TIDMINV
RNS Number : 3804A
Investment Company PLC
23 September 2022
THE INVESTMENT COMPANY PLC
Annual Results Announcement for the year ended 30 June 2022
LEI: 2138004PBWN5WM2XST62
SUMMARY OF RESULTS
At 30 June 2022 At 30 June 2021 Change %
---------------------------- --------------- --------------- --------
Equity Shareholders' funds
(GBP) 16,048,191 16,281,804 (1.43)
Number of ordinary shares
in issue 4,772,049 4,772,049 -
Net asset value ("NAV") per
ordinary share 336.30p 341.19p (1.43)
Ordinary share price (mid) 294.00p 309.00p (4.85)
Discount to NAV 12.58% 9.43% (3.15)
---------------------------- --------------- --------------- --------
At 30 June 2022 At 30 June 2021
---------------------------- --------------- --------------- --------
Total return per ordinary
share* (5.21)p 29.08p
Dividends paid per ordinary
share - 3.00p
---------------------------- --------------- --------------- --------
* 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
During the twelve months the net asset value ("NAV") decreased
by 1.4% to 336.3p and the share price decreased by 4.9% to 294.0p.
There were three important components to the change in net asset
value for the year: First, the price of gold rose 16.3% against
sterling and this increase added about 3.9% to the NAV. Second, the
share price contribution from the equities' portfolio was nil, as
the modest decline in share prices overseas was completely offset
by the weaker British pound. Third, the Company held 3.3% of net
assets in depository receipts for Lukoil which were written down to
zero fair value during the year on account of the impact of
punitive international sanctions regimes which pose great
uncertainty as to the likelihood of receiving any future cash-flows
from this holding.
The substantial weakness of the British pound was an important
contributor to the results during the last twelve months. Though
this weakness was unexpected, the protection that comes from our
broadly international collection of businesses is deliberate. Most
of our investments are listed in different currencies and are
active outside the UK. Excluding the gold holdings - a currency in
its own right - approximately 61.0% of the portfolio is invested in
businesses whose primary listing and trading currency is something
other than the British pound. This temporarily flatters the results
when the pound is weak and will temporarily flatten them when the
pound is strong again.
Income and expenses
Expenses were down substantially from the prior year. This was
largely attributable to both the one-time reorganisation expenses
incurred in the prior year, and this being the first full year
where the cost benefits of being self-managed (i.e. there being no
external investment management fees) translated into a lower
operating expense base. Income also declined as we shifted away
from an income-oriented portfolio to one focused on capital
preservation. Despite the Company's small size, dividend income
offset most of the annual expenses.
The Board is not proposing a dividend: the results do not
justify it and to do so would represent returning capital to
Shareholders in the form of taxable income.
Investments
Presently 67.4% of net assets is invested in 19 different
businesses representing 14 different industries with operations all
over Europe, the Americas and beyond. A further 28.5% is invested
in gold bullion held through three ETFs, and we hold 4.1% in cash
and other legacy assets.
The changes to the portfolio were modest compared to the
transformation of the prior year. We added four new businesses
representing interests in the production of natural flavours and
fragrances, premium dairy production, specialty plastics and
cigarettes - all of which were on our radar screen from day one. We
also sold off four businesses, sold almost all our remaining legacy
assets, and made a small sale of gold bullion. These sales
collectively realised gains of GBP514,000 representing a 17.9% gain
on cost. Excluding the sales of legacy assets and the compulsory
redemption of Fromageries Bel, the portfolio turnover for the year
was approximately 15%. We think this was an especially active year
and anticipate lower turnover in the years to come.
We remain satisfied that gold bullion - as opposed to cash,
short-dated bonds, inflation-linked securities or other securities
- remains the appropriate reserve asset for a prudent saver looking
to protect capital in a thoroughly disingenuous world. In any case
the events of the last twelve months have revealed the weaknesses
of these and other financial assets that we think is endemic. With
the added benefit of hindsight, the timing of the November 2020
repurposing of the Company's investment objective was opportune.
