Half-yearly Report
LONDON STOCK EXCHANGE ANNOUNCEMENT
Finsbury Growth & Income Trust PLC
Unaudited Half Year Results For The Six Months Ended
31 March 2011
Company Summary
Key Statistics
As at As at % Change
31 March 30 September
2011 2010
Share price 318.0p 297.8p +6.8
Net asset value per share (including 326.0p 301.4p +8.2
income)
Net asset value per share (excluding 321.6p 297.0p +8.3
income)
(Discount)/premium of share price to net (1.1)% 0.3% n/a
asset value per share (excluding income)
Gearing†7.1% 6.7% n/a
Shareholders' funds £174.3m £159.6m +9.2
Market capitalisation £170.1m £157.7m +7.9
Number of shares in issue 53,487,423 52,947,423 +1.0
Six months One year to
to 30
31 March September
2011 2010
Share price (total return)# +8.3% +33.1%
Net asset value per share (total return)# +10.3% +25.6%
FTSE All-Share Index (total return) +8.5% +12.5%
(Company benchmark)
Dividends Year ending Year ended
30 September 30
2011 September
2010
First interim dividend 4.4p per 4.4p per
share share
Second interim dividend Yet to be 4.4p per
declared share
# Source - Morningstar
†Calculated by dividing the drawn down amount from the loan facility by
shareholders' funds.
A member of the Association of Investment
Companies
Investment Objective
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 Policy
The Company invests 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 of.
The portfolio is managed by Lindsell Train Limited and will normally comprise
approximately thirty investments. Unless driven by market movements, FTSE 100
companies, including preference shares issued by such companies, will normally
represent between 50% and 100% of the portfolio; at least 70% of the portfolio
will normally be invested in companies within the FTSE 350.
Benchmark
Performance is measured against the FTSE All-Share Index (total return).
First Interim Dividend
A first interim dividend of 4.4p per share (2010: 4.4p) was paid on 6 May 2011
to shareholders registered at the close of business on 1 April 2011. The
associated ex-dividend date was 30 March 2011.
Capital Structure
At 31 March 2011 the Company had 53,487,423 shares of 25p each in issue with no
shares being held in treasury (31 March 2010: 50,855,811 (treasury shares:
1,941,612)). During the six months under review 540,000 new shares were issued.
Since the end of the half-year a further 1,325,000 new shares have been issued.
As at 10 May 2011, the Company had 54,812,423 shares in issue with no shares
being held in treasury.
Gearing
As at 31 March 2011 the Company had a secured multicurrency revolving credit
facility of £20 million provided by Scotiabank Europe plc. As at this date a
total of £12.35 million had been drawn down.
Chairman's Statement
Performance
I am pleased to report that for the six months under review the Company
continued its strong run of performance with a net asset value per share total
return of 10.3% and a share price total return of 8.3%. These results compare
favourably with the Company's benchmark, the FTSE All-Share Index, measured on
a total return basis, which provided a return of 8.5% during the same period.
The principal contributers to net asset value performance were our holdings in
Rathbone Brothers, Schroders, Diageo and Fidessa. Further information on the
Company's entire portfolio can be found in our Investment Manager's Review
beginning on page 5.
The price of the Company's shares began the period at a 0.3% premium to the
Company's ex-income net asset value per share and moved to a 1.1% discount at
the period end. At the time of writing it is at a 0.9% premium.
I am delighted to report that the Company was a winner in the UK Growth &
Income Category at the 2011 Moneywise, Investment Trust Awards.
Share Capital and Discount Control
The Company has now issued a total of 1,865,000 new shares since 1 October 2010
at a minimum 0.5% premium to the estimated cum income net asset value per share
at the time of issue. We believe our ability to meet the market's demand for
liquidity in this way is very beneficial for all investors: not just those
wishing to buy, but those continuing to hold and those wishing to sell. Good
liquidity also helps to preserve a narrower dealing spread in the Company's
shares.
The Board attaches considerable importance to its discount control mechanism
which we use actively when necessary. The Company's strong performance and
ongoing demand for its shares have kept the discount of the Company's share
price to the net asset value per share tight; the average month-end discount of
share price to the ex-income net asset value per share during the half year was
0.9%.
