AVI Global Trust plc Annual Report 2024
Resilience.
Longevity.
Growth.
Annual Report 2024
* As at 30 September 2024.
** Source: Morningstar, performance period 30 June 1985
to 30 September 2024, total return net of fees, GBP.
The current approach to investment was adopted in 1985.
*** As at 30 September 2024, includes: management fee,
marketing and administration costs. Formerly disclosed
as the Expense Ratio.
† For all Alternative Performance Measures
included in this Strategic Report, please see
definitions in the Glossary on pages 101 to 105.
Retail Investors Advised by IFAs
The Company currently conducts its affairs so that
its shares can be recommended by Independent
Financial Advisers (IFAs) in the UK to ordinary retail
investors in accordance with the Financial Conduct
Authority rules in relation to non-mainstream
investment products and intends to continue to
do so. The shares are excluded from the Financial
Conduct Authority’s restrictions which apply to
non-mainstream investment products because
they are shares in an authorised investment trust.
The Company is an Alternative Investment Fund
(AIF) under the European Union’s Alternative
Investment Fund Managers’ Directive (AIFMD).
Its Alternative Investment Fund Manager (AIFM)
is Asset Value Investors Limited (AVI, or the
Investment Manager). Further disclosures required
under the AIFMD can be found on the Company’s
website: www.aviglobal.co.uk.
ISA Status
The Company’s shares are eligible for Stocks &
Shares ISAs.
Awards
AIC Shareholder
Communication Awards
2024 • Winner
Best Report and Accounts
(Generalist)
Investment Week
Investment Company of the
Year Awards 2023 • Winner
Global
Citywire Investment Trust
Awards 2023 • Winner
Global Equities
AVI Global Trust plc (AGT
or the Company) was
established in 1889. The
Company’s investment
objective 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.
Net assets
†
:
£1.1 billion*
Launch date:
1 July 1889
Annualised NAV total return since
1985
†
:
11.6%**
Ongoing Charges Ratio
†
:
0.87%***
Annual Report / Welcome
Annual Report 2024
04
AVI Global Trust plc / Annual Report 2024
Design and Production
www.carrkamasa.co.uk
CONTENTS
Strategic Report:
Company Performance 02
Company Overview 04
The Investment Manager at a Glance 06
Chairman’s Statement 08
Ten Largest Equity Investments 12
Investment Portfolio 14
KPIs and Principal Risks 16
Responsible Business 20
Section 172 Statement 21
Stakeholders 22
Investment Review:
Investment Manager’s Review 24
A Responsible Approach 26
Investment Manager’s Report 30
Portfolio Review 34
Outlook 49
Governance:
Directors 50
Report of the Directors 52
Financial Statements:
Statement of Comprehensive Income 63
Statement of Changes in Equity 64
Balance Sheet 65
Statement of Cash Flows 66
Notes to the Financial Statements 67
Other Reports:
AIFMD Disclosures (Unaudited) 84
Report of the Audit Committee 85
Directors’ Remuneration Policy 88
Report on Remuneration Implementation 90
Independent Auditor’s Report 92
Shareholder Information:
Notice of Annual General Meeting 96
Shareholder Information 100
Glossary 101
Company Information 106
$
$
24
34
08
48
S
IRIR
Investment Review
Strategic Report
Investment Review
$
$
IR
Investment Review
We maintain a corporate website containing a wide
range of information of interest to investors and
stakeholders: www.aviglobal.co.uk
AVIGlobalTrust
AVIGlobalTrust
@AVIglobaltrust
@AVIGlobalTrust
Overview of the Year
Identifying Hidden Value in
Dai Nippon Printing
A Unique Investment
Portfolio
The Attractions of
Investing in Holding
Companies
AVI Global Trust plc / Annual Report 2024
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Strategic Report / Company Performance
Financial Highlights
PERFORMANCE SUMMARY
– Net asset value (NAV) per share total
return was +13.7%
– Share price total return of +16.3%
– Final ordinary dividend of 2.55p, and
total dividend increased to 3.75p
30 September 2024 30 September 2023
Net asset value per share
(total return) for the year
1
*
+13.7% +15.3%
Share price total return for the year* +16.3% +14.8%
Comparator Benchmark
MSCI All Country World Index
(£ adjusted total return
†
) +19.9% +10.5%
Discount*
Share price discount (difference between
share price and net asset value)
2
*
Share price discount:
High
Low
9.0%
12.3%
6.3%
10.9%
12.9%
7.0%
Year to 30 September
2024
Year to 30 September
2023
Earnings and Dividends
Investment income
Revenue earnings per share*
Capital earnings per share*
Total earnings per share
Ordinary dividends per share
Special dividends per share
£26.60m
4.20p
27.45p
31.65p
3.75p
−
£24.45m
4.19p
23.83p
28.02p
3.50p
0.20p
Ongoing Charges Ratio*
Management, marketing and other
expenses (as a percentage of average
shareholders’ funds)
0.87%
0.86%
2024 Year’s Highs/Lows
Net asset value per share*
Net asset value per share
(debt at fair value)*
Share price* (mid market)
High
264.40p
267.39p
248.00p
Low
207.84p
211.81p
187.80p
Buybacks
During the year, the Company purchased and
cancelled 20,112,011 Ordinary Shares (2023:
29,277,886 purchased).
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 debt marked to fair value.
† The Company uses the net version of the index, which
accounts for withholding taxes incurred. If the gross
version of the Index had been used, the comparative
figures for the years ending 30 September 2024 and
30 September 2023 would have been 20.2% and 11.0%,
respectively.
* Alternative Performance Measures
For all Alternative Performance Measures included in this
Strategic Report, please see definitions in the Glossary on
pages 101 to 105.
AVI Global Trust plc / Annual Report 2024
02
Historical record
Year ended 30 September 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Revenue profit for the year £’000 18,942 20,041 16,302 14,289 10,134 21,169 16,933 12,603 18,747 16,268
Revenue earnings per share (p)
†
4.20 4.19 3.24 2.74 1.87 3.82 2.97 2.09 2.86 2.35
Ordinary dividends per share (p)
†
3.75 3.50 3.30 3.30 3.30 3.30 2.60 2.40 2.34 2.34
Special dividend per share (p)
†
– 0.20 – – – – – – 0.56 –
Net assets £’000 1,112,725 1,031,018 969,508 1,133,222 883,605 938,941 941,680 903,229 843,973 697,542
Basic net asset value
per share (p)
†
251.71 223.08 197.27 221.95 167.43 170.52 168.39 155.52 134.10 103.91
† The figures where appropriate have been restated for the share split, which took effect on 17 January 2022, when each existing 10p share was replaced by five new 2p shares, in order to be
comparable on a like-for-like basis.
The Company’s net asset value and share price compared to the MSCI All Country World (£ adjusted total return)*
* The current approach to investment was adopted in June 1985.
AVI Global Trust plc NAV TR
AVI Global Trust plc Share Price TR
Sept
2024
Sept
2023
Sept
2017
Sept
2019
Sept
2021
Sept
2015
Sept
2013
Sept
2011
Sept
2009
Sept
2007
Sept
2005
Sept
2003
Sept
2001
Sept
1999
Sept
1997
Sept
1995
Sept
1993
Sept
1991
Sept
1989
Sept
1987
Sept
1985
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
100
MSCI All Country World Index (£ adjusted total return)
AVI Global Trust plc / Annual Report 2024
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Strategic Report / Company Overview
Finding compelling opportunities
OUR PURPOSE
The Company is an investment
trust. Its investment objective is to
achieve capital growth through a
focused portfolio of mainly listed
investments, particularly in companies
whose shares stand at a discount to
estimated underlying net asset value.
Global Exposure
# Based on location of companies’ underlying assets, rather
than country of listing
OUR CORE VALUES
Unique
A unique portfolio investing in holding companies,
closed-ended funds and asset-backed special
situations unlikely to be found in other funds.
Diversified
A select portfolio of 40 stocks, but with broad
diversification of sectors and companies as a result
of the holding structures which give exposure to
multiple underlying companies.
Engaged
Seeking out good quality, misunderstood
companies and engaging to improve shareholder
value.
Active
Finding complex, inefficient and overlooked
investment opportunities.
Global
Bottom-up stock picking, seeking the best
investment opportunities across the globe.
OUR INVESTMENTS
Our underlying investments provide global exposure:
2024
#
%
2023
%
#
United Kingdom 11
3
North America 22
29
Europe 34
33
Asia 8
10
Japan 18
18
Latin America, Africa &
Emerging Europe 4
6
Oceania 3
1
22%
@AVIglobaltrust / What is AVI Global Trust?
11%
4%
34%
AVI Global Trust plc / Annual Report 2024
04
KEY PERFORMANCE
INDICATORS (KPIs)
The Company uses KPIs as an
effective measurement of the
development, performance or position
of the Company’s business, in order to
set and measure performance reliably.
These are net asset value total return,
share price discount to net asset value
and the Ongoing Charges Ratio.
Net asset value total return*:
+13.7% (2023: +15.3%)
Ongoing Charges Ratio*:
0.87% (2023: 0.86%)
2023 0.86%
2024 0.87%
Discount* (as at Year End):
9.0% (2023: 10.9%)
Capital Structure
As at 30 September 2024, the Company’s issued
share capital comprised 487,662,627 Ordinary
Shares of 1p each, of which 45,600,956 were
held in treasury and therefore the total voting
rights attached to Ordinary Shares in issue
were 442,061,671. As at 12 November 2024
it comprised 484,637,627 Ordinary Shares,
45,600,956 of which were held in treasury,
and therefore the total voting rights attached to
Ordinary Shares in issue were 439,036,671.
OTHER KEY STATISTICS
Net asset value per share:
253.81p (2023: 226.77p)
Number of investments:
40 (2023: 44)
* For all Alternative Performance Measures included in this
Strategic Report, please see definitions in the Glossary on
pages 101 to 105.
Estimated percentage added to
net asset value per share from
buybacks
*
:
+0.4% (2023: 0.6%)
Top 10 investments
†
:
57.2% (2023: 60.7%)
† Of net assets.
Annual General Meeting
The Company’s Annual General Meeting (“AGM”)
will be held at 11.00am on Thursday, 19 December
2024 at 11 Cavendish Square, London W1G 0AN.
Shareholders will be able to submit questions to the
Board and AVI ahead of the AGM and answers to
these, as well as AVI’s presentation, will be made
available on the Company’s website. Please refer
to the Notice of AGM on pages 96 to 99 for further
information and the resolutions which will be
proposed at this meeting.
8%
10 Years +165.3%
3 Years +21.49%
6.3% (2023: 7.0%)
2024 low
2024 high 12.3% (2023: 12.9%)
Read more about our KPIs and Principal Risks on pages
16 to 19 of the Annual Report
18%
3%
AVI Global Trust plc / Annual Report 2024
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Strategic Report / The Investment Manager at a Glance
At a Glance
INVESTMENT
PHILOSOPHY
The investment philosophy
employed by Asset Value Investors
(AVI), the manager of AVI Global
Trust, strives to identify durable
businesses that are growing
in value, trading at discounted
valuations, with catalysts to unlock
and grow value.
01.
Investing in companies trading at a
discount to their net asset value
02.
Identifying good-quality underlying
assets with appreciation potential
at compelling values
03.
Focusing on bottom-up stock
picking
04.
Looking for catalysts to narrow
discounts
05.
Focusing on balance sheet strength
Read more about on our website:
www.aviglobal.co.uk
HOW WE INVEST
AVI aims to achieve long-term capital growth by investing in a diversified
portfolio of companies whose shares are trading at a discount to their estimated
net asset value.
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WHAT DOES AVI INVEST IN?
AVI follows a unique strategy of investing in quality assets typically held through structures that tend
to attract discounts; these types of companies are:
• Holding Companies
• Closed-ended Funds
• Asset-backed Special Situations
PORTFOLIO BREAKDOWN BY AVI CLASSIFICATION*
2024
%
2023
%
Holding Companies 43 58
Closed-ended Funds 31 25
Asset-backed Special Situations 26 17
Source / AVI as at 30 September 2024
* Please refer to page 25 for more information about these classifications.
AVI Global Trust plc / Annual Report 2024
06
HOW WE MANAGE PORTFOLIO RISK
AVI’s value investment process strives to identify and mitigate downside risks in
all market environments.
AVI’s risk management approach uses a variety of qualitative and quantitative processes.
This includes bottom-up research to establish a company’s fundamental value. The portfolio
holdings are monitored on an ongoing basis, and AVI’s in-house order management system
contains an automatic alert system which alerts the Investment Manager to any breaches of built-in
risk parameters.
The investment management team holds regular meetings discussing the portfolio,
with a view to reassess, sell or buy securities, and to discuss current cash position, as well
as sector and geographic weighting.
Reassessment
of positions
Daily monitoring
of positions
Monthly investment
meetings
Stock-specific Risk
• Business risk
• Balance sheet risk
• Shareholder analysis
• Regular meetings with management
Portfolio/Market Risk
• Currency risk
• Geographical concentration risk
• Sector concentration risk
• Stock concentration risk
• Liquidity risk
• Political risk
AVI’S RESPONSIBLE APPROACH
AVI believes that the integration of ESG and sustainability considerations into our
investment strategy is not only integral to comprehensively understanding each
investment’s ability to create long-term value but is aligned with our values as
responsible investors.
Aligned with the PRI
AVI is aligned with the UN-supported Principles
for Responsible Investment (PRI)’s belief that
an economically efficient, sustainable global
financial system is a necessity for long-term
value creation. Such a system will reward
long-term responsible investment, and benefit
the environment and society as a whole. AVI
became a signatory to the PRI on 9 April 2021.
Active Ownership
AVI’s ESG monitoring system helps to identify
weaknesses in a company and empowers us to
engage effectively where appropriate. Through
constructive engagement, we encourage and
expect investee companies to take meaningful
action in remedying weaknesses in the context
of long-term value creation.
STRATEGY
The Company’s strategy is to seek
out-of-favour companies whose
assets are misunderstood by the
market or under-researched, and
which trade significantly below the
estimated value of the underlying
assets.
A core part of this strategy is active
engagement with management, in order to
provide suggestions that could help narrow
the discount and improve operations, thus
unlocking value for shareholders.
INVESTMENT APPROACH
The Company’s assets are
managed by AVI. AVI aims to deliver
superior returns and specialises
in finding companies that, for a
number of reasons, may be selling
on anomalous valuations.
The Investment Manager has the flexibility
to invest around the world and is not
constrained by any fixed geographic or
sector weightings. There is no income target
and no more than 10% of the Company’s
investments may be in unlisted securities.
Over the past five years, there has been
an average of 47 stocks held in the AGT
portfolio.
Website / Hipgnosis Songs Fund: Case Study
AVI Global Trust plc / Annual Report 2024
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Overview of the year
The world continues to be unstable, with conflict
in the Middle East and Ukraine. Elsewhere,
geopolitical tensions particularly between the
United States and China continue to make news
headlines. On a more positive note, inflation
appears to be better in check and we have seen
central banks in the US and Europe begin the
process of cutting interest rates, which should be
positive for companies and markets.
Against this volatile background, the Company’s
NAV total return for the year to 30 September
2024 (one of our three KPIs) was a creditable
+13.7%, which was above the long-term average
annual return and compares with +19.9% for our
comparator benchmark index. Over the last five
years the return has been +65.5%, compared to
+63.3% for the current comparator benchmark
(shareholders may recall that we changed the
benchmark last year
1
).
Turning to the share price, I said at the half-
year stage that 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 by the end of March
it was over 230p. It was at a similar level at the
end of September, and the NAV per share was
also little changed over the second half of our
accounting year. For the year as a whole, the share
price total return was 16.3%, as the discount
closed marginally. The effectively flat return over
the second six months does not tell the whole
story. The Japanese market, in particular, was very
volatile in early August and AVI were able to take
advantage of this, as they explain in their report.
The Board is encouraged to see that the key driver
of returns remains stock selection, demonstrating
that the team at AVI remain consistent in their long-
term investment style.
GRAHAM KITCHEN
Independent Non-Executive Chairman
Strategic Report / Chairman’s Statement
Joined the Board in January 2019
$
1. The current comparator benchmark is the MSCI All Country
World Index (£ adjusted net total returns). For periods up to
30 September 2023 it was the MSCI All Country World ex-US
Index (£ adjusted net total returns). Over the five years to
30 September 2024, the total return of the previous
benchmark was +32.4%.
Against this volatile
background, the
Company’s NAV total
return for the year to 30
September 2024 was a
creditable +13.7%.
AVI Global Trust plc / Annual Report 2024
08
Revenue and dividends
Revenue earnings for the year under review were
4.2 pence per share. At the half year stage we
paid an interim dividend of 1.2 pence per share,
which was the same as last year. The proposed
final dividend is 2.55 pence per share. The total
dividend for the year will therefore be 3.75 pence
per share, which I am pleased to report is an
increase of 7.1% compared with the previous
year’s total ordinary dividend of 3.5 pence
2
. The
Board recognises that a dividend which is steady
and able to rise over time is attractive to many
shareholders but, as we have consistently said, the
portfolio is managed primarily for capital growth.
Gearing
On 12 September 2024, we completed an
agreement to issue further Japanese Yen (JPY)
fixed rate unsecured debt. The new debt is
JPY5bn, for a term of 15 years and at an annual
interest rate of 2.28%. The debt is denominated in
JPY and was equivalent to approximately £25.1m
when issued. In recent years the Company
has issued several tranches of fixed rate debt
at attractive interest rates and our Investment
Manager uses gearing flexibly to take advantage
of investment opportunities. As well as providing
funding at an attractive rate of interest, borrowing
in Japanese Yen provides a natural hedge against
exposure to the currency, as the borrowing offsets
some of the exposure to JPY in the portfolio. As at
30 September 2024 net gearing, with debt at fair
value, was 7.1%.
AGT previously had a revolving credit facility with
Scotiabank but this was terminated at the end of
its contracted life in September 2024.
Investment Policy
We are seeking shareholder approval for revisions
to our investment policy, which was driven by
a review of ways in which AGT can implement
gearing.
The Directors have reviewed the Company’s
Investment Policy and are proposing that
shareholders approve a revised policy at this year’s
AGM. I would like to stress that there will be no
change in the overall strategy that AVI takes in
managing the investment portfolio.
The proposed changes are designed to align the
Investment Policy with current best practice and
to clarify the approach to spreading investment
risk, investing in derivatives and to gearing. In
particular, the level of gearing permitted under
the Company’s Articles of Association and first
adopted several decades ago is much higher
than would be considered acceptable in a
modern investment policy. The Directors are
therefore proposing a limit on total gearing of
20% of net assets. The Company has had both
short- and long-term debt for many years and AVI
are experienced in managing gearing. In future,
gearing will be permitted via the use of derivatives
as well as conventional debt, but subject to
an overall limit of 20% total market exposure.
The proposal to allow gearing via derivatives is
intended to provide additional flexibility in the type
of gearing used, particularly bearing in mind that
interest rates have increased in recent years and
the use of derivatives may prove to be more cost
effective. Derivatives such as total return swaps
or options provide investment exposure to single
stocks or groups of stocks where, depending on
the derivative structure, movement in the value of
the derivative (both up and down) may be higher
than the movement in the related stock prices.
Long-term shareholders will be aware that the
Company has invested in total return swaps on
a number of occasions in recent years and the
Directors are satisfied that AVI have the necessary
experience and controls to invest in derivatives.
We encourage all shareholders to vote in favour of
this resolution at the AGM. Further details are set
out on page 52.
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 factsheet 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. We were very pleased
to hear that AGT had again won “Best Report
and Accounts” in its category in the AIC’s
annual shareholder communications awards in
September 2024. We believe that this award
reflects our commitment to provide informative
and interesting updates to our shareholders and I
would like to thank our fund management team for
their open and proactive approach to explaining
their investment methodology and individual
investments in the portfolio. 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
that these platforms make up four of our top five
shareholders.
In common with many investment trusts, our
shares continued to trade at a persistent discount
during the year. 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 something
that our Investment Manager encourages for many
of our investee companies.
The discount is one of the three KPIs and the
Board takes a very close interest in this. There is
regular interaction between Board and Investment
Manager on the subject, with independent advice
from AGT’s corporate brokers. There are periods
when we buy back shares on most working days
and, during the year under review, 20.1 million
shares were bought back, representing 4.4% 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 net asset value to the benefit
of continuing shareholders, of approximately
0.4%. The average discount over the year under
review was 9.2%, compared with 10.0% for the
preceding year.
In April 2024 we announced that Panmure
Liberum had been appointed as the Company’s
corporate broker. We have experienced a
positive transition to Panmure Liberum who
have introduced a more diverse range of
potential investors in the last few months and
we look forward to working closely with them
going forward, 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.
2. We also paid a special dividend of 0.2 pence per share last
year, to distribute elements of revenue that the Directors
consider to be one-off.
AVI Global Trust plc / Annual Report 2024
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Strategic Report / Chairman’s Statement continued
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 was misleading. We were pleased
and relieved to hear that the Financial Conduct
Authority had issued a “forbearance” notice on
managers’ disclosure of charges in regulated
documents in September 2024, pending a review
of the relevant law and regulations. While, at the
time of writing, there is some uncertainty as to
how costs will be disclosed to investors by the
investment trust industry going forward, we have
reverted to publishing an Ongoing Charges Ratio
which includes all of AGT’s own running costs,
which are made up principally of its investment
management fee and of the other costs of running
the Company itself. Not all listed investment
companies disclose their gross costs and so
it is not possible to produce a comprehensive
summary of the running costs of closed end funds
in AGT’s portfolio of investments.
AGT’s running costs are one of our KPIs and the
Board carefully manages the Company’s costs,
seeking to balance a high quality of service with
reasonable costs from our suppliers.
The Board
The Company is pleased to have met the target
for at least 40% of individuals on the Board to be
women but does not currently meet the targets
for at least one senior Board position to be held
by a woman and at least one individual on the
Board to be from a minority ethnic background.
The Directors have discussed whether to appoint
an additional Director in order to comply with
the guidelines on ethnic diversity. The Directors
concluded that a Board of five independent
non-executive Directors is appropriate for an
investment trust of the size and complexity of AGT
and therefore that it would not be in shareholders’
best interests to incur fees for an additional
Director in order to meet a target. Shareholders’
views on best practice will continue to be taken
into full consideration when the Board next recruits
a new Director.
Annual General Meeting
I am pleased to be able to invite all shareholders
to attend our AGM at 11 Cavendish Square on
Thursday 19 December 2024. We do recognise
that some shareholders may be unable to attend
the AGM, and if you have any questions about
the Annual Report, the investment portfolio or any
other matter relevant to the Company, please write
to us either via email at agm@aviglobal.co.uk or
by post to Link Company Matters Limited, Central
Square, 29 Wellington Street, Leeds, LS1 4DL.
If you are unable to attend the AGM, I urge you
to submit your proxy votes in good time for the
meeting, following the instructions enclosed with
the proxy form. If you vote against any of the
resolutions, we would be interested to hear from
you so that we can understand the reasons behind
any objections.
Outlook
This time last year I wrote that “The geopolitical
and economic environment are undoubtedly
challenging and the world is likely to be unstable
for some time” and those words bear repetition
this year. The level of geopolitical uncertainty could
be exacerbated by the result of the US election.
The opportunities that we reported last year have
borne fruit in the returns produced over the year
to the end of September 2024 but there is clearly
more value to unlock. Markets are likely to remain
volatile but our Investment Manager reports
attractive discounts and an exciting range of
prospects. The Board is confident that we have a
well-resourced, skilled and experienced manager
who should continue to produce attractive returns
for AGT’s shareholders over the long term.
Graham Kitchen
Chairman
12 November 2024
Dividend track record (£)*
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2022
2024**
2023
2021
Normal dividends Special dividends Proposed ordinary dividends * Restated for Share Split ** Relates to proposed dividends for the current year
AVI Global Trust plc / Annual Report 2024
10
D’IETEREN / BELRON
Belron is the global number one operator in
the Vehicle Glass Repair, Replacement, and
Recalibration industry.
Known as Autoglass in the UK and Safelite
in the US, Belron is many multiples larger
than competitors with >40% US market
share, giving it significant scale advantages in
terms of purchasing economies of scale and
cost leadership, relationships with insurance
partners who are industry gatekeepers, and
technological investment, which has become
increasingly relevant.
We expect Belron to keep riding the tailwinds
of increased windshield complexity and the
requirement for Advanced Driver Assistance
System cameras to be recalibrated upon
replacement.
% of Net Assets:
8.3%
Source / Belron Group S.A
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AVI Global Trust plc / Annual Report 2024
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1 2 3 4 5 6
Strategic Report / Ten Largest Equity Investments
57.2%**
DIVERSIFIED
Our portfolio contains broad
diversification to sectors and
companies
Sector breakdown:
Communication
Services: 19%
Consumer
Discretionary: 28%
IT: 11%
Financials: 7%
Consumer
Staples: 14%
Energy: 3%
Healthcare: 4%
Industrials: 4%
Materials: 2%
Real Estate: 5%
Utilities: 1%
Other: 2%
The top ten equity investments
make up 57.2% of the net assets*,
with underlying businesses spread
across a diverse range of sectors
and regions.
All discounts are estimated by AVI
as at 30 September 2024, based on AVI’s
estimate of each company’s net asset value.
* For definitions, see Glossary on pages 101 to 105.
** % of net assets.
A seventh-generation Belgian family-controlled
holding company whose crown jewel asset is a
50% stake in Belron, the global no.1 operator
in the Vehicle Glass Repair, Replacement and
Recalibration industry.
01.
The Murdoch family-controlled holding
company that was established in current form
in 2013. A 62% listed stake in Australian-listed
REA Group accounts for the bulk of News
Corp’s market cap and masks an attractive
collection of unlisted assets. In particular Dow
Jones, a crown jewel asset that successfully
evolved the Wall Street Journal into a thriving
digital consumer and Professional Information
business.
02.
French-listed holding company controlled by
the mercurial Vincent Bollore. Bollore trades at
a 40% discount to our estimated NAV, which
is principally comprised of stakes in Universal
Music Group, Vivendi, cash and self-ownership
loops. We believe there are multiple potential
catalysts on the horizon.
06.
Cordiant Digital Infrastructure is a London-
listed closed-ended fund which invests in
various infrastructure assets such as data
centres, telecom towers, and fibre-optic
asset businesses predominantly in Emerging
Europe. We invested into Cordiant at an unduly
wide 40% discount driven by a rising yield
environment and an unfair read-across from
problems at its closest peer.
07.
D’leteren Group
Holding Company
% of net assets
8.3%
Valuation
£91.8m
Discount
-41%
Source / D’leteren
Group S.A
News Corp
Holding Company
% of net assets
7.5%
Valuation
£83.5m
Discount
-46%
Source / SOPA
Images via Getty
Images
Bollore
Holding Company
% of net assets
5.2%
Valuation
£57.3m
Discount
-40%
Source / VW Pics
via Getty Images
Cordiant Digital
Infrastructure
Closed-ended Fund
% of net assets
4.9%
Valuation
£54.7m
Discount
-27%
Source / Cordiant
Digital Infrastructure
Limited
AVI Global Trust plc / Annual Report 2024
12
6 7 8 9 10
51.1%**
Oakley Capital Investments (OCI) is a London
listed closed-ended fund which invests in the
private funds run by Oakley Capital, a UK-
based private equity firm. OCI owns a portfolio
of fast-growing businesses in the consumer,
education, services, and technology sectors.
03.
Chrysalis Investments is a London-listed
closed-ended fund which invests in late-
stage private companies. Chrysalis’ top five
companies represent 74% of its NAV, despite
being written down significantly below previous
funding rounds and being either profitable
or funded to profitability. Chrysalis’ manager
announced a new capital allocation policy in
February 2024.
04.
London-listed closed-end fund managed
by Swiss private equity manager Partners
Group, which invests in global buyouts on a
co-investment basis alongside Partners’ direct
investing programmes. We invested following
lethargic returns, concerns over governance,
and suspension of the dividend which forced a
sell-off. We have since proactively engaged with
the board on multiple matters.
05.
Rohto is a Japan-based manufacturer and
marketer of cosmetics products and functional
foods. Despite the company’s superior operational
efficiencies and profit margins versus peers, it
trades at a heavy discount due to an unclear
equity story, poor shareholder communication
and inefficient capital allocation. AVI believes that
constructive engagement with management can
help drive long-term value creation, in turn leading
to a re-rating in the shares.
08.
FEMSA is a Mexican family-controlled holding
company with roots dating back to the
establishment of Mexico’s first brewery in 1890.
The bulk of the value lies in unlisted FEMSA
Comercio, which primarily operates Oxxo-
branded convenience stores across Mexico
and Latin America. In 2023 the company
completed a strategic review, simplifying its
structure and generating considerable excess
capital. Despite these significant strides, the
shares still trade at a wide discount.
09.
Reckitt Benckiser is a UK-listed consumer
goods conglomerate which owns a collection of
trusted brands that exhibit meaningful barriers
to entry, high margins, and attractive growth
prospects. Already trading at a discounted
valuation, the company was hit by a litigation
shock which has pushed the shares to a
decade low multiple and record discount to
peers.
10.
Oakley Capital
Investments
Closed-ended Fund
% of net assets
6.6%
Valuation
£73.8m
Discount
-30%
Source / Liberty
Dental Group
Chrysalis
Investments
Closed-ended Fund
% of net assets
6.0%
Valuation
£66.1m
Discount
-36%
Source / Starling
Bank Limited
Partners Group
Private Equity
Closed-ended Fund
% of net assets
5.5%
Valuation
£61.5m
Discount
-26%
Source / Partners
Group
Rohto
Pharmaceutical
Asset-backed
Special Situation
% of net assets
4.9%
Valuation
£54.5m
Discount
-50%
Source / Rohto
Pharmaceutical
Co., Ltd.
FEMSA
Holding Company
% of net assets
4.2%
Valuation
£47.2m
Discount
-29%
Source /
Comunicación
Corporativa FEMSA
Reckitt
Benckiser
Group
Holding Company
% of net assets
4.1%
Valuation
£46.0m
Discount
-38%
Source / Bloomberg
via Getty Images
AVI Global Trust plc / Annual Report 2024
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Strategic Report / Investment Portfolio
Company Portfolio classification
% of
investee
company
IRR
(%, £)
1
ROI
(%, £)
2
Cost
£’000
3
Equity
Exposure
£’000
4
% of
net assets
D'Ieteren Group Holding Company 1.1% 11.4% 10.7% 84,420 91,750 8.3%
News Corp Holding Company 1.1% 10.7% 10.6% 76,395 83,465 7.5%
Oakley Capital Investments Closed-ended Fund 8.3% 22.2% 129.1% 30,163 73,808 6.6%
Chrysalis Investments Closed-ended Fund 11.9% nm 17.8% 56,140 66,119 6.0%
Partners Group Private Equity Closed-ended Fund 10.0% 10.5% 14.9% 58,183 61,539 5.5%
Bollore Holding Company 0.4% 0.2% 0.2% 57,764 57,285 5.2%
Cordiant Digital Infrastructure Closed-ended Fund 8.3% nm 30.6% 43,156 54,706 4.9%
Rohto Pharmaceutical Asset-backed Special Situation 1.2% nm 12.1% 48,846 54,478 4.9%
FEMSA Holding Company 0.3% 14.9% 40.8% 38,306 47,184 4.2%
Reckitt Benckiser Group Holding Company 0.1% nm 2.4% 45,453 45,990 4.1%
Top ten investments 73.3% 538,826 636,324 57.2%
Entain
Holding Company 0.8% nm -10.1% 46,809 41,312 3.7%
Aker ASA
Holding Company 1.4% 15.3% 64.2% 49,864 41,267 3.7%
Apollo Global Management 'A'
Holding Company 0.1% 32.5% 111.6% 19,928 40,899 3.7%
Harbourvest Global Private Equity
Closed-ended Fund 2.2% nm 7.2% 37,525 39,901 3.6%
Christian Dior
Holding Company 0.0% 20.3% 90.6% 21,120 33,712 3.0%
IAC Inc
Holding Company 1.0% -19.6% -40.8% 64,482 33,188 3.0%
Toyota Industries
Asset-backed Special Situation 0.2% nm -13.5% 35,289 30,160 2.7%
GCP Infrastructure Investments
Closed-ended Fund 4.4% nm 22.6% 26,088 29,982 2.7%
Dai Nippon Printing
Asset-backed Special Situation 0.4% 23.3% 23.9% 23,832 29,222 2.6%
Nihon Kohden
Asset-backed Special Situation 1.5% 8.3% 11.7% 25,796 28,907 2.6%
Top twenty investments 99.2% 889,559 984,874 88.5%
Irish Residential Properties
Asset-backed Special Situation 6.3% nm -9.2% 28,020 25,055 2.3%
EXOR
Holding Company 0.1% 11.0% 45.1% 13,574 22,523 2.0%
Third Point Investors
Closed-ended Fund 4.1% 4.6% 22.6% 17,263 21,273 1.9%
Frasers Group
Holding Company 0.5% nm -2.5% 20,811 20,301 1.8%
Symphony International Holdings
Closed-ended Fund 15.7% 3.6% 20.2% 26,636 18,836 1.7%
Abrdn European Logistics Income
Closed-ended Fund 6.5% nm 7.6% 15,619 16,272 1.5%
Kyocera
Asset-backed Special Situation
0.1% nm -21.3% 18,602 14,534 1.3%
Wacom
Asset-backed Special Situation
2.7% -9.8% -23.2% 19,356 13,824 1.2%
SK Kaken
Asset-backed Special Situation
1.8% -6.9% -32.4% 19,056 12,130 1.1%
Net Lease Office Properties
Holding Company 3.6% nm 1.9% 11,823 12,021 1.1%
Top thirty investments 103.0% 1,080,319 1,161,643 104.4%
AVI Global Trust plc / Annual Report 2024
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Company Portfolio classification
% of
investee
company
IRR
(%, £)
1
ROI
(%, £)
2
Cost
£’000
3
Equity
Exposure
£’000
4
% of
net assets
TSI Holdings Asset-backed Special Situation 3.3% 22.4% 27.1% 9,652 11,981 1.1%
Toyo Suisan Kaisha Asset-backed Special Situation 0.2% nm 0.0% 11,531 11,509 1.0%
Konishi Asset-backed Special Situation 2.0% 5.2% 26.5% 8,107 8,985 0.8%
VEF Holding Company 2.3% 2.5% 4.2% 4,525 4,489 0.4%
Seraphim Space Investment Closed-ended Fund 2.6% 9.0% 16.4% 2,950 3,370 0.3%
JPEL Private Equity Closed-ended Fund 18.4% 19.6% 97.4% 1,219 2,180 0.2%
Better Capital (2009) Closed-ended Fund 17.4% 22.0% 41.1% 1,962 903 0.1%
Third Point Investors Private Investments Closed-ended Fund 0.0% – – 563 475 0.0%
Ashmore Global Opportunities – GBP Closed-ended Fund 0.0% 4.0% 8.4% 22 140 0.0%
73.3% 111,264
Equity investments at fair value 1,120,850 1,205,675 108.3%
1 Internal Rate of Return. Calculated from inception of AGT’s investment. Refer to Glossary on
pages 101 to 105. Where it is not possible to report a meaningful figure for the IRR, due to the
investment having been held less than 12 months, this is indicated as “nm”.
2 Return on investment. Calculated from inception of AGT’s investment. Refer to Glossary on
pages 101 to 105.
3 Cost. Refer to Glossary on pages 101 to 105.
4 The fair value column of the total return swaps is determined based on the difference between
the notional transaction price and market value of the underlying shares in the contracts (in
effect the unrealised gains/(losses) on the exposed long and short total return swap positions).
The equity exposure is the cost of purchasing the securities held through long total return
swap positions directly in the market and at the Balance Sheet date would be a cost of
£58,296,000. If the long positions were closed at 30 September 2024, this would result in a loss
of £2,877,000. The notional price of selling the securities to which exposure was gained through
the short total return swaps at the Balance Sheet date would be £53,100,000. If the short
positions were closed on 30 September 2024, this would result in a loss of £931,000. In the
case of long and short total return swaps it is the market value of the underlying shares to which
the portfolio is exposed via the contract.
† Level 3 investment (see note 15).
* The total fair value of total return swap assets of long and short positions is £606,000.
** The total fair value of total return swap liabilities of long and short positions is £4,414,000.
*** Softbank Group is held via a long total return swap. Hedges are held against the position
via short total return swaps on five of its listed underlying holdings: Arm Holdings, Coupang,
Deutsche Telekom, Softbank Corp & T-Mobile (accounting for 86% of Softbank Group’s NAV at
30 September 2024). For further explanation on our position in Softbank Group, please refer
to page 33.
Fair value and gross market exposure of investments
4
Equity
exposure
£’000
Fair value
£’000
% of
net assets
Equity Investments 1,205,675 1,205,675 108.3%
Total return swap long positions
Softbank Group*** Asset-backed Special Situation 58,296 (2,877) -0.3%
58,296 (2,877) -0.3%
Softbank Group total return swap short positions***
Arm Holdings Operating Company (37,666) 606 0.1%
Coupang Operating Company (1,374) (181) 0.0%
Deutsche Telekom Operating Company (1,885) (317) 0.0%
Softbank Corp Operating Company (7,164) (382) 0.0%
T-Mobile Operating Company (5,011) (657) -0.1%
(53,100) (931) 0.0%
5,196 (3,808) -0.3%
Investments and total return swaps 1,210,871 1,201,867 108.0%
Other net current assets less current liabilities 73,229 6.6%
Non-current liabilities (162,371) -14.6%
Net assets 1,112,725 100.0%
AVI Global Trust plc / Annual Report 2024
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Strategic Report / KPIs and Principal Risks
The Company’s Board of Directors meets regularly and at
each meeting reviews performance against a number of key
measures.
In selecting these measures, the Directors considered the key objectives and
expectations of typical investors in an investment trust such as the Company.
NAV total return*
The Directors regard the Company’s NAV total return as being the overall
measure of value delivered to shareholders over the long term. Total return
reflects both the net asset value growth of the Company and also dividends
paid to shareholders. The Investment Manager’s investment style is such
that performance may deviate materially from that of any broad-based equity
index. The Board considers the most useful comparator to be the MSCI All
Country World Index. Over the year under review, the benchmark increased
by +19.9% on a total return basis and over ten years it has increased by
+11.5% on an annualised total return basis.
