Half-year Report

Edinburgh Investment Trust PLC

21 November 2023

 

LEI: 549300HV0VXCRONER808                                                                                                                                    21 November 2023

The Edinburgh Investment Trust plc

HALF-YEARLY FINANCIAL REPORT

SIX MONTHS TO 30 SEPTEMBER 2023

21 November 2023 - The Directors of the Edinburgh Investment Trust plc ("the Company") have today announced the interim results for the period ended 30 September 2023.

Highlights:

·    Net Asset Value (NAV) per share (with debt at fair value) on a total return basis increased by 4.5% compared to the 1.4% return on the FTSE All-Share Index

·    The share price total return was 3.3%

·    First interim dividend declared on 25 October 2023, up 4.7% from the same period in 2022, at 6.7p per share

·    Net gearing (debt at fair value) at 30 September 2023 of 4.1%

·    Share price discount to NAV moved from 7.5% to 8.7% in the six months to 30 September 2023

·    Since James de Uphaugh became Manager of the Company in March 2020, the cumulative NAV return of 73.3% and the share price return of 81.2% have outperformed the FTSE All-Share return of 49.5 (all in total return terms)

Elisabeth Stheeman, Chair, said: "Your Company has produced a Net Asset Value (NAV) total return of 4.5% over the period, and a share price return of 3.3%. These compare with 1.4% for the comparator FTSE All-Share Index. It is pleasing to be able to record that the NAV return now also exceeds that of the index over five and ten years, reflecting the strong progress on many fronts in recent years.

"We announced last month that James de Uphaugh, the Company's Portfolio Manager, will retire in February 2024 after 36 years in the industry. James will be replaced as Portfolio Manager by his colleague Imran Sattar. As part of the succession, Imran has been appointed the Company's deputy Portfolio Manager, replacing Chris Field who has recently retired from Liontrust. I would like to thank James and Chris for their careful stewardship of the Company's portfolio and strong investment results since the appointment of the investment management team in March 2020.

"Once in place as the Company's Portfolio Manager, Imran will continue to apply the same flexible investment process that has been the hallmark of the portfolio for the last three and a half years. The rest of the Board and I look forward to working with Imran. We would like to see Edinburgh considered as a natural 'core' equity investment for savers in the UK and beyond. There is much to be done to achieve this objective, but we are confident that we are making strides towards that goal."

James de Uphaugh, Portfolio Manager, said: "The equity market backdrop improved over the period, principally because inflation has dropped from the previous elevated double-digit levels, but the higher level of interest rates looks likely to persist for some years to come. This means a changed environment for investing when compared with the very low levels of interest rates that have prevailed for most of the period since the 2008/09 global financial crisis.

"On a three-year view, we believe there is potential for a pleasant surprise from UK equities. While it is hard to identify in advance a specific catalyst that will ignite a rerating of UK equities, we do note that the market has absorbed a lot of selling since 2016. At the same time, we observe a pick-up in interest in UK companies by overseas corporates.

"To meet the Company's two investment objectives, we take a total return approach. Within the Company's investment portfolio, we aim to deliver exposure to a diversified range of economic and market themes. Reflecting the diversified portfolio, the contributors to returns came from a broad selection of holdings. Prominent stocks included Centrica (gas supply), Marks & Spencer (retail) and Admiral (insurance).

"Being the Portfolio Manager of your Company for the last three and a half years has been a highlight of my career. While I will miss the engagement with shareholders and the Board alike, I am delighted that my longstanding colleague Imran Sattar will be the next Portfolio Manager. The same investment process and collegiate team approach will remain in place once Imran takes over next year."

Enquiries

Liontrust Fund Partners LLP

James Mowat                                        [phone]

[e-mail]

Investec Bank plc

Tom Skinner                                            + 44 20 7597 4000

Montfort Communications

Gay Collins                                             [phone]

Shireen Farhana                                     [phone]

Ella Henderson                                       [phone]

[e-mail]

Apex Listed Companies Services (UK) Limited

(Company Secretary)        

Nadezda Weissert                                 [phone] 

Notes to editors

About The Edinburgh Investment Trust plc

Founded over 130 years ago, The Edinburgh Investment Trust plc is listed on the London Stock Exchange and is included in the FTSE 250 index. It invests primarily in a portfolio of UK listed shares and has net assets of approximately £1.1 billion. The Company's twin investment objectives for the long term are to outperform the FTSE All-Share Index on a Net Asset Value (NAV) basis and to produce dividend growth in excess of the rate of UK inflation. Liontrust Fund Partners LLP became the Company's AIFM with effect from 1 April 2022.

The Edinburgh Investment Trust plc

HALF-YEARLY FINANCIAL REPORT

SIX MONTHS TO 30 SEPTEMBER 2023

£1,122m

NET ASSETS (2022: £1,003M)

668.00p

SHARE PRICE (2022: 553.00p)

(8.7)%

DISCOUNT* (2022: (10.6)%)

4.1%

GEARING (NET)* (2022: 4.4%)

*       Alternative Performance Measures (see page 27 of the Half-Yearly Financial Report)

Investment Objective

The Edinburgh Investment Trust plc (the 'Company' or the 'Trust' or 'Edinburgh') is an investment trust whose investment objective is to invest primarily in UK securities with the long-term objective of achieving:

1.   an increase of the Net Asset Value ('NAV') per share in excess of the growth in the FTSE All-Share Index; and

2.   growth in dividends per share in excess of the rate of UK inflation

The Company will generally invest in companies quoted on a recognised stock exchange in the UK. The Company may also invest up to 20% of the portfolio in securities listed on stock exchanges outside the UK. The portfolio is selected on the basis of assessment of fundamental value of individual securities and is not structured on the basis of industry weightings.

Nature of the Company

The Company is a publicly listed Investment Company whose shares are traded on the London Stock Exchange ('LSE'). The business of the Company consists of investing the pooled funds of its shareholders, according to a specified investment objective and policy (set out on page 14 of the Company's 2023 Annual Financial Report), with the aim of spreading investment risk and generating a return for shareholders.

The Company uses borrowing to enhance returns to shareholders. This increases the risk to shareholders should the value of investments fall.

The Company has contracted an external manager, Liontrust Fund Partners LLP, ('LFP' or the 'Manager' or 'Portfolio Manager') as Alternative Investment Fund Manager ('AIFM') to manage its investments. Other administrative functions are contracted to external service providers. The Company has a Board of non-executive Directors who oversee and monitor the activities of the Manager and other service providers on behalf of shareholders and ensure that the investment objective and policy are adhered to. The Company has no employees.

The Company's ordinary shares qualify to be considered as mainstream investment products suitable for promotion to retail investors. The Company's ordinary shares are eligible for investment in an ISA.

Strategic Report

Financial Information and Performance Statistics

	Six months to
	30 September
	2023
Total Return(1)(3)(4) (all with dividends reinvested)	% Change
Net asset value(1) (NAV) - debt at fair value	+4.5
Share price(2)	+3.3
FTSE All-Share Index(2)	+1.4

The Company's benchmark is the FTSE All-Share Index.

