REG-MIGO Opportunities Trust Plc: Half-yearly Report
20/12/2022 10:45
MIGO Opportunities Trust plc
Half-yearly Report for the six months ended 31 October 2022
MIGO Opportunities Trust plc (the “Company” or “MIGO”) has today
released its Half-Yearly Report for the six months ended 31 October 2022.
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:
Premier Portfolio Managers Limited
Claire Long, Head of Investment Trusts
DDI: +44 (0) 1483 400463
Email: claire.long@premiermiton.com
Frostrow Capital LLP
Company Secretary
DDI: +44 (0)203 709 8732
Email: info@frostrow.com
Financial Highlights
Six months ended Year ended
31 October 2022 30 April 2022 % change
Net asset value (“NAV”) per share 326.2p 362.6p (10.0%)
Share price 325.5p 355.5p (8.4%)
Share price premium/(discount) to NAV per share 0.2% (2.0%)
Net asset value volatility* 7.1% 8.7%
Gearing* – –
Ongoing charges* 1.3% 1.3%
* Alternative Performance Measure, see Glossary.
Total Return Performance to 31 October 2022
6 months 1 year 5 years
% % %
Net asset value (dividend adjusted) (9.9%) (14.6%) 19.8%
Share price (dividend adjusted) (8.3%) (14.5%) 17.0%
SONIA +2% 1.8% 2.9% 13.2%
Source: Morningstar
Investment Objective
The objective of MIGO Opportunities Trust plc (the “Company”) 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
In the six months to 31 October 2022, financial markets were impacted by the
war in Ukraine, disruptions in the energy markets, inflationary pressures,
supply chain disruptions and an increasing cost of living crisis. In the UK,
economic data releases suggest that the UK is in the early stages of a
recession that the Bank of England forecasts will last for more than a year.
Predictably, markets have reacted through falling equity and bond prices as
well as FX volatility, notably a strong US Dollar and weak Pound. Within the
investment companies sector, where your company invests, this background has
led to a widening of many companies’ discounts to net asset value. I am
pleased to report though that MIGO has continued to hold its own and has more
recently been one of the few investment trusts trading at a premium to net
asset value (“NAV”) per share, even issuing new shares into the market.
Performance
Over the six months to 31 October 2022 the Company’s NAV per share total
return (dividend adjusted) fell by 9.9% and the share price total return
(dividend adjusted) fell by 8.3%. In comparison, the Company’s Benchmark,
sterling SONIA +2%, delivered a total return of 1.8%.
A comprehensive 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. We believe that the current environment is
ideal for the value driven style of our Investment Manager to find new
attractively priced investments over the next year. Net cash at the period-end
was £12.3 million or 15.0% of NAV, which is ready to be deployed when value
opportunities arise. Average discounts to NAV in the Investment trust sector
stood at 13.9% at 31 October 2022 (2021: 2.9%).
Dividend
On 6 October 2022, a final dividend of 0.4p per share in relation to the year
ended 30 April 2022 was paid to shareholders on the register as of 9 September
2022. The associated ex-dividend date was 8 September 2022.
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 from time to time.
Share Price, Share Issuances and Buybacks
MIGO’s share price decreased over the period from 355.5p to 325.5p and the
shares traded at a very small premium to NAV per share of 0.2% at the end of
the period, up from trading at a 2.0% discount to NAV per share at the last
year end at 30 April 2022.
From May to July 2022, the Company undertook buybacks of 1,200,000 shares in
order to manage the share price discount and provide liquidity in a tightening
market. However, more recently, in September and October 2022, with shares
trading at a premium to their net asset value, 200,000 shares were issued to
the market, so that as at 31 October 2022, the Company had 25,110,256
(30 April 2022: 26,110,256) shares in issue. Since the period-end, a further
210,000 shares were issued at a premium, increasing the number of shares in
issue to 25,320,256. We hope that this trend will continue and allow us to
grow the Company.
