4 April 2017
Manchester & London
Investment Trust
Public Limited Company
Half Year Report for the Six Months
Ended
31 January 2017
Summary of Results
|
At
31 January 2017 |
At
31 July 2016 |
Change |
Net assets
attributable to Equity Shareholders (£’000) |
78,580 |
75,546 |
4.0% |
Net asset value per
ordinary share (pence) |
364.90 |
350.80p |
4.0% |
|
Increase |
Total
return to shareholders |
7.1% |
Benchmark
- Dow Jones UK Total Stock Market Total Return |
7.0% |
|
At
31 January 2017 |
At
31 January 2016 |
Change |
Interim ordinary
dividend per ordinary share (p) |
1.82 |
0.40 |
|
First special dividend
per ordinary share (p) |
1.18 |
0.46 |
|
Second special
dividend per ordinary share (p) |
- |
2.10 |
|
Total dividends per
ordinary share (p) |
3.00 |
2.96 |
1.4% |
Ex-dividend date |
13 April
2017 |
Record date |
18 April
2017 |
Payment date |
2 May
2017 |
Chairman’s Statement
Results for the half year ended
31 January 2017
During the half year under review the total return to
shareholders was 7.1%, against an increase in the benchmark of
7.0%.
Whilst the Investment Manager's underlying model of buying
quality global blue chip stocks remains unchanged, the additional
emphasis that has been put on buying business models that are
aligned with key forward looking trends continues to have worked
during the first 6 months of the year. The Investment Manager’s
Report sets out the reasons for this performance.
Dividends
As explained in the Strategic Report of the Annual Report &
Financial Statements Year Ended 31 July
2016 (the “Annual Report 2016”), we have split the dividend
payments in order to better reflect the sources of the Company’s
income. Recurring income from dividends on underlying
holdings has been paid out as ordinary dividends, whilst
non-recurring (other Investment) income has been paid out as
special dividends.
With these results we have announced an ordinary dividend of
1.82p and a first special dividend of 1.18p. The aggregate of
all these is 3.00p per share compared to 2.96p in the same period
last year. This is an increase of 1.4%.
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. The board has confidence that our
Investment Manager’s stated investment strategy gives every
opportunity for this to continue in the remainder of the year.
Mr P H A Stanley
Chairman
4 April 2017.
Investment Manager's Report
Introduction
It has been an interesting six month period with our benchmark
returning 7.0% on the Trumpflation story (the inflation that might
appear during Donald Trump's U.S. Presidential
administration). Trumpflation has been good for
cyclicals and as one strategist put it: "if you were
underweight in Shell and BP you were in trouble" unless, of course,
you were in banks or financials or materials. We had no
holdings in any of these sectors. The worst performing areas
were healthcare and "bond proxies." We held over 40% of our
portfolio in these areas. Therefore, it is with great relief
that we can report we outperformed our benchmark by 0.1% over the
period.
Contribution to performance (based on
Total Return of holdings - including derivatives - in local
currency)
Technology
Investments |
6.7% |
Consumer Goods Investments |
(0.3)% |
Healthcare & Pharmaceuticals
Investments |
(0.8)% |
Other Investments |
0.1% |
Underlying Portfolio Local Currency
Return |
5.7% |
FX & Costs |
1.4% |
Total Portfolio Base Currency
Return |
7.1% |
Technology Investments
Although the election of Donald
Trump was not particularly helpful for the sector,
Technology was still the key driver of portfolio performance during
the period.
NVidia Corp, which is emerging as a key player in artificial
intelligence (due to the advantages of using GPU technology for
machine learning), was a particularly strong performer,
contributing around 1% to underlying portfolio performance (in
local currency).
Our largest four core tech holdings also continued to perform
well, with Microsoft contributing 1%, Amazon.com Inc.
contributing 0.8%, Facebook Inc. 0.4% and Alphabet Inc. 0.3%. Apple
Inc. benefited from a better than expected iPhone 7 launch (also
helped by Samsung’s battery issues) and contributed 0.7% to
portfolio performance. Other notable positive contributors
included: Polar Capital Technology Trust Plc 0.7%, Scottish
Mortgage Investment Trust Plc 0.5%, Syngenta AG 0.4%, Yahoo! Inc.
