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

 

Region	% of equity participations
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

Security	Country	Holding	Fair value £	% of total portfolio
Hal Trust	Netherlands	12,769	1,349,659	8.4
British American Tobacco	UK	27,000	950,266	5.9
Tonnellerie François Frères Group	France	32,000	870,374	5.4
Imperial Oil	Canada	20,000	774,917	4.8
Karelia Tobacco	Greece	3,450	760,199	4.7
Barrick Gold	Canada	45,000	655,562	4.1
Lucas Bols	Netherlands	75,000	652,005	4.1
Bakkafrost	Faroe Islands	12,000	630,026	3.9
Robertet	France	800	581,857	3.6
Crete Plastics	Greece	44,452	562,443	3.5
Emmi	Switzerland	700	559,855	3.5
Cembre	Italy	26,000	559,477	3.5
Nedap	Netherlands	9,000	463,247	2.9
Franco-Nevada	Canada	3,600	389,217	2.4
Alamos Gold	Canada	60,000	345,956	2.2
Bucher Industries	Switzerland	1,200	342,622	2.2
Kri-Kri Milk Industry	Greece	50,000	232,399	1.5
Strix Group	UK	80,000	133,600	0.8
Total equity participations			10,813,681	67.4
Other legacy holdings	Various		61,776	0.4
Total legacy holdings			61,776	0.4
Invesco Physical Gold ETC	UK	15,000	2,158,775	13.5
WisdomTree Physical Swiss Gold ETC	Switzerland	9,000	1,288,520	8.0
WisdomTree Physical Gold ETC	UK	8,000	1,122,491	7.0
Total gold			4,569,786	28.5
Cash			678,592	4.2
Other liabilities net of other assets			(75,644)	(0.5)
Total cash less other net current liabilities			602,948	3.7
Total net assets			16,048,191	100.0

CORPORATE SUMMARY

The Company's purpose, values, strategy and culture

The Investment Company plc (the Company) is an investment trust company that has a premium listing on the London Stock Exchange, its principal activity is portfolio investment. The Company's wholly owned subsidiaries are Abport Limited, an investment dealing company and New Centurion Trust Limited, an inactive investment company (together the Group).

 

The Company consists of the Board and its Shareholders and has no employees or customers in the traditional sense. The culture of the Company is embodied in the Board of Directors whose values are trust and fairness and in the guiding principles as shown on page 3 of the Annual Report.

Investment Objective

At the Annual General Meeting on 4 November 2020, Shareholders voted to amend the Company's Investment Objective and Policy to that shown below.

 

The Company's investment objective is to protect the purchasing power of its capital in real terms, and to participate in enduring economic activities which lend themselves to genuine capital accumulation and wealth creation.

Investment Policy

The Company will seek to acquire and hold, with no predetermined investment time horizon, a collection of assets which, in the Directors' judgement, are well-suited to the avoidance of a permanent loss of capital. These assets will be comprised of minority participations in the equity, debt or convertible securities of quoted businesses which the Directors believe are led by responsible and like-minded managers and suitable for the long-term compounding of earnings. In addition, to protect its capital as well as to maintain liquidity for future investments, the Company will keep reserves in (a) liquid debt instruments such as cash in banks or securities issued by governments and/or (b) liquid, non-debt, tangible assets such as gold bullion, whether held indirectly or in physical form. 

 

The Company has no predetermined maximum or minimum levels of exposure to asset classes, currencies or geographies, and has the ability to invest globally. These exposures will be monitored by the Board in order to ensure an adequate spreading of risks. No holding in an individual company or debt instrument will represent more than 15 per cent. by value of the Company's total assets at the time of acquisition (such restriction does not, however, apply to gold bullion or cash balances). The Company's holdings of gold bullion may be as high as 35 per cent. of total assets at the time of investment.

 

Given the Company's investment objective, asset mix and time horizon, the portfolio will not seek to track any benchmark or index. The Company will not invest more than 10 per cent. of its total assets in other listed closed-ended investment funds. The Company will not use derivative instruments for speculative purposes, nor will it use currency hedges to manage returns in any currency. 

 

The Company's gearing will not exceed 20 per cent. of net assets at the time of drawdown.

 

No material change will be made to the investment policy without the approval of Shareholders by ordinary resolution.

 

Principal Risks and Uncertainties

The management of the business and the execution of the Group's strategy are subject to a number of risks. A robust assessment of the principal risks to the Company has been carried out, including those that would threaten its business model, future performance, solvency and liquidity.

 

The Covid-19 pandemic and the conflict in Ukraine continue to have an effect on both global and domestic economies. Political initiatives to mitigate the impact thereof have included a continued expansion of quantitative easing. These events are all being closely monitored by the Board as is the potential impact on the Company. The Board is also monitoring how BREXIT continues to unfold.

