Annual Financial Report

RNS Number : 3590S

F&C Investment Trust PLC

09 March 2023

 

F&C INVESTMENT TRUST PLC

Audited Statement of Results for the year ended 31 December 2022.

LEI: 213800W6B18ZHTNG7371

Information disclosed in accordance with DTR 4.1.3

9 March 2023

F&C Investment Trust PLC ('FCIT'/the 'Company') today announces its results for the year ended

31 December 2022.

· FCIT's share price was 904.0 pence representing a total return of -0.9%, ahead of its benchmark, the FTSE All-World Index, of -7.7%.

· FCIT's Net Asset Value ("NAV") total return of -5.3%, with debt at market value, ahead of the benchmark.

· The Company has delivered a total shareholder return of 240.7% over the ten-year period to the end of 2022, equivalent to 13.0% per annum .

· The final dividend will be 3.9 pence per share, subject to shareholder approval, and will bring the total dividend for the year to 13.5 pence per share. This will be a 5.5% increase, the 52nd consecutive annual increase.

· FCIT is committed to transition its portfolio to net zero carbon emissions by 2050 at the latest.

Commenting on the markets, Paul Niven, Fund Manager said:

"Throughout 2022, rising inflation and interest rates, in conjunction with geopolitical volatility, weighed on global equities and resulted in valuations falling sharply over the course of the year. The exiting of a low interest rate world has fundamentally changed the investment environment and we will likely continue to see pressure on parts of the equity market. The coming years may also see greater opportunity for performance from markets outside of the US and improved prospects from emerging markets, partly driven by valuation differentials."

T he Chairman, Beatrice Hollond, commented:

"In a difficult market environment, F&C reported the strongest return amongst our peer group of global investment companies and this performance led to our promotion to the FTSE 100 in September 2022.

This year also marks the 52nd consecutive annual dividend increase and with substantial revenue reserves, we remain in a very strong position to continue our track record of increasing annual dividends well into the future.

F&C's flexible and diversified approach makes us well placed to navigate the changed investment backdrop and we remain confident in the long-term prospects for the Company."

The full results statement is attached.

Past performance should not be seen as an indication of future performance. The value of investments and income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested.

Contacts

Paul Niven - Fund Manager

020 3530 6396

Campbell Hood

[e-mail]

07860 911 622

FTI Consulting

[e-mail]

020 3727 1888

About FCIT:

· Founded in 1868 - the oldest collective investment trust

· A diversified portfolio provides exposure to most of the world's stock markets, with exposure to just under 400 individual companies across the globe

· Its aim is to generate long-term growth in capital and income by investing primarily in an international portfolio of listed equities

Visit our website: fandc.com

Chairman's Statement

Dear Shareholder,

2022 was a challenging year for the world and for financial markets, with global equities delivering their weakest annual returns since the Global Financial Crisis of 2008. At the same time, government bond markets suffered their steepest losses in decades. Investors grappled with geopolitical concerns, dominated by the war in Ukraine, and the impact of sharp rises in inflation, leading to aggressive rises in interest rates. Against this backdrop, a sharp decline in sterling against major currencies helped to cushion the decline in our Net Asset Value ('NAV'). Our NAV total return, taking debt at market value, of -5.3% outperformed the return from our benchmark of -7.7% and the discount on which our share price traded relative to NAV per share narrowed, from a start of year level of 7.3%, to end the year at 3.0%. The narrowing of our discount enhanced shareholder returns, resulting in a share price total return of -0.9%. While it is disappointing to report negative returns for shareholders, this return was the strongest amongst our peer group of global investment companies.

Our strong performance, in comparison to other UK listed companies, led to our promotion, for the first time since 2009, to the FTSE 100 in September 2022. Our inclusion in the index of the largest 100 UK companies increases the Company's profile to investors and may lead to higher demand for our shares, which in turn may assist in narrowing the discount at which they trade.

Our NAV per share, with debt at market value, fell from 998.7p per share to 932.1p per share and our share price fell from 926.0p to 904.0p. Again, while disappointing to report a decline, this was modest by comparison to deeper losses in equity markets.

