01
Directors and Advisers
02
Strategic Report
03
Summary of Results
03
Investment Objective
04
Investment Policy
04
Chairman’s Statement
06
Investment Manager's Report
08
Portfolio and Assets
10
Principal Risks and Risk Management
11
Section 172(i) Statement
13
Directors’ Report
14
Corporate Governance Statement
22
Audit Committee Report
28
Directors’ Remuneration Report
30
Statement of Directors’ Responsibilities
34
Independent Auditors’ Report to the Members
36
Consolidated Income Statement
44
Consolidated Statement of Changes in Equity
45
Company Statement of Changes in Equity
46
Consolidated Balance Sheet
47
Company Balance Sheet
48
Consolidated and Company Cash Flow Statements
49
Notes to the Financial Statements
50
Shareholder Information
70
Notice of Annual General Meeting
71
02
02
DIRECTORS AND ADVISERS
Directors
I.R. Dighé (Chairman)
T.W.J. Cleverly (resigned 28 October 2022)
D.A. Horner (appointed 26 July 2023)
T.M. Metcalfe
M.H.W. Perrin
M.J. Weeks (resigned 26 July 2023)
Advisers
Secretary, Administrator and Registered Office
ISCA Administration Services Limited
Suite 8, Bridge House, Courtenay Street
Newton Abbot
Devon TQ12 2QS
Telephone: 01392 487056
tic@iscaadmin.co.uk
Custodian
Fiske plc
Salisbury House
London Wall
London EC2M 5QS
Broker
Singer Capital Markets Advisory LLP
One Bartholomew Lane
London EC2N 2AX
Independent Auditor
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
Investment Manager (from 26 July 2023)
Chelverton Asset Management Limited
Ground Floor Office
Basildon House
7 Moorgate
London EC2R 6AF
Solicitor
Stephenson Harwood LLP
1 Finsbury Circus
London EC2M 7SH
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Telephone: 0371 384 2030
Website: shareview.co.uk
Identification Codes
ISIN:
GB0004658257
SEDOL:
0465825
Bloomberg:
INV LN
LEI:
2138004PBWN5WM2XST62
Website:
https://theinvestmentcompanyplc.co.uk
For general shareholder queries please contact:
info@theinvestmentcompanyplc.co.uk
03
03
Summary of Results
At 30 June
2023
At 30 June
2022
Change
%
Equity Shareholders’ funds (£)
16,270,804
16,048, 1 9 1
1.39
Number of ordinary shares in issue
4,772,049
4,772,049
–
Net asset value (“NAV”) per ordinary share
340.96p
336.30p
1.39
Ordinary share price (mid)
340.00p
294.00p
15.65
Discount to NAV
0.28%
12.58%
12.30
At 30 June
2023
At 30 June
2022
Total return per ordinary share*
15.49p
(5.21)p
Dividends paid per ordinary share
–
–
* The total return per ordinary share is based on total income after taxation as detailed in the Consolidated Income
Statement and in Note 6.
STRATEGIC REPORT
04
04
STRATEGIC REPORT
continued
Investment Objective
At the Annual General Meeting held on 4 November 2020, Shareholders voted to amend the Company’s Investment
Objective and Policy to that shown below.
and to participate in enduring economic activities which lend themselves to genuine capital accumulation and wealth
At a General Meeting held on 26 June 2023, the members voted to amend the Investment Objective to: maximise
capital growth for Shareholders over the long-term by investing in high-quality, quoted, UK small and mid-
cap companies.
Investment Policy
The Company's investment policy to 26 June 2023 was
that the Company would seek to acquire and hold, with
no predetermined investment time horizon, a collection
of assets which, in the Directors’ judgement, are well-
suited to the avoidance of a permanent loss of capital.
These assets will be comprised of minority participations
in the equity, debt or convertible securities of quoted
businesses which the Directors believe are led by
responsible and like-minded managers and suitable for
the long-term compounding of earnings. In addition,
to protect its capital as well as to maintain liquidity for
future investments, the Company will keep reserves
in (a) liquid debt instruments such as cash in banks or
securities issued by governments and/or (b) liquid, non-
debt, tangible assets such as gold bullion, whether held
indirectly or in physical form.
The Company has no predetermined maximum or
minimum levels of exposure to asset classes, currencies
or geographies, and has the ability to invest globally.
These exposures will be monitored by the Board in order
to ensure an adequate spreading of risks. No holding in
an individual company or debt instrument will represent
more than 15% by value of the Company’s total assets
at the time of acquisition (such restriction does not,
however, apply to gold bullion or cash balances). The
Company’s holdings of gold bullion may be as high as
35% of total assets at the time of investment.
Given the Company’s investment objective, asset mix
and time horizon, the portfolio will not seek to track any
benchmark or index. The Company will not invest more
than 10% of its total assets in other listed closed-ended
investment funds. The Company will not use derivative
instruments for speculative purposes, nor will it use
currency hedges to manage returns in any currency.
The Company’s gearing will not exceed 20% of net
assets at the time of drawdown.
With effect from 26 June 2023, the Company’s
investment policy will be as follows: The Company
05
05
intends to fulfil its investment objective through
investing in cash-generative quoted UK small and
mid-cap companies that are expected to grow faster
than the UK stock market as a whole over the long
term and which can finance their own organic growth.
The Company will primarily invest in equity securities
of companies with shares admitted to listing on the Main
Market, the AQSE or to trading on AIM with a market
capitalisation of less than £250 million at the time of
investment. The Company may also invest in companies
with shares admitted to listing on the Main Market, the
AQSE or to trading on AIM with a market capitalisation
of £250 million or more at the time of investment
for liquidity purposes. The Company will identify
prospective companies through a formal quantitative
and qualitative screening process which focuses on
criteria such as the ability to convert a high proportion
of profit into cash, sustainable margins, limited working
capital intensity and a strong management team.
Companies that successfully pass the screening process
will form part of the Company’s ‘investable universe’ of
prospective companies.
The Company has not set any limits on sector weightings
within the portfolio but its exposures to sectors and
stocks will be reported to, and monitored by, the
Board in order to ensure that adequate diversification
is achieved. The Company will maintain a diversified
portfolio of a minimum of 60 holdings in UK small and
mid-cap companies.
The Company may also invest in cash, cash equivalents,
near cash instruments and money market instruments.
The Company will apply the following restrictions on its
investments:
•
not more than 10% of the Company’s Gross Assets at
the time of investment will be invested in the securities
of a single issuer;
•
no investment will be made in companies that are not
listed or traded on the Main Market, the AQSE or AIM
at the time of investment, nor in any companies which
have not applied for their shares to be admitted to
listing or trading on these markets;
•
no investment will be made in other listed or unlisted
closed-ended investment funds or in any open-ended
investment funds; and
• the
Company
will
not
invest
directly
in
FTSE
100 companies (preference shares, loan stocks or
notes, convertible securities or fixed interest securities
or any similar securities convertible into shares), nor
will it invest in the securities of other investment trusts
or in unquoted companies. The Company may, on
some occasions, hold such investments as a result
of corporate actions by investee companies. If the
Company holds shares in a company which enters
the FTSE 100, it may not immediately divest of those
shares but will do so when it considers appropriate,
subject to market conditions.
The Company may hold assets acquired by the
Company prior to the adoption of its investment
policy for which there is no market and whose value
the Company has written down to zero. The Company
shall dispose of such assets as soon as is reasonably
practicable.
No material change will be made to the investment
policy without the approval of Shareholders by ordinary
resolution.
Chairman’s Statement
For the year ended 30 June 2023 the Company was
self-managed and the Company's objective until July
2023 was primarily to protect the purchasing power of
capital. The details of that historic investment policy are
set out on page 4 of this report for reference purposes.
Over its history, the Company has undergone a number
of changes of investment policy and operational
structure to most appropriately reflect the interests
of its Shareholders, with the most recent change
in November 2020.
Whilst the Board was satisfied with the Company’s
performance since 2020, it has been mindful for some
time of the size of the Company, together with the
illiquid nature of the ordinary shares, and the impact
of these factors on the discount to NAV at which the
ordinary shares trade. This discount persisted despite
the strong NAV performance. Accordingly, the Board
announced in February 2023 that it was actively
considering credible opportunities to grow the size
and increase the liquidity of the Company, while also
providing an immediate complete liquidity option for all
Shareholders who wished to realise their shareholding.
This process culminated in a number of proposals
being put to Shareholders and these were approved
at a General Meeting held on 26 June 2023, with over
99.99% of votes cast in favour of the proposals. In July
2023 a tender offer was carried out to allow those
Shareholders who wished to realise their shareholding to
exit and Chelverton Asset Management ("Chelverton")
were appointed as the Company’s Investment Manager
to oversee all aspects of the management of the
Company’s assets, with a new investment policy.
The
Company’s
new
investment
objective
is
to
maximise capital growth for Shareholders over the
long term by investing in high quality quoted UK small
and mid-cap companies. Details of this objective and
the consequent investment policies are elaborated in
detail elsewhere in this Report and Accounts.
Following the change of investment policy, it is expected
the majority, if not all, of the Company’s return will be
derived from capital appreciation and any dividend will
be modest in the context of total long-term returns. The
Board is not proposing a dividend is paid for the year
ended 30 June 2023 given the opportunity provided to
Shareholders, for those who wished to, to realise their
holding in the Company post the year end.
Performance in the year to 30 June 2023
During the twelve months the net asset value (“NAV”)
increased by 1.39% to 340.96p and the share price
increased by 15.65% to 340.00p. At the year-end
the Company was in transition following the general
meeting held on 26 June 2023 and 36.7% of net assets
were invested in 11 different businesses, a further 15.9%
invested in gold bullion held through two ETFs, and
47.4% was in cash net of other liabilities, together with
a small number of other legacy assets. The holdings
as at 30 June 2023 are set out on page 10. As part of
the process of changing to an investment manager the
portfolio was substantially converted into cash in July
2023 and has subsequently been invested in a number
of small and mid-cap companies in line with the new
investment policy.
Income and expenses
Total
expenses,
including
those
that
fell
to
be
accounted for directly through reserves, included
considerable one-off costs in relation to the proposals
put to Shareholders at the General Meeting on 26 June
2023. The proposals were structured in a manner
which apportioned these costs fairly across both new
incoming Shareholders and those who redeemed their
shares pursuant to those proposals.
06
06
STRATEGIC REPORT
continued
07
07
Board
As mentioned in my statement last year, Tom Cleverly
stood down as a Director at the Company’s Annual
General Meeting in October 2022. Subsequent to the
reorganisation of the shares and the appointment of
Chelverton Asset Management as Investment Manager
to the Company on 26 July 2023, Michael Weeks stood
down from the Board. The Board wishes to record their
deep appreciation of both Tom and Michael’s significant
contribution to the Company since their appointment
in November 2020 and wishes them both well in their
future endeavours.
On 26 July 2023, we were delighted to welcome
David Horner to the Board. His deep knowledge and
experience will be highly accretive as we serve to
increase the value of the Company.
Outlook
Whilst we start the Company's next chapter still as a
modest sized investment trust, the Company's assets
are now being managed by an award-winning asset
manager in Chelverton, with a strong track record
of creating value for investors, whilst increasing the
Company's size. I look forward to working with the
Chelverton team as we look to maximise capital growth
over the long term by investing in high quality small and
mid-cap companies.
I. R. Dighé
Chairman
4 October 2023
08
08
Investment Manager's Report
With the new Manager in place, the Company's new
investment strategy is to generate long-term capital
growth for its Shareholders by investing in a portfolio
of small and mid-cap UK listed growth stocks, capturing
the well-publicised small cap outperformance effect.
The characteristics the new Manager looks for in their
investments are companies that can grow faster than
the market through the economic cycle, that self-fund
their organic growth because they are cash generative,
and have high levels of revenue visibility.
The Manager has a 3-stage investment process.
Firstly, deploying a quantitative screen to identify
growing companies which generate cash, have low
working capital intensity and have a sensible balance
sheet. Secondly, reviewing screened companies to
better understand the business model, predictability
of sales, quality of management and sustainability of
margins. Finally, once an investment universe is formed
from stages 1 and 2, the Managers review a company’s
valuation (against their growth rate, margin and sales
visibility) to decide whether to include it in the portfolio.
The basic premise of the investment strategy is that if
a company can grow faster than the rest of the market
and fund its own growth through its own cashflow,
then over time it should outperform the wider market.
Chelverton has successfully deployed this approach in
its open-ended Growth fund since it launched in 2014.
With small and mid-caps underperforming their large
cap peers in the last 12-18 months, and UK equities
trading at historic lows vs their global peers, the
Manager believes this is an excellent time, as we near
the point of maximum pain at the top of the interest
rate cycle, to be deploying your capital in a portfolio
of attractive small and mid-cap growth stocks on
relatively low valuations to generate long-term capital
growth for our Shareholders.
With the legacy portfolio largely realised, the Manager
has started to invest in some of its favourite mid and
small cap shares, which manifest the characteristics
referred to above. The initial focus has been on the
more liquid mid cap names, which the Manager feels are
currently under-rated, with the intention being to build
up the smaller cap weighting over time as opportunities
present themselves at the right valuation.
Examples of new mid cap investments by the Company
include:
1.
Auction Technology Group ("ATG")
– a leading
provider of online bidding services to auctioneers
in
the
Art
and
Antiques
and
Industrial
and
Commercial products segments in the USA and
UK. An exceptionally high margin business, ATG
is benefitting from the trend of more bidding at
auctions moving online, with auctioneers benefitting
from much wider audiences that can be brought to
them by accessing ATG’s customer list. This growth
is being supplemented by a move into adjacent
services for auctioneers and their customers such
as payments and delivery, significantly increasing
the value ATG can drive from its customer base of
nearly 4,000 auctioneers.
2.
Ascential
– a media group, which owns an attractive
group of high margin assets with excellent revenue
visibility including: (i) two major trade shows, Cannes
Lion, the leading global event for the marketing and
advertising industry, and Money2020, a leading
FinTech show held annually in the USA and Europe,
(ii) WGSN, the leading subscription data provider
for the fashion and beauty industry, and finally (iii)
a collection of digital commerce businesses, which
advise brands on how to position themselves on
online retail platforms. Management have initiated
a de-merger process, which the Manager feels
should realise meaningful upside above its current
undemanding valuation.
STRATEGIC REPORT
continued
09
09
3.
Globaldata
–
another
media
business,
which
provides what it regards as “gold standard”
online data and analytics across a wide range of
industry sectors from a single platform. An annual
subscription business with high renewal rates gives
Globaldata excellent cashflow and revenue visibility
characteristics. Already a high margin business,
Globaldata is highly operationally leveraged off a
relatively fixed cost based and should continue to
see margins expand as it adds more customers to
its 5,000 subscriber base.
At the smaller cap end of the market, the Manager has,
amongst others, added the following names:
1.
Aquis Exchange
– provides an equity trading
exchange across most European equity markets
in
competition
with
the
national
exchanges
and competitors like Turquoise. It has a disruptive
“all you can eat” subscription pricing model, which
makes its offering very competitive relative to
its competition. It also sells its exchange software
technology to non-competing exchanges in other
geographies and across other asset classes. It has
also acquired its own stock exchange – The Aquis
Stock Exchange – for growth companies. In the
Manager’s view Aquis has multiple opportunities
for growth across its trading platform, proprietary
data and technology base.
2.
Severfield
- the UK’s leading structural steel
manufacturer
(used
in
commercial
buildings,
infrastructure projects and leisure facilities like
stadia) has an impeccable track record under its
current management team. In the Manager’s view
it is very lowly rated especially given the growth
potential offered by its joint venture with a local
steel producer in the large Indian construction
market, which is just starting to shift from concrete
frames to steel structures.
3.
Ebiquity
– audits the effectiveness of advertisers’
campaigns for many of the leading global brands.
New management have been productising and
automating many of the company’s data driven
solutions to improve both its own operational and
customers’ marketing efficiency. In the Manager’s
view the low rating currently accorded to this
business does not give credit to its market position
with many of the world’s leading global brands nor
to its profitability and growth prospects.
4.
Restore
– the second largest records storage
business in the UK, enjoying high levels of recurring
revenues, has recently seen its share price slump
on the back of profit warnings relating to some
of its ancillary revenues, namely shredding, on
the back of weaker paper recycling prices, and IT
asset destruction, as companies are holding on to
their IT hardware assets for longer as the economy
slows. The subsequent de-rating in the Manager’s
view materially undervalues the strength of the
underlying records management business.
Whilst the list above is not exhaustive, the examples
given are designed to give Shareholders an idea of the
type of businesses the Manager is investing in. Many of
the companies are market leaders in their own space
and are generally high margin, have low capital intensity
and above average prospects. Due to the current
economic backdrop and interest rate environment,
they are trading on depressed valuations, the like of
which the Manager has not seen for several years, so
representing in the Manager’s view an excellent time to
build a portfolio to generate long-term capital growth
for Shareholders.