Exceptionally high inflation, paired with purposefully depressed
interest rates and rapidly falling foreign exchange rates is a
trifecta which few financial assets can withstand. Gold is no
panacea - but its value comes from the fact that it is inert and
completely unaffected by the world around it. It is independent of
any price index, foreign exchange level, interest rate, or the
credit risk of any financial institution. It requires nothing and
it produces nothing. It is the exemplar of financial independence -
there is no other asset like it - and it's precisely this financial
honesty which makes it valuable.
The illusory world of quantitative easing and zero interest
rates is over, and we are already faced with significant inflation
and the spectre of recession. Government is already resorting to
numerous fiscal measures to support households such as energy
subsidies. History teaches us such interventions labeled as
temporary rarely are and here in the UK, The Bank of England pleas
for wage restraint seem to be going unheeded. Daily profit warnings
from seemingly stable businesses are routine. Valuations fall
steeply when held against weakening balance sheets and falling
profitability. The share prices of soundly and conservatively run
companies suffer just the same from higher costs of capital and the
anticipation of more challenging times. Against this backdrop we
continue to invest the capital alongside a small collection of
entrepreneurs and business owners. These are the people who make
something real and valuable to their customers and who favour
economic resilience, operational independence, and the businesses
survival above all else. There is no formula, financial or moral,
that will identify these owners for us, but these are the traits we
look for in the businesses we own.
Board Overview
Tom Cleverly has notified the Board that he does not wish to
seek re-election as a Director at the AGM in order to be able to
focus on his other business commitments. The Board wishes to record
their deep appreciation of his significant contribution to the
Company since his appointment in November 2020 and wishes him well
in his future endeavours.
Outlook
The outlook for small, listed investment trusts remains
challenging as Shareholders and their advisors grapple with
increasing compliance restrictions as to liquidity and overall
market capitalisation. Your Board is satisfied as to the underlying
strength of its portfolio of undertakings but is fully cognisant of
the immense challenges in growing the capital base of the Company.
The Board continues to evaluate genuine opportunities to grow the
capital base of the Company against the strict criteria of capital
preservation and growth over the longer term.
I. R. Dighé
Chairman
22 September 2022
Portfolio Summary
Net Asset Exposure by Trading Currency
At 30 June 2022
Fixed Cash &
income other net
& preference assets
Equities shares Gold % Total
Currency % % % %
--------- --------- ------------- ---- ----------- -----
GBP 6.8 0.4 - 2.4 9.6
CAD 9.4 - - - 9.4
CHF 5.6 - - - 5.6
EUR 37.6 - - 1.3 38.9
NOK 3.9 - - - 3.9
USD 4.1 - 28.5 - 32.6
--------- ------------- ---- ----------- -----
Total 67.4 0.4 28.5 3.7 100.0
--------- ------------- ---- ----------- -----
Equity Participations - Regional Economic Exposure*
At 30 June 2022
% of equity participations
Region
-------------------- --------------------------
Europe 48.9
North America 31.2
Asia, Africa, Other 12.7
South America 7.2
Total 100.0
--------------------------
Equity Participations - By Sector
At 30 June 2022
Sector % of equity participations
---------------- --------------------------
Industrials 40.7
Consumer Goods 39.3
Basic Materials 12.8
Oil & Gas 7.2
--------------------------
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 2022
Fair
value % of
Security Country Holding GBP total
portfolio
------------------------------- --------------- --------- ---------- -----------
Hal Trust Netherlands 12,769 1,349,659 8.4
British American Tobacco UK 27,000 950,266 5.9
Tonnellerie François
Frères Group France 32,000 870,374 5.4
Imperial Oil Canada 20,000 774,917 4.8
Karelia Tobacco Greece 3,450 760,199 4.7
Barrick Gold Canada 45,000 655,562 4.1
Lucas Bols Netherlands 75,000 652,005 4.1
Bakkafrost Faroe Islands 12,000 630,026 3.9
Robertet France 800 581,857 3.6
Crete Plastics Greece 44,452 562,443 3.5
Emmi Switzerland 700 559,855 3.5
Cembre Italy 26,000 559,477 3.5
Nedap Netherlands 9,000 463,247 2.9
Franco-Nevada Canada 3,600 389,217 2.4
Alamos Gold Canada 60,000 345,956 2.2
Bucher Industries Switzerland 1,200 342,622 2.2
Kri-Kri Milk Industry Greece 50,000 232,399 1.5
Strix Group UK 80,000 133,600 0.8
Total equity participations 10,813,681 67.4
---------- -----------
Other legacy holdings Various 61,776 0.4
---------- -----------
Total legacy holdings 61,776 0.4
---------- -----------
Invesco Physical Gold ETC UK 15,000 2,158,775 13.5
WisdomTree Physical Swiss
Gold ETC Switzerland 9,000 1,288,520 8.0
WisdomTree Physical Gold ETC UK 8,000 1,122,491 7.0
Total gold 4,569,786 28.5
---------- -----------
Cash 678,592 4.2
Other liabilities net of other
assets (75,644) (0.5)
---------- -----------
Total cash less other net
current liabilities 602,948 3.7
---------- -----------
Total net assets 16,048,191 100.0
---------- -----------
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 and the conflict in Ukraine continue 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 is the potential impact on
the Company. The Board is also monitoring how BREXIT continues to
unfold.
