Preliminary Announcement
NEWS RELEASE
For immediate release - 17 December 2009
Finsbury Growth & Income Trust PLC
Audited Results for the Year Ended 30 September 2009
Finsbury Growth & Income Trust PLC today announces its preliminary results for
the year ended 30 September 2009.
30 30
September September
2009 %
2008 Change
Share price 231.0p 202.0p +14.4
Net asset value per share (including income) 249.0p 215.5p +15.5
Net asset value per share (excluding income) 243.9p 215.5p +13.2
Dividends per share 9.5p 9.5p -
Discount of share price to net asset value per
share (excluding income)
5.3% 6.3%
Gearing (borrowings as a percentage of
shareholders' funds)
10.6% 11.8%
Share price total return* +22.9% -33.1%
Net asset value per share total return* +24.0% -31.4%
FTSE All-Share Index (total return) (company
benchmark)
+10.8% -22.3%
Total expense ratio (excluding the recovery of
VAT)+
0.9% 1.0%
5 Year Performance Summary 30/9/ 30/9/ 30/9/ 30/9/ 30/9/
2005 2006 2007 2008 2009
Share Price 260.3p 300.3p 307.5p 202.0p 231.0p
Share price total return* +37.2% +19.6% +5.3% -33.1% +22.9%
Net asset value per share (including income)
257.8p 302.6p 315.4p 215.5p 249.0p
Net asset value per share (excluding income)
253.8p 298.4p 310.6p 215.5p 243.9p
Net asset value per share total return*
+31.5% +21.2% +6.9% -31.4% +24.0%
FTSE All-Share Index (total return)
+24.9% +14.7% +12.2% -22.3% +10.8%
Premium/(discount) of share price to net
asset value per share (excluding income)
2.6% 0.6% (1.0)% (6.3)% (5.3)%
Gearing (borrowings as a percentage of
shareholders' funds)
15.6% 13.4% 15.0% 11.8% 10.6%
Ordinary dividends per share 8.0p 8.4p 9.0p 9.5p 9.5p
Special dividends per share - 2.3p - - -
*Source: Morningstar. Includes the 2008 second interim dividend which had an
ex-dividend date of 1 October 2008.
+TER is calculated based on the average net asset value during the year ended
30 September.
This Announcement is not the Company's annual report. It is an abridged version
of the Company's full annual report for the year ended 30 September 2009, which
has been approved by the Board. The full annual report will be sent to
shareholders on 23 December 2009. The full annual report, together with a copy
of this announcement, will also be available on the Company's website:
www.finsburygt.com
The following are attached:
Chairman's Statement
Investment Manager's Review
Income Statement
Reconciliation of Movements in Shareholders' Funds
Balance Sheet
Cash Flow Statement
Notes
For further information please contact:
Mark Pope, Frostrow Capital LLP 020 3 008 4913
Anthony Townsend, Chairman 020 3 008 4910
Nick Train, Lindsell Train Limited 020 7 227 8200
Chairman's Statement
Performance
After a challenging first half of the year to 31 March 2009, markets rallied
strongly in the second half and I am delighted to be able to report that
overall the Company's net asset value total return for the year was 24%. The
share price total return was slightly less at 22.9%. These results compare to
the total return from our benchmark index, the FTSE All-Share index, of 10.8%.
Overall the more buoyant market conditions have provided a welcome contrast to
those experienced in 2008.
The Company's strong outperformance when compared to the benchmark index is
particularly pleasing and was derived principally from good returns from our
major holdings in A.G. Barr, Cadbury, Fidessa, Unilever and Pearson.
Share Capital
The Company has continued to be active in issuing shares from treasury at a
discount of less than 5% and buying back shares for treasury where they were
offered at a discount greater than 5% to the net asset value per share. A total
of 1,009,000 shares were repurchased for treasury during the year in accordance
with the Company's stated policy and 1,330,000 shares were reissued during the
year at a price representing a narrower discount to net asset value per share
than that at which they had been bought into treasury. Following the year end a
further 680,000 shares have been issued from treasury and 1,069,360 shares have
been repurchased to be held in treasury leaving a balance of 1,915,110 shares
held in treasury at the date of this report.
