Half-year Report

Legal Entity Identifier:  213800NN42KX2LG1GQ40

14 May 2019

LONDON STOCK EXCHANGE ANNOUNCEMENT

Finsbury Growth & Income Trust PLC

Unaudited Half Year Results For The Six Months Ended

31 March 2019

This Announcement is not the Company’s Half Year Report & Accounts. It is an abridged version of the Company’s full Half Year Report & Accounts for the six months ended 31 March 2019. The full Half Year Report & Accounts, together with a copy of this announcement, will shortly be available on the Company’s website at www.finsburygt.com where up to date information on the Company, including daily NAV, share prices and fact sheets, can also be found.

The Company's Half Year Report & Accounts for the six months ended 31 March 2019 has been submitted to the UK Listing Authority, and will shortly be available for inspection on the National Storage Mechanism (NSM): www.hemscott.com/nsm.do

For further information please contact: Victoria Hale, Frostrow Capital LLP 020 3170 8732

Company Performance

Financial Highlights

	As at	As at
	31 March	30 September	%
	2019	2018	Change
Share price	829.0p	818.0p	+1.3
Net asset value per share	827.6p	812.8p	+1.8
Premium of share price to net asset value per share^	0.2%	0.6%
Gearing1^	1.3%	1.4%
Shareholders’ funds	£1,557.0m	£1,411.8m	+10.3
Number of shares in issue	188,126,712	173,691,712	+8.3

	Six months to	One year to
	31 March	30 September
	2019	2018
Share price (total return)2^	+2.4%	+13.2%
Net asset value per share (total return)2^	+2.9%	+13.1%
FTSE All-Share Index (total return)* (Company benchmark)2 3	-1.8%	+5.9%
Ongoing charges1^	0.7%	0.7%

	Year ending	Year ended
	30 September	30 September
	2019	2018
First interim dividend	8.0p	7.2p	+11.1
Second interim dividend	Yet to be declared	8.1p

¹ See glossary

² Source – Morningstar

³ Source – FTSE International Limited (“FTSE”) © FTSE 2019*

^Alternative Performance Measures (“APMs”)

The disclosures of performance above are considered to represent the Company’s APMs. Definitions of these APMs together with how these measures have been calculated can be found in the Glossary.

This report contains terminology that may be unfamiliar to some readers. The Glossary gives definitions for frequently used terms.

Chairman’s Statement

Performance

In the six months to 31 March 2019 the Company delivered a net asset value total return of 2.9% and a share price total return of 2.4%. It is again pleasing to note that both have outperformed the Company’s benchmark, the FTSE All Share index, which fell by 1.8% over the same period. The principal contributors to the Company’s net asset value performance were Diageo, Mondelez International and Sage Group. The main detractors were Hargreaves Lansdown, Schroders and Manchester United. Further information on the Company’s portfolio can be found in our Portfolio Manager’s Review.

Share Capital

Consistent demand for the Company’s shares has led to the issue of a total of 14,435,000 new shares in this half year, raising £112.8 million. As at 31 March 2019 the Company had 188,126,712 shares of 25p each in issue (31 March 2018: 165,646,712). Since the end of the half-year to 13 May 2019, being the latest practical date, a further 4,990,000 new shares have been issued raising £43.1 million. As at 13 May 2019, the Company had 193,116,712 shares in issue.

Dividend

The Board has declared a first interim dividend of 8.0p per share, compared to last year’s first interim dividend of 7.2p per share, an increase of 11.1%. The dividend will be paid on Thursday, 16 May 2019 to shareholders who were on the register on Friday, 5 April 2019. The associated ex-dividend date was Thursday, 4 April 2019.

The 11.1% increase to the first interim dividend of 8.0p per share when compared to the corresponding dividend in 2018 has been made to reduce the disparity between the first and second dividends.

The Board expects to declare the second dividend for the year ending 30 September 2019 in late September 2019 and for it to be paid to shareholders in November 2019.

Gearing

As at the half year end the Company was in the final year of its three-year secured fixed term committed revolving credit facility of £75 million with an additional £25 million facility with Scotiabank Europe PLC. The amount currently drawn under the Facility of £36.7 million lies comfortably within the Company’ gearing limit of 25% of net assets.

