Legal Entity Identifier: 213800NN42KX2LG1GQ40
7 May 2021
LONDON STOCK EXCHANGE ANNOUNCEMENT
Finsbury Growth
& Income Trust PLC
Unaudited Half
Year Results For The Six Months Ended
31 March 2021
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 2021. 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 2021 has been
submitted to the UK Listing Authority, and will shortly be
available for inspection on the National Storage Mechanism (NSM):
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
FINANCIAL HIGHLIGHTS
|
AS AT
31 MARCH |
AS AT
30 SEPTEMBER |
% |
|
2021 |
2020 |
CHANGE |
Share price |
862.0p |
840.0p |
2.6 |
Net asset value per share |
856.0p |
846.2p |
1.2 |
Premium/(discount) of share price to
net asset value per share^ |
0.7% |
(0.7)% |
|
Gearing1^ |
0.9% |
0.5% |
|
Shareholders’ funds |
£1,915.9m |
£1,842.5m |
4.0 |
Number of shares in issue |
223,821,303 |
217,751,303 |
2.8 |
|
SIX MONTHS TO
31 MARCH |
ONE YEAR TO 30
SEPTEMBER |
|
|
2021 |
2020 |
|
Share price (total
return)2^ |
+3.7% |
-9.0% |
|
Net asset value per share (total
return)2^ |
+2.2% |
-7.7% |
|
FTSE All-Share Index (total
return2 3) (Company benchmark) |
+18.5% |
-16.6% |
|
Active Share %1 2 |
86.28% |
87.05% |
|
Ongoing charges1^ |
0.6% |
0.6% |
|
|
YEAR ENDING
30 SEPTEMBER |
YEAR ENDED
30 SEPTEMBER |
|
|
2021 |
2020 |
|
First interim dividend |
8.0p |
8.0p |
|
Second interim dividend |
Yet to be
declared |
8.6p |
|
1 See glossary
2 Source – Morningstar
3 Source – FTSE International Limited (“FTSE”) © FTSE
2021
^ Alternative Performance Measures (“APMs”).
Definitions of the APMs together with how the measures have been
calculated can be found in the Glossary.
REVIEWS
CHAIRMAN’S STATEMENT
I am pleased to present my first report as Chairman following
the retirement of Anthony Townsend
from the Board in February 2021.
My Board colleagues and I would like
to thank Anthony for his 22 years of service to the Company, 13 of
them as Chairman. I know that he was particularly sorry not
to be able to say farewell to shareholders in person at the Annual
General Meeting owing to pandemic-related restrictions and we wish
him well for the future.
PERFORMANCE
It is disappointing to have to report that the Company has
underperformed its benchmark. The Company’s net asset value per
share^ over the period under review was up 2.2% on a total return
basis which compares with a return of 18.5% from the Company’s
benchmark, the FTSE All-Share Index. The share price total return
was slightly higher at 3.7% reflecting the move in the share price
over the period from a small discount to the net asset value to a
small premium. The total return for the period was £40.5m
compared with a loss of £358.0m for the corresponding period last
year which reflected significant market uncertainty at the early
stages of the COVID-19 global health crisis.
Our Portfolio Manager’s investment approach involves building a
concentrated portfolio of companies that have strong brands and/or
powerful market franchises. This concentrated approach results in a
very different portfolio when compared with the constituents of the
Company’s benchmark, the FTSE All-Share Index, and demonstrates a
high level of active management. The extent to which a
portfolio is actively managed can be quantified and expressed as a
percentage (“Active Share”)*. At 31
March 2021, the Company's Active Share versus the FTSE
All-Share Index was 86.28%. Such an uncorrelated portfolio
will inevitably perform very differently from its benchmark
(positively or negatively) over different periods of
time.
