Final Results

15 December 2021

Finsbury Growth & Income Trust PLC

(the “Company”)

This announcement contains regulated information

Annual Financial Report for the year ended 30 September 2021

STRATEGIC REPORT / COMPANY SUMMARY

The Company is an investment. Its shares are listed on the premium segment of the Official List and traded on the main market of the London Stock Exchange. The Company is a member of the Association of Investment Companies (“AIC”).

OBJECTIVES AND PERFORMANCE MEASUREMENT

The Company aims to achieve capital and income growth and to provide shareholders with a total return in excess of that of the FTSE All-Share Index (the Company’s benchmark).

The Company’s net assets as at 30 September 2021 were £2,064.7 million (2020: £1,842.5 million) and the market capitalisation was £1,970.9 million (2020: £1,829.1 million).

DIVIDENDS

A first interim dividend of 8.0p per share was paid on 14 May 2021 to shareholders registered at the close of business on 6 April 2021. The associated ex-dividend date was 1 April 2021.

A second interim dividend of 9.1p per share was paid on 12 November 2021 to shareholders registered at close of business on 8 October 2021. The associated ex-dividend date was 7 October 2021.

The total dividend declared for the year was therefore 17.1p per share. An increase of 3% versus last year.

STRATEGIC REPORT / COMPANY PERFORMANCE

FIVE YEAR PERFORMANCE SUMMARY

KEY FACTS

917.7p Net asset value per share† 2020: 846.2p (change: +8.4%)	10.6% Net asset value per share total return1, ^ 2020: (7.7%)	6.3% Share price total return1, ^ 2020: (9.0%)
876.0p Share price 2020: 840.0p (change: +4.3%)	£2.065bn Shareholders’ funds† 2020: £1.843bn (change: +12.1%)	224,991,303 Number of shares in issue 2020: 217,751,303 (change: +3.3%)
4.5% Discount of share price to net asset value per share^ 2020: 0.7%	0.62% Ongoing charges^ 2020: 0.64%	0.3% Gearing^ 2020: 0.5%
88.0p Total return per share† 2020: (67.1p)
86.0% Active share^, * 2020: 87.1%
17.1p Total dividends per share for the year 2020: 16.6p (change: +3.0%)

^ Alternative Performance Measure (see glossary)

† UK GAAP Measure

1 Source – Morningstar

2 Source – FTSE International Limited (“FTSE”) © FTSE 2021* (see glossary)

	30 SEP 2017	30 SEP 2018	30 SEP 2019	30 SEP 2020	30 SEP 2021
Share price	736.5p	818.0p	942.0p	840.0p	876.0p
Share price total return* ^	+14.2%	+13.2%	+17.4%	(9.0%)	+6.3%
Net asset value per share†	732.8p	812.8p	935.6p	846.2p	917.7p
Net asset value per share total return* ^	+13.7%	+13.1%	+17.4%	(7.7%)	+10.6%
FTSE All-Share Index total return** #	+11.9%	+5.9%	+2.7%	(16.6%)	+27.9%
Total return/(loss) per share†	89.6p	93.6p	143.8p	(67.1p)	88.0p
Dividends per share	14.2p	15.3p	16.6p	16.6p	17.1p

* Source: Morningstar

** Source: FTSE International Limited (“FTSE”) © FTSE, 2021

^# See glossary of terms and alternative performance measures)

^ Alternative Performance Measure (“APM”) (see glossary)

^†  UK GAAP Measure

The Company was incorporated in Scotland on 15 January 1926. Lindsell Train was appointed in December 2000. The total return of the Company’s share price over the ten years to 30 September 2021 has been 248.1%, equivalent to a compound annual return of 13.3%¹. This compares to a total return of 119.2%* from the Company’s benchmark, equivalent to a compound annual return of 8.2%*.

* Source: Morningstar, FTSE International Limited (“FTSE”) © FTSE2021

STRATEGIC REPORT / KEY PERFORMANCE INDICATORS

The Board reviews the performance of the portfolio in detail and hears the views of the Portfolio Manager at each meeting.

Information on the Company’s performance is provided in the Chairman’s Statement and the Portfolio Manager’s Review.

This performance is assessed against the following KPIs.

The Board has adjusted one of the Company’s KPIs from Revenue Return per Share to Total Return per Share as it is believed to be a more appropriate measure of performance.

All other KPIs remain unchanged from last year.

+10.6%

NET ASSET VALUE TOTAL RETURN^{^*}

This reflects the growth in the Company’s net asset value including the impact of reinvested dividends.

During the year under review the Company’s net asset value per share total return was 10.6%
(2020: -7.7%).

Over five years, the net asset total return was 54.2%, compared with 29.8% for the Company’s benchmark.

88.0p

TOTAL RETURN/(LOSS) PER SHARE+

The total return per share for the year was 88.0 pence per share (2020: -67.1 pence per share).

Over five years, the Company earned a total of 347.9p per share.

+6.3%

SHARE PRICE TOTAL RETURN^*

This reflects the growth in the value of the Company’s share price including the impact of reinvested dividends.

During the year under review the Company’s share price total return was 6.3% (2020: -9.0%).

Over five years, the share price total return was 47.1%.

(21.6%)

RELATIVE PERFORMANCE TO BENCHMARK AND PEER GROUP

The Company’s benchmark is the FTSE All-Share Index (total return) which delivered a return of 27.9% (2020: -16.6%) over the year. This compares to the Company’s share price total return of 6.3% (2020: -9.0%).

Over five years the share price total return was 47.1% compared to the Company’s benchmark which delivered a return of 29.8%.

The Board also monitors the Company’s net asset value per share return against its AIC peer group^. As at 30 September 2021 the Company’s ranking against its peer group of UK growth and income sector investment trusts was:

Period	Rank out of 25
1 yr	21
3 yr	9
5 yr	2
10 yr	3

(4.5%)

SHARE PRICE (DISCOUNT)/PREMIUM TO NET ASSET VALUE PER SHARE^{^}

The Board reviews the level of (discount)/premium to net asset value per share at every Board meeting and consideration is given to ways in which the share price performance may be enhanced, including the effectiveness of marketing, share issuance and buy-backs, where appropriate. Details of how the Company’s (discount)/premium control mechanism works can be found in the Trust characteristics section on the Company’s website.

Demand for the Company’s shares led to the issue of a total of 7,240,000 new shares during the year (2020: 16,939,591) at a premium to the net asset value per share at the time of issue. At 30 September 2021 the Company’s share price stood at a 4.5% discount to the Company’s net asset value per share (2020: 0.7% discount).

The Company did not buy any shares back during the year (2020: 505,409).

Since the year end the Company has purchased 728,819 shares into treasury.

^ Alternative Performance Measure (see glossary)

+ UK GAAP Measure

* Source: morningstar

STRATEGIC REPORT / CHAIRMAN’S STATEMENT

“Despite the recent underperformance, under Nick Train’s management the Company has performed strongly against its benchmark in 16 of the 20 years”

PERFORMANCE

The Company’s net asset value per share total return^{^} for the year was 10.6% (2020: -7.7%) and the share price total return^{^} was 6.3% (2020: -9.0%). However, it is disappointing to report that the Company significantly underperformed its benchmark over this period - the FTSE All-Share Index, measured on a total return basis, rose by 27.9% over the same period (2020: -16.6%).

As I reported within my interim Chairman’s Statement, our Portfolio Manager’s investment approach involves building a concentrated portfolio of companies that have strong brands and/or powerful market franchises. As the Portfolio Manager points out in his report, 17 stocks account for some 98% of the portfolio. Inevitably, this concentrated approach results in a very different portfolio when compared with the constituents of the Company’s benchmark, and demonstrates a high level of active management. The extent to which a portfolio differs from the benchmark can be quantified and expressed as a percentage (“Active Share”). At 30 September 2021, the Company’s Active Share versus the Company benchmark was 86.0%.

Such an uncorrelated portfolio will inevitably perform very differently from its benchmark (positively or negatively) over different periods of time. We believe that over time our investment approach, selecting companies with durable business models that generate consistently higher returns, will ultimately be reflected in the share prices of the companies we own and hence in the performance of the Company. However, there will be periods, such as now, when the market does not reward this approach.

Despite the recent underperformance, under Nick Train’s management the Company has performed strongly against its benchmark in 16 of the 20 years and has continued to outperform over the last three, five and ten years. The return over the year under review reflects relative underperformance in a period in which the market has rewarded companies with prospects for rapid recovery from the effects of the pandemic as opposed to those businesses which we own: businesses that offer consistent growth.

SHARE CAPITAL

Demand for the Company’s shares led to the issue of a total of 7,240,000 new shares during the year, resulting in net proceeds received by the Company of £62.1 million which were invested in line with the Company’s investment objective. These shares were issued from the shareholder authority which was renewed at the Company’s last Annual General Meeting.

Renewal of the Company’s share issuance authority will be proposed as usual at the Company’s Annual General Meeting.

The Board keeps the Company’s discount under close review and is committed to buying back its own shares at or near the 5% level. While share buy-backs will not necessarily prevent the discount from widening beyond this level, the Board believes that buy-backs enhance the net asset value (“NAV”) per share for remaining shareholders, provide some additional liquidity and help to mitigate discount volatility which can damage shareholders returns. At the year end the discount was 4.5% and at the time of writing (at the close of the UK market on 13 December 2021), the discount was 4.7%. Since the year end the Company has bought back 728,819 shares into treasury at a cost of £6.5 million.

RETURN AND DIVIDEND

Your Board has declared two interim dividends for the year totalling 17.1 pence per share (2020: 16.6 pence).

The Income Statement shows a total gain of 88.0 pence per share (2020: a loss of 67.1 pence) consisting of a revenue return per share of 18.1 pence (2020: 16.5 pence) and a capital return per share of 69.9 pence (2020: loss of 83.6 pence).

In order for shareholders to receive dividend payments on a timely and cost effective basis, your Board continues to elect to distribute the Company’s income to shareholders by means of two interim dividends rather than wait several months to secure shareholder approval at the Annual General Meeting (“AGM”) to pay a final dividend. The dividend policy will again be proposed for approval at the forthcoming AGM.

ONGOING COSTS

The Board maintains a very conservative view on how it manages ongoing costs as they can have a significant impact on long-term returns to investors. The Company’s ongoing charges^{^} figure reduced from 0.64% to 0.62% over the year to 30 September 2021.

This measure takes account of costs expected to be regularly incurred and while it does not include those incurred in buying and selling investments, the low level of portfolio turnover ensures these additional costs remain immaterial. The Board remains focused on delivering value for money for Shareholders.

BORROWING

As at 30 September 2021 the Company entered the final year of its three-year secured fixed term loan from Scotiabank Europe PLC, which consists of a committed revolving credit facility of £50 million together with an additional £50 million facility. As at 30 September 2021 a total of £36.7 million was drawn down under this facility (30 September 2020: £36.7 million).

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (‘ESG’) MATTERS

Our investment approach, which sees us take significant positions in investee companies with long-term sustainable business models, is conducive to the integration of ESG considerations. This applies to both the due diligence and the research carried out in advance of investment as well as the continuing engagement with senior management of the companies we own.

AMENDMENTS TO THE COMPANY’S ARTICLES OF ASSOCIATION

A resolution is to be proposed to Shareholders at the Company’s AGM to adopt new Articles of Association. The new provisions of the Company’s Articles of Association will provide the Board with the flexibility to hold a combination of virtual and in-person shareholder meetings in the future, should the need arise. The Board is committed to holding in-person meetings provided that restrictions are not in place and meetings can be held safely. Certain other technical amendments have been made so that the Articles of Association conform to other applicable legislation and current best practice. In particular, changes have been made to provisions designed to enable the Company to comply with its obligations under various tax reporting requirements. Further details of the changes are set out in the Annual Report.

ANNUAL GENERAL MEETING

The AGM of the Company this year will again be held at Guildhall, City of London EC2V 7HH (please use the Basinghall Street Entrance) on Wednesday, 9 February 2022 at 12 noon, and we hope as many Shareholders as possible will attend. This will be an opportunity to meet the Board and to receive a presentation from our Portfolio Manager.

At the time of writing, it is hoped that it will be possible to hold the AGM in its normal format at the venue set out above. The Board will keep the impact of the COVID-19 pandemic under review and will make necessary changes to the arrangements for the AGM should circumstances dictate. Any changes to the AGM will be communicated on the Company’s website which Shareholders are encouraged to consult for any final arrangements.

The Board strongly encourages all Shareholders to exercise their votes in respect of the meeting in advance. Shareholders who hold their shares directly can vote online by visiting www.signalshares.com and following instructions. Shareholders who hold their shares on retail platforms can find details of how to vote in the Notice of Meeting. Shareholders who require a hard copy form of proxy may request one from the registrar, Link Group. Voting by proxy will ensure that your votes are registered in the event that attendance at the AGM is not possible or restricted. If the meeting is postponed your votes will still be valid when the meeting is eventually held.

OUTLOOK

Your Board continues to support fully the Portfolio Manager’s strategy of investing in high quality companies that own both durable and cash generative brands. We firmly believe that the strategy will continue to deliver strong investment returns to shareholders over the longer term.

