Half-year Report

Odyssean Investment Trust PLC

28 November 2024

 

ODYSSEAN INVESTMENT TRUST PLC

(the "Company", the "Trust" or "OIT")

HALF YEAR REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024

Odyssean Investment Trust PLC has today released its half year report for the six months ended 30 September 2024.

The half year report and other information will be available via www.oitplc.com

A copy of the half year report will also be submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

Net assets grown by 17.8% demonstrating support for OIT's differentiated investment strategy

Company performance

	30 September 2024	31 March 2024	Change
Shareholders' funds	£221.0m	£187.6m	17.8%
NAV per share	169.5p	154.4p	9.8%
Share price per share	171.0p	155.5p	10.0%
Share price premium to NAV per share#	0.9%	0.7%
Ongoing charges#	1.47%	1.48%

Past performance is not a guide to future performance

#   Alternative Performance Measure ("APM"). See glossary.

Highlights

·    In another volatile period, the Net Asset Value (NAV) per share rose by 9.8% exceeding the broader market return of 7.6% (the DNSC ex IC plus Aim Index is used as a comparator and not a benchmark)

·    Net assets of the trust increased by 17.8% due to positive NAV performance, new shares issued via a tap issuance and a small placing in July 2024

·    During the period, the trust issued a total of 9.0m shares at a premium to NAV per share; 6.5m of these were issued via the small placing in July, which was catalysed by a large buy order from a new shareholder

·    The trust's average discount since IPO remains 0.1%

·    Historically the trust's NAV performance has been a beneficiary of M&A, with 10 completed takeovers of portfolio companies since IPO in 2018

·    M&A is expected to be a driver of NAV performance over the next 18-24 months

Linda Wilding

Chair of Odyssean Investment Trust (OIT)

"Notwithstanding short-term share price movements, the Board shares the Portfolio Manager's view that we are not dependent on such macro and government-driven changes to drive performance and have a material impact on the fundamental prospects for portfolio companies and long-term NAV per share growth. We believe returns will result from: our investment strategy which focuses on companies with international sales and earnings streams, as opposed to those focused purely on the UK.

Our Portfolio Manager identifies and invests in companies where executive management actions can create value through the delivery of self-help initiatives and, our valuation discipline which creates a margin of safety against permanent capital loss for each holding, as well as the prospect of mergers and acquisitions (M&A)."

Stuart Widdowson

Fund Manager of Odyssean Investment Trust (OIT)

"Many of our portfolio companies have significant levers to drive shareholder value outside a broader sentiment towards UK smaller companies or takeover interest. The share prices of these situations rarely show straight line improvement and sentiment can vary wildly during a 2-4 year transformation, as the marginal buyer/ seller oscillates between excitement and disappointment on the pace of progress.

"However, in a number of cases the market is taking a very pessimistic view of the ability of these companies to execute a successful transformation, and valuations often are not reflective of the strategic value of assets. As more progress is made in each situation over the next period, we believe that there is the prospect of some material upside, particularly where those holdings are small and the shares illiquid.

"Liquidity in our part of the market remains patchy and we have been able to build positions of size in a number of our investee companies which we believe are hard to replicate in the market today at current share prices."

Press Enquiries

Stuart Widdowson, Odyssean Capital	07710 031620
Neil Langford, Winterflood Securities (Corporate Broker)	020 3100 0160
Sarah Gibbons-Cook/Nick Croysdill, Quill PR (Media Agency)	07702 412680/ 07815 823412 [e-mail]

About Odyssean Investment Trust PLC

Odyssean Investment Trust PLC 'OIT' is a closed-ended investment trust that seeks to deliver attractive returns to its clients by investing in quality businesses and supporting them to deliver superior returns. To achieve this the Board has appointed Odyssean Capital LLP to manage the portfolio. OIT will remain a Small Registered UK AIFM, with Frostrow currently providing risk management support to the Board.

Odyssean Capital invests in a concentrated portfolio of well-researched smaller companies, typically too small for inclusion in the FTSE 250. Constructive corporate engagement is a key part of the Portfolio Manager's approach, drawing on the investment team's lengthy and successful track record in this area. OIT has introduced formal ethical and sustainable investment restrictions, which augment our approach to engagement.

INVESTMENT OBJECTIVE

The investment objective of the Company is to achieve attractive total returns per share principally through capital growth over a long-term period.

INVESTMENT POLICY

The Company primarily invests in smaller company equities quoted on markets operated by the London Stock Exchange, where the Portfolio Manager believes the securities are trading below intrinsic value and where this value can be increased through strategic, operational, management and/or financial initiatives. Where the Company owns an influencing stake, it will engage with other stakeholders to help improve value. The Company may, at times, invest in securities quoted on other recognised exchanges and/or unquoted securities.

It is expected that the majority of the Portfolio by value will be invested in companies too small to be considered for inclusion in the FTSE 250 Index, although there are no specific restrictions on the market capitalisation of issuers into which the Company may invest.

The portfolio will typically consist of up to 25 holdings, with the top 10 holdings accounting for the majority of the Company's aggregate Net Asset Value ("NAV") across a range of industries. The Company will adhere to an exclusion-based investment approach to avoid investment in companies involved in activities the Company deems unethical and/or unsustainable.

The Company may hold cash in the Portfolio from time to time to maintain investment flexibility. There is no limit on the amount of cash which may be held by the Company from time to time.

Investment restrictions

-     No exposure to any investee company will exceed 15 per cent. of Net Asset Value at the time of investment.

-     The Company may invest up to 20 per cent. of Gross Assets at the time of investment in unquoted securities where the issuer has its principal place of business in the UK.

-     The Company may invest up to 20 per cent. of Gross Assets at the time of investment in quoted securities not traded on the London Stock Exchange.

-     The Company will not invest more than 10 per cent., in aggregate, of Gross Assets at the time of investment in other listed closed-end investment funds.

Ethical and sustainability investment restrictions

The Company will not invest¹ in companies which derive any revenue from, or are engaged in:

-     the production or direct distribution of pornography;

-     the manufacture, production or retail of controversial weapons² (e.g. chemical, biological or nuclear weapons, cluster munitions, landmines), civilian firearms and ammunition;

-     the manufacture of alcohol and tobacco products;

-     the ownership or operation of gambling facilities;

-     sub-prime and/or predatory lending;

-     oil and gas production (both conventional and unconventional, including shale oil and gas, coal seam gas, coal bed methane, thermal coal, tar sands, Arctic onshore/ offshore deepwater, shallow water and other onshore/ offshore) and includes extraction and refining;

-     animal experimentation or animal testing, (a) where there is a proven alternative and/or where testing is not mandated by regulation; or (b) where there is no proven alternative and/ or the experimentation or testing is mandated by regulation, but where the investee company is not adhering to the "three Rs" ethics of Replacement, Reduction and Refinement.

The Company will not invest more than 10 per cent., in aggregate, of Gross Assets at the time of investment in companies involved in distributing, licensing, retailing or supplying tobacco and/or alcohol beverage products.

1       'The Company will base its analysis of an investee company's revenues and activities on publicly available information, and will exclude revenues and activities that are considered to be de-minimis, being those that represent less than 1% of the investee company's revenue.

2       Controversial weapons are those that have an indiscriminate and disproportional humanitarian impact on civilian populations, the effects of which can be felt long after military conflicts have ended.

Borrowings

As a Small Registered AIFM, the Company may not employ borrowings.

Derivatives and Hedging

The Company will not use derivatives for investment purposes. It is expected that the Company's assets will be predominantly denominated in Sterling and, as such, the Company does not intend to engage in hedging arrangements, however, the Company may do so if the Board deems it appropriate for efficient portfolio management purposes.

