Legal Entity Identifier: 213800NN42KX2LG1GQ40
14 May 2019
LONDON STOCK EXCHANGE ANNOUNCEMENT
Finsbury Growth
& Income Trust PLC
Unaudited Half
Year Results For The Six Months Ended
31 March 2019
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 31 March 2019. The full Half Year Report &
Accounts, together with a copy of this announcement, will shortly
be available on the Company’s website at www.finsburygt.com where
up to date information on the Company, including daily NAV, share
prices and fact sheets, can also be found.
The Company's Half Year Report & Accounts for the six months
ended 31 March 2019 has been
submitted to the UK Listing Authority, and will shortly be
available for inspection on the National Storage Mechanism (NSM):
www.hemscott.com/nsm.do
For further information please contact: Victoria Hale, Frostrow Capital LLP 020 3170
8732
Company Performance
Financial Highlights
|
As at |
As at |
|
|
31 March |
30 September |
% |
|
2019 |
2018 |
Change |
Share price |
829.0p |
818.0p |
+1.3 |
Net asset value per share |
827.6p |
812.8p |
+1.8 |
Premium of share price to net asset
value per share^ |
0.2% |
0.6% |
|
Gearing1^ |
1.3% |
1.4% |
|
Shareholders’ funds |
£1,557.0m |
£1,411.8m |
+10.3 |
Number of shares in issue |
188,126,712 |
173,691,712 |
+8.3 |
|
Six months to |
One year to |
|
|
31 March |
30 September |
|
|
2019 |
2018 |
|
Share price (total
return)2^ |
+2.4% |
+13.2% |
|
Net asset value per share (total
return)2^ |
+2.9% |
+13.1% |
|
FTSE All-Share Index (total
return)*
(Company benchmark)2 3 |
-1.8% |
+5.9% |
|
Ongoing charges1^ |
0.7% |
0.7% |
|
|
Year ending |
Year ended |
|
|
30 September |
30 September |
|
|
2019 |
2018 |
|
First interim dividend |
8.0p |
7.2p |
+11.1 |
Second interim dividend |
Yet to be declared |
8.1p |
|
1 See glossary
2 Source – Morningstar
3 Source – FTSE International Limited (“FTSE”) © FTSE
2019*
^Alternative Performance Measures (“APMs”)
The disclosures of performance above are considered to represent
the Company’s APMs. Definitions of these APMs together with how
these measures have been calculated can be found in the
Glossary.
This report contains terminology that may be unfamiliar to some
readers. The Glossary gives definitions for frequently used
terms.
Chairman’s Statement
Performance
In the six months to 31 March 2019
the Company delivered a net asset value total return of 2.9% and a
share price total return of 2.4%. It is again pleasing to note that
both have outperformed the Company’s benchmark, the FTSE All Share
index, which fell by 1.8% over the same period. The principal
contributors to the Company’s net asset value performance were
Diageo, Mondelez International and Sage Group. The main detractors
were Hargreaves Lansdown, Schroders and Manchester United. Further
information on the Company’s portfolio can be found in our
Portfolio Manager’s Review.
Share Capital
Consistent demand for the Company’s shares has led to the issue
of a total of 14,435,000 new shares in this half year, raising
£112.8 million. As at 31 March 2019
the Company had 188,126,712 shares of 25p each in issue
(31 March 2018: 165,646,712). Since
the end of the half-year to 13 May
2019, being the latest practical date, a further
4,990,000 new shares have been issued raising £43.1 million. As at
13 May 2019, the Company had
193,116,712 shares in issue.
Dividend
The Board has declared a first interim dividend of 8.0p per
share, compared to last year’s first interim dividend of 7.2p per
share, an increase of 11.1%. The dividend will be paid on Thursday,
16 May 2019 to shareholders who were
on the register on Friday, 5 April
2019. The associated ex-dividend date was Thursday,
4 April 2019.
The 11.1% increase to the first interim dividend of 8.0p per
share when compared to the corresponding dividend in 2018 has been
made to reduce the disparity between the first and second
dividends.