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 and correct imbalances of supply and demand. The Board,
the Investment Manager and the Company’s broker are in regular contact in
order to be able to react swiftly to any disproportionate premiums or
discounts the Company’s shares are trading at.
At the Annual General Meeting (“AGM”) held on 29 September 2022,
shareholders gave the Board authority to issue shares of up to 10% of issued
share capital at the time, whilst disapplying pre-emption rights, amounting to
a total of 2,503,525 shares in total. At the AGM the Board also received
shareholders’ authority to buy back up to 3,752,784 shares, or 14.99% of
issued share capital. These authorities will expire at the next AGM when the
Board will ask for renewed authorities.
The Board
As shareholders will have seen in our Stock Exchange announcement, two new
Directors were appointed to the Board as independent non-executive directors
with effect from 1 November 2022.
Lucy Costa Duarte is a specialist in marketing strategy and investor
relations, working part-time for SV Health Investors, the managers of
International Biotechnology Trust (“IBT”) since 2016. During her time at
IBT, she has overseen a significant improvement in the trust’s discount to
NAV and a positive shift in the shareholder registry as well as introduced an
ESG policy for the Trust. Lucy was formerly a director at Citigroup heading
the emerging markets ECM team in London. She left Citigroup in 2007 and took a
career break to raise her children.
Ian Henderson is an advertising professional who is currently CEO of
specialist agency AML, working with many firms in the finance sector in the UK
and internationally. AML has recently been acquired by Selbey Anderson, the
UK’s fastest-growing marketing services group, of which Ian is now also
chief creative officer. Ian was formerly a creative director at Publicis
Groupe then CEO of a subsidiary, Masius. He left in 2008 to set up a new
agency for Engine Group before leading a management buy-in to start AML in
2011.
On behalf of the whole Board, I am delighted to welcome Lucy and Ian and look
forward to their contribution to the success of the Company.
The Investment Manager
In November 2022, Charlotte Cuthbertson, the co-fund manager of the Company,
left Premier Miton Investors (“PMI”). The Board of MIGO would like to
thank Charlotte for her excellent support over the past years and wishes her
all the best for the future.
The Board has full faith in the Company’s lead portfolio manager, Nick
Greenwood, but nonetheless we have discussed with PMI the resources available
to support him following Charlotte’s departure. Ian Rees, Deputy Head of the
Multi-Asset Team, will support Nick on portfolio management and Claire Long,
Head of Investment Trusts, will support Nick on marketing and communications.
Outlook
I said in the last annual report that the market outlook was one of the
cloudiest that the Company had seen in many years. Visibility has not improved
much since then as the environment remains affected by recession, high
inflation, rising interest rates and the end of quantitative easing policies.
However, with MIGO trading at a premium and issuing shares, the Board believes
that the Company continues to be in a good position. In addition, it is our
view that the market environment will create a number of good value
opportunities over the coming year that fit well into our Manager’s
investment style, creating a firm base for positive future performance.
The Board remains optimistic and thanks shareholders for their continued
support.
Richard Davidson
Chairman
20 December 2022
Investment Manager’s Report
for the six months ended 31 October 2022
Performance
During the six months to 31 October 2022, our net asset value fell from 362.6p
to 326.2p. This represents a fall of 10.0% in capital terms. In comparison,
the Numis All-Share Index* declined 8.3% in capital terms. Our shares also
declined 8.4% and ended the half year trading on a 0.2% premium.
* The full investment companies universe as defined by Numis
Securities Research including both equities and alternative asset investment
companies.
The period under review proved to be highly volatile as appetite for risk
evaporated during the early months of the Ukraine war. This, combined with an
end of the largesse unleashed by central bankers in response to the pandemic,
created a challenging environment. Conditions deteriorated further towards the
end of September as the Truss government’s “mini budget” rapidly
unravelled causing a spike in gilt yields. Deteriorating sentiment triggered a
rapid widening in investment trust discounts. According to the AIC, the
average approached 13.9% at one point having started the year in the region of
2.9%. Happily, MIGO was one of a handful of trusts which commanded a premium
at times during this period. The average discount of our twelve largest
positions at the end of September was 28.8% which is the highest figure for
this measure we have seen. Our bias towards smaller trusts was unhelpful as
large caps held up much better, The FTSE AiM index fell by over 21%
highlighting aversion to stocks with smaller market capitalisations. Our high
cash position softened the blow to some extent.
