REG - AVI Global Trust PLC - Annual Financial Report
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RNS Number : 1394H AVI Global Trust PLC 12 November 2025
AVI GLOBAL TRUST PLC
('AGT' or the 'Company')
LEI: 213800QUODCLWWRVI968
Annual Financial Report for the year ended 30 September 2025
A copy of the Company's Annual Report for the year ended 30 September 2025
will shortly be available to view and download from the Company's website,
https://www.aviglobal.co.uk. Neither the contents of the Company's website nor
the contents of any website accessible from hyperlinks on the Company's
website (or any other website) is incorporated into, or forms part of, this
announcement.
Copies of the Annual Report will be sent to shareholders shortly. Additional
copies may be obtained from the Corporate Secretary, MUFG Corporate Governance
Limited, on 0333 300 1932.
Notice of Annual General Meeting
The Annual General Meeting ('AGM') of the Company will be held on 19 December
2025 at 11.00am at 11 Cavendish Square, London, W1G 0AN. The formal Notice of
AGM can be found within the full Annual Report.
Dividend
The Directors have proposed the payment of a final ordinary dividend of 3.00
pence per Ordinary Share which, if approved by shareholders at the forthcoming
AGM, will be payable on 2 January 2026 to shareholders whose names appear on
the register at the close of business on 28 November 2025 (ex-dividend 27
November 2025).
The following text is copied from the Annual Report and Accounts:
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.
OUR BUSINESS MODEL
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 Asset Value Investors Limited (AVI, or the
Investment Manager). 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 46
stocks held in the AGT portfolio.
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*(1):
+12.4% (2024: +13.7%)
3 Years +47.3%
10 Years +225.3%
Ongoing Charges Ratio*(1)
2025 2024
0.85% 0.87%
Discount*(2) (as at year-end):
6.7% (2024: 9.0%)
2025 high: 11.1% (2024: 12.3%)
2025 low: 6.2% (2024: 6.3%)
OTHER KEY STATISTICS
Net asset value per share(2#):
280.87p (2024: 253.81p)
Number of investments:
45 (2024: 40)
Estimated percentage added to net asset value per share from buybacks*:
+0.6%(1) (2024: 0.4%)
Top 10 investments(±):
56.6% (2024: 57.2%)
* For all Alternative Performance Measures included in this announcement,
please see definitions in the Glossary in the full Annual Report.
(±) Percentage of net assets.
(1) For the period to 30 September 2025.
(2) As at 30 September 2025.
(#) Debt at fair value.
FINANCIAL HIGHLIGHTS
Performance Summary
- Net asset value (NAV) per share total return was +12.4%
- Share price total return of +15.4%
- Final ordinary dividend of 3.00p, and total dividend increased to 4.50p
30 September 30 September
2025 2024
Net asset value per share (total return) for the year(1†) +12.4% +13.7%
Share price total return for the year(†) +15.4% +16.3%
Comparator Benchmark
MSCI All Country World Index (£ adjusted total return) +16.8% +19.9%
Discount(†)
Share price discount (difference between share price and net asset 6.7% 9.0%
value)(2†)
Share price discount: High 11.1% 12.3%
Share price discount: Low 6.2% 6.3%
Year to Year to
30 September 30 September
2025 2024
Earnings and Dividends
Investment income £35.44m £29.76m
Revenue earnings per share(†) 5.07p 4.20p
Capital earnings per share(†) 22.93p 27.45p
Total earnings per share 28.00p 31.65p
Ordinary dividends per share 4.50p 3.75p
Ongoing Charges Ratio(†)
Management, marketing and other expenses 0.85% 0.87%
(as a percentage of average shareholders' funds)
2025 Year's Highs/Lows High Low
Net asset value per share 281.2p 223.1p
Net asset value per share (debt at fair value)(†) 284.8p 226.1p
Share price(†) (mid market) 265.5p 202.0p
Buybacks
During the year, the Company purchased and cancelled 28,650,000 Ordinary
Shares, representing 5.9% of the issued capital as at the start of the
year-end (2024: 20,112,011 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.
(†) Alternative Performance Measures
For all Alternative Performance Measures included in this announcement, please
see definitions in the Glossary in the full Annual Report.
CHAIRMAN'S STATEMENT
Overview of the year
The NAV return for the accounting year was 12.4%, whilst the share price total
return was +15.4%, both compared with +16.8% for our comparator benchmark. As
I reported at the half year stage, from the end of September last year to
mid-February this year the share price and NAV followed a generally upward
trend with relatively low volatility, as markets were unusually calm. This was
then undone by growing concerns over moves by the United States to become more
protectionist and isolationist in its dealings with the rest of the world. It
all came to a head just after the end of our interim reporting period when
President Trump announced a sweeping range of tariffs on imports to the United
States. A period of uncertainty and high volatility in share prices followed
before markets stabilised and moved upwards over the summer.
As well as being volatile, market returns, as measured by benchmark indices,
continue to be dominated by a small group of largely technology related
companies as investors seek to value the potential returns offered by
artificial intelligence. While market returns have been heavily affected by a
focus on a few companies alongside geopolitics and the potential effect on
economic growth, our Investment Manager continues to adhere resolutely to
their focus on investing in companies whose assets and future potential are
undervalued by their share price. There continues to be no shortage of
interesting situations in the portfolio, as set out in their report. In
particular, having had success in Japan in recent years, AVI are now turning
their attention to a growing opportunity in South Korea, which is already
manifesting in some holdings in the portfolio.
In assessing the performance of our Investment Manager our view remains that
long-term returns are the best measure, and this is particularly true for a
manager seeking to produce positive returns without being influenced by market
indices and fashion. Over five years, our net asset value total return has
been +86.0%, compared with +81.2% for our comparator benchmark index.
Revenue and dividends
Revenue earnings for the year were 5.07 pence per share. The Company paid an
interim dividend of 1.50 pence per share in May 2025, an increase of 0.30
pence per share compared with last year. We are proposing a final dividend of
3.00 pence per share, an increase of 17.6% compared with the 2.55 pence per
share paid last year. Assuming that shareholders approve the final dividend at
this year's AGM, total dividends for the year will be 4.50 pence, an increase
of 20.0% compared with the previous year.
The Board recognises that a dividend which is steady and able to rise over
time is attractive to many shareholders and, while we do aim to grow the
dividend over the long term, I will repeat my previous statement that the
portfolio is managed primarily for capital growth.
Share price rating and marketing
AGT has a substantial marketing budget and the Board works closely with AVI as
it seeks to generate demand for AGT shares. Each month AVI produces an
informative factsheet which is available on our website and I encourage you to
register to receive these when they are published. The website contains a
wealth of information on the investments in the portfolio and I also encourage
you to visit it regularly for up-to-date information. AVI is very active in
traditional and social media as we seek to promote our investment proposition
to a growing investor base.
