REG - F&C Investment Trust - Annual Financial Report
10/03/2022 07:01
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RNS Number : 2682E F&C Investment Trust PLC 10 March 2022
F&C INVESTMENT TRUST PLC
Audited Statement of Results for the year ended 31 December 2021.
LEI: 213800W6B18ZHTNG7371
10 March 2022
F&C Investment Trust PLC ('FCIT'/'Company') today announces its results
for the year ended
31 December 2021.
· FCIT's share price at the year end was 926.0 pence. The share price
total return was 19.4%, in line with the return of 19.5% from the benchmark,
the FTSE All-World Index.
· FCIT's Net Asset Value ('NAV') total return of 21.7%, with debt at
market value, was ahead of the benchmark.
· The difference between the strong gains reflected in FCIT's NAV total
return and the share price total return was the effect of the discount
widening over the year, from 5.4% to 7.3%.
· Our private equity holdings outperformed against listed market
equivalents, with both our recent commitments and our older holdings producing
strong gains.
· Our portfolios of listed investments delivered strong absolute
returns, led by North American equities.
· The Company has delivered a total shareholder return of 291.9% over
the ten-year period to the end of 2021, equivalent to 14.6% per annum.
· The final dividend will be 3.8 pence per share, subject to
shareholder approval, and will bring the total dividend for the year to 12.8
pence per share. This will be a 5.8% increase, the 51(st) ( )consecutive
annual increase, and ahead of the Consumer Price Index of 5.4% for the 12
months to 31 December 2021.
· The Company holds very limited exposure to two
Russian securities
which was approximately 0.3% of total assets as at the end of the year. They have been written down and,
once liquidity permits, we will seek to divest all direct exposure
to Russian equities.
· FCIT is committed to transition its portfolio to net zero carbon
emissions by 2050, at the latest.
The Chairman, Beatrice Hollond, said:
"2021 was a good year for our shareholders, despite a very uncertain backdrop, and our objective remains
firmly focused on the delivery of growth in both capital and income
for shareholders over the long-term."
Commenting on the markets, Paul Niven, Fund Manager of FCIT, said:
"The Russian invasion of Ukraine is an historically significant event which is
exerting a terrible toll on the Ukrainian people. Events are fast moving and
causing significant volatility in markets and creating challenges to the
fundamental outlook for the global economy."
The full results statement is attached.
Past performance should not be seen as an indication of future performance.
The value of investments and income derived from them can go down as well as
up as a result of market or currency movements and investors may not get back
the original amount invested.
Contacts
Paul Niven - Fund Manager
0207 011 4385
Campbell Hood
campbell.hood@bmogam.com (mailto:campbell.hood@bmogam.com)
Tel: +44 (0)20 7011 4243
FTI Consulting
bmo@fticonsulting.com (mailto:bmo@fticonsulting.com)
Tel: +44 (0) 20 3727 1888
About FCIT:
· Founded in 1868 - the oldest collective investment trust
· A diversified portfolio provides exposure to most of the world's
stock markets, with exposure to over 400 individual companies across the globe
· Its aim is to generate long-term growth in capital and income by
investing primarily in an international portfolio of listed equities
The Chairman's Statement
Dear Shareholder,
While Covid-19 continued to dominate the political, economic and market
backdrop during 2021, a sharp recovery in global growth and continued monetary
and fiscal support led to strong gains. The Company's share price total return
for the year was 19.4%. Our Net Asset Value ('NAV') total return, taking debt
at market value, of 21.7% exceeded the gains from our benchmark of 19.5%.
Our NAV per share, with debt at market value, rose from 831.8p per share to
998.7p per share and our share price rose from 787.0p to 926.0p, ending the
year close to record highs. The discount on which our shares traded relative
to NAV widened, from 5.4% at the start of year, to 7.3% at the year end.
It was a year of outperformance from our private equity holdings where both
our recent and our older investments produced strong gains. Our portfolios of
listed investments delivered strong absolute returns led by North American
equities, notably with the value component outperforming the growth portfolio.
In aggregate, the listed portfolios slightly lagged the return from the
benchmark while gearing enhanced our overall returns in the strong market
environment. This was helped further by global interest rate rises having the
effect of reducing the fair value of our outstanding debt. Further information
on investment performance can be found in the Fund Manager's Review on page 14
of the Report and Accounts.
