Mid Wynd International Investment Trust Regulatory News (MWY)

Mid Wynd International Investment Trust plc (the 'Company')

Legal Entity Identifier: 549300D32517C2M3A561

Annual Financial Results for the year ended 30 June 2020

Financial Highlights

Returns for the year ended 30 June 2020

Source: Artemis/Datastream

† Alternative Performance Measure.

* The final dividend for the year to 30 June 2020 of 3.12 pence will, if approved by shareholders, be paid on 27 November 2020 to shareholders on the register at the close of business on 2 October 2020.

Strategic Report

Chairman's Statement

I am pleased to report below on another strong year of performance in what has been an unprecedented period of market uncertainty. With this being my last Chairman's Statement, prior to my retirement at this year's Annual General Meeting, it is heartening to have a good tale to tell. I am confident that the Company is in good hands and will continue to provide the capital and income returns that our shareholders have come to expect.

It has been a great privilege to serve on the Board. I wish my colleagues all the best for the future. We have a Board with a broad range of skills and abilities which will meet the challenges which lie ahead. Mid Wynd has always invested on a global basis. In the long run, I think that approach will succeed because the Company is not precluded from attractive investment opportunities by arbitrary geographical restrictions. Unlike a passive fund, it is not obliged to hold unattractive stocks. For private investors willing to take a long view, the Company offers a professionally managed global portfolio which has produced returns well ahead of inflation. In September 1981, when the Company was first publicly quoted, the NAV per share, allowing for the share split in 2011, was 14.26 pence. As at 30 June 2020, it was £6.09 and that is exclusive of all dividends paid to shareholders in the intervening period. The dividend was then 0.36 pence per share. For the year ended 30 June 2020, it will be 6.12 pence per share. These numbers are testament to the value created by long term investing.

Performance

For the year ended 30 June 2020 the Company's share price rose by 9.1% on a total return basis with dividends assumed to be re- invested. This compares with a rise of 5.2% in the Company's comparator index, the MSCI All Country World Index (GBP).

The Company's net asset value per share increased by 10.7%, in capital terms, and on a total return basis, with dividends assumed to be reinvested, the return was 12.2%. Since Artemis' appointment as Investment Manager on 1 May 2014, the net asset value per share has increased by 140.9%, on a total return basis, against the comparator index's increase of 95.8%.

Further details of the performance of the Company during the year are included in the Investment Manager's review.

Earnings and Dividend

The total return for the year ended 30 June 2020 was a gain of 66.16 pence per share, comprising a revenue gain of 7.38 pence and a capital gain of 58.78 pence. The Board is proposing a final dividend of 3.12 pence per share which, subject to approval by shareholders at the Annual General Meeting ('AGM'), will be paid on 27 November 2020 to those shareholders on the register at the close of business on 2 October 2020. An interim dividend of 3.00 pence per share was paid in March 2020 versus the 1.98 pence per share paid in March 2019. The Board took the decision to increase the interim payment this year to help smooth the distributions to our shareholders over the period. We aim to continue this practice where possible.

The total dividend for the current year of 6.12 pence per share represents an increase of 5% on the 5.83 pence per share paid for the year ended 30 June 2019. The dividend is fully covered by the revenue return for the year. As always, it should not be assumed that this rate of growth will be repeated every year. The aim remains to grow the dividend progressively and sustainably over time. However pursuit of income to meet that progressive target will not be at the expense of undue risk to the Company's capital.

Share capital

Throughout the year there has been continued demand for the Company's shares requiring the publication of our Prospectus in June which allowed the Company to continue issuing new shares. This is reflected in the premium to net asset value at which the shares have traded throughout the year; the shares traded briefly at a discount in March as the impact of COVID-19 shook the markets but it did not take long for the premium to return in April. As at the year end shares were trading at near parity with the net asset value, once again reflecting the volatility of the markets. As at 1 September 2020 the shares stand at a premium of 1.4%. The Company's policy, within normal market conditions, is to issue and re-purchase shares where necessary to maintain the share price within a 2% band relative to the net asset value.

The Company issued 9,412,698 new shares during the year, raising £55.2m before costs at an average premium to net asset value of 2.7%. This represents 23.0% of the share capital at the start of the year. Against this trend, in March the Company bought back 97,302 shares into treasury. These shares were subsequently sold from treasury back into the market.

As at 1 September 2020, a further 2,170,000 ordinary shares have been issued raising £13.9m for the Company.

The Company incurs modest costs in operating the discount control policy and when renewing shareholder authority from time to time. However, issuance at a premium and buying back at a discount is consistently value accretive. The Board estimates that since May 2014, the NAV has benefited from the programme by £3.1m after costs with £1.4m net generated in the current financial year.

Borrowings

At 30 June 2020 the Company had drawn €5m (2019: €3m) and US$6m (2019: US$3m) of its US$30 million multi-currency facility with Scotiabank (Ireland). The increased utilisation of the facility has proved invaluable, giving the Investment Manager the ability to take advantage of the moving markets. Further information on the Company's gearing can be found in the Annual Financial Report. The current facility with Scotiabank is due to terminate in February 2021. The Board will consider the best options for future gearing of the Company over the next quarter.

Key service providers

During the COVID-19 lockdown, the Company's third party service providers faced unprecedented challenges to ensure continuity of operations. There continue to be many changes in work practices which stem from the outbreak. The Board obtained confirmation from all its key service providers that there were no material issues relating to the ongoing provision of services and I am pleased to report that the Company has not experienced any material changes to the quality of services it receives.

Board Composition

In June, we received the sad news of the sudden death of our former chairman Pat Barron. He was a member of the Board at the time of the public quotation in 1981 and served as Chairman from 1989 until his retirement in 2012. He was an outstanding personality and the Company benefited greatly from his thirty one years of service.

