Mid Wynd Inter Inv - Half-Yearly Financial Report
01/03/2023 07:00
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RNS Number : 4114R Mid Wynd Intnl Inv Trust PLC 01 March 2023
Mid Wynd International Investment Trust PLC (the 'Company')
LEI: 549300D32517C2M3A561
Half-Yearly Financial Report (unaudited) for the six months ended 31 December
2022
This announcement contains regulated information
Financial Highlights
Six months ended 31 December 2022 Six months ended 31 December 2021
Year ended 30 June 2022
Total Returns
Net asset value per share† 2.6% 10.5% -7.5%
Share price† 4.0% 11.9% -9.5%
MSCI All Country World Index (GBP) 3.3% 7.7% -4.2%
Revenue and dividends
Revenue earnings per share 5.64p 3.78p 11.72p
Dividends per share* 3.85p 3.50p 7.20p
Special dividend per share nil nil 3.00p
Ongoing charges† 0.60% 0.64% 0.60%
As at As at As at
31 December 2022 31 December 2021 30 June
Capital 2022
Net asset value per share 703.40p 829.82p 692.01p
Share price 714.00p 860.00p 693.00p
Net cash / (gearing) † 1.3% (0.4%) 0.3%
Premium† 1.5% 3.6% 0.1%
Source: Artemis/Datastream.
† Alternative Performance Measure
*The interim dividend for the six months to 31 December 2022 will be paid on
31 March 2023 to shareholders on the register at the close of business on 10
March 2023.
**Look-through costs of underlying investment company holdings not included
Since 1 May 2014**
Total returns to 31 December 2022 3 years 5 years 10 years
Net asset value per share† 25.2% 55.8% 184.4% 246.2%
Share price† 22.7% 54.1% 192.1% 262.6%
MSCI All Country World Index (GBP) 23.9% 45.1% 141.3% 191.1%
Source: Artemis/Datastream/Morningstar.
**The date when Artemis was appointed as Investment Manager.
† Alternative Performance Measure
Chairman's
statement
Performance
For the six months ended 31 December 2022 the Company's share price rose 4.0%,
on a total-return basis (with dividends assumed to be re-invested). This
compares to a total return from the MSCI All Country World Index (GBP) of
3.3%.
The Company's net asset value ('NAV') per share rose 2.6% on a total-return
basis. Since Artemis' appointment, as Investment Manager on 1 May 2014, the
net asset value per share has increased by 184.4%, on a total-return basis,
against the comparator index increase of 141.3%.
As at 31 December 2022 the share price stood at a 1.5% premium to net asset
value. The Company's policy, within normal market conditions, is to issue and
repurchase shares where necessary to maintain the share price within a 2% band
relative to the net asset value. Our Investment Manager assesses the company's
NAV on a real time basis when buying or selling the Company's shares. As
highlighted previously, this is not a perfect science and in periods where
markets are particularly volatile the share price may lie outside this range
for very short periods. The volatile market conditions experienced during the
first half of the year are reflective in the average discount to NAV which was
0.2% for the period. Many investment companies have either found their shares
trading at a discount in this period and/or have had to buy back their own
shares to manage that discount. That the Company's shares traded at a premium
to NAV at the end of the period is particularly encouraging and Mid Wynd is
one of the few equity focused investment trusts to find itself in such a
strong position.
Further details on the performance of the Company during the period are
included in the Investment Manager's review.
Earnings and dividend
The net return for the six months to 31 December 2022 was a gain of 17.65
pence per share, comprising a revenue gain of 5.64 pence per share and a
capital gain of 12.01 pence per share. The Board is proposing an interim
dividend of 3.85 pence per share which will be paid on 31 March 2023 to those
shareholders on the register at the close of business on 10 March 2023. This
represents an increase of 10% on last year's interim dividend of 3.50 pence.
Net revenue pence per share this period increased by 49% on the equivalent
period to December 2021. As noted in the Annual Report to June 2022, the
Investment Manager adjusted the portfolio towards investment in higher
yielding companies and this period's increase in earnings is a continued
reflection of that investment decision. It continues to be the aim of the
Board to grow the dividend when revenue levels allow whilst at the same time
providing flexibility to the Investment Manager. It is important that the
Investment Manager retains the flexibility to invest in the shares of lower
yielding companies if this is where the best opportunities arise. Investors
should see the growth in their regular dividend as indicative of the level of
growth directors believe to be progressive; one that will not compromise the
flexibility of our Investment Manager.