Our long-term focus
2021 was a good year for our shareholders, despite a very uncertain backdrop,
and our objective remains firmly focused on the delivery of growth in both
capital and income for shareholders over the long-term. The past decade has
seen exceptional returns for investors in global equities and your Company has
delivered a total shareholder return of 291.9% over the ten-year period to the
end of 2021, equivalent to 14.6% per annum. Indeed, shareholder returns have
been positive in nine of the past ten calendar years, with only 2018 seeing a
small loss in value.
Reflecting further on longer-term returns and the power of compounding, over
the twenty-year period to 31 December 2021 the Company's share price total
return was 536.1%, equivalent to 9.7% per annum. Our capital-only returns over
the past twenty years were 318.1%. Dividends paid to shareholders have risen
by 80.3% over the past decade and by 287.9% over the past twenty years. Such
results continue to demonstrate the importance of compounding income and
capital gains over long periods of time in the process of value creation for
shareholders, together with effective risk management and taking a long-term
view through market volatility.
Increased returns and dividend
Following the most challenging year for our revenue for over a decade, we
enjoyed a robust recovery in 2021. Our income rose on the year to £58.5m
(after tax) while special dividends increased slightly to £1.4m (2020:
£1.2m). The impact of currency movements is estimated to have detracted
£4.0m from our income (2020: £0.4m). Our Net Revenue Return per share rose
to 10.99 pence per share from 9.71 pence per share in 2020.
Throughout the pandemic the Board has carefully considered the revenue
position of your Company and the increasing significance of rising
inflationary pressures. While our revenue increased during 2021, it remains
below pre-pandemic levels and below the level of our recent annual dividend
payments. However, one of our strengths as an investment trust company is to
be able to utilise the revenue reserve to make up such shortfalls in annual
revenue and continue to increase dividend payments for shareholders.
I am therefore delighted to report another rise in the proposed annual
dividend, which will in part be funded by our revenue reserve. Subject to
approval at the Annual General Meeting ('AGM'), shareholders will receive a
final dividend of 3.8 pence per share on 10 May 2022, bringing the total
dividend for 2021 to 12.8 pence: an increase of 5.8% over that of 2020. The
increase is ahead of the 5.4% rise in inflation as measured by the Consumer
Price Index for the 12 months to 31 December 2021 and therefore represents a
real rise in the dividend for the calendar year. In addition, as well as being
our fifty first consecutive rise in annual dividends, it is our one hundred
and fifty fourth annual dividend payment.
Shareholders can also take comfort that, in addition to our substantial
revenue reserve, we have the authority to utilise our capital reserves, which
stood at £4.9bn at the year end, to support dividend payments should we need
to. We therefore remain in a very strong position to continue our track record
of increasing annual dividends in the future. It also remains the hope and
aspiration of the Board to continue to deliver real rises in these dividends
over the long-term.
Discount/Premium
For several years your Company's share price moved closer to parity with the
NAV per share and, at times in 2018 and 2019, traded at a premium, enabling us
to reissue shares from treasury. At the onset of the pandemic in 2020,
however, our share price returned to a discount in the face of the sharp fall
in equity markets and the consequent fall in retail demand. Our shares
continued to trade at a discount throughout 2021 and we bought back a total of
9.9m shares into treasury as part of our ongoing commitment towards achieving
a sustainably low deviation between the share price and NAV. The discount
moved from 5.4% to 7.3% over the year, averaging 7.2%, compared with 6.1% in
2020.
Cost efficiency and Management fee reduction
Our Ongoing Charges figure fell again this year from 0.59% to 0.54%,
representing a further improvement in this measure of cost efficiency and
continuing the trend of recent years. This partly reflects the management fee
structure which is designed to bring down our cost ratios as the Company grows
and to pass the benefits of scale on to shareholders. The Board remains
focused on delivering value for money for shareholders as part of its
performance objectives.
