Annual Financial Report

RNS Number : 7794F

Investment Company PLC

31 October 2018

 

The Investment Company Plc

Annual Results Announcement

for the year ended 30 June 2018

SUMMARY OF RESULTS

	At 30 June 2018	At 30 June 2017	Change
Equity shareholders' funds	17,334,093	17,736,777	(2.27)%
Number of ordinary shares in issue	4,772,049	4,772,049	-
Net asset value ("NAV") per ordinary share	363.24p	371.68p	(2.27)%
Ordinary share price (mid)	331.00p	325.00p	1.85%
(Discount)/premium to NAV	(8.88)%	(12.56)%	-

	At 30 June 2018	At 30 June 2017
Total return per ordinary share*	12.27p	36.31p	-
Return after taxation per ordinary share	25.69p	24.64p	-
Dividends paid/declared per ordinary share	20.70p	20.70p	-

* The total return per ordinary share is based on total comprehensive income after taxation as detailed in the Consolidated Statement of Comprehensive

Income and in note 6 and is shown to enable comparison with other investment trust companies.

CHAIRMAN'S STATEMENT

This statement covers the year to 30 June 2018.

Introduction

Between 30 June 2017 and 30 June 2018 the FTSE All Share Index rose by 5.0%. The FTSE Actuaries UK Conventional Gilts All Stocks Index fell by 0.72% during the same period. The Company's NAV, which has a portfolio invested in both fixed income and equities, was 2.27 % lower within that period. Four dividends amounting to 20.7p per share were declared during the year.

Board Changes

Following earlier undertakings to refresh the Board, a number of changes were made on 6 July 2018. Sir David Thompson, Stephen Cockburn and Peter Allen, who had served on the Board for 13, 27 and 22 years respectively, retired and the Board, on behalf of all Shareholders, takes this opportunity to thank them for their long service. I was appointed, together with Tim Metcalfe, on 6 July 2018. We are both grateful for the continuity, support and expertise that Martin Perrin continues to bring to the Board.

Administrative and Portfolio Changes

As highlighted in the interim report, and following shareholder approval of the continuation vote at the last Annual General Meeting, the Board announced a change of Investment Manager to Fiske plc on 1 February 2018. The Board made a number of other administrative changes with the aim of significantly reducing the Company's ongoing annual expenses. However, the current regulatory environment and your Board's commitment to meet appropriate standards of governance mean that costs will always be subject to upward pressure.

Since the change of Investment Manager there have been a number of changes to the portfolio which are set out more fully in the Investment Manager's Report. You will also see there have been a number of changes to the Twenty Largest Investments.

Auditor

Saffery Champness have served the Company loyally for many years, for which we are grateful. We are now faced with their tenure becoming time-expired. We are pleased to report that we have asked PKF Littlejohn to become the Company's auditor and a resolution to that effect will be proposed at the Annual General Meeting.

Changes to Portfolio

Your new Board asked the Investment Manager to review the portfolio and the assess the Company's ability to meet the current mandate's yield expectations, whilst also carefully appraising the attendant risks in doing so. In order to put the Company on a more sustainable footing, and to give your new Investment Manager the opportunity to grow the assets of the Company, thereby giving your Board the opportunity to grow the size of the Company, we believe that some portfolio repositioning is necessary.

Dividend

In previous years, a relatively sizeable proportion of the dividend has been paid out of capital. Your new Board believes that this is not sustainable in the long term and that the Company must move towards ensuring that any dividend paid to shareholders is covered by the income produced by the assets, after allowing for the fixed costs, in order to give the Company a chance to grow in size. As a result of this change in approach, along with the change in the portfolio yield expectations, it is expected that a lower dividend totalling some 15p1 is likely to be declared throughout the forthcoming year. This will still require a proportion of the dividend to be paid out of capital; however, this will be much lower than in previous years.

The Investment Manager will now seek to invest in equities and loan stocks to achieve a portfolio yield of approximately

5% where this can be achieved without compromising total return.

Portfolio Valuation Changes

As a result of the Board and the Investment Manager's review of the portfolio, a number of changes have been made to the carrying value of those investments which have no market price. This has a resulted in a £234,000 (1.4%) decrease in their valuation, which represents a decrease of 4.9p to the NAV of the Company. The Investment Manager, together with the Company's auditors, believe that these changes to carrying valuations are appropriate as a result of its review of the existing investments.

The Investment Manager's review of the portfolio is set out fully in the Investment Manager's Report.

Continuation

The Company has put forward an ordinary resolution for the continuation of the Company, with the vote taking place at the Annual General Meeting to be held on 29 November 2018.

Your Board is aware that the Company is too small relative to its fixed cost base, and its viability is dependent not just upon performance but also its ability to grow by attracting further capital. Your new Board is wholly committed to exploring all appropriate opportunities that are likely to enhance Shareholder returns and firmly believes that continuation would be in the best interests of all Shareholders as it will enable your new Board to continue with the implementation of the existing changes and to explore new options for the growth of the Company.

1 This is a target and should not be interpreted as a profit or dividend forecast.

Outlook and Recommendation

Your Board believes that Shareholders benefit from the diversification provided by the combination of fixed income and equity investments, as well as from the quarterly dividends paid by the Company. When combined with the measures adopted during the last six months and the Board's commitment to growing the size of the Company meaningfully, the Board believes that the Company has the potential to be an attractive investment proposition.

Accordingly, your Directors recommend that members vote in favour of continuation. Yours faithfully,

I. R. Dighé

Chairman

30 October 2018

INVESTMENT MANAGER'S REPORT

Performance

During the 12 month period to 30 June 2018, the NAV of the Company fell by 2.27% whilst the share price rose by 1.85%. During the year Fiske was appointed investment manager on 1 February 2018 and took responsibility for the portfolio on 1 April 2018. Between 1 April and 30 June 2018 the NAV rose by 0.83% and the discount narrowed from 13.61% to 8.88%.

Investment Commentary

The UK is experiencing moderate GDP growth. The inflationary impact of sterling's depreciation following the EU referendum is unwinding but the anticipated boost to disposable incomes is being partially offset by a rise in energy costs. While business investment remains subdued, exports are strong, job vacancies are high and unemployment is low. Wage growth is not accelerating as anticipated by the Bank of England but that did not prevent the Monetary Policy Committee

- by unanimous vote - from raising rates to 0.75% in early August 2018.

Equity markets dislike uncertainty and the combination of Brexit and global trade wars are a growing investment risk. However, once there is clarity over the post-Brexit regulatory and political environment the UK could start to look even more attractive especially to those investors who are not currently allocating to the UK.

Portfolio

After taking over the responsibility for the portfolio on 1 April 2018, a number of existing holdings were either sold or reduced whilst new holdings were introduced.

In the fixed income part of the portfolio, holdings were reduced or sold in order to protect the capital value of the portfolio in the light of generally rising market interest rates. One of the securities sold was Phoenix Life 7.25% perpetual notes. This bond has a call date in March 2021 which we believe the issuer is likely to use in order to re-finance this debt on better terms.

In the equity segment of the portfolio, we have sold a number of holdings where liquidity was constrained and either the companies had performed well and this was reflected in the current market valuation or we perceived the current value was vulnerable to weakening sales growth, softening margins or to an overly leveraged balance sheet.

Future Prospects

The majority of the portfolio has historically been invested in fixed income securities including corporate bonds, preference shares and convertibles. As at 31 March 2018 the weighting of fixed interest securities was approximately 60%. During the three-month period to 30 June 2018 a number of fixed interest securities were sold, bringing the weighting down to approximately 50%.

Fundamentally, growth in capital value is driven by sustained growth in revenues and stable margins resulting in free cashflows available to re-invest in the business and provide for growth in dividends over time. We believe that share prices ultimately track long-term earnings and cashflows. As a result, our investment approach is to invest for the long term with a "buy and manage" approach.

Over time we will re-focus the portfolio in order to deliver long-term total returns from a blend of capital and income growth from a high conviction/low turnover portfolio. We will be investing with a multi-cap approach focusing on companies listed in the UK and seeking to preserve capital over the business cycle.

This is likely to lead to further reductions in the fixed interest exposure of the portfolio and an increase in the equity component. The process will take time, as a number of the holdings are relatively illiquid and will need to be sold carefully to preserve capital value.

M. Foster, J. P. Q. Harrison and J. Dieppe

Fiske plc

30 October 2018

TWENTY LARGEST INVESTMENTS

At 30 June 2018

Stock	Number	Issue %	Book cost £	Market or Directors' valuation £	% of total portfolio
1. Lloyds Banking Group    7.625% perpetual notes (LBG Capital)	478,000	0.03	204,360	522,301	3.20
7.281% perpetual notes (Bank of Scotland)	400,000	0.27	315,331	474,204	2.90
7.875% perpetual notes (LBG Capital)	362,000	0.05	245,997	419,721	2.57
			765,688	1,416,226	8.67
2. Royal Bank of Scotland Group   9% series 'A' non-cum pref (Natwest)	500,000	0.36	362,920	770,000	4.71
3. Randall & Quilter Investment Holdings    Ordinary 2p ^	401,884	0.32	401,544	655,071	4.01
4. Charles Taylor    Ordinary 1p ^	192,198	0.25	334,592	595,814	3.65
5. Newcastle Building Society    3.849% sub notes 23/12/19 (variable)	600,000	2.40	405,438	583,002	3.57
6. 600 Group    8% conv loan notes 14/02/20	500,000	-	500,000	531,120	3.25
7. Aggregated Micro Power    8% conv loan notes 31/03/21	500,000	2.50	500,000	525,000	3.21
8. The Fishguard & Rosslare Railways and    Harbours Company    2.45% guaranteed preference stock	790,999	63.91	441,810	498,329	3.05
9. Nationwide Building Society    10.25% core capital deferred shares (variable)	3,100	4.49	490,536	471,448	2.89
10. Intercede Group    8% conv loan notes 29/12/21	400,000	8.99	450,000	450,000	2.75

^ Issues with unrestricted voting rights.