Share capital
Despite demand for the Company's shares being affected by the challenging
market conditions, a total of 1,133,200 ordinary shares were issued during the
period from 1 July 2022 to 31 December 2022. This includes 163,200 ordinary
shares which were issued from treasury, having been bought back earlier in the
quarter to help manage a period of discount.
The shares issued raised net £8.2 million. The issuances during the period,
excluding those from treasury, represent an increase of 1.5% on the share
capital balance at the start of the period.
Following the period end, 325,000 ordinary shares were bought back and are
held in treasury.
Borrowings
As at 31 December 2022 the Company had drawn funds of US$15.5 million;
equating to £12.9 million. This compares with the drawn funds as at 30 June
2022 of US$2 million and €5 million; equating to £6 million. The Company
repaid the Euro element of the loan facility during the period.
The Company is in a net cash position of 1.3% at the period end. The level of
cash balances versus borrowings changes on a daily basis depending on
investment activity. The instant availability of the borrowed funds gives the
Investment Manager the ability to react quickly to market opportunities
including buying the Company's own shares when at a greater than 2% discount
to NAV whilst having the ability to drawdown further funds provides the
ongoing flexibility required.
Board succession
As noted in the 2022 Annual Report, Harry Morgan (Senior Independent Director)
stepped down from the Board at the 2022 Annual General Meeting in October,
having served as a Director since 2012. Hamish Baillie was appointed as an
independent non-executive Director with effect from 1 November 2022 and David
Kidd assumed the role of Senior Independent Director upon Harry's retirement.
Hamish Baillie is an experienced investment practitioner who spent twenty
years at Ruffer LLP where he managed an investment trust. His knowledge of
investment matters is complemented by an understanding of the savings market
and the wealth management industry. I would like to welcome Hamish to the
Board.
Management changes
Simon Edelsten, lead manager of Mid Wynd, will retire as a partner of Artemis
Investment Management LLP ("Artemis") towards the end of 2023. Alex
Illingworth is also leaving Artemis. Simon Edelsten and Alex Illingworth have
overseen a highly successful period in our Company's history. Since they took
control of the portfolio, in May 2014, until 31 December 2022 the total return
of Mid Wynd of 184% has been significantly ahead of the MSCI All Country World
Index (GBP) return of 141%. The Board would like to thank them both for their
service to our shareholders over what have been tumultuous years in global
financial markets.
On 1 March 2023 Alex Stanic will join Artemis from JP Morgan Asset
Management's international equity group and will be responsible, with his new
team, for managing our Company's assets. He spent seven years at JP Morgan,
where he led on the global equity funds in the Global Specialist team,
including the Global Unconstrained Equity Fund. Prior to that he was head of
global equities at River & Mercantile, a division he set up in 2009. In
due course Alex Stanic will be joined by two other new members of the global
equity team to supplement analysts, Bobby Powar and May Laghzaoui.
It is not expected that the change in management will lead to any significant
changes to the Company's investment focus, which is to identify investment
themes likely to generate long term growth for shareholders. Simon will work
closely with Alex Stanic and the wider team and is likely to hand over fund
management responsibilities at the end of September whilst remaining in an
advisory capacity until the end of the year.
Outlook
The last six months have seen a return of moderate optimism to equity markets.
It is an optimism based upon the start of a decline in inflation which would
almost certainly bring with it lower short-term interest rates. It is
accompanied by a growing optimism that such a decline in inflation is
occurring without the major contraction in economic activity that would be
particularly negative for corporate earnings. A decline in inflation and
interest rates combined with only a moderate decline in corporate earnings
would be a powerful positive combination for equity prices. The key in
securing positive real returns from equity investment is to assess whether
investors are paying too much to own the corporate income streams that
ultimately underpin such returns for investors over the long-term.
