FINSBURY GROWTH & INCOME TRUST PLC Annual Report for the year ended 30 September 2022 ### Annual Report for the ### year ended 30 September 2022 PERIVAN 263840 ### . ## Contents Financial Calendar Financial Year End STRATEGIC REPORT 30 September 1 Company Summary Final Results Announced 2 Company Performance December 4 Key Performance Indicators 6 Chairman’s Statement Annual General Meeting Tuesday, 17 January 2023 8 Investment Portfolio 10 Portfolio Manager’s Review Half Year End 12 Business Review 31 March Half Year Results Announced GOVERNANCE May 32 Board of Directors Interim Dividends Payable 34 Report of the Directors May and November 39 Corporate Governance 45 Directors’ Remuneration Report 49 Directors’ Remuneration Policy 51 Audit Committee Report 55 Statement of Directors’ Responsibilities INDEPENDENT AUDITORS’ REPORT 56 Independent Auditors’ Report FINANCIAL STATEMENTS 63 Income Statement 64 Statement of Changes in Equity 65 Statement of Financial Position 66 Statement of Cash Flows 67 Notes to the Financial Statements FURTHER INFORMATION 83 Glossary of Terms and Alternative Performance Measures 87 Company Information For more information about Finsbury Growth & Income Trust PLC visit the website WWW.FINSBURYGT.COM Follow us on Twitter @FINSBURYGT STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION # 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"). ## OBJECTIVES AND PERFORMANCE MEASUREMENT The Company aims to achieve capital and income growth and to provide shareholders with a total return in excess of that of the FTSE All-Share Index (the Company's benchmark). The Company's net assets as at 30 September 2022 were £1,830.4 million (2021: £2,064.7 million) and the market capitalisation was £1,725.9 million (2021: £1,970.9 million). ## DIVIDENDS A first interim dividend of 8.3p per share was paid on 13 May 2022 to shareholders registered at close of business on 1 April 2022. The associated ex-dividend date was 31 March 2022. A second interim dividend of 9.8p per share was paid on 4 November 2022 to shareholders registered at close of business on 30 September 2022. The associated ex-dividend date was 29 September 2022. The total dividend declared for the year was therefore 18.1p per share (2021: 17.1p per share), an increase of 5.8%. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 1 STRATEGIC REPORT # Company Performance ![img-0.jpeg](img-0.jpeg) ## KEY FACTS ## 848.4p Net asset value per share 2021: 917.7p (change: -7.6%) ## 800.0p Share price 2021: 876.0p (change: -8.7%) ## 5.7% Discount of share price to net asset value per share* 2021: 4.5% ## (53.4)p (Loss)/return per share† 2021: +88.0p ## 84.8% Active Share** 2021: 86.0% ## 18.1p Total dividends per share for the year† 2021: 17.1p (change: +5.8%) ## FIVE YEAR PERFORMANCE SUMMARY | | 30 SEP 2018 | 30 SEP 2019 | 30 SEP 2020 | 30 SEP 2021 | 30 SEP 2022 | | --- | --- | --- | --- | --- | --- | | Share price | 818.0p | 942.0p | 840.0p | 876.0p | 800.0p | | Share price total return** | +13.2% | +17.4% | (9.0)% | +6.3% | (5.6)% | | Net asset value per share | 812.8p | 935.6p | 846.3p | 917.7p | 848.4p | | Net asset value per share total return** | +13.1% | +17.4% | (7.7)% | +10.6% | (5.8)% | | FTSE All-Share index total return**# | +5.9% | +2.7% | (16.6)% | +27.9% | (4.0)% | | Total (loss)/return per share† | 93.6p | 143.8p | (67.1)p | 88.0p | (53.4)p | | Dividends per share† | 15.3p | 16.6p | 16.6p | 17.1p | 18.1p | * Source: Morningstar ** Source: FTSE International Limited ("FTSE") © FTSE, 2022 # See glossary of terms and alternative performance measures on pages 83 to 86 ^ Alternative Performance Measure ("APM") (see glossary on pages 83 to 86) † UK GAAP Measure 2 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION | (5.8)% | | (5.6)% | | | --- | --- | --- | --- | | | *, ^ | | *, ^ | | Net asset value per share total return | | Share price total return | | | 2021: +10.6% | | 2021: +6.3% | | ## £1.830bn 215,737,992 † Shareholders’ funds (excluding 9,253,311 shares held in treasury) 2021: £2.065bn (change: -11.4%) Number of shares in issue 2021: 224,991,303 (treasury shares 2021: Nil) (change: -4.1%) ## 0.60% ## 1.2% ^ Ongoing charges ^ Gearing 2021: 0.62% 2021: 0.3% * Source – Morningstar ^ Alternative Performance Measure (see glossary on pages 83 to 86) † UK GAAP Measure The Company was incorporated in Scotland on 15 January 1926. Lindsell Train Limited (“Lindsell Train”) was appointed as Portfolio Manager in December 2000. The total return of the Company’s share price over the ten years to 30 September 2022 has been 165.7%, equivalent to a compound annual return of 10.3%. This compares with a total return of 79.5%* from the Company’s benchmark, equivalent to a compound annual return of 6.0%*. * Source: Morningstar, FTSE International Limited (“FTSE”) © FTSE2022 ### TOTAL SHARE PRICE RETURN PERFORMANCE SINCE THE DATE OF APPOINTMENT OF LINDSELL TRAIN ### 2 900 800 700 600 SHARE PRICE 500 ## +632.95% 400 FTSE ALLSHARE INDEX 300 ## +168.46% 200 100 0 Jan Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 Source: Morningstar Rebased to 100 as at 1 January 2001 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 3 ### STRATEGIC REPORT ## Key Performance ## Indicators ## The Board reviews ## (5.8)% (53.4)p ## the performance ## of the portfolio in † ### NET ASSET VALUE TOTAL (LOSS)/RETURN ^* ## detail and hears RETURN The total loss per share for the year was 53.4pence per share (2021: return of This reflects the change in the ## the views of the 88.0pence per share). Company’s net asset value including the impact of reinvested dividends. ## Portfolio Manager Over five years, the Company earned a total of 204.9 pence per share. During the year under review the ## at each meeting. Company’s net asset value per share See the chart below for the five year total return was -5.8% (2021: +10.6%). history. Information on the Company's % pence per performance is provided in the 20 2019 share Chairman's Statement (beginning 2019 150 15 2018 on page 6) and the Portfolio 120 2021 Manager's Review (beginning on 2018 10 2021 90 page 10). 60 5 30 This performance is assessed 0 0 against the following KPIs which -5 -30 are unchanged from last year -60 with the exception of Dividend per -10 2022 2020 2022 -90 Share. 2020 ### Alternative Performance ### Measures ("APM") ## 18.1p The Board believes that each of the APMs, which are typically used within the investment trust † ###  sector, provides additional useful The total dividend declared for information to the shareholders the year was 18.1p per share in order to assess the Company’s (2021: 17.1p per share), an increase of performance between reporting 5.8%. periods and against its peer group. The measures used for the year share under review have remained consistent with the prior year. 18 | | Further information on each of the | 16 | | --- | --- | --- | | | APMs can be found in the glossary | 14 | | pence per | | 12 | beginning on page 83. 10 20 8 ^ Alternative Performance Measure 6 (seeglossary on pages 83 to 86) † UK GAAP Measure 4 * Source: Morningstar 2 0 018 019 020 021 022 4 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 2 2 2 2 2 STRATEGIC REPORT INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION ## (5.6)% (1.6)% (5.7)%(53.4)p ^* ### SHARE PRICE TOTAL RETURN RELATIVE PERFORMANCE SHARE PRICE DISCOUNT/ ### This reflects the change in the value of TO BENCHMARK AND PEER PREMIUM TO NET ASSET VALUE ^ ### the Company’s share price including GROUP PER SHARE the impact of reinvested dividends. The Company’s benchmark is the FTSE The Board reviews the level of discount/ All-Share Index (total return) which premium to net asset value per During the year under review the delivered a return of -4.0% (2021: +27.9%) share at every Board meeting and Company’s share price total return was over the year. This compares with the consideration is given to ways in which -5.6% (2021: +6.3%). | | Company’s share price total return of | the share price performance may be | | --- | --- | --- | | Over five years, the share price total | -5.6% (2021: +6.3%). | enhanced, including the effectiveness | | return was +21.5%. | | of marketing, share issuance and buy- | Over five years the share price total backs, where appropriate. Details of how return was 21.5% compared with the % the Company’s share buy-back and 20 Company's benchmark which delivered 2019 issuance policy works can be found in the a return of 11.3%. Statutory Documentation section on the | 15 | 2018 | | | | | --- | --- | --- | --- | --- | | | | | The Board also monitors the Company’s | Company’swebsite. | | 10 | | | net asset value per share return against | | | | | 2021 | | No shares were issued by the Company | its AIC peer group^. As at 30 September 5 during the year (2021: 7,240,000 new 2022 the Company's ranking against its shares were issued by the Company 0 peer group of UK growth and income at a premium to the higher of the sector investment trusts was: prevailing cum or ex income net asset -5 value per share at the time of issue). | | 2022 | | Rank out of 23 | | | --- | --- | --- | --- | --- | | 20 | | | | At 30 September 2022 the Company’s | | | | Period 2022 2021 | | share price stood at a 5.7% discount to | the Company’s net asset value per share 1 yr 6 21 (2021: 4.5% discount). 3 yr 17 9 1 5 yr 4 2 0 10 yr 1 3 -1 2018 2019 2020 -2 -3 -4 -5 2021 -6 2022 During the year, the Company bought back % 9,253,311 shares into treasury (2021: Nil) at an average price of 826.9p and an average discount of 5.5%. Since the year end the Company has ^ Alternative Performance Measure (see glossary on pages 83 to 86) purchased a further 1,668,897 shares to be * Source: Morningstar held in treasury. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 5 -10 20 STRATEGIC REPORT # Chairman's Statement ![img-1.jpeg](img-1.jpeg) "Your Board continues to fully support the Portfolio Manager's disciplined strategy of investing in high quality companies that own both durable and cash generative brands. It has delivered attractive returns over the longer-term and we believe firmly that this will continue to deliver strong investment returns to shareholders in the future." SIMON HAYES CHAIRMAN ## PERFORMANCE I am disappointed to report that the total return of the Company's net asset value per share for the year was -5.8% (2021 +10.6%). Its benchmark (the FTSE All-Share Index) over the period was -4.0% (2021 +27.9%) and the share price total return was -5.6% (2021 +6.3%). The year under review has seen significant price volatility and shifts in investors' risk appetites as companies and markets were buffeted by a relentless series of economic and geopolitical shocks, including rising interest rates and inflation, domestic political turmoil, and the many devastating effects of the war in Ukraine. This has led to poor absolute returns from most major asset classes, a strengthening dollar and a sell-off in more speculative equity sectors. Looking to the Company's own performance, the year saw marked differences between the first and second halves of the year, at least on a relative basis. In the six months to 31 March 2022, the Company underperformed its benchmark by some 6.9% (NAV, on a total return basis) and by 7.7% in share price terms; the difference between the two measures indicative of a widening discount over that period of the Company's shares relative to its NAV. Conversely, in the second half of the year the Company's net asset value total return exceeded the benchmark by 4.6% and the share price by 5.6%. The Portfolio Manager's concentrated approach results in a very different portfolio when compared with the constituents of the Company's benchmark and demonstrates a high level of active management. The extent to which a portfolio differs from the benchmark can be quantified and expressed as a percentage ("Active Share"). At 30 September 2022, the Company's Active Share versus the FTSE All-Share Index was 84.8% (2021: 86.0%). Such an uncorrelated portfolio will inevitably perform very differently from its benchmark (positively or negatively) over different periods of time. We continue to believe that over time our investment approach, selecting companies with durable business models that generate consistently higher returns, will ultimately be reflected in the share prices of the companies we own and hence in the performance of the Company. This view is supported by the Company's long-term performance record. The Portfolio Manager's report, beginning on page 10, describes the Company's investment philosophy, portfolio composition and performance in more detail. * Alternative Performance Measure (see glossary on pages 83 to 86) 4 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION ## SHARE BUY-BACKS The Board keeps the Company's discount under close review and is committed to buying back its own shares at or near the 5% level, in accordance with its policy. While share buy-backs will not necessarily prevent the discount from widening further, particularly in times of market volatility, the Board believes that buy-backs enhance the net asset value per share for remaining shareholders, provide some additional liquidity and help to mitigate discount volatility which can damage shareholder returns. Discounts are affected by many factors outside the Company's control but where it is in Shareholders' interests (taking account of market conditions), the Company remains committed to buying back shares at a discount to NAV, as demonstrated over the past year. As at 30 September 2022 the discount was 5.7% compared with a closing discount at the last year end of 4.5%. During the year under review the Company bought back a total of 9,253,311 shares into treasury at a cost of approximately £75 million and at an average discount of 5.5%. Over the course of the year the Company's discount averaged 5.2%. As at the close of the UK market on 5 December 2022, the discount was 4.4%. Since the year end, a further £668,897 shares were bought back into treasury at a cost of £14.1 million. As at 5 December 2022, the Company had 214,069,095 shares in issue (excluding 10,922,208 shares held in treasury). ## RETURN AND DIVIDEND The Income Statement shows a total loss of 53.4p per share (2021: gain of 88.0p) consisting of a revenue return per share of 20.6p (2021: gain of 18.1p) and a capital loss per share of 74.0p (2021: gain of 69.9p). Your Board has declared two interim dividends for the year totalling 18.1p per share (2021: 17.1p), an increase of 5.8%. In order to facilitate dividend payments on a timely and cost effective basis, your Board continues to elect to distribute the Company's income to Shareholders by means of two interim dividends rather than wait several months to secure shareholder approval to pay a final dividend at the Annual General Meeting. This dividend policy will again be proposed for approval at the forthcoming Annual General Meeting. ## LOAN FACILITY As at 30 September 2022 a total of £36.7 million was drawn down under our £50 million facility (2021: £36.7 million). This facility expired on 4 October 2022 and was renewed on that date for a three year term with an increased limit of £60 million, and the option of an additional £40 million. Further details can be found within the Report of the Directors on page 34 and note 12 to the financial statements. ## OUTLOOK Your Board continues to fully support the Portfolio Manager's disciplined strategy of investing in high quality companies that own both durable and cash generative brands. It has delivered attractive returns over the longer-term and we believe firmly that this will continue to deliver strong investment returns to shareholders in the future. Our belief is clearly shared with our Portfolio Manager who has continued to buy shares in the Company during the year. Since December 2021, Nick Train and his family have acquired over 800,000 shares and currently speak for 2.2% of the equity of the Company (December 2021: 1.6%). ## BOARD COMPOSITION I am delighted to welcome Pars Purewal to our Board. Pars brings a wealth of knowledge of the investment company sector and his experience will complement that of existing colleagues. Pars will offer himself for election by shareholders at the 2023 Annual General Meeting ("AGM"). ## ANNUAL GENERAL MEETING The AGM of the Company this year will again be held at Guildhall, City of London EC2V 7HH (please use the Basinghall Street Entrance) on Tuesday, 17 January 2023 at 12 noon, and we hope as many Shareholders as possible will attend. This will be an opportunity to meet the Board and to receive a presentation from our Portfolio Manager. The Board strongly encourages all Shareholders to exercise their votes in respect of the meeting in advance. Details of how Shareholders who hold their shares on retail platforms can vote is set out on pages 11 to 13 of the Notice of Meeting. Any shareholder who requires a hard copy form of proxy may request one from the Registrar, Link Group. Simon Hayes Chairman 7 December 2022 * Alternative Performance Measure (see glossary on pages 83 to 95) FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 7 ### STRATEGIC REPORT ## Investment ### PORTFOLIO SECTOR WEIGHTINGS ## Portfolio ### 2022 Consumer Staples (”CS”) 43.4% Financials (”F”) 22.2% Consumer Discretionary (”CD”) 22.1% Technology (”T”) 6.2% Industrials (”I”) 6.1% Source: Frostrow Capital LLP † ### GEOGRAPHICAL ALLOCATION ### 2022 United Kingdom 80.8% United States of America 8.2% France 5.8% Netherlands 5.2% Source: Frostrow Capital LLP † The Company’s investment policy attributes geographical location based on where companies are listed or otherwise incorporated, domiciled or having significant business operations. 8 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION ### INVESTMENTS AS AT 30 SEPTEMBER 2022 | | | | | | | | | | | | CAPITAL | | | | | | | TOTAL | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | FAIR VALUE | | | | NET | APPRECIATION/ | | FAIR VALUE | | | | | | RETURN/ | CONTRIBUTION | | | | | | | | | | | 2021 | INVESTMENTS | | (DEPRECIATION) | | | 2022 | | % OF | | | (LOSS) | | PER SHARE | | | SECTOR INVESTMENTS | | | | | | | £'000 | | £'000 | | £'000 | | £'000 | INVESTMENTS | | | | £'000 | | | (PENCE) | |  CS | Diageo 245,949 (30,535) 14,058 229,472 | | | | | | | | | | | | | | 12.4 | | | 18,880 8.5 | | | | |  CD | RELX 230,416 (15,337) 6,694 221,773 | | | | | | | | | | | | | | 12.0 | | | 12,059 5.4 | | | | |  F | London Stock Exchange 179,571 12,472 5,332 197,375 | | | | | | | | | | | | | | 10.7 | | | 7,954 3.6 | | | | |  CS | Unilever 170,333 2,590 (1,363) 171,560 | | | | | | | | | | | | | | 9.3 | | | 4,847 2.2 | | | | | | Mondelez | # | | | | 167,697 (41,242) 25,926 152,381 | | | | | | | | | | | 29,530 13.3 | | | | | |  CS | | | | | | | | | | | | | | | 8.2 | | | | | | | |  CD | Burberry 145,735 2,051 (737) 147,049 | | | | | | | | | | | | | | 7.9 | | | 3,071 1.4 | | | | |  T | Sage 116,978 (261) (2,059) 114,658 | | | | | | | | | | | | | | 6.2 | | | 895 0.4 | | | | |  I | Experian 69,004 61,579 (18,318) 112,265 | | | | | | | | | | | | | | | 6.1 | | (16,801) (7.5) | | | | |  F | Schroders 167,290 501 (58,970) 108,821 | | | | | | | | | | | | | | 5.9 | | (53,085) (23.9) | | | | | | | Remy Cointreau | | ^ | | | 101,286 1,948 4,150 107,384 | | | | | | | | | | | | 5,570 2.5 | | | | |  CS | | | | | | | | | | | | | | | 5.8 | | | | | | | | | Top 10 Investments 1,562,738 | | | | | | | | | | | | | | 84.5 | | | | | | | | | Heineken | † | | | | 97,280 3,547 (4,311) 96,516 | | | | | | | | | | | | (2,584) (1.2) | | | | |  CS | | | | | | | | | | | | | | | 5.2 | | | | | | | |  F | Hargreaves Lansdown 109,724 1,242 (43,687) 67,279 | | | | | | | | | | | | | | 3.6 | | (40,606) (18.3) | | | | | | | Manchester United | | | # | | 32,683 217 (5,657) 27,243 | | | | | | | | | | | | (5,341) (2.4) | | | | |  CD | | | | | | | | | | | | | | | | 1.5 | | | | | | |  CS | Fevertree 43,410 28,232 (44,929) 26,713 | | | | | | | | | | | | | | | 1.4 | (43,276) (19.5) | | | | | |  F | Rathbone Brothers 28,281 - (5,292) 22,989 | | | | | | | | | | | | | | | 1.2 | | (4,140) (1.9) | | | | |  CS | A.G. Barr 23,162 (709) (2,308) 20,145 | | | | | | | | | | | | | | | 1.1 | | (1,776) (0.8) | | | | |  F | The Lindsell Train Investment Trust plc 14,350 - (4,630) 9,720 | | | | | | | | | | | | | | 0.5 | | | (4,100) (1.8) | | | | Young & Co's Brewery  CD 9,072 (65) (2,816) 6,191 0.3 (2,621) (1.2) (non-voting)  |  F | Frostrow Capital LLP | | * | 5,200 (775) 300 4,725 | | 0.3 | 994 0.5 | | --- | --- | --- | --- | --- | --- | --- | --- | |  CD | Celtic | ** | | 3,488 - 266 3,754 | | 0.2 | 274 0.1 | |  CD | Fuller Smith & Turner 4,970 (885) (1,520) 2,565 | | | | | 0.1 | (1,454) (0.6) | | | Cazoo | # | | | - 13,257 (11,757) 1,500 | | (11,758) (5.3) | |  CD | | | | | | 0.1 | | Daily Mail & General Trust  CD 66,223 (64,782) (1,441) - - (347) (0.2) (non-voting) |  CD | Euromoney Institutional Investor 20,462 (19,009) (1,453) - | | - | (1,246) (0.6) | | --- | --- | --- | --- | --- | |  CD | Pearson 10,442 (9,969) (473) - | | - | (473) (0.2) | |  CS | PZ Cussons 8,260 (7,372) (888) - | | - | (761) (0.3) | | | Total Investments 2,071,266 (63,305) (155,883) 1,852,078 | 100.0 | | | Total Contributions to the net (106,295) (47.8) loss for the year Expenses, Currency Translations and Finance Charges~ (12,445) (5.6) Loss on Ordinary Activities after Taxation (118,740) (53.4) # Listed in the United States ^ Listed in France † Listed in Netherlands * Includes Frostrow Capital LLP AIFM Capital Contribution, fair value £125,000 (2021: £900,000). During the year £775,000 of this capital was repaid  Unquoted ** Includes Celtic 6% cumulative convertible preference shares, fair value £242,000 (2021: £236,000) ~ Net of £14,000 bank interest FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 9 ### STRATEGIC REPORT ## Portfolio ## Manager's ## Review It is disappointing to me to have to report on a second consecutive year of my underperformance of your Company’s benchmark. It has been particularly frustrating, given that the business performance of most of the companies in the portfolio has met or exceeded my expectations. Sometimes this happens. Other investors’ attention is turned to different areas of the stock market, or they disagree with my enthusiasm about the prospects for certain companies – leaving our investments for you becalmed, or worse. Nowhere was this more apparent than in the shares of domestic UK wealth management companies: your holdings in Hargreaves Lansdown and Schroders have suffered a miserable year in terms of their share prices (along with others in this sector), even though their businesses have grown, as measured by increases in customer numbers or assets under management. I can only hope investor sentiment will improve ## “For the benefit of my ego and, towards the UK wealth management industry and, indeed, for the whole UK stock market. ## I hope, to cheer up readers of For the benefit of my ego and, I hope, to cheer up readers ## this report, can I nonetheless of this report, can I nonetheless note that my investment performance improved in the second half of your Company’s ## note that my investment financial year and outperformed – admittedly only by dint of ## performance improved in the falling less than the weak UK stock market. I sincerely hope this recent trend continues. ## second half of your Company’s While there are some stock specific factors that help explain ## financial year and outperformed this improvement in relative investment performance, I ## – admittedly only by dint of believe it is more helpful to analyse it as resulting from a shift in investor preference – a shift back to favouring the sort ## falling less than the weak UK of industries and companies that have always formed the ## stock market. I sincerely hope backbone of your Company’s investment portfolio. ## this recent trend continues.” First, as 2022 has progressed, confidence in the sustainability of high valuations for young technology companies has waned – most obviously reflected in the just under 30% calendar year to ### NICK TRAIN date fall in the NASDAQ Index, but also in the falls of technology ### LINDSELL TRAIN LIMITED shares in many other jurisdictions. PORTFOLIO MANAGER Now, your portfolio does own some technology companies, or businesses that utilise technology to enhance their services, – for instance, Experian, Hargreaves Lansdown, London Stock Exchange, RELX and Sage. But these are very different businesses, coming from very different (lower) valuations than the latest generation of NASDAQ tech darlings, and our holdings have not, therefore, suffered from their share prices being hit so hard in recent months. I would venture more and hope that these tech-advantaged UK companies have a chance to continue to do well as businesses (as they all have) and to do better as share prices. As a foretaste of that possibility, note, at the end of the Company’s year-end, London Stock Exchange shares were up 10% in calendar 2022. Meanwhile RELX shares, although down, are on track to outperform the FTSE All-Share Index for the 12th consecutive year (testament to the unheralded, but consistent 10 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION way that RELX has succeeded in exceeding investors’ yes, Hargreaves Lansdown and Schroders – we can not only expectations for its business, year-in year-out). protect our shareholders’ savings in difficult times, but also generate competitive absolute returns over longer periods. Meanwhile, the alarming macro-economic disturbance afflicting many nations has also weakened investors’ I have forborne from discussing macro-economic conditions in confidence in the earnings power of cyclical businesses. As a this report, though it is evident investors are currently thinking result, we observe investors turning for their equity exposure about little else. My reluctance to opine, is primarily because I to the shares of durable, conservatively-financed and know that we, and I don’t believe anyone else, can really know steadily compounding companies – on the expectation their what is in store. I do know two things, though. First, your portfolio business operations are likely to be less adversely affected is largely invested in substantive companies which have than the average. We own a lot of this type of company – survived and thrived through similarly challenging episodes deliberatelyso. in the past. Second, all investors, indeed most people on the planet, must earnestly hope this wretched war in Ukraine ends A review of our best performing portfolio constituents in the soon. I ask you to conceive the boost to consumer confidence second half of your Company’s financial year endorses this and government finances that would result from peace analysis, with notable relative contributions from Diageo, breaking out and the likely reaction of stock markets around Heineken, Mondelez and Sage, for instance. All of these are the world. That is not a prediction for Company’s new financial companies with, well-merited, reputations for predictable cash year, but it is a sincere hope. flows generated from brands or business franchises that their customers are likely to continue patronising in all but the most adverse economic circumstances. Nick Train In passing, it is noteworthy that there were also helpful share Director, Lindsell Train Limited price gains in two big portfolio holdings where changes in Portfolio Manager senior management were announced during the last six 7 December 2022 months – namely Burberry and Unilever. No doubt those management changes have alerted investors to the possibility of change in business strategy (or even, perhaps, in ownership) and their share prices have risen accordingly. Certainly, we analyse the strategic value of Burberry and Unilever to be meaningfully higher than the value currently accorded either in the stock market. It is a relief to be able to report better recent relative performance, albeit in tough market conditions. But here I must reassert the fundamental investment proposition we use to build your portfolio. This is that the shares of the “durable, conservatively-financed and steadily compounding companies” noted above, do not ONLY do well in relative terms during periods of difficult economic conditions – as they have recently. In fact, they should ALSO outperform (and make their investors attractive capital returns) over entire stock market and/or economic cycles. For instance, there are times when Diageo’s (credible) ambition to grow its annual sales at steady 6-7% per annum, with profits and earnings per share likely to be ahead of that, looks uninteresting – because investors believe they can get faster growth elsewhere. But over time, the remorseless reliability of Diageo’s growth should allow it to surpass that of others that may have shot ahead in the shortterm. In summary – while it is easy to categorise our investment approach for the Company as purely “defensive”, we do not see it as such. Instead, it is my hope that by holding concentrated positions in such exceptional and predictable companies as those mentioned above and others – AG Barr, Experian, Fever-Tree, Rathbones, Remy Cointreau and, FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 11 ### STRATEGIC REPORT ## Business Review ## The Strategic Report, set out on pages 2 to 31 provides a ## review of the Company’s policies and business model, ## together with an analysis of its performance during the ## financial year and its future developments. The Strategic Report has been prepared for Shareholders ### STRATEGY FOR THE YEAR ENDED to assess how the Directors have performed their duty to ### 30 SEPTEMBER 2022 promote the success of the Company. It also considers the Throughout the year under review, the Company continued principal risks and uncertainties facing the Company. to operate as an approved investment company, following its Information on how the Directors have discharged their duty investment objective to achieve capital and income growth under Section 172 of the Companies Act 2006 can be found on and to provide shareholders with a total return in excess of pages 22 to 25. that of the FTSE All-Share Index. The Company’s performance is discussed in the Chairman’s Statement beginning on page6 The Strategic Report contains certain forward-looking and the Portfolio Manager’s Review beginning on page 10 statements. These statements are made by the Directors in which explains investment performance. good faith based on the information available to them up to the date of this report and such statements should be treated During the year, the Board, AIFM and the Portfolio Manager with caution due to the inherent uncertainties, including both undertook all ESG, strategic and administrative activities. economic and business risk factors, underlying any such The Board is aware of the continued emphasis on ESG matters forward-looking information. in recent years. The Portfolio Manager engages with all the As an externally managed investment company we have no companies in the portfolio to understand their ESG approach executive directors, employees or internal operations. The and has developed its own methodology to assess the carbon Company delegates its day-to-day management to third impact of the portfolio. Lindsell Train became a signatory of Net parties. The principal service providers to the Company are Zero Asset Managers (“NZAM”) in December 2021. This reflects Frostrow Capital LLP ("Frostrow") which acts as AIFM, company Lindsell Train’s enhanced efforts as a firm to support the goal secretary and administrator; and Lindsell Train Limited ("Lindsell of net zero greenhouse gas emissions by 2050. Further details Train") which acts as Portfolio Manager. The Bank of New York of the Portfolio Manager’s approach to ESG matters can be Mellon (International) Limited is the Company’s Depositary. found on pages 26 to 29. The Board is responsible for all aspects of the Company’s affairs, including the setting of parameters for and the monitoring of the investment strategy as well as the review of investment performance and policy. It also has responsibility for all strategic issues, the dividend policy, the share issuance and buy-back policy, gearing, share price and discount/ premium monitoring and corporate governance matters. 