The Board is pleased to note that we have continued to experience an increase
in the number of shares owned by retail investment platforms, which account
for four of our top five shareholders, the other being a large wealth manager.
The investment trust industry came under a lot of pressure during the year
under review, as many trusts experienced wide share price discounts to their
underlying NAV, leaving them vulnerable to corporate action. We continue to
use share buybacks when AGT's share price discount is unnaturally wide and
when the Board believes that buying back shares is in the best interests of
shareholders. This is also an approach that our Investment Manager encourages
for many of our investee companies. There are periods when, working closely
with our brokers, we buy back shares on most working days. During the year
under review, 28.7 million shares were bought back, representing 5.9% of the
shares in issue as at the start of the period. Share buybacks benefit
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 the NAV
per share, to the benefit of continuing shareholders, of approximately 0.6%.
The Board believes that the discount can close steadily over time and it is
gratifying to note that over the year under review a narrowing discount
contributed to the share price total return of +15.4%.
The Board
Our policy continues to be that Directors will retire at or before the AGM
following the ninth anniversary of their appointment. Accordingly, Calum
Thomson, who joined the Board in April 2017, plans to retire at the AGM next
year, in December 2026. As part of our succession planning, Anja Balfour has
agreed to take over the role of Senior Independent Director from Calum with
effect from this year's AGM, which will be held on 19 December 2025.
Shareholders' views on best practice will continue to be taken into full
consideration when the Board recruits Calum's successor.
Annual General Meeting
I am pleased to be able to invite all shareholders to attend our AGM at The
King's Fund, 11 Cavendish Square in London on Friday 19 December 2025. We do
recognise that some shareholders may be unable to attend the AGM in person,
and we are therefore pleased to be able to offer facilities for shareholders
to join the AGM virtually. Whilst shareholders joining the AGM virtually will
not be able to vote on the day, they will be able to ask questions via a
messaging function. If you are unable to attend in person or via video 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 MUFG Corporate Governance Limited,19(th)
Floor, 51 Lime Street, London EC3M 7DQ. If you are unable to attend the AGM in
person, 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 very interested to hear from you so that
we can understand the reasons behind any objections.
Outlook
The geopolitical background is likely to remain unpredictable and this will
inevitably lead to periods of volatility in markets, as will economic
uncertainty. In this context your Board continues to encourage our Investment
Manager to do what they do best in seeking undervalued companies in situations
where there is the realistic prospect of improvement. We are encouraged by the
value that AVI perceive in our portfolio and believe that continuing to find
and unlock value is the key to extending their successful track record over
the long term.
Graham Kitchen
Chairman
11 November 2025
KEY PERFORMANCE INDICATORS
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*
1 Year 10 Years (Annualised)
+12.4% +12.5%
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 +16.8% on
a total return basis and over ten years it has increased by +13.2% on an
annualised total return basis.
A full description of performance and the investment portfolio is contained in
the Investment Review, parts of which are included below.
Discount, year-end*
2025 2024
6.7% 9.0%
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 28.7m shares were
bought back and cancelled (representing 5.9% of the issued capital as at the
start of the year), adding an estimated +0.6% to net asset value per share to
the benefit of continuing shareholders. The shares were bought back at a
weighted average discount of 8.6% (2024: 9.6%).
Ongoing Charges Ratio* (year ended 30 Sept):
2025 2024
0.85% 0.87%
The Board continues to be conscious of expenses and aims to maintain 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 2025, the Ongoing Charges Ratio was 0.85%,
down very slightly from 0.87% in the year to 30 September 2024. These running
costs in monetary terms amounted to £9.5m in 2025 (2024: £9.6m).
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.
* For all Alternative Performance Measures included in this announcement,
please see definitions in the Glossary in the full Annual Report.
TEN LARGEST INVESTMENTS
1. Chrysalis Investments
Classification: Closed-ended Fund
Valuation: £95.3m
% of net assets: 8.3%
Discount: -29%
Chrysalis Investments is a London-listed closed-ended fund which invests in
late-stage private companies. The shares still trade at close to a 30%
discount, despite Chrysalis' top three portfolio companies representing 71%
NAV / 100% of its market cap, and the company having conducted a large buyback
over FY25*.
2. News Corp
Classification: Holding Company
Valuation: £82.2m
% of net assets: 7.2%
Discount: -40%
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.
3. Vivendi
Classification: Holding Company
Valuation: £82.1m
% of net assets: 7.2%
Discount: -42%
In December 2024 Vivendi split into 4 companies, to simplify the group
structure, aiming to reduce the record sum-of-the-parts* discount. Vivendi
today is essentially a mono-holding company for Universal Music Group, which
we believe to be a highly attractive asset with few comparable alternatives.
4. D'leteren Group
Classification: Holding Company
Valuation: £74.1m
% of net assets: 6.5%
Discount: -49%
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.
5. HarbourVest Global Private Equity
Classification: Closed-ended Fund
Valuation: £60.8m
% of net assets: 5.3%
Discount: -34%
HarbourVest Global Private Equity was established to invest into HarbourVest's
managed funds, offering investors access to private market assets. AGT first
invested in the fund at an unduly wide -41% discount to NAV, and continue to
proactively engage with the board and management.
6. Oakley Capital Investments
Classification: Closed-ended Fund
Valuation: £58.2m
% of net assets: 5.1%
Discount: -26%
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.
7. Cordiant Digital Infrastructure
Classification: Closed-ended Fund
Valuation: £52.2m
% of net assets: 4.5%
Discount: -29%
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.
8. Rohto Pharmaceutical
Classification: Asset-backed Special Situation
Valuation: £48.0m
% of net assets: 4.2%
Discount: -51%
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.
9. Partners Group Private Equity
Classification: Closed-ended Fund
Valuation: £47.7m
% of net assets: 4.2%
Discount: -25%
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
triggered a sell-off. We have since proactively engaged with the board on
multiple matters.
10. Aker ASA
Classification: Holding Company
Valuation: £47.5m
% of net assets: 4.1%
Discount: -12%
Aker is a Norwegian holding company with investments principally in oil &
gas, renewables & green tech, marine-related activities and industrial
software. Its largest asset is Aker BP, a Norwegian oil company. Aker has a
history of active portfolio management, dealmaking and value creation, with a
track record of strong shareholder returns since Initial Public Offering (IPO)
in 2004.
* For definitions, see the Glossary in the full Annual Report.