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 28.5% 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
8.7% 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 implications The Company looks to
of quantitative easing own a portfolio of assets
and other monetary policies, that possess an enduring
which include mounting real value whether from
inflationary pressure, the value of the underlying
pose a risk to the real assets in an investment,
value of the Company's or in the investee's
assets. 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 are becoming more prominent but are
not yet considered key risks.
Global conflict
The war between Russia and Ukraine has had a significant impact,
inter alia, on inflation and, in conjunction with affairs in China,
an impact on supply chains and globalisation. Investee companies
will vary as to the impact on them and their ability to adapt.
Inflationary pressure
Inflation has escalated sharply in the last 12 months. Not all
companies are well-placed to pass on cost pressures to their
customers. In addition, for The Investment Company, it is expected
that operating costs will rise more than dividend income.
In addition, 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 90.4% is invested in foreign currency stocks
and other assets.
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 in November 2020 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 2022 was 336.30p per share
(2021: 341.19p). The total return of the NAV was (1.43)%.
- (Discount)/premium of share price in relation to NAV
Over the year to 30 June 2022, the Company's share price moved
from trading at a discount of 9.43% to a discount of 12.58%.
- Ongoing Charges Ratio
The Ongoing Charges Ratio for the year to 30 June 2022 amounted
to 2.17% (2021: 2.24%).
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.
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 Covid pandemic and the conflict in Ukraine are the latest
events impacting not just this Company but all commercial entities.
The change in Investment Policy and the decision as supported by
Shareholders during the previous 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 2022, there were five male Directors on the Board. As
discussed in the Chairman's Statement above, Tom Cleverly does not
wish to seek re-election at the forthcoming AGM. There are no
current plans to appoint a replacement. 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 two 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.
In the prior year, the Company underwent considerable change.
One of these - the change of dividend policy - 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.
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.
Following their appointment in January 2021, ISCA Administration
Services acted as Company Secretary and Administrator during the
year and worked with the Directors to ensure the Company continued
to operate normally throughout the restrictions imposed by
Covid.
In January 2022, the Company negotiated a new contract with
Equiniti to continue to provide Registrar services to the
Company.
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
22 September 2022
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 UK adopted international accounting
standards in conformity with the requirements of the Companies Act
2006 and, for the Group, UK adopted international accounting
standards give a true and fair view of the assets, liabilities,
financial position and loss 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
22 September 2022
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2022
Year ended 30 June Year ended 30 June
2022 2021
Revenue Capital Total Revenue Capital Total
Notes GBP GBP GBP GBP GBP GBP
--------- --------- --------- --------- --------- ---------
(Losses)/gains on investments
at fair value through
profit or loss 8 - (227,992) (227,992) - 1,315,694 1,315,694
Exchange gains/(losses/
on capital items - 2,583 2,583 - (88) (88)
Investment income 2 371,956 - 371,956 724,585 - 724,585
Investment management
fee 3 - - - (96,825) - (96,825)
Other expenses 4 (355,618) - (355,618) (535,120) - (535,120)
--------- --------- --------- --------- --------- ---------
Return/(loss) before
taxation 16.338 (225,409) (209,071) 92,640 1,315,606 1,408,246
Taxation 5 (39,554) - (39,554) (20,338) - (20,338)
--------- --------- --------- --------- --------- ---------
Total (loss)/income
after taxation (23,216) (225,409) (248,625) 72,302 1,315,606 1,387,908
--------- --------- --------- --------- --------- ---------
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
--------- --------- --------- --------- --------- ---------
(Loss)/return on total
income after taxation
per 50p ordinary share
- basic & diluted 6 (0.49) (4.72) (5.21) 1.51 27.57 29.08
--------- --------- --------- --------- --------- ---------
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 April 2021 by the Association of Investment
Companies.