I am pleased to report that our portfolio was relatively well positioned for the volatility which unfolded during the year, with cash levels raised and gearing reduced ahead of significant market declines. A reduction in our long position on sterling, which fell by -10.7% against the US dollar in response to rising US interest rates, declining investor risk appetite and UK domestic political concerns, as well as the sale of our small cap allocation also helped returns. A significant positive contributor was the material reduction in exposure to expensive growth stocks, which provided some protection against their underperformance. Our private equity holdings once again outperformed their listed equivalents which declined in value and lagged the return from the benchmark. The impact of gearing in a weak market environment detracted from our returns but we made significant mark-to-market gains on the fair value of our outstanding debt as a result of rises in global interest rates.

Within our listed portfolio, all regions lost value over the year although the sharp decline in sterling against major currencies reduced the scale of the losses. Value and income-oriented strategies delivered strong excess returns against both the market and growth-focused portfolios. While we were tilted towards these outperforming areas in our listed portfolio, the underperformance from stock specific exposure offset the positive impact of this decision. Indeed, while there were some notable highlights, it was a year of disappointing returns from a number of our underlying fund managers, leading to our listed exposure underperforming the benchmark for the year.

In contrast to lacklustre returns from listed equities, our private equity holdings had another strong year with both our newer commitments and historic holdings delivering gains in absolute terms. While there is typically a lag in recognising changes in valuations of private equity holdings and one must take a long-term perspective in considering results, it is pleasing that our portfolio of unlisted investments held up well in this challenging market environment. The Company holds very limited exposure to unlisted disruptive technology companies, many of which have been the subject of significant reductions in valuation. Nonetheless, the Board remains mindful of the risks associated with unlisted investments and continues to adopt a careful approach to both valuation and any new commitment opportunities.

A CONTINUED FOCUS ON THE LONG-TERM

While it was disappointing to lose value for shareholders in 2022, we remain firmly focused on the delivery of growth in both capital and income for shareholders over the long-term. The past decade remains a period where investors in global equities have enjoyed exceptional returns and your Company has delivered a total shareholder return of +240.7% over the ten-year period to the end of 2022, equivalent to +13.0% per annum. 2022 was only the second year in the past decade during which shareholder returns have been negative, with 2018 seeing a similarly modest decline (0.6%).

Reflecting further on longer-term returns and the power of compounding, over the twenty-year period to 31 December 2022 the Company's share price total return was +743.5%, equivalent to +11.2% per annum. Our capital-only returns over the past twenty years were +454.6%. Dividends paid to shareholders have risen by 4.7% per annum over the past decade and by 7.0% over the past twenty years. Such results continue to demonstrate the importance of compounding income and capital gains over long periods in the process of value creation for shareholders.

FIFTY SECOND CONSECUTIVE ANNUAL DIVIDEND INCREASE

After a sharp downturn in our revenue during 2020, we enjoyed a robust recovery in 2021 which continued over the course of 2022. Our earnings rose on the year to £72.6m, a record high, while special dividends increased slightly to £1.6m (2021: £1.4m). The impact of currency movements added £4.9m to our income (2021: detracted £4.0m). Our Net Revenue Return per share rose by 26.7% to 13.92 pence per share from 10.99 pence per share in 2021.

Inflation rose sharply over the year and, while annual rates of Consumer Price Index ('CPI') increases may now be past their highs, the backdrop is one where price pressures are expected to remain elevated for some time to come. While it remains the ambition of the Board to deliver real rises in dividends for shareholders over the long-term, it is also our intention to deliver sustainable rises in dividends. I am therefore delighted to report that the proposed annual dividend will be fully covered by our revenue.

Subject to approval at the Annual General Meeting ('AGM'), shareholders will receive a final dividend of 3.9 pence per share on 11 May 2023, bringing the total dividend for 2022 to 13.5 pence: an increase of 5.5% over that of 2021. The increase compares to the 10.5% rise in inflation as measured by the CPI, which in October reached its highest level for over forty years. In addition, as well as being our fifty second consecutive rise in annual dividends, it is our one hundred and fifty fifth annual dividend payment.

Shareholders can also take comfort that in addition to our substantial revenue reserve (£97.5m at the year end), we have capital reserves which stood at £4.3bn at the year end. We therefore remain in a very strong position to continue our track record of increasing annual dividends well into the future.

