Annual Financial Report

RNS Number : 2896B

Investment Company PLC

07 October 2020

 

THE INVESTMENT COMPANY PLC

ANNUAL FINANCIAL REPORT

ANNOUNCEMENT OF RESULTS

FOR THE YEAR ENDED
30 JUNE 2020

SUMMARY OF RESULTS

	At 30 June 2020	At 30 June 2019	Change %
Equity shareholders' funds	15,037,057	16,620,311	(9.53)
Number of ordinary shares in issue	4,772,049	4,772,049	-
Net asset value ("NAV") per ordinary share	315.11p	348.28p	(9.53)
Ordinary share price (mid)	276.00p	298.00p	(7.38)
Discount to NAV	12.41%	14.44%	2.03
	At 30 June 2020	At 30 June 2019
Total return per ordinary share*	(20.92)p	3.24p
Dividends paid	12.25p	18.20p

* The total return per ordinary share is based on total income after taxation as detailed in the Consolidated Income Statement and in note 6 to the Financial Statements and is shown to enable comparison with other investment trust companies.

CHAIRMAN'S STATEMENT

This statement covers the year to 30 June 2020.

Over the 12 months to 30 June 2020 the FTSE All-Share Index decreased by 15.9%. The Company's NAV reduced by 33.1p a decrease of 9.5% which can be analysed as follows:

	Pence per share	Year to June 2020 %	Pence per share	Year to June 2019 %
Opening net assets	348.28	100.00	363.24	100.00
Portfolio outturn	(32.15)	(9.23)	(12.53)	(3.45)
Investment income	20.14	5.78	24.19	6.66
Expenses paid	(8.91)	(2.56)	(8.63)	(2.37)
Dividends paid	(12.25)	(3.52)	(17.99)	(4.95)
Closing net assets	315.11	(9.53)	348.28	(4.12)

The Company's NAV, was particularly impacted by the sharp fall in the markets in February and March 2020 as a result of the COVID-19 pandemic as the economic implication of a near global shutdown were added to the already grave social consequence of the virus. The Company's NAV per Share fell from 371.48p on 31 January 2020 to 271.48p on 20 March 2020, before recovering to 315.11p at the period end.

Background

Having seen a 7.6% increase in NAV per Share in the first half of the year, in January 2020 the Board's confidence in the market began to ebb as earnings expectations began to come under pressure. The first concerns about the possible spread of COVID-19 beyond China became public in late January and once rapid transmission to Europe and North America became apparent this precipitated the most rapid collapse in markets since 1929. The UK equity market fell by over 30% from mid-February before rallying somewhat in late March to end the year some 16% lower than on 1 July 2019.

The shift from a localised epidemic to a global pandemic, requiring what amounts to a global shutdown with its consequential economic implication, has been rapid. The breathtaking stimulus packages announced by multiple governments and central banks around the world reflect the devastating impact of the lockdown on businesses of all sizes.

As we emerge from the first phase of lockdown here in the UK, domestic and corporate life remain uncertain, but the effects on our economy, savings, and social wellbeing are going to be unprecedented. Many UK listed companies have chosen to suspend or cut their dividends, meaning that dividend income from the UK equity market in 2020 is forecast to be significantly lower than in 2019.

The Company's own income fell by 17% in the year, but in fact this is not because of the market. In the first year under Fiske's management, to June 2019, there was some £275,000 of exceptional income as old arrears were successfully collected: in particular from the legacy holding in Whitnash. In parallel, although other portfolio changes cost some £78,000 in income the overall income was still up some 20% in the year to June 2019.

In the year to June 2020, this exceptional income was not repeated, which in itself would have led to an apparent 24% decrease in income. Meanwhile, one of our non-yielding legacy holdings, Liberty, was sold for some £375,000 in December 2019 and this capital has been deployed into income producing assets.

Overall, portfolio changes have more than clawed back the impact of the prior year portfolio changes, and this is despite some £35,000 of dividends deferred or lost in the COVID-19 environment of the last quarter. After adjusting for the exceptional nature of the prior year Whitnash accrual, the company's total income has actually risen by 9% in the year to June 2020 despite the dividends deferred or lost due to COVID-19.

Although there has been a gradual move towards holdings of ordinary equities - with income growth prospects - some 53% of our income in the year still came from fixed income securities as we seek to mitigate those risks involved in seeking higher yielding equities.

Current income projections from the Company's portfolio and appropriate available investment opportunities anticipate that, after covering the cost of running the Company, it is unlikely that that we will be able to continue to cover the cost of the dividends at previous levels in the mid-term without putting at risk the preservation of capital. In light of this volatility and the material uncertainty that surrounds the ability of many listed companies to maintain their dividend policies your Board has reviewed closely the current investment mandate, and taking into account the assets under its control, the likelihood of being able to maintain the current investment policy for the future.

The Board has, accordingly, considered a range of alternatives for the future of the Company, including the possibility of merging the Company with other investment entities. and we have also sought out the views of our significant shareholders in this regard. Of the options considered, the Board believes that adopting an objective of wealth preservation and long term capital growth is likely to be most attractive to the majority of Shareholders and will also provide the best opportunities to increase the size of the Company, so reducing its pro rata costs and improving its long term viability. Therefore, and as separately being announced today, your Board is dispatching a circular setting out details of the proposed new investment objective and policy together with certain amendments to the Articles and convening the requisite general meeting to seek the approval of shareholders.

AGM

In light of the current COVID-19 travel, public gathering restrictions and social distancing requirements, the forthcoming AGM which is to be held on 4 November 2020 at 11.00am, will be run as a closed meeting and shareholders will not be able to attend in person.

Shareholders' views are important and the Board encourages shareholders to submit their votes via CREST ID rather than attending the meeting in person. Shareholders may also submit questions in advance of the AGM to the Board via email to [e-mail] or by post to the Company Secretary at the address set out in the Annual Report.

