Finsbury Growth & Income Trust Plc - Half-year Report
Legal Entity Identifier: 213800NN42KX2LG1GQ40
Unaudited Half Year Results For The Six Months Ended
This Announcement is not the Company’s Half Year Report & Accounts. It is an abridged version of the Company’s full Half Year Report & Accounts for the six months ended
The Company's Half Year Report & Accounts for the six months ended
COMPANY SUMMARY
INVESTMENT OBJECTIVE AND PERFORMANCE MEASUREMENT
The Company aims to achieve capital and income growth and to provide Shareholders with a total return in excess of that of the FTSE All-Share Index (the Company’s benchmark).
INVESTMENT POLICY
The Company’s investment policy is to invest principally in the securities of companies either listed in the
The portfolio will normally comprise up to 30 investments. This level of concentration is likely to lead to an investment return which is materially different from the Company’s benchmark index and is likely to be more volatile and carry more risk.*
Unless driven by market movements, securities in
The Company will not invest more than 15% of the Company’s net assets, at the time of acquisition, in the securities of any single issuer. For the purposes of this limit only, net assets shall exclude the value of the Company’s investment in
The Company does not and will not invest more than 15%, in aggregate, of the value of the gross assets of the Company in other listed closed ended investment companies. Further, the Company does not and will not invest more than 10%, in aggregate, of the value of its gross assets in other listed closed ended investment companies except where the investment companies themselves have stated investment policies to invest no more than 15% of their gross assets in other listed closed ended investment companies.
The Company has the ability to invest up to 25% of its gross assets in preference shares, bonds and other debt instruments, although no more than 10% of any one issue may be held.
In addition, a maximum of 10% of the Company’s gross assets can be held in cash, where the Portfolio Manager believes market or economic conditions make equity investment unattractive or while seeking appropriate investment opportunities or to maintain liquidity.
The Company’s gearing policy is that gearing will not exceed 25% of the Company’s net assets.
No investment will be made in any fund or investment company managed by
In accordance with the Listing Rules of the
* The Company publishes its Active Share scores in its monthly fact sheet for investors and in both the annual and half-yearly reports to highlight how different the portfolio is from the Company's benchmark index.
PERFORMANCE
Whilst performance is measured against the FTSE All-Share Index, the Company's portfolio is constructed and managed without reference to a stock market index with the Portfolio Manager selecting investments based on their assessment of their long-term value.
The Company’s net assets as at
MANAGEMENT
DIVIDENDS
An interim dividend of 8.8p per share (2023: 8.5p) was paid on
It is expected that a second interim dividend will be declared and paid in the Autumn.
DIVIDEND POLICY
The Company’s aim is to increase or at least maintain the total dividend each year. A first interim dividend is typically paid in May and a second interim in November in lieu of a final dividend.
The level of dividend growth is dependent upon the growth and performance of the companies within the investment portfolio. The decision as to the level of dividend paid takes into account the income forecasts maintained by the Company’s AIFM and Portfolio Manager as well as the level of revenue reserves. These forecasts consider dividends earned from the portfolio together with predicted future earnings and are regularly reviewed by the Board.
All dividends have been distributed from current year income and revenue reserves.
CAPITAL STRUCTURE
At
GEARING
As at the half year end the Company was in the second year of its three-year secured fixed term revolving credit facility (the “facility”) of £60 million with
COMPANY PERFORMANCE
AS AT
KEY FACTS
932.2p 5.9% 2.7%
Net Asset Value Per Share† Net Asset value per share
total return*^ Share price total return*^
30 September 2023 : 891.2p
30 September 2023: 7.2% 30 September 2023: 7.5%
(change 4.6%)
864.0p £1.747bn 187,444,294
Share price Shareholders’ funds†
30 September 2023 : 852.0p 30 September 2023 :
£1.823bn Number of shares in issue
(change 1.4%) (excluding 37,547,009
(change -4.2%) shares held intreasury) 30
September 2023: 204,519,434
(excluding 20,471,869
shares held in treasury)
(change -8.3%)
7.3% 0.6% 1.1%
Discount of share price to Ongoing charges^ Gearing^
net asset value per share^
30 September 2023: 0.6% 30 September 2023: 0.8%
30 September 2023 : 4.4%
45.6p 84.7% 8.8p
First interim dividend per
Return per share† Active Share^* share
31 March 2023: 102.6p 30 September 2023: 85.3% 2023: 8.5p
(change 3.5%)
^ Alternative Performance Measure (see glossary)
†
* Source – Morningstar
**
Source –
CHAIRMAN’S STATEMENT
PERFORMANCE
In the six months to
Further information on the Company’s portfolio can be found in our Portfolio Manager’s Review.