MARKETING

We launched our new branding at the FCIT sponsored lecture held last July at The Guildhall, London. The lecture, which focused on "Smart Choices for a Smarter Future" was a great success and we hope to host another such event in 2024. The new branding has been supported by a marketing campaign which will continue into 2023 and is aimed at increasing awareness of the benefits of investing in the Company and attracting new investors. We hope shareholders like the new look of our annual report.

COMPANY RATING AND EFFICIENCY

Prior to the Covid-19 pandemic your Company was trading at a premium rating and we issued shares in both 2018 and 2019. In 2020 and 2021 we saw the re-emergence of a discount in our share price relative to NAV but it is pleasing to report an improvement in the Company's rating over the course of last year. We bought back a total of 8.4m shares into treasury as part of our commitment towards achieving a sustainably low deviation between the share price and NAV. The discount averaged 7.5% over 2022 and ended the year at 3.0%, narrower than the 7.3% level at the start of the year. The narrowing in our discount was accretive to the shareholder total return over the year.

Contributors to total return in 2022	%
Portfolio return	(7.9)
Management fees	(0.4)
Interest and other Expenses	(0.4)
Buy backs	0.2
Change of value of debt	4.2
Gearing/other	(1.0)
NAV total return	(5.3)
Change in share price discount	4.4
Share price total return	(0.9)
FTSE All-World total return	(7.7)

Source: Columbia Threadneedle Investments

Our Ongoing Charges figure remained at 0.54%, the same level as 2021, with an increase in marketing expenses being offset by a reduction in the management fee paid. From 1 January 2023, as explained in last year's Annual Report, the management fee was reduced to a rate of 0.3% on our market capitalisation up to £4 billion and at 0.25% thereafter. The Board remains focused on delivering value for money for shareholders as part of its performance objectives.

BORROWINGS

In recent years we have taken advantage of historically low interest rates to secure long-dated fixed rate borrowings. We reported in last year's Annual Report that, in the closing stages of 2021, we had agreed £140m of borrowings with repayment dates between 2037 and 2061. These borrowings were drawn down during the first quarter although, given the near term caution of the Fund Manager, they have not yet been invested into equity markets.

As at the end of 2022 we had outstanding debt of £581.3m and a blended borrowing rate of less than 2.4%. These are exceptionally low rates of borrowing for your Company and represent a low hurdle which we expect the returns from our investments to exceed and, therefore, expect that the use of these borrowings will prove accretive to returns over the long-term. At the year end, we held £244m in cash and cash equivalents leading to an effective gearing level (with debt at par value) of 7.3% (2021: 9.4%).

A notable feature of the year was the sharp rise in borrowing costs for both governments and companies. The rise in market based borrowing costs led to a substantial reduction (£182m) in the fair value of our outstanding debt. Indeed, taking debt at fair value, our effective gearing level fell from 9.8% at the start of the year to 3.5% at the end.

BOARD COMPOSITION

Julie Tankard joined the Board on 1 August 2022 as Chairman of the Audit Committee, replacing Jeffrey Hewitt, who retired at the conclusion of the 2022 Annual General Meeting. Her appointment continues our planned sequence of Board changes and again reflects our focus on maintaining the highest level of skills and knowledge on the Board. I would like to thank Jeff once again for his significant contribution in chairing the Audit Committee for 10 years.

Francesca Ecsery will retire at the conclusion of the forthcoming AGM and the process to appoint her successor is in progress. We thank Francesca for her very considerable contribution over almost 10 years, through her expertise in consumer marketing and branding and her guidance on the effective promotion of the Company's investment proposition.

ANNUAL GENERAL MEETING

It was a great pleasure to be able to meet shareholders again last year as we returned to an in-person AGM. It was a "hybrid" meeting, as we also enabled shareholders to view the AGM and participate by asking questions and voting online. We will again offer shareholders the opportunity to participate online at this year's AGM. Full details of how to do so are set out in the letter that accompanies your Form of Proxy or Form of Direction.

Voting at this year's AGM will again be conducted by way of a poll and you are requested to lodge your votes ahead of the meeting by completing your Form of Proxy or Form of Direction in accordance with the instructions. Its completion and return will not preclude you from attending the meeting and voting in person. If you are unable to attend the AGM, you are requested to submit any questions you may have with regard to the resolutions proposed at the AGM, or the performance of the Company, in advance of the meeting to [e-mail]. Following the AGM, the Fund Manager's presentation will be available on the Company's website www.fandc.com.

