Manchester & London Invest

Correction : Annual Financial Report

The Company notes that the announcement released at 7.00am on 29 September 2021
under reference PRNUK-2809211730-CB0B contained a typographical error.

The Strategic Report has been corrected to remove the word “revised” in the
last sentence of the first paragraph in the section on Management Arrangements.

All other details in the announcement remain correct.


MANCHESTER AND LONDON INVESTMENT TRUST PLC

(the “Company”)

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 JULY 2021

The full Annual Report and Financial Statements for the year ended 31 July 2021 can be found on the Company’s website at www.mlcapman.com/manchester-london-investment-trust-plc.

STRATEGIC REPORT

Financial Summary

Total Return Year to 
31 July 
 2021 
Year to 
31 July 
2020  
Percentage 
increase

Total return (£000)
22,222 24,037  (7.6%)

Return per Share
57.10p 74.74p  (23.6%)

Total revenue return per Share
(4.77p) (5.47p) 12.8%

Dividend per Share
14.00p 14.00p  0.00%

   

Capital As at 
31 July 
2021 
As at 
31 July 
2020 
Percentage
increase

Net assets attributable to equity Shareholders(i) (£000)
269,686   225,933  19.4%

Net asset value (“NAV”) per Share
665.43p 625.23p  6.4%

NAV total return(ii)†
8.7% 12.8% 

Benchmark performance - total return basis(iii)
26.1% (19.6%)

Share price
574.00p 630.00p  (8.9)%

Share price premium/(discount) to NAV
(13.7%) 0.76%

 (i) NAV as at 31 July 2021 includes a net £26,946,000 increase in respect of new Shares issued in the year (2020: £39,894,000 increase).

(ii) Total return including dividends reinvested, as sourced from Bloomberg.

(iii) The Company’s benchmark is the MSCI UK Investable Market Index (“MXGBIM or the “benchmark”), as sourced from Bloomberg.

Ongoing Charges Year to 
31 July 
2021 
Year to 
31 July 
2020 
Ongoing charges as a percentage of average net assets*
0.78%

0.77%

* Based on total expenses, excluding finance costs and certain non-recurring items for the year and average monthly NAV.

Alternative performance measure. Details provided in the Glossary below.

CHAIRMAN’S STATEMENT

Results for the year ended 31 July 2021

The portfolio remains focused on larger capitalisation, intellectual property rich companies listed in developed markets which are investing for growth.

Manchester and London Investment Trust plc’s (the “Company”) portfolio performance for the financial year under review has led to a NAV total return per Share of 8.7%* (2020: 12.8%*). The outperformance of the Company against our benchmark for the three years to 31 July 2021 on a total return basis now stands at 32.2%* (2020: 68.5%*).

At the year end, the Shares traded at a 13.7% discount to their NAV per Share, compared to a premium of 0.8% in 2020. Whilst a discount is not ideal, many of the larger technology focused investments trusts listed in the UK also experienced widening discounts.

Dividend

The Directors are proposing a final ordinary dividend of 7.0 pence per Share for the financial year 2021. Accordingly, on a per Share basis, the dividends proposed or paid out in respect of the 2021 financial year total 14.0 pence, including the 7.0 pence interim dividend paid in May 2021. These dividends represent a yield of 2.4% on the Share price as at the year-end (2020: 2.2%).

Shareholder Benefits

I would like to remind Shareholders that the two centre court debentures for The All England Lawn Tennis Ground Ltd that were the subject of an annual draw were sold by the Company as announced on 25 June 2020 and the proceeds reinvested in the portfolio. Therefore this benefit is no longer offered.

Annual General Meeting

Our forty-ninth Annual General Meeting (“AGM”) will be held on 3 November 2021 at 12.00 noon at 12a Princes Gate Mews, London, SW7 2PS. Please do read further details on restrictions on attendance at this year’s AGM, which are contained within the AGM notice.

David Harris

Chairman

28 September 2021

* Source: Bloomberg, See Glossary below.

MANAGER’S REVIEW

The portfolio’s NAV total return per Share of 8.7%* represented a 17.5%* underperformance against the benchmark. This was driven partly by a period of rotation from growth to value, which saw Big Tech materially lag Cyclical sectors (to which the benchmark is significantly more exposed).

Secondly, the material pullback in Chinese Tech stocks towards the end of the year (mainly due to increased regulatory activity) also significantly detracted from portfolio performance (please see the Company’s factsheet available on our website for the latest geographical exposure figures).

Thirdly, a 6.3%* increase in the value of Sterling against the US Dollar over the year was a headwind against performance due to the significant level of US Dollar exposure in the portfolio. Overall, we estimate that the reduction in portfolio performance from Foreign Exchange was roughly 6.4%.

The Total Return of the portfolio broken down by sector holdings in local currency (separating costs and foreign exchange) is shown below:


Total return of underlying sector holdings in local currency
(excluding costs and foreign exchange)


2021 
Information Technology 12.3%
Communication Services 7.9%
Consumer Discretionary (1.8%)
Other investments (including funds, ETFs and beta hedges) (1.4%)
Foreign exchange, operating costs & financing (8.4%)
Total NAV per Share return 8.7%

   


Total return of underlying sector holdings in local currency
(excluding costs and foreign exchange)


2020 
Information Technology 7.2% 
Communication Services 5.0% 
Consumer Discretionary 7.6% 
Other investments (including funds, ETFs and beta hedges)
Foreign Exchange, operating costs & financing
  2.5%
(9.6%) 
Total NAV per Share return 12.8% 

Source: Bloomberg.

Information Technology

The Information Technology sector delivered roughly 141.4% of the NAV total return per Share.

Material positive performers included Microsoft Corporation, ASML Holding NV, Adobe Inc and Salesforce.com Inc.

There were no material negative contributors.

The portfolio’s weighting to this sector (including options on a MTM basis) at the year end was 42.1% of the net assets (2020: 38.1%).

Communication Services

The Communication Services sector delivered roughly 90.8% of the NAV total return per share.

Material positive contributors included Alphabet Inc and Facebook Inc.

On a Delta Adjusted basis we reduced exposure to Alphabet Inc over the year due to concerns over their concentration of earnings from Search and regulatory fears. We continue to hold the position as our sold call options are close to strike and hence if the options expire at strike we have the potential to earn an annualized return of 10.1 per cent (as at 30 July 2021), a significant amount of which would be from time decay alone.

Tencent Holdings Ltd was the only material negative contributor.

The portfolio’s weighting to this sector (including options on a MTM basis) at year end was 44.9% of the net assets (2020: 33.4%).

Consumer Discretionary

The Consumer discretionary sector delivered (20.7%) of the NAV total return per share.

Loses from Alibaba Group Holding Ltd were the primary driver of the negative returns in this sector, outweighing a positive contribution from Amazon.com Inc (the only other key holding in the sector).

The portfolio’s weighting to this sector (including options on a MTM basis) at year end was 25.9% of the net assets (2020: 29.8%).

Other (including funds, ETFs and beta hedges)

Other holdings delivered (16.1%) of the NAV total return per Share.

The majority of the losses in this sector came from Hong Kong & Chinese equity ETF holdings, particularly CSOP Hang Seng TECH Index ETF and KraneShares CSI China Internet Fund (which was disposed of prior to the year end).

Material positive contributors included iShares Expanded Tech-Software Sector ETF (disposed of prior to the year-end), Polar Capital Technology Trust Plc and iShares China CNY Bond UCITS ETF (fixed income ETF).

The portfolio’s weighting to this sector (including options on a MTM basis) at year end was 18.4% of the net assets (2020: 5.9%).

Professional negligence liability risks

M & L Capital Management Limited (“MLCM”), the Manager of the Company, allocates additional own funds against professional liability risks and hence it no longer requires professional liability insurance.

Keeping in Touch

May we remind shareholders that the best way to keep abreast of our views and activities is via the Twitter feed @MLCapMan. In addition, subscription to our Newsletter can be undertaken at www.mlcapman.com.

M&L Capital Management Limited

Manager

28 September 2021

*Source: Bloomberg. See Glossary below.

