TIDMINV
RNS Number : 7799L
Investment Company PLC
15 September 2021
THE INVESTMENT COMPANY PLC
Annual Results Announcement for the year ended 30 June 2021
LEI: 2138004PBWN5WM2XST62
SUMMARY OF RESULTS
At 30 June 2021 At 30 June 2020 Change %
---------------------------- --------------- --------------- --------
Equity Shareholders' funds 16,281,804 15,037,057 8.28
Number of ordinary shares
in issue 4,772,049 4,772,049 -
Net asset value ("NAV") per
ordinary share 341.19p 315.11p 8.28
Ordinary share price (mid) 309.00p 276.00p 11.96
Discount to NAV 9.43% 12.41% 2.98
---------------------------- --------------- --------------- --------
At 30 June 2021 At 30 June 2020
---------------------------- --------------- --------------- --------
Total return per ordinary
share* 29.08p (20.92)p
Dividends paid per ordinary
share 3.00p 12.25p
---------------------------- --------------- --------------- --------
* The total return per ordinary share is based on total income
after taxation as detailed in the Consolidated Income Statement and
in note 6.
CHAIRMAN'S STATEMENT
The Investment Company plc has been through many iterations
since its incorporation in November 1868 and has survived
innumerable challenges in its 153-year history. This would not have
been possible except for Shareholders' willingness to adapt the
Company over the years to changing times and radically different
circumstances. In November 2020, Shareholders again voted in favour
of such a change, with the Company reverting to being self-managed
with a fresh investment policy and new purpose.
The Company's objective is to protect the purchasing power of
its capital in real terms, and to participate in enduring economic
activities which lend themselves to genuine capital accumulation
and wealth creation. This means, quite simply, that we will treat
the Company's capital as an irreplaceable part of our Shareholders'
savings and that we will treat those savings with respect and care.
As a Board we encourage Shareholders to consider our guiding
principles which are set out on page 3 of the Annual Report.
Tom Cleverly and Michael Weeks joined the board in November 2020
and their contribution to the Company has been significant.
Although by no means a unique structure, the Board collectively are
responsible for the governance of the Company and its investment
decisions, with few delegated responsibilities. Nevertheless,
Martin Perrin continues to Chair the Audit Committee, and Tim
Metcalfe remains as the Senior Independent Director. The Board has
also established an Investment Committee, consisting of Ian Dighé,
Tom Cleverly, and Michael Weeks, to ensure an efficient process for
the executing of the Company's investment decisions. However, all
the Directors take a collective interest in the investment
proposals made by the Committee and are intimately involved in the
decisions made.
During the year the Board appointed ISCA as the Company's
Administrator and Company Secretary. The Board is of the view that
ISCA's levels of service represent good value for our Shareholders
and ISCA's professionalism further allows the Board to prioritise
its attention on strategic and investment related matters, over and
above day-to-day administrative matters.
Investments
Following the Shareholder vote in favour of the change in
investment policy in November 2020, the legacy portfolio of over 70
holdings has been transitioned into a significantly reduced number
of participations.
The Company's holdings are now composed of 20 equity
participations with a fair value of GBP10.8 million (66.7% of net
assets), fixed income and legacy holdings of GBP0.7 million (4.0%),
and gold and cash reserves of GBP4.8 million (29.3%). The Company's
holdings as at 30 June 2021 are set out in full below. Starting in
November 2020 we began to completely rebuild the portfolio in order
to meet our new objective. Because of this wholesale change, we
limit our remarks below to investment activity in the second six
months of the year.
During this six-month period from 1 January 2021 to 30 June
2021:
-- We, amongst others, took new positions in Cembre (a
manufacturer and distributor of electrical connectors), Nedap
(which develops radio-frequency identification ("RFID") based
commercial software across many industries), and Fromageries Bel (a
global branded cheese producer). These are the kinds of little
business gems that we hope to own many years from now. However,
this is not always possible. The family controlling Fromageries Bel
announced they will take the company private later this year with a
forced buyout of minority shareholders. Though a small boon to the
net asset value, looking ahead ten years we would rather have held
the shares.
-- We rebalanced our precious metals holdings by selling some
shares in Franco Nevada and a few kilos of gold held through ETCs
to increase our position in Barrick Gold and adding a new position
in an intermediate gold producer, Alamos Gold. This increased our
exposure to precious metals miners and royalties to 7.9% of net
assets.
-- We increased our presence in oil production by adding a new
position in Lukoil. Together with our stake in Imperial Oil this
brings our combined oil holding to 6.6% of net assets. These two
companies share many traits which make them valuable to us: they
have little to no debt, enduring and integrated businesses, proven
reserves which are measured in decades, and a record of sensible
capital decisions over many years. At different times in the past
year they have also represented some of the lowest-priced oil
reserves available in the market.
-- We increased our holdings in Tonnellerie Francois Freres,
British American Tobacco, and ForFarmers. We made a partial sale of
Bakkafrost and Rio Tinto, and we sold out entirely of Diageo to
concentrate our portfolio elsewhere.
-- Of the fixed income and legacy holdings, we sold the Six
Hundred Group bonds early in the second half and our Intercede
notes were redeemed at par. What remains in this category are two
substantial preference shares (3.5% of assets) and several smaller
fixed income securities (0.5% of assets). All these holdings are
illiquid, but we are working to sell them as opportunity allows and
they are marked at conservative valuations.
The pace of investment activity slowed markedly during the
second half as the portfolio transition ran its course. While there
are still a few legacy assets we hope to sell, this transition is
effectively complete and we expect our level of investment activity
to be much more limited in the current year compared to the period
just ended.
Liquidity and Reserves
We continue to hold substantial reserves totalling GBP4.8
million (29.3% of net assets). This consists of gold bullion valued
at GBP4.1 million (25.2%) and cash and other net assets valued at
GBP0.7 million (4.1%). While we hold our gold bullion indirectly
through different ETFs, we view this collectively as a single
investment of 100 kilos of gold. We sold a small amount of gold
during the second half, about 5 kilos worth, but our gold holding
remains largely unchanged from six months ago.
We are willing to hold substantial reserves because we consider
them a necessary part of the pursuit of capital preservation. We
see our reserves as a purposeful component of our portfolio and not
some dial to be constantly fiddled with as financial conditions
become slightly more or less 'bullish'. It is not a matter of
market timing but of identifying and acquiring a collection of
businesses that we'd love to own ten years from now. Our reserves
will vary in time, but we do not consider ourselves 'underinvested'
because we hold more reserves than others may do.
Shareholders
As set out in the list of significant Shareholders on page 16 of
the Annual Report, we were pleased to welcome Edelweiss Holdings
plc as a significant Shareholder in March 2021, who are holding
their shares for investment purposes. We look forward to welcoming
further new Shareholders as the investment policy of the Company
becomes more widely known. As a Board we are mindful of the
Company's modest size, and in due course look forward to broadening
our capital base with likeminded individuals and families. We also
recognise that it is appropriate to offer Shareholders the
opportunity to formally opine on the success of the Company, whilst
recognising the long-term nature of the Company's investment policy
and its participations. To this end a vote on the continuation of
the Company will be proposed at the AGM in 2025.
Income and Expenses
Our income and expenses for the year ending 30 June 2021 are set
out on pages 45 and 46 of the Annual Report. During the year under
review expenses increased by GBP206,921. However, one-off items,
including legal fees and the overlap in Investment Management and
Administration fees, amounted to GBP238,684. If these items, that
are not expected to be repeated in future periods, are excluded,
overall expenses decreased by GBP31,763. It is anticipated that
expenses will continue at this reduced level in future periods,
thereby improving the total return to Shareholders.
AGM
We are hopeful of a return to some form of normality in terms of
public and statutory meetings and look forward to welcoming you to
our 155th AGM on 27 October 2021. Details are set out on pages 58
to 62 of the Annual Report together with the resolutions to be put
to Shareholders at the AGM. We encourage all Shareholders to vote
and as many as possible to attend the AGM in person. It will be a
pleasure to meet with Shareholders again, and we welcome those who
are interested to learn more of our endeavours. We will of course
have in place alternative arrangements should COVID restrictions
return.
Outlook
We are experiencing increasingly fragile and unpredictable
economic times with valuations that often defy any form of
interpretation. The Board looks forward to working with
Shareholders in ensuring the Company holds fast to its guiding
principles and develops a purpose that will endure
generationally.
