TIDMAGT
RNS Number : 9329Z
AVI Global Trust PLC
26 May 2021
This is a correction to the announcement published at 07:00am on
26 May 2021 (RNS number 8018Z) which had incorrect contribution
figures in the Contributors and Detractors section. These figures
have been amended and several other minor non-material changes have
been made. The full corrected announcement is included below.
AVI GLOBAL TRUST PLC
( ' AGT' or the ' Company')
LEI: 213800QUODCLWWRVI968
Announcement of unaudited results for the half year ended 31
March 2021
OBJECTIVE
The investment objective of the Company is to achieve capital
growth through a focused portfolio of investments, particularly in
companies whose shares stand at a discount to estimated underlying
net asset value.
FINANCIAL HIGHLIGHTS
- Net asset value ('NAV') total return per share increased by
26.8%
- Share price total return 29.1%
- Benchmark index increased on a total return basis by 13.5%
- Interim dividend maintained at 6p
PERFORMANCE SUMMARY
Net asset value per share (total return) for six months
to 31 March 2021* 26.8%
Share price total return for six months to 31 March 2021* 29.1%
31 March 2021 31 March 2020
Discount*
(difference between share
price
and net asset value) (2) 7.7% 10.5%
Six months Six months
to to
31 March 2021 31 March 2020
Earnings and Dividends
Investment income GBP6.17m GBP5.86m
Revenue earnings per share 3.31p 3.01p
Capital earnings per share 207.21p -206.99p
Total earnings per share 210.52p -203.98p
Ordinary dividends per
share 6.00p 6.00p
Ongoing Charges Ratio
(annualised)*
Management, marketing
and other expenses (as
a percentage of average
shareholders' funds) 0.84% 0.94%
Period Highs/Lows High Low
Net asset value per share 1,047.19p 835.39p
Net asset value per share
(debt at fair value) 1,032.36p 815.30p
Share price (mid market) 956.00p 729.00p
(1) As per guidelines issued by the AIC, performance is
calculated using net asset values per share inclusive of accrued
income and debt marked to fair value.
(2) As per guidelines issued by the AIC, the discount is
calculated using the net asset value per share inclusive of accrued
income and with the debt marked to fair value.
Buy-backs
During the period, the Company purchased 989,927 Ordinary
Shares, all of which have been placed into treasury.
*Alternative Performance Measures
For all Alternative Performance Measures included in this
Report, please see definitions in the Glossary below.
CHAIRMAN'S STATEMENT
Overview of the half Year
In the Annual Report for the year to 30 September 2020 we
reported that the NAV total return was virtually flat but
marginally better than the MSCI AC World ex-USA Total Return Index
in sterling (the 'Comparator Benchmark'), which recorded a loss. I
am pleased to report that in the six months under review, AGT's NAV
increased by 26.8%. This result made AGT one of the top performers
in its peer group of global investment trusts.
Some of the strongest contributions over the period came from
companies - such as Aker, Jardine Strategic and EXOR - that had
been hardest hit by the COVID-19 pandemic, and subsequently rallied
in November 2020, following the announcement of the Pfizer/BioNTech
vaccine trial results. The manager increased exposure to these
companies, and initiated positions in others, during 2020 when
their valuations appeared particularly compelling. These companies,
and other contributors to performance, are discussed in detail in
the Investment Manager's Review.
Income and Dividend
As we reported in the Annual Report, AGT's revenue account has
been particularly hard hit by the effects of the COVID-19 pandemic.
Our net revenue for the six months under review was 3.31 pence per
share. Shareholders should note that the majority of our revenues
are typically earned in the second half of each accounting
year.
The Board has decided to maintain the interim dividend at 6
pence per share, the same level as last year. As we stated in the
last annual report our current intention is to use revenue
reserves, and if necessary capital reserves, to maintain the annual
dividend at current levels. The Company is operating in an
unprecedented environment and therefore our dividend policy remains
under careful and regular review.
Gearing
Your Company has access to debt and credit facilities in a
variety of currencies, which are used selectively to enhance
returns for shareholders. At 31 March total available debt and
credit facilities were GBP132 million. Of this, c. GBP115 million
was drawn. Net gearing was 6.9% of net assets (September 2020:
8.6%).
The decrease in net gearing from 8.6% to 6.9% over the period is
explained primarily by the strong increase in net assets. Any
increase or decrease in cash and gearing levels is driven primarily
by the Investment Manager's view on investment opportunities, and
not by views on the future direction of markets.
Discount, Share Buybacks and Share Issuance
On 31 March 2021 the discount was 7.7%, compared with 9.3% at 30
September 2020. Shares are bought back with the intention of
limiting the volatility in the discount and when the Directors
believe that it is in the best interests of shareholders. During
the half year under review, just under 1 million shares were bought
back. While the primary objective of buying back shares is to limit
volatility in the discount, the share buybacks marginally increased
the NAV per share for existing shareholders, by an estimated 1.0
pence per share.
At last year's AGM, shareholders again approved the authority to
reissue shares from treasury and to issue new shares. These powers
would only be used if shares could be issued at, or above, the
prevailing NAV per share. No shares were issued during the
period.
We also continue to seek to stimulate demand for the shares by
marketing and promoting the company to a wide range of investors,
both investment professionals and individuals managing their own
affairs and via a range of channels.
Management Arrangements
As I reported in the last Annual Report, our Investment Managers
continue to be able to operate despite the restrictions related to
the COVID-19 pandemic and, as noted above, investment performance
has been very strong. The Board regularly monitors the performance
of all of our suppliers and in February 2021 the Management
Engagement Committee received a report on the ability of our key
suppliers to maintain business as usual. I would again like to
record the Board's thanks to all of our service suppliers for
maintaining business as usual in these difficult times.
Directors
As we set out in last year's annual report, Nigel Rich will
retire from the Board at this year's AGM and I will retire from the
Board in 2022. We plan to appoint a new director in the next few
months and the Nomination Committee has recently appointed a
recruitment consultant to assist in the search for a suitable
candidate.
Annual General Meeting
Last year's AGM was held as a closed meeting, in compliance with
regulations designed to control the spread of the COVID-19 virus.
Each of the resolutions at the AGM was passed with a large majority
in favour and the Board would like to thank shareholders for their
continuing support.
The UK government has announced a phased lifting of lockdown
restrictions and we plan to welcome shareholders to a conventional
AGM in December of this year.
Outlook
Some countries, including the UK, are gradually emerging from
restrictions imposed to contain the spread of the COVID-19 virus
but there is still cause for concern, with infection rates and
levels of restrictions still high in some parts of the world. While
the implementation of mass vaccination programmes gives cause for
hope, there is still a considerable distance to travel before the
world returns to normal. We note, for example, that in Japan, which
accounts for 26% of AGT's NAV in total, the vaccine rollout is
progressing slowly, suggesting that it may take some time before
economic activity can return to normal. Economies will then be
faced with the consequences of the unprecedented level of
government stimulus funded by debt and which ultimately must be
paid for by tax payers.
In the last Annual Report we described the inherent value in
AGT's portfolio of investments and that value has certainly
contributed to performance over the last six months. As set out in
the Investment Manager's Review there are still many opportunities
available and our Investment Manager has been nimble in taking
advantage of these. While the economic picture is complex and
challenging, our investment managers performed well in the six
months under review and we believe that a focus on the type of
investment opportunities which fit our investment mandate will
continue to bring rewards over time.
Susan Noble
Chairman
25 May 2021
INVESTMENT MANAGER'S REPORT
Performance Summary
Over the six-month period ended 31 March 2021, your Company
generated a positive net asset value ('NAV') total return of 26.8%,
which compares to a positive total return of 13.5% from the
Comparator Benchmark.
The announcement in November of the Pfizer/BioNTech vaccine
trial results sparked a broadening in the global recovery of equity
markets, with the net result being that global stock markets on
average delivered double-digit positive returns for 2020. We
commented in last year's Interim Report that during the March 2020
market sell-off, AGT had been hit by a double whammy of NAV
declines and portfolio discount widening, and that we believed this
situation would reverse when investors saw the potential for an
earnings recovery. This view has been borne out in recent months,
with the portfolio discount tightening to 28% by the end of the
interim period, having been as wide as 45% during the March 2020
sell-off. This discount tightening, alongside a recovery in NAVs,
provided a significant boost to your Company's returns.
Perhaps what is most interesting about the market recovery is
what is going on beneath the surface: market leadership has moved
away from high-quality companies with clear secular growth
prospects, and towards more cyclical and economically sensitive
stocks which will benefit from a resumption of economic
activity.
Since the second half of 2020, we have been adding to AGT's
exposure to these cyclical and economically sensitive stocks when
their valuations appear compelling. These include companies such as
Associated British Foods (the UK conglomerate that owns Primark),
those operating in the London office and retail property and
leisure markets (Capital & Counties, Secure Income REIT,
Shaftesbury), Jardine Cycle & Carriage, and Berkshire Hathaway.
These new positions build on the reflation beneficiaries which we
already had in the portfolio such as Aker, Exor and many of the
small-cap names which we hold in Japan, which provided a balance to
the portfolio for much of 2020 when the portfolio had been tilted
towards higher-growth names.