OUTLOOK

In 2022 we witnessed a profound change in the backdrop which had supported equity markets in recent decades. High inflation and rising interest rates punctured extended valuations in equity markets and delivered sharp losses for investors in the most expensive segments of the market. While company fundamentals in many leading businesses may not have changed significantly, the price which investors are willing to ascribe to the prospect of future success has diminished.

Despite declines in equity markets last year leading to a more reasonable valuation backdrop, there are still significant near-term risks. While recent rises in food and energy prices are a challenge, especially to consumers and businesses in Europe and the UK, domestically generated inflation remains uncomfortably high in the US and UK in particular. The bulk of tightening may now be behind us, but there are likely to be more interest rate rises to come and risks to economic growth and corporate earnings are high. Indeed, there is a possibility of recession in coming quarters in many developed economies and corporate margins are likely to remain under pressure over the course of this year.

While the near-term outlook for equity markets remains challenging, we continue to have a long-term investment focus. We have secured long-dated fixed borrowings at the lowest rates of interest for generations and recent setbacks in markets should provide greater prospective returns for the patient investor. We have significant cash which can be deployed to take advantage of long-term opportunities that we expect to arise. In doing so, we will continue to be mindful of our approach to investing responsibly and to our commitment to transition to net zero carbon emissions by 2050, at the latest. While the period of exceptional returns from equity markets and from US equities in particular appears to be over, we remain focused on our overriding objective in the delivery of long-term growth in capital and income for our shareholders.

Beatrice Hollond
Chairman, 8 March 2023

Forward-looking statements

This document may contain forward-looking statements with respect to the financial condition, results of operations and business of the Company. Such statements involve risk and uncertainty because they relate to future events and circumstances that could cause actual results to differ materially from those expressed or implied by forward-looking statements. The forward looking statements are based on the Directors' current view and on information known to them at the date of this document. Nothing should be construed as a profit forecast.

Weighting, stock selection and performance over one year in each investment portfolio strategy and underlying geographic exposure versus Index at 31 December 2022
Investment Portfolio Strategy	Our portfolio strategy weighting %	Underlying geographic exposure(i) %	Benchmark weighting %	Our strategy performance in Sterling %	Gross index performance in Sterling %
North America	39.6	58.4	61.5	(9.2)	(9.2)
Europe inc. UK(iv)	11.4	23.3	16.6	(7.2)	(5.1)
Japan	4.6	7.2	6.4	(13.5)	(5.2)
Emerging Markets	6.9	8.3	10.6	(13.8)	(10.0)
Developed Pacific	-	2.8	4.9	-	(1.6)
Global Strategies(ii)	25.2	-	-	(7.3)	(7.7)
Private Equity(iii)	12.3	-	-	3.6	-

Source: Columbia Threadneedle Investments

(i)Represents the geographic exposure of the portfolio, including underlying exposures in private equity and fund holdings.

(ii)The Global Strategies allocation consisted of Global Income, Global Value and Global Sustainable Opportunities.

(iii)Includes the holdings in Schiehallion and Syncona.

(iv)Includes the holdings in Gilts.

PRINCIPAL AND EMERGING RISKS

The Board has carried out a robust review and assessment of the Company's Principal and Emerging Risks and the uncertainties that could threaten its future success. This includes near-term risks such as those posed by the change of ownership of the Manager and longer-term risks, such as climate change. The consequences for the Company's strategy, business model, liquidity, future prospects, long-term viability and its commitment to transition the portfolio to net zero carbon emissions by 2050, at the latest, form an integral part of this review. As a result of the Board's assessment, the following risk disclosures have been reviewed and revised to reflect what it believes to be the Principal and Emerging Risks that the Company faces at present.

In the past two years we have highlighted, as emerging risks, the extent and impact of the response from governments to meet the costs of Covid-19 and the potential for the imposition of controls and taxes that could be detrimental to the savings industry and investors themselves. These risks are feeding through, with the UK and many other countries now close to or in recession as the impact of the various fiscal measures is being felt.