As noted in the prior year Annual Report, the Board had concluded that a number of changes would be made to the composition of the Board during this year. One such change, as published in the Half-yearly Report, was the appointment of Mrs Diana Dyer Bartlett in February as a non-executive director and, who shortly thereafter, became the Chairman of the Audit Committee. I will stand down at the Annual General Meeting in November of this year and it is intended, subject to re-election at the AGM, that Mr Russell Napier will become Chairman of the Board. Mr Harry Morgan will become Senior Independent Director when Russell becomes Chairman.

I am happy to hand over the chair to Russell. When he joined the Board, he kindly presented his colleagues with a copy of his excellent book, Anatomy of The Bear, which I read with great interest. Every equity investor should read it. However, at the time, it did not seem immediately relevant. Matters have changed somewhat since then. COVID-19 and the policy responses to it have introduced uncertainties into a global economy which has taken four decades of globalisation, cheap air travel and free movement across national borders more or less for granted. Much will depend on the willingness of investors to believe in the ability of The US Federal Reserve and other central banks to do all that it takes. We shall see.

In this new world, certain companies will prosper as they adapt to the conditions of the post COVID-19 order. Others will fail. It is the business of investment trusts to handle equity investment in adverse conditions as well as benign. Mid Wynd has dealt with the 1987 crash, the exit from the ERM, the dot com boom (and bust) and the credit crunch of 2008. The Board has benefited from Russell's perceptive advice and judgement since he joined the Board in 2009 and I thank him for it.

AGM

The AGM will be held on 10 November 2020 at 12 noon at the Edinburgh office of our Investment Manager, Artemis Fund Managers Limited, at 6th Floor, Exchange Plaza, 50 Lothian Road, Edinburgh, EH3 9BY. Since the outlook for the lifting of COVID-19 restrictions is uncertain, the Board, upon advice, has decided reluctantly to proceed with a restricted AGM. The meeting will be restricted to the formal business as set out in the Notice of the AGM, following minimum legal requirements. In accordance with the provisions of the Company's Articles and Government guidance, the Company is reluctantly imposing entry restrictions on attendance at the AGM, and therefore shareholders will not be able to attend the AGM in person.

The Investment Manager will make a pre-recorded presentation in the period leading up to the AGM, made available through the Company's website, I would invite you to email midwyndchairman@artemisfunds.com with any questions you wish to raise to allow these to be addressed in the presentation.

Outlook

Your Company has shown solid performance throughout this uncertain period. However, the consequences of the world and market reactions to the pandemic cannot be known for some considerable time. It is hard to predict the rate or timing of recovery that is surely hoped to come. In the absence of this certainty, your Investment Manager will continue to search out value, taking a long-term view to provide security for past gains and take opportunities when they arise.

I will shortly step down as Chairman in the full knowledge that the Board and Investment Manager will continue the sterling work which is expected of them.

I also wish to thank the managers. I am happy to say that our confidence in giving the mandate to Artemis has been amply justified. The policy of thematic investing in growth at a reasonable price with the aim of capturing growth on the upside while protecting on the downside has rewarded shareholders and enabled the share price to trade at a sustained premium enabling us to grow the size of the Company by share issuance, with the aim of reducing the cost of administration. This has been assisted by a targeted marketing effort which has drawn the attention of the market to the consistently good performance of the portfolio. We have also been assisted by our discount control policy and, as described above, have bought in shares to prevent the development of a discount in the brief period that a discount existed. It should be noted that at 1 May 2014 when the NAV was £2.74, the Company had 25,925,830 shares in issue. As at 30 June 2020 the NAV is £6.09 and the number of shares in issue is 50,284,114. The market cap was then £69.9m and is now well over £300m. These figures speak for themselves and are entirely attributable to the efforts of the Artemis team and, in particular, Simon, Alex and Rosanna. They have delivered consistent outperformance. Thank you.

Contact us

Shareholders can keep up to date with developments between formal reports by visiting midwynd.com where you will find information on the Company and a factsheet which is updated monthly. In addition, the Board is always keen to hear from shareholders.

Should you wish to, you can e-mail the Chairman at midwyndchairman@artemisfunds.com.

Malcolm Scott

3 September 2020

Investment Manager's Review

Introduction

Global equities have enjoyed yet another year of positive returns despite the global pandemic and the recession stemming from lockdown measures taken to protect the public from the virus. The global equity market rise over the year has been dominated by US technology shares many of which have been selected in our Online Services and Screen Time themes, while the companies governments have turned to for healthcare solutions are also the world leaders we have selected in these themes, such as Roche and Thermo Fisher. Altogether the last year has allowed us to demonstrate how the fund protects capital when markets fell in the first quarter, also how our themes can sometimes come through more strongly when there are unexpected challenges to be faced.

Over the year, the Company's share price rose from 568p to 612p up 7.7% and paid dividends of 6.85p giving a total return of 12.2%. This compares with the MSCI AC world index which rose 1.4% in US dollar terms, translating to a rise of 5.2% in Sterling terms. For the record, the UK All share index fell by 16.7% over the period.

Regional performance

Thematic performance

Current investment themes

Online Services (26% of the portfolio) - this theme led investment returns in the Company and many of our investments here have proved their worth to each of us over lockdown - especially amazon.com and last year we added an investment in JD.com which provides similar services in China. This theme has also benefitted from continued investment in the semiconductor industry with both Synopsys and Cadence seeing growth in demand for new chip designs.

The Company used its borrowing facility during the market falls in March to add new investments which benefitted from emerging trends, such as ServiceNow, a US company facilitating working from home and IT outsourcing and cloud computing and Salesforce.com which is the leader in databases to manage workforces.

Screen Time (9% of the portfolio) - again the lockdown has accelerated the trend towards spending more time in front of screen, especially working from home. The equity market continues to attribute low valuations to telecoms companies providing these connections, but such defensive holdings worked well protecting capital when markets fell in the first quarter.

