Annual Report for the
year ended 30 September 2023
FINSBURY GROWTH & INCOME TRUST PLC Annual Report for the year ended 30 September 2023
.
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& Income Trust PLC visit the website
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Financial Calendar
FINANCIAL YEAR END
30 September
FINAL RESULTS ANNOUNCED
December
ANNUAL GENERAL MEETING
Tuesday, 23 January 2024
HALF YEAR END
31 March
HALF YEAR RESULTS ANNOUNCED
May
INTERIM DIVIDENDS PAYABLE
May and November
Contents
STRATEGIC REPORT
1
Company Summary
2 Company Performance
4 Key Performance Indicators (“KPIs”)
6 Chairman’s Statement
8 Investment Portfolio
10 Portfolio Manager’s Review
18 Business Review
GOVERNANCE
40
Board of Directors
42 Report of the Directors
47 Corporate Governance
54 Statement of Directors’ Responsibilities
55 Directors’ Remuneration Policy
57 Directors’ Remuneration Report
61 Audit Committee Report
INDEPENDENT AUDITORS’ REPORT
66
Independent Auditors’ Report
FINANCIAL STATEMENTS
73
Income Statement
74 Statement of Changes in Equity
75 Statement of Financial Position
76 Statement of Cash Flows
77 Notes to the Financial Statements
FURTHER INFORMATION
93
Glossary of Terms and Alternative
Performance Measures
98 Company Information
Please note that the Notice of Annual General
Meeting is set out in a separate document.
1
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
Company Summary
OBJECTIVES AND PERFORMANCE
MEASUREMENT
The Company aims to achieve capital and income growth and
to provide shareholders with a total return in excess of that of
the FTSE All-Share Index (the Company’s benchmark).
The Company’s net assets as at 30 September 2023 were
£1,822.7million (2022: £1,830.4 million) and the market
capitalisation was £1,742.5 million (2022: £1,725.9 million).
Anexplanation of the movement in total net assets is set out
on page74.
The net asset value per share increased by 7.2% during the
financial year to 30 September 2023 on a total return basis
(2022: -5.8%). The detail of this movement can be found on
page 20.
DIVIDENDS
A first interim dividend of 8.5p per share was paid on 19 May
2023 to shareholders registered at close of business on
11 April 2023. The associated ex-dividend date was 6 April 2023.
A second interim dividend of 10.5p per share was paid on
10November 2023 to shareholders registered at close of
business on 6 October 2023. The associated ex-dividend date
was 5 October 2023.
The total dividend declared for the year was therefore
19.0ppershare (2022: 18.1p per share), an increase of 5.0%.
The Company’s Dividend Policy can be found on page 20.
Finsbury Growth & Income Trust PLC is a listed investment company and a
constituent of the FTSE 250. The Company is a member of the Association of
Investment Companies (“AIC”).
2
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
FIVE YEAR PERFORMANCE SUMMARY
AS AT 30 SEPTEMBER
2019 2020 2021 2022 2023
Share price 942.0p 840.0p 876.0p 800.0p 852.0p
Net asset value per share 935.6p 846.2p 917.7p 848.4p 891.2p
Premium/(discount) of Share price to net asset value per share 0.7% (0.7)% (4.5)% (5.7)% (4.4)%
YEAR ENDED 30 SEPTEMBER
2019 2020 2021 2022 2023
Share price total return
* ^
+17.4% (9.0)% +6.3% (5.6)% +7.5%
Net asset value per share total return
* ^
+17.4% (7.7)% +10.6% (5.8)% +7.2%
FTSE All-Share Index total return
** #
+2.7% (16.6)% +27.9% (4.0)% +13.8%
Total return/(loss) per share
†
143.8p (67.1)p 88.0p (53.4)p 61.4p
Dividends per share
†
16.6p 16.6p 17.1p 18.1p 19.0p
* Source: Morningstar
** Source: FTSE International Limited (“FTSE”) © FTSE, 2023
# See glossary of terms and alternative performance measures on pages 93 to 97)
^ Alternative Performance Measure (“APM”) (see glossary on pages 93 to 97)
† UK GAAP Measure
STRATEGIC REPORT
Company
Performance
19.0p
Total dividends per share for the year
†
2022: 18.1p (change: +5.0%)
KEY FACTS
852.0p
Share price
2022: 800.0p (change: +6.5%)
4.4%
Discount of share price to net asset value per share
^
2022: 5.7%
61.4p
Return/(loss) per share
†
2022: (53.4)p
85.3%
Active Share*
^
2022: 84.8%
891.2p
Net asset value per share
2022: 848.4p (change: +5.0%)
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
0.61%
Ongoing charges
^
2022: 0.60%
7.2%
Net asset value per share total return
*, ^
2022: -5.8%
FURTHER
INFORMATION
3
0.8%
Gearing
^
2022: 1.2%
7.5%
Share price total return
*, ^
2022: -5.6%
204,519,434
(excluding 20,471,869 shares held in Treasury)
Number of shares in issue
2022: 215,737,992 (Treasury shares 2022: 9,253,311)
(change:-5.2%)
£1.823bn
Shareholders’ funds
†
2022: £1.830bn (change: -0.4%)
* Source – Morningstar
^ Alternative Performance Measure (see glossary on pages 93 to 97)
† UK GAAP Measure
PERFORMANCE SINCE THE DATE OF APPOINTMENT OF LINDSELL TRAIN AS PORTFOLIO MANAGER TO
30 SEPTEMBER 2023
The Company was incorporated in Scotland on 15 January 1926. Lindsell Train Limited (“Lindsell Train”) was appointed as Portfolio
Manager in December 2000. The total return of the Company’s share price over the ten years to 30 September 2023 has been
118.9%, equivalent to a compound annual return of 8.2%. This compares with a total return of 71.8%* from the Company’sbenchmark,
equivalent to a compound annual return of 5.6%*.
* Source: Morningstar, FTSE International Limited (“FTSE”) © FTSE2023
SHARE PRICE
+688.0%
FTSE ALL-SHARE
INDEX
+205.6%
Source: Morningstar
Rebased to 100 as at 1 January 2001
Jan
01
Sept
01
Sept
02
Sept
03
Sept
04
Sept
05
Sept
06
Sept
07
Sept
08
Sept
09
Sept
10
Sept
11
Sept
12
Sept
13
Sept
14
Sept
15
Sept
16
Sept
17
Sept
18
Sept
20
Sept
21
100
200
300
400
500
600
700
800
900
Sept
22
Sept
23
Sept
19
The Board uses
certain financial and
non-financial KPIs to
monitor and assess
the performance of the
Company in achieving its
strategic aims.
The Board reviews the
performance of the
portfolio in detail and
hears the views of the
Portfolio Manager at
each meeting.
Information on the Company's
performance is provided in the
Chairman's Statement (beginning
on page 6) and the Portfolio
Manager's Review (beginning on
page 10).
This performance is assessed
against the following KPIs which
are unchanged from last year.
Alternative Performance
Measures ("APM")
The Board believes that each of
the APMs, which are typically used
within the investment company
sector, provides additional useful
information to Shareholders in
order to assess the Company’s
performance between reporting
periods and against its peer group.
The APMs used for the year under
review are unchanged from last
year. Further information on each
of the APMs can be found in the
glossary beginning on page 93.
^
Alternative Performance Measure
(seeglossary on pages 93 to 97)
† UK GAAP Measure
* Source: Morningstar
Key Performance
Indicators (“KPIs”)
NET ASSET VALUE TOTAL
RETURN
^*
This reflects the change in the
Company’s net asset value including
the impact of reinvested dividends.
During the year under review the
Company’s net asset value per share
total return was 7.2% (2022: -5.8%).
7.2%
61.4p
-10
-5
0
5
10
15
20
2019
2023
2020
2021
2022
%
-90
-60
-30
0
30
60
90
120
150
2023
2019
2020
2021
2022
pence per share
RETURN/(LOSS) PERSHARE
†
The total return per share for the year
was 61.4pence per share (2022: loss of
53.4pence per share).
Over five years, the Company earned a
total of 172.7 pence per share.
See the chart below for the five year
history:
DIVIDENDS PER SHARE
†
The total dividend declared for
the year was 19.0 pence per share
(2022: 18.1 pence per share), an
increase of 5.0%.
19.0p
0
2
4
6
8
10
12
14
16
18
20
2
019
2
020
2
021
2
022
2
023
pence per
share
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
4
STRATEGIC REPORT
STRATEGIC REPORT
RELATIVE PERFORMANCE
TO BENCHMARK AND PEER
GROUP
The Company’s benchmark is the FTSE
All-Share Index (total return) which
delivered a return of 13.8% (2022: -4.0%)
over the year. This compares with the
Company’s share price total return
of 7.5% (2022: -5.6%) resulting in a
6.3% underperformance against the
benchmark.
The Board also monitors the Company’s
share price return* against its AIC peer
group^. As at 30 September 2023 the
Company's ranking against its peer
group of UK Equity income sector was:
Rank out of 23
Period 2023 2022
1 yr 14 5
3 yr 22 20
5 yr 9 4
10 yr 2 2
(6.3)%
SHARE PRICE DISCOUNT/
PREMIUM TO NET ASSET VALUE
PER SHARE
^
The Board reviews the level of discount/
premium to net asset value per
share at every Board meeting and
consideration is given to ways in which
the share price performance may be
enhanced, including the effectiveness
of marketing, share issuance and buy-
backs, where appropriate. Details of how
the Company’s share buy-back and
issuance policy works can be found in the
Statutory Documentation section on the
Company’swebsite.
(4.4)%61.4p
5
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
SHARE PRICE TOTAL RETURN
^*
This reflects the change in the value of
the Company’s share price including
the impact of reinvested dividends.
During the year under review the
Company’s share price total return was
7.5% (2022: -5.6%).
7.5%
-10
-5
0
5
10
15
20
2019
20
20
2021
2022
2023
%
^ Alternative Performance Measure (see glossary on pages 93 to 97)
* Source: Morningstar
No shares were issued by the Company
during the year (2022: Nil). At 30September
2023 the Company’s share price stood
at a 4.4% discount to the Company’s net
asset value per share (2022: 5.7% discount).
During the year, the Company bought
back 11,218,558 shares into Treasury (2022:
9,253,311) at an average price of 870.6
pence and an average discount of 4.8%.
Since the year end to 5 December 2023
the Company has purchased a further
5,045,317 shares to be held in Treasury.
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
2019
2020
2021
2022
%
2023
SIMON HAYES
CHAIRMAN
PERFORMANCE
It is disappointing to report that while the Company’s net
asset value per share has showed a positive return, this is the
third consecutive year of underperformance relative to its
benchmark, the FTSE All-Share Index.
This marks the longest such period for the Company since
Lindsell Train was appointed as the Company’s Portfolio
Manager in December 2000. It means that while shareholders
have benefited from a strong long-term performance record,
this is not the case for more recent investors, who will have
experienced weak relative returns.
The Company’s net asset value per share returned 7.2%
(2022: -5.8%) over the course of the year, compared with its
benchmark which over the period generated a return of 13.8%
(2022: -4.0%). The share price total return over the same period
was 7.5% (2022: -5.6%).
As the primary purpose of any investment company must be
to produce attractive returns for investors, the recent track
record is concerning and has been the focus of your Board’s
attention. Our role on behalf of shareholders is to hold the
Portfolio Manager to account and to challenge constructively,
a process which Nick Train fully embraces, I am pleased to say.
The Board will continue to monitor performance closely.
While investors’ attention is inevitably drawn to shorter-term
macroeconomic and geopolitical news, we encourage the
Portfolio Manager to continue to focus on delivery over the
long term.
We remain supportive of Lindsell Train’s investment approach,
namely running a highly concentrated portfolio of high
quality businesses with high returns on equity, and believe
that ultimately this will be reflected in the share prices of the
companies we own and hence in the performance of the
Company.
Importantly, there has been a consistency in the stated
investment philosophy and that is reflected in the portfolio’s
constituents. At the same time, there is room for some portfolio
evolution, as Nick Train points out in his report beginning on
page 10, with an increasing role within the portfolio for data,
analytics and software companies.
As it is always important to point out, a highly concentrated
portfolio means higher risk, particularly in the short-term. At
30September 2023, the Company’s Active Share – a measure
of how much it varies from the FTSE All-Share Index benchmark
- was 85.3% (2022: 84.8%). Such an uncorrelated portfolio
will inevitably perform very differently from the wider market,
whether positively or negatively.
Chairman’s
Statement
I urge you to read Nick Train’s very helpful review beginning
on page 10 where he discusses candidly the reasons for
the relative underperformance and describes in detail the
portfolio’s composition and why he believes it offers the
possibility of better future returns.
SHARE BUY-BACKS
The Board keeps the Company’s discount under close review
and is committed to buying back its own shares at or near the
5% level, in accordance with its policy.
While share buy-backs will not necessarily prevent the
discount from widening further, particularly in times of market
volatility, they may, to a limited extent, mitigate a widening
trend. In addition, buy-backs enhance the net asset value per
share for remaining shareholders, provide some additional
liquidity and help to dampen discount volatility which can
damage shareholder returns.
Discounts are affected by many factors outside the
Company’s control but where it is in Shareholders’ interests
(taking account of market conditions), the Company remains
committed to buying back shares at a discount to NAV, as
demonstrated over the past year.
As at 30 September 2023 the discount was 4.4% compared
with a closing discount at the last year end of 5.7%. During
the year under review the Company bought back a total of
11,218,558 shares (5.5% of the shares in issue) into
Treasury
at a cost of approximately £97.7 million and at an average
discount of 4.8%. Over the course of the year the Company’s
discount averaged 4.5%.
As at the close of the UK market on 5 December 2023, the
discount was 6.4%. Since the year end, a further 5,045,317shares
were bought back into Treasury at a cost of £41.5million. As at
5 December 2023, the Company had 199,474,117 shares in issue
(excluding 25,517,186 shares held in Treasury).
RETURN AND DIVIDEND
The Income Statement shows a total return of 61.4p per share
(2022: loss of 53.4p) consisting of a revenue return per share
of 20.0p (2022: 20.6p) and a capital return per share of 41.4p
(2022: loss of 74.0p).
Your Board has declared two interim dividends for the year
totalling 19.0p per share (2022: 18.1p), an increase of 5%. In
order to facilitate dividend payments on a timely and cost-
effective basis, your Board continues to elect to distribute
the Company’s income to Shareholders by means of two
interim dividends rather than wait several months to secure
shareholder approval to pay a final dividend at the Annual
General Meeting. This dividend policy will again be proposed
for approval at the forthcoming Annual General Meeting (AGM).
6
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
STRATEGIC REPORT
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
7
LOAN FACILITY
As at 30 September 2023 a total of £36.7 million (2022: £36.7
million) was drawn down under our £60 million facility.
Further details can be found within the Report of the Directors
and note 12 to the Financial Statements.
INCREASE TO DIRECTORS’ FEES CAP
The Board of Directors is proposing to increase the maximum
aggregate amount potentially payable to Directors by way
of fees for their services as Directors under Article 122 from
£200,000 to £300,000 in any financial year.
This proposed limit increase is not due to any unusual rises
in Directors’ fees, which are expected to be approximately
£192,000 in the current financial year.
An ordinary resolution will be put to Shareholders at the
AGM to increase this limit to £300,000. Further details can
be found in the Report of the Directors and in the Directors’
Remuneration Report on page 57.
CANCELLATION OF SHARE PREMIUM
ACCOUNT
As detailed on page 43, the Company has built up a
substantial share premium account owing to historic high
levels of share issuance. A special resolution will be put to
Shareholders at the AGM to cancel the amount standing to
the credit of the Company’s share premium account, following
which an application will be made to the Scottish Court of
Session to obtain its approval to the cancellation and the
creation of an equivalent distributable reserve.
AUDIT TENDER
The Audit Committee is in the process of conducting an
audit tender which is due to be completed in early 2024.
Accordingly, the Board has not proposed the re-election
of the current auditor, PricewaterhouseCoopers LLP, at the
forthcoming AGM. The Board will appoint the successful
audit firm to carry out the audit for the year ending
30September 2024 and will recommend their appointment
(or re
-appointment) to Shareholders at the AGM held in 2025.
ANNUAL GENERAL MEETING
The AGM of the Company this year will again be held at
Guildhall, City of London EC2V 7HH (please use the Basinghall
Street Entrance) on Tuesday, 23 January 2024 at 12 noon, and
we hope as many Shareholders as possible will attend. This
will be an opportunity to meet the Board and to receive a
presentation from our Portfolio Manager.
The Board strongly encourages all Shareholders to exercise
their votes in respect of the meeting in advance. Details of how
Shareholders can vote, whether holding their shares directly
or on retail platforms, is set out in the Notice of Meeting. Any
Shareholder who requires a hard copy form of proxy may
request one from the Registrar, Link Group.
OUTLOOK
Your Board continues to support fully the Portfolio Manager’s
disciplined strategy of investing in high quality companies
that own both durable and cash generative franchises. It has
delivered attractive returns over the longer term and we firmly
believe that this will continue to deliver strong investment
returns to shareholders in the future.
Our belief is clearly shared with our Portfolio Manager
who has continued to buy shares in the Company. From
1 October 2022 to the date of this Report, Nick Train has
acquired 659,604 shares and currently speaks for 2.6% of the
equity of the Company (December 2022: 2.2%).
Simon Hayes
Chairman
6 December 2023
Investment Portfolio
STRATEGIC REPORT
8
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
Consumer Staples (”CS”) 38.0%
Consumer Discretionary (”CD”) 23.4%
Financials (”F”) 22.3%
Technology (”T”) 8.4%
Industrials (”I”) 7.9%
43.4%
22.1%
22.2%
6.2%
6.1%
2022
2023
Source: Frostrow Capital LLP
United Kingdom 84.2%
United States of America 7.3%
Netherlands 4.8%
France 3.7%
80.8%
8.2%
5.2%
5.8%
2022
2023
Source: Frostrow Capital LLP
PORTFOLIO SECTOR WEIGHTINGS
+
GEOGRAPHICAL ALLOCATION
†
† The Company’s investment policy attributes geographical
location based on where companies are listed or otherwise
incorporated, domiciled or having significant business
operations.
Diageo
+ FTSE Industrial Classification Benchmark (“ICB”) sectors.
9
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
SECTOR INVESTMENTS
FAIR VALUE
1 OCTOBER
2022
£'000
NET
INVESTMENTS
£'000
CAPITAL
APPRECIATION/
(DEPRECIATION)
£'000
FAIR VALUE
30 SEPTEMBER
2023
£'000
% OF
INVESTMENTS
TOTAL
RETURN
£'000
CONTRIBUTION
PER SHARE
(PENCE)
l CD
RELX
221,773 (47,831) 53,886 227,828 12.4 59,085 28.2
l F London Stock Exchange Group 197,375 (109) 15,696 212,962 11.6 18,576 8.9
l CS Diageo 229,472 (1,089) (45,888) 182,495 9.9 (41,075) (19.6)
l CS Unilever 171,560 (12,108) 4,247 163,699 8.9 10,550 5.0
l T Sage 114,658 (7,098) 46,506 154,066 8.4 49,531 23.6
l CD Burberry 147,049 (10,205) 10,301 147,145 8.0 15,117 7.2
l I Experian 112,265 32,413 125 144,803 7.9 2,146 1.0
l CS Mondelez International# 152,381 (40,477) 22,052 133,956 7.3 24,717 11.8
l F Schroders 108,821 (14,182) 6,674 101,313 5.5 12,288 5.9
l CS Heineken† 96,516 (8,262) 315 88,569 4.8 2,576 1.2
Top 10 Investments 1,556,836
84.7
l CS
Remy Cointreau^
107,384 (4,940) (34,276) 68,168 3.7 (32,892) (15.6)
l F Hargreaves Lansdown 67,279 (1,691) (7,254) 58,334 3.2 (6,275) (3.0)
l CS Fever-Tree 26,713 2,231 11,964 40,908 2.2 12,521 6.0
l CD Manchester United# 27,243 176 9,915 37,334 2.0 9,915 4.7
l F Rathbone Brothers 22,989 (1,138) 1,447 23,298 1.3 3,096 1.5
l CS A.G. Barr 20,145 (36) 1,593 21,702 1.2 2,173 1.0
l F The Lindsell Train Investment Trust plc 9,720 - (960) 8,760 0.5 (445) (0.2)
l CD Young & Co’s Brewery (non-voting) 6,191 (509) 1,426 7,108 0.4 1,636 0.8
l CD Rightmove 4,823 (2) 4,821 0.3 27 0.0
l CD Celtic* 3,754 - 577 4,331 0.2 584 0.3
l F Frostrow Capital LLP∆** 4,725 - (1,000) 3,725 0.2 (557) (0.3)
l CD Fuller Smith & Turner 2,565 (1,773) 464 1,256 0.1 514 0.2
l CD Cazoo# 1,500 - (1,421) 79 0.0 (1,421) (0.7)
Total Investments 1,852,078 (111,805) 96,387 1,836,660
100.0
Bank interest and miscellaneous income
205 0.0
Total Contributions to Total Return 142,592
67.9
Expenses, Currency Translations and Finance Charges (13,734) (6.5)
Return on Ordinary Activities after Taxation 128,858 61.4
#
Listed in the United States
†
Listed in Netherlands
^
Listed in France
∆
Unquoted
*
Includes Frostrow Capital LLP AIFM Investment, fair value £125,000 (2022: £125,000)
**
Includes Celtic 6% cumulative convertible preference shares, fair value £267,000 (2022: £242,000)
INVESTMENTS AS AT 30 SEPTEMBER 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
PERFORMANCE
Three years is a meaningful period to review the performance
of a portfolio manager, particularly one like Lindsell Train
Limited (“Lindsell Train”) which takes greater investment risk
than the typical manager and therefore should generate
superior returns. It is, therefore, disappointing for me to report
on the Company’s performance over the last three years, to
30September 2023. This shows a net asset value (“NAV”) per
share total return of 11.8% that is well adrift of the Company’s
benchmark (the FTSE All-Share’s) gain of 39.8%. There have
been three consecutive financial years of underperformance,
with the most recent 12months showing a NAV per share total
return of 7.2%, compared with the benchmark 13.8%.
I assure you that at Lindsell Train we are not complacent
about underperformance and have continued to think hard
about all the holdings within the portfolio and to consider
whether our previously successful investment approach
remains relevant in the third decade of the 21st Century.
Below, I review reasons for the underperformance and
then discuss aspects of the portfolio’s construction and
composition that offer the possibility of better future returns.
UNDERPERFORMANCE
There are three main factors that combined explain the poor
relative performance.
First, in the financial year ending 30 September 2020, not
holding oils, metals and banks during the Covid-19 crisis had
been a boost to relative performance; one that reinforced
my longstanding aversion to investing in those sectors. Since
then, however, it has been the economically sensitive, more
cyclical sectors that have rallied most in the UK stock market.
For example, the share price of the Company’s big holding in
“defensive” Unilever is little changed over the last three years.
Meanwhile on a total return basis Shell has risen by 203%,
BP+173%, Glencore +255%, Rio Tinto +48% and HSBC +145%.
These are all major FTSE All-Share constituents and it has hurt
the Company not to own them. Indeed, we calculate that not
owning those five companies has contributed to over two
thirds of my underperformance over the past three years.
I am not saying I wish I had purchased a basket of commodity
and bank shares in late 2020, because that would have run
counter to Lindsell Train’s, I hope, clearly stated investment
approach. But I do wish the portfolio had benefited more from
the end
-of-Covid-19 bounce.
Next, I must acknowledge that some of my highest conviction
and longstanding holdings performed poorly over the period,
exacerbating the impact of not participating in the cyclical
upswing. London Stock Exchange Group (“LSEG”), Hargreaves
Lansdown (“HL”) and even the more recently purchased
Fever-Tree are examples.
Finally, and in my view even more significant than the
above, at least for future performance, I underestimated the
Portfolio
Manager's
Review
NICK TRAIN
LINDSELL TRAIN LIMITED
PORTFOLIO MANAGER
10
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
STRATEGIC REPORT
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significance of technology change. There has been, obviously,
a huge bull market in companies that are beneficiaries of
technology change, and it is clear Covid-19 acted as an
accelerant for industry, consumer and stock market trends
that had already been gathering momentum in the second
decade of the 21st Century. Finding UK-listed data, analytics
and software companies that are beneficiaries of technology
change has been and remains a priority for me and in RELX
and Sage, for instance, there has been some success. In
hindsight, at the start of the recent three-year period, I wish I
had even more exposure to digital winners.
In my detailed discussion of portfolio holdings below I hope it
will be apparent how I have responded to these challenges.
INVESTMENT APPROACH
Shareholders will not be surprised to read that I reaffirm the
tenets of Lindsell Train’s investment approach, as being the
best way, for us at least, to deliver on my aspiration to deliver
exceptional investment returns.
Lindsell Train runs concentrated portfolios of what we believe
to be excellent businesses. We hope and expect the value
being created inside these companies, as measured by their
sustainable Returns on Equity (“RoE”), will create wealth for
our investors over time. The average weighted RoE for the
Company’s portfolio as at 30 September 2023 was 26%. We
know what the effects can be of owning fine businesses in
size over long periods, because we have already done so
for the Company since Lindsell Train’s appointment. Over
20years Diageo’s share price total return is up over sevenfold,
LSEG thirty fivefold, RELX ninefold and even Unilever is up
sixfold. Concentration can cut both ways, as the Company’s
shareholders have experienced over the last three years, but
if we can continue to hold and find new positions that can
do for us what these have done over the next 20 years, then
the Company certainly offers a differentiated and potentially
rewarding portfolio and investment approach.
The Company’s portfolio is indeed concentrated, with only 16
major holdings above 1% of NAV. I exclude holdings of below 1%,
because they are insignificant in the affairs of the Company
and are either being gradually disposed of or accumulated
(combined holdings less than 1% of NAV, amount to 1.4% of the
portfolio). The top ten holdings account for circa 85% of the
total and the top5 for circa 51%.
Confirmation that the portfolio is invested in profitable and
growing businesses can be found in the fact that 91% of the
portfolio holdings above 1.0% of NAV have increased their
dividend this year (the exceptions are Manchester United and
Schroders). Meanwhile more than 75% of the portfolio by value
is either buying back shares or has paid a special dividend
in2023.
Below you can see a chart showing the progress of the
Company’s dividend payments since Lindsell Train’s
appointment as Portfolio Manager and, alongside it, the
dividend growth of individual portfolio holdings above 1%
of NAV over that same period. As you can see, the dividend
growth varies from the pedestrian – A.G.
Barr (its dividend
was suspended during Covid-19) – to the spectacular London
Stock Exchange Group (“LSEG”). Generally, though, I think
shareholders should be encouraged by the dividend histories
of our big holdings. If their dividend growth continues, their
share prices will follow.
FINSBURY GROWTH & INCOME TRUST PLC -
A HISTORY OF DIVIDEND GROWTH
Portfolio dividend increases 2001 - 2023
A.G. Barr 3.7x
Burberry 20.3x
Diageo 3.7x
Experian 3.2x
Fever-Tree 15.2x
Hargreaves Lansdown
7.6x
Heineken
6.0x
London Stock Exchange Group
36.5x
Manchester United
not paying a dividend
Mondelez
2.8x
Rathbones Group
3.4x
RELX
5.6x
Remy Cointreau
3.3x
Sage
46.7x
Schroders
6.8x
Unilever
5.1x
Note: The following holdings only started paying a dividend in the years
asindicated.
Experian from 2007; Fever-Tree from 2015; Hargreaves Lansdown from 2008;
and, Burberry from 2002. Data provided for Mondelez from 2002 (first full year
of distributions).
Source: Frostrow Capital LLP. Historical dividend per share for Finsbury Growth
& Income Trust PLC between 2001 and 2023. Figures for each year include
dividends payable during the financial year ending 30 September. Nick Train
was appointed investment manager of the Trust in December 2000.
Please note that a special dividend paid in 2006 has been excluded from
this graph. Past performance is not a guide for future performance.
2003
2002
2001
0
2
4
6
8
10
12
14
16
18
20
2004
2005
2006
2007
2008
2009
2010
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2021
2023
2022
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
PORTFOLIO CONSTRUCTION AND CONSTITUENTS
The best way to convey our investment approach and my
optimism for the Company’s prospects is to discuss the
investment case for each of our holdings and show how
its presence in the portfolio is consistent with our strategic
outlook. Therefore, I propose to do so in this report.
First, I will make a broad statement about that strategic
outlook. We expect there will be an acceleration in technology
innovation in coming decades. The result will be great new
investment value created by companies that can take
advantage of the new technologies. In addition, technology
change can be expected to generate productivity-driven
wealth for the world’s population, albeit unequally distributed.
Given that outlook, a question is begged. Can a portfolio
whose performance is measured against the FTSE All-Share
Index, like the Company’s, and that invests very predominantly
in UK companies, be expected to deliver attractive investment
returns? In my opinion the answer to that question is yes.
Although that may surprise some, I hope shareholders will
agree after reading this report that the Company’s portfolio is
comprised of companies that are well placed to participate in
global growth.
The best way to review the Company’s portfolio is to consider
the four industry categories it is built around. These are, in
order of size, as this report is written:
Data, Analytics and Software
44%
Luxury and Premium Consumer Brands
31%
Mass Market Consumer Brands
18%
UK Fund Management
7%
Source: Lindsell Train Limited.
