Annual Financial Report

RNS Number : 7181R

AVI Global Trust PLC

09 November 2021

 

AVI GLOBAL TRUST PLC

('AGT' or the 'Company')

LEI: 213800QUODCLWWRVI968

Annual Financial Report for the year ended 30 September 2021

A copy of the Company's Annual Report for the year ended 30 September 2021 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, Link Company Matters Limited, on 01392 477500. 

The Annual General Meeting ('AGM') of the Company will be held on 16 December 2021 at 11.00am at 11 Cavendish Square, London, W1G 0AN.

The Directors have proposed the payment of a final dividend of 10.50p per Ordinary Share which, if approved by shareholders at the forthcoming AGM, will be payable on 4 January 2022 to shareholders whose names appear on the register at the close of business on 3 December 2021 (ex-dividend 2 December 2021).

The following text is copied from the Annual Report and Accounts:

STRATEGIC REPORT

COMPANY PURPOSE

The Company is an investment trust. Its investment objective is to achieve capital growth through a focused portfolio of investments, particularly in companies whose shares stand at a discount to estimated underlying net asset value.

BUSINESS MODEL

Strategy

Our 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. Often, we engage actively with management in order to provide suggestions for improvements that we believe could help narrow the discount or improve operations, thus releasing value for shareholders.

Investment Approach

As an investment trust, one of the Company's most important relationships is with the Investment Manager.

The Company's assets are managed by Asset Value Investors Limited ('AVI'). AVI aims to deliver superior returns and specialises in finding companies that, for a number of reasons, may be selling on anomalous valuations.

The Investment Manager has the flexibility to invest around the world and is not constrained by any fixed geographic or sector weightings. There is no income target set 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 43 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, discount to net asset value and the expense ratio.

NAV TOTAL RETURNS TO 30 SEPTEMBER 2021*

1 Year	10 Years (Annualised)
36.2%	11.3%

DISCOUNT*

30 September 2021	30 September 2020
6.7%	9.3%

EXPENSE RATIO*

2021	2020
0.83%	0.89%

OTHER KEY STATISTICS

NET ASSET VALUE PER SHARE*

30 September 2021	30 September 2020
1,109.77p	837.13p

TOP TEN INVESTMENTS REPRESENT

52.7%

of portfolio*

ESTIMATED PERCENTAGE ADDED TO NET ASSET VALUE PER SHARE FROM BUYBACKS*

2021	2020
0.3%	0.5%

* For definitions, see Glossary below.

COMPANY PERFORMANCE

Financial Highlights

- Net asset value ('NAV') per share on a total return basis was 36.2%.

- Final dividend of 10.5p and total dividend maintained at 16.5p

- Share price total return of 40.3%

Performance Summary

	30 September  2021	30 September  2020
Net asset value per share (total return) for the year1*	36.2%	0.0%
Share price total return for the year*	40.3%	2.0%
Comparator Benchmark
MSCI All Country World ex-US Index (£ adjusted total return † )	18.8%	-1.8%
Discount*
Share Price Discount (difference between share price and net asset value)2	6.7%	9.3%
	Year to  30 September  2021	Year to  30 September  2020
Earnings and Dividends
Investment income	£20.40m	£15.16m
Revenue earnings per share	13.68p	9.36p
Capital earnings per share	273.10p	(11.18)p
Total earnings per share	286.78p	(1.82)p
Ordinary dividends per share	16.50p	16.50p
Expense Ratio*
Management, marketing and other expenses (as a percentage of average shareholders' funds)	0.83%	0.89%
2020 Year's Highs/Lows	High	Low
Net asset value per share	1,115.86p	835.39p
Net asset value per share (debt at fair value)*	1,099.81p	815.30p
Share price (mid market)	1,020.00p	729.00p

¹ As per guidelines issued by the AIC, performance is calculated using net asset values per share inclusive of accrued income and debt marked to fair value.

² As per guidelines issued by the AIC, the discount is calculated using the net asset value per share inclusive of accrued income and debt marked to fair value.

^† The Company uses the net version of the MSCI All Country World ex-USA Index, which accounts for withholding taxes incurred. If the gross version of the Index had been used, the comparative figures for the years ending 30 September 2021 and 30 September 2020 would have been 19.3% and -1.4%, respectively.

Buybacks

During the year, the Company purchased 3,438,405   Ordinary Shares, all of which were placed into treasury, at a cost of £32.6m (4,573,938 ordinary shares at a cost of £31.1m in 2020).

* Alternative Performance Measures

For all Alternative Performance Measures included in this Strategic Report, please see definitions in the Glossary below.

CHAIRMAN'S STATEMENT

"NAV total return over the year was +36.2%, driven primarily by excellent stock selection."

Overview of the Year

I am pleased to report that the NAV total return over the year to 30 September 2021 was +36.2% driven primarily by excellent stock selection, which compares very well with the comparator benchmark return of +18.8%. Performance during the year under review was naturally linked to the extent and timing of expected economic recovery from the effects of the COVID-19 pandemic but, as described in the Investment Manager's Report, several other factors were also important drivers of investment returns. It was encouraging to note that returns were driven both by the active decision by the Investment manager to position part of the portfolio for the post-COVID economic recovery and also by companies which are less directly economically sensitive, demonstrating the broad and balanced exposure of our investments.

Our Investment Manager's approach focuses on investments where the value of underlying assets can be clearly assessed and AVI invests in companies whose share price is trading below our view of intrinsic value and when there is a realistic prospect of releasing that value. As well as current value, the Investment Manager focuses on the growth prospects of underlying businesses. Performance this year was driven by a combination of these factors, with both the increase in values of underlying businesses and discounts to intrinsic value contributing to the strong NAV return.

Income and Dividend

Our revenue account has recovered somewhat from the effects of the pandemic and revenue earnings per share were 13.68p, compared with 9.36p for the previous accounting year. The Company paid an interim dividend of 6.0p per share on 2 July 2021. We are proposing a final dividend of 10.5p per share for approval at the AGM which will bring the total dividend for the year to 16.5p, which is unchanged from last year.

The Board recognises the importance of income to many shareholders and so has again elected to use revenue reserves, which have been built up over many years as a buffer and are a key advantage of the investment trust structure, to maintain the dividend level. As I have emphasised before, we do not constrain our Investment Manager by setting a revenue target and their mandate is to produce total returns which may be via any combination of capital growth and income. The Board's current intention remains to maintain the dividend at current levels. We have now been operating for over 18 months in an unprecedented environment and therefore our dividend policy remains under careful and regular review.

Gearing

In light of the attractive valuations identified by the Investment Manager and the value added by gearing in recent years, in August the Board agreed a modest increase in the amount of debt available by increasing the Company's revolving credit facility from JPY9.0bn to JPY12.0bn, an increase of approximately £19.5 million in sterling terms. Although the primary currency of the facility is in Japanese Yen, drawings can also be made in Sterling, US Dollars and Euros. As at 30 September 2021, the total debt available, if fully drawn, would produce gearing of 13.5% and net of cash in the portfolio actual gearing was 5.5%*. As I have said in previous statements, any increase or decrease in cash and gearing levels is driven primarily by the Investment Manager's view on investment opportunities, and having appropriate available liquidity, and not by views on the future direction of markets.

Share Price Rating and Marketing

The shares ended the financial year trading at a discount of 6.7%%, which was narrower than the 9.3% at the same point last year.

Your Board continues to believe that it is in the best interests of shareholders to use share buybacks with the intention of limiting any volatility in the discount. During the accounting year under review, some 3.4 million shares were bought back. As in previous years we intervened when the Board believed that the discount was unnaturally wide and intend to continue to follow this approach, which is also an approach that our Investment Manager encourages for many of our investee companies. As well as benefitting shareholders by limiting the discount at which they could sell shares if they so wish, buying back shares at a discount also produced a small uplift in value to the benefit of continuing shareholders, by approximately 0.3%.

Each year, we take powers to issue new shares. These powers would only be used if shares could be issued at, or above, the prevailing NAV per share. Again, the primary purpose of the ability to issue new shares is with a view to containing the volatility of the discount and any new issue would only be made if it were demonstrably beneficial to existing shareholders.

As well as addressing the supply of shares using buybacks we seek to increase demand through proactive marketing by the Investment Manager of the Company and its shares. We promote the Company to a variety of investors and potential investors, from private individuals to professional fund managers and through a variety of traditional and digital media. We aim to provide detailed and informative commentary, which can be accessed via our website www.aviglobal.co.uk .

Proposed Share Split

The price of the Company's existing ordinary shares ('Existing Ordinary Shares') has increased in recent years to the point where shares regularly trade at a price of over 1,000 pence. The Directors are proposing the sub-division of each Existing Ordinary Share into 5 new ordinary shares ('New Ordinary Shares'). The Directors believe that this Share Split may improve the liquidity in the Company's shares, which would benefit all shareholders.

The Share Split will not itself affect the overall value of any shareholder's holding in the Company, and we have made arrangements to ensure that there will be no interruption in trading the shares on the London Stock Exchange when the Share Split takes place.

The New Ordinary Shares will rank pari passu with each other and will carry the same rights and be subject to the same restrictions as the Existing Shares, including the same rights to participate in dividends paid by the Company. The Share Split requires the approval of shareholders and, accordingly, resolution 11 in the Notice of AGM seeks this approval. The Share Split is conditional on the New Ordinary Shares being admitted to the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange's main market for listed securities. If resolution 11 is passed, the Share Split will become effective on admission of the New Shares to the Official List. Further details of the Share Split are set out in the Directors' Report and in the Notice of AGM, both contained in the full Annual Report.

Management Arrangements

For much of the year under review our Investment Manager and other key service providers continued to operate parts of their business with staff working from home, but from our perspective operations and service delivery remained efficient and effective. We are now witnessing a return to the office but with contingency plans having been thoroughly tested. Communications via various media: video conference, telephone and email, have remained effective. The Board took a close interest in assuring that all parts of the Company's infrastructure remained operational and efficient and we would again like to record our thanks to all of our suppliers and the staff working on our account for their support and commitment in such difficult times.

Directors

As announced last year, Nigel Rich will retire at this year's AGM. I would like to record the thanks of his fellow Directors and of the Investment Manager for Nigel's invaluable insights and guidance over the last nine years.

Following Nigel's retirement Calum Thomson will take over the role of Senior Independent Director.

Neil Galloway was appointed as a non-executive Director of the Company with effect from 1 September 2021. Neil is currently Executive Vice President of IWG PLC and is based in London, immediately prior to which he was an Executive Director and CFO of Dairy Farm International Holdings Limited based in Hong Kong. He brings 25 years' experience living and working internationally. Neil has spent most of his career working in Asia but also has experience in the Americas, Europe and the Middle East. Following a successful banking career, he has held senior finance and management roles, almost entirely with or for family-controlled companies, overseeing finance, treasury, risk management, legal, IT, projects and business development, with experience in significant transformation programmes in large and complex businesses. His industry experience spans banking, hospitality, retail (mass market, luxury and franchise operations), real estate and services industries.

We also announced last year that I will retire from the Board at the AGM in 2022. My fellow Directors plan to recruit a new non-executive Director during the course of next year.

Annual General Meeting

Having been obliged to hold last year's AGM behind closed doors, I am pleased to be able to invite all shareholders to attend our AGM in person at 11 Cavendish Square on Thursday 16^th December 2021. While we hope that you are able to attend,   the Directors are aware that government guidance or regulation to contain the spread of COVID-19 might change and if we are obliged to change the arrangements for the AGM after publishing this document, details will be published via RNS and our website. Shareholders who plan to attend the AGM are encouraged to check the website before travelling.

We do recognise that some shareholders may be unable to come to the AGM and if you have any questions about the Annual Report, the investment portfolio or any other matter relevant to the Company, please write to us either via email at [e-mail] or by post to The Company Secretary, AVI Global Trust PLC, Beaufort House, 51 New North Road, Exeter, Devon, EX4 4EP.

If you are unable to attend the meeting, I urge you to submit your proxy votes in good time for the meeting, following the instructions enclosed with the proxy form. If you vote against any of the resolutions, we would be interested to hear from you so that we can understand the reasons behind any objections.

Outlook

Investment performance over the year to 30 September 2021 was strong and it is natural to express some caution on the environment in which we operate, as the world seeks to deal with the continuing effects of the pandemic, resurgent inflation and supply chain issues. Nevertheless, our Investment Manager has demonstrated great skill in navigating the recent challenges and has continued to outperform since the financial year end by +3.7%**. Disciplined focus on tangible, unrealised value alongside solid growth prospects continues to produce a portfolio of investments which the Board believes will serve shareholders well over the long term.

Susan Noble

Chairman

8 November 2021

*Debt at par value.

** As at 31 October 2021.

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*

Company	1 Year	10 Years (Annualised)
	36.2%	11.3%

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 is likely to deviate materially from that of any broadly based equity index. The Board considers the most useful comparator to be the MSCI All Country World ex-US Index. Over the year under review, the benchmark increased by 18.8% on a total return basis and over ten years it has increased by 9.0% on an annualised total return basis.

A full description of performance and the investment portfolio is contained in the Investment Review, below.

Discount*

Year end	30 September 2021	30 September 2020
	6.7%	9.3%
High for the year	11.8%	13.3%
Low for the year	4.6%	5.6%

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 new shares were issued and 3.4m shares were bought back and placed into treasury, adding an estimated 0.3% to net asset value per share to the benefit of continuing shareholders. The shares were bought back at a weighted average discount of 8.2%.

 Expense ratio*

Year ended 30 September 2021	Year ended 30 September 2020
0.83%	0.89%

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 expense ratio is the cost of the fees paid to the Investment Manager. This fee is reviewed annually.

For the year ended 30 September 2021, the expense ratio was 0.83%, down slightly from the previous year.

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 expense 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, as 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. The Board has therefore chosen not to quote an Ongoing Charges Ratio per the AIC's guidance as part of its KPIs but has disclosed an Ongoing Charges Ratio in the Glossary below.

* For definitions, see Glossary below.

Principal Risks

When considering the total return of the investments, the Board must also take account of the risk which has been taken in order to achieve that return. There are many ways of measuring investment risk, and the Board takes the view that understanding and managing risk is much more important than setting any numerical target.

In running an investment trust we face different types of risk and some are more "acceptable" than others. The Board believes that shareholders should understand that, by investing in a portfolio of equity investments invested internationally and with some gearing, they accept that there may be some loss in value, particularly in the short term. That loss in value may come from market movements and/or from movements in the value of the particular investments in our portfolio. We aim to keep the risk of loss under this particular heading within sensible limits, as described below. On the contrary, we have no tolerance for the risk of loss due to misappropriation or fraud.

The Board looks at risk from many different angles, an overview of which is set out below. The Directors carry out robust and regular assessments of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity, and did so during the year under review. The approach to monitoring and controlling risk is not rigid. The Board aims to think not only about the risks that it is aware of and has documented, but also of emerging and evolving risks. The Board does not believe that managing risk is solely the job of someone assigned to the task but that of everyone involved in the management of the Company: the Board, the Investment Manager, the Administrators and other service providers all have a role in thinking about risk, challenging perceptions and being alert to emerging risks. The objective of these assessments is not to be prescriptive, but to understand levels of risk and how they have changed over time. The purpose of this focus is to ensure that the returns earned are commensurate with the risks assumed.

The Board has assessed the risks which the Company faces under a number of headings. A summary of the key risks and mitigating actions are set out in the table below. Shareholders should be aware that no assessment of this nature can be guaranteed to predict all possible risks; the objective is to assess the risks and determine mitigating actions.

Risk Area	Risk Tolerance and Mitigating Actions
Pandemic The continued effects of the COVID-19 pandemic were felt throughout the year. A pandemic such as this affects both (i) the management and operations of the Company and (ii) the Company's investments.	As in the previous accounting year, in seeking reassurance on the continuing operation of the Company, the Board worked closely with the Investment Manager and the various external suppliers to ensure that the portfolio could continue to be managed effectively and that the Company could continue to operate despite restrictive measures on movement imposed to contain the outbreak. AVI's bottom-up research approach and focus on companies with strong balance sheets enabled the Manager to both identify and mitigate risks that the pandemic posed to each investment. The Board received assurances that the Investment Manager continued to be able to execute purchases and sales as usual and was reassured by the Investment Manager's ability to continue to operate "business as usual". The detailed risk matrix which the Audit Committee maintains remained effective in identifying areas of the Company's operations which may be affected by measures implemented to contain the pandemic. The Audit Committee paid particular attention to key suppliers' internal controls reports. The Board will continue to monitor the situation closely and will take action if and when necessary.
Loss of value in the portfolio The market or the Company's portfolio could suffer a prolonged downturn in performance. There will be periods when the investment strategy underperforms in comparison to its benchmark and its peer group and when it results in a decline in value. The net asset value will be affected by general market conditions which in turn can be affected by extraneous events such as the COVID-19 pandemic, US-China trade disputes, Brexit and recent concerns by market participants regarding inflation and the probability of rate hikes	The Board accepts that there is a risk of loss of value by investing in listed equities, particularly in the short term. The Board monitors performance at each Board meeting, and reviews the investment process thoroughly at least annually. The Investment Manager has a clear investment strategy, as set out in the Investment Review. Conventional wisdom holds that the most effective way of reducing risk is to hold a diversified portfolio of assets. The Company typically holds 25-35 core positions. It is important to note that, in line with its investment objective, the Company's holdings are mostly in stocks which are themselves owners of multiple underlying businesses. Thus, the portfolio is much more diversified on a look-through basis than if it were invested in companies with a single line of business. This diversification is evident at country, sector and currency levels. A key element of the Investment Manager's approach is to consider the way in which the portfolio is balanced and to ensure that it does not become overly dependent on one business area, country or investment theme. The Company, through the Investment Manager's compliance function and the Administrator's independent checks, has a robust system for ensuring compliance with the investment mandate.
Gearing While potentially enhancing returns over the long term, the use of gearing makes investment returns more volatile and exacerbates the effect of any fall in portfolio value. There are covenants attached to the Loan Notes and bank debt; in extreme market conditions, these could be breached and require early repayment, which could be expensive.	The Board decided to take on borrowing because it believes that the Investment Manager will produce investment returns which are higher than the cost of debt over the medium to long term, and, therefore, that shareholders will benefit from gearing. In taking on debt, we recognise that higher levels of gearing produce higher risk. While gearing should enhance investment performance over the long term, it will exacerbate any decline in asset value in the short term. It is possible (but, on the basis of past returns, it is considered unlikely) that the investment returns will not match the borrowing cost over time, and therefore the gearing will be dilutive. The Board manages this risk by setting its gearing at a prudent level. The covenants are set at levels with substantial headroom. In common with other investment trusts, we also mark the value of debt to its estimated fair value for the purposes of measuring investment performance as part of the Key Performance Indicators*, which makes the value ascribed to the debt subject to changes in interest rates and so makes our published NAV per share more volatile than would otherwise be the case. However, if we continue with the debt to maturity, it will be repaid at its par value, notwithstanding any changes in fair value over its life. The values of loans denominated in currencies other than Sterling will fluctuate with currency movements and, if the exchange rate of those currencies relative to Sterling increases, then in isolation this will have the effect of reducing NAV per share. However, we have certain assets denominated in the same overseas currencies as these tranches of debt, which would increase in value in Sterling terms if the exchange rates increase, enabling us to offset the debt position by creating a natural hedge.
Foreign exchange The portfolio has investments in a number of countries and there is a risk that the value of local currencies may decline in value relative to Sterling.	Foreign exchange risk is an integral part of a portfolio which is invested across a range of currencies. This risk is managed by the Investment Manager mainly by way of portfolio diversification, but the Investment Manager may, with Board approval, hedge currency risk. The Company did not engage in any currency hedging during the year under review and has not done so in recent years. However, as described above, borrowing in foreign currencies provides a natural hedge against currency risk in situations where the Company holds investments denominated in the borrowed currency. As at 30 September 2021, the Company had EUR50m (£43m) of borrowing and investments denominated in Euros whose value exceeded that of this borrowing. Furthermore, the Company had JPY9m (£60m) of borrowing and investments denominated in Japanese Yen whose value exceeded that of this borrowing. In addition the Company had a loan of £30m, the primary currency of the Company, and holds investments denominated in GBP of a greater value.
Liquidity of investments While the investment portfolio is made up predominantly of liquid investments, there is a possibility that individual investments may prove difficult to sell at short notice.	The Investment Manager takes account of liquidity when making investments and monitors the liquidity of holdings as part of its continuing management of the portfolio. The liquidity and concentration of AVI's holdings across all of its managed portfolios are monitored and reported at regular Board meetings. It is important to note that the potential for the return of capital from investee companies by means of special dividends and the partial or full redemption of shares is a key element of the Investment Manager's strategy, and so trading on a stock exchange is not the only source of liquidity in the portfolio.
Key staff Management of the Company's investment portfolio and other support functions rely on a small number of key staff.	The Investment Manager and key suppliers have staff retention policies and contingency plans. The Board's Management Engagement Committee reviews all of its key suppliers at least once per year.
Discount rating The shares of investment trusts frequently trade at a discount to their published net asset value. The value of the Company's shares will  be subject to the interaction of supply and demand, prevailing net asset values and the general perceptions of investors. The share price will accordingly be subject to unpredictable fluctuations and the Company cannot guarantee that the share price will appreciate in value. The Company may become unattractive to investors, leading to pressure on the share price and discount. This may be due to any of a variety of factors, including investment performance or regulatory change.	Any company's share price is affected by supply and demand for its shares and fluctuations in share price are a risk inherent in investing in the Company. In seeking to mitigate the discount, the Board looks at both supply and demand for the Company's shares. The Board seeks to manage the risk of any widening of the discount by regularly reviewing the level of discount at which the Company's shares trade. If necessary and appropriate, the Board may seek to limit any significant widening through measured buybacks of shares. The Investment Manager has a comprehensive marketing, investor relations and public relations programme which seeks to inform both existing and potential investors of the attractions of the Company and the investment approach. We have a marketing budget to meet third party costs in marketing our shares.
Outsourcing The Company outsources all of its key functions to third parties, in particular the Investment Manager, and any control failures or gaps in the systems and services provided by third parties could result in a financial loss or damage to the Company.	The Board insists that all of its suppliers (and, in particular, the Investment Manager, the Custodian, the Depositary, the Company Secretary, the Administrator and the Registrar) have effective control systems which are regularly reviewed. During the year under review, close attention was paid to the ability of all suppliers to maintain a good level of service while dealing with the continued disruption to working practices necessitated by the COVID-19 pandemic. The Board assesses thoroughly the risks inherent in any change of supplier, including the internal controls of any new supplier.
Climate change As evidence of the effects of climate change grows, there is increasing focus on investment companies' role in influencing investee companies' approach to climate change.	The Board maintains a strategic overview of the portfolio, including ESG criteria. Management of the portfolio, including the integration of ESG considerations into portfolio construction, is delegated to AVI, the Investment Manager. As a responsible steward of assets, AVI fully supports policies and actions implemented by its portfolio companies to support a sustainable environment. AVI engages actively with its portfolio companies, and looks to understand how each company approaches stewardship of the environment, as well as seeking to identify any unacceptable practices that are detrimental to the environment or climate.