Finally, your Board is grateful for the continued support of our shareholder base as we seek a prosperous future for your Company.

Yours faithfully,

I. R. Dighé
Chairman

6 October 2020

INVESTMENT MANAGER'S REPORT

Performance

During the twelve-month period under review to 30 June 2020 the NAV fell by 9.9% whilst the share price decreased by

7.4%. Both were ahead of major UK indices with the FTSE All Share Index down by 15.9% over the corresponding period.

The first half of the year under review, from July to December 2019, was dominated by Boris Johnson being re-elected Prime Minister with a commanding majority which resulted in the UK formally leaving the EU on 31 January 2020. The UK equity market was broadly unchanged during this period although international stocks performed well during the first eight months of 2019 boosted by sterling weakness and investors wanting to own non-UK assets. However, as it became clear that Brexit would finally be delivered, sterling surged (at one point to 1.35 to the US Dollar) and attractively valued UK domestic orientated stocks such as housebuilders, retailers and utilities moved substantially higher.

As we moved into 2020, Covid-19 dominated everything as the world and economies were locked down by governments in order to prevent a widely predicted surge in infections which threatened to overwhelm national health services. Governments in the first instance had to protect life and general well-being at the expense of economic activity. History will judge whether this was the right course of action.

Equity markets had been in denial that COVID-19 was a disruptive influence and found it difficult to gauge the economic and market impact. In essence, no one knew for certain what would happen. However, the arrival of COVID-19 in Italy was the canary in the coal mine moment. Investors then realised that COVID-19 was a significant threat and life was going to be very different. The world was starting to look very unusual with comparisons being drawn to the Spanish Flu pandemic of 1918-1920.

When reality finally hit, equity markets and oil nose-dived as investors panicked, dumping risk assets and scrambling to safe haven assets such as government bonds and gold. Such was the panic that even safe haven assets momentarily came under significant selling pressure. In roughly six weeks, from 12 February to 23 March, the FTSE All Share crashed 35%. We believe this demonstrates how irrational market participants' behaviour can be. Following this fall, investors seemed to think that the market had fallen too far, and the market rose strongly with comprehensive assistance from the largesse of Central Banks and Governments as the monetary and fiscal taps were fully turned on. It is highly likely that extreme market volatility driven by ever increasing levels of algorithmic trading will be a feature of markets until the pandemic is brought under some form of control. For patient, long-term orientated investors - who have undertaken good company-by-company analysis - this will present good opportunities.

Portfolio

During the first six months the portfolio benefitted from corporate activity. A bid was received for Aggregated Micro Power Holdings which was a good outcome for the Company, especially as we were having difficulty selling the shares in the market and they were not paying a dividend. In addition, we received a cash bid for Greene King from CK Asset Holdings Limited in Hong Kong at a significant premium to our purchase price. As a result, we sold the position at an attractive profit and reinvested the proceeds into existing holdings such as Vistry, Polar Capital and Phoenix Group.

We also had a satisfactory resolution to the two preference share holdings in Liberty Ltd & Liberty Retail Ltd. These Liberty preference share issues have not been paying interest for a number of years and as a result they were a drag on the performance of the Company. More importantly, we have been able to deploy the capital received into existing fixed interest and equity holdings which has provided a significant boost towards covering the administration costs and paying the dividend.

We sold the holdings in Restaurant Group and BT, the former due to concerns over debt levels and increasing competition in the eating out market and the latter due to concerns over the sustainability of its dividend.

During the year we added new holdings in Real Estate Credit Investments (RECI), Rio Tinto and Diageo. RECI offered exposure to an attractive dividend stream delivered from debt securities secured on commercial and residential properties in the UK and Europe. Rio Tinto was trading on an undemanding rating and offered an attractive dividend yield for such a well-regarded global mining franchise. Both companies provided support in reaching the Company's income targets.

Whilst Diageo, the global beverage manufacturer and distributor, did not offer the same sort of scale in terms of dividend it does have strong and sustainable margins along with a high rate of cash conversion, combined with a fantastic portfolio of leading brands with strong brand recognition and customer loyalty. Diageo claim that a net extra 550 million customers will reach the legal drinking age by 2030. The current dividend yield is 2.5% which has compounded by 5.8% over the last five years.

In the fixed interest part of the portfolio, we added new holdings in General Accident 7.875% preference shares, Ecclesiastical Insurance Office 8.625% preference shares and Iceland Bondco 6.75% 2024, all at levels that offered attractive yields. This was especially the case when re-investing cash received from redemptions of non-income paying holdings as referred to above.

We also added to several of our existing holdings such as Bank of Scotland 7.281%, Punch Taverns Finance 7.75% 2025 and Lloyds Banking Group 7.625% where prices and available cash allowed.

As mentioned in the interim report we were able to sell the holding in EI Group 7.5% 2024 at an attractive level prior to its ultimate call date, whilst the holding in Newcastle Building Society 3.886% 2019 was redeemed in December as planned. We sold the holding in Bristol Water 4% at an attractive exit yield. The holdings in Morgan Advanced Materials 5% & 5.5% preference shares were sold following the suspension of the dividends as a result of the COVID-19 pandemic.

Outlook

Due to the Covid-19 pandemic we are in the midst of an unprecedented period of global economic uncertainty with a deep recession and a rise in unemployment likely to dominate the headlines. Covid-19 presents enormous challenges for companies as they adapt and take the required strategic initiatives to survive and ultimately thrive in this new environment.

Whilst the current dividend picture remains uncertain, we are reassured that the portfolio has delivered over 90% of the income target set by the Company's Board as being sought to meet the Company's current dividend expectations. There have been a small number of cancellations, deferments or reductions but relative to the market as a whole and our peer group in general we are pleased with the overall outcome. Of the companies impacted, we hope that the housebuilders will return to dividend payments first as more clarity emerges around the economy and trading conditions.