The Board expects to declare the second dividend for the year
ending 30 September 2019 in late
September 2019 and for it to be paid
to shareholders in November 2019.
Gearing
As at the half year end the Company was in the final year of its
three-year secured fixed term committed revolving credit facility
of £75 million with an additional £25 million facility with
Scotiabank Europe PLC. The amount currently drawn under the
Facility of £36.7 million lies comfortably within the Company’
gearing limit of 25% of net assets.
As reported in my last Chairman’s Statement in December 2018, it is intended that this facility
will be renewed with effect from October
2019.
Outlook
As we look forward, our Portfolio Manager remains optimistic
about the outlook and opportunities for the companies in our
portfolio. Your Board continues to believe that our Portfolio
Manager’s strategy of investing for the long-term in durable cash
generative franchises capable of sustained dividend growth will
continue to deliver superior investment returns to
shareholders.
Anthony Townsend
Chairman
14 May 2019
Portfolio Manager’s Review
We know some shareholders are concerned about the possibility of
a prolonged period of underperformance from our strategy – because
they tell me so. In particular they expect the underperformance to
come from one important part of the portfolio. That is they worry
about a downturn in the share prices of our consumer branded-goods
companies – that downturn to be caused either by the possible
overvaluation of such companies or by deterioration in their
business performance, or both.
It is true that over 45% of Finsbury Growth & Income Trust
PLC’s (‘FGIT’) portfolio is invested in consumer brand owners – A G
Barr, Burberry, Diageo, Heineken, Mondelez, Remy and Unilever. And
also true that all of these have been wonderful long and short term
investments for FGIT. You could also argue that this strong
performance has left their valuations looking too high. I disagree.
Although by that I don’t mean to suggest that they might not go
through a period of dull stock market performance – as can happen
to any company in any part of the market. Of course they could. But
I disagree that they have become perilously expensive. But where I
do agree with the sceptics is that there is a bigger question. That
being the debate as to whether changes in consumer tastes and the
digital disruption of the 21st century are impairing the growth and
value of big brands.
Now although we have deliberately picked companies where we have
most confidence in the sustainability of their brands, of course we
give consideration to this question. And there is evidence that
some previously successful brands are struggling, notably in
processed foods and household care. To be clear, we know we must
sell out of any company where long term brand equity is being lost.
Practically what we do is continually monitor the performance of
the businesses we are invested in to be alert to warning
signals.
But so far as FGIT is concerned the signals delivered over the
last six months by our consumer companies are encouraging, we think
and this has been confirmed by their share price performance.
Over the period four of our top five performers were global
brand owners – led by Diageo and including Mondelez, Unilever and
Heineken. (Sage was actually the fourth best – a welcome recovery
from its poor performance in the first half of 2018.) All of these
gave positive returns over a period when the FT All-Share Index was
down. Burberry was the only one of our consumer shares to fall.
But returning to the question of the fortunes of big 20th
century consumer brands in the 21st century – it’s worth thinking
about Unilever. Of all our holdings Unilever is undoubtedly the
most challenged by changes in consumer tastes and buying behaviour
because it has the most mass or mid-market brands. And one might
indeed be cautious about the outlook over the next 25 years for the
brand power of its packaged foods and washing powder assets.