Contributors
A useful return came from our long-held position in Alpha Real. This trust had
been transitioning from an owner of property to a property lender. The process
had been much delayed in response to the outbreak of Covid. Furthermore, there
were more credit losses than we felt comfortable with. Alpha struggled to
generate a following and by late June was trading at a 42% discount. At that
point the trust made a tender offer to buy shares in for cancellation at 175p.
This compared well with the market price at the time of 123p. This level still
represented a significant discount but the outlook for property was becoming
tougher and we decided to sell.
Biotechnology was also a significant contributor to performance. The sector
had suffered as many branches of medicine saw resources diverted towards
fighting Covid. Therefore, progress generally disappointed markets and biotech
stocks fell having initially boomed on the arrival of the pandemic. Further
damage came from the rotation out of growth stocks into value, plus threats
from the Democrats to control US drug pricing. These problems are now in the
past and the sector has rallied sharply. We introduced a holding in
International Biotechnology Trust.
Amedeo Air Four Plus, which was a new investment, leases planes to Emirates
and Thai airlines. Their shares responded positively to a rapid recovery in
demand for air travel which saw many of the trust’s planes return to service
having been mothballed. Severe delays in the delivery of the next generation
of wide-bodied aircraft may well mean that some of Amedeo’s assets will be
generating revenue far longer than was previously expected.
Georgia Capital continues to trade at a discount approaching 60%. Sentiment
towards this trust remains dire mainly due to Georgia’s border with Russia
and memories of the war between the two countries in 2008. In any event demand
for single country Eastern European funds has been non-existent in recent
years. The local economy is booming and has reached a sweet spot, moving on
from basic industries. The establishment of a middle class is boosting growth.
Furthermore, the arrival of Russian professionals, notably IT specialists, has
given the economy a further shot in the arm. The trust confirmed the
conservative nature of its valuation process when it sold Tbilisi’s water
supplier for hard cash at a useful premium to book value. Should the trust
fail to narrow this extreme discount, the eventual exit is likely to be via an
orderly wind down. Key stakeholders are hardly going to achieve an exit by
selling their personal investment into the market at forty pence in the pound.
NB Private Equity and India Capital Growth also made positive contributions to
our attribution.
Detractors
Our principal detractor was EPE Special Opportunities. The dominant investment
within its portfolio is lighting specialist Luceco. That company suffered as a
result of overstocking by DIY stores and high freight costs incurred given
their manufacturing base is in China. No doubt there were also fears that
their factory could find itself in lockdown. Luceco’s results in September
were much better than analysts’ forecasts as freight rates are in decline
and the overstocking situation seems to be resolving itself.
Another significant drag on our attribution was Baker Steel Resources. Whilst
there was little movement in the trust’s underlying portfolio, its shares
fell sharply and ended the period trading at a 37% discount. Sentiment towards
developers of mines has deteriorated as the availability of bank finance dried
up. This is not unusual at this point in the cycle. Some projects will need to
move to the “back burner”. Alternatively, Baker Steel can accept capital
from an alternative lender. This would mean handing over a greater share of
the cake to the provider of capital. On a positive note, four of Baker
Steel’s projects completed funding whilst markets remained open. This has
enabled them to move to the next stage of development. Financing was achieved
for projects focused on Tin in Saxony, Cement in Morocco, Tungsten in Devon
and Gold in Zimbabwe. Whilst it is disappointing that the environment has
cooled, the team would have become stretched if the bulk of the trust’s ten
deposits had reached the intensive stage of development at the same time.
