City round-up: Seneca Global Income & Growth Trust; Science in Sport

Seneca Global Income & Growth Trust, the Liverpool-based investment vehicle, profited from good equity performances, it said today.

It announced half year results for the six months to October 31, which showed a net asset value (NAV) total return +10.5% versus a benchmark of +3.6%, a total share price return of +10.6%, an unchanged quarterly dividend of 1.68p per share, and a yield of 4.8% based on the period-end share price and the current quarterly dividend rate.

The company said the quarterly dividend rate will be maintained for this financial year at least. It added that shares traded very close to net asset value throughout the period.

Chairman Richard Ramsay said: “COVID-19 continues to dominate all of our lives but the health crises it has brought about will pass.

“Indeed, there are reasons to be optimistic about the progress of vaccine trials and treatments, although, while many of us remain subject to ‘lock down’ measures, it is hard to feel positive and to imagine a return to normality.

“COVID-19 has brought many new expressions into our lexicon, not the least of which is ‘the new normal’. Perhaps that will simply turn out to reflect many trends that were already in place but have been accelerated to our collective benefit.”

He added: “In my statement to shareholders this June, I highlighted the main factor that negatively affected SIGT’s performance during the market decline from late February to late March was the manager’s value investing style.

“SIGT’s strong performance during the six month period under review has not particularly been related to any change to the investing style background.

“Growth investing has continued to outshine value investing, with the extraordinary performance of the large technology companies in America of particular note.

“Rather, SIGT’s performance can largely be credited to strong share price performances from a number of the investment trust holdings within specialist assets – as wide discounts narrowed – and to the portfolio’s bias to UK mid- and small-cap companies, where some liquidity returned to that part of the market.

“The real upside from a change in sentiment towards value investing remains to be realised.”

Looking forward, he said: “The board and manager believe an inflection point for the growth vs value investment style factors may well have taken place on 9 November with the news of the Pfizer/BioNTech vaccine trial’s success.

“It may sound extraordinary to suggest a single event on a specific day caused such an inflection point, but investment markets have certainly reacted in that manner.

“SIGT has performed strongly in this environment with a NAV total return per share of 12.4% for the month of November.

“It is now possible to imagine a timetable for recovery, even if it takes many months and is difficult, whereas before 9 November this was not possible and so the reaction of investment markets makes sense.

“They are, after all, no more than discounting the future. How sustained this reaction is and, within that, the change of investment style leadership from growth to value remains to be seen and will be influenced by other news and developments, not least in relation to Brexit.

“But it is clear that SIGT has significant potential to perform well, and the board and manager believe the events and performance in November illustrate just how dramatic this can be.”

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Stephen Moon SiS chief executive

Sports nutrition company, Science in Sport, said it has performed well during the current year, ending December 31, in a trading update today.

The AIM-listed firm, with a manufacturing site in Nelson, East Lancashire, said it was driven by continued momentum in its online business and substantial improvements in gross margin, with both factors leading to the business transitioning into being profitable on an EBITDA level for 2020.

Online channels continue to perform very strongly and this has offset some of the downturn caused in retail channels by the COVID-19 pandemic.

Total online revenues are ahead 39% year-on-year at £23m to the end of November. Online sales are expected to grow to approximately 51% of total revenue for the full year, compared with 38% in 2019.

Very good progress has been made with the PhD.com digital business, up 108% to the end of November versus the same period in 2019.

The USA business is up 32% year-on-year and cash burn is significantly reduced, given the gross margin improvement to 74% and a streamlined operating model.

Group gross margin for the year is forecast to be up by four percentage points to approximately 48%, compared with 44% in 2019.

Given strong momentum in online channels and some recovery in retail following the severe downturn in April and May, the group expecs revenue for 2020 will be in the region of £49.8m, versus £50.6m in 2019.

It expects to report underlying EBITDA of approximately £1.0m for the year, net of COVID-related exceptional costs of £0.3m, versus a full-year loss of £0.3m in 2019. The business has generated a positive EBITDA each month from June 2020 onwards.

The cash position is strong and the group expects to close the year with approximately £10m, having generated cash of around £0.5m in 2020, this after capital investment in production capacity and technology platform.

Chief executive, Stephen Moon, said: “I am pleased to announce the business is performing well.

“We bounced back strongly following our decisive actions in March and April to restructure the business and strengthen the balance sheet.

“Our focus has been accelerating our long-term growth strategy and investing in our online business, and this has successfully delivered for us.

“We have invested in technology and talent to drive our online business across global territories for 2021 onwards, and we have continued to drive innovation and brand equity to underpin our premium margin business.

“A new supply chain unit is planned for late 2021. This will build further on the substantial progress made in gross margin during this year, and we expect to make progress throughout the strategic planning period.”

He added: “Whilst it is too early to reinstate guidance for the longer term, once the COVID-19 pandemic abates, we are well positioned to take advantage of profitable growth opportunities in all major global regions.”