Equity exposures and portfolio sector analysis

Equity exposures (longs)

As at 31 July 2021

Company Sector * Valuation 
£000 
% of net 
assets 
Alphabet Inc.** Consumer services 57,810 21.44
Microsoft Corporation** Information Technology 53,184 19.72
Almazon.com Inc. Consumer Discretionary 45,713 16.95
Adobe Inc.** Information Technology 29,859 11.07
Facebook Inc.** Communication services 29,591 10.97
Alibaba Group Holding Ltd** Consumer Discretionary 24,676 9.15
iShares China CNY Bond USD-D** Fixed Income 23,096 8.57
Tencent Holdings Ltd** Communication services 20,707 7.68
salesforce.com Inc.** Information Technology 18,784 6.97
Netflix Inc.** Communication services 16,487 6.11
ASML Holding NV** Information Technology 16,348 6.06
CSOP Hang Send Tech Index HKD** ETF 15,755 5.84
Polar Capital Technology TR Fund 6,979 2.59
Zynga Inc – CL A Communication services 5,371 1.99
Invesco QQQ Trust Series 1 ETF 2,490 0.92
Global X Cloud Computing ETF** ETF 1,274 0.47
Netease Inc.** Communication Services 399 0.15
Total long positions 368,523 136.65
Other net assets and liabilities (98,837) (36.65)
Net assets 269,686 100.00

*GICS – Global Industry Classification Standard.

**Including equity swap exposures as detailed in note 13.

Portfolio sector analysis

As at 31 July 2021


Sector
% of net 
 assets 
Information Technology 43.8
Communication services 48.3
Consumer Discretionary 26.1
Fund 2.6
Fixed Income 8.6
ETF 7.2
Cash and other net assets and liabilities (36.6)
Net assets 100.0

PRINCIPAL PORTFOLIO HOLDINGS

Amazon.com Inc. (“Amazon”)

Amazon is the world’s largest e-commerce platform and remains a disruptive force in the retail market. Amazon also provides other large scale content and services platforms to consumers and businesses such as Amazon Prime, Amazon Web Services and Amazon Logistics.

Alphabet Inc. (“Alphabet”)

Alphabet is a global technology company with products and platforms across a wide range of tech verticals, including online advertising, cloud-based technology, autonomous vehicles, artificial intelligence and smart phones.

Microsoft Corporation (“Microsoft”)

Microsoft is another global tech company and a leader in cloud-based technology, business software, operating systems and gaming.

Alibaba Group Holding Ltd (“Alibaba”)

Alibaba is one of China’s largest technology company with leading platforms in e-commerce, payments, media, entertainment and cloud computing.

Facebook Inc. (“Facebook”)

Facebook is the largest global social media platform with over 2.9 billion monthly active users and has the second largest global online advertising revenue after Google.

Salesforce.com Inc. (“Salesforce”)

Salesforce is the global leader in CRM software and a major enterprise cloud platform and software-as-a-service (“SAAS”) provider.

Tencent Holdings Ltd (“Tencent”)

Tencent is a Chinese internet company, with platforms in online gaming, social media, digital payments and digital entertainment. Through WeChat, Tencent has built one of Asia’s leading SuperApps with over 1.25 billion monthly active users.

Adobe Inc. (“Adobe”)

Adobe is a SAAS company that provides cloud-based creative, marketing and analytics tools to businesses, professionals and prosumers. Adobe is perhaps best known for Photoshop – imaging, design and photo-editing software.

Netflix Inc. (“Netflix”)

Netflix is a global streaming service for TV shows, Movies and Documentaries with an extensive library of third party and original content. Although Netflix already has good penetration in western markets we still see runway for global expansion, price increases and entry into new content areas such as gaming.

ASML Holding NV (“ASML”)

ASML is a producer of Semiconductor manufacturing equipment, with a near monopoly in advanced EUV lithography, which is one of the leading edge production technologies in the industry’s never ending quest to make smaller and more advanced chips.

All Equity & Debt portfolio holdings

As at 31 July 2021

Stocks Gross
(Underlying Only) % of NAV 
Net Delta
(inc Net Delta
exposure of
options)% of
NAV
Amazon.com Inc. 17.0% 16.2%
Microsoft Corporation 19.7% 14.4%
Alphabet Inc. 21.4% 11.4%
Alibaba Group Holding Ltd 9.2% 9.2%
Ishares China CNY Bond USD-D 8.6% 8.6%
Adobe Inc. 11.1% 8.2%
Tencent Holdings Ltd 7.7% 7.6%
Salesforce.com Inc. 7.0% 7.0%
Facebook Inc. 11.0% 6.5%
Netflix Inc. 6.1% 6.1%
ASML Holding NV 6.1% 6.0%
CSOP Hang Seng Tech Index HKD 5.8% 5.8%
Polar Capital Technology TR 2.6% 2.6%
Zynga Inc – CL A 2.0% 2.1%
Invesco QQQ Trust Series 1 0.9% 0.9%
Global X Cloud Computing ETF 0.5% 0.5%
Netease Inc. 0.1% 0.1%
Nvidia Corp 0.1%
Match Group Inc. 0.1%
Discovery Inc 0.1%
Advanced Micro Devices Inc 0.0%
Monster Beverage Corp 0.0%
Paypal Inc. 0.0%
Dropbox Inc. 0.0%
Ebay Inc. 0.0%
Total 136.7 113.5
Total for Equity Positions Only 128.2 104.9

For an explanation of why we report exposures on a Delta Adjusted basis on our Fact Sheet

please read our FAQ at https://mlcapman.com/faq/

Rounding throughout this report is done on a line by line basis not a total basis.

Investment record of the last ten years

Year ended Total 
Return  (£000)
Return per 
Share* 
(p)
Dividend per 
 Share 
(p)
Net assets (£000) NAV per
Share*
(p)
31 July 2012 (19,945) (88.81) 13.00  75,515 336
31 July 2013 2,522  11.23  13.75  75,050 334.19
31 July 2014 (6,295) (28.08) 13.75  64,361 293.20
31 July 2015 2,483  11.47  6.00  63,074 293.35
31 July 2016 13,424  62.50  13.36  75,546 350.81
31 July 2017 20,055  92.43  9.00  94,661 429.05
31 July 2018 26,792  115.27  12.00  130,388 532.81
31 July 2019 15,900  58.75  14.00  166,981 568.66
31 July 2020 24,037  74.74  14.00  225,933 625.23
31 July 2021 22,222 57.10 14.00 269,686 665.43

* Basic and fully diluted.

Business model

The Company is an investment company as defined by Section 833 of the Companies Act 2006 and operates as an investment trust in accordance with Section 1158 of the Corporation Tax Act 2010.

The Company is also governed by the Listing Rules and Disclosure Guidance and Transparency Rules of the Financial Conduct Authority (the “FCA”) and is listed on the Premium Segment of the Main Market of the London Stock Exchange.

A review of investment activities for the year ended 31 July 2021 is detailed in the Manager’s Review above.

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 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 is not set on just using this index for the future and currently uses this particular UK index because at the current time it is viewed as the most cost advantageous of the currently available UK indices. However, once the Company announces the use of an index, then this index will 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 reports 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 Sustainalytic’s Environmental Percentile was 80.7 per cent as at the Latest Factsheet date

Stakeholder Engagement

The Company’s s172 Statement can be found in the Corporate Governance Statement in the full Annual Report and is incorporated into this Strategic Report by reference.

Dividend policy

The Company may declare dividends as justified by funds available for distribution. The Company will not retain in respect of any accounting period an amount which is greater than 15% of net revenue in that period.

Recurring income from dividends on underlying holdings is paid out as ordinary dividends.

Results and dividends

The results for the year are set out in the Statement of Comprehensive Income and in the Statement of Changes in Equity below.

For the year ended 31 July 2021, the net revenue return attributable to Shareholders was negative £1,857,000 (2020: negative £1,759,000) and the net capital return attributable to Shareholders was £24,079,000 (2020: £25,796,000). Total Shareholders’ funds increased by 19% to £269,686,000 (2020: £225,933,000).

The dividends paid/proposed by the Board for 2020 and 2021 are set out below:

Year ended 31 July 2021
(pence per Share)
Year ended 31 July 2020
(pence per Share)
Interim dividend 7.00 7.00
Proposed final dividend 7.00 7.00
14.00 14.00

Subject to the approval of Shareholders at the forthcoming AGM, the proposed final ordinary dividend will be payable on 9 November 2021 to Shareholders on the register at the close of business on 15 October 2021. The ex-dividend date will be 14 October 2021.

Further details of the dividends paid in respect of the years ended 31 July 2021 and 31 July 2020 are set out in note 7 below.

Principal risks and uncertainties

The Board considers that the following are the principal risks and uncertainties facing the Company. The actions taken to manage each of these are set out below. If one or more of these risks materialised, it could potentially have a significant impact upon the Company’s ability to achieve its investment objective. These risks are formalised within the risk matrix maintained by the Company’s Manager.

Risk How the risk is managed
Investment Performance Risk
The performance of the Company may not be in line with its investment objectives.
Investment performance is monitored and reviewed daily by MLCM as AIFM through:

• Intra-day portfolio statistics; and
• Daily Risk, Liquidity & Volatility reports.

