Schroder BSC Social Impact Trust plc

Half Year Report

Schroder BSC Social Impact Trust plc hereby submits its Half Year Report for the six months ended 31 December 2022 as required by the Financial Conduct Authority's Disclosure Guidance and Transparency Rule 4.2.

The Half Year Report is also available to download from the Company's webpage Schroder BSC Social Impact Trust plc (schroders.com).

Please click on the following link to view the document:

http://www.rns-pdf.londonstockexchange.com/rns/6677U_1-2023-3-29.pdf

The Company has also submitted a copy of its Half Year Report to the National Storage Mechanism and it will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Enquiries:

Kerry Higgins

Schroder Investment Management Limited

Tel: 020 7658 6189

Half Year Report and Accounts

Financial and Impact performance highlights

Delivering 4.7% annualised NAV total return per share since inception on 22 December 2020 in a volatile market, the Company continues to offer both a source of diversification for investors and high social impact.

Chair's Statement

I am pleased to present the half year report of the Schroder BSC Social Impact Trust plc ("the Company"), covering the period from 1 July to 31 December 2022.

The period under review was characterised by market volatility, with inflation reaching 40-year highs, and the rising cost of living, especially energy, placing millions of people at risk of fuel poverty. The cost spikes, in particular for essential items like food and energy, continued to disproportionately impact those who are already most vulnerable and at risk. The services offered to these groups by many of the Company's investments continue to be of critical importance in this difficult climate.

The environment of continued geopolitical tensions, high inflation and rising interest rates remained challenging for public markets, with further volatility introduced in the UK by the September 2022 "mini-budget". While the subsequent reversal of the proposals by the new Prime Minister and Chancellor helped to stabilise the market, concerns remain about pressures on public finances.

The Board believes the Company offers investors a valuable source of portfolio diversification, through access to a unique mix of private market investments, with the dual objectives of providing long term capital growth and income and serving as a source of permanent funding for organisations dedicated to positive social impact.

Financial performance

The Company has delivered resilient NAV total returns since inception on 22 December 2020, in a highly volatile market. Net asset value ("NAV") total return for the six-month period to 31 December 2022 was 1.7%, resulting in a NAV total return since inception of 9.6% (4.7% annualised).

Overall, the Company's NAV per share rose from 105.4p to 105.8p during the period, after fees and expenses and an interim dividend payment of 1.30p per share on 6 December 2022 (2021: 0.57p). The largest positive contribution to the NAV came from investment income (1.34p per share) and valuation gains (1.08p per share) reflecting strong operating performance in the Debt and Equity for Social Enterprises asset class, and uplifts from development completions in the High Impact Housing asset class.

The total share price return during the period was -12.0% as the Company's shares were not immune to negative investor sentiment towards equities which dominated the period. There has been a subsequent recovery in the Company's share price post-period end.

A more detailed analysis of performance and additional information on investments in the period under review are included in the Portfolio Manager's Report.

Social impact performance

The Company published its inaugural Impact Report on 8 June 2022.

As of the date of the Impact Report the Company had committed £85m, financing 160 organisations and reaching 160,000 people, of whom at least 90% were from disadvantaged and vulnerable backgrounds. The Company's investments helped fund over 10,000 affordable homes through the High Impact Housing asset class and generated over £55m of near-term value as savings for government and households. The report received an independent verification from BlueMark, an industry-leading, third-party assurance provider. The full report is available for download on the Company's website.

The Company's investments are also contributing to addressing the specific social challenges created by rising energy costs. For example Agility Eco (in the Bridges Evergreen portfolio) is a leading installer of energy efficiency improvements for low-income households. Man Community Housing Fund received planning permission for a development of 226 zero carbon, 100% affordable homes. Heart of England Community Energy (backed by Triodos UK and the Community Investment Fund) generates enough power for 4,500 homes as well as providing wider community benefits.

We are planning to publish our second Impact Report during the second quarter of 2023, showcasing the meaningful roles our investees have played in communities across the UK during the year, the engagement of our Portfolio Manager to support their success, and our impact management methodology. The Board is keen to help our investors meet their own developing needs in relation to impact reporting, and we will continue to evolve our approach to stay at the leading edge and in response to feedback.

