Half-year Report

Ecofin Global Utilities Inf Tst PLC

18 May 2023

 

ECOFIN GLOBAL UTILITIES AND INFRASTRUCTURE TRUST PLC

Interim Financial Results for the six months ended 31 March 2023

Announcement of Unaudited Results

LEI: 2138005JQTYKU92QOF30

This announcement contains regulated information.

Ecofin Global Utilities and Infrastructure Trust plc (the "Company" or "EGL") is an authorised UK investment trust whose objectives are to achieve a high, secure dividend yield on a portfolio invested primarily in the equities of utility and infrastructure companies in developed countries and long-term growth in the capital value of the portfolio while preserving shareholders' capital in adverse market conditions.

•      During the half-year ended 31 March 2023, the Company's net asset value ("NAV") per share increased by 3.7% on a total return basis. The Company's share price decreased by 0.6% on a total return basis over the 6 months

•      Two quarterly dividends were paid during the period totalling 3.80p per share. With effect from the dividend paid in February 2023, the quarterly dividend was increased to 1.95p per share (7.8p per share per annum)

•      NAV total return has matched the total return of the MSCI World Index since inception and outpaced it over five years, three years and one year

Financial Highlights

as at 31 March 2023

Summary	As at or six months to 31 March 2023	As at or year to 30 September 2022
Net assets attributable to shareholders (£000)	242,560	233,052
Net asset value ("NAV") per share1	212.07p	208.14p
Share price (mid-market)	213.00p	218.00p
Premium to NAV1	0.4%	4.7%
Revenue return per share	2.02p	6.42p
Dividends paid per share	3.80p	7.20p
Dividend yield1,2	3.5%	3.3%
Gearing on net assets1,3	11.0%	11.0%
Ongoing charges ratio1,4	1.33%	1.35%

1. Please refer to Alternative Performance Measures in the Interim Report.

2. Dividends paid (annualised) as a percentage of share price.

3. Gearing is the Company's borrowings (including the net amounts due from/to brokers) less cash divided by net assets attributable to shareholders.

4. The ongoing charges figure is calculated in accordance with guidance issued by the Association of Investment Companies ("AIC") as the

operating costs (annualised) divided by the average NAV (with income) throughout the period.

Performance for periods to 31 March 2023 (all total return in £)	6 months %	1 year %	3 years %	5 years %	Since admission5 %	Since admission % per annum %
NAV per share6	3.7	0.7	61.8	95.6	96.1	10.9
Share price6	-0.6	-0.7	67.8	129.7	149.6	15.1
Indices6, 7:
S&P Global Infrastructure Index	3.8	2.0	51.3	44.6	42.8	5.6
MSCI World Utilities Index	0.6	0.6	28.5	59.3	55.9	7.0
MSCI World Index	6.8	-0.6	60.6	71.3	96.1	10.9
FTSE All-Share Index	12.2	2.8	47.7	27.6	39.5	5.2
FTSE ASX Utilities Index	21.0	1.5	47.5	74.9	38.6	5.1

Source: Bloomberg, Ecofin

5. The Company was incorporated on 27 June 2016 and its investment activities began on 13 September 2016 when the liquid assets of Ecofin Water & Power Opportunities plc ("EWPO") were transferred to it. The formal inception date for the measurement of the Company's performance is 26 September 2016, the date its shares were listed on the London Stock Exchange.

6. Total return includes dividends paid and reinvested immediately. Please also refer to the Alternative Performance Measures in the Annual Report.

7. The S&P Global Infrastructure Index and MSCI World Utilities Index are the global sector indices deemed the most appropriate for performance comparison purposes. The Company does not have a formal benchmark index. The other indices are provided for general interest.

Chairman's Statement

Performance

Your Company performed well in a difficult six months during which economic and market expectations fluctuated. The net asset value (NAV) total return was 3.7% over the six months to 31 March, including the reinvestment of dividends, and the share price total return was -0.6%. The MSCI World Utilities Index and the S&P Global Infrastructure Index produced total returns of 0.6% and 3.8% respectively in sterling terms. In comparison, global equities, measured by the MSCI World Index, returned 6.8%.

The fundamental investment case for our universe of clean energy development and infrastructure renewal companies continued to strengthen during the period. The outlook for earnings and growth held up well while there was no further bad news about windfall tax and government policies. The benefits of a balanced portfolio showed through: good performance in continental Europe outweighed dual headwinds of share price weakness in North America and the strengthening of the pound against the dollar. More details on performance are to be found in the Investment Manager's report.

