Aberforth Geared Value & Income Trust Plc - Final Results
Audited Annual Results for the period from Incorporation on
The following is an extract from the Company's Annual Report and Financial Statements for the period from incorporation on
FINANCIAL HIGHLIGHTS (SUMMARY)
Period from
Launch20on
Period from Inception19on 28 June 2024 1 July 2024
to
Performance (Total Return) to
30 June 2025 (including launch costs)
30 June 2025
(excluding
launch costs)
------------ ------------
Total Assets1 +2.6% +4.4%
Ordinary Share NAV2 +1.3% +3.3%
Ordinary Share Price4 -14.8% -14.8%
ZDP Share NAV3 +7.0% +7.0%
ZDP Share Price5 +8.0% +8.0%
1-21 Refer to Note 2, Alternative Performance Measures, and the Glossary.
The ZDP Share NAV total return of 7.0% is on an Articles basis (see Note 7)
Dividends Declared
Second Interim Dividend per Ordinary Share 3.50p
Special Dividend per Ordinary Share 0.85p
The first interim dividend of 1.50p and the second interim dividend of 3.50p represent the total underlying dividends for the period to
The second interim and special dividend have an ex-dividend date of
THE COMPANY
CHAIRMAN’S STATEMENT
Initial Public Offering (IPO)
Gross IPO proceeds, before launch costs, were £147.6m. The Company started its life near fully invested since £132.7m was subscribed by shareholders in
Company Information
• The Company is an investment trust comprising Ordinary Shares and Zero Dividend Preference (ZDP) Shares issued in a ratio of 8:3. Capital returns to the Ordinary Shareholders are effectively geared by the final capital entitlement due to the ZDP Shareholders. In periods of rising equity prices, this can benefit the net asset value performance attributable to the Ordinary Shares, but the converse also holds true.
•
AGVIT’s investment objective is to provide Ordinary Shareholders with high total returns, incorporating an attractive level of income, and to provide ZDP Shareholders with a pre-determined Final Capital Entitlement of 160.58p per ZDP share on the Planned Winding Up Date of
•
Ordinary Shareholders are entitled to all net income generated by the portfolio of investments. On a
•
The Company invests in a diversified portfolio of 50-100 small
•
Investment Background
AGVIT’s successful launch came at a time of increasing interest in the
Nevertheless, it is undoubtedly true that the investment environment has become more challenging since launch. Much of the uncertainty emanates from the US – the Trump administration’s positions on
Review of Performance
For AGVIT to succeed for its Ordinary Shareholders over the seven year life, capital returns at the total asset level should exceed the hurdle rate imposed by the ZDP shares. Of course, such an outcome would also be consistent with the delivery to ZDP Shareholders of their entitlement. When reporting performance, “since inception” refers to periods since
Portfolio performance
Since launch Total Assets total return DNSCI (XIC) FTSE All-Share To 30 June 2025 4.4% 11.1% 11.2%
• The table above shows the period’s Total Assets total return performance. It measures the portfolio return and is unaffected by AGVIT’s capital structure. Since it covers the period since launch, it is unaffected by one-off launch costs and so is more comparable with equity indices.
•
It is important to emphasise that AGVIT’s investment objective and capital structure reduce the relevance of assessing its performance relative to an equity index. Nevertheless, for context, the table also sets out the performance of larger
• The Managers’ Report delves into AGVIT’s total assets total return, bringing to light influences on both the absolute and relative performance.
Ordinary NAV performance
Total Assets Ordinary NAV
Total returns Ordinary NAV since inception
since launch since launch
To 30 June 2025 4.4% 3.3% 1.3%
• The performance of the Ordinary Shares is affected by the gearing provided by the ZDP Shares. Since the portfolio’s capital performance was below the ZDP Shares’ entitlement rate, the Ordinary NAV total return since launch of 3.3% was lower than the 4.4% Total Assets total return.
•
The Ordinary NAV total return since launch of 3.3% excludes the one-off IPO costs. The Ordinary NAV total return since inception was 1.3%. It is calculated after one-off IPO costs of c.£2.2m. Of these, c.£1.2m are fees and expenses related to launch, which benefited from a contribution from the Investment Managers of £450,000. The other main element arose from a decline in the value of the investment portfolio between
NAV and share price performance
Since inception to 30 Premium/(Discount) Share price total
June 2025 NAV total return return
to NAV
Ordinary Share 1.3% -16.2% -14.8%
ZDP Share (Articles 7.0% 1.0% 8.0%
Basis)
•
In the period from inception to
•
The ZDP Shares’ NAV has increased at a rate consistent with the 7.0% annual increase in their entitlement. The ZDP share price was at a 1.0% premium to NAV at
• While AGVIT generated a positive total return, the portfolio’s capital performance in the Company’s first year was not as we had hoped. However, as the Managers set out in their report, the investment opportunity over AGVIT’s planned life is compelling. Looking beyond the vagaries of near term market sentiment, a better gauge of progress for AGVIT is arguably the performance of the Revenue Return per Ordinary Share, which has been a bright spot since launch.
Resilient Income Performance
Earnings
In my Half Yearly Report, I described how AGVIT’s income performance had been good in its first six months. I am pleased to report that this positive dividend experience continued in the second half of the year. The Revenue Return per Ordinary Share in the period to
Ordinary dividend
AGVIT’s Prospectus stated that the Company will target dividends in the range of 4.00-5.00p, in respect of the period from launch to
In this context, the Board has declared a second interim dividend of 3.50p. This, together with the first interim dividend of 1.50p paid on
Special dividend
On top of the Ordinary dividend of 5.00p, we propose a special dividend of 0.85p. This reflects the strong income performance, which benefits from certain one-off factors noted previously, and the requirement for AGVIT to comply with HMRC’s minimum retention test for investment trusts.
