1
Mid Wynd International
Investment Trust PLC
Annual Financial Report
for the year ended 30 June 2023
2
Company Overview
Net asset value per share
Regular dividend per share
Net asset value total return
719.84p
7.80p
Growth over 5 years: 40%
5.6%
†
Growth over 5 years: 54.6%
Percentage total return - five year summary
GRAPH
† Alternative Performance Measure (see page 74).
Our purpose is to increase the real wealth and prosperity of our shareholders, thus helping them meet
their long-term savings needs.
Through our investment company structure, we enable shareholders, large or small, to invest in an
actively-managed diversified portfolio of securities in a cost-effective way, giving them access to the
growth opportunities offered by world markets. Although the Company aims to provide dividend
growth over time, its primary aim is to maximise total returns to shareholders.
The investment management approach is to identify quality growth companies which are likely to
deliver superior returns for our investors. The aim is to run a diversified portfolio of holdings. Where
appropriate, the Company may use gearing with a view to enhancing shareholder returns.
Dividends pence per ordinary share paid/payable
GRAPH
3
Contents
Financial Highlights
2
Strategic Report
Chairman’s Statement
5
Investment Manager’s Review
9
Portfolio of Investments as at 30 June 2023
11
Introduction to the Company’s New Investment Manager
14
Strategy and Business Review
15
Sustainability, Stewardship & ESG
17
Key Performance Indicators (“KPIs”)
18
Principal Risks and Risk Management
19
Long-term Viability
22
Duty to Promote the Success of the Company
23
Directors and Corporate Governance
Board of Directors
29
Directors’ Report
30
Corporate Governance Report
33
Directors’ Remuneration Policy and Report
38
Report of the Audit Committee
40
Statement of Directors’ Responsibilities in respect of the Annual Financial Report
43
Independent Auditor’s Report
44
Financial Statements
Statement of Comprehensive Income
50
Statement of Financial Position
51
Statement of Changes in Equity
52
Statement of Cash Flows
53
Notes to the Financial Statements
54
Shareholder Information
Notice of Annual General Meeting
66
Information for Shareholders
72
Glossary
75
Investment Manager, Company Secretary and Advisers
76
4
Financial Highlights
Returns for the year ended 30 June 2023
Year ended
30 June
2023
Year ended
30 June
2022
Total returns
Net asset value per ordinary share†
5.6%
(7.5)%
Share price
†
1.0%
(9.5)%
MSCI All Country World Index (GBP)
11.3%
(4.2)%
Revenue and dividends
Revenue earnings per share
10.01p
11.72p
Dividends per share*
7.80p
7.20p
Special dividend per share*
1.70p
3.00p
Ongoing charges
†
**
0.62%
0.60%
As at
30 June
2023
As at
30 June
2022
Capital
Net asset value per share
719.84p
692.01p
Share price
689.00p
693.00p
Net cash
†
2.7%
0.3%
(Discount)/Premium
†
(4.3)%
0.1%
Source: Artemis/Datastream.
* A final dividend, if approved by shareholders, and a special dividend for the year to 30 June 2023 of 3.95 pence and 1.70 pence
respectively will be paid on 10 November 2023 to shareholders on the register at the close of business on 29 September 2023.
** Look-through costs of underlying investment company holdings not included.
† Alternative Performance Measure (see page 74).
Performance for the year ended
30 June 2023
Premium/(discount) during the year ended
30 June 2023
GRAPH
GRAPH
Source: Datastream/Morningstar.
All figures based on a weekly rolling average.
Source: Datastream/Morningstar.
All figures based on a weekly rolling average.
Total returns to 30 June 2023
3 years
5 years
Since 1 May
2014*
10 years
Net asset value per ordinary share†
21.5%
54.6%
192.6%
220.1%
Share price†
16.4%
46.4%
183.5%
202.1%
MSCI All Country World Index (GBP)
32.9%
53.3%
160.2%
176.1%
Source: Artemis/Datastream/Morningstar, total returns with dividends reinvested.
* The date when Artemis was appointed as Investment Manager.
† Alternative Performance Measure (see page 74).
5
Performance since Artemis was appointed Investment Manager
GRAPH
Source: Datastream/Morningstar.
Dividends paid/payable to shareholders
GRAPH
6
Ten year summary
At 30 June
Total
net
assets
(£’000)
1
Borrowings
(£’000)
Share-
holders’
funds
(£’000)
Net asset
value per
share (at
fair value)
(p)
Share
price
(p)
Premium/
(discount)
(%)
Dividend
per share
(p)
2
Ongoing
charges
(%)
†
Net
cash/
(gearing)
(%)
†
2014
67,744
(4,902)
62,842
279.17
274.50
(1.7)
3.80
0.80
5.8
2015
85,463
(4,622)
80,841
322.87
329.75
2.1
4.00
0.79
–
2016
113,064
(5,438)
107,626
369.70
352.00
(4.8)
4.50
0.72
0.9
2017
146,907
(3,849)
143,058
439.75
441.00
0.3
5.00
0.66
0.3
2018
187,979
(4,442)
183,537
493.23
498.00
1.0
5.55
0.67
2.7
2019
231,126
(5,042)
226,084
553.16
568.00
2.7
5.83
0.64
0.2
2020
317,444
(9,401)
308,043
612.61
612.00
(0.1)
6.12
0.68
1.7
2021
462,042
(9,949)
452,093
754.43
772.00
2.3
6.40
0.61
1.5
2022
458,604
(5,951)
452,653
692.01
693.00
0.1
10.20*
0.60
0.3
2023
449,026
–
449,026
719.84
689.00
(4.3)
9.50**
0.62
2.7
Source: Artemis.
1 Total net assets comprise net assets before deduction of bank loans.
2 The 2023 dividend includes the proposed final dividend of 3.95 pence per share which is subject to shareholder approval at the Annual
General Meeting.
† Alternative Performance Measure (see page 74).
* Including a special divdend of 3.00 pence per share.
** Including a special dividend of 1.70 pence per share.
Cumulative ten year performance summary (from 30 June 2013)
At 30 June
Total
dividend
growth
Net asset
value per share
(at fair value)
total return
1†
Share price
total return
1†
MSCI All Country
World Index
(GBP)
total return
1
2014
11.8%
11.7%
8.4%
9.1%
2015
17.6%
30.9%
31.9%
19.4%
2016
32.4%
51.8%
42.6%
35.3%
2017
47.1%
83.8%
81.9%
65.3%
2018
63.2%
107.1%
106.3%
80.1%
2019
71.5%
134.9%
137.9%
97.6%
2020
80.0%
163.6%
159.6%
107.8%
2021
88.2%
227.6%
230.5%
158.9%
2022
200.0%
203.1%
199.2%
148.1%
2023
179.4%
220.1%
202.1%
176.1%
1 Source: Datastream/Morningstar.
† Alternative Performance Measure (see page 74).
7
Strategic Report
Chairman’s Statement
The last twelve months have seen a rise in global equity markets and a rise in the net asset value
(“NAV”) of our Company. The rise in the NAV of Mid Wynd has not kept pace with the rise in our
comparator index. With major structural changes impacting economies, businesses and geo-politics the
global equity markets are seeking to price in what the long-term consequences of these changes are for
corporate earnings and equity valuations. In our current financial year they concluded that technology
stocks are best placed to profit from these structural changes and there has been excitement around the
prospects for earnings from artificial intelligence (AI) which, for some, heralds yet another structural
change. Our Company has invested in the technology sector and benefited from some of this
excitement but not to the extent that the comparator index has benefited. Accurately reflecting all these
major structural changes in the price of equities is something that is likely to be achieved by financial
markets only over many years. The role of our managers is to see through the short-term volatility
associated with such changes and invest to benefit from the developing longer-term trends.
As I mentioned in the Half-Yearly Financial Report, the past twelve months have seen the
announcement of the departure of both our managers from Artemis Fund Managers. While Simon
Edelsten remains at Artemis until October, his forthcoming departure led the Board to review our
management arrangements. This review has led to the appointment of Lazard Asset Management as
our new manager and they are scheduled to take over responsibility for managing our assets in October
2023. You will find further details regarding this appointment later in this Chairman’s Statement and
also later on page 14.
Performance
For the year ended 30 June 2023 the Company’s share price rose by 1.0% on a total return basis with
dividends assumed to be re-invested. The Company’s net asset value per share, on a total return basis,
with dividends assumed to be reinvested, rose by 5.6%. This compares with a rise of 11.3% in the
Company’s comparator index, the MSCI All Country World Index (GBP).
The share price total return is lower than the NAV return owing to the move from a premium to NAV
at the start of the year to a discount at the year end. The discount of 4.3 per cent, seems, on the face of
it, to be outside our target range under the Company’s discount control policy. The explanation for this
apparent anomaly and details of the discount control policy can be found later in this Chairman’s
Statement. The average NAV discount to share price during the year was 1.0%.
Further details of the performance of the Company during the year are included in the Investment
Manager’s Review.
Earnings and dividend
The total return for the year ended 30 June 2023 was a gain of 36.87 pence per share, comprising a
revenue gain of 10.01 pence and a capital gain of 26.86 pence. The Board is proposing a final dividend
of 3.95 pence per share which, subject to approval by shareholders at the Annual General Meeting
(“AGM”), will be paid together with a special dividend of 1.70 pence per share on 10 November 2023
to those shareholders on the register at the close of business on 29 September 2023. An interim
dividend of 3.85p pence per share was paid in March 2023, and so together with the proposed final
dividend (but excluding the special dividend), this gives dividend growth of 8.3% over the year.
The dividend is fully covered by the revenue return for the year. The aim remains to grow the regular
dividend progressively.
To maintain our status as an investment trust we are required by HMRC to distribute 85% of our
earnings in the form of dividends. Last year we decided to distribute a dividend in two forms. The
‘regular dividend’, which we believe reflects the underlying earnings of our investments, and a ‘special
dividend’ which I described last year as reflecting the ‘excess earnings’ of our investments. The aim in
so dividing our dividend is to provide the maximum flexibility for our manager to pursue the best total
return, in the form of capital gains and dividends, rather than to force the manager to focus on the
8
pursuit of dividend income. I reported last year that the earnings of our Company had increased by
72% year on year and this year they have declined by almost 15%. This is the volatile nature of
earnings that one expects when much of our income is derived in foreign currencies, particularly in US
dollars, the sterling exchange rate moves materially, and we declare our dividends in sterling. Changes
to our holdings also impact the total income of the portfolio depending upon the dividend yield of each
investment and a one-off shift to higher yielding stocks materially boosted our earnings in the prior
financial year. In recognition that such volatility of earnings will likely continue the Board will again
declare a special dividend this year. We can again describe this special dividend as our assessment of
the ‘excess earnings’ of our Company. Shareholders should look to the level and growth of the regular
dividend for guidance as to the underlying earnings potential and thus dividend potential of our
Company.
The growth in the regular dividend this year, of 8.3%, has exceeded the annual rate of inflation. Since
the year ended 30 June 2019, before the outbreak of COVID-19 and the surge in inflation that
followed, our regular dividend has increased from 5.83p in 2019 to 8.70p in 2023 an increase of 49%.
Over the same period the UK Consumer Price Index increased by 22%.
Management changes
In 2014, on the retirement of our fund manager from Baillie Gifford, the Board of Mid Wynd
conducted a review of management arrangements and appointed Artemis Fund Managers to manage
our assets. The team of three individuals at Artemis who have successfully managed our assets have
now all left or will soon leave Artemis. The team led by Simon Edelsten has produced very good
performance for our shareholders in often volatile and difficult circumstances. Since their appointment
in 2014 they have stewarded our Company’s assets through shocks that include – Brexit, growing
volatility in US politics, a hot war in Europe, a growing cold war between the developed world and
China and a global pandemic – to name a few! In successfully navigating through these difficult waters
they provided better returns, relative to the comparator index, when equity markets were weak while
capturing a significant portion of the gains when the prices of equities were rising. Such an
achievement is not common even amongst professional investors and the total return of 192.6% from
their appointment to our year end in June 2023, compares very favourably with the total return of
160.2% of our comparator index. This excess performance has been recognised by the marketplace and
as a consequence our shares have traded at a premium to NAV and we have issued shares and grown
the size of the Company. As Chairman of the Company, and a director and shareholder throughout
Artemis’s term as manager, I would like to thank Simon and the team for their diligent and very
successful stewardship of our assets since 2014.
With the departure of our fund managers from Artemis Fund Managers, announced earlier this year,
the Board considered that a full review of management options was necessary. The Board was
informed of the change in personnel at Artemis in mid-February and instigated the review of
management options in March. A review of global equity managers was conducted by Barnett
Waddingham and their brief from the Board was to look for managers successfully pursuing a similar
style to our existing managers, whether in managing portfolios for institutions or retail investors.
Throughout the process the option of continuing with the new team to be appointed by Artemis was
also given due consideration. The Board reviewed a long list of possible managers in May and a short
list of managers in June. At the end of June we announced that Lazard Asset Management would be
our new investment manager.
Lazard is a very well-known name in the world of finance. The company traces its history back to 1848
when the Lazard brothers, immigrants from France, launched their General Merchandise/dry goods
company in New Orleans. The roots of the company are thus not dissimilar to our own as Mid Wynd
traces its roots to a textile manufacturer which opened for business in Dundee in 1797. Lazard has been
involved in banking and finance since the mid-nineteenth century and as of 2023 manages £166bn for
clients in over fifty countries. While well-known to those involved in the institutional fund business,
such as pension fund trustees, the company is less well-known to UK retail investors. This lack of
awareness of Lazard as a manager of UK retail funds was not a deterrent to the Board in appointing the
company as manager of our assets. The Board specifically sought out managers who, while producing
excellent performance, were potentially not well known to retail investors. The over-riding priority for
9
the Board was to find the best manager pursing an approach to investment not dissimilar to that
familiar to investors in our Company. We have found that in our new team at Lazard Asset
Management and are convinced that as wealth managers and retail investors come to understand their
approach to investment management that new investors will be attracted to Mid Wynd.
The team at Lazard Asset Management, of Louis Florentin-Lee and Barney Wilson, have produced
impressive long-term returns. Since inception in February 2011 to the end of June this year their
Lazard Global Quality Growth approach has produced an outperformance of the comparator index (the
MSCI ACW Index) of 2.4% per annum even having deducted the management fees the Board has
agreed with the company. These returns have been achieved managing institutional funds and the team
will now seek to replicate these returns for Mid Wynd thus making their expertise available to all
investors. This excess return is a product of a disciplined approach to assessing the sustainability of
high returns on capital from quality companies and also of calculating the appropriate price to pay for
the shares of such companies. Economic theory asserts that increased competition will attract others to
compete in such areas and thus the returns on capital achievable will decline. This ‘fade’ in returns,
however, has not always materialised and there are companies which have consistently reported high
returns despite the threats from increased competition. One can think of various branded products in
the alcohol and luxury goods business, for instance, which have attracted premium prices and high
returns for their owners – sometimes for over one hundred years. Our managers are searching the
globe, across a wide range of business sectors, to find similar high quality businesses with this form of
replicable high return with limited or no ‘fade’ to returns on capital. The Lazard team has outperformed
the comparator index since 2011 by identifying those companies where the ‘fade’ of returns has not
occurred and by then not paying too much for them. As these companies achieve particularly high
returns on their re-invested capital they tend to re-invest and pay low levels of dividends. For investors
the compounding effect from re-investing the cash flows from high-returning businesses to secure
higher future returns is particularly rewarding.
In their search for such high-quality companies Louis and Barney draw upon the experience of the
more than three hundred investment professionals who work for Lazard Asset Management, including
a team of approximately 70 analysts. From a wide range of recommendations from Lazard analysts
they construct a portfolio, usually of around 40 to 50 stocks, that they believe can sustain high returns
on their capital and represent good value for long-term investors. This approach to investment has
produced good returns when equity markets have been rising and outperformed the comparator index
when equity markets have been falling. The Lazard team has, since inception in 2011, captured 106%
of the upside from markets when equity markets have been rising while capturing 92% of the downside
while equity markets have been falling and these returns take into account management fees. The
team’s long-term focus means that portfolio turnover is low.
The new manager follows a similar approach to stock selection as our previous managers. Both focus
on identifying high quality companies with strong sustainable profitability which can compound over
the long term. Investors can expect changes in the portfolio but also some similarities in holdings
between our new and old investments. Like past managers the Lazard team are free to invest across the
globe in pursuit of such investments. In the past I have stressed the importance, particularly at times of
structural change, of avoiding investment in stock market indices. These indices tend to be comprised
of companies that have benefited from historical long-term trends. The Lazard team, has an active
share, the difference between the portfolio and the composition of the comparator index, of almost
ninety percent. If we are entering a period of major structural change, as many of us expect, then this
willingness to allocate capital without reference to the comparator index is likely to be key to securing
good future returns. The Board very much looks forward to working with the Lazard team in the
pursuit of the high-quality businesses which can both preserve and grow the purchasing power of our
capital, our shareholders’ savings, over the long-term.
The change in investment manager necessitated other changes of service providers for our Company.
The Board has conducted a review of other service providers and has selected Juniper Partners and JP
Morgan to provide the services previously provided by Artemis and Northern Trust.
10
Share Capital
Demand for the Company’s shares continued in the first half of the year with 1,133,200 new shares
issued up to 31 December 2022. However, with market volatility and the announcement of the change
in lead fund managers, the Company entered a period of buybacks. Between 24 February and 30 June
2023, 4,002,662 shares were bought back at a value of £27.6 million and all these buybacks were at a
discount to NAV and thus accretive to net asset value for continuing shareholders. After the year end, a
further 4,466,418 shares were bought back at a further cost of £31.3 million.
The Company’s policy, within normal market conditions, is to issue and re-purchase shares where
necessary to maintain the share price within a band, plus or minus 2%, relative to the net asset value.
Our investment manager assesses the Company’s NAV on a real time basis when buying or selling the
Company’s shares while the price of purchases or issuance are always reported relative to the NAV
reported at a set time of the day. The result can be that some purchases or issuances appear to be out-
with the 2% band established by the Board but the practice of utilising a live NAV is necessary to
ensure that all of our issuance and buybacks are accretive to NAV for continuing shareholders.
Shares were issued and bought back during the year using the existing authorities given at the 2022
AGM. The recent months have seen considerable pressure on investment trust share prices and
discounts generally and Simon Edelsten’s departure and the ensuing change of investment manager
may well have caused some investors to sell their shares in the Company. The Board believes that it is
not unusual for there to be higher levels of turnover in a company’s shares during a period of a
transition of managers. The Board convened a general meeting to be held on 8 September 2023 to
increase the Company’s flexibility to buy back shares. We have changed our manager before, in 2014,
and witnessed significant selling of shares at that time which we bought to ensure that our shares did
not trade out-with the band established by our discount control mechanism. The Board will continue to
operate the discount control mechanism, and this will include issuing shares at a two percent premium
– something we were doing until fairly recently. This discount control mechanism has operated to the
benefit of our shareholders over many years and the current small discount to NAV of our share price
is in marked contrast to the large discount to NAV of many other investment trusts with similar
mandates. At the forthcoming AGM, the Board will seek new authorities to issue and buy back shares
to continue to implement its discount and premium management policy.
Borrowings
At 30 June 2023 the Company had no amounts drawn down on its US$60m facility with the Bank of
Nova Scotia (2022: €5m; US$2m). The Company pays a small fee for the right to access these
additional funds and only when amounts are drawn down is interest expense incurred. Further
information on the Company’s gearing can be found on page 15.
The Company’s revolving credit facility with The Bank of Nova Scotia (UK Branch) needed to be
amended to take account of Lazard’s appointment as our new manager. Taking account of the current
high interest environment, the Board has resolved to terminate the current facility with The Bank of
Nova Scotia.
Board Succession
As discussed in the December 2022 Half-Yearly Report, Hamish Baillie joined the Board on 1
November 2022. The process of refreshing the Board continues. As part of this process I will step
down from the Board of the Company at the 2024 AGM. The Board has been very busy assessing
management options for the Company and also arranging the transition in managers. When that process
is completed, we expect in October 2023, we will focus on future Board composition and the changes
necessary in preparation for my departure from the Board in Q4 2024.
AGM
The AGM will be held in person on 26 October 2023 at 12.00 noon at the offices of Dickson Minto, 16
Charlotte Square, Edinburgh, EH2 4DF.
As Simon Edelsten will have retired before this meeting, it is not intended that he will present at the
forthcoming AGM. However, the new Lazard management team and the CEO of Lazard Asset
11
Management will present in person or via video-link after which they and the Board will be available
to answer shareholder questions.
We encourage those shareholders not attending to e-mail any questions in advance to
cosec@junipartners.com.
As always, I would encourage you to make use of your proxy votes by completing and returning the
form of proxy enclosed with this report.
Outlook
The savers who own the shares of our Company are seeking to both protect and grow the purchasing
power of their wealth. This involves securing positive nominal returns but also, over the long-term,
securing returns higher than the rate of inflation. Over the very long-term equities have provided such
returns but sometimes it has taken more than a decade for the initial investment in equity indices to
result in positive real total returns. If, as Mr Buffet famously said, ‘price is what you pay, value is what
you get’, then it is possible to pay too much even for the highest quality companies. Assessing the
sustainability of corporate returns and the correct price to pay for future returns is the skill and partially
the art of investment. Our shareholders have benefited from the skills of our previous managers in
selecting high quality companies that can produce sustainably high returns and in investing in those
companies at what proved to be attractive valuations. Our Company will continue to pursue such an
investment policy under our new managers.
Investing in companies that can both produce high returns on capital and also reinvest their cash flows
at similarly high returns is an approach that is likely to be particularly attractive in an age of higher
inflation. While none of us can forecast the peak level that inflation might reach in any business cycle,
the structural changes underway in the world do seem to augur a materially higher level of inflation
than we have been used to over the past decades. To defend savings from the erosion of purchasing
power that comes with higher inflation one approach will be to invest in companies that can invest and
reinvest their cash flows for returns that very significantly exceed the rate of inflation. Our new
manager, Lazard Asset Management, will invest in such companies. Their skill, demonstrated since
they began this High Quality Growth strategy, will be in accurately forecasting where corporate returns
can remain sustainably high and of course in not paying too much for such high returns. It is a skill
they have been deploying for over a decade and since the inception of this approach, in February 2011,
that has produced a net outperformance relative to our comparator index of 2.4% per annum. The
shares of companies that can invest and reinvest at rates of return well above the rate of inflation are
likely to remain in strong demand in an era of high inflation.
The steep rise in interest rates since 2020 has not produced the scale of economic deceleration and
perhaps even financial distress that might have been expected. Such a reaction to higher interest rates
in 2008 caused a contraction in economic activity, bank collapses and huge losses for equity investors.
Despite record high levels of debt, relative to GDP, both the public and the private sector have, so far,
been able to service their debts and debt defaults have remained constrained compared to other
economic downturns this millennium. This resilience probably primarily reflects a move by many
debtors to extend the duration of their borrowing and lock in low interest rates in the period of very low
interest rates that pertained up to 2020. Even so debt is always maturing and as it is refinanced the
higher costs of servicing that debt will lead to greater strains for those seeking to service their debts.
The clock is thus ticking for debtors as their debts are refinanced at higher rates of interest. The data on
private sector debt service ratios, which show the proportion of private sector income currently needed
to service debts, indicate that many countries, are at a level where historically their private sectors have
defaulted on their debt obligations and these ratios will continue to deteriorate as debt is refinanced.
Perhaps surprisingly the private sector debt service ratios of the United States, United Kingdom and
Japan are reasonable but for some large and important countries, such as France and China, a
dangerously high level of private sector income is being diverted to service debts. The impact from
rising interest rates on economic growth, financial stability and equity prices has been benign but as
time ticks on and debts are refinanced at higher interest rates this is likely to change. Investing in those
corporate cash flows that can remain robust even in such circumstances can protect investors from the
worst effects of any economic contraction that may come as the impact from higher interest rates hits
12
the private sector. Companies with high returns on capital and low debt levels should be better placed
to weather economic contractions when they come.
It is not easy to discern the major trends that are developing during a period of rapid short-term
changes and general volatility. One trend though is becoming more apparent. That is that governments
are intervening to create outcomes that they believe should not be left to market forces. That is a trend
that involves both the socialisation of private sector risk, as we saw with the significant government
support for the private sector during the COVID-19 crisis, but also in the form of governments co-
opting or cajoling corporations to assist in delivering their political goals. This is a trend that is very
likely to continue as governments react to what are the growing list of ‘crises’ confronting the
electorate – climate change, war in Europe, a cold war with China, higher cost of living etc. While such
intervention may mitigate the extremes of the business cycle it comes at a price for savers in the form
of greater government interference in the allocation or private capital/savings. History suggests that
such government interference rarely results in higher returns on capital for the companies so co-opted
by governments. A well-chosen portfolio of equities may be one of the few places for investors to hide
in such a world particularly by investing in the high-quality companies that can continue to produce
high returns on capital even during such shifts in the balance between markets and governments.
Savers face new challenges but rarely are they unique challenges. History provides some guidance to
the future and it suggests that well managed companies, producing high returns on capital and bought
at good valuations will provide positive real total returns. Our managers have the freedom to seek out
those companies wherever they may be in the world and we expect this ability to find those companies
to benefit our investors.
Contact us
Shareholders can keep up to date with Company performance by visiting www.midwynd.com where
you will find information on the Company, a monthly factsheet and regular updates from the
Investment Manager. In addition, the Board is always keen to hear from shareholders.