Return and Dividend
The Income Statement shows a total return per share of 28.9p (six months ended
31 March 2010: 37.8p) consisting of a revenue return per share of 2.8p (six
months ended 31 March 2010: 4.1p) and a capital return per share of 26.1p (six
months ended 31 March 2010: 33.7p). The Board has declared an unchanged first
interim dividend of 4.4p per share which was paid on 6 May 2011 to shareholders
on the register on 1 April 2011. The associated ex dividend date was 30 March
2011. The Company's net revenue return for the period under review was less
than the same period last year, due principally to timing differences in the
receipt of dividends from a number of the Company's investments.
Borrowings
Your Company has a fixed term committed secured revolving credit facility of £
20m which is subject to a variable rate of interest. As at 31 March 2011 a
total of £12.35m was drawn down under this facility. We believe that the
availability of a meaningful gearing facility of this kind is very useful for a
closed end investment company such as ours.
Developments in the Investment Trust Sector
HM Treasury's review of the tax and company law rules affecting investment
trusts set out in its consultation document last summer has now resulted in
sensible and beneficial amendments which will be advantageous to the whole
industry. Our trade association, the Association of Investment Companies (AIC),
played a leading role in reaching this satisfactory conclusion of the review.
The Alternative Investment Fund Managers Directive was passed into law by the
European Parliament last summer, but there is much detail still to emerge
before this Directive takes effect in 2013. It is however clear that much of
the over-bureaucratic regulation first proposed has been abandoned in favour of
more pragmatic measures and the AIC again played a major role in achieving
this.
Outlook
It is expected that the modest growth anticipated in the UK economy during the
rest of this year and into 2012 will be export led and that consumer spending
growth is likely to lag GDP growth as credit conditions remain relatively tight
and earnings growth remains subdued. However, shareholders will know that most
of the companies in our portfolio are international in their operations so they
are not entirely at the mercy of the UK economy.
Your Board believes that our Investment 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
10 May 2011
Investment Manager's Review
Of course we are pleased that your Company's net asset value per share
outperformed the FTSE All-Share Index again over the recent period.
Nonetheless, we feel duty-bound to admit to shareholders that we regard such
outperformance as random. This is because we make no attempt to micro-manage
the portfolio to achieve a given performance objective from half year to half
year (or even from year to year). Trying to fine tune an investment strategy
over such relatively short term periods is far too difficult for us. Instead,
we hope to achieve satisfactory longer term returns for you by maintaining a
collection of holdings in fine businesses (which we analyse to be undervalued)
and otherwise leave as well alone as we prudently may.
This does not mean that we do not closely follow the companies in which we've
invested your capital - we do. And, in particular, we pay attention to dividend
progression. What follows is a brief review of each constituent (listed
alphabetically), beginning with an update on its most recent dividend
announcement. We hope you will be impressed overall by the pace of dividend
growth across the portfolio after our disappointments on this score last year,
and share our conviction that it remains positioned to generate acceptable
absolute and relative returns into the future.
A.G.Barr - (Last dividend +10% year on year). Key brands - IRN-BRU and Rubicon
(the latter an inspired 2007 acquisition) - will drive further growth and the
growth of soft drink brands has the propensity to generate a lot of valuable
cash. Barr remains a core holding for your Company. Nonetheless, given the size
of the commitment - at one stage in 2010 it accounted for nearly 15% of your
assets - and the sub 2% dividend yield at the current price, we still believe
it made sense to reduce the holding somewhat last year.
Burberry Group - (Dividend +43%). Sales of luxury goods continue to be
amazingly robust. Meanwhile LVMH, owner of Louis Vuitton, of course, and run by
the very shrewd M. Arnault, has recently twice placed values on comparable
assets - Hermes and Bulgari (by bidding for them) - that make Burberry look
undervalued.
Celtic - (Does not pay a dividend). The economics of Scottish football remain
challenging and the club is barely profitable. However, we note that both
Arsenal and Roma SA have changed hands in recent weeks, acquired by rational,
profit-seeking US entrepreneurs and at valuations very much higher than that
commanded by Celtic on the public market. This is a unique "trophy" asset and
an underexploited global brand.
