Aberforth Geared Value & Income Trust reports flat ungeared portfolio performance

(Sharecast News) - Aberforth Geared Value & Income Trust reported on Wednesday that its ungeared portfolio was flat over the six months ended 31 December, as a continued valuation malaise in UK smaller companies left its ordinary share net asset value return negative despite resilient underlying income growth, while the trust lifted its first interim dividend by 4%.

The London-listed trust reported a total assets total return of 0.0% for the six-month period, compared with a 5.3% total return for its opportunity set, the Deutsche Numis Smaller Companies Index excluding investment companies, and a 13.7% return for the FTSE All-Share.

Because the portfolio's capital performance did not exceed the rising entitlement of its zero dividend preference shares, the ordinary share NAV total return was -1.5% over the period.

The ordinary share price total return was 2.7%, helped by a narrowing in the discount to NAV to 13.1% as at 31 December from 16.2% on 30 June.

AGVI said the ZDP shares continued to accrete in line with their predetermined entitlement, with a ZDP share NAV total return of 3.5% and a share price total return of 6.5%.

The ZDP share price stood at a 4.6% premium to NAV at the period end, while the trust said the projected final cumulative cover of the ZDP shares was 2.0x, unchanged over the reporting period.

AGVI has a fixed life to 30 June 2031, when ZDP shareholders are entitled to a final capital entitlement of 160.58p per share.

Income was the brighter spot - investment income from revenue rose 4.8% in the half-year, translating into a revenue return per ordinary share of 3.26p, which the trust said was helped by dividend timing and a special dividend, but still represented underlying income growth of 3%.

The board declared a first interim dividend of 1.56p per ordinary share for the year ending 30 June, up from 1.5p a year earlier.

It said the dividend would be paid on 9 March to shareholders on the register on 6 February, with an ex-dividend date of 5 February.

Chairman Angus Gordon Lennox said smaller companies were being "penalised for their very size and relative illiquidity, rather than for fundamental reasons," and pointed to sustained takeover activity and what he described as "unfairly low valuations" as evidence of the opportunity set the trust was targeting.

"The company's prospects do not rely on mergers and acquisitions. It owns excellent businesses that are growing their dividends," he added.

The trust also confirmed board changes following its annual general meeting in October, with June Jessop appointed as an independent non-executive director and Lesley Jackson becoming senior independent director.

The half-year report was expected to be posted to shareholders by 6 February, and the company said it expected to publish audited annual results for the year ending 30 June in due course under its usual timetable.

At 0933 GMT, shares in Aberforth Geared Value & Income Trust were down 0.51% at 89.04p.

Reporting by Josh White for Sharecast.com.