REG-Mid Wynd International Investment Trust Plc: Half-year Report
27/02/2025 07:15
Half-Yearly Financial Report (Unaudited) for the six months ended 31 December
2024
Financial Highlights
Total returns Six months ended 31 December 2024 Six months ended 31 December 2023 Year ended 30 June 2024
Net asset value per share† 0.8% 6.8% 13.9%
Share price† 0.1% 9.7% 17.1%
MSCI All Country World Index (GBP) 6.5% 7.0% 20.1%
Revenue and dividends Six months ended 31 December 2024 Six months ended 31 December 2023 Year ended 30 June 2024
Revenue earnings per share 2.01p 4.72p 8.00p
Dividends per share* 3.85p 3.85p 8.00p
Ongoing charges† 0.64% 0.60% 0.60%
Capital As at 31 December 2024 As at 31 December 2023 As at 30 June 2024
Net asset value per share 812.18p 763.33p 810.22p
Share price 794.00p 750.00p 797.00p
Net cash† 1.9% 1.7% 1.4%
Discount† 2.2% 1.7% 1.6%
Source: Lazard/Morningstar
†Alternative Performance Measure.
* The interim dividend for the six months to 31 December 2024 will be paid on
28 March 2025 to shareholders on the register at the close of business on 7
March 2025.
Total returns to 31 December 2024 3 years* 5 years* 10 years* Since Lazard appointment
Net asset value per share† 1.6% 48.0% 295.5% 11.6%
Share price† 1.6% 39.7% 290.9% 11.0%
MSCI All Country World Index (GBP) 26.8% 70.9% 201.1% 21.1%
Source: Lazard/Morningstar
†Alternative Performance Measure.
* Total returns over 3, 5 and 10 years cover the period over which Artemis
Fund Managers Limited was the Company’s Investment Manager, from 1 May 2014
to 30 September 2023. Lazard were appointed as Investment Manager with effect
from 1 October 2023.
Chairman’s Statement
Performance
I am pleased to present my first report as Chairman of the Company.
For the six months ended 31 December 2024 the Company’s share price rose by
0.1%, 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
6.5%. The Company’s net asset value (‘NAV’) per share increased by 0.8%
on a total return basis. A detailed review of portfolio performance is
included within the Investment Manager’s Review.
As at 31 December 2024 the share price stood at a 2.2% discount to NAV. This
compares favourably to the weighted average discount of the ‘Global’
sector per the Association of Investment Companies (‘AIC’), of which the
Company is a member, which stood at 8.7% at the same date. Despite continued
volatile market conditions during the six-month period under review the
Company’s average daily discount was 1.9%. 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 NAV. The Company’s
NAV is assessed on a real time basis when buying or selling the Company’s
shares using modelling that updates live prices and exchange rates to provide
the most accurate valuation.
The Ongoing Charges Ratio as at 31 December 2024 marginally increased to
0.64%. This is predominately due to the reduction of gross assets as a result
of the effective operation of our discount control mechanism.
These share buybacks were accretive to net asset value for existing
shareholders, enhancing the NAV total return by approximately £712,000,
equivalent to 56.9% of the Company’s operating expenses for the six months
to 31 December 2024 which is not reflected in the ongoing charges.
Earnings and dividend
The net return for the six months to 31 December 2024 was a gain of 4.77 pence
per share, comprising a revenue gain of 2.01 pence per share and a capital
gain of 2.76 pence per share. The Board is proposing an interim dividend of
3.85 pence per share which will be paid on 28 March 2025 to those shareholders
on the register at the close of business on 7 March 2025. Net revenue return
pence per share this period decreased by 49% on the equivalent period to
December 2023. As outlined in the Annual Report, this decline in revenue was
expected under the investment strategy of the new manager, where the focus has
been to invest in companies which reinvest a higher proportion of their
cashflow into their business, so that we can benefit from high internal rates
of return. Going forward should revenue per share continue to be below the
current dividend level the Board intends at least to maintain the dividend,
using the revenue reserves and, if required, the capital reserve.
Share capital
During the six months to 31 December 2024, the Company bought back 4,225,500
shares at a total cost of £33.7 million at an average discount of 2.1%. These
shares are held in Treasury, bringing the total number of shares held in this
account to 20.7 million as at the period end. It is expected that these shares
will be reissued at such time as market conditions permit the Company’s
return to issuing shares at a premium to NAV and thus at an advantage to
existing shareholders.
