Annual Financial Report

RNS Number : 2993W

F&C Managed Portfolio Trust PLC.

31 July 2018

 

To:                  RNS

Date:              31 July 2018

From:             F&C Managed Portfolio Trust plc

LEI:                213800ZA6TW45NM9YY31

Results for the year ended 31 May 2018

The Board of F&C Managed Portfolio Trust plc announces the audited results of the Company for the year to 31 May 2018.

Chairman's Statement

-     Growth shares achieve 11% return in difficult markets

-     Dividend for Income shares increased by 4.6% plus 0.8p special dividend

-     Seventh consecutive year of dividend increases

-     Board changes announced

-     Continuation vote at September AGM

Performance

For the Company's financial year to 31 May 2018 the NAV total return (adding dividends paid to capital performance) was 3.0% for the Income shares and 11.0% for the Growth shares. This compares with the 6.5% total return for the FTSE All-Share Index, the benchmark index for both portfolios.

For most of the year under review the UK equity market struggled to make headway. It was only a late surge in April and May that allowed a positive return for the year. Despite this, returns from the UK equity market lagged most overseas equity markets, as highlighted by a 9.1% sterling adjusted total return from the MSCI All Country World Index.

The difference between the performance of the Growth Portfolio and the Income Portfolio was the widest since the inception of the Company over ten years ago and reflected the market's preference for growth stocks, particularly in the technology sector. It is difficult for the Income Portfolio to gain exposure to these types of stocks as they typically have very low dividends at best.

The principal contributors to the performance are identified in the Investment Manager's Review, which also includes additional information on the two investment portfolios.

Our longer-term performance is strong and is illustrated graphically in the Annual Report and Financial Statements. The Growth shares have outperformed the benchmark over three years, five years and from launch to 31 May 2018. As explained above, the Income shares experienced a more difficult second half of the financial year and consequently NAV performance is now slightly behind the benchmark over the three years and five years to 31 May 2018 but ahead over the period from launch.

Revenue and dividends

For the year ended 31 May 2018, four interim dividends have now been paid, totalling 5.7p per Income share (5.45p for the previous year). In addition, we declared a special interim dividend of 0.8p per Income share. This was made possible by the receipt of a special dividend from one of our investee companies (3i Infrastructure) and indeed enforced by the need to retain no more than 15% of income under the retention test within the investment trust rules. Both the fourth interim dividend and the special interim dividend were paid after the year end on 13 July 2018.

Excluding the special interim dividend, which by its nature is non-recurring, we have been able to increase the annual dividend by 4.6%, well above inflation on any realistic measure. This is the seventh consecutive year of increase, in line with our objective. As a result (excluding the special interim dividend), the yield on the Income shares was 4.1% on the year-end share price, compared with 3.6% for the FTSE All-Share Index. We were also able to add to the revenue reserve, which is now equivalent to approximately 58% of the annual dividend cost, an important buffer for the dividend in challenging times.

In the absence of unforeseen circumstances, your Board intends again to declare three interim dividends, each of not less than 1.3p per Income share payable in October 2018, January 2019 and April 2019. A fourth interim dividend is expected to be paid in July 2019 when a clearer view emerges of income for the year.

Borrowing

The Board is responsible for the Company's gearing strategy and sets parameters within which the Investment Manager operates. Borrowings are not normally expected to exceed 20% of the total assets of the relevant Portfolio; in practice they have been modest and primarily used to enhance income in the Income Portfolio by investing in higher yielding alternative funds. At the time of writing, borrowings total £5.0 million (8.6% of net assets) in the Income Portfolio and zero in the Growth Portfolio.

Share capital

As part of our efforts to maintain the share price close to the NAV, we were active in issuing shares during the year. 430,000 Income shares were resold from treasury at an average premium to NAV of 1.3% and 520,000 new Income shares were issued from the Company's block listing authority at an average premium to NAV of 1.5%. 815,000 new Growth shares were also issued from the block listing authority at an average premium to NAV of 1.4%.

In normal circumstances, we aim to maintain the discount to NAV at which our shares trade at not more than 5%. In practice over the years the shares have generally traded close to NAV. During the year to 31 May 2018 we have been able to maintain an average premium of 1.6% for the Income shares and 1.1% for the Growth shares.

We are seeking shareholders' approval to renew the powers to allot shares, buy back shares and sell shares from treasury at the Annual General Meeting ("AGM").

Share conversion facility

Shareholders have the opportunity to convert their Income shares into Growth shares or their Growth shares into Income shares annually subject to minimum conversion thresholds. The next opportunity will be on 25 October 2018. Information is provided in the Annual Report and Financial Statements and full details will be provided on the Company's website (www.fcmanagedportfolio.co.uk) from 31 July 2018.

Since launch no conversion has yet taken place as the number of shares offered for conversion has been well below the minimum threshold, which is set by the Board in order to avoid incurring costs of conversion which would be disproportionate to the level of converting assets.

As the ability to convert without incurring capital gains tax should be an attractive facility for shareholders, we have been considering the conversion mechanism and in particular how the costs of conversion are included in the relative NAVs for conversion. Following this review the Board is proposing to amend the Articles of Association so that, at the discretion of the Board, all or some of the costs and expenses of the conversion could be borne by the Company as opposed to converting shareholders, who currently bear all conversion costs. If this is approved by shareholders at the AGM, the Board has determined that all of the conversion costs in the current year will be borne by the Company; the conversion costs this year are expected to be approximately 0.01% of the Company's NAV. We hope that the Company bearing all or some of the conversion costs will allow conversions to proceed in future. Further details of this amendment and certain other regulatory amendments to the Articles of Association are set out in the Annual Report and Financial Statements.

Continuation vote

At the Annual General Meeting on 19 September 2018, shareholders will be asked to vote to approve an ordinary resolution to the effect that the Company continues as an investment trust. This requirement to put a resolution to shareholders at the 2018 AGM (being the tenth AGM of the Company) and five-yearly thereafter is set out in the Company's Articles of Association.