Premium/discount management

During the six months ended 31 December 2022, the Company traded at an average discount to NAV of 3.32%. The Company's share price moved to a discount to NAV in October 2022, during a period of turbulence for UK equities, and as at 31 December 2022 was at a 12.6% discount.

At the 2022 annual general meeting shareholders approved the renewal of the Company's issuance and buy back authorities to enable the Company to issue up to 10% of its issued share capital on a non-pre-emptive basis and to buy back up to 14.99% of the issued share capital.

In January 2023, the Company began to buy back a limited number of shares with the aim of narrowing the discount at which the shares were trading to NAV. While the Board is conscious that buybacks shrink the size of the Company marginally in the short-term it remains our ambition to grow the Company through issuance in the long-term. Addressing the discount to NAV is critical to achieving this goal and the Board believes buybacks can be an effective tool in this regard. The Company has bought back a total of 263,331 to date, all of which are currently held in treasury.

Should the Company's shares reach a sufficient rating to its NAV, the Board will seek to issue shares to new and existing investors. Our Portfolio Manager sees an attractive pipeline of high impact investments. It is the Board's ambition to raise funds to take advantage of these opportunities for our shareholders and to deploy further capital to create more equal life chances and build resilient communities in the UK.

Move to quarterly valuations

I am pleased to announce that the Company intends to increase the frequency of its valuation points from bi-annual to quarterly. The Board are hopeful that this increased transparency will be beneficial to existing shareholders as well as making the Company's shares more attractive to potential new investors. The Company intends to publish its first quarterly NAV in June 2023 with a valuation point of 31 March 2023.

Recent events

Following the end of the reporting period, the Company realised a partial exit from one of its High Impact Housing Investments, the Resonance Real Lettings Property Fund ("RLPF1"), a transaction with an Internal Rate of Return (IRR) on the exited amount above the 6% fund target. The transaction was part of a fund extension and staged exit plan approved by the RLPF1 investors in February 2023. Our Portfolio Manager saw this as an attractive way to remain invested with one of the most experienced social housing managers in the UK, while also crystallising a gain and creating liquidity for further investment and/or buybacks.

In the Portfolio Manager's Report, we provide a summary of the issues experienced during the period by some Social Property REITs. The Board is pleased to report that the Portfolio Manager has monitored this closely and is not seeing any comparable issues in our High Impact Housing investments - with 100% of rent due by December 2022 collected and no negative regulatory judgements. For those readers wishing to understand this market better, we have included key findings from Big Society Capital's second edition of 'Mapping the market: UK social and affordable housing funds 2022' published in November 2022. This report aims to help others make informed investment decisions and underscores the importance of a commitment to impact management throughout the investment life cycle, with clearly defined impact goals, in order to source the best opportunities and reduce risk.

Outlook

In a climate of continuing instability, the Company's investment proposition, to deliver high quality risk adjusted investor returns alongside significant social impact, remains as relevant as ever.

The long-term effects of the pandemic, along with the economic and social impact of geopolitical instability, have exacerbated the social challenges that the Company's investments have been set up to alleviate. Demand for the services offered by these organisations has increased and we do not anticipate this to slow down. They deliver essential government-mandated services and derive a substantial proportion of their revenues from government-backed sources, which have been historically stable through economic cycles. Some of these government contracts are indexed to inflation, and the Company's portfolio includes some further inflation resilience through ownership of real assets such as housing and inflation-indexed leases.

The Board is confident that the Company's investment thesis of impact-driven value, together with strong execution by the Portfolio Manager, will continue to provide an attractive combination of significant social impact, high quality risk-adjusted returns and low correlation to traditional quoted markets.

Your Company plays an important role in helping to expand capital to social enterprises and other organisations across the UK that are purpose-driven and focused on creating a fairer, inclusive and thriving society through sustainable financial models. In pursuit of this, we are keen to share knowledge with retail and institutional investors about the potential to deliver both social impact and financial returns and welcome your engagement with us.

