Mid Wynd International Investment Trust Plc - Half-year Report
To: PRN
From:
LEI: 549300D32517C2M3A561
Date:
Half-Yearly Financial Report (Unaudited) for the six months ended
Financial Highlights
Six months Six months ended Year ended 30 Three months
Total returns ended 31 31 December 2022 June 2023 ended 31
December 2023 December 2023^
Net asset value 6.8% 2.6% 5.6% 6.8%
per share†
Share price† 9.7% 4.0% 1.0% 6.5%
MSCI All Country 7.0% 3.3% 11.3% 6.3%
World Index (GBP)
Revenue and
dividends
Revenue earnings 4.72p 5.64p 10.01p
per share
Dividends per 3.85p 3.85p 7.80p
share*
Special dividend nil nil 1.70p
per share
Ongoing charges† 0.60% 0.60% 0.62%
As at 31 As at 31 As at
Capital December 2023 December 2022
30 June 2023
Net asset value 763.33p 703.40p 719.84p
per share
Share price 750.00p 714.00p 689.00p
Net cash† 1.7% 1.3% 2.7%
(Discount)/premium (1.7)% 1.5% (4.3)%
Source:
Lazard/Morningstar
†Alternative
Performance
Measure
^Performance under Lazard who were appointed as Investment Manager with effect
from 1 October 2023 .
*The interim dividend for the six months to 31 December 2023 will be paid on 28
March 2024 to shareholders on the register at the close of business on 8 March
2024 .
Total returns to 31 December 2023 3 years* 5 years* 10 years*
Net asset value per share† 13.3% 77.6% 204.1%
Share price† 8.6% 70.9% 204.0%
MSCI All Country World Index (GBP) 26.8% 73.9% 178.6%
Source: Lazard/Morningstar
†Alternative Performance Measure
*Total returns over 3, 5 and 10 years cover the period over which Artemis Fund
Managers Limited was the Company’s Investment Manager, from 1 May 2014 to 30
September 2023 .
Chairman’s Statement
Performance
For the six months ended
As at
Management and service provider arrangements
As announced in
The transition to the Company’s new operational state was a successful one and the Board would like to thank all parties involved, including the previous investment manager,
Lazard agreed to waive its investment management fee for the first 15 weeks from appointment, which more than offset the cost of the transition including the ensuing changes to the portfolio. The total gross cost of the implementation of the new management and administration arrangements (including portfolio re-organisation costs of 0.03%) was approximately 0.07% of the Company’s NAV as at
Portfolio re-organisation
The portfolio was extensively rebalanced immediately following Lazard’s appointment. Six holdings from the legacy portfolio were retained and 35 new ones added.
The lack of turnover of the portfolio since the reorganisation reflects Lazard’s approach and we expect portfolio turnover and brokerage commission to remain low.
Earnings and dividend
The net return for the six months to
The revenue per share of the Company in this financial year will benefit from the fee holiday which the Board secured from Lazard on its appointment, offset by additional costs associated with the change of several of our key service providers. As previously communicated, we expect the Lazard investment strategy to generate a lower level of income than that generated by the Company in recent years. After allocating a greater proportion of costs to capital to reflect the change in investment style, as explained under ‘Cost allocation’ below, we expect our revenue returns to be lower in the short term. Until such time as portfolio revenue organically grows to a point where it can, once again, fully fund the dividend, the Board intends at least to maintain the dividend, using the revenue reserve and, if required, the capital reserve, for a short period of time.
The Company has pursued a flexible dividend policy for many years. In the past two years we have separated our dividend into an ordinary and a special dividend. This was to recognise that in the last two years of management by Artemis, the underlying earnings power of our assets was boosted by a temporary shift in the portfolio to companies with higher dividend yields. Given our new Manager’s investment style, we do not expect to pay a special dividend in respect of this financial year nor in the foreseeable future.
The Company has, over many years, not fully distributed all of its income but has retained a portion of its earnings, usually at near the maximum 15% level that is compatible with maintaining investment trust status. This revenue reserve was built up to help to support the Company’s dividend policy during unforeseen events or during a transition phase to a new investment style. As a guide to assessing the length of this period of transition, to a time when dividends are matched or exceeded by revenues, we should note that our Manager’s Global Quality Growth strategy has produced annual dividend growth of 7.7% over the past five years.
