Final Results

LONDON STOCK EXCHANGE ANNOUNCEMENT

13 December 2016

Finsbury Growth & Income Trust PLC

Audited Results for the Year Ended 30 September 2016

The Company’s annual report will be posted to shareholders on Tuesday, 20 December 2016. Members of the public may obtain copies from Frostrow Capital LLP. 25 Southampton Buildings, London WC2A 1AL or from the Company’s website at:

www.finsburygt.com

The Company's annual report and financial statements for the year ended 30 September 2016 will be submitted to the UK Listing Authority, and will shortly be available for inspection on the National Storage Mechanism (NSM):

http://www.morningstar.co.uk/uk/NSM

(Documents will usually be available for inspection within two business days of this notice being given)

Victoria Hale
Frostrow Capital LLP
Company Secretary – 0203 170 8732
13 December 2016

About Finsbury Growth & Income Trust PLC

Finsbury Growth & Income Trust PLC 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.

Keep up to date with Finsbury Growth & Income Trust PLC

For more information about Finsbury Growth & Income Trust PLC visit the website at www.finsburygt.com

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@finsburygt

Winner:

·Moneywise, Investment Trust of the Year 2016, 2015, 2014, 2012 and 2011 UK Equity Income Category

·Rated Fund: Money Observer Rated Funds 2015

·FT & Investors’ Chronicle Awards 2015, Best Income Fund

·Shares Awards 2014, Best Investment Trust

·Investment Week, Investment Company of the Year 2016, 2015, 2013, 2012 and 2011, UK Equity Income Category

·What Investment Trust 2016, Best UK Investment Trust

Company Summary

The Company

The Company is an investment trust and its shares are listed on the premium segment of the Official List and traded on the main market of the London Stock Exchange. The Company is a member of the Association of Investment Companies (“AIC”).

The Company’s net assets as at 30 September 2016 were £936.0 million (2015: £673.7 million) and the market capitalisation was £936.5 million (2015: £673.2 million).

Management

The Company is an Alternative Investment Fund (“AIF”) under the European Union Alternative Investment Fund Managers’ Directive (“AIFMD”).

The Company has appointed Frostrow Capital LLP (“Frostrow”) as Alternative Investment Fund Manager (“AIFM”) to provide company management, company secretarial, administrative and marketing services. The Company and Frostrow have jointly appointed Lindsell Train Limited (“Lindsell Train”) as Portfolio Manager. Further details of the terms of these appointments are provided in the Business Review and full disclosures required under the AIFMD can be found on the Company’s website: www.finsburygt.com.

Performance

Performance is measured against the FTSE All-Share Index.

Capital Structure

The Company’s capital structure is composed solely of ordinary shares. Details are given in note 13 to the Financial Statements.

Dividend

A first interim dividend of 6.1p per share (2015: 5.5p) was paid on 11 May 2016 to shareholders registered at the close of business on 8 April 2016. The associated ex-dividend date was 7 April 2016.

A second interim dividend of 7.0p per share (2015: 6.6p) was paid on 11 November 2016 to shareholders registered at close of business on 14 October 2016. The associated ex-dividend date was 13 October 2016. The total dividend paid for the year was 13.1p per share (2015: 12.1p per share).

ISA Status

The Company’s shares are eligible for Individual Savings Accounts (‘ISAs’) and for Junior ISAs.

Company Performance

The Company was incorporated in Scotland on 15 January 1926. Lindsell Train was first appointed as Investment Manager in December 2000. The total return of the Company’s net asset value per share over the 10 years to 30 September 2016 has been 186.7%*, equivalent to a compound annual return of 11.1%*. This compares to a total return of 75.6%* from the Company’s benchmark, equivalent to a compound annual return of 5.8%*.

*Source: Morningstar, FTSE International Limited (“FTSE”)©FTSE 2016

Financial Highlights for the Year

Share price total return	Net asset value per share total return	FTSE All-Share Index total return
+20.8%	+20.6%	16.8%
2015: +11.8%	2015: +12.0%	2015: (2.3)%
Share price	Net asset value per share	Dividends for the year
658.0p	657.7p	13.1p
2015: 556.5p	2015: 556.9p	2015: 12.1p
+18.2%	+18.1%	+8.3%

Source: Morningstar, FTSE International Limited (“FTSE”)©FTSE 2016

		As at		As at
		30 September		30 September		%
		2016		2015		Change
Share price		658.0p		556.5p		+18.2
Net asset value per share		657.7p		556.9p		+18.1
Premium/(discount) of share price to net asset value per share		0.0%		(0.1%)		–
Gearing1		2.2%		2.9%
Shareholders’ funds		£936.0m		£673.7m		+38.9
Number of shares in issue		142,318,212		120,965,212		+17.7
		Year ended		Year ended
		30 September		30 September		%
		2016		2015		Change
Share price total return2		+20.8%		+11.8%
Net asset value per share total return2		+20.6%		+12.0%
FTSE All-Share Index total return (Company benchmark)2, 3		+16.8%		(2.3%)
Ongoing charges1		0.7%		0.8%
Dividends per share
First interim dividend		6.1p		5.5p
Second interim dividend		7.0p		6.6p
Total for the year		13.1p		12.1p		+8.3

1 See glossary

2 Source – Morningstar

3 Source – FTSE International Limited (“FTSE”)©FTSE 2016*

Chairman’s Statement

Dear Shareholder,

Performance

I am delighted to report that the Company’s net asset value per share on a total return basis for the year was 20.6% (2015: 12.0%) and the share price total return was 20.8% (2015: 11.8%). Both have again significantly outperformed the Company’s benchmark, the FTSE All-Share Index, measured on a total return basis, which rose by 16.8% over the same period (2015: -2.3%). The principal contributions to net asset value performance came from our major holdings in Unilever, Sage Group and RELX.

The Company’s continued good performance and the resulting strong demand for its shares has caused them to trade mostly at a premium to the cum-income net asset value per share throughout the year. The share price ended the year at par with the Company’s net asset value per share (2015: discount of -0.1%).

It is also particularly pleasing to note that our Portfolio Managers’ long term strategy continues to deliver excellent returns with £1,000 invested in the Company ten years ago now being worth £2,867.This compares to a total return of £1,756 from the Company’s benchmark index, the FTSE All-Share Index, over the same period.

Share Capital

Consistent demand for the Company’s shares led to the issue of a total of 21,353,000 new shares during the year, ensuring that the share price premium was effectively managed throughout the year. The net proceeds received by the Company from the issue of these new shares during the year amounted to £128.1 million and was invested in line with the Company’s investment objective. During the first nine months of this calendar year the Company has been the leading fund raiser in the investment trust sector, by way of regular issuance of shares in the secondary market, raising £94 million since 1 January 2016 (source: Winterflood).

In order to facilitate this demand shareholder authority to issue further shares equal to 10% of the Company’s issued share capital on a non-pre-emptive basis was renewed at the Company’s Annual General Meeting in February 2016 and again at a General Meeting held in August 2016.

The Company’s share issuance authority will be proposed for renewal at the Company’s Annual General Meeting to be held in January 2017 and as part of this process a new prospectus will be issued shortly.

Return and Dividend

The Income Statement shows a total return per share of 114.4 pence per share (30 September 2015: 54.3 pence) consisting of a revenue return per share of 15.2 pence (30 September 2015: 13.5 pence) and a capital return per share of 99.2 pence (30 September 2015: 40.8 pence)

The Company’s net revenue return during the year was up just over 12.6% from last year (on a per share basis) and your Board has declared two interim dividends for the year totaling 13.1 pence per share (year ended 30 September 2015: 12.1 pence) a year-on-year increase of 8.3%. This is in line with the Board’s long-term objective of maintaining a progressive dividend policy.

In light of the continued strong demand for the Company’s shares and in order to facilitate dividend payments on a timely and cost effective basis, your Board continues to elect to distribute the Company’s income to shareholders by means of two interim dividends. We continue to keep under review the possibility of paying quarterly dividends, but with the overall yield from the portfolio being relatively low, and with the majority of holdings in our portfolio paying only two dividends a year, we do not believe the significant additional costs would be justified.

Gearing

As at the year end the Company was in the last few days of its three-year secured fixed term committed revolving credit facility of £50 million with Scotiabank Europe PLC. On 4 October 2016 the Board renewed the Facility Agreement increasing the limit to £75 million with an additional £25 million facility available if required. Further details can be found within the Report of the Directors and note 11 to the financial statements.

Amendments to Alternative Investment Management Agreement and Portfolio Management Agreement

On 11 October 2016, the Board was pleased to announce that following negotiations with the Company’s Alternative Investment Manager (AIFM) and Portfolio Manager, an amendment was made to the fee structure payable to both parties which passes some benefit of the economies of scale to shareholders. Full details can be found within the Strategic Report.

The Board

There have been no changes to the Board during this year and in accordance with our policy of all Directors standing for re-election annually, you will find the appropriate resolutions in the Notice of the Annual General Meeting.

Investment in our principal service providers

A shareholder asked me at our last Annual General Meeting about our investments in the Lindsell Train Investment Trust plc and Frostrow Capital LLP. Whilst being able to assure all shareholders that these have both been outstandingly successful investments, I was conscious that the confines of the Annual General Meeting did not facilitate a full explanation as to why the Board considers these to be very important strategic holdings. Shareholders will therefore find within the Strategic Report a detailed explanation as to how and why we hold these participations in our two principal service providers.

Outlook

The outlook for both global and UK equities continued to improve in 2016 and our Portfolio Manager continues to see the opportunity for growth and efficiency gains across portfolio companies.

While the Board at present believes that Brexit will have only a limited impact on the Company’s business model, it is mindful of the impact that it may have on the companies in which it invests. To this end the Board monitors stock valuation together with the Company’s AIFM and Portfolio Manager and receive regular updates from both managers.

It is expected that the Company’s strategy will remain unchanged in the coming year. Your Board fully supports the Portfolio Manager’s strategy of investing in high quality companies that own both durable and cash generative brands. We believe firmly that this will deliver strong investment returns to shareholders over the longer term.

Our Portfolio Manager sets out his views on the prospects of the key holdings in your portfolio.

Annual General Meeting

The Annual General Meeting of the Company this year will again be held at Guildhall, City of London EC2V 7HH (please use the Basinghall Street Entrance) on Thursday, 26 January 2017 at 12 noon, and we hope as many shareholders as possible will attend. This will be an opportunity to meet the Board and to receive a presentation from our Portfolio Managers. We thank you for your continued support.

Anthony Townsend
Chairman
13 December 2016

Discount Control Mechanism (“DCM”)

Shareholders in the Company will know that the principal difference between investment trusts and the other most common collective investment vehicles, unit trusts and open ended investment companies (“OEICs”), is that

·to participate in unit trusts and OEICs, investors apply to the fund managers for new units or shares. These are normally issued and redeemed at or near to net asset value (“NAV”) per share, whereas

·to participate in an investment trust requires the purchase or sale of the shares in that trust through the stock market.

The shares in an investment trust tend to track the NAV per share, but they seldom if ever trade at exactly the NAV per share, or at “par” as it is known. Historically the great majority of investment trusts have traded at a discount to NAV per share, often well into double digits, although there are a select few, usually specialist, investment trusts that trade at a premium.

There are some investors who find the ability to buy stock in investment trusts at a discount attractive, although they are rarely so enthusiastic if they have to sell at a discount. However, your Directors believe that it is in the best interests of all our shareholders (whether buying, holding or selling) that the Company’s shares trade at a price as close to NAV per share as possible.

The level of discount, or premium, at which investment trust shares trade is very substantially affected by the law of supply and demand; put simply a much sought-after share rarely trades at a significant discount and may even trade at a premium, whereas out of favour shares often move to material discounts.

In an effort to try to eliminate discount volatility, your Directors introduced a discount control mechanism (“DCM”) in 2004. Under our DCM, we will normally buy in the Company’s shares being offered on the stock market whenever the discount reaches a level of 5% or more and then hold those shares in “treasury”. Shares held by a company in treasury are, for accounting purposes, effectively eliminated but, legally and for Stock Exchange purposes, they continue to exist, which means they can later be sold back to the market if conditions permit.

In recent years the Company’s successful performance has generated substantial investor interest, which in the absence of the other side of our DCM could have led to our shares moving to a significant premium to NAV per share. Your Directors consider that limiting the premium is just as important as limiting the discount; no-one likes to pay over the odds for an investment! The other side of our DCM is therefore that whenever there are unsatisfied buying orders for our shares in the market, we issue new shares at a small premium to NAV per share. This ensures that there is no asset dilution to our existing shareholders, but stops the market price going to a significant and possibly unsustainable premium. We do therefore effectively become a market maker in our own shares.

These two sides of our DCM are widely to be found elsewhere in the investment trust sector, but there is a third aspect to ours that is rare. As explained above, shares held in treasury continue to exist legally and can be re-sold, but in most cases shareholders will only permit that if they are re-sold at NAV per share or higher. For many years we have sought and obtained the authority of our shareholders to re-sell shares held in treasury at a discount to NAV per share, provided that any sale is at a narrower discount to NAV per share than that prevailing when the shares were bought in. The round trip of buying them in and then selling them out again at a finer discount is always asset-accretive to shareholders, but it is the increased liquidity that this arrangement permits that is the real benefit.

We have not had to use this power for many years, but there was a point some years ago where it was very useful to us in helping us place a large holding of shares in the Company that was too large for the market to digest in one go. We therefore bought part of that holding into treasury and then sold the shares out to the market over the next few months in smaller parcels at a finer discount. The whole operation was a great success and we are therefore very keen to keep this power in our DCM armoury.

It is Resolutions 11, 12, 13 and 14 in the Notice of Annual General Meeting that enable us to operate what we consider to have been a very effective DCM in recent years and we strongly recommend that shareholders therefore vote in favour of those resolutions in order to continue it.

Investment in our Key Service Providers

Corporate Investments

Investment trusts have a somewhat unusual structure compared to most limited companies in the corporate world. They frequently have an entirely non-executive board of directors and contract out the management services they need to one or more third party service providers.

In our case we use Lindsell Train to provide our portfolio management and Frostrow to provide our AIFM, corporate administration, secretarial services, investor relations and marketing; they are by far our two most important service providers. Nick Train, one of the directors of Lindsell Train, heads the fund management team looking after our portfolio and Alastair Smith, Managing Partner of Frostrow, heads the team at Frostrow and oversees the range of services that the firm provides. These two men do therefore effectively provide the senior executive management of Finsbury Growth & Income Trust PLC (the “Company”); they are an essential part of our successful operations. When we first started working with them, the Board therefore felt it was of great importance that we took a meaningful participation in each of their businesses, not just to align our commercial interests with theirs but to bind them in to the future prosperity of the Company.

At the time we approached Lindsell Train in 2000 to discuss with them taking on the investment mandate for the Company, they were in the process of establishing Lindsell Train Investment Trust plc (“LTIT”) which was to take a 25% interest in Lindsell Train; the balance is held by the founding directors Michael Lindsell and Nick Train together with some of their key colleagues. The option of taking a stake directly in Lindsell Train was therefore not open to us, but taking a significant shareholding in their new investment trust was and so we invested £1,000,000 in January 2001 at £100 per share into LTIT. At 30 September 2016, that holding was worth £8,200,000, due in no small part to LTIT’s very valuable holding in Lindsell Train.

When Alastair Smith established Frostrow in 2007, we were able to negotiate with him that the Company took a 10% direct participation in Frostrow at a cost of £150,000, of which £75,000 has been repaid. It is of course an unlisted investment, but using well established industry norms, we have valued that holding at £1,000,000 at 30 September 2016 (see note 1(a) for further details). We have also received very tax-efficient profit distributions totalling £1,486,000 from Frostrow since inception.

By any measure therefore both these investments have been hugely successful but that should not obscure the great strategic importance of them. The success of the Company is very largely due to the skill and commitment both those organisations bring to us, something the Board values even more highly than the investment return we have made on the holdings.

It is very pleasing to us that this is a two way street. Shareholders will see from the Directors Remuneration Report that as at 30 September 2016, Nick Train holds 762,662 shares in the Company and Alastair Smith 72,218 shares. I have consent from Nick Train to tell shareholders that his holding represents the whole of his personal investment in UK equity and is a significant portion of his total assets.

Anthony Townsend
Chairman
13 December 2016

Investment Portfolio
Investments as at 30 September 2016

				Capital
	Fair value			appreciation/	Fair value
	2015	Purchases	Sales	(depreciation)	2016	% of
Investments	£’000	£’000	£’000	£’000	£’000	investments
Diageo	58,243	19,708	–	17,167	95,118	9.9
Unilever	64,711	5,327	–	24,655	94,693	9.9
RELX	60,644	12,672	–	19,892	93,208	9.7
London Stock Exchange	40,538	21,809	–	7,019	69,366	7.3
Sage Group	42,825	1,696	–	20,855	65,376	6.8
Heineken1	44,986	3,602	–	14,373	62,961	6.6
Burberry Group	34,708	19,908	–	3,391	58,007	6.1
Schroders	34,770	22,676	–	(1,013)	56,433	5.9
Hargreaves Lansdown	44,502	7,803	–	2,480	54,785	5.7
Daily Mail & General Trust (non-voting)	28,943	13,219	–	927	43,089	4.5
Mondelez International2	32,025	3,102	–	7,513	42,640	4.5
Fidessa	20,873	621	–	7,186	28,680	3.0
Pearson	37,642	2,878	–	(12,727)	27,793	2.9
Dr. Pepper Snapple2	18,448	–	–	6,395	24,843	2.6
Remy Cointreau3	10,405	5,268	–	7,672	23,345	2.5
Rathbone Brothers	25,173	–	–	(2,835)	22,338	2.3
A.G. Barr	22,790	–	–	(500)	22,290	2.3
The Kraft Heinz Company2	11,154	499	–	5,568	17,221	1.8
Greene King	14,618	–	–	(396)	14,222	1.5
Young & Co’s Brewery (non-voting)	9,030	–	–	1,733	10,763	1.1
Euromoney Institutional Investor	8,820	–	–	1,481	10,301	1.1
The Lindsell Train Investment Trust plc	4,900	–	–	3,300	8,200	0.9
Fuller Smith & Turner	7,749	–	–	(588)	7,161	0.8
Celtic*	2,329	41	–	(31)	2,339	0.2
Frostrow Capital LLP5	1,000	–	–	–	1,000	0.1
Frostrow Capital LLP AIFM Investment5	420	–	–	–	420	–
Thomson Reuters4	10,705	–	(11,189)	484	–	–
	692,951	140,829	(11,189)	134,001	956,592	100.0

All of the above investments are equities listed in the UK, unless otherwise stated.

1 Listed in the Netherlands

2 Listed in the United States

3 Listed in France

4 Listed in Canada

5 Unquoted partnership interest

* Includes Celtic 6% cumulative convertible preference shares, fair value £72,000 (2015: £72,000).

Performance Summary

Five Year Performance Summary

	30 Sep	30 Sep	30 Sep	30 Sep	30 Sep
	2012	2013	2014	2015	2016
Share price	376.0p	479.0p	509.0p	556.5p	658.0p
Share price total return*	+23.6%	+30.5%	+8.6%	+11.8%	+20.8%
Net asset value per share	370.7p	476.1p	507.7p	556.9p	657.7p
Net asset value per share total return*	+21.1%	+31.6%	+8.9%	+12.0%	+20.6%
FTSE All-Share Index total return**	+17.3%	+18.9%	+6.1%	(2.3)%	+16.8%
Revenue return per share	10.8p	12.7p	12.6p	13.5p	15.2p
Dividends per share	9.8p	10.5p	11.3p	12.1p	13.1p

* Source: Morningstar

** Source: FTSE International Limited (“FTSE”)©FTSE 2016†

† See glossary

Contributions to Total Return

for the Year ended 30 September 2016

	Total	Contribution
	return	per share
Investments	£’000	(pence)*
Equities
Unilever	27,136	20.7
Sage Group	22,025	16.8
RELX	21,867	16.6
Diageo	19,494	14.8
Heineken	15,354	11.7
Fidessa	8,199	6.2
Remy Cointreau	8,089	6.2
Mondelez International	8,051	6.1
London Stock Exchange	7,806	5.9
Dr Pepper Snapple	6,850	5.2
The Kraft Heinz Company	6,012	4.6
Burberry Group	4,802	3.7
Hargreaves Lansdown	3,893	3.0
The Lindsell Train Investment Trust plc	3,389	2.6
Young & Co's Brewery (non-voting)	1,916	1.5
Daily Mail & General Trust (non-voting)	1,878	1.4
Euromoney Institutional Investor	1,699	1.3
Thomson Reuters	672	0.5
Schroders	493	0.4
Greene King	194	0.1
A.G. Barr	80	0.1
Celtic	(32)	–
Fuller Smith & Turner	(463)	(0.4)
Rathbone Brothers	(2,163)	(1.6)
Pearson	(10,853)	(8.3)
	156,388	119.1
Preference shares (franked income)
Celtic 6% (cumulative convertible preference shares)	5	–
	5	–
Unquoted
Frostrow Capital LLP	439	0.3
Contribution	156,832	119.4
Expenses and finance charges	(6,544)	(5.0)
Total contribution for the year	150,288	114.4

* Based on 131,338,370 shares, being the weighted average number of shares in issue during the year ended 30 September 2016.

Portfolio Manager’s Review

 â€œSuccess breeds complacency. Complacency breeds failure. Only the paranoid survive.”

Andy Grove

The entertainment world has lost a number of its well-beloveds in 2016, but business has taken some knocks too – notably Andy Grove, who died in March. This Hungarian, who fled Communism, became one of the founders of Intel and was CEO as that company grew into the world’s largest manufacturer of semiconductors. In 1997 Time magazine voted Grove “Man of the Year” for being “the person most responsible for the amazing growth in power and the innovative potential of microchips.”

I head this investment report with one of Andy Grove’s most famous quotes, which neatly captures our current state of mind and subsequently I’m going to offer several more pieces of his wisdom – which seem to me to be of relevance for all investors today.