Webinar/investor event

I would like to invite you to attend a webinar to be given by the Portfolio Manager on 4 April 2023 at 10.00 a.m., providing an opportunity to learn more about social impact investment, the Company's strategy and outlook, and to ask questions. Shareholders are encouraged to sign up using this link: https://registration.duuzra.com/form/SBSIInterim

Susannah Nicklin

Chair

29 March 2023

Portfolio Manager's Report

Portfolio Performance

The Net Asset Value (NAV) total return for the six-month period to 31 December 2022 was 1.68%. This resulted in a NAV total return since the 22 December 2020 IPO of 9.59%, or 4.72% annualised. Overall, the Company's NAV per share rose from 105.39p to 105.84p following a dividend payment of 1.30p in the period based on the earnings of the company in the year to 30 June 2022, as set out in the NAV bridge below.

As shown in the following table, portfolio returns to date have been driven by the performance of more seasoned investments in their mature phase. Mature investments have contributed 1.57% to the NAV total return per share in the six months to 31 December 2022 and 12.16% since launch two years ago. Assets still in their investment phase are earlier in their life cycle and J-curves¹, and to date are producing returns in line with expectations. Once investments become fully deployed, they are re-classified as "Mature" in our portfolio. This was the case for the CBRE Affordable Housing Fund, which was fully deployed during the first quarter of our current financial year. This accounts for the increase in the proportion of "Mature" assets in our portfolio from 58.0% to 67.4%, based on capital committed. On the basis of capital drawn, Mature assets account for 65.8% of our portfolio as of 31 December 2022, compared to 53.6% on 30 June 2022.

¹The term J-curve is used to describe the typical return trajectory of certain types of investments, where low or negative returns in the early years of the investments are followed by a steep rise in returns as investments mature. In the case of the Company's investments, the J-curve effect is due to investing in property purchases and developments, where the early years are characterised by cost outlays, followed by an expected rise in returns as properties are occupied, and rental yield and property valuation uplifts start to be reflected in returns.

Some of the Company's higher impact investments involve the staged deployment of capital over multiple years; we aim to mitigate any cash drag on returns through our Liquidity Assets allocation. This is invested in assets with financial risk and return characteristics similar to the core asset allocation, although they have lower direct social impact given the low availability of social impact-focused assets in publicly listed markets. Liquidity Assets contributed a positive 17bps to returns in the six months to 31 December 2022.

*NAV of £90.3m as at 31 December 2022

Portfolio allocation (31 Dec 2022)

High Impact Exposure as a % of NAV*

*NAV of £90.3m as at 31 December 2022

Invested as a % of NAV*

*NAV of £90.3m as at 31 December 2022

The top three drivers of financial performance in the six-month period to 31 December 2022 were:

-        Bridges Evergreen Fund contributed 0.57p to NAV per share growth with contributions from strong operating performance from investments in Agility Eco and New Reflexions.

-        Man Community Housing Fund contributed 0.50p to NAV per share growth, due to uplifts in value as development sites progress towards practical completion. The fund is near-fully committed with the final 11th site closing imminently, significantly ahead of schedule (within 2 years since launch versus 5 year permitted investment period).

-        The Charity Bond Portfolio contributed 0.37p to NAV per share growth from interest income.

The portfolio continues to deliver strong social impact performance benefiting more disadvantaged groups across areas such as housing, education, fuel poverty and health and social care. The Company's investments are supporting over 160 social organisations benefiting over 160,000 people of which over 90% are from vulnerable or disadvantaged backgrounds. We aim to work with organisations with deep experience in tackling social issues in the local context, as we believe this reduces risk. The average delivery track record of organisations in the portfolio is 27 years. These organisations have built strong relationships with local stakeholders, deep knowledge of the social issues they are addressing, and are trusted by their beneficiaries.

Social outcomes reported in the period include:

-        Man Community Housing Fund received planning permission for its 10th site, the development of 226 zero carbon, 100% affordable homes at Old Malling Farm, Lewes. The project will be delivered in partnership with a modular housebuilder and is expected to deliver the homes within two and a half years starting in early 2023.

