REG - F&C Investment Trust - Annual Financial Report
17/03/2025 07:00
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RNS Number : 8170A F&C Investment Trust PLC 17 March 2025
F&C INVESTMENT TRUST PLC
Audited Statement of Results for the year ended 31 December 2024
LEI: 213800W6B18ZHTNG7371
Information disclosed in accordance with DTR 4.1.3
17 March 2025
F&C Investment Trust plc ('F&C'/the 'Company') today announces its
results for the year ended 31 December 2024.
· F&C's share price was 1,108 pence representing a total return of
+16.9%, against its benchmark, the FTSE All-World Index, of +19.3%.
· F&C's Net Asset Value ('NAV') total return of +21.0%, with debt
at market value, ahead of the benchmark.
· The Company has delivered a total shareholder return of 212.2% over
the ten-year period to the end of 2024, equivalent to 12.1% per annum which
compares with a return of 200.2% (equivalent to 11.6% per annum) from our
benchmark index.
· The final dividend will be 4.8 pence per share, subject to
shareholder approval, and will bring the total dividend for the year to 15.6
pence per share. This will be a 6.1% increase and the 54th consecutive annual
increase.
Commenting on the markets, Paul Niven, Fund Manager said:
"Despite a volatile and rapidly changing market backdrop, our consistent
approach has served shareholders very well over the long term."
The Chairman, Beatrice Hollond, commented:
"F&C's NAV total return has beaten the benchmark and its global peer group
over one, three, five and ten years. Over twenty years, our return is
equivalent to 10.4% per annum. The growth in our dividends over the past
decade is significantly higher than UK inflation."
The full results statement is attached.
Past performance should not be seen as an indication of future performance.
The value of investments and income derived from them can go down as well as
up as a result of market or currency movements and investors may not get back
the original amount invested.
Contacts
Paul Niven - Fund Manager 020 3530 6396
Campbell Hood
campbell.hood@columbiathreadneedle.com
(mailto:campbell.hood@columbiathreadneedle.com) 07860 911 622
Lansons
Tom Straker
columbiathreadneedle@lansons.com (mailto:columbiathreadneedle@lansons.com)
07505 425 961
About F&C:
· Founded in 1868 - the oldest collective investment trust
· A diversified portfolio provides exposure to most of the world's
stock markets, with exposure to just under 400 individual companies across the
globe
· Its aim is to generate long-term growth in capital and income by
investing primarily in an international portfolio of listed equities
Visit our website: fandc.com (http://fandc.com)
Chairman's Statement
Dear Shareholder,
2024 was another strong year for global equity markets with US equities rising
by more than 25%. This was the first time since the late 1990s that US
investors have enjoyed successive annual gains of greater than 20%. As was the
case in 2023, the US outperformed both analysts' expectations and other major
equity markets. The so-called 'Magnificent Seven' US mega-cap technology
stocks delivered returns well in excess of the broader market. Indeed, this
collection of exceptional companies, which include Nvidia, Microsoft and
Amazon, delivered a 67% dollar-based gain on the year, pushing the market
weight of these companies in the US index to new highs.
US equity market performance was driven by better-than-expected economic data
and, as the year progressed, initial fears of recession gave way to robust US
growth, while inflation fell to levels which enabled central banks to begin
cutting interest rates. While the scale of resultant interest rate cuts was
below initial expectations, the combination of strong earnings growth in the
US, declining inflation and interest rates, alongside ongoing optimism over
the impact of Artificial Intelligence ('AI') propelled equity markets to new
record highs. Furthermore, despite uncertainty over policy, the election of
Donald Trump as US President for a second term, with promises of corporate tax
cuts and deregulation, gave further impetus to investor risk appetite in the
final part of the year.
The picture was more mixed outside of the US. While the global economy avoided
a recession over the year, there was reasonable dispersion across regions.
Sluggish economic data, along with lower inflation in Europe and the UK, led
to an easing of interest rate policy by the European Central Bank and the Bank
of England.
Our Net Asset Value ('NAV') total return, taking debt at market value, of
+21.0% outperformed the return from our benchmark index of +19.3%. Our share
price and our NAV total returns exceeded those delivered from our closed ended
peers in 2024. Indeed, both our returns exceed that of our open and closed
ended peers over one, three, five and ten years. This outperformance, over all
these periods is unique in our closed ended sector. As a diversified global
investment trust, designed to provide consistency in terms of performance
outcome, it is pleasing to report these strong and consistent returns for
shareholders. Furthermore, as our NAV total return has also exceeded that of
our market benchmark over one, three, five and ten years, we believe that this
is a strong proof statement on the effectiveness of our investment approach.