Stock	Number	Issue %	Book cost £	Market or Directors' valuation £	% of total portfolio
11. Vodafone Group       Ordinary $0.2095 ^	242,000	-	501,387	444,796	2.72
12. GlaxoSmithKline      Ordinary 11.395p ^	28,250	-	398,185	432,169	2.64
13. National Grid      Ordinary 11.395p ^	50,400	-	403,032	422,554	2.59
14. Royal Mail      Ordinary 1p ^	82,000	0.01	456,549	414,428	2.54
15. Polar Capital      Ordinary 2.5p ^	56,500	0.06	303,980	405,670	2.48
16. Amalgamated Metal Corporation      5.4% Cum Pref £1	256,065	18.21	144,049	204,852	1.25
6% Cum Pref £1	213,510	23.72	103,844	192,159	1.18
			247,893	397,011	2.43
17. Investec Investment Trust      3.5% Cum Pref £1	461,508	35.50	271,938	299,980	1.84
5% Cum Pref £1	104,043	30.12	92,858	93,639	0.57
			364,796	393,619	2.41
18. Severn Trent      Ordinary 97.89p ^	20,000	0.01	399,179	395,900	2.42
19. British American Tobacco      Ordinary 25p ^	10,250	-	402,094	392,524	2.40
20. Direct Line Insurance Group      Ordinary 10.9091p ^	105,621	0.01	354,049	362,174	2.22
			8,483,672	10,556,855	64.61

^ Issues with unrestricted voting rights.

The Company has a total of 69 portfolio investment holdings in 57 companies.

CORPORATE SUMMARY

Investment Objective

The Company's investment objective is to provide shareholders with an attractive level of dividends coupled with capital growth over the long term, through investment in a portfolio of equities, preference shares, loan stocks, debentures and convertibles.

Investment Policy

The Company invests in equity and fixed income securities. The equity portion of the portfolio would principally invest in UK quoted companies, with a wide range of market capitalisations, which are anticipated to pay a growing stream of dividends. It is expected that the fixed income securities would include preference shares, loan stocks, convertibles and related instruments and be issued by UK quoted companies with a wide range of market capitalisations. The conversion rights or equity warrants would normally convert into the underlying equity of the quoted company.

Any use of derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Company's direct investments, as described below. The Company will not enter into uncovered short positions.

Risk diversification

Portfolio risk is mitigated by investing in a diversified spread of investments. Investments in any one company shall not, at the time of acquisition, exceed 15% of the value of the Company's investment portfolio. In the long term, it is expected that the Company's investments will generally be a portfolio of around 75 or more different securities, most of which will represent individually no more than 5% of the value of the Company's total investment portfolio, as at the time of acquisition.

The Company will not invest more than 10% of its gross assets, at the time of acquisition, in other listed closed-ended investment funds, whether managed by the Investment Manager or not, except that this restriction shall not apply to investments in listed closed-ended investment funds which themselves have stated investment policies to invest no more than 15% of their gross assets in other listed closed-ended investment funds.

Unquoted investments

The Investment Manager may invest in unquoted fixed income securities from time to time subject to prior Board approval.

Investment strategy

The Company uses a bottom-up investment approach to selecting a diversified portfolio of equity and fixed income securities.

The investment approach can be described as active and universal, as the Company will not seek to replicate any benchmark and will adopt a multicap investment approach within an overall diversified portfolio. Potential investments are assessed against the key criteria, including, yield along with an assessment of the prospects of underlying corporate growth prospects, market positions, calibre of management and risk and financial resilience.

Dividend Policy

Pursuant to the changes, your Board intends to pay a total dividend of 15p1 per share during the year ending 30 July 2019. Any growth in net income in future years will be taken into account in assessing dividend levels with a view to gradually growing it going forward.

1 This is a target and should not be interpreted as a profit or dividend forecast.

Capital Structure

As at 30 June 2018 and the date of this Annual Report, the Company's share capital consists of 4,772,049 ordinary shares of 50p each. The Company holds no shares in treasury. At general meetings of the Company, holders of ordinary shares are entitled to one vote on a show of hands and on a poll, to one vote for every share held.

In addition, there are 1,717,565 fixed rate preference shares of 50p in issue, all of which are held by New Centurian Trust Limited a wholly owned subsidiary of the Company. The fixed rate preference shares are non-voting, are entitled to receive a cumulative dividend of 0.01p per share per annum, and are entitled to receive their nominal value, 50p, on a distribution of assets or winding up. Preference shares are disclosed as equity in accordance with IAS 32.

Total Assets and Net Asset Value

The Company and its wholly owned subsidiaries, Abport Limited and New Centurion Trust Limited, had total net assets of £17,334,093 and a NAV of 363.24p per ordinary share at 30 June 2018 (2017: £17,736,777 and 371.68p).

Business Model

The principal activity of the Company is investment in equity securities of quoted UK companies with a wide range of market capitalisations, preference shares and prior charge securities with a view to achieving a high rate of income and capital growth over the medium term. The Company has been granted approval from HM Revenue & Customs ("HMRC") as an investment trust under sections 1158 and 1159 of the Corporation Tax Act 2010 ("ss1158/1159") and will continue to be treated as an investment trust company, subject to continuing to meet the conditions for approval.

The Directors are of the opinion that the Company has conducted its affairs for the year ended 30 June 2018 so as to be able to continue to qualify as an investment trust.

The Company's status as an investment trust allows it to obtain an exemption from paying taxes on the profits made from the sale of its investments and all other net capital gains. Investment trusts offer a number of advantages for investors, including access to investment opportunities that might not be open to private investors and to professional stock selection skills at lower cost.

The Company owns Abport Limited, an investment dealing company, and New Centurion Trust Limited, an inactive investment company (the "Subsidiaries"). The Company and its wholly owned Subsidiaries together compromise a group (the "Group").

Principal Risks and Uncertainties

The management of the business and the execution of the Group's strategy are subject to a number of risks. A robust assessment of the principal risks to the Company has been carried out, including those that would threaten its business model, future performance, solvency and liquidity. A summary of the risk management and internal control processes can be found in the Corporate Governance Statement . The key business risks affecting the Group are:

(i)      Investment decisions: the performance of the Group's portfolio is dependent on a number of factors including, but not limited to the quality of initial investment decisions and the strategy and timing of sales;

(ii)     Investment valuations: the valuation of the Group's portfolio and opportunities for realisations depend to some extent on stock market conditions and interest rates; and

(iii)   Macroeconomic environment for preference shares and prior charge securities: the environment for issuing of new preference shares and prior charge securities determines whether new issues become available, thus affecting the choice and scope of investment opportunities for the Group.

Risk Management

Specific policies for managing risks are summarised below and have been applied throughout the year:

1. Market price risk

The Investment Manager monitors the prices of financial instruments held by the Group on a regular basis. In addition, it is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce risks arising from investment decisions and investment valuations. The Investment Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. Most of the equity investments held by the Company are listed on the London Stock Exchange.

2. Interest rate risk

In addition to the impact of the general investment climate, interest rate movements may specifically affect the fair value of investments in fixed interest securities. The Investment Manager monitors the applicable interest rates and yields associated with the securities.

3. Liquidity risk

The Group's assets mainly comprise readily realisable quoted securities that can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of overdraft facilities.

Additional risks and uncertainties include:

Credit risk: the failure of a counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss. Normal delivery versus payment practice and review of counterparties and custodians by the Investment Manager mean that this is not a significant risk.

Discount volatility: The Company's shares may trade at a price which represents a discount to its underlying NAV.

Regulatory risk: The Company operates in an evolving regulatory environment and faces a number of regulatory risks. A breach of section 1158/1159 would result in the Company being subject to capital gains tax on portfolio investments. Breaches of other regulations, including the Companies Act 2006, the UKLA Listing Rules, the UKLA Disclosure Guidance and Transparency Rules, or the Alternative Investment Fund Managers' Directive, could lead to a detrimental outcome. Breaches of controls by service providers to the Company could also lead to reputational damage or loss. The Board monitors compliance with regulations, with reports from the Investment Manager and the Administrator.

Protection of assets: The Company's assets are protected by the using its custodian, Fiske plc. In addition, the Company operates clear internal controls to safeguard all assets.

These and other risks facing the Company are reviewed regularly by the Audit Committee.

Key Performance Indicators ("KPIs")

The Board reviews performance by reference to a number of KPIs and considers that the most relevant KPIs are those that communicate the financial performance and strength of the Group as a whole. The Board and Investment Manager monitor the following KPIs:

-  NAV performance relative to the FTSE All-Share Index (total return)

The NAV per ordinary share at 30 June 2018 was 363.24p per share (2017: 371.68p). The total return of the NAV

after adding back dividends paid was 3.3%. This compares with a total return on the FTSE All-Share Index of 8.98%.

-  (Discount)/premium of share price in relation to NAV

Over the year to 30 June 2018, the Company's share price moved from trading at a discount of 12.56% to a discount of 8.88%.

-  Ongoing Charges Ratio

The Ongoing Charges Ratio for the year to 30 June 2018 amounted to 2.6%.

Management

During the year the Company's investments were managed by Miton Asset Management Limited ("Miton") until 31 March

2018. On 1 April 2018 Fiske plc ("Fiske") took over responsibility as the Investment Manager. Further detail on Fiske is set out below:

•   Fiske is an independent investment management company whose principal activities are the provision of private client investment management, asset management and private client and institutional stockbroking.

