TIDMSIGT
RNS Number : 4996I
Momentum Multi-Asset Value Trust
05 December 2022
To: RNS
From: Momentum Multi-Asset Value Trust plc
LEI: 213800OQTUSRFDIL9L29
Date: 5 December 2022
MOMENTUM MULTI-ASSET VALUE TRUST PLC
ANNOUNCEMENT OF HALF-YEARLY FINANCIAL REPORT
Unaudited results for the six months ended 31 October 2022
Chairman's Statement
KEY FACTS
-- Net asset value total return -16.7% vs Benchmark +8.8%
-- Share price total return -16.3%
-- Annualised volatility 13.6% vs 15.1% for the MSCI UK All Cap Index
-- Quarterly dividend increased to 1.80p per shar e
-- Annualised yield of 4.8% based on the 148.5p period-end share price
Source: MSCI/Morningstar/Momentum Global Investment
Management
OVERVIEW
Inflation is now at its highest levels in 40 years or more, at
rates that have not been experienced by most people of working age.
There are many things that rightly concern most of us at the
moment, not least rising geo-political issues and climate change
but, on a day-to-day basis, inflation, or the cost of living, is
the dominant concern. Understanding how we got here should provide
some clues as to how we might recover. Many commentators had long
worried that loose monetary policy (largely as a response to the
2008 Global Financial Crisis) would at some point lead to higher
consumer price inflation rather than only affecting the values of
capital assets. But equally, most economists and investors had
become too sanguine that Central Banks would be willing and able to
reverse Quantitative Easing (QE) without causing too many shocks.
The impact of this was exacerbated by the onset of COVID-19 and few
commentators predicted governments' reactions to it, the aftermath
of labour market upheavals, supply chain bottlenecks, the reversal
of globalisation and the further easing of monetary conditions. In
addition, the Russian invasion of Ukraine has resulted in energy
and agricultural markets dislocations leading to shortages and
subsequent significant price increases.
These two seismic events, on top of the pre-existing loose
monetary conditions, have led to the consumer price inflation we
see today. It feels too glib to suggest some things will get worse
before they get better, though that is the reality, but
stockmarkets usually begin to discount or reflect recovery before
it actually happens. Governments and Central Banks must be bold
enough to improve monetary conditions by reversing QE. Fiscal
policy must be conducive to encourage individuals, industries and
businesses to adjust and manage change. The timings and costs of
the end of the global pandemic and the war in Ukraine, both human
and financial, are harder to predict. In the meantime, we expect to
see a period of continued and possibly significant volatility in
economies and financial markets.
PERFORMANCE
MAVT adopted its inflation-linked Benchmark of CPI plus 6% per
annum in July 2017. Your Board measures performance against this
Benchmark over a 'typical investment cycle' which is defined as one
that spans five to ten years. But 'typical' is not an adjective
that any reasonable observer could use to describe the last three
years or so, far less the last 12 months. MAVT generated a net
asset value ('NAV') total return per share for the six-month period
(the 'Period') of -16.7%, compared with the Benchmark return of
+8.8%. Indeed, the performance over the 12 months prior to the
Period end is even starker with a NAV total return per share of
-17.2% compared with the Benchmark return of +17.1%. Your Board and
Manager do not seek to hide from these disappointing performance
figures, but we do seek to put them in context. Relative
performance can change significantly over short periods, in both
directions. Looking back 12 months to last year's Half-Yearly
Report, MAVT was well ahead of its Benchmark and other comparator
indices over all medium- and longer-term trailing periods.
MAVT's portfolio is diversified but the investment style and the
underlying assets - each and every one - must represent Value.
There are times when other investment styles perform better than
Value and we have endured such a period of late, when Growth has
been in favour. Given this underperformance of Value, your Board
and Manager believe that the portfolio currently represents
outstanding potential which will, at some point, be recognised by
the stock market. If nothing else, the events of the last three
years or so have amply demonstrated how quickly and significantly
events and investor perceptions change.
The Q&A with the Manager provides greater analysis and
explanation of MAVT's performance for the Period.
DIVIDS
Your Company declared two interim dividends each of 1.8p per
share for the Period, an increase of 7.1% over the equivalent
dividends last year. Based on this quarterly rate the shares
yielded 4.8% on the share price of 148.5p at the Period end.
It is the Board's intention, barring unforeseen circumstances,
to declare aggregate dividends for the year to 30 April 2023 of at
least 7.2p per share. Given the outlook for inflation, it is very
likely the fourth interim dividend due to be announced in May 2023
will be higher than the current quarterly rate of 1.8p per share,
consistent with the Board's intention to increase dividends by at
least inflation over the longer run.