Daily Mail & General Trust - (Dividend +11%). We remain excited by the growth
in the company's online properties, particularly MailOnline, which is turning
into a Facebook-type phenomenon. In the first quarter of this year Time Warner
purchased US gossip website Huffington Post. If we extrapolate from the very
fancy price paid by Time Warner there are £100ms of unrecognised value in Daily
Mail, in our opinion.
Diageo - (Dividend +6%). Peripheral Europe is very tough and it is true that
Greece, Ireland and Spain are important Diageo markets. What is reassuring is
Diageo's relatively debt-free balance sheet which allows it to take a place at
the table for all current auctions of spirits brands. Diageo is one of the UK's
few truly industry-leading global companies, positioning itself for much higher
earnings into the next upswing. Meanwhile its shares offer market beating yield
and dividend growth.
Dr Pepper Snapple -(Dividend +20%). Coke and Pepsi are struggling for growth in
US, but Pepper's non-cola brands are taking share there and, like Barr, it is a
lovely cash machine.
Euromoney Institutional Investor - (Dividend +52%). Daily Mail's sister
company. Shares are consolidating after a great run in 2010, but this is still
the best collection of business to business financial media assets we know in
the world. Bank Credit Analyst, Euromoney and Metal Bulletin, for instance, are
"must-reads" for their respective industries.
Fidessa - (Dividend +10%). Shares are hitting new 10 year highs, but still 25%
below the all time peak of the Tech Boom. Fidessa is a much bigger and better
company today than it was in 2000 and is an increasingly indispensible part of
the plumbing of world capital markets.
Fuller Smith & Turner - (Dividend +5.5%). Investors worry about the economic
squeeze on Middle England pub visits, but Fuller's London bias and clean
balance sheet are helping it. We expect the company to pick up more fine assets
from distressed competitors.
Greene King - (Dividend +6.7%). Maintained capital expenditure, paid back debt
and increased dividend in 2010 - triply reassuring. But it sits in the
unpopular pub/brewing sector. Greene King offers a growing dividend, starting
from a yield 70% above the market average. For us this adequately compensates
for temporary tough times. Now a c2.0% holding and one to which we have been
adding in 2011.
Hargreaves Lansdown - (Dividend +22%). Asset growth remains exceptionally
strong. A beneficiary of both the urgent requirement felt by UK individuals to
provide for their retirements and the general suspicion and disdain felt for
High Street financial service providers.
Kraft Foods - (Dividend unchanged). We expect the undoubted benefits of its
Cadbury acquisition to hasten a return to dividend growth.
Lloyds Preference Shares - (No dividend). Assuming Lloyds is no worse a risk
than RBS, we think these preferred shares could trade at c£1.00, rather than c£
0.90 today. We are still 12 months away from dividend resumption; although, on
balance, we think the chances of that resumption have improved.
London Stock Exchange - (Dividend +4.7%). Volumes of share dealing and new
listings are picking up with the capital market cycle. Meanwhile the exchange
industry is in flux, as participants look to establish dominant global
liquidity pools. The London Stock Exchange remains a resonant brand and likely
lynch-pin in any such global combination.
Marston's - (Dividend unchanged). The recent trading update was encouraging,
highlighting the self-help available to an inherently cash-generative business,
even in a downturn. Its directors have been buying shares for their own
accounts, while similar pub assets are changing hands across the industry at
prices that make Marstons look cheap.
Pearson - (Dividend +7%). By applying digital technology to the education
industry Pearson has accelerated its growth and improved its profitability.
This is a major holding for your Company and one where we have high hopes for a
major rerating. The company has the look of one of the great growth stock
stories of the second decade of the century.
Rathbone Brothers - (Dividend+8%). Rathbone's shares have perked up in 2011,
after a dull phase. The company remains a conservatively financed and strong
franchise in the savings industry, offering participation to wealth creation in
the UK economy and the fortunes of global financial markets. We are bullish on
both.