Success breeds complacency and only the paranoid survive. If you’ll forgive the note of self-congratulation, you’ll understand why that quote might resonate with us at Lindsell Train. We know we’ve enjoyed a surprisingly sustained period of outperformance for your Company. The fact is all three investment themes (broadly defined as: consumer brands, software and media, and stock market proxies) and a good number of the holdings that offer participation to those themes have delivered strong multi-year returns and pushed prices of the best performers to levels where we know some of our shareholders – although not us – have begun to worry. In particular all the big consumer staple stocks we own have hit new all-time highs in 2016 – Diageo, Heineken, and Unilever. And I ask myself – are we paranoid enough about our winners? Have we become complacent?

Well, on this issue – mark us down as complacent. We are not sellers of our consumer shares at current valuations. Of course we can see circumstances when they underperform for a period, but we do not believe Diageo, Heineken and Unilever have become strategically overvalued. Or put another way – we are sure that patient investors in these companies will earn very attractive returns from current share price levels over time.

In the end what it boils down to is other investors’ judgement about what constitutes “expensive” as regards these consumer branded companies is just too cautious. The way I think about it is this. Say your family was lucky enough to own 90% of the shares of Heineken (or Diageo, or Unilever), with the other 10% traded on the public markets. As a long term shareholder you know that Heineken’s dividend has increased c5-fold since 1995, or at 7.5% per annum compound and since 1995 the shares have risen from €8.5 to €72 today and you think there’s a decent chance that sort of wealth creation can continue. But then someone points out to you that at €72 Heineken’s shares have more than trebled since the 2008/9 crisis lows and now sell on a P/E of 23x. And that same someone then makes you an offer. You can switch out of your entire family holding in Heineken into an Index Fund that tracks the MSCI World Equity Index. The MSCI is today valued on a look-through P/E of 19x. That’s nearly 20% less than Heineken! For all that extra diversification and improved liquidity! Does your family want to take this once in a generation opportunity to sell its stake – all or nothing, here and now and at the market price? But you wouldn’t dream of selling, would you? The obvious excellence and reliability of Heineken’s brand and global assets – its proven durability and rarity (there’s only one truly global beer brand and it is Heineken) makes the idea of swapping all that for the mediocrity of the average, even if the average is 20% cheaper, seem nonsensical. Or it does to me. And if that’s true if you own 90% of the equity it also ought to be the case if you only own 100 shares. Though sadly, just for the sake of clarity, my family doesn’t own 90% of Heineken.

But now reverting to Andy Grove; we assure shareholders that we find plenty to be paranoid about in equity markets today and for your portfolio. Here’s another Grove quote which summarises what keeps us awake at night:

“You have no choice but to operate in a world shaped by globalisation and the information revolution. There are two options: adapt or die.”

The nature of our paranoia is perhaps best illustrated by the table below.

Stuff we Think is Important

Top Five Global Companies by Market Capitalisation to the end of July:
2016	2006	2000
Apple	Exxon	Microsoft
Alphabet	General Electric	Cisco
Microsoft	Microsoft	General Electric
Amazon	Gazprom	Intel
Facebook	Citibank	Vodafone

What it shows is that at the end of July 2016 the top five biggest companies in the world as measured by their market capitalisation were all US Technology or Digital businesses. This is the first time this has ever been the case. As you can see even back in 2000 at the peak of the TMT mania General Electric hung on to a top five position. And in the interim several big banks and oil companies have made appearances too. But this clean sweep of the top five in mid 2016 feels significant. To us it emphasises just how important Technology has become in driving economies and stock markets. In fact we don’t think much else really matters. And it’s a reasonable prognosis to expect world stock markets to be meaningfully higher in 10 years time – the good news – but those gains to be delivered by companies and even industries that one is today barely aware of – the less good news.

The table also reminds us how quickly tech stock market wealth can be created. Of course Alphabet (Google) and Facebook barely existed as companies a decade ago and are now valued in the hundreds of billions of dollars. Meanwhile Amazon was trading at a share price of under $6 as recently as 2001 ($825 today) and Apple at $1 a share in 2001 too ($115 today). But if Technology makes fortunes quickly they can be taken away quickly too. Even Andy Groves’ Intel, a top five company back in 2000, is still over 50% below its share price peak of that year. More parochially, but confirming this sense of how quickly wealth can be built and lost we think about Daily Mail & General Trust. About 10 years ago that company invested a total of £80m into a property website: PrimeLocation.com. Today the total value DMGT has derived from that investment stands at getting on for £600m (largely its stake in Zoopla) – more than a 7-bagger. Good stuff; but that online property advertising used to fill the pages of DMGT newspapers and for them value has been lost forever.

Our paranoia engendered by these swings and roundabouts of Tech is really brought home when you consider some of the main contributors and detractors to your Company’s performance over the last 12 months. We enjoyed wonderful gains in software company Sage and digital service and data provider RELX (the old Reed Elsevier). But look at the laggards and there squats Pearson, as it attempts to negotiate a tricky path from text-books to software publishing.

Here are two more Andy Grove quotes that help frame the opportunities and threats faced by all these companies:

“We are now living in Internet time. It’s a new territory and the cyber equivalent of the Oklahoma land rush is on.”

“When a change in how some element of one’s business is conducted becomes an order of magnitude larger than what that business is accustomed to, then all bets are off.”

So – mulling over that pair of comments and to pick on Pearson – that company still has a real opportunity to stake its claim as a global leader in the land rush to dominate digital education services. According to the company it already has more paid for subscribers to its digital learning products than all its competitors put together. On the other hand, the technology-driven challenge to Pearson’s traditional business is evidently intense. Meanwhile, Sage claims it now has a wholly new opportunity to bring its services to the 80% of all the small companies in the geographies where it is active that, amazingly, still have absolutely no accounting software at all. Yet that opportunity hangs on Sage’s success in transitioning its business to a “Cloud” model – a transition that brings risk and competition.

I have limited this part of the discussion to just the technology-related holdings in your portfolio and some shareholders may wonder if it wouldn’t be less stressful to just ditch these and concentrate on a more “reliable” bedrock. But here I must reveal the full depths of my paranoia. The more I think about it the more I believe this next piece of Andy Grove wisdom is the defining challenge for all investors today:

“I have been quoted as saying that in the future all companies will be Internet companies. I still believe that. More than ever really.”

That is an exciting but scary proposition. But it’s one that fits in with our understanding of what is driving business performance at the moment. The companies doing interesting things with digital – whether they are Tech companies or far removed – are the ones making progress. While the cost of ignoring Tech, despite the risks associated, looks to be irrelevance. When companies report results or come and see us I find more and more this is what they want to talk about. And to them, and us as investors, it really matters that, say, visits to Hargreaves Lansdown’s website last year approached 105m, up 19% year-on-year. Or that Burberry’s digital customer contacts rose over 30% in the last financial year to 40 million. Meantime, we regard it as very significant that Unilever has just invested $1bn in the acquisition of an e-commerce business – Dollar Shave. Even Unilever, that stalwart of widow and orphan investors and maker of unglamorous soap and deodorants, is making a big bet that the Internet is shifting the balance between brand owners, retailers and consumers. Or, back to my earlier example of Heineken. Talk to Jean-Francois van Boxmeer, the CEO and you’re left in no doubt how crucial the company regards its digital marketing strategy – as a means to keep the Heineken brand in the minds of the millennials who will be the next generation of drinkers.

To us the point is that there is nowhere to hide. It is so important to ensure to the best of your ability that you’re invested in companies where technology can be their friend.

To conclude – two more Andy Grove quotes:

“You have to keep your spirits up even though you understand you don’t know what you’re doing.”

“Give me a turbulent world as opposed to a quiet world and I’ll take the turbulent one.”

Yes. I am more excited about the outlook for global and UK equities – and hence for the shares of your Company – than I have ever been. Almost every company we meet can see an opportunity for unprecedented growth or efficiency gains or both. Investors by and large are far too pessimistic about the outlook. And yet the pace of technology change – even as this creates the opportunities – means more and more potentially ruinous surprises for individual companies. No wonder we’re paranoid.

Nick Train
Director
Lindsell Train Limited
Portfolio Manager
13 December 2016

Business Review

The Strategic Report, contains a review of the Company’s strategy and business model, an analysis of its performance during the financial year and its future developments and details of the principal risks and challenges that it faces. Its purpose is to inform the shareholders of the Company and help them to assess how the Directors have performed their duty to promote the success of the Company.

Investment Objective

The Company’s investment objective is to achieve capital and income growth and to provide shareholders with a total return in excess of that of the FTSE All-Share Index.

Investment Strategy

Details of the Company’s Investment guidelines are as follows:

·The Company’s investment policy is to invest principally in the securities of UK listed companies, whilst up to a maximum of 20% of the Company’s portfolio, at the time of acquisition, can be invested in quoted companies worldwide.

·Where possible, a minimum position size of 1% of the Company’s gross assets is held unless the holding concerned is being built or disposed.

·The portfolio will normally comprise up to 30 investments. This level of concentration may lead to an investment return which is materially different from the Company’s benchmark index and may be considered to carry above average risk. Unless driven by market movements, securities in FTSE 100 companies and comparable companies listed on an overseas stock exchange will normally represent between 50% and 100% of the portfolio; securities in FTSE 350 companies and comparable companies listed on overseas stock exchanges will normally represent at least 70% of the portfolio.

·The Company does not and will not invest more than 15%, in aggregate, of the value of its gross assets in other closed ended investment companies (including investment trusts) listed on the London Stock Exchange. Further, the Company does not and will not invest more than 10%, in aggregate, of the value of its gross assets in other closed ended investment companies (including investment trusts) listed on the London Stock Exchange, except where the investment companies themselves have stated investment policies to invest no more than 15% of their gross assets in other closed ended investment companies (including investment trusts) listed on the London Stock Exchange.

·The Company’s gearing policy is that gearing will not exceed 25% of the Company’s net assets. In normal market conditions it is expected that the level of gearing will be between 5% and 25% of the Company’s net assets.

·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.

·No investment will be made in any company or fund managed by the Portfolio Manager without the prior approval of the Board.

In accordance with the Listing Rules of the Financial Conduct Authority (“FCA”), the Company can only make a material change to its investment policies with the approval of its shareholders.

Investment 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, investments being selected only after extensive research by the Portfolio Manager. The Portfolio Manager uses a bottom-up stock picking approach and looks to invest in a universe of excellent listed businesses that appear undervalued. It is the Board’s long-term objective, as far as possible, to maintain a progressive dividend policy.

The Board believes that the Company’s performance over the last 10 years (net asset total return of 186.7% compared to a total return from the Company’s benchmark index of 75.6%) demonstrates that it is possible to achieve good performance through investing principally in UK equities without buying and selling portfolio securities on a short term basis. The Company continues to perform competitively because the Portfolio Manager concentrates on the strengths and weaknesses of individual companies.

Dividend Policy

The Company has a progressive dividend policy. The aim of the policy is to increase or at least to maintain the total dividend. Dividends are typically paid in May and as soon as practicably possible after the financial year end, as 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 which are reviewed regularly by the Board. These forecasts consider dividends earned from the portfolio together with predicted future earnings.

Dividends are expected to be paid from Revenue Reserves.

Business Model

The Company has no employees and all of its Directors are non-executive. The Company delegates its day-to-day management to third parties. The principal service providers to the Company are Frostrow Capital LLP (“Frostrow”) which has been appointed as AIFM, company secretary and administrator; Lindsell Train Limited (“Lindsell Train”) which has been appointed as Portfolio Manager. BNY Mellon Trust & Depositary (UK) Limited has been appointed as the Depositary.

Lindsell Train was originally appointed as Investment Manager to the Company in December 2000. Lindsell Train has given Mr Nick Train responsibility for managing the Company’s portfolio. Mr Train was previously head of Global Equities at M&G PLC and head of Pan-European Equities at GT Management PLC. Mr Train has managed money in the UK equity market since 1983, including the top decile performer GT Income Fund (1985-1998). Lindsell Train is authorised and regulated by the FCA.

Frostrow is the AIFM. It is also responsible for providing company secretarial, administrative, accounting and marketing services to the Company. Frostrow was established in 2007 to provide specialist management, company secretarial, administration and marketing services to investment companies. Frostrow is authorised and regulated by the FCA.

The Board is responsible for all aspects of the Company’s affairs, including the setting of parameters for and the monitoring of the investment strategy and the review of investment performance and policy. It also has responsibility for all strategic issues, the dividend policy, the share issuance and buy-back policy, gearing, share price and discount/premium monitoring and corporate governance matters.

Principal Service Providers

Alternative Investment Fund Manager (AIFM)

Frostrow under the terms of its AIFM agreement with the Company provides, inter alia, the following services:

·oversight of the portfolio management function delegated to Lindsell Train;

·investment portfolio administration and valuation;

·risk management services;

·marketing and shareholder services;

·share price discount and premium management;

·administrative and secretarial services;

·advice and guidance in respect of corporate governance requirements;

·maintains the Company’s accounting records;

·maintenance of the Company’s website;

·preparation and dispatch of annual and half year reports and monthly fact sheets; and

·ensuring compliance with applicable legal and regulatory requirements.

During the year to 30 September 2016 under the terms of the AIFM Agreement Frostrow received a periodic fee at a rate of 0.15% per annum of the Company’s market capitalisation plus a fixed fee of £70,000 per annum calculated monthly and payable monthly in arrears.

With effect from 11 October 2016 the following fee amendments were made to the AIFM Agreement:

Frostrow Capital LLP will receive an annual fee of 0.15% of the Company’s market capitalisation up to a value of £1 billion, such fee to reduce to 0.135% per annum of the amount of the Company’s market capitalisation in excess of £1 billion. The fixed fee of £70,000 per annum payable to Frostrow Capital LLP will cease to be payable with effect from the 1 October following the date at which the Company’s market capitalisation attains a level of £1 billion.

The AIFM Agreement may be terminated by either party on giving notice of not less than 12 months.

Portfolio Manager

Under the AIFM Agreement Lindsell Train, as delegate of the AIFM, is responsible for the management of the Company’s portfolio of investments under an agreement between it, the Company and Frostrow (the “Portfolio Management Agreement”).

Under the terms of its Portfolio Management Agreement with the AIFM and the Company, Lindsell Train provides, inter alia, the following services:

·seeking out and evaluating investment opportunities;

·recommending the manner by which monies should be invested, disinvested, retained or realised;

·advising on how rights conferred by the investments should be exercised;

·analysing the performance of investments made; and

·advising the Company in relation to trends, market movements and other matters which may affect the investment objective and policy of the Company.

During the year to 30 September 2016 under the terms of the Portfolio Management Agreement Lindsell Train received a periodic fee at a rate of 0.45% per annum of the Company’s market capitalisation calculated monthly and payable monthly in arrears.

With effect from 11 October 2016 the following amendments were made to the Portfolio Management Agreement: Lindsell Train Limited will receive an annual fee of 0.45% of the Company’s market capitalisation up to a value of £1billion, such fee to reduce to 0.405% per annum of the amount of the Company’s market capitalisation in excess of £1 billion.

The Portfolio Management Agreement may be terminated by either party giving notice of not less than 12 months.

Depositary

The Company has appointed BNY Mellon Trust & Depositary (UK) Limited (the “Depositary”) as its depositary in accordance with the AIFMD on the terms and subject to the conditions of the depositary agreement between the Company, Frostrow and the Depositary (the “Depositary Agreement”). Under the terms of the Depositary Agreement the Company has agreed to pay the Depositary a fee calculated as a percentage of the Company’s gross assets (0.02% of the first £150 million of gross assets and 0.015% of gross assets in excess of £150 million). subject to a minimum fee of £20,000 per annum, plus any applicable VAT.

The Depositary provides the following services:

·responsibility for the safe keeping of custodial assets of the Company;

·verification and maintenance of a record of all other assets of the Company and for the collection of income that arises from those assets;

·taking reasonable care to ensure that the Company is managed in accordance with the AIFMD, the FUND Sourcebook and the Company’s instrument of incorporation, in relation to the calculation of the net asset value per share and the application of income of the Company; and

·a duty to monitor the Company’s compliance with investment restrictions and leverage limits set in its offering documents.

Custodian

In accordance with the AIFM Rules the Depositary delegates custody of the Company’s listed investments to The Bank of New York Mellon SA/NV, London Branch (the “Global Custodian”) and any other Bank of New York affiliate as it sees fit (meaning any direct or indirect subsidiary of The Bank of New York Mellon). As at the date of this annual report, the applicable sub-custodians appointed by the Global Custodian who might be relevant for the purposes of holding the Company’s investments are:

Country	Name of sub-custodian	Regulator
The Netherlands	The Bank of New York Mellon SA/NV	Financial Services and Markets Authority, Belgium
Canada	CIBC Mellon Trust Company	Canadian Securities Administrators
United States of America	The Bank of New York, New York	US Securities and Exchange Commission
France	BNP Paribas Securities Services, Paris	Banque de France

The Global Custodian’s safekeeping fees are charged according to the jurisdiction in which the holdings are based. The majority of the Company’s assets attract a fee of 0.008% of their market value. Variable transaction fees are also chargeable.

Company Promotion

The aim of the Company’s promotional activities is to encourage demand for the Company’s shares. The Company has appointed Frostrow to provide marketing services in the belief that a well-marketed investment company is more likely to grow over time, have a more diverse, stable list of shareholders and its shares will trade at close to NAV per share over the long run. Frostrow actively promotes the Company in the following ways:

Engaging regularly with institutional investors, discretionary wealth managers and a range of execution-only platforms: Frostrow regularly meets institutional investors, discretionary wealth managers and execution-only platform providers to discuss the Company’s strategy and to understand any issues and concerns, covering both investment and corporate governance matters;

Making Company information more accessible: Frostrow works to raise the profile of the Company by targeting key groups within the investment community, holding annual investment seminars, overseeing PR output and managing the Company’s website and wider digital offering, including portfolio manager webcasts and social media;

Disseminating key Company information: Frostrow performs the Investor Relations function on behalf of the Company and manages the investor database. Frostrow produces all key corporate documents, distributes monthly factsheets, annual reports and updates from Lindsell Train on the portfolio and market developments; and

Monitoring market activity, acting as a link between the Company, shareholders and other stakeholders: Frostrow maintains regular contact with sector broker analysts and other research and data providers, and conducts periodic investor perception surveys, liaising with the Board to provide up-to-date and accurate information on the latest shareholder and market developments.

Key Performance Indicators

The Board continually reviews overall performance. The Company’s net asset value per share is announced daily via a regulatory news service and is available online.

At each Board meeting, the Board considers a number of performance measures to assess the Company’s success in achieving its investment objective. The key performance indicators (KPIs) are as follows:

Frostrow is responsible for ensuring the Company complies with the AIFMD, and for providing company secretarial, administration and marketing services to the Company. The management of the portfolio has been delegated to Lindsell Train. Each provider is responsible to the Board which is ultimately responsible to the shareholders for performing against the above KPIs.

Net asset value total return

The Directors regard the Company’s net asset value total return to be a key indicator of value delivered to shareholders over the long term. Total return reflects the net asset value growth of, and the dividends paid by, the Company.

During the year under review the Company’s net asset value per share total return was 20.6% (2015: 12.0%) outperforming the benchmark by 3.8% in absolute terms.

A full description of performance during the year under review and the investment portfolio is contained in the Portfolio Manager’s Review.

Share price total return

The Directors regard the Company’s share price total return to be a key indicator of performance.

During the year under review the Company’s share price total return was 20.8% (2015: 11.8%).

Revenue return per share

The Directors regard the Company’s revenue return per share to be an important indicator of performance.

The revenue return per share for the year was 15.2 p per share (2015: 13.5p per share). The Company’s net revenue return during the year was up 12.6%.

Share price discount/premium to net asset value per share

The Board reviews the level of discount/premium to net asset value per share at every Board meeting and consideration is given to ways in which the share price performance may be enhanced, including the effectiveness of marketing and share issuance and buy-backs, where appropriate.

Demand for the Company’s shares led to the issue of a total of 21,353,000 new shares during the year at a premium to the prevailing cum or ex income net asset value per share at the time of issue. No shares were repurchased by the Company during the year. At 30 September 2016 the Company’s share price stood at par to the Company’s net asset value per share. (2015: (0.1%)).

Benchmark and peer group performance

The Company’s benchmark is the FTSE All-Share Index (total return) which delivered a return of 16.8% (2015: (2.3)%) over the year. This compares to the Company’s share price total return of 20.8%.

The Board also monitors the Company’s net asset value return against its peer group. As at 30 September 2016 the Company ranked number one out of eleven over one, three, five and ten years.*

* source: Morningstar

Risk Management

The principal risks identified by the Board and the actions taken to mitigate them are set out below under six headings.

A detailed risk matrix is reviewed and updated by the Company’s Audit Committee, on behalf of the Board, twice yearly. The principal risks and uncertainties faced by the Company relate to the nature of its objectives and strategy as an investment company and the markets in which it invests.

There were no changes to the Company’s risk management systems during the year and no significant failings or weaknesses were identified from the Board’s most recent risk review.