The Group did not have any income or expense 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 2022
Ordinary Capital
share Share redemption Capital Revenue
capital premium reserve reserve reserve Total
GBP GBP GBP GBP GBP GBP
-------------- ---------------- ------------------ ---------------- ------------- -----------------
Balance at 1
July 2021 2,386,025 4,453,903 2,408,820 8,410,600 (1,377,544) 16,281,804
Total
comprehensive
income
Net loss for
the year - - - (225,409) (23,216) (248,625)
Transactions
with
Shareholders
recorded
directly to
equity
Ordinary
dividends
(note
7) - - - - 15,012 15,012
-------------- ---------------- ------------------ ---------------- ------------- -----------------
Balance at 30
June 2022 2,386,025 4,453,903 2,408,820 8,185,191 (1,385,748) 16,048,191
-------------- ---------------- ------------------ ---------------- ------------- -----------------
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
(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
-------------- ---------------- ------------------ ---------------- ------------- -----------------
The notes below form part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2022
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
2021 2,386,025 858,783 4,453,903 2,408,820 5,852,000 1,122,327 17,081,858
Total comprehensive
income
Net loss for the year - - - - (225,503) (8,715) (234,218)
Transactions with
Shareholders recorded
directly to equity
Ordinary dividends
(note 7) - - - - - 15,012 15,012
Preference share dividends
paid - - - - - (172) (172)
--------- ---------- --------- ----------------- --------- --------- ----------
Balance at 30 June
2022 2,386,025 858,783 4,453,903 2,408,820 5,626,497 1,128,452 16,862,480
--------- ---------- --------- ----------------- --------- --------- ----------
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
(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
--------- ---------- --------- ----------------- --------- --------- ----------
The notes below form part of these financial statements.
CONSOLIDATED BALANCE SHEET
As at 30 June 2022
30 June 30 June
2022 2021
Notes GBP GBP
----------- -----------
Non-current assets
Investments held at fair value through profit
or loss 8 15,445,243 15,618,864
----------- -----------
Current assets
Trade and other receivables 11 30,358 389,029
Cash and cash equivalents 678,592 540,800
----------- -----------
708,950 929,829
----------- -----------
Current liabilities
Trade and other payables 12 (106,002) (266,889)
----------- -----------
(106,002) (266,889)
Net current assets 602,948 662,940
----------- -----------
Net assets 16,048,191 16,281,804
----------- -----------
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 8,185,191 8,410,600
Revenue reserve (1,385,748) (1,377,544)
----------- -----------
Shareholders' funds 16,048,191 16,281,804
----------- -----------
NAV per 50p ordinary share 15 336.30p 341.19p
----------- -----------
These financial statements were approved by the Board on 22
September 2022 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 2022
30 June 30 June
2022 2021
Notes GBP GBP
---------- ----------
Non-current assets
Investments held at fair value through profit
or loss 8 15,444,619 15,618,334
Investment in subsidiaries 9 862,656 862,656
---------- ----------
16,307,275 16,480,990
Current assets
Trade and other receivables 11 89,097 435,180
Cash and cash equivalents 663,863 526,071
---------- ----------
752,960 961,251
---------- ----------
Current liabilities
Trade and other payables 12 (197,755) (360,383)
---------- ----------
(197,755) (360,383)
---------- ----------
Net current assets 555,205 600,868
---------- ----------
Net assets 16,862,480 17,081,858
---------- ----------
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 5,626,497 5,852,000
Revenue reserve 1,128,452 1,122,327
---------- ----------
Shareholders' funds 16,862,480 17,081,858
---------- ----------
As permitted by section 408 of the Companies Act 2006, the
Company has not presented its own Income Statement. The amount of
the Company's return for the financial year dealt with in the
financial statements of the Group is a loss after tax of GBP234,218
(2021: profit of GBP1,382,976).