Investment Manager's Review
Continued
Reed Elsevier - (Dividend unchanged). As demonstrated by other portfolio
holdings (e.g. Fidessa and Pearson), we are already in the early stages of a
new and potentially very rewarding bull market for Media and Technology
companies. Reed, however, remains disappointingly stranded, both in terms of
its business and its share price. This despite its wonderful assets - number
one in Global Scientific Publishing, number two in Global Legal Publishing,
number one in Global Exhibitions. The new Chairman and CEO have talked a decent
story over the last 12 months, now is the time to deliver.
Sage Group - (Dividend +6%). Sage is valued as if it were a low growth
engineering company, despite high profit margins and wonderful cash generation.
If its new CEO can conjure up even a modest acceleration in its sales growth
then the shares could move back toward previous highs - almost 3.0x above
today's levels.
Schroders - (Dividend +24%). Blow-out recent results, with a welcome marked
acceleration in dividend growth. The company is in a phase that could see a
transformative leap in its assets under management, we hope.
Thomson Reuters - (Dividend +4%). Visionary family owners encourage its
executives to invest heavily into market-leading professional information
services. A high return company in a sector investors are warming to, after
years of disregard. Please take note Reed Elsevier!
Unilever - (Dividend +5.4%). Unilever has just sold its Sanex brand to Colgate
for 3.6x Sanex' annual sales. However the rest of Unilever is valued by stock
market investors at only 1.5x sales, despite 50% of these sales deriving from
Emerging Markets. Unilever is a big company trading at a big discount to its
true strategic worth. The 4% dividend yield and dividend growth pay us to wait
while this value is unlocked.
Young & Co's Brewery - (Dividend +2%). London is a formidable economy in its
own right - as a financial centre, seat of government and tourist destination.
Youngs' pubs and beer brands offer a secure participation in the fortunes of
the capital city.
Nick Train, Lindsell Train Limited
Investment Manager
10 May 2011
Portfolio
as at 31 March 2011
Investment Sector Fair % of
Value £ Investments
'000
Diageo Beverages 19,316 10.4
A.G. Barr Beverages 17,797 9.6
Unilever Food Producers 17,347 9.3
Pearson Media 13,797 7.4
Fidessa Software & Computer 11,812 6.4
Services
Rathbone Brothers General Financials 10,822 5.8
Sage Group Software & Computer 9,734 5.2
Services
Schroders General Financials 9,548 5.1
Reed Elsevier Media 7,943 4.3
Kraft Foods ^ Food Producers 7,122 3.9
Top 10 investments 125,238 67.4
Euromoney Institutional Media 6,363 3.4
Investor
Burberry Group Personal Goods 5,982 3.2
Marston's Travel & Leisure 5,926 3.2
Daily Mail & General Media 5,470 2.9
Trust
Dr Pepper Snapple ^ Beverages 5,021 2.7
Hargreaves Lansdown General Financials 5,001 2.7
London Stock Exchange General Financials 4,896 2.6
Thomson Reuters ~ Media 4,805 2.6
Fuller Smith & Turner Travel & Leisure 4,200 2.3
Young & Co's Brewery Travel & Leisure 3,718 2.0
Top 20 investments 176,620 95.0
Greene King Travel & Leisure 3,112 1.7
Lloyds Banking Group Preference Shares 2,771 1.5
9.25% (Banks)
(non cum preference)*
Lindsell Train Investment General Financials 2,140 1.3
Trust
Celtic Travel & Leisure 611 0.3
Frostrow Capital LLP + General Financials 340 0.2
Celtic 6% (cum Travel & Leisure 59 -
preference)*
Total investments 185,653 100.0
All of the above investments are equities listed in the UK, unless otherwise
stated.