I am also very pleased to report that, following constructive discussions with
our Manager, the Company's management fee rate has been reduced and with
effect from 1 January 2022 it will be charged at a rate of 0.325% per annum of
the market capitalisation of the Company up to £3.0 billion, then at 0.3% up
to £4.0 billion and 0.25% beyond that level. With effect from 1 January 2023,
the rate of 0.3% will be applied to a revised first tier of up to £4.0
billion and of 0.25% thereafter. These reductions will help to bring down our
cost ratio further as the Company continues to grow.
Contributors to total return in 2021 %
Portfolio return 19.2
Management fees (0.4)
Interest and other Expenses (0.3)
Buy backs 0.1
Change of value of debt 0.6
Gearing/other 2.5
NAV total return 21.7
Increase in discount (2.3)
Share price total return 19.4
FTSE All-World total return 19.5
Source: BMO GAM
Borrowings
Interest rates remain at historically low levels despite recent rises in
inflation. The Board continues to view this as an attractive environment in
which to lock in low rates on long-dated borrowings that should enhance our
NAV returns from the investments made over their lifetime. During the year we
therefore issued, and drew down, long-dated private placement loan notes
totalling £140m. In December, we agreed to issue a further £140m which have
also now been drawn down.
Currency Hedge
As reported last year, in late 2020 we bought £300m of sterling as a
strategic, partial hedge on our overseas currency exposure. Towards the end of
2021, we reduced the size of the hedge to £200m. During the year, this
position realised a capital gain of £9.1m. At the end of the year, we carried
forward an unrealised capital loss of £4.8m.
Responsible Investment and our commitment to Net Zero
Last year we announced our commitment to transition the Company's portfolio to
net zero carbon emissions by 2050, at the latest. During the year the Board
has considered how it will implement that transition and how our progress
towards achieving it is measured. We recognise the importance of reporting our
progress in a clear and consistent way and therefore detailed information is
provided in the report on Our Approach to Responsible Investment on pages 20
to 27 of the Report and Accounts. In the Fund Manager's report you will find
information on our very limited holdings in Russian securities. In summary,
while the current regime exists in Russia, our approach will be to sell the
very small holdings in the portfolio as soon as is practical.
F&C Investment Trust Lecture
Following the success of the lectures that the Company sponsored in 2018 and
2020, I am pleased to advise that the Company will again be sponsoring a
lecture this year. Providing Covid-19 related restrictions do not prevent us
from doing so, the lecture will be held at The Guildhall, London on Wednesday
13 July. The theme of our lecture this summer is 'Smart choices for a smarter
future', emphasising the positive impact that our financial, social and
environmental choices can have. The lecture will feature thought-provoking
sessions from some renowned speakers and will include information on the
Company's investment approach.
As tickets will be limited, they will be made available to shareholders and
the public via a ballot, with successful applicants selected at random. Video
clips will be made available to everyone on the Company's website following
the event.
The Company is also refreshing its brand, ensuring that it stays relevant for
new and existing investors. We are updating how we communicate and these
changes will be introduced at this year's lecture.
The Manager
I reported at the half year stage that the Bank of Montreal had announced its
intention to sell its asset management business covering Europe, the Middle
East and Africa to Ameriprise Financial, Inc. ('Ameriprise'), the parent
company of Columbia Threadneedle Investments ('Columbia Threadneedle'). The
sale transaction, which included your Company's Manager, BMO Investment
Business Limited, was completed on 8 November 2021. Your Board looks
favourably on this development and has welcomed an assurance that there will
be little change for your Company. Nevertheless, it recognises that any move
of this nature will inevitably create a degree of risk. It is therefore
closely monitoring the integration of the two businesses as it progresses.
Simon Fraser
It was with great shock and sadness that we learned of the untimely death of
Simon Fraser in August last year. Simon was Chairman of your Company for nine
years, from 2010 until 2019, during which time the Company flourished under
his inspiring leadership. He held dear the heritage and values of the Company.
He gave a great deal to the wider investment trust sector and is sorely missed
by those who had the privilege of knowing him.
Board composition
In addition to the appointment of Rain Newton-Smith in May 2021, Stephen
Russell joined the Board on 1 February 2022. Both Rain and Stephen's
appointments continue our planned sequence of Board changes and reflect our
focus on maintaining the highest level of investment skills and economic and
political insight on the Board. They replace Sir Roger Bone, who retired at
the conclusion of the 2021 AGM, and Sarah Arkle, who retired on 31 January
2022. I would like to thank both Roger and Sarah for their hard work and
significant contributions to the Board and its committees throughout their
time as Directors of the Company.