Should you wish to, you can e-mail me at cosec@junipartners.com
Russell Napier
5 September 2023
13
Investment Manager’s Review
Introduction
Global equity indices rose over the past year, driven predominately by US technology shares. While
the Company held a number of investments in this area, it did not have as high a weighting in such
shares as our comparator index (MSCI ACWI). The Company’s net asset value rose by 5.6% compared
with an 11.3% rise in the comparator index in sterling terms.
Global inflation fell over the year as energy prices returned to the levels pertaining before Russia
invaded Ukraine. However, core inflation – especially wage inflation – persists and so interest rates
have risen, especially in the UK. The companies we invest in have handled these pressures very well
and most have grown cash flows significantly through this challenging period.
As shareholders will have read, this will be my last report as the fund manager of your Company and
so I will provide a short report on the past year and also some observations on managing the portfolio
over the past nine years.
Regional Performance
Region
Contribution
%
Asia Pacific ex Japan
(0.3)
Emerging Markets
0.3
Europe
1.6
Japan
2.7
North America
1.9
Thematic performance
Theme
Contribution
%
Automation
2.1
Digital Finance
1.8
Healthcare Costs
(0.2)
Lower Carbon World
0.8
Online Services
2.8
Scientific Equipment
(1.1)
Screen Time
(0.1)
Sustainable Consumer
0.1
Performance over the past year
Online Services (17% of the portfolio): The investments we hold in this area performed very well,
especially Microsoft, Alphabet, Ansys, Adobe and Amazon. Having no exposure to just two stocks,
Apple and Nvidia, accounted for nearly half the year’s underperformance relative to the comparator
index. Our view is that this shows the benchmark has become worryingly concentrated with just a few
very large companies dominating total returns. We prefer to keep the portfolio more balanced than the
comparator index.
Automation (20% of the portfolio): This theme performed well as China slowly reopened and
companies around the world resumed capital investment.
Digital Finance (7% of the portfolio): Our small allocation to Japanese banks performed well. These
companies benefit from persistent – and in Japan’s case, reasonably modest – inflation. Even the
modest rises in long-term interest rates have allowed banks to lend at higher rates while their average
cost of deposits has not been rising as rapidly. This improvement in banks’ margins on lending is very
positive for profits. This theme, which focuses on more lowly-valued equities, acts within the portfolio
as a good balance to more expensive portions, such as US technology shares. Avoiding other
developed world bank stocks during the period also boosted performance relative to the comparator
index.
14
Healthcare Costs (10% of the portfolio): After a strong year in 2022, this theme performed poorly.
The US medical insurance companies are seeing a rise in claims from their customers. Few people
willingly went near a hospital during the pandemic, so there seems to be a backlog of the population
who need medical care. The short-term impact for the companies is that claims from their customers
have risen as the backlog of postponed medical treatment clears.
Five largest stock contributors
Company
Theme
Contribution
%
LVMH Moët Hennessy Louis Vuitton
Sustainable Consumer
1.3
Cie Financière Richemont
Sustainable Consumer
0.7
Amazon
Online Services
0.7
Microsoft
Online Services
0.7
Novo Nordisk
Healthcare Costs
0.7
Five largest stock detractors
Company
Theme
Contribution
%
Estée Lauder
Sustainable Consumer
(0.7)
Olaplex Holdings
Sustainable Consumer
(0.6)
Pfizer
Healthcare Costs
(0.6)
Revvity
Scientific Equipment
(0.4)
Fresenius Medical Care
Healthcare Costs
(0.4)
Transactions
Buying Japanese banks, buying Rockwell Automation and selling Elevance, one of the larger holdings
in US medical insurance, boosted our returns over the year.
Observations on managing the Mid Wynd investment portfolio
In 2014 the Artemis Global Select team was privileged to be appointed to manage the Mid Wynd
portfolio. Alex Illingworth, Rosanna Burcheri and I set about managing the investments to benefit from
fair equity market conditions, but also to avoid giving up gains too easily when conditions worsened.
For most of the past nine years market conditions have been very good indeed and in the one moment
of panic – the Covid outbreak in March 2020 – the portfolio’s resilience became apparent.
The Company had assets of £67m in May 2014 and by the end of that year, after some shareholders
had sold, the Company held 13% of its shares in Treasury. As at 30 June 2023, the Company had assets
of £449m, no gearing and a year’s dividends available as reserves.
Managing an investment trust is different from managing a unit trust. Investment trusts tend to have
much longer lives and are often used to pass down wealth through generations. Unit trusts are more
often used to manage savings through an individual’s lifetime. The Mid Wynd International Investment
Trust is, of course, named after the street in Dundee where the Scott family made a fortune in jute.
Many members of that family remain shareholders, illustrating how the Company has been effective
over the long term. It has also been a pleasure to have previous investment managers on the
shareholder list.
When we took over the management markets had recovered from the 2008 banking crisis, most
equities were reasonably priced, inflation was subdued, and interest rates were held down by central
banks. The portfolio we constructed was balanced between companies that generated strong growth
and others that offered cheaper valuations. The former dominated performance. Over the nine years our
best investments, which should be familiar to shareholders as we will have talked about them in great
detail in previous reports, have been Louis Vuitton, Boston Scientific, Mastercard, Freeport McMoRan
and Thermo Fisher Scientific.
The list of stocks that have reduced the relative performance over the period has just one dominant
constituent: Apple. Owning none of its shares (most of the time) has cost around 5% of relative
performance during our stewardship of the Company’s capital.
15
All in all, over the last nine years, the Company’s assets have grown faster than the global equity
index. These excess returns have come principally from stock selection. Allocations to particular
countries have had little effect though being sceptical about European prospects saved us a little
money. By theme, Online Services and Sustainable Consumer contributed the most, followed by
Healthcare, Scientific Equipment and being sceptical about banks.
Between 2014 and 2020 economic conditions were reasonably benign and equity funds made very
strong returns. Now that inflation has returned, many are looking for ways to defend the value of their
savings. With UK inflation currently over 7%, holding cash or UK government debt guarantees a slow
loss of purchasing power. Equities offer a way to invest one’s savings in the real economy, in
businesses that can adjust to inflation as it ebbs and flows and whose cash flows should grow in real
terms over time. Historically, equities have proven to be the best performing asset class during times of
high inflation, especially between 1978 and 1983. However, current valuations are much higher.
With the current high valuations for equities in mind, the transition from a low to higher inflation
environment means we feel attention must be paid to the value for money in equities, especially value
for money in companies like technology companies whose growing cash earnings are sometimes many
years in the future.
Over the past nine years the returns we have enjoyed in Louis Vuitton, Boston Scientific, Mastercard
and others show that healthy investment returns can come from the steady earnings growth of well-
established businesses. The Company’s returns have not relied on a small number of stocks making
very high returns. They have come from most of our investments doing quite nicely and thankfully
very few proving troublesome. It may mean that we have fewer ‘elephant-hunter’ tales, but it has
worked.
We are pleased to be able to hand over the Company in rude health and would like to take the
opportunity to thank the management and marketing team at Artemis, Martin Stott at Bulletin PR and
the Mid Wynd Board for their support over this time.
We wish the Company and its shareholders all the best for the future.
Simon Edelsten
Fund Manager
Bobby Powar & May Laghzaoui
Analysts
5 September 2023
16
Investments as at 30 June 2023
Investment
Region
Industry
Theme
Market
value
£’000
% of total
net assets
Equities
Amazon
North America
Consumer Discretionary
Online Services
16,969
3.8
Alphabet
North America
Communication Services
Online Services
15,682
3.5
LVMH Moet Hennessy Louis
Vuitton
Europe
Consumer Discretionary
Sustainable Consumer
14,052
3.1
Microsoft
North America
Information Technology
Online Services
13,658
3.0
Taiwan Semiconductor
Manufacturing
Emerging Markets
Information Technology
Automation
13,100
2.9
UnitedHealth Group
North America
Health Care
Healthcare Costs
12,917
2.9
Mastercard
North America
Financials
Digital Finance
12,326
2.7
Rockwell Automation
North America
Industrials
Automation
11,363
2.5
Merck
North America
Health Care
Healthcare Costs
11,091
2.5
Singapore Telecommunications
Developed Asia
Communication Services
Screen Time
11,063
2.5
Top 10 investments
132,221
29.4
Thermo Fisher Scientific
North America
Health Care
Scientific Equipment
11,046
2.5
Mitsubishi UFJ Financial Group
Japan
Financials
Digital Finance
10,475
2.3
Humana
North America
Health Care
Healthcare Costs
10,353
2.3
Essilorluxottica
Europe
Health Care
Sustainable Consumer
9,671
2.2
Cie Financiere Richemont
Europe
Consumer Discretionary
Sustainable Consumer
9,497
2.1
Sumitomo Mitsui Financial Group
Japan
Financials
Digital Finance
9,350
2.1
ANSYS
North America
Information Technology
Automation
9,317
2.1
Union Pacific
North America
Industrials
Lower Carbon World
9,159
2.0
Schneider Electric
Europe
Industrials
Lower Carbon World
9,118
2.0
Synopsys
North America
Information Technology
Automation
8,652
1.9
Top 20 investments
228,859
50.9
Novo Nordisk
Europe
Health Care
Healthcare Costs
8,602
1.9
Keyence
Japan
Information Technology
Automation
8,563
1.9
Omnicom
North America
Communication Services
Screen Time
8,442
1.9
Panasonic Holdings
Japan
Consumer Discretionary
Lower Carbon World
8,393
1.9
Estee Lauder
North America
Consumer Staples
Sustainable Consumer
8,358
1.9
Accenture
North America
Information Technology
Online Services
8,208
1.8
Mettler-Toledo International
North America
Health Care
Scientific Equipment
7,661
1.7
Adobe
North America
Information Technology
Online Services
7,550
1.7
Revvity (formerly PerkinElmer)
North America
Health Care
Scientific Equipment
7,520
1.7
SMC
Japan
Industrials
Automation
7,480
1.7
Top 30 investments
309,636
69.0
Siemens AG
Europe
Industrials
Lower Carbon World
7,401
1.6
Halliburton
North America
Energy
Lower Carbon World
7,220
1.6
Samsung
Developed Asia
Information Technology
Screen Time
7,155
1.6
Avery Dennison
North America
Materials
Sustainable Consumer
7,088
1.6
Proctor & Gamble
North America
Consumer Staples
Sustainable Consumer
7,026
1.6
Rio Tinto
UK
Materials
Lower Carbon World
6,980
1.6
Diageo
UK
Consumer Staples
Sustainable Consumer
6,761
1.5
EQT
North America
Energy
Lower Carbon World
6,643
1.5
Salesforce
North America
Information Technology
Online Services
6,637
1.5
Hexagon
Europe
Information Technology
Automation
6,636
1.5
Top 40 investments
379,183
84.6
Toyota Industries
Japan
Industrials
Automation
6,397
1.4
Prologis (REIT)^
North America
Real Estate
Automation
6,335
1.4
Agilent Technologies
North America
Health Care
Scientific Equipment
5,879
1.3
First Solar
North America
Information Technology
Lower Carbon World
5,719
1.3
Uber Technologies
North America
Industrials
Online Services
5,688
1.3
Unilever
UK
Consumer Staples
Sustainable Consumer
5,566
1.2
Intel Corp
North America
Information Technology
Automation
4,990
1.1
Toppan
Japan
Industrials
Screen Time
4,456
1.0
Thai Beverage
Developed Asia
Consumer Staples
Sustainable Consumer
4,146
0.9
Lam Research
North America
Information Technology
Automation
3,193
0.7
Top 50 investments
431,552
96.2
Gore Street Energy Storage Fund
UK
Financials
Lower Carbon World
3,129
0.7
Siemens Energy AG
Europe
Industrials
Lower Carbon World
3,041
0.7
Aker Carbon Capture
Europe
Industrials
Lower Carbon World
1,216
0.2
Total equity investments (53)
438,938
97.8
Net current assets
10,088
2.2
Total net assets
449,026
100.0
^ Real Estate Investment Trust
17
Regional analysis of the portfolio as at 30 June
GRAPH
Thematic analysis of the portfolio as at 30 June
GRAPH
18
Introduction to the Company’s new Investment Manager
Lazard Asset Management will be replacing Artemis as Investment Manager in October 2023. Lazard
is one of the world’s pre-eminent financial institutions, and celebrates its 175th Anniversary this year.
Lazard Asset Management manages approximately £166 billion of assets for a very diverse array of
clients – with 24 offices across 17 countries, and with equity expertise at its core, the firm is very well
positioned to deliver strong investment outcomes.
Lazard Asset Management’s global equity managers, Louis Florentin-Lee and Barnaby Wilson will be
responsible for managing the Company, and will do so in accordance with the Lazard Global Quality
Growth strategy, which launched in 2011.
Louis and Barnaby have worked together at Lazard Asset Management since 2004 and have managed
the Lazard Global Quality Growth strategy together for the last decade – in the 10 years to 30 June
2023 the strategy has generated a gross return of 262%, compared with the MSCI All Country World
Index (GBP) (MSCI ACWI) return of 176%. Louis and Barnaby began working in the investment
industry in 1996 and 1998, respectively.
The Lazard Global Quality Growth strategy aims to invest in what the team considers to be some of the
best businesses in the world – companies with sustainable competitive advantages that are expected to
generate consistently high returns on capital and that can reinvest in their business to drive future
growth. In identifying and investing in such businesses investors see the cash flows generated on their
behalf re-invested at much higher returns than available elsewhere. The investment approach is
reinforced by 25 years of empirical research and supported by Lazard’s extensive fundamental research
team of global sector analysts.
Given Lazard’s focus on future financial productivity, the investment team fully integrates ESG
analysis into its fundamental research. The companies selected for the portfolio tend to be asset light
and well-managed with good governance, so the portfolio tends to have an attractive ESG profile, with
significantly lower carbon footprint, lower carbon intensity, and lower ESG risk exposure than the
MSCI ACWI. This is an outcome of stock selection, not a target objective. Details of the approach to
stewardship, sustainability and the investment process will be published in the Company’s ESG section
of the AIC website.
Full details on the investment approach that Lazard will bring to Mid Wynd can be accessed via: the
Research & Insights/Investment Research/Quality investing section of the main website:
www.lazardassetmanagement.com
19
Strategy and Business Review
This Strategic Report has been prepared in accordance with the Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013.
Purpose
Our purpose is to increase the real wealth and prosperity of our shareholders, thus helping them meet
their long-term savings needs.
Mid Wynd International Investment Trust plc can trace its heritage back to 1797, when the founder of
the Company set up a textiles business in Dundee. Its origins as an investment company date from
1949, when the Board began to manage the financial reserves as a separate entity from the main trading
business. In September 1981, the shares of Mid Wynd International Investment Trust plc were floated
on the London Stock Exchange. At that time, the Board was entrusted by shareholders to manage their
wealth, with a focus on investing in global companies with strong growth prospects and sustainable
businesses. This focus remains as true for the Board and its appointed investment manager today as it
did back then.
Through our investment company structure, we enable shareholders, large or small, to invest in an
actively-managed diversified portfolio of securities in a cost-effective way, giving them access to the
growth opportunities offered by world markets.
Strategy
As stated above, the Company’s purpose is to increase the real wealth and prosperity of our
shareholders, thus helping them meet their long-term savings needs. To achieve this goal, the Company
has adopted a number of policies which are set out below.
Objective and investment policy
The objective of the Company is to achieve capital and income growth by investing on a worldwide
basis. Although the Company aims to provide dividend growth over time, its primary aim is to
maximise total returns to shareholders.
The Company is prepared to move freely between different markets, sectors, industries, market
capitalisations and asset classes as investment opportunities dictate. On acquisition, no holding shall
exceed 15% of the portfolio. The Company will not invest more than 15% of its gross assets in UK
listed investment companies. Assets other than equities may be purchased from time to time including
but not limited to fixed interest holdings, unquoted securities and derivatives. Subject to prior Board
approval, the Company may use derivatives for investment purposes or for efficient portfolio
management (including reducing, transferring or eliminating investment risk in its investments and
protection against currency risk).
The number of individual holdings will vary over time. To ensure diversification of opportunity and
management of risk, the Company is permitted by its policy to hold between 40 and 140 holdings;
however, the portfolio will generally hold a portfolio of shares at the lower end of this range. The
portfolio will be managed on a global basis rather than as a series of regional sub-portfolios. As at 30
June 2023 there were 53 holdings in the portfolio.
The Board assesses investment performance with reference to the MSCI All Country World Index
(GBP). However, the Directors expect the appointed investment manager to pay little attention to the
composition of this index when constructing the portfolio and the composition of the portfolio is likely
to vary substantially from that of the index. A long-term view is taken and there may be periods when
the net asset value per share declines in absolute terms and relative to the comparator index.
Business model
The Company is incorporated in Scotland and operates as an Investment Trust Company. It is an
investment company within the meaning of section 833 of the Companies Act 2006 (the “Act”) and is
20
approved as an investment trust by HM Revenue and Customs subject to the Company continuing to
comply with the requirements of section 1158 of the Corporation Tax Act 2010. The Company has a
premium listing on the London Stock Exchange. The Company is also an Alternative Investment Fund
whose investment manager is regulated by the Financial Conduct Authority.
The Company has no employees and the Board, which comprises solely of non-executive Directors,
has delegated most of the Company’s operational functions to a number of key service providers. All
key service providers are appointed under rolling contracts which are periodically reviewed, at which
time the appropriateness of the continuing appointment of such service providers is considered. Details
of the key service providers are set out later in this Annual Financial Report.
Dividend policy
The Company’s main focus is on growing shareholders’ capital. Nevertheless, the Company does have
a progressive dividend policy which is not solely determined by the requirements of s1158 of the
Corporation Tax Act 2010 to retain no more than 15% of revenue earnings in any financial year. The
Board intends to grow dividends, subject to the availability of distributable reserves. Where
appropriate, the Board may declare a special dividend.
Gearing and leverage
The Company may use borrowings to support its investment strategy and can borrow up to 30% of its
net assets. The Company has a USD60m multicurrency revolving credit facility with the Bank of Nova
Scotia (London Branch) which is available to the Company until 19 February 2024. As at 30 June
2023, no amounts were drawn down from this facility.
The Company’s gearing is reviewed by the Board and Investment Manager on an ongoing basis. Given
the current environment of high interest rates and the need for amendments to the current facility to
take account of the new investment management arrangements, the Company has decided to terminate
the facility due to expire in February 2024. The use of gearing will be reviewed in due course.
Leverage is defined in the Alternative Investment Fund Managers Directive (“AIFMD”) as any method
by which the Company can increase its exposure by borrowing cash or securities, or from leverage that
is embedded in derivative positions. The Company is permitted to borrow up to 30% of its net assets
(determined as 130% under the Commitment and Gross ratios). The Company is permitted to have
additional leverage of up to 100% of its net assets, which results in permitted total leverage of 230%
under both ratios. The Alternative Investment Fund Manager (the “AIFM”) monitors leverage values
on a daily basis and reviews the limits annually. No changes have been made to these limits during the
year. At 30 June 2023, the Company’s leverage was 99.95% as determined using the Commitment
method and 100.13% using the Gross method. Further details can be found in the Glossary on page 75.
Current and future developments
A summary of the Company’s developments during the year ended 30 June 2023 together with its
prospects for the future, is set out in the Chairman’s Statement on pages 5 to 8 and the Investment
Manager’s Review on pages 9 to 10. The Board’s principal focus is the delivery of positive long-term
returns for shareholders. This will be dependent on the success of the investment strategy, in the
context of both economic and stock market conditions. The investment strategy, and factors that may
have an influence on it, are discussed regularly by the Board and the Investment Manager. The Board
furthermore considers the ongoing development and strategic direction of the Company, as well as any
risks which could impact on the Company’s ability to achieve its strategic objective.
Culture and values
Culture
Corporate culture for an externally-managed investment trust like Mid Wynd International Investment
Trust plc, refers to the beliefs and behaviours that determine how the Directors interact with one
another and how the Board manages relationships with shareholders and key service providers, such as
the appointed investment manager. The culture is defined by the values which are set out below. The
21
s172 report included in this Strategy and Business Review provides further details of how the Board
has operated in this regard.
Values
The Board is mindful that it is overseeing the management of a substantial investment portfolio on
behalf of investors. In many cases, the investment in the Company may represent a large proportion of
an individual’s savings. As all the Directors are invested in the Company, the Directors’ interests are
aligned with those of fellow shareholders in this regard.
Our approach to governing the Company is therefore underpinned by our determination to do the right
thing for our shareholders. Key to this is having a constructive relationship with them, through monthly
updates, half-yearly and annual financial reports, and the opportunity to meet with them at the Annual
General Meeting, when this is held under normal circumstances. We also believe in having strong
relationships with our key service providers, one based on mutual trust and respect, with constructive
challenge when required. Below is a summary of the Board’s most important values:
■ Excellence: the Directors want the Company to succeed. The Board is focused on its purpose of
delivering long-term value for all its shareholders, whether they are large or small. Focusing on
this strategic imperative and adopting best practice wherever appropriate in all the Company’s
dealings are key to driving excellence. We will always put our shareholders first and will
constantly look at how to enhance long term value, for example through the use of gearing,
share issuance, and buybacks.
■ Integrity: the Board seeks to be ethical and honest, to comply with all laws and regulations
applicable to investment companies, avoid conflicts of interest and have zero tolerance to
bribery and corruption, tax evasion or other fraudulent behaviour. It expects the same high
standards to be adopted by all its key service providers.
■ Accountability: the Board recognises the need to explain the Company’s performance to
investors, including the upsides, the downsides and the risks in a clear, straightforward and
transparent manner. Accountability also involves the Board challenging its key service providers
to ensure the Company continues to receive a high standard of service to drive long term
shareholder value. Each of the Directors recognises their individual responsibility to
shareholders and accordingly each of the Directors will stand for re-election at each Annual
General Meeting.
■ Respect: the Board is collegiate and recognises the value of the diverse backgrounds and
opinions of its Directors. It also recognises the importance of treating shareholders and key
service providers with respect. Contact by shareholders via the Chairman’s email address
cosec@junipartners.com is welcomed; the Company adheres to key service provider terms and
conditions such as prompt payment.
■ Sustainable investing, Stewardship and Environmental, Social and Governance (“ESG”)
issues: The Board, recognises that sustainability and ESG matters should be cornerstones to the
investment approach.
22
Sustainability, Stewardship and Environmental, Social & Governance Matters (“ESG”)
The Board recognises that sustainability and ESG matters are important cornerstones to responsible
investment; the Board is committed to taking a responsible approach with the Company’s own
governance matters and, more materially, a responsible approach to the impact the Company has
through the investment decisions made by its appointed investment manager.
The Board delegates authority to its appointed investment manager to invest responsibly; engaging
actively with investee companies to understand their management ethos and to seek sustainable returns.
Given Lazard’s focus on future financial productivity, the investment team integrates ESG analysis
into its fundamental research. The companies selected for the portfolio tend to be asset light and well-
managed with good governance, so the portfolio tends to have an attractive ESG profile, with
significantly lower carbon footprint, lower carbon intensity, and lower ESG risk exposure than the
MSCI ACWI Index. This is an outcome of stock selection, not a target objective.
Portfolio carbon emissions
The challenges around climate change are of increasing concern. The Board has placed greater
importance on considering the issue separately from other ESG issues.
The portfolio’s carbon emissions have remained consistently below its benchmark, the MSCI All
Country World Index (GBP), as detailed in the graph below.
Mid Wynd Carbon Intensity
GRAPH
Company engagement
The Board expects its appointed investment manager to influence through engagement. This is not
always feasible given the small percentage of any company’s stock which the Company generally
holds. The Board favours a policy of engagement over divestment. However, if attempts to influence
companies show little evidence of success and they are failing to make their businesses more
sustainable we expect our appointed investment manager to sell holdings.
23
Key performance indicators (“KPIs”)
The performance of the Company is reviewed regularly by the Board and it uses a number of KPIs to
assess the Company’s success in meeting its objective. The KPIs which have been established for this
purpose are set out below:
■ Net asset value performance compared to the MSCI All Country World Index (GBP)
The Board monitors the performance of the net asset value per share against that of the MSCI All
Country World Index (GBP).
■ Share price performance
The Board monitors the performance of the share price of the Company to ensure that it reflects the
performance of the net asset value.
Discrete annual total returns
Year ended
30 June
Net asset
value
Share
price
MSCI
All Country
World Index
(GBP)
2019
13.3%
15.2%
9.7%
2020
12.2%
9.1%
5.2%
2021
24.3%
27.3%
24.6%
2022
(7.5)%
(9.5)%
(4.2)%
2023
5.6%
1.0%
11.3%
Further details of the 2023 returns can be found within the Chairman’s Statement and Investment
Manager’s Review.