Your Board takes the recent performance record of the Company’s portfolio extremely seriously, and shares the Portfolio Manager’s and, no doubt, Shareholders’ disappointment with recent results. We continue to hold the Portfolio Manager to account for the Company’s performance and support the evolution of the companies and themes represented in the portfolio. We believe the companies we own have the capacity to deliver both attractive returns and outperformance that Shareholders should expect.
SHARE CAPITAL
The Board continues to keep the Company’s discount under close review and is committed to buying back its own shares when the discount approaches or exceeds the 5% level. While share buy-backs will not necessarily prevent the discount from widening beyond this level, the Board believes that buy - backs enhance the net asset value per share for remaining Shareholders, provide some additional liquidity and help to mitigate discount volatility which can damage shareholder returns.
During the six months under review the Company bought back a total of 17,075,140 shares into treasury at a cost of £144 million. As at
Since
DIVIDEND
The Board declared a first interim dividend of 8.8p per share (2023: 8.5p) with respect to the year ending 30
The Board expects to declare the second interim dividend for the year ending
BOARD CHANGES
After nine years as a Director of the Company, I have notified the Board of my intention to stand down at the conclusion of the Company’s Annual General Meeting in
CHANGE OF AUDITOR
During the period the Board initiated a formal competitive tender process for our external audit engagement and appointed
A copy of the resignation statement from
OUTLOOK
The Board believes this combination of a portfolio of world-class companies held for the long term and attractively priced offers real grounds for optimism and the capacity to generate significant returns for Shareholders.
Chairman
^ Alternative Performance Measure (see glossary).
PORTFOLIO MANAGER’S REVIEW
To be candid I find this a difficult report to write. As you will have seen from the Chairman’s Statement, this was yet another six month period when I, with my colleagues at
At the same time, as a career-long
What I find difficult to write is not the acknowledging of our poor investment performance or apologising for it. We do acknowledge and apologise for it. No, what is difficult is finding a credible way to convey to Shareholders why we remain optimistic about the Company’s investment portfolio. It is difficult, because I am conscious that I have been vocally optimistic about its prospects throughout the three years and more of underperformance. So why should I be right this time?
Nonetheless, I must retry to convey that optimism, because, in my opinion, there is tremendous value building in the portfolio. Specifically, I believe we own significant positions in a number of businesses that could grow their market capitalisations multiple times over the next decade or more.
There are always many factors behind any sustained period of poor performance and here I must acknowledge that not owning
In
At this point I make two assertions, because the conclusions we derive from them explain the investment decisions we have subsequently taken.
First, we cannot conceive how to generate the returns we aspire to for the Company’s Shareholders over the next, say, five years without meaningful portfolio exposure to technology-advantaged companies. In addition, I also believe the portfolio needs exposure to consumer-serving companies whose products consumers actually aspire to purchase and enjoy. What I mean is that the opportunities for the owners of luxury or premium brands should be better than ever as the 21st century progresses.
The second assertion is that, contrary to popular perception and despite its dismal recent performance, the
The shape of your portfolio has changed since 2020 and is increasingly structured around companies that benefit from those themes of data and luxury. The shift in portfolio construction has been driven, in part, by starting new holdings, but also by adding to the data, analytics and software companies that were already constituents in 2020.