Economic and market shocks in one form or another, and their consequences, are risks that have long been on the Board's risk assessment. The effects of the Covid-19 pandemic have eased but there can be no complacency. The Company's purpose, strategy, investment policy and innate characteristics, most notably portfolio diversification and an embedded long-term outlook, again demonstrated its strong resilience in the face of a global crisis. Our risk evaluation forms an inherent part of our strategy determination, which seeks to mitigate risks and to pursue the opportunities that arise, not least at times of great turmoil.

BMO GAM has been acquired by Ameriprise and its integration with the business of Columbia Threadneedle Investments is well advanced. The Board looks favourably upon this acquisition and there has been little change for your Company, however an acquisition of such magnitude introduces some uncertainty until the integration of systems is fully implemented. The Board will continue to monitor this risk closely.

PRINCIPAL RISKS

Investment Performance

Inappropriate asset allocation, sector and stock selection, currency exposure and use of gearing and derivatives may give rise to under-performance and impact the Company's dividend paying capacity. Political risk factors, including the potential emergence of restrictive government controls, could also impact performance as could market shocks such as those experienced as a result of Covid-19 and geo political factors. Russia's invasion of Ukraine, continuing economic and market uncertainty and political instability indicates that this risk has increased.

Under our Business Model, a Manager is appointed with the capability and resources to manage the Company's assets through asset allocation, sector and stock selection, gearing and risk management. The Manager can delegate the management of investment portfolios externally to third party managers. The individual global and regional investment portfolios are managed as a whole to provide diversification, lower volatility and lower risk. The performance of the Company relative to its benchmark, its peers and inflation is a KPI measured by the Board on an ongoing basis and is reported on page 39 of the Report and Accounts.

The Company's portfolio is well diversified and its closed end structure enables it to continue to take a long-term view. Detailed reports provided by the Fund Manager are reviewed by the Board at each of its meetings. The Manager's Performance and Risk Oversight team provide independent oversight on investment risk management for the directly managed portfolios. As outlined in the Fund Manager's Review starting on page 8 of the Report and Accounts and reported in the Key Performance Indicators on page 39 of the Report and Accounts, long-term performance remains in line with expectations. In 2020 the Company purchased a series of forward currency contracts to the value of £300m as a partial hedge against the US dollar. This was reduced by £100m in late 2021 and further reduced in 2022 to £20m. Prudent management of the Company's Revenue Reserve means that its dividend paying capacity remains strong.

Effectiveness of Appointed Manager

The Business Model is based on the premise of an effective and strong working relationship with the appointed Manager, while an important responsibility of the Board is the robust annual evaluation of its performance, capabilities and resources, leading to the decision as to whether to reappoint it. Succession planning concerning any potential significant management changes is shared with the Board. Internal performance KPIs and Manager errors are monitored by the Board for indications of continuity or other Manager issues.

The Board met with Columbia Threadneedle's senior management to discuss the acquisition of BMO GAM and comfort was taken as to Columbia Threadneedle's long-term financial strength and resources and its policies and commitment towards the investment trust business and the savings plans.

The Manager's systems and staffing capabilities continued to operate satisfactorily throughout 2022. Thorough reviews and challenges were made through the Audit Committee, Management Engagement Committee and the Board. Whilst the Board has confirmed the reappointment of the Manager, the integration of BMO GAM and Columbia Threadneedle's systems inevitably introduces a degree of uncertainty. A critical milestone is the move to a new order management system, Aladdin, widely regarded as the market leading system. It is expected that this change will be completed in the first half of 2023. This risk is therefore categorised as unchanged.

Cyber Threats and Data Protections

The ancillary functions of administration, company secretarial, accounting and marketing services are all carried out by the Manager. The Board monitors the effectiveness and efficiency of the service providers' processes through internal efficiency KPIs.

The Audit Committee and the Board have reviewed regularly the Company's risk management framework with the assistance of the Manager. Regular control reports from the Manager covering risk, compliance and oversight of its own third-party service providers, including IT security and cyber threats, have also been reviewed. The Manager maintains regular contact with its key outsourced service providers and has received assurances regarding the continuity of their operations. Service levels are monitored by the Manager with any deviations from the service level agreements escalated immediately, both internally and with the relevant third party. The Board has reviewed reports from the Depositary, which is liable for loss of any of the Company's securities and cash held in custody unless resulting from an external event beyond its reasonable control. Whilst the risk of loss remains high, Board and management vigilance also remains heightened and therefore this risk is categorised as unchanged.

