Half-year Report
10/12/2024 09:26
MIGO Opportunities Trust plc
Half-Yearly Report for the six months ended 31 October 2024
MIGO Opportunities Trust plc (the “Company” or “MIGO”) has today
released its Half-Yearly Report for the six months ended 31 October 2024.
The Half-Yearly Report and other information will be available via
www.migoplc.co.uk
A copy of the half-yearly report will also be submitted to the National
Storage Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Enquiries:
Frostrow Capital LLP
Company Secretary
DDI: +44 (0)203 709 8732
Email: info@frostrow.com
Performance Summary
Financial Highlights
Six months ended Year ended % change
31 October 2024 30 April 2024
Net asset value (“NAV”) per share* 360.1p 362.6p (0.7)%
Share price 355.0p 346.0p 2.6%
Share price discount* to NAV per share (1.4)% (4.6)%
Total net assets £74.5m £81.7m (8.8)%
NAV volatility* 4.6% 6.1%
Gearing* 13.4% 6.1%
Ongoing charges ratio* 1.6% 1.5%
* Alternative Performance Measure (“APM”), see Glossary.
For commentary in respect of the above figures and Company’s performance
during the year please see the Chairman’s Statement and the Manager’s
Report below.
Total Return Performance to 31 October 2024
6 months 1 year 5 years
% % %
Net Asset Value* (0.5) 13.0 33.8
Share price* 2.8 14.5 36.0
SONIA plus 2% 3.6 7.4 26.2
* Alternative Performance Measure, see Glossary.
Source: Morningstar.
Investment Objective
The objective of MIGO Opportunities Trust plc (the “Company” or
“MIGO”) is to outperform SONIA plus 2% (the “Benchmark”) over the
longer term, principally through exploiting inefficiencies in the pricing of
closed-end funds (SONIA being the Sterling Overnight Index Average, the
Sterling Risk-Free Reference Rate preferred by the Bank of England for use in
Sterling derivatives and relevant financial contracts). This objective is
intended to reflect the Company’s aim of providing a better return to
shareholders over the longer term than they would get by placing money on
deposit.
The Benchmark is a target only and should not be treated as a guarantee of the
performance of the Company or its portfolio.
Investment Policy
The Company invests in closed-end investment funds traded on the London Stock
Exchange’s main market, but has the flexibility to invest in investment
funds listed or dealt on other recognised stock exchanges, in unlisted
closed-end funds (including, but not limited to, funds traded on AIM) and in
open-ended investment funds. The funds in which the Company invests may
include all types of investment trusts, companies and funds established
onshore or offshore. The Company has the flexibility to invest in any class of
security issued by investment funds including, without limitation, equity,
debt, warrants or other convertible securities. In addition, the Company may
invest in other securities, such as non-investment fund debt, if deemed to be
appropriate to produce the desired returns to shareholders.
The Company is unrestricted in the number of funds it holds.
The Company invests in listed closed-end investment funds that themselves have
stated investment policies to invest no more than 15% of their gross assets in
other listed closed-end investment funds. However, the Company may invest up
to 10%, in aggregate, of the value of its gross assets at the time of
acquisition in closed-end investment funds that do not have such a stated
investment policy.
In addition, the Company will not invest more than 25%, in aggregate, of the
value of its gross assets at the time of acquisition in open-ended funds.
There are no prescriptive limits on allocation of assets in terms of asset
class or geography.
There are no limits imposed on the size of hedging contracts, save that their
aggregated value will not exceed 20% of the portfolio’s gross assets at the
time they are entered into.
The Board permits borrowings of up to 20% of the Company’s net asset value
(measured at the time new borrowings are incurred).
The Company’s investment objective may lead, on occasions, to a significant
amount of cash or near cash being held.
Chairman’s Statement
Overview of the period
Introduction
Looking forward to the six months to 31 October 2024 it appeared that the
headwinds of 2023 with high interest rates, reduced investor risk appetites,
wealth manager mergers, and cost disclosure issues, could all be on their way
to a resolution, before slower interest rate cuts than expected and a general
election with follow-on budget in the UK put things on hold.
In the midst of nervous markets and continuing low demand for UK investment
trusts, MIGO enjoyed steady performance with the NAV decreasing slightly from
362.6p to 360.1p, but with the share price increasing from 346.0p to 355.0p.
MIGO has continued to trade at tight discounts as supportive regular buybacks
and our Investment Manager’s value investment approach which sees MIGO
buying closed-ended funds at wide discounts have retained investor confidence.
This report is coincident with the first anniversary of MIGO’s investments
being managed by AVI. The Board has been extremely happy with the execution of
the move and the commitment of AVI to the Company. The reuniting of our
co-managers, Nick Greenwood and Charlotte Cuthbertson, to run the portfolio
has been enhanced by the depth of both AVI’s investment and marketing
support dedicated to MIGO.
As a result at MIGO’s 2024 triennial Realisation Opportunity only 5.3% of
issued share capital was redeemed; a higher figure than three years ago, but
what the Board views as a decent result in the current climate. We thank all
our investors for their continued confidence in the Company.
Board Change
On 10 July 2024 Hugh van Cutsem retired as a Director of the Company after 14
years of exceptional service to MIGO, during which Hugh proved to be a great
advocate of the Company. We will miss him greatly and wish him success in his
future endeavours. No new Director has been recruited at this point and our
Board has reverted to its long-term norm of four Directors.
Performance
Over the six months to 31 October 2024 the Company’s NAV per share total
return fell by 0.5% whilst the share price total return was up by 2.8%. In
comparison, the Company’s medium-term Benchmark, sterling SONIA +2%,
delivered a total return of 3.6%.