General

The Company will not be required to dispose of any asset or to rebalance the Portfolio as a result of a change in the respective valuations of its assets.

The Company intends to conduct its affairs so as to qualify as an investment trust for the purposes of section 1158 of the CTA 2010.

Any material change to the Company's investment policy set out above will require the approval of Shareholders by way of an ordinary resolution at a general meeting and the approval of the Financial Conduct Authority. Non-material changes to the investment policy may be approved by the Board.

Financial Summary

Company performance	As at 30 September 2024	As at 31 March 2024	Change
Shareholders' funds	£221.0m	£187.6m	17.8%
NAV per share	169.5p	154.4p	9.8%
Share price per share	171.0p	155.5p	10.0%
Share price premium to NAV per share#	0.9%	0.7%

	Six months to 30 September 2024	Year to 31 March 2024
Revenue return per share	(0.1)p	(0.4)p
Capital return per share	14.5p	(5.3)p
Total return per share	14.4p	(5.7)p
NAV total return per share#	9.8%	(3.7)%
DNSC ex IC plus AIM Total Return Index*	7.6%	3.0%

Cost of running the Company	Six months to 30 September 2024	Year to 31 March 2024
Ongoing charges#	1.47%	1.48%

*     Used by the Company as comparator, not a Benchmark. Source: Bloomberg. See glossary for further information.

#    Alternative Performance Measure ("APM"). See glossary.

Past performance is not a guide to future performance.

Chairman's Statement

Introduction

I am pleased to present the Half Year Report and Financial Statements for Odyssean Investment Trust PLC ("OIT" or the "Company") covering the period from 1 April 2024 to 30 September 2024.

Performance

Over the period, the net asset value per share ("NAV per share") of your Company rose by 9.8% in another volatile period, exceeding the broader market return of 7.6%. Being a concentrated, high conviction strategy it is not unusual for the short-term performance to vary materially from the broader market. During the period, the daily performance was more than 0.75% different from the market on more than a quarter of trading days.

Although the period started off with green shoots of increased interest in UK equities, momentum seemed to abate with the announcement of the UK general election some months earlier than expected. Despite an immediate rally driven by the decisiveness of the result, UK equity markets struggled to maintain positive momentum, in part due to uncertainties on the incoming government's taxation and spending plans.

Over the period, performance of the S&P 500 appears to have broadened out from the famous large cap tech names. This broadening out of performance is a positive lead indicator for non-US equities. Non-US equities continued to trade at material discounts to US markets, with UK equity markets being amongst the cheapest globally.

The net assets of your Company increased by 17.8% over the period under review due to the combination of positive NAV performance, new shares issued via tap issuances and also a small placing in July 2024. Notwithstanding that UK equities remain out of favour, it is encouraging to continue to see support for the Company and its differentiated investment strategy, as well as a recognition of the potential returns from the portfolio as sentiment improves.

Discount and premium management

The share price has tracked in line with the NAV per share over the period, albeit with continued volatility. The Company's shares ended the period trading at a 0.9% premium to the NAV per share.

The Company issued a total of 9.0m shares at a premium to the NAV per share over the period, which meant that there was no dilution to existing shareholders. 6.5m of these were issued via a small placing in July, which was catalysed by a large buy order from a new shareholder. Since the period end and up to the date of this report a further 850,000 shares have been issued at a premium to the NAV per share.

The Company's average discount since IPO remains 0.1%. The Board believes that the Company's strong absolute and relative rating is driven by a number of factors including good performance, a differentiated strategy effective communication with existing and potential investors, a clear discount control policy (including a periodic redemption facility) and a well-balanced register of long-term shareholders.

Dividend

The Directors expect that returns for shareholders will be driven primarily by capital growth of the shares rather than dividend income.

No interim dividend will be paid for the year ending 31 March 2025.

Growth of the Company

Through the period, the Company's NAV passed comfortably above £200m. Both the Board and our Portfolio Manager's primary objective is growing the size of the Company over the long term, they are both aware that there are benefits of the Company continuing to grow its absolute size. We believe these benefits include having a broader base, over which to spread fixed costs and a more diversified register driving improved daily liquidity in the secondary market, which in turn helps reduce both the absolute discount over time but also its volatility. As the Company trends towards £250-300m, the liquidity and discount profile are likely to attract new holders for whom the Company might have been too small in the past.

The Company intends to seek to grow both via organic means (NAV performance) as well as periodic issuance in response to demand for new shares exceeding supply from those wishing to sell their shares. The alternative approach of a large placing is less attractive due to the time taken to deploy capital and the risk of cash drag.

While the Board's focus remains on supporting the growth of the Company through measured share issuance, it is not ruling out other strategic initiatives, and notes with interest the pick-up in corporate activity in the Investment Companies sector over the past year. However, the universe of potential appropriate consolidation candidates is small, and both the Board and our Portfolio Manager wish to avoid distraction.

The Board and our Portfolio Manager agree that the investment strategy is not infinitely scalable. However, both parties agree that there appears to be considerable room for the Company to grow before returns from its investment strategy are compromised.

Company Secretary

Frostrow Capital LLP, our Company Secretary, have resigned from their role and will cease to act in this capacity with effect from 25 January 2025. On behalf of the Board, I would like to thank them for their hard work during their appointment. I am pleased to confirm that NSM Funds (UK) Limited will be taking over from them.

Outlook

Investors have sometimes believed that the attractiveness and future returns from UK smaller companies are somewhat tied to the performance of the UK economy. If the recent change of government and their plans for higher tax and government spending were to be a dampener on economic growth, then some might argue that it reduces the attractiveness of UK smaller companies.

Notwithstanding short-term share price movements, the Board shares our Portfolio Manager's view that we are not dependent on such macro and government-driven changes to drive performance and have a material impact on the fundamental prospects for portfolio companies and long-term NAV per share growth. We believe returns will result from: our investment strategy which focuses on companies with international sales and earnings streams, as opposed to those focused purely on the UK. Our Portfolio Manager identifies and invests in companies where executive management actions can create value through the delivery of self-help initiatives and, their valuation discipline which creates a margin of safety against permanent capital loss for each holding, as well as the prospect of mergers and acquisitions (M&A).

Sentiment towards UK equities, including small and mid-cap equities, remains depressed and fragile. However, as earnings appear to be troughing out in cyclical sectors, the Board shares our Portfolio Manager's view that, in the absence of a widespread re-rating of UK small and mid-cap equities, a resurgence in M&A, especially from overseas trade buyers, seems likely. Historically the Company's NAV performance has been a beneficiary of M&A, with 10 completed takeovers of portfolio companies since 2018, 70% of which were executed by trade buyers (or private equity backed trade buyers) and 60% executed by overseas buyers.

Our Portfolio Manager's investment process filters out companies which have "poison pills" making M&A less likely, applies a rigorous valuation methodology to ensure it acquires stock at a large discount to private market transactions, and avoids companies which are unlikely to be coveted by alternative owners to public market investors. As a result, the Board shares our Portfolio Manager's view that M&A will begin to become a more significant driver of the Company's NAV per share returns over the next 18-24 months.

Any improvement in broader sentiment towards UK small and mid-cap companies could see some quite sharp positive share price movements amongst portfolio companies. Liquidity is low, which as market sentiment fell, has in some cases led to disproportionate falls in share prices. It has often been difficult to acquire significant stakes in less liquid companies over the past three years. Our Portfolio Manager takes a long-term view and is open to building stakes on price corrections. Many peers managing open ended funds subject to daily liquidity calls have eschewed these opportunities - leading to stakes being purchased at attractive prices. We share our Portfolio Manager's belief that it is often not possible to build such stakes as confidence and sentiment improves and broader peers attract new capital. It is likely that a number of portfolio holdings will see increased interest from new buyers, which should be positive for performance.