Revenue reserves
After accounting for the 5.85p of total dividends, AGVIT will be able to retain 1.00p of revenue. The ability to retain revenue and to create flexibility to support dividends in future periods is one of the main structural advantages of an investment trust. At this early stage in the Company’s planned life, the Board believes that this is a prudent level of retention given the continuing volatility and uncertainties surrounding geopolitics and the economy generally.
Dividend details
The second interim dividend of 3.50p and the special dividend of 0.85p have an ex dividend date of
Stewardship
The Board is responsible for the effective stewardship of the Company’s affairs. These include oversight of the Managers’ activities in relation to Environmental, Social and Governance (ESG) matters, which are covered on pages 15 to 17 of the Annual Report. They also address the Managers’ ESG policies and practices, along with their voting approach and activity during the year. The Board endorses the Managers’ stewardship policy, which is set out in their submission as a signatory to the
Board Changes
As announced to The Stock Exchange, for personal reasons and as a result of additional time commitments arising from other roles,
Share Buy-backs
The Board regularly reviews the circumstances in which buy-backs would be appropriate for AGVIT. The capital structure influences the implementation of buy-backs, but the Board considers it worthwhile to seek the authority at the AGM to buy- back up to 14.99 per cent. of each class of Shares in issue that was granted in the Prospectus. Any buy-backs will be subject to liquidity in each class of Shares, would respect the rights of the ZDP Shareholders and would provide useful net asset value per share enhancement for its continuing Shareholders. As to the broader issue of discount control, we ought not to lose sight of an important advantage of AGVIT’s fixed life structure, which gives investors the opportunity to exit at near net asset value on planned wind-up.
Annual General Meeting (AGM)
For those Shareholders that would like to meet members of the Board and Aberforth’s investment team in person, the first AGM of the Company will be held at
Outlook
AGVIT endured a volatile year as macro-economic and geopolitical events affected the outlook for profits and swayed stockmarket valuations. At home, the UK’s fiscal position will continue to affect the path of the domestic economy and the companies that rely on it. Overseas, the main challenge comes from the US, the erstwhile source of stability in the financial world, as Donald Trump’s words and actions increase uncertainty for businesses around the world. In view of how the past twelve months unfolded, it is remarkable that equities generated positive returns.
AGVIT’s progress has been slower than that of
• The Managers’ value investment style
This is progressing as we had hoped –
• Valuation recovery potential
This has seen partial success. While valuations of larger
• Continued M&A activity
As was anticipated, M&A interest for smaller companies has been elevated and is likely to remain so as long as stockmarket valuations remain at current levels.
•
The resilience of small
This has been a clear message from our discussions with the Managers – notwithstanding the big picture uncertainties, smaller companies have traded well and remain well financed.
• Attractive income characteristics
Nowhere is the resilience of smaller companies clearer than in AGVIT’s income performance in its first year. In my experience, it is a reasonable assumption that rising dividends will support capital growth in due course.
Of the five factors listed above, four have come through as expected, with only the broad and meaningful recovery in smaller company valuations missing. The Board and Managers believe that all five factors will contribute to AGVIT’s returns over the next six years of its planned life.
As the year drew to a close, I was encouraged by indications that the stockmarket had started to recognise the appeal of small
My fellow Directors and I always welcome the views of all Shareholders on any matter pertinent to the Company, to which end my e-mail address is noted below.
Chairman
Angus.GordonLennox@aberforth.co.uk
Managers’ Report
Introduction
Stockmarket returns in the
Investment background
The positive returns from equities, in the
Centre stage has been
If there was a silver lining to the “Liberation Day”, it was to jolt other countries out of their complacent reliance on US leadership.
Tariffs imposed by the US have a limited direct effect on small
The exposure of small
Analysis of performance and portfolio characteristics
AGVIT’s success over its planned seven year life will be determined by its total assets performance. The ZDP Shareholders will earn their full entitlement as long as total assets do not decline by more than 11.8% per annum, at
Launchto 3monthsto 3monthsto 3monthsto
30September2024 31December2024 31March2025 30June2025
Total assets total return +2.6% -3.1% -8.6% +14.9%
Ordinary share NAV total +2.9% -4.9% -12.8% +21.1%
return
The 4.4% total assets total return was achieved in a volatile fashion, as the mood of the stockmarket varied over the twelve month period. As the table above sets out, AGVIT’s planned life started well, but the December quarter was hampered by the Budget, which was unhelpful to businesses and affected the valuation of the portfolio’s domestically oriented holdings. The March quarter saw attention shift towards those companies earning their revenues outside the
Another way to consider the 4.4% total assets total return is in relation to the 11.1% total return of the DNSCI (XIC), which is AGVIT’s investment universe. The following points give some context to the difference between the two numbers.
•
AGVIT’s portfolio at inception was substantially acquired from
• Reflecting these top-down factors, as well as company specific issues, stock selection hampered AGVIT’s investment performance relative to that of the DNSCI (XIC). When comparing performance with the index, stocks not held by AGVIT can also be influential. Judging by the experience through time of the Managers’ other funds, these non holdings had an unusually large effect on AGVIT’s performance over the past twelve months.
However, the impact of stock selection, both from holdings and non holdings, was not out of line with instances of twelve month under-performance for the Managers’ other funds, either in the twelve months to
• Size positioning was an important influence. AGVIT has a relatively high exposure to the “smaller small” companies within the DNSCI (XIC). At the beginning of the 2024/25 financial year, AGVIT’s weighting in these was 48%, against 27% for the index. This weighting differential, combined with the under-performance of “smaller smalls” against “larger smalls” meant that size positioning had a meaningful impact on AGVIT’s performance relative to the DNSCI (XIC) over the twelve months. Further detail on AGVIT’s size positioning is given below.