The principal financial risks are examined in more detail in note14   to the financial statements.

* The value of long term debt is marked to its fair value for the purpose of measuring investment performance but, as required by the relevant accounting standards, all debt is recognised on the balance sheet at amortised cost.

Environmental, Social and Governance ('ESG') Issues

Both the Board and AVI recognise that social, human rights, community, governance and environmental issues have an effect on its investee companies.

The Board supports AVI in its belief that good corporate governance will help to deliver sustainable long-term shareholder value. AVI is an investment management firm that invests on behalf of its clients and its primary duty is to produce returns for its clients. AVI seeks to exercise the rights and responsibilities attached to owning equity securities in line with its investment strategy. A key component of AVI's investment strategy is to understand and engage with the management of public companies. AVI's Environmental, Social and Governance Policy, which is summarised on AGT's website (https://www.aviglobal.co.uk/how-to-invest/investor-information/esg-policy/), recognises that shareholder value can be enhanced and sustained through the good stewardship of executives and Boards It therefore follows that in pursuing shareholder value AVI will implement its investment strategy through proxy voting and active engagement with management and boards.

The Company is an investment trust and so its own direct environmental impact is minimal. The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions-producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

The Company has no employees. The Company's principal suppliers, which are listed on the inside cover of the Annual Report, have confirmed that they comply with the provisions of the UK Modern Slavery Act 2015.

The Directors do not have service contracts. There are six Directors, four male and two female. Nigel Rich will retire at the conclusion of this year's AGM. Further information on the Board's Diversity policy and the policy on recruitment of new Directors is contained in the full Annual Report .

AVI's full ESG Policy can be found at www.aviglobal.co.uk/how-to-invest/investor-information/esg.policy/

Future Strategy

The Board and the Investment Manager have long believed in their focus on investment in high-quality undervalued assets and that, over time, this style of investment has been well rewarded.

The Company's overall future performance will, inter alia, be affected by: the Investment Manager's decisions; investee companies' earnings, corporate activity, dividends and asset values; and by stock market movements globally. Stock markets are themselves affected by a number of factors, including: economic conditions; central bank and other policymakers' decisions; political and regulatory issues; and currency movements.

The Company's performance relative to its peer group and benchmark will depend on the Investment Manager's ability to allocate the Company's assets effectively, and manage its liquidity or gearing appropriately. More specifically, the Company's performance will be affected by the movements in the share prices of its investee companies in comparison to their own net asset values.

The overall strategy remains unchanged.

Approval of Strategic Report

The Strategic Report has been approved by the Board and is signed on its behalf by:

Susan Noble

Chairman

8 November 2021

TEN LARGEST EQUITY INVESTMENTS

The top ten equity investments make up 52.7% of the net assets*, with underlying businesses spread across a diverse range of sectors and regions.

All discounts are estimated by AVI as at 30 September 2021, based on AVI's estimate of each company's net asset value.

* For definitions, see Glossary below.

1.  PERSHING SQUARE HOLDINGS

Classification: Closed-ended Fund

Valuation: £79.8m

% of net assets: 7.0%

Discount: -29%

A Euronext- and London-listed closed-ended fund managed by a high-profile activist manager. The fund owns a concentrated portfolio of quality US companies. Pershing Square trades on a 29% discount to NAV, which we regard as unsustainably wide for a portfolio of large-cap, liquid securities, particularly given the manager's activist strategy.

2.  THIRD POINT INVESTORS

Classification: Closed-ended Fund

Valuation : £74.4m

% of net assets: 6.6%

Discount : -14%

A London-listed closed-ended fund run by a high-profile activist manager. The fund invests in both long and short equity and credit, with a long equity bias. The fund trades on a discount of 14%, having come in from 23% this year. A large part of this, we believe, is due to the campaign launched by AVI and three other shareholders to address the fund's structural discount.

3.  EXOR

Classification: Holding Company

Valuation: £72.0m

% of net assets: 6.4%

Discount: -39%

EXOR is an Italian-listed holding company run by the Agnelli family, which traces its roots back to the formation of FIAT in 1899. It has exposure to four main assets, three of which are listed: Stellantis, Ferrari and CNH Industrial, and one unlisted: PartnerRe. The Agnelli family has a strong history of value creation and, by aligning investors' capital with theirs, we believe there is a good prospect of achieving outsized returns.

4.  SONY CORP

Classification: Asset-backed Special Situation

Valuation : £63.1m

% of net assets: 5.6%

Discount : -26%

A Tokyo-listed company with four "crown jewel" businesses: Gaming, Music, Pictures and Semiconductors. Despite these attractive businesses, Sony trades on a discount of 26% to our estimate of NAV. We believe this reflects the complexity of the conglomerate structure, which obscures the value on offer and creates misconceptions. There are several ways to unlock this value and tighten the discount to NAV.

5.  Oakley Capital Investments

Classification: Closed-ended Fund

Valuation : £57.8m

% of net assets: 5.1%

Discount : -20%

A London-listed closed-ended fund which invests in the private funds run by Oakley Capital, a UK based private equity firm. Oakley owns a portfolio of fast-growing businesses in the consumer, education and TMT sectors. Its process focuses on less intermediated markets and complex deals (e.g. carve-outs), which avoids the auction process, sourced by a network of entrepreneurs who believe in the Oakley philosophy. We believe the discount will narrow as Oakley continues to generate NAV outperformance, and adopts improved standards of corporate governance.

6.  KKR AND CO

Classification: Holding Company

Valuation: £57.6m

% of net assets: 5.1%

Discount: -26%

A US-listed alternative asset manager with c. USD430bn of assets under management. KKR is one of the largest companies in an industry with appealing structural characteristics, underpinned by valuable fee-related earnings.

7.  FONDUL PROPRIETATEA

Classification: Closed-ended Fund

Valuation: £51.4m

% of net assets: 4.5%

Discount: -4%

A Bucharest- and London-listed closed-ended fund originally set up to provide restitution to Romanian citizens whose property was seized by the Romanian Communist government. Fondul provides exposure to some of Romania's most attractive utility and infrastructure assets, including Hidroelectrica, Bucharest Airport and OMV Petrom. The fund's investment policy is to distribute all excess cash and realisation proceeds to shareholders via dividends and buybacks, and offers the potential for several corporate events to unlock further value.

8.  AKER ASA

Classification: Holding Company

Valuation: £ 48.2 m

% of net assets: 4.3 %

Discount: -28%

Aker is a Norwegian holding company with investments principally in oil & gas, renewables & green tech, marine-related activities and industrial software. It's largest assets are Aker BP, a Norwegian oil exploration and development company, and Aker Horizons, a holding company established to invest in renewable energy and technology. Aker has a history of active portfolio management, deal-making and value creation, with a track record of strong shareholder returns since IPO in 2004.

9.  CHRISTIAN DIOR

Classification: Holding Company

Valuation: £ 47.9 m

% of net assets: 4.2 %

Discount: -13%

Christian Dior's sole asset is a 41% stake in LVMH, the luxury goods conglomerate. We view LVMH as a highly attractive asset, with diverse exposure across Fashion & Leather, Wine & Spirits, Perfume & Cosmetics, Watches & Jewellery, and Selective Retail. LVMH's collection of brands is unique and the rich cultural heritage underlying them is impossible to replicate. These factors drive strong demand, high pricing power and attractive margins. We see strong earnings upside from LVMH, as well as potential returns from collapse of the holding structure.

10.  INVESTOR AB 'B'

Classification: Holding Company

Valuation: £44.1m

% of net assets: 3.9%

Discount: -19%

Investor AB is the Swedish holding company controlled by the Wallenberg family, which pursues a strategy of very long-term oriented active ownership through board representation. We view Investor's exposure to best-in-class industrial-focused public equities as extremely appealing, with further potential upside from their portfolio of attractive unlisted businesses which are benefitting from secular growth trends.

INVESTMENT PORTFOLIO

AT 30 SEPTEMBER 2021

Company	Portfolio classification	% of  investee  company	IRR  (%, GBP)1	ROI  (%, GBP)2	Cost  £'0003	Valuation  £'000	% of  net    assets
Pershing Square Holdings	Closed-ended Fund	0.7%	22.5%	42.3%	54,601	79,770	7.0%
Third Point Investors	Closed-ended Fund	6.2%4	14.9%	60.5%	43,576	74,402	6.6%
EXOR	Holding Company	0.5%	13.3%	38.2%	52,232	71,963	6.4%
Sony Corp	Asset-backed Special Situation	0.1%	33.8%	75.0%	32,612	63,098	5.6%
Oakley Capital Investments	Closed-ended Fund	9.1%	27.0%	98.4%	28,760	57,801	5.1%
KKR & Co	Holding Company	0.1%	79.2%	126.4%	25,618	57,552	5.1%
Fondul Proprietatea	Closed-ended Fund	2.8%	19.2%	103.8%	24,249	51,380	4.5%
Aker ASA	Holding Company	1.1%	18.3%	117.7%	30,455	48,244	4.3%
Christian Dior	Holding Company	0.1%	49.6%	69.4%	28,576	47,945	4.2%
Investor AB 'B'	Holding Company	0.2%	14.3%	81.8%	40,154	44,092	3.9%
Top ten investments					360,833	596,247	52.7%
Godrej Industries	Holding Company	2.0%	7.6%	15.5%	33,806	39,060	3.4%
Pershing Square Tontine Holdings	Holding Company	-	-33.5%	-10.4%	39,488	38,396	3.4%
Apollo Global Management 'A'	Holding Company	0.2%	49.8%	12.0%	32,245	35,856	3.2%
Keisei Electric Railway	Asset-backed Special Situation	0.8%	31.0%	8.3%	32,590	35,250	3.1%
Nintendo	Asset-backed Special Situation	0.1%	-27.7%	-5.0%	42,694	34,234	3.0%
Fomento Economico Mexicano	Holding Company	0.2%	43.2%	19.7%	28,663	34,127	3.0%
IAC/InterActive Corp	Holding Company	0.4%	27.4%	6.3%	33,072	33,984	3.0%
Hipgnosis Songs Fund	Closed-ended Fund	2.0%	9.6%	7.3%	28,427	29,764	2.6%
Associated British Foods	Holding Company	0.2%	-24.9%	-13.0%	32,256	28,007	2.5%
Symphony International Holdings	Closed-ended Fund	15.7%	6.4%	31.1%	26,636	26,398	2.3%
Top twenty investments					690,710	931,323	82.2%
Fujitec	Asset-backed Special Situation	1.7%	20.5%	50.8%	15,402	25,151	2.2%
Swire Pacific 'B'	Holding Company	1.0%	-6.0%	-20.6%	40,329	22,639	2.0%
DTS	Asset-backed Special Situation	2.6%	5.3%	6.0%	21,228	22,079	2.0%
Pasona Group	Asset-backed Special Situation	2.5%	25.7%	73.8%	10,646	21,974	1.9%
Prosus	Holding Company	0.0%	30.5%	7.7%	22,323	20,935	1.9%
Wacom	Asset-backed Special Situation	2.5%	-21.0%	-2.5%	20,244	19,705	1.7%
VNV Global	Holding Company	2.0%	82.2%	63.8%	13,248	21,661	1.9%
Secure Income REIT	Asset-backed Special Situation	1.4%	59.6%	37.7%	14,193	19,090	1.7%
Digital Garage	Asset-backed Special Situation	1.0%	26.8%	40.1%	10,901	15,549	1.4%
SK Karen	Asset-backed Special Situation	1.8%	-9.5%	-22.9%	19,056	14,135	1.2%
Top thirty investments					878,280	1,134,241	100.1%
NS Solutions	Asset-backed Special Situation	0.6%	16.2%	20.6%	11,103	13,210	1.1%
Bank of Kyoto	Asset-backed Special Situation	0.5%	-8.7%	-5.9%	12,858	11,998	1.1%
Konishi	Asset-backed Special Situation	2.1%	3.8%	9.2%	9,760	10,201	0.9%
Capital & Counties Properties	Asset-backed Special Situation	0.7%	4.0%	2.5%	9,319	9,527	0.9%
Toagosei	Asset-backed Special Situation	10.3%	3.5%	8.9%	9,160	9,435	0.8%
Daiwa Industries	Asset-backed Special Situation	2.1%	0.0%	0.1%	9,389	9,022	0.8%
JPEL Private Equity	Closed-ended Fund	18.4%	21.6%	86.0%	2,882	8,426	0.7%
Kato Sangyo	Asset-backed Special Situation	0.8%	0.6%	1.8%	7,161	6,357	0.6%
Teikoku Sen-I	Asset-backed Special Situation	1.7%	4.7%	11.4%	6,899	6,345	0.6%
Tetragon Financial	Closed-ended Fund	0.6%	1.8%	6.3%	8,148	6,050	0.5%
Top Forty Investments					964,959	1,224,812	108.1%
Sekisui Jushi	Asset-backed Special Situation	0.9%	2.3%	6.1%	5,583	5,534	0.5%
Better Capital (2009)	Closed-ended Fund	17.4%	23.3%	45.8%	1,962	2,383	0.2%
Hazama Ando	Asset-backed Special Situation	0.1%	-7.5%	-4.1%	785	737	0.1%
Ashmore Global Opportunities - GBP	Closed-ended Fund	8.5%	4.4%	9.4%	61	698	0.1%
Eurocastle Investment	Closed-ended Fund	3.2%	3.7%	4.6%	380	433	0.0%
Total net equity exposure					973,730	1,234,597	109.0%
Pershing Square Tontine Holdings total return swap# - notional value included in above					(39,488)	(38,396)	-3.4%
Equity investments at fair value					934,242	1,196,201	105.6%
Current assets less current liabilities						9,720	0.8%
Non-current Liabilities						(72,699)	-6.4%
Net assets						1,133,222	100.0%

¹ Internal Rate of Return. Calculated from inception of AVI Global's investment. Refer to Glossary below.

² Return on investment. Calculated from inception of AVI Global's investment. Refer to Glossary below.

³ Cost. Refer to Glossary below.

⁴ 6.2% of the voting rights

^# Refer to glossary below.

INVESTMENT MANAGER'S REVIEW

ABOUT ASSET VALUE INVESTORS

Our Edge

Asset Value Investors specialises in finding securities which have been overlooked or under-researched by other investors. Investments that for one reason or another are priced below their true value but can be made into profitable performers. AVI believes its strategy and investment style differentiate it from other managers in the market because of the following:

1.  36 years' experience of long-term outperformance following our distinctive investment style (annualised NAV total returns of 12.0% since 1985*).

2.  AVI actively looks for the catalyst within a company which will narrow the discount.

3.  AVI promotes active involvement to improve corporate governance and to unlock potential shareholder value.

* Refer to Glossary below

The aim of AVI is to deliver superior investment returns. AVI specialises in investing in securities that for a number of reasons may be selling on anomalous valuations.

Our focus on buying high-quality businesses trading at wide discounts to their net asset value has served us well over the long term. There are periods of time, however, when our style is out of favour and the types of companies in which we invest are ignored by the broader market. This requires us to be patient and to remain true to our style, so that when other investors begin to appreciate the value in those companies, we are well placed to benefit. In the short term, this means that there could be some volatility in our returns. However, we are confident that we own high-quality businesses, which are trading on cheap valuations.

Members of the investment team at AVI invest their own money in funds which they manage. As at 30 September 2021, AVI's investment team owned 216,372 shares in AVI Global Trust plc.

OVERVIEW OF AVI'S INVESTMENT PHILOSOPHY

Introduction to the Strategy

Asset Value   Investors invests in overlooked and under-researched companies, which own quality assets, and trade at discounts to NAV. This philosophy typically leads us to invest in structures such as family-controlled holding companies, closed-ended funds and, most recently, Japanese cash-rich operating companies. However, our views on the types of structures through which we invest are entirely agnostic, and portfolio weightings are determined solely by the opportunity set and our judgment of the risk-reward potential.

Our research process involves conducting detailed fundamental research in order to: (a) understand the drivers of NAV growth; and (b) assess the catalysts for a narrowing discount. We often engage actively with management in order to provide suggestions for improvements that we believe could help narrow the discount or improve operations .

Holding Companies

When we consider a holding company as an investment, we seek several characteristics. The first is a high-quality portfolio of listed and/or unlisted businesses with the potential for sustained, above-average, long-term growth. Many of the underlying companies that we have exposure to are world-famous brands, and include: LVMH, Ferrari, Stellantis, PlayStation, Primark, KKR, and many more.

