REG-Manchester & London Investment Trust Plc: Half-year Report
19/03/2025 16:30
19 March 2025
MANCHESTER AND LONDON INVESTMENT TRUST PLC
(the “Company”)
The Company today announces its Half-yearly Report for the six months ended 31
January 2025. A copy of the Half-Yearly Report can be accessed via the
Company’s website at
www.mlcapman.com/manchester-london-investment-trust-plc or by contacting
the Company Secretary by email on mlitcosec@cm.mpms.mufg.com.
Summary of Results
At 31 January 2025 At 31 July 2024 Change
Net assets attributable to Shareholders (£’000) 349,791 334,099 4.7%
Net asset value (“NAV”) per Ordinary Share (pence) 879.41 831.24 5.8%
Six months to 31 January 2025
Total return to Shareholders* 6.7%
Benchmark - MSCI UK Investable Market Index (MXGBIM)* 4.1%
* Total NAV return including dividends reinvested, as sourced from Bloomberg.
Six months to 31 January 2025 Six months to 31 January 2024 Change
Interim dividend per Ordinary Share (pence) 7.00 7.00 0.00p
Special dividend per Ordinary Share (pence) 7.00 0.00 7.00p
Dates for the interim dividend
Ex-dividend date 10 April 2025
Record date 11 April 2025
Payment date 8 May 2025
CHAIRMAN’S STATEMENT
Results for the half year ended 31 January 2025
The Global Technology sector has continued to rally on Ai excitement, albeit
with a recent set back on some brilliantly executed propaganda by the CCP via
DeepSeek. 2025 is the year that Ai is no longer an “if it will”
phenomenon but more of a “when will it” crescendo of anticipation. It is
becoming ever more evident that the automation of the labour force via agents
will become a reality which will significantly expand the Total Addressable
Market of Ai. The Manager has added an extra strand to their three favourite
secular growth themes of Cloud Computing, Artificial Intelligence and
Semiconductor Use which is Agentic Ai software. The Manager’s Report sets
out the performance of the portfolio in more detail including stock specific
contributions to this period’s performance.
The portfolio remains focused on larger capitalisation, liquid, listed stocks
with profitable and cash generative business models that are aligned with some
of the most exciting forward-looking themes of the day. The Company exited
the period with a Portfolio Net Delta Adjusted Equity Exposure (including
Options) of 98.7 per cent which effectively means the Company was roughly
fully invested.
The Board
There have been no changes to the Board during the period. Biographical
details of all the directors can be found in the latest AGM notice and the
latest Annual Report.
Dividends
With these results, we have announced an ordinary interim dividend of 7.0
pence per Ordinary Share and a special interim dividend of 7.0 pence per
Ordinary Share. This is the same level as the prior year for the ordinary
(31 January 2024: 7.0 pence per Ordinary Share) but the special was not paid
last year.
Discount & Share Buy-Backs
The Board monitors the discount at which the Company’s shares trade in
relation to the underlying NAV per Share. The discount has not narrowed over
the period in line with similar sector invested funds also listed on the
London Stock Exchange. The Company does not have a target discount level at
which it buys back shares and considers a range of factors before it does so,
including the direction of recent market moves, the reasons for any discounts
and whether they are short term or long term in nature and the overall benefit
to Shareholders of any buy backs considering the onerous reporting
requirements of such buy backs and the ongoing cost per Share implications.
It should be noted that the average discount for the Company for the last 5
years sits at ~13.5 per cent (Source: Bloomberg) which, considering the free
float of the Company is less than £150m, could be argued as ‘in line’
with expectations (if not ideal). As at the latest practicable date of 18
March 2025, the number of shares in treasury was 1,260,150 representing ~3.11
per cent of the issued share capital.
It is worth noting that between FY22 to FY25 (so far) the Company has returned
>£32m to shareholders in dividends and buybacks. Shareholder returns remain
a key pillar of our commitment to investors.
Auditor
Deloitte LLP were re-appointed as the Company’s auditor at the AGM held in
2024.
Outlook & Risks
The world has continued to splinter into Sino and US spheres with a
corresponding re-gauging of supply chains, and inflation continues to print
above the required Federal Reserve target rate of two per cent. The
principal risks and uncertainties faced by the Company for the remaining six
months of the financial year, which could have a material impact on
performance, remain consistent with those outlined in the Annual Report for
the year ended 31 July 2024. A detailed explanation of the Company’s
principal risks and uncertainties, and how they are managed through mitigation
and controls, can be found in the Annual Report for the year ended 31 July
2024. The Company has a risk management framework that provides a structured
process for identifying, assessing and managing the risks associated with the
Company’s business.
The investment portfolio is diversified by geography which reduces risk but is
focused on the US technology sector and has a high proportion of US Dollar
investments. The concentration of investment in the two largest holdings is
material and all shareholders should consider whether they are comfortable
with this concentration risk when deciding whether to continue to invest in
the Company (please see Managers Report below).
The key variables for our second half performance are likely to be movements
in the US sovereign yield curve and inflation expectations, the escalating
cold war between China and the USA (including Taiwan), changes to Tariffs &
Export Controls, the price of hydrocarbons and energy, how the Federal Reserve
and other Central Banks respond to the aforementioned, whether the
expectations for the monetisation of Ai meets expectations, the performance of
Microsoft Corporation and Nvidia Inc., the pace of growth of our key four
themes (as described above), further conflict in the Middle East, further
aggressive action by Russia, and the regulation of technology companies
globally. We remain optimistic that our investment exposure, focused on
software, digitalisation, cloud computing, data management, semiconductors,
semiconductor capital equipment and Ai, offers longer-term pricing power to
ward off inflationary threats and significant secular growth opportunities.