•
The Managers invest AGVIT’s assets in accordance with their value investment philosophy. Consequently, AGVIT’s investment returns are influenced by the stockmarket’s preference for more expensively priced growth stocks or more modestly rated value stocks. To understand style effects within the DNSCI (XIC), the Managers use analysis by
The next table sets out a series of characteristics of both the portfolio and the DNSCI (XIC). The paragraphs that follow provide context and explanation for these characteristics.
30 June 2025 30 June 2024
Portfolio Characteristics AGVIT DNSCI (XIC) AGVIT DNSCI (XIC)
Number of companies 68 343 68 339
Weighted average market £671m £1,132m £708m £986m
capitalisation
Weighting in “smaller small” 44% 20% 48% 27%
companies*
Portfolio turnover 12% n/a n/a n/a
Price earnings (PE) ratio 10.7x 14.9x 10.2x 13.5x
(historical)
Dividend yield (historical) 5.3% 3.4% 5.2% 3.4%
Dividend cover (historical) 1.8x 2.0x 1.9x 2.2x
*”Smaller small” companies are members of the DNSCI (XIC) that are not also members of the
Size positioning
As described above, size positioning was an important influence on AGVIT’s investment performance in the year to
Balance sheets
The following table sets out the balance sheet profile of AGVIT’s portfolio and of the Managers’ Tracked Universe. This subset of the DNSCI (XIC) represents 98% by value of the index as a whole and is made up of the 230 companies that the Managers follow closely.
Weight in companies Net cash Net debt/EBITDA < 2x Net debt/EBITDA > 2x Other* with: Tracked Universe 2025 30% 43% 21% 6% Portfolio 2025 38% 47% 11% 4% - Portfolio “smaller 45% 36% 12% 7% smalls” - Portfolio “larger 30% 59% 11% 0% smalls”
*Includes loss-makers and lenders
The balance sheet profile of the portfolio and the Tracked Universe are similarly robust. Around one third of each is represented by companies with net cash on their balance sheets. The more highly leveraged companies tend to be those with asset backing, such as pub businesses and property companies. The final two lines of the table show that there is no meaningful difference between the balance sheet profiles of “smaller small” and “larger small” companies. The lower valuations of the former cohort are not justified by weaker balance sheets.
Strong balance sheets are supporting dividend growth, as the next section explains, and a continued high rate of share buy-backs. Over the twelve months to
Income
While AGVIT’s capital performance over the twelve months was volatile, it made good progress in income terms. Revenue earned from dividends paid by investee companies rose at double digit rates. The table below categorises AGVIT’s 68 holdings at
Nil Payer Cutter Unchanged Payer Increased Payer New/Returner 5 10 20 32 1
AGVIT’s positive income experience was driven by the 32 Increased Payers and the one New / Returners. These out-weighed the drag from the 10 companies that reduced their most recent dividends.
At
Corporate Activity
The Managers are frequently asked what the catalyst will be for a re-rating of small
As long as valuations across small companies remain so attractive, it is likely that takeovers will continue. There is the opportunity for those invested in the asset class to enjoy good investment returns by harvesting takeover premiums as they await a broader re-rating.
The downside of takeovers could be a shrinking of the Managers’ investment universe. However, there are reasons to believe that the opportunity set will remain broad.
•
First, last year’s changes to the Listing Rules should improve the attractiveness of the
•
Second, ten AIM companies have recently moved or announced an intention to move to the Main List. This makes them eligible investments for AGVIT. The Managers have already started a holding in one of the ten and are scrutinising others. The relisting trend is influenced by the new Listing Rules, which level the governance playing field between AIM and the Main List, and by the tax changes announced in the
•
Third, the definition of the DNSCI (XIC) – the bottom 10% by value of the total
Engagement
Since Aberforth was founded in 1990, an integral part of the Managers’ investment process has been engagement with the boards of the investee companies. The approach to engagement is purposeful, discreet and constructive. Its aim is to improve investment outcomes for Aberforth’s clients and investors. The Managers may engage on any topic that they perceive to be affecting the valuation of a company. Their ability to engage is improved by the large stakes – up to 25% of issued share capital – that Aberforth’s clients can collectively take in investee companies.
As highlighted in the Prospectus, the high rate of takeover activity means that M&A terms are a frequent topic of engagement. The Managers often seek to improve terms or, if these are unattractive, to work with the boards of investee companies to discourage takeover interest. The Managers wrote to investee companies in 2024 to reinforce their expectations of boards when they receive a takeover approach.
Another reason for engagement in 2025 stems from the new Listing Rules, which were introduced last year. One of the changes removes the need for a shareholder vote to approve significant transactions. The purpose was to increase the attractiveness of the
Value roll and portfolio turnover
The main influence on AGVIT’s portfolio turnover in any period is usually the stockmarket’s appetite for small
Portfolio turnover is defined as the lower of purchases and sales divided by the average portfolio value. The long term average rate of turnover for the Managers’ funds is 33%. In the twelve months to
Valuations
Price earnings (PE) ratio: 35 year average At31 December 2024 At30 June 2025 World equities* 15.8x 17.7x 18.0x FTSE All-Share 15.3x 14.6x 16.2x Smaller companies** 13.5x 11.9x 12.5x AGVIT’s portfolio 12.0x*** 9.6x 10.1x
* Source: Bloomberg; Panmure Liberum ** DNSCI (XIC) to 2013 then Tracked Universe *** Represented by Aberforth’s longest standing client
As the table above shows, AGVIT’s portfolio continues to benefit from the triple valuation discount that was described in the Prospectus – AGVIT’s portfolio PE is below that of smaller companies, which is below that of large
The next table turns to forward valuations and uses the Managers’ favoured metric, EV/EBITA (enterprise value to earnings before interest, tax and amortisation). Ratios are set out for the portfolio, the Tracked Universe and certain subdivisions of the Tracked Universe. The profits underlying the ratios are based on the Managers’ forecasts for each company that they track. The bullet points following the table summarise its main messages.