As reported in my last Chairman’s Statement in December 2018, it is intended that this facility will be renewed with effect from October 2019.

Outlook

As we look forward, our Portfolio Manager remains optimistic about the outlook and opportunities for the companies in our portfolio. Your Board continues to believe that our Portfolio Manager’s strategy of investing for the long-term in durable cash generative franchises capable of sustained dividend growth will continue to deliver superior investment returns to shareholders.

Anthony Townsend
Chairman
14 May 2019

Portfolio Manager’s Review

We know some shareholders are concerned about the possibility of a prolonged period of underperformance from our strategy – because they tell me so. In particular they expect the underperformance to come from one important part of the portfolio. That is they worry about a downturn in the share prices of our consumer branded-goods companies – that downturn to be caused either by the possible overvaluation of such companies or by deterioration in their business performance, or both.

It is true that over 45% of Finsbury Growth & Income Trust PLC’s (‘FGIT’) portfolio is invested in consumer brand owners – A G Barr, Burberry, Diageo, Heineken, Mondelez, Remy and Unilever. And also true that all of these have been wonderful long and short term investments for FGIT. You could also argue that this strong performance has left their valuations looking too high. I disagree. Although by that I don’t mean to suggest that they might not go through a period of dull stock market performance – as can happen to any company in any part of the market. Of course they could. But I disagree that they have become perilously expensive. But where I do agree with the sceptics is that there is a bigger question. That being the debate as to whether changes in consumer tastes and the digital disruption of the 21st century are impairing the growth and value of big brands.

Now although we have deliberately picked companies where we have most confidence in the sustainability of their brands, of course we give consideration to this question. And there is evidence that some previously successful brands are struggling, notably in processed foods and household care. To be clear, we know we must sell out of any company where long term brand equity is being lost. Practically what we do is continually monitor the performance of the businesses we are invested in to be alert to warning signals.

But so far as FGIT is concerned the signals delivered over the last six months by our consumer companies are encouraging, we think and this has been confirmed by their share price performance.

Over the period four of our top five performers were global brand owners – led by Diageo and including Mondelez, Unilever and Heineken. (Sage was actually the fourth best – a welcome recovery from its poor performance in the first half of 2018.) All of these gave positive returns over a period when the FT All-Share Index was down. Burberry was the only one of our consumer shares to fall.

But returning to the question of the fortunes of big 20th century consumer brands in the 21st century – it’s worth thinking about Unilever. Of all our holdings Unilever is undoubtedly the most challenged by changes in consumer tastes and buying behaviour because it has the most mass or mid-market brands. And one might indeed be cautious about the outlook over the next 25 years for the brand power of its packaged foods and washing powder assets. Nonetheless one has to be impressed by the mitigations Unilever has been able to present against these trends and concerns. For instance, the biggest single brand in Unilever is Dove – at about 9% of total group revenues. This global property – it is available in more than 170 countries – “delivered another year of broad based growth” in 2018 and that means just under 8%. Dove’s revenues are up 84% over the last decade – that’s over 6% CAGR and that rate has accelerated over the last 7 years. This does not indicate a moribund, irrelevant 20th century brand. In fact, Dove, established in 1957, sells more and is almost certainly more valuable as we get toward the end of the second decade of the 21st century than any other time in its history. It is an example of the advantages that can accrue from scale for truly global brands, delivered by truly global companies. Another consolation for investors in Unilever is that surely it is right to be optimistic about increasing wealth around the world? And it is indisputable that Unilever is a beneficiary of increasing wealth. Its sales in Asia – 44% of the total – grew by more than 6% last year. Consumers in Europe may be blasé about soap powder, but sales at Unilever’s Home Care division were up over 4% last year, led by Sunlight (a 19th century brand) in India and China. We were also reassured by the account given to us by Unilever’s new chief executive, Alan Jope. He pointed out that when he joined Unilever as a graduate over 30 years ago the Beauty and Personal Care division accounted for only 8% of Unilever’s sales. Today it is 40% and growing more quickly than the rest of the group. This is an example of how big consumer companies can change over time, responding to the changing tastes of consumers and helps explain the longevity of these rare and very valuable companies like a Nestle, P&G and Unilever.

