.
Annual Report for the
year ended 30 September 2022
FINSBURY GROWTH & INCOME TRUST PLC Annual Report for the year ended 30 September 2022
PERIVAN 263840
For more information about Finsbury Growth
& Income Trust PLC visit the website
WWW.FINSBURYGT.COM
Follow us on Twitter @FINSBURYGT
Financial Calendar
Financial Year End
30 September
Final Results Announced
December
Annual General Meeting
Tuesday, 17 January 2023
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
6 Chairman’s Statement
8 Investment Portfolio
10 Portfolio Manager’s Review
12 Business Review
GOVERNANCE
32 Board of Directors
34 Report of the Directors
39 Corporate Governance
45 Directors’ Remuneration Report
49 Directors’ Remuneration Policy
51 Audit Committee Report
55 Statement of Directors’ Responsibilities
INDEPENDENT AUDITORS’ REPORT
56 Independent Auditors’ Report
FINANCIAL STATEMENTS
63 Income Statement
64 Statement of Changes in Equity
65 Statement of Financial Position
66 Statement of Cash Flows
67 Notes to the Financial Statements
FURTHER INFORMATION
83 Glossary of Terms and Alternative
Performance Measures
87 Company Information
1
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 2022 were
£1,830.4million (2021: £2,064.7 million) and the market
capitalisation was £1,725.9 million (2021: £1,970.9 million).
DIVIDENDS
A first interim dividend of 8.3p per share was paid on 13 May
2022 to shareholders registered at close of business on
1 April 2022. The associated ex-dividend date was 31 March
2022.
A second interim dividend of 9.8p per share was paid on
4November 2022 to shareholders registered at close of
business on 30 September 2022. The associated ex-dividend
date was 29 September 2022.
The total dividend declared for the year was therefore
18.1ppershare (2021: 17.1p per share), an increase of 5.8%.
Finsbury Growth & Income Trust PLC is a listed investment company, its shares
are quoted on the premium segment of the Official List and traded on the
main market of the London Stock Exchange. The Company is a member of the
Association of Investment Companies (“AIC”).
18.1p
Total dividends per share for the year
†
2021: 17.1p (change:+5.8%)
FIVE YEAR PERFORMANCE SUMMARY
30 SEP
2018
30 SEP
2019
30 SEP
2020
30 SEP
2021
30 SEP
2022
Share price 818.0p 942.0p 840.0p 876.0p 800.0p
Share price total return
* ^
+13.2% +17.4% (9.0)% +6.3% (5.6)%
Net asset value per share 812.8p 935.6p 846.2p 917.7p 848.4p
Net asset value per share total return
* ^
+13.1% +17.4% (7.7)% +10.6% (5.8)%
FTSE All-Share Index total return
** #
+5.9% +2.7% (16.6)% +27.9% (4.0)%
Total (loss)/return per share
†
93.6p 143.8p (67.1)p 88.0p (53.4)p
Dividends per share
†
15.3p 16.6p 16.6p 17.1p 18.1p
* Source: Morningstar
** Source: FTSE International Limited (“FTSE”) © FTSE, 2022
# See glossary of terms and alternative performance measures on pages 83 to 86)
^ Alternative Performance Measure (“APM”) (see glossary on pages 83 to 86)
† UK GAAP Measure
STRATEGIC REPORT
Company
Performance
KEY FACTS
800.0p
Share price
2021: 876.0p (change: -8.7%)
5.7%
Discount of share price to net asset value per share
^
2021: 4.5%
(53.4)p
(Loss)/return per share
†
2021: +88.0p
84.8%
Active Share*
^
2021: 86.0%
848.4p
Net asset value per share
2021: 917.7p (change: -7.6%)
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
2
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
0.60%
Ongoing charges
^
2021: 0.62%
(5.8)%
Net asset value per share total return
*, ^
2021: +10.6%
FURTHER
INFORMATION
3
1.2%
Gearing
^
2021: 0.3%
(5.6)%
Share price total return
*, ^
2021: +6.3%
215,737,992
(excluding 9,253,311 shares held in treasury)
Number of shares in issue
2021: 224,991,303 (treasury shares 2021: Nil) (change: -4.1%)
£1.830bn
Shareholders’ funds
†
2021: £2.065bn (change: -11.4%)
* Source – Morningstar
^ Alternative Performance Measure (see glossary on pages 83 to 86)
† UK GAAP Measure
TOTAL SHARE PRICE RETURN PERFORMANCE SINCE THE DATE OF APPOINTMENT OF LINDSELL TRAIN
2
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 2022 has been
165.7%, equivalent to a compound annual return of 10.3%. This compares with a total return of 79.5%* from the Company’s benchmark,
equivalent to a compound annual return of 6.0%*.
* Source: Morningstar, FTSE International Limited (“FTSE”) © FTSE2022
SHARE PRICE
+632.95%
FTSE ALLSHARE
INDEX
+168.46%
Source: Morningstar
Rebased to 100 as at 1 January 2001
Jan
01
Sep
02
Sep
03
Sep
04
Sep
05
Sep
06
Sep
07
Sep
08
Sep
09
Sep
10
Sep
11
Sep
12
Sep
13
Sep
14
Sep
15
Sep
16
Sep
17
Sep
18
Sep
19
Sep
20
Sep
21
Sep
22
0
100
200
300
400
500
600
700
800
900
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
with the exception of Dividend per
Share.
Alternative Performance
Measures ("APM")
The Board believes that each
of the APMs, which are typically
used within the investment trust
sector, provides additional useful
information to the shareholders
in order to assess the Company’s
performance between reporting
periods and against its peer group.
The measures used for the year
under review have remained
consistent with the prior year.
Further information on each of the
APMs can be found in the glossary
beginning on page 83.
^
Alternative Performance Measure
(seeglossary on pages 83 to 86)
† UK GAAP Measure
* Source: Morningstar
Key Performance
Indicators
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 -5.8% (2021: +10.6%).
(5.8)%
(53.4)p
4
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
STRATEGIC REPORT
-10
-5
0
5
10
15
20
2018
2019
2020
2021
2022
%
-90
-60
-30
0
30
60
90
120
150
2018
2019
2020
2021
2022
pence per
share
(LOSS)/RETURN
†
The total loss per share for the year was
53.4pence per share (2021: return of
88.0pence per share).
Over five years, the Company earned a
total of 204.9 pence per share.
See the chart below for the five year
history.

†
The total dividend declared for
the year was 18.1p per share
(2021: 17.1p per share), an increase of
5.8%.
18.1p
0
2
4
6
8
10
12
14
16
18
20
2
018
2
019
2
020
2
021
2
022
pence per
share
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 -4.0% (2021: +27.9%)
over the year. This compares with the
Company’s share price total return of
-5.6% (2021: +6.3%).
Over five years the share price total
return was 21.5% compared with the
Company's benchmark which delivered
a return of 11.3%.
The Board also monitors the Company’s
net asset value per share return against
its AIC peer group^. As at 30 September
2022 the Company's ranking against its
peer group of UK growth and income
sector investment trusts was:
Rank out of 23
Period 2022 2021
1 yr 6 21
3 yr 17 9
5 yr 4 2
10 yr 1 3
(1.6)%
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.
(5.7)%(53.4)p
5
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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
-5.6% (2021: +6.3%).
Over five years, the share price total
return was +21.5%.
(5.6)%
-10
-5
0
5
10
15
20
2018
2019
20
20
2021
2022
%
-6
-5
-4
-3
-2
-1
0
1
2018
2019
2020
2021
2022
%
^ Alternative Performance Measure (see glossary on pages 83 to 86)
* Source: Morningstar
No shares were issued by the Company
during the year (2021: 7,240,000 new
shares were issued by the Company
at a premium to the higher of the
prevailing cum or ex income net asset
value per share at the time of issue).
At 30 September 2022 the Company’s
share price stood at a 5.7% discount to
the Company’s net asset value per share
(2021: 4.5% discount).
During the year, the Company bought back
9,253,311 shares into treasury (2021: Nil) at an
average price of 826.9p and an average
discount of 5.5%.
Since the year end the Company has
purchased a further 1,668,897 shares to be
held in treasury.
PERFORMANCE
I am disappointed to report that the total return of the
Company’s net asset value per share for the year was -5.8%
(2021: +10.6%). Its benchmark (the FTSE All-Share Index) over the
period was -4.0% (2021: +27.9%) and the share price total return
was -5.6% (2021: +6.3%).
The year under review has seen significant price volatility and
shifts in investors’ risk appetites as companies and markets were
buffeted by a relentless series of economic and geopolitical
shocks, including rising interest rates and inflation, domestic
political turmoil, and the many devastating effects of the war in
Ukraine. This has led to poor absolute returns from most major
asset classes, a strengthening dollar and a sell-off in more
speculative equity sectors.
Looking to the Company’s own performance, the year saw
marked differences between the first and second halves of the
year, at least on a relative basis. In the six months to 31 March
2022, the Company underperformed its benchmark by some
6.9% (NAV, on a total return basis) and by 7.7% in share price
terms; the difference between the two measures indicative
of a widening discount over that period of the Company’s
shares relative to its NAV. Conversely, in the second half of the
year the Company’s net asset value total return exceeded the
benchmark by 4.6% and the share price by 5.6%.
The Portfolio Manager’s concentrated approach results in a
very different portfolio when compared with the constituents
of the Company’s benchmark and demonstrates a high level
of active management. The extent to which a portfolio differs
from the benchmark can be quantified and expressed as a
percentage (“Active Share”).
At 30 September 2022, the Company's Active Share versus
the FTSE All-Share Index was 84.8% (2021: 86.0%). Such an
uncorrelated portfolio will inevitably perform very differently
from its benchmark (positively or negatively) over different
periods of time. We continue to believe that over time our
investment approach, selecting companies with durable
business models that generate consistently higher returns, will
ultimately be reflected in the share prices of the companies we
own and hence in the performance of the Company. This view
is supported by the Company’s long-term performance record.
The Portfolio Manager’s report, beginning on page 10, describes
the Company’s investment philosophy, portfolio composition
and performance in more detail.
STRATEGIC REPORT
Chairman’s
Statement
“Your Board continues to fully
support the Portfolio Manager’s
disciplined strategy of investing
in high quality companies
that own both durable and
cash generative brands. It has
delivered attractive returns over
the longer-term and we believe
firmly that this will continue
to deliver strong investment
returns to shareholders in the
future.”
SIMON HAYES
CHAIRMAN
6
^
Alternative Performance Measure (see glossary on pages 83 to 86)
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
7
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, the Board believes that buy-backs enhance the net
asset value per share for remaining shareholders, provide
some additional liquidity and help to mitigate 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 2022 the discount was 5.7% compared
witha closing discount at the last year end of 4.5%. During
the year under review the Company bought back a total
of 9,253,311 shares into treasury at a cost of approximately
£76million and at an average discount of 5.5%. Over the
course ofthe year the Company’s discount averaged 5.2%.
As at the close of the UK market on 5December 2022, the
discount was 4.4%. Since the year end, a further 1,668,897
shares were bought back into treasury at a cost of £14.1 million.
As at 5 December 2022, the Company had 214,069,095shares
in issue (excluding 10,922,208 shares held in treasury).
RETURN AND DIVIDEND
The Income Statement shows a total loss of 53.4p per share
(2021: gain of 88.0p) consisting of a revenue return per share of
20.6p (2021: gain of 18.1p) and a capital loss per share of 74.0p
(2021: gain of 69.9p).
Your Board has declared two interim dividends for the year
totalling 18.1p per share (2021: 17.1p), an increase of 5.8%. 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.