EV/EBITA 2024 2025 2026 AGVIT’s portfolio (68 stocks) 8.2x 8.0x 6.9x Tracked Universe (230 stocks) 11.2x 10.5x 9.3x - Growth stocks 16.0x 15.1x 13.6x - Other stocks 10.6x 9.9x 8.7x - Overseas facing stocks 10.2x 9.8x 8.3x - Domestic facing stocks 12.0x 11.1x 10.0x - “Smaller small” stocks 9.3x 8.9x 7.6x - “Larger small” stocks 11.9x 11.1x 9.9x
• The ratios are lower for 2025 than for 2024. The Managers anticipate modest profit growth in 2025, as lower interest rates and real wage growth still seem likely to offset the increased uncertainty related to trade wars and the Budget.
• The average EV/EBITA multiples of the portfolio are lower than those of the Tracked Universe. This reflects the Managers’ value investment style and the influence of the more highly valued growth stocks on the Tracked Universe’s multiples.
•
The valuation of overseas facing companies (those with more than 60% of revenues outside the
• As noted in the section above on size, the “smaller small” companies within the DNSCI (XIC) remain more attractively valued than do the “larger smalls”.
• Takeovers over the past twelve months were struck on average on a multiple of 16.2x. This compares with the portfolio’s 2025 EV/EBITA of 8.0x.
Outlook and conclusion
When AGVIT launched twelve months ago, American exceptionalism was celebrated and gauged by the success of the US stockmarket. Today, the investment outlook has been complicated by Donald Trump’s convulsive second presidency and its challenge to some of the assumptions that have long underpinned the financial world. Dollar weakness may well be welcomed by the Trump administration and has been seen before, but the present bout is accompanied by debate about whether the dollar risks losing the exorbitant privilege of reserve currency status. There is also debate about the risk-free nature of US government debt, as fiscal spending looks set to rise under the “One Big Beautiful Bill Act” and as foreign governments, disconcerted by the tariffs, question the wisdom of parking their reserves in treasuries. Even the US stockmarket has lost some of its lustre. The potential impact of the tariffs on the profits of US businesses has seen European equities outshine their US counterparts so far in 2025. The uncertainty emanating from the US complicates investment decisions, whether for businesses considering capital projects or fund managers selecting stocks.
The
Against this backdrop,
An important aspect of the recent performance of smaller companies is that it is not driven by fundamental factors. Dividend growth is a useful gauge of fundamental progress since there is a long history of data and it cannot diverge meaningfully from profit growth over time. Using the most recent
Judging by the valuations, the stockmarket is missing the resilience and superior growth of smaller companies. Rather, it seems distracted by their relative illiquidity and volatility, but this obsession risks missing the point of investment in the asset class. The small company premium – i.e. the long term out-performance by smaller companies against larger companies – is inextricably tied up with a willingness to take on liquidity and volatility risk. Those able and willing to commit their capital to smaller companies are rewarded over time for taking on that risk.
AGVIT is well placed to take advantage of the present situation. Its valuation advantage is even greater than that of smaller companies, as previously demonstrated in this report. It provides a high yield and should benefit from the superior dividend growth available from the asset class. Its closed-ended structure means that it can commit to investment in the attractively valued “smaller small” companies, without the concern of a demand for liquidity. Its diversified portfolio reduces the volatility risk of an individual small cap stock and spreads it over 68 holdings. Its structural gearing can enhance portfolio returns and reward shareholders who commit their capital to AGVIT, while discount risk is addressed by its limited life.
None of these points means that AGVIT is impervious to today’s macro-economic and geopolitical threats, or indeed those to come. They do, however, improve the likelihood of a good investment experience over time, particularly when other companies, overseas investors and private equity are already taking advantage of the valuations on offer among small
Managers
FINANCIAL HIGHLIGHTS
TOTAL RETURN PERFORMANCE – see note 7 for further explanation
OrdinaryShare ZDPShare
Period to 30 June 2025
TotalAssets1 NAV2 SharePrice4 NAV3 SharePrice5
Since Inception19 (including 2.6% 1.3% -14.8% 7.0% 8.0%
launch costs)
Since Launch20 (excluding launch 4.4% 3.3% -14.8% 7.0% 8.0%
costs)
The ZDP Share NAV total return of 7.0% is on an Articles basis (see note 7).
ORDINARY SHARE
Capital Net Asset Value per Sharea Share Price Discount6/ ZDP:Equity Gearing
(Premium)7 Ratio9
----------- ---------- ------------ -----------
30 June 2025 99.6p 83.5p 16.2% 40.0%
Inception19 100.0p 100.0p 0.0% 37.5%
The total return per Ordinary Share
a
for the period to
Revenue
Ordinary Special Retained Revenue Ongoing
Revenue Return Dividends per Dividends per Reserves per Charges11
Sharea Share Share16
per Sharea
--------------------- ------------ ----------- ------------
30 June 2025 6.85p 5.00p 0.85p 1.00p 1.4%
ZERO DIVIDEND PREFERENCE SHARE (ZDP SHARE)
Return Projected
Net Asset Share Discount6/ Final Gross
Value per (Premium)7 per Cumulative Redemption
Sharea Price Cover13 Yield15
Sharea
------------ ---------- ------------ ---------- ------------ ------------
30 June 106.2p 108.0p (1.7)% 7.1p 2.0x 6.8%
2025
Inception19 100.0p 100.0p 0.0% n/a 2.0x 7.0%
HURDLE RATES 10
Ordinary Shares ZDP Shares
Annualised Hurdle Rates to return Annualised Hurdle Rates
to return
100p Share Price Zero Value 160.58p Zero Value
------------ ------------ ------------ ------------ ------------
30 June 2025 3.6% 1.7% -11.8% -11.8% -58.3%
Inception19 3.0% 3.0% -10.3% -10.3% -52.9%
REDEMPTION YIELDS
AS AT
Annualised Ordinary Share Redemption Yields14
Dividend Growth (per annum)
Capital
Growth -20.0% -10.0% 0.0% +10.0% +20.0% Terminal
(per NAV17
annum)
------------ ------------ ------------ ------------ ------------ ------------
-20.0% -38.2% -30.5% -22.7% -14.8% -7.0% 0.0p
-10.0% -24.5% -20.7% -15.9% -10.2% -3.8% 8.1p
0.0% 0.9% 2.3% 4.3% 6.8% 10.1% 69.4p
+10.0% 16.0% 16.9% 18.2% 19.9% 22.1% 170.5p
+20.0% 28.8% 29.5% 30.5% 31.7% 33.3% 330.0p
Source:
Hurdle Rates, Redemption Yields and Final Cumulative Cover, are projected, illustrative and do not represent profit forecasts. There is no guarantee these returns will be achieved.