^ Listed in the United States
~ Listed in Canada
* Non-equity - Preference Shares
+ Unquoted partnership interest
Comparison of Sector Weightings with the FTSE All-Share Index
as at 31 March 2011
Sector Finsbury FTSE Finsbury
Growth All-Share Growth
& Income Index & Income
% % (under)/
overweight
%
Oil & Gas - 17.7 (17.7)
Basic Materials - 13.5 (13.5)
Industrials - 7.4 (7.4)
Consumer Goods 39.1 11.1 28.0
Health Care - 6.7 (6.7)
Consumer Services 30.1 9.3 20.8
Telecommunications - 6.3 (6.3)
Utilities - 3.7 (3.7)
Financials (excluding preference shares) 17.7 22.6 (4.9)
Technology 11.6 1.7 9.9
Total excluding preference shares 98.5 100.0 (1.5)
Preference shares 1.5 - 1.5
Total 100.0 100.0 -
Income Statement
For the six months ended 31 March 2011
(Unaudited) (Unaudited) (Audited)
Six months ended 31 Six months ended 31 Year ended 30
March 2011 March 2010 September 2010
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on - 14,364 14,364 - 17,609 17,609 - 28,733 28,733
investments held
at fair value
through profit or
loss
Exchange - - - - (3) (3) - (3) (3)
difference
Income (note 2) 1,952 - 1,952 2,570 - 2,570 5,363 - 5,363
Investment (184) (374) (558) (140) (285) (425) (305) (619) (924)
management and
management fees
(note 3)
Recovery of VAT on - - - 11 23 34 11 23 34
investment
management fee
previously paid
Other expenses (208) (4) (212) (278) (87) (365) (492) (89) (581)
Return on ordinary 1,560 13,986 15,546 2,163 17,257 19,420 4,577 28,045 32,622
activities before
finance charges
and taxation
Finance charges (53) (107) (160) (69) (140) (209) (109) (221) (330)
Return on ordinary 1,507 13,879 15,386 2,094 17,117 19,211 4,468 27,824 32,292
activities before
taxation
Taxation on (48) - (48) (35) - (35) (84) - (84)
ordinary
activities
Return on ordinary 1,459 13,879 15,338 2,059 17,117 19,176 4,384 27,824 32,208
activities after
taxation
Return per share 2.8p 26.1p 28.9p 4.1p 33.7p 37.8p 8.5p 54.0p 62.5p
(note 4)
The "Total" column of this statement represents the Income Statement of the
Company. The "Revenue" and "Capital" columns are supplementary to this and are
prepared under guidance published by the Association of Investment Companies.
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.
Reconciliation of Movements in Shareholders' Funds
Share Capital
Share premium redemption Special Capital Revenue
(Unaudited) capital account reserve reserve reserve reserve Total
Six months ended 31 March £'000 £'000 £'000 £'000 £'000 £'000 £'000
2011
At 30 September 2010 13,237 37,213 3,453 12,424 88,939 4,324 159,590
Net return from ordinary - - - - 13,879 1,459 15,338
activities
Second interim dividend - - - - - (2,330) (2,330)
(4.4p per share) for the
year ended 30 September
2010
Issue of shares 135 1,612 - - - - 1,747
At 31 March 2011 13,372 38,825 3,453 12,424 102,818 3,453 174,345
(Unaudited)
Six months ended 31 March
2010
At 30 September 2009 13,199 35,914 3,453 12,424 57,890 4,779 127,659
Net return from ordinary - - - - 17,117 2,059 19,176
activities
Second interim dividend - - - - - (2,615) (2,615)
(5.1p per share) for the
year ended 30 September
2009
Repurchase of shares into - - - - (5,435) - (5,435)
treasury
Sale of shares from - 420 - - 4,132 - 4,552
treasury
At 31 March 2010 13,199 36,334 3,453 12,424 73,704 4,223 143,337
(Audited)
Year ended 30 September
2010
At 30 September 2009 13,199 35,914 3,453 12,424 57,890 4,779 127,659
Net return on ordinary - - - - 27,824 4,384 32,208
activities
Second interim dividend - - - - - (2,615) (2,615)
(5.1p per share) for the
year ended 30 September
2009
First interim dividend - - - - - (2,224) (2,224)
(4.4p per share) for the
year ended 30 September
2010
Issue of shares 38 381 - - - - 419
Repurchase of shares into - - - - (5,934) - (5,934)
treasury
Sale of shares from - 918 - - 9,159 - 10,077
treasury
At 30 September 2010 13,237 37,213 3,453 12,424 88,939 4,324 159,590
Balance Sheet
as at 31 March 2011
(Unaudited) (Unaudited) (Audited)
