Finsbury Growth & Income Trust Plc - Half-year Report

PR Newswire

London, May 14

Legal Entity Identifier: 213800NN42KX2LG1GQ40

15 May 2023

LONDON STOCK EXCHANGE ANNOUNCEMENT

Finsbury Growth & Income Trust PLC

Unaudited Half Year Results For The Six Months Ended

31 March 2023

This Announcement is not the Companys Half Year Report & Accounts. It is an abridged version of the Companys full Half Year Report & Accounts for the six months ended 31 March 2023. The full Half Year Report & Accounts, together with a copy of this announcement, will shortly be available on the Companys website at www.finsburygt.com where up to date information on the Company, including daily NAV, share prices and fact sheets, can also be found.

The Companys Half Year Report & Accounts for the six months ended 31 March 2023 has been submitted to the UK Listing Authority, and will shortly be available for inspection on the National Storage Mechanism (NSM): https://data.fca.org.uk/#/nsm/nationalstoragemechanism

COMPANY SUMMARY

Finsbury Growth & Income Trust PLC is a listed investment company, its shares are quoted on the premium segment of the Official List and traded on the main market of the London Stock Exchange. The Company is a member of the Association of Investment Companies (AIC).

INVESTMENT OBJECTIVE AND PERFORMANCE MEASUREMENT

The Company aims to achieve capital and income growth and to provide shareholders with a total return in excess of that of the FTSE All-Share Index (the Companys benchmark).

INVESTMENT POLICY

The Companys investment policy is to invest principally in the securities of companies either listed in the UK or otherwise incorporated, domiciled or having significant business operations within the UK. Up to a maximum of 20% of the Companys portfolio, at the time of acquisition, can be invested in companies not meeting these criteria.

The portfolio will normally comprise up to 30 investments. This level of concentration is likely to lead to an investment return which is materially different from the Companys benchmark index and may be considered to carry above average risk*.

Unless driven by market movements, securities in FTSE 100 companies and comparable companies listed on an overseas stock exchange will normally represent between 50% and 100% of the portfolio; securities in FTSE 350 companies and comparable companies listed on overseas stock exchanges will normally represent at least 70% of the portfolio.

The Company will not invest more than 15% of the Companys net assets, at the time of acquisition, in the securities of any single issuer. For the purposes of this limit only, net assets shall exclude the value of the Companys investment in Frostrow Capital LLP.

The Company does not and will not invest more than 15%, in aggregate, of the value of the gross assets of the Company in other listed closed ended investment companies. Further, the Company does not and will not invest more than 10%, in aggregate, of the value of its gross assets in other listed closed ended investment companies except where the investment companies themselves have stated investment policies to invest no more than 15% of their gross assets in other listed closed ended investment companies.

The Company has the ability to invest up to 25% of its gross assets in preference shares, bonds and other debt instruments, although no more than 10% of any one issue may be held.

In addition, a maximum of 10% of the Companys gross assets can be held in cash, where the Portfolio Manager believes market or economic conditions make equity investment unattractive or while seeking appropriate investment opportunities or to maintain liquidity.

The Companys gearing policy is that gearing will not exceed 25% of the Companys net assets.

No investment will be made in any company or fund managed by the Portfolio Manager without the prior approval of the Board.

In accordance with the Listing Rules of the Financial Conduct Authority (FCA), the Company can only make a material change to its investment policy with the approval of its shareholders.

* The Company publishes its Active Share scores in its monthly fact sheet for investors and in both the annual and half-yearly reports to highlight how different the portfolio is from the Companys benchmark index.

PERFORMANCE

Whilst performance is measured against the FTSE All-Share Index, the Companys portfolio is constructed and managed without reference to a stock market index with the Portfolio Manager selecting investments based on their assessment of their long-term value.

The Companys net assets as at 31 March 2023 were 1,958.3 million (30 September 2022: 1,830.4 million) and the market capitalisation was 1,871.8 million (30 September 2022: 1,725.9 million).

MANAGEMENT

Frostrow Capital LLP (Frostrow) is the appointed Alternative Investment Fund Manager (AIFM) and provides company management, company secretarial, administrative and marketing services. Lindsell Train Limited (Lindsell Train) is the appointed Portfolio Manager.