Principal Risks and Uncertainties		Mitigation
Corporate Strategy
The Company’s business model or investment objective may become unacceptable or unattractive to shareholders.		The Board reviews the Company’s investment mandate in relation to market and economic conditions and monitors the Company’s performance against its peers. In addition, the Board holds meetings with shareholders when necessary and regularly reviews the AIFM’s reports on marketing activities and investor feedback. The Company’s stockbroker also regularly reports to the Board on investor sentiment and movements on the share register. The Board holds quarterly discussions with the portfolio manager and undertakes a regular review of compliance with the Company’s investment restrictions.
The Board may be unable to maintain a progressive dividend policy.		The Board regularly reviews income forecasts produced by the AIFM. The Company’s articles of association (the “Articles”) have been amended to permit the payment of dividends out of capital. The Board also regularly reviews the Company’s gearing levels in discussion with the Portfolio Manager as well as compliance with the gearing limits it sets.
The Company’s share price total return may differ materially from the NAV per share total return.		The Board has implemented a discount control mechanism which is intended to protect against the share price widening beyond a 5% discount to NAV per share and a share issuance programme which acts as a premium control mechanism.
Investment Strategy and Activity
The investment strategy adopted by the Portfolio Manager may lead to an investment return that is materially lower than the Company’s benchmark index, thereby failing to achieve the Company’s investment objective.		The Board reviews the performance of the portfolio against the benchmark and the Company’s peer group at every meeting as well as a monthly compliance report and the monthly fact sheet. The Board discusses with the Portfolio Manager the structure of the portfolio, including asset allocation and portfolio concentration, and the investment strategy at each meeting.
The departure of a key individual at the Portfolio Manager may affect the Company’s performance.		The Management Engagement Committee reviews the portfolio management arrangements on an annual basis or as appropriate. In turn, the Portfolio Manager reports on developments at Lindsell Train, including their business continuity and succession plans.
Shareholder Relations and Corporate Governance
The investment objective of existing shareholders no longer coincides with the investment objective of the Company or the Board becomes unaware of the identity of the Company’s shareholders.		The Board regularly reviews movements in the Company’s shareholder register. In addition, the AIFM and the Company’s corporate stockbroker both report on their interactions with investors.
Poor adherence to corporate governance best practice or errors or irregularities in published information could lead to censure by the FCA and/or result in reputational damage to the Company.		The Board reviews all information supplied to shareholders and the AIFM’s marketing activity each quarter and periodically reviews the Company’s website. Details of the Company’s compliance with corporate governance best practice, including information on relations with shareholders, are set out in the Corporate Governance Report.
Operational
The Company’s service providers perform poorly, fail to meet their contractual obligations or fail to provide sufficient or accurate information to the Board for decision-making.		The Management Engagement Committee reviews the terms of all major service agreements and the Audit Committee meets annually with the Company’s auditors to discuss the year’s audit findings without management being present. The AIFM reports by exception on the performance of outsourced service providers and reviews contracts to ensure they remain reasonable and competitive, undertaking tender processes when appropriate.
Errors regarding title to investment holdings or threats to the solvency of the depositary may expose the Company to financial loss.		Both the AIFM’s and the Portfolio Manager’s compliance officers report to the Audit Committee at every meeting and their internal control report, together with the internal control report of the Custodian, are reviewed annually. These reviews include consideration of the associated cyber security risks facing the Company. The AIFM monitors the portfolio movements daily and the Depositary submits semi-annual reports on the safe-keeping of the Company’s assets. The AIFM and the Depositary undertake stock reconciliations and produce monthly exceptions reports, with any discrepancies investigated promptly.
Financial
The Company is exposed to market risk, liquidity risk, credit risk and fraud.		The Portfolio Manager is responsible for undertaking reviews of the creditworthiness of the counterparties that it uses. The Board also sets and reviews the Company’s hedging policy and reviews the exposures in the portfolio at each Board meeting. Compliance with investment guidelines is confirmed monthly. The Board reviews a financial analysis at each meeting and the Depositary monitors all payments made from the Company’s accounts as well as the custody of the Company’s assets. The AIFM confirms adherence with the relevant loan covenants to the provider of the Company’s loan facility on a monthly basis. Board approval is required for gearing and the Board reviews loan covenants on a monthly basis. Further information on financial instruments and risk can be found in note 17 to the Financial Statements.
Accounting, Legal and Regulatory
The regulatory environment in which the Company operates changes, affecting the Company’s modus operandi. Failure to comply with applicable laws and regulations could expose the Company to serious financial loss and reputational damage.		The Board relies on the services of its AIFM and its external advisers to ensure compliance with applicable laws and regulations including the Companies Act 2006, the AIFM Rules, the Corporation Tax Act and the UKLA Listing Rules. The Board reviews compliance reports and internal control reports provided by its service providers, as well as the Company’s financial statements and forecasts. The Depositary reports twice yearly to the Audit Committee, confirming that the Company, acting through the AIFM, has been managed in accordance with the AIFMD, the FUND sourcebook, the Articles (in relation to the calculation of the NAV per share) and with investment restrictions and leverage limits set in its offering documents. The Directors attend AIC Roundtables and conferences to keep up to date on regulatory changes and the Board appoints a specialist investment trust AIFM.

Directors

The Directors of the Company who were in office during the year and up to the date of signing the financial statements were:

Anthony Townsend (Chairman)

John Allard

Neil Collins

Simon Hayes

David Hunt (Chairman of the Audit Committee and Senior Independent Director)

Vanessa Renwick

. Details of the Directors’ remuneration arrangements can be found within the Directors’ Remuneration Report.

Board Diversity

The Board supports the principle of Boardroom diversity, of which gender is one important aspect, and the recommendations of Lord Davies’ review. The Board’s aim is to have a broad range of approaches, backgrounds, skills and experience represented on the Board to make appointments on merit against objective criteria, including diversity. The Board currently comprises five men and one woman.

The Company does not have any employees. Therefore there is no employee information to disclose.

Social, Human Rights and Environmental Matters

The Directors, through the Company’s Portfolio Manager, encourage companies in which investments are made to adhere to best practice with regard to corporate governance. In light of the nature of the Company’s business there are no relevant human rights issues and the Company does not have a human rights policy.

The Company recognises that social and environmental issues can have an effect on some of its investee companies.

The Company is an investment trust and so its own direct environmental impact is minimal. The Board of Directors consists of six Directors, all of whom are resident in the United Kingdom. The Board holds its regular meetings in the United Kingdom and has a policy that travel, as far as possible, is minimal.

The Company falls outside the scope of the Modern Slavery Act 2015 as the Company has no employees. The Company’s suppliers are professional firms and they provide assurance that they also operate in accordance with this legislation.

Approval

The Strategic Report was approved by the Board of Directors on 13 December 2016 and signed on its behalf by:

Anthony Townsend
Chairman

Board of Directors*

The Board of Directors supervises the management of Finsbury Growth & Income Trust PLC and looks after the interests of Shareholders. Each of the Directors is re-elected by shareholders annually.

Anthony Townsend, Chairman

Anthony Townsend, (68), rejoined the Board on 1 February 2005 and became Chairman on 30 January 2008. He has spent over 40 years working in the City and was Chairman of the Association of Investment Companies from 2001 to 2003. Anthony is also Chairman of Baronsmead Second Venture Trust plc, British & American Investment Trust PLC, F&C Global Smaller Companies PLC, Miton Global Opportunities plc, and Gresham House plc.

Shares held: 179,468

Remuneration: £33,000

Neil Collins

Neil Collins, (69), has served on the Board since 30 January 2008. He has spent most of his career in financial journalism and was City Editor of The Daily Telegraph for nearly 20 years until he retired from the position in 2005. Prior to that he had been City Editor of the London Evening Standard and The Sunday Times. A former columnist for the London Evening Standard and commentator for Reuters, Neil currently writes a column for the Financial Times on Saturdays. He was formerly a director of Templeton Emerging Markets Investment Trust PLC.

Shares held: 61,908

Remuneration: £22,000

David Hunt, FCA

David Hunt, (69), has been a Director since 6 July 2006. A Chartered Accountant, he was formerly a director in the Assurance and Business Services division of Smith & Williamson Limited. Prior to that he was a partner at both Binder Hamlyn and Andersen. David has over 30 years’ experience advising quoted companies. He is the Senior Independent Director and Chairman of the Audit Committee. David is also a member of the Audit and Risk Committee of the Church of England Pensions Board.

Shares held: 35,000

Remuneration: £25,250

John Allard

John Allard, (70), has served on the Board since 11 October 2000. A Director of M&G Investment Management for 16 years, he was an Investment Manager with M&G for over 20 years, specialising in equity income funds. John has been a director of various investment trust companies since 1981.

Shares held: 43,582

Remuneration: £22,000

Simon Hayes

Simon Hayes (46), joined the Board on 29 June 2015. Simon is the Chairman of Peel Hunt LLP. He joined Peel Hunt in 1993 and was appointed Head of Corporate Finance in 2003, Chief Executive in 2006 and Chairman in 2016.

Shares held: 20,000

Remuneration: £22,000

Vanessa Renwick

Vanessa Renwick, (55), has served on the Board since 11 October 2000. Vanessa has over 20 years’ experience in the investment funds industry, having worked for Laing & Cruickshank and UBS Warburg. Vanessa has particular expertise in corporate finance and marketing.

Shares held: 47,947

Remuneration: £22,000

All members of the Board are non-executive. None of the Directors has any other connection with the Portfolio Manager or is employed by any of the companies in which the Company holds an investment or any of the Company’s service providers.

* information as at 30 September 2016

The Board and Committees

Responsibility for effective governance and for the overall management of the Company’s affairs lies with the Board. The governance framework of the Company reflects the fact that as an investment company it has no employees and outsources portfolio management to Lindsell Train and company management, risk management, company secretarial, administrative and marketing services to Frostrow.

The Board

Chairman – Anthony Townsend

Senior Independent Director – David Hunt

Four additional non-executive Directors, all considered independent.

Key responsibilities:

–to set strategy, values and standards;

–to provide leadership within a controls framework of which enables risk to be assessed and managed; and

–to challenge constructively and scrutinise performance of all outsourced activities.

Management Engagement Committee

Chairman

Anthony Townsend

All Directors

Key responsibilities:

–to review regularly the contracts, performance and remuneration of the Company’s principal service providers.

Audit Committee

Chairman

David Hunt

All Directors

Key responsibilities:

– to monitor the integrity of the annual report & financial statements;

–to oversee the risk and control environment and financial reporting; and

–to review the performance of the Company’s external auditor.

Copies of the full terms of reference, which clearly define the responsibilities of each Committee, can be obtained from the Company Secretary, will be available for inspection at the Annual General Meeting, and can be found on the Company’s website at www.finsburygt.com.

Scheduled Meetings*

The table below sets out the number of scheduled Board and Committee meetings held during the year ended 30 September 2016 and the number of meetings attended by each Director.

In addition to the scheduled Board meetings there were a number of ad hoc Board meetings to consider matters such as the publication of the Company’s Prospectus, the Company’s authority to allot shares and the approval of regulatory announcements.

			Management
		Audit	Engagement
	Board	Committee	Committee
	(5)	(3)	(1)
Anthony Townsend	5	3	1
John Allard	5	3	1
Neil Collins	5	3	1
Simon Hayes	4	3	1
David Hunt	5	3	1
Vanessa Renwick	5	3	1

* Meetings of the Board, Audit and Management Engagement Committees were held on Tuesday, 4 October 2016, after the Company’s year end. All of the Directors attended the Annual General Meeting held on Thursday, 4 February 2016.

Directors’ Interests

The beneficial interests of the Directors and their families in the Company are set out within this announcement.

Corporate Governance

The Corporate Governance statement, forms part of the Report of the Directors.

The Board has considered the principles and recommendations of the AIC Code of Corporate Governance (AIC Code) by reference to the AIC Corporate Governance Guide for Investment Companies (AIC Guide). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.

The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Corporate Governance Code), will provide better information to shareholders.

The Company has complied with the recommendations of the AIC Code and the relevant provisions of the UK Corporate Governance Code, except as follows:

The UK Corporate Governance Code includes certain provisions relating to:

·the role of the chief executive

·executive directors’ remuneration

·the need for an internal audit function

For the reasons set out in the AIC Guide, and as explained in the UK Corporate Governance Code, the Board considers these provisions are not relevant to the position of the Company, being an externally managed investment company. In particular, all of the Company’s day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. Therefore with the exception of the need for an internal audit function which is addressed in the Audit Committee Report, the Company has not reported further in respect of these provisions.

The Principles of the AIC Code

The AIC Code is made up of 21 principles split into three sections covering:

– The Board

– Board Meetings and relations with the AIFM and the Portfolio Manager

– Shareholder Communications

AIC Code Principle		Compliance Statement
The Board
1. The Chairman should be independent.		The Board believes that the Chairman, Anthony Townsend is independent in character and judgement and is free from relationships that may create a conflict of interest between his own and the shareholders’ interests. The Directors are conscious of the benefits of continuity on the Board and believe that retaining a chairman with sufficient experience of both the Company and the markets is of great benefit to shareholders. There is a clear division of responsibility between the Chairman, the Directors, the AIFM, the Portfolio Manager and the Company’s other third party service providers. The Chairman also continues to be independent of the Portfolio Manager. The Chairman has a seat on the Board of the Company’s AIFM by virtue of the Company’s minority partnership interest in Frostrow. It is a non-executive position and therefore the Board does not believe that this compromises his independence from the Company.
2. A majority of the Board should be independent of the AIFM and the Portfolio Manager.		The Board consists of six non-executive Directors, each of whom is independent of the AIFM and of the Portfolio Manager. None of the Board members has been an employee of the AIFM or Portfolio Manager nor does any Director have relationships or conflicts which are likely to affect their independent judgement.
3. Directors should be submitted for re-election at regular intervals. Nomination for re-election should not be assumed but be based on disclosed procedures and continued satisfactory performance.		All Directors submit themselves for annual re-election by shareholders. The individual performance of each Director standing for re-election is evaluated annually by the remaining members of the Board and, if considered appropriate, a recommendation is made that shareholders vote in favour of their re-election at the Company’s Annual General Meeting.
4. The Board should have a policy on tenure, which is disclosed in the annual report.		The Board subscribes to the view expressed within the AIC Code that long-serving directors should not be prevented from forming part of an independent majority. It does not consider that a director’s tenure necessarily reduces his or her ability to act independently and, following formal performance evaluations, believes that each of those directors is independent in character and judgement and that there are no relationships or circumstances which are likely to affect their judgement. The Board’s policy on tenure is that continuity and experience are considered to add significantly to the strength of the Board and, as such, no limit on the overall length of service of any of the Company’s Directors, including the Chairman, has been imposed. In view of its non-executive nature, the Board considers that it is not appropriate for the Directors to be appointed for a specified term, although new Directors are appointed with the expectation that they will serve for a minimum period of three years, subject to shareholder approval. The terms and conditions of the Directors’ appointments are set out in letters of engagement which are available for inspection on request at the office of Frostrow, the Company’s AIFM, and from the Company Secretary at the Annual General Meeting to be held in January 2017.
5. There should be full disclosure of information about the Board.		The Directors’ biographical details demonstrate the wide range of skills and experience that they bring to the Board. Details of the length of service of each Director are set out in the Directors’ Remuneration Policy Report. Details of the Board’s committees and their composition are set out in the governance report. The Audit Committee is comprised of at least one member with recent relevant financial experience and as a whole has competence relevant to the sector to carry out its duties. Owing to the small size and non-executive nature of the Board, separate remuneration or nomination committees have not been established. Instead, these functions are carried out by the Board as a whole.
6. The Board should aim to have a balance of skills, experience, length of service and knowledge of the company.		The Board considers annually the mix of skills possessed by the Directors, as well as the balance and composition of the Board. The Directors’ biographies demonstrate the breadth of investment, commercial and professional experience relevant to their positions as directors of the Company. It is the Directors’ measured opinion that the Board displays the necessary balance of skills, experience, length of service and knowledge of the Company. When considering new appointments, the Board seeks to add persons with complementary skills or who possess the skills and experience which fill any gaps in the Board’s knowledge or experience and who can, alongside existing Directors, devote sufficient time to the Company to carry out their duties effectively.
7. The Board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors.		During the year the performance of the Board, its committees and individual Directors (including each Director’s independence) was evaluated through a formal assessment process led by the Chairman. This involved the circulation of a Board effectiveness checklist, tailored to suit the nature of the Company, followed by discussions between the Chairman and each of the Directors. The performance of the Chairman was evaluated by the other Directors under the leadership of the Senior Independent Director. The review concluded that the Board was working well and that the structure, mix of skills and operation of the Board continue to be effective and relevant for the Company.
8. Directors’ remuneration should reflect their duties, responsibilities and the value of their time spent.		The Board annually reviews the fees paid to the Directors and compares these with the fees paid by the Company’s peer group and the investment trust industry generally, taking into account the level of time commitment and the responsibilities of each Board member. Details of the remuneration arrangements for the Directors of the Company can be found in the Directors’ Remuneration Policy Report and Directors’ Remuneration Report and in note 4 to the Financial Statements.
9. The independent directors should take the lead in the appointment of new directors and the process should be disclosed in the annual report.		All of the Directors are independent and, subject to there being no conflicts of interest, all Board members are entitled to vote on the appointment of new directors. The Board annually reviews its size and structure, and is responsible for succession planning. The Board has, in the past, used an independent, specialist recruitment consultant to aid the recruitment process. The Board seeks to search for candidates and make appointments based on merit, against objective criteria and with due regard for the benefits of diversity on the Board. Details of the Board’s commitment to diversity are set out within the Business Review.
10. Directors should be offered relevant training and induction.		New appointees to the Board are provided with a full induction programme. The programme covers the Company’s investment strategy, policies and practices. The Directors are also given key information on the Company’s regulatory and statutory requirements as they arise including information on the role of the Board, matters reserved for its decision, the terms of reference for the Board Committees, the Company’s corporate governance practices and procedures and the latest financial information. It is the Chairman’s responsibility to ensure that the Directors have sufficient knowledge to fulfil their role and Directors are encouraged to participate in training courses where appropriate. The Directors have access to the advice and services of a Company Secretary through its appointed representative who is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. The Company Secretary updates the Board on statutory, regulatory and industry matters and internal controls, and changes affecting Directors’ responsibilities are advised to the Board as they arise. There is an agreed procedure for Directors, in the furtherance of their duties, to take independent professional advice if necessary at the Company’s expense.
11. The Chairman (and the Board) should be brought into the process of structuring a new launch at an early stage.		Principle 11 applies to the launch of new investment companies and is therefore not applicable to the Company.
The AIFM and Portfolio Manager
12. Boards and managers should operate in a supportive, co-operative and open environment.		The Board meets regularly throughout the year and representatives of the AIFM and the Portfolio Manager are in attendance at each meeting and Committee meeting. The Chairman encourages open debate to foster a supportive and co-operative approach for all participants.
13. The primary focus at regular Board meetings should be a review of investment performance and associated matters, such as gearing, asset allocation, marketing/investor relations, peer group information and industry issues.		The Board has agreed a schedule of matters specifically reserved for decision by the Board. This includes establishing the investment objectives, strategy and benchmarks, the permitted types or categories of investments, the markets in which transactions may be undertaken, the amount or proportion of the assets that may be invested in any category of investment or in any one investment, and the Company’s share issuance, share buy-back and treasury policies and level of gearing and asset allocation. The Board, at its regular meetings, undertakes reviews of key investment and financial data, revenue projections and expenses, analyses of asset allocation, transactions and performance comparisons, share price and net asset value performance, marketing and shareholder communication strategies, the risks associated with pursuing the investment strategy, peer group information and industry issues. Representatives of the AIFM and Portfolio Manager report on issues affecting the Company at each Board Meeting. The Audit Committee reviews the Company’s risk matrix and the Management Engagement Committee reviews the performance and cost of the Company’s third party service providers.
14. Boards should give sufficient attention to overall strategy.		The Board has established an annual programme of agenda items under which it reviews the Company’s objectives and strategy at each meeting.
15. The Board should regularly review both the performance of, and the contractual arrangements with, the Portfolio Manager (or executives of a self-managed company).		The Management Engagement Committee reviews annually the performance of the AIFM and the Portfolio Manager. The Committee considers the quality, cost and remuneration method of the service provided by the AIFM and the Portfolio Manager against their contractual obligations and the Board receives monthly reports on compliance with the investment restrictions which it has set. The Board also considers the performance analysis provided by the AIFM and Portfolio Manager. The Management Engagement Committee is also responsible for the regular review of the terms of the AIFM Agreement and the Portfolio Management Agreement. The Committee last met in October 2016, at which time it was agreed to amend both the AIFM and Portfolio Management Agreements. Details of the fee amendments can be found within the Strategic Report.
16. The Board should agree policies with the AIFM and the Portfolio Manager covering key operational issues.		The Portfolio Management Agreement sets out the limits of the Portfolio Manager’s authority, beyond which Board approval is required. The Board has also agreed detailed investment guidelines with the AIFM and the Portfolio Manager, which are considered at each Board meeting. A representative of the AIFM and the Portfolio Manager attends each meeting of the Board to address questions on specific matters and to seek approval for specific transactions which the Portfolio Manager is required to refer to the Board. The Board has reviewed the Portfolio Manager’s statement of commitment to the UK Stewardship Code and voting policy and the Portfolio Manager reports on their application. The Portfolio Manager’s statement of commitment to the UK Stewardship Code and voting policy can be found on the Portfolio Manager’s website in the corporate information section.
17. Boards should monitor the level of the share price discount or premium (if any)and, if desirable, take action to reduce it.		The Board considers the discount or premium of the Company’s share price to net asset value per share at each Board meeting and reviews any changes since the previous Board meeting and over the previous twelve months. The Board has implemented a discount/premium control mechanism.
18. The Board should monitor and evaluate other service providers.		The Management Engagement Committee reviews, at least annually, the performance of all the Company’s third party service providers, including the level and structure of fees payable and the length of the notice period, to ensure that they remain competitive and in the best interests of shareholders. The Audit Committee also reviews reports from the principal service providers on compliance and the internal and financial control systems in operation and relevant independent audit reports thereon, as well as reviewing service providers’ anti-bribery and corruption policies to address the provisions of the Bribery Act 2010.
Shareholder Communications
19. The Board should regularly monitor the shareholder profile of the company and put in place a system for canvassing shareholder views and for communicating the Board’s views to shareholders.		A detailed analysis of the shareholder register of the Company is provided to the Directors at each Board meeting. Representatives of the AIFM and Portfolio Manager regularly meet institutional shareholders and private client asset managers to discuss strategy and to understand their issues and concerns and, if applicable, to discuss corporate governance issues. The results of such meetings are reported at the following Board meeting. Regular reports from the Company’s broker are submitted to the Board on investor sentiment and industry issues. Shareholders wishing to communicate with the Chairman, or any other member of the Board, may do so by writing to the Company, for the attention of the Company Secretary at the offices of the AIFM. All shareholders are encouraged to attend the Annual General Meeting, where they are given the opportunity to question the Chairman, the Board and representatives of the Portfolio Manager. The Portfolio Manager will make a presentation to shareholders covering the investment performance and strategy of the Company at the forthcoming Annual General Meeting to be held in January 2017. The Directors welcome the views of all shareholders and place considerable importance on communications with them. The Chairman will ensure that all members of the Board are made aware of any issues or concerns raised by shareholders and that appropriate steps are taken so that the Board has an adequate understanding of these views, through communications with the Company’s AIFM and advisers.
20. The Board should normally take responsibility for, and have a direct involvement in, the content of communications regarding major corporate issues even if the manager is asked to act as spokesman.		The Board is directly involved in and responsible for communications on all major corporate issues and takes into account representations from the AIFM and Portfolio Manager, the Auditors, legal advisers and the Company’s stockbroker.
21. The Board should ensure that shareholders are provided with sufficient information for them to understand the risk/reward balance to which they are exposed by holding the shares.		The Company places great importance on communication with shareholders and aims to provide them with a full understanding of the Company’s investment objective, policy and activities, its performance and the principal investment risks by means of informative annual and half-year reports. This is supplemented by the daily publication, through the London Stock Exchange, of the net asset value of the Company’s shares and the monthly factsheet. The Annual Report provides information on the investment performance, portfolio risk and operational and compliance issues. Further details on the risk/reward balance are set out in note 17 to the Financial Statements. Details of the principal risks identified by the Board and the actions taken to mitigate them can be found within the Strategic Report. The Directors’ statement on the longer term viability of the Company is set out in the Directors’ Report. The investment portfolio is listed in the Strategic Report. The Company’s website,www.finsburygt.com, is updated with monthly factsheets and provides useful information about the Company including the Company’s financial reports, latest prospectus and announcements.