0.3% and PayPal Holdings Inc. 0.2%.
Consumer Goods Investments
As mentioned in the introduction, “bond proxies” were generally
poor performers during the period. So it was of no surprise that
performance from our consumer investments was lacklustre.
Although a number of holdings saw declining share prices, we
significantly mitigated the decline through call selling – delta
hedging our positions. Our overall option overlay strategy
improved the sector’s performance by more than 0.6%.
Even net of option hedges, Heineken NV was still a key drag on
performance, reducing local currency performance by 0.8%.
One of the few positive performers in the sector was Pernod
Ricard SA, which contributed 0.2%.
Healthcare & Pharmaceuticals
Investments
Healthcare was also an overall drag on performance in spite of
our hedging efforts.
Key negative performers in the sector were GlaxoSmithKline Plc
and Shire Plc which both contributed (0.3)% and Allergan Plc and
AstraZeneca Plc both contributing (0.2)%.
The only notable positive contributors were Spire Healthcare
Group Plc (acquired by Mediclinic), which contributed 0.2% and
Zoetis which also contributed 0.2%.
Although we are concerned by some of the sector trends – such as
increasing scrutiny on pricing, it is still a sector that generates
good top line growth, has good Return on Invested Capital (“ROIC”)
and is reasonably inexpensive.
Brexit
There is no change to our view on the impact of Brexit as
referenced in our Annual Report 2016.
Investment Manager
M & L Capital Management
Limited
Portfolio Report Equity Exposures (Longs)
As at 31
January 2017
Company |
Sector |
Value
£’000 |
% of Net
Assets |
Investments |
|
|
|
Amazon.com, Inc. |
Technology |
7,894 |
10.05 |
Facebook Inc. |
Technology |
6,117 |
7.78 |
Microsoft
Corporation |
Technology |
6,100 |
7.76 |
AlphaBet Inc. |
Technology |
5,782 |
7.36 |
Polar Capital
Technology Trust plc |
Technology |
3,323 |
4.23 |
Apple Inc. |
Technology |
3,299 |
4.20 |
GlaxoSmithKline plc
* |
Healthcare &
Pharmaceuticals |
2,975 |
3.79 |
Scottish Mortgage
Investment Trust plc |
Technology |
2,889 |
3.68 |
Yahoo! Inc. * |
Technology |
2,872 |
3.66 |
Heineken NV |
Consumer Goods |
2,617 |
3.33 |
Smith & Nephew plc
* |
Healthcare &
Pharmaceuticals |
2,603 |
3.31 |
Worldwide Healthcare
Trust plc |
Healthcare &
Pharmaceuticals |
2,466 |
3.14 |
Shire plc * |
Healthcare &
Pharmaceuticals |
2,365 |
3.01 |
Beiersdorf AG * |
Healthcare &
Pharmaceuticals |
2,252 |
2.87 |
salesforce.com,
inc. |
Technology |
2,075 |
2.64 |
Pernod Ricard SA
* |
Consumer Goods |
2,020 |
2.57 |
Davide Campari Milano
SPA * |
Consumer Goods |
1,993 |
2.54 |
Unilever plc * |
Consumer Goods |
1,856 |
2.36 |
Zoetis Inc. |
Healthcare &
Pharmaceuticals |
1,600 |
2.04 |
NVidia
Corporation |
Technology |
1,553 |
1.98 |
Paypal Holdings
Inc. |
Technology |
1,502 |
1.91 |
Roche Holding * |
Healthcare &
Pharmaceuticals |
1,389 |
1.77 |
AstraZeneca Plc * |
Healthcare &
Pharmaceuticals |
1,384 |
1.76 |
Syngenta AG * |
Agrobusiness |
1,353 |
1.72 |
The SME Loan Fund plc
* |
Investment Trust |
1,302 |
1.66 |
Adobe systems
Inc. |
Technology |
982 |
1.25 |
Priceline Group
Inc. |
Technology |
883 |
1.12 |
Tencent Holdings Ltd
* |
Technology |
806 |
1.03 |
|
|
74,252 |
94.52 |
Balance held in 16
other positions |
|
7,568 |
9.61 |
Total equities
exposure |
|
81,820 |
104.13 |
Other net assets |
|
(3,240) |
(4.13) |
Net
assets |
|
78,580 |
100.00 |
(*including equity swap
exposures.)