A review of the factors affecting the Company’s performance during the
period, and developments in the portfolio, can be found in the Investment
Manager’s Review. With the investment trust sector still under the cosh and
experiencing wide discounts, the breadth of opportunities available has
encouraged the Portfolio Managers to fully draw down the Company’s loan
facility of £10 million and current portfolio gearing sits at 13.4%.
Dividend
On 4 October 2024, a final dividend of 0.6p per share for the year ended 30
April 2024 was paid.
The Company’s principal objective remains to provide shareholder returns
through capital growth in its investments and outperforming SONIA plus 2% over
the longer term. Therefore, the Board is maintaining its current policy to pay
only those dividends necessary to maintain UK investment trust status. Subject
to the investment trust rules, any dividends and distributions will continue
to be at the discretion of the Board.
Share Price, Share Issuances and Buybacks
From 1 May to 31 October 2024, the Company undertook buybacks of 650,000
shares in order to manage the share price discount (1.4% at period end) and
provide liquidity in the market. In addition, 1,188,066 shares were bought
back following the 2024 Realisation Opportunity as described below. As at 31
October 2024, the Company had 20,699,731 (30 April 2024: 22,537,797) shares in
issue. Since the period-end, a further 393,354 shares were bought back.
The Board’s policy is to be proactive in managing the share price premium or
discount. Issuing new shares at a premium to NAV per share creates value for
existing shareholders and any share issuance also improves the liquidity of
the Company’s shares, controls the premium to NAV per share at which the
shares trade and spreads the operating costs over a larger capital base,
reducing the ongoing charges ratio. Share buybacks reduce the overhang of
shares in the market, correct imbalances of supply and demand and enhance the
NAV per share for those shareholders who remain invested.
2024 Realisation Opportunity
In late summer, MIGO offered its latest triennial Realisation Opportunity. The
Company received a total of 1,188,066 elections, representing 5.3% of issued
share capital, at the deadline on 3 September 2024.
The realisation price for the elected shares was 358.22 pence per ordinary
share, a 2% discount to the NAV per ordinary share. All elected shares were
bought back by the Company at the realisation price on 5 September 2024; a
realisation share class was not created.
2024 Realisation Opportunity and AGM Resolutions 14 and 15
In order to provide maximum flexibility for MIGO to deal with any unplaced
elected shares and realisation shares (should this have become necessary) the
Board had asked for shareholders’ approval of resolutions 14 and 15 at the
2024 AGM. These resolutions provided a mechanism for handling any sizable
election for a cash exit by shareholders. Fortunately, the recent Realisation
Opportunity did not require the implementation of the mechanisms that
resolutions 14 and 15 provided, as the Company was able to buy back all
elected shares. However, the Board notes that a significant number of votes
were cast against resolutions 14 and 15 and understands the technical
principles under which some shareholders chose to vote against these
resolutions, particularly in the very unlikely event that they had needed to
be fully utilised. I would just like to reassure shareholders that all
buybacks, including those of elected or realisation shares, are subject to
shareholder elections and market conditions, and the provisions of these
resolutions have gone unused on this occasion.
The Board takes the result of the recent Realisation Opportunity and broader
feedback on its realisation approach as a strong endorsement for the
Company’s strategy, particularly given the opportunities that the Portfolio
Managers see. The Board continues to have an open dialogue with shareholders
on the approach to offering mechanisms to exit investments which can be seen
as positive for liquidity.
Cost Disclosures
Investors in MIGO may have noted recent press coverage of the cost disclosure
regime for investment companies. European regulation, transposed into UK rules
had meant that the cost disclosed in the ‘Key Information’ (“KID”)
document prepared by all investment companies is considered problematic by
many industry commentators. The Board, our Portfolio Managers and our advisers
have long considered the figure misleading for a number of reasons, resulting
in a disclosed measure of costs which inflates apparent costs and does not
properly reflect the true cost of managing MIGO.
The government and the Financial Conduct Authority (FCA) have now temporarily
exempted investment trusts from complying with these unhelpful cost disclosure
requirements until a new disclosure framework is introduced. The FCA aims to
consult on the proposed new regime in the near future with a view to
finalising the rules in the first half of 2025.
The announcement means that, during the period of the exemption, investment
companies and their AIFMs can choose not to publish a KID or to remove the
offending cost calculations. Client facing firms in the UK will be able to
make more realistic cost disclosures which better reflect the economic reality
of owning investment companies shares. It is hoped that this will remove a
disincentive to owning shares in closed-ended funds and should increase demand
for their shares, ultimately driving a tightening of discounts across the
sector.
The AIC has been actively engaging with members, managers, and distributors
(including key retail platforms and distributors) to explore how the sector
can take advantage of the change of position. The optimum solution will need
widespread acceptance from across the distribution chain. This is a very
welcome development and we hope that the end result will show companies like
MIGO as the competitive investment proposition we believe it to be.
MIGO's own ongoing charges (which are the recurring expenses of running the
Company, excluding charges connected to underlying portfolio holdings) at 31
October 2024 sit at 1.6%, slightly higher than the 1.5% for the year ended 30
April 2024, largely reflecting the effect of share buybacks during the period.
Outlook
My fellow Directors and I share the Portfolio Managers’ view that the level
of value in the investment trust sector is exceptional – the question
appears to be when, rather than if, it is released. The levels of share
buybacks and corporate activity in the sector are close to all-time highs
indicating a beginning to the value return process. Our Portfolio Managers’
positioning to use our borrowing facility indicates their enthusiasm. While
the catalyst is always uncertain, the potential is huge and momentum of events
is now in the right direction.