Contributors and Detractors
Contributors Contribution*
SoftBank Group 1.92%
EXOR 1.81%
Jardine Strategic Holdings 1.74%
VNV Global 1.71%
Pershing Square Holdings 1.64%
Aker 1.60%
Detractors
Japan Special Situations -0.47%
Nintendo -0.38%
The Japan Special Situations basket (15% of NAV) continues to
offer exceptional value, with many of the companies in it likely to
benefit from an economic recovery as lockdowns around the world
ease. A recent research paper from US investment house, GMO,
highlighted that Japanese small-cap value stocks - the type of
stock to which the basket is predominantly exposed - currently
trade at a 45% discount to the wider Japanese market, compared to
the long-term average (since 1983) of 25%. It is encouraging to see
large, well-respected institutions pick up on, and highlight, this
attractive pocket of value. As we discuss in more detail below, the
latest quarterly reports for the stocks in our basket have been
strong, providing evidence of a V-shaped recovery in earnings
following the pandemic. Despite this encouraging trend, the basket
continues to trade on a derisory earnings multiple of just over 4x
EV/EBIT, with 90% of the average market cap covered by net cash and
listed securities.
The macroeconomic backdrop around the world remains uncertain.
While the easing of lockdowns is undoubtedly a benefit, it brings
with it the possibility of an increase in inflation and
corresponding economic and financial instability. Nonetheless, we
remain highly confident about the portfolio and believe that the
current market environment is providing plentiful investment
opportunities.
The next section provides a detailed description of the
portfolio's main contributors to, and detractors from, performance
over the interim period.
Contributors/Detractors
SoftBank Group (NAV: -1% / Price: +45% / Discount: -36% /
Contribution: 1.92%*)
A Tokyo-listed holding company run by the well-known
entrepreneur, Masayoshi Son. Key assets include SoftBank Corp (a
telecoms business), Alibaba, T-Mobile US and Arm Holdings.
SoftBank Group was the largest contributor to returns over the
period, adding 192bps to performance.
We initiated a position in SoftBank in February 2020 and added
to the position at discounts in excess of 75% during the following
month's market rout. The founder and CEO of SoftBank, Masayoshi
Son, had made several public comments regarding what he deemed to
be an unjustifiably wide discount. Following the sell-off and the
unveiling of a large stake taken by a high-profile deep-pocketed
activist investor, Mr Son set out to tackle the discount,
undertaking a series of transformative actions, including: (1)
realising JPY5.5 trillion through asset sales; (2) conducting
JPY2.2 trillion worth of NAV accretive buybacks, with plans for
another JPY0.5 trillion, amounting to 19% of shares in total; (3)
reducing gearing; (4) improving corporate governance through the
appointment of two new independent directors; and (5) enhancing
transparency over the Vision Funds, the c. USD110 billion
technology-focused venture capital funds which it runs.
These actions were complemented by successful IPOs from the
Vision Fund over the past months (notably Doordash and Korean
e-commerce play Coupang) which were taken positively by the market
and helped to shift the narrative around the fund and management's
investing prowess.
The combination of the aforementioned actions and improved
performance of the Vision Fund has driven the market to change its
perspective of the group, with SoftBank now trading on a relatively
narrow discount of 36% to our estimated NAV. Reflecting the tighter
discount and associated reduced upside, and notwithstanding a
plentiful pipeline of prospective IPOs from the Vision Fund, we
reduced our investment in Softbank by over two-thirds. To date, the
investment has generated an IRR of +74% and a multiple on cost of
1.65x (in JPY terms).
EXOR
(NAV: +36% / Price: +55% / Discount: -36% / Contribution:
1.81%*)
An Italian-listed holding company run by the Agnelli family. It
owns four principal assets: Stellantis, Ferrari, CNH Industrial,
and Partner Re.
EXOR was a significant contributor to returns during the period,
benefiting from strong NAV growth and a narrowing of the
discount.
We added to the holding during the period, on the premise that:
(1) the creation of Stellantis, via the merger of Fiat Chrysler and
Peugeot, would create value and drive NAV growth; (2) Fiat Chrysler
and CNH Industrial would likely benefit from a cyclical recovery;
and (3) the discount was out of kilter, both relative to history
and what we deemed to be fair. All three parts of this thesis
contributed to returns but, in each case, we still think that there
is more to come.
Stellantis returned +70% during the period, adding c. EUR3
billion to EXOR's NAV and making it responsible for close to half
of the overall NAV growth. Fiat Chrysler's undervaluation and the
scope for value creation through industry consolidation were key
attractions that initially led us to invest in EXOR. The prospects
for the company appear attractive, with the highly impressive CEO
Carlos Tavares targeting synergies of EUR5 billion in the coming
years. As well as the merger itself, notwithstanding more recent
chip shortages, the global economic recovery bodes well for the
auto industry. In particular, the US market appears in rude health,
with high consumer demand and low levels of dealer inventory
creating the prospect of profitable growth.
CNH Industrial, the agricultural and construction vehicles
business, also contributed to NAV growth, returning +98% over the
period. The prospect of higher GDP growth, particularly in the US,
bodes well for demand for tractors, construction vehicles, and
light-engine vehicles. The latest quarterly results were
significantly better than had been expected, both in terms of
profit and debt reduction. Moreover, the plans to split CNH
Industrial into two separate businesses, previously delayed by
COVID-19, now appear to be back on track. We expect either a sale
of the Iveco truck business or a splitting of the business by early
2022. This should help shine a light on the high-quality
agriculture business.
Turning to the discount, AGT benefited from a narrowing of
EXOR's discount over the period. At 36%, this remains elevated
relative to history (five-year average: 30%), and seems egregious
versus other European holding company discounts, given the asset
quality and proven track record of value creation. We note EXOR's
recent investment in luxury goods company Christian Louboutin and
believe this to be indicative of the type of higher quality asset
that the group will move towards over the next decade. As investors
appreciate this, and as the misconception dissipates that EXOR is a
sleepy, cyclical European industrial holding company, we expect the
discount to narrow.
Jardine Strategic
(NAV: +22% / Price: +67% / Discount: -30% / Contribution:
1.74%*)
Singapore-listed holding company run by the Keswick family, with
exposure to various sectors, including property, food retail and
automobiles.
Jardine Strategic contributed 174bps to performance over the six
months to the end of March as the share price increased +67% (in
USD). Drivers for this performance were two-fold, with both an
improving NAV and a narrowing discount as a result of its take-over
by Jardine Matheson.
Over the period, the NAV grew by +22%, with contributions across
Jardine Strategic's portfolio. The announcement of successful
vaccine trials led to a rally in companies associated with a
reopening of economies. Jardine Strategic's holdings were no
different. Dairy Farm, whose hypermarket business benefited from
stay-at-home orders, will also benefit as life returns to normal
with its large portfolio of convenience and health & beauty
stores reopening. Jardine Cycle & Carriage saw improved
performance as coal and palm oil prices increased, which largely
drives the economy and spending power of Indonesia, where its
largest holding Astra International operates. Hongkong Land was up
by over +30% as it announced strategic partners in its Westbund
development in Shanghai which helped reduce debt on the balance
sheet, while also seeing an improved performance in the retail
assets. The one blot on the copybook was the performance of
Mandarin Oriental which was down by -1% over the period with
international and business travel, on which it depends, not
expected to return this year.
While the performance of Jardine Strategic's portfolio was
strong, the real news came in March when Jardine Matheson announced
an offer to acquire the 15% of Jardine Strategic that it did not
already own, leading to significant discount narrowing. The price
offered was USD33 per share, a 20% premium to the undisturbed price
prior to the announcement, although a 30% discount to NAV at the
time.
The transaction effectively eliminated the circular shareholding
structure - wherein Jardine Matheson owned 85% of Jardine
Strategic, and Jardine Strategic owned 59% of Jardine Matheson -
and resulted in a cleaned-up, simplified entity. We applaud the
action, particularly as it should remove the two layers of
discounts that exist at both the Matheson and Strategic level.
However, we believe that a fairer offer price would have been
closer to Jardine Strategic's NAV, particularly as the listed
nature of the investments means that there is very little ambiguity
over the value of the company.
Nonetheless, given that Jardine Matheson owned 85% of JS, the
deal completed, albeit with 53% of minorities voting against the
amalgamation. Minority investors can apply to the Bermuda courts
(Jardine Strategic's country of domicile) for fair value appraisal,
which holds out the possibility of a re-appraised offer closer to
NAV. We, along with other minority shareholders, have appealed to
the Bermuda courts for a fair value appraisal. Jardine Strategic
shareholders have already approved the offer, meaning that in the
event of the appraisal being unsuccessful, AGT will still receive
the offer price of USD33/share for its holding. We will keep
shareholders abreast of developments as they evolve.
VNV Global
(NAV: -16% / Price: +52% / Discount: -18% / Contribution:
1.71%*)
A Stockholm-listed company which focuses on investing in
early-stage digitally enabled companies.
In June of last year, AGT initiated a position in VNV Global, a
Swedish-listed investment company focused on investing in
disruptive digital businesses, typically ones that create large
networks of users, thus raising barriers to entry. We view VNV's
portfolio as highly exciting. The majority of the portfolio is
invested in four assets: Babylon (51% of NAV using AVI's estimate
of fair value), BlaBlaCar (11%), Voi (8%) and Gett (7%).