There is no doubt we are living in increasingly unpredictable and volatile times and the future is shrouded in uncertainty. We note that your Board, in parallel with our endeavours, has been working to explore how to deliver the long-term sustainable protection of shareholders' funds. We would certainly agree that this is a more stable objective than the Company's historic high-income focus, particularly in today's investment environment.

Whatever the future may hold, investment in well managed, financially sound, cash generative, sustainable businesses will provide the best protection and ultimately returns for patient shareholders.

M. Foster, J. Harrison & J. Dieppe
Fiske plc

6 October 2020

TWENTY LARGEST INVESTMENTS
At 30 June 2020

Stock 1. Lloyds Banking	Number	Book cost £	Market or Directors' valuation £	% of total portfolio
7.625% variable perpetual	600,000	532,175	611,250	4.12%
2. GlaxoSmithKline
Ordinary 25p "	35,200	515,775	575,942	3.89%
3. Punch Taverns 7.75% subordinated notes 30/12/25	550,000	549,698	528,946	3.57%
4. 600 Group 8% loan notes 14/02/22	500,000	500,000	524,030	3.54%
20p Warrants	2,500,000	-	-	-
		500,000	524,030	3.54%
5. Unilever
Ordinary 3.11p "	11,135	448,711	484,929	3.27%
6. Nationwide Building Society 10.25% core capital deferred shares (variable)	3,100	490,536	483,017	3.26%
7. Phoenix Group
Ordinary 10p "	74,625	521,764	480,585	3.24%
8. The Fishguard & Rosslare Railways and
Harbours Company 2.45% guaranteed preference stock	790,999	441,810	458,780	3.10%
9. Rio Tinto
Ordinary 10p "	9,720	413,424	442,114	2.98%
10. Standard Life Aberdeen
Ordinary 13.9683p "	164,650	472,153	440,603	2.97%
11. Premier Oil 6.5% 31/05/21	510,000	503,652	433,041	2.92%
12. Iceland Bondco 6.75% 15/07/24	450,000	416,754	426,745	2.88%
13. Amalgamated Metal Corporation 5.4% cum pref £1	256,065	144,049	220,216	1.49%
6% cum pref £1	213,510	103,844	198,564	1.34%
		247,893	418,780	2.83%
14 National Westminster 9% non-cumulative irredeemable preference	300,000	217,752	417,300	2.82%
15 Real Estate Credit Investment Limited^
Ordinary NPV	328,000	551,745	408,360	2.76%

16 National Grid
Ordinary 11.395p^	40,900	328,643	404,174	2.73%
17 Strix Ordinary £1^	208,636	248,629	400,164	2.70%
18 Virgin Money UK 8% variable perpetual	450,000	415,497	390,861	2.64%
19 Persimmon Ordinary 10p^	16,935	449,861	387,134	2.61%
20. Polar Capital Ordinary 2.5p^	76,300	404,897	383,026	2.58%
		8,671,369	9,099,781	61.41%

^ Issues with unrestricted voting rights

The Group has a total of 55 portfolio investments holdings in 49 companies.
CORPORATE SUMMARY

The Company's purpose, values, strategy and culture

The Investment Company plc (the Company) is an investment trust company that has a premium listing on the London Stock Exchange its principal activity is portfolio investment. The Company's wholly owned subsidiaries are Abport Limited, an investment dealing company and New Centurion Trust Limited, an inactive investment company (together the Group).

The Company consists of the Board and its shareholders and has no employees or customers in the traditional sense. The culture of the Company is embodied in the Board of Directors whose values are trust and fairness.

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.

In seeking to deliver the Company's investment objectives for shareholders they seek to challenge constructively and in a respectful way with the Manager and other stakeholders.

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.

Performance

Details of the Company's performance during the financial year are provided in the Chairman's Statement above. The Investment Manager's Report above includes a review of developments during the year as well as information on investment activity within the portfolio.

Dividend Policy

Your Board had sought to pay a total dividend of 15p for the year ending 30 June 2020. Following three quarterly payments

of 3.75p, in August and November 2019 and in February 2020, the May 2020 payment was restricted to 1p.

Total Assets and Net Asset Value

The Group, had total net assets of £15,037,057 and a NAV of 315.11p per ordinary share at 30 June 2020 (2019:

£16,620,311 and 348.28p).

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.

The recent COVID-19 pandemic and related governmental responses to restrict the global spread of the virus have caused significant economic disruption. Political initiatives to mitigate the impact thereof have included a continued expansion of quantitative easing. These events are all being closely monitored by the Board and Investment Manager as are its potential impact on the Company. How BREXIT actually unfolds also continues to cause some uncertainty for markets.

These matters apart, the Company's principal risks remain unchanged since last year and are set out below. An explanation of how these have been mitigated or managed is also provided, where appropriate.

A summary of the risk management and internal control processes can be found in the Corporate Governance Statement in the Annual Report

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 macroeconomic environment impacts on liquidity and market prices.

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 NA Y

Regulatory risk: The Company operates in an evolving regulatory environment and faces a number of regulatory risks. A breach of sections 1158/1159 of the Corporation Tax Act 2010 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 using a 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 NA Y per ordinary share at 30 June 2020 was 315.11p per share (2019: 348.28p). The total return of the NA Y after

adding back dividends paid was -6.0%. This compares with a total return on the FTSE All-Share Index of -13.0%.

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

Over the year to 30 June 2020, the Company's share price moved from trading at a discount of 14.44 % to a discount

of 12.41%.

- Ongoing Charges Ratio

The Ongoing Charges Ratio for the year to 30 June 2020 amounted to 2.56% (2019: 2.44%).