-        The Bridges Social Outcomes Fund II achieved £50m of outcomes payments, reaching over 18,500 people from fund inception to December 2022, meaning that the projects funded resulted in measurable improvements to the lives of the people supported and reached specific milestones. In turn, this triggered contracted payments from the contract counterparties (typically involving local and central commissioning bodies); the fund is on track to achieving £100m+ of outcomes payments. These outcomes are estimated to generate over £1bn of value to society, consisting of fiscal, economic, and social value, according to data included in the "10 Years of Social Outcomes Contracts" report, published by BSC in June 2022, which estimates that over £10 of public value is created for each £1 spent by commissioners on social outcomes.

-        Active Prospects, with investment from the Social and Sustainable Housing fund (SASH) and the Community Investment Fund (CIF), both in the Company's portfolio, created more much-needed new homes for people with learning disabilities, autistic people or those with mental health needs, including six new homes at a flagship new service in Horley. Active Prospects develops small clusters of self-contained homes with communal facilities. These make it possible for people with very high-level needs to move out of institutions. Active Prospects' high impact approach is to provide "ordinary homes in ordinary communities". In 2022, 100% of people supported by Active Prospects reported positive wellbeing outcomes.

We will be publishing a full review of the Company's social impact performance in our second Impact Report in the second quarter of 2023.

Portfolio Cash Flows and Balance Sheet

In the period £3.9m was drawn down into existing investments - with the majority of that (£3.2m) going towards delivering new affordable homes in the High Impact Housing allocation. In Debt and Equity for Social Enterprises there have been further investments into the secured co-investments with Charity Bank, to Abbeyfield York who started the development of 25 purpose-built quality homes for older people who require supported housing. Within Social Outcomes Contracts, further investment was made into projects supporting young people at risk of homelessness, improving the quality of life of people living with long term health conditions via social prescribing², and improving the process of refugee integration.

²NHS definition: Social prescribing is a key component of Universal Personalised Care. It is an approach that connects people to activities, groups, and services in their community to meet the practical, social and emotional needs that affect their health and wellbeing.

The Company's investment policy permits an allocation of up to 20% of net assets into Liquidity Assets to mitigate cash drag during the investment period of private funds. Following the Investment Policy changes approved by investors at the AGM in December 2022, this allocation can be increased to 30% of net assets immediately after a fundraise, as funds raised are committed to new high impact investments.

Liquidity Assets investments sit within a broader set of tools to manage Company cash and commitment levels, with the central objective of contributing to the Company's target returns and impact goals by minimising the amount of unproductive cash held prior to deployment. In the current environment of heightened inflation, we believe this allocation is particularly important to reduce cash drag impact on the performance of the Company. This allocation can be invested in bond funds, real estate investment trusts, infrastructure trusts and other liquid investments that align with the Company's liquidity requirements, meet high ESG requirements and are compliant with the Company's investment policy.

During the six months to December 2022, we reduced our Liquidity Assets holdings by £4.0m, to fund drawdowns in the High Impact Portfolio, as well as ongoing share buybacks.

As of 31 December 2022, the Company's Liquidity Assets holdings had a value of £12.8m (14% of NAV) and were invested in six funds: during the period we exited our position in the Edentree Ethical and Sustainable Bond Fund and reduced our position in the Vontobel TwentyFour Sustainable Short Term Bond Income Fund by £2m - as we rebalanced the portfolio to reduce duration and exposure to fixed rates in a rising inflation and interest rate environment.

At 31 December 2022, 69% of our Liquidity Assets portfolio is invested in instruments with returns that are floating rate and/or benefit from rising inflation. Liquidity Assets had a positive 17bps contribution to performance in the half.

Portfolio allocation (31 Dec 2022)

High Impact Exposure as a % of NAV

Invested as a % of NAV

Recent Events

In January 2023, the Board commenced a share buyback programme, with the intention of closing the trading discount in the shares. A total of 263,331 shares were purchased from the start of the year until 29 March 2023 and are held in treasury.

To increase flexibility around buybacks the Portfolio Manager has redirected £1.6m of formerly committed but uninvested capital in the Charity Bond portfolio.

In our High Impact Housing portfolio, the Company delivered a partial exit (15% of the Company's investment) from the RLPF1 - as new institutional investment came in alongside an extension of the fund. The exit was delivered at an updated fund NAV, determined via an independent valuation by JLL as at 15 February, at a 3.5% increase to the 30 June 2022 NAV. RLPF1 remains an investment that is highly aligned with the Company's investment strategy, from both an impact and a returns perspective.

