-help
productivity levers and structural growth drivers. It is likely that
increasing focus on company fundamentals and valuation discipline will be
required to outperform in this environment, which plays to the strengths of
the Company’s investment strategy and the Investment Manager’s approach.
Elevated levels of takeover activity within the UK equity market are likely to
continue if current trends prevail, with a number of further bids announced
during the period and post-period end. The Investment Manager’s investment
process and private equity lens across public markets enables the
identification of investment opportunities with potential strategic value that
could be attractive acquisitions for both corporate and financial buyers,
which is reflected in the frequency of portfolio exits as part of takeover
processes (including in this period).
We continue to believe that our fundamentals-focused investment style has the
potential to continue outperforming over the long term. We see significant
opportunities for long-term investors to back quality growth companies at
attractive valuations in an environment where agile smaller businesses with
strong management teams can take market share and build strong long-term
franchises. We will maintain our focus on building a high-conviction portfolio
of less cyclical, high-quality, strategically valuable businesses, which we
believe can deliver strong returns through the market cycle regardless of the
performance of the wider economy.
Top 10 Investee Company Review
Company Investment Thesis Developments
Brooks Macdonald * UK focused wealth management platform; structural growth given continuing transition to self-investment * Announced the disposal of its non-core international division, in addition to two small, strategically accretive bolt-on acquisitions
* Opportunity to leverage operational investments to grow margin and continue strong cash flow generation * (Post-period end) announced its intention to migrate from AIM to Main Market
* A consolidating market; opportunity for Brooks as both consolidator and potential target with recent takeover interest for sector peers
Ricardo * Global strategic, environmental and engineering consultancy * Announced the disposal of its legacy defence business in line with our value creation thesis
* Ongoing strategic transformation to refocus and prioritise the business towards higher growth, higher margin and less capital intensive activities * Acquisition of E3 an international environmental consultancy business
* Strong market position underpinned by significant sector expertise
XPS Pensions Group * Leading ‘challenger’ brand in the pensions consulting, advisory and administration market * Delivered FY25 interim results demonstrating 23% year-on-year revenue growth, and further analyst forecast upgrades
* Highly defensive – high degree of revenue visibility and largely non-discretionary, regulation driven client activity * Continued elevated demand for pensions advisory given Gilt volatility and changes in funding positions, and material sector developments (e.g. McCloud Remedy)
* Significant inflation pass-through ability
* Highly fragmented sector with recent M&A activity, providing opportunity to XPS as a consolidator and potential target
Costain Group * UK infrastructure delivery partner with particularly strong franchise presence across Rail and Water, which are both secular growth markets * Continued orderbook momentum particularly in winning AMP8 framework agreements in the Water sector
* Significantly better capitalised versus history, with a substantially de-risked contracting model (risk sharing and/or transfer vs. historically fixed price contracts)
* Embedded consultancy offering delivering material margin upside above and beyond project delivery
Fintel * Leading UK provider of technology enabled regulatory solutions and services to IFAs, financial institutions and other intermediaries * In-line interim FY24 results demonstrating encouraging growth in subscription revenues, which now account for 65% of total revenue
* Strategically valuable technology platform with opportunity to drive material growth in revenues and margins through supporting customers’ digitisation journeys * Small analyst forecast upgrades
Iomart Group * Integrated datacentre and cloud services provider * Announced a material acquisition of Atech, a highly accredited Microsoft Solutions Partner, in-line with the previously communicated strategy of becoming a leading UK hybrid cloud managed services provider
* Provides both self-managed infrastructure and cloud-managed services, with the latter being a key strategic focus area * In conjunction, announced some elevated churn in its legacy self managed infrastructure business
* Highly cash generative with significant recurring revenue
* Structural growth opportunity from hybrid cloud adoption
The Property Franchise Group (“TPFG”) * Franchised network of lettings-focused UK residential estate agencies * Announced interim FY24 results with 8% like for like growth in lettings managed service fees, and a 16% like for like growth in the sales agreed pipeline
* Attractive quality of earnings profile driven by lettings dominance and the group’s franchise model, with upside from franchisee cross-sell of financial services and property sales in a normalised housing transaction market
* Attractive financial metrics with high returns on capital employed, and cash generation
