Aberforth Geared Value & Income Trust Plc – Half-year Financial Report

Aberforth Geared Value & Income Trust plc
Interim Results for the six months to 31 December 2025

The following is an extract from the Company’s second Half Yearly Report and
Financial Statements for the six months to 31 December 2025. The Half Yearly
Report is expected to be posted to shareholders by 6 February 2026.  Members of
the public may obtain copies from Aberforth Partners LLP, 14 Melville Street,
Edinburgh EH3 7NS or from its website: www.aberforth.co.uk/trusts-and
-funds/aberforth-geared-value-income-trust-plc. A copy will also shortly be
available for inspection at the National Storage Mechanism at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

FINANCIAL HIGHLIGHTS (SUMMARY)

Total returns for the six months to 31 December 2025

Total Assets 0.0%

Ordinary Share NAV              -1.5%
Ordinary Share Price                                     +2.7%
ZDP Share NAV   +3.5%
ZDP Share Price   +6.5%

Refer to Note 2, Alternative Performance Measures, and the
Glossary

Dividend Declared

First interim dividend for the year ending 30 June 2026 of 1.56p per Ordinary
Share. This is 4.0% higher than the previous year’s 1.50p.

The first interim dividend has an ex-dividend date of 5 February 2026, record
date of 6 February 2026 and pay date of 9 March 2026.

The Company

Aberforth Geared Value & Income Trust plc (the Company or «AGVIT») is a closed
ended investment company. It has a fixed life of seven years from launch to 30
June 2031 and its shares are traded on the London Stock Exchange’s Main Market.
The Company has appointed Aberforth Partners LLP as the investment managers
(«the Managers»).

Investment Objective

The Company’s investment objective is to provide Ordinary Shareholders with high
total returns, incorporating an attractive level of income, and to provide ZDP
Shareholders with a pre-determined Final Capital Entitlement of 160.58 pence on
the Planned Winding Up Date of 30 June 2031.

CHAIRMAN’S STATEMENT

Introduction

This is the second interim report of Aberforth Geared Value & Income Trust plc
(AGVIT). It covers the six months to 31 December 2025.

The period unfolded against a backdrop of strong equity markets around the
world. Concerns about a costly trade war abated as markets drew reassurance from
a string of agreements reached by the US with its international trading
partners. Sentiment was further supported by, perhaps temporary, easing of
geopolitical risk, as efforts to resolve the conflicts in Ukraine and Gaza
continued. Elsewhere, during the period, optimism surrounding artificial
intelligence provided additional momentum to stockmarkets.

While the UK market lacks significant exposure to technology companies, the FTSE
All-Share still delivered strong returns, ending 2025 at a record high. This
performance was driven by its larger companies, which are less exposed to
concerns about UK politics and the outlook for the domestic economy than are its
smaller companies. Smaller companies have felt the weight of this despondency
more heavily. The returns of AGVIT and of its opportunity base, the Deutsche
Numis Smaller Companies Index (excluding investment companies) (DNSCI (XIC)),
have lagged the FTSE All-Share. While the stockmarket has neglected the DNSCI
(XIC)’s constituents, overseas companies and private equity have not. Momentum
in M&A transactions has been sustained with the takeover premiums and exit
multiples paid clearly demonstrating the opportunity that AGVIT is targeting in
the small cap universe.

Review of Performance

While equity returns have been positive, it has been a frustrating period for
the performance of the UK’s smaller companies and AGVIT’s portfolio. This
contrasts with the resilience of the Company’s income performance, which is
described in more detail below.

Portfolio performance

· AGVIT’s Total Asset Total Return, which measures its ungeared portfolio
performance, was zero in the six month period ending 31 December 2025.

· For reference, the DNSCI (XIC) delivered a total return of 5.3% in the
period. The FTSE All-Share index, which is dominated by the larger UK listed
companies, recorded a total return of 13.7%.

