TIDMIIT
RNS Number : 2483E
Independent Investment Trust PLC
26 February 2020
The Independent Investment Trust PLC
Annual Financial Report
This is the Annual Financial Report of The Independent
Investment Trust PLC as required to be published under DTR 4 of the
UKLA Listing Rules.
The financial information set out in this Annual Financial
Report does not constitute the Company's statutory accounts for the
years ended 30 November 2018 or 30 November 2019 but is derived
from those accounts. The Company's auditors have reported on the
annual report and financial statements for 2018 and 2019; their
reports were unqualified, did not draw attention to any matters by
way of emphasis, and did not contain statements under 498(2) or
498(3) of the Companies Act 2006. Statutory accounts for the year
ended 30 November 2018 have been filed with the Registrar of
Companies and the statutory accounts for the year ended 30 November
2019 will be delivered to the Registrar in due course.
The annual report and financial Statements for the year ended 30
November 2019, including the Notice of Annual General Meeting, has
been submitted electronically to the National Storage Mechanism and
will shortly be available for inspection at
http://www.morningstar.co.uk/uk/NSM and is also available on the
Independent Investment Trust's website at:
www.independentinvestmenttrust.co.uk .
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.
Baillie Gifford & Co
Company Secretaries
26 February 2020
Chairman's Statement
Over the year to 30 November 2019, our Company produced a net
asset value (NAV) total return of 8.5%. Over the same period,
theoretical investments in the FTSE All-Share Index and the FTSE
World Index would have produced total returns of 11% and 13.1%
respectively. It is particularly disappointing that, after an
encouraging first half, we failed to match the return on either
index. Poor stock selection, notably since the EU referendum, is
largely to blame, with the Eddie Stobart debacle a particularly
painful example.
A further erosion of the rating of our shares saw the discount
move out from 1.2% at 30 November 2018 to 9.4% at 30 November 2019,
producing a share price total return of -0.5%. By 14 January 2020
the NAV had risen to 612p and the share price to 589p, reducing the
discount to 3.8%.
Economic activity over the last year has tended to disappoint
with the result that the nascent tightening of monetary policy
highlighted in our report a year ago has given way to renewed
stimulus. Markets, in the tradition of Pavlov's dog, have responded
well to this. The UK market underperformed the world market over
the period as many investors chose to stay out of the market owing
to the various uncertainties attending Brexit and the political
situation.
We made very few changes to the portfolio over the year: the
only significant adjustment to our sector weightings deriving from
transactions was in technology, where the sale of Kainos and a
reduction in Blue Prism led to a fall in our exposure. Elsewhere,
good share price performances boosted our exposure to housebuilding
and to travel and leisure, while poor share price performances
caused a substantial reduction in our business services exposure.
In keeping with our prediction in last year's report, our cash
balances were higher than usual and ended at 13.6% on 30 November
2019 as against 8.6% on 30 November 2018. Further comments on the
portfolio can be found in the Managing Director's Report below.
At risk of basking in the glow of past glories, we once again
draw attention to our longer term record: for the period from
inception in October 2000 to 30 November 2019, we produced an NAV
total return of 748%, equivalent to a rate of roughly 11.9% per
annum, of which 2.8% per annum can be offset by RPI inflation. By
comparison, the notional return available from the FTSE All-Share
Index over the period amounted to 169%, or 5.3% per annum.
Earnings per share for the year were 13.48p (10.53p in 2018). As
foreshadowed in our interim report, we are recommending a final
dividend of 5p (5p in 2018), making a total regular dividend of 8p
(7p in 2018). In addition, we are proposing a special dividend of
5p (3p in 2018). Both will be paid on 6 April with an ex-dividend
date of 20 February.
Our ongoing charges ratio rose from 0.21% to 0.24%. The only
reason for this is that the average daily value of our assets in
the year under review was materially lower than in the previous
year; our costs actually fell marginally. The ratio remains one of
the lowest - if not the lowest - in the industry.
During the year we were able to buy in rather over 650,000
shares at an average discount of 5.9%. We remain keen to buy back
shares when this can be done on terms that benefit both leaving and
continuing shareholders. Such terms are very much a function of
market conditions prevailing at the time.
One of our major concerns throughout the financial year was the
risk of adverse political developments. The prospect of continuing
stalemate or, worse still, the election of a left wing Labour
government tended to overshadow our enthusiasm for the companies in
which we are invested. The election of a Conservative government
with a substantial majority shortly after our year end has
dispelled this concern. There are, of course, plenty of other
things to worry about - not least the terms on which we exit the EU
- but we believe that the removal of a major worry justifies a less
cautious stance. Since 30 November, we have reduced our cash
balances to GBP33m (9.8% of our assets at 14 January), largely
through investment in domestic UK equities.
Once again, we should like to encourage you to come to the AGM,
which is to be held in the Baillie Gifford offices at Calton Square
at 4.30pm on 26 March 2020. It will help our planning if we know
how many shareholders are likely to attend, and I shall be grateful
if you will mark the proxy form accordingly and return it to the
Company's registrars. I look forward to seeing as many of you as
possible there.
Douglas McDougall
24 January 2020
Past performance is not a guide to future performance,
For a definition of Terms see Glossary of Terms and Alternative
Performance Measures at the end of this announcement.
Total return information is sourced from Baillie
Gifford/Refinitiv and relevant underlying index providers. See
disclaimer at the end of this announcement.
Managing Director's Report
Our performance over the year has been covered in the Chairman's
Statement.
A poor second half performance from our once large holding in
Blue Prism restrained the overall performance of our technology and
telecommunications stake: worth GBP72.7m at 30 November 2018, it
had fallen in value to GBP64.9m at 30 November 2019 after net sales
of GBP12.5m. Blue Prism's share price was hurt by poor interim
results but staged a partial recovery when a year end trading
statement provided reassurance that the company continues to grow
strongly. It still appears to have great potential, but we have
learnt that perceptions of the strength of its market position can
change significantly over short periods of time. Other
disappointments included Zoo Digital, whose legacy subtitling
business came under pressure, and Alfa Financial Software, which
continues to experience weak conditions in its markets. We sold out
of Kainos at a good price and participated in the Seeing Machines
equity issue, since which the share price has staged a worthwhile
recovery. Holdings in Herald, Gamma and FDM all performed well in
response to generally pleasing results.
