Manchester & London Investment Trust Plc - Half-year Report
(the “Company”)
The Company today announces its Half-yearly Report for the six months ended
Summary of Results
At
At
31 July Change
31 January 2024
2023
Net assets attributable to Shareholders (£’000) 272,871 221,379 23.3%
Net asset value (“NAV”) per Ordinary Share 678.90 550.79 23.3%
(pence)
Six months
to 31 January 2024
Total return to Shareholders* 24.9%
Benchmark - MSCI UK Investable Market Index (MXGBIM)* 1.5%
* Total NAV return including dividends reinvested, as sourced from Bloomberg.
Six months to Six months to
Change
31 January 2024 31 January 2023
Interim dividend per Ordinary Share 7.00 7.00 0.0%
(pence)
Dates for the interim dividend
Ex-dividend date11 April 2024 Record date12 April 2024 Payment date7 May 2024
CHAIRMAN’S STATEMENT
Results for the half year ended
The Global Technology sector has continued to rally on Ai excitement, the hope that inflation is in retreat and the perception the US may pull off a rare soft landing for its economy. It is becoming ever more evident that corporate digitalisation and automation of the labour force command increasing significance, and the Manager’s three favourite secular growth themes of Cloud Computing, Artificial Intelligence and Semiconductor Use gather further momentum. The academic studies undertaken by Mark and Richard into Artificial Intelligence over the last three years look prescient in the context of markets today. The Manager’s Report sets out the performance of the portfolio in more detail including stock specific contributions to this performance but a total return on Net Asset value per Share of 24.9 per cent is a great result for Shareholders.
In summary, the portfolio remains focused on larger capitalisation, liquid, listed stocks with profitable and cash generative business models that are aligned with some of the most exciting forward-looking themes of the day. The Company exited the period with a Portfolio Net Delta Adjusted Equity Exposure (including Options) of 107 per cent which effectively means the Company had portfolio exposure gearing of around 7 per cent of Net Assets.
The Board
There have been no changes to the Board during the period. Biographical details of all the directors can be found in the latest AGM notice and the latest Annual Report.
Dividends
With these results, we have announced an ordinary interim dividend of
Discount & Share Buy-Backs
The Board monitors the discount at which the Company’s shares trade in relation to the underlying NAV per Share.
The discount has narrowed over the period in line with similar sector invested funds also listed on the
It should be noted that the average discount for the Company for the last 5 years sits at ~10.8 per cent (Source: Bloomberg) which, considering the free float of the Company is less than £150m, could be argued as ‘in line’ with expectations (if not ideal). The number of shares now in treasury is 335,220 representing ~1 per cent of the issued share capital.
Auditor
Outlook & Risks
The world has continued to splinter into Sino and US spheres with a corresponding re-gauging of supply chains, and inflation continues to print above the required
The investment portfolio is diversified by geography which reduces risk but is focused on the US technology sector and has a high proportion of US Dollar investments. The concentration of investment in the two largest holdings is material and all shareholders should consider whether they are comfortable with this concentration risk when deciding whether to continue to invest in the Company.
The key variables for our second half performance are likely to be movements in the US sovereign yield curve and inflation expectations, the price of hydrocarbons and energy, how the
Please do not forget to consider the fund for this year’s ISA allowance.
Chairman
MANAGER'S REPORT
Portfolio management
During the half year under review, the NAV per Share total return was 24.9 per cent , compared to an increase in the benchmark of 1.5 per cent. The NASDAQ-100 Technology Sector Index (“NDXT”), to which some of the portfolio is exposed, had a total return of 15.7 per cent in GBP .
The
total return of the portfolio by sector
holdings in local currency (excluding costs and foreign exchange) is shown below.
Total return of underlying sector holdings in local currency (excluding 2024 costs and foreign exchange) Information Technology 24.6% Communication Services 0.4% Consumer Discretionary 0.1% Other investments (including funds, ETFs and hedges) (0.5%) Foreign Exchange, operating costs & financing 0.3% Total NAV per Share return 24.9%
It should be noted that the data and views in this report are now dated and potentially stale. A more up to date analysis of our portfolio can be found in our Fund Factsheets: https://mlcapman.com/manchester-london-investment-trust-plc/ and more current views can be found in our Tweets ( https://twitter.com/MLCapMan ) & Newsletters ( https://mlcapman.com/ ).
The 1.0 per cent decrease in the value of Sterling against the US Dollar over the period was a small tailwind for performance due to the significant level of US Dollar exposure in the portfolio. Overall, we estimate the increase in portfolio performance from Foreign Exchange movements was roughly +0.9 per cent.
