MANCHESTER AND LONDON INVESTMENT TRUST PUBLIC LIMITED
COMPANY
(the “Company”)
Half-yearly report for the six months
ended 31 January 2018
A copy of the Half-Yearly Report can be accessed via the
Company’s website at
www.mlcapman.com/manchester-london-investment-trust-plc or by
contacting the Company Secretary by telephone on 01392 477500.
SUMMARY OF RESULTS
|
At
31 January
2018 |
At
31 July
2017 |
Change |
Net assets
attributable to Shareholders (£’000) |
113,657 |
94,661 |
20.1% |
Net asset value
(“NAV”) per Ordinary Share (pence) |
480.36 |
429.05 |
12.0% |
|
Six
months
to 31 January
2018 |
Total return to
Shareholders * |
13.5% |
Benchmark – MSCI UK
Investable Market Index (MXGBIM) * |
4.7% |
* Total return including dividends reinvested, as sourced from
Bloomberg.
|
Six months
to
31 January
2018 |
Six months
to
31 January
2017 |
Change |
Interim ordinary
dividend per Ordinary Share (pence) |
4.00 |
1.82 |
|
First special dividend
per Ordinary Share (pence) |
- |
1.18 |
|
Total dividends per
Ordinary Share (pence) |
4.00 |
3.00 |
33.3% |
Dates for the interim ordinary
dividend
Dividend declaration
date |
3 April
2018 |
Ex-dividend date |
12 April
2018 |
Record date |
13 April
2018 |
Payment date |
8 May
2018 |
CHAIRMAN’S STATEMENT
Results for the half year ended
31 January 2018
During the half year under review, the total return to
Shareholders was 13.5%, against an increase in the benchmark of
4.7%. The Manager’s Report sets out the reasons for this
outperformance. The Manager has retained its focus on buying stocks
with business models that are aligned with key forward-looking
trends. The Board notes the Manager’s views that the positive
momentum for generalist consumer staple stocks may have seen a
shift in trend.
Alternative Investment Fund Managers’
Directive (the “AIFMD”)
The Company has appointed the Manager as its full scope
Alternative Investment Fund Manager (“AIFM”) and Indos Financial as
its Depositary, in order to meet the increased regulatory
requirements of the AIFMD, following the increase in its assets
under management.
Dividends
With these results, we have announced an interim ordinary
dividend of 4.0 pence per Ordinary
Share. This is an increase of over 33% (31 January 2017: 3.0
pence per Ordinary Share).
Outlook
Global events, both political and economic, continue to produce
uncertainty and volatility in equity markets worldwide. Within this
challenging environment, our performance in the first half of the
year has been satisfactory.
P H A Stanley
Chairman
3 April 2018
MANAGER’S REPORT
Portfolio management
The portfolio delivered an 8.8% outperformance against the
benchmark, driven by our sector positioning.
The portfolio segments can be broken down in contribution to
base currency performance terms over the half year as follows:
Total
return of underlying sector holdings in local currency (excluding
costs and foreign exchange) |
Technology
investments |
14.8% |
Consumer
investments |
5.2% |
Healthcare
investments |
0.7% |
Other (including costs
and foreign exchange) |
(7.1%) |
Total NAV per Share
return |
13.5% |
Source: Bloomberg L.P.
Technology investments
Technology (under which we include the Information Technology
GICS (Global Industry Classification Standard) sector and
technology/disruption orientated funds) delivered over 70% of
underlying portfolio total return (in local currency).
The five largest contributors in this sector were Alphabet Inc.,
Facebook Inc., Microsoft Corporation, Alibaba Group Holding Ltd and
Tencent Holdings Ltd, which accounted
for around 60% of the sector return.
Other material positive performers included NVIDIA Corporation,
salesforce.com, Inc., Polar Capital Technology Trust plc, Scottish
Mortgage Investment Trust PLC, PayPal Holdings Inc., Apple Inc. and
ROBO Global Robotics and Automation GO UCITS ETF. There were
no material negative contributors.
We increased our exposure to the technology sector this year and
we focused on the “gorilla” stocks as we become increasingly
convinced that scale is generating enhanced returns. The
portfolio’s delta-adjusted exposure to the sector is now just over
60% of net assets.
Consumer investments
Consumer (under which we include both the Consumer Staples and
the Consumer Discretionary GICS sectors) delivered around 25% of
underlying portfolio total return (in local currency). More than
88% of this performance was driven by Amazon.com, Inc.
The only negative performers were Brown Forman Corporation and
Mondelez International Inc., which have now been disposed of.
The key shift in our thinking in this sector is that we have
repositioned away from generalist consumer goods (think toothpaste)
towards niche consumer goods and experience providers (think
gaming).
Overall, the portfolio’s delta-adjusted exposure to the sector
is just over 20% of net assets.
Healthcare and pharmaceutical
investments
Healthcare (under which we include the Healthcare GICS sector
and Healthcare-orientated funds) delivered less than 1% of
underlying portfolio total return (in local currency).
Material positive contributors included Align Technology Inc.,
Worldwide Healthcare Trust PLC, Smith & Nephew plc, AstraZeneca
PLC and Zoetis Inc. GlaxoSmithKline plc and Allergan plc provided
negative contributions so they were cut from the portfolio.
The portfolio’s delta-adjusted exposure to this sector now
represents just under 10% of net assets as the sector continues to
underperform.