Secondly, we look for the presence of a controlling family or shareholder with a strong track record of capital allocation and returns in excess of broader equity markets. Long-term shareholders provide strategic vision; many of our holding companies have been family-controlled for generations. This combination of attractive, quality assets managed by long-term capital allocators creates the potential for superior NAV growth.

Finally, we invest at a discount to NAV, preferably with a catalyst in place to narrow the discount. This provides an additional source of returns. We estimate that historically about three-quarters of our returns from holding company investments have come from NAV growth and one-quarter from discount tightening.

Closed-ended Funds

Similar to holding companies, we look for certain qualities when we consider a closed-ended fund investment. Most importantly, we look for portfolios of high-quality assets (both listed and unlisted) with good growth potential. Our portfolio of closed-ended funds gives us exposure to many quality companies, such as Chipotle Mexican Grill, Hilton Worldwide, Universal Music Group, Upstart, Babylon, BlaBlaCar, Voi, and many more.

We also focus to a great extent on the discount to NAV at which the closed-ended fund trades. In a nuanced distinction from holding companies, we usually insist on a high probability of the discount narrowing or vanishing entirely before we will consider making an investment. In accordance with this, our stakes in closed-ended funds are larger, and we engage with management, boards, and other shareholders to enact policies to help narrow discounts and boost shareholder returns. Historically, our portfolio of closed-ended funds has generated half of its returns from discount narrowing.

Asset-backed Special Situations

The majority of this portion of the portfolio consists of investments outside of holding companies and closed-ended funds. For several years now, these investments have largely been in Japanese cash-rich operating companies. At present, we hold positions in 15 Japanese operating companies which have, on average, 97% of their market value in cash and listed securities.

Japanese companies have a reputation for overcapitalised balance sheets, but we believe that the winds of change are blowing in Japan. The Japanese government has been championing efforts to improve corporate governance and enhance balance-sheet efficiency, and this programme is beginning to have an effect. Major pension funds have signed up to a new Stewardship Code, boards of directors are guided by the principles of an updated Corporate Governance Code, and there is an identifiable uptick in the presence of activist investors on Japanese share registers.

We can see evidence of this change in increasing payout ratios, buybacks, and more independent directors. We believe that our Japanese holdings stand to benefit from this powerful trend, and that the market will assign a much higher multiple to these companies if it reassesses the probability of the excess cash and securities being returned to shareholders. We are active in pursuing this outcome and engage continuously with the boards and management of our holdings to argue for a satisfactory outcome for all stakeholders.

The focus is on quality, cash-generative businesses with low valuations (our current portfolio trades on just 5x EV/EBIT). These are the sorts of businesses that one should be happy to own; as such, we can afford to take a long-term view on our holdings as we engage with boards and management to create value for all stakeholders.

This financial year, we also invested a smaller tranche of the portfolio into high-quality economically sensitive property stocks which would benefit from the reopening of the global economy. These holdings are also classified within this category of Asset-Backed Special Situations. We discuss these in greater detail in AVI's performance review.

Summary

Our strategy centres upon investing in companies which own diversified portfolios of high-quality assets. In each case, we have sought to invest in companies where the market has misunderstood or overlooked the value on offer, and where our analysis shows that there is a reasonable prospect of this being corrected. The historic returns from this strategy have been strong and came from a combination of discount narrowing and NAV growth.

PERFORMANCE REVIEW

"AGT's portfolio is well positioned to weather any challenges that lie ahead - and hopefully prosper."

- Annualised NAV 10 year total return per share*: 11.3%

- Portfolio discount**: 29.2%

It would be a cliché to say the previous year has been unprecedented - as they say, history does rhyme - however, when the first global pandemic in over 100 years brings the world to a halt, I am at a loss to think of a better word. The past 18 months or so have been completely dissonant with any period that has come before - at least in the lifetime of any investment practitioner. The scope of the uncertainty, and associated challenges, has been massive.

When I wrote to you last, the results of the Pfizer/BioNTech vaccine had just been released, sparking a so-called "value rally", as investors could finally envisage a resumption of economic activity. We had prepared AGT's portfolio for this possibility by investing in a basket of high-quality economically sensitive stocks that would, our analysis showed, benefit from such a resumption. Stocks in the basket included Secure Income REIT, Shaftesbury, Capital & Counties, Derwent London, British Land, Great Portland Estates and Associated British Foods (for Primark). Many of these stocks contributed meaningfully to returns over the period, driven by the prospect of economies returning (gradually) to normal.

Alongside this basket, returns were equally strong from companies which have lower economic sensitivity, such as KKR, Oakley Capital Investments, Christian Dior and Fondul Proprieatea. That is to say, the sources of return in AGT's portfolio this year were diversified and well-balanced.

Altogether, these strong performances resulted in a NAV total return of +36.2%, compared to a return of +18.8% from the comparator benchmark, the MSCI ACWI ex-USA Total Return Index (in GBP).

Deconstructing the returns, it is worthwhile to note that the strong NAV returns were driven by both NAV growth and, to a lesser extent, portfolio discount tightening (from 35% to 29%). The discount to NAV at which AGT's share price trades also tightened (from 9.3% to 6.7%), resulting in share price total returns of +40.3%. Our investment income was also up +35% on the prior year.

As we moved into the second and third quarters of AGT's financial year, the market became increasingly concerned with the prospect of sustained, above-average inflation, generated by both a rebound in economic activity and supply-chain difficulties. Rates initially rose, reflecting inflationary fears, but declined again when the United States Federal Reserve indicated that it stood ready to raise rates if it believed that inflation was at risk of becoming entrenched. In turn, the "value rally" began to peter out and "growth" began to outperform again. To compound matters, this coincided with a change in the regulatory environment in China, with the ruling party expressing a desire to promote "common prosperity".

Dealing with the latter, AGT's portfolio has limited exposure to China. We sold our SoftBank position (exposed to Alibaba) by July 2021 as a result of our investment thesis having played out. The Prosus and Naspers (exposed to Tencent) positions had also been reduced over the course of the year in order to free up cash. At the time of writing, we have fully exited the Prosus/Naspers positions. While headline valuations appear attractive following a sharp sell-off in Chinese equities, a cautious stance is warranted here given the difficulty of predicting the future regulatory direction.

In Japan, where 29% of the portfolio is invested, stock markets did not participate to a great extent in the recovery rally until the summer, when the vaccine rollout began to gather steam. While speaking of Japan, it is worth mentioning that corporate activity appears to be picking up. Our investee companies are responding positively to engagement, and there is a pronounced improvement in managers' and directors' focus on corporate governance and shareholder returns. This bodes well for the Japanese stocks that AGT owns, which have a large portion of cash and securities on the balance sheet, and which have historically displayed poor governance practices and neglected shareholders. On a reporting note, we will no longer be aggregating the Japanese cash-rich operating companies into a "Japan Special Situations" basket. There has been no change to the strategy or our view on its prospects; rather, the increasing concentration in fewer positions meant that aggregating the stocks into a basket was no longer a useful way of reporting. From here, we will talk about the performance of each stock individually.

As the financial year closes, inflation remains the predominant fear playing in investors' minds. While not sanguine about inflation and its potentially destabilising effects, I am confident that many of the companies in AGT's portfolio have very strong business models, giving them significant resilience in the face of inflation. On a look-through basis, examples of companies which should prove resilient in the face of inflation might include LVMH, KKR, Aker BP, Universal Music, Apollo Global, Hidroelectrica and Ferrari.

AGT's portfolio is well positioned to weather any challenges that lie ahead - and hopefully prosper.

Equity Portfolio Value by Market Capitalisation

	2021	2020
	%	%
<£1 billion	25	35
>£1 billion - <£5 billion	28	26
>£5 billion - <£10 billion	11	14
>£10 billion	36	25

Joe Bauernfreund

Chief Investment Officer

Asset Value Investors Limited

8 November 2021

*For definitions, see Glossary below.

** Please refer to page 28 in the full Annual Report for a graph of the weighted average discount over the past 10 years .

PORTFOLIO REVIEW

TOP 20 LOOK-THROUGH COMPANIES

AVI Global Trust invests in holding companies and closed-ended funds that in turn invest in listed and unlisted companies. We show below the top 20 holdings on a 'look-through basis', i.e. the underlying companies to which we have exposure. For example, AVI Global Trust owns a stake in Christian Dior, a Euronext-listed holding company, that accounts for 4.2% of AVI Global Trust's NAV. Christian Dior's only holding is LVMH, a European Luxury conglomerate, which accounts for 100% of Christian Dior's NAV. This translates to AVI Global Trust having an effective exposure to LVMH of 4.2% of AVI Global Trust's NAV. The table below is an indication of the degree of diversification of the portfolio.

Look-through companies	Parent company	Underlying look-through weight	Look-through holding sector
LVMH	Christian Dior	4.2%	Apparel, Accessories and Luxury Goods
KKR Fund Management Business	KKR	3.9%	Asset Management and Custody Banks
Oriental Land	Keisei Electric	3.5%	Leisure Facilities
Nintendo	Nintendo	2.6%	Interactive Home Entertainment
Apollo Fund Management Business	Apollo Global Management	2.5%	Asset management and Custody Banks
Hidroelectrica	Fondul Propreietatea	2.5%	Electric Utilities
Aker BP	Aker	2.5%	Oil and Gas Exploration and Production
FEMSA Comercio	FEMSA	2.2%	Food Retail
Universal Music	Pershing Square Holdings	2.1%	Movies and Entertainment
Godrej Properties	Godrej Industries	1.8%	Real Estate Development
Ferrari	EXOR	1.8%	Automobile Manufacturers
Fujitec	Fujitec	1.7%	Industrial Machinery
Partner RE	EXOR	1.7%	Reinsurance
Stellantis	EXOR	1.7%	Automobile Manufacturers
Sony Playstation	Sony	1.6%	Interactive Home Entertainment
Primark	Associated British Foods	1.6%	Apparel Retail
Sony Music	Sony	1.6%	Movies and Entertainment
Godrej Consumer Products	Godrej Industries	1.5%	Personal Products
Wacom	Wacom	1.5%	Technology Hardware, Storage and Peripherals
Benefit One	Pasona	1.5%	Human Resource and Employment Services

PERSHING SQUARE HOLDINGS: HOW THE LOOK-THROUGH ANALYSIS WORKS
Pershing Square Holdings is a Euronext- and London-listed closed-ended fund in which AVI Global Trust invests. Although Pershing Square Holdings is just one fund, it has investments in multiple different listed companies, providing your Company's portfolio with exposure to a diversified collection of businesses.
Company Name	Estimated % of Pershing Square Holdings' portfolio	Geography	Sector
Universal Music Group	27%	Global	Movies and Entertainment
Lowe's	16%	United States	Home Improvement Retail
Chipotle Mexican Grill	16%	United States	Restaurants
Hilton	11%	Global	Hotels, Resorts and Cruise Lines
Restaurant Brands	11%	North America	Restaurants
Howard Hughes	9%	United States	Real Estate Development
Dominos	7%	Global	Restaurants
Fannie Mae & Freddie Mac	2%	United States	Thrifts and Mortgage Finance
Pershing Square Tontine	1%	United States	Asset Management and Custody Banks

CONTRIBUTORS

THIRD POINT INVESTORS (+3.14%)³

Classification: Closed-ended Fund

% of net assets¹: 6.6%

Discount: -14%

% of investee company: 6.2%

Total return on position FY21 (local)²: 65.3%

Total return on position FY21 (GBP): 59.7%

Contribution (GBP)³:314bps

ROI since date of initial purchase⁴: 60.5%

Third Point Investors Limited (TPOU) was our largest contributor over the financial year, adding 314 basis points (bps) to AGT's NAV on the back of a +71% share price gain. Strong NAV performance (+54%) was compounded by a narrowing discount (from 23% to 14%), the latter due in large part we believe to the campaign launched by ourselves and three other shareholders to properly address the fund's structural discount.

Following a sustained period of mediocre performance, we have been pleased with the improved returns this year. Almost two-thirds of the NAV return for the period came from the performance of Upstart Holdings, with SentinelOne the other main contributor. Combined, we estimate that the two positions contributed over +80% of the total return. Both of these holdings began the year as private companies held within TPOU's venture capital portfolio, with Upstart the first to list in December 2020 followed by SentinelOne in June 2021. Founded by a senior ex-employee at Google, Upstart operates an AI-lending platform that partners with banks to originate loans. Since listing, its share price has increased by almost +1,500% as the company appears to have hit an inflection point in growth. SentinelOne is a cybersecurity business with a particular focus on "Endpoint" security which has become an area of focus for companies in an environment in which many employees have been working from home. SentinelOne's shares are up by +53% from the IPO price. Note that in the case of both companies, there were also material uplifts from their carrying valuations as private companies to their IPO prices. Other contributors to the return included Walt Disney, Prudential, and Danaher.

We originally invested in TPOU in mid-2017, seeing an opportunity to constructively engage with the board to address a series of issues that had contributed towards the company trading at a persistently wide discount to NAV. Over our holding period, changes have included: replacing the legacy Standard Listing (no longer available to new investment companies) with a Premium Listing; commencement of a share buyback programme; reducing the management fee from the highest rate paid by all Third Point clients to one that better reflects TPIL's importance; and the cancellation of "repurchased" Ordinary Shares that, owing to them being held by the Master Fund, had for years continued to pay management and performance fees to Third Point.

Despite these measures, TPOU shares continued to trade at a wide discount to NAV and we became increasingly convinced that the years of neglect meant the discount had become entrenched, and that a more structural solution would be required. Under pressure from ourselves and other shareholders, the board held a strategic review process that culminated in proposals which we believed fell woefully short of the minimum required to tackle TPOU's discount problem; were not reflective of shareholder feedback; and, we believe, bore the imprimatur of the investment manager. Since then, AVI and three other shareholders have sought to requisition an EGM at which shareholders would vote on a proposal that TPOU offers regular redemptions at close to NAV. At the time of writing, the TPOU board has rejected two such requisition requests. It is a basic tenet of corporate governance that boards actually call a meeting if a sufficient percentage of their shareholders request that they do so, and we are deeply concerned by the actions of the board.

OAKLEY CAPITAL INVESTMENTS (+2.93%)³

Classification: Closed-ended Fund

% of net assets¹: 5.1%

Discount: -20%

% of investee company: 9.1%

Total return on position FY21 (local)²: 36.3%

Total return on position FY21 (GBP): 36.3%

Contribution (GBP)³: 293bps

ROI since date of initial purchase⁴: 98.4%

Oakley Capital Investments turned in a very strong performance over AGT's financial year, generating a NAV total return of +27% which, together with a tightening of the discount from 29% to 20%, resulted in share price total returns of +41%.

Encouragingly, the majority of the returns came from EBITDA growth within the portfolio, with some support from multiple expansion and uplifts on disposals of assets. Sterling strength acted as a headwind over the period. Particularly strong performance was seen from IU Group (German private university), Casa (real estate classifieds), TechInsights (semiconductor IP), WishCard Technologies (gift cards) and Time Out, whose share price rose by +50% over the period.

It was a busy year for OCI, with eight investments and three disposals, as well as bolt-on deals and refinancings. New investments included Idealista (online real estate classified advertisements), 7NXT (online fitness and nutrition), WindStar Medical (consumer healthcare), Dexters (London real estate agent), ICP Education (UK nurseries network), ECOMMERCE ONE (German e-commerce solutions) and Seedtag (digital advertising). OCI also made a EUR75m commitment to the Origins fund, which will target smaller companies than the rest of the Oakley funds.

Portfolio-level EBITDA growth over the past 12 months has been an excellent +35%, with EBITDA multiples remaining reasonable (12x) and net debt to EBITDA of 3.5x. 70% of the portfolio is digital, which has helped in navigating the pandemic, and 75% of the portfolio has subscription-based or recurring revenues. These are remarkable attributes in a portfolio, and a highly attractive collection of assets to own.

We continue to believe that Oakley's strategy is a winning one, focusing on business sectors/themes it knows well with secular growth prospects, deals sourced by a network of Oakley-friendly entrepreneurs, and a willingness to engage in complex transactions. The result of this strategy, particularly the latter two aspects, is that 75% of deals are uncontested, which is unusual in the private equity world.

Despite these considerable merits, OCI continues to trade on a 20% discount - one of the widest of its peers, and all the more remarkable when we consider that OCI is one of the top-performing listed private equity funds in London. We have theorised in the past that investors are punishing OCI for past transgressions (i.e. dilutive share issuances), and suspect that this is still partly the case. However, we note that OCI has made significant strides in improving corporate governance, including enshrining in its bye-laws a commitment to avoid dilutive share issuances in the future. The board has also demonstrated a heightened awareness of the discount, buying back 13% of outstanding shares since 2019 at an average discount of -31%. We estimate that these actions resulted in (risk-free and immediate) NAV accretion of +5% for remaining shareholders.

A further concern may be that a significant portion of the portfolio is invested in two companies badly affected by the pandemic, namely Time Out (9% of NAV) and North Sails (19% of NAV). While these concerns are legitimate, we note that: (a) both businesses were performing well prior to COVID-19, suggesting that the business models are in good shape and should recover as lockdowns continue to ease; and (b) three-quarters of the North Sails exposure is to its debt, rather than equity, which is placed higher in the capital structure and therefore more protected in the event of an adverse outcome.

With OCI, we are being offered a fast-growing portfolio with attractive growth opportunities, backed by a manager with a distinct deal-sourcing strategy, and a board that has acknowledged prior errors and is making significant efforts to improve governance - and all this available at a discount of 20%! We remain enthusiastic holders of OCI.

KKR & CO (+2.80%)³

Classification: Holding Company

% of net assets¹: 5.1%

Discount: -26%

% of investee company: 0.1%

Total return on position FY21 (local)²: 77.9%

Total return on position FY21 (GBP): 70.4%

Contribution (GBP)³: 280bps

ROI since date of initial purchase⁴: 126.4%

KKR has been an important contributor to AGT's returns since its introduction to the portfolio in the first half of 2020. Over AGT's 2021 financial year, the company's share price increased by +79%. This added 280bps to AGT's NAV over the period and brought returns over our holding period to +148% which equates to an IRR of +92% (all figures in total return in USD).

Despite these outsized returns, we believe that KKR has an extended runway ahead of mid-teens asset under management (AUM) and earnings growth and we still see considerable upside in the position. The company's Investor Day earlier this year and subsequent results confirmed that the business is firing on all cylinders with assets under management at the end of the second quarter standing +93% higher than a year prior. While this figure was boosted by the acquisition of life insurer Global Atlantic which closed in the first quarter of 2021, organic growth of +49% is indicative of KKR's advantaged position within an industry which is itself benefitting from robust secular tailwinds.

We expect annuity provider Global Atlantic, in which KKR now has a 61% stake, to accelerate KKR's growth even further over the coming years as a source of low-cost liabilities. Crucially, the acquisition means that permanent capital now accounts for almost a third of AUM, providing even greater stability and visibility to fee revenues. KKR's moves to grow its platform beyond traditional private equity have paid off, with 57% of AUM growth between 2010 and 2020 derived from businesses that did not exist ten years ago.

While private equity now accounts for 36% of total AUM (down from ~75% upon listing in 2010), even that figure understates the actual level of diversification with the private equity platform which is now spread across Asian, European, longer dated "Core" funds, as well as specialist growth equity (healthcare and technology) funds, in addition to the original US business. These fund-raising efforts and rapid deployment have led to record levels of embedded gains both in terms of unrealised carried interest and balance sheet investment gains, and should translate to elevated levels of income from these sources over the next few years.