Information Technology
Material positive contributors to the portfolio’s performance from this sector were Nvidia Corp, Microsoft Corp, Advanced Micro Devices Inc, Arista Networks Inc, Cadence Design Systems Inc, ASML Holding NV and Synopsys Inc. Of these, Nvidia Corp and Microsoft Corp , which are the fund’s largest holdings, delivered roughly half of the sector’s total return. This performance validates our strategy of shifting from “Soft Technology” to “Hard Technology” as articulated in the Annual Report, factsheets and newsletters over the last 12 months. There will come a time, if interest rates fall more sharply, when short duration assets will be the alpha generator of choice. We would guess that such a shift will not occur in calendar H1 2024.
There were no material negative contributors.
The portfolio’s weighting to this sector (including options on a MTM basis) at the period end was 105.2 per cent of net assets, up from 97.3 per cent at the end of the previous financial year.
Outlook
We see the Cloud Computing market progressing through the ongoing, short-term optimisation and consolidation period towards secular growth. We estimate a doubling in the size of the market over the next decade as “On Premise” cannot compete with the enhanced security, lower costs and deeper functionality offered by the Cloud. Most importantly, it has become clear that in order to extract value from your data using tools such as Ai you need the data managed and on the Cloud.
Longer term, we see Artificial Intelligence ("Ai") being a material positive driver for the Cloud and Semiconductor markets. It is easy to focus on the growth in GPUs from Ai but please note networking, security and compute all benefit too. To be explicit, we are still taking the “picks and shovels” route to capture the gains from the growth of Ai. The semiconductor market will likely be resurgent during 2024 and, longer term, we see the secular growth in Electric Vehicles, Artificial Intelligence, Cloud Computing, IoT, Digitalisation and Automation driving the Semiconductor market to double over the next decade.
High Impact Risk events
The Great Hack : We lose sleep imagining a cyber breach of one of the hyper-scalers causing a loss of faith in the industry and punitive regulation. In such an event, we would suggest looking to the counter-factual of whether the situation would have been even worse if the data had been stored “On Premises”.
Concentration Risk : The portfolio is now materially concentrated in just 2 holdings; it is also highly concentrated in the Information Technology sector. The fund has a high Active Share Ratio and it is very likely that our performance will vary markedly from all of the better known technology index performances. Should either Nvidia or Microsoft have materially adverse events, or the monetisation of Ai by the sector in general be slower than expected, then the fund will suffer material losses. Humans have a tendency to want everything now! Shareholders should consider if this totality of risk fits with their risk profile. The consensus solution to concentration risk is diversification but so often when one does diversify, one has to diversify into lower quality holdings.
Communication Services
There were no contributors which had an attribution of -/+1% for the portfolio from this sector.
The portfolio’s weighting to this sector (including options on a MTM basis) at the period end was 4.5 per cent of net assets, down from 5.1 per cent at the end of the previous financial year.
The only holding in this sector is Alphabet Inc. which we joke is our “Value investment” holding. Like all Value investments, Alphabet has issues (Search being disrupted by LLM Ai, weak management, over-woke corporate ethos, vanity other-Bets projects, inefficient cost structures, ineffectiveness to move R&D to commercial application) that we have written extensively about in Tweets and Newsletters. However, if Alphabet took some simple logical steps forward the valuation has material upside potential.
Consumer Discretionary
There were no contributors which had an attribution of -/+1% for the portfolio from this sector.
The portfolio’s weighting to this sector (including options on a MTM basis) at the period end was 0.0 per cent of net assets, down from 0.3 per cent at the end of the previous financial year.
Our single holding in the sector was
LVMH SE
which we felt had derated too extensively during 2023.
We sold our holding in
Amazon Inc.
which we see as two businesses: one being an excellent cloud computing business that is nonetheless being out-competed by Microsoft; and a low margin e-commerce business that could become highly unionised and out-competed by new Chinese entrants to its market.
Other investments including hedges
There were no contributors which had an attribution of -/+1% for the portfolio from these holdings.
The portfolio’s weighting to this sector (including options on a MTM basis) at the period end was 2.6 per cent of net assets (please note this includes 2.2 per cent of net assets held in a US money market ETF which effectively operates as a cash alternative rather than an equity exposure). This sector weighting is down from 7.0 per cent at the end of the previous financial year.
During the period, we paired traded one semiconductor stock (Long position) against another semiconductor stock (as a Short position) based on valuation differences. You may see our hedge positions increase and similar positions becoming more common if we see the market rise further and faster.
Current Focus of Investment Process
We use a Data Framework to select the stock universe from which we select specific stock candidates for the portfolio.