Following the period end, 934,500 ordinary shares were bought back and are
held in Treasury.
The Board
On 23 October 2024, Russell Napier stepped down as the Chairman and retired
from the Board. As reported in the Annual Report, the Board began a process to
appoint a new Director in early 2024. Following a rigorous process, completed
with the services of an external search agent, Anulika Malomo was appointed as
an independent non-executive Director on 24 October 2024. Anulika brings
extensive investment experience to the Board and has already made a positive
contribution.
Contact us
Shareholders can keep up to date with developments between formal reports by
visiting our new website at midwynd.com where you will find information on the
Company and a factsheet which is updated monthly.
In addition, the Board is always keen to hear from shareholders and, should
you wish, you can contact me via the Company Secretary at
cosec@junipartners.com.
Outlook
After a lacklustre opening six months, the Board retains confidence in the
strategy and stock selection skills of our manager. As shown in the Investment
Manager's Review, the companies in our portfolio continue to show robust
operational performance with solid earnings growth. This is not currently
being reflected in their share prices, but this cannot remain the case
indefinitely and as long-term investors we remain patient. At a time when
equity indices have become dangerously concentrated, we continue to support
our manager's approach of holding a well-diversified portfolio of quality
businesses.
David Kidd
Chairman
Investment Manager’s Review
Overview
The Company’s NAV rose by 0.8% between 1 July 2024 and 31 December 2024. The
Company’s share price rose by 0.1% during this period, while the MSCI All
Country World Index (‘MSCI ACWI’) gained 6.5%. Below we discuss some of
the things that have impacted performance.1
Last year was undoubtedly disappointing for us, and periods like this
invariably give rise to questions. One question that has been raised is
whether an investment process that has served us very well for most of the
past 14 years is right for today’s world of higher rates and changing
economic circumstances?
Our conclusion, after long reflection, is that recent performance, in the
main, is the result of the unusually ‘narrow’ market environment.2 We
continue to believe that investing in high-quality companies whose earnings
are growing faster than the market average should increase investor wealth and
deliver outperformance in the long run. We certainly consider the portfolio to
be attractively valued and are confident it will benefit from a more
normalised market environment.
Market Review
Global stock markets rose during the first six months of the fiscal year
(second half of calendar 2024), with investor optimism centred on the US. It
is important to note that this rise was not simply a story of markets’
strength: it was also a story of their unusual narrowness.
The MSCI ACWI, a broad global index, returned 6.5% in GBP terms during the
second half of 2024 and is up around 40% since the end of 2022. The US market,
represented by the S&P 500 Index, gained 9.5% during the second half of 2024
and is up over 50% since the end of 2022.3 Such figures are well worth placing
in broader context.
Since 1985, in US dollar terms, the US stock market has appreciated to such a
degree on only a handful of occasions. All have tended to be clustered around
key events in market history, including Black Monday (1987), the dot-com
bubble (late 1990s/early 2000s), the recovery that followed the global
financial crisis (2010) and the recovery that followed the COVID-19 pandemic
(2021).
The extraordinary performance of NVIDIA underlines how the recent boom has
been driven largely by stocks related to artificial intelligence (‘AI’).
The chip designer’s weighting in the MSCI ACWI grew from 0.6% at the start
of 2023 to 4.3% at the end of 2024.
The stock is up 789% over the past 24 months.4 This is nearly 20 times the
return of the MSCI ACWI and nearly 80 times that of the MSCI ACWI Equal
Weighted Index – a disparity that has caused a historically wide spread in
returns between the two indices.
Just 27% of the S&P 500’s constituents outperformed the index over 2024 –
only slightly better than 2023’s 26%. Such figures, which are even lower
than those seen during the dot-com bubble, underscore the remarkable
narrowness of markets.
Against this backdrop, US markets drove overall returns. Europe, Japan, Asia
ex Japan and Emerging Markets all lagged. Information Technology and
Communication Services were the best-performing sectors, while Materials and
Health Care underperformed the wider index. In short, then, if you have not
been in the narrow area that the market has rewarded you have been heavily
punished.
A second factor – which is harder to explain – is that, although the
portfolio generates a higher return on capital than the market both in
aggregate and across sectors, and it has kept up with the market in terms of
growing earnings, the portfolio has lagged the multiple expansion seen
elsewhere. Some of our disappointing stocks have been working through
inventory issues but still managed to generate stronger earnings power than
average. It is a reminder that the market in the short term is a voting
machine and in the long term a weighing machine. We are long-term investors
and look forward to the scales tipping.