Election and Re-Election of the Directors

As the Company is a FTSE 350 company the Board has implemented the provisions of the UK Corporate Governance Code whereby all Directors of the Company stand for re-election on an annual basis.

The Board has considered the position of all of the Directors as part of the evaluation process, and believes that it would be in the Company’s best interests to propose them for re-election at the forthcoming Annual General Meeting for the following reasons:

Mr Townsend, who has been Chairman of the Company since January 2008, brings a wealth of experience to the Board through his long City career. He has been in the investment trust industry for over 25 years and was Chairman of the Association of Investment Companies from 2001-2003.

Mr Allard has extensive experience of the investment management industry and was previously a fund manager with M & G for over 20 years, specialising in equity income stocks. He has detailed knowledge of the markets in which the Company invests and takes a keen interest in all aspects of the Company’s portfolio.

Mr Collins is a financial journalist, he was City Editor of the Daily Telegraph for 19 years and currently writes a weekly column for the Financial Times. He has followed most of the companies in the Company’s portfolio for many years and is a passionate advocate of shareholders’ interests.

Mr Hayes is the Chairman of Peel Hunt LLP and has extensive industry and financial expertise with a strong interest in the investment trust sector.

Mr Hunt is Senior Independent Director and Chairman of the Audit Committee. He is a Chartered Accountant with over 30 years’ experience at partner level of advising quoted companies with Binder Hamlyn, Andersen and Smith & Williamson; his contribution to the Company’s Audit Committee is particularly respected by his colleagues.

Mrs Renwick has over 20 years’ experience at Laing & Cruickshank and UBS Warburg in corporate finance and marketing. She has specialist knowledge of investment product distribution throughout UK markets which is of great benefit to the Company.

The Chairman is pleased to report that following a formal performance evaluation, the Directors’ performance continues to be effective and they continue to demonstrate commitment to the role.

Conflicts of Interest Policy

Directors have a duty to avoid situations in which he or she has, or may have, a direct or indirect interest that conflicts, or possibly may conflict, with the Company’s interests. In line with the Companies Act 2006, the Board has the power to sanction any potential conflicts of interest that may arise and impose such limits or conditions as it thinks fit.

A register of interests and external appointments is maintained by the Company Secretary and is reviewed at each Board meeting. It was resolved at each Board meeting during the year that there were no direct or indirect interests of a Director which conflicted with the interests of the Company.

Anti-Bribery and Corruption Policy

A copy of the Company’s anti-bribery and corruption policy can be found on its website at www.finsburygt.com. The policy is reviewed regularly by the Audit Committee.

Relationship with Shareholders

The Board, the AIFM and the Portfolio Manager consider maintaining good communications with shareholders and engaging with larger shareholders through meetings and presentations a key priority. Shareholders are informed by the publication of annual and half year reports which include financial statements. These reports are supplemented by the daily release of the net asset value per share to the London Stock Exchange and the publication of monthly fact sheets. All this information including interviews with the Portfolio Manager is available on the Company’s website at www.finsburygt.com.

The Board is also keen that the Annual General Meeting (“AGM”) be a participative event for all shareholders. The Portfolio Manager makes a presentation and shareholders are encouraged to attend. The Chairmen of the Board and of the Company’s Committees attend the AGM and are available to respond to queries and concerns from shareholders. At least 20 working days’ notice of the AGM is given to shareholders and separate resolutions are proposed in relation to each substantive issue. Shareholders may submit questions for the AGM in advance of the meeting or make general enquiries of the Company via the Company Secretary. The Directors make themselves available after the AGM to meet shareholders.

Where the vote is decided on a show of hands, the proxy votes received are relayed to the meeting and subsequently published on the Company’s website. Proxy forms have a ‘vote withheld’ option. The notice of the next AGM sets out the business of the AGM together with the full text of any special resolutions.

The Company has made arrangements for investors through the Alliance Trust Savings Scheme to receive all Company communications and have the ability to direct the casting of their votes. The Company has also made arrangements with its registrar for shareholders who own their shares directly rather than through a nominee or share scheme, to view their account via the internet at www.capitashareportal.com. Share Dealing services are also available via this website.

The Board monitors the share register of the Company; it also reviews any correspondence from shareholders at each meeting and maintains regular contact with major shareholders. Shareholders who wish to raise matters with a Director may do so by writing to them at the registered office of the Company.

The Board receives marketing and public relations reports from the AIFM to which the marketing function has been delegated. The Board reviews and considers the marketing plans of the AIFM on a regular basis.

Exercise of Voting Powers

The Board has delegated authority to the Portfolio Manager to vote the shares owned by the Company that are held on its behalf by its Depositary, BNY Mellon Trust & Depositary (UK) Limited (which in turn delegates custody to the Global Custodian, The Bank of New York Mellon SA/NV London Branch, to safe keep the assets. The Board has instructed that the Portfolio Manager submit votes for such shares wherever possible and practicable. The Portfolio Manager may refer to the Board on any matters of a contentious nature.

Nominee Share Code

Where shares are held in a nominee company name and where the beneficial owner of the shares is unable to vote in person, the Company nevertheless undertakes:

·to provide the nominee company with multiple copies of shareholder communications, so long as an indication of quantities has been provided in advance;

·to allow investors holding shares through a nominee company to attend General Meetings, provided the correct authority from the nominee company is available; and

·that investors in the Alliance Trust Savings Scheme are automatically sent shareholder communications, including details of General Meetings, together with a form of direction to facilitate voting and to seek authority to attend.

Nominee companies are encouraged to provide the necessary authority to underlying shareholders to attend the Company’s General Meetings.

By order of the Board
Frostrow Capital LLP

Company Secretary

13 December 2016

Audit Committee Report

for the year ended 30 September 2016

The Committee, which comprises all of the Directors, meets at least three times during the year. All of the Committee members have recent and relevant financial experience, either through their senior management roles or other directorships, and their attendance is shown in the Governance section.

Responsibilities

As Chairman of the Audit Committee I can confirm that the Committee’s main responsibilities during the year were:

1. To review the Company’s half year and annual report and financial statements together with announcements and other filings relating to the financial performance of the Company and issuance of the Company’s shares. In particular, the Committee considered whether the financial statements were fair, balanced and understandable, allowing shareholders to assess the Company’s strategy, investment policy, business model, position and financial performance.

2. To review the risk management and internal control processes of the Company and its key service providers. As part of this review the Committee again reviewed the appropriateness of the Company’s anti-bribery and corruption policy. During the year the Committee reviewed the internal controls in place at the Company’s AIFM, its Portfolio Manager, its Registrar and its Depositary. Further information concerning risk management can be found within the Strategic Report.

3.To recommend the appointment of the external Auditors and agree the scope of their work and their remuneration, reviewing their independence and the effectiveness of the audit process.

4.To consider any non-audit work to be carried out by the Auditors. The Committee reviews the need for non-audit services in accordance with the Company’s Non-Audit Services policy, and authorises such on a case by case basis having given consideration to the cost effectiveness of the services and the objectivity of the Auditors. The external Auditors carried out no non-audit work during the year.

5. To consider the need for an internal audit function. Since the Company delegates its day-to-day operations to third parties and has no employees, the Committee has again determined there is no requirement for such a function.

6.To consider the valuation of the unquoted investment and agree the methodology of the valuation.

The Committee’s Terms of Reference are available for review on the Company’s website at www.finsburygt.com

Meetings and business

The Committee met three times during the year with one meeting being held on 4 October 2016. At each meeting the Committee met representatives of the AIFM and the Portfolio Manager who report as to the proper conduct of business in accordance with the regulatory environment in which the Company, the AIFM and the Portfolio Manager operate. The Committee also met the Auditors, without representatives of the AIFM and the Portfolio Manager being present, once during the year following completion of the audit.

The following matters were dealt with at these meetings:

December 2015:

–Consideration and review of the annual results

–Consideration and approval of the annual report and financial statements

–Review of the Company’s risk management processes

–Review of the Company’s anti-bribery and corruption policy and the measures put in place by the Company’s service providers

May 2016:

–Review of the Committee’s terms of reference

–Consideration and approval of the half year report and financial statements

–Review of risk Company’s management process and internal controls of its key providers

–Review of the AIFM’s internal control framework

October 2016*:

–Approval of the Auditors’ engagement letter and review of their plan for the 2016 audit

–Review of the Company’s risk management processes

–Review of the Company’s anti-bribery and corruption policy and the measures put in place by the Company’s service providers

–Review of the valuation of the unquoted investment

*This meeting was held on 4 October 2016 after the Company’s year end.

Financial Statements

The Financial Statements, and the Annual Report as a whole, are the responsibility of the Board. The Directors’ Responsibilities Statement forms part of the Governance Report. The Board looks to the Audit Committee to advise them in relation to the Financial Statements both as regards their form and content, issues which might arise and on any specific areas requiring judgement.

Significant Reporting Matters

The Committee considered certain significant issues in relation to the Financial Statements. These issues, and how they were addressed, were:

Overall accuracy of the Annual Report

The Committee dealt with this matter by considering the draft Annual Report, a letter from the AIFM in support of the letter of representation made by the Board to the Auditors and the Auditors’ Report to the Audit Committee.

Accounting Policies

The current accounting policies have been updated to reflect the minor changes introduced by the adoption of FRS 102.

Going Concern

The Committee is satisfied that it is appropriate for the Board to prepare the financial statements on the going concern basis. The Financial Statements for the year ended 30 September 2016.

Longer Term Viability

The Committee is satisfied that it is appropriate for the Directors to make the statement that they have a reasonable expectation that the Company will be able to continue its operations and meet its expenses and liabilities as they fall due over the next five years.

Recognition of Revenue from Investments

The Committee wished to receive assurance that all dividends receivable, including special dividends, had been accounted for correctly. They received the necessary confirmation.

Valuation of the Company’s Partnership Interest in Frostrow Capital LLP

The Committee reviewed the consistently applied valuation methodology of the Company’s partnership interest in Frostrow Capital LLP. The proposed valuation, based upon a discounted multiple of revenue, was accepted.

Valuation of the Company’s Investments

The Committee reviews the valuation and existence of investments every six months.

Adoption of new UK GAAP

The Company adopted FRS 102 during the year. The Committee dealt with this by:

–arranging for all Directors to be briefed by the Company’s auditors on the change made to UK GAAP and the expected impact on the Company; and

–reviewing a report prepared by the AIFM of the changes to be made to the half year and Annual Report.

Internal Controls

Risk assessment and the review of internal controls are undertaken by the Board in the context of the Company’s overall investment objective. The reviews cover the key business, operational, compliance and financial risks facing the Company.

The Company has outsourced all its activities and has obtained assurances and information from its various service providers relating to their internal systems and controls to enable the Board to make an appropriate risk and control assessment. Necessary steps will be taken should the review of internal controls identify any significant failings or weaknesses.

In accordance with guidance issued to directors of listed companies, the Directors confirm that they have carried out a robust assessment of the effectiveness of the system of risk management and internal financial controls during the year and that:

a)the Board has in place an ongoing procedure for identifying, evaluating and managing principal risks faced by the Company, which were in place for the year under review and up to the date of this report. This procedure is regularly reviewed by the Board and accords with FRC guidance; and

b)as mentioned above the Board is responsible for the Company’s system of internal controls and for reviewing its effectiveness and that it is designed to manage the risk of failure to achieve business objectives. This can only provide reasonable not absolute assurance against material misstatement or loss.

External Auditors

Meetings:

This year the nature and scope of the audit together with PricewaterhouseCoopers LLP’s audit plan were presented to the Committee on 4 October 2016.

As Chairman of the Committee, I met the Audit Partner, Mr Alex Bertolotti, and his Audit Manager on 21 November 2016 to discuss the outcome of the audit and the draft 2016 Annual Report and financial statements. The Committee then met PricewaterhouseCoopers LLP on 6 December 2016 to review the outcome of the audit and to discuss the limited issues that arose.

Details of the fees paid to the Auditors for audit services, audit related services and other non-audit services are set out in note 4 to the Financial Statements.

Independence and Effectiveness:

In order to fulfil the Committee’s responsibility regarding the independence of the Auditors, we reviewed:

–the senior audit personnel in the audit plan for the year,

–the Auditors’ arrangements concerning potential conflicts of interest,

–the extent of any non-audit services in line with the Company’s policy, and

–the statement by the Auditors that they remain independent within the meaning of the regulations and their professional standards.

In order to consider the effectiveness of the audit process, we reviewed:

–the Auditors’ fulfilment of the agreed audit plan,

–the report arising from the audit itself, and

–feedback from the AIFM.

Following appropriate correspondence the Committee satisfied itself concerning the Auditors’ independence and the effectiveness of the audit process, together with the degree of diligence and professional scepticism brought to bear.

The Audit Committee monitors the level of non-audit work carried out by the Auditors and seeks assurances from the Auditors that they maintain suitable policies and processes ensuring independence, and monitor compliance with the relevant regulatory requirements on an annual basis. The Company operates on the basis whereby the provision of non-audit services by the Auditors is permissible where no conflict of interest arises, where the independence of the Auditors is not likely to be impinged by undertaking the work and the quality and objectivity of both the non-audit work and audit work will not be compromised.

External Auditors

PricewaterhouseCoopers LLP were appointed as Auditors of the Company by the Directors in June 2014 and subsequently by shareholders in February 2015.

PricewaterhouseCoopers LLP have carried out the audit for the years ended 30 September 2014, 2015 and 2016 and were considered to be independent by the Board.

Having indicated their willingness to continue to act as Auditors to the Company for the forthcoming year a resolution re-appointing PricewaterhouseCoopers LLP as Auditors will be proposed at the forthcoming Annual General Meeting.

In accordance with EU Audit Regulations the Company will need to re-tender for new auditors at least every 10 years. It will be mandatory to change audit firm after 20 years. In the meantime, the Committee will continue to carry out an annual assessment of the effectiveness of the audit process.

		Length of
		service as at
	Date of	13 December
Auditors	appointment	2016
PricewaterhouseCoopers LLP	19 June 2014	3 years
Audit Partner Alex Bertolotti	19 June 2014	3 years

David Hunt, FCA
Chairman of the Audit Committee
13 December 2016

Directors’ Remuneration Report

Statement from the Chairman

I am pleased to present the Directors’ Remuneration Report to shareholders.

This report has been prepared in accordance with the requirements of Section 421 of the Companies Act 2006 and the Enterprise and Regulatory Reform Act 2013. An Ordinary Resolution for the approval of this report will be put to shareholders at the Company’s forthcoming Annual General Meeting.

The law requires the Company’s Auditors to audit certain disclosures within this report. Where disclosures have been audited, they are indicated as such and the Auditors’ opinion is included in their report to members.

Due to the Company’s size and to avoid the need to establish a separate Remuneration Committee, the Company’s remuneration function is carried out by the full Board under my Chairmanship. The Board considers the framework for the remuneration of the Directors on an annual basis. It reviews the ongoing appropriateness of the Company’s remuneration policy and the individual remuneration of Directors by reference to the activities of the Company and comparison with other companies of a similar structure and size. This is in-line with the AIC Code.

The last increase to the Directors’ fees was made on 1 October 2014. In 2015 it was agreed to maintain the fees paid to the Directors at their current levels.

At the most recent review, held on 4 October 2016, it was agreed that the Directors’ fees would be increased as follows, effective from 1 October 2016: Chairman increase of £1,500 from £33,000 to £34,500. Chairman of the Audit Committee and SID increase of £2,000 from £25,250 to £27,250. Directors’ increase of £1,000 from £22,000 to £23,000.

All levels of remuneration reflect both the time commitment and responsibility of the role.

No advice from remuneration consultants was received during the period under review.

Directors’ Fees

The Directors are remunerated exclusively by fixed fees in cash and do not receive bonus payments, pension contributions or other benefits from the Company. Directors are not offered options to acquire shares in the Company.

All Directors are entitled to the reimbursement of reasonable out of pocket expenses incurred by them in order to perform their duties as directors of the Company.

As noted in the Strategic Report, all of the Directors are non-executive and therefore there is no Chief Executive Officer (“CEO”). The Company does not have any employees. There is therefore no CEO or employee information to disclose.

No payments were made to former directors of the Company during the financial year ending 30 September 2016 (2015: Nil).

Single total figure of remuneration 2016 (audited)

				Taxable			Taxable
	Date of Appointment		Fees	expenses	Total	Fees	expenses	Total
	to the Board		2016	20163	2016	2015	20153	2015
Anthony Townsend1	1 February 2005		£33,000	–	£33,000	£33,000	–	£33,000
John Allard	11 October 2000		£22,000	–	£22,000	£22,000	£1,210	£23,210
Neil Collins	30 January 2008		£22,000	–	£22,000	£22,000	–	£22,000
Simon Hayes	29 June 2015		£22,000	–	£22,000	£5,669	–	£5,669
David Hunt2	6 July 2006		£25,250	–	£25,250	£25,250	–	£25,250
Vanessa Renwick	11 October 2000		£22,000	–	£22,000	£22,000	–	£22,000
			£146,250	–	£146,250	£129,919	£1,210	£131,129

1 Chairman of the Board

2 Chairman of the Audit Committee and Senior Independent Director

3 Under revised HMRC guidance, travel expenses and other out of pocket expenses are considered taxable benefits for UK-based directors. The expenses in this column comprise out of pocket travel and training expenses together with the associated tax liability incurred by the Directors in the performance of their duties, which are classed as taxable under HMRC guidance

At the Annual General Meeting held in February 2016 the results in respect of the resolutions to approve the Directors’ Remuneration Report were as follows:

Directors’ Remuneration Report

	Votes cast	Votes cast	Votes
	For	Against	withheld*
	35,797,020	808,663	248,476
	(97.79%)	(2.21%)

* Votes withheld are not votes by law and are therefore not counted in the calculation of votes for or against a resolution.

Shareholder approval of the Directors’ Remuneration Policy was last sought at the Annual General Meeting held in January 2014 and will be sought again at the next AGM to be held in January 2017.

Sums paid to Third Parties

None of the fees referred to in the table in the Directors’ Remuneration Report were paid to any third party in respect of the services provided by any of the Directors.

Loss of office

Directors do not have service contracts with the Company but are engaged under letters of appointment. These specifically exclude any entitlement to compensation upon leaving office for whatever reason.

Share Price Return

The chart below illustrates the shareholder return for a holding in the Company’s shares as compared to the FTSE All-Share Index, which the Board has adopted as the measure for both the Company’s performance and that of the Portfolio Manager for the eight years to 30 September 2016.

Relative Cost of Directors’ Remuneration for the Year ended 30 September 2016

The bar chart below shows the comparative cost of Directors’ fees compared with the level of dividend distribution for 2015 and 2016.

Directors’ Interests in Ordinary Shares

The Directors’ interests in the share capital of the Company are shown in the table below:

	Number of shares held
		(Audited)	(Audited)
	13 December	30 September	30 September
	2016	2016	2015
Anthony Townsend (Chairman)	179,468	179,468	179,468
John Allard	44,159	43,582	40,623
Neil Collins	61,908	61,908	48,842
Simon Hayes	20,000	20,000	10,000
David Hunt	35,000	35,000	32,000
Vanessa Renwick	47,960	47,935	42,657
Total	388,495	387,893	353,590

None of the Directors were granted or exercised rights over shares during the year. None of the Directors has any contract (including service contracts) with the Company. There are no provisions included within the Company’s Articles of Association which require Directors to hold shares in the Company.

Managers’ Interests in Ordinary Shares

As at 30 September 2016 Mr Alastair Smith, the Managing Partner of the AIFM, had interests in a total of 72,218 shares of the Company (2015: 63,605 shares) and Mr Nick Train, a Director of the Portfolio Manager, had interests in a total of 762,662 shares of the Company (2015: 522,616 shares).

Annual Statement

On behalf of the Board I confirm that the Remuneration Policy, and this Remuneration Report summarises, as applicable, for the year ended 30 September 2016:

(a)the major decisions on Directors’ remuneration;

(b)any substantial changes relating to Directors’ remuneration made during the year; and

(c)the context in which the changes occurred and decisions have been taken.

Anthony Townsend
Chairman
13 December 2016

Directors’ Remuneration Policy Report

The Company follows the recommendations of the AIC Code that Directors’ remuneration should reflect their duties, responsibilities and the value of their time spent. The Board’s policy is that the remuneration of the Directors should reflect the experience of the Board as a whole, and is determined with reference to comparable organisations and appointments. There are no performance conditions attaching to the remuneration of the Directors as the Board does not believe that this is appropriate for non-executive Directors. This policy is reviewed annually and it is intended that it will continue for the year ending 30 September 2017 and for subsequent financial years.