Automation (13% of the portfolio) - the current recession is leading governments worldwide to encourage industrial investment and to engage in spending on public works. The rise in industrial automation demand now seems to be coming through, especially in Asia.

Emerging Market Consumer (10% of the portfolio) - We had moderated the size of the Company's exposure to this theme, but falls in share prices during the lockdown have thrown up better value opportunities to invest for the longer term allowing us, for instance, to buy a holding in Hermes alongside our long term Louis Vuitton investment.

Healthcare Costs (11% of the portfolio) - although many of our selected investments are central to helping contain the pandemic, such as Roche the world leader in virus testing, much of this work will be done as a public service and for very low margins. Also, the chances of Mr Biden replacing Mr Trump as US President will raise concerns of pressure on US healthcare pricing, even if we see benefits from that change in other ways, such as a reduced likelihood of US-China trade wars.

Scientific Equipment (10% of the portfolio) - Investments in this area seem more likely to benefit from increased testing both for viruses and other human and animal health issues. The companies themselves have continued to grow through the crisis showing the merit of continued research and development of new products in past years.

Low Carbon World (7% of the portfolio) - This theme gave very strong returns over the year and some shareholders may be surprised that we have taken some profits. However, the very large 'green' initiatives being undertaken by governments currently are encouraging more competitors to enter the renewable energy area, some, such as oil majors, with large balance sheets but few relevant skills. This is bringing down returns on investment and the sell on values when fields are developed. Despite these factors, some of the better known shares in this area have become very fashionable and now trade on rather high multiples of future cash flows.

Fintech (8% of the portfolio) - During the year we recognized the accelerating development of digital solutions to financial services. Companies such as Mastercard and Visa have grown their share of our payments at the expense of the local bank branch and these branches increasingly need to automate their services. We invest very little of the Company in traditional banks as the challenges thrown up by 'fintech' offerings remind us of the challenges they face.

High Quality Assets (6% of the portfolio) - Our property holdings performed rather poorly again this year except for warehouse investments, despite bond yields falling again. We are concerned that the very high levels of government spending to try to create jobs after lockdown may take the world from its current disinflationary period into one of higher inflation and so we have invested in gold mines - the gold price already seems to be strengthening on this basis.

Discontinued themes - at the start of this reporting period we sold our remaining holdings in our Tourism theme. This proved fortuitous ahead of lockdown and we do not claim we foresaw the pandemic. However, our concerns about the scale of mass tourism worldwide and the security, biosecurity and environmental impacts were very much on our mind. We believe that travel will return, but that this theme will be constrained in future in ways it has not been in the past.

Five largest stock contributors to performance

Five largest stock detractors from performance

Outlook

Over the last six months investors have worried about the impact of the coronavirus and been reassured by the support governments have put in to support economies; we take almost the opposite view. Our selection of companies with strong business models, strong balance sheets and records of investing for the future, have proved their worth through the crisis and many see expected future growth brought forward by the crisis, such as higher levels of online shopping and greater amounts of home working - these changes we see as persisting even when virus levels have fallen.

We are wary that interest rates have again been cut to levels which force investors to take risk. The UK government ten year bond today (22nd July 2020, Bloomberg), yields all of 11 basis points per annum. Our Company yields ten times that without us having any preference for higher yielding equities. So investors are pushed into equities and other riskier assets whether they want the risk or not. No doubt much of this pressure has resulted in some shares, such as Amazon and perhaps Orsted in wind power becoming very fashionable. Our role here is to monitor the value for money in each of our holdings and to seek out less fashionable companies which still have high quality business models and strong future prospects. We will continue to do that.

However, we are also wary that governments are pledging very large amounts of spending when government debt levels are already very high. The lockdown itself has produced a deflationary shock and rising unemployment; there will no doubt also be many small businesses which struggle to survive. The government spending cannot help all of these, nor do large-scale infrastructure projects create jobs in the way they did in the 1930s. The money issued by government in this period may well look for a home and, after years of inflation levels falling, we may see inflation rise over the next year or two, albeit from very low levels.

Such a reversal would prove a challenge firstly for investors in traditional government bonds (who may look at the 11 basis points on offer with fresh eyes), but also to equity investors who believe past winning investments will simply carry on winning. We therefore continue to monitor value for money in our holdings and to diversify the portfolio by industry and region, thus bringing a diverse range of valuations. We see a fresh range of challenges currently and anticipate further challenges in the year ahead, but the companies we have chosen to include in the portfolio have done us proud this year and give us confidence they will in the years to come.

Sustainable investing

Over recent years a number of investment houses have made much of the sustainability of their investments or how their funds score on measures of environmental, social and governance factors. As we aim for longer term investment success, we have always included these factors in our selection process. Our interpretation of the factors is based on common sense and real-life situations, rather than any tick list or one-size-fits-all screen. As an example, we think that air travel may remain essential in large Asian countries while the environmental damage of cheap flights may become unacceptable in Europe.

We are not, however, looking to change the world, nor do we presume to have an ethical code that all would follow. Our aim is to invest in companies which prosper without damaging society or the environment something that is likely to make profitability more sustainable. We believe that this is an aim that we share with our investors and that this perspective is, and has always been, central to the management of a successful Investment Trust.

Artemis' investment approach

Our aim is to identify reliable commercial trends around the world which are likely to deliver superior growth to our investments. By focusing the portfolio around trends, such as, the growth of consumption from emerging markets, the growth in demand for healthcare in developed markets and technological change on the internet and in the energy industry, we believe our thematic based approach can deliver superior returns over time.

Within each chosen investment theme's universe of companies, there may be many quoted equities which could be attractive investments. Our preference is to select high quality companies with records of profitability, high cash generation, strong balance sheets and which have established barriers to entry to their industries. Such companies sometimes lag equity markets when they recover vigorously, but they protect capital well when economic conditions become more testing.