31 March 31 March 30
September
2011 2010 2010
£'000 £'000 £'000
Fixed assets
Investments designated at fair value 185,653 147,826 168,514
through profit or loss
Current assets
Debtors 527 2,529 613
Cash at bank 670 7,646 1,387
1,197 10,175 2,000
Current liabilities
Creditors (155) (214) (224)
Bank loan (12,350) (14,450) (10,700)
(12,505) (14,664) (10,924)
Net current liabilities (11,308) (4,489) (8,924)
Total net assets 174,345 143,337 159,590
Capital and reserves
Share capital 13,372 13,199 13,237
Share premium account 38,825 36,334 37,213
Capital redemption reserve 3,453 3,453 3,453
Special reserve 12,424 12,424 12,424
Capital reserve 102,818 73,704 88,939
Revenue reserve 3,453 4,223 4,324
Equity shareholders' funds 174,345 143,337 159,590
Net asset value per share (note 5) 326.0p 281.9p 301.4p
Cash Flow Statement
for the six months ended 31 March 2011
(Unaudited) (Unaudited) (Audited)
31 March 31 March 30
September
2011 2010 2010
£'000 £'000 £'000
Net cash inflow from operating activities 1,202 276 4,244
(note 7)
Servicing of finance
Loan interest and arrangement fees paid (212) (192) (326)
Financial investment
Purchase of investments (5,470) (6,473) (19,152)
Sale of investments 2,696 15,055 18,170
Net cash (outflow)/inflow from financial (2,774) 8,582 (982)
investment
Equity dividends paid (2,330) (2,615) (4,839)
Net cash (outflow)/inflow before financing (4,114) 6,051 (1,903)
Financing
Shares issued net of issue expenses 1,747 - 419
Repurchase of shares into treasury - (5,435) (5,934)
Sale of shares from treasury - 4,552 10,077
Drawdown/(repayment) of loans 1,650 950 (2,800)
Net cash inflow from financing 3,397 67 1,762
(Decrease)/increase in cash (717) 6,118 (141)
Reconciliation of net cash flow to
movement in net debt
(Decrease)/increase in cash resulting from (717) 6,118 (141)
cashflows
(Increase)/decrease in debt (1,650) (950) 2,800
Exchange movements - (3) (3)
Movement in net debt (2,367) 5,165 2,656
Net debt at start of period/year (9,313) (11,969) (11,969)
Net debt at end of period/year (11,680) (6,804) (9,313)
Notes to the Interim Financial Statements
1. Basis of preparation
The condensed 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 dated January 2009.
The same accounting policies used for the year ended 30 September 2010 have
been applied.
2. Income
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended 31 ended 31 ended 30
March 2011 March 2010 September
£'000 £'000 2010 £
'000
Income from investments
Franked investment income
- dividends 1,679 2,293 4,807
Unfranked investment income
- limited liability partnership profit-share - 80 80
- overseas dividends 273 184 463
1,952 2,557 5,350
Other income
Interest from HMRC (ie: VAT reclaim on - 13 13
management fees)
Total 1,952 2,570 5,363
3. Investment management and management fees
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended 31 ended 31 ended 30
March 2011 March 2010 September
£'000 £'000 2010 £
'000
Investment management fee 370 277 606
Management fee 158 127 272
VAT thereon* 30 21 46
Total 558 425 924
* VAT on management fee
Notes to the Interim Financial Statements
Continued
4. Return per share
The total return per share is based on the total return attributable to equity
shareholders of £15,338,000 (six months ended 31 March 2010: return of £
19,176,000; year ended 30 September 2010: return of £32,208,000) and on
53,062,424 shares (six months ended 31 March 2010: 50,760,106; year ended 30
September 2010: 51,546,561), being the weighted average number of shares in
issue.
The revenue return per share is calculated by dividing the net revenue return
of £1,459,000 (six months ended 31 March 2010: return of £2,059,000; year ended
30 September 2010: return of £4,384,000) 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 £13,879,000, (six months ended 31 March 2010:
return of £17,117,000; year ended 30 September 2010: return of £27,824,000) by
the weighted average number of shares in issue as above.