Jeffrey Hewitt will retire from the Board at the conclusion of the forthcoming
AGM and the process to appoint his successor is underway. He will be a hard
act to follow as Jeffrey has been an outstanding Chairman of the Audit
Committee for the past 10 years, a role in which he has been a driving force
for change and continual improvement in disclosure in our annual report. On
behalf of the Board and shareholders, we thank him for his service to the
Company and wish him well for the future.
AGM
It has been a great disappointment not to be able to meet shareholders in
person at the last two AGMs as a result of the Covid-19 pandemic and
consequent Government restrictions. Thankfully, the situation has eased
somewhat and therefore we are proposing to hold an in-person AGM on Tuesday 3
May 2022. Last year shareholders approved the adoption of new Articles of
Association which allow the Company to hold shareholder meetings in person and
at the same time allow attendance and participation online for those who are
unable, or who prefer not, to attend in person. This year we are utilising
that new power to hold a "hybrid" meeting, which will allow many more of our
shareholders to view the AGM and participate by asking questions and voting
online. Full details of how to do so are set out in the letter that
accompanies your Form of Proxy or Form of Direction.
Therefore, voting at this year's AGM will be conducted by way of a poll and
you are requested to lodge your votes ahead of the meeting by completing your
Form of Proxy or Form of Direction in accordance with the instructions. Their
completion and return will not preclude you from attending the meeting and
voting in person. If you are unable to attend the AGM, you are requested to
submit any questions you may have with regard to the resolutions proposed at
the AGM or the performance of the Company, in advance of the meeting to
fcitagm@bmogam.com. Following the AGM, the Fund Manager's presentation will be
available on the Company's website www.fandcit.com.
Outlook
Geopolitical risks have risen markedly in recent weeks with the Russian
invasion of Ukraine. Indeed, it has been shocking on a humanitarian level and
raised significant concerns over President Putin's future ambitions on a
regional and global level. While direct linkages to major Western economies
from Russia tend to be small, the impact of sanctions will be significant and
the rise in commodity prices are likely to be the main transmission mechanism
to markets. Rising commodity prices and further disruption to supply chains
will exacerbate inflationary pressure and it will also create a negative
impact on global growth, with Europe at particular risk. In recent decades,
most conflicts have been short term in nature and the wider impacts have been
relatively contained. It remains too early to assess the long-term impact of
Russia's actions but it will remain at least a near term concern for
investors.
Recent decades have seen both equity and fixed income markets buoyed by a
long-term decline in inflation. Lower interest rates, abundant liquidity and,
in response to the pandemic, fiscal largesse, have all helped to propel global
equity markets to record highs. Valuation levels in equities provide limited
scope for disappointment in either earnings or in interest rates and the
recent rise in inflation, which has been broad based and which will be
exacerbated by the Ukrainian conflict, is troubling.
Despite there being grounds for optimism initially that much of the recent
spike in inflation would prove to be transitory as supply chain disruption
diminished and economies re-opened more fully, this does not seem to be the
case. As Covid-19 appears to be becoming endemic in many countries, it still
poses significant risks and new variants may yet cause further disruption.
Investors should be prepared for slowing growth, higher but moderating
inflation and abundant but diminishing liquidity and fiscal support. The
resultant combination of moderating growth in earnings and rises in interest
rates is likely to present a challenge to equity markets in 2022 and beyond.
Global equity markets have been led by US exceptionalism in recent years and,
within the US and globally, a small cohort of stocks have dominated returns.
Companies such as Microsoft and Alphabet feature amongst our largest listed
holdings and represent exceptional businesses which have been able to deliver
tremendous growth in earnings, high margins and an enviable competitive
position versus their peers. Although these businesses are likely to continue
to thrive, we do expect, as was the case in 2021, a more balanced market and
greater sensitivity of investors to valuations. For this reason, we have been
moving away from some of these highly performing, but highly valued,
businesses in favour of companies which also have a strong competitive
position, but which have better valuation support. More detail can be found in
the Fund Manager's Report.
