Half-year Report

Legal Entity Identifier:  213800NN42KX2LG1GQ40

7 May 2021

LONDON STOCK EXCHANGE ANNOUNCEMENT

Finsbury Growth & Income Trust PLC

Unaudited Half Year Results For The Six Months Ended

31 March 2021

This Announcement is not the Company’s Half Year Report & Accounts. It is an abridged version of the Company’s full Half Year Report & Accounts for the six months ended 31 March 2021. The full Half Year Report & Accounts, together with a copy of this announcement, will shortly be available on the Company’s website at www.finsburygt.com where up to date information on the Company, including daily NAV, share prices and fact sheets, can also be found.

The Company's Half Year Report & Accounts for the six months ended 31 March 2021 has been submitted to the UK Listing Authority, and will shortly be available for inspection on the National Storage Mechanism (NSM): https://data.fca.org.uk/#/nsm/nationalstoragemechanism

FINANCIAL HIGHLIGHTS

	AS AT 31 MARCH	AS AT 30 SEPTEMBER	%
	2021	2020	CHANGE
Share price	862.0p	840.0p	2.6
Net asset value per share	856.0p	846.2p	1.2
Premium/(discount) of share price to net asset value per share^	0.7%	(0.7)%
Gearing1^	0.9%	0.5%
Shareholders’ funds	£1,915.9m	£1,842.5m	4.0
Number of shares in issue	223,821,303	217,751,303	2.8

	SIX MONTHS TO 31 MARCH	ONE YEAR TO 30 SEPTEMBER
	2021	2020
Share price (total return)2^	+3.7%	-9.0%
Net asset value per share (total return)2^	+2.2%	-7.7%
FTSE All-Share Index (total return2 3) (Company benchmark)	+18.5%	-16.6%
Active Share %1 2	86.28%	87.05%
Ongoing charges1^	0.6%	0.6%

	YEAR ENDING 30 SEPTEMBER	YEAR ENDED 30 SEPTEMBER
	2021	2020
First interim dividend	8.0p	8.0p
Second interim dividend	Yet to be declared	8.6p

¹ See glossary

² Source – Morningstar

³ Source – FTSE International Limited (“FTSE”) © FTSE 2021 

^{^} Alternative Performance Measures (“APMs”). Definitions of the APMs together with how the measures have been calculated can be found in the Glossary.

REVIEWS

CHAIRMAN’S STATEMENT

I am pleased to present my first report as Chairman following the retirement of Anthony Townsend from the Board in February 2021. My Board colleagues and I would like to thank Anthony for his 22 years of service to the Company, 13 of them as Chairman.  I know that he was particularly sorry not to be able to say farewell to shareholders in person at the Annual General Meeting owing to pandemic-related restrictions and we wish him well for the future.

PERFORMANCE

It is disappointing to have to report that the Company has underperformed its benchmark. The Company’s net asset value per share^ over the period under review was up 2.2% on a total return basis which compares with a return of 18.5% from the Company’s benchmark, the FTSE All-Share Index. The share price total return was slightly higher at 3.7% reflecting the move in the share price over the period from a small discount to the net asset value to a small premium.  The total return for the period was £40.5m compared with a loss of £358.0m for the corresponding period last year which reflected significant market uncertainty at the early stages of the COVID-19 global health crisis.

Our Portfolio Manager’s investment approach involves building a concentrated portfolio of companies that have strong brands and/or powerful market franchises. This concentrated approach results in a very different portfolio when compared with the constituents of the Company’s benchmark, the FTSE All-Share Index, and demonstrates a high level of active management.  The extent to which a portfolio is actively managed can be quantified and expressed as a percentage (“Active Share”)*.  At 31 March 2021, the Company's Active Share versus the FTSE All-Share Index was 86.28%.  Such an uncorrelated portfolio will inevitably perform very differently from its benchmark (positively or negatively) over different periods of time. 

The performance over the six month period is driven in the main by a difficult 2021 to date for a number of key holdings in the portfolio. Holdings (such as Unilever) that performed well during calendar year 2020 due to their defensive nature and which were responsible for the portfolio’s outperformance last year have significantly lagged in 2021 to date. In addition, the share prices of a number of holdings have performed poorly in recent months due to what is hoped are short term issues within those businesses. Our Portfolio Manager’s report provides more context and detail.