 

The Group's principal risks are set out below. An explanation of how these have been mitigated or managed is also provided, where appropriate.

 

The key business risks affecting the Group are:

 

	Risk	Mitigation
Business risk	The profitability, market positioning and outlook for companies in which the Company is invested may decline or fail to make expected progress. This may be because of internal factors at the investee company or external factors such as competitive pressures, economic downturns or political events.	The Company looks to invest in businesses that can demonstrate resilient characteristics and a shared philosophy around long term creation of value.
Concentration risk	28.5% of the Company's portfolio is invested in gold ETCs and a further 8.7% is invested in gold royalty and mining businesses.	At the time of acquisition, investments in any one company shall not exceed 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 policies, which include mounting inflationary pressure, pose a risk to the real value of the Company's assets.	The Company looks to own a portfolio of assets that possess an enduring real value whether from the value of the underlying assets in an investment, or in the investee's ability to create an enduring profit stream.
Operational risk	The Company is reliant on service providers including, ISCA Administration 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.	The Board formally reviews the Company's service providers on an annual basis.

 

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 pence	Capital pence	Total pence	Revenue pence	Capital pence	Total pence
(Loss)/return on total income after taxation per 50p ordinary share - basic & diluted	6	(0.49)	(4.72)	(5.21)	1.51	27.57	29.08

 

The total column of this statement is the Income Statement of the Group prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The supplementary revenue and capital columns are prepared in accordance with the Statement of Recommended Practice ("AIC SORP") issued in April 2021 by the Association of Investment Companies.

 

The Group did not have any income or expense that was not included in total income for the year. Accordingly, total income is also total comprehensive income for the year, as defined by IAS 1 (revised) and no separate Statement of Comprehensive Income has been presented.

 

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.

 

The notes below form part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2022

	Ordinary share            capital                    £	Share      premium                  £	Capital    redemption          reserve                   £	Capital          reserve                    £	Revenue          reserve                    £	Total                    £
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 capital £	Preference share capital £	Share premium  £	Capital redemption reserve £	Capital reserve £	Revenue  reserve £	Total £
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

	Notes	30 June  2022  £	30 June  2021  £
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

	Notes	30 June  2022  £	30 June  2021  £
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
	Notes	30 June                  2022                       £	30 June                  2021                       £	30 June                  2022                       £	30 June                  2021                       £
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  30 June 2022	Year ended  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 30 June 2022 £	Year ended 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  30 June 2022 £	Year ended  30 June 2021 £
Administration and secretarial services - recurring	85,000	81,236
non-recurring	-	36,500
Auditors' remuneration for:
-       Audit of the Group's financial statements	38,900	37,250
Directors' remuneration (see note 18)	100,000	86,292
Transaction costs in relation to the change of investment policy	-	152,285
Other expenses	131,718	141,557
Total expenses	355,618	535,120

 

The audit of the Group's financial statements includes the cost of the audit of Abport Limited of £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 shares held in Treasury)			4,772,049			4,772,049
(Loss)/return per ordinary share basic and diluted (pence)	(0.49)	(4.72)	(5.21)	1.51	27.57	29.08

 

7. Dividends per Ordinary Share

Amounts recognised as distributions to equity holders in the year.

		Year ended 30 June 2022 £	Year ended 30 June 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 At 30 June 2022	Level 1 £	Level 2 £	Level 3 £	Total £
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 At 30 June 2021	Level 1 £	Level 2 £	Level 3 £	Total £
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.

 

Group and Company	Financial assets at fair value through profit or loss £
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 (pence)	16.01	(14.49)	14.00	(12.67)
Assets excluding ETCs	523,654	(473,783)	451,804	(408,775)
ETCs	240,515	(217,610)	216,271	(195,673)

17. Capital Management Policies

Capital is managed so as to maximise the return to Shareholders while maintaining a capital base to allow the Group to operate effectively. Capital is managed on a consolidated basis and to ensure that the Group will be able to continue as a going concern.

 

In order to maintain or adjust the capital structure, the Group may pay dividends to Shareholders, return capital to Shareholders, issue new shares or sell securities to reduce debt.

 

The Group had no debt during the years to 30 June 2022 or 30 June 2021.

18. Related Party Transactions

Fiske plc, was paid a fee in respect of the Investment Management services provided to the Company until the termination of the contract on 5 May 2021.

 

The amount s paid to the Investment Manager, together with the Investment Management Agreement, are disclosed in note 3. Investment Management fees for the year amounted to £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 . This document will also be available on the Company's website at https://theinvestmentcompanyplc.co.uk/ .

 

ISCA Administration Services Limited
22 September 2022