From this stock universe, we select stocks whilst keeping the following attributes in mind:
1. Exposure to “Hard Technology” (high IP, mission critical, recurring, low
churn) rather than “Soft Technology” (social media, easily created apps
such as food delivery);
2. Exposure to the Ai revolution within the Information Technology sphere as
an Enabler rather than just a Beneficiary (pseudo-Ai exposure);
3. The Management Teams of holdings should be undertaking pragmatic cost
cutting or productivity drives;
4. Cash flow per Share and Earnings per Share metrics are considered more
important than Sales Growth;
5. Once Cash Flow is earned then it should be invested wisely in one of: high
ROIC investment, buy backs or dividends (or divesting non-core, capital
hungry activities);
6. Manageable exposure to a China /Taiwan “hot war”; and
7. Realistic Stock Based Compensation schemes.
We have noticed a divergence across the Information Technology sector in the way companies are forecasting their future Ai opportunities. Some companies are offering very optimistic prognostications which is reminiscent of the daft additions of the postfix “.com” in the 2000’s. We would suggest that Investors view this as a Red Flag. The true enablers of Ai will be pragmatic and patient and view themselves as Era-long winners from Ai. Many software companies will be disrupted by Ai, making investing in Technology a dangerous landscape to navigate.
Economy, Market & Technology
The US economy remains robust which is unsurprising considering its make-up is driven by consumption and the latter has a high correlation to high employment and wage growth.
We have consistently said that US Interest Rates will have to be ‘Higher for Longer’ and Technology shares hate surprise increases in discount rates.
To be specific, our portfolio has a strong negative correlation to surprise increases in 10-year
When/if interest rates do come down there may be a wave of funds that exit Money Market Funds and look for a new home in Equities which could drive Equity markets materially higher.
General IT spending is likely to pick up through 2024 as companies focus on optimisation and automation. Spending is being prioritised into Ai, Cloud, Digitalisation and Security and these are the areas we have refocused our “Hard Technology” portfolio on. Spending will likely focus on platforms that can offer a wide spectrum of services including the management of your data. The era of the networked desktop has moved to the data centre connected end point and this means that those with the scale and resources to invest will win. For the minnows, we have further bad news, which is that in a few further years we may start to see Quantum Computing applications become more prevalent and these will require even greater scale.
We have entered the Era of Ai. We believe that we still have a long way to travel down this road and that those that bank quick profits now will rue the day they did so. We are Era-long investors, and our portfolio is firmly focused on Ai Enablers not “.ai show-boaters”. Having said that, we have sold down one holding post the period end that we felt had become overvalued on Ai hype. We will be pragmatic.
The Inflation Reduction Act & CHIPS Act have changed the geopolitical landscape of trade.
Relations with
The regulation and statis of the
We have no idea what the future holds but we believe that since 1771 there has been a glacial shift in the utility as economic units from Man to the Machine. Those that have backed the technological advancement of the Machine over this period have quite commonly made excess investment returns. We believe that Ai is, in part, just an extension of software, albeit with non-sequential processing and non-deterministic outcomes. Hence, we feel that expecting the Era of Ai to develop along the same rough path as the Era of Software is not irrational and offers investors some comfort and guidance. The next decade could be one of the most interesting eras for technology investing ever.
Please:
Visit our website: https://mlcapman.com/about/
Follow our Tweets at: https://twitter.com/MLCapMan
Read our previous articles at: https://www.linkedin.com/company/m-&-l-capitalmanagement-ltd/
Long the Future.