DATA, ANALYTICS AND SOFTWARE
This is the biggest category in the Company’s portfolio,
deliberately so, and it continues to grow as the constituent shares
go up and because we have added new holdings here over
the last three years. All the companies in this segment provide
services, often to global customers, that are critical to their
customers’ ability to conduct their business or personal affairs. It
is, in our opinion, also important to note that all these companies
already use Artificial Intelligence (“AI”)-enhanced tools to improve
the value of their services. Indeed, we believe it is possible to
argue that these UK-listed companies are as well positioned to
take advantage of AI as most to be found quoted on other stock
markets. If that proposition is correct, there could be significant
scope for share price gains, because their valuations are often
lower than for global peers. I discuss in order of position size.
RELX
The Company’s biggest holding has recently hit an all-time
high and is one of the best performers in the portfolio in 2023.
It is the 11th biggest company in the FTSE 100 and its success
and size is based on the importance of the data services it
provides to professionals in the global scientific, legal and
insurance industries. CEO, Erik Engstrom, has been in that
role since 2009 (RELX shares are up nearly sevenfold since
his appointment), but, meeting him again recently, it is clear
that the company’s strategic advantages and its growth
opportunities are better than ever.
The chart below shows RELX’s total share price return since
the start of the current century, compared with that of the US
NASDAQ Composite, expressed in Sterling. Even now, some
of our clients are surprised to see how well RELX has done,
even compared with the “home” of technology, the NASDAQ.
We believe there are other UK-listed data and software
companies that can perform as well in the future as we hope
RELX will continue to do.
Source: Bloomberg.
All returns are provided in GBP.This is an illustrative example to demonstrate
how a security can generate total return and how the manager looks at
the security’s long-term track record. This is not intended as a buy or sell
recommendation. Past performance is not a guide for future performance. All
data from 1 January 2000 to 30 September 2023.
RELX vs NASDAQ, GBP (£)
2000 2003
Total Return (multiple)
2006 2009 2012 2015 2018 2021 2023
RELX total return 11.3x
NASDAQ total return 5.4x
0
2
4
6
8
10
12
“Our ability to identify and leverage
(AI Technology) ahead of others is a
competitive advantage…this is the main
driver in our growth rate and increasing
value-add.”
NICK LUFF, FD, RELX
STRATEGIC REPORT
PORTFOLIO MANAGER’S REVIEW - CONTINUED
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LSEG
London Stock Exchange Group (“LSEG”) is the Company’s
second largest holding, in part because in 2023 its shares
have, at last, shown a double-digit gain. Nonetheless, LSEG’s
shares are still below levels reached in 2021 and, as a result,
have been a detractor to the Company’s performance since
then. After the acquisition of data company, Refinitiv, LSEG is
now the world’s leading provider of real-time financial data.
The shares have had to contend with investor scepticism
about the success of this acquisition and with a sizeable
overhang of LSEG shares that the vendors of Refinitiv have
signalled they intend to sell. To date, trading updates from
the combined group have been encouraging and two thirds
of the stock overhang has been placed. More important, in
our opinion, is the joint venture that LSEG entered into with
Microsoft, announced in December 2022. This joint venture,
which involved Microsoft becoming a top ten shareholder in
LSEG, is designed to accelerate LSEG’s growth as a leading
provider of data services to global financial institutions.
Microsoft’s CEO specifically cited the opportunity to use
Microsoft’s cloud-computing and AI capabilities to enhance
LSEG’s comprehensive data services.
Experian
This is a relatively new holding for the Company, initiated
in 2020, specifically because I wanted to increase portfolio
exposure to globally significant data and analytics
companies. The shares are effectively unchanged since we
began to buy and I have taken advantage of this period
of underperformance to grow the position into one of the
biggest in the Company’s portfolio – 7.9%, as I write this report.
Experian is the world’s biggest credit bureau by revenues
and, as a result, has more information about consumers and
businesses than its peers and can offer a wider range of data
products and software services too. If, as people argue, “Data
is the new Oil”, Experian owns and can access deep wells of
the stuff, that others can’t. The business has grown steadily
since it listed in 2007, with earnings up nearly fourfold since
then. Tools to extract value from data are becoming more
powerful and we believe this will result in Experian’s services
becoming more valuable too.
Sage
Another strong share price performer for the Company in 2023,
Sage shares are being rerated, as investors come to recognise
the business success the company is enjoying after a period of
necessary investment in its core accounting software services. At
its recent Innovation & Product webinar, Sage’s Chief Technology
Officer announced the development of an AI-powered
accounting assistant, a product created in partnership with
Microsoft and soon to be tested with customers. While I have
no particular insight into how important “Sage Assistant” could
turn out to be, I am sure that five years ago most investors
would have doubted Sage had the expertise or even ambition
to develop such a tool. Sage is another UK-listed software/data
company with a global business (the US is its biggest market
and forecast to grow at 16% this year) that is not, or only recently,
recognised by global investors.
Hargreaves Lansdown
I include HL in this category, because it is best analysed as a
technology platform business, an exceptionally profitable one
– a 50% RoE for instance – with the leading share in its market
(Direct to Consumer platforms) and that itself a market
with multi-year growth ahead of it. Perhaps the clearest
corroboration of this perspective on the company is the fact
that its new CEO, appointed in August 2023, is the former Chief
Technology Officer of Elsevier (RELX’s scientific publishing
division). Dan Olley has been appointed to accelerate growth
at HL and it is clear the board believes one way to do this will
be to take advantage of the data HL generates, by dint of
having more customers and more customer interactions than
any of its peers. We wish the new CEO well, because, I must
admit, HL has been the biggest detractor from the Company’s
performance over the last three years. Cautious investors
believe competition will dent HL’s profitability and reduce its
market share. With profits and client numbers at record highs
in 2023 the pessimists’ case is not yet proven.
Rightmove
This is the Company’s newest recent holding, started in
September 2023. It is still a small commitment, well below 1%,
but one we expect to grow. It is another FTSE 100 company, as
are all the others in this section of the Company’s portfolio,
with an opportunity to take advantage of its proprietary data
and create more value for its customers.
14
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
LUXURY & PREMIUM CONSUMER BRANDS
This is another area of the Company’s portfolio that I have
deliberately expanded in recent years, by directing cash
flows to existing holdings and, in one case, adding a new
name, albeit back in 2020. We expect investing in the shares
of the owners of unique, premium brands will deliver proxy
participation in the wealth being created by technology
innovation.
Diageo
The Company’s third biggest holding, Diageo, is the 6th
largest company in the FTSE 100 and the #1 alcoholic
beverage business in the world. A clear majority of its
revenues derive from its premium brands. Back in 2019/2020
Diageo CEO Sir Ivan Menezes, very sadly no longer with us,
told us he had set a stretch goal for the company, of taking
its share of the global total beverage alcohol (“TBA”) market
from 4% in 2020 to 6% in 2030. That would be a 50% increase
in share in a growing industry and struck us as a worthwhile,
if ambitious, target. Particularly if it could be achieved without
impairing Diageo’s existing high rates of return (RoE 48%).
We were impressed, therefore, to hear recently from his
successor, Debra Crew, that by the close of its fiscal year
2022/2023, as announced in its annual results in August, its
share of global TBA had increased from 4% to 4.7%; well on the
way to achieving the 2030 objective.
The fascinating graph below, showing the price of a pint of
Guinness (one of Diageo’s biggest brands) compared with
the gold price is an important reminder of how a great brand
can protect its owners against the malign effects of inflation
overtime.
I still think that the answer to the hypothetical question – What
is the one share you would own if you had to invest all your
savings into it and couldn’t sell for 20 years? – is Diageo. And
it gives me a warm feeling to see that Berkshire Hathaway,
Warren Buffett’s company of course, has become a top ten
shareholder in Diageo.
Frustratingly, Diageo has had a weak share price in 2023, as it
negotiates a slowdown in the consumption of premium spirits
in the Americas. But this means the shares now trade on a
valuation of under 20 times earnings, or an earnings yield of
over 5%. On these terms, we have been adding to the holding
whenever we can.
STRATEGIC REPORT
PORTFOLIO MANAGER’S REVIEW - CONTINUED
Source: Gillen Markets, January 2023. The chart plots the price of Guinness against the price of gold. The price of gold has been rebased to the starting price for Guinness.
Prices of a pint from Guinness records generally. Some earlier end-decade prices estimated. Historical Guinness prices converted to Euros. Gold prices are shown per gram
and sourced from Bloomberg. Past performance is not a guide to future performance.
A Pint of Plain worth more than Gold
€ 0.00
€ 1.00
€ 2.00
€ 3.00
€ 4.00
€ 5.00
€ 6.00
1900 1911 1922 1933 1944 1955 1966 1977 1988 1999 2010 2021
Gold
Source:, Prices of a pint from Guinness records generally. Some earlier end-decade prices estimated. Gold prices are shown per gram and sourced from Bloomberg. All data sourced from
Gillen Markets, January 2023. Past performance is not a guide to future performance.
Guinness
15
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
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Burberry
This is the UK’s only substantive luxury brand and a FTSE 100
constituent. When the shares listed, back in 2002, revenues were
circa £500m. This year they have hit a record of £3bn, thereby
sextupling over 20 years. Over the same period its shares
have done even better and are up eight-fold. The company
has outlined plans to take revenues to £5bn per annum in
the longer term and, if achieved, this would almost certainly
drive the share price higher. Currently investors are fretting
about elevated interest rates and Burberry’s exposure to Asian
consumers, but we are happy that its iconic trench coat remains
such a successful brand in that dynamic region. Interest rates
will stabilise in due course and consumer confidence revive. In
addition, as you can see in the accompanying image, Burberry is
a luxury brand that has protected its owners against the effects
of inflation over the past century.
Source: Bloomberg
All data from 7 November 2002 to 30 September 2023. All returns are provided
in GBP. This is an illustrative example to demonstrate how a security can
generate total return and how the manager looks at the security’s long-
term track record.This is not intended as a buy or sell recommendation. Past
performance is not a guide for future performance.
Burberry, GBP (£)
2002 2006 2010 2014 2018 2022
Burberry total return 12.7x
FTSE All Share total return 4.4x
0
5
10
15
20
Total Return (multiple)
Remy Cointreau & Heineken
Diageo is a nearly perfect alcoholic beverage company, but
it does not own a premium cognac, nor a premium light beer
brand. We have chosen to rectify those minor blemishes by
holding Remy Cointreau and Heineken in the Company’s
portfolio. As at 31December 1999 their respective share prices
were €20 and €30. As at 30 September 2023, they traded at
€115 and €84. That is indicative of the kind of steady returns
that can be made by investing long term in beverage brands
as durable and aspirational as Remy Martin and Heineken, as
we have.
Fever-Tree
We started this holding in 2020, in hindsight prematurely. A
difficult period for Fever-Tree’s profitability has hit its shares
but through it we have been able to build a substantial
stake in the company. The investment proposition remains
unchanged. Fever-Tree has effectively created a new
consumer category – premium mixers. It dominates its
domestic market; indeed, its share of the entire UK mixer
category hit an all-time high over the last six months, 45%. But
the crux of the case is whether that domestic success can
be exported. Can Fever-Tree become a global brand? If it
can, then, in our opinion, the current market capitalisation of
the company is far too low. We were encouraged, therefore,
by its recent half year results, which showed Fever-Tree’s US
revenues grew 32% and, in the process, the US became its
biggest market. There ought to be much more to go for in the
US and the rest of theworld.
Manchester United
I must admit I did not expect to be commenting on this
holding in December 2023, the asset having been put up
for sale over 12 months ago. However, as I am sure you are
aware, the process has been protracted and the resolution
still unclear. All one can say for sure is that Manchester United
is confirmed to be one of the most prestigious “trophy assets”
in the world, as evidenced by the interest in it of a pair of
seriously wealthy individuals.
Source: Burberry. The first image was published in the early 20th Century. The
second image was sourced in October 2023.
16
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
MASS-MARKET CONSUMER BRANDS
We have three long-term holdings in this category. They
have been successful over time, and we expect to retain
our holdings and perhaps to add to them. Although their
brands may not have the allure or exclusivity of, a Burberry
or, say, Johnnie Walker Blue, they are often beloved by their
consumers, or at least purchased regularly because of
their value for money and reliability. The combination of the
affection consumers feel for the brands and their regular
replenishment makes them valuable for investors. It is wise,
or we think so, to have a part of your portfolio invested in
companies that produce predictable cash flows, as do these
three holdings.
Unilever
It is noteworthy that Unilever has a new Chair, CEO and
CFO. And perhaps investors should welcome a fresh set of
perspectives on the business. It is not contentious to claim
Unilever owns a collection of beloved and/or ubiquitous
household brands – Dove, Hellmann’s, Knorr, Magnum, Dirt
is Good. But like many investors and, we are sure, officers
of the company, we are disappointed that recent business
growth has turned out to be so pedestrian. Earnings for 2023
are forecast to be little more than 10% higher than those from
five years ago. We know the new CEO sees opportunities to
reignite growth across the brand portfolio and we hope he
can capitalise on them. People have been writing off Unilever
as “too boring” for as long as I can remember. But it should not
be overlooked that this “boring” business has delivered a near
quadrupling of its share price since the start of this century.
Mondelez
Chocolate, snacks and confectionery have been great
consumer categories for decades and with, for instance,
Cadbury, Oreos and Halls, Mondelez owns some great brands
within those categories. And these brands have driven steady
earnings growth – forecast to be up over 35% over the last five
years. Mondelez shares are up 2.4 times since it demerged
from Kraft in October 2012. Look again in another 11 years, we’d
expect them to be usefully higher still.
A.G. Barr
In 2004 Mr Roger White was appointed CEO of A.G. Barr,
the Irn-Bru company. That year the company had annual
revenues of £125m and earnings of £0.09 a share. He has
recently announced he will step down some time over the
next 12 months. For 2023, A.G. Barr is forecast to generate
revenues of circa £585m and to earn £0.32. The company
has net cash on its balance sheet of nearly £50m – indicative
of the canny conservatism with which it has been run. No
one should expect to get rich quick owning a business like
A.G. Barr, but since Roger’s appointment the share price is up
from just over £1.00 to just under £5.00 today. Shareholders
are grateful for his stewardship and look forward to the next
phase of the company’s history.
UK FUND MANAGEMENT
Schroders & Rathbones
It has been my contention that UK fund management
companies, particularly those engaged in the provision of
private wealth investment services, operate in a growth
industry, where scale and trusted brands confer lasting
advantages. In addition, if one is bullish about global stock
markets, as I always am, you might think fund management
companies would do well. I must acknowledge that the
share prices of the two longstanding holdings we have built
to capture this idea – Rathbones and Schroders – say that I
am wrong. Rathbones shares peaked as long ago as 2017, at
around £28.00, and were priced at little more than £17.00 as
at 30 September 2023. Schroders’ shares hit a high of circa
£6.40 in 2021 but have subsided to circa £4.00 today. We
support the strategies of both companies and congratulate
Rathbones for successfully closing its biggest ever merger in
September 2023. It may well require an improvement in UK
investor confidence and an earnestly to be hoped for bull
market in UK equities before these businesses and share
prices performagain.
STRATEGIC REPORT
PORTFOLIO MANAGER’S REVIEW - CONTINUED
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BORROWINGS, OVERSEAS EXPOSURE AND
SKIN IN THE GAME
The Company has relatively modest amounts of borrowing
– circa £37m, to give a net gearing of 0.8% on its net assets.
We would borrow more if we saw a specific opportunity that
merited the risk of taking on more debt. Debt is always risky.
But that reluctance to run higher levels of gearing should
not be construed as caution on my part about the portfolio
or the UK stock market. We are more than fully invested and
believe the highly concentrated structure of the portfolio offers
plenty of upside, assuming the companies we have chosen
to commit to prosper over time. As I have argued above – we
own some big positions in some outstanding companies, by
global, not just domestic UK, standards.
The Company has the power to invest a proportion of its
assets outside its benchmark index, the UK FTSE All-Share Index
and we have taken advantage of that flexibility. I should signal,
though, that the long underperformance of the UK stock
market has resulted in what seems to us anomalously low
valuations for some of the world class companies that are still
listed on the London market. Diageo is the world #1 alcoholic
beverage business, Experian is the world’s #1 credit bureau,
LSEG is the world #1 provider of real-time financial data. Our
most recent new holdings are from the UK and our team is
working on other apparently highly attractive ideas in the UK
market. In short, I think it likely that the Company’s UK exposure
will go up over the next financial year.
It is a privilege for me to be responsible for the Company’s
investment portfolio, comprised of the precious savings of so
many investors. As co-founder of what has been a successful
fund management company, I am also in the privileged
and lucky position of being able to afford to continue to add
to my own holding in the Company, as is evidenced in this
Annual Report and Financial Statements. For this reason,
the Company’s disappointing share price performance
frustrates me both professionally and personally. Skin in the
game is no guarantee of superior investment performance,
as the Company’s recent record displays. But I assure fellow
shareholders, what happens next for the Company’s share
price really matters to me and my family.
Nick Train
Director, Lindsell Train Limited
Portfolio Manager
6 December 2023
The Strategic Report has been prepared for Shareholders
to assess how the Directors have performed their duty to
promote the success of the Company. It also considers the
principal risks and uncertainties facing the Company.
Information on how the Directors have discharged their duty
under Section 172 of the Companies Act 2006 can be found on
pages 29 to 32.
The Strategic Report contains certain forward-looking
statements. These statements are made by the Directors in
good faith based on the information available to them up to
the date of this report and such statements should be treated
with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such
forward-looking information.
As an externally managed investment company there are
no executive directors, employees or internal operations. The
Company delegates its day-to-day management to third
parties. The principal service providers to the Company are
Frostrow Capital LLP ("Frostrow") which acts as AIFM, company
secretary and administrator; and Lindsell Train Limited ("Lindsell
Train") which acts as Portfolio Manager. The Bank of New York
Mellon (International) Limited is the Company’s Depositary.
The Board is responsible for all aspects of the Company’s
affairs, including the setting of parameters for and the
monitoring of the investment strategy as well as the review of
investment performance and policy. It also has responsibility
for all strategic issues, the dividend policy, the share issuance
and buy-back policy, gearing, share price and discount/
premium monitoring as well as corporate governance matters.
STRATEGY FOR THE YEAR ENDED
30 SEPTEMBER 2023
Throughout the year under review, the Company continued
to operate as an approved investment company, following its
investment objective to achieve capital and income growth
and to provide shareholders with a total return in excess of
that of the FTSE All-Share Index. The Company’s performance
is discussed in the Chairman’s Statement beginning on page6
and the Portfolio Manager’s Review beginning on page 10.
During the year, the Board, AIFM and the Portfolio Manager
undertook all ESG, strategic and administrative activities.
The Board is aware of the continued emphasis on ESG matters
in recent years. The Portfolio Manager engages with all the
companies in the portfolio to understand their ESG approach
and has developed its own methodology to assess the carbon
impact of the portfolio. Lindsell Train became a signatory of
the Net Zero Asset Managers initiative (“NZAM”) in December
2021. This reflects Lindsell Train’s enhanced efforts as a firm
to support the goal of net zero greenhouse gas emissions by
2050. Further details of the Portfolio Manager’s approach to
ESG matters can be found on pages 33 to 36.
18
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
The Strategic Report, set out on pages 1 to 39 provides a review of the Company’s
policies and business model, together with an analysis of its performance during
the financial year and its future developments.
Business Review
STRATEGIC REPORT
19
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INVESTMENT POLICY
The Company’s investment policy is to invest principally
in the securities of companies either listed in the UK or
otherwise incorporated, domiciled or having significant
business operations within the UK. Up to a maximum of 20%
of the Company’s portfolio, at the time of acquisition, can be
invested in companies not meeting these criteria.
The portfolio will normally comprise up to 30 investments. This
level of concentration is likely to lead to an investment return
which is materially different from the Company’s benchmark
index and is likely to be more volatile and carry more risk.
Unless driven by market movements, securities in FTSE
100 companies and comparable companies listed on an
overseas stock exchange will normally represent between 50%
and 100% of the portfolio; securities in FTSE 350 companies
and comparable companies listed on overseas stock
exchanges will normally represent at least 70% of the portfolio.
The Company will not invest more than 15% of the Company’s
net assets, at the time of acquisition, in the securities of any
single issuer. For the purposes of this limit only, net assets shall
exclude the value of the Company’s investment in Frostrow
Capital LLP.
The Company does not and will not invest more than 15%, in
aggregate, of the value of the gross assets of the Company
in other listed closed ended investment companies. Further,
the Company does not and will not invest more than 10%,
in aggregate, of the value of its gross assets in other listed
closed ended investment companies except where the
investment companies themselves have stated investment
policies to invest no more than 15% of their gross assets in
other listed closed ended investment companies.
The Company has the ability to invest up to 25% of its
gross assets in preference shares, bonds and other debt
instruments, although no more than 10% of any one issue may
be held.
In addition, a maximum of 10% of the Company’s gross assets
can be held in cash, where the Portfolio Manager believes
market or economic conditions make equity investment
unattractive or while seeking appropriate investment
opportunities or to maintain liquidity.
The Company’s gearing policy is that gearing will not exceed
25% of the Company’s net assets.
No investment will be made in any fund or investment
company managed by Lindsell Train Limited without the prior
approval of the Board.
In accordance with the Listing Rules of the Financial Conduct
Authority (“FCA”), the Company can only make a material
change to its investment policies with the approval of its
Shareholders.
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
Portfolio structure
84.2%
INVESTED IN UK
DOMICILED COMPANIES
84.7%
TOP TEN HOLDINGS
15.8%
INVESTED GLOBALLY
0.8%
^
GEARING
91.9%
FTSE 100 COMPANIES (AND
COMPARABLE OVERSEAS
COMPANIES)
85.3%
^
ACTIVE SHARE
^ Please see Glossary of Terms and Alternative Performance Measures on pages 93 to 97.
20
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
DIVIDEND POLICY
The Company’s aim is to increase or at least maintain the
total dividend each year. A first interim dividend is typically
paid in May and a second interim in November in lieu of a final
dividend.
The level of dividend growth is dependent upon the growth
and performance of the companies within the investment
portfolio. The decision as to the level of dividend paid takes into
account the income forecasts maintained by the Company’s
AIFM and Portfolio Manager as well as the level of revenue
reserves. These forecasts consider dividends earned from
the portfolio together with predicted future earnings and are
regularly reviewed by the Board.
All dividends have been distributed from current year income
and revenue reserves.
PERFORMANCE
Whilst the Board is disappointed that the Company has
underperformed in the short term, the Portfolio Manager’s
report explains why he believes that the Company’s portfolio
remains appropriate. The Board fully supports the Portfolio
Manager’s view. Please refer to the Chairman’s Statement on
page 6 for further information.
Whilst performance is measured against the FTSE All-Share
Index, the Company’s portfolio is constructed and managed
without reference to a stock market index with the Portfolio
Manager selecting investments based on their assessment of
their long-term value.
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
848.4
30 Sept
2022
Dividends
Costs
Portfolio
NAV per share
Portfolio
gains
Finance
costs
Dividends
paid
Expenses
(inc tax)
Portfolio
income
30 Sept
2023
22.5
45.9
(6.3)
(1.0)
(18.3)
891.2
Pence per share
600
650
700
750
800
850
900
950
0
NAV PER SHARE RECONCILIATION
The chart below shows the contribution (in pence per share) attributable to the various components of investment performance
and costs, which together demonstrate the increase from the starting NAV for the year of 848.4pence to the year-end NAV of
891.2pence, after the payment of dividends to Shareholders.
PROSPECTS
The Board continues to fully support the Portfolio Manager’s
strategy of investing in high quality companies that own both
durable and cash generative brands. The Board firmly believes
that this strategy will continue to deliver strong investment
returns over the long term.
This is supported by the Company’s performance over the
last ten years with a net asset value per share total return^
of 130.0% compared with a total return from the Company’s
benchmark index of 71.8%.
^
Alternative Performance Measure (see glossary on pages 93 to 97)
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
21
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
22
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
The Board is responsible for managing the risks faced by the Company. Through delegation to the Audit Committee, the Board has
established procedures to manage risk, to review the Company’s internal control framework and to establish the level and nature of
the principal risks the Company is prepared to accept in order to achieve its long-term strategic objective. At least once a year the
Audit Committee carries out a robust detailed assessment of the principal and emerging risks.
A risk management process has been established to identify and assess risks, their likelihood and the possible severity of impact.
Further information is provided in the Audit Committee Report beginning on page 61.
These principal risks and the ways they are managed or mitigated are set out on the following pages.
For each risk identified, during the year the Audit Committee considers both the likelihood and impact of the risk and then assigns an inherent
risk score. The scoring of the risk is then reconsidered once the respective key mitigations are applied and a residual risk score is assigned.
The Board’s policy on risk management has not materially changed during the course of the reporting period and up to the year end.
During the year, the Audit Committee conducted an exercise to identify and assess any new or emerging risks affecting the
Company and to take any necessary actions to mitigate their impact. Further information can be found in the report of the Audit
Committee on page 62.
THE COMPANY'S APPROACH TO RISK MANAGEMENT
Change in inherent risk assessment over the last financial year:
No change,
Decreased,
Increased, New risk included during
the year
Change Principal Risks and Uncertainties Key Mitigations
Corporate Strategy
The Company’s investment objective
becomes unattractive to Shareholders.
At each meeting the Board reviews movements in the Company’s
shareholder register. There are regular interactions and engagement
with Shareholders (including at the AGM). Regular feedback from
Shareholders is received from the Company’s broker. Frostrow meets
regularly with major Shareholders on the Company’s behalf.
In addition, the Chairman and the Senior Independent Director meet
with key Shareholders to ascertain views.
The Company publishes its Active Share score in its monthly fact
sheet for investors and in both the annual and half-yearly reports to
highlight how different the portfolio is from the Company’s benchmark
index.
The Company’s share price total return
may differ materially from the NAV per
share total return.
The Board operates a share buy-back policy which is intended to offer
some protection against the share price widening beyond a 5% discount
to NAV per share. There is also a share issuance programme which acts
as a premium control mechanism. Further details of the Company’s share
buy-back policy and premium control mechanism can be found on the
Company’s website.
Investment Strategy and Activity
The departure of a key individual at
the Portfolio Manager may affect the
Company’s performance.
The Board keeps the portfolio management arrangements under
continual review. In turn, the Portfolio Manager reports on developments
at Lindsell Train, including succession and business continuity plans. The
Board meets regularly with other members of the wider team employed
by the Portfolio Manager.
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
Principal Risks, Emerging
Risks and Risk Management
23
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
Change Principal Risks and Uncertainties Key Mitigations
Prolonged underperformance against the
Benchmark.
The Board discusses with the Portfolio Manager the structure of the
portfolio, including asset allocation and portfolio concentration.
The Board reviews the performance of the portfolio against the
benchmark and the Company’s peer group at every meeting.
The Company publishes various measures and statistics in the
monthly fact sheet and in both the annual and half-yearly reports, to
highlight to investors the effects of the investment approach and to
show how different the portfolio is from the Company’s benchmark
index. These measures include number of holdings, Active Share and
portfolio turnover.
A major geopolitical or natural event
such as war, terrorism, natural disaster or
pandemic, and the financial, monetary
and/or political responses to such events
may have an adverse impact on the
revenues and operations of portfolio
companies to the extent that they may no
longer promise returns sufficient to meet
the Company’s investment objective.
Portfolio companies experience a
reduction in share price and dividends.
The Board reviews the performance of the portfolio against the
benchmark and the Company’s peer group at every meeting.
The Board holds monthly portfolio update meetings with the Portfolio
Manager.
The Portfolio Manager regularly engages with the portfolio companies
to discuss any matters of concern that may effect operational
activities.
The investment approach is not aligned
with shareholder expectations in relation
to ESG matters.
The Board conducts an annual review of the Portfolio Manager’s ESG
policy to ensure that it is consistent with that expected by the Board.
In addition the Board reviews the ESG activities of Lindsell Train to
ensure progress is being made by portfolio companies. The Board
also conducts an annual review of other service providers’ policies in
relation to internal controls and governance matters notably modern
slavery, GDPR, cyber security and whistleblowing policies.
The Portfolio Manager has developed a propriety system to assess the
inherent and emerging ESG risks for the investment portfolio which the
Portfolio Manager uses when engaging with the portfolio companies.
This informs the decision to invest, retain or divest any portfolio
investment.
24
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
Change Principal Risks and Uncertainties Key Mitigations
The adverse impact of climate change
on the portfolio companies’ operational
performance.
The Board receives quarterly ESG updates, which include an update on
any climate change related engagement, from the Portfolio Manager
together with monthly portfolio updates. The Board challenges
the Portfolio Manager on ESG matters to ensure that the portfolio
companies are acting in accordance with the Board’s ESG approach.
The Portfolio Manager is a signatory to the UK Stewardship Code and
actively engages with portfolio companies on ESG matters including
climate change.
Lindsell Train developed its own methodology to assess the
carbon impact of the portfolio. Lindsell Train became a signatory
of the NZAM initiative in December 2021. This reflects Lindsell
Train’s enhanced efforts as a firm to support the goal of net zero
greenhouse gas emissions by 2050.
Details of the Company’s and Portfolio Manager’s ESG policies together
with the weighted average carbon intensity of the portfolio companies
are set out on pages 33 to 36.
Operational
Service providers to the Company
deliver poor performance or fail to meet
their contractual obligations to the
Company, include errors or irregularities
in information published on behalf of the
Company.
(This risk is included as a result of the consolidation of
several operational risks as part of the Audit Committee’s
review of principal risks to better reflect the current
outlook. Please refer to page 62 for further detail.)
The Board reviews all information supplied to Shareholders and the
AIFM’s marketing activity at each meeting. The AIFM’s daily controls
ensure accurate publication of information.