The Board is optimistic for the future of MIGO and thanks shareholders for
their continued support.
Richard Davidson
Chairman
10 December 2024
Investment Manager's Report
for the six months ended 31 October 2024
Contributors & Detractors
Performance
The period under review saw some interesting market and political turbulence.
The Net Asset Value returned -0.55% and the share price returned +2.60%.
The average discount for the 6 months was 2.3%.
MIGO went through its triennial realisation opportunity in September and 5.3%
of shareholders chose to redeem. Although this was a larger redemption than in
previous cycles we were still pleased with the outcome as many trusts going
through similar processes this year suffered far greater redemption requests.
Over the past year we have seen several articles about the “death” of the
investment trust sector. While it is true that a boom of alternative,
income-producing trusts launched to cater to income-starved investors over a
prolonged period of easy money has created an over-supply, we think these
fears are overdone. Trusts are going through a clean-up period where we see
the creative destruction of the excesses of a bull market born of low interest
rates and easy money. This has been exacerbated by the availability to obtain
a decent income from conventional sources now that interest rates have risen.
We fully intend to exploit this process in order to produce attractive returns
for our shareholders.
September brought positive developments in addressing the ongoing cost
disclosure issue, which has plagued the sector in recent years. The
requirement for closed-ended funds to report costs in the same manner as
unlisted open-ended funds led to “double-counting” and triggered a
sell-off, hitting sectors such as private equity particularly hard. Initially,
we believed that common sense had prevailed when the FCA declared forbearance
and would no longer take supervisory or enforcement actions if an investment
trust chooses not to follow the previous requirements. However, the sector
still faces challenges on this issue given the stance taken by some retail
platforms.
Contributors
Cordiant Digital Infrastructure (“Cordiant”) was our biggest contributor
over the period. We initiated our position in December 2023, with an
investment thesis predicated on an unduly wide discount which was the result
of an unfair read-across from the tribulations of a highly leveraged peer plus
the pressure of the rising interest rate environment. In reality, Cordiant
owns a high-quality portfolio of infrastructure assets mainly in Emerging
Europe which we visited in September.
Falling yields on German bonds and an announcement of a more aggressive
realisation of assets helped Phoenix Spree Deutschland’s share price to
rally over the period. This Berlin residential property specialist has been in
the doldrums after a series of setbacks over the past few years.
Tufton Assets (“Tufton”), which invests in a portfolio of commercial
sea-going vessels returned +13.9% total return since April. MIGO benefited
from both a recovery in the share price as well as a one-off capital return
from the trust post a strategic review by the board. The outlook for Tufton
remains positive as it is envisioned that demand for fuel-efficient
second-hand vessels will be very strong for at least the next decade.
Furthermore, ESG requirements dictate that industry capacity is steadily being
reduced relative to supply. The fund will begin to realise its portfolio of
assets starting from 2028.
Aircraft leaser Amedeo was another useful contributor. Both Airbus and Boeing
have been unable to fulfil orders for new aircraft. This has left airlines
with insufficient planes to operate planned schedules. This has created a very
firm market for second hand planes.
Detractors
Georgia Capital was the biggest detractor having performed well over the
previous year. The trust’s share price hit £13.64 in April, but we saw a
pullback after anti-government protests rocked the capital, Tbilisi, in May.
This was in response to the passing of the foreign-agents bill which was
viewed by many as being sponsored by Russia in order to provide Georgian
Dream, the governing party, with a means of reducing money and influence of
the West. In October there was a general election in which Georgian Dream
returned as the majority party but with only 54% of the vote. They will
struggle to enact any meaningful anti-West measures.
At a portfolio level the companies held by Georgia Capital continue to trade
very well due to the fund’s exposure to industries that benefit from a
growing middle-class population such as private schooling, hospitals and
insurance businesses.
The uranium price rose impressively during January and Geiger Counter, which
has a portfolio of uranium miners, had been one of our best performers at the
beginning of the year. The uranium price had peaked at $106 in January and at
that point we halved our position to take some profit. Since then, the price
of uranium has fallen back to around $80 and has remained fairly stable.
Seraphim Space’s share price has drifted lower as investors remain nervous
of young companies which require cash to develop their business. This is an
opportunity to arbitrage between perception and reality as many of
Seraphim’s investments are no longer immature. A key positive is that the
defence industry is the biggest customer of the space sector. Defence budgets
are rising sharply amid increased geopolitical challenges.
Additions
A theme we continue to play is property, and two new entrants to our portfolio
since April have been in this sector. abrdn Property Income (API), which
invests in a diversified portfolio of commercial property assets, failed in
its merger with Custodian REIT in March. We took the view that the trust was
therefore likely to wind up and initiated a position when the shares were
trading at an 32% discount. We thought the underlying assets had the potential
to be acquired as a whole portfolio and we were pleased that API was placed
into managed wind-down in May. A sale for the entirety of portfolio was agreed
at a discount of just 6.7% to the September valuation.
Our second investment was PRS REIT (“PRS”) which owns a portfolio of
new-build residential rental properties across England. We believed that PRS
was invested in an interesting area of the market, but had concerns about the
relationship between the board and managers and as a result, whether
shareholders were being properly prioritised. As such, we joined the
requisition put forward by other shareholders such as CCLA, Waverton and CG
Asset Management. This resulted in a replacement of a number of board members
and a subsequent strategic review which began in October and for which we
await the outcome.