INVESTMENT PORTFOLIO
AS AT 30 SEPTEMBER 2025
Company Portfolio classification % of IRR ROI Cost Valuation % of
investee (%, £)(1) (%, £)(2) £'000(3) £'000 net
company assets
Chrysalis Investments Closed-ended Fund 15.4% 33.5% 48.6% 64,150 95,332 8.3%
News Corp Holding Company 1.0% 13.7% 25.1% 65,652 82,183 7.2%
Vivendi Holding Company 3.1% nm 16.7% 71,213 82,103 7.2%
D'Ieteren Group Holding Company 1.0% 20.6% 32.6% 50,512 74,089 6.5%
HarbourVest Global Private Equity Closed-ended Fund 2.9% 18.9% 20.5% 49,577 60,759 5.3%
Oakley Capital Investments Closed-ended Fund 6.1% 21.1% 138.4% 21,555 58,164 5.1%
Cordiant Digital Infrastructure Closed-ended Fund 7.0% 42.2% 54.6% 36,385 52,236 4.5%
Rohto Pharmaceutical Asset-backed Special Situation 1.6% -17.0% -18.4% 59,930 47,968 4.2%
Partners Group Private Equity Closed-ended Fund 7.7% 17.0% 40.7% 44,486 47,740 4.2%
Aker ASA Holding Company 1.1% 16.5% 89.1% 38,161 47,465 4.1%
Top ten investments 501,621 648,039 56.6%
Gerresheimer AG Holding Company 4.1% nm -48.2% 84,637 43,765 3.8%
Entain Holding Company 0.8% 3.6% 4.6% 39,681 42,404 3.7%
Mitsubishi Logistics Asset-backed Special Situation 1.7% nm 7.4% 38,162 40,192 3.5%
Dai Nippon Printing Asset-backed Special Situation 0.5% 11.3% 16.3% 30,461 34,494 3.0%
Kyocera Asset-backed Special Situation 0.2% 2.6% 2.8% 32,541 32,657 2.8%
Jardine Matheson Holdings Holding Company 0.2% nm 42.1% 22,600 31,647 2.8%
GCP Infrastructure Investments Closed-ended Fund 4.5% 22.4% 36.2% 26,088 27,550 2.4%
Samsung C&T Holding Company 0.2% nm 5.9% 24,596 26,018 2.3%
EXOR Holding Company 0.2% 9.9% 36.4% 20,528 25,568 2.2%
Christian Dior Holding Company 0.0% 15.7% 67.7% 19,954 25,000 2.2%
Top twenty investments 840,869 977,334 85.3%
Tokyo Gas Asset-backed Special Situation 0.2% nm 12.3% 20,746 23,608 2.1%
Wacom Asset-backed Special Situation 4.0% -3.4% -9.3% 24,203 22,371 1.9%
Symphony International Holdings Closed-ended Fund 15.7% 4.4% 27.6% 26,636 21,944 1.9%
Toyota Industries Asset-backed Special Situation 0.1% 19.5% 25.0% 16,296 20,323 1.8%
Frasers Group Holding Company 0.6% -6.9% 10.3% 21,920 20,136 1.7%
Amorepacific Holdings Holding Company 1.5% nm -16.6% 20,315 16,899 1.5%
Net Lease Office Properties Holding Company 5.0% nm 0.0% 17,402 16,200 1.4%
HD Hyundai Holding Company 0.2% nm 20.1% 11,309 13,558 1.2%
Bolloré Holding Company 0.1% -5.0% -6.9% 14,569 12,207 1.1%
Kokuyo Asset-backed Special Situation 0.5% nm 23.2% 8,616 10,397 0.9%
Top thirty investments 1,022,881 1,154,977 100.8%
Malibu Life Holdings Closed-ended Fund 2.4% nm 46.9% 8,299 9,953 0.9%
Abrdn European Logistics Income Closed-ended Fund 7.0% 9.9% 14.4% 8,466 9,377 0.8%
Youngone Holdings Holding Company 0.9% nm 2.8% 8,545 8,661 0.8%
Youngone Corporation Holding Company 0.6% nm 7.1% 7,884 8,363 0.7%
Hyosung Corporation Holding Company 0.9% nm -1.9% 6,527 6,394 0.6%
SK Kaken Asset-backed Special Situation 0.8% -5.8% -31.2% 8,463 5,468 0.5%
Cuckoo Holdings Holding Company 0.9% nm 0.3% 5,245 5,220 0.4%
Cuckoo Homesys Holding Company 1.4% nm -5.6% 4,739 4,476 0.4%
VEF Holding Company 2.1% -1.1% -2.7% 4,014 3,631 0.3%
JPEL Private Equity Closed-ended Fund 18.4% 20.3% 104.9% 1,219 3,118 0.3%
Top forty investments 1,086,282 1,219,638 106.5%
Gabia Holding Company 1.0% nm 3.1% 1,811 1,863 0.2%
Better Capital (2009)(†) Closed-ended Fund 17.4% 22.0% 29.0% 1,962 1,783 0.1%
Third Point Investors CVR(†) Closed-ended Fund - - - 1,058 1,055 0.1%
Third Point Investors Private Investments(†) Closed-ended Fund - -7.7% -16.3% 563 463 0.0%
Ashmore Global Opportunities - GBP(†) Closed-ended Fund - 95.0% 154.4% 7 101 0.0%
Equity investments at fair value 1,091,683 1,224,903 106.9%
Other net current assets less current liabilities 82,048 7.2%
Non-current liabilities (161,259) -14.1%
Net assets 1,145,692 100.0%
(1) Internal Rate of Return. Calculated from inception of AGT's investment.
Refer to Glossary in full Annual Report. 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 in full Annual Report.
(3) Cost. Refer to Glossary in full Annual Report.
(†) Level 3 investment (see note 15 in the full Annual Report).
INVESTMENT MANAGER'S REPORT
Performance Review
During the last financial year there has been no shortage of news flow. Trump
2.0, lingering and rising inflation, escalating geo-political tension - take
your pick: the world is abundant in identifiable risks and worries.
Despite this, global equity markets have delivered strong returns.
In this context, AGT delivered respectable absolute performance, with a NAV
total return of +12.4% and share price total return of 15.4%. In relative
terms, this was less impressive - the MSCI AC World Index (our Comparator
Benchmark) returned +16.8%.
At the start of September 2025, returns for AGT were fractionally ahead of the
benchmark over the financial year, however we came unstuck in the final month,
underperforming by -410bps. This was a function of what we did own (most
notably D'Ieteren and Gerresheimer) and what we didn't own (over half of the
index return in September came from the Mag-7 and a handful of AI related
stocks).
If a poor craftsman blames his tools, a poor fund manager bemoans what he
doesn't own - and certainly that is not what we are doing. Rather we add this
to try to contextualise performance as, over short periods of time, our
concentrated and differentiated approach will suffer bouts of
underperformance. This is a feature, not a bug of our strategy:
differentiation is a prerequisite for long-term outperformance, and our
history attests to this fact. Indeed, over the last five years your Company is
ranked as the 2(nd) best performing Investment Trust in its peer group, with a
NAV total return of +86.0%.