The Board receives regular updates from the AIFM of press references
to the Company and its major service providers, the Board receives
regular news on sector developments from the Company’s broker and
from the AIC. The Board has the ability to replace any service provider
which may be the source of reputational concerns.
The Audit Committee receives assurance from all service providers
that they have adequate business continuity plans and internal
controls in place. These controls are reviewed by the AIFM who also
meets with the Company’s principal service providers during the year.
Financial
Fraud (including unauthorised payments
and cyber crime) occurs leading to a loss.
The AIFM and Portfolio Manager have in place robust compliance
monitoring programmes.
The Board receives monthly compliance reviews and a quarterly
expenses analysis.
An annual statement is obtained by the Audit Committee from all
service providers giving representations that there have been no
instances of fraud or bribery.
THE COMPANY'S APPROACH TO RISK MANAGEMENT – CONTINUED
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
25
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
Change Principal Risks and Uncertainties Key Mitigations
The Company is exposed to market
price risk (i.e. performance of investee
companies’ shares).
The Directors acknowledge that market risk is inherent in the
investment process. The Portfolio Manager maintains a diversified
portfolio which is concentrated in a few key sectors. The Board has
imposed guidelines within its investment policy to limit exposure to
individual holdings and limits the level of gearing.
The AIFM reports to the Board with respect to compliance with
investment guidelines on a monthly basis. The Portfolio Manager
provides the Board with regular updates on market movements.
No investment is made in derivative instruments and no currency
hedging is undertaken.
Further information on financial instruments and risk can be found in
note 17 to the Financial Statements beginning on page87.
Accounting, Legal and Regulatory
The Company and/or the Directors fail(s)
to comply with their legal requirements
in relation to FCA dealing rules/handbook
procedures, the AIFMD, the Listing Rules,
the Companies Act 2006, relevant
accounting standards, the Bribery Act
2010, the Criminal Finances Act 2017, GDPR,
tax regulations or any other applicable
regulations.
The Board monitors regulatory change with the assistance of its
AIFM, Portfolio Manager and external professional advisers to ensure
compliance with applicable laws and regulations.
The Board reviews compliance reports and internal control reports
provided by its service providers, as well as the Company’s Financial
Statements and revenue forecasts.
The Depositary reports twice yearly to the Audit Committee, confirming
that the Company, acting through the AIFM, has been managed in
accordance with the AIFMD, the FUND sourcebook, the Articles (in
relation to the calculation of the NAV per share) and with investment
restrictions and leverage limits. The Depositary Report can be found in
the Shareholder information section of the Company’s website.
The AIFM presents a quarterly report on changes in the regulatory
environment, including AIC updates, and how changes have been
addressed.
The regulatory environment in which the
Company operates changes materially,
affecting the Company’s modus
operandi.
The Board monitors regulatory change with the assistance of
the Company’s AIFM, Portfolio Manager and external professional
advisers to ensure that the Board is aware of any likely changes in the
regulatory environment and will be able to adapt as required.
The Directors attend AIC Roundtables and conferences to keep up to
date on regulatory changes and receive industry updates from the
AIFM.
26
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
Change Principal Risks and Uncertainties Key Mitigations
Poor adherence to corporate governance
best practice or errors or irregularities
in published information could lead to
censure and/or result in reputational
damage to the Company.
The Board reviews all information supplied to Shareholders and the AIFM’s
marketing activity at each meeting. Details of the Company’s compliance
with corporate governance best practice, including information on
relationships with Shareholders, are set out in the Corporate Governance
Report on pages 47 to 53.
EMERGING RISKS
During the year, the Audit Committee conducted an exercise
to identify and assess any new or emerging risks affecting the
Company and to take any necessary actions to mitigate their
impact.
The Audit Committee regularly reviews the risk register.
Mitigations, the scoring of each risk and any emerging risks
are discussed in detail as part of this process to ensure that
emerging as well as known risks are identified and, so far as
practicable, mitigated.
The experience and knowledge of the Directors is useful in
these discussions, as are update papers and advice received
from the Board’s key service providers such as the Portfolio
Manager, the AIFM and the Company’s broker. In addition,
the Company is a member of the AIC, which provides regular
technical updates as well as drawing members’ attention to
forthcoming industry and/or regulatory issues and advising on
compliance obligations.
During the year, the Board identified technological
breakthroughs, such as AI as an emerging risk. As well as
offering investment opportunities, the development and
exploitation of technological breakthroughs, such as AI, may
challenge and damage the addressable market, revenue
and operations of portfolio companies to the extent that they
no longer offer the promise of returns consistent with the
Company’s Investment Objective.
To mitigate this risk the Board holds monthly portfolio update
meetings with the Portfolio Manager, who continues to monitor
the situation closely.
The Committee will continue to review newly emerging risks
that arise from time to time to ensure that the implications for
the Company are properly assessed and mitigating controls
introduced where necessary.
FUTURE DEVELOPMENTS
The Board’s primary focus is on the Portfolio Manager’s
investment approach and performance. The subject is
thoroughly discussed at every Board meeting.
In addition, the AIFM updates the Board on Company
communications, promotions and investor feedback, as well as
wider investment company issues.
An outline of performance, investment activity and strategy,
and market background during the year, as well as the outlook,
is provided in the Chairman’s Statement beginning on page 6
the Portfolio Manager’s Review beginning on page 10.
It is expected that the Company’s strategy will remain
unchanged in the coming year.
LONG-TERM VIABILITY STATEMENT
The Directors have carefully assessed the Company’s financial
position and prospects as well as the principal risks facing the
Company and have formed a reasonable expectation that the
Company will be able to continue in operation and meet its
liabilities as they fall due over the next five financial years. The
Board has chosen a five year horizon in view of the long-term
outlook adopted by the Portfolio Manager when making
investment decisions.
To make this assessment and in reaching this conclusion, the
Audit Committee has considered the Company’s financial
position and its ability to liquidate its portfolio and meet its
liabilities as they fall due and notes the following:
• The portfolio is principally comprised of investments
traded on major international stock exchanges. Based
on current trading volumes, 97.5% of the current portfolio
could be liquidated within 30 trading days, with 60.4% in
seven days, and there is no expectation that the nature of
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
THE COMPANY'S APPROACH TO RISK MANAGEMENT – CONTINUED
27
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
the investments held within the portfolio will be materially
different in future;
• With an ongoing charges ratio of 0.61%, the expenses of the
Company are predictable and modest in comparison with
the assets and there are no capital commitments foreseen
which would alter that position;
• Expenses of the Company are covered more than four
times by investment income;
• The closed-ended nature of the Company means that,
unlike an open-ended fund, it does not need to realise
investments when Shareholders wish to sell their shares;
• The founder directors of Lindsell Train Limited, have given
their verbal assurance that they remain committed to
Lindsell Train Limited for at least seven years on a rolling
basis; and
• The Company has no employees, only its Non-Executive
Directors. Consequently it does not have redundancy or
other employment-related liabilities or responsibilities.
The Audit Committee has considered the potential impact
of its principal risks on pages 22 to 27 and various severe
but plausible downside scenarios as well as stress testing
and reverse stress testing. It has also made the following
assumptions in considering the Company’s longer-term
viability:
• There will continue to be demand for investment
companies;
• The Board and the Portfolio Manager will continue to
adopt a long-term view when making investments, and
anticipated holding periods will be at least five years;
• The Company invests principally in the securities of UK
listed companies to which investors will continue to wish to
have exposure;
• The Company will maintain its bank loan facility;
• Regulation will not increase to a level that makes running
the Company uneconomical; and
• The performance of the Company will be satisfactory.
The Board’s long-term view of viability will, of course, be
updated each year in the Company’s Annual Report.
28
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
29
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
ENGAGING WITH THE COMPANY'S STAKEHOLDERS
The following ‘Section 172’ disclosure, required by the Companies Act 2006 and the AIC Code, as explained on pages 29 to 32,
describes how the Directors have had regard to the views of the Company’s stakeholders in their decision-making.
STAKEHOLDER
GROUP
THE BENEFITS OF ENGAGEMENT WITH THE
COMPANY'S STAKEHOLDERS
HOW THE BOARD, THE AIFM AND THE PORTFOLIO MANAGER HAVE
ENGAGED WITH THE COMPANY'S STAKEHOLDERS
Investors Clear communication of the Company’s
strategy and the performance against the
Company's objective can help the share price
trade closer to its NAV per share which benefits
Shareholders.
New shares may be issued to meet demand
without net asset value per share dilution to
existing Shareholders. Increasing the size of
the Company can benefit liquidity as well as
spread costs.
Under the share buy-back policy, the
Company will normally buy in shares being
offered on the stock market whenever the
discount approaches a level of 5% and then
either hold those shares in “Treasury” or cancel
them. Any shares held in Treasury can later be
sold back to the market if conditions permit.
The AIFM and the Portfolio Manager, on behalf of the Board,
complete a programme of investor relations throughout
theyear.
An analysis of the Company’s shareholder register is provided
to the Directors at each Board meeting along with marketing
reports from Frostrow. The Board reviews and considers the
marketing plans on a regular basis. Reports from the Company’s
broker are submitted to the Board on investor sentiment and
industry issues.
Key mechanisms of engagement include:
• The Annual General Meeting
• The Chairman and the Senior Independent Director make
themselves available to engage with Shareholders
• The Chairman writes to major Shareholders each year
offering them the opportunity to meet with himself and the
Senior Independent Director.
• The Company’s website hosts reports, video interviews with
the Portfolio Manager and monthly fact sheets
• One-on-one investor meetings facilitated by Frostrow
who actively engage with professional investors, typically
discretionary wealth managers, some institutions and a
range of execution-only platforms. Regular engagement
helps to attract new investors and retain existing
Shareholders, and over time results in a stable share register
made up of diverse, long-term holders
• The Board will explain in its announcement of the results
of the AGM the actions it intends to take to consult
Shareholders in order to understand the reasons behind
any significant votes against resolutions. Following the
consultation, an update will be published no later than six
months after the AGM and the Annual Report will detail
the impact the Shareholder feedback has had on any
decisions the Board has taken and any actions or resolutions
proposed
At each meeting the Board reviews movements in the
Company’s shareholder register. There are regular interactions
and engagement with Shareholders (including at the AGM).
Regular feedback from Shareholders is received from the
Company’s broker.
30
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
STAKEHOLDER
GROUP
THE BENEFITS OF ENGAGEMENT WITH THE
COMPANY'S STAKEHOLDERS
HOW THE BOARD, THE AIFM AND THE PORTFOLIO MANAGER HAVE
ENGAGED WITH THE COMPANY'S STAKEHOLDERS
Portfolio
Manager
Engagement with the Company's Portfolio
Manager is necessary to:
• evaluate their performance against
the Company's stated strategy and to
understand any risks or opportunities this
may present.
• better understand the internal controls in
place at Lindsell Train.
The Board ensures that the Portfolio Manager's
ESG approach meets standards set by
theBoard.
The Board met regularly with representatives of the Portfolio
Manager throughout the year, with quarterly presentations
and also monthly performance and compliance reporting.
This provides the opportunity for both the Board and Portfolio
Manager to explore and understand how the portfolio has
performed and what may be expected in the future.
The Board receives regular updates from the Portfolio Manager
concerning engagement on ESG matters with the companies
within the portfolio.
The Audit Committee, also met with members of the risk
management and investment compliance teams to better
understand the Portfolio Manager’s internal controls. The Audit
Committee reviews Lindsell Train’s AAF01/20 control reports
annually. During the year the Board discussed its approach to
ESG matters with the Lindsell Train team providing more detail of
their specific approach to responsible ownership which is further
explained on pages 33 to 36.
The Board considers its approach to ESG as well as that of the
companies in which the Company invests, and has developed
its own policy which can be found on page33. The Board
encourages the Company’s Portfolio Manager to engage with
companies and in doing so expects ESG issues to be a key
consideration.
The Board receives an update on Lindsell Train’s engagement
activities within a dedicated quarterly ESG report.
A member of Lindsell Train’s investment team attends each
Board meeting to provide an update on ESG issues and
engagement activities since the last Board meeting.
Service
Providers
The Company contracts with third parties
for other services including: depositary,
investment accounting & administration as
well as company secretarial and registrars.
The Company ensures that the third parties
to whom the services have been outsourced
complete their roles in line with their service
level agreements and are able to continue
to provide these services, thereby supporting
the Company in its success and ensuring
compliance with its obligations.
The Board and Frostrow engage regularly with other service
providers both in one-to-one meetings and via regular written
reporting. This regular interaction provides an environment
where topics, issues and business development needs can be
dealt with efficiently and collegiately.
The Audit Committee reviews Frostrow’s controls report annually.
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
31
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
STAKEHOLDER
GROUP
THE BENEFITS OF ENGAGEMENT WITH THE
COMPANY’S STAKEHOLDERS
HOW THE BOARD, THE AIFM AND THE PORTFOLIO MANAGER HAVE
ENGAGED WITH THE COMPANY’S STAKEHOLDERS
The
Company's
Lender
Investment companies have the ability to
borrow with a view to enhancing long-term
returns to Shareholders. Engagement with
the Company’s lender ensures that it fully
understands the nature of the Company’s
business, the strategy adopted by the
Portfolio Manager and the extent to which the
Company complies with its loan covenants.
Regular reporting to the lender with respect to adherence with
loan covenants and ad hoc meetings with the AIFM.
KEY AREAS OF ENGAGEMENT MAIN DECISIONS AND ACTIONS TAKEN
Investors
The impact of market volatility caused by certain geopolitical
events on the portfolio.
Ongoing dialogue with Shareholders concerning the strategy of
the Company, performance and the portfolio.
Share price performance
Shareholders are provided with performance updates via the
Company’s website as well as the annual and half-year financial
reports and monthly factsheets.
The Portfolio Manager and Frostrow meet regularly with
Shareholders and potential investors to discuss the Company’s
strategy, performance and portfolio. Both the Portfolio Manager
and Frostrow also engage with the Press on the Company’s
behalf.
Information on how to vote your investment company shares on
a selection of major platforms can be found on pages 11 to 13 of
the Notice ofMeeting.
The Chairman and Senior Independent Director, accompanied
by members of the Frostrow team, met with representatives
from major Shareholders to discuss, amongst other things,
shareholder engagement, particularly with Shareholders who
hold their shares via these platforms.
The Board reviews the Company’s share price discount/premium
on a daily basis and has a share buy-back policy, which during
the year resulted in 11,218,558 shares being bought back. Details
of the Company’s share issuance and buy-back policy can be
found on the Company’s website.
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
KEY AREAS OF ENGAGEMENT MAIN DECISIONS AND ACTIONS TAKEN
Portfolio Manager
Portfolio composition, performance, ESG matters, outlook, and
business updates.
The impact of market volatility upon their business and how
some companies in the portfolio have sought to take advantage
of the pandemic, in particular through increased digitalisation.
The integration of ESG into the Portfolio Manager’s investment
processes.
Climate Change
The Portfolio Manager has set ESG targets and engages
regularly with investee companies’ executive management
and the Board receives quarterly ESG updates from the
Portfolio Manager, enabling the conclusion that the risk of
material misstatement due to climate risk remains low.
The Board has received regular updates from the Portfolio
Manager throughout the recent period of market volatility,
including its impact on investment decision making.
The Portfolio Manager reports regularly any ESG issues in the
portfolio companies to the Board.
During the year the Audit Committee considered the Portfolio
Manager’s assessment of the risks associated with climate
change on the portfolio and how the transition to a low-carbon
economy will affect all businesses, irrespective of their size,
sector or geographic location.
Other service providers
As an externally managed investment company, the Company
does not have employees. Its main stakeholders therefore
comprise its Shareholders and a small number of service
providers.
The Board has delegated a wide range of activities to external
agents, in addition to the Portfolio Manager.
These services include AIFM, investment administration,
management and financial accounting, Company Secretarial
and certain other administrative requirements and registration
services. Each of these contracts was entered into after full and
proper consideration by the Board of the quality and cost of the
services offered, including the control systems in operation in so
far as they relate to the affairs of the Company.
The Directors have frequent engagement with the Company’s
other service providers through the annual cycle of reporting
and due diligence meetings or site visits by Frostrow. This
engagement is completed with the aim of maintaining an
effective working relationship and oversight of the services
provided.
The Board met regularly with Frostrow (the AIFM),
representatives of which attend every Board meeting
to provide updates on risk management, accounting,
administration and corporate governance matters.
Reviews of the Company’s service providers have been positive
and the Directors believe their continued appointment is in the
best interests of the Company. The Company has invested in
Frostrow and Lindsell Train. Further details can be found on the
Company’s website.
The Audit Committee met with PricewaterhouseCoopers
LLP (“PwC”) to review the audit plan for the year, agree their
remuneration, review the outcome of the annual audit and
to assess the quality and effectiveness of the audit process.
Please refer to the Audit Committee Report beginning on
page61 for further information.
The Company’s Lender
Continued compliance with covenants set out within the loan
agreement between the Company and the lender.
The Board ensures compliance with loan covenants throughout
the year.
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RESPONSIBLE INVESTMENT
Our Policy
The Board recognises that the most material way for the
Company to have an impact on Environmental, Social
and Governance (“ESG”) issues is through the responsible
ownership of its investments.
It has delegated authority to its Portfolio Manager to engage
actively with the management of investee companies and
encourage that high standards of ESG practice are adopted.
The Company seeks to generate long-term, sustainable
returns on capital. The investee companies which consistently
deliver superior returns over the long term are typically
established, well-run companies whose managers recognise
their impact on the world around them.
In its Responsible Engagement & Investment Policy, the
Portfolio Manager states that its evaluation of ESG factors is
an inherent part of the investment process.
The Board has delegated authority to the Portfolio Manager
to vote the shares owned by the Company that are held on
its behalf by its Custodian. The Board has instructed that the
Portfolio Manager submit votes for such shares wherever
possible and practicable. The Portfolio Manager may refer to
the Board on any matters of a contentious nature.
The Portfolio Manager is a signatory of the 2021 UK
Stewardship Code and became a signatory of Net Zero Asset
Managers initiative in December 2021.
LINDSELL TRAIN’S POLICY
ESG INTEGRATION
Seeking Sustainability
As a long-term investor, Lindsell Train aims to identify
companies that can generate long-term sustainable high
returns on capital. Lindsell Train has historically found that
such companies tend to exhibit characteristics associated
with good corporate governance and responsible business
practices. Indeed, Lindsell Train believes that companies which
observe such standards, and that are serious in their intention
of addressing environmental and social factors, will not only
become more durable but will likely prove to be superior
investments over time.
To that end Lindsell Train’s initial analysis and ongoing
company engagement strategy seeks to incorporate all
sustainability factors that they believe will affect the company’s
ability to deliver long-term value to shareholders. Such factors
may include but are not limited to: environmental (including
climate change), social and employee matters (including
turnover and culture) and governance factors (including
remuneration and capital allocation), cyber resilience,
responsible data utilisation, respect for human rights, anti-
corruption and anti-bribery, and any other risks or issues
facing the business and its reputation. This work is catalogued
in a proprietary database of risk factors in order to centralise
and codify the team’s views, as well as to prioritise Lindsell
Train’s ongoing research and engagement work and is cross-
referenced with the SASB Materiality Map ©.
If, as a result of this assessment, Lindsell Train believes that an
ESG factor is likely to materially impact a company’s long-term
business prospects (either positively or negatively) then this will
be reflected in the long-term growth rate that is applied in the
investment team’s valuation of that company, which alongside
the team’s more qualitative research will influence any final
portfolio decisions (for example, whether Lindsell Train starts a
new position or sells out of an existing holding).
Positive/Negative Screening
As a product of Lindsell Train’s investment philosophy, it does
not invest in the following industries:
• capital intensive industries (energy, commodities or mining)
or any companies involved in the extraction and production
of coal, oil or natural gas; and
• industries that Lindsell Train judges to be sufficiently
detrimental to society that they may be exposed to
burdensome regulation or litigation that could impinge
on financial returns (e.g. tobacco, gambling or arms
manufacturers).
Similarly, Lindsell Train’s investment approach has steered
Nick Train and the investment team to invest in a number
of companies that play an important positive social or
environmental role, for example through providing access to
educational information (RELX), encouraging saving for the
future (Schroders and Hargreaves Lansdown) or encouraging
environmental progress and developing best practice (e.g.,
Diageo and Mondelez). Lindsell Train believes that such
positive benefits for society should be consistent with its aim to
generate competitive long-term returns, thus helping it meet
its clients’ investment objectives.
Climate Change
The risks associated with climate change represent the great
issue of our era and the transition to a low-carbon economy
will affect all businesses, irrespective of their size, sector or
geographic location. Therefore, no company’s revenues are
immune and the assessment of such risks must be considered
within any effective investment approach, particularly one
like Lindsell Train’s that seeks to protect its clients’ capital for
decades to come.
As a relatively small company with a single office location
and 26 employees, Lindsell Train’s climate exposure comes
predominantly from the investment portfolios that it manages
on behalf of its clients. Lindsell Train recognises the systemic
risk posed by climate change and the potential financial
impacts associated with a transition to a low-carbon economy.
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
To help address this, Lindsell Train became a signatory of
the Net Zero Asset Managers (“NZAM”) initiative in December
2021, which affirms its commitment to support the goal of net
zero greenhouse gas emissions by 2050 or sooner. In line with
this ambition, Lindsell Train published a 2030 interim target in
Q4 2022 which has since been approved by The Institutional
Investors Group on Climate Change (“IIGCC”). Lindsell Train
felt it was most appropriate to set a Portfolio Coverage Target,
and has duly targeted 55% of its asset-weighted committed
1
assets to be considered aligned
2
by 2030, as set out by the
Paris Aligned Investment Initiative (“PAII”) Net Zero Investment
Framework. This represents a circa 50% improvement from its
baseline of 36% of assets being Aligned as of 2022, consistent
with a fair share of the 50% global reduction in CO
2
identified
as a requirement in the Intergovernmental Panel on Climate
Change (“IPCC”) special report on global warming of 1.5°C.
Lindsell Train also supports the recommendations of the Task
Force on Climate-Related Financial Disclosures (“TCFD”) and
its efforts to encourage companies to report their climate
related disclosures and data in a uniform and consistent way.
Further information on Lindsell Train’s TCFD related disclosures
can be found in its 2023 TCFD Report, which can be found on
Lindsell Train’s website: www.lindselltrain.com/responsible-
investing/governance-strategy/.
Further, using Morningstar’s carbon metrics calculations,
Lindsell Train is pleased to note that the Company continues to
have a significantly lower weighted average carbon intensity
than its comparable benchmark.
Due to availability of carbon intensity data, the Morningstar
UK GBP index has been used as a proxy for the FTSE All-Share
index. The Morningstar UK index measures the performance
of the UK’s equity markets targeting the top 97% of stocks by
market capitalisation.
1
Committed assets are currently 94% of Lindsell Train’s total AUM. The
assets that were excluded relate to segregated clients that either
declined to have their assets included at this time or did not respond
by the required deadline. There is scope to increase the level of
committed assets over time.
2
Aligned status, as set out by the PAII Net Zero Framework, has
prescribed requirements of the portfolio companies, including;
1) Setting short and medium-term emission reduction targets, 2)
Monitoring emission intensity performance relative to those targets,
and 3) Disclosure of scope 1, 2 and 3 emissions. For higher impact
sectors, further criteria are required to be categorised as Aligned.
Weighted Average Carbon Intensity
FGIT FTSE-All Share GBP
S
ource: Morningstar. The Weighted Average Carbon Intensity for 2023 is as of 31 A
ugust
2023. Figures for 2022 and 2021 are year end as of 31 December.
The
Morningstar carbon intensity definition is as follows: The asset-weighted a
verage
f
or the portfolio of the underlying holdings' Carbon Intensity Scope 1 and 2 (in
USD
terms).
The average only includes holdings for which company Carbon
Intensity
Scope
1 and 2 (in USD terms) is available. Carbon intensity for a company
represents
the
volume of carbon emissions per million dollars of revenue, computed as
follows:
T
otal Emissions Scope 1 and 2 (metric tons of Co
2
) / Revenue (Mil USD). For a p
ortfolio,
carbon
intensity represents the average carbon efficiency of its investments, in
metric
tons of Co
2
. A lower value indicates lower intensity, and greater carbon efficiency.
0
30
60
90
120
150
20222021
20.4
21.68
130.33
2023
15.73
114.44
138.13
Stewardship
Engagement
Engaging with and monitoring investee companies on matters
relating to stewardship has always been an essential element
of Lindsell Train’s investment strategy. Its long-term approach
generally leads it to be supportive of company management.
However, where Lindsell Train disagrees with a company’s
actions, it will try to influence management on specific matters
or policies if Lindsell Train believe it is in the best interests of
its clients. Constructive dialogue has more often than not
resulted in satisfactory outcomes, thus limiting the need for
escalation. However, where this is not the case, Lindsell Train
will consider escalating its engagement and stewardship
activities.
During the year, Lindsell Train engaged with five companies
held within the Company’s portfolio on a wide range of
environmental, social and governance issues as detailed in
the chart on the next page together with case studies of two
such engagements. Moreover, to ensure that the 2030 net zero
interim target remains achievable, Lindsell Train continues
to engage proactively with the management of companies
it holds across its portfolios, the aim being to understand
each company’s individual goals and, where appropriate,
to provide the team’s thoughts on their road maps, with the
overall ambition of reaching an absolute reduction in global
carbon emissions. Using the data gathered to set the 2030
interim target, Lindsell Train has been able to identify which
portfolio companies should be prioritised for engagement on
their progress. Lindsell Train has engaged with management
at a number of companies in recent months and will continue
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to engage with all portfolio companies to understand how
they align with Lindsell Train’s net zero goals. This includes
encouraging them to commit to setting targets that are
measurable, actionable and based on the latest and most
accurate scientific data, as laid out by the Science Based
Targets initiative* (“SBTi”) where possible, to ensure that the
targets are measurable, actionable and based on the best
available information. This initiative has been led by Madeline
Wright, Deputy Portfolio Manager and Head of Investment
ESG. The information gathered from this exercise is stored,
assessed, and monitored within Sentinel, Lindsell Train’s
proprietary ESG database.
* Science-based targets provide companies with a clearly-defined
path to reduce emissions in line with the Paris Agreement goals.
Engagement by Topic
Source: Lindsell Train. 1st October 2020 – 30 September 2021. 36 topics raised with 16 companies.
024681012
Government Structure & Policies 25%
Remuneration 25%
Capital Allocation & Strategy 25%
Other Social
(e.g. supply chain, health & nutrition) 17%
Human Rights 8%
Personnel (HR) matters
Capital Allocation
Governance structure and policies
Sustainability/Clean energy transition
Positive Impact
Other Social matters (e.g. supply chain concerns)
Remuneration
Drinking in moderation
Fair treatment of shareholders
Diversity
Waste reduction/Recycling
Cruelty Free
Data security
Source: Lindsell Train. 1 October 2022 – 30 September 2023. 12 topics raised
with 5 companies.
Key Engagement Case Studies:
Company name: Unilever
Year Founded: 1929
Year FGT first invested: 2006
Sector: Consumer Staples
Engagement topics: Capital Allocation/Strategy & Other
(Reputation)
Date of engagements: February 2023 & August 2023
Engagement format: Call
Reason for Engagement: Lindsell Train spoke with Nils Andersen
(Chairman) and Richard Williams (Investor Relations) early in
2023, following the news that Hein Schumacher was succeeding
Alan Jope as CEO. It was explained that Hein had been identified
several years ago as a possible candidate. He was appointed
following Board interviews where he received unanimous
support. His CV showcases his numerical capabilities (he has
been a CFO at dairy multinational Royal FrieslandCampina) and
his sustainability credentials as well as strong leadership skills
and a good knowledge of emerging markets (having run China
for Heinz). From a perception and reputational standpoint, it also
helps that he is an external hire. Unilever’s new strategy will be
well supported by Hein, who accomplished a similar strategy at
his previous employer. Nils reaffirmed that there are currently no
plans to make any significant disposals or acquisitions to any
significant parts of the business and there is also unlikely to be
any large cost-cutting program under Hein’s leadership. The fact
that Hein hails from the Netherlands does also not foreshadow
any shift in focus.
In a call with CFO Graeme Pitkethly later in the year, the Lindsell
Train investment team discussed Unilever’s decision to retain
its presence in Russia. It sought justification for this decision
and, whilst the team recognises that there is no easy choice,
Lindsell Train conveyed its expectation that management
would keep the situation under active review with the hope of
finding the ‘least worst’ outcome.
Next steps: The engagement regarding the hiring of Hein
Schumacher was productive and insightful, but as with all of
our portfolio companies we will continue to monitor progress
closely and engage with management on aspects of their
corporate strategy on an ongoing basis. The engagement
regarding Unilever’s presence in Russia is ongoing.
Company name:
Mondelez
Year Founded: 1923 (Cadbury was founded in 1824)
Year FGT first invested: 2001 (Kraft Foods (formerly Cadbury)
became Mondelez following a demerger in 2012)
Sector: Consumer Staples
Engagement topic: Human Rights/Modern Slavery
Date of engagement: May 2023
Engagement format: Call
Reason for Engagement: Lindsell Train spoke with the
management of Mondelez ahead of its AGM, which included a
contentious shareholder proposal relating to the eradication
of child labour from the cocoa supply chain. The team has
regularly engaged with Mondelez on this issue and so were
eager to hear management’s views on the resolution, and also
receive an update on the progress the company is making
on this specific initiative. Management communicated that
whilst it is entirely supportive of the aims and intentions of
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
the shareholder proposal, the company is already working
towards these exact goals and believes that the current
strategy continues to be the right one to achieve them.