We value KKR on a sum-of-the-parts basis, and believe that the company's most valuable "part" - fee-related earnings (i.e. from base management fees) - has been made even more valuable by changes made earlier this year to the compensation structure that will see a heavier compensation load placed on carried interest.

CHRISTIAN DIOR (+2.21%)³

Classification: Holding Company

% of net assets¹: 4.2%

Discount: -13%

% of investee company: 0.1%

Total return on position FY21 (local)²: 76.8%

Total return on position FY21 (GBP): 67.6%

Contribution (GBP)³: 221bps

ROI since date of initial purchase⁴: 69.4%

We initiated a position in Christian Dior (CDI) - the holding company through which Bernard Arnault controls European luxury goods conglomerate LVMH - in March 2020. As a single-asset holding company, CDI had typically traded at a tight discount to NAV; however, the COVID-19 market volatility saw the discount widen to 20-25%. We took advantage of this, and we were able to build a position in one of the highest-quality companies in our universe at a dislocated discount. Both parts of the thesis have played out, with NAV growth of +57% boosted by a narrowing of the discount from 24% to 13%, resulting in an +81% return over the period.

Starting with the NAV side of the equation, shares in LVMH returned +57%. The pandemic has had harsh effects on the luxury industry. However, our thesis was that global mega-brands, such as Louis Vuitton, would outperform, benefitting from more flexible cost structures, directly owned stores, and ever-green product mixes, as well as stronger balance sheets and greater capacity to invest in digital sales channels. This seems to be the case. LVMH reported exceptional results for the first half of 2021, with sales and operating profits +11% and +44% above the 2019 level.

More recently, however, following comments made by Chinese President Xi Jinping about the need to promote "Common Prosperity", investors have started to worry about the outlook for growth in China. Whilst the phrase has appeared repeatedly in recent years, in the context of 2021 and a seemingly more invasive approach to regulation and the promotion of social goals, investors are pondering whether the ideals of the Chinese Communist Party might dampen growth for the luxury goods sector.

As a number of CEOs of luxury goods companies have pointed out, the ambition to grow the middle class and reform taxes is likely, prima facie, to be good for the luxury industry over the medium to long term. What is less clear however, particularly in the shorter term, is whether displays of wealth and conspicuous consumption will become less socially acceptable. This remains largely unknowable in the short term. We would refrain from making comparisons to previous anti-grafting campaigns that specifically targeted the luxury goods sector. Moreover, we note that regulatory developments over the last eighteen months have been "pro-luxury", most notably with regard to the development of the Island of Hainan as a duty-free shopping hotspot.

Turning to CDI's discount, AGT has benefitted from a material narrowing of the discount from 24% to 13%. During the period, the family took steps to simplify parts of the control structure which sit above CDI. It is our expectation that at some point in the future - when it suits them - the family will collapse CDI entirely. As such we expect to capture further upside in the discount. Combined with the prospect of continued NAV growth, we remain excited by prospective returns.

EXOR (+2.10%)³

Classification: Holding Company

% of net assets¹: 6.4%

Discount: -39%

% of investee company: 0.5%

Total return on position FY21 (local)²: 39.6%

Total return on position FY21 (GBP): 34.6%

Contribution (GBP)³:210bps

ROI since date of initial purchase⁴: 38.2%

EXOR was a meaningful contributor to returns during the period. The shares returned +58% over the period, as strong NAV growth was complemented by a narrowing of the discount from 43% to 39%.

Our initial investment in EXOR back in 2016 was largely predicated on Fiat Chrysler's undervaluation and the scope for value creation through industry consolidation, as set out in the late Sergio Marchionne's Confessions of a Capital Junkie presentation. During the period a key part of this played out, with the creation of Stellantis through the merger of FCA and Peugeot. We view the merger as a great example of how family-controlled holding companies can create value through the active ownership and management of their holdings. Indeed, during the period, the value of EXOR's stake in what was FCA and became Stellantis returned +83% (including special dividends and distributions) - making it the largest contributor to EXOR's NAV growth. We continue to see considerable upside at Stellantis. CEO Carlos Tavares is targeting EUR5bn of synergies and aims to achieve a 10% operating margin by 2026 - which would likely make Stellantis the most profitable traditional auto maker in the world. We view the discount at which Stellantis trades versus Ford and GM to be unjust and see next year's capital markets day as a possible catalyst for a re-rating.

The other great driver of NAV growth was CNH Industrial, whose shares rallied by +123% over the period, benefitting from a resumption in economic activity and demand for capital goods. In this context CNH reported exceptionally good results, well ahead of expectations and with full year guidance having now been raised twice this year. Results were led by the all-important Agricultural division, which achieved a record 15% operating margin in Q2 and is benefitting from the US agricultural replacement cycle, which finally seems to be turning the corner. The proposed splitting of the company in two should unlock value currently trapped in its conglomerate structure.

AGT benefitted from a narrowing of EXOR's discount from 43% to 39% over the last year. However, when compared to its own history (five-year average: 32%) and other European holding companies, this seems very wide. We would expect this to narrow over time, particularly as John Elkann continues to tilt EXOR's portfolio toward higher quality, less cyclically exposed companies. As and when this happens it should provide a powerful extra fillip on top of NAV returns. We added to the position by more than 50% over the year, to make it your company's third largest position.

SONY CORP (+2.09%)³

Classification: Holding Company

% of net assets¹: 5.6%

Discount: -26%

% of investee company: 0.1%

Total return on position FY21 (local)²: 47.9%

Total return on position FY21 (GBP): 35.5%

Contribution (GBP)³: 209bps

ROI since date of initial purchase⁴: 75.0%

Sony was the fourth largest contributor to returns over the period, adding 209bps to performance with a share price return of +56%. Sony, despite its perception as a shrinking electronics conglomerate, owns a collection of world-class businesses, with the four crown jewels of Gaming, Music, Semiconductors and Pictures accounting for 75% of Sony's NAV.

Over the past year, Sony has proven the quality of its businesses. For the fiscal year ended March 2021, all of Sony's business lines, except the Semiconductor business, grew profits by double digits with overall adjusted profits growth of +15%. This marks the highest profit in Sony's history, although hopefully not for long - analyst consensus is for Sony to grow profits by an annualised +15% over the next five years.

Aside from earnings growth, there have been several developments which we believe have added substantially to Sony's corporate value. Most notable is the multitude of acquisitions focused on bolstering Sony's entertainment content, including investments in Epic Games (most famed for Fortnite), Crunchyroll (one of the world's largest anime platforms) and, most recently, Bluepoint Games (the team behind the remaster of Unchartered and God of War). Then there was November's hugely successful launch of the PlayStation 5 - with demand far outstripping supply and on track to be Sony's best-selling console (despite claims that console gaming was dead). Lastly, although not exhaustively, the value of Sony's pictures division was highlighted when Amazon purchased MGM for USD8.5bn, a deal that implies a value for Sony's pictures segment of USD26bn - 20% of Sony's market cap and almost 3x higher than our carrying value.

Sony faced heavy public criticism for its holding structure in mid-2019, with calls to spin out its semiconductor business and sell its majority stake in Sony Financial. While we sympathise with the logic, and indeed supported the break-up when we initially made the investment, Sony has since made a convincing case for keeping the holding structure. Being able to allocate capital between businesses, and allowing management teams to make long-term decisions, is certainly a benefit of the structure. This, of course, depends on the quality of the holding company management, and in Sony's case we think that the team is of a high calibre. This extends not just to capital allocation and decision making but, in Sony's unique case, to its content value, where Sony can monetise intellectual property (IP) through gaming, film, and music. By that logic, we think that Sony's current 26% discount is remarkable.

We initiated our Sony position in June 2019 and have earned a +39% IRR and an +89% total return, versus the equivalent returns for the MSCI AC World ex US Index of +11% and +22%. Despite the strong performance and considering the quality of Sony's business, its growth prospects and valuation - we remain extremely excited about the return potential, and view it as a core, long-term holding.

PERSHING SQUARE HOLDINGS (+2.08%)³

Classification: Closed-ended Fund

% of net assets¹: 7.0%

Discount: -29%

% of investee company: 0.0%

Total return on position FY21 (local)²: 20.3%

Total return on position FY21 (GBP): 17.1%

Contribution (GBP)³: 208bps

ROI since date of initial purchase⁴: 42.3%

For a second consecutive financial year, Pershing Square Holdings (PSH) was among our top contributors. While PSH's relative outperformance was not as spectacular as that achieved a year ago on the back of its inspired hedge against the impacts of COVID-19 on financial markets, a +30% NAV return for the year to 30 September 2021 represents a very good outcome in absolute terms despite only matching that of the S&P 500 index. A modest reduction in PSH's discount provided a tailwind to returns with the share price up by +33%.

A majority of PSH's holdings by number were relative outperformers including Hilton Worldwide Holdings, Agilent Technologies, Howard Hughes Corp, Chipotle Mexican Grill, Domino's Pizza, and Starbucks.   These were partially offset by the weak share price performance of Pershing Square Tontine Holdings (Pershing Square's SPAC) and the positions in the common and preferred shares of Fannie Mae and Freddie Mac which declined materially following an adverse Supreme Court ruling that ruled as legitimate the 2012 "net sweep" decision that saw the companies' profits diverted to the US Treasury.

We have been impressed by the quality of management across PSH's investee companies with Hilton and Chipotle great examples of management "leaning in" to the impact of COVID-19. In the case of Hilton, a significant part of the 25-30% cost cuts undertaken in FY20 is expected to be retained, leading to - in the words of CEO Chris Nassetta - a "meaningfully higher margin business" that should be able to match or exceed 2019 EBITDA levels by 2022 even if Revenue per Available Room remains ~15% lower than pre-COVID levels. At Chipotle, a focus on digital operations has positioned it as a clear "COVID winner" with the most recent quarterly earnings continuing the run of impressive same-store sales and showing a large portion (80%) of digital sales being retained even as in-restaurant sales recover (back to 70% of pre-COVID levels). This has given management the confidence to raise the targets for average restaurant sales volumes and to re-state the long-term target of 6,000 North American restaurants (more than double the current number).

PSH's portfolio turnover was relatively limited over the year, with Starbucks switched out for Domino's Pizza and Agilent sold to fund the purchase of Universal Music Group (UMG). At just over 30% of PSH's NAV, some investors may baulk at the outsized concentration in UMG. However, we know UMG well from previous research on its then-majority owner Vivendi. The music industry has been transformed over the last ten years by the advent of streaming both in terms of growth and improved quality of earnings, and we had already established positions in Hipgnosis Songs Fund and Round Hill Music Royalty Fund (the latter later being sold to fund an increased holding in the former) to reflect this bullish outlook. Our direct position in Hipgnosis Songs Fund complements the indirect exposure to UMG well with the former offering somewhat of a hedge against the risk of regulatory pressure forcing a more equitable split of streaming royalties between songwriters/recording artists/labels (although, to be clear, this is not our base case). PSH's investment in UMG is off to a good start following its listing with the shares up by +24% on the cost basis (which includes legal costs).

The question of whether the inflation that we are seeing is "transitory" or not, and the associated potential for higher interest rates if it proves not to be, is probably the critical one facing equity investors today. Against this backdrop, we are comfortable with PSH as our largest holding given: (i) their high-quality investee companies and associated pricing power; and (ii) the interest rate "swaptions" held by PSH which provide an asymmetric pay-off in the event of rising rates.

While PSH's discount narrowed in to the low -20%s at the start of 2021 following its inclusion in the FTSE 100 index, it is back at 29% at the time of writing. This seems very much anomalous to us even though the company's high costs shown in its Key Investor Information Document (albeit a function of its outsized return in 2020 which triggered a large performance fee) are unhelpful in attracting demand from the wealth management investor community.

FONDUL PROPRIETATEA (+2.01%)³

Classification: Closed-ended Fund

% of net assets¹: 4.5%

Discount: -4%

% of investee company: 2.3%

Total return on position FY21 (local)²: n/a

Total return on position FY21 (GBP): 38.9%

Contribution (GBP)³: 201bps

ROI since date of initial purchase⁴: 103.8%

Fondul Proprietatea (FP) is a Bucharest- and London-listed closed-ended fund originally set up to provide restitution to Romanian citizens whose property was seized by the Romanian Communist government. Today, FP provides exposure to some of Romania's most attractive utility and infrastructure assets, and has a policy of distributing all excess cash and realisation proceeds to shareholders via dividends and buybacks.

FP has been part of AGT's portfolio since 2015 and continues to be a steady source of returns, this year contributing 201bps to AGT's NAV on the back of a share price total return of +51% which benefitted from the compounding effect of an increasing NAV (up +28%) and a tightening discount (from 18% to 4%).

While the 37% increase in value of FP's stake in listed OMV Petrom (13% of NAV at the start of the period) was helpful, it was yet again Hidroelectrica - part of FP's unlisted portfolio - that generated the bulk of NAV returns. This came despite a lack of progress in Hidroelectrica's IPO. In one of its final actions before being voted out, the previous government had banned the privatisation of state-owned enterprises. A bill repealing this ban failed to work its way through parliament before leadership elections within the ruling PNL party and disagreements between the coalition parties brought essentially all parliamentary business to a halt. We draw comfort from there being a business-friendly majority in parliament and our base case at the time of writing is for the coalition to be re-established, most likely with a new Prime Minister in power.

We also note that FP's investment manager, Franklin Templeton, has indicated that a continued lack of progress on the legislative front will see it look to independently IPO its 20% stake in Hidroelectrica. Whatever the precise route by which Hidroelectrica becomes a listed company, we see a significant amount of upside from its current carrying value given its low-cost production, low CAPEX requirements and associated high levels of free cash flow, and its status as what would be the only pure-play listed hydroelectric company globally.

AKER ASA (+1.91%)³

Classification: Holding Company

% of net assets¹: 4.3%

Discount: -28%

% of investee company: 1.1%

Total return on position FY21 (local)²: 50.1%

Total return on position FY21 (GBP): 52.8%

Contribution (GBP)³: 191bps

ROI since date of initial purchase⁴: 117.7%

Aker was a significant contributor to your Company's returns this year, with returns driven by exceptional NAV growth of +124%. The shares failed to keep pace with the NAV (returning +80%) and as such the discount widened from 9% to 28%. We took advantage of this and added to the position by approximately one-third over the period.

NAV growth was led by Aker BP whose shares rallied by +105%, adding more than 50% to Aker's NAV. As we noted in the Half Year Report which was issued in May, the re-opening of physical economies and improved prospects for global growth had spurred the oil price from USD42 to USD63 from September to March. These trends have continued with Brent crude prices pushing through USD80 in September for the first time in three years.

In the words of one strategist, oil has moved from a cyclical to a structural bull market, with an expected continued imbalance between supply and demand and an estimated USD600 billion capex shortfall through to 2030. Aker has a history of zigging while others zag (Aker BP was, after all, created in a low-price environment), and as such we find it interesting that whilst most oil companies report limited or negative growth outlooks, Aker BP targets a 70% increase in oil and gas production in 2028 versus 2020. We believe that efficient low cost producers have a role to play in meeting the (underestimated) medium term demand for oil, and have the opportunity to create significant value as capital flees the sector. This bodes well for future NAV growth for Aker.

The other major driver of NAV growth was Aker Horizons - the holding company established in 2020 as a platform for Aker to invest in renewable energy and green technology. Over the last year Aker Horizons has: (1) conducted a private placement and listed on the Euronext Growth exchange; (2) acquired a 75% stake in Mainstream Renewable Power, a renewable energy company in the wind and solar energy markets, and (3) launched and listed Aker Clean Hydrogen, a company focused on industrial clean hydrogen. In our view, the creation of Aker Horizons is indicative of how family-controlled companies think in generations not quarters, securing future growth avenues. It is also a prime example of the active approach that the best families take to creating value.

Since AVI first invested in Aker in 2008 we have earned an IRR of +19% (in NOK). The prospect of continuing to align capital with the family at a 28% discount to NAV is an appealing one.

JARDINE STRATEGIC (+1.68%)³

Classification: Holding Company

% of net assets¹: n/a

Discount: n/a

% of investee company: n/a

Total return on position FY21 (local)²: 66.0%

Total return on position FY21 (GBP): 53.6%

Contribution (GBP)³: 168bps

ROI since date of initial purchase⁴: -1.6%

In previous monthly updates and in the Half Year Report, we commented on the situation with Jardine Strategic (JS). The takeover offer from Jardine Matheson, for the 15% of Jardine Strategic that it did not already own, was a foregone conclusion and the takeover completed on the 15th of April 2021. This takeover offer led to Jardine Strategic contributing 168bps to NAV for the year, boosting performance from strong NAV growth at the beginning of the calendar year.

The offer at USD33 was at a 20% premium to the undisturbed share price prior to the offer, but at a 30% discount to our NAV estimate. Due to the corporate structure, minority shareholders were not able to stop the deal from completing when voted upon, although 53% of minority holders voted against the deal. However, the Bermuda Courts, where JS was incorporated, allow shareholders to appeal for a fair value appraisal. We have gone down this route as we believe that a fairer offer price would have been closer to Jardine Strategic's NAV, particularly as the listed nature of its investments means that there was very little ambiguity over the value of the company. Progress at this is time slow as the Bermuda Courts work through a COVID-induced backlog. However, at the time of writing a court hearing is scheduled to discuss procedural matters and discovery to be provided to the experts to make their valuation.

DETRACTORS

NINTENDO (-0.81%)³

Classification: Asset-backed Special Situation

% of net assets¹: 3.0%

Discount: -52%

% of investee company: 0.1%

Total return on position FY21 (local)²: -14.8%

Total return on position FY21 (GBP): -16.8%

Contribution (GBP)³: -81bps

ROI since date of initial purchase⁴: -5.0%

Nintendo was the single-largest detractor from returns for the period, detracting 81bps from performance with a total return of -16% since initial investment. AGT initiated its position in Nintendo in February 2021. The investment thesis was predicated on the high quality of its unique intellectual property (e.g. Super Mario, Pokémon), as well as the digital transformation of its business reminiscent of Sony during the PlayStation 4 cycle.

The video game business has historically been characterised by earnings cyclicality, with revenues and profits driven by the periodic release of new consoles. In 2020, Nintendo's management took large strides in shifting its videogame business towards an attractive, digitally focused model by introducing both subscription revenues and downloadable content onto the Switch platform. The pandemic served as a catalyst to move consumers online, making the digital subsegment the fastest growing part of Nintendo, now accounting for 47% of software sales and helping drive operating margins to 37%. Moreover, Nintendo had opted to further monetise its world-class IP by expanding into new areas - opening its first-ever theme park and releasing trailers for a new Super Mario movie, which is slated for 2022.

Despite the ongoing transformation and deep moat given by IP, the share price has fallen by -15% since the start of 2021. We believe that fears have been stoked by the most recent quarterly earnings release, which provoked concern of a cyclical peak in earnings, and the announcement of the Nintendo Switch OLED - whereas the market had been expecting a new, more powerful "Switch 2" to be announced.

Turning to the first, the most-recent quarterly earnings release revealed that net sales were down by -10% year-on-year, while operating profits and margins declined, and digital sales fell as a proportion of overall revenue. At first glance, these figures are discouraging, suggesting that Nintendo may still be exposed to cyclical swings in earnings. However, it is important to remember that the quarter one year ago was a tough one comparatively, as during the COVID-induced lockdowns many subscribers increased their levels of gaming (and, necessarily, digital downloads) in the absence of regular socialising. Furthermore, due to the pandemic, the Switch has suffered from delays to the production of major new titles which were tipped for release this year. If we take 2019 as a baseline, we see much more encouraging figures: sales of the Switch have doubled, revenue is up by +87%, and digital sales have grown by +148%.