This phenomenon of truly global brands increasing in value in 2019 – even as local/regional brands without the same economies of scale struggle – can be seen in other key properties owned by companies in FGIT. For instance, Diageo’s Tanqueray grew over 20% last year, as the global gin boom rolls on. Johnnie Walker net sales were up 6% over the same period too. Heineken’s eponymous brand – still the biggest earner in the group – grew by 7.7% last year, its best rate for a decade. Mondelez’ Oreo biscuits – the world’s #1 brand – grew high single digits in the US, its biggest market and mid single digits in its second biggest market, which is China. Meanwhile Cadbury (owned by Mondelez and an important reason it is such a major holding in FGIT) grew double digits in India. Remy’s cognacs grew 15% year on year.

I know I’m cherry-picking statistics here and that all these companies have portfolios of brands, for some of which trends may not be so encouraging. But already here is a formidable counter-argument to the proposition that big brands are necessarily doomed in the 21st century. To the contrary, it seems to us there is a decent argument that beloved and prestigious brands are more valuable than ever before. That’s why IRN-BRU, Burberry’s iconic check, Guinness, Tiger Beer, Toblerone, Cointreau and Magnum Ice cream (to name some other great brands FGIT owns) still fill us with enthusiasm. They certainly remain central to our hopes to deliver satisfactory investment returns for FGIT shareholders.

Nick Train
Director
Lindsell Train Limited
Portfolio Manager

14 May 2019

Investment Portfolio
as at 31 March 2019

		Market Value	% of
Investments	Sector	£'000	portfolio
Diageo	Consumer Goods	166,283	10.5
Unilever	Consumer Goods	159,231	10.1
RELX	Consumer Services	151,218	9.6
Mondelez International1	Consumer Goods	135,060	8.6
London Stock Exchange Group	Financials	128,623	8.2
Hargreaves Lansdown	Financials	121,062	7.7
Burberry Group	Consumer Goods	120,104	7.6
Schroders*	Financials	112,290	7.1
Sage Group	Technology	100,261	6.4
Heineken2	Consumer Goods	91,301	5.8
Top 10 Investments		1,285,433	81.6
Remy Cointreau3	Consumer Goods	55,740	3.5
Daily Mail & General Trust (non-voting)	Consumer Services	55,354	3.5
Pearson	Consumer Services	37,228	2.4
A.G. Barr	Consumer Goods	34,891	2.2
Manchester United1	Consumer Services	27,876	1.8
Rathbone Brothers	Financials	27,822	1.8
Lindsell Train Investment Trust plc	Financials	14,750	0.9
Euromoney Institutional Investor	Consumer Services	11,830	0.7
Young & Co Brewery (non voting)	Consumer Services	11,025	0.7
Fuller Smith & Turner	Consumer Services	7,875	0.5
Top 20 Investments		1,569,824	99.6
Celtic**	Consumer Services	5,544	0.3
Frostrow Capital LLP4 ***	Financials	1,885	0.1
Total Investments		1,577,253	100.0

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

¹ Listed in the United States.

² Listed in the Netherlands.

³ Listed in France.

⁴ Unquoted partnership interest.

* Includes Schroders (non-voting) shares, fair value £8,421,000.

** Includes Celtic 6% cumulative convertible preference shares, fair value £294,000.

*** Includes Frostrow Capital LLP AIFM capital contribution, fair value £550,000.

Comparison of Sector Weightings with the FTSE All-Share Index
as at 31 March 2019

	Finsbury Growth & Income	FTSE All-Share*	Finsbury Growth & Income (under)/overweight
Sector	%	%	%
Consumer Goods	48.3	14.6	33.7
Consumer Services	19.5	11.5	8.0
Financials	25.8	25.7	0.1
Technology	6.4	1.1	5.3
Oil & Gas	–	14.2	(14.2)
Basic Materials	–	8.1	(8.1)
Industrials	–	11.0	(11.0)
Telecommunications	–	2.7	(2.7)
Utilities	–	2.8	(2.8)
Health Care	–	8.3	(8.3)
Total	100.0	100.0	0.0

