Half-yearly Results to 30 June 2023
16/08/2023 07:00
Global Opportunities Trust plc
Legal Entity Identifier: 2138005T5CT5ITZ7ZX58
Half-Yearly Results for the six months to 30 June 2023 (unaudited)
Financial Highlights
SHARE PRICE TOTAL RETURN* 2.2% NET ASSET VALUE TOTAL RETURN* (0.2)%
SHAREHOLDERS' FUNDS £103.9m DISCOUNT TO NET ASSET VALUE* (11.1)%
30 June 2023 31 December 2022 % Change
Net Assets/Shareholders' Funds (£) 103,880,000 106,144,000 (2.1)
Shares in issue 29,222,180 29,222,180 -
Net Asset Value per share - cum inc. (pence)* 355.5 363.2 (2.1)
Share Price (pence) 316.0 314.0 0.6
Share Price Discount to Net Asset Value (%)* (11.1) (13.5) -
* Alternative Performance Measure.
CHAIRMAN'S STATEMENT
I am pleased to present the Company's interim report for the six months to 30
June 2023.
Investment Performance
The first half of the year saw markets rebound somewhat with global equities
rising over 9% in sterling terms. The US technology sector was particularly
buoyant as softening headline inflation buoyed investor confidence. Emerging
markets were mixed with Asia not performing particularly well over the period
in contrast to Latin America where a number of markets produced very strong
returns. The rise in sterling masked some of the global bond market recovery
such that whilst gilts advanced slightly, overseas bonds generally produced
negative returns to the sterling investor. Cash returns benefited from the
sequential increases in rates by central banks across the world.
For the six months ended 30 June 2023, the Company's Net Asset Value ("NAV")
Total Return decreased by 0.2% as equity markets rebounded. On a positive
note, the Share Price Total Return increased by 2.2% reflecting a slight
narrowing of the discount to NAV.
As at 30 June 2023 the Company had Net Assets of £103.9m (31 December 2022:
£106.1m), the NAV per ordinary share ("share") was 355.5p (31 December 2022:
363.2p) and the middle market price per share on the London Stock Exchange was
316.0p (31 December 2022: 314.0p), representing a discount of 11.1% to NAV.
Update on Management Arrangements
Shareholders may have noted that with effect from 30 May 2023, the Company
terminated its Investment Management Agreement (the "IMA") with Franklin
Templeton Investment Management Limited ("Franklin Templeton"). Following the
termination of the IMA with Franklin Templeton, Goodhart Partners LLP
("Goodhart") was appointed to provide investment sub-advisory services to the
Company assisting Dr Nairn in managing the global listed equities mandate. The
Board looks forward to working with, and further strengthening its
relationship with Goodhart.
2023 Annual General Meeting
The Annual General Meeting ("AGM") of the Company was held on 26 April 2023.
On behalf of the Board, I would like to thank all those shareholders who
attended the meeting in person or voted by way of proxy. I was pleased to note
that all resolutions were formally passed by the requisite majority.
Board succession
David Ross retired as a Non-Executive Director of the Company at the
conclusion of the AGM and Katie Folwell-Davies was appointed as a
Non-Executive Director of the Company. I would like to formally welcome Katie
to the Board. As previously noted in the Annual Report for the financial year
ended 31 December 2022, following her appointment, Katie has taken on the role
of Chair of the Audit and Management Engagement Committee from David.
Portfolio Information
Shareholders can keep up to date on the performance of the portfolio through
the Company's website at www.globalopportunitiestrust.com.
If you have not yet done so, you can subscribe to receive the monthly
factsheet and other interesting research articles by our Executive Director,
Dr Nairn by visiting the Company's website.
Keep in touch
As always, the Board welcomes communication from shareholders and I can be
contacted directly through the Company Secretary at cosec@junipartners.com.
Outlook
Much of the return in market confidence stemmed from the decline in headline
inflation, allied with the view that tightened monetary policy would be able
to engineer an outcome which would see inflation return to target levels
whilst avoiding a meaningful recession. Equity markets are more than priced
for this outcome. It would be extremely unusual for economic policy to achieve
such an outcome, not least because of the historically unprecedented levels of
debt which exist in all the developed nations. For this reason, the portfolio
remains defensively positioned.
