REG - Allianz Tech Trust - Half-year Report
01/08/2023 07:00
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RNS Number : 7866H Allianz Technology Trust PLC 01 August 2023
31 July 2023
ALLIANZ TECHNOLOGY TRUST PLC
HALF-YEARLY FINANCIAL REPORT
For the six months ended 30 June 2023
HIGHLIGHTS
30 June 31 December 2022 %
2023 Change
Net Asset Value per Ordinary Share 299.7p 231.0p +29.7
Ordinary Share Price 262.0p 210.0p +24.8
Dow Jones World Technology Index (sterling adjusted, total return)
2,437.4 1,832.2 +33.0
Shareholders' Funds £1,188.0m £938.9m +26.5
Discount of Ordinary Share Price to Net Asset Value 12.6% 9.1%
Interim Management Report
Chairman's Statement
Harsh economic and geopolitical realities
This marks my first interim report since taking over the role of Chairman of
Allianz Technology Trust PLC. I am excited by this new role and the
opportunities that lie ahead for the Company. I must take this opportunity to
pass on my thanks, from the Board and on behalf of ATT shareholders past and
present, to my predecessor, Robert Jeens for his commitment and strong
leadership as Chairman of the Company.
Although we will reflect on a period which has seen some incredible
advancements for society, there are unfortunately also negative factors
offsetting these developments. Despite technological progress, mankind
continues in some quarters to display the worst of its attributes and we
cannot ignore the passing of another period where we must acknowledge the
ongoing war in Ukraine, with both its human cost and its impact on the global
economy and geopolitical landscape.
Performance
2023 started as 2022 had left off. The trend of seemingly runaway inflation
followed by aggressive interest rate rises that started as we exited the
pandemic and was then given further impetus by the war in Europe, did not
abate. Glimmers of hope however seemed on occasion to signal we may be
somewhere near a peak. While some factors such as the oil price have rolled
over, core inflation has remained stubbornly high. This has continued to
strain the valuations of growth companies with both their future cash flows
continuing to look mathematically less attractive, as well as their business
wings being clipped as access to cheap money has been curtailed.
Ultimately though, there were sufficient positive signals through the period
to buoy investor sentiment enough to rally global equities off the 2022 lows.
The most positive sector in the first half of the year though was, of course,
artificial intelligence (AI). This spurred the tech sector in a way not seen
for many months with bedrock companies like Nvidia, a key beneficiary of the
theme, seeing its valuation rocket. Whether this theme sustains is to be seen,
but it gave something of a boost across many areas of tech. However, as our
lead portfolio manager has noted, "a rising tide is unlikely to lift all
boats" in this new world, with investors needing to be discriminating in their
stock choices.
Against this 'tale of two halves' backdrop, I can report that performance for
the period was strongly positive in an absolute sense although negative
relative to the Company's reference benchmark. The Company's NAV for the six
months to 30 June 2023 rose by 29.7% (2022: -22.7%) compared to the 33.0%
return from the benchmark.
The shortfall in performance compared to the index is examined in the
Investment Manager's Review below, but one of the main factors continues to be
quite deliberate underweights to some of the largest capitalisation stocks
which dominate the index and which performed well over the period. Despite
this shorter-term shortfall we retain our long-held conviction that the
Company should not chase benchmark-like weights in the largest stocks. Whilst
holding inflated weights in those stocks may give some short-term performance
benefits, we do not view it as appropriate in risk terms to hold such
concentrations. In addition, our portfolio managers remain of the view that,
whilst the mega-caps are largely great companies, the greater long-term growth
story resides further down the market capitalisation scale with mid- and
large-caps. This has been a point of differentiation for the Company for many
years and continues to be a focus, now and into the future.
Given the nature of the Company's investments and its stated investment
objective to achieve capital growth, no dividend is proposed in respect of the
current period and the Board considers it unlikely that any dividend will be
declared in the near future.
AI
We are already beyond the generally high trajectory of technological
advancement we have been witnessing over the past decades, with the
development and impact of generative artificial intelligence.
Generative AI refers to artificial intelligence algorithms that can generate
written content, images, computer code, and even speech. At a US congressional
hearing earlier this year into the potential social impacts of this new
technology, one speaker had 'recorded' a speech - except, although it sounded
just like him in every way, it certainly wasn't. An AI algorithm had instead
given its 'view' - in his voice!