Simon Hayes

Chairman

14 December 2021

^{^} Alternative Performance Measure (see glossary)

STRATEGIC REPORT / INVESTMENT PORTFOLIO

PORTFOLIO SECTOR WEIGHTINGS 2021

Consumer Staples (‘CS’)	48.4%
Financials (‘F’)	24.5%
Consumer Discretionary (‘CD’)	18.2%
Technology (‘T’)	5.6%
Industrials (‘I’)	3.3%

Source: Frostrow Capital LLP

GEOGRAPHICAL ALLOCATION 2021

United Kingdom	82.3%
United States of America	8.1%
France	4.9%
Netherlands	4.7%

Source: Frostrow Capital LLP

INVESTMENTS AS AT 30 SEPTEMBER 2021

SECTOR	INVESTMENTS	FAIR VALUE 2020 £000	NET INVEST- MENTS £000	CAPITAL APPRECIATION/ (DEPRECIATION) £000	FAIR VALUE 2021 £000	% OF INVEST-MENTS	TOTAL RETURN £000	CONTRI- BUTION PER SHARE (PENCE)^
CS	Diageo	175,629	5,114	65,206	245,949	11.9	70,156	31.4
CD	RELX	172,188	13,001	45,227	230,416	11.1	50,336	22.5
F	London Stock Exchange	216,925	(3,307)	(34,047)	179,571	8.7	(32,203)	(14.4)
CS	Unilever	200,329	2,565	(32,561)	170,333	8.2	(26,244)	(11.7)
CS	Mondelez International1	172,731	–	(5,034)	167,697	8.1	(1,911)	(0.9)
F	Schroders+	125,666	–	41,624	167,290	8.1	47,197	21.1
CS	Burberry Group	121,026	4,115	20,594	145,735	7.0	24,001	10.8
T	Sage Group	118,286	486	(1,794)	116,978	5.6	1,068	0.5
F	Hargreaves Lansdown	118,565	1,053	(9,894)	109,724	5.3	(6,022)	(2.7)
CS	Remy Cointreau2	96,324	2,625	2,337	101,286	4.9	3,288	1.5
CS	Heineken3	87,877	3,263	6,140	97,280	4.7	7,280	3.3
I	Experian Group	23,209	42,518	3,277	69,004	3.3	3,824	1.7
CD	Daily Mail & General Trust (non-voting)	36,766	5,797	23,660	66,223	3.2	25,030	11.2
CS	Fever-Tree Drinks	32,215	11,104	91	43,410	2.1	349	0.2
CD	Manchester United1	25,373	210	7,100	32,683	1.6	7,398	3.3
F	Rathbone Brothers	21,341	340	6,600	28,281	1.4	7,628	3.4
CS	A.G. Barr	21,817	–	1,345	23,162	1.1	1,344	0.6
CD	Euromoney Institutional Investor	22,292	(7,941)	6,111	20,462	1.0	6,587	2.9
F	The Lindsell Train Investment Trust plc	11,300	–	3,050	14,350	0.7	3,550	1.6
CD	Pearson	25,713	(25,435)	10,164	10,442	0.5	10,994	4.9
	Young & Co’s Brewery (non-voting)	5,985	–	3,087	9,072	0.4	3,087	1.4
CS	PZ Cussons	8,608	–	(348)	8,260	0.4	(136)	(0.1)
F	Frostrow Capital LLP4 **	3,950	150	1,100	5,200	0.3	1,697	0.8
CD	Fuller Smith & Turner	3,780	–	1,190	4,970	0.2	1,190	0.5
CD	Celtic *	3,693	–	(205)	3,488	0.2	(198)	(0.1)
	Total Investments	1,851,588	55,658	164,020	2,071,266	100.0
	Total Contributions to Total Return						209,290	93.7
	Expenses and Finance Charges						(12,676)	(5.7)
	Return on Ordinary Activities after Taxation						196,614	88.0

^ Based on 223,371,358 shares, being the weighted average shares in issue during the year ended 30 September 2021.

+ Includes Schroders (non-voting) shares, fair value £10,866,000 (2020: £8,315,000)

* Includes Celtic 6% cumulative convertible preference shares, fair value £236,000 (2020: £246,000)

** Includes Frostrow Capital LLP AIFM Investment, fair value £900,000 (2020: £750,000)

¹ Listed in the United States

² Listed in France

³ Listed in Netherlands

⁴ Unquoted

STRATEGIC REPORT / PORTFOLIO MANAGER’S REVIEW

“Your portfolio is made up of strong businesses, with the potential to deliver both business growth and investment value for patient investors.”

After a 12-month period of disappointing NAV performance Shareholders will not be surprised to read that I have engaged in some navel-gazing. As always in such circumstances I come back to the companies to which we have committed your capital. I ask myself - how are the companies performing as businesses (which is not necessarily the same as how their share prices are performing)? And most important, as a team, we ask ourselves – are we invested in brands and franchises that are going to endure and preferably prosper over time? If we get that second question right, I must assume everything will work out just fine. Please read the rest of this report in the context of this opening paragraph.

The 17 biggest holdings in your portfolio (that is all holdings above 1% of the NAV) account for c.98% by value of the whole.

The remaining holdings each represent less than 1%. We may add to some of these smaller positions, but others will be disposed of, at a time and valuation of our choosing.

By most standards 17 holdings, making up essentially all portfolio assets, is exceptionally concentrated. This is deliberate. The Company’s portfolio is highly concentrated, because we have found this gives us the best chance of delivering the returns shareholders require to justify taking the risk of committing their precious savings to stock markets. We have no quibble with any rejoinder that what we do is risky. It is risky – both in the sense that the investment performance that results may turn out to be radically different from that of the benchmark our performance is measured against – in the Company’s case the FTSE All-Share Index. But also risky in the sense that holding such big positions exposes shareholders to the risk of outsize capital losses if something existentially bad befalls any of the companies.

So, while we know of no way to obviate the risk of differentiated investment performance, compared to the Index or other managers (whether our differentiated investment performance turns out to be notably better or worse than the average); by contrast it is in our power to limit the risk of permanent loss of capital, by seeking to invest only in “good” businesses. This is why we have always placed such a great emphasis on the predictability, financial conservatism and enduring relevance of the companies we have chosen to commit your savings to.

Because of the paramount importance of individual holdings in a strategy like the Company’s we have chosen to give an account below of the reasons why we own each of those 17 holdings. They are listed in descending order of size.

Diageo was the Company’s most successful stock over the last 12 months, and, partly as a result, is the biggest position, at just under 12% of NAV.

There are decade-long secular trends driving Diageo’s business. Most notably the propensity for consumers worldwide to drink less alcohol (which is a good thing), but instead to drink more of better-quality products. This growing taste for premium and super-premium beverage brands has accelerated with the incredible increase in consumer wealth over the last decade, notably in the USA and Asia. With arguably the best collection of prestige spirits brands (and Guinness) Diageo has been and will continue to be a prime beneficiary of these trends.

In addition, while we have no view as to whether the inflation pressures afflicting the world in 2021 will turn out to be ephemeral or entrenched, we are sure few companies are better positioned to maintain the real price of their products than Diageo. Would you sooner own a government bond on a running income yield of 2%, or Diageo on a starting dividend yield of 2%? We can’t help worrying that pension schemes around the world that choose the government bond ahead of Diageo, on the grounds that “equities are riskier than bonds”, are making a costly mistake.

RELX – Covid-19 lockdowns have evidently boosted the use of digital tools and data analytics across every industry. Andy Grove’s (ex-Intel CEO) prediction that in the future every company will be an internet company looks increasingly prescient; every company we know is working to become more digital. In the UK we are fortunate that the FTSE contains several major companies that own globally significant troves of data; data their customers need to run their institutions or businesses day-by-day. RELX is one such company – its services deeply embedded in the scientific research, legal and insurance communities. Listen to or read what the executives of RELX have to say about the opportunities still presented to this company and you will understand why it is the Company’s second largest holding.

LSE, like RELX, is another rare British company with globally significant data assets and the technology platform required to deliver data and analysis of that data at scale. It is true that a proportion of this data has been recently acquired, via its 2021 takeover of Refinitiv and also true that there are challenges involved in executing on a transaction of this size. But it is also apparent – on any consideration of the business and share price histories of similar companies, notably in the USA - that the rewards for shareholders of a successful integration of Refinitiv’s data and transaction venues with those of the LSE would be very high indeed.

UK investors complain their home index is too exposed to 20th century declining industries and there are too few domestic technology and data winners in the FTSE. Yet the weakness in LSE’s share price since the Refinitiv deal closed (and LSE has been a notable drag on the Company’s returns in 2021) shows those same investors reluctant to back this obvious contender to be a global tech winner. The iron rule still holds - for those investors who yearn for certainty before committing - by the time you know for sure, it will be too late.

Unilever has been a detractor from the Company’s performance over the last 12 months. Its wide diversification by brands and geography, that made it understandably “defensive” during the traumas of 2020, has counted against it. Especially so during the current period of rising input and logistics costs. It is undeniable that of all the consumer brand companies we own in the Company, Unilever is the one most at risk of a loss of pricing power across its product portfolio. Soap powder is more prone to price competition than Tanqueray or Crunchie Bars.

However, it is important to consider the lessons of Unilever’s long history. Over many, many decades Unilever has successfully exploited its global distribution, its marketing skills, the knowledge it learns about changing consumer tastes and, crucially the billions of pounds of annual cash flows it generates from its brands. It uses all these attributes to develop or acquire new brands. As a result, the shape of Unilever today is very different from that of 30 years ago. Why shouldn’t this formidable company continue to evolve and create value for its owners?

Some may counter that the Internet has changed everything for Unilever; for the worse. But at its recent results meeting, Alan Jope, CEO said: “It is a myth that the infinite shelf space of e-commerce favours middle and small-sized brands. E-commerce is very favourable to relevant big brands; they get first on the search and shopping list.” Even noting the key adjective “relevant” in that quote, if Jope is right (and maybe it is still too soon to be certain) then current pessimism about Unilever is excessive.

The Mondelez position results from our historic major holding in Cadbury, with Oreos, Toblerone and other beloved confectionery and snack brands added to the mix. I have slightly mixed feelings about the investment. Over the last ten years Mondelez stock is up 2.6x. That return looks very satisfactory compared to the dismal showing of the FTSE All-Share, up 44%. But I have to contrast it to NASDAQ over the same period – that index has gone up more than 5-fold, highlighting the rewards for investing in innovative, high-growth tech companies during a period of industrial change.

Mondelez is a terrific company of its type, likely to protect its owners against inflation and to grow in real terms, as consumers all over the world enjoy its treats. But can the Mondelez tortoise ever outpace the successful tech-stock hare? Probably not. But my conclusion is that it is valuable to own both types of company and if Mondelez’ shares are at $156 in 10 years ($60 today) we will be delighted and hope the Shareholders will be too.

Schroders recovered well from the COVID-19 bear market, both as a business and a share price. We continue to like being invested in an institution of such high reputation and financial conservatism. Schroders’ assets under management have reached a record high in 2021, of very nearly US$1trillion (important to express in US$, because most of its big competitors are in the US).

Promisingly the mix of Schroders’ assets has been shifting towards higher fee earning strategies, such as Private Equity and Wealth Management. We hope this means any future acceleration in Schroders’ asset growth will be rewarded with a big share price gain.

Burberry – A cash-rich (no financial debt) global luxury brand, with a longstanding and wonderfully valuable place in the affections of Asian consumers. You would think Burberry would be one of the most highly valued and admired companies in the FTSE 100. Certainly, there is no other company like it in the index. But not so. The British media and analytical community barely have a positive word to say about this iconic franchise. Oh well. We find it remarkable we have been able to become the biggest shareholder in Burberry on such attractive terms; but are grateful for the opportunity.

It is true, we are disappointed that CEO Marco Gobbetti is stepping down - returning to Italy. But his valedictory ruminations on the fashion industry are worth considering – “I find it fascinating – five or seven years ago it was much more limited. The audience for fashion and luxury was not as wide as it has become today. The big change is how fashion and luxury have permeated society. The pandemic has been a great accelerator of luxury. There is a generational change, with younger consumers in the US in particular becoming attached to brands and engaging with them like never before.” Luxury is definitely the right pond for investors to be fishing in today. And Burberry is definitely not a discarded shopping trolley at the bottom of that pond.

Sage – Few companies in your portfolio have tested my patience like this one. Look at the long-term price chart. Time and again the shares rally toward the peak of c£8. But each time the shares slip back, because the company persistently contrives to disappoint against its apparent growth potential. Many similar accounting software companies around the world have been great investments over the last two decades – Sage egregiously not. Other holders – including one we admire greatly – have had enough and sold out.

We are still invested for two reasons. First, in 2017 the previous CEO boldly made an ostensibly very expensive acquisition; Intacct, a US cloud software business. Four years later, Intacct has grown and its future prospects appear better than ever. Even on its own Intacct is worth an appreciable proportion of Sage’s market value, we think. Next, the current executive team has boldly accepted a drop in profit margins by investing more aggressively in new product development and marketing. We must hope better late than never.

Encouragingly, the board has sanctioned two share buybacks over the last year, of £300m each. Sage’s ability to do this speaks to its strong cash generation and balance sheet.

Hargreaves Lansdown – There is a cloud over the Hargreaves share price, relating to events of over two years ago. It is not obvious when or how those clouds will lift. All one can say is that Hargreaves’ business has gone from strength to strength over that time and that like so many digital and “platform” businesses around the world it has been a beneficiary of the great COVID-19-acceleration in consumer digital engagement. It is also worth noting that Hargreaves has a very strong balance sheet indeed as well as a highly profitable business.

Remy Cointreau/Heineken – I do not lightly invest outside the UK for the Company. It is after all a UK equity mandate. Mondelez was effectively inherited from Cadbury, but this pair are the two non-UK holdings we have deliberately chosen to invest in. It is no accident, given our predilections and historic perspectives that both Remy and Heineken should be family-controlled global beverage companies. Looking back at financial history it is apparent that beloved beverage brands offer exceptional longevity and pricing power and have thereby protected the wealth of owners for generations. Add to that the secular growth open to Remy and Heineken with their premium cognac and beer brands and there is scope for centuries more wealth creation.

Experian is one of the newer holdings in the Company, initiated in mid-2020. It is, like RELX and LSE, a globally important data/ analytics company that happens to have its primary listing on the London Stock Exchange. Frankly I should’ve invested in it years ago, but finally the pleading of my younger colleagues prevailed and we are now building what I expect will become one of the top holdings in the portfolio.

Daily Mail & General Trust (‘DMGT’) may or may not still be a constituent of your portfolio by the time you read this report. As I write this the company has received an offer for its outstanding equity by the controlling family shareholder. DMGT has always fascinated me as a collection of media and data assets, evidently very undervalued by other investors. The prospect of that value being crystalised by an offer at an all-time high for the share price has a definite appeal.

Fever-Tree is the other relatively new holding, and, like Experian, we intend to build it further. The shares present a challenge to investors. Its price earnings ratio is either absurdly high, if the company fails to develop its brand as successfully outside the UK as it has done here. Or it is absurdly low if Fever-Tree can truly become the world’s premium mixer brand.

Manchester United – Members of the Glazer family have now sold over £200m of shares in Manchester United in 2021. It seems probable the family does not intend to be an “eternal” owner of the franchise, but equally probable no change of ownership is imminent (or why would they sell?). The destiny of this extraordinary “trophy” asset is unclear, but we are content to remain minority holders of such a unique franchise.

Rathbones – The provision of private wealth investment management services is a growth industry in the UK. Rathbones has a deserved blue-chip reputation, a cash-rich balance sheet and is participating in that industry growth. We expect it to be a bigger and more valuable company over time.

A.G. Barr used to be a major holding in your portfolio, but the position has drifted down to just over 1%, as we have chosen to invest elsewhere across the portfolio and as the shares have languished – now barely higher than 10 years ago. The company remains profitable, with valuable brands and net cash on its balance sheet. We look to its board to find ways to deploy that cash to return Barr to growth and stock market favour. We’d happily add to our holding as its strategy gains traction.