We continue to be grateful for the ongoing support and patience of shareholders during this period of volatility and continued adverse sentiment towards the broader asset class.

Linda Wilding
Chairman

27 November 2024

Portfolio Manager's Report

Stuart Widdowson

Fund Manager

Ed Wielechowski

Fund Manager

Details of the Portfolio Manager

The Company's Portfolio Manager is Odyssean Capital LLP.

The Portfolio Manager was founded in 2017 by Stuart Widdowson and Harwood Capital Management Limited, an independently owned investment group, and is jointly owned by both parties. The Chairman of Odyssean Capital LLP is Ian Armitage, former CEO and Chairman of HgCapital.

The Portfolio Manager's investment team, Stuart Widdowson and Ed Wielechowski, identify and undertake research on potential investee companies as well as managing the portfolio. They draw on the experience of a four-strong Panel of Advisors, who have run and invested in multiple quoted and unquoted smaller companies. In addition, the investment team draws on the expertise and experience of Mr Armitage and Mr Christopher Mills, who sits on Odyssean Capital's Board as a Non-Executive Director. Mr Armitage and Mr Mills have more than 86 years' combined investment experience in quoted and unquoted smaller companies.

Stuart Widdowson, Fund Manager

Stuart has spent the last 24 years investing in public and private UK small and mid-size corporates and a further two years providing investment advisory services in the same field.

Prior to founding the Portfolio Manager, Stuart was at GVQ Investment Management ("GVQ"), where he held the position of fund manager and head of strategic investments for more than seven years. During his time at GVQ, Stuart led the transformation of the performance of Strategic Equity Capital plc ("SEC") and significantly improved shareholder value. Stuart led SEC to win several industry awards and was recognised as Fund Manager of the Year at both the PLC and QCA awards in 2015.

Stuart began his career as a strategy consultant undertaking commercial due diligence and strategy projects for private equity and corporate clients. In 2001, he joined HgCapital and spent five years working on small and mid-cap leveraged buyouts in the UK and Germany. During this time, he worked on a number of public to private transactions of UK quoted companies.

Ed Wielechowski, Fund Manager

Ed joined the Portfolio Manager in December 2017 as a Fund Manager.

Prior to joining Odyssean, Ed was a Principal in the technology team at HgCapital. He joined HgCapital in 2006 and worked on numerous completed deals, including multiple bolt-on transactions made by portfolio companies. He has additional quoted market experience, having led the successful IPO of Manx Telecom plc in 2014, as well as having evaluated and executed public to private transactions. Ed started his career as an analyst in the UK M&A department of JPMorgan in 2004.

Progress and performance in the period

The six months to September 2024 were a broadly positive period for equity investors. After two years of ongoing debate on the future path for inflation and interest rates, investors were given positive news on both with inflation continuing its downwards trend towards target levels in most regions and central banks starting their long awaited easing cycles. The period was marked by volatility driven by growing questions on the outlook for global growth - notably whether the Federal Reserve would manage to pull off the expected 'soft landing' for the US economy.

UK markets seemed to enjoy increased investor interest post March, as evidenced by rising markets and also a return into meaningful inflows to the largest FTSE 250 tracker managed by Vanguard. However, this momentum seemed to ebb on the announcement of the general election. Whilst markets were initially positive about the decisive result, uncertainty on fiscal policy changes ahead of the budget weighed on UK equities. Speculation about increased Capital Gains Tax has undoubtedly driven selling (as evidenced by significant director sales), as has concerns that the Business Relief regime benefitting AIM stocks will be abolished. The latter led to AIM stocks de-rating, especially since the beginning of September.

Key UK indices were positive through the period with the FTSE All-Share, FTSE 250 and FTSE Small Cap all delivering strong gains. Conversely, AIM stocks were broadly flat, continuing a long period of underperformance.

These gains were made despite a continuation of the long-running theme of outflows from UK focused equity funds. Data collected by Calastone suggests that outflows have now persisted for 41 consecutive months. The improved relative sentiment towards the UK is hopefully a positive lead indicator that this trend cannot persist ad infinitum, and any improvement could be a potential catalyst to improving UK equity performance.

The Company's NAV per share rose 9.8% in the period, exceeding the 7.6% rise in the DNSC ex IC plus AIM index, which we use as a comparator.

The top three positive contributors to performance through the period were NCC, Ascential and XP Power.

NCC has continued to deliver on the performance improvement plan initiated post the profits warning in 2023, with shares rising c.43% during the period. This strong share price performance has been driven by improving trading notably in the group's core cyber security division. This division has seen a stabilisation in end markets (from the weakness that drove the historic downgrades), and management have worked hard on self-help actions which have seen improving gross margins through better utilisation, accelerating revenue growth and an improving sales mix (notably through strength in high quality, recurring managed services revenue). We believe the actions at NCC have put in place a solid foundation to drive future value growth from current levels. Despite the strong share price progress through the period, we continue to see significant future potential.

In prior reports we have previously discussed the process of disposals that Ascential was undertaking to drive shareholder value. We had invested in Ascential believing it was trading at a material discount to fair value on a 'sum-of-the-parts' basis, and welcomed management's successful sale of two of the group's divisions in late 2023. These disposals resulted in a material cash return to shareholders during the period, and left a pure play events focused business. This remaining business was itself bid for by Informa PLC in July at a c.50% premium to the then share price. Although we had reduced our investment weighting in Ascential following the capital return and subsequent strong share price performance, the ultimate takeover crystalised a return of c.36% IRR during our holding period, and a total capital gain of £12.5m - the largest of any investment since OIT's launch.

XP Power's shares began the period at depressed levels, driven by a combination of weak end market demand and historic missed expectations. Little credit was being given to the work done by the management team to reduce inventory and reduce costs to mitigate this cyclical weakness in demand, and we believe that the shares were trading at a considerable discount to intrinsic value. In May, the company attracted a hostile bid approach from US listed peer Advanced Energy at a c.68% premium to the then share price. Despite this optically high premium, we went on public record to support the board in not engaging with a bid at this level. This is because we believe it materially undervalued the prospects of the group under any recovery scenario in-line with historic precedents. This view appears to have been shared by other investors as after a month Advanced Energy stated it would not follow through with its bid. Surprisingly, the shares have subsequently drifted back to the level they were shortly before the approach.

The three positions with the largest negative contribution to performance during the period were Stabilus, Gooch & Housego and Auction Technology Group ("ATG").

Stabilus posted a negative trading update during the period flagging reduced demand for its products sold into the automotive sector as that industry saw lower call off volumes. Despite weakness in the automotive focused part of the business, performance in the industrial side of the business and the recent Destaco acquisition were more robust and in-line with expectations (together these parts of the business cover over 50% of profits). We continue to see the group as well placed to benefit from secular growth trends around increasing manufacturing automation and standardisation of luxury features on mass market cars. At current levels shares appear to be trading on trough multiples on cyclical low earnings. We believe that the absolute rating is undemanding for a global niche market leader.

In August Gooch & Housego released a trading update downgrading its full year expectations, driven by the slippage of certain orders due to supply chain delays with key partners. Gooch shares also suffered through the period being one of our few positions listed on AIM, where concerns around any change in business relief rules weighed on sentiment. Despite these short-term and technical issues, we continue to believe that Gooch is making good progress. The new CEO has set out an ambition to double group margins to 15% through self-help, portfolio re-shaping and growth. Early signs are positive on progress on all of these areas despite the mixed macro environment. The weakness in shares through the period have left the group trading on c.1x EV/sales, roughly half its long-term average, and undemanding for a business which we believe has the potential to generate 15% operating margins and grow in excess of GDP across the cycle.