Growing investor enthusiasm for our three computer games
companies, Team 17, Codemasters and Frontier Developments, was the
main factor behind the strong performance of our large stake in the
travel and leisure sector: worth GBP50.3m at 30 November 2018, it
had grown in value to GBP60.6m at 30 November 2019 after net sales
of GBP0.5m. The advent of cloud computing has transformed the
economics of the computer games industry and our holdings all
appear to be benefiting in much the way we had hoped. Elsewhere in
the sector, mildly disappointing share price performances from The
Gym Group (on the back of competition concerns) and our new holding
Loungers (largely attributable to a subdued consumer spending
environment) were outweighed by good recoveries in the prices of On
the Beach and Hollywood Bowl. We took advantage in each case to
reduce the holdings - Hollywood Bowl on grounds of valuation and On
the Beach in anticipation of more difficult trading conditions.
The year under review was a happier one for our housebuilders.
Although there were signs of continued weakness at the high end of
the housing market, demand for reasonably priced houses, the
principal market for most quoted builders, remained strong. Margins
have come back from abnormally high levels, but profitability has
remained at attractive levels and the land market, a vital
component of future profits, has remained benign. Despite the
recovery in share prices, these stocks are still pricing in a
subdued trading outlook. Following the Conservative election
victory, we think there is a good chance that trading conditions
will improve rather than deteriorate. Meanwhile our confidence in
the long term outlook remains as high as ever. Our only activity
during the year comprised a small purchase of Redrow (GBP1.0m),
made to counteract the effect of the company's share consolidation,
and a brief investment in Galliford Try which yielded a profit of
GBP0.2m. The valuation of our position in the sector rose from
GBP41.3m at 30 November 2018 to GBP53.6m at 30 November 2019. We
have made significant additions to our stake since the General
Election.
Our business services stake performed terribly during the year.
A disastrous investment in the conference call company, LoopUp, was
sold at a big loss and we wrote down our holding in Eddie Stobart
to a nominal valuation to reflect the company's untenable financial
position; the shares remain suspended pending the long overdue
publication of the company's interim figures. On a happier note
Midwich, the distributor of audiovisual equipment, continued to
trade satisfactorily and saw this reflected in its share price; we
reduced the holding to take account of the illiquidity in the
market for its shares. Overall, our business service holdings fell
in value from GBP29.1m at 30 November 2018 to GBP14.8m at 30
November 2019 after sales of GBP4.4m.
Our retail holdings also had a difficult year. We sold our
holding in the clothing retailer, Quiz, at a big loss and the share
price of The Works fell sharply as trading deteriorated.
Fortunately, our big holding in the second hand car retailer,
Motorpoint, performed well as the company continued to trade
resiliently in a tough second hand car market; as with Midwich, we
reduced the holding on grounds of illiquidity. Overall, a retail
stake worth GBP16.8m at 30 November 2018 had fallen in value to
GBP14.0m by 30 November 2019 after sales of GBP2.0m.
Elsewhere in the portfolio, the Ashtead share price staged a
strong recovery as the company continued to trade well, but the
Fever-Tree share price fell as the company delivered disappointing
sales in the important UK market; sales elsewhere were ahead of
expectations. The Medica share price was unchanged in reaction to
results that met reduced expectations, while Polar Capital
continued to make satisfactory progress and NAHL staged a muted
recovery as signs emerged that trading was bottoming out. Our
energy holdings performed very poorly in reaction to disappointing
results caused principally by difficult operating conditions in the
Permian Basin. A short lived investment in NewRiver REIT was sold
at a significant loss and, finally, our new holding in the
biotechnology company Oxford Biomedica made a promising debut.
Max Ward
24 January 2020
Past performance is not a guide to future performance.
List of Investments as at 30 November 2019
2018 Gains/ 2019
Value Net transactions (losses) Value
Sector Name GBP'000 GBP'000 GBP'000 GBP'000 %
---------------------- -------------------------- --------- ----------------- ---------- --------- -----
Housing Bellway 5,082 - 1,596 6,678 2.1
Crest Nicholson 13,688 - 1,688 15,376 4.9
Galliford Try - (214) 214 - -
Persimmon 3,800 - 1,316 5,116 1.6
Redrow 18,728 1,044 6,668 26,440 8.5
--------- ----------------- ---------- --------- -----
41,298 830 11,482 53,610 17.1
--------- ----------------- ---------- --------- -----
Industrials Ashtead Group 17,590 - 5,900 23,490 7.5
--------- ----------------- ---------- --------- -----
Retailing Joules Group 3,510 - (60) 3,450 1.1
Motorpoint 9,450 (1,496) 2,030 9,984 3.2
Quiz 1,461 (496) (965) - -
TheWorks.co.uk 2,345 - (1,826) 519 0.2
--------- ----------------- ---------- --------- -----
16,766 (1,992) (821) 13,953 4.5
--------- ----------------- ---------- --------- -----
Consumer Services NAHL Group 2,575 - 425 3,000 1.0
--------- ----------------- ---------- --------- -----
Codemasters Group
Travel and Leisure Holdings 5,950 1,012 2,156 9,118 2.9
Frontier Developments 5,590 - 2,327 7,917 2.6
Hollywood Bowl Group 7,800 (2,342) 1,682 7,140 2.3
Loungers - 3,245 (125) 3,120 1.0
On the Beach Group 19,228 (2,367) 1,011 17,872 5.7
Team 17 Group 6,150 - 3,900 10,050 3.2
The Gym Group 5,580 - (200) 5,380 1.7
--------- ----------------- ---------- --------- -----
50,298 (452) 10,751 60,597 19.4
--------- ----------------- ---------- --------- -----
Business Services Eddie Stobart Logistics* 7,910 - (7,840) 70 -
LoopUp 5,003 (1,808) (3,195) - -
Midwich 16,200 (2,631) 1,181 14,750 4.7
--------- ----------------- ---------- --------- -----
29,113 (4,439) (9,854) 14,820 4.7
--------- ----------------- ---------- --------- -----
Technology and Alfa Financial Software 3,300 - (665) 2,635 0.8
Telecommunications Blue Prism 23,596 (9,235) (1,942) 12,419 4.0
FDM Group 12,735 - 1,830 14,565 4.7
Gamma Communications 4,020 - 2,230 6,250 2.0
Herald Investment Trust 17,325 - 3,735 21,060 6.7
Kainos Group 4,240 (4,395) 155 - -
Seeing Machines 4,800 1,082 461 6,343 2.0
Zoo Digital Group 2,660 - (1,040) 1,620 0.5