· The Managers’ Report explains how the investment environment has affected
AGVIT’s performance and examines the various factors that influenced its return.

NAV and share price performance

· The performance of the Ordinary Shares is affected by the gearing provided
by the ZDP Shares. In the six months to 31 December 2025, the portfolio’s
capital performance was below the hurdle of the rising entitlement of the Zero
Dividend Preference Shares (ZDPs). Accordingly, the Ordinary Share NAV Total
Return was -1.5% in the six months to 31 December 2025.

· The share price discount of the Ordinary Shares to their net asset value
narrowed over the period from 16.2% at 30 June 2025 to 13.1% at 31 December
2025. This influenced the Ordinary Share Price Total Return of 2.7%.

· The ZDP Shares NAV Total Return rose at a rate consistent with the 7.0%
annual increase in their entitlement. The ZDP share price was at a 4.6% premium
to NAV at 31 December 2025. The projected final cumulative cover of the ZDP
Shares was 2.0 times at 31 December 2025 and was unchanged from the start of the
reporting period.

Income performance

· The portfolio’s capital performance contrasts with a good income experience.
Even with all the worries about the performance of the UK economy, the Company’s
Investment Income from Revenue rose 4.8% in the six months to 31 December 2025.
This translates into a Revenue Return per Ordinary Share of 3.26p.

· This was flattered somewhat by the favourable timing of some ordinary
dividends and by a special dividend, but underlying income growth from
investments was still healthy at 3.0%. This outcome was above the Managers’
estimates at the start of the year, which underlines the resilience of AGVIT’s
investment portfolio and bodes well for capital performance in due course.

First interim dividend

Against the backdrop of higher investment income compared with the corresponding
period in the previous year, the Board is pleased to announce a first interim
dividend of 1.56p per Ordinary Share. This is 4.0% higher than the previous
year’s 1.50p. Investors will recall that the Ordinary Shareholders enjoy rights
to all income generated by the portfolio.

The first interim dividend will be paid on 9 March 2026 to Ordinary Shareholders
on the register as at close of business on 6 February 2026.  The ex dividend
date is 5 February 2026.  The Company operates a Dividend Reinvestment Plan.
Details of the plan are available from Aberforth Partners LLP or on their
website, www.aberforth.co.uk.

Board Changes

As I indicated in my Annual Report, Jane Tufnell decided not to stand for
election as a Director at the Annual General Meeting on 28 October 2025.

Upon conclusion of the Annual General Meeting, June Jessop was appointed as an
independent non-executive Director. She has attended Board meetings since
October and is chair of the Remuneration & Nomination Committee and a member of
the Audit Committee. June has worked in the investment management industry for
over 30 years, gaining broad experience in portfolio management, client
relationship, business development and general management roles. June is also a
non-executive director with AVI Global Trust plc.

The Board also announced that Lesley Jackson became Senior Independent Director
on 28 October 2025.

Outlook

The impressive performance of the FTSE All-Share over recent months suggests
that the UK’s larger companies have overcome the «big picture» issues of macro
-economics and politics that seem still to be influencing subdued investor
sentiment towards Britain’s smaller companies. I take encouragement from the
renewed interest in larger companies, since I have observed this filter down
into the smaller company world in previous cycles.

Smaller companies are undeniably more exposed to the vagaries of the economic
cycle but they also have a record of resilience, which contrasts starkly with
the unfairly low valuations currently ascribed to them by the stockmarket. The
Managers’ Report develops on this anomaly and describes a positive outlook for
AGVIT’s investee companies through consideration of their strong balance sheets
and robust cash generation. These positive attributes come through clearly in
the Board’s regular discussions with the Managers about individual holdings.
Another external validation of the portfolio’s fundamental strengths and
attractive valuations can be seen in the sustained high level of takeover
activity within the small cap space. I expect this is likely to continue so long
as the stockmarket shuns the opportunity.

