TIDMMWY
Mid Wynd International Investment Trust plc (the 'Company')
Legal Entity Identifier: 549300D32517C2M3A561
Annual Financial Results for the year ended 30 June 2023
Financial Highlights
Returns for the year ended 30 June 2023
Year ended 30 June Year ended 30 June
2023 2022
Total returns
Net asset value per ordinary share? 5.6% (7.5)%
Share price? 1.0% (9.5)%
MSCI All Country World Index (GBP) 11.3% (4.2)%
Revenue and dividends
Revenue earnings per share 10.01p 11.72p
Dividends per share* 7.80p 7.20p
Special dividend per share* 1.70p 3.00p
Ongoing charges?** 0.62% 0.60%
As at 30 June As at 30 June
2023 2022
Capital
Net asset value per share 719.84p 692.01p
Share price 689.00p 693.00p
Net cash? 2.7% 0.3%
(Discount)/Premium? (4.3)% 0.1%
Source: Artemis/Datastream.
* A final dividend, if approved by shareholders, and a special dividend for
the year to 30 June 2023 of 3.95 pence and 1.70 pence respectively will be paid
on 10 November 2023 to shareholders on the register at the close of business on
29 September 2023.
** Look-through costs of underlying investment company holdings not included.
? Alternative Performance Measure.
Total returns to 3 years 5 years Since 1 May 2014* 10 years
30 June 2023
Net asset value 21.5% 54.6% 192.6% 220.1%
per ordinary
share?
Share price? 16.4% 46.4% 183.5% 202.1%
MSCI All Country 32.9% 53.3% 160.2% 176.1%
World Index (GBP)
* The date when Artemis was appointed as Investment Manager.
? Alternative Performance Measure.
Strategic Report
Chairman's Statement
The last twelve months have seen a rise in global equity markets and a rise in
the net asset value ("NAV") of our Company. The rise in the NAV of Mid Wynd has
not kept pace with the rise in our comparator index. With major structural
changes impacting economies, businesses and geo-politics the global equity
markets are seeking to price in what the long-term consequences of these changes
are for corporate earnings and equity valuations. In our current financial year
they concluded that technology stocks are best placed to profit from these
structural changes and there has been excitement around the prospects for
earnings from artificial intelligence (AI) which, for some, heralds yet another
structural change. Our Company has invested in the technology sector and
benefited from some of this excitement but not to the extent that the comparator
index has benefited. Accurately reflecting all these major structural changes in
the price of equities is something that is likely to be achieved by financial
markets only over many years. The role of our managers is to see through the
short-term volatility associated with such changes and invest to benefit from
the developing longer- term trends.
As I mentioned in the Half-Yearly Financial Report, the past twelve months have
seen the announcement of the departure of both our managers from Artemis Fund
Managers. While Simon Edelsten remains at Artemis until October, his forthcoming
departure led the Board to review our management arrangements. This review has
led to the appointment of Lazard Asset Management as our new manager and they
are scheduled to take over responsibility for managing our assets in October
2023. You will find further details regarding this appointment later in this
Chairman's Statement.
Performance
For the year ended 30 June 2023 the Company's share price rose by 1.0% on a
total return basis with dividends assumed to be re-invested. The Company's net
asset value per share, on a total return basis, with dividends assumed to be
reinvested, rose by 5.6%. This compares with a rise of 11.3% in the Company's
comparator index, the MSCI All Country World Index (GBP).
The share price total return is lower than the NAV return owing to the move from
a premium to NAV at the start of the year to a discount at the year end. The
discount of 4.3 per cent, seems, on the face of it, to be outside our target
range under the Company's discount control policy. The explanation for this
apparent anomaly and details of the discount control policy can be found later
in this Chairman's Statement. The average NAV discount to share price during the
year was 1.0%.
Further details of the performance of the Company during the year are included
in the Investment Manager's Review.
Earnings and dividend
The total return for the year ended 30 June 2023 was a gain of 36.87 pence per
share, comprising a revenue gain of 10.01 pence and a capital gain of 26.86
pence. The Board is proposing a final dividend of 3.95 pence per share which,
subject to approval by shareholders at the Annual General Meeting (`AGM'), will
be paid together with a special dividend of 1.70 pence per share on 10 November
2023 to those shareholders on the register at the close of business on 29
September 2023. An interim dividend of 3.85p pence per share was paid in March
2023, and so together with the proposed final dividend (but excluding the
special dividend), this gives dividend growth of 8.3% over the year.
The dividend is fully covered by the revenue return for the year. The aim
remains to grow the regular dividend progressively.
To maintain our status as an investment trust we are required by HMRC to
distribute 85% of our earnings in the form of dividends. Last year we decided to
distribute a dividend in two forms. The `regular dividend', which we believe
reflects the underlying earnings of our investments, and a `special dividend'
which I described last year as reflecting the `excess earnings' of our
investments. The aim in so dividing our dividend is to provide the maximum
flexibility for our manager to pursue the best total return, in the form of
capital gains and dividends, rather than to force the manager to focus on the
pursuit of dividend income. I reported last year that the earnings of our
Company had increased by 72% year on year and this year they have declined by
almost 15%. This is the volatile nature of earnings that one expects when much
of our income is derived in foreign currencies, particularly in US dollars, the
sterling exchange rate moves materially, and we declare our dividends in
sterling. Changes to our holdings also impact the total income of the portfolio
depending upon the dividend yield of each investment and a one-off shift to
higher yielding stocks materially boosted our earnings in the prior financial
year. In recognition that such volatility of earnings will likely continue the
Board will again declare a special dividend this year. We can again describe
this special dividend as our assessment of the `excess earnings' of our Company.
Shareholders should look to the level and growth of the regular dividend for
guidance as to the underlying earnings potential and thus dividend potential of
our Company.
The growth in the regular dividend this year, of 8.3%, has exceeded the annual
rate of inflation. Since the year ended 30 June 2019, before the outbreak of
COVID-19 and the surge in inflation that followed, our regular dividend has
increased from 5.83p in 2019 to 8.70p in 2023 an increase of 49%. Over the same
period the UK Consumer Price Index increased by 22%.
Management changes
In 2014, on the retirement of our fund manager from Baillie Gifford, the Board
of Mid Wynd conducted a review of management arrangements and appointed Artemis
Fund Managers to manage our assets. The team of three individuals at Artemis who
have successfully managed our assets have now all left or will soon leave
Artemis. The team led by Simon Edelsten has produced very good performance for
our shareholders in often volatile and difficult circumstances. Since their
appointment in 2014 they have stewarded our Company's assets through shocks that
include - Brexit, growing volatility in US politics, a hot war in Europe, a
growing cold war between the developed world and China and a global pandemic -
to name a few! In successfully navigating through these difficult waters they
provided better returns, relative to the comparator index, when equity markets
were weak while capturing a significant portion of the gains when the prices of
equities were rising. Such an achievement is not common even amongst
professional investors and the total return of 192.6% from their appointment to
our year end in June 2023, compares very favourably with the total return of
160.2% of our comparator index. This excess performance has been recognised by
the marketplace and as a consequence our shares have traded at a premium to NAV
and we have issued shares and grown the size of the Company. As Chairman of the
Company, and a director and shareholder throughout Artemis's term as manager, I
would like to thank Simon and the team for their diligent and very successful
stewardship of our assets since 2014.
With the departure of our fund managers from Artemis Fund Managers, announced
earlier this year, the Board considered that a full review of management options
was necessary. The Board was informed of the change in personnel at Artemis in
mid-February and instigated the review of management options in March. A review
of global equity managers was conducted by Barnett Waddingham and their brief
from the Board was to look for managers successfully pursuing a similar style to
our existing managers, whether in managing portfolios for institutions or retail
investors. Throughout the process the option of continuing with the new team to
be appointed by Artemis was also given due consideration. The Board reviewed a
long list of possible managers in May and a short list of managers in June. At
the end of June we announced that Lazard Asset Management would be our new
investment manager.
Lazard is a very well-known name in the world of finance. The company traces its
history back to 1848 when the Lazard brothers, immigrants from France, launched
their General Merchandise/dry goods company in New Orleans. The roots of the
company are thus not dissimilar to our own as Mid Wynd traces its roots to a
textile manufacturer which opened for business in Dundee in 1797. Lazard has
been involved in banking and finance since the mid-nineteenth century and as of
2023 manages £166bn for clients in over fifty countries. While well-known to
those involved in the institutional fund business, such as pension fund
trustees, the company is less well-known to UK retail investors. This lack of
awareness of Lazard as a manager of UK retail funds was not a deterrent to the
Board in appointing the company as manager of our assets. The Board specifically
sought out managers who, while producing excellent performance, were potentially
not well known to retail investors. The over-riding priority for the Board was
to find the best manager pursing an approach to investment not dissimilar to
that familiar to investors in our Company. We have found that in our new team at
Lazard Asset Management and are convinced that as wealth managers and retail
investors come to understand their approach to investment management that new
investors will be attracted to Mid Wynd.
The team at Lazard Asset Management, of Louis Florentin-Lee and Barney Wilson,
have produced impressive long-term returns. Since inception in February 2011 to
the end of June this year their Lazard Global Quality Growth approach has
produced an outperformance of the comparator index (the MSCI ACW Index) of 2.4%
per annum even having deducted the management fees the Board has agreed with the
company. These returns have been achieved managing institutional funds and the
team will now seek to replicate these returns for Mid Wynd thus making their
expertise available to all investors. This excess return is a product of a
disciplined approach to assessing the sustainability of high returns on capital
from quality companies and also of calculating the appropriate price to pay for
the shares of such companies. Economic theory asserts that increased competition
will attract others to compete in such areas and thus the returns on capital
achievable will decline. This `fade' in returns, however, has not always
materialised and there are companies which have consistently reported high
returns despite the threats from increased competition. One can think of various
branded products in the alcohol and luxury goods business, for instance, which
have attracted premium prices and high returns for their owners - sometimes for
over one hundred years. Our managers are searching the globe, across a wide
range of business sectors, to find similar high quality businesses with this
form of replicable high return with limited or no `fade' to returns on capital.