They confirmed that significant progress has been made:
74% of the company’s supply chain is now covered by its
Cocoa Life programme, up from 28% in 2020. Like Mondelez,
Lindsell Train recognises that eradicating child labour from
the cocoa supply chain is a systemic issue that requires
wide-scale collaboration and so Lindsell Train voted in line
with management, as it believes it is unproductive to expect
Mondelez to solve this wider issue on its own.
Next steps: This engagement is ongoing. While Lindsell
Train accepts that Mondelez cannot solve this wider issue
on its own, as the number 2 chocolate brand in the world
Lindsell Train would like to see the company continuing to
set the agenda. Lindsell Train would like the percentage
of the company’s supply chain covered by the Cocoa Life
programme to continue to increase to full coverage, with
credible and sustainable ongoing monitoring firmly in place as
this is not a ‘set and forget’ issue.
Proxy Voting
The primary voting policy of Lindsell Train is to protect or
enhance the economic value of its investments on behalf of
its clients. Lindsell Train has appointed Glass Lewis to aid the
administration of proxy voting and provide additional support
in this area. However, the Manager maintains decision making
responsibility based on its detailed knowledge of the investee
companies. It is Lindsell Train’s policy to exercise all voting rights
which have been delegated to Lindsell Train by its clients.
Voting record:
MANAGEMENT
PROPOSALS
SHAREHOLDER
PROPOSALS
TOTAL
PROPOSALS
With Management 387 2 389
Against Management 0 0 0
Abstain 1 1 2
Totals 388 3 391
Source: Glass Lewis. 1 October 2022 – 30 September 2023.
Votes against management and abstentions have typically
been in the low single-digit range. The main reason for this
is that Lindsell Train’s long-term approach to investment
generally leads it to be supportive of company management
and, where required, Lindsell Train will try to influence
management through its engagement activities. Given Lindsell
Train often builds up large, long-term stakes in the businesses
in which it invests, Lindsell Train finds that management is
open to (and very often encourage) engagement with Lindsell
Train. Furthermore, it is Lindsell Train’s aim to be invested in
‘exceptional’ companies with strong corporate governance
and hence it ought to be rare that Lindsell Train finds itself in a
position where it is voting against management.
In the majority of cases where Lindsell Train has voted against
management it has been on matters relating to remuneration.
Where Lindsell Train does not believe that a company’s
compensation policy is aligned with the long-term best interests
of the shareholders it will write to management to inform them
of Lindsell Train’s intention to vote against such policies.
INTEGRITY AND BUSINESS ETHICS
The Company is committed to carrying out business in an
honest and fair manner. The Board has adopted a zero-
tolerance approach to instances of bribery and corruption.
Accordingly, it expressly prohibits any Director or associated
persons when acting on behalf of the Company from
accepting, soliciting, paying, offering or promising to pay
or authorise any payment, public or private, in the United
Kingdom or abroad to secure any improper benefit from
themselves or for the Company.
The Board applies the same standards to its service providers
in their activities for the Company.
A copy of the Company’s Anti Bribery and Corruption
Policy can be found in the Board and Policies section of the
Company's website. The policy is reviewed annually by the
Audit Committee.
In response to the implementation of the Criminal Finances
Act 2017, the Board adopted a zero-tolerance approach to the
criminal facilitation of tax evasion. A copy of the Company’s
policy on preventing the facilitation of tax evasion can be
found in the Board and Policies section of the Company's
website. The policy is reviewed annually by the Audit
Committee.
In carrying out its activities, the Company aims to conduct itself
responsibly, ethically and fairly, including in relation to social
and human rights issues. As an investment company with
limited internal resource, the Company has little impact on the
environment. The Company believes that high standards of ESG
make good business sense and have the potential to protect
and enhance investment returns. Consequently, the Portfolio
Manager’s investment criteria ensure that ESG and ethical issues
are taken into account and best practice is encouraged. The
Board's expectations are that its principal service providers have
appropriate governance policies in place.
COMPANY PROMOTION
The Company has appointed Frostrow to promote the
Company’s shares to professional investors in the UK and
Ireland. As investment company specialists, the Frostrow team
provides a continuous, proactive marketing and investor
relations service that aims to promote the Company by
encouraging demand for the shares.
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MANAGEMENT ARRANGEMENTS
Alternative Investment Fund Manager (“AIFM”)
Frostrow under the terms of its AIFM agreement with the
Company provides, inter alia, the following services:
• oversight of the portfolio management function delegated
to Lindsell Train;
• promotion of the Company;
• investment portfolio administration and valuation;
• risk management services;
• share price discount and premium management;
• administrative and company secretarial services;
• advice and guidance in respect of corporate governance
requirements;
• maintenance of the Company’s accounting records;
• maintenance of the Company’s website;
• preparation and publication of annual reports, half year
reports and monthly fact sheets; and
• ensuring compliance with applicable legal and regulatory
requirements.
The AIFM Agreement may be terminated by either party on
giving notice of not less than 12 months.
Portfolio Manager
Lindsell Train, as delegate of the AIFM, is responsible for the
management of the Company’s portfolio of investments under
an agreement between it, the Company and Frostrow (the
“Portfolio Management Agreement”).
Under the terms of its Portfolio Management Agreement,
Lindsell Train provides, inter alia, the following services:
• seeking out and evaluating investment opportunities;
• recommending the manner by which monies should be
invested, realised or retained;
• advising on how rights conferred by the investments
should be exercised;
• analysing the performance of investments made; and
• advising the Company in relation to trends, market
movements and other matters which may affect the
investment objective and policy of the Company.
The Portfolio Management Agreement may be terminated by
either party on giving notice of not less than 12 months.
Annual Fees
FEES ON THAT PART OF MARKET
CAPITALISATION AIFM
PORTFOLIO
MANAGER
≤ £1 bn 0.15% 0.45%
> Between £1 bn - £2 bn 0.135% 0.405%
£2 bn + 0.12% 0.36%
Performance Fees
The Company does not pay performance fees.
AIFM AND PORTFOLIO MANAGER EVALUATION
AND RE-APPOINTMENT
The performance of Frostrow as AIFM and Lindsell Train as
Portfolio Manager is continuously monitored by the Board with
a formal evaluation being undertaken each year. As part of
this process the Board monitors the services provided by the
AIFM and the Portfolio Manager as well as receiving regular
reports and views from them. The Board has also considered
the assessment carried out by the AIFM as required by the
FCA’s new Consumer Duty obligations, that the Company’s
Shares provide fair value. It also receives comprehensive
long-term performance measurement reports to enable it to
determine whether or not the performance objective set by
the Board has been met.
Following a review at the Board meeting in September 2023, the
Board considers that the continuing appointment of Frostrow
and Lindsell Train, under the terms described above, is in the
best interests of the Company’s Shareholders. In coming to
this decision, it took into consideration the following additional
reasons:
• the quality and depth of experience of the management,
company secretarial, administrative and marketing team
that the AIFM brought to the management of the Company;
and
• the quality and depth of experience that the Portfolio
Manager brought to the management of the portfolio, the
clarity and rigour of the investment process, consideration
of ESG targets, the high degree of engagement with
portfolio companies on ESG matters, the level of past
long-term performance of the portfolio in absolute terms
and also by reference to the benchmark index.
Depositary
The Bank of New York Mellon (International) Limited (the
“Depositary”) acts as the Company’s depositary in accordance
with the AIFMD on the terms and subject to the conditions of
the depositary agreement between the Company, Frostrow
and the Depositary (the “Depositary Agreement”). Under the
terms of the Depositary Agreement the Company pays the
Depositary a fee between 0.007% to 0.008% of net assets.
The Depositary provides the following services:
• responsibility for the safe-keeping of custodial assets of
the Company;
• verification and maintenance of a record of all other
assets of the Company;
• the collection of income that arises from those assets;
• taking reasonable care to ensure that the Company
is managed in accordance with the AIFMD, the
FUND Sourcebook and the Company’s instrument of
incorporation, in relation to the calculation of the net asset
value per share and the application of income of the
Company; and
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
• monitoring the Company’s compliance with investment
restrictions and leverage limits set by the Board and the AIFM.
In accordance with the AIFM Rules the Depositary acts as
global custodian and may delegate safekeeping to one or
more global sub-custodians. The Depositary has delegated
safekeeping of the assets of the Company to The Bank of New
York Mellon SA/NV and/or The Bank of New York Mellon (The
Global Sub-custodians).
As at the date of this report, the applicable active sub-
custodians appointed by the Depositary who might be
relevant for the purposes of holding the Company’s
investments are:
COUNTRY NAME OF SUB-CUSTODIAN REGULATOR
The Netherlands The Bank of New York
Mellon SA/NV
Financial Services
and Markets
Authority, Belgium
United States
of America
The Bank of New York
Mellon, New York
US Securities
and Exchange
Commission
France The Bank of New York
Mellon SA/NV
The Autorité des
Marchés Financiers
United Kingdom Depositary and
Clearing Centre (DCC)
Deutsche Bank AG,
London Branch
The Financial
Conduct Authority
The Bank of New York
Mellon, New York
US Securities
and Exchange
Commission
Custodian
The Global Sub-Custodian’s safekeeping fees are charged
according to the jurisdiction in which the holdings are based.
The majority of the Company’s assets attract a custody fee
of 0.0033% of their market value. Variable transaction fees are
also chargeable.
The Depositary Agreement may be terminated by either party
on giving notice of not less than 90 days.
On behalf of the Board
Simon Hayes
Chairman
6 December 2023
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40
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
JAMES ASHTON
Non-Executive Director
James Ashton has served on the Board
since 14 October 2020. James is Chief
Executive of the Quoted Companies
Alliance, a membership body which
represents the interests of small and
mid-sized publicly traded companies
with government, regulators and the
media. He is the author of several
business books and chairs Oscar’s Book
Prize, the annual search for the UK’s best
picture book. James was City Editor and
Executive Editor of the Evening Standard
and Independent titles and before that
City Editor of the Sunday Times.
SANDRA KELLY, ACA
Chair of the Audit Committee and
Senior Independent Director
Sandra Kelly has served on the Board
since 9October 2019. A Chartered
Accountant, she was formerly Finance
Director of the Canal & River Trust. Prior
to that she spent eight years as Finance
Director at NHBC (National House-
Building Council). She is a Trustee of the
Land Trust. She previously held senior
finance positions in the commercial
sector, most notably for BMW GB.
SIMON HAYES
Chairman
Simon Hayes has served on the
Board since 29 June 2015 and was
appointed as Chairman with effect from
17February 2021. Simon was Chairman
of Peel Hunt Limited until July 2022.
He joined Peel Hunt in 1993 and was
appointed Head of Corporate Finance
in 2003, Chief Executive in 2006 and
Chairman in 2016.
GOVERNANCE
Board of Directors
*Number of shares held: 175,000
*Annual Remuneration: £41,000
Shared directorships with
other Directors:
None
*Number of shares held: 8,096
*Annual Remuneration: £33,000
Shared directorships with
other Directors:
None
*Number of shares held: 1,047
*Annual Remuneration: £27,000
Shared directorships with
other Directors:
None
The Board of Directors supervises the management of Finsbury Growth &
Income Trust PLC and looks after the interests of Shareholders. The re-election
of Directors is sought annually at the Annual General Meeting.
The Directors of the Company are set out below, all of whom were in office during
the year and up to the date of signing the Financial Statements.
All members of the Board are Non-Executive and serve as members of the Audit Committee.
*Information as at 30 September 2023
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
41
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
KATE CORNISH-BOWDEN
Non-Executive Director
Kate Cornish-Bowden has served
on the Board since 26 October 2017.
Kate was formerly a Fund Manager
for Morgan Stanley where she was
Managing Director and head of the
global core equity team. Kate is a
Non-Executive Director and chair of
the audit committee at CC Japan
Income & Growth Trust plc and the
Non-Executive Chairman of International
Biotechnology Trust plc. She was formerly
a Non-Executive Director and Senior
Independent Director at Schroder
Oriental Income Fund Limited.
PARS PUREWAL, FCA
Non-Executive Director
Pars Purewal has served on the Board
since 28 November 2022. Pars has
broad investment sector experience
gained over a 38-year career at
PricewaterhouseCoopers LLP, including
25 years as Partner across the business’
Audit and Advisory, People, Sales and
UK Asset Management teams. Pars is
a Fellow of the Institute of Chartered
Accountants in England and Wales,
the Chair of Royal London Asset
Management Limited and Royal London
Asset Management Holdings Limited, a
Non-Executive Director on the boards
of The Royal London Mutual Insurance
Society Limited, The Law Debenture
Corporation plc, Temple Holdings Limited
and the Chair of Trustees for Beyond
Food Foundation. He was formerly on the
boards of Brewin Dolphin Holdings PLC
and Federated Hermes Limited.
LORNA TILBIAN
Non-Executive Director
Lorna Tilbian has served on the Board
since 26 October 2017. Lorna is a Non-
Executive director of Premier Foods
plc, ProVen VCT plc and Rightmove plc
where she chairs the Remuneration
Committee. Lorna is also Chair of
Dowgate Capital Ltd and a Director
of Dowgate Wealth Ltd. She was
formerly an Executive Director of Numis
Corporation PLC, a Non-Executive
director of Euromoney Institutional
Investor PLC, Jupiter UK Growth
Investment Trust PLC and M&C Saatchi
PLC, a Director of WestLB Panmure
Limited and S G Warburg Securities.
*Number of shares held: 9,061
*Annual Remuneration: £27,000
Shared directorships with
other Directors:
None
*Number of shares held: -
*Annual Remuneration: £27,000
Shared directorships with
other Directors:
None
*Number of shares held: 11,500
*Annual Remuneration: £27,000
Shared directorships with
other Directors:
None
All members of the Board are Non-Executive and serve as members of the Audit Committee.
*Information as at 30 September 2023
42
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
GOVERNANCE
Report of the Directors
The Directors present this Annual Report on the affairs of the
Company, together with the audited Financial Statements
and the Independent Auditors’ Report for the year ended
30September 2023.
In accordance with the requirement for the Directors to prepare
a Strategic Report and an enhanced Directors’ Remuneration
Report for the year ended 30 September 2023, the following
information is set out in the Strategic Report:
• a review of the Company including details about its
objective, strategy and business model;
• future developments, details of the principal risks and
uncertainties associated with the Company’s activities
(including the Company’s financial risk management
objectives and policies); and
• information regarding community, social, employee, human
rights and environmental issues.
Information about Directors’ interests in the Company’s
ordinary shares is included within the Directors’ Remuneration
Report on page57.
The Corporate Governance Statement on page 47 forms part
of this Directors’ Report.
BUSINESS AND STATUS OF THE COMPANY
The Company is registered as a public limited company in
Scotland (Registered Number SC013958) and is an investment
company within the terms of Section 833 of the Companies
Act 2006. The Company is limited by shares, which are listed
on the premium segment of The Official List of the UK Listing
Authority and traded on the Main Market of the London Stock
Exchange which is a regulated market as defined in Section
1173 of the Companies Act 2006.
The Company has been accepted as an investment trust
under Section 1158 of the Corporation Taxes Act 2010 and Part 2
Chapter 1 of Statutory Instrument 2011/2999. This approval relates
to accounting periods commencing on or after 1 February
2012. The Directors are of the opinion that the Company has
conducted its affairs so as to be able to retain such approval.
RESULTS AND DIVIDENDS
The Return on Ordinary Shares after taxation is shown on
page73. Details of the Company's dividend record can be
found on page 2.
LOAN FACILITY
As at 30 September 2023, the Company was in the first year of
its three-year secured fixed term revolving credit facility (the
“facility”) of £60 million with Scotiabank Europe PLC (“Scotiabank”)
and there is an additional £40 million facility available if required.
As at 30September 2023 a total of £36.7million was drawn down
from this facility (2022: £36.7 million) which equates to gearing
of0.8%.
DIRECTORS
The current Directors of the Company are listed on pages40
and 41, all of whom served as Directors of the Company during
the year and up to the date of signing the Annual Report.
Pars Purewal has served as a Director since his appointment
on 28 November 2022. Mr Purewal was formerly a partner with
the Company’s auditor, PricewaterhouseCoopers LLP (“PwC”).
As Pars left this role more than four years ago he is deemed to
be independent under the terms of the AIC’s Code of Corporate
Governance. Pars’ wife holds an executive position at PwC which
has in place a robust process to manage any potential conflicts
of interest, including the prevention of PwC Partners and their
Persons Closely Associated from dealing in securities of any PwC
clients. As such, Pars and his wife are prevented from purchasing
the Company’s shares. The Board considers that this does not
affect Pars’ independence.
All members of the Board are Non-Executive. None of the
Directors has any other connection with the Portfolio Manager
or is employed by or is an officer of any of the companies
in which the Company holds an investment or any of the
Company’s service providers, with the exception of Lorna
Tilbian who is a Non-Executive director of Rightmove plc.
Directors’ Conflicts of Interest
Directors report on actual or potential conflicts of interest at
each Board meeting. Any Director with a conflict would be
excluded from any related discussion.
Directors’ & Officers’ Liability Insurance Cover
Directors’ and officers’ liability insurance cover was maintained
by the Company during the year. It is intended that this policy
will continue for the year ending 30 September 2024 and
subsequent years.
Directors’ Indemnity
During the year under review and to the date of this report,
indemnities were in force between the Company and each
of its Directors under which the Company has agreed to
indemnify each Director, to the extent permitted by law, in
respect of certain liabilities incurred as a result of carrying out
their role as a Director of the Company. The Directors are also
indemnified against the costs of defending any criminal or
civil proceedings or any claim by the Company or a regulator
as they are incurred. Where the defence is unsuccessful the
Director must repay those defence costs to the Company. The
indemnities are qualifying third party indemnity provisions for
the purposes of the Companies Act 2006.
A copy of each deed of indemnity is available for inspection at
the Company Secretary’s offices during normal business hours
and will be available at the Annual General Meeting.
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
43
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
Directors’ Fees
Reports on Directors’ Remuneration and also the Directors’
Remuneration Policy are set out on pages 55 and 56.
Appointment and Replacement of Directors
Unless otherwise determined by the Company by ordinary
resolution, the number of Directors shall not be less than three.
Directors’ (and Other Senior Individuals)
Interests
The beneficial interests in the Company of the Directors, of
Nick Train, the individual with responsibility for managing
the Company’s portfolio at Lindsell Train, and of Alastair
Smith, Managing Partner at Frostrow, and of the persons
closely associated with them, are set out on page 60 of this
AnnualReport.
As part of the Company’s commitment to transparency, in
May 2022 the Board took the decision to disclose details of
transactions in the Company’s shares by Nick Train.
CAPITAL STRUCTURE
The Company’s capital structure is composed solely of
Ordinary Shares. Details are given in note 13 to the Financial
Statements on page 86.
Details of the voting rights in the Company’s shares at the
date of this Annual Report are given in note 9 to the Notice of
the Annual General Meeting.
Details of the substantial Shareholders in the Company are
listed on page 44.
The giving of powers to issue or buy-back the Company’s
shares requires the relevant resolution to be passed by
Shareholders. Proposals for the renewal of the Board’s current
powers to issue and buy-back shares are detailed within the
Notice of the Annual General Meeting.
There are no restrictions concerning the transfer of securities
in the Company; no special rights with regards to control
attached to securities; no restrictions on voting rights; no
agreements between holders of securities regarding their
transfer known to the Company; and no agreements the
Company is party to that might affect its control following a
successful takeover bid.
Authority To Issue and Purchase Own Shares
It is intended that a special resolution will be proposed to grant
the Company authority to purchase its own shares, so as to
permit the purchase of up to 29,901,170 of the Company’s ordinary
shares (or such other number of shares as is equal to 14.99% of
the total number of ordinary shares in issue at the date of the
passing of the resolution) subject to the constraints set out in
the special resolution. The Directors intend to use this authority
to purchase shares only if this would result in an increase in
net asset value per share and would be in the best interests of
Shareholders generally. Ordinary shares which are purchased
under this authority may be held in Treasury or cancelled.
The Company has adopted a buy-back policy whereby the
Company will buy-back shares as described above when
the share price discount to the net asset value per share
approaches 5%. Treasury shares can be sold back to the
market at a later date at a premium to the cum income net
asset value per share. The Company's share issuance policy
allows the issuance of new shares at a small premium to the net
asset value per share on a regular basis acting as a premium
management tool. A detailed description of this policy can
be found on the Company’s website. During the year 11,218,558
shares were bought back into Treasury (2022: 9,253,311).
Between 1 October 2023 and 5 December 2023, the Company
bought back a further 5,045,317 shares into Treasury.
The benefits to Shareholders of these policies are:
• The volatility of the Company’s share price discount is
minimised;
• The absolute level of the Company’s share price discount
is minimised;
• It is accretive to net asset value per share to the benefit of
existing Shareholders; and
• The Company’s long-term prospects are preserved in that
Shareholders with a longer-term investment horizon are
attracted to the shareholder register.
The Directors believe that granting the Board authority to
purchase shares, as detailed above, is in the best interests
of Shareholders as a whole and therefore recommend that
Shareholders vote in favour of this resolution.
Cancellation of Share Premium Account
The Company has built up a substantial share premium
account owing to historic high levels of share issuance. This
account is non-distributable. The Company may cancel the
share premium account and convert the amount so cancelled
to a distributable reserve following approval by Shareholders
and confirmation of the Scottish Court of Session. Converting the
share premium account to a distributable reserve will provide
a significant pool of reserves which can be used in the future, if
required, to fund share buy-backs or other returns of capital in
accordance with applicable law. The cancellation will therefore
provide the Company with more flexibility in how capital may be
returned in the future.
The Board is accordingly proposing Special Resolution 16 at
the forthcoming AGM, which seeks shareholder approval to
cancel the amount standing to the credit of the current share
premium account, following which it will make an application
to the Scottish Court of Session to obtain its approval
to the cancellation and the creation of an equivalent
distributablereserve.
44
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
GOVERNANCE
REPORT OF THE DIRECTORS - CONTINUED
Voting Rights
Subject to any rights or restrictions attached to any shares, on
a show of hands, every member who is present in person has
one vote and every proxy present who has been duly appointed
has one vote. However, if the proxy has been duly appointed
by more than one member entitled to vote on the resolution,
and is instructed by one or more of those members to vote for
the resolution and by one or more others to vote against it, or is
instructed by one or more of those members to vote in one way
and is given discretion as to how to vote by one or more others
(and wishes to use that discretion to vote in the other way) he or
she has one vote for and one vote against the resolution. Every
corporate representative present who has been duly authorised
by a corporation has the same voting rights as the corporation.
On a poll, every member present in person or by duly appointed
proxy or corporate representative has one vote for every share of
which they are the holder or in respect of which their appointment
as proxy or corporate representative has been made.
A member, proxy or corporate representative entitled to
more than one vote need not, if they vote, use all their votes
or cast all the votes they use the same way. In the case
of joint holders, the vote of the senior who tenders a vote
shall be accepted to the exclusion of the votes of the other
joint holders, and seniority shall be determined by the order
in which the names of the holders stand in the register of
members. A member is entitled to appoint another person as
their proxy to exercise all or any of their rights to attend and to
speak and vote at a meeting of the Company.
The appointment of a proxy shall be deemed also to confer
authority to demand or join in demanding a poll. Delivery of
an appointment of a proxy shall not preclude a member from
attending and voting at the meeting or at any adjournment
of it. A proxy need not be a member. A member may appoint
more than one proxy in relation to a meeting, provided that
each proxy is appointed to exercise the rights attached to a
different share or shares held by them.
Share Capital
At the Annual General Meeting held on 17 January 2023,
authority to allot up to 21,210,521 shares on a non pre-emptive
basis at prices not less than the higher of the prevailing cum
or ex income net asset value per share at the time of issuance
was granted.
Further details of the resolutions concerning issuance
authorities can be found in the Notice of Meeting.
No shares were issued by the Company during the year
(2022: Nil).
SUBSTANTIAL SHARE INTERESTS
As at 30 September 2023, the Company had been notified of the
following substantial interests in the Company’s voting rights.
NUMBER OF SHARES % OF CAPITAL
Rathbones Investment
Management Ltd
18,006,607 8.8
At 30 September 2023 the Company had 204,519,434 shares in
issue (excluding 20,471,869 shares held in Treasury).
These disclosures reflect those Shareholders who have notified
the Company of a substantial interest in its shares when they
have crossed certain thresholds and may not reflect their
current holdings.
The table does not reflect the full range of investors in the
Company. The shareholder register is principally comprised
of private wealth managers and retail investors owning their
shares through a variety of online platforms. A profile of the
Company’s ownership is shown below.
PROFILE OF THE COMPANY’S OWNERSHIP
%OF SHARES HELD AT 30 SEPTEMBER 2023
Source: EQ IR
BENEFICIAL OWNERS OF SHARES –
INFORMATION RIGHTS
Beneficial owners of shares, such as those owning their shares
through a retail platform, who have been nominated by the
registered holder of those shares to receive information rights
under Section 146 of the Companies Act 2006 should direct
all communications to the registered holder of their shares
rather than to the Company’s Registrar, Link Group, or to the
Company directly.
Wealth Managers &
Private Banks 42.9%
Institutional Investors
14.3%
Retail
Shareholders
38.7%
Other
4.1%
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
45
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
INCREASE TO DIRECTORS’ FEES CAP
The Board of Directors is proposing to increase the aggregate
amount potentially payable to Directors by way of fees for
their services as Directors under Article 122 of the Articles of
Association from £200,000 to £300,000 in any financial year.
Please refer to the Chairman’s Statement for further information.
OTHER STATUTORY INFORMATION
The following information is disclosed in accordance with the
Companies Act 2006:
• The rules on the appointment and replacement of
directors are set out in the Company’s Articles. Any
changeto the Articles would be governed by the
Companies Act 2006.
• Subject to the provisions of the Companies Act 2006, to the
Articles, and to any directions given by special resolution,
the business of the Company shall be managed by the
Directors who may exercise all the powers of the Company.
The powers shall not be limited by any special powers
given to the Directors by the Articles and a meeting of the
Directors at which a quorum is present may exercise all the
powers exercisable by the Directors. The Directors’ powers
to issue and buy-back shares, in force at the end of the
year, are recorded in the Directors’ Report.
There are no agreements:
i. to which the Company is a party that might affect its
control following a takeover bid; and/or
ii. between the Company and its Directors concerning
compensation for loss of office.
Listing Rule 9.8.4
Listing Rule 9.8.4 requires the Company to include certain
information, more applicable for traditional trading
companies, in a single identifiable section of the Annual Report
or a cross reference table indicating where the information is
set out. The Directors confirm that there are no disclosures to
be made in this regard.
Political Donations
The Company does not make political donations.
Global Greenhouse Gas (“GHG”) Emissions for
the Year Ended 30 September 2023
The Company is an investment company, with neither
employees nor premises, nor has it any financial or operational
control of the assets which it owns. Consequently, the
Company consumed less than 40,000 kWh of energy during
the year in respect of which the Directors’ Report is prepared
and therefore is exempt from the disclosures required under
the Streamlined Energy and Carbon Reporting criteria. It has
no GHG emissions to report from its operations nor does
it have responsibility for any other emissions producing
sources under the Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013, including those within the
Company’s underlying investment portfolio.
Taskforce for Climate Related Financial
Disclosures (“TCFD”)
The Company notes the TCFD recommendations on climate
related financial disclosures. The Company is an investment
company and, as such, it is exempt from the Listing Rules
requirement to report against the TCFD framework.
UK Sanctions
The Board has made due diligence enquiries of the service
providers that process the Company’s shareholder data to
ensure the Company’s compliance with the UK sanctions
regime. The relevant service providers have confirmed that
they check the Company’s shareholder data against the UK
sanctions list on a daily basis. At the date of this report, no
sanctioned individuals had been identified on the Company’s
shareholder register. The Board notes that stockbrokers and
execution-only platforms also carry out their own due diligence.
Statement of Disclosure of Information to the
Auditors
So far as the Directors are aware, there is no relevant
information (as defined in the Companies Act 2006) of which
the Company’s Auditors are unaware. The Directors have
taken all steps they ought to have taken to make themselves
aware of any relevant audit information (as defined) and to
establish that the Auditors are aware of such information.
The above confirmation is given and should be interpreted
in accordance with the provisions of Section 418 of the
Companies Act 2006.
AGM
The AGM will be held on Tuesday, 23 January 2024 and full
details of the meeting arrangements and the business to be
transacted will be sent under separate cover to Shareholders.
Further information concerning the AGM can be found in the
Chairman’s Statement beginning on page 6.
The full text of the resolutions to be proposed at the AGM
and an explanation of each resolution are contained in the
separate Notice of Meeting. The Directors recommend that
Shareholders cast their proxy votes in favour of all resolutions
proposed, as they will in respect of their own holdings.
46
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
GOVERNANCE
REPORT OF THE DIRECTORS - CONTINUED
GOING CONCERN
The Company’s portfolio, investment activity, the Company’s
cash balances and revenue forecasts, the trends and factors
likely to affect the Company’s performance are reviewed and
discussed at each Board meeting. The Board has considered
a detailed assessment of the Company's ability to meet its
liabilities as they fall due, including stress tests and reverse
stress tests which modelled the effects of substantial falls in
portfolio valuations and liquidity constraints on the Company’s
NAV, cash flows and expenses.
Based on the information available to the Directors at the date
of this report, including the results of these stress tests, the
conclusions drawn in the Viability Statement in the Strategic
Report beginning on page 26, the Company’s cash balances
and access to funding, the Directors are satisfied that the
Company has adequate financial resources to continue in
operation for at least the next 12 months from the date of
approval of this report and that, accordingly, it is appropriate
to continue to adopt the going concern basis in preparing the
Financial Statements.