Although our share price and NAV reached new record highs, in common with many
of our peers in the investment trust sector we saw a widening in our share
price discount to NAV in 2024. Our discount moved from 5.9% at the start of
the year, to end the year at 9.2%. This detracted from shareholder returns,
resulting in a share price total return of +16.9%, lower than our NAV total
return of +21.0%. Our NAV, with debt at market value, rose from 1,022.1p to
1,219.6p per share and our share price rose from 962p to 1,108p. We bought
back 5.3% of our issued share capital, a total of 27.3m shares. We remain
committed towards our objective of achieving a sustainably low deviation
between our share price and NAV, as well as reducing the volatility of the
discount.
Performance from our underlying listed strategies was strong over the year,
with each component of our portfolio delivering a gain in absolute terms.
Performance was particularly strong in North America, Japan and from our
Global Focus strategy, which has exposure to quality growth stocks. While we
were relatively underweight compared to the benchmark index to some of the
Magnificent Seven stocks, overall our listed portfolio modestly outperformed
its benchmark index. The decision by our Fund Manager to reduce our
allocations to emerging markets and Europe in the first half of 2024 served us
well as both regions underperformed the broader benchmark over the year. While
our private equity portfolio produced respectable absolute returns over the
year, performance lagged that of the listed global equity benchmark.
As our investment portfolio has significant investments in US assets the
modest decline in sterling (of -1.8%) against the US dollar was beneficial to
returns. In a year where markets rose strongly, our gearing added value over
the year.
Following our re-admission to the FTSE100 index in 2022, I am pleased to
report that we not only maintained this position, but we actually rose within
the index, cementing our position as one of the UK's leading listed companies.
As noted in our 2023 Annual Report, we have previously been a FTSE100
constituent, but this current period is the longest that we have remained in
the index.
Contributors to total returns in 2024 (%)
Portfolio return((1)) 19.1
Management fees (0.3)
Interest and other expenses (0.5)
Share buybacks 0.5
Change of value of debt 0.6
Gearing/other 1.6
NAV total return 21.0
Change in share price discount (4.1)
Share price total return 16.9
FTSE All-World total return 19.3
Source: Columbia Threadneedle Investments
Long-term results
We remain resolutely focused on our investment objective of securing growth in
both capital and income for shareholders over the long term. Over the ten
years to the end of 2024 your Company delivered a total shareholder return of
+212.2%, equivalent to +12.1% per annum. Returns have remained remarkably
consistent, with limited losses on an annual basis over the past decade.
Over a twenty-year period to 31 December 2024 the Company's NAV return was
+627.3%, equivalent to 10.4% per annum. Our capital-only return (i.e. without
dividends reinvested) over the past twenty years was +469.7% (9.1% per annum)
and our shareholder total return was +751.6% (11.3% per annum). Dividends paid
to shareholders have risen by 5.3% per annum over the past decade and by 6.8%
over the past twenty years. Such results continue to demonstrate the
importance of compounding income and capital gains over the long term, in the
process of value creation for shareholders.
Fifty fourth consecutive annual dividend increase
Our gross and net income generated in 2024 represented a new record high.
Gross income rose by 4.9% to £111.8m and our net revenue rose by 3.5% to
£84.6m. Special dividends fell slightly to £3.6m (2023: £4.4m). The impact
of currency movements reduced our income by £3.4m (2023: -£0.6m). Our Net
Revenue Return per share rose by 7.5% on the year to 17.01 pence, from 15.83
pence per share in 2023.
The UK rate of inflation (as measured by CPI) declined during the year,
falling from 4% to 2.5%. This represents a significant reduction in inflation
from that seen during the inflationary spike post the Covid pandemic and the
invasion of Ukraine, but inflation remains above the target of the Bank of
England and slightly higher than levels seen in the years before Covid. It
remains the ambition of the Board to deliver real rises in dividends for
shareholders over the long-term that are sustainable. I am therefore delighted
to report another rise in the proposed annual dividend, which will again be
fully covered by our revenue earned in the year. Subject to approval at the
Annual General Meeting ('AGM'), shareholders will receive a final dividend of
4.8 pence per share on 7 May 2025, bringing the total dividend for 2024 to
15.6 pence: an increase of 6.1% over that of 2023. The increase compares to
the 2.5% rise in CPI and means that the growth in our dividends has exceeded
UK inflation over one, three, five and ten years. Indeed, the growth in our
dividends over the past decade, at 67.7%, is almost double that of UK
inflation over the equivalent period (35.4%). Furthermore, our full year 2024
dividend, as well as being our fifty fourth consecutive rise in annual
dividends, is our one hundred and fifty seventh annual dividend payment for
shareholders.
