Murray Income Trust PLC

Quarterly Report • Mar 1, 2023

National Storage Mechanism | Additional information

RNS Number : 4200R

Murray Income Trust PLC

01 March 2023

Murray Income Trust PLC

Half Yearly Report 31 December 2022

An investment trust founded in 1923 aiming for high and growing income with capital growth.

Performance Highlights

Net asset value total returnA			Share price total returnA
Six months ended 31 December 2022			Six months ended 31 December 2022
+4.0%			+3.8%
Year ended 30 June 2022	-4.0%		Year ended 30 June 2022	-0.7%
Benchmark total return			Ongoing chargesA
Six months ended 31 December 2022			Forecast year to 30 June 2023
+5.1%			0.50%
Year ended 30 June 2022	+1.6%		Year ended 30 June 2022	0.48%
Earnings per share (revenue)			Dividend per Ordinary share
Six months ended 31 December 2022			Year ended 30 June 2022
16.3p			36.00p
Six months ended 31 December 2021	17.7p		Year ended 30 June 2021	34.50p
Discount to net asset valueA			Dividend yieldA
As at 31 December 2022			As at 31 December 2022
4.1%			4.3%
As at 30 June 2022	3.8%		As at 30 June 2022	4.3%
A Considered to be an Alternative Performance Measure as set out on pages 28 and 29.

Net asset value per share - At 30 June (*31 December) - pence

2018	2019	2020	2021	2022	2022*
856.3	888.1	808.3	934.6	864.9	880.2

Dividends per share - Year ended 30 June - pence

2018	2019	2020	2021	2022
33.25	34.00	34.25	34.50	36.00

Mid-Market price per share - At 30 June (*31 December) - pence

2018	2019	2020	2021	2022	2022*
784.0	850.0	768.0	871.0	832.0	844.0

Financial Calendar, Dividends and Investment Portfolio by Sector

Financial Calendar

Payment dates of quarterly dividends	March, June, September, December
Financial year end	30 June
Expected announcement date of annual results	September
Centenary Annual General Meeting (Glasgow)	7 November 2023

Dividends

	Rate	Ex-dividend date	Record date	Payment date
First interim	8.25p	17 Nov 2022	18 Nov 2022	15 Dec 2022
Second interim	8.25p	16 Feb 2023	17 Feb 2023	16 Mar 2023
Third interim	8.25p	18 May 2023	19 May 2023	15 Jun 2023

Investment Portfolio by Sector as at 31 December 2022

	Company	FTSE All-Share
Financials	18.1	22.4
Industrials	14.1	10.8
Consumer Staples	14.0	16.0
Health Care	13.8	11.6
Consumer Discretionary	9.8	10.4
Basic Materials	8.7	8.9
Energy	7.1	11.2
Utilities	6.9	3.5
Technology	3.4	1.3
Real Estate	2.8	2.5
Telecommunications	1.3	1.4
	100.0	100.0

Chairman's Statement

Shareholders continue to benefit from the enlarged scale of the Company following the merger with Perpetual Income & Growth Investment Trust with net assets over £1 billion, a lower blended management fee rate of 0.37%, a lower forecast ongoing charges ratio of 0.50%, plus additional liquidity and lower bid-offer spreads when trading. Our objective is to continue to provide a high and growing income combined with capital growth from a portfolio principally of UK equities: the dividend yield stood at 4.3% as at 31 December 2022 and we have now increased the dividend every year for the past forty-nine years.

Performance

Over the six months ended 31 December 2022, the Company's net asset value ("NAV") per share rose 4.0% in total return terms, as compared to the FTSE All-Share Index (the "Benchmark") return of 5.1%. The share price total return was 3.8% reflecting the discount widening from 3.8% to 4.1%.

The two principal parts of our investment objective are to provide a high and growing income. The dividend yield, based on the 31 December 2022 share price of 844.0 pence, is 4.3% which is high by most people's standards for an equity portfolio. We continue to grow our dividend, with a dividend increase chalked up in every one of the past forty-nine years. This puts us into the top ten on the AIC's list of 'Dividend Heroes' (the investment trusts with the longest records of annual dividend growth) as measured by the number of consecutive years of dividend growth.

For the full calendar year 2022, NAV total return was -6.0% while the Benchmark returned 0.3% and the share price total return was -4.1%. The underperformance came in the first half of 2022, caused largely by being underweight in the oil and gas sector (which benefited from the war in Ukraine) and a small number of stock specific factors. Looking over longer periods ended 31 December 2022, both NAV and share price performance were behind the Benchmark over three years but ahead of the Benchmark over five and ten years.

	3 years ended	5 years ended	10 years ended
	31 December 2022	31 December 2022	31 December 2022
Performance (total return)	%	%	%
Share priceA	6.8	30.8	94.5
Net asset value per Ordinary shareA	5.7	24.2	99.6
FTSE All-Share	7.1	15.5	88.2
Source: abrdn & Morningstar

Investment Process

Our Manager's investment process is best summarised as a search for good quality companies at attractive valuations. The Manager defines a quality company as one capable of strong and predictable cash generation, sustainably high returns on capital and with attractive growth opportunities. These typically result from a sound business model, a robust balance sheet, good management and strong environmental, social and governance characteristics. These qualities helped avoid the worst of the dividend shocks during the pandemic.

Investment People

abrdn is our appointed investment management company. Charles Luke has been our lead portfolio manager since 2006, and works alongside Rhona Millar and Co-Manager Iain Pyle, as members of abrdn's now 20-strong UK and European Team.

Annual General Meeting ("AGM")

It was like old times at our Annual General Meeting ("AGM") on 1 November 2022, held in London, with many shareholders and their guests attending and plenty of questions asked. Over a buffet lunch afterwards, the opportunity was taken to informally discuss a whole range of matters with shareholders. This year's AGM on 7 November 2023 will be celebrating the Company's centenary and will be held where the Company was founded, in Glasgow.

Board

This is my final year as Chairman and as a Director of the Company. After serving nine years as a Director, I will retire from the Board at the end of the centenary AGM. I am delighted that the other members of the Board have determined that Peter Tait, currently Senior Independent Director, will succeed me as Chairman at that time.

Dividend Policy

Our normal practice is to announce in November our plans for the first, second and third interim dividends for the financial year. On 1 November 2022 we announced interim dividends, each of 8.25p per share, to be paid on 15 December 2022, 16 March 2023 and 15 June 2023. The Board also advised that it expected the fourth interim dividend, to be announced in August 2023 and paid in September 2023, to be at least 11.75 pence per share, as compared to 11.25 pence per share declared for the previous year.