--------- ----------------- ---------- --------- -----
72,676 (12,548) 4,764 64,892 20.7
--------- ----------------- ---------- --------- -----
Beverages Fever-Tree Drinks 23,920 (6,109) (307) 17,504 5.6
--------- ----------------- ---------- --------- -----
Property NewRiver REIT - 2,317 (2,317) - -
--------- ----------------- ---------- --------- -----
Healthcare Medica Group 5,640 - - 5,640 1.8
Oxford Biomedica - 3,171 357 3,528 1.1
--------- ----------------- ---------- --------- -----
5,640 3,171 357 9,168 2.9
--------- ----------------- ---------- --------- -----
Polar Capital Global
Insurance Fund -
Financials Ireland 5,051 - 715 5,766 1.9
--------- ----------------- ---------- --------- -----
Energy/Oilfield
Services Concho Resources - USA 5,107 - (2,300) 2,807 0.9
RPC - USA 2,050 - (1,455) 595 0.2
--------- ----------------- ---------- --------- -----
7,157 - (3,755) 3,402 1.1
--------- ----------------- ---------- --------- -----
Total Investments 272,084 (19,222) 17,340 270,202 86.4
Net Liquid Assets 25,489 17,178 - 42,667 13.6
-------------------------------------------------- --------- ----------------- ---------- --------- -----
Shareholders'
Funds 297,573 (2,044) 17,340 312,869 100
-------------------------------------------------- --------- ----------------- ---------- --------- -----
All holdings are in equities domiciled in the UK unless
otherwise stated.
* The shares were suspended from trading on 23 August 2019.
Key Performance Indicators
The key performance indicators (KPIs) used to measure the
progress and performance of the Company over time are established
industry measures and are as follows:
3/4 the movement in net asset value per ordinary share on a total return basis;
3/4 the discount or premium of the share price to the net asset value; and
3/4 the ongoing charges.
An explanation of these measures can be found in the Glossary of
Terms and Alternative Performance Measures at the end of this
announcement.
In addition to the above, the board also has regard to the total
return of the FTSE All-Share Index and considers the performance of
comparable companies.
The Long Term Record on pages 7 and 8 of the annual report and
financial statements provides detailed performance information
since inception. The net asset value total return for the year is
contained in the Chairman's Statement along with information on the
discount and ongoing charges.
Future Developments of the Company
The outlook for the Company is dependent to a significant degree
on economic events and the financial markets. Further comments on
the outlook for the Company and its investment portfolio are
included in the Chairman's Statement above.
Market Purchases of Own Shares
At the last Annual General Meeting the Company was granted
authority to purchase up to 8,292,468 ordinary shares (equivalent
to 14.99% of its issued share capital), such authority to expire at
the conclusion of the Annual General Meeting to be held in respect
of the year ended 30 November 2019. During the year to 30 November
2019 the Company bought back 652,622 ordinary shares (nominal value
GBP163,156, representing 1.2% of the called up share capital at 30
November 2018) on the London Stock Exchange for cancellation. The
total consideration for these shares was GBP3,396,00. No ordinary
shares were bought back by the Company between 1 December 2019 and
23 January 2020, the latest practicable date prior to publication
of this report.
The principal reasons for share buybacks are to address any
imbalance between the supply and demand for the Company's shares
and to increase the net asset value per remaining share. The
Company may either cancel bought-back shares immediately or hold
them 'in treasury' and then:
i) sell such shares (or any of them) for cash (or its equivalent
under the Companies Act 2006); or
ii) cancel the shares (or any of them).
Shares will only be resold from treasury at a price at or above
net asset value per share. No shares were held in treasury as at 23
January 2020, and no such holdings are planned.
Related Party Transactions
The directors' fees and shareholdings are detailed in the
Directors' Remuneration Report on page 25 of the annual report and
financial statements. With the exception of Max Ward, the managing
director, no director has a contract of service with the Company.
Details of Mr Ward's contract for services are set out on page 24
of the annual report and financial statements. During the year no
director was interested in any contract or other matter requiring
disclosure under section 412 of the Companies Act 2006.
Principal Risks
As explained on pages 20 and 21 of the annual report and
financial statements there is a process for identifying, evaluating
and managing the risks faced by the Company on a regular basis. The
directors have carried out a robust assessment of the principal
risks facing the Company, including those that would threaten its
business model, future performance, solvency or liquidity. There
have been no significant changes to the principal risks during the
year. A description of these risks and how they are being managed
or mitigated is set out below:
Financial risk
The Company's assets consist mainly of listed securities and its
principal financial risks are therefore market related and include
market risk (comprising currency risk, interest rate risk and other
price risk), liquidity risk and credit risk. An explanation of
those risks and how they are managed is contained below. To
mitigate this risk, at each board meeting the composition and
diversification of the portfolio by geographical and industrial
sectors are considered along with sales and purchases of
investments. Individual investments are discussed with the managing
director together with his general views on the various investment
markets and sectors.
Investment strategy risk
Pursuing an investment strategy to fulfil the Company's
objective which the market perceives to be unattractive or
inappropriate, or an ineffective implementation of an attractive or
appropriate strategy, may lead to reduced returns for shareholders
and, as a result, a decreased demand for the Company's shares. This
may lead to the Company's shares trading at a widening discount to
their Net Asset Value. To mitigate this risk, the board regularly
reviews and monitors: the Company's objective and investment policy
and strategy; the investment portfolio and its performance; the
level of discount/premium to Net Asset Value at which the shares
trade; and movements in the share register.