A full description of performance and the investment portfolio is contained in
the Investment Review, commencing on page 24.
Discount*
The Board believes that an important driver of an investment trust’s discount
or premium over the long term is investment performance. However, there
can be volatility in the discount or premium. Therefore, the Board seeks
shareholder approval each year to buy back and issue shares, with a view to
limiting the volatility of the share price discount or premium.
During the year under review, no shares were issued and 20.1m shares
were bought back, adding an estimated 0.4% to net asset value per share
to the benefit of continuing shareholders. The shares were bought back at a
weightedaverage discount of 9.6%.
Ongoing Charges Ratio*
The Board continues to be conscious of expenses and aims tomaintain a
sensible balance between good service and costs.
In reviewing charges, the Board’s Management Engagement Committee
reviews in detail each year the costs incurred and ongoing commercial
arrangements with each of the Company’s key suppliers. The majority of
the Ongoing Charges Ratio is the cost of the fees paid to the Investment
Manager. This fee is reviewed annually.
For the year ended 30 September 2024, the Ongoing Charges Ratio was
0.87%, up very slightly from 0.86% in the year to 30 September 2023. These
running costs in monetary terms amounted to £9.6m in 2024 (2023: £8.7m).
The Board notes that the UK investment management industry uses
various metrics to analyse the ratios of expenses to assets. In analysing the
Company’s performance, the Board considers an Ongoing Charges Ratio
which compares the Company’s own running costs with its assets. In this
analysis the costs of servicing debt and certain non-recurring costs are
excluded. These are accounted for in NAV total return and so form part of
that KPI. Further, in calculating a KPI the Board does not consider it relevant
to consider the management fees of any investment company which the
Company invests in, as the Company is not a fund of funds and to include
management costs of some investee companies but not of others may create
a perverse incentive for the Investment Manager to favour those companies
which do not have explicit management fees.
Key Performance Indicators
NAV total return*:
+13.7%
Discount, Year-End*:
9.0%
Ongoing Charges Ratio* (year ended 30 Sept):
0.87%
1 Year
10 Years (Annualised) +10.2%
+13.7%
2023 10.9%
2024 9.0%
2024 0.87%
2023 0.86%
* For all Alternative Performance Measures included in this Strategic Report, please see definitions
in the Glossary on pages 101 to 105.
AVI Global Trust plc / Annual Report 2024
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When considering the total return of the investments, the
Board must also take account of the risk which has been
taken in order to achieve that return.
There are many ways of measuring investment risk, and the Board takes the
view that understanding and managing risk is much more important than
setting any numerical target.
In running an investment trust we face different types of risk and some are
more acceptable than others. The Board believes that shareholders should
understand that, by investing in a portfolio of equity investments invested
internationally and with some gearing, they accept that there may be some
loss in value, particularly in the short term. That loss in value may come from
market movements and/or from movements in the value of the particular
investments in our portfolio. We aim to keep the risk of loss under this
particular heading within sensible limits, as described below. On the contrary,
we have no tolerance for the risk of loss due to, for example, theft or fraud.
The Board looks at risk from many different angles, an overview of which is
set out on the following pages. The Directors carry out regular reviews of the
emerging and principal risks facing the Company, including those that would
threaten its business model, future performance, solvency or liquidity. The
Board confirms that a robust assessment of these risks has been carried out
during the year under review.
The approach to monitoring and controlling risk is not rigid. The Board aims to
think not only about the risks that it is aware of and has documented, but also
of emerging and evolving risks.
The Board believes that managing risk is the task of everyone involved in
the management of the Company: the Board, the Investment Manager, the
Administrators and other service providers all have a role in thinking about risk,
challenging perceptions and being alert to emerging risks. The objective of
these assessments is not to be prescriptive, but to understand levels of risk
and how they have changed over time. The purpose of this focus is to ensure
that the returns earned are commensurate with the risks assumed.
During the year, the Audit Committee carried out a detailed review of the
risk matrix which is used as a tool to monitor risks and agreed to modify its
approach to enable the Board to better focus on key risks. The Board has
assessed the risks which the Company faces under a number of headings.
Pressure on the discount, a previously identified principal risk, remained
high during the year. This was partly due to heightened geopolitical and
macroeconomic risk, along with the effects of interpretations of the new
UK Consumer Duty regulations, as set out in last year’s Annual Report.
The Board regularly reviewed developments in the UK cost disclosure
regime. In particular, the Board and Investment Manager focused on the
availability of the Company’s shares on online share dealing platforms and
the resulting effects on demand for the shares. While the forbearance notice
issued by the Financial Conduct Authority in September 2024 alleviated
some issues, the approach to cost disclosure which the investment trust
industry will ultimately adopt remains uncertain. A summary of the key
risks and mitigating actions is set out in the table on the following pages.
Shareholders should be aware that no assessment of this nature can be
guaranteed to predict all possible risks; the objective is to assess the risks
and determine mitigating actions.
Principal and Emerging Risks Risk Tolerance and Mitigating Actions
Risk Level /
Movement
Loss of value – portfolio performance
The market or the Company’s portfolio
could suffer a prolonged downturn in
performance.
There will be periods when the
investment strategy underperforms in
comparison to its benchmark and its
peer group, and when it results in a
decline in value.
The Board accepts that there is a risk of loss of value by investing in listed equities, particularly in the
short term. The Board monitors performance at each Board meeting, and reviews the investment
process thoroughly at least annually.
The Investment Manager has a clear investment strategy, as set out in the Investment Review.
Conventional wisdom holds that the most effective way of reducing risk is to hold a diversified
portfolio of assets. The Company typically holds 25-35 core positions. It is important to note that, in
line with its investment objective, the Company’s holdings are mostly in stocks which are themselves
owners of multiple underlying businesses. Thus, the portfolio is more diversified on a look-through
basis than if it were invested in companies with a single line of business. This diversification is evident
at country, sector and currency levels. A key element of the Investment Manager’s approach is to
consider the way in which the portfolio is balanced and to ensure that it does not become overly
dependent on one business area, country or investment theme.
The Company, through the Investment Manager’s compliance function and the Administrator’s
independent checks, has a robust system for ensuring compliance with the investment mandate.
O
Principal and Emerging Risks
Risk Level Key:
High Medium Low
Movement Key:
F Increased O Medium G Low
AVI Global Trust plc / Annual Report 2024
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Strategic Report / KPIs and Principal Risks continued
Principal and Emerging Risks Risk Tolerance and Mitigating Actions
Risk Level /
Movement
Geopolitical and macroeconomic
The net asset value will be affected
by general market conditions which
in turn can be affected by extraneous
events such as the Russian invasion
of Ukraine in 2022, or the escalating
conflict in the Middle East.
Macroeconomic uncertainty, such as
the potential for increased US-China
trade disputes following the US
election or the continued impact of
Brexit, can heighten the previously
identified risk of higher levels of
inflation, cause supply chain disruption
and impact interest rate movements.
The Directors’ assessment under
this heading was already classified
as high and it has increased further
during the year.
Geopolitical tensions have significantly impacted global trade since the Russian invasion of Ukraine
in 2022. The impact of continued conflict is likely to create environments which have not been
experienced in developed economies for many years. Given that markets do not operate in a
vacuum, this can in turn affect asset valuations.
The Investment Manager carries out thorough, regular and detailed analyses of investee companies,
and takes full account of the likely effects of the macroeconomic environment, the ongoing conflicts
in Ukraine and the Middle East and tension over international trade when reviewing the investment
portfolio and potential investments. The Company has no investments in Russia, Ukraine, Palestine
or Israel. While the valuation of the portfolio is likely to be affected by general market movements,
the underlying assets are well diversified by geography and type of company.
F
Gearing
While potentially enhancing returns
over the long term, the use of gearing
makes investment returns more
volatile and exacerbates the effect
of any fall in portfolio value.
There are covenants attached to
the Loan Notes; in extreme market
conditions, these could be breached
and require early repayment, which
could be expensive.
The Board decided to take on borrowing because it believes that the Investment Manager will
produce investment returns which are higher than the cost of debt over the medium to long term
and, therefore, that shareholders will benefit from gearing.
In taking on debt, we recognise that higher levels of gearing produce higher risk. While gearing
should enhance investment performance over the long term, it will exacerbate any decline in asset
value in the short term. It is possible (but, on the basis of past returns, it is considered unlikely) that
the investment returns will not match the borrowing cost over time, and therefore the gearing will be
dilutive. The Board manages this risk by setting the Company’s gearing at a prudent level, and the
covenants are set at levels with substantial headroom.
In common with other investment trusts, we also mark the value of debt to its estimated fair value
for the purposes of measuring investment performance as part of the Key Performance Indicators*,
which makes the value ascribed to the debt subject to changes in interest rates and so makes our
published NAV per share more volatile than would otherwise be the case. However, if we continue
with the debt to maturity, it will be repaid at its par value, notwithstanding any changes in fair value
over its life. The values of loans denominated in currencies other than Sterling will fluctuate with
currency movements and, if the exchange rate of those currencies relative to Sterling increases,
then in isolation this will have the effect of reducing NAV per share. However, we have certain assets
denominated in the same overseas currencies as these tranches of debt, which would increase
in value in Sterling terms if the exchange rates increase, enabling us to offset the debt position by
creating a natural hedge.
O
Foreign exchange
The portfolio has investments in a
number of countries, and there is a risk
that the value of local currencies may
decline in value relative to Sterling.
Foreign exchange risk is an integral part of a portfolio which is invested across a range of currencies.
This risk is managed by the Investment Manager mainly by way of portfolio diversification, but the
Investment Manager may, with Board approval, hedge currency risk.
The Company did not engage in any currency hedging during the year under review and has not
done so in recent years. However, as described above, borrowing in foreign currencies provides
a natural hedge against currency risk in situations where the Company holds investments
denominated in the borrowed currency. As at 30 September 2024, the Company had €50m (£41m)
of borrowing and investments denominated in Euros whose value exceeded that of this borrowing.
Furthermore, the Company had JPY17.5bn (£91m) of borrowing and investments denominated in
Japanese Yen whose value exceeded that of this borrowing. In addition the Company had a loan
of £30m, the primary currency of the Company, and holds investments denominated in GBP of a
greater value.
O
* The value of long debt is marked to its fair value for the purpose of measuring investment performance but, as required by the relevant accounting standards, all debt
is recognised on the balance sheet at amortised cost.
Principal and Emerging Risks continued
AVI Global Trust plc / Annual Report 2024
18
Principal and Emerging Risks Risk Tolerance and Mitigating Actions
Risk Level /
Movement
Liquidity of investments
While the investment portfolio is
made up predominantly of liquid
investments, there is a possibility that
individual investments may prove
difficult to sell at short notice.
The Investment Manager takes account of liquidity when making investments and monitors
the liquidity of holdings as part of its continuing management of the portfolio. The liquidity and
concentration of AVI’s holdings across all of its managed portfolios are monitored and reported at
regular Board meetings.
It is important to note that the potential for the return of capital from investee companies by means
of special dividends and the partial or full redemption of shares is a key element of the Investment
Manager’s strategy, and so trading on a stock exchange is not the only source of liquidity in the
portfolio.
O
Key staff
Management of the Company’s
investment portfolio and other support
functions rely on a small number of
key staff.
The Investment Manager and key suppliers have staff retention policies and contingency plans. The
Board’s Management Engagement Committee reviews all of its key suppliers at least once per year.
O
Discount rating
The shares of investment trusts
frequently trade at a discount to
their published net asset value.
The value of the Company’s shares
will be subject to the interaction
of supply and demand, prevailing
net asset values and the general
perceptions of investors. The share
price will accordingly be subject to
unpredictable fluctuations, and the
Company cannot guarantee that the
share price will appreciate in value.
The Company may become
unattractive to investors, leading
to pressure on the share price and
discount. This may be due to any of a
variety of factors, including investment
performance or regulatory change.
Any company’s share price is affected by supply and demand for its shares and fluctuations in share
price are a risk inherent in investing in the Company. In seeking to mitigate the discount, the Board
looks at both supply and demand for the Company’s shares.
The Board seeks to manage the risk of any widening of the discount by regularly reviewing
the level of discount at which the Company’s shares trade. If necessary and appropriate, the Board
may seek to limit any significant widening through measured buybacks of shares. During the year
under review, in common with most of the investment trust sector, the Company’s shares traded
at a persistent discount and share buybacks were continued to mitigate the pressure on the share
price rating.
The Investment Manager has a comprehensive marketing, investor relations and public relations
programme which seeks to inform both existing and potential investors of the attractions of the
Company and the investment approach. We have a marketing budget to meet third-party costs in
marketing our shares.
O
Outsourcing
The Company outsources all of its key
functions to third parties, in particular
the Investment Manager, and any
control failures or gaps in the systems
and services provided by third parties
could result in a financial loss or
damage to the Company.
The Board insists that all of its suppliers (and, in particular, the Investment Manager, the Custodian,
the Depositary, the Company Secretary, the Administrator and the Registrar) have effective control
systems which are regularly reviewed.
The Board assesses thoroughly the risks inherent in any change of supplier, including the internal
controls of any new supplier.
O
ESG
There is increasing focus on
investment companies’ role in
influencing investee companies’
approach to climate change and
broader ESG issues.
The Board maintains a strategic overview of the portfolio, including ESG criteria. Management of
the portfolio, including the integration of ESG considerations into portfolio construction, is delegated
to AVI, the Investment Manager. As a responsible steward of assets, AVI fully supports policies and
actions implemented by its portfolio companies to support a sustainable environment. AVI engages
actively with its portfolio companies, and looks to understand how each company approaches
stewardship of the environment, as well as seeking to identify any unacceptable practices that are
detrimental to the environment or climate.
O
The principal financial risks are examined in more detail in note 15 to the financial statements on pages 78 to 82.
AVI Global Trust plc / Annual Report 2024
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Strategic Report / Responsible Business
ENVIRONMENTAL, SOCIAL AND
GOVERNANCE (ESG) ISSUES
Both the Board and AVI recognise that social, human rights,
community, governance and environmental issues have an
effect on its investee companies.
The Board firmly supports AVI in its belief that good corporate governance will
help to deliver sustainable long-term shareholder value. AVI is an investment
management firm that invests on behalf of its clients and its primary duty
is to produce returns for its clients. AVI seeks to exercise the rights and
responsibilities attached to owning equity securities in line with its investment
strategy. A key component of AVI’s investment strategy is to understand and
engage with the management of public companies. AVI’s Environmental,
Social and Governance Policy, which is summarised on pages 26 to 28,
recognises that shareholder value can be enhanced and sustained through
the good stewardship of executives and boards. It therefore follows that in
pursuing shareholder value AVI will implement its investment strategy through
proxy voting and active engagement with management and boards.
The Company is an investment trust and so its own direct environmental
impact is minimal. The Company has no greenhouse gas emissions to report
from its operations, nor does it have responsibility for any other emissions-
producing sources under the Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013. As discussed on page 60, as an
investment trust without employees, the Company is not required to report
against the TCFD framework.
The Company has no employees. The Company’s principal suppliers, which
are listed opposite the inside back cover of this report, have confirmed
that they comply with the provisions of the UK Modern Slavery Act 2015.
The Directors do not have service contracts. There are five Directors, three
male and two female. Further information on the Board’s Diversity policy and
the policy on recruitment of new Directors is contained on pages 55 to 56.
FUTURE STRATEGY
The Board and the Investment Manager have long believed in
their focus on investment in high-quality undervalued assets
and that, over time, this style of investment has been well
rewarded.
The Company’s overall future performance will, inter alia, be affected by: the
Investment Manager’s decisions; investee companies’ earnings, corporate
activity, dividends and asset values; and by stock market movements globally.
Stock markets are themselves affected by a number of factors, including:
economic conditions; central bank and other policymakers’ decisions; political
and regulatory issues; and currency movements.
The Company’s performance relative to its peer group and benchmark will
depend on the Investment Manager’s ability to allocate the Company’s assets
effectively, and manage its liquidity or gearing appropriately. More specifically,
the Company’s performance will be affected by the movements in the share
prices of its investee companies in comparison to their own net asset values.
The overall strategy remains unchanged.
Approval of Strategic Report
The Strategic Report has been approved by the Board and is signed on its
behalf by:
Graham Kitchen
Chairman
12 November 2024
AVI Global Trust plc / Annual Report 2024
20
Strategic Report / Section 172 Statement
Culture and Values
The Directors’ overarching duty is to promote
the success of the Company for the benefit
of investors, with due consideration of other
stakeholders’ interests. The Company’s approach
to investment is explained in the Investment
Manager’s Review. The Directors aim to achieve
a supportive business culture combined with
constructive challenge and to provide a regular
flow of information to shareholders and other
stakeholders.
The Company has a number of policies and
procedures in place to assist with maintaining
a culture of good governance, including those
relating to diversity, bribery (including the
acceptance of gifts and hospitality), tax evasion,
conflicts of interest, and dealings in the Company’s
shares.
The Board assesses and monitors compliance
with these policies regularly through Board
meetings and the annual evaluation process.
The Board seeks to appoint the most appropriate
service providers for the Company’s needs and
evaluates the services on a regular basis. The
Board considers the culture of the Investment
Manager and other service providers through
regular reporting and by receiving regular
presentations, as well as through ad hoc
interaction.
The Board also seeks to control the Company’s
costs, thereby enhancing performance and returns
for the Company’s shareholders. The Directors
consider the impact on the community and
environment. The Board and Investment Manager
work closely together in developing and monitoring
the Company’s approach to environmental, social
and governance matters.
Section 172 of the Companies Act 2006
(Companies Act) states that: A Director
of a company must act in the way he
considers, in good faith, would be most
likely to promote the success of the
company for the benefit of its members
as a whole, and in doing so have regard
(amongst other matters) to the following
six items.
Further, the Companies (Miscellaneous Reporting)
Regulations 2018 require Directors to explain how
they have discharged their duties under section
172(1) of the Companies Act 2006 in promoting
the success of their companies for the benefit of
“members as a whole”. The Board’s approach is
described under “Stakeholders” on the next page.
Its views are set out in the table:
Matters for the Board to consider Approach taken by the Board
(a) the likely consequences of any
decision in the long term
In managing the Company, the aim of the Board and of the
Investment Manager is always to ensure the long-term sustainable
success of the Company and, therefore, the likely long-term
consequences of any decision are a key consideration.
In managing the Company during the year under review, we
acted in the way which we considered, in good faith, would be
most likely to promote the Company’s long-term sustainable
success and to achieve its wider objectives for the benefit of
our shareholders as a whole, having had regard to our wider
stakeholders and the other matters set out in section 172 of the
Companies Act.
(b) the interests of the company’s
employees
The Company does not have any employees.
(c) the need to foster the
company’s business relationships
with suppliers, customers and
others
The Board’s approach is described under “Stakeholders” on the
next page.
(d) the impact of the company’s
operations on the community and
the environment
The Board takes a close interest in ESG issues and sets the
overall strategy. As management of the portfolio is delegated to
the Investment Manager, the practical implementation of policy
rests with AVI. A description of AVI’s ESG policy is set out on
pages 26 to 28.
(e) the desirability of the company
maintaining a reputation for high
standards of business conduct
The Board’s approach is described under “Culture and Values”
below.
(f) the need to act fairly as
between members of the
company
The Board’s approach is described under “Stakeholders” on the
next page.
AVI Global Trust plc / Annual Report 2024
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Strategic Report / Stakeholders
In line with the Companies (Miscellaneous Reporting)
Regulations 2018, during the year under review the Board
considered in detail which individuals and organisations
should be regarded as stakeholders.
Its views are set out in the table below:
Stakeholders Why they are important Board Engagement
Shareholders
As the Company is an investment
trust, its shareholders are, in effect,
also its customers.
Continued shareholder support and
engagement are critical to the existence
of the Company and to the delivery
of the long-term strategy.
The Company has a large number of shareholders, including professional and
private investors. Over the years, the Company has developed various ways
of engaging with its shareholders, in order to gain an understanding of their
views. These include:
Annual General Meeting
The Company welcomes attendance from shareholders at AGMs.
At the AGM, the Investment Manager always delivers a presentation
and all shareholders have an opportunity to meet the Directors and
ask questions;
Information from the Investment Manager
The Investment Manager provides written reports with the annual
and interim results, as well as monthly Factsheets which are available on
the Company’s website. Their availability is announced via the
stock exchange;
Investor Relations updates
At every Board meeting, the Directors receive updates on the share
trading activity, share price performance and any shareholders’ feedback,
as well as any publications or comments in the press;
Working with external partners
The Board receives regular updates from the Corporate Broker and
also engages some external providers, such as communications
advisers, to obtain a detailed view on specific aspects of shareholder
communications;
Feedback from shareholders
The Board values the feedback and questions that it receives from
shareholders and takes note of individual shareholders’ views in arriving
at decisions which are taken in the best interests of the Company and of
shareholders as a whole. The Chairman welcomes meetings with major
shareholders, as well as enquiries and feedback from all shareholders.
The Chairman can also be contacted via email at chair@aviglobal.co.uk
or by letter to the Company’s registered office. The Chairman, the Senior
Independent Director or any other member of the Board can be contacted
via either the Company Secretary or the Corporate Broker, both of which
are independent of the Investment Manager.
Recent examples of decisions resulting from feedback from shareholders
and discussions of proposals to enhance shareholders’ best interests
were:
• the change of the Company’s name in May 2019;
• rebalancing of the proportion of the dividend paid as an interim
dividend in the 2019/2020 accounting year;
• the Share Split which was completed in January 2022;
• cancellation of some of the shares held in treasury in February 2022;
• the change of comparator benchmark in 2023; and
• the proposal to change the Company’s stated Investment Policy at
this year’s AGM.
Lenders
The Company has raised capital in the form of
debt from a small group of lenders. Although
the Company is not dependent on debt
funding to maintain its operations, continued
support from lenders is important to maintain
the financial stability of the Company and
flexibility in the investment portfolio.
All of the Company’s debt is subject to contractual terms and restrictions.
We have an established procedure to report regularly to our lenders on
compliance with debt terms.
It is our policy that all interest and repayments of principal will continue
to be made in full and on time.
In line with these considerations and to take advantage of attractive rates
of interest, the decision was made to take out a further JPY5.0bn fixed rate
unsecured debt (as discussed on page 9) during the year.
AVI Global Trust plc / Annual Report 2024
22
Stakeholders Why they are important Board Engagement
Service Providers
The Investment Manager
The Investment Manager’s performance
is critical for the Company to deliver its
investment strategy and meet its objective.
Maintaining a close and constructive working relationship with the Investment
Manager is crucial as the Board and the Investment Manager aim to continue
to achieve long-term returns in line with the Company’s investment objective.
The Board seeks to:
Encourage open discussion with the Investment Manager;
Ensure that the interests of shareholders and of the Investment Manager
are aligned and adopt a tone of constructive challenge;
Draw on Board members’ individual experience to support
the Investment Manager in the sound, long-term development of
investment strategy and, where relevant, the Investment Manager’s
business and resources.
The Board recognises that the Company is the largest client of the Investment
Manager, and so the long-term success of the Investment Manager is closely
aligned to that of the Company.
The Company Secretary attends all Board and Committee meetings.
The Management Engagement Committee undertakes an annual review of
the key service providers, encompassing performance, level of service and
cost. Each provider is an established business and each is required to have in
place suitable policies to ensure that they maintain high standards of business
conduct, treat customers fairly and employ corporate governance best
practice.
Our policy is that all bills and expense claims from suppliers are paid
in full, on time and in full compliance with the relevant contracts.
The Administrator and
Company Secretary
The Administrator and Company Secretary are
key to the effective running of the Company.
Other key service providers
The Company has a number of other key
service providers, each of which provides a
vital service to the Company and ultimately to
its shareholders. While all service providers are
important to the operations of the Company, in
this context the other key service providers are
the Custodian, Depositary and Registrar.
AVI Global Trust plc / Annual Report 2024
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Investment Review / Investment Manager’s Review
About Asset Value Investors
OUR EDGE
Asset Value Investors specialises in
finding companies which have been
overlooked or under-researched by
other investors. Investments that for
one reason or another are priced
below their true value but can be
made into profitable performers. AVI
believes its strategy and investment
style differentiate it from other
managers in the market because of
the following:
01.
39 years’ experience of long-
term outperformance following
our distinctive investment style
(annualised NAV total returns* of
+11.6% since 1985).
02.
AVI actively looks for the catalyst
within a company which will drive
fundamental change.
03.
AVI seeks to improve corporate
governance through active
engagement to unlock potential
shareholder value.
* Refer to Glossary on pages 101 to 105..
Please visit our website for more information:
www.aviglobal.co.uk
WILFRID CRAIGIE ON THE
ATTRACTIVENESS OF
HOLDING COMPANIES
What is AVI’s history of investing
in holding companies?
Ever since AVI were appointed as the
investment manager in 1985, family-
controlled holding companies have
accounted for a significant portion of the
portfolio. At the time there were several
French holding companies that had
complex cascade structures that attracted
discounts upon discount. We were able
to align capital with thoughtful long-term
orientated families that owned attractive
quality assets, with significant upside
potential from discount narrowing and
corporate restructuring. These fundamental
attractions remain at the heart of our
approach today.
How has AVI’s approach evolved
over time?
The basic tenets of the approach remain
unchanged. We are looking to buy durable,
quality businesses, that are growing in
value; that trade at deeply discounted
valuations; and where there is a potential
catalyst or event to unlock and grow value.
Within that though, I would say that in
recent years the third leg – the event or
catalyst – has become an increasingly
prevalent part of the strategy and
something upon which we have placed
increased emphasis.
Schibsted and FEMSA are prime examples
of this, as they both took significant steps
to simplify their corporate structures,
narrowing the discounts at which they
trade. In the current portfolio, News Corp,
D’Ieteren and Bollore all fit this bill.
What are your observations on the
current environment?
To us, it is interesting that whilst global
equity markets have been led to new highs
by an increasingly narrow and expensive
band of US technology companies, such
ebullience is not found in the niche parts of
the market on which we focus.
Holding company discounts are wide
by historical standards and for many
investors, holding companies simply aren’t
relevant. For us, however, we believe
this is a stockpickers’ market and one
where a focus on thorough fundamental
research, catalysts and events will be key
to unlocking value.
Q
Q
Q
A
A
A
After nearly 40 years why does
the opportunity persist?
Whilst we are taught that equity markets
are largely efficient, our experience shows
that certain types of companies – such as
holding companies – attract inefficiencies
and are prone to mispricing. We believe
there are many structural reasons for this.
First and foremost: complexity. Holding
companies can be complex beasts and
this runs in contrast to what equity markets
and investors desire, which is simplicity.
The types of company on which we focus
are often conglomerates in nature, with
multiple and varied businesses; they may
have a dual-share class; they may form
part of a cascade structure; the accounting
often doesn’t match economic reality, for
instance if a company owns a listed stake
in another entity which accounts for a large
proportion of its enterprise value, but
the earnings are not consolidated.
All these issues are compounded by a lack
of research coverage. The companies that
we own typically have little or no sell side
coverage.
And this really comes to the fore with
unlisted assets. We often do our best
work where we can build a high conviction
differentiated view on the value of an
unlisted business, and then look for an
event or catalyst, such as an IPO, sale, or
corporate simplification that will make the
market wake up and re-value it.
Finally, we believe the market
fundamentally misunderstands the
attractions of investing alongside families in
controlled companies, with the consensus
view being one of scepticism. We believe
the ability to think in generations not
quarters is a real competitive advantage
and there is significant literature on the
outperformance of family-controlled
businesses to back this up.
WILFRID CRAIGIE
Senior Investment Analyst
$
Q
A
AVI Global Trust plc / Annual Report 2024
24
Overview of AVI’s Investment Philosophy
The aim of AVI is to deliver superior
investment returns. AVI specialises in
investing in securities that for a number
of reasons may be selling on
anomalous valuations.
Our focus on buying high quality, growing
businesses trading at wide discounts to their net
asset value (NAV) has served us well over the
long term. There are periods of time, however,
when our style is out of favour and the types of
companies in which we invest are ignored by the
broader market. This requires us to be patient
and to remain true to our style, so that when
other investors begin to appreciate the value in
those companies, we are well placed to benefit.
In the short term, this means that there could be
some volatility in our returns. However, we are
confident that we own high-quality businesses,
which are trading on cheap valuations.
Members of the investment team at AVI invest
their own money into the funds that AVI manage.
As at 30September 2024, AVI’s investment
team owned 1,962,608 shares in AGT.
Introduction to the Strategy
Asset Value Investors invests in overlooked
and under-researched companies, which
own quality assets and trade at discounts
to NAV. This philosophy typically leads us to
invest in structures such as family-controlled
holdings companies, closed-ended funds and,
more recently, Japanese cash-rich operating
companies. However, our views on the types
of structures through which we invest are
entirely agnostic, and portfolio weightings are
determined solely by the opportunity set and our
judgement of the risk-reward potential.
Our research process involves conducting
detailed fundamental research in order to: (a)
understand the drivers of NAV growth; and (b)
assess the catalysts for a narrowing discount.
We often engage actively with management, in
order to provide suggestions for improvements
that we believe could help narrow the discount
or improve operations.
Holding Companies
When we consider a holding company as an
investment, we seek several characteristics.
The first is a high-quality portfolio of listed and/
or unlisted businesses with the potential for
sustained, above average, long-term growth.
Many of the underlying companies that we have
exposure to are world-famous brands, and
include: LVMH, Ferrari, Dow Jones, Universal
Music, MGM Resorts, Aker BP, Belron and
many more.
Secondly, we look for the presence of a
controlling family or shareholder with a strong
track record of capital allocation and returns in
excess of broader equity markets. Long-term
shareholders provide strategic vision; many
of our holding companies have been family-
controlled for generations. This combination of
attractive, quality assets managed by long-
term capital allocators creates the potential for
superior NAV growth.
Finally, we invest at a discount to NAV, preferably
with a catalyst in place to narrow the discount.
This provides an additional source of returns. We
estimate that historically about three-quarters of
our returns from holding company investments
have come from NAV growth and one-quarter
from discount tightening.
Closed-ended Funds
Similar to holding companies, we look for certain
qualities when we consider a closed-ended
fund investment. Most importantly, we look for
portfolios of high-quality assets (both listed and
unlisted) with good growth potential. Our portfolio
of closed-ended funds gives us exposure to
many quality companies, such as Starling Bank,
Klarna, IU Group, Phenna Group, and many
more. We also focus to a great extent on the
discount to NAV at which the closed-ended fund
trades. In a nuanced distinction from holding
companies, we usually insist on a high probability
of the discount narrowing or vanishing entirely
before we will consider making an investment.
In accordance with this, our stakes in closed-
ended funds are larger, and we engage with
management, boards, and other shareholders
to enact policies to help narrow discounts and
boost shareholder returns. Historically, our
portfolio of closed-ended funds has generated
half of its returns from discount narrowing.
Asset-Backed Special Situations
The majority of this portion of the portfolio
consists of investments outside of holding
companies and closed-ended funds. For several
years now, these investments have largely been
in Japanese cash-rich operating companies.
At present, we hold positions in nine Japanese
companies which have, on average, 39% of their
market value in cash and listed securities.
Japanese companies have a reputation for
overcapitalised balance sheets, but we believe
that the winds of change are blowing in
Japan. The Japanese government has been
championing efforts to improve corporate
governance and enhance balance-sheet
efficiency, and this programme is beginning
to have an effect. Major pension funds have
signed up to a new Stewardship Code, boards
of directors are guided by the principles of an
updated Corporate Governance Code, and there
is an identifiable uptick in the presence of activist
investors on Japanese share registers.
We can see evidence of this change in increasing
payout ratios, buybacks, and more independent
directors. We believe that our Japanese holdings
stand to benefit from this powerful trend, and
that the market will assign a much higher
multiple to these companies if it reassesses the
probability of the excess cash and securities
being returned to shareholders. We are active in
pursuing this outcome and engage continuously
with the boards and management of our
holdings to argue for a satisfactory outcome for
all stakeholders.
The focus is on quality, cash-generative
businesses with low valuations (our current
portfolio trades on just 11.4x EV/EBIT). These
are the sorts of businesses that one should be
happy to own; as such, we can afford to take a
long-term view on our holdings as we engage
with boards and management to create value for
all stakeholders.
Summary
Our strategy centres upon investing in
companies which own diversified portfolios
of high-quality assets. In each case, we have
sought to invest in companies where the market
has misunderstood or overlooked the value on
offer, and where our analysis shows that there is
a reasonable prospect of this being corrected.
The historic returns from this strategy have been
strong and came from a combination of discount
narrowing and NAV growth.
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Investment Review / A Responsible Approach
A responsible approach
OUR PURPOSE
Helping our clients to make the most of
their financial future.
The people at Asset Value Investors are committed
to leveraging our long heritage, stewardship,
and expertise to make investing responsible,
accessible, and profitable for everyone –
individuals, families, institutions, private companies,
and listed companies. Financial returns matter
and we recognise our position of influence in
questioning the practices of the companies we
invest in for a more sustainable future.
OUR PHILOSOPHY
We are fundamentally committed
to supporting long-term sustainable
businesses that will grow and participate
in the prosperity of the economy,
with a responsible approach to the
environment, society, and governance.
We believe that the integration of ESG and
sustainability considerations into our investment
strategy is integral to comprehensively
understanding each investment’s ability
to create long-term value.
OUR PRINCIPLES
We are aligned with the PRI’s belief that
an economically efficient, sustainable
global financial system is a necessity for
long-term value creation.
Such a system will reward long-term responsible
investment and better align investors with the
broader objectives of society. AVI became a
signatory to the UN-supported Principles for
Responsible Investment (PRI) on 9 April 2021.
In doing so, we have confirmed our belief in our
duty to act in the best long-term interests of our
beneficiaries.
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2
4
It is our view that a responsible approach to the environment, society and
governance is key to long-term sustainable businesses. This guiding principle is
embedded not only in our investment philosophy but in how we manage Asset
Value Investors as a company.
Employees with Equity Ownership in
AVI:
33.3%
AVI was one of the
original 200 investment
firms to support
10,000 black interns
programme
We maintain a corporate website containing a wide range
of information of interest to investors and stakeholders:
www.aviglobal.co.uk
AVIGlobalTrust
AVIGlobalTrust AVI-Global-Trust
@AVIGlobalTrust
Diversity of Workforce:
2024
Number
2024
%
Male 15
62.5
Female 9
37.5
AVI Global Trust plc / Annual Report 2024
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* Drawing on the World Economic Forum’s ‘21 core metrics’,
https://www.weforum.org/stakeholdercapitalism/our-metrics
Investment Period
ESG monitoring system built into our
proprietary database to ensure ESG factors
are considered alongside financial analysis.
Ongoing ESG assessments of portfolio
companies’ performance against defined
ESG metrics. A scoring system is used to
assess trends and highlight potential areas for
engagement.
Tailored questionnaires sent to all
companies based on our assessments to
request additional ESG information and
promote improved sustainability disclosure.
Ongoing controversy monitoring following
a clear engagement pathway if companies
are flagged.
Constructive engagement with boards and
management to help sustainably increase
corporate value by building resilience to ESG
risks and promoting responsible business
practices.
Pre-Investment
Exclusionary screening is not our guiding
framework, however there are certain
exceptions to this. AVI will not invest in a
company with direct involvement* in:
• Tobacco
• Controversial Weapons
• Pornography
Or companies that engage in child labour or
human exploitation as defined by the relevant
ILO conventions.
Prior to investment we:
Assess a company’s exposure to ESG risks
and opportunities, including climate-related
risks and opportunities.
Identify whether the company is involved
in any actual or potential violations of
international norms and standards supported
by ISS^ Norms-based Research.
AVI became a signatory to the UN-supported
Principles for Responsible Investment (PRI)
on 9 April 2021.
* Whereby more than 5% of that company’s NAV is derived from
these activities.
^ Institutional Shareholders Services group of companies.
$
OUR APPROACH
As research-driven value investors, we
seek to truly understand each company
in our portfolio and the context within
which it operates on a case-by-case
basis.
AVI has built ESG factors into its proprietary
database and implemented a number of
processes to support the integration of ESG
considerations into each stage of the investment
process.
DEFINING ‘E’, ‘S’ & ‘G’
AVI has identified* the factors that
we believe are the most material
and relevant to our investments and
developed a bespoke ESG monitoring
system to track the performance and
progress of our portfolio companies
against defined ESG metrics.
We define environmental sustainability within the
context of:
• Environmental Impact
• Tackling Climate Change
• Sustainable Management
Our social focus is divided into:
• Dignity and Equality
• Wellbeing and Development
• Community Engagement
Our approach to governance includes:
• Quality of Governing Body
• Corporate Strategy
• Ethical Behaviour
Our metrics within each of these areas enable us
to assess corporate governance practices and
evaluate a company’s impact and dependencies
on the environment and society, and the extent to
which these are being effectively managed.
OUR STEWARDSHIP
Good stewardship should be viewed as
a continuous practice and is essential
to preserving and enhancing long-term
value.
Active engagement is at the core of our investment
strategy and our ESG monitoring system plays
an important role in helping us to identify potential
areas of engagement. As long-term investors, our
aim is to build constructive relationships with the
boards and management of the companies in
which we invest, addressing issues and offering
suggestions to sustainably improve corporate
value in consideration of all stakeholders and in the
best long-term interest of our clients.
Controversy Monitoring
Supported by ISS Norms Based Research,
we also closely monitor any controversies and
potential violations of international norms and
standards associated with our universe. Whilst our
hope is that controversies do not occur, they can
be a marker of how well a company’s policies are
integrated into business operations and culture,
highlighting vulnerabilities or structural problems
and indicating where improvements can be made.
Through constructive engagement, we encourage
and expect investee companies to take meaningful
action in addressing weaknesses in the context of
long-term value creation.
ACTIVE ENGAGEMENT
We seek to be constructive partners and
continue to maintain an active dialogue
with the boards and management of our
portfolio companies.
The majority of our engagements take place
behind closed doors. However, if necessary, we
are willing to take our concerns public to raise
awareness and compel change.
Our approach to engagement is highly bespoke
and covers a wide range of topics including
ESG themes. We identify ESG engagement
topics on a case-by-case basis and avoid
generic guidance, instead carefully analysing the
issue within the company’s particular context
and offering specific suggestions to address
weaknesses and sustainably enhance corporate
value.