Returning to the financial year, D'Ieteren was the standout performer, adding
+240bps to your Company's NAV. As discussed in last year's annual report,
following the announcement of a special dividend by the company in September
2024, we increased our position by more than 70% (at peak becoming a 10%
position) to take advantage of technical selling pressure and our perceived
view of mispricing. Ultimately this call was proven right, as the shares
re-rated upon trading ex-dividend. We believe this to be indicative of AGT's
bold approach and the idiosyncratic returns it can generate.
At the other side of the ledger is Gerresheimer, which detracted -405bps. We
expand upon the reasons for this in the Investment Manager's commentary, but
suffice to say such dire returns do not sit well with us. The company remains
at a critical juncture, and, as we always do, we are rolling up our sleeves,
engaging with the board, management and other shareholders to enact change and
unlock the considerable value trapped within the company.
As we have said for some time now, the parts of the market upon which we focus
remain neglected by other investors. This has led to a widening of the
portfolio weighted average discount over multiple years, and it now stands at
-37.4%. This is wide by historic standards and a level previously observed
during times of market stress - not the relatively ebullient equity
environment in which we currently find ourselves.
In the interim report we wrote "we are also cautiously optimistic that the
weight of capital retreating from the US generally, and the so-called
Magnificent 7 specifically, has the potential to be a tailwind for narrowing
discounts in our universe". This has yet to come to pass and only reiterates
the importance of focusing on activism, corporate events and catalysts, as a
means to generate returns for us.
In this context, the opportunity set across all parts of our investment
universe remains highly compelling and the competition for capital for new and
existing ideas remains intense.
One particularly exciting area of opportunity is South Korea, which now
accounts for 8% of NAV. Our lesson from Japan is that there will likely be
many false dawns and disappointments along the way. The potential prize
however is great, and we believe that nimble, focused, bottom-up fundamental
investors, with experience of actively engaging with companies are best
positioned to capture this.
In order to fund the investments in South Korean names, we have continued to
recycle capital. During the financial year we exited successful investments in
Apollo, FEMSA and Reckitt where discounts had narrowed, whilst we also cut our
losses in IAC and Softbank. We have also realised capital selectively in
Japan, which now accounts for 19% of the portfolio.
As we look ahead, we remain cautiously optimistic. Valuations remain highly
compelling, with numerous catalysts and events across the portfolio to help
narrow discounts. On an underlying basis we see strong NAV growth potential,
which in the long term will form the bedrock of our returns. Our history -
which is now over 40 years as manager of AGT - suggests that these two facts
stand us in good stead to generate attractive long-term returns.
PORTFOLIO REVIEW
CONTRIBUTORS
D'leteren Group
Classification: Holding Company
% of net assets(1): 6.5%
Discount: -49%
% of investee company: 1.0%
Total return on position FY25 (local)(2): 18.3%
Total return on position FY25 (GBP): 21.4%
Contribution (GBP)(3): 240bps
ROI since date of initial purchase(4): 32.6%
D'Ieteren was the standout performer adding +240bps to NAV, with the position
returning +21% including £35m of dividends received.
In last year's annual report, we discussed the company's announcement of an
extraordinary €74 per share special dividend, equivalent to nearly 40% of
the company's then market cap. Selling pressure from tax-sensitive, domestic
investors - who faced Belgian tax rates of up to 30% vs. AGT's 10% net rate -
pushed the share price down from €226 to a low of €188. During this
period, we increased our position by more than 70% at an average price of just
under €200 per share. This made D'Ieteren the largest position in the
portfolio at a more than 9% weight on 9 December 2024, when the shares closed
at €200 per share. On 10 December 2024, the company traded ex-dividend of
the €74 per share special dividend, yet closed the day at €160 i.e. some
+27% above the implied ex-dividend price of €126. We believe that this
series of events highlights AGT's high conviction-led approach and the
idiosyncratic returns it can generate.
Despite strong performance we continue to see attractive upside underpinned by
Belron (70% of NAV). In May 2025 we attended D'Ieteren's capital markets day,
which included a presentation from Belron's new(ish) CEO, Carlos Brito. The
day served to highlight the company's continued long growth runway, stemming
from increased windshield complexity and ADAS recalibration, as well as
opportunities for growth. Management guide that this should translate to
mid-to-high-single-digit revenue growth through to 2028. The continued
positive sales mix effect should drive margins above 25%, resulting in ~12%
annual growth in operating profit.
D'Ieteren shares currently trade at €159, which represents a -49% discount
to our estimated NAV. In October 2024, we saw a transaction between Belron
minority shareholders which valued the company at a €32bn enterprise value
("EV"). This pegs D'Ieteren's 50% equity stake at €221 per D'Ieteren share.
We believe that this puts a line in the sand for future, more meaningfully
sized transactions in Belron's equity. Notably, we believe that investors are
underestimating the clear signposts from the capital markets day towards a
Belron IPO - which we believe would help to narrow D'Ieteren's discount.
The combination of strong NAV growth prospects and a potential narrowing of
D'Ieteren's, still very wide, discount bode well for future returns.
Aker ASA
Classification: Holding Company
% of net assets(1): 4.1%
Discount: -12%
% of investee company: 1.1%
Total return on position FY25 (local)(2): 55.2%
Total return on position FY25 (GBP): 62.8%
Contribution (GBP)(3): 232bps
ROI since date of initial purchase(4): 89.1%
Having been one of the largest detractors from performance in the last two
financial years, Aker was the second largest contributor to returns in 2025.
Over the course of the year, shares in Aker returned +59% on a total return
basis, which was split roughly evenly between NAV growth (+31%) and discount
narrowing (from 25% to 12%). The +5% appreciation of the Norwegian Krone
versus sterling added a further polish to returns.
Starting with the NAV, the largest contributor was Aker BP, the Norwegian oil
and gas exploration and production company, which accounts for 51% of Aker's
NAV. Shares in Aker BP returned +25%, standing in stark contrast to a -9%
decline in the oil price over the period. Performance at the Johan Sverdrup
oil field has continued to exceed expectations, assuaging prior investor
concerns and helping support the heavy lifting of the current capex cycle, as
Aker BP remains one of the few Western oil companies investing for growth.
Indeed, in February 2025 the company issued encouraging new long-term
guidance. Management expects production to increase from 439k barrels per day
in 2024 to 525k in 2028 and then remain above 500k into the 2030s. Whilst oil
prices remain relatively depressed currently, and the outlook murky, we
believe a long-dated production schedule and industry leading production will
prove themselves to be highly valuable as we move through the decade. Combined
with a current dividend yield of 10%, the prospects for Aker BP and in turn
Aker's NAV appear compelling.
As well as this, it has been a busy period elsewhere in Aker's portfolio. As
we wrote in the interim report, the company has made a concerted effort to
unlock value and realise capital from smaller assets in the portfolio, such as
the sale of Aker BioMarine's Feed Ingredients business.