Starting with the largest asset, Babylon is a data-driven
digital healthcare provider with operations in the UK (GP @ Hand),
the US, Asia, and Rwanda. Babylon has been a beneficiary of the
COVID-19 pandemic, as strained healthcare systems have sought to
reduce the number of in-patient visits, boosting demand for digital
healthcare alternatives. Babylon's stated mission is to focus on
reducing cost and strain on healthcare systems by emphasising
holistic healthcare, rather than waiting for patients to become
sick before initiating treatment. The use of data will be key here,
and we believe that Babylon has a competitive advantage over peers
in this area. As VNV's CEO, Per Brilioth, is fond of saying: "the
one with the most data wins".
Management has estimated that monthly run-rate revenues could
reach USD85 million by end-2021 (i.e., annual run-rate of USD1
billion, although crucially this depends on contracts currently in
the pipeline being signed). The growth runway before Babylon is
potentially enormous. There is a large opportunity in the US - a
market measured in the trillions of dollars - which, following
years of high spending yet poor patient outcomes, is moving toward
risk-sharing or "value-based care" contracts. Recent reports that
Babylon is seeking a US listing in the near-term would provide
confirmation that the current valuation at which it is held in
VNV's NAV is conservative. We note that listed peers trade on an
average EV/Sales multiple of 9x.
The other major assets, although not as large weights in the
NAV, also offer reason to be excited. BlaBlaCar is a French
transportation company which began life as an online, long-distance
carpooling network, has more recently expanded into bus
marketplaces, and is looking to develop other modalities such as
train marketplaces and short-distance carpools for commuters as
well as offering add-ons such as insurance and car financing. The
ultimate vision is to become a one-stop shop for passengers booking
journeys, allowing them to arrange all of their ground transport
needs in a single click. While COVID-19 has been a difficult period
for the company, we believe that it should recover quickly as
lockdowns lift. In our view, BlaBlaCar is a unique asset with a
significant runway of growth ahead of it.
Voi, the Swedish e-mobility company, is likely to be more
familiar to readers as it has been trialling the rollout of
scooters with councils in the UK. European countries tend to
approach the regulation of companies like Voi by operating a
licence scheme, which in effect restricts the number of entrants
into the market and encourages more rational competitive practices
than might otherwise prevail. To date, Voi has expanded into
multiple European countries, and its current UK rollout has been
highly successful, so far being appointed as the exclusive licensee
in 12 cities, including in the regions of Cambridgeshire,
Northamptonshire and the West Midlands - in effect, making it the
only provider of e-scooters to 10 million people. Going forward,
town councils may be keen to encourage solo methods of transport to
ease pressure on public transport, while also reducing social
contact in the post-pandemic phase. E-Scooters are perfectly poised
to capitalise on this trend, and offer the additional benefit of
being greener than other transport alternatives, adding to their
attractiveness for city managers.
Finally, Gett is an Israeli ride-hailing company which derives a
significant portion of revenues from corporate clients, who are
less price sensitive. Gett also provides corporates with
significant benefits, such as billing software and analytics, which
allows companies to streamline and potentially reduce their ground
transportation costs, making Gett more difficult to dislodge.
VNV Global offers difficult-to-replicate exposure to digital
companies with high growth potential and powerful network effects.
The upcoming listing of Babylon would provide validation for our
thesis that its valuation in the official NAV is too low, acting as
a catalyst for a narrowing of the current 18% discount at which we
estimate VNV trades.
Pershing Square Holdings
(NAV: +24% / Price: +31% / Discount: -26% / Contribution:
1.64%*)
A Euronext- and London-listed closed-end fund managed by a
high-profile activist manager. The fund owns a concentrated
portfolio of quality US companies.
In 2020, Pershing Square Holdings ('PSH') had its best single
year since inception of the Pershing Square strategy in 2004,
delivering NAV returns of +70% for shareholders versus +18% for the
S&P 500. Performance in 2020 was driven by a large hedging
gain, and the benefits of re-investing those hedging gains into
portfolio companies at depressed prices in March and April
2020.
The hedging gain relates to credit default swaps that Pershing
bought in early 2020 to protect against the fallout from efforts to
'flatten' the COVID-19 infection curve. In total, it spent USD27
million in premiums buying the swaps, which within a month netted
gains of USD2.6 billion across Pershing's funds. This trade alone
contributed 37% to PSH's returns in 2020. Furthermore, PSH used the
proceeds of the hedging gain to invest in portfolio companies at
depressed prices in March and April 2020, generating a return of
+77% return on the capital invested. As the manager details in its
Annual Report, a buy-and-hold strategy of its portfolio going into
2020 would have realised a return of +15% in 2020, highlighting the
value added by the hedging trade and the benefit of having liquid
capital to invest during market turmoil. Following the end of 2020,
PSH announced that it has entered into hedging transactions to
protect against the impact of rising interest rates. By the end of
February 2021, this had already added +4% to NAV.
Looking forward to the remainder of 2021, we remain optimistic
about PSH's high-quality portfolio, with recent earnings reports
confirming that its companies are recovering from the pandemic, and
continue to have long runways of growth ahead of them.
Pershing Square Tontine Holdings ('PSTH'), Pershing's listed
SPAC vehicle, continues the hunt for an attractive private business
to take public. We view PSH's option to invest its share of an
additional USD2 billion investment, on top of its near USD1 billion
commitment, as a source of potentially valuable upside. The manager
has also indicated that it is likely to launch a second SPAC on the
back of any successful deal completed by PSTH.
At the time of writing, PSH continues to trade on a stubbornly
wide discount of 26% despite numerous positive factors in its
favour, including: (1) a fast-growing portfolio of high-quality
businesses; (2) the manager's hedging actions both during the
crisis and in 2021, which contributed to returns and helped to
counter the criticism that investors are paying hedge fund-like
fees for a long-only portfolio; and (3) recent inclusion in the
FTSE 100 Index. We continue to view PSH as an attractive investment
opportunity, with the potential for both strong NAV performance and
a narrowing of the discount to boost returns.
Aker
(NAV: +91% / Price: +67% / Discount: -21% / Contribution:
1.60%*)
Oslo-listed family-backed holding company with investments
primarily in the energy sector.
Aker was the sixth-largest contributor to your company's
performance during the period. This was driven by NAV growth of
+91%, which was partially diluted by a widening of the discount
from 9% to 21%, resulting in a share price total return of
+67%.
There were two key prongs to the NAV growth: Aker BP and Aker
Horizons. Starting with the former, Aker BP benefited from improved
prospects for global growth and, in turn, oil demand. The price of
Brent crude oil increased +48% over the period, with the reopening
of physical economies and large fiscal stimulus boons for demand.
The OPEC+ group of oil-producing nations appears to be proceeding
with caution, which is further supportive of prices. There is some
debate between Wall Street strategists on one hand and the
International Energy Agency on the other as to whether we are
entering a new "super-cycle" which will lead prices back above $100
per barrel. We do not take a view on this, but rather believe that
Aker BP's management team, who have worked hard in recent years to
reduce costs and improve efficiency, will continue to create value,
either at the Aker BP level or by returning capital to Aker ASA in
the form of dividends, which can be reinvested in new opportunities
with higher long-term growth rates.
Talking of higher long-term growth rates, Aker Horizons - the
holding company established in August 2020 as a platform for Aker
to invest in renewable energy and green technology - has had a
transformational six months. During the period, Aker Horizons: (1)
conducted a private placement and listed on the Euronext Growth
exchange; (2) acquired a 75% stake in Mainstream Renewable Power, a
renewable energy company within the wind and solar energy markets,
for EUR675m; and (3) launched and listed Aker Clean Hydrogen, a
company focussed on industrial clean hydrogen. This high level of
corporate activity has built a new leg to Aker's NAV, and is
indicative of how family-controlled companies think in generations,
securing the next growth avenue. This has been well received by the
market, with Aker Horizons contributing an estimated +32% to Aker's
NAV during the period.
The excess of NAV growth over the share price has seen Aker's
discount widen to 21%. Such lags or mismatches are not uncommon
over short time periods. In general we view the evolution and
diversification of Aker's NAV away from Aker BP to a wider group of
higher growth and less cyclical companies as being supportive of a
tighter discount. We continue to view the prospect of aligning
capital with such active value-creating operators as an attractive
one.
Japan Special Situations
(NAV: +7% / Price: +9% / Discount: -40% / Contribution:
-0.47%*)
A basket of Japanese companies with cash and/or listed
securities covering a large proportion of the market value.
The Japan Special Situations basket was a modest detractor from
returns, driven almost entirely by a weak JPY which dampened
returns by -11% while the underlying basket appreciated by +9%.
Although the companies' share prices increased in JPY terms, they
lagged the recovery in the earnings, and the EV/EBIT of the basket,
on a constant weight basis, fell from 5.0x at the start of the
period, to 4.4x at the end.
For the quarter ending 31st December 2020 (the latest reporting
period) the companies in the basket reported an average
year-on-year increase in profits of +13%, solidifying the recovery
in earnings after a difficult COVID-disrupted trading period.
Fujitec, an elevator and escalator company and the largest position
in the basket, saw its profits increase by 40% and reported its
strongest ever gross profit margins - an area that we covered in a
public presentation that we released in May. Despite what we think
could be the start of a structural transformation of profitability,
Fujitec's share price increased by only a modest +5%, a clear
example of fundamentals and share price divergence.
The largest contributors to the Basket were the Bank of Kyoto
and Digital Garage, whose share prices appreciated by +38% and
+24%, adding 17bps and 15bps respectively. The Bank of Kyoto is a
new position in the basket, initiated due to its remarkably low
valuation; its investment in Nintendo which, before tax, accounts
for 59% of its market cap; and rhetoric from the Financial Services
Agency and the Government about the need for regional banks to
restructure and improve profitability. Over the period it
benefitted from the market's enthusiasm for the restructuring theme
and expectations for higher rates.