Interim Management Report
The important events that have occurred during the period under
review, the key factors influencing the financial statements and
the principal risks and uncertainties for the remaining six months
of the financial year are set out in the Chairman’s Statement on
page 3 and the Investment Manager’s Report on pages 4 and 5.
The principal risks facing the Company are substantially
unchanged since the date of the Annual Report 2016 and continue to
be as set out in that report. Risks faced by the Company include,
but are not limited to, investment and strategy, market, market
price volatility, currency, liquidity risk, credit and counterparty
risk. Details of the Company’s management of these risks and
exposure to them are set out in the Annual Report 2016.
The holding company and ultimate controlling shareholder
throughout the period and the previous year was M&M Investment
Company plc, a company incorporated in England and Wales. This company was controlled throughout
the year by Mr M Sheppard and his immediate family. There are no
other significant changes to the related party disclosures set out
in the Annual Report 2016.
Responsibility Statement
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 and financial
position of the Company; and
• this Half-Year 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 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 that
could do so.
This Half-Year Financial Report was approved by the Board of
Directors on 4 April 2017 and the
above responsibility statement was signed on its behalf by
David Harris, Chairman.
Mr D Harris
Chairman of Audit Committee
Condensed Statement of Comprehensive Income
For the six months ended
31 January 2017
|
(Unaudited)
Six months ended
31 January 2017 |
(Unaudited)
Six months ended
31 January 2016 |
(Audited)
Year ended
31 July 2016 |
|
Revenue
£’000 |
Capital
£’000 |
Total
£’000 |
Revenue
£’000 |
Capital
£’000 |
Total
£’000 |
Revenue
£’000 |
Capital
£’000 |
Total
£’000 |
Gains on
investments
at fair value |
- |
5,094 |
5,094 |
- |
2,030 |
2,030 |
- |
10,712 |
10,712 |
Dividend and debt
Investment income |
466 |
- |
466 |
301 |
- |
301 |
897 |
- |
897 |
Other investment
income |
255 |
- |
255 |
362 |
- |
362 |
2,808 |
- |
2,808 |
|
|
|
|
|
|
|
|
|
|
Gross income |
721 |
5,094 |
5,815 |
663 |
2,030 |
2,693 |
3,705 |
10,712 |
14,417 |
Expenses |
|
|
|
|
|
|
|
|
|
Management fee |
(188) |
- |
(188) |
(159) |
- |
(159) |
(334) |
- |
(334) |
Transaction costs |
(93) |
- |
(93) |
(143) |
- |
(143) |
(223) |
- |
(223) |
Other expenses |
(186) |
(79) |
(265) |
(135) |
- |
(135) |
(224) |
- |
(224) |
|
|
|
|
|
|
|
|
|
|
Total expenses |
(467) |
(79) |
(546) |
(437) |
- |
(437) |
(781) |
- |
(781) |
Profit/(loss)
before finance costs and taxation |
254 |
5,015 |
5,269 |
226 |
2,030 |
2,256 |
2,924 |
10,712 |
13,636 |
|
|
|
|
|
|
|
|
|
|
Finance costs |
(30) |
(45) |
(75) |
(40) |
(73) |
(113) |
(35) |
(177) |
(212) |
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before
tax |
224 |
4,970 |
5,194 |
186 |
1,957 |
2,143 |
2,889 |
10,535 |
13,424 |
|
|
|
|
|
|
|
|
|
|
Taxation |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Profit/(loss) attributable
to equity shareholders |