In reaching these conclusions and those in the Viability
Statement, the stress testing conducted also featured
consideration of the long-term effects of the continuing
uncertainty created by the increase in global inflation and
rising interest rates, together with the consequences of the
wars in Ukraine and the Middle East as well as subsequent
long
-term effects on economies and international relations.
Further information is provided in the Audit Committee report
beginning on page 61.
By order of the Board
Frostrow Capital LLP
Company Secretary
6 December 2023
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
47
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCE
Corporate Governance
Corporate Governance
Statement
The Board has considered the principles and recommendations
of the AIC Code of Corporate Governance (the “AIC Code”).
The AIC Code addresses all the principles set out in the UK
Corporate Governance Code issued by the Financial Reporting
Council (“FRC”) (the “UK Code”), as well as setting out additional
principles and recommendations on issues that are of specific
relevance to investment companies.
The Board considers that reporting against the principles
and recommendations of the AIC Code will provide the best
information to Shareholders and the FRC has confirmed that
by following the AIC Code, boards of investment companies
will meet their obligations in relation to the UK Corporate
Governance Code and associated disclosure requirements
under paragraph 9.8.6 of the UK Listing Rules. The Corporate
Governance Code can be viewed at www.frc.org.uk. The AIC
Code is available on the AIC website (www.theaic.co.uk).
Itincludes an explanation of how the AIC Code adapts the
Principles and Provisions set out in the Corporate Governance
Code to make them relevant for investment companies.
Statement of compliance
The Company has complied with the recommendations of the
AIC Code and the relevant provisions of the UK Code, except in
relation to certain provisions relating to:
• the role of the chief executive;
• executive directors’ remuneration; and
• the need for an internal audit function.
For the reasons set out in the AIC Code, and as explained in the
UK Code, the Board considers these provisions are not relevant
to the position of the Company as it is an externally managed
investment company. In particular, all of the Company’s day-to-
day management and administrative functions are outsourced
to third parties. As a result, the Company has no executive
directors, employees or internal operations. Therefore, the
Company has not reported further in respect of these provisions.
Company
Company’s Purpose, Values and Strategy
The Board assesses the basis on which the Company
generates and preserves value over the long term. The
Strategic Report describes how opportunities and risks to
the future success of the business have been considered
and addressed, the sustainability of the Company’s business
model and how its governance contributes to the delivery
of its strategy. The Company’s investment objective and
investment policy are set out on pages 1 and 19. The Board’s
key responsibilities are to set the Company's strategy, values
and standards; to provide leadership within a controls
framework which enables risks to be assessed and managed;
to challenge constructively and scrutinise performance of all
outsourced activities; and to review regularly the contracts,
performance and remuneration of the Company’s principal
service providers and, in particular, the Portfolio Manager.
Board Committees
The Directors have decided that, given the size of the Board,
it is unnecessary to form separate Remuneration and
Nomination Committees; the duties that would ordinarily fall to
those Committees are carried out by the Board as a whole.
The Audit Committee
The Audit Committee’s key responsibilities are to monitor
the integrity of the Annual Report and Financial Statements;
to oversee the risk and control environment and financial
reporting; and to review the performance of the Company’s
external auditor.
All Independent non-executive Directors are members of
the Committee. Although Simon Hayes is Chairman of the
Board, in light of his continued independence and his valued
contributions in Committee meetings, the Audit Committee
considers it appropriate that he continues to be a member.
Copies of the full terms of reference, which clearly define the
responsibilities of the Audit Committee, can be obtained from
the Company Secretary. They will be available for inspection at
the Annual General Meeting or at the offices of the Company
Secretary and can be found in the Corporate Information
section on the Company’s website.
Board Meetings
Representatives of the Portfolio Manager, AIFM and Company
Secretary are expected to be present at all meetings. The
primary focus at Board meetings is a review of investment
performance and associated matters. The Chairman
encourages open debate within the Board and a supportive
and co-operative relationship with the Company’s AIFM, Portfolio
Manager, advisers and other service providers. The table below
sets out the number of formal Board and Committee meetings
held during the year ended 30September 2023 and the number
of meetings attended by each Director. In addition to the
scheduled Board and Committee meetings, Directors attend
ad hoc meetings to consider matters such as the approval
of regulatory announcements, management accounts and
interimdividends.
The Directors receive monthly portfolio update briefings from
representatives of the Portfolio Manager and AIFM.
BOARD AUDIT COMMITTEE
Total number of meetings 5 4
Simon Hayes 5 4
James Ashton 5 4
Kate Cornish-Bowden 5 4
Sandra Kelly 5 4
Pars Purewal 5 4
Lorna Tilbian 5 4
All of the Directors attended the Annual General Meeting in January 2023,
with the exception of Lorna Tilbian due to unexpected travel disruption.
48
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
GOVERNANCE
CORPORATE GOVERNANCE - CONTINUED
Board
Role of The Board
The role of the Board is to promote the long-term sustainable
success of the Company, generating value for Shareholders
and contributing to wider society.
Board Leadership and Purpose
Responsibility for effective governance and for the overall
management of the Company’s affairs lies with the Board. The
governance framework of the Company reflects the fact that
as an investment company it outsources company secretarial,
administration, marketing, portfolio and risk management
services to Frostrow. Portfolio management is then delegated
to Lindsell Train by Frostrow.
Culture
The Board seeks to establish and maintain a corporate culture
characterised by fairness in its treatment of the Company’s
service providers, whose efforts are collectively directed
towards delivering returns to Shareholders in line with the
Company’s purpose and objectives. It is the Board’s belief
that this contributes to the greater success of the Company,
as well as being an appropriate way to conduct relations
between parties engaged in a common purpose.
Matters Reserved For Decision By The Board
The Board has adopted a schedule of matters reserved for its
decision. This includes, inter alia, the following:
• Requirements under the Companies Act 2006, including
approval of the half yearly and annual financial
statements, recommendation of any dividend, the
appointment or removal of the Company Secretary, and
determining the policy on share issuance and buy-backs.
• Matters relating to certain Stock Exchange requirements
and announcements, the Company’s internal controls, and
the Company’s corporate governance structure, policy
and procedures.
• Decisions relating to the strategic objectives and overall
management of the Company, including the appointment
or removal of the AIFM , Portfolio Manager and other
service providers, and review of the Investment Policy.
• Matters relating to the Board and Board committees,
including the terms of reference and membership of the
committees, the appointment of Directors (including the
Chairman) and the determination of Directors’ remuneration.
Day-to-day operational and portfolio management is
delegated to Frostrow and Lindsell Train respectively.
The Board takes responsibility for the content of communications
regarding major corporate issues, even if Frostrow or Lindsell
Train acts as spokesperson. The Board is kept informed of
relevant promotional material that is issued by Frostrow.
Composition, Succession and Evaluation
The Board seeks to ensure that it is well-balanced and
refreshed regularly by the appointment of new directors with
the skills and experience necessary, in particular, to replace
those lost by directors’ retirements. The Board further ensures
that it is comprised of members who collectively:
i. display the necessary balance of professional skills,
experience, length of service and industry/Company
knowledge; and
ii. are fit and proper to direct the Company’s business with
prudence and integrity; and provide policy guidance on
the structure, size and composition of the Board (and its
Committee) and the identification and selection of suitable
candidates for appointment to the Board (and its Committee).
The composition and skills of the Board are reviewed annually
and at such other times as circumstances may require.
Diversity Policy
The Board supports the principle of boardroom diversity and
therefore the Company’s Diversity Policy applies to both the
Board and Audit Committee.
The Company’s policy is that the Board should be comprised
of directors who collectively display the necessary balance of
professional skills, experience, length of service and industry
knowledge and that appointments to the Board should be
made on merit, against objective criteria, including diversity
in its broadest sense. The objective of the policy is to have a
broad range of approaches, backgrounds, skills, knowledge
and experience represented on the Board. The Board believes
that this will make the Board more effective at promoting
the long-term sustainable success of the Company and
generating value for all Shareholders by ensuring there is
a breadth of perspectives among the Directors and the
challenge needed to support good decision-making.
To this end achieving a diversity of perspectives and
backgrounds on the Board during the year has been, and
will continue to be, a key consideration in any Director
search process. The gender balance of three men and three
women, as at the date of the Annual Report, exceeds the
requirements of the Listing Rules. The Board is aware that
gender representation objectives have been set for FTSE 350
companies and that targets concerning ethnic diversity have
been recommended. The Parker Review set a target for each
FTSE 100 Board to have at least one director of colour by 2021
and for each FTSE 250 Board to have the same by 2024.
The Board will not display any bias in respect of age, gender,
race, sexual orientation, religion, ethnic or national origins,
disability, or educational, professional or socio-economic
background in considering the appointment of its Directors.
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
49
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
Board Diversity
The Board is supportive of the FCA’s updated Listing
Rules(LR 9.8.6R(9)) to encourage greater diversity on listed
company boards and has implemented the FCA’s disclosure
requirements.
The Board has chosen to align its diversity reporting reference
date with the Company’s financial year end and proposes to
maintain this alignment for future reporting periods.
The Company met the three targets on board diversity as at
its chosen reference date, 30 September 2023:
(i) at least 40% of the individuals on its board of directors are
women;
(ii) at least one of the following senior positions on its board of
directors is held by a woman*:
(A) the chair;
(B) the chief executive;
(C) the senior independent director; or
(D) the chief financial officer; and
(iii) at least one individual on its board of directors is from a
minority ethnic background.
The relatively small size of the Company’s Board, and therefore
more infrequent vacancies and opportunities for recruitment,
make achieving diversity on the Board a more challenging
process. As succession planning of the Board progresses
over future years, the Company will continue to strive for
increased diversity on its Board of which gender and ethnicity
are two important aspects. Further details on the Company’s
appointment process can be found under Appointments
to the Board on the following page. This includes engaging
recruitment agencies that sign up to recognised codes of
conduct, which include principles on diversity with the aim
of increasing board diversity integrated through their search
processes.
As required under LR 9.8.6R(10), further detail in respect of
the three targets outlined above as at 30 September 2023 is
disclosed in the tables below.
NUMBER OF
BOARD MEMBERS
PERCENTAGE OF
THE BOARD
NUMBER OF SENIOR POSITIONS ON THE
BOARD (CHAIR AND SID)*
Men 3 50% 1
Women 3 50% 1
Not specified/prefer not to say – – –
* As an externally managed investment company, the Company has no executive directors, employees or internal operations. The Board has
therefore excluded the columns relating to executive management from the tables above. In addition, the senior positions on the Company’s
Board of (B)the chief executive and (D) the chief financial officer are not applicable to the Company. In the absence of the aforementioned
roles, the board considers the Chair of the Audit Committee to also be a senior position on the Board. Sandra Kelly currently serves as both Senior
Independent Director and Chair of the Audit Committee.
NUMBER OF
BOARD MEMBERS
PERCENTAGE OF
THE BOARD
NUMBER OF SENIOR POSITIONS ON THE
BOARD (CHAIR AND SID)*
White British or other White (including minority-white groups) 5 83% 2
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British 1 17% –
Black/African/Caribbean/Black British – – –
Other ethnic group, including Arab – – –
Not specified/prefer not to say – – –
50
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
In order to collect the data required to fulfil the disclosures
in the tables above and below, the Board agreed that
self-reporting by the individuals concerned was the most
appropriate method. Thedata was collected anonymously
by the Company Secretary using a web-based survey where
the following two questions were posed, and individuals were
reminded that ‘Not specified / prefer not to say’ could be
recorded in response:
1. For the purposes of the Listing Rules disclosures, how
should you be categorised; and
2. Please advise your ethnicity.
There have been no changes in Board composition that have
occurred between the reference date and the date on which
the Annual Report was approved.
Policy on Director Tenure
The tenure of each non-executive Director, including the
Chairman, is not ordinarily expected to exceed nine years.
However, the Board has agreed that the tenure of the Chairman
may be extended for an agreed time provided such an
extension is conducive to the Board’s overall orderly succession.
The Board believes that this more flexible approach to the tenure
of the Chairman is appropriate in the context of the regulatory
rules that apply to investment companies, which ensure that the
Chairman remains independent after appointment, while being
consistent with the need for regular refreshment and diversity.
Appointments to the Board
The rules governing the appointment and replacement of
Directors are set out in the Company’s Articles of Association
and the aforementioned succession planning policy. Where
the Board appoints a new Director during the year or after the
year end and before the notice of annual general meeting is
published, that Director will stand for election by Shareholders
at the next Annual General Meeting.
When considering new appointments, the Board endeavours
to ensure that it has the capabilities required to be effective
and oversee the Company’s strategic priorities. This will
include an appropriate range, balance and diversity of skills,
experience and knowledge. The Company is committed to
ensuring that any vacancies arising are filled by the best
qualified candidates.
Subject to there being no conflict of interest, all Directors are
entitled to vote on candidates for the appointment of new
Directors and to recommend to Shareholders the re-election
of Directors at the Annual General Meeting. The Chairman
will not chair the meeting when the Board is dealing with the
appointment of his successor.
As part of the process to appoint Pars Purewal, who was
appointed on 28 November 2022, the Board engaged the
services of specialist recruitment consultants, Trust Associates
Limited, who prepared a list of potential candidates for
consideration by the Board. A short list was then arrived at,
the candidates were interviewed, and Pars Purewal was
subsequently appointed.
At the time of Pars’ recruitment, Trust Associates Limited
were engaging with The Department for Business, Energy &
Industrial Strategy (“BEIS”) in order to become signatories of
The Standard Voluntary Code of Conduct for Executive Search
Firms and were formally added to the list of signatories on
13December 2022. The Code of Conduct aims to broaden
ethnic diversity and gender balance on boards through
executive search firms’ commitment throughout their
recruitment processes, such as initial planning stages, long/
short listing and candidate support.
Trust Associates Limited has no other connection with the
Company or the individual directors.
Induction/Development
New appointments to the Board are provided with a full
induction programme. The programme covers the Company’s
investment strategy, policies and practices. New Directors are
also given key information on the Company’s regulatory and
statutory requirements as they arise including information
on the role of the Board, matters reserved for its decision, the
terms of reference for the Board committee, the Company’s
corporate governance practices and procedures and the
latest financial information. Following their appointment,
Directors are encouraged to participate in training courses
where appropriate.
Division of Responsibilities
Responsibilities of the Chairman
The Chairman’s primary role is to provide leadership to the
Board, assuming responsibility for its overall effectiveness in
directing the company. The Chairman is responsible for:
• ensuring that the Board is effective in its task of setting
and implementing the Company’s direction and strategy,
taking the chair at general meetings and Board meetings,
conducting meetings effectively and ensuring all Directors
are involved in discussions and decision-making;
• setting the agenda for Board meetings and ensuring the
Directors receive accurate, timely and clear information
for decision-making;
• taking a leading role in determining the Board’s
composition and structure, overseeing the induction of
new Directors and the development of the Board as a
whole, leading the annual board evaluation process and
assessing the contribution of individual Directors;
• supporting and also challenging the AIFM and the Portfolio
Manager (and other suppliers where necessary) ensuring
effective communications with Shareholders and, where
appropriate, other stakeholders; and
GOVERNANCE
CORPORATE GOVERNANCE - CONTINUED
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
51
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
• engaging with Shareholders to ensure that the Board has a
clear understanding of shareholder views.
Responsibilities of the Senior Independent Director (“SID”)
The SID serves as a sounding board for the Chairman and
acts as an intermediary for the other Directors and the
Shareholders. The SID is responsible for:
• working closely with the Chairman and providing support;
• leading the annual assessment of the performance of the
Chairman;
• holding meetings with the other non-executive Directors
without the Chairman being present, on such occasions as
necessary;
• carrying out succession planning for the Chairman’s role;
• working with the Chairman, other Directors and
Shareholders to resolve major issues; and
• being available to Shareholders and other Directors to
address any concerns or issues they feel have not been
adequately dealt with through the usual channels of
communication (i.e. through the Chairman or the Portfolio
Manager).
Company Secretary
The Directors have access to the advice and services of a
specialist company secretary, who is responsible for advising
the Board on all governance matters. The Company Secretary
ensures governance procedures are followed and that the
Company complies with applicable statutory and regulatory
requirements.
Directors’ Interests
The beneficial interests of the Directors in the Company are set
out on page 60.
Directors’ Independence
As at the date of the Annual Report, the Board consists of
sixnon-executive Directors, each of whom is independent of
Frostrow and Lindsell Train. No member of the Board has been
an employee of the Company, Frostrow, Lindsell Train or any of
its service providers. Accordingly, the Board considers that all
the Directors are independent and there are no relationships
or circumstances which are likely to affect or could appear to
affect their judgement.
The Chairman is entitled to a seat on the board of the
Company’s AIFM by virtue of the Company’s minority
partnership interest in Frostrow. It is a non-executive
position and therefore the Board does not believe that this
compromises his independence from the Company. At this
time the Board has decided the Chairman will not take a seat
on the board of Frostrow, but continues to receive updates on
the business as part of the review of Frostrow's valuation.
Directors' Other Commitments
Each of the Directors assessed the overall time commitment
of their external appointments and it was concluded that
they have sufficient time to discharge their duties. When
appointing new Directors, the Board takes into account other
demands on the Directors’ time. Any additional external
appointments are not undertaken without prior approval of
the Board.
Board Evaluation
During the year the performance of the Board, its committee
and individual Directors was evaluated through a formal
assessment process led by the Chairman. The performance of
the Chairman was evaluated by the other Directors under the
leadership of Sandra Kelly as Senior Independent Director.
It was concluded that the Chairman continued to uphold the
highest standards of integrity and ethical leadership promoting
a culture of openness and debate based on mutual respect
within the Boardroom.
The Chairman is satisfied that the structure and operation of
the Board continues to be effective and relevant and that there
is a satisfactory mix of skills, experience, length of service and
knowledge of the Company. The Board has considered the
position of all of the Directors, and believes that it would be in
the Company’s best interests to propose them for re-election
by Shareholders at the 2024 Annual General Meeting. The
relevant experience of each of the Directors is detailed on
pages 40 and 41 and on page 8 of the Notice of Meeting.
As an independent external review of the Board was
undertaken in 2021 the next such review will be held in 2024.
Independent Professional Advice
The Board has formalised arrangements under which
the Directors, in the furtherance of their duties, may seek
independent professional advice at the Company’s expense.
Risk and Internal Control
The Statement of Directors’ Responsibilities on page 54
describes the Directors’ responsibility for preparing this report.
The Audit Committee Report, beginning on page 61,
explains the work undertaken to allow the Directors to make
this statement and to apply the going concern basis of
accounting. It also sets out the main roles and responsibilities
as well as the work of the Audit Committee and describes
the Directors’ review of the Company’s risk management and
internal control systems.
A description of the principal risks facing the Company and an
explanation of how they are being managed is provided in the
Strategic Report on pages 22 to 27.
An overview of the Internal Controls structure of the Company
and its service providers is shown overleaf.
52
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
GOVERNANCE
CORPORATE GOVERNANCE - CONTINUED
Principal third party service providers
The Directors
l receive regular reporting at meetings;
l review the assurance report produced by each
organisation;
l receive additional reporting on the control
environment from each of the principal third
party service providers; and
l formally evaluate their performance on an
annual basis.
Secondary third party service providers
The Directors
l receive ad hoc reporting on their activities at
meetings.
Lindsell Train Limited
(Portfolio Management)
Reporting
l Investment performance update at each meeting
l ESG update at each meeting
l Internal Control Report
l Compliance Report (semi-annually)
l Effectiveness of control environment (annually)
Link Group
(Registrar)
l Effectiveness of control environment
(annually)
Winterflood Securities Limited
(Corporate Broker)
l Effectiveness of control environment
(annually)
Bank of New York Mellon
(Depositary and Global Custodian)
Reporting
l Depositary’s Report (semi-annually)
l Effectiveness of control environment (annually)
l Presentation from the Depositary and Custodian (annually)
The Board has responsibility for establishing and assessing internal controls to ensure the Company operates effectively, efficiently and within the
risk appetites set by the Board. As the Company relies on third party service providers for all of its operations, it obtains regular reports from these
counterparties on the nature and effectiveness of controls within these organisations.
The Company’s principal service providers are the Portfolio Manager, Lindsell Train Limited, the AIFM, Company Secretary and Administrator, Frostrow
Capital LLP, and its depositary and custodian, Bank of New York Mellon. The Board receives regular reporting on compliance with the control
environment and assesses the effectiveness of the internal controls through review of the assurance reports from each of these organisations.
In addition, the Company retains a number of secondary providers who report to the Board. These include the registrar, broker and financial adviser.
The services provided by these firms are not integral to the Company’s operating model and internal controls and so the reporting they provide to
the Board on their operations is less extensive.
The Audit Committee formally evaluates the performance and service delivery of all third party service providers at least annually and the
performance of the Company’s external auditor annually, following the completion of the annual audit process.
INTERNAL CONTROLS STRUCTURE
Board of Directors
Non-executive
Sub-committee:
l Audit Committee
Frostrow Capital LLP
(AIFM, Company Secretary and Administrator)
Reporting
l Statement of Financial
Position
l Liquidity
l Income forecasts
l Portfolio valuation
l Portfolio transactions
l Investment limits and
restrictions (monthly)
l Compliance with investment policy and guidelines
(monthly)
l Compliance report (quarterly)
l Effectiveness of control environment
(semi-annually)
l Advice on regulatory changes
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
53
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
Stakeholders
Reporting on Engagement with Stakeholders
The AIC Code requires directors to explain their statutory duties
as stated in Sections 171–177 of the Companies Act 2006. Under
Section 172, directors have a duty to promote the success of
the Company for the benefit of its members as a whole and in
doing so have regard to the consequences of any decisions
in the long term, as well as having regard to the Company’s
stakeholders amongst other considerations.
The Board’s report on its compliance with Section 172 of the
Companies Act 2006 is contained within the Strategic Report
on pages 29 to 32.
Nominee Share Code
Where shares in the Company are held via a nominee
company, the Company undertakes:
• to provide the nominee company with multiple copies of
shareholder communications, so long as an indication of
quantities has been provided in advance; and
• to allow investors holding shares through a nominee
company to attend general meetings.
Nominee companies are encouraged to provide the necessary
authority to underlying Shareholders to attend the Company’s
Annual General Meeting and vote via proxy.
Annual General Meeting
The Annual General Meeting will be held at 12 noon on
Tuesday, 23 January 2024. The formal notice of the Annual
General Meeting is set out in the accompanying circular to
Shareholders, together with explanations of the resolutions and
arrangements for the meeting.
By order of the Board
Frostrow Capital LLP
Company Secretary
6 December 2023
54
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
GOVERNANCE
Statement of Directors’
Responsibilities
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the
Directors have prepared the Company's Financial Statements
in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 102 “The Financial Reporting Standard applicable
in the UK and Republic of Ireland”, and applicable law).
Under company law the Directors must not approve the
Financial Statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of
the profit or loss of the Company for that period. In preparing
the Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable United Kingdom Accounting
Standards, comprising FRS 102 have been followed, subject
to any material departures disclosed and explained in the
Financial Statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the Financial Statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are responsible for:
• keeping adequate accounting records that are sufficient
to show and explain the Company's transactions and
disclose with reasonable accuracy at any time the
financial position of the Company and enable them to
ensure that the Financial Statements comply with the
Companies Act 2006; and
• the maintenance and integrity of the Company’s
website. Legislation in the United Kingdom governing the
preparation and dissemination of Financial Statements
may differ from legislation in other jurisdictions.
RESPONSIBILITY STATEMENT
The Directors consider that the Annual Report and
Financial Statements, taken as a whole, are fair, balanced,
understandable and provide the information necessary for
Shareholders to assess the Company’s position, performance,
business model and strategy.
Each of the Directors, whose names and functions are listed
in the ‘Board of Directors’ section on pages 40 and 41 confirms
that, to the best of their knowledge:
• the Company's Financial Statements, which have been
prepared in accordance with United Kingdom Accounting
Standards give a true and fair view of the assets, liabilities,
financial position and profit of the Company; and
• the Strategic Report includes a fair review of the
development and performance of the business and the
position of the Company, together with a description of
the principal risks and uncertainties that it faces.
Approved by the Board of Directors and signed on its behalf by
Simon Hayes
Chairman
6 December 2023
Note to those who access this document by electronic means:
The Annual Report for the year ended 30 September 2023 has been
approved by the Board of Finsbury Growth & Income Trust PLC. Copies
of the Annual Report are circulated to Shareholders and, where
possible to potential investors. It is also made available in electronic
format for the convenience of readers. Printed copies are available
from the Company Secretary's office in London.
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
55
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCE
Directors’ Remuneration
Policy
The Company follows the recommendations of the AIC Code that Directors’ remuneration should reflect their duties,
responsibilities and the value of their time spent. The Board’s policy is that the remuneration of the Directors should reflect
the experience of the Board as a whole, and is determined with reference to comparable organisations and appointments.
There are no performance conditions attaching to the remuneration of the Directors as the Board does not believe that this is
appropriate for non-executive Directors. This policy is reviewed annually and it is intended that it will continue for the year ending
30 September 2024 and for subsequent financial years.
Shareholder approval of the Directors’ Remuneration Policy was last sought at the AGM held in January 2023. The result in respect
of the resolution was as follows:
Remuneration policy VOTES CAST FOR VOTES CAST AGAINST VOTES WITHHELD*
Votes cast 86,434,157 149,590 79,223
% of votes cast 99.83% 0.17%
* Votes withheld are not votes by law and are therefore not counted in the calculation of votes for or against a resolution
The fees for the Directors are determined within the limits set out in the Company’s Articles of Association, the maximum
aggregate limit currently being £200,000 per annum, and Directors are not eligible for bonuses, pension benefits, share options,
long-term incentive schemes or other benefits. As explained within the Chairman’s Statement, it is proposed to raise the
aggregate amount of Directors’ fees as set out in the Articles of Association from £200,000 to £300,000 in any financial year.
Directors are entitled to claim reasonable expenses from the Company in relation to the performance of their duties. The current
and projected Directors’ fees for 2024 are shown in the following table. The Company does not have any employees.
DATE OF
APPOINTMENT
TO THE BOARD
PROJECTED FEES
YEAR ENDING
30 SEPTEMBER
2024
CURRENT FEES
YEAR ENDED
30 SEPTEMBER
2023
Simon Hayes (Chairman) 29 June 2015 £43,000 £41,000
James Ashton 14 October 2020 £28,500 £27,000
Kate Cornish-Bowden 26 October 2017 £28,500 £27,000
Sandra Kelly (Chair of the Audit Committee and SID) 9 October 2019 £35,000 £33,000
Pars Purewal 28 November 2022 £28,500 £22,812
Lorna Tilbian 26 October 2017 £28,500 £27,000
£192,000 £177,812
The current level of Directors’ fees will not be reviewed until at least September 2024. Any new Director being appointed to the
Board who has not been appointed as either Chairman of the Board or as the Chair of the Audit Committee will, under the current
level of fees, receive £28,500 per annum.
56
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
DIRECTORS’ REMUNERATION YEAR ENDED
30 SEPTEMBER 2023
None of the Directors has a service contract. The terms of their
appointment provide that Directors shall retire and be subject
to election at the first Annual General Meeting after their
appointment and to re-election annually thereafter. The terms
also provide that a Director may be removed without notice
and that compensation will not be due on leaving office.
Theterms and conditions of the Directors’ appointments are
set out in formal letters of appointment which are available
forreview on request from the Company Secretary at
cosec@frostrow.com and will be available for 15 minutes
before, and during, the forthcoming AGM.
CONSIDERATION OF SHAREHOLDERS’ VIEWS
In accordance with best practice recommendations the Board
will put the Remuneration Policy to Shareholders at the Annual
General Meeting at least once every three years. Approval of
this policy was last granted by Shareholders at the Annual
General Meeting held in January 2023 and approval will be
sought accordingly at the Annual General Meeting to be held
in 2026.
Any feedback received from Shareholders is considered as
part of the Board’s annual review of remuneration. In respect
of the year under review no feedback has been received from
Shareholders in relation to remuneration.
GOVERNANCE
DIRECTORS’ REMUNERATION POLICY - CONTINUED
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
57
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCE
Directors’ Remuneration
Report
STATEMENT BY THE CHAIRMAN OF THE BOARD
On behalf of the Board, I am pleased to present the Directors’
Remuneration Report to Shareholders.
This report has been prepared in accordance with the
requirements of Section 421 of the Companies Act 2006 and
the Enterprise and Regulatory Reform Act 2013. An Ordinary
Resolution for the approval of this report will be put to
Shareholders at the Company’s forthcoming Annual General
Meeting. The Directors’ Remuneration Policy Report, which is
separate to this report, can be found on pages 55 and 56.
The law requires the Company’s Auditors to audit certain
disclosures within this report. Where disclosures have been
audited they are indicated as such and the Auditors’ opinion is
included in their report to members on pages 66 to 72.
Due to the Company’s size and to avoid the need to establish
a separate Remuneration Committee, the Company’s
remuneration function is carried out by the full Board under
my Chairmanship. The Board considers the framework for the
remuneration of the Directors on an annual basis. It reviews
the ongoing appropriateness of the Company’s remuneration
policy and the individual remuneration of Directors by
reference to the activities of the Company and comparison
with other companies of a similar structure and size. This is in
line with the AIC Code.
The Directors exercise independent judgement and discretion
when authorising remuneration outcomes, taking into
account the Company’s performance together with wider
circumstances.
The Board considers the level of Directors’ fees annually. At the
most recent review held in September 2023, it was agreed that
the Directors’ fees with effect from 1 October 2023 would be as
follows:
The Chairman – £43,000 (2023: £41,000)
The Chair of the Audit Committee – £35,000 (2023: £33,000)
Other Directors – £28,500 (2023: £27,000).