DIVIDENDS

An interim dividend of 8.5p per share (2022: 8.3p) will be paid on 19 May 2023 to shareholders who were registered at the close of business on 11 April 2023. The associated ex-dividend date was 6 April 2023.

In accordance with FRS 102 dividends are included in the Financial Statements in the period in which they are paid or approved by shareholders.

It is expected that a second interim dividend will be declared and paid in the Autumn.

CAPITAL STRUCTURE

At 31 March 2023 the Company had 207,974,556 shares of 25p each in issue (excluding 17,016,747 held in treasury) (30 September 2022: 215,737,992; excluding 9,253,311 shares held in treasury). During the six months under review 7,763,436 shares were bought back to be held in treasury. Since the end of the half year to 11 May 2023, being the latest practicable date, a further 275,000 shares were bought back and held in treasury.

GEARING

As at the half-year end the Company was in the first year of its three-year secured fixed term revolving credit facility (the facility) of 60 million with Scotiabank Europe PLC (Scotiabank) and there is an additional 40 million facility available if required. As at 31 March 2023 a total of 36.7 million has been drawn down from this facility. This facility was renewed with Scotiabank following the Companys year end, with effect from 4 October 2022.

COMPANY PERFORMANCE

AS AT 31 MARCH 2023

^{^} Alternative Performance Measure (see glossary)

UK GAAP Measure

* Source Morningstar

** Source FTSE International Limited (FTSE) FTSE 2023* (See glossary)

REVIEWS/INVESTMENT PORTFOLIO

CHAIRMANS STATEMENT

PERFORMANCE

I am pleased to report that in the six months to 31 March 2023 the Company delivered a net asset value per share total return^ of 12.3% and a share price total return^ of 12.5%. This was in line with the Companys benchmark, the FTSE All-Share Index, which, measured on a total return basis, rose by 12.3% over the same period. The principal contributors to the Companys net asset value performance were Burberry, RELX and Schroders. The main detractors were Diageo, Hargreaves Lansdown and Remy Cointreau.

Further information on the Companys portfolio can be found in our Portfolio Managers Review.

SHARE CAPITAL

The Board continues to keep the Companys discount under close review and is committed to buying back its own shares when the discount approaches or exceeds the 5% level. While share buy-backs will not necessarily prevent the discount from widening beyond this level, particularly in times of market weakness or volatility, the Board believes that buybacks enhance the net asset value per share for remaining shareholders, provide some additional liquidity and help to mitigate discount volatility which can damage shareholder returns.

During the six months under review the Company has bought back a total of 7,763,436 shares into treasury at a cost of 67.4 million. As at 31 March 2023 the discount was 4.4% and at the time of writing (at the close of the UK market on 11 May 2023), the discount was 4.0%. Over the six months the discount averaged 4.8%, compared with 5.2% over the course of the previous financial year.

Since 1 April 2023 to the date of this report, a further 275,000 shares were bought back into treasury at a cost of 2.5 million. As at 11 May 2023, the Company had 207,699,556 shares in issue (excluding 17,291,747 shares held in treasury).

DIVIDEND

The Board declared a first interim dividend of 8.5p per share (2022: 8.3p) with respect to the year ending 30 September 2023. That dividend will be paid on Friday, 19 May 2023 to shareholders who were on the register on Tuesday, 11 April 2023. The associated ex-dividend date was Thursday, 6 April 2023.

The Board expects to declare the second interim dividend for the year ending 30 September 2023 in the Autumn.

OUTLOOK

The six months under review saw a period of heightened political uncertainty in the UK and continued elevated levels of inflation which are proving more persistent than many economic commentators may have hoped. Against this background, we have seen interest rates rise, equity market volatility increase and, within the investment trust sector, a marked widening of discounts.

Despite this, the Companys portfolio has generated an attractive absolute return as it performed in-line with the Companys benchmark, while the discount has remained relatively stable with the assistance of the Companys active share buy-back policy.

These returns demonstrate that, despite domestic concerns, the UK stock market continues to offer investors the opportunity to own resilient, cash-generative franchises, brands and business models, often with an international rather than domestic reach, that offer the promise of attractive returns.

Our Portfolio Manager remains optimistic about the outlook and opportunities for the companies in our portfolio. Your Board continues to believe that our Portfolio Managers strategy of investing for the long-term in durable businesses capable of sustained dividend growth will reward shareholders with a similar long term outlook.