•   Fiske is distinctive from a number of investment managers in that many of its portfolios do not use traditional benchmarks as they can bring unintentional risks that can impede the day-to-day investment manager's ability to maximise absolute returns for clients.

•   Fiske is focused on delivering positive investment outcomes combined with a high level of service for its clients.

•   Fiske is authorised and regulated by the Financial Conduct Authority, is a member of the London Stock Exchange and is quoted on AIM.

•   Fiske is capitalised with equity capital, it has no debt and does not use financial instruments except its intra-day

Crest cap facility.

Details of the Investment Manager

Fiske has a team of investment managers researching a broad range of quoted UK stocks. The day-to-day management of the portfolio is carried out by Michael Foster, James Harrison and Julian Dieppe.

Michael Foster

Michael joined Fiske in June 2017 to work on the launch of a UCITS fund for Fiske. In May 2018 the Ocean UK Equity Fund was launched with Michael as Lead Portfolio Manager. He holds the Investment Management Certificate and has managed extensive private investments since 2011.

James Harrison

James joined Fiske in 1996 and has over 20 years of industry experience. He is a Chartered Fellow of the Securities Institute and is Chief Executive Officer of Fiske plc. He manages a number of multi-asset private client portfolios and is also a co-manager of the Ocean UK Equity Fund.

Julian Dieppe

Julian joined Fiske in 2010 and has more than eight years of industry experience. He is a Member of the Securities Institute and manages a significant number of multi-asset private client portfolios at Fiske. He is also a co-manager of the Ocean UK Equity Fund.

Management Arrangements

Miton ceased to be the Company's Investment Manager on 31 March 2018. Up to that point, Miton had received £65,759 in management fees in respect of the year ended 30 June 2018.

On 1 February 2018, the Company announced that it was changing Investment Manager, and was appointing Fiske with effect from 1 April 2018. Fiske has been appointed as the Investment Manager under an agreement dated 1 February 2018.

Under the terms of the Investment Management Agreement, the Investment Manager has discretion to buy, sell, retain, exchange or otherwise deal in investment assets for the account of the Company.

The Investment Manager is entitled to receive from the Company, or any member of its subsidiaries in respect of its services provided under the Investment Management Agreement, a management fee payable monthly in arrears calculated at the rate of one-twelfth of 0.75% per calendar month of the NAV for its services under the Investment Management Agreement. This fee has been capped in respect of the first 12 months of Fiske's appointment, at £90,000.

The Investment Management Agreement is terminable by either the Investment Manager or the Company giving to the other not less than six months' written notice. The Investment Management Agreement may be terminated earlier by the Company with immediate effect on the occurrence of certain events, including the liquidation of the Investment Manager or appointment of a receiver or administrative receiver over the whole or any substantial part of the assets or undertaking

of the Investment Manager, or a material breach by the Investment Manager of the Investment Management Agreement which is not remedied. The Company may also terminate the Investment Management Agreement if a continuation vote is not passed.

Having considered the terms of the Investment Management Agreement the Board considers that the current fee structure is appropriate.

It is the opinion of the Board that the continuing appointment of Fiske as Investment Manager on the terms disclosed is in the interests of shareholders as a whole.

As an investment company, managed and marketed in the UK, the Company is an Alternative Investment Fund ("AIF")

under the provisions of the Alternative Investment Fund Manager's Directive ("AIFM").

The Company does not currently use gearing, makes sufficient risk disclosure within the report, and there have been no material changes to the investment policy or objectives. Therefore, it is considered that separate disclosures are not required.

Environmental, Human Rights, Employee, Social and Community Issues

The Board consists entirely of non-executive Directors and during the year the Company had one employee. Day-to-day management of the business is delegated to the Investment Manager. The Company has no direct impact on the community or the environment, and as such has no environmental, human rights, social or community policies. In carrying out its investment activities and in relationships with suppliers, the Company aims to conduct itself responsibly, ethically and fairly.

Environmental, Social and Governance factors are considered as part of the investment process as misjudgments on these matters can incur additional costs to the portfolio holdings, as well as undermining their equity return through reputational damage. The Investment Manager questions the corporate management on a variety of topics to ensure that investee companies are adhering to best practice. These questions can be wide ranging.

The Board's policy on diversity is to take this into account during the recruitment and appointment process. However, members of the Board are appointed on merit, against an objective criteria set by the Board acting as the Nomination Committee therefore there are no set targets against which to report.

The Strategic Report has been approved by the Board of Directors. On behalf of the Board

I. R. Dighé

Chairman

30 October 2018

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing this Annual Report and the financial statements in accordance with applicable United Kingdom law and regulations and those International Financial Reporting Standards ("IFRS") adopted by the European Union and Article 4 of the International Accounting Standards. Company law requires the Directors to prepare financial statements for each financial period which present fairly the financial position of the Group and the financial performance and cash flows of the Group for that period.

In preparing those financial statements, the Directors are required to:

•   select suitable accounting policies and then apply them consistently;

•   make judgements and estimates that are reasonable and prudent;

•   present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

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

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

•   provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the Group financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority.

The financial statements are available on the Administrator's website, www.maitlandgroup.com. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and, accordingly, the Auditor accepts no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction.

We confirm that to the best of our knowledge:

•   the Group and Company financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group;

•   this Annual Report includes a fair review of the development and performance of the business and the position of the Group together with a description of the principal risks and uncertainties that it faces; and

•   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

I. R. Dighé

Chairman

30 October 2018

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2018

		Year to 30 June 2018			Year to 30 June 2017
	Notes	Revenue £	Capita £l	Total £	Revenue £	Capita £l	Total £
Realised gains/(losses)   on investments	11	-	79,185	79,185	-	(659,326)	(659,326)
Unrealised gains on investments   held at fair value through   profit or loss	11	-	732,429	732,429	-	1,018,729	1,018,729
Movement in impairment   provision on investments held   as available for sale		-	(3,745)	(3,745)	-	339,395	339,395
Exchange losses on capital items		-	(3,050)	(3,050)	-	(8,892)	(8,892)
Losses on derivative contracts	12	-	(63,640)	(63,640)	-	(276,213)	(276,213)
Investment income	2	956,273	-	956,273	1,199,285	-	1,199,285
Investment management fee	3	(88,259)	-	(88,259)	(160,723)	-	(160,723)
Other expenses	4	(378,089)	(123)	(378,212)	(279,629)	-	(279,629)
Return before finance costs   and taxation		489,925	741,056	1,230,981	758,933	413,693	1,172,626
Finance costs Bank debit interest		-	-	-	(9)		(9)
Return before taxation		489,925	741,056	1,230,981	758,924	413,693	1,172,617
Taxation	5	(5,329)	-	(5,329)	3,241		3,241
Return after taxation		484,596	741,056	1,225,652	762,165	413,693	1,175,858
Other comprehensive income Movement in unrealised   appreciation on investments   held as available for sale
Recognised in equity		-	30,134	30,134	-	575,730	575,730
Recognised in return after taxation		-	(670,657)	(670,657)	-	(18,637)	(18,637)
Other comprehensive   (expense)/ income after   taxation		-	(640,523)	(640,523)	-	557,093	557,093
Total comprehensive income   after taxation		484,596	100,533	585,129	762,165	970,786	1,732,951
Return after taxation per 50p   ordinary share
Basic and diluted	6	10.16p	15.53p	25.69p	15.97p	8.67p	24.64p
Return on total comprehensive   income after taxation per 50p   ordinary share
Basic and diluted	6	10.16p	2.11p	12.27p	15.97p	20.34p	36.31p

The total column of this statement is the Consolidated Statement of Comprehensive Income of the Group prepared in accordance with IFRS. The supplementary revenue and capital columns are prepared in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.

The notes form part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2018

	Issued ordinary share capital £	Share premium £	Capital redemption reserve £	Revaluation reserve £	Capital reserve £	Revenue account £	Total £
Balance at 1 July 2017	2,386,025	4,453,903	2,408,820	2,557,941	6,569,061	(638,973)	17,736,777
Total comprehensive income Net return for the year	-	-	-	-	741,056	484,596	1,225,652
Movement in unrealized appreciation on investments held as available for sale: - Recognised in equity	-	-	-	30,134	-	-	30,134
- Recognised in return after taxation	-	-	-	(670,657)	-	-	(670,657)
Transactions with shareholders recorded directly to equity Ordinary dividends paid	-	-	-	-	-	(987,813)	(987,813)
Balance at 30 June 2018	2,386,025	4,453,903	2,408,820	1,917,418	7,310,117	(1,142,190)	17,334,093

Balance at 1 July 2016	2,386,025	4,453,903	2,408,820	2,000,848	6,155,368	(413,325)	16,991,639
Total comprehensive income Net return for the year	-	-	-	-	413,693	762,165	1,175,858
Movement in unrealized appreciation on investments held as available for sale: - Recognised in equity	-	-	-	575,730	-	-	575,730
- Recognised in return after taxation	-	-	-	(18,637)	-	-	(18,637)
Transactions with shareholders recorded directly to equity Ordinary dividends paid	-	-	-	-	-	(987,813)	(987,813)
Balance at 30 June 2017	2,386,025	4,453,903	2,408,820	2,557,941	6,569,061	(638,973)	17,736,777