LOAN FACILITY
As at 30 September 2022 a total of £36.7 million was drawn
down under our £50 million facility (2021: £36.7 million).
This facility expired on 4 October 2022 and was renewed on
that date for a three year term with an increased limit of
£60million, and the option of an additional £40 million. Further
details can be found within the Report of the Directors on
page34 and note 12 to the financial statements.
OUTLOOK
Your Board continues to fully support the Portfolio Manager’s
disciplined strategy of investing in high quality companies that
own both durable and cash generative brands. It has delivered
attractive returns over the longer-term and we believe firmly
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 during the year.
Since December 2021, Nick Train and his family have acquired
over 800,000 shares and currently speak for 2.2% of the equity
of the Company (December 2021: 1.6%).
BOARD COMPOSITION
I am delighted to welcome Pars Purewal to our Board. Pars
brings a wealth of knowledge of the investment company
sector and his experience will complement that of existing
colleagues. Pars will offer himself for election by shareholders
at the 2023 Annual General Meeting (“AGM”).
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, 17 January 2023 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 who hold their shares on retail platforms
can vote is set out on pages 11 to 13 of the Notice of Meeting.
Any shareholder who requires a hard copy form of proxy may
request one from the Registrar, Link Group.
Simon Hayes
Chairman
7 December 2022
^
Alternative Performance Measure (see glossary on pages 83 to 86)
STRATEGIC REPORT
Investment
Portfolio
Consumer Staples (”CS”) 43.4%
Financials (”F”) 22.2%
Consumer Discretionary (”CD”) 22.1%
Technology (”T”) 6.2%
Industrials (”I”) 6.1%
Source: Frostrow Capital LLP
United Kingdom 80.8%
United States of America 8.2%
France 5.8%
Netherlands 5.2%
Source: Frostrow Capital LLP
PORTFOLIO SECTOR WEIGHTINGS
2022
GEOGRAPHICAL ALLOCATION
†
2022
8
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
† The Company’s investment policy attributes geographical location
based on where companies are listed or otherwise incorporated,
domiciled or having significant business operations.
9
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
SECTOR INVESTMENTS
FAIR VALUE
2021
£'000
NET
INVESTMENTS
£'000
CAPITAL
APPRECIATION/
(DEPRECIATION)
£'000
FAIR VALUE
2022
£'000
% OF
INVESTMENTS
TOTAL
RETURN/
(LOSS)
£'000
CONTRIBUTION
PER SHARE
(PENCE)
CS
Diageo 245,949 (30,535) 14,058 229,472
12.4
18,880 8.5
CD
RELX 230,416 (15,337) 6,694 221,773
12.0
12,059 5.4
F
London Stock Exchange 179,571 12,472 5,332 197,375
10.7
7,954 3.6
CS
Unilever 170,333 2,590 (1,363) 171,560
9.3
4,847 2.2
CS
Mondelez
#
167,697 (41,242) 25,926 152,381
8.2
29,530 13.3
CD
Burberry 145,735 2,051 (737) 147,049
7.9
3,071 1.4
T
Sage 116,978 (261) (2,059) 114,658
6.2
895 0.4
I
Experian 69,004 61,579 (18,318) 112,265
6.1
(16,801) (7.5)
F
Schroders 167,290 501 (58,970) 108,821
5.9
(53,085) (23.9)
CS
Remy Cointreau
^
101,286 1,948 4,150 107,384
5.8
5,570 2.5
Top 10 Investments 1,562,738
84.5
CS
Heineken
†
97,280 3,547 (4,311) 96,516
5.2
(2,584) (1.2)
F
Hargreaves Lansdown 109,724 1,242 (43,687) 67,279
3.6
(40,606) (18.3)
CD
Manchester United
#
32,683 217 (5,657) 27,243
1.5
(5,341) (2.4)
CS
Fevertree 43,410 28,232 (44,929) 26,713
1.4
(43,276) (19.5)
F
Rathbone Brothers 28,281 - (5,292) 22,989
1.2
(4,140) (1.9)
CS
A.G. Barr 23,162 (709) (2,308) 20,145
1.1
(1,776) (0.8)
F
The Lindsell Train Investment Trust plc 14,350 - (4,630) 9,720
0.5
(4,100) (1.8)
CD
Young & Co's Brewery
(non-voting)
9,072 (65) (2,816) 6,191
0.3
(2,621) (1.2)
F
Frostrow Capital LLP
*
5,200 (775) 300 4,725
0.3
994 0.5
CD
Celtic
**
3,488 - 266 3,754
0.2
274 0.1
CD
Fuller Smith & Turner 4,970 (885) (1,520) 2,565
0.1
(1,454) (0.6)
CD
Cazoo
#
- 13,257 (11,757) 1,500
0.1
(11,758) (5.3)
CD
Daily Mail & General Trust
(non-voting)
66,223 (64,782) (1,441) -
-
(347) (0.2)
CD
Euromoney Institutional Investor 20,462 (19,009) (1,453) -
-
(1,246) (0.6)
CD
Pearson 10,442 (9,969) (473) -
-
(473) (0.2)
CS
PZ Cussons 8,260 (7,372) (888) -
-
(761) (0.3)
Total Investments 2,071,266 (63,305) (155,883) 1,852,078
100.0
Total Contributions to the net
loss for the year
(106,295)
(47.8)
Expenses, Currency Translations and Finance Charges~ (12,445) (5.6)
Loss on Ordinary Activities after Taxation (118,740) (53.4)
#
Listed in the United States
^ Listed in France
† Listed in Netherlands
* Includes Frostrow Capital LLP AIFM Capital Contribution, fair value £125,000 (2021: £900,000). During the year £775,000 of this capital was repaid
 Unquoted
** Includes Celtic 6% cumulative convertible preference shares, fair value £242,000 (2021: £236,000)
~ Net of £14,000 bank interest
INVESTMENTS AS AT 30 SEPTEMBER 2022
It is disappointing to me to have to report on a second
consecutive year of my underperformance of your Company’s
benchmark. It has been particularly frustrating, given that
the business performance of most of the companies in the
portfolio has met or exceeded my expectations. Sometimes
this happens. Other investors’ attention is turned to different
areas of the stock market, or they disagree with my
enthusiasm about the prospects for certain companies –
leaving our investments for you becalmed, or worse.
Nowhere was this more apparent than in the shares of
domestic UK wealth management companies: your holdings
in Hargreaves Lansdown and Schroders have suffered a
miserable year in terms of their share prices (along with others
in this sector), even though their businesses have grown, as
measured by increases in customer numbers or assets under
management. I can only hope investor sentiment will improve
towards the UK wealth management industry and, indeed, for
the whole UK stock market.
For the benefit of my ego and, I hope, to cheer up readers
of this report, can I nonetheless note that my investment
performance improved in the second half of your Company’s
financial year and outperformed – admittedly only by dint of
falling less than the weak UK stock market. I sincerely hope this
recent trend continues.
While there are some stock specific factors that help explain
this improvement in relative investment performance, I
believe it is more helpful to analyse it as resulting from a shift
in investor preference – a shift back to favouring the sort
of industries and companies that have always formed the
backbone of your Company’s investment portfolio.
First, as 2022 has progressed, confidence in the sustainability of
high valuations for young technology companies has waned –
most obviously reflected in the just under 30% calendar year to
date fall in the NASDAQ Index, but also in the falls of technology
shares in many other jurisdictions.
Now, your portfolio does own some technology companies, or
businesses that utilise technology to enhance their services,
– for instance, Experian, Hargreaves Lansdown, London
Stock Exchange, RELX and Sage. But these are very different
businesses, coming from very different (lower) valuations
than the latest generation of NASDAQ tech darlings, and our
holdings have not, therefore, suffered from their share prices
being hit so hard in recent months.
I would venture more and hope that these tech-advantaged
UK companies have a chance to continue to do well as
businesses (as they all have) and to do better as share
prices. As a foretaste of that possibility, note, at the end of the
Company’s year-end, London Stock Exchange shares were up
10% in calendar 2022. Meanwhile RELX shares, although down,
are on track to outperform the FTSE All-Share Index for the 12th
consecutive year (testament to the unheralded, but consistent
STRATEGIC REPORT
Portfolio
Manager's
Review
“For the benefit of my ego and,
I hope, to cheer up readers of
this report, can I nonetheless
note that my investment
performance improved in the
second half of your Company’s
financial year and outperformed
– admittedly only by dint of
falling less than the weak UK
stock market. I sincerely hope
this recent trend continues.”
NICK TRAIN
LINDSELL TRAIN LIMITED
PORTFOLIO MANAGER
10
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
11
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
way that RELX has succeeded in exceeding investors’
expectations for its business, year-in year-out).
Meanwhile, the alarming macro-economic disturbance
afflicting many nations has also weakened investors’
confidence in the earnings power of cyclical businesses. As a
result, we observe investors turning for their equity exposure
to the shares of durable, conservatively-financed and
steadily compounding companies – on the expectation their
business operations are likely to be less adversely affected
than the average. We own a lot of this type of company –
deliberatelyso.
A review of our best performing portfolio constituents in the
second half of your Company’s financial year endorses this
analysis, with notable relative contributions from Diageo,
Heineken, Mondelez and Sage, for instance. All of these are
companies with, well-merited, reputations for predictable cash
flows generated from brands or business franchises that their
customers are likely to continue patronising in all but the most
adverse economic circumstances.
In passing, it is noteworthy that there were also helpful share
price gains in two big portfolio holdings where changes in
senior management were announced during the last six
months – namely Burberry and Unilever. No doubt those
management changes have alerted investors to the possibility
of change in business strategy (or even, perhaps, in ownership)
and their share prices have risen accordingly. Certainly, we
analyse the strategic value of Burberry and Unilever to be
meaningfully higher than the value currently accorded either
in the stock market.
It is a relief to be able to report better recent relative
performance, albeit in tough market conditions. But here
I must reassert the fundamental investment proposition
we use to build your portfolio. This is that the shares of the
“durable, conservatively-financed and steadily compounding
companies” noted above, do not ONLY do well in relative terms
during periods of difficult economic conditions – as they have
recently. In fact, they should ALSO outperform (and make their
investors attractive capital returns) over entire stock market
and/or economic cycles. For instance, there are times when
Diageo’s (credible) ambition to grow its annual sales at steady
6-7% per annum, with profits and earnings per share likely
to be ahead of that, looks uninteresting – because investors
believe they can get faster growth elsewhere. But over time,
the remorseless reliability of Diageo’s growth should allow it
to surpass that of others that may have shot ahead in the
shortterm.
In summary – while it is easy to categorise our investment
approach for the Company as purely “defensive”, we do
not see it as such. Instead, it is my hope that by holding
concentrated positions in such exceptional and predictable
companies as those mentioned above and others – AG
Barr, Experian, Fever-Tree, Rathbones, Remy Cointreau and,
yes, Hargreaves Lansdown and Schroders – we can not only
protect our shareholders’ savings in difficult times, but also
generate competitive absolute returns over longer periods.
I have forborne from discussing macro-economic conditions in
this report, though it is evident investors are currently thinking
about little else. My reluctance to opine, is primarily because I
know that we, and I don’t believe anyone else, can really know
what is in store. I do know two things, though. First, your portfolio
is largely invested in substantive companies which have
survived and thrived through similarly challenging episodes
in the past. Second, all investors, indeed most people on the
planet, must earnestly hope this wretched war in Ukraine ends
soon. I ask you to conceive the boost to consumer confidence
and government finances that would result from peace
breaking out and the likely reaction of stock markets around
the world. That is not a prediction for Company’s new financial
year, but it is a sincere hope.