IR
AVI Global Trust plc / Annual Report 2024
28
Investment Review / A Responsible Approach continued
A responsible approach continued
AGT 2024 PROXY
VOTING RECORD**
Total voted:
100%
Voted against management:
17%
Voted with management:
83%
* 6% of these votes were not officially counted for technical
reasons.
** As at 30/09/2024
100%*
17%
83%
ENGAGEMENT
BREAKDOWN*
Governance:
76%
Social:
14%
Environmental:
10%
* % breakdown of total ESG engagements (147) during FY24.
14%
10%
76%
HIGHLIGHTS FROM 2024
01.
AVI published its first ESG Report,
sharing both qualitative and
quantitative insights into how we
integrate ESG throughout our
investment process
02.
AVI scored comfortably above the PRI
median in each module and reported
through the PRI for the second time
03.
AVI welcomed its third summer intern
through the 10,000 Black Interns
programme
04.
AVI established a Stewardship and
Sustainability Risk Committee,
chaired by our Director responsible
for ESG
Useful resources:
https://www.ccla.co.uk/mental-health
https://www.assetvalueinvestors.com/process/
esg-approach/
www.issgovernance.com/esg/screening/
Policies and reports can be found on our
website: https://www.assetvalueinvestors.
com/agt/#responsibleinvesting
COLLABORATIVE
ENGAGEMENT
We recognise the value of collaborative
engagement in addressing collective
issues.
We continue to participate in CCLA’s collaborative
initiative which seeks to improve the corporate
approach to workplace mental health globally.
During 2024, three companies in the portfolio fell
within scope and joint letters were sent to each.
AVI joined the initiative in 2023 and since then
LVMH has taken significant steps to demonstrate
their commitment to workplace mental health.
BESPOKE ENGAGEMENT
Every engagement is different. Not only do our
engagements cover a broad range of topics, but
we employ a wide variety of engagement methods
to ensure our views are clearly understood and
there is opportunity for constructive dialogue.
During 2024, our team visited a number of
companies for in-person meetings including trips
to our Japanese companies such as Dai Nippon,
TSI Holdings and Wacom, meeting with several
layers of the companies including chairperson,
CXOs and external board members. Whilst the
majority of our engagements are long-distance,
face-to-face discussions can be invaluable in
strengthening collaborative relationships and
deepening our engagements.
Corporate
Mental Health
Benchmark
AGT 2024 ENGAGEMENTS
Engagement Method
Number of
Engagements
Number of
Companies Engaged
Meeting 92 31
Letter 17 13
Company Visit 6 6
Collaborative Engagement 3 3
Presentation 3 3
Press Release 2 2
Shareholder Resolution 1 1
AVI Global Trust plc / Annual Report 2024
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HIPGNOSIS SONGS FUND
We sold out of our shares in Hipgnosis Songs
Fund (SONG) in May 2024, marking the
conclusion of a highly successful engagement
campaign and investment for AGT.
The trials and tribulations of SONG have been
well reported in the media. AVI’s long-standing
concerns regarding the fund’s financial
controls, transparency and efficacy of the
governing body came to a crescendo with
Hipgnosis’ announcement proposing the sale
of a portion of its music portfolio to a related
party at a large discount to carrying value.
Following extensive private engagement with
the Board, AVI published a public letter in
October 2023 urging shareholders to vote
against the proposals at SONG’s upcoming
AGM. Shareholders responded emphatically,
voicing an unequivocal demand for change.
This ultimately saw the newly reconstituted
board oversee a bidding war in which
Blackstone ultimately prevailed with a bid of
$1.30 per share – a premium of +48% to the
undisturbed share price.
We are delighted by the outcome which
demonstrates, once again, not only the
importance of strong corporate governance,
but the power of shareholder activism to effect
change and unlock trapped value.
IR
AVI Global Trust plc / Annual Report 2024
30
Investment Review / Investment Manager’s Report
Performance Review
JOE BAUERNFREUND
Chief Executive Officer, Chief Investment Officer
Length of service:
22 years (9 years as sole Portfolio Manager)
Sole Portfolio Manager of AVI Global Trust since
September 2015
$
“So far, so good” read the introduction
to the 2024 annual report by the Bank of
International Settlements, the so-called
“central bankers’ central bank”.
And this appears largely true. Inflation has
continued to recede such that we are now at the
point of monetary policy easing; the US and major
Western economies have proved surprisingly
resilient; and equity markets have continued to
reach new highs.
That is not to say there is nothing to worry
about. There are many good reasons to believe
that inflation may well be more volatile and
structurally higher than it has been in recent
decades, and in-turn this increases the chances
of central bank policy mistakes. Economic growth
and jobs markets might yet deteriorate faster
than anticipated and, notwithstanding recent
interventions, China’s economic malaise poses an
increased threat to global growth and corporate
profits. Meanwhile the increased financialisation
of markets and corresponding inherent leverage
in the system can lead to bouts of volatility and
instability, as we saw in early August 2024.
Within this context AVI Global Trust’s NAV
increased by +13.7% on a total return basis
over the 12 months to 30 September 2024. This
compares to a +19.9% return for the MSCI AC
World Index, our comparator benchmark.
It has been well documented that index level
returns have principally been driven by a narrow
band of US technology companies. Even so, it is
stark to note that the equal weighted version of the
MSCI AC World index returned +10.7% over the
period (£).
The Company’s performance was driven by stock
selection, with outsized contributions from larger
holdings such as KKR, Hipgnosis Songs Fund
and Schibsted, as we have continued to shape
the portfolio around a concentrated handful of
situations where activism and events provide real
catalysts to unlock value.
Indeed, we believe that activism and the ability
to engage with companies is a key tool in our
arsenal, and central to our ability to generate
differentiated returns and unlock value for all
shareholders. The public example of Hipgnosis
Songs Fund – which added +245bps
1
to returns
over the period – demonstrates this. With that
said, it is our preference and priority that most
engagements remain private, where dialogue can
be most constructive. In both the London-listed
closed-end fund market and amongst Japanese
small caps, we find a large number of lowly valued
companies where we think we can add value
through engagement.
AVI Global Trust plc / Annual Report 2024
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As well as this engagement, a focus on events
and catalysts remains an important part of our
approach. Schibsted was a prime example of this
over the last financial year and we have redeployed
capital into new and existing names where we
believe the prospects for transformational events
are underpriced, such as News Corp (7.5%
weight) and Bollore (5.1%).
In recent weeks, we have also added significantly
to D’Ieteren, which is now your Company’s largest
position. D’Ieteren is due to make an extraordinary
return of capital of 74 euros per share – a yield of
39% – later this year. On a post-distribution basis
D’Ieteren is trading at an implied -54% discount
to NAV which we believe to be a highly attractive
valuation.
Performance since the interim period has been
more challenging as discounts have generally
widened and we have witnessed bouts of
volatility across markets. A number of companies
have endured weaker share price performance,
such as Christian Dior and FEMSA, and there
has been a lack of commensurately strong
performers from the top of the portfolio to offset
this. Lulls in performance are not unexpected for
a concentrated and catalyst-focused investment
strategy, and the underlying asset quality means
we can be patient whilst we wait for events to
occur.
Latterly, the portfolio has also suffered from
extreme volatility in the Japanese equity market
as the Bank of Japan raised interest rates and
attempted (!) to pave the way for further hikes
to come. A strengthening of the Yen saw shifts
in the carry trade, which reverberated through
to global equities, with the TOPIX registering its
largest single day decline since 1987. Such moves
are devoid of fundamentals and likely fuelled by
algorithmic trading.
In our view, fundamentally very little has changed,
and we believe the thesis of governance reform,
corporate activity and activism remains a highly
valid one that is still in a relatively early innings.
As such we took advantage of this volatility,
adding approximately 300bps
1
(£33m) to several
Japanese names at prices few would have
thought possible just a matter of days earlier. As
we have always said, as uncomfortable as it feels
at the time, volatility is the friend of the long-term
investor.
More broadly, both in Japan and other areas of
the world, the opportunity set remains rich, and
idea generation across all parts of our universe is
high. Discounts have generally widened and are
wide by historical standards, as indicated by the
35.7% portfolio weighted average discount at the
year end.
Our focus remains
on the bottom-up
fundamentals of a
relatively small number
of mispriced situations
where we have an
advantage. We continue
to believe that stock
picking, hard work,
activism and a focus on
events are key tenets
in navigating our way
forward.
PORTFOLIO WEIGHTED AVERAGE DISCOUNT*
-50%
-40%
-30%
-20%
-10%
Sept 06 Sept 12Sept 09 Sept 15 Sept 18 Sept 21 Sept 24
-50
-40
-30
-20
-10
EQUITY PORTFOLIO
VALUE BY MARKET
CAPITALISATION
2024
%
2023
%
<£1 billion 37 31
>£1 billion – <£5 billion 20 31
>£5 billion – <£10
billion 10 11
>£10 billion 33 27
Weighted Average Discount:
-35.7%
Annualised NAV 10 Year Total Return
per Share*:
+10.2%
* For definitions, see Glossary on pages 101 to 105.1. See Glossary
As ever, we do not pretend to know what is round
the corner from a macroeconomic perspective.
Rather, our focus remains on the bottom-up
fundamentals of a relatively small number of
mispriced situations where we have an advantage.
We continue to believe that stock picking, hard
work, activism and a focus on events are key
tenets in navigating our way forward. Combined
with attractive starting valuations, this gives us
confidence in generating attractive long-term
returns.
IR
AVI Global Trust plc / Annual Report 2024
32
Investment Review / Investment Manager’s Report continued
Performance Review continued
A UNIQUE INVESTMENT
PORTFOLIO
Chrysalis Investments (Chrysalis) is a
London-listed closed-ended fund which
owns a concentrated portfolio of late-stage,
technology-driven private companies.
We first invested into Chrysalis in January 2024, with an
investment predicated on 1) the abnormally wide -48%
discount to a heavily written-down NAV; 2) Chrysalis’ top
five largest holdings accounting for 69% of NAV, were
all mature, and (mostly) performing strongly; 3) multiple
credible prospects for liquidity events which could lead to
significant uplifts on carrying value; and 4) a new capital
allocation policy, in which £100m of buybacks (24% of the
then prevailing market cap) would be undertaken once a
cash reserve of £50m from exits was hit.
Chrysalis’ largest position is Starling Bank, which accounts
for 30% of its NAV at period end. Starling Bank is a cloud-
native, UK challenger bank built on a proprietary digital
platform known as Engine. Being built from the ground-
up, as a digital-first business, Starling not only benefits
from significant cost advantages versus the incumbent
UK banks, but is also able to develop and launch new
products far quicker as a result.
For example, Starling’s banking platform is accessed solely
via an app, meaning its customer acquisition cost is only
around £40, whereas traditional banks have a customer
acquisition cost of around £250 due to their legacy tech
stack and brick-and-mortar bank branches. This drives
up both Starling’s margins and its return on tangible equity,
which stands at c. 30% vs. peers at 10%, and affords it
a premium valuation. We remain confident in Starling’s
ability to deliver meaningful levels of profitability despite
its relatively low loan-to-deposit ratio and its conservative
balance sheet.
Elsewhere, Chrysalis’ other largest portfolio holdings are
Smart Pension (15% of NAV), a UK Pension Master Trust
and technology platform; Klarna (12% of NAV), a global
leading Buy-Now-Pay-Later payments provider; The
Brandtech Group (10% of NAV), a US-based marketing
technology group; and wefox (9% of NAV), a European
digital platform for insurance brokers which faced liquidity
issues earlier this year that have since been resolved.
On 26 September 2024, Chrysalis announced an exit
from Featurespace for £89m, at a +21% premium to last
carrying value. This kick-started Chrysalis’ £100m buyback
programme.
The prospect for continued buybacks driven by further
realisations at large holdings, such as Klarna or Starling,
and the still-wide -36% discount to NAV makes for a
compelling investment case. Today, AGT owns over 12%
of Chrysalis’ shares, with the position representing 6.0% of
AGT’s NAV. Chrysalis added +1.0% to AGT’s NAV in 2024.
Read more on our website: www.aviglobal.co.uk
Source / Starling Bank Limited
AVI Global Trust plc / Annual Report 2024
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SOFTBACK GROUP:
WHY WE HOLD THE POSITION
ON TOTAL RETURN SWAP
Softbank Group Corp. is a Japanese-listed holding
company founded in 1981 by Masa Son that holds
a variety of listed and unlisted technology-focussed
companies.
90% of Softbank Group’s NAV is accounted for by the listed
holdings, including Arm (61% of NAV), Softbank Corp (12%
of NAV), T-Mobile (8% of NAV), and Deutsche Telekom (3% of
NAV), with the unlisted portion including the two heavily marked-
down Softbank Vision Funds (15% of NAV).
AGT bought Softbank Group Corp via a total return swap on the
10th June 2024, with an investment case predicated around the
likelihood of discount narrowing through large buybacks. At the
time of investment, the discount had blown back out to levels
last seen during the covid sell-off of close to 60%. However,
given the lofty valuations of Softbank’s listed underlying holdings,
such as Arm, we also hedged our exposure to the five largest
listed companies using total return short positions. These short
positions account for 86% of Softbank Group’s NAV.
Holding both the long and short legs of the investment case via
total return swaps allows us to get full equity exposure without
making the same capital outlay as holding the shares directly
and minimises margin requirements due to netting. Using a
combination of long and short total return swaps enables us to
get the full benefit from any discount narrowing, while protecting
us from downside risk in names where we are not comfortable
in their valuations.
Readers might recall that AGT previously held Softbank between
Feb 2020 – July 2021, over which period the company reduced
its shares outstanding by 24% through a significant buyback
program, earning AGT an IRR of 51%, with the lion’s share of
returns attributable to discount tightening.
The gross notional exposure of the positions is as follows:
Position % Notional exposure
Softbank Group 5.2%
Total Short Positions −4.8%
Arm Holdings −3.4%
Softbank Corp −0.6%
T-Mobile −0.5%
Deutsche Telekom −0.2%
Coupang −0.1%
IR
AVI Global Trust plc / Annual Report 2024
34
TOP 20 LOOK-THROUGH COMPANIES
AGT invests in holding companies and closed-ended funds that in turn invest in listed and unlisted companies. We show below the top 20 holdings on a
‘look-through basis’, i.e. the underlying companies to which we have exposure. For example, AGT owns a stake in Aker ASA, a Norwegian-listed holding
company, that accounts for 3.7% of AGT’s NAV. One of Aker ASA’s holdings is Aker BP, a Norwegian Oil & Gas company, which accounts for 55.4% of
Aker ASA’s own NAV. This translates to AGT having an effective exposure to Aker BP of 2.1% of AGT’s NAV. The table below is an indication of the degree
of diversification of the portfolio.
Look-through companies Parent company
Underlying look-
through weight
Look-through
holding sector
Online Operations Entain 4.9% Casinos and Gaming
Rohto Operating Business Rohto Pharmaceutical 4.9% Personal & Beauty Products
Belron D’Ieteren Group 4.7% Specialised Consumer Services
FEMSA Comercio FEMSA 3.0% Food Retail
LVMH Christian Dior 3.0% Apparel, Accessories and Luxury Goods
REA Group News Corp 3.0% Interactive Media & Services
Emitel Cordiant Digital Infrastructure 2.9% Broadcasting
Dow Jones News Corp 2.8% Publishing
Health Division Reckitt Benckiser Group 2.4% Personal Care Products
Nihon Kohden Operating Business Nihon Kohden 2.4% Health Care Equipment
Universal Music Group Bollore 2.2% Movies and Entertainment
CRA Cordiant Digital Infrastructure 2.2% Broadcasting
Hygiene Division Reckitt Benckiser Group 2.2% Household Products
Aker BP ASA Aker ASA 2.1% Oil and Gas Exploration and Production
Athene Apollo Global Management ‘A’ 2.1% Life and Health Insurance
Renewable Energy GCP Infrastructure Investments 1.8% Asset Management
Starling Bank Chrysalis Investments 1.8% Diversified Banks
Frasers Retail Operations Frasers Group 1.8% Specialty Retail
Electronics Dai Nippon Printing 1.7% Electronic Components
Autos D’Ieteren Group 1.2% Automotive Parts & Equipment
NEWS CORP: HOW THE LOOK-THROUGH ANALYSIS WORKS
News Corp is a US-listed Holding Company in which AGT invests. Although News Corp is just one company, it has investments in multiple different
companies, providing your Company’s portfolio with exposure to a diversified collection of businesses.
Company name
Estimated % of
News Corp’s portfolio Geography Sector
REA Group 39.8% Australia Interactive Media and Services
Dow Jones 37.1% Global Publishing
HarperCollins Publishing 10.4% Global Publishing
Move 7.2% North America Internet Services and Infrastructure
Other 5.5% Global –
Investment Review / Portfolio Review
Portfolio Review
AVI Global Trust plc / Annual Report 2024
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Contributors
KKR & Co
Holding
Company
% of net assets
1
N/A*
Discount
N/A*
% of investee
company
N/A*
Total return on
position FY24 (local)
2
40.7%
Total return on
position FY24 (GBP)
36.8%
Contribution (GBP)
3
250bps
ROI since date of
initial purchase
4
216.6%
01
Although we sold the last of our shares in KKR (an investment initiated in
2020) in May 2024, the investment was our largest contributor over AGT’s
financial year.
While earnings growth was stellar over the period (with the company on track
for ~20% compounded annual growth in fee-related earnings per share), the
shares also benefited from multiple expansion as the market reappraised the
business quality and growth prospects, to bring its view more into line with our
own that informed our original thesis.
Our initial thesis was that the listed alternative asset management sector was
systematically undervalued, and that KKR (and Apollo, which we still own)
was itself undervalued relative to peers. At the time of our investment, both
the multiples at which the sector was trading and the volatility of share prices
suggested alternative asset managers were perceived as high beta plays on
risk assets.
It is certainly true that both KKR and Apollo have more on-balance sheet risk
than peers (in the case of KKR, via its investments in its own private equity
funds; for Apollo, via the large balance sheet of its insurance subsidiary
Athene). But our contention was that the market was underestimating the
defensive characteristics of scale-advantaged managers that earn fees on
long-dated committed capital, and the powerful tailwinds for structural growth
across the industry.
KKR and its peers are still often referred to as “private equity managers”
despite having successfully diversified from the foundations on which they
were built. At the time of our first purchase of KKR shares, their private equity
business accounted for 39% of total assets under management, compared
to 72% when they listed in the US in 2010. Even these figures mask the
degree of diversification given that their private equity business is both far less
US-centric than it was then and is now spread across a broader range of
sub-strategies.
Over our four-year holding period, this evolution continued with KKR’s credit
business increasing from 35% of AUM to 47% (having been just 23% in
2010). Much of the recent growth in this segment resulted from KKR’s
acquisition of a controlling stake in life insurance business Global Atlantic,
made in 2020. KKR’s bet here aped that of Apollo, whose success with
Athene Insurance, which it formed in the wake of the Global Financial Crisis,
has been much envied by its alternative asset management peers. Apollo
were the first to see the huge potential from acquiring books of long-term,
sticky, and predictable annuity liabilities against which they were convinced
they could do a better job of managing assets than their previous traditional
insurance company owners.
In early 2024, KKR announced that it was to acquire the 37% of Global
Atlantic that it did not already own. This was taken well by the market. In the
words of KKR co-CEO Scott Nuttall, Global Atlantic has been a ‘home-run
investment’. With Global Atlantic’s assets more than doubling from the point of
acquisition to today, it is hard to argue otherwise, with KKR’s ownership also
helping scale its real estate credit and asset-based finance businesses whose
assets sit well on insurance company balance sheets.
Given the material re-rating in the shares and the intense competition for
capital within our portfolio, we took the decision to reduce and ultimately
exit our stake in KKR in May 2024. Over the life of the investment, initiated in
2020, returns were exceptional with a 217% total return (versus 59% for the
benchmark) and a 40% IRR (versus 14% for the benchmark).
1 For definitions, see Glossary on pages 101 to 105.
2 Weighted returns adjusted for buys and sells over the year.
3 Figure is an estimate by the managers and sum of contributions will not equal quoted total
return over the financial year.
4 Figure quoted in GBP terms. Refer to Glossary on pages 101 to 105 for further details.
* The Company no longer had a position in this investment as at 30 September 2024.
C
IR
AVI Global Trust plc / Annual Report 2024
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Investment Review / Portfolio Review continued
Hipgnosis Songs Fund (SONG) was our second largest contributor over the
financial year.
A bidding war was triggered in April 2024 when Concord – a music rights
firm backed by Apollo – announced a binding offer for SONG at a price of
$1.16-$1.18 per share. Blackstone, the majority owner of Hipgnosis Songs
Management (the Manager of SONG), ultimately prevailed with a bid of
$1.30 per share. This represented a premium of +48% to the undisturbed
share price.
This marked the end of a highly successful investment for AGT, in which we
played a key role in fighting off the proposed related-party sale of a portion
of SONG’s catalogues and also making the case against the company
continuing in its present form. Resolutions proposing each matter were heavily
defeated at shareholder meetings.
With two directors resigning on the eve of the AGM and the then-Chairman
suffering a resounding vote against his re-election, we and other shareholders
engaged with the remaining rump to push for the appointment of two new
directors – Robert Naylor and Francis Keeling – who had just stepped down
from SONG’s peer company Round Hill Music Royalty Fund (RHM) following
its acquisition by Concord. Both were appointed with Robert immediately
installed as Chairman.
We were delighted with an outcome that not only generated a very strong
return for AGT’s shareholders but demonstrated again both the value of
shareholder activism and the critical importance of having the right people
on boards. The new directors joined the company at a time of crisis and
engineered an excellent outcome for shareholders in a timeframe few would
have felt possible at the time of their appointment.
With no viable future as an ongoing listed vehicle, the key task facing the
new appointees was how best to generate competitive tension in a situation
where, under the terms of the Investment Management Agreement, the
Manager had a call option allowing them to purchase the portfolio in the
event of the termination of their management contract. The investigatory work
conducted by the Board and their advisors, some of the fruits of which were
made public, led to an understandable perception that there existed more
than sufficient grounds to terminate the management agreement “for cause”,
which would invalidate the call option. We think it likely that this, alongside
other measures introduced by the newly reconstituted Board, gave Concord
the confidence to make their initial bid and resulted in a higher price ultimately
being achieved for the company than would otherwise have been the case.
We applaud the new directors’ fortitude and shrewd handling of a highly
complex situation.
AVI’s involvement with SONG began several years ago. Following research on
French holding company Vivendi and its investment in UMG, we could see
the attractions of the music rights asset class. As a pure play on catalogue,
SONG had its attractions, and we established a small position in late-2020
with part of our thesis being that SONG would likely be a takeover target once
it had achieved scale. That element of the thesis broke down in October 2021
with the acquisition of a majority stake in the Manager by Blackstone. Given
Blackstone’s deep pockets, we felt that the Manager’s call option over the
portfolio was much more likely to impede any competitive sales process
in the future.
When combined with growing concerns over transparency, earnings quality,
and governance, we took the decision to exit the position and sold over 70%
of our shareholding in late-2021/early-2022 at modest profits on our purchase
price, before the share price began to decline rapidly along with other
alternative income vehicles deemed to be interest-rate sensitive. We were left
with a residual shareholding that equated to a 0.8% stake in the company.
Our full attention turned back to the company following Concord’s bid for
RHM in September 2023, just ahead of SONG’s continuation vote and its
proposal to sell a portion of its catalogues to Blackstone in a related party
deal. With the confidence garnered from extensive research and calls
with industry experts that helped underwrite our valuation of the assets,
we increased our stake almost ten-fold over the following six months and
generated a return on our overall investment materially in excess of AGT’s
benchmark, the MSCI AC World. We sold out of our entire position in late May
2024, and generated a +36% total return/+72% IRR on the position acquired
in late 2023/early 2024 (vs +14%/+27% respectively for the benchmark).
Since we initiated our position in Hipgnosis in September 2020, AGT
generated an IRR/ROI of +21%/+24% on the position.
1 For definitions, see Glossary on pages 101 to 105.
2 Weighted returns adjusted for buys and sells over the year.
3 Figure is an estimate by the managers and sum of contributions will not equal quoted total
return over the financial year.
4 Figure quoted in GBP terms. Refer to Glossary on pages 101 to 105 for further details.
* The Company no longer had a position in this investment as at 30 September 2024.
Hipgnosis
Songs Fund
Closed-ended
Fund
% of net assets
1
N/A*
Discount
N/A*
% of investee
company
N/A*
Total return on
position FY24 (local)
2
38.1%
Total return on
position FY24 (GBP)
38.1%
Contribution (GBP)
3
245bps
ROI since date of
initial purchase
4
24.3%
02
C
Contributors continued
AVI Global Trust plc / Annual Report 2024
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Schibsted ‘B’
Holding
Company
% of net assets
1
N/A*
Discount
N/A*
% of investee
company
N/A*
Total return on
position FY24 (local)
2
26.2%
Total return on
position FY24 (GBP)
21.8%
Contribution (GBP)
3
188bps
ROI since date of
initial purchase
4
49.5%
03
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This time last year Schibsted was your Company’s largest position (8.8% of
NAV). Over the course of AGT’s financial year, Schibsted took significant steps
to unlock value which supported a re-rating in the shares and saw us exit the
investment. Over the course of the year, Schibsted added +188bps to NAV.
Writing in last year’s Annual Report (page 41) we explained that Permira and
Blackstone had entered negotiations to take Adevinta private. In November
2023, this came to fruition with a 115 NOK per share offer. The transaction
– which valued Schibsted’s 28% stake at 40bn NOK/79% of Schibsted’s
pre-announcement market cap – saw Schibsted crystalise a large portion of
its value (24bn NOK), whilst also retaining an 11% stake in the private entity.
Shortly after, in December 2023, Schibsted delivered a second
transformational transaction, selling its legacy News Media assets to its
controlling shareholder, the Tinius Trust, for 6.3bn NOK. This removed
a capital consuming and terminally challenged asset from the group,
transforming Schibsted into a purer classified marketplace business play.
Taken together, these steps have reduced the group’s structural complexity
and shone a light on the highly attractive nature of Schibsted’s Nordic
marketplace assets, the quality and value of which had hitherto been
overlooked. As well as this, the transactions allowed for extraordinary returns
of capital with a total of 24bn NOK returned to shareholders via special
dividends (20bn NOK) and an ongoing buyback programme (4bn NOK).
This simplification has supported a re-rating of the shares from a 45%
discount to close to NAV. The implied ex-Adevinta stub rerated from
c.6x NTM EV/EBITDA
1
to >20x.
Whilst we believe that there is still value to be extracted both from increasing
monetisation in line with international peers and improving margins, as well as
from the unlisted stake in Adevinta, this is better reflected in the valuation, with
risks around execution. As such we have exited the position, allowing us to
recycle capital into other mispriced opportunities.
Over the course of the investment, Schibsted generated a +67% ROI
2
and
+47% IRR
2
which compares favourably to the +31%/22% returns of the
MSCI AC World Index over the same period (all figures in NOK). We believe
that these figures demonstrate the powerful returns that can be driven from
“events” and companies undergoing strategic and structural change. Indeed,
Schibsted is emblematic of what we are trying to achieve.
1 For definitions, see Glossary on pages 101 to 105.
2 Weighted returns adjusted for buys and sells over the year.
3 Figure is an estimate by the managers and sum of contributions will not equal quoted total
return over the financial year.
4 Figure quoted in GBP terms. Refer to Glossary on pages 101 to 105 for further details.
* The Company no longer had a position in this investment as at 30 September 2024.
IR
ENTAIN / BETMGM
BetMGM is a 50:50 joint venture with US-listed
MGM Resorts International, operating in the
large and fast-growing US online sports betting
and iGaming market.
Currently the #3 operator, BetMGM should
benefit from natural market growth coupled
with product improvements, leading to high
levels of organic growth and a flip to profitability.
% of Net Assets:
3.7%
Contributors continued
Investment Review / Portfolio Review continued
Source / Entain plc
AVI Global Trust plc / Annual Report 2024
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AVI Global Trust plc / Annual Report 2024
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Apollo Global
Management
‘A’
Holding
Company
% of net assets
1
3.7%
Discount
-12%
% of investee
company
0.1%
Total return on
position FY24 (local)
2
29.2%
Total return on
position FY24 (GBP)
21.1%
Contribution (GBP)
3
131bps
ROI since date of
initial purchase
4
111.6%
04
C
Following AGT’s 2023 financial year in which Apollo was our largest
contributor, the investment was again a strong performer with a share price
total return of 42% over the year to 30 September 2024.
Taking a step back to our original investment case for Apollo, we believed
that the business was poorly understood by the market when we first initiated
a position back in April 2021 ahead of its announced merger with sister
company Athene Insurance. AGT shareholders with long memories may recall
that we had a very profitable investment in Athene from 2012 to 2017 when it
was a private investment held by a listed Apollo-managed vehicle called
AP Alternative Assets. Life insurance businesses are understandably often
lowly rated by the market. But the reasons why they are so – unpredictable
liabilities with tail risks (e.g. long-term care) and hard-to-hedge liabilities
such as Variable Annuities – simply do not apply to Athene which has a
highly focused business model predominantly centred on fixed annuities.
As such, Athene can be looked at as effectively a spread-lending business,
earning a spread between the rates paid on annuities and the yields earned
on its investments. Its fixed income portfolio (95% of total assets) is 97%
investment-grade, with Athene seeking to earn a return premium from
complexity and illiquidity rather than from taking duration or additional credit
risk, and its return-on-equity has averaged 16% over the last four years
(in line with its target of mid-to-high-teens).
Life insurance businesses are also correctly perceived as being capital
intensive, and this was a source of some disquiet when the Apollo/Athene
merger was announced. But capital intensity is not a bad thing if one is
earning high returns on that capital; and, as we understood at the time, a
material proportion of Athene’s growth was likely to be funded by third-party
“sidecar” vehicles.
The market seems to increasingly have come round to our more positive view
on Apollo as evidenced by the strong share price performance over the last
few years on the back of strong earnings growth and higher multiples. Higher
rates have led to very strong demand for annuities (unsurprisingly, people
prefer to earn higher rather than lower rates on their investments even if only in
nominal terms) with retail inflows of $19bn in the first half of 2024 up by 27%
over the previous half year, building on 2023’s total of $35bn which was itself
up 67% on the prior year.
These inflows need to be invested and, as Apollo’s CEO Marc Rowan has
argued, the real constraint on growth is not capital (which he contends is
“plentiful”) but a lack of safe-yielding high-quality assets. This insight lies
behind Apollo’s focus on investment grade private credit and its investments
in platforms which originate investment grade assets (aviation financing,
mid-market lending, mortgages, supply chain finance, etc.) that find a natural
home on Athene’s balance sheet, those of third-party insurance companies
and other institutions who draw comfort in the alignment of interest from
investing alongside Athene. In addition to one-off syndication fees, Apollo
is increasingly earning ongoing management fees from many of these third
parties establishing separately managed accounts. Athene is at the heart of
this flywheel and provides Apollo a huge advantage over peers in what CEO
Marc Rowan has termed the “Fixed Income Replacement Opportunity”, a
potential market measuring in the tens of trillions of dollars. In early-October
2024, just after AGT’s year-end, Apollo held an Investor Day in New York City
at which it laid out some impressive targets to 2029 which includes $275bn in
annual originations (this compares to just under $150bn in the 12 months to
30 June 2024).
Despite the very strong run for the shares, we see considerable scope for
continued further upside for Apollo shares given its undemanding valuation in
the context of its clear pathway to high-teens earnings growth over the next
five years.
1 For definitions, see Glossary on pages 101 to 105.
2 Weighted returns adjusted for buys and sells over the year.
3 Figure is an estimate by the managers and sum of contributions will not equal quoted total
return over the financial year.
4 Figure quoted in GBP terms. Refer to Glossary on pages 101 to 105 for further details.
IR
AVI Global Trust plc / Annual Report 2024
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Cordiant
Digital
Infrastructure
Closed-ended
Fund
% of net assets
1
4.9%
Discount
-27%
% of investee
company
8.3%
Total return on
position FY24 (local)
2
30.6%
Total return on
position FY24 (GBP)
30.6%
Contribution (GBP)
3
128bps
ROI since date of
initial purchase
4
30.6%
05
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Contributors continued
Cordiant Digital Infrastructure (CORD) was the fifth largest contributor to
returns over the period. We began building our stake in February 2024 at a
discount to NAV of almost 50% in a classic arbitrage between perception
and reality. The perception was that CORD shared the failings of its only listed
investment trust peer, Digital 9 Infrastructure (DGI9), which had run into severe
problems since its listing just weeks after CORD’s own in early-2021.
While the pitch for both investment vehicles was the prospect of attractive
returns from investing in businesses and assets benefitting from the
exponential increase in data traffic, there the similarity ends. The lack of
discipline and investment acumen shown by DGI9’s manager in assembling
its portfolio led to forced sales of assets to shore up an overly indebted
balance sheet; in contrast, CORD’s portfolio was constructed with far more
care, leaving sufficient room on its balance sheet to fund growth capex needs
at its investee companies. We believed the reality was that there was in fact no
read-across from DGI9’s travails to CORD.
Although CORD’s portfolio consists of five businesses, its two largest
positions account for almost 90% of its total portfolio value. These two
businesses, Emitel in Poland and CRA in the Czech Republic, were acquired
for undemanding multiples of earnings despite the highly-cash-flow-generative
nature of their assets and a high degree of visibility and predictability from
contracted revenues.
While broadcast businesses tend to trade for relatively low multiples
compared to other digital assets due to concerns over their useful life
as streaming becomes more widely adopted, this is less of a concern in
Poland and the Czech Republic where the sizable rural population makes
universal high speed broadband coverage harder to achieve. There is also
considerable scope for further innovation in broadcast services, such as 5G
technology that allows for the broadcast of terrestrial digital television directly
to mobile phones.
In any event, both companies are making impressive progress in using the
cash flows from their core broadcast businesses to diversify into segments
such as data centres and telecoms towers, with over half of CRA’s FY24
revenues derived from non-broadcasting services. A recent trip to Prague
confirmed the scale of this opportunity, visiting several sites with ready-
made power and fibre connections (usually the biggest impediment for new
developments) already converted into data centres. The jewel in the crown is
the planned Zbraslav data centre which, with a 26MW capacity, will be one
of the largest in Central and Eastern Europe. With data centres and telecoms
towers commanding multiples in excess of 20x, there is scope for future
multiple arbitrage from potential spin-offs of these non-broadcast assets once
they achieve further scale.
While CORD’s discount has narrowed materially from our purchase levels to
stand at -27% at the time of writing, we see scope for attractive further upside
here from both discount contraction and NAV growth.
1 For definitions, see Glossary on pages 101 to 105.
2 Weighted returns adjusted for buys and sells over the year.
3 Figure is an estimate by the managers and sum of contributions will not equal quoted total return
over the financial year.
4 Figure quoted in GBP terms. Refer to Glossary on pages 101 to 105 for further details.
Investment Review / Portfolio Review continued
Source / Cordiant Digital Infrastructure Limited
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AVI Global Trust plc / Annual Report 2024
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SR
CORDIANT DIGITAL
INFRASTRUCTURE / CRA
CRA is the Czech Republic’s leading
independent multi-asset digital infrastructure
platform.
Under Cordiant’s ownership, CRA is making
great strides in diversifying away from its
traditional broadcast business into assets such
as data centres, making use of redundant
locations with existing grid connections and
infrastructure.
% of Net Assets:
4.9%
AVI Global Trust plc / Annual Report 2024
42
Detractors
Symphony
International
Holdings
Closed-ended
Fund
% of net assets
1
1.7%
Discount
-57%
% of investee
company
15.7%
Total return on
position FY24 (local)
2
-34.9%
Total return on
position FY24 (GBP)
-40.8%
Contribution (GBP)
3
-125bps
ROI since date of
initial purchase
4
20.2%
06
D
Symphony International (SIHL) was our largest detractor over the period,
resulting from a -35% decline in its (US Dollar denominated) share price. The
share price decrease was almost entirely due to a widening discount which
expanded from 36% to 57%.
To recap, SIHL is a London-listed investment company with a focus on
predominantly unlisted (92% of current NAV) Asian consumer and real estate
businesses. The investment, initiated in 2012, has been weak in absolute
and relative terms with an IRR of less than 4% over our holding period. As
the largest independent shareholder, we have worked to improve corporate
governance at the company and unlock value trapped in the persistently wide
discount at which the shares have traded. This culminated in a 2021 public
campaign to Save Symphony.
In September 2023, the company announced that it would pursue an orderly
realisation of its investments. As such, our ultimate returns from SIHL will
depend on the prices at which it realises its investments and the timeframe
over which these realisations take place, rather than its share price on the
screen at any particular point in time. SIHL’s shares trade at a sizeable bid-
offer spread (average of 8% over AGT’s 2024 financial year), are tightly-held
and thinly traded, and are heavily impacted in both directions by relatively
small order sizes.
That SIHL’s shares trade at such a wide discount despite the company having
adopted a managed wind-up strategy reflects, in our view, scepticism around
a management team that has historically prioritised its own interests over
those of shareholders; uncertainty over the timeframe over which realisations
will take place; and - as is often the case with investment companies with
unlisted assets - wariness over whether the carrying values of assets are an
accurate reflection of realisable values. We understand these concerns.
However, we contend that while the management team continues to add to
their already substantial shareholdings, they have little incentive to maintain or
increase reported valuations to artificially high levels and that an incentive may
in fact exist in the opposite direction. That said, they also have little incentive
to expedite asset sales and returns of capital while they still believe that there
is stock available to purchase to add to the over one-third of the company
held by management and the board.
Noting that the pace of management purchases has slowed recently in the
face of low trading volumes, we may not be far from the point where their
attention turns to unlocking the value in their shareholdings trapped by the
huge discount to NAV.
1 For definitions, see Glossary on pages 101 to 105.
2 Weighted returns adjusted for buys and sells over the year.
3 Figure is an estimate by the managers and sum of contributions will not equal quoted total
return over the financial year.