In the year ended 30 June 2022 we were able to increase our full year dividend per share to 36.0p which represented a yield of 4.3% on the 31 December 2022 share price of 844.0p. Revenue earned by the Company for the year was 40.5p per share, with the surplus 4.5p being added to our revenue reserves which serve to support and smooth future dividends. For the year ending 30 June 2023, revenue earned is currently projected to be ahead of last year's dividend.

Share Capital

The Company bought back 1,168,091 Ordinary shares of 25p into treasury during the six months ended 31 December 2022, representing 1.0% of shares in issue at 30 June 2022, resulting in there being 115,522,381 Ordinary shares of 25p in issue with voting rights and an additional 4,007,151 shares held in treasury, at 31 December 2022.

Environmental, Social and Governance ("ESG")

In last year's Half-Yearly Report, we reported a new focus on the net zero initiative, one aspect of our ESG approach. Countries and companies are signing up to commitments as to when their operations will become net zero in terms of carbon emissions and on what basis they will be measured. We can apply this focus to Murray Income too: 96% of the portfolio by value or 50 out of 55 companies held in the portfolio on 31 December 2022 have set a net zero target date. The breakdown is shown in the following table:

	% of Portfolio by Value	Number of Companies
2030	37	18
2040	25	11
2050	34	21
Not yet committed	4	5
Total	100	55
Source: abrdn

Our Manager continues to engage with those that have not yet set a date as well as holding to account or pressing further those that have committed. From the companies that have committed we can infer an average net zero date for the Murray Income portfolio of 2040, a similar number to this time last year. The encouraging change over the year is that only five companies have yet to commit, compared to 16 a year ago. Please note that these numbers are snapshots, they could move up or down if the portfolio changes and the outcomes are not in any case within our control. But this will be a useful number for comparison over time, whilst remembering that net zero is just one of the environmental factors within ESG.

ESG considerations are integrated into the company analysis carried out by our Manager which is able to draw on the expertise of more than 20 in-house ESG specialists covering the UK and Europe.  This aims to mitigate risk and enhance returns over the longer term, results in frequent dialogue with investee companies and helps to ensure that the companies in the portfolio are acting in the best long-term interests of their shareholders and society at large. It is important to note that the policy pursued by our Investment Manager on our behalf is dynamic rather than static. ESG conclusions can change if the inputs change: for example, one might look at Russia's invasion of Ukraine and conclude that the social factor of security and safety is more important now than previously considered. Similarly, one might consider energy security be given a higher weight relative to absolute CO2 emissions and come to a different conclusion on holding an oil or

gas stock.

The Investment Manager's Report contains further information (including examples) on how ESG factors are incorporated into the Managers' investment approach. For more detailed information we would refer you to our 30 June 2022 Annual Report (pages 93-97) and to our website (www.murray-income.co.uk).

Update

From 31 December 2022 to 23 February 2023 (the latest practicable date prior to approval of this Report), the net asset value per share total return and share price total return were 5.1% and 4.5%, respectively, while the Benchmark total return was 6.4%. The discount widened to 6.0% over the same period, during which a further 1,559,380 shares were bought back into treasury by the Company, resulting in 113,963,001 shares with voting rights, and an additional 5,566,531 shares in treasury, as at the date of this Report.

Outlook

Writing this amongst headlines of crisis, emergency, strikes, inflation, recession and 'Spare' Harry, it was easy to miss the headline that the UK's FTSE-100 Index was at a 4-year high. How could that be if everything is so bad? A sense that some of these factors are either as bad as they could be or have started to recover is part of the answer. Let's consider the predominant concerns:

Inflation rose way higher than expected in 2022 fuelled by the jump in oil and gas prices following Russia's invasion of Ukraine. As companies passed on the pain to consumers, inflation rates rose well above central bank targets and sparked demands for increased wages to maintain living standards. The outlook now is rather different: wholesale oil and gas prices have already dropped sharply from last year's levels. The warm European winter (so far) has helped as have increased imports of Liquid Natural Gas. It is possible that we end this winter with enough gas in storage to meet next winter's needs. Central banks in the western world were too slow to react initially but have now tightened monetary policy significantly in response to rising inflation. While the effect is yet to be seen, remember that monetary policy works with a lag: most economists would say 12-18 months. Inflation may have already peaked.

That monetary lag is a negative for growth prospects. Many believe that we in the UK are already in recession. If not, we are very close to it. With interest rates still rising, consumer electricity and gas costs still very high and wages not keeping up with inflation it is going to be a while before growth recovers. But remember that the world economy is still growing.

After thirteen years of super-low interest rates in response to the 2008 financial crisis, it should have been no surprise that interest rates have started to return to normal, that is into the 3-5% range that would be considered average by historical standards. Yet some have been taken by surprise and have clearly not stress tested their business models for a return of normality. The most obvious example of this is the blow-up in LDI (Liability Driven Investment, a strategy used by pension funds to match their assets and liabilities more closely) that caused the crash in the UK gilt market in September. UK gilt yields rose to a level that was entirely reasonable but caught out many pension funds by doing so in six weeks, meaning that a significant number of them could not easily meet their increased collateral requirements. The real problem in this was leverage: some funds were, and still are, using leverage to boost their asset returns so as to meet their future liabilities.

Whenever a new financial crisis appears, excessive leverage is the most likely root cause. Banks' excessive exposure to sub-prime real estate lending is well understood to be the root cause of the 2008 crash. The question is: are markets strong enough to withstand the future stresses on leverage? Those stresses currently seem most visible in property and private equity. Just applying a common sense test reveals that most property prices are too high, yet most investors in property have little experience of falling prices. Combined with leverage and illiquidity, a property crash would be painful for many. Less obvious is the now-huge private equity sector, which depends heavily on leverage and favourable tax treatment for its returns.  If you were a private equity fund that stripped the cash out of a company and paid it to yourselves in dividends, funding that payment by borrowing on the company's balance sheet and then interest rates go up, the net worth of that company would fall. In aggregate, private equity companies are yet to feel that pain. Excess leverage will be a problem if interest rates stay high.

