Invesco Perpetual UK Smaller Co's Investment Trust Plc - Half-year Report

LEGAL ENTITY IDENTIFIER: 549300K1D1P23R8U4U50 Invesco Perpetual UK Smaller Companies Investment Trust plc Half-Yearly Financial Report for the Six Months to 31 July 2024 The following text is extracted from the Half-Yearly Financial Report for the Six Months to 31 July 2024. All page numbers below refer to the Half-Yearly Financial Report which will be made available on the Company's website. Investment Objective Invesco Perpetual UK Smaller Companies Investment Trust plc (`the Company') is an investmenttrust whose investment objective is to achieve long-term total returns for shareholders primarily by investment in a broad cross-section of small to medium sized UK quoted companies. The Company's shares qualify to be considered as a mainstream investment product suitable for promotion to retail investors and are eligible for investment in an ISA. Financial Information and Performance Statistics Total Return Statistics (with dividends reinvested) For Six For Year Months to Ended 31 July 31 January 2024 2024 Net asset value(1)(2) +13.8 -4.1 Share price(1)(2) +13.3 -1.8 Benchmark Index(2)(3) +12.1 -3.3 Capital Statistics At At 31 July 31 January Period End Date 2024 2024 Change Total shareholders' funds (£'000) 180,163 161,395 +11.6% Net asset value (`NAV') per share 532.60p 477.12p +11.6% Share price(2) 470.00p 424.00p +10.8% Discount(1) (11.8)% (11.1)% Gearing(1): - gross gearing 4.6% 5.4% - net gearing 4.5% 5.4% - net cash nil nil Maximum authorised gearing 11.1% 9.3% Six Six months months ended ended 31 July 31 July Return and dividend per ordinary share 2024 2023 Return(1) - revenue 7.33p 8.17p - capital 57.41p (43.56)p - Total 64.74p (35.39)p First interim dividend 3.85p 3.85p Notes: (1)Alternative Performance Measures (`APM'). See pages 16 and 18 for the explanation and calculation of APMs. Further details are provided in the Glossary of Terms and Alternative Performance Measures in the Company's 2024 Annual Financial Report. (2)Source: LSEG Data & Analytics. (3)The benchmark index of the Company is the Deutsche Numis Smaller Companies + AIM (excluding Investment Companies) Index with dividends reinvested. Chairman's Statement Highlights ·Net asset value (`NAV') total return of +13.8% in excess of benchmark index total return of +12.1%. ·Special dividend paid to shareholders who have elected to receive it on 8October 2024. ·First interim dividend paid of 3.85p (2023: 3.85p), maintaining the target dividend yield of 4%. ·New eNewsletter available to sign up to for free, for regular Company and sector insights. Dear Shareholders As my first full year as Chairman has come to a close, there is a significant amount to reflect on, in regards to your Company and the UK in general. Firstly, I am pleased to report that at the Annual General Meeting (`AGM') held on Thursday 6June 2024, all resolutions were passed, including the continuation vote. Your Board thanks shareholders for their ongoing support. Shareholders will have the opportunity to vote for the continuation of the Company at each third AGM, with the next being in 2027. Secondly, the UK market appears to be turning a corner as we have seen stronger performance which has enabled your Portfolio Managers to deliver a return ahead of the benchmark index. Thirdly, we proposed and recently paid a special dividend in October to shareholders who opted to receive it. This option provided shareholders with the opportunity to realise a part of their holding at close to NAV. Further details are included below and on the Company's website. Performance In my last statement in April 2024, I commented on the continuing challenge for the UK and particularly UK smaller companies owing to their greater economic sensitivity to the domestic economy and market. At that point, the Portfolio Managers' performance was slightly behind its benchmark (Deutsche Numis Smaller Companies + AIM (excluding Investment Companies) Index with dividends reinvested, with both delivering a negative return for the year ended 31January 2024. Over the past six months ended 31 July 2024, the NAV performance of your Company was +13.8% with the benchmark index returning +12.1% (both on a total return basis). Not only is the absolute performance generated by the investment portfolio better but it has also outperformed the index by 1.7%. To receive regular updates on the trust's performance, portfolio activity and insights into the UK smaller companies sector as a whole, visit the Company's website and sign up to our new eNewsletter. It is free and signing up only takes a minute. You can register for this service by scanning the QR code included to the right of my signature with your smartphone/device. Dividends & Dividend Policy The Company's dividend policy is to target a dividend yield of 4% of the year end share price, paid from income earned within the portfolio and enhanced, as necessary, through the use of realised capital profits. In accordance with this policy, on 18 July 2024 the Board declared a first interim dividend of 3.85p for the year ending 31 January 2025, which was paid on 30August 2024 to shareholders on the register on 2 August 2024 (2023: 3.85p). A second interim dividend of 3.85p (2023: 3.85p) has been declared and will be paid on 6 December 2024 to ordinary shareholders on the register on 8 November 2024. The expected timetable for the remaining dividend payments is as follows: the third interim dividend is payable in March 2025, with the final dividend payable in June 2025, following its approval by shareholders at the Company's AGM. Shareholders who hold shares on the main register and are residents of the UK, Channel Islands and Isle of Man, have the opportunity to reinvest their dividend via the Dividend Reinvestment Plan (`DRIP'). Further information can be found on the Company's webpage: www.invesco.co.uk/ipukscit. Special Dividend On 22 May 2024, the Board announced a proposed elective return of capital to be offered to all shareholders in respect of up to 10% of the Company's issued shares (excluding treasury shares), and a circular was published providing context and options for shareholders. On 20 August 2024, your Board published the result of the special dividend offer, which was fully taken up. For further details, including important dates, please visit the "Announcements" section of the Company's website. Outlook At the time of writing, your Company's discount is wider than its 12-month average, and with the improving sentiment to the sector, this should be a good time to be invested in our Company. After many years of poor investor sentiment towards the UK, we may now be seeing some improvement, and whilst experience tells us that such improvement will not be in a straight line, our hope is that your Portfolio Managers will deliver outperformance against the benchmark and the peer group. Bridget Guerin