SHARE CAPITAL

Continued demand for the Company’s shares has led to the issue of a total of 6,070,000 new shares in this half year, raising £51.6 million. As at 31 March 2021 the Company had 223,821,303 shares of 25p each in issue (31 March 2020: 211,146,303).

Since 1 April 2021 to the date of this report, a further 1,075,000 new shares have been issued raising £9.7 million. As at 6 May 2021, the Company had 224,896,303 shares in issue.

DIVIDEND

The Board declared an unchanged first interim dividend of 8.0p per share with respect to the year ending 30 September 2021. That dividend will be paid on Friday, 14 May 2021 to shareholders who were on the register on Tuesday, 6 April 2021. The associated ex-dividend date was Thursday, 1 April 2021.

The Board expects to declare the second dividend for the year ending 30 September 2021 in the Autumn.

OUTLOOK

This year continues to be dominated by the impact of the COVID-19  pandemic and of the consequential government measures seeking to bring the virus under control.

Our Portfolio Manager believes that the continued strategy of investing in digital products and services, luxury and premium consumer brands and trusted wealth management services is a sound basis for strong performance over the next decade and beyond. Your Board supports this view and continues to believe that shareholders with a long term outlook will be well rewarded.

Simon Hayes

Chairman

7 May 2021

^ Alternative Performance Measure (see glossary).

*Please see glossary.

PORTFOLIO MANAGER'S REVIEW

I am reporting to you on investment performance for the first six months of your Company’s financial year, from end September 2020 to March 2021 and I acknowledge and apologise for the disappointing return relative to our benchmark, the FTSE All-Share Index (“All-Share”), over that period. The Company’s NAV total return was up 2.2% over the last six months, compared to the All-Share 18.5%. Nonetheless, I hope you will allow me to put this recent performance in the context of what happened during the whole of calendar 2020. When you look at that twelve month period to end December 2020 the NAV total return for your Company was down 2.0%, while the All-Share lost 9.8%.

It is clear, therefore, that the Company’s portfolio was “defensive” and resilient during the worst of the crisis of 2020 - given the NAV outperformed a weak UK stock market over the year. Of course, we were pleased about this, because we have always looked for predictability, reliability and durability when we choose companies to invest in. They are the ones that should hold up well in a crisis. When you look at the list of companies that make up the portfolio you will recognise many long-established businesses, owning brands or franchises that have stood the test of time. Unilever, Diageo, London Stock Exchange, RELX, Mondelez, Schroders and Heineken are examples among the big company holdings.

When asked to describe our investment approach in a nutshell, I often say: “Big positions in intrinsically low risk companies”. And when I look back on 2020 as a whole I think that investment approach showed its worth.

However, there is no getting away from the fact that once the vaccines were announced in November 2020 and citizens and investors began to see a path out of the lockdowns your portfolio started to lag its benchmark and this underperformance continued through the first three months of 2021. There are a number of reasons, but the most obvious is this: because the portfolio did not fall as much during the difficult times, there was less scope for a bounce once confidence recovered.

One way to illustrate what has happened is to consider the performance of Unilever’s share price. During 2020 Unilever’s business held up reasonably well – selling staple food, hygiene, and personal care products all around the world. As a result, Unilever’s share price was something of a safe haven in the context of the UK stock market, actually delivering a modest capital gain in 2020. During the first quarter of 2021, though, Unilever’s share price has fallen 7%, while the UK stock market is up over 5%. Suddenly its “defensive” qualities seem unattractive, when there are “recovery” stories to chase elsewhere. Looking at other dull performers in your portfolio during the first quarter of 2021 confirms this analysis. Heineken, Mondelez and even Fever-Tree all fell: their drinks and chocolate joining Unilever’s soap and ice-cream in being out of favour with investors. These products just do not seem exciting investment propositions – at least for now. Of course, a look at the longer-term share price performance of these companies is a useful reminder that the sort of steady, predictable growth they offer is very valuable. All the holdings mentioned in this paragraph have done well for your portfolio over time and we hope will do so again. For instance, we think it significant that Unilever chose to increase its fourth and final quarterly dividend for 2020 by 8%, having held the previous three unchanged. Unilever cited a recent strong recovery in its sales in China and India as the justification for the dividend hike and if such sales trends continue we expect Unilever’s business growth and share price will improve.