Once an investment opportunity has been identified, we will only commit capital to it when the price offers the chance to invest at a reasonable valuation. This valuation discipline is at the heart of all of our investment decisions. In terms of portfolio construction, this will reflect opportunities that meet our investment criteria and will not be weighted to a benchmark. We aim to run a diversified portfolio, with around 55-75 holdings spread across 8 to 10 different themes.

Over time we have found this investment approach gives a framework to deliver very attractive returns to investors.

Further information on our investment approach can be found on our website at artemis.co.uk.

Simon Edelsten, Alex Illingworth & Rosanna Burcheri

Fund Managers

3 September 2020

Strategy and Business Review

This Strategic Report has been prepared in accordance with the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013.

Business Model

The Company is incorporated in Scotland and operates as an Investment Trust Company and is an investment company within the meaning of section 833 of the Companies Act 2006 (the 'Act'). The Company is premium listed on the official list and is traded on the main market of the London Stock Exchange. It has a global focus. Its business as an investment trust is to buy and sell investments with the aim of achieving the objective and investment policy outlined below.

The Company has been approved as an investment trust in accordance with the requirements of section 1158 of the Corporation Taxes Act 2010. This approval remains subject to the Company continuing to meet the eligibility conditions and ongoing requirements of the regulations. The Board will manage the Company so as to continue to meet these conditions.

The Company has no employees and delegates most of its operational functions to a number of service providers, details of which are set out later in the report.

Objective and investment policy

The objective of the Company is to achieve capital and income growth by investing on a worldwide basis. Although the Company aims to provide dividend growth over time, its primary aim is to maximise total returns to shareholders.

The Company is prepared to move freely between different markets, sectors, industries, market capitalisations and asset classes as investment opportunities dictate. On acquisition, no holding shall exceed 15% of the portfolio. The Company will not invest more than 15% of its gross assets in UK listed investment companies. Assets other than equities may be purchased from time to time including but not limited to fixed interest holdings, unquoted securities and derivatives. Subject to prior Board approval, the Company may use derivatives for investment purposes or for efficient portfolio management (including reducing, transferring or eliminating investment risk in its investments and protection against currency risk).

The number of individual holdings will vary over time. To ensure diversification of opportunity and management of risk, there will be between 40 and 140 holdings, and the portfolio will be managed on a global basis rather than as a series of regional sub-portfolios. As at 30 June 2020 there were 71 holdings in the portfolio.

The Board and Investment Manager assess investment performance with reference to the MSCI All Country World Index (GBP). However, little attention is paid to the composition of this index when constructing the portfolio and the composition of the portfolio is likely to vary substantially from that of the index. A long-term view is taken and there may be periods when the net asset value per share declines in absolute terms and relative to the comparative index.

Gearing and leverage

The Company may use borrowings to support its investment strategy and can borrow up to 30% of its net assets. During the year, the Company held a multicurrency revolving credit facility with Scotiabank (Ireland) which is available to the Company until 19 February 2021. As at 30 June 2020, €5.0m (£4.5m) and US$6.0m (£4.9m) was drawn down from this facility.

The Company's gearing is reviewed by the Board and Investment Manager on an ongoing basis.

Leverage is defined in the Alternative Investment Fund Managers Directive ('AIFMD') as any method by which the Company can increase its exposure by borrowing cash or securities, or from leverage that is embedded in derivative positions. The Company is permitted to borrow up to 30% of its net assets (determined as 130% under the Commitment and Gross ratios). The Company is permitted to have additional leverage of up to 100% of its net assets, which results in permitted total leverage of 230% under both ratios. The Alternative Investment Fund Manager (the 'AIFM') monitors leverage values on a daily basis and reviews the limits annually. No changes have been made to these limits during the year. At 30 June 2020, the Company's leverage was 102.2% as determined using the Commitment method and 103.0% using the Gross method.

Current and future developments

A summary of the Company's developments during the year ended 30 June 2020 together with its prospects for the future, is set out in the Chairman's Statement, the Investment Manager's Review and within the Principal risks and risk management information in the Annual Financial Report. The Board's principal focus is the delivery of positive long-term returns for shareholders. This will be dependent on the success of the investment strategy, in the context of both economic and stock market conditions. The investment strategy, and factors that may have an influence on it, are discussed regularly by the Board and the Investment Manager. The Board furthermore considers the ongoing development and strategic direction of the Company, including its promotion and the effectiveness of communication with shareholders.

Key performance indicators ('KPIs')

The performance of the Company is reviewed regularly by the Board and it uses a number of KPIs to assess the Company's success in meeting its objective. The KPIs which have been established for this purpose are set out below.

- Net asset value performance compared to the MSCI All Country World Index (GBP)

The Board monitors the performance of the net asset value per share against that of the MSCI All Country World Index (GBP).

- Share price performance

The Board monitors the performance of the share price of the Company to ensure that it reflects the performance of the net asset value.

Discrete annual total returns

- Share price premium/(discount) to net asset value

The Board recognises that it is in the interests of shareholders to maintain a share price as close as possible to the net asset value per share. The policy of the Board is to limit the discount or premium to a maximum of 2 per cent in normal circumstances. The Company may issue shares at such times as demand is not being met by liquidity in the market and buy back shares when there is excess supply. This policy has proved consistently effective in generating value within the Company and protecting shareholders' liquidity requirements. During the COVID-19 emergency the stock markets and thus the Company's NAV were particularly volatile. At all times the Company sought to manage the discount and premium within the target parameters. While the Company declares its NAV daily, markets are open almost twenty four hours per day and this accounts for the wider range in premium and discount in 2020. The Company has performed strongly against the challenging market conditions encountered during the current year and as a result, 9,412,698 shares have been issued during the year to 30 June 2020, raising proceeds, net of dealing commission and stock exchange fees of £55.1m. This resulted in the action taken by the Board to seek further shareholder authorities as outlined in the Share Capital section on page 16 of the Annual Financial Report. Costs in relation to increasing the shareholder authorities amounted to £150,000. This is being amortised in line with the share issuance activity over the life of the Prospectus. At the year end the issued share capital of the Company had risen by approximately 94% on the balance at the time of the Investment Manager's appointment in May 2014.