CONCLUSION

As always in these Annual Reports I barely comment on macroeconomic conditions nor make any guess about the next move in the stock market and absolutely not about how the Company’s investment performance may develop. There is no point, in my opinion, speculating about factors that are unknowable. However, I do submit that your portfolio is made up of strong businesses, with the potential to deliver both business growth and investment value for patient investors. In this spirit may I confirm to shareholders that I have continued to add to my personal holding in the company. My family and I currently speak for 1.55% of the equity of the Company. This alignment of interest by no means guarantees successful investment returns, but I assure you the Company continues to command my keenest attention.

Nick Train

Director,
Lindsell Train Limited

Portfolio Manager

14 December 2021

STRATEGIC REPORT / BUSINESS REVIEW

The Strategic Report provides a review of the Company’s policies and business model, together with an analysis of its performance during the financial year and its future developments.

The Strategic Report has been prepared for Shareholders to assess how the Directors have performed their duty to promote the success of the Company. It also considers the principal risks and uncertainties facing the Company.

Information on how the Directors have discharged their duty under Section 172 of the Companies Act 2006 can be found within the Strategic Report.

The Strategic Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the date of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

As an externally managed investment trust the Company has no executive directors, employees or internal operations. The Company delegates its day-to-day management to third parties. The principal service providers to the Company are Frostrow Capital LLP (“Frostrow”) which acts as AIFM, company secretary and administrator; and Lindsell Train Limited (“Lindsell Train”) which acts as Portfolio Manager. The Bank of New York Mellon (International) Limited is the Company’s Depositary.

The Board is responsible for all aspects of the Company’s affairs, including the setting of parameters for and the monitoring of the investment strategy as well as the review of investment performance and policy. It also has responsibility for all strategic issues, the dividend policy, the share issuance and buy-back policy, gearing, share price and discount/ premium monitoring and corporate governance matters.

STRATEGY FOR THE YEAR ENDED 30 SEPTEMBER 2021

Throughout the year under review, the Company continued to operate as an approved investment trust, following its investment objective to achieve capital and income growth and to provide shareholders with a total return in excess of that of the FTSE All-Share Index. The Company’s performance is discussed in the Chairman’s and the Portfolio Manager’s Review explains why the Company holds various key investments in the portfolio.

During the year, the Board, AIFM and the Portfolio Manager undertook all ESG, strategic and administrative activities.

The Board is aware of the increased emphasis on ESG matters in recent years. The Portfolio Manager engages with all the companies in the portfolio to understand their ESG approach and has developed its own methodology to assess the carbon impact of the portfolio.

PORTFOLIO STRUCTURE

82.3% INVESTED IN UK	17.7% INVESTED GLOBALLY	87.5% FTSE 100 COMPANIES (AND COMPARABLE OVERSEAS COMPANIES)
78.9% TOP TEN HOLDINGS	0.3%^ GEARING	86.0%*^ ACTIVE SHARE

* The Company publishes its Active Share score in its monthly fact sheet for investors and in both the annual and half-yearly reports to highlight how different the portfolio is from the Company’s benchmark index.

^ Alternative Performance Measure (see glossary).

INVESTMENT POLICY

The Company’s investment policy is to invest principally in the securities of companies either listed in the UK or otherwise incorporated, domiciled or having significant business operations within the UK. Up to a maximum of 20% of the Company’s portfolio, at the time of acquisition, can be invested in companies not meeting these criteria.

The portfolio will normally comprise up to 30 investments. This level of concentration is likely to lead to an investment return which is materially different from the Company’s benchmark index and may be considered to carry above average risk*.

Unless driven by market movements, securities in FTSE 100 companies and comparable companies listed on an overseas stock exchange will normally represent between 50% and 100% of the portfolio; securities in FTSE 350 companies and comparable companies listed on overseas stock exchanges will normally represent at least 70% of the portfolio.

The Company will not invest more than 15% of the Company’s net assets, at the time of acquisition, in the securities of any single issuer. For the purposes of this limit only, net assets shall exclude the value of the Company’s investment in Frostrow Capital LLP.

The Company does not and will not invest more than 15%, in aggregate, of the value of the gross assets of the Company in other listed closed ended investment companies. Further, the Company does not and will not invest more than 10%, in aggregate, of the value of its gross assets in other listed closed ended investment companies except where the investment companies themselves have stated investment policies to invest no more than 15% of their gross assets in other listed closed ended investment companies.

The Company has the ability to invest up to 25% of its gross assets in preference shares, bonds and other debt instruments, although no more than 10% of any one issue may be held.

In addition, a maximum of 10% of the Company’s gross assets can be held in cash, where the Portfolio Manager believes market or economic conditions make equity investment unattractive or while seeking appropriate investment opportunities or to maintain liquidity.

The Company’s gearing policy is that gearing will not exceed 25% of the Company’s net assets.

No investment will be made in any company or fund managed by the Portfolio Manager without the prior approval of the Board.

In accordance with the Listing Rules of the Financial Conduct Authority (“FCA”), the Company can only make a material change to its investment policies with the approval of its shareholders.

DIVIDEND POLICY

The Company’s aim is to increase or at least maintain the total dividend each year. A first interim dividend is typically paid in May and a second interim in November in lieu of a final dividend.

The level of dividend growth is dependent upon the growth and performance of the companies within the investment portfolio. The decision as to the level of dividend paid takes into account the income forecasts maintained by the Company’s AIFM and Portfolio Manager as well as the level of revenue reserves. These forecasts consider dividends earned from the portfolio together with predicted future earnings and are regularly reviewed by the Board.

All dividends have been distributed from current year income and revenue reserves.

PERFORMANCE

Whilst the Board is disappointed that the Company has underperformed in the short term, the Portfolio Manager’s report explains why he believes that the Company’s portfolio remains appropriate. The Board fully supports the Portfolio Manager’s view.

Whilst performance is measured against the FTSE All-Share Index, the Company’s portfolio is constructed and managed without reference to a stock market index with the Portfolio Manager selecting investments based on his assessment of their long term value.

NAV PER SHARE RECONCILIATION

The chart in the Annual Report shows the contribution (in pence per share) attributable to the various components of investment performance and costs, which together add up to the rise from the starting NAV for the year of 846.2 pence to the year-end NAV of 917.7 pence, after the payment of dividends to Shareholders.

PROSPECTS

The Board continues to support fully the Portfolio Manager’s strategy of investing in high quality companies that own both durable and cash generative brands. The Board firmly believes that this strategy will continue to deliver strong investment returns over the long-term.

This is supported by the Company’s performance over the last ten years with a net asset value per share total return^ of 262.4% compared to a total return from the Company’s benchmark index of 119.2%.

^{^} Alternative Performance Measure (see glossary)

PRINCIPAL RISKS, EMERGING RISKS AND RISK MANAGEMENT / BUSINESS REVIEW

The Board considers that the risks detailed within this report are the principal risks currently facing the Company that could affect the ability of the Company to deliver its strategy.

The Board is responsible for the ongoing identification, evaluation and management of the principal risks faced by the Company and has established a process for the regular review of these risks and their mitigation. This process accords with the UK Corporate Governance Code and the FRC’s Guidance on Risk Management, Internal Control and Related Financial and Business Reporting.

The Board has carried out a robust assessment of the emerging and principal risks facing the Company, including those that would threaten its business model, future performance, solvency and liquidity. Further details of the risk management processes that are in place can be found in the Corporate Governance Statement in the Annual Report.

The Audit Committee also considered the controls in place to mitigate the inherent risks and whether additional controls or actions were required to bring the residual risk down to an acceptable level. The Committee were satisfied with the controls that are in place.

THE COMPANY’S APPROACH TO RISK MANAGEMENT

Movement during the year:  No change,  Decreased,  Increased,  New risk included during the year

Movement	Principal Risks and Uncertainties	Key Mitigations[TA1]
No change	Corporate Strategy The Company’s share price total return may differ materially from the NAV per share total return.	The Board operates a share buy-back policy which is intended to offer some protection against the share price widening beyond a 5% discount to NAV per share. There is also a share issuance programme which acts as a premium control mechanism. Further details of the Company’s share buy-back policy and premium control mechanism can be found on the Company’s website.
No change	Investment Strategy and Activity The investment strategy adopted by the Portfolio Manager including the high degree of concentration of the investment portfolio, may lead to an investment return that is materially lower than the Company’s benchmark index, thereby failing to achieve the Company’s investment objective.	The Board discusses with the Portfolio Manager the structure of the portfolio, including asset allocation and portfolio concentration. The Board reviews the performance of the portfolio against the benchmark and the Company’s peer group at every meeting. The Company publishes various measures and statistics in the monthly fact sheet and in both the annual and half-yearly reports, to highlight to investors the effects of the investment approach and to show how different the portfolio is from the Company’s benchmark index. These measures include number of holdings, Active Share and portfolio turnover.
No change	The departure of a key individual at the Portfolio Manager may affect the Company’s performance.	The Board keeps the portfolio management arrangements under continual review. In turn, the Portfolio Manager reports on developments at Lindsell Train, including succession and business continuity plans. The Board meets regularly with other members of the wider team employed by the Portfolio Manager.
No change	A global event such as COVID-19, ongoing supply chain issues and/or labour shortages may adversely impact the operational activities of the portfolio companies so that they are no longer appropriate to achieve the Company’s investment objective.	The Board reviews the performance of the portfolio against the benchmark and the Company’s peer group at every meeting. Over the course of the COVID -19 pandemic the Board has held extra review meetings by video conference, initially weekly and more recently monthly. The Portfolio Manager regularly engages with the portfolio companies to discuss any matters of concern that may effect operational activities.
No change	The investment approach is not aligned with shareholder expectations in relation to Environmental, Social and Governance (“ESG”) matters.	The Board conducts an annual review of the Portfolio Manager’s ESG policy to ensure that it is consistent with that expected by the Board. The Board also conducts an annual review of other service providers’ policies in relation to internal controls and governance matters notably modern slavery, GDPR, cyber security and policies. The Portfolio Manager has developed a propriety system to assess the inherent and emerging ESG risks for the investment portfolio which the Portfolio Manager uses when engaging with the portfolio companies. This informs the decision to invest, retain or divest any portfolio investment.
No change	Shareholder Relations and Governance The Company’s investment mandate no longer appeals to investors leading to long-term selling pressure which threatens the stability of the Company.	At each meeting the Board reviews movements in the Company’s shareholder register. There are regular interactions and engagement with Shareholders (including at the AGM). Regular feedback from shareholders is received from the Company’s broker. In addition, the Chairman and the Senior Independent Director meet with key shareholders to ascertain views. The Company publishes its Active Share score in its monthly fact sheet for investors and in both the annual and half-yearly reports to highlight how different the portfolio is from the Company’s benchmark index.
No change	Errors or irregularities in published information could lead to censure and/or result in reputational damage to the Company.	The Board reviews all information supplied to shareholders and the AIFM’s marketing activity at each meeting and periodically reviews the Company’s website. The AIFM’s daily controls ensure accurate publication of information.
No change	Operational Adverse reputational impact of one or more of the Company’s key service providers which, by association, causes the Company reputational damage.	The Board receives regular updates from the AIFM of press references to the Company and its major service providers, the Board receives regular news on sector developments from the Company’s broker and from the AIC. Together these sources of information keep the Board appraised of any potential sources of reputational damage arising from services providers. The Board has the ability to replace any service provider which may be the source of reputational concerns.
No change	Financial Fraud (including unauthorised payments and cyber fraud) occurs leading to a loss.	The AIFM and Portfolio Manager have in place robust compliance monitoring programmes. The Board receives monthly compliance reviews and a quarterly expenses analysis. An annual statement is obtained by the Audit Committee from all service providers giving representations that there have been no instances of fraud or bribery.
No change	The Company is exposed to market price risk.	The Directors acknowledge that market risk is inherent in the investment process. The Portfolio Manager maintains a diversified portfolio which is concentrated in a few key sectors. The Board has imposed guidelines within its investment policy to limit exposure to individual holdings and limits the level of gearing.  The AIFM reports to the Board with respect to compliance with investment guidelines on a monthly basis. The Portfolio Manager provides the Board with regular updates on market movements. No investment is made in derivative instruments and no currency hedging is undertaken.  Further information on financial instruments and risk can be found in note 17 to the Financial Statements.
No change	Accounting, Legal and Regulatory The regulatory environment in which the Company operates changes materially, affecting the Company’s modus operandi.	The Board monitors regulatory change with the assistance of the Company’s AIFM, Portfolio Manager and external professional advisers to ensure that the Board is aware of any likely changes in the regulatory environment and will be able to adapt as required.  The Directors attend AIC Roundtables and conferences to keep up to date on regulatory changes and receive industry updates from the AIFM.
No change	The Company and/or the Directors fail(s) to comply with legal requirements in relation to FCA dealing rules/handbook procedures, the AIFMD, the Listing Rules, the Companies Act 2006, relevant accounting standards, the Bribery Act 2010, the Criminal Finances Act 2017, GDPR, tax regulations or any other applicable regulations.	The Board monitors regulatory change with the assistance of its AIFM, Portfolio Manager and external professional advisers to ensure compliance with applicable laws and regulations including the Companies Act 2006, the AIFM Rules, the Corporation Tax Act 2010 (‘Section 1158’), the Market Abuse Regulation (‘MAR’), the Disclosure Guidance and Transparency Rules (“DTRs”) and the UKLA Listing Rules. The Board reviews compliance reports and internal control reports provided by its service providers, as well as the Company’s Financial Statements and revenue forecasts. The Depositary reports twice yearly to the Audit Committee, confirming that the Company, acting through the AIFM, has been managed in accordance with the AIFMD, the FUND sourcebook, the Articles (in relation to the calculation of the NAV per share) and with investment restrictions and leverage limits. The Depositary Report can be found in the Shareholder information section of the Company’s website. The Directors attend AIC Roundtables and conferences to keep up to date on regulatory changes and receive industry updates from the AIFM. The AIFM presents a quarterly report on changes in the regulatory environment, including AIC updates, and how changes have been addressed.
No change	Poor adherence to corporate governance best practice or errors or irregularities in published information could lead to censure and/or result in reputational damage to the Company.	The Board reviews all information supplied to shareholders and the AIFM’s marketing activity at each meeting. Details of the Company’s compliance with corporate governance best practice, including information on relationships with shareholders, are set out in the Corporate Governance Report in the Annual Report.
New risk included during the year	Emerging Risk The adverse impact of climate change on the portfolio companies’ operational performance.	The Board receives quarterly ESG updates, which include an update on any climate change related engagement, from the Portfolio Manager together with monthly portfolio updates. The Board challenges the Portfolio Manager on ESG matters to ensure that the portfolio companies are acting in accordance with the Board’s ESG approach.  The Portfolio Manager is a signatory to the UK Stewardship Code and actively engages with portfolio companies on ESG matters including climate change.  Details of the Company’s and Portfolio Manager’s ESG policies together with the weighted average carbon intensity of the portfolio companies are set out in the Portfolio Manager’s approach to ESG.