Simon Hayes
Chairman

12 May 2023

PORTFOLIO MANAGERS REVIEW

I know how trite the following sentence reads. Our basic economic assumption is that things for the world (including the UK) will keep gradually getting better. We expect technology will deliver productivity gains and drive steady GDP growth everywhere and the fruits of that growth will be spent by consumers on products and services that improve their quality of life. The assumption may indeed be trite, but at least it provides an uncomplicated backdrop to investment decision-making. And that usefully discourages us from excessive trading of your portfolio, based on guesses about the ups and downs of economic life.

Much more importantly, if you work with our assumption then the business performance of the companies in your portfolio and their share prices in the first half of the Companys financial year are not a surprise, but they are encouraging. Things really do seem to be gradually getting better.

For instance, big holdings Burberry and RELX both hit all-time share price highs in the period. The well-received first show from Burberrys new creative director, Daniel Lee, in February 2023, reminded investors that actually this is an iconic, global, luxury brand, well-positioned to benefit from wealth being created, notably in Asia and the Americas. RELX reported a stronger-than-expected set of final results, that demonstrate how increasingly entrenched its data products and software services are in the day-to-day work of scientists, lawyers and risk-professionals around the world. Burberrys shares are up nearly 10-fold since 2003, while RELX is up 4.5 times Both have handsomely outperformed the FTSE All-Share Index. Despite hitting all-time highs recently, why shouldnt their share prices continue to do well?

Another longstanding holding that hit an all-time high in early 2023 was Mondelez, owner of global confectionery and biscuit brands such as Oreo, Milka, Toblerone, Belvita (nine billion Belvita biscuits are baked each year I cant resist sharing that statistic with you!) and Cadbury. We inherited the holding via our investment in Cadbury at the time of its takeover in 2010. Ten years ago, Mondelez was trading at $30, today it is above $70. The world loves chocolate. It is interesting to note Mondelez has now outperformed the NASDAQ over the five years to the end of March 2023; a period that contained both a big bull market for tech shares and a subsequent sell-off. My point? Although finding tech-winners is a worthwhile exercise, it is also risky and that holding a predictable business like Mondelez makes sense for part of a portfolio too.

The share price of the London Stock Exchange Group (LSEG) one of the biggest holdings in the portfolio has picked up over the last six months, though remains below the levels reached in 2021. With each successive set of results the wisdom of the LSEGs acquisition of Refinitiv (which closed in 2021, at that share price peak) looks more apparent and its recently announced joint venture with Microsoft is a further endorsement. LSEGs position providing data, clearing and liquidity to global financial market participants also makes it a nice proxy for the wealth created by the advancement in technology.

Sage shares rose over 12% in the period, as it confirmed accelerating growth in its recurring software revenues to 12% year-on-year. Sages opportunity to sell productivity-boosting software services to companies around the world is also consistent with our optimism about technology gradually creating efficiencies and growth for businesses and consumers. By the way, it is important to remember that Sages biggest and most rapidly growing market is the US. This UK technology company is doing well Stateside, and it is no surprise to see its share register increasingly populated by US investment houses.

Diageo reported record interim results in early 2023, with its revenues driven by record sales of its premium and super-premium brands. Wealthier consumers are drinking less, but better. Diageo is your second biggest portfolio holding, behind RELX. The results were apparently already in the price because Diageos shares closed the period down by circa 4%. Never mind; the company can take advantage of the temporarily flat price by retiring more stock via its newly announced share buyback. Shrinking its share count at this valuation is exceptionally accretive for long-term investors like us, we expect.

By contrast, Fever-Tree was one of the best performers over the period, with shares up over 50%. The growth of Diageos premium brands tallies with the strong revenue growth reported by Fever-Tree: more premium mixers are being sold to serve with high-end spirits. Both Diageo and Fever-Tree remain justifiably optimistic about the long-term prospects for their brands, we think.