DISCOUNT CONTROL MECHANISM ('DCM')
During the Period MAVT bought back 2,167,692 shares costing
GBP3.6m, and issued no shares. Shares are bought back at a small
discount to the NAV per share, and issued at a small premium,
providing a small enhancement to NAV. However, the DCM primarily
operates to provide liquidity to Shareholders and ensures the lack
of any material discount of the share price to the underlying NAV.
These features are of real value to Shareholders and your Board
remains resolute in its application of the DCM to ensure these
benefits are maintained.
GEARING
At the end of the Period, MAVT renewed its GBP10m revolving
credit facility with The Royal Bank of Scotland International Ltd
for a further two years. At the Period end, GBP6.25m was drawn down
and during the Period the average net gearing level was 11.9%. A
small amount of the drawn facility is held in cash to allow instant
access to funds should the need arise. The undrawn element of the
facility is in place to assist largely with the operation of the
DCM, enabling gearing levels to be maintained when the DCM results
in the issuance of new shares, and providing short-term working
capital, if necessary, when shares are bought back.
ANNUAL GENERAL MEETING ('AGM')
At the AGM held on 26 July 2022, Shareholders approved all
resolutions, each by a majority of over 98%, including those
resolutions that help with the effective management of the DCM,
specifically allowing the Company to issue shares equivalent to 30%
of its equity and to buy back up to 14.99%.
OUTLOOK
Past experience suggests the best strategy when markets are
depressed and sentiment is low is to stay invested and rely on
diversified portfolios to navigate volatile markets. This enables
your Manager to capture the recovery that will inevitably come,
probably beginning when hopes are at their lowest. History shows
that investors tend to over-pay for certainty - or at the least the
illusion of it - and under-price uncertainty. In other words,
taking considered risk is a good thing and indeed essential to
making good returns over time.
The prices of many assets held in the portfolio have eroded over
the Period, but the vital issue is whether such erosion is
permanent or temporary and due to fundamental factors or sentiment
and valuation ratings. Recent political turmoil, both at home and
abroad, has continued to agitate financial markets. In the face of
the economic difficulties that almost certainly lie ahead, your
Board is confident that your Manager is well able to discern
between the causal factors and therefore believes there will be
better performance periods ahead.
Jimmy McCulloch
Chairman
2 December 2022
Q&A with the Manager
Q1 Could you outline MAVT's performance for the Period?
A1 Your Company's NAV returned -16.7% against the Benchmark
return of +8.8%. Over the Period, the prices of most asset classes
declined, and inflation hit record levels. We acknowledge that
MAVT's short-term performance has been disappointing. However, we
consider our investments over the long term and our contrarian
investment style may result in periods of negative returns. Your
Company has historically participated strongly in any subsequent
market recovery, as detailed in A8 below, and we expect this
pattern to continue.
Q2 What were the key factors affecting MAVT's performance?
A2 Global equities and bonds have fallen sharply this year and
there have not been many places for investors to hide. The main
drag on performance can be attributed to the portfolio's strong
bias towards UK assets and Sterling.
In addition to the impact of recent political events in the UK,
your Company has suffered from continued fallout from COVID-19 with
China's sporadic lockdowns still causing supply chain issues and
shipping backlogs, which have only recently started to subside.
Furthermore, rising inflation around the world and the impact of
the war in Ukraine continues to depress markets and sentiment.
Many of our UK Equity holdings are in smaller and mid-cap
companies, which are often under-researched or overlooked by larger
investors and can therefore yield interesting opportunities.
However, extreme negative sentiment towards the UK has resulted in
investors withdrawing capital indiscriminately from smaller
companies with a domestic focus. In our view, the selling in this
area of the market has left many companies with strong fundamentals
trading at very low valuations. Looking across global markets there
is not a region, investment style or size index that has
underperformed the MSCI UK Mid Cap Value Index over the Period. The
constituents of this index best represent our preferred UK Equity
allocation.
Our Overseas Equity exposure has fared better, with our holdings
in Japan and Asia proving more resilient over the Period.
In most periods of the economic cycle our Specialist Assets
exposure would act as a portfolio diversifier. While rising
interest rates and wider market turmoil have resulted in falls in
this section of the portfolio, this has not been to the same extent
as in the broader equity portfolio.
Q3 The investment landscape has been challenging this year. How
have you adapted the portfolio to manage this?
A3 Aligned with our contrarian approach, we have maintained, and
indeed expanded, our exposure to the UK, principally by adding to
existing positions where we have seen compelling opportunities on
grounds of valuation. We have reduced our Overseas Equity exposure
which has held up relatively well to these market challenges, and
have sold into relative strength. Over the long term, we are
confident this exposure will provide strong returns as both equity
valuations and currencies revert to more normal levels. However, in
the short term we appreciate that this goes against the consensus
view.
