TIDMMIGO
MIGO Opportunities Trust plc
Half-Yearly Report for the six months ended 31 October 2023
MIGO Opportunities Trust plc (the "Company" or "MIGO") has today released its
Half-Yearly Report for the six months ended 31 October 2023.
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
Financial Highlights
Six months ended Year ended
31 October 2023 30 April 2023 % change
Net asset value ("NAV") per share 319.2p 328.6p (2.9)%
Share price 310.5p 318.5p (2.5)%
Share price discount to NAV per share (2.7)% (3.1)%
Total net assets £74.0m £79.8m (7.4)%
Net asset value volatility* 4.1% 8.2%
Gearing* - -
Ongoing charges* 1.6% 1.4%
*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.
Total Return Performance to 31 October 2023
6 months 1 year 5 years
% % %
Net asset value (dividend adjusted)* (1.9) (1.2) 19.3
Share price (dividend adjusted)* (1.6) (3.6) 15.8
SONIA plus 2% 3.5 6.4 17.5
*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
Introduction
In the six months to 31 October 2023, financial markets around the world
continued to be impacted by rising interest rates aimed at squeezing inflation
back to central bank target levels. These higher rates and the fears they could
hurt profit growth and lead to credit defaults have weighed heavily on share
prices across the globe, with the notable exception of a few highly rated US
stocks deemed to be beneficiaries of emerging AI technologies.
Domestically, UK consumers have struggled with higher interest rates and a cost
of living crisis made worse by high inflation and energy prices. As these
consumers are, ultimately, the source of much demand for UK investment products
of all kinds, we have seen a material reduction in demand for investment trusts
over the period. Coupled with other demand effects such as the consolidation of
the wealth management sector and increasing moves to global benchmarks,
discounts to net asset value across the sector have been pushed to levels not
seen since the global financial crisis.
Despite these trends and a slightly weaker share price, MIGO has continued to
trade at a tight discount as supportive regular buybacks and our Investment
Manager's cash balance and value approach of buying at wide discounts has
retained investor confidence.
Investment Manager, Registered Office, Depositary and Custodian
Aside from market events, 2023 has been dominated by the search for a new AIFM
and Investment Manager for MIGO following the news early in the year, that our
portfolio manager, Nick Greenwood, had decided to leave Premier Miton Investors
("PMI").
Between March and June the Board of MIGO - after consultation with our lawyers
and brokers - performed a full manager review including detailed shareholder
engagement. Feedback from shareholders made it clear that MIGO's investors
wanted MIGO to retain its existing investment objective and policy, ideally with
the established investment team in place. Close to a dozen possible investment
management houses, ranging from large multi-national groups to small boutique
managers, were reviewed in a rigorous selection process. The result of this
exercise was a unanimous decision by the Board to appoint Asset Value Investors
Limited ("AVI") as the Company's future AIFM and Investment Manager, subject to
regulatory approval, which was announced on27July.
Since then, and as announced on 16 October, it has been agreed that Nick
Greenwood would join AVI to co-manage MIGO along with Charlotte Cuthbertson,
both of whom are well known to our longer-term investors as the Company's lead
portfolio managers for a number of years. AVI's appointment commenced from close
of business on Friday 15 December, concurrent with PMI completing its role as
investment manager. Nick Greenwood joined AVI the following business day, Monday
18December. Also, with effect from 18 December 2023, the registered office moved
to the offices of Frostrow Capital LLP, our Company Secretary, Marketing and
Administration Manager. The new address can be found at the end of this
document.
The Board would like to thank Premier Miton for its cooperation in this
transition and for their hard work and support over the years.
We also look forward to working with AVI, an experienced manager of investment
trusts and of funds investing in the investment trust sector, and the Board
expects MIGO to benefit from AVI's deep sector expertise and supportive analyst
resource as well as its distribution and marketing channels. Over the past five
years, AVI has added significant resource to its investment research team; this
depth of knowledge will be available to support MIGO's portfolio managers.
Further information can be found at: www.assetvalueinvestors.com.