1 Past performance is not a reliable indicator of future returns.
2 Source: Bloomberg
3 Source: Bloomberg
4 Source: Bloomberg
Financial Productivity – Returns on Capital
We use Cash Flow Return on Investment (‘CFROI’) as our preferred Return on
Capital metric. Our holdings have a median forward CFROI that is more than
double that of the MSCI ACWI. Within sectors, our holdings have a median CFROI
that is 1.6 to 4.4 times greater than within the MSCI ACWI sectors. Note that
we typically do not invest in Energy, Materials, Real Estate, or Utilities
those companies typically do not generate the levels of returns on capital
that we seek.
Going forward, we believe the key drivers of returns in 2024 – valuation
re-rating and narrow markets – should abate, with market attention returning
to quality stocks. We believe that our portfolio looks well positioned to
benefit from this shift.
Our investment process
The search for Compounders
In the light of the commentary so far, it might be helpful here to remind
investors of our core investment principles. We manage the Company’s
portfolio in accordance with our Global Quality Growth strategy. This aims to
invest in businesses we consider to be “Compounders”.
We define a Compounder as a company we believe is capable of generating
consistently high returns on capital and reinvesting in its business to drive
future growth. This process should create a virtuous “compounding cycle”
of wealth creation in which investors can share.
We believe the broader market undervalues Compounders because it adheres to
the economic law of competition. This prescribes that high returns on capital
attract competition, squeezing market share, driving down prices and resulting
in an erosion of profitability. But we see plenty of real-world examples to
show the theory does not work in practice.
In our view, Compounders have sustainable advantages that help them keep
competitors at bay. Although the market assumes their profitability will fade,
they deliver consistently high financial productivity for longer than
expected.
As a result, investors who focus more on near-term earnings multiples rather
than a company’s long-term earning power are likely to undervalue these
exceptional businesses. This means that when these Compounders “beat the
fade” they tend to beat the market, too.
We prefer to own Compounders for long periods to allow the compounding cycle
to drive cash flows and share prices higher. This is reflected in the
strategy’s turnover, which during the past five years has averaged just
10-15% annually – an approach that has also helped keep trading costs low.
Our investment process is reinforced by empirical research covering 25 years
of markets and supported by Lazard’s extensive fundamental research team of
over 70 global sector specialists. Drawing on this expertise, we look to build
a portfolio that is broadly diversified across sectors, regions and
competitive advantages and which can generate attractive total returns for
investors.
Portfolio activity: our process in practice
Although the average holding period for our Global Quality Growth strategy is
between seven and 10 years, we aim to take full advantage whenever the market
gives us an opportunity to improve the quality of our portfolio. The following
examples illustrate how we have applied this aspect of our investment process
over the past six months.
* Apple remains the world’s leading smartphone vendor, with a loyal and
satisfied installed base. Its iOS platform has a powerful network effect, with
an installed base of more than one billion helping to drive continued
innovation from developers – a competitive edge that is difficult to
replicate.
In addition to the adjacent product categories that benefit from the iOS
ecosystem’s leadership and integration (iPad, Watch, Mac, AirPods), Apple
has built a diversified and growing high-margin revenue stream of software and
services, which together now account for more than 20% of total revenues and
close to 70% of gross margins. This has become a significant growth driver and
has reduced the business’s cyclicality from hardware product cycles.
* Corpay is a global payments company that helps businesses and consumers
easily pay expenses. Its suite of solutions enhances the management of
expenses related to vehicles (e.g. fuelling and parking), travel (e.g. hotel
bookings) and payables (e.g. paying vendors), with the majority of revenues
coming from commercial fleet operators. The company also provides important
analytics, allowing customers to monitor and control fuel spend, optimise
routing and improve overall efficiency.
Corpay is a highly financially productive company, consistently achieving
top-decile returns on capital for over a decade thanks primarily to its
competitive advantages. It enjoys high barriers to entry through its
proprietary closed-loop payment networks, specialised multichannel sales
networks and high switching costs for customers – resulting in very high
renewal rates. Over the past 10 years it has achieved mid-teens earnings
growth by reinvesting cash flows to drive organic growth, acquiring companies
in new verticals and cross-selling to existing customers. It has also invested
in EV charging networks, home charging equipment and fuel-agnostic software to
address the electrification of commercial fleets. According to company data,
EVs generate more revenue for Corpay than standard internal combustion engine
vehicles – although the general transition to EVs is likely to remain
gradual.