* Source: FTSE International Limited (“FTSE”) © FTSE 2019

Income Statement
For the six months ended 31 March 2019

		(Unaudited)			(Unaudited)
	Six months ended 31 March 2019			Six months ended 31 March 2018
	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000
Gains on investments at fair value through profit or loss	–	38,642	38,642	–	19,006	19,006
Currency translations	–	(60)	(60)	–	(35)	(35)
Income (note 2)	13,145	–	13,145	9,973	–	9,973
AIFM and Portfolio Management fees (note 3)	(1,354)	(2,748)	(4,102)	(1,193)	(2,423)	(3,616)
Other expenses	(583)	–	(583)	(498)	–	(498)
Return on ordinary activities before finance charges and taxation	11,208	35,834	47,042	8,282	16,548	24,830
Finance charges	(137)	(279)	(416)	(112)	(227)	(339)
Return on ordinary activities before taxation	11,071	35,555	46,626	8,170	16,321	24,491
Taxation on ordinary activities	(209)	–	(209)	(149)	–	(149)
Return on ordinary activities after taxation	10,862	35,555	46,417	8,021	16,321	24,342
Return per share - basic and diluted (note 4)	6.0p	19.8p	25.8p	5.0p	10.0p	15.0p

The “Total” column of this statement represents the Company’s profit and loss account. The “Revenue” and “Capital” columns are supplementary to this and are prepared under guidance published by The Association of Investment Companies (“AIC”).

All items in the above statement derive from continuing operations. The Company had no recognised gains or losses other than those declared in the Income Statement.

There is no material difference between the net return on ordinary activities before taxation and the net return on ordinary activities after taxation stated above and their historical cost equivalents.

Statement of Changes in Equity

for the six months ended 31 March 2019

	Called up	Share	Capital				Total
(Unaudited) Six months ended 31 March 2019	share	premium	redemption	Special	Capital	Revenue	shareholders
	capital	account	reserve	reserve	reserve	reserve	funds
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 30 September 2018	43,423	684,726	3,453	–	643,037	37,151	1,411,790
Net return from ordinary activities	–	–	–	–	35,555	10,862	46,417
Reclassification of the special dividend received from Dr. Pepper Snapple*	–	–	–	–	(2,499)	2,499	–
Second interim dividend (8.1p per share) for the year ended 30 September 2018	–	–	–	–	–	(14,077)	(14,077)
Issue of shares	3,609	109,214	–	–	–	–	112,823
At 31 March 2019	47,032	793,940	3,453	–	676,093	36,435	1,556,953

* Dr Pepper Snapple paid a special dividend in July 2018. At that time it was treated as being capital in nature. During the six month period, Dr Pepper Snapple clarified that 28.4% of this dividend should be regarded as revenue. Accordingly £2,499,000 of the special dividend has been transferred from the Company’s capital reserve to the revenue reserve.

(Unaudited)
Six months ended 31 March 2018
At 30 September 2017	39,724	572,791	3,453	12,424	515,039	20,990	1,164,421
Net return from ordinary activities	–	–	–	–	16,321	8,021	24,342
Second interim dividend (7.4p per share) for the year ended 30 September 2017	–	–	–	–	–	(11,786)	(11,786)
Issue of shares	1,688	48,904	–	–	–	–	50,592
At 31 March 2018	41,412	621,695	3,453	12,424	531,360	17,225	1,227,569

Statement of Financial Position
as at 31 March 2019

	(Unaudited)	(Audited)
	31 March	30 September
	2019	2018
	£’000	£’000
Fixed assets
Investments designated at fair value through profit or loss (note 1)	1,577,253	1,431,672
Current assets
Debtors	6,576	4,886
Cash and cash equivalents	12,245	13,175
	18,821	18,061
Current liabilities
Creditors: amounts falling due within one year	(2,421)	(1,243)
Bank loan	(36,700)	–
	(39,121)	(1,243)
Net current (liabilities)/assets	(20,300)	16,818
Total assets less current liabilities	1,556,953	1,448,490
Creditors: amounts falling due after one year
Bank loan	–	(36,700)
Net assets	1,556,953	1,411,790
Capital and reserves
Called up share capital	47,032	43,423
Share premium account	793,940	684,726
Capital redemption reserve	3,453	3,453
Capital reserve	676,093	643,037
Revenue reserve	36,435	37,151
Total shareholders’ funds	1,556,953	1,411,790
Net asset value per share – basic and diluted (note 5)	827.6p	812.8p