Following a review of the risk register the Board no longer considers the risks detailed below to be principal risks faced by the Company:

· The risk associated with the Company being unable to maintain its dividend policy;

· The risk associated with the under-performance of the Company’s service providers or their failure to provide sufficient or accurate information to the Board;

· The risk associated with the Company’s service providers becoming unable to meet their contractual obligations as a result of a global event such as a terrorist attack or pandemic; and

· The risk associated with the Company’s exposure to credit risk.

EMERGING RISKS

The Company has carried out a detailed assessment of the Company’s emerging and principal risks. The International Risk Governance Council definition of an ‘emerging’ risk is one that is new or is a familiar risk in a new or unfamiliar context or under new context conditions (re-emerging). Failure to identify emerging risks may cause reactive actions rather than being proactive and, in worst case, could cause the Company to become unviable or otherwise fail or force the Company to change its structure, objective or strategy.

The Audit Committee reviews a risk map at its half-yearly meetings. Emerging risks are discussed in detail as part of this process, and also throughout the year, to try to ensure that emerging (as well as known) risks are identified and, so far as practicable, mitigated. Any emerging risks and mitigations are added to the risk register (e.g. the potential adverse impact of climate change on some of the portfolio companies’ operations affecting their investment value over the short to medium term).

The experience and knowledge of the Directors is useful in these discussions, as are update papers and advice received from the Board’s key service providers such as the Portfolio Manager, the AIFM and the Company’s broker. In addition, the Company is a member of the AIC, which provides regular technical updates as well as drawing members’ attention to forthcoming industry and/or regulatory issues and advising on compliance obligations.

FUTURE DEVELOPMENTS

The Board’s primary focus is on the Portfolio Manager’s investment approach and performance. The subject is thoroughly discussed at every Board meeting.

In addition, the AIFM updates the Board on Company communications, promotions and investor feedback, as well as wider investment company issues.

An outline of performance, investment activity and strategy, and market background during the year, as well as the outlook, is provided in the Chairman’s Statement and the Portfolio Manager’s Review.

It is expected that the Company’s strategy will remain unchanged in the coming year.

LONG TERM VIABILITY STATEMENT

In accordance with the UK Corporate Governance Code, the Directors have carefully assessed the Company’s position and prospects as well as the principal risks have formed a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next five financial years. The Board has chosen a five year horizon in view of the long-term nature and outlook adopted by the Portfolio Manager when making investment decisions.

To make this assessment and in reaching this conclusion, the Audit Committee has considered the Company’s financial position and its ability to liquidate its portfolio and meet its liabilities as they fall due:

· The portfolio is principally comprised of investments traded on major international stock exchanges. Based on current trading volumes, 93.6% of the current portfolio could be liquidated within 30 trading days, with 61.2% in seven days, and there is no expectation that the nature of the investments held within the portfolio will be materially different in future;

· The expenses of the Company are predictable and modest in comparison with the assets and there are no capital commitments foreseen which would alter that position; and

· The Company has no employees, only its non-executive Directors. Consequently it does not have redundancy or other employment related liabilities or responsibilities.

The Audit Committee has considered the potential impact of its principal risks and various severe but plausible downside scenarios as well as stress testing and reverse stress testing. It has also made the following assumptions in considering the Company’s longer-term viability:

· There will continue to be demand for investment trusts;

· The Board and the Portfolio Manager will continue to adopt a long-term view when making investments, and anticipated holding periods will be at least five years;

· The Company invests principally in the securities of UK listed companies to which investors will wish to continue to have exposure;

· The Company will maintain its bank loan facility;

· Regulation will not increase to a level that makes running the Company uneconomical; and

· The performance of the Company will continue to be satisfactory.

The ongoing COVID-19 pandemic was also factored into the key assumptions made by assessing its impact on the Company’s key risks and whether the key risks had increased in their potential to affect the normal, favourable and stressed market conditions. As part of this review the Board considered the impact of a significant and prolonged decline in the Company’s performance and prospects.

ENGAGING WITH THE COMPANY’S STAKEHOLDERS

The following ‘Section 172’ disclosure, required by the Companies Act 2006 and the AIC Code, describes how the Directors have had regard to the views of the Company’s stakeholders in their decision-making.

Who?	Why?	How?
STAKEHOLDER GROUP	THE BENEFITS OF ENGAGEMENT WITH THE COMPANY’S STAKEHOLDERS	HOW THE BOARD, THE AIFM AND THE PORTFOLIO MANAGER HAVE ENGAGED WITH THE COMPANY’S STAKEHOLDERS
Investors	Clear communication of the Company’s strategy and the performance against the Company’s objective can help the share price trade closer to its NAV per share which benefits shareholders. New shares are issued to meet demand without net asset value per share dilution to existing shareholders. Increasing the size of the Company can benefit liquidity as well as spread costs. In an effort to try to eliminate discount volatility, Directors introduced a buy-back policy in 2004. Under the policy, the Company will normally buy in shares being offered on the stock market whenever the discount approaches a level of 5% and then either hold those shares in “treasury” or cancel them. Any shares held in treasury can later be sold back to the market if conditions permit.	The AIFM and the Portfolio Manager, on behalf of the Board, complete a programme of investor relations throughout the year. An analysis of the Company’s shareholder register is provided to the Directors at each Board meeting along with marketing reports from Frostrow. The Board reviews and considers the marketing plans on a regular basis. Reports from the Company’s broker are submitted to the Board on investor sentiment and industry issues. Key mechanisms of engagement include: · The Annual General Meeting · The Chairman and the Senior Independent Director make themselves available to engage with shareholders · The Company’s website hosts reports, video interviews with the Portfolio Manager and monthly fact sheets · One-on-one investor meetings facilitated by Frostrow who actively engage with professional investors, typically discretionary wealth managers, some institutions and a range of execution-only platforms. Regular engagement helps to attract new investors and retain existing shareholders, and over time results in a stable share register made up of diverse, long term holders · Should any significant votes be cast against a resolution proposed at the Annual General Meeting, the Board will engage with Shareholders. · The Board will explain in its announcement of the results of the AGM the actions it intends to take to consult shareholders in order to understand the reasons behind any significant votes against resolutions. · Following the consultation, an update will be published no later than six months after the AGM and the Annual Report will detail the impact the Shareholder feedback has had on any decisions the Board has taken and any actions or resolutions proposed.
Portfolio Manager	Engagement with the Company’s Portfolio Manager is necessary to evaluate their performance against the Company’s stated strategy and to understand any risks or opportunities this may present. The Board ensures that the Portfolio Manager’s ESG approach meets standards set by the Board.	At each meeting the Board reviews movements in the Company’s shareholder register. In addition, there are regular interactions and engagement with shareholders (including at the AGM). Regular feedback from shareholders is received from the Company’s broker. The Board receives regular updates from the Portfolio Manager concerning engagement on ESG matters with the companies within the portfolio.
Service Providers	The Company contracts with third parties for other services including: depositary, investment accounting & administration as well as company secretarial and registrars. The Company ensures that the third parties to whom the services have been outsourced complete their roles in line with their service level agreements thereby supporting the Company in its success and ensuring compliance with its obligations. The ongoing COVID-19 pandemic has meant that it was vital to make certain there were adequate procedures in place at the Company’s key service providers to ensure safety of their employees and the continued high quality service to the Company.	The Board and Frostrow engage regularly with other service providers both in one-to-one meetings and via regular written reporting. This regular interaction provides an environment where topics, issues and business development needs can be dealt with efficiently and collegiately. The Board together with Frostrow have maintained regular contact with the Company’s key service providers during the pandemic, as well as carrying out a review of the service providers’ business continuity plans and additional cyber security provisions. It is the Board’s belief that Frostrow and Lindsell Train are the most significant service providers pertinent to the success of the Company. It was therefore felt to be of great importance that the Company invested in each of their businesses. Further details can be found on the Company’s website.
Portfolio Companies	Gaining a deeper understanding of the portfolio companies and their strategies as well as incorporating consideration of ESG factors into the investment process assists in understanding and mitigating risks of an investment as well as identifying future potential opportunities.	During the year the Board discussed its approach to ESG matters with the Lindsell Train team providing more detail of their specific approach to responsible ownership. The Board does, of course, have to consider its approach to ESG as well as that of the companies in which the Company invests, and has developed its own. The Board encourages the Company’s Portfolio Manager to engage with companies and in doing so expects ESG issues to be a key consideration. The Board receives an update on Lindsell Train’s engagement activities within a dedicated quarterly ESG report. A member of Lindsell Train’s investment team attends each Board meeting to provide an update on ESG issues and engagement activities since the last Board meeting.
The Company’s Lender	Investment trusts have the ability to borrow with a view to enhancing long term returns to shareholders. Engagement with the Company’s lender ensures that it fully understands the nature of the Company’s business, the strategy adopted by the Portfolio Manager and the extent to which the Company complies with its loan covenants.	Regular reporting to the lender with respect to adherence with loan covenants and ad hoc meetings with the AIFM.

What?	Outcomes and actions
WHAT WERE THE KEY TOPICS OF ENGAGEMENT?	WHAT ACTIONS WERE TAKEN, INCLUDING PRINCIPAL DECISIONS?
Investors Impact of market volatility on the performance of the Company arising from COVID-19.	Shareholders are provided with performance updates via the Company’s website as well as the usual financial reports and monthly factsheets. The Portfolio Manager, Frostrow and the broker meet regularly with shareholders and potential investors to discuss the Company’s strategy, performance and portfolio. The Chairman and Senior Independent Director meet with key shareholders from time to time. Information on how to vote your investment company shares on some major platforms can be found in the Notice of Meeting.
Ongoing dialogue with Shareholders concerning the strategy of the Company, performance and the portfolio. Share price performance and the widening of investment trust sector discounts.	The Directors were unable to have the usual face to face interactions with Shareholders this year due to the guidance from the UK government in respect of gatherings of people. During November and December 2021 the Chairman and the Chair of the Audit Committee met with some investors to discuss amongst other things, the performance of the Company. In November 2021 the Chairman wrote to the boards of major platforms to address the channels of communication with the individual shareholders who use platforms as a means to hold shares in the Company The Board reviews the Company’s share price discount/premium on a daily basis and has a share buy-back policy and details of this policy  can be found on the Company’s website. .
Portfolio Manager Portfolio composition, performance, ESG matters, outlook, and business updates. The impact of COVID-19 upon their business and how some companies in the portfolio have sought to take advantage of the pandemic, in particular through increased digitalisation. The integration of ESG into the Portfolio Manager’s investment processes.	No specific action required. The Board has received regular updates from the Portfolio Manager throughout the COVID-19 pandemic, including its impact on investment decision making. In addition, the impact of new working practices adopted by the Portfolio Manager as a consequence of the pandemic have been reviewed by the Board. The Portfolio Manager reports regularly any ESG issues in the portfolio companies to the Board.
Other service providers The Directors have frequent engagement with the Company’s other service providers through the annual cycle of reporting and due diligence meetings or site visits by Frostrow. This engagement is completed with the aim of maintaining an effective working relationship and oversight of the services provided. Continued compliance with covenants set out within the loan agreement between the Company and the lender. Terms of the loan facility agreement	No specific action was required as the reviews of the Company’s service providers have been positive and the Directors believe their continued appointment is in the best interests of the Company. The Company has invested in Frostrow and Lindsell Train. Further details can be found on the Company’s website. No specific action was required due to compliance with loan covenants throughout the year. During the year the Company’s loan facility agreement was amended following Regulator confirmation that LIBOR based agreements should be updated prior to the expiry of LIBOR.

RESPONSIBLE INVESTMENT

Our Policy

The Board recognises that the most material way for the Company to have an impact on Environmental, Social and Governance (“ESG”) issues is through the responsible ownership of its investments.

It has delegated authority to its Portfolio Manager to engage actively with the management of investee companies and encourage that high standards of ESG practice are adopted.

The Company seeks to generate long term, sustainable returns on capital. The investee companies which consistently deliver superior returns over the long term are typically established, well-run companies whose managers recognise their impact on the world around them.

In its Responsible Engagement & Investment Policy, the Portfolio Manager states that its evaluation of ESG factors is an inherent part of the investment process.

The Board has delegated authority to the Portfolio Manager to vote the shares owned by the Company that are held on its behalf by its Custodian. The Board has instructed that the Portfolio Manager submit votes for such shares wherever possible and practicable. The Portfolio Manager may refer to the Board on any matters of a contentious nature.

The Portfolio Manager is a Tier 1 signatory of the 2020 UK Stewardship Code.

The Board does not believe it appropriate to set its own quantitative ESG targets for investee companies at this time. However, ESG issues are discussed at every board meeting.

Lindsell Train’s Policy Stewardship

Engagement

Engaging with and monitoring investee companies on matters relating to stewardship has always been an essential element of our investment strategy. Our long-term approach generally leads us to be supportive of company management; however, where we disagree with a company’s actions, we will try to influence management on specific matters or policies if we believe it is in the best interests of our clients. Constructive dialogue has more often than not resulted in satisfactory outcomes, thus limiting the need for escalation. However, where this is not the case, we will consider escalating our engagement and stewardship activities.

Engagement by Topic

Personnel (HR) matters	11%
Capital Allocation	11%
Governance structure and policies	11%
Sustainability/Clean energy transition	11%
Positive Impact	11%
Other Social matters (e.g. supply chain concerns)	8%
Remuneration	8%
Drinking in moderation	6%
Fair treatment of shareholders	6%
Diversity	6%
Waste reduction/Recycling	6%
Cruelty Free	3%
Data security	2%

Source: Lindsell Train. 1st October 2020 – 30 September 2021. 36 topics raised with 16 companies.

During the year, we have engaged with 16 companies on a wide range of environmental, social and governance issues as detailed in the chart above. We are also in the process of writing to several of our companies to complete an information gathering exercise aimed at clarifying our portfolio companies’ stances on, and approaches to, certain ESG factors with the objective of ensuring that all our companies report this essential data going forward. As public supporters of the Task Force on Climate-Related Financial Disclosures (“TCFD”) and The Sustainability Accounting Standards Board (“SASB”), we are also encouraging these companies to report in line with these, or similar (if more relevant to their business) frameworks, and also to report on positive impact goals and progress. This ongoing ESG research is further complimented by a series of ESG specific calls that we are hosting with each of our companies. This will enable us to identify additional matters of concern or opportunity that require additional scrutiny within our engagement programme.