■ Share price (discount)/premium to net asset value
The Board recognises that it is in the interests of shareholders to maintain a share price as close as
possible to the net asset value (“NAV”) per share. The policy of the Board is to limit the discount or
premium to a maximum of 2 per cent of NAV in normal circumstances. The Company may issue
shares at such times as demand is not being met by liquidity in the market and buy back shares when
there is excess supply. This policy has proved consistently effective in generating value within the
Company and protecting shareholders’ liquidity requirements. This current year has continued to bring
volatility from geopolitical events in Ukraine/Russia as well as inflationary pressures. The Company’s
shares, which were trading at a premium of 0.1% to NAV at the start of the year, moved to a discount
of 4.3% of NAV at the year end. At all times the Company sought to manage the discount and
premium within the target parameters and achieved an average discount of 1% over the year. While the
Company declares its NAV daily, markets are open almost twenty four hours per day and this accounts
for the wider range in premium and discount in 2023 shown on the following chart. During the year the
Company issued 1,133,200 shares raising £8.1m net of costs (representing 1.7% of the issued share
capital at the start of the year) and bought back 4,002,662 shares (representing 6.1% of the issued share
capital at the start of the year) at a cost of £28,729,744. As the Company has utilised a significant
proportion of the authorities granted by shareholders at the last AGM to undertake buybacks, the
Company convened a special meeting on 8 September 2023 to apply for additional authorities up until
the next AGM. The reason for doing this was to ensure the Company would be able to continue to
operate its discount control programme efficiently up until the next AGM.
Although the Company incurs modest costs for operating the policy and when renewing shareholder
authority, issuance at a premium and buying back at a discount under the policy more than
compensates and is consistently accretive to NAV.
24
Share price (discount)/premium to net asset value
GRAPH
Source: Datastream/Morningstar.
All figures based on rolling weekly average.
■ Ongoing charges
The Board is mindful of the ongoing costs to shareholders of running the Company and monitors
operating expenses on a regular basis. The decrease in average funds under management during the
year and certain one-off charges have led to an increase in the Company’s current ongoing charges
ratio to 0.62% (2022: 0.60%).
■ Dividend per share
The Board, in addition to capital growth, continues to pursue its policy of growing dividends. It
monitors the revenue returns generated by the Company during the year, its historic revenue reserves
and expected future revenue and then determines the dividends to be paid. Revenue earnings during the
year decreased by 15% on what was a very strong 2022 return. Revenue earnings will vary depending
on macro economic factors affecting investee companies and the composition of the portfolio. As the
majority of the Company’s revenues are earned in foreign currencies changes in exchange rates can
also materially impact the GBP value of the Company’s earnings. The earnings per share still allow the
Board to increase the interim and final dividends payable to shareholders along with the addition of a
special dividend of 1.70p. Subject to approval of the final dividend by shareholders, a total regular
dividend of 7.80 pence per share (2022: 7.20 pence per share) will be paid in respect of the year ended
30 June 2023. This represents an increase of 8.3%.
Total dividends payable for the year ended 30 June 2023, including the special dividend, amount to
9.50 pence per share.
Dividends payable/paid in respect of the years ended June 2022 and June 2023 were fully covered by
their respective current year earnings.
25
Principal risks and risk management
The Board has carried out a robust assessment of the principal and emerging risks facing the Company.
Following consideration of the principal risks, the Board has concluded that there are no emerging
risks facing the Company that should be added to the current principal risks.
The Board, has developed a risk map which sets out the principal risks faced by the Company and the
controls established to mitigate these risks. This is an ongoing process and the risk map, including any
emerging risks, is formally reviewed at least every six months. The Board pays particular attention to
those risks that might threaten the long-term performance or viability of the Company. Further
information on the Company’s risk management process is set out in the corporate governance section
on pages 36 and 37.
A summary of the key areas of risk, their movement during the year and their mitigation is set out
below:
Movement during the year:
↔ No change
↓ Decreased risk
↑ Increased risk
26
Movement
Principal risk
Mitigation/control
↔
Strategic risk
The management of the portfolio of the Company
may not ac
hieve its investment objective and policy.
The investment objective and policy of the
Company is set by the Board and is subject to
ongoing review and monitoring in conjunction with
the appointed investment manager.
The Company’s investments are selected on their
individual merits and the performance of the
portfolio may not track the wider market
(represented by the MSCI All Country World
Index). The Board believes this approach will
continue to generate good long-term returns for
shareholders. Risk is diversified through a broad
range of investments being held. Both the existing
and future investment managers have proven track
records; the Board discusses the investment
portfolio and its performance with the appointed
investment manager at each Board meeting.
↑
Market risks
The Company invests in a portfolio of international
quoted equities. The prices of equity investments
may be volatile and are affected by a wide variety of
factors many of which can be unforeseen and are
outwith the control of the investee c
ompany or the
appointed investment manager. These price
movements could result in significant losses for the
Company.
Current events such as inflationary pressures and the
current war in Ukraine may negatively affect
investment values leading to the inabi
lity to buy, sell
or value assets at a competitive price, and have an
adverse effect on the Company’s results. The market
risk has increased due to these pressures.
The Company’s functional currency and that in
which it reports its results is sterling. How
ever, the
majority of the Company’s assets, liabilities and
income are denominated in currencies other than
sterling. Consequently, movements in exchange rates
will affect the sterling value of those items. The
country in which a portfolio company is liste
d is
furthermore not necessarily where it earns its profits
and movements in exchange rates on overseas
earnings may have a more significant impact upon a
portfolio company’s valuation than a simple
translation of that company’s share price into
sterling.
The Company does not generally hedge its
currency exposures and changes in exchange rates
may lead to a reduction in the Company’s NAV.
Globally, climate change effects are already
emerging in the form of changing weather patterns.
Extreme weather events
could potentially impair the
operations of individual investee companies,
potential investee companies, their supply chains and
their customers.
The war in Ukraine and other geopolitical events
have resulted in increasing levels of inflation directly
affec
ting economic growth and the underlying
investment values.
The Board considers that the risk of market
volatility is mitigated by the longer-term nature of
the investment objective and the Company’s
closed-ended structure, and that such investments
should be a source of positive returns for
shareholders over the long term.
Risks are diversified through having a range of
investments in the portfolio with exposure to
various geographies, sectors and themes.
Both the existing and future investment managers
have proven track records and are required to
report regularly to the Board on market
developments. At each Board meeting the
appointed investment manager is asked to provide
explanations for the performance of the portfolio
and the rationale for any changes in equity
investments, sectors and geographies. Any use of
derivatives to manage market risks requires Board
approval.
Both the existing and the future investment
managers take climate risks into account, along
with the downside risk to any company (whether in
the form of its business prospects or market
valuation or sustainability of dividends) that is
perceived to be making a detrimental contribution
to climate change. The Company invests in a broad
portfolio of businesses with operations spread
geographically, which should limit the impact of
location- specific weather events.
The Board and its appointed investment manager
have regular discussions to assess the likely impact
of inflation rates on the economy, corporate
profitability and asset prices.
27
Movement
Principal risk
Mitigation/control
↔
Legal and regulatory risk
Changes to the requirements of the framework of
regulation and legislation (including rules relating to
listed closed
-end investment companies), within
which the Company operates, could have a material
adverse effect on the abil
ity of the Company to carry
on its business and maintain its listing. A change to
the legal or regulatory rules in the future could,
amongst other things, lead to the Company being
subject to tax on capital gains.
The Company relies on the services of the
company secretary and investment manager to
monitor ongoing compliance with relevant
regulations, accounting standards and legislation.
The company secretary and investment manager
also appraise the Board of any prospective changes
to the legal and regulatory framework so that any
requisite actions can be planned.
The Board receives quarterly compliance reports
from the investment manager and depositary
confirming compliance with regulations. These
reports also highlight any matter that the relevant
compliance team feel should be brought to the
Board’s attention.
Operational risks
↔
Reliance on third-party service providers
The Company has no employees and all of the
Directors have been appointed on a non
-executive
basis; all operations are outsourced to third
-party
service providers. Failure by any service provider to
carry out its
obligations to the Company in
accordance with the terms of its appointment, to
protect against breaches of the Company’s legal and
regulatory obligations such as data protection or to
perform its obligations to the Company at all as a
result of insolvency
, fraud, breaches of
cybersecurity, failures in business continuity plans or
other causes, could have a material adverse effect on
the Company’s operations.
Experienced third-party service providers are
employed by the Company under appropriate terms
and conditions and with agreed service level
specifications. The Board receives regular reports
from its service providers and reviews the
performance of its key service providers at least
annually.
↔
Reliance on key personnel
The Company’s portfolio is manag
ed by the
appointed investment manager and in particular the
fund management team which has direct
responsibility for portfolio selection. Any change in
relation to the investment executives may adversely
affect the performance of the Company.
As reported, it was announced earlier in the year,
that the two key individuals responsible for
managing the Company’s investments, would be
leaving Artemis. As these were key men, the Board
decided that it needed to review the ongoing fund
management of the Company and following that
review, appointed Lazard Asset Management to
take over the investment management role in
October 2023. The Lazard team is led by two key
individuals, each of whom have worked for Lazard
for many years and have a successful track record.
Further information on risks and the management of them are set out in note 20 of the notes to the
financial statements on pages 61 to 65.
28
Long-term Viability
Viability statement
In accordance with the Association of Investment Companies (the “AIC”) Code of Corporate
Governance, the Board has considered the longer-term prospects for the Company beyond the twelve
months required by the going concern basis of accounting. The period of assessment, in line with our
Key Information Document, is five years to 30 June 2028. The Board has concluded that this period is
appropriate, taking into account the Company’s investment objective and policy and the long-term
investor outlook.
In reviewing the Company’s viability, the Board considered the Company’s business model, the
principal risks and uncertainties, including geo-political risks, current high inflation and interest rates
and the ensuing market volatility as well as emerging risks such as climate change risks. The Company
invests in listed securities and has a liquid portfolio.
Following the publication of this Annual Financial Report, the Company’s investment management
arrangements will change with Lazard taking over responsibility for managing the Company’s
investments in October following Simon Edelsten’s retirement from the Artemis partnership. In
considering the Company’s prospects over the next five years, the Directors have assumed that Lazard
will, on behalf of the Company, continue to follow the Company’s investment objective, that the
Company’s performance will continue to be attractive to shareholders, and that the Company will
continue to meet the requirements to retain its status as an investment trust.
The Company is authorised to trade as an investment company and has the associated tax benefits. Any
change to the Company’s tax arrangements could affect the Company’s viability as an effective
investment vehicle.
The Board considered a five year forecast and a number of stress test scenarios in connection with a
sustained fall in markets. The Board also considered the Company’s ongoing income and expenses and
the liquidity of the Company’s portfolio to ensure that the Company will be able to meet its liabilities
as they fall due.
The conclusion of this review is that the Board has a reasonable expectation that the Company will be
able to continue in operation and meet its liabilities as they fall due over the next five years.
29
Duty to Promote the Success of the Company
How the Directors discharge their duties under s172 of the Companies Act
Under section 172 of the Companies Act 2006, the Directors have a duty to act in good faith and to
promote the success of the Company for the benefit of its shareholders as a whole, and in doing so
have regard to:
a) the likely consequences of any decision in the long term,
b) the interests of the company’s employees,
c) the need to foster the company’s business relationships with suppliers, customers and others,
d) the impact of the company’s operations on the community and the environment,
e) the desirability of the company maintaining a reputation for high standards of business conduct,
and
f) the need to act fairly as between members of the company.
As an externally managed investment trust, the Company has no employees or physical assets. Our
shareholders, our investee companies, our key external service provider, the investment manager, and
other professional service providers, such as the administrator, depositary, registrar, auditor, corporate
broker, tax adviser and lenders are all considered to fall within the scope of section 172.
During the year ended 30 June 2023, Artemis acted as the Company’s Investment Manager, Fund
Administrator and Company Secretary. JP Morgan Europe Limited was the Company’s Depositary
until 3 March 2023 when this service was moved to Northern Trust as part of a wider project initiated
by Artemis and approved by the Board. As announced previously, the Board has appointed Lazard to
replace Artemis Fund Managers as Investment Manager with effect from October 2023. Following this
change, the Board has also appointed Juniper Partners Limited as Company Secretary and Fund
Administrator in place of Artemis Fund Managers; JP Morgan Europe Limited will additionally resume
depositary services.
Whilst certain responsibilities are delegated, the Board retains responsibility for promoting the success
of the Company; the Directors’ responsibilities are set out in the schedule of matters reserved for the
Board and the terms of reference of its committees, all of which are reviewed regularly by the Board.
The Company’s culture and values, as described on page 16 of this Annual Financial Report, have been
established by the Board to manage its key business relationships. The Company’s approach on anti-
bribery and prevention of tax evasion can be found on page 36 and on the Company’s website at
midwynd.com.
30
Engagement with key stakeholders
Stakeholders
Benefits of engagement
How the Company engages with Stakeholders
Shareholders and potential
investors
The Board is responsible for promoting the
success of the Company for the benefit of
the shareholders, taken as a whole, having
regard to the matters listed above and its
stakeholders.
Communicating with shareholders is
essential to ensure the Board is fully aware
of shareholder requirements so that it can
respond to evolving shareholder needs. It
is also important that the Company
communicates its strategy and
performance regularly and effectively to
shareholders to ensure there continues to
be demand for the Company’s shares.
To achieve its objective of promoting the
success of the Company, for the benefit of
the shareholders, taken as a whole, the
Board approaches engagement from two
angles – how the Board communicates its
strategy and performance to shareholders
and how it addresses feedback /
communications received from
shareholders.
Engagement with shareholders is both by
the Board and the Company’s appointed
investment manager. Through the
publication of the Annual Financial
Report, the Half-Yearly Report, monthly
factsheets, RNS announcements and Fund
Manager updates to the Company’s
website, shareholders are kept informed of
developments in Company strategy as well
as Company performance and portfolio
activities. The appointed investment
manager presents at conferences and
webinars throughout the year. The Annual
General Meeting presents a further
opportunity for shareholders to meet the
Board and appointed investment manager
in person.
The Board receives regular feedback on
shareholder meetings from the Company’s
broker and, where appropriate the
Chairman. Any communications from
shareholders are reviewed and discussed
by the Board at Board meetings to ensure
that shareholder views are taken into
consideration as part of any decisions
taken.
Shareholders are encouraged to raise
questions and communicate with the
Chairman and the appointed investment
manager either through the Company’s
website or by attending and asking
questions at the AGM.
The Board considers communication with
shareholders an important function and
Directors are always available to respond
to shareholder queries. For further
information see ‘Relations with
shareholders’ on page 35.
31
Stakeholders
Benefits of engagement
How the Company engages with Stakeholders
Investment Manager
Engagement with the Company’s
appointed investment manager is necessary
to:
■ evaluate its performance against the
Company’s stated investment strategy
and to understand any risks or
opportunities this may present;
■ ensure the investment manager
operates within parameters set by the
Board;
■ ensure the Board understands key
performance issues to inform strategy
and enable good communication with
shareholders;
■ provide the Board with assurances that
the investment manager’s internal
controls are operating effectively; and
■ ensure the investment manager’s
approach to the management of
environmental, social and governance
(“ESG”) issues accords with the
Board’s values
The Board, with the support of its
Management Engagement Committee,
regularly reviews the performance of the
appointed investment manager to ensure
that services provided to the Company are
managed efficiently and effectively for the
benefit of the Company’s shareholders.
The Board meets formally with the
investment manager at quarterly Board
meetings. The investment manager
presents a review of the quarter and any
pertinent information on the portfolio and
its transactions. Informal calls and ad hoc
meetings occur throughout the year and
especially at times of heightened market
volatility.
The Board reviews and discusses plans for
the future marketing, strategy and
development of the Company with the
investment manager.
Reports on the internal controls operated
by the appointed investment manager to
safeguard the Company’s assets and to
ensure transactions and financial reporting
are materially correct are received from the
investment manager and reviewed by the
Board and Audit Committee as
appropriate.
Other third-party service
providers
As an investment company, all services are
outsourced to third-party service providers.
In addition to investment management,
other outsourced services include the
Depositary, the Broker, the Registrar, the
Company’s Lender, its Tax Adviser and
the Auditor.
The Company has detailed the parameters
within which authority has been delegated
and set service levels to monitor service
provider performance.
Engagement is important to ensure that:
■ all service providers are delivering
services in accordance with their
service level agreements;
■ any operational issues are discussed
with the Board; and
■ the Board receives appropriate
assurances that the providers’ internal
controls are operating effectively.
The appointed investment manager has
frequent interaction with the key service
providers and their performance is
continually monitored throughout the year.
The Management Engagement Committee
annually reviews the performance of key
service providers, along with their fee
levels, and provides recommendations to
the Board as required.
As and when appropriate, third party
providers present to the Board.
Annual assurance reports are received to
assist the review of the internal control
environments of the Depositary and
Registrar.
32
Stakeholders
Benefits of engagement
How the Company engages with Stakeholders
Investee companies
The Company’s success relies on its
choice of investments and the performance
of those investments.
Engagement by the appointed investment
manager with the investee companies has
two principal aims:
■ to aid the appointed investment
manager to understand investee
companies and the factors which drive
their performance so as to make better
investment decisions: and
■ to drive positive change in investee
companies through active stewardship.
The aim of such engagement is to
improve performance and hence
shareholder returns.
The Board sets the investment objective
and discusses stock selection, asset
allocation, and the ESG qualities of
investee companies with the appointed
investment manager at each Board
meeting.
The investment manager engages with the
investee companies, prior to investment
and on an on-going basis.
The Board has discussed with both
Artemis Fund Managers and Lazard Asset
Management how Environmental, Social
and Governance (“ESG”) factors are taken
into account when selecting and retaining
investments for the Company. The Board
recognises the importance of ESG both in
the investment process and the stewardship
role.
Both Artemis Fund Managers and Lazard
Asset Management endorse the UK
Stewardship Code.
Board discussions and decisions
Key discussions and decisions made by the Board since the last annual financial report:
Topic
Background & discussion
Decision
Change in Investment Manager
Following the announcement of the
retirement of fund manager Simon
Edelsten from the Artemis partnership and
the departure of Alex Illingworth, the
Board assessed its ongoing investment
management arrangements and, in
conjunction with its adviser, Barnett
Waddington, undertook a rigorous
assessment of potential management
options.
It was decided that following the
retirement of Simon Edelsten from
Artemis and the departure of Alex
Illingworth, it was in shareholders’ best
interests that Lazard be appointed as the
new Investment Manager with effect from
October 2023. It is anticipated that Simon
Edelsten will remain responsible for the
Company’s investments until the
Company’s transition to Lazard. During
the manager review process, the Chairman
engaged with some of the Company’s
largest shareholders to ensure they were
happy with the approach being taken.
Share issuance and buyback
The Board discussed the on-going strategy
of share issuance and buyback to assist in
controlling the share premium/discount to
NAV.
It was decided this strategy was working as
required and the Board continued to give
authority as required. The announcement
of the departure from the Artemis
partnership of Simon Edelsten and Alex
Illingworth coincided with a widening of
discounts to NAV in the investment trust
sector. The Company has been particularly
active, during this period, to ensure that the
Company’s shares trade at a narrow
discount to NAV. To ensure the Company
has sufficient shareholder authority to
continue to operate the discount control
mechanism (which seeks to maintain a
share price within 2% of the Company’s
NAV) the Board resolved to seek
additional authority from shareholders to
continue to buy back the Company’s
shares at a special general meeting
convened for 8 September 2023.
33
Topic
Background & discussion
Decision
Third party service providers
The Company moved its depositary
services from JP Morgan Europe to
Northern Trust in March 2023 as part of a
larger initiative by Artemis Fund
Managers. Further changes in the wake of
the replacement of Artemis Fund
Managers as Investment Manager have
also now been set in motion.
The Board was satisfied that changing
depositary so that all funds operated by
Artemis Fund Managers would be
administered by one party was in
shareholders’ best interests and
accordingly Northern Trust replaced JP
Morgan Europe in March 2023. Since the
announcement of the replacement of
Artemis Fund Managers by Lazard Asset
Management, the Company has decided to
reappoint JP Morgan as the Company’s
depositary. Artemis Fund Managers has
additionally been responsible for the
Company’s Company Secretary services
and this role, alongside fund
administration services, will be transferred
to Juniper Partners with effect from
October 2023. In selecting new service
providers, the Board considered a number
of proposals tendered by recognised
industry providers and concluded that the
appointment of the providers selected was
in shareholders’ best interests.
Gearing
The Board discussed the current policy and
level of gearing utilised.
The Board has considered its continuing
use of gearing in light of current high
interest rates and the proposed change in
Investment Manager. It has been decided
that the current bank facility should not be
retained and accordingly the facility will
be terminated shortly. The future use of
gearing by the Company will be kept under
review.
Board evaluation
The Board discussed how to conduct its
annual board evaluation.
It was agreed that an external specialist
should be appointed to lead the evaluation.
Following the evaluation process, a
number of changes have been made to the
administration of the Board and its
committees.
The Board’s primary focus is to promote the long-term success of the Company for the benefit of the
Company’s shareholders. In doing so, the Board has regard to the impact of its actions on other
stakeholders as described above.
Directors & diversity
The Directors of the Company and their biographical details are set out on page 29.
No Director has a contract of service with the Company.
The Board supports the recommendations of the Hampton-Alexander Review on gender diversity and
the Parker Review on ethnic representation on Boards.
The Board recognises the principles of diversity in the boardroom and acknowledges the benefits of
having greater diversity, including gender, social and ethnic backgrounds, and cognitive and personal
strengths. When setting a new appointment brief, the Nomination Committee considers diversity
alongside seeking to ensure that the overall balance of skills and knowledge that the Board has remains
appropriate, so that it can continue to operate effectively. The Board’s Director selection policy will,
first and foremost, seek to identify the person best qualified to become a Director of the Company,
based on merit and objective criteria.
The Board is currently comprised of four male Directors and one female Director.
The FCA announced a new policy statement on diversity and inclusion on company boards in April
2022. Companies are required to comply with the targets or explain the reasons for non-compliance.
34
Outlined below is an overview of the targets and the Company’s compliance as at 30 June 2023 in
accordance with Listing Rule 9.8.6R(9):
■ 40% of the Board is represented by women: As at 30 June 2023 the Company only has one
female Director. The Company therefore does not meet this diversity target.
■ One woman in a senior position: during the year to 30 June 2023, Diana Dyer Bartlett held the
position of Chair of the Audit Committee. In the absence of Executive roles, the Company
considers the role of Chairman of the Audit Committee to qualify as a senior position. The
Board therefore considers that it met this target.
■ One individual from a minority ethnic background: as at 30 June 2023, no individuals on the
Board are from a minority ethnic background. The Company therefore does not therefore meet
this diversity target.
The Board does not currently meet the targets described above for the following reasons:
■ The Board is small and rotation of Directors does not take place every year.
■ The specialist headhunters retained by the Board to seek a new Board Director in 2023 were
asked to seek candidates from a broad range of diverse backgrounds, especially those who
would extend the Board’s gender and ethnic minority representation. Following completion of
this process, the Board concluded that Hamish Baillie was the best qualified, notwithstanding
that his appointment would not enable the Company to comply with guidance on gender or
ethnic minority representation.
For future director appointments, the Board will seek to meet the guidelines on diversity targets.
The following tables set out the data on the diversity of the Directors on the Company’s Board in
accordance with Listing Rule 9.8.6R(10) as at 30 June 2023. This data has been collected through
consultation with the Board. There have been no changes in the below data since 30 June 2023.
Number of
Board
members
Percentage of
the Board
Number of
senior positions
on the Board
Number in
executive
management
3
Percentage
of executive
management
3
Men
4
80%
1
1
N/A
N/A
Women
1
20%
02
N/A
N/A
Not specified/prefer not to say
–
–
–
N/A
N/A
1 Russell Napier is the Chairman of the Board, a senior position as defined by the Listing Rules.
2 Diana Dyer Bartlett is the Chairman of the Audit Committee. Although this is not a senior position as defined by the Listing Rules, in the
absence of executive roles, the Company considers this role to be a senior position.
3 Not applicable as the Company does not have an executive management team.
Number of
Board
members
Percentage of
the Board
Number of
senior positions
on the Board
Number in
executive
management
2
Percentage
of executive
management1
White British or other White
5
100%
1
1
N/A
N/A
Mixed/Multiple ethnic groups
0
0%
0
N/A
N/A
Asian/Asian British
0
0%
0
N/A
N/A
Black/African/Caribbean/Black
British
0
0%
0
N/A
N/A
Other ethnic group, including Arab
0
0%
0
N/A
N/A
Not specified/prefer not to say
–
–
–
N/A
N/A
1 The Chairman of the Board is a senior position as defined by the Listing Rules. In the absence of executive roles, the Company also
considers the Chairman of the Audit Committee to be a senior position.
2 Not applicable as the Company does not have an executive management team.
Modern Slavery Act 2015
The Company does not fall within the scope of the Modern Slavery Act 2015 as its turnover is less than
£36m. Therefore, no slavery and human trafficking statement is included in the Annual Financial
Report.
35
Sustainability and environmental, social and governance (‘ESG’) matters
The Board recognises that the most material way in which the Company can have an impact on ESG is
through responsible ownership of its investments. The Company’s appointed investment manager is
expected to engage actively with investee companies undertaking extensive evaluation and engagement
on a variety of matters such as strategy, performance, risk, dividend policy, governance and
remuneration. All risks and opportunities are considered as part of the investment process in the
context of enhancing the long-term value of shareholders’ investments. This includes matters relating
to material environmental, human rights and social considerations that will ultimately impact the
profitability of a company or its stock market rating.
Financial statements
The financial statements of the Company are included on pages 50 to 65 of this report.