Since EGL launched in September 2016, the NAV total return and the share price total return have averaged 10.9% and 15.1% per annum respectively. NAV total return has matched the total return of the MSCI World Index since inception and outpaced it over five years, three years and one year.

Dividends

We announced in December an increase in the quarterly dividend to 1.95p per share (7.8p per annum) with effect from the dividend paid in February 2023, helped by the growth in income from the Company's portfolio despite higher finance costs: your Company has a conservative level of borrowings, the price of which is tied to market interest rates.

Share price and share issuance

During the half-year, the Company's share price traded on average at a 1.3% discount to NAV. Market demand pushed the share price to trade at a premium to NAV sufficiently often for EGL to issue a total of 2,411,000 shares, raising £5.2 million during the period. Another 1,920,577 shares have been issued since the end of March. This continues a pattern of new share issuance which began in April 2020, responding to daily demand and helping to reduce cost ratios and improve liquidity in the shares.

Outlook

Since 31 March (to 12 May), the Company's NAV has increased by 1.6% and the share price by 2.3% (both on a total return basis).

EGL's portfolio companies derive most of their revenues and cash flows from businesses which benefit from structural growth opportunities including the move to renewable energy generation and the upgrades of water, waste and transportation infrastructure. These companies combine reliable growth with very resilient business models, providing reassurance in the current economic environment.

Our Investment Manager is confident that portfolio investment income will continue to grow this year, more than covering the extra costs of EGL's modest level of borrowings. Your Company is well placed to continue to achieve its performance objectives.

David Simpson

Chairman

18 May 2023

Investment Manager's Report

Markets and our sectors

After several quarters of declines and with the geopolitical and economic headlines continuing to be bleak, a strong equity market rally took hold as this half-year period began. Bond yields were still increasing quickly, interest rates and inflation were rising almost everywhere and the US dollar was hitting 20 year peaks but equity markets were, as usual, ahead of events. Utilities, even though they had performed very well for the previous year, participated in the recovery rally and so did the more cyclical stocks in the infrastructure universe. Before long, bond yields started to decline, inflation forecasts moderated and sterling was recovering. The much-anticipated recession failed to arrive.

Sterling's strong bounce against the US dollar during the fourth quarter of 2022 (+8.2%) masked the extent of the global equity market rally for UK based investors: the MSCI World Index increased by almost 10% in local currency terms but by only 1.1% in sterling terms. The S&P Global Infrastructure Index's 10.8% gain was trimmed to 2.9% when expressed in sterling terms.

In early 2023, China's much anticipated post-COVID reopening boosted the outlook for the global economy but also inflation and, thereby, expectations for central bank rate hikes. However, energy prices started a steep decline in late December and US natural gas prices returned to levels not seen since 2021. European natural gas prices also fell significantly from 2022 averages, helped by conservation, but remained much higher than prior year levels.

Lower gas and electricity prices improved the outlook for inflation, economic activity and corporate profitability, particularly in Europe where the energy crisis of 2022 presented the biggest threat. This backdrop sustained the rally for equities, which notably excluded utilities.

March's banking turmoil had little sustained effect on equity markets or bond yields but attention did turn back to more defensive equities which had been trailing year-to-date. Global equities rose in March resulting in a 5.7% advance in sterling terms over the first calendar quarter.

During the half-year, earnings reports were strong for most of EGL's utility, water and waste management and transportation infrastructure companies, guidance ranges moved higher in several cases, and companies' growth outlooks were almost all reaffirmed. Windfall tax uncertainty for power utilities began to lift across Europe too; by and large, measures that were settled appeared fair and would not discourage the vast investment in renewables capacity expansion required.

From a policy perspective, we saw developments in Europe's response to the US Inflation Reduction Act (IRA) via the Net Zero Industry Act (NZIA). So far, the NZIA doesn't deliver enough certainty to offer a meaningful counterpunch to the IRA and persuade corporates to arrive at investment decisions. Details will come though and it is likely that decisions taken at sovereign state level will provide more material incentives for large scale investment and domestic manufacturing. Regarding the longer term project of power market reform, the drafts suggest evolution not revolution, which somewhat de-risks potential policy curveballs for utilities and renewables developers in Europe.

Performance summary

Over the 6 months, EGL's NAV increased by 3.7%, in line with the global listed infrastructure index (+3.8%) and better than the sub-set of global utilities (+0.6%). Global equities rose by 6.8%. Sterling's strong appreciation against the US dollar reduced portfolio performance by 5.1 percentage points (and it impacted the US dollar-heavy global indices by even more).