The metrics and statistics within these reports may be used (in combination with other factors) to help inform investment decisions.

The AIFM also provides the Board with monthly performance updates, key portfolio stats (including performance attribution, valuation metrics, VaR and liquidity analysis) and performance charts of top portfolio holdings.

It should be noted that none of the above steps guarantee that Company performance will meet its stated objectives.
Key Man Risk and Reputational Risk
The Company may be unable to fulfil its investment objectives following the departure of key staff of the Manager.
The Manager has a remuneration policy that incentivises key staff to take a long-term view as variable rewards are spread over a five-year period. MLCM also has documented policies and procedures, including a business continuity plan, to ensure continuity of operations in the unlikely event of a departure.

MLCM has a comprehensive compliance framework to ensure strict adherence to relevant governance rules and requirements.
Fund Valuation Risk
The Company’s valuation is not accurately represented to investors.
NAVs are produced independently by the Administrator, based on the Company’s valuation policy.

Valuation is overseen and reviewed by the AIFM’s valuation committee which reconciles and checks NAV reports prior to publication.

It should be noted that the vast majority of the portfolio consists of quoted equities, whose prices are provided by independent market sources; hence material input into the valuation process is rarely required from the valuation committee.
Third-Party Service Providers
Failure of outsourced service providers in performing their contractual duties.
All outsourced relationships are subject to an extensive dual-directional due diligence process and to ongoing monitoring. Where possible, the Company appoints a diversified pool of outsourced providers to ensure continuity of operations should a service provider fail.

The cyber security of third-party service providers is a key risk that is monitored on an ongoing basis. The safe custody of the Company’s assets may be compromised through control failures by the Depositary or Custodian, including cyber security incidents. To mitigate this risk, the AIFM receives monthly reports from the Depositary confirming safe custody of the Company’s assets held by the Custodian.
Regulatory Risk
A breach of regulatory rules/ other legislation resulting in the Company not meeting its objectives or investors’ loss.
The AIFM adopts a series of pre-trade and post-trade controls to minimise breaches. MLCM uses a fully integrated order management system, electronic execution system, portfolio management system and risk system developed by Bloomberg. These systems include automated compliance checks, both pre- and post-execution, in addition to manual checks by the investment team. The AIFM undertakes ongoing compliance monitoring of the portfolio through a system of daily reporting.

Furthermore, there is additional oversight from the Depositary, which ensures that there are three distinct layers of independent monitoring.
Fiduciary Risk
The Company may not be managed to the agreed guidelines.
The Company has a clear documented investment policy and risk profile. The AIFM employs various controls and monitoring processes to ensure guidelines are adhered to (including pre- and post-execution checks as mentioned above and monthly Risk meetings). Additional oversight is also provided by the Company’s Depositary.
.
Fraud Risk
Fraudulent actions may cause loss.
The AIFM has extensive fraud prevention controls and adopts a zero tolerance approach towards fraudulent behaviour and breaches of protocol surrounding fraud prevention. The transfer of cash or securities involve the use of dual authorisation and two-factor authentication to ensure fraud prevention, such that only authorised personnel are able to access the core systems and submit transfers. The second line of defence has access to core systems to ensure complete oversight of all transactions.

In addition to the above, the Board considers the following to be the principal financial risks associated with investing in the Company: market risk, interest rate risk, liquidity risk, currency rate risk and credit and counterparty risk. An explanation of these risks and how they are managed along with the Company’s capital management policies are contained in note 16 of the Financial Statements below.

The Board, through the Audit Committee, has undertaken a robust assessment and review of all the risks stated above and in note 16 of the Financial Statements, together with a review of any emerging or new risks which may have arisen during the year, including those that would threaten the Company’s business model, future performance, solvency or liquidity. Whilst reviewing the principal risks and uncertainties, the Board considered the impact of the COVID-19 pandemic on the Company, concluding that the pandemic did not materially affect the operations of the business.

In accordance with guidance issued to directors of listed companies, the Directors confirm that they have carried out a review of the effectiveness of the systems of internal financial control during the year ended 31 July 2021, as set out in the full Annual Report. There were no matters arising from this review that required further investigation and no significant failings or weaknesses were identified.

Further discussion about risk considerations can be found in the Company’s latest prospectus available at https://mlcapman.com/manchester-london-investment-trust-plc/

Year-end gearing

At the year end, gross long equity exposure represented 136.65% (2020: 117.86%) of net assets.

Key performance indicators

The Board considers the most important key performance indicator to be the comparison with its benchmark index. This is referred to in the Financial Summary above.

Other key measures by which the Board judges the success of the Company are the Share price, the NAV per Share and the ongoing charges measure.

Total net assets at 31 July 2021 amounted to £269,686,000 compared with £225,933,000 at 31 July 2020, an increase of 19.4%, whilst the fully diluted NAV per Share increased to 665.43p from 625.23p.

Net revenue return after taxation for the year was a negative £1,857,000 (2020: negative £1,759,000).

The quoted Share price during the period under review has ranged from a discount of 14.1% to a premium of 6.2%.

Ongoing charges, which are set out above, are a measure of the total expenses (including those charged to capital) expressed as a percentage of the average net assets over the year. The Board regularly reviews the ongoing charges measure and monitors Company expenses.

Future development

The Board and the Manager do not currently foresee any material changes to the business of the Company in the near future. As the majority of the Company’s equity investments are denominated in US Dollar, any currency volatility may have an impact (either positive or negative) on the Company’s NAV per Share, which is denominated in Sterling.

Management arrangements

Under the terms of the management agreement, MLCM manages the Company's portfolio in accordance with the investment policy determined by the Board. The management agreement has a termination period of three months. In line with the management agreement, the Manager receives a variable portfolio management fee. Details of the fee arrangements and the fees paid to the Manager during the year are disclosed in note 3 to the Financial Statements.

The Manager is authorised and regulated by the FCA.

M&M Investment Company Plc (“MMIC”), which is controlled by Mr Mark Sheppard who forms part of the Manager’s investment management team, is the controlling Shareholder of the Company. Further details regarding this are set out in the Directors’ Report in the full Annual Report.

Alternative Investment Fund Managers Directive (the “AIFMD”)

The Company permanently exceeded the sub-threshold limit under the AIFMD in 2017 and MLCM was appointed as the Company’s AIFM with effect from 17 January 2018. Following their appointment as the AIFM, MLCM receives an annual risk management and valuation fee of £59,000 to undertake its duties as the AIFM in addition to the portfolio management fees set out above.

The AIFMD requires certain information to be made available to investors before they invest and requires that material changes to this information be disclosed in the Annual Report.

Remuneration

In the year to 31 July 2021, the total remuneration paid to the employees of the Manager was £486,000 (2020: £429,000), payable to an average employee number throughout the year of four (2020: four).

The management of MLCM is undertaken by Mr Mark Sheppard and Mr Richard Morgan, to whom a combined total of £401,000 (2020: £347,000) was paid by the Manager during the year.

The remuneration policy of the Manager is to pay fixed annual salaries, with non-guaranteed bonuses, dependent upon performance only. These bonuses are generally paid in the Company’s Shares, released over a three-year period.

Leverage

Leverage is defined in the Glossary below.

The leverage policy has been approved by the Company and the AIFM. The policy limits the leverage ratio that can be deployed by the Company at any one time to 275% (gross method) and 250% (commitment method). This includes any gearing created by its investment policy. This is a maximum figure as required by regulation and not necessarily the amount of leverage that is actually used. The leverage ratio as at 31 July 2021 measured by the gross method was 181.6% and that measured by the commitment method was 127.9%.

Risk profile

The risk profile of the Company as measured through the Synthetic Risk Reward Indicator (“SRRI”) score, is currently at 5 on a scale of 1 to 7 as at 31 July 2021. This score is calculated on past performance data using prescribed PRIIPS methodology. Liquidity, counterparty and currency risks are not captured on the scale. The Manager will periodically disclose the current risk profile of the Company to investors. The Company will make this disclosure on its website at the same time as it makes its Annual Report and Financial Statements available to investors or more frequently at its discretion.

For further information on SRI – including key risk disclaimers – please read the Fund Key Information Document available at https://mlcapman.com/manchester-london-investment-trust-plc/

Liquidity arrangements

The Company currently holds no assets that are subject to special arrangements arising from their illiquid nature. If applicable, the Company would disclose the percentage of its assets subject to such arrangements on its website at the same time as it makes its Annual Report and Financial Statements available to investors, or more frequently at its discretion.