Digital Garage's share price recovered somewhat, after lagging
its close peer GMO Payment Gateway, which we attribute to a
confusing group strategy and poor shareholder communication.
Despite the share price recovery, over a year Digital Garage's
share price is only up +31%, vs GMO Payment Gateway's +95% return.
There remains considerable upside and we have been engaging with
management on how to rectify the situation.
Teikoku Sen-I ('Teikoku') and Kanaden were the largest
detractors in the Basket, reducing returns for your Company over
the period by 25bps each, as their shares prices fell by -19% and
-16% respectively. Teikoku manufactures disaster prevention
equipment, from antiflooding pumps to large industrial fire
fighting vehicles. It is suffering from a negative sales mix
effect, with sales of high-margin special purpose vehicles used at
nuclear reactor sites declining, which is forecast to lead to a
-14% fall in profits next year, despite overall sales growing +2%.
We trimmed the position in Teikoku over the period, although we
still believe that the company will be a beneficiary of the
long-term structural tailwind of increased disaster prevention
spending in Japan. Kanaden's business, exposed to machinery,
suffered from reduced capital expenditure during the COVID
downturn. Kanaden was one of the early investments in the Basket,
and while our engagement with management had some success, it had
run its course and we felt that resources were better spent
elsewhere. We exited the position in December, with management
agreeing to buy our shares back, a helpful exit considering the low
liquidity.
We are preparing to submit shareholder proposals to four
companies in the basket which account for 4% of AGT's NAV,
targeting a variety of corporate governance and balance sheet
efficiency issues. Each company has reacted positively so far, and
we hope that changes will be implemented so that we can withdraw
the proposals. We believe that our heightened engagement is coming
at an opportune time with regulatory pressure continuing to ratchet
up via amendments to the Corporate Governance Code and greater
shareholder engagement activity generally.
The Japan Special Situations basket continues to be an
extraordinarily attractive opportunity in our view, as reflected by
the 15% weight in NAV. With the majority of the companies posting
robust earnings growth, low valuation multiples, and a tailwind
from regulatory pressures to improve governance, it is fair to say
that the probability of attractive returns from here is as good as
it has been at any point since inception of the basket over three
years ago.
Nintendo
(NAV: +1%** / Price: -5%** / Discount: -44% / Contribution:
-0.38%*)
Tokyo-listed company which produces gaming consoles and games.
It has created some of the world's most valuable gaming franchises,
including Pokémon, Mario, and Legend of Zelda.
During the period AGT initiated a position in Nintendo, the
listed Japanese video-game company. The investment thesis for
Nintendo is predicated both on its high-quality and unique IP (e.g.
Super Mario, Pokémon), net cash and investments covering a quarter
of its market cap, as well as a digital transformation of its
business that is reminiscent of Sony during the PlayStation 4
cycle. The insights garnered from our deep-dive research into
Sony's gaming division allowed us to spot similarities between it
and Nintendo's business, highlighting how research for one company
can be leveraged for another.
Nintendo is a classic AGT investment, with quality assets that
are misunderstood and overlooked by the market. As a reminder, the
video game business has historically been characterised by earnings
cyclicality, with revenues and profits driven by the periodic
release of new consoles. Sony transformed its own gaming business
by introducing a subscription service to play online, in-game
transactions, cloud-based gaming, and an online digital store,
reducing reliance on hardware sales, and introducing higher margin,
recurring (sticky) revenue streams which are prized by the market
for being stable and highly visible.
Nintendo management took large strides in 2020 to shift its own
video game business towards a digitally focused model by
introducing both subscription revenues and downloadable content
onto the Switch platform. The pandemic served as a catalyst to move
consumers online, making the digital subsegment Nintendo's fastest
growing part of the business, now accounting for 42% of software
sales and helping to drive operating margins to 37% (from 26%). The
introduction of in-game transactions, subscription services, and
different price-point consoles suggests that Nintendo is starting
to build an ecosystem where consumers will store their Switch game
data on the cloud and, in turn, upgrade their console every few
years.
Alongside this digital transformation, Nintendo has recently
started to further monetise its IP by expanding into new areas,
already evidenced by the opening of its first-ever theme park in
Tokyo this month and the release of a new Super Mario movie, slated
for 2022.
Despite the deep moat given by IP, Nintendo trades at c. 10x
operating profits, which we believe reflects fears that management
will remain continually exposed to the traditional hardware cycle.
In our view the release of the Switch Lite in 2019, and the
upcoming release of the Switch Pro, highlights Nintendo's desire to
extend the Switch lifecycle, offering consumers a better experience
on refreshed versions of the platform.
We are excited about the strengths of Nintendo as a business and
believe that it has the opportunity for both significant earnings
growth and valuation upside as the market comes to appreciate the
new and improved business model.
* Contribution is the percentage amount that a position has
added to the Company's net asset value.
** NAV and share price returns calculated from date of
initiation of position.
Outlook
The economic environment remains deeply uncertain. Last year,
the impact of lockdowns on economies and corporate profits gave
cause for concern; this year, the impact of re-opening after
lockdowns gives other reasons to fret. The recent rise in bond
yields highlights investors' concern that the economic recovery
from the pandemic could be substantial, bringing with it the
attendant risk of inflation returning to haunt economies, in
particular in the US as ongoing federal stimulus programmes raise
the possibility of overheating. This poses problems for the more
speculative or excessively valued portions of the market.
Nonetheless, while sections of the market are worried about the
possibility of inflationary pressures, there is also a credible
counterargument to be made: many economies are operating below
potential because of the pandemic, meaning that a rebound in
economic activity is unlikely to produce inflation given
significant excess capacity, or slack, in the system.
It is important to remind readers that we are fundamental,
bottom-up investors. While we do keep an eye on the macroeconomic
backdrop, we do not necessarily take definitive views on future
developments. Our ultimate focus is the identification of
good-quality companies with solid balance sheets, trading at
attractive valuations, with an identifiable catalyst for a
re-rating. In that regard, we are confident about the quality of
your Company's portfolio. The prospects for NAV growth are
promising, with the potential for additional returns through the
tightening of the portfolio discount which, at 28%, does not
reflect the portfolio's capacity for superior performance. Looking
around the world, there are still plenty of overlooked and
mispriced investment opportunities for us to exploit.
Joe Bauernfreund
Asset Value Investors Limited
25 May 2021
INVESTMENT PORTFOLIO
AT 31 MARCH 2021
% of % of total assets
Portfolio investee IRR ROI Cost Valuation less current
Company classification company (%, GBP) (%, GBP) GBP'000 GBP'000 liabilities
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Oakley Capital
Investments Closed-end Fund 13.7% 23.9% 70.3% 43,956 73,204 6.3%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Pershing Square
Holdings Closed-end Fund 0.7% 23.5% 47.3% 40,057 67,031 5.8%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Sony Corp Japan 0.1% 37.5% 63.5% 32,612 57,958 5.0%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Fondul
Proprietatea Closed-end Fund 3.2% 21.5% 100.2% 28,299 55,164 4.8%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
EXOR Holding Company 0.4% 13.9% 44.0% 37,065 54,594 4.7%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Third Point
Investors Closed-end Fund 5.4% 9.4% 33.1% 38,330 52,599 4.5%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
KKR and Co Holding Company 0.2% 87.0% 78.1% 26,723 47,106 4.1%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Naspers Holding Company 0.1% 39.4% 18.5% 38,069 45,044 3.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Christian Dior Holding Company 0.1% 49.5% 38.6% 28,576 39,370 3.4%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Godrej Industries Holding Company 2.0% 5.3% 8.0% 34,289 36,210 3.1%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Top ten investments 347,976 528,280 45.6%
--------------------------------------- ---------- ---------- ---------- --------- ---------- ------------------
Aker ASA Holding Company 0.8% 18.3% 136.4% 18,433 34,042 2.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Nintendo Japan 0.1% n/a n/a 37,053 33,194 2.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Kinnevik 'B' Holding Company 0.4% 60.2% 63.4% 23,998 33,026 2.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Investor AB 'B' Holding Company 0.1% 14.2% 90.8% 26,011 27,525 2.4%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
SoftBank Group Japan 0.0% 68.2% 59.3% 16,366 27,241 2.3%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Swire Pacific 'B' Holding Company 1.0% -4.0% -13.2% 40,329 26,762 2.3%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
doValue Closed-end Fund 3.5% 8.1% 9.5% 27,550 25,149 2.2%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
VNV Global Holding Company 2.0% 138.2% 70.2% 13,248 23,234 2.0%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Symphony