The US S&P500 index reached its all-time high in early January 2022 and by
the end of the year it had declined by almost 20%. Over the same period the
earnings per share of the index increased by 12.5%. Strong earnings growth
throughout the past few years, combined with the decline in the index level in
2022, has brought the price earnings ratio for the S&P500 44% lower from
its April 2021 level. The price earnings ratio for the S&P500 was 18.5X at
the end of 2022 and for the MSCI World ex US index the ratio had declined to
just 13.5X. We are entering an age when it will be difficult to protect
savings from much higher inflation than we have become used to. These
valuations give us confidence that a portfolio of carefully selected equities
can provide such protection from inflation. In a highly leveraged world that
cannot deal with interest rates materially above current levels the risk to
equity valuations comes not primarily through rising interest rates but
through an inability to grow corporate earnings. Our Investment Manager
focuses on finding the companies that can deliver such earnings growth and
investing our capital accordingly.
None of us can know just how painful for citizens and corporate earnings the
next recession will be. However, it is worth bearing in mind the huge levels
of government support for the private sector that have been put in place to
mitigate the impact of higher energy prices and also of higher interest
expense. In most of the developed world bankers continue to extend credit and
support the private sector which is in great contrast to their actions in the
more severe recessions and attendant stock market slumps of this millennium.
This support for households and corporations from the government and banks
does suggest that the negative impact on corporate earnings from any recession
will be more muted than that to which investors have become accustomed. If the
path for corporate earnings through the next recession is benign then a
portfolio of well selected equities, at current valuations, can likely provide
positive real returns for investors.
The key to selecting the right equities to grow real wealth in our new era is
flexibility. Our Company has a particularly flexible mandate to seek to grow
the real purchasing power of your savings. It can invest in any equity market
in the world and given our small size, relative to many pools of capital,
there are many thousands of equities offering sufficient liquidity to invest
in. While we have a comparator index our Investment Manager pays little heed
to it in constructing the portfolio. This provides the freedom to seek out the
winners of our new era rather than being tied to the old winners that dominate
stockmarket indices. The dividend policy of our Company has been adopted by
the Board to ensure that portfolio construction is not constrained by the need
to pursue income at the expense of growth in capital. Over many years now our
Investment Manager has shown the flexibility to change their minds and change
the portfolio in reaction to changing facts and valuations. In their review,
our Investment Manager reports that corporate management, the ultimate
stewards of our capital, has also remained flexible and in doing so has
produced surprisingly positive returns through recent difficulties.
Perhaps Yogi Berra, the famous baseball player, did actually say 'The future
ain't what it used to be.' If he did then perhaps he had in mind periods like
today when major structural change is underway and the future is particularly
unpredictable. In this period of major change our Company retains the
flexibility to adapt and seize the opportunities that change almost always
brings. The winds will change and we have the flexibility to adjust our sails
accordingly.
The pessimist complains about the wind.
The optimist expects it to change.
The realist adjusts the sails.
William Arthur Ward: To Risk
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; along with quarterly briefings and Manager
presentations. In addition, the Board is always keen to hear from
shareholders.
Should you wish, you can e-mail me at midwyndchairman@artemisfunds.com
(mailto:midwyndchairman@artemisfunds.com) .
Russell Napier
Chairman
28 February 2023
Investment Manager's review
Review of period
The period saw more stable equity and bond markets as investors welcomed lower
energy prices, but also recognised the persistence of inflation in wages. The
US Federal Reserve guided markets towards higher interest rates which they
expect will keep inflation under control, the Bank of England and European
Central Bank followed behind and, late in the year, even the Bank of Japan
showed signs of allowing higher interest rates. These higher rates seem likely
to lead to recessions in major economies, but with employment levels high, the
impact of these on equity valuations should be modest as long as companies
with pricing power are selected.
Performance
Global equity markets recovered modestly in the period rising 3.3% in sterling
terms and the Mid Wynd net asset value increased by 2.6%. In share price terms
the Company kept up with the index during the interim period, helped by a
strong December where the portfolio held up well in a risk-off environment.
Importantly during this time there was pressure on investment trust premiums.
As a result Mid Wynd traded to a discount mid period but regained its premium
by mid-November.