M&L Capital Management Limited
Manager
3 April 2018
EQUITY EXPOSURES
Equity exposures (longs)
As at 31
January 2018
Company |
Sector* |
Valuation
£’000 |
% of
net
assets |
|
|
|
|
Amazon.com, Inc. |
Consumer
Discretionary |
18,192 |
16.01 |
Microsoft
Corporation |
Information
Technology |
10,837 |
9.53 |
Alphabet Inc. |
Information
Technology |
10,210 |
8.98 |
Facebook Inc. |
Information
Technology |
8,628 |
7.59 |
Tencent Holdings Ltd
** |
Information
Technology |
8,420 |
7.41 |
Alibaba Group Holding
Ltd ** |
Information
Technology |
7,298 |
6.42 |
Apple Inc. |
Information
Technology |
5,440 |
4.79 |
Polar Capital
Technology Trust plc |
Funds |
4,408 |
3.88 |
Scottish Mortgage
Investment Trust PLC |
Funds |
3,864 |
3.40 |
salesforce.com,
Inc. |
Information
Technology |
3,725 |
3.28 |
JD.Com, Inc. ** |
Consumer
Discretionary |
3,562 |
3.13 |
ROBO Global Robotics
and Automation GO UCITS ETF |
Funds |
3,451 |
3.04 |
Worldwide Healthcare
Trust PLC |
Funds |
3,394 |
2.99 |
PayPal Holdings
Inc. |
Information
Technology |
2,490 |
2.19 |
Pernod Ricard SA
** |
Consumer Staples |
2,195 |
1.93 |
Heineken NV ** |
Consumer Staples |
2,078 |
1.83 |
LVMH Moët Hennessy
Louis Vuitton SE ** |
Consumer
Discretionary |
1,978 |
1.74 |
Zoetis Inc. |
Healthcare |
1,978 |
1.74 |
NVIDIA
Corporation |
Information
Technology |
1,910 |
1.68 |
AstraZeneca Plc
** |
Healthcare |
1,613 |
1.42 |
Electronic Arts Inc.
** |
Information
Technology |
1,482 |
1.30 |
Sage Group plc ** |
Information
Technology |
1,379 |
1.21 |
Intuit Inc. |
Information
Technology |
1,311 |
1.15 |
Bayer AG ** |
Healthcare |
1,237 |
1.09 |
Activision Blizzard,
Inc. |
Information
Technology |
1,121 |
0.99 |
Adobe Systems
Inc. |
Information
Technology |
1,117 |
0.98 |
|
|
113,318 |
99.70 |
Balance held in 12
other positions |
|
5,992 |
5.27 |
Total long equities
exposure |
|
119,310 |
104.97 |
Unlisted
debentures |
|
218 |
0.19 |
Total long
positions |
|
119,528 |
105.16 |
Other net assets |
|
(5,871) |
(5.16) |
Net assets |
|
113,657 |
100.00 |
* GICS - Global Industry Classification
Standard.
** Including equity swap exposures.
INTERIM MANAGEMENT REPORT
The important events that have occurred during the period under
review and the key factors influencing the financial statements are
set out in the Chairman’s Statement and the Manager’s Report
above.
The principal risks facing the Company are substantially
unchanged since the date of the latest Annual Report and Financial
Statements and continue to be as set out in the Strategic Report
and note 17 of that report. Risks faced by the Company include, but
are not limited to, economic and market risk, interest rate risk,
gearing risk, liquidity risk, currency rate risk, credit and
counterparty risk and other general financial risks. Details of the
Company’s management of these risks are set out in the Annual
Report and Financial Statements.
M&M Investment Company plc is the controlling Shareholder of
the Company. This company was controlled throughout the six months
ended 31 January 2018, and continues
to be, controlled by Mr M Sheppard, who forms part of the
investment management team at M&L Capital Management Limited.
Details of related party disclosures are set out in note 8 of this
Report.
STATEMENT OF DIRETORS’
RESPONSIBILITIES
The Directors confirm that to the best of their knowledge:
• the condensed set of financial statements has been prepared in
accordance with International Accounting Standard 34, Interim
Financial Reporting, as adopted by the European Union; and gives a
true and fair view of the assets, liabilities, financial position
and profit/loss of the Company; and
• this Half-Yearly Report includes a fair review of the
information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the Company
during that period; and any changes in the related party
transactions described in the last Annual Report that could do
so.