In addition to these changes in equities, we continued to reduce
our Specialist Assets exposure to infrastructure and property due
to strong performance and holdings trading at premiums. Given their
sensitivity to interest rates, this proved to be the correct
decision but, perhaps with hindsight, we could have been quicker
and more aggressive in reducing our exposure.
Q4 Investors are increasingly concerned about inflation. What
impact do higher inflation and rising interest rates have on the
portfolio?
A4 We are clearly in a period in which the valuation of risk
assets is being reset to reflect higher interest rates. This
heightened uncertainty has resulted in prices in the mid-cap sector
falling even further as many investors are unsure how to value
assets, so they tend to sell and crystallise their losses. Share
prices have moved quickly, but it will take time for underlying
corporate earnings to adjust. That said, there should be some
positive consequences for the portfolio; for example, following the
recent hikes in mortgage rates, we expect to see a squeeze in the
rental market in terms of more demand and less supply. This should
result in higher rents for some of our property holdings.
Many of our Specialist Asset holdings have either implicit or
explicit inflation linkage. For example, renewable energy trusts
such as Greencoat UK Wind will grow their well-covered dividends in
line with the Retail Price Index. Meanwhile, rising inflation has
increased subscriptions for music streaming which should benefit
the music royalty trusts in the portfolio (Hipgnosis Songs Fund and
Round Hill Music Royalty Fund). Music royalty funds have
underperformed in the Period. This is due to investors predicting
lower valuations as the value of future royalties is lower in a
higher interest rate environment. We believe the market has focused
on this negative, missing the positives of strong potential income
growth in the coming years which have the ability to offset current
valuation pressures.
Q5 What effect are currency movements having on the
portfolio?
A5 Sterling weakened significantly against most major currencies
over the Period, particularly against the US Dollar. Therefore, our
Overseas Equity exposure has performed well in Sterling terms,
despite global markets declining significantly. In some cases, the
currency depreciation has fully offset market falls. However, we
have lower exposure to overseas assets than many of our peers, so
we have not benefitted as much as others in this regard. This sets
the portfolio up for a potential uplift versus peers should the
Sterling/Dollar rate return to more normal levels. This has already
begun as we have seen strong Sterling appreciation during
November.
Q6 Many investors have seen significant income impairment. How
is MAVT navigating such challenges?
A6 The underlying portfolio has a strong focus on income, which
is diversified across many asset classes and regions. Over the
Period we have not seen any impairment to income from the portfolio
and, in some cases, dividends have increased. In addition, the
closed-end structure of your Company means that distributable
reserves can be used to support the dividend if needed.
Q7 Are you seeing compelling new investment opportunities? What
new holdings have been added to the portfolio and what did they
replace?
A7 Over the Period we have taken profits from strongly
performing investments and have used that capital to add to some of
our existing holdings. We have made one new investment in Capita,
where the fundamentals, low debt position, and pension surplus make
the current valuation look attractive.
Q8 What is your outlook for the Company for the year ahead?
A8 The portfolio has clearly had a challenging year but, if we
look at the reasons behind this, we can also see how this may set
your Company up for a positive year ahead.
Major macroeconomic shocks usually cause capital to exit quickly
and retreat to the most liquid assets. However, taking into account
the historical returns of your Company, it can be seen that the
best-performing periods have been preceded by a poor-performing
period. If we examine the low points in MAVT's NAV during recent
macro shocks and compare the performance over the following year,
we can see the NAV (total return) gained 44% following the global
financial crisis, 20% following the sovereign debt crisis, 31%
following the Brexit vote and 71% following the COVID-19
sell-off.
Over the next year, we expect to see lower inflation and
interest rates should peak with stocks consequently re-rating from
extremely low multiples. This environment should prove particularly
positive for UK mid-cap companies and, therefore, your Company's
portfolio.
Your investment team has clearly demonstrated that we don't
panic in periods of market turmoil but concentrate on the long-term
cash generation within the portfolio. This enables us to take
advantage of fearful markets by shifting capital to assets where we
believe valuations have detached from reality.