ESG integration

Seeking Sustainability

As long-term investors our aim is to identify companies that can generate long-term sustainable high returns on capital. We have historically found that such companies tend to exhibit characteristics associated with good corporate governance and responsible business practices. Indeed, we believe that companies which observe such standards, and that are serious in their intention of addressing environmental and social factors, will not only become more durable but will likely prove to be superior investments over time.

To that end our initial analysis and ongoing company engagement strategy seeks to incorporate all sustainability factors that we believe will affect the company’s ability to deliver long term value to shareholders. Such factors may include but are not limited to: environmental (including climate change), social and employee matters (including turnover and culture) and governance factors (including remuneration and capital allocation), cyber resilience, responsible data utilisation, respect for human rights, anti-corruption and anti-bribery, and any other risks or issues facing the business and its reputation. This work is catalogued in a proprietary database of risk factors in order to centralise and codify our team’s views, as well as to prioritise our ongoing research and engagement work and is cross-referenced with the SASB Materiality Map ©.

If, as a result of this assessment, we believe that an ESG factor is likely to materially impact a company’s long-term business prospects (either positively or negatively) then we can reflect this in the long-term growth rate that we apply in our valuation of that company, which alongside our more qualitative research will influence any final portfolio decisions (for example, whether we start a new position or sell out of an existing holding).

Positive/Negative Screening

As a product of our investment philosophy, we do not invest in the following industries:

· capital intensive industries (energy, commodities or mining) or any companies involved in the extraction and production of coal, oil or natural gas; and

· industries that we judge to be sufficiently detrimental to society that they may be exposed to burdensome regulation or litigation that could impinge on financial returns (e.g. tobacco, gambling or arms manufacturers).

Similarly, our investment approach has steered us to invest in a number of companies that play an important positive social or environmental role, for example through providing access to educational information (RELX), encouraging saving for the future (Schroders) or encouraging environmental progress and best practice (e.g., Unilever). We believe that such positive benefits for society should be consistent with our aim to generate competitive long-term returns, thus helping us meet our clients’ investment objectives.

Climate Change

The risks associated with climate change represent the great issue of our era and the transition to a low-carbon economy will affect all businesses, irrespective of their size, sector or geographic location. Therefore, no company’s revenues are immune and the assessment of such risks must be considered within any effective investment approach, particularly one like ours that seeks to protect our clients’ capital for decades to come. As such, we have built a proprietary tool that measures the carbon footprint/intensity of our portfolios and we are pleased to note that the Company has a significantly lower weighted average carbon intensity than its comparable benchmark.

Key Engagement Examples:

Burberry – The next generation of Burberry’s customers are increasingly well informed and highly alert to ESG issues. The company’s future therefore depends upon innovating to stay ahead of the curve, whilst always offering the highest quality products.

We are pleased to see evidence of initiatives and behaviours within Burberry that address a growing number of environmental and social issues, including but not limited to: slave labour in supply chains, animal cruelty, water use, climate change and plastic pollution. In the aftermath of the 2020 Boohoo scandal involving slave labour in its supply chain, we engaged with the chairman of Burberry on this matter specifically. We were assured that the prevention of such issues is a priority, and that Burberry maintains tight control on its supply chain both from an ethical and a quality standpoint. Later in the year, we also engaged with Burberry investor relations in response to the Xinjiang cotton scandal. We were assured that Burberry sources no cotton whatsoever from this region, and indeed is a signatory to the Better Cotton Initiative which prevents the use of cotton from areas of conflict, or where growing the crop fails to meet sustainability best practices, for example by causing water stress.

PZ Cussons and Unilever – This engagement was in part in response to the recent news that from 1^st May 2021, China will remove the mandatory animal testing requirements for imported cosmetics. In the case of Unilever, this follows 10 years of hard work to ban this practice and it will enable Unilever to develop its Chinese cosmetics business.

Animal testing of health and personal care products, cosmetics and fragrances is a practice that is not only unnecessary but also acts as a barrier to the growing numbers of cruelty-conscious consumers globally. Fortunately, the practice is less common these days and we have determined through our research that very few of our companies engage in animal testing. Indeed, only companies selling personal care products, cosmetics or fragrances into China will have made their products available for animal-testing. Nonetheless we have monitored this for some time and during Q1 2021 we engaged with the management of both Unilever and PZ Cussons on this matter.

Diageo – In February 2021 we hosted a call with CEO, Ivan Menezes during which we discussed the social benefits from the global shift to drinking less and how this would impact Diageo’s business. Diageo’s strategy is focused on encouraging their customers to drink less and drink better. To that end, marketing is very focused on ensuring drinking in moderation. The source of future growth is not from increased units per capita, but rather from customers trading up from beer to wine, and then to higher quality spirits. So whilst Diageo claims only 2.4% market share of global alcohol sales, they have an important role to play and take this responsibility seriously. Additionally, the company is taking seriously low or zero alcohol offerings and sees an attractive opportunity to build out an additional business stream, as part of the Diageo brand.

Proxy Voting

The primary voting policy of Lindsell Train is to protect or enhance the economic value of its investments on behalf of its clients. Lindsell Train has appointed Glass Lewis to aid the administration of proxy voting and provide additional support in this area. However, the portfolio managers maintain decision making responsibility based on their detailed knowledge of the investee companies. It is our policy to exercise all voting rights which have been delegated to us by our clients.

Voting record:

	MANAGEMENT PROPOSALS	SHAREHOLDER PROPOSALS	TOTAL PROPOSALS
With Management	413	2	415
Against Management	0	0	0
Abstain	1*	0	1
Totals	414	2	416

Source: Glass Lewis. 1st October 2020 – 30 September 2021.

* Mondelez executive compensation resolution.

Votes against management have typically been in the low single-digit range. The main reason for this is that our long-term approach to investment generally leads us to be supportive of company management and, where required, we will try to influence management through our engagement activities. Given we often build up large, long-term, stakes in the businesses in which we invest we find that management are open to (and very often encourage) engaging with Lindsell Train. Furthermore, it is our aim to be invested in ‘exceptional’ companies with strong corporate governance and hence it ought to be rare that we find ourselves in a position where we are voting against management.

In the majority of cases where we have voted against management it has been on matters relating to remuneration. Where we do not believe that a company’s compensation policy is aligned with the long-term best interests of the shareholders we will write to management to inform them of our intention to vote against such policies.

INTEGRITY AND BUSINESS ETHICS

The Company is committed to carrying out business in an honest and fair manner. The Board has adopted a zero-tolerance approach to instances of bribery and corruption. Accordingly, it expressly prohibits any Director or associated persons when acting on behalf of the Company from accepting, soliciting, paying, offering or promising to pay or authorise any payment, public or private, in the United Kingdom or abroad to secure any improper benefit from themselves or for the Company.

The Board applies the same standards to its service providers in their activities for the Company.

A copy of the Company’s Anti Bribery and Corruption Policy can be found in the Board and Policies section of the Company’s website. The policy is reviewed regularly by the Audit Committee.

In response to the implementation of the Criminal Finances Act 2017, the Board adopted a zero-tolerance approach to the criminal facilitation of tax evasion. A copy of the Company’s policy on preventing the facilitation of tax evasion can be found in the Board and Policies section of the Company’s website. The policy is reviewed annually by the Audit Committee.

In carrying out its activities, the Company aims to conduct itself responsibly, ethically and fairly, including in relation to social and human rights issues. As an investment trust with limited internal resource, the Company has little impact on the environment. The Company believes that high standards of ESG make good business sense and have the potential to protect and enhance investment returns. Consequently, the Portfolio Manager’s investment criteria ensure that ESG and ethical issues are taken into account and best practice is encouraged. The Board’s expectations are that its principal service providers have appropriate governance policies in place.

COMPANY PROMOTION

The Company has appointed Frostrow to promote the Company’s shares to professional investors in the UK and Ireland. As investment company specialists, the Frostrow team provides a continuous, proactive marketing, distribution and investor relations service that aims to promote the Company by encouraging demand for the shares.

MANAGEMENT ARRANGEMENTS

Alternative Investment Fund Manager (“AIFM”)

Frostrow under the terms of its AIFM agreement with the Company provides, inter alia, the following services:

· oversight of the portfolio management function delegated to Lindsell Train;

· promotion of the Company;

· investment portfolio administration and valuation;

· risk management services;

· share price discount and premium management;

· administrative and company secretarial services;

· advice and guidance in respect of corporate governance requirements;

· maintenance of the Company’s accounting records;

· maintenance of the Company’s website;

· preparation and publication of annual reports, half year reports and monthly fact sheets; and

· ensuring compliance with applicable legal and regulatory requirements.

The AIFM Agreement may be terminated by either party on giving notice of not less than 12 months.

Portfolio Manager

Under the Portfolio Management Agreement Lindsell Train, as delegate of the AIFM, is responsible for the management of the Company’s portfolio of investments under an agreement between it, the Company and Frostrow (the “Portfolio Management Agreement”).

Under the terms of its Portfolio Management Agreement, Lindsell Train provides, inter alia, the following services:

· seeking out and evaluating investment opportunities;

· recommending the manner by which monies should be invested, realised or retained;

· advising on how rights conferred by the investments should be exercised;

· analysing the performance of investments made; and

· advising the Company in relation to trends, market movements and other matters which may affect the investment objective and policy of the Company.

The Portfolio Management Agreement may be terminated by either party on giving notice of not less than 12 months.

Annual Fees

FEES ON THAT PART OF MARKET		PORTFOLIO
CAPITALISATION	AIFM	MANAGER
Less than or equal to £1 bn	0.15%	0.45%
Between £1bn - £2bn	0.135%	0.405%
£2 bn +	0.12%	0.36%

Performance Fees

The Company does not pay performance fees.

AIFM AND PORTFOLIO MANAGER EVALUATION AND RE-APPOINTMENT

The performance of Frostrow as AIFM and Lindsell Train as Portfolio Manager is continuously monitored by the Board with a formal evaluation being undertaken each year. As part of this process the Board monitors the services provided by the AIFM and the Portfolio Manager as well as receiving regular reports and views from them. The Board also receives comprehensive long-term performance measurement reports to enable it to determine whether or not the performance objective set by the Board has been met.

Following a review at a Board meeting in September 2021 the Board considers that the continuing appointment of Frostrow and Lindsell Train, under the terms described above, is in the best interests of the Company’s shareholders. In coming to this decision, it took into consideration the following additional reasons:

· the quality and depth of experience of the management, company secretarial, administrative and marketing team that the AIFM brought to the management of the Company; and

· the quality and depth of experience that the Portfolio Manager brought to the management of the portfolio, the clarity and rigour of the investment process, the level of past performance of the portfolio in absolute terms and also by reference to the benchmark index.

Depositary

The Bank of New York Mellon (International) Limited (the “Depositary”) acts as the Company’s depositary in accordance with the AIFMD on the terms and subject to the conditions of the depositary agreement between the Company, Frostrow and the Depositary (the “Depositary Agreement”). Under the terms of the Depositary Agreement the Company pays the Depositary a fee of 0.009% of net assets.

The Depositary provides the following services:

· responsibility for the safe-keeping of custodial assets of the Company;

· verification and maintenance of a record of all other assets of the Company and for the collection of income that arises from those assets;

· taking reasonable care to ensure that the Company is managed in accordance with the AIFMD, the FUND Sourcebook and the Company’s instrument of incorporation, in relation to the calculation of the net asset value per share and the application of income of the Company; and

· monitoring the Company’s compliance with investment restrictions and leverage limits set by the Board and the AIFM.

In accordance with the AIFM Rules the Depositary acts as global custodian and may delegate safekeeping to one or more global sub-custodians. The Depositary has delegated safekeeping of the assets of the Company to The Bank of New York Mellon SA/NV and/or The Bank of New York Mellon (The Global Sub-custodians).

As at the date of this report, the applicable active sub-custodians appointed by the Depositary who might be relevant for the purposes of holding the Company’s investments are:

COUNTRY		NAME OF SUB-CUSTODIAN		REGULATOR
The Netherlands		The Bank of New York Mellon SA/NV		Financial Services and Markets Authority, Belgium
United States of America		The Bank of New York Mellon, New York		US Securities and Exchange Commission
France		The Bank of New York Mellon SA/NV		The Autorité des Marchés Financiers
The United Kingdom		Depositary and Clearing Centre (DCC) Deutsche Bank AG, London Branch		The Financial Conduct Authority
		The Bank of New York Mellon, New York		US Securities and Exchange Commission

The Global Sub-Custodian’s safekeeping fees are charged according to the jurisdiction in which the holdings are based. The majority of the Company’s assets attracted a fee of 0.0033% of their market value. Variable transaction fees were also chargeable.

The Depositary Agreement may be terminated by either party on giving notice of not less than 90 days.

Simon Hayes

Chairman

14 December 2021

GOVERNANCE / GOVERNANCE

Statement of Directors’ Responsibilities

The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Financial Statements for each financial period. Under that law the Directors have prepared the Company’s Financial Statements in accordance with United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law (United Kingdom Generally Accepted Accounting Practice).

Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the return or profit of the Company for that period. In preparing the Financial Statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· state whether applicable United Kingdom Accounting Standards have been followed for the Financial Statements, subject to any material departures disclosed and explained in the Financial Statements;

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

· make judgements and accounting estimates that are reasonable and prudent; and

· prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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 Company and enable them to ensure that the Financial Statements and the Directors’ Remuneration Report comply with the Companies Act 2006; and

· the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

RESPONSIBILITY STATEMENT

The Directors consider that the annual report and accounts, taken as a whole, are fair, balanced, understandable and provide the information necessary for shareholders to assess the Company’s position, performance, business model and strategy.

Each of the Directors, whose names and functions are listed in the ‘Board of Directors’ in the Annual Report confirm that, to the best of their knowledge:

· the Company’s Financial Statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law (United Kingdom Generally Accepted Accounting Practice), give a true and fair view of the assets, liabilities, financial position and profit of the company; and

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

Approved by the Board of Directors and signed on its behalf by

Simon Hayes

Chairman

14 December 2021

Note to those who access this document by electronic means:

The Annual Report for the year ended 30 September 2021 has been approved by the Board of Finsbury Growth & Income Trust PLC. Copies of the Annual Report are circulated to shareholders and, where possible to potential investors. It is also made available in electronic format for the convenience of readers. Printed copies are available from the Company Secretary’s office in London.