12 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION ## Portfolio structure | 80.8% | 19.2% | 93.2% | | --- | --- | --- | | INVESTED IN UK | INVESTED GLOBALLY | FTSE 100 COMPANIES (AND | | DOMICILED COMPANIES | | COMPARABLE OVERSEAS | ### COMPANIES) ## ^ ## ^ ## 84.5% 1.2% 84.8% ### TOP TEN HOLDINGS GEARING ACTIVE SHARE ^ Please see Glossary of Terms and Alternative Performance Measures on pages 83 to 86. in aggregate, of the value of its gross assets in other listed ### INVESTMENT POLICY closed ended investment companies except where the The Company’s investment policy is to invest principally investment companies themselves have stated investment in the securities of companies either listed in the UK or policies to invest no more than 15% of their gross assets in otherwise incorporated, domiciled or having significant other listed closed ended investment companies. business operations within the UK. Up to a maximum of 20% of the Company’s portfolio, at the time of acquisition, can be The Company has the ability to invest up to 25% of its invested in companies not meeting these criteria. gross assets in preference shares, bonds and other debt instruments, although no more than 10% of any one issue may The portfolio will normally comprise up to 30 investments. This be held. level of concentration is likely to lead to an investment return which is materially different from the Company’s benchmark In addition, a maximum of 10% of the Company’s gross assets index and may be considered to carry above average risk. can be held in cash, where the Portfolio Manager believes market or economic conditions make equity investment Unless driven by market movements, securities in FTSE unattractive or while seeking appropriate investment 100 companies and comparable companies listed on an opportunities or to maintain liquidity. overseas stock exchange will normally represent between 50% and 100% of the portfolio; securities in FTSE 350 companies The Company’s gearing policy is that gearing will not exceed and comparable companies listed on overseas stock 25% of the Company’s net assets. exchanges will normally represent at least 70% of the portfolio. No investment will be made in any company or fund The Company will not invest more than 15% of the Company’s managed by the Portfolio Manager without the prior approval net assets, at the time of acquisition, in the securities of any of the Board. single issuer. For the purposes of this limit only, net assets shall In accordance with the Listing Rules of the Financial Conduct exclude the value of the Company’s investment in Frostrow Authority (“FCA”), the Company can only make a material Capital LLP. change to its investment policies with the approval of its The Company does not and will not invest more than 15%, in shareholders. 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%, FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 13 ### STRATEGIC REPORT BUSINESS REVIEW - CONTINUED ### DIVIDEND POLICY PERFORMANCE The Company’s aim is to increase or at least maintain the Whilst the Board is disappointed that the Company has total dividend each year. A first interim dividend is typically underperformed in the short term, the Portfolio Manager’s paid in May and a second interim in November in lieu of a final report explains why he believes that the Company’s portfolio dividend. remains appropriate. The Board fully supports the Portfolio Manager’s view. The level of dividend growth is dependent upon the growth and performance of the companies within the investment Whilst performance is measured against the FTSE All-Share portfolio. The decision as to the level of dividend paid takes into Index, the Company’s portfolio is constructed and managed account the income forecasts maintained by the Company’s without reference to a stock market index with the Portfolio AIFM and Portfolio Manager as well as the level of revenue Manager selecting investments based on his assessment of reserves. These forecasts consider dividends earned from their long-term value. the portfolio together with predicted future earnings and are regularly reviewed by the Board. All dividends have been distributed from current year income and revenue reserves. ### NAV PER SHARE RECONCILIATION The chart below shows the contribution (in pence per share) attributable to the various components of investment performance and costs, which together demonstrate the fall from the starting NAV for the year of 917.7pence to the year-end NAV of 848.4pence, after the payment of dividends to Shareholders. 950 917.7 (68.6) 900 (17.4) 22.8 848.4 850 (5.8) (0.3) 800 750 Pence per share 700 650 600 0 | 30 Sept | | Portfolio | Dividends | | Expenses | Finance | Portfolio | 30 Sept | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2021 | | losses | | paid | (inc tax) | costs | income | 2022 | | | NAV per share | | Portfolio CostsDividends | | | | | | This is supported by the Company’s performance over the last ### PROSPECTS ten years with a net asset value per share total return^ of 181.7% The Board continues to fully support the Portfolio Manager’s compared to a total return from the Company’s benchmark strategy of investing in high quality companies that own both index of 79.5%. durable and cash generative brands. The Board firmly believes ^ Alternative Performance Measure (see glossary on pages 83 to 86) that this strategy will continue to deliver strong investment returns over the long term. 14 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 15 ### STRATEGIC REPORT BUSINESS REVIEW - CONTINUED ## Principal Risks, Emerging ## Risks and Risk Management The Board considers that the risks detailed within this report are the principal risks currently facing the Company that could affect the ability of the Company to deliver its strategy. The Board is responsible for the ongoing identification, evaluation and management of the principal risks faced by the Company and has established a process for the regular review of these risks and their mitigation. This process accords with the UK Corporate Governance Code and the FRC's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting. The Board has carried out a robust assessment of the emerging and principal risks facing the Company, including those that would threaten its business model, future performance, solvency and liquidity. Further details of the risk management processes that are in place can be found in the Corporate Governance Statement on page 44 . The Audit Committee also considered the controls in place to mitigate the inherent risks and whether additional controls or actions were required to bring the residual risk down to an acceptable level. The Committee were satisfied with the controls that are in place. During the year, the Audit Committee conducted an exercise to identify and assess any new or emerging risks affecting the Company and to take any necessary actions to mitigate their impact. Further information can be found in the report of the Audit Committee on page 52. ### THE COMPANY'S APPROACH TO RISK MANAGEMENT Movement during the year: No change, Decreased, Increased, New risk included during the year Movement Principal Risks and Uncertainties Key Mitigations The Board operates a share buy-back policy which is intended to ### Corporate Strategy offer some protection against the share price widening beyond The Company’s share price total return may a 5% discount to NAV per share. There is also a share issuance differ materially from the NAV per share total programme which acts as a premium control mechanism. Further return. details of the Company’s share buy-back policy and premium control mechanism can be found on the Company’s website. The Company's investment mandate no At each meeting the Board reviews movements in the Company’s longer appeals to investors leading to long- shareholder register. There are regular interactions and engagement term selling pressure which threatens the with Shareholders (including at the AGM). Regular feedback from stability of the Company. shareholders is received from the Company’s broker. In addition, the Chairman and the Senior Independent Director meet with key shareholders to ascertain views. The Company publishes its Active Share score in its monthly fact sheet for investors and in both the annual and half-yearly reports to highlight how different the portfolio is from the Company’s benchmark index. The Board discusses with the Portfolio Manager the structure of the ### Investment Strategy and Activity portfolio, including asset allocation and portfolio concentration. The investment strategy adopted by The Board reviews the performance of the portfolio against the the Portfolio Manager including the high benchmark and the Company’s peer group at every meeting. degree of stock and sector concentration of the investment portfolio, may lead to an The Company publishes various measures and statistics in the investment return that is materially lower than monthly fact sheet and in both the annual and half-yearly reports, to the Company’s benchmark index, thereby highlight to investors the effects of the investment approach and to failing to achieve the Company’s investment show how different the portfolio is from the Company’s benchmark objective. index. These measures include number of holdings, Active Share and portfolio turnover. 16 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION Movement Principal Risks and Uncertainties Key Mitigations The Board keeps the portfolio management arrangements ### Investment Strategy and Activity – under continual review. In turn, the Portfolio Manager reports on ### continued developments at Lindsell Train, including succession and business The departure of a key individual at the continuity plans. The Board meets regularly with other members of Portfolio Manager may affect the Company’s the wider team employed by the Portfolio Manager. performance. A global event such as the war in Ukraine or The Board reviews the performance of the portfolio against the macro-economic disturbance such as rising benchmark and the Company’s peer group at every meeting. interest rates and global inflation, ongoing The Board holds monthly portfolio update meetings with the supply chain issues and/or labour shortages Portfolio Manager. may adversely impact the operational The Portfolio Manager regularly engages with the portfolio activities of the portfolio companies so that companies to discuss any matters of concern that may effect they are no longer appropriate to achieve the operational activities. Company’s investment objective. The investment approach is not aligned The Board conducts an annual review of the Portfolio Manager's with shareholder expectations in relation to ESG policy to ensure that it is consistent with that expected by the Environmental, Social and Governance ("ESG") Board. In addition the Board reviews the ESG activities of Lindsell matters. Train to ensure progress is being made by portfolio companies. TheBoard also conducts an annual review of other service providers' policies in relation to internal controls and governance matters notably modern slavery, GDPR, cyber security and whistleblowing policies. The Portfolio Manager has developed a propriety system to assess the inherent and emerging ESG risks for the investment portfolio which the Portfolio Manager uses when engaging with the portfolio companies. This informs the decision to invest, retain or divest any portfolio investment. The adverse impact of climate change The Board receives quarterly ESG updates, which include an on the portfolio companies’ operational update on any climate change related engagement, from the performance. Portfolio Manager together with monthly portfolio updates. The Board challenges the Portfolio Manager on ESG matters to ensure that the portfolio companies are acting in accordance with the Board’s ESG approach. The Portfolio Manager is a signatory to the UK Stewardship Code and actively engages with portfolio companies on ESG matters including climate change. Lindsell Train developed its own methodology to assess the carbon impact of the portfolio. Lindsell Train became a signatory of NZAM in December 2021. This reflects Lindsell Train’s enhanced efforts as a firm to support the goal of net zero greenhouse gas emissions by 2050. Details of the Company’s and Portfolio Manager’s ESG policies together with the weighted average carbon intensity of the portfolio companies are set out on pages 26 to 29. The Board reviews all information supplied to shareholders and the ### Shareholder Relations and AIFM’s marketing activity at each meeting and periodically reviews ### Governance the Company’s website. The AIFM's daily controls ensure accurate Errors or irregularities in published information publication of information. could lead to censure and/or result in reputational damage to the Company. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 17 ### STRATEGIC REPORT BUSINESS REVIEW - CONTINUED ### THE COMPANY'S APPROACH TO RISK MANAGEMENT – CONTINUED Movement Principal Risks and Uncertainties Key Mitigations The Board receives regular updates from the AIFM of press ### Operational references to the Company and its major service providers, the Adverse reputational impact of one or more Board receives regular news on sector developments from the of the Company's key service providers Company’s broker and from the AIC. The Board has the ability which, by association, causes the Company to replace any service provider which may be the source of reputational damage. reputational concerns. The AIFM and Portfolio Manager have in place robust compliance ### Financial monitoring programmes. Fraud (including unauthorised payments and cyber fraud) occurs leading to a loss. The Board receives monthly compliance reviews and a quarterly expenses analysis. An annual statement is obtained by the Audit Committee from all service providers giving representations that there have been no instances of fraud or bribery. The Company is exposed to market price risk. The Directors acknowledge that market risk is inherent in the investment process. The Portfolio Manager maintains a diversified portfolio which is concentrated in a few key sectors. The Board has imposed guidelines within its investment policy to limit exposure to individual holdings and limits the level of gearing. The AIFM reports to the Board with respect to compliance with investment guidelines on a monthly basis. The Portfolio Manager provides the Board with regular updates on market movements. No investment is made in derivative instruments and no currency hedging is undertaken. Further information on financial instruments and risk can be found in note 17 to the Financial Statements beginning on page 77. The Board monitors regulatory change with the assistance of ### Accounting, Legal and Regulatory the Company’s AIFM, Portfolio Manager and external professional The regulatory environment in which the advisers to ensure that the Board is aware of any likely changes in Company operates changes materially, the regulatory environment and will be able to adapt as required. affecting the Company’s modus operandi. The Directors attend AIC Roundtables and conferences to keep up to date on regulatory changes and receive industry updates from the AIFM. 18 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION Movement Principal Risks and Uncertainties Key Mitigations The Company and/or the Directors fail(s) The Board monitors regulatory change with the assistance of its to comply with legal requirements in AIFM, Portfolio Manager and external professional advisers to ensure relation to FCA dealing rules/handbook compliance with applicable laws and regulations including the procedures, the AIFMD, the Listing Rules, the Companies Act 2006, the AIFM Rules, the Corporation Tax Act 2010 Companies Act 2006, relevant accounting (‘Section 1158’), the Market Abuse Regulation (“MAR”), the Disclosure standards, the Bribery Act 2010, the Criminal Guidance and Transparency Rules (“DTRs”) and the UKLA Listing Rules. Finances Act 2017, the Association of The Board reviews compliance reports and internal control reports Investment Companies (“AIC”) Statement provided by its service providers, as well as the Company’s of Recommended Practice (“SORP”), GDPR, Financial Statements and revenue forecasts. tax regulations or any other applicable The Depositary reports twice yearly to the Audit Committee, regulations. confirming that the Company, acting through the AIFM, has been managed in accordance with the AIFMD, the FUND sourcebook, the Articles (in relation to the calculation of the NAV per share) and with investment restrictions and leverage limits. The Depositary Report can be found in the Shareholder information section of the Company’s website. The Directors attend AIC Roundtables and conferences to keep up to date on regulatory changes and receive industry updates from the AIFM. The AIFM presents a quarterly report on changes in the regulatory environment, including AIC updates, and how changes have been addressed. Poor adherence to corporate governance The Board reviews all information supplied to shareholders and best practice or errors or irregularities in the AIFM’s marketing activity at each meeting. Details of the published information could lead to censure Company’s compliance with corporate governance best practice, and/or result in reputational damage to the including information on relationships with shareholders, are set Company. out in the Corporate Governance Report on pages 39 to 44. The experience and knowledge of the Directors is useful in ### EMERGING RISKS these discussions, as are update papers and advice received The Company has carried out a detailed assessment of the from the Board’s key service providers such as the Portfolio Company’s emerging and principal risks. The International Manager, the AIFM and the Company’s broker. In addition, Risk Governance Council definition of an ‘emerging’ risk is one the Company is a member of the AIC, which provides regular that is new or is a familiar risk in a new or unfamiliar context or technical updates as well as drawing members’ attention to under new context conditions (re-emerging). Failure to identify forthcoming industry and/or regulatory issues and advising on emerging risks may cause reactive actions rather than being compliance obligations. proactive and, in worst case, could cause the Company to become unviable or otherwise fail or force the Company to During the year, the Board identified as an emerging risk, the change its structure, objective or strategy. deteriorating economic environment which impacts portfolio investments; and potentially, the Company’s service providers. The Audit Committee reviews a risk map at its half-yearly meetings and holds a separate session to review the register, mitigations and scoring of each risk. Emerging risks are discussed in detail as part of this process, and also throughout the year, to ensure that emerging as well as known risks are identified and, so far as practicable, mitigated. Any emerging risks and mitigations are added to the risk register. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 19 ### STRATEGIC REPORT BUSINESS REVIEW - CONTINUED The Audit Committee has considered the potential impact ### FUTURE DEVELOPMENTS of its principal risks on pages 16 to 19 and various severe The Board’s primary focus is on the Portfolio Manager’s but plausible downside scenarios as well as stress testing investment approach and performance. The subject is and reverse stress testing. It has also made the following thoroughly discussed at every Board meeting. assumptions in considering the Company’s longer-term In addition, the AIFM updates the Board on Company viability: communications, promotions and investor feedback, as well as • There will continue to be demand for investment wider investment company issues. companies; An outline of performance, investment activity and strategy, • The Board and the Portfolio Manager will continue to and market background during the year, as well as the outlook, adopt a long-term view when making investments, and is provided in the Chairman’s Statement on pages 6 and 7 the anticipated holding periods will be at least five years; Portfolio Manager’s Review on pages 10 and 11. • The Company invests principally in the securities of UK It is expected that the Company’s strategy will remain listed companies to which investors will continue to wish to unchanged in the coming year. have exposure; ### LONG-TERM VIABILITY STATEMENT • The Company will maintain its bank loan facility; In accordance with the UK Corporate Governance Code, the • Regulation will not increase to a level that makes running Directors have carefully assessed the Company’s position and the Company uneconomical; and prospects as well as the principal risks stated on pages 16 to 19 • The performance of the Company will continue to be and have formed a reasonable expectation that the Company satisfactory. will be able to continue in operation and meet its liabilities as they fall due over the next five financial years. The Board has The continuing uncertainty in the global economy, the chosen a five year horizon in view of the long-term nature ongoing war in Ukraine and COVID-19 related lockdowns, have adopted by the Portfolio Manager when making investment created significant supply chain disruption exacerbating decisions. inflationary pressures worldwide. These were factored into the key assumptions made by assessing their impact on the To make this assessment and in reaching this conclusion, the Company’s key risks and whether the key risks had increased Audit Committee has considered the Company’s financial in their potential to affect the normal, favourable and stressed position and its ability to liquidate its portfolio and meet its market conditions. As part of this review the Board considered liabilities as they fall due: the impact of a significant and prolonged decline in the • The portfolio is principally comprised of investments Company's performance and prospects. traded on major international stock exchanges. Based The Directors confirm therefore, that they have a reasonable on current trading volumes, 97.6% of the current portfolio expectation that the Company will be able to continue in could be liquidated within 30 trading days, with 61.6% in operation and meet its liabilities in full over the coming five seven days, and there is no expectation that the nature of years. the investments held within the portfolio will be materially different in future; • The expenses of the Company are predictable and modest in comparison with the assets and there are no capital commitments foreseen which would alter that position; and • The Company has no employees, only its non-executive Directors. Consequently it does not have redundancy or other employment-related liabilities or responsibilities. 20 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 21 ### STRATEGIC REPORT BUSINESS REVIEW - CONTINUED ### ENGAGING WITH THE COMPANY'S STAKEHOLDERS The following ‘Section 172’ disclosure, required by the Companies Act 2006 and the AIC Code, as explained on pages 22 to 25, describes how the Directors have had regard to the views of the Company’s stakeholders in their decision-making. Who? Why? How? STAKEHOLDER THE BENEFITS OF ENGAGEMENT WITH THE HOW THE BOARD, THE AIFM AND THE PORTFOLIO MANAGER HAVE GROUP COMPANY'S STAKEHOLDERS ENGAGED WITH THE COMPANY'S STAKEHOLDERS Investors Clear communication of the Company’s The AIFM and the Portfolio Manager, on behalf of the Board, strategy and the performance against the complete a programme of investor relations throughout Company's objective can help the share price theyear. trade closer to its NAV per share which benefits An analysis of the Company’s shareholder register is provided shareholders. to the Directors at each Board meeting along with marketing New shares may be issued to meet demand reports from Frostrow. The Board reviews and considers the without net asset value per share dilution to marketing plans on a regular basis. Reports from the Company’s existing shareholders. Increasing the size of broker are submitted to the Board on investor sentiment and the Company can benefit liquidity as well as industry issues. spread costs. Key mechanisms of engagement include: Under the share buy-back policy, the • The Annual General Meeting Company will normally buy in shares being offered on the stock market whenever the • The Chairman and the Senior Independent Director make discount approaches a level of 5% and then themselves available to engage with shareholders either hold those shares in “treasury” or cancel • The Company’s website hosts reports, video interviews with them. Any shares held in treasury can later be the Portfolio Manager and monthly fact sheets sold back to the market if conditions permit. • One-on-one investor meetings facilitated by Frostrow who actively engage with professional investors, typically discretionary wealth managers, some institutions and a range of execution-only platforms. Regular engagement helps to attract new investors and retain existing shareholders, and over time results in a stable share register made up of diverse, long-term holders • The Board will explain in its announcement of the results of the AGM the actions it intends to take to consult shareholders in order to understand the reasons behind any significant votes against resolutions • Following the consultation, an update will be published no later than six months after the AGM and the Annual Report will detail the impact the Shareholder feedback has had on any decisions the Board has taken and any actions or resolutions proposed At each meeting the Board reviews movements in the Company’s shareholder register. There are regular interactions and engagement with shareholders (including at the AGM). Regular feedback from shareholders is received from the Company’s broker. 22 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION Who? Why? How? STAKEHOLDER THE BENEFITS OF ENGAGEMENT WITH THE HOW THE BOARD, THE AIFM AND THE PORTFOLIO MANAGER HAVE GROUP COMPANY'S STAKEHOLDERS ENGAGED WITH THE COMPANY'S STAKEHOLDERS Portfolio Engagement with the Company's Portfolio The Board meets with the Portfolio Manager throughout the year, Manager Manager is necessary to evaluate their with quarterly presentations and also monthly performance and performance against the Company's stated compliance reporting. This provides the opportunity for both the strategy and to understand any risks or Board and Portfolio Manager to explore and understand how opportunities this may present. the portfolio has performed and what may be expected in the future. The Board ensures that the Portfolio Manager's The Board receives regular updates from the Portfolio Manager ESG approach meets standards set by the concerning engagement on ESG matters with the companies Board. within the portfolio. Service The Company contracts with third parties The Board and Frostrow engage regularly with other service Providers for other services including: depositary, providers both in one-to-one meetings and via regular written investment accounting & administration as reporting. This regular interaction provides an environment well as company secretarial and registrars. where topics, issues and business development needs can be The Company ensures that the third parties dealt with efficiently and collegiately. to whom the services have been outsourced complete their roles in line with their service level agreements and are able to continue to provide these services, thereby supporting the Company in its success and ensuring compliance with its obligations. | Portfolio | Gaining a deeper understanding of the | During the year the Board discussed its approach to ESG | | --- | --- | --- | | Companies | portfolio companies and their strategies as | matters with the Lindsell Train team providing more detail of | | | well as incorporating consideration of ESG | their specific approach to responsible ownership which is further | | | factors into the investment process assists | explained on pages 26 to 29. | in understanding and mitigating risks of The Board considers its approach to ESG as well as that of the an investment as well as identifying future companies in which the Company invests, and has developed potential opportunities. its own policy which can be found on page26. The Board encourages the Company’s Portfolio Manager to engage with companies and in doing so expects ESG issues to be a key consideration. The Board receives an update on Lindsell Train's engagement activities within a dedicated quarterly ESG report. A member of Lindsell Train’s investment team attends each Board meeting to provide an update on ESG issues and engagement activities since the last Board meeting. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 23 ### STRATEGIC REPORT BUSINESS REVIEW - CONTINUED Who? Why? How? STAKEHOLDER THE BENEFITS OF ENGAGEMENT WITH THE HOW THE BOARD, THE AIFM AND THE PORTFOLIO MANAGER HAVE GROUP COMPANY’S STAKEHOLDERS ENGAGED WITH THE COMPANY’S STAKEHOLDERS The Investment companies have the ability to Regular reporting to the lender with respect to adherence with Company's borrow with a view to enhancing long-term loan covenants and ad hoc meetings with the AIFM. Lender returns to shareholders. Engagement with the Company’s lender ensures that it fully understands the nature of the Company’s business, the strategy adopted by the Portfolio Manager and the extent to which the Company complies with its loan covenants. What? Outcomes and actions WHAT WERE THE KEY TOPICS OF ENGAGEMENT? WHAT ACTIONS WERE TAKEN, INCLUDING PRINCIPAL DECISIONS? Investors Impact of market volatility on the performance of the Company. Shareholders are provided with performance updates via the Company’s website as well as the annual and half-year financial reports and monthly factsheets. Ongoing dialogue with Shareholders concerning the strategy of The Portfolio Manager, Frostrow and the broker meet regularly the Company, performance and the portfolio. with shareholders and potential investors to discuss the Company’s strategy, performance and portfolio. Information on how to vote your investment company shares on a selection of major platforms can be found on pages 11 to 13 of the Notice ofMeeting. Share price performance and the widening of investment The Chairman and Senior Independent Director, accompanied company sector discounts. by members of the Frostrow team, met with representatives of interactive investor (“ii”) and Hargreaves Lansdown (“HL”) to discuss, amongst other things, shareholder engagement, particularly with shareholders who hold their shares via these platforms. The Board reviews the Company’s share price discount/premium on a daily basis and has a share buy-back policy, details of this policy can be found on the Company’s website. 