Cost allocation
Part of the calculation of our revenue return involves the deduction of the costs of running the Company. A portion of these costs is allocated to the capital account and the balance is charged to the revenue account. Historically, the management fee, the company secretary and administration fee and also the cost of operating our discount control mechanism (which were previously provided by our investment manager) have been allocated between capital and revenue. This will continue to be our policy even though these services will now be provided by other key service providers.
In adopting a cost allocation policy, a company must consider how the policy best reflects its investment strategy. In 2014 we adopted a new policy of allocating 75% of certain management, administration and financing charges to capital and 25% to revenue to reflect Artemis’ investment approach. Lazard has a long track record for its global quality growth investment style and we expect that track record to be the best guide as to the balance of future returns.
A key reason for appointing Lazard as our new Manager is that we expect them to generate high long-term total returns for shareholders. The Lazard style focuses on investing in companies that retain a large proportion of their cash flows to reinvest them at high rates of return, rather than returning cash to shareholders in the form of dividends. Accordingly, we expect a higher proportion of future total returns to come from capital appreciation rather than dividends. To recognise this likely shift, the Company will allocate 90% of the costs mentioned above to capital and 10% to revenue, and the Half-Yearly Financial Report has been drawn up on this basis.
Share capital
Despite successfully weathering the market downturn suffered by many of its peers in the early 2020s, the Company’s discount widened early in 2023 and it entered a period of buybacks from this point. In order to assist with discount management, during the six months to
Given the heightened buyback activity experienced in the summer of 2023, we sought early renewal of our share buyback authority from shareholders in
Following the period end, 1,504,500 ordinary shares were bought back and are held in
Borrowings and cash
The
Board succession
As noted in the 2023 Annual Report, I will step down from the Board at the 2024 Annual General Meeting to be held in October, having served
as a Director since 2009 and as Chairman since 2020. It was further announced in
In consideration of its future composition, the Board intends to recruit a new Director in due course, the process for which will commence over the coming months.
Outlook
We seem to live in a world of the ‘dog that didn’t bark’. That phrase, used by
Interest expense can continue to rise long after interest rates have peaked. While many borrowers see their interest expense rise and fall as the level of short-term interest rates adjust many do not. Some borrowers lock in fixed interest payments over longer periods and their interest expense only rises when that debt matures and has to be refinanced. The evidence is that, during the period of ultra-low interest rates that pervaded from 2009-2022, many companies, individuals and governments did borrow for longer periods and at fixed rates of interests. This change in borrowing pattern has been particularly evident in the US and the
Mid Wynd invests in companies and not economies. The balance sheet of any company can be radically different from that of the economy in which it operates. It can sell products and/or services the demand for which remains resilient in even the toughest of economic circumstances. In selecting our investee companies our Manager looks for companies that can continue to generate high returns on invested capital even in more difficult economic climes. As long as they can continue to do so and we have not paid too much to own the shares these companies are particularly well placed to weather any coming economic storm and, over the long-term, produce good total returns for investors. Total returns from global equities have been driven by a rise in the US stockmarket and from a select band of US listed equities, known to some as ‘the magnificent seven’, and the rise in our NAV, in-line with the comparator index, since Lazard re-organised the portfolio is reassuring.
At a time of great uncertainty, the certainty of high returns on invested capital, where we can find it and buy it at a good price, is likely to be a port in a storm for investors.
Contact us
Shareholders can keep up to date with developments between formal reports by visiting midwynd.com where you will find information on the Company and a factsheet which is updated monthly.
In addition, the Board is always keen to hear from shareholders and, should you wish, you can contact me via the Company Secretary at cosec@junipartners.com.
Chairman
Investment Manager’s Review
Investment Manager’s Report
Six months ended Three months ended Three months ended
Total returns
31 December 2023 31 December 2023 30 September 2023
Net asset value per share 6.8% 6.8% 0.1%
Share price 9.7% 6.5% 3.0%
MSCI All Country World 7.0% 6.3% 0.6%
Index (GBP)
Market Review
Over the three-month period since Lazard became Investment Manager to the Company, global equities rose sharply, as investor optimism shifted amid encouraging inflation data and a changing outlook for interest rates. US stocks rallied as a sustained slowdown in inflation sparked hopes that the US Federal Reserve (‘the Fed’) would end its rate-hiking campaign and perhaps even begin cutting rates. Many investors cheered when the Fed hinted that its rate-hiking campaign had reached its conclusion and forecast that it could reduce interest rates three times in 2024. Additionally, the US economy continued to show resilience, with a revised reading of third-quarter gross domestic product (‘GDP’) coming in higher than initially anticipated at 5.2% and the country continuing to add more jobs than expected. In
Equity markets in both the developed and
developing worlds advanced, with developed markets outperforming developing markets. The US market outperformed while European equities performed in line with the broader global market. In
Investment Process
We manage the Company’s portfolio in accordance with our Global Quality Growth strategy, aiming to invest in businesses we consider to be “Compounders”. Compounders, in our view, are companies we believe will generate consistently high returns on capital and that can reinvest in their business to drive future growth. In doing so, investors can share in the economic wealth created by these businesses. The investment approach is reinforced by empirical research covering 25 years of markets and supported by Lazard’s extensive fundamental research team of 70 global sector specialists.