Five largest stock contributors
Contribution†
Company Theme (%)
Mitsubishi UFJ Digital Finance 0.6
LVMH Moet Hennessy Sustainable Consumer 0.5
Schlumberger Low Carbon World 0.5
Merck Healthcare Costs 0.5
Sumitomo Mitsui Financial Group Digital Finance 0.5
Five largest stock detractors
Contribution†
Company Theme (%)
Olaplex Sustainable Consumer (0.6)
Sonova Healthcare Costs (0.4)
Fresenius Healthcare Costs (0.4)
Apple Screen Time (0.4)
Segro Automation (0.3)
† Alternative Performance Measure
Artemis investment process
Our aim is to identify areas of commercial growth around the world and invest
in companies that trade on attractive valuations and give the Company exposure
to this growth. We select high quality companies, with proven profitability
and high levels of cash generation, preferring businesses with strong balance
sheets and those that have established high barriers to entry. Such companies
sometimes lag equity markets when they recover, but they tend to protect
capital well when economic conditions become more testing. Over time, we have
found this investment approach generally gives a solid framework to deliver
consistent returns to investors.
Current investment themes
Over the last six months our most successful themes were Digital Finance, Low
Carbon World and Healthcare Costs.
Digital Finance - the last year has been one where macroeconomic factors have
played a large role in equity markets. Inflation has eroded the margins of
companies which lack competitive advantages, many technology companies have
seen lower growth and found they have hired too many people, interest rates
have risen to keep inflation under control. Banks in countries likely to tip
into recession have performed poorly, but Asian banks and especially Japanese
banks have welcomed rising interest rates as offering the prospect of higher
interest margins in a recovering economy. However, we have seen such signs
before only to be disappointed, so we are waiting to see how the economy
fares.
Low Carbon World - our investments in this theme include large US oil service
companies. As Europe has looked to replace Russian gas supplies, these
companies have seen demand to help improve supply from existing fields, reduce
methane leaks and catch up after years of low capital investment. We have
avoided the traditional investments in this area, such as wind farm companies,
as valuations seemed high and competition increasing.
Healthcare Costs - again this theme performed well, led by US health insurers.
High employment levels help keep membership numbers buoyant and Americans seem
wary of visiting hospitals if they can avoid it, keeping medical claim
expenses low.
Our worst performing themes were Online Services, Automation and Screen Time.
Although the portfolio has modest holdings in technology shares compared with
the index, the few remaining holdings performed poorly as growth expectations
disappointed and, in the case of Adobe, when the management overpaid for a
large acquisition. Our automation stocks again saw delayed demand as China
remained under covid lockdown - however longer-term prospects still seem very
good.
Thematic attribution
Theme Contribution†
(%)
Digital Finance 1.9
Low Carbon World 1.0
Healthcare Costs 0.7
Scientific Equipment 0.5
Sustainable Consumer 0.1
Materials 0.0
Screen Time (0.3)
Automation (0.3)
Online Services (0.6)
Regional attribution
Region Contribution†
(%)
North America 1.6
Japan 1.3
Europe 0.4
Developed Asia 0.2
Emerging (0.1)
UK (0.3)
† Alternative Performance Measure
Outlook
We feel that investors are more realistic now about prospects than they were a
year ago. The inflation which started to appear after the pandemic became more
worrying when Russia invaded Ukraine, but economies have adjusted well.
Headline inflation is now retreating as energy prices drop and employment
remains strong. Meanwhile, after a significant fall both in equity markets and
the US dollar, better value for money has started to appear for investors.
We aim to grow our investors' real wealth over time. Clearly the last year has
not been one in which hoping to beat inflation has been realistic. However,
persistent inflation of around, say, 4% is not at all unusual for investors.
The companies which cope best with such inflation are the sort favoured in
our investment approach: decent (though not necessarily very high) growth
prospects, good barriers to entry, pricing power and strong balance sheets.
Also, the spread of investments between different sectors and geographic
regions avoids regional pockets of inflation or sharp currency movements
playing too large a role in the overall investment outcome.
Over the last six months we have been impressed by how well our investments
have coped with the economic challenges and have continued to grow their per
share cash earnings - the foundation on which higher share prices are built.
We believe our selected investments should continue to grow in value ahead of
inflation and that their valuations today are more attractive than a year ago.
For these reasons we remain confident that our portfolio is well positioned to
grow investors' real wealth in the years to come.