Departures
We have consistently highlighted corporate activity as a key catalyst for many
of our holdings and a driver for returns for the broader sector. In October
one of our trusts, Atrato Onsite Energy (“Atrato”) was the subject of a
successful takeover bid by a Brookfield and RAIM Apollo joint venture. Atrato
invested in rooftop solar solutions, mainly on top of warehouses on long-term
contracts with blue chip partners such as Tesco and Britvic. We anticipated
that these contracts would continue to be attractive to companies such as
these, seeking stable energy pricing and alignment with net-zero goals. We
first invested in November 2023 when the trust had struggled to attract a
following during a period of higher interest rates. Our thesis centred on the
belief that either investors would return to yielding trusts, or it was a
potential takeout target.
We sold the last of our holding in India Capital Growth Trust. This had been a
long-term holding for MIGO, and we had made significant returns over the
years. Our original investment thesis was based on the revamp of the trust
after Ocean Dial took over the portfolio in 2011. Historically, the trust had
performed very poorly and sat on a wide discount. We increased the holding
during the Covid sell-off when the trust fell to a 40% discount. Ultimately
the trust had a successful run of performance and. combined with the tender
offers, led us to successfully exit the position at around par.
A considerably less profitable exit was Grit Real Estate Investments
(“Grit”). Grit is a specialist in African impact real estate, mainly for
multinationals, in a range of sectors. This was a classic case of a good idea
run by the wrong management team.
Downing Strategic Microcap (“Downing”), as the name suggests, invests in
small companies that it believes are undervalued by the market. Downing was
forced into wind-up after a period of poor performance. The trust made a few
unsuccessful investments early on in its life and struggled to recover, which
was compounded by a bear market in UK microcaps.
Over the last six months, we have been strategically concentrating the
portfolio, adding to our best ideas where we see the biggest uplift and
selling the ideas where the opportunity is not as compelling in this market.
Rights and Issues, which had been a long-term holding and was part of our UK
equity basket, was sold down as a result of this exercise.
Outlook
Less than a week post period-end, Donald Trump secured a resounding victory in
the US Presidential election. There was a rally in the stock market on the
back of the result, but the effects of his policies will take time to digest.
Tariffs and fiscal stimulus could hinder interest rate reductions, and we have
already seen growing investor concern especially in regard to emerging
markets, particularly Asia. We have already reduced our holding in VinaCapital
Vietnam Opportunity Fund, which invests in private companies in Vietnam, as a
result of these concerns.
In our full year results we talked about investment trusts coming out of a
hostile environment. While that statement is still true, headwinds in the
sector have not entirely dissipated. Rachel Reeves’ budget and Trump’s
re-election in the US are likely to mean that interest rates stay higher for
longer.
Investor focus remains on the “Magnificent 7” in the US and precious
little else; it has not broadened as we had hoped. In the words of the
Scottish poet Charles Mackay “Men, it has been well said, think in herds; it
will be seen that they go mad in herds, while they only recover their senses
slowly, one by one.” It is too soon to judge whether the lofty valuations
for these companies constitute a bubble, or if they will continue to grow at
the rates demanded by the market. We are not looking to compete in this area.
Instead, we are focusing on a market that has become wildly dislocated from
fundamental value and where increasing corporate activity is a catalyst to
extract that value and produce returns for shareholders.
Nick Greenwood and Charlotte Cuthbertson
Asset Value Investors Limited
10 December 2024
Average underlying discount*
Top 12 stocks Weight (%) Discount (%)
VinaCapital Vietnam Opportunity Fund 5.4 (23.4)
Oakley Capital Investments 4.8 (29.8)
Baker Steel Resources Trust 4.4 (40.3)
Aquila European Renewables 4.1 (25.0)
JPMorgan Indian Investment Trust 4.0 (20.4)
Tufton Assets 3.8 (20.0)
Phoenix Spree Deutschland 3.8 (41.9)
Chrysalis Investments 3.7 (40.8)
Georgia Capital 3.5 (58.2)
Cordiant Digital Infrasture 3.4 (29.4)
Real Estate Investors 3.1 (34.6)
River and Mercantile UK Micro Cap Investment Co 3.1 (14.5)
Average discount 47.1 (31.5)
Source: Bloomberg, 31.10.2024.
* Please note that the average discount figure only takes into account the
top 12 holdings in the portfolio.