Please do not forget to consider the fund for this year’s ISA allowance.
Daniel Wright
Chairman
19 March 2025
MANAGER'S REPORT
Portfolio management
During the half year under review, the NAV per Share total return was 6.7 per
cent, compared to an increase in the benchmark of 4.1 per cent. The
NASDAQ-100 Technology Sector Index (“NDXT”), to which some of the
portfolio is exposed, had a total return of 8.5 per cent in GBP.
The total return of the portfolio by sector holdings in local currency
(excluding costs and foreign exchange) is shown below.
Total return of underlying sector holdings in local currency (excluding costs and foreign exchange) 2025
Information Technology 2.8%
Communication Services 1.4%
Healthcare 0.3%
Other investments (including funds, ETFs and hedges) 0.0%
Foreign Exchange, operating costs & financing 2.2%
Total NAV per Share return 6.7%
It should be noted that the data and views in this report are now dated and
potentially stale. A more up to date analysis of our portfolio can be found
in our Fund Factsheets:
https://mlcapman.com/manchester-london-investment-trust-plc/and more current
views can be found in our Tweets (https://twitter.com/MLCapMan) & Newsletters
(https://mlcapman.com/Subscribe).
The 3.3 per cent decrease in the value of Sterling against the US Dollar over
the period was a tailwind for performance due to the significant level of US
Dollar exposure in the portfolio. Overall, we estimate the increase in
portfolio performance from Foreign Exchange movements was roughly +3.0 per
cent.
Information Technology
Material positive contributors to the portfolio’s performance from this
sector were Arista Networks Inc, Broadcom Inc, and Nvidia Corp.
Material negative contributors to the portfolio’s performance from this
sector were ASML Holding NV and Advanced Micro Devices Inc.
The portfolio’s weighting to this sector (including options on a MTM basis)
at the period end was 98.2 per cent of net assets, down from 103.2 per cent at
the end of the previous financial year.
Outlook
We see the Cloud Computing market progressing through the ongoing secular
growth period it has enjoyed for a number of years. We estimate a doubling
in the size of this market over the next decade as it has become clear that in
order to extract value from your data using tools such as Ai you need the data
managed and on the Cloud.
We see Artificial Intelligence ("Ai") being a material positive driver for the
Cloud and Semiconductor markets. It is easy to focus on the growth in GPUs
from Ai but please note networking, security and other compute all benefit
too. To be explicit, we are still taking a predominantly “picks and
shovels” route to capture the gains from the growth of Ai although we are
interested in gaining more exposure to the agentic software plays. We
believe that the Ai semiconductor market will be resurgent during 2025 (for
both Training and Inference) but, longer term, we see the growth in Electric
Vehicles, Industrial, IoT, Mobile and Digitalisation being stolen by a heavily
subsidised Chinese Semiconductor industry.
High Impact Risk events
The Great Hack: We lose sleep imagining a cyber breach of one of the
hyper-scalers causing a loss of faith in the industry and punitive regulation.
In such an event, we would suggest looking to the counter-factual of whether
the situation would have been even worse if the data had been stored “On
Premises”.
China: The potentially impending hot conflict in Taiwan initiated by China has
been the primary subject of Academy (see https://mlcapman.com/academy/). A
large proportion of our portfolio would suffer material falls in value should
this event be the outturn, which is why sharp-eyed Factsheet readers see we
have intermittently hedged these positions with EWT US or shorts on other less
advanced semi-conductor plays. Generally, the “cold war” developing
between the US and China has multiple risks for Technology stocks and a
progression through further sanctions, closing of markets, IP theft etc. is
likely to be a strong headwind for a number of our holdings. We are very
keen on the Semi-Cap sector but their high exposure to China has always
deterred us from owning more of these names. China is unlikely to accept the
US desire to make it a number two player in High Technology and hence it may
decide to invest huge amounts into R&D&S&T (the S is Subsidy and the T is
Theft) to break down some of the IP moats that the non-Chinese semiconductor,
semi-cap and EDA software companies maintain, making competition much tougher
in these markets. China already dominates the solar energy market and the EV
market, and we expect more encroachment in the less advanced semiconductor
space. We expect further restrictions on US technology exports and we expect
to see material reductions in sales for some of our holdings including Nvidia
(to Singapore).
Concentration Risk: The portfolio is now materially concentrated in just 2
holdings; it is also highly concentrated in the Information Technology sector.
The fund has a high Active Share Ratio and it is very likely that our
performance will vary markedly from all of the better known technology index
performances. Should either Nvidia or Microsoft have materially adverse
events, or the monetisation of Ai by the sector in general be slower than
expected, then the fund will suffer material losses. Humans tend to want
everything now! Shareholders should consider if this totality of risk fits
with their risk profile. The consensus solution to concentration risk is
diversification but so often when one does diversify, one has to diversify
into lower quality holdings.
Communication Services
Alphabet Inc (+1.2%) was the only contributor which had an attribution of
-/+1% for the portfolio from this sector.
The portfolio’s weighting to this sector (including options on a MTM basis)
at the period end was 7.1 per cent of net assets, up from 4.0 per cent at the
end of the previous financial year.
The largest holding in this sector is Alphabet Inc. which we joke is our
“Value investment” holding. Like all Value investments, Alphabet has
issues (Search being disrupted, weak management, over-woke corporate ethos,
vanity other-Bets projects, inefficient cost structures, ineffectiveness to
move R&D to commercial application, too many divisions) that we have written
extensively about in Tweets and Newsletters. However, if Alphabet took some
simple logical steps forward the valuation has material upside potential.
Waymo and YouTube could be very valuable assets in the future.
This year we added FWONK (Liberty Media Formula One) which saw a share price
performance of 21.1 per cent from our initial purchase. We remain positive
on FWONK as it plays to the increased leisure time, event-based spending
theme.