One more visible change from last year in the UK is in politics: the new Sunak Conservative government may have less than two years to run before losing a general election to Labour, but there seems to be very little difference between the economic policies of the UK's two main political parties. Headline announcements of "take back control', "reform the NHS" and "no unfunded tax cuts" have originated from the Labour camp.  This is perhaps the important legacy of the doomed Truss government: do something too radical and the consequences will force you out of office. Heeding this warning, the two parties now offer remarkably similar economic policies. However unlikely, that heralds the return of political stability. Another intriguing possibility is that a great reset is underway which will lay the foundation for future prosperity. It is well understood that productivity growth in the UK has lagged well behind previous trends and that many UK companies have depended on cheap labour, whether imported or otherwise, to fund their profitability. Whether it was Covid or Brexit, the supply of cheap labour has been disrupted. Companies are finding it very difficult to recruit workers on the low-wage or zero-hours contracts of before. Although the headline unemployment number is low, many people of working age are not currently seeking work, with early retirement and illness being common reasons.  The initial response from many companies has been to cut back a little on staff numbers and wait. But now a new mood is emerging: higher hourly wage rates and better terms and conditions in return for productivity improvements is a recipe for future prosperity. Something is clearly starting to change here.

While the national mood is clearly and rightly pessimistic, there are some grounds for optimism. Remember that 2022 turned out to be nothing like the way it was forecasted to be a year ago. It wouldn't be a surprise if 2023 confounds forecasts too.

Neil Rogan

Chairman

28 February 2023

Investment Manager's Report

The portfolio underperformed the FTSE All-Share Index (the "Benchmark") during the six months ended 31 December 2022 leading to the NAV per Ordinary share rising by 4.0% compared to an increase in the Benchmark of 5.1% (both figures calculated on a total return basis).

From a style perspective the portfolio's Quality bias continued to be a headwind to performance (albeit to a lesser extent than during the first half of the calendar year) as the Value factor outperformed. In sector terms, the portfolio's underweight position in the Communication Services sector and overweight exposure to the Information Technology sector benefited performance. In contrast, the overweight positions in the Materials and Real Estate sectors detracted from relative performance. The holdings in Aveva, TotalEnergies and BHP were the most beneficial to relative returns while the holdings in Marshalls and Watkin Jones detracted the greatest, relatively. Not holding Vodafone and HSBC contributed positively to relative performance while not owning Glencore, Shell and Rio Tinto detracted from relative performance.

Three new holdings were purchased for the portfolio during the six months. The first purchase was the pharmaceutical company, Roche, which has a healthy balance sheet and a strong pipeline which we believe to be undervalued. The second new entrant was Games Workshop, the hobby miniatures company, which we see as a unique asset with strong quality credentials and an attractive dividend yield. The third purchase was LVMH, the European luxury goods company which offers strong long-term growth potential through its portfolio of well-known brands.

We increased exposure to a number of our existing holdings which we believe have high quality characteristics with attractive growth prospects at appealing valuations including Sage, Unilever, Kone, London Stock Exchange Group, Howden Joinery and Relx.

Ten holdings were sold during the period, of which three stocks were sold following takeover bids: Aveva, Euromoney and Countryside Partnerships (we continue to have a holding in the acquiror, Vistry). Concern around high levels of leverage and potential risk to dividends given rising discount rates and higher interest charges resulted in the sales of Sirius Real Estate, Assura and Unite Group in the real estate sector. The small holding in Watkin Jones was sold following a profit warning which led to a change in confidence in the company's business model and concern about the risk of further downgrades. The residual position in Haleon, the consumer healthcare business which was spun-out from GSK, was exited. Finally, the small positions in Bodycote and Weir were sold given more attractive opportunities.

We reduced the exposure to a number of holdings where we have higher conviction in other names in their respective sectors including Ashmore and Nestlé. The holding in AstraZeneca was reduced in order to manage its increasingly large weight in the portfolio.

We continued our measured option-writing programme which is based on our fundamental analysis of holdings in the portfolio. We believe that the option-writing strategy, which we have now employed for over 10 years, is of benefit to the Company by diversifying and modestly increasing the level of income generated and providing headroom to invest in companies with lower starting yields but better dividend and capital growth prospects.

One of the tenets of our investment philosophy is the belief that over the long term in order to grow dividends a company needs to grow its earnings and that high quality companies are best placed to do that. We believe that the portfolio is very well positioned to do just this. Looking at the portfolio from a quantitative perspective at the end of the period, typical measures of portfolio quality such as returns measures and earnings stability were high in absolute terms and considerably better than the Benchmark (for example, in aggregate, the return on equity and return on assets of the portfolio holdings was 24.1% and 8.2% respectively, compared to the Benchmark at 17.0% and 5.7% respectively). Furthermore, the portfolio generates a dividend yield above the Benchmark. At 31 December 2022, the portfolio traded on a P/E multiple of 13.8x compared to the Benchmark on 11.8x: a little more expensive but to our minds a small price to pay for a considerably better quality portfolio and one still very attractively valued in absolute terms.

Environmental, Social and Governance ("ESG")

ESG engagement issues are addressed as part of our regular meetings with management.  However, we also engage on a variety of specific issues outside our regular meetings cycle. It should be noted that given the quality threshold inherent in the portfolio, these meetings are rarely about issues for which we hold significant concerns. To provide a couple of examples of our engagement during the period;. firstly, we met with Nordea to discuss their targets for green lending and reducing financed carbon emissions in their lending portfolio. Nordea appear well placed to benefit from the rise in green bonds and are on a positive trajectory towards achieving their climate targets; and, secondly, we conducted a meeting with London Stock Exchange Group ("LSEG") to discuss the company's approach to human capital management in the context of the large acquisition of Refinitiv and a competitive market for technology talent. We think LSEG are managing these challenges well.

Market and Economic Background

The UK equity market rose by 5.1% on a total return basis over the six month period. The period was characterised by high levels of inflation, monetary policy tightening and concerns about a potential recession. Sentiment towards the outlook ebbed and flowed at times with strong corporate earnings providing some comfort and some optimism that central banks would slow the pace of rate hikes, contrasted with periods of growing fears about recession risks.

Performance at a sector level was mixed. Mining and oil and gas companies performed well but telecommunications, media and real estate companies struggled. The FTSE100 Index outperformed the more domestically focused FTSE250 Index over the period.

Domestic economic data was generally weak. UK GDP was unchanged in the fourth quarter of 2022 following a decline of 0.2% in the third quarter. The UK is the only Group of Seven ("G7") country not to fully recover output lost during the Covid-19 pandemic with the economy 0.8% smaller than at the end of 2019. Consumer confidence was reported to be at its lowest level since records began in 1974. Conversely, employment data generally continued to be strong given the shortage of labour.

