AVI GLOBAL TRUST PLC
(‘AGT’ or the ‘Company’)
LEI: 213800QUODCLWWRVI968
Announcement of unaudited results for the half-year ended 31 March 2024
Half Year Financial Report for the year ended 31 March 2024
A copy of the Company’s Annual Report for the half year ended 31 March 2024 will shortly be available to view and download from the Company’s website, https://www.aviglobal.co.uk. Neither the contents of the Company’s website nor the contents of any website accessible from hyperlinks on the Company’s website (or any other website) is incorporated into, or forms part of, this announcement.
Dividend
The Directors have declared the payment of an interim dividend of 1.2 pence per Ordinary Share for the period ended 31 March 2024, which will be paid on 19 July 2024 to Ordinary shareholders on the register at the close of business on 21 June 2024 (ex-dividend 20 June 2024).
The following text is copied from the Half-Year Report and Accounts:
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 +13.9%
– Share price total return +16.0%
– Benchmark index± increased on a total return basis +16.1%
– Interim dividend maintained at 1.2p
PERFORMANCE SUMMARY
| Six months to | Six months to | |
| 31 March 2024 | 31 March 2023 | |
| Net asset value per share (total return) 1* | +13.9% | +5.3% |
| Share price total return* | +16.0% | +5.5% |
| 31 March 2024 | 31 March 2023 | |
| Discount* (difference between share price and net asset value)2 | 9.4% | 10.4% |
| Six months to | Six months to | |
| 31 March 2024 | 31 March 2023 | |
| Earnings and Dividends | ||
| Investment income | £9.99m | £9.40m |
| Revenue earnings per share | 1.28p | 1.28p |
| Capital earnings per share | 9.42p | 9.42p |
| Total earnings per share | 10.70p | 10.70p |
| Ordinary dividends per share | 1.20p | 1.20p |
| Expense Ratio (annualised)* | ||
| Management, marketing and other expenses as a percentage of average shareholders’ funds | 0.88% | 0.84% |
| High | Low | |
| Period Highs/Lows | ||
| Net asset value per share | 252.88p | 207.84p |
| Net asset value per share (debt at fair value) | 255.40p | 211.81p |
| Share price (mid market) | 231.50p | 187.80p |
1 As per guidelines issued by the Association of Investment Companies (‘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.
Buybacks
During the six months ended 31 March 2024 the Company purchased 11,596,895 Ordinary Shares for cancellation for an aggregate consideration of £24,245,000 adding +0.2% to AGT’s NAV.
*Alternative Performance Measures
For all Alternative Performance Measures included in this Report, please see definitions in the Glossary in the Half-Year Report and Accounts.
± MSCI All Country World Index, please refer to the Glossary in the Half-Year Report and Accounts for further information.
CHAIRMAN’S STATEMENT
Having traded in a range of approximately 180p-200p since the beginning of 2022, the share price increased steadily following a dip in October 2023 and ended the period at over 230p. Over the six months from 30 September 2023 to 31 March 2024, the share price total return1 was +16.0%, while the NAV total return1 was +13.9%, a commendable return which was driven by some notable successes which are described in more detail in the Investment Manager’s Report.
Over the six months under review, stock markets reacted positively to macroeconomic news, which was better than had previously been expected, with fears of recession and inflation abating. Market returns were driven both by this news and by continued excitement around the prospects for Artificial Intelligence (‘AI’), which drove up the share prices of a small number of very large companies which form a high proportion of our benchmark index. The return on our comparator benchmark, the MSCI AC World Index, was +16.1% over the six-month period. Our Investment Manager has a broad-based approach and focuses on investing in companies which, in general, combine growth prospects with attractive share price valuations and, while not focusing on the fashionable parts of the market, was able to deliver strong returns for shareholders.