We continue to benefit from a strong financial position with respect to both
our revenue reserves (£116.2m), which represent approximately one year of
dividend payments, and our capital reserves which stood at £5.3bn at the year
end. As both are potentially distributable, we remain very well placed to
continue our track record of increasing annual dividends well into the
future.
Efficiency
I am pleased to report that our 2024 Ongoing Charges figure fell to 0.45%,
down from 0.49% in 2023. This reduction in charges was driven, in part, by the
benefits of scale applying to our fee arrangement with our Manager and by
greater efficiency in terms of our expenses, relative to an increased asset
base.
The Board remains focused on delivering value for money for shareholders as
part of its performance objectives and the Manager is also supportive of
providing benefits of scale for their clients. Following constructive
discussions with the Manager, I am pleased to advise that, from 1 January
2025, the Company's management fee will be paid at the rate of 0.3% on the
first £3.5bn of the market value of the Company (down from £4bn at present)
and at 0.25% on the value of the Company between £3.5bn and £6bn. A new tier
has been introduced, with a fee of 0.2% on market value above £6bn applying.
From 1 January 2026, the level at which the 0.3% fee will start to apply will
fall further, to £3bn. These revised fee arrangements will ensure that your
Company remains extremely competitively positioned relative to peers and the
Board believes that, along with our delivered investment performance, this
should position the Company to both attract and retain new shareholders over
time.
Borrowings
We did not add to our total borrowings of £578.7m over the course of the
year. Our cash and cash equivalents including short-dated Government bonds
were reduced from £166.5m to £91.1m. There was no Government bond exposure
at the year end. Our effective gearing level (with debt at par and considering
Government bonds as part of our investment portfolio) fell to 8.6% from 9.9%
at the start of the year.
With our substantial long-term borrowings and low fixed rates on our loans
that extend to 2061, we remain very well positioned to add value through
investment in assets which should be expected to deliver a superior return.
Our loans have a blended interest rate of approximately 2.4%, which is far
below current prospective rates which we would pay for short and long-dated
loans.
reducing Carbon Intensity
The Board remains committed to transitioning the Company's portfolio to net
zero carbon emissions by 2050 ('Net Zero'). The Manager's approach to
Responsible Investment is set out in the Annual Report and shareholders will
note that the portfolio's carbon intensity has increased in the last two years
as a result of changes within the portfolio. It is important to be aware that
progress towards Net Zero will not be in the form of a straight-line
trajectory and that there are several reasons for this. The Company has an
investment objective to deliver growth in capital and income over time and the
Board considers that this remains the primary objective for the Fund Manager.
In the short term, delivering on the investment returns objective might
periodically mean increases in the overall carbon intensity of the portfolio
but, over time, we intend to reduce it both through investments in renewable
energy and other decarbonisation technologies, as well as engaging with
companies across our portfolio to ensure their activities are aligned or
aligning to Net Zero. As a result of that engagement, companies are assessed
as to whether they are aligned, aligning, committed, or not aligned to Net
Zero and we also pay close attention to progress on this alignment. More
detail is given in the Responsible Investment section of the Annual Report.
The Board is also cognisant that there might be short term disruption and
challenges in achieving its Net Zero target and it has identified the failure
to transition to Net Zero as a principal risk.
Board Composition
Richard Robinson was appointed to the Board on 3 May 2024, replacing Tom Joy
who stepped down from the Board on 31 March 2024. Richard has been the
Investment Director of the Paul Hamlyn Foundation since 2009 and has
considerable investment management experience.
Edward Knapp will have served as a Director for nine years in July this year.
He will seek re-election at the forthcoming AGM but will step down from the
Board in the second half of this year. We shall miss Edward's outstanding
combination of investment, operational and general management experience. His
contributions to the Board's discussions on strategy and risk have been
particularly valuable. We will commence the process to recruit his successor
shortly and an announcement will be made in due course.
F&C Lecture
In June 2024, we held our biennial lecture. As well as wanting to engage with
our existing shareholders, we continue our efforts to attract young investors
and the event was branded "F&C Live", with the theme "Smart choices:
Navigating an Age of Social Change". We had some thought-provoking speakers
who covered areas such as artificial intelligence, demographics, disruptive
technology and geopolitics. It was very well received by those who attended
and you can view a recording of the event, and interviews with the speakers,
on our website at fandc.com.