24 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION What? Outcomes and actions WHAT WERE THE KEY TOPICS OF ENGAGEMENT? WHAT ACTIONS WERE TAKEN, INCLUDING PRINCIPAL DECISIONS? Portfolio Manager Climate Change - Weighted Average Carbon Intensity During the year the Audit Committee reviewed the risks associated with climate change on the portfolio and how the transition to a low-carbon economy will affect all businesses, irrespective of their size, sector or geographic location. Portfolio composition, performance, ESG matters, outlook, and The Portfolio Manager engages regularly with investee business updates. companies’ Executive management and the Board receives quarterly ESG updates from the Portfolio Manager, enabling the conclusion that the risk of material misstatement due to climate risk remains low. The impact of market volatility upon their business and how The Board has received regular updates from the Portfolio some companies in the portfolio have sought to take advantage Manager throughout the recent period of market volatility, of the pandemic, in particular through increased digitalisation. including its impact on investment decision making. The integration of ESG into the Portfolio Manager’s investment The Portfolio Manager reports regularly any ESG issues in the processes. portfolio companies to the Board. Other service providers The Directors have frequent engagement with the Company’s Reviews of the Company’s service providers have been positive other service providers through the annual cycle of reporting and the Directors believe their continued appointment is in the and due diligence meetings or site visits by Frostrow. This best interests of the Company. The Company has invested in engagement is completed with the aim of maintaining an Frostrow and Lindsell Train. Further details can be found on the effective working relationship and oversight of the services Company’s website. provided. Board Composition Trust Associates Limited were appointed by the Board in June 2022 to assist with the appointment of a new Director, resulting in the appointment of Pars Purewal. Mr Purewal joined the Board on 28 November 2022 and will offer himself for election by shareholders at the 2023 Annual General Meeting. The Company’s Lender Continued compliance with covenants set out within the loan The Board ensures compliance with loan covenants throughout agreement between the Company and the lender. the year. Terms of the loan facility agreement During the year the Company’s loan facility agreement was renewed, details of which can be found on page 34 and within note 12 on page 75. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 25 ### STRATEGIC REPORT BUSINESS REVIEW - CONTINUED any other risks or issues facing the business and its reputation. ### RESPONSIBLE INVESTMENT This work is catalogued in a proprietary database of risk factors ### Our Policy in order to centralise and codify the team’s views, as well as to prioritise its ongoing research and engagement work and is The Board recognises that the most material way for the © cross-referenced with the SASB Materiality Map . Company to have an impact on Environmental, Social and Governance (“ESG”) issues is through the responsible If, as a result of this assessment, it believes that an ESG ownership of its investments. factor is likely to materially impact a company’s long-term business prospects (either positively or negatively) then this It has delegated authority to its Portfolio Manager to engage will be reflected in the long-term growth rate that is applied actively with the management of investee companies and in its valuation of that company, which alongside its more encourage that high standards of ESG practice are adopted. qualitative research will influence any final portfolio decisions The Company seeks to generate long-term, sustainable (for example, whether it starts a new position or sells out of an returns on capital. The investee companies which consistently existing holding). deliver superior returns over the long term are typically Positive/Negative Screening established, well-run companies whose managers recognise As a product of Lindsell Train’s investment philosophy, it does their impact on the world around them. not invest in the following industries: In its Responsible Engagement & Investment Policy, the • capital intensive industries (energy, commodities or mining) Portfolio Manager states that its evaluation of ESG factors is or any companies involved in the extraction and production an inherent part of the investment process. of coal, oil or natural gas; and The Board has delegated authority to the Portfolio Manager • industries that Lindsell Train judges to be sufficiently to vote the shares owned by the Company that are held on detrimental to society that they may be exposed to its behalf by its Custodian. The Board has instructed that the burdensome regulation or litigation that could impinge Portfolio Manager submit votes for such shares wherever on financial returns (e.g. tobacco, gambling or arms possible and practicable. The Portfolio Manager may refer to manufacturers). the Board on any matters of a contentious nature. Similarly, its investment approach has steered it to invest in a The Portfolio Manager is a signatory of the 2021 UK number of companies that play an important positive social Stewardship Code and became a signatory of Net Zero Asset or environmental role, for example through providing access Managers in December 2021. to educational information (RELX), encouraging saving for the future (Schroders, Hargreaves Lansdown) or encouraging ### LINDSELL TRAIN’S POLICY environmental progress and best practice (Unilever). Lindsell Train believes that such positive benefits for society should ### ESG INTEGRATION be consistent with its aim to generate competitive long-term Seeking Sustainability returns, thus helping it meet its clients’ investment objectives. As long-term investors, Lindsell Train’s aim is to identify Climate Change companies that can generate long-term sustainable high The risks associated with climate change represent the great returns on capital. Lindsell Train has historically found that issue of our era and the transition to a low-carbon economy such companies tend to exhibit characteristics associated will affect all businesses, irrespective of their size, sector or with good corporate governance and responsible business geographic location. Therefore, no company’s revenues are practices. Indeed, it believes that companies which observe immune and the assessment of such risks must be considered such standards, and that are serious in their intention of within any effective investment approach, particularly one addressing environmental and social factors, will not only like Lindsell Train that seeks to protect its clients’ capital for become more durable but will likely prove to be superior decades to come. investments over time. As a relatively small company with a single office location To that end, its initial analysis and ongoing company and 25 employees, Lindsell Train’s climate exposure comes engagement strategy seeks to incorporate all sustainability predominantly from the investment portfolios that it manages factors that it believes will affect the company’s ability to on behalf of its clients. Lindsell Train recognise the systemic deliver long-term value to shareholders. Such factors may risk posed by climate change and the potential financial include but are not limited to environmental (including climate impacts associated with a transition to a low-carbon economy. change), social and employee matters (including turnover and LindsellTrain therefore supports the recommendations of the culture) and governance factors (including remuneration and Task Force on Climate-Related Financial Disclosures (“TCFD”) capital allocation), cyber resilience, responsible data utilisation, and its efforts to encourage companies to report their climate respect for human rights, anti-corruption and anti-bribery, and 26 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION related disclosures and data in a uniform and consistent way. Further information on Lindsell Train's TCFD related disclosures can be found on its website: www.lindselltrain.com within its 2022 TCFD Report. In December 2021, Lindsell Train also became a signatory of the Net Zero Asset Managers ("NZAM") initiative, committing to support the goal of net zero greenhouse gas emissions by 2050, in line with global efforts to limit warming to 15 degrees Celsius. Lindsell Train is now in the process of confirming its net zero roadmap, which will include the necessary interim targets and disclosures, which it published in November 2022, within a year of its net zero announcement. Further, using Morningstar's carbon metrics calculations, Lindsell Train is pleased to note that the Finsbury Growth and Income Trust PLC has a significantly lower weighted average carbon intensity than its comparable benchmark. Due to availability of carbon intensity data, the Morningstar UK GBP index has been used as a proxy for the FTSE All-Share index. The Morningstar UK index measures the performance of the UK's equity markets targeting the top 97% of stocks by market capitalisation. #### Weighted Average Carbon Intensity ![img-2.jpeg](img-2.jpeg) Source: Morningstar. Data as of June 2020, June 2021 and June 2022. Data reflects Scope I & 2 emissions only. The Morningstar carbon intensity definition is as follows: The asset-weighted average of holdings with actual emissions data from the Carbon Disclosure Project or estimated values from Sustainability in a portfolio. A lower score is better. Carbon intensity is computed for each holding as follows: Total Emissions (metric tons of Co2) divided by Revenue (MILLES), and aggregated at the fund level. Sustainability looks at the latest reported Scope I (direct emissions from owned or controlled sources) and scope 2 (indirect emissions from the generation of purchased energy). Green House Gas intensity and emissions for over 10,000 companies. More than 100 different estimation models are used for non-reporting companies. ## Stewardship ### Engagement Engaging with and monitoring investee companies on matters relating to stewardship has always been an essential element of Lindsell Train's investment strategy. Its long-term approach generally leads it to be supportive of company management. However, where Lindsell Train disagrees with a company's actions, it will try to influence management on specific matters or policies if they believe it is in the best interests of its clients. Constructive dialogue has more often than not resulted in satisfactory outcomes, thus limiting the need for escalation. However, where this is not the case, Lindsell Train will consider escalating its engagement and stewardship activities. During the year, Lindsell Train engaged with companies held within the Company's portfolio on a wide range of environmental, social and governance issues as detailed in the chart overleaf. Madeline Wright, Deputy Portfolio Manager and Head of Investment ESG at Lindsell Train, has also completed her process of holding an ESG specific discussion with all of Lindsell Train's investee companies (c.70 in total), aimed at establishing a baseline for its ongoing engagement and clarifying its portfolio companies' stances on, and approaches to, certain ESG factors, with the objective of ensuring that all portfolio companies report this essential data going forward. This information is stored, assessed, and monitored within Sentinel, Lindsell Train's proprietary ESG database. As public supporters of TCFD and The IFRS Sustainability Alliance (previously known as the Sustainability Accounting Standards Board), Lindsell Train is also encouraging its portfolio companies to report in line with these, or similar (if more relevant to their business) frameworks, and also to report on positive impact goals and progress to net zero. Furthermore, as signatories of NZAM, Lindsell Train is monitoring carefully the transition to net zero of each of its businesses and encouraging the companies to set science-based targets where possible. This ongoing ESG research is further complemented by a series of ESG specific telephone calls that Lindsell Train is hosting with each of its companies. This will enable Lindsell Train to identify additional matters of concern or opportunity that require further scrutiny within its engagement programme. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 27 ## STRATEGIC REPORT BUSINESS REVIEW - CONTINUED ### Engagement by Topic ![img-3.jpeg](img-3.jpeg) | ● Other Social (e.g. supply chain, health & nutrition) | 21.4% | | --- | --- | | ● Human Rights | 21.4% | | ● Capital Allocation & Strategy | 21.4% | | ● Fair treatment of shareholders | 14.3% | | ● Remuneration | 14.3% | | ● Cruelty Free | 7.2% | Source: Lindsell Train Limited. 14 topics raised with 5 companies between 1 October 2021 and 30 September 2022. ### Key Engagement Examples: #### Unilever This engagement in Q2 2022 was in part in response to the news that from 1 May 2021, China would remove the mandatory animal testing requirements for imported cosmetics. In the case of Unilever, this follows ten years of hard work to ban this practice and it will enable Unilever to develop its Chinese cosmetics business. Animal testing of health and personal care products, cosmetics and fragrances is a practice that is not only unnecessary but also acts as a barrier to the growing numbers of cruelty-conscious consumers globally. Fortunately, the practice is less common these days and Lindsell Train has determined through its research that very few companies engage in animal testing. Indeed, only companies selling personal care products, cosmetics or fragrances into China will have made its products available for animal testing. Nonetheless Lindsell Train has monitored this for some time and engaged with the management of Unilever on this matter. Later in 2022, Lindsell Train's engagement centred on the recent news of the appointment of activist investor, Nelson Peltz of Trian Fund Management LP ("Trian"), to its board as a non-executive director, following his purchase of shares representing 1.5% of Unilever's issued share capital. As Trian's objectives are ostensibly in line with that of Lindsell Train's, it had no objection to the appointment despite being somewhat surprised at the low ticket price to get a seat at the table. Lindsell Train did however take the opportunity to urge the board to resist any proposals that might merely boost short-term value. Unilever's Chair, Nils Andersen confirmed that the board remained committed to their long-term strategy and were focussed on protecting the strategic value of Unilever's assets. #### Mondelez Lindsell Train has also engaged with the company on several occasions to share its views regarding compensation best practice and continue to believe that the company could foster greater shareholder alignment through improved compensation structures. In assessing its compensation policies Lindsell Train focus more on how incentives are structured rather than the actual quantum of compensation. In other words, Lindsell Train can be comfortable with the large rewards provided that the incentives are aligned with shareholders' interest and its principles. In the case for Mondelez, Lindsell Train wrote to management, outlining its reason for abstaining on the resolution concerning compensation at the company's 2021 AGM. #### Burberry and Young & Co's Brewery Lindsell Train became signatories of Find It, Fix It, Prevent It, in Q2 2022. This initiative convened and resourced by CCIA and overseen by an advisory committee, brings together investors, academics and non-governmental organisations ("NGO") to share knowledge, set targets and monitor the progress of its initiative to eradicate modern slavery. In Q3 2022 Lindsell Train engaged with both Burberry and Young & Co's Brewery ("Young's"), putting what it felt to be Find It, Fix It, Prevent It's illuminating questions about modern slavery to both companies. Both Burberry and Young's already have formal Modern Slavery policies in place. Burberry acknowledged that modern slavery has been found in its supply chain but expects this would be the case for any company should it delve deep enough. The company was understandably discreet about the details of detection and remediation but reassured Lindsell Train that its policies are robust and always supported by NGO input, and that it is indeed incumbent on Burberry to report that slavery was found and describe how it was fixed. So for Young's has not found modern slavery in its supply chain, but revealed that the areas of greatest risk are the use of agencies to supply workers (although these comprise <5% of all staff), and employees working without the correct documentation. The former issue will hopefully be phased out as Young's turns away from contracted staff and the latter is being addressed with a well-established checking process and a full yearly HR audit. In response to the Modern Slavery Act's recommendations becoming mandatory, Young's is beefing up its due diligence, e.g. requiring suppliers to register on the Sedex platform which allows for supply chain transparency and the identification of 28 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION risk areas. Most big suppliers are already on Sedex, and overall The Board applies the same standards to its service providers the aim is to get 100% of suppliers and agencies onto the in their activities for the Company. platform. A copy of the Company’s Anti Bribery and Corruption Policy can be found in the Board and Policies section of the Proxy Voting Company's website. The policy is reviewed annually by the The primary voting policy of Lindsell Train is to protect or Audit Committee. enhance the economic value of its investments on behalf of its clients. Lindsell Train has appointed Glass Lewis to aid the In response to the implementation of the Criminal Finances administration of proxy voting and provide additional support Act 2017, the Board adopted a zero-tolerance approach to the in this area. However, the Manager maintains decision making criminal facilitation of tax evasion. A copy of the Company’s responsibility based on its detailed knowledge of the investee policy on preventing the facilitation of tax evasion can be companies. It is Lindsell Train’s policy to exercise all voting found in the Board and Policies section of the Company's rights which have been delegated to it by its clients. website. The policy is reviewed annually by the Audit Committee. Voting Record In carrying out its activities, the Company aims to conduct itself responsibly, ethically and fairly, including in relation to social MANAGEMENT SHAREHOLDER TOTAL PROPOSALS PROPOSALS PROPOSALS and human rights issues. As an investment company with limited internal resource, the Company has little impact on the With Management 387 3 390 environment. The Company believes that high standards of ESG Against Management 0 0 0 make good business sense and have the potential to protect and enhance investment returns. Consequently, the Portfolio Abstain 1 1 2 Manager’s investment criteria ensure that ESG and ethical issues Totals 388 4 392 are taken into account and best practice is encouraged. The Source: Glass Lewis. 1 October 2021 – 30 September 2022. Board's expectations are that its principal service providers have appropriate governance policies in place. Votes against management in previous years have typically ### been in the low single-digit range. The main reason for this COMPANY PROMOTION is that Lindsell Train’s long-term approach to investment The Company has appointed Frostrow to promote the generally leads it to be supportive of company management Company’s shares to professional investors in the UK and and, where required, Lindsell Train will try to influence Ireland. As investment company specialists, the Frostrow team management through its engagement activities. Given Lindsell provides a continuous, proactive marketing, distribution and Train often builds up large, long-term stakes in the businesses investor relations service that aims to promote the Company in which it invests, they find that management is open to (and by encouraging demand for the shares. very often encourages) engagement with them. Furthermore, ### it is Lindsell Train’s aim to be invested in ‘exceptional’ MANAGEMENT ARRANGEMENTS companies with strong corporate governance and hence ### Alternative Investment Fund Manager (“AIFM”) it ought to be rare that Lindsell Train finds itself in a position Frostrow under the terms of its AIFM agreement with the where it is voting against management. Company provides, inter alia, the following services: In the majority of cases where Lindsell Train has voted against • oversight of the portfolio management function delegated management it has been on matters relating to remuneration. to Lindsell Train; Where Lindsell Train does not believe that a company’s compensation policy is aligned with the long-term best • promotion of the Company; interests of the shareholders it will write to management to • investment portfolio administration and valuation; inform them of its intention to vote against such policies. • risk management services; • share price discount and premium management; ### INTEGRITY AND BUSINESS ETHICS • administrative and company secretarial services; The Company is committed to carrying out business in an • advice and guidance in respect of corporate governance honest and fair manner. The Board has adopted a zero- requirements; tolerance approach to instances of bribery and corruption. • maintenance of the Company’s accounting records; Accordingly, it expressly prohibits any Director or associated • maintenance of the Company’s website; persons when acting on behalf of the Company from • preparation and publication of annual reports, half year accepting, soliciting, paying, offering or promising to pay reports and monthly fact sheets; and or authorise any payment, public or private, in the United Kingdom or abroad to secure any improper benefit from • ensuring compliance with applicable legal and regulatory themselves or for the Company. requirements. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 29 ### STRATEGIC REPORT BUSINESS REVIEW - CONTINUED The AIFM Agreement may be terminated by either party on • the quality and depth of experience of the management, giving notice of not less than 12 months. company secretarial, administrative and marketing team that the AIFM brought to the management of the ### Portfolio Manager Company; and Under the Portfolio Management Agreement Lindsell Train, as • the quality and depth of experience that the Portfolio delegate of the AIFM, is responsible for the management of Manager brought to the management of the portfolio, the the Company’s portfolio of investments under an agreement clarity and rigour of the investment process, the level of between it, the Company and Frostrow (the “Portfolio past long-term performance of the portfolio in absolute Management Agreement”). terms and also by reference to the benchmark index. Under the terms of its Portfolio Management Agreement, ### Depositary Lindsell Train provides, inter alia, the following services: The Bank of New York Mellon (International) Limited (the • seeking out and evaluating investment opportunities; “Depositary”) acts as the Company’s depositary in accordance • recommending the manner by which monies should be with the AIFMD on the terms and subject to the conditions of invested, realised or retained; the depositary agreement between the Company, Frostrow • advising on how rights conferred by the investments and the Depositary (the “Depositary Agreement”). Under the should be exercised; terms of the Depositary Agreement the Company pays the • analysing the performance of investments made; and Depositary a fee between 0.007% to 0.008% of net assets. • advising the Company in relation to trends, market The Depositary provides the following services: movements and other matters which may affect the • responsibility for the safe-keeping of custodial assets of investment objective and policy of the Company. the Company; The Portfolio Management Agreement may be terminated by • verification and maintenance of a record of all other either party on giving notice of not less than 12 months. assets of the Company; ### Annual Fees • for the collection of income that arises from those assets; FEES ON THAT PART OF MARKET PORTFOLIO • taking reasonable care to ensure that the Company CAPITALISATION AIFM MANAGER is managed in accordance with the AIFMD, the ≤ £1 bn 0.15% 0.45% FUND Sourcebook and the Company’s instrument of incorporation, in relation to the calculation of the net asset > Between £1 bn - £2 bn 0.135% 0.405% value per share and the application of income of the £2 bn + 0.12% 0.36% Company; and • monitoring the Company’s compliance with investment ### Performance Fees restrictions and leverage limits set by the Board and the AIFM. The Company does not pay performance fees. In accordance with the AIFM Rules the Depositary acts as global custodian and may delegate safekeeping to one or ### AIFM AND PORTFOLIO MANAGER EVALUATION more global sub-custodians. The Depositary has delegated ### AND RE-APPOINTMENT safekeeping of the assets of the Company to The Bank of New The performance of Frostrow as AIFM and Lindsell Train as York Mellon SA/NV and/or The Bank of New York Mellon (The Portfolio Manager is continuously monitored by the Board Global Sub-custodians). with a formal evaluation being undertaken each year. As part of this process the Board monitors the services provided by the AIFM and the Portfolio Manager as well as receiving regular reports and views from them. The Board also receives comprehensive long-term performance measurement reports to enable it to determine whether or not the performance objective set by the Board has been met. Following a review at a Board meeting in September 2022, the Board considers that the continuing appointment of Frostrow and Lindsell Train, under the terms described above, is in the best interests of the Company’s shareholders. In coming to this decision, it took into consideration the following additional reasons: 30 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT AUDITORS’ REPORT STATEMENTSGOVERNANCE INFORMATION As at the date of this report, the applicable active sub- custodians appointed by the Depositary who might be relevant for the purposes of holding the Company’s investments are: COUNTRY NAME OF SUB-CUSTODIAN REGULATOR The Netherlands The Bank of New York Financial Services Mellon SA/NV and Markets Authority, Belgium United States The Bank of New York US Securities of America Mellon, New York and Exchange Commission France The Bank of New York The Autorité des Mellon SA/NV Marchés Financiers United Kingdom Depositary and The Financial Clearing Centre (DCC) Conduct Authority Deutsche Bank AG, London Branch The Bank of New York US Securities Mellon, New York and Exchange Commission ### Custodian The Global Sub-Custodian’s safekeeping fees are charged according to the jurisdiction in which the holdings are based. The majority of the Company’s assets attracted a custody fee of 0.0033% of their market value. Variable transaction fees are also chargeable. The Depositary Agreement may be terminated by either party on giving notice of not less than 90 days. By order of the Board Simon Hayes Chairman 7 December 2022 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 31 ### GOVERNANCE ## Board of Directors ## The Board of Directors supervises the management of Finsbury Growth & ## Income Trust PLC and looks after the interests of Shareholders. The re-election ## of Directors is sought annually at the Annual General Meeting. The Directors of the Company are set out below, all of whom, with the exception of Pars Purewal, were in office during the year and up to the date of signing the financial statements. ### SIMON HAYES SANDRA KELLY, ACA JAMES ASHTON Chairman Chair of the Audit Committee and Non-Executive Director Senior Independent Director | Simon Hayes has served on the | Sandra Kelly joined the Board on | James Ashton has served on the Board | | --- | --- | --- | | Board since 29 June 2015 and was | 9October 2019. A Chartered Accountant, | since 14 October 2020. James is Chief | | appointed as Chairman with effect from | she was formerly Finance Director of the | Executive of the Quoted Companies | | 17February 2021. Simon was Chairman | Canal & River Trust. Prior to that she spent | Alliance, representing the interests of | | of Peel Hunt Limited until July 2022. | eight years as Finance Director at NHBC | small and mid-sized listed companies | | He joined Peel Hunt in 1993 and was | (National House-Building Council). She | with government and regulators. He is | | appointed Head of Corporate Finance | is a Trustee of the Land Trust and Chair | the author of several business books | | in 2003, Chief Executive in 2006 and | and Governor of Headington School in | and chairs Oscar’s Book Prize, the annual | | Chairman in 2016. | Oxford. She previously held senior finance | search for the UK’s best picture book. | | | positions in the commercial sector, most | James was City Editor and Executive | | | notably for BMW GB. | Editor of the Evening Standard and | Independent titles and before that City Editor of the Sunday Times. | *Shares held: 150,000 | | *Shares held: 8,096 | | *Shares held: 1,027 | | | --- | --- | --- | --- | --- | --- | | *Annual Remuneration: £40,000 | | *Annual Remuneration: £32,000 | | *Annual Remuneration: £26,000 | | | Shared directorships | | Shared directorships | | Shared directorships | | | | None | | None | | None | | with other Directors: | | with other Directors: | | with other Directors: | | All members of the Board are non-executive and serve as members of the Audit Committee. None of the Directors has any other connection with the Portfolio Manager or is employed by any of the companies in which the Company holds an investment or by any of the Company’s service providers. *Information as at 30 September 2022 32 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT GOVERNANCE AUDITORS’ REPORT STATEMENTS INFORMATION ### KATE CORNISH-BOWDEN PARS PUREWAL LORNA TILBIAN Non-Executive Director Non-Executive Director Non-Executive Director | Kate Cornish-Bowden has served | Pars Purewal was appointed to the | Lorna Tilbian has served on the Board | | --- | --- | --- | | on the Board since 26 October 2017. | Board on 28 November 2022. Pars has | since 26 October 2017. Lorna is a non- | | Kate was formerly a fund manager | broad investment sector experience | executive director of Premier Foods | | for Morgan Stanley where she was | gained over a 38-year career at | plc, ProVen VCT plc where she chairs | | managing director and head of the | PricewaterhouseCoopers LLP, including | the Remuneration Committee. Lorna is | | global core equity team. Kate is a | 25 years as Partner across the business’ | also chair of Dowgate Capital Ltd and | | non-executive director and chair of the | Audit and Advisory, People, Sales and | a director of Dowgate Wealth Ltd. She | | audit committee at CC Japan Income | UK Asset Management teams. Pars is | was formerly an executive director of | | & Growth Trust plc, a non-executive | a Fellow of the Institute of Chartered | Numis Corporation PLC, a non-executive | | director and senior independent director | Accountants in England and Wales, a | director of Euromoney Institutional | | at Schroder Oriental Income Fund | Non-Executive Director on the board | Investor PLC, Jupiter UK Growth | | Limited and the non-executive chairman | of The Law Debenture Corporation plc, | Investment Trust PLC and M&C Saatchi | | of International Biotechnology Trust plc. | Temple Holdings Limited and the Chair | PLC, a director of WestLB Panmure | | | of Trustees for Beyond Food Foundation. | Limited and S G Warburg Securities. | He was formerly on the Boards of Brewin Dolphin Holdings PLC and Federated Hermes Limited. | *Shares held: 9,061 | | *Shares held: N/A | | *Shares held: 11,500 | | | --- | --- | --- | --- | --- | --- | | *Annual