I. R. Dighé
Chairman
14 September 2021
Portfolio Summary
Asset Exposure by Trading Currency
At 30 June 2021
Fixed income Cash &
& preference other net
Currency Equities shares Gold assets Total
--------- --------- ------------- ----- ----------- ------
GBP 14.6% 4.0% - 3.4% 22.0%
CAD 7.3% - - (0.5)% 6.8%
CHF 6.0% - - - 6.0%
EUR 27.2% - - - 27.2%
NOK 4.4% - - - 4.4%
USD 7.2% - 25.2% 1.2% 33.6%
--------- ------------- ----- ----------- ------
Total 66.7% 4.0% 25.2% 4.1% 100.0%
--------- ------------- ----- ----------- ------
Equity Participations - Regional Economic Exposure*
At 30 June 2021
% of equity participations
Region
-------------------- --------------------------
Europe 42.5%
North America 26.0%
South America 8.4%
Asia, Africa, Other 23.1%
--------------------------
Total 100.0%
--------------------------
Equity Participations - By Sector
At 30 June 2021
Sector % of equity participations
---------------- --------------------------
Consumer Goods 41.0%
Industrials 33.5%
Basic Materials 15.6%
Oil & Gas 9.9%
--------------------------
Total 100.0%
--------------------------
*Directors' estimates. Regional Economic Exposure represents
where in the world the underlying business activity of the equity
participations takes place.
Portfolio and Assets
At 30 June 2021
Fair
value % of total
Security Country Holding GBP portfolio
--------------------------------- --------------- --------- ---------- ------------
Hal Trust Netherlands 11,173 1,423,239 8.7%
British American Tobacco UK 27,000 756,000 4.7%
Tonnellerie François
Frères Group France 32,000 749,872 4.6%
Bakkafrost Faroe Islands 12,000 717,698 4.4%
Barrick Gold Canada 45,000 673,422 4.1%
Strix Group UK 208,636 658,247 4.0%
Imperial Oil Canada 26,000 574,031 3.5%
Unilever UK 13,300 562,656 3.5%
Emmi Switzerland 700 520,122 3.2%
Lukoil ADR Russia 7,500 502,677 3.1%
Lucas Bols Netherlands 55,000 497,596 3.1%
Bucher Industries Switzerland 1,200 454,556 2.8%
Rio Tinto UK 6,700 398,583 2.5%
Nedap Netherlands 7,590 378,522 2.3%
Franco-Nevada Canada 3,600 378,450 2.3%
Cembre Italy 18,000 355,364 2.2%
Safilo Group Italy 300,000 345,064 2.1%
ForFarmers Netherlands 80,000 341,974 2.1%
Fromageries Bel France 876 326,337 2.0%
Alamos Gold Canada 43,000 237,967 1.5%
---------- ------------
Total equity participations 10,852,377 66.7%
---------- ------------
Renold 6% Preference Shares UK 422,109 384,119 2.4%
Redde Northgate 5% Preference
Shares UK 532,763 186,467 1.1%
Other legacy holdings Various 86,764 0.5%
---------- ------------
Total fixed income and legacy
holdings 657,350 4.0%
---------- ------------
Invesco Physical Gold ETC UK 15,000 1,854,185 11.4%
WisdomTree Physical Gold ETC UK 9,500 1,147,781 7.0%
WisdomTree Physical Swiss
Gold ETC Switzerland 9,000 1,107,171 6.8%
---------- ------------
Total gold 4,109,137 25.2%
---------- ------------
Sterling cash 540,800 3.3%
Other assets net of other
liabilities 122,140 0.8%
---------- ------------
Total cash and other net current
assets 662,940 4.1%
---------- ------------
Total net assets 16,281,804 100.0%
---------- ------------
CORPORATE SUMMARY
The Company's purpose, values, strategy and culture
The Investment Company plc (the Company) is an investment trust
company that has a premium listing on the London Stock Exchange,
its principal activity is portfolio investment. The Company's
wholly owned subsidiaries are Abport Limited, an investment dealing
company and New Centurion Trust Limited, an inactive investment
company (together the Group).
The Company consists of the Board and its Shareholders and has
no employees or customers in the traditional sense. The culture of
the Company is embodied in the Board of Directors whose values are
trust and fairness and in the guiding principles as shown on page 3
of the Annual Report.
Investment Objective
At the Annual General Meeting on 4 November 2020, Shareholders
voted to amend the Company's Investment Objective and Policy to
that shown below.
The Company's investment objective is to protect the purchasing
power of its capital in real terms, and to participate in enduring
economic activities which lend themselves to genuine capital
accumulation and wealth creation.
Investment Policy
The Company will seek to acquire and hold, with no predetermined
investment time horizon, a collection of assets which, in the
Directors' judgement, are well-suited to the avoidance of a
permanent loss of capital. These assets will be comprised of
minority participations in the equity, debt or convertible
securities of quoted businesses which the Directors believe are led
by responsible and like-minded managers and suitable for the
long-term compounding of earnings. In addition, to protect its
capital as well as to maintain liquidity for future investments,
the Company will keep reserves in (a) liquid debt instruments such
as cash in banks or securities issued by governments and/or (b)
liquid, non-debt, tangible assets such as gold bullion, whether
held indirectly or in physical form.
The Company has no predetermined maximum or minimum levels of
exposure to asset classes, currencies or geographies, and has the
ability to invest globally. These exposures will be monitored by
the Board in order to ensure an adequate spreading of risks. No
holding in an individual company or debt instrument will represent
more than 15 per cent. by value of the Company's total assets at
the time of acquisition (such restriction does not, however, apply
to gold bullion or cash balances). The Company's holdings of gold
bullion may be as high as 35 per cent. of total assets at the time
of investment.
Given the Company's investment objective, asset mix and time
horizon, the portfolio will not seek to track any benchmark or
index. The Company will not invest more than 10 per cent. of its
total assets in other listed closed-ended investment funds. The
Company will not use derivative instruments for speculative
purposes, nor will it use currency hedges to manage returns in any
currency.
The Company's gearing will not exceed 20 per cent. of net assets
at the time of drawdown.
No material change will be made to the investment policy without
the approval of Shareholders by ordinary resolution.
Principal Risks and Uncertainties
The management of the business and the execution of the Group's
strategy are subject to a number of risks. A robust assessment of
the principal risks to the Company has been carried out, including
those that would threaten its business model, future performance,
solvency and liquidity.
The Covid-19 pandemic continues to have an effect on both global
and domestic economies. Political initiatives to mitigate the
impact thereof have included a continued expansion of quantitative
easing. These events are all being closely monitored by the Board
as are its potential impact on the Company. The Board is also
monitoring how BREXIT continues to unfold.
These matters apart, the Group's principal risks are set out
below. An explanation of how these have been mitigated or managed
is also provided, where appropriate.
The key business risks affecting the Group are:
Risk Mitigation
Business risk The profitability, market The Company looks to
positioning and outlook invest in businesses
for companies in which that can demonstrate
the Company is invested resilient characteristics
may decline or fail and a shared philosophy
to make expected progress. around long term creation
This may be because of value.
of internal factors
at the investee company
or external factors
such as competitive
pressures, economic
downturns or political
events.
-------------------------------- -----------------------------
Concentration risk 25.2% of the Company's At the time of acquisition,
portfolio is invested investments in any one
in gold ETCs and a further company shall not exceed
7.9% is invested in 15% and investments in
gold royalty and mining gold bullion shall not
businesses. exceed 35% of the Company's
total assets.
-------------------------------- -----------------------------
Monetary risk The widespread use of The Company looks to
quantitative easing own a portfolio of assets
and other monetary policies that possess an enduring
poses a risk to the real value whether from
real value of the Company's the value of the underlying
assets. assets in an investment,
or in the investee's
ability to create an
enduring profit stream.
-------------------------------- -----------------------------
Operational risk The Company is reliant The Board formally reviews
on service providers the Company's service
including, ISCA Administration providers on an annual
Services Limited as basis.
Administrator and Company
Secretary, and Fiske
plc as Custodian. Failure
of the internal control
systems of these parties
could result in losses
to the Company.
-------------------------------- -----------------------------
There are other risks that may materially impact the Company;
however the likelihood thereof is considered small.
Foreign currency risk
Under the revised investment policy the Company has increasingly
invested in stocks in overseas markets dominated in foreign
currencies thus increasing the foreign currency risk. As shown
above approximately 78.0% is invested in foreign currency
stocks.