Chairman 15 October 2024 Portfolio Managers' Report QWhat were the key influences on the market over the period? AThe UK market shrugged off the general election and change of government, with the largely inevitable result limiting any potential uncertainty. The improving economic outlook, with accelerating GDP growth, lower inflation and the potential for lower interest rates had a much greater influence. The market rally, triggered by improved inflation data at the end of October 2023, was sustained as CPI trended towards its 2% target level. The much anticipated cut in UK base rates duly arrived in July 2024, and although inflation has ticked-up slightly since, the current Bank of England policy seems overly restrictive, giving the potential for a further easing of rates in the coming months. Takeover activity remained a feature of the UK market, with low valuations drawing interest from a range of both trade and private equity buyers. Receipts from these deals are generally re-deployed into other listed businesses, giving an immediate boost to markets. It also highlights the valuation attractions of the UK market, potentially drawing interest from other investors. On a more global level, the industrial sector struggled, as the easing of post pandemic supply chain disruption allowed businesses to reduce their inventory levels. Whilst there are now signs of ordering patterns normalising, the period of adjustment led to lower demand across the sector. QHow did the portfolio perform over the period? AThe NAV total return for the portfolio over the period was +13.8%, which is an outperformance of 1.7% when compared with the benchmark index, the Deutsche Numis Smaller Companies + AIM (excluding Investment Companies) Index with dividends reinvested, which returned +12.1% on the same basis. QWhich sectors contributed to and detracted from performance? AAn improving consumer outlook meant that the consumer discretionary sector was the most positive contributor to portfolio performance, with leisure and media stocks performing well. We also benefitted from our exposure to financials, with rising markets driving the outperformance. The sector that detracted the most from performance was industrials, where ongoing destocking continued to weigh on profitability. QWhich stocks contributed to and detracted from performance? AThe best performing stocks over the period included: financial administration business, JTC (+31%), our largest holding, continued its impressive long-term record of organic growth. This was augmented with a number of acquisitions, most notably in the US, where management see a significant opportunity for growth. Investment platform, AJ Bell (+45%), gained as stronger stock markets boosted its fee income, and it benefitted as fears about the impact of new Consumer Duty regulations receded. Keywords Studios (+44%), and Alpha Financial Markets Consulting (+38%) both received takeover approaches from private equity. 4imprint (+14%), which sells promotional products, predominantly in the US, had another strong year. The business, which is the largest player in its niche, continued to take share by increasing its advertising spend. The company has good long-term prospects and remains one of the largest holdings in the portfolio. Defence business, Avon Protection (+41%), benefitted from restructuring under its new management team. The business had lost it way under previous management but has significant recovery potential if margins return to historic levels. By far the biggest detractor from performance in the period was veterinary company CVS (-32%). The shares fell following the commencement of a Competition and Markets Authority (`CMA') investigation into the sector triggered by rising vets bills. There is a structural undersupply of vets in the UK, and overseas recruitment has been more difficult since Brexit. Whilst prices in the sector have risen significantly over the last few years, CVS has only increased charges in-line with staff costs, which have increased substantially to attract and retain enough vets. We do not believe the sector is "over earning", and therefore do not believe that the CMA investigation will ultimately have a significant impact on profitability for the business. The company continues to trade well and we have maintained our holding. Market research business, YouGov (-60%), which is a relatively new holding, suffered from lower demand and increased competition in some areas of its business. When introducing new holdings to the portfolio we generally buy a smaller initial position and wait for further news. So thankfully this was a relatively small holding. We will monitor the progress of the business over coming months and decide whether to exit or build to a full position. Focusrite (-26%), is a music technology business which has experienced softer trading following a spike in demand during the pandemic. More recently this has been exacerbated by destocking amongst its retail customers. The business benefits from a market leading position in its segments, and we believe it will recover over the coming years, so we have maintained our holding. QWhat is the current portfolio strategy? AOur investment philosophy remains unchanged. The current portfolio is comprised of 60-70 stocks with the sector weightings being determined by where we are finding attractive companies at a given time, rather than by allocating assets according to a "top down" view of the economy. We continue to seek growing businesses, which have the potential to be significantly larger in the medium term. These tend to be companies that either have great products or services, that can enable them to take market share from their competitors, or companies that are exposed to higher growth niches within the UK economy or overseas. We prefer to invest in cash generative businesses that can fund their own expansion, although we are willing to back strong management teams by providing additional capital to invest for growth. The sustainability of returns and profit margins is vital for the long-term success of a company. The assessment of the position of a business within its supply chain and a clear understanding of how work is won and priced are key to determining if a company has "pricing power". It is also important to determine which businesses possess unique capabilities, in the form of intellectual property, specialist know-how or a scale advantage in their chosen market. We conduct around 300company meetings and site visits a year, and these areas are a particular focus for us on such occasions. In terms of portfolio construction, we continue to favour a mix of both cyclical (economically sensitive) stocks, and more defensive businesses. We believe that the outlook for both the consumer and industrial sectors has improved, and we have reflected this with a tilt towards more cyclically exposed stocks over the 6 