The notes form part of these financial statements

COMPANY STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2018

	Issued ordinary share capital £	Issued preference share capital £	Share premium £	Capital redemption reserve £	Revaluation reserve £	Capital reserve £	Revenue account £	Total £
Balance at 1 July 2017	2,386,025	858,783	4,453,903	2,408,820	2,556,323	4,025,262	1,827,740	18,516,856
Total comprehensive income Net return for the year	-	-	-	-	-	733,093	488,190	1,221,283
Movement in unrealized appreciation on investments held as available for sale: - Recognised in equity	-	-	-	-	41,318	-	-	41,318
- Recognised in return after taxation	-	-	-	-	(673,879)	-	-	(673,879)
Transactions with shareholders recorded directly to equity Ordinary dividends paid	-	-	-	-	-	-	(987,813)	(987,813)
Preference share dividends paid	-	-	-	-	-	-	(172)	(172)
Balance at 30 June 2018	2,386,025	858,783	4,453,903	2,408,820	1,923,762	4,758,355	1,327,945	18,117,593

Balance at 1 July 2016	2,386,025	858,783	4,453,903	2,408,820	1,989,576	3,621,223	2,064,612	17,782,942
Total comprehensive income Net return for the year	-	-	-	-	-	404,039	751,113	1,155,152
Movement in unrealised appreciation on investments held as available for sale: - Recognised in equity	-	-	-	-	585,384	-	-	585,384
- Recognised in return after taxation	-	-	-	-	(18,637)	-	-	(18,637)
Transactions with shareholders recorded directly to equity Ordinary dividends paid	-	-	-	-	-	-	(987,813)	(987,813)
Preference share dividends paid	-	-	-	-	-	-	(172)	(172)
Balance at 30 June 2017	2,386,025	858,783	4,453,903	2,408,820	2,556,323	4,025,262	1,827,740	18,516,856

CONSOLIDATED BALANCE SHEET

As at 30 June 2018

	Note	Group 2018 £	Group 2017 £
Non-current assets Investments	11	16,340,329	16,289,129
Current assets Derivative financial instruments	12	-	63,640
Trade and other receivables	15	265,341	211,300
Investments available for sale		2,077	2,265
Cash and bank balances		843,433	1,267,244
		1,110,851	1,544,449
Current liabilities Trade and other payables	16	(117,087)	(96,801)
		(117,087)	(96,801)
Net current assets		993,764	1,447,648
Net assets		17,334,093	17,736,777
Capital and reserves Issued ordinary share capital	8	2,386,025	2,386,025
Share premium		4,453,903	4,453,903
Capital redemption reserve		2,408,820	2,408,820
Revaluation reserve		1,917,418	2,557,941
Capital reserve		7,310,117	6,569,061
Revenue reserve		(1,142,190)	(638,973)
Shareholders' funds	10	17,334,093	17,736,777
NAV per 50p ordinary share		363.24p	371.68p

These financial statements were approved by the Board on 30 October 2018 and were signed on its behalf by:

I. R. Dighé

Chairman

Company Number: 4205

The notes form part of these financial statements

COMPANY BALANCE SHEET

As at 30 June 2018

	Note	Company 2018 £	Company 2017 £
Non-current assets Investments	11	16,340,329	16,289,129
Investment in subsidiaries	13	862,656	862,656
		17,202,985	17,151,785
Current assets Derivative financial instruments	12	-	63,640
Trade and other receivables	15	285,830	227,059
Cash and bank balances		843,433	1,265,397
		1,129,263	1,556,096
Current liabilities Trade and other payables	16	(214,655)	(191,025)
		(214,655)	(191,025)
Net current assets		914,608	1,365,071
Net assets		18,117,593	18,516,856
Capital and reserves Issued ordinary share capital	8	2,386,025	2,386,025
Issued preference share capital	9	858,783	858,783
Share premium		4,453,903	4,453,903
Capital redemption reserve		2,408,820	2,408,820
Revaluation reserve		1,923,762	2,556,323
Capital reserve		4,758,355	4,025,262
Revenue reserve		1,327,945	1,827,740
Shareholders' funds		18,117,593	18,516,856

As permitted by section 408 of the Companies Act 2006, the Company has not presented its own Income Statement. The amount of the Company's return for the financial year dealt with in the financial statements of the Group is a profit after tax of £1,221,283 (2017: £1,155,152).

These financial statements were approved by the Board on 30 October 2018 and were signed on its behalf by:

I. R. Dighé

Chairman

Company Number: 4205

CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS

For the year ended 30 June 2018

	Group		Company
	Year to 30 June 2018 £	Year to 30 June 2017 £	Year to 30 June 2018 £	Year to 30 June 2017 £
Cash flows from operating activities Cash received from investments	920,760	1,179,839	914,479	1,158,373
Interest received	86	312	86	312
Sundry income	1,300	2,520	1,300	2,520
Investment management fees paid	(88,043)	(160,694)	(88,043)	(160,694)
Cash paid to and on behalf of employees	(14,000)	(26,939)	(14,000)	(26,939)
Other cash payments	(369,197)	(328,439)	(359,643)	(317,701)
Net cash inflow from operating activities	450,906	666,599	454,179	655,871
Cash flows from financing activities Sale of Treasury shares	-	117,384	-	117,384
Dividends paid on ordinary shares	(987,813)	(987,813)	(987,813)	(987,813)
Net cash outflow from financing activities	(987,813)	(870,429)	(987,813)	(870,429)
Cash flows from investing activities Purchase of investments	(5,655,702)	(2,216,355)	(5,655,702)	(2,216,355)
Sale of investments	5,771,848	3,361,689	5,771,848	3,361,689
Purchase of derivative contracts	-	(339,853)	-	(339,853)
Loans from subsidiaries	-	-	-	151,780
Loans to subsidiaries	-	-	(1,426)	-
Net cash inflow from investing activities	116,146	805,481	114,720	957,261
Net (decrease)/increase in cash and cash equivalents	(420,761)	601,651	(418,914)	742,703
Reconciliation of net cash flow to movement in net cash (Decrease)/increase in cash	(420,761)	601,651	(418,914)	742,703
Exchange rate movements	(3,050)	734	(3,050)	734
(Decrease)/increase in net cash	(423,811)	602,385	(421,964)	743,437
Net cash at start of period	1,267,244	664,859	1,265,397	521,960
Net cash at end of period	843,433	1,267,244	843,433	1,265,397
Cash and bank balances	843,433	1,267,244	843,433	1,265,397
	843,433	1,267,244	843,433	1,265,397

NOTES TO THE FINANCIAL STATEMENTS

At 30 June 2018

1.  Accounting policies

Basis of Preparation

The Company is a public limited company limited by shares and incorporated and registered in England and Wales. The Company has been approved as an investment trust within the meaning of section 1158/1159 of the Corporation Tax Act 2010.

The Group's consolidated financial statements for the year ended 30 June 2018, which comprise the audited results of the Company and its wholly owned subsidiaries, Abport Limited and New Centurion Trust Limited (together referred to as the "Group"), have been prepared in conformity with IFRS as adopted by the European Union, which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), and as applied in accordance with the provision of the Companies Act 2006. The annual financial statements have also been prepared in accordance with the AIC Statement of Recommended Practice issued in November 2014 and updated in February 2018 with consequential amendments ("AIC SORP"), except to any extent where it is not consistent with the requirements of IFRS.

In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature have been prepared alongside the Income Statement.

The financial statements are presented in Sterling, which is the Group's functional currency as the UK is the primary environment in which it operates.

Going Concern

The financial statements have been prepared on a going concern basis, being a period of at least 12 months from the date that these financial statements were approved, and on the basis that approval as an investment trust company will continue to be met.

The Directors have made an assessment of the Group's ability to continue as a going concern and are satisfied that the Group has the resources to continue in business for the foreseeable future. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern, having taken into account the liquidity of the Group's investment portfolio and the Group's financial position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance). Therefore, the financial statements have been prepared on the going concern basis.

Basis of Consolidation

The subsidiaries are consolidated from the date of their acquisition, being the date on which control is obtained, and will continue to be consolidated until the date that such control ceases. Control comprises being exposed, or having rights, to variable returns through its power over the investee. The financial statements of the subsidiaries are prepared for the same reporting year as the parent Company, using consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from them are eliminated.

Segmental Reporting

The Directors are of the opinion that the Group is engaged in a single segment of business, being investment business. The Group primarily invests in companies listed in the UK.

Accounting Developments

The accounting policies adopted are consistent with those of the previous financial year. The following accounting standards and their amendments were in issue at the period end but will not be in effect until after this financial year.

International Financial Reporting Standards			Effective date*
IFRS 1		First-time Adoption of International Financial Reporting Standards (amendment)	1 January 2018
IFRS 3		Business Combinations (amendment)	1 January 2019
IFRS 9		Financial Instruments	1 January 2018
IFRS 11		Joint Arrangements (amendment)	1 January 2019
IFRS 15		Revenue from Contracts with Customers	1 January 2018
IFRS 16		Leases	1 January 2019
International Accounting Standards
IAS 12		Income Taxes (amendment)	1 January 2019
IAS 23		Borrowing Costs (amendment)	1 January 2019
IAS 28		Investments in Associates and Joint Ventures  (measuring an associate or joint venture at fair value)	1 January 2018
IAS 28		Investments in Associates and Joint Ventures (long term interests in associates or joint venture)	1 January 2019
IFRIC Interpretations
IFRIC 23	Uncertainty over Income Tax Treatments		1 January 2019

*Years beginning on or after

The Directors are considering the impact of the standards upon the financial statements. With regards to IFRS 9, the Directors have determined that any assets currently disclosed as Investments held for sale will need to be reclassified to investments held at fair value through profit or loss. This will change the presentation of investments and the related allocation of income within the financial statements of the Group. There should be no impact on the returns of the Group.

The new impairment model will also apply to the Group's other financial assets including trade and other receivables and cash and cash equivalents. The Directors expect to apply the simplified approach to recognise lifetime expected credit losses for these current assets. The adoption of IFRS 9 for these assets is not expected by the Directors to have any material impact on the reported Net Asset Value, but there will be presentational differences.