In fact, we have initiated only three new holdings since 2020 and I list them here as examples of the type of company we have been researching and where we have confidence to commit capital in the third decade of the 21st century. By some margin, the most meaningful shift in the portfolio since 2020 is the establishment of a major, top three, holding in Experian. Experian is one of the best positioned companies in the world to take advantage of new data analytic tools; in short, to take advantage of artificial intelligence. As the biggest credit bureau in the world – including being the biggest in the biggest market for credit, the US – Experian probably has more data on more companies and individuals than any other institution, at a time when the demand for commercially relevant learnings, derived from raw data, is growing faster than ever.
There is a similar justification for our most recent new holding, Rightmove. This company is by orders of magnitude the most visited residential property portal in the
Following on from that discussion of Fever-Tree and its role in your portfolio as a rare
In early 2020 roughly c.30% of your portfolio was exposed to companies we judge to have first-class data or technology assets. Today, as a result of the actions I have described above, the proportion is the biggest portfolio allocation, at over 55% and growing. It is so important to emphasize that we have not established this weighting by investing in small, speculative or start-up tech companies. In fact, the biggest holdings in your portfolio are some of the biggest and most successful companies listed on the
Today Sage is a top five holding in the portfolio, after strong recent share price gains and, at c.£12.0bn market value, is the biggest software company listed on the
When you sum the market values of the holdings we have in this category of data and software winners, you arrive at a total of just under 8% of the FTSE All-Share Index. To repeat, the Company’s exposure is over 55%. I do not know if that 55% is yet “enough”. Enough to deliver the returns we aspire to deliver. But it is evident the exposure is already notably and deliberately higher than it was back in 2020. It is also evidently already highly differentiated from the shape of the
I have three final observations.
I mentioned the gap that exists between the valuations of tech-advantaged
A smart shareholder asked me recently – which of your holdings really has the potential to double or treble profits over the next decade or more and, as a result, become a much bigger market capitalized company and higher share price? My answer was that amongst the large-cap holdings it is readily conceivable that RELX and Sage have truly transformative profit potential ahead. And of our mid and smaller capped holdings, Fever-Tree, Hargreaves Lansdown and Rightmove have clear roadmaps to becoming much bigger businesses, if, of course, they can execute on their opportunities.
Finally, your portfolio has three non-
Director
Portfolio Manager
INVESTMENTS AS AT
FAIR VALUE CAPITAL
NET FAIR VALUE
30 APPRECIATION/ % OF
SECTOINVESTMENTS SEPTEMBER INVESTMENTS 31 MARCH
R (DEPRECIATION) 2024 INVESTMENTS
2023 £’000
£’000 £’000
£’000
· F London Stock 212,962 (22,096) 31,532 222,398 12.6
Exchange
· CD RELX 227,828 (56,775) 47,278 218,331 12.4
· I Experian 144,803 19,525 46,366 210,694 11.9
· T Sage 154,066 508 43,110 197,684 11.2
· CS Diageo 182,495 9,300 (6,070) 185,725 10.5
· CS Unilever 163,699 (5,618) (3,573) 154,508 8.7
· CD Burberry 147,145 (1,843) (53,441) 91,861 5.2
· F Schroders 101,313 (7,226) (7,275) 86,812 4.9
Mondelez
· CS International 133,956 (56,700) (2,184) 75,072 4.3
#
· CD Rightmove 4,821 57,411 (361) 61,871 3.5
Top 10 1,504,956 85.2
Investments
· F Hargreaves 58,334 652 (2,752) 56,234 3.2
Lansdown