Viability Statement

The Directors have reviewed the viability of the company as a vehicle for delivering investment performance to shareholders. Their analysis is based on the performance and progress of the Company and its investment portfolio, an assessment of current and future risks, the appropriateness of the investment strategy and review of the financial position of the company, and operating expenses over the next two years. In addition, consultation with key shareholders as to their perspectives is a key consideration.

The Directors also consider viability in the context of the Company being a going concern and it being appropriate that the accounts are prepared on such a basis. This is elaborated in Note 1 to the financial statements.

The Company is putting forward an ordinary resolution for the continuation of the Company at the forthcoming AGM, and your Directors recommend a vote in favour of continuing.

Future Prospects

The future of the Company is dependent upon the success of the investment strategy. The outlook for the Company is discussed in the Chairman's Statement above and the Investment Manager's report above. Further details are also provided in the above Viability Statement.

Board Diversity

When recruiting a new Director, the Board's policy is to appoint individuals on merit. The Board believes diversity is important in bringing an appropriate range of skills, knowledge and experience to the Board and gives that consideration when recruiting new Directors. As at 30 June 2020 there were three male Directors on the Board.

Section 172 Statement

Section 172 of the Companies Act 2006, requires Directors to take into consideration the interests of stakeholders in their decision making. The Directors continue to have regard to the interests of, and the impact of the firm's activities on, the various stakeholders in the firm and to consider what is most likely to promote the success of the Company for its members in the long term.

Whilst the importance of giving due consideration to our stakeholders is not new, S172 requires that the Board elaborates how it discharges its duties in this respect. We have categorised our key stakeholders into three groups. Where appropriate, each group is considered to include both current and potential stakeholders:

· Shareholders

· Investment manager

· Administrator and other service providers

Shareholders

Our shareholders are of course the owners of the Company and we need to act fairly as between members of the Company. The great majority of our shareholders have been so for a long period. We have a regular dialogue with our key shareholders - but all are welcome to be in communication. All shareholders are encouraged to attend our annual general meetings. (It is acknowledged that this will be difficult for 2020.)

Investment Manager

The Board recognizes the critical role of the Investment Manager in the success of the Company. The Investment Manager attends quarterly Board meetings, to participate in transparent discussions where constructive challenge is encouraged. The Board and Investment Manager communicate regularly outside of these meetings with the aim of maintaining an open and transparent relationship.

Administrator and other service providers

The Board seeks to maintain constructive liaison with its service providers so as to optimize the way on why the Company's

needs are met.

The Company does not have any employees and, as a result, the Board does not consider it necessary to establish means for employee engagement with the Board as required by the latest version of the UK Corporate Governance Code.

Environmental, Human Rights, Employee, Social and Community Issues

The Board consists entirely of non-executive Directors and during the year the Company had no employees. Day-to-day management of the portfolio 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 commercial evaluation of investee companies.

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

On behalf of the Board

I. R. Dighé

Chairman

6 October 2020

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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 Group's position and performance, business model and strategy.

On behalf of the Board

I. R. Dighé

Chairman

6 October 2020

CONSOLIDATED INCOME STATEMENT

For the year ended 30 June 2020

Year to 30 June 2020  Year ended 30 June 2019

Notes  Revenue  Capital  Total  Revenue  Capital  Total

		£	£	£	£	£	£
Losses on investments at fair value through profit or loss	11	-	(1,533,978)	(1,533,978)	-	(597,122)	(597,122)
Exchange gain/(losses) on capital items		-	45	45	-	(137)	(137)
Investment income	2	960,982	-	960,982	1,154,271	-	1,154,271
Investment management fee	3	(121,165)	-	(121,165)	(98,697)	-	(98,697)
Other expenses	4	(303,859)	(703)	(304,562)	(301,825)	(646)	(302,471)
Return before taxation		535,958	(1,534,636)	(998,678)	753,749	(597,905)	155,844
Taxation	5	-	-	-	(1,113)	-	(1,113)
Total income/(loss) after taxation		535,958	(1,534,636)	(998,678)	752,636	(597,905)	154,731
		Revenue	Capital	Total	Revenue	Capital	Total
		p	p	p	p	p	p
Return on total income after taxation per 50p ordinary share - basic & diluted	6	11.23	(32.15)	(20.92)	15.77	(12.53)	3.24

The total column of this statement is the Consolidated Income Statement 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.

The Company did not have any income or expenses that was not included in total income for the year. Accordingly, total income is also total comprehensive income for the year, as defined by IAS 1 (revised) and no separate Statement of Comprehensive Income has been presented.

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2020

	Issued ordinary share capital £	Share premium £	Capital redemption reserve £	Revaluation  Capital   reserve  reserve   £ £	Revenue reserve £	Total £
Balance at 1 July 2019	2,386,025	4,453,903	2,408,820	-  8,629,630	(1,258,067)	16,620,311
Total income
Net return for the year	-	-	-	-  (1,534,636)	535,958	(998,678)
Transactions with shareholders recorded directly to equity
Ordinary dividends paid	-	-	-	-  -	(584,576)	(584,576)
Balance at 30 June 2020	2,386,025	4,453,903	2,408,820	-  7,094,994	(1,306,685)	15,037,057
Balance at 1 July 2018	2,386,025	4,453,903	2,408,820	1,917,418  7,310,117	(1,142,190)	17,334,093
Transition to IFRS 9	-	-	-	(1,917,418)  1,917,418	-	-
Total income
Net return for the year	-	-	-	-  (597,905)	752,636	154,731
Transactions with shareholders recorded directly to equity

Ordinary dividends paid  -  -  -  -  -  (868,513) (868,513)

Balance at 30 June 2019  2,386,025 4,453,903  2,408,820  -  8,629,630 (1,258,067) 16,620,311