The Lazard team has outperformed the comparator index since 2011 by identifying
those companies where the `fade' of returns has not occurred and by then not
paying too much for them. As these companies achieve particularly high returns
on their re-invested capital they tend to re-invest and pay low levels of
dividends. For investors the compounding effect from re-investing the cash flows
from high-returning businesses to secure higher future returns is particularly
rewarding.
In their search for such high-quality companies Louis and Barney draw upon the
experience of the more than three hundred investment professionals who work for
Lazard Asset Management, including a team of approximately 70 analysts. From a
wide range of recommendations from Lazard analysts they construct a portfolio,
usually of around 40 to 50 stocks, that they believe can sustain high returns on
their capital and represent good value for long-term investors. This approach to
investment has produced good returns when equity markets have been rising and
outperformed the comparator index when equity markets have been falling. The
Lazard team has, since inception in 2011, captured 106% of the upside from
markets when equity markets have been rising while capturing 92% of the downside
while equity markets have been falling and these returns take into account
management fees. The team's long-term focus means that portfolio turnover is
low.
The new manager follows a similar approach to stock selection as our previous
managers. Both focus on identifying high quality companies with strong
sustainable profitability which can compound over the long term. Investors can
expect changes in the portfolio but also some similarities in holdings between
our new and old investments. Like past managers the Lazard team are free to
invest across the globe in pursuit of such investments. In the past I have
stressed the importance, particularly at times of structural change, of avoiding
investment in stock market indices. These indices tend to be comprised of
companies that have benefited from historical long-term trends. The Lazard team,
has an active share, the difference between the portfolio and the composition of
the comparator index, of almost ninety percent. If we are entering a period of
major structural change, as many of us expect, then this willingness to allocate
capital without reference to the comparator index is likely to be key to
securing good future returns. The Board very much looks forward to working with
the Lazard team in the pursuit of the high-quality businesses which can both
preserve and grow the purchasing power of our capital, our shareholders'
savings, over the long-term.
The change in investment manager necessitated other changes of service providers
for our Company. The Board has conducted a review of other service providers and
has selected Juniper Partners and JP Morgan to provide the services previously
provided by Artemis and Northern Trust.
Share Capital
Demand for the Company's shares continued in the first half of the year with
1,133,200 new shares issued up to 31 December 2022. However, with market
volatility and the announcement of the change in lead fund managers, the Company
entered a period of buybacks. Between 24 February and 30 June 2023, 4,002,662
shares were bought back at a value of £27.6 million and all these buybacks were
at a discount to NAV and thus accretive to net asset value for continuing
shareholders. After the year end, a further 4,466,418 shares were bought back at
a further cost of £31.3 million.
The Company's policy, within normal market conditions, is to issue and re
-purchase shares where necessary to maintain the share price within a band, plus
or minus 2%, relative to the net asset value. Our investment manager assesses
the Company's NAV on a real time basis when buying or selling the Company's
shares while the price of purchases or issuance are always reported relative to
the NAV reported at a set time of the day. The result can be that some purchases
or issuances appear to be out-with the 2% band established by the Board but the
practice of utilising a live NAV is necessary to ensure that all of our issuance
and buybacks are accretive to NAV for continuing shareholders.
Shares were issued and bought back during the year using the existing
authorities given at the 2022 AGM. The recent months have seen considerable
pressure on investment trust share prices and discounts generally and Simon
Edelsten's departure and the ensuing change of investment manager may well have
caused some investors to sell their shares in the Company. The Board believes
that it is not unusual for there to be higher levels of turnover in a company's
shares during a period of a transition of managers. The Board convened a general
meeting to be held on 8 September 2023 to increase the Company's flexibility to
buy back shares. We have changed our manager before, in 2014, and witnessed
significant selling of shares at that time which we bought to ensure that our
shares did not trade out-with the band established by our discount control
mechanism. The Board will continue to operate the discount control mechanism,
and this will include issuing shares at a two percent premium - something we
were doing until fairly recently. This discount control mechanism has operated
to the benefit of our shareholders over many years and the current small
discount to NAV of our share price is in marked contrast to the large discount
to NAV of many other investment trusts with similar mandates. At the forthcoming
AGM, the Board will seek new authorities to issue and buy back shares to
continue to implement its discount and premium management policy.
Borrowings
At 30 June 2023 the Company had no amounts drawn down on its US$60m facility
with the Bank of Nova Scotia (2022: ?5m; US$2m). The Company pays a small fee
for the right to access these additional funds and only when amounts are drawn
down is interest expense incurred. Further information on the Company's gearing
can be found within the Strategy and Business Review.
The Company's revolving credit facility with The Bank of Nova Scotia (UK Branch)
needed to be amended to take account of Lazard's appointment as our new manager.
Taking account of the current high interest environment, the Board has resolved
to terminate the current facility with The Bank of Nova Scotia.
Board Succession
As discussed in the December 2022 Half-Yearly Report, Hamish Baillie joined the
Board on 1 November 2022. The process of refreshing the Board continues. As part
of this process I will step down from the Board of the Company at the 2024 AGM.
The Board has been very busy assessing management options for the Company and
also arranging the transition in managers. When that process is completed, we
expect in October 2023, we will focus on future Board composition and the
changes necessary in preparation for my departure from the Board in Q4 2024.
AGM
The AGM will be held in person on 26 October 2023 at 12.00 noon at the offices
of Dickson Minto, 16 Charlotte Square, Edinburgh, EH2 4DF.
As Simon Edelsten will have retired before this meeting, it is not intended that
he will present at the forthcoming AGM. However, the new Lazard management team
and the CEO of Lazard Asset Management will present in person or via video-link
after which they and the Board will be available to answer shareholder
questions.
We encourage those shareholders not attending to e-mail any questions in advance
to cosec@junipartners.com.
As always, I would encourage you to make use of your proxy votes by completing
and returning the form of proxy enclosed with this report.
Outlook
The savers who own the shares of our Company are seeking to both protect and
grow the purchasing power of their wealth. This involves securing positive
nominal returns but also, over the long-term, securing returns higher than the
rate of inflation. Over the very long-term equities have provided such returns
but sometimes it has taken more than a decade for the initial investment in
equity indices to result in positive real total returns. If, as Mr Buffet
famously said, `price is what you pay, value is what you get', then it is
possible to pay too much even for the highest quality companies. Assessing the
sustainability of corporate returns and the correct price to pay for future
returns is the skill and partially the art of investment. Our shareholders have
benefited from the skills of our previous managers in selecting high quality
companies that can produce sustainably high returns and in investing in those
companies at what proved to be attractive valuations. Our Company will continue
to pursue such an investment policy under our new managers.
Investing in companies that can both produce high returns on capital and also
reinvest their cash flows at similarly high returns is an approach that is
likely to be particularly attractive in an age of higher inflation. While none
of us can forecast the peak level that inflation might reach in any business
cycle, the structural changes underway in the world do seem to augur a
materially higher level of inflation than we have been used to over the past
decades. To defend savings from the erosion of purchasing power that comes with
higher inflation one approach will be to invest in companies that can invest and
reinvest their cash flows for returns that very significantly exceed the rate of
inflation. Our new manager, Lazard Asset Management, will invest in such
companies. Their skill, demonstrated since they began this High Quality Growth
strategy, will be in accurately forecasting where corporate returns can remain
sustainably high and of course in not paying too much for such high returns. It
is a skill they have been deploying for over a decade and since the inception of
this approach, in February 2011, that has produced a net outperformance relative
to our comparator index of 2.4% per annum. The shares of companies that can
invest and reinvest at rates of return well above the rate of inflation are
likely to remain in strong demand in an era of high inflation.
The steep rise in interest rates since 2020 has not produced the scale of
economic deceleration and perhaps even financial distress that might have been
expected. Such a reaction to higher interest rates in 2008 caused a contraction
in economic activity, bank collapses and huge losses for equity investors.
Despite record high levels of debt, relative to GDP, both the public and the
private sector have, so far, been able to service their debts and debt defaults
have remained constrained compared to other economic downturns this millennium.
This resilience probably primarily reflects a move by many debtors to extend the
duration of their borrowing and lock in low interest rates in the period of very
low interest rates that pertained up to 2020. Even so debt is always maturing
and as it is refinanced the higher costs of servicing that debt will lead to
greater strains for those seeking to service their debts. The clock is thus
ticking for debtors as their debts are refinanced at higher rates of interest.
The data on private sector debt service ratios, which show the proportion of
private sector income currently needed to service debts, indicate that many
countries, are at a level where historically their private sectors have
defaulted on their debt obligations and these ratios will continue to
deteriorate as debt is refinanced. Perhaps surprisingly the private sector debt
service ratios of the United States, United Kingdom and Japan are reasonable but
for some large and important countries, such as France and China, a dangerously
high level of private sector income is being diverted to service debts. The
impact from rising interest rates on economic growth, financial stability and
equity prices has been benign but as time ticks on and debts are refinanced at
higher interest rates this is likely to change. Investing in those corporate
cash flows that can remain robust even in such circumstances can protect
investors from the worst effects of any economic contraction that may come as
the impact from higher interest rates hits the private sector. Companies with
high returns on capital and low debt levels should be better placed to weather
economic contractions when they come.
It is not easy to discern the major trends that are developing during a period
of rapid short-term changes and general volatility. One trend though is becoming
more apparent. That is that governments are intervening to create outcomes that
they believe should not be left to market forces. That is a trend that involves
both the socialisation of private sector risk, as we saw with the significant
government support for the private sector during the COVID-19 crisis, but also
in the form of governments co-opting or cajoling corporations to assist in
delivering their political goals. This is a trend that is very likely to
continue as governments react to what are the growing list of `crises'
confronting the electorate - climate change, war in Europe, a cold war with
China, higher cost of living etc. While such intervention may mitigate the
extremes of the business cycle it comes at a price for savers in the form of
greater government interference in the allocation or private capital / savings.