That optimism is also shared by another drinks company in your portfolio, Heineken. Its shares have done well recently, not just because of the recovery from COVID, but because its premium brands, including the eponymous one, continue to deliver secular volume growth and exhibit pricing power that protects from inflation. It must have helped too that Bill Gates (or the Gates Foundation) made a new investment in the shares of Heineken in 2023, to the tune of nearly $1bn. This despite Bill Gates reportedly protesting he is not much of a beer-drinker. We assume he gets to see and act on any number of new technology investment opportunities. But we also assume it makes sense for him and his foundation to ensure some of his wealth is committed to a business as enduring as Heineken, with 159 years of history already and the possibility of decades - or even centuries - of prosperity to come.

Elsewhere, it has been a difficult few years for the shares (and in some cases, businesses) of quoted UK asset management companies. Your portfolio has been affected, with Hargreaves Lansdown shares down another 6% over the last six months, despite the company reporting record results and client numbers. By contrast, we were encouraged to see Schroders shares return 22% over the half year; although by any historic standard they remain very lowly valued. Schroders has been busy in recent years building and acquiring new investment capabilities that should keep it relevant for both institutional and private clients. The growth in assets in Schroders private wealth and private equity divisions through 2022, a difficult year for markets, is encouraging for investors in the parent.

Schroders is a bank, albeit one without the risky bits. The risks in that sector resurfaced during the first quarter of 2023, with shocking failures (notably Credit Suisse, of course). We are not invested in any mainstream banks, but these events are not irrelevant for your portfolio. One detractor to our half-yearly performance was Experian, whose shares were unchanged over the period. As a credit bureau there is certainly a correlation between banks use of Experians services and their ability to extend credit (which would be compromised if problems in the bank sector are deep-seated). Economic history is littered with brief panics associated with bank runs, most of which are localised and soon forgotten. We hope this is a similar episode and have added to Experian through this price weakness. When it last updated the market, in January 2023, Experian reaffirmed its expectation for 8-10% revenue growth, which will be ahead of the circa 6% per annum growth it has delivered since listing on the UK stock market in 2006. Meanwhile, Experians earnings have compounded at nearly 9% per annum since 2007 and we hope there is much more to come over the next 16 years and beyond. Evidently, as the biggest credit bureau in the world, including the biggest in the US, Experian is another attractive UK-listed play on long-term global growth.

During this report I have highlighted the names that constitute over 80% by value of your portfolio, including every share that made a notable positive or negative contribution over the period. The exception is Manchester United, whose shares are up 50%, but where the outcome of the sale of the company is unresolved as I write. I hope I have created two impressions. First, that the portfolio is made up of strong companies that are performing well as businesses and, increasingly, as share prices too. In addition, that the UK stock market is home to some exceptional companies by global standards and owning a collection of them can help long-term savers achieve their investment goals.

Nick Train

Director

Lindsell Train Limited

Portfolio Manager

12 May 2023

INVESTMENTS AS AT 31 MARCH 2023

All of the above investments are equities listed in the UK, unless otherwise stated.

* Includes Celtic 6% cumulative convertible preference shares, fair value 241,000

** Include Frostrow Capital LLP AIFM Investment, fair value 125,000

¹ Listed in the United States

² Listed in France

³ Listed in the Netherlands

⁴ Unquoted partnership interest

FINANCIAL STATEMENTS

Income Statement
for the six months ended 31 March 2023

The Total column of this statement represents the Companys Income Statement.

The Revenue and Capital columns are supplementary to this and are prepared under guidance published by The Association of Investment Companies (AIC).

All items in the above statement derive from continuing operations. The Company had no recognised gains or losses other than those declared in the Income Statement.

There is no material difference between the net return/(loss) on ordinary activities before taxation and the net return/(loss) on ordinary activities after taxation stated above and their historical cost equivalents.

Statement of Changes in Equity

for the six months ended 31 March 2023

Statement of Financial Position
as at 31 March 2023

Statement of Cash Flows
for the six months ended 31 March 2023

Notes to the Financial Statements

1. Basis of preparation

The condensed Financial Statements for the six months to 31 March 2023 have been prepared under the historical cost convention, modified to include the revaluation of investments and in accordance with FRS 104 Interim Financial Reporting and with the AICs Statement of Recommended Practice (the SORP) for Investment Trust Companies and Venture Capital Trusts dated April 2021 and the Companies Act 2006.

The accounting policies used for the year ended 30 September 2022 have been applied.