There will be no change in the accounting for financial liabilities.

In summary, on adoption of IFRS 9 for the first period commencing 1 January 2018, the Directors consider that IFRS

9 will not have a material impact on the financial position or performance of the Group.

The Directors do not expect that the adoption of other standards listed above will have a material impact on the financial statements of the Group in future periods.

Critical Accounting Judgments and Key Sources of Estimation Uncertainty

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts in the Balance Sheet, the Statement of Comprehensive Income and the disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. These are reviewed on an ongoing basis. Actual results may differ from these estimates. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future period if the revision affects both current and future periods.

The major part of the investment portfolio is valued by reference to quoted prices. However a significant part of the portfolio comprises fixed interest stocks which are thinly traded; such stocks are best valued by reference to current market price lists provided by an independent broker, itself a recognised leader in such preference share and similar fixed interest stocks. The Company may overlay such prices with situation specific adjustments including (a) taking a second independent opinion on a specific stock, or (ii) reducing the value to a net present value, to reflect the likely time to be taken to realise a stock which the Company is actively looking to sell. The outturn is reflected in the valuations set out in Note 11 to the accounts.

There were no other significant accounting estimates or significant judgements in the current year.

Investments

The Group's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. The portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio is provided internally on that basis to the Group's Board of Directors.

Investments are measured initially, and at subsequent reporting dates, at fair value, and derecognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time-frame of the relevant market. For listed investments this is deemed to be bid market prices or closing prices for Stock Exchange Electronic Trading Service - quotes and crosses ("SETSqx").

Changes in fair value of investments, realised gains and losses on disposal are also recognised in the Income Statement as capital items.

•    All investments held that have been purchased by the Group since obtaining approval as an investment trust from

1 July 2013 are classified as at "fair value through profit or loss". Changes in fair value of investments are recognised in the Consolidated Income Statement as a capital item. On disposal, realised gains and losses are also recognised in the Consolidated Income Statement as capital items.

•     Investments held at 30 June 2018 which were purchased prior to 1 July 2013 are classified as "assets available for sale". These investments have not been reclassified as at "fair value through profit or loss" in accordance with IAS

39 Financial Instruments: Recognition and Measurement. Realised gains and losses and movement in impairment provision on investments classified as "assets available for sale" are recognised in the Consolidated Income Statement and allocated to the Capital reserve. Movement in unrealised appreciation on investments classified as "assets available for sale" is recognised in the Revaluation reserve.

•     Investments held as current assets by the subsidiary undertaking are classified as 'held for trading', and are at fair value. Profits or losses on investments held for trading are taken to revenue in the Income Statement.

•    The holdings of the investment in subsidiaries are stated at cost less diminution in value.

All investments for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy in note 11.

Derivative Financial Instruments

Derivatives, including Index Put options, which are listed investments are classified as financial instruments being assets or liabilities held for trading. They are initially recorded at cost (being the premium paid to purchase the option) and are subsequently valued at fair value at the close of business at the year-end and included in fixed assets or current assets/liabilities depending on their maturity date.

Changes in the fair value of derivative instruments are recognised as they arise in the capital column of the Income Statement.

Foreign Currency

Transactions denominated in foreign currencies are converted to Sterling at the actual exchange rate as at the date of the transaction. Items that are denominated in foreign currencies at the year end are reported at the rate of exchange at the Balance Sheet date. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or the revenue account depending on whether the gain or loss is of a capital or revenue nature.

Cash and Cash Equivalents

Cash comprises cash in hand, overdrafts and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.

For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts when applicable.

Trade Receivables, Trade Payables and Short-term Borrowings

Trade receivables, trade payables and short-term borrowings are measured at amortised cost.

Income

Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. Fixed returns on non-equity shares are recognised on a time-apportioned basis.

Dividends from overseas companies are shown gross of any non-recoverable withholding taxes which are described separately in the Income Statement.

Special dividends are taken to revenue or capital account depending on their nature. In deciding whether a dividend should be regarded as a capital or revenue receipt, the Board reviews all relevant information as to the reasons for the sources of the dividend on a case-by-case basis.

When the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend forgone is recognised as income. Any excess in the value of the cash dividend is recognised in the capital column.

Where, before recognition of dividend income is due, there is any reasonable doubt that a return will actually be received, for example as a consequence of the investee company lacking distributable reserves, the recognition of the return is deferred until the doubt is removed.

All other income is accounted for on a time-apportioned accruals basis using the effective interest rate method and is recognised in the Income Statement.

Expenses and Finance Costs

All expenses and finance costs are accounted for on an accruals basis.

Taxation

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amount for financial reporting purposes at the reporting date. Deferred tax assets are only recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of timing differences can be deducted. In line with the recommendations of the AIC SORP, the allocation method used to calculate the tax relief on expenses charged to capital is the "marginal" basis. Under this basis, if taxable income is capable of being offset entirely by expenses charged through the revenue account, then no tax relief is transferred to the capital account.

No taxation liability arises on gains from sales of fixed asset investments by the Group by virtue of its investment trust status. However, the net revenue (excluding UK dividend income) accruing to the Group is liable to corporation tax at the prevailing rates.

Dividends Payable to Shareholders

Dividends to shareholders are recognised as a liability in the period in which they are paid or approved in general meetings and are taken to the Statement of Changes in Equity. Dividends declared and approved by the Company after the Balance Sheet date have not been recognised as a liability of the Company at the Balance Sheet date.

Share Capital

Issued share capital consists of Ordinary shares with voting rights and issued preference shares which are non-voting. The Issued preference shares, owned in their entirety by New Centurion Trust Limited, a wholly-owned subsidiary of the Company, are entitled to receive a cumulative dividend of 0.01p per share per annum, and are entitled to receive their nominal value, 50p, on a distribution of assets or a winding up.

Share Premium

The share premium account represents the accumulated premium paid for shares issued in previous periods above their normal value less issue expenses. This is a reserve forming part of non-distributable reserves. The following items are taken to this reserve:

•    Costs associated with the issue of equity;

•    Premium on the issue of shares.

Capital Redemption Reserve

The reserve represents the shares bought back and cancelled. This reserve is not distributable.

Revaluation Reserve

Movement in unrealised appreciation on investments classified as "assets available for sale" is recognised in the Revaluation reserve and is not distributable.

Capital Reserve

The following are taken to this reserve:

•    Gains and losses on derivatives;

•    Gains and losses on the disposal of investments;

•     Net movement arising from changes in the fair value of investments held and classified as at "fair value through profit or loss";

•    Exchange difference of a capital nature; and

•    Expenses together with the related taxation effect, allocated to this reserve in accordance with the above policies.

Realised gains on investments less expenses, provisions and unrealised gains may be considered by the Board for distribution. This reserve is not distributable.

Revenue Reserves

The revenue reserve represents the surplus accumulated profits and is distributable.

2.  Income

	Year ended 30 June 2018 £	Year ended 30 June 2017 £
Income from investments: UK dividends	505,852	536,956
Un-franked dividend income	96,066	230,447
UK fixed interest	346,877	407,272
	948,795	1,174,675
Other income: Bank deposit interest	85	312
Underwriting commission	1,300	2,520
Net dealing gains of subsidiaries	6,093	21,778
Total income	956,273	1,199,285

3.  Investment Management Fee

	Year ended 30 June 2018 £	Year ended 30 June 2017 £
Investment Management Fee	88,259	160,723

The management fee payable monthly in arrears by the Company to the Investment Manager, Fiske plc is calculated at the rate of one-twelfth of 0.75% per calendar month of the NAV of the Company, capped at £90,000 for the first twelve months. For these purposes, the NAV shall be calculated as at the last business day of each month.

At 30 June 2018 an amount of £7,500 (2017: £7,284) was outstanding and due to the Investment Manager.

4.  Other Expenses

	Year ended 30 June 2018 £	Year ended 30 June 2017 £
Administration and secretarial services	121,229	126,849
Auditors' remuneration for: - audit of the Group's financial statements	33,950	28,450
Directors' remuneration (see below)	60,000	60,000
Staff costs	14,000	14,000
Pension costs	280	(57,546)
Other expenses	148,630	107,876
	378,089	279,629

The audit of the Group's financial statements includes the cost of the audit of Abport Limited of £2,000 (2017: £1,950) and New Centurion Trust Limited £2,000 (2017: £1,950), which are charged to the subsidiaries

	Year ended 30 June 2018 £	Year ended 30 June 2017 £
Directors' remuneration: Sir David Thomson	15,000	15,000
Peter Allen	15,000	15,000
Stephen Cockburn	15,000	15,000
Martin Perrin	15,000	15,000
	60,000	60,000

The average number of employees as at 30 June 2018 was one (2017: one) with the aggregate remuneration consisting of:

	Year ended 30 June 2018 £	Year ended 30 June 2017 £
Staff costs Wages and salaries	14,000	14,000
Social security costs	1,579	-
Total	15,579	14,000
Pension costs Pension payments	280	11,274
Pension provision release	-	(70,000)
Workplace pension costs	-	1,180
Total	280	(57,546)

The Company does not have a provision (2017: same) in respect of future pension payments. There are no pension liabilities due to past employees.