For and on behalf of the Board,
Russell Napier
Chairman
5 September 2023
36
Directors and Corporate Governance
Directors
Russell A R Napier (Chairman and Nomination Committee Chairman)
Russell Napier became a Director of the Company in 2009. He worked for Baillie Gifford from 1989
and for Foreign & Colonial Emerging Markets from 1994. In 1995 he joined stockbrokers CLSA in
Hong Kong as its Asian equity strategist. Since 1999 he has been a consultant global macro strategist
advising institutional investors. He is the author of ‘Anatomy of a Bear – Lessons from Wall Street’s
Four Great Bottoms’ and has established and runs a course called ‘A Practical History of Financial
Markets’. He is a limited partner and adviser at Cerno Capital Partners, an investment adviser to
Kennox Asset Management and a member of the advisory board of Bay Capital.
Hamish M Baillie
Hamish Baillie was appointed as a Director of the Company on 1 November 2022. Hamish joined
Ruffer LLP in 2002, becoming a partner in 2006. Between 2011 and 2022 he was the Lead Manager of
Ruffer Investment Company Ltd. Hamish also founded and managed the Edinburgh office of Ruffer
and held firm-wide responsibilities in relation to portfolio management and investor communications.
He was a member of the firm’s UK Wealth Leadership Team and a Director of Ruffer (Channel
Islands) Limited. Hamish retired from Ruffer with effect from 3 October 2022.
Diana Dyer Bartlett (Audit Committee Chairman)
Diana Dyer Bartlett became a Director of the Company and Chair of the Audit Committee in February
2020. After qualifying as a chartered accountant with Deloitte Haskins & Sells, Diana spent five years
in investment banking with Hill Samuel Bank. Since then she has held a number of roles as finance
director of various venture capital and private equity backed businesses and listed companies involved
in software, financial services, renewable energy and coal mining. She was also company secretary of
Tullett Prebon plc and Collins Stewart Tullett plc.
Diana is currently chairman of Smithson Investment Trust plc and a non-executive director and chair of
the audit and risk committee of Schroder British Opportunities Trust plc.
David P Kidd (Senior Independent Director)
David Kidd became a Director of the Company in 2016. He has over 40 years’ investment management
experience, having been chief investment officer of the Royal Bank of Scotland’s investment
management arm, the charity specialists Chiswell Associates and the private bank Arbuthnot Latham.
He is chairman of The Baillie Gifford Japan Trust plc and a director of The Golden Charter Trust.
David is also the Chair of Trustees of the Associated Board of The Royal Schools of Music Pension
Scheme. He recently retired as a Director of The Law Debenture Pension Trust Corporation. He was
previously a non-executive director of Martin Currie Global Portfolio Trust plc, Shires Income plc and
The Salvation Army International Trustee Company.
David is the Senior Independent Director having assumed the role on the retirement of Mr Harry
Morgan at the 2022 Annual General Meeting.
Alan G Scott
Alan Scott became a Director of the Company in 2012. He has over 37 years’ experience in banking,
currently a Product Manager with Coutts & Co, having worked at Adam & Company since 2004 most
recently as Head of Banking Services. Prior to that he held various positions within the NatWest Group
including offshore with Adam & Company International and Royal Bank of Scotland International in
Guernsey and onshore within the Corporate and Personal Banking divisions. He is a Member of the
Chartered Banker Institute and holds Chartered Banker status.
All Directors are members of the Nomination Committee and Management Engagement Committee. In
line with the AIC Code of Corporate Governance 2019 (the ‘AIC Code’), all Directors, barring the
Chairman of the Board, are members of the Audit Committee.
37
Directors’ Report
The Directors have pleasure in presenting their report, together with the audited financial statements of
the Company for the year ended 30 June 2023.
Results and dividends
The Company’s results for the year are set out in the Statement of Comprehensive Income on page 50.
Further analysis of the results can be found in the Strategic Report; including the Chairman’s
Statement, Investment Manager Review and the Business Review.
The Directors are recommending a final dividend, if approved by shareholders, for the year to 30 June
2023 of 3.95 pence, to be paid on 10 November 2023 to shareholders on the register at the close of
business on 29 September 2023.
This, together with the special dividend (also to be paid on 10 November 2023) and the interim
dividend, will result in total dividends for the year of 9.50 pence (2022: 10.20 pence).
Key service providers
During the year, Artemis provided the services of the Company’s AIFM, appointed investment
manager, fund administrator and company secretary. The depositary was JP Morgan until 3 March
2023 when these services were taken over by Northern Trust as part of a wider initiative by Artemis.
Following notification of the retirement of the lead fund manager, Simon Edelsten, from the Artemis
partnership and the departure of Alex Illingworth, the Board undertook a review of the investment
management arrangements. This resulted in the decision to move the management of the Company to
Lazard Asset Management. Lazard is expected to take over as Investment Manager in October 2023.
Simon Edelsten will remain lead fund manager until that time.
As a consequence of the change in appointed investment manager, other service provider changes are
required and will all take effect at the same time that the investment management services are
transferred from Artemis to Lazard. Juniper Partners has been appointed to take over as company
secretary, fund administrator and AIFM. JP Morgan will resume the role of depositary.
Artemis
The Company’s investments were managed during the year by Artemis Fund Managers Limited,
following its appointment as Investment Manager on 1 May 2014, and subject to an investment
management agreement dated 15 July 2014.
Artemis was also AIFM to the Company and provided company secretarial services and fund
administration. Artemis is entitled to a fee of 0.5% per annum of the net asset value of the Company.
Artemis Fund Managers delegated responsibility for the day-to-day portfolio management of the
Company’s portfolio to Artemis Investment Management LLP.
Both Artemis entities are authorised and regulated by the Financial Conduct Authority and at 30 June
2023 had £23.8 billion, in aggregate, of assets under management.
Notice has now been given to Artemis pursuant to its Investment Manager and AIFMD agreement and
the contract is expected to be concluded in October 2023.
Lazard
With effect from October 2023 it is expected that Lazard Asset Management will take over as
Investment Manager. Lazard Asset Management is authorized and regulated by the Financial Conduct
Authority and at 30 June 2023 had in aggregate approximately £166 billion assets under management.
The Company has entered into an investment management agreement with Lazard Asset Management
pursuant to which the fee it will receive for managing the Company’s investments will be 0.4% of
funds under management up to £250m, reducing to 0.38% on funds between £250m to £500m and
0.32% on funds above £500m. As part of the transition, Lazard has additionally agreed to waive its fee
for the first three and a half months.
38
Election and re-election of Directors
In accordance with the AIC Code, the Board has agreed that Directors will offer themselves for re-
election on an annual basis. The Board, on recommendation from the Nomination Committee
recommends the re-election of all Directors who currently hold office at this year’s AGM.
Directors’ insurance and indemnification
Directors’ and Officers’ liability insurance cover is maintained by the Company to cover Directors
against certain liabilities that may arise in conducting their duties.
The Company has entered into deeds of indemnity in favour of each of its Directors. The deeds cover
any liabilities that may arise to a third party, other than the Company, for negligence, default or breach
of trust or duty. The Directors are not indemnified in respect of liabilities to the Company, any
regulatory or criminal fines, any costs incurred in connection with criminal proceedings in which the
Director is convicted or civil proceedings brought by the Company in which judgement is given against
him/her. In addition, the indemnity does not apply to any liability to the extent that it is recovered from
another person.
Capital structure and voting rights
As at 30 June 2023, the capital structure of the Company was 66,381,114 (2022: 65,411,114) ordinary
shares of 5 pence each.
Details of changes to the shares in issue can be found in the Strategic Report on page 18.
As at 31 August 2023 (being the latest practicable date prior to the publication of this Annual Financial
Report) the Company’s issued share capital consisted of 66,381,114 ordinary shares, carrying one vote
each. 8,469,080 ordinary shares are held in Treasury. Therefore, the total voting rights in the Company
as at 31 August 2023 were 57,912,034.
Rights attaching to ordinary shares
At any general meeting of the Company, every ordinary shareholder attending in person or by proxy
(or by corporate representative) is entitled to one vote on a show of hands and, where a poll is called,
every ordinary shareholder attending in person or by proxy is entitled to have one vote for every
ordinary share of which he is the holder. There are no restrictions concerning the voting rights of the
Company’s ordinary shares or the holding or transfer of the Company’s shares and there are no special
rights attached to any of the ordinary shares. The Company is not aware of any agreements between
shareholders which may result in any restriction on the transfer of shares or on the voting rights. The
Company’s ordinary shareholders may, by ordinary resolution, declare dividends provided such
dividends are not in excess of any dividends recommended by the Directors. The Directors may also
pay interim dividends.
The table below sets out those shareholders who notified the Company that they hold more than 3% of
the voting rights attaching to the ordinary shares in issue as at 30 June 2023 and being the latest
practicable date before the printing of this document.
Significant interests
Name
Ordinary
shares
held at
30 June
2023
% of total
voting rights
at 30 June
2023
Ordinary
shares
held at
31 August
2023
% of total
voting rights
at 31 August
2023
Rathbone Investment Management Limited
6,102,477
9.8
6,102,477
10.5
Mr Simon Edelsten
2,449,837
3.9
1,537,837
2.6
Further information on the share capital of the Company is detailed in note 13 of the notes to the
financial statements.
39
Additional shareholder information
The provisions relating to the appointment and replacement of Directors are contained in the Articles
of the Company, a copy of which can be found on the Company’s website at midwynd.com. The
granting of powers to issue or buy back the Company’s shares require appropriate resolutions to be
passed by shareholders. The current authorities to buy back and issue shares will expire at the AGM
and proposals for their renewal are set out in the attached Notice of AGM.
There are no agreements to which the Company is party where that agreement would terminate, or
otherwise contain provisions that would come into force, on a change of control. There are no
agreements between the Company and its Directors concerning compensation for loss of office.
Going concern
The Directors have considered the likely cash flows and operational costs of the Company for the
eighteen months following the year end of this Annual Financial Report. As part of the assessment of
going concern the Directors have reviewed the stress testing performed by the investment manager
which models the impact of adverse economic and market conditions through various scenarios on the
Company’s portfolio as well as the impact of the Company’s buyback policy.
The Directors, having taken in to account the Principal Risks and Uncertainties as disclosed in the
Strategic Report on page 19, believe the Company has adequate financial resources to continue in
operational existence for a period of not less than 12 months from the date of this Annual Financial
Report. The Company has a diversified and liquid portfolio to fund any short-term operational
expenses as required. The Directors have reviewed the revenue and expense forecasts and cash flows
and have concluded the Company should continue to adopt the going concern basis in the preparation
of the financial statements.
Annual general meeting
Details of the 2023 Annual General Meeting (AGM) are set out in the Chairman’s Statement on page 7
and the Notice of Meeting on pages 66 to 70. An explanation of the resolutions to be put to the AGM is
set out on page 71.
The Board, the CEO of Lazard Asset Management and the new Investment Manager will be present at
the AGM (Lazard via videolink) and are keen to meet with shareholders. May I remind shareholders,
whether or not they are able to attend the AGM in person, that you are welcome, at any time, to submit
any questions you may have for the Board or the new Investment Manager at cosec@junipartners.com.
Please submit proxy votes in respect of the resolutions to be proposed at the AGM, irrespective of
whether you intend to attend the AGM.
Voting recommendation
The Directors consider that passing the resolutions to be proposed at the AGM will be in the best
interests of the Company and shareholders as a whole and unanimously recommend that shareholders
vote in favour of each of these resolutions as they intend to do in respect of their own holdings.
Greenhouse gas emissions
As the Company has delegated the investment management and administration of the Company to third
party service providers, and has no fixed premises, there are no greenhouse gas emissions to report
from its operations. The Company has no employees and all of its Directors are non-executive, with all
day-to-day activities being carried out by third parties. The Company considers itself to be a low
energy user as defined in the Streamlined Energy and Carbon Reporting Regulations and therefore is
not required to disclose energy and carbon information.
Audited information
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as
they are each aware, there is no relevant audit information of which the Company’s auditor is unaware
and each Director has taken all steps that they ought to have taken as a Director to make themselves
40
aware of any relevant audit information and to establish that the Company’s auditor is aware of that
information.
Post balance sheet events
The Directors confirm that there have been no post balance sheet events up to 5 September 2023 other
than those included in note 21 on page 65.
On behalf of the Board,
Russell Napier
5 September 2023
41
Corporate Governance Report
The Board is committed to high standards of corporate governance and is pleased to report to
shareholders on the Company’s governance arrangements and the application of the principles of the
relevant governance code during the year.
Statement of compliance
Compliance with the AIC Code:
The Company is committed to high standards of corporate governance and has established procedures
to monitor its continuing compliance with the AIC Code of Corporate Governance (the “AIC Code”).
This statement outlines how the principles of the AIC Code issued in February 2019 were applied
throughout the financial year.
The AIC Code addresses the Principles and Provisions set out in the UK Corporate Governance Code
(the “UK Code”) that are applicable to investment trusts, as well as setting out additional Provisions on
issues that are of specific relevance to the Company.
The Board considers that reporting against the Principles and Provisions of the AIC Code, which has
been endorsed by the Financial Reporting Council (“FRC”) provides more relevant information to
shareholders. The AIC Code is available on the AIC website (theaic.co.uk). It includes an explanation
of how the AIC Code adapts the Principles and Provisions set out in the UK Code to make them
relevant for investment companies.
The Board considers that in the course of the year, and up to the date of this report, the Company has
complied with the Principles and Provisions of the AIC Code. The Board notes the recommendations
of the AIC Code and, where possible, has sought to include further detail in the annual financial report
to outline how the Principles and Provisions of the AIC Code are being applied.
Board leadership and purpose
The Board is responsible for promoting the long-term sustainable success and strategic direction of the
Company and for providing leadership in terms of the Company’s culture, purpose and values (see
page 16). The Board appoints all third-party service providers and monitors their performance
throughout the year; formally evaluating the quality of the service provided by third parties and
considering their terms of engagement. The Board, assisted by the Audit Committee, reviews the risks
faced by the Company and assesses the effectiveness of internal controls in place to mitigate these
risks.
The Board also provides independent oversight of the operations, particularly those of the appointed
investment manager, and challenges investment and operational decisions taken.
The Board meets formally four times a year to review the performance of the Company’s investments,
the financial position of the Company, its performance in relation to the investment objective and all
other important issues to ensure that the Company’s affairs are managed within a framework of prudent
and effective controls.
Division of responsibilities
Responsibilities are clearly defined and allocated between the Chairman, the Board, the appointed
investment manager and a number of third-party service providers. The performance of the investment
manager and third-party service providers is reviewed by the Board on a regular basis.
No one individual has unfettered powers of decision. The Chairman, Russell Napier, was at the time of
his appointment, and remains, independent of the Investment Manager. The Chairman leads the Board
and ensures its effectiveness on all aspects of its operation ensuring that each Director receives
accurate, timely and clear information enabling them to perform effectively as a Board.
42
The Company Secretary liaises with the Chairman prior to each meeting to agree agenda content and
papers to be submitted to Board and Committee meetings. In addition, the Chairman is responsible for
ensuring there is effective communication with shareholders.
The Board has set the parameters within which the investment manager operates and these are set out
in an investment management agreement and in Board minutes. The Board sets the scope of the
Investment Manager’s responsibilities, including principal operating issues such as investment
selection, gearing, and share issuance or buybacks. The Board regularly reviews the investment
restrictions set out in the investment management agreement and any other restrictions set by the Board
from time to time to confirm their continuing appropriateness. The Board retains authority to approve
any changes to investment policy, including such material changes as may require approval of the
shareholders and may review and amend the investment policy guidelines laid down for the appointed
investment manager as it deems appropriate.
Representatives of the appointed investment manager attend each Board meeting enabling the
Directors to seek clarification on its activities in managing the Company.
The Board has formalised arrangements under which Directors, in furtherance of their duties, may take
independent professional advice at the Company’s expense. The Directors have access to the advice
and services of the Company Secretary, through its appointed representatives, who are responsible to
the Board for ensuring that proper procedures are followed, and that applicable rules and regulations
are complied with.
The appointment and removal of the Company Secretary is a matter for the Board as a whole.
Board composition
The Board currently comprises five Directors, comprising four male and one female member, all of
who are non-executive. The names of the Directors, together with their biographical details, are set out
on page 29 of this Report.
The Board considers that all the Directors are independent of the Investment Manager and comply with
the criteria for independence as set out in the AIC Code. The Nomination Committee meets annually to
consider the performance of the Board and consider matters of independence.
David Kidd is the Company’s Senior Independent Director. David Kidd assumed the role following
Harry Morgan’s retirement at the last Annual General Meeting. The Senior Independent Director
provides a sounding board for the Chairman and serves as an intermediary for other Directors and
shareholders. Led by the Senior Independent Director, the Directors meet without the Chairman present
on an annual basis to discuss the Chairman’s performance.
Diversity policy
The Board recognises the importance of having skilled and experienced Directors represented on the
Board to allow it to fulfil its obligations. The Board also recognises the benefits of diversity and gives
regard to this during its recruitment of new Board members; by doing so the Board will not display
bias for age, gender, race, sexual orientation, socio-economic background, religion, ethnic or national
origins or disability in considering the appointment of Directors. The Board seeks to meet the targets of
the FCA’s Listing rule 9.8.6R (9)(a) and will continue to do so during its succession discussions whilst
also ensuring that all appointments are made on the basis of merit against the requirements of the role.
Further details on Board diversity are disclosed on pages 27 and 28.
Appointments to the Board
Directors are appointed subject to the provisions of the Act and the Company’s Articles. Any Directors
appointed by the Board are subject to election by shareholders at the first AGM following their
appointment and to annual re-election thereafter.
The contribution of each individual Director has been reviewed and considered by the Board, with the
support of the Nomination Committee, and the re-election of each of the Directors is recommended on
43
the basis of their industry knowledge, experience and their individual contributions to the operation of
the Company.
The Directors of the Company have not been appointed subject to a service contract. The terms and
conditions of their appointments are set out in letters of appointment, which are available for inspection
at the registered office of the Company and at the AGM.
Board committees
In order to enable the Directors to discharge their duties, a Nomination Committee, an Audit
Committee and a Management Engagement Committee, each with written terms of reference, have
been established. Committee membership is set out on page 29 of this Report. Attendance at meetings
of the committees is restricted to members and persons expressly invited to attend. Copies of the terms
of reference for the Board committees are available from the Company Secretary or on the Company’s
website midwynd.com. The Chairman of the Board acts as Chairman for the Nomination committee
and the Management Engagement Committee and the Audit Committee is chaired by Diana
Dyer Bartlett.
The Company Secretary acts as the Secretary to each committee.
The Board, being small in size and composed entirely of independent non-executive Directors, has not
appointed a Remuneration Committee. Directors’ fees and the appointment of new Directors are
considered by the Board as a whole.
Audit Committee
The responsibilities of the Audit Committee are disclosed in the Report of the Audit Committee on
pages 40 to 42 of this Report.
Management Engagement Committee
A Management Engagement Committee was established during the year and meets at least annually,
reviews the terms of appointment and the performance of each of the Company’s third-party service
providers, including the Investment Manager but excluding the Auditor, which is reviewed by the
Audit Committee. The Committee makes recommendations to the Board for improvement or change as
appropriate.
Nomination Committee
The Nomination Committee meets at least annually. It is responsible for ensuring that the Board has an
appropriate balance of skills and experience to carry out its duties, for identifying and nominating to
the Board new Directors and for proposing that existing Directors be re-elected. The Committee is also
responsible for reviewing and making recommendations to the Board with respect to succession
planning, governance policies; including those policies relevant to the tenure of the chair and diversity
and inclusion.
As detailed in the Strategic Report on page 27, the Board supports the principles of diversity in the
boardroom and considers this when seeking to ensure that the overall balance of skills and knowledge
of the Directors remains appropriate to enable the Board to operate effectively.
The Committee undertakes an annual performance evaluation of the Board and individual Directors,
led by the Chairman. On those occasions when the Committee is reviewing the Chairman, or
considering his successor, the Nomination Committee will normally be chaired by the Senior
Independent Director. The Committee annually considers the appointment of an external evaluator and
an external evaluator was engaged during the financial period as detailed below.
Board evaluation and effectiveness review
During the year, the Board engaged an external provider, Lintstock, to undertake an independent
evaluation of the Board’s performance and that of its Committees, the Chairman and individual
Directors. The review addressed Board and committee composition including knowledge, skills,
experience, diversity, independence as well as the time commitment of the Directors to allow them to
44
discharge their responsibilities effectively. This review was based on a process of appraisal by
interview and detailed questionnaires.
One of the recommendations from the review was that a formal succession plan should be adopted and
this has since been agreed by the Board. As part of the succession plan Russell Napier will be stepping
down from the Board at the Company’s AGM in October 2024. The independent evaluation concluded
that the Board has effective oversight of the management of the Company and has the appropriate
diversity of skills and experience to safeguard shareholders’ interests.
Board succession
Board appointments are subject to a formal and transparent procedure, The Nomination Committee
considers the skill set needs of the Company and seeks to ensure that any vacancies are filled with
highly qualified individuals that will bring the required knowledge and experience to the Board. The
Nomination Committee considers diversity of gender, social and ethnic backgrounds alongside the
individual experience and knowledge.
A plan for the orderly succession over time is regularly discussed.
As noted in the Chairman’s Statement, Russell Napier will be retiring from the Board at the 2024
AGM.
Directors’ and Chairman’s tenure
Directors do not serve on the Board for a specified period of time. Each Director will be subject to the
election/re-election provisions as set out in the Company’s Articles, which provide that a Director
appointed during the year is required to retire and seek election by shareholders at the first annual
general meeting following their appointment. Thereafter, Directors are required to submit themselves
for re-election annually. Providing that the Nomination Committee and the Board remain satisfied that
the relevant Director’s continuing appointment and independence is not impaired by length of service,
the Board does not consider that there should be a set limit on their length of service. The Board does
not consider that the length of time served by a Director is as important as their contribution to the
running of the Company, or that it necessarily impairs their independence. Each situation will be
rigorously reviewed on a case-by-case basis to ensure that a Director’s independence is maintained and
that their continuing appointment is in the best interests of the Company.
Induction and training
New Directors appointed to the Board are provided with an induction which is tailored to the particular
circumstances of the appointee. Regular updates are provided on changes in regulatory requirements
that could affect the Company. The Directors are encouraged to attend industry and other seminars
covering issues and developments relevant to investment trusts and receive other training as necessary.
Board and committee meetings
The following table sets out the Directors’ attendance at the Board and Committee meetings held
during the year.
Board
Audit
Committee
Nomination
Committee
Management
Engagement
Committee
Number of meetings
4
3
1
1
Russell Napier*
4/4
N/A
1/1
1/1
Hamish Baillie**
2/2
2/2
1/1
1/1
Diana Dyer Bartlett
4/4
3/3
1/1
1/1
David Kidd
4/4
3/3
1/1
1/1
Harry Morgan***
2/2
1/1
N/A
N/A
Alan Scott
4/4
3/3
1/1
1/1
* In line with best practice, Russell Napier stood down as a member of the Audit Committee on becoming Chairman. However he
continues to attend the committee’s meetings.
** Hamish Bailie was appointed on 1 November 2022.
*** Harry Morgan retired on 26 October 2022.
45
In addition to the above scheduled meetings, there were numerous adhoc Board meetings to manage
the review of investment management arrangements as well as sub-committee meetings to approve
Company announcements.
Relations with shareholders
The Board considers communication with shareholders an important function and Directors are always
available to respond to shareholder queries. The Board aims to ensure that shareholders are kept fully
informed of developments in the Company’s business through the Annual and Half-Yearly Financial
Reports, as well as the daily announcement of the net asset values of the Company’s ordinary shares to
the London Stock Exchange. The appointed investment manager produces a monthly factsheet and a
detailed quarterly commentary on the portfolio and Company performance which can be found on the
Company’s website at midwynd.com, along with other information on the Company. The investment
manager meets with the Company’s major shareholders on a periodic basis.
Shareholders are encouraged to attend and vote at the AGM, during which the Board and Investment
Manager are available to discuss issues affecting the Company. Details of shareholder voting are
declared at every AGM and are available on the website as soon as practicable following the close of
the meeting. Should 20 per cent or more of votes be cast against a Board recommendation for a
resolution, an explanation of what actions the Company intends to take in order to consult shareholders
will be provided when announcing voting results. An update on views received from shareholders and
actions taken will also be published no later than six months after the AGM together with a final
summary in the next Annual Financial Report.
All Directors intend to attend this year’s AGM, details of which are set out in the Notice of Meeting on
pages 66 to 67 of this Report.
Engagement with stakeholders
More information about how the Board fosters the relationships with its shareholders and other
stakeholders, and how the Board considers the impact that any material decision will have on relevant
stakeholders, can be found in the section 172 statement in the Strategic Report on pages 23 to 27.
UK Stewardship Code
Both Artemis and Lazard are signatories to the Stewardship Code 2023. The Board has given the
appointed investment manager discretion to exercise the Company’s voting rights and therefore does
not intend to apply to become a signatory to the new code itself.
Voting policy
The Board has given the Investment Manager discretion to exercise the Company’s voting rights and
the Investment Manager, so far as is practicable, will exercise them in respect of resolutions proposed
by investee companies.
Bribery Act 2010
The Company is committed to carrying out business fairly, honestly and openly and policies and
procedures have been established to prevent bribery.
Criminal Finances Act 2017
The Company has a commitment to zero tolerance towards the criminal facilitation of tax evasion.
Conflicts of interest
The Board has put in place procedures to deal with conflicts and potential conflicts of interest and
considers that these have operated effectively throughout the year. The Board also confirms that its
procedures for the approval of conflicts and potential conflicts of interest have been followed by the
Directors during the year under review.