Uncertainty over where interest rates would settle undermined the property
sector which saw price falls across the board. There was little sign of the
wheat being sorted from the chaff. All our positions within the sector
suffered unilaterally. Ten-year gilt yields have subsequently softened to 3.1%
from a peak of 4.5%. Therefore, declines in the share prices of Phoenix Spree,
Industrials REIT, Macau Property Opportunities and Real Estate Investors dwarf
any predictions of actual falls in their portfolios. Once there is certainty
about where rates will settle for better or worse, the sector is likely to
rally. Any lasting damage is likely be found in sub sectors where yields fell
to unsustainably low levels. Our exposure to property is via areas which were
already unloved and overlooked.
A major negative contribution came from our Vietnamese trusts. This comes as a
surprise as the country is a beneficiary of the Chinese Covid lockdown and its
trade war with the United States. Given Vietnam enjoyed strong GDP growth
during the last quarter, we would have expected its stock market to be trading
on a higher multiple than the current historic PE ratio of 8x. The Ho Chi Minh
stock market faced two challenges: one external, one internal. International
investors have ploughed substantial capital into projects in Vietnam. The
local authorities were keen that the investors did not lose money through the
dong’s weakness against a very strong US Dollar. This led to unexpectedly
aggressive rises in interest rates which caused locals to retreat from stocks.
The other challenge came from excesses in the property market where developers
issued bonds inappropriately to retail investors. Arrests were made leading to
fears that losses on these bonds would systemically undermine the banking
system. This now seems unlikely; however Vietnamese equities are notoriously
volatile given that the stock market is dominated by retail investors who
often trade on margin. Once share prices start falling, investors need to sell
to meet margin calls which in turn causes prices to fall further and more
margin calls to be made; a vicious circle ensues. We don’t believe that
recent events undermine the longer-term attractions of the Ho Chi Minh market.
Exposure to smaller companies proved unhelpful given how weak the asset class
was amid fears of a recession. We disposed of our entire position in Strategic
Equity Capital and significantly reduced our holdings in River & Mercantile UK
Micro Cap and Henderson Opportunities.
New entries and departures
We touched on the new entrants Amedeo Air Four Plus and International
Biotechnology Trust earlier. In addition to Alpha Real and Strategic Equity
Capital, Artemis Alpha and Third Point departed the portfolio.
Post the hike in interest rates, a number of higher yielding trusts with
alternative asset class mandates saw their share prices fall sharply. Ten-year
gilt yields touched 4.5% in the immediate aftermath of the mini budget. At
that point it made sense to switch out of, say, an infrastructure trust
yielding 5% into government securities. It became clear that many of these
trusts had originally been bought purely for income which was scarce rather
than for their fundamental attractions. In response to the evaporation of the
yield premium there was a universal sell off with many babies thrown out with
the bath water. We identified opportunities where trusts had been harshly
treated. Frustratingly, the market proved highly illiquid. Nevertheless, post
our interim period, we have three new names in the portfolio: Aquila European
Renewables, EJF Investments and Grit Real Estate.
Aquila directly owns a range of hydroelectric, solar and wind assets in
Greece, Scandinavia and Iberia. The managers are based in Germany and as a
result have struggled to establish a following in the UK. The shares trade at
one of the widest discounts in the sector. Furthermore, their accounting
practices are conservative relative to peers. For example, the remaining
economic life of their assets is assumed to be shorter than many of its peers.
This suggests that true discount is wider than at first sight.
EJF describes its mandate as “regulatory arbitrage”. It typically invests
in preference securities of medium and smaller sized US Banks. Many of these
were issued to bolster balance sheets in the aftermath of the Global Financial
Crisis. The market mechanism for these assets is highly inefficient. The
portfolio managers are based in Washington and face a similar problem to
Aquila in generating a following in the United Kingdom. This partially
explains why we were able to acquire some shares in this well-run fund at a
32% discount.