In 2025, capital allocation has also been more front footed - most notably in
August the company announced Stargate Norway - a JV with NuScale and OpenAI to
build a renewable-powered data centre in Narvik, Northern Norway. Whilst we
remain sceptical about the vast build out of AI-related infrastructure and the
capital cycle, from Aker's perspective the capital outlay is modest at c.2% of
NAV.
More meaningful, however, has been the impact on Aker's shares, which rose +9%
on the day of the announcement. Since this point, we have seen a continued
narrowing of the discount, which has gone from 25% a year ago to 12% today. We
have taken advantage of this and reduced the position by about a quarter in
recent months (and indeed by more following the end of the financial year).
We continue to be attracted by the controlling shareholders' track record of
value creation and the assets the company owns. The narrowing of the discount
tempers our enthusiasm, and this has been reflected in the reduced position
size. The company's history and our own trading history suggests that the
future path of the discount will be volatile and we will endeavour to exploit
this if the opportunity arises.
Chrysalis Investments
Classification: Closed-ended Fund
% of net assets(1): 8.3%
Discount: -29%
% of investee company: 15.4%
Total return on position: FY25 (local)(2): 28.6%
Total return on position: FY25 (GBP): 28.6%
Contribution (GBP)(3): 208bps
ROI since date of initial purchase(4): 48.6%
Chrysalis was the third largest contributor to NAV in FY25, adding +208bps.
Over the period, Chrysalis' shares generated a total return on the position of
+29% for AGT, driven by a +17% appreciation in the NAV and a tightening of the
discount from -36% to -29%.
Readers of our newsletters will recall that AVI first initiated the position
in Chrysalis in January 2024, with an investment case predicated on the
following four factors.
Firstly, Chrysalis traded at an abnormally wide 48% discount to a heavily
written-down NAV, which we felt provided some downside protection to the lofty
valuations seen in the private tech space in 2021. Chrysalis' portfolio had
also become increasingly concentrated with its top five holdings, accounting
for 69% of NAV, all being mature companies and (mostly) performing strongly.
We felt that there were multiple credible prospects for liquidity events
offering significant potential for carrying value uplifts. And, finally, a new
capital allocation policy had been agreed upon by shareholders, promising
£100m of buybacks (24% of the prevailing market cap), which would be
triggered once cash reserves from exits reached £50m.
It is therefore pleasing for us that Chrysalis' contribution has been driven
by the very factors which first attracted us to the company.
Firstly, two exits in quick succession meant that Chrysalis hit the £50m cash
buffer threshold, commencing its £100m buyback programme. This started on 30
September 2024, with the company spending c. £83m over the financial year, to
purchase some 83m of its own shares, at a weighted average discount of -35%.
Secondly, the NAV/share return of +17% over FY25 has been led by (1) a +49%
write-up in the valuation of Starling Bank, driven by the strong fundamentals
underpinning the business, and (2) a +14% markup in Klarna, which listed on 10
September 2025 on the New York Stock Exchange.
Following the company's write-up over the course of 2025, Starling Bank now
represents 44% of Chrysalis' NAV.
From AVI's research on the company, including meeting with current management
and ex-employees, it is our belief that Starling Bank boasts the
characteristics of a best-in-class, digital-first neobank, but with the added
optionality of a tangible SaaS(†) offering through the Engine Platform.
Starling's banking operations were built from the ground-up as a digital-first
business. This not only drives significant cost advantages compared to
incumbent UK high-street banks, but it has enabled Starling to develop and
launch new products far more quickly as a result. Being digital-first,
Starling's customer acquisition cost is only £40 versus £250 for traditional
banks - with their numerous high-street branches to pay for - and the customer
payback period is only 2.5 months. This low-cost operational model also
generates far superior returns, boasting a ROTE(††) of c. 45% (assuming
NAV net of excess capital) versus UK peers at 17%. Starling's banking business
is also the perfect case study for the company's SaaS offering, the Engine
platform being built on the exact architecture that Engine offers to new
potential clients -100% API(†††) uptime, zero customer downtime, and the
industry-leading Net Promoter Score. We believe that the Engine platform
represents a compelling growth opportunity, with management targeting c.
£100m in ARR(††††) within two years. Admittedly, Engine has just two
clients to date, Salt Bank in Romania and AMP Bank in Australia, which
contributed just c. £9m in fee revenue in FY25. However, Starling management
recently disclosed that they have signed a "Globally Systematic Financial
Institution" for a deal potentially worth £50m ARR, with an additional five
deals still "in discovery".
At the current carrying value, AVI estimates Chrysalis' position in Starling
Bank to be worth £3.3bn, or c. 3.2x trailing book value. This compares to 1x
for the UK incumbent banks. Although this is a premium multiple, we believe
that Starling's exceptional unit economics and growth potential more than
justify it. Should we see Engine formally announce new major clients, we
believe there could be significant further upside.
Elsewhere, we remain excited by Chrysalis' position in recently listed Klarna
(13% of NAV), and believe that the market continues to undervalue the company
relative to its primary peer, Affirm. This is despite Klarna being the number
one global player in Buy-Now-Pay-Later financing, leveraging its fixed-term
bank deposit-driven funding model to extend its short duration loan-book to
consumers.
Chrysalis closed the period at a -29% discount to its NAV. We continue to
engage with the board on the company's future strategy, AGT owning over 12% of
the company.
( )
(†) Software as a Service.
(††) Return on tangible equity. For definition, see Glossary in full
Annual Report
(†††) For definition, see Glossary in full Annual Report
(††††) Annual Recurring Revenue. For definition, see Glossary in full
Annual Report
( )
Apollo Global Management
Classification: Holding Company
% of net assets(1): N/A*
Discount: N/A*
% of investee company: N/A*
Total return on position FY25 (local)(2): 42.1%
Total return on position FY25 (GBP): 49.3%
Contribution (GBP)(3): 202bps
ROI since date of initial purchase(4): 166.0%
Despite only being held for little more than the first two months of the
financial year, Apollo ("APO") was one of the largest contributors with a
share price increase of +47% in GBP over this short period. Buoyed first by
stellar Q3 2024 results and then - just a day later - by a US election result
that poured rocket fuel on the US financials sector as a whole - and the
alternative asset managers (AAMs) in particular - on optimism around a revival
of deal activity and the prospect of a more benign regulatory environment.
We believe APO's share price led the post-election charge amongst its peers
for two specific reasons. Firstly, there had been growing concerns that its
life insurance business, Athene, (more accurately described as Retirement
Services), might become subject to increased regulatory oversight given an
increasing media focus on "private equity owned insurers". While even this
label is highly misleading, suggesting as it does that insurers like Athene
either sit within limited life funds - they do not - and/or that their balance
sheets are loaded with private equity investments managed by their owner - in
most cases, certainly in Athene's, they are not - the fact is that the
election result reduced the probability of tightened regulation to close to
zero.