Continuing appointment of the Manager

The Board keeps the performance of MLCM, in its capacity as the Company’s Manager, under continual review. It has noted the good long-term performance record and commitment, quality and continuity of the team employed by the Manager. As a result, the Board concluded that it is in the best interests of the Shareholders as a whole that the appointment of the Manager on the agreed terms should continue.

Human rights, employee, social and community issues

The Board consists entirely of non-executive Directors. The Company has no employees and day-to-day management of the business is delegated to the Manager and other service providers. As an investment trust, the Company has no direct impact on the community or the environment, and as such has no human rights, social or community policies. In carrying out its investment activities and in relationships with suppliers, the Company aims to conduct itself responsibly, ethically and fairly. Further details of the Environmental, Social and Governance policy and of the Company’s Board composition and related diversity considerations can be found in the Statement of Corporate Governance in the full Annual Report.

Gender diversity

At 31 July 2021, the Board comprised four male Directors. As stated in the Statement of Corporate Governance, the appointment of any new Director is made on the basis of merit.

Approval

This Strategic Report has been approved by the Board and signed on its behalf by:

David Harris

Chairman

28 September 2021

DIRECTORS

David Harris (Chairman of the Board)

Brett Miller

Sir James Waterflow

Daniel Wright (Chairman of the Audit Committee and Senior Independent Director)

All the Directors are non-executive. Mr Harris, Sir James Waterlow and Mr Wright are independent of the Company’s Manager.

EXTRACTS FROM THE DIRECTORS’ REPORT

Share capital

At 31 July 2021, the Company’s issued Share capital comprised 40,528,238 Shares of 25 pence each, of which none were held in Treasury.

At general meetings of the Company, Shareholders are entitled to one vote on a show of hands and on a poll, to one vote for every Share held. Shares held in Treasury do not carry voting rights.

In circumstances where Chapter 11 of the Listing Rules would require a proposed transaction to be approved by Shareholders, the controlling Shareholder (see the full Annual Report for further details) shall not vote its Shares on that resolution. In addition, any Director of the Company appointed by MMIC, the controlling Shareholder, shall not vote on any matter where conflicted and the Directors will act independently from MMIC and have due regard to their fiduciary duties.

Issue of Shares

At the Annual General Meeting held on 2 November 2020, Shareholders approved the Board’s proposal to authorise the Company to allot Shares up to an aggregate nominal amount of £3,011,311. In addition, the Directors were authorised to issue shares up to an aggregate nominal value of £3,011,311 on a non-pre-emptive basis. This authority is due to expire at the Company’s forthcoming AGM on 3 November 2021.

In addition to this authority, at the General Meeting held on 2 November 2020, Shareholders approved the Board’s proposal to authorise the Company to allot further Shares up to an aggregate nominal amount of £10,000,000 on a non-pre-emptive basis. This authority is due to expire on 31 December 2021. On 19 November 2020, the Company published a prospectus approved by the Financial Conduct Authority. The prospectus was required to allow Share issuances under this authority.

Furthermore and in addition to the above authorities, at a General Meeting held on 7 January 2021, Shareholders approved the Board’s proposal to authorise the Company to allot further shares up to an aggregate nominal amount of £1,500,000 on a non-pre-emptive basis. This authority expired on 28 January 2021, being 15 business days from the passing of the relevant resolutions.

During the period, MMIC subscribed to Shares as noted below.

Date of subscription Number of Shares Price paid per share (pence) Market price on date on subscription (pence) Date of admission to trading
30 September 2020 1,262,500 640.20 629.00 6 October 2020
13 January 2021 3,000,000 613.80 592.00 19 January 2021

The Share issues detailed above were made at a price equal to the latest reported NAV as at the day of the issue.

As at the date of this report, the total voting rights were 40,500,849.

On 1 December 2020, the Company’s block listing of 4,000,000 Shares, to be listed and admitted to trading on the premium segment of the London Stock Exchange’s main market, became effective. During the year ended 31 July 2021, a total of 130,000 Shares (with a nominal value of £32,500) were issued under this block listing. These shares were issued to satisfy market demand for the Shares and to manage the premium to NAV at which the Shares were trading at the time of issuance. As at the date of this Report the balance of Shares not yet issued under the block listing was 3,870,000.

Full details of Shares issued during the year are set out in Note 14 to the Financial Statements.

Purchase of Shares

At the Annual General Meeting held on 2 November 2020, Shareholders approved the Board’s proposal to authorise the Company to acquire up to 14.99% of its issued Share capital (excluding Treasury Shares) amounting to 5,416,747 Shares. This authority is due to expire at the Company’s forthcoming AGM on 3 November 2021.

The Company did not purchase any of its own Shares during the year. Since the year end, 27,395 Shares have been bought back and at the date of this report there were 40,528,238 Shares in issue of which 27,395 were held in treasury. The total amount paid for these shares from the year end until the date of this report was £159,875,79 at an average price of 583.59pence per Share.

Sale of Shares from Treasury

At the Annual General Meeting held on 2 November 2020, Shareholders approved the Board’s proposal to authorise the Company to waive pre-emption rights in respect of Treasury Shares up to an aggregate amount of £3,011,311 and to permit the allotment or sale of Shares from Treasury at a discount to NAV. This authority is due to expire at the Company’s forthcoming AGM on 3 November 2021.

No Shares were held in Treasury and no Shares were sold from Treasury during the year. As at the date of this report, 27,395 Shares are held in Treasury.

Going concern

The Directors consider that it is appropriate to adopt the going concern basis in preparing the Financial Statements. After making enquiries, and considering the nature of the Company’s business and assets, the Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future. In arriving at this conclusion, the Directors have considered the liquidity of the portfolio and the Company’s ability to meet obligations as they fall due for a period of at least 12 months from the date that these Financial Statements were approved. In making this assessment, the Directors have considered any likely impact of the current COVID-19 pandemic on the Company, its operations and the investment portfolio. The Directors consider that the COVID-19 pandemic has not materially impacted the operations of the Company.

Cashflow projections have been reviewed and provide evidence that the Company has sufficient funds to meet both its contracted expenditure and its discretionary cash outflows in the form of the dividend policy. Additionally, Value at Risk scenario analyses to demonstrate that the company has sufficient capital headroom to withstand market volatility are performed periodically.

Viability statement

The Directors have assessed the prospects of the Company over a five-year period. The Directors consider five years to be a reasonable time horizon to consider the continuing viability of the Company, however they also consider viability for the longer-term foreseeable future.

In their assessment of the viability of the Company, the Directors have considered each of the Company’s principal risks and uncertainties as set out in the Strategic Report above and in particular, have considered the potential impact of a significant fall in global equity markets on the value of the Company’s investment portfolio overall. The Directors have also considered the Company’s income and expenditure projections and the fact that the Company’s investments mainly comprise readily realisable securities which could be sold to meet funding requirements if necessary. On that basis, the Board considers that five years is an appropriate time period to assess continuing viability of the Company.

In forming their assessment of viability, the Directors have also considered:

• internal processes for monitoring costs;

• expected levels of investment income;

• the performance of the Manager;

• portfolio risk profile;

• liquidity risk;

• gearing limits;

• counterparty exposure; and

• financial controls and procedures operated by the Company.

The Board has reviewed the influence of the COVID-19 pandemic on its service providers and is satisfied with the ongoing services provided to the Company.

Based upon these considerations, the Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five-year period.

By order of the Board

Link Company Matters Limited

Company Secretary

28 September 2021

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RELATION TO THE ANNUAL REPORT AND FINANCIAL STATEMENTS

The Directors are responsible for preparing the Company’s Annual Report and Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Financial Statements for each financial period. Under that law, they have elected to prepare the Financial Statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union. 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 the Financial Statements, the Directors are required to:

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 to enable them to ensure that the Financial Statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors’ Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and ensuring that the Annual Report includes information required by the Listing Rules and Disclosure Guidance and Transparency Rules of the FCA.

The Financial Statements are published on the Company’s website, www.mlcapman.com/ manchester-london-investment-trust-plc, which is maintained on behalf of the Company by the Manager. The Manager has agreed to maintain, host, manage and operate the Company’s website and to ensure that it is accurate and up-to-date and operated in accordance with applicable law. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the Auditor accepts no responsibility for any changes that have occurred to the Financial Statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the Financial Statements may differ from legislation in their jurisdiction.

We confirm that to the best of our knowledge:

i.  the Financial Statements, prepared in accordance with the IFRS, give a true and fair view of the assets, liabilities, financial position and return of the Company; and

ii.  the Annual Report includes a fair review of the development and performance of the business and position of the Company, together with a description of the principal risks and uncertainties that it faces.

The Directors consider that the Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for Shareholders to assess the Company’s position and performance, strategy and business model and strategy.