It would be possible to spend a significant amount of time debating AI with
multiple different lenses, including morality, ethics, and human advancement.
Ultimately though, the power of AI seems really to lie not in the ability to
let someone (thing?) else write your next report, but in the largely unseen
applications where algorithms are already crunching almost unfathomable
amounts of data. They are doing this infinitely faster than we could as human
beings and therefore are able to make faster advancements, for example in the
development of new medicines.
As with any 'theme', there are companies that represent the area as their
more-or-less sole focus, as well as companies where they may be more of a
beneficiary as a key supplier. Nvidia - a key talking point of the period -
falls into this latter category. AI is exciting in terms of what it could
achieve, but that will require the right infrastructure to be in place to
support the massive computer and storage requirements. Our portfolio managers
currently see more potential in this latter type of company, rather than a
'pure-play'. That being said, we also note the predominance of AI related
activities starting to take larger shares across many companies, with
Microsoft being a key example. Recently Winterflood Research curated an
'indicative and non-exhaustive' list of 18 underlying companies set to benefit
from generative artificial intelligence and the AIC examined which member
companies had the greatest exposure. The Company topped this list with, at the
time, exposure to 13 of them, representing over 37% of the portfolio. The
Winterflood list included semiconductor companies (Nvidia, Taiwan
Semiconductor Manufacturing, ASML, AMD, Applied Materials and Intel); search
companies (Alphabet, Microsoft and Baidu); enterprise and productivity
software companies (Salesforce, Workday, HubSpot, SAP and ServiceNow); and
companies offering cloud computing (Amazon, IBM, Oracle and Cisco).
Whilst this is currently a positive aspect for the Company, the Board is
acutely aware of both shareholder and wider market concerns over the potential
for AI to represent an ESG risk factor, particularly from the 'Social' angle.
To that end we are engaging with our lead portfolio manager to understand a
range of views and perspectives on this matter and will ensure that this
continues to be appropriately considered from a risk perspective.
Discount/Buybacks
Over the period our discount to NAV remained elevated, particularly in the
context of a longer-term picture where we traded closer to par and often at a
small premium when demand for technology stocks was high.
Some factors driving the current discount are outside our control and affect
many more companies than ourselves. In particular, continued uncertainty for
investors is seeing the closed end fund sector in general at a higher average
discount than has been typical over recent years. Notwithstanding the boost to
tech shares over recent months, investors perhaps remain unsure of the outlook
for interest rates and are consequently cautious.
The Board continues to pay close attention to the level of discount and,
through the Company's broker, have been active in buying back shares. Over the
period 10,052,149 shares were bought back at an average discount of 11.8%.
Since the period end on 30 June 2023, a further 801,500 shares have been
bought back. All shares repurchased are held in treasury rather than cancelled
so that they may be reissued if sufficient demand arises.
Consumer Duty
The Board has worked with Allianz Global Investors, UK Limited ('AllianzGI
UK'), our AIFM, to ensure all obligations under the FCA's new Consumer Duty
regulations have been appropriately considered and applied to the Company. All
communications including the website, factsheets and other published
documentation, have been reviewed to ensure they are appropriate for
consumers. A 'value assessment' has also been undertaken and it was concluded
that the Company provides fair value. The value assessment is made available
to distributors such as investment platforms and wealth managers to inform
their own due diligence.
Portfolio management team
This report marks a year since Mike Seidenberg took over the lead portfolio
manager role on 1 July 2022. Within that period, Mike has been diligently
executing the 'day job' against a sometimes unforgiving backdrop, whilst also
getting to grips with the additional responsibilities that come with the lead
role - such as responding to press enquiries, particularly during the height
of the ChatGPT euphoria and interest. We thank Mike for his first year fully
established at the helm of the Company's portfolio management.
Investment management corporate changes
As outlined in the Company's Annual Financial Report, our contract with
Allianz Global Investors GmbH, UK Branch as AIFM of the Company transferred
during the period to AllianzGI UK which is a new FCA authorised and regulated
UK entity taking on all activities of the former UK Branch of AllianzGI GmbH.