History suggests that such government interference rarely results in higher
returns on capital for the companies so co-opted by governments. A well-chosen
portfolio of equities may be one of the few places for investors to hide in such
a world particularly by investing in the high-quality companies that can
continue to produce high returns on capital even during such shifts in the
balance between markets and governments.
Savers face new challenges but rarely are they unique challenges. History
provides some guidance to the future and it suggests that well managed
companies, producing high returns on capital and bought at good valuations will
provide positive real total returns. Our managers have the freedom to seek out
those companies wherever they may be in the world and we expect this ability to
find those companies to benefit our investors.
Contact us
Shareholders can keep up to date with Company performance by visiting
www.midwynd.com where you will find information on the Company, a monthly
factsheet and regular updates from the Investment Manager. In addition, the
Board is always keen to hear from shareholders.
Should you wish to, you can e-mail me at cosec@junipartners.com.
Russell Napier
5 September 2023
Investment Manager's Review
Introduction
Global equity indices rose over the past year, driven predominately by US
technology shares. While the Company held a number of investments in this area,
it did not have as high a weighting in such shares as our comparator index (MSCI
ACWI). The Company's net asset value rose by 5.6% compared with an 11.3% rise in
the comparator index in sterling terms.
Global inflation fell over the year as energy prices returned to the levels
pertaining before Russia invaded Ukraine. However, core inflation - especially
wage inflation - persists and so interest rates have risen, especially in the
UK. The companies we invest in have handled these pressures very well and most
have grown cash flows significantly through this challenging period.
As shareholders will have read, this will be my last report as the fund manager
of your Company and so I will provide a short report on the past year and also
some observations on managing the portfolio over the past nine years.
Regional Performance
Region Contribution %
Asia Pacific ex Japan (0.3)
Emerging Markets 0.3
Europe 1.6
Japan 2.7
North America 1.9
Thematic performance
Theme Contribution %
Automation 2.1
Digital Finance 1.8
Healthcare Costs (0.2)
Lower Carbon World 0.8
Online Services 2.8
Scientific Equipment (1.1)
Screen Time (0.1)
Sustainable Consumer 0.1
Performance over the past year
Online Services (17% of the portfolio): The investments we hold in this area
performed very well, especially Microsoft, Alphabet, Ansys, Adobe and Amazon.
Having no exposure to just two stocks, Apple and Nvidia, accounted for nearly
half the year's underperformance relative to the comparator index. Our view is
that this shows the benchmark has become worryingly concentrated with just a few
very large companies dominating total returns. We prefer to keep the portfolio
more balanced than the comparator index.
Automation (20% of the portfolio): This theme performed well as China slowly
reopened and companies around the world resumed capital investment.
Digital Finance (7% of the portfolio): Our small allocation to Japanese banks
performed well. These companies benefit from persistent - and in Japan's case,
reasonably modest - inflation. Even the modest rises in long-term interest rates
have allowed banks to lend at higher rates while their average cost of deposits
has not been rising as rapidly. This improvement in banks' margins on lending is
very positive for profits. This theme, which focuses on more lowly-valued
equities, acts within the portfolio as a good balance to more expensive
portions, such as US technology shares. Avoiding other developed world bank
stocks during the period also boosted performance relative to the comparator
index.
Healthcare Costs (10% of the portfolio): After a strong year in 2022, this theme
performed poorly. The US medical insurance companies are seeing a rise in claims
from their customers. Few people willingly went near a hospital during the
pandemic, so there seems to be a backlog of the population who need medical
care. The short-term impact for the companies is that claims from their
customers have risen as the backlog of postponed medical treatment clears.
Five largest stock contributors
Company Theme Contribution %
LVMH Moët Hennessy Louis Vuitton Sustainable Consumer 1.3
Cie Financière Richemont Sustainable Consumer 0.7
Amazon Online Services 0.7
Microsoft Online Services 0.7
Novo Nordisk Healthcare Costs 0.7
Five largest stock detractors
Company Theme Contribution %
Estée Lauder Sustainable Consumer (0.7)
Olaplex Holdings Sustainable Consumer (0.6)
Pfizer Healthcare Costs (0.6)
Revvity Scientific Equipment (0.4)
Fresenius Medical Care Healthcare Costs (0.4)
Transactions
Buying Japanese banks, buying Rockwell Automation and selling Elevance, one of
the larger holdings in US medical insurance, boosted our returns over the year.
Observations on managing the Mid Wynd investment portfolio
In 2014 the Artemis Global Select team was privileged to be appointed to manage
the Mid Wynd portfolio. Alex Illingworth, Rosanna Burcheri and I set about
managing the investments to benefit from fair equity market conditions, but also
to avoid giving up gains too easily when conditions worsened. For most of the
past nine years market conditions have been very good indeed and in the one
moment of panic - the Covid outbreak in March 2020 - the portfolio's resilience
became apparent.
The Company had assets of £67m in May 2014 and by the end of that year, after
some shareholders had sold, the Company held 13% of its shares in Treasury. As
at 30 June 2023, the Company had assets of £449m, no gearing and a year's
dividends available as reserves.
Managing an investment trust is different from managing a unit trust. Investment
trusts tend to have much longer lives and are often used to pass down wealth
through generations. Unit trusts are more often used to manage savings through
an individual's lifetime. The Mid Wynd International Investment Trust is, of
course, named after the street in Dundee where the Scott family made a fortune
in jute. Many members of that family remain shareholders, illustrating how the
Company has been effective over the long term. It has also been a pleasure to
have previous investment managers on the shareholder list.
When we took over the management markets had recovered from the 2008 banking
crisis, most equities were reasonably priced, inflation was subdued, and
interest rates were held down by central banks. The portfolio we constructed was
balanced between companies that generated strong growth and others that offered
cheaper valuations. The former dominated performance. Over the nine years our
best investments, which should be familiar to shareholders as we will have
talked about them in great detail in previous reports, have been Louis Vuitton,
Boston Scientific, Mastercard, Freeport McMoRan and Thermo Fisher Scientific.
The list of stocks that have reduced the relative performance over the period
has just one dominant constituent: Apple. Owning none of its shares (most of the
time) has cost around 5% of relative performance during our stewardship of the
Company's capital.
All in all, over the last nine years, the Company's assets have grown faster
than the global equity index. These excess returns have come principally from
stock selection. Allocations to particular countries have had little effect
though being sceptical about European prospects saved us a little money. By
theme, Online Services and Sustainable Consumer contributed the most, followed
by Healthcare, Scientific Equipment and being sceptical about banks.
Between 2014 and 2020 economic conditions were reasonably benign and equity
funds made very strong returns. Now that inflation has returned, many are
looking for ways to defend the value of their savings. With UK inflation
currently over 7%, holding cash or UK government debt guarantees a slow loss of
purchasing power. Equities offer a way to invest one's savings in the real
economy, in businesses that can adjust to inflation as it ebbs and flows and
whose cash flows should grow in real terms over time. Historically, equities
have proven to be the best performing asset class during times of high
inflation, especially between 1978 and 1983. However, current valuations are
much higher.
With the current high valuations for equities in mind, the transition from a low
to higher inflation environment means we feel attention must be paid to the
value for money in equities, especially value for money in companies like
technology companies whose growing cash earnings are sometimes many years in the
future.
Over the past nine years the returns we have enjoyed in Louis Vuitton, Boston
Scientific, Mastercard and others show that healthy investment returns can come
from the steady earnings growth of well-established businesses. The Company's
returns have not relied on a small number of stocks making very high returns.
They have come from most of our investments doing quite nicely and thankfully
very few proving troublesome. It may mean that we have fewer `elephant-hunter'
tales, but it has worked.
We are pleased to be able to hand over the Company in rude health and would like
to take the opportunity to thank the management and marketing team at Artemis,
Martin Stott at Bulletin PR and the Mid Wynd Board for their support over this
time.
We wish the Company and its shareholders all the best for the future.
Simon Edelsten
Fund Manager
Bobby Powar & May Laghzaoui
Analysts
5 September 2023
Introduction to the Company's new Investment Manager
Lazard Asset Management will be replacing Artemis as Investment Manager in
October 2023. Lazard is one of the world's pre-eminent financial institutions,
and celebrates its 175th Anniversary this year. Lazard Asset Management manages
approximately £166 billion of assets for a very diverse array of clients - with
24 offices across 17 countries, and with equity expertise at its core, the firm
is very well positioned to deliver strong investment outcomes.
Lazard Asset Management's global equity managers, Louis Florentin-Lee and
Barnaby Wilson will be responsible for managing the Company, and will do so in
accordance with the Lazard Global Quality Growth strategy, which launched in
2011.
Louis and Barnaby have worked together at Lazard Asset Management since 2004 and
have managed the Lazard Global Quality Growth strategy together for the last
decade - in the 10 years to 30 June 2023 the strategy has generated a gross
return of 262%, compared with the MSCI All Country World Index (GBP) (MSCI ACWI)
return of 176%. Louis and Barnaby began working in the investment industry in
1996 and 1998, respectively.
The Lazard Global Quality Growth strategy aims to invest in what the team
considers to be some of the best businesses in the world - companies with
sustainable competitive advantages that are expected to generate consistently
high returns on capital and that can reinvest in their business to drive future
growth. In identifying and investing in such businesses investors see the cash
flows generated on their behalf re-invested at much higher returns than
available elsewhere. The investment approach is reinforced by 25 years of
empirical research and supported by Lazard's extensive fundamental research team
of global sector analysts.
Given Lazard's focus on future financial productivity, the investment team fully
integrates ESG analysis into its fundamental research. The companies selected
for the portfolio tend to be asset light and well-managed with good governance,
so the portfolio tends to have an attractive ESG profile, with significantly
lower carbon footprint, lower carbon intensity, and lower ESG risk exposure than
the MSCI ACWI. This is an outcome of stock selection, not a target objective.