We believe the market undervalues Compounders because it adheres to the economic law of competition. This theory prescribes that high returns on capital attract competition, which results in an erosion of these returns towards a cost of capital. However, we see plenty of examples that show this theory may not always work. We believe Compounders have sustainable competitive advantages, and they can outperform when they can deliver consistently high financial productivity for longer than the market expects – when they “beat the fade” they can “beat the market”. These types of exceptional businesses can often be inefficiently valued by market participants, who can be focused more on near-term multiples rather than the long-term earnings power of the company. Our investment philosophy therefore encourages us to own Compounders for a long period of time, to allow the Compounding Cycle to drive cash flows and share prices higher. Over the last five years, portfolio turnover has averaged 10-15% annually – this low level of turnover also helps to ensure trading costs are at a relatively low level.
The portfolio is constructed through stock selection, based on our proprietary fundamental research. We aim to deliver a portfolio that is broadly diversified across sectors, regions and competitive advantages, in order to generate attractive total returns for investors.
Performance
Lazard was appointed Investment Manager with effect from
We proceeded to reshape the Company’s assets to align with the Lazard Global Quality Growth strategy. Our trading team aimed to transition the portfolio quickly while seeking natural liquidity, seeking to reduce market impact and not apply unnecessary pressure on share prices in either the buy direction or the sell direction. The transition of the portfolio went very smoothly, with trades 93% complete on day one and 99.7% complete by day four. Estimated trading costs were less than 0.03%, which was very pleasing to see.
The portfolio was invested in 41 names. We retained the six names that were consistent with our investment philosophy and held in our institutional strategy, and we invested in 35 new names. Broad portfolio exposures changed as a result. Between
For the fourth quarter of 2023, the Company’s NAV appreciated by 6.8% (all returns are stated in GBP). In share price terms, the Company rose by 6.5%, outperforming the MSCI All Country World Index which gained 6.3% over the same period. The Company traded at a discount over the period, ending the period at a discount of 1.7% compared with a discount of 7.2% for its
The portfolio is constructed through stock selection, based on our proprietary fundamental research. At the stock level, key contributors to absolute returns included:
-- Microsoft, US software and cloud computing provider, has seen the cloud
become a significant driver of returns, as its clients implement
cloud-based processes to improve marketing and costs. Microsoft has
reinvested into Artificial Intelligence (‘AI’) and gaming to access
emerging technologies and to expand its total addressable market.
-- S&P Global offers financial ratings, benchmarks, data, and analytics.
Services are typically critical to its clients’ underlying business –
for example, bond ratings for fixed income investment – so subscriptions
are generally renewed and the company enjoys a high degree of recurring
revenue.
-- Japan’s Toei Animation generates proprietary animation content which can
be leveraged across formats (e.g., television, film, games, toys).
Voiceovers make animation more easily portable to different regions, and
the company appears attractive as a place to work for leading animators.
-- Hexagon is a leader in measurement systems that help to improve
manufacturing efficiency. Its shares have been recovering from lows in
October 2023 following a negative research report in July of last year.
We believe the company fundamentals are sound and senior management has
embraced governance changes.
-- Partners Group is a Swiss asset manager specialising in private markets
investing. The company has restarted booking performance fees, which it
does only when it exits an investment.
Key detractors to absolute returns included:
-- Aon is a global insurance broker and consultant. Its shares fell after
the company announced plans to acquire NFP, a US-centric risk and
benefits broker, for $14.3 billion in December 2023 . We believe the
price is full but it may not account for the positives of consolidating
a fragmented market and where Aon expands its database of risk
information.