Contribution analysis by individual holdings in the Period
Contributors Asset class Contribution
1. Doric Nimrod Air Two Specialist Assets +0.44%
-------------------- -------------
2. Doric Nimrod Air Three Specialist Assets +0.24%
-------------------- -------------
3. Diversified Energy Company UK Equities +0.17%
-------------------- -------------
4. JLEN Environmental Assets
Group Specialist Assets +0.14%
-------------------- -------------
5. Accrol Group UK Equities +0.07%
-------------------- -------------
Detractors Asset class Contribution
-------------------- -------------
1. Marston's UK Equities -0.79%
-------------------- -------------
2. Chrysalis Investments Specialist Assets -0.78%
-------------------- -------------
3. Schroder UK Public Private
Trust Specialist Assets -0.73%
-------------------- -------------
4. Ninety One Global Gold
Fund Defensive Assets -0.70%
-------------------- -------------
5. Strix Group UK Equities -0.65%
-------------------- -------------
Momentum Global Investment Management
2 December 2022
Enquiries:
Steve Hunter, Momentum Global Investment
Management Ltd 0151 906 2481
Mobile 07470 478974
Gary Moglione, Momentum Global Investment
Management Ltd 0151 906 2461
Mobile 07469 852685
Sally Walton, SEC Newgate (media enquiries) 020 3757 6872
Mobile 07961 463864
Juniper Partners Limited, Company Secretary 0131 378 0500
Unaudited Income Statement
Six months ended Six months ended 31
31 October 2022 (unaudited) October 2021 (unaudited)
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ------ ---------- ---------- --------- ------------- ------------- --------
(Losses)/gains on investments - (9,653) (9,653) - 457 457
Currency gains/(losses) - 8 8 - (12) (12)
Income 2 1,545 - 1,545 1,540 - 1,540
Investment management
fee (69) (160) (229) (81) (187) (268)
Administrative expenses (254) - (254) (267) - (267)
Profit/(loss) before
finance costs and taxation 1,222 (9,805) (8,583) 1,192 258 1,450
Finance costs (32) (73) (105) (19) (36) (55)
--------------------------------- ------ ---------- ---------- --------- ------------- ------------- --------
Profit/(loss) before
taxation 1,190 (9,878) (8,688) 1,173 222 1,395
Taxation (12) - (12) (12) - (12)
--------------------------------- ------ ---------- ---------- --------- ------------- ------------- --------
Profit/(loss) for
the Period/ total comprehensive
income 1,178 (9,878) (8,700) 1,161 222 1,383
--------------------------------- ------ ---------- ---------- --------- ------------- ------------- --------
Return per share (pence) 3 3.88 (32.54) (28.66) 3.42 0.65 4.07
The total column of this statement represents the profit and
loss account of the Company. The supplementary revenue and capital
columns are both prepared under guidance published by the
Association of Investment Companies.
All revenue and capital items in the above statement derive from
continuing operations.
Audited Income Statement
Year ended 30 April
2022 (audited)
Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ -------- -------- --------
Losses on investments - (1,453) (1,453)
Currency losses - (15) (15)
Income 2 3,167 - 3,167
Investment management
fee (155) (366) (521)
Administrative expenses (522) - (522)
Profit/(loss) before
finance costs and
taxation 2,490 (1,834) 656
Finance costs (34) (81) (115)
------------------------------- ------ -------- -------- --------
Profit/(loss) before
taxation 2,456 (1,915) 541
Taxation (38) - (38)
------------------------------- ------ -------- -------- --------
Profit/(loss) for
the year/total comprehensive
income 2,418 (1,915) 503
------------------------------- ------ -------- -------- --------
Return per share
(pence) 3 7.30 (5.78) 1.52
The total column of this statement represents the profit and
loss account of the Company. The supplementary revenue and capital
columns are both prepared under guidance published by the
Association of Investment Companies.
All revenue and capital items in the above statement derive from
continuing operations.