The Company’s prospects do not rely on M&A. It owns excellent businesses that
are growing their dividends. This has driven the rise in AGVIT’s first interim
dividend, which we have announced today, and in due course should support the
portfolio’s capital growth. There is also scope for capital growth embedded in
the unusually low valuations of the portfolio’s holdings, which should close in
on longer term averages over time. For the Ordinary Shares, this progress would
be magnified by the gearing from the ZDP Shares. Another structural advantage
offered by AGVIT is its fixed life, which addresses the share price’s discount
to net asset value by giving the opportunity to realise value at close to net
asset value on planned winding-up.

The Board and Managers, who have continued to add to their personal
shareholdings, therefore believe that AGVIT’s portfolio and capital structure
can deliver on the investment objective for the benefit of both classes of
shareholder over the Company’s life.

Finally, my fellow directors and I welcome the views of shareholders and are
available should you wish to discuss these with us. My email address is noted
below. Once again, thank you for your support.

Angus Gordon Lennox

Chairman

27 January 2026

[email protected]

MANAGERS’ REPORT

Performance

In the six months to 31 December 2025, AGVIT’s total assets total return was
0.0%. The total assets total return measures the performance of the investment
portfolio and is unaffected by AGVIT’s gearing. It is therefore comparable with
the 5.3% total return of the investment universe of small UK quoted companies,
as measured by the DNSCI (XIC). Larger UK quoted companies performed more
strongly, with the FTSE All-Share achieving a return of 13.7% in the six month
period.

Investment background

The valuations of small UK quoted companies have faced two challenges over
recent months. One is more relevant to those companies that earn their profits
within the UK economy, the other to those companies reliant on overseas markets.

· The former group, the domestics, comprises consumer-oriented companies, such
as retailers, leisure businesses and media companies. It accounts for around 53%
of the revenues of DNSCI (XIC) constituents. These companies were most severely
affected by Brexit and by lockdown during the pandemic. They operated
resiliently in the face of these challenges but were confronted in 2025 by
intensifying concerns about the UK government’s fiscal situation. The Chancellor
has struggled to achieve convincing fiscal headroom as she contends with her own
fiscal rules, manifesto commitments and the internal politics of the Labour
Party. The predicament was encapsulated by the gyrations in gilt yields through
2025 and by the rising cost of government debt here in comparison with the rest
of the world: ten year gilt yields started 2025 in line with those in the US but
ended the year 31 basis points higher. The UK private sector, already wary after
the 2024 Budget, was naturally cautious ahead of the 2025 Budget. It is likely
that economic activity suffered as, in a classic Ricardian fashion, households
and businesses held back on spending and investment. This was to the
disadvantage of the domestically oriented companies.

· The overseas facing companies tend to be industrial businesses and account
for the other 47% of the DNSCI (XIC)’s total revenues. They were less affected
by the pandemic and their profitability even benefited from the EU referendum as
sterling weakened in its aftermath. The disruption of supply chains in the wake
of the pandemic, along with the conflicts in Ukraine and Gaza, were unhelpful,
but these companies tended to enjoy good trading conditions in recent years.
That changed in April 2025 with Donald Trump’s tariff announcements. Their
longer lasting effects on global trade and broad economic activity are as yet
uncertain, but it is clear that businesses have incurred near term headwinds in
the form of higher costs and working capital requirements. Consequently, the
valuations of overseas facing companies within the DNSCI (XIC) have also come
under pressure.

These twin pressures have hampered the valuation of smaller companies,
particularly those whose profits are perceived to be more sensitive to broader
economic activity. This has affected AGVIT’s performance since many of the most
attractively valued smaller companies today are in the more economically
sensitive sectors of the stockmarket. Indeed, the market’s near term fears of
cyclicality can often be what presents the Managers with investment opportunity
as they take a longer term view of a business’s underlying qualities and profit
potential.