As part of the fund extension, RLPF1 entered into 15-year leases with Notting Hill Genesis (NHG) and Capital Letters for over 50% of its property portfolio; St. Mungo's continues to manage the remainder of the portfolio, with the intention to transfer this to those partners over the course of this year.

Having had a decade long partnership with St Mungo's, Resonance, the manager, has in the last two years expanded out to having over 20 partners across the country. Resonance looks for partners with strong culture, practice and commercial strength; in selecting its counterparties, the organisation looks for:

-        Local focus and relationship

-        Longevity and track record

-        Strong balance sheet

-        Strong governance and leadership

RLPF1's two new leasing counterparties (NHG and Capital Letters) rate highly on the criteria above.

NHG is a charitable community benefit society, created in 2018 from two well-established housing associations and is now one of the largest housing associations in London and the southeast. NHG's parent group own and manage more than 66,000 properties and employ around 2,000 staff. The group's main activities relate to the management of social housing, including care and support, as well as the development of new homes. The group's roots reach back to the 1960s when its legacy organisations were established by local people who shared a similar vision: to house West London's working poor, providing them a home from which they can build themselves and their families a secure future. The group have a strong balance sheet, an A credit rating from S&P and Fitch, and the strongest governance rating (G1) from the Regulator of Social Housing published in August 2022.

NHG's dedicated Temporary Housing team operate 3,000 homes owned by 2,000 landlords across London boroughs. In February 2023, Resonance entered into a partnership with NHG that will see the housing association take over the management of 590 properties across the Resonance housing funds, starting with over 100 tenanted properties from the RLPF1 portfolio. This partnership arrangement is the largest ever carried out by NHG's temporary housing business and Resonance funds will become the largest landlord for NHG.

Capital Letters was established in December 2018 by 13 London Boroughs (expanded to 21 members by July 2022) to increase the supply of rented accommodation for homeless households across London, reduce competition for the limited pool of properties and drive down costs. The company enables the members to collaborate and work in partnership to procure accommodation to tackle homelessness, rather than competing with each other for a scarce resource across London. By pooling resources and sharing expertise, Capital Letters provides a better service to both private sector landlords and tenants. Capital Letters is a not-for-profit company limited by guarantee and owned by their members. Their work has been made possible by £38m of Flexible Homelessness Support Grant from the Department for Levelling Up, Housing and Communities³ (DLUHC) which will last until 2024. In light of this, and as outlined in their most recent corporate strategy, Capital Letters has been working on developing independent sources of income to ensure that it can be financially viable without recourse to government funding. Crucially, this will also ensure that the services it provides for homeless families will continue when the grant ceases over the long-term. Since inception, Capital Letters, have helped around 4,000 homeless families find homes in the private rented sector.

³Formerly the Ministry of Housing, Communities and Local Government (MHCLG).

High Impact Housing - Sector Spotlight

We note some of the challenges being experienced by listed Social Property REITs - often linked to the short operating history and limited delivery experience of property counterparties. We are not seeing any comparable issues in our High Impact Housing investments - with 100% of rent due by December 2022 collected and no negative regulatory judgements. As outlined in our Impact Report last year, we target organisations with proven track records of delivering impact in their local context - with an average social organisation track record of 27 years.

⁴Based on the 30 counterparties across the four High Impact Housing investments within the Company's portfolio.

It is estimated that £16.9 billion is needed every year for the next ten years to adequately respond to the chronic shortage of social and affordable housing in the UK. Over the past decade, the amount of private capital investing to respond to this need has steadily increased, most notably from social and affordable housing funds.

To help investors navigate this evolving fund market, in November 2022 Big Society Capital launched the second edition of "Mapping the market: UK social and affordable housing funds 2022". Sharing experience and key practical lessons, it aims to help others make informed investment decisions that include a robust assessment of managers' impact practices.

In the last eleven years of investing in this area, Big Society Capital has learnt the importance of a commitment to impact management throughout the investment life cycle and having clearly defined impact goals. Effective consideration of impact guides sourcing of the best opportunities and the visibility of impact delivered helps reduce risk.