Together with a new AIFM and Investment Manager, MIGO also has a new Depositary
and Custodian, JP Morgan Europe Limited and JP Morgan Chase Bank respectively.
AVI and its client funds have well established working relationships with JP
Morgan. We thank the team at BNYM for their support over the years and for their
help in transitioning the Company's business over to JPMorgan. We look forward
to working with JP Morgan's excellent team who have contributed to making the
transition an easy one.
In spite of all the uncertainty over the past months, it has been encouraging to
see that shareholders have been happy to stand by MIGO and await further
developments. Accordingly, supported in part by the Board's proactive approach
to buybacks, our share price and discount have held at reasonably steady levels.
I thank everyone for their patience.
Board Changes
As already noted in the annual report, the appointment of AVI as our new AIFM
and Investment Manager meant that Katya Thomson could no longer be considered
independent under the AIC's Code of Corporate Governance, as she also sits on
the board of another AVI managed investment trust. She had therefore taken the
decision to step down from her role as non-executive director and Chairman of
the Audit Committee once a replacement could be found.
Consequently, the Board undertook a search for a new independent, non-executive
Director with the necessary qualifications to take over from Katya as Chairman
of the Audit Committee. As already announced on 12 December 2023, I am happy to
report that the Directors have appointed MsCaroline Gulliver to join the Board
and as our new Chairman of the Audit Committee with effect from the close of
business on 29December 2023. Katya will step down from her role on the same day,
but will continue to be available to support Caroline and the Board of MIGO for
as long as needed.
Having graduated in Accountancy from the University of Dundee in 1987, Caroline
joined EY as graduate trainee in Edinburgh where she spent a 25 year career,
latterly as an Executive Director in London, acting as Senior Statutory Auditor
for many investment trusts and open-ended investment companies. She also worked
on a large number of investment trust Stock Exchange transactions including new
fund launches, both onshore and offshore, and fund reconstructions and mergers.
Caroline left EY in September 2012 to pursue other interests including non
-executive directorship positions. She currently has three active closed-end
fund Board appointments - JP Morgan Global Emerging Markets Income Trust plc,
International Biotechnology Trust plc and abrdn European Logistics Income plc.
She is a member of the Institute of Chartered Accountants of Scotland (CA).
The Board warmly welcomes Caroline and looks forward to working with her. At the
same time, we will miss Katya's insights and wish her well for the future,
thanking her for many years of support and advocacy of MIGO.
Performance
Over the six months to 31 October 2023 the Company's NAV per share total return
(dividend adjusted) fell by 1.9% and the share price total return (dividend
adjusted) fell by 1.6%. In comparison, the Company's Benchmark, sterling SONIA
+2%, delivered a total return of 3.5%.
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. Wecontinue to 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 £6.9
million or 9.5% of NAV, which is ready to be deployed when value
opportunitiesarise.
Dividend
On 5 October 2023, a final dividend of 3.0p per share in relation to the year
ended 30 April 2023 was paid to shareholders on the register as of 8 September
2023.
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 318.5p to 310.5p and the
shares traded at a small discount to NAV per share of 2.7% at the end of the
period, up from trading at a 3.1% discount to NAV per share at the last year end
at 30 April 2023.
From May to October 2023, the Company undertook buybacks of 1,125,000 shares in
order to manage the share price discount and protect liquidity in the market.
This support for the shares was particularly important given the ongoing new
manager search and wait for regulatory approval as well as weakness in the
investment trust sector at that time. As at 31 October 2023, the Company had
23,172,797 (30 April 2023: 24,297,797) shares in issue. Since the period-end, a
further 100,000shares 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 and correct imbalances of supply and demand. The Board, PMI as the
Investment Manager and the Company's broker were in regular contact in order to
be able to react swiftly to any disproportionate premiums or discounts the
Company's shares were trading at. This is expected to continue with AVI as the
new AIFM and Investment Manager.
At the Annual General Meeting ("AGM") held on 20 September 2023, 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
2,354,779 shares in total. At the AGM the Board also received shareholders'
authority to buy back up to 3,529,814 shares, or 14.99% of issued share capital.