The following table shows the remuneration components for each Board Role. The 2023 annual rate was approved with effect
from 1 October 2023.
COMPONENT
2023
ANNUAL RATE (£)
2022
ANNUAL RATE (£)* PURPOSE AND OPERATION
Basic Annual Fee:
Each Director
£28,500 £27,000 In recognition of the time and commitment required by Directors
of public companies as well as the responsibilities of the role. The
basic fee is reviewed against fees paid by peer companies to
ensure that it reflects fair and adequate compensation for the
role.
Additional Fee:
Chairman of the Board
£14,500 £14,000 For the additional time, commitment and responsibility required
on the Company’s business issues; and providing leadership as
Chairman of theBoard.
Additional Fee:
Chair of the Audit Committee
£6,500 £6,000 For the greater time required on the financial and reporting affairs
of theCompany.
Additional Fee:
Each Director
Variable Variable In the event that the Company undertakes a complex or large
project, such additional fee as will fairly compensate for the
additional time and commitment required by a Director.
Expenses:
Each Director
Variable Variable Reimbursement of expenses properly incurred by Directors in
attending meetings and/or otherwise in the performance of their
duties to theCompany.
* The 2022 remuneration components were approved with effect from 1 October 2022.
No advice from remuneration consultants was received
during the year under review although a review of
remuneration of the Company’s peer group of investment
companies was undertaken along with research by Nurole
Limited and Trust Associates Limited, which indicated that the
Company’s remuneration levels are in line with the market.
Directors’ Fees
The Directors are remunerated exclusively by fixed fees and do
not receive bonus payments, pension contributions or other
benefits from the Company. Directors are not offered options
to acquire shares in the Company.
All Directors are entitled to the reimbursement of reasonable
out of pocket expenses incurred by them in order to perform
their duties as directors of the Company.
As noted in the Strategic Report, all of the Directors are non-
executive and therefore there is no Chief Executive Officer
(“CEO”). The Company does not have any employees. There is
therefore no CEO or employee information to disclose.
No payments were made to former Directors of the Company.
58
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
At the last AGM held in January 2023 the result in respect of the resolution to approve the Directors’ Remuneration Report was as
follows:
Remuneration report VOTES CAST FOR VOTES CAST AGAINST VOTES WITHHELD*
Votes cast 86,451,715 137,827 73,428
% of votes cast 99.84% 0.16%
* A vote Withheld is not a vote in law and is not counted in the calculation of the proportion of votes “For” and “Against” a resolution.
Shareholder approval of the Directors’ Remuneration Report will be sought again at the AGM to be held in January 2024.
Directors’ remuneration for the year ended 30 September 2023 (audited)
DATE OF
APPOINTMENT
FEES
2023
TAXABLE
†
BENEFITS
2023
TOTAL
FEES
2023
FEES
2022
TAXABLE
†
BENEFITS
2022
TOTAL FEES
2022
Simon Hayes 29 June 2015 £41,000 – £41,000 £40,000 – £40,000
James Ashton 14 October 2020 £27,000 – £27,000 £26,000 – £26,000
Kate Cornish-Bowden 26 October 2017 £27,000 – £27,000 £26,000 – £26,000
Sandra Kelly 9 October 2019 £33,000 – £33,000 £32,000 – £32,000
Pars Purewal 28 November 2022 £22,812 – £22,812 N/A N/A N/A
Lorna Tilbian 26 October 2017 £27,000 – £27,000 £26,000 – £26,000
£177,812 – £177,812 £150,000 – £150,000
†
Taxable expenses primarily comprise travel and associated expenses incurred by the Directors in attending Board and Committee meetings in
London
Fees have been pro-rated where a change takes place during a financial year.
No fees were paid to third parties in respect of services provided.
The table below contains the annual percentage change in remuneration over the five financial years prior to the current year in
respect of the various director roles.
Fee Rates:
YEAR TO
30 SEPT 2019
YEAR TO
30 SEPT 2020
YEAR TO
30 SEPT 2021
YEAR TO
30 SEPT 2022
YEAR TO
30 SEPT 2023
Chairman £37,500
+8.7%
£37,500
0.0%
£40,000
+6.7%
£40,000
0.0%
£41,000
+2.5%
Chair of the Audit Committee £30,000
+10.1%
£30,000
0.0%
£32,000
+6.7%
£32,000
0.0%
£33,000
+3.1%
Directors’ fees £24,500
+6.5%
£24,500
0.0%
£26,000
+6.1%
£26,000
0.0%
£27,000
+3.8%
Additional fees – – – – –
GOVERNANCE
DIRECTORS’ REMUNERATION REPORT - CONTINUED
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
59
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
TEN YEARS TOTAL SHAREHOLDER RETURN TO 30 SEPTEMBER 2023
Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Sep 18 Sep 20
Sep 21
Sep 19
Source: Morningstar
Rebased to 100 at September 2013
Sep 22 Sep 23
+118.9%
+71.8%
FINSBURY GROWTH
& INCOME TRUST
SHARE PRICE
(TOTAL RETURN)
FTSE ALL SHARE
INDEX (TOTAL
RETURN) (THE
COMPANY’S STATED
BENCHMARK)
100
150
200
250
RELATIVE COST OF DIRECTORS’ REMUNERATION
The bar chart below shows the comparative cost of Directors’ fees compared with the level of dividend distribution and
buy-backs in respect of the financial years ending 30 September 2022 and 2023.
Directors’
Fees
DividendsDirectors’
Fees
Repurchase of
the Company's
shares
Dividends
£m
£0.2m £0.2m £nil
£39.1m
0
10
20
30
40
50
60
70
80
90
100
£97.7m
2023 2022
Repurchase of
the Company's
shares
£39.7m
£76.5m
Source: Frostrow Capital LLP
Loss of office
Directors do not have service contracts with the Company but are engaged under letters of appointment. These specifically exclude
any entitlement to compensation upon leaving office for whatever reason.
Share Price Return
The chart below illustrates the shareholder return for the ten years to 30 September 2023 for a holding in the Company’s shares as
compared with the FTSE All-Share Index, which the Board has adopted as the measure for both the Company’s performance and
that of the Portfolio Manager.
60
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
Directors’ Interests in Ordinary Shares
The Directors’ interests in the share capital of the Company are shown in the table below:
NUMBER OF ORDINARY SHARES OF 25p HELD
(AUDITED)
30 SEPTEMBER 2023
NUMBER OF SHARES
HELD
VALUATION*
30 SEPTEMBER 2023
£'000
(AUDITED)
30 SEPTEMBER 2022
NUMBER OF SHARES
HELD
VALUATION*
30 SEPTEMBER 2022
£’000
Simon Hayes (Chairman) 175,000 1,491 150,000 1,200
James Ashton 1,047 9 1,027 8
Kate Cornish-Bowden 9,061 77 9,061 72
Sandra Kelly 8,096 69 8,096 65
Pars Purewal
^
– – N/A N/A
Lorna Tilbian 11,500 98 11,500 92
Total 204,704 1,744 179,684 1,437
* The Company’s share price as at 30 September 2023 was 852.0p (2022: 800.0p)
^
Pars Purewal was appointed as a Director on 28 November 2022
None of the Directors was granted or exercised rights over shares during the year. None of the Directors has any contract
(including service contracts) with the Company.
There are no provisions included within the Company’s Articles of Association which require Directors to hold shares in the
Company. Further detail is provided on page 42 in respect of the prevention of Pars Purewal purchasing shares in the Company.
Other Interests in Ordinary Shares
Interests in the share capital of the Company are shown in the table below:
NUMBER OF ORDINARY SHARES OF 25p HELD
30 SEPTEMBER 2023
NUMBER OF SHARES
HELD
VALUATION*
30 SEPTEMBER 2023
£’000
30 SEPTEMBER 2022
NUMBER OF SHARES
HELD
VALUATION*
30 SEPTEMBER 2022
£’000
Alastair Smith (Managing Partner of Frostrow) 61,935 528 61,471 492
Nick Train (Portfolio Manager) 5,237,243 44,621 4,602,639 36,821
* The Company’s share price as at 30 September 2023 was 852.0p (2022: 800.0p)
Between 1 October 2023 and 5 December 2023, being the latest practicable date before the publication of the Annual Report,
James Ashton acquired a further 500 Ordinary Shares, Simon Hayes acquired a further 10,000 Ordinary Shares and Nick Train
acquired a further 25,000 Ordinary Shares. In addition, as part of respective dividend reinvestment plans, James Ashton acquired
a further 13 Ordinary Shares and Simon Hayes acquired a further 2,256 Ordinary Shares.
No Director held any interests in the issued stock or shares of the Company other than as stated above.
Annual Statement
On behalf of the Board I confirm that the Remuneration Policy, set out on pages 55 and 56, and this Remuneration Report
summarises, as applicable, for the year ended 30 September 2023:
(a) the major decisions on Directors’ remuneration;
(b) any substantial changes relating to Directors’ remuneration made during the year; and
(c) the context in which the changes occurred and decisions were taken.
Simon Hayes
Chairman
6 December 2023
GOVERNANCE
DIRECTORS’ REMUNERATION REPORT - CONTINUED
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
61
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCE
Audit Committee Report
On behalf of the Board, I am pleased to present the Audit
Committee’s Report for the year ended 30 September 2023.
ROLE AND COMPOSITION
The Audit Committee (the "Committee") comprises all the
Directors of the Company.
The role of the Committee is to ensure that shareholder
interests are properly protected in relation to the application
of financial reporting and internal control principles, risk
management and to assess the effectiveness of the audit.
The Committee’s role and responsibilities are set out in full in
its terms of reference which are available in the Corporate
Information section of the Company’s website.
The Committee as a whole has competence relevant to
the investment company sector with Committee members
having a range of financial and investment experience. The
requirement for at least one member of the Committee to
have recent and relevant experience is satisfied by myself
being a chartered accountant.
RESPONSIBILITIES
As Chair of the Committee I can confirm that the Committee’s
main responsibilities during the year and how it fulfilled them is
set out below:
1. To review the Company’s half year and annual financial
statements together with announcements and other
filings relating to the financial performance of the
Company. In particular, the Committee considered
whether the Financial Statements were fair, balanced
and understandable, allowing Shareholders to assess the
Company’s strategy, investment policy, business model,
financial performance and financial position at each
period end.
2. To review the risk management and internal control
processes of the Company and its key service providers.
As part of this review the Committee reviewed the
appropriateness of the Company’s anti-bribery and
corruption policy. During the year the Committee also
reviewed the internal controls in place at the Company’s
AIFM, its Portfolio Manager, its Registrar and its Depositary
and undertook a full review of the Company's risk register.
Further details can be found on page 62.
3. To ensure compliance with Section 1158 of the
Corporation Tax Act 2010. The Committee obtained
confirmation from Frostrow that the Company continues to
meet the regulatory requirements.
4. To agree the scope of the Auditors’ work and their
remuneration. The Committee review their independence
and the effectiveness of the audit process.
5. To consider any non-audit work to be carried out by the
Auditors. The Committee reviews the need for non-audit
services in accordance with the Company’s non-audit
services policy.
6. To consider the need for putting the audit out to tender.
The Company is required to carry out a tender every
tenyears.
MEETINGS
The Committee held four meetings during the financial
year and meeting attendance is shown on page 47.
Representatives of Frostrow acting as AIFM attended each
of the Committee’s meetings and reported on to the proper
conduct of business in accordance with the regulatory
environment in which the Company and the AIFM operate.
The Committee also met the Auditors twice during the
year and once, following completion of the audit, without
representatives of the AIFM being present.
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
Internal Controls and Risk Management
The Directors have identified(StrategicReportpages 22
to26) sixmain areas of risk and have identified the actions to
evaluate and manage the specific risks in those six areas:
• Corporate Strategy;
• Investment Strategy and Activity;
• Shareholder Relations and Corporate Governance;
• Operational;
• Financial; and
• Accounting, Legal and Regulatory.
The Committee reviews the various actions taken and satisfies
itself that they are sufficient: in particular the Committee
reviews the Company’s schedule of key risks at each meeting
and agrees amendments to both risks and mitigating actions
if necessary.
During the September 2023 Audit Committee meeting, the
Committee reviewed the key risks identified by its peer group
against the Company’s existing principal risks. During the Audit
Committee meeting the Committee was invited to consider
the risks identified by other members of the Company’s peer
group and whether these should be added to the Company’s
risk register, and if so, consider the appropriate scoring to be
applied. As a result of this exercise the Company’s existing risks
were broadened to include the new emerging risk factors that
were identified by the Committee: further information can be
found in the Strategic Report on page 26.
The Board has overall responsibility for the Company’s risk
management and systems of internal controls and for
reviewing their effectiveness. In common with the majority of
investment companies, investment management, accounting,
company secretarial and custodial services have been
delegated to third parties. The effectiveness of the internal
controls is assessed on a continuing basis by the AIFM, the
SIGNIFICANT MATTERS CONSIDERED BY THE AUDIT COMMITTEE AND THE BOARD DURING THE
YEAR
SIGNIFICANT REPORTING MATTER HOW THE ISSUE WAS ADDRESSED
Risk assessment of Fraudulent Activity The Committee once again reviewed the impact of the risk of fraudulent activity. Following an
assessment and identification of types of fraud that the Company could be exposed to, it was
believed that the Company’s key service providers had adequate, robust controls in place to
mitigate the event of any fraudulent activity.
Risk assessment of Climate Change The Committee reviewed an assessment of the impact of climate change and the weighted
average carbon intensity of the portfolio companies. The Committee noted the key topics of
engagement undertaken by Lindsell Train with each of the portfolio companies and that the
assessment identified that the Company has a significantly lower weighted average carbon
intensity than its comparable benchmark. Please refer to page 34 for further information.
Audit Committees and the External Audit:
Minimum Standard
The Committee noted the consultation and the AIC’s response to the consultation, and
considered the activities it undertakes to meet the requirements of the subsequently finalised
‘Audit Committees and the External Audit: Minimum Standard’ published by the Financial
Reporting Council (“FRC”). The Committee will continue to monitor outcomes and next steps
arising from the consultation.
Proposed changes to the UK Corporate
Governance Code 2018 and Corporate
Reporting
The Committee noted the consultation published by the FRC on proposed changes to the UK
Corporate Governance Code 2018 and will continue to monitor the timescale for implementation
of these proposals.
The Committee noted that the UK government had recently announced it had withdrawn the
draft Companies (Strategic Report and Directors’ Report) (Amendment) Regulations 2023,
which were laid in Parliament on 19 July 2023. These regulations would have introduced further
reporting requirements on both listed and private companies, including an annual resilience
statement, a material fraud statement, a distributable profits figure, and a triennial audit and
assurance policy statement.
The Company’s Audit Tender In accordance with the Company’s Audit Tender Guidelines, the Company will be conducting
an audit tender in early 2024. The Audit Committee considered a framework and the potential
implications of managed shared audits, as proposed by the BEIS consultation - restoring trust in
audit and corporate governance.
UK Corporate Governance Code 2018,
Provision 25: necessity of an Internal
Audit function
In light of the relative simplicity of the operations and the use of independent external
consultants, who report directly to the Committee, to advise on regulatory compliance and
adherence to internal procedures, it was concluded that no internal audit function was required.
GOVERNANCE
AUDIT COMMITTEE REPORT - CONTINUED
These matters were discussed by the Committee; any recommendations were fully considered and recommendations were
then made to the Board.
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
63
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
Portfolio Manager and the Depositary. Each maintains its own
systems and prepares independently audited internal control
reports. The Committee reviews these audited reports and
additionally receives regular reports from these third parties.
The Committee is satisfied that appropriate systems have
been in place for the year under review.
ANNUAL REPORT AND FINANCIAL
STATEMENTS
The Annual Report and the Financial Statements as a whole,
are the responsibility of the Board. The Directors’ Responsibility
Statement is contained on page 54. The Board looks to
the Committee to advise them in relation to the Financial
Statements both as regards their form and content, and on
any specific areas requiring judgement.
Although the Committee did not identify any significant
issues as part of its review of the Annual Report and Financial
Statements, it paid particular attention to:
Accounting Policies
The accounting policies, as set out on pages 77 to 79, have
been applied throughout the year. In light of there being
no unusual transactions during the year or other possible
reasons, the Committee found no cause to change any of
thepolicies.
Existence of investments
During the year the Committee met with representatives of
the Depositary who provided reassurance concerning the
safekeeping of the Company’s investments.
Going Concern
The Audit Committee, at the request of the Board, considered
the ability of the Company to adopt the going concern
basis for the preparation of the Financial Statements. Having
reviewed the Company’s financial position, the Committee
is satisfied that it is appropriate for the Board to prepare
the Financial Statements for the year ended 30 September
2023 on a going concern basis. The Committee’s review of
the Company’s financial position included consideration of
the cash and cash equivalents position of the Company, the
diversification of the portfolio, and the analysis of portfolio
liquidity, which estimated a liquidation of c.60.4% of the
portfolio within seven trading days (based on current market
volumes). Stress testing was completed to determine the
appropriateness of preparing the Financial Statements on a
going concern basis.
Interest in unquoted investment
The Committee reviewed the valuation methodology of the
Company’s partnership interest in Frostrow Capital LLP. The
valuation, based upon a multiple of earnings, was accepted.
Internal audit
Since the Company delegates its day to day operations to
third parties and has no employees, the Committee again
determined that there is no requirement for an internal audit
function.
Internal Controls
The Committee is responsible for ensuring that suitable
controls are in place to prevent and detect fraud, error and
misstatement of financial information. As the Company
outsources all of its functions to third parties, neither the
Committee nor the Company has any internal control structure
in place but instead requires its third party service providers to
report on their internal controls. These reports are received at
least annually, including reports which have been independently
verified by the relevant service provider’s independent Auditor.
Long-Term Viability
The Committee considered, on behalf of the Board, the longer-
term viability of the Company in connection with the Board’s
statement (see pages 26 and 27). The Committee reviewed
the Company’s financial position (including its cash flows and
liquidity position), the principal risks and uncertainties and the
results of stress tests. The stress tests considered the impact
of one or more of the key risks crystallising and then modelled
the impact on the portfolio. The results demonstrated the
impact on the Company’s NAV, its expenses and its ability to
meet its liabilities.
In even the most stressed scenario, the Company was
shown to have sufficient cash, or to be able to liquidate a
sufficient portion of its listed holdings, in order to be able to
meet its liabilities as they fall due. Based on these results the
Committee concluded it was reasonable for the Board to
expect that the Company will be able to continue in operation
and meet its liabilities as they fall due over the next five
financial years.
64
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
Recognition of Income from Investments
The Committee received assurance that all dividends
receivable, including special dividends, had been accounted
for appropriately.
Review of Disclosure and Communication
The Committee reviews whether it is following best practice in
its disclosure and whether it is communicating clearly. In order
to do this, the Committee receives reports on current and
future changes to regulatory and accounting reporting from
the Company Secretary and Auditors.
During the year the Committee reviewed the Annual Report in
order to refresh the format and content to ensure it continues
to be informative to readers.
Valuation of Investments
The Committee reviewed the robustness of the AIFM’s
processes in place for recording investment transactions as
well as ensuring the valuation of investments is in accordance
with the adopted accounting policies as detailed within
Frostrow’s independent controls report.
EXTERNAL AUDITORS
Meetings
The nature and scope of the 2023 audit, together with
PricewaterhouseCoopers LLP’s ("PwC") audit plan, were
reviewed by the Committee on 9 May 2023.
I met with the Engagement Leader, Jeremy Jensen, and the
Audit Manager on 16 November 2023 to discuss the audit and
the draft 2023 Annual Report and Financial Statements. The
Committee then met them on 28 November 2023 to review
the outcome of the audit.
Details of the fees paid to the Auditors for audit services are
set out in note 4 to the Financial Statements on page 81.
Independence and Effectiveness
In order to fulfil the Committee’s responsibility regarding the
independence of the Auditors, the Committee reviewed:
• the senior audit personnel in the audit plan,
• the Auditors’ arrangements concerning potential conflicts
of interest,
• the statement by the Auditors that they remain
independent within the meaning of the regulations and
their professional standards,
• the Financial Reporting Council’s Audit Quality Review
report on PwC and discussed the findings with the Audit
Partner.
• the extent of any non-audit services to ensure this was in
line with the Company’s policy.
In order to consider the effectiveness of the audit process, the
Committee reviewed:
• the Auditors’ fulfilment of the agreed audit plan,
• the report arising from the audit itself, and
• feedback from the AIFM on the conduct of the audit.
The Committee satisfied itself concerning the Auditors’
independence and the effectiveness of the audit process,
together with the degree of diligence and professional
scepticism brought to bear.
The Committee monitors the level of non-audit work carried
out by the Auditors and seeks assurances from the Auditors
that they maintain suitable policies and processes ensuring
independence, and monitor compliance with the relevant
regulatory requirements on an annual basis. No non-audit
work was carried out by the Auditors during the year.
The Company does not allow any non-audit services
permitted under the 70% fee cap set out in the FRC’s 2019
ethical standard.
Auditor Tendering
The Committee has a duty to consider carefully the audit for
value and effectiveness and, as part of its annual review, the
need for putting the audit out to tender for reasons of quality,
independence or value as well as the Auditors’ term in office.
The Committee reviews the scope and effectiveness of the
audit process, including agreeing the auditor’s assessments
of materiality, and monitors the auditor’s independence and
objectivity. It conducted a formal review of the performance
of the Auditors during the year, concluding that performance
had been satisfactory. However, as reported below, legislation
means that the Company has to carry out a tender for the
audit before the next audit.
PricewaterhouseCoopers LLP (“PwC”) were the Auditors for the
financial year and this was their tenth audit of the Company.
They were appointed by the Board in June 2014 and their
appointment was approved by Shareholders at the AGM held
in February 2015 following a formal tender process and this
appointment has been renewed by Shareholders at each
subsequent AGM. As a public company listed on the London
Stock Exchange, the Company is subject to mandatory auditor
rotation requirements and therefore the Company will put
its external audit out to tender at least every ten years, and
change auditor at least every 20 years. The next audit tender
will take place in early 2024, in order that the successful
candidate’s appointment or re-appointment can be approved
by Shareholders at the AGM to be held in 2025.
The Committee will be mindful of any potential conflicts of
GOVERNANCE
AUDIT COMMITTEE REPORT - CONTINUED
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
65
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
interest. Any firms providing other services to the Company
within a two-year period of the date of the audit tender will be
unable to participate.
Independent Auditors’ Remuneration
The Committee approved a fee of £57,780 (excluding VAT) for
the audit of the year ended 30 September 2023 (2022: £52,080
(excluding VAT)).
This represents an increase of 10.9% compared with the
previous year’s fee. The increase was attributed to inflationary
rises. The Committee believes that the fee is in line with audit
fees payable for the investment company sector and is
reflective of the level of work required to carry out a robust
audit.
Independent Auditors’ Re-appointment
The Audit Committee is in the process of conducting an audit
tender which is due to be completed in early 2024. Accordingly,
the Board has not proposed the re-election of the current
auditor, PwC, at the forthcoming AGM.
On completion of the audit tender the successful firm will be
appointed by the Board, following a recommendation from the
Audit Committee, to fill a casual vacancy. This appointment will
be proposed for Shareholder approval at the 2025 AGM.
Committee Effectiveness
As part of the evaluation process, the Board undertook an
evaluation of the Audit Committee’s effectiveness during
October and November 2023. The Board confirmed that the
Audit Committee had conducted its affairs in accordance
with its terms of reference. The Board considers that the Audit
Committee’s approach is comprehensive and appropriate,
that it focuses on the right issues and is managed well.
Sandra Kelly, ACA
Chair of the Audit Committee
6 December 2023
66
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF FINSBURY GROWTH & INCOME TRUST PLC
Report on the audit of the
financial statements
OPINION
In our opinion, Finsbury Growth & Income Trust PLC’s financial statements:
• give a true and fair view of the state of the Company’s affairs as at 30 September 2023 and of its return and cash flows for the
year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and
applicable law); and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report, which comprise: the Statement of Financial Position
as at 30 September 2023; the Income Statement, Statement of Cash Flows and Statement of Changes in Equity for the year then
ended; and the notes to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
ouropinion.
Independence
We remained independent of the Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not
provided.
We have provided no non-audit services to the Company in the period under audit.
OUR AUDIT APPROACH
Overview
Audit scope
• The Company is a standalone Investment Trust Company. The principal service providers to the Company are Frostrow Capital LLP
which acts as AIFM, company secretary and administrator; and Lindsell Train Limited which acts as Portfolio Manager.
• We conducted our audit of the financial statements using information from the AIFM and Apex Fund Administration Services UK LTD
(formerly Maitland Institutional Services), with whom the AIFM has engaged to provide certain administrative functions.
• We tailored the scope of our audit taking into account the types of investments within the Company, the involvement of the third
parties referred to above, the accounting processes and controls, and the industry in which the Company operates.
Key audit matters
• Income from Investments
• Valuation and existence of quoted investments
Materiality
• Overall materiality: £18,227,290 (2022: £18,303,000) based on 1% of net assets.
• Performance materiality: £13,670,460 (2022: £13,727,000).
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCESTRATEGIC REPORT
67
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Income from Investments
Refer to the Audit Committee Report,
Accounting Policies and Notes to the financial
statements.
ISAs (UK) presume there is a risk of fraud in
income recognition because of the pressure
management may feel to achieve a certain
objective.
For the Company we consider that ‘income’
refers to both revenue and capital (including
gains and losses on investments).
We focused this risk on the existence/
occurrence of gains/losses on investments
as well as the completeness and accuracy
of dividend income recognition and its
presentation in the Income Statement as set
out in the requirements of The Association
of Investment Companies’ Statement of
Recommended Practice (the “AIC SORP”).
We assessed the accounting policy for income recognition for compliance with accounting
standards and the AIC SORP and performed testing to confirm that income had been
accounted for in accordance with this stated accounting policy.
We found that the accounting policies implemented were in accordance with accounting
standards and the AIC SORP, and that income had been accounted for in accordance with the
stated accounting policy.
We understood and assessed the design and implementation of key controls surrounding
income recognition.
The gains/losses on investments held at fair value through profit or loss comprise realised and
unrealised gains/losses. For unrealised gains and losses, we sample tested the valuation of
the portfolio at the year-end, together with testing the reconciliation of opening and closing
investments. For realised gains/losses, we tested a sample of disposal proceeds by agreeing
the proceeds to bank statements and we re-performed the calculation of a sample of realised
gains/losses.
We sample tested dividend receipts by agreeing the dividend rates from investments to
independent third party sources.
To test for completeness, we sample tested that the appropriate dividends had been received
in the year by reference to independent data of dividends declared for listed investments during
the year.
We sample tested occurrence by testing that dividends recorded in the year had been declared
in the market by investment holdings, and we traced a sample of dividends received to bank
statements.
We sample tested journal entries made to income accounts (both revenue and capital).
We also tested the allocation and presentation of dividend income between the revenue and
capital return columns of the Income Statement in line with the requirements set out in the AIC
SORP by determining reasons behind dividend distributions.
No material misstatements were identified from this testing.
68
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
Key audit matter How our audit addressed the key audit matter
Valuation and existence of quoted
investments
Refer to the Audit Committee Report,
Accounting Policies and Notes to the financial
statements.
The investment portfolio at the year-end
principally compromised quoted equity
investments valued at £1,833m.
We focused on the valuation and existence
of quoted investments because investments
represent the principal element of the net
asset value as disclosed in the Statement of
Financial Position.
We tested the valuation of all quoted equity investments by agreeing the prices used in the
valuation to independent third party sources.
We tested the existence of the investment portfolio by agreeing the holdings of all quoted
investments to an independently obtained custodian confirmation.
No material misstatements were identified from this testing.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the
industry in which it operates.
The impact of climate risk on our audit
In planning our audit, we made enquiries of the Directors and Portfolio Manager to understand the extent of the potential impact
of climate change on the Company’s financial statements.
The Directors and Portfolio Manager concluded that the impact on the measurement and disclosures within the financial
statements is not material because the Company's investment portfolio is principally made up of level 1 quoted securities
which are valued at fair value based on market prices. We found this to be consistent with our understanding of the Company's
investment activities.
We also considered the consistency of the climate change disclosures included in the Strategic Report with the financial
statements and our knowledge from our audit.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall Company materiality
£18,227,290 (2022: £18,303,000).
How we determined it
1% of net assets.
Rationale for benchmark applied
We have applied this benchmark, a generally accepted auditing practice for investment
trust audits, in the absence of indicators that an alternative benchmark would be
appropriate and because we believe this provides an appropriate and consistent year
on-year basis for our audit.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope
of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example
in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to £13,670,460
(2022:£13,727,000) for the Company financial statements.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FINSBURY GROWTH & INCOME TRUST PLC
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCESTRATEGIC REPORT
69
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £911,360
(2022: £915,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
CONCLUSIONS RELATING TO GOING CONCERN
Our evaluation of the directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting
included:
• evaluating the Directors' updated risk assessment and considering whether it addressed relevant threats to the Company;
• evaluating the Directors' assessment of potential operational impacts, considering their consistency with other available
information and our understanding of the business and assessed the potential impact on the financial statements;
• reviewing the Directors' assessment of the Company's financial position in the context of its ability to meet future expected
operating expenses and debt repayments, their assessment of liquidity as well as their review of the operational resilience of
the Company and oversight of key third party service providers; and
• assessing the implication of reductions in NAV as a result of market performance on the ongoing ability of the Company to
operate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Company's
ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of
this report.