Netcall * Provider of AI-driven process automation and customer engagement solutions * Announced FY24 results demonstrating 9% growth in both automation and customer engagement sales, with a significant uptick in cloud contact centre revenues (in-line with the company’s shift to cloud strategy)
* Structural tailwinds driving adoption of process automation, catalysed further by rising employment costs and AI technology capabilities
* High levels of revenue visibility due to contracted revenues, with >100% Net Revenue Retention in FY24
Everplay Group (formerly Team17 Group) * Independent video game developer and publisher * Announced the appointment of a new CFO/COO (ex. Codemasters)
* Attractive quality of earnings underpinned by revenue generation from the back catalogue of titles, including the Worms franchise which, first released in 1995, is still a revenue contributor today * Reported interim FY24 results demonstrating 11% year on year revenue growth (with 30% growth from the back catalogue), and six new game launches
* High quality leadership team (ex. Codemasters) with a significant founder shareholder still involved in the business
Trufin * Provider of financing, payment and video game publishing software and services * Year end trading update guiding to revenue and EBITDA significantly ahead of market expectations
* Significant latent value when appraised on a sum of the parts basis * Exceptional trading from the group’s “Playstack” division, underpinned by strong takeup in the acclaimed Balatro and Abiotic Factor game launches
Portfolio as at 31 December 2024
Company Sector Classification Date of first investment Cost £’000 Valuation £’000 % of invested portfolio at 31 December 2024 % of invested portfolio at 30 June 2024 % of net assets
Brooks Macdonald Financial Services Jun 2016 18,355 16,346 9.9 10.3 9.8
Ricardo Business Services Sep 2021 18,133 16,344 9.9 8.2 9.8
XPS Pensions Group Business Services Jul 2019 5,384 15,896 9.7 23.8 9.5
Costain Group Business Services Jun 2024 11,187 12,904 7.8 2.1 7.7
Fintel Business Services Oct 2020 8,884 12,686 7.7 9.5 7.6
Iomart Group Technology Mar 2022 24,702 12,589 7.7 10.0 7.6
The Property Franchise Group Business Services Oct 2023 9,125 11,476 7.0 6.8 6.9
Netcall Technology Mar 2023 10,048 11,018 6.7 2.2 6.6
Everplay Group (formerly Team17 Group) Technology Dec 2023 10,875 10,886 6.6 6.0 6.5
Trufin Technology Jul 2023 7,805 10,135 6.2 3.0 6.1
Halfords Group Consumer Jun 2024 9,564 8,357 5.1 1.0 5.0
Tribal Group Technology Dec 2014 11,742 7,625 4.7 4.9 4.7
Diaceutics Healthcare Sep 2024 5,597 5,469 3.3 – 3.3
Benchmark Industrial Goods & Services Jun 2019 6,734 5,250 3.2 3.8 3.1
Inspired Business Services Jul 2020 13,754 4,168 2.5 4.1 2.5
Next 15 Group Business Services Oct 2024 3,393 3,247 2.0 – 1.9
Total investments 164,396 98.6
Cash 2,364 1.4
Net current liabilities (27) (0.0)
Total shareholders' equity 166,733 100.0
Ken Wotton
Gresham House Asset Management
25 February 2025
Statement of Directors’ Responsibilities, Going Concern, Principal Risks and
Uncertainties
Statement of Directors’ Responsibilities
The Directors confirm that to the best of their knowledge:
* the condensed set of financial statements contained within the Half-Yearly
Report has been prepared in accordance with IAS 34, ‘Interim Financial
Reporting’, and give a true and fair view of the assets, liabilities,
financial position and profit of the Company as required by Disclosure
Guidance and Transparency Rules (“DTR”) 4.2.4R;
* the Half-Yearly Report includes a fair review of the information required
by:
(a) DTR 4.2.7 of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year 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 year; and
(b) DTR 4.2.8 of the Disclosure Guidance and Transparency Rules, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the Company during that period; and any changes in
the related party transactions described in the last Annual Report that could
do so.
This Half-Yearly Report was approved by the Board of Directors on 25 February
2025 and the above responsibility statement was signed on its behalf by
William Barlow, Chairman.
Going Concern
The Company has adequate financial resources to meet its investment
commitments and, and as a consequence, the Directors believe that the Company
is well placed to manage its business risks. After making appropriate
enquiries and due consideration of the Company’s cash balances, the
liquidity of the Company’s investment portfolio, the cost base of the
Company and (as referenced in the Chairman’s Statement) consideration of the
2025 Realisation event, the Directors have a reasonable expectation that the
Company has adequate available financial resources to continue in operational
existence for the foreseeable future and accordingly have concluded that it is
appropriate to continue to adopt the going concern basis in preparing the
Half-Yearly Report, consistent with previous periods.
Principal Risks and Uncertainties
The overriding risks and uncertainties to an investor relate to the markets on
which are traded the Company’s shares and the shares of the companies in
which the Company invests.
The principal risks and uncertainties are set out on pages 22 to 24 of the
Annual Report for the year ended 30 June 2024, which is available at
www.strategicequitycapital.com.
The Company’s principal risks and uncertainties have not changed since the
date of the Annual Report and are not expected to change for the remaining six
months of the Company’s financial year.