COMPANY STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2020

	Issued ordinary share capital £	Issued preference share capital £	Share premium £	Capital redemption reserve £	Revaluation  Capital   reserve  reserve   £ £	Revenue reserve £	Total £
Balance at 1 July 2019	2,386,025	858,783	4,453,903	2,408,820	-  6,084,192	1,223,515	17,415,238
Total income
Net return for the year	-	-	-	-	-  (1,534,824)	546,549	(988,275)
Transactions with shareholders recorded directly to equity
Ordinary dividends paid	-	-	-	-	-  -	(584,576)	(584,576)
Preference share dividends paid	-	-	-	-	-  -	(172)	(172)
Balance at 30 June 2020	2,386,025	858,783	4,453,903	2,408,820	-  4,549,368	1,185,316	15,842,215
Balance at 1 July 2018	2,386,025	858,783	4,453,903	2,408,820	1,923,762  4,758,355	1,327,945	18,117,593
Transition to IFRS 9	-	-	-	- (1,923,762)  1,923,762		-	-
Total income
Net return for the year	-	-	-	-	-  (597,925)	764,255	166,330
Transactions with shareholders recorded directly to equity
Ordinary dividends paid	-	-	-	-	-  -	(868,513)	(868,513)
Preference share dividends paid	-	-	-	-	-  -	(172)	(172)
Balance at 30 June 2019	2,386,025	858,783	4,453,903	2,408,820	-  6,084,192	1,223,515	17,415,238

CONSOLIDATED BALANCE SHEET

As at 30 June 2020

		Note	Group 2020 £	Group 2019 £
Non-current assets
Investments held at fair value through profit or loss		11	14,818,360	15,777,113
Current assets
Trade and other receivables		14	87,716	192,958
Cash and cash equivalents			265,052	785,703
			352,768	978,661
Current liabilities
Trade and other payables		15	(134,071)	(135,463)
			(134,071)	(135,463)
Net current assets			218,697	843,198
Net assets			15,037,057	16,620,311
Capital and reserves
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
Capital reserve			7,094,994	8,629,630
Revenue reserve			(1,306,685)	(1,258,067)
Shareholders' funds	10		15,037,057	16,620,311
NAV per 50p ordinary share			315.11p	348.28p

These financial statements were approved by the Board on 6 October 2020 and were signed on its behalf by:

I. R. Dighé
Chairman

Company Number: 4205

COMPANY BALANCE SHEET

As at 30 June 2020

	Note	Company 2020 £	Company 2019 £
Non-current assets
Investments held at fair value through profit or loss	11	14,817,179	15,775,016
Investment in subsidiaries	12	862,656	862,656
		15,679,835	16,637,672
Current assets
Trade and other receivables	14	124,631	218,353
Cash and cash equivalents		263,948	785,703
		388,579	1,004,056
Current liabilities
Trade and other payables	15	(226,199)	(226,490)
		(226,199)	(226,490)
Net current assets		162,380	777,566
Net assets		15,842,215	17,415,238
Capital and reserves
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
Capital reserve		4,549,368	6,084,192

Revenue reserve  1,185,316  1,223,515

Shareholders' funds  15,842,215  17,415,238

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 loss after tax of £988,275 (2019: profit of £166,330).

These financial statements were approved by the Board on 6 October 2020 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 2020

Cash flows from operating activities	Note	Group   Year to  Year to   30 June 2020  30 June 2019   £ £		Company   Year to  Year to 30 June 2020  30 June 2019   £ £
Income received from investments		1,067,425	1,203,692	1,067,425	1,203,692
Interest received		15	-	15	-
Sundry income		-	-	-	-
Investment management fees paid		(122,170)	(95,795)	(122,170)	(95,795)
Cash paid to and on behalf of employees		-	(1,167)	-	(1,167)
Other cash payments		(306,165)	(263,981)	(294,645)	(259,075)
Net cash inflow from operating activities		639,105	842,749	650,625	847,655
Cash flows from financing activities
Dividends paid on ordinary shares	7	(584,576)	(868,513)	(584,576)	(868,513)
Net cash outflow from financing activities		(584,576)	(868,513)	(584,576)	(868,513)
Cash flows from investing activities
Purchase of investments	11	(6,703,387)	(6,497,746)	(6,703,387)	(6,497,746)
Sale of investments	11	6,128,162	6,465,917	6,127,058	6,465,917
Loans to subsidiaries		-	-	(11,520)	(4,906)
Net cash outflow from investing activities		(575,225)	(31,829)	(587,849)	(36,735)
Net decrease in cash and cash equivalents		(520,696)	(57,593)	(521,800)	(57,593)
Reconciliation of net cash flow to movement in net cash
Decrease in cash		(520,696)	(57,593)	(521,800)	(57,593)
Exchange rate movements		45	(137)	45	(137)
Decrease in net cash		(520,651)	(57,730)	(521,755)	(57,730)
Net cash at start of period		785,703	843,433	785,703	843,433
Net cash at end of period		265,052	785,703	263,948	785,703

Analysis of net cash

Cash and cash equivalents  265,052  785,703  263,948  785,703

265,052  785,703  263,948  785,703

NOTES TO THE FINANCIAL STATEMENTS

At 30 June 2020

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 sections 1158/1159 of the Corporation Tax Act 2010. The Company's registered office is Hamilton Centre, Rodney Way, Chelmsford CM1 3BY.

The Group's consolidated financial statements for the year ended 30 June 2020, 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 October 2019 ("AIC SORP"), except to any extent where it is not consistent with the requirements of IFRS.

The revised SORP issued in October 2019 is applicable for accounting periods beginning on or after 1 January 2019. As a result, the presentations of gains and losses arising from disposals of investments and gains and losses on revaluation of investments have now been combined, as shown in note 11. The result of this change has no impact on the net asset value or total return for both the current year and prior year. No other accounting policies or disclosures have changed as a result of the revised SORP.