Healthcare
There were no contributors which had an attribution of -/+1% for the portfolio
from this sector.
The portfolio’s weighting to this sector (including options on a MTM basis)
at the period end was 2.3 per cent of net assets, up from 1.9 per cent at the
end of the previous financial year.
Our favoured holding in this sector is ISRG (Intuitive Surgical) which saw a
share price performance over the period of 28.6 per cent. We would buy a lot
more but the stock trades expensively.
Other investments including hedges
There were no contributors which had an attribution of -/+1% for the portfolio
from these holdings.
The portfolio’s weighting to this sector (including options on a MTM basis)
at the period end was 1.3 per cent of net assets (please note this includes
1.7 per cent of net assets held in a US money market ETF which effectively
operates as a cash alternative rather than an equity exposure). This sector
weighting is up from 0.9 per cent at the end of the previous financial year
(excluding healthcare).
Current Focus of Investment Process
We use a Data Framework to select the stock universe from which we select
specific stock candidates for the portfolio.
From this stock universe, we select stocks whilst keeping the following
attributes in mind:
1. Exposure to Elite Financial Metrics (high IP, mission critical,
recurring, low churn);
2. Exposure to Secular Growth;
3. Exposure to the Ai revolution within the Information Technology sphere as
an Enabler rather than just a Beneficiary (pseudo-Ai exposure);
4. The Management Teams of holdings should be undertaking pragmatic cost
cutting or productivity drives;
5. Cash flow per Share and Earnings per Share metrics are considered equally
as important as Sales Growth;
6. Once Cash Flow is earned then it should be invested wisely in one of:
high ROIC investment, buy backs or dividends (or divesting non-core, capital
hungry activities);
7. Manageable exposure to a China/Taiwan “hot war”; and
8. Realistic Stock Based Compensation schemes.
We believe that the true enablers of Ai will be pragmatic and patient and view
themselves as Era-long winners from Ai. Many software companies will be
disrupted by Ai, making investing in Technology a dangerous landscape to
navigate.
Economy, Market & Technology
The US economy remains robust which is unsurprising considering its make-up is
driven by consumption and consumption has a high correlation to high
employment and wage growth. We have consistently said that US Interest Rates
will have to be ‘Higher for Longer’ and Technology shares hate surprise
increases in discount rates. To be specific, our portfolio has a strong
negative correlation to surprise increases in 10-year Treasury yields. There
are many forecasts for an impending recession in the USA because that is what
happened historically each time rates were raised so steeply. We believe
that “every time is different”. We are not so convinced that the
recession outturn is already written but we do worry about escalating global
debt levels and increasing long term discount rates.
General IT spending is likely to pick up through 2025 as companies focus on
optimisation and automation. Spending is being prioritised into Ai & Cloud
and these are the areas we have refocused our portfolio on. Spending will
likely focus on platforms that can offer a wide spectrum of services including
the management of your data. The era of the networked desktop has moved to
the data centre connected end point and this means that those with the scale
and resources to invest will win. For the minnows, we have further bad news,
which is that in a few further years we may start to see Quantum Computing
applications become more prevalent and these will require even greater scale.
Few now doubt that we have entered the Era of Ai. We believe that we still
have a long way to travel down this road and that those that bank quick
profits now will rue the day they did so. The press make a lot of noise and
the vast majority of it should be ignored (example: DeepSeek). We are
Era-long investors, and our portfolio is firmly focused on Ai Deliverers not
“.ai show-boaters”. Having said that, we will be pragmatic and we will
have to pivot.
Make no mistake of this, the West is now in a cold war with China and the
Chinese are our enemy. The world is a far more dangerous place and will
become so if we remain complacent of the new reality. In the meantime, the
regulation and statis of the UK & Eurozone surely lead to a slow and withering
aging of Europe as it is outcompeted on either side by the USA and China.
The situation in the UK & Eurozone is so bad now that it is viewed by the US
and China as a comedy zone that can be ignored (see Ukraine negotiations).
We have no idea what the future holds but we believe that since 1771 there has
been a glacial shift in the utility as economic units from Man to the Machine.
Those that have backed the technological advancement of the Machine over
this period have quite commonly made excess investment returns. We believe
that Ai is, in part, just an extension of software, albeit with non-sequential
processing and non- deterministic outcomes (Software 2.0). Hence, we feel
that expecting the Era of Ai to develop along the same rough path as the Era
of Software is not irrational and offers investors some comfort and guidance.
The next decade could be one of the most interesting eras for technology
investing ever. It is of a low probability but still possible that we could
see Ai completely transform the global economy in the short period of a decade
whereby the effective Total Addressable Market of Software 2.0 sees a greater
than 10 fold growth.
Please:
Visit our website: https://mlcapman.com/about/
Follow our Tweets at: https://twitter.com/MLCapMan
Read our previous articles at:
https://www.linkedin.com/company/m-&-l-capitalmanagement-ltd/
Long the Future.