Nick Train
Director, Lindsell Train Limited
Portfolio Manager
7 December 2022
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 22 to 25.
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 we have 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 and corporate governance matters.
STRATEGY FOR THE YEAR ENDED
30 SEPTEMBER 2022
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
which explains investment performance.
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 Net
Zero Asset Managers (“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 26 to 29.
The Strategic Report, set out on pages 2 to 31 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.
STRATEGIC REPORT
Business Review
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
13
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 may be considered to carry above average 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 company or fund
managed by the Portfolio Manager 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
80.8%
INVESTED IN UK
DOMICILED COMPANIES
84.5%
TOP TEN HOLDINGS
19.2%
INVESTED GLOBALLY
1.2%
^
GEARING
93.2%
FTSE 100 COMPANIES (AND
COMPARABLE OVERSEAS
COMPANIES)
84.8%
^
ACTIVE SHARE
^ Please see Glossary of Terms and Alternative Performance Measures on pages 83 to 86.
14
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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.
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 his assessment of
their long-term value.
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
917.7
30 Sept
2021
Portfolio CostsDividends
NAV per share
Portfolio
income
Finance
costs
Dividends
paid
Expenses
(inc tax)
Portfolio
losses
30 Sept
2022
(68.6)
22.8
(5.8)
(0.3)
(17.4)
848.4
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 fall from the starting NAV for the year of 917.7pence to the year-end NAV of
848.4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 181.7%
compared to a total return from the Company’s benchmark
index of 79.5%.
^
Alternative Performance Measure (see glossary on pages 83 to 86)
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
15
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
16
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
The Board considers that the risks detailed within this report are the principal risks currently facing the Company that could affect
the ability of the Company to deliver its strategy.
The Board is responsible for the ongoing identification, evaluation and management of the principal risks faced by the Company
and has established a process for the regular review of these risks and their mitigation. This process accords with the UK Corporate
Governance Code and the FRC's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting.
The Board has carried out a robust assessment of the emerging and principal risks facing the Company, including those that
would threaten its business model, future performance, solvency and liquidity. Further details of the risk management processes
that are in place can be found in the Corporate Governance Statement on page 44 .
The Audit Committee also considered the controls in place to mitigate the inherent risks and whether additional controls or actions
were required to bring the residual risk down to an acceptable level. The Committee were satisfied with the controls that are in place.
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 52.
THE COMPANY'S APPROACH TO RISK MANAGEMENT
Movement during the year:
No change,
Decreased,
Increased, New risk included during the year
Movement Principal Risks and Uncertainties Key Mitigations
Corporate Strategy
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.
The Company's investment mandate no
longer appeals to investors leading to long-
term selling pressure which threatens the
stability of the Company.
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.
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.
Investment Strategy and Activity
The investment strategy adopted by
the Portfolio Manager including the high
degree of stock and sector concentration
of the investment portfolio, may lead to an
investment return that is materially lower than
the Company’s benchmark index, thereby
failing to achieve the Company’s investment
objective.
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.
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
Principal Risks, Emerging
Risks and Risk Management
17
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
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STRATEGIC REPORT
FURTHER
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Movement Principal Risks and Uncertainties Key Mitigations
Investment Strategy and Activity –
continued
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.
A global event such as the war in Ukraine or
macro-economic disturbance such as rising
interest rates and global inflation, ongoing
supply chain issues and/or labour shortages
may adversely impact the operational
activities of the portfolio companies so that
they are no longer appropriate to achieve the
Company’s investment objective.
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
Environmental, Social and Governance ("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.
TheBoard 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.
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 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.
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 26 to 29.
Shareholder Relations and
Governance
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 and periodically reviews
the Company’s website. The AIFM's daily controls ensure accurate
publication of information.
18
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
Movement Principal Risks and Uncertainties Key Mitigations
Operational
Adverse reputational impact of one or more
of the Company's key service providers
which, by association, causes the Company
reputational damage.
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.
Financial
Fraud (including unauthorised payments and
cyber fraud) 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 is exposed to market price risk. 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 77.
Accounting, Legal and Regulatory
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.
THE COMPANY'S APPROACH TO RISK MANAGEMENT – CONTINUED
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
Movement Principal Risks and Uncertainties Key Mitigations
The Company and/or the Directors fail(s)
to comply with 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, the Association of
Investment Companies (“AIC”) Statement
of Recommended Practice (“SORP”), 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 including the
Companies Act 2006, the AIFM Rules, the Corporation Tax Act 2010
(‘Section 1158’), the Market Abuse Regulation (“MAR”), the Disclosure
Guidance and Transparency Rules (“DTRs”) and the UKLA Listing Rules.
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 Directors attend AIC Roundtables and conferences to keep up
to date on regulatory changes and receive industry updates from
the AIFM.
The AIFM presents a quarterly report on changes in the regulatory
environment, including AIC updates, and how changes have been
addressed.
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 39 to 44.
EMERGING RISKS
The Company has carried out a detailed assessment of the
Company’s emerging and principal risks. The International
Risk Governance Council definition of an ‘emerging’ risk is one
that is new or is a familiar risk in a new or unfamiliar context or
under new context conditions (re-emerging). Failure to identify
emerging risks may cause reactive actions rather than being
proactive and, in worst case, could cause the Company to
become unviable or otherwise fail or force the Company to
change its structure, objective or strategy.
The Audit Committee reviews a risk map at its half-yearly
meetings and holds a separate session to review the register,
mitigations and scoring of each risk. Emerging risks are discussed
in detail as part of this process, and also throughout the year, to
ensure that emerging as well as known risks are identified and, so
far as practicable, mitigated. Any emerging risks and mitigations
are added to the risk register.
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 as an emerging risk, the
deteriorating economic environment which impacts portfolio
investments; and potentially, the Company’s service providers.
20
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 on pages 6 and 7 the
Portfolio Manager’s Review on pages 10 and 11.
It is expected that the Company’s strategy will remain
unchanged in the coming year.
LONG-TERM VIABILITY STATEMENT
In accordance with the UK Corporate Governance Code, the
Directors have carefully assessed the Company’s position and
prospects as well as the principal risks stated on pages 16 to 19
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 nature
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:
• The portfolio is principally comprised of investments
traded on major international stock exchanges. Based
on current trading volumes, 97.6% of the current portfolio
could be liquidated within 30 trading days, with 61.6% in
seven days, and there is no expectation that the nature of
the investments held within the portfolio will be materially
different in future;
• 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; 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 16 to 19 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 continue to be
satisfactory.
The continuing uncertainty in the global economy, the
ongoing war in Ukraine and COVID-19 related lockdowns, have
created significant supply chain disruption exacerbating
inflationary pressures worldwide. These were factored into
the key assumptions made by assessing their impact on the
Company’s key risks and whether the key risks had increased
in their potential to affect the normal, favourable and stressed
market conditions. As part of this review the Board considered
the impact of a significant and prolonged decline in the
Company's performance and prospects.
The Directors confirm therefore, that they have a reasonable
expectation that the Company will be able to continue in
operation and meet its liabilities in full over the coming five
years.
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
21
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 22 to 25,
describes how the Directors have had regard to the views of the Company’s stakeholders in their decision-making.
Who? Why? How?
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
theyear.
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 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.
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
23
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
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Who? Why? How?
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.
The Board ensures that the Portfolio Manager's
ESG approach meets standards set by the
Board.
The Board meets with 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.
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.
Portfolio
Companies
Gaining a deeper understanding of the
portfolio companies and their strategies as
well as incorporating consideration of ESG
factors into the investment process assists
in understanding and mitigating risks of
an investment as well as identifying future
potential opportunities.
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 26 to 29.
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26. 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.
24
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
Who? Why? How?
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.
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
What? Outcomes and actions
WHAT WERE THE KEY TOPICS OF ENGAGEMENT? WHAT ACTIONS WERE TAKEN, INCLUDING PRINCIPAL DECISIONS?
Investors
Impact of market volatility on the performance of the Company.
Ongoing dialogue with Shareholders concerning the strategy of
the Company, performance and the portfolio.
Share price performance and the widening of investment
company sector discounts.
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, Frostrow and the broker meet regularly
with shareholders and potential investors to discuss the
Company’s strategy, performance and portfolio.
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
of interactive investor (“ii”) and Hargreaves Lansdown (“HL”)
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, details of this
policy can be found on the Company’s website.
25
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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What? Outcomes and actions
WHAT WERE THE KEY TOPICS OF ENGAGEMENT? WHAT ACTIONS WERE TAKEN, INCLUDING PRINCIPAL DECISIONS?
Portfolio Manager
Climate Change - Weighted Average Carbon Intensity
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.
During the year the Audit Committee reviewed 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.
The Portfolio Manager 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.
Other service providers
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.
Board Composition
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.
Trust Associates Limited were appointed by the Board in June
2022 to assist with the appointment of a new Director, resulting in
the appointment of Pars Purewal.
Mr Purewal joined the Board on 28 November 2022 and will
offer himself for election by shareholders at the 2023 Annual
General Meeting.
The Company’s Lender
Continued compliance with covenants set out within the loan
agreement between the Company and the lender.
Terms of the loan facility agreement
The Board ensures compliance with loan covenants throughout
the year.
During the year the Company’s loan facility agreement was
renewed, details of which can be found on page 34 and within
note 12 on page 75.
26
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 in December 2021.
LINDSELL TRAIN’S POLICY
ESG INTEGRATION
Seeking Sustainability
As long-term investors, Lindsell Train’s aim is 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, it 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, its initial analysis and ongoing company
engagement strategy seeks to incorporate all sustainability
factors that it believes 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 its ongoing research and engagement work and is
cross-referenced with the SASB Materiality Map
©
.
If, as a result of this assessment, it 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 its valuation of that company, which alongside its more
qualitative research will influence any final portfolio decisions
(for example, whether it 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, its investment approach has steered it 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, Hargreaves Lansdown) or encouraging
environmental progress and best practice (Unilever). 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 that seeks to protect its clients’ capital for
decades to come.
As a relatively small company with a single office location
and 25 employees, Lindsell Train’s climate exposure comes
predominantly from the investment portfolios that it manages
on behalf of its clients. Lindsell Train recognise the systemic
risk posed by climate change and the potential financial
impacts associated with a transition to a low-carbon economy.
LindsellTrain therefore supports the recommendations of the
Task Force on Climate-Related Financial Disclosures (“TCFD”)
and its efforts to encourage companies to report their climate
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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FURTHER
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related disclosures and data in a uniform and consistent way.
Further information on Lindsell Train’s TCFD related disclosures
can be found on its website: www.lindselltrain.com within its
2022 TCFD Report.
In December 2021, Lindsell Train also became a signatory of
the Net Zero Asset Managers (“NZAM“) initiative, committing
to support the goal of net zero greenhouse gas emissions by
2050, in line with global efforts to limit warming to 1.5 degrees
Celsius. Lindsell Train is now in the process of confirming its net
zero roadmap, which will include the necessary interim targets
and disclosures, which it published in November 2022, within a
year of its net zero announcement.
Further, using Morningstar’s carbon metrics calculations,
Lindsell Train is pleased to note that the Finsbury Growth and
Income Trust PLC has 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.
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 they 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 companies held
within the Company’s portfolio on a wide range of environmental,
social and governance issues as detailed in the chart overleaf.
Madeline Wright, Deputy Portfolio Manager and Head of
Investment ESG at Lindsell Train, has also completed her process
of holding an ESG specific discussion with all of Lindsell Train’s
investee companies (c.70 in total), aimed at establishing a
baseline for its ongoing engagement and clarifying its portfolio
companies’ stances on, and approaches to, certain ESG factors,
with the objective of ensuring that all portfolio companies
report this essential data going forward. This information is
stored, assessed, and monitored within Sentinel, Lindsell Train’s
proprietary ESG database.