The performance over the six month period is driven in the main
by a difficult 2021 to date for a number of key holdings in the
portfolio. Holdings (such as Unilever) that performed well during
calendar year 2020 due to their defensive nature and which were
responsible for the portfolio’s outperformance last year have
significantly lagged in 2021 to date. In addition, the share prices
of a number of holdings have performed poorly in recent months due
to what is hoped are short term issues within those businesses. Our
Portfolio Manager’s report provides more context and detail.
SHARE CAPITAL
Continued demand for the Company’s shares has led to the issue
of a total of 6,070,000 new shares in this half year, raising £51.6
million. As at 31 March 2021 the
Company had 223,821,303 shares of 25p each in issue (31 March 2020: 211,146,303).
Since 1 April 2021 to the date of
this report, a further 1,075,000 new shares have been issued
raising £9.7 million. As at 6 May
2021, the Company had 224,896,303 shares in issue.
DIVIDEND
The Board declared an unchanged first interim dividend of 8.0p
per share with respect to the year ending 30
September 2021. That dividend will be paid on Friday,
14 May 2021 to shareholders who were
on the register on Tuesday, 6 April
2021. The associated ex-dividend date was Thursday,
1 April 2021.
The Board expects to declare the second dividend for the year
ending 30 September 2021 in the
Autumn.
OUTLOOK
This year continues to be dominated by the impact of the
COVID-19 pandemic and of the consequential government
measures seeking to bring the virus under control.
Our Portfolio Manager believes that the continued strategy of
investing in digital products and services, luxury and premium
consumer brands and trusted wealth management services is a sound
basis for strong performance over the next decade and beyond. Your
Board supports this view and continues to believe that shareholders
with a long term outlook will be well rewarded.
Simon Hayes
Chairman
7 May 2021
^ Alternative Performance Measure (see glossary).
*Please see glossary.
PORTFOLIO MANAGER'S REVIEW
I am reporting to you on investment performance for the first
six months of your Company’s financial year, from end September 2020 to March
2021 and I acknowledge and apologise for the disappointing
return relative to our benchmark, the FTSE All-Share Index
(“All-Share”), over that period. The Company’s NAV total return was
up 2.2% over the last six months, compared to the All-Share 18.5%.
Nonetheless, I hope you will allow me to put this recent
performance in the context of what happened during the whole of
calendar 2020. When you look at that twelve month period to end
December 2020 the NAV total return
for your Company was down 2.0%, while the All-Share lost 9.8%.
It is clear, therefore, that the Company’s portfolio was
“defensive” and resilient during the worst of the crisis of 2020 -
given the NAV outperformed a weak UK stock market over the year. Of
course, we were pleased about this, because we have always looked
for predictability, reliability and durability when we choose
companies to invest in. They are the ones that should hold up well
in a crisis. When you look at the list of companies that make up
the portfolio you will recognise many long-established businesses,
owning brands or franchises that have stood the test of time.
Unilever, Diageo, London Stock Exchange, RELX, Mondelez, Schroders
and Heineken are examples among the big company holdings.
When asked to describe our investment approach in a nutshell, I
often say: “Big positions in intrinsically low risk companies”. And
when I look back on 2020 as a whole I think that investment
approach showed its worth.
However, there is no getting away from the fact that once the
vaccines were announced in November
2020 and citizens and investors began to see a path out of
the lockdowns your portfolio started to lag its benchmark and this
underperformance continued through the first three months of 2021.
There are a number of reasons, but the most obvious is this:
because the portfolio did not fall as much during the difficult
times, there was less scope for a bounce once confidence
recovered.
One way to illustrate what has happened is to consider the
performance of Unilever’s share price. During 2020 Unilever’s
business held up reasonably well – selling staple food, hygiene,
and personal care products all around the world. As a result,
Unilever’s share price was something of a safe haven in the context
of the UK stock market, actually delivering a modest capital gain
in 2020. During the first quarter of 2021, though, Unilever’s share
price has fallen 7%, while the UK stock market is up over 5%.