Nonetheless one has to be impressed by the mitigations Unilever has
been able to present against these trends and concerns. For
instance, the biggest single brand in Unilever is Dove – at about
9% of total group revenues. This global property – it is available
in more than 170 countries – “delivered another year of broad based
growth” in 2018 and that means just under 8%. Dove’s revenues are
up 84% over the last decade – that’s over 6% CAGR and that rate has
accelerated over the last 7 years. This does not indicate a
moribund, irrelevant 20th century brand. In fact, Dove, established
in 1957, sells more and is almost certainly more valuable as we get
toward the end of the second decade of the 21st century than any
other time in its history. It is an example of the advantages that
can accrue from scale for truly global brands, delivered by truly
global companies. Another consolation for investors in Unilever is
that surely it is right to be optimistic about increasing wealth
around the world? And it is indisputable that Unilever is a
beneficiary of increasing wealth. Its sales in Asia – 44% of the total – grew by more than 6%
last year. Consumers in Europe may
be blasé about soap powder, but sales at Unilever’s Home Care
division were up over 4% last year, led by Sunlight (a 19th century
brand) in India and China. We were also reassured by the account
given to us by Unilever’s new chief executive, Alan Jope. He pointed out that when he joined
Unilever as a graduate over 30 years ago the Beauty and Personal
Care division accounted for only 8% of Unilever’s sales. Today it
is 40% and growing more quickly than the rest of the group. This is
an example of how big consumer companies can change over time,
responding to the changing tastes of consumers and helps explain
the longevity of these rare and very valuable companies like a
Nestle, P&G and Unilever.
This phenomenon of truly global brands increasing in value in
2019 – even as local/regional brands without the same economies of
scale struggle – can be seen in other key properties owned by
companies in FGIT. For instance, Diageo’s Tanqueray grew over 20%
last year, as the global gin boom rolls on. Johnnie Walker net sales were up 6% over the
same period too. Heineken’s eponymous brand – still the biggest
earner in the group – grew by 7.7% last year, its best rate for a
decade. Mondelez’ Oreo biscuits – the world’s #1 brand – grew high
single digits in the US, its biggest market and mid single digits
in its second biggest market, which is China. Meanwhile Cadbury (owned by Mondelez
and an important reason it is such a major holding in FGIT) grew
double digits in India. Remy’s
cognacs grew 15% year on year.
I know I’m cherry-picking statistics here and that all these
companies have portfolios of brands, for some of which trends may
not be so encouraging. But already here is a formidable
counter-argument to the proposition that big brands are necessarily
doomed in the 21st century. To the contrary, it seems to us there
is a decent argument that beloved and prestigious brands are more
valuable than ever before. That’s why IRN-BRU, Burberry’s iconic
check, Guinness, Tiger Beer, Toblerone, Cointreau and Magnum Ice
cream (to name some other great brands FGIT owns) still fill us
with enthusiasm. They certainly remain central to our hopes to
deliver satisfactory investment returns for FGIT shareholders.
Nick Train
Director
Lindsell Train Limited
Portfolio Manager
14 May 2019
Investment Portfolio
as at 31 March 2019
|
|
Market Value |
% of |
Investments |
Sector |
£'000 |
portfolio |
Diageo |
Consumer Goods |
166,283 |
10.5 |
Unilever |
Consumer Goods |
159,231 |
10.1 |
RELX |
Consumer Services |
151,218 |
9.6 |
Mondelez
International1 |
Consumer Goods |
135,060 |
8.6 |
London Stock Exchange Group |
Financials |
128,623 |
8.2 |
Hargreaves Lansdown |
Financials |
121,062 |
7.7 |
Burberry Group |
Consumer Goods |
120,104 |
7.6 |
Schroders* |
Financials |
112,290 |
7.1 |
Sage Group |
Technology |
100,261 |
6.4 |
Heineken2 |
Consumer Goods |
91,301 |
5.8 |
Top 10 Investments |
|
1,285,433 |
81.6 |
Remy Cointreau3 |
Consumer Goods |
55,740 |
3.5 |
Daily Mail & General Trust
(non-voting) |
Consumer Services |
55,354 |
3.5 |
Pearson |
Consumer Services |
37,228 |
2.4 |
A.G. Barr |
Consumer Goods |
34,891 |
2.2 |
Manchester United1 |
Consumer Services |
27,876 |
1.8 |
Rathbone Brothers |
Financials |
27,822 |
1.8 |
Lindsell Train Investment Trust
plc |
Financials |
14,750 |
0.9 |
Euromoney Institutional
Investor |
Consumer Services |
11,830 |
0.7 |
Young & Co Brewery (non
voting) |
Consumer Services |
11,025 |
0.7 |
Fuller Smith & Turner |
Consumer Services |
7,875 |
0.5 |
Top 20 Investments |
|
1,569,824 |
99.6 |
Celtic** |
Consumer Services |
5,544 |
0.3 |
Frostrow Capital LLP4
*** |
Financials |
1,885 |
0.1 |
Total Investments |
|
1,577,253 |
100.0 |
All of the above investments are equities listed in the UK,
unless otherwise stated.