Auction Technology Group downgraded its outlook on ongoing softness in asset pricing across its core Industrial & Commercial and Arts & Antiques, online auction markets, which also led to the shares de-rating. Despite the headwinds in its end markets, ATG continues to make progress on the aspects of the business that are under its control. We believe that the group has a unique market position as the leading platform connecting buyers with vendors of assets, and the core opportunity for ATG is to improve the experience for their customers and better monetise this position. The group seems to be making good progress around this, initially through rolling out value added services covering integrated payments and shipping and marketing support. All of these activities improve the experience for users, whilst allowing ATG to capture more value from each transaction they facilitate. Continuing progress on these initiatives can support material growth for ATG and it enjoys a high margin, cash generative business model. We note that comparable online marketplace businesses trade on significantly higher ratings than ATG, suggesting future opportunity.

The portfolio was on average 98% invested across the period. Net cash began the period at 2.8% and ended the period at 1.4%. The portfolio consisted of 16 holdings as at the end of September 2024.

Portfolio development

The six months to September 2024 saw a return to a more normal level of portfolio activity following a quieter prior period.

In total c.£51.4m was invested across the period into stock purchases. c.£20m was invested across two new positions. Firstly, a new top ten position was initiated in Genus PLC, a leading provider of genetics to the porcine and bovine markets. Secondly, a smaller weight position was initiated in a Canadian listed, but globally active B2B technology business, Blackline Safety Corp - a position which has scope to grow over time. Where we invest in businesses listed outside the UK it typically reflects prior knowledge of the company, business model or management team which gives us a strong diligence or experiential 'angle' to de-risk the investment, this investment reflected these criteria. In this case we first met the CEO in 2005 and have tracked his progress since. The investment was made via a placing.

c. £31.4m was invested into existing positions with material follow-on investments made in Essentra and Auction Technology Group as these newer positions were scaled, as well as investments into Gooch & Housego and XPP following share price weakness.

Through the period we realised c.£34.9m from sales with two positions fully exited raising £25.7m, and partial realisations raising a further £9.2m.

The fully exited positions were Ascential and Chemring. As described above, Ascential delivered on management's breakup of the group delivering a material cash return to shareholders following a disposal of two of the group's divisions, before the remaining events focus business was itself bid for by Informa PLC.

Chemring was a smaller position in the portfolio. We had been long-term investors in Chemring, with it being one of the first investments in OIT following IPO. The group saw some volatility during our investment (notably the tragic explosion at one of its sites shortly after we initially invested), but overall the group delivered strong performance driving up group margins through self-help, disposing of lower quality non-core assets and delivering strong growth through investment in new facilities and particularly its cyber and electronic warfare business Roke. Chemring shares have performed well over the past 12 months and, although we see an ongoing strong demand environment as positive for the group, we see better risk/reward opportunities elsewhere in the market. Over the c.6 years of investment, we have adjusted our weighting, but overall Cheering has delivered a c.20% IRR against a flat market.

Liquidity in our part of the market remains patchy and we have been able to build positions of size in a number of our investee companies which we believe would be hard to replicate in the market today at current share prices.

Portfolio detail

At the end of the period under review, the portfolio comprised 16 companies. During the period two new positions were initiated, one inside the top ten, and one smaller position outside the top ten which has scope for future growth. Two positions were fully exited (as detailed above).

Key updates through the period for the largest ten positions (accounting for 78.9% of net asset value) are detailed below:

NCC Group

% NAV: 15.3%

Sector: TMT

Leading independent provider of software escrow services and cyber security consulting provided through the Assurance division.

NCC's posted a solid set off full year results in June. The group flagged improving performance through the year from its Cyber Security Division led by 36% year on year growth in the recurring, higher quality managed service business offsetting a softer period for more transactional work. The cyber business also saw gross margins increase c.800bps through the period as utilisation levels improved. The group's Software Escrow Division delivered well continuing its recent track record of organic growth. We continue to see NCC as making good progress on its turnaround journey with increasing confidence that management will drive the cyber business to their targets of mid-teens growth and mid-teens margin. Successful execution would justify a valuation meaningfully in excess of the current share price.

XP Power

% NAV: 11.7%

Sector: Industrials

Leading supplier of power supplies and power converters for industrial, healthcare and semi-conductor end markets.

H1 results for XPP confirmed trading was 'in-line' with management expectations for a period of softer trading driven by ongoing de-stocking in the healthcare and industrial sectors and the semi-conductor market working through the low point of the current cycle. As described above, key news during the period was the announcement of an unsolicited bid for the company from US peer Advanced Energy at 1,950p per share (a c.68% premium to the then share price). This approach was rejected by the board of XPP which noted it 'fundamentally undervalues the company and its prospects.' With seeming little shareholder support, the bid ultimately fell away. With the company's end markets at a low ebb, and the bid being less than the long-term average EV/Sales ratio, we went on record to indicate we would not be willing to accept a bid at that price. In prior cycles, when XPP's markets turn, the group has seen a material profit recovery and a sharp re-rating.

Elementis

% NAV: 11.0%

Sector: Industrials

Leading producer of specialty chemicals focused on personal care, talc and coatings markets.

Elementis's H1 results were strong, driving upgrades to full year expectations. The group delivered c.5% revenue growth led by the Coatings and Personal Care divisions offsetting ongoing challenging markets in talc. The group made strong progress on margins, through price and mix as well as self-help cost savings, with full year expected savings for 2024 increased to c.$15m (from prior target of $12m). Interestingly the group announced a strategic review of its talc business with a disposal one possible outcome. Elementis's shares performed well during the period as new investors began to buy into the self-help story. We continue to see further value to come as the full cost savings and margin potential of the group is delivered. A disposal of the talc division would also clarify the equity story and underline the quality of the rest of the group.

Genus

% NAV: 7.7%

Sector: Healthcare

Leading global provider of genetics and related services to porcine and bovine markets.

Genus is a provider of genetics and related services into the global porcine and bovine industries. We believe it enjoys a strong position in its supply chain, benefits from very material barriers to entry and is a highly strategic asset. The group is the clear global leader in porcine genetics, where we believe it has the best product and a unique "royalty" based business model which smooths what can be a cyclical market. The bovine side of the business is one of the leading global players in what is a more fragmented market, and enjoys a strong presence in the higher growth area of sexed semen.

The group appears to have been undermanaged in recent years, notably on the bovine side of the business which makes effectively no margin when costs are fully allocated (vs. we believe >15% for peers). This has been a headwind for shares in recent years alongside an unusual confluence of many of the group's markets being simultaneously at demand low points.

We see multiple drivers of shareholder value from this point. Firstly, the group's end markets should recover from current cyclical lows and Genus is well positioned to take market share given the strength of its product range. Secondly, a newly installed CEO is focused on driving the bovine business to industry level margins through self‑help actions and greater R&D discipline. Beyond this we see further 'break-out' upside from a new disease resistant pig genetic line currently in FDA approval process, which although a longer-term story could provide a multiyear runway of further growth. We believe that shares today are trading below the sum-of-the parts of the group and undervalue Genus's potential in a market where private equity is active.

Xaar

% NAV: 6.1%

Sector: Industrials

Leading independent designer and manufacturer of industrial inkjet print heads.