Annual General Meeting ('AGM')
It was a pleasure to meet many shareholders at the Company's AGM on 26 April
2023. The Board once again put in place arrangements for shareholders to
attend the AGM electronically if they could not attend in person, as well as
being able to ask questions. All resolutions were passed. A recording of the
AGM, including a presentation from the lead portfolio manager, Mike
Seidenberg, can be found on the company's website.
We would also remind shareholders that the key elements of this year's Annual
Financial Report were made available in an updated online format (the 'Annual
Stakeholder Report') at tinyurl.com/ATT-stakeholderreport-22.
Outlook
As has so often been the case in recent years, the only certainty from a
macroeconomic perspective seems to be uncertainty. In the US as with much of
the rest of the world, the outlook for inflation is undoubtedly the key
influence on the general direction of markets. Some confidence of an
approaching peak has already been priced in, spurring markets, but any more
certainty backed by positive action from the US Federal Reserve and other
central banks would be a further catalyst.
That of course is a driver for overall market confidence, but we must also
examine what might drive the sector. Beyond interest rates, where a reversal
of recent rises would give a mathematical boost to growth stocks, there are
the secular growth trends to consider. These are identified by our lead
portfolio manager in his report, as well as regularly being discussed on our
podcast and in interviews and webinars that the manager participates in.
Ultimately, despite the macroeconomic backdrop, our portfolio manager
continues to follow a bottom-up stock picking approach. Regardless of the
shorter term direction of markets or how the global economy performs, there
remain some fantastic long term growth companies in the technology sector
(with more emerging over time), and our lead portfolio manager and his team
are deftly uncovering many of them.
Principal risks and uncertainties for the remainder of the financial year
The principal risks and uncertainties facing the Company are broadly unchanged
from those described in the annual financial report for the year ended 31
December 2022. These are set out in the Strategic Report on pages 20 to 21 of
that report, together with commentary on the Board's approach to mitigating
the risks and uncertainties. Given the global macroeconomic and geopolitical
backdrop, market risk remains front of mind and the Board, AIFM and Investment
Manager continue to monitor the situation carefully.
The Board performs a high-level review of the principal risks at every meeting
to ensure that the risk
assessment is current and relevant, adjusting mitigating factors and
procedures as appropriate.
Keeping in touch
Shareholders are reminded that the Company's website
www.allianztechnologytrust.com is the 'go-to' destination for the very latest
news, views and broadcast content relating to the Company. We continue to
offer an ongoing email communications programme distributing monthly
factsheets, insights and other occasional Company updates to all those who opt
in to receive them. If you would enjoy receiving these targeted
communications, you can sign up easily via the Company's website.
Going concern
The Directors believe that it is appropriate to adopt the going concern basis
in preparing the financial statements as the assets of the Company consist
mainly of securities that are readily realisable, and the Company's assets are
significantly greater than its liabilities. The Directors have assessed the
impact of the change in investment management arrangements and the continued
operational resilience of the Company's service providers and have concluded
that the Company has adequate financial resources to continue in operational
existence for twelve months after approval of these financial statements.
The Company is subject to a continuation vote of the Shareholders every five
years. The last continuation vote was put to Shareholders at the AGM in 2021.
Related party transactions
Note 15 of the Company's 2022 Annual Financial Report gives details of related
party transactions and transactions with the AIFM and Investment Manager.
The basis for these has not changed during the six months under review. This
report is available on the Company's website at www.allianztechnologytrust.com
Responsibility statement
The Directors confirm to the best of their knowledge that:
- the condensed set of financial statements contained within the half-yearly
financial report has been prepared in accordance with FRS 102 and FRS 104, as
set out in Note 1 and the Accounting Standards Board's Statement: 'Half-Yearly
Financial Reports';
- the interim management report includes a fair review of the information
required by Disclosure and Transparency Rule 4.2.7 R, of important events that
have occurred during the first six months of the financial year, 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
financial year; and
- the interim management report includes a fair review of the information
concerning related party transactions as required by Disclosure and
Transparency Rule 4.2.8 R. The half-yearly financial report was approved by
the Board on 31 July 2023 and signed on its behalf by the Chairman.