1-21 Refer to Note 2, Alternative Performance Measurement, and Glossary.
a
GOING CONCERN
The Audit Committee has undertaken and documented an assessment of whether it is appropriate for the Company to adopt the going concern basis of accounting. This assessment was for the period of at least 12 months from the date of approval of the financial statements. The Committee reported the results of its assessment to the Board.
The Company’s business activities, capital structure, planned life and borrowing facility, together with the factors likely to affect its development and performance, are set out in the Strategic Report contained in the Annual Report. In addition, the Annual Report includes the Company’s objectives, policies and processes for managing its capital, its financial risk, details of its financial instruments and its exposures to credit risk and liquidity risk. The Company’s assets comprise mainly readily realisable equity securities, which, if necessary, can be sold to meet any funding requirements, though funding flexibility can typically be achieved through the use of the bank overdraft facility. The Company has adequate financial resources to enable it to meet its day-to-day working capital requirements.
DIRECTORS’ RESPONSIBILITY STATEMENT – ANNUAL REPORT AND FINANCIAL STATEMENTS
The Directors who were in office at the date of approving the financial statements confirm to the best of their knowledge that:
(a) the financial statements, which have been prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit/loss of the Company;
(b) the Strategic Report includes a fair review of the development and performance of the business and financial position of the Company, together with a description of the principal risks and uncertainties that it faces; and
(c) the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company’s performance, business model and strategy.
On behalf of the Board
Chairman
PRINCIPAL RISKS
The Board carefully considers the risks faced by the Company and seeks to manage these risks through continual review, evaluation, mitigating controls and action as necessary. A risk matrix for the Company is maintained. It groups risks into the following categories: portfolio management; investor relations; regulatory and legal; and financial and operational. The Company outsources all the main operational activities to recognised, well-established firms and the Board receives internal control reports from these firms, where available, to review the effectiveness of their control frameworks. Further information regarding the Board's governance and oversight of risk can be found on page 34 of the Annual Report. The Audit Committee Report on pages 35 to 37 of the Annual Report details the Committee's review process, matters considered, and actions taken on internal controls and risks during the period.
The Board regularly reviews emerging risks. These are risks that are still evolving, are not fully understood, but that could have a future impact on the Company. The Board also regularly monitors how the Managers integrate risks into investment decision making.
Principal risks are those risks in the matrix that have the highest risk ratings based on likelihood and impact. They are expected to be relatively consistent from year to year given the nature of the Company and its business. The principal risks faced by the Company, together with the approach taken by the Board towards them, are summarised below. To indicate the extent to which the principal risks change during the period and the level of monitoring required, each principal risk has been categorised as either dynamic risk, requiring detailed monitoring as it can change regularly, or stable risks.
Significant fall in capital performance Risk– this is a portfolio management Mitigation/monitoring risk The Company’s investment policy and strategy expose the portfolio to share price movements. The performance of the The Board has outsourced portfolio investment portfolio will be influenced management to experienced investment by stock selection, liquidity and managers with a clearly defined market risk (see Market risk below). investment philosophy and investment Investment in small companies is process. The Board receives regular and generally perceived to carry more risk detailed reports on investment than investment in large companies. performance and risk. Senior investment While this is reasonable when comparing representatives ofAberforth Partners individual companies, it is much less attend each Board meeting. This is a so when comparing the risks inherent in dynamic risk, with detailed diversified portfolios of small and consideration during the period. The large companies. The Board's aim is to Managers’ Report contains information on achieve the investment objective by portfolio investment performance and ensuring the investment portfolio is risk. managed in accordance with the policy and strategy.
Market risk factors affecting portfolio management and/or investment performance
Risk– this is a portfolio management Mitigation/monitoring
risk
The Managers regularly assess the
exposure to market risk when making
Investment performance is affected by investment decisions and the Board
several market risk factors, such as monitors the results via the Managers’
economic, geopolitical, and societal reporting. The Board and Managers closely
factors, which cause uncertainty about monitor economic and political
future price movements of investments. developments including the potential
The Board delegates consideration of effects of climate change (see pages 15
market risk to the Managers to be to 17 of the Annual Report). This was a
carried out as part of the investment dynamic risk during the period, in which
process. the Managers reported on market risks
including those referred to in the
Managers’ Report.
Political and taxation changes outwith the Company's control
Risk– this is a portfolio management Mitigation/monitoring
risk
The Board monitors in conjunction with
Investment performance is affected by the Managers the political and tax
political and taxation risk factors, landscape affecting the Company and takes
which cause uncertainty about future action if in the best interests of
price movements of investments. shareholders as a whole. Company advisors
provide regular updates. This is a
dynamic risk.