Our flexible and pragmatic approach to capital allocation has served your
Company well over many decades and, as the economic and market environment
shifts, perhaps in a significant change, we will continue to adapt and seek
profitable opportunities within the listed and private markets. We remain
confident in the prospects for your Company and continue to focus on the
long-term delivery of growth in both capital and income for our shareholders.
Beatrice Hollond
Chairman
9 March 2022
Forward-looking statements
This document may contain forward-looking statements with respect to the
financial condition, results of operations and business of the Company. Such
statements involve risk and uncertainty because they relate to future events
and circumstances that could cause actual results to differ materially from
those expressed or implied by forward-looking statements. The forward looking
statements are based on the Directors' current view and on information known
to them at the date of this document. Nothing should be construed as a profit
forecast.
Weighting, stock selection and performance over one year in each investment
portfolio strategy and underlying geographic exposure versus Index at 31
December 2021
Investment Portfolio Strategy Our portfolio strategy weighting % Underlying geographic exposure* % Our strategy performance in Sterling % Gross index performance in Sterling %
Benchmark weighting %
North America 40.6 57.8 62.4 23.7 27.6
Europe inc UK 10.0 23.5 16.7 13.9 17.0
Japan 4.6 6.9 6.3 2.6 2.1
Emerging Markets 7.2 9.3 10.1 3.8 (1.6)
Developed Pacific - 2.5 4.5 - -
Global Strategies** 27.6 - - 19.0 19.5
Private Equity*** 10.0 - - 30.1 -
Source: BMO GAM
*Represents the geographic exposure of the portfolio, including underlying
exposures in private equity and fund holdings.
**The Global Strategies allocation consisted of Global Income, Global Smaller
Companies, Global Value and Global Sustainable Opportunities.
***Includes the holdings in Schiehallion and Syncona.
Principal Risks and Future Prospects
The Board's processes for monitoring the principal risks and identifying
emerging risks are set out in note 26 to the Report and Accounts. Economic and
market shocks in one form or another, and their consequences, are risks that
have long been on the Board's risk assessment. The effects of the Covid-19
pandemic appear to be easing somewhat but its duration and future impact
remain unknown and there can be no complacency. Nevertheless, the Company's
purpose, strategy, investment policy and innate characteristics, most notably
portfolio diversification and an embedded long-term outlook, have again
demonstrated its strong resilience in the face of a global crisis. Our risk
evaluation forms an inherent part of our strategy determination, described on
page 9 of the Report and Accounts, which looks to mitigate risks and to pursue
the opportunities that arise not least at times of great turmoil. Last year we
highlighted, as emerging risks, the extent and impact of the eventual response
from governments to meet the costs of Covid-19 and the potential for the
imposition of controls and taxes that could be detrimental to the savings
industry and investors themselves. Although these risks remain, the impact of
the Covid-19 pandemic and the resulting actions have been articulated in each
of the principal risks rather than as a separate risk.
As reported on page 6 of the Report and Accounts, BMO GAM has been acquired by
Ameriprise and its business is to be merged with Columbia Threadneedle. The
Board looks favourably upon this acquisition and expects there to be little
change for your Company. Nevertheless, any acquisition of such magnitude will
introduce some uncertainty until integration of systems and personnel is fully
implemented. Therefore the Board is treating this aspect as an emerging risk
that it will monitor closely.
Risk description: Investment proposition and its promotion - Failure
to access the targeted market or meet investor needs or expectations,
including Responsible Investment policies not resulting in demonstratable
progress towards our net zero commitment, leading to significant pressure on
the share price.
Unchanged throughout the year.
Mitigation by strategy: Our investment and business strategies aim to position
us as a clear and core investment choice through all available channels.
Our discount is a KPI measured by the Board on a continual basis and is
reported on page 13 of the Report and Accounts.
Risk description: Investment performance - Inappropriate asset allocation,
sector and stock selection, currency exposure and use of gearing and
derivatives may give rise to under-performance and impact dividend paying
capacity. Political risk factors, including the potential emergence of
restrictive government controls, could also impact performance as could market
shocks such as those experienced as a result of Covid-19 and geo political
factors.