Details of the approach to stewardship, sustainability and the investment
process will be published in the Company's ESG section of the AIC website.
Full details on the investment approach that Lazard will bring to Mid Wynd can
be accessed via: the Research & Insights/Investment Research/Quality investing
section of the main website: www.lazardassetmanagement.com
Strategy and Business Review
This Strategic Report has been prepared in accordance with the Companies Act
2006 (Strategic Report and Directors' Report) Regulations 2013.
Purpose
Our purpose is to increase the real wealth and prosperity of our shareholders,
thus helping them meet their long-term savings needs.
Mid Wynd International Investment Trust plc can trace its heritage back to 1797,
when the founder of the Company set up a textiles business in Dundee. Its
origins as an investment company date from 1949, when the Board began to manage
the financial reserves as a separate entity from the main trading business. In
September 1981, the shares of Mid Wynd International Investment Trust plc were
floated on the London Stock Exchange. At that time, the Board was entrusted by
shareholders to manage their wealth, with a focus on investing in global
companies with strong growth prospects and sustainable businesses. This focus
remains as true for the Board and its appointed investment manager today as it
did back then.
Through our investment company structure, we enable shareholders, large or
small, to invest in an actively-managed diversified portfolio of securities in a
cost-effective way, giving them access to the growth opportunities offered by
world markets.
Strategy
As stated above, the Company's purpose is to increase the real wealth and
prosperity of our shareholders, thus helping them meet their long-term savings
needs. To achieve this goal, the Company has adopted a number of policies which
are set out below.
Objective and investment policy
The objective of the Company is to achieve capital and income growth by
investing on a worldwide basis. Although the Company aims to provide dividend
growth over time, its primary aim is to maximise total returns to shareholders.
The Company is prepared to move freely between different markets, sectors,
industries, market capitalisations and asset classes as investment opportunities
dictate. On acquisition, no holding shall exceed 15% of the portfolio. The
Company will not invest more than 15% of its gross assets in UK listed
investment companies. Assets other than equities may be purchased from time to
time including but not limited to fixed interest holdings, unquoted securities
and derivatives. Subject to prior Board approval, the Company may use
derivatives for investment purposes or for efficient portfolio management
(including reducing, transferring or eliminating investment risk in its
investments and protection against currency risk).
The number of individual holdings will vary over time. To ensure diversification
of opportunity and management of risk, the Company is permitted by its policy to
hold between 40 and 140 holdings; however, the portfolio will generally hold a
portfolio of shares at the lower end of this range. The portfolio will be
managed on a global basis rather than as a series of regional sub-portfolios. As
at 30 June 2023 there were 53 holdings in the portfolio.
The Board assesses investment performance with reference to the MSCI All Country
World Index (GBP). However, the Directors expect the appointed investment
manager to pay little attention to the composition of this index when
constructing the portfolio and the composition of the portfolio is likely to
vary substantially from that of the index. A long-term view is taken and there
may be periods when the net asset value per share declines in absolute terms and
relative to the comparator index.
Business model
The Company is incorporated in Scotland and operates as an Investment Trust
Company. It is an investment company within the meaning of section 833 of the
Companies Act 2006 (the "Act") and is approved as an investment trust by HM
Revenue and Customs subject to the Company continuing to comply with the
requirements of section 1158 of the Corporation Tax Act 2010. The Company has a
premium listing on the London Stock Exchange. The Company is also an Alternative
Investment Fund whose investment manager is regulated by the Financial Conduct
Authority.
The Company has no employees and the Board, which comprises solely of non
-executive Directors, has delegated most of the Company's operational functions
to a number of key service providers. All key service providers are appointed
under rolling contracts which are periodically reviewed, at which time the
appropriateness of the continuing appointment of such service providers is
considered. Details of the key service providers are set out later in this
Annual Financial Report.
Dividend policy
The Company's main focus is on growing shareholders' capital. Nevertheless, the
Company does have a progressive dividend policy which is not solely determined
by the requirements of s1158 of the Corporation Tax Act 2010 to retain no more
than 15% of revenue earnings in any financial year. The Board intends to grow
dividends, subject to the availability of distributable reserves. Where
appropriate, the Board may declare a special dividend.
Gearing and leverage
The Company may use borrowings to support its investment strategy and can borrow
up to 30% of its net assets. The Company has a USD60m multicurrency revolving
credit facility with the Bank of Nova Scotia (London Branch) which is available
to the Company until 19 February 2024. As at 30 June 2023, no amounts were drawn
down from this facility.
The Company's gearing is reviewed by the Board and Investment Manager on an
ongoing basis. Given the current environment of high interest rates and the need
for amendments to the current facility to take account of the new investment
management arrangements, the Company has decided to terminate the facility due
to expire in February 2024. The use of gearing will be reviewed in due course.
Leverage is defined in the Alternative Investment Fund Managers Directive
("AIFMD") as any method by which the Company can increase its exposure by
borrowing cash or securities, or from leverage that is embedded in derivative
positions. The Company is permitted to borrow up to 30% of its net assets
(determined as 130% under the Commitment and Gross ratios). The Company is
permitted to have additional leverage of up to 100% of its net assets, which
results in permitted total leverage of 230% under both ratios. The Alternative
Investment Fund Manager (the "AIFM") monitors leverage values on a daily basis
and reviews the limits annually. No changes have been made to these limits
during the year. At 30 June 2023, the Company's leverage was 99.95% as
determined using the Commitment method and 100.13% using the Gross method.
Further details can be found in the Glossary within the Annual Financial Report.
Current and future developments
A summary of the Company's developments during the year ended 30 June 2023
together with its prospects for the future, is set out in the Chairman's
Statement and the Investment Manager's Review. The Board's principal focus is
the delivery of positive long-term returns for shareholders. This will be
dependent on the success of the investment strategy, in the context of both
economic and stock market conditions. The investment strategy, and factors that
may have an influence on it, are discussed regularly by the Board and the
Investment Manager. The Board furthermore considers the ongoing development and
strategic direction of the Company, as well as any risks which could impact on
the Company's ability to achieve its strategic objective.
Culture and values
Culture
Corporate culture for an externally-managed investment trust like Mid Wynd
International Investment Trust plc, refers to the beliefs and behaviours that
determine how the Directors interact with one another and how the Board manages
relationships with shareholders and key service providers, such as the appointed
investment manager. The culture is defined by the values which are set out
below. The s172 report included in this Strategy and Business Review provides
further details of how the Board has operated in this regard.
Values
The Board is mindful that it is overseeing the management of a substantial
investment portfolio on behalf of investors. In many cases, the investment in
the Company may represent a large proportion of an individual's savings. As all
the Directors are invested in the Company, the Directors' interests are aligned
with those of fellow shareholders in this regard.
Our approach to governing the Company is therefore underpinned by our
determination to do the right thing for our shareholders. Key to this is having
a constructive relationship with them, through monthly updates, half-yearly and
annual financial reports, and the opportunity to meet with them at the Annual
General Meeting, when this is held under normal circumstances. We also believe
in having strong relationships with our key service providers, one based on
mutual trust and respect, with constructive challenge when required. Below is a
summary of the Board's most important values:
· Excellence: the Directors want the Company to succeed. The Board is focused
on its purpose of delivering long- term value for all its shareholders, whether
they are large or small. Focusing on this strategic imperative and adopting best
practice wherever appropriate in all the Company's dealings are key to driving
excellence. We will always put our shareholders first and will constantly look
at how to enhance long term value, for example through the use of gearing, share
issuance, and buybacks.
· Integrity: the Board seeks to be ethical and honest, to comply with all laws
and regulations applicable to investment companies, avoid conflicts of interest
and have zero tolerance to bribery and corruption, tax evasion or other
fraudulent behaviour. It expects the same high standards to be adopted by all
its key service providers.
· Accountability: the Board recognises the need to explain the Company's
performance to investors, including the upsides, the downsides and the risks in
a clear, straightforward and transparent manner. Accountability also involves
the Board challenging its key service providers to ensure the Company continues
to receive a high standard of service to drive long term shareholder value. Each
of the Directors recognises their individual responsibility to shareholders and
accordingly each of the Directors will stand for re-election at each Annual
General Meeting.
· Respect: the Board is collegiate and recognises the value of the diverse
backgrounds and opinions of its Directors. It also recognises the importance of
treating shareholders and key service providers with respect. Contact by
shareholders via the Chairman's email address cosec@junipartners.com is
welcomed; the Company adheres to key service provider terms and conditions such
as prompt payment.
· Sustainable investing, Stewardship and Environmental, Social and Governance
("ESG") issues: The Board, recognises that sustainability and ESG matters should
be cornerstones to the investment approach.
Sustainability, Stewardship and Environmental, Social & Governance Matters
("ESG")
The Board recognises that sustainability and ESG matters are important
cornerstones to responsible investment; the Board is committed to taking a
responsible approach with the Company's own governance matters and, more
materially, a responsible approach to the impact the Company has through the
investment decisions made by its appointed investment manager.
The Board delegates authority to its appointed investment manager to invest
responsibly; engaging actively with investee companies to understand their
management ethos and to seek sustainable returns.
Given Lazard's focus on future financial productivity, the investment team
integrates ESG analysis into its fundamental research. The companies selected
for the portfolio tend to be asset light and well-managed with good governance,
so the portfolio tends to have an attractive ESG profile, with significantly
lower carbon footprint, lower carbon intensity, and lower ESG risk exposure than
the MSCI ACWI Index. This is an outcome of stock selection, not a target
objective.
Portfolio carbon emissions
The challenges around climate change are of increasing concern. The Board has
placed greater importance on considering the issue separately from other ESG
issues.
The portfolio's carbon emissions have remained consistently below its benchmark,
the MSCI All Country World Index (GBP).
Company engagement
The Board expects its appointed investment manager to influence through
engagement. This is not always feasible given the small percentage of any
company's stock which the Company generally holds. The Board favours a policy of
engagement over divestment. However, if attempts to influence companies show
little evidence of success and they are failing to make their businesses more
sustainable we expect our appointed investment manager to sell holdings.