The Board attaches considerable importance to its discount control mechanism
which is actively used. The average month end discount of share price to the
ex-income net asset value per share during the year was 4%.
Return and Dividend
The Income Statement shows a total return per share of 43.1p consisting of a
revenue return per share of 9.1p and a capital return per share of 34.0p.
Your Board has declared two interim dividends for the year totalling 9.5p per
share (year ended 30 September 2008: 9.5p). The total cost of the two dividends
attributable to the year was £4.826m which compares to a net revenue available
for distribution for the year of £4.639m and therefore £187,000 of brought
forward reserves have been applied in paying the total dividend for the year.
Following payment of the second interim dividend on 6 November 2009 the Company
has £2.164m of retained distributable reserves which is equivalent to
approximately 4.2p per share.
The Board is very conscious of the importance of income to our shareholders,
but also considers it vital not to compromise the investment strategy of the
Company. The EU has barred Lloyds Banking Group from paying preference share
dividends before 2012, a ruling that will have an impact on the Company's
income. The result will be an income shortfall from the current rate of
dividend payment which may exceed the availability of the Company's
distributable reserves. However, the extent and duration of the shortfall is
not possible to ascertain today. The Board will review the position at the time
of the interim dividend declaration in March 2010.
Borrowings
Subsequent to the year end the Company arranged a new secured fixed term
committed multicurrency revolving credit facility of £15m with Scotiabank
Europe PLC which is subject to an interest rate linked to the London Inter-Bank
Offered Rate. A total of £14.45m is currently drawn down from this new
facility.
Proposed Change to Investment Policy
The Company's current investment policy is to invest principally in the
securities of UK quoted securities. However, outside the control of our
Investment Manager we already have two investments, namely Thomson Reuters and
Dr Pepper Snapple, equating to approximately 5% of the portfolio, that do not
fulfil this criteria. Under the Listing Rules the Company is required to seek
the approval of shareholders for any material change in its investment policy
and I set out below further information about the proposed change. An ordinary
resolution to approve the change will be proposed at the Company's Annual
General Meeting to be held at 12 noon on Wednesday, 27 January 2010 at The City
of London Club, 19 Old Broad Street, London EC2N 1DS.
Our Investment Manager believes that it would be beneficial to shareholders if
the restriction of investing principally in the UK were amended such that up to
a maximum of 20% of the Company's portfolio can be invested in quoted companies
worldwide. This would enable the Company to retain its membership of the UK
Growth & Income Sector as administered by the Association of Investment
Companies.
The Board strongly supports the investment philosophy and approach of our
Investment Manager Lindsell Train Limited and is of the view that, particularly
in the current difficult market conditions, the Company is more likely to be
able to achieve capital and income growth and to provide shareholders with a
total return in excess of that of the FTSE All-Share Index if this proposed
amendment to the Company's investment policy were made.
VAT
As shareholders will be aware from my previous statements, VAT is no longer
charged on investment management fees following the ruling by the European
Court of Justice in October 2007. All past VAT payments due for reclaim by the
Company have now been received.
Alternative Investment Fund Manager ('AIFM') Directive
The AIFM Directive is draft legislation currently being considered in Europe
which will regulate 'alternative investment funds'. As currently drafted it
will adversely affect all investment trusts, including this Company. The Board
therefore actively supports the initiatives being taken by the Association of
Investment Companies to ensure that the Directive is tailored to accommodate
the investment company structure. The Board will keep shareholders informed of
developments concerning the Directive as they arise.
Outlook
Whilst the recovery in markets generally during 2009 has been welcome, the
outlook remains difficult to gauge, both from a capital and an income return
perspective. The UK economy continues to have an uncertain feel about it and
unemployment is expected to continue to rise in the short term. An increase in
inflation in the short term has also been predicted by the Bank of England. The
current financial year will see a general election in the UK, however it is
difficult to see that whoever wins will be able to make meaningful changes in
the short term and the prospect of significant public spending cuts and tax
rises is virtually certain.
Despite this unpromising outlook, your Board remains strongly supportive of our
Investment Manager's strategy of investing for the long term in durable cash
generative franchises with sustainable dividend growth rates. We continue to
believe that this strategy will deliver superior investment returns to
shareholders.