months. QWhat are the major holdings in the portfolio? AThe 5 largest holdings in the portfolio at the end of the period were: ·JTC (4.5% of the portfolio) is a financial administration business providing services to real estate and private equity funds, multinational companies, and high net worth individuals. The business has a strong culture, a reputation for quality and has augmented its organic growth with acquisitions. Margins and returns on capital are strong and the business benefits from long term contracts, giving it excellent earnings visibility. ·4imprint (3.9% of the portfolio) sells promotional materials such as pens, bags and clothing which are emblazoned with company logos. The business gathers orders through online and catalogue marketing, which are then routed to their suppliers who produce and dispatch the products to customers. As a result of outsourcing most of the manufacturing, the business has a relatively low capital requirement and can focus on marketing and customer service. Continual reinvestment of revenue into marketing campaigns has enabled the business to generate an enviable long term growth record whilst maintaining margins. ·Hill & Smith (3.4% of the portfolio) is a supplier of products and services into the infrastructure sectors in the US and UK. Its proprietary steel and composite products are used in the rail, roads, water, and energy sectors. The business also provides galvanizing services to protect steel structures, and leases temporary road barriers and security products. The company generates good margins and benefits from exposure to growing infrastructure investment. ·AJ Bell (3.3% of the portfolio) is an investment platform offering share dealing, custody and other investment services to both financial advisors and retail investors in the UK. The business benefits from a high level of recurring revenue from levying charges on assets under administration. It has an excellent long term growth record, and its low fee structure and well invested technology stack should enable it to continue taking market share in the future. ·Hilton Food (3.2% of the portfolio) partners with major supermarkets across the world to supply their prepacked meat, fish, and plant-based products on a long -term "cost plus" basis. This model reduces the volatility in profits typically seen in food businesses by allowing them to pass changes in the cost of raw materials on to their customers. The business has benefitted from the global trend in supermarkets moving from in-store to centralised packing and relying on a reduced number of trusted suppliers. Hilton Foods has an excellent long term growth record, both from signing customers in new countries and increasing share within existing customers. The business has also successfully added new product categories via acquisition, which it can then sell into its global customer base. QWhat were the new holdings added over the period? ANew stocks that we added to the portfolio in the period include: ·GlobalData (£1,800million market cap) provides data and analytics to businesses in the healthcare, technology and consumer sectors. The business benefits from a high level of recurring revenue, with 85% of sales coming via subscriptions. The company owns over 290proprietary data sets including medical/drug data, pricing indices and industry sales data, which it packages and sells to companies in different ways. The business has an enviable growth record, with revenue increasing 80% over the last 5 years, and is highly profitable, with margins in excess of 25%. The business recently sold a 40% share of its healthcare division for £434million. The company will use the proceeds to accelerate the growth of the business investing in people, acquisitions, and Artificial Intelligence (`AI') tools to make its data more useable. ·Oxford Instruments (£1,340million market cap) provides high technology products and services to industrial businesses and scientific research organisations in the healthcare, life sciences, semiconductor, and communications sectors. Its product range includes optical spectroscopy, X-ray, atomic force microscopy, nuclear magnetic resonance, electron microscopy, and low-temperature systems, which customers use for materials analysis, life sciences, astronomy, quantum technology etc. It generates attractive margins, has a good long term growth record, and a cash balance sheet. QWhat is the Managers approach to gearing? AGearing decisions are taken after reviewing a variety of metrics including valuations, earnings momentum, market momentum, bond spreads and a range of economic indicators. After analysing this data, we have moved the Company to a geared position of around 4.5%. The valuation of the UK Smaller Companies sector continues to look attractive. Interest rates are likely to fall further with inflation back towards its target, and this should improve the relative attraction of equites compared to bonds and bank deposits. This combined with an improving economic backdrop, and the ongoing takeover activity in the sector, suggest that we are likely to increase gearing over the coming months. QHow does ESG factor in the investment process? AEnvironment, Social and Governance (`ESG') issues are increasingly a focus for many investors and analysis of these factors has always been a core part of our investment process. Invesco has significant resources focussed on ESG, both at a group and individual team level. Our proprietary ESGintel system draws in company specific data from a broad range of sources and enables ESG related metrics to be quantified. This provides fund managers with clear overview of areas of concern, allowing targeted engagement with businesses to bring about positive change. Environmental liabilities, socially dubious business practises and poor corporate governance, can have a significant impact on share prices. We assess environmental risks within a business, and analyse the steps being taken to reduce its environmental impact. We like businesses with strong cultures and engaged employees, and avoid businesses, which, whilst acting within the law, run the risk of a public backlash, or being constrained by new legislation. We believe that governance, board structure and incentivisation, are by far the most important factors within ESG in determining shareholder returns. The importance of businesses being managed by good quality people, with appropriate incentivisation should not be underestimated. Therefore, we proactively consult with all the businesses we own on these matters and vote against resolutions where standards fall short of our expectations. QWhat is the dividend policy of the Company? AThe Company pays out all the income earned within the portfolio and enhances it using a small amount of realised capital profits to target a dividend yield of 4% based on the year end share price. This provides shareholders with an attractive