M&L Capital Management Limited @MLCapMan
19 March 2025
Equity Exposures AND PORTFOLIO SECTOR ANALYSIS
Equity exposures (longs)
As at 31 January 2025
Company Sector* Exposure £’000 % of net assets
NVIDIA Corporation** Information Technology 120,761 34.5
Microsoft Corporation** Information Technology 85,247 24.4
Broadcom Inc. Information Technology 23,417 6.7
Arista Networks Inc. Information Technology 22,331 6.4
ASML Holding NV** Information Technology 20,437 5.8
Synopsys Inc. Information Technology 18,840 5.4
Advanced Micro Devices Inc. Information Technology 18,663 5.3
Alphabet Inc. Communication Services 17,242 5.0
Micron Technology Inc. Information Technology 11,147 3.2
Apple Inc.** Information Technology 10,503 3.0
Cadence Design Systems Inc. Information Technology 9,222 2.6
Intuitive Surgical Inc. Health Care 8,146 2.3
Liberty media Formula One Group** Communication Services 7,921 2.3
I-shares 0-3 month Treasury Bond Other 6,053 1.8
Dell Technologies Inc.** Information Technology 4,853 1.4
Salesforce Inc.** Information Technology 3,657 1.0
Polar Capital Technology Trust Other 2,658 0.8
Remy Cointreau S.A. Other 1,414 0.4
Applied Materials Inc. Information Technology 987 0.3
Pernod Ricard S.A. Other 830 0.2
AeroVironment Inc.** Other 406 0.1
Western Digital Corporation Information Technology 194 0.1
Motorola Solutions Inc. Information Technology 104 0.0
Pfizer Inc.** Health Care 85 0.0
Allianz Technology Trust Other 12 0.0
Total Long Equity exposure 395,130 113.0
Other net assets and liabilities*** (45,399) (13.0)
Net assets 349,791 100.0
* GICS – Global Industry Classification Standard.
** Including equity swap exposures.
***Includes Short Equity exposures and Options valued at marked to market.
Exposure is related to Delta Adjusted Exposure (Glossary).
INTERIM MANAGEMENT REPORT
The important events that have occurred during the period under review and the
key factors influencing the financial statements are set out in the
Chairman’s Statement and the Manager’s Report above.
The principal risks facing the Company are substantially unchanged since the
date of the latest Annual Report and Financial Statements and continue to be
as set out in the Strategic Report and note 16 of that report. Risks faced
by the Company include, but are not limited to, investment performance risk;
key man risk and reputational risk; fund valuation risk; risk associated with
engagement of third-party service providers; regulatory risk; fiduciary risk;
fraud risk; market risk; interest rate risk; liquidity risk; currency rate
risk; and credit and counterparty risk. Details of the Company’s
management of these risks are set out in the Annual Report and Financial
Statements.
M&M Investment Company plc is the controlling shareholder of the Company.
This company was controlled throughout the six months ended 31 January 2025,
and continues to be controlled by Mark Sheppard, who forms part of the
investment management team at M&L Capital Management Limited. Details of
related party disclosures are set out in note 7 of this Report.
DIRECTORS’ REPORT
Going Concern
As detailed in the notes to the financial statements and in the Annual Report
for the year ended 31 July 2024, the Board continually monitors the financial
position of the Company and has considered for the six months ended 31 January
2025 an assessment of the Company’s ability to meet its liabilities as they
fall due. The review also included consideration of the level of readily
realisable investments and current cash and debt ratios of the Company and the
ability to repay any outstanding prime broking facilities. In light of the
results of these tests on the Company’s cash balances and liquidity
position, the Directors consider that the Company has adequate financial
resources to enable it to continue in operational existence. Having carried
out the assessment, the Directors are satisfied that it is appropriate to
continue to adopt the going concern basis in preparing the financial results
of the Company. The Directors have not identified any material uncertainties
or events that might cast significant doubt upon the Company’s ability to
continue as a going concern. The assets of the Company comprise mainly of
securities that are readily realisable and accordingly, the Company has
adequate financial resources to meet its liabilities as and when they fall due
and to continue in operational existence for the foreseeable future.
Related Party Transactions
In accordance with DTR 4.2.8R there have been no new related party transaction
agreements during the six-month period to 31 January 2025 and therefore
nothing to report on any material effect by such transactions on the financial
position or performance of the Company during that period. There have
therefore been no changes in any related party transaction agreements
described in the last Annual Report that could have a material effect on the
financial position or performance of the Company in the first six months of
the current financial year or to the date of this report.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors confirm that to the best of their knowledge:
• the condensed set of financial statements has been prepared in accordance
with International Accounting Standard 34, Interim Financial Reporting; and
gives a true and fair view of the assets, liabilities, financial position and
return of the Company; and
• this Half-Yearly Report includes a fair review of the information required
by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first six months
of the current financial year and that have materially affected the financial
position or performance of the Company during that period; and any changes in
the related party transactions described in the last Annual Report that could
do so.
This Half-Yearly Report was approved by the Board of Directors and the above
responsibility statement was signed on its behalf by:
Daniel Wright
Chairman
19 March 2025
Condensed Statement of Comprehensive Income
For the six months ended 31 January 2025
(Unaudited) Six months ended 31 January 2025 (Unaudited) Six months ended 31 January 2024 (Audited) Year ended 31 July 2024
Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000
Gains on investments at fair value through profit or loss 126 23,513 23,639 155 54,995 55,150 357 123,556 123,913
Investment income 605 - 605 526 - 526 1,092 - 1,092
Interest income 624 - 624 659 - 659 1,354 - 1,354
Gross return 1,355 23,513 24,868 1,340 54,995 56,335 2,803 123,556 126,359
Expenses
Management fee (1,256) - (1,256) (327) - (327) (1,458) - (1,458)
Other operating expenses (324) - (324) (270) - (270) (563) - (563)
Total expenses (1,580) - (1,580) (597) - (597) (2,021) - (2,021)
Return before finance costs and taxation (225) 23,513 23,288 743 54,995 55,738 782 123,556 124,338
Finance costs (61) (1,617) (1,678) (36) (1,319) (1,355) (68) (2,966) (3,034)
Return on ordinary activities before tax (286) 21,896 21,610 707 53,676 54,383 714 120,590 121,304
Taxation (46) - (46) (77) - (77) (144) - (144)
Return on ordinary activities after tax (332) 21,896 21,564 630 53,676 54,306 570 120,590 121,160
Return per Share: Basic and fully diluted (pence) (0.83) 54.60 53.77 1.57 133.54 135.11 1.42 300.03 301.45
The total column of this statement represents the Condensed Statement of
Comprehensive Income, prepared in accordance with international accounting
standards in conformity with the requirements of UK IFRS the Companies Act
2006. The supplementary revenue and capital columns are both prepared under
the Statement of Recommended Practice published by the Association of
Investment Companies (“AIC SORP”).