		At 30 September	At 31 March
Capital Return(1)(4)		2023	2023	Change %
Net asset value - debt at fair value		731.79p	713.75p	+2.5
Share price(2)		668.00p	660.00p	+1.2
FTSE All-Share Index(2)		4,127.24	4,157.88	-0.7
Discount(1)(3)(4) - debt at fair value		(8.7)%	(7.5)%
Gearing (debt at fair value)(1)(3)(4)	- gross gearing	5.8%	6.6%
	- net gearing	4.1%	4.7%

	Six months to	Six months to
	30 September	30 September
Revenue Return and Dividends(3)	2023	2022	Change %
Revenue return per ordinary share ordinary share	11.54p	14.77p	-21.9
First interim dividend(5)	6.70p	6.40p	+4.7
Consumer Price Index(2)(4) - annual change	6.7%	10.2%

Notes:

⁽¹⁾        These terms are defined in the Glossary of Terms and Alternative Performance Measures, on pages 27 to 30 of the Half-Yearly Financial Report. NAV with debt at fair value is widely used by the investment company sector for the reporting of performance, premium or discount, gearing and ongoing charges. Further details are provided in the Alternative Performance Measures on pages 83 to 86 of the Company's 2023 Annual Financial Report.

⁽²⁾        Source: Refinitiv.

⁽³⁾        Key Performance Indicator.

⁽⁴⁾        Alternative Performance Measures.

⁽⁵⁾        Dividends declared in respect of the financial year.

Chair's Statement

ELISABETH STHEEMAN / CHAIR

PERFORMANCE

Your Company has produced a Net Asset Value (NAV) total return of 4.5% over the period, and a share price return of 3.3%. These compare with 1.4% for the comparator FTSE All‑Share Index. The majority of this outperformance has come, as we would expect, from stock selection. The most significant contributions came from two of the more contrarian positions in the portfolio: Centrica and Marks & Spencer. There were no particular detractors of note. The Manager expands on the market backdrop and performance in his section of this report. There was also a further contribution to the NAV from the fair value of the Company's debt: as bond yields have continued to rise, the fair value of the Company's long-term borrowings has fallen. Over the period the value of the debt fell by £10m (see the Alternative Performance Measures section of this report, which set out the detail), or approximately 0.9% of average NAV. The share price return of 3.3% was slightly lower than the NAV return, as the discount widened a little. I discuss the discount, and how we are addressing it, below.

As ever, I would recommend that any assessment of investment performance is based on longer-term returns. The period since March 2020, which is the full length of the Manager's tenure, is the longest period we can assess. Over this three and a half year period, the NAV total return has been 73.3%, versus a rise in the FTSE All‑Share Index of 49.5%. The share price total return is 81.2%, reflecting a narrowing of the discount since March 2020.

It is pleasing to be able to record that the NAV return now also exceeds that of the index over five and ten years, albeit modestly in the case of the five year return. Nevertheless, this is the first time in several years that we have been in this position, reflecting the strong progress on many fronts in recent years.

DIVIDEND

The Board declared a first interim of 6.7p per share in October. The interim accounts in this report record six month income comprising underlying regular dividend income of £19.9m and special dividends of £0.5m. Total income for the period, including some welcome interest on uninvested cash, is therefore £20.9m. This has reduced compared with the same period last year, but last year's income was boosted by several special dividends. Overall, the level of dividend income for the portfolio remains in line with our longer term expectations.

BORROWINGS

There have not been any changes to the debt profile of the Company. We continue to operate with £120m of debt in nominal terms which is c.10% of NAV. Net gearing measured at fair value is a more modest 4.1% of NAV. The Company's debt has an average of 24 years to run and a blended cost of a fixed 2.4% per annum. The rates of interest in the market now are far higher: we have a competitive advantage from having secured this debt at such low rates.

SHARE PRICE DISCOUNT TO NET ASSET VALUE

The Company's shares continue to trade at a discount. This widened slightly over the period, reflecting wider discounts for many equity investment trusts. This explains why the share price return was a little lower than that of the Net Asset Value. We monitor the discount relative to peers as well as against the Company's own history. Over the period we bought back shares actively, as did many other investment trusts, with 3% of the Company's shares purchased over the period. These buybacks should both help narrow the discount, and be a sound allocation of capital: buying back the Company's shares at a discount unarguably enhances NAV returns for those shareholders that remain invested. We think of share buybacks as one of a number of factors designed to help narrow the discount. Other factors include generating investor confidence in a repeatable investment process, careful management of the balance sheet of the Company, and raising the profile of the Company through a range of marketing initiatives.

MARKETING

We were delighted to host a well-attended Annual General Meeting in Edinburgh in July. Similarly, we hosted a popular presentation to retail investors in central London in October. Thank you to the shareholders who took the trouble to attend one or both of these events. Videos of these presentations have since been posted to the Company's website. We will flag other events and presentations on the website and via other media (including the occasional old-fashioned letter via Royal Mail - this helped generate much interest in the London event). Shareholders can also subscribe to updates via the website, which is a quick and easy way to ensure that you are up to date on all the Company's different activities.

Other promotional activities are underway - for example in both print media and online - and the Board carefully reviews the success of these initiatives against a series of key performance indicators.

MANAGER SUCCESSION

We announced last month that James de Uphaugh, the Company's Portfolio Manager, will retire in February 2024 after 36 years in the industry. James will continue to manage the Company's portfolio until February and will then be replaced as Portfolio Manager by his colleague Imran Sattar. As part of the succession, Imran has been appointed the Company's deputy Portfolio Manager, replacing Chris Field who has recently retired from Liontrust. I would like to thank James and Chris for their careful stewardship of the Company's portfolio and strong investment results since the appointment of the investment management team in March 2020.

Imran has been a member of the Liontrust Global Fundamental Team ('GFT') since 2018, managing UK equity client portfolios jointly alongside James and Chris. Imran is also lead manager for another UK equity strategy in his own right. Before joining the GFT, he was a Managing Director and Fund Manager at BlackRock, where he managed UK equity funds with combined assets of over £2 billion. Imran joined Mercury Asset Management (now BlackRock) in 1997, where he first worked with James. He will become head of the GFT in February 2024. Imran has already been out introducing himself to shareholders and this process will continue ahead of February's transition.

Once in place as the Company's Portfolio Manager, Imran will continue to apply the same flexible investment process that has been the hallmark of the portfolio since March 2020. Other than the change of Portfolio Manager, there will be no change to the Company's two investment objectives, strategy or the portfolio's key features - namely a high conviction portfolio of 40 to 50 differentiated holdings, primarily invested in UK equities, underpinned by fundamental company research. Imran, like James, will also be supported by a collegiate team of nine fund managers and analysts: the depth of experience across the GFT will be an important factor to ensure the repeatability of attractive long-term returns in the years ahead. The rest of the Board and I look forward to working with Imran. We will make a further announcement about the wider team responsible for managing the Company, including a deputy Portfolio Manager, in due course.