4 Figure quoted in GBP terms. Refer to Glossary on pages 101 to 105 for further details.
Investment Review / Portfolio Review continued
Source / Baard Gudim for Aker Solutions
AVI Global Trust plc / Annual Report 2024
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Aker ASA
Holding
Company
% of net assets
1
3.7%
Discount
-26%
% of investee
company
1.4%
Total return on
position FY24 (local)
2
-11.1%
Total return on
position FY24 (GBP)
-17.4%
Contribution (GBP)
3
-111bps
ROI since date of
initial purchase
4
64.2%
07
D
For the second consecutive year, Aker was a meaningful detractor from
returns (-111bps). Over the course of the year, on a total return basis, the
shares declined by -13% which was largely a function of a -11% decline in the
NAV as well as a small widening of the discount from 24% to 26%. The Trust’s
returns were better than this, as we sold c.17% of our holding some +15%
above where the shares currently trade, however we were punished by a -8%
depreciation of the NOK.
Starting with the NAV, this was almost exclusively a function of a -16% decline
in the share price of Aker BP, which accounts for 55% of Aker’s NAV. Brent
crude oil prices are some -25% lower than they were a year ago as demand
(particularly from China) has been lower than anticipated and non-OPEC
supply has exceeded expectations. In turn, latterly, it has been reported that
OPEC are looking to abandon their long-term $100 per barrel price target.
We do not profess to have a crystal ball when it comes to oil prices – nor
attempt to – with the recent escalation of geo-political risk and corresponding
rise in the oil price serving as a reminder of oil’s unpredictability. Rather our
investment in Aker has always been founded upon the attractive valuation of
the underlying assets, the controlling shareholder’s track record of creating
value through active ownership and the (at the time of acquisition very wide)
discount at which Aker trades. On all three fronts there is room for optimism.
Aker BP now trades on an 11.2% dividend yield, which is about as cheap as
it has ever been. We believe this to be an attractive valuation for a low-cost
operator with a long-dated production schedule and continue to believe that
oil will play an important and elongated role in the energy transition.
The controlling family continue to show themselves to be thoughtful long-term
owners with a keen eye for how to grow and unlock value. An example of this
from the last year comes from Aker Biomarine (6% of NAV), shares in which
have returned +125% over the last year as the company spun-off its food
ingredients business following a strategic review.
Since AGT first invested in Aker in 2008, we have earned an IRR of +17%
(in NOK). The prospect of continuing to align capital with the controlling family
at such a discount to NAV is an appealing one.
1 For definitions, see Glossary on pages 101 to 105.
2 Weighted returns adjusted for buys and sells over the year.
3 Figure is an estimate by the managers and sum of contributions will not equal quoted total
return over the financial year.
4 Figure quoted in GBP terms. Refer to Glossary on pages 101 to 105 for further details.
IR
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Detractors continued
Investment Review / Portfolio Review continued
FEMSA
Holding
Company
% of net assets
1
4.2%
Discount
-29%
% of investee
company
0.3%
Total return on
position FY24 (local)
2
-3.5%
Total return on
position FY24 (GBP)
-9.9%
Contribution (GBP)
3
-69bps
ROI since date of
initial purchase
4
40.8%
08
D
Having been the second largest contributor in the 2023 Financial Year
1
(+258bps), this year FEMSA was the third largest detractor (-69bps). This was
principally a function of a deprecation of the Mexican Peso.
By way of reminder, FEMSA is a Mexican family controlled holding company.
We initiated a position in 2021 with an investment case predicated on the
highly attractive nature of FEMSA Comercio – which operates Oxxo-branded
convenience stores, and other small-format retail stores, across Mexico and
Latin America. The business is expertly managed, with strong unit economics,
earning high returns on capital with a long growth runway.
Despite these attractions, FEMSA traded at an unduly low valuation reflecting
its conglomerate group structure, and we believed that the market was
mispricing the potential for management to take steps to unlock value. Over
time this was indeed what occurred, with management conducting a strategic
review that concluded in 2023 with the exiting of Heineken and other non-
core assets via sales totalling over $11bn.
This simplified the group structure, and the equity story propelled the (ADS
1
)
shares to an all-time-high of a little above $140 in February 2024. Over this
time, we exited nearly 30% of our position at an average price of $118 and as
high as $133.
However, since this point, the shares have fallen back to trade at $99 at the
period end, as the discount has widened from the high teens to 29% as we
write. This is reflective of both macro and micro factors. Starting with the
former, Mexican equities have been under pressure since the spring National
Elections and FEMSA – which accounts for c.13% of the MSCI Mexico
Index – has not been immune to this. Moreover, this has been amplified
by the depreciation of the Peso, most notably against Sterling where it has
weakened by some -19% over the last year.
Turning to the micro: Q2 results published in July 2024 fell short of
expectations, with a deceleration in Oxxo’s Same Store Sales (SSS) growth
to +4.1% (from +9.7% in Q1), with both traffic and ticket size decelerating
(from +2.2% to -0.6% for traffic and from +7.3% to +4.7% for ticket size). As
management explained “the second quarter was an atypical one… where
each month reflected a unique set of mixed effects generally more negative
than positive”.
We concur that this recent disappointment is temporary in nature, reflecting
short-term headwinds and expect that SSS growth will recover in the second
half of the year and into 2025. Turning to the bigger picture, management
indicate that going forward they believe SSS growth can likely exceed the
old rule of thumb of +5% achieved prior to 2019 and we see a long growth
runway for new stores, with current new store openings running at +1,621
over the last twelve months (+7.3% year-on-year). Combined, we believe
that these factors will lead to double-digit topline growth in the future, with
operating profit likely to compound in the low-teens.
1 For definitions, see Glossary on pages 101 to 105.
2 Weighted returns adjusted for buys and sells over the year.
3 Figure is an estimate by the managers and sum of contributions will not equal quoted total
return over the financial year.
4 Figure quoted in GBP terms. Refer to Glossary on pages 101 to 105 for further details.
Despite the significant strides that management have taken to simplify the
group, the attractions and growth prospects remain poorly reflected in the
share price, with FEMSA trading at a 29% discount to NAV and the unlisted
FEMSA Comercio stub trading at an implied 8.7x NTM EBITDA vs. a historic
long-term average of c.13x. We believe this to be a highly attractive valuation
and see the scope for better than-expected capital returns, with management
already having returned 60% of the $3bn billed to be returned to shareholders
by 2026. As such, having reduced the position earlier in the year at $133 per
share, we have been increasing the position recently, at $109.
To date the investment has generated an IRR / ROI of 15% and 41% (in GBP).
FEMSA / FEMSA COMERCIO
FEMSA Comercio operates Oxxo-branded
convenience stores across Mexico and Latin
America.
Oxxo’s management are expert operators of
this model, with over 20,000 stores in Mexico
(10x the second largest player) and a new
one (pre-COVID) opening every six hours. The
average cost of a new store is c.$130,000,
which at maturity earns a 30% return on capital
and has a payback period of just three years.
The runway for growth in both Mexico and,
more recently, Brazil and the US, is very long.
% of Net Assets:
4.2%
Source / Comunicación Corporativa FEMSA
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AVI Global Trust plc / Annual Report 2024
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Keisei Electric
Railway
Asset-backed
Special Situation
% of net assets
1
N/A*
Discount
N/A*
% of investee
company
N/A*
Total return on
position FY24 (local)
2
-24.2%
Total return on
position FY24 (GBP)
-29.5%
Contribution (GBP)
3
-53bps
ROI since date of
initial purchase
4
-29.5%
09
D
Keisei Electric Railway (Keisei) was a detractor over the period, shaving
off -53bps from AGT’s NAV. This was a relatively short and unsuccessful
investment, due to the combination of NAV weakness and discount
widening, leading to a -24% return in JPY. The -9% depreciation of the Yen
compounded matters, and we took the decision to exit the position.
We first initiated a position in the Japanese railway company due to its
21% stake in the listed theme park operator – Oriental Land (OLC) – which
accounted for 180% of Keisei Electric’s market cap pre-tax. However,
Japanese accounting rules dictate that Keisei value OLC on their balance
sheet based solely on a proportionate net income basis, thereby significantly
deflating the book value of Keisei Electric.
OLC offers exposure to Japan’s largest theme parks – Tokyo Disneyland
and Tokyo DisneySea – which are also two of the most visited theme parks
in the world (#2 and #4). OLC also owns six high-quality Disney-themed
hotels, a further three hotels through subsidiary Milial Resorts, and the facilities
surrounding the park area – monorail, shopping mall, and theatre.
In the context of wider corporate governance reforms, we felt that Keisei
Electric’s stake in OLC would be an obvious target for unwinding, given the
lack of synergies between the two companies and the outsized proportion of
intrinsic value that it represents to Keisei. Given the underlying business quality
of both the railway operations and of OLC, and with a public activist already
on the register, we felt that we could be patient and await any unlocking of this
value.
Following Keisei’s AGM, in which the public activist’s shareholder proposal
to sell down the OLC stake was rejected and the directors’ approval rating
remained completely unchanged, we believed that the management team
would no longer feel pressured to take action over the stake in OLC and
correct its undervaluation. In a competing capital environment, we decided to
reallocate our capital to opportunities with more near-term catalysts and made
the decision to sell our position in Keisei Electric.
1 For definitions, see Glossary on pages 101 to 105.
2 Weighted returns adjusted for buys and sells over the year.
3 Figure is an estimate by the managers and sum of contributions will not equal quoted total
return over the financial year.
4 Figure quoted in GBP terms. Refer to Glossary on pages 101 to 105 for further details.
* The Company no longer had a position in this investment as at 30 September 2024.
Toyota
Industries
Asset-backed
Special Situation
% of net assets
1
2.7%
Discount
-45%
% of investee
company
0.2%
Total return on
position FY24 (local)
2
-11.3%
Total return on
position FY24 (GBP)
-12.7%
Contribution (GBP)
3
-47bps
ROI since date of
initial purchase
4
-13.5%
10
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Toyota Industries was a detractor over the period, reducing NAV by -47bps
and generating a return of -14% in GBP.
By way of reminder, we initiated our position in Toyota Industries in November
2023, with an investment case predicated on the low implied valuation of
Toyota Industries’ stub due to the outsized value trapped in its Toyota Group
cross-shareholdings, which accounted for 93% of the company’s then market
cap. This is despite the company’s dominant market position as the number
one supplier of forklift trucks (30% share) and auto AC compressors (50%
share) globally, and with long-term growth potential in logistics solutions from
the continued expansion of e-commerce.
In particular, we felt that management would be under pressure to correct
the company’s lowly valuation and return on equity ratio following the request
made by the Tokyo Stock Exchange for companies trading under 1x Price/
Book value to disclose an improvement plan.
In the period since initiation of our investment, Toyota Motor’s Chairman
has received a historically low approval rating of 72% (only 57% if excluding
votes from Toyota Group companies), the wider group has started to unwind
cross-shareholdings, Toyota Industries announced a buyback worth 3% of
market cap (JPY180bn) and commenced buybacks of its own shares from
Toyota Motor for the first time in its history. We believe that this shift in attitude
towards shareholder returns from its historically conservative stance is a real
step-change for Toyota and highlights the pressure that the group is feeling.
The market, however, appears to have lost patience with the Group’s slow
rate of change as evidenced by Toyota Industries’ shares being down by -2%
year-to-date.
At current prices, Toyota Industries trades at a -45% discount to our
estimated NAV. The Toyota Industries stub trades at a lowly 1.6x forward
EBIT versus forklift peers at 14.0x and consignment auto part peers at 10.3x.
At this valuation, the stub only represents 13% of Toyota’s market cap,
suggesting that the market is not pricing in any potential for management
to unlock the value trapped within the structure.
We remain confident in our holding in Toyota Industries and believe that the
continued growth of the company’s underlying operations and potential for
unlocking of value across the Toyota Group make for an exciting combination.
1 For definitions, see Glossary on pages 101 to 105.
2 Weighted returns adjusted for buys and sells over the year.
3 Figure is an estimate by the managers and sum of contributions will not equal quoted total
return over the financial year.
4 Figure quoted in GBP terms. Refer to Glossary on 101 to 105 for further details.
Detractors continued
Investment Review / Portfolio Review continued
TOYOTA INDUSTRIES / MATERIALS
HANDLING EQUIPMENT
Toyota Industries Materials Handling Equipment
division is the leading manufacturer of forklifts
worldwide, with approximately 30% market
share.
The division is in the process of transforming
itself into a solutions-based warehousing
automation business – providing a full fleet of
warehousing services, including proprietary
data/software. We believe there is a strong
runway for continued earnings growth from the
continuing penetration of e-commerce.
% of Net Assets:
2.7%
Source / Luis Alvarez via Getty Images
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Investment Review / Portfolio Review continued
IDENTIFYING HIDDEN VALUE
IN DAI NIPPON PRINTING
Dai Nippon Printing (DNP) is a Japanese-listed
industrial conglomerate with a longstanding,
150-year history founded in printing books and
magazines for Japanese readers.
It is not the company’s rich history which first attracted
AVI to DNP, but its transformation into a collection of
high growth, niche end-market electronic component
businesses which exhibit dominant market share and
remain misvalued by the market.
If one were to only look at DNP’s headline financials you
would be forgiven for thinking that DNP remains a sleepy
printing business, given that over 50% of its revenues
are still generated by its low-growth, low-margin printing
operations. However, these headlines figures obfuscate
the true value in DNP – the Electronics segment. Not only
is the electronics segment DNP’s core earnings driver, but
the segment has compounded earnings at an impressive
+20% compound annual growth rate (CAGR) since
2017, generates an operating margin of 20%+, and
now accounts for over 60% of DNP’s consolidated
operating profit.
Within the Electronics segment, the crown jewel is the
metal mask printing business in which DNP has close
to 100% market share. A metal mask is a fundamental
component used in the production of OLED screens for
smartphones, tablets and laptops, and represents around
10% of the total cost of an OLED display. AVI estimates
that the margin on a metal mask used in a smartphone
is around 30-35% and this increases to 35%+ for larger
displays. Current OLED screen penetration in these devices
is less than 10%, and DNP are forecasting +7% CAGR
in smartphones (already 50% penetrated) and a +32%
CAGR in larger devices. The Electronics segment is also
home to an optical film business (c. 60% market share),
a photomask business (c. 30-35% market share in the
external sales market), and lead frames.
As well as this, DNP announced a transformative medium-
term plan in March 2023, which included a plan to buyback
JPY300bn in shares from FY23-27 (30% of market cap
at time of announcement), funded through a combination
of operating cash flow, using net cash, a selling down of
cross-shareholdings to less than 10% of net assets, and
exiting legacy businesses, including the traditional printing
business. To date, DNP has bought back JPY150bn of
shares outstanding.
DNP contributed +0.53% to AGT’s NAV in 2024. The
prospect of continued strong earnings growth from DNP’s
dominant niche businesses, a significant ongoing buyback,
and continued undervaluation (adjusted EV/fwd. EBIT at a
lowly 9.3x at period end) bode well for prospective returns.
Image source / Dai Nippon Printing Co., Ltd.
Outlook
The macroeconomic and geopolitical environment
remains confusing, worrying and interesting in
equal measure. Equity markets – as they tend to –
have continued to climb the wall of worry from the
October 2023 lows.
Then, as now, the risks feel real and there are
plenty of issues to worry about. Indeed, investors
continue to fret over whether we will endure a
so-called soft, hard or even no landing. A lot of ink
has been spilt by others on which of these might
occur; however, history shows that market timing
is largely a futile exercise and it must always be
remembered that the economy and the market are
not the same thing.
As readers of our reports will not be surprised to
hear, our attention, time and focus remain on the
bottom-up fundamentals, which our experience
shows are the key to generating long-term
outperformance.
In this regard, there is quite a lot to be excited
about. The opportunity set across the niche and
overlooked parts of the equity market in which we
fish is rich. Discounts – as indicated by the 35.1%*
portfolio weighted average discount – are wide
by historical standards. And we have positioned
the portfolio to benefit from a number of explicit
catalysts and events, including our own activism.
Together we believe that these ingredients set us in
good stead to earn attractive long-term returns.
Joe Bauernfreund
CEO / CIO
Asset Value Investors Limited
12 November 2024
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Investment Review / Outlook
JOE BAUERNFREUND
CEO / CIO
TOM TREANOR
Head of Research
* As at 7 November 2024.
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D NMA
Governance / Directors
Your Board
GRAHAM KITCHEN
Independent Non-Executive Chairman
CALUM THOMSON FCA
Senior Independent Non-Executive
Director
January 2019 April 2017
Date of Appointment:
January 2019
External Appointments:
Non-Executive Director of The Mercantile
Investment Trust plc and Places for People.
Experience and Contribution:
Over 25 years’ experience as an investment
manager at Invesco, Threadneedle and, until
March 2018, Janus Henderson, where he was
Global Head of Equities. He was previously
Chair of the Investment Committee for the
Cancer Research Pension Fund, member of
the investment committee of Independent Age
and Chairman of Invesco Select Trust plc and
Perpetual Asset management UK Limited.
Graham held the position of Interim Global Head
of Investment Strategy at Perpetual Group until
March 2024. Graham is an experienced fund
manager and Head of Investments and brings
to the Board experience both of managing
investments and of managing teams of investment
managers.
Last re-elected to the Board:
2023
Annual Remuneration:
£55,500
Employment by the Investment Manager:
None
Other connections with the
Company or Investment Manager:
None
Shared Directorships with any
other Company Directors:
None
Shareholding in Company
†
:
109,500 Ordinary Shares
* 33,250 held by Jane Kitchen.
Date of Appointment:
April 2017
Appointed Committee Chairman:
June 2017 (Audit), February 2023 (Nomination)
External Appointments:
Non-Executive Director and Audit Committee
Chairman of The Diverse Income Trust plc,
The Bank of London and The Middle East plc,
Ghana International Bank plc, Patria Private Equity
Trust plc and TPT Retirement Solutions Ltd.
Non-Executive Director of Schroder Unit Trusts
Limited and Schroder Pension Management
Limited. He is also Chairman of The Tarbat
Discovery Centre (a Pictish museum) and a trustee
of Suffolk Wildlife Trust.
Experience and Contribution:
A qualified accountant with over 30 years’
experience in the financial services industry,
including 21 years as audit partner at Deloitte
LLP, specialising in the asset management sector.
Calum has wide ranging experience in auditing
companies in the asset management sector and
latterly as a non-executive director and audit
committee chairman. He is fully qualified to lead
the Company’s Audit Committee.
Last re-elected to the Board:
2023
Annual Remuneration:
£43,500
Employment by the Investment Manager:
None
Other connections with the
Company or Investment Manager:
None
Shared Directorships with any
other Company Directors:
None
Shareholding in Company
†
:
44,490 Ordinary Shares
D NMA
Attendance at meetings
Name Board Audit
Management
Engagement Nomination Disclosure
Graham
Kitchen
5(5) 4(4) 2(2) 2(2) – (–)
Anja
Balfour*
4(5) 4(4) 2(2) 2(2) – (–)
Neil
Galloway
5(5) 4(4) 2(2) 2(2) – (–)
June
Jessop
5(5) 4(4) 2(2) 2(2) – (–)
Calum
Thomson
5(5) 4(4) 2(2) 2(2) – (–)
The number in brackets denotes the number of meetings each
was entitled to attend. The Disclosure Committee did not meet
during the period.
* Ms Balfour was unable to attend the December 2023 Board
meeting as she was recovering from a medical procedure.
Attendance at meetings
Chairman
Member
A
Audit Committee
M
Management Engagement Committee
N
Nomination Committee
D
Disclosure Committee
† As at 12 November 2024].
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ANJA BALFOUR
Independent Non-Executive Director
NEIL GALLOWAY
Independent Non-Executive Director
JUNE JESSOP
Independent Non-Executive Director
January 2018 September 2021 January 2023
D NMA
Date of Appointment:
January 2018
External Appointments:
Chairman of The Global Smaller Companies Trust
plc and Non-Executive Director of Scottish Friendly
Assurance Society.
Experience and Contribution:
Over 20 years’ experience in managing Japanese
and International Equity portfolios for Stewart Ivory,
Baillie Gifford and Axa Framlington. Previously
Chairman of Schroder Japan Growth Fund plc,
a trustee of Venture Scotland, a member of the
Finance and Corporate Services Committee of
Carnegie UK Trust and a Non-Executive Director
of Martin Currie Asia Unconstrained Trust plc.
Anja brings to the Board experience of managing
Japanese portfolios, which is particularly relevant
to the Company’s Japanese equity investments,
along with experience of broader international
funds and as a non-executive director.
Last re-elected to the Board:
2023
Annual Remuneration:
£35,500
Employment by the Investment Manager:
None
Other connections with the
Company or Investment Manager:
None
Shared Directorships with any
other Company Directors:
None
Shareholding in Company
†
:
36,500 Ordinary Shares
Date of Appointment:
September 2021
Appointed Management Engagement
Committee Chairman:
February 2023
External Appointments:
Chief Financial Officer of Pepco Group N.V.
Experience and Contribution:
25 years’ experience living and working
internationally. Currently based in London, he
has spent most of his career working in Asia but
also has experience in the Americas, Europe
and the Middle East. Following a successful
banking career, he has held senior finance and
management roles, almost entirely with or for
family-controlled companies, overseeing finance,
treasury, risk management, legal, IT, projects
and business development, with experience in
significant business transformation programmes in
large and complex businesses. He was previously
Executive Vice President of IWG PLC and an
Executive Director and CFO of DFI Retail Group
Holdings Limited based in Hong Kong.
His industry experience spans banking, hospitality,
retail (mass market, luxury and franchise
operations), real estate and services industries.
Last re-elected to the Board:
2023
Annual Remuneration:
£35,500
Employment by the Investment Manager:
None
Other connections with the
Company or Investment Manager:
None
Shared Directorships with any
other Company Directors:
None
Shareholding in Company
†
:
40,000 Ordinary Shares
Date of Appointment:
January 2023
External Appointments:
N/A
Experience and Contribution:
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 30 years 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 and brings to the
Board experience both of managing assets of an
investment trust and investing in investment trusts
on behalf of clients.
Elected to the Board:
2023
Annual Remuneration:
£35,500
Employment by the Investment Manager:
None
Other connections with the
Company or Investment Manager:
None
Shared Directorships with any
other Company Directors:
None
Shareholding in Company
†
:
45,000 Ordinary Shares
D NMA
D NMA
† As at 12 November 2024].
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Governance / Report of the Directors
The Directors present their report and the audited financial
statements for the year ended 30 September 2024.
Status
The Company is registered as a public limited company as defined by the
Companies Act 2006 and is an investment company under Section 833 of
the Companies Act 2006. It is a member of the Association of Investment
Companies (AIC).
The Company has been approved as an investment trust under Sections
1158/1159 of the Corporation Tax Act 2010. The Directors are of the opinion,
under advice, that the Company continues to conduct its affairs as an
Approved Investment Trust under the Investment Trust (Approved Company)
(Tax) Regulations 2011.
The Company’s Investment Manager is authorised as an AIFM by the
Financial Conduct Authority under the AIFMD regulations. The Company
has provided disclosures on its website, www.aviglobal.co.uk/disclosures,
incorporating the requirements of the AIFMD regulations.
Review of the Year
A review of the year and the outlook for the forthcoming year can be found
in the Strategic Report and Investment Manager’s Review and a discussion
of the Company’s consideration of business relationships with suppliers,
shareholders and others can be found in the s172 Statement.
Investment Objective
The 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.
Investment Policy
The current Investment Policy is:
Investments are principally in companies listed on recognised stock
exchanges in the UK and/or overseas, which may include investment holding
companies, investment trusts and other companies, the share prices of which
are assessed to be below their estimated net asset value or intrinsic worth.
Although listed assets make up the bulk of the portfolio, the Company
may also invest in unlisted assets with the prior approval of the Board. The
Company generally invests on a long-only basis but may hedge exposures
through the use of derivative instruments and may also hedge its foreign
currency exposures.
There are no geographic limits on exposure, as the Company invests
wherever it considers that there are opportunities for capital growth. Risk is
spread by investing in a number of holdings, many of which themselves are
diversified companies.
The Company will not invest in any holding that would represent more than
15% of the value of its total investments at the time of investment. Potential
investments falling within the scope of the Company’s investment objective will
differ over the course of market cycles. The number of holdings in the portfolio
will vary depending upon circumstances and opportunities within equity
markets at any particular time.
The Company is able to gear its assets through borrowings which may vary
substantially over time according to market conditions, but gearing will not
exceed twice the nominal capital and reserves of the Company.
Proposed changes to the Investment Policy
As set out in the Chairman’s Statement, the Directors have reviewed the
Company’s Investment Policy and are proposing that shareholders approve a
revised statement at this year’s AGM. The proposed new investment policy as
set out below has been reviewed and approved by the UK Financial Conduct
Authority (FCA).
Proposed Investment Policy proposed for adoption at the 2024 AGM
Investments are principally in companies listed on recognised stock
exchanges globally, which may include investment holding companies,
closed-ended funds and other companies, the share prices of which are
assessed to be below their estimated net asset value or intrinsic worth.
Although listed assets make up the bulk of the portfolio, the Company
may also invest in unlisted assets with the prior approval of the Board.
The total value of unlisted investments will not represent more than 10%
of total assets, measured at the time of making any investment.
It is intended that the Company will generally invest in equity instruments,
however it may invest in equity-related investments (such as derivatives
and convertibles) where it believes that it is advantageous to do so.
Investment in equity related instruments may be in situations where an
investment in a derivative is more cost effective than a direct investment in
equity and/or to gain geared exposure. Total market exposure will always
be subject to the limit on gearing set out below. The Company may also
hedge exposures through the use of derivative instruments and may also
hedge its foreign currency exposures.
There are no geographic limits on exposure, as the Company invests
wherever it considers that there are opportunities for capital growth.
Risk is spread by investing in a number of holdings, many of which
themselves hold a diversified portfolio of assets.
Potential investments falling within the scope of the Company’s
investment objective will differ over the course of market cycles.
The number of holdings in the portfolio will vary depending upon
circumstances and opportunities within equity markets at any particular
time. The Company will not make any investment that would result in its
exposure to any single issuer representing more than 15% of the value of
its total assets at the time of investment.
Subject always to this restriction, in order to comply with the Listing
Rules, the Company will not invest more than 10% of total assets in
other listed closed-ended investment funds, except that this restriction
shall not apply to investments in listed closed-ended investment funds
which themselves have stated investment policies to invest no more
than 15% of their total assets in other listed closed-ended investment
funds.
The Company is able to gear its assets to seek to enhance long-term
capital growth and for the purposes of capital flexibility and efficient
portfolio management. Gearing may take the form of bank borrowings,
geared exposure using derivative instruments, and any other such
methods as the Board may determine. Gearing may vary substantially
over time according to market conditions, but gearing will not exceed
20%. of Net Asset Value at the time of drawdown of the relevant
borrowings or entering into the relevant transaction, as appropriate.
In accordance with the Listing Rules, the Company will not make any
material change to its published investment policy without prior approval
of the FCA and the approval of its shareholders by ordinary resolution.
Such an alteration would be announced by the Company through a
Regulatory Information Service.
Distribution Policy
Dividend Policy
The Company will ensure that its annual dividend each year will be paid
out of the profits available for distribution and will be at least sufficient to
enable it to qualify as an investment trust under the Corporation Tax Act 2010.
The Board may elect to pay a special dividend if appropriate. The Company’s
primary objective is to seek returns which may come from any combination
of increases in the value of underlying investments, a narrowing of discounts
to underlying asset value and distributions by investee companies. The Board
does not set an income target for the Investment Manager.
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Results and Dividends
The Company’s profit for the year was £142,657,000, which included a profit of £18,942,000 attributable to revenue (2023: profit of £134,137,000 which
included a profit of £20,041,000 attributable to revenue). The profit for the year attributable to revenue has been applied as follows:
£’000
Current year revenue available for dividends 18,942
Interim dividend of 1.2p per Ordinary Share paid on 19 July 2024 5,367
Recommended final dividend payable on 3 January 2025 to shareholders on the register as at 29 November 2024
(ex dividend 28 November 2024):
- Final dividend of 2.55p per Ordinary Share 11,195*
11,195
* Based on shares in circulation on 12 November 2024.
Frequency of Dividend Payment
The Company will normally pay two dividends per year: an interim dividend
declared at the time that the half year results are announced, and a final
dividend declared at the time that the annual results are announced.
The final dividend will be subject to shareholder approval at the Annual
General Meeting each year.
Buybacks
The Company may also distribute capital by means of share buybacks when
the Board believes that it is in the best interests of shareholders to do so.
Authority to buy back shares is sought from shareholders at each Annual
General Meeting.
Gearing Levels
Under normal market conditions, it is expected that the portfolio will be fully
invested, although net gearing levels may fluctuate depending on the value of
the Company’s assets and short-term movements in liquidity.
The Company’s debt as a percentage of total equity as at 30 September
2024 was 14.6%. Long-term debt comprised six tranches of Loan Notes of
£30m, €30m, €20m, JPY8bn, JPY4.5bn and JPY5bn.
The Company’s capital structure comprises
Ordinary Shares and Loan Notes.
Ordinary Shares
At 30 September 2024, there were 487,662,627 Ordinary Shares of 2 pence
each in issue (2023: 507,774,638 Ordinary Shares) of which 45,600,956
(2023: 45,600,956) were held in treasury and therefore the total voting rights
attaching to Ordinary Shares in issue were 442,061,671.
Income entitlement
The profits of the Company (including accumulated revenue reserves)
available for distribution and resolved to be distributed shall be distributed
by way of interim, final and (where applicable) special dividends among the
holders of Ordinary Shares, subject to the payment of interest to the holders
of Loan Notes.
Capital entitlement
After meeting the liabilities of the Company and the amounts due to Loan
Note holders on a winding-up, the surplus assets shall be paid to the holders
of Ordinary Shares and distributed among such holders rateably according to
the amounts paid up or credited as paid up on their shares.
Voting entitlement
Each Ordinary shareholder is entitled to one vote on a show of hands
and, on a poll, to one vote for every Ordinary Share held.
The Notice of Meeting and Form of Proxy stipulate the deadlines for the valid
exercise of voting rights and, other than with regard to Directors not being
permitted to vote their shares on matters in which they have an interest, there
are no restrictions on the voting rights of Ordinary Shares.
Transfers
There are no restrictions on the transfer of the Company’s shares
other than a) transfers by Directors and Persons Discharging Managerial
Responsibilities and their connected persons during closed periods
under the Market Abuse Regulation or which may constitute insider dealing,
b) transfers to more than four joint transferees and c) transfers of shares which
are not fully paid up or on which the Company has a lien provided that such
would not prohibit dealings taking place on an open and proper basis.
The Company is not aware of any agreements between shareholders
or any agreements or arrangements with shareholders which would change in
the event of a change of control of the Company.
Loan Notes
At 30 September 2024, there were in issue the following unsecured private
placement notes (the Loan Notes).
Description Issued
Income
entitlement Maturity
Estimated
Fair Value
£30m 4.184% Series A Sterling 15 Jan
2016
4.184% 15 Jan
2036
£26.1m
Senior Unsecured Loan Notes
2036
€30m 3.249% Series B Euro 15 Jan
2016
3.249% 15 Jan
2036
£23.1m
Senior Unsecured Loan Notes
2036
€20m 2.93% Euro Senior 1 Nov
2017
2.93% 1 Nov
2037
£14.7m
Unsecured Loan Notes 2037
JPY8bn 1.38% Senior 6 Jul
2022
1.38% 6 Jul
2032
£40.2m
Unsecured Loan Notes 2032
JPY4.5bn 1.44% Senior 25 Jul
2023
1.44% 25 Jul
2033
£22.6m
Unsecured Loan Notes 2033
JPY5bn 2.28% Senior
Unsecured Loan Notes 2039
12 Sep
2024
2.28% 12 Sep
2039
£26.4m
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The Loan Notes are unsecured. If the Company is liquidated, the Loan Notes
are redeemable by the Company at a price which is in each case the higher of
par and the terms set out in the table below:
Description Redemption terms
£30m 4.184% Series A
Sterling Senior Unsecured
Loan Notes 2036
The price at which the Gross Redemption
Yield on the date of redemption is
equivalent to the yield on a reference
UK government bond.
€30m 3.249% Series B Euro
Senior Unsecured Loan Notes
2036 and €20m 2.93% Euro
Senior Unsecured Loan Notes
2037
The price at which the Gross Redemption
Yield on the date of redemption is
equivalent to the yield on a reference
German government bond.
JPY8bn 1.38% Senior
Unsecured Loan Notes 2032
50% of the notional value of the issued
loans could be redeemed at the price
at which the Gross Redemption Yield
on the date of redemption is equivalent
to the yield on a reference Japanese
government bond, while for the 50% of
swapped notes the redemption price is
equivalent to the yield on a reference US
Treasury plus an Applicable Percentage
of 0.5%.
JPY4.5bn 1.44% Senior
Unsecured Loan Notes 2033
and JPY5bn 2.28% Senior
Unsecured Loans 2039
The price at which the Gross Redemption
Yield on the date of redemption is
equivalent to the yield on a reference
Japanese government bond.
Had the Company been liquidated on 30 September 2024, the redemption
premium would have amounted to £19.0m over and above the fair values.
Voting entitlement
The holders of the Loan Notes have no right to attend or to vote at general
meetings of the Company.
Debt Covenants
Under the terms of the Loan Notes, covenants require that the net assets of
the Company shall not be less than £300,000,000 and total indebtedness
shall not exceed 30% of net assets.
Significant agreements
Other than the Loan Notes set out above, the Company is not aware of any
significant agreements to which the company is a party that take effect, alter
or terminate upon a change of control of the company following a takeover
bid.
Directors and Board Structure
The Directors of the Company are listed on pages 50 and 51. All served
throughout the period under review.
In accordance with the AIC’s Code of Corporate Governance all of the
Directors will retire at the forthcoming AGM and offer themselves for
re-election. During the year under review, the Board carried out a review of
its performance and the performance of each of the individual Directors.
In reviewing the contribution of each Director, the Board considered the
experience of each Director, as set out under the individual Directors’
biographies on pages 50 and 51 and the ways in which they contributed to
the Board during the year. The Board performance review concluded that the
Board continued to function well and no matters for concern were identified.
Having considered the findings of the annual review, the Board considers that
all Directors contribute effectively, possess the necessary skills and experience
and continue to demonstrate commitment to their roles as non-executive
Directors of the Company.
It was therefore agreed that all Directors should stand for re-election, and the
re-election of each of the Directors is recommended by the Board. During
the year the Board took the feedback from the 2023 Board evaluation into
account and undertook a detailed discussion of the matters which had been
suggested as focus areas for the Board during a Strategy meeting held in May
2024, as well as discussing these during Board meetings held throughout the
year as appropriate.
The Company has provided indemnities to the Directors in respect of costs
or other liabilities which they may incur in connection with any claims relating
to their performance or the performance of the Company whilst they are
Directors.
New appointees to the Board are provided with a full induction programme.
The programme covers the Company’s investment strategy, policies and
practices. The Directors are also given key information on the Company’s
regulatory and statutory requirements as they arise, including information on
the role of the Board, matters reserved for its decision, the terms of reference
for the Board Committees, the Company’s corporate governance practices
and procedures and the latest financial information.
It is the Chairman’s responsibility to ensure that the Directors have sufficient
knowledge to fulfil their roles and Directors are encouraged to participate in
training courses where appropriate. The Directors have access to the advice
and services of the Company Secretary through its appointed representative
which is responsible to the Board for ensuring that Board procedures are
followed and that applicable rules and regulations are complied with. The
Company Secretary is also responsible for ensuring good information flows
between all parties.
The Directors, in the furtherance of their duties, may take independent
professional advice at the Company’s expense.
The beneficial interests of the current Directors and their connected persons
in the securities of the Company as at 30 September 2024 are set out in the
Directors’ Report on Remuneration Implementation on page 91.
The general powers of the Directors are contained within the relevant
UK legislation and the Company’s Articles of Association. The Directors
are entitled to exercise all powers of the Company, subject to any limitations
imposed by the Articles of Association or applicable legislation. The Articles
of Association may only be amended by way of a special resolution of
shareholders.
Board Independence
The Chairman and all Directors were considered independent of the
Investment Manager at the time of their appointment and, in line with the
guidelines of the AIC Code of Corporate Governance, all continue to be
considered independent.
Policy on Tenure of Directors
The Board has a policy requiring that Directors should stand down after a
maximum of nine years, but will consider the term of the Chairman separately,
taking account of the need for an orderly transition.
It considers that a long association with the Company and experience
of a number of investment cycles can be valuable to its deliberations and does
not compromise a Director’s independence. However, it does also recognise
the need for progressive refreshing of the Board. Please refer to page 55 for
further details on current succession planning.
Role and Responsibilities of the Chairman
The Chairman leads the Board and is responsible for its overall effectiveness
in directing the affairs of the Company. Key aspects of the Chairman’s role and
responsibilities are to:
• Act with objective judgement
• Promote a culture of openness and debate
• Facilitate constructive Board relations and the effective contribution
of all Directors
Governance / Report of the Directors continued
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• Working with the Company Secretary, ensure that all Directors receive
accurate and timely information so that they can discharge their duties
• Seek regular engagement with the Company’s shareholders
• Act on the results of the annual evaluation of the performance of the
Board, its Committees and individual Directors.
Graham Kitchen was independent on appointment and remains independent
as set out in the AIC Code.
Role and Responsibilities of the Senior Independent Director
The key elements of the Senior Independent Director’s role are to:
• Act as a sounding board for the Chairman
• Lead the annual evaluation of the Chairman as part of the annual
evaluation process
• In the event of any major difference of opinion on the direction of the
Company, act as an intermediary between the Chairman, other Directors
and the Investment Manager
• Provide a conduit for views of shareholders in the event that the usual
channels are not available or not suitable in the circumstances.
Board Committees
The Board has agreed a schedule of matters specifically reserved for
decision by the full Board, subject to which the Board has delegated specific
duties to Committees of the Board which operate within written terms of
reference. The Board considers that, as it is comprised of independent non-
executive Directors, it is not necessary to establish a separate Remuneration
Committee. Each Director abstains from voting on their individual
remuneration.
Link Company Matters Limited acts as Company Secretary to each
Committee. No persons other than the Committee members are entitled
to attend Committee meetings unless formally invited by the Committee.
Copies of the terms of reference for each Board Committee are available
from the Company Secretary and can be found on the Company’s website.
As the Company has only five Directors, all of whom are non-executive,
it is the Board’s policy that all Directors will sit on all Board Committees.