International
Holdings Closed-end Fund 15.7% 5.2% 22.6% 26,636 22,874 2.0%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Fujitec* Japan 1.7% 19.3% 39.8% 15,402 22,382 1.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Top twenty investments 593,002 803,709 69.4%
--------------------------------------- ---------- ---------- ---------- --------- ---------- ------------------
Hipgnosis Songs
Fund Closed-end Fund 1.6% 21.9% 10.2% 20,260 22,147 1.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Fomento Economico
Mexicano Holding Company 0.2% n/a n/a 20,669 21,984 1.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Associated
British Foods Holding Company 0.1% 33.8% 7.1% 20,360 21,801 1.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
DTS* Japan 2.6% 2.3% 1.4% 21,228 21,378 1.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Jardine Strategic Holding Company 0.1% -3.7% -8.0% 23,787 21,274 1.8%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Tetragon
Financial Closed-end Fund 1.9% 1.8% 6.0% 24,138 18,669 1.6%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Berkshire
Hathaway Holding Company 0.0% n/a n/a 15,889 16,099 1.4%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Shaftesbury REIT Property 0.6% 108.4% 31.4% 10,699 14,602 1.2%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
SK Kaken* Japan 1.8% -13.2% -25.8% 19,056 13,874 1.2%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
IAC/InterActive
Corp Holding Company 0.1% 211.5% 45.3% 9,168 13,326 1.2%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Top thirty investments 778,256 988,323 85.4%
--------------------------------------- ---------- ---------- ---------- --------- ---------- ------------------
Pasona Group* Japan 2.5% 11.9% 24.7% 10,646 12,763 1.1%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
JPEL Private
Equity Closed-end Fund 18.4% 19.6% 69.9% 6,638 12,530 1.1%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Secure Income
REIT Property 1.0% 114.2% 27.5% 9,488 11,964 1.0%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Digital Garage* Japan 0.9% 24.7% 29.7% 9,263 11,930 1.0%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Jardine Cycle &
Carriage Holding Company 0.2% n/a n/a 11,091 10,995 0.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Daiwa Industries* Japan 2.8% -3.5% -10.0% 12,394 10,376 0.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Mitsubishi Estate Japan 0.1% -14.0% -5.1% 10,622 10,105 0.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Bank of Kyoto* Japan 0.3% 60.8% 17.7% 8,594 10,098 0.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Konishi* Japan 2.1% 3.7% 6.9% 9,760 10,088 0.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
NS Solutions* Japan 0.5% 11.3% 10.6% 9,097 9,946 0.8%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Top forty investments 875,849 1,099,118 94.9%
--------------------------------------- ---------- ---------- ---------- --------- ---------- ------------------
Capital &
Counties
Properties Property 0.7% n/a n/a 9,319 9,791 0.9%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Toagosei* Japan 0.8% 2.8% 5.8% 9,160 9,252 0.8%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
GP Investments Closed-end Fund 16.5% -13.6% -50.3% 16,162 7,998 0.7%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Teikoku Sen-I* Japan 1.7% 7.3% 16.2% 6,899 6,931 0.6%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Kato Sangyo* Japan 0.8% 1.5% 4.2% 7,161 6,754 0.6%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Hazama Ando* Japan 0.6% n/a n/a 6,846 6,708 0.6%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Sekisui Jushi* Japan 1.0% 0.7% 1.6% 6,631 6,368 0.6%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Round Hill Music
Royalty
Fund Closed-end Fund 2.0% -2.9% -1.1% 4,925 4,852 0.4%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Better Capital
(2009) Closed-end Fund 2.1% 23.6% 46.6% 1,962 2,616 0.2%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Eurocastle
Investment Closed-end Fund 3.2% 8.1% 9.5% 380 339 0.0%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Ashmore Global
Opportunities
- GBP Closed-end Fund 8.5% 2.5% 4.8% 61 58 0.0%
------------------ ------------------- ---------- ---------- ---------- --------- ---------- ------------------
Total investments 945,355 1,160,785 100.3%
--------------------------------------- ---------- ---------- ---------- --------- ---------- ------------------
Other net assets and
liabilities (3,047) -0.3%
--------------------------------------- ---------- ---------- ---------- --------- ---------- ------------------
Total assets less current
liabilities 1,157,738 100.0%
--------------------------------------- ---------- ---------- ---------- --------- ---------- ------------------
* Constituent of Japanese Special Situations basket.
Refer to Glossary below.
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 March 2021 (unaudited)
For the six months For the six months For the year
to 31 March 2021 to 31 March 2020 to 30 September 2020
--------------------------- ------------------------------ -----------------------------
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------ -------- -------- ------- -------- --------- --------- -------- --------- --------
Income
Investment income 6,168 27 6,195 5,861 - 5,861 15,157 - 15,157
(Losses)/gains on financial
assets and financial liabilities
held at fair value - 216,478 216,478 - (221,778) (221,778) - (3,073) (3,073)
Exchange gains/(losses) on
currency balances - (101) (101) - 900 900 - (1,594) (1,594)
---------------------------------- -------- -------- ------- -------- --------- --------- -------- --------- --------
6,168 216,404 222,572 5,861 (220,878) (215,017) 15,157 (4,667) 10,490
Expenses
Investment management fee (997) (2,327) (3,224) (988) (2,305) (3,293) (1,789) (4,173) (5,962)
Other expenses (including
irrecoverable
VAT) (884) - (884) (822) - (822) (1,630) - (1,630)
---------------------------------- -------- -------- ------- -------- --------- --------- -------- --------- --------
Profit/(loss) before finance
costs and taxation 4,287 214,077 218,364 4,051 (223,183) (219,132) 11,738 (8,840) 2,898
Finance costs (455) (1,072) (1,527) (443) (1,044) (1,487) (913) (2,150) (3,063)
Exchange (losses)/gains on
loan revaluation - 4,704 4,704 - (2,069) (2,069) - (1,114) (1,114)
---------------------------------- -------- -------- ------- -------- --------- --------- -------- --------- --------
Profit/(loss) before taxation 3,832 217,709 221,541 3,608 (226,296) (222,688) 10,825 (12,104) (1,279)
Taxation (350) - (350) (320) - (320) (691) - (691)
---------------------------------- -------- -------- ------- -------- --------- --------- -------- --------- --------
Profit/(loss) for the period 3,482 217,709 221,191 3,288 (226,296) (223,008) 10,134 (12,104) (1,970)
---------------------------------- -------- -------- ------- -------- --------- --------- -------- --------- --------
Earnings per Ordinary Share 3.31p 207.21p 210.52p 3.01p (206.99p) (203.98p) 9.36p (11.18p) (1.82p)
---------------------------------- -------- -------- ------- -------- --------- --------- -------- --------- --------
The total column of this statement is the Income Statement of
the Company prepared in accordance with IFRS, as adopted by the
European Union. The supplementary revenue and capital columns are
presented in accordance with the Statement of Recommended Practice
issued by the Association of Investment Companies ('AIC SORP').
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
during the year.
There is no other comprehensive income, and therefore the profit
for the six months after tax is also the total comprehensive
income.
The accompanying notes are an integral part of these financial
statements.
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 March 2021 (unaudited)
Capital
Ordinary share redemption Capital Revenue
capital reserve Share premium reserve Merger reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the six
months to 31
March 2021
---------------- --------------- --------------- --------------- --------- --------------- --------- ----------
Balance as at
30 September
2020 11,600 7,335 28,078 764,245 41,406 30,941 883,605
Ordinary Shares
bought back
and held in
treasury - - - (8,332) - - (8,332)
Total
comprehensive
income for the
period - - - 217,709 - 3,482 221,191
Ordinary
dividends paid
(see note 6) - - - - - (11,040) (11,040)
---------------- --------------- --------------- --------------- --------- --------------- --------- ----------
Balance as at
31 March 2021 11,600 7,335 28,078 973,622 41,406 23,383 1,085,424
---------------- --------------- --------------- --------------- --------- --------------- --------- ----------
For the six months to 31 March 2020
Balance as at 30 September 2019 11,600 7,335 28,078 807,421 41,406 43,101 938,941
Ordinary Shares bought back and held in
treasury - - - (10,730) - - (10,730)
Total comprehensive income for the period - - - (226,296) - 3,288 (223,008)
Ordinary dividends paid (see note 6) - - - - - (15,854) (15,854)
------------------------------------------------ ------- ------ ------- ---------- ------- --------- ----------
Balance as at 31 March 2020 11,600 7,335 28,078 570,395 41,406 30,535 689,349
------------------------------------------------ ------- ------ ------- ---------- ------- --------- ----------
For the year ended 30 September 2020
-------------------------------------------- ------------- ------ ------- --------- ------- --------- ---------
Balance as at 30 September 2019 11,600 7,335 28,078 807,421 41,406 43,101 938,941
Ordinary Shares bought back and held in
treasury - - - (31,072) - - (31,072)
Total comprehensive Income for the year - - - (12,104) - 10,134 (1,970)
Ordinary dividends paid (see note 6) - - - - - (22,294) (22,294)
-------------------------------------------- ------------- ------ ------- --------- ------- --------- ---------
Balance as at 30 September 2020 11,600 7,335 28,078 764,245 41,406 30,941 883,605
-------------------------------------------- ------------- ------ ------- --------- ------- --------- ---------
The accompanying notes are an integral part of these financial
statements.