5.  Taxation

	Year ended 30 June 2018			Year ended 30 June 2017
	Revenue £	Capital £	Total £	Revenue £	Capital £	Total £
Overseas taxation suffered	5,329	-	5,329	-	-	-
Overseas taxation - reversal of priors year tax	-	-	-	(3,241)	-	(3,241)
	5,329	-	5,329	(3,241)	-	(3,241)

The current tax charge for the year is lower than the standard rate of corporation tax in the UK of 19% to 30 June 2018 and 19.75% to 30 June 2017. The differences are explained below:

	Year ended 30 June 2018			Year ended 30 June 2017
	Revenue £	Capital £	Total £	Revenue £	Capital £	Total £
Return on ordinary activities	489,925	741,056	1,230,981	758,924	413,693	1,172,617
Theoretical tax at UK Corporation tax rate of 19% (2017: 19.75%)	93,086	140,801	233,886	149,887	81,704	231,591
Effects of: UK dividends that are not taxable	(96,112)	-	(96,112)	(106,049)	-	(106,049)
Overseas dividends that are not taxable	(18,253)	-	(18,253)	(45,513)	-	(45,513)
Non taxable investment gains	-	(140,801)	(140,801)	-	(81,704)	(81,704)
Overseas taxation suffered	5,329	-	5,329	-	-	-
Reversal priors year's tax	-	-	-	(3,241)	-	(3,241)
Unrelieved expenses	21,279	-	21,279	1,675	-	1,675
Actual current tax charged to the revenue account	5,329	-	5,329	(3,241)	-	(3,241)

Factors that may affect future tax charges

The Company has excess management expenses of £1,596,643 (2017: £1,484,651). It is unlikely that the Company will generate sufficient taxable income in the future to use these expenses to reduce future tax charges and therefore no deferred tax asset has been recognised.

Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Company meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an investment trust company under HMRC rules.

6.  Return per Ordinary Share

	Year ended 30 June 2018			Year ended 30 June 2017
	Revenue	Capital	Total	Revenue	Capital	Total
Return after taxation Return attributable to ordinary shareholders (£)	484,596	741,056	1,225,652	762,165	413,693	1,175,858
Weighted average number of ordinary shares in issue (excluding shares held in Treasury)			4,772,049			4,772,049
Return per ordinary share (pence)	10.16p	15.53p	25.69p	15.97p	8.67p	24.64p

The return on total comprehensive income per ordinary share has been calculated to enable comparison of the returns per share shown in the annual reports of other investment trust companies. A reconciliation is shown below:

Return on total comprehensive income

	Year ended 30 June 2018			Year ended 30 June 2017
	Revenue	Capital	Total	Revenue	Capital	Total
Return on total comprehensive income
Return attributable to ordinary shareholders (£)	484,596	741,056	1,225,652	762,165	413,693	1,175,858
Add other comprehensive income recognised in equity	-	30,134	30,134	-	575,730	575,730
Add other comprehensive income recognised in profit and loss	-	(670,657)	(670,657)	-	(18,637)	(18,637)
Return attributable to ordinary shareholders (£)	484,596	100,533	585,129	762,165	970,786	1,732,951
Weighted average number of ordinary shares in issue (excluding shares held in Treasury)			4,772,049			4,772,049
Return per ordinary share (pence)	10.16p	2.11	12.27p	15.97p	20.34p	36.31p

7.  Dividends per Ordinary Share

	Year ended 30 June 2018 £	Year ended 30 June 2017 £
Declared and paid per Ordinary Share In respect of the prior period:
Fourth interim dividend 5.70p (2017: 5.70p)	272,007	272,007
In respect of the year under review:
First interim 5.00p (2017: 5.00p)	238,602	238,602
Second interim dividend 5.00p (2017: 5.00p)	238,602	238,602
Third interim dividend 5.00p (2017: 5.00p)	238,602	238,602
	987,813	987,813
Declared per Ordinary Share Dividend declared in respect of the year under review: Fourth interim dividend 5.70p (2017: 5.70p)	272,007	272,007

The Directors have declared a first interim dividend in respect of the year ending 30 June 2019 of 5.00p per ordinary share payable on 17 November 2018 to all shareholders on the register at close of business on 27 October 2018. The ex-dividend date was 26 October 2018.

8.  Ordinary Share Capital

	Group and Company 2018		Group and Company 2017
Issued, allotted and fully paid:	Number	£	Number	£
Ordinary shares of 50p each	4,772,049	2,386,025	4,772,049	2,386,025

The ordinary shares entitle the holders to receive all ordinary dividends and all remaining assets on a winding up, after the fixed rate preference shares have been satisfied in full.

The Company does not hold any ordinary shares in Treasury (2017: none).

9.  Issued Preference Share Capital

	Group		Company
	2018	2017	2018	2017
	£	£	£	£
Issued preference share capital	-	-	858,783	858,783

The 1,717,565 fixed rate preference shares of 50p each are non-voting, entitled to receive a cumulative dividend of 0.01p per share per annum, and are entitled to receive their nominal value, 50p, on a distribution of assets or a winding up. The whole of the issue is held by New Centurion Trust Limited, a wholly owned subsidiary of the Company.

The Directors do not consider the fair values of the issued preference share capital to be significantly different from the carrying values.

10. Net Asset Value per Ordinary Share

The NAV per ordinary share is calculated as follows:	2018	2017
	£	£
Net assets	17,334,093	17,736,777
Ordinary shares in issue, excluding own shares held in Treasury	4,772,049	4,772,049
NAV per ordinary share	363.24p	371.68p

The underlying investments of the wholly owned subsidiary New Centurion Trust Limited comprise issued preference share capital, as discussed in note 9, in the Company and, being effectively eliminated on consolidation, the valuation thereof does not impact the NAV attributable to ordinary shareholders.

11. Investments

		Group		Company
	2018 £	2017 £	2018 £	2017 £
Available for sale	6,592,447	8,588,507	6,592,447	8,588,507
At fair value through profit and loss	9,747,882	7,700,622	9,747,882	7,700,622
Total investments designated at fair value	16,340,329	16,289,129	16,340,329	16,289,129
Investments available for sale
	2018	Group 2017	2018	Company 2017
	£	£	£	£
Opening book cost	6,562,916	6,926,993	6,618,535	6,982,611
Opening net investment holding gains	2,025,591	1,129,103	1,969,972	1,073,485
Total investments designated as available for sale	8,588,507	8,056,096	8,588,507	8,056,096
Movements in the year:
Purchases at cost	-	-	-	-
Sales - proceeds	(1,923,800)	(136,055)	(1,923,800)	(136,055)
- gains/(losses) on sales	572,008	(228,022)	572,008	(228,022)
(Decrease)/increase in investment holding gains	(644,268)	896,488	(644,268)	896,488
Closing valuation	6,592,447	8,588,507	6,592,447	8,588,507
Closing book cost	5,211,124	6,562,916	5,266,743	6,618,534
Closing net investment holding gains	1,381,322	2,025,591	1,325,704	1,969,973
	6,592,447	8,588,507	6,592,447	8,588,507

Analysis of changed in investment holding gains Movement in impairment provision		(3,745)	339,395	(11,707)	329,741
Recognised in equity		30,134	575,730	41,318	585,384
Recognised in return after taxation		(670,657)	(18,637)	(673,879)	(18,637)
Losses on investments		(644,268)	896,488	(644,268)	896,488
Investments held at fair value through profit or loss
Group                                               Company
	2018 £		2017 £	2018 £	2017 £
Opening book cost	8,301,661		9,973,717	8,301,661	9,973,717
Opening net investment holding losses	(601,039)		(1,619,768)	(601,039)	(1,619,768)
Total investments designated as available for sale	7,700,622		8,353,949	7,700,622	8,353,949
Movements in the year:
Purchases at cost	5,655,702		1,877,185	5,655,702	1,877,185
Sales - proceeds	(3,848,048)		(3,117,937)	(3,848,048)	(3,117,937)
- losses on sales	(492,823)		(431,304)	(492,823)	(431,304)
Decrease in investment holding losses	732,429		1,018,729	732,429	1,018,729
Closing valuation	9,747,882		7,700,622	9,747,882	7,700,622
Closing book cost	9,616,492		8,301,661	9,616,492	8,301,661
Closing net investment holding gains/(losses)	131,390		(601,039)	131,390	(601,039)
	9,747,882		7,700,622	9,747,882	7,700,622

Transaction costs

	Group		Company
	Year ended		Year ended
	2018 £	2017 £	2018 £	2017 £
Costs on acquisitions	28,265	1,880	28,265	1,880
Costs on disposals	8,020	4,543	8,020	4,543
	6,423	36,285	6,423	36,285

Analysis of capital gains

	Group		Company
	Year ended		Year ended
	2018 £	2017 £	2018 £	2017 £
Gains/(losses) on sale of investments	79,185	79,185	79,185	79,185
Movement in investment holding gains	88,161	88,161	88,161	88,161
	167,346	167,346	167,346	167,346

Fair Value Hierarchy

The Group is required to classify fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in measuring the fair value of each asset. The fair value as the amount at which the asset could be sold or the liability transferred in an orderly transaction between market participants, at the measurement date, other than a forced or liquidation sale.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 - valued using quoted prices, unadjusted in active markets for identical assets or liabilities.

Level 2 - valued by reference to valuation techniques using observable inputs for the asset or liability other than quoted prices included in level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data or the asset or liability.

The table below sets out fair value measurements of financial instruments as at 30 June 2018, by the level in the fair value hierarchy into which the fair value measurement is categorised.