This Half-Yearly Report was approved by the Board of Directors
and the above responsibility statement was signed on its behalf
by:
P H A Stanley
Chairman
3 April 2018
CONDENSED STATEMENT OF COMPREHENSIVE
INCOME
For the six months ended 31 January
2018
|
(Unaudited)
Six months ended
31 January 2018 |
(Unaudited)
Six months ended
31 January 2017
(restated) |
(Audited)
Year ended
31 July 2017
(restated) |
|
Revenue
£’000 |
Capital
£’000 |
Total
£’000 |
Revenue
£’000 |
Capital
£’000 |
Total
£’000 |
Revenue
£’000 |
Capital
£’000 |
Total
£’000 |
Gains on investments
at fair value through profit or loss* |
- |
13,585 |
13,585 |
- |
5,256 |
5,256 |
- |
20,064 |
20,064 |
Investment income |
383 |
- |
383 |
466 |
- |
466 |
1,053 |
- |
1,053 |
Other investment
income* |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
Gross return |
383 |
13,585 |
13,968 |
466 |
5,256 |
5,722 |
1,053 |
20,064 |
21,117 |
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fee |
(280) |
- |
(280) |
(188) |
- |
(188) |
(424) |
- |
(424) |
Transaction
costs* |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Other operating
expenses |
(206) |
- |
(206) |
(186) |
(79) |
(265) |
(365) |
(89) |
(454) |
|
|
|
|
|
|
|
|
|
|
Total expenses |
(486) |
- |
(486) |
(374) |
(79) |
(453) |
(789) |
(89) |
(878) |
Return before
finance costs and taxation |
(103) |
13,585 |
13,482 |
92 |
5,177 |
5,269 |
264 |
19,975 |
20,239 |
|
|
|
|
|
|
|
|
|
|
Finance costs* |
(13) |
(71) |
(84) |
(10) |
(65) |
(75) |
(19) |
(118) |
(137) |
|
|
|
|
|
|
|
|
|
|
Return on ordinary
activities before tax |
(116) |
13,514 |
13,398 |
82 |
5,112 |
5,194 |
245 |
19,857 |
20,102 |
|
|
|
|
|
|
|
|
|
|
Taxation |
(28) |
- |
(28) |
- |
- |
- |
(47) |
- |
(47) |
|
|
|
|
|
|
|
|
|
|
Return on ordinary
activities after tax* |
(144) |
13,514 |
13,370 |
82 |
5,112 |
5,194 |
198 |
19,857 |
20,055 |
|
|
|
|
|
|
|
|
|
|
Return
per Ordinary Share:
Basic and fully diluted (pence) |
(0.64) |
59.84 |
59.2 |
0.38 |
23.74 |
24.12 |
0.91 |
91.52 |
92.43 |
* Figures for six months ended 31 January
2017 and year ended 31 July
2017 have been restated following a change in accounting
policy. Total return on ordinary activities after tax for these
periods are unaffected. See note 2.
The total column of this statement represents the Condensed
Statement of Comprehensive Income, prepared in accordance with
International Financial Reporting Standards (“IFRS”). The
supplementary revenue and capital columns are both prepared under
the Statement of Recommended Practice published by the Association
of Investment Companies (“AIC SORP”).
All items in the above statement are derived from continuing
operations. No operations were acquired or discontinued during the
period.
The notes below form part of these financial statements.
CONDENSED STATEMENT OF CHANGES IN
EQUITY
For the six months ended 31 January
2018
|
Share
capital
£’000 |
Share
premium
£’000 |
Shares held
in treasury
£’000 |
Capital
reserve
£’000 |
Retained
earnings
£’000 |
Total
£’000 |
Balance at 1 August
2017 |
5,614 |
35,865 |
(984) |
29,351 |
24,815 |
94,661 |
Total comprehensive
income |
- |
- |
- |
13,514 |
(144) |
13,370 |
Sale of Ordinary
Shares from treasury |
- |
616 |
984 |
- |
- |
1,600 |
Share issue |
301 |
5,072 |
- |
- |
- |
5,373 |
Equity dividends
paid |
- |
- |
- |
- |
(1,347) |
(1,347) |
Balance at 31
January 2018 |
5,915 |
41,553 |
- |
42,865 |
23,324 |
113,657 |
|
|
|
|
|
|
|
|
|
Share
capital
£’000 |
Share
premium
£’000 |
Shares
held
in treasury
£’000 |
Capital
reserve
£’000 |
Retained
earnings
£’000 |
Total
£’000 |
Balance at 1 August
2016 |
5,614 |
35,317 |
(2,315) |
9,415 |
27,515 |
75,546 |
Total comprehensive
income* |
- |
- |
- |
5,112 |
82 |
5,194 |
Goodwill written
back |
- |
- |
- |
79 |
- |
79 |
Sale of Ordinary
Shares from treasury |
- |
- |
- |
- |
- |
- |
Equity dividends
paid |
- |
- |
- |
- |
(2,239) |
(2,239) |
Balance at 31
January 2017 |
5,614 |
35,317 |
(2,315) |
14,606 |
25,358 |
78,580 |
|
|
|
|
Share
capital
£’000 |
Share
premium
£’000 |
Shares held
in treasury
£’000 |
Capital
reserve
£’000 |
Retained
earnings
£’000 |
Total
£’000 |
Balance at 1 August
2016 |
5,614 |
35,317 |
(2,315) |
9,415 |
27,515 |
75,546 |
Total comprehensive
income* |
- |
- |
- |
19,857 |
198 |
20,055 |
Goodwill written
back |
- |
- |
- |
79 |
- |
79 |
Sale of Ordinary
Shares from treasury |
- |
548 |
1,331 |
- |
- |
1,879 |
Equity dividends
paid |
- |
- |
- |
- |
(2,898) |
(2,898) |
Balance at 31 July
2017 |
5,614 |
35,865 |
(984) |
29,351 |
24,815 |
94,661 |
|
|
|
|
|
|
|
|
|
|
|
|
* Six months ended 31 January 2017
and year ended 31 July 2017 have been
restated following a change in accounting policy. The total
comprehensive income remains unchanged. See note 2 for further
detail.
The notes below form part of these financial statements.
