Aberforth Geared Income has published its results covering the year to the end of June 2014. Over the year the total return on the company was 29.2% (well ahead of the return on the Numis Smaller Companies Index ex Investment Companies +20.3% and the FTSE All-Share Index +13.1%), the gearing effect of the company’s zero dividend preference shares pushed the return on the ordinary share net asset value to 41.9%. the discount closed a little and so the return to ordinary shareholders was 44.1%. The second interim dividend was increased by 7.85% plus a 1.2p special dividend. The cover on the ZDPs increased to 2.5x.
The manager’s report says that smaller small companies outperformed larger ones and value stocks outperformed growth stocks during the period – both these factors favoured Aberforth Geared Income’s portfolio. They note that both the M&A market and the IPO market have picked up over the past year – two companies in the portfolio were bid for and Aberforth Geared Income bought one IPO at launch and one that fell sharply after launch.