Statement of Cash Flows
for the six months ended 31 March 2019

	(Unaudited) 31 March 2019 £’000	(Unaudited) 31 March 2018 £’000
Net cash inflow from operating activities before interest (note 7)	7,610	6,147
Interest paid	(400)	(337)
Net cash inflow from operating activities	7,210	5,810
Investing activities
Purchase of investments	(111,378)	(49,294)
Sale of investments	5,584	3,607
Net cash outflow from investing activities	(105,794)	(45,687)
Financing activities
Equity dividends paid	(14,077)	(11,786)
Shares issued	111,791	50,036
Net cash inflow from financing activities	97,714	38,250
Decrease in cash and cash equivalents	(870)	(1,627)
Currency translations	(60)	(35)
Cash and cash equivalents at 1 October	13,175	11,482
Cash and cash equivalents at 31 March	12,245	9,820

Notes to the Financial Statements

1. Basis of preparation

The condensed Financial Statements for the six months to 31 March 2019 have been prepared under the historical cost convention, modified to include the revaluation of investments and in accordance with FRS 104 ‘Interim Financial Reporting’ and with the AIC’s Statement of Recommended Practice (“the SORP”) for Investment Trust Companies and Venture Capital Trusts issued in November 2014 and updated in January 2017 and February 2018 with consequential amendments, and the Companies Act 2006.

The accounting policies used for the year ended 30 September 2018 have been applied.

Fair Value

Under FRS 102 and FRS 104 investments have been classified using the following fair value hierarchy:

Level 1 – quoted prices in active markets

Level 2 – prices of recent transactions for identical instruments

Level 3 – valuation techniques using observable and unobservable market data.

The financial assets and liabilities measured at fair value in the Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows:

As at 31 March 2019

	Level 1	Level 2	Level 3
	£’000	£’000	£’000	Total
Equity investments	1,555,074	–	–	1,555,074
Limited liability partnership interest (Frostrow Capital LLP)	–	–	1,335	1,335
AIFM Capital contribution (Frostrow Capital LLP)	–	–	550	550
Preference shares investment	294	–	–	294
	1,555,368	–	1,885	1,557,253

As at 30 September 2018

	Level 1	Level 2	Level 3
	£’000	£’000	£’000	Total
Equity investments	1,429,520	–	–	1,429,520
Limited liability partnership interest (Frostrow Capital LLP)	–	–	1,335	1,335
AIFM Capital contribution (Frostrow Capital LLP)	–	–	550	550
Preference shares investment	267	–	–	267
	1,429,787	–	1,885	1,431,672

2. Income

	(Unaudited)	(Unaudited)
	Six months ended	Six months ended
	31 March 2019	31 March 2018
	£’000	£’000
Income from investments
Franked investment income
– dividends	11,593	8,781
Unfranked investment income
– overseas dividends	1,527	1,171
– limited liability partnership – priority profit-share on AIFM Capital Contribution	25	21
Total income	13,145	9,973

3. AIFM and Portfolio Management fees

	(Unaudited)	(Unaudited)
	Six months ended	Six months ended
	31 March 2019	31 March 2018
	£’000	£’000
AIFM fee	1,026	904
Portfolio management fee	3,076	2,712
Total fees	4,102	3,616

4. Return per share - basic and diluted

The total return per share is based on the total return attributable to equity shareholders of £46,417,000 (six months ended 31 March 2018: return of £24,342,000) and on 179,928,909 shares (six months ended 31 March 2018: 162,609,813), being the weighted average number of shares in issue during the period.

Revenue return per share is calculated by dividing the net revenue return of £10,862,000 (six months ended 31 March 2018: return of £8,021,000) by the weighted average number of shares in issue as above.

The capital return per share is calculated by dividing the net capital return attributable to shareholders of £35,555,000, (six months ended 31 March 2018: return of £16,321,000) by the weighted average number of shares in issue as above.