CONDENSED STATEMENT OF FINANCIAL POSITION
As at
31 January 2018
|
(Unaudited)
31 January
2018
(restated)
£’000 |
(Unaudited)
31 January
2017
(restated)
£’000 |
(Audited)
31 July
2017
(restated)
£’000 |
|
|
|
|
Non-current
assets |
|
|
|
Investments held at
fair value through profit and loss |
95,529 |
55,396 |
76,106 |
|
|
|
|
Current
assets |
|
|
|
Unrealised derivative
assets |
6,658 |
1,381 |
5,173 |
Trade and other
receivables |
48 |
380 |
4,486 |
Cash and cash
equivalents |
14,910 |
23,163 |
11,205 |
|
21,616 |
24,924 |
20,864 |
Gross
assets |
117,145 |
80,320 |
96,970 |
|
|
|
|
Current
liabilities |
|
|
|
Unrealised derivative
liabilities |
(3,147) |
(1,516) |
(2,046) |
Trade and other
payables |
(341) |
(224) |
(263) |
|
(3,488) |
(1,740) |
(2,309) |
Net assets |
113,657 |
78,580 |
94,661 |
|
|
|
|
Equity attributable
to equity holders |
|
|
|
Ordinary Share
capital |
5,915 |
5,614 |
5,614 |
Shares held in
treasury |
- |
(2,315) |
(984) |
Share premium |
41,553 |
35,317 |
35,865 |
Capital reserves* |
42,865 |
14,606 |
29,351 |
Retained
earnings* |
23,324 |
25,358 |
24,815 |
Total equity
Shareholders’ funds |
113,657 |
78,580 |
94,661 |
Net asset value per
Ordinary Share (pence) |
480.36 |
364.90 |
429.05 |
* 31 January 2017 and 31 July 2017 have been restated following a
change in accounting policy as detailed in note 2. Total equity
Shareholders’ funds are unaffected.
The notes below form part of these financial statements.
CONDENSED STATEMENT OF CASH FLOWS
For the six
months ended 31 January 2018
|
Six
months to
31 January
2018
(Unaudited)
£’000 |
Six
months to
31 January
2017
(Unaudited)
£’000 |
Year
ended
31 July
2017
(Audited)
£’000 |
Cash flow from
operating activities |
|
|
|
Return on operating
activities before tax |
13,398 |
5,194 |
20,102 |
Interest expense |
84 |
75 |
137 |
Gains on investments
held at fair value through profit or loss |
(12,829) |
(5,057) |
(16,736) |
Decrease/(increase) in
receivables |
68 |
(358) |
(55) |
Increase/(decrease) in
payables |
25 |
(40) |
(75) |
(Increase)/decrease in
derivative financial instruments |
(383) |
1,657 |
(1,585) |
Non-cash expenses |
- |
79 |
79 |
Taxation |
(28) |
-
|
(57) |
Net cash generated
from operating activities |
335 |
1,550 |
1,810 |
|
|
|
|
Cash flow from
investing activities |
|
|
|
Purchase of
investments |
(17,050) |
(19,101) |
(38,162) |
Sale of
investments |
14,826 |
7,761 |
13,422 |
Net cash used in
investing activities |
(2,224) |
(11,340) |
(24,740) |
|
|
|
|
Cash flow from
financing activities |
|
|
|
Equity dividends
paid |
(1,347) |
(2,239) |
(2,898) |
Sale of Ordinary
Shares from treasury |
1,600 |
- |
1,879 |
Share issue |
5,373 |
- |
- |
Interest paid |
(32) |
(60) |
(98) |
Net cash generated
from/(used in) financing activities |
5,594 |
(2,299) |
(1,117) |
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents |
3,705 |
(12,089) |
(24,047) |
Cash and cash
equivalents at the beginning of the period |
11,205 |
35,252 |
35,252 |
Cash and cash
equivalents at the end of the period |
14,910 |
23,163 |
11,205 |
The notes below form part of these financial statements.
NOTES TO THE CONDENSED FINANCIAL
STATEMENTS
1. Significant accounting policies
Basis of preparation
The condensed financial statements, which comprise the unaudited
results of the Company, have been prepared in accordance with IFRS,
as adopted by the European Union, and as applied in accordance with
the provisions of the Companies Act 2006. The financial statements
have been prepared in accordance with the AIC SORP, except to any
extent where it is not consistent with the requirements of
IFRS.
The functional currency of the Company is Pounds Sterling
because this is the currency of the primary economic environment in
which the Company operates. The condensed financial statements are
presented in Pounds Sterling rounded to the nearest thousand,
except where otherwise indicated.
The half-year financial statements have been prepared in
accordance with IAS 34 “Interim Financial Reporting”.
The accounting policies are as set out in the Annual Report for
the year ended 31 July 2017, with the
exception of the amendments detailed in note 2 which are in effect
for the year ending 31 July 2018.
Comparatives have been re-stated for the year ended 31 July 2017 and the six-month period to
31 January 2017. A reconciliation of
the impact of the revised accounting policy can be found in note
2.
The financial information contained in this Half-Yearly Report
does not constitute statutory accounts as defined by the Companies
Act 2006. The financial information for the periods ended
31 January 2018 and 31 January 2017 have not been audited or reviewed
by the Company’s Auditors. The figures and financial information
for the year ended 31 July 2017 are
an extract from the latest published audited statements (re-stated
where applicable) and do not constitute the statutory accounts for
that year. Those accounts have been delivered to the Registrar of
Companies and include a report of the Auditor, which was
unqualified and did not contain a statement under either Section
498(2) or 498(3) of the Companies Act 2006.
Going concern
The Directors have made an assessment of the Company’s ability
to continue as a going concern and are satisfied that the Company
has adequate resources to continue in operational existence for the
foreseeable future (being a period of 12 months from the date these
financial statements were approved). Furthermore, the Directors are
not aware of any material uncertainties that may cast significant
doubt upon the Company’s ability to continue as a going concern,
having taken into account the liquidity of the Company’s investment
portfolio and the Company’s financial position in respect of its
cash flows, borrowing facilities and investment commitments (of
which there are none of significance). Therefore, the financial
statements have been prepared on the going concern basis and on the
basis that approval as an investment trust will continue to be
met.