But there were other factors impinging on the Company’s investment returns during the first quarter of 2021. The truth is several of our holdings are working through issues that have put a dampener on their share prices– temporary issues, we hope.

For instance, the portfolio was hit during the first quarter of 2021 by a 20% fall in the value of the biggest holding – the London Stock Exchange. To be fair, LSE did well as a business and share in 2020. Indeed, it hit an all-time high in mid?February 2021, as investors cheered the eventual closing of its acquisition of Refinitiv. But travelling was better than arriving and the LSE’s confirmation of heavy integration costs prompted what turned into a bout of profit taking. We still believe the new LSE Group will be a formidably profitable, growing and increasingly valuable business.

Elsewhere, we hoped Burberry would have a better year in 2021 after a difficult 2020 and this still seems possible. But recently Burberry’s share price has been buffeted by geopolitics. Rising trade tensions between China and the West put luxury companies like Burberry in an uncomfortable position – given the importance of Chinese consumers for them.

We also looked to RELX doing better as a share price in 2021 -given that 90% of its business is made up of growing digital products and services, but the shares remain flat to the end of the first quarter. This is largely because there are still few signs the other 10% of its business – its Exhibitions and Conference division – will soon return to former profitability.

We have had to be patient with our investment in Sage, as the company sacrifices short-term profitability to invest in its cloud software services. We think there are signs Sage’s investment is paying off, but other investors evidently need more certainty.

Hargreaves Lansdown continues to trade well as a business – reporting record assets and customer numbers, and rising profits. But the shares remain close to lows of recent years, as share sales by its founders and the Woodford debacle keep investors cautious.

Even though sales at AG Barr, Diageo, Fever-Tree, Heineken and Remy held up quite well in 2020, there is no escaping the fact that every week bars and clubs remain closed in 2021, particularly across Europe, is another week of lost high profit margin revenue for beverage companies. We must hope that as the Spring and Summer sun begins to shine and party spirits revive their share prices will push on.

In short, as you can tell, there has been a lot for me and other shareholders to feel frustrated about over the last six months. It is an uncomfortable feeling when parts of the market we are not invested in are doing well. Or when longstanding and previously successful holdings are hit by profit-taking or their shares simply tread water. All investors will experience periods like this and during them it is important to understand what is causing the underperformance and then to judge whether change is required in a portfolio to improve its prospects.

In this case I do not believe change is required, or at most only marginal change. This is because your portfolio has been constructed to participate in what we expect will be three of the big money-making opportunities of the next decade and longer. Those three opportunities are Digital Products and Services, Luxury and Premium Consumer Brands and trusted Wealth Management Services. Digital technology is creating new wealth and that wealth will either be spent on aspirational products or be saved and reinvested into the markets. When I look at the Company’s portfolio today I believe most of it is made up of companies that offer access to those opportunities, from the LSE and RELX, via Burberry and Diageo, to Hargreaves Lansdown and Schroders. If that is right, then our recent period of disappointing performance should prove temporary.

Nick Train

Director

Lindsell Train Limited

Portfolio Manager

7 May 2021

INVESTMENT PORTFOLIO

as at 31 March 2021

INVESTMENTS	SECTOR	FAIR VALUE £000	% OF INVESTMENTS
Diageo	Consumer Goods	203,929	10.5
RELX	Consumer Services	194,669	10.1
Unilever	Consumer Goods	172,502	8.9
London Stock Exchange Group	Financials	166,512	8.6
Mondelez International 1	Consumer Goods	164,980	8.5
Schroders *	Financials	163,640	8.5
Burberry Group	Consumer Goods	152,146	7.9
Hargreaves Lansdown	Financials	118,156	6.1
Sage Group	Technology	100,987	5.2
Heineken 2	Consumer Goods	97,244	5.0
Top 10 Investments		1,534,765	79.3
Remy Cointreau 3	Consumer Goods	94,387	4.9
Daily Mail & General Trust (non-voting)	Consumer Services	51,450	2.7
Experian Group	Industrials	38,167	2.0
Pearson	Consumer Services	36,126	1.9
Fever-Tree Drinks	Consumer Goods	31,967	1.7
Euromoney Institutional Investor	Consumer Services	26,516	1.4
Manchester United 1	Consumer Services	25,954	1.3
Rathbone Brothers	Financials	24,402	1.3
A.G. Barr	Consumer Goods	21,952	1.1
Lindsell Train Investment Trust plc	Financials	14,200	0.7
Top 20 Investments		1,899,886	98.3
PZ Cussons	Consumer Goods	9,765	0.5
Young & Co Brewery (non voting)	Consumer Services	9,240	0.5
Fuller Smith & Turner	Consumer Services	6,020	0.3
Frostrow Capital LLP 4 **	Financials	5,100	0.2
Celtic ***	Consumer Services	3,815	0.2
Total Investments		1,933,826	100.0

All of the above investments are equities listed in the UK, unless otherwise stated.