224 |
4,970 |
5,194 |
186 |
1,957 |
2,143 |
2,889 |
10,535 |
13,424 |
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per
share (p) |
1.04 |
23.08 |
24.12 |
0.87 |
9.10 |
9.97 |
13.45 |
49.05 |
62.50 |
The total column of this statement represents the Condensed
Company’s Statement of Comprehensive Income, prepared in accordance
with IFRS. The supplementary revenue and capital return
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 2017
|
|
|
Share
Capital |
Share
Premium |
Other
Reserves |
Capital
Reserve |
Retained Earnings |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Balance at 1 August
2016 |
5,614 |
35,317 |
(79) |
7,179 |
27,515 |
75,546 |
Total comprehensive
income |
- |
- |
79 |
4,970 |
224 |
5,273 |
Equity dividends
paid |
- |
- |
- |
- |
(2,239) |
(2,239) |
Balance at 31
January 2017 |
5,614 |
35,317 |
- |
12,149 |
25,500 |
78,580 |
|
|
|
|
|
|
|
|
|
|
Share
Capital |
Share Premium |
Other
Reserves |
Capital Reserve |
Retained Earnings |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Balance at 1 August
2015 |
5,614 |
35,132 |
(79) |
19,933 |
2,474 |
63,074 |
Total comprehensive
income |
- |
- |
- |
1,957 |
186 |
2,143 |
Buybacks of ordinary
shares |
- |
- |
- |
(121) |
- |
(121) |
Equity dividends
paid |
- |
- |
- |
- |
(419) |
(419) |
Balance at 31
January 2016 |
5,614 |
35,132 |
(79) |
21,769 |
2,241 |
64,677 |
|
|
|
Share
Capital |
Share
Premium |
Other
Reserves |
Capital Reserve |
Retained Earnings |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Balance at 1 August
2015 |
5,614 |
35,295 |
(79) |
(3,436) |
25,680 |
63,074 |
Total comprehensive
income |
- |
- |
- |
10,535 |
2,889 |
13,424 |
Buybacks of ordinary
shares |
- |
- |
- |
(134) |
- |
(134) |
Sale of ordinary
shares |
- |
22 |
- |
214 |
- |
236 |
Equity dividends
paid |
- |
- |
- |
- |
(1,054) |
(1,054) |
Balance at 31 July
2016 |
5,614 |
35,317 |
(79) |
7,179 |
27,515 |
75,546 |
The notes below form part of these financial statements.
Condensed Statement of Financial Position
As at 31
January 2017
|
(Unaudited)
31 January
2017
£’000 |
(Unaudited)
31 January
2016
£’000 |
(Audited)
31 July
2016
£’000 |
Non-current
assets |
|
|
|
Investments held at
fair value through profit and loss |
55,396 |
36,242 |
38,999 |
|
55,396 |
36,242 |
38,999 |
Current
assets |
|
|
|
Unrealised derivative
financial assets |
1,381 |
1,887 |
3,269 |
Trade and other
receivables |
380 |
50 |
22 |
Cash and cash
equivalents |
23,163 |
29,439 |
35,252 |
|
24,924 |
31,376 |
38,543 |
Gross
assets |
80,320 |
67,618 |
77,542 |
|
|
|
|
Current
liabilities |
|
|
|
Unrealised derivative
liabilities |
(1,516) |
(2,717) |
(1,746) |
Trade and other
payables |
(224) |
(224) |
(250) |
|
(1,740) |
(2,941) |
(1,996) |
Net assets |
78,580 |
64,677 |
75,546 |
|
|
|
|
Equity attributable
to equity holders |
|
|
|
Ordinary share
capital |
5,614 |
5,614 |
5,614 |
Share premium |
35,317 |
35,132 |
35,317 |
Capital reserves |
12,149 |
21,769 |
7,179 |
Goodwill reserve |
- |
(79) |
(79) |
Retained earnings |
25,500 |
2,241 |
27,515 |
Total
equity shareholders’ funds |
78,580 |
64,677 |
75,546 |
Net asset value per
share (p) |
364.90 |
301.50 |
350.80 |
The notes below form part of these financial statements.