Simon Edelsten & Alex Illingworth
Fund Managers
Bobby Powar & May Laghzaoui
Analysts
28 February 2023
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, reliance on key personnel and borrowing. 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 as
described in the previous Annual Financial Report. These risks remain
applicable to the six months under review and the remaining six months in the
financial year. Details of the risks and their management is described in more
detail in the Annual Financial Report 30 June 2022 which is available at
midwynd.com.
Related Party Transactions
During the six months ended 31 December 2022, no transactions with related
parties have taken place which have materially impacted the Company.
Going Concern
The Directors have considered the Company's principal risks and uncertainties
together with its current financial position, assets and liabilities,
projected revenue and expenses and the Company's dividend policy. The
Directors also considered the impact on the Company of recent market
volatility due to the war in Ukraine and the inflationary pressures currently
being felt. It is the Directors' opinion that the Company has adequate
resources to continue in operational existence for the foreseeable future, a
period of at least 12 months from the approval of this Half-Yearly Financial
Report. For this reason, the going concern basis of accounting continues to be
used in the preparation of these financial statements.
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 31 December 2022:
• 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 31 December 2022 was
approved by the Board and the above responsibility statement has been signed
on its behalf by:
Russell Napier
Chairman
28 February 2023
Condensed statement of comprehensive income
For the six months ended For the six months ended For the year ended
31 December 2022 31 December 2021 30
June
2022
(unaudited) (unaudited) (aud
ited
)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments - 8,509 8,509 - 45,906 45,906 - (45,017) (45,017)
Currency gains - 427 427 - 146 146 - 446 446
Income 4,894 - 4,894 3,199 - 3,199 9,377 - 9,377
Investment management fee (308) (923) (1,231)
(287) (862) (1,149) (609) (1,828) (2,437)
Other expenses (306) (3) (309) (247) (2) (249) (488) (8) (496)
Net return/(loss) before finance costs and taxation 2,644 45,127 47,771
4,301 8,071 12,372 8,280 (46,407) (38,127)
Finance costs of borrowings (37) (112) (149)
(56) (168) (224) (83) (252) (335)
Net return/(loss) on ordinary activities before taxation 45,015 47,622
4,245 7,903 12,148 2,607 8,197 (46,659) (38,462)
Taxation on ordinary activities (303) - (303)
(535) - (535) (854) - (854)
Net return/(loss) on ordinary activities after taxation 45,015 47,319
3,710 7,903 11,613 2,304 7,343 (46,659) (39,316)
Net return/(loss) per share 3.78p 73.86p 77.64p
5.64p 12.01p 17.65p 11.72p (74.47)p (62.75)p
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 2022 31 December 2021 30 June 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Non current assets
Investments held at fair value through profit or loss 460,466 521,216 439,101
Current assets
Debtors 1,254 1,003 24,969
Cash and cash equivalents 18,904 16,712 7,096
20,158 17,715 32,065
Creditors
Amounts falling due within one year (13,700) (19,522) (18,513)
Net current assets/(liabilities) 6,458 (1,807) 13,552
Total net assets 466,924 519,409 452,653
Capital and reserves
Called up share capital 3,320 3,130 3,271
Capital redemption reserve 16 16 16
Share premium 242,122 213,121 235,110
Capital reserve 214,882 298,653 206,979
Revenue reserve 6,584 4,489 7,277
Shareholders' funds 466,924 519,409 452,653
Net asset value per ordinary share 703.40p 829.82p 692.01p
Condensed statement of changes in equity
For the six months ended 31 December 2022 (unaudited)
Share Capital Share Capital Revenue Shareholders'
capital redemption premium reserve(1,2) reserve(2) funds
£'000 reserve £'000 £'000 £'000 £'000
£'000
Shareholders' funds at 3,271 16 235,110 206,979 7,277 452,653
1 July 2022
Net return on ordinary activities after taxation - - - 7,903 3,710 11,613
Issue of shares from treasury - - 59 1,116 - 1,175
Repurchase of shares into treasury - - - (1,116) - (1,116)
Issue of new shares (net of costs) 49 - 6,953 - - 7,002
Dividends paid - - - - (4,403) (4,403)
