Half-Yearly Results to 30 June 2024
04/09/2024 07:00
Global Opportunities Trust plc
Legal Entity Identifier: 2138005T5CT5ITZ7ZX58
Half-Yearly Results for the six months to 30 June 2024 (unaudited)
Financial Highlights
INCREASE IN NET ASSET VALUE PER SHARE 1.4% NET ASSET VALUE TOTAL RETURN* 3.1%
SHAREHOLDERS’ FUNDS £107.9m DISCOUNT TO NET ASSET VALUE* 19.8%
30 June 2024 31 December 2023 % Change
Net Assets/Shareholders’ Funds (£) 107,896,000 106,411,000 1.4
Shares in issue 29,222,180 29,222,180 –
Net Asset Value per share (pence)* 369.2 364.1 1.4
Share Price (pence) 296.0 298.0 (0.7)
Share Price Discount to Net Asset Value (%)* 19.8 18.2 n/a
* Alternative Performance Measure.
CHAIRMAN’S STATEMENT
I am pleased to present the Company’s interim report for the six months to
30 June 2024.
Investment performance
For the six months to 30 June 2024, the Company generated positive returns.
Net Asset Value (‘NAV’) Total Return increased by 3.1% whilst Share Price
Total Return increased by 1.0%, with dividends assumed to be reinvested. In
comparison, the FTSE All-World Index rose 12.2% on a total return basis, with
the strong performance experienced at the end of 2023 continuing into the
first half of 2024. The Bloomberg Global Aggregate Bond Index on the other
hand declined by approximately 2%. We would continue to remind shareholders
however, that the Company has no stated benchmark against which it seeks to
outperform. Its objective is to achieve real long-term total return through
investing globally in undervalued assets.
As at 30 June 2024 the Company had Net Assets of £107.9m (31 December 2023:
£106.4m), the NAV per ordinary share was 369.2p (31 December 2023: 364.1p)
and the middle market price per share on the London Stock Exchange was 296.0p
(31 December 2023: 298.0p), representing a discount of 19.8% to NAV.
Share capital and discount
The widening of the Company’s discount from its year-end position of 18.2%
is disappointing albeit the discount averaged a comparable 18.4% during the
period. The average discount of the ‘Flexible Investment’ sector of the
Association of Investment Companies (‘AIC’) (of which the Company is a
member) was 22.2% as at 30 June 2024. The narrowing of the Company’s
discount is a focus of the Board and the opportunities to expand the
Company’s reach by appealing to a wider shareholder base are continuing to
be explored. No share buybacks were undertaken during the period.
2024 Annual General Meeting
I chaired my third Annual General Meeting of the Company which was held on 16
May 2024 (‘the AGM’). On behalf of the Board, I would like to thank all
those shareholders for their engagement, either in person or by way of proxy,
and was pleased to note that all resolutions were formally passed by the
requisite majority at the AGM.
Portfolio Information
Shareholders can keep up to date on the performance of the portfolio through
the Company’s website at www.globalopportunitiestrust.com where you will
find information on the Company, a monthly factsheet and research articles by
our Executive Director, Dr Nairn. There is also an option to sign-up to
receive the latest publications directly via email.
Outlook
In the short to medium term the outlook is dominated by geopolitical events. A
large number of Western countries are facing elections. In the UK we have the
prospect of reasonable stability with the election of a new Labour government
which is emphasising fiscal responsibility and growth. The outlook is less
stable when one considers the recent results of the French elections and the
looming US Presidential election. The war in Ukraine grinds on with shocking
loss of life and China has been making ominous noises about Taiwan for some
time now. Equity markets have been remarkably resilient against this backdrop
such that they are close to historically high valuations on a cyclically
adjusted basis. This leaves us with a continued risk averse approach albeit
with some opportunities beginning to appear, particularly further down the
market capitalisation scale.
Keep in Touch
As always, the Board welcomes communication from shareholders and I can be
contacted through the Company Secretary at cosec@junipartners.com.
Cahal Dowds
Chairman
3 September 2024
EXECUTIVE DIRECTOR’S REPORT
The first six months of 2024 broadly followed the pattern of 2023 albeit that
equity returns were particularly skewed towards the artificial intelligence
(‘AI’) theme and a small number of US technology stocks in particular.