These authorities will expire at the next AGM when the Board will ask for
renewed authorities.
Ongoing Charges Issues
Investors will be aware of the ongoing charges figure ("OCF") which is the
charge paid over a year quoted on the 'Key Investor Information' ("KID")
document. The Board, our advisers and many investment trust specialists have
long considered the figure misleading as we believe it double counts the cost of
investing in other investment trusts. A significant portion of MIGO's OCF (1.29%
out of a total OCF of 2.81% as per 16 October 2023 KID) is due to costs incurred
by the underlying investments and is not an additional cost to MIGO - and is
therefore not represented under Financial Highlights. Whether actual and
underlying costs are presented in one single figure or in a layered approach,
many platforms and readers will add them up, and in an industry where low fee
levels are sometimes misunderstood as the simplest way to evaluate how value is
delivered, this can become a problem.
The Board of MIGO, together with many other industry participants, has lobbied
the Association of Investment Companies and HM Treasury to intervene to confirm
that costs associated with listed investment companies should be excluded from
the `single figure' OCF across all retail product and service categories. This,
together with amended legislation, should show companies like ours as
competitive as they really are. The first results of this lobbying activity have
been in the news recently, as responsibility for this issue has been passed to
the FCA. We await clarity and a common sense solution.
Outlook
2023 has been a year of significant change for MIGO and for the investment trust
sector. Discounts across the investment trust sector have widened materially,
presenting numerous attractive investment opportunities for the Company, both
within sectors we have long followed and invested in, and in sectors which have
historically traded at tight discounts or, indeed, premiums to net asset value
where tight ratings have previously precluded our investment. With a new AIFM
and Investment Manager in place we feel MIGO is ready for what 2024 will bring.
As a result we believe the portfolio is well positioned both for future growth
in net asset values within portfolio companies and for the tightening of
discounts across the sector.
The Board is optimistic for the future of MIGO and thanks shareholders for their
continued support.
Richard Davidson
Chairman
19 December 2023
Investment Manager's Report
for the six months ended 31 October 2023
Performance
During the six months to 31 October 2023, our net asset value fell from 328.25p
to 319.13p. This represents a fall of 1.86% in capital terms once the payment of
a 3p dividend is taken into account. Incomparison, the Numis All-Share Index*
declined 11.7% in capital terms. Our shares also declined 2.51% and ended the
half year trading on a 2.7% discount
*The full investment companies universe as defined by Numis Securities Research
including both equities and alternative asset investment companies.
The period under review was one of the toughest in recent years for the
investment trust sector. Itfaced a perfect storm. This reflected a combination
of four factors: rising UK interest rate expectations, kneejerk selling in the
face of weak share prices, the rapid consolidation of the wealth management
industry and, most importantly, the methodology used to disclose costs which
makes closed end funds appear expensive when compared to their open ended peers.
Given these torrid conditions during which the FTSE All Share Closed End Index
slumped 8.47%, our portfolio held up well. This was partially due to the cash
balances we held entering the period.
Expectations as to where UK interest rates would peak steadily rose. At one
point, forecasts approached 6.5%. During the summer it was possible to buy a two
-year gilt on a redemption yield of 5.4%. Bearing in mind the vast majority of
this return is effectively tax free for many investors, the ability to get a
decent income from conventional sources undermined demand for many trusts. These
were created to find a solution to the lack of income at a time when deposit
rates were close to zero. In the new environment they needed to yield a premium
to gilts which meant that share prices needed to fall. The sharp declines
reflected a lack of demand rather than concerns about the quality of these
trusts' underlying investments. This provided an arbitrage opportunity given
that in many cases demand for what the trusts owned remained steady. It was
simply the structure in which they were held which was out of favour. This is
certainly true for our existing position in Aquila European Renewables which has
invested in solar assets in Iberia and wind farms in Scandinavia. It is in the
alternatives sector where the bulk of our research efforts are currently focused
seeking portfolios which have the scope to grow both net asset value and
dividends.