Key performance indicators ("KPIs")
The performance of the Company is reviewed regularly by the Board and it uses a
number of KPIs to assess the Company's success in meeting its objective. The
KPIs which have been established for this purpose are set out below:
Net asset value performance compared to the MSCI All Country World Index (GBP)
The Board monitors the performance of the net asset value per share against that
of the MSCI All Country World Index (GBP).
Share price performance
The Board monitors the performance of the share price of the Company to ensure
that it reflects the performance of the net asset value.
Further details of the 2023 returns can be found within the Chairman's Statement
and Investment Manager's Review.
Share price (discount)/premium to net asset value
The Board recognises that it is in the interests of shareholders to maintain a
share price as close as possible to the net asset value ("NAV") per share. The
policy of the Board is to limit the discount or premium to a maximum of 2 per
cent of NAV in normal circumstances. The Company may issue shares at such times
as demand is not being met by liquidity in the market and buy back shares when
there is excess supply. This policy has proved consistently effective in
generating value within the Company and protecting shareholders' liquidity
requirements. This current year has continued to bring volatility from
geopolitical events in Ukraine/Russia as well as inflationary pressures. The
Company's shares, which were trading at a premium of 0.1% to NAV at the start of
the year, moved to a discount of 4.3% of NAV at the year end. At all times the
Company sought to manage the discount and premium within the target parameters
and achieved an average discount of 1% over the year. While the Company declares
its NAV daily, markets are open almost twenty four hours per day and this
accounts for the wider range in premium and discount in 2023 shown on the
following chart. During the year the Company issued 1,133,200 shares raising
£8.1m net of costs (representing 1.7% of the issued share capital at the start
of the year) and bought back 4,002,662 shares (representing 6.1% of the issued
share capital at the start of the year) at a cost of £28,729,744. As the Company
has utilised a significant proportion of the authorities granted by shareholders
at the last AGM to undertake buybacks, the Company convened a special meeting on
8 September 2023 to apply for additional authorities up until the next AGM. The
reason for doing this was to ensure the Company would be able to continue to
operate its discount control programme efficiently up until the next AGM.
Although the Company incurs modest costs for operating the policy and when
renewing shareholder authority, issuance at a premium and buying back at a
discount under the policy more than compensates and is consistently accretive to
NAV.
Ongoing charges
The Board is mindful of the ongoing costs to shareholders of running the Company
and monitors operating expenses on a regular basis. The decrease in average
funds under management during the year and certain one-off charges have led to
an increase in the Company's current ongoing charges ratio to 0.62% (2022:
0.60%).
Dividend per share
The Board, in addition to capital growth, continues to pursue its policy of
growing dividends. It monitors the revenue returns generated by the Company
during the year, its historic revenue reserves and expected future revenue and
then determines the dividends to be paid. Revenue earnings during the year
decreased by 15% on what was a very strong 2022 return. Revenue earnings will
vary depending on macro economic factors affecting investee companies and the
composition of the portfolio. As the majority of the Company's revenues are
earned in foreign currencies changes in exchange rates can also materially
impact the GBP value of the Company's earnings. The earnings per share still
allow the Board to increase the interim and final dividends payable to
shareholders along with the addition of a special dividend of 1.70p. Subject to
approval of the final dividend by shareholders, a total regular dividend of 7.80
pence per share (2022: 7.20 pence per share) will be paid in respect of the year
ended 30 June 2023. This represents an increase of 8.3%.
Total dividends payable for the year ended 30 June 2023, including the special
dividend, amount to 9.50 pence per share.
Dividends payable/paid in respect of the years ended June 2022 and June 2023
were fully covered by their respective current year earnings.
Principal risks and risk management
The Board has carried out a robust assessment of the principal and emerging
risks facing the Company. Following consideration of the principal risks, the
Board has concluded that there are no emerging risks facing the Company that
should be added to the current principal risks.
The Board, has developed a risk map which sets out the principal risks faced by
the Company and the controls established to mitigate these risks. This is an
ongoing process and the risk map, including any emerging risks, is formally
reviewed at least every six months. The Board pays particular attention to those
risks that might threaten the long-term performance or viability of the Company.
Further information on the Company's risk management process is set out in the
corporate governance section within the Annual Financial Report.
A summary of the key areas of risk, their movement during the year and their
mitigation is set out below:
Movement Principal risk Mitigation/con
trol
No Strategic risk The
change investment
The management objective and
of the policy of the
portfolio of Company is
the Company set by the
may not Board and is
achieve its subject to
investment ongoing
objective and review and
policy. monitoring in
conjunction
with the
appointed
investment
manager.
The Company's
investments
are selected
on their
individual
merits and
the
performance
of the
portfolio may
not track the
wider market
(represented
by the MSCI
All Country
World Index).
The Board
believes this
approach will
continue to
generate good
long-term
returns for
shareholders.
Risk is
diversified
through a
broad range
of
investments
being held.
Both the
existing and
future
investment
managers have
proven track
records; the
Board
discusses the
investment
portfolio and
its
performance
with the
appointed
investment
manager at
each Board
meeting.
Increased Market risks The Board
Risk considers that
The Company invests in a portfolio of the risk of
international quoted equities. The prices of market
equity investments may be volatile and are volatility is
affected by a wide variety of factors many of mitigated by
which can be unforeseen and are outwith the the longer-term
control of the investee company or the appointed nature of the
investment manager. These price movements could investment
result in significant losses for the Company. objective and
the Company's
Current events such as inflationary pressures closed-ended
and the current war in Ukraine may negatively structure, and
affect investment values leading to the that such
inability to buy, sell or value assets at a investments
competitive price, and have an adverse effect on should be a
the Company's results. The market risk has source of
increased due to these pressures. positive
returns for
The Company's functional currency and that in shareholders
which it reports its results is sterling. over the long
However, the majority of the Company's assets, term.
liabilities and income are denominated in
currencies other than sterling. Consequently, Risks are
movements in exchange rates will affect the diversified
sterling value of those items. The country in through having
which a portfolio company is listed is a range of
furthermore not necessarily where it earns its investments in
profits and movements in exchange rates on the portfolio
overseas earnings may have a more significant with exposure
impact upon a portfolio company's valuation than to various
a simple translation of that company's share geographies,
price into sterling. The Company does not sectors and
generally hedge its currency exposures and themes.
changes in exchange rates may lead to a
reduction in the Company's NAV. Both the
existing and
Globally, climate change effects are already future
emerging in the form of changing weather investment
patterns. Extreme weather events could managers have
potentially impair the operations of individual proven track
investee companies, potential investee records and are
companies, their supply chains and their required to
customers. report
regularly to
The war in Ukraine and other geopolitical events the Board on
have resulted in increasing levels of inflation market
directly affecting economic growth and the developments.
underlying investment values. At each Board
meeting the
appointed
investment
manager is
asked to
provide
explanations
for the
performance of
the portfolio
and the
rationale for
any changes in
equity
investments,
sectors and
geographies.
Any use of
derivatives to
manage market
risks requires
Board approval.
Both the
existing and
the future
investment
managers take
climate risks
into account,
along with the
downside risk
to any company
(whether in the
form of its
business
prospects or
market
valuation or
sustainability
of dividends)
that is
perceived to be
making a
detrimental
contribution to
climate change.
The Company
invests in a
broad portfolio
of businesses
with operations
spread
geographically,
which should
limit the
impact of
location
-specific
weather events.
The Board and
its appointed
investment
manager have
regular
discussions to
assess the
likely impact
of inflation
rates on the
economy,
corporate
profitability
and asset
prices.
No Legal and The Company
change regulatory relies on the
risk services of the
company
Changes to the secretary and
requirements investment
of the manager to
framework of monitor ongoing
regulation and compliance with
legislation relevant
(including regulations,
rules relating accounting
to listed standards and
closed-end legislation.
investment The company
companies), secretary and
within which investment
the Company manager also
operates, appraise the
could have a Board of any
material prospective
adverse effect changes to the
on the ability legal and
of the Company regulatory
to carry on framework so
its business that any
and maintain requisite
its listing. A actions can be
change to the planned.
legal or
regulatory The Board
rules in the receives
future could, quarterly
amongst other compliance
things, lead reports from
to the Company the investment
being subject manager and
to tax on depositary
capital gains. confirming
compliance with
regulations.
These reports
also highlight
any matter that
the relevant
compliance team
feel should be
brought to the
Board's
attention.
Operational
risks
No Reliance on Experienced
Change third-party third-party
service service
providers providers are
employed by the
The Company Company under
has no appropriate
employees and terms and
all of the conditions and
Directors have with agreed
been appointed service level
on a non specifications.
-executive The Board
basis; all receives
operations are regular reports
outsourced to from its
third-party service
service providers and
providers. reviews the
Failure by any performance of
service its key service
provider to providers at
carry out its least annually.
obligations to
the Company in
accordance
with the terms
of its
appointment,
to protect
against
breaches of
the Company's
legal and
regulatory
obligations
such as data
protection or
to perform its
obligations to
the Company at
all as a
result of
insolvency,
fraud,
breaches of
cybersecurity,
failures in
business
continuity
plans or other
causes, could
have a
material
adverse effect
on the
Company's
operations.
No Reliance on As reported, it
change key personnel was announced
earlier in the
The Company's year, that the
portfolio is two key
managed by the individuals
appointed responsible for
investment managing the
manager and in Company's
particular the investments,
fund would be
management leaving
team which has Artemis. As
direct these were key
responsibility men, the Board
for portfolio decided that it
selection. Any needed to
change in review the
relation to ongoing fund
the investment management of
executives may the Company and
adversely following that
affect the review,
performance of appointed
the Company. Lazard Asset
Management to
take over the
investment
management role
in October
2023. The
Lazard team is
led by two key
individuals,
each of whom
have worked for
Lazard for many
years and have
a successful
track record.