Portfolio Valuation
As at 31 October 2024
Security Investment Region Valuation % of
Sector £’000 portfolio
VinaCapital Vietnam Opportunity Fund Private Equity Asia Pacific 4,054 5.0
Oakley Capital Investments Private Equity Global 3,611 4.4
Baker Steel Resources Trust Mining Global 3,270 4.0
Aquila European Renewables Other Renewables Europe 3,053 3.7
JPMorgan Indian Investment Trust Equity India 2,987 3.7
Tufton Assets Equity Global 2,862 3.5
Phoenix Spree Deutschland Property Europe 2,823 3.5
Chrysalis Investments Alternatives Global 2,727 3.3
Georgia Capital Equity Europe 2,581 3.2
Cordiant Digital Infrasture Property Europe 2,552 3.2
30,520 37.5
Real Estate Investors* Property UK 2,310 2.8
River and Mercantile UK Micro Cap Investment Co Equity UK 2,286 2.8
Geiger Counter # Mining Global 2,268 2.8
RTW Biotech Opportunities Equity North America 2,222 2.7
The PRS REIT Property UK 2,193 2.7
International Biotechnology Trust Equity North America 2,050 2.5
Ecofin US Renewables Infrastructure Trust Alternatives North America 2,045 2.5
Duke Royalty* Alternatives UK 1,986 2.4
NB Private Equity Partners Private Equity North America 1,971 2.4
VH Global Sustainable Energy Opportunities Equity Global 1,947 2.4
51,798 63.5
AVI Japan Opportunity Trust Equity Japan 1,769 2.2
New Star Investment Trust Equity Global 1,737 2.1
Dunedin Enterprise Investment Trust † Private Equity Global 1,716 2.1
Biotech Growth Trust Equity North America 1,660 2.0
Hansa Investment Co Equity Global 1,507 1.8
Schroder British Opportunities Trust Equity UK 1,479 1.8
Life Settlement Assets Alternatives North America 1,474 1.8
Seraphim Space Investments Equity Global 1,446 1.8
Ecofin Global Utilities and Infrastructure Equity Europe 1,433 1.8
EPE Special Opportunities* Private Equity UK 1,387 1.7
67,406 82.6
Aberdeen Property Income Trust Property UK 1,334 1.6
Baillie Gifford Shin Nippon Equity Asia Pacific 1,305 1.6
Amedeo Air Four Plus Alternatives Global 1,268 1.6
Rockwood Strategic Equity UK 1,253 1.5
Life Science REIT Property UK 1,208 1.5
Yellow Cake* Mining Global 1,120 1.4
Augmentum Fintech Private Equity Europe 1,112 1.4
Marwyn Value Investors Private Equity UK 904 1.1
Henderson Opportunities Trust Equity UK 901 1.1
Ground Rents Income Fund Property UK 789 1.0
78,600 96.4
VPC Speciality Lending Investments Alternatives North America 760 0.9
Macau Property Opportunities Fund † Property Asia Pacific 698 0.9
Schroders Capital Global Innovation Trust Equity Global 600 0.7
The Schiehallion Fund Equity Global 490 0.6
CEPS* Equity UK 126 0.2
Aseana Properties † Property Asia Pacific 111 0.1
Better Capital PCC † ^ Private Equity UK 84 0.1
Grit Real Estate Income Property Africa 78 0.1
Cambrium Global Timberland † ^ Equity Global 33 0.0
Reconstruction Capital II † ^ Equity Europe 29 0.0
Total investments 81,609 100.0
Other current liabilities (including net cash) (7,062)
Net asset value 74,547
* AIM/NEX Listed.
† In liquidation.
# Includes both Ordinary and Convertible Preference share holdings.
^ Unlisted or trading of shares currently suspended.
Capital Structure
As at the date of this report, the Company’s share capital comprises
20,306,377 Ordinary shares of 1p each with one vote per share.
The Company’s Articles of Association contain provisions enabling
shareholders to elect at three-year intervals for the realisation of all or
part of their shareholding (the “Realisation Opportunity”). At the
discretion of the Company, shareholders may request that all or part of the
Ordinary shares they hold be placed, repurchased, or purchased out of the
proceeds of an issue of new Ordinary shares, or purchased under a tender offer
or by a market maker. If realisation elections cannot be satisfied in their
entirety through the placing and/or repurchase mechanism, all remaining
Elected shares shall be converted into Realisation shares.
Also in the event that the Company does not make available to members an
opportunity to effect such a realisation at the appointed time, shareholders
may serve a realisation election requesting that all or part of their Ordinary
shares be converted into Realisation shares.
The portfolio would then be split into two separate and distinct pools pro
rata as between the Continuing Ordinary shares (the “Continuation Pool”)
and the Realisation shares (the “Realisation Pool”). The Continuation Pool
would be managed in accordance with the Company’s investment objective and
policy, while the assets comprising the Realisation Pool would be managed in
accordance with an orderly realisation programme with the aim of making
progressive returns of cash to holders of Realisation shares as soon as
practicable. The precise mechanism for any return of cash to holders of
Realisation shares would depend on the relevant factors prevailing at the time
and would be at the discretion of the Board. If the net asset value of the
Company’s Continuing Ordinary shares is more than £30 million, then the
Company would continue in operation.
In September 2024, the Company offered a Realisation Opportunity, giving
shareholders the option either to retain or to realise their investment in the
Company. Realisation elections were received in respect of 5.3% of shares in
issue at the time, and these shares were subsequently repurchased by the
Company. There are currently no Realisation shares in issue.
The next Realisation Opportunity will be offered to shareholders in 2027. The
Board intends to put forward tailored proposals in relation to each
Realisation Opportunity to ensure it can be delivered efficiently and in
accordance with the best interests of the Company, at the relevant point in
time.
Interim Management Report
Principal Risks and Uncertainties
A review of the half year and the outlook for the Company can be found in the
Chairman’s Statement and in the Investment Manager’s Review. The principal
risks and uncertainties facing the Company fall into the following broad
categories: investment risks (including market and discount risk, cash,
interest rate, other price, currency, liquidity and credit risk), strategic
and business risks (including the Company’s business objectives and
strategy, key person risk, company duration risk, global risk and ongoing
charges risk), operational risks (in particular service provider risk) and
legal, regulatory and tax risks (including ESG and climate change risk and UK
legal and regulatory risk). These risks were explained in detail on pages 21
to 24 in the Annual Report for the year ended 30 April 2024 and remain
materially unchanged as at 31 October 2024.
A challenging economic environment in many countries, inflation, an ongoing
cost of living crisis and increased energy costs, were joined by the war in
Gaza as a new risk which might lead to wider confrontations in the Middle East
with global impacts as yet unforeseen. Also, elections in many parts of the
world and technological breakthroughs such as artificial intelligence
(“AI”) posed both opportunities as well as possible risks and
uncertainties, which may impact portfolio investments and potentially, the
Company’s service providers.
Related Parties Transactions
During the first six months of the current financial year, no transactions
with related parties have taken place, which have materially affected the
financial position or the performance of the Company.