Exposure by sector and region
In line with our investment process, our sectoral and regional exposures are
driven by stock selection. No top-down allocations are made. Changes in
exposure from 1 July 2024 to 31 December 2024 resulted from market movements
and the following purchases/sales.
* Purchases: Equifax (Industrials), Corpay (Financials), Diageo (Consumer
Staples) and Apple and Cadence Design Systems (Information Technology)
* Sales: Alphabet (Communication Services), Shimano (Consumer Discretionary),
Estée Lauder (Consumer Staples) and Intuit (Information Technology)
Sector exposure fell in Consumer Discretionary and rose in Information
Technology as we shifted our position in Alphabet to Apple. Typically, the
strategy has zero weight in Real Estate, Energy, Materials and Utilities, as
companies in these sectors tend not to generate sufficient returns on capital
to be considered of high quality.
Performance
NAV, discount and share price
The Company’s NAV rose by 0.8% in GBP terms between 1 July 2024 and 31
December 2024. Shares traded at a small discount to the NAV during this
period, ending at a discount of 2.2% – compared with a discount of 8.7% for
the Association of Investment Companies (‘AIC’) Global sector peer group.
The Company’s share price rose by 0.1%, compared with a 6.5% gain for the
MSCI ACWI.
As discussed earlier, unusually narrow markets can create a headwind for
active managers whose investment process is geared towards portfolio
diversification. We would expect the portfolio to experience a relative lag
when a significant area of the market becomes notably extended or overbought,
as has been the case in this instance.
Key stock-level contributors to portfolio performance
The following stocks have been key contributors to the Company’s absolute
returns during the period covered in this report.
Five principal contributors
Contribution to
Company Total Return (%)
Aon 0.80
Salesforce 0.71
Visa 0.69
Apple 0.63
Accenture 0.55
Source: Lazard/FactSet.
Data in GBP and for the period from 1 July 2024 to 31 December 2024.
* Aon is a global insurance broker and consultant. The company is seeing
better revenue growth across its business lines of commercial risk,
reinsurance, health and wealth, with margin expansion.
* Salesforce, a leading customer relationship management (‘CRM’) software
producer, rose as the company announced plans to hire a thousand new
salespeople to sell its new Agentforce AI capabilities amid indications of
strong customer interest. We believe the business is undervalued, as it has
attractive exposure to secular growth in digital transformation investment, a
leading multiproduct suite and a recurring subscription revenue stream, with
significant room for margin expansion.
* Visa continues to generate a high level of financial productivity and has
been showing purchase volume and transaction growth. The global payments
company’s brand and four-party ecosystem – card-issuing banks, consumers,
merchants and merchant acquirers – serve as strong barriers to competition
as digital payments increase.
* Apple remains the world’s leading smartphone vendor, as noted earlier. It
benefits from a substantial installed base, the network effects of its iOS
platform and a diversified and growing high-margin revenue stream of software
and services.
* Accenture is an IT services consultant that is strongly positioned to assist
corporate clients through their digitisation journeys, including the
integration of AI into their businesses. The company had seen a slowdown in
discretionary spending and a shift of budgets towards AI, with its shares
rebounding from an oversold position.
Key stock-level detractors to portfolio performance
The following stocks have been key detractors from the Company’s absolute
returns during the period covered in this report.
Five principal detractors
Contribution to
Company Total Return (%)
ASML (0.77)
Alphabet (0.74)
VAT Group (0.74)
Adobe (0.51)
Booz Allen Hamilton (0.35)
Source: Lazard/FactSet.
Data in GBP and for the period from 1 July 2024 to 31 December 2024.
* ASML has a virtual monopoly in leading-edge lithography machines that
“print” circuits on to semiconductor silicon wafers. While the increasing
complexity of chip designs is fuelling demand for the company’s equipment,
shares have experienced headwinds in light of capital expenditure cuts from
key semiconductor companies, as well as fears of potential tariffs and
possible bans on shipments of chips to China.