Increased during the year.
Mitigation by strategy: Under our Business Model, a manager is appointed with
the capability and resources to manage the Company's assets, asset allocation,
gearing, stock and sector selection and risk and can delegate the management
of investment portfolios externally. The individual global and regional
investment portfolios are managed as a whole to provide diversification, lower
volatility and risk.
The performance of FCIT relative to its benchmark, its peers and inflation is
a KPI measured by the Board on a continual basis and is reported on page 13 of
the Report and Accounts.
Risk description: Appointed Manager - Failure of BMO GAM to continue to
operate effectively resulting from inadequate systems or resources or through
the loss of key staff..
Increased during the year.
Mitigation by strategy: The Business Model is based on the premise of an
effective and strong working relationship with the appointed Manager while an
important responsibility of the Board is the robust annual evaluation of its
performance, capabilities and resources, leading to the decision on whether to
reappoint it. Succession planning concerning any potential significant
management changes is shared with the Board.
Internal performance KPIs and Manager errors are monitored by the Board for
indications of continuity or other Manager issues.
Risk description: Service providers and systems security - Covid-19 and the
implementation of working from home and increased sophistication of cyber
threats have heightened risks of loss through errors, fraud or control
failures at service providers or loss of data through business continuity
failure.
Unchanged throughout the year.
Mitigation by strategy: The ancillary functions of administration, company
secretarial, accounting and marketing services are all carried out by the
Manager.
The Board monitors effectiveness and efficiency of service providers'
processes through internal efficiency KPIs.
Ten Year Horizon
Through a series of connected stress tests ranging from moderate to extreme
scenarios including the impact of market shocks and based on historical
information, but forward-looking over the ten years commencing 1 January 2022,
the Board assessed the effects of:
• falls in the value of the publicly listed investments;
• widening discount and increased buyback levels;
• illiquidity and early calls on private equity commitments;
• adverse fluctuations in exchange rates; and
• adverse fluctuations in annual revenue.
The assumptions used for these tests purposefully did not take into account
that under such severe conditions the Board and Manager would have taken
action to mitigate the risks and offset the impact. Furthermore, the tests
were a theoretical and illustrative scenario exercise, the assumptions for
which are extreme and highly unlikely. Their purpose was to help inform the
Directors of the Company's resilience under conditions so severe that they
would impact global economies, markets, companies and businesses alike. The
tests help to support the Board's assessment of the Company's long-term
viability. The results do not represent its views or give an indication of the
likely outcome.
The Company has proved resilient and prosperous for more than 150 years. There
will inevitably be risks, but we believe that the future will continue to
present tremendous opportunities for investors and for shareholder returns to
be enhanced through a focus on companies that engage in sustainable business
practices. Shareholders can be assured that our focus on delivering
sustainable growth in capital and income over the longer term will be
maintained. Having considered its current position and the principal and
emerging risks that the Company faces and having applied stress tests under
worst-case scenarios that would severely impact global economies and markets
alike, the Board confirms that it has assessed the Company's prospects, to the
extent that it is able to do so, over the next ten years. In concluding that
ten years is an appropriate period for this assessment, the Board considers
that this approximates to:
• a suitable period over which its longer term investment performance is
measurable and comparable;
• the periods over which it would typically commit to and benefit from its
private equity investments; and
• the tenure of the Directors from a corporate governance perspective.
The Board also took into consideration the long-term duration of the Company's
debt, the perceived viability of the Company's principal service providers,
the potential effects of expected regulatory changes and the potential threat
from competition. The Company's business model, strategy and the embedded
characteristics shown opposite have helped define and maintain its stability
over many decades. The Board expects this to continue over many more years to
come.
The Directors confirm therefore, that they have a reasonable expectation that
the Company will be able to continue in operation and meet its liabilities in
full over the coming ten years to 31 December 2031.
Statement of Directors' Responsibilities in Respect of the Financial
Statements
In accordance with Chapter 4.1.12 of the Disclosure Guidance and
Transparency Rules the Directors confirm, that to the best of their knowledge:
· the financial statements, prepared in accordance with applicable
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Company;
· the Strategic Report includes a fair review of the development
and performance of the business and the position of the Company, together with
a description of the principal risks and uncertainties that it faces; and
· in the opinion of the Directors 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 Company's
position and performance, business model and strategy.