In recent years, gloom about the UK’s politics and economics affected sentiment
towards the UK stockmarket in general, with the valuations of both small and
large companies below their long term averages. That started to change in 2025.
The very strong total returns from large companies took their valuations above
the long term average, even as smaller companies continued to languish. A common
explanation for this performance divergence rests in the different sector
profiles of the large and small company universes. Among the stronger performers
in the FTSE All-Share in 2025 were the banks, defence, mining, telecoms and life
assurance, which are all sectors with a lower representation in the DNSCI (XIC).
However, this explanation struggles when the banks are considered further. Most
of the banks are heavily reliant on the domestic UK economy. They are literally
geared into the health of British businesses and households, the same sort of
exposure that many smaller companies have.

Smaller companies are being penalised for their very size and relative
illiquidity, rather than for fundamental reasons. This suspicion is backed up by
analysis of the dividend characteristics of the DNSCI (XIC) and the FTSE All
Share. For the first time since the global financial crisis, the dividend yield
of the DNSCI (XIC) is higher than the FTSE All-Share’s. This is despite small
companies’ average dividend cover being above that of large companies and
despite small companies’ balance sheets being stronger than those of large
companies. Moreover, dividend growth of the DNSCI (XIC) has remained superior to
that of the FTSE All-Share. Since 2015 – the year before the EU referendum and
therefore a fair starting point – small company dividend growth has been 63%,
whereas large company dividend growth has been 29%. Since 2019 – the year before
the pandemic – small companies have grown their dividends by 23%, whereas large
companies have seen their aggregate dividends decline by 6%.

The superior dividend growth from smaller companies is evident in almost all
time periods and supports the growing dividends paid by AGVIT. These dividends
also benefit from how the Managers invest AGVIT’s capital. An important facet of
the process is the «value roll», in which capital is rotated from companies with
low upside to the Managers’ target prices into companies with high upsides. This
rotation implies that capital is moved from companies with low dividend yields
into those with high dividend yields, a dynamic that enhances the income earned
by the portfolio over time.

Influences on performance and portfolio characteristics

In the six months to 31 December 2025, AGVIT’s total assets total return was
0.0%. The DNSCI (XIC)’s was 5.3%.  The following paragraphs provide context and
explanation for the portfolio’s performance over the six months, as well as
setting out aspects of the portfolio’s positioning that are likely to influence
future performance.

Portfolio            31                31 December 2024
characteristics December 2025
AGVIT DNSCI (XIC) AGVIT DNSCI (XIC)
Number of companies 66 352 69 350
Weighted average £691m £1,225m £659m £1,019m
market
capitalisation
Weighting in 42% 17% 44% 21%
«smaller small»
companies*
Weighting in 47% 26% 31% 30%
companies with net
cash***
Portfolio turnover 27% – ** –
over 12 months
Price earnings (PE) 10.6x 13.8x 9.6x 13.0x
ratio (historical)
Dividend yield 5.7% 3.4% 5.6% 3.4%
(historical)
Dividend cover 1.6x 2.1x 1.9x 2.2x
(historical)

*Members of the DNSCI (XIC) that are not also members of the FTSE 250; ** Not
available owing to launch date; ***Tracked Universe

Economic cyclicality

As described above, AGVIT’s returns have been influenced by concerns about
economic activity both domestically and overseas. Many of the most attractively
valued companies within the DNSCI (XIC) at present are perceived as sensitive to
the economic cycle. The Managers are prepared to look beyond these near term
concerns, putting more store in the resilience of business models, records of
profit progress from cycle to cycle and strength of balance sheets. Such bouts
of concern are not unusual in Aberforth’s 35 years. Economic cyclicality has
hampered recent performance, but it is the Managers’ experience that the
stockmarket tends to under-estimate the resilience of smaller companies and thus
creates the conditions for a strong recovery in due course.