* Alphabet, Google’s parent company, generates a high level of financial
productivity through search/digital advertising, supported by its dominant
share in search query volumes. Adjacent product areas – including Android,
Chrome, Maps, YouTube and Gmail – create an ecosystem that drives consumer
usage across the Google platform. However, the US Department of Justice
(‘DOJ’) is considering a break-up of the company, whose pre-eminence in
the US browser market has been judged an illegal monopoly. While there is a
long runway before a final decision, we believe the DOJ’s proposals increase
risk to the company’s operating income and competitive positioning. The
market also appears concerned about the return on investment from AI capital
expenditure. We shifted our position to what we regard as better risk/reward
opportunities – namely, Apple.
* VAT Group makes vacuum valves, which are critical components of
semiconductor manufacturing equipment. We see demand for these increasing as
more steps of the manufacturing process incorporate vacuum environments to
achieve higher circuit density and thinner circuit line widths. However, due
to cyclical weakness in the equipment market, orders for the company’s
valves were below expectations.
* Adobe, an established leader in digital transformation, should be a winner
as AI is integrated into workflows, but the market seems to be concerned about
the pace of AI-related revenues and low-end competition. We believe Adobe will
be able to benefit from its leadership in core markets and innovation, which
can drive double-digit earnings growth. Continued growth in content creation
should generate increased need for the company’s products, benefiting
average revenue per user (‘ARPU’) and subscriber growth.
* Booz Allen Hamilton one of the leading providers high-end management and
technology consulting services, catering to the US government. It fell in
response to the incoming Trump administration’s creation of the Department
of Government Efficiency (‘DOGE’), with investors fearing a cut in
government spending on contractors. We continue to like the company due to its
high returns and asset-light business model, which for several years has grown
organic revenue more than the industry’s average.
Key sectoral and regional contributors to portfolio performance
As discussed above, our sectoral and regional exposures are driven by stock
selection.
At the sectoral level, Financials and Information Technology contributed to
total return. This was offset by holdings in Industrials, Health Care and
Communications Services.
Sector contributions
Contribution to
Sector Total Return (%)
Financials 2.30
Information Technology 0.58
Energy 0.00*
Materials 0.00*
Real Estate 0.00*
Utilities 0.00*
Consumer Staples (0.09)
Consumer Discretionary (0.13)
Communication Services (0.33)
Health Care (0.40)
Industrials (1.08)
Source: Lazard/FactSet.
Data in GBP and for the period from 1 July 2024 to 31 December 2024.
* Portfolio has no exposure.
At the regional level, holdings in North America and Emerging Markets made a
positive contribution to performance. This was offset by headwinds in Europe
ex UK.
Regional contributions
Contribution to
Region Total Return (%)
North America 1.69
Emerging Markets 0.60
Japan 0.18
Asia ex Japan 0.16
United Kingdom 0.05
Europe ex UK (1.84)
Source: Lazard/FactSet.
Defined by country of listing.
Data in GBP and for the period from 1 July 2024 to 31 December 2024.
Outlook
We reiterate our firm belief that investing in the highest-quality companies
is the best way to increase investor wealth and outperform over the long term.
We are optimistic about the prospects for 2025, as we expect many of the
performance headwinds of 2024 to abate.
Our confidence stems from our fundamental research, which persuades us that
the companies we are invested in should continue to deliver solid earnings and
cash flow growth. We are reminded that share prices do not always follow
fundamentals over the short term. As long-term investors, we need to have the
patience and fortitude to follow our conviction and stay the course through
challenging periods. We believe the market will assign a higher valuation to
our companies over time if they continue to demonstrate strong operating
performance.
We continue to look for ways to improve the quality of the portfolio,
primarily by shifting positions in favour of names where we see a higher level
of quality, where barriers to competition are stronger or where reinvestment
opportunities are more prevalent, for example. We are in constant dialogue
with our fundamental research analysts regarding new ideas and updates on
existing holdings, and we also meet company management ourselves to source
further opportunities and to build our perspective on the operating
environment that businesses are facing.
AI has the potential to transform companies over the long term, and we
certainly do not underestimate its power. We believe the market is ascribing
most of AI’s value to those businesses that are building AI infrastructure
rather than to the many that are poised to benefit from this transformative
technology. We believe equity markets could broaden as investors seek a more
attractive risk/reward profile, and a strategy such as ours – which is
focused on financial productivity – should benefit from a more normalised
market environment and a rotation into high-quality names.
We expect to see continued volatility, both as the US Federal Reserve and
other central banks seek to balance the goals of maintaining financial
stability and controlling inflation and as President Trump proposes new
polices and signs executive orders. Our holdings are typically market leaders
that have pricing power, so we see our companies as strongly positioned for
the realistic scenarios ahead.