BALANCE SHEET
as at 31 March 2021 (unaudited)
At 30
At 31 March At 31 March September
2021 2020 2020
Notes GBP'000 GBP'000 GBP'000
-------------------------------- ------ ------------- -------------- -----------
Non-current assets
Investments held at fair
value through profit or loss 1,160,785 745,951 959,709
---------------------------------------- ------------- -------------- -----------
1,160,785 745,951 959,709
Current assets
Total Return Swap assets - 1,355 -
Sales for future settlement - 3,710 -
Other receivables 3,245 3,268 8,775
Cash and cash equivalents 37,746 42,672 31,596
---------------------------------------- ------------- -------------- -----------
40,991 51,005 40,371
Total assets 1,201,776 796,956 1,000,080
---------------------------------------- ------------- -------------- -----------
Current liabilities
Revolving Credit facility (42,629) (29,872) (39,314)
Other payables (1,409) (3,823) (2,097)
---------------------------------------- ------------- -------------- -----------
(44,038) (33,695) (41,411)
--------------------------------------- ------------- -------------- -----------
Total assets less current
liabilities 1,157,738 763,261 958,669
---------------------------------------- ------------- -------------- -----------
Non-current liabilities
4.184% Series A Sterling
Unsecured Loan Notes 2036 (29,902) (29,896) (29,899)
3.249% Series B Euro Unsecured
Loan Notes 2036 (25,487) (26,452) (27,140)
2.93% Euro Senior Unsecured
Loan Notes 2037 (16,925) (17,564) (18,025)
(72,314) (73,912) (75,064)
--------------------------------------- ------------- -------------- -----------
Net assets 1,085,424 689,349 883,605
---------------------------------------- ------------- -------------- -----------
Equity attributable to equity
Shareholders
------------------------------- ------------ ------------ ------------
Ordinary share capital 11,600 11,600 11,600
Capital redemption reserve 7,335 7,335 7,335
Share premium 28,078 28,078 28,078
Capital reserve 973,622 570,395 764,245
Merger reserve 41,406 41,406 41,406
Revenue reserve 23,383 30,535 30,941
------------------------------- ------------ ------------ ------------
Total equity 1,085,424 689,349 883,605
------------------------------- ------------ ------------ ------------
Net asset value per Ordinary
Share - basic 1,038.07p 635.20p 837.13p
------------------------------- ------------ ------------ ------------
Number of shares in issue
excluding
Treasury Shares 5 104,561,803 108,524,456 105,551,730
------------------------------- ------------ ------------ ------------
The accompanying notes are an integral part of these financial
statements.
Registered in England & Wales No. 28203
STATEMENT OF CASH FLOWS
for the six months ended 31 March 2021 (unaudited)
Six months Six months Year to
to to 30 September
31 March 2021 31 March 2020
2020
GBP'000 GBP'000 GBP'000
----------------------------------------------- -------------- ----------- --------------
Reconciliation of (loss)/profit
before taxation to net cash (outflow)/inflow
from operating activities
(Loss)/profit before taxation 221,541 (222,688) (1,279)
Losses/(gains) on investments
held at fair value through profit
or loss (216,478) 221,778 3,073
Decrease/(increase) in other receivables (1,175) 351 1,441
(Decrease)/increase in other payables (627) (575) (158)
Taxation (paid)/received (159) (279) (685)
Amortisation of debenture and
loan issue expenses (6,243) (192) 391
9 10 20
Net cash (outflow)/inflow from
operating activities (3,132) (1,595) 2,803
----------------------------------------------- -------------- ----------- --------------
Investing activities
Purchases of investments (331,962) (192,390) (424,934)
Sales of investments 354,255 198,213 431,936
----------------------------------------------- -------------- ----------- --------------
Cash inflow from investing activities 22,293 5,823 7,002
----------------------------------------------- -------------- ----------- --------------
Financing activities
Dividends paid (11,040) (15,854) (22,294)
Payments for Ordinary Shares bought
back and held in treasury (8,775) (10,421) (30,633)
Net drawdown/(repayment) of revolving
credit facility 6,798 - 10,000
Cash outflow from financing activities (13,017) (26,275) (42,927)
----------------------------------------------- -------------- ----------- --------------
Increase/(decrease) in cash and
cash equivalents 6,144 (22,047) (33,122)
----------------------------------------------- -------------- ----------- --------------
Reconciliation of net cash flow
movements in funds:
Cash and cash equivalents at beginning
of year 31,596 64,725 64,725
Exchange rate movements 6 (6) (7)
Increase/(decrease) in cash and
cash equivalents 6,144 (22,047) (33,122)
----------------------------------------------- -------------- ----------- --------------
Increase/(decrease) in net cash 6,150 (22,053) (33,129)
----------------------------------------------- -------------- ----------- --------------
Cash and cash equivalents at end
of period 37,746 42,672 31,596
----------------------------------------------- -------------- ----------- --------------
The accompanying notes are an integral part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 31 March 2021 (unaudited)
1. Significant accounting policies
The condensed financial statements of the Company have been
prepared in accordance with International Accounting Standards
(IAS) 34 - "Interim Financial Reporting" as adopted by the EU.
In the current period, the Company has applied amendments to
IFRS. These include annual improvements to IFRS, changes in
standards, legislative and regulatory amendments, changes in
disclosure and presentation requirements. The adoption of these has
not had any material impact on these financial statements and the
accounting policies used by the Company followed in these half-year
financial statements are consistent with the most recent Annual
Report for the year ended 30 September 2020.
Going concern
The financial statements have been prepared on a going concern
basis and on the basis that approval as an investment trust company
will continue to be met.
The Directors have made an assessment of the Company's ability
to continue as a going concern and are satisfied that the Company
has adequate resources to continue in operational existence for a
period of at least 12 months from the date when these financial
statements were approved.
In making the assessment, the Directors have considered the
likely impacts of the current COVID-19 pandemic on the Company,
operations and the investment portfolio.
The Directors noted that the Company, with the current cash
balance and holding a portfolio of liquid listed investments, is
able to meet the obligations of the Company as they fall due. The
current cash balance plus available additional borrowing, through
the revolving credit facility, enables the Company to meet any
funding requirements and finance future additional investments. The
Company is a closed-end fund, where assets are not required to be
liquidated to meet day to day redemptions. The Company is in a net
current liability position as at 31 March 2021, however this is not
determined to be a going concern risk due to the significant
portfolio of level 1 investments which could be sold to settle
liabilities.
The Directors, the Manager and other service providers have put
in place contingency plans to minimise disruption. Furthermore, the
Directors are not aware of any material uncertainties that may cast
significant doubt on the Company's ability to continue as a going
concern, having taken into account the liquidity of the Company's
investment portfolio and the Company's financial position in
respect of its cash flows, borrowing facilities and investment
commitments (of which there are none of significance). Therefore,
the financial statements have been prepared on the going concern
basis.
Comparative information
The financial information contained in this Half Year Report
does not constitute statutory accounts as defined in the Companies
Act 2006. The financial information for the half-year period ended
31 March 2020 has not been audited or reviewed by the Company's
Auditor.
The comparative figures for the financial year ended 30
September 2020 are not the Company's statutory accounts for that
financial year. The statutory accounts for the year to 30 September
2020 were reported on by the Company's Auditor and delivered to the
Registrar of Companies. The report of the Auditor was (i)
unqualified, (ii) did not include a reference to any matters to
which the Auditor drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
2. Income
6 months 6 months Year to
to to 30 September
31 March 31 March 2020
2021 2020
GBP'000 GBP'000 GBP'000
Income from investments
Listed investments 6,359 5,773 14,598
Total Return Swap dividends* - 129 369
-------------------------------- ---------- ---------- --------------
6,359 5,902 14,967
-------------------------------- ---------- ---------- --------------
Other income
Deposit interest - 246 264
Total Return Swap interest* (65) (256) (481)
Underwriting commission - - 426
Interest on French withholding
tax received - - 1
Exchange losses on receipt of
income** (126) (31) (20)
-------------------------------- ---------- ---------- --------------
(191) (41) 190
-------------------------------- ---------- ---------- --------------
Total income 6,168 5,861 15,157
-------------------------------- ---------- ---------- --------------
* Net income (paid)/received on underlying holdings in Total
Return Swaps.
** Exchange movements arise from ex-dividend date to payment
date.
3. Earnings per Ordinary Share
6 months to 31 March 2021
Revenue Capital Total
------------------------------------- --------- --------- --------
Net profit/(loss) (GBP'000) 3,482 217,709 221,191
Weighted average number of Ordinary
Shares 105,068,233
------------------------------------- ------------------------------
Earnings per Ordinary Share 3.31p 207.21p 210.52p
------------------------------------- --------- --------- --------
6 months to 31 March 2020
Revenue Capital Total
------------------------------------- -------- ---------- ----------
Net profit/(loss) (GBP'000) 3,288 (226,296) (223,008)
Weighted average number of Ordinary
Shares 109,327,150
------------------------------------- --------------------------------
Earnings per Ordinary Share 3.01p (206.99p) (203.98p)
------------------------------------- -------- ---------- ----------
Year to 30 September 2020
Revenue Capital Total
------------------------------------- --------- --------- --------
Net profit (GBP'000) 10,134 (12,104) (1,970)
Weighted average number of Ordinary
Shares 108,222,102
------------------------------------- ------------------------------
Earnings per Ordinary Share 9.36p (11.18p) (1.82p)
------------------------------------- --------- --------- --------
There are no dilutive instruments issued by the Company. Both
the basic and diluted earnings per share for the Company are
represented above.
4. Net asset value per Ordinary Share
The net asset value per Ordinary Share is based on net assets of
GBP1,085,424,000 (31 March 2020: GBP689,349,000; 30 September 2020:
GBP883,605,000) and on 104,561,803 (31 March 2020: 108,524,456; 30
September 2020: 105,551,730) Ordinary Shares, being the number of
Ordinary Shares in issue excluding shares held in treasury at the
relevant period ends.