Secondly, the change in administration raised the prospects of alternative
investments being allowed into the $12trn 401(k) US pension market. While
there were no legal restrictions on such pension plans investing in private
assets, fears of litigation had prevented any such moves to date. We note that
a subsequent executive order in August 2025 unequivocally laid the grounds for
removing "the regulatory burdens and litigation risk" around such investments.
With its experience in retirement services, via its ownership of Athene, and
having been first to identify what Rowan terms the "Fixed Income Replacement
Opportunity" (replacing a portion of the ~$40trn public investment grade
market with private investment grade credit), APO is arguably the best placed
of all its peers to capitalise on an opening up of the 401(k) market.
We bought APO in 2021, at a time when we believed the AAM sector was
misunderstood and undervalued; when valuations for balance sheet heavy
companies like APO and KKR (note AGT also owned KKR for four years up until
mid-2024) within the sector were overly penalised; and when APO's share price
was suffering from the scandal around former CEO Leon Black's links to Jeffrey
Epstein. Our thesis was that the market viewed the companies as levered plays
on financial markets when, in fact, the bulk of their value resides in their
high-quality, visible, recurring, and predictable streams of fee-related
earnings derived from management fees charged on long duration capital.
In the specific case of APO, there were also concerns ahead of its merger with
its sister company, Athene. 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 96%
investment-grade, with Athene seeking to earn a return premium from complexity
and illiquidity rather than from taking duration or additional credit risk and
targeting a mid-to-high-teens return on equity. 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, an increasing proportion of Athene's growth
was likely to be funded by third-party "sidecar" vehicles.
While consensus estimates of forward earnings increased over our holding
period, the bulk of returns came from multiple expansion as the market
favourably reassessed the company's earnings quality and the duration of its
growth opportunity.
With our view and that of the market much more aligned, we sold our position
in December 2024, just after the announcement of APO's inclusion in the
S&P 500. This long-awaited event was met with a disappointing reaction by
the market, perhaps because the shares being on the cusp of inclusion for so
long meant it was more priced in than we had assessed. We were still pleased
with overall returns of +166% and an IRR of +41% over our three-and-a-half
year holding period vs. +28% / +9% for the MSCI ACWI and +42% / +13% for the
S&P 500. We note that, at the time of writing, Apollo's shares sit -27%
below where we sold the last of our holding. We continue to monitor Apollo and
the wider peer group as part of our investment universe.
*The Company no longer had a position in this investment as at 30 September
2025.
Toyota Industries
Classification: Asset-backed Special Situation
% of net assets(1): 1.8%
Discount: -37%
% of investee company: 0.1%
Total return on position FY25 (local)(2): 51.9%
Total return on position FY25 (GBP): 47.9%
Contribution (GBP)(3): 153bps
ROI since date of initial purchase(4): 25.0%
Toyota Industries was AGT's fifth largest contributor over the financial year,
adding +153bps to NAV. The investment delivered strong returns following Akio
Toyoda's proposal for Toyota Industries to be taken private, vindicating our
long-held thesis that the market was fundamentally mispricing the value
trapped within the Toyota Group's complex cross-shareholding structure.
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 the
Toyota Industries stub, due to the outsized value of the Toyota Group
cross-shareholdings, which accounted for 93% of the company's then market cap.
We were also attracted to the company's dominant market position as the number
one supplier of forklift trucks (30% global share) and auto AC compressors
(50% share globally), with long-term growth potential in logistics solutions
from the continued expansion of e-commerce.
It was our opinion at the time that Toyota's management were under significant
pressure to correct the company's lowly valuation and capital inefficiencies.
This followed the requests made by the Tokyo Stock Exchange for companies
trading under 1x book value to disclose value improvement plans, as well as
the mounting scrutiny from Toyota shareholders, as evidenced by the Toyota
Motor Chairman's historically low approval rating of 72% in 2024 (or just 57%
if excluding Toyota Group companies).
Our thesis materialised in April 2025, when initial reports began circulating
that Akio Toyoda, Chairman of Toyota Motor and grandson of Toyota's founder,
wanted to take Toyota Industries private in a rumoured $42bn transaction - one
of the largest such deals in history. The potential proposal represented a
seismic shift for Japanese corporate governance, with Toyota long seen as the
ultimate symbol of resistance to reform.
However, the outcome was not without disappointments.
The formal offers then arrived some six weeks later at just ¥16,300 per share
($33bn), representing an 11% discount to the prevailing market price and a
lowly +23% premium to the undisturbed share price.
This offer reflects the risks of insider-led transactions rather than
competitive auction processes. The deal, while still addressing the
cross-shareholding issues that had long frustrated value-oriented investors,
prioritised the interests of the Toyota founding family and group companies
over minority shareholders. The offer came in well below what we felt was a
fair value for Toyota Industries, with the AVI estimate nearer ¥20,000 per
share (a c.+50% premium from the undisturbed price).
Given the material re-rating in the shares when the potential deal was first
leaked, we took the decision at the time to reduce our stake by 50%, cutting
our weighting from 4% to 2% of AGT's NAV by the end of June 2025. This allowed
us to crystallise substantial gains at a premium to the eventual tender offer
price, while maintaining exposure to what we believe remains one of the most
significant corporate governance stories in modern Japan.
We continue to believe that the Toyota Industries deal will be remembered as a
watershed moment for Japanese corporate governance, demonstrating that even
the most entrenched resistance to reform can ultimately yield to sustained
activist pressure and changing market dynamics.
Although we remain disappointed by the pricing and structure of the deal as it
stands, the investment in Toyota Industries exemplifies how AVI's approach of
patient capital deployment into mispriced situations, where there is room to
engage constructively with management teams, can provide real catalysts to
unlock significant trapped value. Over the course of our investment, we have
earned an IRR/ROI(†) of +20%/+25%.
( )
(†) Internal Rate of Return/Return on Investment.
DETRACTORS
Gerresheimer AG
Classification: Holding Company
% of net assets(1): 3.8%
Discount: -62%
% of investee company: 4.1%
Total return on position FY25 (local)(2): -50.3%
Total return on position FY25 (GBP): -48.2%
Contribution (GBP)3: -405bps
ROI since date of initial purchase4: -48.2%
Gerresheimer ("GXI"), the German conglomerate, was the largest detractor from
your Company's performance, costing -405bps, with a return of -48% in GBP.
By way of reminder, we started building a position in GXI in late 2024 and
early 2025. At the time, our thesis was simple: GXI offers exposure to a
leading player in the oligopolistic pharmaceutical primary packaging market,
with high barriers to entry and attractive growth prospects. However, these
merits were not reflected in the group's stock market valuation, with the
company trading at a significant discount to our estimated NAV. We saw
numerous paths to unlock value, most notably through the strategic review of
its Moulded Glass division, but were also encouraged by reported private
equity interest in the entire business.