Turning to the second, Nintendo announced that it would be releasing a Nintendo Switch OLED on 8 October 2021 - a moderately upgraded version of the Switch with backwards compatibility. The new console sold out within minutes on pre-orders. Nonetheless, some market participants had been calling for a "Switch 2" style console with a much more powerful chip, instead of the more minor upgrade that Nintendo has opted for with the Switch OLED. We had maintained that this would be a mistake, as such a console would not have been backwards compatible with existing Switch games, effectively making it much harder for Nintendo to build a sustainable ecosystem around the Switch. While we recognise why hardcore gamers could be disappointed with this console, we think that the announcement of this upgrade reaffirms our initial investment thesis: Nintendo is moving away from the cyclical business model dependent on successful new console releases, focusing instead on building an environment in which digital and recurring revenues - stickier and higher-margin - play a larger role.

Overall, while the market performance to date has been disappointing, we see no contradictory evidence that would lower the conviction in our thesis. At the current share price, Nintendo trades at 8x forward operating profits and 16x forward earnings, a valuation which we believe does not adequately reflect the quality of Nintendo's business. Nor does it reflect the significance of the shift from a hardware-driven business model to one focused on digital, recurring revenues and increased IP monetisation.

PERSHING SQUARE TONTINE HOLDINGS (-0.70%)³

Classification: Holding Company

% of net assets¹: 3.4%

Discount: -2%

% of investee company: n/a

Total return on position FY21 (local)²: 10.1%

Total return on position FY21 (GBP): -10.1%

Contribution (GBP)³: -70bps

ROI since date of initial purchase⁴: -10.4%

Pershing Square Tontine Holdings (PSTH; Pershing Square's US-listed SPAC), was the second-largest detractor over the period with its -12% share price decline deducting 70bps from AGT's NAV. We invested in PSTH in June 2021 following its announcement of a deal to acquire a 10% stake in Universal Music Group (UMG), a then-unlisted company that we knew well from previous research on its then-majority owner Vivendi. The decline in PSTH's share price that accompanied the announcement of the deal was, we believe, driven by retail investors who had hoped for a more "exciting" target. We were happy to take advantage of this sell-off to acquire an indirect position in a high-quality business with attractive secular growth prospects at what we believed to be a compelling valuation.

However, subsequent to our purchase of PSTH, it was announced that the UMG transaction had been blocked by US regulators who had objected to the deal structure. As a result, the UMG purchase agreement was re-assigned from PSTH to London-listed Pershing Square Holdings (PSH). This meant that we still gained exposure to UMG via our long-standing position in PSH, albeit in a less concentrated fashion than would have been achieved had the original deal terms stood. UMG's share price performance since listing has confirmed our view that Pershing Square's acquisition price was highly advantaged, with the shares up by +24% on a cost basis (which includes legal costs). Nevertheless, PSTH's shares understandably declined on the news of the broken deal.

Although PSTH trading below its cash balance offers an attractive risk-adjusted return given the free optionality, we are not short of other alternative homes (both in new and existing investments) for the capital that offer higher prospective absolute returns. Initially, we replaced our direct exposure to PSTH with a total return swap with a well-known investment bank at a modest cost of financing to free up capital (only 30% margin was required). We then took the decision subsequent to the financial year-end to exit the position entirely to fully release the capital.

ASSOCIATED BRITISH FOODS (-0.47%)³

Classification: Holding Company

% of nest assets¹: 2.5%

Discount: -43%

% of investee company: 0.2%

Total return on position FY21 (local)² : -13.0%

Total Return on position FY21 (GBP): -13.0%

Contribution (GBP):-47bps

ROI since date of initial purchase: -13.0%

Associated British Foods (ABF) is a UK conglomerate involved in retailing, grocery, agriculture, sugar and ingredients. It owns some of the best-recognised brands in UK food and retail, including Primark, Twinings, Ovaltine, Jordans, Dorset, Ryvita, Patak's, Blue Dragon, Silver Spoon, and Billington's. Primark is the single-biggest division, accounting for almost half of sales in 2019 (i.e. prior to the pandemic). ABF is controlled by the Weston family whose charitable trust, Wittington Investments, owns 55% of the shares.

We initiated a position in ABF in November 2020, believing that the share price at the time inadequately reflected Primark's potential for a recovery following lockdowns. Since that date, we have earned a total return of -13% on our position, reflecting the market's growing pessimism over ABF's/Primark's future. We believe that this pessimism is misplaced.

It is impossible to talk about ABF without talking about Primark, being the largest single division. Its competitive position is built on three core offerings: fashionable clothes, at affordable prices, in great locations. In 2019 (the last year before the pandemic), revenues were GBP8bn, and had grown at mid-double-digits over a long period of time. Primark's low-cost, high-volume approach drove significant scale, allowing it to re-invest cost savings in lower costs for consumers - creating a significant competitive edge and customer loyalty in the process, allowing it to consistently earn attractive margins and high returns on capital.

We believe that ABF's low rating currently reflects investors' concerns over Primark. We address these issues below and present what we hope are convincing counterarguments.

 1. Online: Primark has a low online presence, effectively operating just a "magazine-style" website and social media accounts. This leaves it vulnerable to competitors that sell online at a time when retail is increasingly going digital. In our view, this is a legitimate concern, but overblown. Firstly, Primark sales recovered strongly after lockdowns were eased, with third-quarter like-for-like sales growing by +3% compared to 2019. Furthermore, Primark is maintaining market share in retail in the UK (including online), suggesting that it is able to compete effectively with its online peers. It is worth noting that Primark has recently revamped its website to offer more granular views of its range, as well as details of whether particular stores stock particular items. In our view, this may be a prelude to Primark initiating a click-and-collect offering (although management have been reticent to say too much on this topic). The introduction of a click-and-collect offering would go a long way to easing investors' minds about the future of the business

2. ESG: Consumers are becoming increasingly environmentally conscious which, given Primark's fast fashion offering, may be a concern for future growth. We recently listened in to Primark's own dedicated "ESG Day", in which ABF and Primark management outlined the steps that they were taking to, within the next decade, make the business more sustainable, including better durability and recyclability, sustainable agricultural practices, and insisting on living wages for suppliers' workers. In our view, ABF's management is inherently conservative, and would only outline goals that it believes have a high probability of being achieved. Integrating ESG into Primark potentially adds a fourth leg to the core offering - great clothes, great prices, great locations and, now, ethically sustainable.

3. Growth/expansion: Aside from the pandemic, Primark has had some issues getting the format of its stores right when expanding into markets such as the US and Germany. In our view, these issues have been settled, and Primark's growth trajectory in the US and Europe looks very promising and has years of runway ahead of it. The total store network numbers some 400 locations, compared to larger peers whose stores in Europe and the US number in the thousands.

We estimate that, using reasonably conservative inputs, the market is implicitly valuing ABF on 5-6x operating profits, which we believe is a remarkable price for a business with a significant competitive advantage and a large runway of growth ahead of it.

Outside of Primark, ABF has many other attractive characteristics. The other four divisions are of good-to-excellent quality, providing growing cash flows without requiring additional capital and earning attractive returns on capital. The presence of the Weston family is also beneficial, providing a long-term vision for the group. We have been encouraged in our dialogue with members of management to hear them repeatedly emphasise the importance of thinking long-term, and undertaking business in a sustainable, ethical manner.

Overall, we are excited to gain exposure to a world-class stable of businesses, led by a strong founding family, at a discount of over 40%.

OUTLOOK

The intertwined themes of inflation, interest rates and growth continue to dominate investor thinking and drive markets. The optimism that characterised the start of the year has subsided; hopes of reflation have slid to fears of potential stagflation. Concerns about China's regulatory environment and possible contagion from the Evergrande property crisis lurk in the background as potential risks. Yet, markets continue to grind higher, as the successful global vaccine roll-out and  accommodative monetary policy conditions continue. In an environment such as this we believe it makes sense to increase the level of portfolio concentration to reflect our most attractive and highest conviction ideas. We remain confident in the outlook for a portfolio of attractive quality assets trading at lowly valuations, as indicated by the 29% portfolio weighted average discount.

Joe Bauernfreund

Chief Executive Officer

Asset Value Investors Limited

8 November 2021

¹ For definitions, see Glossary below^.

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 below for further details.

DIRECTORS

Susan Noble - Independent Non-Executive Chairman

Nigel Rich CBE, FCA - Senior Independent Non-Executive Director

Calum Thomson FCA - Independent Non-Executive Director, Chairman of the Audit Committee

Anja Balfour - Independent Non-Executive Director

Graham Kitchen - Independent Non-Executive Director

Neil Galloway - Independent Non-Executive Director

All Directors are non-executive and independent of the Investment Manager.

EXTRACTS FROM THE REPORT OF THE DIRECTORS

Investment Objective, Policy and Restrictions

The objective of the Company is to achieve capital growth through a focused portfolio of investments, particularly in companies whose shares stand at a discount to estimated underlying net asset value.

Investments are principally in companies listed on recognised stock exchanges in the UK and/or overseas, which may include investment holding companies, investment trusts and other companies, the share prices of which are assessed to be below their estimated net asset value or intrinsic worth.

Although listed assets make up the bulk of the portfolio, the Company may also invest in unlisted assets with the prior approval of the Board.

The Company generally invests on a long-only basis but may hedge exposures through the use of derivative instruments and may also hedge its foreign currency exposures.

There are no geographic limits on exposure, as the Company invests wherever it considers that there are opportunities for capital growth. Risk is spread by investing in a number of holdings, many of which themselves are diversified companies.

The Company will not invest in any holding that would represent more than 15% of the value of its total investments at the time of investment.

Potential investments falling within the scope of the Company's investment objective will differ over the course of market cycles. The number of holdings in the portfolio will vary depending upon circumstances and opportunities within equity markets at any particular time.

The Company is able to gear its assets through borrowings which may vary substantially over time according to market conditions but gearing will not exceed twice the nominal capital and reserves of the Company.

Distribution Policy

Dividend Policy

The Company will ensure that its annual dividend each year will be paid out of the profits available for distribution and will be at least sufficient to enable it to qualify as an investment trust under the Corporation Tax Act 2010. The Board may elect to pay a special dividend if the Company has exceptional receipts from its investments. The Company's primary objective is to seek returns which may come from any combination of increases in the value of underlying investments, a narrowing of discounts to underlying asset value and distributions by investee companies.

The Board does not set an income target for the Investment Manager.

Frequency of Dividend Payment

The Company will normally pay two dividends per year: an interim dividend declared at the time that the half year results are announced, and a final dividend declared at the time that the annual results are announced.

The final dividend will be subject to shareholder approval at the Annual General Meeting each year.

Buybacks

The Company may also distribute capital by means of share buybacks when the Board believes that it is in the best interests of shareholders to do so. Authority to buy back shares is sought from shareholders at each Annual General Meeting.

Gearing Levels

The Company's Investment Policy, as disclosed above, permits a significant level of gearing, as do the Company's Articles of Association and the limits set under AIFMD (see the Company's website https://www.aviglobal.co.uk).

Under normal market conditions, it is expected that the portfolio will be fully invested, although net gearing levels may fluctuate depending on the value of the Company's assets and short-term movements in liquidity.

The Company's debt as a percentage of total equity as at 30 September 2021 was 11.7%. Long-term debt comprised three tranches of Loan Notes, of £30m, €30m and €20m, and shorter-term debt, a JPY12.0bn unsecured multi-currency revolving credit liability.

Results and Dividends

The Company profit for the year was £299,563,000, which included a profit of £14,289,000 attributable to revenue (2020: loss of £1,970,000 which included a profit of £10,134,000 attributable to revenue). The profit for the year attributable to revenue has been applied as follows:

	£'000
Current year revenue available for dividends	14,289
Interim dividend of 6.0p per Ordinary Share paid on 2 July 2021	6,267
Recommended final dividend payable on 4 January 2022 to shareholders on the register as at 3 December 2021 (ex-dividend 2 December 2021):
- Final dividend of 10.50p per Ordinary Share	10,685*
	16,952

* Based on shares in circulation on 8 November 2021.

Capital structure

The Company's capital structure comprises Ordinary Shares and Loan Notes.

Ordinary Shares

At 30 September 2021, there were 116,003,133 (2020: 116,003,133) Ordinary Shares of 10p each in issue, of which 13,889,808 (2020: 10,451,403) were held in treasury and therefore the total voting rights attaching to Ordinary Shares in issue were 102,113,325.

Income entitlement

The profits of the Company (including accumulated revenue reserves) available for distribution and resolved to be distributed shall be distributed by way of interim, final and (where applicable) special dividends among the holders of Ordinary Shares, subject to the payment of interest to the holders of Loan Notes.

Capital entitlement

After meeting the liabilities of the Company and the amounts due to Loan Note holders on a winding-up, the surplus assets shall be paid to the holders of Ordinary Shares and distributed among such holders rateably according to the amounts paid up or credited as paid up on their shares.

Voting entitlement

Each Ordinary shareholder is entitled to one vote on a show of hands and, on a poll, to one vote for every Ordinary Share held. The Notice of Meeting and Form of Proxy stipulate the deadlines for the valid exercise of voting rights and, other than with regard to Directors not being permitted to vote their shares on matters in which they have an interest, there are no restrictions on the voting rights of Ordinary Shares.

Transfers

There are no restrictions on the transfer of the Company's shares other than a) transfers by Directors and Persons Discharging Managerial Responsibilities and their connected persons during closed periods under the Market Abuse Regulation or which may constitute insider dealing, b) transfers to more than four joint transferees and c) transfers of shares which are not fully paid up or on which the Company has a lien provided that such would not prohibit dealings taking place on an open and proper basis.

The Company is not aware of any agreements between shareholders or any agreements or arrangements with shareholders which would change in the event of a change of control of the Company.

Proposed Share Split

At this year's AGM Shareholders will vote on a proposal to sub-divide each existing ordinary share into five new ordinary shares. Please refer to the description of Resolution 11 in the Directors' Report for further information.

Loan Notes

At 30 September 2021, there were in issue fixed rate 20 year unsecured private placement notes (the 'Loan Notes'). The Loan Notes were issued in the following tranches:

• on 15 January 2016: £30m 4.184% Series A Sterling Unsecured Loan Notes 2036

• on 15 January 2016: €30m 3.249% Series B Euro Unsecured Loan Notes 2036

• on 1 November 2017: €20m 2.93% Euro Senior Unsecured Loan Notes 2037

Income entitlement

Interest is payable half-yearly in each case at annual rates of 4.184% on the £30m Sterling Loan Notes, 3.249% on the €30m Euro Loan Notes and 2.93% on the €20m Euro Senior Loan Notes.

Capital entitlement

The Loan Note holders are entitled to repayment of principal at their par value and outstanding interest on the redemption date or, if earlier, on the occurrence of an event of default. The redemption dates are:

• 15 January 2036 for the 4.184% Series A Sterling Unsecured Loan Notes 2036

• 15 January 2036 for the 3.249% Series B Euro Unsecured Loan Notes 2036

• 1 November 2037 for the 2.93% Euro Senior Unsecured Loan Notes 2037

The Loan Notes are unsecured. If the Company is liquidated, the Loan Notes are redeemable by the Company at a price which is the higher of par and:

• for the 4.184% Series A Sterling Unsecured Loan Notes 2036, the price at which the Gross Redemption Yield on the date of redemption is equivalent to the yield on a reference UK government bond

• for the 3.249% Series B Euro Unsecured Loan Notes 2036 and for the 2.93% Euro Senior Unsecured Loan Notes 2037, the price at which the Gross Redemption Yield on the date of redemption is equivalent to the yield on a reference German government bond, in each case together with interest accrued up to and including the date of redemption.

The estimated fair values of the Loan Notes as at 30 September 2021 were Series A: £36.5m and Series B: £31.8m and Euro Senior: £20.7m, being £6.6m, £6.1m and £3.6m respectively above the amortised values excluding interest.

Had the Company been liquidated on 30 September 2021, the redemption premium would have amounted to £16.5m over and above the fair values.

Voting entitlement

The holders of the Loan Notes have no right to attend or to vote at general meetings of the Company.

Debt Covenants

Under the terms of the Loan Notes, covenants require that the net assets of the Company shall not be less than £300,000,000 and total indebtedness shall not exceed 40% of net assets. The Company also has a short-term JPY12bn multi-currency revolving credit facility, the terms of which include covenants requiring that the net assets shall not be less than £300m and the adjusted net asset coverage to borrowings shall not be less than 4:1.

Management Arrangements

AVI, the Investment Manager, is the Company's appointed AIFM, and is engaged under the terms of an Investment Management Agreement ('IMA') dated 17 July 2014. The IMA is terminable by six months' notice from either party, other than for "cause".

During the year under review, the Investment Manager was entitled to an annual management fee of 0.70% of the net assets of the Company, up to £1bn and 0.60% for that proportion of assets above £1bn.

J.P. Morgan Europe Limited was appointed as Depositary under an agreement with the Company and AVI dated 2 July 2014, and is paid a fee on a sliding scale between 1.0 basis points and 1.95 basis points based on the assets of the Company. The Depositary Agreement is terminable on 90 calendar days' notice from either party.

JPMorgan Chase Bank, National Association, London Branch, has been appointed as the Company's Custodian under an agreement dated 2 July 2014. The agreement will continue for so long as the Depositary Agreement is in effect and will terminate automatically upon termination of the Depositary Agreement, unless the parties agree otherwise.

Link Company Matters Limited was appointed as corporate Company Secretary on 1 April 2014. The current annual fee is £72,225, which is subject to an annual RPI increase. The Agreement may be terminated by either party on six months' written notice.

With the Board's consent, AVI has sub-contracted certain fund administration services to Link Asset Services. The cost of these sub-contracted services is borne by AVI from its own resources and not by the Company.

Going Concern

The financial statements have been prepared on a going concern basis and on the basis that approval as an investment trust company will continue to be met.

The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for a period of at least 12 months from the date when these financial statements were approved.

In making the assessment, the Directors have considered the likely impacts of the current COVID-19 pandemic on the Company, operations and the investment portfolio.

The Directors noted that the Company, with the current cash balance and holding a portfolio of liquid listed investments, is able to meet the obligations of the Company as they fall due. The surplus cash plus borrowing facilities enables the Company to meet any funding requirements and finance future additional investments. The Company is a closed ended fund, where assets are not required to be liquidated to meet day to day redemptions.

The Directors have completed stress tests assessing the impact of changes in market value and income with associated cash flows. In making this assessment, they have considered plausible downside scenarios. These tests were driven by the possible effects of continuation of the COVID-19 pandemic but, as an arithmetic exercise, apply equally to any other set of circumstances in which asset value and income are significantly impaired. The conclusion was that in a plausible downside scenario the Company could continue to meet its liabilities. Whilst the economic future is uncertain, and the Directors believe that it is possible the Company could experience reductions in income and/or market value, the opinion of the Directors is that this should not be to a level which would threaten the Company's ability to continue as a going concern.

The Directors, the Manager and other service providers have put in place contingency plans to minimise disruption. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt on the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance). Therefore, the financial statements have been prepared on the going concern basis.

Viability

The Directors consider viability as part of their continuing programme of monitoring risk. The Directors have made a robust assessment of the principal and emerging risks. The Directors believe five years to be a reasonable time horizon to consider the continuing viability of the Company, reflecting a balance between a longer-term investment horizon and the inherent shorter-term uncertainties within equity markets, although they do have due regard to viability over the longer term and particularly to key points outside this time frame, such as the due dates for the repayment of long-term debt. The Company is an investment trust whose portfolio is invested in readily realisable listed securities and with some short-term cash deposits. The following facts support the Directors' view of the viability of the Company:

· In the year under review, expenses (including finance costs and taxation) were adequately covered by investment income.

· The Company has a liquid investment portfolio.

