Athelney Trust half-year results: dividend held as NAV slips

A challenging half for Athelney Trust

Athelney Trust has reported a weaker first half of 2026, with its net asset value falling and investment income dropping by almost a quarter.

The small-cap-focused investment trust ended June with net asset value, or NAV, of 163.1p per share. NAV represents the value of the trust's assets after liabilities, divided by the number of shares in issue.

That was 3.8% below the 169.5p reported at the end of December 2025. However, after including the 7.6p final dividend paid in April, NAV total return was positive at 0.71%.

The share price finished the period unchanged at 165p. Meanwhile, the board maintained the interim dividend at 2.4p per share, despite a sizeable fall in portfolio income.

Athelney Trust's key figures

Metric	Six months to 30 June 2026	Comparison
NAV per share	163.1p	169.5p at 31 December 2025
NAV movement	-3.8%	Six-month period
NAV total return	0.71%	Including dividend paid
Share price	165p	Unchanged from 31 December 2025
Gross revenue	£101,002	£133,835 in H1 2025
Revenue return per share	4.0p	5.5p in H1 2025
Total return per share	-7.7p	4.8p in H1 2025
Interim dividend	2.4p	Unchanged year on year
Net assets	£3.52 million	£3.66 million at 31 December 2025
Cash	£26,030	£118,191 at 31 December 2025

Why NAV went backwards

The main drag was investment performance. Athelney recorded losses of £198,135 on investments held at fair value, compared with gains of £44,604 in the equivalent period of 2025.

After capital expenses, the capital loss was £252,512, equivalent to 11.7p per share. This outweighed the positive revenue return and produced an overall loss of £166,309, or 7.7p per share.

Management attributed the difficult period to weak sentiment towards growth and technology-related companies. The portfolio is tilted towards businesses using technology to generate structural growth, rather than sectors driven primarily by economic cycles.

That positioning hurt as investors reassessed software valuations and the possible impact of autonomous artificial intelligence agents on traditional Software-as-a-Service workflows. Management also highlighted geopolitical conflict and regulatory pressure on healthcare as factors it had not anticipated.

The trust underperformed the FTSE 250 over the six months. The index gained 2.4%, while Athelney's NAV declined by 3.8% before dividends.

There was some improvement later in the period. Athelney reported a second-quarter total return of 8.6%, compared with an 8.5% increase in the FTSE 250.

The dividend is steady, but income weakened

The 2.4p interim dividend will be paid on 25 September 2026 to shareholders on the register at the close of business on 11 September.

Maintaining the payment supports Athelney's stated objective of delivering long-term dividend growth and maintaining a progressive dividend record. The trust paid total dividends of 10.0p for its latest financial year, comprising a 2.4p interim payment and a 7.6p final dividend.

At the 165p period-end share price, the company reported a yield of 6.1%. This ranked Athelney third out of 20 trusts in the Association of Investment Companies' UK Smaller Companies sector comparison.

The catch is that dividend income from the portfolio is moving in the wrong direction. Gross revenue fell 24.5% to £101,002, while revenue return per share dropped from 5.5p to 4.0p.

The board said the decline principally reflected lower income from investments. It also stressed the importance of maintaining revenue reserves to support the dividend policy.

Revenue reserves stood at £68,674 at the end of June, down from £146,470 at the end of 2025 after the 7.6p final dividend was paid. The final dividend for the current financial year will not be decided until the first quarter of 2027.

For income-focused investors, the maintained interim payment is encouraging. However, the lower revenue and reduced reserves mean future dividend coverage deserves close attention.

Share price resilience provides some support

The board reported that Athelney's discount to NAV narrowed from 2.6% to 1.1%, compared with a 12.46% average discount for the AIC UK Smaller Companies sector.

There is an apparent inconsistency in the announcement. A 165p share price is above the reported NAV of 163.1p, which would ordinarily indicate a small premium rather than a discount. Investors may want to seek clarification on this point.

Either way, the central message is that Athelney's shares held their value during the half despite the decline in the underlying portfolio. That suggests shareholder demand was more resilient than the performance of the investments themselves.

A concentrated portfolio of smaller companies

Athelney's portfolio was valued at £3.48 million at the end of June, with a further £38,033 of net current assets.

AEW UK REIT was the largest position, representing 14.9% of the portfolio. Games Workshop was the second-largest at 9.3%, followed by Mony Group at 5.6%.

Other significant holdings included Liontrust Asset Management, S & U, PayPoint, AJ Bell, BTG Consulting and Cake Box. The trust added just one new company during the period, buying a position in business energy supplier YU Group worth £81,250 at the period end.

The portfolio's concentration can work in both directions. Strong performance from a major holding can make a meaningful difference, but setbacks in the largest positions can also have an outsized effect on NAV.

Management highlighted operational progress at AJ Bell, Boku, Cake Box, Raspberry Pi, Spectra Systems and Wise. However, strong company-level trading has not yet translated into stronger portfolio valuations.

Costs and cash are worth watching

Athelney continues to charge no annual management fee. From 1 January 2026, however, a performance fee of 10% of outperformance above the return on cash was introduced. The performance fee had previously been 0%.

Investment management expenses for the half were £834. Total other expenses were £68,342, of which £53,543 was allocated to capital.

The ongoing charges figure for 2026 will not be calculated until the year end. The reported figure for 2025 was 3.91%, which is significant in the context of a trust with net assets of only £3.52 million.

Cash declined from £118,191 at the end of 2025 to £26,030. The trust generated £68,439 of net cash from investment activity, but paid £163,999 in dividends during the half.

The directors nevertheless concluded that Athelney has adequate resources to continue operating for the foreseeable future.

What investors should watch next

The investment case rests on a recovery in sentiment towards UK smaller companies and a market reappraisal of Athelney's growth-focused holdings.

The positives are the maintained interim dividend, stable share price, second-quarter recovery and management's confidence in the operating performance of portfolio companies.

The negatives are equally clear. NAV underperformed the FTSE 250, gross revenue fell 24.5%, revenue reserves reduced, cash declined and the portfolio remains concentrated. The uncertainty around the reported discount also requires clarification.

The next six months need to show that resilient trading at portfolio companies can feed through into valuations. Investors should also monitor dividend income, revenue reserves, ongoing charges and the terms of the new performance fee when the full-year figures arrive.