¹ Listed in the United States.

² Listed in the Netherlands.

³ Listed in France.

⁴ Unquoted.

* Includes Schroder (non-voting) shares, fair value £11,180,000.

** Includes Frostrow Capital AIFM Investment, fair value £800,000.

*** Includes Celtic 6% cumulative convertible preference shares, fair value £239,000.

FINANCIAL STATEMENTS

INCOME STATEMENT

for the six months ended 31 March 2021

	(UNAUDITED)			(UNAUDITED)
	SIX MONTHS ENDED 31 MARCH 2021			SIX MONTHS ENDED 31 MARCH 2020
	REVENUE	CAPITAL	TOTAL	REVENUE	CAPITAL	TOTAL
	£000	£000	£000	£000	£000	£000
Gains/(losses) on investments at fair value through profit or loss	–	31,000	31,000	–	(367,580)	(367,580)
Currency translations	–	(20)	(20)	–	(40)	(40)
Income (note 2)	15,873	–	15,873	16,035	–	16,035
AIFM and Portfolio Management fees (note 3)	(1,794)	(3,643)	(5,437)	(1,697)	(3,446)	(5,143)
Other expenses	(482)	–	(482)	(650)	(20)	(670)
Return/(loss) on ordinary activities before finance charges and taxation	13,597	27,337	40,934	13,688	(371,086)	(357,398)
Finance charges	(67)	(135)	(202)	(111)	(226)	(337)
Return/(loss) on ordinary activities before taxation	13,530	27,202	40,732	13,577	(371,312)	(357,735)
Taxation on ordinary activities	(265)	–	(265)	(252)	–	(252)
Return/(loss) on ordinary activities after taxation	13,265	27,202	40,467	13,325	(371,312)	(357,987)
Return/(loss) per share – basic and diluted (note 4)	6.0p	12.2p	18.2p	6.5p	(180.9)p	(174.4)p

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.

There is no material difference between the net return/(loss) on ordinary activities before taxation and the net return/(loss) on ordinary activities after taxation stated above and their historical cost equivalents.

STATEMENT OF CHANGES IN EQUITY

for the six months ended 31 March 2021

(Unaudited) Six months ended 31 March 2021	CALLED UP SHARE CAPITAL	SHARE PREMIUM ACCOUNT	CAPITAL REDEMPTION RESERVE	CAPITAL RESERVE	REVENUE RESERVE	TOTAL SHAREHOLDERS FUNDS
	£000	£000	£000	£000	£000	£000
At 1 October 2020	54,438	1,039,510	3,453	699,693	45,436	1,842,530
Net return from ordinary activities	–	–	–	27,202	13,265	40,467
Second interim dividend (8.6p per share) for the year ended 30 September 2020	–	–	–	–	(18,727)	(18,727)
Issue of shares	1,517	50,067	–	–	–	51,584
At 31 March 2021	55,955	1,089,577	3,453	726,895	39,974	1,915,854

(Unaudited) Six months ended 31 March 2020	CALLED UP SHARE CAPITAL	SHARE PREMIUM ACCOUNT	CAPITAL REDEMPTION RESERVE	CAPITAL RESERVE	REVENUE RESERVE	TOTAL SHAREHOLDERS FUNDS
	£000	£000	£000	£000	£000	£000
At 30 September 2019	50,203	904,320	3,453	875,981	44,803	1,878,760
Net (loss)/return from ordinary activities	–	–	–	(371,312)	13,325	(357,987)
Second interim dividend (8.6p per share) for the year ended 30 September 2019	–	–	–	–	(17,297)	(17,297)
Issue of shares	2,584	84,744	–	–	–	87,328
Repurchase of Shares into treasury	–	–	–	(3,394)	–	(3,394)
Sale of Shares from treasury	–	90	–	3,368	–	3,458
At 31 March 2020	52,787	989,154	3,453	504,643	40,831	1,590,868