-- BRP is a Canadian manufacturer of power sports equipment such as jet
skis and snowmobiles. Its management has lowered guidance amidst
softening retail demand given macroeconomic conditions, and this put
pressure on the shares. The company operates in a duopoly, and we
believe that BRP has superior product development and distributor
relationships, which positions the company well as the economy improves.
-- Toyota Industries, the Japanese auto parts supplier, fell with the
Japanese stock market at the beginning of October. The position was sold
as the portfolio was transitioned to the new strategy. Our Global
Quality Growth strategy typically does not invest in auto makers or auto
parts suppliers as they may not generate the level of return on capital
that we prefer.
-- Shares of Verisk Analytics, a risk data and analytics provider, saw
profit taking in Q4 after a strong run through Q3, 2023.
-- Estee Lauder, the premium cosmetics brand, reported a slowdown in their
China sales. We believe the company’s competitive position remains
intact and expect margins to recover with growth in travel retail.
Our region and sector exposures are driven by stock selection. At the region and sector level, contribution in the fourth quarter was led by
Top five contributors
Contribution
Company %
Microsoft 0.72
S&P Global 0.64
Toei Animation 0.63
Hexagon 0.52
Partners Group 0.48
Bottom five detractors
Contribution
Company %
Aon (0.58)
BRP (0.17)
Toyota Industries (0.16)
Verisk Analytics (0.15)
Estee Lauder (0.13)
As of 31 December 2023 . Shows top
and bottom five stocks by
contribution since 1 October 2023 ,
the date upon which Lazard became
Investment Manager to the Company.
Regional contribution
Contribution
Region %
North America 3.62
Europe ex-UK 1.42
Japan 1.05
Emerging Markets 0.79
UK 0.17
Asia ex-Japan (0.23)
As of 31 December 2023 . Shows
contribution by region based on
country of listing since 1 October
2023 , the date upon which Lazard
became Investment Manager to the
Company.
Outlook
We expect to see continued volatility as the Fed and other central banks seek to balance the goals of maintaining financial stability and controlling inflation. We believe that Compounders have fundamental advantages that can provide resilience across different macro scenarios, and this can be important in navigating potential uncertainties in equity markets. For example, should interest rates rise, Compounders should benefit as their “economic moats” widen and they continue to generate cash flow into the future. Should inflation persist, the competitive advantages of Compounders should offer pricing power, allowing Compounders to pass through higher costs and maintain margins.
While AI has the potential to transform companies over the long-term, we are cautious that the exuberance surrounding AI has the potential to drive valuations in certain stocks to unsustainable levels in the short term. Towards the end of the 2023, this concentration of equity returns began to broaden from a smaller set of names to the wider market, presenting a better environment for quality investing should this continue.
We firmly believe that investing in the highest quality companies is the best way to deliver outperformance over the long-term.
Fund Managers
Interim Management Report and Responsibility Statement
Principal Risks and Uncertainties
Pursuant to DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, the principal risks and uncertainties faced by the Company include strategic risk, market risks, legal and regulatory risk and operational risks including reliance on third-party service providers and reliance on key personnel. External factors such as geopolitical risk also bring risk and uncertainty to the Company.
The Directors have assessed these risks and are of the opinion the nature of the risks and the way in which they are managed have not materially changed from the description provided on pages 19 to 21 of the previous Annual Financial Report for the year ended
Related Party Transactions
During the six months ended
As disclosed in the Annual Financial Report for the year ended
Going Concern
The Directors have considered the Company’s principal risks and uncertainties together with its current financial position, the liquid nature of its investments, assets and liabilities, projected revenue and expenses and the Company’s dividend policy and share buyback programme. The Directors also considered the impact on the Company of recent market volatility due to the conflicts in
Responsibility Statement of the Directors in respect of the Half-Yearly Financial Report
The Directors confirm that to the best of their knowledge, in respect of the Half-Yearly Financial Report for the six months ended
• the condensed set of financial statements has been prepared in accordance with Financial Reporting Standard (‘FRS’) 104: ‘Interim Financial Reporting’;
• the Half-Yearly Financial Report, includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of the important events that have occurred during the first six months of the financial year and their impact on the financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last Annual Financial Report that could do so.