Cahal Dowds
Chairman
15 August 2023
EXECUTIVE DIRECTOR'S REPORT
The first half of 2023 demonstrated the resilience of investor sentiment as
markets rallied strongly following the declines of 2022. If we look back at
2022, market concerns principally stemmed from the gradual increase of
interest rates to more normal levels in the light of soaring inflation. Part
of the inflationary impulse was demand led, stemming from the release of post
Covid consumer expenditure. This, combined with supply constraints and
logistical issues, and Ukraine-induced energy price rises, exacerbated the
headline inflation rate rise. Since the rise in energy prices was not going to
repeat arithmetically, headline inflation had to fall. This decline likely
gave rise to the resilience in asset markets and was accompanied by continued
growth in employment and consumption. Investors could therefore look forward
to a time of falling headline inflation and interest rate peaks.
However, this narrative ignores the lagged effects of the interest rate rises
that have already happened even if there were to be no further increases. It
also ignores the debt overhang which looms for most developed economies. When
these are taken into account, combined with the stubborn nature of core
inflation, the outlook does not look so benign. Even if we are approaching
peak interest rates, which is far from certain, it is likely that the concerns
over inflation will be replaced by concerns over economic growth and hence
corporate profitability. Unfortunately, equity valuations appear to be
discounting the rosiest possible outlook rather than one with potential
economic storm clouds. For this reason, the Company retained broadly the same
defensive portfolio structure. This structure is one constructed to try and
minimise downside risk whilst retaining some upside, but being ready to switch
when opportunities arise.
I remain confident that the portfolio is following the correct approach and
see investor sentiment turning as the effects of rising interest rates and the
debt overhang works its way through the global economy and the post Covid
expenditure boom peters out.
Dr Sandy Nairn
Executive Director
15 August 2023
PORTFOLIO OF INVESTMENTS
as at 30 June 2023
Company Sector Country Valuation £'000 % of Net assets
Templeton European Long-Short Equity SIF 1 Financials Luxembourg 13,875 13.4
Volunteer Park Capital Fund SCSp 2 Financials Luxembourg 7,942 7.7
TotalEnergies Energy France 3,204 3.1
Unilever Consumer Staples United Kingdom 3,155 3.0
Samsung Electronics Information Technology South Korea 2,689 2.6
Sumitomo Mitsui Trust Holdings Financials Japan 2,588 2.5
Panasonic Consumer Discretionary Japan 2,587 2.5
Orange Communication Services France 2,448 2.4
ENI Energy Italy 2,431 2.3
Novartis Health Care Switzerland 2,410 2.3
Raytheon Technologies Industrials United States 2,313 2.2
Dassault Aviation Industrials France 2,141 2.1
Sanofi Health Care France 2,014 1.9
Imperial Brands Consumer Staples United Kingdom 1,956 1.9
Lloyds Banking Financials United Kingdom 1,879 1.8
General Dynamics Industrials United States 1,862 1.8
Nabtesco Industrials Japan 1,849 1.8
Murata Manufacturing Information Technology Japan 1,797 1.7
Tesco Consumer Staples United Kingdom 1,757 1.7
Daiwa House Industry Real Estate Japan 1,661 1.6
Fresenius Medical Care Health Care Germany 1,601 1.5
Verizon Communications Communication Services United States 1,356 1.3
Total investments 65,515 63.1
Cash and other net current assets 38,365 36.9
Net assets 103,880 100.0
1 Luxembourg Specialised Investment Fund
2 Luxembourg Special Limited Partnership
DISTRIBUTION OF INVESTMENTS
as at 30 June 2023 (% net assets)
Sector Distribution Geographical Distribution
Sector % Region / country %
Financials: Long-Short Fund 13.4 Europe ex UK 15.6
Financials: Private Equity Fund 7.7 Europe: Long-Short Fund 13.4
Financials: Direct Equities 4.3 Total Europe 29.0
Total Financials 25.4 North America: Private Equity Fund 7.7
Industrials 7.9 North America: Direct Equities 5.3
Consumer Staples 6.6 Total North America 13.0
Health Care 5.7 Japan 10.1
Energy 5.4 United Kingdom 8.4
Information Technology 4.3 Asia Pacific ex Japan 2.6
Communication Services 3.7 Cash and other net assets* 36.9
Consumer Discretionary 2.5
Real Estate 1.6
Cash and other net assets* 36.9
The figures detailed in the sector distribution represent the Company's
exposure to those sectors.
The figures detailed in the geographical distribution represent the Company's
exposure to these countries or regional areas through its investments and
cash.