· CS Heineken † 88,569 (45,961) 2,381 44,989 2.6
· CS Fever-Tree 40,908 1,225 47 42,180 2.4
· CS Remy 68,168 (18,702) (12,280) 37,186 2.1
Cointreau ^
· CS A.G Barr 21,702 (1,930) 3,860 23,632 1.3
· CD Manchester 37,334 (16,676) (2,707) 17,951 1.0
United #
· F Rathbone 23,298 (2,975) (2,521) 17,802 1.0
Brothers
The Lindsell
· F Train 8,760 (840) 7,920 0.5
Investment
Trust
Young & Co’s
· CD Brewery 7,108 (523) (1,239) 5,346 0.3
(non-voting)
· CD Celtic * 4,331 (76) 4,255 0.2
Top 20 1,762,451 99.8
Investments
Frostrow
· F Capital LLP 3,725 3,725 0.2
(unquoted) **
· CD Cazoo # 79 (12) (67) 0.0
· CD Fuller Smith 1,256 (1,351) 95 0.0
& Turner
Total 1,836,660 (149,767) 79,283 1,766,176 100.0
Investments
# Listed in
† Listed in
^
Listed in
* Includes Celtic 6% cumulative preference shares, fair value £256,000 (
**
FINANCIAL STATEMENTS
INCOME STATEMENT
for the six months ended
(UNAUDITED) (UNAUDITED)
SIX MONTHS ENDED SIX MONTHS ENDED
31 MARCH 2024 31 MARCH 2023
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL
£’000 £’000 £’000 £’000 £’000 £’000
Gains on investments at fair – 79,283 79,283 – 207,567 207,567
value through profit or loss
Currency translations – (80) (80) – (42) (42)
Income (note 2) 17,339 – 17,339 15,921 – 15,921
AIFM and Portfolio Management (1,184) (3,552) (4,736) (1,292) (3,878) (5,170)
fees (note 3)
Other expenses (613) – (613) (585) (17) (602)
Return on ordinary activities
before finance charges and 15,542 75,651 91,193 14,044 203,630 217,674
taxation
Finance charges (303) (910) (1,213) (230) (687) (917)
Return on ordinary activities 15,239 74,741 89,980 13,814 202,943 216,757
before taxation
Taxation on ordinary activities (3) – (3) (259) – (259)
Return on ordinary activities 15,236 74,741 89,977 13,555 202,943 216,498
after taxation
Return per share – basic and 7.7p 37.9p 45.6p 6.4p 96.2p 102.6p
diluted (note4)
The “Total” column of this statement represents the Company’s Income Statement.
The “Revenue” and “Capital” columns are supplementary to this and are prepared under guidance published by
All items in the above statement derive from continuing operations. The Company had no recognised gains or losses other than those declared in the Income Statement; therefore no separate Statement of Comprehensive Income has been presented.
STATEMENT OF CHANGES IN EQUITY
for the six months ended
(Unaudited) CALLED UP SHARE PREMIUM CAPITAL CAPITAL REVENUE TOTAL
SHARE REDEMPTION SHAREHOLDERS
Six months ACCOUNT RESERVE RESERVE
ended 31 CAPITAL £’000 RESERVE £’000 £’000 FUNDS
March 2024 £’000 £’000 £’000
At 1 October 56,248 1,099,847 3,453 604,212 58,969 1,822,729
2023
Net return
from ordinary – – – 74,741 15,236 89,977
activities
Second
interim
dividend
(10.5p per
share) for – – – – (21,454) (21,454)
the year
ended 30
September
2023
Repurchase of
shares into – – – (143,951) – (143,951)
Treasury
At 31 March 56,248 1,099,847 3,453 535,002 52,751 1,747,301
2024
CALLED UP SHARE CAPITAL TOTAL
(Unaudited)
SHARE PREMIUM REDEMPTION CAPITAL REVENUE SHAREHOLDERS
Six months ended
31 March 2023 CAPITAL ACCOUNT RESERVE RESERVE RESERVE FUNDS
£’000 £’000 £’000 £’000 £’000 £’000
At 1 October 2022 56,248 1,099,847 3,453 614,947 55,889 1,830,384
Net (loss)/return
from ordinary – – – 202,943 13,555 216,498
activities
Second interim
dividend (9.8p per
share) for the – – – – (21,182) (21,182)
year ended 30
September 2022
Repurchase of
shares into – – – (67,410) – (67,410)
Treasury
At 31 March 2023 56,248 1,099,847 3,453 750,480 48,262 1,958,290
STATEMENT OF FINANCIAL POSITION
as at
(UNAUDITED) (AUDITED)
31 MARCH 30 SEPTEMBER
2024 2023
£’000 £’000
Fixed assets
Investments held at fair value through profit or loss 1,766,176 1,836,660
(note 1)
Current assets
Debtors 10,305 10,209
Cash and cash equivalents 6,766 17,426
17,071 27,635
Current liabilities