Audit Committee
The Audit Committee met four times in the year under review. The Committee
comprises the whole Board, being independent Directors and is chaired by
Mr Thomson. All members of the Committee have recent and relevant
financial experience and the Committee as a whole has competence relevant
to the sector in which the Company operates. The Audit Committee has set
out a formal Report on pages 85 to 87 of the Annual Report.
The Board notes that the AIC Code permits the Chairman of the Board to be
a member of the Audit Committee of an investment trust. In light of the fact
that the Board consists of only five members and recognising the Chairman’s
long experience in investment management, the Audit Committee resolved to
continue the Chairman’s appointment to the Committee.
Management Engagement Committee
The Management Engagement Committee meets at least once each year and
comprises the whole Board, being independent Directors. Mr Galloway is the
Chairman of the Management Engagement Committee. The main functions
of the Committee are to define the terms of the Investment Management
Agreement (IMA), ensuring that the Investment Manager follows good
industry practice, is competitive and continues to act in the best interests of
shareholders. The Committee monitors the Investment Manager’s compliance
with the terms of the IMA and the Investment Manager’s performance.
The Committee also reviews the services and performance of the
Company’s other third-party service providers. The Committee has a
procedure for formal annual reviews of all service providers and also
occasionally carries out further, ad hoc, reviews as it deems to be necessary.
Nomination Committee
The Nomination Committee comprises the whole Board and is chaired
by Mr Thomson. The Nomination Committee convenes to undertake the
annual appraisal of the performance of the Board, its Committees and the
Directors and, if agreed, to propose the re-election of the Directors, each
of whom will retire at the AGM. The Nomination Committee maintains a
matrix which summarises the key skills and experience of each Director and
which is reviewed at least once per year. This skills matrix is a key element
of the process of ensuring that the Board has an appropriate mix of skills
and experience and will be used when considering longer-term succession
plans, as well as identifying any areas which may require strengthening. The
matrix would also be taken into account when compiling the specification for
candidates for new Board appointments.
The Nomination Committee also meets to consider succession plans and the
appointment of new Directors to the Board. Candidates for nomination may
be sourced from outside the Company using third-party search and selection
services, as well as potential candidates known to Directors through their
extensive knowledge of the industry.
Following a review of the length of the current Directors’ tenure, the intention is
currently for Mr Thomson to retire at the 2026 AGM and for the search for his
replacement to commence in 2026, to ensure an orderly handover. In order
to identify suitable candidates, the criteria for the search will take in account
the skills matrix and the fact that Mr Thomson currently chairs the Audit
Committee and the Nomination Committee. As discussed on the following
page, diversity considerations will also be taken into account.
Disclosure Committee
A Disclosure Committee, comprising all Directors, meets when required
to ensure that inside information is identified and disclosed, if necessary,
in a timely fashion in accordance with relevant law and regulation.
Due to the necessity for meetings to be called on short notice, the
quorum for the Committee is two members, one of whom shall be
either the Chairman, the Chairman of the Audit Committee or the
Senior Independent Director.
Diversity
The Company is committed to ensuring that any vacancies arising are filled
by the most qualified candidates. The Board has adopted a diversity policy,
which acknowledges the benefits of diversity, and remains committed to
ensuring that the Company’s Directors bring a wide range of skills, knowledge,
experience, backgrounds and perspectives to the Board.
Whilst the Board does not feel that it would be appropriate to set targets as all
appointments are made on merit, the following objectives for the appointment
of Directors have been established: (i) all Board appointments will be made on
merit, in the context of the skills, knowledge and experience that are needed
for the Board to be effective; and (ii) long lists of potential non-executive
Directors should include diverse candidates of appropriate merit.
The Board notes the FCA rules on diversity and inclusion on company boards
included in Listing Rule 6.6.6 (9-11):
• At least 40% of individuals on the Board to be women;
• At least one senior Board position to be held by a woman; and
• At least one individual on the Board to be from a minority ethnic
background.
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In accordance with Listing Rule 6 Annex 1R, the below tables, in prescribed
format, show the gender and ethnic background of the Directors at the year-
end.
Gender identity or sex
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
Men 3 60% 2
Women 2 40% –
Not specified/prefer not to say – – –
Ethnic background
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
White British or other White
(including minority white groups) 5 100% 2
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British – – –
Black/African/Caribbean/
Black British – – –
Other ethnic group – – –
Not specified/prefer not to say – – –
The data in the above tables was collected through self-reporting by the
Directors, who were asked to indicate which of the categories specified in the
prescribed tables were most applicable to them.
As an externally managed company, the Company does not have any
employees. The Board acknowledges the importance of diversity for the
effective functioning of the Board which helps create an environment
for success and effective decision making. The Board is aware of the
recommendations of the Hampton-Alexander Review on gender diversity and
the Parker Review on ethnic diversity and inclusion on company boards. The
Company is pleased to have met the target for at least 40% of individuals on
the Board to be women but does not currently meet the targets for at least
one senior Board position to be held by a woman and at least one individual
on the Board to be from a minority ethnic background. During the year under
review, the Board and Nomination Committee considered whether, bearing
in mind that none of the Directors is currently close to the end of their tenure,
an additional Director should be appointed to meet the ethnic diversity target.
Following discussion, it was agreed that it was not in the best interest of
shareholders to increase the size of the Board or to replace any of the current
Directors before the end of their term. The targets have been and will continue
to be taken into consideration in respect of the recruitment of all new Directors
of the Company.
As the Board is made up wholly of non-executive Directors it only has two
roles which are classed in the UK Listing Rules as “senior”, namely the
Chairman and Senior Independent Director. At present neither of these roles
is filled by a female Director. The Board is focused on addressing all of the
relevant targets and, through its Nomination Committee, will keep these
matters under regular review and will take account of the targets when
appointing further Board members in the future.
Management Arrangements
AVI, the Investment Manager, is the Company’s appointed AIFM, and
is engaged under the terms of an IMA dated 17 July 2014. The IMA is
terminable by six months’ notice from either party, other than for “cause”.
During the year under review, the Investment Manager was entitled to
an annual management fee of 0.70% of the net assets of the Company,
up to £1bn and 0.60% for that proportion of assets above £1bn.
J.P. Morgan Europe Limited was appointed as Depositary under an
agreement with the Company and AVI dated 2 July 2014, and is paid
a fee on a sliding scale between 1.00 basis points* and 1.95 basis points
based on the assets of the Company. The Depositary Agreement is terminable
on 90 calendar days’ notice from either party.
JPMorgan Chase Bank, National Association, London Branch, has been
appointed as the Company’s Custodian under an agreement dated
2 July 2014. The agreement will continue for so long as the Depositary
Agreement is in effect and will terminate automatically upon termination
of the Depositary Agreement, unless the parties agree otherwise.
Link Company Matters Limited was appointed as corporate Company
Secretary on 1 April 2014. The current annual fee is £91,931, which is
subject to an annual RPI increase. The Agreement may be terminated
by either party on six months’ written notice.
Fund administration services are provided by Waystone Administration
Solutions (UK) Limited with an annual fee of £145,434. This fee is subject to
an annual increase linked to the UK RPI.
Continuing Appointment of the Investment Manager
The Board keeps the performance of the Investment Manager under
continual review, and the Management Engagement Committee conducts
an annual appraisal of the Investment Manager’s performance, and makes
a recommendation to the Board about the continuing appointment of the
Investment Manager. It is the opinion of the Directors that the continuing
appointment of the Investment Manager is in the interests of shareholders
as a whole. The reasons for this view are that the Investment Manager has
executed the investment strategy according to the Board’s expectations and
has, over the long term, produced positive returns relative to the broader
market and the comparator benchmark.
Corporate Governance
The Listing Rules and the Disclosure Guidance and Transparency Rules
(Disclosure Rules) of the UK Financial Conduct Authority require listed
companies to disclose how they have applied the principles and complied
with the provisions of the corporate governance code to which the issuer is
subject. The provisions of the UK Corporate Governance Code (UK Code)
issued by the Financial Reporting Council (FRC) in July 2018 are applicable
for the year under review. The related Code of Corporate Governance (AIC
Code) issued by the AIC in February 2019 addresses all of the principles
set out in the UK Code, as well as setting out additional principles and
recommendations on issues that are specific to investment trusts. The FRC
has confirmed that AIC member companies which report against the AIC
Code and which follow the AIC Guide will meet the obligations in relation
to the UK Code and associated disclosure requirements of the Disclosure
Rules. The Board considers that the principles and recommendations of
the AIC Code provide the most appropriate framework for the Company’s
governance.
The Board notes the publication of the revised AIC Code in August
2024, which is applicable to the Company for the financial year ending
30 September 2026. The Board has noted the changes that have been
made in the revised AIC Code and, where appropriate, is putting processes
into place to ensure that it will be in compliance. The Company will report
against compliance with the revised AIC Code in the 2026 Annual Report
and Accounts.
The AIC Code can be viewed at www.theaic.co.uk
The UK Code can be viewed at www.frc.org.uk
The Board considers that reporting against the principles and
recommendations of the AIC Code (which incorporates the UK Code)
provides shareholders with full details of the Company’s Corporate
Governance compliance.
Governance / Report of the Directors continued
* See Glossary
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Set out below are full details of how the Company has applied the Principles of the AIC Code:
AIC Code Principle Compliance Statement
A A successful company is led by an effective
board, whose role is to promote the long-
term sustainable success of the company,
generating value for shareholders and
contributing to wider society.
In managing the Company, the aim of the Board and of the Investment Manager is always to
ensure the long-term sustainable success of the Company and, therefore, the likely long-term
consequences of any decision are a key consideration.
Both the Board and AVI recognise that social, human rights, community, governance and
environmental issues have an effect on its investee companies. The Board supports AVI in its
belief that good corporate governance will help to deliver sustainable long-term shareholder value.
AVI is an investment management firm that invests on behalf of its clients and its primary duty is
to produce returns for its clients. AVI seeks to exercise the rights and responsibilities attached to
owning equity securities in line with its investment strategy. A key component of AVI’s investment
strategy is to understand and engage with the management of public companies.
More information on the Company’s long-term performance record can be found on page 3
and more details of AVI’s ESG Policy are on pages 26 to 28 of this Report.
B The board should establish the company’s
purpose, values and strategy, and satisfy
itself that these and its culture are aligned.
All directors must act with integrity, lead by
example and promote the desired culture.
The purpose of the Company is to achieve capital growth through a focused portfolio of mainly listed
investments, particularly in companies whose shares stand at a discount to estimated underlying net
asset value.
More information on our culture and how it is aligned with the Company’s purpose and strategy can
be found under Culture and Values on page 21 of this Report.
C The board should ensure that the necessary
resources are in place for the company
to meet its objectives and measure
performance against them. The board should
also establish a framework of prudent and
effective controls, which enable risk to be
assessed and managed.
The Directors regularly consider the Company’s financial position in the context of its business
model, the balance sheet, cash flow projections, availability of funding and the Company’s
contractual commitments. The Company’s objective is to achieve capital growth through a focused
portfolio of mainly listed investments, particularly in companies whose shares stand at a discount to
estimated underlying net asset value, therefore one of the measures which the Board considers is
NAV total returns, details of which can be found on page 16.
As explained earlier, the Company is subject to various risks in pursuing its objectives and in
order to effectively assess and manage risk, appropriate controls and policies are in place and
are regularly reviewed and assessed by the Audit Committee. These are detailed in the Strategic
Report on pages 17 to 19, in the Audit Committee Report on page 86 and in note 15 to the financial
statements.
D In order for the company to meet its
responsibilities to shareholders and
stakeholders, the board should ensure
effective engagement with, and encourage
participation from, these parties.
On pages 22 and 23 we describe our key stakeholders, the reason they are important and how
we seek to gain an understanding of their interests and also how the Board engages with them.
How opportunities and risks to the future success of the
business have been considered and addressed
An overview of the Company’s performance is set out in the Chairman’s Statement, and a more
detailed review is set out in the Investment Manager’s Review. A detailed review of risk management
is set out on pages 17 to 19.
The sustainability of the company’s business model The sustainability of the business model is set out in the Viability Statement on page 61.
How its governance contributes to the delivery
of its strategy
The approach to governance is set out in this section of the Annual Report, in particular the
description of the Board structure on page 54, as well as in the s172 statement on pages 21 to 23.
Throughout the year ended 30 September 2024, the Company has
complied with the provisions of the AIC Code and the relevant provisions
of the UK Code, except as set out in this paragraph. As the entire Board is
non-executive and consists of only five members, the Board does not have
a separate Remuneration Committee. The UK Code includes provisions
relating to the role of the Chief Executive, executive Directors’ remuneration
and the need for an internal audit function. For the reasons set out in the
AIC Code, and as explained in the UK Code, the Board considers that
these provisions are not relevant to the position of the Company, being an
externally managed investment company. In particular, all of the Company’s
day-to-day management and administrative functions are outsourced to third
parties. As a result, the Company has no executive directors, employees or
internal operations and as such the Directors do not determine the need for
an internal audit function to be practicable or necessary. The Company has
therefore nothing to report in respect of these provisions.
The table below sets out information required under Provision 1 of the
UK Code and how it is disclosed in this Annual Report:
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Governance / Report of the Directors continued
AIC Code Principle Compliance Statement
F The chair leads the board and is responsible
for its overall effectiveness in directing the
company. They should demonstrate objective
judgement throughout their tenure and
promote a culture of openness and debate.
In addition, the chair facilitates constructive
board relations and the effective contribution
of all non-executive directors, and ensures
that directors receive accurate, timely and
clear information.
The role and responsibilities of the Chairman are described on page 54. The Company recognises
that the Chairman leads the Board and is responsible for its overall effectiveness in directing the
affairs of the Company.
The annual evaluation of the Board’s effectiveness always considers the performance of the
Chairman, and whether he has performed his role effectively. The Directors, led by the Senior
Independent Director, have concluded that the Chairman has fulfilled his role and performed well to
support the effective functioning of the Board. Further information on our culture can be found on
page 21.
G The board should consist of an appropriate
combination of directors (and, in particular,
independent non-executive directors)
such that no one individual or small group
of individuals dominates the board’s
decision-making.
During the year under review, the Board consisted only of non-executive Directors and all of the
Directors are deemed to be independent of the Investment Manager. In the Board’s opinion, each
Director continues to provide constructive challenge and robust scrutiny of matters that come before
the Board.
The Board also considers the composition of the Board, as well as the longer-term succession
plans. As a Board, we aim to be as well-equipped as a Board of any large investment trust to
effectively give direction to, and exercise scrutiny of, the Company’s activities.
H Non-executive directors should have sufficient
time to meet their board responsibilities.
They should provide constructive challenge,
strategic guidance, offer specialist advice and
hold third-party service providers to account.
The Board considers the required time commitment annually and, during the year under review,
the Board concluded that all Directors continued to devote sufficient time to the business of the
Company. All new Board appointments and/or additional commitments are reviewed and agreed
by the Board and on an annual basis. The Board assesses whether individual Directors commit
sufficient and productive time to the Company. Through their contributions in meetings, as well as
outside of the usual meeting cycle, the Directors share their experience and guidance with, as well
as constructively challenge, the Investment Manager.
The Board, supported by the Management Engagement Committee, regularly assesses the
performance of all third-party service providers. More details on the work of the Management
Engagement Committee can be found on page 55.
I The board, supported by the company
secretary, should ensure that it has the
policies, processes, information, time and
resources it needs in order to function
effectively and efficiently.
The Board’s responsibilities are set out in the schedule of Matters Reserved for the full Board
and certain responsibilities are delegated to its Committees, so that it can operate effectively and
efficiently. Supported by its Committees, the Board has overall responsibility for purpose, strategy,
business model, performance, asset allocation, capital structure, approval of key contracts,
the framework for risk management and internal controls and governance matters, as well as
engagement with shareholders and other key stakeholders.
A number of Board policies are reviewed on a regular basis. Directors are also provided with
any relevant information and have access to the Company Secretary and independent advisers, if
required.
J Appointments to the board should be
subject to a formal, rigorous and transparent
procedure, and an effective succession plan
should be maintained. Both appointments and
succession plans should be based on merit
and objective criteria and, within this context,
should promote diversity of gender, social
and ethnic backgrounds, cognitive and
personal strengths.
The Company is committed to ensuring that any vacancies arising are filled by the most qualified
candidates. The Board has adopted a Diversity Policy, which acknowledges the benefits of diversity,
and remains committed to ensuring that the Company’s Directors bring a wide range of skills,
knowledge, experience, backgrounds and perspectives to the Board. The Company’s policy on the
tenure of Directors also helps to guide long-term succession plans, and recognises the need for and
value of progressive refreshing of the Board.
Both policies are described in more detail on pages 54 and 55.
K The board and its committees should have
a combination of skills, experience and
knowledge. Consideration should be given to
the length of service of the board as a whole
and membership regularly refreshed.
The Nomination Committee, which comprises the whole Board, is responsible for identifying
and recommending to the Board the appointment of new Directors. The Nomination Committee
maintains a matrix which summarises the key skills and experience of each Director and the matrix
is reviewed at least once per year. This skills matrix is a key element of the process of ensuring that
the Board has an appropriate mix of skills and experience and will be used when considering longer-
term succession plans.
L Annual evaluation of the board should
consider its composition, diversity and how
effectively members work together to achieve
objectives. Individual evaluation should
demonstrate whether each director continues
to contribute effectively.
An annual evaluation of the performance of the Board, its Committees and individual Directors
takes place every year, and an independent review is undertaken every three years. Please refer
to page 54 for discussion of the outcome of this year’s performance evaluation.
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AIC Code Principle Compliance Statement
M The board should establish formal and
transparent policies and procedures to ensure
the independence and effectiveness of
external audit functions and satisfy itself on the
integrity of financial and narrative statements.
The Audit Committee supports the Board in fulfilling its oversight responsibilities by reviewing
the performance of the external Auditor, audit quality, as well as the Auditor’s objectivity and
independence. The Committee also reviews the integrity and content of the financial statements,
including the ongoing viability of the Company. More details can be found in the Committee’s report
on pages 85 to 87.
N The board should present a fair, balanced and
understandable assessment of the company’s
position and prospects.
The Audit Committee supports the Board in assessing that the Company’s Annual Report presents
a fair, balanced and understandable assessment of the Company’s position and prospects.
Please refer to the Report of the Audit Committee on pages 85 to 87 for further information.
O The board should establish procedures to
manage risk, oversee the internal control
framework, and determine the nature and
extent of the principal risks the company is
willing to take in order to achieve its long-term
strategic objectives.
The work of the Audit Committee, that supports the Board through its independent oversight of
the financial reporting process, including the financial statements, the system of internal control
and management of risk, the appointment and ongoing review of the quality of the work and
independence of the Company’s external Auditor, as well as the procedures for monitoring
compliance, is described in pages 85 to 87.
P Remuneration policies and practices should
be designed to support strategy and promote
long-term sustainable success.
The Directors are all non-executive and independent of the Investment Manager. They receive fees
and no component of any Director’s remuneration is subject to performance factors.
Whilst there is no requirement under the Company’s Articles of Association or letters of appointment
for Directors to hold shares in the Company, all of the Directors do have shares
in the Company and the details of their shareholdings are set out on page 91.
Q A formal and transparent procedure
for developing a policy for remuneration
should be established. No director
should be involved in deciding their
own remuneration outcome.
As the Company has no employees and the Board is comprised wholly of non-executive Directors,
the Board has not established a separate Remuneration Committee. Directors’ remuneration is
determined by the Board as a whole, at its discretion within an aggregate ceiling as set out in
the Company’s Articles of Association. Each Director abstains from voting on their own individual
remuneration.
The details of the Remuneration Policy and Directors’ fees can be found on pages 88 to 91.
The terms and conditions of the Directors’ appointments are set out in Letters of Appointment,
which are available for inspection on request at the registered office of the Company.
R Directors should exercise independent
judgement and discretion when authorising
remuneration outcomes, taking account of
company and individual performance, and
wider circumstances.
The process of reviewing the Directors’ fees is described on page 90, although there are no
performance related elements of the remuneration, there is therefore very little scope for the exercise
of discretion or judgement.
UK Corporate Governance Code Principle E relates to the treatment of employees and so is generally not applicable to companies under the AIC Code
if, as in the case of the Company, there are no employees.
Interests in Share Capital
Information on the structure, rights and restrictions relating to share capital is given on page 53.
At 30 September 2024 and 7 November 2024, the following holdings representing more than 3% of the Company’s voting rights had been reported
to the Company:
Number held at
30 September 2024
Percentage at
30 September 2024
Percentage held at
7 November 2024
Interactive Investor 48,970,443 11.08% 11.15%
Hargreaves Lansdown Asset Management Limited 45,912,030 10.39% 10.46%
Charles Stanley & Co Limited 25,000,113 5.66% 5.69%
Halifax Share Dealing Limited 22,605,669 5.11% 5.15%
Lazard Asset Management LLC 22,884,714 4.59% 5.21%
AJ Bell 20,711,623 4.69% 4.72%
Evelyn Partners 16,531,306 3.74% 3.77%
The Company has not received any further notifications in the period from the year end to 7 November 2024.
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Financial Risk Management
The principal risks and uncertainties facing the Company are set out on
pages 17 to 19. The principal financial risks and the Company’s policies for
managing these risks are set out in note 15 to the financial statements.
Greenhouse Gas Emissions and TCFD/SECR reporting
The Company’s environmental statements are set out in the Strategic Report
on page 20. The Company has no greenhouse gas emissions to report from
the operations of the Company, nor does it have responsibility for any other
emissions producing sources reportable under the Companies Act 2006
(Strategic Report and Directors’ Report) Regulations 2013 or the SECR
framework.
As an investment trust without employees, the Company is also not required
to report against the TCFD. However, understanding and managing climate-
related risks and opportunities based on the TCFD’s recommendations is a
fundamental part of AVI’s investment approach, as discussed on pages 26
to 28.
Anti-Bribery and Corruption Policy
The Company has adopted an Anti-Bribery and Corruption Policy
and has reviewed the statements regarding compliance with the Bribery Act
2010 by the Company’s Investment Manager and key service providers.
These statements are reviewed regularly by the Management Engagement
Committee.
Disclosure of Information to the Auditor
The Directors who held office at the date of approval of the Report of the
Directors confirm that, so far as they are aware, there is no relevant audit
information of which the Company’s Auditor is unaware; and each Director
has taken all of the steps that he/she ought to have taken as a Director to
make himself/herself aware of any relevant audit information and establish that
the Company’s Auditor is aware of that information.
Requirements of the Listing Rules
Listing Rule 6.6.4 requires the Company to include information specified in
Listing Rule 6.6.1R in a single identifiable section of the Annual Report or a
cross reference table indicating where the information is set out. The Directors
confirm that no disclosures are required in relation to Listing Rule 6.6.1R.
Auditor
BDO LLP and have indicated their willingness to continue in office and
Resolutions will be proposed at the forthcoming AGM to re-appoint them as
Auditor and to authorise the Directors to determine their remuneration. Further
information about the Company’s external Auditor, including tenure, can be
found in the Audit Committee’s Report on pages 86 to 87.
Annual General Meeting
The Notice of the AGM to be held on 19 December 2024 (the Notice) is set out
on pages 96 to 99. Further information on the resolutions comprising special
business being put to shareholders at the forthcoming AGM is set out below:
Proposed new investment policy – ordinary resolution
Resolution 11, proposed as an ordinary resolution, seeks shareholder
approval for the Company to adopt a proposed new Investment Policy.
As described in the Chairman’s statement there will be no change in the
overall approach that AVI takes in managing the investment portfolio but the
proposed changes are designed to align the Investment Policy with current
best practice and to clarify the approach to spreading investment risk,
investing in derivatives and to gearing. The proposed investment Policy is set
out on page 52.
Resolution 12: Authority to allot shares
The Directors seek to renew the general and unconditional authority to
allot Ordinary Shares up to 146,345,557 Ordinary Shares of 2 pence each,
representing approximately one-third of the issued Ordinary Share capital
(excluding shares held in treasury). The Directors will only exercise this
authority if they consider it to be in the best interests of the Company and
would only issue shares at a price at or above the prevailing NAV per share at
the time of issue. This authority would expire 15 months after the date of the
passing of the resolution or, if earlier, at the next AGM of the Company.
No shares were issued in the year.
As at 7 November 2024, 45,600,956 shares were held in treasury,
representing 9.41% of the issued share capital.
Resolution 13 – Authority to issue shares outside of pre-emption rights
The Directors seek to renew the authority to allot, other than on a
pre-emptive basis, Ordinary Shares (including the grant of rights to subscribe
for, or to convert any securities into Ordinary Shares) for cash up to a
maximum of 21,951,833 Ordinary Shares, representing up to approximately
5% of the Ordinary Shares (excluding shares held in treasury) in issue as at
12 November 2024, and to transfer or sell Ordinary Shares held in treasury.
The Directors will only exercise this authority if they consider it to be
advantageous to the Company and its shareholders. Shares will not
be issued or sold from treasury other than at a price equal to or above
the prevailing NAV per share.
No shares were issued in the year to 30 September 2024.
Resolution 14 – Share buyback facility
At the AGM held on 20 December 2023, the Directors were authorised
to make market purchases of up to 14.99% of the shares in circulation
at the date of that meeting. During the year, 20,112,011 shares have been
bought back (nominal value £402,240, aggregate consideration £43,967,466),
representing 4.13% of the issued capital as at the year-end. These shares
were bought back in order to limit any significant widening of the discount.
As at the year-end, authority to buy back a further 56,357,648 Ordinary
Shares remained.
At the forthcoming AGM, the Directors will seek to renew the authority for
up to 14.99% of Ordinary Shares in issue (excluding shares held in treasury),
representing 65,811,596 Ordinary Shares, as at 12 November 2024, to be
bought back. Purchases would be made in accordance with the relevant
provisions of the Companies Act and Listing Rules. The authority will expire 15
months after the date of the passing of the resolution or, if earlier, at the next
AGM of the Company.
Details of shares bought back during the year under review can be found
in note 13 to the financial statements.
Ordinary Shares bought back may be held in treasury for cancellation or sale
at a future date rather than being cancelled upon purchase. The Directors will
not exercise the authority granted under this resolution unless they consider it
to be in the best interests of shareholders and shares would only be bought
back at a discount to the prevailing NAV per share.
Resolution 15 – Notice period for general meetings
This resolution will allow the Company to hold general meetings (other than
an AGM) on 14 clear days’ notice. The notice period for general meetings
of the Company is 21 clear days unless: (i) shareholders approve a shorter
notice period, which cannot however be less than 14 clear days; and (ii) the
Company offers the facility for all shareholders to vote by electronic means.
AGMs must always be held on at least 21 clear days’ notice. It is intended
that the flexibility offered by this resolution will only be used for time sensitive,
non-routine business and where merited in the interests of shareholders as a
whole. The approval will be effective until the Company’s next AGM, when it is
intended that a similar resolution will be proposed.
Governance / Report of the Directors continued
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Recommendation
The Directors consider that all of the resolutions to be proposed at the AGM
are in the best interests of the Company and its members as a whole. The
Directors unanimously recommend that shareholders vote in favour of all of
the resolutions, as they intend to do in respect of their own beneficial holdings.
Going Concern
The financial statements have been prepared on the 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 of the Company have considered the
likely impacts of international and economic uncertainties on the Company,
operations and the investment portfolio. These include, but are not limited to,
the impact of the conflicts in Ukraine and the Middle East, geopolitical and
economic challenges around the world, supply shortages and inflationary
pressures.
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 surplus cash enables the Company to
meet any funding requirements and finance future additional investments.
The Company is a closed-ended fund, where assets are not required to
be liquidated to meet day-to-day redemptions. In forming our view that the
company is a going concern we have taken into account any loan facilities
that expire during the period and the likelihood of our ability or need to renew
the facility.
The Directors have completed stress tests assessing the impact of changes in
market value and income with associated cash flows and any potential impact
on the debt covenants associated with the Company’s long-term borrowing.
In making this assessment, they have considered severe but plausible
downside scenarios. The conclusion was that in a severe but plausible
downside scenario the Company could continue to meet its liabilities. Whilst
the economic future is uncertain, and the Directors believe that it is possible
the Company could experience reductions in income and/or market value,
the opinion of the Directors is that this should not be to a level which would
threaten the Company’s ability to continue as a going concern.
The Directors, the Investment 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.
Viability
The Directors consider viability as part of their continuing programme of
monitoring risk. The Directors have made a robust assessment of the principal
and emerging risks. The Directors believe five years to be a reasonable
time horizon to consider the continuing viability of the Company, reflecting a
balance between a longer-term investment horizon and the inherent shorter-
term uncertainties within equity markets, although they do have due regard
to viability over the longer term and particularly to key points outside this
time frame, such as the due dates for the repayment of long-term debt. The
Company is an investment trust whose portfolio is invested in readily realisable
listed securities and with some short-term cash deposits. The following facts
support the Directors’ view of the viability of the Company:
• In the year under review, expenses (including finance costs and taxation)
were adequately covered by investment income.
• The Company has a liquid investment portfolio.
• The Company has long-term debt of £30m and €30m which both fall
due for repayment in 2036, €20m which falls due for repayment in 2037,
JPY8bn which falls due for repayment in 2032, JPY4.5bn which falls
due in 2033 and JPY5bn which falls due in 2039. This debt was covered
approximately seven times as at the end of September 2024 by the
Company’s total assets. The Directors are of the view that, subject to
unforeseen circumstances, the Company will have sufficient resources to
meet the costs of annual interest and eventual repayment of principal on
this debt.
The Company has a large margin of safety over the covenants on its debt.
The Company’s viability depends on the global economy and markets
continuing to function. The Directors also consider the possibility of a wide-
ranging collapse in corporate earnings and/or the market value of listed
securities. To the latter point, it should be borne in mind that a significant
proportion of the Company’s expenses are in ad valorem investment
management fees, which would reduce if the market value of the Company’s
assets were to fall.
In arriving at its conclusion, the Board has taken account of the potential
effects of the conflicts in Ukraine and the Middle East, geopolitical and
economic challenges around the world, supply shortages and inflationary
pressures on the value of the Company’s assets, income from those assets
and the ability of the Company’s key suppliers to maintain effective and
efficient operations. As set out in the Going Concern statement, in assessing
the potential effects of these international and economic uncertainties, the
Directors have completed stress tests which included severe but plausible
downside scenarios.
In order to maintain viability, the Company has a robust risk control framework
which, following guidelines from the FRC, has the objectives of reducing the
likelihood and impact of: poor judgement in decision-making; risk-taking that
exceeds the levels agreed by the Board; human error; or control processes
being deliberately circumvented.
Taking the above into account, and the potential impact of the principal and
emerging risks as set out on pages 17 to 19, the Directors have a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due for a period of five years from the date of approval
of this Annual Report.
Approval
The Report of the Directors has been approved by the Board.
By Order of the Board
Link Company Matters Limited
Corporate Secretary
12 November 2024
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Statement of Directors’ Responsibilities in Respect of the Annual Report
and the Financial Statements
The Directors are responsible for preparing the Annual Report and financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law they are required to prepare the financial
statements in accordance with UK-adopted international accounting
standards and applicable law.
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of affairs
of the Company and of its profit or loss for that period. In preparing these
financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant and
reliable;
• state whether they have been prepared in accordance with UK-adopted
international accounting standards;
• assess the Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend
to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate accounting records that
are sufficient to show and explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that its financial statements comply with the
Companies Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the Company and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors’ Report, Directors’ Remuneration
Report and Corporate Governance Statement that complies with that law and
those regulations.
In accordance with Disclosure Guidance and Transparency Rule 4.1.15R, the
financial statements will form part of the annual financial report prepared using
the single electronic reporting format under the TD ESEF Regulation. The
auditor’s report on these financial statements provides no assurance over the
ESEF format.
The financial statements of the Company are published on the Company’s
website at www.aviglobal.co.uk. The Directors are responsible for the
maintenance and integrity of the corporate and financial information included
on the Company’s website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
Responsibility Statement of the Directors in Respect of the Annual
Financial Report
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
• the Strategic Report includes a fair review of the development and
performance of the business and the position of the Company, together
with a description of the principal risks and uncertainties that the
Company faces.
We consider the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Company’s position and performance, business
model and strategy.
Graham Kitchen
Chairman
12 November 2024
Governance / Report of the Directors continued
Financial Statements / Statement of Comprehensive Income
For the year ended 30 September 2024
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Notes
2024
Revenue
return
£’000
2024
Capital
return
£’000
2024
Total
£’000
2023
Revenue
return
£’000
2023
Capital
return
£’000
2023
Total
£’000
Income
Investment income 2 26,603 3,153 29,756 24,450 – 24,450
Gains on financial assets and financial liabilities held
at fair value 8 – 130,745 130,745 – 112,909 112,909
Exchange (losses)/gains on cash and cash equivalents – (4,367) (4,367) – 3,138 3,138
26,603 129,531 156,134 24,450 116,047 140,497
Expenses
Investment management fee 3 (2,283) (5,328) (7,611) (2,067) (4,824) (6,891)
Other expenses 3 (2,035) – (2,035) (1,782) – (1,782)
Profit before finance costs and tax 22,285 124,203 146,488 20,601 111,223 131,824
Finance costs 4 (1,602) (3,781) (5,383) (1,381) (3,262) (4,643)
Exchange gains on revaluation of loan notes 4 – 6,008 6,008 – 6,135 6,135
Profit before taxation 20,683 126,430 147,113 19,220 114,096 133,316
Taxation 5 (1,741) (2,715) (4,456) 821 – 821
Profit for the year 18,942 123,715 142,657 20,041 114,096 134,137
Earnings per Ordinary Share (pence) 7 4.20 27.45 31.65 4.19 23.83 28.02
The total column of this statement is the Income Statement of the Company prepared in accordance with UK-adopted international accounting standards.
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 period.
There is no other comprehensive income, and therefore the profit/loss for the year after tax is also the total comprehensive income.
The accompanying notes are an integral part of these financial statements.
FS
Financial Statements / Statement of Changes in Equity
For the year ended 30 September 2024
AVI Global Trust plc / Annual Report 2024
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Ordinary
share capital
£’000
Capital
redemption
reserve
£’000
Share
premium
£’000
Capital
reserve*
£’000
Merger
reserve
£’000
Revenue
reserve**
£’000
Total
£’000
For the year to 30 September 2024
Balance as at 30 September 2023 10,155 8,780 28,078 910,267 41,406 32,332 1,031,018
Ordinary Shares bought back for cancellation (402) 402 – (44,187) – – (44,187)
Total comprehensive income for the year – – – 123,715 – 18,942 142,657
Ordinary dividends paid (see note 6) – – – – – (16,763) (16,763)
Balance as at 30 September 2024 9,753 9,182 28,078 989,795 41,406 34,511 1,112,725
For the year ended 30 September 2023
Balance as at 30 September 2022 10,741 8,194 28,078 852,839 41,406 28,250 969,508
Ordinary Shares bought back for cancellation (586) 586 – (56,668) – – (56,668)
Total comprehensive income for the year – – – 114,096 – 20,041 134,137
Ordinary dividends paid (see note 6) – – – – – (15,959) (15,959)
Balance as at 30 September 2023 10,155 8,780 28,078 910,267 41,406 32,332 1,031,018
* Within the balance of the capital reserve, £899,960,000 relates to realised gains (2023: £765,247,000) which under the Articles of Association is distributable by way of dividend. The remaining
£89,835,000 relates to unrealised gains and losses on financial instruments (2023: £145,020,000) and is non-distributable.
** Revenue reserve is fully distributable.
The accompanying notes are an integral part of these financial statements.
Financial Statements / Balance Sheet
As at 30 September 2024
Notes
2024
£’000
2023
£’000
Non-current assets
Investments held at fair value through profit or loss 8 1,205,675 1,144,759
1,205,675 1,144,759
Current assets
Total return swap assets 8, 9, 16 606 2,174
Trade receivables, prepayments and other debtors 9 26,027 45,674
Cash and cash equivalents 10 48,597 4,231
75,230 52,079
Total assets 1,280,905 1,196,838
Current liabilities
Total return swap liabilities 8, 11, 16 (4,414) (20,873)
Trade payables, accruals and short term borrowings 11 (1,395) (3,398)
(5,809) (24,271)
Total assets less current liabilities 1,275,096 1,172,567
Non-current liabilities
4.184% Series A Sterling Senior Unsecured Loan 2036 12 (29,927) (29,920)
3.249% Series B Euro Senior Unsecured Loan 2036 12 (24,902) (25,960)
2.93% Euro Senior Unsecured Loan 2037 12 (16,549) (17,250)
1.38% JPY Senior Unsecured Loan Notes 2032 12 (41,558) (43,761)
1.44% JPY Senior Unsecured Loan Notes 2033 12 (23,413) (24,658)
2.28% JPY Senior Unsecured Loan Notes 2039 12 (26,022) –
(162,371) (141,549)
Net assets 1,112,725 1,031,018
Equity attributable to equity shareholders
Ordinary Share capital 13 9,753 10,155
Capital redemption reserve 9,182 8,780
Share premium 28,078 28,078
Capital reserve 989,795 910,267
Merger reserve 41,406 41,406
Revenue reserve 34,511 32,332
Total equity 1,112,725 1,031,018
Net Asset Value per Ordinary Share - basic and diluted (pence) 14 251.71 223.08
Number of shares in issue excluding Treasury 13 442,061,671 462,173,682
These financial statements were approved and authorised for issue by the Board of AVI Global Trust plc on 12 November 2024 and were signed
on its behalf by:
Graham Kitchen
Chairman
The accompanying notes are an integral part of these financial statements.
Registered in England & Wales No. 28203
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FS
2024
£’000
2023
£’000
Reconciliation of profit before taxation to net cash inflow from operating activities
Profit before taxation 147,113 133,316
Gains on investments held at fair value through profit or loss (130,745) (112,909)
Decrease/(increase) in other receivables 16,547 (39,985)
(Decrease)/Increase in other payables (710) 1,004
Taxation (paid)/received (4,627) 671
Exchange gains on Loan Notes and revolving credit facility (7,542) (10,921)
Amortisation of loan issue expenses 43 39
Net cash inflow/(outflow) from operating activities 20,079 (28,785)
Investing activities
Purchases of investments (752,490) (516,837)
Sales of investments 809,394 527,529
Net cash inflow from investing activities 56,904 10,692
Financing activities
Dividends paid (16,763) (15,959)
Payments for Ordinary Shares bought back (44,177) (58,722)
Drawdown of revolving credit facility 82,957 49,144
Repayment of revolving credit facility (81,423) (44,359)
Issue of loans net of costs 26,788 24,753
Net cash outflow from financing activities (32,618) (45,143)
Increase/(decrease) in cash and cash equivalents 44,365 (63,236)
Reconciliation of net cash flow movements in funds:
Cash and cash equivalents at beginning of year 4,231 67,274
Exchange rate movements 1 193
Increase/(decrease) in cash and cash equivalents 44,365 (63,236)
Increase/(decrease) in net cash 44,366 (63,043)
Cash and cash equivalents at end of year 48,597 4,231
Dividends received 27,372 20,369
Interest paid 5,531 4,533
Interest received 2,711 3,409
The accompanying notes are an integral part of these financial statements.