As public supporters of TCFD and The IFRS Sustainability
Alliance (previously known as the Sustainability Accounting
Standards Board), Lindsell Train is also encouraging its portfolio
companies to report in line with these, or similar (if more
relevant to their business) frameworks, and also to report on
positive impact goals and progress to net zero. Furthermore,
as signatories of NZAM, Lindsell Train is monitoring carefully the
transition to net zero of each of its businesses and encouraging
the companies to set science-based targets where possible.
This ongoing ESG research is further complemented by
a series of ESG specific telephone calls that Lindsell Train
is hosting with each of its companies. This will enable
Lindsell Train to identify additional matters of concern or
opportunity that require further scrutiny within its engagement
programme.
Weighted Average Carbon Intensity
Finsbury Growth & Income Trust PLC Morningstar UK GBP
S
ource: Morningstar. Data as of June 2020, June 2021 and June 2022. Data reflects
Scope 1 & 2 emissions only.
The
Morningstar carbon intensity definition is as follows: The asset-weighted average
of
holdings with actual emissions data from the Carbon Disclosure Project or
estimated
values from Sustainalytics in a portfolio. A lower score is better. Carbon
Intensity
is computed for each holding as follows: Total Emissions (metric tons of Co2)
divided
by Revenue (Mil USD), and aggregated at the fund level. Sustainalytics looks at
the
latest reported scope 1 (direct emissions from owned or controlled sources) and
scope
2 (indirect emissions from the generation of purchased energy) Green House
Gas
intensity and emissions for over 10,000 companies. More than 100 different
estimation models are used for non-reporting companies.
0
30
60
90
120
150
20212022
21.06
22.52
111.05
2020
18.98
124.03
119.42
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
Source: Lindsell Train Limited. 14 topics raised with 5 companies between
1October 2021 and 30September 2022.
Key Engagement Examples:
Unilever
This engagement in Q2 2022 was in part in response to the
news that from 1 May 2021, China would remove the mandatory
animal testing requirements for imported cosmetics. In the
case of Unilever, this follows ten years of hard work to ban
this practice and it will enable Unilever to develop its Chinese
cosmetics business. Animal testing of health and personal
care products, cosmetics and fragrances is a practice that is
not only unnecessary but also acts as a barrier to the growing
numbers of cruelty-conscious consumers globally. Fortunately,
the practice is less common these days and Lindsell Train has
determined through its research that very few companies
engage in animal testing. Indeed, only companies selling
personal care products, cosmetics or fragrances into China
will have made its products available for animal testing.
Nonetheless Lindsell Train has monitored this for some time and
engaged with the management of Unilever on this matter.
Later in 2022, Lindsell Train’s engagement centred on the recent
news of the appointment of activist investor, Nelson Peltz of
Trian Fund Management L.P. (“Trian”), to its board as a non-
executive director, following his purchase of shares representing
1.5% of Unilever's issued share capital. As Trian’s objectives are
ostensibly in line with that of Lindsell Train's, it had no objection
to the appointment despite being somewhat surprised at
the low ticket price to get a seat at the table. Lindsell Train did
however take the opportunity to urge the board to resist any
proposals that might merely boost short-term value. Unilever's
Chair, Nils Andersen confirmed that the board remained
committed to their long-term strategy and were focussed on
protecting the strategic value of Unilever’s assets.
Mondelez
Lindsell Train has also engaged with the company on several
occasions to share its views regarding compensation best
practice and continue to believe that the company could
foster greater shareholder alignment through improved
compensation structures. In assessing its compensation
policies Lindsell Train focus more on how incentives are
structured rather than the actual quantum of compensation.
In other words, Lindsell Train can be comfortable with the
large rewards provided that the incentives are aligned
with shareholders’ interest and its principles. In the case for
Mondelez, Lindsell Train wrote to management, outlining
its reason for abstaining on the resolution concerning
compensation at the company’s 2021 AGM.
Burberry and Young & Co's Brewery
Lindsell Train became signatories of Find It, Fix It, Prevent It, in
Q2 2022. This initiative convened and resourced by CCLA and
overseen by an advisory committee, brings together investors,
academics and non-governmental organisations (“NGO”)
to share knowledge, set targets and monitor the progress of
its initiative to eradicate modern slavery. In Q3 2022 Lindsell
Train engaged with both Burberry and Young & Co's Brewery
("Young's"), putting what it felt to be Find It, Fix It, Prevent
It’s illuminating questions about modern slavery to both
companies. Both Burberry and Young's already have formal
Modern Slavery policies in place.
Burberry acknowledged that modern slavery has been found
in its supply chain but expects this would be the case for
any company should it delve deep enough. The company
was understandably discreet about the details of detection
and remediation but reassured Lindsell Train that its policies
are robust and always supported by NGO input, and that it
is indeed incumbent on Burberry to report that slavery was
found and describe how it was fixed.
So far Young’s has not found modern slavery in its supply
chain, but revealed that the areas of greatest risk are the
use of agencies to supply workers (although these comprise
<5% of all staff), and employees working without the correct
documentation. The former issue will hopefully be phased out
as Young’s turns away from contracted staff and the latter is
being addressed with a well-established checking process
and a full yearly HR audit.
In response to the Modern Slavery Act’s recommendations
becoming mandatory, Young’s is beefing up its due diligence,
e.g. requiring suppliers to register on the Sedex platform which
allows for supply chain transparency and the identification of
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
Source: Lindsell Train. 1st October 2020 – 30 September 2021. 36 topics raised with 16 companies.
024681012
Other Social (e.g. supply chain, health & nutrition) 21.4%
Human Rights 21.4%
Capital Allocation & Strategy 21.4%
Fair treatment of shareholders 14.3%
Remuneration 14.3%
Cruelty Free 7.2%
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
Engagement by Topic
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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risk areas. Most big suppliers are already on Sedex, and overall
the aim is to get 100% of suppliers and agencies onto the
platform.
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 it by its clients.
Voting Record
MANAGEMENT
PROPOSALS
SHAREHOLDER
PROPOSALS
TOTAL
PROPOSALS
With Management 387 3 390
Against Management 0 0 0
Abstain 1 1 2
Totals 388 4 392
Source: Glass Lewis. 1 October 2021 – 30 September 2022.
Votes against management in previous years 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, they find that management is open to (and
very often encourages) engagement with them. 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 its 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, distribution and
investor relations service that aims to promote the Company
by encouraging demand for the shares.
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.
30
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
The AIFM Agreement may be terminated by either party on
giving notice of not less than 12 months.
Portfolio Manager
Under the Portfolio Management Agreement 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 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 a Board meeting in September 2022, 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, 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;
• for 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
• 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).
STRATEGIC REPORT
BUSINESS REVIEW - CONTINUED
31
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
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 attracted 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.
By order of the Board
Simon Hayes
Chairman
7 December 2022
32
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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, representing the interests of
small and mid-sized listed companies
with government and regulators. 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 joined the Board on
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 and Chair
and Governor of Headington School in
Oxford. 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
*Shares held: 150,000
*Annual Remuneration: £40,000
Shared directorships
with other Directors:
None
*Shares held: 8,096
*Annual Remuneration: £32,000
Shared directorships
with other Directors:
None
*Shares held: 1,027
*Annual Remuneration: £26,000
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, with the exception of Pars Purewal, 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. None of the Directors has any other
connection with the Portfolio Manager or is employed by any of the companies in which the Company holds an investment or by
any of the Company’s service providers.
*Information as at 30 September 2022
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
33
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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, a non-executive
director and senior independent director
at Schroder Oriental Income Fund
Limited and the non-executive chairman
of International Biotechnology Trust plc.
PARS PUREWAL
Non-Executive Director
Pars Purewal was appointed to the
Board on 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, a
Non-Executive Director on the board
of 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 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.
*Shares held: 9,061
*Annual Remuneration: £26,000
Shared directorships
with other Directors:
None
*Shares held: N/A
*Annual Remuneration: N/A
Shared directorships
with other Directors:
None
*Shares held: 11,500
*Annual Remuneration: £26,000
Shared directorships
with other Directors:
None
34
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
GOVERNANCE
Report of the Directors
The Directors present their Annual Report on the affairs of the
Company, together with the audited Financial Statements
and the Independent Auditors’ Report for the year ended
30September 2022.
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 2022, 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 and the Company’s policy
regarding Board diversity.
Information about Directors’ interests in the Company’s
ordinary shares is included within the Annual Report in the
Remuneration section of the Directors’ Remuneration Report.
The Corporate Governance Statement on page 39 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 received approval from HM Revenue &
Customs as an investment company under sections 1158
and 1159 of the Corporation Tax Act 2010. In the opinion of the
Directors, the Company continues to conduct its affairs to
qualify for such approval.
RESULTS AND DIVIDENDS
The Return on Ordinary Shares after taxation is shown on
page63. Details of the Company's dividend record can be
found on page 2.
LOAN FACILITY
As at 30 September 2022 the Company was in the final
month of its three-year secured fixed term revolving credit
facility (the “facility”) of £50 million with Scotiabank Europe PLC
(“Scotiabank”) and there is an additional £50 million facility
available if required, which matured on 4 October 2022. As at
30September 2022 a total of £36.7 million was drawn down from
this facility (2021: £36.7 million) which equates to gearing of 1.2%,
after taking into account net current assets including cash.
Subsequent to the year-end on 4 October 2022, the Company’s
loan facility with Scotiabank was renewed and it entered into a
new three-year secured facility of £60 million with an additional
£40 million facility available if required.
DIRECTORS
The current Directors of the Company are listed on pages32
and 33. With the exception of Pars Purewal, they all 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 three 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 and therefore does not affect the Board’s view of his
independence.
No other person was a Director during any part of the year or
up to the approval of this Report.
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 2023 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
his or her 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
35
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
Directors’ Fees
Reports on Directors’ Remuneration and also the Directors’
Remuneration Policy are set out on pages 45 to 50.
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 48 of this
AnnualReport.
As part of the Company’s commitment to transparency,
during the year 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 76.
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 36.
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 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 32,088,957 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 9,253,311 shares were bought back into treasury (2021: nil).
Between 1 October 2022 and 5 December 2022, the Company
bought back a further 1,668,897 shares into Treasury.
The Directors believe that 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;
• The Company’s long-term prospects are preserved in that
shareholders with a longer-term investment horizon are
attracted to the shareholder register; and
• The true value of the investment portfolio is captured as
long-term returns are not affected by extraneous factors.
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 to vote in favour of this resolution.
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.
36
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
GOVERNANCE
REPORT OF THE DIRECTORS - CONTINUED
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
his 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 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 9 February 2022,
authority to allot up to 22,401,935 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
(2021: 7,240,000 new shares were issued by the Company at a
premium to the higher of the prevailing cum or ex income net
asset value per share at the time of issue).
31 OCTOBER 2022 30 SEPTEMBER 2022
NUMBER OF SHARES % OF CAPITAL NUMBER OF SHARES % OF CAPITAL
Hargreaves Lansdown, stockbrokers 23,681,833 11.01 27,625,655 12.76
Interactive Investor 19,773,449 9.19 19,711,224 9.10
RBC Brewin Dolphin 17,422,680 8.10 17,464,737 8.06
Evelyn Partners 13,149,356 6.11 13,117,879 6.06
AJ Bell, stockbrokers 11,872,776 5.52 12,140,758 5.61
Rathbones 10,392,541 4.83 10,399,420 4.80
Investec Wealth & Investment 9,614,168 4.47 9,630,637 4.45
Charles Stanley 6,848,436 3.18 6,860,293 3.17
1607 Capital Partners – – 6,685,204 3.09
At 30 September 2022 the Company had 215,737,992 shares in issue (excluding 9,253,311 shares held in Treasury). As at 31 October
2022 the Company had 215,128,434 shares in issue (excluding 9,862,869 Shares held in Treasury).