Chelverton Asset Management
4 October 2023
Portfolio and Assets
At 30 June 2023
Security
Country
Holding
Fair
Value
£
% of total
net assets
Hal Trust
Netherlands
13,024
1,309,776
8.0
Imperial Oil
Canada
20,000
805,803
5.0
Lucas Bols
Netherlands
65,000
582,847
3.6
Emmi
Switzerland
700
531,123
3.3
Agnico Eagle Mines
Canada
13,000
511,043
3. 1
Barrick Gold
Canada
35,000
466,060
2.9
Cembre
Italy
16,000
420, 1 1 2
2.6
Bucher Industries
Switzerland
1,200
416,740
2.6
Tonnellerie François Frères Group
France
10,003
351,916
2.1
Nedap
Netherlands
6,904
344,786
2.1
Bakkafrost
Faroe Islands
5,000
235,701
1.4
Total equity participations
5,975,907
36.7
Invesco Physical Gold ETC
UK
10,000
1,455,953
8.9
WisdomTree Physical Gold ETC
UK
8,000
1,132,610
7.0
Total gold
2,588,563
15.9
Cash
8,282,426
50.9
Other liabilities net of other assets
(576,092)
(3.5)
Total cash less other net current liabilities
7,706,334
47.4
Total net assets
16,270,804
100.0
10
10
STRATEGIC REPORT
continued
Principal Risks and Risk Management
Principal Risks and Uncertainties
The management of the business and the execution of the Company’s strategy are subject to a number of risks.
An assessment of the principal risks to the Group and Company has been carried out, including those that would
threaten its business model, future performance, solvency and liquidity.
The current economic environment, including the level of inflation, rising interest rates and the conflict in Ukraine,
continue to have an effect on both global and domestic economies. These events are all being closely monitored by the
Board as is their potential impact on the Company.
The Group’s principal risks are set out below. An explanation of how these have been mitigated or managed is also
provided, where appropriate. The key business risks affecting the Group are:
RISK
MITIGATION
BUSINESS
RISK
The
profitability,
market
positioning
and
outlook for companies in which the Company
is invested may decline or fail to make
expected progress. This may be because of
internal factors at the investee company or
external factors such as competitive pressures,
economic downturns or political events.
The
Company
looks
to
invest
in
businesses
that
can
demonstrate
resilient characteristics and a shared
philosophy around long term creation
of value.
CONCENTRATION
RISK
The Company has too much exposure to one
stock or sector.
Under the new investment policy,
from 26 July 2023 investments in any
one company shall not exceed 10%
of the Company's gross assets at the
time of acquisition.
MONETARY
RISK
The widespread implications of quantitive
easing and other monetary policies, which
include mounting inflationary pressure, pose a
risk to the real value of the Company's assets.
The
Company
looks
to
own
a
portfolio of assets that possess an
enduring real value whether from the
value of the underlying assets in an
investment, or in the investee’s ability
to create an enduring profit stream.
OPERATIONAL
RISK
The Company is reliant on service providers
including, ISCA Administration Services Limited
as Administrator and Company Secretary, and
Fiske plc as Custodian. Failure of the internal
control systems of these parties could result in
losses to the Company.
The
Board
formally
reviews
the
Company’s service providers on an
annual basis.
There are other risks that are becoming more prominent but are not yet considered key risks.
11
11
Global conflict
The continuing war between Russia and Ukraine has
had a significant impact, inter alia, on inflation and, in
conjunction with affairs in China, an impact on supply
chains and globalisation. Investee companies will vary
as to the impact on them and their ability to adapt.
Inflationary pressure
Inflation has escalated sharply in the last 12 months and
the Bank of England has raised interest rates on several
occasions in an attempt to reduce the level of inflation.
Not all investee companies are well-placed to pass on
cost pressures to their customers. In addition, for the
Company, it is expected that operating costs will rise
more than dividend income.
In addition, there are other risks that may materially
impact the Company, however, the likelihood thereof is
considered small.
Foreign currency risk
Under
the
investment
policy
in
operation
during
the year, the Company was invested in stocks in
overseas markets dominated in foreign currencies
thus increasing the foreign currency risk. However, as
discussed under Post Balance Sheet Events in Note 19,
the policy approved at the General Meeting on 26 June
2023 means that, going forward, the Company will only
invest in UK stocks.
Regulatory risk
The Company operates in an evolving regulatory
environment and faces a number of regulatory risks.
A breach of sections 1158/1159 of the Corporation Tax
Act 2010 would result in the Company being subject to
capital gains tax on portfolio investments. Breaches
of other regulations, including the Companies Act
2006, the United Kingdom Listing Authority ("UKLA")
Listing Rules, the UKLA Disclosure Guidance and
Transparency Rules, or the Alternative Investment
Fund Managers’ Directive, could lead to a detrimental
outcome. Breaches of controls by service providers to
the Company could also lead to reputational damage or
loss. The Board monitors compliance with regulations,
with reports from the Administrator.
Discount volatility
The Company’s shares may trade at a price which
represents a discount to its underlying NAV.
Market price risk
The Board monitors the prices of financial instruments
held by the Company on a regular basis. In addition,
it is the Board’s policy to hold an appropriate spread
of investments in the portfolio in order to reduce risks
arising from investment decisions and investment
valuations. The Board actively monitors market prices
throughout the year and meets regularly in order
to review investment strategy. Most of the equity
investments held by the Company are listed on a
recognised Stock Exchange.
Liquidity risk
The
Company's
assets
mainly
comprise
readily
realisable quoted securities that can be sold to meet
funding commitments if necessary.
Credit risk
The failure of a counterparty to a transaction to
discharge its obligations under that transaction that
could result in the Company suffering a loss. Normal
delivery versus payment practice and a review of
counterparties and custodians by the Board mean that
this is not a significant risk.
Interest rate risk
Given the changes in the portfolio in November 2020
this is not considered to be a direct risk to the Company
other than through its effect on investee companies.
12
12
STRATEGIC REPORT
continued
Section 172(i) Statement
Section 172(i) of the Companies Act 2006, requires
Directors to take into consideration the interests of
stakeholders in their decision making. The Directors
continue to have regard to the interests of, and
the impact of the firm’s activities on, the various
stakeholders in the firm and to consider what is most
likely to promote the success of the Company for its
members in the long term.
Whilst the importance of giving due consideration to our
stakeholders is not new, S172 requires that the Board
elaborates how it discharges its duties in this respect.
We have categorised our key stakeholders into two
groups. Where appropriate, each group is considered
to include both current and potential stakeholders:
• Shareholders
•
Administrator and other service providers
Shareholders
Our Shareholders are of course the owners of the
Company and we need to act fairly as between
members of the Company.
During the year the Board considered the size of the
Company and after consultation with Shareholders
made the following proposals to Shareholders:
1.
To offer existing Shareholders an exit from the
Company via a Tender Offer.
2.
To announce an Offer for Subscription to enable
new Shareholders to subscribe for new shares in
the Company.
3.
To change the Investment Objective and Policy.
4.
To appoint Chelverton Asset Management as
Investment Manager.
5.
To cancel the share premium account and capital
redemption reserve.
The proposals were approved by Shareholders at a
General Meeting on 26 June 2023. Further details are
given in Note 19 on pages 67 to 69.
We have a regular dialogue with our key Shareholders
– but all are welcome to be in communication. All
Shareholders are encouraged to attend our Annual
General Meeting.
Investment Manager
As part of the changes as stated above and in Note
19, Chelverton Asset Management were appointed
as Investment Manager on 26 July 2023. Details of
the Investment Management Agreement are given in
Note 3 on page 55.
Administrator and other service providers
The Board seeks to maintain constructive liaison with its
service providers so as to optimise the way in which the
Company’s needs are met.
ISCA
Administration
Services
acted
as
Company
Secretary and Administrator during the year and
worked with the Directors to ensure the Company
continued to operate efficiently.
The Strategic Report has been approved by the Board
of Directors.
On behalf of the Board
I. R. Dighé
Chairman
4 October 2023
13
13
The Directors present their report and audited financial
statements for the year ended 30 June 2023.
The Company
The Company is an investment company within the
meaning of Section 833 of the Companies Act 2006
and has been granted approval from HM Revenue
& Customs (“HMRC”) as an investment trust under
sections 1158 and 1159 of the Corporation Tax Act
2010 and will continue to be treated as an investment
trust company, subject to continuing to meet the
conditions for approval. The Company has a premium
listing on the London Stock Exchange and its principal
activity is portfolio investment.
The Directors are of the opinion that the Company has
conducted its affairs for the year ended 30 June 2023
so as to be able to continue to qualify as an investment
trust.
The Company’s status as an investment trust allows it
to obtain an exemption from paying taxes on the profits
made from the sale of its investments and all other net
capital gains.
As an investment company, managed and marketed
in the UK, the Company is an Alternative Investment
Fund (“AIF”) under the provisions of the Alternative
Investment
Fund
Manager’s
Directive
(“AIFMD”).
The Company was registered by the FCA as a Small
Registered UK Alternative Investment Fund Manager
(“AIFM”) with effect from 29 March 2018.
The Company owns Abport Limited, an investment
dealing company, and New Centurion Trust Limited,
an inactive investment company (the “Subsidiaries”).
The Company and its wholly owned Subsidiaries
together comprise a group (the “Group”).
Investment Policy
The Company’s Investment Policy is set out on pages
4 and 5.
Performance
Details of the Company’s performance during the
financial year are provided in the Chairman’s Statement
on page 6 and the financial statements on pages 44
to 69.
DIRECTORS’ REPORT
Key Performance Indicators (“KPIs”)
The Board reviews performance by reference to a number of KPIs and considers that the most relevant KPIs are
those that communicate the financial performance and strength of the Group as a whole. The Board monitors the
following KPIs:
NAV performance:
The NAV per
ordinary share at 30 June 2023
was 340.96p per share (2022:
336.30p). The total return of the
NAV was 1.39% (2022: -1.43%).
Discount of share price in relation
to NAV:
Over the year to 30 June
2023, the Company’s share price
moved from trading at a discount
of 12.58% to a discount of 0.28%.
Ongoing
Charges
Ratio:
The
Ongoing
Charges
Ratio
for
the
year
to
30
June
2023
amounted to 2.39% (2022: 2.17%).
14
Going Concern
In accordance with the Financial Reporting Council’s
guidance
on
going
concern,
the
Directors
have
undertaken a review of the Company’s ability to
continue as a going concern.
The Directors believe that the Company is well placed
to manage its business risks and that the assets of
the Company consist mainly of securities which are
readily realisable. The Directors are of the opinion
that the Group has adequate resources to continue
in operational existence for the foreseeable future
and that it is therefore appropriate to adopt the going
concern basis in preparing the financial statements. In
arriving at this conclusion, the Directors have considered
the liquidity of the portfolio and reviewed cash flow
forecasts showing the ability of the Company to meet
obligations as they fall due for a period of at least 12
months from the date that these financial statements
were approved.
In addition, the Directors have regard to ongoing
investor interest in the sustainability of the Company’s
business model and in the continuation of the Company,
specifically being interested in feedback from meetings
and conversations with Shareholders.
In addition to considering the principal risks on pages
11 and 12 and the financial position of the Company as
described above, the Board has also considered the
following further factors:
•
the Board continues to adopt a long-term view when
making investments;
• regulation will not increase to a level that makes the
running of the Company uneconomical; and
•
the performance of the Company will be satisfactory
and should performance be less than the Board deem
acceptable it has the powers to take appropriate
action.
Viability Statement
Over the Company’s life it has experienced a number of
significant social and economic events impacting world
history. The level of inflation, rising interest rates and the
conflict in Ukraine are the latest events impacting not just
this Company but all commercial entities. The change
in Investment Policy and the decision as supported by
Shareholders during the year demonstrates the viability
of the Company as a vehicle for delivering investment
performance to Shareholders. The Board's analysis
is based on the performance and progress of the
Company and its investment portfolio, an assessment
of current and future risks, the appropriateness of
the investment strategy and review of the financial
position of the Company, and operating expenses
over the next two years. In addition, consultation with
key Shareholders as to their perspectives is a key
consideration.
The Directors also consider viability in the context
of the Company being a going concern and it being
appropriate that the accounts are prepared on such
a basis. This is elaborated in Note 1 to the financial
statements.
Future Prospects
The future of the Company is dependent upon the
success of the investment strategy. The outlook for the
Company is discussed in the Chairman’s Statement on
pages 6 and 7.
15
Board Diversity
When recruiting a new Director, the Board’s policy is
to appoint individuals on merit matched against the
skill requirements identified by the Board. The changes
to the Board during the reporting period were driven
from the re-structuring undertaken and voted on by
Shareholders including David Horner joining the Board
as a representative of the newly appointed Investment
Manager.
The Board believes diversity is important in bringing
an
appropriate
range
of
skills,
knowledge
and
experience to the Board and gives this consideration
when recruiting new Directors and has also noted the
requirements of Listing Rule 9.8.6R (9) following the
Parker Report on increasing the diversity on the boards
of public companies. As at 30 June 2023, there were
four male Directors on the Board. All Directors identified
themselves as Caucasian by ethnic background. As
disclosed in Note 19, Michael Weeks stepped down as a
Director on 26 July 2023 with David Horner appointed
as a Director on the same day.
When making appointments in the future the Board
will continue to operate an open-minded approach
to
recruitment
without
restrictions
against
any
perceived group or individual. The Board will take into
consideration the diversity targets set by Listing Rule
9.8.6R (9) when making future appointments, however
due to the size of the Board meeting a target of 40% of
Directors being women with one being a senior Board
position, and one individual being from a minority ethnic
background may not be reached in the immediate
future.
The Company does not have any employees other
than Directors and, as a result, the Board does not
consider it necessary to establish means for employee
engagement with the Board as required by the latest
version of the UK Corporate Governance Code.
Environmental, Human Rights, Employee, Social and
Community Issues
The Board consists entirely of Non-Executive Directors
and during the year the Company had no employees.
The Company has no direct impact on the community
or the environment, and as such has no environmental,
human rights, social or community policies. In carrying
out
its
investment
activities
and
in
relationships
with suppliers, the Company aims to conduct itself
responsibly, ethically and fairly.
Environmental, Social and Governance factors are
considered as part of the commercial evaluation of
investee companies.
Modern Slavery Act
As an investment vehicle that does not provide goods
or services in the normal course of business, nor does
it have, apart from the Directors, any employees, the
Directors consider that the Company is not required to
make a slavery or human trafficking statement under
the Modern Slavery Act 2015.
Criminal Finances Act 2017 and Bribery Act 2010
The Company has zero tolerance towards the criminal
facilitation of tax evasion and a policy of zero tolerance
in relation to bribery and corruption both in its own
actions and those of its third party advisors and service
providers.
Greenhouse Gas Emissions
As an investment company with its activities outsourced
to third parties or self managed by the Non-Executive
Directors, the Company’s own direct environmental
impact is minimal. The Company has no greenhouse gas
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. Furthermore, the
Company and Group considers itself to be a low energy
user under the Streamlined Energy & Carbon Reporting
regulations and therefore is not required to disclose
energy and carbon information.
Directors
Ian Dighé (Chairman)
was appointed to the Board on
6 July 2018. He has significant listed company experience,
particularly
in
the
investment
banking,
corporate
broking, asset management and closed end funds
16
DIRECTORS' REPORT
continued
sectors. He was a co- founder of Bridgewell Group plc
and was Chairman of Miton Group plc from February
2011,
overseeing
the
successful
refinancing
and
subsequent growth of the group. He retired from the
Miton board in December 2017. He is an Independent
Director of Edelweiss Holdings plc, and a director of a
number of private companies, and charities.
Tim Metcalfe
was appointed to the Board on 6 July
2018. He is an experienced corporate financier, having
spent over 20 years working at Robert Fleming & Co.,
N M Rothschild, Westhouse Securities, and Northland
Capital Partners and was Joint CEO of Zeus Capital,
prior to being the co-founder, in 2015, of IFC Advisory,
an investor relations and financial PR adviser to small
and mid-cap companies.
Martin
Perrin
(Audit
Committee
Chairman)
was
appointed to the Board in June 2013. He is a non-
executive director of Fiske plc. He is a Chartered
Accountant and Chartered Fellow of the Securities
Institute and has wide international experience of
operations and finance in both regulated financial
services firms and in technology companies in industry.
Michael
Weeks
was
appointed
to
the
Board
on
4 November 2020 and resigned on 26 July 2023. He
is a member of the executive committee of Edelweiss
Holdings plc, where he has been part of the investment
team since 2011. He is a CFA charterholder and holds
degrees in chemical engineering and philosophy.