OUTLOOK

As well as delivering on the Company's two investment objectives, we would like to see Edinburgh considered as a natural 'core' equity investment for savers in the UK and beyond. There is much to be done to achieve this objective, but we are confident that we are making strides towards that goal. A new Portfolio Manager will take the Company forward in 2024 and we look forward to working with him and his colleagues in the years ahead.

ELISABETH STHEEMAN / Chair / 20 NOVEMBER 2023

Portfolio Manager's Report

For the period ended 30 September 2023

JAMES DE UPHAUGH /
PORTFOLIO MANAGER

MEETING THE COMPANY'S OBJECTIVES

To meet the Company's two investment objectives, we take a total return approach. By this, we mean seeking an attractive combination of capital and income. We apply a flexible investment process, with an open-minded approach to investments, delivered through a team approach. Within the Company's investment portfolio, we aim to deliver exposure to a diversified range of economic and market themes. As the Chair has noted in her statement, I will retire in 2024. Being the Portfolio Manager of your Company for the last three and a half years has been a highlight of my career. While I will miss the engagement with shareholders and the Board alike, I am delighted that my longstanding colleague Imran Sattar will be the next Portfolio Manager. The same investment process and collegiate team approach will remain in place once Imran takes over next year.

PERFORMANCE REVIEW

The equity market backdrop improved over the period, principally because inflation has dropped from the previous elevated double-digit levels. This has enabled the Bank of England to slow the pace of interest rate rises. Nonetheless, the higher level of interest rates looks likely to persist for some years to come. This means a changed environment for investing when compared with the very low levels of interest rates that have prevailed for most of the period since the 2008/09 global financial crisis.

The total return for the portfolio over the six month reporting period was modestly positive, and a little ahead of the index return.

Reflecting the diversified portfolio, the contributors to returns came from a broad selection of holdings. Prominent stocks included Centrica (gas supply), Marks & Spencer (retail) and Admiral (insurance). As is sometimes the case, avoiding large index constituents that fall in price can also help relative returns. Diageo, Prudential and British American Tobacco fell into this category over the last six months.

On the negative ledger, the electrical distribution group RS continues to grapple with unexpected management change and less than sparky trading. WPP was also weak - we have since reduced the holding. NatWest has been caught up in the general change in sentiment towards banks - a reaction to the Silicon Valley Bank collapse earlier in the year, combined with the self-made difficulty of the unplanned departure of its chief executive.

TRADING ACTIVITY

In aggregate, activity has been relatively low, with portfolio turnover of 7%. Over the full tenure of our appointment, annual turnover has been 25% implying a typical holding period for each stock of four years. The biggest purchases in this period have been Lloyds Bank, Haleon, Marks & Spencer and Publicis.

We would highlight the purchase of Haleon, which we believe has arrived on the market at too low a price following its demerger from GSK. Demergers are typically of interest to us - they tend to be unloved assets that come to the market without all the excitement of a normal flotation. The purchase was funded by a sale of Reckitt, which is now struggling to generate positive underlying sales growth.

The biggest sales were WPP, Standard Chartered, Shell and Tesco. The sale of WPP funded the Publicis investment - WPP has greater exposure to legacy advertising which faces greater challenges, whereas Publicis has made some bold but prescient moves to build up its exposure to the increasingly important 'data' side of the advertising market.

BORROWINGS

As the Chair has noted in her statement, the fair value of the debt has further reduced over the period in line with the bond market. We ended the period with net gearing (i.e. after adjusting for cash balances) of 4.1%. As the last practical date before signing this report, net gearing was 5.6%. Were we to have had a fully invested portfolio (i.e. no cash and all the debt invested in the equity portfolio) at the end of September, gearing would have been 5.8%. We are firmly of the view that there is significant upside to UK equities (see Outlook comment below) and as such we are deploying the gearing in full, bar a normal c2% cash balance.

OUTLOOK

In our opinion, UK equities are undervalued in absolute terms and against peers. For example, the market's free cash flow yield is the highest of major markets. Even if you adjust for the cyclical element of the market (i.e. allowing for the higher exposure of the market to e.g. banks and oil stocks), it still appears very attractively valued.

While it is hard to identify in advance a specific catalyst that will ignite a rerating of UK equities, we do note that the market has absorbed a lot of selling since 2016, particularly by pension and retail investors. At the same time, we observe a pick-up in interest in UK companies by overseas corporates. Taking all this together, we believe there is potential for a pleasant surprise from UK equities on a three year view.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE PORTFOLIO ISSUES: HOW THEY ARE MANAGED

FOCUSING ON WHAT MATTERS

With a mandate to manage the Trust's assets and a long term investment perspective, the Global Fundamental Team ('GFT') looks holistically at companies when making investment decisions. It examines macro-economic factors which address financial, societal or environmental changes that a group may face (for example new technology, demographic or climate change). The team also considers internal changes that may take place within an organisation including restructuring, closing business lines, or pivoting to new business models and products. Such internal changes may enable a company to re-engineer itself so that its future is very different from its past.

As part of these examinations, the GFT undertakes materiality assessments to identify and prioritise the key exposures that a company faces over the investable time horizon of the Trust, which is typically three years. These assessments bring together the external factors and internal changes and enable the team to determine where the greatest threats and opportunities lie for each holding. These key issues lead the team's engagement with companies. The team assigns Resiliency scores, using a 1-5 scale, based on how well a holding is managing its key exposures. It also assigns Conviction scores, again on a 1-5 scale, which reflect the team's conviction in owning a stock. Portfolio weightings are determined to some extent by conviction scores and changes in these over time.

Within this context, analysing a company's ESG exposures becomes straightforward. Whether these exposures focus on climate change areas, supply chain matters, diversity stats, or other areas, the team takes a holistic approach to ensure that it considers the most likely and most potentially impactful exposures for a holding. It is not uncommon for some ESG related risks / opportunities to have a longer time horizon than the Trust's focus - for example, where physical or transitional risks arise from global warming. The team, therefore, also considers a group's emerging exposures within the context of a group's macroeconomic and evolving environment - this helps the team develop a view of how competitive a group will be in three years and beyond.

IMPLEMENTING OUR MATERIALITY PROCESS IN PRACTICE

Haleon

Edinburgh acquired a position in Haleon as a result of its spin-out from GSK. Since then the team has been increasing the weighting in the holding across client portfolios, including for the Trust. The team has raised its conviction and resiliency scores for Haleon to 4 (from 3) as Haleon's management has demonstrated its ability to drive attractive topline growth with an appropriate balance of price and volume. Maintaining volume growth is key for brand health and thus the long duration growth of Haleon's portfolio. Driving attractive topline growth is a key identified material risk/opportunity for Haleon, growing revenue through increased household penetration, market share gains, and portfolio innovation and expansion. Haleon is a leading consumer health company with a strong scientific heritage and, as such, plays an important role as a trusted brand as consumers increasingly make their own decisions about healthcare.