1 Listed in the United
States.
2 Listed in the
Netherlands.
3 Listed in France.
4 Unquoted partnership interest.
* Includes Schroders (non-voting) shares, fair value
£8,421,000.
** Includes Celtic 6% cumulative convertible preference shares,
fair value £294,000.
*** Includes Frostrow Capital LLP AIFM capital contribution,
fair value £550,000.
Comparison of Sector Weightings with the FTSE All-Share
Index
as at 31 March 2019
|
Finsbury Growth &
Income |
FTSE All-Share* |
Finsbury Growth
& Income (under)/overweight |
Sector |
% |
% |
% |
Consumer Goods |
48.3 |
14.6 |
33.7 |
Consumer Services |
19.5 |
11.5 |
8.0 |
Financials |
25.8 |
25.7 |
0.1 |
Technology |
6.4 |
1.1 |
5.3 |
Oil & Gas |
– |
14.2 |
(14.2) |
Basic Materials |
– |
8.1 |
(8.1) |
Industrials |
– |
11.0 |
(11.0) |
Telecommunications |
– |
2.7 |
(2.7) |
Utilities |
– |
2.8 |
(2.8) |
Health Care |
– |
8.3 |
(8.3) |
Total |
100.0 |
100.0 |
0.0 |
* Source: FTSE International Limited (“FTSE”) © FTSE 2019
Income Statement
For the six months ended 31 March
2019
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
Six months
ended 31 March 2019 |
Six months
ended 31 March 2018 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Gains on investments at fair value
through profit or loss |
– |
38,642 |
38,642 |
– |
19,006 |
19,006 |
Currency translations |
– |
(60) |
(60) |
– |
(35) |
(35) |
Income (note 2) |
13,145 |
– |
13,145 |
9,973 |
– |
9,973 |
AIFM and Portfolio Management
fees
(note 3) |
(1,354) |
(2,748) |
(4,102) |
(1,193) |
(2,423) |
(3,616) |
Other expenses |
(583) |
– |
(583) |
(498) |
– |
(498) |
Return on ordinary activities
before finance charges and taxation |
11,208 |
35,834 |
47,042 |
8,282 |
16,548 |
24,830 |
Finance charges |
(137) |
(279) |
(416) |
(112) |
(227) |
(339) |
Return on ordinary activities
before taxation |
11,071 |
35,555 |
46,626 |
8,170 |
16,321 |
24,491 |
Taxation on ordinary activities |
(209) |
– |
(209) |
(149) |
– |
(149) |
Return on ordinary
activities after taxation |
10,862 |
35,555 |
46,417 |
8,021 |
16,321 |
24,342 |
Return per share - basic and
diluted (note 4) |
6.0p |
19.8p |
25.8p |
5.0p |
10.0p |
15.0p |
The “Total” column of this statement represents the Company’s
profit and loss account. The “Revenue” and “Capital” columns are
supplementary to this and are prepared under guidance published by
The Association of Investment Companies (“AIC”).
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.
There is no material difference between the net return on
ordinary activities before taxation and the net return on ordinary
activities after taxation stated above and their historical cost
equivalents.