Grit invests in African property excluding South Africa. Its shares are deeply
out of favour trading at a 58% discount. In practice it uses its expertise to
develop property for western governments and multinationals who do not wish to
involve themselves in the intricacies of local property ownership. It owns a
range of assets including embassies, shopping malls, accommodation blocks for
miners and diplomats, offices and holiday resorts. The trust is in the process
of acquiring connected companies which will turn Grit into a fee earning fund
manager rather than purely the owner of a property portfolio. This is poorly
understood by the market however we have only taken a toehold position as
leverage will remain high until the transactions are completed. Should there
be any short-term setbacks, this gearing would ensure that the effects would
be painful.
We have revisited the Japanese activist trusts and have added to Nippon Active
Value at a point when it had become overlooked and unloved. Until recently we
were cynical having been told many times over the years that Japanese
corporate governance was improving only to be disappointed. These trusts have
recently performed much better than generalist peers. Nevertheless, because
the yen has been friendless, returns have been muted. Japanese managements
still rebuff asset stripping style attacks, but they are now listening to
pragmatic approaches. The fact that there are more activists tackling local
companies means that an improvement in corporate governance is gaining
momentum. Smaller Japanese stocks are very lowly rated, and we see Nippon as
offering a discount on a discount with corporate activity acting as a catalyst
for change.
Looking forward, we remain cautious. Investors have enjoyed “free” money
for over a decade. Abundant liquidity has supported a widespread rise in asset
prices during that period. This phase has now come to an end and the process
will move into reverse, suggesting mainstream indices face a headwind. The
tide will be against us; however, the authorities will be limited in respect
of how fast liquidity can be drained from the financial system given the
fragility of markets. Nevertheless, there will remain many opportunities for
us to exploit. These will be found in overlooked corners of the closed end
world. On past occasions when discounts within our portfolio became as wide as
they are presently, it proved to be the precursor to the next upward run in
the value of our assets.
Nick Greenwood
Premier Fund Managers Limited
20 December 2022
Average underlying discount*
Top 12 stocks Weight (%) Discount (%)
Dunedin Enterprise Investment Trust 6.4 (2.6)
Vietnam Enterprise Investments 5.6 (16.2)
Yellow Cake 4.4 (5.0)
NB Private Equity Partners 4.4 (32.3)
Geiger Counter 4.1 (7.3)
Baker Steel Resources Trust 4.1 (41.9)
Biotech Growth Trust 3.9 (8.3)
Georgia Capital 3.5 (58.9)
Oakley Capital Investments 3.5 (34.4)
Phoenix Spree Deutschland 3.4 (49.4)
New Star Investment Trust 3.2 (28.3)
CQS Natural Resources Growth and Income 2.7 (16.4)
Average discount (25.1) (1)
Source: Bloomberg, 31.10.2022.
* This table covers 49.2% of the Company’s holdings.
1 Please note that the average discount figure only takes into account
the top 12 holdings in the portfolio.