5. Share capital
During the period to 31 March 2021, 989,927 (six months to 31
March 2020: 1,601,212; year to 30 September 2020: 4,573,938)
Ordinary Shares were bought back and placed in treasury for an
aggregate consideration of GBP8,332,000 (six months to 31 March
2020: GBP10,729,000; year to 30 September 2020: GBP31,072,000).
No Ordinary Shares held in treasury were cancelled in the period
(six months to 31 March 2020: nil; year ended 30 September 2020:
nil).
6. Dividends
During the period, the Company paid a final dividend of 10.5p
per Ordinary Share for the year ended 30 September 2020 on 3
January 2021 to Ordinary shareholders on the register at 4 December
2020 (ex-dividend 3 December 2020). An interim dividend of 6p per
Ordinary Share for the period ended 31 March 2021 has been declared
and will be paid on 2 July 2021 to Ordinary shareholders on the
register at the close of business on 11 June 2021 (ex-dividend 10
June 2021).
7. Values of financial assets and financial liabilities
Valuation of financial instruments
The Company measures fair values using the following hierarchy
that reflects the significance of the inputs used in making the
measurements.
The fair value is the amount at which the asset could be sold or
the liability transferred in an orderly transaction between market
participants, at the measurement date, other than a forced or
liquidation sale.
Categorisation within the hierarchy has been determined on the
basis of the lowest level input that is significant to the fair
value measurement of the relevant assets as follows:
-- Level 1 - valued using quoted prices, unadjusted in active
markets for identical assets or liabilities.
-- Level 2 - valued by reference to valuation techniques using
observable inputs for the asset or liability other than quoted
prices included in Level 1.
-- Level 3 - valued by reference to valuation techniques using
inputs that are not based on observable market data for the asset
or liability.
Financial assets
The table below sets out fair value measurements of financial
instruments as at the period end, by the level in the fair value
hierarchy into which the fair value measurement is categorised.
Financial assets at fair value through Level Level 2 Level Total
profit or loss at 31 March 2021 1 3
----------------------------------------
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ---------- -------- -------- ----------
Equity investments 1,158,111 - 2,674 1,160,785
There have been no transfers during the period between Levels 1,
2 and 3.
Level Level Level 3 Total
1 2
Financial assets at fair value through GBP'000 GBP'000 GBP'000 GBP'000
profit or loss at 31 March 2020
Equity investments 740,215 5,736 - 745,951
Total Return Swap assets - 1,355 - 1,355
---------------------------------------- -------- -------- -------- --------
740,215 7,091 - 747,306
---------------------------------------- -------- -------- -------- --------
Level Level Level 3 Total
1 2
Financial assets at fair value through GBP'000 GBP'000 GBP'000 GBP'000
profit or loss at 30 September 2020
Equity investments 951,491 5,602 2,616 959,709
951,491 5,602 2,616 959,709
---------------------------------------- -------- -------- -------- --------
Fair value of Level 3 investments The following table summarises
the Company's Level 3 investments that were accounted for at fair
value:
Six months Six months Year to
to to 30 September
31 March 2021 31 March 2020
2020
GBP'000 GBP'000 GBP'000
----------------------------------- -------------- ----------- --------------
Opening fair value of investment 2,616 - -
Transfer from Level 1 to Level
3 in the year 394 - 2,616
Sales - proceeds (615) - -
Realised loss on equity sales (24) - -
Movement in investment holding 303 - -
gairs
Closing fair value of investments 2,674 - 2,616
Fair value through profit or loss
The inputs used to measure fair value are categorised into
different levels of the hierarchy, and each investment is
categorised entirely according to the lowest priority level that is
significant to the fair value measurement of the relevant asset or
liability.
Financial liabilities
Valuation of Loan Notes
The Company's Loan Notes are measured at amortised cost, with
the fair values set out below. Other financial assets and
liabilities of the Company are carried in the Balance Sheet at an
approximation to their fair value.
At 30 September
At 31 March 2021 At 31 March 2020 2020
Amortised Amortised Amortised
Cost Fair value Cost Fair value Cost Fair value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- ----------- ---------- ----------- ---------- -----------
4.184% Series A Sterling
Unsecured Loan Notes
2036 (29,902) (35,755) (29,896) (36,693) (29,899) (38,677)
3.249% Series B Euro
Unsecured Loan Notes
2036 (25,487) (31,059) (26,452) (32,632) (27,140) (34,826)
2.93% Euro Senior
Unsecured Loan Notes
2037 (16,925) (20,168) (17,564) (21,223) (18,025) (22,779)
Total (72,314) (86,982) (73,912) (90,548) (75,064) (96,282)
-------------------------- ---------- ----------- ---------- ----------- ---------- -----------
There is no publicly available price for the Company's Loan
Notes, their fair market value has been derived by calculating the
relative premium (or discount) of the loan versus the publicly
available market price of the reference market instrument and
exchange rates. As this price is derived by a model, using
observable inputs, it would be categorised as level 2 under the
fair value hierarchy.
The financial liabilities in the table below are shown at their
fair value, being the amount at which the liability may be
transferred in an orderly transaction between market participants.
The costs of early redemption of the Loan Notes are set out in the
Glossary below
Level Level 2 Level Total
1 3
-----------------------------------
Financial liabilities at 31 March GBP'000 GBP'000 GBP'000 GBP'000
2021
----------------------------------- --------- --------- -------- ---------
Loan Notes - (86,982) - (86,982)
- (86,982) - (86,982)
--------------------------------------------- --------- -------- ---------
Level Level Level 3 Total
1 2
-----------------------------------
Financial liabilities at 31 March GBP'000 GBP'000 GBP'000 GBP'000
2020
----------------------------------- --------- --------- -------- ---------
Loan Notes - (90,548) - (90,548)
- (90,548) - (90,548)
Level Level Level 3 Total
1 2
---------------------------------------
Financial liabilities at 30 September GBP'000 GBP'000 GBP'000 GBP'000
2020
--------------------------------------- --------- --------- -------- ---------
Loan Notes - (96,282) - (96,282)
- (96,282) - (96,282)
------------------------------------------------- --------- -------- ---------
8. Derivatives
The Company may use a variety of derivative contracts including
total return swaps to enable the Company to gain long and short
exposure to individual securities. Derivatives are valued by
reference to the underlying market value of the corresponding
security.
31 March 31 March 30 September
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------- --------- --------- -------------
Total return swaps
Current assets - 1,355 -
Net value of derivatives - 1,355 -
------------------------- --------- --------- -------------
The gross positive exposure of Total Return Swaps as at 31 March
2021 was GBPnil (31 March 2020: GBP17,350,000; 30 September 2020:
GBPnil) and the total negative exposure of Total Return Swaps was
GBPnil (31 March 2020: GBPnil; 30 September 2020: GBPnil). The
liabilities are secured against assets held with Jefferies Hoare
Govett (the "prime broker"). The collateral held as at 31 March
2021 was GBPnil (31 March 2020: GBP5,036,000; 30 September 2020:
GBPnil) which is included in cash and cash equivalents in the
Balance Sheet
9. Related parties and transactions with the Investment Manager
The Company paid management fees to Asset Value Investors
Limited during the period amounting to GBP3,324,000 (six months to
31 March 2020: GBP3,293,000; year ended 30 September 2020:
GBP5,962,000). At the half-year end, the following amounts were
outstanding in respect of management fees: GBPnil (31 March 2020:
GBPnil; 30 September 2020: GBP488,000).
Fees paid to Company's Directors for the six months ended 31
March 2021 amounted to GBP84,000 (six months to 31 March 2020:
GBP84,000; year ended 30 September: GBP168,500
10. Post Balance Sheet events
Since the period end the Company has not bought back any shares.
On 12 April 2021, the Company drew down an additional JPY2.5bn of
the JPY9.0bn facility which is now fully utilised. The markets and
operations have continued to be disrupted by the effects of the
COVID-19 pandemic. However, since the half year end the NAV per
share has increased by 1.5% to 24 May 2021 and contingency plans at
the Investment Manager and key service suppliers have proven
effective in mitigating the effects on management of the portfolio
and on all supporting operations
PRINCIPAL RISKS AND UNCERTAINTIES
Whilst the principal risks facing the Company are substantially
unchanged since the date of the Annual Report 2020 and continue to
be as set out on pages 8 to 11 of that report the ongoing COVID-19
pandemic has impacted the business in a number of areas as detailed
in the Chairman's Statement and Investment Manager's Report.
Risks faced by the Company include, but are not limited to,
investment risk, portfolio diversification, gearing, discount,
market risk, market price volatility, currency, liquidity risk,
interest rate and credit and counterparty risk. Details of the
Company's management of these risks and exposure to them are set
out in the Annual Report 2020.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
-- the condensed set of financial statements has been prepared
in accordance with International Accounting Standard 34, Interim
Financial Reporting as adopted by the EU; and
-- this Half Year 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 Company
during that period; and any changes in the related party
transactions described in the last Annual Report that could do
so.
This Half Year Report was approved by the Board of Directors on
25 May 2021 and the above responsibility statement was signed on
its behalf by Susan Noble, Chairman.
Susan Noble
Chairman
25 May 2021
GLOSSARY
Alternative Performance Measure ('APM')
An APM is a numerical measure of the Company's current,
historical or future financial performance, financial position or
cash flows, other than a financial measure defined or specified in
the applicable financial framework.