2. Change in accounting policy
During the period to 31 January
2018, the Company changed its policy with regards to the
recognition of realised gains and losses on investments, derivative
instruments and associated interest charges.
Previously, upon disposal of investments, realised gains and
losses were recognised in the Statement of Comprehensive Income as
capital or revenue dependent on their nature. A position was deemed
to be revenue rather than capital if the position had been opened
and closed and the duration that the position was open was less
than twelve months. Changes to core holdings were not classified as
revenue regardless of their duration. Positions opened but not yet
closed were deemed to be capital investments in nature until
closed, at which point their duration determined if they were
classified as revenue rather than capital.
Unrealised changes to the value of securities in relation to
derivatives were allocated initially to capital, until realisation,
where they were similarly allocated to either revenue or capital
dependent upon their nature. Notional interest expenses on long
positions were initially allocated 100% to capital whilst the
position was unrealised and, upon realisation, expensed through the
Statement of Comprehensive Income as revenue or capital in
accordance with the Company’s revenue recognition accounting
policy.
The Company has voluntarily elected that, to be in line with
normal market practice, all unrealised and realised gains and
losses on the disposal of investments and the realisation of
derivative instruments are to be recognised in the Statement of
Comprehensive Income as capital, along with associated notional
interest expenses on long positions.
The revised accounting policies are outlined below.
Investments (revised)
Investments are measured initially, and at subsequent reporting
dates, at fair value, and derecognised at trade date where a
purchase or sale is under a contract whose terms require delivery
within the time-frame of the relevant market. For listed
investments, this is deemed to be bid market prices or closing
prices for Stock Exchange Electronic Trading Service – quotes and
crosses (“SETSqx”).
Changes in fair value of investments are recognised in the
Statement of Comprehensive Income as a capital item. On disposal,
realised gains and losses are also recognised in the Statement of
Comprehensive Income as capital items.
All investments for which fair value is measured or disclosed in
the financial statements are categorised within the fair value
hierarchy in note 7.
Financial instruments (revised)
The Company may use a variety of derivative instruments,
including equity swaps, futures, forwards and options under master
agreements with the Company’s derivative counterparties to enable
the Company to gain long and short exposure on individual
securities.
The Company recognises financial assets and financial
liabilities when it becomes a party to the contractual provisions
of the instrument. Listed options and futures contracts are
recognised at fair value through profit or loss valued by reference
to the underlying market value of the corresponding security,
traded prices and/or third party information.
Notional dividend income arising on long positions is recognised
in the Statement of Comprehensive Income as revenue. Interest
expenses on long positions are allocated to capital.
Unrealised changes to the value of securities in relation to
derivatives are recognised in the Statement of Comprehensive Income
as capital items.
The voluntary changes in accounting policy have the following
impact to the Financial Statements:
|
Six months to
31 January 2017
(unaudited) |
Year ended
31 July 2017
(audited) |
|
Published
£’000 |
Re-stated
£’000 |
Change
£’000 |
Published
£’000 |
Re-stated
£’000 |
Change
£’000 |
Statement of
Comprehensive Income |
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
Other
investment income |
255 |
- |
(255) |
1,532 |
- |
(1,532) |
Transaction
costs |
(93) |
- |
93 |
- |
- |
- |
Finance
costs |
(30) |
(10) |
20 |
(35) |
(19) |
16 |
Return on ordinary activities
after tax |
224 |
82 |
(142) |
1,714 |
198 |
(1,516) |
|
|
|
|
|
|
|
Return per
Share (pence) |
1.04 |
0.38 |
(0.66) |
7.9 |
0.91 |
(6.99) |
|
|
|
|
|
|
|
Capital |
|
|
|
|
|
|
Gains on investments at fair value through profit
or loss |
5,094 |
5,256 |
162 |
18,532 |
20,064 |
1,532 |
Finance
costs |
(45) |
(65) |
(20) |
(102) |
(118) |
(16) |
Return on ordinary activities
after tax |
4,970 |
5,112 |
142 |
18,341 |
19,857 |
1,516 |
|
|
|
|
|
|
|
Return per
Share (pence) |
23.08 |
23.74 |
0.66 |
84.53 |
91.52 |
6.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of
Financial Position |
|
|
|
|
|
|
Capital
reserves |
12,149 |
12,291 |
142 |
27,835 |
29,351 |
1,516 |
Retained
earnings |
25,500 |
25,358 |
(142) |
26,331 |
24,815 |
(1,516) |
3. Return per Ordinary Share
Returns per Ordinary Share are based on the weighted average
number of Shares in issue during the period. Normal and diluted
return per Share are the same as there are no dilutive elements of
Share capital.