BENEFITS OF OUR APPROACH

One of the many virtues of this approach is nuance. Investors know that companies come in all shapes, sizes, and management abilities, and a holistic approach makes understanding nuance possible. Take, for example, the risks and opportunities from climate change. For one group, a key concern might be the speed at which it is (or isn't) transitioning from fossil fuels to greener energy. For another group, a prime concern could be that all of its manufacturing plants are concentrated in areas of extreme flood risk. And a third company might lack the board expertise required for managing climate issues and linking this directly with pay and group strategy. Appreciating the nuance in these is critical - not only does it lead to much better engagement with a group and increases the chance of promoting positive change, it also helps the team make more informed investment decisions for the fund.

One example of employing nuance in engagement over the past year has been in the team's engagement with banks on their approach to incorporating carbon considerations in lending decisions. While lending decisions have ramifications beyond the investable time horizon of the fund, having these discussions with banks has helped the team understand banks' asset allocation decisions and expectations for return on investment. Inevitably, different banks manage climate risks differently - some may not enforce specific exclusions on coal or fossil fuels development, and instead may score loans based on longer term risks, including climate exposures. Others may take a more blunt approach, refusing to finance projects that do not have specific climate related targets and management in place. Each approach has costs and benefits associated with it and the GFT takes these into account when engaging with management and when analysing the company for inclusion in the Trust. The importance comes in understanding what matters most - and then engaging, voting, and making investment decisions with that in mind.

EXAMPLES OF ENGAGEMENT ON CARBON ISSUES

In the last year, the team undertook several engagements with holdings that focused on carbon. Two examples are HSBC and Standard Chartered. In both instances, the GFT aimed to understand how the groups take carbon and climate change exposures into considerations when making loan or funding decisions. The team wanted to understand what factors these banks see as 'red lines', if any; what time horizon the groups use when thinking about climate related exposures; and how the evaluation of exposures impacts the cost of borrowing money, if at all.

HSBC

During engagement with HSBC in February 2023, the group reported that it is building a new centre of excellence in terms of net zero which includes regional hubs with focus on regulatory changes. The focus will also cover carbon impacts related to real estate (commercial and residential), shipping, oil and gas, utilities, and agriculture. When evaluating projects, HSBC assesses clients' transition plans and whether clients' plans align with net zero. In assessing clients' transition plans, HSBC uses sector-specific indicators over 3 areas: climate transition plans, policy compliance and finance related emissions. HSBC has a policy to phase out the financing of coal-fired power and thermal coal mining in the EU from 2030 and in the other markets by 2040. The group engages with clients with the greatest material exposures to help formulate a decarbonisation plan that is stretching but achievable. HSBC's approach to carbon also covers its underwriting activities, as well.

JAMES DE UPHAUGH / Portfolio Manager

20 NOVEMBER 2023

Interim Management Report

The Directors are required to provide an Interim Management Report in accordance with the Financial Conduct Authority ('FCA') Disclosure Guidance and Transparency Rules ('DTR'). The Directors consider that the Chair's Statement on pages 4 and 5 and the Portfolio Manager's Report on pages 6 to 7 of the Half-Yearly Financial Report provide details of the important events which have occurred during the six months ended 30 September 2023 ('Period') and their impact on the financial statements.

The statement on related party transactions and the Directors' Statement of Responsibility (below), the Chair's Statement and the Portfolio Manager's Report together constitute the Interim Management Report of the Company for the Period. The outlook for the Company for the remaining six months of the year to 31 March 2024 is discussed in the Chair's Statement and the Portfolio Manager's Report.

Principal Risks and Uncertainties

A detailed explanation of the principal risks and uncertainties facing the Company can be found on pages 18 to 21 of the 2023 Annual Financial Report, which is available on the Company's website at www.edinburgh-investment-trust.co.uk

Since the publication of the 2023 Annual Financial Report and as detailed above, the risks posed by the war in Ukraine, inflation and the secondary effects of the COVID-19 pandemic continue to be a serious threat to the global economy. In addition, the recent tragic events in Israel and Gaza and the potential for further escalation provide further risk to the stability of the global economy. The Board continues to monitor these situations closely and has been in regular contact with the Manager and the Company's other service providers to assess and mitigate the impact on the Company's investment objectives, investment portfolio and shareholders.

Otherwise, in the view of the Board, these principal risks and uncertainties are substantially unchanged from the previous year end and are as much applicable to the remaining six months of the financial year, as they were to the six months under review.

The principal risk factors relating to the Company can be summarised as follows:

Market Risk - a fall in the stock market as a whole will affect the performance of the portfolio as well as the performance of individual portfolio investments; it also includes interest rate, inflation and currency risks; market risk may be impacted by increased volatility during the continuing period of uncertainty arising from the war in Ukraine, energy costs, supply chain disruption and potential further evolution of COVID-19;

Investment Performance Risk - this is the stock-specific risk that the stock selection process may not achieve the Company's published objectives;

Income/Dividend Risk - the Company is subject to the risk of not generating enough income from its investments to meet its objectives. The Board monitors this risk by reviewing income and dividend forecasts and comparing them with budget. The Board also considers the level of income at each meeting and decides on the dividends to be paid. The Board can use the Company's income and capital reserves to supplement dividends if needed;

Borrowing Risk - the Company has fixed long-term borrowings through its Unsecured Senior Loan Notes. If the Company's investments fall in value, gearing will result in an increased adverse impact on performance;

Share Price Risk - the Company's prospects and NAV may not be fully reflected in the share price;

Corporate Governance and Internal Controls Risk - the Board has delegated to third-party service providers the management of the investment portfolio, depositary and custody services, registration services, accounting and company secretarial services and therefore relies on these service providers to manage the associated risks;

Reliance on Manager and other Third-Party Service Providers Risk - the Company has no employees, so is reliant upon the performance of third-party service providers for it to function particularly the Manager, Company Secretary, administrator, depositary, custodian and registrar;

Physical and Transitional Climate Change - climate change may pose significant risks to investments, as it affects the operations, value, business model and dividends of the companies we invest in. We also face the challenge of adapting to a low-carbon economy and responding to the expectations of investors, regulators and policymakers. Our Portfolio Manager evaluates these risks and considers the potential impact of climate change on each portfolio holding. You can find more details on this process in the s.172 statement on page 23 of the Annual Report. We also diversify our portfolio by investing in businesses across different regions, which helps us mitigate the risk of location-specific weather events. We monitor and review the climate change related risks regularly and follow any new guidance;

Emerging Risks - the Company may be affected by unexpected macro-economic changes in inflation, interest rates and energy costs. It may also be affected by the changing regulatory landscape around ESG issues. Whilst these risks currently exist, the extent of them is yet to fully emerge but they are regularly assessed by the Manager and the Board.

Other risks such as business, cyber security, strategic, policy and political risks, as well as regulatory risks (such as an adverse change in the tax treatment of investment companies) and the perceived impact of the Manager ceasing to be involved with the Company, are all considered.