Statement of Changes in Equity
for the six months ended 31 March
2019
|
Called up |
Share |
Capital |
|
|
|
Total |
(Unaudited)
Six months ended 31 March 2019 |
share |
premium |
redemption |
Special |
Capital |
Revenue |
shareholders |
capital |
account |
reserve |
reserve |
reserve |
reserve |
funds |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
At 30 September 2018 |
43,423 |
684,726 |
3,453 |
– |
643,037 |
37,151 |
1,411,790 |
Net return from ordinary
activities |
– |
– |
– |
– |
35,555 |
10,862 |
46,417 |
Reclassification of the special
dividend received from
Dr. Pepper Snapple* |
– |
– |
– |
– |
(2,499) |
2,499 |
– |
Second interim dividend (8.1p per
share) for the year ended 30 September 2018 |
– |
– |
– |
– |
– |
(14,077) |
(14,077) |
Issue of shares |
3,609 |
109,214 |
– |
– |
– |
– |
112,823 |
At 31 March 2019 |
47,032 |
793,940 |
3,453 |
– |
676,093 |
36,435 |
1,556,953 |
* Dr Pepper Snapple paid a special dividend in July 2018. At that time it was treated as being
capital in nature. During the six month period, Dr Pepper Snapple
clarified that 28.4% of this dividend should be regarded as
revenue. Accordingly £2,499,000 of the special dividend has been
transferred from the Company’s capital reserve to the revenue
reserve.
(Unaudited) |
|
|
|
|
|
|
|
Six months ended 31 March 2018 |
|
|
|
|
|
|
|
At 30 September 2017 |
39,724 |
572,791 |
3,453 |
12,424 |
515,039 |
20,990 |
1,164,421 |
Net return from ordinary
activities |
– |
– |
– |
– |
16,321 |
8,021 |
24,342 |
Second interim dividend (7.4p per
share) for the year ended
30 September 2017 |
– |
– |
– |
– |
– |
(11,786) |
(11,786) |
Issue of shares |
1,688 |
48,904 |
– |
– |
– |
– |
50,592 |
At 31 March 2018 |
41,412 |
621,695 |
3,453 |
12,424 |
531,360 |
17,225 |
1,227,569 |
Statement of Financial Position
as at 31 March 2019
|
(Unaudited) |
(Audited) |
|
31 March |
30 September |
|
2019 |
2018 |
|
£’000 |
£’000 |
Fixed assets |
|
|
Investments designated at fair value
through profit or loss (note 1) |
1,577,253 |
1,431,672 |
Current assets |
|
|
Debtors |
6,576 |
4,886 |
Cash and cash equivalents |
12,245 |
13,175 |
|
18,821 |
18,061 |
Current liabilities |
|
|
Creditors: amounts falling due
within one year |
(2,421) |
(1,243) |
Bank loan |
(36,700) |
– |
|
(39,121) |
(1,243) |
Net current
(liabilities)/assets |
(20,300) |
16,818 |
Total assets less current
liabilities |
1,556,953 |
1,448,490 |
Creditors: amounts falling due
after one year |
|
|
Bank loan |
– |
(36,700) |
Net assets |
1,556,953 |
1,411,790 |
Capital and reserves |
|
|
Called up share capital |
47,032 |
43,423 |
Share premium account |
793,940 |
684,726 |
Capital redemption reserve |
3,453 |
3,453 |
Capital reserve |
676,093 |
643,037 |
Revenue reserve |
36,435 |
37,151 |
Total shareholders’
funds |
1,556,953 |
1,411,790 |
Net asset value per share – basic
and diluted (note 5) |
827.6p |
812.8p |
Statement of Cash Flows
for the six months ended 31 March
2019
|
(Unaudited)
31 March
2019
£’000 |
(Unaudited)
31 March
2018
£’000 |
Net cash inflow from operating
activities before interest (note 7) |
7,610 |
6,147 |
Interest paid |
(400) |
(337) |
Net cash inflow from operating
activities |
7,210 |
5,810 |
Investing activities |
|
|
Purchase of investments |
(111,378) |
(49,294) |
Sale of investments |
5,584 |
3,607 |
Net cash outflow from investing
activities |
(105,794) |
(45,687) |
Financing activities |
|
|
Equity dividends paid |
(14,077) |
(11,786) |
Shares issued |
111,791 |
50,036 |
Net cash inflow from financing
activities |
97,714 |
38,250 |
Decrease in cash and cash
equivalents |
(870) |
(1,627) |
Currency translations |
(60) |
(35) |
Cash and cash equivalents at 1
October |
13,175 |
11,482 |
Cash and cash equivalents at 31
March |
12,245 |
9,820 |
Notes to the Financial Statements
1. Basis of preparation
The condensed Financial Statements for the six months to
31 March 2019 have been prepared
under the historical cost convention, modified to include the
revaluation of investments and in accordance with FRS 104 ‘Interim
Financial Reporting’ and with the AIC’s Statement of Recommended
Practice (“the SORP”) for Investment Trust Companies and Venture
Capital Trusts issued in November
2014 and updated in January
2017 and February 2018 with
consequential amendments, and the Companies Act 2006.