Inflation continued to be high with the Consumer Prices Index reaching 11.1% in October, the highest level in more than four decades. The government announced caps to household energy bills for the next two years. Widespread strike action towards the end of 2022 weighed on sectors including transport, health, education, and postal services. The Bank of England ("BoE") acted to control inflation by raising interest rates multiple times over the period, with the policy rate ending the year at 3.5% (and subsequently has been increased to 4.0%).

Political uncertainty was elevated as Prime Minister Johnson announced his resignation. The impact of fiscal policy on markets was heightened when the new Chancellor Kwarteng's mini-budget, announcing widespread tax cuts, sparked a wave of selling of UK gilts and a substantial weakening of the pound. The BoE launched emergency measures to stabilise markets, delaying a planned gilt sale and instead committing to buy more gilts. UK government bond prices rose and the pound recovered somewhat as first Chancellor Kwarteng and then Prime Minister Truss resigned and many of their previously announced tax cuts were reversed.

Circumstances overseas also had an impact on the UK equity market. Towards the end of the period, signs that China would move away from their zero-covid policy was taken positively for stocks with exposure to the Chinese economy, including miners. Energy prices continued to be elevated compared to historic averages due to the impact of the Russian invasion of Ukraine on energy markets, which led to the energy sector outperforming.

Outlook

We expect the multiple headwinds facing the global economy - rate hikes, elevated energy costs and the continued impact of Covid-19 - to lead to challenging conditions in 2023. Uncertainties remain around the potential depth and severity of an economic downturn. For the UK, we currently forecast GDP to decline by 1.3% in 2023. We expect the BoE to continue to act to control inflation. For 2023, the Manager's economists expect one more 0.50% rate increase from the BoE, which would see rates reach 4.5% in the spring. Given the recessionary outlook they then foresee a sharp cutting cycle resulting in base rates ending 2023 at 2.5%.

Although the backdrop may be challenging, we are optimistic about the outlook for the holdings in the portfolio. The portfolio is jam-packed with high quality, predominantly global businesses capable of delivering appealing long-term earnings and dividend growth at a modest aggregate valuation. In more difficult times it is those companies which can demonstrate pricing power and resilience, benefit from their robust balance sheets and are led by experienced management teams that are able to emerge stronger - ultimately this will be recognised in their valuations. That these companies are predominantly listed in the UK, a market that remains attractive on a relative, absolute and cyclically-adjusted basis, is doubly appealing. Therefore, we feel very comfortable maintaining our focus on excellent quality highly profitable businesses capable of delivering sustainable earnings and dividend growth over the long term.

Charles Luke and Iain Pyle,

abrdn Investments Limited

Investment Manager

28 February 2023

Ten Largest Investments

As at 31 December 2022

	AstraZeneca			Diageo
AstraZeneca researches, develops, produces and markets pharmaceutical products. With a significant focus on oncology and rare diseases the company offers appealing growth potential over the medium term.		Diageo produces, distills and markets alcoholic beverages including vodkas, whiskies, tequilas, gins and beer. The company should benefit from attractive long term drivers such as population and income growth, and premiumisation. The company has a variety of very strong brands and faces very limited private label competition.
	Unilever			Relx
Unilever is a global consumer goods company supplying food, home and personal care products. The company has a portfolio of strong brands including Dove, Knorr, Axe and Persil. Over half of the company's sales are to developing and emerging markets.		Relx is a global provider of information and analytics for professionals and businesses across a number of industries including scientific, technical, medical and law. The company offers resilient earnings combined with long term structural growth opportunities.
	TotalEnergies			BHP Group
TotalEnergies is a broad energy company that produces and markets fuels, natural gas and electricity. It is a leader in the sector's energy transition with an attractive pipeline of renewable assets.		BHP Group (formerly BHP Billiton) is a diversified resources group with a global portfolio of high quality assets particularly iron ore and copper. The company combines an appealing dividend yield combined with a strong balance sheet.
	SSE			Anglo American
SSE is a utility company mostly focused on networks and renewables. The path to net zero will require significant investment in distribution networks and the company should also benefit from its strong position in offshore wind generation.		Anglo American is a diversified mining company with appealing exposure to future-facing commodities such as copper and platinum group metals. The company offers attractive growth prospects coupled with a strong balance sheet and generous dividend yield.
	BP			Standard Chartered
BP is a fully integrated energy company involved in exploration, production, refining, transportation and marketing of oil and natural gas. We believe the industry is currently in a sweetspot with rising prices and benign costs. The company provides an attractive dividend yield and is well placed for the energy transition.		Standard Chartered is an international banking group offering a broad mix of services, primarily in emerging markets. The startegy is focused on creating a higher quality business, growing with end markets while controlling costs leading to improving returns.