Annual General Meeting
This year's AGM will be a "hybrid" meeting, which will enable shareholders who
cannot attend in person to view the AGM online and to participate by asking
questions and voting if they wish. Full details of how to do so are set out in
the letter that accompanies your Form of Proxy or Form of Direction.
Voting will be conducted by way of a poll, and you are requested to lodge your
votes ahead of the meeting by completing your Form of Proxy or Form of
Direction in accordance with the instructions. Its completion and return will
not preclude you from attending the meeting and voting in person. If you are
unable to attend the AGM, you are requested to submit any questions you may
have with regard to the resolutions proposed at the AGM, or the performance of
the Company, in advance of the meeting to F&Cagm@columbiathreadneedle.com.
Following the AGM, the Fund Manager's presentation will be available on the
Company's website at fandc.com.
Outlook
2024 saw a continuation of many of the market themes from 2023. Performance
from the Magnificent Seven sent US equities to record highs and to record
levels of market concentration. It is noteworthy that recent equity market
gains have been fuelled by such a small number of companies. However, there
are expectations for a broadening out of returns across equity markets over
the coming year.
The forecast for economic growth remains mixed for 2025. In the US, inflation
is now expected to remain above target for longer, with jobs and underlying
activity still showing strong readings. This is likely to leave only limited
room for the Federal Reserve to cut interest rates from current levels. In
Europe and the UK, signs of slowing economic growth means central banks are
expected to cut rates over the coming year.
Equity markets, particularly the US, appear to be valued with little room for
disappointment. Whilst there is investor enthusiasm for an expansionary policy
mix that includes tax cuts and extra fiscal spending from the new US
administration, investors continue to be concerned over potential tariffs and
the route the new US administration will pursue regarding foreign policy.
These could act as headwinds for global growth and investor sentiment in 2025.
Furthermore, the current dominance of a small cohort of leading companies may
face challenges from a number of areas including increased competition or
regulatory challenges.
Our robust corporate structure and long-term perspective on investment
opportunities is one of our great strengths. Our long-dated senior notes
provide fixed, low-cost borrowings from which we can fund investments. Our
dividend, rising for a fifty-fourth consecutive year, is fully covered. We
continue to hold significant revenue reserves, which should help us to
continue to meet our objective of delivering above inflation increases in the
dividend over the coming years. Our Private Equity portfolio, mainly focused
on mid-market opportunities, remains well positioned, after a relatively
fallow period, to benefit from future growth. Realisations in our portfolio
managed by Columbia Threadneedle Investments increased in 2024 and we hope to
see that continue into 2025. Our recent Growth and Venture Capital investments
remain in the early stages of their investment programmes, but we remain
optimistic over longer-term prospects there. There are many reasons for
caution and indeed recent events relating to potential lower cost advances in
AI illustrate the potential for both market volatility and shocks but,
equally, the backdrop for financial markets does appear positive for the
coming years. Regardless of potential short-term volatility, we remain
resolutely focused on long-term opportunities.
Beatrice Hollond
14 March 2025
Forward-looking statements
This document may contain forward-looking statements with respect to the
financial condition, results of operations and business of the Company. Such
statements involve risk and uncertainty because they relate to future events
and circumstances that could cause actual results to differ materially from
those expressed or implied by forward-looking statements. The forward looking
statements are based on the Directors' current view and on information known
to them at the date of this document. Nothing should be construed as a profit
forecast.
Weighting, stock selection and performance over one year in each investment
portfolio strategy and underlying geographic exposure versus Index at 31
December 2024
Investment Our portfolio strategy Underlying geographic exposure((1)) % Benchmark Our strategy Net index
Portfolio
weighting %
weighting %
Strategy performance performance
in sterling %
in sterling %
North America 41.7 64.5 67.2 27.7 26.3
Europe inc. UK 8.3 20.0 13.7 11.3 4.2
Japan 4.1 5.7 5.7 14.9 9.7
Emerging Markets 4.9 7.7 9.9 7.9 9.4
Developed Pacific 2.1 3.5 (3.9)
Global Strategies((2)) 30.1 17.6 19.3
Private Equity((3)) 10.9 9.7
(1) Represents the geographic exposure of the portfolio, including underlying
exposures in private equity and fund holdings.
(2) The Global Strategies allocation consists of Global Income, Global Value,
Global Focus and Global Enhanced.