Importantly the report highlights the risks that Big Society Capital believes are most material to social and affordable housing investments and the qualities we look for in managers to mitigate these risks. These qualities are seen in all the High Impact Housing managers the Company invests in.

Outlook

The government published a Spring Budget on 15 March 2023, after the period end, with a focus on reducing inflation, growing the economy, and reducing debt. The government's stated focus is to ensure sustainable long-term growth and reduce inflation to 2.9% by the end of 2023. A more positive macroeconomic backdrop has allowed the government to shift the focus from "stability" to "growth" - in an effort to counteract concerns of an impending UK recession in 2023.

There were a number of Budget measures with relevance for the Company:

-        We are particularly encouraged by the government's recognition of the crucial role of charities and social enterprises in reaching "people in need that central or local government cannot"⁵. To support their work, the Spring Budget allocated over £100m of funding for charities and community organisations. This will be allocated over the next two years to frontline organisations most impacted by increased demand for their services from vulnerable people and increased delivery costs, and measures to increase the energy efficiency and sustainability of voluntary, community and social enterprise (VCSE) organisations.

-        One of the key pillars for the government's growth agenda is education, and the Spring Budget introduces additional funding of £63m to support "Returnerships", skills programmes aimed at the over-50s. Alongside the government's continued commitment to post-18 education, the measures offer a positive backdrop for the activities of organisations such as Skills Training in the Bridges Evergreen portfolio.

-        Measures to reduce inflation include the extension of support for households to reduce the cost of living, including the extension of the Energy Price Guarantee (EPG) of £2,500 for a further three months until June 2023. After this time, energy prices are expected to fall below the guarantee threshold, reflecting a steep fall in wholesale energy prices since the start of the year. To support more vulnerable households, the government will also align charges for comparable direct debit and Pre-Payment Meter (PPMs) customers, ensuring that those on PPMs no longer pay a premium for their energy costs, a move that has been campaigned for among others by Fair by Design, a program established by Big Society Capital.

Despite the measures announced, it is estimated that UK households are still facing the largest fall in living standards since records began in the 1950s - and they will not return to their pre-pandemic level until at least 2028, reflecting the impact of the trade shock suffered by the UK since the energy crisis began, on top of structural weaknesses in the economy⁶. As we have highlighted previously, this fall in living standards disproportionately affects those who are already most vulnerable in society, increasing the already high percentage of the population living in poverty, estimated at 20% in 2020/2021⁷. In this environment the scaling of proven solutions tackling social issues - such as the organisations the Company supports - is needed more than ever.

⁵Jeremy Hunt, via Civil Society, 15 March 2023.

⁶Institute for Government, 2023

⁷Joseph Rowntree Foundation, 2023

Also, in early 2023, further issues have emerged in the banking sector, with knock-on effects on credit markets. As of the time of writing, there are no material impacts expected on the Company's investments. The underlying revenue sources of the portfolio are primarily from UK government backed sources (over 80% as of December 2022) and have been historically stable through economic cycles. We anticipate that stability will continue through the current turbulence and fiscal pressures, supported by the savings government and society make with the impact of our investments.

In this challenging environment the goals of the Company remain the same: to deliver for shareholders high quality returns with a low correlation to traditional quoted markets alongside significant social impact for more disadvantaged groups across the UK.

Jeremy Rogers, Hermina Popa

Big Society Capital

29 March 2023

Portfolio Overview (31 December 2022)

Liquidity Assets

*Exposure is NAV plus undrawn commitments.

Investment Portfolio at 31 December 2022

Principal Risks and Uncertainties

The Board has determined that the key risks for the Company are strategic risk, investment management risk, liquidity risk, valuation risk and cyber security risk. Additionally, the Board also discussed and monitored a number of risks that could potentially impact the Company's ability to meet its strategic objectives. These were political risk, climate change risk, COVID-19 related risks, inflation risk and UK political risk. The Board has determined they are not currently material for the Company. These risks are set out on pages 45 and 46 of the Report and Accounts for the year ended 30 June 2022.