The dispersion of returns across regions was remarkable: whether looking at the local sector indices or the portfolio's regional performances, pan-European stocks provided strongly positive returns whereas US utilities, sometimes treated like bond proxies, fell, lagging by about 15% over the 6 months. The contribution to NAV was equally lop-sided: The fifteen best contributors were European and spanned utilities (led by Enel, Endesa, E.ON, SSE and Engie), environmental services (Veolia) and transportation infrastructure (Vinci, Ferrovial), while the poorest performers during the period were North American clean energy specialists (NextEra Energy, Dominion Energy, NextEra Energy Partners, Constellation, TransAlta Renewables), Chinese holdings (China Longyuan Power and China Water Affairs) and Drax. Drax gave back some of its 2022 stock price gains, given uncertainty around UK government approval of its Carbon Capture and Sequestration project and declining power prices.

Last year's clean energy 'winners', propelled by higher power prices and the structural growth catalysts inherent in the energy transition and the IRA, suffered harsh profit taking in early 2023. Elevated interest rates were a source of concern for businesses which 'borrow to grow', as were higher equipment costs, trade policy issues, permitting delays, and transmission and interconnection constraints. Falling electricity prices, even though they remained above pre-2022 levels, will have reduced the sub-sector's appeal too, even if many companies now have limited exposure to merchant prices.

Conversely, shares such as Enel, E.ON and Veolia, which had performed poorly in the previous year, recovered very swiftly when interest rates pulled back, the severe pressures on power retailing were alleviated, and economic growth prospects in Europe improved.

NextEra Energy's shares and those of its yieldco NextEra Energy Partners were a drag on the NAV (together -1.4% over 6 months). We believe this is attributable to the factors mentioned above, compounded by the unexpected retirement of the CEO of NextEra's Florida utility and an investigation into its lobbying activities in Florida which rumbles on. This overshadowed good earnings reports which included NextEra extending its growth outlook to 2026 for EPS (6-8% p.a.) and dividends per share (10% p.a.).

Purchases and sales

We made adjustments in the portfolio, considering the opportunities presented by volatility and our strategy to increase the portfolio's exposure to environmental services and transportation infrastructure while reducing power price sensitivity. In this respect the largest purchases were of China Water Affairs and ENAV.

China Water Affairs is a large Chinese integrated water operator providing raw water, tap water, sewage treatment and related services. The company's direct drinking water business should deliver mid-double digit growth as single-use plastic bottle regulations become more stringent, and the regulated water supply business will benefit from structural asset base growth driven by greater urbanisation and population growth. The stock has yet to perform but we expect it will, given the low valuation, 5% dividend yield and even higher dividend per share growth.

ENAV is a long-standing portfolio holding that was promoted into the top 10 during the period. The company is the monopoly supplier of Italian air traffic control and air navigation services (for civilian aircraft and drones), and the only air navigation service provider in the world listed on a stock exchange. Revenues are highly regulated and growing (based on the number of flights rather than each plane's occupancy), and cash flow generation is strong.

We also increased the portfolio's holdings in Drax (after profit taking last year), DTE Energy and National Grid. National Grid's almost fully regulated business presents an attractive combination of defensiveness, inflation protection and superior growth as the company invests heavily in electricity networks. After considerable share price weakness, we also added to AES, China Suntien Green Energy and Enel.

Holdings in Acciona Energias and Redes Energeticas Nacionais were sold; the positions had been profitable and we saw better value elsewhere. Another material source of cash (and profit) was the completion of the nationalisation of EDF in January.

In the portfolio analysis in the Interim Report, you may notice a new sector category named 'Environmental services'. This is to better cater for and illustrate the portfolio's holdings in this area which have grown with the additions of Veolia and China Water Affairs over the last year (American Water Works and Essential Utilities have been long-standing holdings).

Income and gearing

Gearing averaged 12% over the half-year (in line with fiscal 2022's average) and was 11% at 31 March. Our models indicate another solid year for portfolio investment income growth. We expect the increase in income will be more than sufficient to cover the significantly higher cost of borrowings.

Strategy

EGL's diversified portfolio of infrastructure equities has performed satisfactorily through the significant stress tests of the last year. We are now seeing a welcome stabilisation in interest rates with bond yields discounting significant reductions in inflation and rates in the next few years. Gas and power prices are back to pre-crisis levels, providing an attractive pricing environment for utilities and the potential for good returns for renewables developers. For the next two years, most generators are broadly hedged so sensitivity to power prices will be limited. Lower natural gas prices will translate into lower customer bills, lessening the risk of clawback from power producers by governments seeking to reduce customer bills.