The Half-Yearly Financial Report for the six months ended
Chairman
Condensed Statement of Comprehensive Income
For the six months For the six months
ended ended For the year ended
31 December 2023 31 December 2022 30 June 2023 (audited)
(unaudited) (unaudited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Gains on
investments - 24,097 24,097 - 8,509 8,509 - 19,123 19,123
held at
fair value
Currency - 100 100 - 427 427 - 636 636
gains
Income 3,291 - 3,291 4,894 - 4,894 8,725 - 8,725
Investment
management (69) (622) (691) (287) (862) (1,149) (575) (1,726) (2,301)
fee
Other (466) (69) (535) (306) (3) (309) (572) (8) (580)
expenses
Net return
before
finance 2,756 23,506 26,262 4,301 8,071 12,372 7,578 18,025 25,603
costs and
taxation
Finance
costs of (4) (34) (38) (56) (168) (224) (167) (506) (673)
borrowings
Net return
on ordinary
activities 2,752 23,472 26,224 4,245 7,903 12,148 7,411 17,519 24,930
before
taxation
Taxation on
ordinary (47) - (47) (535) - (535) (884) - (884)
activities
Net return
on ordinary
activities 2,705 23,472 26,177 3,710 7,903 11,613 6,527 17,519 24,046
after
taxation
Net return
per 4.72p 40.92p 45.64p 5.64p 12.01p 17.65p 10.01p 26.86p 36.87p
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.
No operations were acquired or discontinued during the period.
The net return for the period disclosed above represents the Company’s total
comprehensive income.
Condensed Statement of Financial Position
As at As at As at
31 December 2023 31 December 2022 30 June 2023 (audited)
(unaudited) (unaudited)
£’000 £’000 £’000
Non current assets
Investments held at
fair value through 412,360 460,466 438,938
profit or loss
Current assets
Debtors 543 1,254 675
Cash and cash 6,969 18,904 12,243
equivalents
7,512 20,158 12,918
Creditors
Amounts falling due (550) (13,700) (2,830)
within one year
Net current assets 6,962 6,458 10,088
Total net assets 419,322 466,924 449,026
Capital and reserves
Called up share capital 3,320 3,320 3,320
Capital redemption 16 16 16
reserve
Share premium account 242,115 242,122 242,115
Capital reserve 167,545 214,882 196,730
Revenue reserve 6,326 6,584 6,845
Shareholders’ funds 419,322 466,924 449,026
Net asset value per 763.33p 703.40p 719.84p
ordinary share
Condensed Statement of Changes in Equity
For the six months ended 31 December 2023 (unaudited)
Share Capital Capital Revenue Shareholders’
capital redemption Share premium reserve1,2 reserve2 funds
reserve
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 3,320 16 242,115 196,730 6,845 449,026
July 2023
Net return on
ordinary
activities - - - 23,472 2,705 26,177
after
taxation
Repurchase of
shares into - - - (52,657) - (52,657)
Treasury
Dividends - - - - (3,224) (3,224)
paid
Shareholders’
funds at 31 3,320 16 242,115 167,545 6,326 419,322
December 2023
For the six months ended 31 December 2022 (unaudited)
Share Capital Capital Revenue Shareholders’
capital redemption Share premium reserve1,2 reserve2 funds
reserve
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 3,271 16 235,110 206,979 7,277 452,653
July 2022
Net return on
ordinary
activities - - - 7,903 3,710 11,613
after
taxation
Issue of
shares from - - 59 1,116 - 1,175
Treasury
Repurchase of
shares into - - - (1,116) - (1,116)
Treasury
Issue of new
shares (net 49 - 6,953 - - 7,002
of costs)
Dividends - - - - (4,403) (4,403)
paid
Shareholders’
funds at 31 3,320 16 242,122 214,882 6,584 466,924
December 2022
For the year ended 30 June 2023 (audited)
Share Capital Capital Revenue Shareholders’
capital redemption Share premium reserve1,2 reserve2 funds
reserve
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 3,271 16 235,110 206,979 7,277 452,653
July 2022
Net return on
ordinary
activities - - - 17,519 6,527 24,046
after
taxation
Issue of
shares from - - 59 1,116 - 1,175
Treasury
Repurchase of
shares into - - - (28,884) - (28,884)
Treasury
Issue of new
shares (net 49 - 6,946 - - 6,995
of costs)
Dividends - - - - (6,959) (6,959)
paid
Shareholders’
funds at 30 3,320 16 242,115 196,730 6,845 449,026
June 2023
1 Capital reserve as at 31 December 2023 includes realised gains of £133,904,000
(31 December 2022 : £178,504,000; 30 June 2023 : £155,914,000).