SUBSTANTIAL SHARE INTERESTS
The Company was aware of the following substantial registered interests in the voting rights of the Company as at 30 September
2022 and 31 October 2022, being the latest practicable date before publication of the Annual Report:
BENEFICIAL OWNERS OF SHARES –
INFORMATION RIGHTS
The beneficial owners of shares who have been nominated by
the registered holder of those shares to receive information
rights under Section 146 of the Companies Act 2006 are
required to direct all communications to the registered holder
of their shares rather than to the Company’s registrar, or to the
Company directly.
AGM
The AGM will be held on Tuesday, 17 January 2023 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.
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
37
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
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.
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 of
association (the “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 2022
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.
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.
GOING CONCERN
The Company’s portfolio, investment activity, the Company’s
cash balances and revenue forecasts, and 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.
38
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
GOVERNANCE
REPORT OF THE DIRECTORS - CONTINUED
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 on page 20, 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 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
war in Ukraine and the subsequent long-term effects on
economies and international relations.
By order of the Board
Frostrow Capital LLP
Company Secretary
7 December 2022
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
39
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 (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 Financial Reporting
Council 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 paragraph 9.8.6 of
the UK Listing Rules.
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 13. 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 seeks to
encourage 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
overleaf sets out the number of formal Board and Committee
meetings held during the year ended 30September 2022
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.
40
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
GOVERNANCE
CORPORATE GOVERNANCE - CONTINUED
BOARD AUDIT COMMITTEE
Total number of meetings 5 3
Simon Hayes 5 3
James Ashton 5 3
Kate Cornish-Bowden 5 3
Sandra Kelly 5 3
Pars Purewal* N/A N/A
Lorna Tilbian 5 3
* Pars Purewal was appointed to the Board on 28 November 2022.
All of the Directors, with the exception of Pars Purewal, attended
the Annual General Meeting in February 2022.
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.
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
41
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
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 recommendations of Lord Davies’ reports on Women
on Boards. 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 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 for 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.
Board Diversity
The Board is supportive of the FCA’s recently updated Listing
Rules (LR 9.8.6R(9)) to encourage greater diversity on listed
company boards and has implemented the FCA’s disclosure
requirements applying to financial years starting on or after
1April 2022.
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 has met two of the three targets on board
diversity as at its chosen reference date, 30 September 2022:
(i) at least 40% of the individuals on its board of directors are
women; and
(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.
As at 30 September 2022, the Company did not meet the
target of at least one individual on its board of directors being
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,
but ongoing process. As succession planning of the Board
progresses over future years, the Company will continue to
strive for increased diversity on its Board through its Diversity
Policy. 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 2022 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 2 40% 1
Women 3 60% 1
Other – – –
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) 5 100% 2
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British – – –
Black/African/Caribbean/Black British – – –
Other ethnic group, including Arab – – –
Not specified/prefer not to say – – –
42
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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. Thedata 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.
The changes in Board composition that have occurred
between the reference date and the date on which the Annual
Report was approved are 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
Other – – –
Not specified/prefer not to say – – –
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 – – –
* 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.
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, 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.
GOVERNANCE
CORPORATE GOVERNANCE - CONTINUED
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
43
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
Trust Associates Limited are 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. 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. 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
• 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 48.
Directors’ Independence
As at the date of the Annual Report, the Board consists of
sixnon-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
44
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
the Chairman was evaluated by the other Directors under the
leadership of Sandra Kelly as Senior Independent Director.
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 2023 Annual General Meeting. The
relevant experience of each of the Directors is detailed on
pages 32 to 33 and on page 8 of the Notice of AGM.
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 55
describes the Directors’ responsibility for preparing this report.
The Audit Committee Report, beginning on page 51,
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 16 to 19.
Stakeholders
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.
Relationship With Other Service Providers
The Board has delegated a wide range of activities to external
agents, in addition to the Portfolio Manager.
These services include 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.
Further information on the service providers is contained within
the Strategic Report on pages 29 to 31.
The Board scrutinises the performance of the AIFM and
Portfolio Manager at each meeting and reviews the
contractual relationships with them both at least annually.
Further information on the AIFM and Portfolio Manager fees are
contained within the Strategic Report on page 30 and note 3
on page 70.
Exercise Of Voting Powers
The Board has delegated authority to Lindsell Train (as Portfolio
Manager) to cast its vote in relation to the shares owned by
the Company.
Please refer to page 29 for further information.
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.
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 22 to 25.
Annual General Meeting
The Annual General Meeting will be held at 12 noon on
Tuesday, 17 January 2023. 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
7 December 2022
GOVERNANCE
CORPORATE GOVERNANCE - CONTINUED
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
45
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 49 and 50.
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 56 to 62.
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 and
the fees had remained unchanged since 1 October 2020. At
the most recent review held in September 2022, it was agreed
that the Directors’ fees with effect from 1 October 2022 would
be as follows:
The Chairman – £41,000 (2021: £40,000)
The Chair of the Audit Committee – £33,000 (2021: £32,000)
Other Directors – £27,000. (2021: £26,000).
Table of Directors’ Remuneration Components from 1 October 2022
COMPONENT ANNUAL RATE (£) PURPOSE AND OPERATION
Basic Annual Fee:
Each Director
£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
£14,000 For the additional time, commitment and responsibility required on the Company’s
business issues; and providing leadership as Chairman of the Board.
Additional Fee:
Audit Committee Chairman
£6,000 For the greater time required on the financial and reporting affairs of the Company.
Additional Fee:
Each Director
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 Reimbursement of expenses properly incurred by Directors in attending meetings and/or
otherwise in the performance of their duties to the Company.
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 in cash
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
other than disclosed in the table shown on page 46.
46
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
At the last AGM held in February 2022 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 65,858,487 182,176 110,701
% of votes cast 99.72% 0.28%
* 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 2023.
Single total figure of remuneration for the year ended 30 September 2022 (audited)
DATE OF
APPOINTMENT
FEES
2022
TAXABLE
†
BENEFITS
2022
TOTAL
FEES
2022
FEES
2021
TAXABLE
†
BENEFITS
2021
TOTAL FEES
2021
Simon Hayes
1
29 June 2015 £40,000 – £40,000 £34,377 – £34,377
James Ashton 14 October 2020 £26,000 – £26,000 £25,133 – £25,133
Kate Cornish-Bowden 26 October 2017 £26,000 – £26,000 £26,000 – £26,000
Sandra Kelly
2
9 October 2019 £32,000 – £32,000 £32,000 – £32,000
Lorna Tilbian 26 October 2017 £26,000 – £26,000 £26,000 – £26,000
Anthony Townsend
3
1 February 2005 – – – £15,333 – £15,333
£150,000 – £150,000 £158,843 – £158,843
1
Chairman of the Board with effect from 17 February 2021 and Senior Independent Director until 17 February 2021
2
Appointed Chair of the Audit Committee on 12 May 2020 and Senior Independent Director with effect from 17 February 2021
3
Chairman of the Board until his retirement on 17 February 2021
†
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 2018
YEAR TO
30 SEPT 2019
YEAR TO
30 SEPT 2020
YEAR TO
30 SEPT 2021
YEAR TO
30 SEPT 2022
Chairman
£34,500
0.0%
£37,500
+8.7%
£37,500
0.0%
£40,000
+6.7%
£40,000
0.0%
Chair of the Audit Committee
£27,250
0.0%
£30,000
+10.1%
£30,000
0.0%
£32,000
+6.7%
£32,000
0.0%
Directors' fees
£23,000
0.0%
£24,500
+6.5%
£24,500
0.0%
£26,000
+6.1%
£26,000
0.0%
Additional fees – – – – –
GOVERNANCE
DIRECTORS’ REMUNERATION REPORT - CONTINUED
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
47
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
TEN YEARS TOTAL SHAREHOLDER RETURN TO 30 SEPTEMBER 2022
Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Sep 19
Sep 20
Sep 18
Source: Morningstar
Rebased to 100 at September 2012
Sep 21 Sep 22
+165.7%
+79.5%
FINSBURY GROWTH
& INCOME TRUST
PLC SHARE PRICE
(TOTAL RETURN)
FTSE ALL SHARE
INDEX (TOTAL
RETURN) (THE
COMPANY’S STATED
BENCHMARK)
100
150
200
250
300
350
Lorem ipsum
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 2021 and 2022.
Directors’
Fees
DividendsDirectors’
Fees
Repurchase of
the Company's
shares
Dividends
£m
£0.2m £0.2m £nil
£39.7m
£38.4m
0
10
20
30
40
50
60
70
80
£76.5m
2022 2021
Repurchase of
the Company's
shares
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 2022 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.
48
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 2022
SHARES HELD
VALUATION*
30 SEPTEMBER 2022
£'000
(AUDITED)
30 SEPTEMBER 2021
SHARES HELD
VALUATION*
30 SEPTEMBER 2021
£’000
Simon Hayes (Chairman) 150,000 1,200 100,000 876
James Ashton 1,027 8 1,008 9
Kate Cornish-Bowden 9,061 72 8,061 71
Sandra Kelly 8,096 65 5,822 51
Pars Purewal
^
N/A N/A N/A
Lorna Tilbian 11,500 92 – –
Total 179,684 1,437 114,891 1,007
* The Company’s share price as at 30 September 2022 was 800.0p (2021: 876.0p)
^
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.
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 2022
SHARES HELD
VALUATION*
30 SEPTEMBER 2022
£’000
30 SEPTEMBER 2021
SHARES HELD
VALUATION*
30 SEPTEMBER 2021
£’000
Alastair Smith (Managing Partner of Frostrow) 61,471 492 60,266 528
Nick Train (Portfolio Manager) 4,602,639 36,821 3,656,710 32,033
* The Company’s share price as at 30 September 2022 was 800.0p (2021: 876.0p)
Between 1 October 2022 and 5 December 2022, being the latest practicable date before the publication of the Annual Report, the
Portfolio Manager acquired a further 127,000 Ordinary Shares. In addition, as part of respective dividend reinvestment plans, James
Ashton acquired a further 11 Ordinary Shares and Simon Hayes acquired a further 1,778 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 49 and 50, and this Remuneration Report
summarise, as applicable, for the year ended 30 September 2022:
(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
7 December 2022
GOVERNANCE
DIRECTORS’ REMUNERATION REPORT - CONTINUED
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
49
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 2023 and for subsequent financial years.
Shareholder approval of the Directors’ Remuneration Policy was last sought at the AGM held in February 2020, the result in respect
of the resolution was as follows:
VOTES CAST FOR VOTES CAST AGAINST VOTES WITHHELD*
Votes cast 65,195,445 107,706 97,580
% of votes cast 99.84% 0.16%
* Votes withheld are not votes by law and are therefore not counted in the calculation of votes for or against a resolution
The Board has not subsequently received any views from opposing or abstaining shareholders in respect of the levels of Directors’
remuneration following this vote. Shareholder approval of the Directors’ Remuneration Policy will be sought again at the AGM to be
held in January 2023.