The geographical distribution is based on each investment's principal stock
exchange listing or domicile, except in instances where this would not give a
proper indication of where its activities predominate.
*The geographical distribution of cash and other net assets as at 30 June 2023
is based on currencies held in the following regions/countries:
North America 25.5%
Japan 8.2%
Europe ex UK 2.7%
United Kingdom 0.5%
36.9%
DIRECTORS' STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES
The important events that have occurred during the period under review and the
key factors influencing the Financial Statements are set out in the Chairman's
Statement and Executive Director's Report. The principal factors that could
impact the remaining six months of the financial year are also detailed in the
Chairman's Statement and Executive Director's Report.
Principle Risks and Uncertainties
The Board has considered the principal and emerging risks facing the Company.
The Board has concluded that there are no significant additional risks facing
the Company other than those detailed below and in the Annual Report and
Financial Statements for the year ended 31 December 2022.
The Board considers that the following risks remain the principal risks
associated with investing in the Company: investment and strategy risk, key
person risk, discount volatility risk, price risk, foreign currency risk,
liquidity risk, operational risk and regulatory risk. Other risks associated
with investing in the Company include, but are not limited to, credit risk,
interest rate risk and gearing risk. These risks, and the way in which they
are managed, are described in more detail under the heading "Principal risks
and uncertainties" within the Strategic Report in the Company's Annual Report
and Financial Statements for the year ended 31 December 2022.
The emerging risks facing the Company have largely remained unchanged since
those detailed in the Annual Report for the year ended 31 December 2022,
namely geopolitical tension, inflation, and economic recession. During the
period under review, the Board monitored emerging risks associated with the
banking sector following the collapse of Credit Suisse, First Republic Bank,
Silicon Valley Bank, and Signature Bank. The Company's investment portfolio
had no direct exposure to any of the aforementioned banks.
The risks identified by the Board as detailed above are not exhaustive and
various other risks may apply to an investment in the Company. Potential
investors may wish to obtain independent financial advice as to the
suitability of investing in the Company.
Going concern
The Half-Yearly Report has been prepared on a going concern basis. The
Directors consider that this is the appropriate basis as they have a
reasonable expectation that the Company has adequate resources to continue in
operational existence and meet its financial commitments as they fall due for
a period of at least twelve months from the date of approval of the unaudited
financial statements.
DIRECTORS' STATEMENT OF RESPONSIBILITIES IN RESPECT OF THE FINANCIAL
STATEMENTS
The Directors confirm that to the best of their knowledge:
* The condensed set of Financial Statements, prepared in accordance with
Financial Reporting Standard ("FRS") 104: "Interim Financial Reporting", gives
a true and fair view of the assets, liabilities, financial position and profit
or loss of the Company; and
* This Half-Yearly Report includes a fair review of the information required
by:
(a) Disclosure Guidance and Transparency Rule 4.2.7R, being an indication of
important events that have occurred during the first six months of the
financial year, and their impact on the condensed set of Financial Statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
(b) Disclosure Guidance and Transparency Rule 4.2.8R, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the Company during that period; and any changes in the related
party transactions described in the last Annual Report that could do so.
This Half-Yearly Report has not been audited or reviewed by the Company's
auditor.
This Half-Yearly Report was approved by the Board of Directors and the above
responsibility statement was signed on its behalf by:
Cahal Dowds
Chairman
15 August 2023
INCOME STATEMENT
for the six months to 30 June 2023 (unaudited)
Six months to 30 June 2023 Six months to 30 June 2022
Revenue £'000 Capital £'000 Total £'000 Revenue £'000 Capital £'000 Total £'000
Gains on investments at fair value through profit or loss - 564 564 - 6,725 6,725
Unrealised foreign exchange (losses)/gains on current assets - (2,278) (2,278) - 1,539 1,539
Realised foreign exchange (losses)/gains on current assets - (7) (7) - 384 384
Income 1,539 - 1,539 1,454 - 1,454
Management fee (25) (58) (83) (73) (171) (244)
Other expenses (348) - (348) (268) - (268)
Net return before finance costs and taxation 1,166 (1,779) (613) 1,113 8,477 9,590
Finance costs
Interest payable and related charges (8) - (8) (12) - (12)
Net return before taxation 1,158 (1,779) (621) 1,101 8,477 9,578
Taxation - overseas withholding tax (182) - (182) (141) - (141)
Net return after taxation 976 (1,779) (803) 960 8,477 9,437
Return per share 3.3p (6.1)p (2.8)p 3.0p 26.9p 29.9p
All revenue and capital items in the above statement derive from continuing
operations.