Statement of Comprehensive Income
for the six month period to 31 December 2024
Six month period ended 31 December 2024 unaudited Year ended 30 June 2024 audited Six month period to 31 December 2023 unaudited
Revenue return £'000 Capital return £'000 Total £'000 Revenue return £’000 Capital return £’000 Total £’000 Revenue return £'000 Capital return £'000 Total £'000
Investments
(Losses)/gains on investments held at fair value through profit or loss - (18,649) (18,649) - 24,099 24,099 - 1,573 1,573
- (18,649) (18,649) - 24,099 24,099 - 1,573 1,573
Income
Dividends 2,822 - 2,822 3,997 2,111 6,108 2,344 - 2,344
Interest 39 - 39 55 - 55 31 - 31
Total income 2,861 - 2,861 4,052 2,111 6,163 2,375 - 2,375
Expenses
Investment Manager’s fee (669) - (669) (1,270) - (1,270) (616) - (616)
Performance fee - - - - (1,409) (1,409) - (369) (369)
Other expenses (447) - (447) (756) - (756) (408) - (408)
Total expenses (1,116) - (1,116) (2,026) (1,409) (3,435) (1,024) (369) (1,393)
Net return before taxation 1,745 (18,649) (16,904) 2,026 24,801 26,827 1,351 1,204 2,555
Taxation - - - - - - - - -
Net return and total comprehensive income for the period 1,745 (18,649) (16,904) 2,026 24,801 26,827 1,351 1,204 2,555
pence pence pence pence pence pence pence pence pence
Return per Ordinary share 3.70 (39.49) (35.79) 4.15 50.84 54.99 2.74 2.44 5.18
The total column of this statement represents the Statement of Comprehensive
Income. The supplementary revenue and capital return columns are both prepared
under guidance published by the AIC.
All items in the above statement derive from continuing operations. No
operations were acquired or discontinued in the period.
The notes form an integral part of these Half-Yearly financial statements.
Statement of Changes in Equity
for the six month period to 31 December 2024
Share capital £'000 Share premium account £'000 Special reserve £'000 Capital reserve £'000 Capital redemption reserve £’000 Revenue reserve £'000 Total £'000
For the six month period to 31 December 2024 unaudited
1 July 2024 6,353 11,300 - 165,489 2,897 3,926 189,965
Net return and total comprehensive income for the period - - - (18,649) - 1,745 (16,904)
Dividends paid - - - - - (1,648) (1,648)
Share buy-backs - - - (4,680) - - (4,680)
31 December 2024 6,353 11,300 - 142,160 2,897 4,023 166,733
For the year to 30 June 2024 audited
1 July 2023 6,353 11,300 3,590 142,952 2,897 3,131 170,223
Net return and total comprehensive income for the year - - - 24,801 - 2,026 26,827
Dividends paid - - - - - (1,231) (1,231)
Share buy-backs - - (3,590) (2,264) - - (5,854)
30 June 2024 6,353 11,300 - 165,489 2,897 3,926 189,965
For the six month period to 31 December 2023 unaudited
1 July 2023 6,353 11,300 3,590 142,952 2,897 3,131 170,223
Net return and total comprehensive income for the period - - - 1,204 - 1,351 2,555
Dividends paid - - - - - (1,231) (1,231)
Share buy-backs - - (3,035) - - - (3,035)
31 December 2023 6,353 11,300 555 144,156 2,897 3,251 168,512
The notes form an integral part of these Half-Yearly financial statements.
Balance Sheet
as at 31 December 2024
As at 31 December 2024 unaudited £'000 As at 30 June 2024 audited £'000 As at 31 December 2023 unaudited £'000
Non-current assets
Investments held at fair value through profit or loss 164,396 182,364 166,393
Current assets
Trade and other receivables 312 166 75
Cash and cash equivalents 2,364 9,153 2,979
2,676 9,319 3,054
Total assets 167,072 191,683 169,447
Current liabilities
Trade and other payables (339) (1,718) (935)
Net assets 166,733 189,965 168,512
Capital and reserves
Share capital 6,353 6,353 6,353
Share premium account 11,300 11,300 11,300
Special reserve - - 555
Capital reserve 142,160 165,489 144,156
Capital redemption reserve 2,897 2,897 2,897
Revenue reserve 4,023 3,926 3,251
Total shareholders’ equity 166,733 189,965 168,512
pence pence pence
Net asset value per share 358.41 396.87 345.83
number number number
Ordinary shares in issue 46,520,577 47,865,450 48,726,211
The notes form an integral part of these Half-Yearly financial statements.