The Board believes that the Company has proved a very effective vehicle for shareholders to gain exposure to a wide range of markets and sectors:

•  the NAV total return of both the Income shares and Growth shares has outperformed the FTSE All-Share Index since launch on 16 April 2008;

•  the NAV total return of both the Income shares and Growth shares have equalled or bettered the benchmark index in eight of the ten financial years since launch;

•  the annual dividend on the Income shares has been increased in each of the last seven years. This dividend represents an attractive yield of 4.1% based on the share price at the year-end;

•  since the Company's launch both the Income shares and Growth shares have traded at close to NAV (average premium of 0.2% and discount of 0.2% respectively);

•  annually the Company offers the ability to switch between the Growth shares and Income shares, and vice versa, in a tax efficient and cost-effective manner to suit investors' needs;

•  in just over ten years we have grown the Company from net assets of £42.8 million at launch to £130.8 million at the year-end; and

•  the ongoing charges of running the Company have reduced steadily from 1.5% at launch to close to 1%.

Accordingly, the Board strongly believes that it is in the best interests of shareholders for the Company to continue and encourages shareholders to vote in favour of the resolution, as they intend to do in respect of their own shareholdings.

Board composition

Four of the Directors were appointed at the launch of the Company and so all have served for ten years. We do believe it is important to "refresh" the Board from time to time in order to avoid stale, consensus thinking so during the year we carried out a recruitment process with facilitation from a professional recruitment agency specialising in the investment trust sector. I am delighted to announce that Sue Inglis was appointed to the Board on 9 July 2018. Sue has extensive experience and knowledge of the asset management and investment company sectors and we believe she will contribute significantly to the direction of the Company. Her experience can be viewed in the Annual Report and Financial Statements. Sue will be put forward for election at the AGM.

I intend to retire at the end of the calendar year in order to make way for further board changes. The Directors have elected Colin McGill to follow me as Chairman while Alistair Stewart will become Chairman of the Audit Committee. The refreshment process will continue thereafter.

I would like to thank my Board colleagues as well as Peter Hewitt and Ian Ridge for their support, advice and expertise over the last ten years. It has been an effective Board with a balance of skills and styles - and a pleasure to serve on. I am confident that the Company will be left in good hands.

AGM

The AGM will be held at 12.30pm on Wednesday 19 September 2018 in the offices of BMO Global Asset Management, Exchange House, Primrose Street, London. It will be followed by a presentation from our Investment Manager, Peter Hewitt. This is a good opportunity for shareholders to meet the Board and Investment Manager and I would encourage you to attend.

Outlook

Although there will be much focus on Brexit and the accompanying political uncertainty for some time to come, from an investment standpoint it is best to focus on the prospects for the fundamentals. In this regard the underlying fundamentals remain generally positive although the policy Quantitative Easing - which was so supportive of financial markets - has given way to one of tighter monetary policy, particularly in the US where the Federal Reserve has raised interest rates seven times. This does not preclude positive returns from equities; however the driver will be earnings growth as opposed to higher valuations. It is encouraging that against a background of largely synchronised global growth it is likely that strong corporate earnings growth will continue for some time yet.

Nonetheless, although the duration of a bull market is not a constraint on future returns, this one, at over nine years, is long in the tooth and at some stage will come to an end. This warrants a cautious approach with an emphasis for both Portfolios on selecting the highest quality investment company fund managers in the belief that this should serve shareholders' interests best amidst these uncertain times.

Richard M Martin

Chairman

30 July 2018

Investment Manager's Review

Stockmarket Background

The overall background for global equity markets has remained positive over the past twelve months. Political uncertainty, which was acute this time last year, moderated somewhat, though that could easily change. However, it is economic fundamentals which have the greatest influence on markets and tend to dictate their direction and in this regard for the year under review they have been positive. Inflation

has risen but only from very low levels and recently has shown signs of flattening out across major economies. Interest rates have remained low and stable almost everywhere with the notable exception of the United States. However, the rate rises have been well flagged and therefore have not been unexpected for financial markets. Perhaps the most important element has been growth, which has strengthened and broadened out in a synchronised manner for Europe, Asia Pacific, most Emerging Markets and notably the United States. This backdrop has allowed corporate profits to experience a robust recovery and underpin positive returns for most major equity markets.

The US has once again helped to lead global markets higher. A key additional stimulus came from some quite substantial corporate and personal tax cuts implemented in the US which was beneficial for US corporate earnings. Despite significant political uncertainty around Brexit and the slowest rate of growth amongst developed economies the UK still managed a positive return over the year. However, this was in doubt until the last couple of months when a sharp decline in the value of sterling against the dollar and a surge of merger activity was behind an unexpected near 10% surge in the FTSE All-Share, led by the largest companies which were the main beneficiaries of these trends. Despite this late recovery, in relative terms only Europe was behind the UK when returns were translated back into sterling.

Performance

For the year to 31 May 2018, the FTSE All-Share Index rose 6.5% (in total return terms). Over the same period the Net Asset Value of the Growth Portfolio gained 11.0% whilst that of the Income Portfolio was ahead by 3.0% (again both in total return terms). This represents the sixth consecutive financial year that the Growth Portfolio has been ahead of the FTSE All-Share Index. The disparity in performance between the Growth Portfolio and the Income Portfolio over the past year has never been as wide and indicative of the bifurcated nature of performance that has existed across many global equity markets. Particularly in the US and China, new economy stocks, as highlighted by certain technology or internet companies, have experienced extremely strong growth which has fed through to very strong share price performance.  In contrast more value orientated stocks examples of which could be found in the telecoms, utility or tobacco sectors, have seen their share prices lag mainstream indices. These types of companies are typically quite mature and have above average dividend yields and often form a core element within income or equity income portfolios. Technology or growth companies often do not pay dividends as they require the cash they generate to fund future growth and so investment companies with a dividend requirement will find it difficult to own these types of companies.

The above trend is especially visible in the US and Chinese equity markets but is also in part a factor behind the relative underperformance of UK and European equity markets. There are not many of the growth type of companies described above in the UK and Europe whereas there is a much greater weighting in large financial, telecom, consumer and energy companies which have not performed as strongly in the past year.

Change in discounts can often be a significant factor behind the performance of investment companies, however, despite a pick up in volatility in equity markets over the last twelve months the average discount of the investment company sector has only moved slightly, narrowing from 4.5% to 3.7%.

Growth Portfolio - Leaders and Laggards

The strongest performer in the Growth Portfolio was Syncona Limited which achieved a total return of 47%. The company was formed in December 2016 when BACIT (formerly Battle against Cancer Trust) acquired Syncona Partners, then a subsidiary of the Wellcome Trust who now own a 33% holding in the enlarged investment company.