46
Russell Napier supplies investment research to Lazard Asset Management. The Board has confirmed
there is no conflict of interest. The supply of services is monitored as a potential conflict.
Internal controls and management of risk
The Board recognises its responsibility for the implementation, review and maintenance of effective
systems of internal control to manage the risks to which the Company is exposed as well as ensuring
that a sound system of internal control is maintained to safeguard the Company’s assets and
shareholders’ interests. As the majority of the Company’s systems are maintained on behalf of the
Company by third party service providers under contract, the Board fulfils its obligations by requiring
these service providers to report and provide assurances on their systems of internal control, which are
designed to manage, rather than eliminate, risks. In light of the Board’s reliance on these systems and
the reports thereon, the Board can only provide reasonable and not absolute assurance against material
misstatement or loss. The Board does, however, ensure that these service providers are employed
subject to clearly defined contracts and only appoints reputable companies with extensive expertise in
their respective fields.
The investment manager, depositary and the administrator have established internal control
frameworks and annual external audits which provide reasonable assurances as to the effectiveness of
the internal control systems operated on behalf of their clients. The investment manager and depositary
report to the Board on a regular basis with regard to the operation of their internal controls and risk
management within their operations in so far as this impacts the Company. In addition, the investment
manager reports quarterly to the Board on compliance with the terms of its delegated authorities under
its investment management agreement and other restrictions determined by the Board.
The administrator and depositary also report on a quarterly basis any breaches of law and regulation
and any operational errors. This enables the Board to address any issues with regard to the management
of the Company as and when they arise and to identify any known internal control failures.
The key procedures which have been established to provide effective internal controls are as follows:
■ The Board, through the Audit Committee, has carried out and documented a risk and control
assessment, which is kept under ongoing, and at least a six monthly, review.
■ The Audit Committee receives updates of any internal audit reviews conducted on behalf of the
appointed investment manager which may be considered of relevance to the Company.
■ Investment management, accounting and custody of assets are segregated. The procedures of the
individual parties carrying out these functions are designed to complement each other.
■ The Board is responsible for setting the overall investment policy and monitoring the actions of
the appointed investment manager. The Board reviews information produced by the appointed
investment manager in detail on a regular basis.
■ The fund administrator reports to the Board on a quarterly basis and ad hoc as appropriate. In
addition, the Board receives the administrator’s semi-annual report on its internal controls.
■ The Board asks its key service providers to confirm that they have adequate whistleblowing
procedures and the Audit Committee reviews the whistleblowing procedures of the appointed
investment manager.
■ The Board clearly defines the duties and responsibilities of the Company’s agents and advisers
in the terms of their contracts. The appointment of agents and advisers is conducted by the
Board after consideration of the quality of parties involved; their ongoing performance and
contractual arrangements are monitored to ensure that they remain effective.
■ Mandates for authorisation of investment transactions and expense payments are approved by
the Board.
The Directors have monitored the effectiveness of the Company’s internal controls throughout the year
under review and up to the date of this report.
47
Further information on the risks and the management of them is set out in the Strategic Report on
pages 19 to 21 and note 20 of the notes to the financial statements.
The Directors consider that the Annual Financial Report, taken as a whole, is fair, balanced and
understandable and the information provided to shareholders is sufficient to allow them to assess the
Company’s performance, business model and strategy.
By order of the Board.
Artemis Fund Managers Limited
Company Secretary
5 September 2023
48
Directors’ Remuneration Policy and Report
Directors’ Remuneration Policy
The Directors are pleased to present their Remuneration Policy.
The remuneration policy of the Company was approved by shareholders at the Annual General
Meeting (“AGM”) held on 10 November 2020 when 13,972,266 (99.45%) votes received were in
favour, 77,886 (0.55%) were against and votes withheld were 30,697. The policy will apply until the
2023 AGM (being three years from the date of shareholder approval of the policy). A resolution to
approve the remuneration policy is included in the Notice of Annual General Meeting convened for 26
October 2023.
Fees are commensurate with the amount of time Directors are expected to spend on the Company’s
affairs, whilst seeking to ensure that fees are set at an appropriate level so as to enable candidates of a
sufficient calibre to be recruited. The Company’s Articles state the maximum aggregate amount of fees
that can be paid to Directors in any year. This is currently set at £200,000 per annum and shareholder
approval is required for any changes to this.
The Board reviews and sets the level of Directors’ fees annually, or at the time of the appointment of a
new director, as provided for in the Directors’ letters of appointment. The review considers a range of
external information, including peer group comparisons, industry surveys, relevant independent
research and any comments received from shareholders. Each Director is entitled to a base fee. The
Chairman of the Board and the Chairman of the Audit Committee are paid a higher fee than the other
Directors, to reflect the additional work required to carry out their roles.
No Director is entitled to any benefits in kind, share options, annual bonuses, long-term incentives,
pensions or other retirement benefits or compensation for loss of office.
Directors are appointed with no fixed notice periods and are not entitled to any extra payments on
resignation. It is also considered appropriate that no aspect of Directors’ remuneration is performance-
related in light of the Directors’ non-executive status.
Directors are able to claim expenses that are incurred in respect of duties undertaken in connection
with the management of the Company.
New Directors will be remunerated in accordance with this policy and will not be entitled to any
payments from the Company in respect of remuneration arrangements in place with any other
employers which are terminated upon appointment as a Director of the Company.
Directors’ Remuneration Report
The Directors are pleased to present the Company’s Remuneration Report for the year ended 30 June
2023 which sets out how the Board has implemented the Directors’ Remuneration Policy. The
Company’s Auditor is required to audit certain information contained within this report and, where
information set out below has been audited, it is clearly indicated. The Auditor’s opinion is included in
the Independent Auditor’s Report which can be found on pages 44 to 49.
The Remuneration Report will be submitted to shareholders for approval at the AGM to be held on 26
October 2023. A Notice of the AGM accompanies this Annual Financial Report. In accordance with
the matters reserved for the Board’s decision, the Board is responsible for:
(i) Determining the remuneration of the Directors, subject to compliance with the Articles and the
Remuneration Policy, as approved by shareholders.
(ii) Approving the Directors’ Remuneration Report and Directors’ Remuneration Policy included in
this Annual Financial Report.
(iii) Approving the Directors’ Remuneration Policy at least every three years and monitoring the
policy to ensure compliance.
49
The Board
During the year ended 30 June 2023, the Board consisted solely of non-executive Directors who
determine their remuneration as a whole. Accordingly, a separate Remuneration Committee has not
been established. Following a review on 25 May 2023 the Board agreed that the fees for each Director,
with effect from 1 July 2023, should be increased to £40,750 for the Chairman (2023: £37,500),
£34,750 for the Chairman of the Audit Committee (2023: £32,000) and £29,000 (2023: £26,750) for
the other Directors. Directors’ fees were last increased on 1 July 2022. The review considered the fees
paid by trusts in the Company’s peer group, its position relative to these peers and the industry as a
whole and concluded an increase was warranted to ensure salaries were commenserate with peers and
for Board positions to remain attractive when recruiting. The Board has not relied upon the advice or
services of any person to assist in making its remuneration decisions.
Directors’ fees (audited)
The Directors who served during the year to 30 June 2023 and to 30 June 2022 received the following
emoluments.
Director
Year ended
30 June
2023
Year ended
30 June
2022
Russell Napier*
£37,500
£35,000
Diana Dyer Bartlett
£32,000
£30,000
David Kidd
£26,750
£25,000
Harry Morgan**
£15,265
£25,000
Alan Scott
£26,750
£25,000
Hamish Baillie***
£11,122
–
£149,387
£140,000
* Russell Napier was appointed as Chairman of the Board on 10 November 2020.
** Harry Morgan resigned from the Board on 26 October 2022.
*** Hamish Baillie was appointed to the Board on 1 November 2022.
Annual Percentage Change in Remuneration
This represents the annual percentage change in the total remuneration paid to the Directors over a five
year period by position, together with details of the positions held by the current Board.
Chairman of the Board
Chairman of the Audit
Committee
Director
Year ended
£
% increase
£
% increase
£
% increase
2018
27,500
25.00%
24,000
33.33%
20,000
25.00%
2019
27,500
–
24,000
–
20,000
–
2020
27,500
–
24,000
–
20,000
–
2021
29,500
7.27%
25,500
6.25%
21,500
7.50%
2022
35,000
18.64%
30,000
17.65%
25,000
16.28%
2023
37,500
7.14%
32,000
6.67%
26,750
7.00%
Expenditure by the Company as remuneration and distributions to Shareholders
The table below compares the remuneration paid to Directors with distributions made to shareholders
during the year under review and the prior financial review:
2023
2022
Directors’ fees
£149,387
£140,000
Distributions to Shareholders
– dividends
£6,958,926
£4,255,161
– net share buybacks
£28,729,744
£nil
50
Directors’ interests
The interests of the Directors and their connected persons who held office at the year end in the
ordinary shares of the Company were as follows :
Director
Nature of Interest
Holding
as at
30 June
2023
Holding
as at
1 July
2022
Russell Napier
Beneficial
157,125
157,125
Hamish Baillie
Beneficial
4,350
–
Diana Dyer Bartlett
Beneficial
8,037
8,037
David Kidd
Beneficial
25,000
17,500
Alan Scott
Beneficial
155,675
155,675
Beneficial trustee
138,850
138,850
On 25 July 2023, a person connected with Alan Scott sold 5,675 shares. There have been no further
changes in the Directors’ interests up to the date of signing this Annual Financial Report. At no time
during the year did any Director hold a material interest in any contract, arrangement or transaction
with the Company.
Performance graph
GRAPH
The ten year performance graph above sets out the Company’s share price total return from 1 July
2013, compared to the total return of a notional investment in the MSCI All Country World Index
(GBP).
Statement of voting at the last annual general meeting
The following table sets out the votes received at the last Annual General Meeting of shareholders,
held on 26 October 2022, in respect of the approval of the Directors’ Remuneration Report:
Votes cast for
Votes cast against
Total
votes
cast
Number of
votes
withheld
Number
%
Number
%
18,385,510
97.29
157,898
0.85
18,543,408
30,510
Statement
On behalf of the Board an in accordance with the Regulations, I confirm that the Remuneration Policy
and Remuneration Report summarises, as applicable, for the year to 30 June 2023:
(i) the major decisions on Directors’ remuneration;
(ii) any substantial changes relating to Directors’ remuneration made during the year; and
(iii) the context in which the changes occurred and decisions have been taken.
The report on Directors’ remuneration was approved by the Board on 5 September 2023 and signed on
its behalf by the Chairman.
Russell Napier
Chairman
51
Report of the Audit Committee
I am pleased to present the Report of the Audit Committee for the year ended 30 June 2023. Details of
the responsibilities of the committee and our activities are described below.
Meetings
The Committee meets at least three times each year and representatives from the appointed investment
manager and the fund administrator may be invited to attend the meetings of the Audit Committee to
report on issues as required.
The Audit Committee meets with representatives of the Company’s auditor at least twice each year to
plan for and discuss any matters arising from the audit.
Roles and responsibilities
The main responsibilities of the Audit Committee include:
■ monitoring the integrity of the financial statements of the Company and any formal
announcements relating to the Company’s financial performance, and reviewing significant
financial reporting judgements contained in them;
■ providing a challenge to areas of judgement;
■ confirming to the Board whether the Annual and Half-yearly Financial Reports, taken as a
whole, are fair, balanced and understandable, and provide the information necessary for
shareholders to assess the Company’s position and performance, business model and strategy;
■ reviewing the appropriateness and consistency of the Company’s accounting policies;
■ reviewing the effectiveness of the Company’s financial reporting, risk management systems and
internal control policies and procedures for the identification, assessment and reporting of risks;
■ reviewing and challenging the Company’s going concern and viability statements;
■ reviewing the need for an internal audit function;
■ conducting the audit tender process and making recommendations to the Board, about the
appointment, reappointment and removal of the external auditor, and approving the
remuneration and terms of engagement of the external auditor;
■ reviewing and monitoring the external auditor’s independence and objectivity;
■ reviewing the effectiveness and quality of the external audit process, taking into consideration
relevant UK professional and regulatory requirements;
■ developing and implementing policy on the engagement of the external auditor to supply non-
audit services, ensuring there is prior approval of non-audit services, considering the impact this
may have on independence, taking into account the relevant regulations and ethical guidance in
this regard, and reporting to the Board on any improvement or action required; and
■ reporting to the Board on how it has discharged its responsibilities.
The Audit Committee provides a forum through which the Company’s auditor reports to the Board.
Composition
All members of the Board are members of the Audit Committee other than the Chairman, Russell
Napier, who with reference to guidance from the 2019 AIC Code attends as a guest.
All members of the Audit Committee are considered to have relevant and recent financial and
investment experience as a result of their employment in financial services and other industries. The
Chairman of the Audit Committee, Diana Dyer Bartlett is a chartered accountant and chairs the audit
committee of one other listed company.
52
Activities during the year
The Audit Committee met three times during the year. At these meetings, the Committee considered
the Annual Report, the Half-yearly Financial Report, the audit plan and reviewed the Company’s
compliance with s1159 of the Corporation Tax Act 2010. The Committee considered the following
significant matters in respect of this Annual Financial Report:
Significant issue
How the issue was addressed
Valuation and ownership of investments
The Company’s investments are valued in accordance with
the accounting policies, and the listed investments are valued
by the Company’s administrator. These prices are reviewed
and overseen by the Company’s appointed investment
manager. The investment manager and Board also monitor
the liquidity of the portfolio. The Depositary is responsible
for holding the Company’s assets in custody and verifying
the ownership of these assets. The Company receives regular
reports from the depositary, including at the year end.
Allocation of expenses
The Committee reviews the allocation of investment
management fees and finance costs between income and
capital on an annual basis. Following this review, no change
was recommended to the current 25% income/75% capital
split; other operating expenses are charged to the revenue
account.
Compliance with Section 1158 of the Corporation Tax Act
2010
The Board and Audit Committee receives regular reporting
from the Investment Manager including as at the year end
date.
Maintaining internal controls
As part of the Board’s review of internal controls, the Audit
Committee carries out and documents a risk and control
assessment, which is kept under ongoing, and at least a six
monthly, review. The Audit Committee reports its findings
and recommendations to the Board.
The appointed investment manager and the administrator are
expected to maintain internal control frameworks to provide
reasonable assurance as to the effectiveness of the internal
controls operated on behalf of their clients. Both third parties
are required to report to the Board, on a quarterly basis, any
operational errors or breaches of internal controls, law or
regulation.
Revenue recognition, including allocation of special
dividends as revenue or capital returns
The recognition of investment income and the allocation of
special dividends is undertaken in accordance with
accounting policy note 2(g) to the financial statements on
page 54.
The Board and Audit Committee review the revenue forecast
at each meeting.
Going concern & viability
The Committee considered the Company’s investment
objective, risk management policies, capital management
policies and procedures, the nature of the portfolio and
expenditure and cash flow projections. As a result, they have
determined that the Company has adequate resources, an
appropriate financial structure and suitable management
arrangements in place to continue in operational existence for
at least twelve months from the date of approval of these
financial statements. They also determined the period for
review of the Company viability should be five years. These
recommendations were made to the Board.
The Committee also assessed the viability of the Company,
reviewing a series of stress tests on the Company’s net assets
and the impact of negative market movements. Following
this assessment, the Committee recommended the Viability
Statement to the Board.
53
Appointment and remuneration of the external Auditor
Regulations in place require the Company to rotate audit firms after a period of ten years, which may
be extended where audit tenders are carried out or where more than one audit firm is appointed to
perform the audit. The audit firm is required to rotate the partner every five years.
Johnston Carmichael LLP was appointed as external auditor in March 2020. This year is the fourth
year of tenure. Mr David Holmes retired and is no longer involved in the audit of the Company and has
been replaced by Mr Richard Sutherland.
The fees paid to Johnston Carmichael LLP in respect of audit services are disclosed in note 4 of the
notes to the financial statements.
Audit for the year ended 30 June 2023
As part of the planning for the annual audit, the Audit Committee met with Johnston Carmichael LLP
and reviewed their audit strategy document, which highlighted the level of materiality to be applied by
the Auditor, the key perceived audit risks, and the scope of the audit.
The key areas of audit focus undertaken by the external auditor and agreed by the Committee were:
■ Valuation and ownership of quoted investments
■ Revenue recognition, including allocation of special dividends as revenue or capital returns
The audit work performed in these areas included agreement of ownership of all listed investments to
the independent custodian report, a 100% recalculation of investment valuations using independent
third-party market prices, a 100% recalculation of dividends due to the Company, and allocation of
special dividends.
The auditor also considered the going concern and viability of the Company, the maintenance of its
investment trust status, share issuances, transition of service providers and its compliance with all
relevant regulations.
The Audit Committee discussed with the external auditor their key observation in the external auditor’s
report regarding the misallocation of dividend income (page 45). This issue arose during the transition
of services to Northern Trust. The external auditor performed additional procedures on the transition
and this work, together with the procedures performed to audit dividend income led to the issue being
identified.
The Audit Committee met with representatives of the Company’s auditor at the Audit Committee
meeting held on 24 August 2023 to discuss matters arising from the annual audit and to assess the
independence and effectiveness of the external audit process.
Effectiveness and independence of the external auditor
The Committee monitors the auditor’s independence through assurances provided by the auditor on its
compliance with the relevant ethical standards; through approval of, and compliance with, the non-
audit services policy, and by assessing the appropriateness of the fees paid to the auditor for work
undertaken during the annual external audit.
During the audit planning, Johnston Carmichael LLP confirmed its independence to the Committee and
its willingness to continue in office as independent auditor.
The effectiveness of the audit was evaluated through discussion of the services received from the
auditor between the Committee and those at the investment manager closely involved in the audit
process. The Committee also assessed the level and robustness of questioning performed by the
auditor, the professional scepticism exercised by the auditor; the timeliness of performing the audit
tasks; the responsiveness of the audit team to queries, the quality control process operated by the
auditor, and the quality of review of the Annual Financial Report. The Committee also met privately
with the Audit Partner to discuss the efficiency of response and accuracy of information provided from
the investment manager during the audit.
54
After careful consideration of the services provided since appointment and the above review of its
effectiveness, the Audit Committee recommended to the Board that Johnston Carmichael LLP should
be re-appointed as auditor for the Company. Accordingly, resolutions will be proposed at the
forthcoming AGM for the auditor’s appointment and to authorise the Directors to agree the auditor’s
remuneration.
Non-audit services
The Audit Committee has established a policy for the provision of non-audit services to the Company
which prohibits the provision of certain services by the auditor which the Audit Committee believes
would compromise auditor independence. Non-audit services are permitted subject to the Audit
Committee being satisfied that the engagement would not compromise independence, where the total
fees for non-audit services is less than 70 per cent of the average audit fees for the last three years and
where knowledge would be advantageous in carrying out the service.
There were no non-audit services provided by Johnston Carmichael LLP during the year ended 30 June
2023.
Internal audit function
Systems and controls are in place to maintain a safe environment for the Company’s assets and
shareholders’ investments; helping to ensure the maintenance of proper accounting records and the
provision of accurate financial information.
The Company is an investment company, has no employees and delegates all operational and
investment activities to third-party service providers, including the appointed investment manager.
External audit reports on internal controls operated by key service providers such as the investment
manager and depositary are received by the Company. Taking these reports into consideration, the
Audit Committee concluded that it is not necessary for the Company to have its own internal audit
function; this conclusion is reviewed annually.
Audit Committee effectiveness
During the year, the Audit Committee reviewed its effectiveness and concluded that it had discharged
all its obligations as set out in the Audit Committee’s terms of reference in an efficient and effective
manner. The Audit Committee concluded that there were no changes required to its procedures.
Audited information
The Audit Committee considers that the Annual Financial Report, taken as a whole, is fair, balanced
and understandable and the information provided to shareholders is sufficient to allow them to assess
the Company’s performance, business model and strategy and has reported to the Board accordingly.
On behalf of the Board
Diana Dyer Bartlett
Chairman of the Audit Committee
5 September 2023
55
Statement of Directors’ Responsibilities in respect of the Annual Financial Report and
the Financial Statements
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Financial Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that
law the Directors have elected to prepare the financial statements in accordance with UK Accounting
Standards, including FRS 102 ‘The Financial Reporting Standard Applicable in the UK and Republic
of Ireland’.
Under company law the Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the
Company for that period. In preparing each of the financial statements, the Directors are required to:
■ select suitable accounting policies and then apply them consistently;
■ make judgements and estimates that are reasonable and prudent;
■ state whether applicable UK Accounting Standards have been followed, subject to any material
departures being disclosed and explained in the financial statements; and
■ prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that its financial statements comply with the
Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic
Report, a Directors’ Report and Corporate Governance Statement, and a Directors’ Remuneration
Report that complies with that law and those regulations.
The financial statements are published on a website, midwynd.com, maintained by the Company’s
Investment Manager. Responsibility for the maintenance and integrity of the corporate and financial
information relating to the Company on this website has been delegated to the Investment Manager by
the Directors. Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge:
(a) the financial statements, prepared in accordance with the applicable set of accounting standards,
give a true and fair view of the assets, liabilities and financial position of the Company as at 30
June 2023 and of the profit for the year then ended;
(b) in the opinion of the Directors, the Annual Financial Report taken as a whole, is fair, balanced
and understandable and it provides the information necessary to assess the Company’s position
and performance, business model and strategy; and
(c) the Strategic Report includes a fair review of the development and performance of the business
and the position of the Company, together with a description of the principal risks and
uncertainties that it faces.
For and on behalf of the Board.
Russell Napier
Chairman
5 September 2023
56
Independent Auditor’s Report to the members of Mid Wynd International Investment
Trust PLC
Opinion
We have audited the financial statements of Mid Wynd International Investment Trust plc (“the
Company”), for the year ended 30 June 2023, which comprise the Statement of Comprehensive
Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of
Cash Flows and notes to the financial statements, including significant accounting policies. The
financial reporting framework that has been applied in their preparation is applicable law and United
Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting
Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted
Accounting Practice).
In our opinion the financial statements:
■ Give a true and fair view of the state of the Company’s affairs as at 30 June 2023 and of its
return for the year then ended;
■ Have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
■ Have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor
responsibilities for the audit of the financial statements section of our report. We are independent of the
Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard, as applied to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Our approach to the audit
We planned our audit by first obtaining an understanding of the Company and its environment,
including its key activities delegated by the Board to relevant approved third-party service providers
and the controls over provision of those services.
We conducted our audit using information maintained and provided by The Northern Trust Company,
London Branch (the “Administrator”), Artemis Fund Managers Limited (“the “Company Secretary”,
“Investment Manager” and “AIFM”) and The Northern Trust Company, London Branch (the
“Custodian”), to whom the Company’s directors have delegated the provision of services. For the
period pre-transition of service providers we also conducted our audit using information maintained
and provided by JP Morgan Europe Ltd (the “Administrator”) and JP Morgan Chase Bank N.A (the
“Custodian”) and we audited the migration of data from pre-transition service providers to post-
transition service providers.
We tailored the scope of our audit to reflect our risk assessment, taking into account such factors as the
types of investments within the Company, the involvement of the Administrator, the accounting
processes and controls, and the industry in which the Company operates.
The scope of our audit was influenced by our application of materiality. We set certain quantitative
thresholds for materiality. These together with qualitative considerations, helped us to determine the
scope of our audit and the nature, timing and extent of our audit procedures on the individual financial
statement line items and disclosures and in the evaluation of the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
57
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, we do not provide
a separate opinion on these matters.
We summarise below the key audit matters in arriving at our audit opinion above, together with how
our audit addressed these matters and the results of our audit work in relation to these matters.
Key audit matter
How our audit addressed the key audit matter and our conclusions
Valuation and ownership of quoted investments
(as described on page 40 in the Report of the Audit
Committee and as per the
accounting policy on page 54 and
Note 9).
At 30 June 2023 the valuation of the investments portfolio
was £438.9m (2022: £439.1m), accounting for 98% (2022:
97%) of net assets.
As this is the largest component of the Company’s Statement
of Financial Positi
on, and a key driver of the Company’s net
assets and total return, this has been designated as a key audit
matter, being one of the most significant assessed risks of
material misstatement due to fraud or error.
There is a further risk that the investments
held at fair value
may not be actively traded and the quoted prices may not be
reflective of their fair value (valuation).
Additionally, there is a risk that the Company does not have
proper legal title to the investments recorded as held at year
end (own
ership).
We obtained and assessed controls reports provided by the
Administrators and the Custodians to evaluate the design of
the process and implementation of key controls.
We compared market prices and exchange rates applied to all
quoted investments h
eld at 30 June 2023 to an independent
third
-party source and recalculated the investment valuations.
We obtained average trading volumes from an independent
third
-party source for all quoted investments held at year end
as evidence of the existence of an a
ctive market, and noted no
significant illiquid holdings.
We agreed the ownership of all quoted investments at year end
to the independently received custodian report.
From our completion of these procedures, we identified no
material misstatements in rela
tion to the valuation and
ownership of the investments.
Revenue recognition, including allocation of special
dividends as revenue or capital returns
(as described on page 41 in the Report of the Audit
Committee and as per the accounting policy on page 54
and
Note 3).
Investment income recognised in the year to 30 June 2023
was £8.7m (2022: £9.4m), consisting primarily of dividend
income from quoted investments.
Revenue
-based performance metrics are often one of the key
performance indicators for stakeholde
rs. The investment
income received by the Company during the year directly
impacts these metrics and the minimum dividend required to
be paid by the Company.