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. 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 2023 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
2023
CURRENT FEES
YEAR ENDED
30 SEPTEMBER
2022
Simon Hayes (Chairman) 29 June 2015 £41,000 £40,000
James Ashton 14 October 2020 £27,000 £26,000
Kate Cornish-Bowden 26 October 2017 £27,000 £26,000
Sandra Kelly (Chair of the Audit Committee and SID) 9 October 2019 £33,000 £32,000
Pars Purewal 28 November 2022 £22,812 –
Lorna Tilbian 26 October 2017 £27,000 £26,000
£177,812 £150,000
The current level of Directors’ fees will not be reviewed until at least September 2023. 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 £27,000 per annum.
50
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
DIRECTORS’ REMUNERATION YEAR ENDED
30 SEPTEMBER 2022
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.
Theterms and conditions of the Directors’ appointments are
set out in formal letters of appointment which are available
forreview 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 February 2020 and approval is sought
accordingly at the Annual General Meeting to be held in
January 2023.
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
51
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 2022.
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 and issuance of the Company’s shares.
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 29.
3. To ensure compliance with Section 1158 of the
Corporation Tax Act 2010. The Committee obtained
confirmation that the Company continues to meet the
regulatory requirements.
4. To recommend the appointment of external Auditors
and agree the scope of their work and their remuneration,
reviewing 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.
MEETINGS
The Committee held three meetings during the financial
year and meeting attendance is shown on page 40.
Representatives of Frostrow acting as AIFM attended each
of the Committee’s meetings and reported as 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.
SIGNIFICANT MATTERS CONSIDERED BY THE
AUDIT COMMITTEE AND THE BOARD DURING
THE YEAR
In summary, additional to the Committee's core responsibilities,
the main matters arising in relation to 2022 were:
• The Committee is aware of the increase in fraudulent
activity over the last three years exploiting organisations,
as a result of the COVID-19 pandemic, together with
the cost of living crisis. 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.
• The Committee reviewed an assessment of the impact
of climate changed and the weighted average carbon
intensity of the portfolio companies. The Committee note
the key topics of engagement undertaken by Lindsell Train
with each of the portfolio companies and that assessment
identified that the Company has a significantly lower
weighted average carbon intensity than its comparable
benchmark. Please refer to page 27 for further information.
• The Committee noted the consultation published by the
Department of Business, Energy and Industrial Strategy on
restoring trust in audit and corporate governance, and will
continue to monitor the timescale for implementation of
these proposals.
• 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.
These matters were discussed by the Committee and
any recommendations were fully considered and
recommendations were then made to the Board.
52
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
Internal Controls and Risk Management
The Directors have identified(StrategicReportpages 16
to19) sixmain 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 requires amendments to both risks and mitigating actions
if necessary.
In preparation for the Audit Committee meeting held in
September 2022, each Director, Lindsell Train Limited as
Portfolio Manager and Frostrow Capital LLP as AIFM were each
asked to independently list what they considered to be the
greatest five risks that could impact the sustainable success of
the Company, without reference to the Company’s existing risk
register. During the Audit Committee meeting the Committee
were invited to consider the risks identified by the individuals
and whether these should be added to the Company’s risk
register, and if so, consider the appropriate scoring to be
applied. The purpose of the exercise was to reassess the
principal risks and identify any new, emerging risks and to
take any necessary action to mitigate their potential impact.
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 19.
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
Portfolio Manager and the Depositary. Each maintains its own
systems and prepares independently audited internal control
reports. The Committee receives 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 55. 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 67 to 69, 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
the policies although, as trailed in the 2021 Annual Report, the
allocation of expenses between capital and revenue was
changed following a detailed review by the Committee in2021.
The Company’s previous approach was to charge 67%
of management fees and finance costs to capital and
33% to revenue. Following review it was agreed that from
1 October 2021 the Company’s allocation of expenses policy
be amended to reflect that 75% of management fees and
finance costs would be charged to capital and 25% to
revenue. The revised allocation was in line with the AIC’s
statement of recommended practice which recommends
that an investment trust recognises the allocation of expenses
between income and capital that reflects returns over the
longer term.
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
Having considered the Company’s financial position, and
reviewed stress and reverse stress tests, the Committee
satisfied itself that it is appropriate for the Board to present the
Financial Statements on the 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.
GOVERNANCE
AUDIT COMMITTEE REPORT - CONTINUED
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
53
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
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.
Long-Term Viability
The Committee satisfied itself that it is appropriate for the
Board to make the statement on page 20 that it has a
reasonable expectation that the Company will be able to
continue its operations over the next five years.
Recognition of Income from Investments
The Committee received assurance that all dividends
receivable, including special dividends, had been accounted
for appropriately.
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.
EXTERNAL AUDITORS
Meetings
The nature and scope of the 2022 audit, together with
PricewaterhouseCoopers LLP’s ("PwC") audit plan, were
reviewed by the Committee on 10 May 2022.
I, together with other Committee members, met with the
Engagement Leader, Jeremy Jensen and the Senior Audit
Manager on 14 November 2022 to discuss the audit and
the draft 2022 Annual Report and Financial Statements. The
Committee then met them again on 28 November 2022 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 71.
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, and
• the extent of any non-audit services 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.
The Company is required to carry out a tender every ten
years with the next due to be conducted no later than 2023.
The Company is therefore in compliance with the provisions
of “The Statutory Audit Services for Large Companies Market
Investigation” (Mandatory use of responsibilities) Order 2014 as
issued by the Competition & Markets Authority.
PwC have been the Company’s Auditors since June 2014,
which was the last occasion an audit tender was held and this
appointment has been renewed at each subsequent AGM.
54
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
The Audit Committee, following a review, remains satisfied
with the effectiveness and independence of PwC. It has not,
therefore, considered it necessary to require the audit to be
put out to tender early. When necessary the Audit Committee
discusses engagement and partner rotation with PwC. There
are no contractual or similar obligations restricting the
Company’s choice of auditors. In order to comply with audit
regulation the Committee plan to commence the audit tender
process during the course of 2023.
Independent Auditors Re-appointment
Having indicated their willingness to continue to act as
Auditors to the Company for the forthcoming year a resolution
re-appointing PwC as Auditors will be proposed at the
forthcoming Annual General Meeting.
Performance Evaluation
The Committee undertook an evaluation of its performance
during December 2022.
As part of its evaluation the Committee reviewed the following:
• Its role
• Membership, Independence, Objectivity and
Understanding
• Skills
• Scope of Work
• Communications
The Committee confirmed that it had conducted its affairs in
accordance with its terms of reference and were satisfied that
the Committee had been effective.
Sandra Kelly, ACA
Chair of the Audit Committee
7 December 2022
GOVERNANCE
AUDIT COMMITTEE REPORT - CONTINUED
GOVERNANCE
STRATEGIC REPORT
FURTHER
INFORMATION
55
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
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 and the Directors’
Remuneration Report 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 32 and 33 confirms
that, to the best of their knowledge:
• the Company's Financial Statements, which have been
prepared in accordance with United Kingdom Accounting
Standards, comprising FRS 102 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
7 December 2022
Note to those who access this document by electronic means:
The Annual Report for the year ended 30 September 2022 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.
56
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 2022 and of its loss 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, comprising 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 2022; 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 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: £18,303,000 (2021: £20,640,000) based on 1% of net assets.
• Performance materiality: £13,727,000 (2021: £15,480,000).
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCESTRATEGIC REPORT
57
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 page 53 (Audit Committee Report),
page 67 (Accounting Policies) and page 70
(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 focussed 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 tested dividend receipts by agreeing the dividend rates from investments to independent
third party sources.
To test for completeness, we 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 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.
58
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
Key audit matter How our audit addressed the key audit matter
Valuation and existence of quoted
investments
Refer to page 53 (Audit Committee Report),
page 67 (Accounting Policies) and pages 74
and 80 (Notes to the financial statements).
The investment portfolio at the year-end
principally compromised quoted equity
investments valued at £1,847m.
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.
In planning our audit, we made enquiries of the Directors and Investment Manager to understand the extent of the potential
impact of climate change on the Company’s financial statements.
The Directors and Investment 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 £18,303,000 (2021: £20,640,000).
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% (2021: 75%) of overall materiality, amounting to £13,727,000 (2021:
£15,480,000) 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
59
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 £915,000
(2021:£1,032,000) 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, including ongoing
impact of rising inflation, Russia’s Invasion of Ukraine, and the subsequent economic uncertainty;
• 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 significant 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.
60
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 2022 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
61
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 9years, covering the years ended 30 September 2014 to 30 September 2022.
Jeremy Jensen (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
7 December 2022
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FINSBURY GROWTH & INCOME TRUST PLC
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
63
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
FINANCIAL STATEMENTS
Income Statement
FOR THE YEAR ENDED 30 SEPTEMBER 2022
YEAR ENDED 30 SEPTEMBER 2022 YEAR ENDED 30 SEPTEMBER 2021
NOTE
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
(Losses)/gains on investments at fair
value through profit or loss 9 – (155,883) (155,883) – 164,020 164,020
Currency translations – 14 14 – (16) (16)
Income 2 50,792 – 50,792 46,114 – 46,114
AIFM and portfolio management fees 3 (2,678) (8,034) (10,712) (3,709) (7,531) (11,240)
Other expenses 4 (1,069) (9) (1,078) (1,004) (3) (1,007)
Return/(loss) on ordinary activities
before finance charges and taxation 47,045 (163,912) (116,867) 41,401 156,470 197,871
Finance charges 5 (171) (512) (683) (136) (277) (413)
Return/(loss) on ordinary activities
before taxation 46,874 (164,424) (117,550) 41,265 156,193 197,458
Taxation on ordinary activities 6 (1,190) – (1,190) (844) – (844)
Return/(loss) on ordinary activities after
taxation 45,684 (164,424) (118,740) 40,421 156,193 196,614
Return/(loss) per share – basic and
diluted 7 20.6p (74.0)p (53.4)p 18.1p 69.9p 88.0p
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 Total Comprehensive Income has been presented.
The notes on pages 67 to 82 form part of these Financial Statements.
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
FINANCIAL STATEMENTS
Statement of Changes in
Equity
FOR THE YEAR ENDED 30 SEPTEMBER 2022
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
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 2020 54,438 1,039,510 3,453 699,693 45,436 1,842,530
Net return from ordinary activities – – – 156,193 40,421 196,614
Second interim dividend (8.6p per share)
for the year ended 30 September 2020 – – – – (18,727) (18,727)
First interim dividend (8.0p per share)
for the year ended 30 September 2021 8 – – – – (17,906) (17,906)
Issue of shares 1,810 60,337 – – – 62,147
At 30 September 2021 56,248 1,099,847 3,453 855,886 49,224 2,064,658
The notes on pages 67 to 82 form part of these Financial Statements.
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
65
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
NOTE
2022
£’000
2021
£’000
Fixed assets
Investments held at fair value through profit or loss 9 1,852,078 2,071,266
Current assets
Debtors 10 12,398 9,428
Cash and cash equivalents 7,835 22,531
20,233 31,959
Current liabilities
Creditors: amounts falling due within one year 11 (5,227) (1,867)
Bank loan 12 (36,700) –
(41,927) (1,867)
Net current liabilities (21,694) 30,092
Total assets less current liabilities 1,830,384 2,101,358
Creditors: amount falling due after more than one year
Bank loan 12 – (36,700)
Net assets 1,830,384 2,064,658
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 14 614,947 855,886
Revenue reserve 55,889 49,224
Total shareholders’ funds 1,830,384 2,064,658
Net asset value per share 15 848.4p 917.7p
The Financial Statements on pages 63 to 82 were approved by the Board of Directors on 7 December 2022 and were signed on its
behalf by:
Simon Hayes
Chairman
The notes on pages 67 to 82 form part of these Financial Statements.