We remain focused on our philosophy of investing the portfolio in high-quality
companies – Compounders – whose barriers to competition can sustain
elevated levels of financial productivity and which can reinvest back into
their business at similar returns in order to drive future growth. Spanning 25
years of equity markets, our extensive experience suggests this approach
should deliver outperformance over time.
We thank you for your continued investment.
Louis Florentin-Lee & Barnaby Wilson
Fund Managers
Interim Management Report and Responsibility Statement
Principal Risks and Uncertainties
Pursuant to DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, the
principal risks and uncertainties faced by the Company include strategic risk,
market risks, legal and regulatory risk and operational risks including
reliance on third-party service providers and reliance on key personnel.
The Directors have assessed these risks and are of the opinion the nature of
the risks and the way in which they are managed have not materially changed
from the description provided on pages 20 to 22 of the previous Annual
Financial Report for the year ended 30 June 2024 which is available at
midwynd.com. These risks remain applicable to the six months under review and
the remaining six months in the financial year.
Related Party Transactions
During the six months ended 31 December 2024, 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, the liquid nature
of its investments, assets and liabilities, projected revenue and expenses and
the Company’s dividend policy and share buyback programme. 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 2024:
* 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 2024 was
approved by the Board and the above Responsibility Statement has been signed
on its behalf by:
David Kidd
Chairman
Condensed Statement of Comprehensive Income
For the six months ended 31 December 2024 (unaudited) For the six months ended 31 December 2023 (unaudited) For the year ended 30 June 2024 (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments held at fair value - 2,215 2,215 - 24,097 24,097 - 49,019 49,019
Currency (losses)/ gains - (41) (41) - 100 100 - 61 61
Income 1,535 - 1,535 3,291 - 3,291 5,650 110 5,760
Investment management fee (81) (732) (813) (69) (622) (691) (134) (1,207) (1,341)
Other expenses (312) (126) (438) (466) (69) (535) (665) (218) (883)
Net return before finance costs and taxation 1,142 1,316 2,458 2,756 23,506 26,262 4,851 47,765 52,616
Finance costs of borrowings - - - (4) (34) (38) (2) (21) (23)
Net return on ordinary activities before taxation 1,142 1,316 2,458 2,752 23,472 26,224 4,849 47,744 52,593
Taxation on ordinary activities (187) - (187) (47) - (47) (448) (71) (519)
Net return on ordinary activities after taxation 955 1,316 2,271 2,705 23,472 26,177 4,401 47,673 52,074
Net return per ordinary share 2.01p 2.76p 4.77p 4.72p 40.92p 45.64p 8.00p 86.66p 94.66p
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 31 December 2024 (unaudited) As at 31 December 2023 (unaudited) As at 30 June 2024 (audited)
£’000 £’000 £’000
Non current assets
Investments held at fair value through profit or loss 363,729 412,360 398,094
Current assets
Debtors 605 543 1,950
Cash and cash equivalents 7,192 6,969 5,742
7,797 7,512 7,692
Creditors
Amounts falling due within one year (776) (550) (1,692)
Net current assets 7,021 6,962 6,000
Total net assets 370,750 419,322 404,094
Capital and reserves
Share capital 3,320 3,320 3,320
Capital redemption reserve 16 16 16
Share premium account 242,115 242,115 242,115
Capital reserve 120,334 167,545 152,673
Revenue reserve 4,965 6,326 5,970
Shareholders’ funds 370,750 419,322 404,094
Net asset value per ordinary share 812.18p 763.33p 810.22p
Condensed Statement of Changes in Equity
For the six months ended 31 December 2024 (unaudited)
Share capital Capital redemption reserve Share premium Capital reserve 1,2 Revenue reserve 2 Shareholders’ funds
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 July 2024 3,320 16 242,115 152,673 5,970 404,094
Net return on ordinary activities after taxation - - - 1,316 955 2,271
Repurchase of shares into Treasury - - - (33,655) - (33,655)
Dividends paid - - - - (1,960) (1,960)
Shareholders’ funds at 31 December 2024 3,320 16 242,115 120,334 4,965 370,750
For the six months ended 31 December 2023 (unaudited)
Share capital Capital redemption reserve Share premium Capital reserve 1,2 Revenue reserve 2 Shareholders’ funds
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 July 2023 3,320 16 242,115 196,730 6,845 449,026
Net return on ordinary activities after taxation - - - 23,472 2,705 26,177
Repurchase of shares into Treasury - - - (52,657) - (52,657)
Dividends paid - - - - (3,224) (3,224)
Shareholders’ funds at 31 December 2023 3,320 16 242,115 167,545 6,326 419,322
For the year ended 30 June 2024 (audited)
Share capital Capital redemption reserve Share premium Capital reserve 1,2 Revenue reserve 2 Shareholders’ funds
£’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 July 2023 3,320 16 242,115 196,730 6,845 449,026
Net return on ordinary activities after taxation - - - 47,673 4,401 52,074
Repurchase of shares into Treasury - - - (91,730) - (91,730)
Dividends paid - - - - (5,276) (5,276)
Shareholders’ funds at 30 June 2024 3,320 16 242,115 152,673 5,970 404,094
1 Capital reserve as at 31 December 2024 includes realised gains of £69,481,000 (31 December 2023: £133,904,000; 30 June 2024: £101,175,000).