Tim Scholefield
Chairman
31 July 2023
.
INVESTMENT MANAGER'S REVIEW
Investment Review
Global equities rallied over the first half of 2023 as signs that inflation
was finally starting to cool and swift action to avoid a widespread banking
crisis helped investors overcome concerns about waning economic momentum.
Japanese equities were among the strongest performers, with major indices
touching 33-year highs. US indices also delivered robust gains, led by a
narrow band of technology stocks. In contrast, Chinese shares lost ground amid
concerns that the nation's post-pandemic recovery was running out of steam. At
a sector level, information technology, communication services and consumer
discretionary shares climbed sharply, helped by growing interest in artificial
intelligence and its applications, but consumer staples and resource-focused
sectors lagged.
Western central banks continued to tighten monetary policy. Headline inflation
rates fell although, with core inflation proving far stickier in many
economies, policymakers signalled that the peak in rates had yet to be
reached. In contrast, the Bank of Japan maintained its accommodative stance,
while, with China's economic recovery fading, the People's Bank of China cut
rates for the first time in almost a year in June.
The British pound strengthened as elevated UK inflation levels boosted
expectations that the Bank of England would have to tighten monetary policy
considerably. The euro also rallied against the US dollar and Japanese yen as
the European Central Bank insisted that the fight against inflation was far
from over. In contrast, the Federal Reserve paused its rate hikes in June
while the Bank of Japan kept interest rates at -0.1%. During the period, we
reduced exposure to some financial services and professional services (Human
Resources software providers) companies which we felt would struggle amid the
uncertain economic conditions and job reductions across various technology
companies. The team increased exposure to some cyclical companies in the
semiconductor and hardware segments. We continue to hold our positions in high
growth companies that we believe are well-positioned to maintain steady growth
rates. We expect technology to remain the persistent driver of long-term
economic growth.
Top Contributors and Detractors
During the period under review, the Company's net assets rose by 29.7%. The
Company underperformed the Dow Jones World Technology Index (sterling
adjusted, total return) by 3.3% and outperformed the FTSE All-Share Index by
27.1% during the period. The portfolio's relative underperformance versus the
Dow Jones World Technology Index was largely due to the market rotation from
growth stocks and the concentration in the mega cap stocks (Apple and
Microsoft).
Meta, parent company of Facebook and Instagram, delivered solid earnings
results, driven by strong user engagement which boosts overall advertising
spend, as well as improvements in e-commerce ad spend. Meta lowered its full
year 2023 total operating expenses and capital expenditures outlook, which
have been a key focus of investor angst. The company noted that it will focus
on driving efficiencies in some areas, while contemplating revenue growth in
others. This is evident in the company's revised data centre plans, where Meta
is focused on cost-efficiency and flexibility. This is a very welcome change
as Meta's high level of spending has been a concern for several years.
Additionally, Reels plays (a newer product on the company's platform) doubled
year-over-year, and Meta expects Reels usage should contribute to more stable
revenue growth over time.
Palo Alto Networks, cyber security hardware and software provider, delivered
better than expected sales and profit metrics, strong full-year guidance, and
further evidence the company's innovation flywheel is healthier than ever.
Impressive growth in revenue and earnings demonstrated strength in the
business model across the board. Free Cash Flow growth, a key metric of total
company health, also topped estimates by a wide margin. Steady research and
development investments coupled with the benefits from successful acquisitions
have been driving revenue growth in its Next Generation Security (NGS)
segment. The NGS business is the primary growth engine of the business, and
the management team has been executing very well.
Other top active contributors included our overweight positions in MongoDB, a
next generation database company, and HubSpot, an integrated software
application company used primarily by small and medium sized businesses, as
well as not owning Tencent, a Chinese internet company.
Aspen Technology, a software provider to oil & gas industry, was among the
top detractors after the company reported earnings results that fell short of
expectations. The reported results were complicated by a number of
acquisitions the company has done over the past year. Management believes
these acquisitions enhance the company's overall business model and offer
multiple options for future growth. However, it will likely take some time for
the company's overall growth to stabilize as it integrates acquisitions and
deals with macro challenges. Given the uncertain near to medium term, we
decided to exit the position as we see more attractive risk/reward profiles in
other areas of the portfolio.