All items in the above statement are derived from continuing operations. No
operations were acquired or discontinued during the period.
There is no other comprehensive income, and therefore the return for the
period after tax is also the total comprehensive income.
The notes below form part of these financial statements.
Condensed Statement of Changes in Equity
For the six months ended 31 January 2025
For the six months from 1 August 2024 to 31 January 2025 (unaudited) Share capital £’000 Share premium £’000 Special reserve* £’000 Capital reserve* £’000 Retained earnings* £’000 Total £’000
Balance at 1 August 2024 10,132 25,888 86,468 211,611 - 334,099
Ordinary shares bought back and held in treasury - - (3,065) - - (3,065)
Total comprehensive income - - - 21,896 (332) 21,564
Dividends paid - - (2,807) - - (2,807)
Balance at 31 January 2025 10,132 25,888 80,596 233,507 (332) 349,791
For the six months from 1 August 2023 to 31 January 2024 (unaudited) Share capital £’000 Share premium £’000 Special reserve* £’000 Capital reserve* £’000 Retained earnings* £’000 Total £’000
Balance at 1 August 2023 10,132 25,888 94,338 91,021 - 221,379
Total comprehensive income - - - 53,676 630 54,306
Dividends paid - - (2,184) - (630) (2,814)
Balance at 31 January 2024 10,132 25,888 92,154 144,697 - 272,871
For the year from 1 August 2023 to 31 July 2024 (audited) Share capital £’000 Share premium £’000 Special reserve* £’000 Capital reserve* £’000 Retained earnings* £’000 Total £’000
Balance at 1 August 2023 10,132 25,888 94,338 91,021 - 221,379
Total comprehensive income - - - 120,590 570 121,160
Dividends paid - - (7,870) - (570) (8,440)
Balance at 31 July 2024 10,132 25,888 86,468 211,611 - 334,099
* These reserves are distributable, excluding any unrealised capital reserve.
The balance of the unrealised capital reserve at 31 January 2025 was
£170,096,000 (31 January 2024: £114,428,000; 31 July 2024: £161,436,000).
The notes below form part of these financial statements.
Condensed Statement of Financial Position
As at 31 January 2025
Notes (Unaudited) 31 January 2025 £’000 (Unaudited) 31 January 2024 £’000 (Audited) 31 July 2024 £’000
Non-current assets
Investments held at fair value through profit and loss 311,794 244,388 309,002
Current assets
Unrealised derivative assets 2,711 11,894 4,866
Trade and other receivables 195 124 419
Cash and cash equivalents 18,256 6,711 7,187
Cash collateral receivable from brokers 25,054 13,755 16,371
46,216 32,484 28,843
Creditors – amounts falling due within one year
Unrealised derivative liabilities (7,691) (1,858) (3,248)
Trade and other payables (528) (274) (498)
Cash collateral payable to brokers - (1,869) -
(8,219) (4,001) (3,746)
Net current assets 37,997 28,483 25,097
Net assets 349,791 272,871 334,099
Equity attributable to equity holders
Ordinary Share capital 10,132 10,132 10,132
Share premium 25,888 25,888 25,888
Special reserves 80,596 92,154 84,468
Capital reserves 233,507 144,697 211,611
Retained earnings (332) - -
Total equity Shareholders’ funds 349,791 272,871 334,099
Net asset value per Ordinary Share – basic and diluted (pence) 879.41 678.90 831.24
Number of shares in issue excluding treasury 3 39,775,645 40,193,018 40,193,018
The notes below form part of these financial statements.
Condensed Statement of Cash Flow
For the six months ended 31 January 2025
Six months to 31 January 2025 (Unaudited) £’000 Six months to 31 January 2024 (Unaudited) £’000 Year ended 31 July 2024 (Audited) £’000
Cash flow from operating activities
Return on operating activities before tax 21,610 54,383 121,304
Interest expense 1,678 1,355 3,034
Gains on investments held at fair value through profit or loss (22,576) (54,753) (123,533)
(Increase)/decrease in receivables (13) 23 (34)
(Decrease)/increase in payables (21) (32) 163
Exchange gains on currency balances (937) (240) (23)
Tax (46) (77) (144)
Net cash (used in)/generated from operating activities (305) 659 767
Cash flow from investing activities
Purchase of investments (9,813) (45,084) (79,749)
Sale of investments 31,366 33,376 65,875
Derivative instrument cashflows (3,617) 4,611 14,638
Net cash inflow/(outflow) in investing activities 17,936 (7,097) 764
Cash flow from financing activities
Ordinary shares bought back and held in treasury (3,052) - -
Equity dividends paid (2,807) (2,814) (8,440)
Interest paid (1,640) (1,326) (2,976)
Net cash used in financing activities (7,499) (4,140) (11,416)
Net increase/(decrease) in cash and cash equivalents 10,132 (10,578) (9,885)
Exchange gains on currency balances 937 240 23
Cash and cash equivalents at the beginning of the period 7,187 17,049 17,049
Cash and cash equivalents at the end of the period 18,256 6,711 7,187
The notes below form part of these financial statements.
Notes to the Condensed Financial Statements
1. Significant accounting policies
Basis of preparation
The condensed financial statements of the Company have been prepared in
accordance with international accounting standards, International Accounting
Standard 34 “Interim Financial Reporting”, in conformity with the
requirements of the Companies Act 2006.