We believe that earnings guidance for utilities is conservative, being based on normalised power price assumptions but higher interest and capital expenditure related costs. Earnings per share growth targets are generally in the region of 6-8% per annum. Transportation infrastructure businesses are growing and investing to accomplish necessary renewal. This segment of EGL's essential assets investment universe may be less recession- resistant but companies have the benefit of inflation-linkage in their contracts and regulated returns. We expect that the valuations in the listed segment will continue to be attractive to private equity. In EGL's sectors we can find an appealing combination of growth and defensiveness, often in the same company. Our focus on quality of earnings and balance sheet strength is not new but worth reiterating.

We remain optimistic that the favourable policy support for decarbonisation and electrification, the relative competitiveness of renewables, and the ever-rising demand for energy price stability will continue to provide strong tailwinds for this strategy. Our focus on essential assets and asset-backed services should continue to do well in most market environments while undemanding share valuations lend downside protection.

Ecofin Advisors Limited

Investment Manager

18 May 2023

Condensed Statement of Comprehensive Income

	Notes	Six months ended                                Six months ended 31 March 2023 (unaudited)             31 March 2022 (unaudited)						Year ended 30 September 2022 (audited)
		Revenue £'000	Capital £'000	Total           Revenue £'000                £'000		Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains on investments held at
fair value through profit or loss		-        5,961		5,961	-	25,233	25,233	-	16,129	16,129
Foreign exchange gains/(losses)		-	1,397	1,397	-	(281)	(281)	-	(3,076)	(3,076)
Income	2	3,799	-	3,799	3,408	-	3,408	9,835	-	9,835
Investment management fees		(466)	(698)	(1,164)	(534)	(534)	(1,068)	(1,089)	(1,089)	(2,178)
Administration expenses		(464)	-	(464)	(374)	-	(374)	(885)	-	(885)
Net return before finance costs and taxation		2,869	6,660	9,529	2,500	24,418	26,918	7,861	11,964	19,825
Finance costs		(200)	(300)	(500)	(26)	(26)	(52)	(118)	(118)	(236)
Net return before taxation		2,669	6,360	9,029	2,474	24,392	26,866	7,743	11,846	19,589
Taxation	3	(392)	-	(392)	(205)	-	(205)	(1,104)	-	(1,104)
Net return before taxation		2,277	6,360	8,637	2,269	24,392	26,661	6,639	11,846	18,485
Return per ordinary share (pence)	4	2.02	5.63	7.65	2.24	24.13	26.37	6.42	11.46	17.88

The total column of the Condensed Statement of Comprehensive Income is the profit and loss account of the Company.

The revenue and capital columns are supplementary to this and are published under guidance from the AIC.

All revenue and capital returns in the above statement derive from continuing operations. No operations were acquired or discontinued during the six months ended 31 March 2023.

The Company has no other comprehensive income and therefore the net return on ordinary activities after taxation is also the total comprehensive income for the period.

Condensed Statement of Financial Position

	As at                   As at                                          31 March 2023     31 March 2022                                              (unaudited)          (unaudited)                                 Notes               £'000                  £'000			As at     30 September           2022 (audited) £'000
Non-current assets Equity securities valued at fair value through profit or loss		268,709	250,226	258,334
Current assets
Debtors and prepayments		2,388	1,132	1,409
		2,388	1,132	1.409
Creditors: amounts falling due within one year
Prime brokerage borrowings		(24,419)	(29,484)	(25,613)
Other creditors		(4,118)	(937)	(1,078)
		(28,537)	(30,421)	(26,691)
Net current liabilities		(26,149)	(29,289)	(25,282)
Net assets		242,560	220,937	233,052
Share capital and reserves
Called-up share capital	5	1,143	1,013	1,119
Share premium		45,930	16,763	40,801
Special reserve		114,971	116,459	116,976
Capital reserve	6	80,516	86,702	74,156
Revenue reserve		-	-	-
Total shareholders' funds		242,560	220,937	233,052
NAV per ordinary share (pence)	7	212.07	217.97	208.14