The fees for the Directors are determined within the limits set out in the Company’s Articles of Association, the maximum aggregate limit currently being £200,000 per annum, and they are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits. Directors are authorised to claim reasonable expenses from the Company in relation to the performance of their duties. The current and projected Directors’ fees for 2017 are shown in the following table. The Company does not have any employees.

Directors’ Fees Current and Projected

		Projected	Current
	Date of Appointment	Fees	Fees
	to the Board	2017	2016
Anthony Townsend (Chairman)	1 February 2005	£34,500	£33,000
John Allard	11 October 2000	£23,000	£22,000
Neil Collins	30 January 2008	£23,000	£22,000
Simon Hayes	29 June 2015	£23,000	£22,000
David Hunt (Chairman of the Audit Committee and Senior Independent Director)	6 July 2006	£27,250	£25,250
Vanessa Renwick	11 October 2000	£23,000	£22,000
		£153,750	£146,250

The current level of Directors’ fees will not be reviewed until at least September 2017. Any new Director being appointed to the Board who has not been appointed as either Chairman of the Board or as the Senior Independent Director will, under the current level of fees, receive £23,000 per annum.

Directors’ Remuneration Year Ended 30 September 2016

None of the Directors has a service contract. The terms of their appointment provide that Directors shall retire and be subject to election at the first Annual General Meeting after their appointment and to re-election annually thereafter. The terms also provide that a Director may be removed without notice and that compensation will not be due on leaving office. The terms and conditions of the Directors’ appointments are set out in formal letters of appointment which are available for review of the Company’s Annual General Meeting.

In accordance with best practice recommendations the Board will put the Remuneration Policy to shareholders at the Annual General Meeting at least once every three years. Approval of this policy was last granted by shareholders at the Annual General Meeting held in January 2014. In respect of the year under review no feedback has been received from shareholders in relation to remuneration.

Statement of Directors’ Responsibilities

The Directors are responsible for preparing the Report and Accounts, the Directors’ Remuneration Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the Directors have prepared the financial statements in accordance with United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law (United Kingdom Generally Accepted Accounting Practice).

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. 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 respectively;

·prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Financial Statements are published on the Company’s website www.finsburygt.com and via the website of the AIFM www.frostrow.com. The maintenance and integrity of these websites, so far as it relates to the Company, is the responsibility of the AIFM. The work carried out by the Auditors does not involve consideration of the maintenance and integrity of these websites and, accordingly, the Auditors accept no responsibility for any changes that have occurred to the Financial Statements since they were initially presented on these websites. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy.

Each of the Directors, whose names and functions are listed ,within the governance section confirm that, to the best of their knowledge:

·the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law), give a true and fair view of the assets, liabilities, financial position and net return of the Company; and

·the Directors’ Report contains a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board
Anthony Townsend
Chairman
13 December 2016

Financial Statements / Income Statement
for the year ended 30 September 2016

			2016			2015
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£’000	£’000	£’000	£’000	£’000	£’000
Gains on investments at fair value
through profit or loss	9	–	134,001	134,001	–	47,338	47,338
Exchange difference		–	(69)	(69)	–	(94)	(94)
Income	2	23,300	–	23,300	17,379	–	17,379
AIFM and Portfolio management fees	3	(1,594)	(3,236)	(4,830)	(1,252)	(2,541)	(3,793)
Other expenses	4	(981)	–	(981)	(952)	–	(952)
Return on ordinary activities before
finance charges and taxation		20,725	130,696	151,421	15,175	44,703	59,878
Finance charges	5	(219)	(445)	(664)	(187)	(379)	(566)
Return on ordinary activities
before taxation		20,506	130,251	150,757	14,988	44,324	59,312
Taxation on ordinary activities	6	(469)	–	(469)	(305)	–	(305)
Return on ordinary activities
after taxation		20,037	130,251	150,288	14,683	44,324	59,007
Basic and diluted return per share	7	15.2p	99.2p	114.4p	13.5p	40.8p	54.3p

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, therefore no separate statement of Total Comprehensive Income has been presented.

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.

The notes form part of these Financial Statements.

Financial Statements / Statement of Changes in Equity
for the year ended 30 September 2016

	Called up	Share	Capital				Total
	Share	premium	redemption	Special	Capital	Revenue	Shareholders’
	capital	account	reserve	reserve	reserve	reserve	funds
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 1 October 2015	30,241	341,188	3,453	12,424	273,166	13,218	673,690
Net return from ordinary activities	–	–	–	–	130,251	20,037	150,288
Second interim dividend (6.6p per share) for the year ended 30 September 2015*	–	–	–	–	–	(8,008)	(8,008)
First interim dividend (6.1p per share) for the year ended 30 September 2016*	–	–	–	–	–	(7,931)	(7,931)
Issue of shares	5,338	122,754	–	–	–	–	128,092
Cost of share issuance	–	(109)	–	–	–	–	(109)
At 30 September 2016	35,579	463,833	3,453	12,424	403,417	17,316	936,022
	Called up	Share	Capital				Total
	share	premium	redemption	Special	Capital	Revenue	Shareholders’
	capital	account	reserve	reserve	reserve	reserve	funds
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 1 October 2014	24,370	215,304	3,453	12,424	228,842	10,538	494,931
Net return from ordinary activities	–	–	–	–	44,324	14,683	59,007
Second interim dividend (6.2p per share) for the year ended 30 September 2014*	–	–	–	–	–	(6,086)	(6,086)
First interim dividend (5.5p per share) for the year ended 30 September 2015*	–	–	–	–	–	(5,917)	(5,917)
Issue of shares	5,871	125,992	–	–	–	–	131,863
Cost of share issuance	–	(108)	–	–	–	–	(108)
At 30 September 2015	30,241	341,188	3,453	12,424	273,166	13,218	673,690

* All dividends paid during the year have been funded from the Revenue reserves account.

The notes form part of these Financial Statements.

Financial Statements / Statement of Financial Position
as at 30 September 2016

		2016	2015
	Notes	£’000	£’000
Fixed assets
Investments designated at fair value through profit or loss	9	956,592	692,951
Current assets
Debtors	10	3,284	2,621
Cash and cash equivalents		12,198	8,440
		15,482	11,061
Current liabilities
Creditors: amounts falling due within one year		(1,552)	(1,322)
Bank loan	11	(34,500)	–
	11	(36,052)	(1,322)
Net current (liabilities)/assets		(20,570)	9,739
Total assets less current liabilities		936,022	702,690
Creditors: amounts falling due after more than one year
Bank loan	12	–	(29,000)
Net assets		936,022	673,690
Capital and reserves
Called up share capital	13	35,579	30,241
Share premium account		463,833	341,188
Capital redemption reserve		3,453	3,453
Special reserve		12,424	12,424
Capital reserve	14	403,417	273,166
Revenue reserve		17,316	13,218
Total shareholders’ funds		936,022	673,690
Net asset value per share – basic and diluted	15	657.7p	556.9p

The Financial Statements were approved by the Board of Directors on 13 December 2016 and were signed on its behalf by:

Anthony Townsend
Chairman

The notes form part of these Financial Statements.

Company Registration Number 13958 (Registered in Scotland)

Financial Statements / Statement of Cash Flows
for the year ended 30 September 2016

		2016	2015
	Notes	£’000	£’000
Net cash inflow from operating activities before interest	18	16,135	11,923
Interest paid		(664)	(566)
Net cash inflow from operating activities		15,471	11,357
Investing activities
Purchase of investments		(140,760)	(131,529)
Sale of investments		11,189	802
Net cash outflow from investing activities		(129,571)	(130,727)
Financing activities
Equity dividends paid		(15,939)	(12,003)
Shares issued		128,475	132,086
Drawdown of loans		5,500	5,900
Cost of share issuance		(109)	(108)
Net cash inflow from financing activities		117,927	125,875
Increase in cash and cash equivalents		3,827	6,505
Exchange movements		(69)	(94)
Cash and cash equivalents at 1 October		8,440	2,029
Cash and cash equivalents at 30 September		12,198	8,440

The notes form part of these Financial Statements.

Financial Statements / Notes to the Financial Statements

1. Accounting Policies

The Company is a public limited company (PLC) incorporated in England and Wales, with registered office of 50 Lothian Road, Festival Square, Edinburgh EH3 9WJ.

The principal accounting policies, all of which have been applied consistently throughout the year in the preparation of these Financial Statements, are set out below:

(a) Basis of preparation

The Financial Statements have been prepared under the historical cost convention, except for the measurement at fair value of investments, and in accordance with UK Generally Accepted Accounting Practice (GAAP) and the Statement of Recommended Practice (SORP) for “Financial Statements of Investment Trust Companies and Venture Capital Trusts” issued by the Association of Investment Companies and dated November 2014 and the Companies Act 2006.

The Financial Statements have been prepared on a going concern basis. The Directors believe this is appropriate as the Company’s net assets consist almost entirely of liquid securities which are quoted on recognised stock exchanges.

In preparing these financial statements the Company has applied FRS 102 ‘The Financial Reporting Standard applicable in the UK and Ireland’ for the first time. Aside from presentational aspects relating to the Statement of Cash Flows, no significant changes have arisen from the adoption of the new standards. Where changes have arisen, they are substantially in relation to presentation, disclosure and non-quantifiable aspects – there has been no impact to the financial position or the financial performance and no comparative figures required restating.

In preparing these financial statements the Company has early adopted amendments to FRS 102: Fair value hierarchy disclosures (March 2016) published by the FRC (see note 17).

Presentation of the Income Statement

In order to reflect better the activities of an investment trust company and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The net revenue return is the measure the Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Sections 1158 and 1159 of the Corporation Tax Act 2010.

Judgements and key sources of estimation and uncertainty

The preparation of the financial statements requires the Directors to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the Statement of Financial Position date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. In the process of applying the Company’s accounting policies, the Directors have made the following judgement, apart from those involving estimations, which has the most significant effect on the amounts recognised in the financial statements:

·The unquoted investment in Frostrow Capital LLP has been valued by the Directors at two times Frostrow’s annual recurring revenues with a 10% liquidity discount applied.

(b) Investments held at fair value through profit or loss

As the Company’s business is investing in financial assets with a view to profiting from their total return in the form of dividends, interest or increases in fair value, investments are designated at fair value through profit or loss and are initially recognised at fair value. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the investments is provided internally on this basis to the Board. Fair value for quoted investments is deemed to be bid market prices, or last traded price, depending on the convention of the stock exchange on which they are quoted.

Changes in the fair value of investments held at fair value through profit or loss, and gains and losses on disposal are recognised in the Income Statement as a capital item.

All purchases and sales of investments are accounted for on the trade date basis.

The Company’s policy is to expense transaction costs on acquisition through the capital column of the Income Statement. The total of such expenses, showing the total amounts included in disposals and acquisitions are disclosed in note 9.

(c) Investment Income

Dividends receivable on equity shares are recognised on the ex-dividend date.

Fixed returns on non-equity shares are recognised on a time apportionment basis.

Special dividends: In deciding whether a dividend should be regarded as a capital or revenue receipt, the Company reviews all relevant information as to the reasons for and sources of the dividend on a case by case basis depending upon the nature of the receipt.

The limited liability partnership (LLP) profit share is recognised in the financial statements when the entitlement to the income is established.

(d) Dividend Payments

Dividends paid by the Company on its shares are recognised in the financial statements in the period in which they are paid and are shown in the Statement of Changes in Equity.

(e) Expenditure and Finance Charges

All the expense and finance costs are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except as follows:

(1)expenses which are incidental to the acquisition or disposal of an investment are treated as part of the cost or proceeds of that investment (as explained in 1(b) above);

(2)expenses are taken to the capital reserve via the capital column of the Income Statement, where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In line with the Board’s expected long term split of returns, in the form of capital gains and income from the Company’s portfolio, 67% of the portfolio management fee, AIFM fee and finance costs are taken to the capital reserve;

(f) Taxation

Deferred taxation is provided on all timing differences that have originated but not been reversed by the Statement of Financial Position date other than those differences regarded as permanent. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the reversal of timing differences can be deducted. Any liability to deferred tax is provided for at the rate of tax enacted or substantially enacted.

Any tax relief obtained in respect of AIFM and portfolio management fees, finance costs and other capital expenses charged or allocated to the capital column of the Income Statement is reflected in the Capital Reserve and a corresponding amount is charged against the revenue column of the Income Statement. The tax relief is the amount by which corporation tax payable is reduced as a result of these capital expenses.

(g) Foreign currency

Transactions recorded in overseas currencies during the year are translated into Sterling at the exchange rates ruling at the date of the transaction. Assets and liabilities denominated in overseas currencies at the Statement of Financial Position date are translated into sterling at the exchange rate ruling at that date.

(h) Cash and Cash Equivalents

Cash and cash equivalents are defined as cash and demand deposits readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

(i)Nature and purpose of reserves

Special reserve

The special reserve arose following Court approval in July 2002 to transfer £13.16 million from the share premium account. This reserve is distributable and has historically been used to fund any share buy-backs by the Company.

Capital redemption reserve

This reserve arose when ordinary shares were redeemed by the Company and subsequently cancelled, at which point the amount equal to the par value of the ordinary share capital was transferred from the ordinary share capital to the capital redemption reserve.

Capital reserve

This reserve reflects any:

·gains or losses on the disposal of investments;

·exchange differences of a capital nature;

·the increases and decreases in the fair value of investments which have been recognised in the capital column of the Income Statement; and

·expenses which are capital in nature as disclosed in note I(e).

·following amendments to the Company’s Articles of Association in 2015, this reserve can be used to distribute realised capital profits by way of dividend.

Revenue reserve

This reserve reflects all income and expenditure which are recognised in the revenue column of the income statement and is distributable by way of dividend.

2. Income

	2016	2015
	£’000	£’000
Income from investments
Franked investment income
– dividends	19,370	14,755
Unfranked investment income
– overseas dividends	3,491	2,302
– limited liability partnership – profit-share	401	292
– limited liability partnership – priority profit share on AIFM capital contribution	38	30
Total income	23,300	17,379

3. AIFM and Portfolio Management Fees

			2016			2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000
AIFM fee	416	844	1,260	330	670	1,000
Portfolio management fee	1,178	2,392	3,570	922	1,871	2,793
Total fees	1,594	3,236	4,830	1,252	2,541	3,793

4. Other Expenses

			2016			2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000
Directors’ fees	146	–	146	130	–	130
Auditors’ fees –
statutory annual audit	27	–	27	25	–	25
taxation compliance services	–	–	–	4	–	4
Stock listing fees	157	–	157	157	–	157
Registrar fees	107	–	107	103	–	103
Depositary fees	155		155	121	–	121
Custody fees	96	–	96	71	–	71
Legal and professional fees	6	–	6	15	–	15
Promotional costs	47	–	47	61	–	61
Printing and postage	80	–	80	66	–	66
Other expenses*	160	–	160	199	–	199
Total expenses	981	–	981	952	–	952

All of the above expenses include VAT where applicable, with the exception of the fees paid to the Company’s Auditors, which are shown net of VAT.

* includes £5,000 payable to Grant Thornton UK LLP in relation to taxation compliance services carried out during the year.

Further details of the amounts paid to Directors are included in the Directors’ Remuneration Report.

5. Finance Charges

			2016			2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000
On bank loans wholly repayable within five years	198	402	600	168	340	508
Arrangement fees	–	–	–	3	7	10
Loan facility expenses	21	43	64	16	32	48
	219	445	664	187	379	566

6. Taxation on Ordinary Activities

(a) Analysis of charge in the year

			2016			2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000
UK Corporation tax at 20% (2015 20.5%)	–	–	–	–	–	–
Overseas withholding taxation	577	–	577	345	–	345
Recoverable overseas withholding taxation	(108)	–	(108)	(40)	–	(40)
	469	–	469	305	–	305

(b) Factors affecting current tax charge for year

The tax assessed for the year is lower (2015: lower) than the standard rate of UK corporation tax of 20% (2015: 20.5%)

The differences are explained below:

			2016			2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000
Total return on ordinary activities before taxation	20,506	130,251	150,757	14,988	44,324	59,312
Return on ordinary activities
multiplied by UK corporation tax of
20% (2015: 20.5%)	4,101	26,050	30,151	3,073	9,086	12,159
Effects of:
Overseas tax	577	–	577	345	–	345
Overseas tax recoverable	(108)	–	(108)	(40)	–	(40)
Franked investment income not subject to
corporation tax – UK dividend income	(3,874)	–	(3,874)	(3,025)	–	(3,025)
Overseas dividends not taxable	(698)	–	(698)	(472)	–	(472)
Excess expenses unutilised	471	–	471	424	–	424
Amounts charged to capital	–	736	736	–	599	599
Expenses not deductible for tax purposes	–	14	14	–	19	19
Capital return not subject to tax*	–	(26,800)	(26,800)	–	(9,704)	(9,704)
Current tax charge for the year (note 6(a))	469	–	469	305	–	305

* Gains on investments are not subject to corporation tax within an investment trust company.

(c) Provision for deferred taxation

No provision for deferred taxation has been made in the current or prior year.

At 30 September 2016, the Company has not recognised a deferred tax asset of £9,462,000 (17% tax rate) (2015: £9,944,000 20% tax rate) arising principally as a result of surplus management and loan expenses. It is not anticipated that this asset will be utilised in the foreseeable future.

Deferred tax is not provided on unrealised capital gains or losses arising on investments because the Company meets and intends to continue meeting the conditions for approval as an investment trust.

7. Return per Share

			2016			2015
	Revenue	Capital	Total	Revenue	Capital	Total
	pence	pence	pence	pence	pence	pence
Return per share	15.2	99.2	114.4	13.5	40.8	54.3

The total return per share is based on the total return attributable to equity shareholders of £150,288,000 (2015: £59,007,000), and on 131,338,370 (2015: 108,624,916) shares, being the weighted average number of shares in issue during the year.

Revenue return per share is based on the net revenue on ordinary activities after taxation of £20,037,000 (2015: £14,683,000).

Capital return per share is based on the net capital profit for the year of £130,251,000 (2015: £44,324,000).

8. Dividends

In accordance with FRS 102 dividends are included in the Financial Statements in the year in which they are paid or approved by shareholders.

	Ex-Dividend	Register	Payment	2016	2015
	Date	Date	Date	£’000	£’000
First interim dividend of 6.1p per share (2015: 5.5p)	7 April 2016	8 April 2016	11 May 2016	7,931	5,917
Second interim dividend of 7.0p per share (2015: 6.6p)	13 October 2016	14 October 2016	11 November 2016	9,982	8,008

The second interim dividend of 7.0p per share (2015: 6.6p) has not been included as a liability in these Financial Statements as it is only recognised in the financial year in which it is paid.

The total dividends payable in respect of the financial year which forms the basis of Section 1158 of the Corporation Tax Act 2010 are set out below:

	2016
	£’000
Revenue available for distribution by way of dividend for the year	20,037
2016: First interim dividend of 6.1p per share paid on 11 May 2016	(7,931)
2016: Second interim dividend of 7.0p per share paid on 11 November 2016	(9,982)
Net addition to revenue reserves	2,124

9. Investments

Analysis of portfolio movements

	2016	2015
	£’000	£’000
Opening book cost	446,682	315,065
Opening investment holding gains	246,269	199,733
Valuation at 1 October	692,951	514,798
Movements in the year:
Purchases at cost	140,829	131,617
Sales
– Proceeds	(11,189)	(802)
– Gain on sales	7,359	802
Net movement in investment holding gains	126,642	46,536
Valuation at 30 September	956,592	692,951
Closing book cost	583,681	446,682
Investment holding gains at 30 September	372,911	246,269
Valuation at 30 September	956,592	692,951

Investment holding gains

	2016	2015
	£’000	£’000
Gains based on historical cost	7,359	802
Net movement in investment holding gains in the year	126,642	46,536
Gains on investments during the year	134,001	47,338

Purchase transaction costs for the year to 30 September 2016 were £788,000 (2015: £736,000). These comprise of stamp duty costs of £650,000 (2015: £540,000) and commission of £138,000 (2015: £196,000). Sales transaction costs for the year to 30 September 2016 were £11,000 (2015: £nil) and comprise commission. These transaction costs are included within the gains on investments within the Income Statement.

10. Debtors

	2016	2015
	£’000	£’000
Amount due from broker in respect of shares issued by the Company	589	972
Prepayments and accrued income	2,695	1,649
	3,284	2,621

11. Creditors: amounts falling due within one year

	2016	2015
	£’000	£’000
Bank loan*	34,500	–
Amounts due to brokers	909	840
Other creditors and accruals	643	482
	36,052	1,322

* Scotiabank Europe PLC, the provider of the Company’s loan facility, has a fixed and floating charge over the assets of the Company as security against any funds drawn down under the loan facility. As at 30 September 2016, the Company was in its final few days of its three year secured fixed term multicurrency revolving credit facility of £50 million.

The main covenant under the loan facility required that, at each month end, total borrowings should not exceed £50 million and the ratio of Adjusted Total Net Assets to Debt was not permitted to be less than 5:1.

There were no breaches of the covenant during the year. The Board has set a gearing limit which must not exceed 25% of the Company’s Net Asset Value.

This facility was renewed on favorable terms on 4 October 2016. Further details can be found in note 17 and the Report of the Directors’.

12. Creditors: amounts falling due after more than one year

	2016	2015
	£’000	£’000
Bank loan	–	29,000
	–	29,000

13. Called Up Share capital

	2016	2015
	£’000	£’000
Allotted, issued and fully paid:
142,318,212 (2015: 120,965,212) ordinary shares of 25p each	35,579	30,241

During the year 21,353,000 new ordinary shares were issued for consideration of £128,092,000 being an average price of 599.88p per share. At the year end there was a debtor of £589,000 (2015: £972,000) in relation to shares issued but not settled until after the year end.

