Established in 1889, the Company's investment objective is to achieve capital growth through a focused portfolio of investments, particularly in companies whose shares stand at a discount to estimated underlying net asset value.b
The Company is an investment trust and its shares have a premium listing on the London Stock Exchange. It is a member of the Association of Investment Companies (‘AIC’).
The Company’s net asset value as at 30 September 2017 was £903m and the market capitalisation was £806m.
Shareholders’ money is principally invested in companies with three key features:
(of which 15 are held in Japanese Special Situations)
Shareholders’ money is principally invested in three types of companies:
The return of the portfolio is measured against the MSCI All Country World ex-US Index return.
Over the past ten years, the Company has produced a compound average annual net asset value total return of 6.3%. There have been periods of underperformance when compared with the benchmark but, over the longer term, the Board believes that the Investment Manager’s style of investment will provide higher than average returns for investors. Over the year under review, the level of absolute return was exceptionally strong and the net asset value total return outperformed the benchmark index.
The Investment Manager charges 0.7% of net assets. There is no performance fee. The Company’s total annual costs (known as Ongoing Charges) are 0.87% of net assets.
The Investment Manager focuses on capital growth, but the Company has either maintained or increased its ordinary dividends for the past 30 years. When an exceptionally high payment is received from an investee company, the Company occasionally pays a special dividend. The Board would expect in future years at least to maintain the level of ordinary dividends.
The Company’s shares have been trading at a discount to their net asset value. The Company manages the volatility of the discount through a policy of buying back its own shares.
The Company is geared by its Debenture Stock and also by Loan Notes that were issued in January 2016. A further issue of Loan Notes was announced after the financial year end and these were issued on 1 November 2017.
The Company has a Board of Directors which is responsible for oversight of the Investment Manager and also the risks and controls operated by the Company. All investment involves risk. The aim is to secure attractive returns without undue risk.
The Company has net assets of £903.2m and gross investment income of £17.4m.
1 The lead benchmark is the MSCI All Country World ex-US Index.
JAPANESE SPECIAL SOLUTIONS
The companies in this category are as follows:
WENDEL/ Constantia Flexibles
Constantia Flexibles is one of the world’s leading manufacturers of flexible packaging and labels. The group supplies its products to numerous multinational corporations and local market leaders in the food, pet food, pharmaceuticals and beverage industries. In recent years the group has developed from a supplier with a strong European regional focus into a group which is active...learn mored
INVESTOR AB / ATLAS COPCO
Atlas Copco provides high quality compressors, industrial vacuum pumps, power tools and construction & mining equipment, as well as service plans, through its five business areas: Compressor Technique, Vacuum Technique, Industrial Technique, Construction Technique and Mining & Rock Excavation...
The Company is an investment trust. Its investment objective is to achieve capital growth through a focused portfolio of mainly listed investments, particularly in companies whose shares stand at a discount to estimated underlying net asset value.
Our strategy is to seek out-of-favour companies whose assets are misunderstood by the market or under-researched, and which trade significantly below their intrinsic value or where pressure can be brought to bear to enact change to release value for shareholders.
As an investment trust, the Company’s most important relationship is with the Investment Manager.
The Company’s assets are managed by Asset Value Investors Limited. AVI aims to deliver superior returns and specialises in investment in securities 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, but does seek to maintain a concentrated yet diversified portfolio. No more than 10% of the Company’s investments may be in unlisted securities. AVI’s investment philosophy is described in more detail on page 16 of the Annual Report and the Company’s Investment Policy is set out on page 38.
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 include Net Asset Value Total Return, Discount to Net Asset Value and Value for Money.
The top ten equity investments make up 47.0% of total assets less current liabilities, with underlying businesses spread across a diverse range of sectors and regions.