2 The Company may pay dividends from both capital and revenue reserves.
Condensed Statement of Cash Flows
For the six months ended 31 December 2024 (unaudited) For the six months ended 31 December 2023 (unaudited) For the year ended 30 June 2024 (unaudited)
£’000 £’000 £’000
Net cash outflow from operations before dividends and interest (1,630) (1,363) (2,649)
Dividends received from investments 1,529 3,118 5,672
Interest received 6 113 133
Interest paid - (39) (23)
Net cash (outflow)/inflow from operating activities (95) 1,829 3,133
Cash flow from investing activities
Purchase of investments (46,083) (388,879) (375,073)
Sale of investments 83,687 439,638 463,853
Realised currency (losses)/gains (38) 98 65
Net cash generated from investing activities 37,566 50,863 88,845
Cash flow from financing activities
Repurchase of shares into Treasury (34,058) (54,737) (93,200)
Dividends paid (1,960) (3,224) (5,276)
Net cash outflow from financing activities (36,018) (57,961) (98,476)
Net increase/(decrease) in cash and cash equivalents 1,453 (5,269) (6,498)
Cash and cash equivalents at start of the period 5,742 12,243 12,243
Increase/(decrease) in cash in the period 1,453 (5,269) (6,498)
Currency losses on cash and cash equivalents (3) (5) (3)
Cash and cash equivalents at end of the period 7,192 6,969 5,742
Notes to the Half-Yearly Financial Report
1.(a) Accounting policies
The unaudited condensed financial statements for the six months to 31 December 2024 comprise the statements set out in the Interim Report together with the related notes. 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 2024 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 (‘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 2024 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditors’ report on those accounts was not
qualified and did not contain statements under sections 498(2) or (3) of the Act. The unaudited condensed financial statements for the six months ended 31 December 2024 have been prepared on a going concern basis.
1.(b) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged through the revenue reserve except where they relate directly to the acquisition or disposal of an investment, in which case they are added to the cost of the investment or deducted from the sale proceeds, and where they are connected with the maintenance or the enhancement of the value of investments are charged to the capital reserve. The management fees, company secretarial and administration fees, the cost of operating the
discount control mechanism and finance costs are allocated 90% to capital and 10% to revenue.
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 2024 being 47,602,419 (six months ended 31 December 2023: 57,362,785 and year ended 30 June 2024: 55,010,567).
3. Dividends
An interim dividend for the six months ended 31 December 2024 of 3.85 pence per ordinary share (six months ended 31 December 2023: 3.85 pence) has been declared. This dividend will be paid on 28 March 2025 to those shareholders on the register at close of business on 7 March 2025.
4. Borrowing facilities
On 19 February 2021, the Company entered into a three year agreement with The Bank of Nova Scotia (UK Branch) for a US$60 million multi-currency revolving credit facility. Following a review, the Company terminated the agreement on 11 September 2023.
5. Fair value hierarchy
All investments are designated at fair value through profit or loss on initial recognition in accordance with FRS 102. The following table provides an analysis of these investments based on the fair value hierarchy as described below which reflects the reliability and significance of the information used to measure their fair value. The disclosure is split into the following categories: Level 1 – Investments with unadjusted quoted prices in an active market; Level 2 – Investments whose fair value is based
on inputs other than quoted prices that are either directly or indirectly observable; Level 3 – Investments whose fair value is based on inputs that are unobservable (i.e. for which market data is unavailable).