Suddenly its “defensive” qualities seem unattractive, when there
are “recovery” stories to chase elsewhere. Looking at other dull
performers in your portfolio during the first quarter of 2021
confirms this analysis. Heineken, Mondelez and even Fever-Tree all
fell: their drinks and chocolate joining Unilever’s soap and
ice-cream in being out of favour with investors. These products
just do not seem exciting investment propositions – at least for
now. Of course, a look at the longer-term share price performance
of these companies is a useful reminder that the sort of steady,
predictable growth they offer is very valuable. All the holdings
mentioned in this paragraph have done well for your portfolio over
time and we hope will do so again. For instance, we think it
significant that Unilever chose to increase its fourth and final
quarterly dividend for 2020 by 8%, having held the previous three
unchanged. Unilever cited a recent strong recovery in its sales in
China and India as the justification for the dividend
hike and if such sales trends continue we expect Unilever’s
business growth and share price will improve.
But there were other factors impinging on the Company’s
investment returns during the first quarter of 2021. The truth is
several of our holdings are working through issues that have put a
dampener on their share prices– temporary issues, we hope.
For instance, the portfolio was hit during the first quarter of
2021 by a 20% fall in the value of the biggest holding – the London
Stock Exchange. To be fair, LSE did well as a business and share in
2020. Indeed, it hit an all-time high in mid?February 2021, as investors cheered the eventual
closing of its acquisition of Refinitiv. But travelling was better
than arriving and the LSE’s confirmation of heavy integration costs
prompted what turned into a bout of profit taking. We still believe
the new LSE Group will be a formidably profitable, growing and
increasingly valuable business.
Elsewhere, we hoped Burberry would have a better year in 2021
after a difficult 2020 and this still seems possible. But recently
Burberry’s share price has been buffeted by geopolitics. Rising
trade tensions between China and
the West put luxury companies like Burberry in an uncomfortable
position – given the importance of Chinese consumers for them.
We also looked to RELX doing better as a share price in 2021
-given that 90% of its business is made up of growing digital
products and services, but the shares remain flat to the end of the
first quarter. This is largely because there are still few signs
the other 10% of its business – its Exhibitions and Conference
division – will soon return to former profitability.
We have had to be patient with our investment in Sage, as the
company sacrifices short-term profitability to invest in its cloud
software services. We think there are signs Sage’s investment is
paying off, but other investors evidently need more certainty.
Hargreaves Lansdown continues to trade well as a business –
reporting record assets and customer numbers, and rising profits.
But the shares remain close to lows of recent years, as share sales
by its founders and the Woodford debacle keep investors
cautious.
Even though sales at AG Barr, Diageo, Fever-Tree, Heineken and
Remy held up quite well in 2020, there is no escaping the fact that
every week bars and clubs remain closed in 2021, particularly
across Europe, is another week of
lost high profit margin revenue for beverage companies. We must
hope that as the Spring and Summer sun begins to shine and party
spirits revive their share prices will push on.
In short, as you can tell, there has been a lot for me and other
shareholders to feel frustrated about over the last six months. It
is an uncomfortable feeling when parts of the market we are not
invested in are doing well. Or when longstanding and previously
successful holdings are hit by profit-taking or their shares simply
tread water. All investors will experience periods like this and
during them it is important to understand what is causing the
underperformance and then to judge whether change is required in a
portfolio to improve its prospects.
In this case I do not believe change is required, or at most
only marginal change. This is because your portfolio has been
constructed to participate in what we expect will be three of the
big money-making opportunities of the next decade and longer. Those
three opportunities are Digital Products and Services, Luxury and
Premium Consumer Brands and trusted Wealth Management Services.
Digital technology is creating new wealth and that wealth will
either be spent on aspirational products or be saved and reinvested
into the markets. When I look at the Company’s portfolio today I
believe most of it is made up of companies that offer access to
those opportunities, from the LSE and RELX, via Burberry and
Diageo, to Hargreaves Lansdown and Schroders. If that is right,
then our recent period of disappointing performance should prove
temporary.