Loss of Key Person

The Board has considered who are the key people that could potentially pose a risk to the Company should they leave Columbia Threadneedle Investments and are confident that those people could be replaced appropriately through internal promotion or external recruitment. The person posing the largest key person risk is the Company's Fund Manager, Paul Niven, who is Head of Asset Allocation (Europe, Middle East & Africa) at Columbia Threadneedle Investments and as such is a key person in managing the Company's assets. He has been our Fund Manager for almost 9 years.

The Board meets with members of the wider Columbia Threadneedle investment management team to ensure that relationships are fully developed at all levels. Succession planning concerning any potential significant management changes is shared with the Board. Paul's team is 20 strong and it is divided into sectors with lead individuals who have detailed knowledge of the portfolio within their remit. The Board has received assurance from senior management at Columbia Threadneedle Investments that Paul's team has the necessary breadth and experience if they were required to manage without him. The Board is confident that the structure that supports Paul could manage in the event that he was to become incapacitated or leave the firm. The Board considers that this risk is unchanged but has chosen to identify it separately as a principal risk.

EMERGING RISK

Transition to Net Zero

The Board has made a commitment to transition the Company's portfolio to net zero carbon emissions by 2050, at the latest. Responsible Investment is a field that is evolving rapidly and it can present both opportunities and threats to the long-term investment performance that we aim to deliver to our shareholders.

The Manager believes in the power of engaged, long-term ownership as a force for positive change. It applies high standards of Responsible Investment in managing the investments on behalf of our shareholders and takes seriously its stewardship responsibilities, actively engaging with investee companies. The Board meets with Columbia Threadneedle's Responsible Investment team on a regular basis. We recognise the importance of disclosing information on Responsible Investment that is relevant, reliable and, as far as possible, ensuring that it is presented in a consistent way from year to year in order that our progress can be assessed.

The Board has continued to work with the Manager in managing the Company's risks. A risk summary is produced by the Manager in consultation with the Board to identify the risks to which the Company is exposed, the controls in place and the actions being taken to mitigate them. The Board, through the Audit Committee, has a robust process for considering the resulting risk control assessment at regular meetings and on an ongoing basis reviews the significance of the risks and the reasons for any changes.

The Board carried out a thorough review of the risks that could impact the sustainable success of the Company. The purpose of the exercise was to reassess the principal risks and identify any new, emerging risks and to take any necessary action to mitigate their potential impact. The Risk Control Assessment was then revised in line with the conclusions that were reached. It was agreed that the risk to investment performance had increased as a result of market uncertainty and political instability; that key person risk should be regarded as a principal risk; and that, whilst the risk of loss through cyber threats remained heightened, there had been increased Board and management vigilance and therefore the risk remained unchanged. The Board continues to review and challenge the risks that the Company faces.

Ten Year Horizon

Through a series of connected stress tests ranging from moderate to extreme scenarios including the impact of market shocks and based on historical information, but forward-looking over the ten years commencing 1 January 2023, the Board assessed the effects of:

• falls in the value of the publicly listed investments;

• increased buyback volumes;

• illiquidity and early calls on private equity commitments;

• adverse fluctuations in exchange rates; and

• falls in annual revenue.

The assumptions used for these tests purposefully did not take into account that under such severe conditions the Board and Manager would have taken action to mitigate the risks and offset the impact. Furthermore, the tests were a theoretical and illustrative scenario exercise, the assumptions for which are extreme and highly unlikely. Their purpose was to help inform the Directors of the Company's resilience under conditions so severe that they would impact global economies, markets, companies and businesses alike. The tests help to support the Board's assessment of the Company's long-term viability. The results do not represent its views or give an indication of the likely outcome.

Having considered its current position and the principal and emerging risks that the Company faces and having applied stress tests under worst-case scenarios that would severely impact global economies and markets alike, the Board confirms that it has assessed the Company's prospects, to the extent that it is able to do so, over the next ten years.

In concluding that ten years is an appropriate period for this assessment, the Board considers that this approximates to a suitable period over which its longer term investment performance is measurable and comparable; the periods over which it would typically commit to and benefit from its private equity investments; and the tenure of the Directors from a corporate governance perspective.