14. Capital Reserve

		Capital
		reserve
	Capital	investment
	reserves	holding gains
	realised	unrealised	Total
	£’000	£’000	£’000
At 1 October 2015	26,897	246,269	273,166
Net gains on investments	7,359	126,642	134,001
Expenses charged to capital	(3,236)	–	(3,236)
Finance costs charged to capital	(445)	–	(445)
Foreign currency exchange difference	(69)	–	(69)
At 30 September 2016	30,506	372,911	403,417

Under the terms of the Company’s Articles of Association, sums within “Capital Reserves Realised” are available for distribution.

15. Net Asset Value per Share

The net asset value per share is based on net assets of £936,022,000 (2015: £673,690,000) and on 142,318,212 (2015: 120,965,212) shares in issue at the year end.

16. Related Parties

The following are considered to be related parties:

·Lindsell Train Limited (Portfolio Manager)

·Frostrow Capital LLP (AIFM) (under the Listing rules)

·The Directors of the Company

Details of the relationship between the Company and Lindsell Train Limited are disclosed in the Business Review. Details of fees paid to Lindsell Train Limited by the Company can be found in note 3.

The Company has an investment in The Lindsell Train Investment Trust plc with a book cost of £1,000,000 (2015: £1,000,000) and a fair value of £8,200,000 as at 30 September 2016 (2015: £4,900,000). The Lindsell Train Investment Trust is managed by the Company’s Portfolio Manager.

Details of the relationship between the Company and Frostrow Capital LLP and details of the Company’s partnership interest in Frostrow Capital LLP, and income received from the partnership are set out in note 2 and note 17 respectively and are also disclosed in the Strategic Report. Details of fees paid to Frostrow Capital LLP can be found in note 3.

Details of the remuneration of all Directors can be found within the Directors’ Remuneration Report and the Directors’ Remuneration Policy. Details of the Directors’ interests in the capital of the Company can be found inDirectors’ Remuneration Report

All material related party transactions have been disclosed in notes 3 and 4.

17. Risk Management

As an investment trust, the Company invests in equities and other investments for the long term so as to secure its investment objective. In pursuit of its investment objective, the Company is exposed to a variety of risks that could result in either a reduction in the Company’s net assets or a reduction in the revenue returns available for distribution.

The Company’s financial instruments comprise mainly of equity investments, cash balances, borrowings, debtors and creditors that arise directly from its operations.

The principal risks inherent in managing the Company’s financial instruments are market risk, liquidity risk and credit risk. These risks and the Directors’ approach to the management of them are set out in the Strategic Report.

Market risk

Market risk comprises three types of risk: market price risk, interest rate risk and currency risk.

Market price risk

As an investment company, performance is dependent on the performance of the underlying companies and securities in which it invests. The market price of investee companies’ shares is subject to their performance, supply and demand for the shares and investor sentiment regarding the company or the industry sector in which it operates. Consequently market price risk is one of the most significant risks to which the Company is exposed.

At 30 September 2016, the fair value of the Company’s assets exposed to market price risk was £956,592,000 (2015: £692,951,000). If the fair value of the Company’s investments at the Statement of Financial Position date increased or decreased by 20%, while all other variables remained constant, the capital return and net assets attributable to shareholders for the year ended 30 September 2016 would have increased or decreased by £191,318,000 or 134.4p per share (2015: £138,590,000 or 114.6p per share).

No derivatives or hedging instruments are currently utilised to manage market price risk.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Interest rate movement may affect:

·the interest payable on the Company’s variable rate borrowings

·the level of income receivable from variable interest securities and cash deposits

·the fair value of investments of fixed rate securities

The Company’s main exposure to interest rate risk during the year ended 30 September 2016 was through its three year £50,000,000 secured multicurrency committed revolving credit facility with Scotiabank Europe PLC maturing in October 2016. Borrowings varied throughout the year as part of the Board’s endorsed policy. Borrowings at the year-end amounted to £34,500,000 (2015: £29,000,000) at an interest rate of 1.86% (LIBOR plus 1.30% per annum).

If the above level of borrowing was maintained for a year a 1% increase/decrease in LIBOR would decrease/increase the revenue return by £114,000, (2015: £96,000) decrease/increase the capital return by £231,000 (2015: £194,000), and decrease/increase the net assets by £345,000 (2015: £290,000).

The weighted average interest rate, during the year, on borrowings under the above mentioned revolving credit facility was 1.88% (2015: 1.87%).

On the 4 October 2016 the Board renewed the facility agreement with Scotiabank, for a further three years. Under the new agreement interest is charged at LIBOR plus 1.05% per annum, previously charged at LIBOR plus 1.30% per annum.

At 30 September 2016, the Company’s financial assets and liabilities exposed to interest rate risk were as follows:

	2016	2016	2015	2015
	within	more than	within	more than
	one year	one year	one year	one year
	£’000	£’000	£’000	£’000
Exposure to floating rates:
Assets
Cash and cash equivalents	12,198	–	8,440	–
Liabilities
Creditors: amount falling due within one year
– borrowings under the loan facility	(34,500)	–	–	–
Creditors: amount falling due after more than one year
– borrowings under the loan facility	–	–	–	(29,000)
Exposure to fixed rates:
Assets
Investments at fair value through profit or loss#	492	–	492	–
Liabilities	–	–	–	–

# Celtic 6% cumulative convertible preference shares and Frostrow Capital LLP AIFM Investment.

Currency risk

The Financial Statements are presented in sterling, which is the functional currency and presentational currency of the Company. At 30 September 2016, the Company’s investments, with the exception of five, were priced in sterling. The five exceptions, Heineken, listed in the Netherlands, Remy Cointreau listed in France, and Dr. Pepper Snapple, The Kraft Heinz Company and Mondelez International, all listed in the United States, represent 18% of the portfolio.

The AIFM and the Portfolio Manager monitor the Company’s exposure to foreign currencies on a continuous basis and regularly report to the Board. The Company does not hedge against foreign currency movements, but the Portfolio Manager takes account of the risk when making investment decisions.

Income denominated in foreign currencies is converted into sterling on receipt. The Company does not use financial instruments to mitigate the currency exposure in the period between its receipt and the time that the income is included in the Financial Statements.

At 30 September 2016 the Company held £84,704,000 (2015: £61,627,000) of investments denominated in U.S. dollars, £86,306,000 (2015: £55,391,000) in Euros and £nil (2015: £10,705,000) in Canadian dollars.

The following table details the sensitivity of the Company’s capital or revenue return after taxation for the year to a % increase and decrease in sterling against foreign currency, after applying the average rate of volatility of the currency over the year. The average rate of volatility for each currency over the year: U.S. dollars 4.4% increase and decrease (2015: 1.8%), Canadian dollars 5.9% (2015: 4.0%) and Euros 5.0% (2015: 3.6%).

If sterling had weakened against the foreign currencies, as stated above, this would have had the following effect:

			2016			2015
	US$	Canadian$	Euro	US$	Canadian$	Euro
	£’000	£’000	£’000	£’000	£’000	£’000
Increase in revenue return	17	–	27	4	–	3
Increase in capital return	3,880	–	4,492	1,148	442	2,066
Total return after tax/increase in shareholders’ funds	3,897	–	4,519	1,152	442	2,069

If sterling had strengthened against the foreign currency as stated above, this would have had the following effect:

			2016			2015
	US$	Canadian$	Euro	US$	Canadian$	Euro
	£’000	£’000	£’000	£’000	£’000	£’000
Decrease in revenue return	(16)	–	(25)	(4)	–	(2)
Decrease in capital return	(3,555)	–	(4,068)	(1,106)	(408)	(1,922)
Total return after tax/decrease in shareholders’ funds	(3,571)	–	(4,093)	(1,110)	(408)	(1,924)

Credit Risk

Credit risk is the Company’s exposure to financial loss from the failure of a counterparty to deliver securities or cash for acquisition or disposals of investments which could result in the Company suffering a financial loss. Credit risk is managed as follows:

–Investment transactions are carried out only with brokers whose creditworthiness is reviewed by the Portfolio Manager.

–Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company’s custodian bank ensures that the counterparty to any transactions entered into by the Company has delivered its obligation before any transfer of cash or securities away from the Company is completed.

–Any failing trades in the market are closely monitored by both the AIFM and the Portfolio Manager.

–Cash is only held at banks that have been identified by the Board as reputable and of high credit quality. Bank of New York Mellon has a credit rating of Aa1 (Moodys) and AA- (S&P).

As at 30 September 2016, the exposure to credit risk was £15,554,000 (2015: £11,133,000), comprising:

	2016	2015
	£’000	£’000
Fixed assets:
Non-equity investments (preference shares)	72	72
Current assets:
Other receivables (amounts due from brokers, dividends and interest receivable)	3,284	2,621
Cash and cash equivalents	12,198	8,440
Total exposure to credit risk	15,554	11,133

Liquidity risk of investments

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Liquidity risk is not significant as the majority of the Company’s assets are investments in quoted equities and other quoted securities that are readily realisable, and are significantly in excess of its financial liabilities.

Fair value of financial assets and financial liabilities

Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value or at a reasonable approximation of fair value.

Valuation of financial instruments

The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements. Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows:

·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:

	Level 1	Level 2	Level 3	Total
As at 30 September 2016	£’000	£’000	£’000	£’000
Equity investments	955,100	–	–	955,100
Limited liability partnership interest (Frostrow Capital LLP)	–	–	1,000	1,000
AIFM Capital contribution (Frostrow Capital LLP)	–	–	420	420
Preference share investments	72	–	–	72
	955,172	–	1,420	956,592
	Level 1	Level 2	Level 3	Total
As at 30 September 2015	£’000	£’000	£’000	£’000
Equity investments	691,459	–	–	691,459
Limited liability partnership interest (Frostrow Capital LLP)	–	–	1,000	1,000
AIFM Capital contribution (Frostrow Capital LLP)	–	–	420	420
Preference share investments	72	–	–	72
	691,531	–	1,420	692,951

The valuation techniques used by the Company are explained in the accounting policies note.

There have been no transfers during the year between Levels 1 and 2. A reconciliation of fair value measurements in Level 3 is set out below.

Level 3 Reconciliation of financial assets at fair value through profit or loss at 30 September

	2016	2015
	£’000	£’000
Opening fair value	1,420	1,060
AIFM Capital Contribution (Frostrow Capital LLP)	–	100
Total gains included in gains on investments in the Income Statement
– on assets held at the end of the year	–	260
Closing fair value	1,420	1,420

If the value of Frostrow Capital LLP’s revenue and the value of the AIFM investment was to increase or decrease by 10%, while all the other variables had remained constant, the return and net assets attributable to shareholders for the year ended 30 September 2016 would have increased/decreased by £131,000 (2015: £131,000).

Capital management objectives, policies and procedures

The structure of the Company’s capital is described in note 13 and details of the Company’s reserves are shown in the Statement of Changes in Equity.

The Company’s capital management objectives are:

·to ensure that it is able to continue as a going concern; and

·to achieve capital and income growth and to provide shareholders with a total return in excess of that of the FTSE All-Share Index through an appropriate balance of equity and debt.

The Board, with the assistance of the AIFM and the Portfolio Manager, regularly monitors and reviews the broad structure of the Company’s capital. These reviews include:

·the level of gearing, set at limits in normal market conditions, between 5% and 25% of net assets, which takes account of the Company’s position and the views of the Board, the AIFM and the Portfolio Manager on the market; and

·the extent to which revenue reserves should be retained or utilised.

·ensuring the Company’s ability to continue as a going concern and details of the related risks and how they are managed are set out on pages 68 and 22 to 24 of the Annual Report.

The Company’s objectives, policies and procedures for managing capital are unchanged from last year.

There were no breaches by the Company during the year of the financial covenants put in place by Scotiabank Europe plc in respect of the committed revolving credit facility provided to the Company.

These requirements are unchanged since last year and the Company has complied with them at all times.

18. Net Cash Inflow from Operating Activities Before Interest

	2016	2015
	£’000	£’000
Total return before finance charges and taxation	151,421	59,878
Less: capital return before finance charges and taxation	(130,696)	(44,703)
Net revenue before finance charges and taxation	20,725	15,175
Increase in accrued income and prepayments	(1,112)	(481)
Increase in creditors	161	99
Taxation – overseas tax paid	(403)	(329)
AIFM and Portfolio management fees charged to capital	(3,236)	(2,541)
Net cash inflow from operating activities	16,135	11,923

19. Substantial Interests

As at 30 September 2016 the Company held interests in 3% or more of any class of capital in the following entities:

			% of issued
			share capital
			or Limited
			Liability
		Fair value	Partnership
Company or Limited Liability Partnership	Shares held	£’000	interest
A.G. Barr	4,345,102	22,290	3.7
Celtic	3,192,128	2,267	3.4
Fidessa	1,196,500	28,680	3.1
Frostrow Capital LLP (unquoted)	–	1,420	10.0
The Lindsell Train Investment Trust plc*	10,000	8,200	5.0
Young & Co’s Brewery	1,050,000	10,763	5.5

* Also managed by Lindsell Train Limited who receive a portfolio management fee based on the Company’s market capitalisation. See the strategic Report for details of the existing and new fee arrangements.

Independent Auditors’ Report to the Members of Finsbury Growth & Income Trust PLC
Report on the Financial Statements

Our opinion

In our opinion, Finsbury Growth & Income Trust PLC’s financial statements (the “Financial Statements”):

·give a true and fair view of the state of the Company’s affairs as at 30 September 2016 and of its profit and cash flows for the year then ended;

·have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

·have been prepared in accordance with the requirements of the Companies Act 2006.

What we have audited

The Financial Statements, included within the Annual Report, comprise:

·the Income Statement for the year ended 30 September 2016;

·the Statement of Changes in Equity for the year then ended;

·the Statement of Financial Position as at 30 September 2016;

·the Statement of Cash Flows for the year then ended; and

·the notes to the Financial Statements, which include a summary of significant accounting policies and other explanatory information.

Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the Financial Statements. These are cross-referenced from the Financial Statements and are identified as audited.

The financial reporting framework that has been applied in the preparation of the Financial Statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Our audit approach

Overview

Materiality:

·Overall materiality: £9.36 million (2015: £6.73 million) which represents 1% of net assets.

Audit Scope:

·The Company is a standalone Investment Trust Company and engages Frostrow Capital LLP (the “AIFM”) to manage its assets.

·We conducted our audit of the Financial Statements at the offices of the AIFM and at Maitland Administration Services Limited (“Maitland”) (formerly Phoenix Administration Services Limited) who the AIFM has engaged to provide certain accounting, administrative and valuation functions to the AIFM of the Company.

·We tailored the scope of our audit taking into account the types of investments within the Company, the involvement of the third parties referred to above, the accounting processes and controls, and the industry in which the Company operates.

Areas of Focus:

·Investment income.

·Valuation and existence of investments.

The scope of our audit and our areas of focus

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”).

We designed our audit by determining materiality and assessing the risks of material misstatement in the Financial Statements. In particular, we looked at where the Directors made subjective judgements, the key area being the valuation of the one unquoted investment. As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.

The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, are identified as “areas of focus” in the table below. We have also set out how we tailored our audit to address these specific areas in order to provide an opinion on the Financial Statements as a whole, and any comments we make on the results of our procedures should be read in this context. This is not a complete list of all risks identified by our audit.

Area of focus		How our audit addressed the area of focus
Investment income Refer to page 37 of the Annual Report (Audit Committee Report), page 49 of the Annual Report (Accounting Policies) and page 50 of the Annual Report (notes). We focused on the accuracy and completeness of investment income recognition and its presentation in the Income Statement as set out in the requirements of The Association of Investment Companies Statement of Recommended Practice (the ‘AIC SORP’). This is because incomplete or inaccurate investment income could have a material impact on the Company’s net asset value and dividend cover.		We assessed the accounting policy for Investment Income recognition for compliance with accounting standards and the AIC SORP and performed testing to check that income had been accounted for in accordance with this stated accounting policy as set out in note 1(c) on page 49 of the Financial Statements. We understood and assessed the design and implementation of key controls surrounding Investment Income recognition. In addition, we tested dividend receipts by agreeing the dividend rates for a sample of all investments to independent third party sources. To test for completeness, we tested that the appropriate dividends had been received in the year by reference to independent data of dividends declared by a sample of investment holdings in the portfolio. We tested the allocation and presentation of Investment Income between the income and capital return columns of the Income Statement in line with the requirements set out in the AIC SORP. We then tested the validity of income and capital special dividends to independent third party sources.
Valuation and existence of investments Refer to page 37 of the Annual Report (Audit Committee Report), page 49 (Accounting Policies) and page 53 (notes) of the Annual Report. The investment portfolio at the year-end principally comprised listed equity investments valued at £957m. We focused on the valuation and existence of investments because investments represent the principal element of the net asset value as disclosed on the Statement of Financial Position in the Financial Statements.		We tested the valuation of the listed equity investments by agreeing the prices used in the valuation to independent third party sources. We tested the existence of the investment portfolio by agreeing the holdings for investments to an independent custodian confirmation from The Bank of New York Mellon SA/NV London Branch.

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the Financial Statements as a whole, taking into account the types of investment within the company, the involvement of the AIFM and Maitland, the accounting processes and controls, and the industry in which the Company operates.

The AIFM outsources certain accounting, administrative and valuation functions to Maitland.

As part of our risk assessment, we assessed the control environment in place at both the AIFM and Maitland to the extent relevant to our audit. This assessment involved obtaining and reading the relevant control reports, issued by the independent auditor of the AIFM and Maitland in accordance with generally accepted assurance standards for such work, to gain an understanding of both the AIFM’s and Maitland’s control environment and to consider the operating and accounting structure at both the AIFM and Maitland. Following this assessment, we applied professional judgement to determine the extent of testing required over each balance in the Financial Statements.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual Financial Statement line items and disclosures and in evaluating the effect of misstatements, both individually and on the Financial Statements as a whole.

Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:

Overall materiality		£9.36 million (2015: £6.73 million).
How we determined it		1% of net assets.
Rationale for benchmark applied		We have applied this benchmark, a generally accepted auditing practice for investment trust audits, in the absence of indicators that an alternative benchmark would be appropriate and because we believe this provides an appropriate and consistent year-on-year basis for our audit.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £468,000 (2015: £335,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Going concern

Under the Listing Rules we are required to review the Directors’ statement, set out on page 68 of the Annual Report , in relation to going concern. We have nothing to report having performed our review.

Under ISAs (UK & Ireland) we are also required to report to you if we have anything material to add or to draw attention to in relation to the Directors’ statement about whether they considered it appropriate to adopt the going concern basis in preparing the Financial Statements. We have nothing material to add or to draw attention to.

As noted in the Directors’ statement, the directors have concluded that it is appropriate to adopt the going concern basis in preparing the Financial Statements. The going concern basis presumes that the Company has adequate resources to remain in operation, and that the directors intend it to do so, for at least one year from the date the Financial Statements were signed. As part of our audit we have concluded that the Directors’ use of the going concern basis in preparing the Financial Statements is appropriate.

However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the Company’s ability to continue as a going concern.

Other required reporting

Consistency of other information

Companies Act 2006 opinion

In our opinion, the information given in the Strategic Report and the Report of the Directors for the financial year for which the Financial Statements are prepared is consistent with the Financial Statements.

ISAs (UK & Ireland) reporting

Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:

·	information in the Annual Report is:			We have no exceptions to report.
	-	materially inconsistent with the information in the audited Financial Statements; or
	-	apparently materially incorrect based on, or materially inconsistent with, our knowledge of the company acquired in the course of performing our audit; or
	-	otherwise misleading.
·	the statement given by the Directors on page 43 of the Annual Report, in accordance with provision C.1.1 of the UK Corporate Governance Code (the “Code”), that they consider the Annual Report taken as a whole to be fair, balanced and understandable and provides the information necessary for members to assess the Company’s position and performance, business model and strategy is materially inconsistent with our knowledge of the Company acquired in the course of performing our audit.			We have no exceptions to report.
·	the section of the Annual Report on page 36 of the Annual Report, as required by provision C.3.8 of the Code, describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee.			We have no exceptions to report.

The Directors’ assessment of the principal risks that would threaten the solvency or liquidity of the Company

Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to:

·	the Directors’ confirmation in the Annual Report that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity.		We have nothing material to add or to draw attention to.
·	the disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.		We have nothing material to add or to draw attention to.
·	the Directors’ explanation in the Annual Report, in accordance with provision C.2.2. of the code, as to how they have assessed the prospects of the Company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.		We have nothing material to add or to draw attention to.

Under the Listing Rules we are required to review the Directors’ statement that they have carried out a robust assessment of the principal risks facing the Company and the Directors’ statement in relation to the longer-term viability of the Company, set out on pages 68 and 69 of the Annual Report. Our review was substantially less in scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statements; checking that the statements are in alignment with the relevant provisions of the Code; and considering whether the statements are consistent with the knowledge acquired by us in the course of performing our audit. We have nothing to report having performed our review.

Adequacy of accounting records and information and explanations received

Under the Companies Act 2006 we are required to report to you if, in our opinion:

·we have not received all the information and explanations we require for our audit; or

·adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

·the Financial Statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Directors’ remuneration

Directors’ Remuneration Report – Companies Act 2006 opinion

In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

Other Companies Act 2006 reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of Directors’ remuneration specified by law are not made. We have no exceptions to report arising from this responsibility.

Corporate governance statement

Under the Companies Act 2006 we are required to report to you if, in our opinion, a corporate governance statement has not been prepared by the Company. We have no exceptions to report arising from this responsibility.

Under the Listing Rules we are required to review the part of the Corporate Governance Statement relating to ten further provisions of the UK Corporate Governance Code. We have nothing to report having performed our review.

Responsibilities for the financial statements and the audit

Our responsibilities and those of the directors

As explained more fully in the Statement of Directors’ Responsibilities set out on page 43 of the Annual Report, the Directors are responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the Financial Statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What an audit of financial statements involves

An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable assurance that the Financial Statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:

·whether the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequately disclosed;

·the reasonableness of significant accounting estimates made by the Directors; and

·the overall presentation of the Financial Statements.

We primarily focus our work in these areas by assessing the Directors’ judgements against available evidence, forming our own judgements, and evaluating the disclosures in the Financial Statements.

We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.