Investment Portfolio

## As at 31 December 2022
				Total
			Valuation	investments
Investment	Sector	Country	£'000	%
AstraZeneca	Pharmaceuticals and Biotechnology	UK	69,196	6.3
Diageo	Beverages	UK	57,207	5.2
Unilever	Personal Care, Drug and Grocery Stores	UK	54,457	4.9
RELX	Media	UK	49,444	4.5
TotalEnergies	Oil, Gas and Coal	France	45,007	4.1
BHP	Industrial Metals and Mining	UK	40,669	3.7
SSE	Electricity	UK	37,524	3.4
Anglo American	Industrial Metals and Mining	UK	36,290	3.3
BP	Oil, Gas and Coal	UK	33,557	3.1
Standard Chartered	Banks	UK	29,655	2.7
Top ten investments			453,006	41.2
Experian	Industrial Support Services	UK	27,342	2.5
Inchcape	Industrial Support Services	UK	27,314	2.5
London Stock Exchange	Finance and Credit Services	UK	25,237	2.3
Coca-Cola HBC	Beverages	UK	25,004	2.3
Sage	Software and Computer Services	UK	24,203	2.2
Safestore	Real Estate Investment Trusts	UK	23,955	2.2
National Grid	Gas, Water and Multi-utilities	UK	23,166	2.1
Novo-Nordisk	Pharmaceuticals and Biotechnology	Denmark	22,565	2.0
Close Brothers	Banks	UK	22,329	2.0
Rentokil Initial	Industrial Support Services	UK	22,090	2.0
Top twenty investments			696,211	63.3
Croda International	Chemicals	UK	18,767	1.7
Convatec	Medical Equipment and Services	UK	17,648	1.6
Howden Joinery	Retailers	UK	17,621	1.6
Nordea Bank	Banks	Sweden	17,401	1.6
Intermediate Capital	Investment Banking and Brokerage Services	UK	17,328	1.6
M&G	Investment Banking and Brokerage Services	UK	17,093	1.5
Oversea-Chinese Banking	Banks	Singapore	16,617	1.5
Direct Line Insurance	Non-life Insurance	UK	15,373	1.4
Drax	Electricity	UK	15,190	1.4
OSB	Finance and Credit Services	UK	14,469	1.3
Top thirty investments			863,718	78.5
Vistry	Household Goods and Home Construction	UK	14,390	1.3
Kone	Industrial Engineering	Finland	14,207	1.3
Hiscox	Non-life Insurance	UK	13,978	1.3
Microsoft	Software and Computer Services	United States	13,307	1.2
GSK	Pharmaceuticals and Biotechnology	UK	13,073	1.2
Smith & Nephew	Medical Equipment and Services	UK	12,312	1.1
LVMH	Personal Goods	France	11,501	1.0
Nestlé	Food Producers	Switzerland	11,146	1.0
Oxford Instruments	Electronic and Electrical Equipment	UK	10,916	1.0
Mondi	General Industrials	UK	10,875	1.0
Top forty investments			989,423	89.9
Roche	Pharmaceuticals and Biotechnology	Switzerland	10,765	1.0
RS	Industrial Support Services	UK	10,332	1.0
Games Workshop	Leisure Goods	UK	10,153	0.9
Marshalls	Construction and Materials	UK	9,968	0.9
Telenor	Telecommunications Service Providers	Norway	9,020	0.8
VAT	Electronic and Electrical Equipment	Switzerland	8,694	0.8
Chesnara	Life Insurance	UK	7,482	0.7
Genuit	Construction and Materials	UK	7,475	0.7
Industrials REIT	Real Estate Investment Trusts	UK	6,760	0.6
Dechra Pharmaceuticals	Pharmaceuticals and Biotechnology	UK	6,694	0.6
Top fifty investments			1,076,766	97.9
Mowi	Food Producers	Norway	5,923	0.5
XP Power	Electronic and Electrical Equipment	UK	5,560	0.5
Accton Technology	Telecommunications Equipment	Taiwan	5,074	0.5
Moonpig	Retailers	UK	4,362	0.4
Ashmore	Investment Banking and Brokerage Services	UK	2,452	0.2
Total investments (55)			1,100,137	100.0

All investments are in ordinary shares.

Investment Case Studies

Games Workshop

Games Workshop, with a market capitalisation of approximately £3bn, was introduced to the portfolio in the period under review. The unique mid-cap company has very strong intellectual property through its fantasy wargame Warhammer series. The company designs, manufactures, distributes and sells high quality miniatures and related products via retail, trade and online channels. Around three-quarters of sales are outside the UK with significant growth opportunities in the United States and Asia. There are also opportunities to grow outside the core table-top product, for example in computer games and television and the company recently announced it would work with Amazon to develop film and television productions. High customer loyalty and strong IP means the business model has high margins, generating very high returns on capital employed. The company has no debt and an attractive dividend yield.

LVMH

LVMH, the Paris-listed luxury goods company, was added to the portfolio in the period under review. The company has an approximate market capitalisation of €400bn and the holding provides the portfolio with exposure to a market segment that is difficult to access through companies listed in the UK. The company has a wide selection of best-in-class brands across divisions including Fashion & Leather Goods (for example Louis Vuitton, Dior, Fendi, Marc Jacobs), Wines & Spirits (for example, Moet Hennessey, Krug, Dom Perignon, Glenmorangie), Perfumes & Cosmetics and Watches & Jewellery. LVMH demonstrates very strong financial quality characteristics with pricing power, high gross and operating margins, strong cashflows and a robust balance sheet, and is known for taking a long-term perspective on investment. The dividend yield is relatively modest but we see good scope for strong long-term dividend growth.

Interim Board Report

Principal Risks and Uncertainties

The Board regularly reviews the principal risks and uncertainties which it has identified, together with the delegated controls it has established to manage the risks and address the uncertainties. These are considered to be unchanged as at 31 December 2022, as compared to 30 June 2022, other than in relation to the Board's perception of heightened interest rate risk and geopolitical uncertainty, noting the potential volatility associated with the conflict in Ukraine, which the Board anticipates will persist over the six months to 30 June 2023. The principal risks and uncertainties are set out in detail on pages 16 to 19 of the Company's Annual Report for the year ended 30 June 2022 ("Annual Report 2022") which is available on the Company's website. The Annual Report 2022 also contains, in note 18 to the Financial Statements, an explanation of other risks relating to the Company's investment activities, specifically market risk, liquidity

risk and credit risk, and a note of how these risks are managed.

Related Party Transactions

Under Generally Accepted Accounting Practice (UK Accounting Standards and applicable law), the Company has identified the Directors as related parties. No other related parties have been identified. There have been no related party transactions that have had a material effect on the financial position of the Company.

Going Concern

The factors which have an impact on the Company's status as a going concern are set out in the Going Concern section of the Directors' Report on page 42 of the Annual Report 2022. As at 31 December 2022, there had been no material changes to these factors.

The Board has set limits for borrowing and regularly reviews the level of any gearing, cash flow projections and compliance with covenants associated with the Senior Loan Notes and bank facilities. As at 31 December 2022, in addition to the £40m 10 year Senior Loan Notes 2027 and £60m 10 year Senior Loan Notes 2029, £6.7m of the Company's three-year £50m multi-currency revolving bank credit facility (the "Facility") was drawn down. On the expiry of the Facility in October 2024, the Company would expect to continue to access a credit facility.  However, should acceptable terms for a new credit facility not be forthcoming at that time, any outstanding borrowing will be repaid through the proceeds of equity sales.

The Directors are mindful of the principal risks and uncertainties disclosed above and, having reviewed forecasts detailing revenue and liabilities, they believe that the Company has adequate financial resources to continue its operational existence for the foreseeable future.  Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis of accounting in preparing the Financial Statements.

US Executive Order No. 14032

The Board confirms that the Company has not and does not intend to invest in any of the companies designated as "Chinese Military-Industrial Complex Companies" by the US Executive Order No. 14032.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Half-Yearly Financial Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

·  the condensed set of Financial Statements has been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting);

·  the Half-Yearly Board Report includes a fair review of the information required by rule 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 financial year); and

·  the Half-Yearly Board Report includes a fair review of the information required by 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so).

The Half-Yearly Financial Report for the six months ended 31 December 2022 comprises the Half-Yearly Board Report, the Directors' Responsibility Statement and the condensed set of Financial Statements.