Xaar's H1 trading was in-line with expectations and confirmed 2024 would be a challenging year for the company driven by ongoing weakness in its core legacy market in ceramics printing. Notwithstanding short-term trading uncertainties, we remain excited by the medium-term prospects for Xaar. Over the period the company has significantly grown share in its existing markets, as well as launching long anticipated new products into new applications. Whilst the outlook for the ceramics printing market remains challenged (China construction weakness seems set to continue) we see opportunities as having the scope to materially scale the business in the longer term from growing its revenues in end markets where it is less present (textiles, corrugate and advanced manufacturing). Successful adoption of inkjet printing of UV inks for battery coatings (vs current PET coating technique and the competing UV ink spray approach) could see an inflection in the business' performance and perception. We believe that inkjet printing of battery coatings offers a materially lower total cost of ownership for battery manufacturers to coat batteries, and may have other applications in Electric Vehicles such as cooling board and cooling tube coating.

James Fisher

% NAV: 6.1%

Sector: Business Services

Leading provider of niche marine services across the renewables, energy and defence sectors.

James Fisher's FY23 results confirmed the group had traded in-line with expectations, with growth seen across all divisions. The group also began to show the early benefits of its transformation towards a more unified, simple business model with improvements in margins and ROCE. The group also completed the disposal of its RMS Pump Tools business, realising £83m of cash which was used to reduce group leverage towards the management target, supporting a subsequent re-financing and material reduction in ongoing bank costs. With the group having now managed through its balance challenges, James Fisher as well placed to progress on its ongoing self-help transformation programme. The new management team have a solid foundation to drive towards their initial targets of 10% margins (vs. 6.0% in FY23) and 15% ROCE. With shares still trading materially below 1.0x sales, delivery of these targets suggests significant potential upside.

Gooch & Housego

% NAV: 5.8%

Sector: Industrials

Manufacturer of photonics solutions for a variety of end markets.

Gooch posted an inline H1 trading update in April, noting a robust forward orderbook despite ongoing tough end markets. Unfortunately, later in the period the group downgraded full year expectations due to certain orders being pushed out into the following year on the back of supply chain / third party delays. We remain of the view that Gooch is on the right track and there are some good growth opportunities ahead of it. Management is making progress on their self-help plan to materially improve margins through simplification of the group and operational efficiency, whilst a more commercial approach to R&D has landed well with customers suggesting stronger organic growth to come. Shares remain well below their long-term ratings, and we see potential for this discount to correct as delivery of this operational potential comes through and end markets become more favourable.

Dialight

% NAV: 5.6%

Sector: Industrials

Leading manufacturer of LED lighting systems for harsh industrial environments.

A brief trading update from Dialight in June confirmed trading was "in-line with expectations" through March 2024 and progress was being made on the disposal of non-core business units. More recently, unfortunately the group announced an unexpectedly adverse outcome to its long running litigation with its former outsourced production partner. This is frustrating as operationally and strategically, Dialight continues to progress through its transformation journey. The new management team is in the process of rebuilding the group's production, sales and marketing and central functions. These actions should transform the business' quality, being able to drive better growth, higher margins, ultimately increasing its covetability. We do not believe that the potential of this transformation is reflected in the current share price.

Spire Healthcare

% NAV: 5.1%

Sector: Healthcare

Leading provider of private hospitals in the UK.

Spire's H1 results were broadly in-line with expectations, demonstrating ongoing growth in private (led by insured patients) and NHS treatments, progress in its recently acquired non hospital business and initial delivery on cost savings targets. We continue to believe Spire is well placed in a supportive market. High NHS waiting lists continue to drive demand for private healthcare. Beyond the supportive demand environment, Spire continues on its self-help programme to deliver £60m of cost savings from back office areas by FY26 - an objective that looks highly achievable. There is a clear pathway to strong organic earnings progression in the next few years and we expect the group to continue to bolster this with accretive M&A to expand its higher ROCE non hospital based business. We believe that the change of government is likely to be positive for Spire's prospects.

Essentra

% NAV: 4.5%

Sector: Industrials

Leading manufacturer and distributor of essential industrial components.

After a solid H1 update, late in the period Essentra flagged that the outlook for end markets had softened, and resultantly downgraded its full year forecasts. Whilst this update was disappointing we view it as reflective of broad market conditions and not a company specific issue. We continue to believe that Essentra is a well-run leader in a large and fragmented market. Management have delivered well on managing the cost base through the current cyclical low and the group is well positioned to see a rapid rebound in profits when end markets recover. We see further upside from management continuing their track record of bolt-on M&A to expand the group's geographic and product range.

The remaining six investments represent up to 4.3% of NAV each. They are weighted towards our core focus sectors and include positions with the potential to scale as liquidity and due diligence allows.

Outlook

Since the period end, the long trailed first budget of the new UK government as well as the decisive US election result have removed two key uncertainties for investors.

The long lead up to the UK budget, with many of the tax changes being telegraphed in advance, in our view has led to both UK consumer and business sentiment falling - and marginal decisions on spending investment and hiring being delayed. We share the concerns of some commentators that the increase in public expenditure beyond existing plans is unlikely to stimulate growth, as historically the public sector has generally been a poor allocator of capital and according to the Economist, public sector productivity is unchanged since the mid-1990s despite the advances the private sector has made and the advent of more technology in the workplace.

The largesse being afforded to the public sector in the UK is reminiscent of the 1970s, and we fear that there will be increasing "crowding out" of the private sector by the public sector. The ultimate result of this is likely to be that the UK economy slips back from the growth trajectory experienced in the first half of the year - both in absolute terms and relative to other advanced economies.

In contrast, the clear mandate given to the incoming US government will support de-regulation and lower taxation, providing an even more supportive environment for private sector businesses. There is likely to be much more ambition to curtail public sector waste and inefficiency than in the UK, which we believe should help slow the unsustainable rise in US public debt. In short, we expect the performance gap between the growth in the US and the UK economies to continue to widen, not shrink.

In both the US and the UK, our expectation is for interest rates, whilst on a downward trend, to perhaps decline less fast and to settle at a higher level than previously anticipated.

Given this backdrop, it is likely that US equities will remain in favour, but that performance will be driven much more broadly across all companies, rather than the extreme concentration of recent performance - which had been driven by the large tech stocks. The decisive victory is likely to lead to improved business confidence and a pick-up in economic activity through 2025. This is likely to drive re-ratings of more traditional and small and mid-cap US companies, which we believe will begin to re-consider acquisitions.

With interest rates not set to fall back to the very low levels of the last decade, we believe that growth at a reasonable price (GARP) and value investing will continue to be relatively more attractive than growth investing. At some point as the US equity market re-rates, we believe it is likely that international investors will begin to look to non-US equity markets, initially seeking companies which have significant sales and earnings exposure to the US, but are trading at a material discount to US peers on account of a non-US listing. The Company's portfolio would be a direct beneficiary of such a trend.

The converse appears to have been the case since July, when prior to the budget there was much more investor interest in domestically focused companies, particularly consumer facing companies and housebuilders.

Whilst at times, relative and absolute performance for the portfolio has been more challenging, we believe that this has the potential to shift in an opposite and positive direction as 2025 progresses, particularly due to the international nature of the underlying portfolio company sales. The portfolio in aggregate has 35% of sales derived from the US, compared with only c.8% for the average FTSE smaller company and 17% for the average FTSE 100 company.

In addition, we believe the earnings cycle of industrial companies in the portfolio is likely to turn in 2025, due to a combination of improved end market confidence (and many of these companies having significant exposure to the US economy), as well as the very soft comparatives from a difficult 2024. Investor sentiment will at some point recognise this likely earnings improvement trajectory and begin to price it in. The portfolio holdings we expect to see this occur first in are XP Power, Gooch & Housego and Essentra.