Long-term Viability
Viability statement
In accordance with the Association of Investment Companies (the "AIC") Code of
Corporate Governance, the Board has considered the longer-term prospects for the
Company beyond the twelve months required by the going concern basis of
accounting. The period of assessment, in line with our Key Information Document,
is five years to 30 June 2028. The Board has concluded that this period is
appropriate, taking into account the Company's investment objective and policy
and the long-term investor outlook.
In reviewing the Company's viability, the Board considered the Company's
business model, the principal risks and uncertainties, including geo-political
risks, current high inflation and interest rates and the ensuing market
volatility as well as emerging risks such as climate change risks. The Company
invests in listed securities and has a liquid portfolio.
Following the publication of this Annual Financial Report, the Company's
investment management arrangements will change with Lazard taking over
responsibility for managing the Company's investments in October following Simon
Edelsten's retirement from the Artemis partnership. In considering the Company's
prospects over the next five years, the Directors have assumed that Lazard will,
on behalf of the Company, continue to follow the Company's investment objective,
that the Company's performance will continue to be attractive to shareholders,
and that the Company will continue to meet the requirements to retain its status
as an investment trust.
The Company is authorised to trade as an investment company and has the
associated tax benefits. Any change to the Company's tax arrangements could
affect the Company's viability as an effective investment vehicle.
The Board considered a five year forecast and a number of stress test scenarios
in connection with a sustained fall in markets. The Board also considered the
Company's ongoing income and expenses and the liquidity of the Company's
portfolio to ensure that the Company will be able to meet its liabilities as
they fall due.
The conclusion of this review is that the Board has a reasonable expectation
that the Company will be able to continue in operation and meet its liabilities
as they fall due over the next five years.
Duty to Promote the Success of the Company
How the Directors discharge their duties under s172 of the Companies Act
Under section 172 of the Companies Act 2006, the Directors have a duty to act in
good faith and to promote the success of the Company for the benefit of its
shareholders as a whole, and in doing so have regard to:
a)the likely consequences of any decision in the long term,
b)the interests of the company's employees,
c)the need to foster the company's business relationships with suppliers,
customers and others,
d)the impact of the company's operations on the community and the environment,
e)the desirability of the company maintaining a reputation for high standards of
business conduct, and
f)the need to act fairly as between members of the company.
As an externally managed investment trust, the Company has no employees or
physical assets. Our shareholders, our investee companies, our key external
service provider, the investment manager, and other professional service
providers, such as the administrator, depositary, registrar, auditor, corporate
broker, tax adviser and lenders are all considered to fall within the scope of
section 172.
During the year ended 30 June 2023, Artemis acted as the Company's Investment
Manager, Fund Administrator and Company Secretary. JP Morgan Europe Limited was
the Company's Depositary until 3 March 2023 when this service was moved to
Northern Trust as part of a wider project initiated by Artemis and approved by
the Board. As announced previously, the Board has appointed Lazard to replace
Artemis Fund Managers as Investment Manager with effect from October 2023.
Following this change, the Board has also appointed Juniper Partners Limited as
Company Secretary and Fund Administrator in place of Artemis Fund Managers; JP
Morgan Europe Limited will additionally resume depositary services.
Whilst certain responsibilities are delegated, the Board retains responsibility
for promoting the success of the Company; the Directors' responsibilities are
set out in the schedule of matters reserved for the Board and the terms of
reference of its committees, all of which are reviewed regularly by the Board.
The Company's culture and values, as described within the Annual Financial
Report, have been established by the Board to manage its key business
relationships. The Company's approach on anti-bribery and prevention of tax
evasion can also be found within the Annual Financial Report and on the
Company's website at midwynd.com.
Engagement with key stakeholders
Stakeholders Benefits of How the Company
engagement engages with
Stakeholders
Shareholders and The Board is To achieve its
potential responsible objective of
investors for promoting promoting the
the success success of the
of the Company, for the
Company for benefit of the
the benefit shareholders, taken
of the as a whole, the
shareholders, Board approaches
taken as a engagement from two
whole, having angles - how the
regard to the Board communicates
matters its strategy and
listed above performance to
and its shareholders and how
stakeholders. it addresses
feedback /
Communicating communications
with received from
shareholders shareholders.
is essential
to ensure the Engagement with
Board is shareholders is both
fully aware by the Board and the
of Company's appointed
shareholder investment manager.
requirements Through the
so that it publication of the
can respond Annual Financial
to evolving Report, the Half
shareholder -Yearly Report,
needs. It is monthly factsheets,
also RNS announcements
important and Fund Manager
that the updates to the
Company Company's website,
communicates shareholders are
its strategy kept informed of
and developments in
performance Company strategy as
regularly and well as Company
effectively performance and
to portfolio
shareholders activities. The
to ensure appointed investment
there manager presents at
continues to conferences and
be demand for webinars throughout
the Company's the year. The Annual
shares. General Meeting
presents a further
opportunity for
shareholders to meet
the Board and
appointed investment
manager in person.
The Board receives
regular feedback on
shareholder meetings
from the Company's
broker and, where
appropriate the
Chairman. Any
communications from
shareholders are
reviewed and
discussed by the
Board at Board
meetings to ensure
that shareholder
views are taken into
consideration as
part of any
decisions taken.
Shareholders are
encouraged to raise
questions and
communicate with the
Chairman and the
appointed investment
manager either
through the
Company's website or
by attending and
asking questions at
the AGM.
The Board considers
communication with
shareholders an
important function
and Directors are
always available to
respond to
shareholder queries.
For further
information see
`Relations with
shareholders' within
the Annual Financial
Report.
Stakeholders Benefits of How the Company
engagement engages with
Stakeholders
Investment Engagement The Board, with
Manager with the the support of
Company's its Management
appointed Engagement
investment Committee,
manager is regularly
necessary to: reviews the
performance of
? - the appointed
evaluate its investment
performance manager to
against the ensure that
Company's services
stated provided to the
investment Company are
strategy and managed
to understand efficiently and
any risks or effectively for
opportunities the benefit of
this may the Company's
present; shareholders.
? - ensure The Board meets
the investment formally with
manager the investment
operates manager at
within quarterly Board
parameters set meetings. The
by the Board; investment
manager
? - ensure presents a
the Board review of the
understands quarter and any
key pertinent
performance information on
issues to the portfolio
inform and its
strategy and transactions.
enable good Informal calls
communication and ad hoc
with meetings occur
shareholders; throughout the
year and
? - provide especially at
the Board with times of
assurances heightened
that the market
investment volatility.
manager's
internal The Board
controls are reviews and
operating discusses plans
effectively; for the future
and marketing,
strategy and
? - ensure development of
the investment the Company
manager's with the
approach to investment
the management manager.
of
environmental, Reports on the
social and internal
governance controls
("ESG") issues operated by the
accords with appointed
the Board's investment
values manager to
safeguard the
Company's
assets and to
ensure
transactions
and financial
reporting are
materially
correct are
received from
the investment
manager and
reviewed by the
Board and Audit
Committee as
appropriate.
Other third As an The appointed
-party investment investment
service company, all manager has
services are frequent
providers outsourced to interaction
third-party with the key
service service
providers. providers and
their
In addition to performance is
investment continually
management, monitored
other throughout the
outsourced year.
services
include the The Management
Depositary, Engagement
the Fund Committee
Administrator, annually
the Company reviews the
Secretary, the performance of
Broker, the key service
Registrar, the providers,
Company's along with
Lender, its their fee
Tax Adviser levels, and
and the provides
Auditor. recommendations
to the Board as
The Company required.
has detailed
the parameters As and when
within which appropriate,
authority has third party
been delegated providers
and set present to the
service levels Board.
to monitor
service Annual
provider assurance
performance. reports are
received to
Engagement is assist the
important to review of the
ensure that: internal
control
? - all environments of
service the Depositary
providers are and Registrar.
delivering
services in
accordance
with their
service level
agreements;
? - any
operational
issues are
discussed with
the Board; and
? - the
Board receives
appropriate
assurances
that the
providers'
internal
controls are
operating
effectively.
Stakeholders Benefits of How the
engagement Company
engages with
Stakeholders
Investee The The Board sets
companies Company's the investment
success objective and
relies on discusses
its choice stock
of selection,
investments asset
and the allocation,
performance and the ESG
of those qualities of
investments. investee
companies with
Engagement the appointed
by the investment
appointed manager at
investment each Board
manager with meeting.
the investee
companies The investment
has two manager
principal engages with
aims: the investee
companies,
- to aid the prior to
appointed investment and
investment on an on-going
manager to basis.
understand
investee The Board has
companies discussed with
and the both Artemis
factors Fund Managers
which drive and Lazard
their Asset
performance Management how
so as to Environmental,
make better Social and
investment Governance
decisions: ("ESG")
and factors are
taken into
- to drive account when
positive selecting and
change in retaining
investee investments
companies for the
through Company. The
active Board
stewardship. recognises the
The aim of importance of
such ESG both in
engagement the investment
is to process and
improve the
performance stewardship
and hence role.
shareholder
returns. Both Artemis
Fund Managers
and Lazard
Asset
Management
endorse the UK
Stewardship
Code.
Board discussions and decisions
Key discussions and decisions made by the Board since the last annual financial
report:
Topic Background & Decision
discussion
Change in Following It was
Investment the decided that
Manager announcement following the
of the retirement of
retirement Simon
of fund Edelsten from
manager Artemis and
Simon the departure
Edelsten of Alex
from the Illingworth,
Artemis it was in
partnership shareholders'
and the best
departure of interests
Alex that Lazard
Illingworth, be appointed
the Board as the new
assessed its Investment
ongoing Manager with
investment effect from
management October 2023.
arrangements It is
and, in anticipated
conjunction that Simon
with its Edelsten will
adviser, remain
Barnett responsible
Waddington, for the
undertook a Company's
rigorous investments
assessment until the
of potential Company's
management transition to
options. Lazard.