and consistent yield whilst allowing us to target businesses that we believe will deliver the best total return, without having to compromise on quality to hit an income target. QWhat are your expectations for the year ahead? ADespite the protestations of the new government, the UK economy is in decent shape. The consumer sector is seeing discretionary income growing at over 10% this year, as wages continue to rise at a rate well ahead of inflation. Household balance sheets are also relatively strong following a period of elevated savings. This, combined with full employment, should ensure a healthy consumer backdrop as we progress through the year. The industrial sector has struggled over the last year, as businesses reduced inventories following the period of post pandemic supply chain disruption. Conversations with businesses suggest that in many cases inventories have returned to historic levels and ordering patterns are normalising. We are hopeful that this will herald a return to growth for the industrial sector over the coming year. So, with an improving economic outlook, a continued high level of take-over activity, and the relatively low valuation of UK smaller companies, we believe the sector can continue to make good progress over the next year. Jonathan Brown & Robin West Portfolio Managers 15 October 2024 Principal Risks and Uncertainties The Directors confirm that they have carried out a robust assessment of the emerging and principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. Most of these risks are market related and are similar to those of other investment trusts investing primarily in listed markets. The Audit Committee reviews the Company's risk control summary at each meeting, and as part of this process, gives consideration to identify emerging risks. Emerging risks, such as evolving cyber threat, geo-political tension and climate related risks, have been considered during the period as part of the Directors' assessment. Principal Risk Mitigating Procedures and Controls Description Market The Directors have assessed the market impact of the ongoing (Economic) uncertainty from the conflicts in the Middle East and Ukraine Risk and the resulting sanctions imposed on Russia through regular discussions with the Portfolio Managers and the Corporate Factors such Broker. The Company's current portfolio consists of companies as listed on the main UK equity market and those listed on AIM. fluctuations The Company does not have direct investments in Russia or hold in stock stocks with significant links to Russia. To a limited extent, markets, futures can be used to mitigate against market (economic) interest rates risk, as can the judicious holding of cash or other very and exchange liquid assets. Futures are not currently being used. rates are not under the control of the Board or the Portfolio Managers, but may give rise to high levels of volatility in the share prices of investee companies, as well as affecting the Company's own share price and the discount to its NAV. The risk could be triggered by unfavourable developments globally and/or in one or more regions, contemporary examples being the market uncertainty in relation to the wider political developments in Ukraine and the Middle East. Investment The Portfolio Managers' approach to investment is one of Risk individual stock selection. Investment risk is mitigated via the stock selection process, together with the slow build-up The Company of holdings rather than the purchase of large positions invests in outright. This allows the Portfolio Managers, cautiously, to small and observe more data points from a company before adding to a medium-sized position. The overall portfolio is well diversified by company companies and sector. The weighting of an investment in the portfolio traded on the tends to be loosely aligned with the market capitalisation of London Stock that company. This means that the largest holdings will often Exchange or on be amongst the larger of the smaller companies available. The AIM. By their Portfolio Managers are relatively risk averse, look for lower nature, these volatility in the portfolio and seek to outperform in more are generally challenging markets. The Portfolio Managers remain cognisant considered at all times of the potential liquidity of the portfolio. riskier than There can be no guarantee that the Company's strategy and their larger business model will be successful in achieving its investment counterparts objective. The Board monitors the performance of the Company, and their giving due consideration to how the Manager has incorporated share prices ESG considerations including climate change into their can be more investment process. The Board also has guidelines in place to volatile, with ensure that the Portfolio Managers adhere to the approved lower investment policy. The continuation of the Manager's mandate liquidity. In is reviewed annually. addition, as smaller companies may not generally have the financial strength, diversity and resources of larger companies, they may find it more difficult to overcome periods of economic slowdown or recession. Furthermore, the risk of climate change and matters concerning ESG could affect the valuation of companies held in the portfolio. Shareholders' The Board reviews regularly the Company's investment objective Risk and strategy to ensure that it remains relevant, as well as reviewing the composition of the shareholder register, peer The value of group performance on both a share price and NAV basis, and the an investment Company's share price discount to NAV per share. The Board and in the Company the Portfolio Managers maintain an active dialogue with the may go down as aim of ensuring that the market rating of the Company's shares well as up and reflects the underlying NAV; both share buy back and issuance an investor facilities are in place to help the management of this may not get process. back the amount invested. Reliance on Third-party service providers are subject to ongoing the Manager monitoring by the Manager and the Board. and other Third-Party The Manager reviews the performance of all third-party Service providers regularly through formal and informal meetings. Providers The Audit Committee reviews regularly the performance and The Company internal controls of the Manager and all third-party providers has no through audited service organisation control reports together employees and with updates on information security, the results of which are the Board reported to the Board. comprises non -executive The Manager's business continuity plans are reviewed on an directors ongoing basis and the Directors are satisfied that the Manager only. The has in place robust plans and infrastructure to minimise the Company is impact on its operations so that the Company can continue to therefore trade, meet regulatory obligations, report and meet reliant upon shareholder requirements. The Board receives regular update the reports from the Manager and third-party service providers on performance of business continuity processes and has been provided with third-party assurance from them all insofar as possible that measures are service in place for them to continue to provide contracted services providers for to the Company. its executive function and service provisions. The Company's operational structure means that all cyber risk (information and physical security) arises at its third-party service providers, including fraud, sabotage or crime against the Company. The Company's operational capability relies upon the ability of its third -party service providers to continue working throughout the disruption caused by a major event such as the Covid-19 pandemic. Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to successfully pursue its investment policy. The Company's main service providers, of which the Manager is the principal provider, are listed on page 19. The Manager may be exposed to reputational risks. In particular, the Manager may be exposed to the risk that litigation, misconduct, operational failures, negative publicity and press speculation, whether or not it is valid, will harm its reputation. Damage to the reputation of the Manager could potentially result in counterparties and third parties being unwilling to deal with the Manager and by extension the Company, which carries the Manager's name. This could have an adverse impact on the ability of the Company to pursue its investment policy successfully. Regulatory The Manager reviews the level of compliance with tax and other Risk financial regulatory requirements on a regular basis. The Board regularly considers all risks, the measures in place to The Company is control them and the possibility of any other risks that could subject to arise. The Manager's Compliance and Internal Audit team various laws produce annual reports for review by the Company's Audit and Committee. Further details of risks and risk management regulations by policies as they relate to the financial assets and virtue of its liabilities of the Company are detailed in note 16 of the status as an Company's 2024 Annual Financial Report. investment trust, its listing on the London Stock Exchange and being an Alternative Investment Fund under the UK AIFMD regime. A loss of investment trust status could lead to the Company being subject to corporation tax on the chargeable capital gains arising on the sale of its investments. Other control failures, either by the Manager or any other of the Company's service providers, could result in operational or reputational problems, erroneous disclosures or loss of assets through fraud, as well as breaches of regulations. In the view of the Board, these principal risks and uncertainties are as much applicable to the remaining six months of the financial year as they were to the six months under review. Thirty Largest Investments AT 31 JULY 2024 Ordinary shares unless stated otherwise Market Value % of Company Sector £'000 Portfolio JTC Investment Banking 8,437 4.5 and Brokerage Services 4imprint Media 7,379 3.9 Hill & Smith Industrial Metals 6,403 3.4 and Mining AJ Bell Investment Banking 6,165 3.3 and Brokerage Services Hilton Food Food Producers 6,118 3.2 Chemring Aerospace and 5,727 3.0 Defence Advanced Medical Medical Equipment 5,100 2.7 Solutions and Services Alfa Financial Software and 5,088 2.7 Software Computer Services Hollywood Bowl Travel and Leisure 5,007 2.7 Coats General Industrials 5,000 2.6 Top Ten Holdings 60,424 32.0 Serco Industrial Support 4,260 2.3 Services Alpha Financial Industrial Support 3,981 2.1 Markets Services Consulting Brooks Investment Banking 3,691 2.0 Macdonald and Brokerage Services Mitchells & Travel and Leisure 3,432 1.8 Butlers Volution Construction and 3,361 1.8 Materials Genuit Construction and 3,348 1.8 Materials Essentra Industrial Support 3,323 1.8 Services Marshalls Construction and 3,294 1.7 Materials Avon Protection Aerospace and 3,138 1.7 Defence discoverIE Electronic and 3,094 1.6 Electrical Equipment Top Twenty 95,346 50.6 Holdings Johnson Service Industrial Support 3,066 1.6 Services Aptitude Software Software and 2,995 1.6 Computer Services The Gym Travel and Leisure 2,991 1.6 Kainos Software and 2,988 1.6 Computer Services CVS Consumer Services 2,968 1.6 Loungers Travel and Leisure 2,941 1.5 GlobalData Media 2,868 1.5 Energean Oil, Gas and Coal 2,815 1.5 Crest Nicholson Household Goods and 2,767 1.5 Home Construction Young & Co's Travel and Leisure 2,734 1.4 Brewery - Non -Voting Top Thirty 124,479 66.0 Holdings Other Investments 63,987 34.0 (33) Total Investments: 63 (31 January 2024: 188,466 100.0 66) Investments quoted on AIM. Governance Going Concern The financial statements have been prepared on a going concern basis. The portfolio of investments is comprised entirely of quoted securities and the ongoing charges are around 1% of net assets. As at 15October 2024, the Company has drawn down £15.4 million of its credit facility, with a further £4.6 million available for investment opportunities within prescribed limits as set by the Board. The Directors consider this is the appropriate basis, as the Company has adequate resources to continue in operational existence for the foreseeable future, being taken as at least 12 months after signing the balance sheet. In considering this, the Directors took into account the diversified portfolio of readily realisable securities which can be used to meet funding commitments, and the ability of the Company to meet all of its liabilities, including any borrowing, and ongoing expenses as they fall due. Related Party Transactions and Transactions with the Manager Note 20 of the Company's 2024 Annual Financial Report gives details of related party transactions and transactions with the Manager. This report is available on the Company's section of the Manager's website at www.invesco.co.uk/ipukscit. Directors' Responsibility Statement in respect of the preparation of the Half -Yearly Financial Report The Directors are responsible for preparing the Half-Yearly Financial Report using accounting policies consistent with applicable law and International Financial Reporting Standards. The Directors confirm that to the best of their knowledge: -the condensed set of financial statements contained within the Half-Yearly Financial Report have been prepared in accordance with the International Accounting Standards 34 `Interim Financial Reporting'; -the interim management report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FCA's Disclosure Guidance and Transparency Rules; and -the interim management report includes a fair review of the information required on related party transactions. The Half-Yearly Financial Report has not been audited or reviewed by the Company's auditor. Signed on behalf of the Board of