Condensed Statement of Cash Flows
For the six months
ended 31 January 2017
|
(Unaudited)
31 January
2017
£’000 |
(Unaudited)
31 January
2016
£’000 |
(Audited)
31 July
2016
£’000 |
Cash flow from
operating activities |
|
|
|
Profit before tax |
5,194 |
2,143 |
13,424 |
Interest paid |
75 |
56 |
383 |
(Gains)/losses on
investments |
(5,057) |
1,158 |
(7,941) |
(Increase)/decrease in
receivables |
(358) |
(26) |
2 |
(Decrease)/increase in
payables |
(40) |
24 |
50 |
Decrease/(increase) in
derivative financial instruments |
1,657 |
1,771 |
(546) |
Non cash movement |
79 |
- |
- |
Net cash generated
from operating activities |
1,550 |
5,126 |
5,372 |
|
|
|
|
Cash flow from
investing activities |
|
|
|
Purchase of
investments |
(19,101) |
(27,363) |
(39,450) |
Sale of
investments |
7,761 |
18,039 |
36,432 |
Net
cash (used in)/generated from investing activities |
(11,340) |
(9,324) |
(3,018) |
|
|
|
|
Cash flow from
financing activities |
|
|
|
Equity dividends
paid |
(2,239) |
(419) |
(1,054) |
Resale of ordinary
shares |
- |
- |
236 |
Buybacks of ordinary
shares |
- |
(121) |
(134) |
Interest paid |
(60) |
(56) |
(383) |
Net
cash used in financing activities |
(2,299) |
(596) |
(1,335) |
|
|
|
|
Net
(decrease)/increase in cash and cash equivalents |
(12,089) |
(4,794) |
1,019 |
Cash and cash
equivalents at the beginning of the period |
35,252 |
34,233 |
34,233 |
Cash and cash
equivalents at the end of the period |
23,163 |
29,439 |
35,252 |
|
|
|
|
|
|
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 accounting policies are as set out in the Annual Report for the
year ended 31 July 2016.
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 thousands,
except where otherwise indicated.
The half-year financial statements have been prepared in
accordance with IAS 34 “Interim Financial Reporting”.
The financial information contained in this half-year financial
report does not constitute statutory accounts as defined by the
Companies Act 2006. The financial information for the periods ended
31 January 2017 and 31 January 2016 have not been audited or reviewed
by the Company’s Auditors. The figures and financial information
for the year ended 31 July 2016 are
an extract from the latest published audited statements 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. Return per share
Returns per 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 on share
capital.
|
6 months to |
6 months to |
Year ended |
|
31 January 2017 |
31 January 2016 |
31 July 2016 |
|
(unaudited) |
(unaudited) |
(audited) |
|
|
|
|
|
Net
return |
Per
share |
Net
return |
Per
share |
Net
return |
Per
share |
|
£’000 |
Pence |
£’000 |
pence |
£.000 |
pence |
Return on total
comprehensive income |
|
|
|
|
|
|
Revenue |
224 |
1.04 |
186 |
0.87 |
2,889 |
13.45 |
Capital |
4,970 |
23.08 |
1,957 |
9.10 |
10,535 |
49.05 |
|
|
|
|
|
|
|
Total comprehensive
income |
5,194 |
24.12 |
2,143 |
9.97 |
13,424 |
62.50 |
|
|
|
|
|
|
|
Weighted average
number of ordinary shares |
|
21,534,420 |
|
21,396,920 |
|
21,477,042 |
|
|
|
|
|
|
|
3. Issued ordinary share capital
|
6 months to |
6 months to |
Year ended |
|
31 January |
31 January |
31 July |
|
2017 |
2016 |
2016 |
|
(unaudited) |
(unaudited) |
(audited) |
|
|
|
|
|
Number |
£’000 |
Number |
£’000 |
Number |
£’000 |
25p shares in
issue |
22,457,042 |
5,614 |
22,457,042 |
5,614 |
22,457,042 |
5,614 |
Shares held in
treasury |
(922,622) |
|
(1,007,622) |
|
(922,622) |
|
Shares in
circulation |
21,534,420 |
|
22,457,000 |
|
21,534,420 |
|
|
|
|
|
|
|
|
The Company’s share capital comprises Ordinary shares of 25p
each with one vote per share. No shares were bought back, cancelled
or resold in the six month period to 31
January 2017 (six months to 31
January 2016: 51,500 shares bought back for treasury at a
cost of £121,000 and no shares resold; year ended 31 July 2016: 51,500 Ordinary Shares bought back
for treasury at a total cost of £134,000 and 85,000 shares resold
from treasury for a gross consideration of £236,000).