Company Registration Number SC013958 (Registered in Scotland)
FINANCIAL STATEMENTS
Statement of Financial
Position
AS AT 30 SEPTEMBER 2022
66
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
NOTE
2022
£’000
2021
£’000
Net cash inflow from operating activities before interest 18 38,098 31,953
Interest paid (683) (375)
Net cash inflow from operating activities 37,415 31,578
Investing activities
Purchase of investments (79,080) (92,966)
Sale of investments 139,227 37,981
Net cash inflow/(outflow) from investing activities 60,147 (54,985)
Financing activities
Dividends paid (39,019) (36,633)
Shares issued – 62,147
Repurchase of Shares into treasury (73,253) –
Net cash (outflow)/inflow from financing activities (112,272) 25,514
(Decrease)/increase in cash and cash equivalents (14,710) 2,107
Currency transactions 14 (16)
Cash and cash equivalents at the beginning of the financial year* 22,531 20,440
Cash and cash equivalents at the end of the financial year* 7,835 22,531
Reconciliation of net debt
2022
£’000
2021
£’000
Cash and cash equivalents* 7,835 22,531
Borrowings (36,700) (36,700)
Total (28,865) (14,169)
* Comprises solely cash held at bank.
FINANCIAL STATEMENTS
Statement of Cash Flows
FOR THE YEAR ENDED 30 SEPTEMBER 2022
The notes on pages 67 to 82 form part of these Financial Statements.
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
67
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 37 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 2022 (2021:
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 the 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 74.
(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 2022
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FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 (2021: 67% capital, 33% revenue).
(F) TAXATION
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.
Any tax relief obtained in respect of AIFM and portfolio management fees, finance costs and other capital expenses charged are
allocated to the capital column of the Income Statement.
(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
69
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
(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 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; and
• expenses which are capital in nature as disclosed in note 1(e).
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 83.
70
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
2. Income
2022
£’000
2021
£’000
Income from investments
UK listed dividends* 41,827 39,167
Overseas dividends* 8,257 6,350
Limited liability partnership – profit-share and priority profit share on
AIFM capital contribution 694 597
Other operating income – bank interest 14 –
Total income 50,792 46,114
* Include special dividends which have been credited to the revenue account totalling £1,833,000 (2021: £949,000):
• UK listed dividends £1,205,000 (2021: £949,000).
• Oversea dividends £628,000 (2021: nil).
3. AIFM and portfolio management fees
2022 2021
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
AIFM fee 670 2,008 2,678 927 1,883 2,810
Portfolio Management fee 2,008 6,026 8,034 2,782 5,648 8,430
Total fees 2,678 8,034 10,712 3,709 7,531 11,240
With effect from 1 October 2021, 75% of the Portfolio management and AIFM fees were taken to the Capital reserve and 25% is taken
to the Revenue reserve. Previously, 67% was taken to the Capital reserve and 33% to the Revenue reserve.
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
71
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
4. Other Expenses
2022 2021
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
Directors’ fees 150 – 150 159 – 159
Auditors’ fees –
statutory annual audit 63 – 63 58 – 58
Depositary’s fees 193 – 193 211 – 211
Stock listing and FCA fees 140 – 140 133 – 133
Custody fees 118 – 118 109 – 109
Indices cost 74 – 74 40 – 40
Registrar’s fees 59 – 59 57 – 57
Promotional costs 60 – 60 51 – 51
Printing and postage 52 – 52 35 – 35
Directors' D&O insurance 41 – 41 33 – 33
Other expenses 119 9 128 118 3 121
Total expenses 1,069 9 1,078 1,004 3 1,007
Further details of the amounts paid to Directors are included in the Directors’ Remuneration Report on pages 45 to 48.
During the year ended 30 September 2022 there were no non-audit services provided by the Company's Auditor (2021: nil).
All of the above expenses include VAT where applicable.
5. Finance Charges
2022 2021
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
Interest payable on bank loan 161 482 643 123 250 373
Loan facility commitment fees 10 30 40 13 27 40
171 512 683 136 277 413
With effect from 1 October 2021, 75% of the finance costs were taken to the Capital reserve and 25% is taken to the Revenue
reserve. Previously, 67% was taken to the Capital reserve and 33% to the Revenue reserve.
72
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
6. Taxation on Ordinary Activities
(A) ANALYSIS OF CHARGE IN THE YEAR
2022 2021
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
UK Corporation tax at 19% (2021: 19%) – – – – – –
Overseas withholding tax 1,364 – 1,364 1,036 – 1,036
Recoverable overseas withholding tax (174) – (174) (192) – (192)
1,190 – 1,190 844 – 844
(B) FACTORS AFFECTING CURRENT TAX CHARGE FOR YEAR
The tax assessed for the year is higher (2021: higher) than the standard rate of UK corporation tax of 19% (2021: 19%).
The differences are explained below:
2022 2021
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
REVENUE
£’000
CAPITAL
£’000
TOTAL
£’000
Total return/(loss) on ordinary activities
before taxation 46,874 (164,424) (117,550) 41,265 156,193 197,458
Return/(loss) on ordinary activities multiplied by
UK corporation tax of 19% (2021: 19%) 8,906 (31,240) (22,334) 7,840 29,677 37,517
Effects of:
Overseas taxation 1,190 – 1,190 844 – 844
Franked investment income not subject to
corporation tax – UK dividend income (7,947) – (7,947) (7,441) – (7,441)
Overseas dividends not taxable (1,569) – (1,569) (1,207) – (1,207)
Excess management expenses 610 – 610 808 – 808
Amounts charged to capital – 1,625 1,625 – 1,484 1,484
Non-taxable loss/(return) on investments* – 29,618 29,618 – (31,164) (31,164)
Currency translations – (3) (3) – 3 3
Total tax charge for the year (note 6(a)) 1,190 – 1,190 844 – 844
* Loss/(return) on investments are not subject to corporation tax within an investment company.
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
73
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
(C) DEFERRED TAXATION
As at 30 September 2022, the Company had unutilised management expenses and other reliefs for taxation purposes of
£122,041,000 (2021: £110,404,000). 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 £30,510,000 (2021: £27,601,000) based
on the prospective corporation tax rate of 25% (2021: 25%).
Given the Company’s status as an investment company and the intention to continue meeting 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
2022
£’000
2021
£’000
The return/(loss) per share is based on the following figures:
Revenue return 45,684 40,421
Capital (loss)/return (164,424) 156,193
Total (loss)/return (118,740) 196,614
Weighted average number of shares*
in issue during the year 222,335,694 223,371,358
Revenue return per share 20.6p 18.1p
Capital (loss)/return per share (74.0)p 69.9p
Total (loss)/return per share (53.4)p 88.0p
The calculation of the total, revenue and capital (loss)/returns per ordinary share is carried out in accordance with IAS 33,
"Earnings per Share (as adopted in the UK)".
As at 30 September 2022 and 2021 there were no dilutive instruments in issue, therefore the basic and diluted (loss)/return per
share are the same.
* Excludes shares held in Treasury.
74
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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.
EX-DIVIDEND
DATE
RECORD
DATE
PAYMENT
DATE
2022
£’000
2021
£’000
First interim dividend of
8.3p per share (2021: 8.0p) 31 March 2022 1 April 2022 13 May 2022 18,545 17,906
Second interim dividend of
9.8p per share (2021: 9.1p)
29 September
2022
30 September
2022
4 November
2022 21,181 20,474
39,726 38,380
The second interim dividend of 9.8p per share (2021: 9.1p) 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 ensures compliance with Section 1158 of the Corporation Tax Act
2010 are set out below:
2022
£’000
2021
£’000
Revenue available for distribution by way of dividend for the year 45,684 40,421
2022 First interim dividend of 8.3p per share (2021: 8.0p) paid on 13 May 2022 (18,545) (17,906)
2022 Second interim dividend of 9.8p per share (2021: 9.1p) paid on 4 November 2022 (21,181) (20,474)
Net additions to revenue reserves 5,958 2,041
The Company’s dividend policy is set out on page 14.
9. Investments held at Fair Value Through Profit or Loss
ANALYSIS OF PORTFOLIO MOVEMENTS
2022
£’000
2021
£’000
Opening book cost 1,303,097 1,244,210
Opening investment holding gains 768,169 607,378
Valuation at 1 October 2,071,266 1,851,588
Movements in the year:
Purchases at cost 79,246 93,690
Sales proceeds (142,551) (38,032)
(Losses)/gains on investments (155,883) 164,020
Valuation at 30 September 1,852,078 2,071,266
Closing book cost 1,293,409 1,303,097
Investment holding gains at 30 September 558,669 768,169
Valuation at 30 September 1,852,078 2,071,266
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
75
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
The Company received £142,551,000 (2021: £38,032,000) from investments sold in the year. The book cost of these investments
when they were purchased was £53,618,000 (2021: £34,803,000). 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 2022 were £161,000 (2021: £213,000). These comprise stamp duty costs of
£110,000 (2021: £173,000) and commission of £51,000 (2021: £40,000). Sales transaction costs for the year to 30 September 2022 were
£53,000(2021: £15,000) and comprise commission.
10. Debtors
2022
£’000
2021
£’000
Amounts due from brokers in respect of portfolio trading – disposals 3,998 674
Accrued income and prepayments 8,400 8,754
12,398 9,428
11. Creditors: Amounts Falling Due Within One Year
2022
£’000
2021
£’000
Amounts due to brokers in respect of portfolio trading – purchases 890 724
Amounts due to brokers in respect of shares repurchased by the Company 3,262 –
Other creditors and accruals 1,075 1,143
5,227 1,867
12. Bank Loan
2022
£’000
2021
£’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 2022 the Company was in its final
few days of its three year secured fixed term multi-currency revolving loan facility of £50million (with an additional £50 million
available if required).
The facility was renewed on 4 October 2022 with the following new terms: Three year secured fixed term multi-currency revolving
credit facility of £60 million (with an additional £40 million available if required).
The main covenant under the loan facility required that, at each month end, total borrowings should not exceed £100 million
(2021:£100 million), Net Asset Value must not fall below £750 million (2021: £300 million) and the ratio of Adjusted Total Net Assets to
Debt is not to be less than 4:1 (2021: 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13 and the Report of the Directors on page 34 for further details.
76
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
13. Called Up Share Capital
2022
£’000
2021
£’000
Allotted, issued and fully paid:
215,737,992 (2021: 224,991,303) ordinary shares of 25p each 53,935 56,248
9,253,311 (2021: Nil) ordinary shares of 25p held in treasury 2,313 –
224,991,303 (2021: 224,991,303) total ordinary shares of 25p each 56,248 56,248
No shares were issued by the Company during the year (2021: 7,240,000 new shares were issued).
During the year, the Company bought back 9,253,311 shares to be held in treasury at a cost of £76,515,000 (2021: Nil).
Between 1 October 2022 and 5 December 2022, the Company bought back a further 1,668,897 shares into treasury.
14. Capital Reserve
CAPITAL
RESERVE
REALISED
£'000
CAPITAL
RESERVE
INVESTMENT
HOLDING GAINS
UNREALISED
£'000
2022
TOTAL
£'000
2021
TOTAL
£'000
At 1 October 2021 87,717 768,169 855,886 699,693
Net gains/(losses) on investments 53,618 (209,501) (155,883) 164,020
Repurchase of shares into treasury (76,515) – (76,515) –
Expenses charged to capital (8,043) – (8,043) (7,534)
Finance costs charged to capital (512) – (512) (277)
Currency translations 14 – 14 (16)
At 30 September 2022 56,279 558,668 614,947 855,886
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 £614,947,000, as at 30 September 2022 as this is subject to fair value
movements and may not be readily realisable at short notice.