The accounting policies used for the year ended 30 September 2018 have been applied.
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:
As at 31 March 2019
|
Level 1 |
Level 2 |
Level 3 |
|
|
£’000 |
£’000 |
£’000 |
Total |
Equity investments |
1,555,074 |
– |
– |
1,555,074 |
Limited liability partnership
interest (Frostrow Capital LLP) |
– |
– |
1,335 |
1,335 |
AIFM Capital contribution (Frostrow
Capital LLP) |
– |
– |
550 |
550 |
Preference shares investment |
294 |
– |
– |
294 |
|
1,555,368 |
– |
1,885 |
1,557,253 |
As at 30 September 2018
|
Level 1 |
Level 2 |
Level 3 |
|
|
£’000 |
£’000 |
£’000 |
Total |
Equity investments |
1,429,520 |
– |
– |
1,429,520 |
Limited liability partnership
interest (Frostrow Capital LLP) |
– |
– |
1,335 |
1,335 |
AIFM Capital contribution (Frostrow
Capital LLP) |
– |
– |
550 |
550 |
Preference shares investment |
267 |
– |
– |
267 |
|
1,429,787 |
– |
1,885 |
1,431,672 |
2. Income
|
(Unaudited) |
(Unaudited) |
|
Six months ended |
Six months ended |
|
31 March 2019 |
31 March 2018 |
|
£’000 |
£’000 |
Income from investments |
|
|
Franked investment income |
|
|
– dividends |
11,593 |
8,781 |
Unfranked investment income |
|
|
– overseas dividends |
1,527 |
1,171 |
– limited liability partnership –
priority profit-share on AIFM Capital Contribution |
25 |
21 |
Total income |
13,145 |
9,973 |
3. AIFM and Portfolio Management fees
|
(Unaudited) |
(Unaudited) |
|
Six months ended |
Six months ended |
|
31 March 2019 |
31 March 2018 |
|
£’000 |
£’000 |
AIFM fee |
1,026 |
904 |
Portfolio management fee |
3,076 |
2,712 |
Total fees |
4,102 |
3,616 |
4. Return per share - basic and diluted
The total return per share is based on the total return
attributable to equity shareholders of £46,417,000 (six months
ended 31 March 2018: return of
£24,342,000) and on 179,928,909 shares (six months ended
31 March 2018: 162,609,813), being
the weighted average number of shares in issue during the
period.
Revenue return per share is calculated by dividing the net
revenue return of £10,862,000 (six months ended 31 March 2018: return of £8,021,000) by the
weighted average number of shares in issue as above.
The capital return per share is calculated by dividing the net
capital return attributable to shareholders of £35,555,000, (six
months ended 31 March 2018: return of
£16,321,000) by the weighted average number of shares in issue as
above.
During the period there were no dilutive instruments held,
therefore the basic and diluted returns per share are the same.
5. Net asset value per share - basic and diluted
The net asset value per share is based on net assets
attributable to shares of £1,556,953,000 (30
September 2018: £1,411,790,000) and on 188,126,712 shares in
issue (30 September 2018:
173,691,712).