Although the Company incurs modest costs for operating the policy and when renewing shareholder authority, issuance at a premium and buying back at a discount under the policy more than compensates and is consistently accretive to NAV. The Board estimates that since the Investment Manager was appointed, the NAV has increased due to share issuance by £3.1m after all costs, with £1.4m of this gain being generated in the latest financial year.

Due to the limited availability of new ordinary shares for the Company to issue, for a brief period between 27 May 2020 and 17 June 2020, the Company increased the premium limit to a maximum of 4 per cent in normal circumstances. Following the confirmation of shareholder approval to increase the share issuance authority at the general meeting on 17 June 2020, the Company reverted back to its stated premium limit of 2 per cent. Further details of the shares issued and bought back during the year are set out in the Share Capital section of the Annual Financial Report.

- Ongoing charges

The Board is mindful of the ongoing costs to shareholders of running the Company and monitors operating expenses on a regular basis. The Company's current ongoing charges ratio is 0.7% (2019: 0.7%).

- Dividend per share

The Board aims to grow the dividends paid to shareholders, in addition to capital growth. It monitors the revenue returns generated by the Company during the year, its historic revenue reserves and expected future revenue and then determines the dividends to be paid. Subject to approval of the final dividend by shareholders, a total dividend of 6.12 pence per share (2019: 5.83 pence per share) will be paid in respect of the year ended 30 June 2020. This represents an increase of 5%.

Dividends paid in respect of the years ended June 2020 and June 2019 were fully covered by their respective current year earnings.

Principal risks and risk management

The Board, in conjunction with the Investment Manager, has developed a risk map which sets out the principal risks faced by the Company. It is used to monitor these risks and to review the effectiveness of the controls established to mitigate them. Further information on the Company's internal controls is set out in the corporate governance section of the Annual Financial Report.

A summary of the key areas of risk and uncertainties is set out below along with controls in place to manage these which are highlighted for each risk.

- Strategic risk: The management of the portfolio of the Company may not achieve its investment objective and policy. The Company's investments are selected on their individual merits and the performance of the portfolio may not track the wider market (represented by the MSCI All Country World Index (GBP)). The Board believes this approach will continue to generate good long-term returns for shareholders. Risk is diversified through a broad range of investments being held. The Investment Manager has a proven track record; the Board discusses the investment portfolio and its performance with the Investment Manager at each Board meeting.

- Market risks: The Company invests in a portfolio of international quoted equities. The prices of equity investments may be volatile and are affected by a wide variety of factors many of which can be unforeseen and are outwith the control of the investee company or the Investment Manager. These price movements could result in significant losses for the Company.

The Company's functional currency and that in which it reports its results is sterling. However, the majority of the Company's assets, liabilities and income are denominated in currencies other than sterling. Consequently, movements in exchange rates will affect the sterling value of those items. The country in which a portfolio company is listed is furthermore not necessarily where it earns its profits and movements in exchange rates on overseas earnings may have a more significant impact upon a portfolio company's valuation than a simple translation of that company's share price into sterling. The Company does not generally hedge its currency exposures and changes in exchange rates may lead to a reduction in the Company's NAV.

The Company pays interest on amounts drawn down under its borrowing facility with Scotiabank (Ireland). As such, the Company will be exposed to fluctuations in the prevailing market rates for each currency drawn down under the facility.

The UK left the European Union on 31 January 2020. The UK has until 31 December 2020 to agree and ratify a trade deal with the European Union. The terms of any trade deal agreed between the UK and the European Union or the UK failing to agree a trade deal with the European Union could create uncertainty in the UK (and potentially global) markets and currencies.

The Investment Manager has a proven track record and reports regularly to the Board on market developments. At each Board meeting the Investment Manager provides explanations for the performance of the portfolio and the rationale for any changes in investment themes. Any use of derivatives requires Board approval.

- Borrowing: The Company has a multicurrency revolving credit facility with Scotiabank (Ireland) to borrow money for investment purposes. If the Company's investments fall in value, any borrowings will magnify the extent of the losses and if borrowing facilities are not renewed, the Company may also have to sell investments to repay borrowings. All borrowing arrangements entered into require the prior approval of the Board and gearing levels are discussed by the Board and Investment Manager at each Board meeting. The majority of the Company's investments are in quoted companies which are highly liquid.

- Regulatory: Failure to comply with the requirements of a framework of regulation and legislation (including rules relating to listed closed-end investment companies), within which the Company operates or changes to such framework could have a material adverse effect on the ability of the Company to carry on its business and maintain its listing. Breach of the tests that a company must meet to retain approval as an investment trust company or a change to the legal or regulatory rules in the future could, amongst other things, lead to the Company being subject to tax on capital gains.

The Company relies on the services of the Company Secretary and Investment Manager to monitor ongoing compliance with relevant regulations, accounting standards and legislation. The Company Secretary and Investment Manager also appraise the Board of any prospective changes to the legal and regulatory framework so that any requisite actions can be planned. The Company's auditor provides an annual update on any accounting standard changes that affect the Company.

- Reliance on third party service providers: The Company has no employees and all of the Directors have been appointed on a non-executive basis; all operations are outsourced to third party service providers. Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment, to protect against breaches of the Company's legal and regulatory obligations such as data protection or to perform its obligations to the Company at all as a result of insolvency, fraud, breaches of cybersecurity, failures in business continuity plans or other causes, could have a material adverse effect on the Company's operations.

Experienced third party service providers are employed by the Company under appropriate terms and conditions and with agreed service level specifications. The Board receives regular reports from its service providers and reviews the performance of its key service providers at least annually.