Regulatory risk
The Company operates in an evolving regulatory environment and
faces a number of regulatory risks. A breach of sections 1158/1159
of the Corporation Tax Act 2010 would result in the Company being
subject to capital gains tax on portfolio investments. Breaches of
other regulations, including the Companies Act 2006, the UKLA
Listing Rules, the UKLA Disclosure Guidance and Transparency Rules,
or the Alternative Investment Fund Managers' Directive, could lead
to a detrimental outcome. Breaches of controls by service providers
to the Company could also lead to reputational damage or loss. The
Board monitors compliance with regulations, with reports from the
Administrator.
Discount Volatility
The Company's shares may trade at a price which represents a
discount to its underlying NAV.
Market price risk
The Board monitors the prices of financial instruments held by
the Company on a regular basis. In addition, it is the Board's
policy to hold an appropriate spread of investments in the
portfolio in order to reduce risks arising from investment
decisions and investment valuations. The Board actively monitors
market prices throughout the year and meets regularly in order to
review investment strategy. Most of the equity investments held by
the Company are listed on a recognised Stock Exchange.
Liquidity risk
The Group's assets mainly comprise readily realisable quoted
securities that can be sold to meet funding commitments if
necessary. Short-term flexibility is achieved through the use of
overdraft facilities.
Credit risk
The failure of a counterparty to a transaction to discharge its
obligations under that transaction that could result in the Company
suffering a loss. Normal delivery versus payment practice and
review of counterparties and custodians by the Board mean that this
is not a significant risk.
Interest rate risk
Given the changes in the portfolio resulting from the change of
Investment Objective and Policy this is not considered a
significant risk.
Performance
Details of the Company's performance during the financial year
are provided in the Chairman's Statement and in the financial
statements below.
Key Performance Indicators ("KPIs")
The Board reviews performance by reference to a number of KPIs
and considers that the most relevant KPIs are those that
communicate the financial performance and strength of the Group as
a whole. The Board and Investment Manager monitor the following
KPIs:
- NAV performance
The NAV per ordinary share at 30 June 2021 was 341.19p per share
(2020: 315.11p). The total return of the NAV after adding back
dividends paid was 9.2%.
- (Discount)/premium of share price in relation to NAV
Over the year to 30 June 2021, the Company's share price moved
from trading at a discount of 12.41 % to a discount of 9.43%.
- Ongoing Charges Ratio
The Ongoing Charges Ratio for the year to 30 June 2021 amounted
to 2.24% (2020: 2.56%).
Going Concern
In accordance with the Financial Reporting Council's guidance on
going concern, including its Covid-19 guidance, the Directors have
undertaken a review of the Company's ability to continue as a going
concern and specifically in the context of the ongoing Covid-19
pandemic.
The Directors believe that the Company is well placed to manage
its business risks and that the assets of the Group consist mainly
of securities which are readily realisable. The Directors are of
the opinion that the Group has adequate resources to continue in
operational existence for the foreseeable future and that it is
therefore appropriate to adopt the going concern basis in preparing
the financial statements. In arriving at this conclusion, the
Directors have considered the liquidity of the portfolio and
reviewed cash flow forecasts showing the ability of the Company to
meet obligations as they fall due for a period of at least 12
months from the date that these financial statements were
approved.
In addition, the Directors have regard to ongoing investor
interest in the sustainability of the Company's business model and
in the continuation of the Company, specifically being interested
in feedback from meetings and conversations with Shareholders.
In addition to considering the principal risks shown above and
the financial position of the Company as described above, the Board
has also considered the following further factors:
-- the Board continues to adopt a long-term view when making
investments;
-- regulation will not increase to a level that makes the
running of the Company uneconomical; and
-- the performance of the Company will be satisfactory and
should performance be less than the Board deem acceptable it has
the powers to take appropriate action.
Viability Statement
Over the Company's life it has experienced a number of
significant social and economic events impacting world history. The
recent, and ongoing Covid pandemic is the latest event, impacting
not just this Company but all commercial entities. The Board is
pleased that through its systems and the support of its advisors it
has continued to offer attractive investment opportunities to
investors. The change in Investment Policy and the decision as
supported by Shareholders during the past year to become
self-managed by the Board demonstrates the viability of the Company
as a vehicle for delivering investment performance to Shareholders.
The Board's analysis is based on the performance and progress of
the Company and its investment portfolio, an assessment of current
and future risks, the appropriateness of the investment strategy
and review of the financial position of the Company, and operating
expenses over the next two years. In addition, consultation with
key Shareholders as to their perspectives is a key
consideration.
The Directors also consider viability in the context of the
Company being a going concern and it being appropriate that the
accounts are prepared on such a basis. This is elaborated in Note 1
to the financial statements.
Future Prospects
The future of the Company is dependent upon the success of the
investment strategy. The outlook for the Company is discussed in
the Chairman's Statement above.
Board Diversity
When recruiting a new Director, the Board's policy is to appoint
individuals on merit matched against the skill requirements
identified by the Board. The Board believes diversity is important
in bringing an appropriate range of skills, knowledge and
experience to the Board and gives that consideration when
recruiting new Directors and has also noted the Parker Report on
increasing the diversity on boards of public companies. As at 30
June 2021, there were five male Directors on the Board. When making
appointments in the future the Board will continue to operate an
open-minded approach to recruitment without restrictions against
any perceived group or individual.
The Company does not have any employees other than Directors
and, as a result, the Board does not consider it necessary to
establish means for employee engagement with the Board as required
by the latest version of the UK Corporate Governance Code.
Section 172(i) Statement
Section 172(i) of the Companies Act 2006, requires Directors to
take into consideration the interests of stakeholders in their
decision making. The Directors continue to have regard to the
interests of, and the impact of the firm's activities on, the
various stakeholders in the firm and to consider what is most
likely to promote the success of the Company for its members in the
long term.
Whilst the importance of giving due consideration to our
stakeholders is not new, S172 requires that the Board elaborates
how it discharges its duties in this respect. We have categorised
our key stakeholders into three groups. Where appropriate, each
group is considered to include both current and potential
stakeholders:
-- Shareholders
-- Administrator and other service providers
Shareholders
Our Shareholders are of course the owners of the Company and we
need to act fairly as between members of the Company. The great
majority of our Shareholders have been so for a long period.
During the year, the Company has undergone considerable change.
One of these - the change of dividend policy has, as anticipated,
led to some changes to our Shareholder base. Nevertheless, these
changes were undertaken with the active support of Shareholders as
being in the best interests of the Company as a whole.
We have a regular dialogue with our key Shareholders - but all
are welcome to be in communication. All Shareholders are encouraged
to attend our Annual General Meeting. (It is acknowledged that this
may still be difficult for 2021.)
Administrator and other service providers
The Board seeks to maintain constructive liaison with its
service providers so as to optimise the way in which the Company's
needs are met.
Environmental, Human Rights, Employee, Social and Community
Issues
The Board consists entirely of Non-Executive Directors and
during the year the Company had no employees. As such the Company
has no direct impact on the community or the environment, and as
such has no environmental, human rights, social or community
policies. In carrying out its investment activities and in
relationships with suppliers, the Company aims to conduct itself
responsibly, ethically and fairly.
Environmental, Social and Governance factors are considered as
part of commercial evaluation of investee companies.
The Strategic Report has been approved by the Board of
Directors.
On behalf of the Board
I. R. Dighé
Chairman
14 September 2021
STATEMENT OF DIRECTORS' RESPONSIBILITIES
We confirm that to the best of our knowledge:
-- the Group and Company financial statements, which have been
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and, for
the Group, international financial reporting standards adopted
pursuant to Regulation (EC) No. 1606/2002 as it applies in the
United Kingdom, give a true and fair view of the assets,
liabilities, financial position and profit of the Group and
Company;
-- the Annual Report includes a fair review of the development
and performance of the business and the position of the Group and
Company together with a description of the principal risks and
uncertainties faced by the Group and Company; and
-- the Annual Report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for Shareholders to assess the position and performance,
business model and strategy of the Group and Company.