FAIR VALUE

Under FRS 102 and FRS 104 investments have been classified using the following fair value hierarchy:

Level 1 quoted prices in active markets

Level 2 prices of recent transactions for identical instruments

Level 3 valuation techniques using observable and unobservable market data.

The financial assets and liabilities measured at fair value in the Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows:

2. Income

3. AIFM and Portfolio Management fees

4. Return/(Loss) per share basic and diluted

The calculation of the total, revenue and capital returns/(loss) per ordinary share is carried out in accordance with IAS33, Earnings per Share.

During the period there were no dilutive instruments held, therefore the basic and diluted return/(loss) per share are the same.

5. Net asset value per share

6. Transaction costs

Purchase transaction costs for the six months ended 31 March 2023 were 14,000 (six months ended 31 March 2022: 142,000). These comprise stamp duty costs of 8,000 (31 March 2022: 102,000) and commission of 6,000 (31March 2022: 40,000).

Sales transaction costs for the six months ended 31 March 2023 were 32,000 (six months ended 31 March 2022: 24,000). These comprise solely commission.

These transaction costs are included within the gains and losses on investments within the Income Statement.

7. Reconciliation of total return/(loss) before finance costs and taxation to net cash inflow from operating activities

8. Going concern

The Directors believe, having considered the Companys financial position, investment objective, risk management policies, capital management policies and procedures, as well as the nature of the portfolio and the expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future. In addition, there are no material uncertainties relating to the Company that would prevent its ability to continue in such operational existence for at least twelve months from the date of the approval of this half year financial report. For these reasons, the Directors consider there is reasonable evidence to continue to adopt the going concern basis in preparing the Financial Statements. In reviewing the position as at the date of this report, the Board has considered the guidance on this matter issued by the Financial Reporting Council.

As part of their assessment, the Directors have given careful consideration to the consequences for the Company of continuing uncertainty created by the increase in global inflation and rising interest rates, together with the consequences of the war in Ukraine and the subsequent long-term effects on economies and international relations. As previously reported, stress testing was carried out in November 2022 to establish the impact of a significant and prolonged decline in the Companys performance and prospects. This included a range of plausible downside scenarios such as reviewing the effects of substantial falls in investment values and the impact on the Companys ongoing charges ratio. It is recognised that the Company is mainly invested in readily realisable, listed securities that can be sold, if necessary, to repay indebtedness.

9. Accounts for the year ended 30 September 2022

The figures and financial information for the year to 30 September 2022 are extracted from the latest published accounts of the Company and do not constitute statutory accounts for the year.

Those accounts have been delivered to the Registrar of Companies and included the Report of the Auditor which was unqualified and did not contain a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying the report, and did not contain a statement under section 498 of the Companies Act 2006 regarding any inconsistency between the auditable part of the directors remuneration report and the Companys accounting records.

GOVERNANCE/INTERIM MANAGEMENT REPORT

INTERIM MANAGEMENT REPORT

The Directors are required to provide an Interim Management Report in accordance with the UK Listing Authoritys Disclosure and Transparency Rules. They consider that the Chairmans Statement and the Portfolio Managers Review, the following statements and the Directors Responsibility Statement together constitute the Interim Management Report for the Company for the six months ended 31 March 2023.

A review of the performance and the outlook for the Company can be found in the Chairmans Statement and in the Portfolio Managers Review.

PRINCIPAL RISKS AND UNCERTAINTIES

The Directors continue to review the risk register for the Company which identifies the risks that the Company is exposed to, the controls in place and the actions being taken to mitigate them.

The principal risks and uncertainties faced by the Company include the following:

The Companys share price total return may differ materially from the NAV per share total return.

The Company is exposed to market price risk.

The Companys investment mandate no longer appeals to investors leading to long-term selling pressure which threatens the stability of the Company.

The investment strategy adopted by the Portfolio Manager including the high degree of stock and sector concentration of the investment portfolio, may lead to an investment return that is materially lower than the Companys benchmark index, thereby failing to achieve the Companys investment objective.

The departure of a key individual at the Portfolio Manager may affect the Companys performance.

The investment approach is not aligned with shareholder expectations in relation to Environmental, Social and Governance (ESG) matters.

The adverse impact of climate change on the portfolio companies operational performance.

Errors or irregularities in published information could lead to censure and/or result in reputational damage to the Company.