REPORTING ON OTHER INFORMATION
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the
other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this
report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Report of the Directors, we also considered whether the disclosures required by the
UKCompanies Act 2006 have been included.
70
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic report and Report of the Directors
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Report
of the Directors for the year ended 30 September 2023 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic report and Report of the Directors.
Directors' Remuneration
In our opinion, the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of
the corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other
information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and
we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks
and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern
basis of accounting in preparing them, and their identification of any material uncertainties to the Company’s ability to
continue to do so over a period of at least twelve months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why the
period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the Company was substantially less in scope than
an audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that
the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the
statement is consistent with the financial statements and our knowledge and understanding of the Company and its environment
obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the financial statements and our knowledge obtained during
theaudit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess the Company's position, performance, business model and
strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Audit Committee.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FINSBURY GROWTH & INCOME TRUST PLC
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCESTRATEGIC REPORT
71
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the Company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the
Listing Rules for review by the auditors.
RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Company and industry, we identified that the principal risks of non-compliance with laws and
regulations related to breaches of Section 1158 of the Corporation Tax Act 2010, and we considered the extent to which non-compliance
might have a material effect on the financial statements. We evaluated management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related
to posting inappropriate journal entries to increase income (investment income and/or capital gains) or to overstate the net asset value
of the Company. Audit procedures performed by the engagement team included:
• discussions with the AIFM and the Audit Committee, including specific enquiry of known or suspected instances of
non-compliance with laws and regulation and fraud where applicable;
• reviewing relevant meeting minutes, including those of the Audit Committee;
• assessment of the Company’s compliance with the requirements of Section 1158 of the Corporation Tax Act 2010, including
recalculation of numerical aspects of the eligibility conditions;
• identifying and testing journal entries, in particular manual year end journal entries posted during the preparation of the
financial statements; and
• designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FINSBURY GROWTH & INCOME TRUST PLC
72
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
OTHER REQUIRED REPORTING
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received
from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the directors on 19 June 2014 to audit the
financial statements for the year ended 30 September 2014 and subsequent financial periods. The period of total uninterrupted
engagement is 10 years, covering the years ended 30 September 2014 to 30 September 2023.
Jeremy Jensen (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
6 December 2023
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FINSBURY GROWTH & INCOME TRUST PLC
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
73
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
FINANCIAL STATEMENTS
Income Statement
FOR THE YEAR ENDED 30 SEPTEMBER 2023
YEAR ENDED 30 SEPTEMBER 2023 YEAR ENDED 30 SEPTEMBER 2022
NOTE
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
Gains/(losses) on investments at fair
value through profit or loss 9 – 96,387 96,387 – (155,883) (155,883)
Currency translations – (65) (65) – 14 14
Income 2 47,391 – 47,391 50,792 – 50,792
AIFM and portfolio management fees 3 (2,609) (7,828) (10,437) (2,678) (8,034) (10,712)
Other expenses 4 (1,150) (17) (1,167) (1,069) (9) (1,078)
Return/(loss) on ordinary activities
before finance charges and taxation 43,632 88,477 132,109 47,045 (163,912) (116,867)
Finance charges 5 (517) (1,548) (2,065) (171) (512) (683)
Return/(loss) on ordinary activities
before taxation 43,115 86,929 130,044 46,874 (164,424) (117,550)
Taxation on ordinary activities 6 (1,186) – (1,186) (1,190) – (1,190)
Return/(loss) on ordinary activities after
taxation 41,929 86,929 128,858 45,684 (164,424) (118,740)
Return/(loss) per share – basic and
diluted 7 20.0p 41.4p 61.4p 20.6p (74.0)p (53.4)p
The “Total” column of this statement represents the Company’s income statement.
The “Revenue” and “Capital“ columns are supplementary to this and are prepared under guidance published by the Association
of Investment Companies (“AIC“).
All items in the above statement derive from continuing operations.
The Company had no recognised gains or losses other than those declared in the Income Statement; therefore no separate
Statement of Comprehensive Income has been presented.
The notes on pages 77 to 92 form part of these Financial Statements.
74
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
FINANCIAL STATEMENTS
Statement of Changes in
Equity
FOR THE YEAR ENDED 30 SEPTEMBER 2023
NOTE
CALLED UP
SHARE
CAPITAL
£’000
SHARE
PREMIUM
ACCOUNT
£’000
CAPITAL
REDEMPTION
RESERVE
£’000
CAPITAL
RESERVE
£’000
REVENUE
RESERVE
£’000
TOTAL
SHAREHOLDERS’
FUNDS
£’000
At 1 October 2022 56,248 1,099,847 3,453 614,947 55,889 1,830,384
Net return from ordinary activities – – – 86,929 41,929 128,858
Second interim dividend (9.8p per share)
for the year ended 30 September 2022 8 – – – – (21,182) (21,182)
First interim dividend (8.5p per share)
for the year ended 30 September 2023 8 – – – – (17,667) (17,667)
Repurchase of shares into Treasury 13 – – – (97,664) – (97,664)
At 30 September 2023 56,248 1,099,847 3,453 604,212 58,969 1,822,729
NOTE
CALLED UP
SHARE
CAPITAL
£’000
SHARE
PREMIUM
ACCOUNT
£’000
CAPITAL
REDEMPTION
RESERVE
£’000
CAPITAL
RESERVE
£’000
REVENUE
RESERVE
£’000
TOTAL
SHAREHOLDERS’
FUNDS
£’000
At 1 October 2021 56,248 1,099,847 3,453 855,886 49,224 2,064,658
Net (loss)/return from ordinary activities – – – (164,424) 45,684 (118,740)
Second interim dividend (9.1p per share)
for the year ended 30 September 2021 8 – – – – (20,474) (20,474)
First interim dividend (8.3p per share)
for the year ended 30 September 2022 8 – – – – (18,545) (18,545)
Repurchase of shares into Treasury 13 – – – (76,515) – (76,515)
At 30 September 2022 56,248 1,099,847 3,453 614,947 55,889 1,830,384
The notes on pages 77 to 92 form part of these Financial Statements.
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
75
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
NOTE
2023
£’000
2022
£’000
Fixed assets
Investments held at fair value through profit or loss 9 1,836,660 1,852,078
Current assets
Debtors 10 10,209 12,398
Cash and cash equivalents 17,426 7,835
27,635 20,233
Current liabilities
Creditors: amounts falling due within one year 11 (4,866) (5,227)
Bank loan 12 – (36,700)
(4,866) (41,927)
Net current assets/(liabilities) 22,769 (21,694)
Total assets less current liabilities 1,859,429 1,830,384
Creditors: amount falling due after more than one year
Bank loan 12 (36,700) –
Net assets 1,822,729 1,830,384
Capital and reserves
Called up share capital 13 56,248 56,248
Share premium account 1,099,847 1,099,847
Capital redemption reserve 3,453 3,453
Capital reserve 14 604,212 614,947
Revenue reserve 58,969 55,889
Total Shareholders’ funds 1,822,729 1,830,384
Net asset value per share 15 891.2p 848.4p
The Financial Statements on pages 73 to 92 were approved by the Board of Directors on 6 December 2023 and were signed on its
behalf by:
Simon Hayes
Chairman
The notes on pages 77 to 92 form part of these Financial Statements.
Company Registration Number SC013958 (Registered in Scotland)
FINANCIAL STATEMENTS
Statement of Financial
Position
AS AT 30 SEPTEMBER 2023
76
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
NOTE
2023
£’000
2022
£’000
Net cash inflow from operating activities 18 36,895 38,098
Investing activities
Purchase of investments (41,840) (79,080)
Sale of investments 154,301 139,227
Net cash inflow from investing activities 112,461 60,147
Financing activities
Dividends paid (38,849) (39,019)
Repurchase of shares into Treasury (98,792) (73,253)
Interest paid
†
(2,059) (683)
Net cash outflow from financing activities (139,700) (112,955)
Increase/(decrease) in cash and cash equivalents 9,656 (14,710)
Currency transactions (65) 14
Cash and cash equivalents at the beginning of the financial year* 7,835 22,531
Cash and cash equivalents at the end of the financial year* 17,426 7,835
†
Reclassified as "financing activities" from "operating activities" as it better reflects the nature of this expense.
Reconciliation of net debt
2023
£’000
2022
£’000
Cash and cash equivalents* 17,426 7,835
Borrowings (36,700) (36,700)
Net debt (19,274) (28,865)
* Comprises solely cash held at bank.
FINANCIAL STATEMENTS
Statement of Cash Flows
FOR THE YEAR ENDED 30 SEPTEMBER 2023
The notes on pages 77 to 92 form part of these Financial Statements.
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
77
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
1. Accounting Policies
The Company is a public limited company (PLC) incorporated in the United Kingdom, with registered office at 50 Lothian Road,
Festival Square, Edinburgh EH3 9WJ.
The principal accounting policies, all of which have been applied consistently throughout the year in the preparation of these
Financial Statements, are set out below:
(A) BASIS OF PREPARATION
The Financial Statements have been prepared in accordance with UK Generally Accepted Accounting Practice (GAAP) under
UK and Republic of Ireland Company Law, FRS 102 ‘The Financial Reporting Standard applicable in the UK, the Statement of
Recommended Practice (SORP) for “Financial Statements of Investment Trust Companies and Venture Capital Trusts” issued
by the Association of Investment Companies in July 2022 and the Companies Act 2006 under the historical cost convention as
modified by the valuation of investments at fair value through profit or loss.
The Financial Statements have been prepared on a going concern basis. The disclosure on going concern on page 46 in the
Statement of Directors' Responsibilities forms part of these Financial Statements.
Presentation of the Income Statement
In order to reflect better the activities of an investment trust company and in accordance with the SORP, supplementary
information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside
the Income Statement. The net revenue return is the measure the Directors believe appropriate in assessing the Company’s
compliance with certain requirements set out in Sections 1158 and 1159 of the Corporation Tax Act 2010.
Significant Judgements and Critical Sources of Estimation Uncertainties
There were no significant judgements or critical estimates reported during the financial year ended 30 September 2023
(2022:none).
(B) INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
Investments are measured under FRS 102, sections 11 and 12 and are measured initially, and at subsequent reporting dates, at fair
value.
Changes in the fair value of investments and gains and losses on disposal are recognised in the Income Statement as a capital
item. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its
investment strategy, and information about the investments is provided internally on this basis to the Board. Fair value for quoted
investments is deemed to be bid market prices, or last traded price, depending on the convention of the stock exchange on which
they are quoted.
All purchases and sales of investments are accounted for on a trade date basis.
The Company’s policy is to expense transaction costs on acquisition/disposal through the gains on investment at fair value
through profit or loss. The total of such expenses, showing the total amounts included in disposals and acquisitions, is disclosed in
note 9 on page 85.
(C) INCOME
Dividends receivable from equity shares are recognised in Revenue on an ex-dividend basis except where, in the opinion of
the Board, the dividend is capital in nature, in which case it is included in Capital. Overseas dividends are stated gross of any
withholding tax.
When the Company has elected to receive scrip dividends in the form of additional shares rather than cash, the amount of cash
dividend foregone is recognised in Revenue.
Fixed returns on non-equity shares are recognised on a time apportionment basis.
FINANCIAL STATEMENTS
Notes to the
financial statements
FOR THE YEAR ENDED 30 SEPTEMBER 2023
78
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
Special dividends: In deciding whether a dividend should be regarded as a Capital or Revenue receipt, the Company reviews all
relevant information as to the reasons for and sources of the dividend on a case by case basis depending upon the nature of
the receipt. Special dividends of a revenue nature are recognised through the Revenue column of the Income Statement. Special
Dividends of a capital nature are recognised through the Capital column of the Income Statement.
The limited liability partnership (LLP) profit share is recognised in the financial statements when the entitlement to the income
is established, following the conclusion of the partnership's annual audit. Deposit interest receivable is taken to revenue on an
accruals basis.
(D) DIVIDENDS PAYABLE
Dividends paid by the Company are recognised in the Financial Statements and are shown in the Statement of Changes in Equity
in the period in which they became legally binding, which in the case of an interim dividend is the point at which it is paid and for
a final dividend when it is approved by Shareholders in line with the ICAEW Tech Release 02/17BL.
(E) EXPENDITURE AND FINANCE CHARGES
All the expense and finance costs are accounted for on an accruals basis. Expenses are charged through the Revenue column of
the Income Statement except as follows:
(1) expenses which are incidental to the acquisition or disposal of an investment are treated as part of the cost or deducted from
proceeds of that investment (as explained in 1(B) above);
(2) expenses are taken to the Capital reserve via the Capital column of the Income Statement, where a connection with the
maintenance or enhancement of the value of the investments can be demonstrated. In line with the Board's expected
long-term split of returns, 75% of the portfolio management fee, AIFM fee and finance costs are taken to the Capital reserve
and the balance to the Revenue reserve (2022: 75% capital, 25% revenue).
(F) TAXATION
Dividend income received by the Company may be subject to withholding tax imposed in the country of origin. The tax charges
shown in the Income Statement relates to overseas withholding tax on dividend income.
Current tax is provided at the amounts expected to be paid or recovered.
Deferred taxation is provided on all timing differences that have originated but not been reversed by the Statement of Financial
Position date other than those differences regarded as permanent. This is subject to deferred tax assets only being recognised if it
is considered more likely than not that there will be suitable profits from which the reversal of timing differences can be deducted.
Any liability to deferred tax is provided for at the rate of tax enacted or substantially enacted.
(G) FOREIGN CURRENCY
Transactions recorded in overseas currencies during the year are translated into sterling at the exchange rates ruling at the
date of the transaction. Assets and liabilities denominated in overseas currencies at the Statement of Financial Position date are
translated into sterling at the exchange rate ruling at that date. Profits or losses on the translation of foreign currency balances,
whether realised or unrealised are credited or debited to the Revenue or Capital column of the Income Statement depending on
whether the gain or loss is of a revenue or capital nature.
(H) CASH AND CASH EQUIVALENTS
Cash and cash equivalents and demand deposits readily convertible to known amounts of cash and subject to insignificant risk
of changes in value are defined as cash.
(I) BANK LOAN
Bank loans are initially recognised at fair value, net of transaction costs incurred. Bank loans are subsequently measured at
amortised cost. The loan amounts falling due for repayment within one year are included under current liabilities in the Statement
of Financial Position and the loan amounts falling due after one year are included under “Creditors: amounts falling due after
more than one year” in the Statement of Financial Position.
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
79
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
(J) REPURCHASE OF SHARES FOR CANCELLATION OR TO HOLD IN TREASURY
The cost of repurchasing ordinary shares (for cancellation or to hold in Treasury) including the related stamp duty and
transaction cost is charged to the ‘capital reserve’ and dealt with in the Statement of Changes in Equity. Share repurchase
transactions are accounted for on a trade date basis.
Where shares are cancelled (or are subsequently cancelled having previously been held in Treasury), the nominal value of those
shares is transferred out of ‘Called up share capital’ and into the ‘Capital redemption reserve’.
Should shares held in Treasury be reissued, the sales proceeds will be treated as a realised capital profit up to the amount of the
purchase price of those shares and will be transferred to capital reserves. The excess of the sales proceeds over the purchase
price will be transferred to ‘Share premium’.
(K) OPERATING SEGMENTS
The Company defines operating segments and segment performance in the financial statements based on information used by
the Board of Directors which is considered the Chief Operating Decision Maker
^
. The Directors are of the opinion that the Company
is engaged in a single segment of business, being the investments business. The results published in this Annual Report therefore
correspond to this sole operating segment.
(L) NATURE AND PURPOSE OF RESERVES
Capital Redemption Reserve
This reserve arose when ordinary shares were bought by the Company and subsequently cancelled, at which point the amount equal
to the par value of the ordinary share capital was transferred from the ordinary share capital to the Capital Redemption reserve.
Capital Reserve
This reserve reflects any:
• gains or losses on the disposal of investments;
• exchange differences of a capital nature;
• increases and decreases in the fair value of investments which have been recognised in the capital column of the Income
Statement;
• expenses which are capital in nature as disclosed in note 1(E); and
• excess of the purchase price over the nominal value of shares which have been bought back by the Company for
cancellation or to be held in Treasury. See note 1(J) above for further details.
Following amendments to the Company’s Articles of Association in 2015, this reserve can be used to distribute certain capital
profits by way of dividend.
Revenue Reserve
This reserve reflects all income and expenditure which are recognised in the revenue column of the Income Statement and may
be distributable by way of dividend.
When making a distribution to Shareholders, the Directors determine profits available for distribution by reference to ‘Guidance
on realised and distributable profits under the Companies Act 2006’ issued by the Institute of Chartered Accountants in England
and Wales and the Institute of Chartered Accountants of Scotland in April 2017. The availability of distributable reserves in the
Company is dependent on those distributions meeting the definition of qualifying consideration within that guidance and on
available cash resources of the Company and other accessible sources of funds. The distributable reserves are therefore subject
to these restrictions or limitations at the time such distribution is made.
^ See glossary of terms on page 93 to 97.
80
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
2. Income
2023
£’000
2022
£’000
Income from investments
UK listed dividends* 39,247 41,827
Overseas dividends* 7,496 8,257
Priority profit share on AIFM Capital contribution – 81
Limited liability partnership – profit-share 443 613
Other operating income – bank interest and miscellaneous income 205 14
Total income 47,391 50,792
* Include special dividends which have been credited to the revenue account totalling £591,000 (2022: £1,833,000):
• UK listed dividends £nil (2022: £1,205,000).
• Overseas dividends £591,000 (2022: £628,000).
3. AIFM and portfolio management fees
2023 2022
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
AIFM fee 652 1,957 2,609 670 2,008 2,678
Portfolio Management fee 1,957 5,871 7,828 2,008 6,026 8,034
Total fees 2,609 7,828 10,437 2,678 8,034 10,712
75% of the Portfolio management and AIFM fees are taken to the Capital reserve and 25% is taken to the Revenue reserve. See
note1(E) on page 78 for further details.
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
81
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
4. Other Expenses
2023 2022
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
Directors’ fees 178 – 178 150 – 150
Auditors’ fees – statutory annual audit 69 – 69 63 – 63
Depositary’s fees 175 – 175 193 – 193
Stock listing and FCA fees 152 – 152 140 – 140
Custody fees 119 – 119 118 – 118
Index costs 85 – 85 74 – 74
Registrar’s fees 64 – 64 59 – 59
Promotional costs 55 – 55 60 – 60
Printing and postage 43 – 43 52 – 52
Directors' D&O insurance 37 – 37 41 – 41
Broker fees 36 – 36 7 – 7
Other expenses 137 17 154 112 9 121
Total expenses 1,150 17 1,167 1,069 9 1,078
Further details of the amounts paid to Directors are included in the Directors’ Remuneration Report on pages 57 to 60.
During the year ended 30 September 2023 there were no non-audit services provided by the Company's Auditor (2022: nil).
All of the above expenses include VAT where applicable. The auditor’s fees for the statutory annual audit were £57,780
excludingVAT (2022: £52,080).
5. Finance Charges
2023 2022
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
Interest payable on bank loan 483 1,445 1,928 161 482 643
Loan facility commitment fees 23 69 92 10 30 40
Arrangement fee 11 34 45 – – –
517 1,548 2,065 171 512 683
82
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
6. Taxation on Ordinary Activities
(A) ANALYSIS OF CHARGE IN THE YEAR
2023 2022
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
UK Corporation tax at 22%
#
(2022: 19%) – – – – – –
Overseas withholding tax 1,308 – 1,308 1,364 – 1,364
Recoverable overseas withholding tax (122) – (122) (174) – (174)
1,186 – 1,186 1,190 – 1,190
(B) FACTORS AFFECTING TOTAL TAX CHARGE FOR YEAR
The tax assessed for the year is lower (2022: higher) than the standard rate of UK corporation tax of 25% (2022: 19%).
The differences are explained below:
2023 2022
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
Total return/(loss) on ordinary activities
before taxation 43,115 86,929 130,044 46,874 (164,424) (117,550)
Return/(loss) on ordinary activities multiplied by
UK corporation tax of 22%
#
(2022: 19%) 9,485 19,124 28,609 8,906 (31,240) (22,334)
Effects of:
Overseas taxation 1,186 – 1,186 1,190 – 1,190
Franked investment income not subject to
corporation tax – UK dividend income (8,634) – (8,634) (7,947) – (7,947)
Overseas dividends not taxable (1,649) – (1,649) (1,569) – (1,569)
Excess management expenses 798 – 798 610 – 610
Amounts charged to capital – 2,067 2,067 – 1,625 1,625
Non-taxable (return)/loss on investments* – (21,205) (21,205) – 29,618 29,618
Currency translations – 14 14 – (3) (3)
Total tax charge for the year (note 6(A)) 1,186 – 1,186 1,190 – 1,190
* (Return)/loss on investments are not subject to corporation tax within an investment company.
#
With effect from 1 April 2023, the main rate of corporation tax increased from 19% to 25%, therefore the hybrid rate of 22% has
been used.
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
83
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
(C) DEFERRED TAXATION
As at 30 September 2023, the Company had unused management expenses and other reliefs for taxation purposes of
£135,063,000 (2022: £122,041,000). It is unlikely that the Company will generate sufficient taxable income in excess of the available
deductible expenses and therefore the Company has not recognised a deferred tax asset of £33,766,000 (2022: £30,510,000)
based on the prospective corporation tax rate of 25% (2022: 25%).
Given the Company’s status as an investment company and the intention to continue to meet the conditions required to
maintain such status in the foreseeable future, the Company has not provided for deferred tax on any capital gains or losses
arising on the revaluation or disposal of investments.
7. Return/(loss) per share – Basic and Diluted
2023
£’000
2022
£’000
The return/(loss) per share is based on the following figures:
Revenue return 41,929 45,684
Capital return/(loss) 86,929 (164,424)
Total return/(loss) 128,858 (118,740)
Weighted average number of shares in issue during the year 209,802,492 222,335,694
Revenue return per share 20.0p 20.6p
Capital return/(loss) per share 41.4p (74.0)p
Total return/(loss) per share 61.4p (53.4)p
The calculation of the total, revenue and capital returns/(loss) per ordinary share is carried out in accordance with IAS 33,
"Earnings per Share (as adopted in the UK)".
As at 30 September 2023 and 2022 there were no dilutive instruments in issue, therefore the basic and diluted return/(loss) per
share are the same.
* Excludes shares held in Treasury.
84
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
8. Dividends
In accordance with FRS 102 dividends are included in the Financial Statements in the period in which they are paid or approved
by Shareholders.
Amounts recognised as distributable to Shareholders for the year ended 30 September 2023 were as follows:
EX-DIVIDEND
DATE
PAYMENT
DATE
2023
£’000
2022
£’000
Second interim dividend paid for the year ended
30 September 2022 of 9.8p per share
29 September
2022
4 November
2022 21,182 -
First interim dividend paid for the year ended
30 September 2023 of 8.5p per share 6 April 2023 19 May 2023 17,667 -
Second interim dividend paid for the year ended
30 September 2021 of 9.1p per share
7 October
2021
12 November
2021 - 20,474
First interim dividend paid for the year ended
30 September 2022 of 8.3p per share 31 March 2022 13 May 2022 - 18,545
38,849 39,019
* Second interim dividend of 10.5p per share for the
year ended 30 September 2023 (2022: 9.8p) 5 October 2023
10 November
2023 21,454 21,182
* The second interim dividend of 10.5p per share (2022: 9.8p) has not been included as a liability in these Financial Statements as it
is only recognised in the financial year in which it is paid.
The total dividends payable in respect of the financial year which forms the basis of the retention test under Section 1158 of the
Corporation Tax Act 2010 are set out below:
2023
£’000
2022
£’000
Revenue available for distribution by way of dividend for the year 41,929 45,684
2023 First interim dividend of 8.5p per share (2022: 8.3p) paid on 19 May 2023 (17,667) (18,545)
2023 Second interim dividend of 10.5p per share (2022: 9.8p) paid on 10 November 2023 (21,454) (21,182)
Net additions to revenue reserves 2,808 5,957
The Company’s dividend policy is set out on page 20.
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
85
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
9. Investments held at Fair Value Through Profit or Loss
ANALYSIS OF PORTFOLIO MOVEMENTS
2023
£’000
2022
£’000
Opening book cost 1,293,409 1,303,097
Opening investment holding gains 558,669 768,169
Valuation at 1 October 1,852,078 2,071,266
Movements in the year:
Purchases at cost 42,619 79,246
Sales proceeds (154,424) (142,551)
Gains/(losses) on investments 96,387 (155,883)
Valuation at 30 September 1,836,660 1,852,078
Closing book cost 1,244,868 1,293,409
Investment holding gains at 30 September 591,792 558,669
Valuation at 30 September 1,836,660 1,852,078
The Company received £154,424,000 (2022: £142,551,000) from investments sold in the year. The realised gains of these investments
were £63,263,000 (2022: £53,618,000) and the book cost of these investments when they were purchased was £91,161,000
(2022:£88,933,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were
included in the fair value of the investments.
Purchase transaction costs for the year to 30 September 2023 were £50,000 (2022: £161,000). These comprise stamp duty costs of
£33,000 (2022: £110,000) and commission of £17,000 (2022: £51,000). Sales transaction costs for the year to 30 September 2023 were
£55,000 (2022: £53,000) and comprise commission.
10. Debtors
2023
£’000
2022
£’000
Amounts due from brokers in respect of portfolio trading – disposals 4,121 3,998
Accrued income and prepayments 6,088 8,400
10,209 12,398
11. Creditors: Amounts Falling Due Within One Year
2023
£’000
2022
£’000
Amounts due to brokers in respect of portfolio trading – purchases 1,669 890
Amounts due to brokers in respect of shares repurchased by the Company 2,134 3,262
Other creditors and accruals 1,063 1,075
4,866 5,227
86
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
12. Bank Loan
2023
£’000
2022
£’000
Bank loan 36,700 36,700
Scotiabank Europe PLC, the provider of the Company’s loan facility, has a fixed and floating charge over the assets of the
Company as security against any funds drawn down under the loan facility. As at 30 September 2023 the Company was in the
first year of its three year secured fixed term multi-currency revolving loan facility of £60million (with an additional £40 million
available if required).
This facility was renewed on 4 October 2022 and will expire in early October 2025.
The main covenant under the loan facility required that, at each month end, total borrowings should not exceed £100 million
(2022:£100 million), Net Asset Value must not fall below £750 million (2022: £300 million) and the ratio of Adjusted Total Net Assets
to Debt is not to be less than 4:1 (2022: 4:1). There were no breaches of the covenants during the year.
The Board has set a gearing limit which must not exceed 25% of the Company’s net asset value. See the Strategic Report on
page19 and the Report of the Directors on page 42 for further details.
13. Called Up Share Capital
2023
£’000
2022
£’000
Allotted, issued and fully paid:
204,519,434 (2022: 215,737,992) ordinary shares of 25p each 51,130 53,935
20,471,869 (2022: 9,253,311) ordinary shares of 25p held in Treasury 5,118 2,313
224,991,303 (2022: 224,991,303) total ordinary shares of 25p each 56,248 56,248
No shares were issued by the Company during the year (2022: Nil).
During the year, the Company bought back 11,218,558 shares to be held in Treasury at a cost of £97,664,000 (2022: 9,253,311 shares
were bought back at a cost of £76,515,000).
Between 1 October 2023 and 5 December 2023, the Company bought back a further 5,045,317 shares into Treasury at a cost of
£41,531,000.
14. Capital Reserve
CAPITAL
RESERVE
REALISED
£'000
CAPITAL
RESERVE
INVESTMENT
HOLDING GAINS
UNREALISED
£'000
2023
TOTAL
£'000
CAPITAL
RESERVE
REALISED
£'000
CAPITAL
RESERVE
INVESTMENT
HOLDING GAINS
UNREALISED
£'000
2022
TOTAL
£'000
At 1 October 2022 56,279 558,668 614,947 87,717 768,169 855,886
Net gains/(losses) on investments 63,263 33,124 96,387 53,618 (209,501) (155,883)
Repurchase of shares into Treasury (97,664) – (97,664) (76,515) – (76,515)
Expenses charged to capital (7,845) – (7,845) (8,043) – (8,043)
Finance costs charged to capital (1,548) – (1,548) (512) – (512)
Currency translations (65) – (65) 14 – 14
At 30 September 2023 12,420 591,792 604,212 56,279 558,668 614,947
The amount of the capital reserve that is distributable is complex to determine and is not necessarily the full amount of the
reserve as disclosed within these Financial Statements of £604,212,000 as at 30 September 2023 (2022: £614,947,000) as this is
subject to fair value movements and may not be readily realisable at short notice.
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
87
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
15. Net Asset Value Per Share
2023 2022
Net assets (£'000) 1,822,729 1,830,384
Number of shares in issue (excluding shares held in Treasury) 204,519,434 215,737,992
Net asset value per share 891.2p 848.4p
As at 30 September 2023 and 2022 there were no dilutive instruments held, therefore the basic and diluted net asset value per
share are the same.
At 30 September 2023 20,471,869 shares were held in Treasury (2022: 9,253,311).
16. Transactions with the AIFM, the Portfolio Manager and
Related Parties
Details of the relationship between the Company, Frostrow and Lindsell Train are disclosed on the Company’s website
and also in the Report of the Directors on pages 36 and 37.
As at 30 September 2023, the Company had an investment in Frostrow with a book cost of £200,000 (2022: £200,000) and
a fair value of £3,725,000 (2022: £4,725,000) (including the AIFM capital contribution of £125,000 (2022: £125,000)). During the
year Frostrow earned a total of £2,609,000 (2022: £2,678,000) in respect of AIFM fees, of which £209,000 was outstanding at
30September 2023 (2022: £209,000).