On behalf of the Board
I. R. Dighé
Chairman
14 September 2021
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2021
Year ended 30 June Year ended 30 June
2021 2020
Revenue Capital Total Revenue Capital Total
Notes GBP GBP GBP GBP GBP GBP
--------- --------- --------- --------- ----------- -----------
Gains /(losses) on investments
at fair value through
profit or loss 8 - 1,315,694 1,315,694 - (1,533,978) (1,533,978)
Exchange (losses)/gains
on capital items - (88) (88) - 45 45
Investment income 2 724,585 - 724,585 960,982 - 960,982
Investment management
fee 3 (96,825) - (96,825) (121,165) - (121,165)
Other expenses 4 (535,120) - (535,120) (303,859) (703) (304,562)
--------- --------- --------- --------- ----------- -----------
Return before taxation 92,640 1,315,606 1,408,246 535,958 (1,534,636) (998,678)
Taxation 5 (20,338) - (20,338) - - -
--------- --------- --------- --------- ----------- -----------
Total income/(loss) after
taxation 72,302 1,315,606 1,387,908 535,958 (1,534,636) (998,678)
--------- --------- --------- --------- ----------- -----------
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
--------- --------- --------- --------- ----------- -----------
Return on total income
after taxation per 50p
ordinary share - basic
& diluted 6 1.51 27.57 29.08 11.23 (32.15) (20.92)
--------- --------- --------- --------- ----------- -----------
The total column of this statement is the Income Statement of
the Group prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006. The supplementary revenue and capital columns are prepared in
accordance with the Statement of Recommended Practice ("AIC SORP")
issued in October 2019 by the Association of Investment
Companies.
The Group did not have any income or expenses that was not
included in total income for the year. Accordingly, total income is
also total comprehensive income for the year, as defined by IAS 1
(revised) and no separate Statement of Comprehensive Income has
been presented.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
during the year.
The notes below form part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
Ordinary Capital
share Share redemption Capital Revenue
capital premium reserve reserve reserve Total
GBP GBP GBP GBP GBP GBP
-------------- ---------------- ------------------ ---------------- ------------- -----------------
Balance at 1
July 2020 2,386,025 4,453,903 2,408,820 7,094,994 (1,306,685) 15,037,057
Total
comprehensive
income
Net return for
the year - - - 1,315,606 72,302 1,387,908
Transactions
with
Shareholders
recorded
directly to
equity
Ordinary
dividends
paid
(note 7) - - - - (143,161) (143,161)
-------------- ---------------- ------------------ ---------------- ------------- -----------------
Balance at 30
June 2021 2,386,025 4,453,903 2,408,820 8,410,600 (1,377,544) 16,281,804
-------------- ---------------- ------------------ ---------------- ------------- -----------------
Balance at 1
July 2019 2,386,025 4,453,903 2,408,820 8,629,630 (1,258,067) 16,620,311
Total
comprehensive
income
Net return for
the year - - - (1,534,636) 535,958 (998,678)
Transactions
with
Shareholders
recorded
directly to
equity
Ordinary
dividends
paid
(note 7) - - - - (584,576) (584,576)
-------------- ---------------- ------------------ ---------------- ------------- -----------------
Balance at 30
June 2020 2,386,025 4,453,903 2,408,820 7,094,994 (1,306,685) 15,037,057
-------------- ---------------- ------------------ ---------------- ------------- -----------------
The notes below form part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
Ordinary Preference Capital
share share Share redemption Capital Revenue
capital capital premium reserve reserve reserve Total
GBP GBP GBP GBP GBP GBP GBP
----------- ----------- --------------- ---------------- ------------- ----------- --------------
Balance at 1
July 2020 2,386,025 858,783 4,453,903 2,408,820 4,549,368 1,185,316 15,842,215
Total
comprehensive
income
Net return for
the
year - - - - 1,302,632 80,344 1,382,976
Transactions
with
Shareholders
recorded
directly to
equity
Ordinary
dividends
paid (note 7) - - - - - (143,161) (143,161)
Preference
share
dividends
paid - - - - - (172) (172)
----------- ----------- --------------- ---------------- ------------- ----------- --------------
Balance at 30
June
2021 2,386,025 858,783 4,453,903 2,408,820 5,852,000 1,122,327 17,081,858
----------- ----------- --------------- ---------------- ------------- ----------- --------------
Balance at 1
July 2019 2,386,025 858,783 4,453,903 2,408,820 6,084,192 1,223,515 17,415,238
Total
comprehensive
income
Net return for
the
year - - - - (1,534,824) 546,549 (988,275)
Transactions
with
Shareholders
recorded
directly to
equity
Ordinary
dividends
paid (note 7) - - - - - (584,576) (584,576)
Preference
share
dividends
paid - - - - - (172) (172)
----------- ----------- --------------- ---------------- ------------- ----------- --------------
Balance at 30
June
2020 2,386,025 858,783 4,453,903 2,408,820 4,549,368 1,185,316 15,842,215
----------- ----------- --------------- ---------------- ------------- ----------- --------------
The notes below form part of these financial statements.
CONSOLIDATED BALANCE SHEET
As at 30 June 2021
30 June 30 June
2021 2020
Notes GBP GBP
----------- -----------
Non-current assets
Investments held at fair value through profit
or loss 8 15,618,864 14,818,360
----------- -----------
Current assets
Trade and other receivables 11 389,029 87,716
Cash and cash equivalents 540,800 265,052
----------- -----------
929,829 352,768
----------- -----------
Current liabilities
Trade and other payables 12 (266,889) (134,071)
----------- -----------
(266,889) (134,071)
Net current assets 662,940 218,697
----------- -----------
Net assets 16,281,804 15,037,057
----------- -----------
Capital and reserves
Ordinary share capital 13 2,386,025 2,386,025
Share premium 4,453,903 4,453,903
Capital redemption reserve 2,408,820 2,408,820
Capital reserve 8,410,600 7,094,994
Revenue reserve (1,377,544) (1,306,685)
----------- -----------
Shareholders' funds 16,281,804 15,037,057
----------- -----------
NAV per 50p ordinary share 15 341.19p 315.11p
----------- -----------
These financial statements were approved by the Board on 14
September 2021 and were signed on its behalf by:
I. R. Dighé
Chairman
Company Number: 0004205
The notes below form part of these financial statements.
COMPANY BALANCE SHEET
As at 30 June 2021
30 June 30 June
2021 2020
Notes GBP GBP
---------- ----------
Non-current assets
Investments held at fair value through profit
or loss 8 15,618,334 14,817,179
Investment in subsidiaries 9 862,656 862,656
---------- ----------
16,480,990 15,679,835
Current assets
Trade and other receivables 11 435,180 124,631
Cash and cash equivalents 526,071 263,948
---------- ----------
961,251 388,579
---------- ----------
Current liabilities
Trade and other payables 12 (360,383) (226,199)
---------- ----------
(360,383) (226,199)
---------- ----------
Net current assets 600,868 162,380
---------- ----------
Net assets 17,081,858 15,842,215
---------- ----------
Capital and reserves
Ordinary share capital 13 2,386,025 2,386,025
Preference share capital 14 858,783 858,783
Share premium 4,453,903 4,453,903
Capital redemption reserve 2,408,820 2,408,820
Capital reserve 5,852,000 4,549,368
Revenue reserve 1,122,327 1,185,316
---------- ----------
Shareholders' funds 17,081,858 15,842,215
---------- ----------
As permitted by section 408 of the Companies Act 2006, the
Company has not presented its own Income Statement. The amount of
the Company's return for the financial year dealt with in the
financial statements of the Group is a profit after tax of
GBP1,382,976 (2020: loss of GBP988,275).
These financial statements were approved by the Board on 14
September 2021 and were signed on its behalf by:
I. R. Dighé
Chairman
Company Number: 0004205
The notes below form part of these financial statements.