- Reliance on key personnel: The Company's portfolio is managed by the Investment Manager and in particular there are three investment executives within the Artemis Fund Managers team who have direct responsibility for portfolio selection. Any change in relation to the investment executives may adversely affect the performance of the Company.

The engagement of three individuals in the management of the portfolio provides continuity. The Investment Manager additionally has business continuity plans in the unlikely event that the whole team left. The individuals all hold substantial interests in the Company and the Investment Manager has appropriate incentive arrangements in place to retain its staff

- Pandemic (COVID-19): The rapid spread of COVID-19 has caused governments to implement policies to restrict the gathering, interaction or movement of people with ensuing downturn in the global economy. These policies have inevitably changed the nature of the operations of some aspects of the Company, its key service providers and the companies in which it invests. The future development and the long-term impacts of the outbreak are unknown; share prices respond to assessments of future economic activity as well as their own forecast performance.

The Board and its Investment Manager have regular discussions to assess this impact of COVID-19 on the investment portfolio, including its ability to generate income for shareholders. The Board also receives reports on the operational resilience of third party service providers.

Further information on risks and uncertainties and the management of them are set out in the Annual Financial Report.

Other matters

Viability statement

In accordance with the Association of Investment Companies (the 'AIC') Code of Corporate Governance, the Board has considered the longer term prospects for the Company beyond the twelve months required by the going concern basis of accounting. The period assessed is in line with our Key Investor Document is five years. This has been deemed appropriate for the Company given the nature of its business, its current size and the longer term view taken by the Investment Manager when constructing the portfolio and the long term investor outlook.

In considering the Company's prospects over the next five years, the Directors have assumed that the Company will continue to adopt the same investment objective, that the Company's performance will continue to be attractive to shareholders, and that the Company will continue to meet the requirements to retain its status as an investment trust.

As part of its assessment of the viability of the Company, the Board has considered each of the principal risks above including matters relating to COVID-19 and the impact on the Company's portfolio of longer lasting damage to the economy, of a withdrawal of liquidity, of a significant fall in global markets and changes in regulation. The Board has also considered the liquidity of the Company's portfolio to ensure that it will be able to meet its liabilities as they fall due. The Board has concluded, given the very liquid nature of the majority of the investments, the level of ongoing expenses and the availability of gearing, that the Company will continue to be in a position to cover its liabilities.

The Company is authorised to trade as an investment company and has the associated tax benefits. Any change to the Company's tax arrangements could affect the Company's viability as an effective investment vehicle.

The conclusion of this review is that the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next five years.

Share capital

During the year to 30 June 2020 the Company issued 9,412,698 new shares (2019: 3,666,000) to satisfy continued demand for the Company's shares, raising proceeds of £55.2m. All of the shares were issued at a premium to the prevailing net asset value on the date of issue.

During the year the Company bought back to treasury, at a cost of £0.45m, 97,302 ordinary shares (2019:nil). These buybacks took place in March 2020 at a time of considerable uncertainty within the market. All shares were subsequently reissued at a premium to NAV, generating proceeds of £0.5m.

The Directors' authority to buy back shares will expire at the end of the AGM on 10 November 2020. The Directors intend to seek approval from the shareholders to renew this authority at the 2020 AGM in order to allow the Directors to continue to manage the liquidity of the Company's shares in accordance with its stated discount/premium management policy.

On 17 June 2020 shareholders approved the issue of a Prospectus to issue shares up to an aggregate nominal value of £1,250,000 (representing approximately 50% of the Company's issued share capital as at 29 May 2020) on a non pre-emptive basis. The authority granted with the Prospectus expires on 30 June 2021. Shareholders also granted additional authority to the Directors to issue shares up to an aggregate nominal value of £369,218 (representing approximately 15% of the Company's issued share capital as at 29 May 2020). This authority expires at the end of the AGM on 10 November 2020.

The Directors intend to seek approval from the shareholders to renew their allottment authority at the 2020 AGM.

Directors

The Directors of the Company and their biographical details are set out in the Annual Financial Report. Each of the Directors held office throughout the year under review, with the exception of Mrs Diana Dyer Bartlett who was appointed on 1 February 2020. The Chairman, who has indicated his intention to retire at the Company's AGM on 10 November 2020, will be replaced, subject to shareholder approval, by Mr Russell Napier.

No Director has a contract of service with the Company.

Appointments to the Board will be made on merit with due regard to the benefits of diversity, including gender. The Board recognises the benefits of diversity and over time, as suitably qualified candidates emerge, expects that this will increase. The Board considers its commitment to greater diversity is not in conflict with a policy on board tenure in which the Chairman would not ordinarily serve for more than ten years as Chairman. The Board is of the view that the shareholders' best interests are served by retaining the services of a well-qualified Chairman rather than losing them for reasons unrelated to ability. This policy on tenure does not materially restrict the ability of the Board to increase diversity and the annual appraisal process assesses whether the Chairman retains the confidence of the Board.

The Board is currently comprised of five male Directors and one female Director. Following the retirement of the Chairman, the Board will revert to consisting of five Directors. The Company does not have any employees.

Modern Slavery Act 2015

The Company does not fall within the scope of the Modern Slavery Act 2015 as its turnover is less than £36m. Therefore no slavery and human trafficking statement is included in the Annual Financial Report.

Social and environmental matters

The Company has no employees and has delegated the management of the Company's investments to Artemis. In its capacity as Investment Manager, Artemis has a Corporate Governance and Shareholder Engagement policy which sets out a number of principles that are intended to be considered in the context of its responsibility to manage investments in the financial interests of shareholders. Artemis undertakes extensive evaluation and engagement with company managements on a variety of matters such as strategy, performance, risk, dividend policy, governance and remuneration. All risks and opportunities are considered as part of the investment process in the context of enhancing the long-term value of shareholders' investments. This will include matters relating to material environmental, human rights and social considerations that will ultimately impact the profitability of a company or its stock market rating and hence these matters are an integral part of Artemis' thinking as institutional investors. Further details of this can be found in the Annual Financial Report.