Okta, security software provider, was also a top detractor in the period.
Management reiterated their cautious view around Fiscal Year 2024 guidance,
indicating that they have assumed a worsening macro environment. Okta also
noted that the recent execution missteps were caused by over-hiring which led
to sales territories being cut too small for sales representatives to meet
their numbers. This was yet another series of challenges for Okta and we
decided to exit the position and may revisit in the future.
Other active detractors included overweight positions in Paycom Software, an
integrated payroll and human resources software company, and JD.com, a Chinese
internet company, and an underweight to Apple.
Outlook
Our expectation is that the recent macro challenges could translate to an
attractive opportunity for long-term investors as the technology sector is
likely to continue benefitting from secular tailwinds which should drive
capital appreciation over time. Having said this, we are cognizant of the
scrutiny on IT budgets and the potential challenge near term. In addition,
many companies continue to struggle to find workers to meet customer demand
and are likely to further leverage technology-based solutions to improve
productivity of limited staffs. As companies need to reduce costs and improve
productivity, particularly in light of a potentially uncertain macroeconomic
outlook, we expect to see accelerating demand for innovative and more
productive solutions such as cloud computing, software-as-a-service,
artificial intelligence, and cyber security.
Lastly, we are excited about artificial intelligence (AI) and what it means to
the companies who trial and embrace these new models. Like many secular themes
in technology, we would expect the companies which both enable AI and benefit
from the use of AI to have good long term revenue growth and profitability
characteristics but caution investors to expect volatility in this emerging
sector. This is yet another example of technology solving a difficult problem
and providing companies with a competitive advantage over time. We are in a
period of rapid change, where technology is key to the prosperity of most
industries. This environment is likely to provide attractive growth
opportunities in many technology stocks over the next several years.
We continue to believe the technology sector can provide some of the best
absolute and relative return opportunities in the equity markets-particularly
for bottom-up stock pickers with long-term selection capabilities.
Mike Seidenberg
Lead Portfolio Manager
31 July 2023
Top five contributors Active Contributions GBP (%)*
MongoDB, Inc. Class A Overweight 1.21
Meta Platforms Inc. Class A Overweight 1.21
HubSpot, Inc Overweight 0.85
Palo Alto Networks, Inc Overweight 0.72
Tencent Holdings Ltd Underweight 0.70
4.70
Top five detractors
Paycom Software, Inc Overweight -0.85
Aspen Technology, Inc Overweight -0.81
Apple Inc Underweight -0.75
Okta, Inc. Class A Overweight -0.75
JD.com, Inc. Sponsored ADR Class A Overweight -0.69
-3.86
Relative to Dow Jones World Technology Index. Figures may not add due to
rounding.
.
SUMMARY OF UNAUDITED RESULTS
INCOME STATEMENT
For the six months ended For the six months ended
30 June 2023 30 June 2022
Total Total
Revenue £'000s Capital Return £'000s Revenue £'000s Capital Return £'000s
£'000s (Note 1) £'000s (Note 1)
Gains (losses) on investments held at fair value through profit or loss - 275,144 275,144 - (455,025) (455,025)
Exchange (losses) gains on currency balances (33) (1,326) (1,359) 43 6,039 6,082
Income 2,470 - 2,470 3,158 - 3,158
Investment management and performance fee (Note 2) (3,258) - (3,258) (3,604) - (3,604)
Administration expenses (491) - (491) (510) - (510)
Profit (loss) before finance costs and taxation (1,312) 273,818 272,506 (913) (448,986) (449,899)
Finance costs: Interest payable and similar charges - - - - - -
Profit (loss) on ordinary activities before taxation (1,312) 273,818 (913) (448,986)
272,506 (449,899)
Taxation (429) - (429) (393) - (393)
Profit (loss) attributable to ordinary shareholders (1,741) 273,818 (448,986)
272,077 (1,306) (450,292)
Earnings (loss) per ordinary share (Note 3) (0.43p) 68.39p 67.96p (0.31p) (106.81p) (107.12p)
BALANCE SHEET
As at As at As at
30 June 30 June 2022 31 December 2022
2023
£'000s £'000s £'000s
Investments held at fair value through profit or loss (Note 4) 1,173,373 914,379 898,937