· The Company has long-term debt of £30m and €30m which both fall due for repayment in 2036 and €20m which falls due for repayment in 2037. This debt was covered over 17 times as at the end of September 2021 by the Company's total assets. The Directors are of the view that, subject to unforeseen circumstances, the Company will have sufficient resources to meet the costs of annual interest and eventual repayment of principal on this debt.

· The Company has short-term debt of JPY9,000m via an unsecured revolving credit facility.

The Company has a large margin of safety over the covenants on its debt. The Company's viability depends on the global economy and markets continuing to function. The Directors also consider the possibility of a wide-ranging collapse in corporate earnings and/or the market value of listed securities. To the latter point, it should be borne in mind that a significant proportion of the Company's expenses are in ad valorem investment management fees, which would reduce if the market value of the Company's assets were to fall.

In arriving at its conclusion, the Board has taken account of the potential effects of the COVID-19 pandemic on the value of the Company's assets, income from those assets and the ability of the Company's key suppliers to maintain effective and efficient operations. As set out in the Going Concern statement above, in assessing the potential effects of the COVID-19 pandemic the Directors have completed stress tests which included plausible downside scenarios.

In order to maintain viability, the Company has a robust risk control framework which, following guidelines from the FRC, has the objectives of reducing the likelihood and impact of: poor judgement in decision-making; risk-taking that exceeds the levels agreed by the Board; human error; or control processes being deliberately circumvented.

Taking the above into account, and the potential impact of the principal and emerging risks as set out in the Annual Report, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of five years from the date of approval of this Annual Report.

Approval

The Report of the Directors has been approved by the Board.

By Order of the Board

Link Company Matters Limited

Company Secretary

Statement of Directors' Responsibilities in respect of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law they are required to prepare financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.

Under Company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of its profit and loss for that period. In preparing the financial statements, the Directors are required to:

· select suitable accounting policies and apply them consistently;

· make judgements and estimates that are reasonable, relevant and reliable;

· state whether they have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006;

· assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

· use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The financial statements of the Company are published on the Company's website at www.aviglobal.co.uk. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in Respect of the Annual Financial Report

We confirm that to the best of our knowledge:

· the financial statements, prepared in accordance with applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

· the Strategic Report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that the Company faces.

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Susan Noble  

8 November 2021

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the year ended 30 September 2021 but is derived from those accounts. Statutory accounts for the year ended 30 September 2021 will be delivered to the Registrar of Companies in due course. The Auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditors' report can be found in the Company's full Annual Report and Accounts on the Company's website at https://www.aviglobal.co.uk.

STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 September 2021

		2021  Revenue  return	2021  Capital  return	2021  Total	2020  Revenue  return	2020  Capital  return	2020  Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Income
Investment income	2	20,376	27	20,403	15,157	-	15,157
Gains/(losses) on financial assets and financial liabilities held at fair value	8	-	289,398	289,398	-	(3,073)	(3,073)
Exchange losses on currency balances		-	705	705	-	(1,594)	(1,594)
		20,376	290,130	310,506	15,157	(4,667)	10,490
Expenses
Investment management fee	3	(2,138)	(4,988)	(7,126)	(1,789)	(4,173)	(5,962)
Other expenses (including irrecoverable VAT)	3	(1,735)	-	(1,735)	(1,630)	-	(1,630)
Profit/(loss) before finance costs and taxation		16,503	285,142	301,645	11,738	(8,840)	2,898
Finance costs	4	(955)	(2,248)	(3,203)	(913)	(2,150)	(3,063)
Exchange gains/(losses) on loan revaluation	4	-	2,385	2,385	-	(1,114)	(1,114)
Profit/(loss) before taxation		15,548	285,279	300,827	10,825	(12,104)	(1,279)
Taxation	5	(1,259)	(5)	(1,264)	(691)	-	(691)
Profit/(loss) for the year		14,289	285,274	299,563	10,134	(12,104)	(1,970)
Earnings per Ordinary Share	7	13.68p	273.10p	286.78p	9.36p	(11.18p)	(1.82p)

The total column of this statement is the income statement of the Company prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The supplementary revenue return and capital return columns are presented in accordance with the Statement of Recommended Practice issued by the Association of investment companies ('AIC SORP').

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.

There is no other comprehensive income, and therefore the profit for the year after tax is also the total comprehensive income.

The accompanying notes are an integral part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

for the year ended 30 September 2021

	Ordinary share capital	Capital redemption reserve	Share premium	Capital  reserve*	Merger reserve	Revenue  reserve**	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
For the year ended 30 September 2021
Balance as at 30 September 2020	11,600	7,335	28,078	764,245	41,406	30,941	883,605
Ordinary Shares bought back and held in treasury	-	-	-	(32,638)	-	-	(32,638)
Total comprehensive income for the year	-	-	-	285,274	-	14,289	299,563
Ordinary dividends paid (see note 6)	-	-	-	-	-	(17,308)	(17,308)
Balance as at 30 September 2021	11,600	7,335	28,078	1,016,881	41,406	27,922	1,133,222
For the year ended 30 September 2020
Balance as at 30 September 2019	11,600	7,335	28,078	807,421	41,406	43,101	938,941
Ordinary Shares bought back and held in treasury	-	-	-	(31,072)	-	-	(31,072)
Total comprehensive income for the year	-	-	-	(12,104)	-	10,134	(1,970)
Ordinary dividends paid (see note 6)	-	-	-	-	-	(22,294)	(22,294)
Balance as at 30 September 2020	11,600	7,335	28,078	764,245	41,406	30,941	883,605

* Within the balance of the capital reserve, £757,120,000 relates to realised gains (2020: £675,997,000) which under the Articles of Association is distributable by way of dividend. The remaining £259,761,000 relates to unrealised gains and losses on financial instruments (2020: £88,247,000 ) and is non-distributable.

** Revenue reserve is fully distributable by way of dividend.

The accompanying notes are an integral part of these financial statements.

BALANCE SHEET

as at 30 September 2021

		2021	2020
	Notes	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss	8	1,196,201	959,709
		1,196,201	959,709
Current assets
Other receivables	9	4,572	8,775
Cash and cash equivalents		68,418	31,596
		72,990	40,371
Total assets		1,269,191	1,000,080
Current liabilities
Total return swap liabilities	8, 10	(1,091)	-
Revolving credit facility	10	(59,821)	(39,314)
Other payables	10	(2,358)	(2,097)
		(63,270)	(41,411)
Total assets less current liabilities		1,205,921	958,669
Non-current liabilities
4.184% Series A Sterling Unsecured Loan Notes 2036	11	(29,906)	(29,899)
3.249% Series B Euro Unsecured Loan Notes 2036	11	(25,715)	(27,140)
2.93% Euro Senior Unsecured Loan Notes 2037	11	(17,078)	(18,025)
		(72,699)	(75,064)
Net assets		1,133,222	833,605
Equity attributable to equity shareholders
Ordinary share capital	12	11,600	11,600
Capital redemption reserve		7,335	7,335
Share premium		28,078	28,078
Capital reserve		1,016,881	764,245
Merger reserve		41,406	41,406
Revenue reserve		27,922	30,941
Total equity		1,133,222	883,605
Net asset value per Ordinary Share - basic and diluted	13	1,109.77p	837.13p
Number of shares in issue excluding Treasury	12	102,113,325	105,551,730

These financial statements were approved and authorised for issue by the Board of AVI Global Trust plc on 8 November 2021 and were signed on its behalf by:

Susan Noble

Chairman

The accompanying notes are an integral part of these financial statements.

Registered in England & Wales No. 28203

STATEMENT OF CASH FLOWS

for the year ended 30 September 2021

	2021  £'000	2020  £'000
Reconciliation of profit/(loss) before taxation to net cash inflow from operating activities
Profit/(loss) before taxation	300,827	(1,279)
(Gains)/losses on investments held at fair value through profit or loss	(289,398)	3,073
(Increase)/decrease in other receivables	(2,438)	1,441
Decrease in other payables	(438)	(158)
Taxation paid	(1,138)	(685)
Exchange (gains)/losses on Loan Notes and revolving credit facility	(5,304)	391
Amortisation of loan issue expenses	20	20
Net cash inflow from operating activities	2,131	2,803
Investing activities
Purchases of investments	(655,244)	(424,934)
Sales of investments	716,184	431,936
Cash inflow from investing activities	60,940	7,002
Financing activities
Dividends paid	(17,308)	(22,294)
Payments for Ordinary Shares bought back and placed in treasury	(32,371)	(30,633)
Net drawdown of revolving credit facility	23,426	10,000
Cash outflow from financing activities	(26,253)	(42,927)
Increase/(decrease) in cash and cash equivalents	36,818	(33,122)
Reconciliation of net cash flow movement in funds:
Cash and cash equivalents at beginning of year	31,596	64,725
Exchange rate movements	4	(7)
Increase/(decrease) in cash and cash equivalents	36,818	(33,122)
Increase/(decrease) in net cash	36,822	(33,129)
Cash and cash equivalents at end of year	68,418	31,596

The accompanying notes are an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

1.  General information and accounting policies

AVI Global Trust plc is a company incorporated and registered in England and Wales. The principal activity of the Company is that of an investment trust company within the meaning of Sections 1158/1159 of the Corporation Tax Act 2010 and its investment approach is detailed in the Strategic Report.

The Company's financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The financial statements have also been prepared in accordance with the AIC SORP for the financial statements of investment trust companies and venture capital trusts.

Basis of preparation

The functional currency of the Company is Pounds Sterling because this is the currency of the primary economic environment in which the Company operates. The financial statements are also presented in Pounds Sterling rounded to the nearest thousand, except where otherwise indicated.

Going concern

The financial statements have been prepared on a going concern basis and on the basis that approval as an investment trust company will continue to be met.

The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for a period of at least 12 months from the date when these financial statements were approved.

In making the assessment, the Directors have considered the likely impacts of the current COVID-19 pandemic on the Company, operations and the investment portfolio.

The Directors noted that the Company, with the current cash balance and holding a portfolio of liquid listed investments, is able to meet the obligations of the Company as they fall due. The current cash balance plus available additional borrowing, through the revolving credit facility, enables the Company to meet any funding requirements and finance future additional investments. The Company is a closed-ended fund, where assets are not required to be liquidated to meet day-to-day redemptions. The Company is in a net current asset position as at 30 September 2021.

The Directors have completed stress tests assessing the impact of changes in market value and income with associated cash flows. In making this assessment, they have considered plausible downside scenarios. These tests were driven by the possible effects of continuation of the COVID-19 pandemic but, as an arithmetic exercise, apply equally to any other set of circumstances in which asset value and income are significantly impaired. The conclusion was that in a plausible downside scenario the Company could continue to meet its liabilities. Whilst the economic future is uncertain, and the Directors believe that it is possible the Company could experience further reductions in income and/or market value, the opinion of the Directors is that this should not be to a level which would threaten the Company's ability to continue as a going concern.

The Directors, the Manager and other service providers have put in place contingency plans to minimise disruption. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt on the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance). Therefore, the financial statements have been prepared on the going concern basis.

Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. The Company primarily invests in companies listed in the UK and other recognised international exchanges.

Accounting developments

In the year under review, the Company has applied amendments to IFRS issued by the IASB. These include annual improvements to IFRS, changes in standards, legislative and regulatory amendments, changes in disclosure and presentation requirements. The adoption of the changes to accounting standards has had no material impact on these or prior years' financial statements.

There are amendments to IAS/IFRS that will apply from 1 October 2021 as follows:

· Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to IFRS 9, IAS 39 and IFRS 7);

· IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies; Changes in Accounting Estimates and Errors (Amendment - Disclosure initiative - Definition of Material); and

· Revisions to the Conceptual Framework for Financial Reporting.

The adoption of the changes to accounting standards has had no material impact on these, or prior years', financial statements.

The Directors do not anticipate that the adoption of these standards will have a material impact on the financial statements as presented.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statements in conformity with international accounting standards requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts in the Balance Sheet, the Statement of Comprehensive Income and the disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future period if the revision affects both current and future periods. There were no significant judgements or estimates which had a significant impact on these financial statements.

Investments

The Company's business is investing in financial assets with a view to capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis in accordance with the documented investment strategy and information is provided internally on that basis to the Company's Board of Directors.

The investments held by the Company are designated "at fair value through profit or loss". All gains and losses are allocated to the capital return within the Statement of Comprehensive Income as "Gains or losses on investments held at fair value through profit or loss". Also included within this heading are transaction costs in relation to the purchase or sale of investments. When a purchase or sale is made under a contract, the terms of which require delivery within the timeframe of the relevant market, the investments concerned are recognised or derecognised on the trade date.

All investments are designated upon initial recognition as held at fair value through profit or loss, and are measured at subsequent reporting dates at fair value, which is either the bid price or closing price for Stock Exchange Electronic Trading Service - quotes and crosses ('SETSqx'). The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been accumulated is recognised in profit or loss.

Fair values for unquoted investments, or for investments for which the market is inactive, are established by using various valuation techniques in accordance with the International Private Equity and Venture Capital (the 'IPEV') guidelines. These may include recent arm's length market transactions, the current fair value of another instrument that is substantially the same, discounted cash flow analysis, option pricing models and reference to similar quoted companies. Where there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, that technique is utilised. Where no reliable fair value can be estimated for such instruments, they are carried at cost. These are constantly monitored for value. The values, if any, are approved by the Board.

All investments for which a fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy levels in note 14. A transfer between levels may result from the date of an event or a change in circumstances.

Foreign currency

Transactions denominated in currencies other than Pounds Sterling are recorded at the rates of exchange prevailing on the date of the transaction. Items which are denominated in foreign currencies are translated at the rates prevailing on the Balance Sheet date. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or the revenue account depending on whether the gain or loss is capital or revenue in nature.

Cash and cash equivalents

Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments and money market funds, that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts when applicable.

Other receivables and payables

Trade receivables, trade payables and short-term borrowings are measured at amortised cost and balances revalued for exchange rate movements.

Revolving credit facility

The revolving credit facility is recognised at amortised cost and revalued for exchange rate movements.

Income

Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established.  Fixed returns on non-equity shares are recognised on a time-apportioned basis. Dividends from overseas companies are shown gross of any withholding taxes which are disclosed separately in the Statement of Comprehensive Income.

Special dividends are taken to the revenue or capital account depending on their nature. In deciding whether a dividend should be regarded as a capital or revenue receipt, the Board reviews all relevant information as to the reasons for the sources of the dividend on a case-by-case basis.

When the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend forgone is recognised as income. Any excess in the value of the cash dividend is recognised in the capital column.

Underwriting income is recognised upon completion of underwriting of a share issue. Where shares are received rather than cash, the value of the cash foregone is recognised as income. Any excess in the value of the underwriting is recognised in the capital column.

All other income is accounted on a time-apportioned accruals basis and is recognised in the Statement of Comprehensive Income.

Expenses and finance costs

All expenses are accounted on an accruals basis. On the basis of the Board's expected long-term split of total returns in the form of capital and revenue returns of 70% and 30% respectively, the Company charges 70% of its management fee and finance costs to capital.

Expenses incurred directly in relation to arranging debt finance are amortised over the term of the finance.

Expenses incurred in buybacks of shares to be held in treasury are charged to the capital reserve through the Statement of Changes in Equity.

Taxation

The charge for taxation is based on the net revenue for the year and takes into account taxation deferred or accelerated because of temporary differences between the treatment of certain items for accounting and taxation purposes.

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amount for financial reporting purposes at the reporting date. Deferred tax assets are only recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of timing differences can be deducted. In line with the recommendations of the SORP, the allocation method used to calculate the tax relief on expenses charged to capital is the "marginal" basis. Under this basis, if taxable income is capable of being offset entirely by expenses charged through the revenue account, then no tax relief is transferred to the capital account.

Dividends payable to shareholders

Dividends to shareholders are recognised as a liability in the period in which they are paid or approved in general meetings and are taken to the Statement of Changes in Equity. Dividends declared and approved by the Company after the Balance Sheet date have not been recognised as a liability of the Company at the Balance Sheet date.

Non-current liabilities: Loan Notes

The non-current liabilities are valued at amortised cost. Costs in relation to arranging the debt finance have been capitalised and are amortised over the term of the finance. Hence, amortised cost is the par value less the amortised costs of issue.

The Euro Loan Notes are shown at amortised cost with the exchange difference on the principal amounts to be repaid reflected. Any gain or loss arising from changes in the exchange rate between Euro and Sterling is included in the capital reserves and shown in the capital column of the Statement of Comprehensive Income.

Further details of the non-current liabilities are set out in note 11.

Capital redemption reserve

The capital redemption reserve represents non-distributable reserves that arise from the purchase and cancellation of shares.

Share premium

The share premium account represents the accumulated premium paid for shares issued in previous periods above their nominal value less issue expenses. This is a reserve forming part of the non-distributable reserves. The following items are taken to this reserve:

· costs associated with the issue of equity; and

· premium on the issue of shares.

Capital reserve

The following are taken to the capital reserve through the capital column in the Statement of Comprehensive Income:

Capital reserve - other, forming part of the distributable reserves:

· gains and losses on the disposal of investments;

· amortisation of issue expenses of Loan Notes;

· costs of share buybacks;

· exchange differences of a capital nature; and

· expenses, together with the related taxation effect, allocated to this reserve in accordance with the above policies.

Capital reserve - investment holding gains, not distributable:

· increase and decrease in the valuation of investments held at the year end.

Merger reserve

The merger reserve represents the share premium on shares issued on the acquisition of Selective Assets Trust plc on 13 October 1995 and is not distributable.

Revenue reserve

The revenue reserve represents the surplus of accumulated profits and is distributable by way of dividends.

2. Income

	2021  £'000	2020  £'000
Income from investments
UK dividends	255	-
UK REIT dividends	390	-
Overseas dividends	20,045	14,598
Total return swap dividends*	-	369
	20,690	14,967
Other income
Deposit interest	12	264
Total return swap interest*	(200)	(481)
Underwriting commission	1	426
Interest on French withholding tax received	-	1
Exchange losses on receipt of income**	(127)	(20)
	20,376	15,157
	20,376	15,157
Capital dividend***	27	-
	20,403	15,157

* Net income (paid)/received on underlying holdings in total return swaps.

** Exchange movements arise from ex-dividend date to payment date.

*** Dividend received is attributed to a distribution of capital.

3. Investment management fee and other expenses

	2021	2021		2020	2020
	Revenue	Capital	2021	Revenue	Capital	2020
	return	return	Total	return	return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Management fee	2,138	4,988	7,126	1,789	4,173	5,962
Other expenses:
Directors' emoluments - fees	171	-	171	169	-	169
Auditor's remuneration - audit	40	-	40	35	-	35
Marketing	411	-	411	459	-	459
Printing and postage costs	49	-	49	65	-	65
Registrar fees	91	-	91	80	-	80
Custodian fees	272	-	272	185	-	185
Depositary fees	140	-	140	120	-	120
Advisory and professional fees	343	-	343	249	-	249
Costs associated with dividend receipts	5	-	5	60	-	60
Irrecoverable VAT	76	-	76	85	-	85
Regulatory fees	76	-	76	72	-	72
Directors' insurances & other expenses	61	-	61	51	-	51
	1,735	-	1,735	1,630	-	1,630

For the year ended 30 September 2021, the fee calculated in accordance with the IMA amounted to 0.7% of net assets for assets up to £1bn and 0.6% of net assets over £1bn (2020: 0.7%) calculated on a quarterly basis.

Details of the IMA and fees paid to the Investment Manager are set out in the Report of the Directors.