.
On behalf of the Board
Beatrice Hollond
Chairman
9 March 2022
Income Statement
For the year ended 31 December 2021 2020
Revenue Capital Total Revenue Capital Total
£'000s £'000s £'000s £'000s £'000s £'000s
Gains on investments - 879,862 879,862 - 475,886 475,886
Exchange movements on foreign currency loans, cash balances and derivatives
(176) 4,251 4,075 (167) (1,249) (1,416)
Income 77,629 - 77,629 70,178 - 70,178
Management fees (4,935) (14,805) (19,740) (4,297) (12,892) (17,189)
Other expenses (3,500) (57) (3,557) (3,416) (70) (3,486)
Net return before finance costs and taxation 69,018 869,251 938,269 62,298 461,675 523,973
Finance costs (2,778) (8,335) (11,113) (2,349) (7,049) (9,398)
Net return on ordinary activities before
taxation 66,240 860,916 927,156 59,949 454,626 514,575
Taxation on ordinary activities (7,740) (138) (7,878) (7,469) - (7,469)
Net return attributable to shareholders 58,500 860,778 919,278 52,480 454,626 507,106
Net return per share - basic (pence) 10.99 161.74 172.73 9.71 84.09 93.80
The total column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
The net return attributable to Shareholders is also the total comprehensive
income.
Statement of Changes in Equity
Share Capital Capital Revenue Total
Capital Redemption Reserves Reserve Shareholders'
Reserve Funds
For the year ended 31 December 2021 £'000s £'000s £'000s £'000s £'000s
Balance brought forward 31 December 2020 140,455 122,307 4,147,868 100,930 4,511,560
Dividends paid - - - (65,578) (65,578)
Shares repurchased by the Company and held in treasury
- - (84,326) - (84,326)
Net return attributable to shareholders - - 860,778 58,500 919,278
Balance carried forward 31 December 2021 140,455 122,307 4,924,320 93,852 5,280,934
Share Capital Capital Revenue Total
Capital Redemption Reserves Reserve Shareholders'
Reserve Funds
For the year ended 31 December 2020 £'000s £'000s £'000s £'000s £'000s
Balance brought forward 31 December 2019 140,455 122,307 3,735,063 111,224 4,109,049
Dividends paid - - - (62,774) (62,774)
Shares repurchased by the Company and held in treasury
- - (41,821) - (41,821)
Net return attributable to shareholders - - 454,626 52,480 507,106
Balance carried forward 31 December 2020 140,455 122,307 4,147,868 100,930 4,511,560
Balance Sheet
At 31 December 2021 2020
£'000s £'000s £'000s £'000s
Fixed assets
Investments 5,779,123 4,856,368
Current assets
Debtors 8,267 23,675
Cash at Bank and short-term deposits 53,111 46,654
61,378 70,329
Creditors: amounts falling due within one year
Loans (110,452) (40,000)
Other (9,277) (8,521)
(119,729) (48,521)
Net current (liabilities)/assets (58,351) 21,808
Total assets less current liabilities 5,720,772 4,878,176
Creditors: amounts falling due after more than one year
Loans (439,263) (366,041)
Debenture (575) (575)
(439,838) (366,616)
Net assets 5,280,934 4,511,560
Capital and Reserves
Share capital 140,455 140,455
Capital redemption reserve 122,307 122,307
Capital reserves 4,924,320 4,147,868
Revenue reserve 93,852 100,930
Total shareholders' funds 5,280,934 4,511,560
Net asset value per share - prior charges at
nominal value (pence) 1,002.49 840.69
Statement of Cash Flows
for the year ended 31 December 2021 2020
£'000s £'000s
Cash flows from operating activities before dividends received and interest
paid
(27,576) (32,127)
Dividends received
77,652 70,055
Interest paid
(11,037) (9,429)
Cash flows from operating activities 39,039 28,499
Investing activities
Purchases of investments (2,527,995) (2,548,873)
Sales of investments 2,483,392 2,681,183
Other capital charges and credits (56) (76)
Cash flows from investing activities (44,659) 132,234
Cash flows before financing activities (5,620) 160,733
Financing activities
Equity dividends paid (65,578) (62,774)
Repayment of loans (120,000) (75,000)
Drawdown of loans 270,000 40,000
Cash flows from share issues - 1,931
Cash flows from share buybacks for treasury shares (83,961) (41,401)
Cash flows from financing activities 461 (137,244)
Net (decrease)/increase in cash and cash equivalents (5,159) 23,489
Cash and cash equivalents at the beginning of the year 46,654 28,196
Effect of movement in foreign exchange 11,616 (5,031)