Whilst AI has been widely used since the 1980’s the ‘new’ AI relates to
its ability to process the written word through ‘large language models’
(‘LLMs’). This element of AI is still in the early stages and whilst it
will inevitably bring productivity improvements in a range of areas it is not
the economic panacea that markets seem to believe. We remain in an environment
with elevated valuations and meaningful government debt overhangs which have
to constrain policy. This reality is dawning on electorates which are reacting
to the realisation that incumbent governments cannot satisfy all the promises
that have been made. This will lead to more political instability with France
as an early example. Against this backdrop the UK stands out as an area of
relative stability.
Whilst bond markets have corrected, equity market valuations remain at
historically high levels which implies substantial risk, even if the economic
and political background were more supportive. For this reason, the portfolio
remains conservatively positioned. However, the composition is more nuanced
since we still see opportunities, particularly outside of the mega-caps. In
the first half we initiated positions in Qinetiq and Jet2 for example. Qinetiq
has leadership positions in a number of defence related areas and Jet2, whilst
affected by the economic cycle, combines a low valuation with a high-quality
management team. This has been part of increasing exposure to the UK equities.
The portfolio also reoriented part of the Japanese exposure from larger
companies which had performed well into the AVI Japan Special Situations Fund
to take advantage of the value in the over-capitalised Japanese small-cap
companies.
We anticipate that the stark economic choices facing the major economies will
prove increasingly difficult to ignore and will become ever more evident in
company results/ forecasts. Combining this with an unfolding election season
and the global geopolitical tensions suggests that the seemingly unshakeable
optimism of equity markets will be severely tested.
The portfolio has been constructed to try and provide positive returns through
the cycle including periods of asset market decline. For this reason, one of
the characteristics has been a volatility level around one third that of
equity markets. The target has been to identify attractive investments without
taking on meaningful broad equity market risk. There will come a time when it
is appropriate to take a more sanguine view of risk and we are prepared to do
this when the potential returns justify.
Dr Sandy Nairn
Executive Director
3 September 2024
PORTFOLIO OF INVESTMENTS
as at 30 June 2024 (unaudited)
Company Sector Country Valuation £’000 % of Net assets
Templeton European Long-Short Equity SIF 1 Financials Luxembourg 16,113 14.9
AVI Japan Special Situations Fund Financials Japan 8,097 7.5
Volunteer Park Capital Fund SCSp 2 Financials Luxembourg 7,842 7.3
TotalEnergies Energy France 3,749 3.5
Unilever Consumer Staples United Kingdom 3,345 3.1
Samsung Electronics Information Technology South Korea 2,902 2.7
Qinetiq Industrials United Kingdom 2,658 2.5
ENI Energy Italy 2,606 2.4
Lloyds Banking Financials United Kingdom 2,360 2.2
Imperial Brands Consumer Staples United Kingdom 2,276 2.1
Jet2 Industrials United Kingdom 2,204 2.0
Alibaba Consumer Discretionary Hong Kong 2,186 2.0
Tesco Consumer Staples United Kingdom 2,163 2.0
Orange Communication Services France 2,110 2.0
Dassault Aviation Industrials France 1,954 1.8
General Dynamics Industrials United States 1,952 1.8
Sanofi Health Care France 1,820 1.7
RTX Industrials United States 1,804 1.7
Panasonic Consumer Discretionary Japan 1,753 1.6
Verizon Communications Communication Services United States 1,512 1.4
Total investments 71,406 66.2
Cash and other net current assets 36,490 33.8
Net assets 107,896 100.0
1 Luxembourg Specialised Investment Fund
2 Luxembourg Special Limited Partnership
DISTRIBUTION OF INVESTMENTS
as at 30 June 2024 (% net assets)
Sector Distribution Geographical Distribution
Sector % Region / country %
Financials: Long-Short Fund 14.9 Europe ex UK 11.4
Financials: Japan Fund 7.5 Europe: Long-Short Fund 14.9
Financials: Private Equity Fund 7.3 Total Europe 26.3
Financials: Direct Equities 2.2 North America: Private Equity Fund 7.3
Total Financials 31.9 North America: Direct Equities 4.9
Industrials 9.8 Total North America 12.2
Consumer Staples 7.2 United Kingdom 13.9
Energy 5.9 Japan 9.1
Consumer Discretionary 3.6 Asia Pacific ex Japan 4.7
Communication Services 3.4 Cash and other net assets* 33.8
Information Technology 2.7
Health Care 1.7
Cash and other net assets* 33.8
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 2024
is based on currencies held in the following regions/countries:
US Dollar 24.8%
British Pound 6.4%
Swiss Franc 2.2%
Euro 0.3%
Japanese Yen 0.1%
33.8%
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 on pages 3 to 5 of
the Interim 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.