The total column of this statement is the profit and loss account of the
Company.
The revenue and capital columns are prepared in accordance with guidance
issued by the Association of Investment Companies ("AIC").
A separate Statement of Comprehensive Income has not been prepared as all
gains and losses are included in the Income Statement.
BALANCE SHEET
as at 30 June 2023
30 June 2023 (unaudited) £'000 31 December 2022 (audited) £'000
Fixed asset investments
Investments at fair value through profit or loss 65,515 69,283
Current assets
Debtors 438 412
Cash at bank and short-term deposits 38,031 36,629
38,469 37,041
Current liabilities
Creditors (104) (180)
(104) (180)
Net current assets 38,365 36,861
Net assets 103,880 106,144
Capital and reserves
Called-up share capital 645 645
Share premium 1,597 1,597
Capital redemption reserve 14 14
Special reserve 9,760 9,760
Capital reserve 88,319 90,098
Revenue reserve 3,545 4,030
Total shareholders' funds 103,880 106,144
Net asset value per share 355.5p 363.2p
STATEMENT OF CHANGES IN EQUITY
for the six months to 30 June 2023 (unaudited)
Six months to 30 June 2023 Share capital £'000 Share premium £'000 Capital redemption reserve £'000 Special reserve £'000 Capital reserve £'000 Revenue reserve £'000 Total £'000
At 31 December 2022 645 1,597 14 9,760 90,098 4,030 106,144
Net return after taxation - - - - (1,779) 976 (803)
Dividends paid - - - - - (1,461) (1,461)
At 30 June 2023 645 1,597 14 9,760 88,319 3,545 103,880
Six months to 30 June 2022 Share capital £'000 Share premium £'000 Capital redemption reserve £'000 Special reserve £'000 Capital reserve £'000 Revenue reserve £'000 Total £'000
At 31 December 2021 645 1,597 14 32,961 77,026 3,880 116,123
Net return after taxation - - - - 8,477 960 9,437
Dividends paid - - - - - (1,461) (1,461)
Share purchases for treasury - - - (23,201) - - (23,201)
At 30 June 2022 645 1,597 14 9,760 85,503 3,379 100,898
NOTES TO THE FINANCIAL STATEMENTS
for the six months to 30 June 2023
1. Accounting policies
Basis of accounting
The Company applies Financial Reporting Standard ("FRS") 102: "The Financial
Reporting Standard applicable in the UK and Republic of Ireland" and the
Statement of Recommended Practice as issued by the AIC. The Company has
prepared the Financial Statements for the six months to 30 June 2023 in
accordance with FRS 104: "Interim Financial Reporting". The Company has
elected to remove the Cash Flow Statement from the Half-Yearly Report, as
permitted by FRS 102 section 7.1A.
The accounting policies are set out in the Company's Annual Report and
Financial Statements for the year ended 31 December 2022 and remain unchanged.
70% of management fees and finance costs relating to borrowings are charged to
capital, with 30% of these costs charged to revenue, as detailed in the Income
Statement.
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.
The Directors have noted that the Company, holding a portfolio consisting
principally of liquid listed investments and cash balances, is able to meet
the obligations of the Company as they fall due, any future 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 reviewed stress tests assessing the impact of changes and
scenario analysis to assist them in determination of going concern. In making
this assessment, the Directors have considered plausible downside scenarios
that have been financially modelled. These tests apply to any set of
circumstances in which asset value and income are significantly impaired. The
conclusion was that in a plausible downside scenario, the Company could
continue to meet its liabilities. Whilst the economic future is uncertain, and
the Directors believe that it is possible the Company could experience further
reductions in income and/or market value, 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 Company and its key 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. Therefore, the financial statements have been prepared on the
going concern basis.
Comparative information
The financial information for the six months to 30 June 2023 and for the six
months to 30 June 2022 have not been audited or reviewed by the Company's
Auditor pursuant to the Auditing Practices Board guidance on such reviews. The
financial information contained in this report does not constitute statutory
accounts as defined in the Companies Act 2006.