Regulatory risk
Failure to comply with applicable legal and regulatory
requirements such as the tax rules for investment trusts, the UKLA
Listing Rules, the Companies Act and the Alternative Investment
Fund Managers Regulations 2013 could lead to suspension of the
Company's Stock Exchange listing, financial penalties, a qualified
audit report or to the Company being subject to tax on capital
gains. To mitigate this risk, the practical measures to ensure
compliance with regulations and with company law, and to provide
effective and efficient operations as they relate to secretarial
and administrative matters, have been delegated to Baillie Gifford
& Co. Baillie Gifford's Internal Audit and Compliance
departments provide regular reports to the audit committee on
Baillie Gifford's monitoring programmes. Major regulatory change
could impose disproportionate compliance burdens on the Company or
threaten the viability of the investment trust structure. In such
circumstances representation would be made to defend the special
circumstances of investment trusts. Shareholder documents and
announcements, including the Company's published interim and annual
report and financial statements, are subject to stringent review
processes and procedures are in place to ensure adherence to the
Transparency Directive and the Market Abuse Directive with
reference to inside information.
Custody risk
Safe custody of the Company's assets may be compromised through
control failures by the Company's custodian, including breaches of
cyber security. To mitigate this risk, cash and portfolio holdings
are regularly reconciled to the custodian's records by Baillie
Gifford & Co. The audit committee reviewed Baillie Gifford's
Report on Internal Controls which details the controls in place
regarding the recording and reconciliation of cash and portfolio
holdings to third party data. The custodian's Internal Controls
Reports are reviewed by Baillie Gifford & Co and a summary of
the key points is provided to the audit committee by Baillie
Gifford & Co's Business Risk department.
Operational risk
Risk of loss resulting from inadequate or failed internal
controls, processes and systems, or from external events. To
mitigate this risk, Baillie Gifford's Internal Audit and Compliance
departments provide regular reports to the audit committee. The
board also reviews Baillie Gifford's Report on Internal Controls
and the reports by other key service providers are reviewed by
Baillie Gifford on behalf of the board. In addition, Baillie
Gifford has a comprehensive business continuity plan which
facilitates continued operations of the business in the event of a
service disruption or major disaster.
Discount risk
The discount/premium at which the Company's shares trade
relative to its Net Asset Value can change. The risk of a widening
discount is that it may undermine investor confidence in the
Company. To manage this risk, the board monitors the level of
discount/premium at which the shares trade and the Company has
authority to buy back its existing shares when deemed by the board
to be in the best interests of the Company and its
shareholders.
Political risk
The board is of the view that political change in areas in which
the Company invests or may invest may increasingly have practical
consequences for the Company. To mitigate this risk, developments
are closely monitored and considered by the board. The board has
noted the UK Government's intention that the UK should leave the
European Union on 31 January 2020. Whilst there is considerable
uncertainty at present, the board will continue to monitor
developments as they occur and assess the potential consequences
for the Company's future activities.
Resource risk
As the Company is self managed and has only two employees (the
managing director and full-time portfolio manager of the portfolio,
Max Ward, and an office manager) the loss of personnel may
adversely impact investment performance. To mitigate this risk,
contingency plans are in place to deal with any loss of personnel.
Secretarial and accounting functions are contracted out to Baillie
Gifford & Co and are not subject to resource risk.
Viability Statement
In accordance with provision C.2.2 of the 2016 UK Corporate
Governance Code, the directors have assessed the prospects of the
Company over a five year period. The directors believe this period
to be appropriate as it is reflective of the Company's investment
and planning timeframe and, in the absence of any adverse change to
the regulatory environment and the favourable tax treatment
afforded to UK investment trusts, is a period over which they do
not expect there to be any significant change to the current
principal risks and to the adequacy of the mitigating controls in
place. The directors do not envisage any change in strategy or
objectives or any events that would prevent the Company from
continuing to operate over that period.
In making this assessment the directors have taken into account
the Company's current position and its self-managed status and have
conducted a robust assessment of the Company's principal risks and
uncertainties detailed above. Although the Company has the
authority to buy back up to 14.99% of its issued share capital,
which is renewed annually, there is no stated discount control
mechanism in place. The directors have also considered the
Company's investment objective and policy, its dividend policy, the
nature of its assets, its liabilities and projected income and
expenditure. The Company is not permitted to employ gearing whilst
it continues to be a small registered UK AIFM, its ongoing charges
are a very small percentage of its assets (2019 - 0.24%; 2018 -
0.21%) and the vast majority of the Company's investments are
readily realizable and can be sold to meet liabilities as they fall
due. Contingency plans are in place to deal with any loss of key
personnel. In the event of the departure of the managing director,
which is not foreseen within the indicated timespan, the board
would endeavour to present shareholders with an option to realize
their investment at around liquidating value, being the net asset
value less expenses relating to the liquidation of the company, or
to convert to another investment trust.
Based on this assessment, the directors have 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
years.
Going Concern
Having assessed the principal risks and other matters set out in
the Viability Statement above, the directors consider it
appropriate to adopt the going concern basis of accounting in
preparing these financial statements and confirm that they are not
aware of any material uncertainties which may affect the Company's
ability to continue to do so over a period of at least twelve
months from the date of approval of these financial statements.
Financial Instruments
As an investment trust, the Company invests in equities and
makes other investments so as to achieve its investment objective
of providing good absolute returns over long periods by investing
the great majority of its assets in quoted securities and, if
appropriate, index futures. In pursuing its investment objective,
the Company is exposed to various types of risk that are associated
with the financial instruments and markets in which it invests.
These risks are categorised here as market risk (comprising
currency risk, interest rate risk and other price risk), liquidity
risk and credit risk. The board monitors closely the Company's
exposures to these risks but does so in order to reduce the
likelihood of a permanent loss of capital rather than to minimise
short-term volatility. Risk provides the potential for both losses
and gains. In assessing risk, the board encourages the managing
director to exploit the opportunities that risk affords.
The risk management policies and procedures outlined in this
note have not changed substantially from the previous accounting
period.
Market Risk
The fair value or future cash flows of a financial instrument or
other investment held by the Company may fluctuate because of
changes in market prices. This market risk comprises three elements
- currency risk, interest rate risk and other price risk. The board
of directors reviews and agrees policies for managing these risks
and the Company's managing director both assesses the exposure to
market risk when making individual investment decisions and
monitors the overall level of market risk across the investment
portfolio.