Adverse reputational impact of one or more of the Companys key service providers which, by association, causes the Company reputational damage.

Fraud (including unauthorised payments and cyber fraud) occurs leading to a loss.

The regulatory environment in which the Company operates changes materially, affecting the Companys modus operandi.

The Company and/or the Directors fail(s) to comply with legal requirements in relation to FCA dealing rules/ handbook procedures, the AIFMD, the Listing Rules, the Companies Act 2006, relevant accounting standards, the Bribery Act 2010, the Criminal Finances Act 2017, the Association of Investment Companies (AIC) Statement of Recommended Practice (SORP), GDPR, Consumer Duty, tax regulations or any other applicable regulations.

Poor adherence to corporate governance best practice or errors or irregularities in published information could lead to censure and/or result in reputational damage to the Company.

During the previous financial year, the Board identified as an emerging risk, the deteriorating economic environment which impacts portfolio investments; and potentially, the Companys service providers.

Information on each of these risks is given in the Annual Report for the year ended 30 September 2022.

In the view of the Board, there have not been any material changes to the fundamental nature of these risks and they are applicable to the remainder of the financial year.

RELATED PARTY TRANSACTIONS

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company.

DIRECTORS RESPONSIBILITIES

The Board of Directors confirms that, to the best of its knowledge:

(i) the condensed set of financial statements contained within the Half Year Report have been prepared in accordance with applicable United Kingdom Generally Accepted Accounting Practice standards; and

(ii) the interim management report includes a true and fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period and any changes in the related party transactions described in the last annual report that could do so.

The Half Year Report has not been audited by the Companys auditors.

This Half Year Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the date of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

For and on behalf of the Board

Simon Hayes
Chairman

12 May 2023

FURTHER INFORMATION

Glossary of Terms and Alternative Performance Measures (APM)

ACTIVE SHARE (APM)

Active Share is expressed as a percentage and shows the extent to which a funds holdings and their weightings differ from those of the funds benchmark index. A fund that closely tracks its index might have an Active Share of less than 20% and be considered passive, while a fund with an Active Share of 60% or higher is generally considered to be actively managed. The Company has a distinctive strategy: a concentrated portfolio of holdings invested across a small number of sectors and themes. Active Share helps quantify the extent to which the portfolio differs from the benchmark index.

The Active Share performance is sourced from Morningstar.

AIC

Association of Investment Companies. The AIC represents a broad range of investment companies, investment trusts, VCTs and other closed-ended funds.

ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (AIFMD)

Agreed by the European Parliament and the Council of the European Union and transposed into UK legislation, the AIFMD classifies certain investment vehicles, including investment companies, as Alternative Investment Funds (AIFs) and requires them to appoint an Alternative Investment Fund Manager (AIFM) and depositary to manage and oversee the operations of the investment vehicle. The Board of the Company retains responsibility for strategy, operations and compliance and the Directors retain a fiduciary duty to shareholders.

ALTERNATIVE PERFORMANCE MEASURE (APM)

An Alternative Performance Measure (APM) is a numerical measure of the Companys current, historical or future financial performance, financial position or cash flows other than a financial measure defined or specified in the applicable financial framework. In selecting these Alternative Performance Measures, the Directors considered the key objectives and expectations of typical investors and believe that each APM gives the reader useful and relevant information in judging the Companys performance and in comparing other Investment Companies.

BENCHMARK RETURN

Total return on the benchmark, assuming that all dividends received were re-invested, without transaction costs, into the shares of the underlying companies at the time the shares were quoted ex-dividend.

DISCOUNT OR PREMIUM (APM)

A description of the difference between the share price and the net asset value per share. The size of the discount or premium is calculated by subtracting the share price from the net asset value per share and is usually expressed as a percentage (%) of the net asset value per share. If the share price is higher than the net asset value per share the result is a premium. If the share price is lower than the net asset value per share, the shares are trading at a discount. The Board regularly reviews the level of the discount/premium of the Companys share price to the net asset value per share and considers ways in which share price performance may be enhanced, including the effectiveness of share buy-backs, where appropriate.

FTSE DISCLAIMER

FTSE is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distributions of FTSE data is permitted without FTSEs express written consent.