FINANCIAL STATEMENTS / INCOME STATEMENT

FOR THE YEAR ENDED 30 SEPTEMBER 2021

		YEAR ENDED 30 SEPTEMBER 2021			YEAR ENDED 30 SEPTEMBER 2020
		REVENUE	CAPITAL	TOTAL	REVENUE	CAPITAL	TOTAL
	NOTE	£000	£000	£000	£000	£000	£000
Gains/(losses) on investments at fair value through profit or loss	9	–	164,020	164,020	–	(168,895)	(168,895)
Currency translations		–	(16)	(16)	–	(57)	(57)
Income	2	46,114	–	46,114	40,373	–	40,373
AIFM and portfolio management fees	3	(3,709)	(7,531)	(11,240)	(3,381)	(6,864)	(10,245)
Other expenses	4	(1,004)	(3)	(1,007)	(1,194)	(19)	(1,213)
Return/(loss) on ordinary activities before finance charges and taxation		41,401	156,470	197,871	35,798	(175,835)	(140,037)
Finance charges	5	(136)	(277)	(413)	(209)	(427)	(636)
Return/(loss) on ordinary activities before taxation		41,265	156,193	197,458	35,589	(176,262)	(140,673)
Taxation on ordinary activities	6	(844)	–	(844)	(736)	–	(736)
Return/(loss) on ordinary activities after taxation		40,421	156,193	196,614	34,853	(176,262)	(141,409)
Return/(loss) per share – basic and diluted	7	18.1p	69.9p	88.0p	16.5p	(83.6p)	(67.1p)

The “Total” column of this statement represents the Company’s income statement.

The “Revenue” and “Capital” columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies (AIC).

All items in the above statement derive from continuing operations.

The Company had no recognised gains or losses other than those declared in the Income Statement; therefore no separate statement of Total Comprehensive Income has been presented.

The notes form part of these Financial Statements.

FINANCIAL STATEMENTS / STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 SEPTEMBER 2021

	CALLED UP  SHARE  CAPITAL  £000	SHARE  PREMIUM  ACCOUNT  £000	CAPITAL  REDEMPTION RESERVE  £000	CAPITAL  RESERVE  £000	REVENUE  RESERVE  £000	TOTAL  SHARE-HOLDERS’ FUNDS  000
At 1 October 2020	54,438	1,039,510	3,453	699,693	45,436	1,842,530
Net return from ordinary activities	–	–	–	156,193	40,421	196,614
Second interim dividend (8.6p per share) for the year ended 30 September 2020	–	–	–	–	(18,727)	(18,727)
First interim dividend (8.0p per share) for the year ended 30 September 2021	–	–	–	–	(17,906)	(17,906)
Issue of shares	1,810	60,337	–	–	–	62,147
At 30 September 2021	56,248	1,099,847	3,453	855,886	49,224	2,064,658

	CALLED UP  SHARE  CAPITAL  £000	SHARE  PREMIUM  ACCOUNT  £000	CAPITAL  REDEMPTION RESERVE  £000	CAPITAL  RESERVE  £000	REVENUE  RESERVE  £000	TOTAL  SHARE-HOLDERS’ FUNDS £000
At 1 October 2019	50,203	904,320	3,453	875,981	44,803	1,878,760
Net (loss)/return from ordinary activities	–	–	–	(176,262)	34,853	(141,409)
Second interim dividend (8.6p per share) for the year ended 30 September 2019	–	–	–	–	(17,297)	(17,297)
First interim dividend (8.0p per share) for the year ended 30 September 2020	–	–	–	–	(16,923)	(16,923)
Issue of shares	4,235	135,100	–	–	–	139,335
Repurchase of shares into treasury	–	–	–	(3,394)	–	(3,394)
Sale of shares from treasury	–	90	–	3,368	–	3,458
At 30 September 2020	54,438	1,039,510	3,453	699,693	45,436	1,842,530

The notes form part of these Financial Statements.

FINANCIAL STATEMENTS / STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2021

	NOTE	2021 £000	2020 £000
Fixed assets
Investments held at fair value through profit or loss	9	2,071,266	1,851,588
Current assets
Debtors	10	9,428	8,277
Cash and cash equivalents		22,531	20,440
		31,959	28,717
Current liabilities
Creditors: amounts falling due within one year	11	(1,867)	(1,075)
		(1,867)	(1,075)
Net current assets		30,092	27,642
Total assets less current liabilities		2,101,358	1,879,230
Creditors: amount falling due after more than one year
Bank loan	12	(36,700)	(36,700)
Net assets		2,064,658	1,842,530
Capital and reserves
Called up share capital	13	56,248	54,438
Share premium account		1,099,847	1,039,510
Capital redemption reserve		3,453	3,453
Capital reserve	14	855,886	699,693
Revenue reserve		49,224	45,436
Total shareholders’ funds		2,064,658	1,842,530
Net asset value per share	15	917.7p	846.2p

The Financial Statements were approved by the Board of Directors on 14 December 2021 and were signed on its behalf by:

Simon Hayes
Chairman

The notes form part of these Financial Statements.

Company Registration Number SC013958 (Registered in Scotland)

FINANCIAL STATEMENTS / STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

	NOTE	2021 £000	2020 £000
Net cash inflow from operating activities before interest	18	31,953	26,587
Interest paid		(375)	(770)
Net cash inflow from operating activities		31,578	25,817
Investing activities
Purchase of investments		(92,966)	(160,703)
Sale of investments		37,981	23,689
Net cash outflow from investing activities		(54,985)	(137,014)
Financing activities
Dividends paid		(36,633)	(34,220)
Shares issued		62,147	143,471
Repurchase of Shares into treasury		–	(3,394)
Sale of shares from treasury		–	3,458
Net cash inflow from financing activities		25,514	109,315
Increase/(decrease) in cash and cash equivalents		2,107	(1,882)
Currency translations		(16)	(57)
Cash and cash equivalents at the beginning of the financial year		20,440	22,379
Cash and cash equivalents at the end of the financial year		22,531	20,440

The notes form part of these Financial Statements.

FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2021

1. ACCOUNTING POLICIES

The Company is a public limited company (PLC) incorporated in the United Kingdom, with registered office at 50 Lothian Road, Festival Square, Edinburgh EH3 9WJ.

The principal accounting policies, all of which have been applied consistently throughout the year in the preparation of these Financial Statements, are set out below:

(A) Basis of Preparation

The Financial Statements have been prepared in accordance with UK Generally Accepted Accounting Practice (GAAP) under UK Company Law, FRS 102 ‘The Financial Reporting Standard applicable in the UK, the Statement of Recommended Practice (SORP) for “Financial Statements of Investment Trust Companies and Venture Capital Trusts” issued by the Association of Investment Companies in April 2021 and the Companies Act 2006 under the historical cost convention as modified by the valuation of investments at fair value through profit or loss.

The Financial Statements have been prepared on a going concern basis. The disclosure on going concern in the Statement of Directors’ Responsibilities forms part of these Financial Statements.

Presentation of the Income Statement

In order to reflect better the activities of an investment trust company and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The net revenue return is the measure the Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Sections 1158 and 1159 of the Corporation Tax Act 2010.

Significant Judgements and Critical Sources of Estimation Uncertainties

There were no significant judgements or critical estimates reported during the financial year ended 30 September 2021 (2020: none).

(B) Investments held at Fair Value through Profit or Loss

Investments are measured under FRS 102, sections 11 and 12 and are measured initially, and at subsequent reporting dates, at fair value.

Changes in the fair value of investments and gains and losses on disposal are recognised in the Income Statement as a capital item. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the investments is provided internally on this basis to the Board. Fair value for quoted investments is deemed to be bid market prices, or last traded price, depending on the convention of the stock exchange on which they are quoted.

All purchases and sales of investments are accounted for on the trade date basis.

The Company’s policy is to expense transaction costs on acquisition/disposal through the gains on investment at fair value through profit or loss. The total of such expenses, showing the total amounts included in disposals and acquisitions are disclosed in note 9.

(C) Income

Dividends receivable from equity shares are recognised in Revenue on an ex-dividend basis except where, in the opinion of the Board, the dividend is Capital in nature, in which case it is included in Capital. Overseas dividends are stated gross of any withholding tax.

When the Company has elected to receive scrip dividends in the form of additional shares rather than cash, the amount of cash dividend foregone is recognised in Revenue.

Fixed returns on non-equity shares are recognised on a time apportionment basis.

Special dividends: In deciding whether a dividend should be regarded as a Capital or Revenue receipt, the Company reviews all relevant information as to the reasons for and sources of the dividend on a case by case basis depending upon the nature of the receipt. Special dividends of a revenue nature are recognised through the revenue column of the Income Statement. Special Dividends of a capital nature are recognised through the capital column of the Income Statement.

The limited liability partnership (LLP) profit share is recognised in the financial statements when the entitlement to the income is established. Deposit interest receivable is taken to revenue on an accruals basis.

(D) Dividends Payable

Dividends paid by the Company on its shares are recognised in the Financial Statements in the period in which they go ex-dividend and become payable and are shown in the Statement of Changes in Equity.

(E) Expenditure and Finance Charges

All the expense and finance costs are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except as follows:

1. expenses which are incidental to the acquisition or disposal of an investment are treated as part of the cost or deducted from proceeds of that investment (as explained in 1(b) above);
2. expenses are taken to the Capital reserve via the capital column of the Income Statement, where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. Consequently 67% of the portfolio management fee, AIFM fee and finance costs are taken to the Capital reserve and the balance to the Revenue reserve.

With effect from 1 October 2021 75% of the portfolio management fee, AIFM fee and finance costs will be taken to the Capital reserve and 25% will be taken to the Revenue reserve.

(F) Taxation

Current tax is provided at the amounts expected to be paid or recovered.

Deferred taxation is provided on all timing differences that have originated but not been reversed by the Statement of Financial Position date other than those differences regarded as permanent. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the reversal of timing differences can be deducted. Any liability to deferred tax is provided for at the rate of tax enacted or substantially enacted.

Any tax relief obtained in respect of AIFM and portfolio management fees, finance costs and other capital expenses charged are allocated to the capital column of the Income Statement.

(G) Foreign Currency

Transactions recorded in overseas currencies during the year are translated into Sterling at the exchange rates ruling at the date of the transaction. Assets and liabilities denominated in overseas currencies at the Statement of Financial Position date are translated into sterling at the exchange rate ruling at that date. Profits or losses on the translation of foreign currency balances, whether realised or unrealised are credited or debited to the Income Statement.

(H) Cash and Cash Equivalents

Cash and cash equivalents and demand deposits readily convertible to known amounts of cash and subject to insignificant risk of changes in value are defined as cash.

(I) Bank Loan

Bank loans are initially recognised at fair value, net of transaction costs incurred. Bank loans are subsequently measured at amortised cost. The loan amounts falling due for repayment within one year are included under current liabilities in the Statement of Financial Position and the loan amounts falling due after one year are included under “Creditors: amounts falling due after more than one year” in the Statement of Financial Position.

(J) Nature and Purpose of Reserves

Capital Redemption Reserve

This reserve arose when ordinary shares were bought by the Company and subsequently cancelled, at which point the amount equal to the par value of the ordinary share capital was transferred from the ordinary share capital to the Capital Redemption reserve.

Capital Reserve

This reserve reflects any:

• gains or losses on the disposal of investments;
• exchange differences of a capital nature;
• increases and decreases in the fair value of investments which have been recognised in the capital column of the Income Statement; and
• expenses which are capital in nature as disclosed in note 1(e).

Following amendments to the Company’s Articles of Association in 2015, this reserve can be used to distribute certain capital profits by way of dividend.

Revenue Reserve

This reserve reflects all income and expenditure which are recognised in the revenue column of the Income Statement and may be distributable by way of dividend.

When making a distribution to shareholders, the Directors determine profits available for distribution by reference to ‘Guidance on realised and distributable profits under the Companies Act 2006’ issued by the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland in April 2017. The availability of distributable reserves in the Company is dependent on those distributions meeting the definition of qualifying consideration within that guidance and on available cash resources of the Company and other accessible sources of funds. The distributable reserves are therefore subject to these restrictions or limitations at the time such distribution is made.

2. INCOME

	2021	2020
	£000	£000
Income from investments
UK listed dividends*	39,167	34,236
Overseas dividends	6,350	5,629
Limited liability partnership – profit-share and priority profit share on
AIFM capital contribution	597	508
Total income	46,114	40,373

*  includes special dividends which have been credited to the revenue account totalling £949,000 (2020: 725,000)

3. AIFM and portfolio management fees

	2021			2020
	REVENUE	CAPITAL	TOTAL	REVENUE	CAPITAL	TOTAL
	£000	£000	£000	£000	£000	£000
AIFM fee	927	1,883	2,810	845	1,716	2,561
Portfolio management fee	2,782	5,648	8,430	2,536	5,148	7,684
Total fees	3,709	7,531	11,240	3,381	6,864	10,245

4. OTHER EXPENSES

	2021			2020
	REVENUE	CAPITAL	TOTAL	REVENUE	CAPITAL	TOTAL
	£000	£000	£000	£000	£000	£000
Directors’ fees	159	–	159	168	–	168
Auditors’ fees – statutory annual audit	48	–	48	48	–	48
Stock listing and FCA fees	133	–	133	353	–	353
Depositary’s fees	211	–	211	192	–	192
Custody fees	109	–	109	96	–	96
Registrar’s fees	57	–	57	59	–	59
Promotional costs	51	–	51	51	–	51
Legal and professional fees*	10	3	13	16	19	35
Printing and postage	35	–	35	30	–	30
Company broker fees	37	–	37	27	–	27
Other expenses	154	–	154	154	–	154
Total expenses	1,004	3	1,007	1,194	19	1,213

*  During the year the Company incurred additional legal fees totalling £5,000, in relation to an amendment to the Company’s loan agreement with Scotiabank, of which 67% has been charged to capital and 33% charged to revenue. This is in line with the Company’s accounting policy.

Further details of the amounts paid to Directors are included in the Directors’ Remuneration Report in the Annual Report.

All of the above expenses include VAT where applicable, with the exception of the fees paid to the Company’s Auditors, which are shown excluding VAT.

