Final Results
23/09/2022 07:00
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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 (£) 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 £514,000 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
Currency Equities Fixed income & preference shares Gold Cash & other net assets Total
% % % % %
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 total portfolio
Security Country Holding £
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 positioning and outlook for companies in which the The Company looks to invest in businesses that can demonstrate resilient
Company is invested may decline or fail to make expected progress. This may be characteristics and a shared philosophy around long term creation of value.
because 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 portfolio is invested in gold ETCs and a further 8.7% At the time of acquisition, investments in any one company shall not exceed
is invested in gold royalty and mining businesses. 15% and investments in gold bullion shall not exceed 35% of the Company's
total assets.
Monetary risk The widespread implications of quantitative easing and other monetary The Company looks to own a portfolio of assets that possess an enduring real
policies, which include mounting inflationary pressure, pose a risk to the value whether from the value of the underlying assets in an investment, or in
real value of the Company's assets. the investee's ability to create an enduring profit stream.
Operational risk The Company is reliant on service providers including, ISCA Administration The Board formally reviews the Company's service providers on an annual basis.
Services Limited as 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 2022 Year ended 30 June 2021
Notes Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
(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 6 (0.49) (4.72) (5.21) 1.51 27.57 29.08
& diluted
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 share Share Capital redemption reserve Capital Revenue Total
capital premium £ reserve reserve £
£ £ £ £
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 share Preference share Share Capital redemption reserve Capital Revenue Total
capital capital premium £ reserve reserve £
£ £ £ £ £
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 £ £
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 £ £
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 £234,218 (2021: profit of £1,382,976).
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 £ £ £ £
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, £61,152 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
£ £
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
£ £
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 £nil (2021: £1,678) was outstanding and due to
the Investment Manager.
4. Other expenses
Year ended Year ended
30 June 2022 30 June 2021
£ £
Administration and secretarial services - recurring 85,000 81,236
- 36,500
non-recurring
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 £3,300 (2021: £3,150) and New Centurion Trust Limited
£3,300 (2021: £3,150), 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 2022 Year ended 30 June 2021
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
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 2022 Year ended 30 June 2021
Revenue Capital Total Revenue Capital Total
£ £ £ £ £ £
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 £2,323,531 (2021: £2,156,636).
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 2022 Year ended 30 June 2021
Revenue Capital Total Revenue Capital Total
Return/(loss) after taxation attributable to ordinary Shareholders (£) (23,216) (225,409) (248,625) 72,302 1,315,606 1,387,908
Weighted average number of ordinary shares in issue (excluding 4,772,049 4,772,049
shares held in Treasury)
(Loss)/return per ordinary share (0.49) (4.72) (5.21) 1.51 27.57 29.08
basic and diluted (pence)
7. Dividends per Ordinary Share
Amounts recognised as distributions to equity holders in the year.
Year ended 30 June Year ended 30 June
2022 2021
£ £
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
£ £ £ £
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
Summary of capital gains/(losses) 2022 2021 2022 2021
£ £ £ £
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
£ £ £ £
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 £3,443,998 and that shown
in the Cash Flow Statement above is £136,747 which is represented by the
payment of the trade outstanding at 30 June 2021 of £165,529, the scrip
dividend in Hal Trust of £30,376 and an exchange loss of £1,594.
The difference between the sales proceeds in note 8 of £3,389,627 and that
shown in the Cash Flow Statement above is £359,306 which is represented by
the receipt of the trade outstanding at 30 June 2021 of £360,797 and an
exchange loss of £1,491.
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 £ £ £ £
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 £ £ £ £
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 £6,115 (2021:
£59,432).
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 at fair value through profit or loss
Group and Company £
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 2022 30 June 2021
£ £
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:
Country of Incorporation % share of capital held % share of voting rights Nature of business
Abport Limited England 100% 100% Investment dealing company
New Centurion Trust Limited England 100% 100% Investment dealing 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
£ £ £ £
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
£ £ £ £
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 £ Number £
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
£ £ £ £
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
£ £
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 investments Other net assets/(liabilities) Total Overseas investments Other net assets/(liabilities) Total
£ £ £ £ £ £
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
£ £ £ £
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 (£) 543,773 (543,773) 575,486 (575,486)
- on ETCs 228,489 (228,489) 205,457 (205,457)
- on earnings and net assets (£) 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%: £ £ £ £
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 16.01 (14.49) 14.00 (12.67)
(pence)
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 £nil (2021: £96,825). In addition, £8,247 (2021:
£5,459) was paid to Fiske plc pursuant to a custody agreement.
As at the year end, £2,005 (2021: £3,745) 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 £20,000. 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: £nil).
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
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) . This document will
also be available on the Company's website at
https://theinvestmentcompanyplc.co.uk/
(https://theinvestmentcompanyplc.co.uk/) .
ISCA Administration Services Limited
22 September 2022
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