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 Directors have made an assessment of the Group's ability to continue as a going concern. This has included consideration of portfolio liquidity, the Group's financial position in respect of its cash flows and investment commitments (of which there are none of significance), the working arrangements of the Manager and key service providers, continued eligibility to be approved as an investment trust company and the impact of the Covid19 pandemic. In addition, 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.

The Directors are satisfied that the Group has the resources to continue in business for the foreseeable future being a period of at least 12 months from the date that these financial statements were approved. Therefore, the financial statements have been prepared on the going concern basis.

Basis of Consolidation

IFRS10 stipulates that subsidiaries of Investment Entities are not consolidated. The Investment Company meets all three characteristics of Investment Entity as described, however, it is envisaged that one of the subsidiaries will be a dealing subsidiary and, therefore consolidated financial statements are presented for the Group. 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 following policies were adopted during the financial year.

International Accounting Standards  Effective date

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

International Financial Reporting Standards

Annual improvements to IFRS 2015-2017 Cycle  1 January 2019

IFRS 16  Leases  1 January 2019

The adoption of these policies has had no material impact on the Group or the Company.

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 3  Business Combinations (amendment)  1 January 2020**

Annual Improvements to IFRS Standards 2018-2020  1 January 2022**

IAS 1 and IAS 8 Amendments Definition of material  1 January 2020 IAS1 (Amendments) Classification of Liabilities as Current or Non-Current 1 January 2022**

*Years beginning on or after

**Not yet endorsed for use in the EU

The Directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Group or Company 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 Consolidated Income Statement 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 £4,166,493 of the portfolio comprises fixed interest stocks which are thinly traded; such stocks are primarily 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 Directors 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 Group 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 or previous year.

Investments

As 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, Investments are classified at fair value through profit or loss on initial recognition in accordance with IFRS 9. 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 quoted investments this is deemed to be bid market prices or closing prices.

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

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.

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 at bank 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.

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 disclosed separately in the Income Statement.

Dividend income will only be recognised when there is reasonable certainty that the issuer has the ability to make the return.

Expenses and Finance Costs

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

Taxation

The tax expense represents the sum of the tax currently payable. The tax payable is based on the taxable profit for the

year. Taxable profit differs from net profit as reported in the Consolidated Income Statement because it excludes items

that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates applicable at the balance sheet date.

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 nominal value of the shares bought back and cancelled. This reserve is not distributable.

Capital Reserve

Capital expenses, gains or losses on realisation of investments held at fair value through profit or loss and changes in

fair value of investments are transferred to the capital reserves.

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 differences 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 net revenue for the year is transferred to the revenue reserve and dividends paid are deducted from the revenue

reserve.

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

2. Income Income from investments:	Year ended 30 June 2020 £	Year ended 30 June 2019 £
UK dividends	614,753	848,003
Unfranked dividend income	23,727	46,335
UK fixed interest	322,487	259,933
	960,967	1,154,271
Other income:
Bank deposit interest	15	-
Total income	960,982	1,154,271
3. Investment Management Fee
	Year ended	Year ended
	30 June 2020	30 June 2019
	£	£
Investment Management Fee	121,165	98,697

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. For these purposes, the NAV shall be calculated as at the last business day of each month.

At 30 June 2020 an amount of £9,397 (2019: £10,402) was outstanding and due to the Investment Manager.

4. Other Expenses

	Year ended  Year ended   30 June 2020  30 June 2019   £ £
Administration and secretarial services	81,000	81,000
Auditors' remuneration for:
- audit of the Group's financial statements	35,000	35,000
Directors' remuneration (see note 18)	51,250	45,319
Staff costs	-	1,167
Pension costs	-	233
Other expenses	136,609	139,106
Revenue	303,859	301,825
Capital charges	703	646
Total	304,562	302,471
The audit of the Group's financial statements includes the cost of	the audit of Abport Limited of £3,000 (2019:	£2,000)
and New Centurion Trust Limited £3,000 (2019: £2,000), which are charged to the subsidiaries.

In conjunction with the resignation of former directors in the prior year, a secretary also retired with the aggregate remuneration consisting of:

Year ended  Year ended

30 June 2020  30 June 2019

£ £

Staff costs

Wages and salaries  -  1,167

Social security costs  -  -

Total  -  1,167

Pension costs

Pension payments  -  233

Total  -  233

There were no employees as at 30 June 2020 or 2019.

The Company does not have a provision (2019: same) in respect of future pension payments. There are no pension liabilities due to past employees.

5. Taxation

Year ended 30 June 2020  Year ended 30 June 2019

Revenue  Capital  Total  Revenue  Capital  Total

£ £ £ £ £ £

Current Taxation

Overseas taxation suffered  -  -  -  1,113  -  1,113

-  -  -  1,113  -  1,113

The current tax charge for the year is lower than (2019: lower than) the standard rate of corporation tax in the UK of 19% to 30 June 2020 and 30 June 2019. The differences are explained below:

	Revenue £	Year ended 30 June 2020   Capital  Total   £ £		Revenue £	Year ended 30 June 2019   Capital  Total   £ £
Return on ordinary activities	535,958	(1,534,636)	(998,678)	753,749	(597,905)	155,844
Theoretical tax at UK Corporation tax rate of 19% (2019: 19%)	101,832	(291,581)	(189,749)	143,212	(113,602)	29,610
Effects of:
UK dividends that are not taxable	(116,803)	-	(116,803)	(161,121)	-	(161,121)
Overseas dividends that are not taxable	-	-	-	(4,422)	-	(4,422)
Non taxable investment gains	-	291,581	291,581	-	113,602	113,602
Overseas taxation suffered	-	-	-	1,113	-	1,113
Unrelieved expenses	14,971	-	14,971	22,331	-	22,331
Actual current tax charged to the revenue account	-	-	-	1,113	-	1,113

