Trading, Management Fee & Redemption Update

RNS Number : 8769X

Miton UK MicroCap Trust plc

03 September 2020

 

Miton UK Microcap Trust plc (the "Company")

Trading Update, Reduction in Management Fee and Redemption Update

Trading Update

2020 has been a difficult year for UK quoted companies, with many suffering a setback in trading conditions due to the pandemic. Since the end of last year, the FTSE All Share Index has fallen substantially, even when dividend income receipts are included. Smaller company share prices have delivered mixed returns over this period, with the FTSE SmallCap Index (excluding Investment Companies) well down and the AIM All-Share Index almost unchanged.

Over the same period, the Company's net asset value ("NAV") has appreciated by 19.1%. The Company's strategy principally invests in microcap UK quoted companies that have the advantage of being less reliant on the growth of the UK economy and where there is greater opportunity to select individual stocks that have the potential to deliver premium returns. Returns in the year to 30 April 2020 were also enhanced by the strategic use of an option. In March 2019, the Company invested in a FTSE100 Put option that would be expected to marginally detract from returns if markets were stable, but as equity markets around the world fell sharply during the first quarter of 2020 in response to the global pandemic, the Company was able to sell the Put option for a multiple of its book cost. The cash received from its exercise was used to fund additional investments at a time when many valuations were standing at unusually low metrics, which enhanced the Company's participation in the subsequent stock market recovery.

The Company was first listed on 29 April 2015, and since that time the NAV total return has been 32.3%, when dividends are included. All the comparative data is summarised below on a total return basis.

Data as at 1 Sep 2020	Company NAV	Company Share Price	FTSE All-Share	FTSE AIM All-Share	FTSE Small- Cap (ex. ITs)
2020 year to date	19.1%	4.2%	-19.8%	1.2%	-19.9%
Return since IPO	32.3%	11.0%	7.2%	37.7%	9.9%

Reduction in Management Fee

While the Trust's portfolio has appreciated this year, its share price has not risen as rapidly. As of 1 September 2020, the Company's share price stood at 54.5p compared with an NAV excluding current period revenue of 63.71p per ordinary share. The Board notes that the Trust's share price has been at an average discount of approximately 3% since IPO, but that it is well below that level at present.

The Board is conscious of the Company's ongoing charges and the discount the Company's Ordinary Shares currently trade at. As a result, the Board has agreed with Premier Portfolio Managers Limited, the Company's investment manager, to reduce the annual management fee.

With effect from 1 September 2020, the annual management fee has been reduced from 1.0% to 0.9% per annum of market capitalisation. The management fee payable on the Redemption Pool has reduced from 1.0% to 0.9% per annum of NAV, with effect from the same date. These fees will continue to be calculated on a monthly basis and are payable in arrears.

All other provisions of the management agreement remain unchanged.

Redemption Update

The Company has a redemption facility through which shareholders are entitled to request the redemption of all or part of their holding of Ordinary Shares on an annual basis (the "Redemption Facility"). The operation of the Redemption Facility is entirely at the discretion of the Board.  The deadline for the 30 June 2020 Redemption Point was 2 June 2020.

As stated in the Company's announcement on 30 June 2020 (the "Announcement"), the Board resolved to effect the Redemption using the redemption pool method set out in the Company's Articles, pursuant to which the Company notionally divided its assets and liabilities into two pools, the Redemption Pool and the Continuing Pool.

The assets of the Redemption Pool have now been liquidated, with the final asset sold on 1 September 2020. The Redemption Price per Ordinary Share will equal the aggregate cash received by the Company upon the realisation of the Redemption Pool, after deducting the costs of the redemption which will be borne by the relevant pool, the final dividend attributable to the Redemption Pool, an adjustment for any attributable unsettled liabilities (including the reduced management fee from 1 September 2020 as outlined above) and a pro-rata share of the costs and expenses of the Company not attributable to a particular pool, divided by the number of Redemption Shares.

The Ordinary Shares in the Redemption Pool will rank for the final dividend for the year ended 30 April 2020 of 0.1 pence per Ordinary Share, payable on 29 September 2020 to shareholders on the register at 4 September 2020. The ex-dividend date is 3 September 2020.

The Company intends to announce the Redemption Price and then make a single distribution in respect of the Redemption Pool capital as soon as practicably possible.

All capitalised terms used and not defined shall have the same meaning as in the Announcement.

Link Company Matters Limited - Company Secretary

LEI: 21380048Q8UABVMAG916

 

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