Further information concerning the portfolio, including dividend prospects, can
be found in our Investment Manager's report below.
Anthony Townsend
Chairman
17 December 2009
Investment Manager Review
The last twelve months have, of course, been a most disagreeable white-knuckle
ride, with every chance that further nauseating loop-de-loops await.
We look back and wonder two things. What lessons have we learned? And,
perhaps more important, which of the investment rules or guidelines, that had
served us well for the previous seven years of our responsibility for your
Company's portfolio, stood up to the intense examination of the bear market and
remain valid?
As to lessons learned - one springs, most painfully, to mind. We will never
again invest in the shares of any bank without paying closer attention to how
it funds its business. I'm afraid that like the boards of several institutions
we were complacent in assuming major banks would always be able to refinance
their short term liabilities. As this report is written our only remaining
exposure to the banking sector is via Lloyds preference shares, a position held
for many years. These have proven a poor allocation of your capital. What we
regarded as one of the least risky assets in the portfolio has turned out to be
one of the worst performers and this disappointment has been compounded by the
recent announcement of a two year suspension of their dividends, required by
the EU (we sold the Lloyds ordinary shares after the period end, on learning of
this dividend hiatus). In our judgement these preference shares are cheap
today, assuming Lloyds is a healing institution, but this situation must be
watched closely.
Turning to our guiding principles, we have growing concerns about one long term
touchstone. We had always believed in the efficacy of investing in shares
offering above average dividend yields. This may still be a winning strategy
in the very long term, but there is something bothersome to us about the
outlook for UK dividends. It is not only that they are being cut at a quicker
rate, reportedly, than before the First World War; it is their unusual
distribution. Nearly half the total dividends by value currently paid by
London-listed companies derive from just six giant companies - BHP, BP, Glaxo,
HSBC, Shell and Vodafone. And of these six, five pay their dividends in
dollars, not sterling - Vodafone the exception. Investing for dividend yield
today, therefore, not only requires one to concentrate on a limited number of
companies, for which you may or may not have any great enthusiasm (and we own
none of the six currently), it also involves involuntary currency risk. As to
that risk, the fact is we agree with a comment we heard recently - that picking
developed world currencies now is like being asked to choose between horses in
a glue factory - they are all knackered. And perhaps sterling is even more so
than any other, in which case receiving one's dividends in US dollars will be a
boon. But nothing beats matching one's long term liabilities to the currency
that will be required to pay for them and all your Company's constituents pay
sterling dividends, with the exception of Thomson Reuters and Dr Pepper
Snapple.
These concerns mean that although dividends still very much matter in our
thinking, we place higher value today on the sustainability of a given
company's dividend, or even better, on the sustainability of its dividend
growth rate, than on the starting level of dividend yield. For instance,
software company Fidessa is a key holding for your Company - not least because
of its 64% capital gain over the last year. Fidessa has a wonderful dividend
record, having increased its annual payments from 3.4p in 1999 to 27p this
year, including a 33% hike in its recent interim coupon. Today Fidessa's
shares offer a starting dividend yield of just 2% - some 35% less than that of
the FTSE All Share itself, although still usefully higher than the current rate
of UK retail price inflation. Nonetheless, we think it would be a mistake to
exchange Fidessa's shares for others with a higher starting yield, but without
the same security and growth potential. The reason can be seen here - the
current value of the investment in Fidessa is more than double the book cost -
meaning that the "dividend yield to book cost", or today's dividend as a
percentage of the average purchase price, is over 4%. That 4%, which should go
higher, as Fidessa increases future dividends, is one measure of the success of
a "growth and income" investment. And, more generally, we think some of the
best dividend prospects in the portfolio are found with companies more
traditionally regarded as "growth" plays, rather than "income" stocks - for
instance, London Stock Exchange, Pearson, Reed Elsevier, Sage, Schroders and
Thomson Reuters.
We retain greater confidence in the following tried and tested investment
rules. Last year's bouleversements confirmed for us the validity of one of the
most forthright and challenging propositions about investment we know - from
fabled US investor Peter Lynch.
"No one can predict the economy, interest rates or the stock market. Dismiss
all such forecasts."