Syncona had helped to create and invested in seven leading life sciences businesses built around highly innovative academic science which comprise the core of the portfolio. The seven holdings have made significant progress with one, Nightstar, already listed on NASDAQ and another, Autolus, having listed since the year end. Syncona Limited was valued at £1.5bn at the year end and is in the FTSE 250 Index. The next four best contributors all have a technology theme running through their portfolios. Edinburgh Worldwide Investment Trust rose 42% over the year and is a global small cap specialist. Managed by Baillie Gifford it is mainly invested in developed markets in companies under $5bn market capitalisation with a bias to technology and healthcare. Allianz Technology Trust was one of the top performers last year and continued its run this past year with a 39% rise in the share price. The trust has exposure to a number of the well-known larger technology and internet companies but also uses its San Francisco base to find new and emerging companies from Silicon Valley. The portfolio has exciting prospects. Herald Investment Trust has been a long time holding in the Growth Portfolio and is focussed on smaller companies in the technology and media sectors. The majority of its portfolio is invested in UK companies with the balance in the US and Asia. In the last financial year, the shares produced a 32% total return. Special mention should be made of Scottish Mortgage Investment Trust which was a top performer last year and maintained its record this year with a 29% gain. The trust is by far the biggest UK listed investment company by market value at over £7.5bn and is the only investment company which is a constituent of the FTSE 100 Index. The outstanding long term performance record is built through a concentrated portfolio of genuinely transformational companies mainly from the technology and healthcare sectors in the US and now increasingly China.

The most notable underperformer last year was Woodford Patient Capital Trust which suffered a 21% decline in the share price. The trust is principally invested in new, predominantly private companies, mainly though not exclusively in the UK. Around two thirds of the portfolio is in healthcare/biotechnology companies. Unfortunately the largest holding Prothena had unexpectedly bad news from an important clinical trial and suffered a sharp share price reversal. As the name infers investors require to exercise patience with this trust as the shares are lower than when listed three years ago. That said, a number of the major holdings are unlisted companies which have made encouraging progress at the operating level and the expectation is this will be reflected in better share performance in due course. Henderson European Focus Trust had a disappointing year with a 10% fall in the share price total return. European equities were the poorest performing region over the year and this affected the rating of this trust's shares which moved from a small premium to an 8% discount with most of that happening during the second half of the financial year. The long-term record remains ahead of both its benchmark and peer group. Another holding which lagged over the period was Personal Assets Trust which experienced a 3% decline in share price total return. The trust is positioned very defensively and is held to provide an element of protection for the portfolio in the event of a market setback. That it should underperform when equity markets make positive returns is not unexpected.

Income Portfolio - Leaders and Laggards

The top performer for the Income Portfolio was CC Japan Income & Growth Trust which recorded a 24% share price total return over the year. This was markedly ahead of the Japanese TOPIX Index and the result of outstanding stock selection. Although the dividend yield is one of the lowest in the Income Portfolio, the growth of the dividend is rapid and being able to gain exposure to an equity market which typically is not viewed as having sufficient yield provides a useful diversification for the portfolio. BB Biotech continued its strong performance record and was a notable contributor to performance with a total return of 21% from the shares. The Net Asset Value made good progress and the rating of the shares moved from a discount to a small premium, helped by a 5% dividend yield. Another notable performer was 3i Infrastructure which achieved an 18% share price total return. This was driven by the profitable sale of two key assets, namely stakes in Anglian Water and Elenia (a Finnish electricity distributor) and resulted in the payment of a substantial special dividend to shareholders. The company is well positioned for the future and has increased guidance for dividend growth. A recovery in the oil price over the course of the year was a key factor in the 18% share price total return achieved by Blackrock Commodities Income Investment Trust.

Looking at the laggards, HICL Infrastructure the large, predominantly PFI infrastructure company experienced a 13% decline in share price total return. Most of this was not due to asset performance but a sharp reduction in the rating of the company as it moved from a premium to a discount. The well-publicised failure of one of its sub-contractors Carillion resulted in a 2% reduction to the asset value; however, the concern that a prospective Labour government may seek to take back some of its PFI contracts into public ownership was a major cause of the de rating of the shares. Perpetual Income & Growth Investment Trust has had a difficult year in terms of performance which was behind a 6% fall in share price total return. Significant positions in tobacco stocks and British Telecom and exposure to Provident Financial and Capita, both of which had unexpected profit warnings, were important factors. Although capital performance lagged, dividends were 5% higher and the yield on the shares is approaching 4%. Despite still good longer term performance numbers, the holding is under review. Henderson High Income Trust declined by 5% in share price total returns. It invests mainly in higher yielding UK equities and slightly underperformed in asset terms over the year however for shareholders this was exacerbated as the share price moved from a small premium to a 4% discount. Most of this happened in the first half of the financial year with performance stabilising in recent months. The shares yield over 5% and the dividend grew by over 2% over the last twelve months.

(All share prices are total return.)

Investment Strategy and Prospects

It is often said that bull markets for equities "climb a wall of worry". This has certainly been the case over the past couple of years with all sorts of uncertainties, especially of the political kind, being manifest. Looking ahead there seems little change in the sense that uncertainty of the political variety will be with us for some time. For the UK, Brexit casts a long shadow. By later this year or early next, the nature of the terms of Brexit will be known. At this stage however, speculating on the eventual outcome is a fruitless endeavour.

Over the medium to longer term, returns from financial markets tend to be determined much less by political events and much more by the outlook for the fundamentals of the economy and the prospects for corporate profits and dividends. In this regard the synchronised nature of global growth, led by the US, has created a positive backdrop for equity markets. This is set to continue for the balance of this year and likely into 2019. However, a key policy which has proven to be a strong tailwind for financial markets is coming to an end. Quantitative Easing has, in the US, moved to Quantitative Tightening as the Federal Reserve has steadily increased interest rates and has stopped purchases of financial assets. Interest rates have been increased seven times to be at 2% with more predicted over the next year. Against a background of a slower economy the Bank of England has been more gradual, but even here has increased interest rates once. The ECB in Europe has indicated it will halt purchases of bonds by the end of this year, although a rise in interest rates is still some way off, the change of trend is clear.