5. Net asset value per share
The net asset value per share is based on net assets attributable to shares of
£174,345,000 (31 March 2010: £143,337,000 and 30 September 2010: £159,590,000)
and on 53,487,423 shares in issue (31 March 2010: 50,855,811 and 30 September
2010: 52,947,423) (excluding treasury shares).
6. Transaction costs
Purchase transaction costs for the six months ended 31 March 2011 were £39,000
(six months ended 31 March 2010: £47,000; year ended 30 September 2010: £
141,000).
Sales transaction costs for the six months ended 31 March 2011 were £4,000 (six
months ended 31 March 2010: £9,000; year ended 30 September 2010: £22,000).
7. Reconciliation of net total return before finance costs and taxation to net
cash inflow from operating activities
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended 31 ended 31 ended 30
March 2011 March 2010 September
£'000 £'000 2010 £
'000
Total return before finance charges and 15,546 19,420 32,622
taxation
Less capital return before finance charges and (13,986) (17,257) (28,045)
taxation
Net revenue before finance costs and taxation 1,560 2,163 4,577
Decrease in accrued income 85 572 260
Decrease/(increase) in other debtors 1 (2,092) 135
(Decrease)/increase in creditors (17) 3 26
Taxation - irrecoverable overseas tax paid (49) (21) (69)
Investment management and management fees (374) (262) (596)
charged to capital
Other expenses charged to capital (4) (87) (89)
Net cash inflow from operating activities 1,202 276 4,244
8. 2010 accounts
The figures and financial information for the year to 30 September 2010 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 Auditors which was unqualified and did not contain a
reference to any matters to which the auditors drew attention by way of
emphasis without qualifying the report, and did not contain a statement under
section 498 of the Companies Act 2006.
Interim Management Report
Principal Risks and Uncertainties
A review of the half year, including reference to the risks and uncertainties
that existed during the period, and the outlook for the Company can be found in
the Chairman's Statement beginning on page three and in the Investment
Manager's Review beginning on page five. The principal risks faced by the
Company fall into nine broad categories: market price risk; interest rate risk;
portfolio performance; operational and regulatory risk; credit risk; liquidity
risk; investment management key person risk; availability of bank finance;
inability to maintain a progressive dividend policy. Information on each of
these areas, with the exception of the availability of bank finance and the
Board's ability to maintain a progressive dividend policy, is given in the
Business Review within the Annual Report and Accounts for the year ended 30
September 2010. The risk associated with the availability of bank finance is
that the provider may no longer be prepared to lend to the Company. Copies of
the monthly loan covenant compliance certificates, provided for the lender, are
circulated to the Board and both the Board and the Investment Manager are kept
fully informed of any likelihood of the withdrawal of the loan facility so that
repayment can be effected in an orderly fashion if necessary. With regard to
the Company's dividend policy, the Board regularly reviews the Company's
portfolio and also income forecasts prepared by the Manager; regular reports on
the Company's income position are also made by the Company's Investment Manager
at each Board meeting. The Company also maintains a distributable revenue
reserve which can be used to help make up any shortfall in income received by
the Company.
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.
Related Party Transactions
During the first six months of the current financial year no material
transactions with related parties have taken place which have affected the
financial position or the performance of the Company during the period.
Directors' Responsibilities
The Directors are responsible for preparing the Interim Report in accordance
with applicable law and regulations. The Directors confirm that to the best of
their knowledge the condensed set of financial statements, within the Interim
Report, have been prepared in accordance with applicable accounting standards,
give a true and fair view of the assets, liabilities, financial position and
the return for the half-year ended 31 March 2011 and that the Chairman's
Statement, the Investment Manager's Review and the Interim Management Report
include a fair review of the information required by 4.1.8R to 4.2.11R of the
FSA's Disclosure and Transparency Rules.
The Interim Report has not been reviewed or audited by the Company's auditors.
The Interim Report was approved by the Board on 10 May 2011 and the above
responsibility statement was signed on its behalf by:
Anthony Townsend
Chairman
Frostrow Capital LLP
Company Secretary
25 May 2011
0203 008 4913
www.frostrow.com
A copy of the interim report has been submitted to the National Storage
Mechanism and will shortly be available for inspection at www.hemscott.com/
nsm.do
The interim report will also 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.
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