Moreover, in the absence of a re-rating of holdings with material US$ sales and earnings, we expect to see incoming M&A interest from US trade buyers. We see little to drive a material re-rating of sterling against the US$, and many of our portfolio companies remain not just undervalued in absolute terms, but also are more lowly rated that close US peers.

Many of our portfolio companies have significant levers to drive shareholder value outside a broad sentiment improvement towards UK smaller companies or takeover interest. The share prices of these situations rarely show straight line improvement and sentiment can vary wildly during a 2-4 year transformation, as the marginal buyer/ seller oscillates between excitement and disappointment on the pace of progress. However, in a number of cases the market is taking a very pessimistic view of the ability of these companies to execute a successful transformation and valuations often are not reflective of the strategic value of assets. As more progress is made in each situation over the next period we believe that there is the prospect of some material upside, particularly where those holdings are small and the shares illiquid.

Over the past few years, the Company's NAV has benefitted from portfolio holdings which have catalysed significant value through a breakup of a mini conglomerate structure or a sale of one or more divisions. Good examples have been Ascential and Euromoney. In the immediate future we anticipate that a successful conclusion of the longstanding strategic review of Benchmark Holdings is likely to result in a sale of some or all of the three business units, creating an uplift to current market value as well as releasing capital for re-investment. Equally, a successful conclusion of Elementis's strategic review of its talc division, perceived by many as a poison pill, could lead to a notable re-rating of the remaining group. There are further opportunities elsewhere across the portfolio.

The deliberate shift we made in the portfolio towards the industrial sector, especially smaller electronics companies in the latter part of 2023, was in retrospect, from a share price perspective, premature - although we had missed the worst of many share price declines, the trading conditions continued to deteriorate further than we had anticipated and in the short term had been insufficiently offset by self-help we had identified. However, we believe that we have secured highly strategic stakes in many of these companies, where there is very substantial upside to come as the earnings cycle turns and investor sentiment improves, or alternatively the M&A "animal spirits" rise again.

In the meantime, we appreciate shareholders' patience and support as long-awaited and delayed catalysts come through in the portfolio.

Stuart Widdowson | Ed Wielechowski

Portfolio Managers

Odyssean Capital LLP

27 November 2024

Portfolio of Investments

as at 30 September 2024

Company	Sector	Country of Listing	Cost £'000	Valuation £'000	% of Net Assets
NCC Group	TMT	UK	17,621	33,782	15.3%
XP Power	Industrials	UK	29,581	25,925	11.7%
Elementis	Industrials	UK	17,124	24,390	11.0%
Genus	Healthcare	UK	20,262	17,000	7.7%
Xaar	Industrials	UK	14,572	13,504	6.1%
James Fisher and Sons	Business Services	UK	9,483	13,376	6.1%
Gooch and Housego	Industrials	UK	10,308	12,870	5.8%
Dialight	Industrials	UK	5,303	12,350	5.6%
Spire Healthcare	Healthcare	UK	10,912	11,163	5.1%
Essentra	Industrials	UK	9,832	9,932	4.5%
Top 10 equity investments				174,292	78.9%
Other equity investments*				43,736	19.8%
Total equity investments				218,028	98.7%
Cash and other net current assets				2,979	1.3%
Net assets				221,007	100.0%

*     Other equity investments include six investments, each represents between 1.1% and 4.3% of NAV. These are spread across our core focus sectors and all offer scope to scale, subject to further due diligence and pricing remaining attractive.

Interim Management Report and Statement of Directors' Responsibilities

Interim Management Report

The important events that have occurred during the period under review, the key factors influencing the financial statements and the principal factors that could impact the remaining six months of the financial year are set out in the Chairman's Statement and the Portfolio Manager's Report.

Principal Risks and Uncertainties

The principal risks and uncertainties associated with the Company are set out on pages 36 to 42 of the Annual Report and Accounts for the year ended 31 March 2024, which is published on the Company's website. Such risks and uncertainties are as applicable for the remaining six months of the Company's financial year as they have been for the period under review. The risks can be summarised under the following headings: investment performance not being comparable to the expectations of investors, share price performance, loss of personnel or reputation of the Portfolio Manager, material changes within the Portfolio Manager's organisation, valuation of unquoted investments, reliance on the performance of third-party service providers, global risk, UK regulatory and legal risk, governance risk, ESG and climate change risk, market risks (including market price risk, currency risk and interest rate risk), liquidity risk and credit risk.

The Board has noted that global markets are continuing to experience unusually high levels of uncertainty and heightened geopolitical risks. The Board continues to monitor this closely. The Directors have considered the impact of this continued uncertainty on the Company's financial position and, based on the information available to them at the date of this report, have concluded that no adjustments are required to the accounts as at 30 September 2024. Developments continue to be closely monitored by the Board.

Related Party Transactions

During the first six months of the current financial year no material transactions with related parties other than those set out in the notes to the financial statements have taken place which have affected the financial position of the performance of the Company.

Going Concern

The Directors believe, having considered the Company's investment objectives, risk management policies, capital management policies and procedures, nature of the portfolio and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future and, more specifically, that there are no material uncertainties relating to the Company that would prevent its ability to continue in such operational existence for at least twelve months from the date of the approval of this Half Year Report. For these reasons, they consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts.

Responsibility Statement

The Directors confirm that, to the best of their knowledge:

(i)         the condensed set of financial statements contained within the Half Year Report have been prepared in accordance with International Accounting Standards ("IAS") 34; and

(ii)         the Interim Management Report includes a fair review of the information required by:

a)     DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

b)    DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions that could do so.

The Half Year Report has not been audited by the Company's Auditor.

This Half Year Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the date of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

For and on behalf of the Board

Linda Wilding

Chairman

27 November 2024

Condensed Income Statement

for the six months ended 30 September 2024

	Notes	Six months ended 30 September 2024 (unaudited)			Six months ended 30 September 2023 (unaudited)
		Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Income	3	1,764	-	1,764	784	-	784
Net gains/(losses) on investments held at fair value		-	18,891	18,891	-	(4,231)	(4,231)
Portfolio management and performance fees	4	(1,062)	(681)	(1,743)	(901)	-	(901)
Other expenses	5	(760)	-	(760)	(416)	-	(416)
Return before taxation		(58)	18,210	18,152	(533)	(4,231)	(4,764)
Taxation	6	-	-	-	-	-	-
Net return for the period		(58)	18,210	18,152	(533)	(4,231)	(4,764)
Basic and diluted return per share (pence)	7	(0.1)	14.5	14.4	(0.5)	(3.7)	(4.2)

The total column of the statement is the Income Statement of the Company prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the United Kingdom. The supplementary revenue and capital columns are presented for information purposes as recommended by the Statement of Recommended Practice ("AIC SORP") issued by the AIC.

All items in the above Statement derive from continuing operations. No operations were acquired or discontinued during the period.

There is no other comprehensive income, and therefore the return for the period after tax is also the total comprehensive income for the period.

The notes form part of these financial statements.