With full employment, there are at long last signs that wage growth in the US (and again even in the UK) is accelerating. This is seen as a key component of rising inflation which is why the monetary authorities are keen to try to normalise interest rates after a decade of extremely low levels.

In this environment the valuation accorded to equity markets stops expanding (a key driver in recent years). In my report last year it was noted that the forward P/E ratio on the S&P Composite Index was 17x. This year it has fallen to 16x and yet the US market achieved a positive return of 11% over the past twelve months. Looking ahead, positive returns in most equity markets will be driven by earnings growth with valuations, if anything, likely to contract further.

Encouragingly earnings growth is strong in many markets. In the US, fuelled by tax cuts, year on year corporate earnings growth as at the end of Q1 2018 was 24%. In the UK this was 8%, with all major regions, Asia Pacific, Europe and Emerging Markets, reporting strong earnings and dividend progress.

The fact that this bull run for equity markets began in 2009 and that in a historic context this is much longer than almost any other bull market phase does not mean an end is imminent. In broad terms the environment remains constructive for further progress in equity markets. However, what should be anticipated are bouts of volatility which can be both sharp and uncomfortable.  The principal risk is that central banks, particularly the Federal Reserve in the US, could tighten monetary policy too far or too fast in response to evidence that inflationary pressures are building. Although there are also more UK specific Brexit related risks, robust synchronised growth across most regions should be a key influence.

In terms of long term investment strategy, F&C Managed Portfolio Trust has endeavoured to participate in sectors which offer genuine secular growth opportunities such as technology, healthcare and biotechnology. Examples of investment companies which are exposed to these sectors would be Monks Investment Trust, Polar Capital Technology Trust, Allianz Technology Trust, Scottish Mortgage Investment Trust, Edinburgh Worldwide Investment Trust, HgCapital Trust and Syncona Limited. As many of these types of trusts either do not pay dividends or have very low dividend yields, it is more challenging to include them in an Income Portfolio. However, due to robust dividend performance across the whole Income Portfolio and also the income transfer between the Growth Portfolio and the Income Portfolio, scope has been created to permit some exposure to trusts in these sectors in the Income Portfolio. Examples include BB Biotech, BB Healthcare, Monks Investment Trust and Allianz Technology Trust even though the latter two have negligible or no dividend yields. Over the long term, returns from companies exposed to these sectors have been exceptional and looking ahead the opportunity for holdings in these sectors remains exciting.

In terms of investment selections, considerable effort is put into the identification of investment managers who have a clear and disciplined style with strong long-term performance records. Though there are risks which warrant a cautious approach, on balance prospects for equity market returns remain positive.

Peter Hewitt

Investment Manager

F&C Investment Business Limited

30 July 2018

Income Statement (audited)

Year to 31 May 2018

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments		-	6,558	6,558
Foreign exchange loss		-	(1)	(1)
Income		3,905	-	3,905
Investment management and performance fee		(249)	(849)	(1,098)
Other expenses		(476)	-	(476)
Return on ordinary activities before finance      costs and tax		3,180	5,708	8,888
Finance costs		(44)	(66)	(110)
Return on ordinary activities before tax		3,136	5,642	8,778
Tax on ordinary activities	5	(27)	-	(27)
Return attributable to shareholders		3,109	5,642	8,751
Return per Income share	3	7.32p	(3.42p)	3.90p
Return per Growth share	3	-	20.45p	20.45p

The total column of this statement is the Profit and Loss Account of the Company.  The supplementary revenue and capital columns are prepared under guidance published by The Association of Investment Companies.

Segmental analysis, illustrating the two separate portfolios of assets, the Income Portfolio and the Growth Portfolio, is provided in note 2.

All revenue and capital items in the Income Statement derive from continuing operations.

Return attributable to shareholders represents the profit/(loss) for the year and also total comprehensive income.

Income Statement (audited)

Year to 31 May 2017

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments		-	22,555	22,555
Foreign exchange gains		-	3	3
Income		3,167	-	3,167
Investment management and performance fee		(219)	(554)	(773)
Other expenses		(461)	-	(461)
Return on ordinary activities before finance      costs and tax		2,487	22,004	24,491
Finance costs		(19)	(30)	(49)
Return on ordinary activities before tax		2,468	21,974	24,442
Tax on ordinary activities		(17)	-	(17)
Return attributable to shareholders		2,451	21,974	24,425
Return per Income share	3	5.89p	21.35p	27.24p
Return per Growth share	3	-	38.71p	38.71p

The total column of this statement is the Profit and Loss Account of the Company.  The supplementary revenue and capital columns are prepared under guidance published by The Association of Investment Companies.

Segmental analysis, illustrating the two separate portfolios of assets, the Income Portfolio and the Growth Portfolio, is provided in note 2.

All revenue and capital items in the Income Statement derive from continuing operations.

Return attributable to shareholders represents the profit/(loss) for the year and also total comprehensive income.

Balance Sheet (audited)

As at 31 May 2018

		Income Shares	Growth Shares	Total
	Notes	£'000	£'000	£'000
Fixed assets
Investments at fair value		61,255	69,911	131,166
Current assets
Debtors		260	62	322
Cash at bank and on deposit		1,905	3,197	5,102
		2,165	3,259	5,424
Creditors
Amount falling due within one year		(170)	(645)	(815)
Net current assets		1,995	2,614	4,609
Creditors
Amounts falling due in more  than one year		(5,000)	-	(5,000)
Net assets		58,250	72,525	130,775
Capital and reserves
Called-up share capital		4,306	3,517	7,823
Share premium		22,597	20,408	43,005
Capital redemption reserve		-	182	182
Special reserve		19,371	17,190	36,561
Capital reserves		9,414	31,228	40,642
Revenue reserve		2,562	-	2,562
Shareholders' Funds		58,250	72,525	130,775
Net asset value per share (pence)	6	135.29p	206.23p

Balance Sheet (audited)