At 30 June 2018	Level 1 £	Level 2 £	Level 3 £	Total £
Financial assets at fair value through profit or loss
Equities	7,770,314	-	-	7,770,314
Fixed Interest bearing securities	471,448	-	1,506,120	1,977,568
Derivative financial instruments	-	-	-	-
Financial assets available for sale
Equities	800,000	413,559	2,889,789	4,103,348
Fixed Interest bearing securities	2,061,228	-	427,871	2,489,099
Current asset investments held by a trading subsidiary	2,077	-	-	2,077
	11,105,067	413,559	4,823,780	16,342,406
At 30 June 2017	Level 1 £	Level 2 £	Level 3 £	Total £
Financial assets at fair value through profit or loss
Equities	6,036,337	-	-	6,036,337
Fixed Interest bearing securities	-	-	1,664,286	1,664,286
Derivative financial instruments	63,640	-	-	63,640
Financial assets available for sale
Equities	1,184,018	415,248	3,127,681	4,726,947
Fixed Interest bearing securities	3,172,258	-	689,301	3,861,559
Current asset investments held by a trading subsidiary	2,176	89	-	2,265
	10,458,429	415,337	5,481,268	16,355,034

There were no transfers between level 1 and 2 during the current or prior year.

The valuation techniques used by the Group are set out in the Accounting Policies in Note 1.

Valuation process for Level 2 investments

The valuations are provided by an independent third party broker. The values are determined using observable inputs including prevailing interest rates, the maturity and redemption dates of the investment. The equity securities of the issuing company of the investments held are or have been publicly listed. The information includes reported results, commentary on current trading and, third party research.

Valuation process for Level 3 investments

Investments classified within Level 3 have significant unobservable inputs. Level 3 investments can typically include unlisted equity and corporate debt securities. As observable prices are not available for these securities, the Group has used valuation techniques to derive the fair value using recognised valuation methodologies, in accordance with International Private Equity and Venture Capital ("IPEVC" valuation Guidelines including discounted cash flow modelling where relevant.

The Level 3 investments held by the Company currently consist of fixed interest bearing securities and certain equity securities. These are valued by the Investment Manager with valuation confirmations provided to the Board on a regular basis. The equity securities of the issuing company of the Level 3 investments held have been formerly listed and, therefore, detailed public information is available to substantiate the future prospects of the issuing company. The fixed interest bearing securities anticipated future cash returns and cash-flows. This information includes reported results, commentary on current trading, and third party research.

The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Valuation techniques used include the use of comparable recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity specific inputs.

Unobservable inputs are not provided by the Company but provided by a third party pricing vendor, these prices that are provided by the pricing vendor are not adjusted.

The Company does not have any other reasonably available information on this and relies on the third party vendor's knowledge and expertise.

The following stocks are valued at nil due to no source, 600 Group Warrants, Gable Holdings 7.35% Loan Note and Whitnash 6.5% 2nd Preference shares.

The following stock are delisted and subsequently valued at nil, Fairpoint Group and Gable Holdings.

Aggregated Micro Power Holdings 8% Convertible Bond is valued by using the quoted price on the Channel Islands securities exchange.

Intercede Group 8% Secured Convertible Loan notes are valued at par as no other information is available.

London County 3% Perpetual is valued by the Board on the understanding that the former London County Council will buy this stock at this price.

If the value of the level 2 and 3 investments were to increase or decrease by 10%, while all the other variables remained constant, the net assets and net profit available to shareholders would have increased/decreased by £523,734 (2017: £589,650).

The table below presents the movement in Level 3 investments that were accounted for at fair value for the year ending 30 June 2018.

Year ended 30 June 2018 Group	Financial assets at fair value through profit or loss £	Available for sale £	Total £
Opening balance	1,664,286	3,816,982	5,481,268
Movement in impairment provision on investments available for sale	-	(99,952)	(99,952)
Movement in unrealised appreciation on investments available for sale
recognised in equity	-	(20,156)	(20,156)
Movement in unrealised appreciation on investments available for sale
recognised in return after taxation	-	3,865	3,865
Purchases at cost	-	-	-
Movement in unrealised gains/(losses) on investments at fair value
through profit or loss	(158,165)	-	(158,165)
Realised loss	-	16,930	16,930
Sales proceeds	-	(400,010)	(400,010)
Closing balance	1,506,121	3,317,659	4,823,780

Company	Financial assets at fair value through profit or loss £	Available for sale £	Total £
Opening balance	1,664,286	3,816,982	5,481,268
Movement in impairment provision on investments available for sale	-	(105,215)	(105,215)
Movement in unrealised appreciation on investments available for sale
recognised in equity	-	(18,115)	(18,115)
Movement in unrealised appreciation on investments available for sale
recognised in return after taxation	-	7,087	7,087
Purchases at cost	-	-	-
Movement in unrealised gains/(losses) on investments at fair value
through profit or loss	(158,165)	-	(158,165)
Realised loss	-	16,930	16,930
Sales proceeds	-	(400,010)	(400,010)
Closing balance	1,506,121	3,317,659	4,823,780

Year ended 30 June 2017 Group	Financial assets at fair value through profit or loss £	Available for sale £	Total £
Opening balance	1,121,062	3,584,063	4,705,125
Movement in impairment provision on investments available for sale	-	379,611	379,611
Movement in unrealised appreciation on investments available for sale recognised in equity	-	140,645	140,645
Movement in unrealised appreciation on investments available for sale recognised in return after taxation	-	-	-
Purchases at cost	450,000	-	450,000
Movement in unrealised gains/(losses) on investments at fair value through profit or loss	402,989	-	402,989
Realised loss	-	(266,693)	(266,693)
Sales proceeds	(309,765)	(20,644)	(330,409)
Closing balance	1,664,286	3,816,982	5,481,268

Company	Financial assets at fair value through profit or loss £	Available for sale £	Total £
Opening balance	1,121,062	3,584,063	4,705,125
Movement in impairment provision on investments available for sale Movement in unrealised appreciation on investments available for sale recognised in equity	- -	365,057 155,199	365,057 155,199
Movement in unrealised appreciation on investments available for sale recognised in return after taxation Purchases at cost	- 450,000	- -	- 450,000
Movement in unrealised gains/(losses) on investments at fair value through profit or loss	402,989	-	402,989
Realised loss	-	(266,693)	(266,693)
Sales proceeds	(309,765)	(20,644)	(330,409)
Closing balance	1,664,286	3,816,982	5,481,268

During the year, two stocks were written down. Aggregated Power 8% conv loan notes 31/03/2021 was written down by £189,000, moving the market value from £714,000 to £525,000.

The valuation of Aggregated Micro Power 8% convertible loan note 30/03/2021 variable was previously carried at a level assuming the ultimate conversion of the loan note into the ordinary equity shares of the company. On review by the Investment Manager and directors it was decided that a more prudent basis for the carrying valuation should be the price quoted on the Channel Islands securities exchange. Should a conversion event take place in the future the notional uplift in value can be reviewed.

Liberty 6% Preference Shares was written down by £120,000, moving the market value from £123,000 to £3,000.

During the year there were two significant disposals: Stock	Proceeds	Cost	Valuation
	£	£	@ 30.06.2017 £
Tate & Lyle 6.5% Preference	100,009	84,826	91,913
Rea Finance	300,000	298,254	297,000

12. Derivative Contracts

The derivative contracts serve as components of the Company's investment strategy and are utilised primarily to structure and hedge investments, to enhance performance and reduce risk to the Group (the Company does not designate any derivative as a hedging instrument for hedge accounting purposes). The derivative contracts that the Company may hold from time to time or issue include: index-linked notes, contracts for differences, covered options and other equity-related derivative instruments.

These instruments can involve a high degree of leverage and are very volatile. A relatively small movement in the underlying value of a derivative contract may have a significant impact on the profit and loss and net assets of the Group. The Company's investment objective sets limits on investments in derivatives with a high risk profile. The Investment Manager is instructed to closely monitor the Company's exposure under derivative contracts and any use of the derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Company's direct investments. The Company will not enter into uncovered short positions.

As at 30 June 2018, the Group had no positions in the following type of derivative:

Options

Options are contractual agreements that convey the right, but not the obligation, for the purchaser either to buy or sell a specific amount of a financial instrument at a fixed price, either at a fixed future date or at any time within a specified period.

The Company purchases either Put or Call options through regulated exchanges and OTC markets. Options purchased by the Company provide the Company with the opportunity to purchase (Call options) or sell (Put options) the underlying asset at an agreed-upon value either on or before the expiration of the option. The Company is exposed to credit risk on purchased options only to the extent of their carrying value, which is their fair value.

During the year, the FTSE 100 March 2018 6,000 Put option expired.

	Group		Company
	Year ended		Year ended
	2018 £	2017 £	2018 £	2017 £
Movements in the period:
Opening valuation	63,640	-	63,640	-
Purchases at cost	-	339,853	-	339,853
Sales proceeds	-	-	-	-
Losses on sales	(339,853)	-	(339,853)	-
Movements in unrealised loss	276,213	276,213	276,213	276,213
Closing valuation	-	63,640	-	63,640
Closing bookcost	-	339,853	-	339,853
Closing unrealised loss	-	276,213	-	276,213
	-	63,640	-	63,640

	Group		Company
	Year ended		Year ended
	2018 £	2017 £	2018 £	2017 £
Analysis of capital gains
Losses on sale of investments	339,853)	-	(339,853)	-
Movement in investment holding losses	276,213	(276,213)		276,213
	(63,640)	(276,213)	(63,640)	(276,213)

13. Investment in Subsidiaries

	Company
	Year ended
	2018 £	2017 £
At cost	5,410,552	5,410,552
Provision for diminution in value	(4,547,896)	(4,547,896)
At cost	862,656	862,656

At 30 June 2018, the Company held interests in the following subsidiary companies:

	Country of	% share of	% share of
	Incorporation	capital held	voting rights	Nature of business
Abport Limited	England	100%	100%	Investment dealing company
New Centurion Trust Limited	England	100%	100%	Investment holding company

The registered office for both companies above is:

Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW

14. Substantial Share Interests

The Company has notified interests in 3% or more of the voting rights of the following companies:

Company	% share of voting rights
Associated British Engineering	4.88
Coral Products	3.03

15.  Trade and Other Receivables

		Group		Company
	2018	2017	2018	2017
	£	£	£	£
Amounts due from subsidiaries	-	-	20,489	15,759
Accrued income	15,998	79,158	15,998	79,158
Due from brokers	-	-	-	-
Dividends receivable	215,804	118,329	215,804	118,329
Taxation recoverable	3,182	6,284	3,182	6,284
Other receivables	30,357	7,529	30,357	7,529
	265,341	211,300	285,830	227,059

The carrying amount of trade receivables approximates to their fair value. Trade and other receivables are not past due at 30 June 2018.