Comparator Benchmark
The Company's Comparator Benchmark is the MSCI All Country World
ex-US Total Return Index, expressed in Sterling terms. The
benchmark is an index which measures the performance of global
equity markets, both developed and emerging. The weighting of index
constituents is based on their market capitalisation. Dividends
paid by index constituents are assumed to be reinvested in the
relevant securities at the prevailing market price. The Investment
Manager's investment decisions are not influenced by whether a
particular company's shares are, or are not, included in the
benchmark. The benchmark is used only as a yard stick to compare
investment performance.
Cost
The book cost of each investment is the total acquisition value,
including transaction costs, less the value of any disposals or
capitalised distributions allocated on a weighted average cost
basis.
In the case of total return swaps, cost is defined as the
notional cost of the position.
Discount/Premium
If the share price is lower than the NAV per share it is said to
be trading at a discount. The size of the discount is calculated by
subtracting the share price from the NAV per share and is usually
expressed as a percentage of the NAV per share. If the share price
is higher than the NAV per share, this situation is called a
premium.
The discount and performance are calculated in accordance with
guidelines issued by the AIC. The discount is calculated using the
net asset values per share inclusive of accrued income with debt at
market value.
Earnings before Interest, Tax, Depreciation and Amortisation
('EBITDA')
A proxy for the cash flow generated by a business - it is most
commonly used for businesses that do not (yet) generate operating
or shareholder profits.
Gearing
Gearing refers to the ratio of the Company's debt to its equity
capital. The Company may borrow money to invest in additional
investments for its portfolio. If the Company's assets grow, the
shareholders' assets grow proportionately more because the debt
remains the same. But if the value of the Company's assets falls,
the situation is reversed. Gearing can therefore enhance
performance in rising markets but can adversely impact performance
in falling markets.
The gearing of 10.6% represents borrowings of GBP114,943,000
expressed as a percentage of shareholders' funds of
GBP1,085,424,000. Net gearing of 6.9% represents borrowings of
GBP114,943,000, less net current assets of GBP39,582,000, expressed
as a percentage of shareholders' funds of GBP1,085,424,000.
As at 31 March 2020, the values of Loan Notes were:
2036 GBP 2036 EUR 2037 EUR JPY revolving
loan loan loan credit facility* Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- --------- ------------------ ---------
Value of issue 30,000 22,962 17,526 44,573 115,061
Unamortised issue
costs (98) (74) (116) - (288)
Exchange movement - 2,599 (485) (1,944) 170
--------------------- --------- --------- --------- ------------------ ---------
Amortised book cost 29,902 25,487 16,925 42,629 114,943
--------------------- --------- --------- --------- ------------------ ---------
Fair value 35,755 31,059 20,168 42,629 129,611
--------------------- --------- --------- --------- ------------------ ---------
Redemption value 42,807 38,757 25,773 42,629 149,966
--------------------- --------- --------- --------- ------------------ ---------
* The revolving credit facility increased to JPY6.5 billion
(previously JPY4.0 billion) on 26 February 2021 equivalent to
GBP42.6 million at current exchange rates. On 12 April 2021 (and
after the end of the period under review) a further JPY2.5 billion
was drawn down.
Internal Rate of Return ('IRR')
The IRR is the annualised rate of return earned by an
investment, adjusted for dividends, purchases and sales, since the
holding was first purchased.
In some instances, we display "n/a" instead of IRR figures in
the Investment Portfolio table. In most instances, this is done if
the holding period is less than three months, as annualising
returns over short-term periods can produce misleading numbers.
Net Asset Value ('NAV') per share
The NAV per share is shareholders' funds expressed as an amount
per individual share. Shareholders' funds are the total of all of
the Company's assets, at their current market value, having
deducted all liabilities and prior charges at par value, or at
their fair value as appropriate. The NAV per share of 1,038.07p is
calculated by dividing the NAV GBP1,085,424,000 by the number of
Ordinary Shares in issue, excluding Treasury shares, of
104,561,803.
The NAV with debt at fair value is calculated in the same manner
but with debt at fair value GBP86,982,000, rather than the par
value of GBP72,314,000. The NAV with debt at fair value is
therefore 1,024.04p
(GBP'000) Shareholders' Debt at Debt at Shares outstanding NAV with NAV with
funds par value* fair value* debt at debt at fair
par value value
31-Mar-21 1,085,424 72,314 86,982 104,561,803 1,038.07 1,024.04
31-Mar-21 689,349 73,912 90,548 108,524,456 635.20 619.87
30-Sep-20 883,605 75,064 96,282 105,551,730 837.13 817.03
* Not including the Revolving Credit Facility, which is not fair
valued.
Ongoing Charges Ratio
Ongoing Expenses Ratio (APM)/Ongoing Charges Ratio. As
recommended by the AIC in its current guidance, the Company's
Ongoing Charges Ratio is the sum of: (a) its Ongoing Expenses
Ratio; and (b) the Ongoing Charges Ratios incurred at the
underlying funds in which the Company has investments, weighted for
the value of the investment in each underlying fund as a percentage
of the Company's NAV. The Company's ongoing expenses ratio is its
annualised expenses of GBP8,416,000 (excluding finance costs and
certain non-recurring items) expressed as a percentage of the
average monthly net assets of GBP1,000,977,000 of the Company
during the period.
A reconciliation of the Ongoing Charges to the Ongoing Expenses
Ratio as at 31 March 2021 is provided below
Ongoing Expenses Ratio
(a Key performance Indicator) a 0.84%
Underlying Charges Ratio b 1.30%
--------- ------
Ongoing Charges Ratio = a + b 2.14%
--------- ------
Return on Investment ('ROI')
The ROI is the total profits earned to date on an investment
divided by the total cost of the investment.
Shares bought back and held in treasury
The Company may repurchase its own shares and shares repurchased
may either be cancelled immediately or held in treasury. Shares
repurchased, whether cancelled or held in treasury, do not qualify
to vote at shareholder meetings or receive dividends. Share
repurchases may increase earnings per share. Further, to the extent
that shares are repurchased at a price below the prevailing net
asset value per share this will enhance the net asset value per
share for remaining shareholders.
Total Return - NAV and Share Price Returns
The combined effect of any dividends paid, together with the
rise or fall in the share price or NAV. Total return statistics
enable the investor to make performance comparisons between
investment trusts with different dividend policies. Any dividends
received by a shareholder are assumed to have been reinvested in
either additional shares in the Company or in the assets of the
Company at the prevailing NAV, in either case at the time that the
shares begin to trade ex-dividend. An annualised return is the
average compound annual return, for return data over a period of
time longer than a year.
Weight
Weight is defined as being each position's value as a percentage
of total assets less current liabilities.
SHAREHOLDER INFORMATION
Dividends
Shareholders who wish to have dividends paid directly into a
bank account rather than by cheque to their registered address can
complete a mandate form for the purpose. Mandate forms may be
obtained from Equiniti Limited, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA on request or downloaded from
Equiniti's website www.shareview.co.uk . The Company operates the
BACS system for the payment of dividends. Where dividends are paid
directly into shareholders' bank accounts, dividend tax vouchers
are sent to shareholders' registered addresses.
Share Prices
The Company's Ordinary Shares are listed on the London Stock
Exchange under 'Investment Trusts'. Prices are published daily in
The Financial Times, The Times, The Daily Telegraph, The Scotsman
and The Evening Standard.
Change of Address
Communications with shareholders are mailed to the last address
held on the share register. Any change or amendment should be
notified to Equiniti Limited at the address given above, under the
signature of the registered holder.
Daily Net Asset Value
The net asset value of the Company's shares can be obtained by
contacting Customer Services on 020 7659 4800 or via the website:
www.aviglobal.co.uk .
COMPANY INFORMATION
Directors
Susan Noble (Chairman)
Anja Balfour
Graham Kitchen
Nigel Rich
Calum Thomson
Secretary
Link Company Matters Limited
Beaufort House
51 New North Road
Exeter
Devon EX4 4EP
Tel: 01392 477500
Registered Office
Beaufort House
51 New North Road
Exeter
Devon EX4 4EP
Registered in England & Wales
No. 28203
Investment Manager and AIFM
Asset Value Investors Limited
25 Bury Street
London SW1Y 6AL
Registrar and Transfer Office
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Registrar's Shareholder Helpline
Tel. 0371 384 2490
Lines are open 8.30am to 5.30pm, Monday to Friday.
Registrar's Broker Helpline
Tel. 0906 559 6025
Calls to this number cost GBP1 per minute from a BT Landline,
other providers' costs may vary.
Lines are open 8.30am to 5.30pm, Monday to Friday.
Corporate Broker
Jefferies Hoare Govett
100 Bishopsgate
London EC2N 4JL
Auditor
KPMG LLP
319 St Vincent Street
Glasgow G2 5AS
Depositary
J.P. Morgan Europe Limited
25 Bank Street
London E14 5JP
Banker and Custodian
JPMorgan Chase Bank NA
125 London Wall
London EC2Y 5AJ
A copy of the Half Year Report can be viewed and downloaded from
the Company's website:
www.aviglobal.co.uk .
The content of the Company's web-pages and the content of any
website or pages which may be accessed through hyperlinks on the
Company's web-pages or this announcement is neither incorporated
into nor forms part of the above announcement.
National Storage Mechanism
A copy of the Half Year Report will be submitted shortly to the
National Storage Mechanism ('NSM') and will be available for
inspection at the NSM, which is situated at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
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END
IR BSGDUBBDDGBL
(END) Dow Jones Newswires
May 26, 2021 10:18 ET (14:18 GMT)
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