Finsbury Growth & Income Trust PLC
(the “Company”)
This announcement contains regulated information
Annual Financial Report for the year ended 30 September 2024
Finsbury Growth & Income Trust PLC is a listed investment company and a constituent of the FTSE 250. The Company is a member of the Association of Investment Companies (“AIC”).
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 net asset value per share increased by 8.2% during the financial year to 30 September 2024 on a total return basis (2023: 7.2%).
DIVIDENDS
During the year the Company paid two interim dividends totalling 19.6p (2023: 19.0p) which was an increase of 3.2%.
KEY FACTS
| As at 30th September 2024 | As at 30th September 2023 | Change | |
| Net asset value per share | 943.4p | 891.2p | +5.8% |
| Share price | 861.0p | 852.0p | +1.1% |
| Discount of share price to net asset value per share | 8.7% | 4.4% | |
| Return per share | 57.7p | 61.4p | -6.0% |
| Active Share | 84.1% | 85.3% | |
| Total dividends per share for the year | 19.6p | 19.0p | +3.2% |
| Net asset value per share total return | 8.2% | 7.2% | |
| Shareholders’ funds | £1.582bn | £1.823bn | -13.2% |
| Ongoing charges | 0.61% | 0.61% | |
| Share price total return | 3.4% | 7.5% | |
| Gearing | 0.7% | 0.8% | |
| Number of shares in issue (excluding 57,273,635 shares held in Treasury) | 167,717,668 | 204,519,434 (Treasury shares: 20,471,869) | -18.0% |
FIVE YEARS SUMMARY
| As at 30th September | 2020 | 2021 | 2022 | 2023 | 2024 |
| Share price | 840.0p | 876.0p | 800.0p | 852.0p | 861.0p |
| Net asset value per share | 846.2p | 917.7p | 848.4p | 891.2p | 943.4p |
| Discount of Share price to net asset value per share | 0.7% | 4.5% | 5.7% | 4.4% | 8.7% |
| Year ended 30th September | 2020 | 2021 | 2022 | 2023 | 2024 |
| Share price total return | (9.0)% | +6.3% | (5.6)% | +7.5% | +3.4% |
| Net asset value per share total return | (7.7)% | +10.6% | (5.8)% | +7.2% | +8.2% |
| FTSE All-Share Index total return | (16.6)% | +27.9% | (4.0)% | +13.8% | +13.4% |
| Total (loss)/return per share | (67.1)p | 88.0p | (53.4)p | 61.4p | 57.7p |
| Dividends per share | 16.6p | 17.1p | 18.1p | 19.0p | 19.6p |
Chairman’s Statement
Simon Hayes, Chairman
PERFORMANCE
As we approach Finsbury’s 100th anniversary and after almost ten years on your Board I am very aware of how essential it is that investment managers have a long-term perspective. However, managing funds over such time horizons is inevitably difficult and I am disappointed to report another year of underperformance by your Company when measured against the performance of the benchmark, the FTSE All-Share Index. While the Company’s long-term track record remains impressive, this will provide little solace to more recent investors for whom returns will be substantially below what they may have hoped for.
The Company’s net asset value (“NAV”) per share delivered a total return of 8.2% over the financial year compared with a benchmark total return of 13.4%. The share price return over the same period was 3.4%, reflecting a widening of the discount to NAV.
In the face of this ongoing period of challenging performance your Board has continued to provide constructive challenge to the Portfolio Manager, regularly reviewing the investment process, portfolio themes and individual holdings throughout the year. The Board has also undertaken a series of meetings with institutional Shareholders (representing approximately a third of the Company’s share capital), to ascertain their views of the Company and the extent of their continued support for the investment approach. While no one wants to experience a prolonged period of underperformance, it is clear that there remains significant support from investors for the Company’s concentrated investment portfolio. No Shareholder has expressed to us any appetite for a material change in approach.
We are grateful for this continued support but do not take it for granted. With that in mind, and as part of broader shareholder engagement, your Board will hold a continuation vote after the current financial year ends in September 2025 (expected to be held at the Company’s AGM in January 2026). This will offer all Shareholders, in particular our retail shareholders who represent a significant proportion of our register, an opportunity to express their support, or otherwise, for the continuation of the Company with its current investment strategy.
In the meantime, your Board remains committed to buying back shares, as described in more detail below, aware of the value of the additional liquidity an active buy-back strategy offers and of the enhancement in net asset value that buy-backs provide. In the past financial year, the Company has bought back over £310 million worth of its own shares which is more then three times the value bought back in 2023.
As it is always important to point out, a highly concentrated portfolio means higher risk, particularly in the short term. At 30 September 2024, the Company’s Active Share – a measure of how much it varies from the FTSE All-Share Index benchmark – was 84.1% (2023: 85.3%). Such an uncorrelated portfolio will inevitably perform very differently from the wider market, whether positively or negatively.
I urge you to read Nick Train’s very helpful review where he discusses the reasons for the relative underperformance and explains why he holds the top ten holdings of the portfolio and why he is optimistic for better future returns.
OUTLOOK
During this period of disappointing performance it is worth remembering that the interests of Shareholders, your Board and your Portfolio Manager are closely aligned. First, significant buy-backs at a discount increase the NAV per share for those Shareholders who maintain their holding. Secondly, fees are levied on the market capitalisation of the Company and not the NAV, meaning that fees payable decline commensurately with the size of any discount. Finally, our Portfolio Manager has continued to buy shares in the Company. Over the last year, Nick Train has acquired 222,800 shares and currently speaks for 3.5% of the equity of the Company (December 2023: 2.6%).
Your Board continues to fully support the Portfolio Manager’s disciplined strategy of investing for the long term in high quality companies that own both durable and cash generative franchises. As an investment trust, our portfolio is permitted to be concentrated on the highest conviction ideas. When those ideas pay off, the impact on performance will be significant. We believe that it is only a matter of time before the Company resumes its excellent long-term record.
It has been a privilege to serve the Company and its Shareholders and I wish you all the very best for the future.