In recent decades the wealth management industry has been a significant owner of
trusts. Investec's recent merger with Rathbones highlights the extent of the
last decade's consolidation from hundreds of small independent private client
stockbrokers into a small number of major national chains. Given the newly
combined organisation will have assets under management of £100 billion, it is
difficult to see how these organisations will be able use closed ended funds in
the longer term. In order to move the needle investors would want potential
investments to represent at least 1% of their portfolio. In the case of a £100
billion pound pot this means buying a billion pounds' worth of shares. Even in
the case of the very largest trusts, this would be challenging. In the shorter
term any unwinding of exposure is likely to be felt in trusts with market
capitalisations between £500 million and £1 billion in size which until recently
were big enough for the mega chains to include within portfolios.
The most serious threat comes from the unintended consequences of regulation
which threatens the sector's very existence. The methodology behind the
calculation of underlying costs continues to drive capital from the sector.
Investment trusts now appear very expensive especially in alternative asset
classes such as shipping, private equity and second-hand life polices, where
these calculations throw up some very strange results and, as a result, many
trusts are uninvestable for some types of investors whose products are marketed
on grounds of low cost. Whilst there has been some encouragement lately with HM
Treasury acknowledging the problem and the issue being debated in the Houses of
Parliament, we may have to wait some time for reform. Furthermore, it is clear
that advisers have reacted to weak trust share prices associated with widening
discounts by selling.
These challenges have supressed demand and left the market oversupplied. Given
that trusts trade wherever the balance of supply and demand lies, it is not
surprising that discounts across the sector stand close to widest ever levels.
Previous occasions when share prices fell this far below the value of underlying
portfolios were times of extreme stress in markets such as the global financial
crisis.
We have heard the death knell sounded for investment trusts many times before.
The sector has always evolved and progressed. There are self help measures which
can be adopted. Oversupply can be dealt with via buy backs. The law of natural
selection is alive and well in the world of closed end funds and we expect to
see the recent trend of mergers and wind downs to continue. There are new
audiences to focus on, such as self-directed investors and newer wealth
management businesses often staffed by individuals who have departed the vast
chains. Despite experimental capital structures being mooted, the closed end
fund is the best structure for accessing illiquid asset classes. The travails of
open ended property funds sum up the challenges and explain why investment
trusts will continue to exist.
Contributors
Within our portfolio, uranium proved to be our greatest contributor as the
metal's spot price crept up steadily. A severe shortfall in supply is
developing. This has been exacerbated by energy security concerns given Russia
and Kazakhstan's roles in the supply chain. Turmoil in Niger is disrupting
supplies of Uranium to the French power industry. The decision to extend the
lives of many power stations in an effort to achieve net zero is leading to
demand being much greater than expected in the short term. Longer term demand
will be driven by the build out of the nuclear industry in the Middle East and
Asia. Whilst uranium is not a rare metal, it will be impossible to boost supply
meaningfully given the long lead times , often a decade, in turning a promising
deposit into a working mine.
Shares in Georgia Capital have continued their steady appreciation yet still
trade at an extreme discount. The country stands at the traditional economic
sweet spot where wealth has just reached the point where the population can
afford to visit pharmacies, get their cars serviced and insured and pay to get
their children educated. In the short term the local economy has been boosted by
the arrival of much of Russia's IT Industry who prefer Tbilisi to the risk of
being called up at home. Despite recent successes we doubt whether the trust has
a long-term future. In current conditions It is difficult enough for any
investment trust to generate a following, let alone an eastern European single
country fund. At some point this will be recognised and an alternative structure
sought. Should the team who are significant shareholders seek an exit, they will
achieve this by handing back assets to shareholders at market value. Georgia
Capital is exactly the sort of situation we seek. It offers returns from an
attractive macro view as well as a special situation element.
We have benefitted from the three-way merger between Nippon Active Value,
Atlantis Japan and Aberdeen Japan. We were able to exit from some of our
Atlantis shares at a modest discount. This transaction has removed what has
proved to be one of our more disappointing holdings and move the focus towards
activist investing in Japan, one of our current themes. We already owned shares
in Nippon Active Value which has become one of our largest holdings post-merger.