There is a risk that revenue is incomplete or inaccurate
through failure to recognise income enti
tlements or failure to
appropriately account for their treatment. It has therefore
been designated as a key audit matter being one of the most
significant assessed risks of material misstatement due to
fraud or error.
Additionally, there is a risk of incor
rect allocation of special
dividends as revenue or capital returns as judgement is
required in determining their allocation within the Statement
of Comprehensive Income.
We obtained and assessed controls reports provided by the
Administrators to evaluate
the design of the process and
implementation of key controls.
We confirmed that income was recognised and disclosed in
accordance with the AIC SORP by assessing the accounting
policies.
We recalculated 100% of dividends due to the Company based
on invest
ment holdings throughout the year and dividend
announcements made by investee companies.
We agreed a sample of dividends received to bank statements.
We assessed the completeness of the special dividend
population with reference to third party market data
and
determined whether special dividends recognised were revenue
or capital in nature with reference to the underlying
commercial circumstances of the dividend payments.
Key observation
As a result of our completion of these procedures an
adjustment was re
corded in the financial statements to correct
a misallocation of dividend income from the capital column of
the Statement of Comprehensive Income to income within the
revenue column of the Statement of Comprehensive Income.
We have identified no other mate
rial misstatements in relation
to revenue recognition, including allocation of special
dividends as revenue or capital returns.
58
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it
probable that the economic decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality in determining the nature and extent of our work and in evaluating the
results of that work.
Materiality measure
Value
Materiality for the Financial Statements as a Whole – we have set materiality as
1% of net assets as we believe that net assets is the primary performance measure
used by investors and is the key driver of shareholder value. It is also the standard
industry benchma
rk for materiality for investment trusts and we determined the
measurement percentage to be commensurate with the risk and complexity of the
audit and the Company’s listed status.
£4.49m
(2022: £4.53m)
Performance Materiality – performance materiality represents amounts set by the
auditor at less than materiality for the financial statements as a whole, to reduce to
an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the financ
ial statements as a
whole.
In setting this we consider the Company’s overall control environment and any
experience of the audit that indicates a lower risk of material misstatements. Based
on our judgement of these factors, we have set performance materia
lity at 75% of
our overall financial statement materiality.
£3.37m
(2022: £3.40m)
Specific Materiality – recognising that there are transactions and balances of a
lesser amount which could influence the understanding of users of the financial
statements w
e calculate a lower level of materiality for testing such areas.
Specifically, given the importance of the distinction between revenue and capital for
the Company, we also applied a separate testing threshold for the revenue column
of the Statement of Comp
rehensive Income, set at the higher of 5% of the net return
before taxation and our Audit Committee Reporting Threshold.
We have also set a separate specific materiality in respect of related party
transactions and Directors’ remuneration.
We used our judg
ement in setting these thresholds and considered our experience
and industry benchmarks for specific materiality.
£0.37m
(2022: £0.41m)
Audit Committee Reporting Threshold – we agreed with the Audit Committee that
we would report to them all differences i
n excess of 5% of overall materiality in
addition to other identified misstatements that warranted reporting on qualitative
grounds, in our view. For example, an immaterial misstatement as a result of fraud.
£0.22m
(2022: £0.23m)
During the course of the audit, we reassessed initial materiality and found no reason to alter the basis of
calculation used at year-end.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the
Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of
accounting included:
■ Evaluating management’s method of assessing going concern, including assessment of loan
covenants and consideration of market conditions and uncertainties;
■ Assessing and challenging the forecast cashflows and associated sensitivity modelling used by
the Directors in support of their going concern assessment;
59
■ Obtaining and recalculating management’s assessment of the Company’s ongoing maintenance
of investment trust status;
■ Evaluating management’s assessment of the business continuity plans of the Company’s main
service providers; and
■ Assessing the adequacy of the Company’s going concern disclosures included in the Annual
Report.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the Company’s
ability to continue as a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the Directors’ statement in the financial
statements about whether the Directors considered it appropriate to adopt the going concern basis
of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are
described in the relevant sections of this report.
Other information
The other information comprises the information included in the Annual Report other than the financial
statements and our auditor’s report thereon. The Directors are responsible for the other information
contained within the Annual Report. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly
prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
■ The information given in the Strategic Report and the Directors’ Report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
■ The Strategic Report and the Directors’ Report have been prepared in accordance with
applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the Strategic Report or the
Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
■ Adequate accounting records have not been kept by the Company, or returns adequate for our
audit have not been received from branches not visited by us; or
60
■ The financial statements and the part of the Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and returns; or
■ Certain disclosures of Directors’ remuneration specified by law are not made; or
■ We have not received all the information and explanations we require for our audit; or
■ A corporate governance statement has not been prepared by the Company.
Corporate governance statement
We have reviewed the Directors’ Statement in relation to going concern, longer-term viability and that
part of the Corporate Governance Statement relating to the entity’s compliance with the provisions of
the UK Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is materially consistent with the financial statements
or our knowledge obtained during the audit:
■ The Directors’ statement with regards to the appropriateness of adopting the going concern basis
of accounting and any material uncertainties identified set out on page 31;
■ The Directors’ explanation as to its assessment of the Company’s prospects, the period this
assessment covers and why the period is appropriate set out on page 22;
■ The Directors’ statement on fair, balanced and understandable set out on page 37;
■ The Directors’ statement on whether it has a reasonable expectation that the Company will be
able to continue in operation and meets its liabilities set out on page 22;
■ The Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 19;
■ The section of the annual report that describes the review of the effectiveness of risk
management and internal control systems set out on pages 36 and 37; and
■ The section describing the work of the Audit Committee set out on pages 40 to 42.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 43, the Directors
are responsible for the preparation of the financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error. In preparing the financial statements, the Directors are responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Company
or to cease operations, or have no realistic alternative but to do so.
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
61
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
We assessed whether the engagement team collectively had the appropriate competence and
capabilities to identify or recognise non-compliance with laws and regulations by considering their
experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential
fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert
to any indications of fraud or non-compliance with laws and regulations throughout the audit.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the
Company and the sector in which it operates, focusing on those provisions that had a direct effect on
the determination of material amounts and disclosures in the financial statements. The most relevant
frameworks we identified include:
■ Companies Act 2006;
■ FCA listing and DTR rules;
■ The principles of the UK Corporate Governance Code applied by the AIC Code of Corporate
Governance (the “AIC Code”);
■ Industry practice represented by the Statement of Recommended Practice: Financial Statements
of Investment Trust Companies and Venture Capital Trusts (“the SORP”) issued in July 2022;
■ Financial Reporting Standard 102; and
■ The Company’s qualification as an investment trust under section 1158 of the Corporation Tax
Act 2010.
We gained an understanding of how the Company is complying with these laws and regulations by
making enquiries of management and those charged with governance. We corroborated these enquiries
through our review of relevant correspondence with regulatory bodies and board meeting minutes.
We assessed the susceptibility of the Company’s financial statements to material misstatement,
including how fraud might occur, by meeting with management and those charged with governance to
understand where it was considered there was susceptibility to fraud. This evaluation also considered
how management and those charged with governance were remunerated and whether this provided an
incentive for fraudulent activity. We considered the overall control environment and how management
and those charged with governance oversee the implementation and operation of controls. We
identified a heightened fraud risk in relation to the completeness and allocation of special dividends
(audit procedures performed in response to these risks are set out in the section on key audit matters
above) and management override (procedures in response to this risk are included below).
In addition to the above, the following procedures were performed to provide reasonable assurance that
the financial statements were free of material fraud or error:
■ Reviewing minutes of meetings of those charged with governance for reference to: breaches of
laws and regulation or for any indication of any potential litigation and claims; and events or
conditions that could indicate an incentive or pressure to commit fraud or provide an
opportunity to commit fraud;
■ Performing audit work procedures over the risk of management override of controls, including
testing of journal entries and other adjustments for appropriateness, recalculating the investment
management fee, evaluating the business rationale of significant transactions outside the normal
course of business and reviewing judgements made by management in their calculation of
accounting estimates for potential management bias;
62
■ Completion of appropriate checklists and use of our experience to assess the Company’s
compliance with the Companies Act 2006 and the Listing Rules; and
■ Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial
statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than
the risk of not detecting one resulting from error, as fraud may involve intentional concealment,
forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures
described above and the further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely we would become aware of it.
Other matters which we are required to address
Following the recommendation of the Audit Committee, we were appointed by the Board on 25 March
2020 to audit the financial statements for the year ended 30 June 2020 and subsequent financial
periods. The period of our total uninterrupted engagement is four years, covering the years ended 30
June 2020 to 30 June 2023.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company
and we remain independent of the Company in conducting our audit.
Our audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Richard Sutherland (Senior Statutory Auditor)
For and behalf of Johnston Carmichael LLP
Statutory Auditor
Edinburgh, United Kingdom
5 September 2023
63
Financial Statements
Statement of Comprehensive Income
For the year ended 30 June
Notes
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
2022
Revenue
£’000
2022
Capital
£’000
2022
Total
£’000
Gains/(losses) on investments
–
19,123
19,123
–
(45,017)
(45,017)
Currency gains
–
636
636
–
446
446
Income
3
8,725
–
8,725
9,377
–
9,377
Investment management fee
(575)
(1,726)
(2,301)
(609)
(1,828)
(2,437)
Other expenses
4
(572)
(8)
(580)
(488)
(8)
(496)
Net return/(loss) before
finance costs and taxation
7,578
18,025
25,603
8,280
(46,407)
(38,127)
Finance costs of borrowings
5
(167)
(506)
(673)
(83)
(252)
(335)
Net return/(loss) on ordinary
activities before taxation
7,411
17,519
24,930
8,197
(46,659)
(38,462)
Taxation on ordinary activities
6
(884)
–
(884)
(854)
–
(854)
Net return/(loss) on ordinary
activities after taxation
6,527
17,519
24,046
7,343
(46,659)
(39,316)
Net return/(loss) per ordinary
share
8
10.01p
26.86p
36.87p
11.72p
(74.47p)
(62.75p)
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.
The net return/(loss) for the year disclosed above represents the Company’s total comprehensive
income.
The accompanying notes on pages 54 to 65 are an integral part of the financial statements.
64
Statement of Financial Position
As at 30 June
Notes
2023
£’000
2022
£’000
Non-current assets
Investments held at fair value through profit or loss
9
438,938
439,101
Current assets
Debtors
10
675
24,969
Cash and cash equivalents
11
12,243
7,096
12,918
32,065
Creditors
Amounts falling due within one year
12
(2,830)
(18,513)
Net current assets
10,088
13,552
Total net assets
449,026
452,653
Capital and reserves
Called up share capital
13
3,320
3,271
Capital redemption reserve
14
16
16
Share premium
14
242,115
235,110
Capital reserve
14
196,730
206,979
Revenue reserve
14
6,845
7,277
Shareholders’ funds
449,026
452,653
Net asset value per ordinary share
15
719.84p
692.01p
These financial statements were approved by the Board of Directors and signed on its behalf on
5 September 2023.
Russell Napier
Chairman
The accompanying notes on pages 54 to 65 are an integral part of the financial statements.
65
Statement of Changes in Equity
For the year ended 30 June 2023
Notes
Share
capital
£’000
Capital
redemption
reserve
£’000
Share
premium
£’000
Capital
reserve
1,2
£’000
Revenue
reserve
2
£’000
Shareholders’
funds
£’000
Shareholders’ funds at 1 July
2022
3,271
16
235,110
206,979
7,277
452,653
Net return on ordinary activities
after taxation
–
–
–
17,519
6,527
24,046
Issue of new shares (net of costs)
14
49
–
6,946
–
–
6,995
Issue of shares from treasury
14
–
–
59
1,116
–
1,175
Repurchase of shares into
treasury
14
–
–
–
(28,884)
–
(28,884)
Dividends paid
7
–
–
–
–
(6,959)
(6,959)
Shareholders’ funds at
30 June 2023
14
3,320
16
242,115
196,730
6,845
449,026
For the year ended 30 June 2022
Notes
Share
capital
£’000
Capital
redemption
reserve
£’000
Share
premium
£’000
Capital
reserve
1,2
£’000
Revenue
reserve
2
£’000
Shareholders’
funds
£’000
Shareholders’ funds at 1 July
2021
2,997
16
191,253
253,638
4,189
452,093
Net (loss)/return on ordinary
activities after taxation
–
–
–
(46,659)
7,343
(39,316)
Issue of new shares (net of costs)
14
274
–
43,857
–
–
44,131
Dividends paid
7
–
–
–
–
(4,255)
(4,255)
Shareholders’ funds at 30 June
2022
14
3,271
16
235,110
206,979
7,277
452,653
1 Capital reserve as at 30 June 2023 includes realised gains of £155,914,000 (30 June 2022: £191,640,000).
2 The Company may pay dividends from both capital and revenue reserves.
The accompanying notes on pages 54 to 65 are an integral part of the financial statements.
Registered in Scotland. Registration number: SC042651
66
Statement of Cash Flows
For the year ended 30 June
Notes
2023
£’000
2023
£’000
2022
£’000
2022
£’000
Cash generated in operations
16
5,486
4,768
Interest received
3
286
10
Interest paid
(704)
(335)
(418)
(325)
Net cash inflow from operating
activities
5,068
4,443
Cash flow from investing
activities
Purchase of investments
(554,175)
(689,754)
Sale of investments
585,162
639,527
Realised currency gains
28
1,517
Net cash generated from/(used
in) investing activities
31,015
(48,710)
Cash flow from financing
activities
Issue of new shares, net of costs
6,995
44,131
Issue of shares from treasury
1,175
–
Repurchase of share to treasury,
net of costs
(26,804)
–
Dividends paid
7
(6,959)
(4,255)
Net repayment of credit facility
(5,292)
(5,064)
Net cash (used in)/generated
from financing activities
(30,885)
34,812
Net increase/(decrease) in cash
and cash equivalents
5,198
(9,455)
Cash and cash equivalents at
start of the year
7,096
16,556
Increase/(decrease) in cash in the
year
5,198
(9,455)
Currency losses on cash and cash
equivalents
(51)
(5)
Cash and cash equivalents at end
of the year
12,243
7,096
The accompanying notes on pages 54 to 65 are an integral part of the financial statements.
67
Notes to the Financial Statements
1. General information
Mid Wynd International Investment Trust PLC is an investment trust company domiciled in the United
Kingdom and incorporated in Scotland.
The address of its registered office is 6th Floor, Exchange Plaza, 50 Lothian Road Edinburgh, EH3
9BY. The ordinary shares of the Company are premium listed on the London Stock Exchange. The
Company’s registered number is SC042651.
2. Accounting policies
(a) Basis of accounting
The financial statements are prepared on a going concern basis under the historical cost convention
modified to include the revaluation of investments.
The financial statements have been prepared in accordance with the Companies Act 2006, applicable
United Kingdom accounting standards, including Financial Reporting Standard (‘FRS’) 102, and the
Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and
Venture Capital Trusts’ (the ‘SORP’) issued by the Association of Investment Companies (the ‘AIC’)
in July 2022.
In order to better reflect the activities of the Company and in accordance with guidance issued by the
AIC, supplementary information which analyses the profit and loss account between items of a revenue
and capital nature has been presented in the Statement of Comprehensive Income.
Financial assets and financial liabilities are recognised in the Company’s Statement of Financial
Position when it becomes a party to the contractual provisions of the instrument.
No significant estimates or judgements have been made in the preparation of the financial statements.
The Directors consider the Company’s functional currency to be Sterling as the Company’s
shareholders are predominantly based in the UK and the Company is subject to the UK’s regulatory
environment.
(b) Investments
Purchases and sales of investments are accounted for on a trade date basis. Investments are designated
as held at fair value through profit or loss on initial recognition and are measured at subsequent
reporting dates at fair value. The fair value of listed investments is bid value or last traded prices for
holdings on certain recognised overseas exchanges.
Changes in the value of investments held at fair value through profit or loss and gains and losses on
disposal are recognised in the Statement of Comprehensive Income as gains/ (losses) on investments.
Also included within this caption are transaction costs in relation to the purchase or sale of
investments. Assets are derecognised at the trade date of the disposal.
Proceeds are measured at fair value which are regarded as the proceeds of sale less any transaction
costs.
(c) Derivatives
The Company may use derivatives for the purpose of efficient portfolio management (including
reducing, transferring or eliminating risk in its investments and protection against currency risk) and to
achieve capital growth. No derivatives were used by the Company during this year or the
preceding year.
(d) Financial instruments
The Company’s financial instruments comprise securities, cash balances, receivables and payables that
arise directly from its operations; for example, in respect of sales and purchases awaiting settlement,
68
and receivables for accrued income. Other debtors and creditors do not carry any interest, are short-
term in nature and are accordingly stated at nominal value.
(e) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term
highly liquid investments with original maturities of three months or less.
(f) Bank borrowings
The Company has a three year credit facility with The Bank of Nova Scotia. The amounts borrowed
are disclosed as the amounts received. The arrangement fee in relation to the facility is amortised over
the three year period on a straight line basis. A monthly non-utilisation fee is charged on the unused
balance.
(g) Income
Income from equity investments is brought into account on the date on which the investments are
quoted ex-dividend or, where no ex-dividend date is quoted, when the Company’s right to receive
payment is established. Unfranked investment income includes the taxes deducted at source. Franked
investment income is stated net of tax credits. If scrip is taken in lieu of dividends in cash, the net
amount of the cash dividend declared is credited to the revenue account. Any excess in the value of the
shares received over the amount of the cash dividend foregone is recognised as capital. Special
dividends are reviewed on a case by case basis when determining if a dividend is to be treated as
revenue or capital. It is likely that where a special dividend results in a significant reduction in the
capital value of a holding, then the dividend will generally be treated as capital, otherwise this will be
recognised as revenue. Interest from fixed interest securities is recognised on an effective interest rate
basis. Interest receivable on deposits is recognised on an accruals basis.
(h) 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 enhancement of the value of investments are charged to the capital reserve.
Management fees are accounted for on an accruals basis and allocated 25% to the revenue reserve and
75% to the capital reserve. Costs arising from the filing of claims to reclaim tax on overseas dividends
have been deducted from the revenue reserve.
(i) Finance costs
Loan interest is accounted for on an accruals basis and has been allocated 25% to the revenue reserve
and 75% to the capital reserve.
(j) Taxation
Taxation represents the sum of taxation payable, any withholding tax suffered and any deferred tax.
Taxation is charged or credited in the Statement of Comprehensive Income. Any taxation payable is
based on the Company’s profit for the year, calculated using tax rates in force at the balance sheet date.
Deferred taxation is recognised in full using the balance sheet liability method, providing for temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for taxation purposes.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance
sheet date. Deferred tax assets are recognised only to the extent that it is probable that future taxable
profits will be available against which the asset can be utilised.
Due to the Company’s status as an investment trust, and the intention to continue meeting the
conditions required, the Company has not provided for deferred tax on any capital gains and losses
arising on the revaluation or disposal of investments.
69
(k) Foreign currencies
Transactions involving foreign currencies are converted at the rate ruling at the time of the transaction.
Monetary assets and liabilities in foreign currencies are translated at the closing rates of exchange at
the date of the Statement of Financial Position, with the exception of forward currency contracts which
are valued at the forward rate on that date. Any gain or loss arising from a change in exchange rates
subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or
revenue reserve as appropriate.
(l) Reserves
Capital reserve
This reserve reflects any gains or losses on investments realised in the period along with any increases
and decreases in the fair value of investments held that have been recognised in the Statement of
Comprehensive Income. These include gains and losses from foreign currency exchange differences
and gains on the return of capital by way of investee companies paying dividends that are capital in
nature. Expenses may also be charged to this reserve in accordance with the above policies. This
reserve is distributable by way of dividend.
Capital redemption reserve
This reserve includes the nominal value of all shares bought back and cancelled by the Company. This
reserve is not distributable.
Revenue reserve
The revenue profit or loss for the year is taken to or from this reserve. This reserve is distributable by
way of dividend.
(m) Segmental reporting
The Company has only one material segment of business being that of an investment trust company.
3. Income
2023
£’000
2022
£’000
Income from investments
Overseas dividends
7,447
8,149
UK dividends
992
1,110
Scrip dividends
–
108
8,439
9,367
Other income
Bank interest
286
10
Total income
8,725
9,377
Total income comprises:
Dividends and UK interest from financial assets designated at fair value
through profit or loss
8,439
9,367
Other income
286
10
Total income
8,725
9,377
70
4. Other expenses
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
2022
Revenue
£’000
2022
Capital
£’000
2022
Total
£’000
Directors’ remuneration
149
–
149
140
–
140
Depositary fees
55
–
55
73
–
73
Custody fees
50
8
58
57
8
65
Auditor’s remuneration
33
–
33
28
–
28
Stock exchange fees
29
–
29
24
–
24
Printing fees
21
–
21
21
–
21
Registrar fees
19
–
19
20
–
20
Directors’ & officers’ insurance
13
–
13
15
–
15
Other expenses
203
–
203
110
–
110
572
8
580
488
8
496
* Other expenses include AIC membership fees, Directors’ expenses, FCA fees, Taxation fees and public relations costs.
5. Finance costs of borrowings
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
2022
Revenue
£’000
2022
Capital
£’000
2022
Total
£’000
Loan interest
115
343
458
47
143
190
Loan non-utilisation fee
48
145
193
33
99
132
Bank overdraft interest
4
18
22
3
10
13
Finance costs
167
506
673
83
252
335
6. Taxation on ordinary activities
a) Tax charge for the year
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
2022
Revenue
£’000
2022
Capital
£’000
2022
Total
£’000
Overseas taxation
884
–
884
854
–
854
Total tax
884
–
884
854
–
854
b) Factors affecting the tax charge for the year
The tax charge for the year is lower (2022: higher) than the average standard rate of corporation tax in
the UK (20.50%) as explained below:
The differences are explained below:
2023
£’000
2022
£’000
Net return/(loss) on ordinary activities before taxation
24,930
(38,462)
Net return/(loss) on ordinary activities multiplied by the average standard rate of
corporation tax in the UK of 20.50% (2022: 19.00%)
5,111
(7,308)
Effects of:
Overseas tax – non offsettable
884
854
Taxable losses in the year not utilised
563
533
Double taxation relief expensed
(17)
(11)
Non taxable scrip dividends
–
(20)
Income not taxable (UK dividends)
(203)
(211)
Income not taxable (overseas dividends)
(1,403)
(1,451)
Capital (return)/loss not taxable
(4,051)
8,468
Current tax charge for the year
884
854
Starting 1 April 2023, corporation tax increased from 19% to 25%. The applicable tax rate for the year
of 20.5% is the effective rate of tax for the year.
71
Factors that may affect future tax charges
At 30 June 2023, the Company had a potential deferred tax asset of £3,695,000 (2022: £3,039,000)
based on a prospective corporation tax rate of 20.5% (2022: 19.0%), in respect of taxable losses which
are available to be carried forward and offset against future taxable profits. A deferred tax asset has not
been recognised on these losses as it is considered unlikely that the Company will make suitable
taxable revenue profits in excess of deductible expenses in future periods. Due to the Company’s status
as an investment trust, and the intention to continue meeting the conditions required to obtain approval
in the foreseeable future, the Company has not provided for deferred tax on any capital gains and
losses arising on the revaluation or disposal of investments.
7. Dividends paid and proposed
2023
2022
2023
£’000
2022
£’000
Amounts recognised as distributions in the year:
Unclaimed dividends refunded to the Company
–
–
–
(14)
Previous year’s final dividend
3.70p
3.30p
2,431
2,018
Previous year’s special dividend
3.00p
nil
1,972
nil
First interim dividend
3.85p
3.50p
2,556
2,251
Total dividend
10.55p
6.80p
6,959
4,255
Set out below are the total dividends paid and payable in respect of the financial year. The revenue
available for distribution by way of dividend for the year is £6,527,000 (2022: £7,343,000).
2023
2022
2023
£’000
2022
£’000
Dividends paid and payable in respect of the year:
First interim dividend
3.85p
3.50p
2,556
2,251
Proposed final dividend
3.95p
3.70p
2,463
2,431
Special dividend
1.70p
3.00p
667
1,972
Total dividend
9.50p
10.20p
5,686
6,654
8. Net return/(loss) per ordinary share
2023
Revenue
2023
Capital
2023
Total
2022
Revenue
2022
Capital
2022
Total
Net return/(loss) on ordinary
activities after taxation
10.01p
26.86p
36.87p
11.72p
(74.47p)
(62.75p)
Revenue return per ordinary share is based on the net revenue return on ordinary activities after
taxation for the financial year of £6,527,000 (2022: £7,343,000) and on 65,211,820 (2022: 62,652,936)
ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury
shares) during the year.
Capital gain per ordinary share is based on the net capital gain on ordinary activities after taxation for
the financial year of £17,519,000 (2022: loss £46,659,000) and on 65,211,820 (2022: 62,652,936)
ordinary shares, being the weighted average number of ordinary shares in issue during the year.
9. Non-current assets – investments
Investments in securities are financial assets designated at fair value through profit or loss on initial
recognition in accordance with FRS 102. The following tables provide 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 levels are determined by the lowest (that is the least reliable or least independently observable)
level of input that is significant to the fair value measurement for the individual investment in its
entirety as follows:
Level 1 – investments using unadjusted quoted prices for identical instruments in an active market;
72
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).