Statement of Cash Flows
for the six month period to 31 December 2024
Six month period to 31 December 2024 unaudited £'000 Year ended 30 June 2024 audited £’000 Six month period to 31 December 2023 unaudited £'000
Operating activities
Net return before taxation (16,904) 26,827 2,555
Adjustment for losses/(gains) on investments 18,649 (24,099) (1,573)
Operating cash flows before movements in working capital 1,745 2,728 982
(Increase)/decrease in receivables (139) 102 321
(Decrease)/increase in payables (1,323) 1,134 209
Purchases of portfolio investments (42,205) (67,433) (32,988)
Sales of portfolio investments 41,461 78,465 37,479
Net cash flow from operating activities (461) 14,996 6,003
Financing activities
Equity dividends paid (1,648) (1,231) (1,231)
Shares bought back in the period (4,680) (5,854) (3,035)
Net cash flow from financing activities (6,328) (7,085) (4,266)
(Decrease)/increase in cash and cash equivalents for period (6,789) 7,911 1,737
Cash and cash equivalents at start of period 9,153 1,242 1,242
Cash and cash equivalents at period end 2,364 9,153 2,979
The notes form an integral part of these Half-Yearly financial statements.
Notes to the Financial Statements
1.1 Corporate information
Strategic Equity Capital plc is a public limited company incorporated and
domiciled in the United Kingdom, registered in England and Wales under the
Companies Act 2006 whose shares are publicly traded. The Company is an
investment company as defined by Section 833 of the Companies Act 2006.
The Company carries on business as an investment trust within the meaning of
Sections 1158/1159 of the Corporation Tax Act 2010.
1.2 Basis of preparation/statement of compliance
The Half-Yearly financial statements of the Company have been prepared on a
going concern basis and in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006. They do not
include all the information required for a full report and financial
statements and should be read in conjunction with the report and financial
statements of the Company for the year ended 30 June 2024, which have been
prepared in accordance with IFRS. Where presentational guidance set out in the
Statement of Recommended Practice (“SORP”) for investment trust companies
and venture capital trusts issued by the AIC is consistent with the
requirements of IFRS, the Directors have sought to prepare financial
statements on a basis compliant with the recommendations of the SORP.
The condensed Half-Yearly financial statements do not comprise statutory
accounts within the meaning of Section 434 of the Companies Act 2006. The
financial statements for the six month periods to 31 December 2024 and 31
December 2023 have not been either audited or reviewed by the Company’s
Auditor. Information for the year ended 30 June 2024 has been extracted from
the latest published Annual Report and financial statements, which have been
filed with the Registrar of Companies. The report of the Auditor on those
financial statements was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of the Companies
Act 2006.
Convention
The financial statements are presented in Sterling, being the currency of the
Primary Economic Environment in which the Company operates, rounded to the
nearest thousand.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business, being investment business.
1.3 Accounting policies
The accounting policies, presentation and method of computation used in these
condensed financial statements are consistent with those used in the
preparation of the financial statements for the year ended 30 June 2024.
1.4 New standards and interpretations not applied
Implementation of changes and accounting standards in the financial periods,
as outlined in the financial statements for the year ended 30 June 2024, had
no significant effect on the accounting or reporting of the Company.
2. Income
Six month period to 31 December 2024 unaudited Year ended 30 June 2024 audited Six month period to 31 December 2023 unaudited
£'000 £'000 £'000
Income from investments
UK dividend income 2,822 3,997 2,344
Other operating income
Liquidity interest 39 55 31
Total income 2,861 4,052 2,375
3. Other expenses
Six month period to 31 December 2024 unaudited Year ended 30 June 2024 audited Six month period to 31 December 2023 unaudited
£'000 £'000 £'000
Secretarial services 92 181 92
Auditor’s remuneration for:
Audit services 20 39 39
Directors’ remuneration 86 175 92
Other expenses 249 361 185
447 756 408
4. Dividend
The Company paid a final dividend of 3.50p in respect of the year ended 30
June 2024 (30 June 2023: 2.50p) per Ordinary share on 47,080,561 (30 June
2023: 49,233,260) shares, amounting to £1,647,820 (30 June 2023:
£1,230,832). The dividend was paid on 20 November 2024 to Shareholders on the
register at 10 October 2024. In line with previous years, the Board does not
intend to propose an interim dividend.
5. Return per Ordinary share
Six month period to 31 December 2024 Year ended 30 June 2024 Six month period to 31 December 2023
Revenue return pence Capital return pence Total pence Revenue return pence Capital return pence Total pence Revenue return pence Capital return pence Total pence
Return per Ordinary share 3.70 (39.49) (35.79) 4.15 50.84 54.99 2.74 2.44 5.18
Returns per Ordinary share are calculated based on 47,224,964 (30 June 2024:
48,778,400 and 31 December 2023: 49,290,313) being the weighted average number
of Ordinary shares, excluding shares held in treasury, in issue throughout the
period.
The Half Yearly Report will be posted to shareholders shortly. The Report will
also be available for download from the following website:
www.strategicequitycapital.com or on request from the Company Secretary.
National Storage Mechanism
A copy of the Half Yearly Report will be submitted shortly to the National
Storage Mechanism and will be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of this announcement.
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