On behalf of the Board

David Harris

Chairman

28 September 2021

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company’s statutory accounts for the years ended 31 July 2021 and 31 July 2020 but is derived from those accounts. Statutory accounts for the year ended 31 July 2020 have been delivered to the Registrar of Companies and statutory accounts for the year ended 31 July 2021 will be delivered to the Registrar of Companies in due course. The Auditor has reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor’s report can be found on page 50 and further of the Company’s full Annual Report at www.mlcapman.com/manchester-london-investment-trust-plc.

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 July 2021

2021 2020

Notes
Revenue 
£000 
Capital  £000  Total 
£000 
Revenue 
£000 
Capital 
£000 
Total 
£000 
Gains
Gains on investments at fair value through profit or loss 9 250 25,117 25,367 (285) 27,368  27,083 
Investment income 2 823 - 823 647  647 
Gross return
1,073

25,117

26,190
362  27,368  27,730 
Expenses
Management fee 3 (1,958) - (1,958) (1,470) (1,470)
Other operating expenses 4 (725) - (725) (555) (555)
Total expenses (2,683) - (2,683) (2,025) (2,025)
Return before finance costs and tax (1,610) 25,117 23,507 (1,663) 27,368  25,705 
Finance costs 5 (205) (1,038) (1,243) (37) (1,572) (1,609)
Return on ordinary activities before tax (1,815) 24,079 22,264 (1,700) 25,796  24,096 
Taxation 6 (42) - (42) (59) (59)
Return on ordinary activities after tax (1,857) 24,079 22,222 (1,759) 25,796  24,037 
Return per Share pence pence pence pence pence  pence 
Basic and fully diluted 8 (4.77) 61.87 57.10 (5.47) 80.21  74.74 

The total column of this statement is the Income Statement of the Company prepared in accordance with International Financial Reporting Standards as adopted by the European Union in conformity with the requirements of the Companies Act 2006. The supplementary revenue and capital columns are presented in accordance with the Statement of Recommended Practice issued by the AIC (“AIC SORP”).

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.

There is no other comprehensive income, and therefore the return for the year after tax is also the total comprehensive income.

The notes below form part of these Financial Statements.

S TATEMENT OF CHANGES IN EQUITY

For the year ended 31 July 2021



Notes
Share
capital
£000
Share
premium
£000
Special 
reserve**
£000 
Capital
Reserve*
£000
Retained 
earnings**
£000 

Total 
£000 
Balance at 1 August 2020 9,034 107,188 - 99,161 10,550 225,933
Changes in equity for 2021
Shares issued 14 1,098 25,888 - - - 26,986
Cancellation of share premium account - (107,188) 107,188 - - -
Total comprehensive income/(loss) -   - - 24,079 (1,857) 22,222
Dividends paid 7 -   - - - (5,455) (5,455)
Balance at 31 July 2021 10,132 25,888 107,188 123,240 3,238 269,686
Balance at 1 August 2019 7,341 68,987 - 73,365  17,288 166,981 
Changes in equity for 2020
Shares issued 14 1,693 38,201 - - - 39,894
Total comprehensive income/(loss) - - - 25,796  (1,759) 24,037 
Dividends paid 7 - - - (4,979) (4,979)
Balance at 31 July 2020 9,034 107,188 - 99,161  10,550 225,933 

The special reserve created by the cancellation of the share premium account.

* Within the balance of the capital reserve, £1,637,000 relates to realised gains (2020: £7,138,000) and is distributable by way of a dividend. The remaining £121,603,000 relates to unrealised gains and losses on financial instruments (2020: £92,023,000) and is non-distributable.

** Fully distributable.

The notes below form part of these Financial Statements.

STATEMENT OF FINANCIAL POSITION

As at 31 July 2021

2021 2020 
Notes £000  £000 
Non-current assets
Investments at fair value through profit or loss 9 156,919 137,333 
Current assets
Unrealised derivative assets 13 44,903 29,229 
Trade and other receivables 10 42 18 
Cash and cash equivalents 11 82,970 86,177 
127,915 115,424 
Current liabilities
Unrealised derivative liabilities 13 (14,871) (24,278)
Trade and other payables 12 (277) (2,546)
(15,148) (26,824)
Net current assets 112,767 88,600 
Net assets 269,686 225,933 
Capital and reserves
Share capital 14 10,132 9,034 
Share premium 25,888 107,188 
Special reserves 107,188 -
Capital reserve 123,240 99,161 
Retained earnings 3,238 10,550 
Total equity 269,686 225,933 
Basic and fully diluted NAV per Share 15 665.43p 625.23p 

The Financial Statements were approved by the Board of Directors and authorised for issue on 28 September 2021 and are signed on its behalf by:

David Harris

Chairman

Manchester and London Investment Trust Public Limited Company

Company Number: 01009550

The notes below form part of these Financial Statements.

STATEMENT OF CASH FLOWS

For the year ended 31 July 2021

2021 
£000 
2020
£000 
Cash flow from operating activities
Return on operating activities before tax 22,264 24,096 
Interest expense 1,075 1,609 
Gains on investments held at fair value through profit or loss (26,633) (30,119)
Increase/(decrease) in receivables (10) 32 
Increase/(decrease) in payables (92) 192 
Derivative instruments cash flows (21,704) (3,028)
Tax paid (42) (59)
Net cash (used in) from operating activities (25,142) (7,277)

Cash flow from investing activities
Purchases of investments (82,898) (38,134)
Sales of investments 84,370 65,630 
Net cash inflow from investing activities 1,472 27,496 

Cash flow from financing activities
Ordinary shares issued 26,986   39,894
Interest paid (1,068) (1,837) 
Equity dividends paid (5,455) (4,979) 
Net cash generated in financing activities 20,463 33,078

Net (decrease)/increase in cash and cash equivalents
(3,207) 53,297 
Cash and cash equivalents at beginning of year 86,177 32,880 
Cash and cash equivalents at end of year 82,970 86,177 

The notes below form part of these Financial Statements.

NOTES FORMING PART OF THE FINANCIAL STATEMENTS

For the year ended 31 July 2021

1. General information and accounting policies

Manchester and London Investment Trust plc is a public limited company incorporated in the UK and registered in England and Wales. The principal activity of the Company is that of an investment trust company within the meaning of Sections 1158/1159 of the Corporation Tax Act 2010 and its investment approach is detailed in the Strategic Report.

The Financial Statements of the Company have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union in conformity with the requirements of the Companies Act 2006. The annual Financial Statements have also been prepared in accordance with the AIC SORP for the financial statements of investment trust companies and venture capital trusts.

Basis of preparation

In order to better reflect the activities of an investment trust company and in accordance with the AIC SORP, supplementary information which analyses the Statement of Comprehensive Income between items of revenue and capital nature has been prepared alongside the Statement of Comprehensive Income.

The Financial Statements are presented in Sterling, which is the Company’s functional currency as the UK is the primary environment in which it operates, rounded to the nearest £000s, except where otherwise indicated.

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 operational existence for a period of at least 12 months from the date when these financial statements were approved.

In making the assessment, the Directors have considered the likely impacts of the current COVID-19 pandemic on the Company, operations and the investment portfolio.

The Directors noted that the Company, with the current cash balance and holding a portfolio of listed investments, is able to meet the obligations of the Company as they fall due. The surplus 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 plausible downside scenarios. These tests were driven by the possible effects of continuation of the COVID-19 pandemic but, as an arithmetic exercise, apply equally to any other 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, 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, the Manager and other service providers have put in place contingency plans to minimise disruption. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt on 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.

Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. The Company primarily invests in companies listed on recognised international exchanges.

Accounting developments

In the year under review, the Company has applied amendments to IFRS issued by the IASB. These include annual improvements to IFRS, changes in standards, legislative and regulatory amendments, changes in disclosure and presentation requirements. The adoption of the changes to accounting standards has had no material impact on these or prior years’ financial statements. There are amendments to IAS/IFRS that will apply from 1 August 2021 as follows:

The adoption of the changes to accounting standards has had no material impact on these or prior years’ financial statements.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts in the financial statements. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The areas requiring the most significant judgement and estimation in the preparation of the Financial Statements are: valuation of derivatives; accounting for revenue and expenses in relation to CFD; and setting the level of dividends paid and proposed in satisfaction of both the Company’s long-term objective. The policies for these are set out in the notes to the Financial Statements.

There were no significant accounting estimates or critical accounting judgements in the year.

Investments

Investments are measured initially, and at subsequent reporting dates, at fair value, and derecognised at trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe of the relevant market. For listed equity investments, this is deemed to closing prices.

Changes in fair value of investments are recognised in the Statement of Comprehensive Income as a capital item. On disposal, realised gains and losses are also recognised in the Statement of Comprehensive Income as capital items.