David Horner
was appointed to the Board on 26 July
2023. He qualified as a chartered accountant and has
considerable experience of analysing and working with
smaller companies. In 2013 he resigned his membership
of The Institute of Chartered Accountants in England
and Wales, as his career is now fully involved in fund
management.
Details of the interests of the Directors in the share
capital of the Company are set out in the Directors’
Remuneration Report on page 32.
In accordance with the policy adopted by the Board,
all Directors, with the exception of Michael Weeks,
will stand for re-election and David Horner for
election at the forthcoming AGM. Further details of
the independence of the Board and Board tenure is
provided in the Corporate Governance Statement.
The Board has considered the position of the Directors
as part of the evaluation process and believes that
it would be in the Company’s best interests for each
of them to be proposed for election or re-election at
the forthcoming AGM, given their material level of
contribution and commitment to the role.
As a non-executive Director of Fiske plc, Mr Perrin
is deemed to be interested in the Company’s past
management
agreement
and
current
custody
agreement. Mr Horner, by virtue of being Managing
Director
of
Chelverton
Asset
Management,
the
Company's Investment Manager from 26 July 2023, is
deemed to be interested in the Investment Management
Agreement. There were no other contracts subsisting
during the year under review or up to the date of this
report in which a Director of the Company is or was
materially interested and which is or was significant in
relation to the Company’s business.
Directors’ and Officers’ Liability Insurance
Directors’ and Officers’ liability insurance cover was in
place throughout the financial year and as at the date
of this report. The Company’s Articles of Association
provide, subject to the provisions of UK legislation, that
the Directors may be indemnified out of the assets of
the Company in respect of liabilities they may sustain or
incur in connection with their appointment.
Conflicts of Interest
The Companies Act 2006 provides that a director
must avoid a situation where they could have, a direct
or indirect interest that conflicts, or could perceivably
conflict with the Company’s interests. The Company’s
Articles of Association permit the Board to consider
and, if appropriate, to authorise situations where a
Director has an interest that conflicts, or might possibly
conflict, with the Company. The Board has a formal
system in place at each board meeting for the Directors
17
to
declare
situations
for
authorisation
by
those
Directors not involved in the situation. Any situations
considered
and
any
authorisations
subsequently
given are appropriately recorded. Any Director who
is considered conflicted might be asked to leave the
meeting or remain but not participate in the discussion
and abstain from voting or influencing a decision or
course of action. All Directors acknowledge that any
decision they take as a Directors of the Company must
be taken to promote the success of the Company.
The Board believes that the system it has in place for
reporting, considering and recording situations where a
Director has an interest that conflicts such as Mr Perrin’s
and Mr Horner's appointments as discussed on page 22,
or might possibly conflict, with the Company operated
effectively during the year under review.
Capital Structure
As at 30 June 2023, the Company’s share capital
consisted of 4,772,049 ordinary shares of 50p each.
In addition, there are 1,717,565 fixed rate preference
shares of 50p in issue, all of which are held by New
Centurion Trust Limited a wholly owned subsidiary
of the Company. The fixed rate preference shares
are non-voting, are entitled to receive a cumulative
dividend of 0.01p per share per annum, and are entitled
to receive their nominal value, 50p, on a distribution of
assets or winding up. Preference shares are disclosed
as equity in accordance with IAS 32.
At any general meeting of the Company, holders of
ordinary shares are entitled to one vote on a show of
hands and on a poll, to one vote for every share held.
During the year under review the Company did not
repurchase any ordinary shares in the market, issue any
ordinary shares or sell ordinary shares from treasury.
The Company held no shares in treasury as at 30 June
2023. The authorities granted at the 2022 AGM, to
buy back shares and to issue new ordinary shares
or sell ordinary shares from treasury for cash, were
temporarily supplemented by resolutions approved at
a General Meeting on 26 June 2023, for the purposes
of the transactions set out in Note 19 and will expire
at the conclusion of the 2023 AGM. The Directors
are proposing that these authorities be renewed at
the AGM. At the General Meeting on 26 June 2023,
Shareholders gave approval to proposals that included
a Tender Offer to buy back shares and an Issue to raise
new capital.
As announced on 18 July 2023, 3,980,664 ordinary shares
were validly tendered pursuant to the Tender Offer,
constituting 83.4% of the existing issued share capital.
All validly tendered ordinary shares were accepted in
full, with 3,747,673 ordinary shares repurchased by the
Company and 232,991 ordinary shares sold to Incoming
Shareholders pursuant to the Matched Bargain Facility.
In addition, on 26 July 2023 the Company issued
812,829 new ordinary shares ("new ordinary shares")
in connection with the Offer for Subscription and
Intermediaries Offer.
Following
Admission,
and
completion
of
the
Tender
Offer,
the
Company's
total
issued
share
capital comprises of 5,584,878 ordinary shares. The
Company will hold all 3,747,673 ordinary shares that
were repurchased pursuant to the Tender Offer in
Treasury. Therefore, the total number of shares with
voting rights in the Company will be 1,837,205.
The above figure of 1,837,205 may be used by
Shareholders as the denominator for the calculations
by which they will determine if they are required to
notify their interest, or a change to their interest in, the
Company under the FCA's Disclosure Guidance and
Transparency Rules.
18
DIRECTORS' REPORT
continued
Substantial Shareholdings
As at 30 June 2023, the Company had been notified of the following notifiable interests in its voting rights:
Number of
ordinary shares
% of
voting rights
Edelweiss Holdings Plc
1,246,909
26.13
Philip J. Milton & Company plc
432,086
9.05
Mr C.P. Kirkley
291,443
6.11
Mr C.A. Kirkley
291,443
6.11
Aboyne-Clyde Rubber Estates of Ceylon Ltd
203,800
4.27
On 27 July 2023 the Company was notified that Edelweiss Holdings Plc and Aboyne-Clyde Rubber Estates of
Ceylon Limited had tendered all of their shares of 1,246,909 and 203,800 respectively and no longer held any
shares in the Company. At the date of this report the Company had been notified of the following new interests in
the voting rights: Mr J Baker 287,042 (15.62%) and Chelverton Asset Management Limited 90,000 (4.90%).
Controlling Party
The Director’s consider that there is no controlling
party.
Change of Control
The Directors are not aware of any agreements
between Shareholders that may result in restrictions on
the transfer of securities or voting rights. The Directors
are not aware of any other restrictions on the transfer
of shares in the Company other than certain restrictions
that may from time to time be imposed by laws and
regulations. There are no agreements to which the
Company is party that might affect its control following
a successful takeover bid.
Requirements of the FCA Listing Rules
FCA Listing Rule 9.8.4 requires the Company to include
certain information 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 the only disclosure required in relation to FCA
Listing Rule 9.8.4, is that as a Non-Executive Director
of Fiske, Mr Perrin is deemed to have an interest in
the Company’s Custody Agreement. There were no
other contracts subsisting during the year to which the
Company was a party and in which a Director of the
Company is or was materially interested; or between
the Company and a controlling shareholder.
From 26 July 2023, Mr Horner, as Managing Director of
Chelverton Asset Management, is deemed to have an
interest in the Investment Management Agreement.
Articles of Association
Under section 21 of the Companies Act 2006 the
Company’s
Articles
of
Association
can
only
be
amended by special resolution at a general meeting
of the Shareholders. The Articles of Association were
amended at the General Meeting on 26 June 2023 and
became effective on 26 July 2023.
19
Annual General Meeting
The Company’s AGM will be held at the offices of
Chelverton Asset Management Limited, Ground Floor
Office, Basildon House, 7 Moorgate, London EC2R 6AF
on Tuesday 7 November 2023 at 11.00 am. The Notice
of Meeting is set out on pages 71 to 75.
Shareholders are encouraged to submit their proxy
votes ahead of the meeting to ensure that their votes
count towards deciding each resolution. Appointing the
Chair of the meeting rather than a named person will
ensure that the vote will count.
The
business
of
this
year’s AGM
consists
of
12
resolutions. Resolutions 1 to 8 are the normal resolutions
concerning the approval of the Report and Accounts
and the election and re-election of Directors and are
self-explanatory.
Authority to allot shares
Resolutions 9 and 10: Authority to issue shares and
disapplication of pre-emption rights
The Board wishes to have the authority to issue ordinary
shares and may only allot shares for cash if authorised
to do so by Shareholders in a General Meeting.
Accordingly, an ordinary resolution to authorise the
Directors to allot ordinary shares up to an aggregate
nominal amount of £183,720 equal to 20% of the
Company’s issued ordinary share capital, excluding
shares held in Treasury, at the date of this Notice, will
be proposed as Resolution 9.
In addition, Resolution 10 is being proposed as a special
resolution to authorise the Directors to disapply the
pre-emption rights of existing Shareholders in relation
to the issue of ordinary shares under Resolution 9 and
to sell ordinary shares from treasury up to a maximum
nominal amount of £183,720 equal to 20% of the
Company’s issued share capital, excluding shares held
in Treasury, as at the date of the Notice of AGM.
The Directors intend to issue ordinary shares, subject to
any applicable regulatory requirements, when it is in the
best interests of Shareholders to do so.
These authorities, if approved, will expire at the Annual
General Meeting of the Company to be held in 2024.
Purchase of Own Shares
Resolution 11: Authority to purchase shares
Resolution 11, a special resolution, will renew the
Company’s authority to make market purchases of up
to 14.99% of its issued ordinary shares, excluding shares
held in Treasury, either for cancellation or placing
into treasury at the determination of the Directors.
Purchases of ordinary shares will be made within
guidelines established from time to time by the Board.
Any purchase of ordinary shares would be made only
out of the available cash resources of the Company.
The Directors would use this authority to address any
significant imbalance between the supply and demand
for the Company’s ordinary shares and to manage the
discount to NAV at which the ordinary shares trade.
Ordinary shares will be repurchased only at prices
below the NAV per ordinary share, which should have
the effect of increasing the NAV per ordinary share for
remaining Shareholders. This authority will expire at the
AGM to be held in 2024 when a resolution to renew the
authority will be proposed.
20
DIRECTORS' REPORT
continued
Notice Period for General Meetings
Resolution 12: Authority for a 14 day notice period
Resolution 12, a special resolution, will give the Directors
the ability to convene General Meetings, other than
annual general meetings, on a minimum of 14 clear
days’ notice. The minimum notice period for annual
general meetings will remain at 21 clear days. The
approval will be effective until the Company’s AGM to
be held in 2024, at which it is intended renewal will be
sought. The Directors will only call a General Meeting
on 14 days’ notice where they consider it to be in the
interests of Shareholders to do so and the relevant
matter is required to be dealt with expediently.
Continuation
The Company’s Articles provide that an ordinary
resolution be put to Shareholders at the Annual General
Meeting, proposing that the Company continues in
existence as a closed-ended investment company, every
5 years. At the General Meeting held on 26 June 2023,
Shareholders approved the amendment of the Articles
of Association in respect to the continuation vote, the
next such vote will be at the Annual General Meeting in
2028 and every fifth general meeting thereafter.
Recommendation
The Directors consider that all the resolutions to
be proposed at the AGM are likely to promote the
success of the Company and are in the best interests
of the Company and its Shareholders as a whole. The
Directors unanimously recommend that Shareholders
vote in favour of each resolution, as they intend to do in
respect of their own beneficial holdings.
Post balance sheet events
Full details of the post balance sheet events are given in
Note 19 on pages 67 to 69.
Reappointment of Auditors
PKF Littlejohn LLP, the independent external Auditor of
the Company, were appointed in 2018. Resolutions to
reappoint PKF Littlejohn LLP as the Company’s Auditor,
and to authorise the Audit Committee to determine
their remuneration will be proposed at the forthcoming
AGM.
Auditor Information
In accordance with the requirement and definitions
under section 418 of the Companies Act 2006, each
of the Directors at the date of approval of this report
confirms that:
• so far as they are each aware, there is no relevant
audit information of which the Company’s Auditor is
unaware; and
•
each Director has taken all the steps that he ought to
have taken as a Director to make himself aware of
any relevant audit information and to establish that
the Company’s Auditor is aware of that information.
The Directors’ Report was approved by the Board on
4 October 2023.
On behalf of the Board
I. R. Dighé
Chairman
4 October 2023
21
Corporate Governance Statement
The Corporate Governance Statement forms part of the Directors’ Report.
22
Statement of Compliance
The Directors have adopted the AIC Code published
in February 2019 for the financial year ended 30 June
2023. The AIC Code addresses the principles and
provisions 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 the Company.
The
Board
considers
that
reporting
against
the
principles and recommendations of the AIC Code,
and by reference to the AIC Guide as outlined above,
will provide the most appropriate information to
Shareholders.
The AIC Code was endorsed in February 2019 by the
Financial Reporting Council (“FRC”) which has confirmed
that in complying with the AIC Code, the Company will
meet its obligations in relation to the UK Code. The AIC
Code is available online at: www.theaic.co.uk. A copy of
the UK Code can be found at: www.frc.org.uk.
This statement has been compiled in accordance with
the FCA’s Disclosure and Transparency Rule (“DTR”) 7.2
on Corporate Governance Statements.
The Board considers that the Company has complied
fully with the AIC Code and the relevant provisions of
the UK Code, except as set out below.
Although
self-managed
during
the
year,
the
Company does not employ a chief executive, nor any
executive Directors. The systems and procedures of
the Administrator and other service providers, and
the annual statutory audit as well as the size of the
Company’s operations, gives the Board confidence
that an internal audit function is not appropriate. The
Company is therefore not reporting further in respect
of these areas.
The Board has further considered the principles of the
UK Code and believes that the Company has complied
with the provisions thereof for the year under review,
except as outlined above.
The Board of Directors
Until Mr Cleverly stood down at the Company's AGM on
28 October 2022 the Board consisted of five Directors.
From this point, the Board consists of four non-executive
Directors all of whom, with the exception of Mr Perrin,
who is a non-executive Director of Fiske plc, are
considered to be independent by the Board. Fiske plc
were until 4 November 2020 the investment manager
and remain as the Company's custodian.
Messrs Dighé and Weeks hold directorships or positions
of senior management within Edelweiss Holdings plc
(“Edelweiss”), who were a significant shareholder in
the Company in the year. Notwithstanding these
cross-directorships and links with Edelweiss, the Board
considers Messrs Dighé and Weeks to be independent
Directors as they do not represent Edelweiss through
their chairmanship and directorships of the Company.
Furthermore, their appointments to the Board occurred
prior to Edelweiss becoming a significant Shareholder.
Michael Weeks resigned as a Director on 26 July 2023
and David Horner was appointed on the same day.
On appointment, David Horner is not considered to
be independent by the Board due to him being the
Managing Director of the Company's Investment
Manager, appointed on that date.
The Board is responsible for all matters of direction
and control of the Group, including its investment
policy, strategy and delivery. The Directors review at
regular meetings the Group’s investments and all other
important issues to ensure that control is maintained
over the Group’s affairs.
DIRECTORS' REPORT
continued
23
The Chairman, Mr I. R. Dighé, is considered to be
independent and has no conflicting relationships. He
considers himself to have sufficient time to commit to
the Company’s affairs.
The AIC Code recommends that the Board should
appoint one of its independent non- executive directors
to be the Senior Independent Director. Mr Metcalfe is
the Company’s Senior Independent Director.
The Board has formalised the arrangements under
which Directors, in the furtherance of their duties, may
take independent professional advice.
The Directors each have a service contract, copies of
which are available on request from the Secretary. Mr
Perrin is approaching his twelfth year as Chairman of
the Audit Committee, his independence is reviewed on
an annual basis and the Board is committed to reviewing
his continuing appointment at an appropriate time.
The appointment of a new Director would be on the
basis of a candidate’s merits and the skills/experience
identified by the Board as being desirable to complement
those of the existing Directors. The Company’s diversity
policy, is set out on page 16, but diversity is one of the
factors that would be taken into account when making
a new appointment.
Board Operation
The Directors meet at regular Board meetings usually once a quarter, with additional meetings arranged as
necessary. Further discussions were held by the Directors throughout the year, regarding the future direction of the
Company, resulting in proposals being put to Shareholders at the General Meeting on 26 June 2023. During the year
ended 30 June 2023, the number of formal Board and Committee meetings attended by each Director who served
during the year was as follows:
Board
Meetings
Audit Committee
Meetings
Number
entitled to
attend
Number
attended
Number
entitled to
attend
Number
attended
Ian Dighé
4
4
2
2
Tom Cleverly*
2
2
2
2
Tim Metcalfe
4
4
2
2
Martin Perrin
4
4
2
2
Michael Weeks
4
4
2
2
* Stood down on 28 October 2022.
Performance Evaluation
An annual evaluation for the year ended 30 June 2023
has been carried out. This took the form of a formal
questionnaire by the Directors as to the effectiveness
of the Board, the chairmanship and its Committees and
how the Company can better serve Shareholders.