Creditors: amounts falling due within one year (6,746) (4,866)
(6,746) (4,866)
Net current assets 10,325 22,769
Total assets less current liabilities 1,776,501 1,859,429
Creditors: amounts falling due after one year
Bank loan (29,200) (36,700)
Net assets 1,747,301 1,822,729
Capital and reserves
Called up share capital 56,248 56,248
Share premium account 1,099,847 1,099,847
Capital redemption reserve 3,453 3,453
Capital reserve 535,002 604,212
Revenue reserve 52,751 58,969
Total Shareholders’ funds 1,747,301 1,822,729
Net asset value per share (note 5) 932.2p 891.2p
STATEMENT OF CASH FLOWS
for the six months ended
(UNAUDITED) (UNAUDITED)
31 MARCH 31 MARCH
2024 2023
£’000 £’000
Net cash inflow from operating activities before 12,110 15,349
interest (note 7)
Investing activities
Purchase of investments (76,946) (14,924)
Sale of investments 226,391 84,545
Net cash inflow from investing activities 149,445 69,621
Financing activities
Equity dividends paid (21,454) (21,182)
Repayment of loans (7,500) –
Repurchase of Shares into Treasury (141,968) (68,523)
Interest paid (1,213) (917)
Net cash outflow from financing activities (172,135) (90,622)
Decrease in cash and cash equivalents (10,580) (5,652)
Currency translations (80) (42)
Cash and cash equivalents at 1 October 17,426 7,835
Cash and cash equivalents at 31 March 6,766 2,141
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The condensed Financial Statements for the six months to
The accounting policies used for the year ended
FAIR VALUE
Under FRS 102 and FRS 104 investments have been classified using the following fair value hierarchy:
Level 1 – quoted prices in active markets
Level 2 – prices of recent transactions for identical instruments
Level 3 – valuation techniques using observable and unobservable market data.
The financial assets and liabilities measured at fair value in the Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows:
(UNAUDITED) AS AT 31 MARCH 2024
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
AS AT 31 MARCH 2024
£'000 £'000 £'000 £'000
Equity investments 1,762,195 – – 1,762,195
Limited liability partnership interest – – 3,600 3,600
(Frostrow)
AIFM Capital contribution (Frostrow) – – 125 125
Preference share investments 256 – – 256
1,762,451 – 3,725 1,766,176
(AUDITED) AS AT 30 SEPTEMBER 2023
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
AS AT 30 SEPTEMBER 2023
£'000 £'000 £'000 £'000
Equity investments 1,832,668 – – 1,832,668
Limited liability partnership interest – – 3,600 3,600
(Frostrow)
AIFM Capital contribution (Frostrow) – – 125 125
Preference share investments 267 – – 267
1,832,935 – 3,725 1,836,660
2. INCOME
(UNAUDITED) (UNAUDITED)
SIX MONTHS SIX MONTHS
ENDED ENDED
31 MARCH 2024 31 MARCH 2023
£'000 £'000
Income from investments
UK listed dividends 16,050 14,207
Overseas dividends 1,131 1,684
Other operating income 158 30
Total income 17,339 15,921
3. AIFM AND PORTFOLIO MANAGEMENT FEES
(UNAUDITED) (UNAUDITED)
SIX MONTHS TO 31 SIX MONTHS TO 31
MARCH 2024 MARCH 2023
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL
£'000 £'000 £'000 £'000 £'000 £'000
AIFM fee 296 888 1,184 323 969 1,292
Portfolio management fee 888 2,664 3,552 969 2,909 3,878
Total fees 1,184 3,552 4,736 1,292 3,878 5,170
4. RETURN PER SHARE – BASIC AND DILUTED
(UNAUDITED) (UNAUDITED)
SIX MONTHS SIX MONTHS
TO 31 MARCH TO 31 MARCH
2024 2023
£'000 £'000
The return per share is based on the following figures:
Revenue return 15,236 13,555
Capital return 74,741 202,943
Total return 89,977 216,498
Weighted average number of shares in issue for the 197,249,523 210,888,032
period
Revenue return per share 7.7p 6.4p
Capital return per share 37.9p 96.2p
Total return per share 45.6p 102.6p
The calculation of the total, revenue and capital returns per ordinary share is carried out in accordance with IAS 33, ”Earnings per Share”.