In the current period, the Company has applied amendments to IFRS. These
include annual improvements to IFRS, changes in standards, legislative and
regulatory amendments, changes in disclosure and presentation requirements.
The adoption of these has not had any material impact on these financial
statements and the accounting policies used by the Company followed in these
half-year financial statements are consistent with the most recent Annual
Report for the year ended 31 July 2024.
Going concern
The financial statements have been prepared on a going concern basis and on
the basis that approval as an investment trust company will continue to be
met.
The Directors have made an assessment of the Company’s ability to continue
as a going concern and are satisfied that the Company has adequate resources
to continue in business for the foreseeable future, being a period of at least
12 months from the date these financial statements were approved. In making
the assessment, the Directors have considered the likely impacts of
international and economic uncertainties on the Company, operations and the
investment portfolio. These include, but are not limited to, the war in
Ukraine, political and economic instability in the UK, supply shortages and
inflationary pressures.
The Directors noted that the cash balance exceeds any short-term liabilities,
the Company holds a portfolio of liquid listed investments and is able to meet
the obligations of the Company as they fall due. The current cash enables
the Company to meet any funding requirements and finance future additional
investments. The Company is a closed end fund, where assets are not required
to be liquidated to meet day to day redemptions.
The Directors have completed stress tests assessing the impact of changes in
market value and income with associated cash flows. In making this
assessment, they have considered severe but plausible downside scenarios.
These tests apply equally to any set of circumstances in which asset value
and income are significantly impaired. The conclusion was that in a
plausible downside scenario the Company could continue to meet its
liabilities. Whilst the economic future is uncertain, and the Directors
believe that it is possible the Company could experience further reductions in
income and/or market value, and changes in expenses, the opinion of the
Directors is that this should not be to a level which would threaten the
Company’s ability to continue as a going concern.
The Directors also regularly assess the resilience of key third party service
providers, most notably the Investment Manager and Fund Administrator. The
Directors do not have any concerns about the financial viability of the
Company’s third party service providers. Furthermore, the Directors are
not aware of any material uncertainties that may cast significant doubt upon
the Company’s ability to continue as a going concern, having taken into
account the liquidity of the Company’s investment portfolio and the
Company’s financial position in respect of its cash flows, borrowing
facilities and investment commitments (of which there are none of
significance). Therefore, the financial statements have been prepared on the
going concern basis.
Comparative information
The financial information contained in this Half-Yearly Report does not
constitute statutory accounts as defined by the Companies Act 2006. The
financial information for the periods ended 31 January 2025 and 31 January
2024 have not been audited or reviewed by the Company’s Auditors.
The comparative figures for the year ended 31 July 2024 are an extract from
the latest published audited statements and do not constitute the Company’s
statutory accounts for that financial year. Those accounts have been
reported on by the Company’s Auditor and delivered to the Registrar of
Companies. The report of the Auditor was unqualified, did not include a
reference to any matters to which the Auditor drew attention by way of
emphasis without qualifying their report, and did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
1. Return per Ordinary Share
Returns per Ordinary Share are based on the weighted average number of Shares
in issue during the period. Normal and diluted return per Share are the same
as there are no dilutive elements of share capital.
Six months to 31 January 2025 (unaudited) Six months to 31 January 2024 (unaudited) Year ended 31 July 2024 (audited)
Net return £’000 Per Share pence Net return £’000 Per Share Pence Net Return £’000 Per Share Pence
Return on ordinary activities after tax
Revenue (332) (0.83) 630 1.57 570 1.42
Capital 21,896 54.60 53,676 133.54 120,590 300.03
Total return on ordinary activities 21,564 53.77 54,306 135.11 121,160 301.45
Weighted average number of Ordinary Shares 40,104,163 40,193,018 40,193,018
1. Share capital
Six months to 31 January 2025 (unaudited) Six months to 31 January 2024 (unaudited) Year ended 31 July 2024 (audited)
25p Ordinary Shares Number £’000 Number £’000 Number £’000
Opening Ordinary Shares in issue 40,528,238 10,132 40,528,238 10,132 40,528,238 10,132
Shares issued - - - - - -
Closing Ordinary Shares in issue 40,528,238 10,132 40,528,238 10,132 40,528,238 10,132
Treasury shares:
Balance at beginning of the period/year 335,220 335,220 335,220
Buyback of Ordinary shares into treasury 417,373 - -
Balance at end of period/year 752,593 335,220 335,220
Total Ordinary Share capital excluding treasury shares 39,775,645 40,193,018 40,193,018
The Company’s Share capital comprises Ordinary Shares of 25p each with one
vote per Share.
During the period no Ordinary Shares were issued (six months to 31 January
2024: nil; year ended 31 July 2024: nil), with net consideration of £nil (six
months to 31 January 2024: £nil; year ended 31 July 2024: £nil).
During the period 417,373 Ordinary Shares were bought back and placed in
treasury (six months to 31 January 2024: nil; year ended 31 July 2024: nil).
1. Dividends per Ordinary Share
The Board has declared an interim dividend of 7p per Ordinary Share and a
special dividend of 7p per Ordinary Share (2024: interim dividend of 7p per
Ordinary Share) which will be paid on 8 May 2025 to Shareholders registered at
the close of business on 11 April 2025 (ex-dividend 10 April 2025).
This dividend has not been included as a liability in these financial
statements.
1. Net asset value per Ordinary Share
Net asset value per Ordinary Share is based on net assets of £349,791,000 (31
January 2024: £272,871,000; 31 July 2024: £334,099,000) at the period end
and 39,775,645 (31 January 2024: 40,193,018; 31 July 2024: 40,193,018) being
the number of Ordinary Shares excluding Treasury Shares in issue at the period
end.