Directors. Bridget Guerin Chairman 15 October 2024 Condensed Statement of Comprehensive Income For the For the six six months months ended ended 31 July 31 July 2024 2023 Revenue Capital Total Revenue Capital Total Notes £'000 £'000 £'000 £'000 £'000 £'000 Profit/(loss - 20,361 20,361 - (14,695) (14,695) ) on investments held at fair value Income 2 2,855 - 2,855 3,074 491 3,565 2,855 20,361 23,216 3,074 (14,204) (11,130) Investment 3 (98) (553) (651) (92) (523) (615) management fee Other (238) (150) (388) (217) (1) (218) expenses Profit/(loss 2,519 19,658 22,177 2,765 (14,728) (11,963) ) before finance costs and taxation Finance 3 (41) (236) (277) (1) (8) (9) costs Profit/(loss 2,478 19,422 21,900 2,764 (14,736) (11,972) ) before taxation Taxation 4 - - - - - - Profit/(loss 2,478 19,422 21,900 2,764 (14,736) (11,972) ) after taxation Return per 7.33p 57.41p 64.74p 8.17p (43.56)p (35.39)p ordinary share Weighted average number of ordinary shares in 33,826,929 33,826,929 issue during the period The total columns of this statement represent the Company's statement of comprehensive income, prepared in accordance with UK-adopted international accounting standards. The profit/(loss) after taxation is the total comprehensive income/(loss). The supplementary revenue and capital columns are both prepared in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies. All items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the period. Condensed Statement of Changes in Equity Capital Share Share Redemption Capital Revenue Capital Premium Reserve Reserve Reserve Total Notes £'000 £'000 £'000 £'000 £'000 £'000 For the six months ended 31 July 2024 At 31 January 10,642 22,366 3,386 123,147 1,854 161,395 2024 Total - - - 19,422 2,478 21,900 comprehensive income for the period Dividends 5 - - - (1,278) (1,854) (3,132) paid At 31 July 10,642 22,366 3,386 141,291 2,478 180,163 2024 For the six months ended 31 July 2023 At 31 January 10,642 22,366 3,386 137,004 1,517 174,915 2023 Total - - - (14,736) 2,764 (11,972) comprehensive loss for the period Dividends 5 - - - (2,048) (1,517) (3,565) paid At 31 July 10,642 22,366 3,386 120,220 2,764 159,378 2023 Condensed Balance Sheet Registered number 02129187 At At 31 July 31 January 2024 2024 Notes £'000 £'000 Non-current assets Investments held at fair 188,466 169,481 value through profit or loss Current assets Amounts due from brokers 13 529 Overseas withholding tax - 30 recoverable Income tax recoverable - 4 Prepayments and accrued 357 369 income Cash and cash equivalents 18 - 388 932 Total assets 188,854 170,413 Current liabilities Amounts due to brokers (88) (48) Bank overdraft - (8,753) Accruals (403) (217) (491) (9,018) Total assets less current 188,363 161,395 liabilities Non-current liabilities Bank facility (8,200) - Net assets 180,163 161,395 Capital and reserves Share capital 10,642 10,642 Share premium 22,366 22,366 Capital redemption reserve 3,386 3,386 Capital reserve 141,291 123,147 Revenue reserve 2,478 1,854 Total shareholders' funds 180,163 161,395 Net asset value per 532.60p 477.12p ordinary share Number of ordinary shares 6 33,826,929 33,826,929 in issue at the period end Condensed Cash Flow Statement Six months Six months ended 31 July ended 31 July 2024 2023 Notes £'000 £'000 Cash flow from operating activities Profit/(loss) before taxation 21,900 (11,972) Add back finance costs 277 9 Adjustments for: Purchases of investments (15,495) (9,562) Sales of investments 17,427 5,920 1,932 (3,642) (Profit)/loss on investments held at (20,361) 14,695 fair value Decrease in receivables 46 80 Increase/(decrease) in payables 186 (37) Net cash inflow/(outflow) from 3,980 (867) operating activities Cash flow from financing activities Finance cost paid (277) (9) Bank overdraft repayment (8,753) - Bank facility drawdown 8,200 - Dividends paid 5 (3,132) (3,565) Net cash outflow from financing (3,962) (3,574) activities Net increase/(decrease) in cash and 18 (4,441) cash equivalents Cash and cash equivalents at start of - 5,055 the period Cash and cash equivalents at the end of 18 614 the period Reconciliation of cash and cash equivalents to the Balance Sheet is as follows: Cash held at custodian 18 44 Invesco Liquidity Funds plc - Sterling, - 570 money market fund Cash and cash equivalents 18 614 Cash flow from operating activities includes: Dividends received 2,868 3,649 Interest received - 2 As the Company did not have any long term debt at both the current and prior period ends, no reconciliation of the financial liabilities is presented. Notes to the Condensed Financial Statements 1.Basis of Preparation The condensed financial statements have been prepared using the same accounting policies as those adopted in the Company's 2024 Annual Financial Report. They have been prepared on an historical cost basis, in accordance with the applicable UK-adopted international accounting standards and, where possible, in accordance with the Statement of Recommended Practice for Financial Statements of Investment Trust Companies and Venture Capital Trusts, updated by the Association of Investment Companies in July 2022 (`AIC SORP'). 2.Income Six months Six months ended 31 July ended 31 July 2024 2023 £'000 £'000 Income from investments: UK dividends - ordinary 2,643 2,561 - special 150 409 Overseas dividends 62 102 2,855 3,072 Other income: Deposit interest - 2 2,855 3,074 No special dividends have been recognised in capital during the period (31 July 2023: £491,000). Overseas dividends include dividends received on UK listed investments where the investee company is domiciled outside of the UK. 3.Management Fee and Finance Costs The investment management fee and finance costs are allocated 15% to revenue and 85% to capital. A base management fee is payable monthly in arrears and is calculated at the rate of 0.75% (31 July 2023: 0.75%) per annum by reference to the Company's gross funds under management. During the period the Company's £15 million overdraft facility was replaced with a new uncommitted £20 million 364 day revolving credit facility. 4.Taxation and Investment Trust Status No tax liability arises on capital gains because the Company has been accepted by HMRC as an approved investment trust and it is the intention of the Directors to conduct the affairs of the Company so that it continues to satisfy the conditions for this approval. 