15. Net Asset Value Per Share
2022 2021
Net assets (£'000) 1,830,384 2,064,658
Number of shares in issue (excluding shares held in treasury) 215,737,992 224,991,303
Net asset value per share 848.4p 917.7p
As at 30 September 2022 and 2021 there were no dilutive instruments held, therefore the basic and diluted net asset value per
share are the same.
At 30 September 2022 9,253,311 shares were held in treasury (2021: Nil).
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTS
GOVERNANCESTRATEGIC REPORT
77
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 29 and 30.
The Company has an investment in Frostrow with a book cost of £200,000 (2021: £975,000) and a fair value of £4,725,000 (including
the AIFM capital contribution of £125,000 (2021: £900,000)) as at 30 September 2022 (2021: £5,200,000)). During the year Frostrow
received a total of £2,678,000 in respect of AIFM fees, of which £209,000 was outstanding at 30 September 2022. (2021: £236,000).
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 (2021: £1,000,000) and a fair value of £9,720,000 as at 30 September 2022 (2021:£14,350,000). During the year Lindsell Train
received £8,034,000 in respect of Portfolio Management fees of which £627,000 was outstanding at 30 September 2022. (2021: £708,000).
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 70 and details of the remuneration payable to the
AIFM and the Portfolio Manager are disclosed in note 3 also on page 70.
Details of the fees of all Directors can be found on pages 45 to 50 and in note 4 on page 71. Directors’ interests in the capital of the
Company can be found on page 48. 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 16 to 19.
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.
At 30 September 2022, the fair value of the Company’s assets exposed to market price risk was £1,852,078,000 (2021: £2,071,266,000
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 2022 would have increased or decreased by £185,208,000 or 85.85p per share (2021: £207,127,000 or 92.1p per 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
78
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
The Company’s main exposure to interest rate risk during the year ended 30 September 2022 was through its three year £50,000,000
secured multi-currency committed revolving credit facility (with an additional £50 million facility available if required) with Scotiabank
Europe PLC which matured in early October 2022.
Borrowings at the year end amounted to £36,700,000 (2021: £36,700,000) at an interest rate of 3.257% (2.188% SONIA plus 1.069% margin
and fees (2021: 1.033% (0.078% LIBOR plus 0.955% margin and fees))).
If the above level of borrowing was maintained for a year, a 10% increase or decrease in SONIA: (2021: LIBOR) would decrease or
increase the revenue return by £20,000, (2021: £1,000), decrease or increase the capital return in that year by £60,000 (2021: £2,000)
and decrease or increase the net assets by £80,000 (2021: £3,000).
The weighted average interest rate, during the year, on borrowings under the above mentioned revolving credit facility was 1.74%
(2021: 1.02%). At 30 September 2022, the Company’s financial assets and liabilities exposed to interest rate risk were as follows:
2022 2021
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 7,835 – 22,531 –
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
#
367 – 1,136 –
Liabilities – – – –
#
Celtic 6% cumulative convertible preference shares and Frostrow Capital LLP AIFM Capital Contribution.
Currency Risk
The Financial Statements are presented in sterling, which is the functional and presentational currency of the Company. At 30
September 2022, 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 20.8% 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 2022 the Company held £181,124,000 (2021: £200,380,000) of investments denominated in U.S. dollars and
£203,900,000 (2021: £198,566,000) in euros.
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 2022
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 to the U.S. dollar and euro (2021: 10% increase and decrease).
The analysis is based on the Company’s foreign currency financial instruments held at each Statement of Financial Position date.
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:
2022
£’000
2021
£’000
Impact on revenue return 299 231
Impact on capital return 43,109 44,314
Total return after tax/increase in shareholders’ funds 43,408 44,545
If sterling had strengthened against the foreign currencies as stated above, assuming all other variables remain constant, this
would have had the following effect:
2022
£’000
2021
£’000
Impact on revenue return (245) (189)
Impact on capital return (35,288) (36,259)
Total return after tax/decrease in shareholders’ funds (35,533) (36,448)
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 ordinarily 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.
– 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 2022, the exposure to credit risk was £12,075,000 (2021: £23,441,000), comprising:
2022
£’000
2021
£’000
Fixed assets:
Non-equity investments (preference shares) 242 236
Current assets:
Other receivables (amounts due from brokers) 3,998 674
Cash and cash equivalents 7,835 22,531
Total exposure to credit risk 12,075 23,441
80
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 2022 it is estimated that 97.6% of the investment portfolio could be liquidated within 30 days with 61.6% in
sevendays, based on current trading volumes.
Liquidity risk exposure
FINANCIAL LIABILITIES COMPRISE:
30 SEPTEMBER
2022
£'000
30 SEPTEMBER
2021
£'000
Due within one month:
Balances due to brokers in respect of portfolio trading - purchases 890 724
Amounts due to brokers in respect of shares repurchased by the Company 3,262 –
Accruals 1,075 1,143
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, these
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.
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 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
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 2022
AS AT 30 SEPTEMBER 2021
LEVEL 1
£'000
LEVEL 2
£'000
LEVEL 3
£'000
TOTAL
£'000
Equity investments
2,065,830 – – 2,065,830
Limited liability partnership interest (Frostrow)
– – 4,300 4,300
Frostrow - AIFM capital contribution
– – 900 900
Preference share investments
236 – – 236
2,066,066 – 5,200 2,071,266
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 2021.
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
2022
£’000
2021
£’000
Opening fair value 5,200 3,950
Frostrow - AIFM capital contribution (repayment)/drawndown (775) 150
Total gains included in gains on investments in the Income Statement 300 1,100
Closing fair value 4,725 5,200
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 2022 would have increased/decreased by
£460,000 (2021: £430,000, applying the same assumptions).
CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES
The structure of the Company’s capital is described in note 13 on page 76 and details of the Company’s reserves are shown in the
Statement of Changes in Equity on page 64.
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.
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.
These requirements are unchanged since last year and the Company has complied with them at all times.
82
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
18. Net Cash Inflow from Operating Activities before Interest
2022
£’000
2021
£’000
Total (loss)/return before finance charges and taxation (116,867) 197,871
Add/(deduct): capital loss/(gain) before finance charges and taxation 163,912 (156,470)
Net revenue before finance charges and taxation 47,045 41,401
Decrease/(increase) in accrued income 81 (1,111)
(Decrease)/increase in creditors (68) 30
Taxation – overseas withholding tax paid (917) (833)
AIFM, portfolio management fees and other expenses charged to capital (8,043) (7,534)
Net cash inflow from operating activities 38,098 31,953
19. Substantial Interests
At 30 September 2022 the Company held interests in 3% or more of any class of capital in the following entities:
COMPANY OR LIMITED LIABILITY PARTNERSHIP
SHARES
HELD
2022
FAIR VALUE
£'000
% OF ISSUED
SHARE
CAPITAL
OR LIMITED
LIABILITY
PARTNERSHIP
INTEREST
A. G. Barr 4,427,500 20,145 4.0
Frostrow Capital LLP (unquoted)+ – 4,725 9.2
Manchester United 2,293,500 27,243 4.2
The Lindsell Train Investment Trust plc* 10,000 9,720 5.0
Young & Co’s Brewery (non voting shares) 1,042,282 6,191 4.3
+ 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 are detailed on page 30.
20. Post Balance Sheet Event
Subsequent to the year-end, on 4 October 2022, the Company's loan facility with Scotiabank was renewed. See page 34 for
furtherdetails.
During the period from 1 October 2022 to 5 December 2022, a further 1,668,897 shares were bought back and held in treasury at a
cost of £14,082,000.
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCESTRATEGIC REPORT
83
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 usually 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
2022
30 SEPTEMBER
2021
Share price (p) 2 800.0 876.0
Net asset value per share (p) 2 848.4 917.7
Discount 2 and 5 5.7% 4.5%
FURTHER INFORMATION
Glossary of Terms and
Alternative Performance Measures
84
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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
2022
£’000
30 SEPTEMBER
2021
£’000
Bank loan (prior charges) 65 (36,700) (36,700)
Net current assets 15,006 30,092
Net debt (21,694) (6,608)
Net assets 65 1,830,384 2,064,658
Gearing 3 1.2% 0.3%
LEVERAGE
For the purpose of the Alternative Investment Fund Managers (AIFM) Directive, leverage is a method which increases the
Company’s exposure, including the borrowing of cash and the use of derivatives.
Leverage is calculated slightly differently from the AIC method of calculating gearing in that it is expressed as a ratio between the
Company’s exposure and its net asset value. It is calculated under gross and commitment methods. Under the gross method,
exposure represents the Company’s investment positions excluding sterling cash balances. Under the commitment method,
exposure represents the Company's investment positions including sterling cash balances and after certain hedging and netting
positions are offset (where applicable). For these purposes the Board has set a maximum leverage of 125% for both methods.
30 SEPTEMBER
2022
30 SEPTEMBER
2021
Gross method 101.2% 100.3%
Commitment method 101.6% 101.4%
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
85
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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
2022
30 SEPTEMBER
2021
Opening NAV per share (p) 2 917.7 846.2
(Decrease)/increase in NAV per share (p) (69.3) 71.5
Closing NAV per share (p) 2 848.4 917.7
(Decrease)/increase in NAV per share (7.6)% +8.4%
Impact of dividends re-invested* +1.8% +2.2%
NAV per share total return 2, 3 and 4 (5.8)% +10.6%
* The NAV total return is calculated on the assumption that the total dividends of 17.4p (16.6p) 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 (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. The Board
continues to be conscious of expenses and works hard to maintain a sensible balance between high quality service and the cost
of provision.
PAGE
30 SEPTEMBER
2022
£'000
30 SEPTEMBER
2021
£'000
AIFM and portfolio
management fees 70 10,712 11,240
Operating expenses 71 1,078 1,007
Total expenses 11,790 12,247
Average net assets during the year 1,973,934 1,988,069
Ongoing charges 3 0.60% 0.62%
PEER GROUP
Finsbury Growth & Income Trust PLC is part of the AIC’s UK Equity Income Investment Trust 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 dividend
growth.
86
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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 aims to establish industry-specific disclosure standards across ESG topics that
facilitate communication between companies and investors about financially material, decision-useful information.
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
2022
30 SEPTEMBER
2021
Opening share price share (p) 2 876.0 840.0
(Decrease)/increase in share price (p) (76.0) +36.0
Closing share price (p) 2 800.0 876.0
(Decrease)/increase in share price 2 (8.7)% +4.3%
Impact of dividends re-invested* +3.1% +2.0%
Share price total return 2 (5.6)% +6.3%
* The share price total return is calculated on the assumption that the total dividends of 17.4p (16.6p) 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.
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.
FURTHER INFORMATION
GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES - CONTINUED
FURTHER
INFORMATION
INDEPENDENT
AUDITORS’ REPORT
FINANCIAL
STATEMENTSGOVERNANCESTRATEGIC REPORT
87
FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022
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
E-Mail: 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
10th Floor
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
Designed and printed by Perivan
Perivan 256419
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www.mobiusinvestmenttrust.com
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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 rms and
individuals we know are operating without
our authorisation.
3 Get impartial advice
Think about getting impartial nancial
advice before you hand over any money.
Seek advice from someone unconnected to
the rm 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-rm. 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 at a discount 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 and that any 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 87.
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PERIVAN 263840
Winner
CFI.co Award 2021. Category: Best ESG portfolio management strategy (UK)