As at 31 May 2017

		Income Shares	Growth Shares	Total
	Notes	£'000	£'000	£'000
Fixed assets
Investments at fair value		61,863	61,770	123,633
Current assets
Debtors		189	48	237
Cash at bank and on deposit		773	2,691	3,464
		962	2,739	3,701
Creditors
Amount falling due within one year		(171)	(688)	(859)
Net current assets		791	2,051	2,842
Creditors
Amounts falling due in more  than one year		(5,000)	-	(5,000)
Net assets		57,654	63,821	121,475
Capital and reserves
Called-up share capital		4,254	3,435	7,689
Share premium		21,839	18,879	40,718
Capital redemption reserve		-	182	182
Special reserve		18,873	17,190	36,063
Capital reserves		10,865	24,135	35,000
Revenue reserve		1,823	-	1,823
Shareholders' Funds		57,654	63,821	121,475
Net asset value per share (pence)	6	136.93p	185.78p

Cash Flow Statement (audited)

Year to 31 May 2018

		Income	Growth
		Shares	Shares	Total
		£'000	£'000	£'000
Net cash outflow from operations before dividends and interest		(664)	(730)	(1,394)
Dividends received		2,860	963	3,823
Interest received Interest paid		4 (102)	7 -	11 (102)
Net cash inflow from operating activities		2,098	240	2,338
Investing activities
Purchases of investments		(15,258)	(7,307)	(22,565)
Disposals of investments		15,354	5,962	21,316
Net cash flows from investing activities		96	(1,345)	(1,249)
Net cash flows before financing activities		2,194	(1,105)	1,089
Financing activities Equity dividends paid		(2,370)	-	(2,370)
Proceeds from issuance of new shares Sale of shares from treasury		708 600	1,611 -	2,319 600
Net cash flows from financing activities		(1,062)	1,611	549
Net movement in cash and cash equivalents Cash and cash equivalents at the beginning of the year		1,132 773	506 2,691	1,638 3,464
Cash and cash equivalents at the end of the year		1,905	3,197	5,102
Represented by: Cash at bank and short term deposits		1,905	3,197	5,102

Cash Flow Statement (audited)

Year to 31 May 2017

		Income	Growth
		Shares	Shares	Total
		£'000	£'000	£'000
Net cash outflow from operations before dividends and interest		(624)	(589)	(1,213)
Dividends received		2,373	812	3,185
Interest received Interest paid		14 (87)	3 -	17 (87)
Net cash inflow from operating activities		1,676	226	1,902
Investing activities
Purchases of investments		(11,594)	(5,871)	(17,465)
Sales of investments		7,650	6,530	14,180
Net cash flows from investing activities		(3,944)	659	(3,285)
Net cash flows before financing activities		(2,268)	885	(1,383)
Financing activities Equity dividends paid		(2,228)	-	(2,228)
Proceeds from issuance of new shares Sale of shares from treasury Shares purchased to be held in treasury Loan drawn down		12 1,074 (579) 4,000	144 1,075 (418) -	156 2,149 (997) 4,000
Net cash flows from financing activities		2,279	801	3,080
Net movement in cash and cash equivalents Cash and cash equivalents at the beginning of the year		11 762	1,686 1,005	1,697 1,767
Cash and cash equivalents at the end of the year		773	2,691	3,464
Represented by: Cash at bank and short term deposits		773	2,691	3,464

Statement of Changes in Equity (audited)

Year to 31 May 2018

Income Shares	Share capital £000	Share premium account £000	Capital redemption reserve £000	Special reserve £000	Capital reserves £000	Revenue reserve £000	Total shareholders' funds £000
As at 31 May 2017	4,254	21,839	-	18,873	10,865	1,823	57,654
Increase in share capital in issue, net of share issuance expenses	52	656	-	-	-	-	708
Shares sold from treasury	-	102	-	498	-	-	600
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	631	631
Transfer of capital from Income to Growth portfolio	-	-	-	-	(631)	-	(631)
Dividends paid	-	-	-	-	-	(2,370)	(2,370)
Return attributable to shareholders	-	-	-	-	(820)	2,478	1,658
As at 31 May 2018	4,306	22,597	-	19,371	9,414	2,562	58,250
Growth Shares
As at 31 May 2017	3,435	18,879	182	17,190	24,135	-	63,821
Increase in share capital in issue, net of share issuance expenses	82	1,529	-	-	-	-	1,611
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	(631)	(631)
Transfer of capital from Income to Growth Portfolio	-	-	-	-	631	-	631
Return attributable to shareholders	-	-	-	-	6,462	631	7,093
As at 31 May 2018	3,517	20,408	182	17,190	31,228	-	72,525
Total Company
As at 31 May 2017	7,689	40,718	182	36,063	35,000	1,823	121,475
Increase in share capital in issue, net of share issuance expenses	134	2,185	-	-	-	-	2,319
Shares sold from treasury	-	102	-	498	-	-	600
Dividends paid	-	-	-	-	-	(2,370)	(2,370)
Return attributable to shareholders	-	-	-	-	5,642	3,109	8,751
As at 31 May 2018	7,823	43,005	182	36,561	40,642	2,562	130,775

Statement of Changes in Equity (audited)

Year to 31 May 2017

Income Shares	Share capital £000	Share premium account £000	Capital redemption reserve £000	Special reserve £000	Capital reserves £000	Revenue reserve £000	Total shareholders' funds £000
As at 31 May 2016	4,254	21,685	-	18,532	1,973	1,600	48,044
Shares sold from treasury	-	154	-	920	-	-	1,074
Shares purchased for treasury	-	-	-	(579)	-	-	(579)
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	516	516
Transfer of capital from Income to Growth portfolio	-	-	-	-	(516)	-	(516)
Dividends paid	-	-	-	-	-	(2,228)	(2,228)
Return attributable to shareholders	-	-	-	-	9,408	1,935	11,343
As at 31 May 2017	4,254	21,839	-	18,873	10,865	1,823	57,654
Growth Shares
As at 31 May 2016	3,428	18,546	182	16,733	11,053	-	49,942
Increase in share capital in issue, net of share issuance expenses	7	133	-	-	-	-	140
Shares sold from treasury	-	200	-	875	-	-	1,075
Shares purchased for treasury	-	-	-	(418)	-	-	(418)
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	(516)	(516)
Transfer of capital from Income to Growth Portfolio	-	-	-	-	516	-	516
Return attributable to shareholders	-	-	-	-	12,566	516	13,082
As at 31 May 2017	3,435	18,879	182	17,190	24,135	-	63,821
Total Company
As at 31 May 2016	7,682	40,231	182	35,265	13,026	1,600	97,986
Increase in share capital in issue, net of share issuance expenses	7	133	-	-	-	-	140
Shares sold from treasury	-	354	-	1,795	-	-	2,149
Shares purchased for treasury	-	-	-	(997)	-	-	(997)
Dividends paid	-	-	-	-	-	(2,228)	(2,228)
Return attributable to shareholders	-	-	-	-	21,974	2,451	24,425
As at 31 May 2017	7,689	40,718	182	36,063	35,000	1,823	121,475

Principal Risks

Most of the Company's principal risks that could threaten the achievement of its objective; strategy, future performance, liquidity and solvency are market related and comparable to those of other investment trusts investing primarily in listed securities.