What we find valuable here is not so much the assertion that the so-called
experts - including us - have no real idea what will happen next (sometimes
their predictions are true, sometimes untrue and only hindsight enables you to
establish which is which) and in any case contradict each other, it is the
insistence that investors take decisions or build portfolios on something more
tangible than guesses about an unknowable future.
Something more tangible, for instance, is a disciplined contrarian approach.
Perhaps Warren Buffett puts it best, in his typically homely way.
"Whether we're talking socks or stocks, I like buying quality merchandise when
it is marked down."
Having hoarded cash for years, Buffett committed billions to the equity markets
last Autumn when others were selling in despair. While few executed with such
aplomb, we at least held our nerve and increased your Company's borrowings and
gearing as markets approached their lows - magnifying the benefits of the
subsequent recovery for shareholders. Today, borrowings stand at £14.45m, for
gearing of 11.4%. In addition, we followed Buffett's quip and invested
sartorially with the one new holding we initiated for your Company last year.
This was Burberry. In mid-2007 Burberry shares peaked at £7.20. We had
followed the company for years, but owned none, unable to make sense of the
valuation at those prices. By October 2008, though, they had halved, to £
3.60. At this point we started buying - tentatively. One month later the
shares halved again, hitting a multi-year low of £1.60. We carried on buying,
admittedly flinching slightly as we did so. A year on, the shares are back at
£5.65! Burberry - which does carry a line of natty check socks - is definitely
"quality merchandise". And even if its share price behaves like an elevator
with a lunatic at the controls, you should always look for opportunities to
pick up quality at bargain prices.
Finally, it has been a great relief to us that our favourite investment rule,
the one rule that has never yet failed us, has held fast. This was taught me
by a former boss and I share it willingly here. The rule says that - "if a
company makes products that taste good, buy the shares". Good tasting products
tend to attract loyal customers and loyal customers make for both decent and
reliable profitability and, critically, for long run inflation-proofing - rare
and valuable characteristics.
The portfolio is full of companies whose products taste good - such as A.G.
Barr, Diageo, Dr Pepper, Fullers, Marston's, Unilever and Youngs - and, by and
large, their shares held up well during recent traumas and have made rewarding
longer term investments. Most topically, your Company has a substantial
investment in Cadbury, currently caught up in a bid tussle. We note that
Cadbury shares had outperformed the FTSE All Share Index over 1, 3, 10 and 20
years even before Kraft's approach - a satisfactory showing, for what was
regarded as a dull, but worthy company and testament to the power of investing,
over the long term, in companies whose products "taste good". We expect Kraft
will have to pay up to win control of this exceptional corporate asset. We
certainly have no intention of accepting anything like its sighting shot.
Nick Train, Lindsell Train Limited
Investment Manager
17 December 2009
Income Statement
incorporating the revenue account for the year ended 30 September 2009
2009 2008
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Gains/
(losses) on
investments
designated
at fair
value
through - 17,942 17,942 - (51,522) (51,522)
profit or
loss
Exchange - 2 2
difference
Income 2 5,401 - 5,401 6,363 - 6,363
Investment
management,
management
and
performance 3 (226) (460) (686) (300) (609) (909)
fees
Recovery of
VAT on
investment
management
fee 6 50 101 151 - - -
previously
paid
Other (410) - (410) (434) - (434)
expenses
Return/
(loss) on
ordinary
activities
before 4,815 17,585 22,400 5,629 (52,131) (46,502)
finance
charges and
taxation
Finance (176) (359) (535) (346) (702) (1,048)
charges
Return/
(loss) on
ordinary 4,639 17,226 21,865 5,283 (52,833) (47,550)
activities
before
taxation
Taxation on
ordinary
activities - - - - - -
Return/
(loss) on
ordinary 4,639 17,226 21,865 5,283 (52,833) (47,550)
activities
after
taxation
Return/ 4 9.1p 34.0p 43.1p 10.1p (101.2)p (91.1)p
(loss) per
share
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.