All investments for which fair value is measured or disclosed in the Financial Statements are categorised within the fair value hierarchy in note 9.

Financial instruments

The Company may use a variety of derivative instruments, including CFD, futures, forwards and options under master agreements with the Company’s derivative counterparties to enable the Company to gain long and short exposure on individual securities.

The Company recognises financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. Listed options and futures contracts are recognised at fair value through profit or loss valued by reference to the underlying market value of the corresponding security, traded prices and/or third party information.

Notional dividend income arising on long positions is recognised in the Statement of Comprehensive Income as revenue. Interest expenses on long positions are allocated to capital.

Unrealised changes to the value of securities in relation to derivatives are recognised in the Statement of Comprehensive Income as capital items.

Foreign currency

Transactions denominated in foreign currencies are converted to Sterling at the actual exchange rate as at the date of the transaction. Monetary assets and liabilities and non-monetary assets held at fair value denominated in foreign currencies at the year end are translated at the Statement of Financial Position date. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or the revenue account depending on whether the gain or loss is capital or revenue in nature.

Cash and cash equivalents

Cash comprises cash in hand and overdrafts and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.

For the purposes of the Statement of Financial Position and the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts when applicable.

Trade receivables, trade payables and short-term borrowings

Trade receivables, trade payables and short-term borrowings are measured at amortised cost.

Revenue recognition

Revenue is recognised when it is probable that economic benefits associated with a transaction will flow to the Company and the revenue can be reliably measured.

Dividends from overseas companies are shown gross of any non-recoverable withholding taxes which are disclosed separately in the Statement of Comprehensive Income.

Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company’s right to receive payment is established.

All other income is accounted for on a time-apportioned basis and recognised in the Statement of Comprehensive Income.

Expenses

All expenses are accounted for on an accruals basis and are charged to revenue. All other administrative expenses are charged through the revenue column in the Statement of Comprehensive Income.

Finance costs

Finance costs are accounted for on an accruals basis.

Financing charged by the Prime Brokers on open long positions are allocated to capital, with other finance costs being allocated to revenue.

Taxation

The charge for taxation is based on the net revenue for the year and any deferred tax.

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amount for financial reporting purposes at the reporting date. Deferred tax assets are only recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of timing differences can be deducted. In line with recommendations of the AIC SORP, the allocation method used to calculate the tax relief on expenses charged to capital is the “marginal” basis. Under this basis, if taxable income is capable of being offset entirely by expenses charged through the revenue account, then no tax relief is transferred to the capital account.

No taxation liability arises on gains from sales of fixed asset investments by the Company by virtue of its investment trust status. However, the net revenue (excluding investment income) accruing to the Company is liable to corporation tax at prevailing rates.

Dividends payable to Shareholders

Dividends to Shareholders are recognised as a liability in the period in which they are approved and are taken to the Statement of Changes in Equity. Dividends declared and approved by the Company after the Statement of Financial Position date have not been recognised as a liability of the Company at the Statement of Financial Position date.

Share capital

The share capital is the nominal value of issued ordinary shares and is not distributable

Share premium

The Share premium account represents the accumulated premium paid for Shares issued in previous periods above their nominal value less issue expenses. This is a reserve forming part of the non-distributable reserves. The following items are taken to this reserve:

• costs associated with the issue of equity;

• premium on the issue of Shares; and

• premium on the sales of Shares held in Treasury over the market value.

Special Reserve

The special reserve was created by a cancellation of the share premium account by order of the High Court in February 2021 increasing the distributable reserves of the Company.

Capital reserve

The following are taken to capital reserve:

• gains and losses on the realisation of investments;

• increases and decreases in the valuation of the investments held at the year end;

• cost of share buy backs;

• exchange differences of a capital nature; and

• expenses, together with the related taxation effect, allocated to this reserve in accordance with the above policies.

Retained earnings

The revenue reserve represents accumulated profits and losses and any surplus profits. The surplus accumulated profits are distributable by way of dividends.

2. Income

2021
£000
2020
£000
Dividends from listed investments 815 392
Interest - 255
Sundry income 8 -
823 647

3. Management fee

2021 2020
£000 £000
Base fee 1,266 941
Variable fee 633 470
Risk management and valuation fee 59 59
1,958 1,470

The Management Fee payable to the Manager is equal to 0.5% per annum of the Company’s NAV (the “Base Fee”), calculated as at the last business day of each calendar month (the “Calculation Date”), and is paid monthly in arrears. An uplift of 0.25% of the NAV will be applied to the fee, should the performance of the Company over the 36-month period to the Calculation Date be above that of the Company’s benchmark. In addition, a Risk Management and Valuation fee equating to £59,000 on an annualised basis is charged by the AIFM. The Manager is also reimbursed any expenses incurred by it on behalf of the Company.

The fee is not subject to Value Added Tax (“VAT”). Transactions with the Manager during the year are disclosed in note 17.

The management fee is chargeable to revenue.

4. Other operating expenses

2021
£000
2020
 000
Directors’ fees 97 55
Auditors’ remuneration 32 38
Registrar fees 31 31
Depositary fees 92 68
Other expenses 473 369
725 555

Other operating expenses include irrecoverable VAT where appropriate.

No non-audit services were provided by Deloitte LLP in the year to 31 July 2021.

5. Finance costs

2021 2020
£000 £000
Charged to revenue 205 37
Charged to capital 1,038 1,572
1,243 1,609

6. Taxation

2021 2020
Revenue 
£000 
Capital  £000  Total 
£000 
Revenue 
£000 
Capital 000  Total 
£000 
Current tax:
Overseas tax not recoverable 42 - 42 59  59 
42 - 42 59  59 

The tax assessed for the year is the standard rate of corporation tax in the United Kingdom of 19%.

The differences are explained below:
Profit/(loss) before tax (1,815) 24,079 22,264 (1,700) 25,796  24,096
Theoretical tax at the UK corporation tax rate of 19% (2020: 19%)
(345)

4,575

4,230
(323) 4,901  4,578 
Tax exempt overseas investment income
(56)

-

(56)
(75)  (75) 
Tax exempt income - other
(2)

-

(2)
Profits on investment appreciation not taxable
-

(4,772)

(4,772)
(5,200) (5,200)
Unrelieved tax losses and other deductions arising in the period
403

197

600
398  299  696
Overseas tax not recoverable 42 - 42 59  59 
Total tax charge 42 - 42 59  59 

At 31 July 2021, there is an unrecognised deferred tax asset, measured at the standard rate of 19 per cent, of £2,392,000 (2020: £1,792,000). This deferred tax asset relates to surplus management expenses. It is unlikely that the Company will generate sufficient taxable profits in the foreseeable future to recover these amounts and therefore the asset has not been recognised in the year, or in prior years.

As at 31 July 2021, the Company has unrelieved capital losses of £9,329,000 (2020: £9,329,000). There is therefore, a related unrecognised deferred tax asset, measured at the standard rate of 19 per cent, of £1,773,000 (2020: £1,773,000). These capital losses can only be utilised to the extent that the Company does not qualify as an investment trust in the future and, as such, the asset has not been recognised.

7. Dividends


Amounts recognised as distributions to equity holders in the period:
2021
£000
2020
£000
Final ordinary dividend for the year ended 31 July 2020 of 7.0p (2019: 7.0p) per Share 2,618 2,609
Interim ordinary dividend for the year ended 31 July 2021 of 7.0p (2020: 7.0p) per Share 2,837 2,370
5,455 4,979

The Directors are proposing a final ordinary dividend of 7.0p for the financial year 2021. These proposed dividends have been excluded as a liability in these Financial Statements in accordance with IFRS.

We also set out below the total dividend payable in respect of the financial year, which is the basis on which the requirements of Section 1158 of the Corporation Tax Act 2010 are considered.

2021
£000
2020
£000
Interim ordinary dividend for the year ended 31 July 2021 of 7.0p
(2020: 7.0p) per Share
2,837 2,370
Proposed final ordinary dividend for the year ended 31 July 2021 of 7.0p (2020: 7.0p) per Share* 2,835* 2,530
5,672 4,900

*Based on shares in circulation on 28 September 2021 (excluding Share held in treasury).

8. Return per Share

2021 2020
Net Return 
£000 
Weighted Average  Shares Total 
(p) 
Net Return 
£000 
Weighted Average Shares Total 
(p)
Basic and fully diluted return:
Net revenue return after taxation (1,857) 38,917,758 (4.77) (1,759) 32,160,449 (5.47)
Net capital return after taxation 24,079 38,917,758 61.87 25,796  32,160,449 80.21 
Total 22,222 38,917,758 57.10 24,037  32,160,449 74.74 

Basic revenue, capital and total return per Share is based on the net revenue, capital and total return for the period and on the weighted average number of Shares in issue of 38,917,758 (2020: 32,160,449).