At 31 March 2019 there were no
dilutive instruments held, therefore the basic and diluted net
asset value per share are the same.
6. Transaction costs
Purchase transaction costs for the six months ended 31 March 2019 were £548,000 (six months ended
31 March 2018: £247,000). These
comprise of stamp duty costs of £498,000 (31
March 2018: £221,000) and commission of £50,000
(31 March 2018: £26,000).
Sales transaction costs for the six months ended 31 March 2019 were £1,000 (six months ended
31 March 2018: £2,000. These comprise solely of
commission.
These transaction costs are included within the gains 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 ended |
Six months ended |
|
31 March 2019 |
31 March 2018 |
|
£’000 |
£’000 |
Total return before finance charges
and taxation |
47,042 |
24,830 |
Less: capital return before finance
charges and taxation |
(35,834) |
(16,548) |
Net revenue before finance costs and
taxation |
11,208 |
8,282 |
Increase/(decrease) in accrued
income and prepayments |
(687) |
679 |
Increase/(decrease) in
creditors |
33 |
(21) |
Taxation – irrecoverable overseas
tax paid |
(196) |
(370) |
AIFM and Portfolio management fees
charged to capital |
(2,748) |
(2,423) |
Net cash inflow from operating
activities |
7,610 |
6,147 |
8. 2018 accounts
The figures and financial information for the year to
30 September 2018 are extracted from
the latest published accounts of the Company and do not constitute
statutory accounts for the year.
Those accounts have been delivered to the Registrar of Companies
and included the Report of the Auditor which was unqualified and
did not contain a reference to any matters to which the Auditor
drew attention by way of emphasis without qualifying the report,
and did not contain a statement under section 498 of the Companies
Act 2006.
Governance/Interim Management Report
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company were
explained in detail within the Annual Report for the year ended
30 September 2018. The Directors are
not aware of any significant new risks or uncertainties and in the
view of the Board these principal risks and uncertainties are
applicable to the remaining six months of the financial year as
they were to the six months under review.
The Company acknowledges the continued uncertainty surrounding
the UK’s decision to leave the EU.
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.
Going Concern
The Directors, having made relevant enquiries, are satisfied
that it is appropriate to prepare financial statements on the going
concern basis as the net assets of the Company consist primarily of
liquid securities, all of which, with the exception of the
partnership interest in Frostrow Capital LLP, are traded on
recognised stock exchanges. In preparing the financial statements
as the Company has adequate resources to continue in operational
existence for the foreseeable future. In reviewing the position as
at the date of this report, the Board has considered the guidance
on this matter issued by the Financial Reporting Council.
Directors’ Responsibility Statement
The Directors confirm that, to the best of their knowledge:
(i) the condensed set of financial statements
contained within the Half Year Report has been prepared in
accordance with applicable accounting standards;
(ii) the Interim Management Report includes a fair review
of the information required by Disclosure Guidance and Transparency
Rule 4.2.7R (an indication of important events that have occurred
during the first six months of the financial year and a description
of the principal risks and uncertainties for the remaining six
months of the financial year); and
(iii) the Interim Management Report includes a fair review of
the information required by Disclosure Guidance and Transparency
Rule 4.2.8R (disclosure of related party transactions and changes
therein).
In order to provide these confirmations, and in preparing these
financial statements, the Directors are required to:
• select suitable accounting policies
and then apply them consistently;
• make judgements and accounting
estimates that are reasonable and prudent;
• state whether applicable UK Accounting
Standards have been followed, subject to any material departures
disclosed and explained in the financial statements; and
• prepare the financial statements on
the going concern basis unless it is inappropriate to presume that
the Company will continue in business;
and the Directors confirm that they have done so.
The Half Year Report has not been reviewed or audited by the
Company’s Auditor.
The Half Year Report was approved by the Board on 14 May 2019 and the above responsibility
statement was signed on its behalf by:
Anthony
Townsend
Chairman
Glossary of Terms and Alternative
Performance Measures (‘APM’)
AIC
The Association of Investment Companies.