Portfolio Valuation
as at 31 October 2022
Investment Valuation % of
Company Sector Region £’000 NAV
Dunedin Enterprise Investment Trust (†) Private Equity Global 5,275 6.4
Vinacapital Vietnam Opportunity Fund Private Equity Asia Pacific – Vietnam 4,617 5.6
Yellow Cake* Mining – Uranium Global 3,600 4.4
NB Private Equity Partners Private Equity North America 3,589 4.4
Baker Steel Resources Trust Mining Global 3,430 4.1
Geiger Counter Mining – Uranium Global 3,417 4.1
Biotech Growth Trust Equity UK 3,243 3.9
Georgia Capital Equity Europe 2,906 3.5
Oakley Capital Investments Private Equity Global 2,836 3.5
Phoenix Spree Deutschland Real Estate Europe 2,772 3.4
35,685 43.3
New Star Investment Trust Equity Global 2,604 3.2
CQS Natural Resources Growth and Income Mining Global 2,255 2.7
Real Estate Investors* Real Estate UK 2,139 2.5
Atlantis Japan Growth Fund Equity Japan 2,006 2.4
International Biotechnology Trust Equity UK 1,944 2.4
Duke Royalty* Other – Alternative Lender Global 1,684 2.1
Vietnam Enterprise Investments Equity Asia Pacific – Vietnam 1,619 2.0
India Capital Growth Fund* Equity India 1,590 1.9
Epe Special Opportunities* Private Equity UK 1,520 1.9
Ashoka India Equity Investment Trust Equity India 1,503 1.8
54,549 66.2
Hansa Investment Co Equity Global 1,460 1.8
River & Mercantile UK Micro Cap Investment Co Equity – Small Cap UK 1,315 1.6
Downing Strategic Micro-Cap Investment Trust Equity – Small Cap UK 1,201 1.5
Nippon Active Value Fund Equity – Small Cap Japan 1,114 1.4
Life Settlement Assets Other – Life Policies North America 1,113 1.4
Macau Property Opportunities Fund (†) Real Estate Asia Pacific – China 1,108 1.4
Marwyn Value Investors Equity UK 1,038 1.3
Industrials REIT Real Estate UK 1,044 1.3
Schroder Uk Public Private Equity UK 964 1.2
VPC Speciality Lending Investments Equity UK 961 1.2
65,867 80.3
Henderson Opportunities Trust Equity UK 792 1.0
Ground Rents Income Fund Real Estate UK 792 1.0
Rockwood Strategic* Equity – Small Cap UK 730 0.9
Amedeo Air Four Plus Equity Global 671 0.8
Aseana Properties (†) Real Estate Asia Pacific 198 0.2
Chelverton Growth Trust Equity UK 168 0.2
Chrysalis Investments Private Equity Europe 193 0.2
Reconstruction Capital II* (†) Equity Europe 84 0.1
Better Capital Pcc (†)^ Private Equity UK 62 0.1
Renn Universal (†)^ Equity North America 50 0.1
Crystal Amber Fund* Equity – Small Cap UK 48 0.1
Origo Partners (†)^ Private Equity Emerging Markets 42 0.1
Cambium Global Timberland* (†) Other – Forestry Global 33 0.0
Grit Investment Trust Equity – Small Cap UK 1 0.0
Total investments 69,731 85.1
Other current assets (including net cash) 12,171 14.9%
Net asset value 81,902 100.0%
* AIM/NEX Listed
(† ) In liquidation, in a process of realisation or has a fixed
life.
^ Unlisted.
Capital Structure
As at the date of this report, the Company’s share capital comprises
25,320,256 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 2021, 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 0.55% 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 2024. 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; liquidity,