Other useful contributions came from exposure to India and Vietnam. Both
countries have benefited from multinationals seeking to diversify their supply
chains and manufacturing operations away from China, given the deterioration in
relations with the United States.
Detractors
Disappointments include Baker Steel Resources, Phoenix Spree Deutschland and
Macau Property Opportunities. In the case of Baker Steel there is currently
little interest in lending to develop new mines and many of the trust's projects
have been delayed in the absence of financing. It is noticeable that the
carrying value of these assets are now only a fraction of what they would be
worth as an operational mine. Baker Steel shares trade at a significant discount
to the already depressed carrying value. It would only need a couple of
successes to drive the share price significantly higher. It is a bit of a
mystery as to why Phoenix Spree is so depressed given that locally listed peer
Vonovia has been moving steadily higher in recent months. There remains a
shortage of residential property available to rent in Berlin. The most likely
reason is a lack of interest and knowledge about the asset class amongst UK
Investors. After a burst of excitement about the reopening of China post-Covid,
recent newsflow has been depressing and taken its toll on the Macau
Opportunities share price.
Despite solid progress within its portfolio, Oakley Capital's share price
struggled during the period. Private equity trusts have been particularly hard
-hit by the cost disclosure issues discussed earlier.
Additions
We have added to the unloved biotechnology sector by introducing a holding in
RTW Biotech Opportunities. The biotech sector is suffering from a hangover as
the result of the excesses of 2021. The sector tends to be categorised as early
stage and its share prices move inversely to Treasuries. Therefore, Biotechs
have been punished as interest rate expectations have increased and the sector
now trades at a twenty year low, leaving market prices out of synch with
fundamentals. Retail investors and investment tourists have long departed share
registers. The inverse correlation with Treasuries explains why
counterintuitively the sector acts defensively heading into a recession.
Increased innovation has led to significantly more drugs reaching the market
with a record number of approvals expected in 2023. Fifty per cent of new
products are developed by smaller companies so the long term winners are
unlikely to be the big index stocks. A significant number of blockbuster drugs
are coming off patent so big pharma has an urgent need and the necessary cash to
buy Biotechs in order to restock product lines. The Inflation Reduction Act
ensures that drug pricing is off the agenda in the run up to the forthcoming US
election. We have adopted a package approach owning Biotech Growth and
International Biotechnology in addition to RTW Biotech. Discount controls mean
that the value lies in underlying portfolios rather than these trusts trading
below stated NAV.
We bought a position in Ecofin US Renewables after its Texan wind farm was
damaged by a tornado. The utility substation which connects the site to the grid
was destroyed. A new connection is being made via another substation. In the
meantime, the trust will pay a reduced dividend. We believe that the reaction in
the share price was out of proportion to the challenges.
Departures
Industrials REIT was acquired by Blackstone at the beginning of the period and
Atlantis Japan was taken over by Nippon Active Value as noted earlier. Vietnam
Enterprise was sold into strength leaving our Vietnam exposure focussed on
VinaCapital Vietnam Opportunities.
Outlook
In recent weeks the outlook has brightened as expectations of further interest
rate rises have petered out. Investors will now anticipate their eventual
decline. Many investment trust share prices are languishing at levels which
generate attractive yields for investors buying today. Should interest rates
actually fall, this attraction will grow further. In the medium term such wide
discounts are unsustainable as, if the market fails to properly value closed
ended funds for structural reasons, then the real world will claim the
underlying assets on the cheap albeit at higher levels than today. Furthermore,
should there prove to be a sensible reform of the cost disclosure regime, we
should expect trust share prices to rally sharply as investors who have been
forced onto the sidelines are allowed to return to the market. Generally
speaking, when discounts have become very wide trust investors have then
benefitted from the powerful combination of rising net asset values and
narrowing discounts. Given the widespread opportunities to exploit mispricings,
our cash position steadily declined during the period under review and has
continued to decline since.