Financial Statements / Statement of Cash Flows
For the year ended 30 September 2024
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Financial Statements / Notes to the Financial Statements
1. General information and accounting policies
AVI Global Trust plc is a company incorporated and registered in England and Wales. The principal activity of the Company is that of an investment trust
company within the meaning of Sections 1158/1159 of the Corporation Tax Act 2010 and its investment approach is detailed in the Strategic Report.
The Company’s financial statements have been prepared in accordance with UK-adopted international accounting standards and the AIC SORP.
Basis of preparation
The functional currency of the Company is Pounds Sterling because this is the currency of the primary economic environment in which the Company operates.
The financial statements are also presented in Pounds Sterling rounded to the nearest thousand, except where otherwise indicated.
Going concern
The financial statements have been prepared on the 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 of the Company have considered the likely impacts of international and economic uncertainties on the Company,
operations and the investment portfolio. The Directors also regularly assess the resilience of key third-party service providers, most notably the Investment
Manager and Fund Administrator. In making their assessment, the Directors have considered the likely impacts of international and economic uncertainties on
the Company, operations and the investment portfolio. These include, but are not limited to, geopolitical events, the conflicts in Ukraine and the Middle East and
inflationary pressures.
The Directors noted that the Company, with the current cash balance and holding a portfolio of listed investments, is able to meet the obligations of the
Company as they fall due. The current cash balance enables the Company to meet any funding requirements and finance future additional investments.
The Company is a closed-ended fund, where assets are not required to be liquidated to meet day-to-day redemptions.
The Directors have completed stress tests assessing the impact of changes in market value and income with associated cash flows. In making this assessment,
they have considered severe but plausible downside scenarios and simulated a 50% reduction in NAV during January 2025, the impact on future cash flows
as a result of this through to September 2029. The conclusion was that in a severe but plausible downside scenario the Company could continue to meet its
liabilities. Whilst the economic future is uncertain, and the Directors believe that it is possible the Company could experience further reductions in income and/or
market value, and changes in expenses, the opinion of the Directors is that this should not be to a level which would threaten the Company’s ability to continue
as a going concern.
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 and investment commitments
(of which there are none of significance). Therefore, the financial statements have been prepared on the going concern basis.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. The Company primarily invests in
companies listed in the UK and on other recognised international exchanges.
Accounting developments
In the current year, the Company has applied a number of amendments to UK-adopted international standards that that are mandatorily effective for an
accounting period that begins on or after 1 October 2023.
In accordance with an amendment to IAS1, Presentation of Financial Statements, the Company now discloses its material accounting policy information instead
of significant accounting policies. The updates incorporated:
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
• Definition of Accounting Estimates (Amendments to IAS 8);
• Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction – Amendments to IAS 12 Income Taxes; and
• IFRS 17 Insurance Contracts.
There are amendments to IAS/IFRS that will apply from 1 October 2024 as follows:
• Classification of liabilities as current or non-current (Amendments to IAS 1);
• Non-current liabilities with Covenants (Amendments to IAS 1); and
• Supplier Finance Arrangements – Amendments to IAS7 and IFRS7.
The Company intends to adopt the Standards in the reporting period when they become effective. The adoption of these Standards impact the Company’s
accounting policy disclosures, with revised presentations and additional disclosures to the Financial Statements.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with UK-adopted international accounting standards requires management to make judgements,
estimates and assumptions that affect the application of policies and the reported amounts in the Balance Sheet, the Statement of Comprehensive Income
and the disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements
about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
1
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1. General information and accounting policies continued
Critical accounting judgements and key sources of estimation uncertainty continued
The areas requiring judgement and estimation in the preparation of the financial statements relate to the determination of the carrying value of unquoted
investments at fair value through profit or loss. The policies for these are set out in the notes to the financial statements below. The Company values unquoted
investments by following the International Private Equity Venture Capital Valuation (IPEV) guidelines. Further areas are recognising and classifying unusual or
special dividends received as either capital or revenue in nature; the valuation of derivatives; the recognition of expenses between capital and revenue; and the
level of deferred tax.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period of the revision and future period if the revision affects both current and future periods.
There are no further significant judgements or estimates in these financial statements.
Investments
The Company’s business is investing in financial assets with a view to capital growth. The portfolio of financial assets is managed and its performance evaluated
on a fair value basis in accordance with the documented investment strategy and information is provided internally on that basis to the Company’s Board of
Directors.
The investments held by the Company are designated “at fair value through profit or loss”. All gains and losses are allocated to the capital return within
the Statement of Comprehensive Income as “Gains or losses on investments held at fair value through profit or loss”. Also included within this heading are
transaction costs in relation to the purchase or sale of investments. When a purchase or sale is made under a contract, the terms of which require delivery within
the time frame of the relevant market, the investments concerned are recognised or derecognised on the trade date.
All investments are designated upon initial recognition as held at fair value through profit or loss, and are measured at subsequent reporting dates at fair value,
which is either the bid price or closing price for Stock Exchange Electronic Trading Service – quotes and crosses (SETSqx). The Company derecognises a
financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all of the risks
and rewards of ownership of the asset to another entity. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum
of the consideration received and receivable and the cumulative gain or loss that had been accumulated is recognised in profit or loss.
Fair values for unquoted investments, or for investments for which the market is inactive, are established by using various valuation techniques in accordance
with the International Private Equity and Venture Capital (IPEV) guidelines. These may include recent arm’s length market transactions, the current fair value
of another instrument that is substantially the same, net asset value, discounted cash flow analysis, option pricing models and reference to similar quoted
companies. Where there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to
provide reliable estimates of prices obtained in actual market transactions, that technique is utilised. Unquoted investments are constantly monitored with fair
values approved by the Company’s Board of Directors.
All investments for which a fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy levels in note 15.
A transfer between levels may result from the date of an event or a change in circumstances.
Foreign currency
Transactions denominated in currencies other than Pounds Sterling are recorded at the rates of exchange prevailing on the date of the transaction. Items which
are denominated in foreign currencies are translated at the rates prevailing on the Balance Sheet date. Any gain or loss arising from a change in exchange rate
subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or the revenue account depending on whether the gain
or loss is capital or revenue in nature.
Derivatives
Derivatives, including Total return swaps, are classified as financial instruments at fair value and included in current assets/liabilities. Derivatives are derecognised
when the contract expires or on the trade on which the contract is sold. Changes in fair value of derivative instruments are recognised as they arise in the
capital column of the Statement of Comprehensive Income. The fair value is calculated by either the quoted price (if listed) or a broker using models with inputs
from market prices. On disposal or expiry, realised gains and losses are also recognised in the Statement of Comprehensive Income as capital items. Cash
flows relating to the derivatives underlying security are reflected within the revenue account. Cost of financing derivatives is allocated in accordance with the
Company’s accounting policy, with 70% charged to capital and 30% charged to revenue.
Cash and cash equivalents
Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments and money market funds, that are readily
convertible to known amounts of cash and which are subject to insignificant risk of changes in value.
Cash held in margin/collateral accounts at the Company’s brokers is presented within trade receivables, prepayments and other debtors in the financial
statements.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above.
Income
Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis. Dividends receivable on equity shares where no
ex-dividend date is quoted are brought into account when the Company’s right to receive payment is established. Fixed returns on non-equity
shares are recognised on a time-apportioned basis. Dividends from overseas companies are shown gross of any withholding taxes which are
disclosed separately in the Statement of Comprehensive Income.
Special dividends are taken to the revenue or capital account depending on their nature. In deciding whether a dividend should be regarded as
a capital or revenue receipt, the Board reviews all relevant information as to the reasons for the sources of the dividend on a case-by-case basis.
Financial Statements / Notes to the Financial Statements continued
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1. General information and accounting policies continued
Income continued
When the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend forgone
is recognised as income. Any excess in the value of the cash dividend is recognised in the capital column.
Interest income on fixed interest securities is recognised in the Statement of Comprehensive Income based on the effective yield to maturity of the fixed interest
security.
All other income is accounted on a time-apportioned accruals basis and is recognised in the Statement of Comprehensive Income.
Expenses and finance costs
All expenses are accounted on an accruals basis. On the basis of the Board’s expected long-term split of total returns in the form of capital and revenue returns
of 70% and 30% respectively, the Company charges 70% of its management fee and finance costs to capital.
Expenses incurred directly in relation to arranging debt finance are amortised over the term of the finance.
Expenses incurred in buybacks of shares are charged to the capital reserve through the Statement of Changes in Equity.
Taxation
The charge for taxation is based on the net revenue for the year and takes into account taxation deferred or accelerated because of temporary differences
between the treatment of certain items for accounting and taxation purposes.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amount
for financial reporting purposes at the reporting date. Deferred tax assets are only recognised if it is considered more likely than not that there will be suitable
profits from which the future reversal of timing differences can be deducted. In line with the recommendations of the SORP, the allocation method used to
calculate the tax relief on expenses charged to capital is the “marginal” basis. Under this basis, if taxable income is capable of being offset entirely by expenses
charged through the revenue account, then no tax relief is transferred to the capital account.
Dividends payable to shareholders
Dividends to shareholders are recognised as a liability in the period in which they are paid or approved in general meetings and are taken to the Statement of
Changes in Equity. Dividends declared and approved by the Company after the Balance Sheet date have not been recognised as a liability of the Company at
the Balance Sheet date.
Non-current liabilities: Loan Notes and Revolving Credit Facility
The non-current liabilities and revolving credit facility are valued at amortised cost. Costs in relation to arranging the finance have been capitalised and are
amortised over the term of the finance. The amortised cost is the par value less the amortised costs with exchange difference on the principal amounts to
be repaid reflected. Any gain or loss arising from changes in the exchange rates are included in the capital reserves and shown in the capital column of the
Statement of Comprehensive Income.
Further details of the non-current liabilities are set out in note 12 and in the Glossary.
Capital redemption reserve
The capital redemption reserve represents non-distributable reserves that arise from the purchase and cancellation of shares.
Share premium
The share premium account represents the accumulated premium paid for shares issued in previous periods above their nominal value less issue expenses.
This is a reserve forming part of the non-distributable reserves. The following items are taken to this reserve:
• costs associated with the issue of equity; and
• premium on the issue of shares.
Capital reserve
The following are taken to the capital reserve through the capital column in the Statement of Comprehensive Income:
Capital reserve – other, forming part of the distributable reserves:
• gains and losses on the disposal of investments;
• amortisation of issue expenses of Loan Notes;
• costs of share buybacks;
• exchange differences of a capital nature; and
• expenses, together with the related taxation effect, allocated to this reserve in accordance with the above policies.
Capital reserve – investment holding gains, not distributable:
• increase and decrease in the valuation of investments held at the year-end.
Merger reserve
The merger reserve represents the share premium on shares issued on the acquisition of Selective Assets Trust plc on 13 October 1995 and
is not distributable.
Revenue reserve
The revenue reserve represents the surplus of accumulated profits and is distributable by way of dividends.
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2. Income
2024
£’000
2023
£’000
Income from investments
UK dividends 1,852 296
Overseas dividends 22,657 21,544
Income from fixed interest securities – 240
24,509 22,080
Other income
Deposit interest 2,784 3,005
Total return swap dividends* (480) (416)
Exchange losses on receipt of income** (210) (421)
Interest received on corporation tax refunds – 202
26,603 24,450
Capital dividend*** 3,153 –
29,756 24,450
* Net income (paid)/received on underlying holdings in Total return swaps.
** Exchange movements arise from ex-dividend date to payment date.
*** Dividend received is attributed to a distribution of capital.
3. Investment management fee and other expenses
2024
Revenue
return
£’000
2024
Capital
return
£’000
2024
Total
£’000
2023
Revenue
return
£’000
2023
Capital
return
£’000
2023
Total
£’000
Management fee 2,283 5,328 7,611 2,067 4,824 6,891
Other expenses:
Directors’ emoluments – fees 201 – 201 190 – 190
Auditor’s remuneration – audit 61 – 61 54 – 54
Marketing 605 – 605 573 – 573
Printing and postage costs 76 – 76 69 – 69
Registrar fees 96 – 96 95 – 95
Custodian fees 77 – 77 83 – 83
Depositary fees 126 – 126 123 – 123
Advisory and professional fees 487 – 487 360 – 360
Costs associated with dividend receipts 21 – 21 18 – 18
Irrecoverable VAT 89 – 89 32 – 32
Regulatory fees 119 – 119 98 – 98
Directors’ insurances and other expenses 77 – 77 87 – 87
2,035 – 2,035 1,782 – 1,782
The management fee calculated in accordance with the IMA amounted to 0.7% of net assets for assets up to £1bn and 0.6% of net assets over £1bn
calculated on a quarterly basis.
Details of the IMA and fees paid to the Investment Manager are set out in the Report of the Directors.
2 3
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4. Finance costs
2024
Revenue
return
£’000
2024
Capital
return
£’000
2024
Total
£’000
2023
Revenue
return
£’000
2023
Capital
return
£’000
2023
Total
£’000
Loan notes and revolving credit facility interest
4.184% Series A Sterling Senior Unsecured Loan Notes 2036 377 879 1,256 375 876 1,251
3.249% Series B Euro Senior Unsecured Loan Notes 2036 246 575 821 254 593 847
2.93% Euro Senior Unsecured Loan Notes 2037 149 347 496 152 354 506
1.38% JPY Senior Unsecured Loan Notes 2032 168 393 561 188 439 627
1.44% JPY Senior Unsecured Loan Notes 2033 100 233 333 20 46 66
2.28% JPY Senior Unsecured Loan Notes 2039 9 22 31 – – –
JPY Revolving credit facility 80 187 267 62 144 206
Total return swap interest 455 1,061 1,516 282 659 941
1,584 3,697 5,281 1,333 3,111 4,444
Amortisation
4.184% Series A Sterling Senior Unsecured Loan Notes 2036 – 7 7 – 7 7
3.249% Series B Euro Senior Unsecured Loan Notes 2036 – 5 5 – 5 5
2.93% Euro Senior Unsecured Loan Notes 2037 – 7 7 – 8 8
1.38% JPY Senior Unsecured Loan Notes 2032 – 18 18 – 18 18
1.44% JPY Senior Unsecured Loan Notes 2033 – 5 5 – 1 1
JPY Revolving credit facility 17 40 57 48 112 160
17 82 99 48 151 199
Bank interest
Bank debit interest 1 2 3 – – –
Total 1,602 3,781 5,383 1,381 3,262 4,643
Exchange gains in Loan Notes* – 6,008 6,008 – 6,135 6,135
* Revaluation of Euro and JPY Loan Notes.
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5. Taxation
Year ended 30 September 2024 Year ended 30 September 2023
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Analysis of charge/(credit) for the year
Overseas tax suffered* 1,741 2,715 4,456 1,638 – 1,638
Withholding tax received previously written off – – – (29) – (29)
Corporation tax refund** – – – (2,430) – (2,430)
Tax charge/(credit) for the year 1,741 2,715 4,456 (821) – (821)
* Tax deducted on payment of overseas dividends by local tax authorities.
** Corporation tax refund in respect of 2008/09.
The taxation assessed for the year is lower (2023: lower) than the standard rate of corporation tax in the UK of 25% (2023: 22%). The differences are explained
below:
Year ended 30 September 2024 Year ended 30 September 2023
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Profit before taxation 20,683 126,430 147,113 19,220 114,096 133,316
Profit before taxation multiplied by the standard rate of
corporation tax of 25% (2023: 22%) 5,171 31,608 36,779 4,229 25,101 29,330
Effects of the non-taxable items:
– UK dividends that are not taxable (334) – (334) (65) – (65)
– Foreign dividends that are not taxable (5,611) (788) (6,399) (4,648) – (4,648)
– Non-taxable investment gains – (33,097) (33,097) – (26,880) (26,880)
– Irrecoverable overseas tax 1,741 2,715 4,456 1,638 – 1,638
– Withholding tax received previously written off – – – (29) – (29)
– Corporation tax refunds – – – (2,430) – (2,430)
– Current period tax losses not utilised 686 2,088 2,774 484 1,779 2,263
– Corporate interest restriction 80 189 269 – – –
– Offshore income gains 8 – 8 – – –
Tax charge/(credit) for the year 1,741 2,715 4,456 (821) – (821)
At 30 September 2024, the Company had management expenses of £105,307,000 (30 September 2023: £96,478,000), a non-trade loan relationship deficit
of £25,688,000 (30 September 2023: £23,688,000) and carried forward disallowed interest expense of £7,883,000 (30 September 2023: £6,805,000) that
are potentially available to offset future taxable revenue. A deferred tax asset of £34,719,000 (30 September 2023: £31,743,000), based on the enacted UK
corporation tax rate of 25% that applied from 1 April 2023, has not been recognised because the Company is not expected to generate sufficient taxable
income in future periods that the carried forward tax losses and disallowed interest expense can be utilised against.
Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Company meets (and intends to
continue for the foreseeable future to meet) the conditions for approval as an Investment Trust Company.
5
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6. Dividends
2024
£’000
2023
£’000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 30 September 2023 of 2.30p (2022: 2.10p) per Ordinary Share 10,484 10,258
Special dividend for the year ended 30 September 2023 of 0.20p (2022: none) per Ordinary Share 912 –
Interim dividend for the year ended 30 September 2024 of 1.20p (2023: 1.20p) per Ordinary Share 5,367 5,701
16,763 15,959
Set out below are the interim and final dividends paid or proposed on Ordinary Shares in respect of the financial year, which is the basis on which the
requirements of Section 1159 of the Corporation Tax Act 2010 are considered.
2024
£’000
2023
£’000
Interim dividend for the year ended 30 September 2024 of 1.20p (2023: 1.20p) per Ordinary Share 5,367 5,701
Proposed final dividend for the year ended 30 September 2024 of 2.55p (2023: 2.30p) per Ordinary Share 11,195* 10,514
Special dividend for the year ended 30 September 2024 of nil (2023: 0.2p) per Ordinary Share – 914
5,367 17,129
* Based on shares in circulation on 12 November 2024.
7. Earnings per Ordinary Share
The earnings per Ordinary Share is based on the Company’s net profit after tax of £142,657,000 (2023: net profit of £134,137,000) and on 450,758,728 (2023:
478,739,622) Ordinary Shares, being the weighted average number of Ordinary Shares in issue (excluding shares in treasury) during the year.
The earnings per Ordinary Share detailed above can be further analysed between revenue and capital as follows:
30 September 2024 30 September 2023
Basic and diluted Revenue Capital Total Revenue Capital Total
Net profit (£’000) 18,942 123,715 142,657 20,041 114,096 134,137
Weighted average number of Ordinary Shares 450,758,728 478,739,622
Earnings per Ordinary Share (pence) 4.20 27.45 31.65 4.19 23.83 28.02
There are no dilutive instruments issued by the Company (2023: none).
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8. Investments held at fair value through profit or loss
30 September 2024 30 September 2023
Equities
£’000
Unrealised
derivatives
asset
£’000
Unrealised
derivatives
liabilities
£’000
Total
£’000
Equities
£’000
Debt
securities
£’000
Unrealised
derivatives
asset
£’000
Unrealised
derivatives
liabilities
£’000
Total
£’000
Financial assets held at fair value
Opening book cost 983,849 – – 983,849 888,954 20,893 – – 909,847
Opening investment holding
gains/(losses) 160,910 2,174 (20,873) 142,211 97,477 1,466 – – 98,943
Opening fair value 1,144,759 2,174 (20,873) 1,126,060 986,431 22,359 – – 1,008,790
Movement in the year:
Purchases at cost 751,187 – – 751,187 472,751 39,655 – – 512,406
Sales/Close – Proceeds (812,627) 6,502 – (806,125) (443,380) (60,041) (4,624) – (508,045)
– realised gains/(losses) on sales and
close of total return swaps 198,441 (6,502) – 191,939 65,525 (507) 4,624 – 69,642
(Decrease)/increase in investment holding gains (76,085) (1,568) 16,459 (61,194) 63,432 (1,466) 2,174 (20,873) 43,267
Closing fair value of investments 1,205,675 606 (4,414) 1,201,867 1,144,759 – 2,174 (20,873) 1,126,060
Closing book cost 1,120,850 – – 1,120,850 983,849 – – – 983,849
Closing investment holding
gains/(losses) 84,825 606 (4,414) 81,017 160,910 – 2,174 (20,873) 142,211
Closing fair value 1,205,675 606 (4,414) 1,201,867 1,144,759 – 2,174 (20,873) 1,126,060
Financial assets and liabilities held at fair value
30 September
2024
£’000
30 September
2023
£’000
Equities 1,205,675 1,144,759
Total return swaps – asset 606 2,174
Total return swaps - liability (4,414) (20,873)
1,201,867 1,126,060
Year ended
30 September
2024
£’000
Year ended
30 September
2023
£’000
Transaction costs
Cost on acquisitions 724 457
Cost on disposals 631 350
1,355 807
Analysis of capital gains/(losses)
Gains on sales/close out of financial assets 191,939 69,642
Movement in investment holding (losses)/gains for the year (61,194) 43,267
Net gains on investments 130,745 112,909
The Company received £806,125,000 (2023: £508,045,000) from investments sold in the year. The book cost of these investments when they were purchased
was £614,186,000 (2023: £438,403,000). These investments have been revalued over time and until they were sold any unrealised gains or losses were
included in the fair value of the investments.
The Company has thirteen interests amounting to an investment of 3% or more of the equity capital of investee companies which are set out in the Investment
Portfolio on pages 14 and 15.
8
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9. Trade receivables, prepayments and other debtors
2024
£’000
2023
£’000
Total return swaps 606 2,174
Trade receivables, prepayments and other debtors
Sales for future settlement – 3,271
Cash collateral receivable 23,113 39,325
Tax recoverable 627 456
Prepayments and accrued income 2,259 2,585
VAT recoverable 28 37
Total trade receivables, prepayments and other debtors 26,027 45,674
Cash collateral receivable is cash held at Jefferies International Limited against exposure to derivatives.
Tax recoverable relates to withholding tax in a number of countries, some of which is past due, but is in the process of being reclaimed by the Custodian
through local tax authorities and also tax deducted on UK REIT dividends, which the Company expects to receive in due course.
No other receivables are past due or impaired.
10. Cash and cash equivalents
2024
£’000
2023
£’000
Cash at bank 13,597 4,231
Liquidity account 35,000 –
48,597 4,231
11. Current liabilities
2024
£’000
2023
£’000
Total return swaps 4,414 20,873
Trade payables, accruals and short-term borrowings
Purchases for future settlement – 1,303
Amounts owed for share buybacks 13 3
Management fees – 573
Interest payable 859 648
Other payables 523 871
Total trade payables, accruals and short term borrowings 1,395 3,398
Total current liabilities 5,809 24,271
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11. Current liabilities continued
Revolving credit facility
The unsecured revolving credit facility with Scotiabank Europe Plc for a JPY8.0bn (£41,700,000) (the facility) was terminated at the end of its contracted life on
26 September 2024. It was repaid on 10 September 2024 and no drawings were made after that date. The facility when in existence consisted of a multi-
currency facility with drawings available in Japanese Yen, Pounds Sterling, US Dollars and Euros.
The interest charged was the appropriate risk free rate (RFR)* plus the additional margin:
• Japanese Yen 1.025% margin over the Tokyo unsecured overnight rate (TONAR)**;
• Pounds Sterling 1.42% margin over SONIA (sterling overnight index average);
• US Dollars 1.25% margin above the secured overnight financing rate (SOFR); and
• Euros 1.25% margin above the Euro short-term rate (€ STR).
Undrawn balances below JPY2.0bn were charged at 0.35% and any undrawn portion above this were charged at 0.30%.
Under the terms of the facility, the covenant required net assets not to be less than £300m and the adjusted net asset coverage to borrowings not less than 4:1.
The facility is shown at amortised cost and revalued for exchange rate movements. Any gain or loss arising from changes in exchange rates is included in the
capital reserves and shown in the capital column of the Statement of Comprehensive Income. Interest costs are charged to capital and revenue in accordance
with the Company’s accounting policies.
** If TONAR was less than 0% it was deemed to be 0%.
At 30 September 2024 At 30 September 2023
¥‘000 £’000 ¥’000 £’000
Opening balance – – – –
Proceeds from amounts drawn 16,000,000 82,957 8,000,000 49,144
Repayment (16,000,000) (81,423) (8,000,000) (44,359)
Exchange rate movement – (1,534) – (4,785)
Total – – – –
12. Non-current liabilities
2024
£’000
2023
£’000
4.184% Series A Sterling Senior Unsecured Loan Notes 2036 29,927 29,920
3.249% Series B Euro Senior Unsecured Loan Notes 2036 24,902 25,960
2.93% Euro Senior Unsecured Loan Notes 2037 16,549 17,250
1.38% JPY Senior Unsecured Loan Notes 2032 41,558 43,761
1.44% JPY Senior Unsecured Loan Notes 2033 23,413 24,658
2.28% JPY Senior Unsecured Loan Notes 2039 26,022 –
Total 162,371 141,549
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12. Non-current liabilities continued
The amortised costs of issue expenses are set out in note 4.
The fair values of the Loan Notes are set out in note 15.
The Company issued two Loan Notes on 15 January 2016:
£30,000,000 4.184% Series A Sterling Senior Unsecured Loan Notes due 15 January 2036
€30,000,000 3.249% Series B Euro Senior Unsecured Loan Notes due 15 January 2036
The Company issued further Loan Notes on 1 November 2017:
€20,000,000 2.93% Euro Senior Unsecured Loan Notes due 1 November 2037
The Company issued further Loan Notes on 6 July 2022:
¥8,000,000,000 1.38% JPY Senior Unsecured Loan Notes due 6 July 2032
¥4,500,000,000 1.44% JPY Senior Unsecured Loan Notes due 25 July 2033
The Company issued further Loan Notes on 25 July 2023:
¥4,500,000,000 1.44% JPY Senior Unsecured Loan Notes due 25 July 2033
The Company issued further Loan Notes on 12 September 2024:
¥5,000,000,000 2.28% JPY Senior Unsecured Loan Notes due 12 September 2039
Under the terms of the Loan Notes, the covenant requires that the net assets of the Company shall not be less than £300,000,000 and total indebtedness shall
not exceed 30% of net assets.
13. Called-up share capital
Number of
shares
Nominal value
£’000
Allotted, called up and fully paid
Ordinary Shares of 2p each (2023: 2p)
Balance at beginning of the year 507,774,638 10,155
Ordinary Shares bought back and cancelled (20,112,011) (402)
Balance at end of the year 487,662,627 9,753
Treasury shares
Balance at beginning of the year 45,600,956
Balance at end of the year 45,600,956
Total Ordinary Share capital excluding treasury shares 442,061,671
At 30 September 2024, the Company held 45,600,956 shares in treasury, with a nominal value of £912,000.
Ordinary Shares of 2p each
During the year to 30 September 2024, 20,112,011 Ordinary Shares of 2p were bought back for cancellation for an aggregate consideration of £43,967,000
(2023: 29,277,886 shares for aggregate consideration of £56,668,000).
The allotted, called up and fully paid shares at 30 September 2024 consisted of 487,662,627 Ordinary Shares of 2p each in issue, and 45,600,956 Ordinary
Shares held in treasury. The total voting rights attaching to Ordinary Shares in issue and ranking for dividends was 442,061,671 as at 30 September 2024.
14. Net asset value
The net asset value per Ordinary Share and the net asset value attributable to the Ordinary Shares at the year-end are calculated in accordance with their
entitlements in the Articles of Association and were as follows:
30 September 2024 30 September 2023
NAV per
Ordinary
Share
Pence
Net asset
value
attributable
£’000
NAV per
Ordinary
Share
Pence
Net asset
value
attributable
£’000
Basic and diluted 251.71 1,112,725 223.08 1,031,018
Net asset value per Ordinary Share is based on net assets and on 442,061,671 Ordinary Shares (2023: 462,173,682), being the number of Ordinary Shares in
issue excluding Treasury Shares at the year-end.
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15. Financial instruments and capital disclosures
Investment objective and policy
The Company’s investment objective and policy are detailed on page 52.
The Company’s financial instruments comprise equity and fixed-interest investments, cash balances, receivables, payables and borrowings. The Company
makes use of borrowings to achieve improved performance in rising markets. The risk of borrowings may be reduced by raising the level of cash balances or
fixed-interest investments held.
Risks
The risks identified arising from the financial instruments are market risk (which comprises market price risk, interest rate risk and foreign currency risk), liquidity
risk and credit and counterparty risk. The Company may also enter into derivative transactions to manage risk.
The Board and Investment Manager consider and review the risks inherent in managing the Company’s assets which are detailed below.
Market risk
Market risk arises mainly from uncertainty about future prices of financial instruments used in the Company’s business. It represents the potential loss which
the Company might suffer through holding market positions by way of price movements, interest rate movements, exchange rate movements and systematic
risk (risk inherent to the market, reflecting economic and geopolitical factors). The Investment Manager assesses the exposure to market risk when making
each investment decision and these risks are monitored by the Investment Manager on a regular basis and the Board at quarterly meetings with the Investment
Manager.
Market price risk
Market price risk (i.e. changes in market prices other than those arising from currency risk or interest rate risk) may affect the value of investments.
Adherence to investment policies mitigates the risk of excessive exposure to any particular type of security or issuer. The portfolio is managed with an
awareness of the effects of adverse price movements through detailed and continuing analysis with the objective of maximising overall returns to shareholders.
The assessment of market risk is based on the Company’s portfolio as held at the year-end. The Company has experienced volatility in the fair value of
investments during recent years due to geopolitical events. Further additional volatility during the year has resulted from the conflicts in Ukraine and the Middle
East and inflation. The Company has used 20% to demonstrate the impact of a significant reduction/increase in the fair value of the investments and the impact
upon the Company that might arise from future significant events.
If the fair value of the listed equity investments at the year-end of £1,204,157,000 (2023: £1,142,936,000) decreased or increased by 20%, then it would have
had an adverse/positive impact on the Company’s capital return and equity of £240,831,000 (2023: £228,587,000).
As at 30 September 2024, £1,518,000 (2023: £1,823,000) of the Company’s investments are in unquoted companies held at fair value. A change in market
inputs that would result in a 20% decrease in the fair value of the unquoted investments at 30 September 2024 would have decreased the net assets
attributable to the Company’s shareholders by £304,000 (30 September 2023: £365,000); an equal change in the opposite direction would have increased the
net assets attributable to the Company’s shareholders and reduced the loss for the year by an equal amount.
Foreign currency
The value of the Company’s assets and the total return earned by the Company’s shareholders can be significantly affected by foreign exchange rate
movements, as most of the Company’s assets are denominated in currencies other than Pounds Sterling, the currency in which the Company’s financial
statements are prepared. Income denominated in foreign currencies is converted to Pounds Sterling upon receipt.
A 5% rise or decline of Sterling against foreign currency denominated (i.e. non Pounds Sterling) assets and liabilities held at the year-end would have increased/
decreased the net asset value by £35,073,000 (2023: £47,448,000).
The currency exposure is as follows:
Currency risk
GBP
£’000
USD
£’000
EUR
£’000
JPY
£’000
NOK
£’000
SEK
£’000
Total
£’000
At 30 September 2024
Other receivables 611 23,476 627 1,313 – – 26,027
Cash and cash equivalents 48,597 – – – – – 48,597
Other payables (679) (118) (371) (227) – – (1,395)
Total return swaps – (3,808) – – – – (3,808)
4.184% Series A Sterling Senior Unsecured Loan Notes 2036 (29,927) – – – – – (29,927)
3.249% Series B Euro Senior Unsecured Loan Notes 2036 – – (24,902) – – – (24,902)
2.93% Euro Senior Unsecured Loan Notes 2037 – – (16,549) – – – (16,549)
1.38% JPY Senior Unsecured Loan Notes 2032 – – – (41,558) – – (41,558)
1.44% JPY Senior Unsecured Loan Notes 2033 – – – (23,413) – – (23,413)
2.28% JPY Senior Unsecured Loan Notes 2039 – – – (26,022) – – (26,022)
Currency exposure on net monetary items 18,602 19,550 (41,195) (89,907) – – (92,950)
Investments held at fair value through profit or
loss – equities 392,664 259,661 291,864 215,730 41,267 4,489 1,205,675
Total net currency exposure 411,266 279,211 250,669 125,823 41,267 4,489 1,112,725
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15. Financial instruments and capital disclosures continued
This exposure is representative at the Balance Sheet date and may not be representative of the year as a whole. The balances are of the holding
investment and may not represent the actual exposure of the subsequent underlying investment.
Currency risk
GBP
£’000
USD
£’000
EUR
£’000
JPY
£’000
NOK
£’000
INR
£’000
SGD
£’000
SEK
£’000
CAD
£’000
Total
£’000
At 30 September 2023
Other receivables 1,073 42,926 456 1,219 – – – – – 45,674
Cash and cash equivalents 4,196 – – 35 – – – – – 4,231
Other payables (1,484) (249) (1,423) (242) – – – – – (3,398)
Total return swaps – (20,705) – – – – – – 2,006 (18,699)
4.184% Series A Sterling Senior Unsecured Loan
Notes 2036 (29,920) – – – – – – – – (29,920)
3.249% Series B Euro Senior Unsecured Loan
Notes 2036 – – (25,960) – – – – – – (25,960)
2.93% Euro Senior Unsecured Loan Notes 2037 – – (17,250) – – – – – – (17,250)
1.38% JPY Senior Unsecured Loan Notes 2032 – – – (43,761) – – – – – (43,761)
1.44% JPY Senior Unsecured Loan Notes 2033 – – – (24,658) – – – – – (24,658)
Currency exposure on net monetary items (26,135) 21,972 (44,177) (67,407) – – – – 2,006 (113,741)
Investments held at fair value through profit or
loss–equities 108,195 376,754 253,920 203,302 153,545 34,097 10,957 3,989 – 1,144,759
Total net currency exposure 82,060 398,726 209,743 135,895 153,545 34,097 10,957 3,989 2,006 1,031,018
Interest rate risk
Interest rate movements may affect:
• the fair value of investments in fixed-interest rate securities;
• the level of income receivable on cash deposits;
• the interest payable on variable rate borrowings; and
• the fair value of the Company’s long-term debt.
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making
investment decisions.
The Loan Notes issued by the Company pay a fixed rate of interest and are carried in the Company’s Balance Sheet at amortised cost rather than
at fair value. Hence, movements in interest rates will not affect net asset values, as reported under the Company’s accounting policies, but may have
an impact on the Company’s share price and discount/premium. The fair value of the debt and its effect on the Company’s assets is set out below.
The exposure at 30 September of financial assets and financial liabilities to interest rate risk is shown by reference to floating interest rates.
At
30 September
2024
£’000
At
30 September
2023
£’000
Exposure to floating interest rates
Cash collateral receivable from broker 23,113 39,325
Cash and cash equivalents 48,597 4,231
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15. Financial instruments and capital disclosures continued
30 September 2024 30 September 2023
Book cost
£’000
Fair value
£’000
Book cost*
£’000
Fair value
£’000
4.184% Series A Sterling Senior Unsecured Loan Notes 2036 29,927 26,103 29,920 25,051
3.249% Series B Euro Senior Unsecured Loan Notes 2036 24,902 23,119 25,960 22,158
2.93% Euro Senior Unsecured Loan Notes 2037 16,549 14,671 17,250 13,936
1.38% JPY Senior Unsecured Loan Notes 2032 41,558 40,203 43,761 40,584
1.44% JPY Senior Unsecured Loan Notes 2033 23,413 22,623 24,658 22,757
2.28% JPY Senior Unsecured Loan Notes 2039 26,022 26,377 – –
Total 162,371 153,096 141,549 124,486
* 2023 figures updated for consistency.
Interest rate sensitivity of the Company’s Loan Notes is an APM as set out in the Glossary.
Liquidity risk
Liquidity risk is mitigated by the fact that the Company has £71,710,000 (2023: £43,556,000) cash and cash equivalents, the assets are readily realisable. The
Company is a closed-ended fund, assets do not need to be liquidated to meet redemptions, and sufficient liquidity is maintained to meet obligations as they fall
due.
The remaining contractual payments on the Company’s financial liabilities at 30 September, based on the earliest date on which payment can be required and
current exchange rates at the Balance Sheet date, were as follows:
In 1 year
or less
£’000
In more than
1 year but not
more than 2
years
£’000
In more than 2
years but not
more than 3
years
£’000
In more than 3
years but not
more than 10
years
£’000
In more than
10 years
£’000
Total
£’000
At 30 September 2024
4.184% Series A Sterling Senior Unsecured Loan
Notes 2036 (1,255) (1,255) (1,255) (8,786) (31,883) (44,434)
3.249% Series B Euro Senior Unsecured Loan
Notes 2036 (811) (811) (811) (5,676) (26,175) (34,284)
2.93% Euro Senior Unsecured Loan Notes 2037 (488) (488) (488) (3,413) (18,345) (23,222)
1.38% JPY Senior Unsecured Loan Notes 2032 (575) (575) (575) (44,578) – (46,303)
1.44% JPY Senior Unsecured Loan Notes 2033 (338) (338) (338) (25,483) – (26,497)
2.28% JPY Senior Unsecured Loan Notes 2039 (594) (594) (594) (4,160) (29,034) (34,976)
Total return swap liabilities (4,032) (382) – – – (4,414)
Other payables (1,395) – – – – (1,395)
(9,488) (4,443) (4,061) (92,096) (105,437) (215,525)
In 1 year
or less
£’000
In more than
1 year but not
more than 2
years
£’000
In more than 2
years but not
more than 3
years
£’000
In more than 3
years but not
more than 10
years
£’000
In more than
10 years
£’000
Total
£’000
At 30 September 2023
4.184% Series A Sterling Senior Unsecured Loan
Notes 2036 (1,255) (1,255) (1,255) (8,786) (33,138) (45,689)
3.249% Series B Euro Senior Unsecured Loan
Notes 2036 (845) (845) (845) (5,918) (28,135) (36,588)
2.93% Euro Senior Unsecured Loan Notes 2037 (508) (508) (508) (3,558) (19,635) (24,717)
1.38% JPY Senior Unsecured Loan Notes 2032 (606) (606) (606) (47,559) – (49,377)
1.44% JPY Senior Unsecured Loan Notes 2033 (356) (356) (356) (27,197) – (28,265)
Total return swap liabilities (20,873) – – – – (20,873)
Other payables (3,398) – – – – (3,398)
(27,841) (3,570) (3,570) (93,018) (80,908) (208,907)
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15. Financial instruments and capital disclosures continued
Credit risk
Credit risk is mitigated by diversifying the counterparties through which the Investment Manager conducts investment transactions. The credit standing of all
counterparties is reviewed periodically, with limits set on amounts due from any one counterparty. As at the year-end cash is held with JP Morgan (A2*) and
Morgan Stanley in the Liquidity Fund (AAA*).