During the period there were no dilutive instruments held, therefore the basic and diluted return per share are the same.
5. NET ASSET VALUE PER SHARE
(UNAUDITED) (AUDITED)
AS AT AS AT
31 MARCH 30 SEPTEMBER
2024 2023
Net Assets (£'000) 1,747,301 1,822,729
Number of shares in issue 187,444,294 204,519,434
Net asset value per share 932.2p 891.2p
6. TRANSACTION COSTS
Purchase transaction costs for the six months ended
Sales transaction costs for the six months ended
These transaction costs are included within the gains and losses on investments within the Income Statement.
7. RECONCILIATION OF TOTAL RETURN BEFORE FINANCE COSTS AND TAXATION TO NET CASH INFLOW FROM OPERATING ACTIVITIES
(UNAUDITED) (UNAUDITED)
SIX MONTHS SIX MONTHS
ENDED ENDED
31 MARCH 2024 31 MARCH 2023
£'000 £'000
Total return before finance charges and taxation 91,193 217,674
Deduct capital return before finance charges and (75,651) (203,630)
taxation
Net revenue before finance costs and taxation 15,542 14,044
Increase in accrued income and prepayments 282 5,912
Increase in creditors 390 13
Taxation – irrecoverable overseas tax paid (552) (725)
AIFM, Portfolio management and other fees charged to (3,552) (3,895)
capital
Net cash inflow from operating activities 12,110 15,349
8. GOING CONCERN
The Directors believe, having considered the Company’s financial position, investment objective, risk management policies, capital management policies and procedures, as well as the nature of the portfolio and the expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future. In addition, there are no material uncertainties relating to the Company that would prevent its ability to continue in such operational existence for at least twelve months from the date of the approval of this half year financial report. For these reasons, the Directors consider there is reasonable evidence to continue to adopt the going concern basis in preparing the Financial Statements. In reviewing the position as at the date of this report, the Board has considered the guidance on this matter issued by the
As part of their assessment, the Directors have given careful consideration to the consequences for the Company of continuing uncertainty created by the increase in global inflation and rising interest rates, together with the consequences of the wars in
9. COMPARATIVE INFORMATION
The financial information contained in this Half Year Report does not constitute statutory accounts as defined in sections 434 to 436 of the Companies Act 2006. The financial information for the six months ended
The information for the year ended
GOVERNANCE / INTERIM MANAGEMENT REPORT
INTERIM MANAGEMENT REPORT
The Directors are required to provide an Interim Management Report in accordance with the
PRINCIPAL RISKS AND UNCERTAINTIES
A review of the half year, including reference to the risks and uncertainties that existed during the period and the outlook for the Company can be found in the Chairman’s Statement and in the Portfolio Manager’s Review.The principal risks faced by the Company fall into the following broad categories: market risk; portfolio performance; share price performance; cyber risk; key person risk; valuation risk; climate change; geopolitical or natural event risk; and operational disruption. Information on each of these areas is given in the Strategic Report/Business Review within the Annual Report for the year ended
The Company’s principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remaining six months of the Company’s financial year.