How the Directors discharge their duties under s172 of the Companies Act

Under section 172 of the Companies Act 2006, the Directors have a duty to act in good faith and to promote the success of the company for the benefit of its shareholders as a whole, and in doing so have regard to:

a) the likely consequences of any decision in the long term,

b) the interests of the company's employees,

c) the need to foster the company's business relationships with suppliers, customers and others,

d) the impact of the company's operations on the community and the environment,

e) the desirability of the company maintaining a reputation for high standards of business conduct, and

f) the need to act fairly as between members of the company.

As an externally managed investment trust, the Company has no employees or physical assets. Our shareholders, Artemis as our Investment Manager, our investee companies and other professional service providers, such as the administrator, depositary, registrar, auditor, corporate broker and lenders are all considered to fall within the scope of section 172.

The Board is responsible for promoting the long-term sustainable success and strategic direction of the Company for the benefit of the Company's shareholders. Whilst certain responsibilities are delegated, directors' responsibilities are set out in the schedule of matters reserved for the Board and the terms of reference of its committees, both of which are reviewed regularly by the Board. The Board has set the parameters within which the Investment Manager operates and these are set out in the Investment Management Agreement and in Board minutes.

The Company's corporate values have been established by the Board to manage its key business relationships. The Company's approach on anti-bribery and prevention of tax evasion can be found in the Annual Financial Report and on the Company's website at midwynd.com.

Shareholders

To help the Board in its aim to act fairly as between the Company's members, it encourages communications with all shareholders. The Annual and Interim reports are issued to shareholders and are available on the Company's website together with other relevant information including monthly factsheets. The Board regularly reviews and discusses any shareholder communications received at Board meetings. This ensures that shareholder views are taken into consideration as part of any decisions taken by the Board. The Board considers communication with shareholders an important function and Directors are always available to respond to shareholder queries. Shareholders are welcome to contact the Board through use of the midwyndchairman@artemisfunds.com email address. Due to current COVID-19 restrictions, it is anticipated that our normal AGM format of shareholder invitation to our registered office will be suspended this year. Full details of the temporary arrangements in place can be found in the Annual Financial Report. We very much hope to revert to normal practice in 2021.

As a means of ensuring good communication with our shareholders, the Company continues to engage a communications consultancy firm to assist with its marketing and future development and the Board and Investment Manager discuss the topic regularly.

Additionally, through its membership of the AIC, the Board believes the Company and shareholders benefit from the work undertaken by this body with their representation of the investment trust industry.

Investment Manager

The Board receives regular updates from the Investment Manager and ensures that information pertaining to its key parties is provided, as required, as part of the information presented in regular board meetings.

This enables the Investment Manager to demonstrate the Company's strategy through those channels that reach its key parties, ensuring they are kept updated of the latest developments. The Investment Manager ensures communication with the Company's brokers is maintained and opportunities for growing the Company's retail base and featuring on investment platforms is strengthened.

During the period, the COVID-19 pandemic resulted in additional discussions being held between the Board and Investment Manager to discuss the impact on the Company, and specifically to ensure the protection of shareholders' interests and to understand the opportunities presented for investment in the weaker equity markets.

Investee companies

The Board has discussed with the Investment Manager how Environmental, Social and Governance ('ESG') factors are taken into account when selecting and retaining investments for the Company. The Board recognises the increasing importance placed on this area and is working with the Investment Manager in relation to future engagement on behalf of the Company. Further information on social and environmental matters is provided in the Annual Financial Report.

The Board has given discretion to the Investment Manager to exercise the Company's voting rights. The Investment Manager endorses the UK Stewardship Code.

Other key service providers

The Board regularly reviews the performance of other service providers to ensure that services provided to the Company are managed efficiently and effectively for the benefit of the Company's shareholders. The Board monitors the performance of these other key service providers such as the administrator, depositary and registrar through regular reporting at Board meetings or via the Company Secretary. The Board receives regulatory updates at every Board meeting and as necessary from the Company Secretary and carefully assesses the impact of these on the Company.

The Company's auditor attends two Audit Committee meetings per year which provides the Board with good opportunity for engagement and discussion of those areas which are key to ensuring the successful operation of the Company.

Decisions made during the year

Certain key decisions taken by the Board during the year also serve as examples of how the needs and priorities of the Company's key parties are taken into account by the Board as part of its decision making process. Key decisions made during the year include:

- the appointment of a new Director and Audit Committee Chair, Mrs Diana Dyer Bartlett, on 1 February 2020. Mrs Dyer Bartlett has recent relevant financial experience, being a chartered accountant who is also audit committee chairman of two other public companies, one of which is an investment trust. The Board continues to consider future succession planning and the need for the requisite skills and experience required to meet the challenges and future opportunities facing the Company, as well as the benefits of diversity, including gender and ethnicity;

- undertaking a re-tender for statutory audit services for the year ended 30 June 2020. This was following the decision of Scott-Moncrieff to exit the Public Interest Entity market and its subsequent resignation as auditor of the Company. Following the re-tender process, Johnston Carmichael LLP were appointed as auditor of the Company on 25 March 2020 and shareholders will be asked to formally approve the appointment at the Annual General Meeting to be held on 10 November 2020. Johnston Carmichael LLP have recent relevant experience in auditing investment trusts such as the Company; and

- the Board sought shareholder approval to issue new shares by issuing a Prospectus and extending the general issuance authorities. The purpose of this is to meet continuing demand for the Company's shares and manage the share premium to net asset value; thereby maintaining liquidity in the Company's shares, creating shareholder value by issuing shares at a premium to net asset value and reducing fixed administration costs per share. This authority was granted by shareholders at a General Meeting held on 17 June 2020 and also via publication of a prospectus on 30 June 2020, detailed further on page 16 of the Annual Financial Report. These authorities will enable the Company to meet the expected continuing demand for the Company's shares and create shareholder value through issuing at a premium to net asset value.