Remuneration: £26,000 | | *Annual Remuneration: N/A | | *Annual Remuneration: £26,000 | | | Shared directorships | | Shared directorships | | Shared directorships | | | | None | | None | | None | | with other Directors: | | with other Directors: | | with other Directors: | | FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 33 GOVERNANCE # Report of the Directors The Directors present their Annual Report on the affairs of the Company, together with the audited Financial Statements and the Independent Auditors' Report for the year ended 30 September 2022. In accordance with the requirement for the Directors to prepare a Strategic Report and an enhanced Directors' Remuneration Report for the year ended 30 September 2022, the following information is set out in the Strategic Report: - a review of the Company including details about its objective, strategy and business model; - future developments, details of the principal risks and uncertainties associated with the Company's activities (including the Company's financial risk management objectives and policies); and - information regarding community, social, employee, human rights and environmental issues and the Company's policy regarding Board diversity. Information about Directors' interests in the Company's ordinary shares is included within the Annual Report in the Remuneration section of the Directors' Remuneration Report. The Corporate Governance Statement on page 39 forms part of this Directors' Report. ## BUSINESS AND STATUS OF THE COMPANY The Company is registered as a public limited company in Scotland (Registered Number SC013958) and is an investment company within the terms of Section 833 of the Companies Act 2006. The Company is limited by shares, which are listed on the premium segment of The Official List of the UK Listing Authority and traded on the main market of the London Stock Exchange which is a regulated market as defined in Section 1173 of the Companies Act 2006. The Company has received approval from HM Revenue & Customs as an investment company under sections 1158 and 1159 of the Corporation Tax Act 2010. In the opinion of the Directors, the Company continues to conduct its affairs to qualify for such approval. ## RESULTS AND DIVIDENDS The Return on Ordinary Shares after taxation is shown on page 63. Details of the Company's dividend record can be found on page 2. ## LOAN FACILITY As at 30 September 2022 the Company was in the final month of its three-year secured fixed term revolving credit facility (the "facility") of £50 million with Scotiabank Europe PLC ("Scotiabank") and there is an additional £50 million facility available if required, which matured on 4 October 2022. As at 30 September 2022 a total of £36.7 million was drawn down from this facility (2021 £36.7 million) which equates to gearing of 12%, after taking into account net current assets including cash. Subsequent to the year-end on 4 October 2022, the Company's loan facility with Scotiabank was renewed and it entered into a new three-year secured facility of £60 million with an additional £40 million facility available if required. ## DIRECTORS The current Directors of the Company are listed on pages 32 and 33. With the exception of Pars Purewal, they all served as Directors of the Company during the year and up to the date of signing the Annual Report. Pars Purewal has served as a Director since his appointment on 28 November 2022. Mr Purewal was formerly a partner with the Company's auditor, PricewaterhouseCoopers LLP ("PwC"). As Pars left this role more than three years ago he is deemed to be independent under the terms of the AIC's Code of Corporate Governance. Pars' wife holds an executive position at PwC which has in place a robust process to manage any potential conflicts of interest and therefore does not affect the Board's view of his independence. No other person was a Director during any part of the year or up to the approval of this Report. ## Directors' Conflicts of Interest Directors report on actual or potential conflicts of interest at each Board meeting. Any Director with a conflict would be excluded from any related discussion. ## Directors' & Officers' Liability Insurance Cover Directors' and officers' liability insurance cover was maintained by the Company during the year. It is intended that this policy will continue for the year ending 30 September 2023 and subsequent years. ## Directors' Indemnity During the year under review and to the date of this report, indemnities were in force between the Company and each of its Directors under which the Company has agreed to indemnify each Director, to the extent permitted by law, in respect of certain liabilities incurred as a result of carrying out his or her role as a Director of the Company. The Directors are also indemnified against the costs of defending any criminal or civil proceedings or any claim by the Company or a regulator as they are incurred. Where the defence is unsuccessful the Director must repay those defence costs to the Company. The indemnities are qualifying third party indemnity provisions for the purposes of the Companies Act 2006. A copy of each deed of indemnity is available for inspection at the Company Secretary's offices during normal business hours and will be available at the Annual General Meeting. 34 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT GOVERNANCE AUDITORS’ REPORT STATEMENTS INFORMATION shareholders generally. Ordinary shares which are purchased ### Directors’ Fees under this authority may be held in treasury or cancelled. Reports on Directors’ Remuneration and also the Directors’ Remuneration Policy are set out on pages 45 to 50. The Company has adopted a buy-back policy whereby the Company will buy-back shares as described above when ### Appointment and Replacement of Directors the share price discount to the net asset value per share Unless otherwise determined by the Company by ordinary approaches 5%. Treasury shares can be sold back to the resolution, the number of Directors shall not be less than three. market at a later date at a premium to the cum income net asset value per share. The Company's share issuance policy ### Directors’ (and Other Senior Individuals) allows the issuance of new shares at a small premium to ### Interests the net asset value per share on a regular basis acting as a premium management tool. A detailed description of this The beneficial interests in the Company of the Directors, of policy can be found on the Company’s website. During the Nick Train, the individual with responsibility for managing year 9,253,311 shares were bought back into treasury (2021: nil). the Company’s portfolio at Lindsell Train, and of Alastair Smith, Managing Partner at Frostrow, and of the persons Between 1 October 2022 and 5 December 2022, the Company closely associated with them, are set out on page 48 of this bought back a further 1,668,897 shares into Treasury. AnnualReport. The Directors believe that the benefits to shareholders of these As part of the Company’s commitment to transparency, policies are: during the year the Board took the decision to disclose details • The volatility of the Company’s share price discount is of transactions in the Company’s shares by Nick Train. minimised; ### CAPITAL STRUCTURE • The absolute level of the Company’s share price discount is minimised; The Company’s capital structure is composed solely of Ordinary Shares. Details are given in note 13 to the Financial • It is accretive to net asset value per share to the benefit of Statements on page 76. existing Shareholders; • The Company’s long-term prospects are preserved in that Details of the voting rights in the Company’s shares at the shareholders with a longer-term investment horizon are date of this Annual Report are given in note 9 to the Notice of attracted to the shareholder register; and the Annual General Meeting. • The true value of the investment portfolio is captured as Details of the substantial shareholders in the Company are long-term returns are not affected by extraneous factors. listed on page 36. The Directors believe that granting the Board authority to The giving of powers to issue or buy-back the Company’s purchase shares, as detailed above, is in the best interests shares requires the relevant resolution to be passed by of shareholders as a whole and therefore recommend that shareholders. Proposals for the renewal of the Board’s current shareholders to vote in favour of this resolution. powers to issue and buy-back shares are detailed within the Notice of the Annual General Meeting. ### Voting Rights There are no restrictions concerning the transfer of securities Subject to any rights or restrictions attached to any shares, on in the Company; no special rights with regards to control a show of hands, every member who is present in person has attached to securities; no restrictions on voting rights; no one vote and every proxy present who has been duly appointed agreements between holders of securities regarding their has one vote. However, if the proxy has been duly appointed transfer known to the Company; and no agreements the by more than one member entitled to vote on the resolution, Company is party to that might affect its control following a and is instructed by one or more of those members to vote for successful takeover bid. the resolution and by one or more others to vote against it, or is instructed by one or more of those members to vote in one way ### Authority To Purchase Own Shares and is given discretion as to how to vote by one or more others It is intended that a special resolution will be proposed to grant (and wishes to use that discretion to vote in the other way) he or the Company authority to purchase its own shares, so as to she has one vote for and one vote against the resolution. Every permit the purchase of up to 32,088,957 of the Company’s corporate representative present who has been duly authorised ordinary shares (or such other number of shares as is equal to by a corporation has the same voting rights as the corporation. 14.99% of the total number of ordinary shares in issue at the date On a poll, every member present in person or by duly appointed of the passing of the resolution) subject to the constraints set out proxy or corporate representative has one vote for every share of in the special resolution. The Directors intend to use this authority which they are the holder or in respect of which their appointment to purchase shares only if this would result in an increase in as proxy or corporate representative has been made. net asset value per share and would be in the best interests of FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 35 ## GOVERNANCE ### REPORT OF THE DIRECTORS - CONTINUED A member, proxy or corporate representative entitled to more than one vote need not, if they vote, use all their votes or cast all the votes they use the same way. In the case of joint holders, the vote of the senior who tenders a vote shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order in which the names of the holders stand in the register of members. A member is entitled to appoint another person as his proxy to exercise all or any of their rights to attend and to speak and vote at a meeting of the Company. The appointment of a proxy shall be deemed also to confer authority to demand or join in demanding a poll. Delivery of an appointment of proxy shall not preclude a member from attending and voting at the meeting or at any adjournment of it. A proxy need not be a member. A member may appoint more than one proxy in relation to a meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by them. ### Share Capital At the Annual General Meeting held on 9 February 2022, authority to allot up to 22,401,935 shares on a non pre-emptive basis at prices not less than the higher of the prevailing cum or ex income net asset value per share at the time of issuance was granted. Further details of the resolutions concerning issuance authorities can be found in the Notice of Meeting. No shares were issued by the Company during the year (2021 7,240,000 new shares were issued by the Company at a premium to the higher of the prevailing cum or ex income net asset value per share at the time of issue). ### SUBSTANTIAL SHARE INTERESTS The Company was aware of the following substantial registered interests in the voting rights of the Company as at 30 September 2022 and 31 October 2022, being the latest practicable date before publication of the Annual Report: | | 31 OCTOBER 2022 | | 30 SEPTEMBER 2022 | | | --- | --- | --- | --- | --- | | | NUMBER OF SHARES | % OF CAPITAL | NUMBER OF SHARES | % OF CAPITAL | | Hargreaves Lansdown, stockbrokers | 23,681,833 | 11.01 | 27,625,655 | 12.76 | | Interactive Investor | 19,773,449 | 9.19 | 19,711,224 | 9.10 | | RBC Brewin Dolphin | 17,422,680 | 8.10 | 17,464,737 | 8.06 | | Evelyn Partners | 13,149,356 | 6.11 | 13,117,879 | 6.06 | | AJ Bell, stockbrokers | 11,872,776 | 5.52 | 12,140,758 | 5.61 | | Rathbones | 10,392,541 | 4.83 | 10,399,420 | 4.80 | | Investec Wealth & Investment | 9,614,168 | 4.47 | 9,630,637 | 4.45 | | Charles Stanley | 6,848,436 | 3.18 | 6,860,293 | 3.17 | | 1507 Capital Partners | - | - | 6,685,204 | 3.09 | At 30 September 2022 the Company had 215,737,992 shares in issue (excluding 9,253,311 shares held in Treasury). As at 31 October 2022 the Company had 215,128,434 shares in issue (excluding 9,862,869 Shares held in Treasury). ### BENEFICIAL OWNERS OF SHARES – INFORMATION RIGHTS The beneficial owners of shares who have been nominated by the registered holder of those shares to receive information rights under Section 146 of the Companies Act 2006 are required to direct all communications to the registered holder of their shares rather than to the Company's registrar, or to the Company directly. ### AGM The AGM will be held on Tuesday, 17 January 2023 and full details of the meeting arrangements and the business to be transacted will be sent under separate cover to Shareholders. Further information concerning the AGM can be found in the Chairman's Statement beginning on page 6. 36 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION The full text of the resolutions to be proposed at the AGM and an explanation of each resolution are contained in the separate Notice of Meeting. The Directors recommend that shareholders cast their proxy votes in favour of all resolutions proposed, as they will in respect of their own holdings. ## OTHER STATUTORY INFORMATION The following information is disclosed in accordance with the Companies Act 2006: - The rules on the appointment and replacement of directors are set out in the Company's articles of association (the "Articles"). Any change to the Articles would be governed by the Companies Act 2006. - Subject to the provisions of the Companies Act 2006, to the Articles, and to any directions given by special resolution, the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. The powers shall not be limited by any special powers given to the Directors by the Articles and a meeting of the Directors at which a quorum is present may exercise all the powers exercisable by the Directors. The Directors' powers to issue and buy-back shares, in force at the end of the year, are recorded in the Directors' Report. There are no agreements: i. to which the Company is a party that might affect its control following a takeover bid; and/or ii. between the Company and its Directors concerning compensation for loss of office. ## Listing Rule 9.8.4 Listing Rule 9.8.4 requires the Company to include certain information, more applicable for traditional trading companies, in a single identifiable section of the Annual Report or a cross reference table indicating where the information is set out. The Directors confirm that there are no disclosures to be made in this regard. ## Political Donations The Company does not make political donations. ## Global Greenhouse Gas ("GHG") Emissions for the Year Ended 30 September 2022 The Company is an investment company, with neither employees nor premises, nor has it any financial or operational control of the assets which it owns. Consequently, the Company consumed less than 40,000 kWh of energy during the year in respect of which the Directors' Report is prepared and therefore is exempt from the disclosures required under the Streamlined Energy and Carbon Reporting criteria. It has no GHG emissions to report from its operations nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013, including those within the Company's underlying investment portfolio. ## Taskforce for Climate Related Financial Disclosures ("TCFD") The Company notes the TCFD recommendations on climate related financial disclosures. The Company is an investment company and, as such, it is exempt from the Listing Rules requirement to report against the TCFD framework. ## Statement of Disclosure of Information to the Auditors So far as the Directors are aware, there is no relevant information (as defined in the Companies Act 2006) of which the Company's Auditors are unaware. The Directors have taken all steps they ought to have taken to make themselves aware of any relevant audit information (as defined) and to establish that the Auditors are aware of such information. The above confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006. ## GOING CONCERN The Company's portfolio, investment activity, the Company's cash balances and revenue forecasts, and the trends and factors likely to affect the Company's performance are reviewed and discussed at each Board meeting. The Board has considered a detailed assessment of the Company's ability to meet its liabilities as they fall due, including stress tests and reverse stress tests which modelled the effects of substantial falls in portfolio valuations and liquidity constraints on the Company's NAV, cash flows and expenses. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 37 ### GOVERNANCE REPORT OF THE DIRECTORS - CONTINUED Based on the information available to the Directors at the date of this report, including the results of these stress tests, the conclusions drawn in the Viability Statement in the Strategic Report on page 20, the Company’s cash balances and access to funding, the Directors are satisfied that the Company has adequate financial resources to continue in operation for at least the next 12 months and that, accordingly, it is appropriate to continue to adopt the going concern basis in preparing the Financial Statements. In reaching these conclusions and those in the Viability Statement, the stress testing conducted also featured consideration of the long-term effects of the continuing uncertainty created by the increase in global inflation and rising interest rates, together with the consequences of the war in Ukraine and the subsequent long-term effects on economies and international relations. By order of the Board Frostrow Capital LLP Company Secretary 7 December 2022 38 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT GOVERNANCE AUDITORS’ REPORT STATEMENTS INFORMATION ### GOVERNANCE ## Corporate Governance framework which enables risks to be assessed and managed; ## Corporate Governance to challenge constructively and scrutinise performance of all outsourced activities; and to review regularly the contracts, ## Statement performance and remuneration of the Company’s principal The Board has considered the principles and service providers and, in particular, the Portfolio Manager. recommendations of the AIC Code of Corporate Governance ### (the “AIC Code”). The AIC Code addresses all the principles set Board Committees out in the UK Corporate Governance Code (the “UK Code”), as The Directors have decided that, given the size of the Board, well as setting out additional principles and recommendations it is unnecessary to form separate Remuneration and on issues that are of specific relevance to investment Nomination Committees; the duties that would ordinarily fall to companies. those Committees are carried out by the Board as a whole. The Board considers that reporting against the principles ### The Audit Committee and recommendations of the AIC Code will provide the best The Audit Committee’s key responsibilities are to monitor information to shareholders and the Financial Reporting the integrity of the Annual Report and Financial Statements; Council has confirmed that by following the AIC Code, boards to oversee the risk and control environment and financial of investment companies will meet their obligations in relation reporting; and to review the performance of the Company’s to the UK Corporate Governance Code and paragraph 9.8.6 of external auditor. the UK Listing Rules. All Independent non-executive Directors are members of ## Statement of compliance the Committee. Although Simon Hayes is Chairman of the Board, in light of his continued independence and his valued The Company has complied with the recommendations of the contributions in Committee meetings, the Audit Committee AIC Code and the relevant provisions of the UK Code, except in considers it appropriate that he continues to be a member. relation to certain provisions relating to: Copies of the full terms of reference, which clearly define the • the role of the chief executive; responsibilities of the Audit Committee, can be obtained from • executive directors’ remuneration; and the Company Secretary. They will be available for inspection at the Annual General Meeting or at the offices of the Company • the need for an internal audit function. Secretary and can be found in the Corporate Information For the reasons set out in the AIC Code, and as explained in section on the Company’s website. the UK Code, the Board considers these provisions are not ### Board Meetings relevant to the position of the Company as it is an externally managed investment company. In particular, all of the Representatives of the Portfolio Manager, AIFM and Company Company’s day-to-day management and administrative Secretary are expected to be present at all meetings. The functions are outsourced to third parties. As a result, the primary focus at Board meetings is a review of investment Company has no executive directors, employees or internal performance and associated matters. The Chairman seeks to operations. Therefore, the Company has not reported further in encourage open debate within the Board and a supportive and respect of these provisions. co-operative relationship with the Company’s AIFM, Portfolio Manager, advisers and other service providers. The table overleaf sets out the number of formal Board and Committee ## Company meetings held during the year ended 30September 2022 and the number of meetings attended by each Director. In ### Company’s Purpose, Values and Strategy addition to the scheduled Board and Committee meetings, The Board assesses the basis on which the Company Directors attend ad hoc meetings to consider matters such generates and preserves value over the long term. The as the approval of regulatory announcements, management Strategic Report describes how opportunities and risks to accounts and interim dividends. the future success of the business have been considered and addressed, the sustainability of the Company’s business The Directors receive monthly portfolio update briefings from model and how its governance contributes to the delivery representatives of the Portfolio Manager and AIFM. of its strategy. The Company’s investment objective and investment policy are set out on pages 1 and 13. The Board’s key responsibilities are to set the Company's strategy, values and standards; to provide leadership within a controls FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 39 ### GOVERNANCE CORPORATE GOVERNANCE - CONTINUED the Company’s corporate governance structure, policy BOARD AUDIT COMMITTEE and procedures. Total number of meetings 5 3 • Decisions relating to the strategic objectives and overall Simon Hayes 5 3 management of the Company, including the appointment James Ashton 5 3 or removal of the AIFM , Portfolio Manager and other Kate Cornish-Bowden 5 3 service providers, and review of the Investment Policy. Sandra Kelly 5 3 • Matters relating to the Board and Board committees, including the terms of reference and membership of the Pars Purewal* N/A N/A committees, the appointment of Directors (including the Lorna Tilbian 5 3 Chairman) and the determination of Directors’ remuneration. Day-to-day operational and portfolio management is * Pars Purewal was appointed to the Board on 28 November 2022. delegated to Frostrow and Lindsell Train respectively. All of the Directors, with the exception of Pars Purewal, attended The Board takes responsibility for the content of communications the Annual General Meeting in February 2022. regarding major corporate issues, even if Frostrow or Lindsell Train acts as spokesperson. The Board is kept informed of ## Board relevant promotional material that is issued by Frostrow. ### Role of The Board Composition, Succession and Evaluation The role of the Board is to promote the long-term sustainable The Board seeks to ensure that it is well-balanced and success of the Company, generating value for shareholders refreshed regularly by the appointment of new directors with and contributing to wider society. the skills and experience necessary, in particular, to replace those lost by directors’ retirements. The Board further ensures ### Board Leadership and Purpose that it is comprised of members who collectively: Responsibility for effective governance and for the overall i. display the necessary balance of professional skills, management of the Company’s affairs lies with the Board. The experience, length of service and industry/Company governance framework of the Company reflects the fact that knowledge; and as an investment company it outsources company secretarial, administration, marketing, portfolio and risk management ii. are fit and proper to direct the Company’s business with services to Frostrow. Portfolio management is then delegated prudence and integrity; and provide policy guidance on to Lindsell Train by Frostrow. the structure, size and composition of the Board (and its Committee) and the identification and selection of suitable ### Culture candidates for appointment to the Board (and its Committee). The Board seeks to establish and maintain a corporate culture The composition and skills of the Board are reviewed annually characterised by fairness in its treatment of the Company’s and at such other times as circumstances may require. service providers, whose efforts are collectively directed towards delivering returns to shareholders in line with the ### Diversity Policy Company’s purpose and objectives. It is the Board’s belief The Board supports the principle of boardroom diversity and that this contributes to the greater success of the Company, therefore the Company’s Diversity Policy applies to both the as well as being an appropriate way to conduct relations Board and Audit Committee. between parties engaged in a common purpose. The Company’s policy is that the Board should be comprised ### Matters Reserved For Decision By The Board of directors who collectively display the necessary balance of The Board has adopted a schedule of matters reserved for its professional skills, experience, length of service and industry decision. This includes, inter alia, the following: knowledge and that appointments to the Board should be made on merit, against objective criteria, including diversity • Requirements under the Companies Act 2006, including in its broadest sense. The objective of the policy is to have a approval of the half yearly and annual financial broad range of approaches, backgrounds, skills, knowledge statements, recommendation of any dividend, the and experience represented on the Board. The Board believes appointment or removal of the Company Secretary, and that this will make the Board more effective at promoting determining the policy on share issuance and buy-backs. the long-term sustainable success of the Company and • Matters relating to certain Stock Exchange requirements generating value for all shareholders by ensuring there is and announcements, the Company’s internal controls, and a breadth of perspectives among the Directors and the challenge needed to support good decision-making. 40 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION To this end achieving a diversity of perspectives and backgrounds on the Board during the year has been, and will continue to be, a key consideration in any Director search process. The gender balance of three men and three women, as at the date of the Annual Report, exceeds the recommendations of Lord Davies' reports on Women on Boards. The Board is aware that gender representation objectives have been set for FTSE 350 companies and that targets concerning ethnic diversity have been recommended. The Review set a target for each FTSE 100 Board to have at least one director of colour by 2021 and for each FTSE 250 Board to have the same by 2024. The Board will not display any bias for age, gender, race, sexual orientation, religion, ethnic or national origins, disability, or educational, professional or socio-economic background in considering the appointment of its Directors. ### Board Diversity The Board is supportive of the FCA's recently updated Listing Rules (LR 9.8.6R(9)) to encourage greater diversity on listed company boards and has implemented the FCA's disclosure requirements applying to financial years starting on or after 1 April 2022. The Board has chosen to align its diversity reporting reference date with the Company's financial year end and proposes to maintain this alignment for future reporting periods. The Company has met two of the three targets on board diversity as at its chosen reference date, 30 September 2022: - (i) at least 40% of the individuals on its board of directors are women; and - (ii) at least one of the following senior positions on its board of directors is held by a woman: - (A) the chair; - (B) the chief executive; - (C) the senior independent director; or - (D) the chief financial officer. As at 30 September 2022, the Company did not meet the target of at least one individual on its board of directors being from a minority ethnic background. The relatively small size of the Company's Board, and therefore more infrequent vacancies and opportunities for recruitment, make achieving diversity on the Board a more challenging, but ongoing process. As succession planning of the Board progresses over future years, the Company will continue to strive for increased diversity on its Board through its Diversity Policy. Further details on the Company's appointment process can be found under Appointments to the Board on the following page. This includes engaging recruitment agencies that sign up to recognised, codes of conduct, which include principles on diversity with the aim of increasing board diversity integrated through their search processes. As required under LR 9.8.6R(10), further detail in respect of the three targets outlined above as at 30 September 2022 is disclosed in the tables below. | | NUMBER OF BOARD MEMBERS | PERCENTAGE OF THE BOARD | NUMBER OF SENIOR POSITIONS ON THE BOARD (CHAIN AND 100)* | | --- | --- | --- | --- | | Men | 2 | 40% | 1 | | Women | 3 | 60% | 1 | | Other | – | – | – | | Not specified/prefer not to say | – | – | – | | | NUMBER OF BOARD MEMBERS | PERCENTAGE OF THE BOARD | NUMBER OF SENIOR POSITIONS ON THE BOARD (CHAIN AND 100)* | | --- | --- | --- | --- | | White British or other White (including minority-white groups) | 5 | 100% | 2 | | Mixed/Multiple Ethnic Groups | – | – | – | | Asian/Asian British | – | – | – | | Black/African/Caribbean/Black British | – | – | – | | Other ethnic group, including Arab | – | – | – | | Not specified/prefer not to say | – | – | – | * As an externally managed investment company, the Company has no executive directors, employees or internal operations. The Board has therefore excluded the columns relating to executive management from the tables above. In addition, the senior positions on the Company's Board of (B) the chief executive and (D) the chief financial officer are not applicable to the Company. In the absence of the aforementioned rules, the board considers the Chair of the Audit Committee to also be a senior position on the Board. Sandra Kelly currently serves as both Senior Independent Director and Chair of the Audit Committee. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 4 ### GOVERNANCE CORPORATE GOVERNANCE - CONTINUED In order to collect the data required to fulfil the disclosures 1. For the purposes of the Listing Rules disclosures, how in the tables above and below, the Board agreed that should you be categorised; and self-reporting by the individuals concerned was the most 2. Please advise your ethnicity. appropriate method. Thedata was collected anonymously The changes in Board composition that have occurred by the Company Secretary using a web-based survey where between the reference date and the date on which the Annual the following two questions were posed, and individuals were Report was approved are disclosed in the tables below. reminded that ‘Not specified / prefer not to say’ could be recorded in response: NUMBER OF PERCENTAGE OF NUMBER OF SENIOR POSITIONS ON THE BOARD MEMBERS THE BOARD BOARD (CHAIR AND SID)* Men 3 50% 1 Women 3 50% 1 Other – – – Not specified/prefer not to say – – – NUMBER OF PERCENTAGE OF NUMBER OF SENIOR POSITIONS ON THE BOARD MEMBERS THE BOARD BOARD (CHAIR AND SID)* White British or other White (including minority-white groups) 5 83% 2 Mixed/Multiple Ethnic Groups – – – Asian/Asian British 1 17% – Black/African/Caribbean/Black British – – – Other ethnic group, including Arab – – – Not specified/prefer not to say – – – * As an externally managed investment company, the Company has no executive directors, employees or internal operations. The Board has therefore excluded the columns relating to executive management from the tables above. In addition, the senior positions on the Company’s Board of (B)the chief executive and (D) the chief financial officer are not applicable to the Company. In the absence of the aforementioned roles, the board considers the Chair of the Audit Committee to also be a senior position on the Board. Sandra Kelly currently serves as both Senior Independent Director and Chair of the Audit Committee. ### Policy On Director Tenure When considering new appointments, the Board endeavours to ensure that it has the capabilities required to be effective The tenure of each non-executive Director, including the and oversee the Company’s strategic priorities. This will Chairman, is not ordinarily expected to exceed nine years. include an appropriate range, balance and diversity of skills, However, the Board has agreed that the tenure of the Chairman experience and knowledge. The Company is committed to may be extended for an agreed time provided such an ensuring that any vacancies arising are filled by the best extension is conducive to the Board’s overall orderly succession. qualified candidates. The Board believes that this more flexible approach to the tenure Subject to there being no conflict of interest, all Directors are of the Chairman is appropriate in the context of the regulatory entitled to vote on candidates for the appointment of new rules that apply to investment companies, which ensure that the Directors and to recommend to shareholders the re-election Chairman remains independent after appointment, while being of Directors at the Annual General Meeting. The Chairman consistent with the need for regular refreshment and diversity. will not chair the meeting when the Board is dealing with the appointment of his successor. ### Appointments To The Board The rules governing the appointment and replacement of As part of the process to appoint Pars Purewal, the Board Directors are set out in the Company’s Articles of Association engaged the services of specialist recruitment consultants, and the aforementioned succession planning policy. Where Trust Associates Limited, who prepared a list of potential the Board appoints a new Director during the year or after the candidates for consideration by the Board. A short list was year end and before the notice of annual general meeting is then arrived at, the candidates were interviewed, and Pars published, that Director will stand for election by shareholders Purewal was subsequently appointed. at the next Annual General Meeting. 42 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT GOVERNANCE AUDITORS’ REPORT STATEMENTS INFORMATION Trust Associates Limited are engaging with The Department • holding meetings with the other non-executive Directors for Business, Energy & Industrial Strategy (“BEIS”) in order without the Chairman being present, on such occasions as to become signatories of The Standard Voluntary Code of necessary; Conduct for Executive Search Firms. The Code of Conduct aims • carrying out succession planning for the Chairman’s role; to broaden ethnic diversity and gender balance on boards • working with the Chairman, other Directors and through executive search firms’ commitment throughout their Shareholders to resolve major issues; and recruitment processes, such as initial planning stages, long/ short listing and candidate support. • being available to Shareholders and other Directors to address any concerns or issues they feel have not been Trust Associates Limited has no other connection with the adequately dealt with through the usual channels of Company or the individual directors. communication (i.e. through the Chairman or the Portfolio Manager). ### Induction/Development ### New appointments to the Board are provided with a full Company Secretary induction programme. The programme covers the Company’s The Directors have access to the advice and services of a investment strategy, policies and practices. New Directors are specialist company secretary, who is responsible for advising also given key information on the Company’s regulatory and the Board on all governance matters. The Company Secretary statutory requirements as they arise including information ensures governance procedures are followed and that the on the role of the Board, matters reserved for its decision, the Company complies with applicable statutory and regulatory terms of reference for the Board committee, the Company’s requirements. corporate governance practices and procedures and the ### latest financial information. Directors are encouraged to Directors’ Interests participate in training courses where appropriate. The beneficial interests of the Directors in the Company are set out on page 48. ### Division of Responsibilities ### Responsibilities of the Chairman Directors’ Independence The Chairman’s primary role is to provide leadership to the As at the date of the Annual Report, the Board consists of Board, assuming responsibility for its overall effectiveness in sixnon-executive Directors, each of whom is independent of directing the company. The Chairman is responsible for: Frostrow and Lindsell Train. No member of the Board has been • ensuring that the Board is effective in its task of setting an employee of the Company, Frostrow, Lindsell Train or any of and implementing the Company’s direction and strategy, its service providers. Accordingly, the Board considers that all taking the chair at general meetings and Board meetings, the Directors are independent and there are no relationships conducting meetings effectively and ensuring all Directors or circumstances which are likely to affect or could appear to are involved in discussions and decision-making; affect their judgement. • setting the agenda for Board meetings and ensuring the The Chairman is entitled to a seat on the board of the Directors receive accurate, timely and clear information for Company’s AIFM by virtue of the Company’s minority decision-making; partnership interest in Frostrow. It is a non-executive position and therefore the Board does not believe that this • taking a leading role in determining the Board’s compromises his independence from the Company. At this composition and structure, overseeing the induction of time the Board has decided the Chairman will not take a seat new Directors and the development of the Board as a on the board of Frostrow, but continues to receive updates on whole, leading the annual board evaluation process and the business as part of the review of Frostrow's valuation. assessing the contribution of individual Directors; ### • supporting and also challenging the AIFM and the Portfolio Directors' Other Commitments Manager (and other suppliers where necessary) ensuring Each of the Directors assessed the overall time commitment effective communications with shareholders and, where of their external appointments and it was concluded that appropriate, other stakeholders; and they have sufficient time to discharge their duties. When • engaging with shareholders to ensure that the Board has a appointing new Directors, the Board takes into account other clear understanding of shareholder views. demands on the Directors’ time. Any additional external appointments are not undertaken without prior approval of Responsibilities of the Senior Independent Director (“SID”) the Board. The SID serves as a sounding board for the Chairman and ### acts as an intermediary for the other Directors and the Board Evaluation Shareholders. The SID is responsible for: During the year the performance of the Board, its committee • working closely with the Chairman and providing support; and individual Directors was evaluated through a formal • leading the annual assessment of the performance of the assessment process led by the Chairman. The performance of Chairman; FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 43 ## GOVERNANCE CORPORATE GOVERNANCE - CONTINUED the Chairman was evaluated by the other Directors under the leadership of Sandra Kelly as Senior Independent Director. The Chairman is satisfied that the structure and operation of the Board continues to be effective and relevant and that there is a satisfactory mix of skills, experience, length of service and knowledge of the Company. The Board has considered the position of all of the Directors, and believes that it would be in the Company's best interests to propose them for re-election by shareholders at the 2023 Annual General Meeting. The relevant experience of each of the Directors is detailed on pages 32 to 33 and on page 8 of the Notice of ADM. ### Independent Professional Advice The Board has formalised arrangements under which the Directors, in the furtherance of their duties, may seek independent professional advice at the Company's expense. ## Risk and Internal Control The Statement of Directors' Responsibilities on page 55 describes the Directors' responsibility for preparing this report. The Audit Committee Report, beginning on page 51, explains the work undertaken to allow the Directors to make this statement and to apply the going concern basis of accounting. It also sets out the main roles and responsibilities as well as the work of the Audit Committee and describes the Directors' review of the Company's risk management and internal control systems. A description of the principal risks facing the Company and an explanation of how they are being managed is provided in the Strategic Report on pages 16 to 19. ## Stakeholders As an externally managed investment company, the Company does not have employees. Its main stakeholders therefore comprise its shareholders and a small number of service providers. ### Relationship With Other Service Providers The Board has delegated a wide range of activities to external agents, in addition to the Portfolio Manager. These services include investment administration, management and financial accounting, Company Secretarial and certain other administrative requirements and registration services. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of the services offered, including the control systems in operation in so far as they relate to the affairs of the Company. Further information on the service providers is contained within the Strategic Report on pages 29 to 31. The Board scrutinises the performance of the AIFM and Portfolio Manager at each meeting and reviews the contractual relationships with them both at least annually. Further information on the AIFM and Portfolio Manager fees are contained within the Strategic Report on page 30 and note 3 on page 70. ### Exercise Of Voting Powers The Board has delegated authority to Lindsell Train (as Portfolio Manager) to cast its vote in relation to the shares owned by the Company. Please refer to page 29 for further information. ### Nominee Share Code Where shares in the Company are held via a nominee company, the Company undertakes: - to provide the nominee company with multiple copies of shareholder communications; so long as an indication of quantities has been provided in advance; and - to allow investors holding shares through a nominee company to attend general meetings. Nominee companies are encouraged to provide the necessary authority to underlying shareholders to attend the Company's Annual General Meeting and vote via proxy. ### Reporting on Engagement with Stakeholders The AIC Code requires directors to explain their statutory duties as stated in sections 171-177 of the Companies Act 2006. Under section 172, directors have a duty to promote the success of the Company for the benefit of its members as a whole and in doing so have regard to the consequences of any decisions in the long term, as well as having regard to the Company's stakeholders amongst other considerations. The Board's report on its compliance with Section 172 of the Companies Act 2006 is contained within the Strategic Report on pages 22 to 25. ### Annual General Meeting The Annual General Meeting will be held at 12 noon on Tuesday, 17 January 2023. The formal notice of the Annual General Meeting is set out in the accompanying circular to Shareholders, together with explanations of the resolutions and arrangements for the meeting. By order of the Board **Frostrow Capital LLP** Company Secretary 7 December 2022 44 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION GOVERNANCE # Directors' Remuneration Report ## STATEMENT BY THE CHAIRMAN OF THE BOARD On behalf of the Board, I am pleased to present the Directors' Remuneration Report to shareholders. This report has been prepared in accordance with the requirements of Section 421 of the Companies Act 2006 and the Enterprise and Regulatory Reform Act 2013. An Ordinary Resolution for the approval of this report will be put to shareholders at the Company's forthcoming Annual General Meeting. The Directors' Remuneration Policy Report, which is separate to this report, can be found on pages 49 and 50. The law requires the Company's Auditors to audit certain disclosures within this report. Where disclosures have been audited they are indicated as such and the Auditors' opinion is included in their report to members on pages 56 to 62. Due to the Company's size and to avoid the need to establish a separate Remuneration Committee, the Company's remuneration function is carried out by the full Board under my Chairmanship. The Board considers the framework for the remuneration of the Directors on an annual basis. It reviews the ongoing appropriateness of the Company's remuneration policy and the individual remuneration of Directors by reference to the activities of the Company and comparison with other companies of a similar structure and size. This is in line with the AIC Code. The Directors exercise independent judgement and discretion when authorising remuneration outcomes, taking into account the Company's performance together with wider circumstances. The Board considers the level of Directors' fees annually and the fees had remained unchanged since 1 October 2020. At the most recent review held in September 2022, it was agreed that the Directors' fees with effect from 1 October 2022 would be as follows: The Chairman – £41,000 (2021: £40,000) The Chair of the Audit Committee – £33,000 (2021: £32,000) Other Directors – £27,000 (2021: £26,000). ## Table of Directors' Remuneration Components from 1 October 2022 | COMPONENT | ANNUAL RATE (£) | PURPOSE AND OPERATION | | --- | --- | --- | | Basic Annual Fee: Each Director | £27,000 | In recognition of the time and commitment required by Directors of public companies as well as the responsibilities of the role. The basic fee is reviewed against fees paid by peer companies to ensure that it reflects fair and adequate compensation for the role. | | Additional Fee: Chairman of the Board | £14,000 | For the additional time, commitment and responsibility required on the Company's business issues, and providing leadership as Chairman of the Board. | | Additional Fee: Audit Committee Chairman | £5,000 | For the greater time required on the financial and reporting affairs of the Company. | | Additional Fee: Each Director | Variable | In the event that the Company undertakes a complex or large project, such additional fee as will fairly compensate for the additional time and commitment required by a Director. | | Expenses: Each Director | Variable | Reimbursement of expenses properly incurred by Directors in attending meetings and/or otherwise in the performance of their duties to the Company. | No advice from remuneration consultants was received during the year under review although a review of remuneration of the Company's peer group of investment companies was undertaken along with research by Nurale Limited and Trust Associates Limited which indicated that the Company's remuneration levels are in line with the market. ### Directors' Fees The Directors are remunerated exclusively by fixed fees in cash and do not receive bonus payments, pension contributions or other benefits from the Company. Directors are not offered options to acquire shares in the Company. All Directors are entitled to the reimbursement of reasonable out of pocket expenses incurred by them in order to perform their duties as directors of the Company. As noted in the Strategic Report, all of the Directors are non-executive and therefore there is no Chief Executive Officer ("CEO"). The Company does not have any employees. There is therefore no CEO or employee information to disclose. No payments were made to former Directors of the Company other than disclosed in the table shown on page 46. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 45 ### GOVERNANCE DIRECTORS’ REMUNERATION REPORT - CONTINUED At the last AGM held in February 2022 the result in respect of the resolution to approve the Directors’ Remuneration Report was as follows: Remuneration report VOTES CAST FOR VOTES CAST AGAINST VOTES WITHHELD* Votes cast 65,858,487 182,176 110,701 % of votes cast 99.72% 0.28% * A vote Withheld is not a vote in law and is not counted in the calculation of the proportion of votes “For” and “Against” a resolution. Shareholder approval of the Directors’ Remuneration Report will be sought again at the AGM to be held in January 2023. ### Single total figure of remuneration for the year ended 30 September 2022 (audited) | | | | | † | | | | | † | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | TAXABLE | | | TOTAL | | TAXABLE | | | | | | DATE OF | FEES | BENEFITS | | | FEES | FEES | BENEFITS | | | TOTAL FEES | | | APPOINTMENT | 2022 | | 2022 | | 2022 | 2021 | | 2021 | | | 2021 | 1 Simon Hayes 29 June 2015 £40,000 – £40,000 £34,377 – £34,377 James Ashton 14 October 2020 £26,000 – £26,000 £25,133 – £25,133 Kate Cornish-Bowden 26 October 2017 £26,000 – £26,000 £26,000 – £26,000 2 Sandra Kelly 9 October 2019 £32,000 – £32,000 £32,000 – £32,000 Lorna Tilbian 26 October 2017 £26,000 – £26,000 £26,000 – £26,000 3 Anthony Townsend 1 February 2005 – – – £15,333 – £15,333 £150,000 – £150,000 £158,843 – £158,843 1 Chairman of the Board with effect from 17 February 2021 and Senior Independent Director until 17 February 2021 2 Appointed Chair of the Audit Committee on 12 May 2020 and Senior Independent Director with effect from 17 February 2021 3 Chairman of the Board until his retirement on 17 February 2021 † Taxable expenses primarily comprise travel and associated expenses incurred by the Directors in attending Board and Committee meetings in London Fees have been pro-rated where a change takes place during a financial year. No fees were paid to third parties in respect of services provided. The table below contains the annual percentage change in remuneration over the five financial years prior to the current year in respect of the various director roles. | | | YEAR TO | | | YEAR TO | | YEAR TO | | | YEAR TO | | YEAR TO | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Fee Rates: | 30 SEPT 2018 | | | 30 SEPT 2019 | | 30 SEPT 2020 | | | 30 SEPT 2021 | | 30 SEPT 2022 | | | | | | £34,500 | | | £37,500 | | £37,500 | | | £40,000 | | £40,000 | | | Chairman | | | 0.0% | | +8.7% | | | 0.0% | | +6.7% | | | 0.0% | | | | £27,250 | | | £30,000 | | £30,000 | | | £32,000 | | £32,000 | | | Chair of the Audit Committee | | | 0.0% | | +10.1% | | | 0.0% | | +6.7% | | | 0.0% | | | | £23,000 | | | £24,500 | | £24,500 | | | £26,000 | | £26,000 | | | Directors' fees | | | 0.0% | | +6.5% | | | 0.0% | | +6.1% | | | 0.0% | Additional fees – – – – – 46 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION ### Loss of office Directors do not have service contracts with the Company but are engaged under letters of appointment. These specifically exclude any entitlement to compensation upon leaving office for whatever reason. ### Share Price Return The chart below illustrates the shareholder return for the ten years to 30 September 2022 for a holding in the Company's shares as compared with the FTSE All-Share Index, which the Board has adopted as the measure for both the Company's performance and that of the Portfolio Manager. ### TEN YEARS TOTAL SHAREHOLDER RETURN TO 30 SEPTEMBER 2022 ![img-4.jpeg](img-4.jpeg) Source: Morningstar Released to 100 at September 2012 ### RELATIVE COST OF DIRECTORS' REMUNERATION The bar chart below shows the comparative cost of Directors' fees compared with the level of dividend distribution and buy-backs in respect of the financial years ending 30 September 2021 and 2022. ![img-5.jpeg](img-5.jpeg) Source: Frostrow Capital LLP FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 47 ### GOVERNANCE DIRECTORS’ REMUNERATION REPORT - CONTINUED ### Directors’ Interests in Ordinary Shares The Directors’ interests in the share capital of the Company are shown in the table below: NUMBER OF ORDINARY SHARES OF 25p HELD | | | (AUDITED) | | VALUATION* | | | | (AUDITED) | | VALUATION* | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 30 SEPTEMBER 2022 | | | 30 SEPTEMBER 2022 | | | 30 SEPTEMBER 2021 | | | 30 SEPTEMBER 2021 | | | | | SHARES HELD | | | | £'000 | | SHARES HELD | | | | £’000 | Simon Hayes (Chairman) 150,000 1,200 100,000 876 James Ashton 1,027 8 1,008 9 Kate Cornish-Bowden 9,061 72 8,061 71 Sandra Kelly 8,096 65 5,822 51 ^ Pars Purewal N/A N/A N/A Lorna Tilbian 11,500 92 – – Total 179,684 1,437 114,891 1,007 * The Company’s share price as at 30 September 2022 was 800.0p (2021: 876.0p) ^ Pars Purewal was appointed as a Director on 28 November 2022 None of the Directors was granted or exercised rights over shares during the year. None of the Directors has any contract (including service contracts) with the Company. There are no provisions included within the Company’s Articles of Association which require Directors to hold shares in the Company. ### Other Interests in Ordinary Shares Interests in the share capital of the Company are shown in the table below: NUMBER OF ORDINARY SHARES OF 25p HELD | | | | VALUATION* | | | | | VALUATION* | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 30 SEPTEMBER 2022 | | 30 SEPTEMBER 2022 | | | 30 SEPTEMBER 2021 | | 30 SEPTEMBER 2021 | | | | | SHARES HELD | | | £’000 | | SHARES HELD | | | £’000 | Alastair Smith (Managing Partner of Frostrow) 61,471 492 60,266 528 Nick Train (Portfolio Manager) 4,602,639 36,821 3,656,710 32,033 * The Company’s share price as at 30 September 2022 was 800.0p (2021: 876.0p) Between 1 October 2022 and 5 December 2022, being the latest practicable date before the publication of the Annual Report, the Portfolio Manager acquired a further 127,000 Ordinary Shares. In addition, as part of respective dividend reinvestment plans, James Ashton acquired a further 11 Ordinary Shares and Simon Hayes acquired a further 1,778 Ordinary Shares. No Director held any interests in the issued stock or shares of the Company other than as stated above. ### Annual Statement On behalf of the Board I confirm that the Remuneration Policy, set out on pages 49 and 50, and this Remuneration Report summarise, as applicable, for the year ended 30 September 2022: (a) the major decisions on Directors’ remuneration; (b) any substantial changes relating to Directors’ remuneration made during the year; and (c) the context in which the changes occurred and decisions were taken. Simon Hayes Chairman 7 December 2022 48 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT GOVERNANCE AUDITORS’ REPORT STATEMENTS INFORMATION ### GOVERNANCE ## Directors’ Remuneration ## Policy The Company follows the recommendations of the AIC Code that Directors’ remuneration should reflect their duties, responsibilities and the value of their time spent. The Board’s policy is that the remuneration of the Directors should reflect the experience of the Board as a whole, and is determined with reference to comparable organisations and appointments. There are no performance conditions attaching to the remuneration of the Directors as the Board does not believe that this is appropriate for non-executive Directors. This policy is reviewed annually and it is intended that it will continue for the year ending 30 September 2023 and for subsequent financial years. Shareholder approval of the Directors’ Remuneration Policy was last sought at the AGM held in February 2020, the result in respect of the resolution was as follows: VOTES CAST FOR VOTES CAST AGAINST VOTES WITHHELD* Votes cast 65,195,445 107,706 97,580 % of votes cast 99.84% 0.16% * Votes withheld are not votes by law and are therefore not counted in the calculation of votes for or against a resolution The Board has not subsequently received any views from opposing or abstaining shareholders in respect of the levels of Directors’ remuneration following this vote. Shareholder approval of the Directors’ Remuneration Policy will be sought again at the AGM to be held in January 2023. The fees for the Directors are determined within the limits set out in the Company’s Articles of Association, the maximum aggregate limit currently being £200,000 per annum, and Directors are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits. Directors are entitled to claim reasonable expenses from the Company in relation to the performance of their duties. The current and projected Directors’ fees for 2023 are shown in the following table. The Company does not have any employees. | | | PROJECTED FEES | | | CURRENT FEES | | | --- | --- | --- | --- | --- | --- | --- | | | DATE OF | | YEAR ENDING | | YEAR ENDED | | | APPOINTMENT | | | 30 SEPTEMBER | | 30 SEPTEMBER | | | TO THE BOARD | | | | 2023 | | 2022 | Simon Hayes (Chairman) 29 June 2015 £41,000 £40,000 James Ashton 14 October 2020 £27,000 £26,000 Kate Cornish-Bowden 26 October 2017 £27,000 £26,000 Sandra Kelly (Chair of the Audit Committee and SID) 9 October 2019 £33,000 £32,000 Pars Purewal 28 November 2022 £22,812 – Lorna Tilbian 26 October 2017 £27,000 £26,000 £177,812 £150,000 The current level of Directors’ fees will not be reviewed until at least September 2023. Any new Director being appointed to the Board who has not been appointed as either Chairman of the Board or as the Chair of the Audit Committee will, under the current level of fees, receive £27,000 per annum. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 49 ### GOVERNANCE DIRECTORS’ REMUNERATION POLICY - CONTINUED ### DIRECTORS’ REMUNERATION YEAR ENDED ### 30 SEPTEMBER 2022 None of the Directors has a service contract. The terms of their appointment provide that Directors shall retire and be subject to election at the first Annual General Meeting after their appointment and to re-election annually thereafter. The terms also provide that a Director may be removed without notice and that compensation will not be due on leaving office. Theterms and conditions of the Directors’ appointments are set out in formal letters of appointment which are available forreview on request from the Company Secretary at cosec@frostrow.com and will be available for 15 minutes before, and during, the forthcoming AGM. ### CONSIDERATION OF SHAREHOLDERS’ VIEWS In accordance with best practice recommendations the Board will put the Remuneration Policy to shareholders at the Annual General Meeting at least once every three years. Approval of this policy was last granted by shareholders at the Annual General Meeting held in February 2020 and approval is sought accordingly at the Annual General Meeting to be held in January 2023. Any feedback received from Shareholders is considered as part of the Board’s annual review of remuneration. In respect of the year under review no feedback has been received from shareholders in relation to remuneration. 