Whilst the investment thesis was simple, our experience has been anything but.
In June 2025, the company issued a third effective profit warning within the
last nine months, with it becoming apparent that internal controls and
tracking of the business performance were poor, further damaging the
relationship and credibility that the company had with the investment
community. In response, we published a public letter to the supervisory board
which made three main recommendations in order to restore and protect value:
1) the need for new financial leadership; 2) an accelerated exit of Moulded
Glass; 3) the establishment of a capital allocation committee.
Since this point, two of our three demands have been addressed: the CFO has
been replaced and GXI has publicly committed to exit Moulded Glass. We view
these as important steps in the right direction and have been encouraged by
our early conversations with the new CFO Wolf Lehmann. As we saw it, the
company has considerable self-help potential, a strong path ahead to unlock
value, with private equity interest in the company having dissipated.
However, this progress and optimism was de-railed by news in September 2025
when BaFin, the German regulator, announced an investigation into
Gerresheimer, leading to a further setback in the share price. In a so-called
Special Matter Audit the question relates to the treatment of certain Bill
& Hold contacts and whether revenue was correctly recognised in 2024, or
whether in fact it should have been recognised in 2025. Whilst this appears to
be a discrete issue, affecting c.2% of revenues, investors have not
unreasonably run for the hills, with little tolerance for a management team
and supervisory board that have shown themselves to be at best incompetent. In
our view this only reinforces the need for wholesale changes, with the
reputation of the company severely damaged.
With that said, there remains much to like about Gerresheimer.
The core Containment Solutions and Delivery Systems business remains the jewel
in the crown, supplying mission critical but low proportion of total cost
products into end markets with attractive secular growth prospects. Over the
last half decade, the business has continued to move up the value chain toward
High Value Solutions which, all else being equal, should be conducive to
better growth, margins and valuation multiples. At present none of this is
reflected in the share price, which embeds a significant discount at of 7.8x
NTM EV/EBITDA(†) / 7.7x PE versus peers at 19.1x / 26.6x. At current prices
one is paying an EV to Net Plant Property & Equipment multiple of just
1.9x - a fact that likely cannot escape peers who trade 5-10x or even certain
customers such as Novo Nordisk, for whom GXI's dual chamber CagriSema syringe
is of the utmost importance.
In order to arrest the decline and unlock the considerable latent value we
continue to actively engage with the board, management and other shareholders.
Returns to date have been dismal but we are optimistic of improvements to come
and will be working hard to secure them.
(†) Next Twelve Months. For definition, please see Glossary in the full
Annual Report.
Rohto Pharmaceutical
Classification: Asset-backed Special Situation
% of net assets(1): 4.2%
Discount: -51%
% of investee company: 1.6%
Total return on position FY25 (local)(2): -23.6%
Total Return on position FY25 (GBP): -26.1%
Contribution (GBP)(3): -167 bps
ROI since date of initial purchase(4): -18.4%
Rohto Pharmaceutical ("Rohto") was the second largest detractor, reducing
performance by -167bps with a return on our position of -26% over the period
(GBP).
Rohto is Japan's leading skincare and eye-drop manufacturing company. Our
investment thesis centres on the company's combination of high-quality
fundamentals and an attractive valuation, as Rohto continues to trade at a
meaningful discount to global cosmetic peers, despite a strong track record of
consistent revenue growth and mid-teens operating margins.
AVI believes that Rohto's undervaluation is driven by the focus on non-core
businesses, misleading investor relations communication, and lower allocation
to shareholder returns than peers. Specifically, management needs to
reallocate its R&D(†) spending from the low-profit prescription drug
business and regenerative medicine business, towards its high-value, high
market share product lines, such as skin care products.
We initiated a position in Rohto in June 2024, and in the early stages of our
engagement we privately sent constructive letters and presentations to
management. However, we were only able to meet with one board member. As such,
in April 2025, we launched a public campaign titled 'Awakening Rohto', which
is available to view on our website. The 100-page presentation seeks to
highlight the robustness of the core skincare and eye drops businesses, while
articulating the need for management to quantitatively justify ongoing
investment in the medical segment.
Within the cosmetics market, Rohto was not alone in seeing its share price
decline, with close peers returning -25% on average over the twelve-month
period. This decline can be partly attributed to the slowdown in the Chinese
market, while for Rohto specifically, core skincare brand Melano CC saw a
slowdown in sales due to heightened competition from private brands and Korean
manufacturers entering the market.
Investors' concerns about Rohto's future growth potential were somewhat
alleviated by the FY2025 first quarter earnings announcement in August, with
revenue rising +20% YoY(††) while operating profit fell modestly by -1%
YoY, beating consensus guidance. Full-year guidance remained unchanged, with
revenue forecast to grow by +8% YoY and operating profit to increase by +2%.
The share price rose +14% in the day following the announcement, with market
confidence rising particularly due to the recovery of core brands in the
cosmetics segment, as domestic sales for the brand Hada Labo improved.
In a sign of improving shareholder communication, shortly after our financial
year end in October, the company for the first time held a meeting for
shareholders and investors to discuss the business strategy and brand
portfolio, with the Chairman, CEO, and an external director making
presentations. AVI believes that this was a result of the pressure on
management to quantitatively explain the future strategy.
Going forward, AVI will continue our constructive engagement with management,
and we remain optimistic about the outlook for the cosmetics business and
future growth potential overseas in both cosmetics and OTC(†††) eye
care. We will push Rohto to provide more granular and quantitative disclosure
on the medical business segment, specifically regarding a timeline for
becoming profitable and whether the investment meets the cost of capital.
To date, the investment has generated an ROI of -18%, and our engagement
continues unabated to unlock the substantial upside to the intrinsic value.
(†) Research & Development
(††) Year-on-Year
(†††) Over The Counter
IAC
Classification: Holding Company
% of net assets(1): N/A
Discount: N/A*
% of investee company: N/A*
Total return on position FY25 (local)(2): -22.2%
Total return on position FY25 (GBP): -20.0%
Contribution (GBP)(3): -70bps
ROI since date of initial purchase(4): -50.4%
During the period we exited the position in IAC, which detracted -70bps.
What started out as a small and highly successful investment (predicated on
the spin-off of Vimeo) became a much larger and painful investment. Returns
were both a function of terrible NAV performance and significant discount
widening (selling on an average -42% discount vs. an average purchase on a
-29% discount).
In terms of the NAV performance, we made two mistakes. In the case of Angi we
mistook operational complexity for a moat, and the business found it much
harder than we anticipated to grow both sides of its marketplace. In the case
of Dotdash Meredith, both we and IAC management were culpable of mistaking
cyclical forces for secular. The growth rates Dotdash achieved in 2021/22 were
unsustainable and were cyclical in nature, not secular. In turn, Meredith was
unable to deliver on the high targets set out at the time of the merger with
Dotdash.