@MLCapMan
Equity Exposures AND PORTFOLIO SECTOR ANALYSIS
Equity exposures (longs)
As at
______________________________________________________________________________ | | |Exposure| | |Company |Sector* | |% of net assets| | | |£’000 | | |______________________________|______________________|________|_______________| |Microsoft Corporation** |Information Technology|79,685 |29.2 | |______________________________|______________________|________|_______________| |NVIDIA Corporation** |Information Technology|60,387 |22.1 | |______________________________|______________________|________|_______________| |Advanced Micro Devices Inc |Information Technology|26,339 |9.7 | |______________________________|______________________|________|_______________| |ASML Holding NV** |Information Technology|23,012 |8.4 | |______________________________|______________________|________|_______________| |Cadence Design Systems Inc |Information Technology|20,683 |7.6 | |______________________________|______________________|________|_______________| |Synopsys Inc |Information Technology|18,661 |6.8 | |______________________________|______________________|________|_______________| |Arista Networks Inc |Information Technology|15,968 |5.9 | |______________________________|______________________|________|_______________| |Alphabet Inc** |Communication services|12,384 |4.5 | |______________________________|______________________|________|_______________| |ANSYS Inc** |Information Technology|10,563 |3.9 | |______________________________|______________________|________|_______________| |Oracle Corporation |Information Technology|8,053 |3.0 | |______________________________|______________________|________|_______________| |Micron Technology Inc |Information Technology|5,792 |2.1 | |______________________________|______________________|________|_______________| |Broadcom Inc |Information Technology|5,607 |2.1 | |______________________________|______________________|________|_______________| |Intuitive Surgical Inc |Health Care |5,258 |1.9 | |______________________________|______________________|________|_______________| |Motorola Solutions Inc |Information Technology|3,488 |1.3 | |______________________________|______________________|________|_______________| |Applied Materials Inc** |Information Technology|3,006 |1.1 | |______________________________|______________________|________|_______________| |Cisco Systems Inc |Information Technology|2,286 |0.8 | |______________________________|______________________|________|_______________| |Rambus Inc** |Information Technology|1,991 |0.7 | |______________________________|______________________|________|_______________| |Polar Capital Technology Trust|Fund |1,903 |0.7 | |Plc | | | | |______________________________|______________________|________|_______________| |Super Micro Computer Inc |Information Technology|1,040 |0.4 | |______________________________|______________________|________|_______________| |Jenoptik AG |Information Technology|632 |0.2 | |______________________________|______________________|________|_______________| |Dell Technologies Inc |Information Technology|91 |0.0 | |______________________________|______________________|________|_______________| |Total Long Equity exposure | |306,829 |112.4 | |______________________________|______________________|________|_______________| |Other net assets and | |(33,958)|(12.4) | |liabilities*** | | | | |______________________________|______________________|________|_______________| |Net assets | |272,871 |100.0 | |______________________________|______________________|________|_______________|
* GICS – Global Industry Classification Standard.
** Including equity swap exposures.
***Includes Short Equity exposures and Options valued at marked to market.
Exposure is related to Delta Adjusted Exposure (Glossary).
Interim Management Report
The important events that have occurred during the period under review and the key factors influencing the financial statements are set out in the Chairman’s Statement and the Manager’s Report.
The principal risks facing the Company are substantially unchanged since the date of the latest Annual Report and Financial Statements and continue to be as set out in the Strategic Report and note 16 of that report. Risks faced by the Company include, but are not limited to, investment performance risk; key man risk and reputational risk; fund valuation risk; risk associated with engagement of third-party service providers; regulatory risk; fiduciary risk; fraud risk; market risk; interest rate risk; liquidity risk; currency rate risk; and credit and counterparty risk. Details of the Company’s management of these risks are set out in the Annual Report and Financial Statements.
DIRECTORS’ REPORT
Going Concern
As detailed in the notes to the financial statements and in the Annual Report for the year ended
Related Party Transactions
In accordance with DTR 4.2.8R there have been no new related party transaction agreements during the six-month period to
Statement of Directors’ Responsibilities
The Directors confirm that to the best of their knowledge:
• the condensed set of financial statements has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting; and gives a true and fair view of the assets, liabilities, financial position and return of the Company; and
• this Half-Yearly 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 important events that have occurred during the first six months of the financial year and their impact on the condensed set of 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 Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so.
This Half-Yearly Report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by:
Chairman
13 March 2024
Condensed Statement of Comprehensive Income
For the six months ended
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31 January 2024 31 January 2023 31 July 2023
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Gains /
(losses) on
investments
at fair 155 54,995 55,150 110 (20,870) (20,760) 296 29,284 29,580
value
through
profit or
loss
Investment 526 - 526 232 - 232 575 - 575
income
Interest 659 - 659 1,049 - 1,049 1,754 - 1,754
income
Gross 1,340 54,995 56,335 1,391 (20,870) (19,479) 2,625 29,284 31,909
return
Expenses
Management (327) - (327) (250) - (250) (532) - (532)
fee
Other
operating (270) - (270) (245) - (245) (499) - (499)
expenses
Total (597) - (597) (495) - (495) (1,031) - (1,031)
expenses
Return
before
finance 743 54,995 55,738 896 (20,870) (19,974) 1,594 29,284 30,878
costs and
taxation
Finance (36) (1,319) (1,355) (15) (922) (937) (38) (2,009) (2,047)
costs
Return on
ordinary 707 53,676 54,383 881 (21,792) (20,911) 1,556 27,275 28,831
activities
before tax
Taxation (77) - (77) (29) - (29) (77) - (77)
Return on
ordinary 630 53,676 54,306 852 (21,792) (20,940) 1,479 27,275 28,754
activities
after tax
Return per
Share:
Basic and 1.57 133.54 135.11 2.12 (54.12) (52.00) 3.67 67.78 71.45
fully
diluted
(pence)
The total column of this statement represents the Condensed Statement of Comprehensive Income, prepared in accordance with international accounting standards in conformity with the requirements of
All items in the above statement are derived from continuing operations. No operations were acquired or discontinued during the period.