cash and foreign exchange risk and interest rate risk), strategic risks
(including shareholder relations and share price performance risk; key person
risk and company duration risk), operational risks (in particular service
provider risk) and macro risks (including global risk, UK regulatory and legal
risk, governance risk and ESG and climate change risk). These risks were
explained in detail on pages 16 to 22 in the Annual Report for the year ended
30 April 2022.
In addition, the war in Ukraine and continuing Covid outbreaks as well as the
impact of inflation, interest rate rises and the prospect of a recession are
recognised as principal risks and uncertainties with a possible impact on the
investment performance of the Company as well as on the operations of the
Company and its 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 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; and
(iii) The Interim Management Report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, 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 of the Disclosure Guidance and Transparency
Rules, 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
20 December 2022
Condensed Income Statement
Six months to Six months to
31 October 2022 (unaudited) 31 October 2021 (unaudited)
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
(Losses)/gains on investments – (9,492) (9,492) – 9,698 9,698
Income 4 754 – 754 943 – 943
Investment management fee (273) – (273) (319) – (319)
Other expenses (286) – (286) (493) – (493)
Return/(loss) before finance costs and taxation 195 (9,492) (9,297) 131 9,698 9,829
Finance costs (53) – (53) (37) – (37)
Return/(loss) before taxation 142 (9,492) (9,350) 94 9,698 9,792
Taxation – – – – – –
Return/(loss) after taxation 142 (9,492) (9,350) 94 9,698 9,792
Return/(loss) per Ordinary share (pence) 0.6 (37.8) (37.2) 0.3 36.1 36.4
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
Share capital £’000 Capital redemption reserve £’000 Share premium account £’000 Special reserve £’000 Capital reserve £’000 Revenue reserve £’000 Total £’000
Six months to 31 October 2022 (Unaudited)
Balance at 30 April 2022 261 89 27,729 1,222 65,034 349 94,684
Buyback of shares for cancellation (12) 12 – (1,222) (2,787) – (4,009)
Share issuance 2 – 675 – – – 677
Dividends paid – – – – – (100) (100)
Return for the period – – – – (9,492) 142 (9,350)
Balance at 31 October 2022 251 101 28,404 – 52,755 391 81,902
Six months to 31 October 2021 (Unaudited)
At 30 April 2021 269 74 25,105 6,406 61,303 (12) 93,145
Buyback of shares for cancellation (2) 2 – (738) – – (738)
Return for the period – – – – 9,698 94 9,792
Balance at 31 October 2021 267 76 25,105 5,668 71,001 82 102,199
The notes form an integral part of these financial statements.
Condensed Statement of Financial Position
Note As at 31 October 2022 (unaudited) £’000 As at 30 April 2022 (audited) £’000
Non-current assets
Investments 5 69,731 83,480
Current assets
Debtors 115 567
Cash 12,292 10,891
12,407 11,458
Creditors: amounts falling due within one year
Creditors (236) (254)
(236) (254)
Net current assets 12,171 11,204
Net assets 81,902 94,684
Share capital and reserves:
Share capital 251 261
Capital redemption reserve 101 89
Share premium account 28,404 27,729
Special reserve – 1,222
Capital reserve 52,755 65,034
Revenue reserve 391 349
Total shareholders’ funds 81,902 94,684
Net asset value per ordinary share (pence) 326.2 362.6
The net asset value per ordinary share is based on 25,110,256 shares, being
the shares in issue as at 31 October 2022 (30 April 2022: 26,110,256).
The notes form an integral part of these financial statements.
Condensed Cash Flow Statement
Six months to Six months to
31 October 2022 31 October 2021
(unaudited) (unaudited)
£’000 £’000
Net cash inflow from operating activities 311 91
Investing activities
Purchases of investments (5,546) (6,517)
Sales of investments 10,107 15,125
Net cash inflow from investing activities 4,561 8,608
Financing activities
Share issuance 677 –
Buyback of shares for cancellation (4,009) (738)
Revolving credit facility repayment – (2,000)
Dividends paid (100) –
Finance costs paid (35) (34)
Net cash outflow from financing activities (3,467) (2,772)
Increase in cash 1,405 5,927
Reconciliation of net cash flow movement in funds:
Cash at beginning of period 10,891 4,035
Exchange rate movements (4) 2
Increase in cash 1,405 5,927
Increase in net cash 1,401 5,929
Cash at end of period 12,292 9,964
The notes form an integral part of these financial statements.
Notes to the Condensed Interim Financial Statements
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 2022.
2 Financial statements
The condensed financial statements contained in this interim financial report
do not constitute statutory accounts as defined in s434 of the Companies Act
2006. The financial information for the six months to 31 October 2022 and 31
October 2021 has not been audited or reviewed by the Company’s external
auditors.
The information for the year ended 30 April 2022 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 2022 31 October 2021
£’000 £’000
Income from investments:
UK dividend income 175 380
Non UK dividend income 453 415
Property income dividends 110 148
Total income from investments 738 943
Bank interest 16 –
Total income 754 943
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.
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 2022
Investment – Equities 69,545 42 144 69,731
Total 69,545 42 144 69,731
As at 30 April 2022
Investment – Equities 83,267 40 173 83,480
Total 83,267 40 173 83,480
Glossary of Terms and Alternative Performance Measures (“APMs”)
Discount or 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 result is 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 2022 30 April 2022
Closing NAV per share (p) 326.2 362.6
Closing share price (p) 325.5 355.5
Premium/(discount) 0.2% (2.0%)
Net Asset Value (“NAV”) Total Return (APM)
NAV total return is the closing NAV per share including any cumulative
dividends paid as a percentage over the opening NAV.