Balance Sheet
As at As at As at
31 October 31 October 30 April
2022 2021 2022
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Fixed assets
Investments at fair value through
profit or loss 7 49,433 68,490 63,401
----------------------------------- ------------ ------------ ----------
Current assets
Debtors and prepayments 248 869 573
Cash 553 509 670
----------------------------------- ------------ ------------ ----------
801 1,378 1,243
----------------------------------- ------------ ------------ ----------
Creditors: amounts falling
due within one year
Bank loan (6,250) (7,000) (7,000)
Other creditors (152) (165) (276)
----------------------------------- ------------ ------------ ----------
(6,402) (7,165) (7,276)
----------------------------------- ------------ ------------ ----------
Net current liabilities (5,601) (5,787) (6,033)
----------------------------------- ------------ ------------ ----------
Net assets 43,832 62,703 57,368
----------------------------------- ------------ ------------ ----------
Capital and reserves
Called-up share capital 12,400 12,400 12,400
Share premium account 16,043 16,029 16,063
Special reserve 9,506 16,508 13,116
Capital redemption reserve 2,099 2,099 2,099
Capital reserve - unrealised (18,876) (6,228) (9,238)
Capital reserve - realised 20,428 19,795 20,668
Revenue reserve 2,232 2,100 2,260
----------------------------------- ------------ ------------ ----------
Equity shareholders' funds 43,832 62,703 57,368
----------------------------------- ------------ ------------ ----------
Net asset value per share
(pence) 5 150.51 189.27 183.34
----------------------------------- ------------ ------------ ----------
Statement of Changes in Equity
Six months ended 31 October 2022 (unaudited)
Notes Share Share Special Capital Capital Capital
capital premium reserve redemption reserve reserve Revenue
reserve - - reserve Total
unrealised realised
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
Balance at 30
April 2022 12,400 16,063 13,116 2,099 (9,238) 20,668 2,260 57,368
Total
comprehensive
income - - - - (9,638) (240) 1,178 (8,700)
Dividends paid 4 - - - - - (1,206) (1,206)
Discount
Control
Mechanism
costs - (20) - - - - - (20)
Shares bought
back into
Treasury 6 - - (3,610) - - - - (3,610)
--------------- ------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
Balance at
31 October
2022 12,400 16,043 9,506 2,099 (18,876) 20,428 2,232 43,832
--------------- ------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
Six months ended 31 October 2021 (unaudited)
Notes Share Share Special Capital Capital Capital
capital premium reserve redemption reserve reserve Revenue
reserve - - realised reserve Total
unrealised
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------ --------- --------- --------- ----------- ----------- ------------ ---------- --------
Balance at 30
April 2021 12,400 16,044 20,651 2,099 (5,498) 18,843 2,082 66,621
Total
comprehensive
income - - - - (730) 952 1,161 1,383
Dividends paid 4 - - - - - - (1,143) (1,143)
Discount
Control
Mechanism
costs - (15) - - - - - (15)
Shares bought
back into
Treasury 6 - - (4,143) - - - - (4,143)
--------------- ------ --------- --------- --------- ----------- ----------- ------------ ---------- --------
Balance at
31 October
2021 12,400 16,029 16,508 2,099 (6,228) 19,795 2,100 62,703
--------------- ------ --------- --------- --------- ----------- ----------- ------------ ---------- --------
Year ended 30 April 2022 (audited)
Notes Share Share Special Capital Capital Capital
capital premium reserve redemption reserve reserve Revenue
reserve - - reserve Total
unrealised realised
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------ --------- --------- --------- -------------- ----------- --------- ------------ ---------
Balance at
30 April 2021 12,400 16,044 20,651 2,099 (5,498) 18,843 2,082 66,621
Total
comprehensive
income - - - - (3,740) 1,825 2,418 503
Dividends
paid 4 - - - - - - (2,240) (2,240)
Discount
Control
Mechanism
costs - (34) - - - - - (34)
Shares issued
from Treasury 53 260 - - - - 313
Shares bought
back into
Treasury 6 - - (7,795) - - - - (7,795)
---------------- ------ --------- --------- --------- -------------- ----------- --------- ------------ ---------
Balance at
30 April 2022 12,400 16,063 13,116 2,099 (9,238) 20,668 2,260 57,368
---------------- ------ --------- --------- --------- -------------- ----------- --------- ------------ ---------
Cash Flow Statement
Six months Six months Year
ended 31 ended 31
October October ended 30
2022 2021 April 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Net return before finance costs
and taxation (8,583) 1,450 656
Adjustments for:
Loss/(gain) on investments 9,653 (457) 1,453
Exchange movements (8) 12 15
Loan interest paid (108) (49) (74)
Tax paid (25) (12) (38)
Decrease/(increase) in dividends
receivable 308 188 (105)
Increase in other debtors (21) (23) (15)
Decrease in other creditors (51) (64) (61)
-------------------------------------------------------- -------------- ---------------------- ------------
Net cash inflow from operating
activities 1,165 1,045 1,831
-------------------------------------------------------- -------------- ---------------------- ------------
Investing activities
Purchase of investments (2,141) (5,148) (11,735)
Sales of investments 6,418 9,238 19,660
-------------------------------------------------------- -------------- ---------------------- ------------
Net cash inflow from investing
activities 4,277 4,090 7,925
-------------------------------------------------------- -------------- ---------------------- ------------
Financing activities
Repayment of loan (750) - -
Proceeds of share issues - - 313
Cost of share buy-backs (3,611) (4,347) (8,020)
Equity dividends paid (1,206) (1,143) (2,240)
-------------------------------------------------------- -------------- ---------------------- ------------
Net cash outflow from financing
activities (5,567) (5,490) (9,947)
-------------------------------------------------------- -------------- ---------------------- ------------
Decrease in cash (125) (355) (191)
Exchange movements 8 (12) (15)
Opening balance 670 876 876
-------------------------------------------------------- -------------- ---------------------- ------------
Closing balance 553 509 670
-------------------------------------------------------- -------------- ---------------------- ------------
Notes
1. Accounting policies
Basis of accounting
The half-yearly financial statements have been prepared in
accordance with FRS 104 'Interim Financial Reporting', UK Generally
Accepted Accounting Practice ('UK GAAP') and the Statement of
Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' (issued by the Association of
Investment Companies in July 2022). They have also been prepared on
the assumption that approval as an investment trust will continue
to be granted. The half-yearly financial statements have been
prepared on a going concern basis and have been prepared using the
same accounting policies as the preceding annual financial
statements.