There is no other comprehensive income, and therefore the return for the period after tax is also the total comprehensive income.
The notes form part of these financial statements.
Condensed Statement of Changes in Equity
For the six months ended
For the six months Share Share Capital Retained
from 1 August 2023 Special reserve* Total
to capital premium reserve* earnings*
£’000 £’000
31 January 2024 £’000 £’000 £’000 £’000
(unaudited)
Balance at 1 August 10,132 25,888 94,338 91,021 - 221,379
2023
Ordinary shares
bought back and held - - - - - -
in treasury
Total comprehensive - - - 53,676 630 54,306
income
Dividends paid - - (2,184) - (630) (2,814)
Balance at 31 10,132 25,888 92,154 144,697 - 272,871
January 2024
For the six months Share Share Capital Retained
from 1 August 2022 Special reserve* Total
to capital premium reserve* earnings*
£’000 £’000
31 January 2023 £’000 £’000 £’000 £’000
(unaudited)
Balance at 1 August 10,132 25,888 98,780 63,746 - 198,546
2022
Ordinary shares
bought back and - - - - - -
held in treasury
Total comprehensive - - - (21,792) 852 (20,940)
income/(loss)
Dividends paid - - (1,967) - (852) (2,819)
Balance at 31 10,132 25,888 96,813 41,954 - 174,787
January 2023
For the year from 1 Share Share Capital Retained
August 2022 to Special reserve* Total
capital premium reserve* earnings*
31 July 2023 £’000 £’000
(audited) £’000 £’000 £’000 £’000
Balance at 1 August 10,132 25,888 98,780 63,746 - 198,546
2022
Ordinary shares
bought back and held - - (289) - - (289)
in treasury
Total comprehensive - - - 27,275 1,479 28,754
income
Dividends paid - - (4,153) - (1,479) (5,632)
Balance at 31 July 10,132 25,888 94,338 91,021 - 221,379
2023
*
These reserves are distributable, excluding any unrealised capital reserve. The balance of the unrealised capital reserve at
The notes form part of these financial statements.
Condensed Statement of Financial Position
As at
(Unaudited) (Unaudited) (Audited)
31 January 31 January 31 July
Notes
2024 2023 2023
£’000 £’000 £’000
Non-current assets
Investments held at fair value through 244,388 124,849 188,264
profit and loss
Current assets
Unrealised derivative assets 11,894 1,237 5,680
Trade and other receivables 124 237 147
Cash and cash equivalents 6,711 36,021 17,049
Cash collateral receivable from brokers 13,755 17,346 12,186
32,484 54,841 35,062
Creditors – amounts falling due within
one year
Unrealised derivative liabilities (1,858) (3,840) (1,411)
Trade and other payables (274) (1,063) (277)
Cash collateral payable to brokers (1,869) - (259)
(4,001) (4,903) (1,947)
Net current assets/(liabilities) 28,483 49,938 33,115
Net assets 272,871 174,787 221,379
Equity attributable to equity holders
Ordinary Share capital 10,132 10,132 10,132
Share premium 25,888 25,888 25,888
Special reserves 92,154 96,813 94,338
Capital reserves 144,697 41,954 91,021
Retained earnings - - -
Total equity Shareholders’ funds 272,871 174,787 221,379
Net asset value per Ordinary Share – 678.90 434.04 550.79
basic and diluted (pence)
Number of shares in issue excluding 3 40,193,018 40,270,055 40,193,018
Treasury
The notes form part of these financial statements.