During the
manager
review
process, the
Chairman
engaged with
some of the
Company's
largest
shareholders
to ensure
they were
happy with
the approach
being taken.
Share The Board It was
issuance and discussed decided this
buyback the on-going strategy was
strategy of working as
share required and
issuance and the Board
buyback to continued to
assist in give
controlling authority as
the share required. The
premium/disco announcement
unt to NAV. of the
departure
from the
Artemis
partnership
of Simon
Edelsten and
Alex
Illingworth
coincided
with a
widening of
discounts to
NAV in the
investment
trust sector.
The Company
has been
particularly
active,
during this
period, to
ensure that
the Company's
shares trade
at a narrow
discount to
NAV. To
ensure the
Company has
sufficient
shareholder
authority to
continue to
operate the
discount
control
mechanism
(which seeks
to maintain a
share price
within 2% of
the Company's
NAV) the
Board
resolved to
seek
additional
authority
from
shareholders
to continue
to buy back
the Company's
shares at a
special
general
meeting
convened for
8 September
2023.
Topic Background & Decision
discussion
Third The Company The Board was
party moved its satisfied that
service depositary changing
providers services from depositary so
JP Morgan that all funds
Europe to operated by
Northern Artemis Fund
Trust in Managers would
March 2023 as be
part of a administered
larger by one party
initiative by was in
Artemis Fund shareholders'
Managers. best interests
Further and
changes in accordingly
the wake of Northern Trust
the replaced JP
replacement Morgan Europe
of Artemis in March 2023.
Fund Managers Since the
as Investment announcement
Manager have of the
also now been replacement of
set in Artemis Fund
motion. Managers by
Lazard Asset
Management,
the Company
has decided to
reappoint JP
Morgan as the
Company's
depositary.
Artemis Fund
Managers has
additionally
been
responsible
for the
Company's
Company
Secretary
services and
this role,
alongside the
fund
administration
services, will
be transferred
to Juniper
Partners with
effect from
October 2023.
In selecting
new service
providers, the
Board
considered a
number of
proposals
tendered by
recognised
industry
providers and
concluded that
the
appointment of
the providers
selected was
in
shareholders'
best
interests.
Gearing The Board The Board has
discussed the considered its
current continuing use
policy and of gearing in
level of light of
gearing current high
utilised. interest rates
and the
proposed
change in
Investment
Manager. It
has been
decided that
the current
bank facility
should not be
retained and
accordingly
the facility
will be
terminated
shortly. The
future use of
gearing by the
Company will
be kept under
review.
Board The Board It was agreed
evaluation discussed how that an
to conduct external
its annual specialist
board should be
evaluation. appointed to
lead the
evaluation.
Following the
evaluation
process, a
number of
changes have
been made to
the
administration
of the Board
and its
committees.
The Board's primary focus is to promote the long-term success of the Company for
the benefit of the Company's shareholders. In doing so, the Board has regard to
the impact of its actions on other stakeholders as described above.
Directors & diversity
The Directors of the Company and their biographical details are set out within
the Annual Financial Report.
No Director has a contract of service with the Company.
The Board supports the recommendations of the Hampton-Alexander Review on gender
diversity and the Parker Review on ethnic representation on Boards.
The Board recognises the principles of diversity in the boardroom and
acknowledges the benefits of having greater diversity, including gender, social
and ethnic backgrounds, and cognitive and personal strengths. When setting a new
appointment brief, the Nomination Committee considers diversity alongside
seeking to ensure that the overall balance of skills and knowledge that the
Board has remains appropriate, so that it can continue to operate effectively.
The Board's Director selection policy will, first and foremost, seek to identify
the person best qualified to become a Director of the Company, based on merit
and objective criteria.
The Board is currently comprised of four male Directors and one female Director.
The FCA announced a new policy statement on diversity and inclusion on company
boards in April 2022. Companies are required to comply with the targets or
explain the reasons for non-compliance. Outlined below is an overview of the
targets and the Company's compliance as at 30 June 2023 in accordance with
Listing Rule 9.8.6R(9):
· 40% of the Board is represented by women: As at 30 June 2023 the Company
only has one female Director. The Company therefore does not meet this diversity
target.
· One woman in a senior position: during the year to 30 June 2023, Diana Dyer
Bartlett held the position of Chair of the Audit Committee. In the absence of
Executive roles, the Company considers the role of Chairman of the Audit
Committee to qualify as a senior position. The Board therefore considers that it
met this target.
· One individual from a minority ethnic background: as at 30 June 2023, no
individuals on the Board are from a minority ethnic background. The Company
therefore does not therefore meet this diversity target.
The Board does not currently meet the targets described above for the following
reasons:
· The Board is small and rotation of Directors does not take place every year.
· The specialist headhunters retained by the Board to seek a new Board
Director in 2023 were asked to seek candidates from a broad range of diverse
backgrounds, especially those who would extend the Board's gender and ethnic
minority representation. Following completion of this process, the Board
concluded that Hamish Baillie was the best qualified, notwithstanding that his
appointment would not enable the Company to comply with guidance on gender or
ethnic minority representation.
For future director appointments, the Board will seek to meet the guidelines on
diversity targets.
The following tables set out the data on the diversity of the Directors on the
Company's Board in accordance with Listing Rule 9.8.6R(10) as at 30 June 2023.
This data has been collected through consultation with the Board. There have
been no changes in the below data since 30 June 2023.
+----------------+---------+----------+----------------+-----------+------------
-+
| |Number of|Percentage|Number of senior|Number in |Percentage
of|
| |Board |of the |positions on the|executive |executive
|
| |members |Board |Board |management3|management3
|
+----------------+---------+----------+----------------+-----------+------------
-+
|Men |4 |80% |11 |N/A |N/A
|
+----------------+---------+----------+----------------+-----------+------------
-+
|Women |1 |20% |02 |N/A |N/A
|
+----------------+---------+----------+----------------+-----------+------------
-+
|Not |- |- |- |N/A |N/A
|
|specified/prefer| | | | |
|
|not to say | | | | |
|
+----------------+---------+----------+----------------+-----------+------------
-+
1 Russell Napier is the Chairman of the Board, a senior position as defined by
the Listing Rules.
2 Diana Dyer Bartlett is the Chairman of the Audit Committee. Although this is
not a senior position as defined by the Listing Rules, in the absence of
executive roles, the Company considers this role to be a senior position.
3 Not applicable as the Company does not have an executive management team.
Number of Board Percentage Number of senior Number in Percentage of
positions on the executive executive
members of the Board management2 management1
Board
White British or 5 100% 11 N/A N/A
other White
Mixed/Multiple 0 0% 0 N/A N/A
ethnic groups
Asian/Asian 0 0% 0 N/A N/A
British
Black/African/Carib 0 0% 0 N/A N/A
bean/Black British
Other ethnic 0 0% 0 N/A N/A
group, including
Arab
Not - - - N/A N/A
specified/prefer
not to say
1 The Chairman of the Board is a senior position as defined by the Listing
Rules. In the absence of executive roles, the Company also considers the
Chairman of the Audit Committee to be a senior position.
2 Not applicable as the Company does not have an executive management team.
Modern Slavery Act 2015
The Company does not fall within the scope of the Modern Slavery Act 2015 as its
turnover is less than £36m. Therefore, no slavery and human trafficking
statement is included in the Annual Financial Report.
Sustainability and environmental, social and governance (`ESG') matters
The Board recognises that the most material way in which the Company can have an
impact on ESG is through responsible ownership of its investments. The Company's
appointed investment manager is expected to engage actively with investee
companies undertaking extensive evaluation and engagement on a variety of
matters such as strategy, performance, risk, dividend policy, governance and
remuneration. All risks and opportunities are considered as part of the
investment process in the context of enhancing the long-term value of
shareholders' investments. This includes matters relating to material
environmental, human rights and social considerations that will ultimately
impact the profitability of a company or its stock market rating.
For and on behalf of the Board,
Russell Napier
Chairman
5 September 2023
Statement of Directors' Responsibilities in respect of the Annual Financial
Report and the Financial Statements
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Financial Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with UK Accounting Standards, including FRS
102 `The Financial Reporting Standard Applicable in the UK and Republic of
Ireland'.
Under company law the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Company and of the profit or loss of the Company for that period. In
preparing each of the financial statements, the Directors are required to:
? select suitable accounting policies and then apply them
consistently;
? make judgements and estimates that are reasonable and
prudent;
? state whether applicable UK Accounting Standards have been followed,
subject to any material departures being disclosed and explained in the
financial statements; and
? prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and enable
them to ensure that its financial statements comply with the Companies Act 2006.
They have general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Company and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, a Directors' Report and Corporate Governance
Statement, and a Directors' Remuneration Report that complies with that law and
those regulations.
The financial statements are published on a website, midwynd.com, maintained by
the Company's Investment Manage. Responsibility for the maintenance and
integrity of the corporate and financial information relating to the Company on
this website has been delegated to the Investment Manager by the Directors.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge:
(a) the financial statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets, liabilities
and financial position of the Company as at 30 June 2023 and of the profit for
the year then ended;
(b) in the opinion of the Directors, the Annual Financial Report taken as a
whole, is fair, balanced and understandable and it provides the information
necessary to assess the Company's position and performance, business model and
strategy; and
(c) the Strategic Report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
For and on behalf of the Board.
Russell Napier
Chairman
5 September 2023
Statement of Comprehensive Incomefor the year ended 30 June 2023
2023 2023 2023 2022 2022 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) - 19,123 19,123 - (45,017) (45,017)
on
investments
Currency - 636 636 - 446 446
gains
Income 8,725 - 8,725 9,377 - 9,377
Investment (575) (1,726) (2,301) (609) (1,828) (2,437)
management
fee
Other (572) (8) (580) (488) (8) (496)
expenses
Net 7,578 18,025 25,603 8,280 (46,407) (38,127)
return/(loss)
before
finance costs
and taxation
Finance costs (167) (506) (673) (83) (252) (335)
of borrowings
Net 7,411 17,519 24,930 8,197 (46,659) (38,462)
return/(loss)
on
ordinary
activities
before
taxation
Taxation on (884) - (884) (854) - (854)
ordinary
activities
Net 6,527 17,519 24,046 7,343 (46,659) (39,316)
return/(loss)
on
ordinary
activities
after
taxation
Net 10.01p 26.86p 36.87p 11.72p (74.47p) (62.75p)
return/(loss)
per
ordinary
share
The total column of this statement is the profit and loss account of the
Company.