|
Six months to
31 January 2018
(unaudited) |
Six months to
31 January 2017
(unaudited)
(re-stated) |
Year ended
31 July 2017
(audited)
(re-stated) |
|
Net
return
£’000 |
Per Share
pence |
Net
return
£’000 |
Per Share
pence |
Net
return
£’000 |
Per Share
pence |
Return on ordinary
activities after tax |
|
|
|
|
|
|
Revenue |
(144) |
(0.64) |
82 |
0.38 |
198 |
0.91 |
Capital |
13,514 |
59.84 |
5,112 |
23.74 |
19,857 |
91.52 |
|
|
|
|
|
|
|
Total return on
ordinary activities |
13,370 |
59.20 |
5,194 |
24.12 |
20,055 |
92.43 |
|
|
|
|
|
|
|
Weighted average
number of Ordinary Shares |
|
22,583,506 |
|
21,534,420 |
|
21,697,085 |
|
|
|
|
|
|
|
4. Share capital
|
Six months to
31 January
2018
(unaudited) |
Six months to
31 January
2017
(unaudited) |
Year ended
31 July
2017
(audited) |
25p Ordinary
Shares |
Number |
£’000 |
Number |
£’000 |
Number |
£’000 |
Opening Ordinary
Shares in issue |
22,457,042 |
5,614 |
22,457,042 |
5,614 |
22,457,042 |
5,614 |
Shares issued |
1,203,849 |
301 |
- |
- |
- |
- |
Closing Ordinary
Shares in issue |
23,660,891 |
5,915 |
22,457,042 |
5,614 |
22,457,042 |
5,614 |
Shares held in treasury
Opening Ordinary
Shares held in treasury |
(394,254) |
|
(922,622) |
|
(922,622) |
|
Shares sold from
treasury |
394,254 |
|
- |
|
528,368 |
|
Closing Shares held in
treasury |
- |
|
(922,622) |
|
(394,254) |
|
|
|
|
|
|
|
|
Shares in
circulation |
23,660,891 |
|
21,534,420 |
|
22,062,788 |
|
The Company’s Share capital comprises Ordinary Shares of 25p
each with one vote per Share. During the six months to 31 January 2018, the Company sold 394,254
Ordinary Shares from treasury for a gross consideration of
£1,600,000, generating a surplus of £616,000, recognised in the
Share premium account (six months to 31
January 2017: no Shares sold from treasury; year ended
31 July 2017: 528,368 Ordinary Shares
sold from treasury for a total consideration of £1,879,000,
generating a surplus of £548,000).
During the six months to 31 January
2018, the Company issued 1,203,849 Ordinary Shares (six
months to 31 January 2017: none; year
ended 31 July 2017: none), with a
nominal value of £301,000, for total proceeds of £5,401,000. The
surplus of £5,100,000 had been recognised in the Share premium
account, net of Share issue costs of £28,000.
5. Dividends per Ordinary Share
The Board has declared an interim dividend of 4.00p per Ordinary
Share (2017: interim dividend of 1.82p per Ordinary Share and a
special dividend of 1.18p, total 3.00p) which will be paid on
8 May 2018 to Shareholders registered
at the close of business on 13 April
2018.
This dividend has not been included as a liability in these
financial statements.
6. Net asset value per
Ordinary Share
Net asset value per Ordinary Share is based on net assets at the
period end and 23,660,891 (31 January
2017: 21,534,420 and 31 July
2017: 22,602,788) Ordinary Shares in issue at the period end
excluding Ordinary Shares held in treasury.
7. Fair value hierarchy
Financial assets and liabilities of the Company are carried in
the Statement of Financial Position at their fair value or
approximation of fair value. The fair value is the amount at which
the asset could be sold in an ordinary transaction between market
participants, at the measurement date, other than a forced or
liquidation sale. The Company measures fair values using the
following hierarchy that reflects the significance of the inputs
used in making the measurements.
Categorisation within the hierarchy has been determined on the
basis of the lowest level input that is significant to the fair
value measurement of the relevant asset as follows:
-
Level 1 – valued using quoted prices, unadjusted in active
markets for identical assets and liabilities.
-
Level 2 – valued by reference to valuation techniques using
observable inputs for the asset or liability other than quoted
prices included in Level 1.
-
Level 3 – valued by reference to valuation techniques using
inputs that are not based on observable market data for the asset
or liability.
The tables below set out fair value measurement of financial
instruments, by the level in the fair value hierarchy into which
the fair value measurement is categorised.
Financial assets at fair value through
profit or loss at 31 January 2018
|
Level 1
£’000 |
Level 2
£’000 |
Level 3
£’000 |
Total
£’000 |
Equity investments |
95,311 |
- |
- |
95,311 |
Debentures |
- |
218 |
- |
218 |
Derivatives – assets |
- |
6,658 |
- |
6,658 |
Total |
95,311 |
6,876 |
- |
102,187 |
Financial assets at fair value through profit or loss at
31 January 2017
|
Level 1
£’000 |
Level 2
£’000 |
Level 3
£’000 |
Total
£’000 |
Equity investments |
55,160 |
- |
- |
55,160 |
Debentures |
- |
236 |
- |
236 |
Derivatives – assets |
- |
1,381 |
- |
1,381 |
Total |
55,160 |
1,617 |
- |
56,777 |
Financial assets at fair value through profit or loss at
31 July 2017
|
Level 1
£’000 |
Level 2
£’000 |
Level 3
£’000 |
Total
£’000 |
Equity investments |
75,877 |
- |
- |
75,877 |
Debentures |
- |
229 |
- |
229 |
Derivatives – assets |
- |
5,173 |
- |
5,173 |
Total |
75,877 |
5,402 |
- |
81,279 |
There have been no transfers during the period between level 1
and 2 fair value measurements and no transfers into or out of level
3 fair value measurement.