Investments in Order of Valuation

AS AT 30 SEPTEMBER 2023

UK LISTED ORDINARY SHARES UNLESS STATED OTHERWISE

		Value	% of
Investment	Sector	£'000	Portfolio
Shell	Oil, Gas and Coal	92,370	7.6
Centrica	Gas, Water and Multi-Utilities	69,654	5.7
BAE Systems	Aerospace and Defence	62,251	5.1
Unilever	Personal Care, Drug and Grocery Stores	56,237	4.6
Tesco	Personal Care, Drug and Grocery Stores	53,236	4.4
AstraZeneca	Pharmaceuticals and Biotechnology	49,360	4.1
NatWest	Banks	44,747	3.7
Ashtead	Industrial Transportation	40,371	3.3
Marks & Spencer	Retailers	40,311	3.3
HSBC	Banks	39,079	3.2
TEN TOP HOLDINGS		547,616	45.0
Anglo American	Industrial Metals and Mining	37,918	3.1
Weir	Industrial Engineering	35,944	3.0
Haleon	Pharmaceuticals and Biotechnology	32,852	2.7
GSK	Pharmaceuticals and Biotechnology	32,518	2.7
Dunelm	Retailers	32,049	2.5
Hays	Industrial Support Services	28,051	2.3
Admiral	Non-Life Insurance	27,184	2.2
Compass	Consumer Services	26,472	2.2
RS	Industrial Support Services	25,560	2.1
Novartis - Swiss Listed	Pharmaceuticals and Biotechnology	23,907	2.0
TWENTY TOP HOLDINGS		850,071	69.8
Standard Chartered	Banks	22,721	1.9
BP	Oil, Gas and Coal	22,603	1.9
Mondi	General Industrials	22,503	1.8
Serco	Industrial Support Services	22,463	1.8
ConvaTec	Medical Equipment and Services	21,192	1.7
Whitbread	Travel and Leisure	20,471	1.7
Greggs	Personal Care, Drug and Grocery Stores	18,705	1.5
easyJet	Travel and Leisure	15,284	1.4
Smith & Nephew	Medical Equipment and Services	14,977	1.2
Thales - French Listed	Aerospace and Defence	13,300	1.1
THIRTY TOP HOLDINGS		1,044,290	85.8
Lloyds Bank	Banks	12,720	1.0
WPP	Media	11,930	1.0
CNH Industrial	Industrial Engineering	11,801	1.0
Howden Joinery	Retailers	11,790	1.0
KPN - Dutch Listed	Telecommunications Service Providers	11,709	0.9
Redrow	Household Goods and Home Construction	11,490	0.9
Newmont - US Listed	Precious Metals and Mining	11,045	0.9
Bellway	Household Goods and Home Construction	11,039	0.9
Travis Perkins	Industrial Support Services	10,919	0.9
Ascential	Software and Computer Services	10,730	0.9
FORTY TOP HOLDINGS		1,159,463	95.2
Publicis - French Listed	Media	9,620	0.8
Roche - Swiss Listed	Pharmaceuticals and Biotechnology	8,179	0.7
Intel - US Listed	Technology Hardware and Equipment	7,606	0.6
QinetiQ	Aerospace and Defence	7,248	0.6
Morgan Sindall	Construction and Materials	5,427	0.5
LondonMetric Property	Real Estate Investment Trusts	5,019	0.4
Marshalls	Construction and Materials	4,853	0.4
Siemens - German Listed	General Industrials	4,534	0.4
Pets at Home	Retailers	3,686	0.3
Vesuvius	Industrial Engineering	1,799	0.1
FIFTY TOP HOLDINGS		1,217,434	100.0
Eurovestech (UQ)	Investment Banking and Brokerage Services	-	-
Raven Property (S) - Preference shares	Real Estate Investment Services	-	-
TOTAL HOLDINGS 52 (31 March 2023:46)		1,217,434	100.0

UQ - Unquoted Investment

S - Delisted

Governance

Going Concern, Related Party Transactions and Statement of Directors' Responsibilities in respect of the preparation of the half-yearly financial report

GOING CONCERN

This Half-Yearly Financial Report has been prepared on a going concern basis. The Directors consider this is the appropriate basis as the Company has adequate resources to continue in operational existence for the foreseeable future being at least twelve months from the date of this report. In considering this, the Directors have reviewed the Company's investment objective and capital structure generally. The Directors considered the diversified portfolio of readily realisable securities which can be used to meet funding commitments, the long term nature and obligations of the Unsecured Senior Loan Notes, and the ability of the Company to meet all its liabilities and ongoing expenses from its assets and revenue. The Directors also considered revenue forecasts for the forthcoming year and future dividend payments and accumulated revenue reserves in concluding that the going concern basis is appropriate.

RELATED PARTY TRANSACTIONS

Under UK Generally Accepted Accounting Practice (UK Accounting Standards and applicable law) and in accordance with the definition provided by Listing Rule 11.1.4, the Company has identified the Directors as related parties. No other related parties have been identified. No transactions with related parties have taken place which have materially affected the financial position or the performance of the Company.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Half-Yearly Financial Report using accounting policies consistent with applicable law and UK Accounting Standards.

The Directors confirm that to the best of their knowledge:

-    the condensed set of financial statements has been prepared in accordance with the FRS 104 Interim Financial Reporting; and

-    the interim management report includes a fair review of the information required by Disclosure Guidance and Transparency Rules (DTR):

(a)  DTR 4.2.7R, 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 4.2.8R, 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.

The Half-Yearly Financial Report has not been audited or reviewed by the Company's auditor.

Signed on behalf of the Board of Directors

ELISABETH STHEEMAN
CHAIR
20 NOVEMBER 2023

Financial Review

Condensed Income Statement

	Six Months to 30 September 2023			Six Months to 30 September 2022
		(Unaudited)			(Unaudited)
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments held at fair value	-	21,802	21,802	-	(159,708)	(159,708)
Losses on foreign exchange	-	(48)	(48)	-	(223)	(223)
Income - note 2	20,883	-	20,883	28,071	-	28,071
	20,883	21,754	42,637	28,071	(159,931)	(131,860)
Investment management fee - note 3	(759)	(1,772)	(2,531)	(722)	(1,686)	(2,408)
Other expenses	(611)	(5)	(616)	(504)	(4)	(508)
Net return before finance costs and taxation	19,513	19,977	39,490	26,845	(161,621)	(134,776)
Finance costs - note 3	(472)	(1,006)	(1,478)	(1,285)	(3,002)	(4,287)
Return on ordinary activities before taxation	19,041	18,971	38,012	25,560	(164,623)	(139,063)
Taxation - note 4	(144)	-	(144)	(376)	-	(376)
Return on ordinary activities after taxation for the financial period	18,897	18,971	37,868	25,184	(164,623)	(139,439)
Return per ordinary share:
Basic	11.54p	11.58p	23.12p	14.77p	(96.56)p	(81.79)p
Weighted average number of ordinary shares in issue during the period			163,782,164			170,486,924

The 'total' columns of this statement represent the Company's income statement, prepared in accordance with UK Accounting Standards. The 'return on ordinary activities after taxation for the financial period' is the total comprehensive income/(expense) and therefore no additional statement of other comprehensive income is presented. The supplementary 'revenue' and 'capital' columns are presented for information purposes in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies. All items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the period.