Condensed Statement of Changes in Equity

						Six months ended 31 March 2023 (unaudited)
		Share capital £'000					Share premium account             £'000	Special reserve1 £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
		Balance at 1 October 2022			1,119		40,801	116,976	74,156	-	233,052
		Return after taxation			-		-	-	6,360	2,277	8,637
		Issue of ordinary shares			24		5,129	-	-	-	5,153
		Dividends paid (see note 8)			-		-	(2,005)	-	(2,277)	(4,282)
		Balance at 31 March 2023			1,143		45,930	114,971	80,516	-	242,560
						Six months ended 31 March 2022 (unaudited)
			Share capital £'000				Share premium           account        £'000	Special reserve1 £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
	Balance at 1 October 2021		1,007				15,500	117,730	62,310	-	196,547
	Return after taxation		-				-	-	24,392	2,269	26,661
	Issue of ordinary shares		6				1,263	-	-	-	1,269
	Dividends paid (see note 8)		-				-	(1,271)	-	(2,269)	(3,540)
	Balance at 31 March 2022		1,013				16,763	116,459	86,702	-	220,937
						Year ended 30 September 2022 (audited)
				Share capital £'000			Share premium account £'000	Special reserve1 £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
	Balance at 1 October 2021			1,007			15,500	117,730	62,310	-	196,547
	Return after taxation			-			-	-	11,846	6,639	18,485
	Issue of ordinary shares			112			25,301	-	-	-	25,413
	Dividends paid (see note 8)			-			-	(754)	-	(6,639)	(7,393)
	Balance at 30 September 2022			1,119			40,801	116,976	74,156	-	233,052

1. The special reserve may be used, where the board considers it appropriate, by the Company for the purposes of paying dividends to

shareholders and, in particular, smoothing payments of dividends to shareholders.

Condensed Statement of Cash Flows

Six months          Six months          Year ended                                                                                                                                                                      ended                 ended      30 September                                                                                                                                                            Notes 31 March 2023 31 March 2022             2022                                                                                                                                                              (unaudited)          (unaudited)             (audited)                                                                                                                                                                        £'000                  £'000                  £'000
Net return before finance costs and taxation	9,529	26,918                19,825
(Decrease)/increase in accrued expenses	(29)	87                     228
Overseas withholding tax	(489)	(315)                  (786)
Deposit interest income	(3)	(13)                    (37)
Dividend income	(3,796)	(3,395)              (9,798)
Foreign exchange (gains)/losses                                                                                  12	(1,397)	281                 3,076
Dividends received	3,589	3,309               9,462
Deposit interest received	3	13                      37
Interest paid	(500)	(52)                 (236)
Gains on investments	(5,961)	(25,233)            (16,129)
Increase/(decrease) in other debtors	1	(5)                         1
Net cash flow from operating activities	947	1,595                  5,643
Investing activities
Purchases of investments	(46,338)	(39,921)            (76,989)
Sales of investments	44,317	36,181                56,277
Net cash generated from/(used in) investing activities	(2,021)	(3,740)             (20,712)
Financing activities
Movement in prime brokerage borrowings	203	(6,389)              (10,260)
Dividends paid                                                                                                               8	(4,282)	(3,540)                (7,393)
Share issue proceeds	5,153	1,104                  25,413
Net cash generated from/(used in) financing activities	1,074	(8,825)                   7,760
Decrease in cash	-	(10,970)                (7,309)
Analysis of changes in cash during the period                                                        12
Opening balance	-	11,251                  11,251
Foreign exchange movement	-	(281)                 (3,942)
Decrease in cash	-	(10.970)                 (7,309)
Closing balances	-	-                            -

Foreign exchange gains for the period to 31 March 2023 are associated with the Company's prime brokerage borrowings.

Notes to the Condensed Financial Statements

for the six months ended 31 March 2023

1. Accounting policies

(a) Basis of preparation

The Condensed Financial Statements have been prepared in accordance with Financial Reporting Standard ("FRS") 104 Interim Financial Reporting and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in July 2022. The Condensed Financial Statements are prepared in Sterling which is the functional currency of the Company and rounded to the nearest £'000. They have also been prepared on a going concern basis and approval as an investment trust has been granted by HMRC.

The Condensed Financial Statements have been prepared using the same accounting policies as the preceding Financial Statements which were prepared in accordance with Financial Reporting Standard 102.

The financial information contained in this Interim Report does not constitute statutory accounts as defined in Sections 434-436 of the Companies Act 2006. The financial information for the periods ended 31 March 2023 and 31 March 2022 has not been audited.

The information for the year ended 30 September 2022 has been extracted from the latest published audited Financial Statements which have been filed with the Registrar of Companies. The report of the Auditor on those accounts contained no qualification or statement under Section 498 of the Companies Act 2006.