In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited Financial Statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Alex Bertolotti (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London

13 December 2016

Report of the Directors

In accordance with the requirements of the Companies Act 2006 (the “Act”) and the UK Listing and Disclosure and Transparency Rules, the Directors present their annual report on the affairs of the Company, together with the audited financial statements and the Independent Auditors’ Report for the year ended 30 September 2016.

Full biographical details of the Board of Directors can be found within the Strategic Report.

The Corporate Governance Statement forms part of this Report of the Directors.

Disclosures relating to future developments and risk management can be found within the Strategic Report.

Business and Status of the Company

The Company is registered as a public limited company in Scotland (Registered Number SC013958) and is an investment company within the terms of Section 833 of the Act. Its shares are listed on the premium segment of The Official List of the UK Listing Authority and traded on the main market of the London Stock Exchange which is a regulated market as defined in Section 1173 of the Act.

The Company has applied for and been accepted as an approved investment trust under sections 1158 and 1159 of the Corporation Taxes Act 2010 and Part 2 Chapter 1 of Statutory Instrument 2011/2999. The Directors are of the opinion that the Company has conducted its affairs so as to be able to retain such approval.

It is the Directors’ intention that the Company should continue to manage its affairs so as to be a qualifying investment for inclusion in the stocks and shares components of an Individual Savings Account (“ISA”) and Junior ISA.

The Company is required to comply with company law, the rules of the UK Listing Authority, UK Financial Reporting Standards, and its Articles of Association.

The Company is a member of the Association of Investment Companies (“AIC”).

Investment Objective and Policy

The Company’s investment objective is to achieve capital and income growth and to provide shareholders with a total return in excess of that of the FTSE All-Share Index.

Details of the Company’s investment policy and strategy can be found within the Strategic Report.

Results and Dividends

The results attributable to shareholders for the year are shown under Company Performance. Details of the Company’s dividend record can be found in the Business Review.

Share Capital

At the Annual General Meeting held on Thursday, 4 February 2016, authority to allot up to 12,811,621 shares on a non pre-emptive basis at prices not less than the higher of the prevailing cum or ex income net asset value per share at the time of issuance was granted.

All of the shares available under this allotment authority were issued and the Company held a General Meeting on 23 August 2016 where shareholder authority was obtained to issue a further 13,998,321 shares on the same basis. A prospectus has also been published in order to obtain admission to the Official List maintained by the UK Listing Authority of any shares issued pursuant to the authority obtained.

During the year, 21,353,000 new shares were issued by the Company at a premium to the higher of the prevailing cum or ex income net asset value per share at the time of issue. Since the year-end and to 13 December 2016, the latest practicable date before publication of this report, a further 5,340,000 new shares have been issued under the same issuance criteria.

No shares were repurchased by the Company during the year.

Capital Structure

The following includes disclosures that are made in accordance with S.1 2007/1093 C.49 Commencement No. 2 Order 2007.

The Company’s capital structure is composed solely of Ordinary Shares. Details are given in note 13 to the Financial Statements.

As at 30 September 2016 there were 142,318,212 shares of 25p each in issue (2015: 120,965,212) each share having one vote. Details of the voting rights in the Company’s shares at the date of this annual report are given in note 9 to the Notice of Annual General Meeting.

There were no shares held in treasury during the year (2015: nil).

Details of the substantial shareholders in the Company are listed in the Report of the Directors.

The giving of powers to issue or buy-back the Company’s shares requires the relevant resolution to be passed by shareholders. Proposals for the renewal of the Board’s current powers to issue and buy-back shares are detailed in the Notice of Annual General Meeting.

There are no restrictions concerning the transfer of securities in the Company; no special rights with regard to control attached to securities; no restrictions on voting rights; no agreements between holders of securities regarding their transfer known to the Company; and no agreements which the Company is party to that might affect its control following a successful takeover bid.

Substantial Share Interests

The Company was aware of the following substantial interests in the voting rights of the Company as at 30 September 2016 and 30 November 2016, being the latest practicable date before publication of the annual report:

		30 November 2016		30 September 2016
		Number of	% of	Number of	% of
Shareholders	Registered Holders	shares	capital	shares	capital
Hargreaves Lansdown	Various Nominee Accounts	14,730,524	10.07	14,129,463	9.93
Alliance Trust Savings	Alliance Trust Savings Nominees	14,291,453	9.77	13,970,807	9.82
Brewin Dolphin, stockbrokers	Various Nominee Accounts	12,812,192	8.76	12,499,904	8.79
Investec Wealth & Investment	Various Nominee Accounts	9,926,616	6.79	9,839,419	6.92
Rathbones	Various Nominee Accounts	7,504,105	5.13	7,459,262	5.24
Charles Stanley	Rock Nominees	5,185,449	3.55	5,058,816	3.56
JPMorgan Asset Management	Various Nominee Accounts	4,889,516	3.34	4,889,516	3.44
Aberdeen Asset Management	Various Nominee Accounts	4,406,919	3.01	4,352,912	3.06

As at 30 September 2016 the Company had 142,318,212 shares in issue. As at 30 November 2016 the Company had 146,548,212 shares in issue.

Beneficial Owners of Shares – Information Rights

The beneficial owners of shares who have been nominated by the registered holder of those shares to receive information rights under Section 146 of the Companies Act 2006 are required to direct all communications to the registered holder of their shares rather than to the Company’s registrar, Capita Asset Services, or to the Company directly.

Retail Investors advised by IFAs

The Company currently conducts its affairs so that its shares can be recommended by Independent Financial Advisers (“IFAs”) in the UK to ordinary retail investors in accordance with the Financial Conduct Authority (“FCA”) rules in relation to non-mainstream investment products and intends to continue to do so. The shares are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are shares in an authorised investment trust.

Individual Savings Accounts

The Company’s shares are eligible to be held in the stocks and shares component of an ISA or Junior ISA, subject to applicable annual subscription limits (£15,240 for an ISA and £4,080 for a Junior ISA for the 2016/2017 tax year). Investments held in ISAs or Junior ISAs will be free of UK tax on both capital gains and income. The opportunity to invest in Ordinary Shares through an ISA is restricted to certain UK resident individuals aged 18 or over. Junior ISAs are available for UK resident children aged under 18 and born before 1 September 2002 or after 2 January 2011. Sums received by a shareholder on a disposal of ordinary shares held within an ISA or Junior ISA will not count towards the shareholder’s annual limit. Individuals wishing to invest in ordinary shares through an ISA should contact their professional advisers regarding their eligibility as should individuals wishing to invest through a Junior ISA for children under 18 years old.

Fixed Asset Investments

The fair value of the Company’s investments at 30 September 2016 was £956,592,000 (2015: £692,951,000) showing a gain since acquisition of £372,911,000 (2015: gain £246,269,000). Taking these investments at this valuation, the net assets attributable to each share at 30 September 2016 amounted to 657.7p (2015: 556.9p).

Holding in The Lindsell Train Investment Trust plc and Partnership Interest in Frostrow Capital LLP

In 2001 the Company acquired a holding, equivalent to 5% of the issued share capital, in The Lindsell Train Investment Trust plc, which is managed by Lindsell Train, the Company’s Portfolio Manager. The Lindsell Train Investment Trust plc owns 25% of Lindsell Train and so the Company has an indirect interest of 1.25% in Lindsell Train.

The Company also acquired a 10% partnership interest in Frostrow in return for a capital contribution of £150,000 in 2007, of which £75,000 was repaid to the Company by Frostrow in 2008. The valuation of the Company’s investment in The Lindsell Train Investment Trust plc and Frostrow at the year end can be found within the Strategic Report. In addition, the Company has agreed to provide capital to Frostrow to enable it to satisfy its capital requirements under AIFMD, subject to a maximum of £500,000 in aggregate which may be varied from time to time. In return, the Company receives a priority return of 9% per annum of the balance of capital contributions made to Frostrow from time to time by the Company, as a first charge on Frostrow’s profits. As at 30 September 2016, Frostrow had received £420,000 (2015: £420,000) from the Company to meet its capital requirements under AIFMD. Subsequent to 30 September 2016 a further £60,000 was received.

Loan Facility

As at 30 September 2016 the Company was in the last year of its three-year secured fixed term committed revolving credit facility of £50 million with Scotiabank Europe PLC. As at this date a total of £34.5 million was drawn down from this facility (2015: £29 million) which equates to net gearing of 2.2% and which is consistent with the Company’s policy that the Company’s gearing should not exceed 25% of its net assets.

On 4 October 2016 the Board renewed the Facility Agreement increasing the limit to £75 million, with an additional £25 million accordion option. The amount drawn under the facility lies comfortably within the Company’s gearing limit and remains within the constraints of the Company’s investment policy.

Financial Instruments

The Company’s financial instruments comprise its portfolio, cash balances, debtors and creditors that arise directly from its operations, such as sales and purchases awaiting settlement and accrued income. The financial risk management and policies arising from its financial instruments are disclosed in note 17 to the Financial Statements.

Going Concern

The content of the investment portfolio, trading activity, the Company’s cash balances and revenue forecasts, and the trends and factors likely to affect the Company’s performance are reviewed and discussed at each Board meeting. The Directors, having made relevant enquiries, are satisfied that it is appropriate to continue to adopt the going concern basis in preparing the financial statements as a significant proportion of the Company’s holdings are readily realisable and, accordingly, the Company has adequate financial resources to continue in operation for at least the next 12 months.

Viability Statement

In accordance with the UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the 12 months required by the ‘Going Concern’ provision. The Board asked the Audit Committee to address this requirement, which should take account of the Company’s current position and the principal risks as set out in the Strategic Report so that the Board may state that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment.

To provide this assessment the Audit Committee has considered the Company’s financial position as described above and its ability to liquidate its portfolio and meet its expenses as they fall due:

·The portfolio comprises principally of investments traded on major international stock exchanges and there is a spread of investments by size of company. The current portfolio could be liquidated to the extent of 82% within seven trading days and there is no expectation that the nature of the investments held within the portfolio will be materially different in future;

·The expenses of the Company are predictable and modest in comparison with the assets and there are no capital commitments foreseen which would alter that position; and

·The Company has no employees, with only non-executive Directors and consequently does not have redundancy or other employment related liabilities or responsibilities.

The Audit Committee, as well as considering the principal risks and the financial position of the Company as set out above, has also considered the following assumptions in considering the longer-term viability:

·The Board and the Portfolio Manager will continue to adopt a long-term view when making investments, and anticipated holding periods can be at least five years;

·The Company has recently extended the loan facility provided by Scotiabank Europe PLC;

·The Company invests principally in the securities of UK listed companies to which investors will wish to continue to have exposure;

·There will continue to be demand for investment trusts;

·Regulation will not increase to a level that makes running the Company uneconomical; and

·The performance of the Company will continue to be satisfactory.

Taking account of the anticipated investment holding periods, the expected extension of the Company’s gearing facility and the liquidity and medium term prospects of the Company’s investment portfolio, the Directors have formed a reasonable expectation that the Company will be able to continue its operations and meet its liabilities as they fall due over the next five years.

Directors

Directors’ Fees

Reports on Directors’ Remuneration and also the Directors’ Remuneration Policy are set out on pages 39 to 42 of the Annual Report.

Directors’ and Officers’ Liability Insurance Cover

Directors’ and Officers’ liability insurance cover was maintained by the Board during the year ended 30 September 2016. It is intended that this policy will continue for the year ended 30 September 2017 and subsequent years.

Directors’ Indemnities

During the year and as at the date of this report, indemnities are in force between the Company and each of its Directors under which the Company has agreed to indemnify each Director, to the extent permitted by law, in respect of certain liabilities incurred as a result of carrying out his/her role as a Director of the Company. The Directors are also indemnified against the costs of defending any criminal or civil proceedings or any claim by the Company or a regulator as they are incurred provided that where the defence is unsuccessful the Director must repay those defence costs to the Company. The indemnities are qualifying third party indemnity provisions for the purposes of the Companies Act 2006.

A copy of each deed of indemnity is available for inspection at the offices of Frostrow during normal business hours and will be available for inspection at the Annual General Meeting.

Directors’ (and Other Senior Individuals) Interests

The beneficial interests in the Company of the Directors, of Nick Train, the individual with responsibility for managing the Company’s portfolio at Lindsell Train and Alastair Smith, Managing Partner at Frostrow, and the persons closely associated with them, are set out on page 41 of the Annual Report.

Corporate Governance

The Corporate Governance report, which includes the Company’s Corporate Governance policies is set out on pages 28 to 35 of The Annual Report.

AIFM and Portfolio Manager Evaluation and Re-Appointment

The performance of Frostrow as AIFM and Lindsell Train as Portfolio Manager is continuously monitored by the Board with a formal evaluation being undertaken each year. As part of this process the Board monitors the services provided by the AIFM and the Portfolio Manager and receives regular reports and views from them. The Board also receives comprehensive performance measurement reports to enable it to determine whether or not the performance objective set by the Board has been met.

Following a review at the Management Engagement Committee meeting in October 2016 the Board believes that the continuing appointment of the AIFM and the Portfolio Manager, under the terms described within the Strategic Report (as applicable), is in the best interests of the Company’s shareholders. In coming to this decision it took into consideration the following additional reasons:

–the quality and depth of experience of the management, company secretarial, administrative and marketing team that the AIFM brought to the management of the Company; and

–the quality and depth of experience allocated by the Portfolio Manager to the management of the portfolio, the clarity and rigour of the investment process, the level of past performance of the portfolio in absolute terms and also by reference to the benchmark index.

–the amendment to the fee structure payable to both parties as referred to in the Strategic Report.

Political Donations

The Company has not in the past and does not intend in the future to make political donations.

Anti-Bribery and Corruption Policy

The Board has adopted a zero tolerance approach to instances of bribery and corruption. Accordingly it expressly prohibits any Director or associated persons when acting on behalf of the Company, from accepting, soliciting, paying, offering or promising to pay or authorise any payment, public or private, in the United Kingdom or abroad to secure any improper benefit for themselves or for the Company.

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended).

Disclosure of information to the Auditors

So far as the Directors are aware, there is no relevant information of which the Auditors are unaware. The Directors have taken all steps they ought to have taken to make themselves aware of any relevant audit information and to establish that the Auditors are aware of such information.

Listing Rule 9.8.4

Listing Rule 9.8.4 requires the Company to include certain information in a single identifiable section of the Annual Report or a cross reference table indicating where the information is set out. The Directors confirm that there are no disclosures to be made in this regard.

Annual General Meeting

The Company’s Annual General Meeting will be held at the Guildhall, City of London EC2V 7HH on Thursday, 26 January 2017 at 12 noon.

Explanatory notes to the proposed resolutions can be found on pages 84 and 85 of the Annual Report.

Recommendation

The Board considers that the resolutions relating to the proposed items of special business, are in the best interests of shareholders as a whole. Accordingly, the Board unanimously recommends to the shareholders that they vote in favour of the resolutions to be proposed at the forthcoming Annual General Meeting as the Directors intend to do in respect of their own beneficial holdings totalling 388,495 shares.

By order of the Board

Frostrow Capital LLP
Company Secretary
13 December 2016

AIFMD Disclosures (Unaudited)

The Company’s AIFM, Frostrow Capital LLP and the Company are required to make certain disclosures available to investors in accordance with the Alternative Investment Fund Managers Directive (“AIFMD”).

Those disclosures that are required to be made pre-investment are included within an Investor Disclosure Document which can be found on the Company’s website www.finsburygt.com

The periodic disclosures to investors are made below:

·Information on the investment strategy, sector investment focus and principal stock exposures are included in the Strategic Report.

·None of the Company’s assets are subject to special arrangements arising from their illiquid nature.

·There are no new arrangements for managing the liquidity of the Company or any material changes to the liquidity management systems and procedures employed by Frostrow.

·The Strategic Report and note 17 to the Financial Statements, set out the risk profile and risk management systems in place. There have been no changes to the risk management systems in place during the year under review and no breaches of the risk limits set, with no breach expected.

·The maximum level of leverage has not changed in the period under review (see Glossary for further details). The total amount of leverage employed by the Company as at 30 September 2016 is shown below.

	Gross	Commitment
	Method	Method
Maximum limit	125%	125%
Actual	102%	102%

·Following completion of an assessment of the application of the proportionality principle to the FCA’s AIFM Remuneration Code, the AIFM has disapplied the pay-out process rules with respect to it and any of its delegates. This because the AIFM considers that it carries out non-complex activities and is operating on a small scale.

Depositary Report
The Directors
Finsbury Growth & Income Trust PLC
50 Lothian Road
Festival Square
Edinburgh
EH3 9WJ

RE: Finsbury Growth & Income Trust PLC

Dear Sirs and Madam,

Having been appointed Depositary with effect from the 22nd of July 2014 we can provide the following confirmation of our responsibilities from that date.

The Depositary is responsible for the safekeeping of all custodial assets of the Company, for verifying and maintaining a record of all other assets of the Company and for the collection of income that arises from those assets. It is the duty of the Depositary to take reasonable care to ensure that the Company is managed in accordance with the Alternative Investment Fund Managers Directive (AIFMD), the FUND Sourcebook and the Company’s Instrument of Incorporation, in relation to the calculation of the net asset value per share and the application of income of the Company. The Depositary also has a duty to monitor the Company’s compliance with investment restrictions and leverage limits set in its offering documents.

Having carried out such procedures as we consider necessary to discharge our responsibilities as Depositary of the Company, it is our opinion, based on the information available to us and the explanations provided, that in all material respects the Company, acting through the Alternative Investment Fund Manager (AIFM) has been managed in accordance with AIFMD, the FUND sourcebook, the Instrument of Incorporation of the Company in relation to the calculation of the net asset value per share, the application of income of the Company; and with investment restrictions and leverage limits set in its offering documents.

Yours faithfully,

BNY Mellon Trust & Depositary (UK) Limited

13 December 2016

Further Information / Shareholder Information

Financial Calendar

30 September	Financial Year End
December	Final Results Announced
January/February	Annual General Meeting
31 March	Half Year End
May	Half Year Results Announced
May/November	Interim Dividends Payable

Annual General Meeting

The Annual General Meeting of Finsbury Growth & Income Trust PLC will be held at Guildhall, City of London EC2V 7HH on Thursday, 26 January 2017 at 12 noon.

Further details on the location of the Annual General Meeting can be found within the Notice of Meeting.

Share Prices

The Company’s ordinary shares are listed on the London Stock Exchange under ‘Investment Companies’. The price is given daily in the Financial Times and other newspapers.

Change of Address

Communications with shareholders are mailed to the address held on the share register. In the event of a change of address or other amendment this should be notified to the Company’s Registrars, Capita Asset Services, under the signature of the registered holder.

Daily Net Asset Value

The daily net asset value of the Company’s shares can be obtained on the Company’s website at www.finsburygt.com and is published daily via the London Stock Exchange.

Further Information / Glossary of Terms

AIC

Association of Investment Companies.

AIFMD

The Alternative Investment Fund Managers 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).

AIFM Rules

AIFMD and all applicable rules and regulations implementing AIFMD in the UK, including without prejudice to the generality of the foregoing the Alternative Investment Fund Managers Regulations 2013 (SI2013/1773) and all relevant provisions of the FCA Handbook.

Discount or Premium

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.

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

Calculated using the Association of Investment Companies definition.

Total assets, less current liabilities before deducting any prior changes minus cash/cash equivalents (including outstanding trades) divided by Shareholders’ Funds, expressed as percentage.

Leverage

The AIFM Directive (the “Directive”) introduced the obligation on the Company and its AIFM in relation to leverage as defined by the Directive. The Directive leverage definition is slightly different to the Association of Investment Companies method of calculating gearing and is as follows; any method by which the AIFM increases the exposure of an AIFM it manages whether through borrowing of cash or securities, or leverage embedded in derivative positions.

There are two methods for calculating leverage under the Directive – the Gross Method and the Commitment Method. The process for calculating exposure under each methodology is largely the same, except where certain conditions are met, the Commitment Method enables instruments to be netted off to reflect ‘netting’ or ‘hedging’ arrangements and the entity exposure is effectively reduced.

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

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.

Ongoing Charges

Ongoing charges are calculated by taking the Company’s annualised expenses, excluding exceptional items, and expressing them as a percentage of the average net asset value of the Company over the year.

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 year.

Share Price Total Return

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.

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.

Further Information / How to Invest

Investment Platforms

The Company’s shares are traded openly on the London Stock Exchange and can be purchased through a stock broker or other financial intermediary. The shares are available through savings plans (including Investment Dealing Accounts, ISAs, Junior ISAs and SIPPs) which facilitate both regular monthly investments and lump sum investments in the Company’s shares. There are a number of investment platforms that offer these facilities. A list of some of them, that is not comprehensive nor constitutes any form of recommendation, can be found below:

AJ Bell Youinvest	http://www.youinvest.co.uk/
Alliance Trust Savings	http://www.alliancetrustsavings.co.uk/
Barclays Stockbrokers	https://www.barclaysstockbrokers.co.uk/
Bestinvest	http://www.bestinvest.co.uk/
Charles Stanley Direct	https://www.charles-stanley-direct.co.uk/
Club Finance	http://www.clubfinance.co.uk/
FundsDirect	http://www.fundsdirect.co.uk/Default.asp
Halifax Share Dealing	http://www.halifax.co.uk/Sharedealing/
Hargreaves Lansdown	http://www.hl.co.uk/
HSBC	https://investments.hsbc.co.uk/
iDealing	http://www.idealing.com/
Interactive Investor	http://www.iii.co.uk/
IWEB	http://www.iweb-sharedealing.co.uk/share-dealing-home.asp
Saga Share Direct	https://www.sagasharedirect.co.uk/
Selftrade	http://www.selftrade.co.uk/
The Share Centre	https://www.share.com/
Saxo Capital Markets	http://uk.saxomarkets.com/
TD Direct Investing	http://www.tddirectinvesting.co.uk/

Capita Asset Services – Share Dealing Service

A quick and easy share dealing service is available to existing shareholders through the Company’s Registrar, Capita Asset Services, to either buy or sell shares. An online and telephone dealing facility provides an easy to access and simple to use service.