Nick
Train
Director
Lindsell Train Limited
Portfolio Manager
7 May 2021
INVESTMENT PORTFOLIO
as at 31 March 2021
INVESTMENTS |
SECTOR |
FAIR VALUE
£’000 |
% OF
INVESTMENTS |
Diageo |
Consumer Goods |
203,929 |
10.5 |
RELX |
Consumer Services |
194,669 |
10.1 |
Unilever |
Consumer Goods |
172,502 |
8.9 |
London Stock Exchange Group |
Financials |
166,512 |
8.6 |
Mondelez International
1 |
Consumer Goods |
164,980 |
8.5 |
Schroders * |
Financials |
163,640 |
8.5 |
Burberry Group |
Consumer Goods |
152,146 |
7.9 |
Hargreaves Lansdown |
Financials |
118,156 |
6.1 |
Sage Group |
Technology |
100,987 |
5.2 |
Heineken 2 |
Consumer Goods |
97,244 |
5.0 |
Top 10 Investments |
|
1,534,765 |
79.3 |
Remy Cointreau 3 |
Consumer Goods |
94,387 |
4.9 |
Daily Mail & General Trust
(non-voting) |
Consumer Services |
51,450 |
2.7 |
Experian Group |
Industrials |
38,167 |
2.0 |
Pearson |
Consumer Services |
36,126 |
1.9 |
Fever-Tree Drinks |
Consumer Goods |
31,967 |
1.7 |
Euromoney Institutional
Investor |
Consumer Services |
26,516 |
1.4 |
Manchester United 1 |
Consumer Services |
25,954 |
1.3 |
Rathbone Brothers |
Financials |
24,402 |
1.3 |
A.G. Barr |
Consumer Goods |
21,952 |
1.1 |
Lindsell Train Investment Trust
plc |
Financials |
14,200 |
0.7 |
Top 20 Investments |
|
1,899,886 |
98.3 |
PZ Cussons |
Consumer Goods |
9,765 |
0.5 |
Young & Co Brewery (non
voting) |
Consumer Services |
9,240 |
0.5 |
Fuller Smith & Turner |
Consumer Services |
6,020 |
0.3 |
Frostrow Capital LLP 4
** |
Financials |
5,100 |
0.2 |
Celtic *** |
Consumer Services |
3,815 |
0.2 |
Total Investments |
|
1,933,826 |
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.
* Includes Schroder (non-voting) shares, fair value
£11,180,000.
** Includes Frostrow Capital AIFM Investment, fair value
£800,000.
*** Includes Celtic 6% cumulative convertible preference shares,
fair value £239,000.
FINANCIAL STATEMENTS
INCOME STATEMENT
for the six months ended 31 March
2021
|
(UNAUDITED) |
(UNAUDITED) |
|
SIX MONTHS ENDED
31 MARCH 2021 |
SIX MONTHS ENDED
31 MARCH 2020 |
|
REVENUE |
CAPITAL |
TOTAL |
REVENUE |
CAPITAL |
TOTAL |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Gains/(losses) on
investments at fair value through profit or loss |
– |
31,000 |
31,000 |
– |
(367,580) |
(367,580) |
Currency
translations |
– |
(20) |
(20) |
– |
(40) |
(40) |
Income (note 2) |
15,873 |
– |
15,873 |
16,035 |
– |
16,035 |
AIFM and Portfolio
Management fees (note 3) |
(1,794) |
(3,643) |
(5,437) |
(1,697) |
(3,446) |
(5,143) |
Other expenses |
(482) |
– |
(482) |
(650) |
(20) |
(670) |
Return/(loss) on
ordinary activities before finance charges and
taxation |
13,597 |
27,337 |
40,934 |
13,688 |
(371,086) |
(357,398) |
Finance charges |
(67) |
(135) |
(202) |
(111) |
(226) |
(337) |
Return/(loss) on
ordinary activities before taxation |
13,530 |
27,202 |
40,732 |
13,577 |
(371,312) |
(357,735) |
Taxation on ordinary
activities |
(265) |
– |
(265) |
(252) |
– |
(252) |
Return/(loss) on
ordinary activities after taxation |
13,265 |
27,202 |
40,467 |
13,325 |
(371,312) |
(357,987) |
Return/(loss) per
share – basic and diluted (note 4) |
6.0p |
12.2p |
18.2p |
6.5p |
(180.9)p |
(174.4)p |
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 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/(loss) on
ordinary activities before taxation and the net return/(loss) on
ordinary activities after taxation stated above and their
historical cost equivalents.