For and on behalf of the Board

Neil Rogan,

Chairman

28 February 2023

Condensed Statement of Comprehensive Income (unaudited)

		Six months ended			Six months ended
		31 December 2022			31 December 2021
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments		-	22,014	22,014	-	59,821	59,821
Currency gains/(losses)		-	626	626	-	(19)	(19)
Income	2	20,869	-	20,869	22,562	-	22,562
Investment management fees	4, 13	(566)	(1,321)	(1,887)	(611)	(1,425)	(2,036)
Administrative expenses		(718)	-	(718)	(748)	-	(748)
Net return before finance costs and taxation		19,585	21,319	40,904	21,203	58,377	79,580
Finance costs		(359)	(837)	(1,196)	(344)	(802)	(1,146)
Net return before taxation		19,226	20,482	39,708	20,859	57,575	78,434
Taxation	5	(259)	-	(259)	(130)	-	(130)
Net return after taxation		18,967	20,482	39,449	20,729	57,575	78,304
Return per Ordinary share	6	16.3p	17.6p	33.9p	17.7p	49.2p	66.9p
The total column of this statement represents the profit and loss account of the Company prepared in accordance with FRS 102. The 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued in the period.
The accompanying notes are an integral part of the condensed financial statements.

Condensed Statement of Financial Position (unaudited)

		As at	As at
		31 December 2022	30 June 2022
	Notes	£'000	£'000
Fixed assets
Investments at fair value through profit or loss		1,100,137	1,098,793
Current assets
Other debtors and receivables		5,345	9,061
Cash and cash equivalents		30,859	20,131
		36,204	29,192
Creditors: amounts falling due within one year
Derivative financial instruments		(1,372)	-
Other payables		(1,585)	(1,513)
Bank loans	7	(6,665)	(6,507)
		(9,622)	(8,020)
Net current assets		26,582	21,172
Total assets less current liabilities		1,126,719	1,119,965
Creditors: amounts falling due after one year
2.51% Senior Loan Notes 2027	7	(39,935)	(39,930)
4.37% Senior Loan Notes 2029	7	(69,990)	(70,780)
		(109,925)	(110,710)
Net assets		1,016,794	1,009,255
Capital and reserves
Share capital	8	29,882	29,882
Share premium account		438,213	438,213
Capital redemption reserve		4,997	4,997
Capital reserve		513,858	502,672
Revenue reserve		29,844	33,491
Total Shareholders' funds		1,016,794	1,009,255
Net asset value per Ordinary share	9
Debt at par value		880.2p	864.9p
The accompanying notes are an integral part of the condensed financial statements.

Condensed Statement of Changes in Equity (unaudited)

## Six months ended 31 December 2022
		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2022	29,882	438,213	4,997	502,672	33,491	1,009,255
Net return after tax	-	-	-	20,482	18,967	39,449
Buyback of shares	-	-	-	(9,296)	-	(9,296)
Dividends paid (note 3)	-	-	-	-	(22,614)	(22,614)
Balance at 31 December 2022	29,882	438,213	4,997	513,858	29,844	1,016,794
## Six months ended 31 December 2021
		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2021	29,882	438,213	4,997	594,282	26,485	1,093,859
Net return after tax	-	-	-	57,575	20,729	78,304
Buyback of shares	-	-	-	(3,075)	-	(3,075)
Dividends paid (note 3)	-	-	-	-	(21,053)	(21,053)
Balance at 31 December 2021	29,882	438,213	4,997	648,782	26,161	1,148,035
The accompanying notes are an integral part of the condensed financial statements.

Condensed Statement of Cash Flows (unaudited)

		Six months ended	Six months ended
		31 December 2022	31 December 2021
	Notes	£'000	£'000
Operating activities
Net return before finance costs and taxation		40,904	79,580
Increase in accrued expenses		1,114	445
Overseas withholding tax		(244)	(648)
Dividend income		(19,333)	(21,566)
Dividends received		20,933	22,382
Interest income		(330)	(92)
Interest received		283	92
Interest paid		(1,177)	(1,131)
Gains on investments		(22,014)	(59,821)
Amortisation on Loan Notes		(785)	(784)
Foreign exchange (gains)/losses		(626)	19
Increase in other debtors		(342)	(165)
Stock dividends included in investment income		-	(2,696)
Net cash inflow from operating activities		18,383	15,615
Investing activities
Purchases of investments		(112,528)	(95,243)
Sales of investments		135,999	116,577
Net cash inflow from investing activities		23,471	21,334
Financing activities
Dividends paid	3	(22,614)	(21,053)
Buyback of Ordinary shares for treasury	8	(9,296)	(3,034)
Repayment of bank loans		(6,755)	(6,290)
Drawdown of bank loans		6,664	6,258
Net cash outflow from financing activities		(32,001)	(24,119)
Increase in cash		9,853	12,830
Analysis of changes in cash during the period
Opening balance		20,131	4,493
Effect of exchange rate fluctuations on cash held		875	29
Increase in cash as above		9,853	12,830
Closing balance		30,859	17,352
The accompanying notes are an integral part of the condensed financial statements.

Notes to the Financial Statements

For the year ended 31 December 2022

## 1.	## Accounting policies
	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 for 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in July 2022. They have also been prepared on a going concern basis and on the assumption that approval as an investment trust will continue to be granted.
	The condensed financial statements have been prepared using the same accounting policies as the preceding annual financial statements.

## 2.	## Income
		Six months ended	Six months ended
		31 December 2022	31 December 2021
		£'000	£'000
	Investment income
	UK dividends	15,006	14,927
	Overseas dividends	3,693	3,698
	Property income dividends	634	245
	Stock dividends	-	2,696
		19,333	21,566
	Other income
	Deposit interest	13	-
	Money Market interest	318	-
	Traded option premiums	1,205	996
		1,536	996
	Total income	20,869	22,562

## 3.	## Dividends
	Dividends paid on Ordinary shares deducted from the revenue reserve:
		Six months ended	Six months ended
		31 December 2022	31 December 2021
		£'000	£'000
	2021 fourth interim dividend - 9.75p	-	11,412
	2022 first interim dividend - 8.25p	-	9,641
	2022 fourth interim dividend - 11.25p	13,127	-
	2023 first interim dividend - 8.25p	9,556	-
	Return of unclaimed dividends	(69)	-
		22,614	21,053
	The first interim dividend for 2023 of 8.25p (2022 - 8.25p) was paid on 15 December 2022 to shareholders on the register on 18 November 2022. The ex-dividend date was 17 November 2022.
	A second interim dividend for 2023 of 8.25p (2022 - 8.25p) will be paid on 16 March 2023 to shareholders on the register on 17 February 2023. The ex-dividend date is 16 February 2023.
	A third interim dividend for 2023 of 8.25p (2022 - 8.25p) will be paid on 15 June 2023 to shareholders on the register on 19 May 2023. The ex-dividend date is 18 May 2023.