Nick Greenwood
Asset Value Investors Limited
19 December 2023
Average underlying discount*
Top 12 stocks Weight (%) Discount (%)
VinaCapital Vietnam Opportunity Fund 6.4% (19.6)
Georgia Capital 5.4% (59.2)
Yellow Cake 4.9% (16.6)
Geiger Counter 4.8% (26.0)
Oakley Capital Investments 4.2% (38.3)
Nippon Active Value Fund 4.0% (8.9)
JPMorgan Indian Investment Trust 3.8% (19.8)
Baker Steel Resources Trust 3.2% (48.7)
NB Private Equity Partners 3.2% (30.1)
Aquila European Renewables 3.1% (26.4)
Phoenix Spree Deutschland 2.7% (61.4)
New Star Investment Trust 2.7% (38.0)
Average discount 48.4% (32.8)1
Source: Bloomberg, 31.10.2023.
1Please note that the average discount figure only takes into account the top 12
holdings in the portfolio.
Portfolio Valuation
as at 31 October 2023
Security Investment Region Valuation £'000 %
Sector of NAV
VinaCapital Vietnam Private Asia 4,730 6.4%
Opportunity Fund Equity Pacific -
Vietnam
Georgia Capital Equity Europe 3,965 5.4%
Yellow Cake* Mining - Global 3,588 4.9%
Uranium
Geiger Counter# Mining - Global 3,515 4.8%
Uranium
Oakley Capital Private Global 3,135 4.2%
Investments Equity
Nippon Active Value Equity - Japan 2,988 4.0%
Fund Small Cap
JPMorgan Indian Equity India 2,815 3.8%
Investment Trust
Baker Steel Resources Mining Global 2,397 3.2%
Trust
NB Private Equity Private North 2,382 3.2%
Partners Equity America
Aquila European Other - Europe 2,295 3.1%
Renewables Renewables
31,809 43.0%
Phoenix Spree Real Estate Europe 2,028 2.7%
Deutschland
New Star Investment Equity Global 2,026 2.7%
Trust
Real Estate Investors* Real Estate UK 1,994 2.7%
Duke Royalty* Other - Global 1,985 2.7%
Alternative
Lender
EPE Special Private UK 1,899 2.6%
Opportunities* Equity
International Equity UK 1,540 2.1%
Biotechnology Trust
River & Mercantile UK Equity - UK 1,502 2.0%
Micro Cap Investment Small Cap
Co
CQS Natural Resources Mining Global 1,499 2.0%
Growth AndIncome
Hansa Investment Co Equity Global 1,373 1.9%
Biotech Growth Trust Equity UK 1,364 1.8%
49,016 66.3%
Downing Strategic Equity - UK 1,328 1.8%
Micro-Cap Investment Small Cap
Trust
Dunedin Enterprise Private Global 1,269 1.7%
Investment Trust? Equity
Ground Rents Income Real Estate UK 1,240 1.7%
Fund
Life Settlement Assets Other - Life North 1,183 1.6%
Policies America
Macau Property Real Estate Asia 1,120 1.5%
Opportunities Fund? Pacific -
China
India Capital Growth Equity India 1,029 1.4%
Fund*
Amedeo Air Four Plus Other - UK 1,013 1.4%
Specialist
Fund
Ecofin US Renewables Private North 995 1.3%
Infrastructure Trust Equity America
Schroder Capital Equity Global 961 1.3%
Global Innovation
Trust
Rockwood Strategic* Equity - UK 889 1.2%
Small Cap
60,042 81.2%
Rights & Issues Equity - UK 817 1.1%
Investment Trust Small Cap
VPC Speciality Lending Other - Global 787 1.1%
Investments Alternative
Lender
Henderson Equity UK 735 1.0%
Opportunities Trust
AVI Japan Opportunity Equity Japan 733 1.0%
Trust
Schroder British Equity UK 701 0.9%
Opportunities Trust
Chrysalis Investments Private Europe 685 0.9%
Equity
RTW Biotech Equity Global 675 0.9%
Opportunities
Marwyn Value Investors Equity UK 647 0.9%
EJF Investments Other - Global 432 0.6%
Specialist
Fund
Grit Real Estate Real Estate Africa 385 0.5%
Income
66,639 90.1%
Chelverton Growth Equity UK 177 0.2%
Trust
Aseana Properties? Real Estate Asia 110 0.1%
Pacific
Reconstruction Capital Equity Europe 67 0.1%
II*?