The Company has an investment in The Lindsell Train Investment Trust plc, which is managed by Lindsell Train, with a book cost
of £1,000,000 (2022: £1,000,000) and a fair value of £8,760,000 as at 30 September 2023 (2022:£9,720,000). During the year Lindsell
Train earned a total of £7,828,000 (2022: £8,034,000) in respect of Portfolio Management fees of which £626,000 was outstanding
at 30September 2023 (2022: £627,000).
Further details can be found in the Corporate Information section of the Company's website.
Details of the income received from the AIFM are disclosed in note 2 on page 80 and details of the remuneration payable to the
AIFM and the Portfolio Manager are disclosed in note 3 also on page 80.
Details of the fees of all Directors can be found on pages 55 to 60 and in note 4 on page 81. Directors’ interests in the capital of the
Company can be found on page 60. There were no other material transactions during the year with the Directors of the Company.
17. Risk Management
As an investment company the Company invests in equities and other investments for the long term so as to secure its
investment objective as stated on page 1. In pursuit of its investment objective, the Company is exposed to a variety of risks that
could result in either a reduction in the Company’s net assets or a reduction in the revenue returns available for distribution.
The Company’s financial instruments comprise mainly equity investments, cash balances, borrowings, debtors and creditors that
arise directly from its operations.
The principal risks inherent in managing financial instruments are market risk, liquidity risk and credit risk.
The principal and emerging risks of the Company and the Directors’ approach to the management of those where the Directors
consider there to be a high inherent risk are set out in the Strategic Report on pages 22 to 26.
MARKET RISK
Market risk comprises three types of risk: market price risk, interest rate risk and currency risk.
Market Price Risk
As an investment company, performance is dependent on the performance of the underlying companies and securities in which
it invests. The market price of investee companies’ shares is subject to their performance, supply and demand for the shares and
investor sentiment regarding the company or the industry sector in which it operates. Consequently, market price risk is one of the
most significant risks to which the Company is exposed.
88
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
At 30 September 2023, the fair value of the Company’s assets exposed to market price risk was £1,836,660,000 (2022: £1,852,078,000
see page9). If the fair value of the Company’s investments at the Statement of Financial Position date increased or decreased
by10%, while all other variables remained constant, the capital return and net assets attributable to Shareholders for the year
ended 30September 2023 would have increased or decreased by £183,666,000 or 89.80p per share (2022: £185,208,000 or
85.85pper share).
No derivatives or hedging instruments are currently utilised to manage market price risk.
Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market interest rates.
Interest rate movement may affect:
• the interest payable on the Company’s variable rate borrowings
• the level of income receivable from variable interest securities and cash deposits
• the fair value of investments of fixed rate securities
The Company’s main exposure to interest rate risk during the year ended 30 September 2023 was through its three year £60,000,000
(2022: £50,000,000) secured multi-currency committed revolving credit facility (with an additional £40 million facility available if
required (2022: £50 million)) with Scotiabank Europe PLC.
Borrowings at the year end amounted to £36,700,000 (2022: £36,700,000) at an interest rate of 6.486% (5.186% SONIA plus 1.30% margin)
(2022: 3.257% (2.188% SONIA plus 1.069% margin and fees)).
If the above level of borrowing was maintained for a year, a 10% increase or decrease in SONIA would decrease or increase the
revenue return by £48,000, (2022: £20,000), decrease or increase the capital return in that year by £142,000 (2022: £60,000) and
decrease or increase the net assets by £190,000 (2022: £80,000).
The weighted average interest rate, during the year, on borrowings under the above mentioned revolving credit facility was 5.15%
(2022: 1.74%). At 30 September 2023, the Company’s financial assets and liabilities exposed to interest rate risk were as follows:
2023 2022
WITHIN
ONE YEAR
£'000
MORE THAN
ONE YEAR
£'000
WITHIN
ONE YEAR
£'000
MORE THAN
ONE YEAR
£'000
Exposure to floating rates:
Assets
Cash and cash equivalents 17,426 – 7,835 –
Liabilities
Creditors: amount falling due within one year – borrowings under the loan
facility – – (36,700) –
Creditors: amount falling due after more than one year
– borrowings under the loan facility – (36,700) – –
Exposure to fixed rates:
Assets
Investments at fair value through profit or loss
#
392 – 367 –
Liabilities – – – –
#
Celtic 6% cumulative convertible preference shares and Frostrow Capital LLP AIFM Capital Contribution.
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
89
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
Currency Risk
The Financial Statements are presented in sterling, which is the functional and presentational currency of the Company.
At30September 2023, the Company’s investments, with the exception of five, were priced in sterling. The five exceptions were:
Heineken, listed in the Netherlands, Remy Cointreau listed in France, Manchester United, Cazoo and Mondelez, all of which are
listed in the United States. The aggregate of these represents 17.9% of the portfolio.
The AIFM and the Portfolio Manager monitor the Company’s exposure to foreign currencies on a continuous basis and regularly
report to the Board. The Company does not hedge against foreign currency movements, but the Portfolio Manager takes account
of the risk when making investment decisions.
Income denominated in foreign currencies is converted into sterling on receipt. The Company does not use financial instruments to
mitigate the currency exposure in the period between its receipt and the time that the income is included in the Financial Statements.
Foreign Currency Exposure
At 30 September 2023 the Company held £171,369,000 (2022: £181,124,000) of investments denominated in U.S. dollars and
£156,737,000 (2022:£203,900,000) in euros.
Currency Sensitivity
The following table details the sensitivity of the Company’s return after taxation for the year to a 10% increase or decrease in the
value of sterling compared with the U.S. dollar and euro (2022: 10% increase and decrease).
The analysis is based on the Company’s foreign currency financial instruments held at each Statement of Financial Position date.
In addition to the foreign currency exposure on investments held at 30 September 2023, the Company also held £1,125,000 (2022:
£4,039,000) in debtors denominated in U.S. dollars and £2,117,000 (2022: £1,766,000) denominated in Euros.
This level of sensitivity is considered to be reasonably possible based on observation of current market conditions and
historicaltrends.
If sterling had weakened against the U.S. dollar and euro, as stated above, assuming all other variables remain constant, this
would have had the following effect:
2023
£’000
2022
£’000
Impact on revenue return 259 299
Impact on capital return 36,568 43,109
Total return after tax/increase in Shareholders’ funds 36,827 43,408
If sterling had strengthened against the foreign currencies as stated above, assuming all other variables remain constant, this
would have had the following effect:
2023
£’000
2022
£’000
Impact on revenue return (212) (245)
Impact on capital return (29,918) (35,288)
Total return after tax/decrease in Shareholders’ funds (30,130) (35,533)
Credit Risk
Credit risk is the risk that the counterparty to a transaction fails to discharge its obligations under that transaction, which could
result in the Company suffering a loss. Credit risk is managed as follows:
– Investment transactions are carried out only with brokers which are considered to have a high credit rating.
– Transactions are undertaken on a delivery versus payment basis whereby the Company’s custodian bank ensures that the
counterparty to any transactions entered into by the Company has delivered its obligation before any transfer of cash or
securities away from the Company is completed.
90
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
– Any failing trades in the market are closely monitored by both the AIFM and the Portfolio Manager.
– Cash is only held at banks that have been identified by the Board as reputable and of high credit quality.
– Bank of New York Mellon has a credit rating of Aa2 (Moody's) and AA- (Fitch).
At 30 September 2023, the exposure to credit risk was £21,814,000 (2022: £12,075,000), comprising:
2023
£’000
2022
£’000
Fixed assets:
Non-equity investments (preference shares) 267 242
Current assets:
Other receivables (amounts due from brokers) 4,121 3,998
Cash and cash equivalents 17,426 7,835
Total exposure to credit risk 21,814 12,075
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
Liquidity risk is not considered significant as the majority of the Company’s assets are investments in quoted equities.
Asat30September 2023 it is estimated that 97.5% of the investment portfolio could be realised within 30 days with 60.4%
insevendays, based on current trading volumes.
Liquidity risk exposure
FINANCIAL LIABILITIES COMPRISE:
30 SEPTEMBER
2023
£'000
30 SEPTEMBER
2022
£'000
Due within one month:
Balances due to brokers in respect of portfolio trading - purchases 1,669 890
Amounts due to brokers in respect of shares repurchased by the Company 2,134 3,262
Accruals 1,063 1,075
Bank loan – 36,700
Due after three months and after one year:
Bank loan 36,700 –
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value or at a
reasonable approximation of fair value.
VALUATION OF FINANCIAL INSTRUMENTS
The Company measures fair values using the following fair value 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 asset, noting that most of the Company's investments are quoted assets, which
have been categorised as level 1 investments:
• Level 1 – quoted prices in active markets.
• Level 2 – prices of recent transactions for identical instruments.
• Level 3 – valuation techniques using observable and unobservable market data.
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
91
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
The financial assets and liabilities measured at fair value in the Statement of Financial Position are grouped into the fair value
hierarchy at the reporting date as follows:
AS AT 30 SEPTEMBER 2023
LEVEL 1
£'000
LEVEL 2
£'000
LEVEL 3
£'000
TOTAL
£'000
Equity investments 1,832,668 – – 1,832,668
Limited liability partnership interest (Frostrow) – – 3,600 3,600
Frostrow - AIFM capital contribution – – 125 125
Preference share investments 267 – – 267
1,832,935 – 3,725 1,836,660
AS AT 30 SEPTEMBER 2022
LEVEL 1
£'000
LEVEL 2
£'000
LEVEL 3
£'000
TOTAL
£'000
Equity investments
1,847,111 – – 1,847,111
Limited liability partnership interest (Frostrow)
– – 4,600 4,600
Frostrow - AIFM capital contribution
– – 125 125
Preference share investments
242 – – 242
1,847,353 – 4,725 1,852,078
The unquoted investment in Frostrow has been re-valued by the Directors during the year, using two unobservable market data
sources, being Frostrow’s earnings and an agreed appropriate comparator multiple. This was the same methodology adopted to
value Frostrow as at 30September 2022.
There have been no transfers during the year between Levels 1 and 2. A reconciliation of fair value measurements in Level 3 is set
out below.
Level 3 Reconciliation of financial assets at fair value through profit or loss at 30 September
2023
£’000
2022
£’000
Opening fair value 4,725 5,200
Frostrow - AIFM capital contribution (repayment) – (775)
Total (losses)/gains included in gains/(losses) on investments in the Income Statement (1,000) 300
Closing fair value 3,725 4,725
If the earnings used in the valuation were to increase or decrease by 10% while all the other variables remained constant, the
return and net costs attributable to Shareholders for the year ended 30 September 2023 would have increased/decreased by
£360,000 (2022: £460,000, applying the same assumptions).
CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES
The structure of the Company’s capital is described in note 13 on page 86 and details of the Company’s reserves are shown in the
Statement of Changes in Equity on page 74.
The Company’s capital management objectives are:
• to ensure that it is able to continue as a going concern; and
• to achieve capital and income growth and to provide Shareholders with a total return in excess of that of the FTSE All-Share
Index through an appropriate balance of equity and debt.
92
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
The Board, with the assistance of the AIFM and the Portfolio Manager, regularly monitors and reviews the broad structure of the
Company’s capital. These reviews include:
• the level of gearing, set at a limit in normal market conditions, is not to exceed 25% of the Company's net assets, which takes
account of the Company’s position and the views of the Board, the AIFM and the Portfolio Manager on the market;
• the extent to which revenue reserves should be retained or utilised; and
• ensuring the Company’s ability to continue as a going concern.
The Company’s objectives, policies and procedures for managing capital are unchanged from last year.
There were no breaches by the Company during the year of the financial covenants put in place by Scotiabank Europe plc in
respect of the committed revolving credit facility provided to the Company.
Apart from the covenant to ensure that the net asset value of the Company exceeds £750m (2022: £300m), the covenants are
unchanged since last year and the Company has complied with them at all times.
18. Net Cash Inflow from Operating Activities
2023
£’000
2022
£’000
Total return/(loss) before finance charges and taxation 132,109 (116,867)
(Deduct)/add: capital (gain)/loss before finance charges and taxation (88,477) 163,912
Net revenue before finance charges and taxation 43,632 47,045
Decrease in accrued income and prepayments 2,235 81
Decrease in creditors (18) (68)
Taxation – overseas withholding tax paid (1,109) (917)
AIFM, portfolio management fees and other expenses charged to capital (7,845) (8,043)
Net cash inflow from operating activities 36,895 38,098
19. Substantial Interests
At 30 September 2023 the Company held interests in 3% or more of any class of capital in the following entities:
COMPANY OR LIMITED LIABILITY PARTNERSHIP
NUMBER OF
SHARES
HELD
2023
FAIR VALUE
£'000
% OF ISSUED
SHARE
CAPITAL
OR LIMITED
LIABILITY
PARTNERSHIP
INTEREST
A. G. Barr 4,420,000 21,702 4.0
Frostrow Capital LLP (unquoted)
†
– 3,725 9.8
Manchester United 2,305,000 37,334 4.4
The Lindsell Train Investment Trust plc* 10,000 8,760 5.0
†
Includes Frostrow Capital LLP's AIFM Capital Contribution, fair value £125,000.
* Also managed by Lindsell Train Limited which receives a portfolio management fee based on the Company’s market
capitalisation. The details of the fee arrangements with the Company can be found on page 37.
20. Post Balance Sheet Events
During the period from 1 October 2023 to 5 December 2023, a further 5,045,317 shares were bought back and held in Treasury at a
cost of £41,531,000.
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCESTRATEGIC REPORT
93
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
ACTIVE SHARE (APM)
Active Share is expressed as a percentage and shows the extent to which a fund’s holdings and their weightings differ from
those of the fund’s benchmark index. A fund that closely tracks its index might have a low Active Share of less than 20% and
be considered passive, while a fund with an Active Share of 60% or higher is generally considered to be actively managed. The
Company has a distinctive strategy: a concentrated portfolio of holdings invested across a small number of sectors and themes.
Active Share helps quantify the extent to which the portfolio differs from the benchmark index.
The Active Share performance is sourced from Morningstar.
AIC
Association of Investment Companies. The AIC represents a broad range of investment companies, investment trusts, VCTs and
other closed-ended funds.
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (AIFMD)
Agreed by the European Parliament and the Council of the European Union and transposed into UK legislation, the AIFMD classifies
certain investment vehicles, including investment companies, as Alternative Investment Funds (AIFs) and requires them to appoint
an Alternative Investment Fund Manager (AIFM) and depositary to manage and oversee the operations of the investment vehicle.
The Board of the Company retains responsibility for strategy, operations and compliance and the Directors retain a fiduciary duty
to Shareholders.
ALTERNATIVE PERFORMANCE MEASURE ("APM")
An Alternative Performance Measure (APM) is a numerical measure of the Company’s current, historical or future financial
performance, financial position or cash flows other than a financial measure defined or specified in the applicable financial
framework. In selecting these Alternative Performance Measures, the Directors considered the key objectives and expectations
of typical investors and believe that each APM gives the reader useful and relevant information in judging the Company's
performance and in comparing other investment companies.
BENCHMARK RETURN
Total return on the benchmark, assuming that all dividends received were re-invested, without transaction costs, into the shares of
the underlying companies at the time the shares were quoted ex-dividend.
CHIEF OPERATING DECISION MAKER
The Chief Operating Decision Maker of the Company is considered to be the Board of Directors. It is a Generally Accepted
Accounting Principal (GAAP) requirement to disclose who the chief operating decision maker is.
DISCOUNT OR PREMIUM (APM)
A description of the difference between the share price and the net asset value per share. The size of the discount or premium
is calculated by subtracting the share price from the net asset value per share and is expressed as a percentage (%) of the
net asset value per share. If the share price is higher than the net asset value per share the result is a premium. If the share
price is lower than the net asset value per share, the shares are trading at a discount. The Board regularly reviews the level of
the discount/premium of the Company’s share price to the net asset value per share and considers ways in which share price
performance may be enhanced, including the effectiveness of share buy-backs, where appropriate.
DISCOUNT OR PREMIUM (APM) PAGE
30 SEPTEMBER
2023
30 SEPTEMBER
2022
Share price (p) 2 852.0 800.0
Net asset value per share (p) 2 891.2 848.4
Discount 2 and 5 4.4% 5.7%
FURTHER INFORMATION
Glossary of Terms and
Alternative Performance Measures
94
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
FURTHER INFORMATION
GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES - CONTINUED
FTSE DISCLAIMER
“FTSE©” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence.
All rights in the FTSE indices and/or FTSE ratings vest in FTSE and or its licensors. Neither FTSE nor its licensors accept any liability for
any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distributions of FTSE Data is permitted
without FTSE’s express written consent.
GEARING (APM)
Gearing represents prior charges, adjusted for net current assets, expressed as a percentage of net assets (AIC methodology).
The Directors believe that it is appropriate to show net gearing in relation to Shareholders’ funds as it represents the amount of
debt funding on the investment portfolio. The gearing policy is that borrowing will not exceed 25% of the Company's net assets.
Prior charges includes all loans and bank overdrafts for investment purposes.
PAGE
30 SEPTEMBER
2023
£’000
30 SEPTEMBER
2022
£’000
Bank loan (prior charges) 75 (36,700) (36,700)
Net current assets 22,769 15,006
Bank loan adjusted for net current assets (13,931) (21,694)
Net assets 75 1,822,729 1,830,384
Gearing 3 0.8% 1.2%
THE INSTITUTIONAL INVESTORS GROUP ON CLIMATE CHANGE (“IIGCC”)
IIGCC membership enables organisations to ensure that they are part of the solution to climate change.
THE INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE (“IPCC”)
The IPCC is the United Nations body for assessing the science related to climate change.
NET ZERO ASSET MANAGERS INITIATIVE (“NZAM”)
The Net Zero Asset Managers initiative is an international group of asset managers committed to supporting the goal of net zero
greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius; and to supporting
investing aligned with net zero emissions by 2050 or sooner.
NET ASSET VALUE (“NAV”)
The value of the Company’s assets, principally investments made in other companies and cash being held, less any liabilities. The
NAV is also described as “Shareholders’ funds”. The NAV is often expressed in pence per share after being divided by the number
of shares that have been issued. The NAV per share is unlikely to be the same as the share price which is the price at which the
Company’s shares can be bought or sold by an investor. The share price is determined by the relationship between the demand
and supply of the shares.
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCESTRATEGIC REPORT
95
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
NET ASSET VALUE TOTAL RETURN PER SHARE (APM)
The theoretical total return on an investment over a specified period assuming dividends paid to Shareholders were reinvested at
net asset value per share at the time the shares were quoted ex-dividend. This is a way of measuring investment management
performance of investment companies which is not affected by movements in discounts or premiums. The Directors regard the
Company’s net asset value total return per share as being the overall measure of value delivered to Shareholders over the
long term. The Board considers the principal comparator to be its benchmark, the FTSE All-Share Index.
NAV TOTAL RETURN PAGE
30 SEPTEMBER
2023
30 SEPTEMBER
2022
Opening NAV per share (p) 2 848.4 917.7
Increase/(decrease) in NAV per share (p) 42.8 (69.3)
Closing NAV per share (p) 2 891.2 848.4
Increase/(decrease) in NAV per share 5.0% (7.6)%
Impact of dividends re-invested* +2.2% +1.8%
NAV per share total return 2, 3 and 4 7.2% (5.8)%
* The NAV total return is calculated on the assumption that the total dividends of 18.3p (2022: 17.4p) paid by the Company during
the year were reinvested into assets of the Company at the NAV per share at the ex-dividend date. The Treasury shares held by
the Company have been excluded from this calculation.
The source of this data is Morningstar who have calculated the return on an industry comparative basis.
ONGOING CHARGES FIGURE (APM)
Ongoing charges are calculated by taking the Company’s annualised operating expenses expressed as a proportion of the
average daily net asset value of the Company over the year. The costs of buying and selling investments are excluded, as are
interest costs, taxation, cost of buying back or issuing ordinary shares and other non-recurring costs. Ongoing charges represent
the costs that Shareholders can reasonably expect to pay from one year to the next, under normal circumstances.
PAGE
30 SEPTEMBER
2023
£'000
30 SEPTEMBER
2022
£'000
AIFM and portfolio management fees 80 10,437 10,712
Operating expenses (excluding finance costs) 81 1,167 1,078
Total expenses 11,604 11,790
Average net assets during the year 1,907,121 1,973,934
Ongoing charges figure (excluding finance costs) 3 0.61% 0.60%
OTHER COST RATIOS
The total ongoing costs as described in the Company’s latest Key Information Document (“KID”) is 0.72%. This represents the
impact of the costs that are incurred each year for the running of the Company including the impact of the finance costs (0.11%).
THE PARIS AGREEMENT
The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global
temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the
temperature increase even further to 1.5 degrees Celsius.
96
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
THE PARIS ALIGNED INVESTMENT INITIATIVE (“PAII”)
The PAII was launched by the Institutional Investors Group on Climate Change (“IIGCC”) in Europe in May 2019, to explore how
investors can align their portfolios with the goals of the Paris Agreement.
PEER GROUP
Finsbury Growth & Income Trust PLC is part of the AIC’s UK Equity Income sector. The trusts in this universe are defined as trusts
whose investment objective is to achieve a total return for Shareholders through both capital and dividendgrowth.
REVERSE STRESS TEST
Reverse stress tests are stress tests that identify scenarios and circumstances which would make a business unworkable and
identify potential business vulnerabilities.
SASB
The Sustainability Accounting Standards Board (“SASB”) aims to establish industry-specific disclosure standards across ESG
topics that facilitate communication between companies and investors about financially material, information that is useful for
decision-making.
SHARE PRICE TOTAL RETURN (APM)
The change in capital value of a company’s shares over a given period, plus dividends paid to Shareholders, expressed as a
percentage of the opening value. The assumption is that dividends paid to Shareholders are re-invested in the shares at the
time the shares are quoted ex-dividend. The Directors regard the Company’s share price total return to be a key indicator of
performance. This reflects share price growth of the Company which the Board recognises is important to investors.
SHARE PRICE TOTAL RETURN PAGE
30 SEPTEMBER
2023
30 SEPTEMBER
2022
Opening share price share (p) 2 800.0 876.0
Increase/(decrease) in share price (p) 52.0 (76.0)
Closing share price (p) 2 852.0 800.0
Increase/(decrease) in share price 2 6.5%
(8.7)%
Impact of dividends re-invested* +1.0% +3.1%
Share price total return 2 and 5 7.5%
(5.6)%
* The share price total return is calculated on the assumption that the total dividends of 18.3p (2022: 17.4p) paid during the year
were reinvested into shares of the Company at the share price at the ex-dividend date.
The source is Morningstar who have calculated the return on an industry comparative basis.
STERLING OVERNIGHT INDEX AVERAGE ("SONIA")
SONIA is an interest rate published by the Bank of England. SONIA can be seen as the average interest rate at which a selection of
financial institutions lend to one another in British pound sterling (GBP) with a maturity of 1 day (overnight).
STRESS TESTING
Stress testing Is a forward-looking analysis technique that considers the impact of a variety of extreme but plausible economic
scenarios on the financial position of the Company.
FURTHER INFORMATION
GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCESTRATEGIC REPORT
97
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
TCFD
The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (”TCFD”) to improve and increase
reporting of climate-related financial information.
TREASURY SHARES
Shares previously issued by a company that have been bought back from Shareholders to be held by the company for potential
sale or cancellation at a later date. Such shares are not capable of being voted and carry no rights to dividends.
98
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023
Share Prices
The Company’s ordinary shares are listed on the London Stock
Exchange under ‘Investment Companies’.
Daily Net Asset Value per share
The daily net asset value per share of the Company’s sharescan
be obtained on the Company’s website www.finsburygt.com
and is published daily via the London Stock Exchange.
Registered Office
50 Lothian Road
Festival Square
Edinburgh EH3 9WJ
Incorporated in Scotland with company no. SC013958 and
registered as an investment company under Section 833 of the
Companies Act 2006.
AIFM, Company Secretary and Administrator
Frostrow Capital LLP
25 Southampton Buildings
London WC2A 1AL
Telephone: 020 3008 4910
Email: info@frostrow.com
Website: www.frostrow.com
Authorised and regulated by the Financial Conduct Authority.
Portfolio Manager
Lindsell Train Limited
3rd Floor
66 Buckingham Gate
London SW1E 6AU
Telephone: 020 7808 1225
Website: www.lindselltrain.com
Authorised and regulated by the Financial Conduct Authority.
Independent Auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London SE1 2RT
Depositary
The Bank of New York Mellon (International) Limited
160 Queen Victoria Street
London EC4V 4LA
Global Custodian
Bank of New York Mellon
160 Queen Victoria Street
London EC4V 4LA
ISA STATUS
The Company’s shares are eligible for Individual Savings Accounts
("ISAs") and for Junior ISAs.
Registrars
If you have any queries in relation to your shareholding please
contact:
Link Group
Central Square
29 Wellington Street
Leeds LS1 4DL
Email: shareholderenquiries@linkgroup.co.uk
Telephone +44 (0)371 664 0300
Website: www.linkgroup.eu
Calls are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 09:00 and 17:30,
Monday to Friday excluding public holidays in England and Wales.
Share Portal
If you hold your shares directly you can register online to view your
holdings using the Share Portal, a service offered by Link Group
www.signalshares.com.
The Share Portal is an online service enabling you to quickly and
easily access and maintain your shareholding online – reducing
the need for paperwork and providing 24 hour access to your
shareholding details.
Details of how Shareholders who hold their shares on retail platforms
can vote can be found on pages
11 to 13 of the Notice of Meeting.
Corporate Broker
Winterflood Securities Limited
The Atrium Building
Cannon Bridge
25 Dowgate Hill
London EC4R 2GA
Identification Codes
Shares: SEDOL: 0781606
ISIN: GB0007816068
BLOOMBERG: FGT LN
EPIC: FGT
Legal Entity Identifier (LEI)
213800NN4ZKX2LGIGQ40
Global Intermediary Identification Number (GIIN)
QH4BH0.99999.SL.826
Disability Act
Copies of this Annual Report and other documents issued by the
Company are available from the Company Secretary. If needed,
copies can be made available in a variety of formats, including
braille, audio tape or larger type as appropriate. You can contact
the Registrar to the Company, Link Asset Services, which has installed
telephones to allow speech and hearing impaired people who have
their own telephone to contact them directly, without the need for
an intermediate operator. For this service please call 0800731 1888.
Specially trained operators are available during normal business
hours to answer queries via this service. Alternatively, if you prefer
to go through a ‘typetalk’ operator (provided by The Royal National
Institute for Deaf People) you should dial 18001 from your textphone
followed by the number you wish to dial.
FURTHER INFORMATION
Company Information
Perivan 256419
Mobius Investment Trust Plc
25 Southampton Buildings, London WC2A 1AL
www.mobiusinvestmenttrust.com
This report is printed on Revive 100% White Silk a totally recycled paper
produced using 100% recycled waste at a mill that has been awarded the
ISO 14001 certificate for environmental management.
The pulp is bleached using a totally chlorine free (TCF) process.
This report has been produced using vegetable based inks.
Avoid investment fraud
1 Reject cold calls
If you’ve received unsolicited contact about
an investment opportunity, chances are
it’s a high risk investment or a scam. You
should treat the call with extreme caution.
The safest thing to do is to hang up.
2 Check the FCA Warning List
The FCA Warning List is a list of firms and
individuals we know are operating without
our authorisation.
3 Get impartial advice
Think about getting impartial financial
advice before you hand over any money.
Seek advice from someone unconnected to
the firm that has approached you.
Report a Scam
If you suspect that you have been
approached by fraudsters please tell the
FCA using the reporting form at
www.fca.org.uk/consumers/report-
scam-unauthorised-firm. You can also call
the FCA Consumer Helpline on
0800 111 6768
If you have lost money to investment fraud,
you should report it to Action Fraud on
0300 123 2040 or online at
www.actionfraud.police.uk
Find out more at
www.fca.org.uk/scamsmart
Investment scams are
designed to look like
genuine investments
Spot the warning signs
Have you been:
• contacted out of the blue
• promised tempting returns
and told the investment is safe
• called repeatedly, or
• told the offer is only available
for a limited time?
If so, you might have been
contacted by fraudsters.
Remember: if it sounds too
good to be true, it probably is!
Be ScamSmart
Warning to Shareholders:
Many companies have become aware that their Shareholders have received
unsolicited phone calls or correspondence concerning investment matters.
These are typically from overseas based ‘brokers’ who target UK Shareholders
offering to sell them what often turn out to be worthless or high-risk shares in
US or UK investments. They can be very persistent and extremely persuasive.
Shareholders are therefore advised to be very wary of any unsolicited advice,
offers to buy shares or offers of free company reports.
Please note that it is very unlikely that either the Company or the Company’s
Registrar, Link Asset Services, would make unsolicited telephone calls to
Shareholders. Such calls would relate only to official documentation already
circulated to Shareholders and never in respect of investment ‘advice’.
Shareholders who suspect they may have been approached by fraudsters
should advise the Financial Conduct Authority (“FCA”) using the share fraud
report form at www.fca.org.uk/scams or call the FCA Customer Helpline on
0800 111 6768. You may also wish to call either the Company Secretary or the
Registrar whose contact details can be found on page 98.
This report is printed on Revive 100% White Silk a totally recycled paper produced
using 100% recycled waste at a mill that has been awarded the ISO 14001
certificate for environmental management.
The pulp is bleached using a totally chlorine free (“TCF”) process. This report has
been produced using vegetable based inks.
.
A member of the Association of Investment Companies