## 4.	## Management fee and finance costs
	The management fee is as reported in the 2022 Annual Report, being a tiered fee based on net assets and calculated as follows:
	Fee rate	Net
	per annum	assets	£'million
	0.55%	up to	350
	0.45%	within the range	350-450
	0.25%	greater than	450
	The management fee and finance costs are charged 30% to revenue and 70% to capital.

## 5.	## Taxation
	The expense for taxation reflected in the Condensed Statement of Comprehensive Income is based on the estimated annual tax rate expected for the full financial year. The estimated annual corporation tax rate used for the year to 30 June 2023 is an effective rate of 19% (2022 - 19%) until 31 March 2023 and 25% thereafter.
	During the period the Company suffered withholding tax on overseas dividend income of £259,000 (31 December 2021 - £130,000).

## 6.	## Return per Ordinary share
		Six months ended		Six months ended
		31 December 2022		31 December 2021
		£'000	p	£'000	p
	Revenue return	18,967	16.3	20,729	17.7
	Capital return	20,482	17.6	57,575	49.2
	Total return	39,449	33.9	78,304	66.9
	Weighted average number of Ordinary shares in issue		116,250,589		116,964,663

## 7.	## Senior Loan Notes and bank loans
	Senior Loan Notes
	The Company has in issue:
	(i) £40,000,000 of 10 year Senior Loan Notes at a fixed rate of 2.51%, redeemable at par on 8 November 2027;
	(ii) £60,000,000 of 15 year Senior Loan Notes at a fixed rate of 4.37% redeemable at par on 8 May 2029.
	The Loan Notes rank pari passu and are secured by floating charges over the whole of the assets of the Company and pay interest in half yearly instalments in May and November. The Company has complied with both Note Purchase Agreements: that the ratio of net assets to gross borrowings must be greater than 3.5:1 and that net assets must not be less than £550,000,000.
	The fair value of the Loan Notes is shown in note 9. The fair value of the 2.51% Loan Notes is calculated by aggregating the expected future cash flows discounted at a rate comprising the borrower's margin plus an average of market rates applicable to loans of a similar period of time. The fair value of the 4.37% Loan Notes is based on a comparable quoted debt security and their amortisation is presented as a finance cost, split 70% to capital and 30% to revenue.
							31 December 2022		30 June 2022
							£'000		£'000
	2.51% Senior Loan Notes						40,000		40,000
	Unamortised 2.51% Senior Loan Notes issue expenses						(65)		(70)
	4.37% Senior Loan Notes at fair value						73,344		73,344
	Amortisation of 4.37% Senior Loan Note						(3,354)		(2,564)
							109,925		110,710
	Bank loans
	The Company has a three year £50 million multi-currency unsecured revolving bank credit facility with Bank of Nova Scotia Limited, committed until 27 October 2024. At the period end the Company had drawn down the facility as shown below:
		31 December 2022				30 June 2022
		Rate	Currency	£'000		Rate		Currency		£'000
	Euro	2.82%	3,300,000	2,928		1.15%		2,326,000		2,002
	Swiss Franc	1.80%	1,200,000	1,078		1.35%		2,500,000		2,150
	US Dollar	5.14%	1,570,000	1,305		2.70%		768,000		633
	Danish Krona	3.08%	6,850,000	817		1.15%		5,410,000		626
	Norwegian Krone	4.40%	6,360,000	537		2.59%		13,145,000		1,096
				6,665						6,507

## 8.	## Share capital
		Six months ended	Year ended
		31 December 2022	30 June 2022
	Ordinary shares of 25p each: publicly held
	Opening balance	116,690,472	117,046,487
	Buyback of shares for treasury	(1,168,091)	(356,015)
		115,522,381	116,690,472
	Ordinary shares of 25p each; held in treasury
	Opening balance	2,839,060	2,483,045
	Buyback of shares for treasury	1,168,091	356,015
		4,007,151	2,839,060
	Total issued share capital	119,529,532	119,529,532
	During the period 1,168,091 Ordinary shares were bought back for treasury at a cost of £9,296,000. As at the date of signing this report a further 1,559,380 shares have been bought back at a cost of £13,565,000.

## 9.	## Net asset value per Ordinary share
	The net asset value and the net asset value attributable to the Ordinary shares at the end of the period follow. These were calculated using 115,522,381 (30 June 2022 - 116,690,472) Ordinary shares in issue at the period end (excluding treasury shares).
		31 December 2022		30 June 2022
			Net Asset Value		Net Asset Value
			Attributable		Attributable
		£'000	pence	£'000	pence
	Net asset value - debt at par	1,016,794	880.2	1,009,255	864.9
	Add: amortised cost of 2.51% Senior Loan Notes	39,935	34.5	39,930	34.1
	Less: fair value of 2.51% Senior Loan Notes	(39,518)	(34.2)	(39,725)	(33.9)
	Add: amortised cost of 4.37% Senior Loan Notes	69,990	60.6	70,780	60.5
	Less: fair value of 4.37% Senior Loan Notes	(58,765)	(50.9)	(63,905)	(54.6)
	Net asset value - debt at fair value	1,028,436	890.2	1,016,335	871.0

## 10.	## Transaction costs
	During the period, expenses were incurred in acquiring or disposing of investments classified at 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 ended
		31 December 2022	31 December 2021
		£'000	£'000
	PurchasesA	479	315
	SalesA	82	58
		561	373
	A Costs  associated with the purchases and sale of portfolio investments in the normal course of the Company's business comprising stamp duty, financial transaction taxes and brokerage.