Cash and cash equivalents at the end of the year 53,111 46,654
Represented by:
Cash at bank 27,798 16,177
Short-term deposits 25,313 30,477
Cash and cash equivalents at the end of the year 53,111 46,654
Notes
1 NET RETURN PER SHARE
2021 2021 2020 2020
pence £'000s pence £'000s
Total return 172.73 919,278 93.80 507,106
Revenue return 10.99 58,500 9.71 52,480
Capital return 161.74 860,778 84.09 454,626
Weighted average ordinary shares in issue,
excluding shares held in treasury - number 532,196,543 540,641,336
2 DIVIDENDS
The Directors have proposed a final dividend in respect of the year ended 31
December 2021 of 3.80p per share payable on 10 May 2022 to all shareholders on
the register at close of business on 8 April 2022.
3 FINANCIAL RISK MANAGEMENT
The Company is an investment company, listed on the London Stock Exchange, and
conducts its affairs so as to qualify in the United Kingdom (UK) as an
investment trust under the provisions of Section 1158 of the Corporation Tax
Act 2010. In so qualifying, the Company is exempted in the UK from corporation
tax on capital gains on its portfolio of investments.
The Company's investment objective is to secure long-term growth in capital
and income through a policy of investing primarily in an internationally
diversified portfolio of public listed equities, as well as unlisted
securities and private equity, with the use of gearing. In pursuing the
objective, the Company is exposed to financial risks which could result in a
reduction of either or both of the value of the net assets and the profits
available for distribution by way of dividend. These financial risks are
principally related to the market (currency movements, interest rate changes
and security price movements), liquidity and credit. The Board of Directors,
together with the Manager, is responsible for the Company's risk management.
The full details of financial risks are contained in note 26 of the Report and
Accounts.
4 GOING CONCERN
In assessing the going concern basis of accounting the Directors have had
regard to the guidance issued by the Financial Reporting Council. They have
also considered the Company's objective, strategy and investment policy, the
current cash position of the Company, the availability of the loan facility
and compliance with its covenants and the operational resilience of the
Company and its service providers. More information on the Board's assessment
is provided on pages 34 and 35 of the Report and Accounts.
5 ANNUAL GENERAL MEETING
The annual general meeting will be held on 3 May 2022 at 12 noon.
6 REPORT AND ACCOUNTS
This statement was approved by the Board on 9 March 2022. It is not the
Company's statutory accounts. The statutory accounts for the financial year
ended 31 December 2021 have been approved and audited, and received an audit
report which was unqualified and did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying the
report. The statutory accounts for the financial year ended 31 December 2020
received an audit report which was unqualified and did not include a reference
to any matters to which the auditors drew attention by way of emphasis without
qualifying the report.
The Report and Accounts for the financial year ended 31 December 2021 will be
posted to shareholders on or around 29 March 2022 and copies may be obtained
thereafter during normal business hours from the Company's Registered Office,
Exchange House, Primrose Street, London EC2A 2NY.
Information disclosed in accordance with Disclosure Guidance and Transparency
Rule 4.1
By order of the Board
BMO Investment Business Limited
Company Secretary,
9 March 2022
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
ENDS
A copy of the Report and Accounts will be submitted to the National Storage
Mechanism and will shortly be available for inspection at www.fca.org.uk
The Report and Accounts will also be available on the Company's website
at fandcit.com (http://www.jpmindian.co.uk/) from 10 March 2022
(http://www.jpmindian.co.uk/) , where up to date information on the Company,
including daily NAV and share prices, factsheets and portfolio information can
also be found.
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