Worsley Investors (WINV – formerly AXA Property Trust) has announced its results or the nine month period ended 31 March 2021, during which its core equity strategy has performed strongly. During the period, WINV provided a return on its NAV of 4.16% that was driven by valuation of the Curno cinema and the invested portion of WINV’s core equity strategy. However, WINV’s core equity strategy returned +85.7% during the period, which is well ahead of the returns provided by its benchmark, the FTSE Small Cap Index, which WINV says returned +39.0%.
These results are the trust’s first audited financial statements since it moved its financial year end to 31 March and so they cover the nine-month period to 31 March 2021. These follow on very closely from the trust’s interim report, for the six months ended 31 December 2020, which were only released three months ago.
The results
WINV’s chairman, William Scott, says that, given the uncertain backdrop, the trust’s independent valuers, Knight Frank, have adopted a very conservative approach with the effect that their assumption of one quarter’s rental holiday has effectively offset the increased contracted rental which Worsley Associates LLP agreed last year with the tenant, UCI Italia. Consequently, the valuation is unchanged in Euro terms.
Notwithstanding the new lease terms agreed in June 2020, the tenant approached the manager in February 2021 seeking further negotiations. The board says that a very generous offer was made but this was not taken up and so the terms remain as they were in June 2020. The contractual rental has been paid through to the end of June. WINV benefits from an intermediate parent company guarantee and WINV’s board has noted the recent public statements by AMC Entertainment Holdings Inc., the ultimate parent company of the UCI group, that in the last two months it has raised US$1.25 billion to expand its footprint and to invest in existing theatres.
During the last quarter, the invested capital in WINV’s core equity strategy returned +25.4% and, over the nine-months under review, it returned +85.7%. WINV says this compares with +10.6% and +39.0%, respectively, for the FTSE Small Cap Index. WINV says that, since the funds from the trust’s capital raise became available in March 2020, the return on its invested equity positions has been significantly in excess of 100%. Given the relative valuation performances of the Curno cinema and the core equity portfolio, the proportions of its NAV per share, which each represents, have improved from 67%/13% at the beginning of the nine-month period to 58%/39% at the period end.
Portfolio activity
WINV’s portfolio has remained fully invested in the period since the 2021 interim results were announced on 17 March 2021. This includes a previously undisclosed holding of some 2.1% of Net Assets in Shepherd Neame Limited, a very long-established family brewer and pub-owning company, whose shares are traded on the Aquis Exchange. Shephard Neame has a market capitalisation of £150.4 million, which WINV’s manager points out as being at a significant discount to its latest published Net Assets of some £187 million. The manager says that this is backed by its conservatively valued portfolio of 316 pubs and hotels, located throughout the South East of England, the majority of which are freehold sites.
The largest portfolio position remains the c. 4% shareholding in Smiths News plc, England’s major distributor of newspapers and magazines. WINV’s manager says that, in early May, Smiths News published its 2021 interim results, which disclosed continued strong trading, reorganisation costs much reduced from previous years, and a pleasing reduction in debt. The resumption of dividends was announced later in June and the outlook remains good in the manager’s view.
The Northamber shareholding is unchanged since the Interim Statement. Preliminary (less than 2% of Net Assets) holdings are also held more than 10 other companies. The manager says that it continues to sell down several positions where it had previously pared back WINV’s holdings as their prices rose substantially above the trust’s entry levels. Three new positions have been initiated. As at 15 June 2021 the Company’s portfolio, which had a total cost of £3.34 million and a combined market value of some £6.05 million comprised 16 stocks.