Condensed Statement of Cash Flows
For the six months ended
Six months to Six months to Year ended
31 January 31 January 31 July
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
£’000 £’000 £’000
Cash flow from operating activities
Return on operating activities before tax 54,383 (20,911) 28,831
Interest expense 1,355 937 2,047
Losses on investments held at fair value (54,753) 22,776 (27,810)
through profit or loss
(Increase)/decrease in receivables 23 (208) (116)
(Decrease)/increase in payables (32) (16) 26
Exchange gains on currency balances (240) (1,902) (1,473)
Tax (77) (29) (77)
Net cash generated/(used in) from 659 647 1,428
operating activities
Cash flow from investing activities
Purchase of investments (45,084) (70,222) (116,934)
Sale of investments 33,376 49,012 73,120
Derivative instrument cashflows 4,611 9,556 17,023
Net cash (used)/generated in investing (7,097) (11,654) (26,791)
activities
Cash flow from financing activities
Ordinary shares bought back and held in - - (289)
treasury
Equity dividends paid (2,814) (2,819) (5,632)
Interest paid (1,326) (895) (1,980)
Net cash (used)/generated in financing (4,140) (3,714) (7,901)
activities
Net (decrease)/ increase in cash and cash (10,578) (14,721) (33,264)
equivalents
Exchange gains on currency balances 240 1,902 1,473
Cash and cash equivalents at the 17,049 48,840 48,840
beginning of the period
Cash and cash equivalents at the end of 6,711 36,021 17,049
the period
The notes form part of these financial statements.
Notes to the Condensed Financial Statements
1. Significant accounting policies
Basis of preparation
The condensed financial statements of the Company have been prepared in accordance with international accounting standards, International Accounting Standard 34 “Interim Financial Reporting”, in conformity with the requirements of the Companies Act 2006.
In the current period, the Company has applied amendments to IFRS.
These include annual improvements to IFRS, changes in standards, legislative and regulatory amendments, changes in disclosure and presentation requirements.
The adoption of these has not had any material impact on these financial statements and the accounting policies used by the Company followed in these half-year financial statements are consistent with the most recent Annual Report for the year ended
Going concern
The financial statements have been prepared on a going concern basis and on the basis that approval as an investment trust company will continue to be met.
The Directors have made an assessment of the Company’s ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in business for the foreseeable future, being a period of at least 12 months from the date these financial statements were approved.
In making the assessment, the Directors have considered the likely impacts of international and economic uncertainties on the Company, operations and the investment portfolio.
These include, but are not limited to, the war in
The Directors noted that the cash balance exceeds any short-term liabilities, the Company holds a portfolio of liquid listed investments and is able to meet the obligations of the Company as they fall due. The current cash enables the Company to meet any funding requirements and finance future additional investments. The Company is a closed end fund, where assets are not required to be liquidated to meet day to day redemptions.
The Directors have completed stress tests assessing the impact of changes in market value and income with associated cash flows. In making this assessment, they have considered severe but plausible downside scenarios. These tests apply equally to any set of circumstances in which asset value and income are significantly impaired. The conclusion was that in a plausible downside scenario the Company could continue to meet its liabilities. Whilst the economic future is uncertain, and the Directors believe that it is possible the Company could experience further reductions in income and/or market value, and changes in expenses, the opinion of the Directors is that this should not be to a level which would threaten the Company’s ability to continue as a going concern.
The Directors also regularly assess the resilience of key third party service providers, most notably the Manager and Fund Administrator. The Directors do not have any concerns about the financial viability of the Company’s third party service providers. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Company’s ability to continue as a going concern, having taken into account the liquidity of the Company’s investment portfolio and the Company’s financial position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance). Therefore, the financial statements have been prepared on the going concern basis.
Comparative information
The financial information contained in this Half-Yearly Report does not constitute statutory accounts as defined by the Companies Act 2006.
The financial information for the periods ended
The comparative figures for the year ended
1. Return per Ordinary Share
Returns per Ordinary Share are based on the weighted average number of Shares in issue during the period. Normal and diluted return per Share are the same as there are no dilutive elements of share capital.
Six months to Six months to Year ended
31 January 2024 31 January 2023 31 July 2023
(unaudited) (unaudited) (audited)
Net Net Net
Per Share Per Share Per Share
return return Return
Pence Pence Pence
£’000 £’000 £’000
Return on ordinary
activities after tax
Revenue 630 1.57 852 2.12 1,479 3.67
Capital 53,676 133.54 (21,792) (54.12) 27,275 67.78
Total return on ordinary 54,306 135.11 (20,940) (52.00) 28,754 71.45
activities
Weighted average number of 40,193,018 40,270,055 40,242,768
Ordinary Shares
1. Share capital
Six months to Six months to Year ended
31 January 31 January 31 July
2024 2023 2023
(unaudited) (unaudited) (audited)
25p Ordinary Shares Number £’000 Number £’000 Number £’000
Opening Ordinary Shares in 40,528,238 10,132 40,528,238 10,132 40,528,238 10,132
issue
Shares issued - - - - - -
Closing Ordinary Shares in 40,528,238 10,132 40,528,238 10,132 40,528,238 10,132
issue
Treasury shares:
Balance at beginning of 335,220 258,183 258,183
the period/year
Buyback of Ordinary shares - - 77,037
into treasury
Balance at end of 335,220 258,183 335,220
period/year
Total Ordinary Share
capital excluding treasury 40,193,018 40,270,055 40,193,018
shares
The Company’s Share capital comprises Ordinary Shares of 25p each with one vote per Share.