GEARING (APM)

Gearing represents prior charges, adjusted for net current assets expressed as a percentage of net assets (AICmethodology). The Directors believe that it is appropriate to show net gearing in relation to shareholders funds as it represents the amount of debt funding on the investment portfolio. The gearing policy is that borrowing will not exceed 25% of the Companys net assets. Prior charges includes all loans and bank overdrafts for investment purposes.

LEVERAGE

For the purpose of the Alternative Investment Fund Managers (AIFM) Directive, leverage is a method which increases the Companys exposure, including the borrowing of cash and the use of derivatives.

Leverage is calculated slightly differently from the AIC method of calculating gearing in that it is expressed as a ratio between the Companys exposure and its net asset value. It is calculated under gross and commitment methods. Under the gross method, exposure represents the Companys investment positions excluding sterling cash balances. Under the commitment method, exposure represents the Companys investment positions including sterling cash balances and after certain hedging and netting positions are offset (where applicable). For these purposes the Board has set a maximum leverage of 125% for both methods.

NET ASSET VALUE (NAV)

The value of the Companys assets, principally investments made in other companies and cash being held, less any liabilities. The NAV is also described as shareholders funds. The NAV is often expressed in pence per share after being divided by the number of shares that have been issued. The NAV per share is unlikely to be the same as the share price which is the price at which the Companys shares can be bought or sold by an investor. The share price is determined by the relationship between the demand and supply of the shares.

NET ASSET VALUE TOTAL RETURN PER SHARE (APM)

The theoretical total return on an investment over a specified period assuming dividends paid to shareholders were reinvested at net asset value per share at the time the shares were quoted ex-dividend. This is a way of measuring investment management performance of investment trusts which is not affected by movements in discounts or premiums. The Directors regard the Companys net asset value total return per share as being the overall measure of value delivered to shareholders over the long term. The Board considers the principal comparator to be its benchmark, the FTSE All-Share Index.

* Total dividends declared during the period of 0.0p (2022: 17.4p declared during the 2022 financial year) were re?invested at the cum income NAV per share at the ex?dividend date. The treasury shares held by the Company have been excluded from this calculation.

In accordance with FRS 102 dividends are included in the Financial Statements in the period in which they are paid or approved by shareholders.

The source is Morningstar which has calculated the return on an industry comparative basis.

ONGOING CHARGES (APM)

Ongoing charges are calculated by taking the Companys annualised operating expenses expressed as a proportion of the average daily net asset value of the Company over the year. The costs of buying and selling investments are excluded, as are interest costs, taxation, cost of buying back or issuing ordinary shares and other non-recurring costs. Ongoing charges represent the costs that shareholders can reasonably expect to pay from one year to the next, under normal circumstances. The Board continues to be conscious of expenses and works hard to maintain a sensible balance between high quality service and the cost of provision.

* Estimated expenses for the year ending 30 September 2023.

PEER GROUP

Finsbury Growth & Income Trust PLC is part of the AICs UK Equity Income Investment Trust Sector. The trusts in this universe are defined as trusts whose investment objective is to achieve a total return for shareholders through both capital and dividend growth.

REVERSE STRESS TEST

Reverse stress tests are stress tests that identify scenarios and circumstances which would make a business unworkable and identify potential business vulnerabilities.

SHARE PRICE TOTAL RETURN (APM)

The change in capital value of a companys shares over a given period, plus dividends paid to shareholders, expressed as a percentage of the opening value. The assumption is that dividends paid to shareholders are re?invested in the shares at the time the shares are quoted ex dividend. The Directors regard the Companys share price total return to be a key indicator of performance. This reflects share price growth of the Company which the Board recognises is important to investors.

* Total dividends declared during the period of 0.0p (2022: 17.4p declared during the 2022 financial year) were re?invested at the share price at the ex-dividend date.

The source is Morningstar which has calculated the return on an industry comparative basis.

STRESS TESTING

Stress testing is a forward-looking analysis technique that considers the impact of a variety of extreme but plausible economic scenarios on the financial position of the Company.

TREASURY SHARES

Shares previously issued by a company that have been bought back from shareholders to be held by the Company for potential sale or cancellation at a later date. Such shares are not capable of being voted and carry no rights to dividends.

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Victoria Hale

Frostrow Capital LLP

Company Secretary 0203 170 8732