The total credit exposure represents the carrying value of fixed-income investments, cash and receivable balances and totals £75,231,000 (2023: £52,079,000).
Fair values of financial assets and financial liabilities
Valuation of financial instruments
The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements.
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 within 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.
The tables below set out fair value measurements of financial instruments as at the year-end, by the level in the fair value hierarchy into which the fair
value measurement is categorised.
Financial assets at fair value through profit or loss at 30 September 2024
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Equity investments 1,204,157 – 1,518 1,205,675
Total return swap assets – 606 – 606
1,204,157 606 1,518 1,206,281
Financial assets at fair value through profit or loss at 30 September 2023
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Equity investments 1,142,936 – 1,823 1,144,759
Total return swap assets – 2,174 – 2,174
1,142,936 2,174 1,823 1,146,933
Fair value of Level 3 investments
30 September
2024
£’000
30 September
2023
£’000
Opening fair value of investments 1,823 25,431
Acquisition – 583
Sales – proceeds (61) (21,715)
Realised gains/(losses) on equity sales 33 (1,687)
Movement in investment holding losses (277) (789)
Closing fair value of investments 1,518 1,823
Investments classified within Level 3 are reviewed on a regular basis by the Manager. As observable prices are not available for these investments, the Manager
has used appropriate valuation techniques to derive the fair value. The Manager considers the appropriateness of the valuation model inputs, as well as the
valuation result using various methods and techniques generally recognised as standard.
* Moody’s credit ratings.
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15. Financial instruments and capital disclosures continued
Financial liabilities
Valuation of Loan Notes
The Company’s Loan Notes are measured at amortised cost, with the fair values and costs of early redemption set out in the Glossary on page 103.
Other financial assets and liabilities of the Company are carried in the Balance Sheet at an approximation to their fair value.
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.
Financial liabilities at 30 September 2024
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Loan Notes – (153,096) – (153,096)
Total return swap liabilities – (4,414) – (4,414)
– (157,510) – (157,510)
Financial liabilities at 30 September 2023
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Loan Notes – (124,487) – (124,487)
Total return swap liabilities – (20,873) – (20,873)
– (145,360) – (145,360)
The fair value of the total return swaps is derived using the market price of the underlying instruments and exchange rates and therefore would be categorised
as Level 2.
Capital management policies and procedures
The structure of the Company’s capital is described on page 53 and details of the Company’s reserves are shown in the Statement of Changes in Equity
on page 64.
The Company’s capital management objectives are:
• to ensure that it will be able to continue as a going concern;
• to achieve capital growth through a focused portfolio of investments, particularly in companies whose share prices stand at a discount to estimated
underlying net asset value, through an appropriate balance of equity capital and debt; and
• to maximise the return to shareholders while maintaining a capital base to allow the Company to operate effectively and meet obligations as they fall due.
The Board, with the assistance of the Investment Manager, regularly monitors and reviews the broad structure of the Company’s capital on an ongoing basis.
These reviews include:
• the level of gearing, which takes account of the Company’s position and the Investment Manager’s views on the market; and
• the extent to which revenue in excess of that which is required to be distributed should be retained.
The Company’s objectives, policies and processes for managing capital are unchanged from last year but the Directors are proposing that shareholders adopt a
revised Investment Policy at the AGM to be held on 19 December 2024.
The Company is subject to externally imposed capital requirements:
a) as a public company, the Company is required to have a minimum share capital of £50,000; and
b) in accordance with the provisions of Sections 832 and 833 of the Companies Act 2006, the Company, as an investment company:
(i) is only able to make a dividend distribution to the extent that the assets of the Company are equal to at least one and a half times its liabilities after the
dividend payment has been made; and
(ii) is required to make a dividend distribution with respect to each accounting year such that it does not retain more than 15% of the income that
it derives from shares and securities in that year.
These requirements are unchanged since last year and the Company has complied with them at all times.
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16. Derivatives
The Company may use a variety of derivative contracts, including total return swaps, to enable it to gain long exposure to individual securities.
Derivatives are valued by reference to the underlying market value of the corresponding security.
At
30 September
2024
£’000
At
30 September
2023
£’000
Total return swaps
Current assets 606 2,174
Current liabilities (4,414) (20,873)
Net value of derivatives (3,808) (18,699)
The gross positive exposure on total return swaps as at 30 September 2024 was £58,296,000 (30 September 2023: £70,934,000) and the total negative
exposure of total return swaps was £53,100,000 (30 September 2023: £46,986,000). The liabilities are secured against assets held with Jefferies International
Limited. The collateral held as at 30 September 2024 was £23,113,000 (30 September 2023: £39,325,000).
17. Contingencies, guarantees and financial commitments
At 30 September 2024, the Company had no significant financial commitments.
18. Related party transactions and transactions with the Investment Manager
Fees paid to the Company’s Directors are disclosed in the Report on Remuneration Implementation on page 90. At the year-end, £nil was outstanding due to
Directors (2023: £nil).
The transaction pursuant to the IMA with AVI is set out in the Report of the Directors on page 56. Management fees for the year amounted to £7,611,000
(2023: £6,891,000).
As at the year-end, the following amounts were outstanding in respect of management fees: £nil (2023: £573,000).
19. Post balance sheet events
Since the year-end, the Company has bought back 3,025,000 Ordinary Shares with a nominal value of £60,500 at a total cost of £6,966,000.
17 18 1916
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Other Reports / AIFMD Disclosures (Unaudited)
The Company’s AIFM is Asset Value Investors Limited.
The AIFMD requires certain information to be made available to investors in
AIFs before they invest and requires that material changes to this information
be disclosed in the annual report of each AIF. Those disclosures that are
required to be made pre-investment are included within an AIFMD Investor
Disclosure Document. This, together with other necessary disclosures
required under AIFMD, can be found on the Company’s website
www.aviglobal.co.uk.
All authorised AIFMs are required to comply with the AIFMD Remuneration
Code. The AIFM’s remuneration disclosures can be found on the Company’s
website www.aviglobal.co.uk.
Leverage:
For the purposes of the AIFMD, leverage is any method which increases the
Company’s exposure, including the borrowing of cash and the use
of derivatives.
This is expressed as a ratio between the Company’s exposure and its net
asset value, and is calculated under the Gross and Commitment Methods
in accordance with AIFMD. Under the Gross Method, exposure represents
the sum of the Company’s positions without taking account of any netting
or hedging arrangements. Under the Commitment Method, exposure is
calculated after certain hedging and netting positions are offset against each
other.
The Company is required to state its maximum and actual leverage levels,
calculated as prescribed by the AIFMD as at 30 September 2024. This gives
the following figures:
Leverage Exposure Gross Method
Commitment
Method
Maximum Limit 150% 130%
Actual Level 121% 111%
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Other Reports / Report of the Audit Committee
Role of the Audit Committee
The Audit Committee’s main functions are:
• To monitor the internal financial control and risk management systems on
which the Company is reliant.
• To consider whether there is a need for the Company to have its own
internal audit function.
• To monitor the integrity of the half year and annual financial statements of
the Company by reviewing and challenging, where necessary, the actions
and judgements of the Investment Manager and the Administrator.
• To review the proposed audit programme and the subsequent Audit
Report of the external Auditor and to assess the effectiveness and quality
of the audit process, the nature of the non-audit work and the levels of
fees paid in respect of both audit and non-audit work, in compliance with
the Company’s Non-Audit Services Policy.
• To make recommendations to the Board in relation to the appointment,
re-appointment or removal of the Auditor, and to negotiate their
remuneration and terms of engagement on audit and non-audit work.
• To monitor and review annually the external Auditor’s independence,
objectivity, effectiveness, resources and qualifications.
Composition of the Audit Committee
The Audit Committee comprises the whole Board, being independent
Directors. Calum Thomson, a qualified chartered accountant with over
30 years’ experience, has chaired the Audit Committee throughout the year.
All members of the Committee have recent and relevant financial experience,
and the Committee as a whole has competence relevant to the investment
trust sector. The Audit Committee operates within defined terms of reference,
which are available on the Company’s website.
Activities During the Year:
• Review of the Half Year Report for the period to 31 March 2024,
recommending its approval to the Board;
• Consideration of the external Auditor’s plan for the audit of the year end
financial statements;
• Review of the Company’s internal controls and risk management system,
including an annual assessment of emerging and principal risks facing the
Company;
• Commission a detailed review of the risk register which resulted in a
simplified register which provides a higher level of focus on key risks;
• Review of the service levels provided by the Company’s Custodian and
Depositary;
• Review of the controls reports issued by the Company’s outsourced
service providers, including those issued by the Company’s
Administrator, Depositary, Custodian and Investment Manager;
• Review of the year-end financial statements, including a review to ensure
that the financial statements issued by the Company are considered
fair, balanced and understandable, and discussion of the findings of the
external audit with the Auditor. Several sections of the Annual Accounts
are not subject to formal statutory audit, including the Strategic Report
and Investment Manager’s Review; and the checking process for the
financial information in these sections was considered by the Audit
Committee, and by the Auditor;
• Assessment and recommendation to the Board on whether it was
appropriate to prepare the Company’s financial statements on the going
concern basis. This review included challenging the assumptions on
viability of the Company and reviewing stress tests focused on its ability to
continue to meet its viability. The Board’s conclusions are
set out in the Report of the Directors on page 61;
• Consideration of a statement by the Directors on the long-term viability of
the Company. That statement can be found on page 61;
• Recommendation of a final dividend for the year ended 30 September
2024 and an interim dividend for the period to 31 March 2024;
• Review of special dividends received in the year to determine their
allocation to the revenue or capital account in the Statement of
Comprehensive Income;
• Review of the measures it should take in order to comply with the FRC’s
Minimum Standard for Audit Committees and updates to its terms of
reference and meeting agendas to ensure that the Committee meets the
responsibilities set out in the Minimum Standard;
• Review of the schedule of expenditure changes; and
• Review of the Committee’s terms of reference.
Significant Areas of Focus
The Committee considers in detail the annual and interim statements and
its key focus in its work on the Annual Report and Accounts is that the
financial statements are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Company’s position
and performance, business model and strategy. The Committee also carefully
considers the most significant issues, both operational and financial, likely to
impact on the Company’s financial statements.
The key area of focus for the Committee was the valuation of the investment
portfolio: 99.87% of the equity investment portfolio at the year-end can be
verified against daily market prices and observable price movements. The
remaining 0.13% uses methodologies not based on observable inputs.
The following other areas of focus were considered throughout the year
and as part of the annual audit:
• The possibility of management override of controls, because individuals
have access to the Company’s assets and accounting records in order to
fulfil their roles. The Board, through the Audit Committee, is responsible
for ensuring that suitable internal control systems to prevent and detect
fraud and error are designed and implemented by the third-party service
providers to the Company and is also responsible for reviewing the
effectiveness of such controls.
• Valuation of investments: Most of the Company’s assets are listed and
regularly traded and so values for these assets can be verified from
market sources. In the case of unlisted investments the Committee
challenges management to ensure that valuations are reasonable and
appropriate given the circumstances and information available. Valuations
are also verified as part of the audit process.
• Revenue recognition: Dividends are accounted for on an ex-dividend
basis and occasionally the Company receives special dividends.
All revenues are reconciled and there is separation of duties between the
Investment Manager and Administrator.
• Management fees: The Investment Manager’s fee is the largest expense
item. The Administrator ensures that each fee payment is independently
verified and the amounts paid are further verified as part of the audit
process.
• Debt covenants: Compliance with debt covenants is verified by the
Administrator at each month end and certified to lenders and notified to
the Directors.
• Going Concern and Viability: During the year and as part of the year-end
review the Committee considered the Company’s ability to continue to
operate and its future viability. Stress tests were carried out, examining
the effects of substantial falls in asset value and revenues. Throughout
the year, the Audit Committee has also dedicated time to considering the
likely economic effects and the impact on the Company of the conflicts in
Ukraine and the Middle East, geopolitical and economic challenges around
the world, supply shortages, inflationary pressures and how the level of
demand for the Company’s shares may affect the discount.
• Compliance with the Companies Act and Listing Rules: Reports on
compliance are received and reviewed at each quarterly Board meeting.
OR
AVI Global Trust plc / Annual Report 2024
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Significant Areas of Focus continued
• Investment Trust Status: A report on compliance with the requirements to
maintain investment trust status is received and reviewed at each Board
meeting. As part of the year-end process, the Audit Committee reviews
the requirements to retain investment trust status, and in particular the
minimum dividend distribution which must be made with respect to the
year under review.
A further significant risk control is to ensure that the investment portfolio
accounted for in the financial statements reflects physical ownership of
the relevant securities. The Company uses the services of an independent
Custodian (JPMorgan Chase Bank, NA) to hold the assets of the Company.
The investment portfolio is reconciled regularly by the Administrator to the
Custodian’s records. The systems and controls operated by the Custodian
are also monitored by the Depositary, J.P. Morgan Europe Limited, whose
responsibilities include oversight of the safekeeping of the Company’s assets.
The Audit Committee meets with the Depositary, as necessary, to review
the work of the Depositary, and to consider the effectiveness of the internal
controls at the Custodian.
Given the nature of the Company’s investments, substantial funds can be
received from corporate actions at investee companies. The implementation
of the corporate actions can be complex and challenging. The Committee
reviews such corporate actions, and takes advice where necessary.
The Committee reviews the analysis of corporate actions provided by
the Investment Manager and ensures that the treatment in the financial
statements is appropriate.
The Company suffers withholding tax on many of its dividends received, some
of which is irrecoverable. The Audit Committee and the Investment Manager
aim to ensure that any recoverable withholding tax is received in a timely
manner. However, such recovery can be difficult in some jurisdictions, and the
Company has incurred professional service fees in this area. During the year
under review the Audit Committee decided to make a provision against an
amount of withholding tax that has remained due for over nine years.
At each Audit Committee meeting, the members discussed the emerging
risks that may have an impact on the Company. Topics discussed in the year
under review included the continuing effects of the conflicts in Ukraine and
the Middle East, the impact of Consumer Duty in respect of cost disclosures,
developments in the investment trust sector and consolidation in the wealth
managers sector and in particular increasing levels of inflation and the growing
prominence of climate change.
Internal Controls
The Board confirms that there is an ongoing process for identifying, evaluating
and managing the emerging and principal risks faced by the Company in line
with the FRC’s Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting published in September 2014 and the
FRC’s Guidance on Audit Committees published in April 2016. This process
has been in place for the year under review and up to the date of approval
of this report, and accords with the guidance. In particular, it has reviewed
and updated the process for identifying and evaluating the significant risks
affecting the Company and policies by which these risks are managed.
The risks of any failure of such controls are identified in a Risk Matrix and a
schedule of Key Risks, which are regularly reviewed by the Board and which
identify the likelihood and severity of the impact of such risks and the controls
in place to minimise the probability of such risks occurring. Where reliance
is made on third parties to manage identified risks, those risks are matched
to appropriate controls reported in the relevant third-party service provider’s
annual report on controls. The principal risks identified by the Board are set
out in the Strategic Report on pages 17 to 19.
Internal Controls continued
The following are the key components which the Company has in place
to provide effective internal control:
• The Board has agreed clearly defined investment criteria, which specify
levels of authority and exposure limits. Reports on compliance with these
criteria are regularly reviewed by the Board.
• The Board has a procedure to ensure that the Company can continue
to be approved as an investment company by complying with sections
1158/1159 of the Corporation Tax Act 2010.
• The Investment Manager and Administrator prepare forecasts and
management accounts which allow the Board to assess the Company’s
activities and to review its performance.
• The contractual agreements with the Investment Manager and other third-
party service providers, and adherence to them, are regularly reviewed.
• The services of and controls at the Investment Manager and other
third-party suppliers are reviewed at least annually.
• The Audit Committee receives and reviews assurance reports on the
controls of all third-party service providers, including the Custodian and
Administrator, undertaken by professional service providers.
• The Audit Committee seeks to ensure that the Company is recovering
withholding tax on overseas dividends to the fullest extent possible.
• The Investment Manager’s Compliance Officer continually reviews
the Investment Manager’s operations. The Investment Manager also
employs an independent compliance consultant. Compliance reports are
submitted to the Committee at least annually.
Internal control systems are designed to meet the Company’s particular needs
and the risks to which it is exposed. They do not eliminate the risk of failure to
achieve business objectives and, by their nature, can only provide reasonable
and not absolute assurance against misstatement or loss.
As the Company has no employees, it does not have a whistle-blowing policy
and procedure in place. The Company delegates its main functions to third-
party providers, each of whom report on their policies and procedures to the
Audit Committee.
The Audit Committee believes that the Company does not require an internal
audit function, principally because the Company delegates its day-to-day
operations to third parties, which are monitored by the Committee, and which
provide control reports on their operations at least annually.
External Audit Process
The Audit Committee meets at least twice a year with the Auditor.
The Auditor provides a planning report in advance of the preparation
of the Annual Report and a report on the annual audit. The Audit Committee
has an opportunity to question and challenge the Auditor in respect of each
of these reports. In addition, the Audit Committee Chairman discusses
the audit plan and results of the audit with the external Auditor prior to the
relevant Audit Committee meeting. After each audit, the Audit Committee
reviews the audit process and considers its effectiveness. The review of the
2023 audit concluded that the audit process had worked well, and that the
key matters had been adequately addressed by the auditors. At least once
a year, the Audit Committee has an opportunity to discuss any aspect of the
Auditor’s work with the Auditor in the absence of the Investment Manager
and administrators.
The Audit Committee specifically considered and discussed with the Auditor
the use of Alternative Performance Measures in this Annual Report. The
Auditor made a number of recommendations, which have been incorporated
in the Annual Report.
Other Reports / Report of the Audit Committee continued
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Auditor Assessment and Independence
The Audit Committee has reviewed BDO’s independence policies
and procedures, including quality assurance procedures. It was
considered that those policies and procedures remained fit for purpose.
Christopher Meyrick is the Audit Partner allocated to the Company. The
audit of the financial statements for the year to 30 September 2024 is his
second as Audit Partner and it is the second year for which BDO have been
the Company’s auditors. The Committee has also taken into consideration
the standing, skills and experience of the audit firm and the audit team, and
is satisfied that BDO is both independent and effective in carrying out their
responsibilities.
The Audit Committee has discussed the findings of the FRC’s recent
2024 Audit Quality Report on the quality of audits performed by BDO
and questioned the audit team on any particular areas of the findings that
caused them to change their audit approach and was relevant to the audit
of the Company. Whilst the Committee is disappointed with the lack of
progress since the previous Audit Quality Report, it noted that the proportion
of audits that were inspected and found to require “no more than limited
improvements” had decreased noticeably compared with the previous year,
and has satisfied itself that none of the shortcomings identified are directly
relevant to the audit of the Company.
Fees Payable to the Auditor
Total fees payable to the Auditor were £61,000 (2023: £54,000). Of the
total fees, the fees for audit services were £61,000 (2023: £54,000).
The Audit Committee has approved and implemented a policy on the
engagement of the Auditor to supply non-audit services, taking into account
the recommendations of the FRC, and does not believe there to be any
impediment to the Auditor’s objectivity and independence.
All non-audit work to be carried out by the Auditor must be approved
by the Audit Committee in advance. The cost of non-audit services provided
by the Auditor for the financial year ended 30 September 2024 was £nil
(2023: £nil). The Audit Committee is satisfied that BDO was independent on
appointment and remains independent.
Reappointment of the Auditor
Taking into account the performance and effectiveness of the Auditor
and the confirmation of their independence, the Committee recommends that
BDO LLP be re-appointed as Auditor to the Company.
CMA Order
AGT has complied throughout the year ended 30 September 2024 with the
provisions of the CMA Order.
Calum Thomson
Audit Committee Chairman
12 November 2024
OR
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Other Reports / Directors’ Remuneration Policy
This Remuneration Policy provides details of the remuneration policy for the
Directors of the Company. All Directors are independent and non-executive,
appointed under the terms of Letters of Appointment, and none have a
service contract. The Company has no employees.
This Remuneration Policy was last approved at the AGM of the Company
held in 2022. The policy will apply until it is next put to shareholders for
renewal of that approval at the Company’s AGM in 2025. Any variation
of the policy prior to the 2025 AGM would be submitted for shareholder
approval.
The non-executive Directors of the Company are entitled to such rates of
annual fees as the Board at its discretion shall from time to time determine.
In addition to the annual fee, under the Company’s Articles of Association,
if any Director is requested to perform extra or special services, they will be
entitled to receive such additional remuneration as the Board may think fit,
and such remuneration may be either in addition to or in substitution for any
other remuneration that they may be entitled to receive.
Total remuneration paid to Directors is subject to an annual aggregate limit of
£300,000, as set out in the Company’s Articles of Association.
No component of any Director’s remuneration is subject to performance
factors.
The rates of fees per Director are reviewed annually. Annual fees are
pro-rated where a change takes place during a financial year.
Table of Directors’ Remuneration Components*
Component Director Rate at 30 September 2024 Purpose of reward Operation
Annual fee All Directors £35,500 For commitment as Directors
of a public company
Determined by the Board at
its discretion (see Note 1)
Additional Fee Chairman of the Board £20,000 For additional responsibility
and time commitment
Determined by the Board at
its discretion (see Note 1)
Additional Fee Chairman of the Audit
Committee
£5,500 For additional responsibility
and time commitment
Determined by the Board at
its discretion (see Note 1)
Additional Fee Senior Independent Director £2,500 For additional responsibility
and time commitment
Determined by the Board at
its discretion (see Note 1)
Additional Fee All Directors Discretionary For performance of extra or
special services in their role as
a Director
Determined by the Board at
its discretion (see Notes 1
and 2)
Expenses All Directors N/A Reimbursement of expenses
paid by them in order to
perform their duties
Reimbursement upon
submission of appropriate
invoices
Notes:
1. The Board only exercises its discretion in setting rates of fees after an analysis of fees paid to Directors of other companies having similar profiles to that of the Company, and consultation with third-
party advisers. Individual Directors do not participate in discussions relating to their own remuneration.
2. Additional fees would only be paid in exceptional circumstances in relation to the performance of extra or special duties. No such fees were paid in the year to 30 September 2024.
* The Company has no employees. Accordingly, there are no differences in policy on the remuneration of Directors and the remuneration of employees. No Director is entitled to receive any remuneration
which is performance-related. As a result, there are no performance conditions in relation to any elements of the Directors’ remuneration in existence to set out in this Remuneration Policy.
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Views of Shareholders
Any views expressed by shareholders on the fees being paid to Directors
would be taken into consideration by the Board when reviewing levels
of remuneration.
Recruitment Remuneration Principles
1.The remuneration package for any new Chairman or non-executive Director
will be the same as the prevailing rates determined on the bases set out
above. The fees and entitlement to reclaim reasonable expenses will be set
out in Directors’ Letters of Appointment.
2. The Board will not pay any introductory fee or incentive to any person
to encourage them to become a Director, but may pay the fees of search
and selection specialists in connection with the appointment
of any new non-executive Director.
3. The Company intends to appoint only non-executive Directors for the
foreseeable future.
4. The maximum aggregate fees currently payable to all Directors is £300,000.
Service Contracts
None of the Directors has a service contract with the Company.
Non-executive Directors are engaged under Letters of Appointment
and are subject to annual re-election by shareholders.
Loss of Office
Directors’ Letters of Appointment expressly prohibit any entitlement
to payment on loss of office.
Scenarios
The Chairman’s and non-executive Directors’ remuneration is fixed at annual
rates, and there are no other scenarios where remuneration will vary unless
there are payments for extra or special services in their role as Directors. It
is accordingly not considered appropriate to provide different remuneration
scenarios for each Director.
Statement of Consideration of Conditions Elsewhere in the Company
As the Company has no employees, a process of consulting with employees
on the setting of the Remuneration Policy is not relevant.
Other Items
None of the Directors has any entitlement to pensions or pension-related
benefits, medical or life insurance schemes, share options, long-term incentive
plans or performance-related payments. No Director is entitled to any other
monetary payment or any assets of the Company except in their capacity
(where applicable) as shareholders of the Company.
Directors’ and Officers’ liability insurance cover is maintained by the Company,
at its expense, on behalf of the Directors.
The Company has also provided indemnities to the Directors in respect
of costs or other liabilities which they may incur in connection with any claims
relating to their performance or the performance of the Company whilst they
are Directors.
The Directors’ interests in contractual arrangements with the Company are
as shown in the Report of the Directors. Except as noted in the Report of
the Directors, no Director was interested in any contracts with the Company
during the period or subsequently.
Review of the Remuneration Policy
The Board has agreed that there would be a formal review before any change
to the Remuneration Policy; and, at least once a year, the Remuneration
Policy will be reviewed to ensure that it remains appropriate.
OR
AVI Global Trust plc / Annual Report 2024
90
This Report is prepared in accordance with Schedule 8 of the Large and
Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013.
A resolution to approve this Report on Remuneration Implementation will be
proposed at the AGM of the Company to be held on 19 December 2024.
Statement from the Chairman
As the Company has no employees and the Board is comprised wholly of non-
executive Directors, the Board has not established a separate Remuneration
Committee. Directors’ remuneration is determined by the Board as a whole, at
its discretion within an aggregate ceiling of £300,000 per annum. Each Director
abstains from voting on their own individual remuneration.
During the year, the Board carried out a review of the level of Directors’ fees
in accordance with the Remuneration Policy and considered the level of non-
executive director fee increases applied by investment trusts with assets of
around £1bn, as well as by the Company’s peer group. This review concluded
that the fees would be increased with effect from 1 April 2024 to £55,000
(previously £53,000) per annum for the Chairman and £35,500 (previously
£34,000) per annum for other Directors. The additional fee payable to the
Chairman of the Audit Committee was increased from £5,000 to £5,500
and the additional fee paid to the Senior Independent Director remained
unchanged at £2,500 per annum.
The Board is satisfied that the changes to the remuneration of the Directors
are compliant with the Directors’ Remuneration Policy approved by
shareholders at the AGM held on 20 December 2022.
There will be no significant change in the way that the Remuneration Policy will
be implemented in the course of the next financial year.
Directors’ Emoluments (audited information)
Directors are only entitled to fees at such rates as are determined by the
Board from time to time and in accordance with the Directors’ Remuneration
Policy as approved by the shareholders.
None of the Directors has any entitlement to pensions or pension-related
benefits, medical or life insurance schemes, share options, long-term incentive
plans or performance-related payments. No Director is entitled to any other
monetary payment or any assets of the Company consequently, there are no
arrangements in place for payments to past Directors.
Accordingly, the Single Total Figure table below does not include columns for
any of these items or their monetary equivalents.
Other Reports / Report on Remuneration Implementation
As the Company does not have a Chief Executive Officer or any executive
Directors, there are no percentage increases to disclose in respect of their
total remuneration, and it has not reported on those aspects of remuneration
that relate to executive Directors.
Directors’ & Officers’ liability insurance is maintained and paid for by the
Company on behalf of the Directors.
In line with market practice, the Company has agreed to indemnify the
Directors in respect of costs, charges, losses, liabilities, damages and
expenses, arising out of any claims or proposed claims made for negligence,
default, breach of duty, breach of trust or otherwise, or relating to any
application under Section 1157 of the Companies Act 2006, in connection
with the performance of their duties as Directors of the Company. The
indemnities would also provide financial support from the Company should
the level of cover provided by the Directors’ & Officers’ liability insurance
maintained by the Company be exhausted.
Voting at AGM
A binding Ordinary Resolution approving the Directors’ Remuneration Policy
was approved by shareholders at the AGM held on 20 December 2022
and a non-binding Ordinary Resolution adopting the Directors’ Report on
Remuneration Implementation for the year ended 30 September 2023 was
approved by shareholders at the AGM held on 20 December 2023. The votes
cast by proxy were as follows:
Remuneration Policy
For - % of votes cast 99.70%
Against - % of votes cast 0.23%
At Chairman’s discretion - % of votes cast 0.07%
Total votes cast 160,532,124
Number of votes withheld 462,486
Report on Remuneration Implementation
For - % of votes cast 99.49%
Against - % of votes cast 0.29%
At Chairman’s discretion - % of votes cast 0.22%
Total votes cast 130,123,120
Number of votes withheld 418,975
The Directors who served during the year received the following emoluments:
Single Total Figure Table (audited information)
Fees paid (£) Taxable benefits (£)* Total (£) Percentage change (%)
1
Name of Director 2024 2023 2024 2023 2024 2023 2023 - 2024 2022 - 2023 2021 - 2022 2020 - 2021
Graham Kitchen 54,250 47,664 566 467 54,816 48,131 13.8 56.3
3
5.2 3.4
Anja Balfour 34,750 33,000 2,953 5,514 37,703 38,514 5.3 8.2 5.2 3.4
Neil Galloway 34,750 33,000 – – 34,750 33,000 5.3 8.2 5.2 –
June Jessop
2
34,750 25,000 3,720 2,404 38,470 27,404 39.0 – – –
Calum Thomson 42,500 40,500 1,124 864 43,624 41,364 4.9 8.0 10.3
4
3.4
Susan Noble
5
– 11,026 – 267 – 11,293 – – 5.6 3.9
201,000 190,190 8,363 9,516 209,363 199,706
* Reimbursement of travel expenses.
1 The average percentage change over the previous financial years. Fees for Directors who were appointed or resigned during the year were calculated on a pro-rata basis, in order to provide
a meaningful figure.
2 Appointed 1 January 2023.
3 Mr Kitchen was appointed as Chairman with effect from 20 December 2022 and since then received the additional fee for this function.
4 Mr Thomson was appointed as Senior Independent Director with effect from 16 December 2021 and since then received the additional fee for this function.
5 Retired 20 December 2022.
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Sums Paid to Third Parties (audited information)
None of the fees referred to in the above table were paid to any third party in
respect of the services provided by any of the Directors.
Other Benefits
Taxable benefits – Article 100 of the Company’s Articles of Association
provides that Directors are entitled to be reimbursed for reasonable expenses
incurred by them in connection with the performance of their duties and
attendance at Board and General Meetings.
Pensions related benefits – Article 101 permits the Company to provide
pension or similar benefits for Directors and employees of the Company.
However, no pension schemes or other similar arrangements have been
established and no Director is entitled to any pension or similar benefits.
Share Price Total Return
The chart below illustrates the total shareholder return for a holding
in the Company’s shares, as compared to the MSCI All Country World ex-US
Index and the MSCI All Country World Index (£ adjusted total return), which
have been adopted by the Board as the measure for both the Company’s
performance and that of the Investment Manager for the year.
Ten years to 30 September 2024
Sep
2014
Sep
2015
Sep
2024
Sep
2023
Sep
2022
Sep
2021
Sep
2020
Sep
2019
Sep
2018
Sep
2017
Sep
2016
50
100
150
200
250
300
350
£
AGT Price Total Return
MSCI ACWI
MSCI ACWI ex-US
Relative Importance of Spend on Pay
The table below shows the proportion of the Company’s income spent
on pay.
2024 2023 Difference
Spend on Directors’ fees* £201,000 £190,000 5.8%
Management fee and other
expenses
£9,645,000 £8,673,000 11.2%
Distribution to shareholders:
(a) dividends £16,763,000 £15,959,000 5.0%
(b) share buybacks £43,967,000 £56,668,000 (22.4%)
* As the Company has no employees the total spend on remuneration comprises only the
Directors’ fees.
Note: the items listed in the table above are as required by the Large and Medium-sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 ss.20, with the
exception of the management fee and other expenses, which has been included because the
Directors believe that it will help shareholders’ understanding of the relative importance of the
spend on pay.
The figures for this measure are the same as those shown in note 3 to the financial statements.
Statement of Directors’ Shareholding and Share Interests
(audited information)
Neither the Company’s Articles of Association nor the Directors’ Letters of
Appointment require a Director to own shares in the Company. The interests
of the Directors and their connected persons in the equity and debt securities
of the Company at 30 September 2024 (or date of retirement if earlier or date
of appointment, if later) are shown in the table below:
Ordinary Shares
2024 2023
Graham Kitchen 109,500
1
109,500
1
Anja Balfour 36,500 36,500
Neil Galloway 40,000 25,000
June Jessop 45,000 28,000
Calum Thomson 44,490 44,490
1 Includes 33,250 shares held by Jane Kitchen as at 30 September 2024
(as at 30 September 2023: 33,250).
There have been no changes to Directors’ interests between 30 September
2024 and the date of this Report.
Annual Statement
On behalf of the Board and in accordance with Part 2 of Schedule 8
of the Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013, I confirm that the above Report on
Remuneration Implementation summarises, as applicable, for the year
to 30 September 2024:
(a) the major decisions on Directors’ remuneration;
(b) any substantial changes relating to Directors’ remuneration made during
the year; and
(c) the context in which the changes occurred and decisions have
been taken.
Graham Kitchen
Chairman
12 November 2024
OR
AVI Global Trust plc / Annual Report 2024
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Other Reports / Independent Auditor’s Report
For the year ended 30 September 2024
Opinion on the financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s affairs as at
30 September 2024 and of its profit for the year then ended;
• have been properly prepared in accordance with UK-adopted
International Accounting Standards; and
• have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of AVI Global Trust plc (the
Company) for the year ended 30 September 2024 which comprise Statement
of Comprehensive Income, Statement of Changes in Equity, Balance Sheet,
Statement of Cash Flows, and Notes to the Financial Statements, including
a summary of material accounting policy information. The financial reporting
framework that has been applied in their preparation is applicable law and UK-
adopted International Accounting Standards.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion. Our audit opinion is consistent with the additional report to the
Audit Committee.
Independence
Following the recommendation of the Audit Committee, we were appointed
by the Board of Directors on 19 January 2023 to audit the financial
statements for the year ended 30 September 2023 and subsequent financial
periods. The period of total uninterrupted engagement including retenders
and reappointments is two years, covering the years ended 30 September
2023 to 30 September 2024. We remain independent of the Company in
accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. The non-audit services
prohibited by that standard were not provided to the Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use
of the going concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the Directors’ assessment of the
Company’s ability to continue to adopt the going concern basis of accounting
included:
• Evaluating the appropriateness of the Directors’ method of assessing the
going concern in light of economic and market conditions by reviewing
the information used by the Directors in completing their assessment;
• Assessing the appropriateness of the Directors’ assumptions and
judgements made by comparing the prior year forecasted costs to the
actual costs incurred to check that the projected costs are reasonable;
• Assessing the projected management fees for the year to check that
it was in line with the current assets under management levels and the
projected market growth forecasts for the following year;
• Assessing the appropriateness of the Directors’ assumptions and
judgements made in their base case and stress tested forecasts
including consideration of the available cash resources relative to forecast
expenditure and commitments; and
• Challenging the Directors’ assumptions and judgements made in their
forecasts including performing an independent analysis of the liquidity of
the portfolio.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or collectively,
may cast significant doubt on the Company’s ability to continue as a going
concern for a period of at least twelve months from when the financial
statements are authorised for issue.
In relation to the Company’s reporting on how it has applied the UK Corporate
Governance Code, we have nothing material to add or draw attention to in
relation to the Directors’ statement in the financial statements about whether
the Directors considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Overview
Key audit matters
2024 2023
Valuation and ownership of
quoted investments
Materiality Company financial statements
as a whole
£11.1m (2023: £9.8m) based on
1% (2023: 1%) of Net assets
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and
its environment, including the Company’s system of internal control, and
assessing the risks of material misstatement in the financial statements. We
also addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional judgement,
were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
AVI Global Trust plc / Annual Report 2024
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Key audit matter
How the scope of our audit addressed the
key audit matter
Valuation and ownership of quoted
investments
Refer to page 85 (Audit Committee
Report), page 68 (Accounting policy)
and pages 78 to 82 (Financial
disclosures)
The investment portfolio at the year-end comprised of quoted
equity investments amounting to £1,204m.
We considered the valuation and ownership of quoted investments
to be the most significant audit area as the quoted investments
also represent the most significant balance in the Financial
Statements and underpin a significant portion of the principal
activity of the entity.
Whilst we do not consider their valuation to be subject to a
significant degree of estimation or judgement, there is a risk
that the prices used for the listed equity investments held by the
Company are not reflective of the fair value of those investments as
at the year-end.
There is also a risk that errors made in the recording of investment
holdings result in the incorrect reflection of investments owned by
the Company.
For these reasons and the materiality of the balance in relation to
the financial statements as a whole, we considered this to be a key
audit matter.
We responded to this matter by testing the
valuation and ownership of the whole portfolio
of quoted investments. We performed the
following procedures:
• Confirmed the year-end bid price was used
by agreeing to externally quoted prices;
• Assessed if there were contra indicators,
such as liquidity considerations, to suggest
bid price is not the most appropriate
indication of fair value by considering the
realisation period for individual holdings;
• Recalculated the valuation by multiplying
the number of shares held per the
statement obtained from the custodian by
the valuation per share;
• Obtained direct confirmation of the number
of shares held per equity investment from
the custodian regarding all investments held
at the balance sheet date; and
• We also considered the completeness,
accuracy and clarity of investment-related
disclosures against the requirements of
relevant accounting standard.