Principal 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 2023.
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 2023.
The emerging risks facing the Company have largely remained unchanged since
those detailed in the Annual Report for the year ended 31 December 2023,
namely those risks arising from heightened geopolitical tensions.
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 12 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
3 September 2024
INCOME STATEMENT
for the six months to 30 June 2024 (unaudited)
Six months to 30 June 2024 Six months to 30 June 2023
Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000
Gains on investments at fair value through profit or loss – 2,288 2,288 – 564 564
Unrealised foreign exchange losses on current assets – (157) (157) – (2,278) (2,278)
Realised foreign exchange losses on current assets – (342) (342) – (7) (7)
Income 1,623 – 1,623 1,539 – 1,539
Management fee (20) (48) (68) (25) (58) (83)
Other expenses (299) – (299) (348) – (348)
Net return before finance costs and taxation 1,304 1,741 3,045 1,166 (1,779) (613)
Finance costs
Interest payable and related charges (9) – (9) (8) – (8)
Net return before taxation 1,295 1,741 3,036 1,158 (1,779) (621)
Taxation – overseas withholding tax (90) – (90) (182) – (182)
Net return after taxation 1,205 1,741 2,946 976 (1,779) (803)
Return per share 4.1p 6.0p 10.1p 3.3p (6.1)p (2.8)p
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 2024 (unaudited)
30 June 2024 (unaudited) £’000 31 December 2023 (audited) £’000
Fixed asset investments
Investments at fair value through profit or loss 71,406 64,083
Current assets
Debtors 587 374
Cash at bank and short-term deposits 36,030 42,105
36,617 42,479
Current liabilities
Creditors (127) (151)
(127) (151)
Net current assets 36,490 42,328
Net assets 107,896 106,411
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 92,022 90,281
Revenue reserve 3,858 4,114
Total shareholders’ funds 107,896 106,411
Net asset value per share 369.2 364.1
STATEMENT OF CHANGES IN EQUITY
for the six months to 30 June 2024 (unaudited)
Six months to 30 June 2024 Share capital £’000 Share premium £’000 Capital redemption reserve £’000 Special reserve £’000 Capital reserve £’000 Revenue reserve £’000 Total £’000
At 31 December 2023 645 1,597 14 9,760 90,281 4,114 106,411
Net return after taxation – – – – 1,741 1,205 2,946
Dividends paid – – – – – (1,461) (1,461)
At 30 June 2024 645 1,597 14 9,760 92,022 3,858 107,896
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
STATEMENT OF CASH FLOW
For the six months to 30 June 2024 (unaudited)
Six months to 30 June 2024 £’000 Six months to 30 June 2023 £’000
Cash flows from operating activities
Net return on ordinary activities before taxation 3,036 (621)
Adjustments for:
Gains on investments (2,288) (564)
Interest payable 9 8
Purchases of investments* (15,132) (52)
Sales of investments* 10,077 4,383
Dividend income (921) (1,105)
Other income (702) (434)
Dividend income received 877 1,064
Other income received 610 456
Increase in receivables (39) (2)
Decrease in payables (24) (76)
Overseas withholding tax deducted (108) (185)
(7,641) 3,493
Net cash flows from operating activities (4,605) 2,872
Cash flows from financing activities
Equity dividends paid from revenue (1,461) (1,461)
Interest paid (9) (9)
Net cash flows from financing activities (1,470) (1,470)
Net (decrease)/increase in cash and cash equivalents (6,075) 1,402
Cash and cash equivalents at the start of the period 42,105 36,629
Cash and cash equivalents at the end of the period 36,030 38,031
* Receipts from the sale of, and payments to acquire, investment securities
have been classified as components of cash flows from operating activities
because they form part of the Company’s dealing operations.
NOTES TO THE FINANCIAL STATEMENTS
for the six months to 30 June 2024
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 2024 in
accordance with FRS 104: “Interim Financial Reporting”.