There
were
no
significant
actions
arising
from
the evaluation process and it was agreed that the
current composition of the Board and its Committees
was appropriate and that the Board and its Committees
were functioning effectively.
24
Tenure
In terms of overall length of tenure, the AIC Code
does not make specific restrictions on tenure for
Directors. Some market commentators have expressed
opinions that considerable length of service (which
has generally been defined as a limit of 9 years) may
lead to the compromise of a Director’s independence.
The Board does not believe that a Director should
be appointed for a finite period. The AIC Code does
recommend that it should have a policy on tenure of
its Chairman. The Board has noted that there is no
requirement under the AIC Code for its Chairman to
stand down after nine years however, it has adopted a
nine-year maximum tenure policy for its Chairman.
Re-election of Directors
All Directors shall seek annual re-election by the
Shareholders
at
the
Company’s
Annual
General
Meeting (“AGM”). In addition, David Horner will seek
election, having been appointed on 26 July 2023.
The Chairman and the Senior independent Director
have subsequently undertaken a review and assessment
of the effectiveness of the revised structure in delivering
the new Investment Policy and meeting the Board's
obligations to Shareholders. This review undertaken
through meetings and discussion with each individual
Director has concluded that each Director, and the
Board and its Committees, are working well and no
weaknesses have been identified requiring a revision to
the Board. The Board has considered the election and
re-election of each individual Director and recommends
their election and re-election on the basis of their skills,
knowledge and continued contribution.
Board Responsibilities
The Board is responsible for the determination and
implementation of the Company’s investment policy and
strategy and has overall responsibility for the Company’s
activities. The Board’s main roles are to create value for
Shareholders, to provide leadership to the Company
and to approve the Company’s strategic objectives.
The Board has adopted a schedule of matters reserved
for its decision and specific responsibilities that includes:
reviewing the Company’s investments, asset allocation,
gearing policy, cash management, investment outlook
and revenue forecasts.
The Company's day-to-day administrative functions
have been subcontracted to a number of service
providers,
each
engaged
under
separate
legal
agreements.
At each Board meeting the Directors follow a formal
agenda, which is circulated in advance by the Company
Secretary. The Company Secretary and Administrator
regularly provide financial information, together with
briefing notes and papers in relation to changes in
the Company’s economic and financial environment,
statutory
and
regulatory
changes
and
corporate
governance best practice.
Committees of the Board
The Company has appointed an Audit Committee to
monitor specific operations, further details are provided
in the Audit Committee Report on pages 28 and 29. Given
the size of the Board, it is not felt appropriate to have
a separate Management Engagement, Nomination or
Remuneration Committee. The functions that would
be normally carried out by these Committees are dealt
with by the full Board.
During the year, the Audit Committee was comprised of
all of the Directors of the Company and was chaired by
Mr Perrin. Given the size of the Board, it was deemed
proportionate and practical for all Directors to sit on
the Audit Committee. Mr Perrin FCA, is a chartered
accountant with a wide experience of operations
and finance in industry. The Board is satisfied that Mr
Perrin has recent and relevant financial experience
in the sector the Company operates to guide the
Committee in its deliberations. From 26 July 2023, the
Audit Committee will comprise of all Directors, except
Mr Horner, who is Managing Director of the Investment
Manager.
DIRECTORS' REPORT
continued
25
Investment Committee
The
Company
set
up
an
Investment
Committee
following Shareholder approval in November 2020
that investment decisions would be made by the
Board rather than employing an Investment Manager.
Membership of the Investment Committee comprised
the Chairman and Michael Weeks. The Committee
operated until 26 July 2023 when Chelverton Asset
Management were appointed as Investment Manager
to the Company.
Internal Control Review
The Directors are responsible for the Group’s risk
management and systems of internal control, for the
reliability of the financial reporting process and for
reviewing their effectiveness.
Throughout the year under review and up to the date of
this Annual Report, there has been an ongoing process
for identifying, evaluating and managing the principal
risks faced by the Group, which accords with guidance
supplied by the FRC on risk management, internal
control and related financial and business reporting.
This is reviewed on a regular basis by the Board. The
internal control systems are designed to ensure that
proper accounting records are maintained, that the
financial information on which business decisions are
made and which are issued for publication is reliable
and that the assets of the Group are safeguarded.
The risk management process and Group systems of
internal control are designed to manage rather than
eliminate the risk of failure to achieve the Group’s
objectives. It should be recognised that such systems
can only provide reasonable, not absolute, assurance
against material misstatement or loss.
The Directors have carried out a robust review of
the effectiveness of the systems of internal control
as they have operated during the year and up to the
date of approval of the Annual Report and Financial
Statements. The internal control systems in place
are considered to be effective as there were no
matters arising from this review that required further
investigation and no significant failings or weaknesses
were identified.
Risk assessment and a review of internal controls is
undertaken regularly in the context of the Company’s
overall investment objective. The Board, through the
Audit Committee, has identified risk management
controls in four key areas: corporate strategy; published
information and compliance with laws and regulations;
relationships with service providers; and investment
and business activities. In arriving at its judgement, the
Board has considered the Company’s operations in light
of the following factors:
• the nature and extent of risks which it regards as
acceptable for the Company to bear within its overall
business objective;
•
the threat of such risks becoming reality;
• the Company’s ability to reduce the incidence and
impact of risk on its performance; and
•
the cost to the Company and benefits related to the
Company and third parties operating the relevant
controls.
Most functions for the day-to-day management of the
Company are sub-contracted to third party service
providers, and the Directors therefore obtain regular
assurances
and
information
from
these
suppliers
regarding their internal systems and controls.
Internal Audit
As the Company’s investment management is carried
out by the Board and the administration and custodial
activities
are
carried
out
by
third
party
service
providers the Board does not consider it necessary
to have an internal audit function. The Board reviews
financial information produced by the Administrator on
a regular basis.
26
Relations with Shareholders
Communication with Shareholders is given a high priority
by the Board. All Shareholders are encouraged to vote
at the AGM. Shareholders that wish to communicate
directly with the Board or to lodge a question in advance
of the AGM should contact the Company Secretary at
the address on page 2 or contact the Board via email to
info@theinvestmentcompanyplc.co.uk.
The Annual and Half-Yearly Reports of the Group
are prepared by the Board to present a full, fair,
balanced and understandable review of the Group's
performance, business model and strategy. Copies
of these are released to the London Stock Exchange.
The Annual Report is dispatched to Shareholders by
mail and is also available from the Secretary or at
https://theinvestmentcompanyplc.co.uk.
The
Board
maintains
regular
dialogue
with
representatives of the Company’s largest Shareholders
throughout the year. The Board is mindful of feedback
received from Shareholders.
Disclosure Guidance and Transparency Rules (“DGTR”)
Other information required to be disclosed pursuant
to the DGTR has been placed in the Directors’ Report
because it is information which refers to events that
have taken place during the course of the year.
On behalf of the Board
I. R. Dighé
Chairman
4 October 2023
DIRECTORS' REPORT
continued
28
Role of the Audit Committee
The primary responsibilities of the Audit Committee
(the “Committee”) are:
•
to monitor the integrity of the financial statements of
the Group, and review the financial reporting process
and the accounting policies of the Group;
• to present a fair balance and understandable
assessment of the Group’s Annual Report and
Financial Statements;
•
to keep under review the effectiveness of the Group’s
internal control environment and risk management
systems;
•
to review annually the need for the Group to have its
own internal audit function;
• to make recommendations to the Board in relation
to the re-appointment or removal of the external
Auditor and to approve its remuneration and terms
of engagement;
•
to review the effectiveness of the audit process;
• to develop and implement a policy on the supply of
non-audit services by the Auditor; and
• to review and monitor the Auditor’s independence
and objectivity.
Matters considered in the year
The Committee met twice during the financial year to
consider the financial statements and to review the
internal control systems.
The Audit Committee has:
• reviewed the need for the Group to have its own
internal audit function;
• reviewed the internal controls and risk management
systems of the Company and those of its third party
service providers;
• reviewed and, where appropriate, updated the
Company’s risk register;
• agreed the audit plan with the Auditor, including the
principal areas of focus;
•
received and discussed with the Auditor its report on
the results of the audit; and
•
reviewed the Group’s financial statements.
The principal issues identified by the Committee were
the valuation and ownership of the investment portfolio,
in particular the unquoted holdings and revenue
recognition. The Board relies on the Administrator to
use correct listed prices and seeks comfort in the testing
of this process through the internal control statements.
This was discussed with the Administrator and Auditor
at the conclusion of the audit of the financial statements.
The
Committee
assesses
annually
whether
it
is
appropriate to prepare the Group's financial statements
on a going concern basis. The Board’s conclusions are
set out in Note 1 of the financial statements.
The Committee considers the internal control system
of the Company and its third party service providers.
There were no significant matters of concern identified
in the Committee’s review of the internal controls of the
Company and its third party service providers.
Following consideration of the above, and its detailed
review, the Committee was of the opinion that the
Annual Report and Financial Statements, taken as a
whole, are fair, balanced and understandable and
provide the information necessary to assess the Group’s
position and performance, business model and strategy
and advised the Board accordingly.
AUDIT COMMITTEE REPORT
29
Auditor
The Audit Committee will, in accordance with the terms
of reference of the Committee, continue to consider
the need to put the audit out to tender, the Auditor’s
performance, its fees and independence, along with
matters raised during each audit.
Audit Fees
An audit fee of £46,300 has been agreed in respect
of the audit for the year ended 30 June 2023. Of this
amount, £38,700 relates to the Audit of the Company
and £3,800 to each of the subsidiary companies.
Audit services
The Committee reviews the need for non-audit services
and authorises such on a case by case basis, having
consideration to the cost-effectiveness of the services
and the independence and objectivity of the Auditor.
No non-audit services were provided to the Group in
the year under review.
Appointment of the Auditor
The Committee conducted a review of PKF Littlejohn
LLP’s independence and audit process effectiveness as
part of its review of the financial reporting for the year
ended 30 June 2023. In considering the effectiveness,
the Committee reviewed the audit plan in July 2023,
discussing the materiality level and identification of
key financial reporting risks. The Committee also
considered the execution of the audit against the plan,
as well as the auditor’s reporting to the Committee in
respect of the financial statements. Based on this,
the Committee were satisfied that the quality of the
external audit process had been good with appropriate
focus and challenge on the key audit risks.
The Committee advises the Board on the appointment
of the external auditor and determines the Auditors’
remuneration.
It
keeps
under
review
the
cost
effectiveness and also the independence and objectivity
of the external auditor. The Committee was satisfied
that the objectivity and independence of the auditor
was not impaired during the year.
This is the fifth year in which PKF Littlejohn LLP has
conducted the audit. As a Public Interest Entity listed
on the London Stock Exchange the Company is subject
to mandatory auditor rotation requirements. The
Company will be required to put the external audit out to
tender at least every ten years and change the Auditor
at least every twenty years. Under the legislation the
Company will be required to put the audit out to tender,
at the latest, following the 2028 year end. The auditor is
required to rotate partners every five years.
The current audit partner for the Company, Ian Cowan,
is in his fifth year in this role.
M. H. W. Perrin (FCA)
Chairman, Audit Committee
4 October 2023
DIRECTORS’ REMUNERATION REPORT
The Board has prepared this report in accordance with the requirements of the Large and Medium Sized Companies
and Groups (Accounts and Reports) (Amendment) Regulations 2013. An ordinary resolution for the approval of the
Remuneration Report will be put to Shareholders at the forthcoming AGM. The law requires the Company’s Auditor
to audit certain disclosures provided. Where disclosures have been audited, they are indicated as such. The Auditor’s
opinion is included in the Independent Auditor’s Report on pages 36 to 43.
Annual Statement from the Chairman
The Directors’ Remuneration Report for the year ended
30 June 2023 is set out below.
Given the size of the Board, it is not considered
appropriate for the Company to have a separate
Remuneration Committee and the functions of this
Committee are carried out by the Board as a whole.
Each Director of the Company takes no part in
discussions concerning their own remuneration.
Remuneration Policy
The Board’s policy is that the remuneration of non-
executive Directors should reflect the experience
of the Board as a whole, and is determined with
reference to comparable financial organisations and
appointments.
The Directors’ fees are determined within the limits
set out in the Company’s Articles of Association, not to
exceed a maximum aggregate amount of £250,000
per annum. In addition, Directors may be paid extra
remuneration for the performance of service which in
the opinion of the Director is beyond the ordinary and
usual duties of a Director. Under the Company’s Articles
of Association, if any Director performs or agrees to
perform services (including services as a member of
any committee(s)) which in the opinion of the Directors
are beyond the ordinary and usual duties of a Director,
the Director may (unless otherwise expressly resolved
by the Company in general meeting) be paid such
extra remuneration by way of salary or otherwise, as
the Directors may determine, which shall be charged
as part of the Company’s ordinary working expenses.
However, as the Directors do not receive performance
related pay, any additional remuneration would not be
based on a percentage of profits.
Directors have not been paid bonuses, pension benefits,
share options, long-term incentive schemes or other
performance-related benefits or compensation for
loss of office. Director’s fees will be reviewed in the
future, within the context of growing the assets of the
Company, and will be subject to Shareholder approval.
Fees for any new Director appointed will be on the
above basis. Any views expressed by Shareholders on
the fees being paid to Directors would be taken into
consideration by the Board.
The terms of appointment provide that Directors shall
retire and be subject to annual re-election at each
Annual General Meeting of the Company in accordance
with the Articles of Association of the Company.
Compensation will not be paid upon early termination
of appointment.
Shareholder views of remuneration policy
The formal views of unconnected Shareholders have
not been sought in the preparation of this policy.
Employees
The Company does not have any employees and,
therefore no Chief Executive Officer. Accordingly,
the disclosures required under paragraphs 18(2), 19,
38 and 39 of Schedule 8 of the Large and Medium
sized Companies and Groups (Accounts and Reports)
Regulations 2008 are not required.
30
Directors’ Emoluments for the Year (audited information)
The Directors who served in the year received the following total emoluments:
Year ended
30 June 2023
Year ended
30 June 2022
Fees
£
Total
£
Fees
£
Total
£
Ian Dighé
20,000
20,000
20,000
20,000
Tom Cleverly (resigned 28 October 2022)
6,667
6,667
20,000
20,000
Tim Metcalfe
20,000
20,000
20,000
20,000
Martin Perrin
20,000
20,000
20,000
20,000
Michael Weeks
20,000
20,000
20,000
20,000
86,667
86,667
100,000
100,000
Michael Weeks resigned from the Board on 26 July 2023 and David Horner was appointed on the same day. Mr
Horner has waived his right to receive fees. Therefore, Directors emoluments for the year to 30 June 2024 are
expected to be £20,000 each for Mr Dighé, Mr Metcalfe and Mr Perrin.
Company Performance
The Company does not have a specific benchmark against which performance is measured. The graph
below compares the total return (assuming all dividends are reinvested) to holders of ordinary shares compared to
the total shareholder return of the MSCI World Index.
The Company has had several different investment objectives and policies which makes any long-term comparison
to an index difficult, however, the MSCI World Index is the closest broad index against which to measure the
Company’s recent performance.
Shareholder return (pence) rebased to 100
400
300
250
200
150
100
50
ORDINARY SHARES
NAV Total Return
Share price Total Return
MSCI World Net Total Return Index
350
31 March
2012
31 March
2010
30 June
2013*
30 June
2020
30 June
2019
30 June
2018
30 June
2017
30 June
2016
30 June
2015
30 June
2014
30 June
2023
*15 months to 30 June 2013.
30 June
2021
31 March
2011
30 June
2022
31
Relative Importance of Spend on Pay
The table below shows the proportion of the Company’s income spent on pay.
2023
£
2022
£
2022/2023
Change
2021
£
2021/2022
Change
2020
£
2020/2021
Change
Dividends paid to Ordinary
Shareholders in the year
–
–
–
143,161
(100.0)%
584,576
(75.5)%
Directors’ fees
86,667
100,000
(13.3)%
86,292
15.9%
51,250
68.4%
Directors’ Beneficial and Family Interests
The Board has not adopted a policy that Directors are required to own shares in the Company. The interests of the
current Directors and their families in the voting rights of the Company are set out below:
As at
30 June 2023
No. of ordinary
shares
As at
30 June 2022
No. of ordinary
shares
Ian Dighé
30,820
30,820
Tim Metcalfe*
47,505
47,505
Martin Perrin*
21,695
21,695
Michael Weeks
32,000
32,000
Tom Cleverly (resigned 28 October 2022)
–
7,061
* Together with his persons closely associated.
As a result of the Tender Offer and buyback on 26 July 2023 as detailed in Note 19 the Directors interests at the date
of this Report are as follows.