50 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT GOVERNANCE AUDITORS’ REPORT STATEMENTS INFORMATION ### GOVERNANCE ## Audit Committee Report On behalf of the Board, I am pleased to present the Audit 5. To consider any non-audit work to be carried out by the Committee’s Report for the year ended 30 September 2022. Auditors. The Committee reviews the need for non-audit services in accordance with the Company’s non-audit ### ROLE AND COMPOSITION services policy. The Audit Committee (the "Committee") comprises all the ### MEETINGS Directors of the Company. The Committee held three meetings during the financial The role of the Committee is to ensure that shareholder year and meeting attendance is shown on page 40. interests are properly protected in relation to the application Representatives of Frostrow acting as AIFM attended each of financial reporting and internal control principles, risk of the Committee’s meetings and reported as to the proper management and to assess the effectiveness of the audit. conduct of business in accordance with the regulatory The Committee’s role and responsibilities are set out in full in environment in which the Company and the AIFM operate. its terms of reference which are available in the Corporate The Committee also met the Auditors twice during the Information section of the Company’s website. year and once, following completion of the audit, without The Committee, as a whole, has competence relevant to representatives of the AIFM being present. the investment company sector with Committee members ### having a range of financial and investment experience. The SIGNIFICANT MATTERS CONSIDERED BY THE ### requirement for at least one member of the Committee to AUDIT COMMITTEE AND THE BOARD DURING have recent and relevant experience is satisfied by myself ### THE YEAR being a chartered accountant. In summary, additional to the Committee's core responsibilities, ### RESPONSIBILITIES the main matters arising in relation to 2022 were: • The Committee is aware of the increase in fraudulent As Chair of the Committee I can confirm that the Committee’s activity over the last three years exploiting organisations, main responsibilities during the year and how it fulfilled them is as a result of the COVID-19 pandemic, together with set out below: the cost of living crisis. Following an assessment and 1. To review the Company’s half year and annual identification of types of fraud that the Company could financial statements together with announcements be exposed to, it was believed that the Company’s key and other filings relating to the financial performance of service providers had adequate, robust controls in place to the Company and issuance of the Company’s shares. mitigate the event of any fraudulent activity. In particular, the Committee considered whether • The Committee reviewed an assessment of the impact the Financial Statements were fair, balanced and of climate changed and the weighted average carbon understandable, allowing shareholders to assess the intensity of the portfolio companies. The Committee note Company’s strategy, investment policy, business model, the key topics of engagement undertaken by Lindsell Train financial performance and financial position at each with each of the portfolio companies and that assessment period end. identified that the Company has a significantly lower 2. To review the risk management and internal control weighted average carbon intensity than its comparable processes of the Company and its key service providers. benchmark. Please refer to page 27 for further information. As part of this review the Committee reviewed the • The Committee noted the consultation published by the appropriateness of the Company’s anti-bribery and Department of Business, Energy and Industrial Strategy on corruption policy. During the year the Committee also restoring trust in audit and corporate governance, and will reviewed the internal controls in place at the Company’s continue to monitor the timescale for implementation of AIFM, its Portfolio Manager, its Registrar and its Depositary these proposals. and undertook a full review of the Company's risk register. • In light of the relative simplicity of the operations and Further details can be found on page 29. the use of independent external consultants, who report 3. To ensure compliance with Section 1158 of the directly to the Committee, to advise on regulatory Corporation Tax Act 2010. The Committee obtained compliance and adherence to internal procedures, it was confirmation that the Company continues to meet the concluded that no internal audit function was required. regulatory requirements. These matters were discussed by the Committee and any recommendations were fully considered and 4. To recommend the appointment of external Auditors recommendations were then made to the Board. and agree the scope of their work and their remuneration, reviewing their independence and the effectiveness of the audit process. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 51 ### GOVERNANCE AUDIT COMMITTEE REPORT - CONTINUED ### Internal Controls and Risk Management ANNUAL REPORT AND FINANCIAL ### The Directors have identified(StrategicReportpages 16 STATEMENTS to19) sixmain areas of risk and have identified the actions to The Annual Report and the Financial Statements as a whole, evaluate and manage the specific risks in those six areas: are the responsibility of the Board. The Directors’ Responsibility • Corporate Strategy; Statement is contained on page 55. The Board looks to the Committee to advise them in relation to the Financial • Investment Strategy and Activity; Statements both as regards their form and content, and on • Shareholder Relations and Corporate Governance; any specific areas requiring judgement. • Operational; Although the Committee did not identify any significant • Financial; and issues as part of its review of the Annual Report and Financial • Accounting, Legal and Regulatory. Statements, it paid particular attention to: The Committee reviews the various actions taken and satisfies ### Accounting Policies itself that they are sufficient: in particular the Committee reviews the Company’s schedule of key risks at each meeting The accounting policies, as set out on pages 67 to 69, have and requires amendments to both risks and mitigating actions been applied throughout the year. In light of there being if necessary. no unusual transactions during the year or other possible reasons, the Committee found no cause to change any of In preparation for the Audit Committee meeting held in the policies although, as trailed in the 2021 Annual Report, the September 2022, each Director, Lindsell Train Limited as allocation of expenses between capital and revenue was Portfolio Manager and Frostrow Capital LLP as AIFM were each changed following a detailed review by the Committee in2021. asked to independently list what they considered to be the greatest five risks that could impact the sustainable success of The Company’s previous approach was to charge 67% the Company, without reference to the Company’s existing risk of management fees and finance costs to capital and register. During the Audit Committee meeting the Committee 33% to revenue. Following review it was agreed that from were invited to consider the risks identified by the individuals 1 October 2021 the Company’s allocation of expenses policy and whether these should be added to the Company’s risk be amended to reflect that 75% of management fees and register, and if so, consider the appropriate scoring to be finance costs would be charged to capital and 25% to applied. The purpose of the exercise was to reassess the revenue. The revised allocation was in line with the AIC’s principal risks and identify any new, emerging risks and to statement of recommended practice which recommends take any necessary action to mitigate their potential impact. that an investment trust recognises the allocation of expenses As a result of this exercise the Company’s existing risks were between income and capital that reflects returns over the broadened to include the new emerging risk factors that were longer term. identified by the Committee: further information can be found ### in the Strategic Report on page 19. Existence of investments During the year the Committee met with representatives of The Board has overall responsibility for the Company’s risk the Depositary who provided reassurance concerning the management and systems of internal controls and for safekeeping of the company’s investments. reviewing their effectiveness. In common with the majority of investment companies, investment management, accounting, ### Going Concern company secretarial and custodial services have been Having considered the Company’s financial position, and delegated to third parties. The effectiveness of the internal reviewed stress and reverse stress tests, the Committee controls is assessed on a continuing basis by the AIFM, the satisfied itself that it is appropriate for the Board to present the Portfolio Manager and the Depositary. Each maintains its own Financial Statements on the going concern basis. systems and prepares independently audited internal control reports. The Committee receives these audited reports and ### Interest in unquoted investment additionally receives regular reports from these third parties. The Committee is satisfied that appropriate systems have The Committee reviewed the valuation methodology of the been in place for the year under review. Company’s partnership interest in Frostrow Capital LLP. The valuation, based upon a multiple of earnings, was accepted. 52 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT GOVERNANCE AUDITORS’ REPORT STATEMENTS INFORMATION ### Internal audit Independence and Effectiveness Since the Company delegates its day to day operations to In order to fulfil the Committee’s responsibility regarding the third parties and has no employees, the Committee again independence of the Auditors, the Committee reviewed: determined that there is no requirement for an internal audit • the senior audit personnel in the audit plan, function. • the Auditors’ arrangements concerning potential conflicts ### Long-Term Viability of interest, The Committee satisfied itself that it is appropriate for the • the statement by the Auditors that they remain Board to make the statement on page 20 that it has a independent within the meaning of the regulations and reasonable expectation that the Company will be able to their professional standards, and continue its operations over the next five years. • the extent of any non-audit services in line with the ### Recognition of Income from Investments Company’s policy. The Committee received assurance that all dividends In order to consider the effectiveness of the audit process, the receivable, including special dividends, had been accounted Committee reviewed: for appropriately. • the Auditors’ fulfilment of the agreed audit plan, ### Valuation of Investments • the report arising from the audit itself, and The Committee reviewed the robustness of the AIFM’s • feedback from the AIFM on the conduct of the audit. processes in place for recording investment transactions as well as ensuring the valuation of investments is in accordance The Committee satisfied itself concerning the Auditors’ with the adopted accounting policies. independence and the effectiveness of the audit process, together with the degree of diligence and professional ### EXTERNAL AUDITORS scepticism brought to bear. The Committee monitors the level of non-audit work carried ### Meetings out by the Auditors and seeks assurances from the Auditors The nature and scope of the 2022 audit, together with that they maintain suitable policies and processes ensuring PricewaterhouseCoopers LLP’s ("PwC") audit plan, were independence, and monitor compliance with the relevant reviewed by the Committee on 10 May 2022. regulatory requirements on an annual basis. No non-audit I, together with other Committee members, met with the work was carried out by the Auditors during the year. Engagement Leader, Jeremy Jensen and the Senior Audit The Company does not allow any non-audit services Manager on 14 November 2022 to discuss the audit and permitted under the 70% fee cap set out in the FRC’s 2019 the draft 2022 Annual Report and Financial Statements. The ethical standard. Committee then met them again on 28 November 2022 to review the outcome of the audit. ### Auditor Tendering Details of the fees paid to the Auditors for audit services are The Committee has a duty to consider carefully the audit for set out in note 4 to the Financial Statements on page 71. value and effectiveness and, as part of its annual review, the need for putting the audit out to tender for reasons of quality, independence or value. The Company is required to carry out a tender every ten years with the next due to be conducted no later than 2023. The Company is therefore in compliance with the provisions of “The Statutory Audit Services for Large Companies Market Investigation” (Mandatory use of responsibilities) Order 2014 as issued by the Competition & Markets Authority. PwC have been the Company’s Auditors since June 2014, which was the last occasion an audit tender was held and this appointment has been renewed at each subsequent AGM. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 53 ### GOVERNANCE AUDIT COMMITTEE REPORT - CONTINUED The Audit Committee, following a review, remains satisfied with the effectiveness and independence of PwC. It has not, therefore, considered it necessary to require the audit to be put out to tender early. When necessary the Audit Committee discusses engagement and partner rotation with PwC. There are no contractual or similar obligations restricting the Company’s choice of auditors. In order to comply with audit regulation the Committee plan to commence the audit tender process during the course of 2023. ### Independent Auditors Re-appointment Having indicated their willingness to continue to act as Auditors to the Company for the forthcoming year a resolution re-appointing PwC as Auditors will be proposed at the forthcoming Annual General Meeting. ### Performance Evaluation The Committee undertook an evaluation of its performance during December 2022. As part of its evaluation the Committee reviewed the following: • Its role • Membership, Independence, Objectivity and Understanding • Skills • Scope of Work • Communications The Committee confirmed that it had conducted its affairs in accordance with its terms of reference and were satisfied that the Committee had been effective. Sandra Kelly, ACA Chair of the Audit Committee 7 December 2022 54 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER STRATEGIC REPORT GOVERNANCE AUDITORS’ REPORT STATEMENTS INFORMATION ### GOVERNANCE ## Statement of Directors’ ## Responsibilities The Directors are responsible for preparing the Annual Report ### RESPONSIBILITY STATEMENT and the Financial Statements in accordance with applicable The Directors consider that the Annual Report and law and regulations. Financial Statements, taken as a whole, are fair, balanced, Company law requires the Directors to prepare Financial understandable and provide the information necessary for Statements for each financial year. Under that law the shareholders to assess the Company’s position, performance, Directors have prepared the Company's Financial Statements business model and strategy. in accordance with United Kingdom Generally Accepted Each of the Directors, whose names and functions are listed in Accounting Practice (United Kingdom Accounting Standards, the ‘Board of Directors’ section on pages 32 and 33 confirms comprising FRS 102 “The Financial Reporting Standard applicable that, to the best of their knowledge: in the UK and Republic of Ireland”, and applicable law). • the Company's Financial Statements, which have been Under company law the Directors must not approve the prepared in accordance with United Kingdom Accounting Financial Statements unless they are satisfied that they give a Standards, comprising FRS 102 give a true and fair view true and fair view of the state of affairs of the Company and of of the assets, liabilities, financial position and profit of the the profit or loss of the Company for that period. In preparing Company; and the Financial Statements, the Directors are required to: • the Strategic Report includes a fair review of the • select suitable accounting policies and then apply them development and performance of the business and the consistently; position of the Company, together with a description of • state whether applicable United Kingdom Accounting the principal risks and uncertainties that it faces. Standards, comprising FRS 102 have been followed, subject Approved by the Board of Directors and signed on its behalf by to any material departures disclosed and explained in the Financial Statements; • make judgements and accounting estimates that are reasonable and prudent; and • prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Simon Hayes Company will continue in business. Chairman The Directors are also responsible for safeguarding the assets 7 December 2022 of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for: Note to those who access this document by electronic means: The Annual Report for the year ended 30 September 2022 has been • keeping adequate accounting records that are sufficient approved by the Board of Finsbury Growth & Income Trust PLC. Copies to show and explain the Company's transactions and of the Annual Report are circulated to shareholders and, where disclose with reasonable accuracy at any time the possible to potential investors. It is also made available in electronic format for the convenience of readers. Printed copies are available financial position of the Company and enable them to from the Company Secretary's office in London. ensure that the Financial Statements and the Directors’ Remuneration Report comply with the Companies Act 2006; and • the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 55 ### INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF FINSBURY GROWTH & INCOME TRUST PLC ## Report on the audit of the ## financial statements ### OPINION In our opinion, Finsbury Growth & Income Trust PLC’s financial statements: • give a true and fair view of the state of the Company’s affairs as at 30 September 2022 and of its loss and cash flows for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements, included within the Annual Report, which comprise: the Statement of Financial Position as at 30 September 2022; the Income Statement, Statement of Cash Flows and Statement of Changes in Equity for the year then ended; and the notes to the Financial Statements, which include a description of the significant accounting policies. Our opinion is consistent with our reporting to the Audit Committee. ### BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion. ### Independence We remained independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were notprovided. We have provided no non-audit services to the Company in the period under audit. ### OUR AUDIT APPROACH ### Overview Audit scope • The Company is a standalone Investment Trust Company. The principal service providers to the Company are Frostrow Capital LLP which acts as AIFM, company secretary and administrator; and Lindsell Train Limited which acts as Portfolio Manager. • We conducted our audit of the financial statements using information from the AIFM and Maitland Institutional Services, with whom the AIFM has engaged to provide certain administrative functions. • We tailored the scope of our audit taking into account the types of investments within the Company, the involvement of the third parties referred to above, the accounting processes and controls, and the industry in which the Company operates. Key audit matters • Income from investments • Valuation and existence of quoted investments Materiality • Overall materiality: £18,303,000 (2021: £20,640,000) based on 1% of net assets. • Performance materiality: £13,727,000 (2021: £15,480,000). 56 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER AUDITORS’ REPORT STATEMENTSGOVERNANCESTRATEGIC REPORT INFORMATION ### The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. ### Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. The key audit matters below are consistent with last year. ### Key audit matter How our audit addressed the key audit matter Income from investments Refer to page 53 (Audit Committee Report), We assessed the accounting policy for income recognition for compliance with accounting page 67 (Accounting Policies) and page 70 standards and the AIC SORP and performed testing to confirm that income had been (Notes to the financial statements). accounted for in accordance with this stated accounting policy. ISAs (UK) presume there is a risk of fraud in We found that the accounting policies implemented were in accordance with accounting income recognition because of the pressure standards and the AIC SORP, and that income had been accounted for in accordance with the management may feel to achieve a certain stated accounting policy. objective. We understood and assessed the design and implementation of key controls surrounding For the Company we consider that ‘income’ income recognition. refers to both revenue and capital (including The gains/losses on investments held at fair value through profit or loss comprise realised and gains and losses on investments). unrealised gains/losses. For unrealised gains and losses, we sample tested the valuation of We focussed this risk on the existence/ the portfolio at the year-end, together with testing the reconciliation of opening and closing occurrence of gains/losses on investments investments. For realised gains/losses, we tested a sample of disposal proceeds by agreeing as well as the completeness and accuracy the proceeds to bank statements and we re-performed the calculation of a sample of realised of dividend income recognition and its gains/losses. presentation in the Income Statement as set We tested dividend receipts by agreeing the dividend rates from investments to independent out in the requirements of The Association third party sources. of Investment Companies’ Statement of Recommended Practice (the "AIC SORP"). To test for completeness, we tested that the appropriate dividends had been received in the year by reference to independent data of dividends declared for listed investments during theyear. We tested occurrence by testing that dividends recorded in the year had been declared in the market by investment holdings, and we traced a sample of dividends received to bankstatements. We sample tested journal entries made to income accounts (both revenue and capital). We also tested the allocation and presentation of dividend income between the revenue and capital return columns of the Income Statement in line with the requirements set out in the AIC SORP by determining reasons behind dividend distributions. No material misstatements were identified from this testing. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 57 ### INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FINSBURY GROWTH & INCOME TRUST PLC ### Key audit matter How our audit addressed the key audit matter Valuation and existence of quoted investments Refer to page 53 (Audit Committee Report), We tested the valuation of all quoted equity investments by agreeing the prices used in the page 67 (Accounting Policies) and pages 74 valuation to independent third party sources. and 80 (Notes to the financial statements). We tested the existence of the investment portfolio by agreeing the holdings of all quoted The investment portfolio at the year-end investments to an independently obtained custodian confirmation. principally compromised quoted equity No material misstatements were identified from this testing. investments valued at £1,847m. We focused on the valuation and existence of quoted investments because investments represent the principal element of the net asset value as disclosed in the Statement of Financial Position. ### How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the industry in which it operates. In planning our audit, we made enquiries of the Directors and Investment Manager to understand the extent of the potential impact of climate change on the Company’s financial statements. The Directors and Investment Manager concluded that the impact on the measurement and disclosures within the financial statements is not material because the Company's investment portfolio is principally made up of level 1 quoted securities which are valued at fair value based on market prices. We found this to be consistent with our understanding of the Company's investment activities. We also considered the consistency of the climate change disclosures included in the Strategic Report with the financial statements and our knowledge from our audit. ### Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: Overall company materiality £18,303,000 (2021: £20,640,000). How we determined it 1% of net assets. Rationale for benchmark applied We have applied this benchmark, a generally accepted auditing practice for investment trust audits, in the absence of indicators that an alternative benchmark would be appropriate and because we believe this provides an appropriate and consistent year on-year basis for our audit. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to £13,727,000 (2021: £15,480,000) for the company financial statements. 58 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER AUDITORS’ REPORT STATEMENTSGOVERNANCESTRATEGIC REPORT INFORMATION In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £915,000 (2021:£1,032,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. ### CONCLUSIONS RELATING TO GOING CONCERN Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included: • evaluating the Directors' updated risk assessment and considering whether it addressed relevant threats, including ongoing impact of rising inflation, Russia’s Invasion of Ukraine, and the subsequent economic uncertainty; • evaluating the Directors' assessment of potential operational impacts, considering their consistency with other available information and our understanding of the business and assessed the potential impact on the financial statements; • reviewing the Directors' assessment of the Company's financial position in the context of its ability to meet future expected operating expenses and debt repayments, their assessment of liquidity as well as their review of the operational resilience of the Company and oversight of key third-party service providers; and • assessing the implication of significant reductions in NAV as a result of market performance on the ongoing ability of the Company to operate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Company's ability to continue as a going concern. In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. ### REPORTING ON OTHER INFORMATION The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on theseresponsibilities. With respect to the Strategic report and Report of the Directors, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 59 ### INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FINSBURY GROWTH & INCOME TRUST PLC Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. ### Strategic report and Report of the Directors In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Report of the Directors for the year ended 30 September 2022 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Report of the Directors. ### Directors’ Remuneration In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. ### CORPORATE GOVERNANCE STATEMENT The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to: • The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks; • The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated; • The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the Company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; • The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate; and • The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Our review of the Directors’ statement regarding the longer-term viability of the Company was substantially less in scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the Company and its environment obtained in the course of the audit. In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during theaudit: • The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to assess the Company's position, performance, business model and strategy; • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and • The section of the Annual Report describing the work of the Audit Committee. 60 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER AUDITORS’ REPORT STATEMENTSGOVERNANCESTRATEGIC REPORT INFORMATION ### INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FINSBURY GROWTH & INCOME TRUST PLC We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors. ### RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT ### Responsibilities of the directors for the financial statements As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. ### Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the Company and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of section 1158 of the Corporation Tax Act 2010, and we considered the extent to which non-compliance might have a material effect on the financial statements. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase income (investment income and/or capital gains) or to overstate the net asset value of the Company. Audit procedures performed by the engagement team included: • discussions with the AIFM and the Audit Committee, including specific enquiry of known or suspected instances of non-compliance with laws and regulation and fraud where applicable; • reviewing relevant meeting minutes, including those of the Audit Committee; • assessment of the Company’s compliance with the requirements of section 1158 of the Corporation Tax Act 2010, including recalculation of numerical aspects of the eligibility conditions; • identifying and testing journal entries, in particular manual year end journal entries posted during the preparation of the financial statements; and • designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing. There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 61 ### INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FINSBURY GROWTH & INCOME TRUST PLC ### Use of this report This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. ### OTHER REQUIRED REPORTING ### Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: • we have not obtained all the information and explanations we require for our audit; or • adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or • certain disclosures of Directors’ remuneration specified by law are not made; or • the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. ### Appointment Following the recommendation of the Audit Committee, we were appointed by the Directors on 19 June 2014 to audit the financial statements for the year ended 30 September 2014 and subsequent financial periods. The period of total uninterrupted engagement is 9years, covering the years ended 30 September 2014 to 30 September 2022. Jeremy Jensen (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 7 December 2022 62 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION # FINANCIAL STATEMENTS # Income Statement FOR THE YEAR ENDED 30 SEPTEMBER 2022 | | NOTE | YEAR ENDED 30 SEPTEMBER 2022 | | | YEAR ENDED 30 SEPTEMBER 2021 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | REVENUE £'000 | CAPITAL £'000 | TOTAL £'000 | REVENUE £'000 | CAPITAL £'000 | TOTAL £'000 | | (Losses)/gains on investments at fair value through profit or loss | 9 | – | (155,883) | (155,883) | – | 164,020 | 164,020 | | Currency translations | | – | 14 | 14 | – | (16) | (16) | | Income | 2 | 50,792 | – | 50,792 | 46,114 | – | 46,114 | | AFM and portfolio management fees | 3 | (2,678) | (8,034) | (10,712) | (3,709) | (7,531) | (11,240) | | Other expenses | 4 | (1,069) | (9) | (1,078) | (1,004) | (3) | (1,007) | | **Return/(loss) on ordinary activities before finance charges and taxation** | | 47,045 | (163,912) | (116,867) | 41,401 | 156,470 | 197,871 | | Finance charges | 5 | (171) | (512) | (683) | (136) | (277) | (413) | | **Return/(loss) on ordinary activities before taxation** | | 46,874 | (164,424) | (117,550) | 41,265 | 156,193 | 197,458 | | Taxation on ordinary activities | 6 | (1,190) | – | (1,190) | (844) | – | (844) | | **Return/(loss) on ordinary activities after taxation** | | 45,684 | (164,424) | (118,740) | 40,421 | 156,193 | 196,614 | | **Return/(loss) per share – basic and diluted** | 7 | 20.6p | (74.0)p | (53.4)p | 18.1p | 69.9p | 88.0p | The "Total" column of this statement represents the Company's income statement. The "Revenue" and "Capital" columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies ("AIC"). All items in the above statement derive from continuing operations. The Company had no recognised gains or losses other than those declared in the Income Statement; therefore no separate statement of Total Comprehensive Income has been presented. The notes on pages 67 to 82 form part of these Financial Statements. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 69 ### FINANCIAL STATEMENTS ## Statement of Changes in ## Equity FOR THE YEAR ENDED 30 SEPTEMBER 2022 | | CALLED UP | | | SHARE | | CAPITAL | | | | | | TOTAL | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | SHARE | PREMIUM | | REDEMPTION | | CAPITAL | | REVENUE | | SHAREHOLDERS’ | | | | CAPITAL | | ACCOUNT | | | RESERVE | RESERVE | | RESERVE | | | FUNDS | | NOTE | | £’000 | | £’000 | | £’000 | | £’000 | | £’000 | | £’000 | At 1 October 2021 56,248 1,099,847 3,453 855,886 49,224 2,064,658 Net (loss)/return from ordinary activities – – – (164,424) 45,684 (118,740) Second interim dividend (9.1p per share) for the year ended 30 September 2021 8 – – – – (20,474) (20,474) First interim dividend (8.3p per share) for the year ended 30 September 2022 8 – – – – (18,545) (18,545) Repurchase of shares into treasury 13 – – – (76,515) – (76,515) At 30 September 2022 56,248 1,099,847 3,453 614,947 55,889 1,830,384 | | CALLED UP | | | SHARE | | CAPITAL | | | | | | TOTAL | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | SHARE | PREMIUM | | REDEMPTION | | CAPITAL | | REVENUE | | SHAREHOLDERS’ | | | | | CAPITAL | ACCOUNT | | | RESERVE | RESERVE | | RESERVE | | | FUNDS | | NOTE | | £’000 | | £’000 | | £’000 | | £’000 | | £’000 | | £’000 | At 1 October 2020 54,438 1,039,510 3,453 699,693 45,436 1,842,530 Net return from ordinary activities – – – 156,193 40,421 196,614 Second interim dividend (8.6p per share) for the year ended 30 September 2020 – – – – (18,727) (18,727) First interim dividend (8.0p per share) for the year ended 30 September 2021 8 – – – – (17,906) (17,906) Issue of shares 1,810 60,337 – – – 62,147 At 30 September 2021 56,248 1,099,847 3,453 855,886 49,224 2,064,658 The notes on pages 67 to 82 form part of these Financial Statements. 64 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION # FINANCIAL STATEMENTS # Statement of Financial Position AS AT 30 SEPTEMBER 2022 | | NOTE | 2022 £'000 | 2021 £'000 | | --- | --- | --- | --- | | **Fixed assets** | | | | | Investments held at fair value through profit or loss | 9 | 1,852,078 | 2,071,266 | | **Current assets** | | | | | Debtors | 10 | 12,398 | 9,428 | | Cash and cash equivalents | | 7,835 | 22,531 | | | | 20,233 | 31,959 | | **Current liabilities** | | | | | Creditors: amounts falling due within one year | 11 | (5,227) | (1,867) | | Bank loan | 12 | (36,700) | – | | | | (41,927) | (1,867) | | **Net current liabilities** | | (21,694) | 30,092 | | **Total assets less current liabilities** | | 1,830,384 | 2,101,358 | | **Creditors: amount falling due after more than one year** | | | | | Bank loan | 12 | – | (36,700) | | **Net assets** | | 1,830,384 | 2,064,658 | | **Capital and reserves** | | | | | Called up share capital | 13 | 56,248 | 56,248 | | Share premium account | | 1,099,847 | 1,099,847 | | Capital redemption reserve | | 3,453 | 3,453 | | Capital reserve | 14 | 614,947 | 855,886 | | Revenue reserve | | 55,889 | 49,224 | | **Total shareholders' funds** | | 1,830,384 | 2,064,658 | | **Net asset value per share** | 15 | 848.4p | 917.7p | The Financial Statements on pages 63 to 82 were approved by the Board of Directors on 7 December 2022 and were signed on its behalf by: **Simon Hayes** Chairman The notes on pages 67 to 82 form part of these Financial Statements Company Registration Number SC013958 (Registered in Scotland) FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 65 FINANCIAL STATEMENTS # Statement of Cash Flows FOR THE YEAR ENDED 30 SEPTEMBER 2022 | | NOTE | 2022 £'000 | 2021 £'000 | | --- | --- | --- | --- | | Net cash inflow from operating activities before interest | III | 38,098 | 31,953 | | Interest paid | | (683) | (375) | | Net cash inflow from operating activities | | 37,415 | 31,578 | | Investing activities | | | | | Purchase of investments | | (79,080) | (92,966) | | Sale of investments | | 139,227 | 37,981 | | Net cash inflow/(outflow) from investing activities | | 60,147 | (54,985) | | Financing activities | | | | | Dividends paid | | (39,019) | (38,633) | | Shares issued | | – | 62,147 | | Repurchase of Shares into treasury | | (73,253) | – | | Net cash (outflow)/inflow from financing activities | | (112,272) | 25,514 | | (Decrease)/increase in cash and cash equivalents | | (14,710) | 2,107 | | Currency transactions | | 14 | (16) | | Cash and cash equivalents at the beginning of the financial year* | | 22,531 | 20,440 | | Cash and cash equivalents at the end of the financial year* | | 7,835 | 22,531 | ## Reconciliation of net debt | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Cash and cash equivalents* | 7,835 | 22,531 | | Borrowings | (36,700) | (36,700) | | Total | (28,865) | (14,169) | * Comprises solely cash held at bank. The notes on pages 67 to 82 form part of these Financial Statements. 66. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION # FINANCIAL STATEMENTS # Notes to the financial statements FOR THE YEAR ENDED 30 SEPTEMBER 2022 ## 1. Accounting Policies The Company is a public limited company (PLC) incorporated in the United Kingdom, with registered office at 50 Lothian Road, Festival Square, Edinburgh EH3 9WJ. The principal accounting policies, all of which have been applied consistently throughout the year in the preparation of these Financial Statements, are set out below: ### (A) BASIS OF PREPARATION The Financial Statements have been prepared in accordance with UK Generally Accepted Accounting Practice (GAAP) under UK and Republic of Ireland Company Law, FRS 102 'The Financial Reporting Standard applicable in the UK, the Statement of Recommended Practice (SORP) for 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued by the Association of Investment Companies in July 2022 and the Companies Act 2008 under the historical cost convention as modified by the valuation of investments at fair value through profit or loss. The Financial Statements have been prepared on a going concern basis. The disclosure on going concern on page 37 in the Statement of Directors' Responsibilities forms part of these Financial Statements. #### Presentation of the Income Statement In order to reflect better the activities of an investment trust company and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The net revenue return is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Sections 1158 and 1159 of the Corporation Tax Act 2010. #### Significant Judgements and Critical Sources of Estimation Uncertainties There were no significant judgements or critical estimates reported during the financial year ended 30 September 2022 (2021 none). ### (B) INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS Investments are measured under FRS 102, sections 11 and 12 and are measured initially, and at subsequent reporting dates, at fair value. Changes in the fair value of investments and gains and losses on disposal are recognised in the Income Statement as a capital item. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy, and information about the investments is provided internally on this basis to the Board. Fair value for quoted investments is deemed to be bid market prices, or last traded price, depending on the convention of the stock exchange on which they are quoted. All purchases and sales of investments are accounted for on the trade date basis. The Company's policy is to expense transaction costs on acquisition/disposal through the gains on investment at fair value through profit or loss. The total of such expenses, showing the total amounts included in disposals and acquisitions, is disclosed in note 9 on page 74. ### (C) INCOME Dividends receivable from equity shares are recognised in Revenue on an ex-dividend basis except where, in the opinion of the Board, the dividend is capital in nature, in which case it is included in Capital. Overseas dividends are stated gross of any withholding tax. When the Company has elected to receive scrip dividends in the form of additional shares rather than cash, the amount of cash dividend foregone is recognised in Revenue. Fixed returns on non-equity shares are recognised on a time apportionment basis. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 67 ### FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS - CONTINUED Special dividends: In deciding whether a dividend should be regarded as a Capital or Revenue receipt, the Company reviews all relevant information as to the reasons for and sources of the dividend on a case by case basis depending upon the nature of the receipt. Special dividends of a revenue nature are recognised through the Revenue column of the Income Statement. Special Dividends of a Capital nature are recognised through the Capital column of the Income Statement. The limited liability partnership (LLP) profit share is recognised in the financial statements when the entitlement to the income is established, following the conclusion of the partnership's annual audit. Deposit interest receivable is taken to revenue on an accruals basis. ### (D) DIVIDENDS PAYABLE Dividends paid by the Company are recognised in the Financial Statements and are shown in the Statement of Changes in Equity in the period in which they became legally binding, which in the case of an interim dividend is the point at which it is paid and for a final dividend when it is approved by Shareholders in line with the ICAEW Tech Release 02/17BL. ### (E) EXPENDITURE AND FINANCE CHARGES All the expense and finance costs are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except as follows: (1) expenses which are incidental to the acquisition or disposal of an investment are treated as part of the cost or deducted from proceeds of that investment (as explained in 1(b) above); (2) expenses are taken to the Capital reserve via the capital column of the Income Statement, where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In line with the Board's expected long-term split of returns, 75% of the portfolio management fee, AIFM fee and finance costs are taken to the Capital reserve and the balance to the Revenue reserve (2021: 67% capital, 33% revenue). ### (F) TAXATION Current tax is provided at the amounts expected to be paid or recovered. Deferred taxation is provided on all timing differences that have originated but not been reversed by the Statement of Financial Position date other than those differences regarded as permanent. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the reversal of timing differences can be deducted. Any liability to deferred tax is provided for at the rate of tax enacted or substantially enacted. Any tax relief obtained in respect of AIFM and portfolio management fees, finance costs and other capital expenses charged are allocated to the capital column of the Income Statement. ### (G) FOREIGN CURRENCY Transactions recorded in overseas currencies during the year are translated into sterling at the exchange rates ruling at the date of the transaction. Assets and liabilities denominated in overseas currencies at the Statement of Financial Position date are translated into sterling at the exchange rate ruling at that date. Profits or losses on the translation of foreign currency balances, whether realised or unrealised are credited or debited to the revenue or capital column of the Income Statement depending on whether the gain or loss is of a revenue or capital nature. ### (H) CASH AND CASH EQUIVALENTS Cash and cash equivalents and demand deposits readily convertible to known amounts of cash and subject to insignificant risk of changes in value are defined as cash. ### (I) BANK LOAN Bank loans are initially recognised at fair value, net of transaction costs incurred. Bank loans are subsequently measured at amortised cost. The loan amounts falling due for repayment within one year are included under current liabilities in the Statement of Financial Position and the loan amounts falling due after one year are included under “Creditors: amounts falling due after more than one year” in the Statement of Financial Position. 68 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER GOVERNANCESTRATEGIC REPORT AUDITORS’ REPORT STATEMENTS INFORMATION ### (J) REPURCHASE OF SHARES FOR CANCELLATION OR TO HOLD IN TREASURY The cost of repurchasing ordinary shares (for cancellation or to hold in Treasury) including the related stamp duty and transaction cost is charged to the ‘capital reserve’ and dealt with in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date basis. Where shares are cancelled (or are subsequently cancelled having previously been held in Treasury), the nominal value of those shares is transferred out of ‘Called up share capital’ and into the ‘Capital redemption reserve’. Should shares held in Treasury be reissued, the sales proceeds will be treated as a realised capital profit up to the amount of the purchase price of those shares and will be transferred to capital reserves. The excess of the sales proceeds over the purchase price will be transferred to ‘Share premium’. ### (K) OPERATING SEGMENTS The Company defines operating segments and segment performance in the financial statements based on information used by ^ the Board of Directors which is considered the Chief Operating Decision Maker . The Directors are of the opinion that the Company is engaged in a single segment of business, being the investments business. The results published in this report therefore correspond to this sole operating segment. ### (L) NATURE AND PURPOSE OF RESERVES ### Capital Redemption Reserve This reserve arose when ordinary shares were bought by the Company and subsequently cancelled, at which point the amount equal to the par value of the ordinary share capital was transferred from the ordinary share capital to the Capital Redemption reserve. ### Capital Reserve This reserve reflects any: • gains or losses on the disposal of investments; • exchange differences of a capital nature; • increases and decreases in the fair value of investments which have been recognised in the capital column of the Income Statement; and • expenses which are capital in nature as disclosed in note 1(e). Following amendments to the Company’s Articles of Association in 2015, this reserve can be used to distribute certain capital profits by way of dividend. ### Revenue Reserve This reserve reflects all income and expenditure which are recognised in the revenue column of the Income Statement and may be distributable by way of dividend. When making a distribution to shareholders, the Directors determine profits available for distribution by reference to ‘Guidance on realised and distributable profits under the Companies Act 2006’ issued by the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland in April 2017. The availability of distributable reserves in the Company is dependent on those distributions meeting the definition of qualifying consideration within that guidance and on available cash resources of the Company and other accessible sources of funds. The distributable reserves are therefore subject to these restrictions or limitations at the time such distribution is made. ^ See glossary of terms on page 83. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 69 ## FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS - CONTINUED ## 2. Income | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | **Income from investments** | | | | UK listed dividends* | 41,827 | 39,167 | | Overseas dividends* | 8,257 | 6,350 | | Limited liability partnership – profit-share and priority profit share on AIFM capital contribution | 694 | 597 | | Other operating income – bank interest | 14 | – | | **Total income** | **50,792** | **46,114** | * Include special dividends which have been credited to the revenue account totalling £1,833,000 (2021: £949,000): - UK listed dividends £1,205,000 (2021: £949,000). - Overseas dividends £528,000 (2021: nil). ## 3. AIFM and portfolio management fees | | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | REVENUE £'000 | CAPITAL £'000 | TOTAL £'000 | REVENUE £'000 | CAPITAL £'000 | TOTAL £'000 | | AIFM fee | 670 | 2,008 | 2,678 | 927 | 1,883 | 2,810 | | Portfolio Management fee | 2,008 | 6,026 | 8,034 | 2,782 | 5,648 | 8,430 | | **Total fees** | **2,678** | **8,034** | **10,712** | **3,709** | **7,531** | **11,240** | With effect from 1 October 2021, 75% of the Portfolio management and AIFM fees were taken to the Capital reserve and 25% is taken to the Revenue reserve. Previously, 67% was taken to the Capital reserve and 33% to the Revenue reserve. 70 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION ## 4. Other Expenses | | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | REVENUE £'000 | CAPITAL £'000 | TOTAL £'000 | REVENUE £'000 | CAPITAL £'000 | TOTAL £'000 | | Directors' fees | 150 | – | 150 | 159 | – | 159 | | Auditors' fees – | | | | | | | | statutory annual audit | 63 | – | 63 | 58 | – | 58 | | Depository's fees | 193 | – | 193 | 211 | – | 211 | | Stock listing and FCA fees | 140 | – | 140 | 133 | – | 133 | | Custody fees | 118 | – | 118 | 109 | – | 109 | | Indices cost | 74 | – | 74 | 40 | – | 40 | | Registrar's fees | 59 | – | 59 | 57 | – | 57 | | Promotional costs | 60 | – | 60 | 51 | – | 51 | | Printing and postage | 52 | – | 52 | 35 | – | 35 | | Directors' D&O insurance | 41 | – | 41 | 33 | – | 33 | | Other expenses | 119 | 9 | 128 | 118 | 3 | 121 | | **Total expenses** | **1,069** | **9** | **1,078** | **1,004** | **3** | **1,007** | Further details of the amounts paid to Directors are included in the Directors' Remuneration Report on pages 45 to 48. During the year ended 30 September 2022 there were no non-audit services provided by the Company's Auditor (2021: nil). All of the above expenses include VAT where applicable. ## 5. Finance Charges | | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | REVENUE £'000 | CAPITAL £'000 | TOTAL £'000 | REVENUE £'000 | CAPITAL £'000 | TOTAL £'000 | | Interest payable on bank loan | 161 | 482 | 643 | 123 | 250 | 373 | | Loan facility commitment fees | 10 | 30 | 40 | 13 | 27 | 40 | | | 171 | 512 | 683 | 136 | 277 | 413 | With effect from 1 October 2021, 75% of the finance costs were taken to the Capital reserve and 25% is taken to the Revenue reserve. Previously, 67% was taken to the Capital reserve and 33% to the Revenue reserve. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 71 ## FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS - CONTINUED ## 6. Taxation on Ordinary Activities ### (A) ANALYSIS OF CHARGE IN THE YEAR | | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | REVENUE £'000 | CAPITAL £'000 | TOTAL £'000 | REVENUE £'000 | CAPITAL £'000 | TOTAL £'000 | | UK Corporation tax at 19% (2021: 19%) | – | – | – | – | – | – | | Overseas withholding tax | 1,364 | – | 1,364 | 1,036 | – | 1,036 | | Recoverable overseas withholding tax | (174) | – | (174) | (192) | – | (192) | | | 1,190 | – | 1,190 | 844 | – | 844 | ### (B) FACTORS AFFECTING CURRENT TAX CHARGE FOR YEAR The tax assessed for the year is higher (2021: higher) than the standard rate of UK corporation tax of 19% (2021: 19%). The differences are explained below: | | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | REVENUE £'000 | CAPITAL £'000 | TOTAL £'000 | REVENUE £'000 | CAPITAL £'000 | TOTAL £'000 | | Total return/(loss) on ordinary activities before taxation | 46,874 | (164,424) | (117,550) | 41,265 | 156,193 | 197,458 | | Return/(loss) on ordinary activities multiplied by UK corporation tax of 19% (2021: 19%) | 8,906 | (31,240) | (22,334) | 7,840 | 29,677 | 37,517 | | Effects of: | | | | | | | | Overseas taxation | 1,190 | – | 1,190 | 844 | – | 844 | | Franked investment income not subject to corporation tax – UK dividend income | (7,947) | – | (7,947) | (7,441) | – | (7,441) | | Overseas dividends not taxable | (1,569) | – | (1,569) | (1,207) | – | (1,207) | | Excess management expenses | 610 | – | 610 | 808 | – | 808 | | Amounts charged to capital | – | 1,625 | 1,625 | – | 1,484 | 1,484 | | Non-taxable loss/(return) on investments* | – | 29,618 | 29,618 | – | (31,164) | (31,164) | | Currency translations | – | (3) | (3) | – | 3 | 3 | | **Total tax charge for the year (note 6(a))** | **1,190** | **–** | **1,190** | **844** | **–** | **844** | * Loss/(return) on investments are not subject to corporation tax within an investment company. 72 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION ### (C) DEFERRED TAXATION As at 30 September 2022, the Company had unutilised management expenses and other reliefs for taxation purposes of £122,041,000 (2021: £110,404,000). It is unlikely that the Company will generate sufficient taxable income in excess of the available deductible expenses and therefore the Company has not recognised a deferred tax asset of £30,510,000 (2021: £27,601,000) based on the prospective corporation tax rate of 25% (2021: 25%). Given the Company's status as an investment company and the intention to continue meeting the conditions required to maintain such status in the foreseeable future, the Company has not provided for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments. ## 7. Return/(loss) per share – Basic and Diluted | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | The return/(loss) per share is based on the following figures: | | | | Revenue return | 45,684 | 40,421 | | Capital (loss)/return | (164,424) | 156,193 | | **Total (loss)/return** | **(118,740)** | **196,614** | | Weighted average number of shares* | | | | in issue during the year | 222,335,694 | 223,371,358 | | Revenue return per share | 20.6p | 18.1p | | Capital (loss)/return per share | (74.0)p | 69.9p | | **Total (loss)/return per share** | **(53.4)p** | **88.0p** | The calculation of the total, revenue and capital (loss)/returns per ordinary share is carried out in accordance with IAS 33, "Earnings per Share (as adopted in the UK)". As at 30 September 2022 and 2021 there were no dilutive instruments in issue, therefore the basic and diluted (loss)/return per share are the same. * Excludes shares held in Treasury. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 73 ## FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS - CONTINUED ### 8. Dividends In accordance with FRS 102 dividends are included in the Financial Statements in the period in which they are paid or approved by shareholders. | | EX-DIVIDEND DATE | RECORD DATE | PAYMENT DATE | 2022 £'000 | 2021 £'000 | | --- | --- | --- | --- | --- | --- | | First interim dividend of 8.3p per share (2021: 8.0p) | 31 March 2022 | 1 April 2022 | 13 May 2022 | 18,545 | 17,906 | | Second interim dividend of 9.8p per share (2021: 9.1p) | 29 September 2022 | 30 September 2022 | 4 November 2022 | 21,181 | 20,474 | | | | | | 39,726 | 38,380 | The second interim dividend of 9.8p per share (2021: 9.1p) has not been included as a liability in these Financial Statements as it is only recognised in the financial year in which it is paid. The total dividends payable in respect of the financial year which ensures compliance with Section 1158 of the Corporation Tax Act 2010 are set out below: | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Revenue available for distribution by way of dividend for the year | 45,684 | 40,421 | | 2022 First interim dividend of 8.3p per share (2021: 8.0p) paid on 13 May 2022 | (18,545) | (17,906) | | 2022 Second interim dividend of 9.8p per share (2021: 9.1p) paid on 4 November 2022 | (21,181) | (20,474) | | Net additions to revenue reserves | 5,958 | 2,041 | The Company's dividend policy is set out on page 14. ### 9. Investments held at Fair Value Through Profit or Loss #### ANALYSIS OF PORTFOLIO MOVEMENTS | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Opening book cost | 1,303,097 | 1,244,210 | | Opening investment holding gains | 768,169 | 607,378 | | Valuation at 1 October | 2,071,266 | 1,851,588 | | Movements in the year: | | | | Purchases at cost | 79,246 | 93,690 | | Sales proceeds | (142,551) | (38,032) | | (Losses)/gains on investments | (155,883) | 164,020 | | Valuation at 30 September | 1,852,078 | 2,071,266 | | Closing book cost | 1,293,409 | 1,303,097 | | Investment holding gains at 30 September | 558,669 | 768,169 | | Valuation at 30 September | 1,852,078 | 2,071,266 | 74 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION The Company received £142,551,000 (2021: £38,032,000) from investments sold in the year. The book cost of these investments when they were purchased was £53,618,000 (2021: £34,803,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. Purchase transaction costs for the year to 30 September 2022 were £161,000 (2021: £213,000). These comprise stamp duty costs of £110,000 (2021: £173,000) and commission of £51,000 (2021: £40,000). Sales transaction costs for the year to 30 September 2022 were £53,000 (2021: £15,000) and comprise commission. ## 10. Debtors | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Amounts due from brokers in respect of portfolio trading – disposals | 3,998 | 674 | | Accrued income and prepayments | 8,400 | 8,754 | | | 12,398 | 9,428 | ## 11. Creditors: Amounts Falling Due Within One Year | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Amounts due to brokers in respect of portfolio trading – purchases | 890 | 724 | | Amounts due to brokers in respect of shares repurchased by the Company | 3,262 | – | | Other creditors and accruals | 1,075 | 1,143 | | | 5,227 | 1,867 | ## 12. Bank Loan | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Bank loan | 36,700 | 36,700 | Scotabank Europe PLC, the provider of the Company's loan facility, has a fixed and floating charge over the assets of the Company as security against any funds drawn down under the loan facility. As at 30 September 2022 the Company was in its final few days of its three year secured fixed term multi-currency revolving loan facility of £50 million (with an additional £50 million available if required). The facility was renewed on 4 October 2022 with the following new terms: Three year secured fixed term multi-currency revolving credit facility of £60 million (with an additional £40 million available if required). The main covenant under the loan facility required that, at each month end, total borrowings should not exceed £100 million (2021: £100 million), Net Asset Value must not fall below £750 million (2021: £300 million) and the ratio of Adjusted Total Net Assets to Debt is not to be less than 4:1 (2021: 4:1). There were no breaches of the covenants during the year. The Board has set a gearing limit which must not exceed 25% of the Company's net asset value. See the Strategic Report on page 13 and the Report of the Directors on page 34 for further details. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023 75 ### FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS - CONTINUED ## 13. Called Up Share Capital 2022 2021 £’000 £’000 Allotted, issued and fully paid: 215,737,992 (2021: 224,991,303) ordinary shares of 25p each 53,935 56,248 9,253,311 (2021: Nil) ordinary shares of 25p held in treasury 2,313 – 224,991,303 (2021: 224,991,303) total ordinary shares of 25p each 56,248 56,248 No shares were issued by the Company during the year (2021: 7,240,000 new shares were issued). During the year, the Company bought back 9,253,311 shares to be held in treasury at a cost of £76,515,000 (2021: Nil). Between 1 October 2022 and 5 December 2022, the Company bought back a further 1,668,897 shares into treasury. ## 14. Capital Reserve CAPITAL RESERVE | CAPITAL | | | INVESTMENT | | | | | --- | --- | --- | --- | --- | --- | --- | | RESERVE | | HOLDING GAINS | | | 2022 | 2021 | | REALISED | | | UNREALISED | | TOTAL | TOTAL | | | £'000 | | | £'000 | £'000 | £'000 | At 1 October 2021 87,717 768,169 855,886 699,693 Net gains/(losses) on investments 53,618 (209,501) (155,883) 164,020 Repurchase of shares into treasury (76,515) – (76,515) – Expenses charged to capital (8,043) – (8,043) (7,534) Finance costs charged to capital (512) – (512) (277) Currency translations 14 – 14 (16) At 30 September 2022 56,279 558,668 614,947 855,886 The amount of the capital reserve that is distributable is complex to determine and is not necessarily the full amount of the reserve as disclosed within these Financial Statements of £614,947,000, as at 30 September 2022 as this is subject to fair value movements and may not be readily realisable at short notice. ## 15. Net Asset Value Per Share 2022 2021 Net assets (£'000) 1,830,384 2,064,658 Number of shares in issue (excluding shares held in treasury) 215,737,992 224,991,303 Net asset value per share 848.4p 917.7p As at 30 September 2022 and 2021 there were no dilutive instruments held, therefore the basic and diluted net asset value per share are the same. At 30 September 2022 9,253,311 shares were held in treasury (2021: Nil). 76 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION ## 16. Transactions with the AIFM, the Portfolio Manager and Related Parties Details of the relationship between the Company, Frostrow and Lindsell Train are disclosed on the Company's website and also in the Report of the Directors on pages 29 and 30. The Company has an investment in Frostrow with a book cost of £200,000 (2021: £975,000) and a fair value of £4,725,000 (including the AIFM capital contribution of £125,000 (2021: £900,000)) as at 30 September 2022 (2021: £5,200,000). During the year Frostrow received a total of £2,678,000 in respect of AIFM fees, of which £209,000 was outstanding at 30 September 2022 (2021: £236,000). The Company has an investment in The Lindsell Train Investment Trust plc, which is managed by Lindsell Train, with a book cost of £1,000,000 (2021: £1,000,000) and a fair value of £9,720,000 as at 30 September 2022 (2021: £14,350,000). During the year Lindsell Train received £8,034,000 in respect of Portfolio Management fees of which £627,000 was outstanding at 30 September 2022 (2021: £708,000). Further details can be found in the Corporate Information section of the Company's website. Details of the income received from the AIFM are disclosed in note 2 on page 70 and details of the remuneration payable to the AIFM and the Portfolio Manager are disclosed in note 3 also on page 70. Details of the fees of all Directors can be found on pages 45 to 50 and in note 4 on page 71. Directors' interests in the capital of the Company can be found on page 48. There were no other material transactions during the year with the Directors of the Company. ## 17. Risk Management As an investment company the Company invests in equities and other investments for the long term so as to secure its investment objective as stated on page 1. In pursuit of its investment objective, the Company is exposed to a variety of risks that could result in either a reduction in the Company's net assets or a reduction in the revenue returns available for distribution. The Company's financial instruments comprise mainly equity investments, cash balances, borrowings, debtors and creditors that arise directly from its operations. The principal risks inherent in managing financial instruments are market risk, liquidity risk and credit risk. The principal and emerging risks of the Company and the Directors' approach to the management of those where the Directors consider there to be a high inherent risk are set out in the Strategic Report on pages 16 to 19. ### MARKET RISK Market risk comprises three types of risk: market price risk, interest rate risk and currency risk. #### Market Price Risk As an investment company, performance is dependent on the performance of the underlying companies and securities in which it invests. The market price of investee companies' shares is subject to their performance, supply and demand for the shares and investor sentiment regarding the company or the industry sector in which it operates. Consequently, market price risk is one of the most significant risks to which the Company is exposed. At 30 September 2022, the fair value of the Company's assets exposed to market price risk was £1,852,078,000 (2021: £2,071,266,000 see page 9). If the fair value of the Company's investments at the Statement of Financial Position date increased or decreased by 10%, while all other variables remained constant, the capital return and net assets attributable to shareholders for the year ended 30 September 2022 would have increased or decreased by £185,208,000 or 85.85p per share (2021: £207,127,000 or 92.1p per share). No derivatives or hedging instruments are currently utilised to manage market price risk. #### Interest Rate Risk Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate movement may affect: - the interest payable on the Company's variable rate borrowings - the level of income receivable from variable interest securities and cash deposits - the fair value of investments of fixed rate securities FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2023 77 ### FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS - CONTINUED The Company’s main exposure to interest rate risk during the year ended 30 September 2022 was through its three year £50,000,000 secured multi-currency committed revolving credit facility (with an additional £50 million facility available if required) with Scotiabank Europe PLC which matured in early October 2022. Borrowings at the year end amounted to £36,700,000 (2021: £36,700,000) at an interest rate of 3.257% (2.188% SONIA plus 1.069% margin and fees (2021: 1.033% (0.078% LIBOR plus 0.955% margin and fees))). If the above level of borrowing was maintained for a year, a 10% increase or decrease in SONIA: (2021: LIBOR) would decrease or increase the revenue return by £20,000, (2021: £1,000), decrease or increase the capital return in that year by £60,000 (2021: £2,000) and decrease or increase the net assets by £80,000 (2021: £3,000). The weighted average interest rate, during the year, on borrowings under the above mentioned revolving credit facility was 1.74% (2021: 1.02%). At 30 September 2022, the Company’s financial assets and liabilities exposed to interest rate risk were as follows: 2022 2021 | | WITHIN | MORE THAN | | WITHIN | MORE THAN | | | --- | --- | --- | --- | --- | --- | --- | | ONE YEAR | | ONE YEAR | | ONE YEAR | ONE YEAR | | | | £'000 | | £'000 | £'000 | | £'000 | Exposure to floating rates: Assets Cash and cash equivalents 7,835 – 22,531 – Liabilities Creditors: amount falling due within one year – borrowings under the loan facility (36,700) – – – Creditors: amount falling due after more than one year – borrowings under the loan facility – – – (36,700) Exposure to fixed rates: Assets # Investments at fair value through profit or loss 367 – 1,136 – Liabilities – – – – # Celtic 6% cumulative convertible preference shares and Frostrow Capital LLP AIFM Capital Contribution. ### Currency Risk The Financial Statements are presented in sterling, which is the functional and presentational currency of the Company. At 30 September 2022, the Company’s investments, with the exception of five, were priced in sterling. The five exceptions were: Heineken, listed in the Netherlands, Remy Cointreau listed in France, Manchester United, Cazoo and Mondelez, all of which are listed in the United States. The aggregate of these represents 20.8% of the portfolio. The AIFM and the Portfolio Manager monitor the Company’s exposure to foreign currencies on a continuous basis and regularly report to the Board. The Company does not hedge against foreign currency movements, but the Portfolio Manager takes account of the risk when making investment decisions. Income denominated in foreign currencies is converted into sterling on receipt. The Company does not use financial instruments to mitigate the currency exposure in the period between its receipt and the time that the income is included in the Financial Statements. ### Foreign Currency Exposure At 30 September 2022 the Company held £181,124,000 (2021: £200,380,000) of investments denominated in U.S. dollars and £203,900,000 (2021: £198,566,000) in euros. 