The accounting policies are set out in the Company’s Annual Report and
Financial Statements for the year ended 31 December 2023 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 is unlikely to 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 2024 and for the six
months to 30 June 2023 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 2023; 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 2023 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 2024 £’000 Six months to 30 June 2023 £’000
Revenue
Income from investments
UK dividend income 278 257
Overseas dividend income 643 848
921 1,105
Total income comprises
Dividend income 921 1,105
Rebate income 38 30
Bank interest 664 404
1,623 1,539
1. Dividends
Six months to 30 June 2024 £’000 Six months to 30 June 2023 £’000
2023 final dividend of 5.0p per ordinary share paid in May 2024 1,461 –
2022 final dividend of 5.0p per ordinary share paid in May 2023 – 1,461
1,461 1,461
1. Return per share
Six months to 30 June 2024 Six months to 30 June 2023
Net return £’000 Per share pence Net return £’000 Per share pence
Revenue return after taxation 1,205 4.1 976 3.3
Capital return after taxation 1,741 6.0 (1,779) (6.1)
Total return 2,946 10.1 (803) (2.8)
The returns per share for the six months to 30 June 2024 are based on
29,222,180 shares (six months to 30 June 2023: 29,222,180 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 2024 £’000 Year to 31 December 2023 £’000
Opening book cost 54,044 60,663
Changes in fair value of investments 10,039 8,620
Opening fair value 64,083 69,283
Movements in the period:
Purchases at cost 15,132 949
Sales – proceeds (10,097) (8,420)
Sales – realised gains on sales 280 852
Changes in fair value of investments 2,008 1,419
Closing fair value 71,406 64,083
Closing book cost 59,359 54,044
Changes in fair value of investments 12,047 10,039
Closing fair value 71,406 64,083
The fair value hierarchy for investments held at fair value at the period end
is as follows:
30 June 2024 £’000 31 December 2023 £’000
Level 1 47,451 41,135
Level 2 16,113 14,699
Level 3 7,842 8,249
71,406 64,083
1. Cash at bank and short-term deposits
30 June 2024 £’000 31 December 2023 £’000
US dollar 26,702 25,904
Sterling 6,805 5,011
Swiss franc 2,302 2,441
Euro 123 125
Japanese yen 88 8,613
South Korean won 10 11
36,030 42,105
During the period, the Company opened a new US dollar notice account with The
Royal Bank of Scotland International Limited. As at 30 June 2024 £10,500,000
was placed on deposit (31 December 2023: £nil).
The Company also opened two new US dollar liquidity funds with Goldman Sachs
and JPMorgan respectively. As at 30 June 2024 £7,685,000 was placed in each
fund, totalling £15,370,000 (31 December 2023: £nil).
1. Net asset value per share and share capital
The NAV is based on net assets at 30 June 2024 of £107,896,000 (31 December
2023: £106,411,000) and on 29,222,180 shares (31 December 2023: 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 2024, no shares were repurchased or issued
from Treasury by the Company.
As at 30 June 2024 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 is the Executive Director of the Company and is a substantial
shareholder.
The Company has invested in Volunteer Park Capital Fund SCSp (“VPC”). The
Alternative Investment Fund Manager of VPC is Goodhart Partners LLP
(“Goodhart”). Goodhart Partners S.a.r.l. is the general partner to VPC and
is 100% owned by Goodhart. Goodhart was also appointed to provide investment
sub-advisory services to the Company with effect from 31 May 2023.
Dr Nairn is the sole controller of a company which holds a significant
shareholding (30.61%) in Goodhart and will be a beneficiary of the management
fees and carried interest payable to Goodhart related companies. Given Dr
Nairn’s interests in Goodhart, it was agreed with him, in March 2023, that
his salary would be reduced (such reduction equalling the entire salary, if
necessary) by his share (through his minority interest in Goodhart) of amounts
credited in the same period in respect of (i) any carried interest on
co-investments made by the Company alongside Goodhart and (ii) any partnership
profit allocations attributable to Goodhart’s net profits on fees earned
from the Company (including the Company’s existing investment in VPC and any
carried interest attributable to VPC earned by Goodhart or any
Goodhart-sponsored vehicle).
1. Post balance sheet events
There were no events subsequent to the half-year end and up to 3 September
2024, 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
3 September 2024
END
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