## 11.	## 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 has 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 (ie developed using market data) for the asset or liability, either directly or indirectly; and
	Level 3: inputs are unobservable (ie 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 1	Level 2	Level 3	Total
	As at 31 December 2022			Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities			a)	1,100,137	-	-	1,100,137
	Financial liabilities at fair value through profit or loss
	Derivatives			b)	(992)	(380)	-	(1,372)
	Net fair value				1,099,145	(380)	-	1,098,765
					Level 1	Level 2	Level 3	Total
	As at 30 June 2022			Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities			a)	1,098,793	-	-	1,098,793
	Net fair value				1,098,793	-	-	1,098,793
	a)	Quoted equities. The fair value of the Company's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges.
	b)	Derivatives. The fair value of the Company's investments in Exchange Traded Options has been determined using observable market inputs on an exchange traded basis and therefore has been included in Fair Value Level 1.
		The fair value of the Company's investments in Over the Counter Options (where the underlying equities are also held) has been determined using observable market inputs other than quoted prices of the underlying equities (which are included within Fair Value Level 1) and therefore determined as Fair Value Level 2.
		The fair value of the 2.51% Senior Loan Notes have been calculated as £39,518,000 (30 June 2022 - £39,725,000), determined by aggregating the expected future cash flows for that loan discounted at a rate comprising the borrower's margin plus an average of market rates applicable to loans of a similar period of time, compared to carrying amortised cost of £39,935,000 (30 June 2022 - £39,930,000).
		The fair value of the 4.37% Senior Loan Notes, have been calculated as £58,765,000 (30 June 2022 - £63,905,000), the value being based on a comparable debt security, compared to carrying amortised cost of £69,990,000 (30 June 2022 - £70,780,000).
		All other financial assets and liabilities of the Company are included in the Condensed Statement of Financial Position at their book value which in the opinion of the Directors is not materially different from their fair value.

## 12.	## Analysis of changes in net debt
		At	Currency		Non-cash	At
		30 June 2022	differences	Cash flows	movements	31 December 2022
		£000	£000	£000	£000	£000
	Cash and cash equivalents	20,131	875	9,853	-	30,859
	Debt due within one year	(6,507)	(249)	91	-	(6,665)
	Debt due after one year	(110,710)	-	-	785	(109,925)
	Total	(97,086)	626	9,944	785	(85,731)
		At	Currency		Non-cash	At
		30 June 2021	differences	Cash flows	movements	31 December 2021
		£000	£000	£000	£000	£000
	Cash and cash equivalents	4,493	29	12,830	-	17,352
	Debt due within one year	(6,241)	(48)	32	-	(6,257)
	Debt due after one year	(112,279)	-	-	784	(111,495)
		(114,027)	(19)	12,862	784	(100,400)

## 13.	## Transactions with the Manager
	The Company has delegated the provision of investment management, secretarial, accounting and administration and promotional services to the Manager.
	The amounts charged excluding VAT for the period are set out below:
		Six months ended	Six months ended
		31 December 2022	31 December 2021
		£'000	£'000
	Management fees	1,887	2,036
	Promotional activities	200	200
	Secretarial fees	38	38
		2,125	2,274
	The amounts payable excluding VAT at the period end are set out below:
		Six months ended	Six months ended
		31 December 2022	31 December 2021
		£'000	£'000
	Management fees	635	675
	Promotional activities	100	100
	Secretarial fees	19	19
		754	794
	No fees are charged in the case of investments managed or advised by the abrdn Group. There were no commonly managed funds held in the portfolio during the six months to 31 December 2022 (2021 - none). The management agreement may be terminated by either party on the expiry of three months written notice. On termination the Manager would be entitled to receive fees which would otherwise have been due up to that date.

## 14.	## Segmental information
	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.

## 15.

The financial information in this report does not comprise statutory accounts within the meaning of Section 434 - 436 of the Companies Act 2006. The financial information for the year ended 30 June 2022 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified and contained no statement under Section 498 of the Companies Act 2006.

## 16.	This Half-Yearly Financial Report was approved by the Board on 28 February 2023.

Alternative Performance Measures ("APMs")

Alternative performance measures are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes FRS 102 and the AIC SORP. The Directors assess the Company's performance against a range of criteria which are reviewed as particularly relevant for closed-end investment companies.
## Discount to net asset value per Ordinary share
The discount is the amount by which the share price is lower than the net asset value per share, expressed as a percentage of the net asset value.
		31 December 2022	30 June 2022
NAV per Ordinary share (p)	a	880.2p	864.9p
Share price (p)	b	844.0p	832.0p
Discount	(b-a)/a	4.1%	3.8%
## Dividend yield
The annual dividend per Ordinary share divided by the share price, expressed as a percentage.
		31 December 2022	30 June 2022
Dividends per share (p)	a	36.00p	36.00p
Share price (p)	b	844.0p	832.0p
Dividend yield	a/b	4.3%	4.3%
## Net gearing
Net gearing measures the total borrowings less cash and cash equivalents dividend by shareholders' funds, expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes amounts due to and from brokers at the year end as well as cash and cash equivalents.
		31 December 2022	30 June 2022
Borrowings (£'000)	a	116,590	117,217
Cash (£'000)	b	30,859	20,131
Amounts due to brokers (£'000)	c	-	-
Amounts due from brokers (£'000)	d	-	2,490
Shareholders' funds (£'000)	e	1,016,794	1,009,255
Net gearing	(a-b+c-d)/e	8.4%	9.4%
## Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average daily net asset values with debt at fair value published throughout the period. The ratio for 31 December 2022 is based on forecast ongoing charges for the year ending 30 June 2023.
		31 December 2022	30 June 2022
Investment management fees (£'000)	a	3,783	3,997
Administrative expenses (£'000)	b	1,341	1,350
Less: non-recurring chargesA (£'000)	c	(8)	(30)
Ongoing charges (£'000)	a+b+c	5,116	5,317
Average net assets (£'000)	d	1,024,717	1,102,862
Ongoing charges ratio	(a+b+c)/d	0.50%	0.48%
A 31 December 2022 comprises £7,000 relating to legal fees and £1,000 relating to other professional services unlikely to recur. 30 June 2022 comprises £20,000 Directors recruitment fee, £8,000 for legal fees relating to the private placement notes and £2,000 for professional fees for Taiwan tax work.
The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations, which includes financing and transaction costs.
## Total return
Total return is considered to be an alternative performance measure. Share price and NAV total returns show how the NAV and share price has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. Share price and NAV total returns are monitored against open-ended and closed-ended competitors, and the FTSE All-Share Index, respectively.
		Share price	NAV
Opening at 1 July 2022	a	832.0p	864.9p
Closing at 31 December 2022	b	844.0p	880.2p
Price movements	c=(b/a)-1	1.4%	1.8%
Dividend reinvestmentA	d	2.4%	2.2%
Total return	c+d	3.8%	4.0%
A Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend. NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend.

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