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
For the year ended 30 June 2021
Group Company
30 June 30 June 30 June 30 June
2021 2020 2021 2020
Notes GBP GBP GBP GBP
------------ ------------------ ------------ ------------------
Cash flows generated from
operating activities
Income received from investments 777,299 1,067,425 777,299 1,067,425
Interest received 8,568 15 8,568 15
Sundry income 1,224 - 1,224 -
Overseas taxation paid (19,195) - (19,195) -
Investment management fees
paid (104,544) (122,170) (104,544) (122,170)
Other cash payments (564,381) (306,165) (555,145) (294,645)
------------ ------------------ ------------ ------------------
Net cash generated from operating
activities 98,971 639,105 108,207 650,625
------------ ------------------ ------------ ------------------
Cash flows used in financing
activities
Dividends paid on ordinary
shares 7 (143,161) (584,576) (143,161) (584,576)
------------ ------------------ ------------ ------------------
Net cash used in financing
activities (143,161) (584,576) (143,161) (584,576)
------------ ------------------ ------------ ------------------
Cash flows generated from/(used
in) investing activities
Purchase of investments 8 (13,442,242) (6,703,387) (13,442,242) (6,703,387)
Sale of investments 8 13,762,164 6,128,162 13,748,539 6,127,058
Loans to subsidiaries - - (9,236) (11,520)
------------ ------------------ ------------ ------------------
Net cash generated from/(used
in) investing activities 319,922 (575,225) 297,061 (587,849)
------------ ------------------ ------------ ------------------
Net increase/(decrease) in
cash and cash equivalents 275,732 (520,696) 262,107 (521,800)
------------ ------------------ ------------ ------------------
Reconciliation of net cash
flow to movement in net cash
Increase/(decrease) in cash 275,732 (520,696) 262,107 (521,800)
Exchange rate movements 16 45 16 45
------------ ------------------ ------------ ------------------
Increase/(decrease) in net
cash 275,748 (520,651) 262,123 (521,755)
Net cash at start of period 265,052 785,703 263,948 785,703
------------ ------------------ ------------ ------------------
Net cash at end of period 540,800 265,052 526,071 263,948
------------ ------------------ ------------ ------------------
Analysis of net cash
Cash and cash equivalents 540,800 265,052 526,071 263,948
------------ ------------------ ------------ ------------------
540,800 265,052 526,071 263,948
------------ ------------------ ------------ ------------------
The notes below form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
1. Accounting policies
Basis of Preparation
The Company is a public limited company limited by shares and
incorporated and registered in England and Wales. The Company has
been approved as an investment trust within the meaning of sections
1158/1159 of the Corporation Tax Act 2010.
The Company's registered office is Suite 8, Bridge House,
Courtenay Street, Newton Abbot, Devon TQ12 2QS.
The Group's consolidated financial statements for the year ended
30 June 2021, which comprise the audited results of the Company and
its wholly owned subsidiaries, Abport Limited and New Centurion
Trust Limited (together referred to as the "Group"), have been
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and in
accordance with the requirements of the Companies Act 2006. The
annual financial statements have also been prepared in accordance
with the AIC Statement of Recommended Practice issued in October
2019 ("AIC SORP"), except to any extent where it is not consistent
with the requirements of IFRS.
In order to better reflect the activities of an investment trust
company and in accordance with guidance issued by the AIC,
supplementary information which analyses the Income Statement
between items of a revenue and capital nature have been prepared
alongside the Income Statement.
The financial statements are presented in Sterling, which is the
Group's functional currency as the UK is the primary environment in
which it operates.
Going Concern
The Directors have made an assessment of the Group's ability to
continue as a going concern. This has included consideration of
portfolio liquidity, the Group's financial position in respect of
its cash flows and investment commitments (of which there are none
of significance), the working arrangements of key service
providers, continued eligibility to be approved as an investment
trust company and the impact of the Covid-19 pandemic. In addition,
the Directors are not aware of any material uncertainties that may
cast significant doubt upon the Group's ability to continue as a
going concern.
The Directors are satisfied that the Group has the resources to
continue in business for the foreseeable future being a period of
at least 12 months from the date that these financial statements
were approved. Therefore, the financial statements have been
prepared on the going concern basis.
Basis of Consolidation
IFRS10 stipulates that subsidiaries of Investment Entities are
not consolidated. The Investment Company meets all three
characteristics of Investment Entity as described, however, it is
envisaged that one of the subsidiaries will be a dealing subsidiary
and, therefore consolidated financial statements are presented for
the Group. The financial statements of the subsidiaries are
prepared for the same reporting year as the parent Company, using
consistent accounting policies. All inter-company balances and
transactions, including unrealised profits arising from them are
eliminated.
Segmental Reporting
The Directors are of the opinion that the Group is engaged in a
single segment of business, being investment business.
The Group primarily invests in companies listed in the UK,
Continental Europe and North America.
Accounting Developments
The following accounting standards and their amendments were
adopted during the financial year.
Amendments to References to the Conceptual Framework in IFRS
Standards
International Accounting Standards Effective date
IAS 39 Financial Instruments: Recognition and Measurement
(amendment) 1 January 2020
IAS 1 and 8 Definition of Material (amendments to IAS 1 and 8) 1 January 2020
Various Amendments to references to conceptual framework 1 January 2020
International Financial Reporting Standards
IFRS 3 Business Combinations (amendment) 1 January 2020
The adoption of these policies has had no material impact on the
Group or the Company.
The following accounting standards and their amendments were in
issue at the year end but will not be in effect until after this
financial year.
International Accounting Standards Effective date*
IAS 1 (Amendments) Presentation of Financial Statements 1
January 2023
regarding classification of liabilities
IAS 1 (Amendments) Presentation of Financial Statements 1
January 2023
regarding the amendments of disclosure of accounting
policies
IAS 8 (Amendments) Accounting Policies, Changes in Accounting
Estimates and Error to distinguish between accounting
policies
and accounting estimates 1 January 2023
IAS 37 (Amendments) Provisions, Contingent Liabilities and Contingent
Assets outlines the accounting for provisions, with
contingent
assets and contingent liabilities 1 January 2022
IFRS 2018-20 Annual Improvements to IFRS Standards 2018-2020 1 January 2022
*Years beginning on or after
The Directors do not expect that the adoption of the standards
listed above will have a material impact on the financial
statements of the Group or Company in future periods
Critical Accounting Judgments and Key Sources of Estimation
Uncertainty
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and the reported amounts in
the Balance Sheet, the Consolidated Income Statement and the
disclosure of contingent assets and liabilities at the date of the
financial statements. The estimates and associated assumptions are
based on historical experience and various other factors that are
believed to be reasonable under the circumstances, the results of
which form the basis of making judgements about carrying values of
assets and liabilities that are not readily apparent from other
sources.
The estimates and underlying assumptions are based on historical
experience and other factors that are considered to be relevant.
These are reviewed on an ongoing basis. Actual results may differ
from these estimates. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision
and future period if the revision affects both current and future
periods.
The major part of the investment portfolio is valued by
reference to quoted prices. However, GBP594,320 of the portfolio
comprises fixed interest stocks which are thinly traded; such
stocks are primarily valued by reference to current market price
lists provided by an independent broker, itself a recognised leader
in such preference share and similar fixed interest stocks. The
Directors may overlay such prices with situation specific
adjustments including (a) taking a second independent opinion on a
specific stock, or (b) reducing the value to a net present value,
to reflect the likely time to be taken to realise a stock which the
Group is actively looking to sell. The outturn is reflected in the
valuations set out in note 8 to the accounts.
There were no other significant accounting estimates or
significant judgements in the current or previous year.
Investments
As the Group's business is investing in financial assets with a
view to profiting from their total return in the form of income and
capital growth, Investments are classified at fair value through
profit or loss on initial recognition in accordance with IFRS 9.
The portfolio of financial assets is managed and its performance
evaluated on a fair value basis, in accordance with a documented
investment strategy, and information about the portfolio is
provided internally on that basis to the Group's Board of
Directors.
Investments are measured initially, and at subsequent reporting
dates, at fair value, and derecognised at trade date where a
purchase or sale is under a contract whose terms require delivery
within the time-frame of the relevant market. For quoted
investments this is deemed to be bid market prices or closing
prices.
Changes in fair value of investments and realised gains and
losses on disposal are recognised in the Income Statement as
capital items. The holdings of the investment in subsidiaries are
stated at cost less diminution in value. All investments for which
fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy in note 8.
Foreign Currency
Transactions denominated in foreign currencies are converted to
Sterling at the actual exchange rate as at the date of the
transaction. Items that are denominated in foreign currencies at
the year end are reported at the rate of exchange at the Balance
Sheet date. Any gain or loss arising from a change in exchange rate
subsequent to the date of the transaction is included as an
exchange gain or loss in the capital reserve or the revenue account
depending on whether the gain or loss is of a capital or revenue
nature.
Cash and Cash Equivalents
Cash comprises cash at bank and demand deposits. Cash
equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject
to insignificant risk of changes in value.
For the purpose of the Statement of Cash Flows, cash and cash
equivalents consist of cash and cash equivalents as defined
above.
Income
Dividends receivable on quoted equity shares are taken to
revenue on an ex-dividend basis. Dividends receivable on equity
shares where no ex-dividend date is quoted are brought into account
when the Company's right to receive payment is established. Fixed
returns on non-equity shares are recognised on a time-apportioned
basis.
Dividends from overseas companies are shown gross of any
non-recoverable withholding taxes which are disclosed separately in
the Income Statement.
Dividend income will only be recognised when there is reasonable
certainty that the issuer has the ability to make the return.
Expenses and Finance Costs
All expenses and finance costs are accounted for on an accruals
basis.