(b) Income

Income from investments, including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are credited to capital or revenue, according to the circumstances. The fixed returns on debt securities are recognised on a time apportionment basis so as to reflect the effective yield on the debt securities. Interest receivable from cash and short-term deposits is treated on an accruals basis.

(c) Expenses

All expenses are accounted for on an accruals basis. Expenses are charged to the revenue account except where they directly relate to the acquisition or disposal of an investment, in which case they are charged to the capital account; in addition, expenses are charged to the capital account where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect, since 1 October 2022 the management fee and overdraft interest have been allocated 60% to the capital account and 40% to the revenue account (previously 50% to the capital account and 50% to the revenue account).

(d) Taxation

The charge for taxation is based on the profit for the year to date and takes into account, if applicable, taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred taxation is provided using the liability method on all timing differences, calculated at the rate at which it is anticipated the timing differences will reverse. Deferred tax assets are recognised only when, on the basis of available evidence, it is more likely than not that there will be taxable profits in future against which the deferred tax asset can be offset.

Due to the Company's status as an investment trust company and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue within the Condensed Statement of Comprehensive Income on the same basis as the particular item to which it relates using the Company's effective rate of tax for the year, based on the marginal basis.

(e) Valuation of investments

For the purposes of preparing the Condensed Financial Statements, the Company has applied Sections 11 and 12 of FRS 102 in respect of financial instruments. All investments are measured initially and subsequently at fair value and transaction costs are expensed immediately. Investment transactions are accounted for on a trade date basis. The fair value of the financial instruments in the Condensed Statement of Financial Position is based on their quoted bid price at the reporting date, without deduction of the estimated future selling costs. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Condensed Statement of Comprehensive Income as "Gains on investments held at fair value through profit or loss". Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase.

(f) Cash and cash equivalents

Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to insignificant risk of change in value.

(g) Borrowings

Short-term borrowings, which comprise of prime brokerage borrowings, are recognised initially at the fair value of the consideration received, net of any issue expenses, and subsequently at amortised cost using the effective interest method. The finance costs, being the difference between the net proceeds of borrowings and the total amount of payments required to be made in respect of those borrowings, accrue evenly over the life of the borrowings and are allocated 40% to revenue and 60% to capital.

(h) Segmental reporting

The directors are of the opinion that the Company is engaged in a single segment of business activity, being investment business.

Consequently, no business segmental analysis is provided.

(i) Nature and purpose of reserves

Share premium account

The balance classified as share premium includes the premium above nominal value received by the Company on issuing shares net

of issue costs.

Special reserve

The special reserve arose following court approval in November 2016 to transfer £123,609,000 from the share premium account. This reserve is distributable and may be used, where the board considers it appropriate, by the Company for the purposes of paying dividends to shareholders and, in particular, augmenting or smoothing payments of dividends to shareholders. There is no guarantee that the board will in fact make use of this reserve for the purpose of the payment of dividends to shareholders. The special reserve can also be used to fund the cost of share buy-backs.

Capital reserve

Gains and losses on disposal of investments and changes in fair values of investments are transferred to the capital account. Foreign exchange differences of a capital nature are also transferred to the capital account. The capital element of the management fee and relevant finance costs are charged to this account. Any associated tax relief is also credited to this account.

Revenue reserve

This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income.

The Company's special reserve, capital reserve and revenue reserve may be distributed by way of dividend.

(j) Foreign currency

Monetary assets and liabilities and non-monetary assets held at fair value in foreign currencies are translated into sterling at the rates of exchange ruling at the Condensed Statement of Financial Position date. Transactions involving foreign currencies are converted at the rate ruling on the date of the transaction. Gains and losses on the translation of foreign currencies are recognised in the revenue or capital account of the Condensed Statement of Comprehensive Income depending on the nature of the underlying item.

(k) Dividends payable

Dividends are recognised in the period in which they are paid.

2. Income

Six months ended          Six months ended                  Year ended                                                                                                                                             31 March 2023              31 March 2022       30 September 2022                                                                                                                                                           £'000                          £'000                          £'000
Income from investments (revenue account)
UK dividends	470	332                            1,254
Overseas dividends	3,214	2,726                            7,966
Stock dividends	112	337                               578
	3,796	3,395                           9,798
Other income (revenue account)
Deposit interest	3	13                             37
Total income	3,799	3,408                            9,835

During the six months ended 31 March 2022, the Company received no special dividends (31 March 2022: £nil and 30 September 2022: £416,000).

3. Taxation

The taxation charge for the period, and the comparative periods, represents withholding tax suffered on overseas dividend income.