The Board, the AIFM and the Portfolio Manager discuss and identify emerging risks as part of the risk identification process and have considered the impact of technological breakthroughs, such as AI, may have on the operations of the portfolio companies.
RELATED PARTY TRANSACTIONS
During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company.
DIRECTORS’ RESPONSIBILITIES
The Board of Directors confirms that, to the best of its knowledge:
(i) the condensed set of financial statements contained within the Half Year Report have been prepared in accordance with applicable United Kingdom Generally Accepted Accounting Practice standards; and
(ii) the interim management report includes a true and fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period and any changes in the related party transactions described in the last annual report that could do so.
The Half Year Report has not been audited by the Company’s auditors.
This Half Year Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the date of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
For and on behalf of the Board
Chairman
FURTHER INFORMATION
GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES (“APM”)
ACTIVE SHARE (APM)
Active Share is expressed as a percentage and shows the extent to which a fund’s holdings and their weightings differ from those of the fund’s benchmark index. A fund that closely tracks its index might have an Active Share of less than 20% and be considered passive, while a fund with an Active Share of 60% or higher is generally considered to be actively managed. The Company has a distinctive strategy: a concentrated portfolio of holdings invested across a small number of sectors and themes. Active Share helps quantify the extent to which the portfolio differs from the benchmark index.
The Active Share performance is sourced from Morningstar.
AIC
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (“AIFMD”)
Agreed by the
ALTERNATIVE PERFORMANCE MEASURE (“APM”)
An Alternative Performance Measure is a numerical measure of the Company’s current, historical or future financial performance, financial position or cash flows other than a financial measure defined or specified in the applicable financial framework. In selecting these Alternative Performance Measures, the Directors considered the key objectives and expectations of typical investors and believe that each APM gives the reader useful and relevant information in judging the Company's performance and in comparing other Investment Companies.
BENCHMARK RETURN
Total return on the benchmark, assuming that all dividends received were re-invested, without transaction costs, into the shares of the underlying companies at the time the shares were quoted ex-dividend.
DISCOUNT OR PREMIUM (APM)
A description of the difference between the share price and the net asset value per share. The size of the discount or premium is calculated by subtracting the share price from the net asset value per share and is usually expressed as a percentage (%) of the net asset value per share. If the share price is higher than the net asset value per share the result is a premium. If the share price is lower than the net asset value per share, the shares are trading at a discount. The Board regularly reviews the level of the discount/premium of the Company’s share price to the net asset value per share and considers ways in which share price performance may be enhanced, including the effectiveness of share buy-backs, where appropriate.
31 MARCH 30 SEPTEMBER
DISCOUNT OR PREMIUM (APM)
2024 2023
Share Price (p) 864.0 852.0
Net Asset value per share (p) 932.2 891.2
Discount 7.3% 4.4%
FTSE DISCLAIMER
“FTSE©” is a trade mark of the London Stock Exchange Group companies and is used by
GEARING (APM)
Gearing represents prior charges, adjusted for net current assets expressed as a percentage of net assets (AIC methodology). The Directors believe that it is appropriate to show net gearing in relation to Shareholders’ funds as it represents the amount of debt funding on the investment portfolio. The gearing policy is that borrowing will not exceed 25% of the Company’s net assets.
Prior charges include all loans and bank overdrafts for investment purposes.
31 MARCH 30 SEPTEMBER
2024 2023
£’000 £’000
Bank loan (prior charges) (29,200) (36,700)
Less net current assets 10,325 22,769
(18,875) (13,931)
Net assets 1,747,301 1,822,729
Gearing 1.1% 0.8%
NET ASSET VALUE (“NAV”)
The value of the Company’s assets, principally investments made in other companies and cash being held, less any liabilities. The NAV is also described as “Shareholders’ funds”. The NAV is often expressed in pence per share after being divided by the number of shares that have been issued. The NAV per share is unlikely to be the same as the share price which is the price at which the Company’s shares can be bought or sold by an investor. The share price is determined by the relationship between the demand and supply of the shares.