In addition, the Board is mindful of the continuing impact of the war in Ukraine, inflation and increasing interest rates. The Board considers that these are risks that could have further implications for financial markets. In all other respects, the Company's principal risks and uncertainties, and their mitigation, have not changed materially since the publication, on 21 October 2022, of the Annual Report, and are not expected to change materially for the remaining six months of the Company's financial year.

Going concern

The Board has considered the Company's principal risks and uncertainties (including whether there are any emerging risks); has scrutinised the detailed cash flow forecast; and has considered their assessment of the likelihood and quantum of funds which could be raised from sales of investments. As a result, the Board is comfortable that the Company will have sufficient liquid funds to pay operating expenses.

On this basis, the Board considers it appropriate to adopt the going concern basis of accounting in preparing the Company's accounts.

Related party transactions

There have been no transactions with related parties that have materially affected the financial position or the performance of the Company during the six months ended 31 December 2022.

Directors' responsibility statement

The Directors confirm that, to the best of their knowledge, this set of condensed financial statements has been prepared in accordance with United Kingdom Generally Accepted Accounting Practice, in particular with Financial Reporting Standard 104 "Interim Financial Reporting" and with the Statement of Recommended Practice, "Financial Statements of Investment Companies and Venture Capital Trusts" issued in July 2022 and that this Interim Management Report includes a fair review of the information required by 4.2.7 R and 4.2.8 R of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

Income Statement

For the six months ended 31 December 2022 (unaudited)

The "Total" column of this statement is the profit and loss account of the Company. The "Revenue" and "Capital" columns represent supplementary information prepared under guidance issued by The Association of Investment Companies. The Company has no other items of other comprehensive income, and therefore the net return after taxation is also the total comprehensive income for the period.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period.

Statement of Changes in Equity

For the six months ended 31 December 2022 (unaudited)     

Statement of Financial Position

at 31 December 2022 (unaudited)

Cash Flow Statement

For the six months ended 31 December 2022 (unaudited)

Notes to the Accounts

1.      Financial Statements

The information contained within the accounts in this half year report has not been audited or reviewed by the Company's independent auditor.

The figures and financial information for the year ended 30 June 2022 are extracted from the latest published accounts of the Company and do not constitute statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditor which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

2.      Accounting policies

Basis of accounting

The accounts have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice, in particular with Financial Reporting Standard 104 "Interim Financial Reporting" and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by the Association of Investment Companies in July 2022.

All of the Company's operations are of a continuing nature.

The accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended 30 June 2022.

3.      Taxation

The Company's effective corporation tax rate is nil, as deductible expenses exceed taxable income. The Company intends to continue meeting the conditions required to retain its status as an Investment Trust Company, and therefore no provision has been made for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments.

4.      Return per share

5.      Dividend paid

No dividend has been declared in respect of the six months ended 31 December 2022.

6.      Called-up share capital

Changes in called-up share capital during the period were as follows:

Changes in the number of shares in issue during the period were as follows:

7.      Net asset value per share

8.      Financial instruments measured at fair value

The Company's financial instruments within the scope of FRS 102 that are held at fair value comprise certain investments held in its investment portfolio.

FRS 102 requires that financial instruments held at fair value are categorised into a hierarchy consisting of the three levels below. A fair value measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement.

Level 1 - valued using unadjusted quoted prices in active markets for identical assets.

Level 2 - valued using observable inputs other than quoted prices included within Level 1.

Level 3 - valued using inputs that are unobservable.

At 31 December 2022, the Company's investment held at fair value, were categorised as follows:

There have been no transfers between Levels 1, 2 or 3 during the period (period ended 31 December 2021 and year ended 30 June 2022: nil).

9.      Uncalled capital commitments

At 31 December 2022, the Company had uncalled capital commitments amounting to £13,573,000 (31 December 2021: £17,917,000 and 30 June 2022: £17,392,000) in respect of follow-on commitments, which may be drawn down or called by investee entities, subject to agreed notice periods.

10.    Events after the interim period that have not been reflected in the financial statements for the interim period

The Directors have evaluated the period since the interim date and have not noted any events which have not been reflected in the financial statements.