Better Capital PCC?^ Private UK 62 0.1%
Equity
RENN Universal?^ Equity North 50 0.1%
America
Cambrium Global Other - Global 33 0.0%
Timberland*? Forestry
Crystal Amber Fund* Equity - UK 30 0.0%
Small Cap
Total investments 67,166 90.8%
Other current assets 6,790 9.2%
(including net cash)
Net asset value 73,956 100.0%
*AIM/NEX Listed
?In liquidation, in a process of realisation or has a fixed life.
#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 23,072,797
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, ESG and climate change risk, UK
regulatory risk, UK legal risk and governance risk). These risks were explained
in detail on pages 17 to 22 in the Annual Report for the year ended 30 April
2023.
In addition, a deterioration in economic environment is recognised as a
principal risk and uncertainty, 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 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
19 December 2023
Condensed Income Statement
Six months Six months
to to
31 October 31 October
2023 2022
(unaudited) (unaudited)
Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Losses on - (1,697) (1,697) - (9,492) (9,492)
investments
Income 4 936 - 936 754 - 754
Investment (250) - (250) (273) - (273)
management
fee
Other (525) - (525) (286) - (286)
expenses
Return/(loss 161 (1,697) (1,536) 195 (9,492) (9,297)
) before
finance
costs
andtaxation
Finance (52) - (52) (53) - (53)
costs
Return/(loss 109 (1,697) (1,588) 142 (9,492) (9,350)
) before
taxation
Taxation - - - - - -
Return/(loss 109 (1,697) (1,588) 142 (9,492) (9,350)
) after
taxation
Return/(loss 0.5 (7.1) (6.7) 0.6 (37.8) (37.2)
) per
ordinary
share
(pence)
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 Special Capital Revenue
capital reserve account reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Six months to
31
October 2023
(Unaudited)
Balance at 30 243 111 29,088 - 49,175 1,231 79,848
April
2023
Buyback of (11) 11 - - (3,597) - (3,597)
shares
for
cancellation
Dividends - - - - - (707) (707)
paid
Loss for the - - - - (1,697) 109 (1,588)
period
Balance at 31 232 122 29,088 - 43,881 633 73,956
October 2023
Six months to
31October2022
(Unaudited)
Balance at 30 261 89 27,729 1,222 65,034 349 94,684
April
2022
Buyback of (12) 12 - (1,222) (2,787) - (4,009)
shares
for
cancellation
Share 2 - 675 - - - 677
issuance
Dividends - - - - - (100) (100)
paid
Return for - - - - (9,492) 142 (9,350)
the
period
Balance at 31 251 101 28,404 - 52,755 391 81,902
October 2022
The notes form an integral part of these financial statements.
Condensed Statement of Financial Position
As at As at
31 October 2023 30 April 2023
(unaudited) (audited)
Note £'000 £'000
Non-current assets
Investments 5 67,166 67,855
Current assets
Debtors 55 361
Cash 6,995 13,139
7,050 13,500
Creditors: amounts
falling due within one
year
Creditors (260) (1,507)
(260) (1,507)
Net current assets 6,790 11,993
Net assets 73,956 79,848
Share capital and
reserves:
Share capital 232 243
Share premium account 29,088 29,088
Capital redemption 122 111
reserve
Capital reserve 43,881 49,175
Revenue reserve 633 1,231
Total shareholders' 73,956 79,848
funds
Net asset value per 319.2 328.6
ordinary share (pence)
The net asset value per ordinary share is based on 23,172,797 shares, being the
shares in issue as at 31 October 2023 (30 April 2023: 24,297,797).
The notes form an integral part of these financial statements.