Reconciliation of Movements in Shareholders' Funds
For the year ended 30 September 2009
Called-up Share Capital
share premium
capital £ account Special redemption Capital Revenue
'000 £'000 reserve reserve £ reserve reserve
£'000 '000 £'000 £'000 Total £
'000
At 30 September 2008 13,199 35,914 12,424 3,453 39,845 4,949 109,784
Net return on
ordinary activities
- - - - 17,226 4,639 21,865
Second interim
dividend (5.1p per
share) for the year
ended 30 September
2008 - - - - - (2,598) (2,598)
First interim
dividend (4.4p per
share) for the year
ended 30 September
2009 - - - - - (2,211) (2,211)
Repurchase of shares
into treasury
- - - - (1,856) - (1,856)
Sale of shares from - - - - 2,675 - 2,675
treasury
Year ended 30
September 2009
13,199 35,914 12,424 3,453 57,890 4,779 127,659
At 30 September 2007 13,162 35,482 12,424 3,453 97,023 4,511 166,055
Net (loss)/return on
ordinary activities
- - - - (52,833) 5,283 (47,550)
Second interim
dividend (4.8p per
share) for the year
ended 30 September
2007 - - - - - (2,527) (2,527)
First interim
dividend (4.4p per
share) for the year
ended 30 September
2008 - - - - - (2,318) (2,318)
Shares issued net of
issue expenses
37 432 - - - - 469
Repurchase of shares
into treasury
- - - - (6,081) - (6,081)
Sale of shares from - - - - 1,736 - 1,736
treasury
Year ended 30
September 2008
13,199 35,914 12,424 3,453 39,845 4,949 109,784
Balance Sheet
as at 30 September 2009
2009 2008
£'000 £'000
Fixed assets
Investments designated at fair value through profit 138,799 121,586
or loss
Current assets
Debtors 1,022 1,159
Cash at bank 1,531 204
2,553 1,363
Current Liabilities
Creditors (193) (165)
Bank loan (13,500) (13,000)
(13,693) (13,165)
Net current liabilities (11,140) (11,802)
Total net assets 127,659 109,784
Capital and reserves
Called-up share capital 13,199 13,199
Share premium account 35,914 35,914
Capital redemption reserve 3,453 3,453
Special reserve 12,424 12,424
Capital reserve 57,890 39,845
Revenue reserve 4,779 4,949
Equity shareholders' funds 127,659 109,784
Net asset value per share (note 5) 249.0p 215.5p
Cash Flow Statement
for the year ended 30 September 2009
2009 2008
£'000 £'000
Net cash inflow from operating activities 4,573 5,548
Net cash outflow from servicing of finance (487) (1,185)
Financial investment
Purchase of investments (7,017) (5,886)
Sale of investments 7,746 21,791
Net cash inflow from financial investment 729 15,905
Equity dividends paid (4,809) (4,845)
Net cash inflow before financing 6 15,423
Financing
Shares issued net of issue expenses - 469
Repurchase of shares into treasury (1,856) (6,081)
Sale of shares from treasury 2,675 1,736
Drawdown/(repayment) of loans 500 (11,850)
Net cash inflow/(outflow)/inflow from financing 1,319 (15,726)
Increase/(decrease) in cash 1,325 (303)
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash resulting from cashflows 1,325 (303)
(Increase)/decrease in debt (500) 11,850
Exchange movements 2 -
Movement in net debt 827 11,547
Net debt at 1 October 2008 (12,796) (24,343)
Net debt at 30 September 2009 (11,969) (12,796)
Notes
1. Accounting Policies
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:
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" issued by the Association of Investment Trust
Companies dated January 2009.
Investments
Investments have been designated by the Board as held at fair value through
profit or loss and accordingly are valued at fair value. Fair value for quoted
investments is deemed to be bid market prices, or last traded price, depending
on the convention of the exchange on which they are quoted.
Unquoted investments are valued by the Directors using primary valuation
techniques in accordance with IPEVCA guidelines.
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 "gains or losses on investments held at fair value through profit or loss".
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 and the
capital column of the Income Statement. The total of such expenses, showing the
total amounts included in disposals and additions are disclosed below, as
recommended by the SORP.
Transaction costs on the acquisition and sale of investments totalled £36,000
and £13,000 respectively (2008: £50,000 and £33,000) and are included in the
gains/(losses) on investments within the Income Statement.
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
Reconciliation of Movements in Shareholders' Funds.
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.
LLP profit share is recognised in the financial statements when the entitlement
to the income is established.