Going Concern
The Directors believe, having considered the Company’s investment objective,
risk management policies, capital management policies and procedures, the
nature of the portfolio and expenditure projections, that the Company has
adequate resources, an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the foreseeable
future and, more specifically, that there are no material uncertainties
pertaining to the Company that would prevent its ability to continue in such
operational existence for at least twelve months from the date of the approval
of this Half-Yearly Report. For these reasons, the Directors consider there is
reasonable evidence to continue to adopt the going concern basis in preparing
the Half-Yearly Report.
Directors Responsibility Statement
The Board of Directors confirms that, to the best of its knowledge:
(i) the condensed set of financial statements contained within the
Half-Yearly Report has been prepared in accordance with United Kingdom
Generally Accepted Accounting Principles (“UK GAAP”) including Financial
Reporting Standard 104 (Interim Financial Reporting);
(ii) The Half-Yearly Report and condensed financial statements give a true
and fair view of the assets, liabilities, financial position and return of the
Company as at 31 October 2024 as required by the UK Listing Authority
Disclosure Guidance and Transparency Rules (DTR) 4.2.4R; and
(iii) The Interim Management Report includes a fair review of the information
required by:
(a) DTR 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) DTR 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 entity during that
period; and any changes in the related party transactions described in the
last annual report that could do so.
The Half-Yearly Report has not been reviewed or audited by the Company’s
auditor.
This Half-Yearly Report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the information
available to them up to the date of this report and such statements should be
treated with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such forward-looking
information.
For and on behalf of the Board
Richard Davidson
Chairman
10 December 2024
Condensed Income Statement
Six months to Six months to
31 October 2024 31 October 2023
(unaudited) (unaudited)
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Losses on investments – (671) (671) – (1,697) (1,697)
Income 4 1,256 – 1,256 936 – 936
Investment management fee (248) – (248) (250) – (250)
Other expenses (451) – (451) (525) – (525)
Return before finance costs and taxation 557 (671) (114) 161 (1,697) (1,536)
Finance costs (321) – (321) (52) – (52)
Return before taxation 236 (671) (435) 109 (1,697) (1,588)
Taxation – – – – – –
Return after taxation 236 (671) (435) 109 (1,697) (1,588)
Return per Ordinary share (pence) 1.1 (3.0) (1.9) 0.5 (7.1) (6.7)
The Total column of this statement is the Income Statement of the Company. The
supplementary revenue and capital columns have been prepared in accordance
with guidance issued by the AIC.
All revenue and capital items in the above statement derive from continuing
operations. There are no recognised gains or losses other than those passing
through the Income Statement and therefore no Statement of Total Comprehensive
Income has been presented.
The notes form an integral part of these financial statements.
Condensed Statement of Changes in Equity
Capital Share
Share redemption premium Capital Revenue
capital reserve account reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Six months to 31 October 2024 (Unaudited)
Balance at 30 April 2024 225 129 29,088 51,320 952 81,714
Buyback of shares for cancellation (18) 18 – (6,605) – (6,605)
Dividends paid 6 – – – – (127) (127)
Return for the period – – – (671) 236 (435)
Balance at 31 October 2024 207 147 29,088 44,044 1,061 74,547
Six months to 31 October 2023 (Unaudited)
Balance at 30 April 2023 243 111 29,088 49,175 1,231 79,848
Buyback of shares for cancellation (11) 11 – (3,597) – (3,597)
Dividends paid 6 – – – – (707) (707)
Return for the period – – – (1,697) 109 (1,588)
Balance at 31 October 2023 232 122 29,088 43,881 633 73,956
The notes form an integral part of these financial statements.
Condensed Statement of Financial Position
As at As at
31 October 2024 30 April 2024
(unaudited) (audited)
Note £’000 £’000
Non-current assets
Investments 5 81,609 83,708
Current assets
Debtors 209 1,107
Cash 3,994 2,365
4,203 3,472
Creditors: amounts falling due within one year
Creditors (11,265) (5,466)
(11,265) (5,466)
Net current liabilities (7,062) (1,994)
Net assets 74,547 81,714
Share capital and reserves:
Share capital 207 225
Share premium account 29,088 29,088
Capital redemption reserve 147 129
Capital reserve 44,044 51,320
Revenue reserve 1,061 952
Total shareholders’ funds 74,547 81,714
Net asset value per Ordinary share (pence) 360.1 362.6
The net asset value per ordinary share is based on 20,699,731 shares, being
the shares in issue as at 31 October 2024 (30 April 2024: 22,537,797).
The notes form an integral part of these financial statements.
Condensed Statement of Cash Flow
Six months to Six months to
31 October 2024 31 October 2023
(unaudited) (unaudited)
£’000 £’000
Net cash inflow from operating activities 1,198 441
Investing activities
Purchases of investments (17,216) (11,286)
Sales of investments 19,504 9,043
Net cash inflow/(outflow) from investing activities 2,288 (2,243)
Financing activities
Buyback of shares for cancellation (6,605) (3,597)
Revolving credit facility drawdown 5,000 –
Dividends paid (127) (706)
Finance costs paid (122) (35)
Net cash outflow from financing activities (1,854) (4,338)
Increase/(decrease) in cash 1,632 (6,140)
Reconciliation of net cash flow movement in funds:
Cash at beginning of period 2,365 13,139
Exchange rate movements (3) (4)
Increase/(decrease) in cash 1,632 (6,140)
Increase/(decrease) in net cash 1,629 (6,144)
Cash at end of period 3,994 6,995
The notes form an integral part of these financial statements.