5.Dividends paid on Ordinary Shares Six months ended Six months ended 31 July 2024 31 July 2023 Rate £'000 Rate £'000 Third interim (prior year) 3.85p 1,302 3.75p 1,269 Final (prior year) 5.41p 1,830 6.79p 2,296 Total 9.26p 3,132 10.54p 3,565 The first interim dividend of 3.85p per ordinary share (31 July 2023: 3.85p) was paid on 30 August 2024 to shareholders on the register on 2 August 2024. As set out in the Company's circular dated 19 July 2024, during the period the Board offered a return of capital to shareholders in respect of up to 10% of the Company's issued shares (excluding treasury shares). The return of capital was proposed by way of an elective special dividend, where all shareholders had an opportunity to elect in respect of each share held. The value of the special dividend was an amount per share which represented 97.5% of the published unaudited NAV per share of £4.8485 as at the net asset value certification date (being 6.00p.m. on 17 September 2024). All shares on which the special dividend was paid on 8 October 2024 were cancelled for no consideration pursuant to the reduction of capital. A second interim dividend of 3.85p (2023: 3.85p) has been declared and will be paid on 6 December 2024 to ordinary shareholders on the register on 8 November 2024. 6.Share Capital, including Movements Share capital represents the total number of shares in issue, including treasury shares. Six months Year ended ended 31 July 31 January 2024 2024 Share capital: Ordinary shares of 20p each (£'000) 6,765 6,765 Treasury shares of 20p each (£'000) 3,877 3,877 10,642 10,642 Number of ordinary shares in issue: 33,826,929 33,826,929 Number of shares held in treasury: 19,382,155 19,382,155 Total 53,209,084 53,209,084 The elective special dividend paid on 8 October 2024 referred to in note 5 above resulted in a reduction in share capital. As at 15 October 2024, the Company's share capital consisted of 30,444,281 ordinary shares in issue and a further 19,382,155 shares held in treasury. 7.Classification Under Fair Value Hierarchy Note 16 of the Company's 2024 Annual Financial Report sets out the basis of classification. As at 31 July 2024, all of the Company's portfolio was composed of quoted (Level 1) investments. 8.Status of Half-Yearly Financial Report The financial information contained in this Half-Yearly Financial Report, which has not been reviewed or audited by an independent auditor, does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The financial information for the half years ended 31 July 2023 and 31 July 2024 has not been audited. The figures and financial information for the year ended 31 January 2024 are extracted and abridged from the latest audited accounts and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the Independent Auditor's Report, which was unqualified. By order of the Board Invesco Asset Management Limited Company Secretary 15 October 2024 Glossary of Terms and Alternative Performance Measures Alternative Performance Measure (`APM') An APM is a measure of performance or financial position that is not defined in applicable accounting standards and cannot be directly derived from the financial statements. The calculations shown in the corresponding tables are for the six months ended 31 July 2024 and the year ended 31 January 2024. The APMs listed here are widely used in reporting within the investment company sector and consequently aid comparability. Benchmark (or Benchmark Index) A market index, which averages the performance of companies in any sector, giving a good indication of any rises or falls in the market. The benchmark used in these accounts is the Deutsche Numis Smaller Companies + AIM (excluding Investment Companies) Index, with dividends reinvested. (Discount)/Premium (APM) Discount is a measure of the amount by which the mid-market price of an investment company share is lower than the underlying net asset value (`NAV') of that share. Conversely, premium is a measure of the amount by which the mid -market price of an investment company share is higher than the underlying net asset value of that share. In this Half-Yearly Financial Report the discount is expressed as a percentage of the net asset value per share and is calculated according to the formula set out below. If the shares are trading at a premium the result of the below calculation will be positive and if they are trading at a discount it will be negative. 31 July 31 January 2024 2024 Share price a 470.00p 424.00p Net asset value per share b 532.60p 477.12p Discount c = (a-b)/b (11.8)% (11.1)% Gearing (APM) The gearing percentage reflects the amount of borrowings that a company has invested. This figure indicates the extra amount by which net assets, or shareholders' funds, would move if the value of a company's investments were to rise or fall. A positive percentage indicates the extent to which net assets are geared; a nil gearing percentage, or `nil', shows a company is ungeared. A negative percentage indicates that a company is not fully invested and is holding net cash as described below. There are several methods of calculating gearing and the following has been used in this report: Gross Gearing (APM) This reflects the amount of gross borrowings in use by a company and takes no account of any cash balances. It is based on gross borrowings as a percentage of net assets. As at 31 July 2024, the Company has gross borrowings of £8,200,000 (31 January 2024: £8,753,000). 31 July 31 January 2024 2024 £'000 £'000 Bank facility 8,200 - Bank overdraft facility - 8,753 Gross borrowings a 8,200 8,753 Net asset value b 180,163 161,395 Gross gearing c = a/b 4.6% 5.4% Net Gearing or Net Cash (APM) Net gearing reflects the amount of net borrowings invested, i.e. borrowings less cash and cash equivalents (incl. investments in money market funds). It is based on net borrowings as a percentage of net assets. Net cash reflects the net exposure to cash and cash equivalents, as a percentage of net assets, after any offset against total borrowings. 31 July 31 January 2024 2024 £'000 £'000 Bank facility 8,200 - Bank overdraft facility - 8,753 Less: cash and cash equivalents (18) - Net borrowings a 8,182 8,753 Net asset value b 180,163 161,395 Net gearing c = a/b 4.5% 5.4% Maximum Authorised Gearing This reflects the maximum authorised borrowings of the Company taking into account both any gearing limits laid down in the investment policy and the maximum borrowings laid down in covenants under any borrowing facility and is calculated as follows: 31 July 31 January 2024 2024 £'000 £'000 Maximum authorised borrowings as laid down in: Investment policy: - lower of 30% of net asset value; and a = 30% x e 54,049 48,419 - £25m b 25,000 25,000 Bank facility covenants: lower of 30% of net asset value and £20m (31 January 2024: bank overdraft facility covenants: lower of 30% of net asset value and £15m) c 20,000 15,000 Maximum authorised borrowings (d = d 20,000 15,000 lower of a, b and c) Net asset value e 180,163 161,395 Maximum authorised gearing f = d/e 11.1% 9.3% Net Asset Value (`NAV') Also described as shareholders' funds, the NAV is the value of total assets less liabilities. Liabilities for this purpose include current and long-term liabilities. The NAV per share is calculated by dividing the net assets by the number of ordinary shares in issue (excluding shares held in treasury). For accounting purposes assets are valued at fair (usually market) value and liabilities are valued at amortised cost (their repayment - often nominal - value). Return The return generated in a period from the investments including the increase and decrease in the value of investments over time and the income received. Total Return Total return is the theoretical return to shareholders that measures the combined effect of any dividends paid together with the rise or fall in the share price or NAV. In this Half-Yearly Financial Report these return figures have been sourced from LSEG Data & Analytics who calculate returns on an industry comparative basis. Net Asset Value Total Return (APM) Total return on net asset value per share, assuming dividends paid by the Company were reinvested into the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend. Share Price Total Return (APM) Total return to shareholders, on a mid-market price basis, assuming all dividends received were reinvested, without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend. Net Asset Share Six months ended 31 July 2024 Value Price As at 31 July 2024 532.60p 470.00p As at 31 January 2024 477.12p 424.00p Change in period a 11.6% 10.8% Impact of dividend reinvestments(1) b 2.2% 2.5% Total return for the period c = a+b 13.8% 13.3% Net Asset Share Year ended 31 January 2024 Value Price As at 31 January 2024 477.12p 424.00p As at 31 January 2023 517.09p 451.00p Change in year a -7.7% -6.0% Impact of dividend reinvestments(1) b 3.6% 4.2% Total return for the year c = a+b -4.1% -1.8% (1)Total dividends paid during the six months to 31 July 2024 of 9.26p (31 January 2024: 18.24p) reinvested at the NAV or share price on the ex-dividend date. NAV or share price falls subsequent to the reinvestment date consequently further reduce the returns, vice versa if the NAV or share price rises. Benchmark Index Total return on the benchmark index is on a mid-market value basis, assuming all dividends received were reinvested, without transaction costs, into the shares of the underlying companies at the time the shares were quoted ex-dividend. Directors, Investment Manager and Administration Directors Bridget Guerin (Chairman of the Board and Nomination Committee) Graham Paterson (Chairman of the Audit Committee) Mike Prentis (Chairman of the Management Engagement Committee and Senior Independent Director) Simon Longfellow (Chairman of the Marketing Committee) Registered Office and Company Number Perpetual Park Perpetual Park Drive Henley-on-Thames Oxfordshire RG9 1HH Registered in England and Wales Number 02129187 Alternative Investment Fund Manager (Manager) Invesco Fund Managers Limited Company Secretary and Correspondence Address Invesco Asset Management Limited 43-45 Portman Square London W1H 6LY 020 3753 1000 Company Secretarial Contact: Naomi Rogers/James Poole Invesco Client Services Invesco has a Client Services Team available from 8.30am to 6.00pm Monday to Friday (excluding UK Bank Holidays). Please feel free to take advantage of their expertise by ringing 0800 085 8677 www.invesco.co.uk/investmenttrusts Depositary, Custodian and Banker The Bank of New York Mellon (International) Limited 160 Queen Victoria Street London EC4V 4LA Independent Auditor Ernst & Young LLP 25 Churchill Place Canary Wharf London E14 5EY Corporate Broker JPMorgan Cazenove 25 Bank Street London E14 5JP Registrar Link Group Central Square 29 Wellington Street Leeds LS1 4DL 0371 664 0300 If you hold your shares directly as a paper share certificate and not through an investment platform or savings scheme and have queries relating to your shareholding you should contact the company's Registrar, Link Group, on: 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Link Group provides an on-line and telephone share dealing service for paper share certificates to existing shareholders who are not seeking advice on buying or selling. This service is available at www.linksharedeal.com or 0371 664 0445. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside the UK will be charged at the applicable international rate. Lines are open 9.00am to 5.30pm Monday to Friday (excluding Bank Holidays in England and Wales). Shareholders holding paper share certificates can also access their holding details via Link's website www.signalshares.com. Link Group is the business name of Link Market Services Limited. Alternatively, you can also buy and sell shares yourself through a wide variety of `execution -only' investment platforms - where you make the investment decisions and your shares are held electronically in an account on your behalf. These tend to be cheaper than holding paper share certificates and also mean you don't need to worry about losing your certificate. Most investment platforms allow you to manage your investment trust holdings online, as well as access to a wide range of investmentoptions. Platforms generally charge fees for holding and trading shares. You can find a list of the major platforms at: https://www.invesco.com/uk/en/investment -trusts/invesco-insights/how-to-invest-in-investment-trusts.html Manager's Website Information relating to the Company can be found on the Company's section of the Manager's website, which can be located at www.invesco.co.uk/ipukscit. The contents of websites referred to in this document, or accessible links within those websites, are not incorporated into, nor do they form part of, this financial report. General Data Protection Regulation (`GDPR') The Company has a privacy notice which sets out what personal data is collected and how and why it is used. The privacy notice can be found at www.invesco.co.uk/ipukscit under the `Literature' section, or a copy can be obtained from the Company Secretary whose correspondence address is found above. Investor Warning The Company, Invesco and the Registrar would never contact members of the public to offer services or require any type of upfront payment. If you suspect you have been approached by fraudsters, please contact the FCA consumer helpline on 0800 111 6768 and Action Fraud on 03001232040. Further details for reporting frauds, or attempted frauds, can be found below. National Storage Mechanism A copy of the Half-YearlyFinancial Report will besubmitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated athttps://data.fca.org.uk/#/nsm/nationalstoragemechanism. Hard copies of the Half-Yearly Financial Report will be posted to shareholders and can be requested from the Company Secretary by email atinvestmenttrusts@invesco.comorat the Company's correspondence address, 2ndFloor, 43-45 Portman Square, London W1H 6LY. For further information, please contact: Naomi Rogers/James Poole For and on behalf of Invesco Asset Management Limited Corporate Secretary toInvesco Select Trust plc Email:investmenttrusts@invesco.com Will Ellis Head of Specialist Funds - Invesco Email:will.ellis@invesco.com Invesco Asset Management Limited Corporate Company Secretary This information was brought to you by Cision http://news.cision.com

XLON