No. of ordinary
shares
Ian Dighé
37,996
Tim Metcalfe*
47,505
Martin Perrin*
31,741
David Horner (appointed 26 July 2023)
28,704
* Together with his persons closely associated.
Michael Weeks who resigned as a Director on 26 July 2023 tendered his 32,000 shares as part of the Tender Offer.
32
DIRECTORS’ REMUNERATION REPORT
continued
Voting at Annual General Meeting
In accordance with the requirement of the Companies Act 2006 Shareholder approval for the Remuneration Report
will be sought at the 2023 AGM.
An ordinary resolution adopting the Remuneration Report was approved at the AGM held on 28 October 2022. The
votes cast by proxy were as follows:
Directors’ Remuneration Report
Number of
votes
% of votes
cast
For and discretionary
2,955,335
99.96
Against
1,115
0.04
Total votes cast
2,956,450
100.00
Number of votes withheld
–
Voting on the Remuneration Policy at the AGM held on 27 October 2021 was as follows:
Directors’ Remuneration Policy
Number of
votes
% of votes
cast
For and discretionary
1,697,560
83.32
Against
339,744
16.68
Total votes cast
2,037,304
100.00
Number of votes withheld
1,266,909
Approval
The Directors’ Remuneration Report was approved by the Board on 4 October 2023.
On behalf of the Board
I. R. Dighé
Chairman
33
The Directors are responsible for preparing this 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 Group and Company financial statements
in
accordance
with
UK
adopted
international
accounting
standards
in
conformity
with
the
requirements of the Companies Act 2006. Additionally,
the Financial Conduct Authority’s Disclosure Guidance
and Transparency Rules require the Directors to
prepare the Group financial statements in accordance
with UK adopted international accounting standards.
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 Group and Company and of the profit or loss of the
Group and Company for that period.
In preparing those financial statements, the Directors
are required to:
• select suitable accounting policies and then apply
them consistently;
•
make judgements and estimates that are reasonable
and prudent;
• state whether applicable UK adopted international
accounting
standards,
in
conformity
with
the
requirements of the Companies Act 2006 and, for
the Group, UK adopted international accounting
standards
have
been
followed,
subject
to
any
material departures disclosed and explained in the
financial statements; and
•
prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain
the
Group’s
and
Company’s
transactions
and disclose with reasonable accuracy at any time
the financial position of the Group and Company
and
enable
them
to
ensure
that
the
financial
statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable
steps for the prevention and detection of fraud and
other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Strategic Report,
Directors’ Report, Directors’ Remuneration Report and
Corporate Governance Statement that comply with
that law and those regulations, and for ensuring that
the Annual Report includes information required by the
Listing Rules of the Financial Conduct Authority.
The financial statements are available on the Company’s
website
at
https://theinvestmentcompanyplc.co.uk.
The Directors are also responsible for the maintenance
and integrity of the Company’s website. Visitors to the
website need to be aware that legislation in the United
Kingdom covering the preparation and dissemination
of the financial statements may differ from legislation
in their jurisdiction.
34
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
We confirm that to the best of our knowledge:
•
the Group and Company financial statements, which
have been prepared in accordance with UK adopted
international accounting standards in conformity with
the requirements of the Companies Act 2006 and,
for the Group, UK adopted international accounting
standards, give a true and fair view of the assets,
liabilities, financial position and profit of the Group
and Company;
• the Annual Report includes a fair review of the
development and performance of the business and
the position of the Group and Company together with
a description of the principal risks and uncertainties
faced by the Group and Company; and
•
the Annual Report and financial statements, taken as
a whole, are fair, balanced and understandable and
provide the information necessary for Shareholders
to assess the position and performance, business
model and strategy of the Group and Company.
On behalf of the Board
I. R. Dighé
Chairman
4 October 2023
35
36
36
Opinion
We have audited the Financial Statements of The
and its subsidiaries (the ‘Group’) for the year ended
30 June 2023 which comprise the Consolidated Income
Statement, the Consolidated and Company Statements
of Changes in Equity, the Consolidated and Company
Balance Sheets, the Consolidated and Company Cash
Flow Statements and notes to the Financial Statements,
including significant accounting policies. The financial
reporting framework that has been applied in their
preparation
is
applicable
law
and
UK-adopted
international accounting standards and as regards the
Parent Company Financial Statements, as applied in
accordance with the provisions of the Companies Act
2006.
In our opinion:
•
the Financial Statements give a true and fair view of
the state of the Group’s and of the Parent Company’s
affairs as at 30 June 2023 and of the Group’s profit
for the year then ended;
• the
Group
Financial
Statements
have
been
properly prepared in accordance with UK-adopted
international accounting standards;
•
the Parent Company Financial Statements have been
properly prepared in accordance with UK-adopted
international accounting standards and as applied in
accordance with the provisions of the Companies Act
2006; and
• the Financial Statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the
audit of the Financial Statements section of our report.
We are independent of the Group and Parent Company
in accordance with the ethical requirements that are
relevant to our audit of the Financial Statements in the
UK, including the FRC’s Ethical Standard as applied to
listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to going concern
In
auditing
the
Financial
Statements,
we
have
concluded that the Director's use of the going concern
basis of accounting in the preparation of the Financial
Statements is appropriate. Our evaluation of the
Directors’ assessment of the Group’s and Parent
Company’s ability to continue to adopt the going
concern basis of accounting included:
• an assessment of management’s assumptions in
modelling future financial performance and cashflow
requirements, including consideration of the key
changes arising from adopting the new investment
objective and ensuring any investment commitments
are reflected therein;
• assessing liquidity and the ability of management to
trade in the investment portfolio in order to cover
operational expenditure as required;
• checking the mathematical accuracy of the forecast
used to model future financial performance and
cashflow requirements;
• assessing
the
mitigating
factors
available
to
management including their ability to generate
cash from the investment portfolio, should that be
required, and the liquidity of the portfolio; and
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
37
37
Our application of 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 follows:
Group
Parent
company
Overall materiality
£337,000 (2022: £323,000)
£336,000 (2022: £322,000)
Performance materiality
£235,900 (2022: £226,100)
£235,200 (2022: £225,400)
Triviality
£16,850 (2022: £16,150)
£16,800 (2022: £16,100)
Basis for determining materiality
2% of gross assets
Rationale for the benchmark
applied
We have set our overall materiality at 2% of gross assets as the carrying value
of the investments is a key driver of shareholder value and a key performance
indicator used by management and forms more than 90% of gross assets. The
basis of materiality has been consistently applied in the current and previous
year.
Performance materiality represents amounts set by the auditor at less than the
overall materiality to reduce the probability that the aggregate of uncorrected
and undetected misstatements exceeds the overall materiality. In setting this
we consider the overall control environment and the history of corrected and
uncorrected misstatements. Based on these factors we have set performance
materiality at 70% of our overall materiality.
• assessing the appropriateness of the going concern
disclosures included within the Financial Statements.
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 Group’s or Parent 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 relation to the entities 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.
38
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS
continued
38
In addition to the above, we determined a specific materiality in our audit of the consolidated and Parent Company
Income Statement, as follows:
Group
Parent company
Overall materiality
£20,000 (2022: £18,000)
£18,000 (2022: £16,000)
Performance materiality
£14,000 (2022: £12,600)
£12,600 (2022: £11,200)
Triviality
£1,000 (2022: £900)
£900 (2022: £800)
Basis for determining
materiality
5% of other expenses
Rationale for the
benchmark applied
We consider expenses to be a stable metric for Income Statement materiality and have
applied this method consistently in the current and previous year. Cost control is a key
focus of the Group, and hence this is deemed to be a suitable performance indicator to
use for determining materiality.
For the reasons noted above, performance materiality has been set at 70% of the
overall materiality.
We set materiality for each component of the Group at a lower level of materiality, dependent on the size and
our assessment of the risk of material misstatement of that component. This was consistent between the Balance
Sheet and Income Statement for both subsidiaries. For Abport Limited, overall materiality was set at £10,000
(2022: £9,000), and for New Centurion Trust Limited at £16,000 (2022: £16,000). We further applied performance
materiality thresholds of 70% of each component materiality.
We have agreed with the Audit Committee that we would report to the Committee individual audit differences
in excess of the trivial thresholds outlined above, as well as differences below these thresholds that, in our view,
warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters that we identified when assessing the overall
presentation of the Financial Statements.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risk of material misstatement in the Financial
Statements. In particular, we looked at areas involving significant accounting estimates and judgement by the
Directors and considered future events that are inherently uncertain such as the valuation of unquoted investments.
We also addressed the risk of management override of internal controls, including among other matters consideration
of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
39
39
The Group’s only significant and material component was the Parent Company and this was subject to a full scope
audit by a team with relevant sector experience undertaken from our office based in London. The components
identified as not significant and not material were subject to review procedures undertaken by the same audit team.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our 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) we identified, 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
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.
Key Audit Matter
How our scope addressed this matter
Valuation and ownership of
investments (notes 1 and 8)
Our work in this area included:
•
testing a sample of listed investment valuations to closing bid prices
published by an independent pricing source;
•
agreeing the listed investments held at the year end to the custody
report received directly from the custodian Fiske plc;
• testing a sample of investment additions and disposals and
corroborating to supporting documentation including recalculating
any realised gains/losses on disposal to ensure individual investment
purchases and disposals, including any resulting gain or loss, are
accurately recorded;
• reviewing and assessing management’s valuation on a sample of
the unlisted investments by checking to supporting evidence; and
• performing a reconciliation of the investment holdings, verifying
that the correct classification has been applied to each holding and
that the fair value hierarchy disclosure is presented in accordance
with IFRS 13.
Based on the work performed, we are satisfied that the Group and
Parent Company’s valuation of the investments held is appropriate,
and that the Group and Parent Company hold legal title to the
investments.
The Group holds investments with a
carrying value of £8.56m as at 30 June
2023. The Group’s investments include
both listed and unlisted holdings and
are
valued
using
the
appropriate
level of the fair value hierarchy as per
IFRS 13
Fair Value Measurement
.
Director valuations involve accounting
estimation
and
judgement
and
therefore there is a risk that the year-
end
investment
valuation
may
be
materially misstated.
Furthermore, there is a risk that the
Group does not hold the legal title to
the investments. As above, investments
are a highly significant component of
the Balance Sheet and therefore if the
investments were to not be rightfully
owned, this would have a material
impact on the Financial Statements.
Therefore, this is determined to be a
key audit matter.
40
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS
continued
40
Other information
The other information comprises the information
included in the Annual Report, other than the Financial
Statements and our Auditor’s Report thereon. The
Directors are responsible for the other information
contained within the Annual Report. Our opinion on
the Group and Parent Company Financial Statements
does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
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 course of the audit,
or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether this gives rise to a material misstatement in
the Financial Statements themselves. 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 in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion the part of the Directors’ Remuneration
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the
course of the audit:
•
the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
Financial Statements are prepared is consistent with
the Financial Statements; and
• the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the
Group and the Parent Company and their environment
obtained in the course of the audit, we have not
identified material misstatements in the Strategic
Report or the Directors’ Report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept
by the Parent Company, or returns adequate for
our audit have not been received from branches not
visited by us; or
• the Parent Company Financial Statements and the
part of the Directors’ Remuneration Report to be
audited are not in agreement with the accounting
records and returns; or
• certain
disclosures
of
Directors’
remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Corporate Governance Statement
We have reviewed the Directors' statement in relation
to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to
the Group’s and Parent Company's compliance with
the provisions of the UK Corporate Governance Code
specified for our review by the Listing Rules.
41
41
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
or
our
knowledge obtained during the audit:
•
Directors' statement with regards the appropriateness
of adopting the going concern basis of accounting
and any material uncertainties identified set out on
page 15;
• Directors’ explanation as to their assessment of the
Group’s prospects, the period this assessment covers
and why the period is appropriate set out on page 15;
• Directors’
statement
on
whether
they
have
a
reasonable expectation that the Group will be able to
continue in operation and meet its liabilities set out on
page 15;
• Directors' statement that they consider the Annual
Report and the Financial Statements, taken as a
whole, to be fair, balanced and understandable set
out on pages 34 and 35;
•
Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set
out on page 25;
• the section of the Annual Report that describes the
review of effectiveness of risk management and
internal control systems set out on page 25; and
• the
section
describing
the
work
of
the
Audit
Committee set out on pages 28 and 29.
Responsibilities of Directors
As explained more fully in the Statement of Directors’
Responsibilities,
the
Directors
are
responsible
for
the preparation of the Group and Parent Company
Financial Statements and for being satisfied that they
give a true and fair view, and for such internal control
as the Directors 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 Group and Parent Company Financial
Statements, the Directors are responsible for assessing
the Group’s and the Parent 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 Group or the Parent Company or
to cease operations, or have no realistic alternative but
to do so.
Auditor’s 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 Auditor’s 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.
42
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS
continued
42
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:
• We obtained an understanding of the Group and
Parent Company and the sector in which they
operate to identify laws and regulations that could
reasonably be expected to have a direct effect
on the Financial Statements. We obtained our
understanding in this regard through discussions with
management, industry research, and the application
of our cumulative audit knowledge and experience of
the sector.
• We determined the principal laws and regulations
relevant to the Group and Parent Company in this
regard to be those arising from the Financial Conduct
Authority
(FCA)
Rules,
Listing
Rules,
Disclosure
Guidance and Transparency Rules, the principles
of the UK Corporate Governance Code applied by
the AIC Code of Corporate Governance (the AIC
Code), the AIC Statement of Recommended Practice
Financial Statements of Investment Trust Companies
and Venture Capital Trusts issued in July 2022 (“AIC
SORP) to the extent that is consistent with IFRS,
Companies Act 2006, UKLA Listing Rules, Alternative
Investment Fund Managers’ Directive and UK tax
legislation including qualification as an investment
trust under section 1158 of the Corporation tax Act
2010.
• We designed our audit procedures to ensure the
audit team considered whether there were any
indications of non-compliance by the Group and
Parent Company with those laws and regulations.
These procedures included, but were not limited to
enquiries of management, review of minutes of those
charged with governance review of legal/regulatory
correspondence and reviewing financial statement
disclosures and testing to supporting documentation
to assess compliance with applicable laws and
regulations.
•
We also identified the risks of material misstatement of
the Financial Statements due to fraud. We considered,
in addition to the non-rebuttable presumption of
a risk of fraud arising from management override
of controls, the risk of fraud related to revenue
recognition, the posting of unusual journals and the
manipulation of the Group’s alternative performance
profit
measures
and
other
key
performance
indicators to meet externally communicated targets.
The potential for management bias was identified
in
relation
to
the
valuation
and
ownership
of
investments and we addressed this by challenging the
assumptions and judgements made by management
when auditing the accounting estimate (refer to the
Key Audit Matters section).
•
As in all of our audits, we addressed the risk of fraud
arising from management override of controls by
performing audit procedures which included, but
were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and
evaluating the business rationale of any significant
transactions that were deemed unusual or outside the
normal course of business.
43
43
Because of the inherent limitations of an audit,
there is a risk that we will not detect all irregularities,
including those leading to a material misstatement
in the Financial Statements or non-compliance with
regulation. This risk increases the more that compliance
with a law or regulation is removed from the events
and transactions reflected in the Financial Statements,
as we will be less likely to become aware of instances
of non-compliance. The risk is also greater regarding
irregularities occurring due to fraud rather than error,
as fraud involves intentional concealment, forgery,
collusion, omission or misrepresentation.
A
further
description
of
our
responsibilities
for
the
audit
of
the
Financial
Statements
is
located
on
the
Financial
Reporting
Council’s
website
at:
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our Auditor’s Report.
Other matters which we are required to address
We were appointed by the Audit Committee on
29 November 2018 to audit the Financial Statements
for the period ending 30 June 2019 and subsequent
financial periods. Our total uninterrupted period of
engagement is five years, covering the periods ending
30 June 2019 to 30 June 2023.
The non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the Group or the Parent
Company and we remain independent of the Group
and the Parent Company in conducting our audit.
Our audit opinion is consistent with the additional report
to the Audit Committee.
Use of our report
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
Members those matters we are required to state to
them in an Auditor’s Report and for no other purpose.
To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone, other than the
Company and the Company's Members as a body, for
our audit work, for this report, or for the opinions we
have formed.
Ian Cowan (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
4 October 2023
The notes on pages 50 to 69 form part of these financial statements.