2. Income
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2022 2021 2022
GBP'000 GBP'000 GBP'000
------------------------- -------------- -------------- ------------
Income from investments
UK franked income 620 587 1,309
UK unfranked income 218 202 276
Overseas dividends 707 751 1,582
------------------------- -------------- -------------- ------------
Total income 1,545 1,540 3,167
------------------------- -------------- -------------- ------------
3. Return per share
The revenue return per Ordinary share is calculated on net
revenue on ordinary activities after taxation for the Period of
GBP1,178,000 (31 October 2021 - GBP1,161,000; 30 April 2022 -
GBP2,418,000) and on 30,352,318 (31 October 2021 - 33,926,022; 30
April 2022 - 33,122,018) Ordinary shares, being the weighted
average number of Ordinary shares in issue during the Period.
The capital return per Ordinary share is calculated on net
capital losses for the Period of GBP9,878,000 (31 October 2021 -
gains of GBP222,000; 30 April 2022 - losses of GBP1,915,000) and on
30,352,318 (31 October 2021 - 33,926,022; 30 April 2022 -
33,122,018) Ordinary shares, being the weighted average number of
Ordinary shares in issue during the Period.
The total return per Ordinary share is calculated on total
losses for the Period of GBP8,700,000 (31 October 2021 - gains of
GBP1,383,000; 30 April 2022 - gains of GBP503,000) and on
30,352,318 (31 October 2021 - 33,926,022; 30 April 2022 -
33,122,018) Ordinary shares, being the weighted average number of
Ordinary shares in issue during the Period.
4. Dividends
Ordinary dividends on equity shares deducted from reserves are
analysed below:
Six months Six months Year ended
ended ended 30 April
31 October 31 October 2022
2022 2021
GBP'000 GBP'000 GBP'000
----------------------------- ------------------- ------------------- -------------------
Fourth interim dividend for
2021: 1.68p - 578 578
First interim dividend for
2022: 1.68p - 565 565
Second interim dividend for
2022: 1.68p - - 550
Third interim dividend for
2022: 1.68p - - 547
Fourth interim dividend for 672 - -
2022: 2.16p
First interim dividend for 534 - -
2023: 1.80p
----------------------------- ------------------- ------------------- -------------------
1,206 1,143 2,240
----------------------------- ------------------- ------------------- -------------------
The Company has declared a second interim dividend in respect of
the year ending 30 April 2023 of 1.80p (2022 - 1.68p) per Ordinary
share which will be paid on 16 December 2022 to Shareholders on the
register on 25 November 2022.
5. Net asset value per share
As at As at As at
31 October 31 October 30 April
2022 2021 2022
Net assets GBP43,832,000 GBP62,703,000 GBP57,368,000
Number of Ordinary shares
in issue 29,123,156 33,128,848 31,290,848
Net asset value per Ordinary
share 150.51p 189.27p 183.34p
------------------------------ -------------------- -------------- --------------
6. Called-up share capital
During the Period, the Company repurchased 2,167,692 Ordinary
shares at a cost of GBP3,610,000 which were placed in Treasury (31
October 2021 - 2,207,500 Ordinary shares at a cost of GBP4,143,000
which were placed in Treasury; 30 April 2022 - 4,210,500 Ordinary
shares at a cost of GBP7,795,000 which were placed in
Treasury).
During the Period there were no Ordinary shares re-issued from
Treasury (31 October 2021 - nil; 30 April 2022 - 165,000 Ordinary
shares for proceeds of GBP313,000).
At 31 October 2022 there were 20,477,932 Ordinary shares held in
Treasury (31 October 2021 - 16,472,240 Ordinary shares held in
Treasury; 30 April 2022 - 18,310,240 Ordinary shares held in
Treasury).