Key observations:
Based on our procedures performed we did
not identify any matters to suggest the valuation
or ownership of the quoted equity investments
was not appropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence
the economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
Company financial statements 2024 2023
Materiality £11.1m £9.8m
Basis for determining
materiality
1% of Net assets
Rationale for the benchmark
applied
As an investment trust, the net asset
value is the key measure of performance
for users of the financial statements.
Performance materiality £8.3m £7.3m
Basis for determining
performance materiality
75% of materiality
Rationale for the percentage
applied for performance
materiality
The level of performance materiality
applied was set after having considered
a number of factors including the
expected total value of known and
likely misstatements and the level of
transactions in the year.
Reporting threshold
We agreed with the Audit Committee that we would report to them all
individual audit differences in excess of £555k (2023: £490k). We also agreed
to report differences below this threshold that, in our view, warranted reporting
on qualitative grounds.
OR
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Other Reports / Independent Auditor’s Report continued
For the year ended 30 September 2024
Other information
The Directors are responsible for the other information. The other information
comprises the information included in the Annual Report other than the
financial statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon. Our responsibility is to read the
other information and, in doing so, consider whether the other information
is materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation
to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Company’s compliance with the
provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that
each of the following elements of the Corporate Governance Statement is
materially consistent with the financial statements or our knowledge obtained
during the audit.
Going concern and
longer-term viability
• The Directors’ statement with regards
to the appropriateness of adopting the
going concern basis of accounting and
any material uncertainties identified set
out on page 61; and
• The Directors’ explanation as to
their assessment of the Company’s
prospects, the period this assessment
covers and why the period is
appropriate set out on page 61.
Other Code provisions • Directors’ statement on fair, balanced
and understandable set out on page
62;
• Board’s confirmation that it has
carried out a robust assessment of the
emerging and principal risks set out on
page 17;
• The section of the Annual Report that
describes the review of effectiveness of
risk management and internal control
systems set out on page 86; and
• The section describing the work of the
Audit Committee set out on page 85.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during
the course of the audit, we are required by the Companies Act 2006 and ISAs
(UK) to report on certain opinions and matters as described below.
Strategic Report and
Directors’ Report
In our opinion, based on the work undertaken in
the course of the audit:
• the information given in the Strategic Report
and the Directors’ Report for the financial
year for which the financial statements are
prepared is consistent with the financial
statements; and
• the Strategic Report and the Directors’
Report have been prepared in accordance
with applicable legal requirements.
In the light of the knowledge and understanding
of the Company and its environment obtained
in the course of the audit, we have not identified
material misstatements in the Strategic Report
or the Directors’ Report.
Directors’
remuneration
In our opinion, the part of the Directors’
Remuneration Report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
Matters on which we
are required to report
by exception
We have nothing to report in respect of the
following matters in relation to which the
Companies Act 2006 requires us to report to
you if, in our opinion:
• adequate accounting records have not been
kept, or returns adequate for our audit have
not been received from branches not visited
by us; or
• the financial statements and the part of
the Directors’ Remuneration Report to
be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of Directors’
remuneration specified by law are not
made; or
• we have not received all the information and
explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ Responsibilities, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.
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Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
• Our understanding of the Company and the industry in which it operates;
• Discussion with management and those charged with governance; and
• Obtaining an understanding of the Company’s policies and procedures
regarding compliance with laws and regulations,
We considered the significant laws and regulations to be Companies Act
2006, the FCA listing and DTR rules, the principles of the AIC Code of
Corporate Governance, industry practice represented by the AIC SORP, the
applicable accounting framework, and qualification as an Investment Trust
under UK tax legislation as any non-compliance of this would lead to the
Company losing various deductions and exemptions from corporation tax.
Our procedures in respect of the above included:
• Agreement of the financial statement disclosures to underlying supporting
documentation;
• Enquiries of management and those charged with governance relating to
the existence of any non-compliance with laws and regulations;
• Reviewing minutes of meeting of those charged with governance
throughout the period for instances of non-compliance with laws and
regulations; and
• Reviewing the calculation in relation to Investment Trust compliance to
check that the Company was meeting its requirements to retain their
Investment Trust Status.
Fraud
We assessed the susceptibility of the financial statement to material
misstatement including fraud.
Our risk assessment procedures included:
• Enquiry with the Investment Manager, the Administrator and those
charged with governance regarding any known or suspected instances
of fraud;
• Review of minutes of meeting of those charged with governance for any
known or suspected instances of fraud; and
• Discussion amongst the engagement team as to how and where fraud
could occur in the financial statements.
Based on our risk assessment, we considered the areas most susceptible to
be management override of controls.
Our procedures in respect of the above included:
• In addressing the risk of management override of control, we:
– Performed a review of estimates and judgements applied by
management in the financial statements to assess their appropriateness
and the existence of any systematic bias;
– Considered the opportunity and incentive to manipulate accounting
entries and target tested relevant adjustments made in the period end
financial reporting process;
– Reviewed for significant transactions outside the normal course of
business; and
– Performed a review of unadjusted audit differences, if any, for indications
of bias or deliberate misstatement.
We also communicated relevant identified laws and regulations and potential
fraud risks to all engagement team members who were all deemed to have
appropriate competence and capabilities and remained alert to any indications
of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely we are to
become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report, or for the
opinions we have formed.
Chris Meyrick (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Edinburgh, UK
12 November 2024
OR
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Shareholder Information / Notice of Annual General Meeting
This Document is Important and Requires your Immediate
Attention
If you are in any doubt about the action to take, you should consult your
stockbroker, bank manager, solicitor, accountant or other independent
professional adviser authorised under the Financial Services and Markets Act
2000 (as amended) without delay. If you have sold or transferred all of your
Ordinary Shares in the capital of AVI Global Trust plc (the Company) and, as a
result, no longer hold any Ordinary Shares in the Company, please send this
document and the accompanying Form of Proxy as soon as possible to the
purchaser or transferee or to the person through whom the sale or transfer
was effected for transmission to the purchaser or transferee.
Notice is hereby given that the One Hundred and Thirty Fifth Annual General
Meeting of AVI Global Trust plc will be held at 11 Cavendish Square, London
W1G 0AN at 11.00am on Thursday, 19 December 2024 to consider the
following business.
The resolutions numbered 1 to 12 are proposed as ordinary resolutions, which
must each receive more than 50% of the votes cast in order to be passed.
Resolutions numbered 13 to 15 are proposed as special resolutions, which
must each receive at least 75% of the votes cast in order to be passed.
1. To receive and adopt the financial statements of the Company
for the financial year ended 30 September 2024 together with the
Strategic Report and the Reports of the Directors and Auditor.
2. To approve a final ordinary dividend of 2.55p per Ordinary Share.
3. To re-elect Anja Balfour as a Director of the Company.
4. To re-elect Neil Galloway as a Director of the Company.
5. To re-elect June Jessop as a Director of the Company.
6. To re-elect Graham Kitchen as a Director of the Company.
7. To re-elect Calum Thomson as a Director of the Company.
8. To re-appoint BDO LLP as the Company’s Auditor.
9. To authorise the Audit Committee to determine the Auditor’s
remuneration.
10. To approve the Directors’ Report on Remuneration Implementation
for the year ended 30 September 2024.
11. That the proposed new investment policy, as detailed in the Annual
Report and Financial Statements and a copy of which is initialled by the
Chairman for the purpose of identification and production at the annual
general meeting, be and is hereby approved and adopted with effect from
19 December 2024 as the Company’s investment policy in place of its
existing investment policy.
12. THAT the Directors of the Company be and are hereby generally and
unconditionally authorised in accordance with Section 551 of the
Companies Act 2006 (the Act) to exercise all of the powers of the
Company to allot Ordinary Shares in the capital of the Company (Ordinary
Shares) and to grant rights to subscribe for or to convert any security
into Ordinary Shares in the Company up to a maximum of 146,345,557
Ordinary Shares provided that such authority shall expire on the date
which is 15 months after the date of the passing of this resolution or,
if earlier, at the conclusion of the next Annual General Meeting of the
Company, save that the Company may before such expiry make offers
or agreements which would or might require Ordinary Shares to be
allotted, or rights to be granted, after such expiry and the Directors may
allot Ordinary Shares, or grant such rights, in pursuance of such offers
or agreements as if the authority conferred hereby had not expired; and
all unexercised authorities previously granted to the Directors to allot
Ordinary Shares be and are hereby revoked.
13. THAT, subject to the passing of resolution 12 above, the Directors of
the Company be and are hereby generally authorised and empowered
pursuant to Sections 570 and 573 of the Companies Act 2006 (the Act)
to allot equity securities (as defined in Section 560 of the Act) (including
the grant of rights to subscribe for, or to convert any securities into,
Ordinary Shares in the capital of the Company (Ordinary Shares) and the
sale of Ordinary Shares held by the Company in treasury) wholly for cash
pursuant to any existing authority given in accordance with Section 551 of
the Act, as if Section 561 of the Act did not apply to any such allotment,
provided that this power shall be limited to the allotment of equity
securities:
(a) in connection with an offer of such securities by way of rights
to holders of Ordinary Shares on the register of members of the
Company on a fixed record date in proportion (as nearly as may
be practicable) to their respective holdings of Ordinary Shares but
subject to such exclusions or other arrangements as the Directors
may deem necessary or expedient in relation to treasury shares,
fractional entitlements or any legal or practical problems arising under
the laws of, or the requirements of, any territory or any regulatory or
governmental body or authority or stock exchange; and
(b) otherwise than pursuant to sub-paragraph (a) above, equating to a
maximum of 21,951,833 Ordinary Shares being approximately 5%
of the equity share capital in issue as at 12 November 2024, and the
authority hereby granted shall expire on the date which is
15 months after the date of the passing of this resolution or, if earlier,
the date of the next Annual General Meeting of the Company,
save that the Company may before such expiry make an offer or
agreement which would or might require equity securities to be
allotted after such expiry and the Directors may allot equity securities
and sell Treasury Shares in pursuance of such an offer or agreement
as if the power conferred hereby had not expired.
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14. THAT the Company be and is hereby generally and unconditionally
authorised for the purposes of Section 701 of the Companies Act 2006
(the Act) to make one or more market purchases (within the meaning
of Section 693(4) of the Act) of Ordinary Shares in the capital of the
Company (Ordinary Shares) either for cancellation or to hold as Treasury
Shares (within the meaning of Section 724 of the Act) provided that:
(a) the maximum aggregate number of Ordinary Shares hereby
authorised to be purchased is 65,811,596;
(b) the Directors be authorised to determine at their discretion that any
Ordinary Shares purchased be cancelled or held by the Company as
Treasury Shares;
(c) the minimum price which may be paid for a share shall be the
nominal value of that share (exclusive of associated expenses);
(d) the maximum price which may be paid for an Ordinary Share shall
be the higher of: (i) 5% above the average of the middle market
quotations of the Ordinary Shares (as derived from the Daily Official
List of the London Stock Exchange) for the five business days
immediately preceding the date on which the relevant share is
contracted to be purchased (exclusive of associated expenses);
and (ii) the higher of the price of the last independent trade and
the highest current independent bid for an Ordinary Share of the
Company on the London Stock Exchange; and
(e) unless previously varied, revoked or renewed, the authority hereby
conferred shall expire on the date which is 15 months after the date
of the passing of this resolution or, if earlier, the date of the next
Annual General Meeting of the Company save that the Company
may prior to such expiry enter into a contract or arrangement to
purchase Ordinary Shares under this authority which will or may
be completed or executed wholly or partly after the expiry of this
authority and may make a purchase of Ordinary Shares pursuant to
any such contract or arrangement as if the authority hereby conferred
had not expired.
15. THAT a general meeting other than an Annual General Meeting may
be called on not less than 14 clear days’ notice.
By Order of the Board
Link Company Matters Limited
Corporate Secretary
Registered Office:
Central Square
29 Wellington Street
Leeds
LS1 4DL
12 November 2024
AVI Global Trust plc / Annual Report 2024
98
1. Attending the AGM in Person
If you wish to attend the AGM in person, you should sign the admission card
enclosed with this document and hand it to the Company’s Registrars on
arrival at the AGM.
2. Appointment of Proxy
Members are entitled to appoint a proxy to exercise all or any of their
rights to attend and to speak and vote on their behalf at the meeting.
A shareholder may appoint more than one proxy in relation to the AGM
provided that each proxy is appointed to exercise the rights attached
to a different share or shares held by that shareholder. A proxy need not
be a shareholder of the Company.
3. Appointment of Proxy
A proxy form which may be used to make such appointment and give proxy
instructions accompanies this notice. Where two or more valid appointments
of proxy are received in respect of the same share in relation to the same
meeting, the one which is last sent shall be treated as replacing and revoking
the other or others. If the Company is unable to determine which is last sent,
the one which is last received shall be so treated. If the Company is unable
to determine either which is last sent or which is last received, none of such
appointments shall be treated as valid in respect of that share. The termination
of the authority of a person to act as proxy must be notified to the Company
in writing.
To be valid, any proxy form or other instrument appointing a proxy must
be received by post or (during normal business hours only) by hand at the
Company’s Registrars, Equiniti Limited, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA by 11.00am on Tuesday, 17 December
2024. In determining the time for delivery of proxies pursuant to the Articles
of Association, no account has been taken of any part of a day that is not a
working day. Alternatively, you may send any document or information relating
to proxies to the electronic address indicated on the form of proxy.
The return of a completed proxy form, other such instrument or any
CREST Proxy Instruction (as described in paragraph 8 below) will not prevent
a shareholder attending the AGM and voting in person if he/she wishes to
do so.
If you require additional proxy forms, please contact the Registrar’s helpline on
+44 (0)371 384 2490. Lines are open 8.30am to 5.30pm Monday to Friday
(excluding public holidays in England and Wales).
Alternatively, you may, if you wish, register the appointment of a proxy
electronically by going to Equiniti’s Shareview website, www.shareview.co.uk,
and logging in to your Shareview Portfolio. Once you have logged in, simply
click ‘View’ on the ‘My Investments’ page and then click on the link to vote
and follow the on-screen instructions. If you have not yet registered for a
Shareview Portfolio, go to www.shareview.co.uk and enter the requested
information. It is important that you register for a Shareview Portfolio with
enough time to complete the registration and authentication processes.
To be valid, the appointment of a proxy electronically must be made by
11.00am on Tuesday, 17 December 2024. In determining the time for
electronic appointment of proxies pursuant to the Articles of Association,
no account has been taken of any part of a day that is not a working day.
4. Appointment of Proxy by Joint Shareholders
In the case of joint shareholders, where more than one of the joint
shareholders purports to appoint one or more proxies, only the purported
appointment submitted by the most senior holder will be accepted. Seniority
is determined by the order in which the names of the joint shareholders
appear in the Company’s register of members in respect of the joint
shareholding, with the first named being the most senior.
5. Nominated Persons
Any person to whom this notice is sent who is a person nominated
under Section 146 of the Companies Act 2006 to enjoy information rights
(a Nominated Person) may, under an agreement between him/her and the
shareholder by whom he/she was nominated, have a right to be appointed
(or to have someone else appointed) as a proxy for the AGM. If a Nominated
Person has no such proxy appointment right or does not wish to exercise it,
he/she may, under any such agreement, have a right to give instructions to
the shareholder as to the exercise of voting rights.
The statement of the rights of shareholders in relation to the appointment of
proxies does not apply to Nominated Persons as such rights can only be
exercised by registered shareholders of the Company.
6. Entitlement to Attend and Vote
To be entitled to attend and vote at the AGM (and for the purpose of the
determination by the Company of the votes they may cast), shareholders
must be registered in the Register of Members of the Company at 6.30pm
on Tuesday, 17 December 2024 (or, in the event of any adjournment, 6.30pm
on the date which is two business days before the time of the adjourned
meeting). Changes to the Register of Members after the relevant deadline shall
be disregarded in determining the rights of any person to attend and vote at
the meeting.
7. Issued Share Capital and Total Voting Rights
As at 12 November 2024, the Company’s issued share capital consisted
of 484,637,627 Ordinary Shares, carrying one vote each, of which
45,600,956 were in treasury. Therefore, the voting rights in the Company as at
12 November 2024 equate to a total of 439,036,671 votes. Treasury shares
represented 9.41% of the issued share capital as at 12 November 2024.
8. CREST Members
CREST members who wish to appoint a proxy or proxies through the CREST
electronic proxy appointment service may do so by using the procedures
described in the CREST Manual. CREST Personal Members or other CREST
sponsored members, and those CREST members who have appointed a
service provider(s), should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service
to be valid, the appropriate CREST message (a CREST Proxy Instruction)
must be properly authenticated in accordance with Euroclear UK & Ireland
Limited’s specifications, and must contain the information required for such
instruction, as described in the CREST Manual (available via
www.euroclear.com). The message, regardless of whether it constitutes the
appointment of a proxy or is an amendment to the instruction given to
a previously appointed proxy must, in order to be valid, be transmitted so
as to be received by the issuer’s agent (ID RA19) by 11.00am on Tuesday,
17 December 2024. For this purpose, the time of receipt will be taken to be
the time (as determined by the time stamp applied to the message by the
CREST Application Host) from which the issuer’s agent is able to retrieve the
message by enquiry to CREST in the manner prescribed by CREST. After this
time any change of instructions to proxies appointed through CREST should
be communicated to the appointee through other means.
Shareholder Information / Notice of Annual General Meeting continued
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CREST members and, where applicable, their CREST sponsors, or voting
service providers should note that Euroclear UK & Ireland Limited does not
make available special procedures in CREST for any particular message.
Normal system timings and limitations will, therefore, apply in relation to
the input of CREST Proxy Instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST member is a CREST personal
member, or sponsored member, or has appointed a voting service provider,
to procure that his CREST sponsor or voting service provider(s) take(s))
such action as shall be necessary to ensure that a message is transmitted
by means of the CREST system by any particular time. In this connection,
CREST members and, where applicable, their CREST sponsors or voting
system providers are referred, in particular, to those sections of the CREST
Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
You may not use any electronic address provided either in this Notice
of Meeting or any related documents (including the Form of Proxy) to
communicate with the Company for any purposes other than those expressly
stated.
9. Proxymity
If you are an institutional investor you may be able to appoint a proxy
electronically via the Proxymity platform, a process which has been agreed by
the Company and approved by the Registrar. For further information regarding
Proxymity, please go to www.proxymity.io. Your proxy must be lodged by
11.00am on Tuesday, 17 December 2024 in order to be considered valid.
Before you can appoint a proxy via this process you will need to have agreed
to Proxymity’s associated terms and conditions. It is important that you
read these carefully, as you will be bound by them and they will govern the
electronic appointment of your proxy.
10. Corporate Members
Any corporation which is a member can appoint one or more corporate
representatives who may exercise on its behalf all of its powers as a member
provided that they do not do so in relation to the same shares. To be able to
attend and vote at the meeting, corporate representatives will be required
to produce, prior to their entry to the meeting, evidence satisfactory to the
Company of their appointment.
11. Rights to Publish Statements under Section 527 of the Companies Act
2006
Under Section 527 of the Companies Act 2006, members meeting the
threshold requirements set out in that section have the right to require the
Company to publish on a website a statement setting out any matter relating
to:
(i) the audit of the Company’s financial statements (including the Auditor’s
Report and the conduct of the audit) that are to be laid before the AGM; or
(ii) any circumstance connected with an Auditor of the Company ceasing
to hold office since the previous meeting at which annual financial
statements and reports were laid in accordance with Section 437
of the Companies Act 2006.
The Company may not require the shareholders requesting any such website
publication to pay its expenses in complying with Sections 527 or 528 of the
Companies Act 2006. Where the Company is required to place a statement
on a website under Section 527 of the Companies Act 2006, it must forward
the statement to the Company’s Auditor not later than the time when it makes
the statement available on the website. The business which may be dealt
with at the AGM includes any statement that the Company has been required
under Section 527 of the Companies Act 2006 to publish on a website.
12. Questions and Answers
Any member attending the meeting has the right to ask questions.
The Company must cause to be answered any such question relating
to the business being dealt with at the meeting but no such answer need
be given if (a) to do so would interfere unduly with the preparation for
the meeting or involve the disclosure of confidential information, (b) the answer
has already been given on a website in the form of an answer to a question,
or (c) it is undesirable in the interests of the Company or the good order of the
meeting that the question be answered.
However, where appropriate, the Chairman may offer to provide an answer to
a question after the conclusion of the AGM.
If you are unable to attend the AGM in person and have any questions about
the Annual Report, the investment portfolio or any other matter relevant to the
Company, please write to us either via email at agm@aviglobal.co.uk or by
post to AVI Global Trust PLC, Link Company Matters Limited, Central Square,
29 Wellington Street, Leeds, LS1 4DL.
13. Information on the Company’s Website
In accordance with Section 311A of the Companies Act 2006, the contents of
this notice of meeting and, if applicable, any members’ statements, members’
resolutions or members’ matters of business received by the Company after
the date of this notice will be available on the Company’s website
www.aviglobal.co.uk.
14. Display Documents
None of the Directors has a contract of service with the Company. Copies
of the Letters of Appointment of the Directors will be available for inspection
at the registered office of the Company during usual business hours on any
weekday (except weekends and public holidays) until the date of the meeting
and at the place of the meeting for a period of 15 minutes prior to and during
the meeting.
15. Electronic Address
Any electronic address provided either in this notice or in any related
documents (including the Form of Proxy) may not be used to communicate
with the Company for any purposes other than those expressly stated.
AVI Global Trust plc / Annual Report 2024
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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.com. 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 0845 850 0181 or via the website:
www.aviglobal.co.uk.
Provisional Financial Calendar 2024/2025
• December 2024 Annual General Meeting
• January 2025 Final dividend paid on Ordinary Shares
• May 2025 Announcement of half year results
• June 2025 Interim dividend paid on Ordinary Shares
• November 2025 Announcement of annual results
• November 2025 Posting of Annual Report
• December 2025 Annual General Meeting
Shareholder Information / Shareholder Information
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Shareholder Information / Glossary
ADS
ADS, or American depositary shares, are shares in non-US companies, held by US banks, that are traded on major US markets. These can be bought and
traded freely by investors and help give foreign companies access to a broader investor base.
AIFM
The AIFM, or Alternative Investment Fund Manager, is Asset Value Investors, which manages the portfolio on behalf of AGT shareholders. The current approach
to investment used by Asset Value Investors was adopted in June 1985.
NAV total return since inception of strategy in June 1985 (annualised)
30 September
2024
30 September
2023
Closing NAV per share (p) 253.81 226.77 a
Dividends paid out (p) 49.20 45.50 b
Benefits from reinvesting dividends (p) 136.51 117.34 c
Adjusted NAV per share (p) 439.52 389.61 d = a + b + c
Opening NAV per share (p)* – June 1985 5.94 5.94 e
Annualised NAV total return (%) 11.6% 11.5% ((d/e) ^ (1/39.25)) - 1
Algorithmic trading
A trading strategy in which trading orders are executed using automated pre-programmed instructions accounting for variables such as time, price, and volume.
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. In selecting these Alternative Performance Measures, the Directors considered the
key objectives and expectations of typical investors in an investment trust such as the Company.
AUM
AUM, or assets under management, is the total market value of the investments managed by a firm or fund, on behalf of its investors.
Bps/Basis points
One basis point is 0.01% (one hundredth of one per cent).
CAPEX
Capex, or capital expenditure, is the money a corporate entity spends to buy, maintain, or improve its fixed asset base – buildings, land, factories, equipment, etc.
Carry trade
A carry trade is a strategy that involves borrowing funds at a lower interest rate and investing in assets which provides a higher rate of return.
Comparator Benchmark
As described in the Chairman’s Statement the Company’s Comparator Benchmark is the MSCI All Country World Total Return Index, but performance is
also reported compared with the previous comparator benchmark, 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 on the day that the relevant securities
first trade ex-dividend. 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.
Currency
GBP EUR USD SEK JPY NOK SGD INR CAD
Pounds
Sterling
Euro US Dollar Swedish
Krona
Japanese
Yen
Norwegian
Krone
Singapore
Dollar
Indian
Rupee
Canadian
Dollar
Discount/Premium (APM)
If the share price is lower than the NAV per share, it is said to be trading at a discount. The size of the Company’s discount is calculated by subtracting the share
price of 231.0p (2023: 202.0p) from the NAV per share (with debt at fair value) of 253.8p (2023: 226.8p) and is usually expressed as a percentage of the NAV
per share, 9.0% (2023: 10.9%). If the share price is higher than the NAV per share, this situation is called a premium.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)
A proxy for the cash flow generated by a business – it is most commonly used to assess businesses that do not (yet) generate operating or shareholder profits.
EV/EBITDA
The ratio of enterprise value (EV) to EBITDA. EV is a measure of a company’s total value, often used as a more comprehensive alternative to market
capitalisation. It includes the market value of a company’s equity, its debt and any cash or cash equivalents on its balance sheet.
AVI Global Trust plc / Annual Report 2024
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Gearing (APM)
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.
Using debt at par value, the gross gearing of 14.6% (2023: 13.7%) represents borrowings of £162,371,000 (2023: £141,549,000) expressed as a percentage
of shareholders’ funds of £1,112,725,000 (2023: £1,031,018,000). Using debt at fair value, gross gearing is 13.6% (2023: 11.9%).
Net gearing, which accounts for cash balances and uses debt at par value, is 8.0% (2023: 11.0%). Using debt at fair value, net gearing is 7.1% (2023: 7.4%).
The gross and net gearing reconciliation calculations are provided below:
Gross Gearing (Debt at Par)
2024
£’000
2023
£’000
Debt (162,371) (141,549) a
NAV 1,112,725 1,031,018 b
Gross Gearing 14.6% 13.7% =a/b
Net Gearing (Debt at Par)
2024
£’000
2023
£’000
Current Assets (inc. Cash) 74,624 52,079 a
Current Liabilities (1,395) (3,398) b
Debt (£'000) (162,371) (141,549) c
Net Debt (£'000) (89,142) (92,868) d=a+b+c
NAV (£'000) 1,112,725 1,031,018 e
Net Gearing 8.0% 9.0% =d/e
Gross Gearing (Debt at fair value)
2024
£’000
2023
£’000
Debt (153,096) (124,487) a
NAV 1,122,000 1,048,080 b
Gross Gearing 13.6% 11.9% =a/b
Net Gearing (Debt at fair value)
2024
£’000
2023
£’000
Current Assets (inc. Cash) (£'000) 74,624 52,079 a
Current Liabilities (£'000) (1,395) (3,398) b
Debt at Fair Value (£'000) (153,096) (124,487) c
Net Debt (£'000) (79,867) (75,806) d=a+b+c
NAV at Fair Value (£'000) 1,122,000 1,048,080 e
Net Gearing 7.1% 7.2% =d/e
The current values of the Loan Notes and revolving credit facility consist of the following:
30 September 2024 30 September 2023
2036
GBP
loan
£’000
2036
EUR
loan
£’000
2037
EUR
loan
£’000
2032
JPY
loan
£’000
2033
JPY
loan
£’000
2039
JPY
loan
£’000
Total
£’000
2036
GBP
loan
£’000
2036
EUR
loan
£’000
2037
EUR
loan
£’000
2032
JPY
loan
£’000
2033
JPY
loan
£’000
Total
£’000
Value of issue 30,000 22,962 17,526 49,516 24,802 26,828 171,634 30,000 22,962 17,526 49,516 24,802 144,806
Unamortised issue costs (73) (56) (90) (143) (43) (41) (446) (80) (61) (97) (162) (48) (448)
Exchange movement – 1,996 (887) (7,815) (1,346) (765) (8,817) – 3,059 (179) (5,593) (96) (2,809)
Amortised book cost 29,927 24,902 16,549 41,558 23,413 26,022 162,371 29,920 25,960 17,250 43,761 24,658 141,549
Fair value 26,103 23,119 14,671 40,203 22,623 26,377 153,096 25,051 22,158 13,936 40,584 22,757 124,487
Redemption value 28,392 27,536 17,885 44,087 24,870 29,349 172,119 28,869 26,960 17,292 39,577 26,291 138,989
Shareholder Information / Glossary continued
AVI Global Trust plc / Annual Report 2024
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Gearing (APM) continued
The fair values of the Loan Notes are calculated using net present values of future cash flows and the yields, taking account of exchange rates. The redemption
value includes the penalty payable on early redemption.
The impact of holding the Loan Notes at fair value would be to increase the Company’s net assets with debt at fair value by £9,275,000 (2023: increase by
£17,062,000). The fair value is lower than the amortised cost (face value less capitalised costs) due to increased market interest rates.
The fair value of the Company’s Loan Notes at the year-end was £153,096,000 (2023: £124,487,000). The interest rates of the non-current liabilities (Loan
Notes) are fixed. A 1% increase in market interest rates would be expected to decrease the fair value of the Loan Notes, decreasing the liability and therefore
increasing net assets by approximately £13,300,000 (2023: £10,800,000), all other factors being equal. A 1% decrease would increase the fair value of the Loan
Notes, increasing the liability and therefore decreasing net assets by approximately £18,900,000 (2023: £12,000,000).
Internal Rate of Return (IRR)
The IRR is a measure of the total return on an investment taking account of the amount and timing of all amounts invested and amounts realised. The IRR is
expressed as an annualised percentage. The use of IRR enables different investments with differing cash flow profiles to be compared on a like for like basis.
M&A
Mergers and acquisitions
Market cap/capitalisation
The total market value of a company’s shares – that is the share price multiplied by the number of shares in issue.
Multiple/compression/expansion
The “multiple” is a comparison between the market capitalisation of a company and a fundamental quantity, typically earnings. If the multiple expands, the ratio
of market capitalisation to earnings increases, whereas if it contracts the ratio decreases
NAV Total Return (APM)
NAV total return is calculated by assuming that dividends paid out are re-invested into the NAV on the ex-dividend date. This is accounted for in the “Effect of
reinvesting dividends” line. The NAV used here includes debt marked to fair value and is inclusive of accumulated income.
Where an “annualised” figure is quoted, this means that the performance figure quoted is not a standard one-year figure, and therefore has been converted into
an annual return figure in order to ease comparability. For example, if AGT’s NAV increased by +100% over a ten-year period, this would become an annualised
NAV return of 7.2%.
NAV total return over 1 year Page
30 September
2024
30 September
2023
Closing NAV per share (p) 253.81 226.77 a
Dividends paid out (p) 73 3.70 3.30 b
Effect of reinvesting dividends (p) 0.43 0.19 c
Adjusted NAV per share (p) 257.94 230.26 d = a+b+c
Opening NAV per share (p)* 226.77 199.76 e
NAV total return (%) 13.7% 15.3% + (d/e)-1
NAV total return over 10 years (annualised)
Closing NAV per share (p) 253.81 226.77 a
Dividends paid out 30.04 28.94 b
Effect of reinvesting dividends (p) 20.56 18.34 c
Adjusted NAV per share (p) 304.41 274.05 d = a + b + c
Opening NAV per share (p)* 114.70 109.92 e
Annualised NAV total return (%) 10.2% 9.6% ((d/e) ^ (1/10)) - 1
Net Assets
Net assets are the total value of all the Company’s assets less all liabilities. Net assets is equivalent to shareholders’ funds.
Net Asset Value (NAV) (APM)
The NAV is shareholders’ funds expressed as an amount per individual share. Shareholders’ funds are the total value of all the Company’s assets, at current
market value, having deducted all liabilities including debt at amortised cost revalued for exchange rate movements. The total NAV per share is calculated by
dividing shareholders’ funds of £1,112,725,000 (2023: £1,031,018,000) by the number of Ordinary Shares in issue excluding Treasury Shares of 442,061,0671
(2023: 462,173,682) at the year-end.
AVI Global Trust plc / Annual Report 2024
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Net Asset Value (debt at fair value) (APM)
The adjusted NAV per share (debt at fair value) incorporates the debt at fair value instead of at amortised cost, increasing the NAV by £9,275,000 (2023:
£17,062,000 increase). This is calculated by the original NAV of £1,112,725,000 (2023: 1,031,018,000) less the debt at amortised cost £162,371,000 (2023:
£141,549,000), adding back the debt at fair value £153,096,000 (2023: £124,487,000). The adjusted NAV (debt at fair value) is £1,122,000,000 (2023:
£1,048,080,000) divided by the number of Ordinary Shares in issue excluding Treasury Shares of 442,061,671 (2023: 462,173,682) at the year-end provides
the adjusted NAV per share (debt at fair value) provides the adjusted NAV per share (debt at fair value) of 253.81p (2023: 226.77p).
Ongoing Charges Ratio (APM)
The Company’s Ongoing Charges Ratio (formerly disclosed as the Expense Ratio) represents the annualised expenses (excluding finance costs and certain
non-recurring items) of £9,583,000 (2023: £8,655,000) (being investment management fees of £7,611,000 (2023: £6,891,000) and other expenses of
£2,034,000 (2023: £1,782,000) less non-recurring expenses of £62,000 (2023: £18,000)) expressed as a percentage of the average daily net assets of
£1,100,968,000 (2023: £1,010,898,000) during the year as disclosed to the London Stock Exchange. Not all listed investment companies are now disclosing
their gross costs and so it is not possible to produce a comprehensive summary of the running costs of closed end funds in AGT’s portfolio of investments.
% of investee Company
AGT’s economic exposure to each investee company, as estimated by AVI.
Return on Investment (ROI)
The ROI is the total profits earned to date on an investment divided by the total cost of the investment.
Revenue and Capital Earnings per Share (APM)
Revenue earnings per share is calculated by dividing revenue profit after tax for the year of £18,942,000 (2023: £20,041,000) by the weighted average of
Ordinary Shares (excluding shares in issue) during the year 450,758,728 (2023: 478,739,622). Capital earnings per share is calculated by dividing capital profit
for the year of £123,715,000 (2023: profit of £114,096,000) by the weighted average of Ordinary Shares (excluding shares in issue) during the year 450,758,728
(2023: 478,739,622).
Shares Bought Back
The Company may repurchase its own shares, reducing the number of freely traded shares ranking for dividends and enhancing returns and earnings per
Ordinary Share to the remaining shareholders. When the Company repurchases its shares, it does so at a total cost below the prevailing NAV per share.
The estimated percentage added to the NAV per share from buybacks of 0.4% (2023: 0.6%) is derived from the repurchase of shares in the market at a
discount to the prevailing NAV at the point of repurchase. The shares were bought back at a weighted average discount of 9.6% (2023: 10.1%).
30 September
2024
30 September
2023
Weighted average discount of buybacks 9.6% 10.1% a
Percentage of shares bought back 4.4% 6.0% b
NAV accretion from buyback 0.4% 0.6% (a
*
b) / (1 – b)
Share Price Total Return (APM)
Share price total return is calculated by assuming that dividends paid out are re-invested into new shares on the ex-dividend date. This is accounted for in the
“Effect of reinvesting dividends” line.
Share price total return over 1 year Page
30 September
2024
30 September
2023
Closing price per share (p) 231.00 202.00 a
Dividends paid out (p) 73 3.70 3.30 b
Effect of reinvesting dividends (p) 0.06 0.10 c
Adjusted price per share (p) 234.76 205.40 d = a+b+c
Opening price per share (p) 202.00 179.00 e
Share price total return (%) 16.3% 14.8% = (d/e) - 1
Small cap
A small-cap stock is a company whose market capitalisation is between $250m to $2bn.
TOPIX
The Tokyo Stock Price Index is a capitalisation-weighted Japanese index which lists all firms in the Prime Market.
Total Assets
Total assets include investments, cash, current assets and all other assets. An asset is an economic resource, being anything tangible or intangible that can be
owned or controlled to produce positive economic value. The total assets less all liabilities is equivalent to total shareholders’ funds.
Total Return (APM)
Total return statistics enable the investor to make performance comparisons between investment trusts with different dividend policies. The total return
measures the combined effect of any dividends paid, together with the rise or fall in the share price or NAV. This is calculated by the movement in the NAV or
share price plus dividend income reinvested by the Company at the prevailing NAV or share price.
Shareholder Information / Glossary continued
AVI Global Trust plc / Annual Report 2024
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Total Return Swap
A total return swap is a financial contract between two parties, whereby each party agrees to “swap” a series of cash flows. On the long positions, AGT receives
income but pays floating rate interest and capital movement. Capital movement is based on the notional value (the equity exposure of the underlying security).
On short positions, AGT pays income and receives the floating rate interest and capital movement. For further explanation on our position in Softbank Group,
please refer to page 33.
Treasury Share
When a share is bought back it may be cancelled immediately or held (at zero value) as a Treasury Share. Shares that are held in treasury can be reissued for
cash at minimal cost. The Company will only reissue shares from treasury at a price at or above the prevailing NAV per share.
Weight
Weight is defined as being each position’s value as a percentage of net assets.
Weighted-average Discount (APM)
The weighted-average discount is calculated as being the sum of the products of each holding’s weight in AGT’s portfolio times its discount.
AVI calculates an estimated sum-of-the-parts NAV per share for each holding in AGT’s portfolio. This NAV is compared with the share price of the holding in
order to calculate a discount.
Weighted Average Shares (APM)
The weighted average shares outstanding is calculated by multiplying the outstanding number of shares after each share issue and buy back of shares during
the year with the time weighted portion. The total of the weighted average of shares in issue excluding Treasury shares during the year is 450,758,728.
* The opening NAV per share is restated for the share split.
AVI Global Trust plc / Annual Report 2024
106
Shareholder Information / Company Information
Directors
Graham Kitchen (Chairman)
Anja Balfour
Neil Galloway
June Jessop
Calum Thomson
Secretary
Link Company Matters Limited
Central Square
29 Wellington Street
Leeds
LS1 4DL
Tel: 0333 300 1932
Registered Office
Link Company Matters Limited
Central Square
29 Wellington Street
Leeds
LS1 4DL
Tel: 0333 300 1932
Registered in England & Wales
No. 28203
Company Administrator
Waystone Administration
Solutions (UK) Limited
Broadwalk House
Southernhay West
Exeter
EX1 1TS
Corporate Broker
Panmure Liberum Ltd
Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Investment Manager and AIFM
Asset Value Investors Limited
2 Cavendish Square
London W1G 0PU
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 £1 per minute from a BT landline, other
providers’ costs may vary. Lines are open 8.30am to 5.30pm,
Monday to Friday.
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
HOW TO INVEST
AGT is a closed-ended investment
trust with shares listed on the
London Stock Exchange and part
of the FTSE 250 index. Shares in
AGT can be bought directly on the
London Stock Exchange or through
investment platforms.
For more information visit: www.aviglobal.co.uk