NAV total return is an alternative way of measuring investment management
performance of investment trusts which is not affected by movements in the
share price.
Six months to One year to Five years to
31 October 2022 31 October 2022 31 October 2022
Closing NAV per share (p) 326.2 326.2 326.2
Dividends reinvested (p) 0.4 0.4 0.4
Dividend adjusted closing NAV per share (p) 326.6 326.6 326.6
Opening NAV per share (p) 362.6 382.3 272.6
Dividend adjusted NAV per share returns (9.9%) (14.6%) 19.8%
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 2022 30 April 2022
£’000 £’000
Total expenses per Income Statement 559 1,389
Less non-recurring expenses – 124*
Total expenses – annualised 1,118 1,265
Average net assets 84,074 98,701
Ongoing charges 1.3% 1.3%
* Non-recurring expenses during the year to 30 April 2022 related to
costs incurred on the Company’s realisation opportunity in September 2021.
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. Many of these managers net these costs off within
their valuations, and therefore they form part of the Company’s investment
return, and it is not practical to calculate an ongoing charges percentage
from the information they provide.
Share Price Total Return (APM)
The combined effect of the rise and fall in the share price, together with any
dividend paid/reinvested. 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).
Six months to One year to Five years to
31 October 2022 31 October 2022 31 October 2022
Closing share price (p) 325.5 325.5 325.5
Dividends reinvested (p) 0.4 0.4 0.4
Dividend adjusted closing share price (p) 325.9 325.9 325.9
Opening share price (p) 355.5 381.0 278.5
Dividend adjusted share returns (8.3%) (14.5%) 17.0%
NAV Volatility (APM)
Volatility is related to the 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 2022 30 April 2022
Standard deviation of daily NAV (A) 0.62% 0.54%
Number of trading days 132 263
Square root of the number of trading days (B) 11.5 16.2
Annualised volatility (A*B) 7.1% 8.7%
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
SEDOL number 3436594
ISIN number GB0034365949
Bloomberg symbol MIGO
The Company releases its net asset value per Ordinary share to the London
Stock Exchange on a daily basis.
Website: www.migoplc.co.uk
Annual and Half-Yearly Reports
Copies of the Annual Reports are available from the Company Secretary and on
the Company’s website. Copies of the Half-Yearly Reports are only available
on the Company’s website.
Investment Manager: Premier Fund Managers Limited
The Company’s Investment Manager is Premier Fund Managers Limited, a wholly
owned subsidiary of Premier Miton Group plc, an asset management group
managing £10.6 billion on behalf of clients (as at 30 September 2022).
Product strengths include UK equities, US equities, European and Global
equities and a wide range of multi-asset strategies.
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.
Directors and Advisers
Directors (all non-executive)
Richard Davidson (Chairman)
Katya Thomson (Audit Committee Chairman)
Hugh van Cutsem
Lucy Costa Duarte (appointed on 1 November 2022)
Ian Henderson (appointed on 1 November 2022)
Registered Office
6th Floor
Paternoster House
65 St Paul’s Churchyard
London EC4M 8AB
Company Secretary, Marketing & Administration
Frostrow Capital LLP
25 Southampton Buildings
London WC2A 1AL
Website: www.frostrow.com
Email: info@frostrow.com
Alternative Investment Fund Manager
Premier Portfolio Managers Limited
Eastgate Court
High Street
Guildford
Surrey GU1 3DE
Investment Manager
Premier Fund Managers Limited
Eastgate Court
High Street
Guildford
Surrey GU1 3DE
Website: www.premiermiton.com
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.
Stockbroker and Financial Adviser
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
Depositary and Custodian
The Bank of New York
Mellon (International) Limited
One Canada Square
London E14 5AL
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. 5020752
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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