4. Finance costs

	2021	2021		2020	2020
	Revenue	Capital	2021	Revenue	Capital	2020
	return	return	Total	return	return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Loan, debenture and revolving credit facility interest
4.184% Series A Sterling Unsecured Loan Notes 2036	376	879	1,255	376	879	1,255
3.249% Series B Euro Unsecured Loan Notes 2036	252	588	840	259	604	863
2.93% Euro Senior Unsecured Loan Notes 2037	152	355	507	154	359	513
Revolving credit facility	139	325	464	93	217	310
	919	2,147	3,066	882	2,059	2,941
Amortisation
4.184% Series A Sterling Unsecured Loan Notes 2036	-	7	7	-	7	7
3.249% Series B Euro Unsecured Loan Notes 2036	-	5	5	-	5	5
2.93% Euro Senior Unsecured Loan Notes 2037	-	7	7	-	7	7
JPY revolving credit facility	31	71	102	31	72	103
	31	90	121	31	91	122
Bank interest
Bank debit interest	5	11	16	-	-	-
Total	955	2,248	3,203	913	2,150	3,063
Exchange gains/(losses) on Loan Notes*	-	2,385	2,385	-	(1,114)	(1,114)

* Revaluation of Euro Loan Notes.

5. Taxation

	Year ended 30 September 2021			Year ended 30 September 2020
	Revenue  return	Capital return	Total	Revenue  return	Capital return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Analysis of charge for the year
Overseas tax not recoverable*	1,259	5	1,264	691	-	691
Tax cost for the year	1,259	5	1,264	691	-	691

* Tax deducted on payment of overseas dividends by local tax authorities.

The tax assessed for the year is the standard rate of corporation tax in the United Kingdom of 19%. The differences are explained below:

	Year ended 30 September 2021			Year ended 30 September 2020
	Revenue    return	Capital   return	Total	Revenue  return	Capital  return	Total
	'000	'000	'000	'000	'000	'000
Return on ordinary activities after interest payable but before appropriations	15,548	285,279	300,827	10,825	(12,104)	(1,279)
Theoretical tax at UK corporation tax rate of 19%	2,954	54,202	57,156	2,057	(2,300)	(243)
Effects of the non-taxable items:
- UK dividend income	(48)	-	(48)	-	-	-
- Tax-exempt overseas investment income	(3,785)	(5)	(3,790)	(2,770)	-	(2,770)
- (Losses)/gains on investments, exchange gains on capital items and movement of fair value or derivative financial instruments	-	(55,572)	(55,572)	-	1,098	1,098
- Excess management expenses carried forward	615	1,375	1,990	540	1,202	1,742
- Corporate interest restriction	264	-	264	173	-	173
- Overseas tax not recoverable	1,259	5	1,264	691	-	691
Tax credit for the year	1,259	5	5	691	-	691

At 30 September 2021, the Company had unrelieved management expenses of £98,322,000 (30 September 2020: £87,852,000) that are available to offset future taxable revenue. On 3 March 2021, the UK Government announced its intention to increase the rate of UK corporation tax from 19% to 25% from 1 April 2023 and this was subsequently substantively enacted on 24 May 2021. The potential deferred tax asset has been calculated using a corporation tax rate of 25% (2020: 19%). A deferred tax asset of £24,580,500 has not been recognised because the Company is not expected to generate sufficient taxable income in future periods in excess of the available deductible expenses and accordingly, the Company is unlikely to be able to reduce future tax liabilities through the use of existing surplus losses.

Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Company meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an investment trust company.

6. Dividends

	2021	2020
	£'000	£'000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 30 September 2020 of 10.50p (2019: 14.50p) per Ordinary Share	11,041	15,855
Interim dividend for the year ended 30 September 2021 of 6.00p (2020: 6.00p) per Ordinary Share	6,267	6,439
	17,308	22,294

Set out below are the interim and final dividends paid or proposed on Ordinary Shares in respect of the financial year, which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered.

	2021	2020
	£'000	£'000
Interim dividend for the year ended 30 September 2021 of 6.00p (2020: 6.00p) per Ordinary Share	6,267	6,439
Proposed final dividend for the year ended 30 September 2021 of 10.50p (2020: 10.50p) per Ordinary Share	10,685*	11,041
	16,952	17,480

* Based on shares in circulation on 8 November 2021.

7. Earnings per Ordinary Share

The earnings per Ordinary Share is based on Company net profit after tax of £299,563,000 (2020: net loss of £1,970,000 ) and on 104,458,669 (2020: 108,222,102) Ordinary Shares, being the weighted average number of Ordinary Shares in issue (excluding shares in treasury) during the year.

The earnings per Ordinary Share detailed above can be further analysed between revenue and capital as follows:

	30 September 2021			30 September 2020
Basic and diluted	Revenue	Capital	Total	Revenue	Capital	Total
Net profit/(loss) (£'000)	14,289	285,274	299,563	10,134	(12,104)	(1,970)
Weighted average number of Ordinary Shares			104,458,669			108,222,102
Earnings per Ordinary Share	13.68p	273.10p	286.78p	9.36p	(11.18)p	(1.82)p

There are no dilutive instruments issued by the Company (2020: none).

8. Investments held at fair value through profit or loss

	30 September	30 September
	2021	2020
	£'000	£'000
Financial assets held at fair value
Opening book cost	865,047	852,421
Opening investment holding gains	94,662	121,208
Opening fair value	959,709	973,629
Movement in the year:
Purchases at cost:
Equities	655,676	424,886
Sales/Close - proceeds:
Equities and total return swaps	(709,673)	(435,733)
- realised gains on equity sales and close of total return swaps	123,192	23,473
Increase/(decrease) in investment holding gains	166,206	(26,546)
Closing fair value	1,195,110	959,709
Closing book cost	934,242	865,047
Closing investment holding gains	260,868	94,662
Closing fair value	1,195,110	959,709
Financial assets held at fair value
Equities	1,196,201	959,709
Total return swaps	(1,091)	-
	1,195,110	959,709

	Year ended	Year ended
	30 September	30 September
	2021	2020
	£'000	£'000
Transaction costs
Cost on acquisition	433	251
Cost on disposals	480	243
	913	494

Analysis of capital gains
Gains on sales/close out of financial assets based on historical cost	123,192	23,473
Movement in investment holding gains for the year	166,206	(26,546)
Net gains on investments	289,398	(3,073)

The Company received £709,673,000 (2020: £435,733,000) from investments sold in the year. The book cost of these investments when they were purchased was £586,481,000 (2020: £412,260,000). These investments have been revalued over time and until they were sold any unrealised gains or losses were included in the fair value of the investments.

9. Other receivables

	2021	2020
	£'000	£'000
Sales for future settlement	-	6,515
Tax recoverable	524	650
Prepayments and accrued income	4,008	1,585
VAT recoverable	40	25
	4,572	8,775

Tax recoverable relates to withholding tax in a number of countries, some of which is past due, but is in the process of being reclaimed by the Custodian through local tax authorities and also tax deducted on UK REIT dividends, which the Company expects to receive in due course.

No other receivables are past due or impaired.

10. Current liabilities

	2021	2020
	£'000	£'000
Total return swap	1,091	-
Revolving credit facility	59,821	39,314
Other payables
Purchases for future settlement	432	-
Amounts owed for share buybacks	710	443
Management fees	-	488
Interest payable	856	797
Other payables	360	369
Total other payables	2,358	2,097
Total current liabilities	63,270	41,411

Revolving credit facility

On 29 April 2019, the Company entered into an agreement with Scotiabank Europe Plc for a JPY4.0bn (£27,700,000) unsecured revolving credit facility (the 'facility') for a period of three years.

The facility was increased to JPY9.0bn and converted to a multi currency facility with drawings available in Japanese Yen, Pounds Sterling, US Dollars and Euros on 5 March 2020 with an interest rate of 0.75% over LIBOR on any drawn balances.

On 23 August 2021 the facility was further increased to JPY12.0bn. The agreement was additionally novated in reference to the relevant changes in interest calculations with the discontinuation of LIBOR.

The interest chargeable will be the appropriate RFR plus the additional margin:

• Japanese Yen	1.025% margin over the Tokyo unsecured overnight rate (TONAR);
• Pounds Sterling	1.42% margin over SONIA (sterling overnight index average);
• US Dollars	1.25% margin above the secured overnight financing rate (SOFR);
• Euros	1.25% margin above the Euro short-term rate (€ STR).

Undrawn balances below JPY2.0bn are charged at 0.35% and any undrawn portion above this is charged at 0.30%.

Under the terms of the facility, the covenant requires that the net assets shall not be less than £300m and the adjusted net asset coverage to borrowings shall not be less than 4:1.

The facility is shown at amortised cost and revalued for exchange rate movements. Any gain or loss arising from changes in exchange rates is included in the capital reserves and shown in the capital column of the Statement of Comprehensive Income. Interest costs are charged to capital and revenue in accordance with the Company's accounting policies.

11. Non-current liabilities

	2021	2020
	£'000	£'000
4.184% Series A Sterling Unsecured Loan Notes 2036	29,906	29,899
3.249% Series B Euro Unsecured Loan Notes 2036	25,715	27,140
2.93% Euro Senior Unsecured Loan Notes 2037	17,078	18,025
Total	72,699	75,064

The amortised costs of issue expenses are set out in note 4.

The fair values of the Loan Notes are set out in note 14.

The Company issued two Loan Notes on 15 January 2016:

£30,000,000  4.184% Series A Sterling Unsecured Loan Notes due 15 January 2036

€30,000,000  3.249% Series B Euro Unsecured Loan Notes due 15 January 2036

The Company issued further Loan Notes on 1 November 2017:

€20,000,000  2.93% Euro Senior Unsecured Loan Notes due 1 November 2037

Under the terms of the Loan Notes, the net assets of the Company shall not be less than £300,000,000 and total indebtedness shall not exceed 40% of net assets.

Further information on the Loan Notes is set out above.

12. Called-up share capital

	Ordinary Shares of 10p each
	Number of   shares	Nominal value £'000
Allotted, called up and fully paid:	116,003,133	11,600
Treasury Shares:
Balance at beginning of year	10,451,403
Buyback of Ordinary Shares into treasury	3,438,405
Balance at end of year	13,889,808
Total Ordinary Share capital excluding Treasury Shares	102,113,325

During the year, 3,438,405    (2020: 4,573,938) Ordinary Shares with a nominal value of £344,000 (2020: £457,000 ) and representing 2.96% of the issued share capital, were bought back and placed in treasury for an aggregate consideration of £32,638,000 (2020: £31,072,000 ). No Ordinary Shares were bought back for cancellation (2020: nil). No Ordinary Shares were cancelled from treasury during the year (2020: nil).

The allotted, called up and fully paid shares at 30 September 2021 consisted of 116,003,133 Ordinary Shares.

13. Net asset value

The net asset value per Ordinary share and the net asset value attributable to the Ordinary Shares at the year end are calculated in accordance with their entitlements in the Articles of Association and were as follows:

	30 September 2021		30 September 2020
	NAV per Ordinary Share Pence	Net asset value attributable £'000	NAV per Ordinary Share Pence	Net asset value attributable £'000
Basic and diluted	1,109.77	1,133,222	837.13	883,605

Net asset value per Ordinary Share is based on net assets and on 102,113,325 Ordinary Shares (2020: 105,551,730 ), being the number of Ordinary Shares in issue excluding Treasury Shares at the year end.

14. Financial instruments and capital disclosures

Investment objective and policy

The investment objective of the Company is to achieve capital growth through a focused portfolio of investments, particularly in companies whose share prices stand at a discount to estimated underlying net asset value.

The Company's investment objective and policy are detailed above.

The Company's financial instruments comprise equity and fixed-interest investments, cash balances, receivables, payables and borrowings. The Company makes use of borrowings to achieve improved performance in rising markets. The risk of borrowings may be reduced by raising the level of cash balances or fixed-interest investments held.

Risks

The risks identified arising from the financial instruments are market risk (which comprises market price risk, interest rate risk and foreign currency risk), liquidity risk and credit and counterparty risk. The Company may also enter into derivative transactions to manage risk.

The Board and Investment Manager consider and review the risks inherent in managing the Company's assets which are detailed below.

Market risk

Market risk arises mainly from uncertainty about future prices of financial instruments used in the Company's business. It represents the potential loss which the Company might suffer through holding market positions by way of price movements, interest rate movements and exchange rate movements. The Investment Manager assesses the exposure to market risk when making each investment decision and these risks are monitored by the Investment Manager on a regular basis and the Board at quarterly meetings with the Investment Manager.

Market price risk

Market price risk (i.e. changes in market prices other than those arising from currency risk or interest rate risk) may affect the value of investments.

The portfolio is managed with an awareness of the effects of adverse price movements through detailed and continuing analysis with the objective of maximising overall returns to shareholders. The Company has experienced volatility in the fair value of investments during recent years due to COVID-19 and Brexit. The Company has used 20% to demonstrate the impact of a significant reduction/increase in the fair value of the investments and the impact upon the Company that might arise from future significant events. If the fair value of the Company's investments at the year end increased or decreased by 20%, then it would have had an impact on the Company's capital return and equity of £239,022,000 (2020: £191,941,000).

Foreign currency

The value of the Company's assets and the total return earned by the Company's shareholders can be significantly affected by foreign exchange rate movements as most of the Company's assets are denominated in currencies other than Pounds Sterling, the currency in which the Company's financial statements are prepared. Income denominated in foreign currencies is converted to Pounds Sterling upon receipt.

A 5% rise or decline of Sterling against foreign currency denominated (i.e. non Pounds Sterling) assets and liabilities held at the year end would have increased/decreased the net asset value by £48,114,000 (2020: £40,307,000 ).

The currency exposure is as follows:

Currency risk
	GBP	EUR	USD	SEK	JPY	NOK	CHF	HKD	INR	RON	Total
	'000	'000	'000	'000	'000	'000	£'000	£'000	£'000	£'000	'000
At 30 September 2021
Other receivables	487	252	1,496	-	1,472	-	269	596	-	-	4,572
Cash and cash equivalents	55,068	-	13,350	-	-	-	-	-	-	-	68,418
Other payables	(1,269)	(384)	(66)	-	(639)	-	-	-	-	-	(2,358)
Total return swaps	-	-	(1,091)	-	-	-	-	-	-	-	(1,091)
4.184% Series A Sterling Unsecured Loan Notes 2036	(29,906)	-	-	-	-	-	-	-	-	-	(29,906)
3.249% Series B Euro Unsecured Loan Notes 2036	-	(25,715)	-	-	-	-	-	-	-	-	(25,715)
2.93% Euro Senior Unsecured Loan Notes 2037	-	(17,078)	-	-	-	-	-	-	-	-	(17,078)
Revolving credit facility	-	-	-	-	(59,821)	-	-	-			(59,821)
Currency exposure on net monetary items	24,380	(42,925)	13,689	-	(58,988)	-	269	596	-	-	(62,979)
Investments held at fair value through profit or loss - equities	146,572	141,276	357,263	65,753	324,014	48,244	-	22,639	39,060	51,380	1,196,201
Total net currency exposure	170,952	98,351	370,952	65,753	265,026	48,244	269	23,235	39,060	51,380	1,133,222

This exposure is representative at the Balance Sheet date and may not be representative of the year as a whole. The balances are of the holding investment and may not represent the actual exposure of the subsequent underlying investment. 

	GBP	EUR	USD	SEK	JPY	NOK	CHF	HKD	INR	Other	Total
	'000	'000	'000	'000	'000	'000	£'000	£'000	£'000	£'000	'000
At 30 September 2020
Other receivables	102	168	147	-	7,439	197	285	437	-	-	8,775
Cash and cash equivalents	31,596	-	-	-	-	-	-	-	-	-	31,596
Other payables	(1,534)	(406)	-	-	(157)	-	-	-	-	-	(2,097)
4.184% Series A Sterling Unsecured Loan Notes 2036	(29,899)	-	-	-	-	-	-	-	-	-	(29,899)
3.249% Series B Euro Unsecured Loan Notes 2036	-	(27,140)	-	-	-	-	-	-	-	-	(27,140)
2.93% Euro Senior Unsecured Loan Notes 2037	-	(18,025)	-	-	-	-	-	-	-	-	(18,025)
Revolving credit facility	(10,000)	-	-	-	(29,314)	-	-	-	-	-	(39,314)
Currency exposure on net monetary items	(9,735)	(45,403)	147	-	(22,032)	197	285	437	-	-	(76,104)
Investments held at fair value through profit or loss - equities	87,196	108,687	301,093	95,681	285,793	20,287	-	20,035	25,350	15,587	959,709
Total net currency exposure	77,461	63,284	301,240	95,681	263,761	20,484	285	20,472	25,350	15,587	883,605

Interest rate risk

Interest rate movements may affect:

• the fair value of investments in fixed-interest rate securities;

• the level of income receivable on cash deposits;

• the interest payable on variable rate borrowings; and

• the fair value of the Company's long-term debt.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions.

The Loan Notes issued by the Company pay a fixed rate of interest and are carried in the Company's Balance Sheet at amortised cost rather than at fair value. Hence, movements in interest rates will not affect net asset values, as reported under the Company's accounting policies, but may have an impact on the Company's share price and discount/premium. The fair value of the debt and its effect on the Company's assets is set out below.

The exposure at 30 September of financial assets and financial liabilities to interest rate risk is shown by reference to floating interest rates.

	At  30 September 2021  £'000	At  30 September 2020  £'000
Exposure to floating interest rates: Cash and cash equivalents	68,418	31,596
JPY revolving credit facility	(59,821)	(39,314)

If the above level of cash was maintained for a year, a 1% increase in interest rates would increase the revenue return and net assets by £86,000 (2020: decrease by £77,000). Management proactively manages cash balances. If there was a fall of 1% in interest rates, it would potentially impact the Company by turning positive interest to negative interest. The total effect would be a revenue reduction/cost increase of £86,000 (2020: revenue reduction/cost increase of £77,000).

	30 September 2021		30 September 2020
	Book cost £'000	Fair value £'000	Book cost £'000	Fair value £'000
4.184% Series A Sterling Unsecured Loan Notes 2036	29,906	36,519	29,899	38,677
3.249% Series B Euro Unsecured Loan Notes 2036	25,715	31,779	27,140	34,826
2.93% Euro Senior Unsecured Loan Notes 2037	17,078	20,700	18,025	22,779
Total	72,699	88,998	75,064	96,282

The impact of holding the Loan Notes at fair value would be to reduce the Company's net assets by £16,299,000 (2020: £21,218,000).

The fair value of the Company's Loan Notes at the year end was £88,998,000 (2020: £96,282,000). The interest rates of the non-current liabilities (Loan Notes) are fixed. A 1% increase in market interest rates would be expected to decrease the fair value of the non-current liabilities by approximately -£9.8m (2020: £11.2m), all other factors being equal. A 1% decrease would increase the fair values by £11.3m (2020: £13.0m).

Liquidity risk

The Company's assets mainly comprise readily realisable securities which can be easily sold to meet funding commitments, if necessary. Unlisted investments, if any, in the portfolio are subject to liquidity risk. The risk is taken into account by the Directors when arriving at their valuation of these items.

Liquidity risk is mitigated by the fact that the Company has £68,418,000 (2020: £31,596,000) cash at bank, the assets are readily realisable and further short-term flexibility is available through the use of bank borrowings. The Company is a closed-ended fund, assets do not need to be liquidated to meet redemptions, and sufficient liquidity is maintained to meet obligations as they fall due.