Structural conflicts of interest between the objectives of the Ordinary and ZDP Shareholders Risk– this is an investor relations Mitigation/monitoring risk The different rights and expectations of the holders of Ordinary Shares and the holders of ZDP Shares may give rise to conflicts of interest between them. The Board is cognisant of this risk and While the Company’s investment considers both sets of Shareholders and objective and policy seek to strike a acts in a manner that it considers fair, balance between the interests of both reasonable and equitable to both classes classes of Shareholder, there can be no of Shareholder. This is a stable risk. guarantee that such a balance will be achieved and maintained during the life of the Company.
Significant fall in revenue generation from the portfolio
Risk– this is a portfolio management Mitigation/monitoring
risk
The Board receives regular and detailed
A significant fall in investment income reports from the Managers on income
could lead to the inability to provide performance together with income
an attractive level of income to forecasts. The Board and Managers
Ordinary Shareholders. monitor investment income and it is
considered a dynamic risk.
Loss of key investment management personnel
Risk– this is an operational and Mitigation/monitoring
portfolio management risk
The Board recognises that the collegiate
approach employed by the Managers
The Board believes that a risk exists mitigates this risk. Board members are
in the potential loss of key investment in regular contact with the partners and
personnel at the Managers. staff of the Managers and monitor
personnel changes. This is a stable
risk.
Failure to meet the continuing obligations associated with regulatory risks Risk– this is a regulatory and legal Mitigation/monitoring risk Breach of regulatory rules could lead to suspension of the Company’s share price listings, financial penalties or a qualified audit report. Breach of The Board reviews regular reports from Section 1158 of the Corporation Tax Act the Secretaries to monitor compliance 2010 could lead to the Company losing with regulations. This is a stable risk. investment trust status and, as a consequence, any capital gains would then be subject to tax.
Cyber risk
Risk– this is an operational risk Mitigation/monitoring
The Board oversees the Managers’ (and
The Company and Managers are subject to other service providers’) cyber security
a cyber risk event negatively affecting controls via external control reports
shareholders or other stakeholders. and Board update papers. This is a
dynamic risk.
The Income Statement, Reconciliation of Movements in Shareholders’ Funds, Balance Sheet and Cash Flow Statement are set out below.
INCOME STATEMENT
For the period from incorporation on
(audited)
Period to
30 June 2025
Revenue Capital Total
£’000 £’000 £’000
Net (losses) on investments - (1,062) (1,062)
Investment income 7,879 - 7,879
Other income 174 - 174
Investment management fee (note 3) (320) (746) (1,066)
Portfolio transaction costsi - (847) (847)
Other expenses (369) - (369)
-------- -------- --------
Net return before finance costs and tax 7,364 (2,655) 4,709
Finance costs:
Appropriation to ZDP Shares (note 8) - (2,859) (2,859)
Interest expense and overdraft fee (1) (4) (5)
-------- -------- --------
Return on ordinary activities before tax 7,363 (5,518) 1,845
Tax on ordinary activities (6) - (6)
-------- -------- --------
Return attributable to Equity Shareholders 7,357 (5,518) 1,839
======= ====== =======
Return per Ordinary Share (note 5) 6.85p (5.14)p 1.71p
The Board declared on
The total column of this statement is the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period. A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.
i
Includes £602,000 in respect of stamp duty incurred on the transfer of securities from
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
For the period from incorporation on
(audited)
Share Share Special Capital Revenue
capital premium reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000
Balance as at 29 March - - - - - -
2024
Return on ordinary - - - (5,518) 7,357 1,839
activities after tax
Equity dividends paid - - - - (1,610) (1,610)
(see note 4)
Issue of Ordinary Shares 1,073 106,258 - - - 107,331
Ordinary Share issue - (592) - - - (592)
costs
Share Premium - (105,621) 105,621 - - -
cancellation
Cost of Share Premium - (45) - - - (45)
cancellation
Issue of redeemable 50 - - - - 50
Shares
Redemption of redeemable (50) - - - - (50)
Shares
-------- -------- -------- -------- -------- --------
Balance as at 30 June 1,073 - 105,621 (5,518) 5,747 106,923
2025
====== ====== ====== ====== ====== ======
BALANCE SHEET
As at
(audited)
30 June 2025
£’000
Fixed assets
Investments at fair value through profit or loss (note 6) 147,998
----------
Current assets
Debtors 716
Cash at bank 1,049
----------
1,765
Creditors (amounts falling due within one year) (109)
----------
Net current assets 1,656
----------
Total Assets less Current Liabilities 149,654
Creditors (amounts falling due after more than one year)
ZDP Shares (note 8) (42,731)
----------
TOTAL NET ASSETS 106,923
=======
Capital and Reserves: Equity Interests
Share capital:
Ordinary Shares (note 9) 1,073
Reserves:
Special reserve 105,621
Capital reserve (5,518)
Revenue reserve 5,747
----------
TOTAL SHAREHOLDERS’ FUNDS 106,923
=======
Net Asset Value per Ordinary Share (note 7) 99.62p
Net Asset Value per ZDP Share (note 7) 106.17p
CASH FLOW STATEMENT
For the period from incorporation on
(audited)
Period to
30 June 2025
£’000
Operating activities
Net revenue before finance costs and tax 7,364
Tax (withheld) from income (6)
Investment management fee charged to capital (note 3) (746)
(Increase) in debtors (711)
Increase in creditors 78
--------
Cash inflow from operating activities 5,979
--------
Investing activities
Purchases of investments - excluding transaction costs (33,742)
Sales of investments - excluding transaction costs 16,608
--------
Cash (outflow) from investing activities (17,134)
--------
Financing activities
Proceeds from issue of Ordinary Shares (note 9) 2,651
Proceeds from issue of ZDP Shares (note 9) 12,182
Share issue costs paid (969)
Share premium cancellation costs paid (45)
Equity dividends paid (note 4) (1,610)
Interest and fees paid (5)
--------
Cash inflow from financing activities 12,204
--------
Change in cash during the period 1,049
=====
Cash at the start of the period -
Cash at the end of the period 1,049
======
SUMMARY NOTES TO THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been presented under Financial Reporting Standard 102 (FRS 102) and the AIC’s Statement of Recommended Practice “Financial Statements of
2. ALTERNATIVE PERFORMANCE MEASURES
Alternative Performance Measures (APMs) are measures that are not defined under the requirements of FRS 102. The Company believes that APMs, referred to within “Financial Highlights” section of this announcement, provide Shareholders with important information on the Company. These APMs are also a component of the internal management reporting to the Board. A glossary of the APMs can be found at the end of this announcement and on page 63 of the Annual Report.