Taxation
The tax expense represents the sum of the tax currently payable.
The tax payable is based on the taxable profit for the year.
Taxable profit differs from net profit as reported in the
Consolidated Income Statement because it excludes items that are
taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Group's liability for
current tax is calculated using tax rates applicable at the balance
sheet date.
No taxation liability arises on gains from sales of fixed asset
investments by the Group by virtue of its investment trust status.
However, the net revenue (excluding UK dividend income) accruing to
the Group is liable to corporation tax at the prevailing rates.
Dividends Payable to Shareholders
Dividends to shareholders are recognised as a liability in the
period in which they are paid or approved in general meetings and
are taken to the Statement of Changes in Equity. Dividends declared
and approved by the Company after the Balance Sheet date have not
been recognised as a liability of the Company at the Balance Sheet
date.
Share Capital
Issued share capital consists of Ordinary shares with voting
rights and issued preference shares which are non-voting. The
Issued preference shares, owned in their entirety by New Centurion
Trust Limited, a wholly-owned subsidiary of the Company, are
entitled to receive a cumulative dividend of 0.01p per share per
annum, and are entitled to receive their nominal value, 50p, on a
distribution of assets or a winding up.
Share Premium
The share premium account represents the accumulated premium
paid for shares issued in previous periods above their normal value
less issue expenses. This is a reserve forming part of
non-distributable reserves. The following items are taken to this
reserve:
-- costs associated with the issue of equity; and
-- premium on the issue of shares.
Capital Redemption Reserve
The reserve represents the nominal value of the shares bought
back and cancelled. This reserve is not distributable.
Capital Reserve
Capital expenses, gains or losses on realisation of investments
held at fair value through profit or loss and changes in fair value
of investments are transferred to the capital reserves.
The following are taken to this reserve:
-- gains and losses on the disposal of investments;
-- net movement arising from changes in the fair value of
investments held and classified as at "fair value through profit or
loss";
-- exchange differences of a capital nature; and
-- expenses together with the related taxation effect, allocated
to this reserve in accordance with the above policies.
Realised gains on investments less expenses, provisions and
unrealised gains may be considered by the Board for distribution.
This reserve is not distributable.
Revenue Reserves
The net revenue for the year is transferred to the revenue
reserve and dividends paid are deducted from the revenue
reserve.
The revenue reserve represents the surplus accumulated profits
and is distributable.
2. Income
Year ended Year ended
30 June 2021 30 June 2020
GBP GBP
------------- -------------
Income from investments:
UK dividends 438,996 614,753
Unfranked dividend income: 132,143 23,727
UK fixed interest 143,654 322,487
------------- -------------
714,793 960,967
Other income
Bank deposit and other interest 9,792 15
Total income 724,585 960,982
------------- -------------
3. Investment management fee
Year ended Year ended
30 June 2021 30 June 2020
GBP GBP
------------- -------------
Investment management fee 96,825 121,165
------------- -------------
Pursuant to the changes to the Company's Investment Objective
and Policy, and the Company becoming self-managed on 4 November
2020, the Investment Management Agreement with Fiske plc came to an
end on 5 May 2021. The management fee payable monthly in arrears by
the Company to the Investment Manager was calculated at the rate of
one-twelfth of 0.75% of the NAV as at the last business day of each
calendar month.
At 30 June 2021, an amount of GBP1,678 (2020: GBP9,397) was
outstanding and due to the Investment Manager.
4. Other expenses
Year ended Year ended
30 June 2021 30 June 2020
GBP GBP
------------- -------------
Administration and secretarial services
- recurring 81,236 81,000
non-recurring 36,500 -
Auditors' remuneration for:
* Audit of the Group's financial statements 37,250 35,000
Directors' remuneration (see note
18) 86,292 51,250
Transaction costs in relation to
the change of investment policy 152,285 -
Other expenses 141,557 136,609
------------- -------------
535,120 303,859
Capital charges - 703
------------- -------------
Total income 535,120 304,562
------------- -------------
The audit of the Group's financial statements includes the cost
of the audit of Abport Limited of GBP3,150 (2020: GBP3,000) and New
Centurion Trust Limited GBP3,150 (2020: GBP3,000), which are
charged to the subsidiaries.
The Directors were the Group and Company's only employees in the
current and comparative period.
5. Taxation
Year ended 30 June Year ended 30 June
2021 2020
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
------- ------- ------ ------- ------- -----
Current Taxation - - - - - -
Overseas taxation suffered 20,338 - 20,338 - - -
------- ------- ------ ------- ------- -----
20,338 - 20,338 - - -
------- ------- ------ ------- ------- -----
The current tax charge for the year is lower than (2020: higher
than) the standard rate of corporation tax in the UK of 19%. The
differences are explained below:
Year ended 30 June Year ended 30 June
2021 2020
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
-------- --------- --------- --------- ----------- ---------
Return on ordinary activities 92,640 1,315,606 1,408,246 535,958 (1,534,636) (998,678)
Tax at UK Corporation
tax rate of 19% (2020:19%) 17,602 249,965 267,567 101,832 (291,581) (189,749)
Effects of:
UK dividends that are
not taxable (83,409) - (83,409) (116,803) - (116,803)
Overseas dividends that
are not taxable (8,386) - (8,386) - - -
Non-taxable investment
(gains)/losses - (249,965) (249,965) - 291,581 291,581
Overseas taxation suffered 20,338 - 20,338 - - -
Unrelieved expenses 74,193 - 74,193 (14,971) - (14,971)
-------- --------- --------- --------- ----------- ---------
Actual current tax charged
to the revenue account 20,338 - 20,338 - - -
-------- --------- --------- --------- ----------- ---------
Factors that may affect future tax charges
The Company has excess management expenses of GBP2,156,636
(2020: GBP1,766,147). It is unlikely that the Company will generate
sufficient taxable income in the future to use these expenses to
reduce future tax charges and therefore no deferred tax asset has
been recognised.
Deferred tax is not provided on capital gains and losses arising
on the revaluation or disposal of investments because the Company
meets (and intends to continue for the foreseeable future to meet)
the conditions for approval as an investment trust company under
HMRC rules.
6. Return per Ordinary Share
Returns per share are based on the weighted average number of
shares in issue during the year. Normal and diluted returns per
share are the same as there are no dilutive elements on share
capital.
Year ended 30 June Year ended 30 June
2021 2020
Revenue Capital Total Revenue Capital Total
------- --------- --------- ------- ----------- ---------
Return after taxation
attributable to ordinary
Shareholders (GBP) 72,302 1,315,606 1,387,908 535,958 (1,534,636) (998,678)
------- --------- --------- ------- ----------- ---------
Weighted average number
of ordinary shares in
issue (excluding
shares held in Treasury) 4,772,049 4,772,049
Return per ordinary share
basic and diluted (pence) 1.51 27.57 29.08 11.23 (32.15) (20.92)
------- --------- --------- ------- ----------- ---------
7. Dividends per Ordinary Share
Amounts recognised as distributions to equity holders in the
year.
Year ended Year ended
30 June 30 June
2021 2020
GBP GBP
---------- ----------
Paid per Ordinary share in respect of the
prior period:
Fourth interim dividend of 1.00p (2020:
3.75p) paid on 7 September 2020 47,720 178,952
In respect of the year under review:
First interim dividend of 1.00p (2020: 3.75p)
paid on 4 December 2020 47,720 178,952
Second interim dividend of 1.00p (2020:
3.75p) paid on 26 February 2021 47,721 178,952
Third interim dividend of nil (2020: 1.00p) - 47,720
---------- ----------
Total 143,161 584,576
---------- ----------
No further dividend will be declared in respect of the year
under review.