16.  Trade and Other Payables

	Group 2018 £	2017 £	Company 2018 £	2017 £
Preference dividends payable to the Company's wholly owned subsidiary	-	-	861	689
Amount due to subsidiaries	-	-	101,533	98,228
Due to brokers	-	-	-	-
Investment management fees	7,500	7,284	7,500	7,284
Other trade payables and accruals	109,587	89,517	104,761	84,824
	117,087	96,801	214,655	191,025

17     Analysis of Financial Assets and Liabilities

Investment Objective and Policy

The Group's investment objective is to provide shareholders with an attractive level of dividends coupled with capital growth over the long-term. The investing activities in pursuit of its investment objective involve certain inherent risks. The Group's financial instruments can comprise the following held in accordance with the Company's investment objectives and policies:

·   Shares and debt securities;

·   Derivative instruments for efficient portfolio management, gearing and investment purposes;

·   Current asset investments held by its subsidiary;

·   Cash, liquid resources and short-term debtors and creditors that arise from its operations; and

·   Conversion rights or equity warrants.

Any use of derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Company's direct investments, as described below.

Risks

The risks identified arising from the Group's financial instruments are market risk (which comprises market price risk and interest rate risk, liquidity risk and credit and counterparty risk). The Group may enter into derivative contracts to manage risk. The FTSE 100 March 2018 put option held at the beginning of the year expired on 16 March 2018. The Board reviews and agrees policies for managing each of these risks, which are summarised below.

Market Risk

Market risk arises mainly from uncertainty about future prices of financial instruments used in the Group's business. It represents the potential loss the Group might suffer through holding market positions by way of price movements, interest rate movements and exchange rate movements. The Group assesses the exposure to market risk when making each investment decision and these risks are monitored by the Investment Manager on a regular basis and the Board at quarterly meetings with the Investment Manager.

Market price risk

Market price risk (i.e. changes in market prices other than those arising from currency risk or interest rate risk) may affect the value of investments.

The Board manages the risks inherent in the investment portfolio by ensuring full and timely reporting of relevant information from the Investment Manager. Investment performance and exposure are reviewed at each Board meeting.

The Group's exposure to changes in market values was £16,340,329 (2017: £16,355,034). The direct impact of a 5% movement in the value of the portfolio investments and current asset investments amounts to £817,016 (2017: £817,752). An equal change in the opposite direction would have decreased the net assets and net profit available to shareholders by an equal and opposite amount. The analysis is based on closing balances only and is not representative of the year as a whole. The market value of the option may move in a different direction to Securities.

	2018 £	2017 £
Securities available for sale	6,592,447	8,590,772
Securities at fair value through profit and loss	9,747,882	7,700,622
Derivative financial instruments	-	63,640
Total investment	16,340,329	16,355,034
	2018	2017
	£	£
Securities available for sale	329,622	429,539
Securities at fair value through profit and loss	487,394	385,031
Derivative financial instruments	-	3,182
Effect on post-tax profit for the year and on equity	817,016	817,752

Interest Rate Risk

Interest rate movements may affect the level of income receivable on cash deposits. The Group's financial assets and liabilities, excluding short-term debtors and creditors, may include investment in fixed interest securities, such as UK corporate debt stock, whose fair value may be affected by movements in interest rates. The majority of the Group's financial assets and liabilities, however, are non-interest bearing. As a result, the Group's financial assets and liabilities are not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates.

The possible effects on the fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions. The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions.

	Cash flow interest rate risk	No interest rate risk	Total	Cash flow interest rate risk	No interest rate risk	Total
	2018	2018	2018	2017	2017	2017
	£	£	£	£	£	£
Investments available for sale	2,489,099	4,103,348	6,592,447	3,861,559	4,726,948	8,588,507
Investments at fair value through profit and loss	1,506,120	8,241,762	9,747,882	1,664,286	6,036,336	7,700,622
Investment in Subsidiary	-	2,077	2,077	-	2,265	2,265
Derivative financial investments	-	-	-	-	63,640	63,640
Other receivables*	-	234,984	234,984	-	203,771	203,771
Cash at bank	843,433	-	843,433	1,267,244	-	1,267,244
Current liabilities	-	(117,087)	(117,087)	-	(96,801)	(96,801)
	4,838,652	12,465,084	17,303,736	6,793,089	10,936,159	17,729,248

* The above table doesn't include prepayments of £30,357 (2017: £7,529).

Interest rate movements may affect the level of income receivable on cash deposits and fixed interest bearing securities. The impact of a 1% movement in interest rates would move net assets and net profit available to shareholders by the following amounts:

	2018	2017
	£	£
Fixed interest bearing securities	3,469	4,073
Bank interest	1	3

Liquidity Risk

The Group's assets mainly comprise readily realisable quoted and unquoted securities that can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the ability to liquidate listed securities.

The Group's liquidity risk is managed by the Investment Manager in accordance with established policies and procedures in place. Cash flow forecasting is performed in the operating entities of the Group and aggregated by the Investment Manager. The Investment Manager monitors the rolling forecasts of the group's liquidity requirements to ensure it has sufficient cash to meet obligations as they fall due.

The maturity profile of the Group's financial liabilities £117,087 (2017: £96,801) are all due in one year or less.

Credit and Counterparty Risk

Credit risk is the risk of financial loss to the Group if the contractual party to a financial instrument fails to meet its contractual obligations.

The maximum exposure to credit risk as at 30 June 2018 was £1,110,851 (2016: £1,544,449). The calculation is based on the Group's credit risk exposure as at 30 June 2018 and this may not be representative for the whole year.

The Group's quoted investments are held on its behalf by Bank of New York Mellon acting as the Group's custodian. Bankruptcy or insolvency of the custodian may cause the Group's rights with respect to securities held by the custodian to be delayed.

Where the Investment Manager makes an investment in a bond, corporate or otherwise, the credit rating of the issuer is taken into account so as to minimise the risk to the Group of default.

Investment transactions are carried out with a number of brokers where creditworthiness is reviewed by the Investment Manager.

Cash is only held at banks that have been identified by the Board as reputable and of high credit quality.

Foreign Currency Risk

Although the Company's performance is measured in sterling, a proportion of the Company's assets may be either denominated in other currencies, investments with currency exposure or the trading activities of its investee companies.

At 30 June, the Group held £1,502 (2017: £1,340) of investments held for sale denominated in Australian Dollars. This is not material to the fund.

Derivatives

The Investment Manager may use derivative instruments in order to "hedge" the market risk of part of the portfolio. The Investment Manager reviews the risks associated with individual investments and, where they believe it appropriate, may use derivatives to mitigate the risk of adverse market (or currency) movements. The Investment Manager discusses regularly the hedging strategy with the Board.

At the year end, there were no derivative contracts open (2017: one).

Capital Management Policies

Capital is managed so as to maximise the return to shareholders while maintaining a capital base to allow the Group to operate effectively. Capital is managed on a consolidated basis and to ensure that it will be able to continue as a going concern.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell securities to reduce debt.

The Board, with the assistance of the Investment Manager, monitors and reviews the capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings' as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as "equity" as shown in the consolidated balance sheet plus net debt. The gearing ratios at 30 June 2018 and 2017 were as follows:

	2018	2017
	£	£
Cash and bank balances	843,433	1,267,244
Net cash	843,433	1,267,244
Ordinary shareholders' funds	17,568,224	17,736,777
Gearing (net debt/ordinary shareholders' funds)	nil	nil

18. Transactions with the Investment Manager and Related Parties

The amounts paid to the Investment Manager, together with details of the Investment Management Agreement, are disclosed in note 3. Investment Management fees for the year amounted to £88,259 (2017: £160,723).

During the year Miton ceased to be the Investment Manager as of the 1 April 2018. The fees paid to Miton during the year were £65,759.

On the 1 April 2018 Fiske plc took over responsibility as Investment Manager. The fees paid to Fiske during the year were £22,500. As at the year end, the following amounts were outstanding in respect of management fees: £7,500 (2017: £7,284).

The Board consists of three non-executive Directors all of whom, with the exception of Mr Perrin who is a non-executive Director of the Investment Manager, are considered to be independent by the Board. For the year ended 30 June 2018 all Directors including, the Chairman, received an annual fee of £15,000.

At the year end, there were no outstanding fees payable to Directors (2017: nil).

Expenses outstanding to Directors at the year end consists of £nil (2017: £1,957). No interest is charged on the balance and consists of reimbursement of expenses incurred.

There were no other identifiable related parties at the year end.

PUBLICATION OF NON-STATUTORY ACCOUNTS

The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006.  The 2018 Annual Report and Financial Statements will be filed with the Registrar of Companies shortly.

The report of the auditor for the year ended 30 June 2018 contained no qualification or statement under Section 498(2) or (3) of the Companies Act 2006.

This announcement was approved by the Board of Directors on 30 October 2018.

Copies of the Annual Report and Financial Statements will be sent to members shortly and will be available from the registered office c/o The Company Secretary.

 

END

 

 

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