1. Fair value hierarchy
The Company measures fair values using the following hierarchy that reflects
the significance of the inputs used in making the measurements.
The fair value is the amount at which the asset could be sold in an ordinary
transaction between market participants, at the measurement date, other than a
forced or liquidation sale.
The Company measures fair values using the following hierarchy that reflects
the significance of the inputs used in making the measurements.
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset as follows:
* Level 1 – valued using quoted prices, unadjusted in active markets for
identical assets and liabilities.
* Level 2 – valued by reference to valuation techniques using observable
inputs for the asset or liability other than quoted prices included in Level
1.
* Level 3 – valued by reference to valuation techniques using inputs that
are not based on observable market data for the asset or liability.
The tables below set out fair value measurement of financial instruments, by
the level in the fair value hierarchy into which the fair value measurement is
categorised.
Financial assets/liabilities at fair value through profit or loss at 31
January 2025
Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Investments 311,794 - - 311,794
Unrealised derivatives assets - 2,711 - 2,711
Unrealised derivative liability - (7,691) - (7,691)
Total 311,794 (4,980) - 306,814
Financial assets/liabilities at fair value through profit or loss at 31
January 2024
Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Investments 244,388 - - 244,388
Unrealised derivatives assets - 11,894 - 11,894
Unrealised derivative liability - (1,858) - (1,858)
Total 244,388 10,036 - 254,424
Financial assets/liabilities at fair value through profit or loss at 31 July
2024
Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Investments 309,002 - - 309,002
Unrealised derivatives assets - 4,866 - 4,866
Unrealised derivative liability - (3,248) - (3,248)
Total 309,002 1,618 - 310,620
1. Transactions with the Manager and related parties
M&L Capital Management Limited (“MLCM”), a company controlled by Mark
Sheppard, acts as Manager to the Company. Mark Sheppard is also a director
of M&M Investment Company plc (“MMIC”) which is the controlling
Shareholder of the Company.
During the six months to 31 January 2025, MMIC (including connected parties)
purchased 277,022 Ordinary shares, with net consideration of £2,023,972.46.
As at 31 January 2025, MMIC (including connected parties) was interested in
a total of 23,577,888 Ordinary Shares of 25 pence each in the Company,
representing 59.3% of the issued share capital.
Total fees charged by the Manager for the six months to 31 January 2025 were
£1,256,000 (six months to 31 January 2024: £327,000; year ended 31 July
2024: £1,458,000), of which £213,000 was outstanding as at 31 January 2025
(31 January 2024: £63,000 31 July 2024: £218,000).
The fees payable to Directors are set out in the 2024 Annual Report.
There were no other related party transactions in the period.
1. Post Statement of Financial Position event
There were no other significant events since the end of the reporting period.
1. Glossary
Reference should be made to the Glossary in our Annual Report for the year
ended 31 July 2024 (pages 90 to 92) for a definition of key terms and
Alternative Performance Measures (such as NAV, NAV per Share and Total
Return).
INVESTMENT OBJECTIVE
The investment objective of the Company is to achieve capital appreciation.
INVESTMENT POLICY
Asset allocation
The Company’s investment objective is sought to be achieved through a policy
of actively investing in a diversified portfolio, comprising any of global
equities and/or fixed interest securities and/or derivatives.
The Company may invest in derivatives, money market instruments, currency
instruments, contracts for differences (“CFDs”), futures, forwards and
options for the purposes of (i) holding investments and (ii) hedging positions
against movements in, for example, equity markets, currencies and interest
rates.
The Company seeks investment exposure to companies whose shares are listed,
quoted or admitted to trading. However, it may invest up to 10% of gross
assets (at the time of investment) in the equities and/or fixed interest
securities of companies whose shares are not listed, quoted or admitted to
trading.
Risk diversification
The Company intends to maintain a diversified portfolio and it is expected
that the portfolio will have between approximately 20 to 100 holdings. No
single holding will represent more than 20% of gross assets at the time of
investment. In addition, the Company’s five largest holdings (by value)
will not exceed (at the time of investment) more than 75% of gross assets.
Although there are no restrictions on the constituents of the Company’s
portfolio by geography, industry sector or asset class, it is intended that
the Company will hold investments across a number of geographies and industry
sectors. During periods in which changes in economic, political or market
conditions or other factors so warrant, the Manager may reduce the Company’s
exposure to one or more asset classes and increase the Company’s position in
cash and/or money market instruments.
The Company will not invest more than 15% of its total assets in other listed
closed-ended investment funds. However, the Company may invest up to 50% of
gross assets (at the time of investment) in an investment company subsidiary,
subject always to the other restrictions set out in this investment policy and
the Listing Rules.
Gearing
The Company may borrow to gear the Company’s returns when the Manager
believes it is in Shareholders’ interests to do so. The Company’s
Articles of Association (“Articles”) restrict the level of borrowings that
the Company may incur up to a sum equal to two times the net asset value of
the Company as shown by the then latest audited balance sheet of the Company.
The effect of gearing may be achieved without borrowing by investing in a
range of different types of investments including derivatives. Save with the
approval of Shareholders, the Company will not enter into any investments
which have the effect of increasing the Company’s net gearing beyond the
limit on borrowings stated in the Articles.
General
In addition to the above, the Company will observe the investment restrictions
imposed from time to time by the Listing Rules which are applicable to
investment companies with shares listed on the Official List of the Financial
Conduct Authority (“FCA”).
No material change will be made to the investment policy without the approval
of Shareholders by ordinary resolution.
In the event of any breach of the investment restrictions applicable to the
Company, Shareholders will be informed of the remedial actions to be taken by
the Board and the Manager by an announcement issued through a regulatory
information service approved by the FCA.