Value style

The Managers follow a value investment philosophy. They calculate target
valuations for existing and potential investments. These are influenced by
fundamental analysis of the companies, judgement informed by experience, and
reference to other relevant valuations in equity markets or corporate activity.
Growth of profits is an important component of target valuations, but the
Managers find that stockmarket valuations are often too generous in their
assumptions of the sustainability and pace of growth.

To gauge the style effect on AGVIT’s performance, the Managers use analysis by
the London Business School (LBS). This defines value narrowly in terms of low
price to book ratios, rather than in the broader fashion undertaken by the
Managers. Therefore, while useful, the LBS approach is an imperfect measure of
style effects, particularly over short periods. The LBS analysis suggests that
value stocks within the DNSCI (XIC) under-performed the index as a whole in the
six months to 31 December 2025 and so style effects would have been negative for
AGVIT’s performance.

Size, within the DNSCI (XIC)

The DNSCI (XIC) includes all main listed stocks in the UK with market
capitalisations below c.£2.5bn. It therefore has an extensive overlap with the
FTSE 250 and includes many mid caps, which the Managers refer to as «larger
small» companies. However, AGVIT has a relatively high exposure to the DNSCI
(XIC)’s «smaller small» companies, in common with the Managers’ other
portfolios. This positioning reflects the more attractive valuations available
down the market capitalisation scale, which are demonstrated in the Valuations
section later in this report. Analysis by LBS shows that the return from
«smaller small» companies exceeded that from «larger small» companies in the six
months and so AGVIT benefited from its size positioning.

Corporate activity

The pattern is a familiar one of recent years – a lot of takeovers targeting
small UK quoted companies, a lot of buy-backs and few IPOs.

On M&A, the recommended takeovers of two companies in the DNSCI (XIC) were
announced and completed in the six months to 31 December 2025. On top of those,
there were offers outstanding for another ten companies at the period end. Of
these twelve deals, the bidders were most often trade buyers, with private
equity houses less active. The bidders were overwhelmingly from overseas,
attracted by the presently low stockmarket valuations of small UK quoted
companies. The average premium of the bid price to the undisturbed share price
before announcement of the deal was 41%, which is above the longer term average
premium for control of 25-30%. AGVIT had investments in five of the twelve
takeover targets. Three of the five deals were announced before 30 June 2025 and
so the takeover premiums benefited performance in the previous financial year.
M&A was therefore only a modest boost to returns in the six months to 31
December 2025.

Takeovers can be an effective means by which the value in AGVIT’s portfolio is
realised. However, there is an important caveat. The low valuations of smaller
companies mean that takeovers may be proposed on unattractive terms and that
investors’ interests might be better served by rejecting the takeover approach.
The risk is exacerbated by boards and some shareholders yielding too quickly to
takeover interest, no doubt succumbing to the gloomy sentiment towards the UK.
The Managers attempt to mitigate the risk by engaging with boards to support
their independence if the terms of a bid are unattractive or to improve the
terms. This engagement is helped by the often significant stakes that AGVIT and
Aberforth’s other clients hold in investee companies. At 31 December 2025, 11%
of AGVIT’s portfolio was invested in companies that had attracted takeover
interest over the previous 18 months, but where the approaches had not developed
into formal bids. In several of these situations, the Managers were consulted by
the boards of the target companies and, if the standalone option promised
superior returns, supported their independence.

The depressed valuations of small UK quoted companies mean that the IPO market
remains subdued. There were just two floatations of a reasonable size and
eligible for the DNSCI (XIC) in 2025. The Managers view this dearth of activity
as a temporary phenomenon and a function of prevailing valuations. Recent
regulatory change, to the listing rules and prospectus regime, are likely to
encourage IPOs once the valuation basis of the small UK quoted companies
recovers.