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 March
2021
(Unaudited)
Six months ended
31 March 2021 |
CALLED UP
SHARE
CAPITAL |
SHARE
PREMIUM
ACCOUNT |
CAPITAL
REDEMPTION
RESERVE |
CAPITAL
RESERVE |
REVENUE
RESERVE |
TOTAL
SHAREHOLDERS
FUNDS |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
At 1 October 2020 |
54,438 |
1,039,510 |
3,453 |
699,693 |
45,436 |
1,842,530 |
Net return from ordinary
activities |
– |
– |
– |
27,202 |
13,265 |
40,467 |
Second interim dividend (8.6p per
share) for the year ended 30 September 2020 |
– |
– |
– |
– |
(18,727) |
(18,727) |
Issue of shares |
1,517 |
50,067 |
– |
– |
– |
51,584 |
At 31 March 2021 |
55,955 |
1,089,577 |
3,453 |
726,895 |
39,974 |
1,915,854 |
(Unaudited)
Six months ended
31 March 2020 |
CALLED UP
SHARE
CAPITAL |
SHARE
PREMIUM
ACCOUNT |
CAPITAL
REDEMPTION
RESERVE |
CAPITAL
RESERVE |
REVENUE
RESERVE |
TOTAL
SHAREHOLDERS
FUNDS |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
At 30 September 2019 |
50,203 |
904,320 |
3,453 |
875,981 |
44,803 |
1,878,760 |
Net (loss)/return from ordinary
activities |
– |
– |
– |
(371,312) |
13,325 |
(357,987) |
Second interim dividend (8.6p per
share) for the year ended 30 September 2019 |
– |
– |
– |
– |
(17,297) |
(17,297) |
Issue of shares |
2,584 |
84,744 |
– |
– |
– |
87,328 |
Repurchase of Shares into
treasury |
– |
– |
– |
(3,394) |
– |
(3,394) |
Sale of Shares from treasury |
– |
90 |
– |
3,368 |
– |
3,458 |
At 31 March 2020 |
52,787 |
989,154 |
3,453 |
504,643 |
40,831 |
1,590,868 |
STATEMENT OF FINANCIAL POSITION
as at 31 March 2021
|
(UNAUDITED)
31 MARCH
2021
£’000 |
(AUDITED)
30 SEPTEMBER
2020
£’000 |
Fixed assets |
|
|
Investments designated at fair value
through profit or loss (note 1) |
1,933,826 |
1,851,588 |
Current assets |
|
|
Debtors |
7,685 |
8,277 |
Cash and cash equivalents |
12,207 |
20,440 |
|
19,892 |
28,717 |
Current liabilities |
|
|
Creditors: amounts falling due
within one year |
(1,164) |
(1,075) |
Net current
assets |
18,728 |
27,642 |
Total assets less current
liabilities |
1,952,554 |
1,879,230 |
Creditors: amounts falling due
after one year |
|
|
Bank loan |
(36,700) |
(36,700) |
Net assets |
1,915,854 |
1,842,530 |
Capital and reserves |
|
|
Called up share capital |
55,955 |
54,438 |
Share premium account |
1,089,577 |
1,039,510 |
Capital redemption reserve |
3,453 |
3,453 |
Capital reserve |
726,895 |
699,693 |
Revenue reserve |
39,974 |
45,436 |
Total shareholders’
funds |
1,915,854 |
1,842,530 |
Net asset value per share – (note 5) |
856.0p |
846.2p |
STATEMENT OF CASH FLOWS
for the six months ended 31 March
2021
|
(UNAUDITED)
31 MARCH
2021 |
(UNAUDITED)
31 MARCH
2020 |
|
£’000 |
£’000 |
Net cash inflow from operating
activities before interest (note 7) |
10,319 |
8,468 |
Interest paid |
(151) |
(507) |
Net cash inflow from operating
activities |
10,168 |
7,961 |
Investing activities |
|
|
Purchase of investments |
(55,894) |
(88,771) |
Sale of investments |
4,656 |
1,132 |
Net cash outflow from investing
activities |
(51,238) |
(87,639) |
Financing activities |
|
|
Equity dividends paid |
(18,727) |
(17,297) |
Shares issued |