The remaining contractual payments on the Company's financial liabilities at 30 September, based on the earliest date at which payment can be required and current exchange rates at the Balance Sheet date, were as follows:

	In 1 year  or less	In more than 1  year but not  more than  2 years	In more than 2  years but not  more than  3 years	In more than 3  years but not  more than   10 years	In more than 10 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 30 September 2021
4.184% Series A Sterling Unsecured Loan Notes 2036	(1,255)	(1,255)	(1,255)	(8,786)	(17,355)	(29,906)
3.249% Series B Euro Unsecured Loan Notes 2036	(838)	(838)	(838)	(5,865)	(17,336)	(25,715)
2.93% Euro Senior Unsecured Loan Notes 2037	(504)	(504)	(504)	(3,526)	(12,040)	(17,078)
Total return swap liabilities	(1,091)	-	-	-	-	(1,091)
Revolving credit facility	(59,821)	-	-	-	-	(59,821)
Other payables	(2,358)	-	-	-	-	(2,358)
	(65,867)	(2,597)	(2,597)	(18,177)	(46,731)	(135,969)

	In 1 year  or less	In more than 1  year but not  more than   2 years	In more than 2  years but not  more than  3 years	In more than 3  years but not  more than   10 years	In more than  10 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 30 September 2020
4.184% Series A Sterling Unsecured Loan Notes 2036	(1,255)	(1,255)	(1,255)	(8,786)	(17,348)	(29,899)
3.249% Series B Euro Unsecured Loan Notes 2036	(884)	(884)	(884)	(6,190)	(18,298)	(27,140)
2.93% Euro Senior Unsecured Loan Notes 2037	(532)	(532)	(532)	(3,721)	(12,708)	(18,025)
Revolving credit facility	(39,314)	-	-	-	-	(39,314)
Other payables	(2,097)	‑	-	-	-	(2,097)
	(44,082)	(2,671)	(2,671)	(18,697)	(48,354)	(116,475)

Credit risk

Credit risk is mitigated by diversifying the counterparties through which the Investment Manager conducts investment transactions. The credit standing of all counterparties is reviewed periodically, with limits set on amounts due from any one counterparty. As at the year end cash is held with JP Morgan (A2*) and Morgan Stanley in the Liquidity Fund (AAA*).

The total credit exposure represents the carrying value of fixed-income investments, cash and receivable balances and totals £72,990,000 (2020: £40,371,000).

Fair values of financial assets and financial liabilities

Valuation of financial instruments

The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements. Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant assets as follows:

· Level 1 - valued using quoted prices unadjusted in active markets for identical assets or liabilities.

· Level 2 - valued by reference to valuation techniques using observable inputs for the asset or liability other than quoted prices included within Level 1.

· Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data for the asset or liability.

The tables below set out fair value measurements of financial instruments as at the year end, by the level in the fair value hierarchy into which the fair value measurement is categorised.

Financial assets at fair value through profit or loss at 30 September 2021	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Equity investments	1,193,120	-	3,081	1,196,201
	1,193,120	-	3,081	1,196,201

Financial assets at fair value through profit or loss at 30 September 2020	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Equity investments	951,491	5,602	2,616	959,709
	951,491	5,602	2,616	959,709

The valuation of Level 2 equity investments is determined using the average of independent broker traded prices available in the market. The valuation techniques used by the Company are explained in the accounting policies note above.

The fair value of the total return swaps was derived by using the market price of the underlying instruments and exchange rates and therefore would be categorised as Level 2.

Fair Value of Level 3 investments

	30 September 2021	30 September 2020
	£'000	£'000
Opening fair value of investments	2,616	-
Transfer from Level 1 to Level 3 in the year	394	2,616
Sales - proceeds	(616)	-
Realised loss on equity sales	(24)	-
Movement in investment holding gains	711	-
Closing fair value of investments	3,081	2,616

The fair value of the Level 3 investment is derived from the net asset value less the average discount prior to delisting.

Financial liabilities

Valuation of Loan Notes

The Company's Loan Notes are measured at amortised cost, with the fair values set out below. Other financial assets and liabilities of the Company are carried in the Balance Sheet at an approximation to their fair value.

	At 30 September 2021		At 30 September 2020
	Book value	Fair value	Book value	Fair value
	£'000	£'000	£'000	£'000
4.184% Series A Sterling Unsecured Loan Notes 2036	(29,906)	(36,519)	(29,899)	(38,677)
3.249% Series B Euro Unsecured Loan Notes 2036	(25,715)	(31,779)	(27,140)	(34,826)
2.93% Euro Senior Unsecured Loan Notes 2037	(17,078)	(20,700)	(18,025)	(22,779)
Total	(72,699)	(88,998)	(75,064)	(96,282)

There is no publicly available price for the Company's Loan Notes. Their fair market value has been derived by calculating the relative premium (or discount) of the loan versus the publicly available market price of relevant reference market instruments and exchange rates. As this price is derived by a model, using observable inputs, it would be categorised as Level 2 under the fair value hierarchy. The fair value of the total return swaps is derived using the market price of the underlying instruments and exchange rates and therefore would be categorised as Level 2.

The financial liabilities in the table below are shown at fair value, being the amount at which the liability may be transferred in an orderly transaction between market participants. The costs of early redemption of the Loan Notes are set in the Glossary.

Financial liabilities at 30 September 2021	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Loan Notes	-	(88,998)	-	(88,998)
Total return swap liabilities	-	(1,091)	-	(1,091)
	-	(90,089)	-	(90,089)

Financial liabilities at 30 September 2020	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Loan Notes	-	(96,282)	-	(96,282)
	-	(96,282)	-	(96,282)

Capital management policies and procedures

The structure of the Company's capital is described in the Annual Report and details of the Company's reserves are shown in the Statement of Changes in Equity.

The Company's capital management objectives are:

· to ensure that it will be able to continue as a going concern;

· to achieve capital growth through a focused portfolio of investments, particularly in companies whose share prices stand at a discount to estimated underlying net asset value, through an appropriate balance of equity capital and debt; and

· to maximise the return to shareholders while maintaining a capital base to allow the Company to operate effectively and meet obligations as they fall due.

The Board, with the assistance of the Investment Manager, regularly monitors and reviews the broad structure of the Company's capital on an ongoing basis. These reviews include:

· the level of gearing, which takes account of the Company's position and the Investment Manager's views on the market; and

· the extent to which revenue in excess of that which is required to be distributed should be retained.

The Company's objectives, policies and processes for managing capital are unchanged from last year.

The Company is subject to externally imposed capital requirements:

a)  as a public company, the Company is required to have a minimum share capital of £50,000; and

b)  in accordance with the provisions of Sections 832 and 833 of the Companies Act 2006, the Company, as an investment company:

i)  is only able to make a dividend distribution to the extent that the assets of the Company are equal to at least one and a half times its liabilities after the dividend payment has been made; and

ii)  is required to make a dividend distribution with respect to each accounting year such that it does not retain more than 15% of the income that it derives from shares and securities in that year.

These requirements are unchanged since last year and the Company has complied with them at all times.

15. Derivatives

The Company may use a variety of derivative contracts, including total return swaps, to enable it to gain long and short exposure to individual securities. Derivatives are valued by reference to the underlying market value of the corresponding security.

	At  30 September 2021  £'000	At  30 September 2020  £'000
Total return swaps
Current assets	-	-
Current liabilities	(1,091)	-
Net value of derivatives	(1,091)	-

The gross positive exposure on total return swaps as at 30 September 2021 was £38,396,000 (30 September 2020: £nil) and the total negative exposure of total return swaps was £39,487,000 (30 September 2020: £nil). The liabilities are secured against assets held with Jefferies Hoare Govett (the 'prime broker'). The collateral held as at 30 September 2021 was £13,349,000 (30 September 2020: £nil), which is included in cash and cash equivalents in the Balance Sheet.

16. Contingencies, guarantees and financial commitments

At 30 September 2021, the Company had £nil financial commitments (2020: £nil).

At 30 September 2021, the Company had £nil contingent liability in respect of any investments carrying an obligation for future subscription or underwriting commitments (2020: £nil).

17. Related party transactions and transactions with the Investment Manager

Fees paid to the Company's Directors are disclosed in the Report on Remuneration Implementation in the full Annual Report. At the year end, £nil was outstanding due to Directors (2020: £nil).

The transaction pursuant to the IMA with AVI is set out in the Report of the Directors. Management fees for the year amounted to £7,126,000 (2020: £5,962,000 ).

As at the year end, the following amounts were outstanding in respect of management fees: £nil (2020: £488,000).

18. Post balance sheet events

Since the year end, the Company has bought back 350,551Ordinary Shares with a nominal value of £35,055 at a total cost of £3,554,000, which have been placed in treasury.

GLOSSARY

AIFM

The AIFM, or Alternative Investment Fund Manager, is Asset Value Investors, which manages the portfolio on behalf of AGT shareholders. The current approach to investment used by Asset Value Investors was adopted in June 1985.

NAV total return since inception of strategy in June 1985 (annualised)

Closing NAV per share (p) - 30 September 2021	1,093.81	a
Dividends paid out (p)	194.48	b
Benefits from re-investing dividends (p)	534.87	c
Adjusted NAV per share (p)	1,823.16	d=a+b+c
Opening NAV per share (p) - June 1985	29.72	E
Annualised NAV total return (%)	12.0%	((d/e) ^ (1/36.25)) - 1

Alternative Performance Measure ('APM')

An APM is a numerical measure of the Company's current, historical or future financial performance, financial position or cash flows, other than a financial measure defined or specified in the applicable financial framework. In selecting these Alternative Performance Measures, the Directors considered the key objectives and expectations of typical investors in an investment trust such as the Company.

Comparator Benchmark

The Company's Comparator Benchmark is the MSCI All Country World ex-US Total Return Index, expressed in Sterling terms. The benchmark is an index which measures the performance of global equity markets, both developed and emerging. The weighting of index constituents is based on their market capitalisation.

Dividends paid by index constituents are assumed to be reinvested in the relevant securities at the prevailing market price. The Investment Manager's investment decisions are not influenced by whether a particular company's shares are, or are not, included in the benchmark. The benchmark is used only as a yard stick to compare investment performance.

Cost

The book cost of each investment is the total acquisition value, including transaction costs, less the value of any disposals or capitalised distributions allocated on a weighted average cost basis.

Currency
GBP	EUR	USD	SEK	JPY	NOK	CHF	HKD	BRL	RON	INR
Pounds Sterling	Euro	US Dollar	Swedish Krona	Japanese Yen	Norwegian Krone	Swiss Franc	Hong Kong Dollar	Brazilian Real	Romanian Lei	Indian Rupee

Discount/Premium (APM)

If the share price is lower than the NAV per share, it is said to be trading at a discount. The size of the Company's discount is calculated by subtracting the share price of 1,020.00p (2020: 741.00p) from the NAV per share (with debt at fair value) of 1,093.81p  (2020: 817.03p) and is usually expressed as a percentage of the NAV per share, 6.7% (2020: 9.3%). If the share price is higher than the NAV per share, this situation is called a premium.

Earnings Before Interest, Tax, Depreciation and Amortisation ('EBITDA')

A proxy for the cash flow generated by a business - it is most commonly used for businesses that do not (yet) generate operating or shareholder profits.

Gearing (APM)

Gearing refers to the ratio of the Company's debt to its equity capital. The Company may borrow money to invest in additional investments for its portfolio. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets.

Using debt at par value, the gross gearing of 11.7% (2020: 12.9%) represents borrowings of £ 132,520,000   (2020: £114,378,000) expressed as a percentage of shareholders' funds of £1, 133,222,000 (2020: £883,605,000 ).Using debt at fair value, gross gearing is 13.3% (2020: 15.7%).

Net gearing, which accounts for cash balances and uses debt at par value, is 5.5% (2020: 8.6%). Using debt at fair value, net gearing is 7.0% (2020: 11.3%).

The current values of the Loan Notes and revolving credit facility consist of the following:

	30 September 2021
	2036  GBP loan  £'000	2036  EUR Loan  £'000	2037  EUR Loan  £'000	JPY  revolving  credit facility  £'000	Total  £'000
Value of issue	30,000	22,962	17,526	61,201	131,689
Unamortised issue costs	(94)	(71)	(113)	-	(278)
Exchange movement	-	2,824	(335)	(1,380)	1,109
Amortised book cost	29,906	25,715	17,078	59,821	132,520
Fair value	36,519	31,779	20,700	59,821	148,819
Redemption costs	5,167	6,547	4,804	-	16,518
Redemption value	41,686	38,326	25,504	59,821	165,337

	30 September 2020
	2036  GBP loan  £'000	2036  EUR Loan  £'000	2037  EUR Loan  £'000	JPY revolving credit facility £'000	Total  £'000
Value of issue	30,000	22,962	17,526	37,775	108,263
Unamortised issue costs	(101)	(77)	(119)	-	(297)
Exchange movement	-	4,255	618	1,539	6,412
Amortised book cost	29,899	27,140	18,025	39,314	114,378
Fair value	38,677	34,826	22,779	39,314	135,596
Redemption costs	7,336	8,124	5,911	-	21,371
Redemption value	46,013	42,950	28,690	39,314	156,967

The fair values of the Loan Notes are calculated using net present values of future cash flows and the yields, taking account of exchange rates. The redemption value includes the penalty payable on early redemption.

Internal Rate of Return ('IRR')

The IRR is the annualised rate of return earned by an investment, adjusted for dividends, purchases and sales, since the holding was first purchased.

Net Asset Value ('NAV')

The NAV is shareholders' funds expressed as an amount per individual share. Shareholders' funds are the total value of all the Company's assets, at a current market value, having deducted all liabilities including debt at amortised cost revalued for exchange rate movements. The total NAV per share is calculated by dividing shareholders' funds of £1, 133,222,000   (2020: £883,605,000 ) by the number of Ordinary Shares in issue excluding Treasury Shares of 102,113,325   (2020: 105,551,730 ) at the year end.

Net Asset Value (debt at fair value) (APM)

The adjusted NAV per share (debt at fair value) incorporates the debt at fair value instead of at amortised cost, reducing the NAV by £16,298,000 (2020: £21,218,000). This is calculated by the original NAV of £1,133,222,000 (2020: £883,605,000) less the debt at amortised cost £72,699,000 (2020: £75,064,000), adding back the debt at fair value £88,998,000(2020: £96,282,000). The adjusted NAV (debt at fair value) is £1,116,924,000 (2020: £862,387,000) divided by the number of Ordinary Shares in issue excluding Treasury Shares of 102,113,325 (2020: 105,551,730) at the year end provides the adjusted NAV per share (debt at fair value).

Ongoing Charges Ratio / Expense Ratio (APM)

As recommended by the AIC in its current guidance, the Company's Ongoing Charges Ratio is the sum of: (a) its Expense   Ratio; and (b) the Ongoing Charges   R atios incurred at the underlying funds in which the Company has investments, weighted for the value of the investment in each underlying   fund as a percentage of the Company's NAV. For a detailed discussion of the   Expense Ratio, please see the discussion of Key Performance   Indicators in the Annual Report.

The Company's Expense Ratio is its annualised expenses (excluding finance costs and certain non-recurring items) of £8,820,000   (2020: £7,592,000) (being investment management fees of £7,126,000 (2020: £5,962,000) and other expenses of £1,735,000 (2020: £1,630,000) less non-recurring expenses of £41,000 (2020: £nil) expressed as a percentage of the average month-end net assets of £1,058,575,000 (2020: £853,625,000) during the year as disclosed   to the London Stock Exchange.

A reconciliation of the Ongoing Charges to the Expense Ratio is provided below:

		2021	2020
Expense Ratio (a Key Performance Indicator)	a	0.83%	0.89%
Underlying Charges Ratio	b	1.27%	1.42%
Ongoing Charges Ratio	=a+b	2.10%	2.31%

% of investee company

AGT's economic exposure to each investee company, as estimated by AVI.

Return on Investment ('ROI')

The ROI is the total profits earned to date on an investment divided by the total cost of the investment.

Shares Bought Back and Held in Treasury

The Company may repurchase its own shares and these are then held in treasury, reducing the freely traded shares ranking for dividends and enhancing returns and earnings per Ordinary Share to the remaining shareholders. When the Company repurchases its shares, it does so at a total cost below the prevailing NAV per share.

The estimated percentage added to NAV per share from buybacks of 0.3% (2020: 0.5%) is derived from the repurchase of shares in the market at a discount to the prevailing NAV at the point of repurchase. The shares were bought back at a weighted average discount of 8.2% (2020: 10.5%).

	30 September	30 September
	2021	2020
Weighted average discount of buybacks	8.2%	10.5%	a
Percentage of shares bought back	3.3%	4.2%	b
NAV accretion from buyback	0.3%	0.5%	(a*b)/(1-b)

Total Assets

Total assets include investments, cash, current assets and all other assets. An asset is an economic resource, being anything tangible or intangible that can be owned or controlled to produce positive economic value. The total assets less all liabilities is equivalent to total shareholders' funds.

Total Return (APM)

Total return statistics enable the investor to make performance comparisons between investment trusts with different dividend policies. The total return measures the combined effect of any dividends paid, together with the rise or fall in the share price or NAV. This is calculated by the movement in the NAV or share price plus dividend income reinvested by the Company at the prevailing NAV or share price.

NAV Total Return (APM)

NAV total return is calculated by assuming that dividends paid out are re-invested into the NAV on the ex-dividend date. This is accounted for in the "benefits from re-investing dividends" line. The NAV used here includes debt marked to fair value and is inclusive of accumulated income.

Where an "annualised" figure is quoted, this means that the performance figure quoted is not a standard one-year figure, and therefore has been converted into an annual return figure in order to ease comparability. For example, if AGT's NAV increased by +100% over a ten-year period, this would become an annualised NAV return of 7.2%.

NAV total return over 1 year	30 September  2021	30 September  2020
Closing NAV per share (p)	1,093.81	817.03	a
Dividends paid out (p)	16.50	20.50	b
Benefits from re-investing dividends (p)	2.49	0.80	c
Adjusted NAV per share (p)	1,112.80	838.33	d=a+b+c
Opening NAV per share (p)	817.03	838.29	e
NAV total return (%)	36.2%	0.0%	=(d/e)-1

NAV total return over 10 years (annualised)
Closing NAV per share (p) - September 2021	1,093.81	817.03	a
Dividends paid out (p)	135.20	126.40	b
Benefits from re-investing dividends (p)	114.62	57.73	c
Adjusted NAV per share (p)	1,343.63		d = a + b + c
Opening NAV per share (p) - September 2011	460.35		e
Annualised NAV total return (%)	11.3%		((d/e) ^ (1/10)) - 1

Share Price Total Return (APM)

Share price total return is calculated by assuming that dividends paid out are re-invested into new shares on the ex-dividend date. This is accounted for in the "benefits from re-investing dividends" line.

Share price total return over 1 year	30 September  2021	30 September  2020
Closing price per share (p)	1,020.00	741.00	a
Dividends paid out (p)	16.50	20.50	b
Benefits from re-investing dividends (p)	2.64	0.55	c
Adjusted price per share (p)	1,039.14	762.05	d=a+b+c
Opening price per share (p)	741.00	747.00	e
Share price total return (%)	40.2%	2.0%	=(d/e)-1

Total Return Swap

A total return swap is a financial contract between two parties, whereby each party agrees to "swap" a series of payments. AGT has entered into a swap on Pershing Square Tontine Holdings ('PSTH') with a well-known investment bank. Effectively, AGT gets paid the total return on PSTH, and in return agrees to pay a series of floating-rate interest payments to the investment bank. The gross equity exposure is disclosed in the investment portfolio. The swap requires 30% margin on the position.

Weight

Weight is defined as being each position's value as a percentage of net assets.

Weighted-average Discount (APM)

The weighted-average discount is calculated as being the sum of the products of each holding's weight in AGT's portfolio times its discount. AVI calculates an estimated sum-of-the-parts NAV per share for each holding in AGT's portfolio. This NAV is compared with the share price of the holding in order to calculate a discount.

NATIONAL STORAGE MECHANISM

A copy of the Annual Report and Accounts will be submitted shortly to the National Storage Mechanism ('NSM') and will be available for inspection at the NSM, which is situated at : https://data.fca.org.uk/#/nsm/nationalstoragemechanism

 

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