While the DNSCI (XIC) has not been refreshed by IPOs, it is experiencing an
influx of companies that are choosing to move from AIM to the Main Market. AGVIT
does not invest in AIM quoted companies except in limited circumstances. These
include when an AIM company makes a public announcement of its intention to move
to the Main List. Over the past 18 months, 15 AIM quoted companies announced an
intention to relist. Of these, six completed the process in 2025 and were
included in the DNSCI (XIC) on its annual rebalancing on 1 January 2026. Of the
15 companies, AGVIT has invested in two. These businesses were subject to the
Managers’ usual investment process of research and engagement. Their valuations
were attractive and consistent with the existing portfolio’s.

Income

The UK’s economic and political uncertainties contributed to a lacklustre
capital performance in the six months to 31 December 2025, but the dividend
performance from small UK quoted companies remained resilient. AGVIT’s income
experience is shown in the following table, which splits the portfolio’s 66
holdings into categories determined by the most recent dividend action.

Nil Payer Cutter Unchanged Payer Increased Payer
6 8 22 30

The drag on AGVIT’s income from the 8 cutters was out-weighed by the 30
companies that increased their dividends and by the receipt of one special
dividend. This good dividend experience drove an increase in AGVIT’s Investment
Income over the six months to 31 December 2025, which allowed the Board to
increase the first interim dividend by 4.0%.

The average historical dividend yield of AGVIT’s holdings at 31 December 2025
was 5.7%, which compares with 3.4% for the DNSCI (XIC). The portfolio’s average
dividend cover was 1.6x, against 2.1x of the DNSCI (XIC). The dividend cover
reflects the impact of macro economic uncertainty on profits, together with the
higher dividends as companies looked through the near term uncertainty and took
confidence from strong balance sheets. The Managers’ forecasts suggest that
dividend cover will rise in 2026 and 2027.

Significant stakes

Engagement with the boards of investee companies has always been a crucial
component of the Managers’ investment process. It is particularly relevant at
present in view of the high rate of takeover activity among smaller companies
and of the recent regulatory changes to the listing rules and prospectus regime.
The latter are intended to make the UK stockmarket a more attractive place to
list, but they come at a cost by undermining governance protections for
investors in UK listed companies.

The Managers’ scope to engage effectively is supported by their ability to take
significant stakes of up to 25% in issued share capital across their client
base. At 31 December 2025, AGVIT had five holdings in which Aberforth’s clients
had a stake of more than 20% and 20 holdings in which the stake exceeded 10%.
The 20 holdings had a combined portfolio weight of 21%.

Significant stakes bring increased influence but come with a downside in the
form of illiquidity – reducing these positions by selling into the stockmarket
can be difficult. However, there are compensating factors. First, the increased
influence, coupled with patience and support, has contributed to improved
investment outcomes – significant stakes have enhanced the performance of the
Managers’ portfolios over time. Second, illiquidity has been manageable. Exiting
significant stakes has been facilitated by M&A or by renewed investor appetite
as prospects for the business improve. Third, AGVIT’s closed-end structure is
ideally suited to holding significant stakes – patient support from investors is
often required as boards work to improve business performance. The Managers are
confident that their approach to engagement and ability to take significant
stakes have enhanced their clients’ returns over time and will continue to do
so.

Balance sheets

The following table sets out the balance sheet profile of AGVIT’s portfolio and
of the Managers’ Tracked Universe.  This subset of the DNSCI (XIC) represents
99% by value of the index as a whole and is made up of the 246 companies that
the Managers follow closely.

Weight in Net cash Net debt/EBITDA 2x Other*
companies
with:
Portfolio 47% 37% 14% 2%
2025
Tracked 26% 43% 24% 7%
Universe
2025

*includes loss-makers and lenders.

Balance sheets remain robust both within the portfolio and among small caps in
general. Compared with a year ago, the portfolio’s exposure to companies with
stronger balance sheets has risen: the weighting in companies with net cash and
leverage below two times was 82% at the end of 2024 and 84% at the end of 2025.
This shift reflects both the cash generation of the investee companies and
portfolio activity. The stockmarket’s lack of interest in smaller companies
means that stronger balance sheets are not being reflected in higher valuations.
This lack of discernment has brought more companies into the Managers’ valuation
range and has contributed to the higher exposure to companies with strong
balance sheets.