Condensed Statement of Cash Flow
Six months to Six months to
31 October 2023 31 October 2022
(unaudited) (unaudited)
£'000 £'000
Net cash inflow from 441 311
operating activities
Investing activities
Purchases of investments (11,286) (5,546)
Sales of investments 9,043 10,107
Net cash (outflow)/inflow (2,243) 4,561
from investing activities
Financing activities
Share issuance - 677
Buyback of shares for (3,597) (4,009)
cancellation
Dividends paid (706) (100)
Finance costs paid (35) (35)
Net cash outflow from (4,338) (3,467)
financing activities
(Decrease)/increase in (6,140) 1,405
cash
Reconciliation of net
cash flow movement in
funds:
Cash at beginning of 13,139 10,891
period
Exchange rate movements (4) (4)
(Decrease)/increase in (6,140) 1,405
cash
(Decrease)/increase in (6,144) 1,401
net cash
Cash at end of period 6,995 12,292
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 2023.
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 2023 and 31
October 2022 has not been audited or reviewed by the Company's external
auditors.
The information for the year ended 30 April 2023 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 2023 31 October 2022
£'000 £'000
Income from investments:
UK dividend income 328 175
Non UK dividend income 373 453
Property income dividends - 110
Total income from investments 701 738
Bank interest 235 16
Total income 936 754
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 2023
Investment - Equities 67,022 - 144 67,166
Total 67,022 - 144 67,166
As at 30 April 2023
Investment - Equities 67,672 - 183 67,855
Total 67,672 - 183 67,855
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 2023 30 April 2023
Closing NAV per share (p) 319.2 328.6
Closing share price (p) 310.5 318.5
(Discount) (2.7)% (3.1)%
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 2023 31 October 2023 31 October 2023
Closing NAV per share 319.2 319.2 319.2
(p)
Dividends reinvested 3.0 3.4 3.4
(p)
Dividend adjusted 322.2 322.6 322.6
closing NAV per share
(p)
Opening NAV per share 328.6 326.2 270.4
(p)
Dividend adjusted NAV (1.9)% (1.2)% 19.3%
per share returns
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 2023 30 April 2023
£'000 £'000
Total expenses per Income Statement 827 1,199
Less non-recurring expenses (198) -
Total expenses - annualised 1,258 1,199
Average net assets 78,125 83,660
Ongoing charges 1.6% 1.4%
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 2023 31 October 2023 31 October 2023
Closing share price 310.5 310.5 310.5
(p)
Dividends reinvested 3.0 3.4 3.4
(p)
Dividend adjusted 313.5 313.9 313.9
closing share price
(p)
Opening share price 318.5 325.5 271.0
(p)
Dividend adjusted (1.6)% (3.6)% 15.8%
share returns
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 2023 30 April 2023
Standard deviation of daily NAV (A) 0.4% 0.5%
Number of trading days 128 250
Square root of the number of trading days (B) 11.3 15.8
Annualised volatility (A*B) 4.5% 8.2%
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 number3436594
ISIN numberGB0034365949
Bloomberg symbolMIGO
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.
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 15December 2023. AVI is an experienced manager of
investment trusts with assets under management of £1.4 billion as at 31 October
2023, deep sector expertise and supportive analyst resource.
Previously, MIGO's Investment Manager was Premier Fund Managers Limited.
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
Ian Henderson
*Katya Thomson will resign from her role as independent non-executive Director
and Audit Committee Chairman with effect from the close of business on 29
December 2023.
Caroline Gulliver has been appointed as independent non-executive Director and
Audit Committee Chairman with effect from the same day.
Registered Office
25 Southampton Buildings
London WC2A 1AL
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 and Investment Manager
Asset Value Investors Limited
2 Cavendish Square
London W1G 0PU
Website: www.assetvalueinvestors.com
Asset Value Investors Limited was appointed as AIFM and Investment Manager with
effect from close of business on15December 2023, taking over from Premier
Portfolio Managers Limited and Premier Fund Managers Limited respectively.
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
***Up until the close of business on 15 December 2023, The Bank of New York
Mellon (International) Limited served as Depositary and Custodian.
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.
This information was brought to you by Cision http://news.cision.com
END
(END) Dow Jones Newswires
December 19, 2023 04:43 ET (09:43 GMT)
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