In accordance with the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, issued by the Financial Reporting Council, the Board has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. It has also regularly reviewed the effectiveness of the Company's risk management and internal control systems for the period. The principal risks and uncertainties faced by the Company, and the Board's mitigation approach are described below.

Market Risk. The Company's assets consist mainly of listed closed-ended investment companies and its principal risks are therefore market related and include market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk.

Mitigation:  An explanation of these risks and the way in which they are managed are contained in the notes to the financial statements.  The Board regularly considers the composition and diversification of the Income Portfolio and the Growth portfolio together with purchases and sales of investments.  Investments and markets are discussed with the Investment Manager on a regular basis.

Investment Risk. Incorrect strategy, asset allocation, stock selection, inappropriate capital structure, insufficient monitoring of costs, failure to maintain an appropriate level of discount/premium and the use of gearing could all lead to poor returns for shareholders.

Mitigation: The investment strategy, performance against peers and the benchmark, and gearing are reviewed with the Investment Manager at each Board meeting. The Income Portfolio and Growth Portfolio are diversified and comprise listed closed-ended investment companies and their composition are reviewed regularly with the Board. The Board regularly considers ongoing charges and a discount management policy has operated since the launch of the Company. Underlying dividends from investee companies and the dividend paying capacity of the Company are closely monitored.

Custody Risk. Safe custody of the Company's assets may be compromised through control failures by the custodian.

Mitigation: The Board receives quarterly reports from the Depositary confirming safe custody of the Company's assets and cash and holdings are reconciled to the Custodian's records. The Custodian's internal controls reports are also reviewed by the Manager and key points reported to the Audit Committee. The Depositary is specifically liable for loss of the Company's securities and cash held in custody.

Operational Risk. Failure of F&C as the Company's main service provider or disruption to its business, or that of an outsourced or third party service provider, could lead to an inability to provide accurate reporting and monitoring, leading to a potential breach of the Company's investment mandate or loss of shareholders' confidence. External cyber attacks could cause such failure or could lead to the loss or sabotage of data.

Mitigation: The Board meets regularly with the management of F&C and its Risk team to review internal control and risk reports from the Manager which includes oversight of third party service providers. The Manager's appointment is reviewed annually and the contract can be terminated with six months' notice.  A business continuity plan is in place. The Manager continues to benefit from the long-term financial strength and policies of its parent company, Bank of Montreal. F&C has outsourced trade processing, valuation and middle office tasks and systems to State Street Bank and Trust Company ("State Street") and supervision of such third party service providers, including DST Financial Services who administer the F&C savings plans, has been maintained by F&C. This includes the review of IT security and cyber threat. The Board received a presentation during the year from the Custodian on its own cyber-security controls.

Viability Assessment and Statement

In accordance with the UK Corporate Governance Code, the Board is required to assess the future prospects for the Company and has considered that a number of characteristics of the Company's business model and strategy were relevant to this assessment:

·      The Company's investment objective and policy, which are subject to regular Board monitoring, means that the Company is invested principally in two diversified portfolios of investment companies and the level of borrowing is restricted.

·      These investments are principally in listed securities which are traded in the UK or another Regulated Exchange and which are expected to be readily realisable.

·      The Company is a closed-end investment trust, whose shares are not subject to redemptions by shareholders.

·      Subject to shareholder continuation votes, the first of which will be at the forthcoming AGM on 19 September 2018 and five yearly thereafter, the Company's business model and strategy is not time limited.

Also relevant were a number of aspects of the Company's operational arrangements:

·      The Company retains title to all assets held by the Custodian under the terms of a formal agreement with the Custodian and Depositary.

·      The fixed term borrowing facility, which remains available until February 2022, and the revolving credit facility which remains available until February 2019, is also subject to a formal agreement, including financial covenants with which the Company complied in full during the year.

In considering the viability of the Company, the Directors carried out a robust assessment of the principal risks and uncertainties which could threaten the Company's objective and strategy, future performance and solvency, including the impact of a significant fall in equity markets on the Company's investment portfolios.  These risks, their mitigations and the processes for monitoring them are set out above within Principal Risks and in the Report of the Audit Committee and in Notes 17 to 22 to the financial statements within the Annual Report. The Directors have also considered:

·      The level of ongoing charges incurred by the Company which are modest and predictable and total 1.07% and 1.03% of average net assets for the Income shares and Growth shares respectively,

·      Future revenue and expenditure projections,

·      Its ability to meet liquidity requirements given the Company's investment portfolios consist principally of listed investment companies which can be realised if required,

·      The ability to undertake share buybacks if required,

·      That the Company's objective and policy continue to be relevant to investors,

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

·      That there will be a continuation vote at the forthcoming AGM. The Board fully supports the continuation of the Company and, with the support of the shareholders, the expectation is for the continuation vote to be passed.

These matters were assessed over a three year period to July 2021, and the Board will continue to assess viability over three year rolling periods, taking account of severe but plausible scenarios.  A rolling three year period represents the horizon over which the Directors believe they can form a reasonable expectation of the Company's prospects, although they do have due regard to viability over the longer term.

Based on their assessment, and in the context of the Company's business model, strategy and operational arrangements set out above, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period to July 2021.

Responsibility Statement of the Directors in Respect of the Annual Financial Report

We confirm that to the best of our knowledge:

·      the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

·      the Strategic Report and the Report of the Directors include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that they face.

We consider the annual report and financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

On behalf of the Board

Richard M. Martin

Chairman

30 July 2018

Notes (audited)

1.   The financial statements of the Company, which are the responsibility of, and were approved by, the Board on 30 July 2018, have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, Financial Reporting Standards ("FRS 102") and the Statement of Recommended Practice (''SORP'') "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by the Association of Investment Companies (''AIC''). The audited financial statements for the Company comprise the Income Statement and the total columns of the Balance Sheet, the Cash Flow Statement, the Statement of Changes in Equity and the Company totals shown in the notes to the financial statements.