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:
Notes (continued)
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);
expenses are taken to capital reserve realised 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 investment management fee and finance costs are
taken to the capital reserve;
performance fees are charged 100% to capital.
Taxation
The payment of taxation is deferred or accelerated because of timing
differences between the treatment of certain items for accounting and taxation
purposes. Full provision for deferred taxation is made under the liability
method, without discounting, on all timing differences that have arisen, but
not reversed by the balance sheet date, unless such provision is not permitted
by Financial Reporting Standard 19.
Any tax relief obtained in respect of management and investment 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 -
realised 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.
Capital Reserve
The following are taken to this reserve:
Gains and losses on the realisation of investments;
Exchange differences of a capital nature;
Expenses, together with the related taxation effect, allocated to this reserve
in accordance with the above policies; and
-Increase and decrease in the valuation of investments held at the
year end.
Following guidance in the revised SORP, the capital reserve realised and the
capital reserve unrealised are now presented as one reserve on the face of the
Balance Sheet.
(h) Cash at bank
Cash comprises cash in hand and demand deposits.
2. Income
2009 2008
£'000 £'000
Income from investments
Franked investment income
- dividends 5,326 6,237
Unfranked investment income
- Limited Liability Partnership profit-share 70 11
- fixed interest - 65
- money market dividend 5 44
5,401 6,357
Other income
Bank interest - 6
Total Income 5,401 6,363
Notes (continued)
3. Investment Management, Management and Performance Fees
Revenue Capital Total Revenue Capital Total
2009 2009 2009 2008 2008 2008
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fee 144 293 437 199 402 601
Management fee 71 145 216 86 176 262
VAT on management fee 11 22 33 15 31 46
Total fees 226 460 686 300 609 909
4. Return/(loss) per Share
Revenue Capital Total Revenue Capital Total
2009 2009 2009 2008 2008 2008
Return/(loss) per Share 9.1p 34.0p 43.1p 10.1p (101.2)p (91.1)p
The total return per share is based on the total loss
attributable to equity shareholders of £21,865,000 (2008: loss £47,550,000),
and on 50,737,975 (2008: 52,206,113) 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 £4,639,000 (2008: profit £5,283,000).
Capital profit per share is based on net capital loss for the
year of £17,226,000 (2008: loss £52,833,000).
5. Net Asset Value per Share
Net asset value per share is based on net assets of £127,659,000
(2008:£109,784,000) and on 51,271,673 (excluding treasury shares) (2008:
50,950,673) shares in issue at the year end. As at 30 September 2009 the
Company held 1,525,750 shares in treasury (2008: 1,846,750).
6. Contingent Asset
On 31 October 2007 the Association of Investment Companies announced that HM
Revenue and Customs had confirmed to the Investment Management Association that
investment trust management fees should no longer attract Value Added Tax
(VAT). As a result, during the period the Company's previous Manager, Close
Investments Limited (Close), submitted a claim to HM Revenue and Customs for
the repayment of £154,000, which equates to 0.3p per share. This amount is in
respect of VAT previously paid by the Company to Close. In view of the fact
that at the Company's year end, the absolute amount was still subject to
challenge by HMRC, only £120,000 of this amount was recognised during the year,
leaving a contingent asset of £34,000 as at 30 September 2009. Subsequent to
the year end the amount of £154,000 has now been received in full. Also, during
the year an amount of £31,000 in respect of VAT paid to Lindsell Train during
the three month period ended 30 September 2007 was received.
7. Financial Information
This preliminary statement is not the Company's statutory accounts. The above
results for the year ended 30 September 2009 are an abridged version of the
Company's audited statutory accounts, which have not yet been filed with the
Registrar of Companies.
The statutory accounts for the year ended 30 September 2008 have been delivered
to the Registrar of Companies and those for 30 September 2009 will be
despatched to shareholders shortly. The statutory accounts for the years ended
30 September 2008 and 2009 both received an audit report which was unqualified,
did not include a reference to any matters to which the auditors drew attention
by way of emphasis without qualifying the report, and did not contain
statements under Section 237 (2) and (3) of the Companies Act 1985 or Section
498 of the Companies Act 2006 as applicable.
Frostrow Capital LLP,
Company Secretary
17 December 2009
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