During the period there were no dilutive instruments held, therefore the basic and diluted returns per share are the same.

5. Net asset value per share - basic and diluted

The net asset value per share is based on net assets attributable to shares of £1,556,953,000 (30 September 2018: £1,411,790,000) and on 188,126,712 shares in issue (30 September 2018: 173,691,712).

At 31 March 2019 there were no dilutive instruments held, therefore the basic and diluted net asset value per share are the same.

6. Transaction costs

Purchase transaction costs for the six months ended 31 March 2019 were £548,000 (six months ended 31 March 2018: £247,000). These comprise of stamp duty costs of £498,000 (31 March 2018: £221,000) and commission of £50,000 (31 March 2018: £26,000).

Sales transaction costs for the six months ended 31 March 2019 were £1,000 (six months ended 31 March 2018: £2,000. These comprise solely of commission.

These transaction costs are included within the gains on investments within the Income Statement.

7. Reconciliation of total return before finance costs and taxation to net cash inflow from operating activities

	(Unaudited)	(Unaudited)
	Six months ended	Six months ended
	31 March 2019	31 March 2018
	£’000	£’000
Total return before finance charges and taxation	47,042	24,830
Less: capital return before finance charges and taxation	(35,834)	(16,548)
Net revenue before finance costs and taxation	11,208	8,282
Increase/(decrease) in accrued income and prepayments	(687)	679
Increase/(decrease) in creditors	33	(21)
Taxation – irrecoverable overseas tax paid	(196)	(370)
AIFM and Portfolio management fees charged to capital	(2,748)	(2,423)
Net cash inflow from operating activities	7,610	6,147

8. 2018 accounts

The figures and financial information for the year to 30 September 2018 are extracted from the latest published accounts of the Company and do not constitute statutory accounts for the year.

Those accounts have been delivered to the Registrar of Companies and included the Report of the Auditor which was unqualified and did not contain a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying the report, and did not contain a statement under section 498 of the Companies Act 2006.

Governance/Interim Management Report

Principal Risks and Uncertainties

The principal risks and uncertainties facing the Company were explained in detail within the Annual Report for the year ended 30 September 2018. The Directors are not aware of any significant new risks or uncertainties and in the view of the Board these principal risks and uncertainties are applicable to the remaining six months of the financial year as they were to the six months under review.

The Company acknowledges the continued uncertainty surrounding the UK’s decision to leave the EU.

Related Party Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company.

Going Concern

The Directors, having made relevant enquiries, are satisfied that it is appropriate to prepare financial statements on the going concern basis as the net assets of the Company consist primarily of liquid securities, all of which, with the exception of the partnership interest in Frostrow Capital LLP, are traded on recognised stock exchanges. In preparing the financial statements as the Company has adequate resources to continue in operational existence for the foreseeable future. In reviewing the position as at the date of this report, the Board has considered the guidance on this matter issued by the Financial Reporting Council.

Directors’ Responsibility Statement

The Directors confirm that, to the best of their knowledge:

(i)   the condensed set of financial statements contained within the Half Year Report has been prepared in accordance with applicable accounting standards;

(ii)  the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (an indication of important events that have occurred during the first six months of the financial year and a description of the principal risks and uncertainties for the remaining six months of the financial year); and

(iii) the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;

and the Directors confirm that they have done so.

The Half Year Report has not been reviewed or audited by the Company’s Auditor.

The Half Year Report was approved by the Board on 14 May 2019 and the above responsibility statement was signed on its behalf by:

Anthony Townsend

Chairman

Glossary of Terms and Alternative Performance Measures (‘APM’)

AIC

The Association of Investment Companies.

Alternative Investment Fund Managers Directive (AIFMD)

The Alternative Investment Fund Manager Directive (the “Directive”) is a European Union Directive that entered into force on 22 July 2013. The Directive regulates EU fund managers that manage alternative investment funds (this includes investment trusts).

Alternative Performance Measure (APM)

An APM is a numerical measure of the Company’s current, historical or future financial performance, financial position or cash flows, other than a financial measure defined or specified in the applicable financial framework. In selecting these Alternative Performance Measures, the Directors considered the key objectives and expectations of typical investors in an investment trust such as the Company.