The Board also took into consideration the long-term duration of the Company's debt, the perceived viability of the Company's principal service providers, the potential effects of expected regulatory changes and the potential threat from competition. The Company's business model, strategy and the embedded characteristics have helped define and maintain its stability over many decades. The Board expects this to continue over many more years to come.

The Directors confirm therefore, that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities in full over the coming ten years to 31 December 2032.

Statement of Directors' Responsibilities in Respect of the Financial Statements

In accordance with Chapter 4.1.12 of the Disclosure  Guidance and Transparency Rules the Directors confirm, that to the best of their knowledge:

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

· the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces; and

· in the opinion of the Directors the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

.

On behalf of the Board

Beatrice Hollond

Chairman, 8 March 2023

Income Statement

For the year ended 31 December	2022			2021
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
(Losses)/gains on investments	-	(527,760)	(527,760)	-	879,862	879,862
Exchange movements on foreign currency loans, cash balances and derivatives	387	(11,382)	(10,995)	(176)	4,251	4,075
Income	96,235	-	96,235	77,629	-	77,629
Management fees	(4,582)	(13,747)	(18,329)	(4,935)	(14,805)	(19,740)
Other expenses	(5,567)	(46)	(5,613)	(3,500)	(57)	(3,557)
Net return before finance costs and taxation	86,473	(552,935)	(466,462)	69,018	869,251	938,269
Finance costs	(3,495)	(10,486)	(13,981)	(2,778)	(8,335)	(11,113)
Net return on ordinary activities before taxation	82,978	(563,421)	(480,443)	66,240	860,916	927,156
Taxation on ordinary activities	(10,383)	(551)	(10,934)	(7,740)	(138)	(7,878)
Net return attributable to shareholders	72,595	(563,972)	(491,377)	58,500	860,778	919,278
Net return per share - basic (pence)	13.92	(108.14)	(94.22)	10.99	161.74	172.73

The total column of this statement is the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations.

The net return attributable to Shareholders is also the total comprehensive income.

Statement of Changes in Equity

	Share	Capital	Capital	Revenue	Total
	Capital	Redemption	Reserves	Reserve	Shareholders'
		Reserve			Funds
For the year ended 31 December 2022	£'000s	£'000s	£'000s	£'000s	£'000s
Balance brought forward 31 December 2021	140,455	122,307	4,924,320	93,852	5,280,934
Dividends paid	-	-	-	(68,983)	(68,983)
Shares repurchased by the Company and held in treasury	-	-	(70,749)	-	(70,749)
Net return attributable to shareholders	-	-	(563,972)	72,595	(491,377)
Balance carried forward 31 December 2022	140,455	122,307	4,289,599	97,464	4,649,825

	Share	Capital	Capital	Revenue	Total
	Capital	Redemption	Reserves	Reserve	Shareholders'
		Reserve			Funds
For the year ended 31 December 2021	£'000s	£'000s	£'000s	£'000s	£'000s
Balance brought forward 31 December 2020	140,455	122,307	4,147,868	100,930	4,511,560
Dividends paid	-	-	-	(65,578)	(65,578)
Shares repurchased by the Company and held in treasury	-	-	(84,326)	-	(84,326)
Net return attributable to shareholders	-	-	860,778	58,500	919,278
Balance carried forward 31 December 2021	140,455	122,307	4,924,320	93,852	5,280,934

Balance Sheet

At 31 December		2022		2021
	£'000s	£'000s	£'000s	£'000s
Fixed assets
Investments		4,924,533		5,779,123
Current assets
Investments	59,424		-
Debtors	11,061		8,267
Cash at Bank and short-term deposits	243,846		53,111
	314,321		61,378
Creditors: amounts falling due within one year
Loans	-		(110,452)
Other	(7,190)		(9,277)
	(7,190)		(119,729)
Net current assets/(liabilities)		307,131		(58,351)
Total assets less current liabilities		5,231,664		5,720,772
Creditors: amounts falling due after more than one year
Loans	(581,264)		(439,263)
Debenture	(575)		(575)
		(581,839)		(439,838)
Net assets		4,649,825		5,280,934
Capital and Reserves
Share capital		140,455		140,455
Capital redemption reserve		122,307		122,307
Capital reserves		4,289,599		4,924,320
Revenue reserve		97,464		93,852
Total shareholders' funds		4,649,825		5,280,934
Net asset value per share - prior charges at   nominal value (pence)		896.94		1,002.49

