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Highlights
- Strong annual NAV performance: +17.3% NAV total return, with share price total return of +17.5%.
- Healthy dividend: Total dividend for FY2024 at 21.5 pence per share.
- Positive UK outlook: Low unemployment, rising disposable income, and business investment driving optimism.
Schroder UK Mid Cap Fund plc (LSE:SCP) has announced its financial results for the year ending September 30, 2024, highlighting robust returns amidst a challenging economic landscape. The fund achieved a NAV per share total return of +17.3%, though it trailed the FTSE Mid 250 ex Investment Trusts Index, which delivered a +21.4% return. The share price total return closely mirrored NAV performance, achieving +17.5%.
Over the longer term, the company’s performance remains ahead of its benchmark, attributed to its consistent investment strategy. Key contributors to performance over the year included consumer discretionary, financials, and domestic industrial sub-sectors such as construction, support services, and transportation.
Dividend and Financial Strategy
The board has declared a final dividend of 15.5 pence per share, bringing the total dividend for FY2024 to 21.5 pence per share. This reflects the company’s commitment to delivering steady shareholder returns.
Gearing also played a role in enhancing performance, with net gearing rising to 9.5% from 6.8% in 2023. £25 million from the company’s Revolving Credit Facility was deployed during the period, demonstrating strategic financial management.
Leadership Transition
A significant leadership change was announced, with Harry Morley set to succeed Robert Talbut as Chair following the AGM in February 2025. Talbut's tenure, spanning nine years, saw significant growth and performance milestones for the fund.
Positive UK Market Outlook
The board and investment manager maintain a positive outlook for the UK economy, buoyed by favorable conditions including:
- Low unemployment and increasing household disposable income.
- Reduced interest rates: The Bank of England cut rates by 25 basis points to 4.75%, with further reductions expected.
- Moderate inflation: Expected to support disposable incomes and improve sentiment toward the UK equity market.
UK mid-caps, in particular, are emerging as an attractive sector due to robust earnings growth expectations and promising dividend yields. The sector is also seeing heightened merger and acquisition activity driven by interest from domestic and international buyers, including private equity investors.