Cash and cash equivalents 16,529 88,275 41,695
Net current liabilities (1,900) (943) (1,684)
Total Net Assets 1,188,002 1,001,711 938,948
Called up Share Capital 10,719 10,719 10,719
Share Premium Account 334,191 334,191 334,191
Capital Redemption Reserve 1,021 1,021 1,021
Capital Reserve 877,766 689,189 626,971
Revenue Reserve (35,695) (33,409) (33,954)
Shareholders' Funds 1,188,002 1,001,711 938,948
Net Asset Value per Ordinary Share 299.7p 241.5p 231.0p
The net asset value is based on ordinary shares in issue of 396,435,569 414,774,931 406,487,718
Treasury shares in issue 32,321,111 13,981,749 22,268,962
STATEMENT OF CHANGES IN EQUITY
Called up Share Premium Account Capital Redemption Reserve
Share £'000s £'000s Capital Revenue Reserve
Capital Reserve £'000s Total
£'000s £'000s £'000s
Six months ended 30 June 2023
Net assets at 1 January 2023 10,719 334,191 1,021 626,971 (33,954) 938,948
Revenue loss - - - - (1,741) (1,741)
Shares repurchased into treasury during the period (Note 5)
- - - (23,023) - (23,023)
Capital profit - - - 273,818 - 273,818
Net assets at 30 June 2022 10,719 334,191 1,021 877,766 (35,695) 1,188,002
Six months ended 30 June 2022
Net assets at 1 January 2022 10,719 334,191 1,021 1,158,544 (32,103) 1,472,372
Revenue loss - - - - (1,306) (1,306)
Shares repurchased into treasury during the period (Note 5)
- - - (20,369) - (20,369)
Capital loss - - - (448,986) - (448,986)
Net assets at 30 June 2022 10,719 334,191 1,021 689,189 (33,409) 1,001,711
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Note 1 - Summary Statement of Accounting Policies and Basis of Preparation
The condensed set of financial statements have been prepared in accordance
with FRS 102 'Interim Financial Reporting' (FRS 104) issued by the FRC in
January 2022 and the Statement of Recommended Practice - 'Financial Statements
of Investment Trust Companies and Venture Capital Trusts' (SORP) issued by the
Association of Investment Companies (AIC) in July 2022.
The accounting policies applied for the condensed set of financial statements
with regard to measurement and classification have not changed from those set
out on the Company's annual report for the year ended 31 December 2022.
The total column of the Income Statement is the profit and loss account of the
Company. All revenue and capital items derive from continuing operations. No
operations were acquired or discontinued in the period. A Statement of Total
Recognised Gains and Losses is not required as all gains and losses of the
Company have been reflected in the Income Statement.
Note 2 - Management
Allianz Global Investors UK Ltd are appointed as AIFM and portfolio management
services are provided by Voya Investment Management Co LLC. The management
agreement provides for a base fee of 0.8% per annum payable quarterly in
arrears and calculated on the average value of the market capitalisation of
the Company at the last business day of each month in the relevant quarter.
The base fee reduces to 0.6% for any market capitalisation between £400m and
£1 billion, and 0.5% for any market capitalisation over £1 billion.
Additionally there is a fixed fee of £55,000 per annum to cover AllianzGI's
administration costs.
In each year, in accordance with the management contract, the Investment
Manager is entitled to a performance fee subject to various performance
conditions. For years beginning on or after 1 January 2022, the performance
fee entitlement is equal to 10.0% (1 December 2013 to 31 December 2021: 12.5%)
of the outperformance of the adjusted NAV per share total return as compared
to the benchmark index, the Dow Jones World Technology Index (sterling
adjusted, total return). Any underperformance brought forward from previous
years is taken into account in the calculation of the performance fee.
A performance fee is only payable where the NAV per share at the end of the
relevant Performance Period is greater than the NAV per share at the end of
the financial year in which a performance fee was last paid. At 31 December
2022 this 'high water mark' (HWM) was 297.2p per share. In the event the HWM
is not reached in any year, any outperformance shall instead be carried
forward to future periods to be applied as detailed below. Any performance fee
payable is capped at 1.75% of the average daily NAV of the Company over the
period. For this purpose, the NAV is calculated after deduction of the
associated performance fee payable.