There is no need to pre-register and there are no complicated forms to fill in. The online and telephone dealing service allows you to trade ‘real time’ at a known price which will be given to you at the time you give your instruction.

To deal online or by telephone all you need is your surname, investor code, full postcode and your date of birth. Your investor code can be found on your share certificate. Please have the appropriate documents to hand when you log on or call, as this information will be needed before you can buy or sell shares.

For further information on this service, please contact: www.capitadeal.com (online dealing) Telephone: [phone] (Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom are charged at the applicable international rate. Lines are open between 8.00 a.m. – 4.30 p.m., Monday to Friday excluding public holidays in England and Wales).

RISK WARNINGS

• Past performance is no guarantee of future performance.

  –The value of your investment and any income from it may go down as well as up and you may not get back the amount invested. This is because the share price is determined, in part, by the changing conditions in the relevant stock markets in which the Company invests and by the supply and demand for the Company’s shares.

  –As the shares in an investment trust are traded on a stock market, the share price will fluctuate in accordance with supply and demand and may not reflect the underlying net asset value of the shares; where the share price is less than the underlying value of the assets, the difference is known as the ‘discount’. For these reasons, investors may not get back the original amount invested.

  –Although the Company’s financial statements are denominated in sterling, some of the holdings in the portfolio are currently denominated in currencies other than sterling and therefore they may be affected by movements in exchange rates. As a result, the value of your investment may rise or fall with movements in exchange rates.

  –Investors should note that tax rates and reliefs may change at any time in the future.

  –The value of ISA and Junior ISA tax advantages will depend on personal circumstances. The favourable tax treatment of ISAs and Junior ISAs may not be maintained.

Further Information / Notice of the Annual General Meeting

Notice is hereby given that the Annual General Meeting of Finsbury Growth & Income Trust PLC will be held at the Guildhall, City of London EC2V 7HH on Thursday, 26 January 2017 at 12 noon, for the following purposes:

Ordinary Business

1. To receive the Annual Report and Financial Statements for the year ended 30 September 2016.

2. To re-elect Anthony Townsend as a Director of the Company.

3. To re-elect John Allard as a Director of the Company.

4. To re-elect Neil Collins as a Director of the Company.

5. To re-elect Simon Hayes as a Director of the Company.

6. To re-elect David Hunt as a Director of the Company.

7. To re-elect Vanessa Renwick as a Director of the Company.

8. To receive and approve the Directors’ Remuneration Report for the year ended 30 September 2016.

9. To approve the Directors’ Remuneration Policy.

10. To re-appoint PricewaterhouseCoopers LLP as Auditors to the Company and to authorise the Audit Committee to determine their remuneration.

Special Business

To consider, and if thought fit, pass the following resolutions of which resolutions 12, 13, 14 and 15 are proposed as special resolutions:

Authority to Allot Shares

11. THAT in substitution of all existing authorities the Directors be and are hereby generally and unconditionally authorised in accordance with Section 551 of the Companies Act 2006 (the “Act”) to exercise all powers of the Company to allot relevant securities (within the meaning of Section 551 of the Act) up to a maximum aggregate nominal amount of £3,691,455 being 10% of the issued share capital at 13 December 2016 and representing 14,765,821 shares of 25p each in the Company (or, if changed, the number representing 10% of the issued share capital of the Company at the date at which this resolution is passed) provided that this authority shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2018 or 15 months from the date of passing this resolution, whichever is the earlier, unless previously revoked, varied or renewed by the Company in general meeting and provided that the Company shall be entitled to make, prior to the expiry of such authority, an offer or agreement which would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant securities pursuant to such offer or agreement as if the authority conferred hereby had not expired.

Disapplication of Pre-emption Rights

12. THAT in substitution of all existing powers (but in addition to any power conferred on them by resolution 13 set out in the notice convening the Annual General Meeting at which this resolution is proposed (“Notice of Annual General Meeting”) the Directors be and are hereby generally empowered pursuant to Section 570 of the Act to allot equity securities (within the meaning of Section 560 of the Act) for cash pursuant to the authority conferred on them by resolution 11 set out in the Notice of Annual General Meeting or otherwise as if Section 561(1) of the Act did not apply to any such allotment:

(a) pursuant to an offer of equity securities open for acceptance for a period fixed by the Directors where the equity securities respectively attributable to the interests of holders of shares of 25p each in the Company (“Shares”) are proportionate (as nearly as may be) to the respective numbers of Shares held by them but subject to such exclusions or other arrangements in connection with the issue as the Directors may consider necessary, appropriate or expedient to deal with equity securities representing fractional entitlements or to deal with legal or practical problems arising in any overseas territory, the requirements of any regulatory body or stock exchange, or any other matter whatsoever; and

(b) provided that (otherwise than pursuant to sub-paragraph (a) above) this power shall be limited to the allotment of equity securities up to an aggregate nominal value of £3,691,455, being 10% of the issued share capital of the Company as at 13 December 2016 and representing 14,765,821 shares or, if changed, the number representing 10% of the issued share capital of the Company at the date of the meeting at which this resolution is passed, and provided further that (i) the number of equity securities to which this power applies shall be reduced from time to time by the number of treasury shares which are sold pursuant to any power conferred on the Directors by resolution 13 set out in the Notice of Annual General Meeting and (ii) no allotment of equity securities shall be made under this power which would result in Shares being issued at a price which is less than the higher of the Company’s estimated cum or ex income net asset value per Share as at the latest practicable time before such allotment of equity securities as determined by the Directors in their reasonable discretion,

and such power shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or 15 months from the date of passing this resolution, whichever is earlier, unless previously revoked, varied or renewed by the Company in general meeting and provided that the Company shall be entitled to make, prior to the expiry of such authority, an offer or agreement which would or might otherwise require equity securities to be allotted after such expiry and the Directors may allot equity securities pursuant to such offer or agreement as if the power conferred hereby had not expired.

Treasury Shares

13. THAT in substitution of all existing powers (but in addition to any power conferred on them by resolution 12 set out in the Notice of Annual General Meeting) the Directors be and are hereby generally empowered pursuant to Section 570 of the Act to sell relevant shares (within the meaning of Section 560 of the Act) if, immediately before the sale, such shares are held by the Company as treasury shares (as defined in Section 724 of the Act (“Treasury Shares”)), for cash as if Section 561(1) of the Act did not apply to any such sale provided that:

(a) where any Treasury Shares are sold pursuant to this power at a discount to the then prevailing net asset value of ordinary shares of 25p each in the Company (“Shares”), such discount must be (i) lower than the discount to the net asset value per Share at which the Company acquired the Shares which it then holds in treasury and (ii) not greater than 5% to the prevailing net asset value per Share at the latest practicable time before such sale (and for this purpose the Directors shall be entitled to determine in their reasonable discretion the discount to the net asset value at which such Shares were acquired by the Company and the net asset value per Share at the latest practicable time before such Shares are sold pursuant to this power); and

(b) this power shall be limited to the sale of relevant shares having an aggregate nominal value of £3,691,455, being 10% of the issued share capital of the Company as at 13 December 2016 and representing 14,765,821 Shares or, if changed, the number representing 10% of the issued share capital of the Company at the date of the meeting at which this resolution is passed, and provided further that the number of relevant shares to which power applies shall be reduced from time to time by the number of Shares which are allotted for cash as if Section 561(1) of the Act did not apply pursuant to the power conferred on the Directors by resolution 12 set out in the Notice of Annual General Meeting,

and such power shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or 15 months from the date of passing this resolution, whichever is earlier, unless previously revoked, varied or renewed by the Company in general meeting and provided that the Company shall be entitled to make, prior to the expiry of such authority, an offer or agreement which would or might otherwise require treasury shares to be sold after such expiry and the Directors may sell Treasury Shares pursuant to such offer or agreement as if the power conferred hereby had not expired.

Authority to Repurchase Shares

14. THAT the Company be and is hereby generally and unconditionally authorised in accordance with Section 701 of the Act to make one or more market purchases (within the meaning of Section 693(4) of the Act) of ordinary shares of 25 pence each in the capital of the Company (“Shares”) (either for retention as Treasury Shares for future reissue, resale, transfer or cancellation) provided that:

(i) the maximum aggregate number of Shares authorised to be purchased is 22,133,966 or, if changed, the number representing 14.99% of the issued share capital of the Company at the date of the meeting at which this resolution is proposed;

(ii) the minimum price (exclusive of expenses) which may be paid for a Share is 25 pence;

(iii) the maximum price (exclusive of expenses) which may be paid for a Share is an amount equal to the greater of (i) 105% of the average of the middle market quotations for a Share as derived from the Daily Official List of the London Stock Exchange for the five business days immediately preceding the day on which that Share is purchased and (ii) the higher of the last independent trade in shares and the highest then current independent bid for shares on the London Stock Exchange as stipulated in Article 5(1) of Regulation No. 2233/2003 of the European Commission (Commission Regulation of 22 December 2003 implementing the Market Abuse Directive as regards exemption for buyback programmes and stabilisation of financial instruments);

(iv) this authority shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2018 or, if earlier, on the expiry of 15 months from the date of the passing of this resolution unless such authority is renewed prior to such time; and

(v) the Company may make a contract to purchase Shares under this authority before the expiry of the authority which will or may be executed wholly or partly after the expiration of such authority, and may make a purchase of Shares in pursuance of any such contract.

General Meetings

15. THAT any General Meeting of the Company (other than the Annual General Meeting of the Company) shall be called by notice of at least 14 clear days provided that the authority shall expire on the conclusion of the next Annual General Meeting of the Company, or, if earlier, on the expiry 15 months from the date of the passing of this resolution.

By order of the Board

	Registered office:
Frostrow Capital LLP	50 Lothian Road
Company Secretary	Festival Square
13 December 2016	Edinburgh EH3 9WJ

Notes

1. Members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at the meeting. A shareholder may appoint more than one proxy in relation to the meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. A proxy need not be a shareholder of the Company. A proxy form which may be used to make such appointment and give proxy instructions accompanies this notice.

2. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolutions. If no voting indication is given, a proxy may vote or abstain from voting at his/her discretion. A proxy may vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.

3. To be valid any proxy form or other instrument appointing a proxy must be completed and signed and received by post or (during normal business hours only) by hand at Capita Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF no later than 12 noon on Tuesday, 24 January 2017.

4. In the case of a member which is a company, the instrument appointing a proxy must be executed under its seal or signed on its behalf by a duly authorised officer or attorney or other person authorised to sign. Any power of attorney or other authority under which the instrument is signed (or a certified copy of it) must be included with the instrument.

5. The return of a completed proxy form, other such instrument or any CREST Proxy Instruction (as described below) will not prevent a shareholder attending the meeting and voting in person if he/she wishes to do so.

6. Any person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or have someone else appointed) as a proxy for the meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.

7. The statement of the rights of shareholders in relation to the appointment of proxies in paragraph 1 above does not apply to Nominated Persons. The rights described in that paragraph can only be exercised by shareholders of the Company.

8. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, only shareholders registered on the register of members of the Company (the “Register of Members”) by close of business on Tuesday, 24 January 2017 (or, in the event of any adjournment, by close of business on the date which is two days before the time of the adjourned meeting) will be entitled to attend and vote or be represented at the meeting in respect of shares registered in their name at that time. Changes to the Register of Members after that time will be disregarded in determining the rights of any person to attend and vote at the meeting.

9. As at 13 December 2016 (being the last business day prior to the publication of this notice) the Company’s issued share capital consists of 147,658,212 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 13 December 2016 are 147,658,212.

10. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

11. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with the specifications of Euroclear UK and Ireland Limited (“CRESTCo”), and must contain the information required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID RA10) no later than 48 hours before the time appointed for holding the meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Application Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

12. CREST members and, where applicable, their CREST sponsors or voting service providers, should note that CRESTCo does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

13. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

14. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Register of Members in respect of the joint holding (the first named being the most senior).

15. Members who wish to change their proxy instructions should submit a new proxy appointment using the methods set out above. Note that the cut-off time for receipt of proxy appointments (see above) also applies in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded.

16. Members who have appointed a proxy using the hard-copy proxy form and who wish to change the instructions using another hard-copy form, should contact Capita Asset Services on 0871 664 0300 (Calls cost 12p per minute plus your phone company’s access charge. Calls outside the United Kingdom will be charged at the applicable international rate. We are open between 9.00 a.m. – 5.30 p.m., Monday to Friday excluding public holidays in England and Wales).

17. If a member submits more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.

18. In order to revoke a proxy instruction, members will need to inform the Company. Members should send a signed hard copy notice clearly stating their intention to revoke a proxy appointment to Capita Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF.

19. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power of attorney) must be included with the revocation notice. If a member attempts to revoke its proxy appointment but the revocation is received after the time for receipt of proxy appointments (see above) then, subject to paragraph 4, the proxy appointment will remain valid.

Further Information / Explanatory Notes to the Resolutions

Resolution 1 – To receive the Annual Report and Financial Statements

The annual report and Financial Statements for the year ended 30 September 2016 will be presented to the AGM. These Financial Statements accompanied this Notice of Meeting and shareholders will be given an opportunity at the meeting to ask questions.

Resolutions 2 to 7 – Re-election of Directors

Resolutions 2 to 7 deal with the re-election of each Director. Biographies of each of the Directors can be found under the Governance section.

The Board has confirmed, following a performance review, that the Directors standing for election and re-election continue to perform effectively. Further details are set out on page 34.

Resolutions 8 and 9 – Remuneration Report and Remuneration Policy

The Directors’ Remuneration Report is set out in full in the Annual Report on pages 39 to 41. The Directors’ Remuneration Policy is set out on page 42.

Resolution 10 – Re-appointment of auditors

Resolution 10 relates to the re-appointment of PricewaterhouseCoopers LLP as the Company’s independent auditors to hold office until the next Annual General Meeting of the Company and also authorises the Audit Committee to set their remuneration. Following the implementation of the Competition and Markets Authority order on Statutory Audit Services only the Audit Committee may negotiate and agree the terms of the auditors’ service agreement.

Resolutions 11 to 13

Ordinary Resolution 11 in the Notice of Annual General Meeting will renew the authority to allot the unissued share capital up to an aggregate nominal amount of £3,691,455 (equivalent to 14,765,821 shares, or 10% of the Company’s existing issued share capital on 13 December 2016, being the nearest practicable date prior to the signing of this Report). Such authority will expire on the date of the next Annual General Meeting or after a period of 15 months from the date of the passing of the resolution, whichever is earlier. This means that the authority will have to be renewed at the next Annual General Meeting.

When shares are to be allotted for cash, Section 551 of the Companies Act 2006 (the “Act”) provides that existing shareholders have pre-emption rights and that the new shares must be offered first to such shareholders in proportion to their existing holding of shares. However, shareholders can, by special resolution, authorise the Directors to allot shares otherwise than by a pro rata issue to existing shareholders. Special Resolution 12 will, if passed, give the Directors power to allot for cash equity securities up to 10% of the Company’s existing share capital on 13 December 2016 (reduced by any treasury shares sold by the Company pursuant to Resolution 13, as described below), as if Section 551 of the Act does not apply. This is the same nominal amount of share capital which the Directors are seeking the authority to allot pursuant to Resolution 11. This authority will also expire on the date of the next Annual General Meeting or after a period of 15 months, whichever is earlier. This authority will not be used in connection with a rights issue by the Company.

Under Section 724 of the Companies Act 2006 (“s724”) the Company is permitted to buy back and hold shares in treasury and then sell them at a later date for cash, rather than cancelling them. It is a requirement of s724 that such sale be on a pre-emptive, pro rata, basis to existing shareholders unless shareholders agree by special resolution to disapply such pre-emption rights. Accordingly, in addition to giving the Directors power to allot unissued share capital on a non pre-emptive basis pursuant to Resolution 12, Special Resolution 13, if passed, will give the Directors authority to sell shares held in treasury on a non pre-emptive basis. The benefit of the ability to hold treasury shares is that such shares may be resold. This should give the Company greater flexibility in managing its share capital, and improve liquidity in its shares. Any re-sale of treasury shares would only take place at a narrower discount to the ex-income net asset value per share than that at which they had been bought into treasury, and in any event at a discount no greater than 5% to the prevailing ex-income net asset value per share, and this is reflected in the text of Resolution 13. It is also the intention of the Board that sales from treasury would only take place when the Board believes that to do so would assist in the provision of liquidity to the market. The number of treasury shares which may be sold pursuant to this authority is limited to 10% of the Company’s existing share capital on 13 December 2016 (reduced by any equity securities allotted for cash on a non-pro rata basis pursuant to Resolution 12, as described above). This authority will also expire on the date of the next Annual General Meeting or after a period of 15 months, whichever is earlier.

The Directors intend to use the authority given by Resolutions 11, 12 and 13 to allot shares and disapply pre-emption rights only in circumstances where this will be clearly beneficial to shareholders as a whole. The issue proceeds would be available for investment in line with the Company’s investment policy. No issue of shares will be made which would effectively alter the control of the Company without the prior approval of shareholders in general meeting.

Resolution 14

The Directors wish to renew the authority given by shareholders at the previous Annual General Meeting. The principal aim of a share buy-back facility is to enhance shareholder value by acquiring shares at a discount to net asset value, as and when the Directors consider this to be appropriate. The purchase of shares, when they are trading at a discount to net asset value per share, should result in an increase in the net asset value per share for the remaining shareholders. This authority, if conferred, will only be exercised if to do so would result in an increase in the net asset value per share for the remaining shareholders and if it is in the best interests of shareholders generally. Any purchase of shares will be made within guidelines established from time to time by the Board. It is proposed to seek shareholder authority to renew this facility for another year at the Annual General Meeting.

Under the current Listing Rules, the maximum price that may be paid on the exercise of this authority must not exceed the higher of (i) 105% of the average of the middle market quotations for the shares over the five business days immediately preceding the date of purchase and (ii) the higher of the last independent trade and the highest current independent bid on the trading venue where the purchase is carried out. The minimum price which may be paid is 25p per share. Shares which are purchased under this authority will either be cancelled or held as treasury shares.

Special Resolution 14 in the Notice of Annual General Meeting will renew the authority to purchase in the market a maximum of 14.99% of shares in issue on 13 December 2016, being the nearest practicable date prior to the signing of this Report, (amounting to 22,133,966 shares). Such authority will expire on the date of the next Annual General Meeting or after a period of 15 months from the date of passing of the resolution, whichever is earlier. This means in effect that the authority will have to be renewed at the next Annual General Meeting or earlier if the authority has been exhausted.

Resolution 15

Special Resolution 15 seeks shareholder approval for the Company to hold General Meetings (other than the Annual General Meeting) at 14 clear days’ notice.

Further Information / Company Information

Directors

Anthony Townsend, (Chairman)

John Allard

Neil Collins

Simon Hayes

David Hunt, FCA (Chairman of the Audit Committee and

Senior Independent Director)

Vanessa Renwick

Registered Office

50 Lothian Road,
Festival Square,
Edinburgh EH3 9WJ

Website
www.finsburygt.com

Company Registration Number
SCO13958 (Registered in Scotland)

The Company is an investment company as defined under Section 833 of the Companies Act 2006.

AIFM, Company Secretary and Administrator

Frostrow Capital LLP

25 Southampton Buildings
London WC2A 1AL
Telephone: [phone]
E-Mail: [e-mail]
Website:www.frostrow.com

Authorised and regulated by the Financial Conduct Authority.

If you have an enquiry about the Company or if you would like to receive a copy of the Company’s monthly fact sheet by e-mail, please contact Frostrow Capital using the above e-mail address.

Portfolio Manager

Lindsell Train Limited
5th Floor,
66 Buckingham Gate,
London SW1E 6AU
Telephone: [phone]
Website:www.lindselltrain.com

Authorised and regulated by the Financial Conduct Authority.

Independent Auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London SE1 2RT

Depositary

BNY Mellon Trust & Depositary (UK) Limited
BNY Mellon Centre
160 Queen Victoria Street,
London EC4V 4LA
Website: www.bnymellon.com

Global Custodian

Bank of New York Mellon
160 Queen Victoria Street
London EC4V 4LA

Registrars

Capita Asset Services
The Registry,
34 Beckenham Road,
Beckenham,
Kent BR3 4TU
Telephone (in UK): 0871 664 0300†
Telephone (from overseas): [phone]
Facsimile: + 44 (0) 1484 600911
E-Mail: [e-mail]
Website:www.capitaassetservices.com

Please contact the Registrars if you have a query about a certificated holding in the Company’s shares.

† Calls cost 12p per minute plus your phone company’s access charge and may be recorded for training purposes.Lines are open from 9.00 a.m. to 5.30 p.m. Monday to Friday excluding public holidays in England and Wales.

Lending Banker

Scotiabank Europe PLC
201 Bishopsgate, 6th Floor
London EC2M 3NS

Stockbrokers

Winterflood Investment Trusts
The Atrium Building,
Cannon Bridge,
25 Dowgate Hill
London EC4R 2GA

Share Price Listings

The price of your shares can be found in various publications including the Financial Times, The Daily Telegraph, The Times and The Scotsman.

The Company’s net asset value per share is announced daily on the TrustNet website at www.trustnet.com.

Identification Codes

Shares:	SEDOL:	0781606
	ISIN:	GB0007816068
	BLOOMBERG:	FGT LN
	EPIC:	FGT

Foreign Account Tax Compliance Act (“FATCA”)

IRS Registration Number (GIIN):

QH4BH0.99999.SL.826

Further Information / Disability Act

Disability Act

Copies of this annual report and other documents issued by the Company are available from the Company Secretary. If needed, copies can be made available in a variety of formats, including braille, audio tape or larger type as appropriate. You can contact the Registrar to the Company, Capita Asset Services, which has installed telephones to allow speech and hearing impaired people who have their own telephone to contact them directly, without the need for an intermediate operator, for this service please call 0800 731 1888. Specially trained operators are available during normal business hours to answer queries via this service. Alternatively, if you prefer to go through a ‘typetalk’ operator (provided by The Royal National Institute for Deaf People) you should dial 18001 from your textphone followed by the number you wish to dial.

-ANNOUNCEMENT ENDS -