Condensed Statement of Changes in Equity

			Capital
	Share	Share	Redemption	Capital	Revenue
	Capital	Premium	Reserve	Reserve	Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
For the six months ended 30 September 2023 (Unaudited)
At 31 March 2023	48,917	10,394	24,676	1,003,989	51,368	1,139,344
Return on ordinary activities	-	-	-	18,971	18,897	37,868
Dividends paid - note 5	-	-	-	-	(22,086)	(22,086)
Shares bought back and held in treasury	-	-	-	(33,177)	-	(33,177)
At 30 September 2023	48,917	10,394	24,676	989,783	48,179	1,121,949
For the six months ended 30 September 2022 (Unaudited)
At 31 March 2022	48,917	10,394	24,676	1,041,086	50,764	1,175,837
Return on ordinary activities	-	-	-	(164,623)	25,184	(139,439)
Dividends paid - note 5	-	-	-	-	(21,859)	(21,859)
Shares bought back and held in treasury	-	-	-	(11,569)	-	(11,569)
At 30 September 2022	48,917	10,394	24,676	864,894	54,089	1,002,970

Condensed Balance Sheet

	30 September	31 March
	2023	2023
	(Unaudited)	(Audited)
	£'000	£'000
Non current assets
Investments held at fair value through profit or loss - note 7	1,217,434	1,226,649
Current assets
Debtors	7,817	12,392
Cash and cash equivalents	20,307	22,362
Total assets	1,245,558	1,261,403
Non current liabilities
Unsecured Senior Loan Notes	(120,000)	(120,000)
Current liabilities
Other payables	(3,609)	(2,059)
Total liabilities	(123,609)	(122,059)
Net assets	1,121,949	1,139,344
Equity
Called up share capital - note 6	48,917	48,917
Share premium account	10,394	10,394
Capital redemption reserve	24,676	24,676
Capital reserve	989,783	1,003,989
Revenue reserve	48,179	51,368
Total equity	1,121,949	1,139,344
Net asset value per ordinary share - note 8
Basic and diluted - debt at par value	699.36p	688.52p
Basic and diluted - debt at fair value	731.79p	713.75p
Number of 25p ordinary shares (excluding treasury) in issue at the period end - note 6	160,425,525	165,476,525

ELISABETH STHEEMAN
CHAIR
20 NOVEMBER 2023

Signed on behalf of the Board of Directors

The accompanying notes on pages below are an integral part of these financial statements.

Condensed Cash Flow Statement

	Six Months to 30 September
	2023	2022
	£'000	£'000
Cash flow from operating activities
Net return before finance costs and taxation	39,490	(134,776)
Tax on overseas income - note 4	(144)	(376)
Adjustments for:
Purchase of investments	(89,511)	(141,998)
Sale of investments	119,464	113,079
(Gains)/losses on investments held at fair value	(21,802)	159,708
Decrease in debtors	7,529	2,719
(Decrease)/increase in creditors	(1,255)	359
Net cash inflow/(outflow) from operating activities	53,771	(1,285)
Cash flow from financing activities
Interest and commitment fees paid on bank facility	(3)	(14)
Interest paid on unsecured senior loan notes/debenture stocks	(1,494)	(3,874)
Issue of unsecured senior loan notes	-	100,000
Redemption of debenture loan stock	-	(100,000)
Shares bought back and held in treasury	(32,243)	(12,017)
Dividends paid - note 5	(22,086)	(21,859)
Net cash outflow from financing activities	(55,826)	(37,764)
Net decrease in cash and cash equivalents	(2,055)	(39,049)
Cash and cash equivalents at start of the period	22,362	68,728
Cash and cash equivalents at the end of the period	20,307	29,679
Reconciliation of cash and cash equivalents to the Balance Sheet is as follows:
Cash held at custodian	1,131	2,324
Goldman Sachs Liquidity Reserve International Fund	19,176	27,355
Cash and cash equivalents	20,307	29,679
Cash flow from operating activities includes:
Dividends received	27,237	30,342
Interest received	7	-

	At 1 April 2023 £'000	Cash flows £'000	Non-cash movement £'000	At 30 September 2023 £'000
Reconciliation of net debt:
Cash and cash equivalents	22,362	(2,055)	-	20,307
Unsecured Senior Loan Notes	(120,000)	-	-	(120,000)
Total	(97,638)	(2,055)	-	(99,693)

Notes to the Condensed Financial Statements

1. ACCOUNTING POLICIES

The condensed financial statements have been prepared in accordance with applicable United Kingdom Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, FRS 104 Interim Financial Reporting and the Statement of Recommended Practice Financial Statements of Investment Trust Companies and Venture Capital Trusts, issued by the Association of Investment Companies in July 2022. The financial statements are issued on a going concern basis.

The accounting policies applied to these condensed financial statements are consistent with those applied in the financial statements for the year ended 31 March 2023.

2. INCOME

		Six Months to 30 September
		2023	2022
		(Unaudited)	(Unaudited)
		£'000	£'000
Income from investments:
UK dividends	- ordinary	18,299	19,076
	- special	147	5,693
UK zero coupon bond income		-	41
Overseas dividends	- ordinary	1,570	3,116
	- special	318	-
UK unfranked investment income		542	145
		20,876	28,071
Other income:
Deposit interest		7	-
Total income		20,883	28,071

3. MANAGEMENT FEE AND FINANCE COSTS

The management fee arrangements are as reported in the Company's 2023 Annual Financial Report, being 0.04000% on the first £500 million and 0.03875% on the remainder of the market capitalisation of the Company's ordinary shares at each month end and paid monthly in arrears (equivalent to an annualised fee of 0.480% on the first £500m and 0.465% on the remainder). The management fee and finance costs are allocated 30% to revenue and 70% to capital.

4. TAXATION

Owing to the Company's status as an investment company no tax liability arises on capital gains. The tax charge represents withholding tax suffered on overseas income. A deferred tax asset is not recognised in respect of surplus management expenses since the Directors believe that there will be no taxable profits in the future against which these can be offset.

5. DIVIDENDS PAID ON ORDINARY SHARES

	Six Months to 30 September
	2023		2022
	(Unaudited)		(Unaudited)
	Pence	£'000	Pence	£'000
Third interim	6.70	11,050	6.40	10,934
Final	6.70	11,036	6.40	10,925
Total paid	13.40	22,086	12.80	21,859

The first interim dividend of 6.70p per ordinary share for the year ended 31 March 2024 (2023: 6.40p) will be paid on 24 November 2023 to shareholders on the register on 3 November 2023.

6. SHARE CAPITAL, INCLUDING MOVEMENTS

Share capital represents the total number of shares in issue, including treasury shares.