Any outperformance in excess of the cap (or where the HWM has not been met)
shall be carried forward to future years to be available for offset against
future underperformance but not to generate a performance fee. To the extent
the Company has underperformed the benchmark, such underperformance is carried
forward and must be offset by future outperformance before a performance fee
can be paid. Underperformance/outperformance amounts carried forward do so
indefinitely until offset.
The performance fee accrued as at 30 June 2023 was £nil (30 June 2022: £nil;
31 December 2022: £nil).
The Investment Manager's fee is charged 100% to Revenue and the performance
fee is charged 100% to Capital.
Note 3 - Earnings per Ordinary Share
The earnings per Ordinary Share is based on the net profit for the half year
of £272,077,000 (30 June 2022: net loss of £450,292,000, 31 December 2022:
net loss of £494,161,000) and on the weighted average number of Ordinary
Shares in issue during the period of 400,385,538 (30 June 2022: 420,370,209,
31 December 2022: 415,019,252).
Note 4 - Valuation of Investments
Investments are designated as held at fair value through profit or loss in
accordance with FRS 102 sections 11 and 12. Investments are initially
recognised at Fair Value, which is determined to be their cost. Subsequently,
investments are revalued at Fair Value, which is the bid market price for
listed investments.
FRS 102 sets out three fair value hierarchy levels for disclosure.
Level 1: The unadjusted quoted price in an active market for identical assets
or liabilities that the entity can access at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are
observable (i.e. developed using market data) for the asset or liability,
either directly or indirectly.
Level 3: Inputs are unobservable (i.e. for which market data is unavailable)
for the asset or liability.
As at 30 June 2023, the financial assets at fair value through profit or loss
of £1,173,373,000 (31 December 2022: £898,937,000) are categorised as
follows:
As at As at
30 June 31 December 2022
2023
£'000s £'000s
Level 1 1,173,373 898,937
Level 2 - -
Level 3 - -
1,173,373 898,937
Note 5 - Called up Share Capital
At 30 June 2023 there were 396,435,569 Ordinary Shares in issue (30 June 2022:
414,774,931; 31 December 2022: 406,487,718). During the half-year ended 30
June 2023 the Company repurchased 10,052,149 Ordinary shares into treasury
(half-year ended 30 June 2022: 8,416,659; and year ended 31 December 2022:
16,703,872). During the same period no Ordinary Shares were issued from the
block listing facility or reissued from treasury (half-year ended 30 June
2022: nil: year ended 31 December 2022: nil).
Since 30 June 2023, 801,500 shares were repurchased into treasury.
Note 6 - Investments
Purchases for the half-year ended 30 June 2023 were £577,258,000 (30 June
2022: £433,944,000) and sales were £577,965,000 (30 June 2022:
£492,676,000).
Note 7 - Transaction Costs
Brokers commission costs on equity purchases for the half-year ended 30 June
2023 amounted to £151,000 (30 June 2022: £104,000) and on sales were
£192,000 (30 June 2022: £134,000).
Note 8 - Comparative Information
The half yearly financial report to 30 June 2023 and the comparative
information to 30 June 2022 have neither been audited nor reviewed by the
Company's auditors and do not constitute statutory accounts as defined in
section 434 of the Companies Act 2006 for the respective periods. The
financial information for the year ended 31 December 2022 has been extracted
from the statutory accounts for that year which have been delivered to the
Registrar of Companies. The auditor's report on those financial statements was
unqualified and did not contain a statement under Section 498 (2) or (3) of
the Companies Act 2006.