Details of the Company's investment portfolio are shown above.
There were no derivative financial instrument holdings during the
year.
Currency Risk
Some of the Company's assets, liabilities and income are
denominated in currencies other than sterling (the Company's
functional currency and that in which it reports its results).
Consequently, movements in exchange rates may affect the sterling
value of those items.
The managing director monitors the Company's exposure to foreign
currencies and reports to the board on a regular basis. He assesses
the risk to the Company of the foreign currency exposure by
considering the effect on the Company's net asset value and income
of a movement in the rates of exchange to which the Company's
assets, liabilities, income and expenses are exposed. However, the
country in which a company is listed is not necessarily where it
earns its profits. The effect of movement in exchange rates on
overseas earnings may have a more significant impact upon a
company's valuation than that arising from a simple translation of
the currency in which the company is quoted.
Foreign currency borrowings and forward currency contracts may
be used to limit the Company's exposure to anticipated future
changes in exchange rates which might otherwise adversely affect
the value of the portfolio of investments. At 30 November 2019 the
Company had no such borrowings or contracts.
Exposure to currency risk through asset allocation, which is
calculated by reference to the currency in which the asset or
liability is quoted, is shown below.
Cash and cash Debtors and
Investments equivalents creditors* Net exposure
At 30 November 2019 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------- -------------- ------------ ---------------
US dollar 3,402 - 4 3,406
----------------------- -------------- -------------- ------------ ---------------
Total exposure to
currency risk 3,402 - 4 3,406
Sterling 266,800 43,446 (783) 309,463
----------------------- -------------- -------------- ------------ ---------------
270,202 43,446 (779) 312,869
----------------------- -------------- -------------- ------------ ---------------
* Includes net non-monetary assets of GBP53,000.
Cash and cash Debtors and
Investments equivalents creditors* Net exposure
At 30 November 2018 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------- -------------- ------------ ---------------
US dollar 7,157 - 23 7,180
----------------------- -------------- -------------- ------------ ---------------
Total exposure to
currency risk 7,157 - 23 7,180
Sterling 264,927 25,794 (328) 290,393
----------------------- -------------- -------------- ------------ ---------------
272,084 25,794 (305) 297,573
----------------------- -------------- -------------- ------------ ---------------
* Includes net non-monetary assets of GBP56,000.
Currency Risk Sensitivity
At 30 November 2019, if sterling had strengthened by 5% in
relation to all currencies, with all other variables held constant,
total net assets and total return on ordinary activities would have
decreased by the amounts shown below. A 5% weakening of sterling
against all currencies, with all other variables held constant,
would have had an equal but opposite effect on the financial
statement amounts. The analysis is performed on the same basis for
2018.
2019 2018
GBP'000 GBP'000
----------- --------- ---------
US dollar 170 359
----------- --------- ---------
Interest Rate Risk
Interest rate movements may affect directly:
3/4 the fair value of any investments in fixed interest rate securities;
3/4 the level of income receivable on cash deposits;
3/4 the fair value of any fixed-rate borrowings; and
3/4 the interest payable on any variable rate borrowings.
Interest rate movements may also have an impact upon the market
value of investments outwith fixed income securities. The effect of
interest rate movements upon the earnings of a company may have a
significant impact upon the valuation of that company's equity.
The possible effects on fair value and cashflows that could
arise as a result of changes in interest rates are taken into
account when making investment decisions and when entering into
borrowing agreements.
The board reviews on a regular basis the amount of investments
in cash and fixed income securities and the income receivable on
cash deposits, floating rate notes and other similar
investments.
The Company may finance part of its activities through
borrowings at approved levels. The amount of any such borrowings
and the approved levels are monitored and reviewed regularly by the
board. Movements in interest rates, to the extent that they affect
the market value of the Company's fixed rate borrowings, if any,
may also affect the valuation of the Company's shares in relation
to its net asset value.
Cash deposits generally comprise call or short-term money market
deposits of less than one month which are repayable on demand. The
benchmark rate which determines the interest payments received on
cash balances is the bank base rate.
There have been no significant changes to the interest rate risk
profile of the Company's financial assets during the year. There
were no financial assets subject to interest rate risk at 30
November 2019 and 30 November 2018 other than the cash and cash
equivalents shown in the credit risk exposure table below.
Interest Rate Risk Sensitivity
The weighted average interest rate on cash balances held at 30
November 2019 was 0.5% (2018 - 0.3%). An increase of 100 basis
points in interest rates at 30 November 2019 would, over a full
year, have increased the net return on ordinary activities after
taxation by GBP571,000 (2018 - increased by GBP258,000) and would
have increased the net asset value per share by 1.04p (2018 -
increased by 0.47p). The calculations are based on the cash
balances as at the respective Balance Sheet dates and are not
representative of the year as a whole.
Other Price Risk
Changes in market prices other than those arising from interest
rate risk or currency risk may also affect the value of the
Company's net assets.
The board manages the market price risks inherent in the
investment portfolio by ensuring full and timely access to relevant
information from the managing director. The board meets regularly
and at each meeting reviews investment performance, the investment
portfolio and the rationale for the current investment positioning
to ensure consistency with the Company's objectives and investment
policies. The portfolio does not seek to reproduce any index.
Investments are selected based upon the merit of individual
companies and therefore performance may well diverge from
comparative indices.
Other Price Risk Sensitivity
A full list of the Company's investments by broad industrial or
commercial sector is given above. In addition, an analysis of the
investment portfolio is contained in the Managing Director's Report
above.
86% (2018 - 91%) of the Company's net assets are invested in
equities. A 5% increase in equity valuations at 30 November 2019
would have increased net assets and total return on ordinary
activities by GBP13,510,000 (2018 - GBP13,604,000). A decrease of
5% would have had an equal but opposite effect.
Liquidity Risk
This is the risk that the Company will encounter difficulty in
meeting obligations associated with financial liabilities.
Liquidity risk is not significant as the majority of the
Company's investment assets are in securities that are readily
realizable. The board provides guidance to the managing director as
to the maximum exposure to any one holding and to the maximum
aggregate exposure to substantial holdings.
The Company's liabilities at 30 November 2019 are all due within
3 months.