Financial liabilities at amortised
cost at 31 January 2018
|
Level 1
£’000 |
Level 2
£’000 |
Level 3
£’000 |
Total
£’000 |
Derivatives – liabilities |
- |
3,148 |
- |
3,148 |
Financial liabilities at amortised cost at 31 January 2017
|
Level 1
£’000 |
Level 2
£’000 |
Level 3
£’000 |
Total
£’000 |
Derivatives – liabilities |
- |
1,516 |
- |
1,516 |
Financial liabilities at amortised cost at 31 July 2017
|
Level 1
£’000 |
Level 2
£’000 |
Level 3
£’000 |
Total
£’000 |
Derivatives – liabilities |
- |
2,046 |
- |
2,046 |
8. Transactions with the Manager and
related parties
M&L Capital Management Limited ("MLCM”), a company
controlled by Mr M Sheppard, acts as Manager to the Company.
Details of the fee arrangements are given in the Annual Report. On
17 January 2018, MLCM was appointed
as the AIFM of the Company. Mr M Sheppard is also a director of
M&M Investment Company plc (“MMIC”) which is the controlling
Shareholder of the Company.
The Management fee charged by MLCM is payable quarterly in
arrears and is equal to 0.5% of the net asset value of the Company
on an annualised basis. In addition, a Risk Management and
Valuation fee equating to £59,000 on an annualised basis is charged
by the Manager, in its role as the Company’s AIFM. Total fees paid
charged by the Manager for the six months to 31 January 2018 were £280,000, of which £143,000
was outstanding as at 31 January
2018.
Management fees are charged to revenue as set out in the
Statement of Comprehensive Income.
Midas Investment Management Limited (“Midas”), a company also
controlled by Mr M Sheppard, also provides services to the Company.
Fees charged by Midas include a monthly financial advisory fee and
commissions on the purchase and sale of investments and the
provision of the ISA & Savings schemes. During the six months
to 31 January 2018, total fees
amounted to £4,000 of which £2,000 was outstanding as at
31 January 2018.
Other administration costs incurred by the majority Shareholder,
MMIC, on behalf of the Company were also recharged to the Company
in the period. During the six months to 31
January 2018 £6,000 was recharged to the Company, of which
£3,000 was outstanding as at 31 January
2018.
On 6 December 2017, MMIC
subscribed for a further 1,078,849 Ordinary Shares of 25 pence each at 444.92
pence per share, equating to a total consideration paid of
£4,800,015. Following this transaction, MMIC was interested in a
total of 12,339,870 ordinary shares of 25
pence each in the Company, representing 52.43% of the issued
share capital. This transaction was deemed to be a smaller related
party transaction within the definition of Listing Rule 11.1.10R as
the relevant class test percentage ratios were less than 5% but
exceeded the 0.25% threshold as set out in LR 11.1.10R(1). As at
the date of this report, MMIC holds 12,414,870 Ordinary Shares,
representing 52.47% of the issued Share capital.
The fees payable to Directors are set out in the Annual
Report.
There were no other related party transactions.
INVESTMENT OBJECTIVE
The investment objective of the Company is to achieve capital
appreciation together with a reasonable level of income.
INVESTMENT POLICY
Asset
allocation
The Company’s investment objective is sought to be achieved
through a policy of actively investing in a diversified portfolio,
comprising UK and overseas equities and fixed interest
securities. The Company seeks to invest in companies whose
shares are admitted to trading on a regulated market.
However, it may invest in a small number of equities and fixed
interest securities of companies whose capital is not admitted to
trading on a regulated market. Investment in overseas
equities is utilised by the Company to increase the risk
diversification of the Company’s portfolio and to reduce dependence
on the UK economy in addressing the growth and income elements of
the Company’s investment objective.
The Company may invest in derivatives, money market instruments,
currency instruments, contracts for differences (“CFDs”), futures,
forwards and options for the purposes of (i) holding investments
and (ii) hedging positions against movements in, for example,
equity markets, currencies and interest rates.
There are no maximum exposure limits to any one particular
classification of equity or fixed interest security. The
Company’s investments are not limited to any one industry sector
and its current investment portfolio is spread across a range of
sectors. The Company has no specific criteria regarding
market capitalisation or credit ratings in respect of investee
companies.
Risk
diversification
The Company intends to maintain a relatively focused portfolio,
seeking capital growth by investing in approximately 20 to 40
securities. The Company will not invest more than 15% of the
gross assets of the Company at the time of investment in any one
security. However, the Company may invest up to 50% of the
gross assets of the Company at the time of investment in an
investment company subsidiary, subject always to other restrictions
set out in this investment policy and the Listing Rules.
The Company intends to be fully invested whenever
possible. However, during periods in which changes in
economic conditions or other factors so warrant, the Manager may
reduce the Company’s exposure to one or more asset classes and
increase the Company’s position in cash and/or money market
instruments.
Gearing
The Company may borrow to gear the Company’s returns when the
Manager believes it is in Shareholders’ interests to do so.
The Company’s investment policy and the Articles permit the Company
to incur borrowing up to a sum equal to two times the adjusted
total of capital and reserves. Any change to the Company’s
borrowing policy will only be made with the approval of
Shareholders by special resolution.
The effect of gearing may be achieved without borrowing by
investing in a range of different types of investments including
derivatives. The Company will not enter into any investments
which have the effect of increasing the Company’s net gearing
beyond the above limit.
General
In addition to the above, the Company will observe the
investment restrictions imposed from time to time by the Listing
Rules which are applicable to investment companies with shares
listed on the Official List of the UK Listing Authority (“UKLA”)
under Chapter 15.
In accordance with the Listing Rules, the Company will manage
and invest its assets in accordance with the Company’s investment
policy. Any material changes in the principal investment
policies and restrictions (as set out above) of the Company will
only be made with the approval of Shareholders by ordinary
resolution.