Investment Strategy and Style
The fund’s portfolio is constructed with flexibility but is primarily
focused on stocks that exhibit the attributes of growth.
Target Benchmark
The Company was originally set up by Brian Sheppard as a vehicle for British
retail investors to invest in with the hope that total returns would exceed
the total returns on the UK equity market. Hence, the benchmark the Company
uses to assess performance is one of the many available UK equity indices
being the MSCI UK Investable Market Index (MXGBIM). The Company has used
this benchmark to assess performance for over five years but is not set on
using this particular UK Equity index forever into the future and currently
uses this particular UK Equity index because at the current time it is viewed
as the most cost advantageous of the currently available UK Equity indices
(which have a high degree of correlation and hence substitutability).
However, once the Company announces the use of an index, then this index
should be used across all of the Company’s documentation.
Investments for the portfolio are not selected from constituents of this index
and hence the investment remit is in no way constrained by the index, although
the Manager’s management fee is varied depending on performance against the
benchmark. It is suggested that Shareholders review the Company’s Active
Share Ratio that is on the fund factsheets as this illustrates to what degree
the holdings in the portfolio vary from the underlying benchmark.
Environmental, Social, Community and Governance
The Company considers that it does not fall within the scope of the Modern
Slavery Act 2015 and it is not, therefore, obliged to make a slavery and human
trafficking statement. In any event, the Company considers its supply chains
to be of low risk as its suppliers are typically professional advisers.
In its oversight of the Manager and the Company’s other service providers,
the Board seeks assurances that they have regard to the benefits of diversity
and promote these within their respective organisations. The Company has
given discretionary voting powers to the Manager. The Manager votes against
resolutions they consider may damage Shareholders’ rights or economic
interests and report their actions to the Board. The Company believes it is
in the Shareholders’ interests to consider environmental, social, community
and governance factors when selecting and retaining investments and has asked
the Manager to take these issues into account. The Manager does not exclude
companies from their investment universe purely on the grounds of these
factors but adopts a positive approach towards companies which promote these
factors. The portfolio’s the alytics Environmental Percentile was 82.8 per
cent as at 31 January 2025.
The Company notes the Task Force on Climate-related Financial Disclosures
(‘TCFD’) reporting recommendations. However, as a listed investment
company, the Company is not subject to the Listing Rule requirement to report
against the framework. The Company fully recognises the impact climate
change has on the environment and society, and the Manager continues to work
with the investee companies to raise awareness on climate change risks, carbon
emission and energy efficiency.
SHAREHOLDER INFORMATION
Investing in the Company
The Shares of the Company are listed on the Official List of the FCA and
traded on the London Stock Exchange. Private investors can buy or sell Shares
by placing an order either directly with a stockbroker or through an
independent financial adviser.
Electronic communications from the Company
Shareholders now have the opportunity to be notified by email when the
Company’s Annual Report, Half-Yearly Report and other formal communications
are available on the Company’s website, instead of receiving printed copies
by post. This reduces the cost to the Company as well as having an
environmental benefit in the reduction of paper, printing, energy and water
usage. If you have not already elected to receive electronic communications
from the Company and now wish to do so, visit www.signalshares.com. All you
need to register is your investor code, which can be found on your Share
certificate or your dividend confirmation statement.
Alternatively, you can contact MUFG Corporate Markets’ Customer Support
Centre which is available to answer any queries you have in relation to your
shareholding: By phone: 0371 664 0300 (from overseas call +44 (0) 371 664
0300). Calls are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the applicable
international rate. Lines are open between 09:00 - 17:30, Monday to Friday
excluding public holidays in England and Wales.
By email – shareholderenquiries@cm.mpms.mufg.com
By post – MUFG Corporate Markets - Share Dealing, Central Square, 29
Wellington Street, Leeds, LS1 4DL.
Frequency of NAV publication
The Company’s NAV is released to the London Stock Exchange on a weekly
basis.
Sources of further information
Copies of the Company’s Annual and Half-Yearly Reports, factsheets and
further information on the Company can be obtained from its website:
www.mlcapman.com/manchester-london-investment-trust-plc.
Key dates
Half-Yearly results announced March
Interim dividend payment May
Company’s year end 31 July
Annual results announced September
Annual General Meeting November
Expected final dividend payment November
Company’s half-year end 31 January
CORPORATE INFORMATION
Directors and Advisors
Directors Auditor
Daniel Wright (Chairman) Deloitte 110 Queen Street Glasgow G1 3BX
Brett Miller
Sir James Waterlow
Daren Morris
Manager and Alternative Investment Fund Manager Administrator
M&L Capital Management Limited 12a Princes Gate Mews London SW7 2PS ir@mlcapman.com www.mlcapman.com Waystone Administration Solutions (UK) Limited Broadwalk House Southernhay West Exeter EX1 1TS
Company Secretary Registrar
MUFG Corporate Governance Limited 19th Floor 51 Lime Street London EC3M 7DQ MUFG Corporate Markets (UK) Limited 10th Floor Central Square 29 Wellington Street Leeds LS1 4DL Tel: 0371 664 0300 Email: shareholderenquiries@linkgroup.co.uk
Depositary Bank
Indos Financial Limited The Scalpel 18th Floor 52 Lime Street London EC3M 7AF National Westminster Bank plc 11 Spring Gardens Manchester M60 2DB
Company Details
Registered office Country of incorporation
12a Princes Gate Mews London SW7 2PS Registered in England and Wales Company Number: 01009550
Company website
www.mlcapman.com/manchester-london-investment-trust-plc
LEI: 213800HMBZXULR2EEO10
Name of authorised official of issuer responsible for making notification
MUFG Corporate Governance Limited, Company Secretary
Tel: 0333 300 1950
19 March 2025
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