5. Finance Charges

	2021			2020
	REVENUE	CAPITAL	TOTAL	REVENUE	CAPITAL	TOTAL
	£000	£000	£000	£000	£000	£000
Interest payable on bank loan	123	250	373	184	373	557
Arrangement fee	–	–	–	12	26	38
Loan facility expenses	13	27	40	13	28	41
	136	277	413	209	427	636

6. Taxation on Ordinary Activities

(A) Analysis of Charge in the year

	2021			2020
	REVENUE	CAPITAL	TOTAL	REVENUE	CAPITAL	TOTAL
	£000	£000	£000	£000	£000	£000
UK Corporation tax at 19% (2020: 19%)	–	–	–	–	–	–
Overseas withholding tax	1,036	–	1,036	880	–	880
Recoverable overseas withholding tax	(192)	–	(192)	(144)	–	(144)
	844	–	844	736	–	736

(B) Factors Affecting Current Tax Charge for year

The tax assessed for the year is higher (2020: higher) than the standard rate of UK corporation tax of 19% (2020: 19%).

The differences are explained below:

		2021			2020
	REVENUE	CAPITAL	TOTAL	REVENUE	CAPITAL	TOTAL
	£000	£000	£000	£000	£000	£000
Total return/(loss) on ordinary activities before taxation	41,265	156,193	197,458	35,589	(176,262)	(140,673)
Return/(loss) on ordinary activities multiplied by UK corporation tax of 19% (2020: 19%)	7,840	29,677	37,517	6,762	(33,490)	(26,728)
Effects of:
Overseas taxation	844	–	844	736	–	736
Franked investment income not subject to corporation tax – UK dividend income	(7,441)	–	(7,441)	(6,504)	–	(6,504)
Overseas dividends not taxable	(1,207)	–	(1,207)	(1,070)	–	(1,070)
Excess management expenses	808	–	808	812	–	812
Amounts charged to capital	–	1,484	1,484	–	1,389	1,389
Non-taxable (returns)/losses on investments*	–	(31,164)	(31,164)	–	32,090	32,090
Currency translations	–	3	3	–	11	11
Total tax charge for the year (note 6(a))	844	–	844	736	–	736

*  (Return)/losses on investments are not subject to corporation tax within an investment trust company.

(C) Deferred Taxation

As at 30 September 2021, the Company had unutilised management expenses and other reliefs for taxation purposes of £110,404,000 (2020: £98,428,000). It is unlikely that the Company will generate sufficient taxable income in excess of the available deductible expenses and therefore the Company has not recognised a deferred tax asset of £27,601,000 (2020: £18,701,000) based on the prospective corporation tax rate of 25% (2020: 19%).

Given the Company’s status as an investment company and the intention to continue meeting the conditions required to maintain such status in the foreseeable future, the Company has not provided for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments.

7. Return/(Loss) Per Share – Basic and Diluted

	2021	2020
	£000	£000
The return/(loss) per share is based on the following figures:
Revenue return	40,421	34,853
Capital return/(loss)	156,193	(176,262)
Total return/(loss)	196,614	(141,409)
Weighted average number of shares in issue during the year	223,371,358	210,795,674
Revenue return per share	18.1p	16.5p
Capital return/(loss) per share	69.9p	(83.6)p
Total return/(loss) per share	88.0p	(67.1)p

The calculation of the total, revenue and capital returns/(loss) per ordinary share is carried out in accordance with IAS 33, “Earnings per Share (as adopted in the EU)”.

As at 30 September 2021 and 2020 there were no dilutive instruments in issue, therefore the basic and diluted return/(loss) per share are the same.

8. Dividends

In accordance with FRS 102 dividends are included in the Financial Statements in the year in which they are paid or approved by shareholders.

	EX-DIVIDEND	REGISTER	PAYMENT	2021	2020
	DATE	DATE	DATE	£000	£000
First interim dividend of 8.0p per share (2020: 8.0p)	1 April 2021	6 April 2021	14 May 2021	17,906	16,923
Second interim dividend of 9.1p per share (2020: 8.6p)	7 October 2021	8 October 2021	12 November 2021	20,474	18,727

The second interim dividend of 9.1p per share (2020: 8.6p) has not been included as a liability in these Financial Statements as it is only recognised in the financial year in which it is paid.

The total dividends payable in respect of the financial year which ensures compliance with Section 1158 of the Corporation Tax Act 2010 are set out below:

	2021	2020
	£000	£000
Revenue available for distribution by way of dividend for the year	40,421	34,853
2021: First interim dividend of 8.0p per share (2020: 8.0p) paid on 14 May 2021	(17,906)	(16,923)
2021 Second interim dividend of 9.1p per share (2020: 8.6p) paid on 12 November 2021	(20,474)	(18,727)
Net additions to/(from) revenue reserves	2,041	(797)

9. Investments held at Fair Value Through Profit or Loss

Analysis of Portfolio Movements

	2021	2020
	£000	£000
Opening book cost	1,244,210	1,093,373
Opening investment holding gains	607,378	795,461
Valuation at 1 October	1,851,588	1,888,834
Movements in the year:
Purchases at cost	93,690	155,338
Sales proceeds	(38,032)	(23,689)
Gains/(losses) on investments	164,020	(168,895)
Valuation at 30 September	2,071,266	1,851,588
Closing book cost	1,303,097	1,244,210
Investment holding gains at 30 September	768,169	607,378
Valuation at 30 September	2,071,266	1,851,588

The Company received £38,032,000 (2020: £23,689,000) from investments sold in the year. The book cost of these investments when they were purchased was £34,803,000 (2020: £4,502,000). These investments have been revalued over time and until they were sold any unrealised gains/ losses were included in the fair value of the investments.

Purchase transaction costs for the year to 30 September 2021 were £213,000 (2020: £512,000). These comprise of stamp duty costs of £173,000 (2020: £449,000) and commission of £40,000 (2020: £63,000). Sales transaction costs for the year to 30 September 2021 were £15,000 (2020: £8,000) and comprise commission.

10. Debtors

	2021	2020
	£000	£000
Amounts due from brokers	674	–
Accrued return of capital	–	623
Accrued income and prepayments	8,754	7,654
	9,428	8,277

11. Creditors: Amounts Falling Due Within One Year

	2021	2020
	£000	£000
Amounts due to brokers	724	–
Other creditors and accruals	1,143	1,075
	1,867	1,075

12. Bank Loan

	2021	2020
	£000	£000
Bank loan	36,700	36,700

Scotiabank Europe PLC, the provider of the Company’s loan facility, has a fixed and floating charge over the assets of the Company as security against any funds drawn down under the loan facility. The multi-currency revolving loan facility of £50 million (with an additional £50 million available if required) is due to expire in early October 2022.

The main covenant under the loan facility required that, at each month end, total borrowings should not exceed £100 million and the ratio of Adjusted Total Net Assets to Debt is not to be less than 4:1. There were no breaches of the covenant during the year.

The Board has set a gearing limit which must not exceed 25% of the Company’s net asset value.

13. CALLED UP SHARE CAPITAL

	2021	2020
	£000	£000
Allotted, issued and fully paid:
224,991,303 (2020: 217,751,303) ordinary shares of 25p each	56,248	54,438

During the year 7,240,000 (2020: 16,939,591) new ordinary shares were issued for consideration of £62,147,000 (2020: £139,335,000) being an average price of 858.38p (2020: 822.54p) per share.

During the year the Company did not buy back any shares.

14. CAPITAL RESERVE

		CAPITAL
	CAPITAL	RESERVE
		INVESTMENT
	RESERVE	HOLDING GAINS	2021	2020
	REALISED	UNREALISED	TOTAL	TOTAL
	£000	£000	£000	£000
At 1 October 2020	92,315	607,378	699,693	875,981
Net gains/(losses) on investments	3,229	160,791	164,020	(168,895)
Sale of shares from treasury	–	–	–	3,368
Repurchase of shares into treasury	–	–	–	(3,394)
Expenses charged to capital	(7,534)	–	(7,534)	(6,883)
Finance costs charged to capital	(277)	–	(277)	(427)
Currency translations	(16)	–	(16)	(57)
At 30 September 2021	87,717	768,169	855,886	699,693

The amount of the capital reserve that is distributable is complex to determine and is not necessarily the full amount of the reserve as disclosed within these Financial Statements of £855,886,000, as at 30 September 2021 as this is subject to fair value movements and may not be readily realisable at short notice.

15. NET ASSET VALUE PER SHARE

	2021	2020
Net assets (£000)	2,064,658	1,842,530
Number of shares in issue	224,991,303	217,751,303
Net asset value per share	917.7p	846.2p

As at 30 September 2021 and 2020 there were no dilutive instruments held, therefore the basic and diluted net asset value per share are the same.

16. Transactions with the AIFM, the Portfolio Manager and Related Parties

Details of the relationship between the Company, Frostrow and Lindsell Train are disclosed on the Company’s website and also in the Report of the Directors in the Annual Report.

The Company has an investment in Frostrow with a book cost of £975,000 (2020: £825,000) and a fair value of £5,200,000 (including the AIFM capital contribution of £900,000) (2020: £750,000) as at 30 September 2021 (2020: 3,950,000).

The Company has an investment in The Lindsell Train Investment Trust plc, which is managed by Lindsell Train, with a book cost of £1,000,000 (2020: £1,000,000) and a fair value of £14,350,000 as at 30 September 2021 (2020: £11,300,000).

Details of the income received and fees payable to the AIFM are disclosed in notes 2 and 3 and details of the remuneration payable to the Portfolio Manager are detailed in note 3.

Details of the fees of all Directors can be found in the Annual Report and in note 4. Directors’ interests in the capital of the Company can be found in the Annual Report. There were no other material transactions during the year with the Directors of the Company.

17. RISK MANAGEMENT

As an investment trust, the Company invests in equities and other investments for the long term so as to secure its investment objective. In pursuit of its investment objective, the Company is exposed to a variety of risks that could result in either a reduction in the Company’s net assets or a reduction in the revenue returns available for distribution.

The Company’s financial instruments comprise mainly of equity investments, cash balances, borrowings, debtors and creditors that arise directly from its operations.

The principal risks inherent in managing the Company’s financial instruments are market risk, liquidity risk and credit risk.

The principal and emerging  risks and the Directors’ approach to the management of those where the Directors consider there to be a high inherent risk are set out in the Strategic Report.

Market Risk

Market risk comprises three types of risk: market price risk, interest rate risk and currency risk.

Market Price Risk

As an investment company, performance is dependent on the performance of the underlying companies and securities in which it invests. The market price of investee companies’ shares is subject to their performance, supply and demand for the shares and investor sentiment regarding the company or the industry sector in which it operates. Consequently, market price risk is one of the most significant risks to which the Company is exposed.

At 30 September 2021, the fair value of the Company’s assets exposed to market price risk was £2,071,266,000 (2020: £1,851,588,000). If the fair value of the Company’s investments at the Statement of Financial Position date increased or decreased by 10%, while all other variables remained constant, the capital return and net assets attributable to shareholders for the year ended 30 September 2021 would have increased or decreased by £207,127,000 or 92.1p per share (2020: £185,159,000 or 85.0p per share).

No derivatives or hedging instruments are currently utilised to manage market price risk.

Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Interest rate movement may affect:

• the interest payable on the Company’s variable rate borrowings
• the level of income receivable from variable interest securities and cash deposits
• the fair value of investments of fixed rate securities

The Company’s main exposure to interest rate risk during the year ended 30 September 2021 was through its three year £50,000,000 secured multi-currency committed revolving credit facility (with an additional £50 million facility available if required) with Scotiabank Europe PLC maturing in October 2022. Borrowings at the year end amounted to £36,700,000 (2020: £36,700,000) at an interest rate of 1.033% (LIBOR plus 0.96% per annum).

If the above level of borrowing was maintained for a year a 1% increase/decrease in LIBOR in 2021/22 would decrease/increase the revenue return by £92,000, (2020: £121,000), decrease/increase the capital return in that year by £275,000 (2020: £246,000) and decrease/increase the net assets by £367,000 (2020: 367,000).

The weighted average interest rate, during the year, on borrowings under the above mentioned revolving credit facility was 1.02% (2020: 1.57%). At 30 September 2021, the Company’s financial assets and liabilities exposed to interest rate risk were as follows:

	2021		2020
	WITHIN	MORE THAN	WITHIN	MORE THAN
	ONE YEAR	ONE YEAR	ONE YEAR	ONE YEAR
	£000	£000	£000	£000
Exposure to floating rates:
Assets
Cash and cash equivalents	22,531	–	20,440	–
Liabilities
Creditors: amount falling due within one year – borrowings on the loan facility	–	–	–	–
Creditors: amount falling due after more than one year
– borrowings under the loan facility	–	(36,700)	–	(36,700)
Exposure to fixed rates:
Assets
Investments at fair value through profit or loss#	1,136	–	996	–
Liabilities	–	–	–	–

^#  Celtic 6% cumulative convertible preference shares and Frostrow Capital LLP AIFM Investment.

Currency Risk

The Financial Statements are presented in sterling, which is the functional currency and presentational currency of the Company. At 30 September 2021, the Company’s investments, with the exception of four, were priced in sterling. The four exceptions were, Heineken, listed in the Netherlands, Remy Cointreau listed in France, Manchester United and Mondelez International, both of which are listed in the United States and the aggregate of these four represents 19.3% of the portfolio.

The AIFM and the Portfolio Manager monitor the Company’s exposure to foreign currencies on a continuous basis and regularly report to the Board. The Company does not hedge against foreign currency movements, but the Portfolio Manager takes account of the risk when making investment decisions.

Income denominated in foreign currencies is converted into sterling on receipt. The Company does not use financial instruments to mitigate the currency exposure in the period between its receipt and the time that the income is included in the Financial Statements.

Foreign Currency Exposure

At 30 September 2021 the Company held £200,380,000 (2020: £198,104,000) of investments denominated in U.S. dollars and £198,566,000 (2020: £184,201,000) in Euros.

Currency Sensitivity

The following table details the sensitivity of the Company’s return after taxation for the year to a 10% increase or decrease in the value of sterling compared to the U.S. dollar and euro (2020: 10% increase and decrease).

The analysis is based on the Company’s foreign currency financial instruments held at each Statement of Financial Position date.

This level of sensitivity is considered to be reasonably possible based on observation of current market conditions and historical trends.

If sterling had weakened against the U.S. dollar and euro, as stated above, assuming all other variables remain constant, this would have had the following effect:

	2021	2020
	£000	£000
Impact on revenue return	231	175
Impact on capital return	44,314	42,472
Total return after tax/increase in shareholders’ funds	44,545	42,647

If sterling had strengthened against the foreign currencies as stated above, assuming all other variables remain constant, this would have had the following effect:

	2021	2020
	£000	£000
Impact on revenue return	(189)	(143)
Impact on capital return	(36,259)	(34,764)
Total return after tax/decrease in shareholders’ funds	(36,448)	(34,907)

Credit Risk

Credit risk is the risk that the counterparty to a transaction fails to discharge its obligations under that transaction, which could result in the Company suffering a loss. Credit risk is managed as follows:

– Investment transactions are carried out only with brokers which are considered to have a high credit rating.

– Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company’s custodian bank ensures that the counterparty to any transactions entered into by the Company has delivered its obligation before any transfer of cash or securities away from the Company is completed.

– Any failing trades in the market are closely monitored by both the AIFM and the Portfolio Manager.

– Cash is only held at banks that have been identified by the Board as reputable and of high credit quality. Bank of New York Mellon has a credit rating of Aa2 (Moody’s) and AA- (Fitch).

At 30 September 2021, the exposure to credit risk was £32,195,000 (2020: £28,963,000), comprising:

	2021	2020
	£000	£000
Fixed assets:
Non-equity investments (preference shares)	236	246
Current assets:
Other receivables (amounts due from brokers, dividends and priority profit share receivable)	9,428	8,277
Cash and cash equivalents	22,531	20,440
Total exposure to credit risk	32,195	28,963

Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Liquidity risk is not considered significant as the majority of the Company’s assets are investments in quoted equities. As at 30 September 2021 it is estimated that 93.6% of the investment portfolio could be liquidated within 30 days with 61.2% in seven days, based on current trading volumes.

Liquidity risk exposure

	30 SEPTEMBER	30 SEPTEMBER
FINANCIAL LIABILITIES COMPRISE:	2021	2020
	£000	£000
Due within one month:
Balances due to brokers	724	–
Accruals	1,143	1,075
Due after three months and after one year:
Bank loan	36,700	36,700

Fair Value of Financial Assets and Financial Liabilities

Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value or at a reasonable approximation of fair value.

Valuation of Financial Instruments

The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements. 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 – quoted prices in active markets.
• Level 2 – prices of recent transactions for identical instruments.
• Level 3 – valuation techniques using observable and unobservable market data.

The financial assets and liabilities measured at fair value in the Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows:

AS AT 30 SEPTEMBER 2021	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL
	£000	£000	£000	£000
Equity investments	2,065,830	–	–	2,065,830
Limited liability partnership interest (Frostrow)	–	–	4,300	4,300
AIFM capital contribution (Frostrow)	–	–	900	900
Preference share investments	236	–	–	236
	2,066,066	–	5,200	2,071,266

AS AT 30 SEPTEMBER 2020	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL
	£000	£000	£000	£000
Equity investments	1,847,392	–	–	1,847,392
Limited liability partnership interest (Frostrow)	–	–	3,200	3,200
AIFM capital contribution (Frostrow)	–	–	750	750
Preference share investments	246	–	–	246
	1,847,638	–	3,950	1,851,588

The unquoted investment in Frostrow, has been re-valued by the Directors during the year, using two unobservable market data sources, being Frostrow’s earnings and an agreed appropriate comparator multiple. This is the same methodology adopted to value Frostrow as at 30 September 2020.

There have been no transfers during the year between Levels 1 and 2. A reconciliation of fair value measurements in Level 3 is set out below.

Level 3 Reconciliation of financial assets at fair value through profit or loss at 30 September

	2021	2020
	£000	£000
Opening fair value	3,950	2,140
AIFM capital contribution (Frostrow)	150	150
Total gains included in gains on investments in the Income Statement	1,100	1,660
Closing fair value	5,200	3,950

If the earnings used in the valuation were to increase or decrease by 10% while all the other variables remained constant, the return and net costs attributable to shareholders for the year ended 30 September 2021 would have increased/decreased by £430,000 (2020: £320,000, applying the same assumptions).

Capital Management Objectives, Policies and Procedures

The structure of the Company’s capital is described in note 13 and details of the Company’s reserves are shown in the Statement of Changes in Equity.

The Company’s capital management objectives are:

• to ensure that it is able to continue as a going concern; and
• to achieve capital and income growth and to provide shareholders with a total return in excess of that of the FTSE All-Share Index through an appropriate balance of equity and debt.

The Board, with the assistance of the AIFM and the Portfolio Manager, regularly monitors and reviews the broad structure of the Company’s capital. These reviews include:

• the level of gearing, set at a limit in normal market conditions, is not to exceed 25% of the Company’s net assets, which takes account of the Company’s position and the views of the Board, the AIFM and the Portfolio Manager on the market;
• the extent to which revenue reserves should be retained or utilised; and
• ensuring the Company’s ability to continue as a going concern.

The Company’s objectives, policies and procedures for managing capital are unchanged from last year.

There were no breaches by the Company during the year of the financial covenants put in place by Scotiabank Europe plc in respect of the committed revolving credit facility provided to the Company.

These requirements are unchanged since last year and the Company has complied with them at all times.

NET CASH INFLOW FROM OPERATING ACTIVITIES BEFORE INTEREST

	2021	2020
	£000	£000
Total return/(loss) before finance charges and taxation	197,871	(140,037)
(Deduct)/add: capital (gain)/loss before finance charges and taxation	(156,470)	175,835
Net revenue before finance charges and taxation	41,401	35,798
Increase in accrued income and prepayments	(1,111)	(1,803)
Increase/(decrease) in creditors	30	(45)
Taxation – overseas withholding tax paid	(833)	(480)
AIFM, portfolio management fees and other expenses charged to capital	(7,534)	(6,883)
Net cash inflow from operating activities	31,953	26,587

19. SUBSTANTIAL INTERESTS

At 30 September 2021 the Company held interests in 3% or more of any class of capital in the following entities:

			% OF ISSUED
			SHARE
			CAPITAL
		2021	OR LIMITED
			LIABILITY
COMPANY OR LIMITED LIABILITY PARTNERSHIP	SHARES	FAIR VALUE	PARTNERSHIP
	HELD	£000	INTEREST
A. G. Barr	4,480,000	23,162	4.0
Celtic	3,251,399	3,488	3.4
Frostrow Capital LLP (unquoted)+	–	5,200	10.0
Manchester United	2,275,000	32,683	5.3
The Lindsell Train Investment Trust plc*	10,000	14,350	5.0
Young & Co’s Brewery (non voting shares)	1,050,000	9,072	5.5

FURTHER INFORMATION / GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES

ACTIVE SHARE

Active Share is expressed as a percentage and shows the extent to which a fund’s holdings and their weightings differ from those of the fund’s benchmark index. A fund that closely tracks its index might have a low Active Share of less than 20% and be considered passive, while a fund with an Active Share of 60% or higher is generally considered to be actively managed.

AIC

Association of Investment Companies.

ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (AIFMD)

Agreed by the European Parliament and the Council of the European Union and transposed into UK legislation, the AIFMD classifies certain investment vehicles, including investment companies, as Alternative Investment Funds (AIFs) and requires them to appoint an Alternative Investment Fund Manager (AIFM) and depositary to manage and oversee the operations of the investment vehicle. The Board of the Company retains responsibility for strategy, operations and compliance and the Directors retain a fiduciary duty to shareholders.

ALTERNATIVE PERFORMANCE MEASURE (APM)

An Alternative Performance Measure (APM) is a numerical measure of the Company’s current, historical or future financial performance, financial position or cash flows other than a financial measure defined or specified in the applicable financial framework. In selecting these Alternative Performance Measures, the Directors considered the key objectives and expectations of typical investors and believe that each APM gives the reader useful and relevant information in judging the Company's performance and in comparing other investment companies.

BENCHMARK RETURN

Total return on the benchmark, assuming that all dividends received were re-invested, without transaction costs, into the shares of the underlying companies at the time the shares were quoted ex-dividend.

DISCOUNT OR PREMIUM (APM)

A description of the difference between the share price and the net asset value per share. The size of the discount or premium is calculated by subtracting the share price from the net asset value per share and is usually expressed as a percentage (%) of the net asset value per share. If the share price is higher than the net asset value per share the result is a premium. If the share price is lower than the net asset value per share, the shares are trading at a discount.

DISCOUNT OR PREMIUM (APM)		30 SEPTEMBER 2021	30 SEPTEMBER 2020
Share price (p)		876.0	840.0
Net asset value per share (p)		917.7	846.2
Discount		4.5%	0.7%

FTSE DISCLAIMER

“FTSE© is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/ or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distributions of FTSE Data is permitted without FTSE’s express written consent.

GEARING (APM)

Gearing represents prior charges, adjusted for net current assets expressed as a percentage of net assets (AIC methodology). Prior charges includes all loans and bank overdrafts for investment purposes.

		30 SEPTEMBER	30 SEPTEMBER
		2021	2020
		£000	£000
Bank loan (prior charges)		(36,700)	(36,700)
Net current assets		30,092	27,642
Net debt		(6,608)	(9,058)
Net assets		2,064,658	1,842,530
Gearing		0.3%	0.5%

LEVERAGE

For the purpose of the Alternative Investment Fund Managers (AIFM) Directive, leverage is a method which increases the Company’s exposure, including the borrowing of cash and the use of derivatives.

Leverage is calculated slightly differently to the AIC method of calculating gearing in that it is expressed as a ratio between the Company’s exposure and its net asset value. It is calculated under gross and commitment methods. Under the gross method, exposure represents the Company’s investment positions excluding sterling cash balances. Under the commitment method, exposure represents the Company's investment positions including sterling cash balances and after certain hedging and netting positions are offset (where applicable). For these purposes the Board has set a maximum leverage of 125% for both methods.

	30 SEPTEMBER 2021	30 SEPTEMBER 2020
Gross method Commitment method	100.3% 101.4%	100.5% 101.6%

NET ASSET VALUE (NAV)

The value of the Company’s assets, principally investments made in other companies and cash being held, less any liabilities. The NAV is also described as ‘shareholders’ funds’. The NAV is often expressed in pence per share after being divided by the number of shares that have been issued. The NAV per share is unlikely to be the same as the share price which is the price, at which the Company’s shares can be bought or sold by an investor. The share price is determined by the relationship between the demand and supply of the shares.

NET ASSET VALUE TOTAL RETURN PER SHARE (APM)

The theoretical total return on an investment over a specified period assuming dividends paid to shareholders were reinvested at net asset value per share at the time the shares were quoted ex-dividend. This is a way of measuring investment management performance of investment trusts which is not affected by movements in discounts or premiums.

		30 SEPTEMBER 2021	30 SEPTEMBER 2020
Opening NAV per share (p)		846.2	935.6
Increase/(decrease)in NAV per share (p)		71.5	(89.4)
Closing NAV per share (p)		917.7	846.2
Increase/(decrease) in NAV per share		+8.4%	(9.6%)
Impact of dividends re-invested*		+2.2%	+1.9%
NAV per share total return		+10.6%	(7.7%)

* Total dividends paid during the financial year of 16.6p (2020: 16.6p) were re-invested at the cum dividend NAV/share price during the year.

The source is Morningstar who have calculated the return on an industry comparative basis.

ONGOING CHARGES (APM)

Ongoing charges are calculated by taking the Company’s annualised operating expenses expressed as a proportion of the average daily net asset value of the Company over the year. The costs of buying and selling investments are excluded, as are interest costs, taxation, cost of buying back or issuing ordinary shares and other non-recurring costs.

NAV TOTAL RETURN		30 SEPTEMBER	30 SEPTEMBER
		2021	2020
		£'000	£'000
AIFM and portfolio management fees		11,240	10,245
Operating expenses		1,007	1,213
Total expenses		12,247	11,458
Average net assets during the year		1,988,069	1,779,936
Ongoing charges		0.62%	0.64%

PEER GROUP

Finsbury Growth & Income Trust PLC is part of the AIC’s UK Equity Income Investment Trust Sector. The trusts in this universe are defined as trusts whose investment objective is to achieve a total return for shareholders through both capital and dividend growth. The members will normally have at least 80% of their assets in UK securities return.

REVERSE STRESS TEST

Reverse stress tests are stress tests that identify scenarios and circumstances which would make a business unworkable and identifies potential business vulnerabilities.

SASB

The Sustainability Accounting Standards Board.

SHARE PRICE TOTAL RETURN (APM)

The change in capital value of a company’s shares over a given period, plus dividends paid to shareholders, expressed as a percentage of the opening value. The assumption is that dividends paid to shareholders are re-invested in the shares at the time the shares are quoted ex dividend.

SHARE PRICE TOTAL RETURN		30 SEPTEMBER 2021	30 SEPTEMBER 2020
Opening share price share (p)		840.0	942.0
Increase/(decrease) in share price (p)		36.0	(102.0)
Closing share price (p)		876.0	840.0
Increase/(decrease) in share price		+4.3%	(10.8%)
Impact of dividends re-invested*		+2.0%	+1.8%
Share price total return		+6.3%	(9.0%)

* Total dividends paid during the financial year of 16.6p (2020: 16.6p) were re-invested at the cum dividend NAV/share price during the year.

The source is Morningstar who have calculated the return on an industry comparative basis.

STRESS TESTING

Is a forward-looking analysis technique that considers the impact of a variety of extreme but plausible economic scenarios on the financial position of the Company.

TCFD

Task Force on Climate-Related Financial Disclosures.

TREASURY SHARES

Shares previously issued by a company that have been bought back from shareholders to be held by the company for potential sale or cancellation at a later date. Such shares are not capable of being voted and carry no rights to dividends.

202 1 Accounts

The figures and financial information for 2021 are extracted from the Annual Report and financial statements for the year ended 30 September 2021 and do not constitute the statutory accounts for the year.  The Annual Report and financial statements include the Report of the Independent Auditor which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.  The Annual Report and financial statements have not yet been delivered to the Registrar of Companies.

20 20 Accounts

The figures and financial information for 2020 are extracted from the published Annual Report and financial statements for the period ended 30 September 2020 and do not constitute the statutory accounts for that year.  The Annual Report and financial statements have been delivered to the Registrar of Companies and included the Report of the Independent Auditor which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

Annual report and financial statements

Copies of the Annual Report and financial statements will be posted to shareholders in early January 2022 and will be available on the Company’s website (www.finsburygt.com) or in hard copy format from the Company Secretary.

The Company's Annual Report for the period ended 30 September 2021 has been submitted to the Financial Conduct Authority and will shortly be available for inspection on the National Storage Mechanism (NSM) via https://data.fca.org.uk/#/nsm/nationalstoragemechanism. 

The Annual General Meeting will be held on Wednesday, 9 February 2022.

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

-ENDS-

For further information please contact

Victoria Hale
Company Secretary
For and on behalf of Frostrow Capital LLP
020 3170 8732