The strength of balance sheets raises the question of how capital should be
deployed. This is a frequent topic of engagement for the Managers with the
boards of AGVIT’s investee companies. The highest priority should be organic
investment to maintain the viability of a business and allow it to grow. This is
especially pertinent at present since it seems that the economic and political
uncertainty has discouraged companies from larger capital expenditure projects.
After organic investment, a coherent and appropriate dividend policy is
essential, optimally one that allows ordinary dividends to grow in real terms
through economic cycles. After that, acquisitions may be considered, but these
should be assessed against the benchmark of lower risk special dividends or
share buy-backs. Many small companies bought back shares in 2025, including 26
companies within AGVIT’s portfolio.

Value roll and portfolio turnover

The main influence on AGVIT’s portfolio turnover in any period is usually the
stockmarket’s appetite for small UK quoted companies. If prices and valuations
are rising, the upsides to the Managers’ target prices are likely to be
narrowing. All else being equal, this would encourage the rotation of AGVIT’s
capital from companies with lower upsides to those with higher.

Portfolio turnover is defined as the lower of purchases and sales divided by the
average portfolio value. Over the 12 months to 31 December 2025, turnover was
27% and was influenced by the period’s significant takeover
activity.

Valuations

Recent Managers’ Reports have described how AGVIT is subject to a triple
valuation discount. This referred to AGVIT’s portfolio being on lower valuations
than small UK quoted companies, which were on lower valuations than UK large
companies, which were on lower valuations than world equities. The table below
updates the analysis.

Price 35 year 31 December 2023 31 December 2024 31 December 2025
earnings (PE) average
ratio:
World 16.0x 16.0x 17.0x 18.1x
equities*
FTSE All 15.3x 10.3x 14.6x 17.6x
-Share
Smaller 13.5x 10.3x 11.9x 12.2x
companies**
Aberforth/AGVI 12.0x*** 7.9x*** 9.6x 10.6x
T portfolio

* Source: Bloomberg; Panmure Liberum

** DNSCI (XIC) to 2013 then Tracked Universe

*** Data for Aberforth’s longest standing client

Twelve months on, the triple discount remains in place, and yet there has been
movement. The historical PEs of all four groups have risen, but the most
significant move over the past twelve months has been among large UK companies.
The PE of the FTSE All-Share has jumped from 14.6x to 17.6x and now sits above
its long term average of 15.3x. Meanwhile, the PE of smaller companies, and of
AGVIT’s portfolio in particular, remain below the long term averages. As noted
in the opening section of this report, it is unclear at the fundamental level
why the valuation gap between small and large companies should have opened up to
this degree. In view of the fundamental qualities of smaller companies –
stronger balance sheets and higher growth – their lower valuations offer the
opportunity of stronger future share price returns.

The following table turns to forward looking valuations. It uses the Managers’
favoured valuation metric, EV/EBITA (enterprise value to earnings before
interest, tax and amortisation). Ratios are set out for the portfolio, the
Tracked Universe and certain subdivisions of the Tracked Universe. The profits
underlying the ratios are based on the Managers’ forecasts for each company that
they track. The bullet points following the table summarise its main messages.

EV/EBITA 2024 2025 2026
AGVIT’s portfolio 7.8x 8.0x 7.3x
Tracked Universe (246 stocks) 11.2x 11.1x 9.7x
–      34 growth stocks 19.8x 17.5x 15.5x
–      212 other stocks 10.5x 10.5x 9.1x
–      113 stocks > 60% revenue within UK 11.5x 11.2x 10.1x
–      113 stocks > 60% revenue overseas 10.8x 10.7x 9.2x
–      110 stocks > £600m market cap 12.0x 11.8x 10.4x
–      136 stocks