Notes to the Condensed Interim Financial Statements
For the six months ended 31 October 2024
1 Accounting policies
These condensed financial statements have been prepared on a going concern
basis in accordance with the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority, FRS 104 ‘Interim Financial Reporting’, the
Statement of Recommended Practice ‘Financial Statements of Investment Trust
Companies and Venture Capital Trusts’ updated in July 2022 and using the
same accounting policies as set out in the Company’s Annual Report for the
year ended 30 April 2024.
2 Financial statements
The condensed financial statements contained in this interim financial report
do not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The financial information for the six months to 31 October
2024 and 31 October 2023 has not been audited or reviewed by the Company’s
external auditors.
The information for the year ended 30 April 2024 has been extracted from the
latest published audited financial statements. Those statutory financial
statements have been filed with the Registrar of Companies and included the
report of the auditors, which was unqualified and did not contain a statement
under Sections 498(2) or (3) of the Companies Act 2006.
3 Going concern
After making enquiries, and having reviewed the investments, Statement of
Financial Position and projected income and expenditure for the next 12
months, the Directors have a reasonable expectation that the Company has
adequate resources to continue in operation for the foreseeable future. The
Directors have therefore adopted the going concern basis in preparing these
financial statements.
4 Income
Six months to Six months to
31 October 31 October
2024 2023
(unaudited) (unaudited)
£’000 £’000
Income from investments:
UK dividend income 655 328
Non UK dividend income 571 373
Property income dividends 16 –
Total income from investments 1,242 701
Bank interest 14 235
Total income 1,256 936
5 Fair value hierarchy
The methods of fair value measurement are classified into a hierarchy based on
reliability of the information used to determine the valuation.
Classification Input
Level 1 Quoted prices in an active market.
Level 2 Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data), either directly or indirectly.
Level 3 Inputs are unobservable (i.e. for which market data is unavailable).
The table below sets out the Company’s fair value hierarchy investments.
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
As at 31 October 2024 (unaudited)
Investment – Equities 81,463 – 146 81,609
Total 81,463 – 146 81,609
As at 30 April 2024 (audited)
Investment – Equities 83,512 – 196 83,708
Total 83,512 – 196 83,708
6 Dividends
A final dividend relating to the year ended 30 April 2024 of 0.6p per ordinary
share was paid during the six months ended 31 October 2024 (2023: 3.0p).
Glossary of Terms and Alternative Performance Measures (“APMs”)
Adjusted Market Capitalisation
The average of the mid-market prices for an Ordinary share as derived from the
Daily Official List of the London Stock Exchange on each business day in the
relevant calendar month multiplied by the number of Ordinary Shares in issue
on the last business day of the relevant calendar month, adjusted by adding
the amount per Ordinary Share of all dividends declared in respect of which
Ordinary Shares have gone “ex div” in the relevant calendar month,
excluding any Ordinary Shares held in treasury.
Alternative Performance Measures
Alternative Performance Measures (‘APMs’) are numerical measures of
current, historical or future financial performance, financial position or
cash flow that are not GAAP measures. APM’s are intended to supplement the
information in the financial statements providing useful industry-specific
information that can assist shareholders to better understand the performance
of the Company.
Discount / Premium (APM)
A description of the difference between the share price and the net asset
value per share. The size of the discount or premium is calculated by
subtracting the share price from the net asset value per share and is usually
expressed as a percentage (%) of the net asset value per share. If the share
price is higher than the net asset value per share, the shares are trading at
a premium. If the share price is lower than the net asset value per share, the
shares are trading at a discount.
As at As at
31 October 30 April
2024 2024
Closing NAV per share (p) 360.1 362.6
Closing share price (p) 355.0 346.0
Discount (1.4)% (4.6)%
Gearing (APM)
Gearing amplifies the impact of gains or losses on the net asset value of the
Company. It can be positive for a company’s performance, although it can
have negative effects on performance when underlying assets fall in value. It
is the Company’s policy to determine the adequate level of gearing
appropriate to its own risk profile.
Gearing is calculated in accordance with guidance from the AIC as follows
The amount of borrowings as a proportion of net assets, expressed as a
percentage.
As at As at
31 October 30 April
2024 2024
Total borrowings 10,000 5,000
Total net assets 74,547 81,714
Gearing 13.4% 6.1%
Net Asset Value per share (“NAV”) (APM)
The NAV is shareholders’ funds expressed as an amount per individual share.
Shareholders’ funds are the total value of all the Company’s assets, at
current market value, having deducted all liabilities and prior charges at
their par value (or at their asset value).
Ongoing Charges (APM)
Ongoing charges are calculated by taking the Company’s annualised revenue
and capitalised expenses (excluding finance costs and certain non-recurring
items) expressed as a percentage of the average monthly net assets of the
Company during the year.
Six months to Year to
31 October 30 April
2024 2024
£’000 £’000
Total expenses per Income Statement 669 1,492
Less non-recurring expenses (42) (252)
Total expenses – annualised 1,314 1,240
Average net assets 80,393 80,850
Ongoing charges ratio 1.6% 1.5%
The ongoing charges percentage reflects the costs incurred directly by the
Company which are associated with the management of a static investment
portfolio. Consistent with AIC Guidance, the ongoing charges percentage
excludes non-recurring items. In addition, the NAV performance also includes
the costs incurred directly or indirectly in investments that are managed by
external fund managers.