NET ASSET VALUE TOTAL RETURN PER SHARE (APM)
The theoretical total return on an investment over a specified period assuming dividends paid to Shareholders were reinvested at net asset value per share at the time the shares were quoted ex-dividend. This is a way of measuring investment management performance of investment trusts which is not affected by movements in discounts or premiums. The Directors regard the Company’s net asset value total return per share as being the overall measure of value delivered to Shareholders over the long term. The Board considers the principal comparator to be its benchmark, the FTSE All-Share Index.
31 MARCH 30 SEPTEMBER
2024 2023
Opening NAV per share (p) 891.2 848.4
Increase in NAV per share (p) 41.0 42.8
Closing NAV per share (p) 932.2 891.2
Increase in NAV per share 4.6% 5.0%
Impact of dividends re-invested* +1.3% +2.2%
NAV per share total return 5.9% 7.2%
* Total dividends declared during the period of 10.5p (2023: 18.3p declared during the 2023 financial year) were re-invested at the cum income NAV per share at the ex - dividend date. The treasury shares held by the Company have been excluded from this calculation.
In accordance with FRS 102 dividends are included in the Financial Statements in the period in which they are paid or approved by Shareholders.
The source is Morningstar which has calculated the return on an industry comparative basis.
ONGOING CHARGES (APM)
Ongoing charges are calculated by taking the Company’s annualised operating expenses expressed as a proportion of the average daily net asset value of the Company over the year. The costs of buying and selling investments are excluded, as are interest costs, taxation, cost of buying back or issuing ordinary shares and other non-recurring costs. Ongoing charges represent the costs that Shareholders can reasonably expect to pay from one year to the next, under normal circumstances. The Board continues to be conscious of expenses and works hard to maintain a sensible balance between high quality service and the cost of provision.
31 MARCH 30 SEPTEMBER
2024 2023
£’000 £’000
AIFM and portfolio management fees 9,171 10,437
Operating expenses 1,157 1,167
Total expenses 10,328* 11,604
Average net assets during the period/year 1,765,240 1,907,121
Ongoing charges 0.59%** 0.61%
* Estimated expenses as reported in the Company’s latest revenue forecasts for the year ending
** Assumes no change in the average assets.
OTHER COST RATIOS
Please see the 2023 Annual Report for further details.
PEER GROUP
REVERSE STRESS TEST
Reverse stress tests are stress tests that identify scenarios and circumstances which would make a business unworkable and identify potential business vulnerabilities.
SHARE PRICE TOTAL RETURN (APM)
The change in capital value of a company’s shares over a given period, plus dividends paid to Shareholders, expressed as a percentage of the opening value. The assumption is that dividends paid to Shareholders are re-invested in the shares at the time the shares are quoted ex dividend. The Directors regard the Company’s share price total return to be a key indicator of performance. This reflects share price growth of the Company which the Board recognises is important to investors.
31 MARCH 30 SEPTEMBER
SHARE PRICE TOTAL RETURN
2024 2023
Opening share price (p) 852.0 800.0
Increase in share price (p) 12.0 52.0
Closing share price (p) 864.0 852.0
% Increase in share price 1.4% 6.5%
% Impact of dividends re-invested* +1.3% +1.0%
Share price total return 2.7% 7.5%
* Total dividends declared during the period of 10.5p (2023: 18.3p declared during the 2023 financial year) were re-invested at the share price at the ex-dividend date.
The source is Morningstar which has calculated the return on an industry comparative basis.
STRESS TESTING
Stress testing is a forward-looking analysis technique that considers the impact of a variety of extreme but plausible economic scenarios on the financial position of the Company.
TREASURY SHARES
Shares previously issued by a company that have been bought back from Shareholders to be held by the Company for potential sale or cancellation at a later date. Such shares are not capable of being voted and carry no rights to dividends.
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Company Secretary – 0203 170 8732