Alternative Investment Fund Managers Directive (AIFMD)
The Alternative Investment Fund Manager Directive (the
“Directive”) is a European Union Directive that entered into force
on 22 July 2013. The Directive
regulates EU fund managers that manage alternative investment funds
(this includes investment trusts).
Alternative Performance Measure (APM)
An APM 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 in an investment trust such
as the Company.
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.
|
|
As at |
As at 30 |
|
|
31 March 2019 |
September 2018 |
Share Price (p) |
|
829.0 |
818.0 |
Net Asset value per share (p) |
|
827.6 |
812.8 |
Premium of share price to net asset
value per share |
|
0.2% |
0.6% |
FTSE Disclaimer
“FTSE©” is a trade mark of the London Stock Exchange Group
companies and is used by FTSE International Limited under licence.
All rights in the FTSE indices and/or FTSE ratings vest in FTSE
and/or its licensors. Neither FTSE nor its licensors accept any
liability for any errors or omissions in the FTSE indices and/or
FTSE ratings or underlying data. No further distributions of FTSE
Data is permitted without FTSE’s express written consent.
Gearing (APM)
Gearing represents prior charges, adjusted for net current
assets expressed as a percentage of net assets. Prior charges
includes all loans and bank overdrafts for investment purposes.
|
|
31 March |
30 September |
|
|
2019 |
2018 |
|
|
£’000 |
£’000 |
Prior Carges
|
|
- |
(36,700) |
Net Current Assets |
|
16,400 |
16,818 |
Net Debt |
|
(20,300) |
(19,882) |
Net Assets |
|
1,556,953 |
1,411,790 |
Gearing |
|
1.3% |
1.4% |
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’ per share. The NAV
is often expressed in pence per share after being divided by the
number of shares which 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 (APM)
The 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.
|
|
31 March |
30 September |
NAV Total Return |
|
2019 |
2018 |
Opening NAV per share (p) |
|
812.8 |
732.8 |
Increase in NAV per share (p) |
|
14.8 |
80.0 |
Closing NAV per share (p) |
|
827.6 |
812.8 |
% Increase in NAV |
|
1.8% |
10.9% |
Impact of dividends
re-invested* |
|
1.1% |
2.2% |
NAV per share total return (p) |
|
2.9% |
13.1% |
* Total dividends paid during the period of 8.1p (14.60p paid
during the 2018 financial year) were re-invested at the cum
dividend NAV price during the period. Where the dividend is
invested and NAV price falls, this will further reduce the return,
if it rises, any increase would be greater. The source is
Morningstar who have 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.
|
|
As at |
As at 30 |
|
|
31 March 2019 |
September 2018 |
|
|
£’000 |
£’000 |
Operating Expenses |
|
9,638* |
8,670 |
Average Net Assets during the
period/year |
|
1,392,688 |
1,291,632 |
Ongoing Charges |
|
0.7% |
0.7% |
* Estimated expenses for the year ending 30 September 2019, as at 31 March 2019.
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.
|
|
31 March |
30 September |
Share Price Total Return |
|
2019 |
2018 |
Opening share price (p) |
|
818.0 |
736.5 |
Increase in share price (p) |
|
11.0 |
81.5 |
Closing share price (p) |
|
829.0 |
818.0 |
% Increase in share price |
|
1.3% |
11.1% |
Impact of dividends
re-invested* |
|
1.1% |
2.1% |
Share price total return (p) |
|
2.4% |
13.2% |
* Total dividends paid during the period of 8.1p (14.60p paid
during the 2018 financial year) were re?invested at the cum
dividend NAV/share price during the period. Where the dividend is
invested and NAV/share price falls, this will further reduce the
return, if it rises, any increase would be greater. The source is
Morningstar who have calculated the return on an industry
comparative basis.
- END-
Victoria Hale
Frostrow Capital LLP
Company Secretary – 0203 170 8732
14 May 2019