(3) Includes the holdings in Schiehallion and Syncona.
Source: Columbia Threadneedle Investments
PRINCIPAL AND EMERGING RISKS
Risk monitoring
The Board has continued to work with the Manager in managing the Company's
risks. A risk summary is produced by the Manager in consultation with the
Board to identify the risks to which the Company is exposed, the controls in
place and the actions being taken to mitigate them. The Board, through the
Audit Committee, has a robust process for considering the resulting risk
control assessment at regular meetings and on an ongoing basis it reviews the
significance of the risks and the reasons for any changes.
To a great extent, the Company is reliant on the risk management and internal
control processes that are embedded in the Manager's day-to-day operations.
The Board is confident through regular review and scrutiny that the Manager
has the required systems, tools, governance and processes in place to
identify, assess, monitor, manage and mitigate all material risk and control
issues that might impact the Company. This includes the ability of the Manager
to leverage expert resource as required: for example, the Company benefits
from the Manager's global team of experts that focuses continually on
cybersecurity. The Manager provides ongoing comprehensive risk management and
control across the whole of the Company's portfolio, including management and
oversight of the risks arising from the use of both internal resource and
third party managers.
The Board carried out a thorough review of the risks that could impact the
sustainable success of the Company. The purpose of the exercise was to
reassess the principal and emerging risks and identify any new, emerging risks
and to take any necessary action to mitigate their potential impact. The Risk
Control Assessment was then revised in line with the conclusions that were
reached. As a result of this review, some risks have been reclassified as
Principal Risks and two new Emerging Risks have been identified.
The Board confirms that it has carried out a robust review and assessment of
the Company's principal and emerging risks and the uncertainties that could
threaten its future success. This includes near-term risks such as those posed
by geopolitical uncertainty and longer-term risks, such as climate change. The
consequences for the Company's strategy, business model, liquidity, future
prospects, long term viability and its commitment to transition the portfolio
to net zero carbon emissions by 2050, form an integral part of this review.
Our risk evaluation forms an inherent part of our strategy determination,
which seeks to mitigate risks and to pursue the opportunities that arise. As a
result of the Board's assessment, the following risk disclosures reflect what
it believes to be the Principal and Emerging Risks that the Company faces at
present, the material controls in place to mitigate those risks and whether
the status of those risks has changed in the year under review.
PRINCIPAL RISKS
Risk Description Risk Mitigation/Controls Status
Unsatisfactory Investment Performance
Sub-optimal implementation Under our business model, a Manager is appointed with Long-term performance
of the investment strategy, the capability and resources to manage the Company's remains in line with the
for example poor asset assets through asset allocation, sector and stock selection, risk management Company's objective and
and the use of gearing. The Manager can delegate the management of investment
allocation, sector and stock
the Board's expectations.
portfolios externally to third-party managers. The individual global and
selection, concentration risk, regional investment portfolios are Prudent management of the Company's Revenue Reserve means that its dividend
paying capacity remains strong. The
excessive diversification, managed as a whole to provide diversification, lower volatility and lower
risk. key indicators of risk remain within tolerance across the long-term,
inadequate inhouse private
diversified portfolio.
The performance of the Company relative to its benchmark, its peers and
equity capability, currency inflation is a KPI measured Consequently, the Board
exposure and use of gearing by the Board on an ongoing basis. The Company's portfolio is well diversified considers that this risk has
and its closed-end structure enables it to continue to take a long-term view.
and derivatives may give rise Detailed reduced.
to under-performance against the Company's benchmark index and companies reports, including revenue forecasts, provided by the Fund Manager are
within its reviewed by the Board at each of its
peer group. It may also impact the Company's dividend meetings.
paying capacity.
Geopolitical Actions
Geopolitical risks may The Company has a clearly defined investment strategy. Assets are diversified The Board considers that this risk has increased.
to reduce concentration risk and investment processes incorporate
result in global financial and non-financial and
equity markets instability. risk considerations in the assessment of investment opportunities. Gearing
limits are set by the Board and
Geopolitical actions may
levels are reported regularly.
result in the imposition of
The Manager has systems, staff and controls in place to enable ongoing
government and/or regulatory controls, causing falls in equity markets and monitoring of, and quick reaction to,
resulting in long term bear markets, with inflation damaging real returns,
thereby restricting financial crises.
growth opportunities. The results of forward looking stress tests, ranging from moderate to extreme
scenarios, have provided the basis for the Board to confirm the Company's long
A significant weakening of term
the US Dollar against sterling viability.
would impact dividend income and absolute performance negatively and reduce
the attractiveness of overseas assets to UK investors.