Credit Risk
This is the risk that a failure of a counterparty to a
transaction to discharge its obligations under that transaction
could result in the Company suffering a loss.
This risk is managed as follows:
3/4 where the managing director makes an investment in a bond or
other security with credit risk, that credit risk is assessed and
then compared to the prospective investment return of the security
in question;
3/4 the Company's listed investments are held on its behalf by
The Bank of New York Mellon, the Company's custodian. Bankruptcy or
insolvency of the custodian may cause the exercise of the Company's
rights with respect to securities held by the custodian to be
delayed. The company secretaries monitor the Company's risk by
reviewing the custodian's internal control reports and reporting
their findings to the board;
3/4 investment transactions are carried out with a large number
of brokers whose creditworthiness is reviewed by the managing
director. Transactions are ordinarily undertaken on a delivery
versus payment basis whereby the Company's custodian bank ensures
that the counterparty to any transaction entered into by the
Company has delivered on its obligations before any transfer of
cash or securities away from the Company is completed; and
3/4 cash is only held at banks that have been approved by the board as creditworthy.
Credit Risk Exposure
The exposure to credit risk at 30 November was:
2019 2018
GBP'000 GBP'000
--------------------------- --------- ---------
Cash and cash equivalents 43,446 25,794
Debtors 213 210
--------------------------- --------- ---------
43,659 26,004
--------------------------- --------- ---------
None of the Company's financial assets are past due or
impaired.
Capital Management
The capital of the Company is its share capital and reserves as
set out in notes 11 and 12 of the annual report and financial
statements. The objective of the Company is to provide good
absolute returns over long periods by investing the great majority
of its assets in UK and international quoted securities and, if
appropriate, index futures. The Company's investment policy is set
out on pages 9 and 10 of the annual report and financial
statements. In pursuit of the Company's objective, the board has a
responsibility for ensuring the Company's ability to continue as a
going concern and details of the related risks and how they are
managed are set out above.
Shares may be issued and/or repurchased as explained on pages 15
and 16 of the annual report and financial statements and any
changes to the share capital during the year are set out in note 12
of the annual report and financial statements. The Company does not
have any externally imposed capital requirements.
Fair Value of Financial Instruments
Investments in securities as disclosed in note 8 on page 42 of
the annual report and financial statements are financial assets
held at fair value through profit or loss. In accordance with FRS
102 and the fair value heirarchy, all of the Company's investments
are classified as level 1, with the exception of Eddie Stobart,
whose shares were suspended from trading on 23 August 2019 and are
classified as level 3, within the fair value hierarchy described
below, which reflects the reliability and significance of the
information used to measure their fair value. All of the Company's
investments as at 30 November 2018 were also classified as level 1.
For all other financial assets and liabilities, carrying value
approximates to fair value.
Fair Value Hierarchy
The fair value hierarchy used to analyse the basis on which the
fair values of financial instruments held at fair value through the
profit or loss account are measured is described below. Fair value
measurements are categorized on the basis of the lowest level input
that is significant to the fair value measurement.
Level 1 - using unadjusted quoted prices for identical
instruments in an active market;
Level 2 - using inputs, other than quoted prices included within
Level 1, that are directly or indirectly observable (based on
market data); and
Level 3 - using inputs that are unobservable (for which market
data is unavailable).
At 30 November 2019 Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- --------- ---------
Financial asset at fair
value through profit or
loss 270,132 - 70 270,202
-------------------------- --------- --------- --------- ---------
At 30 November 2018 Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- --------- ---------
Financial asset at fair
value through profit or
loss 272,084 - - 272,084
-------------------------- --------- --------- --------- ---------
Statement of Directors' Responsibilities in Respect of the
Annual Report and the Financial Statements
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 year. Under that law the directors
have elected to prepare the financial statements in accordance with
applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice) including FRS 102
'The Financial Reporting Standard applicable in the UK and Republic
of Ireland'. 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 profit or loss of the Company for that period. In preparing
these financial statements, the directors are required to:
3/4 select suitable accounting policies and then apply them consistently;
3/4 make judgements and accounting estimates that are reasonable and prudent;
3/4 state whether applicable United Kingdom Accounting Standards
have been followed, subject to any material departures disclosed
and explained in the financial statements; and
3/4 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 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 Directors' remuneration report comply
with the Companies Act 2006. The Directors are also responsible
both for safeguarding the assets of the Company and for the
maintenance and integrity of the Company's website, and hence for
taking reasonable steps for the prevention and detection of fraud
and other irregularities (in the case of the safeguarding of
assets) and also for the preservation of the website integrity.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Under applicable laws and regulations, the directors are also
responsible for preparing a Strategic Report, a Directors' Report,
a Directors' Remuneration Report and a Corporate Governance
Statement that comply with that law and those regulations.
Each of the directors, whose names and functions are listed
within the board of directors section confirms that, to the best of
his knowledge:
3/4 the financial statements, which have been prepared in
accordance with applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted Accounting Practice)
including FRS 102 'The Financial Reporting Standard applicable in
the UK and Republic of Ireland', give a true and fair view of the
assets, liabilities, financial position and net return of the
Company;
3/4 the annual report and financial statements taken as a whole,
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's position and
performance, business model and strategy; and
3/4 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.
On behalf of the board
Douglas McDougall
Chairman
24 January 2020
Income Statement
For the year ended For the year ended
30 November 2019 30 November 2018
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------------- -------- -------- -------- -------- -------- --------
Gains/(losses) on investments - 17,338 17,338 - (41,752) (41,752)
Currency losses - (4) (4) - (2) (2)
Income (note 2) 8,178 - 8,178 6,601 - 6,601
Administrative expenses (740) - (740) (751) - (751)
---------------------------------------------------------- -------- -------- -------- -------- -------- --------
Net return on ordinary activities before taxation 7,438 17,334 24,772 5,850 (41,754) (35,904)
Tax on ordinary activities (7) - (7) (11) - (11)
---------------------------------------------------------- -------- -------- -------- -------- -------- --------
Net return on ordinary activities after taxation 7,431 17,334 24,765 5,839 (41,754) (35,915)
---------------------------------------------------------- -------- -------- -------- -------- -------- --------
Net return per ordinary share (note 3) 13.48p 31.45p 44.93p 10.53p (75.27p) (64.74p)
---------------------------------------------------------- -------- -------- -------- -------- -------- --------
Note:
Dividends per share paid and payable in respect of the
year (note 4) 13.00p 10.00p
---------------------------------------------------------- -------- -------- -------- -------- -------- --------
The total column of this statement is the profit and loss
account of the Company. The supplementary revenue and capital
columns are prepared under guidance published by the Association of
Investment Companies.