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2023
Year ended
30 June 2023
Year ended
30 June 2022
Notes
Revenue
£
Capital
£
Total
£
Revenue
£
Capital
£
Total
£
Gains/(losses) on investments
at fair value through profit or
loss
8
(227,992 )
(227,992 )
Exchange gains on capital
items
Investment income
2
Investment management fee
3
Other expenses
4
(396,562 )
(396,562 )
(355,618 )
(355,618 )
(Loss)/return before taxation
(93,087 )
(225,409 )
(209,071 )
Taxation
5
(45,020 )
(45,020 )
(39,554 )
(39,554 )
Total (loss)/income after
taxation
(138,107 )
(23,216 )
(225,409 )
(248,625 )
Revenue
pence
Capital
pence
Total
pence
Revenue
pence
Capital
pence
Total
pence
(Loss)/return on total income
after taxation per 50p
ordinary share – basic &
diluted
6
(2.89
(0.49
(4.72
(5.21
The total column of this statement is the Income Statement of the Group prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act 2006. The supplementary revenue
and capital columns are prepared in accordance with the Statement of Recommended Practice (“AIC SORP”) issued
in July 2022 by the Association of Investment Companies.
The Group did not have any income or expense that was not included in total income for the year. Accordingly, total
income is also total comprehensive income for the year, as defined by IAS 1 (revised) and no separate Statement of
Comprehensive Income has been presented.
All revenue and capital items in the above statement derive from continuing operations. No operations were
acquired or discontinued during the year.
44
The notes on pages 50 to 69 form part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2023
Ordinary
share
capital
£
Share
premium
£
Capital
redemption
reserve
£
Capital
reserve
£
Revenue
reserve
£
Total
£
Balance at
1 July 2022
(1,385,748 )
Total comprehensive
income
Net return/(loss)
for the year
(138,107 )
Transactions with
Shareholders recorded
directly to equity
Tender Offer costs
(Note 19)*
(516,583 )
(516,583 )
Balance at
30 June 2023
(1,523,855 )
Balance at
1 July 2021
(1,377,544 )
Total comprehensive
income
Net loss
for the year
(225,409 )
(23,216 )
(248,625 )
Transactions with
Shareholders recorded
directly to equity
Ordinary dividends
(Note 7)
Balance at
30 June 2022
(1,385,748 )
* These costs relate to the Tender Offer as discussed in Note 19. As Shareholders approved the proposals in a
General Meeting on 26 June 2023, the Directors feel it appropriate to accrue for the costs considered unavoidable
in the year. As the share premium account was in the process of being cancelled at the year end, the costs have been
charged against the capital reserve.
45
The notes on pages 50 to 69 form part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2023
Ordinary
share
capital
£
Preference
share
capital
£
Share
premium
£
Capital
redemption
reserve
£
Capital
reserve
£
Revenue
reserve
£
Total
£
Balance at
1 July 2022
2,386,025
858,783
4,453,903
2,408,820
5,626,497
1,128,452
16,862,480
Total comprehensive
income
Net return/(loss)
for the year
–
–
–
–
340,885
(124,976)
215,909
Transactions with
Shareholders recorded
directly to equity
Tender Offer costs
(Note 19)
–
–
–
–
(516,583)
–
(516,583)
Preference share
dividends paid
–
–
–
–
–
(172)
(172)
Balance at
30 June 2023
2,386
,
025
858,783
4,453,903
2,408,820
5,450,799
1,003,304
16,561,634
Balance at
1 July 2021
2,386,025
858,783
4,453,903
2,408,820
5,852,000
1,122,327
17,081,858
Total comprehensive
income
Net loss
for the year
–
–
–
–
(225,503)
(8,715)
(234,218)
Transactions with
Shareholders recorded
directly to equity
Ordinary dividends
(Note 7)
–
–
–
–
–
15,012
15,012
Preference share
dividends paid
–
–
–
–
–
(172)
(172)
Balance at
30 June 2022
2,386,025
858,783
4,453,903
2,408,820
5,626,497
1,128,452
16,862,480
46
The notes on pages 50 to 69 form part of these financial statements.
CONSOLIDATED BALANCE SHEET
At 30 June 2023
Notes
30 June
2023
£
30 June
2022
£
Non-current assets
Investments held at fair value through profit or loss
8
Current assets
Trade and other receivables
11
Cash and cash equivalents
Current liabilities
Trade and other payables
12
(601,160 )
(106,002 )
(601,160 )
(106,002 )
Net current assets
Net assets
Capital and reserves
Ordinary share capital
13
Share premium
Capital redemption reserve
Capital reserve
Revenue reserve
(1,523,855 )
(1,385,748 )
Shareholders’ funds
NAV per 50p ordinary share
15
I. R. Dighé
Company Number: 0004205
47
The notes on pages 50 to 69 form part of these financial statements.
COMPANY BALANCE SHEET
At 30 June 2023
Notes
30 June
2023
£
30 June
2022
£
Non-current assets
Investments held at fair value through profit or loss
8
8,564,470
15,444,619
Investment in subsidiaries
9
326,277
862,656
8,890,747
16,307,275
Current assets
Trade and other receivables
11
80,759
89,097
Cash and cash equivalents
8,281,759
663,863
8,362,518
752,960
Current liabilities
Trade and other payables
12
(691,631)
(197,755)
(691,631)
(197,755)
Net current assets
7,670,887
555,205
Net assets
16,561,634
16,862,480
Capital and reserves
Ordinary share capital
13
2,386,025
2,386,025
Preference share capital
14
858,783
858,783
Share premium
4,453,903
4,453,903
Capital redemption reserve
2,408,820
2,408,820
Capital reserve
5,450,799
5,626,497
Revenue reserve
1,003,304
1,128,452
Shareholders’ funds
16,561,634
16,862,480
As permitted by section 408 of the Companies Act 2006, the Company has not presented its own Income Statement.
The amount of the Company’s return for the financial year dealt with in the financial statements of the Group is a
gain after tax of £215,909 (2022: loss of £234,218).
These financial statements were approved by the Board on 4 October 2023 and were signed on its behalf by:
I. R. Dighé
Chairman
Company Number: 0004205
48
The notes on pages 50 to 69 form part of these financial statements.
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
For the year ended 30 June 2023
Notes
30 June
2023
£
30 June
2022
£
30 June
2023
£
30 June
2022
£
Cash flows used in operating activities
Income received from investments
303,1 1 4
342,923
Interest received
6,451
38
Overseas taxation paid
(46,539 )
(29,350 )
(46,539)
(29,350)
Investment management fees paid
(1,678 )
–
(1,678)
Other cash payments
(382,266 )
(347,995 )
(370,586)
(335,407)
Net cash used in operating activities
(119,240 )
(36,062 )
(107,560)
(23,474)
Cash flows used in financing activities
Tender Offer expenses paid
19
(35,000 )
(35,000)
–
Net cash used in financing activities
(35,000 )
(35,000)
–
Cash flows generated from investing activities
Purchase of investments
8
(3,412,011 )
(3,580,745 )
(3,412,011)
(3,580,745)
Sale of investments
8
11,173,539
3,748,933
Loans to subsidiaries
3,049
(12,588)
Net cash generated from investing activities
7,764,577
155,600
Net increase in cash and cash equivalents
7,622,017
132,1 2 6
Reconciliation of net cash flow to
movement in net cash
Increase in cash
7,622,017
132,1 2 6
Exchange rate movements
(4,121 )
(4,1 2 1 )
5,666
Increase in net cash
7,617,896
137,792
Net cash at start of period
663,863
526,071
Net cash at end of period
8,281,759
663,863
Analysis of net cash
Cash and cash equivalents
8,281,759
663,863
8,281,759
663,863
Group
Company
49
The Company is a public limited company limited by shares and incorporated and registered in England and Wales
The Company has been approved as an investment trust within the meaning of sections 1158/1159 of the Corporation
Tax Act 2010. The Company’s registered office is Suite 8, Bridge House, Courtenay Street, Newton Abbot TQ12 2QS.
The Group’s consolidated financial statements for the year ended 30 June 2023 , which comprise the audited results
of the Company and its wholly owned subsidiaries, Abport Limited and New Centurion Trust Limited (together
referred to as the “Group”), have been prepared in accordance with UK adopted international accounting standards
and in accordance with the requirements of the Companies Act 2006. The annual financial statements have also
been prepared in accordance with the AIC Statement of Recommended Practice issued in July 2022 (“AIC SORP”),
except to any extent where it is not consistent with the requirements of UK IFRS.
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by
the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital
nature have been prepared alongside the Income Statement.
The Directors have made an assessment of the Group’s ability to continue as a going concern. This has included
consideration of the reconstruction in July 2023 as discussed in the Post Balance Sheet Events note on pages 67
to 69, portfolio liquidity, the Group’s financial position in respect of its cash flows and investment commitments (of
which there are none of significance), the working arrangements of key service providers, the continued eligibility to
be approved as an investment trust company, the impact of the current economic environment and the conflict in
Ukraine. In addition, the Directors are not aware of any material uncertainties that may cast significant doubt upon
the Group’s ability to continue as a going concern.
The Directors are satisfied that the Group has sufficient resources to continue in business for the foreseeable future
being a period of at least 12 months from the date that these financial statements were approved. Therefore, the
IFRS10 stipulates that subsidiaries of Investment Entities are not consolidated. The Investment Company meets all three
characteristics of an Investment Entity as described, however, it is envisaged that one of the subsidiaries will be a dealing
subsidiary and, therefore consolidated financial statements are presented for the Group. The financial statements of the
subsidiaries are prepared for the same reporting year as the parent Company, using consistent accounting policies. All
The Directors are of the opinion that the Group is engaged in a single segment of business, being investment business.
During the year, the Group primarily invested in companies listed in the UK, Continental Europe and North America.
As part of the change of investment policy, adopted on 26 June 2023, going forward the Group will primarily invest
The following, relevant accounting standards and their amendments were in issue at the year end but will not be in
effect until after this financial year.
International Accounting Standards
Effective date*
IAS 1
(Amendments) Presentation of Financial Statements regarding classification of
liabilities
1 January 2023
IAS 1
(Amendments) Presentation of Financial Statements regarding the amendments of
disclosure of accounting policies
1 January 2023
IAS 8
(Amendments) Accounting Policies, Changes in Accounting Estimates and Error to
distinguish between accounting policies and accounting estimates
1 January 2023
* Years beginning on or after
The Directors do not expect that the adoption of the standards listed above will have a material impact on the
The preparation of financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies and the reported amounts in the Balance Sheet,
the Consolidated Income Statement and the disclosure of contingent assets and liabilities at the date of the financial
statements. The estimates and associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements
about carrying values of assets and liabilities that are not readily apparent from other sources.
The estimates and underlying assumptions are based on historical experience and other factors that are considered
to be relevant. These are reviewed on an ongoing basis. Actual results may differ from these estimates. Revisions
to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that
period or in the period of the revision and future period if the revision affects both current and future periods.
The major part of the investment portfolio is valued by reference to quoted prices. However, the Board assesses the
portfolio for any investments which it considers the value has fallen permanently below cost. Any such loss is treated
as a permanent impairment and as a realised loss, even though the investment is still held.
In addition, the portfolio includes some legacy holdings of fixed interest stocks which are thinly traded; such stocks
are primarily valued by reference to current market price lists provided by an independent broker, itself a recognised
leader in such preference shares and similar fixed interest stocks. The Directors may overlay such prices with
situation specific adjustments including (a) taking a second independent opinion on a specific stock, or (b) reducing
the value to a net present value, to reflect the likely time to be taken to realise a stock which the Group is actively
looking to sell. At 30 June 2023 these were valued at nil. The outturn is reflected in the valuations set out in Note 8 to
the financial statements.
As the Group’s business is investing in financial assets with a view to profiting from their total return in the form
of income and capital growth, Investments are classified at fair value through profit or loss on initial recognition
in accordance with IFRS 9. The portfolio of financial assets is managed and its performance evaluated on a fair
value basis, in accordance with a documented investment strategy, and information about the portfolio is provided
internally on that basis to the Group’s Board of Directors.
Investments are measured initially, and at subsequent reporting dates, at fair value, and derecognised at trade date
where a purchase or sale is under a contract whose terms require delivery within the time-frame of the relevant
market. For quoted investments this is deemed to be bid market prices or closing prices.
Changes in fair value of investments and realised gains and losses on disposal are recognised in the Consolidated
Income Statement as capital items. The holdings of the investment in subsidiaries are stated at cost less diminution
in value. All investments for which fair value is measured or disclosed in the Financial Statements are categorised
Transactions denominated in foreign currencies are converted to Pounds Sterling at the actual exchange rate as at
the date of the transaction. Items that are denominated in foreign currencies at the year-end are reported at the
rate of exchange at the Balance Sheet date. Any gain or loss arising from a change in exchange rate subsequent
to the date of the transaction is included as an exchange gain or loss in the capital reserve or the revenue account
Cash comprises cash at bank and demand deposits. Cash equivalents are short-term, highly liquid investments that
are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.
For the purpose of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as
Current assets are initially recognised at cost and subsequently measured at amortised cost and balances revalued
for exchange rate movement. Current assets comprise debtors, prepayments and cash and are subject to review
Current liabilities are initially recognised at cost and subsequently measured at amortised cost and balances revalued
for exchange rate movement. Current liabilities comprise accruals and other creditors and are subject to review for
Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis. Dividends receivable
on equity shares where no ex-dividend date is quoted are brought into account when the Company’s right to receive
payment is established. Fixed returns on non-equity shares are recognised on a time-apportioned basis.
Dividends from overseas companies are shown gross of any non-recoverable withholding taxes which are disclosed
separately in the Consolidated Income Statement.
Dividend income will only be recognised when there is reasonable certainty that the issuer has the ability to make
The tax expense represents the sum of the tax currently payable. The tax payable is based on the taxable profit
for the year. Taxable profit differs from net profit as reported in the Consolidated Income Statement because it
excludes items that are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The Group’s liability for current tax is calculated using tax rates applicable at the Balance Sheet date.
No taxation liability arises on gains from sales of fixed asset investments by the Group by virtue of its investment
trust status. However, the net revenue (excluding UK dividend income) accruing to the Group is liable to corporation
Dividends to Shareholders are recognised as a liability in the period in which they are paid or approved in general
meetings and are taken to the Statement of Changes in Equity. Dividends declared and approved by the Company
Issued share capital consists of ordinary shares with voting rights and issued preference shares which are non-voting.
The issued preference shares, owned in their entirety by New Centurion Trust Limited, a wholly-owned subsidiary of
the Company, are entitled to receive a cumulative dividend of 0.01p per share per annum, and are entitled to receive
Share Premium
The share premium account represents the accumulated premium paid for shares issued in previous periods above
their normal value less issue expenses. This is a reserve forming part of non-distributable reserves. The following
items are taken to this reserve:
•
costs associated with the issue of equity; and
•
premium on the issue of shares.
The reserve represents the nominal value of the shares bought back and cancelled. This reserve is not distributable.
Capital Reserve
Capital expenses, gains or losses on realisation of investments held at fair value through profit or loss and changes
in fair value of investments are transferred to the capital reserve.
The following are taken to this reserve:
•
gains and losses on the disposal of investments;
•
net movement arising from changes in the fair value of investments held and subsidiaries classified as at “fair
value through profit or loss”;
•
exchange differences and appropriate costs of a capital nature;
•
expenses together with the related taxation effect, allocated to this reserve in accordance with the above policies; and
•
the cost of the Tender Offer as discussed in Note 19.
Realised gains on investments less expenses, provisions and unrealised gains may be considered by the Board for
distribution. This reserve is not distributable.
Revenue Reserves
The net revenue for the year is transferred to the revenue reserve and any dividends paid are deducted from the
revenue reserve.
30 June
2023
£
Year ended
30 June
2022
£
Income from investments:
UK dividends
52,082
122,508
Unfranked dividend income (including scrip dividends)
244,942
258,224
UK fixed interest
–
(8,814)
297,024
371,918
Other income
Bank deposit and other interest
6,451
38
Total income
303,475
Year ended
30 June
2023
£
Year ended
30 June
2022
£
Investment management fee
–
–
The Company has been self-managed since 4 November 2020.
Following completion of the Tender Offer, on 26 July 2023 Chelverton Asset Management was appointed as
Investment Manager.
The Investment Manager will be entitled to an annual fee of 0.75% of the Net Asset Value. To the extent that the
ongoing charges ratio exceeds 2% the Investment Manager has waived the management fee and shall instead make
a contribution to the Company to ensure that the ongoing charges ratio does not exceed 2%.