Statement of Cash Flows

for the year ended 31 December			2022	2021
			£'000s	£'000s
Cash flows from operating activities before dividends received and interest paid Dividends received Interest paid			(34,064) 93,292 (13,239)	(27,576) 77,652 (11,037)
Cash flows from operating activities			45,989	39,039
Investing activities
Purchases of investments			(2,068,248)	(2,527,995)
Sales of investments			2,338,540	2,483,392
Other capital charges and credits			(50)	(56)
Cash flows from investing activities			270,242	(44,659)
Cash flows before financing activities			316,231	(5,620)
Financing activities
Equity dividends paid			(68,983)	(65,578)
Repayment of loans Drawdown of loans			(110,329) 140,000	(120,000) 270,000
Cash flows from share buybacks for treasury shares			(71,534)	(83,961)
Cash flows from financing activities			(110,846)	461
Net increase/(decrease) in cash and cash equivalents			205,385	(5,159)
Cash and cash equivalents at the beginning of the year			53,111	46,654
Effect of movement in foreign exchange			(14,660)	11,616
Cash and cash equivalents at the end of the year			243,836	53,111
Represented by:
Cash at bank			144,096	27,798
Short-term deposits			99,740	25,313
Cash and cash equivalents at the end of the year			243,836	53,111

Notes

1  NET RETURN PER SHARE

	2022	2022	2021	2021
	pence	£'000s	pence	£'000s
Total return	(94.22)	(491,377)	172.73	919,278
Revenue return	13.92	72,595	10.99	58,500
Capital return	(108.14)	(563,972)	161.74	860,778
Weighted average ordinary shares in issue, excluding shares held in treasury - number		521,526,881		532,196,543

2  DIVIDENDS

The Directors have proposed a final dividend in respect of the year ended 31 December 2022 of 3.90p per share payable on 11 May 2023 to all shareholders on the register at close of business on 11 April 2023.

3  FINANCIAL RISK MANAGEMENT

The Company is an investment company, listed on the London Stock Exchange, and conducts its affairs so as to qualify in the United Kingdom (UK) as an investment trust under the provisions of Section 1158 of the Corporation Tax Act 2010. In so qualifying, the Company is exempted in the UK from corporation tax on capital gains on its portfolio of investments.

The Company's investment objective is to secure long-term growth in capital and income through a policy of investing primarily in an internationally diversified portfolio of public listed equities, as well as unlisted securities and private equity, with the use of gearing. In pursuing the objective, the Company is exposed to financial risks which could result in a reduction of either or both of the value of the net assets and the profits available for distribution by way of dividend. These financial risks are principally related to the market (currency movements, interest rate changes and security price movements), liquidity and credit. The Board of Directors, together with the Manager, is responsible for the Company's risk management.

The full details of financial risks are contained in note 26 of the Report and Accounts.

4  GOING CONCERN

In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council. They have also considered the Company's objective, strategy and investment policy, the current cash position of the Company, the availability of the loan facility and compliance with its covenants and the operational resilience of the Company and its service providers. More information on the Board's assessment is provided on pages 42 and 43 of the Report and Accounts.

5  ANNUAL GENERAL MEETING

The annual general meeting will be held on 27 April 2023 at 12 noon.

6  ANNUAL REPORT AND ACCOUNTS

This statement was approved by the Board on 8 March 2023. It is not the Company's statutory accounts. The statutory accounts for the financial year ended 31 December 2022 have been approved and audited and received an audit report which was unqualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report. The statutory accounts for the financial year ended 31 December 2021 received an audit report which was unqualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report.

The Annual Report and Accounts will be posted to shareholders on or around 24 March 2023.

Columbia Threadneedle Investment Business Limited,

Company Secretary, 8 March 2023

For further information, please contact:

Jonathan Latter

For and on behalf of

Columbia Threadneedle Investment Business Limited

020 3530 6283  

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated  into, or forms part of, this announcement.

Columbia Threadneedle Investment Business Limited

ENDS

A copy of the Annual Report and Accounts has been submitted to the National Storage Mechanism and will shortly be available for inspection at   https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

The Annual Report and Accounts will also shortly be available on the Company's website at   www.fandc.com  where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

 

END

 

 

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