8. Investments
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
------------ ----------- ------------ -----------
Opening book cost 16,538,418 15,211,950 16,571,760 15,203,979
Opening net investment holding (1,754,581
(losses)/gains (1,720,058) 565,163 ) 571,037
------------ ----------- ------------ -----------
Opening valuation 14,818,360 15,777,113 14,817,179 15,775,016
Movements in the year:
Purchases at cost 13,607,771 6,703,387 13,607,771 6,703,387
Sales proceeds (14,122,961) (6,128,162) (14,109,336) (6,127,058)
Realised(losses)/gains on sales (668,405) 751,243 (695,080) 791,452
Unrealised gains/(losses) in the
year 1,984,099 (2,285,221) 1,997,800 (2,325,618)
Closing valuation 15,618,864 14,818,360 15,618,334 14,817,179
------------ ----------- ------------ -----------
Being:
Book cost 15,354,823 16,538,418 15,375,115 16,571,760
Net investment holding gains/(losses) 264,041 (1,720,058) 243,219 (1,754,581)
------------ ----------- ------------ -----------
15,618,864 14,818,360 15,618,334 14,817,179
------------ ----------- ------------ -----------
Group Company
2021 2020 2021 2020
Summary of capital gains/(losses) GBP GBP GBP GBP
--------- ----------- --------- -----------
Realised (losses)/gains on sales (668,405) 751,243 (695,080) 791,452
Unrealised gains /(losses) in
the year 1,984,099 (2,285,221) 1,997,800 (2,325,618)
--------- ----------- --------- -----------
1,315,694 (1,533,978) 1,302,720 (1,534,166)
--------- ----------- --------- -----------
Transaction costs
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
------ ------ ------ ------
Costs on purchases 24,721 30,858 24,721 30,858
Costs on sales 20,698 7,018 20,698 7,016
------ ------ ------ ------
45,419 37,876 45,419 37,874
------ ------ ------ ------
Fair Value Hierarchy
Fair value is the amount at which an asset could be sold in an
ordinary transaction between market participants at the measurement
date, other than a forced or liquidation sale. The Group measures
fair values using the following hierarchy that reflects the
significance of the inputs used in making the measurements.
Categorisation within the hierarchy has been determined on the
basis of the lowest level input that is significant to the fair
value measurement of the relevant asset as follows:
Level 1 - valued using quoted prices, unadjusted in active
markets for identical assets and liabilities.
Level 2 - valued by reference to valuation techniques using
observable inputs for the asset or liability other than quoted
prices included in Level 1.
Level 3 - valued by reference to valuation techniques using
inputs that are not based on observable market data or the asset or
liability.
The table below sets out fair value measurement of financial
instruments as at 30 June 2021, by the level in the fair value
hierarchy into which the fair value measurement is categorised.
Group
At 30 June 2021 Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
---------- ------- ------- ----------
Financial assets at fair value
through profit or loss:
Equities 14,962,044 - 594,320 15,556,364
Fixed interest-bearing securities 62,500 - - 62,500
---------- ------- ------- ----------
15,024,544 - 594,320 15,618,864
---------- ------- ------- ----------
Group
At 30 June 2020 Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
---------- ------- --------- ----------
Financial assets at fair value
through profit or loss:
Equities 8,724,184 257,617 1,670,066 10,651,867
Fixed interest-bearing securities 3,806,493 - 360,000 4,166,493
---------- ------- --------- ----------
12,530,677 257,617 2,030,066 14,818,360
---------- ------- --------- ----------
There were no transfers between levels during the current or
prior year.
The valuation techniques used by the Group are set out in the
Accounting Policies in Note 1.
Valuation process for Level 2 investments
Investments classified within level 2 are valued by reference to
quoted prices but not being actively traded have been treated as
level 2.
Valuation process for Level 3 investments
Investments classified within Level 3 comprise two groups:
a) Those valued by reference to an indicative price list of an
independent third-party broker, but the said price list is not
sufficiently definitive or observable/publicly available, so as to
meet the criteria for a level 2 categorisation; and
b) At 30 June 2020, there was one genuinely unquoted stock which
had been valued by the Directors using recognised valuation
methodologies drawing on reported results and commentary on current
trading. Intercede Group 8% Secured Convertible Loan notes was
valued at discounted par value and was redeemed during the
year.
If the value of the level 2 and level 3 investments were to
increase or decrease by 10%, while all the other variables remained
constant, the net assets and net profit available to Shareholders
would have increased/decreased by GBP59,432 (2020: GBP228,768).
Reconciliation of Level 3 investments
The following table summarises Level 3 investments that were
accounted for at fair value for the year ending 30 June 2021.
Group and Company Financial assets
at fair value
through profit
or loss
GBP
----------------
Opening fair value 2,030,066
Purchases -
Sales proceeds (1,545,167)
Total gains/(losses) included in gains on investments
in the Consolidated income statement
* on assets sold 234,740
* on assets held at the year end (125,319)
----------------
Closing balance 594,320
----------------
9. Investment in Subsidiaries
Company Company
30 June 30 June
2021 2020
GBP GBP
----------- -----------
At cost 5,410,552 5,410,552
Provision for diminution in value (4,547,896) (4,547,896)
----------- -----------
Net value 862,656 862,656
----------- -----------
At 30 June 2021, the Company held interests in the following
subsidiary companies:
% share % share
Country of of capital of voting
Incorporation held rights Nature of business
--------------- ----------- ---------- ------------------
Investment dealing
Abport Limited England 100% 100% company
New Centurion Trust Investment dealing
Limited England 100% 100% company
10. Substantial Share Interests
The Company has no notified interests in 3% or more of the
voting rights of any companies at 30 June 2021 (30 June 2020:
Nil).
11. Trade and Other Receivables
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
------- ------ ------- -------
Amounts due from subsidiaries - - 46,151 36,915
Accrued income 8,814 26,462 8,814 26,462
Dividends receivable 4,602 49,461 4,602 49,461
Taxation recoverable 8,978 9,084 8,978 9,084
Amounts due from brokers 360,797 - 360,797 -
Other receivables 5,838 2,709 5,838 2,709
------- ------ ------- -------
389,029 87,716 435,180 124,631
------- ------ ------- -------
The carrying amount of such receivables approximates to their
fair value. Trade and other receivables are not past due at 30 June
2021.
12. Trade and Other Payables
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
------- ------- ------- -------
Preference dividends payable
to the Company's wholly owned
subsidiary - - 1,377 1,205
Amounts due to subsidiaries - - 101,533 101,533
Investment management fees 1,678 9,397 1,678 9,397
Amounts due to brokers 165,529 - 165,529 -
Trade payables and accruals 99,682 124,674 90,266 114,064
------- ------- ------- -------
266,889 134,071 360,383 226,199
------- ------- ------- -------
13. Ordinary Share Capital
Group and Company Group and Company
2021
Issued allotted and fully paid: Number GBP Number GBP
--------- --------- --------- ---------
Ordinary shares of 50p each 4,772,049 2,386,025 4,772,049 2,386,025
--------- --------- --------- ---------
The ordinary shares entitle the holders to receive all ordinary
dividends and all remaining assets on a winding up, after the fixed
rate preference shares have been satisfied in full.
The Company does not hold any ordinary shares in Treasury (2020:
None).
14. Issued Preference Share Capital
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
---- ---- ------- -------
Issued preference share of
50p each - - 858,783 858,783
---- ---- ------- -------
The 1,717,565 fixed rate preference shares are non-voting,
entitled to receive a cumulative dividend of 0.01p per share per
annum, and are entitled to receive their nominal value of 50p, on a
distribution of assets or a winding up. The whole of the issue is
held by New Centurion Trust Limited, a wholly owned subsidiary of
the Company.
The Directors do not consider the fair values of the issued
preference share capital to be significantly different from the
carrying values.
15. Net Asset Value per Ordinary Share
The NAV per ordinary share is calculated as follows:
2021 2020
GBP GBP
---------- ----------
Net Assets 16,281,804 15,037,057
---------- ----------
Ordinary shares in issue 4,772,049 4,772,049
---------- ----------
NAV per ordinary share 341.19p 315.11p
The underlying investments of the wholly owned subsidiary New
Centurion Trust Limited comprise issued preference share capital,
as discussed in Note 14, in the Company and, being effectively
eliminated on consolidation, the valuation thereof does not impact
the NAV attributable to ordinary Shareholders.
16. Financial Instruments and Associated Risks
Investment Objective and Policy
At the Annual General Meeting on 4 November 2020, Shareholders
voted to amend the Company's Investment Objective and Policy to
that shown below.
The Company's investment objective is to protect the purchasing
power of its capital in real terms, and to participate in enduring
economic activities which lend themselves to genuine capital
accumulation and wealth creation.
Risks
The Group's financial risk management can be found in the
strategic report on pages 9 and 10 of the Annual Report.
The Group's financial instruments comprise securities, cash
balances, receivables and payables. They are classified in the
following categories:
-- those to be measured subsequently at fair value through profit or loss; and
-- those to be measured at amortised cost.
The financial assets held at amortised cost include trade and
other receivables, cash and cash equivalents.
The main risks identified arising from the Group's financial
instruments are:
a) market price risk, including currency risk, interest rate risk and other price risk;
b) liquidity risk; and
c) credit risk.