3. INVESTMENT MANAGEMENT FEE
The Managers,
4. DIVIDENDS PAID
Period ended
Amounts recognised as distributions to equity holders in the
period: 30 June 2025
£’000
In respect of the period to 30 June 2025 :
First interim dividend of 1.50p (paid on 10 March 2025 ) 1,610
------------
Total 1,610
------------
The second interim dividend for the period ended
5. RETURN PER SHARE
Period ended
30 June 2025
Ordinary Shares
Net return for the period £1,839,000
Weighted average Ordinary Shares in issue during the period 107,331,000
Return per Ordinary Share 1.71p
ZDP Shares
Appropriation to ZDP Shares for the period £2,859,000
Weighted average ZDP Shares in issue during the period 40,249,000
Return per ZDP Share 7.10p
There are no dilutive or potentially dilutive shares in issue.
6. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
Period ended
30 June 2025
£’000
Investments at fair value through profit or loss
Opening fair value -
Opening fair value adjustment -
------------
Opening book cost -
Purchases at costb 165,600
Sale proceeds (16,633)
Realised gains on sales 2,835
------------
Closing book cost 151,802
Closing fair value adjustment (3,804)
------------
Closing fair value 147,998
------------
b
Includes £128.2m in respect of an in specie transfer of securities from
All investments are in ordinary shares listed on the
Period ended
30 June 2025
£’000
Gains/(losses) on investments:
Net realised gains on sales 2,835
Market value loss on transactions in period from 21 June 2024 to (93)
28 June 2024 (see note 9)
Movement in fair value adjustment (3,804)
------------
Net (losses) on investments (1,062)
------------
In accordance with FRS 102, fair value measurements have been classified using the fair value hierarchy:
Level 1 - using unadjusted quoted prices for identical instruments in an active market;
Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data); and
Level 3 - using inputs that are unobservable (for which market data is unavailable).
All investments are held at fair value through profit or loss, have been classified as Level 1 and are traded on a recognised stock exchange.
7. NET ASSET VALUE (“NAV”) PER SHARE
The Net Assets and the Net Asset Value per share attributable to the Ordinary Shares and ZDP Shares are as follows.
30 June 2025
Ordinary ZDP
Total
Shares Shares
Net assets attributable £106,923,000 £42,731,000 £149,654,000
Number of Shares at the reporting date 107,331,000 40,249,000 147,580,000
------------ ------------ ------------
NAV per Share (a) 99.62p 106.17p 101.41p
Dividend reinvestment factor8 (b) 1.016535 - 1.011587
------------ ------------ ------------
NAV per Share on a total return basis
at the end of the period (c) = (a) x 101.27p 106.17p 102.58p
(b)
------------ ------------ ------------
NAV per Share on a total return basis 100.00p 100.00p 100.00p
at Inception (d)
------------ ------------ ------------
Total Return performance in the period 1.3% 6.2% 2.6%
since Inception (c) / (d) - 1
------------ ------------ ------------
Total return performance since Launch reflects performance subsequent to the charging of the costs of the Launch. From Launch to
8. ZERO DIVIDEND PREFERENCE SHARES
Period ended
30 June
2025
£’000
Opening Balance
Issue of ZDP Shares 40,249
Capitalisation of issue costs of ZDP Shares (377)
------------
Opening balance 39,872
Issue costs amortised during the period 43
Capital growth of ZDP Shares 2,816
------------
Closing Balance 42,731
------------
Expenses of £377,000 associated with the issue of the ZDP Shares have been capitalised. These will be amortised over the expected life of the ZDP Shares and charged to capital as a finance cost within the Income Statement.
9. SHARE CAPITAL
No. of Shares £’000
As at 30 June 2025
Ordinary Shares of 1p each 107,331,000 1,073
ZDP Shares of 1p each 40,249,000 402
----------------- ------------
Total issued and allotted 147,580,000 1,475
----------------- ------------
Upon incorporation on
The Company acted as the rollover option for the existing shareholders of
On
On
In addition, 2,650,710 Ordinary Shares and 12,182,051 ZDP Shares were allotted to satisfy the demand of the Placing and Offer for Subscription at the issue price of £1 each. The proceeds of these issues were used to acquire securities for the Company’s investment portfolio. These allotments resulted in the Company having a total of 107,331,000 Ordinary Shares and 40,249,000 ZDP Shares, which were admitted to listing on the Official List and to trading on the
In
Costs of £592,000 associated with the issue of the Ordinary Shares, net of an
Further details of the rights and responsibilities of the Ordinary and ZDP Shareholders are available in the Annual Report and the Prospectus dated
10. Financial instruments and risk management
The Company’s financial instruments comprise its investment portfolio, cash balances, ZDP Shares, debtors and creditors that arise directly from its operations such as sales and purchases awaiting settlement, and investment income receivable. Note 1 to the financial statements contained in the Annual Report sets out the significant accounting policies, including criteria for recognition and the basis of measurement applied for significant financial instruments excluding cash at bank, which is carried at fair value. Note 1 to the financial statements contained in the Annual Report also includes the basis on which income and expenses arising from financial assets and liabilities are recognised and measured.