Factors that may affect future tax charges

The Company has excess management expenses of £1,777,975 (2019: £1,699,180). 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 2020  Year ended 30 June 2019

Revenue  Capital  Total  Revenue  Capital  Total

Return after taxation

Return attributable to ordinary

shareholders (£)  535,958  (1,534,636)  (998,678)  752,636  (597,905)  154,731

Weighted average number of
ordinary shares in issue (excluding

shares held in Treasury)  -  -  4,772,049  4,772,049
Return per ordinary share (pence)

basic and diluted  11.23p  (32.15)p  (20.92)p  15.77p  (12.53)p  3.24p

7. Dividends per Ordinary Share

Year ended  Year ended

30 June 2020  30 June 2019

£ £

Declared and paid per Ordinary Share
In respect of the prior period:

Fourth interim dividend 3.75p (2019: 5.70p)  178,952  272,007
In respect of the year under review:

First interim 3.75p (2019: 5.00p)  178,952  238,602

Second interim dividend 3.75p (2019: 3.75p)  178,952  178,952

Third interim dividend 1.00p (2019: 3.75p)  47,720  178,952

584,576  868,513

Declared per Ordinary Share

Dividend declared in respect of the year under review:

Fourth interim dividend 1.00p (2019: 3.75p)  47,720  178,952

8. Ordinary Share Capital

Group and Company  Group and Company

2020  2019

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 (2019: none).

9. Issued Preference Share Capital

Group  Company

2020  2019  2020  2019

£ £ £ £

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:

2020  2019

	£	£
Net assets	15,037,057	16,620,311
Ordinary shares in issue	4,772,049	4,772,049
NAV per ordinary share	315.11p	348.28p

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

Investments held at fair value through profit or loss		Group		Company
	2020	2019	2020	2019
	£	£	£	£
Opening book cost	15,211,950	14,913,072	15,203,979	14,883,235
Opening net investment holding gains	565,163	1,429,334	571,037	1,457,094
Total investments designated as held at fair value	15,777,113	16,342,406	15,775,016	16,340,329
Movements in the year:
Purchases at cost	6,703,387	6,497,746	6,703,387	6,497,746
Sales - proceeds	(6,128,162)	(6,465,917)	(6,127,058)	(6,465,917)
Losses on investments * ^	(1,533,978)	(597,122)	(1,534,166)	(597,142)
Closing valuation	14,818,360	15,777,113	14,817,179	15,775,016
Closing book cost	16,538,418	15,211,950	16,571,760	15,203,979
Closing net investment holding (losses)/gains	(1,720,058)	565,163	(1,754,581)	571,037
	14,818,360	15,777,113	14,817,179	15,775,016

*The Group received £6,128,162 (2019: £6,465,917) from investments sold in the year. The book cost of these investments when they were purchased was £5,376,919 (2019: £6,198,868). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of investments.

^The Company received £6,127,058 (2019: £6,465,917) from investments sold in the year. The book cost of these investments when they were purchased was £5,335,606 (2019: £6,177,002). These investments have been revalued over time and until they were sold any unrealised gains / losses were included in the fair value of investments.

	2020 £	Group Year ended 2019 £		2020 £	Company Year ended 2019 £
Transaction costs
Costs on acquisitions	30,858		30,438	30,858	30,438
Costs on disposals	7,018		9,165	7,016	9,165
	37,876		39,603	37,874	39,603
		Group			Company
	2020		2019	2020	2019
	£		£	£	£
Analysis of capital gains
Gains on sale of investments	751,243		267,049	791,452	288,915

Movement in investment holding gains  (2,285,221)  (864,171)  (2,325,618)  (886,057)

(1,533,978)  (597,122)  (1,534,166)  (597,142)

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 by the level in the fair value hierarchy into which the fair value measurement is categorised.

At 30 June 2020	Level 1	Level 2	Level 3	Total
	£	£	£	£
Financial assets at fair value through profit or loss
Equities	8,724,184	257,617	1,670,066	10,651,867
Fixed Interest bearing securities	3,806,493	-	360,000	4,166,493
	12,530,677	257,617	2,030,066	14,818,360
At 30 June 2019	Level 1	Level 2	Level 3	Total
	£	£	£	£
Financial assets at fair value through profit or loss
Equities	8,803,036	300,353	2,250,165	11,353,554
Fixed Interest bearing securities	3,721,476	-	702,083	4,423,559
	12,524,512	300,353	2,952,248	15,777,113

There were no transfers between levels 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

Investments classified within level 2 are valued by reference to quoted prices but not being actively traded have been

treated as level 2.

Valuation process for Level 3 investments

Investments classified within Level 3 comprise two groups:

a)  Those valued by reference to an indicative price list of an independent third party broker, but the said price list is not sufficiently definitive or observable/publicly available, so as to meet the criteria for a level 2 categorisation, and in addition:

b)  There is one genuinely unquoted stock which has been valued by the directors using recognised valuation methodologies drawing on reported results and commentary on current trading. The valuation of this is regularly

reviewed by the Directors. Given this, having no independent source of pricing, it has been assessed by the Directors as having the following value attribution: Intercede Group 8% Secured Convertible Loan notes: discounted par value.

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 £228,768 (2019: £325,260).

The table below presents the movement in Level 3 investments that were accounted for at fair value for the year ending 30 June 2020.

Year ended 30 June 2020  Financial

assets at fair value through

Group and Company  profit or loss

£

Opening balance  2,952,248

Losses on investments ^^  44,542

Sales proceeds  (966,724)

Closing balance  2,030,066

^^The Group & Company received £966,724 from investments sold in the year. The book cost of these investments when they were purchased was £752,980. These investments have been revalued over time and until they were sold any unrealised gains / losses were included in the fair value of investments.