Over time we also became more cautious about management and the widening gap
between their words and actions (e.g. the lack of share buybacks from 2021 to
2025). With hindsight this inaction should have offered us more of warning
sign.
That said, taking a step back, it serves as a great reminder of the powers of
diversification and portfolio management. As Howard Marks says,
"diversification allows investors to dare to be wrong." This is important as
invariably we will make mistakes from time to time but in such a way that the
portfolio returns are not excessively damaged. It is inevitable that we will
make more mistakes in the future, but we hope that they will be different
ones.
*The Company no longer had a position in this investment as at 30 September
2025.
Christian Dior
Classification: Holding Company
% of net assets(1): 2.2%
Discount: -18%
% of investee company: 0.0%
Total return on position FY25 (local)(2): -14.3%
Total Return on position FY25 (GBP): -11.0%
Contribution (GBP)(3): -62bps
ROI since date of initial purchase(4): 67.7%
Christian ("CDI") - the French-listed mono-holding company through which the
Arnault family control LVMH - was a meaningful detractor. Over the course of
the period, shares in CDI declined by -24%, which was entirely driven by a
decline in the NAV, with the discount largely unchanged at 18%.
Since LVMH was momentarily crowned Europe's first $500bn company in the spring
of 2023, the business has faced a plethora of issues that have curtailed
growth, reduced margins and led to material cuts to earnings estimates.
Generally speaking, the business has suffered a cyclical post COVID
normalisation, following a period of unprecedentedly strong growth (from 2018
to 2022 the all-important Fashon & Leather Goods ("F&LG") business saw
organic growth of +200%). This normalisation has been exacerbated by the
increased importance of new/occasional customers, who are more aspirational in
nature compared to prior cycles, as interest rates and reduced wealth impaired
spending power. At the same time, we have seen a prolonged slowdown in the
Chinese economy (with the Chinese cluster accounting for more than 30% of
industry revenues). This has also coincided with the end of a period of
super-normal growth for Dior, in which revenues and operating profits grew
from ~€2.6bn and ~€500m respectively in 2018 to ~€8.6bn and ~€3.4bn in
2023. (We estimate that, despite Dior accounting for less than one tenth of
F&LG EBIT(†) at the start of the period it accounted for somewhere
between a quarter and a third of the growth). Finally, there is a sense of
design fatigue across Louis Vuitton and Dior, as well as excessive price
taking without commensurate innovation.
As well as material cuts to earnings expectations, LVMH shares suffered a
significant de-rating as many investors have questioned whether the issues
facing the luxury goods sector generally and LVMH specifically were structural
rather than cyclical. At the nadir in June 2025, LVMH shares traded at just
14x 2025e EV/EBIT(††) and 20x 2025e PE(†††) (5.3% FCF(††††)
yield) and a significant 34% discount to our estimated sum-of-the-parts(1).
We used this period of weakness to bolster our position, viewing the above
issues as temporary in nature. To date this has been well rewarded - with the
shares up by +22% from the point at which we added. We continue to see further
upside because we believe that, as in past cycles, LVMH will likely emerge
stronger as the leader in a structurally attractive industry, with good growth
prospects, margins and high returns on capital. This bodes well for future NAV
growth, with room for Christian Dior's discount to narrow if and when the
mono-holding structure is collapsed, acting as a further kicker.
(†) Earnings Before Interest and Tax
(††) Enterprise Value
(†††) Price to Earnings ratio
(††††) Free Cash Flow
Softbank Group Corp
Classification: Asset-backed Special Situation
% of net assets(1): N/A*
Discount: N/A*
% of investee company: N/A*
Total return on position FY25 (local)(2): -9.0%
Total Return on position FY25 (GBP): -7.3%
Contribution (GBP)(3): -40bps
ROI since date of initial purchase(4): -6.9%
Our hedged position in Softbank Group detracted -0.53% over the period.
Softbank Group is a Japanese-listed holding company, founded in 1981 by Masa
Son, that holds a variety of listed and unlisted technology-focused companies.
We initiated the position in June 2024. At the time of investment, the
discount had blown back out to levels last seen during the COVID sell-off,
close to 60%. However, given the lofty valuations of Softbank's listed
underlying holdings, such as ARM Holdings, 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 allowed us to get
full equity exposure without making the same capital outlay as holding the
shares directly and minimised margin requirements due to netting. Using this
combination of long and short total return swaps also allowed us to get the
full benefit from any discount narrowing, while protecting us from downside
risk in names where we were not comfortable in their valuations.
While we believed new investments and substantial share buybacks were not
mutually exclusive, given the company's strong balance sheet, our conviction
in the thesis waned as it became clear that management's priority was
overwhelmingly to preserve as much capacity as possible for new AI-related
investments. We believed that this decision would impact management's ability
to conduct share buybacks and narrow Softbank's wide discount. As a result, we
sold our shareholding in April 2025.
1 For definitions, see Glossary in full Annual Report.
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 in full Annual Report for
further details.
*The Company no longer had a position in this investment as at 30 September
2025.
OUTLOOK
In recent weeks there has been a chorus of alarm bells from the great and good
of financial markets - from Jamie Dimon, to the IMF to the Bank of England -
surrounding a potential stock market bubble and AI. We do not profess to have
any great insight into what comes next, but in the same way a watched pan
never boils, markets don't tend to correct just as everyone warns they will.
Rather - they climb the wall of worry. How long for is obviously the pertinent
and unknowable question, but whilst the funding taps remains open and positive
reinforcement loops persist, the answer is quite a long time. If and when a
shock
occurs we are well placed to capitalise, with gearing having been reduced in
recent weeks and currently standing at 2.6%.
As readers of our reports will know, macro postulations and predictions are
not something upon which we focus or devote energy to. Rather, our attention
is on the bottom-up fundamentals.
In this vein there is a lot to be excited about. As we have explained for some
time, the parts of the market upon which we focus remain overlooked and
ignored. This is reflected in wide discounts, as indicated by the -39%
portfolio weighted average. We continue to believe that a focus on events,
activism and hard work will be key to unlocking value and driving returns, and
have assembled a concentrated-yet-diverse portfolio to reflect this. Our
experience shows these are the inputs for delivering attractive long-term
returns.
Joe Bauernfreund
CEO/CIO
Asset Value Investors Limited
11 November 2025
FURTHER INFORMATION
AVI Global Trust Plc's annual report and accounts for the year ended 30
September 2025 (which includes the notice of meeting for the Company's AGM)
will be available today on https://www.aviglobal.co.uk.
It will also be submitted shortly in full unedited text to the Financial
Conduct Authority's National Storage Mechanism and will be available for
inspection at data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) in accordance with
DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules.
ENDS
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