78 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION ## Currency Sensitivity The following table details the sensitivity of the Company's return after taxation for the year to a 10% increase or decrease in the value of sterling compared to the U.S. dollar and euro (2021: 10% increase and decrease). The analysis is based on the Company's foreign currency financial instruments held at each Statement of Financial Position date. This level of sensitivity is considered to be reasonably possible based on observation of current market conditions and historical trends. If sterling had weakened against the U.S. dollar and euro, as stated above, assuming all other variables remain constant, this would have had the following effect: | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Impact on revenue return | 299 | 231 | | Impact on capital return | 43,109 | 44,314 | | Total return after tax/increase in shareholders' funds | 43,408 | 44,545 | If sterling had strengthened against the foreign currencies as stated above, assuming all other variables remain constant, this would have had the following effect: | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Impact on revenue return | (245) | (189) | | Impact on capital return | (35,288) | (36,259) | | Total return after tax/decrease in shareholders' funds | (35,533) | (36,448) | ## Credit Risk Credit risk is the risk that the counterparty to a transaction fails to discharge its obligations under that transaction, which could result in the Company suffering a loss. Credit risk is managed as follows: - Investment transactions are carried out only with brokers which are considered to have a high credit rating. - Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company's custodian bank ensures that the counterparty to any transactions entered into by the Company has delivered its obligation before any transfer of cash or securities away from the Company is completed. - Any failing trades in the market are closely monitored by both the AIFM and the Portfolio Manager. - Cash is only held at banks that have been identified by the Board as reputable and of high credit quality. - Bank of New York Mellon has a credit rating of Aa2 (Moody's) and AA- (Fitch). At 30 September 2022, the exposure to credit risk was £12,075,000 (2021: £23,441,000), comprising: | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | **Fixed assets:** | | | | Non-equity investments (preference shares) | 242 | 236 | | **Current assets:** | | | | Other receivables (amounts due from brokers) | 3,996 | 674 | | Cash and cash equivalents | 7,835 | 22,531 | | Total exposure to credit risk | 12,075 | 23,441 | FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 79 ### FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS - CONTINUED ### Liquidity Risk Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is not considered significant as the majority of the Company’s assets are investments in quoted equities. As at 30September 2022 it is estimated that 97.6% of the investment portfolio could be liquidated within 30 days with 61.6% in sevendays, based on current trading volumes. Liquidity risk exposure | | 30 SEPTEMBER | | 30 SEPTEMBER | | | --- | --- | --- | --- | --- | | | | 2022 | | 2021 | | FINANCIAL LIABILITIES COMPRISE: | | £'000 | | £'000 | Due within one month: Balances due to brokers in respect of portfolio trading - purchases 890 724 Amounts due to brokers in respect of shares repurchased by the Company 3,262 – Accruals 1,075 1,143 Bank loan 36,700 – Due after three months and after one year: Bank loan – 36,700 ### FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value or at a reasonable approximation of fair value. ### VALUATION OF FINANCIAL INSTRUMENTS The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements. Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the asset, noting that most of the Company's investments are quoted assets, these have been categorised as level 1 investments: • Level 1 – quoted prices in active markets. • Level 2 – prices of recent transactions for identical instruments. • Level 3 – valuation techniques using observable and unobservable market data. The financial assets and liabilities measured at fair value in the Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL AS AT 30 SEPTEMBER 2022 £'000 £'000 £'000 £'000 Equity investments 1,847,111 – – 1,847,111 Limited liability partnership interest (Frostrow) – – 4,600 4,600 Frostrow - AIFM capital contribution – – 125 125 Preference share investments 242 – – 242 1,847,353 – 4,725 1,852,078 80 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER GOVERNANCESTRATEGIC REPORT AUDITORS’ REPORT STATEMENTS INFORMATION | | | LEVEL 1 | | LEVEL 2 | LEVEL 3 | TOTAL | | --- | --- | --- | --- | --- | --- | --- | | AS AT 30 SEPTEMBER 2021 | | £'000 | | £'000 | £'000 | £'000 | | Equity investments | 2,065,830 – – 2,065,830 | | | | | | | Limited liability partnership interest (Frostrow) | | | – – 4,300 4,300 | | | | | Frostrow - AIFM capital contribution | | | – – 900 900 | | | | | Preference share investments | | 236 – – 236 | | | | | 2,066,066 – 5,200 2,071,266 The unquoted investment in Frostrow has been re-valued by the Directors during the year, using two unobservable market data sources, being Frostrow’s earnings and an agreed appropriate comparator multiple. This was the same methodology adopted to value Frostrow as at 30September 2021. There have been no transfers during the year between Levels 1 and 2. A reconciliation of fair value measurements in Level 3 is set out below. ### Level 3 Reconciliation of financial assets at fair value through profit or loss at 30 September 2022 2021 £’000 £’000 Opening fair value 5,200 3,950 Frostrow - AIFM capital contribution (repayment)/drawndown (775) 150 Total gains included in gains on investments in the Income Statement 300 1,100 Closing fair value 4,725 5,200 If the earnings used in the valuation were to increase or decrease by 10% while all the other variables remained constant, the return and net costs attributable to shareholders for the year ended 30 September 2022 would have increased/decreased by £460,000 (2021: £430,000, applying the same assumptions). ### CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES The structure of the Company’s capital is described in note 13 on page 76 and details of the Company’s reserves are shown in the Statement of Changes in Equity on page 64. The Company’s capital management objectives are: • to ensure that it is able to continue as a going concern; and • to achieve capital and income growth and to provide shareholders with a total return in excess of that of the FTSE All-Share Index through an appropriate balance of equity and debt. The Board, with the assistance of the AIFM and the Portfolio Manager, regularly monitors and reviews the broad structure of the Company’s capital. These reviews include: • the level of gearing, set at a limit in normal market conditions, is not to exceed 25% of the Company's net assets, which takes account of the Company’s position and the views of the Board, the AIFM and the Portfolio Manager on the market; • the extent to which revenue reserves should be retained or utilised; and • ensuring the Company’s ability to continue as a going concern. The Company’s objectives, policies and procedures for managing capital are unchanged from last year. There were no breaches by the Company during the year of the financial covenants put in place by Scotiabank Europe plc in respect of the committed revolving credit facility provided to the Company. These requirements are unchanged since last year and the Company has complied with them at all times. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 81 ### FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS - CONTINUED ## 18. Net Cash Inflow from Operating Activities before Interest 2022 2021 £’000 £’000 Total (loss)/return before finance charges and taxation (116,867) 197,871 Add/(deduct): capital loss/(gain) before finance charges and taxation 163,912 (156,470) Net revenue before finance charges and taxation 47,045 41,401 Decrease/(increase) in accrued income 81 (1,111) (Decrease)/increase in creditors (68) 30 Taxation – overseas withholding tax paid (917) (833) AIFM, portfolio management fees and other expenses charged to capital (8,043) (7,534) Net cash inflow from operating activities 38,098 31,953 ## 19. Substantial Interests At 30 September 2022 the Company held interests in 3% or more of any class of capital in the following entities: % OF ISSUED SHARE CAPITAL OR LIMITED | | | | | 2022 | | LIABILITY | | --- | --- | --- | --- | --- | --- | --- | | | SHARES | | FAIR VALUE | | PARTNERSHIP | | | COMPANY OR LIMITED LIABILITY PARTNERSHIP | | HELD | | £'000 | | INTEREST | A. G. Barr 4,427,500 20,145 4.0 Frostrow Capital LLP (unquoted)+ – 4,725 9.2 Manchester United 2,293,500 27,243 4.2 The Lindsell Train Investment Trust plc* 10,000 9,720 5.0 Young & Co’s Brewery (non voting shares) 1,042,282 6,191 4.3 + Includes Frostrow Capital LLP's AIFM Capital Contribution, fair value £125,000. * Also managed by Lindsell Train Limited which receives a portfolio management fee based on the Company’s market capitalisation. The details of the fee arrangements with the Company are detailed on page 30. ## 20. Post Balance Sheet Event Subsequent to the year-end, on 4 October 2022, the Company's loan facility with Scotiabank was renewed. See page 34 for furtherdetails. During the period from 1 October 2022 to 5 December 2022, a further 1,668,897 shares were bought back and held in treasury at a cost of £14,082,000. 82 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER AUDITORS’ REPORT STATEMENTSGOVERNANCESTRATEGIC REPORT INFORMATION ### FURTHER INFORMATION ## Glossary of Terms and ## Alternative Performance Measures ### ACTIVE SHARE (APM)^ Active Share is expressed as a percentage and shows the extent to which a fund’s holdings and their weightings differ from those of the fund’s benchmark index. A fund that closely tracks its index might have a low Active Share of less than 20% and be considered passive, while a fund with an Active Share of 60% or higher is generally considered to be actively managed. The Company has a distinctive strategy: a concentrated portfolio of holdings invested across a small number of sectors and themes. Active Share helps quantify the extent to which the portfolio differs from the benchmark index. The Active Share performance is sourced from Morningstar. ### AIC Association of Investment Companies. The AIC represents a broad range of investment companies, investment trusts, VCTs and other closed-ended funds. ### ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (AIFMD) Agreed by the European Parliament and the Council of the European Union and transposed into UK legislation, the AIFMD classifies certain investment vehicles, including investment companies, as Alternative Investment Funds (AIFs) and requires them to appoint an Alternative Investment Fund Manager (AIFM) and depositary to manage and oversee the operations of the investment vehicle. The Board of the Company retains responsibility for strategy, operations and compliance and the Directors retain a fiduciary duty to shareholders. ### ALTERNATIVE PERFORMANCE MEASURE ("APM") An Alternative Performance Measure (APM) is a numerical measure of the Company’s current, historical or future financial performance, financial position or cash flows other than a financial measure defined or specified in the applicable financial framework. In selecting these Alternative Performance Measures, the Directors considered the key objectives and expectations of typical investors and believe that each APM gives the reader useful and relevant information in judging the Company's performance and in comparing other investment companies. ### BENCHMARK RETURN Total return on the benchmark, assuming that all dividends received were re-invested, without transaction costs, into the shares of the underlying companies at the time the shares were quoted ex-dividend. ### CHIEF OPERATING DECISION MAKER The Chief Operating Decision Maker of the Company is considered to be the Board of Directors. It is a Generally Accepted Accounting Principal (GAAP) requirement to disclose who the chief operating decision maker is. ### DISCOUNT OR PREMIUM (APM) A description of the difference between the share price and the net asset value per share. The size of the discount or premium is calculated by subtracting the share price from the net asset value per share and is usually expressed as a percentage (%) of the net asset value per share. If the share price is higher than the net asset value per share the result is a premium. If the share price is lower than the net asset value per share, the shares are trading at a discount. The Board regularly reviews the level of the discount/premium of the Company’s share price to the net asset value per share and considers ways in which share price performance may be enhanced, including the effectiveness of share buy-backs, where appropriate. 30 SEPTEMBER 30 SEPTEMBER DISCOUNT OR PREMIUM (APM) PAGE 2022 2021 Share price (p) 2 800.0 876.0 Net asset value per share (p) 2 848.4 917.7 Discount 2 and 5 5.7% 4.5% FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 83 ### FURTHER INFORMATION GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES - CONTINUED ### FTSE DISCLAIMER “FTSE©” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distributions of FTSE Data is permitted without FTSE’s express written consent. ### GEARING (APM) Gearing represents prior charges, adjusted for net current assets, expressed as a percentage of net assets (AIC methodology). The Directors believe that it is appropriate to show net gearing in relation to shareholders’ funds as it represents the amount of debt funding on the investment portfolio. The gearing policy is that borrowing will not exceed 25% of the Company's net assets. Prior charges includes all loans and bank overdrafts for investment purposes. | | 30 SEPTEMBER | | 30 SEPTEMBER | | | --- | --- | --- | --- | --- | | | | 2022 | | 2021 | | PAGE | | £’000 | | £’000 | Bank loan (prior charges) 65 (36,700) (36,700) Net current assets 15,006 30,092 Net debt (21,694) (6,608) Net assets 65 1,830,384 2,064,658 Gearing 3 1.2% 0.3% ### LEVERAGE For the purpose of the Alternative Investment Fund Managers (AIFM) Directive, leverage is a method which increases the Company’s exposure, including the borrowing of cash and the use of derivatives. Leverage is calculated slightly differently from the AIC method of calculating gearing in that it is expressed as a ratio between the Company’s exposure and its net asset value. It is calculated under gross and commitment methods. Under the gross method, exposure represents the Company’s investment positions excluding sterling cash balances. Under the commitment method, exposure represents the Company's investment positions including sterling cash balances and after certain hedging and netting positions are offset (where applicable). For these purposes the Board has set a maximum leverage of 125% for both methods. 30 SEPTEMBER 30 SEPTEMBER 2022 2021 Gross method 101.2% 100.3% Commitment method 101.6% 101.4% ### NET ASSET VALUE (NAV) The value of the Company’s assets, principally investments made in other companies and cash being held, less any liabilities. The NAV is also described as ‘shareholders’ funds’. The NAV is often expressed in pence per share after being divided by the number of shares that have been issued. The NAV per share is unlikely to be the same as the share price which is the price at which the Company’s shares can be bought or sold by an investor. The share price is determined by the relationship between the demand and supply of the shares. 84 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 INDEPENDENT FINANCIAL FURTHER AUDITORS’ REPORT STATEMENTSGOVERNANCESTRATEGIC REPORT INFORMATION ### NET ASSET VALUE TOTAL RETURN PER SHARE (APM) The theoretical total return on an investment over a specified period assuming dividends paid to shareholders were reinvested at net asset value per share at the time the shares were quoted ex-dividend. This is a way of measuring investment management performance of investment companies which is not affected by movements in discounts or premiums. The Directors regard the Company’s net asset value total return per share as being the overall measure of value delivered to shareholders over the long term. The Board considers the principal comparator to be its benchmark, the FTSE All-Share Index. 30 SEPTEMBER 30 SEPTEMBER NAV TOTAL RETURN PAGE 2022 2021 Opening NAV per share (p) 2 917.7 846.2 (Decrease)/increase in NAV per share (p) (69.3) 71.5 Closing NAV per share (p) 2 848.4 917.7 (Decrease)/increase in NAV per share (7.6)% +8.4% Impact of dividends re-invested* +1.8% +2.2% NAV per share total return 2, 3 and 4 (5.8)% +10.6% * The NAV total return is calculated on the assumption that the total dividends of 17.4p (16.6p) paid by the Company during the year were reinvested into assets of the Company at the NAV per share at the ex-dividend date. The treasury shares held by the Company have been excluded from this calculation. The source of this data is Morningstar who have calculated the return on an industry comparative basis. ### ONGOING CHARGES (APM) Ongoing charges are calculated by taking the Company’s annualised operating expenses expressed as a proportion of the average daily net asset value of the Company over the year. The costs of buying and selling investments are excluded, as are interest costs, taxation, cost of buying back or issuing ordinary shares and other non-recurring costs. Ongoing charges represent the costs that shareholders can reasonably expect to pay from one year to the next, under normal circumstances. The Board continues to be conscious of expenses and works hard to maintain a sensible balance between high quality service and the cost of provision. | | 30 SEPTEMBER | | 30 SEPTEMBER | | | --- | --- | --- | --- | --- | | | | 2022 | | 2021 | | PAGE | | £'000 | | £'000 | AIFM and portfolio management fees 70 10,712 11,240 Operating expenses 71 1,078 1,007 Total expenses 11,790 12,247 Average net assets during the year 1,973,934 1,988,069 Ongoing charges 3 0.60% 0.62% ### PEER GROUP Finsbury Growth & Income Trust PLC is part of the AIC’s UK Equity Income Investment Trust Sector. The trusts in this universe are defined as trusts whose investment objective is to achieve a total return for shareholders through both capital and dividend growth. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 85 ## FURTHER INFORMATION GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES - CONTINUED ## REVERSE STRESS TEST Reverse stress tests are stress tests that identify scenarios and circumstances which would make a business unworkable and identify potential business vulnerabilities. ## SASB The Sustainability Accounting Standards Board aims to establish industry-specific disclosure standards across ESG topics that facilitate communication between companies and investors about financially material, decision-useful information. ## SHARE PRICE TOTAL RETURN (APM) The change in capital value of a company's shares over a given period, plus dividends paid to shareholders, expressed as a percentage of the opening value. The assumption is that dividends paid to shareholders are re-invested in the shares at the time the shares are quoted ex-dividend. The Directors regard the Company's share price total return to be a key indicator of performance. This reflects share price growth of the Company which the Board recognises is important to investors. | SHARE PRICE TOTAL RETURN | PAGE | 30 SEPTEMBER 2021 | 30 SEPTEMBER 2021 | | --- | --- | --- | --- | | Opening share price share (p) | 2 | 876.0 | 840.0 | | (Decrease)/increase in share price (p) | | (76.0) | +36.0 | | Closing share price (p) | 2 | 800.0 | 876.0 | | (Decrease)/increase in share price | 2 | (8.7)% | +4.3% | | Impact of dividends re-invested* | | +3.1% | +2.0% | | Share price total return | 2 | (5.6)% | +6.3% | * The share price total return is calculated on the assumption that the total dividends of 17.4p (16.6p) paid during the year were reinvested into shares of the Company at the share price at the ex-dividend date. The source is Morningstar who have calculated the return on an industry comparative basis. ## STERLING OVERNIGHT INDEX AVERAGE ("SONIA") SONIA is an interest rate published by the Bank of England. SONIA can be seen as the average interest rate at which a selection of financial institutions lend to one another in British pound sterling (GBP) with a maturity of 1 day (overnight). ## STRESS TESTING Stress testing is a forward-looking analysis technique that considers the impact of a variety of extreme but plausible economic scenarios on the financial position of the Company. ## TCFD The Financial Stability Board created the Task Force on Climate-related Financial Disclosures ("TCFD") to improve and increase reporting of climate-related financial information. ## TREASURY SHARES Shares previously issued by a company that have been bought back from shareholders to be held by the company for potential sale or cancellation at a later date. Such shares are not capable of being voted and carry no rights to dividends. 66 FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 STRATEGIC REPORT GOVERNANCE INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS FURTHER INFORMATION # FURTHER INFORMATION # Company Information ## Share Prices The Company's ordinary shares are listed on the London Stock Exchange under Investment Companies'. ## Daily Net Asset Value per share The daily net asset value per share of the Company's shares can be obtained on the Company's website www.finaburygt.com and is published daily via the London Stock Exchange. ## Registered Office 50 Lothian Road Festival Square Edinburgh EH3 9WJ Incorporated in Scotland with company no. SC013958 and registered as an investment company under Section 833 of the Companies Act 2006. ## AIFM, Company Secretary and Administrator Frostrow Capital LLP 25 Southampton Buildings London WC2A 1AL Telephone: 020 3008 4910 E-Mail: info@frostrow.com Website: www.frostrow.com Authorised and regulated by the Financial Conduct Authority. ## Portfolio Manager Lindell Train Limited 3rd Floor 65 Buckingham Gate London SW1E 6AU Telephone: 020 7808 1225 Website: www.lindelltrain.com Authorised and regulated by the Financial Conduct Authority. ## Independent Auditors PricewaterhouseCoopers LLP 7 More London Riverside London SE1 2RT ## Depository The Bank of New York Mellon (International) Limited 160 Queen Victoria Street London EC4V 4LA ## Global Custodian Bank of New York Mellon 160 Queen Victoria Street London EC4V 4LA ## ISA STATUS The Company's shares are eligible for Individual Savings Accounts ("ISAs") and for Junior ISAs. ## Registrars If you have any queries in relation to your shareholding please contact: Link Group 10th Floor Central Square 29 Wellington Street Leeds LS1 4DL email: shareholders@linkgroup.co.uk telephone +44 (0)371 664 0300+ Website: www.linkgroup.eu + Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 09:30 and 17:30. Monday to Friday excluding public holidays in England and Wales. ## Share Portal If you hold your shares directly you can register online to view your holdings using the Share Portal, a service offered by Link Group www.signalshares.com The Share Portal is an online service enabling you to quickly and easily access and maintain your shareholding online – reducing the need for paperwork and providing 24 hour access to your shareholding details. Details of how Shareholders who hold their shares on retail platforms can vote can be found on pages 11 to 13 of the Notice of Meeting. ## Corporate Broker Winterflood Securities Limited The Atrium Building Cannon Bridge 25 Dowgate Hill London EC4R 2GA ## Identification Codes | Shares: | SEDOL: | 0781606 | | --- | --- | --- | | | ISIN: | 080007816068 | | | BLOOMBERG: | FGT LN | | | EPIC: | FGT | ## Legal Entity Identifier (LEI) 213800NN420Q2L0iGQ40 ## Global Intermediary Identification Number (GIIN) QH48H0.99999.SL826 ## Disability Act Copies of this Annual Report and other documents issued by the Company are available from the Company Secretary. If needed, copies can be made available in a variety of formats, including braille, audio tape or larger type as appropriate. You can contact the Registrar to the Company, Link Asset Services, which has installed telephones to allow speech and hearing impaired people who have their own telephone to contact them directly, without the need for an intermediate operator. For this service please call 0800 731 1888. Specially trained operators are available during normal business hours to answer queries via this service. Alternatively, if you prefer to go through a 'typetalk' operator (provided by The Royal National Institute for Deaf People) you should dial 18001 from your textphone followed by the number you wish to dial. FINSBURY GROWTH & INCOME TRUST PLC Annual Report 2022 67 Designed and printed by Perivan ## Warning to Shareholders: Many companies have become aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas based ‘brokers’ who target UK shareholders offering to sell them what often turn out to be worthless or high-risk shares in US or UK investments. They can be very persistent and extremely persuasive. Shareholders are therefore advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports. Please note that it is very unlikely that either the Company or the Company’s Registrar, Link Asset Services, would make unsolicited telephone calls to shareholders and that any such calls would relate only to official documentation already circulated to shareholders and never in respect of investment ‘advice’. Shareholders who suspect they may have been approached by fraudsters should advise the Financial Conduct Authority (“FCA”) using the share fraud report form at www.fca.org.uk/scams or call the FCA Customer Helpline on 0800 111 6768. You may also wish to call either the Company Secretary or the Registrar whose contact details can be found on page 87. Avoid investment fraud Report a Scam ## Be ScamSmart | | 1 Reject cold calls | If you suspect that you have been | | --- | --- | --- | | | If you’ve received unsolicited contact about | approached by fraudsters please tell the | | | an investment opportunity, chances are | FCA using the reporting form at | | Investment scams are | it’s a high risk investment or a scam. You | www.fca.org.uk/consumers/report- | | | should treat the call with extreme caution. | scam-unauthorised-rm. You can also call | ### designed to look like The safest thing to do is to hang up. the FCA Consumer Helpline on ### genuine investments 0800 111 6768 2 Check the FCA Warning List The FCA Warning List is a list of rms and Spot the warning signs If you have lost money to investment fraud, individuals we know are operating without you should report it to Action Fraud on Have you been: our authorisation. 0300 123 2040 or online at • contacted out of the blue 3 Get impartial advice www.actionfraud.police.uk • promised tempting returns Think about getting impartial nancial and told the investment is safe advice before you hand over any money. Find out more at • called repeatedly, or Seek advice from someone unconnected to www.fca.org.uk/scamsmart • told the offer is only available the rm that has approached you. for a limited time? If so, you might have been contacted by fraudsters. ### Remember: if it sounds too ### good to be true, it probably is! This report is printed on Revive 100% White Silk a totally recycled paper produced using 100% recycled waste at a mill that has been awarded the ISO 14001 certificate for environmental management. The pulp is bleached using a totally chlorine free (TCF) process. This report has been produced using vegetable based inks. This report is printed on Revive 100% White Silk a totally recycled paper produced using 100% recycled waste at a mill that has been awarded the ISO 14001 certificate for environmental management. The pulp is bleached using a totally chlorine free (TCF) process. This report has been produced using vegetable based inks. ### Mobius Investment Trust Plc ### 25 Southampton Buildings, London WC2A 1AL ### www.mobiusinvestmenttrust.com Perivan 256419 A member of the Association of Investment Companies ## Winner CFI.co Award 2021. Category: Best ESG portfolio management strategy (UK) PERIVAN 263840 ### .