Investment Managers' Q&A video / View video
Investment Managers' Review / Download section
Overview of AVI's Investment Philosophy / Download section
Performance Review / Download section
Portfolio Review / Download section
Outlook / Download section
Statement of Comprehensive Income / Download section
Statement of Changes in Equity / Download section
Balance Sheet / Download section
Statement of Cash Flows / Download section
Notes to the Financial Statements / Download section
AIFM Disclosures / Download section
Glossary / Download section
Report of the Audit Committee / Download section
Directors' Remuneration Policy / Download section
Report on Remuneration Implementation / Download section
Independent Auditor's Report / Download section
Through Pargesa's stake in GBL it holds interests in a number of listed companies. The portfolio is concentrated on a limited number of major holdings with the aim of creating long-term value through active ownership.
Photography / Umicore
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: Fiat Chrysler Automobile, Ferrari and CNH, and one unlisted: PartnerRe.
Photography / Ferrari S.p.A. Copyright
A London-listed closed-end fund investing in oil & gas companies, mainly in the US and Canada with a focus on unconventional (shale) assets. Backed by a management team with a strong track record in the sector, Riverstone Energy was able to capitalise on the distress in the sector following the oil price crash to assemble an attractive portfolio concentrated in the lowest-cost basins in North America. The company trades on a 18% discount to NAV.
Source / Riverstone Energy Ltd
Symphony is a London-listed closed-end fund with a focus on the Asian consumer. The shares trade at a deep discount to the value of the investment portfolio, half of which is invested in fast-growing Minor International, a Thai-listed hotels and restaurants group with a global footprint. Other exposures include real estate and healthcare.
Source / Elewana Collection – Loisaba Tented Camp – Laikipia, Kenya, owned by Minor International
Wendel is a French-listed holding company with exposure to a diverse range of sectors. Major business lines include certification and inspection services, consumer packaging and mobile telephone infrastructure through their investments in Bureau Veritas, Constantia Flexibles and IHS.
Source / Stahl
JPEL Private Equity is a London-listed closed-end fund investing in private equity investments primarily in the US and Europe. The portfolio is well-balanced between mature legacy funds and more recent secondary direct investments – the former generate prodigious cash flows that will now be distributed to shareholders under the new realisation policy; the latter are largely high growth companies bought at attractive valuations that have produced strong NAV growth.
Photography / Getty Images representing Corsicana Bedding Inc.
An Asian holding company which holds significant interests in Jardine Matheson, Hongkong Land, Jardine Cycle & Carriage, Dairy Farm and Mandarin Oriental by way of a cross shareholding between Jardine Matheson and Jardine Strategic. The group structure, which is controlled by the Keswick family, provides broad exposure to Asian businesses at an attractive discount to the value of their listed underlying holdings, while providing the base for long-term value creation through the stable stewardship of their investee companies.
Source / Market Place by Jason in Hong Kong, owned by Dairy Farm
A Euronext and London-listed closed-end fund investing in a multi-asset portfolio with exposure to CLO equity, hedge funds, and real estate. Tetragon wholly owns or has substantial stakes in the asset managers that manage its portfolio, and the ultimate IPO of this asset management business is likely to release some of the value found in the company’s 34% discount to NAV.
Source / Tetragon Financial Group Ltd
Adler Real Estate owns a portfolio of c. 50,000 residential units throughout Germany. The company primarily focuses on affordable housing while improving operating performance of these often undermanaged assets. It is trading on a 14% discount to NAV while peers are trading at or above NAV.
Source / Adler Real Estate AG
Photography / Tobias Vollmer
A Euronext and London-listed closed-end fund investing in a highly-concentrated, predominantly long portfolio of listed US equities. The manager’s reputation has been damaged by the catastrophic losses experienced in their out-sized position in Valeant Pharmaceuticals, but that enabled us to make the investment at a wide discount to NAV despite the manager’s long-term track record still being outstanding. The shares trade on a 24% discount to NAV, which we believe is far too wide.
Photography / Getty Images representing Cadbury, owned by Mondelez International