INVESTMENT PORTFOLIO
As at 30 June 2023
Investment Sector(#) Sub sector(#) Country Valuation % of Portfolio
£'000s
Apple Technology, Hardware Storage & Peripherals Technology, Hardware Storage & Peripherals United States 108,320 9.2
NVIDIA Semiconductors & Semiconductor Equipment Semiconductors United States 107,581 9.2
Microsoft Software Systems Software United States 99,526 8.5
Meta Platforms Interactive Media & Services Interactive Media & Services United States 95,220 8.1
Alphabet Interactive Media & Services Interactive Media & Services United States 61,797 5.3
Amazon.com Broadline Retail Broadline Retail United States 39,357 3.4
Advanced Micro Devices Semiconductors & Semiconductor Equipment Semiconductors United States 37,759 3.2
MongoDB IT Services Internet Services & Infrastructure United States 34,748 3.0
HubSpot Software Application Software United States 34,407 2.9
Palo Alto Networks Software Systems Software United States 32,466 2.8
Top ten investments 651,181 55.6
Shopify IT Services Internet Services & Infrastructure Canada 29,864 2.5
Datadog Software Application Software United States 29,523 2.5
Salesforce Software Application Software United States 29,332 2.5
Samsung Electronics Technology, Hardware Storage & Peripherals Technology, Hardware Storage & Peripherals South Korea 28,751 2.5
Oracle Software Systems Software United States 28,032 2.4
Crowdstrike Software Systems Software United States 26,837 2.3
Taiwan Semiconductor Semiconductors & Semiconductor Equipment Semiconductors Taiwan 24,612 2.1
Netflix Entertainment Movies & Entertainment United States 23,469 2.0
ASML Semiconductors & Semiconductor Equipment Semiconductor Equipment Netherlands 22,731 1.9
Applied Materials Semiconductors & Semiconductor Equipment Semiconductor Equipment United States 20,165 1.7
Top Twenty Investments 914,497 78.0
ServiceNow Software Systems Software United States 19,472 1.7
Monolithic Power Systems Semiconductors & Semiconductor Equipment Semiconductors United States 19,142 1.6
Mercadolibre Broadline Retail Broadline Retail United States 18,467 1.6
ON Semiconductor Semiconductors & Semiconductor Equipment Semiconductors United States 17,454 1.5
Lam Research Semiconductors & Semiconductor Equipment Semiconductor Equipment United States 16,728 1.4
KLA Semiconductors & Semiconductor Equipment Semiconductor Equipment United States 16,061 1.4
Marvell Technology Semiconductors & Semiconductor Equipment Semiconductors United States 15,838 1.3
Cadence Design Software Application Software United States 15,772 1.3
Fortinet Software Systems Software United States 15,450 1.3
Uber Technologies Ground Transportation Passenger Ground Transportation United States 15,050 1.3
Top Thirty Investments 1,083,931 92.4
Micron Technology Semiconductors & Semiconductor Equipment Semiconductors United States 14,932 1.3
Arista Networks Communications Equipment Communications Equipment United States 11,908 1.0
NXP Semiconductors Semiconductors & Semiconductor Equipment Semiconductors Netherlands 11,759 1.0
Trade Desk Media Advertising United States 11,671 1.0
Cyberark Software Software Systems Software Israel 9,643 0.8
Zscaler Software Systems Software United States 8,723 0.7
Altair Engineering Software Application Software United States 8,147 0.7
Tesla Automobiles Automobile Manufacturers United States 8,141 0.7
Smartsheet Software Application Software United States 4,518 0.4
Total Investments 1,173,373 100.0
#GICS Industry classifications
.
ANALYSIS OF PORTFOLIO
As at 30 June 2023
Sector Breakdown(#) % of Portfolio Geographical Breakdown % of Invested Funds
Software 30.8 United States 89.2
Semiconductors & Semiconductor Equipment 27.6 Netherlands 2.9
Interactive Media & Services 13.4 Canada 2.5
Technology, Hardware Storage & Peripherals 11.7 South Korea 2.5
IT Services 5.5 Taiwan 2.1
Broadline Retail 5.0 Israel 0.8
Entertainment 2.0
Ground Transportation 1.3
Communications Equipment 1.0
Media 1.0
Automobiles 0.7
Total Portfolio 100.0 Total Portfolio 100.0
(#) GICS Industry Classifications
As cash is excluded and the weightings for each sector are rounded to the
nearest tenth of a percent, the aggregate weights may not
equal 100%.
For further information, please contact:
Kelly Nice Stephanie Carbonneil
Company Secretary Head of Investment Trusts
Allianz Technology Trust PLC Allianz Global Investors UK Limited
Tel: 020 3246 7475 Tel: 020 3246 7256
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