4. Dividends per ordinary share
The Board declared an interim dividend of 1.82p (2016: 0.40p)
per ordinary share and a special dividend of 1.18p (2016: First
0.46p, second 2.10p) to shareholders registered at the close of
business on 18 April 2017.
This dividend has not been included as a liability in these
financial statements.
5. Net asset value per
ordinaryshare
Net asset value per ordinary share is based on net assets at the
period end and 21,534,420 (31 July
2016: 21,534,420 and 31 January
2016: 22,457,000) ordinary shares in issue at the period end
excluding shares held in treasury.
6. Fair value hierarchy
Financial assets and liabilities of the Company are carried in
the Balance Sheet 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 2017
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
£’000 |
£’000 |
£’000 |
£’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 January 2016
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
Equity investments |
35,996 |
- |
- |
35,996 |
Debentures |
- |
246 |
- |
246 |
Derivatives – assets |
- |
1,887 |
- |
1,887 |
|
35,996 |
2,133 |
- |
38,129 |
Financial assets at fair value through profit or loss at
31 July 2016
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
Equity investments |
38,753 |
- |
- |
38,753 |
Debentures |
- |
246 |
- |
246 |
Derivatives – assets |
- |
3,269 |
- |
3,269 |
|
38,753 |
3,515 |
- |
42,268 |
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 2017
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
Derivatives –
Liabilities |
- |
1,516 |
- |
1,516 |
Financial liabilities at amortised cost at 31 January 2016
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
Derivatives – Liabilities |
- |
2,717 |
- |
2,717 |
Financial liabilities at amortised cost at 31 January 2017
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
Derivatives – Liabilities |
- |
1,746 |
- |
1,746 |
7. Transactions with the Manager and
related parties
M & L Capital Management Limited (‘MLCM’), a company
controlled by Mr. M. Sheppard, acts
as Investment Manager to the Company. Details of the fee
arrangements are given in the Annual Report. Mr. M. Sheppard
is also a director of M&M Investment Company Plc which is the
holding company of Manchester and
London Investment Trust public limited company.
Midas Investment Management Limited (“Midas”), a company also
controlled by Mr. M Sheppard also provides services as detailed
below.
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.
Investment management fees are charged to revenue set out in the
Statement of Comprehensive Income.
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.
Monthly company secretarial and office administration costs
incurred by the holding company, M&M Investment Company Plc, on
behalf of the Company were also recharged to the Company in the
period.
The fees payable to Directors are set out in the Annual
Report.
There are 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.
The Company intends to be fully invested whenever
possible. However, during periods in which changes in
economic conditions or other factors so warrant, the Investment
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.
Details of the Company’s management of these risks and exposure
to them are set out in the Annual Report 2016.
Gearing
The Company may borrow to gear the Company’s returns when the
Investment 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 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 Investment
Manager by an announcement issued through a Regulatory Information
Service approved by the FCA.
Benchmark
Index
Performance is measured against the Dow Jones U.K. Total Stock
Market Total Return Index (GBP).
Shareholder information
The price and net asset value are also published in the
Investment Companies Sector of The Financial Times.
ISA and Savings Schemes - cost
efficient ways to invest in the Company.
The shares of Manchester & London Investment Trust public
limited company (“MLIT” or the “Company”) are listed on the
Official List 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. Alternatively, investments can be made through the
Company’s Share Savings Plan or the MLIT Individual Savings Account
(“ISA”).