These financial statements were approved by the Board on 22
September 2022 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 2022
Group Company
30 June 30 June 30 June 30 June
2022 2021 2022 2021
Notes GBP GBP GBP GBP
----------- ------------------ ----------- ------------------
Cash flows (used in)/generated
from operating activities
Income received from investments 342,923 777,299 342,923 777,299
Interest received 38 9,792 38 9,792
Overseas taxation paid (29,350) (19,195) (29,350) (19,195)
Investment management fees
paid (1,678) (104,544) (1,678) (104,544)
Other cash payments (347,995) (564,381) (335,407) (555,145)
----------- ------------------ ----------- ------------------
Net cash (used in)/generated
from operating activities (36,062) 98,971 (23,474) 108,207
----------- ------------------ ----------- ------------------
Cash flows used in financing
activities
Dividends paid on ordinary
shares 7 - (143,161) - (143,161)
----------- ------------------ ----------- ------------------
Net cash used in financing
activities - (143,161) - (143,161)
----------- ------------------ ----------- ------------------
Cash flows generated from
investing activities
Purchase of investments 8 (3,580,745) (13,442,242) (3,580,745) (13,442,242)
Sale of investments 8 3,748,933 13,762,164 3,748,933 13,748,539
Loans to subsidiaries - - (12,588) (9,236)
----------- ------------------ ----------- ------------------
Net cash generated from investing
activities 168,188 319,922 155,600 297,061
----------- ------------------ ----------- ------------------
Net increase in cash and
cash equivalents 132,126 275,732 132,126 262,107
----------- ------------------ ----------- ------------------
Reconciliation of net cash
flow to movement in net cash
Increase in cash 132,126 275,732 132,126 262,107
Exchange rate movements 5,666 16 5,666 16
----------- ------------------ ----------- ------------------
Increase in net cash 137,792 275,748 137,792 262,123
Net cash at start of period 540,800 265,052 526,071 263,948
----------- ------------------ ----------- ------------------
Net cash at end of period 678,592 540,800 663,863 526,071
----------- ------------------ ----------- ------------------
Analysis of net cash
Cash and cash equivalents 678,592 540,800 663,863 526,071
----------- ------------------ ----------- ------------------
678,592 540,800 663,863 526,071
----------- ------------------ ----------- ------------------
The notes below form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
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 2022, 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 UK adopted international accounting
standards 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 April 2021 ("AIC SORP"), except to any extent where it is not
consistent with the requirements of UK 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 conflict in Ukraine and 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 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
*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, the Board assesses the
portfolio for any investments which it considers the value has
fallen permanently below cost. Any such loss is treated as a
permanent impairment and as a realised loss, even though the
investment is still held.
In addition, GBP61,152 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 financial statements.
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 Consolidated 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 Cash Flow Statement , cash and cash
equivalents consist of cash and cash equivalents as defined
above.
Current Assets
Current assets are initially recognised at cost and subsequently
measured at amortised cost and balances revalued for exchange rate
movement. Current assets comprise debtors, prepayments and cash and
are subject to review for impairment at least at each reporting
date.
Current Liabilities
Current liabilities are initially recognised at cost and
subsequently measured at amortised cost and balances revalued for
exchange rate movement. Current liabilities comprise accruals and
other creditors and are subject to review for impairment at least
at each reporting date.
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 Consolidated 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 reserve.
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 2022 30 June 2021
GBP GBP
------------- -------------
Income from investments:
UK dividends 122,508 438,996
Unfranked dividend income (including
scrip dividends): 258,224 132,143
UK fixed interest (8,814) 143,654
------------- -------------
371,918 714,793
Other income
Bank deposit and other interest 38 9,792
Total income 371,956 724,585
------------- -------------
3. Investment management fee
Year ended Year ended
30 June 2022 30 June 2021
GBP GBP
-------------- -------------
Investment management fee - 96,825
-------------- -------------
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 2022, an amount of GBPnil (2021: GBP1,678) was
outstanding and due to the Investment Manager.