2 The Company may pay dividends from both capital and revenue reserves.
Condensed Statement of Cash Flows
For the six months For the six months
ended ended For the year ended 30
June 2023 (unaudited)
31 December 2023 31 December 2022
(unaudited) (unaudited)
£’000 £’000 £’000
Cash generated from 1,755 3,283 5,486
operations
Interest received 113 146 286
Interest paid (39) (224) (704)
Net cash generated
from operating 1,829 3,205 5,068
activities
Cash flow from
investing activities
Purchase of (388,873) (308,156) (554,175)
investments
Sale of investments 439,638 306,740 585,162
Realised currency 98 353 28
gains
Net cash generated
from/
50,863 (1,063) 31,015
(used in) investing
activities
Cash flow from
financing activities
Issue of new shares, - 7,002 6,995
net of costs
Issue of shares from - 1,175 1,175
Treasury
Repurchase of shares (54,737) (1,116) (26,804)
into Treasury
Net drawdown/
(repayment) of - 6,982 (5,292)
credit facility
Dividends paid (3,224) (4,403) (6,959)
Net cash (used
in)/generated from (57,961) 9,640 (30,885)
financing activities
Net
(decrease)/increase (5,269) 11,782 5,198
in cash and cash
equivalents
Cash and cash
equivalents at start 12,243 7,096 7,096
of the period
(Decrease)/increase
in cash in the (5,269) 11,782 5,198
period
Currency
(losses)/gains on (5) 26 (51)
cash and cash
equivalents
Cash and cash
equivalents at end 6,969 18,904 12,243
of the period
Notes to the Half-Yearly Financial Report
1.(a) Accounting policies The financial statements have been prepared in accordance with the Company’s accounting policies as set out in the Annual Financial Report for the year ended30 June 2023 (except for the allocation of expenses between capital and revenue) and are presented in accordance with the Companies Act 2006 (the ‘Act’), FRS 104 and the requirements of the Statement of Recommended Practice ‘Financial Statements ofInvestment Trust Companies and Venture Capital Trusts’ (‘SORP’) issued by theAssociation of Investment Companies (the ‘AIC’) inJuly 2022 . The financial information contained within this Half-yearly Financial Report does not constitute statutory accounts as defined in sections 434 to 436 of the Act. The financial information for the year ended30 June 2023 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditors’ report on those accounts was not qualified and did not contain statements under sections 498(2) or (3) of the Act. The unaudited condensed financial statements for the six months ended31 December 2023 have been prepared on a going concern basis. 1.(b) Expenses All expenses are accounted for on an accruals basis. Expenses are charged through the revenue reserve except where they relate directly to the acquisition or disposal of an investment, in which case they are added to the cost of the investment or deducted from the sale proceeds, and where they are connected with the maintenance or the enhancement of the value of investments are charged to the capital reserve. From1 July 2023 , management fees, company secretarial and administration fees, the cost of operating the discount control mechanism and finance costs are allocated 90% to capital and 10% to revenue. Until30 June 2023 , these costs were allocated 75% to capital and 25% to revenue. 2. Return per share Return per share has been calculated based on the weighted average number of ordinary shares in issue for the six months ended31 December 2023 being 57,362,785 (31 December 2022 : 65,786,856;30 June 2023 : 65,211,820). 3. Dividends An interim dividend for the six months ended31 December 2023 of3.85 pence per ordinary share (31 December 2022 :3.85 pence ) has been declared. This dividend will be paid on28 March 2024 to those shareholders on the register at close of business on8 March 2024 . 4. Borrowing facilities On19 February 2021 , the Company entered into a three year agreement with The Bank of Nova Scotia (UK Branch) for aUS$60 million multi-currency revolving credit facility. Following a review, the Company terminated the agreement on11 September 2023 . 5. Fair value hierarchy All investments are designated at fair value through profit or loss on initial recognition in accordance with FRS 102. The following table provides an analysis of these investments based on the fair value hierarchy as described below which reflects the reliability and significance of the information used to measure their fair value. The disclosure is split into the following categories: Level 1 – Investments with unadjusted quoted prices in an active market; Level 2 – Investments whose fair value is based on inputs other than quoted prices that are either directly or indirectly observable; Level 3 – Investments whose fair value is based on inputs that are unobservable (i.e. for which market data is unavailable). 