Shareholders' funds at 31 December 2022 3,320 16 242,122 214,882 6,584 466,924
For the six months ended 31 December 2021 (unaudited)
Share Capital Share Capital Revenue Shareholders'
capital redemption premium reserve(1,2) reserve(2) funds
£'000 reserve £'000 £'000 £'000 £'000
£'000
Shareholders' funds at 2,997 16 191,253 253,638 4,189 452,093
1 July 2021
Net return on ordinary activities after taxation - - - 45,015 2,304 47,319
Issue of new shares (net of costs) 133 - 21,868 - - 22,001
Dividends paid - - - - (2,004) (2,004)
Shareholders' funds at 31 December 2021 3,130 16 213,121 298,653 4,489 519,409
For the year ended 30 June 2022 (audited)
Share Capital Share Capital Revenue Shareholders'
capital redemption premium reserve(1,2) reserve(2) funds
£'000 reserve £'000 £'000 £'000 £'000
£'000
Shareholders' funds at 2,997 16 191,253 253,638 4,189 452,093
1 July 2021
Net (loss)/return on ordinary activities after taxation - - - (46,659) 7,343 (39,316)
Issue of new shares (net of costs) 274 - 43,857 - - 44,131
Dividends paid - - - - (4,255) (4,255)
Shareholders' funds at 30 June 2022 3,271 16 235,110 206,979 7,277 452,653
( )
(1) Capital reserve as at 31 December 2022 includes realised gains of
£178,504,000 (31 December 2021: £207,896,000; 30 June 2022: £191,640,000).
(2) The Company may pay dividends from both capital and revenue reserves.
Condensed statement of cash flows
For the six For the six For the year ended
months ended months ended 30 June 2022
31 December 2022 31 December 2021 (audited)
(unaudited) (unaudited) £'000
£'000 £'000
Cash generated from operations 3,283 1,522 4,768
Interest received 146 1 10
Interest paid (224) (149) (335)
Net cash generated from operating activities 3,205 1,374 4,443
Cash flow from investing activities
Purchase of investments (308,156) (313,243) (689,754)
Sale of investments 306,740 283,525 639,527
Realised currency gains/(losses) 353 (3) 1,517
Net cash used in investing activities (1,063) (29,721) (48,710)
Cash flow from financing activities
Issue of new shares, net of costs 7,002 21,575 44,131
Issue of shares from treasury 1,175 - -
Repurchase of shares into treasury (1,116) - -
Net drawdown/(repayment) of credit facility 6,982 8,962 (5,064)
Dividends paid (4,403) (2,004) (4,255)
Net cash generated from financing activities 9,640 28,533 34,812
Net increase/(decrease) in cash and cash equivalents 11,782 186 (9,455)
Cash and cash equivalents at start of the period 7,096 16,556 16,556
Increase/(decrease) in cash in the period 11,782 186 (9,455)
Currency gains/(losses) on cash and cash equivalents 26 (30) (5)
Cash and cash equivalents at end of the period 18,904 16,712 7,096
Notes to the Half-Yearly Financial Report
1 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
ended 30 June 2022 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 of Investment Trust Companies and Venture
Capital Trusts' ('SORP') issued by the Association of Investment Companies
(the 'AIC') in July 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 ended 30 June 2022 has been
extracted from the statutory accounts which have been filed with the Registrar
of Companies. The Auditor's 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 ended 31
December 2022 have been prepared on a going concern basis.
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 ended 31 December 2022 being
65,786,856 (31 December 2021: 60,944,418; 30 June 2022: 62,652,936).
3 Dividends
An interim dividend for the six months ended 31 December 2022 of 3.85 pence
per ordinary share (31 December 2021: 3.50 pence) has been declared. This
dividend will be paid on 31 March 2023 to those shareholders on the register
at close of business on 10 March 2023.
4 Borrowing facilities
The Company has entered into a three year agreement with The Bank of Nova
Scotia (UK Branch) for a US$60 million multi-currency revolving credit
facility terminating on 19 February 2024, of which US$15.5 million (£12.9
million) was drawn down at 31 December 2022 (31 December 2021: US$14.0 million
(£10.3 million); 30 June 2022: US$2.0 million (£1.6 million)) and €nil
(£nil) was drawn down at 31 December 2022 (31 December 2021: €10.0 million
(£8.4 million); 30 June 2022: €5.0 million (£4.3 million)). These amounts
are recognised in amounts falling due within one year in the condensed
statement of financial position.