STATEMENT OF FINANCIAL POSITION

as at 31 March 2021

	(UNAUDITED) 31 MARCH 2021 £000	(AUDITED) 30 SEPTEMBER  2020 £000
Fixed assets
Investments designated at fair value through profit or loss (note 1)	1,933,826	1,851,588
Current assets
Debtors	7,685	8,277
Cash and cash equivalents	12,207	20,440
	19,892	28,717
Current liabilities
Creditors: amounts falling due within one year	(1,164)	(1,075)
Net current assets	18,728	27,642
Total assets less current liabilities	1,952,554	1,879,230
Creditors: amounts falling due after one year
Bank loan	(36,700)	(36,700)
Net assets	1,915,854	1,842,530
Capital and reserves
Called up share capital	55,955	54,438
Share premium account	1,089,577	1,039,510
Capital redemption reserve	3,453	3,453
Capital reserve	726,895	699,693
Revenue reserve	39,974	45,436
Total shareholders’ funds	1,915,854	1,842,530
Net asset value per share – (note 5)	856.0p	846.2p

STATEMENT OF CASH FLOWS

for the six months ended 31 March 2021

	(UNAUDITED) 31 MARCH 2021	(UNAUDITED) 31 MARCH 2020
	£000	£000
Net cash inflow from operating activities before interest (note 7)	10,319	8,468
Interest paid	(151)	(507)
Net cash inflow from operating activities	10,168	7,961
Investing activities
Purchase of investments	(55,894)	(88,771)
Sale of investments	4,656	1,132
Net cash outflow from investing activities	(51,238)	(87,639)
Financing activities
Equity dividends paid	(18,727)	(17,297)
Shares issued	51,584	88,533
Repurchase of Shares into Treasury	–	(3,394)
Sale of Shares from Treasury	–	3,458
Net cash inflow from financing activities	32,857	71,300
Decrease in cash and cash equivalents	(8,213)	(8,378)
Currency translations	(20)	(40)
Cash and cash equivalents at 1 October	20,440	22,379
Cash and cash equivalents at 31 March	12,207	13,961

NOTES TO THE FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The condensed Financial Statements for the six months to 31 March 2021 have been prepared under the historical cost convention, modified to include the revaluation of investments and in accordance with FRS 104 ‘Interim Financial Reporting’ and with the AIC’s Statement of Recommended Practice (“the SORP”) for Investment Trust Companies and Venture Capital Trusts dated April 2021 and the Companies Act 2006.

The accounting policies used for the year ended 30 September 2020 have been applied.

Fair Value

Under FRS 102 and FRS 104 investments have been classified using the following fair value hierarchy:

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:

	(UNAUDITED) AS AT 31 MARCH 2021
	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL
AS AT 31 MARCH 2021	£'000	£'000	£'000	£'000
Equity investments	1,928,487	–	–	1,928,487
Limited liability partnership interest (Frostrow)	–	–	4,300	4,300
AIFM Capital contribution (Frostrow)	–	–	800	800
Preference share investments	239	–	–	239
	1,928,726	–	5,100	1,933,826

	(AUDITED) AS AT 30 SEPTEMBER 2020
	LEVEL 1	LEVEL 2	LEVEL 3	TOTAL
AS AT 30 SEPTEMBER 2020	£'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

2. INCOME

	(UNAUDITED)	(UNAUDITED)
	SIX MONTHS	SIX MONTHS
	ENDED	ENDED
	31 MARCH 2021	31 MARCH 2020
	£'000	£'000
Income from investments
UK listed dividends	13,915	14,177
Overseas dividends	1,924	1,828
Limited liability partnership – priority profit-share on AIFM capital contribution	34	30
Total income	15,873	16,035

3. AIFM AND PORTFOLIO MANAGEMENT FEES

	(UNAUDITED) SIX MONTHS TO 31 MARCH			(UNAUDITED) SIX MONTHS TO 31 MARCH
			2021			2020
	REVENUE	CAPITAL	TOTAL	REVENUE	CAPITAL	TOTAL
	£'000	£'000	£'000	£'000	£'000	£'000
AIFM fee	448	911	1,359	424	862	1,286
Portfolio management fee	1,346	2,732	4,078	1,273	2,584	3,857
Total fees	1,794	3,643	5,437	1,697	3,446	5,143