51,584 |
88,533 |
Repurchase of Shares into
Treasury |
– |
(3,394) |
Sale of Shares from Treasury |
– |
3,458 |
Net cash inflow from financing
activities |
32,857 |
71,300 |
Decrease in cash and cash
equivalents |
(8,213) |
(8,378) |
Currency translations |
(20) |
(40) |
Cash and cash equivalents at 1
October |
20,440 |
22,379 |
Cash and cash equivalents at 31
March |
12,207 |
13,961 |
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The condensed Financial Statements for the six months to
31 March 2021 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 dated April 2021 and
the Companies Act 2006.
The accounting policies used for the year ended 30 September 2020 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:
|
(UNAUDITED) AS AT 31 MARCH 2021 |
|
LEVEL 1 |
LEVEL 2 |
LEVEL 3 |
TOTAL |
AS AT 31 MARCH 2021 |
£'000 |
£'000 |
£'000 |
£'000 |
Equity investments |
1,928,487 |
– |
– |
1,928,487 |
Limited liability partnership
interest (Frostrow) |
– |
– |
4,300 |
4,300 |
AIFM Capital contribution
(Frostrow) |
– |
– |
800 |
800 |
Preference share investments |
239 |
– |
– |
239 |
|
1,928,726 |
– |
5,100 |
1,933,826 |
|
(AUDITED) AS AT 30 SEPTEMBER 2020 |
|
LEVEL 1 |
LEVEL 2 |
LEVEL 3 |
TOTAL |
AS AT 30 SEPTEMBER 2020 |
£'000 |
£'000 |
£'000 |
£'000 |
Equity investments |
1,847,392 |
– |
– |
1,847,392 |
Limited liability partnership
interest (Frostrow) |
– |
– |
3,200 |
3,200 |
AIFM Capital contribution
(Frostrow) |
– |
– |
750 |
750 |
Preference share investments |
246 |
– |
– |
246 |
|
1,847,638 |
– |
3,950 |
1,851,588 |
2. INCOME
|
(UNAUDITED) |
(UNAUDITED) |
|
SIX MONTHS |
SIX MONTHS |
|
ENDED |
ENDED |
|
31 MARCH
2021 |
31 MARCH
2020 |
|
£'000 |
£'000 |
Income from investments |
|
|
UK listed dividends |
13,915 |
14,177 |
Overseas dividends |
1,924 |
1,828 |
Limited liability partnership –
priority profit-share on AIFM capital contribution |
34 |
30 |
Total income |
15,873 |
16,035 |
3. AIFM AND PORTFOLIO MANAGEMENT FEES
|
(UNAUDITED) SIX MONTHS
TO 31 MARCH |
(UNAUDITED) SIX MONTHS
TO 31 MARCH |
|
|
|
2021 |
|
|
2020 |
|
REVENUE |
CAPITAL |
TOTAL |
REVENUE |
CAPITAL |
TOTAL |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
AIFM fee |
448 |
911 |
1,359 |
424 |
862 |
1,286 |
Portfolio management fee |
1,346 |
2,732 |
4,078 |
1,273 |
2,584 |
3,857 |
Total fees |
1,794 |
3,643 |
5,437 |
1,697 |
3,446 |
5,143 |
4. RETURN/(LOSS) PER SHARE – BASIC AND DILUTED
|
(UNAUDITED) |
(UNAUDITED) |
|
SIX MONTHS |
SIX MONTHS |
|
TO 31
MARCH |
TO 31
MARCH |
|
2021 |
2020 |
|
£'000 |
£'000 |
The return/(loss) per share is based
on the following figures: |
|
|
Revenue return |
13,265 |
13,325 |
Capital return/(loss) |
27,202 |
(371,312) |
Total return/(loss) |
40,467 |
(357,987) |
Weighted average number of shares in
issue for the period |
221,896,250 |
205,307,145 |
Revenue return per share |
6.0p |
6.5p |
Capital return/(loss) per share |
12.2p |
(180.9)p |
Total return/(loss) per share |
18.2p |
(174.4)p |
The calculation of the total, revenue and capital returns/(loss)
per ordinary share is carried out in accordance with IAS 33,
"Earnings per Share (as adopted in the EU)".