The latest published audited financial statements which have been delivered to
the Registrar of Companies are the Annual Report and Financial Statements for
the year ended 31 December 2022; the report of the independent Auditor thereon
was unqualified and did not contain a statement under Section 498 of the
Companies Act 2006. Information shown for the year ended 31 December 2022 is
extracted from that Annual Report and Financial Statements.
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 listed companies.
1. Income
Six months to 30 June 2023 £'000 Six months to 30 June 2022 £'000
Revenue
Income from investments
UK dividend income 257 235
Overseas dividend income 848 1,176
1,105 1,411
Total income comprises
Dividend income 1,105 1,411
Rebate income 30 30
Bank interest 404 13
1,539 1,454
1. Dividends
Six months to 30 June 2023 £'000 Six months to 30 June 2022 £'000
2022 final dividend of 5.0p per ordinary share paid in May 2023 1,461 -
2021 final dividend of 5.0p per ordinary share paid in May 2022 - 1,461
1,461 1,461
1. Return per share
Six months to 30 June 2023 Six months to 30 June 2022
Net return £'000 Per share pence Net return £'000 Per share pence
Revenue return after taxation 976 3.3 960 3.0
Capital return after taxation (1,779) (6.1) 8,477 26.9
Total return (803) (2.8) 9,437 29.9
The returns per share for the six months to 30 June 2023 are based on
29,222,180 shares (six months to 30 June 2022: 31,563,185 shares), being the
weighted average number of shares, excluding shares held in treasury, in
circulation during the period.
1. Investments
Six months to 30 June 2023 £'000 Year to 31 December 2022 £'000
Opening book cost 60,663 84,582
Changes in fair value of investments 8,620 (660)
Opening fair value 69,283 83,922
Movements in the period:
Purchases at cost 51 21,645
Sales - proceeds (4,383) (46,442)
Sales - realised gains on sales 394 878
Changes in fair value of investments 170 9,280
Closing fair value 65,515 69,283
Closing book cost 56,725 60,663
Changes in fair value of investments 8,790 8,620
Closing fair value 65,515 69,283
The fair value hierarchy for investments held at fair value at the period end
is as follows:
30 June 2023 £'000 31 December 2022 £'000
Level 1 43,698 47,277
Level 2 13,875 14,298
Level 3 7,942 7,708
65,515 69,283
1. Cash at bank and short-term deposits
30 June 2023 £'000 31 December 2022 £'000
US dollar 26,553 13,036
Japanese yen 8,448 9,766
Swiss franc 2,299 3,802
Sterling 597 10,013
Euro 123 -
South Korean won 11 12
38,031 36,629
1. Net asset value per share and share capital
The NAV is based on net assets at 30 June 2023 of £103,880,000 (31 December
2022: £106,144,000) and on 29,222,180 shares (31 December 2022: 29,222,180
shares), being the number of shares, excluding shares held in treasury, in
circulation at the period end.
During the six months to 30 June 2023, no shares were repurchased or issued
from Treasury by the Company.
As at 30 June 2023 there were 64,509,642 shares in issue of which 35,287,462
shares were held in treasury, resulting in there being 29,222,180 shares in
circulation.
1. Related party transactions
Dr Sandy Nairn was appointed as an Executive Director of the Company on 27
April 2022. He is also lead portfolio manager and holds a substantial interest
in the shares of the Company.
The Company has invested in Volunteer Park Capital Fund ("VPC"). The
Alternative Investment Fund Manager of VPC is Goodhart Partners LLP
("Goodhart"). Goodhart Partners S.a.r.l. is the general partner of VPC which
is 100% owned by Goodhart. Dr Nairn is the sole controller of a company which
holds a significant shareholding (25.83%) in Goodhart and will be a
beneficiary of the management fees and carried interest payable to Goodhart
related companies.
Goodhart was also appointed to provide investment sub-advisory services to the
Company with effect from 31 May 2023.
1. Post balance sheet events
There were no events subsequent to the half-year end and up to 15 August 2023,
the date of this report.
1. Availability of Half-Yearly Report
The Half-Yearly Report will shortly be available to view on the Company's
website at www.globalopportunitiestrust.com where up to date information on
the Company, including daily NAV and share prices, factsheets and portfolio
information can also be found.
A copy of the Half-Yearly Report will shortly be submitted to the Financial
Conduct Authority's National Storage Mechanism and will be available for
inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
For further information please contact:
Juniper Partners Limited
Company Secretary
e-mail: cosec@junipartners.com
15 August 2023
END
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