Discount or Premium (APM)

A description of the difference between the share price and the net asset value per share. The size of the discount or premium is calculated by subtracting the share price from the net asset value per share and is usually expressed as a percentage (%) of the net asset value per share. If the share price is higher than the net asset value per share the result is a premium. If the share price is lower than the net asset value per share, the shares are trading at a discount.

		As at	As at 30
		31 March 2019	September 2018
Share Price (p)		829.0	818.0
Net Asset value per share (p)		827.6	812.8
Premium of share price to net asset value per share		0.2%	0.6%

FTSE Disclaimer

“FTSE©” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distributions of FTSE Data is permitted without FTSE’s express written consent.

Gearing (APM)

Gearing represents prior charges, adjusted for net current assets expressed as a percentage of net assets. Prior charges includes all loans and bank overdrafts for investment purposes.

		31 March	30 September
		2019	2018
		£’000	£’000
Prior Carges		-	(36,700)
Net Current Assets		16,400	16,818
Net Debt		(20,300)	(19,882)
Net Assets		1,556,953	1,411,790
Gearing		1.3%	1.4%

Net Asset Value (NAV)

The value of the Company’s assets, principally investments made in other companies and cash being held, less any liabilities. The NAV is also described as ‘shareholders’ funds’ per share. The NAV is often expressed in pence per share after being divided by the number of shares which have been issued. The NAV per share is unlikely to be the same as the share price which is the price at which the Company’s shares can be bought or sold by an investor. The share price is determined by the relationship between the demand and supply of the shares.

Net Asset Value Total Return (APM)

The total return on an investment over a specified period assuming dividends paid to shareholders were reinvested at net asset value per share at the time the shares were quoted ex-dividend. This is a way of measuring investment management performance of investment trusts which is not affected by movements in discounts or premiums.

		31 March	30 September
NAV Total Return		2019	2018
Opening NAV per share (p)		812.8	732.8
Increase in NAV per share (p)		14.8	80.0
Closing NAV per share (p)		827.6	812.8
% Increase in NAV		1.8%	10.9%
Impact of dividends re-invested*		1.1%	2.2%
NAV per share total return (p)		2.9%	13.1%

* Total dividends paid during the period of 8.1p (14.60p paid during the 2018 financial year) were re-invested at the cum dividend NAV price during the period. Where the dividend is invested and NAV price falls, this will further reduce the return, if it rises, any increase would be greater. The source is Morningstar who have calculated the return on an industry comparative basis.

Ongoing Charges (APM)

Ongoing charges are calculated by taking the Company’s annualised operating expenses expressed as a proportion of the average daily net asset value of the Company over the year. The costs of buying and selling investments are excluded, as are interest costs, taxation, cost of buying back or issuing ordinary shares and other non-recurring costs.

		As at	As at 30
		31 March 2019	September 2018
		£’000	£’000
Operating Expenses		9,638*	8,670
Average Net Assets during the period/year		1,392,688	1,291,632
Ongoing Charges		0.7%	0.7%

* Estimated expenses for the year ending 30 September 2019, as at 31 March 2019.

Share Price Total Return (APM)

The change in capital value of a company’s shares over a given period, plus dividends paid to shareholders, expressed as a percentage of the opening value. The assumption is that dividends paid to shareholders are re-invested in the shares at the time the shares are quoted ex dividend.

		31 March	30 September
Share Price Total Return		2019	2018
Opening share price (p)		818.0	736.5
Increase in share price (p)		11.0	81.5
Closing share price (p)		829.0	818.0
% Increase in share price		1.3%	11.1%
Impact of dividends re-invested*		1.1%	2.1%
Share price total return (p)		2.4%	13.2%

* Total dividends paid during the period of 8.1p (14.60p paid during the 2018 financial year) were re?invested at the cum dividend NAV/share price during the period. Where the dividend is invested and NAV/share price falls, this will further reduce the return, if it rises, any increase would be greater. The source is Morningstar who have calculated the return on an industry comparative basis.

- END-

Victoria Hale

Frostrow Capital LLP

Company Secretary – 0203 170 8732

14 May 2019