Service Delivery Failure
Service providers are unable Legal agreements are in place with the Manager, sub-portfolio managers and The Board considers that this risk is unchanged.
other third party service
to provide expected services.
providers. These set out the agreed service levels which are monitored. All
Delivery failure may be due third parties provide reports on their internal controls environment which are
independently audited. These reports are reviewed by the Board with follow up
to various factors including queries directed to the relevant parties where
systems failure, data breach, necessary.
material error and fraud. The Manager produces a quarterly investment trust controls report, detailing
any breaches, errors and/or
This includes functions
general updates relevant to the Company. Each year the Board reviews the
delegated by the Manager, Manager's Assessment of Value for the Company, which is submitted by the
Manager to the
for example fund accounting,
FCA in compliance with the Consumer Duty regulation.
third party sub-portfolio
The Company's Depositary is liable in the event of a loss of assets.
managers and third party
The performance of the Manager and the third party service providers are
providers appointed directly evaluated formally by the Management Engagement Committee on an annual basis.
by the Company, for example
the Custodian, Registrar and
Depositary.
Discount
The absolute level and The Board monitors the discount/premium at which the Despite a significant increase in the volume of shares bought back during the
year, the discount widened. Therefore, the Board considers that this risk has
volatility of the discount/ shares trade on an absolute level and relative to its peer increased.
premium to NAV at which companies and the wider investment trust sector.
the Company's shares trade It operates a share buyback programme, thereby enhancing the NAV per share for
ongoing shareholders and with the aim of minimising the absolute level and
moves to an extent that it
volatility of the discount at which the Company's shares trade.
disadvantages shareholders.
For example, the discount may widen through lack of demand for the shares in
the market as a result of significant underperformance. As a result, the
attractiveness of the Company's shares to investors is diminished. A wide
discount may also attract activist shareholders.
Cybercrime
Disruption to the Manager's The Audit Committee receives an annual update from the Manager's Chief Whilst the risk of loss remains high, Board and management vigilance also
Information Security Officer remains heightened and therefore this risk is categorised as
systems as a result of
and the organisation is ensuring that it is compliant with the Digital unchanged.
cybercrime could prevent Operational Resilience Act ('DORA'), which came into effect in January 2025.
There are multiple layers of controls in place from
the accurate monitoring and
protecting data, applications, end points, servers and the network through to
reporting of the Company's people and processes and there are a number of proactive policies in place,
along with
financial position and impact
a 24/7 security operation centre to monitor threats. The Manager is fully
the confidentiality or integrity aware and acts upon new cyber
of company data. Cybercrime information as and when it becomes available.
could also impact other
service providers' ability to
provide the agreed services
and could result in the theft of Company or client assets.
Loss of Key Person
A key individual or team The Board meets with members of the wider Columbia Threadneedle investment The Board meets with
management team to ensure that relationships are fully developed at all
could depart from the levels. Succession planning concerning any potential significant management members of the Manager's team frequently and therefore considers that this
changes is shared with the Board. risk has reduced.
Manager causing disruption
The Manager's Multi-Asset Solutions team is more than 20 strong and senior
to the management of the members of the team attend Board meetings regularly. The Board
Company's assets and underperformance. has received assurance from senior management at Columbia Threadneedle
Investments that it has the necessary breadth and experience if it was
The person posing the required to manage without Mr Niven and it is confident that the structure
that supports him could manage in the event that he was to become
greatest key person risk is the Company's Fund Manager, Paul Niven, who is incapacitated or leave the firm.
Head of Multi-Asset
Having considered who are the key people that could potentially pose a risk to
Solutions (EMEA) at Columbia Threadneedle Investments and who has been the Company should they leave Columbia Threadneedle Investments, the Board is
managing the Company's assets since 2014. confident that they could be replaced appropriately through internal promotion
or external recruitment.
Failure to Transition to Net Zero
The Board has made a commitment to transition the The Manager believes in the power of engaged, long-term ownership as a force Increased geopolitical
for positive change. It applies
Company's portfolio to net
uncertainty and policy
high standards of responsible investment in managing the investments on behalf
zero carbon emissions by of our shareholders and takes seriously its stewardship responsibilities, changes in the near term may lead to increases in carbon intensity globally.
actively Therefore, the Board considers that this risk has increased.