The Company pays interest separately on each currency drawn down. Interest is
charged on each currency at variable rates. Sterling is calculated with
reference to RFR (Risk-free rate); US dollar with reference to SOFR RFR and
Japanese yen with reference to TONAR RFR. The US$ interest rate applied as at
31 December 2022 was 5.36% (31 December 2021: 1.53%; 30 June 2022: 2.36%). The
€ interest rate applied as at 31 December 2022 was nil% (31 December 2021:
1.30%; 30 June 2022: 1.30%).
The main covenants relating to the revolving credit facility are:
(i) Total borrowing shall not exceed 33.33% of net asset
value.
(ii) The Company's minimum net asset value shall be £170
million.
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
2022 2021 2022
£'000 (unaudited) £'000 (unaudited) £'000 (audited)
Level 1 460,466 521,216 439,101
Total value of investments 460,466 521,216 439,101
6 Reconciliation of net return/(loss) before finance costs and taxation to cash from operations
For the six months ended 31 December For the six months ended 31 December For the year ended 30 June
2022 2021 2022
£'000 £'000 £'000 (audited)
(unaudited) (unaudited)
Net return/(loss) before finance costs and taxation 12,372 47,771 (38,127)
(Gains)/losses on investments (8,509) (45,906) 45,017
Decrease/(increase) in accrued income and other debtors
450 19 (847)
Currency gains (427) (146) (446)
Increase in creditors 78 88 35
Overseas tax suffered (535) (303) (854)
Interest received (146) (1) (10)
Cash generated from operations 3,283 1,522 4,768
7 Analysis of changes in net cash
At 30 June 2022 Cashflow Exchange movements At 31 December 2022
£'000 £'000 £'000 £'000
(audited) (unaudited) (unaudited) (unaudited)
Cash and cash equivalents 7,096 11,782 26 18,904
Debt due within one year (5,951) (6,982) 47 (12,886)
Total 1,145 4,800 73 6,018
8 Share capital
In the six months ended 31 December 2022, 163,200 ordinary shares were
purchased into treasury with net costs of £1,116,000 (six months ended 31
December 2021 and year ended 30 June 2022: the Company made no purchases into
treasury).
In the six months ended 31 December 2022, 163,200 ordinary shares were
subsequently sold from treasury with net proceeds of £1,175,000 (six months
ended 31 December 2021 and year ended 30 June 2022: the Company had no sales
from treasury).
In the six months ended 31 December 2022, 970,000 new ordinary shares were
allotted with net proceeds of £706,000 (six months ended 31 December 2021;
2,668,000 new ordinary shares were allotted with net proceeds of £22,022,000,
year ended 30 June 2022: 5,486,000 new ordinary shares were allotted with net
proceeds of £44,197,000).
There were no ordinary shares held in treasury at the period end or prior year
end.
9 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 to 31
December 2022, £75,000 was paid to Directors (31 December 2021: £70,000; 30
June 2022: £140,000) of which £nil was outstanding at the period end (31
December 2021: outstanding £nil; 30 June 2022: outstanding £nil).
10 Transactions with the Investment Manager
The investment management fee payable to Artemis Fund Managers Limited for the
six months ended 31 December 2022 was £1,149,000 (31 December 2021
£1,231,000; 30 June 2022 £2,437,000) of which £573,000 was outstanding at
the period end (31 December 2021 £633,000; 30 June 2022 £597,000).
11. Post Balance Sheet Events
Following the period end and up to 28 February 2023, 325,000 ordinary shares
were bought back to be held in treasury.
Availability of Half-Yearly Financial Report
Copies of the Half-Yearly Financial Report for the six months ended 31 December 2022 will be sent to shareholders shortly and will also be available on request from the registered office at 6(th) Floor, Exchange Plaza, 50 Lothian Road, Edinburgh, EH3 9BY as well as on the Company's website midwynd.com.
A copy of the Half-Yearly Financial Report will also be submitted to the FCA's
National Storage Mechanism and will soon be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
For further information, please contact:
Artemis Fund Managers Limited
Company Secretary
Telephone number: 0131 225 7300
1 March 2023
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