During the period there were no dilutive instruments held,
therefore the basic and diluted return/(loss) per share are the
same.
5. NET ASSET VALUE PER SHARE
|
(UNAUDITED) |
(AUDITED) |
|
AS AT |
AS AT 30 |
|
31 MARCH |
SEPTEMBER |
|
2021 |
2020 |
Net Assets (£'000) |
1,915,854 |
1,842,530 |
Number of shares in issue |
223,821,303 |
217,751,303 |
Net asset value per share |
856.0p |
846.2p |
6. TRANSACTION COSTS
Purchase transaction costs for the six months ended 31 March 2021 were £160,000 (six months ended
31 March 2020: £351,000). These
comprise stamp duty costs of £136,000 (31
March 2020: £314,000) and commission of £24,000
(31 March 2020: £37,000).
Sales transaction costs for the six months ended 31 March 2021 were £1,000 (six months ended
31 March 2020: £nil). These comprise
solely commission.
These transaction costs are included within the gains and losses
on investments within the Income Statement.
7. RECONCILIATION OF TOTAL RETURN/(LOSS) BEFORE FINANCE COSTS
AND TAXATION TO NET CASH INFLOW FROM OPERATING ACTIVITIES
|
(UNAUDITED) |
(UNAUDITED) |
|
SIX MONTHS |
SIX MONTHS |
|
ENDED |
ENDED |
|
31 MARCH
2021 |
31 MARCH
2020 |
|
£'000 |
£'000 |
Total return/(loss) before finance
charges and taxation |
40,934 |
(357,398) |
(Deduct)/add: capital (return)/loss
before finance charges and taxation |
(27,337) |
371,086 |
Net revenue before finance costs and
taxation |
13,597 |
13,688 |
Decrease/(increase) in accrued
income and prepayments |
745 |
(1,317) |
Increase/(decrease) in
creditors |
38 |
(187) |
Taxation – irrecoverable overseas
tax paid |
(418) |
(250) |
AIFM and Portfolio management fees
charged to capital |
(3,643) |
(3,446) |
Other expenses charged to
capital |
– |
(20) |
Net cash inflow from operating
activities |
10,319 |
8,468 |
8. GOING CONCERN
The Directors believe, having considered the Company’s
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 Financial Reporting Council.
9. 2020 ACCOUNTS
The figures and financial information for the year to
30 September 2020 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
INTERIM MANAGEMENT REPORT
The Directors are required to provide an Interim Management
Report in accordance with the UK Listing Authority’s Disclosure and
Transparency Rules. They consider that the Chairman’s Statement and
the Portfolio Manager’s Report, the following statements and the
Directors’ Responsibility Statement below together constitute the
Interim Management Report for the Company for the six months ended
31 March 2021.
PRINCIPAL RISKS AND UNCERTAINTIES
A review of the half year 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:
- Corporate Strategy;
- Investment Strategy and Activity, Shareholder Relations and
Governance;
- Operational;
- Financial and Accounting; and
- Legal and Regulatory
Information on each of these areas is given in the Strategic
Report/Business Review within the Annual Report and Accounts for
the year ended 30 September 2020. The
principal risks and uncertainties have not changed since the date
of that report.