Condensed Statement of Changes in Equity

			Special
Six months ended 30 September 2024	Share	Share	distributable	Capital	Revenue
	capital	premium	reserve	reserve	reserve	Total
(unaudited)	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance as at 1 April 2024	1,214	53,542	85,475	47,721	(395)	187,557
Net proceeds from share issuance	90	15,208	-	-	-	15,298
Net return for the period	-	-	-	18,210	(58)	18,152
As at 30 September 2024	1,304	68,750	85,475	65,931	(453)	221,007
			Special
Six months ended 30 September 2023	Share	Share	distributable	Capital	Revenue
	capital	premium	reserve	reserve	reserve	Total
(unaudited)	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance as at 1 April 2023	1,129	40,556	85,475	53,968	77	181,205
Net proceeds from share issuance	39	6,001	-	-	-	6,040
Net return for the period	-	-	-	(4,231)	(533)	(4,764)
As at 30 September 2023	1,168	46,557	85,475	49,737	(456)	182,481

The notes form part of these financial statements.

Condensed Statement of Financial Position

as at 30 September 2024

		As at	As at
		30 September	31 March
		2024	2024
		£'000	£'000
	Notes	(unaudited)	(audited)
Non-current assets
Investments at fair value through profit or loss	9	218,028	182,296
Current assets
Trade and other receivables		1,773	1,937
Cash		2,580	4,935
		4,353	6,872
Total assets		222,381	189,168
Current liabilities
Trade and other payables		(1,374)	(1,611)
Total liabilities		(1,374)	(1,611)
Total assets less current liabilities		221,007	187,557
Net assets		221,007	187,557
Represented by:
Share capital	10	1,304	1,214
Share premium		68,750	53,542
Special distributable reserve	10	85,475	85,475
Capital reserve		65,931	47,721
Revenue reserve		(453)	(395)
Total equity attributable to equity holders of the Company		221,007	187,557
Basic and diluted net asset value per share (pence)	8	169.5	154.4

The notes form part of these financial statements.

Condensed Cash Flow Statement

for the six months ended 30 September 2024

	Six months	Six months
	ended	ended
	30 September	30 September
	2024	2023
	£'000	£'000
	(unaudited)	(unaudited)
Reconciliation of loss before taxation to net cash outflows from operating activities
Net return before tax	18,152	(4,764)
(Gains)/losses on investments held at fair value through profit and loss	(18,891)	4,231
(Increase)/decrease in receivables	(612)	372
Increase in payables	738	4
Net cash outflow from operating activities	(613)	(157)
Investing activities
Purchases of investments	(52,741)	(14,571)
Sales of investments	35,702	11,869
Net cash outflow from investing activities	(17,039)	(2,702)
Financing activities
Net proceeds from share issuance	15,297	6,040
Net cash inflow from investing activities	15,297	6,040
(Decrease)/increase in cash	(2,355)	3,181
Reconciliation of net cash flow movements in funds
Cash at the beginning of period	4,935	1,370
(Decrease)/increase in cash	(2,355)	3,181
Cash at end of period	2,580	4,551

The notes form part of these financial statements.

Notes to the Financial Statements

for the six months ended 30 September 2024 (unaudited)

1. General information

Odyssean Investment Trust PLC is a listed public limited company incorporated in England and Wales. The registered office of the Company is 25 Southampton Buildings, London WC2A 1AL.

2. Accounting policies

a)    Basis of preparation/statement of compliance

The interim financial information covers the period from 1 April 2024 to 30 September 2024 and has been prepared in accordance with IAS 34, 'Interim Financial Reporting'.

The Company's annual financial statements for the year ended 31 March 2024 were prepared in accordance with IFRS as adopted by the United Kingdom, which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), and as applied in accordance with the AIC SORP for the financial statements of investment trust companies and venture capital trusts, except to any extent where it is not consistent with the requirements of IFRS.

The accounting policies used by the Company followed in these half year financial statements are consistent with the most recent Annual Report for the year ended 31 March 2024.

Copies of the interim financial information will be made available to the public at the registered office of the Company and on the Company's website: www.oitplc.com.

b)    Functional and presentation currency

The condensed financial statements are presented in sterling, which is also the Company's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

c)    Comparative information

The financial information contained in this Half Year Report does not constitute statutory accounts as defined in the Companies Act 2006. The financial information contained within this report relates to the following periods: 1 April 2024 to 30 September 2024 (unaudited and unreviewed by the Company's Auditor) and 1 April 2023 to 30 September 2023 (unaudited and unreviewed by the Company's Auditor); and as at 31 March 2024 (audited) for the Balance Sheet. The comparative figures for the period 30 September 2023 are not the Company's statutory accounts for that financial year. The Company's statutory accounts are for the year ended 31 March 2024 and were reported on by the Company's Auditor and delivered to the Registrar of Companies. The report of the Auditor was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

d)    Going concern

The financial statements have been prepared on a going concern basis and on the basis that approval as an investment trust company will continue to be met.

The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future (being a period of at least 12 months from the date on which these financial statements were approved). Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, debt and investment commitments.

3. Income

	Six months ended			Six months ended
	30 September 2024			30 September 2023
	(unaudited)			(unaudited)
	Income	Capital	Total	Income	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Income from investments
UK dividends	1,668	-	1,668	598	-	598
Overseas dividends	-	-	-	126	-	126
	1,668	-	1,668	724	-	724
Other income
Bank interest	96	-	96	60	-	60
Total income	1,764	-	1,764	784	-	784

4. Portfolio management and performance fees

	Six months ended			Six months ended
	30 September 2024			30 September 2023
	(unaudited)			(unaudited)
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Portfolio management fee	1,062	-	1,062	901	-	901
Performance fee	-	681	681	-	-	-
	1,062	681	1,743	901	-	901

The Company is liable to pay a performance fee depending on the performance of the Company over a rolling three-year period as set out in the Company's prospectus dated 26 March 2018. Based on the performance of the Company to 30 September 2024, a performance fee of £681,000 (2023: no performance fee) has been accrued in the NAV and included in Trade and Other Payables in the Balance Sheet.

Pursuant to the terms of the Portfolio Management Agreement, the Portfolio Manager is entitled to receive an annual management fee equal to the lower of: (i) 1.0% of the net asset value (calculated before deduction of any accrued but unpaid management fee and any performance fee) per annum; or (ii) 1.0% per annum of the Company's market capitalisation. The annual management fee is calculated and accrues daily and is payable quarterly in arrears.

The Company's performance is measured over rolling three-year periods ending on 31 March each year (each a "Performance Period"), by comparing the NAV total return per ordinary share over a Performance Period against the total return performance of the DNSC ex IC plus AIM Index (the "Comparator Index"). The third Performance Period ran from 1 April 2021 to 31 March 2024 and no performance fee was paid to the Portfolio Manager (Performance fee period to 31 March 2023: £nil).

A Performance Fee is payable if the net asset value per ordinary share at the end of the relevant Performance Period (as adjusted to: (i) add back the aggregate value of any dividends per ordinary share paid (or accounted as paid for the purposes of calculating the NAV) to shareholders during the relevant Performance Period; and (ii) exclude any accrual for unpaid Performance Fee accrued in relation to the relevant Performance Period) (the "Net Asset Value Total Return per Share") exceeds both:

(i)    the net asset value per ordinary share on the first business day of a Performance Period as adjusted by the aggregate amount: of (i) the total return on the Comparator Index (expressed as a percentage); and (ii) 1.0% per annum over the relevant Performance Period (the "Target Net Asset Value per Share"); and

(ii)   the highest previously recorded net asset value per ordinary share as at the end of the relevant Performance Period in respect of which a Performance Fee was last paid (or the net asset value per ordinary share as at Initial Admission, if no Performance Fee has been paid) (the "High Watermark"),

with any resulting excess amount being known as the "Excess Amount".

The Portfolio Manager will be entitled to 10% of the Excess Amount multiplied by the time weighted average number of ordinary shares in issue during the relevant Performance Period to which the calculation date relates. The Performance Fee will accrue daily.