4. Other expenses
Year ended Year ended
30 June 2022 30 June 2021
GBP GBP
------------- -------------
Administration and secretarial services
- recurring 85,000 81,236
non-recurring - 36,500
Auditors' remuneration for:
* Audit of the Group's financial statements 38,900 37,250
Directors' remuneration (see note
18) 100,000 86,292
Transaction costs in relation to
the change of investment policy - 152,285
Other expenses 131,718 141,557
------------- -------------
Total expenses 355,618 535,120
------------- -------------
The audit of the Group's financial statements includes the cost
of the audit of Abport Limited of GBP3,300 (2021: GBP3,150) and New
Centurion Trust Limited GBP3,300 (2021: GBP3,150), 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
2022 2021
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
------- ------- ------ ------- ------- ------
Current Taxation - - - - - -
Overseas taxation suffered 39,554 - 39,554 20,338 - 20,338
------- ------- ------ ------- ------- ------
39,554 - 39,554 20,338 - 20,338
------- ------- ------ ------- ------- ------
The current tax charge for the year is higher than (2021:lower
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
2022 2021
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
-------- --------- --------- -------- --------- ---------
Return on ordinary activities 16,338 (225,409) (209,071) 92,640 1,315,606 1,408,246
Tax at UK Corporation
tax rate of 19% (2021:19%) 3,104 (42,828) (39,724) 17,602 249,965 267,567
Effects of:
UK dividends that are
not taxable (23,277) - (23,277) (83,409) - (83,409)
Overseas dividends that
are not taxable (11,537) - (11,537) (8,386) - (8,386)
Non-taxable investment
losses/(gains) - 42,828 42,828 - (249,965) (249,965)
Overseas taxation suffered 39,554 - 39,554 20,338 - 20,338
Unrelieved expenses 31,710 - 31,710 74,193 - 74,193
-------- --------- --------- -------- --------- ---------
Actual current tax charged
to the revenue account 39,554 - 39,554 20,338 - 20,338
-------- --------- --------- -------- --------- ---------
Factors that may affect future tax charges
The Company has excess management expenses of GBP2,323,531
(2021: GBP2,156,636). 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.
On 3 March 2021, the UK government announced that it intended to
increase the main rate of corporation tax to 25% for the financial
years beginning 1 April 2023. This new rate was substantively
enacted by Finance Act 2021 on 10 June 2021.
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
2022 2021
Revenue Capital Total Revenue Capital Total
-------- --------- --------- ------- --------- ---------
Return/(loss) after taxation
attributable to ordinary
Shareholders (GBP) (23,216) (225,409) (248,625) 72,302 1,315,606 1,387,908
-------- --------- --------- ------- --------- ---------
Weighted average number
of ordinary shares in
issue (excluding
shares held in Treasury) 4,772,049 4,772,049
(Loss)/return per ordinary
share
basic and diluted (pence) (0.49) (4.72) (5.21) 1.51 27.57 29.08
-------- --------- --------- ------- --------- ---------
7. Dividends per Ordinary Share
Amounts recognised as distributions to equity holders in the
year.
Year ended Year ended
30 June 30 June
2022 2021
GBP GBP
---------- ----------
Paid per Ordinary share in respect of the
prior period:
Fourth interim dividend of 0.00p (2021:
1.00p) - 47,720
In respect of the year under review:
First interim dividend of 0.00p (2021: 1.00p) - 47,720
Second interim dividend of 0.00p (2021:
1.00p) - 47,721
- 143,161
---------- ----------
Unclaimed dividends in respect of prior
periods clawed back after 12 years (15,012) -
---------- ----------
Total (15,012) 143,161
---------- ----------
No dividend will be declared in respect of the year under
review.
8. Investments
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
----------- ------------ ----------- ------------
Opening book cost 15,354,823 16,538,418 15,375,115 16,571,760
Opening net investment holding
gains/(losses) 264,041 (1,720,058) 243,219 (1,754,581)
----------- ------------ ----------- ------------
Opening valuation 15,618,864 14,818,360 15,618,334 14,817,179
Movements in the year:
Purchases at cost 3,443,998 13,607,771 3,443,998 13,607,771
Sales proceeds (3,389,627) (14,122,961) (3,389,627) (14,109,336)
Realised gains/(losses) on sales 219,171 (668,405) 219,171 (695,080)
Permanent diminution * (541,006) - (541,006) -
Unrealised gains in the year 93,843 1,984,099 93,749 1,997,800
Closing valuation 15,445,243 15,618,864 15,444,619 15,618,334
----------- ------------ ----------- ------------
Being:
Book cost 15,087,359 15,354,823 15,107,651 15,375,115
Net investment holding gains 357,884 264,041 336,968 243,219
----------- ------------ ----------- ------------
15,445,243 15,618,864 15,444,619 15,618,334
----------- ------------ ----------- ------------
* The Company has provided for a permanent diminution in the
value of its holding in Lukoil GDR.