Year ended
30 June
2023
£’000
Year ended
30 June
2022
£’000
Quoted (Level 1)
438,938
439,101
Total financial asset investments
438,938
439,101
Year ended
30 June 2023
Year ended
30 June 2022
Total
£’000
Total
£’000
Opening book cost
423,603
367,405
Fair value adjustment
15,498
78,187
Opening valuation
439,101
445,592
Purchases at cost
542,350
701,579
Disposals – proceeds
(561,636)
(663,053)
Gains/(losses) on investments
19,123
(45,017)
Closing valuation
438,938
439,101
Closing book cost
398,145
423,603
Fair value adjustment
40,793
15,498
438,938
439,101
The purchases and sales proceeds figures above include transaction costs of £417,000 on purchases
(2022: £521,000) and £203,000 on sales (2022: £224,000), making a total of £620,000 (2022:
£745,000).
The Company received £561,636,000 (2022: £663,053,000) from investments sold in the year. The
book cost of these investments when they were purchased was £567,808,000 (2022: £645,381,000).
These investments have been revalued over time and until they were sold any unrealised gains/losses
were included in the fair value of the investments.
All investments are considered level 1. There have been no transfers between levels during the year.
10. Debtors
2023
£’000
2022
£’000
Income accrued (net of irrecoverable overseas withholding tax)
280
1,097
Other debtors and prepayments
395
346
Sales for subsequent settlement
–
23,526
Total debtors
675
24,969
None of the above debtors are financial assets designated at fair value through profit or loss. The
carrying amount of the debtors is a reasonable approximation of fair value.
11. Cash and cash equivalents
2023
£’000
2022
£’000
Amounts held in Northern Trust Global Liquidity Fund – US Dollar
Liquidity Fund
9,547
–
Cash and bank balances (including Spots contracts)
2,696
3,868
Amounts held in JPMorgan Liquidity Funds – US Dollar Liquidity Fund
(Institutional dist.)
–
3,228
Total cash and cash equivalents
12,243
7,096
73
12. Creditors – amounts falling due within one year
2023
£’000
2022
£’000
Payable on repurchase of ordinary shares into treasury
2,080
–
Other creditors and accruals
750
737
Purchases for subsequent settlement
–
11,825
Bank loans
–
5,951
Total creditors
2,830
18,513
The Company has a three year multi-currency revolving credit facility with The Bank of Nova Scotia
for US$60 million (2022: US$60 million), terminating in February 2024. Further information can be
found in note 20.
13. Called up share capital
(a) Share capital
2023
Number
2023
£’000
2022
Number
2022
£’000
Allotted, called up and fully paid:
Ordinary shares of 5p each
62,378,452
3,120
65,411,114
3,271
Ordinary shares of 5p each held in treasury
4,002,662
200
–
–
66,381,114
3,320
65,411,114
3,271
(b) Ordinary shares
Shares
£’000
Movements in ordinary shares during the year:
Ordinary shares in issue on 1 July 2022
65,411,114
3,271
Issuance of ordinary shares
970,000
49
Net movement of ordinary shares in treasury
(4,002,662)
(200)
Ordinary shares in issue on 30 June 2023
62,378,452
3,120
The movements in ordinary shares held in treasury during the year are as follows:
2023
Shares
2023
£’000
2022
Shares
2022
£’000
Balance brought forward
–
–
–
–
Repurchases of ordinary shares
4,165,862
208
–
–
Sale of ordinary shares
(163,200)
(8)
–
–
Balance carried forward
4,002,662
200
–
–
During the year ended 30 June 2023, the Company repurchased 4,002,662 shares into treasury
(2022: nil).
74
14. Capital and reserves
Share
capital
£’000
Capital
redemption
reserve
£’000
Share
premium
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Shareholde
rs’
funds
£’000
At 1 July 2022
3,271
16
235,110
206,979
7,277
452,653
Losses on sales of investments
–
–
–
(6,172)
–
(6,172)
Currency gain on bank loans
–
–
–
659
–
659
Finance costs charged to capital
–
–
–
(506)
–
(506)
Other currency losses
–
–
–
(23)
–
(23)
Expenses charged to capital
–
–
–
(1,734)
–
(1,734)
Issue of new shares
49
–
6,946
–
–
6,995
Issue of shares from treasury
–
–
59
1,116
–
1,175
Repurchase of shares into treasury
–
–
–
(28,884)
–
(28,884)
Changes in unrealised gains
–
–
–
25,295
–
25,295
Revenue return on ordinary activities
after taxation
–
–
–
–
6,527
6,527
Dividends paid
–
–
–
–
(6,959)
(6,959)
At 30 June 2023
3,320
16
242,115
196,730
6,845
449,026
The capital reserve includes unrealised gains on non-current asset investments of £40,793,000 (2022:
£15,498,000) as disclosed in note 9.
The capital reserve and the revenue reserve are distributable by way of dividend.
15. Net asset value per ordinary share
The net asset value per ordinary share and the net assets attributable to the ordinary shareholders at the
year end were as follows:
2023
Net asset
value per
share
2023
Net assets
£’000
2022
Net asset
value per
share
2022
Net assets
£’000
Ordinary shares
719.84p
449,026
692.01p
452,653
During the year the movements in the assets attributable to the ordinary shares were as follows:
2023
£’000
2022
£’000
Total net assets at 1 July
452,653
452,093
Total recognised gains/(losses) for the year
24,046
(39,316)
Issue of new shares
6,995
44,131
Issue of shares from treasury
1,175
–
Repurchase of shares into treasury
(28,884)
–
Dividends paid
(6,959)
(4,255)
Total net assets at 30 June
449,026
452,653
Net asset value per ordinary share is based on net assets as shown above and on 62,378,452 (2022:
65,411,114) ordinary shares, being the number of ordinary shares in issue at the year end.
75
16. Reconciliation of net return/(loss) before finance costs and taxation to cash generated from
operations
At 30 June 2023, the Company did not have any financial commitments which had not been accrued
(2022: nil).
2023
£’000
2022
£’000
Net return/(loss) before finance costs and taxation
25,603
(38,127)
(Gains)/losses on investments
(19,123)
45,017
Currency gains
(636)
(446)
Increase in accrued income and other debtors
768
(847)
Interest received
(286)
(10)
(Decrease)/increase in creditors
44
35
Overseas tax suffered
(884)
(854)
Cash generated from operations
5,486
4,768
17. Analysis of changes in net cash
At 1 July
2022
£'000
Cashflow
£'000
Exchange
movements
£'000
At 30 June
2023
£'000
Cash and cash equivalents
7,096
5,198
(51)
12,243
Debt due within one year
(5,951)
5,292
659
–
Total
1,145
10,490
608
12,243
18. Contingent liabilities, guarantees and financial commitments
At 30 June 2023 and 30 June 2022 the Company had no contingent liabilities, guarantees or financial
commitments.
19. Transactions with the investment manager and related parties
The investment management fees payable to Artemis are disclosed in the Statement of Comprehensive
Income on page 50. The amount outstanding at 30 June 2023 was £561,000 (2022: £597,000). 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.
Fees payable during the year to the Directors and their interests in shares of the Company are
considered to be related party transactions and are disclosed within the Directors’ Remuneration Report
on pages 38 to 39.
20. Financial Instruments
As an investment trust, the Company invests in equities and makes other investments so as to meet its
investment objective of achieving capital and income growth by investing on a worldwide basis. In
pursuing its investment objective, the Company is exposed to various types of risk that are associated
with the financial instruments and markets in which it invests.
These risks are categorised here as market risk (comprising currency risk, interest rate risk and other
price risk), liquidity risk and credit risk. The Board monitors closely the Company’s exposure to these
risks but does so in order to reduce the likelihood of a permanent loss of capital rather than to minimise
the short-term volatility.
The Company may enter into derivative transactions as explained in the investment policy on page 54.
In the period under review, the Company did not enter into any forward foreign exchange contracts. At
the year end there were no open positions (2022: no open positions).
76
Market risk
The fair value or future cash flows of a financial instrument or other investment held by the Company
may fluctuate because of changes in market prices. This market risk comprises three elements –
currency risk, interest rate risk and other price risk. The Board reviews and agrees policies for
managing these risks and the Company’s investment manager assesses the exposure to market risk
when making individual investment decisions and monitors the overall level of market risk across the
investment portfolio on an ongoing basis. Details of the Company’s investment portfolio are shown in
note 9 and on pages 11 and 12.
(i) Currency risk
Certain of the Company’s assets, liabilities and income are denominated in currencies other than
Sterling (the Company’s functional currency and that in which it reports its results). Consequently,
movements in exchange rates may affect the Sterling value of those items.
The investment manager monitors the Company’s exposure to foreign currencies and reports to the
Board on a regular basis.
The investment manager assesses the risk to the Company of the foreign currency exposure by
considering the effect on the Company’s net asset value and income of a movement in the rates of
exchange to which the Company’s assets, liabilities, income and expenses are exposed. However, the
country in which a company is listed is not necessarily where it earns its profits. The movement in
exchange rates on overseas earnings may have a more significant impact upon a company’s valuation
than a simple translation of the currency in which the company is quoted.
Foreign currency borrowings may limit the Company’s exposure to anticipated future changes in
exchange rates which might otherwise adversely affect the value of the portfolio of investments.
At 30 June 2023
Investments
£’000
Cash and
cash
equivalents
£’000
Bank
loan
£’000
Other
debtors and
creditors
£’000
Net
exposure
£’000
US Dollar
256,691
9,626
–
207
266,524
Japanese Yen
55,114
318
–
–
55,432
Euro
43,282
–
–
131
43,413
Singapore Dollar
15,209
–
–
–
15,209
Taiwan Dollar
13,100
–
–
136
13,236
Swiss Franc
9,497
–
–
–
9,497
Danish Krone
8,602
–
–
36
8,638
Korean Won
7,155
–
–
28
7,183
Swedish Krona
6,636
–
–
–
6,636
Norwegian Krone
1,215
–
–
–
1,215
Total exposure to currency risk
416,501
9,944
–
538
426,983
Sterling
22,437
2,299
–
(2,693)
22,043
Total
438,938
12,243
–
(2,155)
449,026
77
At 30 June 2022
Investments
£’000
Cash and
cash
equivalents
£’000
Bank
loan
£’000
Other
debtors and
creditors
£’000
Net
exposure
£’000
US Dollar
276,810
1,354
(1,647)
7,271
283,788
Japanese Yen
29,396
2,063
–
(889)
30,570
Singapore Dollar
23,304
39
–
–
23,343
Euro
26,877
215
(4,304)
115
22,903
Swedish Krona
14,507
–
–
298
14,805
Hong Kong Dollar
12,308
633
–
(159)
12,782
Taiwan Dollar
7,871
–
–
4,490
12,361
Korean Won
11,615
–
–
51
11,666
Swiss Franc
11,080
–
–
–
11,080
Danish Krone
6,839
–
–
25
6,864
Canadian Dollar
5,659
–
–
29
5,688
Norwegian Krone
1,632
–
–
–
1,632
Total exposure to currency risk
427,898
4,304
(5,951)
11,231
437,482
Sterling
11,203
2,792
–
1,176
15,171
Total
439,101
7,096
(5,951)
12,407
452,653
Currency risk sensitivity
At 30 June 2023, if Sterling had strengthened by 5% in relation to all currencies, with all other
variables held constant, total net assets and total return on ordinary activities would have decreased by
the amounts shown below.
A 5% weakening of Sterling against all currencies, with all other variables held constant, would have
had an equal but opposite effect on the amounts included in the financial statements. The analysis is
performed on the same basis as for 2022.
2023
£’000
2022
£’000
US Dollar
13,326
14,189
Japanese Yen
2,772
1,529
Euro
2,171
1,145
Singapore Dollar
760
1,167
Taiwan Dollar
662
618
Swiss Franc
475
554
Danish Krone
432
343
Korean Won
359
583
Swedish Krona
332
740
Norwegian Krone
61
82
Hong Kong dollar
–
639
Canadian Dollar
–
284
21,350
21,873
(ii) Interest rate risk
Interest rate movements may affect directly:
■ the fair value of the investments in fixed interest rate securities;
■ the level of income receivable on cash deposits; and
■ the interest payable on the value of the Company’s borrowings.
Interest rate movements may also impact the market value of the Company’s investments outwith fixed
income securities.
The effect of interest rate movements upon the earnings of a company may have a significant impact
upon the valuation of that company’s equity. The possible effects on fair value and cash flows that
78
could arise as a result of changes in interest rates are taken into account when making investment
decisions and when entering into borrowing agreements.
Based on the Company’s monetary financial instruments at each balance sheet date, an increase of 2%
in interest rates, with all other variables being held constant, would increase the Company’s total net
assets and total return for the year to 30 June 2023 by £245,000 (30 June 2022: £23,000). This is
mainly due to the Company’s exposure to interest rates on its cash balances held. A decrease of 2%
would have an equal but opposite effect.
The Board reviews on a regular basis the amount of investments in cash and fixed income securities
and the income receivable on cash deposits, floating rate notes and other similar investments.
The interest rate risk profile of the Company’s financial assets and liabilities at 30 June 2023 and 30
June 2022 is shown below.
Financial assets
The Company’s cash balances are primarily maintained in US Dollar Liquidity Funds. The interest
received is determined by the interest rate in the relevant country of the currency.
Financial liabilities
The interest rate risk profile of the Company’s bank loan is shown below.
Interest rate exposure
2023
£’000
2022
£’000
Euro
–
4,304
US dollar
–
1,647
Total exposure
–
5,951
As at the year end, the Company had a three year multi-currency revolving credit facility with The
Bank of Nova Scotia (UK Branch) for US$60 million terminating on 19 February 2024. Taking
account of the current high interest environment, the Board has resolved to terminate the facility with
The Bank of Nova Scotia.
The Company pays interest separately on each currency drawn down. Interest is charged on each
currency at variable rates. Sterling is calculated with reference to RFR (Risk-free rate); US dollar with
reference to SOFR (Secured Overnight Financing Rate) RFR and Japanese yen with reference to
TONAR (Tokyo Overnight Averaged Rate) RFR.
No currency drawn down as at 30 June 2023.
As at 30 June 2022 US$2.0 million (£1.6 million) was drawn down at the interest rate of 2.36% and
€5.0 million (£4.3 million) was drawn down at the interest rate of 1.30%.
The main covenants relating to the revolving credit facility are:
(i) Total borrowings shall not exceed 33.33% (2022: 33.33%) of the Company’s investment
portfolio.
(ii) The Company’s minimum net asset value shall be £170 million (2022: £170 million).
Interest rate risk sensitivity on bank borrowings
As the majority of the Company’s financial assets are non-interest bearing and the loan can be repaid
within the next 12 months the exposure to fair value interest rate fluctuations on bank loans is limited.
(iii) Other price risk
Changes in market prices other than those arising from interest rate risk or currency risk may also
affect the value of the Company’s net assets.
79
The Board manages the market price risks inherent in the investment portfolio by ensuring full and
timely access to relevant information from the investment manager. The Board meets regularly and at
each meeting reviews investment performance, the investment portfolio and the rationale for the
current investment positioning to ensure consistency with the Company’s objectives and investment
policies. The portfolio does not seek to reproduce the index. Investments are selected based upon the
merit of individual companies and therefore performance may well diverge from short term
fluctuations in the comparative index.
Other price risk sensitivity
Investments are valued at bid prices which equate to their fair value. A full list of the Company’s
investments is given on pages 11 and 12. In addition, an analysis of the investment portfolio by
geographical split is given on page 13. A 5% increase in quoted valuations at 30 June 2023 would have
increased total assets, and the total return on ordinary activities after taxation by £21,947,000 (2022:
£21,955,000). A decrease of 5% would have had an equal but opposite effect.
Liquidity risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with
financial liabilities.
The Alternative Investment Fund Manager (“AIFM”) has a liquidity management policy for the
Company which is intended to ensure that the Company’s investment portfolio maintains a level of
liquidity which is appropriate to the Company’s expected outflows, which include share buy backs,
dividends and operational expenses. This policy involves an assessment of the prices or values at
which it expects to be able to liquidate its assets over varying hypothetical periods in varying market
conditions, taking into account the sensitivity of particular assets to particular market risks and other
relevant factors.
This requires the AIFM to identify and monitor investment in asset classes which are considered to be
relatively illiquid. Illiquid assets of the Company are likely to include investments in unquoted
companies. None of the Company’s investments were unquoted in the current year or prior year. The
quoted companies in the portfolio are generally deemed to be liquid but from time to time, however,
liquidity in these holdings may be affected by wider economic events. The Company’s portfolio is
monitored on an ongoing basis to ensure that it is adequately diversified and liquid. The AIFM’s
liquidity management policy is reviewed on at least an annual basis and updated, as required.
There have been no material changes to the liquidity management systems and procedures during the
year. In addition, none of the Company’s assets are subject to special arrangements arising from their
illiquid nature.
The Company has the power to enter into borrowings, which gives it access to additional funding when
required.
Credit and counterparty risk
This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that
transaction could result inthe Company suffering a loss.
This risk is managed as follows:
■ The Company’s quoted investments and cash are held on its behalf by the Company’s Custodian
and Banker. Bankruptcy or insolvency of the Custodian may cause the Company’s rights with
respect to securities held by the Custodian to be delayed. The investment manager monitors the
Company’s risk by reviewing the Custodian’s internal control reports and reporting on their
findings to the Board.
■ Investment transactions are carried out with a large number of brokers whose creditworthiness is
reviewed by the investment manager. Transactions are ordinarily undertaken on a delivery
versus payment basis whereby the Company’s Custodian ensures that the counterparty to any
80
transaction entered into by the Company has delivered on its obligations before any transfer of
cash or securities away from the Company is completed.
■ Transactions involving derivatives, and other arrangements wherein the creditworthiness of the
entity acting as broker or counterparty to the transaction is likely to be of sustained interest, are
subject to rigorous assessment by the Investment Manager of the creditworthiness of that
counterparty.
Fair value of financial assets and financial liabilities
The Directors are of the opinion that the financial assets and liabilities of the Company are stated at fair
value in the balance sheet.
Capital management
The capital of the Company is its share capital and reserves as set out in notes 13 and 14 together with
its borrowings (see note 12). The objective of the Company is to achieve capital and income growth by
investing on a worldwide basis. The Company’s investment policy is set out in page 15. In pursuit of
the Company’s objective, the Board has a responsibility for ensuring the Company’s ability to continue
as a going concern and details of the related risks and how they are managed are set out on pages 19 to
21. The Company has the ability to issue and buy back its shares (see page 18) and changes to the share
capital during the year are set out in note 13. The Company does not have any externally imposed
capital requirements.
21. Post Balance Sheet Events
At at 31 August 2023, a further 4,466,418 shares have been bought back to be held in Treasury for net
consideration of £31.3 million.
On 31 August 2023, the Company gave Notice of a General Meeting at which shareholder authority
will be sought to ensure the Company’s buyback authorities are not exhausted and the Company is able
to continue to buy back shares in the period up until the 2023 AGM. The General Meeting will be held
at 10.00 a.m. on 8 September 2023 at the offices of Dickson Minto, 16 Charlotte Square, Edinburgh
EH2 4DF.
On 5 September 2023, the Board resolved to terminate the revolving credit facility with the Bank of
Nova Scotia.
81
Shareholder information
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Mid Wynd International Investment Trust
PLC will be held at the offices of Dickson Minto, 16 Charlotte Square, Edinburgh, EH2 4DF on 26
October 2023 at 12 noon (the ‘Meeting’) for the following purposes:
Ordinary Business
To consider and, if thought fit, pass Resolutions 1 to 12 (inclusive) which will be proposed as ordinary
resolutions:
1. To receive and adopt the Annual Financial Report of the Company for the year ended 30 June
2023 together with the Report of the Directors.
2. To approve the Directors’ Remuneration Policy.
3. To approve the Directors’ Remuneration Report for the year ended 30 June 2023.
4. To approve a final dividend of 3.95 pence per ordinary share for the year ended 30 June 2023.
5. To re-elect Russell Napier as a Director of the Company.
6. To re-elect Diana Dyer Bartlett as a Director of the Company.
7. To re-elect David Kidd as a Director of the Company.
8. To re-elect Alan Scott as a Director of the Company.
9. To elect Hamish Baillie as a Director of the Company.
10. To re-appoint Johnston Carmichael LLP as Auditor of the Company to hold office from the
conclusion of the Meeting until the conclusion of the next meeting at which the financial
statements are laid before the Company.
11. To authorise the Directors to determine the remuneration of the Auditor.
12. That, in substitution for any existing authority, but without prejudice to the exercise of any such
authority prior to the date hereof, the Directors of the Company be and they are hereby generally
and unconditionally authorised in accordance with Section 551 of the Companies Act 2006 (the
‘Act’) to exercise all the powers of the Company to allot new shares in the Company and to
grant rights to subscribe for, or to convert any security into, ordinary shares in the Company
(such shares and rights together being ‘Securities’) up to an aggregate nominal value of
£964,235, being equal to approximately 33.3% of the Company’s issued share capital (excluding
treasury shares) as at 31 August 2023, to such persons and on such terms as the Directors may
determine, such authority to expire at the conclusion of the next annual general meeting of the
Company held after the passing of this resolution, unless previously revoked, varied or extended
by the Company in a general meeting, save that the Company may at any time prior to the
expiry of this authority make an offer or enter into an agreement which would or might require
Securities to be allotted or granted after the expiry of such authority and the Directors shall be
entitled to allot or grant Securities in pursuance of such an offer or agreement as if such
authority had not expired.
To consider and, if thought fit, to pass Resolution 13, which will be proposed as a special
resolution:
13. That, in substitution for any existing authority but without prejudice to the exercise of any such
authority prior to the date hereof, the Company be and is hereby generally and unconditionally
authorised pursuant to Section 701 of the Act to make market purchases (within the meaning of
Section 693(4) of the Act) of any of its ordinary shares in the capital of the Company in such
manner and upon such terms as the Directors of the Company may from time to time determine,
provided that:
82
(a) the maximum aggregate number of ordinary shares hereby authorised to be purchased is
8,681,013, or, if less, the number representing approximately 14.99% of the issued
ordinary share capital of the Company (excluding treasury shares) as at the date on which
this resolution is passed;
(b) the minimum price which may be paid for any ordinary share is the nominal value
thereof;
(c) the maximum price which may be paid for any ordinary share shall not be more than the
higher of:
(i) 5% above the average of the middle market quotations for an ordinary share (as
derived from the Daily Official List of the London Stock Exchange) over the five
business days immediately preceding the date of purchase; and
(ii) the higher of the price of the last independent trade in ordinary shares and the
highest current independent bid for such shares on the London Stock Exchange;
and
(d) unless previously varied, revoked or renewed by the Company in a general meeting, the
authority hereby conferred shall expire at the conclusion of the next annual general
meeting of the Company held after the passing of this resolution, save that the Company
may, prior to such expiry, enter into a contract to purchase ordinary shares under such
authority which will or might be completed or executed wholly or partly after the
expiration of such authority and may make a purchase of ordinary shares pursuant to any
such contract.
Special Business
To consider, and if thought fit, pass Resolutions 14 and 15 which will be proposed as special
resolutions:
14. That, subject to the passing of Resolution 12, above (the ‘Section 551 Resolution’), but without
prejudice to the exercise of any such authority prior to the date hereof, the Directors of the
Company be and they are hereby generally empowered, pursuant to Sections 570 and 573 of the
Act, to allot equity securities (as defined in Section 560(1) of the Act), for cash pursuant to the
authority given by the Section 551 Resolution or by way of a sale of treasury shares (as defined
in Section 560(3) of the Act), in each case as if Section 561(1) of the Act did not apply to any
such allotment of equity securities or sale of treasury shares, provided that this power:
(a) shall be limited to the allotment of equity securities or sale of treasury shares in
connection with an offer of such securities to the holders of shares in the capital of the
Company in proportion (as nearly as may be) to their respective holdings of such shares
but subject to such exclusions, limits or restrictions or other arrangements as the
Directors may deem necessary or expedient to deal with treasury shares, fractional
entitlements, record dates or any legal, regulatory or practical problems in or under the
laws of any territory, or the requirements of any regulatory body or any stock exchange in
any territory or otherwise howsoever; or
(b) shall be limited to the allotment of equity securities or sale of treasury shares (otherwise
than pursuant to sub-paragraph (a) of this resolution) up to an aggregate nominal value of
£434,340 being approximately 15% of the nominal value of the issued share capital of the
Company (excluding treasury shares), as at 31 August 2023; and
(c) expires at the conclusion of the next annual general meeting of the Company held after
the passing of this resolution, save that the Company may, before such expiry, make an
offer or enter into an agreement which would or might require equity securities to be
allotted after such expiry and the Directors may allot equity securities in pursuance of any
such offer or agreement as if the power conferred hereby had not expired.
83
15. That a general meeting of the Company other than an annual general meeting may be called on
not less than 14 clear days’ notice provided that this authority shall expire at the conclusion of
the next annual general meeting of the Company.
By order of the Board
Artemis Fund Managers Limited
Company Secretary
5 September 2023
Registered Office:
6th Floor, Exchange Plaza,
50 Lothian Road
Edinburgh, EH3 9BY
84
Notes
1. Attending the Meeting in person
If you wish to attend the Meeting, please arrive at the venue for the Meeting in good time to
allow your attendance to be registered. It is advisable to have some form of identification with
you as you may be asked to provide evidence of your identity prior to being admitted to the
Meeting.