4. RETURN/(LOSS) PER SHARE – BASIC AND DILUTED

	(UNAUDITED)	(UNAUDITED)
	SIX MONTHS	SIX MONTHS
	TO 31 MARCH	TO 31 MARCH
	2021	2020
	£'000	£'000
The return/(loss) per share is based on the following figures:
Revenue return	13,265	13,325
Capital return/(loss)	27,202	(371,312)
Total return/(loss)	40,467	(357,987)
Weighted average number of shares in issue for the period	221,896,250	205,307,145
Revenue return per share	6.0p	6.5p
Capital return/(loss) per share	12.2p	(180.9)p
Total return/(loss) per share	18.2p	(174.4)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)".

During the period there were no dilutive instruments held, therefore the basic and diluted return/(loss) per share are the same.

5. NET ASSET VALUE PER SHARE

	(UNAUDITED)	(AUDITED)
	AS AT	AS AT 30
	31 MARCH	SEPTEMBER
	2021	2020
Net Assets (£'000)	1,915,854	1,842,530
Number of shares in issue	223,821,303	217,751,303
Net asset value per share	856.0p	846.2p

6. TRANSACTION COSTS

Purchase transaction costs for the six months ended 31 March 2021 were £160,000 (six months ended 31 March 2020: £351,000). These comprise stamp duty costs of £136,000 (31 March 2020: £314,000) and commission of £24,000 (31 March 2020: £37,000).

Sales transaction costs for the six months ended 31 March 2021 were £1,000 (six months ended 31 March 2020: £nil). These comprise solely commission.

These transaction costs are included within the gains and losses on investments within the Income Statement.

7. RECONCILIATION OF TOTAL RETURN/(LOSS) BEFORE FINANCE COSTS AND TAXATION TO NET CASH INFLOW FROM OPERATING ACTIVITIES

	(UNAUDITED)	(UNAUDITED)
	SIX MONTHS	SIX MONTHS
	ENDED	ENDED
	31 MARCH 2021	31 MARCH 2020
	£'000	£'000
Total return/(loss) before finance charges and taxation	40,934	(357,398)
(Deduct)/add: capital (return)/loss before finance charges and taxation	(27,337)	371,086
Net revenue before finance costs and taxation	13,597	13,688
Decrease/(increase) in accrued income and prepayments	745	(1,317)
Increase/(decrease) in creditors	38	(187)
Taxation – irrecoverable overseas tax paid	(418)	(250)
AIFM and Portfolio management fees charged to capital	(3,643)	(3,446)
Other expenses charged to capital	–	(20)
Net cash inflow from operating activities	10,319	8,468

8. GOING CONCERN

The Directors believe, having considered the Company’s investment objective, risk management policies, capital management policies and procedures, as well as the nature of the portfolio and the expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future. In addition, there are no material uncertainties relating to the Company that would prevent its ability to continue in such operational existence for at least twelve months from the date of the approval of this half year financial report. For these reasons, the Directors consider there is reasonable evidence to continue to adopt the going concern basis in preparing the Financial Statements. In reviewing the position as at the date of this report, the Board has considered the guidance on this matter issued by the Financial Reporting Council.

9. 2020 ACCOUNTS

The figures and financial information for the year to 30 September 2020 are extracted from the latest published accounts of the Company and do not constitute statutory accounts for the year.

Those accounts have been delivered to the Registrar of Companies and included the Report of the Auditor which was unqualified and did not contain a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying the report, and did not contain a statement under section 498 of the Companies Act 2006.

GOVERNANCE/INTERIM MANAGEMENT REPORT

INTERIM MANAGEMENT REPORT

The Directors are required to provide an Interim Management Report in accordance with the UK Listing Authority’s Disclosure and Transparency Rules. They consider that the Chairman’s Statement and the Portfolio Manager’s Report, the following statements and the Directors’ Responsibility Statement below together constitute the Interim Management Report for the Company for the six months ended 31 March 2021.