2050. Responsible investment is a field that is evolving rapidly and it can
present both opportunities and threats to the long-term investment performance engaging with investee companies. The Board meets with Columbia Threadneedle's
that we aim to deliver to our shareholders. responsible investment team on a regular basis. We recognise the importance of
disclosing information on responsible investment that is relevant, reliable
and, as far as possible, ensuring that it is presented in a consistent way
from year to year in order that our progress can be assessed.
Emerging Risks
Risk Description Risk Mitigation/Controls
Disruptive Technology
The emergence of new, disruptive technology, The Company's Fund Manager is supported by a team of experienced investment
professionals who provide research, supplemented by third party firms.
including the use of Artificial Intelligence, presents both opportunities and
threats. It could have a negative impact on the valuation of investments Assets are diversified to reduce concentration risk, in line with the agreed
within the portfolio and/or the consequences of new disruptive technology are investment strategy. We believe that it will take some time for the impact of
not understood fully and therefore investment opportunities are missed. Artificial Intelligence to flow through which, therefore, gives the Fund
Manager time
to react and reposition the Company's portfolio accordingly.
Responsible Investment Disclosure
Rapidly evolving and increasing ESG regulations present the dual risks of the The Manager's Responsible Investment team specialises in ESG matters and is
failure to comply with ESG disclosure requirements and that inaccurate supported by its Legal team and the Company Secretary. Advice is also received
tracking and collection of from external legal advisers, the AIC and the Company's auditors on changes to
legislation and their impact on the Company's reporting requirements.
data in a relatively immature field will result in inaccurate reporting to
stakeholders. The disclosures within the Company's annual report are reviewed by the Auditor
and require Board approval.
LONG-TERM VIABILITY
The UK Corporate Governance Code and the AIC Code of Corporate Governance
require the Board to assess the prospects of the Company over a longer period
than the 12 months required by the Going Concern provision.
The Directors carried out scenario testing in order to consider the Company's
long-term viability over a period of ten years to 31 December 2034. The tests
commenced with a base case scenario that covered a range of assumptions that
they considered to be the most relevant, to which sensitivity analysis was
then applied in order to assess the impact of more extreme scenarios. A key
assumption in each scenario included no change to the Company's dividend
policy.
The worst case scenario tested by the Directors was based on what they
believed to be severe but realistic assumptions. It addressed the potential
impact of falls of 40% in the value of the listed investments and 35% for the
private equity investments in 2025; followed by a 20% index fall in 2026
impacting equities, together with fluctuations in income receipts. The fall in
value of investments may occur for a variety of reasons. Under this scenario
the early funding of the private equity commitments would increase the
proportion of that portfolio as a percentage of the total value of the
investments as a whole. All loans were assumed to have been repaid at the
beginning of 2025. Private equity valuations were assumed to make a modest
recovery in later years, while exchange rate movements would fluctuate from
year to year.
The results from the worst-case scenario showed that under such highly adverse
conditions the net assets would fall to no lower than £1.6 billion and would
be at £2.6 billion by 31 December 2034. Dividend payments to shareholders
could continue to be paid through the utilisation of Capital Reserves.
Under a scenario based on the movements in income, inflation and valuations
over the ten year period that followed the financial crisis of 2008, net
assets would rise to £11.0 billion at 31 December 2034. Whilst a scenario
that used the movements in income, inflation and valuations in the ten years
following the 1970's oil crisis showed that net assets would rise to £20.6
billion by 31 December 2034.
The assumptions used for these tests purposefully did not take into account
that under such severe conditions the Board and Manager would have taken
further action to mitigate the risks and offset the impact. Furthermore, the
tests were a theoretical and illustrative scenario exercise, the assumptions
for which are extreme and highly unlikely. Their purpose was to help inform
the Directors of the Company's resilience under conditions so severe that they
would impact global economies, markets, companies and businesses alike. The
tests help to support the Board's assessment of the Company's long-term
viability. The results do not represent its views or give an indication of the
likely outcome.
Having considered its current position and the principal and emerging risks
that the Company faces and having applied stress tests under worst-case
scenarios that would severely impact global economies and markets alike, the
Board confirms that it has assessed the Company's prospects, to the extent
that it is able to do so, over the next ten years.
In concluding that ten years is an appropriate period for this assessment, the
Board considers that this approximates to a suitable period over which its
longer-term investment performance should be judged and the periods over which
it would typically commit to and benefit from its private equity investments.
The Board also took into consideration the long-term duration of the Company's
debt, the perceived viability of the Company's principal service providers,
the potential effects of expected regulatory changes and the potential threat
from competition. The Company's business model, strategy and the embedded
characteristics have helped define and maintain its stability over many
decades. The Board expects this to continue over many more years to come.