4. Return per ordinary share

	Six months ended 31 March 2023 p	Six months ended 31 March 2022 p	Year ended 30 September 2022 p
Revenue return	2.02	2.24	6.42
Capital return	5.63	24.13	11.46
Total return	7.65	26.37	17.88
The returns per share are based on the following:
	Six months ended 31 March 2023 £'000	Six months ended 31 March 2022 £'000	Year ended 30 September 2022 £'000
Revenue return	2,277	2,269	6,639
Capital return	6,360	24,392	11,846
Total return	8,637	26,661	18,485
Weighted average number of ordinary shares in issue	112,886,269	101,121,775	103,375,349

5. Ordinary share capital

	31 March 2023	31 March 2022			30 September 2022
	Number	£'000                 Number		£'000	Number	£'000
Issued and fully paid
Ordinary shares of 1p each	111,968,423	1,119	100,738,423	1,007	100,738,423	1,007
Issue of new ordinary shares	2,411,000	24	625,000	6	11,230,000	112
Ordinary shares of 1p each	114,379,423	1,143	101,363,423	1,013	111,968,423	1,119

The Company was admitted to the Main Market of the London Stock Exchange on 26 September, 2016. The total number of ordinary shares in the Company in issue immediately following admission was 91,872,247, each with equal voting rights. During the period, the Company issued 2,411,000 (31 March 2022: 625,000 and 30 September 2022: 11,230,000) ordinary shares with net proceeds of £5,153,000 (31 March 2022: £5,269,000 and 30 September 2022: 25,413,000).

Since 31 March 2023 the Company has issued 1,920,577 ordinary shares for net proceeds of £4,109,791.

6. Capital reserve

31 March 2023              31 March 2022       30 September 2022                                                                                                                                                      £'000                          £'000                          £'000
Opening balance	74,156	62,310                        62,310
Movement in investment holding gains	(1,518)	17,051                          3,073
Gains on realisation of investments at fair value	7,479	8,182                        13,056
Currency gains/(losses)	1,397	(281)                       (3,076)
Investment management fees	(698)	(534)                      (1,089)
Finance costs	(300)	(26)                          (118)
	80,516	86,702                       74,156

The capital reserve reflected in the Condensed Statement of Financial Position at 31 March 2023 includes gains of £37,832,000 (31 March 2022: gains of £53,328,000 and 30 September 2022: gain of £39,349,000) which relate to the revaluation of investments held at the reporting date.

7. NAV per ordinary share

	As at 31 March 2023	As at 31 March 2022	As at 30 September 2022
Net asset value attributable (£'000)	242,560	220,937	233,052
Number of ordinary shares in issue	114,379,423	101,363,423	111,968,423
NAV per share	212.07p	217.97p	208.14p

8. Dividends on ordinary shares

	Six months ended 31 March 2023 £'000	Six months ended 31 March 2022 £'000	Year ended 30 September 2022 £'000
Fourth interim for 2021 of 1.65p (paid 30 November 2021)	-	1,666	1,666
First interim for 2022 of 1.65p (paid 26 February 2022)	-	1,874	1,874
Second interim for 2022 of 1.85p (paid 31 May 2022)	-	-	1,893
Third interim for 2022 of 1.85p (paid 31 August 2022)	-	-	1,960
Fourth interim dividend for 2022 of 1.85p (paid on 30 November 2022)	2,082	-	-
First interim dividend for 2023 of 1.95p (paid on 28 February 2023)	2,200	-	-
	4,282	3,540	7,393

A second interim dividend for 2023 of 1.95p will be paid on 31 May 2023 to shareholders on the register on 28 April 2023. The ex-dividend date was 27 April 2023.

9. Transaction costs

During the period expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Condensed Statement of Comprehensive Income. The total costs were as follows:

	Six months ended 31 March 2023 £'000	Six months ended 31 March 2022 £'000	Year ended 30 September 2022 £'000
Purchases	104	69	138
Sales	18	13	25
	122	82	163

The above transaction costs are calculated in line with AIC's Statement of Recommended Practice (SORP). The transaction costs in the  Company's Key Information Document are calculated on a different basis and in line with the EU's Packaged Retail Investment and Insurance-based Products (PRIIPs) regulations.