2.   Segmental analysis

            The Company carries on business as an investment trust and manages two separate portfolios of assets: the Income Portfolio and the Growth Portfolio.

            The Company's Income Statement can be analysed as follows. This has been disclosed to assist shareholders' understanding, but this analysis is additional to that required by FRS 102:

Year ended 31 May 2018

	Income Portfolio			Growth Portfolio			Total
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments	-	(512)	(512)	-	7,070	7,070	-	6,558	6,558
Foreign exchange losses	-	(1)	(1)	-	-	-	-	(1)	(1)
Income	2,920	-	2,920	985	-	985	3,905	-	3,905
Investment management and        performance fees	(161)	(241)	(402)	(88)	(608)	(696)	(249)	(849)	(1,098)
Other expenses	(216)	-	(216)	(260)	-	(260)	(476)	-	(476)
Return on ordinary activities before finance costs and tax	2,543	(754)	1,789	637	6,462	7,099	3,180	5,708	8,888
Finance costs	(44)	(66)	(110)	-	-	-	(44)	(66)	(110)
Return on ordinary activities before tax	2,499	(820)	1,679	637	6,462	7,099	3,136	5,642	8,778
Tax on ordinary activities	(21)	-	(21)	(6)	-	(6)	(27)	-	(27)
Return  #	2,478	(820)	1,658	631	6,462	7,093	3,109	5,642	8,751

Year ended 31 May 2017

	Income Portfolio			Growth Portfolio			Total
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments	-	9,654	9,654	-	12,901	12,901	-	22,555	22,555
Foreign exchange gains	-	3	3	-	-	-	-	3	3
Income	2,341	-	2,341	826	-	826	3,167	-	3,167
Investment management and        performance fees	(146)	(219)	(365)	(73)	(335)	(408)	(219)	(554)	(773)
Other expenses	(225)	-	(225)	(236)	-	(236)	(461)	-	(461)
Return on ordinary activities before finance costs and tax	1,970	9,438	11,408	517	12,566	13,083	2,487	22,004	24,491
Finance costs	(19)	(30)	(49)	-	-	-	(19)	(30)	(49)
Return on ordinary activities before tax	1,951	9,408	11,359	517	12,566	13,083	2,468	21,974	24,442
Tax on ordinary activities	(16)	-	(16)	(1)	-	(1)	(17)	-	(17)
Return  #	1,935	9,408	11,343	516	12,566	13,082	2,451	21,974	24,425

# Any net revenue return attributable to the Growth Portfolio is transferred to the Income Portfolio and a corresponding transfer of an identical amount of capital is made from the Income Portfolio to the Growth Portfolio and accordingly the whole return in the Growth Portfolio is capital.  Refer to the Statement of Changes in Equity.

3.   Return per share

      The Return per share is as follows:

Year ended 31 May 2018	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to Portfolios	2,478	(820)	1,658	631	6,462	7,093
Transfer of net income from       Growth to Income Portfolio	631	-	631	(631)	-	(631)
Transfer of capital from Income    to Growth Portfolio	-	(631)	(631)	-	631	631
Return attributable to       shareholders	3,109	(1,451)	1,658	-	7,093	7,093
Return per share	7.32p	(3.42p)	3.90p	-	20.45p	20.45p
Weighted average number of shares in issue during the year (excluding shares held in treasury)		42,451,199			34,687,229

Year ended 31 May 2017	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to Portfolios	1,935	9,408	11,343	516	12,566	13,082
Transfer of net income from       Growth to Income Portfolio	516	-	516	(516)	-	(516)
Transfer of capital from Income    to Growth Portfolio	-	(516)	(516)	-	516	516
Return attributable to       shareholders	2,451	8,892	11,343	-	13,082	13,082
Return per share	5.89p	21.35p	27.24p	-	38.71p	38.71p
Weighted average number of shares in issue during the year (excluding shares held in treasury)		41,646,802			33,793,152

4.       Dividends

		2018
		Income shares Total
Dividends on Income shares		£'000
Amounts recognised as distributions to shareholders during the year:
For the year ended 31 May 2017
- fourth interim dividend of 1.70p per Income share		716
For the year ended 31 May 2018
- first interim dividend of 1.30p per Income share		550
- second interim dividend of 1.30p per Income share		550
- third interim dividend of 1.30p per Income share		554
		2,370
Amounts relating to the year but not paid at the year end:
- fourth interim dividend of 1.80p per Income share*		775
- special dividend of 0.8p per Income share*		344

* Based on 43,055,035  Income Shares in issue at the record date of 29 June 2018.

The fourth interim dividend of 1.80p per Income share and a special dividend of 0.8p per Income share were paid on 13 July 2018 to shareholders on the register on 29 June 2018, with an ex-dividend date of 28 June 2018.

The Growth shares do not carry an entitlement to receive dividends.

5.       (a) Tax on ordinary activities

    Year ended 31 May 2018

	Income Portfolio			Growth Portfolio			Total
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Current tax charge for the year (all irrecoverable overseas tax) being Taxation on ordinary activities	21	-	21	6	-	6	27	-	27

 (b) Reconciliation of tax charge

		2018
		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Return on ordinary activities before tax:		1,679	7,099	8,778
Corporation tax at standard rate of 19 per cent		319	1,349	1,668
Effects of:
Losses/(gains) on investments not taxable		97	(1,343)	(1,246)
Overseas tax suffered		21	6	27
Non taxable UK dividend income		(235)	(162)	(397)
Non taxable overseas dividend income		(292)	(24)	(316)
Expenses not utilised		111	180	291
Current year tax charge (note 5 (a))		21	6	27

6.       The net asset value per Income share is calculated on net assets of £58,250,000 (2017: £57,654,000), divided by 43,055,035 (2017: 42,105,035) Income shares, being the number of Income shares in issue at the year end (excluding shares held in treasury).

The net asset value per Growth share is calculated on net assets of £72,525,000 (2017: £63,821,000), divided by 35,167,037 (2017: 34,352,037) Growth shares, being the number of Growth shares in issue at the year end (excluding shares held in treasury). 

