AVI GLOBAL TRUST PLC
(‘AGT’ or the ‘Company’)
LEI: 213800QUODCLWWRVI968
Announcement of unaudited results for the half-year ended 31 March 2023
Half Year Financial Report for the year ended 31 March 2023
A copy of the Company’s Annual Report for the half year ended 31 March 2023 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 1.2p per Ordinary Share for the period ended 31 March 2023, which will be paid on 14 July 2023 to Ordinary shareholders on the register at the close of business on 16 June 2023 (ex-dividend 15 June 2023).
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 +5.3% to 208.35p
– Share price total return +5.5%
– Benchmark index increased on a total return basis +10.3%
– Interim dividend maintained at 1.2p
PERFORMANCE SUMMARY
| Net asset value per share (total return) for six months to 31 March 20231* | 5.3% | |
| Share price total return for the six months to 31 March 2023* | 5.5% | |
| 31 March 2023 | 31 March 2022 | |
| Discount* (difference between share price and net asset value)2 | 10.4% | 9.1% |
| Six months to | Six months to | |
| 31 March 2023 | 31 March 2022 | |
| Earnings and Dividends | ||
| Investment income | £9.40m | £9.25m |
| Revenue earnings per share | 1.28p | 1.25p |
| Capital earnings per share | 9.42p | (0.18p) |
| Total earnings per share | 10.70p | 1.07p |
| Ordinary dividends per share | 1.20p | 1.20p |
| Expense Ratio (annualised)* | ||
| Management, marketing and other expenses(as a percentage of average shareholders’ funds) | 0.84% | 0.87% |
| High | Low | |
| Period Highs/Lows | ||
| Net asset value per share | 225.53p | 195.03p |
| Net asset value per share (debt at fair value) | 227.99p | 197.80p |
| Share price (mid market) | 205.50p | 174.60p |
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 2023 the Company purchased 11,946,757 Ordinary Shares for cancellation at a cost of £23,206,000 . During the half-year no Ordinary Shares were cancelled from treasury.
*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.
CHAIRMAN’S STATEMENT
My predecessor Susan Noble retired at the Annual General Meeting in December 2022 and this is my first statement as Chairman. The Company has thrived under Susan’s leadership and the Board would like to record our thanks to her. We have enjoyed working with her and wish her well in her future endeavours.
Overview of the Half Year
Having lived through over a decade of very low inflation and interest rates, economies and markets are now having to adjust to higher levels of both. The collapse of Silicon Valley Bank and the rescue of Credit Suisse in March 2023 illustrate the challenges for governments and central banks in seeking to control inflation while not causing lasting economic damage.
The NAV total return1 for the six months under review was +5.3%, underperforming our comparator benchmark which produced a return of +10.3%. As set out in the Investment Manager’s Report, all of the underperformance occurred in a difficult period in March 2023. While it is disappointing to report returns behind the benchmark, AVI have produced strong returns over the long term and we are encouraged by the range of investment opportunities which the team are now seeing.
Revenue and Dividends
Revenue earnings for the six months under review were 1.28 pence per share. The Board has elected to pay an interim dividend of 1.2 pence 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 but, as my predecessors in the chair have regularly noted, the portfolio is managed primarily for capital growth.
Gearing
We have not made any changes to the structure of the Company’s debt in the period under review. Deployment of available cash is the responsibility of AVI and driven by their stock selection and, as set out in the Investment Manager’s Report, net gearing increased in the period, driven by the Investment Manager taking advantage of some attractive investment opportunities.
Share Price Rating and Marketing
The Board and Manager take an active interest in the share price rating. We have an extensive marketing programme which promotes the shares to a wide variety of investors, both professional and individuals. We aim to provide comprehensive and engaging reports on our activities and disseminate these through both traditional and electronic media channels.
We also recognise that at times there can be merit in using share buybacks with the intention of limiting the volatility in the discount. This is an approach which we encourage with many of our investee companies. During the six months under review, 11.9 million shares were bought back, representing 2.43% of the shares in issue (excluding treasury shares) as at the start of the period. Shares were bought back when the Board believed that the discount was unnaturally wide. As well as benefitting 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, by approximately 0.22%.
The Board
Following Susan Noble’s retirement, June Jessop was appointed as a non-executive Director with effect from 1 January 2023. June was previously Senior Business Manager at Stewart Investors and a member of the EMEA Management Committee of First Sentier Investors (of which Stewart Investors is a sub-brand). June has spent her entire career in financial services, gaining broad experience in portfolio management, client relationship, business development and, latterly, general management roles. She has been an investment manager for institutions, charities and private clients, including managing assets of an investment trust and investing in closed-end funds on behalf of clients. My colleagues and I are delighted to welcome June to the Board. She brings a wealth of experience in both managing assets and in the management of investment businesses. Her skills complement those of the other Board members and we look forward to working with her.
Annual General Meeting
The resolutions at the AGM in December 2022 were each passed by a large majority and the Board would like to thank shareholders for their continuing support.
Outlook
The changes to the portfolio described in the Investment Manager’s Report are indicative of the opportunities currently presented in various parts of the world. In particular, the level of gearing has increased and I would emphasise that this is driven solely by opportunities at the individual company level rather than any view on economies or markets.
The recent issues in the banking sector are a cause for concern, as more broadly are the continuing geopolitical and inflationary challenges that the world faces. Against this background your Board believes that there is a good base of value in the portfolio and we are optimistic. While markets will inevitably be volatile, over the long term we expect AVI to continue to deliver attractive returns to investors.
Graham Kitchen
Chairman
31 May 2023