Total Returns (APM)
The combined effect of any dividends paid, together with the rise or fall in
the share price or NAV. Total return statistics enable the investor to make
performance comparisons between trusts with different dividend policies. Any
dividends (after tax) received by a shareholder are assumed to have been
reinvested in either additional shares of the trust at the time the shares go
ex-dividend (the share price total return) or in the assets of the trust at
its NAV per share (the NAV total return). As the Company does not normally pay
dividends the NAV and share price total return are calculated by taking the
increase in the NAV or share price during the relevant period and dividing by
the opening NAV or share price.
Net Asset Value (“NAV”) Total Return (APM)
Six months to One year to Five years to
31 October 31 October 31 October
2024 2024 2024
Closing NAV per share (p) 360.1 360.1 360.1
Dividends reinvested (p) 0.6 0.6 4.0
Dividend adjusted closing NAV per share (p) 360.7 360.7 364.1
Opening NAV per share (p) 362.6 319.2 272.2
Dividend adjusted NAV per share returns (0.5)% 13.0% 33.8%
Share Price Total Return (APM)
Six months to One year to Five years to
31 October 31 October 31 October
2024 2024 2024
Closing share price (p) 355.0 355.0 355.0
Dividends reinvested (p) 0.6 0.6 4.0
Dividend adjusted closing share price (p) 355.6 355.6 359.0
Opening share price (p) 346.0 310.5 264.0
Dividend adjusted share returns 2.8% 14.5% 36.0%
NAV Volatility (APM)
Volatility is related to th e degree to which NAVs or prices differ from
their mean (the standard deviation). Volatility is calculated by taking the
daily NAV or closing prices over the relevant year and calculating the
standard deviation of those prices. The daily standard deviation is then
multiplied by an annualisation factor being the square root of the number of
the trading days in the year.
Six months to Year ended
31 October 30 April
2024 2024
£’000 £’000
Standard deviation of daily NAV (A) 0.4% 0.4%
Number of trading days 129 253
Square root of the number of trading days (B) 11.4 15.9
Annualised volatility (A*B) 4.6% 6.1%
Shareholder Information
Share Dealing
Shares can be traded through a stockbroker or other authorised intermediary.
The Company’s Ordinary shares are traded on the London Stock Exchange. The
Company’s shares are fully qualifying investments for Individual Savings
Accounts (“ISAs”).
Share Register Enquiries
The register for the Company’s ordinary shares is maintained by
Computershare Investor Services PLC. If you would like to notify a change of
name or address, please contact the registrar in writing to Computershare
Investor Services PLC, the Pavilions, Bridgwater Road, Bristol BS99 6ZZ.
With queries in respect of your shareholdings, please contact Computershare on
0370 889 3231 (lines are open from 8.30 am to 5.30 pm, UK time, Monday to
Friday). Alternatively, you can email WebCorres@computershare.co.uk or contact
the Registrar via www.investorcentre.co.uk.
Share Capital and Net Asset Value Information
Ordinary 1p shares 20,699,731 as at 31 October 2024
SEDOL number 3436594
ISIN number GB0034365949
Bloomberg symbol MIGO
The Company releases its net asset value per Ordinary share to the London
Stock Exchange daily.
Annual and Half-Yearly Reports
Copies of the Annual Reports are available from the Company Secretary and on
the Company’s website, www.migoplc.co.uk. Copies of the Half-Yearly Reports
are only available on the Company’s website.
AIFM and Investment Manager: Asset Value Investors Limited
The Company’s Alternative Investment Fund Manager (“AIFM”) and
Investment Manager is Asset Value Investors Limited (“AVI”) which was
appointed with effect from close of business on 15 December 2023. AVI is an
experienced manager of investment trusts with assets under management
(including debt) of £1.7 billion as at 31 October 2024, deep sector expertise
and supportive analyst resource.
Investor updates in the form of monthly factsheets are available from the
Company’s website, www.migoplc.co.uk
Association of Investment Companies
The Company is a member of the Association of Investment Companies.
Legal Entity Identifier
21380075RRMI7D4NQS20
Directors and Advisers
Directors (all non-executive)
Richard Davidson (Chairman)
Caroline Gulliver (Audit Committee Chairman)
Lucy Costa Duarte
Ian Henderson
Registered Office
25 Southampton Buildings
London WC2A 1AL
Company Secretary, Marketing & Administration
Frostrow Capital LLP
25 Southampton Buildings
London WC2A 1AL
Telephone: 0203 008 4910
Website: www.frostrow.com
Email: info@frostrow.com
Alternative Investment Fund Manager and Investment Manager
Asset Value Investors Limited
2 Cavendish Square
London W1G 0PU
Website: www.assetvalueinvestors.com
Stockbroker and Financial Adviser
Deutsche Numis
The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgewater Road
Bristol BS99 6ZZ
United Kingdom
Telephone: (0) 370 889 3231**
Email: WebCorres@computershare.co.uk
Website: www.investorcentre.co.uk
Please contact the Registrars if you have a query about a certificated holding
in the Company’s shares.
** Calls are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the applicable
international rate. Lines are open between 8.30am to 5.30pm, Monday to Friday
excluding public holidays in England and Wales.
Depositary
JP Morgan Europe Limited
25 Bank Street
London E14 5JP
Custodian
JP Morgan Chase Bank, N.A., London Branch
25 Bank Street
London E14 5JP
Independent Auditors
PricewaterhouseCoopers LLP
7 More London
Riverside
London SE1 2RT
A member of the Association of Investment Companies
MIGO Opportunities Trust plc
An investment company as defined under Section 833 of the Companies Act 2006
Registered in England and Wales No. 05020752
END
Neither the contents of the Company’s website nor the contents of any
website accessible from hyperlinks on this announcement (or any other website)
is incorporated into, or forms part of, this announcement.
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