All revenue and capital items in this statement derive from
continuing operations.
A Statement of Comprehensive Income is not required as the
Company does not have any other comprehensive income and the net
return on ordinary activities after taxation is both the profit and
comprehensive income for the year.
Balance Sheet
-------------
At 30 November 2019 At 30 November 2018
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------ ---------- --------- ---------- ---------
Fixed assets
Investments held at fair value through profit or loss 270,202 272,084
Current assets
Debtors 266 266
Cash and cash equivalents 43,446 25,794
------------------------------------------------------ ---------- --------- ---------- ---------
43,712 26,060
Creditors
Amounts falling due within one year (1,045) (571)
------------------------------------------------------ ---------- --------- ---------- ---------
Net current assets 42,667 25,489
------------------------------------------------------ ---------- --------- ---------- ---------
Total net assets 312,869 297,573
------------------------------------------------------ ---------- --------- ---------- ---------
Capital and reserves
Share capital 13,679 13,842
Share premium account 15,242 15,242
Special distributable reserve 12,465 15,861
Capital redemption reserve 2,853 2,690
Capital reserve 258,771 241,437
Revenue reserve 9,859 8,501
------------------------------------------------------ ---------- --------- ---------- ---------
Shareholders' funds 312,869 297,573
------------------------------------------------------ ---------- --------- ---------- ---------
Net asset value per ordinary share (note 5) 571.8p 537.4p
------------------------------------------------------ ---------- --------- ---------- ---------
Statement of changes in equity
For the year ended 30 November 2019
Special Capital
Share premium distributable redemption Capital Revenue Shareholders'
Share capital account reserve reserve reserve* reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------------- -------------- ------------- ------------- --------- -------------- --------------
Shareholders'
funds at 1
December 2018 13,842 15,242 15,861 2,690 241,437 8,501 297,573
Net return on
ordinary
activities
after
taxation - - - - 17,334 7,431 24,765
Shares bought
back for
cancellation
(note 5) (163) - (3,396) 163 - - (3,396)
Dividends paid
during the
year
(note 4) - - - - - (6,073) (6,073)
-------------- ------------- -------------- ------------- ------------- --------- -------------- --------------
Shareholders'
funds at 30
November 2019 13,679 15,242 12,465 2,853 258,771 9,859 312,869
-------------- ------------- -------------- ------------- ------------- --------- -------------- --------------
For the year ended 30 November 2018
Special Capital
Share premium distributable redemption Capital Revenue Shareholders'
Share capital account reserve reserve reserve* reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- -------------- ------------- ------------- ------------- --------- -------------- --------------
Shareholders'
funds at 1
December 2017 13,867 15,242 16,387 2,665 283,191 7,099 338,451
Net return on
ordinary
activities
after
taxation - - - - (41,754) 5,839 (35,915)
Shares bought
back for
cancellation
(note 5) (25) - (526) 25 - - (526)
Dividends paid
during the
year
(note 4) - - - - - (4,437) (4,437)
-------------- -------------- ------------- ------------- ------------- --------- -------------- --------------
Shareholders'
funds at 30
November 2018 13,842 15,242 15,861 2,690 241,437 8,501 297,573
-------------- -------------- ------------- ------------- ------------- --------- -------------- --------------
* The Capital Reserve balance at 30 November 2019 included an
investment holding gain on fixed asset investments of GBP96,327,000
(2018 - gain of GBP88,310,000).
Notes
-----
1. The financial statements for the year to 30 November 2019 have been prepared in accordance
with FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'
on the basis of the accounting policies set out in the annual report and financial statements
which are unchanged from the prior year and have been applied consistently. The Company has
elected not to present a Statement of Cash Flows for the current year as a Statement of Changes
in Equity has been provided and substantially all of the Company's investments are highly
liquid and are carried at market value.
-----------------------------------------------------------------------------------------------------
2. Income Year to Year to
30 November 2019 30 November 2018
GBP'000 GBP'000
----------------------------------- -------------------------- ------------------------------------
Income from investments and interest
receivable 8,159 6,582
Other income 19 19
--------------------------------------- -------------------------- ------------------------------------
8,178 6,601
--------------------------------------- -------------------------- ------------------------------------
3. Net return per Year to 30 November 2019 Year to 30 November 2018
ordinary share
Revenue Capital Total Revenue Capital Total
----------------- ---------------- ----------------- ------- ------------ -------- ------------
Net return on
ordinary activities
after taxation
(GBP'000) 7,431 17,334 24,765 5,839 (41,754) (35,915)
Weighted average
number of ordinary
shares in issue
during the year 55,114,893 55,469,725
--------------------- -------------------------------------------- ------------------------------------
Net return per
ordinary share 13.48p 31.45p 44.93p 10.53p (75.27p) (64.74p)
--------------------- ---------------- ----------------- ------- ------------ -------- ------------
Returns per ordinary share are based on the return for the financial year and on the weighted
average number of ordinary shares in issue during the year as shown above. There are no dilutive
or potentially dilutive shares in issue.
-----------------------------------------------------------------------------------------------------
4. Ordinary dividends Year to Year to
30 November 2019 30 November 2018
Pence GBP'000 Pence GBP'000
----------------------------------- ----------------- ------- ---------------------- ------------
Amounts recognized as distributions
in the year:
Previous year's final dividend paid 8
April 2019 5.00 2,766 4.00 2,219
Previous year's special dividend paid 8
April 2019 3.00 1,660 2.00 1,109
Interim dividend paid 23 August 2019 3.00 1,647 2.00 1,109
--------------------------------------- ----------------- ------- ---------------------- ------------
11.00 6,073 8.00 4,437
--------------------------------------- ----------------- ------- ---------------------- ------------
Set out below are the total dividends paid and proposed in respect of the financial year,
which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010
are considered. The revenue available for distribution by way of dividend for the year is
GBP7,431,000 (2018 - GBP5,839,000).