7.       During the year, the Company resold out of treasury 430,000 (2017: 795,000) Income shares, receiving net proceeds of £600,000 (2017: £1,074,000). 520,000 Income shares were issued during the year for net proceeds of £708,000 (2017: nil). At May 2018, the Company held no  Income shares in treasury (2017: 430,000).

8.       During the year the Company issued 815,000 (2017: 75,000) Growth shares receiving net proceeds of £1,611,000 (2017: £140,000).  At 31 May 2018, the Company held no Growth shares in treasury (2017: nil). 

9.   Financial Instruments

The Company's financial instruments comprise its investment portfolio, cash balances, bank borrowings and debtors and creditors that arise directly from its operations. As an investment trust the Company holds a portfolio of financial assets in pursuit of its investment objective.

Listed and quoted fixed asset investments held are valued at fair value.

The fair value of the financial assets and liabilities of the Company at 31 May 2018 and 31 May 2017 is not materially different from their carrying value in the financial statements.

The main risks that the Company faces arising from its financial instruments are:

(i)       market price risk, being the risk that the value of investment holdings will fluctuate as a result of changes in market prices caused by factors other than interest rate or currency rate movements;

(ii)      interest rate risk, being the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates;

(iii)      foreign currency risk, being the risk that the value of investment holdings, investment purchases, investment sales and income will fluctuate because of movements in currency rates;

(iv)      credit risk, being the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company; and

(v)       liquidity risk, being the risk that the Company may not be able to liquidate its investments quickly or otherwise raise funds to meet financial commitments.

Market price risk

The management of market price risk is part of the fund management process and is typical of equity and debt investment. The portfolios are managed with an awareness of the effects of adverse price movements through detailed and continuing analysis with an objective of maximising overall returns to shareholders.

Interest rate risk

Floating rate

When the Company retains cash balances the majority of the cash is held in variable rate bank accounts yielding rates of interest linked to the UK base rate which was 0.5 per cent at 31 May 2018 (2017: 0.25 per cent). There are no other assets which are directly exposed to floating interest rate risk. The cost of the Company's revolving credit facility from The Royal Bank of Scotland is linked to LIBOR but was not drawn down at 31 May 2018 or 31 May 2017.

Fixed rate

The Income Portfolio no longer holds fixed interest investments. The Growth Portfolio does not hold any fixed interest investments.

The Income Portfolio has a £5 million fixed rate loan with an interest rate of 2.03% per annum.

Foreign currency risk

The Company may invest in overseas securities which give rise to currency risks.  At 31 May 2018, the Income Portfolio had US dollar denominated investments valued at £nil (2017: £511,000), a Swiss Franc denominated investment valued at £1,873,000 (2017: £1,627,000) and a Euro denominated investment valued at £1,737,000 (2017: £1,760,000).

As the remainder of the Company's investments and all other assets and liabilities are denominated in sterling there is no other direct foreign currency risk.  However, although the Company's performance is measured in sterling and the Company's investments (other than the above) are denominated in sterling a proportion of their underlying assets are quoted in currencies other than sterling. Therefore movements in the rates of exchange between sterling and other currencies may affect the market price of the Company's investment portfolios and therefore the market price risk includes an element of currency exposure.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Manager has in place a monitoring procedure in respect of counterparty risk which is reviewed on an ongoing basis. The carrying amounts of financial assets best represents the maximum credit risk exposure at the balance sheet date.

Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is considered to be small due to the short settlement period involved and the acceptable credit quality of the brokers used. The Manager monitors the quality of service provided by the brokers used to further mitigate this risk

All the assets of the Company which are traded on a recognised exchange are held by JPMorgan Chase Bank, the Company's custodian. Bankruptcy or insolvency of the custodian may cause the Company's rights with respect to securities held by the custodian to be delayed or limited. The Board monitors the Company's risk by reviewing the custodian's internal control reports.

The credit risk on liquid funds is controlled because the counterparties are banks with acceptable credit ratings, normally rated A or higher, assigned by international credit rating agencies. Bankruptcy or insolvency of such financial institutions may cause the Company's ability to access cash placed on deposit to be delayed, limited or lost.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in realising assets or otherwise raising funds to meet financial commitments.  The risk of the Company not having sufficient liquidity at any time is not considered by the Board to be significant, given that the Company's listed and quoted securities are considered to be readily realisable.

The Company's liquidity risk is managed on an ongoing basis by the Manager in accordance with policies and procedures in place. The Company's overall liquidity risks are monitored on a quarterly basis by the Board.

The Company maintains sufficient investments in cash and readily realisable securities to pay accounts payable and accrued expenses which are settled in accordance with suppliers stated terms.

The Company has a £7 million term and revolving loan facility agreement with The Royal Bank of Scotland. The facility has two elements: a £5 million five year fixed term loan, maturing 10 February 2022, and a £2 million revolving credit facility until 10 February 2019. As at 31 May 2018, £5 million of the fixed term loan was drawn down (2017: £5 million). The interest rate on the fixed rate loan, which is fully drawn, is 2.03% per annum. The revolving credit facility was not drawn down at 31 May 2018 (2017: not drawn down).

10.     Subject to certain minimum and maximum thresholds which may be set by the Board of F&C Managed Portfolio Trust plc ("the Board") from time to time, shareholders have the opportunity to convert their Income shares into Growth shares and/or their Growth shares into Income shares upon certain dates, the next of which will be on 25 October 2018 and then annually or close to annually thereafter (subject to the articles of association of the Company). The Conversion notice period commences on 31 July 2018 and full details will be provided on the Company's website and in the Company's Annual Report and Financial Statements.

 11.    These are not full statutory accounts in terms of Section 434 of the Companies Act 2006. The full audited Annual Report and Financial Statements for the year ended 31 May 2018 will be sent to shareholders shortly, and will be available for inspection at Quartermile 4, 7a Nightingale Way, Edinburgh, the registered office of the Company.  The full Annual Report and Financial Statements will be available on the Company's website www.fcmanagedportfolio.co.uk 

The audited financial statements for the year to 31 May 2018 will be lodged with the Registrar of Companies following the Annual General Meeting to be held on 19 September 2018.

For further information, please contact:

Peter Hewitt, F&C Investment Business Limited   0131 718 1244

Ian Ridge, F&C Investment Business Limited        0131 718 1010

 

END

 

 

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