31 December 31 December 30 June 2023 2023 2022 £’000 £’000 £’000 (unaudited) (unaudited) (audited) Level 1 412,360 460,466 438,938 Total value of investments 412,360 460,466 438,938 6. Reconciliation of net return before finance costs and taxation to cash from operations For the six For the six For the year months ended 31 months ended 31 ended December 2023 December 2022 30 June 2023 £’000 £’000 £’000 (unaudited) (unaudited) (audited) Net return before finance costs 26,262 12,372 25,603 and taxation Gains on investments (24,097) (8,509) (19,123) Currency gains (100) (427) (636) Decrease in accrued income and 87 450 768 other debtors Interest received (113) (146) (286) (Decrease)/increase in creditors (237) 78 44 Overseas tax suffered (322) (535) (884) Corporation tax refunded 275 - - Cash generated from operations 1,755 3,283 5,486 7. Analysis of changes in net cash At 30 June Cashflow Exchange At 31 December 2023 movements 2023 £’000 £’000 £’000 £’000 (audited) (unaudited) (unaudited) (unaudited) Cash and cash 12,243 (5,374) 100 6,969 equivalents Total 12,243 (5,374) 100 6,969 8. Share capital In the six months ended31 December 2023 , 7,445,136 ordinary shares were purchased intoTreasury at a total cost of £52,657,000 (six months ended31 December 2022 : 163,200 ordinary shares at a total cost of £1,116,000 and year ended30 June 2023 : 4,002,662 ordinary shares at a total cost of £28,884,000). In the six months ended31 December 2023 , no ordinary shares were sold fromTreasury (six months ended31 December 2022 and year ended30 June 2023 : 163,200 ordinary shares were sold fromTreasury with net proceeds of £1,175,000). In the six months ended31 December 2023 , no new ordinary shares were allotted (six months ended31 December 2022 and year ended30 June 2023 : 970,000 new ordinary shares were allotted with net proceeds of £6,995,000). As at31 December 2023 , 11,447,798 ordinary shares were held inTreasury (31 December 2022 : nil;30 June 2023 : 4,002,662). 9. Net asset value per ordinary share The calculation of the net asset value per ordinary share is based on the following: 31 December 31 December 30 June 2022 2023 2023 (unaudited) (unaudited) (audited) Shareholders’ funds 419,322 466,924 449,026 (£’000) Number of ordinary shares in issue at 54,933,316 66,381,114 62,378,452 period end Net asset value per 763.33p 703.40p 719.84p ordinary share 10. Related party transactions The Directors are considered to be related parties. No Director has an interest in any transactions which are, or were, unusual in their nature or significant to the nature of the Company. The Directors receive fees for their services. During the six months ended31 December 2023 , £82,000 was paid to Directors (six months ended31 December 2022 : £75,000 and year ended30 June 2023 : £149,000) of which £nil was outstanding at the period end (31 December 2022 : outstanding £nil;30 June 2023 : outstanding £nil). 11. Transactions with the Investment Manager The investment management fee payable toArtemis Fund Managers Limited for the three months ended30 September 2023 was £525,000 (six months ended31 December 2022 : £1,149,000 and year ended30 June 2023 : £2,301,000) of which £nil was outstanding at the period end (31 December 2022 : £573,000;30 June 2023 : £561,000).Lazard Asset Management Limited was appointed as Investment Manager with effect from1 October 2023 . As part of the Investment Management Agreement, Lazard agreed to waive the management fee for the first 15 weeks from appointment, and fees due to Lazard will start to accrue with effect from13 January 2024 . The 15 week management fee waived is being amortised over six months from1 October 2023 , being the minimum notice period that the Company is required to provide to Lazard. 12. Post Balance Sheet Events Following the period end and up to27 February 2024 , 1,504,500 ordinary shares were bought back to be held inTreasury at a total cost of £11,453,000. 13. Status of this report These are not full statutory accounts for the purposes of Section 434 of the Companies Act 2006 and are unaudited. Statutory accounts for the year ended30 June 2023 , which received an unqualified audit report and which did not contain a statement under Section 498 of the Companies Act 2006, have been lodged with the Registrar of Companies. No full statutory accounts in respect of any period after30 June 2023 have been reported on by the Company’s auditors or delivered to the Registrar of Companies. A copy of the Half-Yearly Financial Report will be sent to shareholders and is available on the Company’s website at midwynd.com. Shareholders are encouraged to visit the website for further information on the Company. For further information please contact:Juniper Partners Limited Company Secretary email: cosec@junipartners.com29 February 2024