1. The MLIT Investment Plan
MLIT operates a zero-charge Savings Plan and all cash (whether
from subscriptions or dividends) is reinvested in the Company’s
shares. Investors have the option of making a lump sum
payment to the Plan or regular payments on a monthly or quarterly
basis, whichever is preferred. The Plan can be held jointly
or set up for the benefit of children and there is no upper limit
on the amount which can be invested.
2. The MLIT ISA
Like the Savings Plan, the MLIT zero-charge ISA consists solely
of MLIT shares and all cash (whether from subscriptions or
dividends) is reinvested in the Company’s shares. There are
no commissions or annual administration charges on the ISA.
Subscriptions may be made either by lump sum or by monthly
payments. The current lump sum minimum payment is £2,000 with
a maximum subscription per year of £15,240.
3. The transfer of other ISAs into the
MLIT ISA
Equity ISAs and cash ISAs which are currently held by other
managers may be transferred into an MLIT ISA free of charge.
The costs of selling the existing holdings and purchasing the MLIT
shares will also be free of charge.
Disposal of other shareholdings
MLIT offers a facility whereby holders may sell any of their
existing shares without incurring any commission costs as long as
the full proceeds are reinvested into MLIT shares. The
purchase of the MLIT shares will also be undertaken free of
commission.
Please contact Midas Investment Management Limited on 0161
228 1709 should you require further details on these savings
plans and for the full terms and conditions.
Shareholder Benefits
All shareholders with 2,500 shares (excluding the officers of
the Company) are eligible to participate in a draw undertaken by
the Directors before the Annual General Meeting in respect of The
All England Lawn Tennis Ground plc Debentures listed below.
Once a party’s holding exceeds 2,500 shares, the probability of
success in this draw may increase for every additional share
held. The investment policy of the Company may result in
some, or all, of the Debentures being sold in which event the
benefit would cease.
Centre Court
The Company owns two Debentures normally 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 are normally thirteen draws, each draw
entitling the successful shareholder to one pair of adjacent seats
for one day's play.
Corporate Information
Directors
P H A Stanley (Chairman)
D Harris
B Miller
Secretary
Capita Company Secretarial Services Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU |
Administrator
Capita Sinclair Henderson Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU |
Registered
Office
2nd Floor
Arthur House
Chorlton Street
Manchester
M1 3FH
Tel: 0161 228 1709
Fax: 0161 228 2510 |
Registrar
Computershare Investor Services plc
PO Box 82
The Pavillions
Bridgwater Road
Bristol
BS99 7NH
Tel: 0870 702 0003
Fax: 0870 703 6114 |
Registered in
England & Wales
Company Number 01009550
Company website
www.mlcapman.com/manchester-london-investment-trust-plc/ |
Bankers
National Westminster Bank plc
11 Spring Gardens
Manchester
M60 2DB |
Investment
Manager
M & L Capital Management Limited
Basement Office
21 Brompton Square
London
SW3 2AD
Tel: 0207 584 5733
Fax: 0207 589 3923 |
Independent
Auditors
Deloitte LLP
Saltire Court
20 Castle Terrace
Edinburgh
EH1 2DB |
Website and Price Information
The Company has a dedicated website which may be found at
www.mlcapman.com/manchester-london-investment-trust-plc/. The
website has been designed to be utilised as the Company’s primary
method of electronic communication with shareholders and contains
copies of the Report and Accounts, other documents published by the
Company and announcements made by the Company to the
market.
The Company releases its Net Asset Value to the London Stock
Exchange on a weekly basis. Share price information may also
be found in the Financial Times.
Should shareholders wish to receive our Monthly Factsheets
directly please provide your email address to the Investment
Manager.
Copies of the Half-Year Financial Report for the six months
ended 31 January 2017 will be
available from the Company’s registered office at 2nd
Floor, Arthur House, Chorlton
Street, Manchester, M1 3FH, as
well as on the Company’s website at
www.mlcapman.com/manchester-london-investment-trust-plc/ .