During the period no
Ordinary Shares were issued (six months to
During the period no
Ordinary Shares were bought back and placed in treasury (six months to
1. Dividends per Ordinary Share
The Board has declared an interim dividend of 7p per Ordinary Share (2023: interim dividend of 7p per Ordinary Share) which will be paid on
This dividend has not been included as a liability in these financial statements.
1. Net asset value per Ordinary Share
Net asset value per Ordinary Share is based on net assets of £272,871,000 (
1. Fair value hierarchy
The Company measures fair values using the following hierarchy that reflects the significance of the inputs used in making the measurements.
The fair value is the amount at which the asset could be sold in an ordinary transaction between market participants, at the measurement date, other than a forced or liquidation sale.
The Company measures fair values using the following hierarchy that reflects the significance of the inputs used in making the measurements. Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows:
-- Level 1 – valued using quoted prices, unadjusted in active markets for
identical assets and liabilities.
-- Level 2 – valued by reference to valuation techniques using observable
inputs for the asset or liability other than quoted prices included in
Level 1.
-- Level 3 – valued by reference to valuation techniques using inputs that
are not based on observable market data for the asset or liability.
The tables below set out fair value measurement of financial instruments, by the level in the fair value hierarchy into which the fair value measurement is categorised.
Financial assets/liabilities at fair value through profit or loss at
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments 244,388 - - 244,388
Unrealised derivatives assets - 11,894 - 11,894
Unrealised derivative liability - (1,858) - (1,858)
Total 244,388 10,036 - 254,424
Financial assets/liabilities at fair value through profit or loss at
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments 124,849 - - 124,849
Unrealised derivatives assets - 1,237 - 1,237
Unrealised derivative liability - (3,840) - (3,840)
Total 124,849 (2,603) - 122,246
Financial assets/liabilities at fair value through profit or loss at
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments 188,264 - - 188,264
Unrealised derivatives assets - 5,680 - 5,680
Unrealised derivative liability - (1,411) - (1,411)
Total 188,264 4,269 - 192,533
1. Transactions with the Manager and related parties
During the six months to
Total fees charged by the Manager for the six months to
The fees payable to Directors are set out in the 2023 Annual Report.
There were no other related party transactions in the period.
1. Post Statement of Financial Position event
There were no other significant events since the end of the reporting period.
1. Glossary
Reference should be made to the Glossary in our Annual Report for the year ended
Investment Objective
The investment objective of the Company is to achieve capital appreciation.
Investment Policy
Asset allocation
The Company’s investment objective is sought to be achieved through a policy of actively investing in a diversified portfolio, comprising any of global equities and/or fixed interest securities and/or derivatives.
The Company may invest in derivatives, money market instruments, currency instruments, contracts for differences (“CFDs”), futures, forwards and options for the purposes of (i) holding investments and (ii) hedging positions against movements in, for example, equity markets, currencies and interest rates.
The Company seeks investment exposure to companies whose shares are listed, quoted or admitted to trading. However, it may invest up to 10% of gross assets (at the time of investment) in the equities and/or fixed interest securities of companies whose shares are not listed, quoted or admitted to trading.
Risk diversification
The Company intends to maintain a diversified portfolio and it is expected that the portfolio will have between approximately 20 to 100 holdings. No single holding will represent more than 20% of gross assets at the time of investment. In addition, the Company’s five largest holdings (by value) will not exceed (at the time of investment) more than 75% of gross assets.
Although there are no restrictions on the constituents of the Company’s portfolio by geography, industry sector or asset class, it is intended that the Company will hold investments across a number of geographies and industry sectors. During periods in which changes in economic, political or market conditions or other factors so warrant, the Manager may reduce the Company’s exposure to one or more asset classes and increase the Company’s position in cash and/or money market instruments.
The Company will not invest more than 15% of its total assets in other listed closed-ended investment funds. However, the Company may invest up to 50% of gross assets (at the time of investment) in an investment company subsidiary, subject always to the other restrictions set out in this investment policy and the Listing Rules.
Gearing
The Company may borrow to gear the Company’s returns when the Manager believes it is in Shareholders’ interests to do so. The Company’s Articles of Association (“Articles”) restrict the level of borrowings that the Company may incur up to a sum equal to two times the net asset value of the Company as shown by the then latest audited balance sheet of the Company.