Group Company
2022 2021 2022 2021
Summary of capital gains/(losses) GBP GBP GBP GBP
--------- --------- --------- ---------
Realised gains/(losses) on sales 219,171 (668,405) 219,171 (695,080)
Permanent diminution (541,006) - (541,006) -
Unrealised gains in the year 93,843 1,984,099 93,749 1,997,800
--------- --------- --------- ---------
(227,992) 1,315,694 (228,086) 1,302,720
--------- --------- --------- ---------
Transaction costs
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
------ ------ ------ ------
Costs on purchases 7,339 24,721 7,339 24,721
Costs on sales 5,405 20,698 5,405 20,698
------ ------ ------ ------
12,744 45,419 12,744 45,419
------ ------ ------ ------
Reconciliation of cash movements in investment transactions
The difference between the purchases in note 8 of GBP3,443,998
and that shown in the Cash Flow Statement above is GBP136,747 which
is represented by the payment of the trade outstanding at 30 June
2021 of GBP165,529, the scrip dividend in Hal Trust of GBP30,376
and an exchange loss of GBP1,594.
The difference between the sales proceeds in note 8 of
GBP3,389,627 and that shown in the Cash Flow Statement above is
GBP359,306 which is represented by the receipt of the trade
outstanding at 30 June 2021 of GBP360,797 and an exchange loss of
GBP1,491.
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 2022, by the level in the fair value
hierarchy into which the fair value measurement is categorised.
Group Level 1 Level 2 Level 3 Total
At 30 June 2022 GBP GBP GBP GBP
---------- ------- ------- ----------
Financial assets at fair value
through profit or loss:
Equities 10,814,305 - 61,152 10,875,457
Exchange traded commodities 4,569,786 - - 4,569,786
---------- ------- ------- ----------
15,384,091 - 61,152 15,445,243
---------- ------- ------- ----------
Group Level 1 Level 2 Level 3 Total
At 30 June 2021 GBP GBP GBP GBP
---------- ------- ------- ----------
Financial assets at fair value
through profit or loss:
Equities 10,852,907 - 594,320 11,447,227
Exchange traded commodities 4,109,137 - - 4,109,137
Fixed interest-bearing securities 62,500 - - 62,500
---------- ------- ------- ----------
15,024,544 - 594,320 15,618,864
---------- ------- ------- ----------
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 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.
If the value of the 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 GBP6,115 (2021: GBP59,432).
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 2022.
Financial assets
Group and Company at fair value
through profit
or loss
GBP
----------------
Opening fair value 594,320
Purchases -
Sales proceeds (573,939)
Total gains/(losses) included in (losses)/gains
on investments in the Consolidated Income Statement
* on assets sold 55,099
* on assets held at the year end (14,328)
----------------
Closing balance 61,152
----------------
9. Investment in Subsidiaries
Company Company
30 June 30 June
2022 2021
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 2022, 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
The registered office of the subsidiaries is the same as that of
the 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 2022 (30 June 2021:
nil).
11. Trade and Other Receivables
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
------ ------- ------ -------
Amounts due from subsidiaries - - 58,739 46,151
Accrued income - 8,814 - 8,814
Dividends receivable 12,035 4,602 12,035 4,602
Taxation recoverable 641 8,978 641 8,978
Amounts due from brokers - 360,797 - 360,797
Other receivables 17,682 5,838 17,682 5,838
------ ------- ------ -------
30,358 389,029 89,097 435,180
------ ------- ------ -------
The carrying amount of such receivables approximates to their
fair value. Trade and other receivables are not past due at 30 June
2022.