The main risks that the Company faces arising from its financial instruments are as follows:
(i) Market price risk is the risk that the market value of investment holdings will fluctuate as a result of changes in market prices caused by factors other than interest rate or currency rate movement.
(ii) Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company.
(iii) Liquidity risk is the risk that the Company will encounter difficulty raising funds to meet its cash commitments as they fall due. Liquidity risk may result from either the inability to sell financial instruments quickly at their fair values or from the inability to generate cash inflows as required.
(iv) Interest rate risk is the risk that the interest receivable/payable and the market value of investment holdings may fluctuate because of changes in market interest rates. The Company’s investment portfolio is currently not directly exposed to interest rate risk. The Company’s policy is to hold cash in variable rate bank accounts.
The Company’s financial instruments are all denominated in sterling and therefore the Company is not directly exposed to significant currency risk. However, it is recognised that most investee companies, whilst listed in the
11. RELATED PARTY TRANSACTIONS
The Directors have been identified as related parties and their fees and interests have been disclosed in the Directors’ Remuneration Report contained in the Annual Report on page 39 and 40. During the period no Director or entity controlled by a Director was interested in any contract or other matter requiring disclosure under section 412 of the Companies Act 2006.
12. FURTHER INFORMATION
The foregoing do not constitute statutory accounts (as defined in section 434(3) of the Companies Act 2006) of the Company. The statutory accounts for the period ended
Certain statements in this announcement are forward looking statements. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ materially from those expressed or implied by those statements. Forward looking statements regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. Accordingly, undue reliance should not be placed on forward looking statements.
The Annual Report is expected to be posted to shareholders by
Glossary of
Net Asset Value, also described as Shareholders’ Funds, is the value of total assets less all liabilities. The Net Asset Value or NAV per Ordinary Share is calculated by dividing this amount by the total number of Ordinary Shares in issue.
Net Asset Value (ZDP Share) is the value of the entitlement to the ZDP Shareholders. The Net Asset Value or NAV per ZDP Share is calculated by dividing this amount by the total number of ZDP Shares in issue.
Glossary of Alternative Performance Measures
1. Total Assets Total Return
represents the return of the combined funds of the Ordinary Shareholders and ZDP Shareholders assuming that dividends paid to Ordinary Shareholders were reinvested at the NAV per Ordinary Share at the close of business on the day the Ordinary Shares were quoted ex dividend. Total Assets less current liabilities as at
2. Ordinary Share NAV Total Return
represents the theoretical return on the NAV per Ordinary Share, assuming that dividends paid to Shareholders were reinvested at the NAV per Ordinary Share at the close of business on the day the shares were quoted ex dividend. The NAV per Ordinary Share as at
3. ZDP Share NAV Total Return
represents the return on the entitlement value of a ZDP Share. The ZDP Share NAV, on an Accounts basis, as at
4. Ordinary Share Price Total Return
represents the theoretical return to an Ordinary Shareholder, on a closing market price basis, assuming that all dividends received were reinvested, without transaction costs, into the Ordinary Shares of the Company at the close of business on the day the shares were quoted ex dividend. The Ordinary Share price as at
5. ZDP Share Price Total Return
represents the theoretical return to a ZDP Shareholder, on a closing market price basis. The ZDP Share price as at
6. Discount is the amount by which the stockmarket price per Share is lower than the NAV per Share. The discount is normally expressed as a percentage of the NAV per Share.
7. Premium is the amount by which the stockmarket price per Share exceeds the NAV per Share. The premium is normally expressed as a percentage of the NAV per Share.
Other Glossary Terms
8. Dividend Reinvestment Factor is calculated on the assumption that dividends paid by the Company were reinvested into Ordinary Shares of the Company at the NAV per Ordinary Share or the share price, as appropriate, on the day the Ordinary Shares were quoted ex dividend.
9. ZDP:Equity Gearing Ratio is calculated by dividing the asset value attributable to the ZDP Shares by the asset value attributable to the Ordinary Shares.
10. Hurdle Rate is the rate of capital growth per annum in the Company’s investment portfolio to return a stated amount per Share at the planned winding-up date.
11. Ongoing Charges represents the percentage per annum of investment management fees and other operating expenses to the average published Ordinary Shareholders’ NAV over the period.
12. Portfolio Turnover is calculated by summing the lesser of purchases and sales over the relevant period divided by the average portfolio value for that period.
13. Projected Final Cumulative Cover is the ratio of the total assets of the Company, as at the calculation date, to the sum of the assets required to pay the final capital entitlement of 160.58p per ZDP Share on the planned winding-up date, future estimated investment management fees charged to capital, and estimated winding-up costs.
14. Redemption Yield (Ordinary Share) is the annualised rate at which projected future income and capital cash flows (based on assumed future capital/dividend growth rates) are discounted to produce an amount equal to the share price at the date of calculation.
15. Gross Redemption Yield (ZDP Share) is the annualised rate at which the planned future payment of capital is discounted to produce an amount equal to the price at the date of calculation.
16. Retained Revenue Reserves per Share is a cumulative figure of revenue earned but not distributed and is calculated after accounting for dividends paid by the Company, including those not yet recognised in the financial statements.
17. Terminal NAV (Ordinary Share) is the projected NAV per Ordinary Share at the planned winding-up date at a stated rate of capital growth in the Company’s investment portfolio after taking into account the final capital entitlement of the ZDP Shares, future estimated costs charged to capital, and estimated winding-up costs.
Key Dates
18. Company Incorporation Date
is
19. Inception Date
is
20. Launch/Listing Date
is
21. Planned Winding-Up Date
is
CONTACT:
Aberforth Partners LLP
Managers and Secretaries
ANNOUNCEMENT ENDS