The effect of gearing may be achieved without borrowing by investing in a range of different types of investments including derivatives. Save with the approval of Shareholders, the Company will not enter into any investments which have the effect of increasing the Company’s net gearing beyond the limit on borrowings stated in the Articles.
General
In addition to the above, the Company will observe the investment restrictions imposed from time to time by the Listing Rules which are applicable to investment companies with shares listed on the Official List of the
No material change will be made to the investment policy without the approval of Shareholders by ordinary resolution.
In the event of any breach of the investment restrictions applicable to the Company, Shareholders will be informed of the remedial actions to be taken by the Board and the Manager by an announcement issued through a regulatory information service approved by the
Investment Strategy and Style
The fund’s portfolio is constructed with flexibility but is primarily focused on stocks that exhibit the attributes of growth.
Target Benchmark
The Company was originally set up by
Investments for the portfolio are not selected from constituents of this index and hence the investment remit is in no way constrained by the index, although the Manager’s management fee is varied depending on performance against the benchmark. It is suggested that Shareholders review the Company’s Active Share Ratio that is on the fund factsheets as this illustrates to what degree the holdings in the portfolio vary from the underlying benchmark.
Environmental, Social, Community and Governance
The Company considers that it does not fall within the scope of the Modern Slavery Act 2015 and it is not, therefore, obliged to make a slavery and human trafficking statement. In any event, the Company considers its supply chains to be of low risk as its suppliers are typically professional advisers.
In its oversight of the Manager and the Company’s other service providers, the Board seeks assurances that they have regard to the benefits of diversity and promote these within their respective organisations.
The Company has given discretionary voting powers to the Manager.
The Manager votes against resolutions they consider may damage Shareholders’ rights or economic interests and report their actions to the Board.
The Company believes it is in the Shareholders’ interests to consider environmental, social, community and governance factors when selecting and retaining investments and has asked the Manager to take these issues into account.
The Manager does not exclude companies from their investment universe purely on the grounds of these factors but adopts a positive approach towards companies which promote these factors.
The portfolio’s Sustainalytics Environmental Percentile was 81.8 per cent as at
The Company notes the
Shareholder Information
Investing in the Company
The Shares of the Company are listed on the Official List of the
Electronic communications from the Company
Shareholders now have the opportunity to be notified by email when the Company’s Annual Report, Half-Yearly Report and other formal communications are available on the Company’s website, instead of receiving printed copies by post. This reduces the cost to the Company as well as having an environmental benefit in the reduction of paper, printing, energy and water usage. If you have not already elected to receive electronic communications from the Company and now wish to do so, visit www.signalshares.com . All you need to register is your investor code, which can be found on your Share certificate or your dividend confirmation statement.
Alternatively, you can contact Link’s Customer Support Centre which is available to answer any queries you have in relation to your shareholding:
By phone: 0371 664 0300 (from overseas call +44 (0) 371 664 0300).
Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the
By email – shareholderenquiries@linkgroup.co.uk
By post –
Frequency of NAV publication
The Company’s NAV is released to the
Sources of further information
Copies of the Company’s Annual and Half-Yearly Reports, factsheets and further information on the Company can be obtained from its website: www.mlcapman.com/manchester-london-investment-trust-plc .
Key dates
Half-Yearly results announced March Interim dividend payment May Company’s year end 31 July Annual results announced September Annual General Meeting November Expected final dividend payment November Company’s half-year end 31 January
Corporate Information
Directors and advisers Directors AuditorDaniel Wright (Chairman)Deloitte LLP Brett Miller 110 Queen Street SirJames Waterlow Glasgow Daren Morris G1 3BXManager and Alternative Investment Fund Manager AdministratorM&L Capital Management Limited Link Alternative Fund Administrators Limited 12a Princes Gate Mews Broadwalk HouseLondon SW7 2PS Southernhay West ir@mlcapman.comExeter EX1 1TS www.mlcapman.com Registrar Company SecretaryLink Group Link Company Matters Limited 10th Floor 6th FloorCentral Square 65 Gresham Street 29 Wellington Street London Leeds LS1 4DL EC2V 7NQ Tel: 0371 664 0300 Email: shareholderenquiries@linkgroup.co.uk DepositaryIndos Financial Limited Bank The ScalpelNational Westminster Bank plc 18th Floor 11Spring Gardens 52 Lime Street Manchester M60 2DBLondon EC3M 7AF COMPANY DETAILS Registered office Country of incorporation 12a Princes Gate Mews Registered inEngland andWales London SW7 2PS Company Number: 01009550 Company website www.mlcapman.com/manchester-london-investment-trust-plc
Legal Entity Identifier 213800HMBZXULR2EEO10