PRINCIPAL RISKS AND UNCERTAINTIES

A review of the half year and the outlook for the Company can be found in the Chairman’s Statement and in the Portfolio Manager’s Review. The principal risks faced by the Company fall into the following broad categories:

• Corporate Strategy;
• Investment Strategy and Activity, Shareholder Relations and Governance;
• Operational;
• Financial and Accounting; and
• Legal and Regulatory

Information on each of these areas is given in the Strategic Report/Business Review within the Annual Report and Accounts for the year ended 30 September 2020. The principal risks and uncertainties have not changed since the date of that report.

The Board and Portfolio Manager continue to review the portfolio for the potential impact of the pandemic. The business continuity arrangements of the Portfolio Manager, AIFM and other third party service providers have proven robust with operations continuing largely as normal.

RELATED PARTY TRANSACTIONS

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company.

DIRECTORS’ RESPONSIBILITIES

The Board of Directors confirms that, to the best of its knowledge:

(i)  the condensed set of financial statements contained within the Half Year Report have been prepared in accordance with applicable United Kingdom Generally Accepted Accounting Practice standards; and

(ii)  the interim management report includes a true and fair review of the information required by:

(a)  DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year;

(b)  DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

The Half Year Report has not been audited by the Company’s auditors.

This Half Year 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.

The Half Year Report was approved by the Board on 7 May 2021 and the above responsibility statement was signed on its behalf by:

Simon Hayes

Chairman

FURTHER INFORMATION

GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES (“APM”)

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

The Association of Investment Companies.

ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (AIFMD)

The Alternative Investment Fund Manager Directive (the “Directive”) is a European Union Directive that entered into force on 22 July 2013. The Directive regulates EU fund managers that manage alternative investment funds (this includes investment trusts).

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.

		31 MARCH	30 SEPTEMBER
		2021	2020
Share Price (p)		862.0	840.0
Net Asset value per share (p)		856.0	846.2
Premium/(discount) of share price to net asset value per share		0.7%	(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. Prior charges includes all loans and bank overdrafts for investment purposes.

		31 MARCH	30 SEPTEMBER
		2021	2020
		£'000	£'000
Prior Charges		(36,700)	(36,700)
Net Current Assets		18,728	27,642
Net Debt		(17,972)	(9,058)
Net Assets		1,915,854	1,842,530
Gearing		0.9%	0.5%

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’ per share. The NAV is often expressed in pence per share after being divided by the number of shares which 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.

		31 MARCH	30 SEPTEMBER
NAV TOTAL RETURN		2021	2020
Opening NAV per share (p)		846.2	935.6
Increase/(decrease) in NAV per share (p)		9.8	(89.4)
Closing NAV per share (p)		856.0	846.2
% Increase/(decrease) in NAV		1.2%	(9.6%)
% Impact of dividends re-invested*		1.0%	1.9%
NAV per share total return (p)		2.2%	(7.7%)

* Total dividends paid during the period of 8.6p (2020: 16.6p paid during the 2020 financial year) were re-invested at the cum income NAV per share at the ex-dividend date.

The source is Morningstar which has 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.

		31 MARCH	30 SEPTEMBER
		2021	2020
		£'000	£'000
AIFM and Portfolio management fees		10,924*	10,245
Operating Expenses		1,198	1,213
Total Expenses		12,122	11,458
Average Net Assets during the period/year		1,899,015	1,779,936
Ongoing Charges		0.6%	0.6%

* Estimated expenses for the year ending 30 September 2021, based on the asset size as at 31 March 2021.

REVENUE RETURN PER SHARE

The revenue return per share is calculated by taking the Return on ordinary activities after taxation and dividing by the weighted average number of shares in issue during the period/year.

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.

		31 MARCH	30 SEPTEMBER
SHARE PRICE TOTAL RETURN		2021	2020
Opening share price (p)		840.0	942.0
Increase/(decrease) in share price (p)		22.0	(102.0)
Closing share price (p)		862.0	840.0
% Increase/(decrease) in share price		2.6%	(10.8%)
% Impact of dividends re-invested*		1.1%	1.8%
Share price total return		3.7%	(9.0%)

* Total dividends paid during the period of 8.6p (2020: 16.6p paid during the 2020 financial year) were re-invested at the share price at the ex-dividend date.

The source is Morningstar which has calculated the return on an industry comparative basis.

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.

- END-

Victoria Hale

Frostrow Capital LLP

Company Secretary – 0203 170 8732

7 May 2021