During the Period there were no new Ordinary shares issued by
the Company (31 October 2021 - nil; 30 April 2022 - nil).
At 31 October 2022, excluding Treasury shares, there were
29,123,156 Ordinary shares in issue (31 October 2021 - 33,128,848;
30 April 2022 - 31,290,848).
The costs of the operation of the Discount Control Mechanism of
GBP20,000 have been charged against the premium on shares
issued.
Treasury shares are Ordinary shares that have been repurchased
by the Company but not yet cancelled. These shares are held in a
Treasury account and remain part of the Company's share capital but
do not carry any rights to receive dividends or vote at General
Meetings.
7. Fair Value Hierarchy
Financial Reporting Standard 102 requires an entity to classify
fair value measurements using a fair value hierarchy that reflects
the significance of the inputs used in making the measurements. The
fair value hierarchy has the following levels:
- Level 1: the unadjusted quoted price in an active market for
identical assets or liabilities that the entity can access at the
measurement date;
- Level 2: inputs other than quoted prices included within Level
1 that are observable (i.e. developed using market data) for the
asset or liability, either directly or indirectly; and
- Level 3: inputs are unobservable (i.e. for which market data
is unavailable) for the asset or liability.
The financial assets measured at fair value in the Balance Sheet
are grouped into the fair value hierarchy at 31 October 2022 as
follows:
Financial assets Level 1 Level Level Total
at fair value through GBP'000 2 GBP'000 3 GBP'000 GBP'000
profit or loss
---------------------------- --------- ----------- ----------- ---------
Quoted equities (a) 37,190 - - 37,190
Unit Trusts and OEICs
(a) 12,236 - - 12,236
Investments in liquidation
(b) - - 7 7
Net fair value 49,426 - 7 49,433
---------------------------- --------- ----------- ----------- ---------
(a) Quoted Investments
Quoted equities included in Fair Value Level 1 are actively
traded on recognised stock exchanges and the fair value of these
investments have been determined by reference to their quoted bid
prices at the reporting date. The fair value for OEICs included in
Level 1 has been determined based on prices published by the
relevant fund manager. Those OEICs included within Level 1 are
quoted in an active market.
(b) Investments in liquidation
Goodhart Partners Horizon Fund HMG Global Emerging Markets
Equity Fund is in liquidation. The fair value has been determined
based on the current value of the fund, as provided by the relevant
fund manager, with the application of a liquidation discount.
8. Half-Yearly Financial Report
The results for the six months ended 31 October 2022 and six
months ended 31 October 2021, which have not been reviewed by the
Company's auditors pursuant to the Auditing Practices Board
guidance on 'Review of Interim Financial Information', constitute
non-statutory accounts as defined in sections 434 - 436 of the
Companies Act 2006. The financial information for the year ended 30
April 2022 has been extracted from the latest published audited
financial statements which have been filed with the Registrar of
Companies. The report of the auditors on those accounts contained
no qualification or statement under section 498 (2), (3) or (4) of
the Companies Act 2006.
This Half-Yearly Report was approved by the Board on 2 December
2022.
The report and accounts for the half-year ended 31 October 2022
will be made available on the website https://momentum.co.uk/MAVT
.
9. Principal Risks and Uncertainties
Risks are inherent in the investment process, but it is
important that their nature and magnitude are understood so that
risks, particularly those which the Company seeks to avoid or
minimise, can be identified and either avoided or controlled. The
Board has carried out a robust assessment of the principal and
emerging risks facing the Company, including those that threaten
its business model, future performance, solvency or liquidity. The
Board has established a detailed framework of the key risks that
the business is exposed to, with associated policies and processes
devised to mitigate or manage those risks.
The principal risks faced by the Company, are set out below. The
Company faces emerging investment-related risks from rising
inflation, extreme geopolitical events and climate change. The
impact of these on the principal risks is detailed below.
Investment and strategy risks
An inappropriate strategy, including asset class, country and
sector allocation, stock selection and use of gearing, could lead
to underperformance against the Company's Benchmark and peer group,
and have an adverse effect on Shareholders' returns. This could
also lead to share buy-backs and a reduction in the size of the
Company.
Mitigation: The Company's strategy is formally reviewed by the
Board at least annually, considering investment performance,
Shareholder views, developments in the marketplace and the
structure of the Company. The strategy has been kept under regular
review in light of rising inflation, the Russia Ukraine conflict
and the impact of recent share buy-backs on the size of the
Company.
The Board requires the Manager to provide an explanation of
significant stock selection decisions and the rationale for the
composition of the investment portfolio at each Board meeting, when
gearing levels are also reviewed. The Board monitors the spread of
investments to ensure that it is adequate to minimise the risks
associated with particular asset classes, countries or factors
specific to particular sectors.