All revenue and capital items in this statement derive from continuing
operations.
The net return/(loss) for the year disclosed above represents the Company's
total comprehensive income.
Statement of Financial Position as at 30 June 2023
2023 2022
£'000 £'000
Non-current assets
Investments held at fair value through profit or loss 438,938 439,101
Current assets
Debtors 675 24,969
Cash and cash equivalents 12,243 7,096
12,918 32,065
Creditors
Amounts falling due within one year (2,830) (18,513)
Net current assets 10,088 13,552
Total net assets 449,026 452,653
Capital and reserves
Called up share capital 3,320 3,271
Capital redemption reserve 16 16
Share premium 242,115 235,110
Capital reserve 196,730 206,979
Revenue reserve 6,845 7,277
Shareholders' funds 449,026 452,653
Net asset value per ordinary share 719.84p 692.01p
These financial statements were approved by the Board of Directors and signed on
its behalf on 5 September 2023.
Russell Napier
Chairman
Statement of Changes in Equity
For the year ended 30 June 2023
Share Capital Share Capital Revenue Shareholders'
capital redemption premium reserve1,2 reserve2
funds
£'000 reserve £'000 £'000 £'000
£'000
£'000
Shareholders' 3,271 16 235,110 206,979 7,277 452,653
funds at 1
July 2022
Net return on - - - 17,519 6,527 24,046
ordinary
activities
after
taxation
Issue of new 49 - 6,946 - - 6,995
shares (net
of costs)
Issue of - - 59 1,116 - 1,175
shares from
treasury
Repurchase of - - - (28,884) - (28,884)
shares
into treasury
Dividends - - - - (6,959) (6,959)
paid
Shareholders' 3,320 16 242,115 196,730 6,845 449,026
funds at
30 June 2023
For the year ended 30 June 2022
Share Capital Share Capital Revenue Shareholders'
capital redemption premium reserve1,2 reserve2
funds
£'000 reserve £'000 £'000 £'000
£'000
£'000
Shareholders' 2,997 16 191,253 253,638 4,189 452,093
funds
at 1 July
2021
Net - - - (46,659) 7,343 (39,316)
(loss)/return
on
ordinary
activities
after
taxation
Issue of new 274 - 43,857 - - 44,131
shares
(net of
costs)
Dividends - - - - (4,255) (4,255)
paid
Shareholders' 3,271 16 235,110 206,979 7,277 452,653
funds
at 30 June
2022
1 Capital reserve as at 30 June 2023 includes realised gains of £155,914,000 (30
June 2022: £191,640,000).
2 The Company may pay dividends from both capital and revenue reserves.
Statement of Cash Flows for the year ended 30 June 2023
2023 2023 2022 2022
£'000 £'000 £'000 £'000
Cash generated in 5,486 4,768
operations
Interest received 286 10
Interest paid (704) (335)
(418) (325)
Net cash inflow from 5,068 4,443
operating activities
Cash flow from investing
activities
Purchase of investments (554,175) (689,754)
Sale of investments 585,162 639,527
Realised currency gains 28 1,517
Net cash generated 31,015 (48,710)
from/(used in) investing
activities
Cash flow from financing
activities
Issue of new shares, net of 6,995 44,131
costs
Issue of shares from 1,175 -
treasury
Repurchase of share to (26,804) -
treasury, net of costs
Dividends paid (6,959) (4,255)
Net repayment of credit (5,292) (5,064)
facility
Net cash (used (30,885) 34,812
in)/generated from
financing activities
Net increase/(decrease) in 5,198 (9,455)
cash and cash equivalents
Cash and cash equivalents 7,096 16,556
at start of the year
Increase/(decrease) in cash 5,198 (9,455)
in the year
Currency losses on cash and (51) (5)
cash equivalents
Cash and cash equivalents 7,096
at end of the year
12,243
Notes to the Financial Statements
1. Accounting policies
The financial statements are prepared on a going concern basis under the
historical cost convention modified to include the revaluation of investments.
The financial statements have been prepared in accordance with the Companies Act
2006, applicable United Kingdom accounting standards, including Financial
Reporting Standard (`FRS') 102, and the Statement of Recommended Practice
`Financial Statements of Investment Trust Companies and Venture Capital Trusts'
(the `SORP') issued by the Association of Investment Companies (the `AIC') in
July 2022.
In order to better reflect the activities of the Company and in accordance with
guidance issued by the AIC, supplementary information which analyses the profit
and loss account between items of a revenue and capital nature has been
presented in the Statement of Comprehensive Income.
Financial assets and financial liabilities are recognised in the Company's
Statement of Financial Position when it becomes a party to the contractual
provisions of the instrument.
No significant estimates or judgements have been made in the preparation of the
financial statements.
The Directors consider the Company's functional currency to be Sterling as the
Company's shareholders are predominantly based in the UK and the Company is
subject to the UK's regulatory environment.
2. Income
2023 2022
£'000 £'000
Income from investments
Overseas dividends 7,447 8,149
UK dividends 992 1,110
Scrip dividends - 108
8,439 9,367
Other income
Bank interest 286 10
Total income 8,725 9,377
Total income comprises:
Dividends and UK interest from financial assets 8,439 9,367
designated at fair value through profit or loss
Other income 286 10
Total income 8,725 9,377
3. Dividends paid and proposed
2023 2022 2023 2022
£'000 £'000
Amounts recognised as distributions in the year:
Unclaimed dividends refunded to the Company - - - (14)
Previous year's final dividend 3.70p 3.30p 2,431 2,018
Previous year's special dividend 3.00p nil 1,972 nil
First interim dividend 3.85p 3.50p 2,556 2,251
Total dividend 10.55p 6.80p 6,959 4,255
Set out below are the total dividends paid and payable in respect of the
financial year. The revenue available for distribution by way of dividend for
the year is £6,527,000 (2022: £7,343,000).
2023 2022 2023 2022
£'000 £'000
Dividends paid and payable in respect of the year:
First interim dividend 3.85p 3.50p 2,556 2,251
Proposed final dividend 3.95p 3.70p 2,463 2,431
Special dividend 1.70p 3.00p 667 1,972
Total dividend 9.50p 10.20p 5,686 6,654
4. Net return/(loss) per ordinary share
2023 2023 2023 2022 2022 2022
Revenue Capital Total Revenue Capital Total
Net 10.01p 26.86p 36.87p 11.72p (74.47p) (62.75p)
return/(los
s) on
ordinary
activities
after
taxation
Revenue return per ordinary share is based on the net revenue return on ordinary
activities after taxation for the financial year of £6,527,000 (2022:
£7,343,000) and on 65,211,820 (2022: 62,652,936) ordinary shares, being the
weighted average number of ordinary shares in issue (excluding treasury shares)
during the year.
Capital gain per ordinary share is based on the net capital gain on ordinary
activities after taxation for the financial year of £17,519,000 (2022: loss
£46,659,000) and on 65,211,820 (2022: 62,652,936) ordinary shares, being the
weighted average number of ordinary shares in issue during the year.
5. Net asset value per ordinary share
The net asset value per ordinary share and the net assets attributable to the
ordinary shareholders at the year end were as follows:
2023 2023 2022 2022
Net asset Net assets Net asset value per share Net assets
value per
share £'000 £'000
Ordinary 719.84p 449,026 692.01p 452,653
shares
During the year the movements in the assets attributable to the ordinary shares
were as follows:
2023 2022
£'000 £'000
Total net assets at 1 July 452,653 452,093
Total recognised gains/(losses) for the year 24,046 (39,316)
Issue of new shares 6,995 44,131
Issue of shares from treasury 1,175 -
Repurchase of shares into treasury (28,884) -
Dividends paid (6,959) (4,255)
Total net assets at 30 June 449,026 452,653
Net asset value per ordinary share is based on net assets as shown above and on
62,378,452 (2022: 65,411,114) ordinary shares, being the number of ordinary
shares in issue at the year end.
6.Transactions with the investment manager and related parties
The investment management fees payable to Artemis are disclosed in the Statement
of Comprehensive Income within the Annual Financial Report. The amount
outstanding at 30 June 2023 was £561,000 (2022: £597,000). The existence of an
independent Board of Directors demonstrates that the Company is free to pursue
its own financial and operating policies and therefore the investment manager is
not considered to be a related party.
Fees payable during the year to the Directors and their interests in shares of
the Company are considered to be related party transactions and are disclosed
within the Directors' Remuneration Report within the Annual Financial Report.
7. Annual Financial Report
This Annual Financial Report announcement does not constitute the Company's
statutory accounts for the years ended 30 June 2023 and 30 June 2022 but is
derived from those accounts. Statutory accounts for the year ended 30 June 2022
have been delivered to the Registrar of Companies. The statutory accounts for
the year ended 30 June 2023 and the year ended 30 June 2022 both received an
audit report which was unqualified and did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying the report and did not include statements under Section 498 of the
Companies Act 2006 respectively. The statutory accounts for the year ended 30
June 2023 will be delivered to the Registrar of Companies shortly.
The audited Annual Financial Report for the year ended 30 June 2023 will be
posted to shareholders shortly. Copies may be obtained from the Company's
registered office at 6th Floor, Exchange Plaza, 50 Lothian Road, Edinburgh, EH3
9BY or at midwynd.com.
The Annual General Meeting of the Company will be held on Thursday, 26 October
2023.
For further information, please contact:
Company Secretary
Tel: 0131 225 7300
Artemis Fund Managers Limited
This information was brought to you by Cision http://news.cision.com
END
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