31 December 2024 31 December 2023 30 June 2024
£’000 £’000 £’000
(unaudited) (unaudited) (audited)
Level 1 363,729 412,360 398,094
Total value of investments 363,729 412,360 398,094
6. Reconciliation of net return before finance costs and taxation to cash from operations
For the six months ended 31 December 2024 For the six months ended 31 December 2023 For the year ended 30 June 2024
£’000 £’000 £’000
(unaudited) (unaudited) (audited)
Net return before finance costs and taxation 2,458 26,262 52,616
Gains on investments (2,215) (24,097) (49,019)
Currency losses/(gains) 41 (100) (61)
Increase/(decrease) in accrued income and other debtors 207 87 (79)
Dividend income (1,529) (3,118) (5,672)
Interest received (6) (113) (133)
(Decrease)/increase in creditors (399) (237) 218
Overseas tax suffered (187) (322) (792)
Corporation tax refunded - 275 273
Net cash outflow from operations before interest and dividends (1,630) (1,363) (2,649)
7. Analysis of changes in net cash
At 30 June 2024 Cashflow Exchange movements At 31 December 2024
£’000 £’000 £’000 £’000
(audited) (unaudited) (unaudited) (unaudited)
Cash and cash equivalents 5,742 1,453 (3) 7,192
Total 5,742 1,453 (3) 7,192
8. Share capital
In the six months ended 31 December 2024, 4,225,500 ordinary shares were purchased into Treasury at a total cost of £33,655,000 (six months ended 31 December 2023: 7,445,136 ordinary shares at a total cost of £52,657,000 and year ended 30 June 2024: 12,504,096 ordinary shares at a total cost of £91,730,000). In the six months ended 31 December 2024, no ordinary shares were sold from Treasury (six months ended 31 December 2023 and year ended 30 June 2024: no ordinary shares were sold from Treasury). In the
six months ended 31 December 2024, no new ordinary shares were allotted (six months ended 31 December 2023 and year ended 30 June 2024: no new ordinary shares were allotted). As at 31 December 2024, 20,732,258 ordinary shares were held in Treasury (31 December 2023: 11,447,798; 30 June 2024: 16,506,758).
9. Net asset value per ordinary share
The calculation of the net asset value per ordinary share is based on the following:
31 December 2024 31 December 2023 30 June 2024
(unaudited) (unaudited) (audited)
Shareholders’ funds (£’000) 370,750 419,322 404,094
Number of ordinary shares in issue at period end 45,648,856 54,933,316 49,874,356
Net asset value per ordinary share 812.18p 763.33p 810.22p
10. Related party transactions
The Directors are considered to be related parties. No Director has an interest in any transactions which are, or were, unusual in their nature or significant to the nature of the Company. The Directors receive fees for their services. During the six months ended 31 December 2024, £85,000 was paid to Directors (six months ended 31 December 2023: £82,000 and year ended 30 June 2024: £163,000) of which £nil was outstanding at the period end (31 December 2023: outstanding £nil; 30 June 2024: outstanding
£nil).
11. Transactions with the Investment Manager
The investment management fees payable to Lazard and the Company’s former investment manager, Artemis are disclosed in the Statement of Comprehensive Income. The amount outstanding to Lazard at 31 December 2024 was £364,000 (31 December 2023 amount outstanding to Artemis: £525,000 and year ended 30 June 2024 amount outstanding to Lazard: £738,000). The existence of an independent Board of Directors demonstrates that the Company is free to pursue its own financial and operating policies and therefore the
Investment Manager is not considered to be a related party.
12. Post Balance Sheet Events
Following the period end and up to 24 February 2025, 934,500 ordinary shares were bought back to be held in Treasury, at a total cost of £7,615,000.
13. Status of this report
These are not full statutory accounts for the purposes of Section 434 of the Companies Act 2006 and are unaudited. Statutory accounts for the year ended 30 June 2024, which received an unqualified audit report and which did not contain a statement under Section 498 of the Companies Act 2006, have been lodged with the Registrar of Companies. No full statutory accounts in respect of any period after 30 June 2024 have been reported on by the Company’s auditors or delivered to the Registrar of Companies. A copy
of the Half-Yearly Financial Report will be sent to shareholders and is available on the Company’s website at midwynd.com (http://www.patplc.co.uk). Shareholders are encouraged to visit the website for further information on the Company. For further information please contact: Juniper Partners Limited Company Secretary email: cosec@junipartners.com
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