30 June
2023
£
Year ended
30 June
2022
£
Administration and secretarial services
85,000
85,000
Auditors’ remuneration for:
– audit of the Group’s financial statements
46,300
38,900
Directors’ remuneration (see Note 18)
86,667
100,000
Other expenses
178,595
131,718
Total expenses
396,562
The audit of the Group’s financial statements includes the cost of the audit of Abport Limited of £3,800 (2022:
Year ended 30 June 2023
Year ended 30 June 2022
Revenue
£
Capital
£
Total
£
Revenue
£
Capital
£
Total
£
Current Taxation
–
–
–
–
–
–
Overseas taxation suffered
45,020
–
45,020
39,554
–
39,554
45,020
–
45,020
39,554
–
39,554
The current tax charge for the year is higher than (2022: higher than) the standard rate of corporation tax in the UK
of 20.5%. The differences are explained below:
Year ended 30 June 2023
Year ended 30 June 2022
Revenue
£
Capital
£
Total
£
Revenue
£
Capital
£
Total
£
Return on ordinary activities
(93,087)
877,303
784,216
16,338
(225,409)
(209,071)
Tax at UK Corporation tax
rate of 20.5% (2022: 19%)
(19,083)
179,847
160,764
3,104
(42,828)
(39,724)
Effects of:
UK dividends that are not
taxable
(10,677)
–
(10,677)
(23,277)
–
(23,277)
Overseas dividends that are
not taxable
(11,172)
–
(11,172)
(11,537)
–
(11,537)
Non-taxable investment
(gains)/losses
–
(179,847)
(179,847)
–
42,828
42,828
Overseas taxation suffered
45,020
–
45,020
39,554
–
39,554
Unrelieved expenses
40,932
–
40,932
3 1 ,710
–
3 1 ,710
Actual current tax charged
to the revenue account
45,020
–
45,020
39,554
–
39,554
Factors that may affect future tax charges
generate sufficient taxable income in the future to use these expenses to reduce future tax charges and therefore no
deferred tax asset has been recognised.
Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because
the Company meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an
On 3 March 2021, the UK government announced that it intended to increase the main rate of corporation tax to
25% for the financial years beginning 1 April 2023. This new rate was substantively enacted by Finance Act 2021 on
Returns per share are based on the weighted average number of shares in issue during the year. Normal and diluted
returns per share are the same as there are no dilutive elements on share capital.
Year ended
30 June 2023
Year ended
30 June 2022
Revenue
Capital
Total
Revenue
Capital
Total
(Loss)/return after taxation
attributable to ordinary
Shareholders (£)
(138,107)
877,303
739,196
(23,216)
(225,409)
(248,625)
Weighted average number
of ordinary shares in issue
(excluding shares held in
Treasury)
4,772,049
4,772,049
(Loss)/return per ordinary
share basic and diluted
(pence)
(2.89)
18.38
15.49
(0.49)
(4.72)
Amounts recognised as distributions to equity holders in the year.
Year ended
30 June
2023
£
Year ended
30 June
2022
£
Unclaimed dividends in respect of prior periods
clawed back after 12 years
–
(15,012)
Total
–
(15,012)
Group
Company
2023
£
2022
£
2023
£
2022
£
Investments held at fair value through profit or loss
Opening book cost
15,087,359
15,354,823
15,107,651
15,375,115
Opening net investment holding gains
357,884
264,041
336,968
243,219
Opening valuation
15,445,243
15,618,864
15,444,619
15,618,334
Movements in the year:
Purchases at cost
3,439,089
3,443,998
3,439,089
3,443,998
Sales proceeds
(11,196,367)
(3,389,627)
(11,195,700)
(3,389,627)
Realised gains on sales
793,589
219, 1 7 1
826,631
219, 1 7 1
Permanent diminution*
–
(541,006)
–
(541,006)
Unrealised gains in the year
82,916
93,843
49,831
93,749
Closing valuation
8,564,470
15,445,243
8,564,470
15,444,619
Being:
Book cost
8,123,670
15,087,359
8,177,670
15,107,651
Net investment holding gains
440,800
357,884
386,800
336,968
8,564,470
15,445,243
8,564,470
15,444,619
* The Company provided for a permanent diminution in the value of its holding in Lukoil GDR in the year ended
30 June 2022.
Group
Company
2023
£
2022
£
2023
£
2022
£
Summary of capital gains/(losses)
Realised gains on sales
793,589
219, 1 7 1
826,631
219, 1 7 1
Permanent diminution
–
(541,006)
–
(541,006)
Unrealised gains in the year
82,916
93,843
49,831
93,749
876,505
(227,992)
876,462
(228,086)
Group
Company
2023
£
2022
£
2023
£
2022
£
Transaction costs
Costs on purchases
5,734
7,339
5,734
7,339
Costs on sales
21,680
5,405
21,592
5,405
27,414
12,744
27,326
12,744
Reconciliation of cash movements in investment transactions
The difference between the purchases in Note 8 of £3,439,089 and that shown in the Cash Flow Statement on
page 49 is £27,078 which is represented by the scrip dividend in Hal Trust of £27,249 and an exchange loss of £171.
The difference between the sales proceeds in Note 8 of £11,169,367 and that shown in the Cash Flow Statement on
page 49 is £4,839 which is represented by an exchange loss of £4,839.
Fair Value Hierarchy
Fair value is the amount at which an asset could be sold in an ordinary transaction between market participants at
the measurement date, other than a forced or liquidation sale. The Group measures fair values using the following
hierarchy that reflects the significance of the inputs used in making the measurements.
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to
the fair value measurement of the relevant asset as follows:
Level 1 – valued using quoted prices, unadjusted in active markets for identical assets and liabilities.
Level 2 – valued by reference to valuation techniques using observable inputs for the asset or liability other than
quoted prices included in Level 1.
Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data for
the asset or liability.
The table below sets out fair value measurement of financial instruments as at 30 June 2023, by the level in the fair
value hierarchy into which the fair value measurement is categorised.
Group
At 30 June 2023
Level 1
£
Level 2
£
Level 3
£
Total
£
Financial assets at fair value through profit or loss:
Equities
5,975,907
–
–
5,975,907
Exchange traded commodities
2,588,563
–
–
2,588,563
8,564,470
–
–
8,564,470
Group
At 30 June 2022
Level 1
£
Level 2
£
Level 3
£
Total
£
Financial assets at fair value through profit or loss:
Equities
10,814,305
–
61,152
10,875,457
Exchange traded commodities
4,569,786
–
–
4,569,786
15,384,091
–
61,152
15,445,243
There were no transfers between levels during the current or prior year.
The valuation techniques used by the Group are set out in the Accounting Policies in Note 1.
Valuation process for Level 2 investments
Investments classified within level 2 are valued by reference to quoted prices but not being actively traded have
been treated as level 2.
Valuation process for Level 3 investments
Investments classified within Level 3 comprise those valued by reference to an indicative price list of an independent
third party broker, but the said price list is not sufficiently definitive or observable/publicly available, so as to meet
the criteria for a level 2 categorisation.
If the value of the level 3 investments were to increase or decrease by 10%, while all the other variables remained
constant, the net assets and net profit available to Shareholders would have increased/decreased by £nil (2022:
£6,115).
Reconciliation of Level 3 investments
The following table summarises Level 3 investments that were accounted for at fair value for the year ended
30 June 2023.
Group and Company
Financial assets at
fair value through
profit or loss
£
Opening fair value
61,152
Total (losses) included in gains/(losses) on investments in
the Consolidated Income Statement
– on assets sold
–
– on assets held at the year end
(61,152)
Closing balance
30 June
2023
£
Company
30 June
2022
£
At cost
5,410,552
5,410,552
Provision for diminution in value
(5,084,275)
(4,547,896)
Net value
326,277
At 30 June 2023, the Company held interests in the following subsidiary companies:
Country of
Incorporation
% share of
capital held
% share of
voting rights
Nature of business
Abport Limited
England
100%
100%
Investment dealing company
New Centurion Trust Limited
England
100%
100%
Investment dealing company
The Company has no notified interests in 3% or more of the voting rights of any companies at 30 June 2023 (30 June
Group
Company
2023
£
2022
£
2023
£
2022
£
Amounts due from subsidiaries
–
–
55,690
58,739
Dividends receivable
5,944
12,035
5,944
12,035
Taxation recoverable
639
641
639
641
Other receivables
18,485
17,682
18,486
17,682
25,068
30,358
80,759
89,097
The carrying amount of such receivables approximates to their fair value. Trade and other receivables are not past
Company
2023
£
2022
£
2023
£
2022
£
Preference dividends payable to the Company’s wholly
owned subsidiary
–
–
1,721
1,549
Amounts due to subsidiaries
–
–
101,533
101,533
Trade payables and accruals
601,160
106,002
588,377
94,673
601,160
106,002
691,631
197,755
As the Shareholders voted in favour of the new proposals at a General Meeting on 26 June 2023, the Directors feel
Group and Company
2023
Group and Company
2022
Number
£
Number
£
Issued allotted and fully paid:
Ordinary shares of 50p each
4,772,049
2,386,025
4,772,049
2,386,025
As announced on 18 July 2023, 3,980,664 ordinary shares were validly tendered pursuant to the Tender Offer,
constituting 83.4% of the existing issued share capital. All validly tendered ordinary shares were accepted in full, with
3,747,673 ordinary shares repurchased by the Company and 232,991 ordinary shares sold to Incoming Shareholders
pursuant to the Matched Bargain Facility.
In addition, on 26 July 2023 the Company issued 812,829 new ordinary shares in connection with the Offer for
Subscription and Intermediaries Offer.
Following Admission, and completion of the Tender Offer, the Company's total issued share capital comprises of
5,584,878 ordinary shares. The Company will hold all 3,747,673 ordinary shares that were repurchased pursuant
to the Tender Offer in Treasury. Therefore, the total number of shares with voting rights in the Company will be
1,837,205.
The above figure of 1,837,205 may be used by Shareholders as the denominator for the calculations by which they
will determine if they are required to notify their interest, or a change to their interest in, the Company under the
FCA's Disclosure Guidance and Transparency Rules.
The ordinary shares entitle the holders to receive all ordinary dividends and all remaining assets on a winding up,
after the fixed rate preference shares have been satisfied in full.
At the year end, the Company did not hold any ordinary shares in Treasury (2022: None).
14. Issued Preference Share Capital
Group
Company
2023
£
2022
£
2023
£
2022
£
Issued preference share of 50p each
–
–
858,783
858,783
The 1,717,565 fixed rate preference shares are non-voting, entitled to receive a cumulative dividend of 0.01p per
share per annum, and are entitled to receive their nominal value of 50p, on a distribution of assets or a winding up.
The whole of the issue is held by New Centurion Trust Limited, a wholly owned subsidiary of the Company.
The Directors do not consider the fair values of the issued preference share capital to be significantly different from
15. Net Asset Value per Ordinary Share
The NAV per ordinary share is calculated as follows:
2023
£
2022
£
Net Assets
16,270,804
16,048,191
Ordinary shares in issue
4,772,049
4,772,049
NAV per ordinary share
340.96p
336.30p
The underlying investments of the wholly owned subsidiary New Centurion Trust Limited comprise issued preference
share capital, as discussed in Note 14, in the Company and, being effectively eliminated on consolidation, the
valuation thereof does not impact the NAV attributable to ordinary Shareholders.
Investment Objective and Policy
The Company’s investment objective during the year was to protect the purchasing power of its capital in real terms,
and to participate in enduring economic activities which lend themselves to genuine capital accumulation and wealth
creation.
At a General Meeting held on 26 June 2023, the members voted to amend the Investment Objective to: maximise
capital growth for Shareholders over the long-term by investing in high-quality, quoted, UK small and mid-
cap companies.
Risks
The Group’s financial risk management can be found in the Strategic Report on pages 11 and 12.
The Group’s financial instruments comprise securities, cash balances, receivables and payables. They are classified
in the following categories:
•
those to be measured subsequently at fair value through profit or loss; and
•
those to be measured at amortised cost.
The financial assets held at amortised cost include trade and other receivables, cash and cash equivalents.
The main risks identified arising from the Group’s financial instruments are:
(a)
market price risk, including currency risk, interest rate risk and other price risk;
(b) liquidity risk; and
(c)
credit risk.
The Board reviews and agrees policies for managing each of these risks, which are summarised below.
Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Group’s
business. It represents the potential loss the Group might suffer through holding market positions by way of price
movements, interest rate movements and exchange rate movements. The Board assesses the exposure to market
price risk when making each investment decision and monitor these risks on the whole of the investment portfolio
During the year, the Group’s total return and net assets were affected by currency translation movements as a
significant proportion of the Company’s assets were denominated in currencies other than Sterling, which is the
Group’s functional currency. It was not the Group’s policy to hedge this currency risk. Under the new investment
policy, voted for on 26 June 2023, the Company will invest in UK companies only, hence this risk will have little direct
Interest rate risk
The Group’s financial assets and liabilities, include cash, equity shares, preference shares and fixed interest stocks.
As the majority of the Group’s financial assets and liabilities are non-interest bearing the direct exposure to interest
rates is not material.
The impact of movements would not significantly affect the net assets attributable to ordinary Shareholders or the
total profit.
Other price risk
Other price risk arises from changes in market prices other than those arising from currency risk or interest rate risk.
The Board manages the risks inherent in the investment portfolio by maintaining a spread of investments across
different sectors and monitoring market prices throughout the year. The Board meets regularly in order to review
investment performance and its investment strategy.
This is the risk that that the Group will encounter difficulty in meeting its obligations associated with financial liabilities.
All liabilities are due within one year.
The Group invests in a spread of investments which are traded on recognised stock markets and which can be readily
The Group does not have any significant exposure to credit risk arising from one individual party. Credit risk is spread
across a number of counterparties, each having an immaterial effect on the Group’s cash flows should a default
happen. The Group assesses its debtors from time to time to ensure they are neither past due or impaired.
The maximum exposure of financial assets to credit risk at the Balance Sheet date was as follows:
Group
Company
2023
£
2022
£
2023
£
2022
£
Financial assets neither past due or impaired
Trade and other receivables
25,068
30,358
80,759
89,097
Cash and cash equivalents
8,282,426
678,592
8,281,759
663,863
8,307,494
708,950
8,362,518
Sensitivity Analysis
At the year end, the Board believes that the Group's assets are mainly exposed to market price risk.
As part of the Tender Offer and Issue of Shares as discussed in Note 19, the majority of the portfolio was converted
into cash. As a result, the Directors feel it is not helpful to provide sensitivity analysis at the year end. At the Tender
Capital is managed so as to maximise the return to Shareholders while maintaining a capital base to allow the Group
to operate effectively. Capital is managed on a consolidated basis and to ensure that the Group will be able to
continue as a going concern.
In order to maintain or adjust the capital structure, the Group may pay dividends to Shareholders, return capital to
Shareholders, issue new shares or sell securities to reduce debt.
Fiske plc, a company in which Mr Perrin is a non-executive director, is the Company's custodian. An amount of
£7,248 (2022: £8,247) was paid to Fiske plc pursuant to the custody agreement and, as at the year end, £1,228
(2022: £2,005) was payable to Fiske plc.
At the year end, the Board consisted of four non-executive Directors all of whom, with the exception of Mr Perrin,
who is a non-executive Director of Fiske plc, the Company's custodian and until 4 November 2020 the investment
manager, are considered to be independent by the Board. Messrs Dighé and Weeks hold directorships or positions of
senior management within Edelweiss Holdings plc (“Edelweiss”), who were significant Shareholders in the Company
during the year. For the year ended 30 June 2023, all Directors, including the Chairman, received an annual fee of
£20,000. Further information can be found within the Directors' Remuneration Report on page 31.
As described in Note 19, as part of the Post Balance Sheet Events, Michael Weeks resigned from the Board on 26 July
2023 and David Horner was appointed as a non-executive Director. Mr Horner is the Managing Director of the new
Investment Manager.
The Directors did not receive any other form of remuneration and at the year end, there were no outstanding fees
payable to Directors (2022: £nil).
On 9 June 2023 the Company published a circular setting out details outlining the following proposals:
•
the appointment of Chelverton Asset Management Limited as the Company’s Investment Manager;
•
the appointment of David Horner, the founder and managing director of the Proposed Manager, as a Proposed
Director;
•
an amendment to the Company’s investment objective and policy to that set out on pages 4 and 5;
•
a Tender Offer to all Shareholders to realise some or all of their investment in the Company;
• the cancellation of the amounts standing to the credit of the Company’s share premium account and capital
redemption reserve in order to increase the Company’s distributable reserves to fund the Tender Offer;
•
an Issue of up to 6 million ordinary shares on a non-pre-emptive basis for new and existing investors;
•
an amendment to the Company’s Articles of Association to change the timing of the Company’s next continuation
vote; and
•
following completion of the Issue and the Tender Offer, a sub-division of the Company’s ordinary shares.
These proposals were approved by Shareholders in a General Meeting on 26 June 2023.
On 18 July 2023, the Board announced that 3,980,664 ordinary shares had been validly tendered pursuant to the
Tender Offer, constituting 83.4% of the existing issued share capital of the Company. In addition, the Company
had received total commitments of approximately £3.6 million pursuant to the Placing, Offer for Subscription and
Intermediaries Offer.
On 19 July 2023, the Company announced:
1.