12. Investment in Subsidiaries

Company

2020  2019

£ £

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 2020, 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 Hamilton Centre, Rodney Way, Chelmsford, Essex CM1 3BY

13.  Substantial Share Interests

The Company has no notified interests in 3% or more of the voting rights of any companies at 30 June 2020.

14.  Trade and Other Receivables

		Group		Company
	2020	2019	2020	2019
	£	£	£	£
Amounts due from subsidiaries	-	-	36,915	25,395
Accrued income	26,462	35,577	26,462	35,577

Dividends receivable	49,461	146,804	49,461	146,804
Taxation recoverable	9,084	6,064	9,084	6,064
Other receivables	2,709	4,513	2,709	4,513
	87,716	192,958	124,631	218,353

The carrying amount of trade receivables approximates to their fair value. Trade and other receivables are not past due at 30 June 2020.

15.  Trade and Other Payables

		Group		Company
	2020	2019	2020	2019
	£	£	£	£
Preference dividends payable to the Company's wholly owned subsidiary	-	-	1,205	1,033
Amount due to subsidiaries	-	-	101,533	101,533
Investment management fees	9,397	10,402	9,397	10,402
Other trade payables and accruals	124,674	125,061	114,064	113,522
	134,071	135,463	226,199	226,490

16.  Financial Instruments and Associated Risks

The Groups financial instruments comprise securities, cash balances, receivables and payables. They are classified in the following categories:

· those to be measured subsequently at fair value through profit or loss; and

· those to be measured at amortised cost.

The financial assets held at amortised cost include trade and other receivables, cash and cash equivalents.

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.

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 Group'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 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 £14,818,360 (2019: £15,777,113). The direct impact of a 5% movement in the value of investments amounts to £740,918 (2019: £788,856). 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.

	2020	2019
	£	£
Securities at fair value through profit or loss	14,818,360	15,777,113
Total investment	14,818,360	15,777,113

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
	2020	2020	2020	2019	2019	2019
	£	£	£	£	£	£
Investments at fair value through profit or loss	4,166,493	10,650,686	14,817,179	3,957,341	11,817,675	15,775,016
Investment in Subsidiary	-	1,181	1,181	-	2,097	2,097
Other receivables*	-	85,007	85,007	-	188,445	188,445
Cash at bank	265,052	-	265,052	785,703	-	785,703
Current liabilities	-	(134,071)	(134,071)	-	(135,463)	(135,463)
	4,431,545	10,602,803	15,034,398	4,743,044	11,872,754	16,615,798

* The above table does not include prepayments of £2,709 (2019: £4,513).

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:

	2020	2019
	£	£
Fixed interest bearing securities	3,225	2,599
Bank interest	-	-
	3,225	2,599

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 £134,071 (2019: £135,463) is 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 2020 was £352,768 (2019: £978,661). The calculation is based on the Group's credit risk exposure as at 30 June 2020 and this may not be representative for the whole year.

The Group's quoted investments are held on its behalf by Fiske plc 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 Group's performance is measured in sterling, a proportion of the Group'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 £1,181 (2019: £1,285) of investments held for sale denominated in Australian Dollars. This is not material to the Group.

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 (2019: none).

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 the Group 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 Group had no debt during the years to June 2020 or 2019.

17. Related Party Transactions

Details of the relationship between the Company/Group and the Investment Manager, Fiske plc are disclosed in the

Strategic Report pages 3 to 13 of the Financial Statements.

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 £121,165 (2019: £98,697). In addition, £8,183 was paid to Fiske plc pursuant to a custody agreement (2019: £6,141).

As at the year end, the following amounts were outstanding payable to Fiske plc: £20,622 (2019: £13,670).

Key Management Personnel

The Board consists of three non-executive Directors all of whom, with the exception of Mr Perrin who is a non-executive Director of Fiske plc, are considered to be independent by the Board. For the year ended 30 June 2020 all Directors including, the Chairman, received an annual fee of £15,000 between 1 July 2019 and 31 January 2020. From 1 February 2020 and going forward they have received a basic fee rate of £15,000 p.a. and fees for additional services at an annualized rate of £5,000 making a total of £20,000 p.a. The Directors did not receive any other form of renumeration.

Controlling Party

The Director's consider that there is no controlling party.

At the year end, there were no outstanding fees payable to Directors (2019: £nil).

Expenses outstanding to Directors at the year end consists of £nil (2019: £nil). No interest is charged on the balance and consists of reimbursement of expenses incurred.

There were no other related party transactions during the current or previous year.  

FURTHER INFORMATION

The Annual General Meeting of the Company will be held on 4 November 2020 at 11.00am at IFC Advisory, Birchin Court, Birchin Lane, London EC3V 9DU.

In light of the current UK Government measures around the COVID-19 virus and the desire of the Company to protect the health and safety of Shareholders, you will understand that the Annual General Meeting will be convened with the minimum quorum of Shareholders present in order to conduct the business of the meeting.

The only attendees who will be permitted entry to the meeting will be those who will need to be present to form the quorum to allow the business to be conducted.

Accordingly, Shareholders will be prevented from attending the Annual General Meeting in person and are instead strongly encouraged to complete and return the enclosed Form of Proxy in accordance with the instructions printed thereon. Given the current restrictions on attendance, Shareholders are strongly encouraged to appoint the Chairman of the Annual General Meeting to act as their proxy. Completed Forms of Proxy should be returned to the Company's Registrar, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, as soon as possible, and in any case so as to be received by the Registrar by not later than 11.00a.m. on 2 November 2020.

Shareholders wishing to raise any questions at the Annual General Meeting should do so by email to [e-mail] so as to be received no later than 6.30 p.m. on 2 November 2020.

A copy of the Annual Report will submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. This document will also be available on the Company's website at https://www.maitlandgroup.com/investment-trusts/the-investment-company-plc/.

Maitland Administration Services Limited

6 October 2020 

END

 

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