12. Trade and Other Payables
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
------- ------- ------- -------
Preference dividends payable
to the Company's wholly owned
subsidiary - - 1,549 1,377
Amounts due to subsidiaries - - 101,533 101,533
Investment management fees - 1,678 - 1,678
Amounts due to brokers - 165,529 - 165,529
Trade payables and accruals 106,002 99,682 94,673 90,266
------- ------- ------- -------
106,002 266,889 197,755 360,383
------- ------- ------- -------
13. Ordinary Share Capital
Group and Company Group and Company
2022 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 (2021:
None).
14. Issued Preference Share Capital
Group Company
2022 2021 2022 2021
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:
2022 2021
GBP GBP
---------- ----------
Net Assets 16,048,191 16,281,804
---------- ----------
Ordinary shares in issue 4,772,049 4,772,049
---------- ----------
NAV per ordinary share 336.30p 341.19p
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 8 and 9 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 price 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 2022 30 June 2021
Overseas Other net Overseas Other net
investments assets/(liabilities) Total investments assets/(liabilities) Total
GBP GBP GBP GBP GBP GBP
------------ --------------------- ---------- ------------ --------------------- ----------
Australian
Dollar 624 - 624 530 - 530
Canadian Dollar 1,510,090 3,257 1,513,347 1,190,448 (87,454) 1,102,994
Euro 6,031,660 214,098 6,245,758 4,417,968 1,770 4,419,738
Norwegian Krone 630,026 - 630,026 717,698 - 717,698
Swiss Franc 902,477 - 902,477 974,678 - 974,678
US Dollar 5,225,348 1,638 5,226,986 5,285,236 192,535 5,477,771
------------ --------------------- ---------- ------------ --------------------- ----------
14,300,225 218,993 14,519,218 12,586,558 106,851 12,693,409
------------ --------------------- ---------- ------------ --------------------- ----------
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 nor
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
2022 2021 2022 2021
GBP GBP GBP GBP
------- --------- ------- ---------
Fixed interest securities - 62,500 - 62,500
Preference shares 61,152 594,320 61,152 594,320
Accrued income and other debtors 30,358 389,029 89,097 435,180
Cash and cash equivalents 678,592 540,800 663,863 526,071
------- --------- ------- ---------
770,102 1,586,649 814,112 1,618,071
------- --------- ------- ---------
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
2022 2021
Profit and net
assets Profit and net assets
increase (decrease) increase (decrease)
-------- ---------- ---------- -----------
If overall prices rose/fell
by 5%:
* on share prices (GBP) 543,773 (543,773) 575,486 (575,486)
* on ETCs 228,489 (228,489) 205,457 (205,457)
-------- ---------- ---------- -----------
* on earnings and net assets (GBP) 772,262 (772,262) 780,943 (780,943)
* in earnings net asset value per Ordinary share
(pence) 16.18 (16.18) 16.36 (16.36)
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
2022 2021
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 328,724 (297,418) 232,618 (210,464)
Swiss Franc 47,499 (42,975) 51,299 (46,413)
Norwegian Krone 33,159 (30,001) 37,774 (34,176)
Australian Dollar 33 (30) 28 (25)
Canadian Dollar 79,650 (72,065) 58,052 (52,524)
US Dollar 275,104 (248,904) 288,304 (260,846)
--------- --------------- --------- ---------------
* on earnings and net assets 764,169 (691,393) 668,075 (604,448)
- on earnings and net asset
value per Ordinary share
(pence) 16.01 (14.49) 14.00 (12.67)
Assets excluding ETCs 523,654 ( 473,783) 451,804 ( 408,775)
ETCs 240,515 (217,610) 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 30 June 2022 or 30
June 2021.
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 GBPnil (2021:
GBP96,825). In addition, GBP8,247 (2021: GBP5,459) was paid to
Fiske plc pursuant to a custody agreement.
As at the year end, GBP2,005 (2021: GBP3,745) was payable to
Fiske plc under the custody agreement.
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 are considered to be independent by the Board.
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 previous
year. For the year ended 30 June 2022, all Directors, including the
Chairman, received an annual fee of GBP20,000. Further information
can be found within the Directors' Remuneration Report on page 25
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 (2021: 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 28
October 2022 at 11.00am at the City of London Club, 19, Old Broad
Street, London EC2N 1DS.
A copy of the Annual Report will be 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
22 September 2022
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