	Six Months to	Year to
	30 September	31 March
	2023	2023
	(Unaudited)	(Audited)
Share capital	£'000	£'000
Ordinary shares of 25p each	40,107	41,369
Treasury shares of 25p each	8,810	7,548
Total called up share capital	48,917	48,917
	Six Months to	Year to
	30 September	31 March
	2023	2023
Share capital	(Unaudited)	(Audited)
Number of ordinary shares in issue (excluding treasury):
Brought forward	165,476,525	171,078,129
Shares bought back into treasury	(5,051,000)	(5,601,604)
Carried forward	160,425,525	165,476,525
Number of shares held in treasury:
Brought forward	30,190,209	24,588,605
Shares bought back into treasury	5,051,000	5,601,604
Carried forward	35,241,209	30,190,209
Total ordinary shares	195,666,734	195,666,734

Subsequent to the period end, and as at 16 November 2023 (the latest practicable date before publication of this Half-Yearly Report), 2,749,000 ordinary shares were bought back at an average price of 651.45p.

7. CLASSIFICATION UNDER FAIR VALUE HIERARCHY

All except two of the Company's portfolio of investments are in the Level 1 category as defined in FRS 102 as amended for fair value hierarchy disclosures (March 16). The three levels set out in this follow.

Level 1 - The unadjusted quoted price 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.

Level 3 - Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.

Categorisation within the hierarchy is determined on the basis of the lowest level input that is significant to the fair value measurement of each relevant asset/liability. The valuation techniques used by the Company are explained in the accounting policies note.

The fair value hierarchy analysis for investments and related forward currency contracts held at fair value at the period end is as follows:

	30 September	31 March
	2023	2023
	(Unaudited)	(Audited)
	£'000	£'000
Financial assets designated at fair value through profit or loss:
Level 1	1,217,434	1,226,649
Level 3	-	-
Total for financial assets	1,217,434	1,226,649

There were two investments in Level 3 at the period end (31 March 2023: two investments) totalling £nil (31 March 2023: £nil).

There was no change to the position size or fair value for either holding.

8. NET ASSET VALUE PER ORDINARY SHARE

Refer to Alternative Performance Measures for definitions of NAV - debt at par and NAV - debt at fair value.

NAV - debt at par

The shareholders' funds and NAV per share in the Condensed Balance Sheet on page 19 of the Half-Yearly Financial Report are accounted for in accordance with accounting standards. The Unsecured Senior Loan Notes were issued at and being recorded at their par value of £120m. A reconciliation showing the NAV per share and Shareholders' funds using debt at fair value is shown in the Alternative Performance Measures on page 29 of the Half-Yearly Financial Report.

9. INVESTMENT TRUST STATUS

It is the intention of the Directors to conduct the affairs of the Company so that it satisfies the conditions for approval as an investment trust company within the meaning of section 1159 of the Corporation Tax Act 2010.

10. STATUS OF HALF-YEARLY FINANCIAL REPORT

The financial information contained within the financial statements in this Half-Yearly Financial Report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The financial information for the half years ended 30 September 2023 and 30 September 2022 has not been audited. The figures and financial information for the year ended 31 March 2023 are extracted and abridged from the latest audited accounts and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the Independent Auditor's Report which was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

By order of the Board

APEX LISTED COMPANIES SERVICES (UK) LIMITED

Company Secretary
20 November 2023

Other Information for Shareholders

Directors, Advisors and Principal Service Providers

DIRECTORS

Elisabeth Stheeman, Chair

Aidan Lisser, Senior Independent Director*

Steve Baldwin, Audit Committee Chairman

Patrick Edwardson, Management Engagement Committee Chairman

Annabel Tagoe-Bannerman

Victoria Hastings (retired 19 July 2023)

* Senior Independent Director from 19 July 2023

REGISTERED OFFICE

First Floor

9 Haymarket Square,

Edinburgh EH3 9EP

COMPANY NUMBER

Registered in Scotland.

Number: SC1836

ALTERNATIVE INVESTMENT FUND MANAGER (MANAGER)

Liontrust Fund Partners LLP

2 Savoy Court

London WC2R 0EZ

 020 7412 1700

COMPANY SECRETARY

Apex Listed Companies Services (UK) Limited

6^th Floor, 125 London Wall

London EC2Y 5AS

 020 3327 9720

INDEPENDENT AUDITORS

PricewaterhouseCoopers LLP

7 More London Riverside

London SE1 2RT

DEPOSITARY AND CUSTODIAN

The Bank of New York Mellon (International Limited)

160 Queen Victoria Street

London EC4V 4LA

BANKER

The Bank of New York Mellon

160 Queen Victoria Street

London EC4V 4LA

CORPORATE BROKER

Investec Bank plc

30 Gresham Street

London EC2V 7QP

LEGAL ADVISORS

Dentons UK and Middle East LLP

First Floor

9 Haymarket Square,

Edinburgh EH3 8RY

THE ASSOCIATION OF INVESTMENT COMPANIES

The Company is a member of the Association of Investment Companies. Contact details are as follows:

 020 7282 5555

Email: [e-mail]

Website: www.theaic.co.uk

REGISTRAR

Link Group

10^th Floor

Central Square

29 Wellington Street

Leeds, LS1 4DL

If you hold your shares direct and not through a Savings Scheme or ISA and have queries relating to your shareholding, you should contact the Registrars on:

 0371 664 0300

Calls are charged at the standard geographic rate and will vary by provider.

From outside the UK: [phone]. Calls from outside the United Kingdom will be charged at the applicable international rate. Lines are open from 9.00am to 5.30pm, Monday to Friday (excluding UK Public Holidays).

Shareholders can also access their holding details via Link's website:

www.signalshares.com

Link Group provide an on-line and telephone share dealing service to existing shareholders who are not seeking advice on buying or selling. This service is available at www.linksharedeal.com or

 0371 664 0445

Calls are charged at the standard geographic rate and will vary by provider.

From outside the UK: [phone]. Calls from outside the United Kingdom will be charged at the applicable international rate. Lines are open from 8.00am to 5.30pm, Monday to Friday (excluding UK Public Holidays).

Link Group is the business name of Link Market Services Limited.

Alternative Performance Measures

ALTERNATIVE PERFORMANCE MEASURE (APM)

An APM is a measure of performance or financial position that is not defined in applicable accounting standards and cannot be directly derived from the financial statements. The calculations shown in the corresponding tables are for the interim period ended 30 September 2023 and the year ended 31 March 2023. The APMs listed here are widely used in reporting within the investment company sector and consequently aid comparability, providing useful additional information.

BENCHMARK (OR BENCHMARK INDEX)

A standard against which performance can be measured, usually an index that averages the performance of companies in a stock market or a segment of the market. The benchmark most often referred to in this Half-Yearly Financial Report is the FTSE All-Share Index.

BENCHMARK RETURN

Total return on the benchmark is on a mid-market value basis, assuming all dividends received were reinvested, without transaction costs, into the shares of the underlying companies at the time the shares were quoted ex-dividend.