Revenue and dividend
Revenue earnings for the period were 1.38 pence per share. The Board has elected to pay an interim dividend of 1.2p per share, which is the same as last year. The Board recognises that a dividend which is steady and able to rise over time is attractive to many shareholders and, while we do aim to grow the dividend over time, I would like to repeat my previous statement that the portfolio is managed primarily for capital growth.
Share price rating and marketing
AGT has a substantial marketing budget and the Board works closely with AVI as it seeks to generate demand for the shares. Each month AVI produces an informative fact sheet which is available on our website and I encourage you to register on the site to receive these when they are published. AVI is also active in the media – both traditional and increasingly social media – as we seek to promote our investment proposition to a growing investor base. The Board is pleased to note that our marketing efforts have resulted in a substantial increase over time in the number of shares owned via retail investment platforms, and indeed these platforms make up four of our top five shareholders.
In common with many investment trusts, our shares continued to trade at a frustratingly persistent discount. We use share buybacks when the discount is unnaturally wide and when the Board believes that buying back shares is in the best interests of shareholders. This is also an approach that our Investment Manager encourages for many of our investee companies. There are periods when we buy back shares on most working days and, during the six months under review, 11.6 million shares were bought back, representing 2.3% of the shares in issue as at the start of the period. As well as benefiting shareholders by limiting the discount at which they could sell shares if they so wish, buying back shares at a discount also produced an uplift in value to the benefit of continuing shareholders, of approximately 0.2%.
In April we announced that Panmure Gordon had been appointed as the Company’s corporate broker. We look forward to working with the team at Panmure Gordon, particularly in seeking to find new shareholders. I would also like to thank our previous corporate brokers, Jefferies, for their help and support over the last several years.
In the 2023 Annual Report I raised the issue of the unintended consequences on the investment trust industry of recent regulatory pronouncements relating to Consumer Duty in respect of cost disclosures. In particular, the inclusion of costs embedded in our underlying investee funds in the overall cost figures disclosed in relation to your Company is misleading. The apparent lack of understanding associated with this disclosure and the consequent misinterpretation puts us at an unreasonable disadvantage when it comes to assessing the value of investing in the Company. This could lead to a reduced demand for our shares. For example, the Board is aware that both the potential for new investment in the Company and the reinvestment of dividends issued by the Company have been blocked for investors using the fidelity.co.uk platform. We have requested the management of the Fidelity platform to explain the reasons that have caused them to suspend investment in your Company’s shares on their platform. Rest assured we have taken this extremely seriously and have raised the issue and in particular the lack of transparency with the Financial Conduct Authority and our trade body the AIC. More broadly, efforts also continue to find a solution to correct the misleading approach to cost disclosure by putting pressure on government and regulators. We remain hopeful that the result will be a fair and logical outcome although recognise that the UK General Election may cause delays in any decisions to change the disclosure regime.
Annual general meeting
All resolutions at the Company’s AGM on 20 December 2023 were passed by a large majority and I would like to thank shareholders for their continuing support. It was good to meet a number of shareholders at the meeting. We welcome the opportunity to engage with shareholders and if you have any questions or points that you would like to raise with the Board, please send an email to aviglobal_cosec@linkgroup.co.uk or write to: The Company Secretary, AVI Global Trust PLC, 65 Gresham Street, London EC2V 7NQ.
Outlook
Stock market returns over the six months under review were very strong but I would caution that economies and markets are not immune from further headwinds. While better than expected economic news helped to propel markets, there is a risk of setbacks and the geopolitical background remains unstable, both of which could cause markets to fall.
Against this background our Investment Manager describes a number of opportunities for growth in the investment portfolio. Their focus on acquiring stakes in companies at attractive valuations has proven resilient and their persistence in pursuing value was demonstrated, for example, by the takeover bids for Hipgnosis Songs Fund in April. As ever, there will be unexpected events along the way but we are optimistic that the portfolio and investment process are well set to continue delivering attractive returns.
Graham Kitchen
Chairman
4 June 2024