TIDMEGL
RNS Number : 7817Z
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
As at or six months
to As at or year to
Summary 31 March 2023 30 September 2022
----------------------------------------- -------------------- -------------------
Net assets attributable to shareholders
(GBP000) 242,560 233,052
Net asset value ("NAV") per share(1) 212.07p 208.14p
----------------------------------------- -------------------- -------------------
Share price (mid-market) 213.00p 218.00p
Premium to NAV(1) 0.4% 4.7%
----------------------------------------- -------------------- -------------------
Revenue return per share 2.02p 6.42p
Dividends paid per share 3.80p 7.20p
Dividend yield(1,2) 3.5% 3.3%
Gearing on net assets(1,3) 11.0% 11.0%
Ongoing charges ratio(1,4) 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.
3 years 5 years Since
admission(5) Since admission
Performance for % % %
periods to 31 March
2023 6 months 1 year % per annum
(all total return
in GBP) % % %
--------------------------- ---------- ------- -------- -------- -------------- ----------------
NAV per share(6) 3.7 0.7 61.8 95.6 96.1 10.9
Share price(6) -0.6 -0.7 67.8 129.7 149.6 15.1
--------------------------- ---------- ------- -------- -------- -------------- ----------------
Indices(6, 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 GBP5.2 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 Januar y.
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
Six months ended Six months Year ended
ended 30 September 2022
31 March 2023 (unaudited) 31 (audited)
March 2022 (unaudited)
-------------------- ----- ----------------------------------------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 As at
31 March 2023 30 September
31 March 2022 2022 (audited)
(unaudited) GBP'000
(unaudited)
Notes GBP'000
GBP'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
Share premium Special Capital Revenue
capital account reserve(1) reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 Special
premium reserve Capital Revenue
Share capital account (1) reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 Special
premium reserve Capital Revenue
Share capital account (1) reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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)
GBP'000 GBP'000
GBP'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 GBP'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 GBP123,609,000 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
GBP'000
GBP'000
GBP'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: GBPnil and 30 September 2022:
GBP416,000).
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 Year ended
Six months ended ended 30 September
31 March 2023 31 March 2022 2022
p p 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 Year ended
Six months ended ended 30 September
31 March 2023 31 March 2022 2022
GBP'000 GBP'000 GBP'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 GBP'000 Number GBP'000 Number GBP'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 GBP5,153,000
(31 March 2022: GBP5,269,000 and 30 September 2022:
25,413,000).
Since 31 March 2023 the Company has issued 1,920,577 ordinary
shares for net proceeds of GBP4,109,791.
6. Capital reserve
31 March 2023
31 March 2022
30 September
2022
GBP'000
GBP'000
GBP'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 GBP37,832,000
(31 March 2022: gains of GBP53,328,000 and 30 September 2022: gain
of GBP39,349,000) which relate to the revaluation of investments
held at the reporting date.
7. NAV per ordinary share
As at As at As at
31 March 2023 31 March 30 September
2022 2022
------------------------------ --------------- ------------ --------------
Net asset value attributable
(GBP'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 Six months Year ended
ended ended 30 September
31 March 31 March 2022
2023 2022 GBP'000
GBP'000 GBP'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 2,082 - -
1.85p (paid on 30 November 2022)
First interim dividend for 2023 of 2,200 - -
1.95p (paid on 28 February 2023)
---------------------------------------- ----------- ----------- --------------
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 Six months Year ended
31 March 2023 ended 30 September
GBP'000 31 March 2022
2022 GBP'000
GBP'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:
Level
Level 1 Level 2 3 Total
As at 31 March 2023 Notes GBP'000 GBP'000 GBP'000 GBP'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
---------------------------------------- --------- --------- --------- ---------
Level 1 Level 2 Level 3 Total
As at 31 March 2022 Notes GBP'000 GBP'000 GBP'000 GBP'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
---------------------------------------- --------- --------- --------- ---------
Level 1 Level 2 Level 3 Total
As at 30 September 2022 Notes GBP'000 GBP'000 GBP'000 GBP'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 GBPnil (31 March 2022: GBPnil and
30 September 2022: GBPnil).
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 GBP200 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 GBP1,164,000 (31 March 2022: GBP1,068,000 and
30 September 2022: GBP2,178,000) of investment management fees were
earned by Ecofin Advisors Limited, with a balance of GBP580,000 (31
March 2022: GBP539,000 and 30 September 2022: GBP562,000) being
payable to Ecofin Advisors Limited at the period end.
12. Analysis of changes in net debt
As at Currency As at
30 September Differences Cash flows 31 March
2022 2023
GBP'000 GBP'000 GBP'000 GBP'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 Currency As at
30 September 2021 differences 31 March
GBP'000 GBP'000 Cash flows 2022
GBP'000 GBP'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/eg l . 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: 01245 950 317
18 May 2023
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END
IR BLGDUGGBDGXR
(END) Dow Jones Newswires
May 18, 2023 02:00 ET (06:00 GMT)
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