10. Fair value hierarchy

FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following levels:

Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date;

Level 2: inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly; and

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

The financial assets and liabilities measured at fair value in the Condensed Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows:

As at 31 March 2023	Notes	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Financial assets at fair value through profit or loss
Quoted equities	a)	246,316	4,393	-	268,709
Total		246,316	4,393	-	268,709
As at 31 March 2022	Notes	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Financial assets at fair value through profit or loss
Quoted equities	a)	246,051	4,175	-	250,226
Total		246,051	4,175	-	250,226
As at 30 September 2022	Notes	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Financial assets at fair value through profit or loss
Quoted equities	a)	258,334	-	-	258,334
Total		258,334	-	-	258,334

a) Equities and preference shares

The fair value of the Company's investments in equities and preference shares has been determined by reference to their quoted bid prices at the reporting date. Equities and preference shares included in Fair Value Level 1 are actively traded on recognised stock exchanges. Investments categorised as Level 2 are not considered to trade in active markets.

11. Related party transactions and transactions with the Investment Manager

Fees payable to the directors and their interests in shares of the Company are considered to be related party transactions and are disclosed within the Directors' Remuneration Report on pages 30 and 32 of the 2022 Report and Accounts. The balance of fees due to directors at the period end was £nil (31 March 2022: £nil and 30 September 2022: £nil).

The Company has an agreement with Ecofin Advisors Limited for the provision of investment management services.

The investment management fee is calculated at 1.00% per annum of the Company's NAV on the first £200 million and 0.75% per annum of NAV thereafter, payable quarterly in arrears. The management fee was chargeable 50% to revenue and 50% to capital until 30 September 2022. With effect from 1 October 2022 the management fee is chargeable 40% to revenue and 60% to capital.

During the period £1,164,000 (31 March 2022: £1,068,000 and 30 September 2022: £2,178,000) of investment management fees were earned by Ecofin Advisors Limited, with a balance of £580,000 (31 March 2022: £539,000 and 30 September 2022: £562,000) being payable to Ecofin Advisors Limited at the period end.

12. Analysis of changes in net debt

	As at	Currency	As at
	30 September 2022	Differences	Cash flows            31 March 2023
	£'000	£'000	£'000                           £'000
Cash and short term deposits	-	-	-	-
Debt due within one year	(25,613)	1,397	(203)	(24,419)
	(25,613)	1,397	(203)	(24,419)

	As at 30 September 2021 £'000	Currency differences £'000	Cash flows £'000	As at 31 March 2022 £'000
Cash and short term deposits	11,251	(281)	(10,970)	-
Debt due within one year	(35,873)	-	6,389	(29,484)
	(24,622)	(281)	(4,581)	(29,484)

A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis.

Interim Management Report

The principal and emerging risks and uncertainties that could have a material impact on the Company's performance have not changed from those set out on pages 16 to 18 of the Company's Annual Report for the year ended 30 September 2022.

The directors consider that the Chairman's Statement and the Investment Manager's Report set out herein, the above disclosure on related party transactions and the Directors' Responsibility Statement below, together constitute the Interim Management Report of the Company for the six months ended 31 March 2023 and satisfy the requirements of Disclosure Guidance and Transparency Rules 4.2.3 to 4.2.11 of the Financial Conduct Authority.

The Interim Report has not been reviewed or audited by the Company's Auditor.

Directors' Responsibility Statement

The directors listed in the Interim Report confirm that to the best of their knowledge:

(i) the condensed set of Financial Statements has been prepared in accordance with FRS 104 (Interim Financial Reporting) and give

a true and fair review of the assets, liabilities, financial position and profit and loss of the Company as required by Disclosure Guidance and Transparency Rule 4.2.4 R;

(ii) the Interim Management Report includes a fair review, as required by Disclosure Guidance and Transparency Rule 4.2.7 R, of important events that occurred during the six months ended 31 March 2023 and their impact on the condensed set of Financial Statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

(iii) the Interim Management Report includes a fair review of the information concerning related party transactions as required by Disclosure Guidance and Transparency Rule 4.2.8 R.

This Interim Report was approved by the board on 18 May 2023 and the Directors' Responsibility Statement was signed on its behalf by:

Susannah Nicklin

Director

18 May 2023

Interim Report 2023

The Interim Report will be available on the Investment Manager's website www.ecofininvest.com/egl. A copy of the Interim Report for the six months ended 31 March 2023 will be submitted to the National Storage Mechanism of the FCA and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The financial information for the period ending 31 March 2023 comprises non-statutory accounts within the meaning of Sections 434 - 436 of the Companies Act 2006.

For further information, please contact:

Faith Pengelly

For and on behalf of

Maitland Administration Services Limited

Company Secretary

Tel: [phone]

18 May 2023

 

END