Payment of a Performance Fee that has been earned will be deferred to the extent that the amount payable exceeds 1.75% per annum of the net asset value at the end of the relevant Performance Period (amounts deferred will be payable when, and to the extent that, following any later Performance Period(s) with respect to which a Performance Fee is payable, it is possible to pay the deferred amounts without causing that cap to be exceeded or the relevant net asset value total return per share to fall below both the relevant target net asset value per share and the relevant High Watermark for such Performance Period, with any amount not paid being retained and carried forward).

Subject at all times to compliance with relevant regulatory and tax requirements, any Performance Fee paid or payable shall be satisfied in cash and the Portfolio Manager shall, as soon as reasonably practicable following receipt of such payment, use 50% of such performance fee payment to make market purchases of ordinary shares (rounded down to the nearest whole number of ordinary shares) within four months of the date of the performance fee payment as a collective group rather than as individuals.

Each such tranche of shares acquired by the Portfolio Manager will be subject to a lock-up undertaking for a period of three years post issuance or acquisition (subject to customary exceptions).

At no time shall the Portfolio Manager (and/or any persons deemed to be acting in concert with it for the purposes of the Takeover Code) be obliged, in the absence of a relevant whitewash resolution having been passed in accordance with the Takeover Code, to receive, or acquire, further ordinary shares where to do so would trigger a requirement to make a mandatory offer pursuant to Rule 9 of the Takeover Code. Where any restriction exists on the issuance of further ordinary shares to the Portfolio Manager, the relevant amount of the Performance Fee may be paid in cash.

In addition, the Portfolio Manager is entitled to reimbursement for all costs and expenses properly incurred by it in the performance of its duties under the Portfolio Management Agreement.

The Company may terminate the Portfolio Management Agreement by giving the Portfolio Manager not less than six months' prior written notice. The Portfolio Manager may terminate the Portfolio Management Agreement by giving the Company not less than six months' prior written notice.

5. Other expenses

	Six months ended 30 September 2024 £'000 (unaudited)	Six months ended 30 September 2023 £'000 (unaudited)
Directors' fees*	64	62
Company Secretarial and Administration fee	234	201
Audit fee for the audit of the Company's financial statements	42	38
Other expenses	420	115
	760	416

*        Peter Hewitt does not receive a Director fee in respect of his services to the Company. Each of the Directors has agreed to use their applicable Directors' fees (net of applicable taxes) to acquire ordinary shares in the secondary market, subject to regulatory requirements. In relation to any dealings, the Directors will comply with the share dealing code adopted by the Company in accordance with the Market Abuse Regulation. The Board will be responsible for taking all proper and reasonable steps to ensure compliance with the share dealing code by the Directors.

Other expenses include £271,000 of costs relating to the Company's Realisation Opportunity, which took place in June 2024. This cost is non-recurring in nature and therefore excluded from the calculation for the Company's ongoing charges ratio.

6. Taxation

The Company has an effective tax rate of 0%, as investment gains are exempt from tax owing to the Company's status as an investment trust, and there is expected to be an excess of management expenses over taxable income and thus there is no charge for corporation tax.

7. Return per share

The capital, revenue and total return per ordinary share are based on the net return shown in the Condensed Income Statement and the weighted average number of ordinary shares during the period of 125,656,524 (2023: 114,753,839).

There are no dilutive instruments in issue and therefore no difference between the basic and diluted return per ordinary share.

8. Net asset value per ordinary share

The basic net asset value per ordinary share is based on net assets of £221,007,000 (2023: 182,481,000) and on 130,419,212 (2023: 116,807,053) ordinary shares, being the number of ordinary shares in issue at the period end.

There are no dilutive instruments in issue and therefore no difference between the basic and diluted total net asset per ordinary share.

9. Investments at fair value through profit or loss

The Company is required 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 consists of the following three levels:

-     Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

-     Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

-     Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data from investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange quoted market bid or closing prices at the close of business on the Condensed Balance Sheet date, without adjustment for transaction costs necessary to realise the asset.

	As at 30 September 2024				As at 31 March 2024
	(unaudited)				(audited)
	Total	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Quoted at fair value	218,028	218,028	-	-	182,296	182,296	-	-
Total	218,028	218,028	-	-	182,296	182,296	-	-

There were no transfers between levels during the period (during the year ended 31 March 2024, £8,685,000 of level 2 investments were transferred to level 1).

10. Share capital and reserves

	Six months ended 30 September 2024 (unaudited)		Year ended 31 March 2024 (audited)
	Number of		Number of
	Shares	£'000	Shares	£'000
Issued and fully paid:
Ordinary shares of 1p:
Balance at the beginning of the period	121,452,053	1,214	112,945,053	1,129
New shares issued during the period	8,967,159	90	8,507,000	85
Balance at the end of the period	130,419,212	1,304	121,452,053	1,214

Special distributable reserve

Upon initial placing and subsequent issuance of the Company's ordinary shares on 1 May 2018 and 27 June 2018 respectively, the Company accumulated a premium account of £85,495,000. Following approval of the Court, effective on 8 August 2018, the share premium account was cancelled and the balance after cancellation cost of £20,000 was transferred to the special distributable reserve.

11. Related party transactions

The amount incurred in respect of portfolio management fees during the period to 30 September 2024 was £1,062,000 (30 September 2023: £901,000), of which £558,000 was outstanding at 30 September 2024 (30 September 2023: £449,000).

The amount incurred in respect of Directors' fees during the period to 30 September 2024 was £64,000 (2023: £62,000) of which £nil was outstanding at period end (2023: £nil).

Glossary

AIC

Association of Investment Companies.

DNSC ex IC plus AIM Total Return Index

The Deutsche Numis Smaller Companies Plus AIM excluding Investment Companies Index, which is used by the Company as a performance comparator index, not a formal benchmark.

FCA

Financial Conduct Authority.

IPO

Initial public offering.

LSE

London Stock Exchange.

M&A

Mergers and acquisitions.

NAV

NAV stands for net asset value and represents shareholders' funds. Shareholders' funds are the total value of a company's assets at current market value less its liabilities.

NAV total return per share (APM)

NAV total return is the closing NAV per share including any cumulative dividends paid as a percentage over the opening NAV.

	Six months ended 30 September 2024 (unaudited)	Year ended 31 March 2024 (audited)
Opening NAV per ordinary share (p)	154.4	160.4
Closing NAV per ordinary share (p)	169.5	154.4
NAV total return per ordinary share (%)	9.8%	(3.7)%

Ongoing charges (APM)

Based on total expenses, excluding finance costs and certain non-recurring items for the period or year, and average daily net asset value.

	Six months ended 30 September 2024 (unaudited)	Year ended 31 March 2024 (audited)
Total expenses per note 4 and note 5 (£'000)	1,822	2,655
Less one-off expenses for tender offer	(271)	-
Total ongoing expenses	1,551	2,655
Annualised total expenses (£'000)	3,102	2,655
Average net asset value (£'000)	211,110	179,954
Ongoing charges (%)	1.47%	1.48%

Share price premium/discount to NAV per share (APM)

A description of the difference between the share price and the net asset value per share. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the net asset value per share the result is a premium. If the share price is lower than the net asset value per share, the shares are trading at a discount.

Premium/(discount) calculation	30 September 2024 (unaudited)	31 March 2024 (audited)
Closing NAV per share (p)	169.5	154.4
Closing share price (p)	171.0	155.5
Premium (%)	0.9%	0.7%

TMT

Technology, media and telecom.

ENDS

Frostrow Capital LLP

Company Secretary

0203 008 4913

27 November 2024

 

END