That the Net Asset Value ("NAV") per ordinary share (including unaudited revenue but excluding any accrued
Transaction Costs) at the Calculation Date, being 6.00 p.m. on 18 July 2023, was 348.38 pence per ordinary
share. Accordingly, the Tender Price and Issue Price, which had been calculated using the methodology set out
in Part 6 of the Prospectus published by the Company on 9 June 2023, was as follows:
TENDER PRICE
ISSUE PRICE
337.76 PENCE
348.38 PENCE
The Tender Price represented a 3.0% discount to the Company's NAV per ordinary share at close of business
on 18 July 2023, reflecting the proportion of the Transaction Costs to be borne by Existing Shareholders, and is
equal to the estimated Post-Transaction NAV per ordinary share.
The Issue Price represented a 3.1% premium to the Tender Price and the estimated Post-Transaction NAV per
ordinary share reflecting the proportion of the estimated Transaction Costs borne by Incoming Shareholders.
2.
That the following Directors, and the Proposed Director, subscribed for new ordinary shares pursuant to the
Issue (the "Directors' Participation") as outlined below:
Existing
number of
ordinary shares
held
Number of new
ordinary shares
subscribed for
pursuant to the Issue
Resulting
number of
ordinary shares
held
Percentage of
issued share
capital held
on Admission
Ian Dighé
30,820
7,176
37,996
2.07%
Martin Perrin*
21,695
10,046
31,741
1.73%
David Horner
–
28,704
28,704
1.57%
* Together with his persons closely associated.
3.
That by virtue of Ian Dighé and Martin Perrin's positions as current directors of the Company, the Directors'
Participation was considered to be a related party transaction for the purposes of the Listing Rules. In addition,
David Horner was considered to be an associate of the Proposed Manager as a result of his holding of over 30%
of the shares in the Proposed Manager. The Transaction constituted a smaller related party transaction and the
Company had received written confirmation from the Sponsor that the terms of the Transaction were fair and
reasonable as far as Shareholders of the Company were concerned.
4.
That with effect from, Completion of the Tender Offer, on 26 July 2023, Michael Weeks would resign from the
Board and David Horner would be appointed as a non-independent non-executive Director of the Company.
5.
That the Court had confirmed the cancellation of the Company's share premium account and capital redemption
reserve on 18 July 2023 creating further distributable reserves to fund the Tender Offer
6.
That 3,980,664 ordinary shares were validly tendered pursuant to the Tender Offer, constituting 83.4% of the
existing issued share capital. All validly tendered ordinary shares would be accepted in full with 3,747,673 ordinary
shares repurchased by the Company and 232,991 ordinary shares sold to Incoming Shareholders pursuant to the
Matched Bargain Facility.
7.
That the Company would issue 812,829 new ordinary shares in connection with the Offer for Subscription and
Intermediaries Offer. Applications had been made for the new ordinary shares to be admitted to the premium
listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities
("Admission") and that Admission would become effective and that dealings will commence on 26 July 2023.
On 26 July 2023 the Company announced:
that following Admission, and completion of the Tender Offer, the Company's total issued share capital
will comprise of 5,584,878 ordinary shares. The Company will hold all 3,747,673 ordinary shares that were
repurchased pursuant to the Tender Offer in treasury. Therefore, the total number of shares with voting rights
in the Company will be 1,837,205.
That the above figure of 1,837,205 may be used by Shareholders as the denominator for the calculations
by which they will determine if they are required to notify their interest, or a change to their interest in, the
Company under the FCA's Disclosure Guidance and Transparency Rules.
That as part of the Tender Offer and Issue of Share the following transactions with Directors had occurred:
Bought
Sold
Ian Dighé
7,176 shares
–
Martin Perrin*
10,046 shares
–
David Horner
28,704 shares
–
Michael Weeks
–
32,000 shares
20. Ultimate controlling party
69
SHAREHOLDER INFORMATION
Fraud Warning
Fraudsters use persuasive and high-pressure tactics to
lure investors into scams and we are aware of entities
from time to time purporting to be The Investment
Company plc. They may offer to sell shares that
turn out to be worthless or non-existent, or to buy
shares at an inflated price in return for an upfront
payment. While high profits are promised, if you
buy or sell shares in this way you will probably lose
your money. Detailed advice on how to avoid and
report potential investment scams is available on the
FCA website: www.fca.org.uk/scamsmart.
The Company has also been made aware of attempts
to issue documentation in the Company’s name which is
not legitimate. Anyone wishing to verify the authenticity
of any documentation should contact the Company
Secretary on 01392 487056 or tic@iscaadmin.co.uk.
The Company has also been made aware of a website
purporting to be the Company's website which is not
legitimate. Anyone wishing to verify the authenticity of
the website should contact the Company Secretary on
01392 487056 or tic@iscaadmin.co.uk.
70
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the 157th Annual General Meeting of the Company will be held at the offices of Chelverton
Asset Management Limited, Ground Floor Office, Basildon House, 7 Moorgate, London EC2R 6AF on Tuesday
7 November 2023 at 11.00 am to consider and, if thought fit, pass the following resolutions, of which numbers 1 to 9
will be proposed as ordinary resolutions and numbers 10 to 12 as special resolutions.
Ordinary Business
Resolution 1 – Ordinary Resolution
To receive and adopt the Strategic Report, Reports of the Directors and Auditor and the audited financial statements
for the year ended 30 June 2023.
Resolution 2 – Ordinary Resolution
To receive and approve the Directors’ Remuneration Report.
Resolution 3 – Ordinary Resolution
To re-elect I.R. Dighé as a Director of the Company.
Resolution 4 – Ordinary Resolution
To re-elect T.M. Metcalfe as a Director of the Company.
Resolution 5 – Ordinary Resolution
To re-elect M. H. W. Perrin as a Director of the Company.
Resolution 6 – Ordinary Resolution
To elect D.A. Horner as a Director of the Company.
Resolution 7 – Ordinary Resolution
To re-appoint PKF Littlejohn LLP as Auditor of the Company to hold office from the conclusion of this meeting until
the conclusion of the next meeting at which financial statements are laid before the Company.
Resolution 8 – Ordinary Resolution
To authorise the Directors to determine the remuneration of the Auditor.
Resolution 9 – Ordinary Resolution
THAT, in substitution for any existing authorities, the Directors be and are hereby generally and unconditionally
authorised in accordance with Section 551 of the Companies Act 2006 (“the Act”) to exercise all the powers of the
Company to allot ordinary shares of 50 pence each in the capital of the Company (“ordinary shares”) up to an
aggregate nominal amount of £183,720 (being 20% of the issued ordinary share capital, excluding Treasury shares,
of the Company at the date of this Notice, during the period commencing on the date of the passing of this Resolution
and expiring at the conclusion of the Annual General Meeting of the Company to be held in 2024 (unless previously
renewed, varied or revoked by the Company in general meeting) (the “Section 551 period”), but so that the Company
may, at any time prior to the expiry of the Section 551 period, make offers or agreements which would or might require
ordinary shares to be allotted after the expiry of the Section 551 period and the Directors may allot ordinary shares in
pursuance of such offers or agreements as if the authority had not expired.
71
Resolution 10 – Special Resolution
THAT, in substitution for any existing authorities, subject to the passing of Resolution 9, the Directors be and they are
hereby empowered, in accordance with Sections 570 and 573 of the Act, to allot ordinary shares for cash pursuant
to the authority conferred on the Directors by Resolution 9 above, and to sell ordinary shares from Treasury for
cash as if Section 561(1) of the Act did not apply to any such allotment or sale, up to an aggregate nominal amount of
£183,720 (being 20% of the issued ordinary share capital, excluding Treasury shares, of the Company at the date of
this Notice, such power to expire at the conclusion of the Annual General Meeting of the Company to be held in 2024
(unless previously renewed, varied or revoked by the Company in general meeting) save that the Company may, at
any time prior to the expiry of such power, make an offer or enter into an agreement which would or might require
ordinary shares to be allotted or sold after the expiry of such power and the Directors may allot or sell ordinary
shares in pursuance of such an offer or agreement as if such power had not expired.
Resolution 11 – Special Resolution
THAT, the Company is hereby generally and unconditionally authorised in accordance with Section 701 of the Act
to make market purchases (within the meaning of Section 693(4) of the Act) of ordinary shares of 50p each in the
capital of the Company (“ordinary shares”) provided that:
(a)
the maximum number of ordinary shares hereby authorised to be purchased is 275,397 (representing 14.99%
of the ordinary shares in issue, excluding shares held in Treasury at the date of the passing of this Resolution);
(b)
the minimum price which may be paid for each ordinary share is 50p;
(c)
the maximum price which may be paid for each ordinary share shall not be more than the higher of: (i) an
amount equal to 105% of the average of the middle market quotations of ordinary shares taken from the Daily
Official List of the London Stock Exchange for the five business days immediately preceding the day on which
the contract of purchase is made; and (ii) the higher of the price of the last independent trade in the ordinary
shares and the highest then current independent bid for the ordinary shares on the London Stock Exchange;
(d)
this authority will (unless previously renewed, varied or revoked by the Company in general meeting) expire at
the conclusion of the Annual General Meeting of the Company to be held in 2024;
(e)
the Company may make a contract of purchase for ordinary shares under this authority before this authority
expires which will or may be executed wholly or partly after its expiration; and
(f)
any ordinary shares bought back under the authority hereby granted may, at the discretion of the Directors, be
cancelled or held in Treasury and if held in Treasury may be resold from Treasury or cancelled at the discretion
of the Directors.
Resolution 12 – Special Resolution
THAT, a General Meeting other than an Annual General Meeting may be called on not less than 14 clear days' notice.
By order of the Board.
ISCA Administration Services Limited
Suite 8, Bridge House, Courtenay Street, Newton Abbot, Devon TQ12 2QS
4 October 2023
72
NOTICE OF ANNUAL GENERAL MEETING
continued
NOTES
Right to appoint a proxy
1.
A member entitled to attend and vote at this meeting may appoint one or more persons as his/her proxy to
attend, speak and vote on his/her behalf at the meeting. A proxy does not need to be a member of the Company.
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 that member.
2.
A proxy form which may be used to make such appointment and give proxy directions accompanies this notice.
If you do not receive a proxy form and believe that you should have one, or if you require additional proxy forms
in order to appoint more than one proxy, please contact the Registrar on +44 (0) 371 384 2030. If calling from
outside of the UK, please ensure the country code is used. The helpline is open Monday to Friday 8.30am to
5.30pm, excluding public holidays in England and Wales.
Procedure for appointing a proxy
3.
To be valid, the proxy form, together with any power of attorney or other authority under which it is signed or
a notarially certified copy thereof, should be lodged at the office of the Company’s Registrar, Equiniti Limited,
Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA and must be received by post or (during normal
business hours only) by hand at Equiniti Limited, Aspect House, Spencer Road, Lancing West Sussex no later than
48 hours (excluding non-working days) before the time of the meeting or any adjournment thereof.
4.
The return of a completed proxy form will not preclude a member from attending the Annual General Meeting
and voting in person if he or she wishes to do so. The termination of the authority of a person to act as proxy
must be notified to the Company in writing.
Nominated persons
5.
Any person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act
2006 to enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the
member by whom he or she was nominated, have a right to be appointed (or to have someone else appointed)
as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does
not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the member
as to the exercise of voting rights.
6.
The statement of the rights of members in relation to the appointment of proxies in Notes 1 and 3 above does
not apply to Nominated Persons. The rights described in those notes can only be exercised by members of the
Company.
Record date and entitlement to vote
7.
To be entitled to attend and vote at the Annual General Meeting (and for the purpose of the determination by
the Company of the votes they may cast), members must be entered on the Company’s register of members
at 18:30 on 3 November 2023 (or, in the event of any adjournment, 48 hours before the time of the adjourned
meeting). Changes to the register of members after the relevant deadline will be disregarded in determining
the right of any person to attend and vote at the meeting. Only holders of ordinary shares are entitled to attend
and vote at the Annual General Meeting.
73
8.
As at 3 October 2023, (the business day prior to the publication of this notice), the Company’s issued share
capital amounted to 1,837,205 ordinary shares carrying one vote each. The total voting rights in the Company
as at 3 October 2023 were 1,837,205 votes.
Members’ rights
9.
In accordance with Section 319A of the Companies Act 2006, the Company must cause any question relating to
the business being dealt with at the meeting put by a member attending the meeting to be answered. No such
answer need be given if:
(a)
to do so would:
(i)
interfere unduly with the preparation for the meeting, or
(ii)
involve the disclosure of confidential information;
(b)
the answer has already been given on a website in the form of an answer to a question; or
(c)
it is undesirable in the interests of the Company or the good order of the meeting that the question be
answered.
10.
A corporation which is a member can appoint one or more corporate representatives who may exercise, on its
behalf, all its powers as a member provided that no more than one corporate representative exercises powers
over the same share.
11.
Members should note that it is possible that, pursuant to requests made by members of the Company under Section
527 of the Companies Act 2006, the Company may be required to publish on a website a statement setting out any
matter relating to: (i) the audit of the Company’s accounts (including the auditor’s report and the conduct of the
audit) that are to be laid before the Annual General Meeting; or (ii) any circumstances connected with an auditor of
the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in
accordance with Section 437 of the Companies Act 2006.The Company may not require the members requesting
any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006.
Where the Company is required to place a statement on a website under Section 527 of the Companies Act 2006, it
must forward the statement to the Company’s auditor not later than the time when it makes the statement available
on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the
Company has been required under Section 527 of the Companies Act 2006 to publish on a website.
12.
Members satisfying the thresholds in Section 338 of the Companies Act 2006 may require the Company to give,
to members of the Company entitled to receive notice of the Annual General Meeting, notice of a resolution which
those members intend to move (and which may properly be moved) at the Annual General Meeting. A resolution may
properly be moved at the Annual General Meeting unless: (i) it would, if passed, be ineffective (whether by reason of
any inconsistency with any enactment or the Company’s constitution or otherwise); (ii) it is defamatory of any person;
or (iii) it is frivolous or vexatious. A request made pursuant to this right may be in hard copy or electronic form, must
identify the resolution of which notice is to be given, must be authenticated by the person(s) making it and must be
received by the Company not later than six weeks before the date of the Annual General Meeting.
13.
Members satisfying the thresholds in Section 338A of the Companies Act 2006 may request the Company
to include in the business to be dealt with at the Annual General Meeting any matter (other than a proposed
resolution) which may properly be included in the business at the Annual General Meeting. A matter may
properly be included in the business at the Annual General Meeting unless (i) it is defamatory of any person or
(ii) it is frivolous or vexatious. A request made pursuant to this right may be in hard copy or electronic form, must
identify grounds for the request, must be authenticated by the person(s) making it and must be received by the
Company not later than six weeks before the date of the Annual General Meeting.
74
NOTICE OF ANNUAL GENERAL MEETING
continued
Electronic Proxy Appointment through CREST
14.
CREST members who wish to appoint a proxy or proxies, or amend an instruction to a previously appointed
proxy, through the CREST electronic proxy appointment service may do so for the Annual General Meeting to
be held at 11.00am on 7 November 2023 and any adjournment(s) thereof, by using the procedures described
in the CREST manual (available via www.euroclear.com). CREST personal members or other CREST sponsored
members, and those CREST members who have appointed (a) voting service provider(s), should refer to their
CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate
CREST message (a CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear
UK & Ireland Limited (Euroclear)’s specifications and must contain the information required for such
instructions, as described in the CREST manual. The message, regardless of whether it relates to the
appointment of a proxy or to an instruction to a previously appointed proxy, must be transmitted so as to
be received by the issuer’s agent (ID: RA19) by no later than 11.00am on 3 November 2023.
For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to
the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message
by enquiry to CREST in the manner prescribed by CREST.
CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note
that Euroclear does not make available special procedures in CREST for any particular messages. Normal
system timings and limitations will therefore apply in relation to the input of CREST proxy instructions. It is
the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed (a) voting service provider(s), to procure that his/her
CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a
message is transmitted by means of the CREST system by any particular time. In this connection, CREST
members and, where applicable, their CREST sponsors or voting service provider(s) is/are referred, in
particular, to those sections of the CREST manual concerning practical limitations of the CREST system and
timings.
The Company may treat as invalid a CREST proxy instruction in the circumstances set out in Regulation
35(5)(a) of the Uncertificated Securities Regulations 2001.
Documents
15. The Annual Report incorporating this Notice of Annual General Meeting and, if applicable, any members’
statements, members’ resolutions or members’ matters of business received by the Company after the dates of
this Notice will be available on the Company’s website, https://theinvestmentcompanyplc.co.uk.
16.
A copy of the Directors’ service contracts will be available for inspection at the registered office of the Company
during usual business hours on any weekday (except weekends and public holidays) until the date of the meeting
and at the place of the meeting for a period of fifteen minutes prior to and during the meeting.
Registered in England and Wales No. 0004205
75
76
FOUNDED 1868
REGISTERED NO. 4205
ENGLAND AND WALES