The Board and Portfolio Manager continue to review the portfolio
for the potential impact of the pandemic. The business continuity
arrangements of the Portfolio Manager, AIFM and other third party
service providers have proven robust with operations continuing
largely as normal.
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;
(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.
The Half Year Report was approved by the Board on 7 May 2021 and the above responsibility statement
was signed on its behalf by:
Simon
Hayes
Chairman
FURTHER INFORMATION
GLOSSARY OF TERMS AND ALTERNATIVE
PERFORMANCE MEASURES (“APM”)
ACTIVE SHARE
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 a low 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.
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 Alternative Performance Measure (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 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.
|
|
31 MARCH |
30
SEPTEMBER |
|
|
2021 |
2020 |
Share Price (p) |
|
862.0 |
840.0 |
Net Asset value per share (p) |
|
856.0 |
846.2 |
Premium/(discount) of share price to
net asset value per share |
|
0.7% |
(0.7%) |
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 |
|
|
2021 |
2020 |
|
|
£'000 |
£'000 |
Prior Charges |
|
(36,700) |
(36,700) |
Net Current Assets |
|
18,728 |
27,642 |
Net Debt |
|
(17,972) |
(9,058) |
Net Assets |
|
1,915,854 |
1,842,530 |
Gearing |
|
0.9% |
0.5% |
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 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.
|
|
31 MARCH |
30
SEPTEMBER |
NAV TOTAL RETURN |
|
2021 |
2020 |
Opening NAV per share (p) |
|
846.2 |
935.6 |
Increase/(decrease) in NAV per share
(p) |
|
9.8 |
(89.4) |
Closing NAV per share (p) |
|
856.0 |
846.2 |
% Increase/(decrease) in NAV |
|
1.2% |
(9.6%) |
% Impact of dividends
re-invested* |
|
1.0% |
1.9% |
NAV per share total return (p) |
|
2.2% |
(7.7%) |
* Total dividends paid during the period of 8.6p (2020: 16.6p
paid during the 2020 financial year) were re-invested at the cum
income NAV per share at the ex-dividend date.
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.
|
|
31 MARCH |
30
SEPTEMBER |
|
|
2021 |
2020 |
|
|
£'000 |
£'000 |
AIFM and Portfolio management
fees |
|
10,924* |
10,245 |
Operating Expenses |
|
1,198 |
1,213 |
Total Expenses |
|
12,122 |
11,458 |
Average Net Assets during the
period/year |
|
1,899,015 |
1,779,936 |
Ongoing Charges |
|
0.6% |
0.6% |
* Estimated expenses for the year ending 30 September 2021, based on the asset size as at
31 March 2021.
REVENUE RETURN PER SHARE
The revenue return per share is calculated by taking the Return
on ordinary activities after taxation and dividing by the weighted
average number of shares in issue during the period/year.
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 |
|
2021 |
2020 |
Opening share price (p) |
|
840.0 |
942.0 |
Increase/(decrease) in share price
(p) |
|
22.0 |
(102.0) |
Closing share price (p) |
|
862.0 |
840.0 |
% Increase/(decrease) in share
price |
|
2.6% |
(10.8%) |
% Impact of dividends
re-invested* |
|
1.1% |
1.8% |
Share price total return |
|
3.7% |
(9.0%) |
* Total dividends paid during the period of 8.6p (2020: 16.6p
paid during the 2020 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.
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.
- END-
Victoria Hale
Frostrow Capital LLP
Company Secretary – 0203 170 8732
7 May 2021