The Board reviews and agrees policies for managing each of these
risks, which are summarised below.
Market Price Risk
Market risk arises mainly from uncertainty about future prices
of financial instruments used in the Group's business. It
represents the potential loss the Group might suffer through
holding market positions by way of price movements, interest rate
movements and exchange rate movements. The Board assesses the
exposure to market price risk when making each investment decision
and monitor these risks on the whole of the investment portfolio on
an ongoing basis.
Currency risk
The Group's total return and net assets can be materially
affected by currency translation movements as a significant
proportion of the Company's assets are denominated in currencies
other than Sterling, which is the Group's functional currency. It
is not the Group's policy to hedge this currency risk.
The revenue account is subject to currency fluctuation arising
on overseas income. The Group does not hedge this currency
risk.
Foreign currency exposure by currency of denomination at the
Balance Sheet date:
Group Group
30 June 2021 30 June 2020
Overseas Other net Overseas Other net
investments assets/(liabilities) Total investments assets/(liabilities) Total
GBP GBP GBP GBP GBP GBP
------------ --------------------- ---------- ------------ --------------------- -----
Australian
Dollar 530 - 530 1,181 - 1,181
Canadian Dollar 1,190,448 (87,454) 1,102,994 - - -
Euro 4,417,968 1,770 4,419,738 - - -
Norwegian Krone 717,698 - 717,698 - - -
Swiss Franc 974,678 - 974,678 - - -
US Dollar 5,285,236 192,535 5,477,771 - - -
------------ --------------------- ---------- ------------ --------------------- -----
12,586,558 106,851 12,693,409 1,181 - 1,181
------------ --------------------- ---------- ------------ --------------------- -----
Interest rate risk
The Group's financial assets and liabilities, include cash,
equity shares, preference shares and fixed interest stocks. As the
majority of the Group's financial assets and liabilities are
non-interest bearing the direct exposure to interest rates is not
material.
The impact of movements would not significantly affect the net
assets attributable to ordinary Shareholders or the total
profit.
Other price risk
Other price risk arises from changes in market prices other than
those arising from currency risk or interest rate risk.
The Board manages the risks inherent in the investment portfolio
by maintaining a spread of investments across different sectors and
monitoring market prices throughout the year. The Board meets
regularly in order to review investment performance and its
investment strategy.
Liquidity Risk
This is the risk that that the Group will encounter difficulty
in meeting its obligations associated with financial
liabilities.
All liabilities are due within one year.
The Group invests in a spread of investments, including physical
gold, which are traded on recognised stock markets and which can be
readily realised for cash.
Credit Risk
The Group does not have any significant exposure to credit risk
arising from one individual party. Credit risk is spread across a
number of counterparties, each having an immaterial effect on the
Group's cash flows should a default happen. The Group assesses its
debtors from time to time to ensure they are neither past due or
impaired.
The maximum exposure of financial assets to credit risk at the
Balance Sheet date was as follows:
Financial assets neither past
due or impaired Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
--------- --------- --------- ---------
Fixed interest securities 62,500 4,166,493 62,500 4,166,493
Preference shares 594,320 2,897,094 594,320 2,897,094
Accrued income and other debtors 389,029 87,716 435,180 124,631
Cash and cash equivalents 540,800 265,052 526,071 263,948
--------- --------- --------- ---------
1,586,649 7,416,355 1,618,071 7,452,166
--------- --------- --------- ---------
Sensitivity Analysis
The Board believes that the Group's assets are mainly exposed to
market price risk and currency risk.
The table below shows the impact on profit and net assets if
overall shares prices rose or fell by 5% at the Balance Sheet date
with all other variables held constant:
Group
2021 2020
Profit and net assets Profit and net assets
increase (decrease) increase (decrease)
---------- ----------- ---------- -----------
If overall prices rose/fell
by 5%:
* on share prices (GBP) 575,486 (575,486) 740,918 (740,918)
* on ETCs 205,457 (205,457) - -
---------- ----------- ---------- -----------
* on earnings and net assets (GBP) 780,943 (780,943) 740,918 (740,918)
* in earnings net asset value per Ordinary share
(pence) 16.36 (16.36) 15.53 (15.53)
The table below shows the impact on profit and net assets if
Sterling had moved by 5% against all currencies at the Balance
Sheet date with all other variables held constant:
Group
30 June 2021 30 June 2020
Profit and net assets Profit and net assets
5% 5% 5% 5%
weakening (strengthening) weakening (strengthening)
If Sterling had moved by
5%: GBP GBP GBP GBP
--------- --------------- --------- ---------------
Euro 232,618 (210,464) - -
Swiss Franc 51,299 (46,413) - -
Norwegian Krone 37,774 (34,176) - -
Australian Dollar 28 (25) 62 (56)
Canadian Dollar 58,052 (52,524) - -
US Dollar 288,304 (260,846) - -
--------- --------------- --------- ---------------
* on earnings and net assets 668,075 (604,448) 62 (56)
- on earnings and net asset
value per Ordinary share
(pence) 14.00 (12.67) - -
Assets excluding ETCs 451,804 ( 408,775) - -
ETCs 216,271 (195,673) - -
17. Capital Management Policies
Capital is managed so as to maximise the return to Shareholders
while maintaining a capital base to allow the Group to operate
effectively. Capital is managed on a consolidated basis and to
ensure that the Group will be able to continue as a going
concern.
In order to maintain or adjust the capital structure, the Group
may pay dividends to Shareholders, return capital to Shareholders,
issue new shares or sell securities to reduce debt .
The Group had no debt during the years to June 2021 or 30 June
2020.
18. Related Party Transactions
Fiske plc, was paid a fee in respect of the Investment
Management services provided to the Company until the termination
of the contract on 5 May 2021.
The amount s paid to the Investment Manager, together with the
Investment Management Agreement, are disclosed in note 3.
Investment Management fees for the year amounted to GBP96,825
(2020: GBP121,165). In addition, GBP5,459 (2020: GBP8,183) was paid
to Fiske plc pursuant to a custody agreement.
As at the year end, GBP3,745 (2020: GBP20,622) was payable to
Fiske plc.
Key Management Personnel
The Board consists of five non-executive Directors all of whom,
with the exception of Mr Perrin who is a non-executive Director of
Fiske plc, the Company's custodian and until 4 November 2020 the
investment manager Messrs Dighé, Cleverly and Weeks hold
directorships or positions of senior management within Edelweiss
Holdings plc ("Edelweiss"), who became a significant Shareholder in
the Company during the year. For the year ended 30 June 2021, all
Directors, including the Chairman, received an annual fee of
GBP20,000. Further information can be found within the Directors'
Remuneration Report on page 26 of the Annual Report.
The Directors did not receive any other form of renumeration and
at the year end, there were no outstanding fees payable to
Directors (2020: GBPnil).
There were no other related party transactions during the
current or previous year .
19. Post Balance Sheet Events
There were no post balance sheet events requiring disclosure
.
20. Ultimate controlling party
The Directors consider that there is no overall controlling
party.
SHAREHOLDER INFORMATION
Fraud warning
Fraudsters use persuasive and high-pressure tactics to lure
investors into scams and we are aware of entities from time to time
purporting to be The Investment Company plc. They may offer to sell
shares that turn out to be worthless or non-existent, or to buy
shares at an inflated price in return for an upfront payment. While
high profits are promised, if you buy or sell shares in this way
you will probably lose your money. Detailed advice on how to avoid
and report potential investment scams is available on the FCA
website: www.fca.org.uk/scamsmart.
The Company has also been made aware of attempts to issue
documentation in the Company's name which is not legitimate. Anyone
wishing to verify the authenticity of any documentation should
contact the Company Secretary on 01392 487056 or
tic@iscaadmin.co.uk.
The Company has also been made aware of a website purporting to
be the Company's website which is not legitimate. Anyone wishing to
verify the authenticity of the website should contact the Company
Secretary on 01392 487056 or tic@iscaadmin.co.uk.
FURTHER INFORMATION
The Annual General Meeting of the Company will be held on 27
October 2021 at 11.00am at the City of London Club, Old Broad
Street, London EC2N 1DS.
Please note that if Government advice concerning public meetings
and gatherings were to change the arrangements for the AGM may be
altered or changed, details of any changes will be posted to the
Company's website.
A copy of the Annual Report will submitted to the National
Storage Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism . This
document will also be available on the Company's website at
https://theinvestmentcompanyplc.co.uk/ .
ISCA Administration Services Limited
14 September 2021
END
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