The Board's primary focus is to promote the long term success of the Company for the benefit of the Company's shareholders. In doing so, the Board has regard to the impact of its actions on other key parties as described above.

Financial statements

The financial statements of the Company are included in the Annual Financial Report.

On behalf of the Board.

Malcolm Scott

Chairman

3 September 2020

Statement of Directors' Responsibilities in respect of the Annual Financial Report and the Financial Statements

Management Report

Listed companies are required by the Financial Conduct Authority's Disclosure Guidance and Transparency Rules (the 'Rules') to include a management report in their annual financial statements. The information required to be in the management report for the purpose of the Rules is included in the Strategic Report. Therefore no separate management report has been included.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Financial Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law they are required to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing each of the financial statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and estimates that are reasonable and prudent;

- state whether applicable UK Accounting Standards have been followed, subject to any material departures being disclosed and explained in the financial statements; and

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report and Corporate Governance Statement, and a Directors' Remuneration Report that complies with that law and those regulations.

The financial statements are published on a website, midwynd.com, maintained by the Company's Investment Manager, Artemis Fund Managers Limited. Responsibility for the maintenance and integrity of the corporate and financial information relating to the Company on this website has been delegated to the Investment Manager by the Directors. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

We confirm that to the best of our knowledge:

(a) the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities and financial position of the Company as at 30 June 2020 and of the profit for the year then ended; and

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

For and on behalf of the Board.

Malcolm Scott

Chairman

3 September 2020

Statement of Comprehensive Income For the year ended 30 June

The total column of this statement is the profit and loss account of the Company.

All revenue and capital items in this statement derive from continuing operations.

The net return for the year disclosed above represents the Company's total comprehensive income.

Statement of Financial Position As at 30 June

These financial statements were approved by the Board of Directors and signed on its behalf on 3 September 2020.

Malcolm Scott

Chairman

Statement of Changes in Equity

For the year ended 30 June 2020

For the year ended 30 June 2019

Statement of Cash Flows For the year ended 30 June

Notes to the Financial Statements

1. Accounting policies

The financial statements are prepared on a going concern basis under the historical cost convention modified to include the revaluation of investments.

The financial statements have been prepared in accordance with the Companies Act 2006, applicable United Kingdom accounting standards, including Financial Reporting Standard ('FRS') 102, and the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies (the 'AIC') in October 2019.

In order to better reflect the activities of the Company and in accordance with guidance issued by the AIC, supplementary information which analyses the profit and loss account between items of a revenue and capital nature has been presented in the Statement of Comprehensive Income.

Financial assets and financial liabilities are recognised in the Company's Statement of Financial Position when it becomes a party to the contractual provisions of the instrument.

No significant estimates or judgements have been made in the preparation of the financial statements.

The Directors consider the Company's functional currency to be Sterling as the Company's shareholders are predominantly based in the UK and the Company is subject to the UK's regulatory environment.

2. Income

3. Dividends paid and proposed

Set out below are the total dividends paid and payable in respect of the financial year. The revenue available for distribution by way of dividend for the year is £3,330,000 (2019: £2,650,000).

4. Net return per ordinary share

Revenue return per ordinary share is based on the net revenue return on ordinary activities after taxation for the financial year of £3,330,000 (2019: £2,650,000), and on 45,134,883 (2019: 39,052,594) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year.

Capita return per ordinary share is based on the net capital return on ordinary activities after taxation for the financial year of £26,530,000 (2019: £23,326,000), and on 45,134,883 (2019: 39,052,594) ordinary shares, being the weighted average number of ordinary shares in issue (excluding treasury shares) during the year.

5. Net asset value per ordinary share

The net asset value per ordinary share and the net assets attributable to the ordinary shareholders at the year end, calculated in accordance with the Articles of Association, were as follows:

During the year the movements in the assets attributable to shareholders were as follows:

Net asset value per ordinary share is based on net assets as shown above and on 50,284,114 (2019: 40,871,416) ordinary shares, being the number of ordinary shares in issue at the year end.

6. Transactions with the Investment Manager and related parties

The amounts paid to the Investment Manager and amounts outstanding at the year end are disclosed in the Annual Financial Report. The existence of an independent Board of Directors demonstrates that the Company is free to pursue its own financial and operating policies and therefore the Investment Manager is not considered to be a related party.

Fees payable during the year to the Directors and their interests in shares of the Company are considered to be related party transactions and are disclosed within the Directors' Remuneration Report in the Annual Financial Report.

7. Post Balance Sheet Event

On 12 August 2020, the Company repaid US$3.0 million and EUR2.5 million of its loan facility.

As at 1 September 2020, a further 2,170,000 ordinary shares have been issued since the year end.

8. Annual Financial Report

This Annual Financial Report announcement does not constitute the Company's statutory accounts for the years ended 30 June 2020 and 30 June 2019 but is derived from those accounts. Statutory accounts for the year ended 30 June 2019 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 June 2019 and the year ended 30 June 2020 both received an audit report which was unqualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not include statements under Section 498 of the Companies Act 2006 respectively. The statutory accounts for the year ended 30 June 2020 will be delivered to the Registrar of Companies shortly.

The audited Annual Financial Report for the year ended 30 June 2020 will be posted to shareholders shortly. Copies may be obtained from the Company's registered office at 6th Floor, Exchange Plaza, 50 Lothian Road, Edinburgh, EH3 9BY or at midwynd.com.

The Annual General Meeting of the Company will be held on Tuesday, 10 November 2020.

For further information, please contact:

Company Secretary

Tel: 0131 225 7300

Artemis Fund Managers Limited

4 September 2020