9. Investments at fair value through profit or loss

2021 2020
Total 
£000 
Total 
£000 
Analysis of investment portfolio movements
Opening cost at 1 August 69,228 78,800
Opening unrealised appreciation at
1 August
68,105 53,259
Opening fair value at 1 August 137,333 132,059
Movements in the year
Purchases at cost 80,696 40,338
Sales proceeds (84,365) (65,634)
Realised profit on sales 15,234 15,724
Increase in unrealised appreciation 8,021 14,846
Closing fair value at 31 July 156,919 137,333
Closing cost at 31 July 80,793 69,228
Closing unrealised appreciation at
31 July
76,126 68,105
Closing fair value at 31 July 156,919 137,333

Fair value hierarchy

Financial assets of the Company are carried in the Statement of Financial Position at fair value. The fair value is the amount at which the asset could be sold or the liability transferred in an orderly 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 assets as follows:

The tables below set out fair value measurements of financial instruments as at the year end, by their category in the fair value hierarchy into which the fair value measurement is categorised.

Financial assets at fair value through profit or loss at 31 July 2021

Level 1 Level 2 Total
£000 £000 £000
Equity investments 156,919 - 156,919
Derivatives – assets - 44,903 44,903
Total 156,919 44,903 201,822

Financial assets at fair value through profit or loss at 31 July 2021

Level 1 Level 2 Total
£000 £000 £000
Equity investments 137,333 - 137,333
Derivatives – assets - 29,229 29,229
Total 137,333 29,229 166,562

There have been no transfers during the year between Level 1 and 2 fair value measurements.

Financial liabilities at 31 July 2021

Level 2 Total
£000 £000
Derivatives - liabilities 14,871 14,871

Financial liabilities at 31 July 2020

Level 2 Total
£000 £000
Derivatives - liabilities 24,278 24,278

Transaction costs

During the year, the Company incurred transaction costs of £44,000 (2020: £25,000) on the purchase and disposal of investments.

Analysis of capital gains and losses

2021  2020 
£000  £000 
Gains on sales investments 15,234 15,724 
Investment holding gains 8,021 14,846 
Realised losses on derivative instruments (15,356) (20,424)
Unrealised gains on derivative instruments 18,733 19,973 
Realised (losses) on currency balances and trade settlements (1,515) (2,751)
25,117 27,368 
Dividend income /cost in respect of contracts for difference 250 (285)
25,367 27,083 

10. Trade and other receivables

2021
£000
2020
£000
Dividends receivable - 11
Due from brokers - 4
Prepayments 42 3
42 18

11. Cash and cash equivalents

2021
£000
2020
£000
Cash and cash equivalents 82,970 86,177
82,970 86,177

Details of what comprises cash and cash equivalents can be found in note 1.

12. Trade and other payables

2021
£000
2020
£000
Due to Brokers - 2,204
Accruals 277 342
277 2,546

13. Derivatives

The Company may use a variety of derivative contracts, including equity swaps, futures, forwards and options under master agreements with the Company’s derivative counterparties to enable it to gain long and short exposure on individual securities. Derivatives are valued by reference to the underlying market value of the corresponding security.

The net fair value of derivatives at 31 July 2021 was a positive £30,032,000 (2020: positive £4,951,000). The corresponding gross exposure on equity swaps as at 31 July 2021 was £211,603,000 (2020: £128,951,000). The total exposure of negative equity swaps was £nil (2020: £24,448,000). The net marked to market futures and options total value as at 31 July 2021 was negative £14,871,000 (2020: negative £23,538,000).

2021
£000
2020
£000
Assets
Unrealised derivative assets 44,903 29,229
Current liabilities
Unrealised derivative liabilities 14,871 24,278

The above liabilities are secured against assets held with the Prime Brokers.

The levels of collateral as at 31 July 2021 were:

• Morgan Stanley & Co. International plc £127.2m (2020: £116.9m)

• JP Morgan Securities PLC. £142.5m (2020: £111.1m)

The assets listed above are covered by the terms and conditions described by the Prime Brokerage agreements between the Company and the respective Prime Brokers above.

14. Share capital

2021 2020
Share capital Number 
(’000)
£000 Number 
 (’000)
£000
Shares of 25p each issued and fully paid
Balance as at 1 August 36,135,738 9,034 29,363,930 7,341
Shares issued 4,392,500 1,098 6,771,808 1,693
Balance as at 31 July 40,528,238 10,132 36,135,738 9,034

During the year to 31 May 2021, 4,392,500 (31 May 2020: 6,771,808) Ordinary Shares were issued for a net consideration of £27,070,000 (2020: £38,201,000).

15. NAV per Share

NAV per Share Net assets
attributable
2021 
(p)
2020 
(p)
2021
£000
2020
£000
Shares: basic and fully diluted 665.43 625.23 269,686 225,933

The basic NAV per Share is based on net assets at the year end and 40,528,238 (2020: 36,135,738) Shares in issue, adjusted for any Shares held in Treasury.

16. Risks – investments, financial instruments and other risks

Investment objective and policy

The Company’s investment objective and policy are detailed above.

The investing activities in pursuit of its investment objective involve certain inherent risks.

The Company’s financial instruments can comprise:

Risks

The risks identified arising from the Company’s financial instruments are market risk (which comprises market price risk and interest rate risk), liquidity risk and credit and counterparty risk. The Company may enter into derivative contracts to manage risk. The Board reviews and agrees policies for managing each of these risks, which are summarised below.

These policies remained unchanged since the beginning of the accounting period.

Market risk

Market risk arises mainly from uncertainty about future prices of financial instruments used in the Company’s business. It represents the potential loss the Company might suffer through holding market positions by way of price movements, interest rate movements and exchange rate movements. The Company assesses the exposure to market risk when making each investment decision and these risks are monitored by the Manager on a regular basis and the Board at quarterly meetings with the Manager.

Details of the long equity exposures held at 31 July 2021 are shown above.

If the price of these investments and equity swaps had increased by 5% at the reporting date with all other variables remaining constant, the capital return in the Statement of Comprehensive Income and the net assets attributable to equity holders of the Company would increase by £18,426,000.

A 5% decrease in share prices would have resulted in an equal and opposite effect of £18,426,000, on the basis that all other variables remain constant. This level of change is considered to be reasonable based on observation of current market conditions.

At the year end, the Company’s direct equity exposure to market risk was as follows:

Company
2021 2020
£000 £000
Equity long exposures
Investments held in equity form 156,919 137,333
Long exposure held in equity swaps 211,603 128,952
368,522 266,285

Interest rate risk

Interest rate risk arises from uncertainty over the interest rates charged by financial institutions. It represents the potential increased costs of financing for the Company. The Manager actively monitors interest rates and the Company’s ability to meet its financing requirements throughout the year and reports to the Board.

Liquidity risk

Liquidity risk reflects the risk that the Company will have insufficient funds to meet its financial obligations as they fall due. The Directors have minimised liquidity risk by investing in a portfolio of quoted companies that are readily realisable.

The Company's uninvested funds are held almost entirely with the Prime Brokers or on deposits with UK banking institutions.

As at 31 July 2021, the financial liabilities comprised:

Company
2021
£000
2020
£000
Unrealised derivative liabilities 14,871 24,278
Trade payables and accruals 277 2,550
15,148 26,828

The above liabilities are stated at amortised cost or approximate fair value.

The Company manages liquidity risk through constant monitoring of the Company’s gearing position to ensure the Company is able to satisfy any and all debts within the agreed credit terms.

Currency rate risk

Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. If Sterling had strengthened by 5% against all other currencies at the reporting date, with all other variables remaining constant, the total return in the Statement of Comprehensive Income and the net assets attributable to equity holders of the Company, assuming the Company held no balances in Sterling, would have decreased by £13,484,000. If the Sterling had weakened by 5% against all currencies, there would have been an equal and opposite effect. This level of change is considered to be reasonable based on observation of current market conditions.

The Company’s material foreign currency exposures are laid out below.

Sterling  US Dollar  Euro  Hong Kong 
Dollar 
Total 
£000  £000  £000  £000  £000 
Equity exposure 6,979 144,795 - 5,145 156,919
Derivative assets - 41,720 6,667 (3,484) 44,903
Derivative liabilities - (14,639) (226) (6) (14,871)
Cash* 56,694 34,823 (3,037) (5,510) 82,970
Trade and other receivables
42

-

-

-

42
Trade and other payables (2 77 ) - - - (2 77 )
63,438 206,699 3,404 (3,855) 269,686

* Includes balances held in margin accounts relating to equity swaps.