The Board monitors the investment performance and Discount
Control Mechanism activity at each Board meeting.
Portfolio and market risks
External factors such as market, economic, political and
legislative change could cause increased market volatility. This
could lead to a fall in the market value of the Company's portfolio
which would have an adverse effect on Shareholders' funds.
Mitigation: The Board monitors the implementation and results of
the investment process, including gearing strategy and ESG
strategy, with the Manager on an ongoing basis and at each Board
meeting, through reviews of the portfolio composition, investment
activity and performance.
Financial risks
Exposure to inappropriate levels of market price risk, foreign
currency risk, interest rate risk and liquidity and credit risk
could result in volatility of Shareholders' funds.
Mitigation: The Company has a diversified portfolio comprising
mainly readily realisable securities, mitigating the Company's
exposure to liquidity risk. The risk of a counterparty failing is
minimised through regular review and due diligence.
Earnings and dividend risks
Fluctuations in earnings resulting from changes in the
underlying portfolio, or factors impacting the dividend paying
ability of investee companies, could result in the Company being
required to pay dividends out of reserves on a sustained basis,
resulting in a reduction in NAV.
Mitigation: The Board reviews detailed income forecasts prepared
by the Manager and the Company Secretary at each Board meeting and
when the quarterly dividends are declared.
The Board and the Manager have kept the dividend paying ability
of the investee companies under regular review during the COVID-19
pandemic. The Company's ability to pay dividends out of
distributable capital reserves can provide flexibility in times of
market stress.
Operational and cyber risks
Disruption to, or failure of, systems and controls, including
cyber-attacks at the Manager and the Company's third-party service
providers, in particular the Administrator and Custodian, could
result in financial and reputational damage to the Company.
Mitigation: The Manager's operational systems and controls and
those of the third-party service providers are regularly tested and
monitored and are reported on at each Board meeting. An internal
control report, which includes an assessment of risks, together
with the procedures to mitigate such risks, is prepared by the
Company Secretary and reviewed by the Audit Committee at least once
a year. The Custodian, J.P. Morgan Chase Bank N.A., produces an
internal control report every six months which is reviewed by its
auditor and gives assurance regarding the effective operation of
its controls. A summary of this report is reviewed by the Audit
Committee.
The operational requirements of the Company, including from the
Manager and its service providers, were subject to rigorous testing
as to their application during the COVID-19 pandemic, when
increased use of out of office working and on-line communication
was required. The operational arrangements proved robust.
Regulatory risks
Breach of regulatory rules could lead to suspension of the
Company's stock exchange listing or financial penalties. Breach of
sections 1158 and 1159 of the Corporation Tax Act 2010 could lead
to the Company being subject to tax on chargeable gains.
Mitigation: The Company Secretary monitors the Company's
compliance with the rules of the FCA and sections 1158 and 1159 of
the Corporation Tax Act 2010. Compliance with the principal rules
is reviewed by the Directors at each Board meeting.
Key man risks
Loss of key personnel and poor succession planning at the
Manager or Company Secretary could lead to disruption for the
Company.
Mitigation: To reduce key man risk, MGIM operates a team
approach to fund management, with each member of the four strong
highly experienced investment team contributing to the performance
of the Company through their research specialisations. Juniper
Partners has experienced company secretarial and administration
teams in place, with appropriate levels of cover.
Directors' Statement of Responsibilities in Respect of the
Half-Yearly Financial Report
In accordance with Chapter 4 of the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority, the
Directors confirm that to the best of their knowledge:
-- the condensed set of financial statements has been prepared
in accordance with Financial Reporting Standard 104 (Interim
Financial Reporting) on a going concern basis, and gives a true and
fair view of the assets, liabilities, financial position and net
return of the Company;
-- the half-yearly report includes a fair review of the
important events that have occurred during the first six months of
the financial year and their impact on the financial
statements;
-- the Directors' Statement of Principal Risks and Uncertainties
shown above is a fair review of the principal risks and
uncertainties for the remainder of the financial year;
-- the half-yearly report includes a fair review of the related
party transactions that have taken place in the first six months of
the financial year; and
-- in light of the controls and monitoring processes that are in
place, the Company has adequate resources and arrangements to
continue operating within its stated objective and policy for the
foreseeable future. Accordingly, the accounts continue to be drawn
up on the basis that the Company is a going concern.
Jimmy McCulloch
Chairman
2 December 2022
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END
IR BLBDDGSGDGDD
(END) Dow Jones Newswires
December 05, 2022 02:00 ET (07:00 GMT)
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