2. Appointment of proxies
Members are entitled to appoint one or more proxies to exercise all or any of their rights. A
proxy need not be a member of the Company. To be validly appointed a proxy must be
appointed using the procedures set out in these notes and in the notes to the accompanying
proxy form.
Members can only appoint more than one proxy where each proxy is appointed to exercise
rights attached to different shares. Members cannot appoint more than one proxy to exercise the
rights attached to the same share(s). If a member wishes to appoint more than one proxy, they
should contact Computershare on 0370 707 1186. Lines are open from 8.30am to 5.30pm,
Monday to Friday).
A member may instruct their proxy to abstain from voting on any resolution to be considered at
the Meeting by marking the “vote withheld” option when appointing their proxy. It should be
noted that an abstention is not a vote in law and will not be counted in the calculation of the
proportion of votes “for” or “against” the resolution.
A person who is not a member of the Company but who has been nominated by a member to
enjoy information rights does not have a right to appoint any proxies under the procedures set
out in these notes and should read note 8 below.
Appointing the Chairman of the Meeting will ensure your vote will be registered.
3. Appointment of a proxy using a proxy form
A proxy form for use in connection with the Meeting is enclosed. To be valid any proxy form or
other instrument appointing a proxy, together with any power of attorney or other authority
under which it is signed or a certified copy thereof, must be received by post or (during normal
business hours only) by hand by the Registrar at Computershare Investor Services PLC, The
Pavilions, Bristol BS99 6ZY or eproxyappointment.com no later than 48 hours (excluding non-
working days) before the time of the Meeting or any adjournment of that meeting.
If you do not have a proxy form and believe that you should have one, or you require additional
proxy forms, please contact the Registrar on 0370 707 1186 (Lines are open from 8.30am to
5.30pm, Monday to Friday).
4. Appointment of a proxy through CREST
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy
appointment service may do so by using the procedures described in the CREST Manual and by
logging on to the following website: euroclear.com/CREST. CREST personal members or other
CREST sponsored members, and those CREST members who have appointed (a) voting service
provider(s), should refer to their CREST sponsor or voting service provider(s) who will be able
to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the
appropriate CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in
accordance with Euroclear UK & Ireland Limited’s specifications, and must contain the
information required for such instruction, as described in the CREST Manual. The message,
regardless of whether it constitutes the appointment of a proxy or is an amendment to the
instruction given to a previously appointed proxy, must in order to be valid be transmitted so as
to be received by the Registrar (ID 3RA50) no later than 48 hours (excluding non-working days)
before the time of the Meeting or any adjournment of that meeting. For this purpose, the time of
85
receipt will be taken to be the time (as determined by the timestamp applied to the message by
the CREST Application Host) from which the Registrar is able to retrieve the message by
enquiry to CREST in the manner prescribed by CREST. After this time any change of
instructions to proxies appointed through CREST should be communicated to the appointee
through other means.
CREST members and, where applicable, their CREST sponsors or voting service provider(s)
should note that Euroclear UK & Ireland Limited does not make available special procedures in
CREST for any particular message. Normal system timings and limitations will, therefore, apply
in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST member is a CREST personal member, or
sponsored member, or has appointed (a) voting service provider(s), to procure that his CREST
sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a
message is transmitted by means of the CREST system by any particular time. In this
connection, CREST members and, where applicable, their CREST sponsors or voting system
providers are referred, in particular, to those sections of the CREST Manual concerning practical
limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in
Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
5. Appointment of proxy by joint holders
In the case of joint holders, where more than one of the joint holders purports to appoint one or
more proxies, only the purported appointment submitted by the most senior holder will be
accepted. Seniority is determined by the order in which the names of the joint holders appear in
the Company’s register of members in respect of the joint holding (the first named being the
most senior).
6. Corporate representatives
Any corporation which is a member can appoint one or more corporate representatives.
Members can only appoint more than one corporate representative where each corporate
representative is appointed to exercise rights attached to different shares. Members cannot
appoint more than one corporate representative to exercise the rights attached to the same
share(s). Appointing the Chairman of the Meeting will ensure your vote will be registered.
7. Entitlement to attend and vote
To be entitled to attend and vote at the Meeting (and for the purpose of determining the votes
they may cast), members must be registered in the Company’s register of members at 6.00 pm
on 24 October 2023 (or, if the Meeting is adjourned, at 6.00 pm two working days prior to the
adjourned meeting).
Changes to the register of members after the relevant deadline will be disregarded in
determining the rights of any person to attend and vote at the Meeting.
Please see note 1 regarding attendance at this year’s AGM.
8. Nominated persons
Any person to whom this notice is sent who is a person nominated under Section 146 of the Act
to enjoy information rights (a ‘Nominated Person’) may, under an agreement between him/her
and the member by whom he/she was nominated, have a right to be appointed (or to have
someone else appointed) as a proxy for the Meeting. If a Nominated Person has no such proxy
appointment right or does not wish to exercise it, he/she may, under any such agreement, have a
right to give instructions to the member as to the exercise of voting rights.
9. Forms of proxy
A personalised form of proxy will be sent to each registered shareholder with the Annual
Financial Report and instructions on how to vote will be contained therein.
86
10. Website giving information regarding the Meeting
Information regarding the Meeting, including information required by Section 311A of the Act,
and a copy of this Notice of Meeting is available on the website: midwynd.com.
11. Voting rights
As at 31 August 2023 (being the latest practicable date prior to the publication of this notice) the
Company’s issued share capital consisted of 66,381,114 ordinary shares, carrying one vote each.
8,469,080 ordinary shares are held in Treasury. Therefore, the total voting rights in the
Company as at 31 August 2023 were 57,912,034 votes.
12. Notification of shareholdings
Any person holding 3% or more of the total voting rights of the Company who appoints a
person other than the Chairman of the general meeting as his proxy will need to ensure that they
both comply with their respective disclosure obligations under the UK Disclosure Rules and
Transparency Rules.
If the Chairman, as a result of any proxy appointments, is given discretion as to how the votes of
those proxies are cast, and the voting rights in respect of those discretionary proxies, when
added to the interests in the Company’s ordinary shares already held by the Chairman, result in
the Chairman holding such number of voting rights that he has a notifiable obligation under the
Disclosure Rules and Transparency Rules, the Chairman will make the necessary notifications to
the Company and the Financial Conduct Authority. As a result, any member holding 3% or
more of the voting rights in the Company who grants the Chairman a discretionary proxy in
respect of some or all of those voting rights and so would otherwise have a notification
obligation under the Disclosure Rules and Transparency Rules, need not make a separate
notification to the Company and the Financial Conduct Authority.
13. Members’ right to require circulation of resolution to be proposed at the Meeting
Members meeting the threshold requirements set out in the Act have the right to: (a) require the
Company to give notice of any resolution which can properly be, and is to be, moved at the
Meeting pursuant to Section 338 of the Act; and/or (b) include a matter in the business to be
dealt with at the Meeting, pursuant to Section 338A of the Act.
14. Further questions and communication
Under Section 319A of the Act, the Company must cause to be answered any question relating
to the business being dealt with at the Meeting put by a member attending the Meeting unless
answering the question would interfere unduly with the preparation for the Meeting or involve
the disclosure of confidential information, or the answer has already been given on a website in
the form of an answer to a question, or it is undesirable in the interests of the Company or the
good order of the Meeting that the question be answered.
Shareholders are invited to submit questions in advance of the AGM to the Company Secretarial
Department by writing to Artemis Fund Managers Limited, 6th Floor, Exchange Plaza, 50
Lothian Road, Edinburgh, EH3 9BY. Alternatively, questions may be sent via email to the
Chairman’s email address midwyndchairman@artemisfunds.com.
Members may not use any electronic address provided in this notice or in any related documents
(including the accompanying proxy form) to communicate with the Company for any purpose
other than those expressly stated.
15. Documents available for inspection
The following documents will be available for inspection at the registered office of the
Company during normal business hours on any weekday (Saturdays, Sundays and English
public holidays excepted) from the date of this notice until the conclusion of the Meeting:
15.1. a statement of all transactions of each Director and of their family interests in the share
capital of the Company; and
15.2. copies of the Directors’ letters of appointment.
87
No Director has a service contract with the Company.
16. Directors’ biographies
The biographies of the Directors standing for re-election or election are set out on page 29 of the
Company’s Annual Financial Report for the year ended 30 June 2023.
17. Announcement of results
As soon as practicable following the Meeting, the results of the voting at the Meeting will be
announced via a Regulatory Information Service and the number of votes cast for and against
and the number of votes withheld in respect of each resolution will be placed on the website:
midwynd.com.
18. Audit concerns
Members should note that it is possible that, pursuant to requests made by members of the
Company under Section 527 of the Act, the Company may be required to publish on a website a
statement setting out any matter relating to: (a) the audit of the Company’s financial statements
(including the auditor’s report and the conduct of the audit) that are to be laid before the
Meeting; or (b) any circumstance connected with an auditor of the Company ceasing to hold
office since the previous meeting at which annual financial statements were laid in accordance
with Section 437 of the Act. The Company may not require the members requesting any such
website publication to pay its expenses in complying with Sections 527 or 528 of the Act.
Where the Company is required to place a statement on a website under Section 527 of the Act,
it must forward the statement to the Company’s auditor not later than the time when it makes the
statement available on the website. The business which may be dealt with at the Meeting
includes any statement that the Company has been required under Section 527 of the Act to
publish on a website.
88
Appendix to Notice of AGM
The Annual General Meeting (‘AGM’) of the Company will be held on 26 October 2023 at 12 noon.
The formal Notice of AGM is set out on pages 66 to 67 which includes important information on the
arrangements for this year’s AGM. The following information is important and requires your
immediate attention. If you are in any doubt about the action you should take, you should consult an
independent financial adviser, authorised under the Financial Services and Markets Act 2000. If you
have sold or transferred all of your ordinary shares in the Company, please forward this document with
its accompanying form of proxy at once to the purchaser or transferee, or to the stockbroker, bank or
other agent through whom the sale or transfer was effected, for onward transmission to the purchaser or
transferee.
The information set out below is an explanation of the business to be considered at the 2023 Annual
General Meeting. To be passed, the ordinary resolutions require 50% of the votes cast to be in their
favour and the special resolutions require 75% of votes cast to be in their favour.
Ordinary business
Resolutions 1 to 12 are all ordinary resolutions. Resolution 1 is a resolution to adopt the Annual
Financial Report. Resolutions 2 and 3 concern the approval of the Directors’ Remuneration Policy and
Directors’ Remuneration Report, as detailed on pages 38 to 39. Resolution 4 invites shareholders to
approve the final dividend. Resolutions 5 to 8 invite shareholders to re-elect each of the existing
Directors for another year whilst resolution 9 invites shareholders to elect Mr Hamish Baillie to the
Board. The Board, on recommendation from the Nomination Committee, recommends the re-election
or election of all Directors at this year’s AGM (their biographies are set out on page 29). Resolutions
10 and 11 concern the re-appointment and remuneration of the Company’s auditor, discussed in the
Report of the Audit Committee on pages 40 to 42. Resolution 12 is the proposal to seek authorisation
for the Directors to allot shares up to a maximum aggregate nominal amount of £964,235 (being
approximately 33.3% of the issued share capital (excluding any shares held in treasury) as at 31 August
2023).
Resolution 13: authority to make market purchases of the Company’s own shares (special
resolution)
At the AGM held on 26 October 2022, the Company was granted authority to make market purchases
of up to 9,839,872 ordinary shares of 5p each for cancellation or holding in treasury. A further General
Meeting is due to be held on 8 September 2023 at which a further 14.99% of buyback authority will be
sought to ensure the authority is not exhausted prior to the 2023 AGM. Both these authorities will
expire at the forthcoming AGM. The Directors believe it is in the best interests of the Company and its
shareholders to have a general authority for the Company to buy back its ordinary shares in the market
as they keep under review the share price discount to NAV. A special resolution will be proposed at the
forthcoming AGM to give the Company authority to make market purchases of up to 14.99% of the
ordinary shares in issue as at the date on which the resolution is passed (excluding treasury shares). If
renewed, this authority will lapse at the conclusion of the AGM in 2024 unless renewed, varied or
revoked earlier.
Special business
Resolution 14: power to disapply pre-emption rights (special resolution)
The Directors are seeking authority to allot a limited number of unissued ordinary shares for cash
without first offering them to existing shareholders in accordance with statutory pre-emption
procedures. A special resolution will be proposed to authorise the Directors to allot shares up to a
maximum aggregate nominal amount of £434,340 (being 15% of the issued share capital as at
31 August 2023) on a non pre-emptive basis. This authority includes shares that the Company sells or
transfers that have been held in treasury. If approved, this authority will expire at the conclusion of the
AGM in 2024 unless renewed, varied or revoked earlier.
89
Resolution 15: authority to call a general meeting on fewer days’ notice (special resolution)
This resolution is seeking authority for the Company to call a general meeting, other than an annual
general meeting, on not less than 14 clear days’ notice provided that this authority shall expire at the
conclusion of the next annual general meeting of the Company.
90
Information for Shareholders (unaudted)
Buying shares in the Company
The Company’s ordinary shares are traded on the London Stock Exchange and can be bought or sold
through a stockbroker, a financial advisor or via an investment platform. Find out more at
midwynd.com.
Company numbers:
London Stock Exchange (SEDOL) number: B6VTTK0
ISIN number: GB00B6VTTK07
Ticker: MWY
Capital Gains Tax
For Capital Gains Tax indexation purposes, the market value of an ordinary share in the Company as at
31 March 1982 was 52 pence. The equivalent price, adjusted for the five for one share split in October
2011, is 10.4 pence.
Share register enquiries
Computershare maintains the share register on behalf of the Company. In the event of queries
regarding shares registered in your own name, please contact the Registrar on 0370 707 1186. This
helpline also offers an automated self-service functionality (available 24 hours a day, 7 days a week)
which allows you to:
■ hear the latest share price;
■ confirm your current share holding balance;
■ confirm your payment history; and
■ order Change of Address forms, Dividend Bank Mandates and Stock Transfer forms.
By quoting the reference number on your share certificate you can also check your holding on the
Registrar’s website at investorcentre.co.uk.
It also offers a free, secure share management website service which allows you to:
■ view your share portfolio and see the latest market price of your shares;
■ calculate the total market price of each shareholding;
■ view price histories and trading graphs;
■ update bank mandates and change address details;
■ use online dealing services; and
■ pay dividends directly into your overseas bank account in your chosen local currency.
To take advantage of this service, please log in at investorcentre.co.uk. You will need your Shareholder
Reference Number and Company Code to do this (this information can be found on the last dividend
confirmation or your share certificate).
Dividend Reinvestment Plan
Computershare provides a Dividend Reinvestment Plan which can be used to buy additional shares
instead of receiving your dividend via cheque or into your bank account. For further information log in
to investorcentre.co.uk and follow the instructions or telephone 0370 707 1694.
91
Electronic proxy voting
If you hold stock in your own name you can choose to vote by returning proxies electronically at
eproxyappointment.com. If you have any questions about this service please contact Computershare on
0370 707 1186.
Financial Advisers and retail investors
The Company currently conducts its affairs so that the shares in issue can be recommended by
Financial Advisers to ordinary retail investors in accordance with the Financial Conduct Authority’s
(‘FCA’s’) rules in relation to non-mainstream investment products and intends to do so for the
foreseeable future. The shares are excluded from the FCA’s restrictions which apply to non-
mainstream investment products because they are shares in an investment trust.
Further information on the Company
The Company’s net asset value is calculated daily and released to the London Stock Exchange. The
share prices are listed in the Financial Times and also on the TrustNet website (trustnet.com). Up-to-
date information can be found on the Company’s website (midwynd.com), including a factsheet which
is updated monthly. Shareholders can also contact the Chairman to express any views on the Company
or to raise any questions they have using the email address: midwyndchairman@artemisfunds.com.
AIFMD disclosures
A number of disclosures are required to be made under the AIFMD as follows:
■ Information in relation to the leverage of the Company is provided in the Strategic Report on
pages 15 and 16.
■ Details of the Company’s principal risks and their management are provided in the Strategic
Report on pages 19 to 21.
■ Details of the monitoring undertaken of the liquidity of the portfolio is provided in note 20 in
the notes to the financial statements.
■ The Investment Manager is not able to enter into any stocklending agreements; to borrow
money against the security of the Company’s investments; nor create any charges over any of
the Company’s investments, unless prior approval has been received from the Board.
■ Details of the Company’s strategy and policies, administration arrangements and risk
management and monitoring, required to be made available to investors in the Company before
they invest, are available at midwynd.co.uk.
Any material changes to this information is required to be reported in the Company’s Annual Financial
Report.
There have been no material changes from the prior year to the information above which requires
disclosure to shareholders.
As the AIFM to the Company, Artemis is required to make certain disclosures regarding remuneration
which will be disclosed at the appropriate time.
Remuneration
Artemis operates its remuneration policies and practices at a group level which includes both Artemis
Investment Management LLP and its subsidiary Artemis Fund Managers Limited (AFML). Details of
the group remuneration policies are available on Artemis’ website artemisfunds.com.
No staff are employed by AFML directly but are employed and paid by other entities of Artemis.
Artemis has apportioned the total amount of remuneration paid to all 224 Artemis partners and staff in
respect of AFML’s duties performed based on the number of funds. It has estimated that the total
amount of remuneration paid in respect of duties for the Company for the year ended 31 December
2022 is £887,387, of which £388,396 is fixed remuneration and £498,991 is variable remuneration.
92
The aggregate amount of remuneration paid to Identified Staff that is attributable to duties for the
Company for the year ended 31 December 2022 is £315,886. Identified Staff are those senior
individuals whose managerial responsibilities or professional activities could influence, and have a
material impact on, the overall risk profile of each regulated entity and the funds it manages. The
AFML Code staff are the members of Artemis’ Management and Executive Committees, certain fund
managers, and others in specified roles. This includes certain individuals who are partners in Artemis
Investment Management LLP.
Common Reporting Standard
The Organisation for Economic Co-operation and Development’s Common Reporting Standard for
Automatic Exchange of Financial Account Information (the ‘Common Reporting Standard’) requires
the Company to provide information annually to HM Revenue & Customs (“HMRC”) on the tax
residencies of those certificated shareholders that are tax resident in countries out with the UK that
have signed up to the Common Reporting Standard.
All new shareholders, excluding those whose shares are held in CREST, will be sent a certification
form by the Registrar to complete. Existing shareholders may also be contacted by the Registrar should
any extra information be needed to correctly determine their tax residence.
Failure to provide this information may result in the holding being reported to HMRC.
For further information, please see HMRC’s Quick Guide: Automatic Exchange of Information –
information for account holders; gov.uk/government/publications/exchangeofinformationaccount-
holders.
Data Protection
The Company is committed to ensuring the protection of any personal data provided to them.
Further details of the Company’s privacy policy can be found on the Company’s website at
midwynd.com.
Reporting calendar
Year End
30 June
Results announced
Interim: February
Annual: September
Dividends Payable
March and November
Annual General Meeting
October
93
Alternative Performance Measures (‘APM’)
Alternative Performance Measure (‘APM’)
An alternative performance measure is a financial measure of historical or future financial
performance, financial position, or cash flows, other than a financial measure defined or specified in
the applicable financial reporting framework.
A description and explanation of the APMs used within the Annual Financial Report can be found
below:
Ongoing charges
Total expenses (excluding finance costs and taxation) incurred by the Company as a percentage of
average net asset values.
Due to lack of information, no account has been taken of the Company’s share of costs of its holdings
in investment companies on a look-through basis.
The decrease in average funds under management during the year and certain one-off charges have led
to an increase in the Company’s current ongoing charges ratio.
Ongoing charges
As at
30 June
2023
£’000
As at
30 June
2022
£’000
Investment management fee
2,301
2,437
Other expenses
580
496
Total expenses
2,881
2,933
Average net assets
464,206
485,437
Ongoing charges
0.62%
0.60%
Total return
The total return on an investment is made up of capital appreciation (or depreciation) and any income
paid out (which is deemed to be reinvested) by the investment. Measured over a set period, it is
expressed as a percentage of the value of the investment at the start of the period.
Net asset value total return for the year ended 30 June
2023
pence
2022
pence
Opening net asset value
692.01
754.43
Closing net asset value
719.84
692.01
Dividends paid during financial year
10.55
6.80
5.6%
(7.5)%
Share price total return for the year ended 30 June
2023
pence
2022
pence
Opening share price
693.00p
772.00p
Closing share price
689.00p
693.00p
Dividends paid during financial year
10.55p
6.80p
1.0%
(9.5)%
The total returns percentages assumes that dividends paid out by the Company are re-invested into
shares at the value on the ex-dividend date and so the figure will be slightly different to the arithmetic
calculation.
94
Premium/(Discount)
The amount, expressed as a percentage, by which the share price is more or less than the NAV per
ordinary share.
Net Gearing
The net gearing reflects the amount of borrowings (see Note 12) the Company has used to invest in the
market less cash and cash equivalents, divided by net assets.
A negative percentage reflects a net cash position.
The Company’s position is set out below:
Gearing
As at
30 June
2023
£’000
As at
30 June
2022
£’000
Bank loans
–
5,951
Cash and cash equivalents
(12,243)
(7,096)
Net gearing
(12,243)
(1,145)
Net assets
449,026
452,653
Net cash
(2.7)%
(0.3)%
Further disclosure of the borrowings/debt position of the Company can be found in note 20.
Leverage
Leverage is defined in the AIFMD as any method by which an AIFM increases the exposure of an
Alternative Investment Fund it manages, whether through borrowing of cash or securities, or leverage
embedded in derivative positions or by any other means.
There are two measures of calculating leverage:
■ the gross method, which does not reduce exposure for hedging; and
■ the commitment method, which reduces exposure for hedging.
Net asset value
Net asset value represents the total value of the Company’s assets less the total value of its liabilities,
and is normally expressed on a per share basis.
95
Glossary
Administrator
Is an entity that provides certain services to support the operation of an investment fund or investment
company. These services include, amongst other things, settling investment transactions, maintaining
accounting books and records and calculating daily net asset values. Please refer to page 76 for further
information on the administration providers during the year.
Alternative Investment Fund Managers Directive (AIFMD)
A European Union directive from 2012 and 2013, now adopted in to UK law, that applies to certain
types of investment funds, including investment companies.
Alternative Investment Fund Manager (AIFM)
Is an entity that provides certain investment services, including portfolio and risk management
services. For the Company, Artemis Fund Managers Limited is the AIFM.
Banker and Custodian
Is a bank that is responsible for holding an investment fund’s or investment company’s assets and
securities and maintaining their bank accounts. Please refer to page 76 for further information on the
banking and custodial service providers during the year.
Depositary
Is a financial institution that provides certain fiduciary services to investment funds or investment
companies. The AIFMD requires that investment funds and investment companies have a depositary
appointed to safe-keep their assets and oversee their affairs to ensure that they comply with obligations
in relevant laws and constitutional documents. Please refer to page 76 for further information on the
depositary service providers during the year.
Discount/Premium
If the share price of an investment trust is lower than the net asset value per share, the shares are said to
be trading at a discount. The size of the discount is calculated by subtracting the share price from the
net asset value per share and is usually expressed as a percentage of the net asset value per share. If the
share price is higher than the net asset value per share, the shares are said to be trading at a premium.
Net Gearing
The net gearing reflects the amount of borrowings (see Note 12) the Company has used to invest in the
market less cash and cash equivalents, divided by net assets.
A negative percentage reflects a net cash position.
96
Investment Manager, Company Secretary and Advisers
Registered office
6th Floor, Exchange Plaza
50 Lothian Road
Edinburgh
EH3 9BY
From October 2023:
28 Walker Street
Edinburgh
EH3 7HR
Website: midwynd.com
Investment Manager, Alternative Investment
Fund Manager and Company Secretary
Artemis Fund Managers Limited
Cassini House
57 St James’s Street
London SW1A 1LD
From October 2023
Investment Manager
Lazard Asset Management Limited
50 Stratton Street
London W1J 8LL
Alternative Investment Fund Manager and
Company Secretary
Juniper Partners Limited
28 Walker Street
Edinburgh
EH3 7HR
Registrar
Computershare Investor Services PLC
The Pavillions
Bridgwater Road
Bristol BS99 6ZZ
Tel: 0370 707 1186
Lines are open from 8.30am to 5.30pm, Monday
to Friday.
Website: investorcentre.co.uk
Administrator
Artemis Fund Managers Limited
Cassini House
57 St James’s Street
London SW1A 1LD
From October 2023:
Juniper Partners Limited
28 Walker Street
Edinburgh
EH3 7HR
Depositary
Northern Trust Investor Services Limited
50 Bank Street
Canary Wharf
London E14 5NT
From October 2023:
J.P. Morgan Europe Limited
25 Bank Street
Canary Wharf
London E14 5JP
Banker & Custodian
The Northern Trust Company, London Branch
50 Bank Street
Canary Wharf
London E14 5NT
From October 2023:
J.P. Morgan Chase Bank N.A.
25 Bank Street
Canary Wharf
London E14 5JP
Independent Auditor
Johnston Carmichael LLP
7-11 Melville Street
Edinburgh EH3 7PE
Broker
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
97
Artemis Fund Managers Limited
Cassini House, 57 St James’s Street, London SW1A 1LD
6th floor, Exchange Plaza, 50 Lothian Road, Edinburgh EH3 9BY
Fund Service Centre 0800 092 2051
Facsimile 0207 643 3708
Email artemisenquiries@ntrs.com
Website www.artemisfunds.com