The Company constantly monitors currency rate risk to ensure balances, wherever possible, are translated at rates favourable to the Company.

Credit and counterparty risk

Credit risk is the risk of financial loss to the Company if the contractual party to a financial instrument fails to meet its contractual obligations.

The maximum exposure to credit risk as at 31 July 2021 was £136,049,000 (2020: £115,424,000). The calculation is based on the Company’s credit risk exposure as at 31 July 2021 and this may not be representative for the whole year.

The Company’s quoted investments are held on its behalf by the Prime Brokers. Bankruptcy or insolvency of the Prime Brokers may cause the Company’s rights with respect to securities held by the Prime Brokers to be delayed. The Manager and the Board monitor the Company’s risk and exposures.

Where the Manager makes an investment in a bond, corporate or otherwise, the credit worthiness of the issuer is taken into account so as to minimise the risk to the Company of default. The credit standing and other associated risks are reviewed by the Manager.

Investment transactions are carried out with a number of brokers where creditworthiness is reviewed by the Manager.

Cash is only held at banks that have been identified by the Board as reputable and of high credit quality. The Manager reviews these on a continual basis with regular updates to the Board.

Capital management policies

The structure of the Company’s capital is noted in the Statement of Changes in Equity and managed in accordance with the investment objective and policy set out in the Strategic Report.

The Company’s capital management objectives are to maximise the return to Shareholders while maintaining a capital base to allow the Company to operate effectively and meet obligations as they fall due.

The Board, with the assistance of the Manager, monitors and reviews the capital on an ongoing basis.

The Company is subject to externally imposed capital requirements:

These requirements are unchanged since last year and the Company has complied with them at all times.

A sensitivity analysis has not been prepared for interest risk, as the Company is not materially exposed to interest rates.

17. Related party transactions

MLCM, a company controlled by Mr Mark Sheppard, is the Manager and AIFM of the Company. Mr Sheppard is also a director of MMIC, which is the controlling Shareholder of the Company.

The Manager receives a monthly management fee for these services which in the year under review amounted to a total of £1,958,000 (2020: £1,470,000) excluding VAT. The balance owing to the Manager as at 31 July 2021 was £177,000 (2020: £148,000). Also payable to the Manager during the year were expenses incurred on behalf of the Company of £Nil (2020: £Nil).

During the year, MMIC subscribed for a further 4,262,500 Shares of 25 pence each. Total consideration for the subscriptions amounted to £26,496,525. A detailed breakdown of the subscriptions can be found in the Directors’ Report in the full Annual Report.

Details relating to the Directors’ emoluments are found in the Directors’ Remuneration Report in the full Annual Report.

18. Ultimate control

The ultimate controlling Shareholder throughout the year and the previous year was MMIC, a company incorporated in the UK and registered in England and Wales. This company was controlled throughout the year and the previous year by Mr Mark Sheppard and his immediate family.

A copy of the financial statements of MMIC can be obtained from the Company’s website: www.mlcapman.com/manchester-london-investment-trust-plc.

19. Post Statement of Financial Position events

Since the year end the Company has bought back 27,325 Ordinary Shares at an average price of 583.59 pence per Share, which have been placed in treasury. Further details can be found in the Directors’ Report in the full Annual Report.

GLOSSARY

Active share

Active share is a measure of the percentage of stock holdings in a manager’s portfolio that differ from the comparative benchmark index. It is calculated by summing the absolute differences between benchmark and portfolio holdings’ weights, then dividing by two (to eliminate double counting). An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index (when using leverage, maximum active share levels can exceed 100%).

Alternative Performance Measure (‘APM’)

An APM is a numerical measure of the Company’s current, historical or future financial performance, financial position or cash flows, other than a financial measure defined or specified in the applicable financial framework. In selecting these Alternative Performance Measures, the Directors considered the key objectives and expectations of typical investors in an investment trust such as the Company.

Delta

Delta measures the degree to which an option is exposed to shifts in the price of the underlying asset (i.e. stock) or commodity (i.e. futures contract).  Values range from 1.0 to –1.0 (or 100 to –100, depending on the convention employed).  See website link for further details: https://mlcapman.com/faq/

Delta Adjusted Exposure

Delta times the underlying security’s notional exposure for options. For all other instruments, the notional exposure of the security. At the sector and portfolio levels, this is the sum of the individual security delta adjusted exposures. See website link for further details: https://mlcapman.com/faq/

Discount/premium

If the Share price is lower than the NAV per Share it is said to be trading at a discount. The size of the discount is calculated by subtracting the Share price from the NAV per Share and is usually expressed as a percentage of the NAV per Share. If the Share price is higher than the NAV per Share, this situation is called a premium.

Gearing

Gearing refers to the level of the Company’s debt to its equity capital. The Company may borrow money to invest in additional investments for its portfolio. If the Company’s assets grow, the Shareholders’ assets grow proportionately more because the debt remains the same. But if the value of the Company’s assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets.

Gearing represents borrowings at par less cash and cash equivalents (including any outstanding trade or foreign exchange settlements) expressed as a percentage of Shareholders’ funds.

Potential gearing is the Company’s borrowings expressed as a percentage of Shareholders’ funds.

Equity gearing is the Company’s borrowings adjusted for cash and bonds expressed as a percentage of Shareholders’ funds.

Leverage

For the purposes of the AIFMD, leverage is any method which increases the Company’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s exposure and its NAV and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company’s positions after the deduction of Sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of Sterling cash balances and after certain hedging and netting positions are offset against each other.

Net asset value (“NAV”)

The NAV is Shareholders’ funds expressed as an amount per individual Share. Shareholders’ funds are the total value of all the Company’s assets, at a current market value, having deducted all liabilities and prior charges at their par value (or at their asset value). The total NAV per Share is calculated by dividing the NAV by the number of Ordinary Shares in issue excluding Treasury Shares.

Prime Broker

Prime brokerage is the bundling of services by investment banks enabling the Company to borrow securities and cash in order to be able to invest on a netted basis and achieve an absolute return. The Prime Broker provides custody and a centralised securities clearing facility for the Company so the Company’s collateral requirements are netted across all deals handled by the Prime Broker.

Ongoing charges ratio

As recommended by the AIC, ongoing charges are the Company’s annualised expenses including (excluding finance costs, variable management fee and certain non-recurring items) expressed as a percentage of the average monthly net assets of £258,180,000. The ongoing charges ratio is 0.78%.

Total assets

Total assets include investments, cash, current assets and all other assets. An asset is an economic resource, being anything tangible or intangible that can be owned or controlled to produce value and to produce positive economic value. Assets represent the value of ownership that can be converted into cash. The total assets less all liabilities will be equivalent to total Shareholders’ funds.

Total return

Total return statistics enable the investor to make performance comparisons between investment trusts with different dividend policies. The total return measures the combined effect of any dividends paid, together with the rise or fall in the Share price or NAV. This is calculated by the movement in the NAV or Share price plus dividend income reinvested by the Company at the prevailing NAV or Share price.

NAV Total Return Page** 31 July 2021 31 July 2020
Closing NAV per Share (p) 3 665.43 625.23 a
Total dividends paid in the year ended 31 July 2021 (2020) (p)
14.00
15.00
Adjusted closing NAV (p) 679.43 640.23
Opening NAV per Share (p) 3 625.23 568.66 b
NAV total return unadjusted (c=((a-b)/b)) (%) 8.67 12.58 c
NAV total return adjusted (%)* 3/4 8.7 12.8

* Based on NAV price movements and dividends reinvested at the relevant cum dividend NAV value during the period. Where the dividend is invested and the NAV value falls this will further reduce the return or, if it rises, any increase will be greater. The source is Bloomberg who have calculated the return on an industry comparative basis.

** Page numbers refer to those in the full Annual Report

ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of Manchester and London Investment Trust plc will be held at 12a Princes Gate Mews, London, SW7 2PS on Wednesday 3 November 2021 at 12.00 noon. Please note that the Annual General Meeting will be held virtually and attendance in person is not permitted.

The notice of this meeting, which includes an explanation of the items of business to be considered at the meeting and restrictions on attendance in person, will be circulated to Shareholders and will also be available at  www.mlcapman.com/manchester-london-investment-trust-plc.

NATIONAL STORAGE MECHANISM

A copy of the Annual Report and Financial Statements and Notice of Annual General Meeting will be submitted shortly to the National Storage Mechanism (“NSM”) and will be available for inspection at the NSM, which is situated at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

LEI: 213800HMBZXULR2EEO10

ENDS

Neither the contents of the Company’s website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.