In the event of any breach of the investment restrictions
applicable to the Company, Shareholders will be informed of the
remedial actions to be taken by the Board and the Manager by an
announcement issued through a regulatory information service
approved by the Financial Conduct Authority (“FCA”).
SHAREHOLDER BENEFITS
All Shareholders with 2,500 Shares (excluding the officers of
the Company) are entitled to participate in a draw undertaken by
the Directors before the Annual General Meeting in respect of The
All England Lawn Tennis Ground Limited Debentures listed below.
Once a Shareholder’s holding exceeds 2,500 Shares, the probability
of success in this draw will increase for every additional Share
held. In the event that holding these Debentures did not align with
the investment strategy of the Company, the Debentures will be
sold; in such case, the above benefit would cease.
Centre Court
The Company owns two Debentures entitling it to two Centre Court
seats (together with two badges admitting entry to the Debenture
Holders' Lounge) for the thirteen days play of the championships.
There will be thirteen draws, each draw entitling the successful
Shareholder to one pair of adjacent seats for one day's play. The
Sheppard family remove their Shares from the draw to manage
conflicts of interest, hence your probability of success more than
doubles.
Contribution to
Society
Every year a number of Shareholders who win the All England Lawn
Tennis Wimbledon Championship debenture ticket draw do not come
forward and claim their tickets by the due date notified to them by
the Company. In such circumstances, they are notified that
their tickets will be sold back to the All England Lawn Tennis and
Croquet Club (“AELTC”) and the proceeds from these ticket sales
gifted to charity. In the last six months, a sum of £13,600
was donated by the Company in respect of such AELTC return ticket
sales to Alzheimer’s Research UK
(https://www.alzheimersresearchuk.org).
SHAREHOLDER INFORMATION
Investing in the Company
The Shares of the Company are listed on the Official List of the
UKLA and traded on the London Stock Exchange. Private investors can
buy or sell Shares by placing an order either directly with a
stockbroker or through an independent financial adviser.
Electronic communications from the
Company
Shareholders now have the opportunity to be notified by email
when the Company’s annual report, half-yearly report and other
formal communications are available on the Company’s website,
instead of receiving printed copies by post. This reduces the cost
to the Company as well as having an environmental benefit in the
reduction of paper, printing, energy and water usage. If you have
not already elected to receive electronic communications from the
Company and now wish to do so, visit www.signalshares.com. All you
need to register is your investor code, which can be found on your
Share certificate or your dividend confirmation statement.
Alternatively, you can contact Link’s Customer Support Centre
which is available to answer any queries you have in relation to
your Shareholding:
By phone – UK – 0871 664 0300, from overseas call +44 (0) 371
664 0300 (calls cost 12p per minute plus your phone company’s
access charge. Calls outside the United
Kingdom will be charged at the applicable international
rate. Link are open between 09:00 - 17:30, Monday to Friday
excluding public holidays in England and Wales).
By email – shareholder.enquiries@linkgroup.co.uk
By post – Link Asset Services, The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU.
Frequency of NAV publication
The Company’s NAV is released to the London Stock Exchange on a
weekly basis and also published in the Investment Companies sector
of The Financial Times.
Sources of further information
Copies of the Company’s annual and half-yearly reports,
factsheets and further information on the Company can be obtained
from its website:
www.mlcapman.com/manchester-london-investment-trust-plc.
Key dates
Half-yearly results announced |
April |
Interim dividend payment |
May |
Company’s year end |
31 July |
Annual results announced |
October |
Annual General Meeting |
November |
Expected final dividend payment |
December |
Company’s half-year end |
31 January |
CORPORATE INFORMATION
DIRECTORS AND
ADVISERS |
|
Directors
P H A Stanley (Chairman)
D Harris
B Miller
|
Auditor
Deloitte LLP
Saltire Court
20 Castle Terrace
Edinburgh EH1 2DB |
Manager and
Alternative Investment Fund Manager
M&L Capital Management Limited
12a Princes Gate Mews
London SW7 2PS
Tel: 0207 584 5733 |
Administrator
Link Alternative Fund Administrators Limited
Beaufort House
51 New North Road
Exeter EX4 4EP |
Company
Secretary
Link Company Matters Limited
Beaufort House
51 New North Road
Exeter EX4 4EP
Tel: 01392 477500 |
Bank
National Westminster Bank plc
11 Spring Gardens
Manchester M60 2DB |
Registrar
Link Asset Services Limited
The Registry
34 Beckenham Road
Beckenham BR3 4TU
Tel: 0871 664 0300
Email: shareholder.enquiries@linkgroup.co.uk
www.linkassetservices.com |
Depositary
Indos Financial Limited
27 Clements Lane
London EC4N 7AE |
Company details |
|
Registered
office
12a Princes Gate Mews
London SW7 2PS |
Country of
incorporation
Registered in England and Wales
Company Number: 01009550 |
Company website
www.mlcapman.com/manchester-london-investment-trust-plc |
National Storage Mechanism
A copy of the Half-Yearly Report will be submitted shortly to
the National Storage Mechanism (‘NSM’) and will be available for
inspection at the NSM, which is situated at
www.morningstar.co.uk/uk/NSM.
Neither the contents of the Company’s
website nor the contents of any website accessible through
hyperlinks on the Company’s website (or any website) or this
announcement is incorporated into, or forms part of this
announcement.
LEI: 213800HMBZXULR2EEO10
3 April 2018