DISCOUNT OR PREMIUM (APM)

Discount is a measure of the amount by which the mid-market price of an investment company share is lower than the underlying net asset value of that share. Conversely, Premium is a measure of the amount by which the mid-market price of an investment company share is higher than the underlying net asset value of that share. In this Half-Yearly Financial Report, the discount is expressed as a percentage of the NAV per share with debt at fair value (see reconciliation of NAV per share with debt at fair value below on page 29 of the Half-Yearly Financial Report) and is calculated according to the formula set out below. If the shares are trading at a premium the result of the below calculation will be positive and if they are trading at a discount, it will be negative.

		30 September	31 March
		2023	2023
Share price	a	668.00p	660.00p
Net asset value per share - debt at fair value	b	731.79p	713.75p
Discount	c = (a-b)/b	(8.7)%	(7.5)%

GEARING

The gearing percentage reflects the amount of borrowings that a company has invested. This figure indicates the extra amount by which net assets, or shareholders' funds, would move if the value of a company's investments were to rise or fall. A positive percentage indicates the extent to which net assets are geared; a nil gearing percentage, or 'nil', shows a company is ungeared. A negative percentage indicates that a company is not fully invested and is holding net cash as described below.

There are several methods of calculating gearing and the following has been used in this report:

GROSS GEARING (APM)

This reflects the amount of gross borrowings in use by a company and takes no account of any cash balances. It is based on gross borrowings as a percentage of net assets.

		30 September	31 March
		2023	2023
		£'000	£'000
Unsecured Senior Loan Notes - debt at fair value		67,966	78,253
Gross borrowings	a	67,966	78,253
Net asset value - debt at fair value	b	1,173,983	1,181,091
Gross gearing	c = a/b	5.8%	6.6%

NET GEARING OR NET CASH (APM)

Net gearing reflects the amount of net borrowings invested, i.e. borrowings less cash and cash equivalents (incl. investments in money market funds). It is based on net borrowings as a percentage of net assets. Net cash reflects the net exposure to cash and cash equivalents, as a percentage of net assets, after any offset against total borrowings.

		30 September	31 March
		2023	2023
		£'000	£'000
Unsecured Senior Loan Notes - debt at fair value		67,966	78,253
Less: cash and cash equivalents		(20,307)	(22,362)
Net borrowings	a	47,659	55,891
Net asset value - debt at fair value	b	1,173,983	1,181,091
Net gearing	c = a/b	4.1%	4.7%

LEVERAGE

Leverage, for the purposes of the UK AIFM Directive, is not synonymous with gearing as defined above. In addition to borrowings, it encompasses anything that increases the Company's exposure, including foreign currency and exposure gained through derivatives. Leverage expresses the Company's exposure as a ratio of the Company's net asset value.

Accordingly, if a Company's exposure was equal to its net assets it would have leverage of 100%. Two methods of calculating such exposure are set out in the AIFMD, gross and commitment. Under the gross method, exposure represents the aggregate of all the Company's exposures other than cash balances held in base currency and without any offsetting. The commitment method takes into account hedging and other netting arrangements designed to limit risk, offsetting them against the underlying exposure.

NET ASSET VALUE (NAV)

Also described as shareholders' funds, the NAV is the value of total assets less liabilities. Liabilities for this purpose include current and long-term liabilities. The NAV per share is calculated by dividing the net asset value by the number of ordinary shares in issue (excluding shares held in treasury). For accounting purposes assets are valued at fair (usually market) value and liabilities are valued at amortised cost (their repayment - often nominal - value). An alternative NAV with debt at fair value, values long term liabilities at their market (fair) value and is shown below.

NET ASSET VALUE (NAV) - DEBT AT PAR

The NAV with debt at par recognises the value of the debt liability as the nominal amount that will be repaid at maturity. For the £120m Unsecured Senior Loan Notes, this recognises a liability of £120m. This is the basis used in the preparation of the Condensed Balance Sheet on page 19 of the Half-Yearly Financial Report.

NET ASSET VALUE (NAV) - DEBT AT FAIR VALUE

The fair value of each tranche of the £120m Unsecured Senior Loan Notes is ascertained by the administrator by aggregating the discounted value of future cashflows, being the contractual interest payments and the repayment of capital at maturity as each falls due. The discount factor used for each tranche is based on the market yield of UK Treasuries with similar maturity dates adjusted to incorporate a credit spread.

The net asset value per share adjusted to include the Unsecured Senior Loan Notes at fair value rather than at par is as follows:

	30 September 2023		31 March 2023
	(Unaudited)		(Audited)
		Shareholders'		Shareholders'
	NAV per share	funds	NAV per share	funds
	pence	£'000	pence	£'000
NAV - debt at par	699.36p	1,121,949	688.52	1,139,344
Unsecured Senior Loan Notes - at par	74.80p	120,000	72.52	120,000
Unsecured Senior Loan Notes - at fair value	(42.37p)	(67,966)	(47.29)	(78,253)
NAV - debt at fair value	731.79p	1,173,983	713.75	1,181,091

RETURN

The return generated in a period from the investments.

CAPITAL RETURN

Reflects the return on NAV, but excluding any dividends reinvested.

TOTAL RETURN

Total return is the theoretical return to shareholders that measures the combined effect of any dividends paid together with the rise or fall in the share price or NAV. In this Half-Yearly Financial Report these return figures have been sourced from Refinitiv who calculate returns on an industry comparative basis.

TREASURY SHARES

Shares previously issued by a Company that have been bought back from shareholders to be held by the Company for potential sale or cancellation at a later date. Such shares are not capable of voting and carry no rights to dividends.

NET ASSET VALUE TOTAL RETURN (APM)

Total return on net asset value per share, with debt at fair value, assuming dividends paid by the Company were reinvested into the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend.

SHARE PRICE TOTAL RETURN (APM)

Total return to shareholders, on a mid-market price basis, assuming all dividends received were reinvested, without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend.

		Net Asset	Share
Six Months Ended 30 September 2023		Value	Price
As at 30 September 2023		731.79p	668.00p
As at 31 March 2023		713.75p	660.00p
Change in period	a	2.5%	1.2%
Impact of dividend reinvestments(1)	b	2.0%	2.1%
Total return for the period	c = a+b	4.5%	3.3%

		Net Asset	Share
Year Ended 31 March 2023		Value	Price
As at 31 March 2023		713.75p	660.00p
As at 31 March 2022		686.69p	634.00p
Change in year	a	3.9%	4.1%
Impact of dividend reinvestments(1)	b	4.0%	4.3%
Total return for the year	c = a+b	7.9%	8.4%

(1)   Total dividends paid during the period of 13.40p (31 March 2023: 25.60p) reinvested at the NAV or share price on the ex-dividend date. NAV or share price falls subsequent to the reinvestment date consequently further reduce the returns, vice versa if the NAV or share price rises.

By order of the Board

Apex Listed Companies Services (UK) Limited

Company Secretary

21 November 2023

ENDS

 

END