Year to Year to
30 November 2019 30 November 2018
Pence GBP'000 Pence GBP'000
----------------------------------- ----------------- ------- ---------------------- ============
Amounts paid and payable in respect
of the year:
Interim dividend paid 23 August 2019 3.00 1,647 2.00 1,109
Final dividend payable 6 April 2020 5.00 2,736 5.00 2,766
Special dividend payable 6 April 2020 5.00 2,736 3.00 1,660
13.00 7,119 10.00 5,535
--------------------------------------- ----------------- ------- ---------------------- ------------
If approved, the recommended final and special dividends will be paid on 6 April 2020 to all
shareholders on the register at the close of business on 21 February 2020. The ex-dividend
date is 20 February 2020.
-----------------------------------------------------------------------------------------------------
5. Net asset value per ordinary share As at As at
30 November 2019 30 November 2018
-----------------------------------
Pence GBP'000 Pence GBP'000
----------------- ---------------- ----------------- ------- ------------ ----------------------
Net asset value attributable to
ordinary shares 571.8 312,869 537.4p 297,573
--------------------------------------- ----------------- ------- ---------------------- ------------
The net asset value per share is based on net assets as shown above and on 54,717,378 shares
(2018 - 55,370,000), being the number of shares in issue at the year end. There are no dilutive
or potentially dilutive shares in issue.
During the year the Company bought back and cancelled 652,622 (2018 - 100,000) ordinary shares
with a nominal value of GBP163,000 (2018 - GBP25,000) at a cost of GBP3,396,000 (2018 - GBP526,000).
No shares were allotted during the year. At 30 November 2019 the Company had authority remaining
to buy back a further 7,639,846 ordinary shares and to allot new shares up to an aggregate
nominal value amount of GBP4,774,939.
6. Transaction costs incurred on the purchase and sale of the investments are added to the purchase
cost or deducted from the sale proceeds, as appropriate. During the year, transaction costs
on purchases amounted to GBP120,000 (2018 - GBP95,000) and transaction costs on sales amounted
to GBP96,000 (2018 - GBP131,000).
Glossary of Terms and Alternative Performance Measures (APM)
Total Assets
The total value of all assets held less all liabilities (other
than liabilities in the form of borrowings).
Net Asset Value
Net Asset Value (NAV) is the value of all assets held less all
liabilities (including liabilities in the form of borrowings). The
NAV per share is calculated by dividing this amount by the number
of ordinary shares in issue.
Discount/Premium (APM)
As stockmarkets and share prices vary, an investment trust's
share price is rarely the same as its NAV. When the share price is
lower than the NAV per share it is said to be trading at a
discount. The size of the discount is calculated by subtracting the
share price from the NAV per share and is usually expressed as a
percentage of the NAV per share. If the share price is higher than
the NAV per share, this situation is called a premium.
Net Liquid Assets
Net liquid assets comprise current assets less current
liabilities (excluding borrowings).
Total Return (APM)
The total return is the return to shareholders after reinvesting
the dividend on the date that the share price goes ex-dividend.
Net Asset Value 2019 2018
--------------------------------------------------------------------------- ---- ------- -------
Opening NAV per share at 1 December 2018 (2017) (a) 537.43p 610.20p
Closing NAV per share at 30 November (b) 571.79p 537.43p
Total dividend adjustment factor* (c) 1.02019 1.01278
Adjusted closing NAV per share (d = b x c) (d) 583.33p 544.30p
Total return on net asset value (d - a) ÷ a expressed as a percentage 8.5% (10.8%)
--------------------------------------------------------------------------------- ------- -------
* The dividend adjustment factor is calculated on the assumption
that the dividends paid out by the Company are reinvested into
shares of the Company at the cum income NAV at the ex-dividend
date.
Share Price 2019 2018
--------------------------------------------------------------------------- ---- ------- -------
Opening share price at 1 December 2018 (2017) (a) 531.00p 654.00p
Closing share price at 30 November (b) 518.00p 531.00p
Total dividend adjustment factor* (c) 1.02046 1.01151
Adjusted closing share price (d = b x c) (d) 528.60p 537.11p
Total return on net share price (d - a) ÷ a expressed as a percentage (0.5%) (17.9%)
--------------------------------------------------------------------------------- ------- -------
* The dividend adjustment factor is calculated on the assumption
that the dividends paid out by the Company are reinvested into
shares of the Company at the last traded price quoted at the
ex-dividend date.
Glossary of Terms and Alternative Performance Measures (APM)
(Ctd)
Ongoing Charges (APM)
The total administrative expenses incurred by the Company as a
percentage of the average shareholders' funds, calculated on a
daily basis.
2019 2018
GBP'000 GBP'000
--------------------------------------------------------- -------- --------
Total administrative expenses (a) 740 751
Average net asset value (b) 303,015 350,330
Ongoing charges (a) ÷ (b) expressed as a percentage 0.24% 0.21%
--------------------------------------------------------- -------- --------
Available Cash
Cash and cash equivalents as adjusted for investment and share
buy-back transactions awaiting settlement.
Gearing
At its simplest, gearing is borrowing. Just like any other
public company, an investment trust can borrow money to invest in
additional investments for its portfolio. The effect of the
borrowing on the shareholders' assets is called 'gearing'. If the
Company's assets grow, the shareholders' assets grow
proportionately more because the debt remains the same. But if the
value of the Company's assets falls, the situation is reversed.
Gearing can therefore enhance performance in rising markets but can
adversely impact performance in falling markets. The level of
gearing can be adjusted through the use of derivatives which affect
the sensitivity of the value of the portfolio to changes in the
level of markets.
Net gearing/(cash) is borrowings less available cash (as defined
above) and fixed interest securities (ex-convertibles) divided by
shareholders' funds.
Compound Annual Return
The compound annual return converts the return over a period of
longer than one year to a constant annual rate of return applied to
the compounded value at the start of each year.
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Legal Entity Identifier: 213800IYHGJTZJ3MO642
Regulated Information Classification: Annual financial and audit
reports
- ends -
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