The Directors confirm therefore, that they have a reasonable expectation that
the Company will be able to continue in operation and meet its liabilities in
full over the coming ten years to 31 December 2034.
On behalf of the Board
Beatrice Hollond
Chairman
14 March 2025
Statement of Directors' Responsibilities in Respect of the Financial
Statements
In accordance with Chapter 4.1.12 of the Disclosure Guidance and
Transparency Rules the Directors confirm, that to the best of their knowledge:
· the financial statements, prepared in accordance with applicable
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Company;
· the Strategic Report includes a fair review of the development
and performance of the business and the position of the Company, together with
a description of the principal risks and uncertainties that it faces; and
· in the opinion of the Directors the annual report and financial
statements, taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
On behalf of the Board
Beatrice Hollond
Chairman, 14 March 2025
Income Statement
for the year ended 31 December
Revenue Capital 2024 Revenue Capital 2023
Total
Total
£'000s £'000s
£'000s £'000s
£'000s £'000s
Gains on investments - 935,609 935,609 - 477,671 477,671
Exchange movements on foreign currency loans, cash balances and derivatives (779) 5,003 4,224 (561) (482) (1,043)
Income 111,806 - 111,806 106,621 - 106,621
Management fees (4,603) (13,811) (18,414) (4,146) (12,438) (16,584)
Other expenses (5,739) (79) (5,818) (5,727) (68) (5,795)
Net return before finance costs and taxation 100,685 926,722 1,027,407 96,187 464,683 560,870
Finance costs (3,433) (10,298) (13,731) (3,460) (10,381) (13,841)
Net return on ordinary activities before taxation 97,252 916,424 1,013,676 92,727 454,302 547,029
Taxation on ordinary activities (12,695) (1,222) (13,917) (11,067) (3,118) (14,185)
Net return attributable to shareholders 84,557 915,202 999,759 81,660 451,184 532,844
Net return per share - basic (pence) 17.01 184.10 201.11 15.83 87.46 103.29
The total column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
The net return attributable to shareholders is also the total comprehensive
income.
Statement of Changes in Equity
for the year ended 31 December 2024
Share Capital redemption reserve Capital reserves Revenue reserve Total shareholders' funds
capital
£'000s £'000s £'000s £'000s
£'000s
Balance brought forward 31 December 2023 140,455 122,307 4,664,438 107,287 5,034,487
Dividends paid - - - (75,604) (75,604)
Shares repurchased by the Company and held in treasury - - (280,120) - (280,120)
Net return attributable to shareholders - - 915,202 84,557 999,759
Balance carried forward 31 December 2024 140,455 122,307 5,299,520 116,240 5,678,522
for the year ended 31 December 2023
Share Capital redemption reserve Capital reserves Revenue reserve Total shareholders' funds
capital
£'000s £'000s £'000s £'000s
£'000s
Balance brought forward 31 December 2022 140,455 122,307 4,289,599 97,464 4,649,825
Dividends paid - - - (71,837) (71,837)
Shares repurchased by the Company and held in treasury - - (76,345) - (76,345)
Net return attributable to shareholders - - 451,184 81,660 532,844
Balance carried forward 31 December 2023 140,455 122,307 4,664,438 107,287 5,034,487
Balance Sheet
at 31 December
£'000s 2024 £'000s 2023
£'000s £'000s
Fixed assets
Investments 6,164,525 5,451,521
Current assets
Investments - 79,357
Debtors 15,060 11,244
Cash and cash equivalents 91,147 87,170
106,207 177,771
Creditors: amounts falling due within one year
Other (12,909) (13,836)
(12,909) (13,836)
Net current assets 93,298 163,935
Total assets less current liabilities 6,257,823 5,615,456
Creditors: amounts falling due after more than one year
Loans (578,726) (580,394)
Debenture (575) (575)
(579,301) (580,969)
Net assets 5,678,522 5,034,487
Capital and reserves
Share capital 140,455 140,455
Capital redemption reserve 122,307 122,307
Capital reserves 5,299,520 4,664,438
Revenue reserve 116,240 107,287
Total shareholders' funds 5,678,522 5,034,487
Net asset value per share - prior charges at nominal value (pence) 1,176.82 987.56
Statement of Cash Flows
for the year ended 31 December
2024 2023
£'000s
£'000s
Cash flows from operating activities before dividends received and interest (36,166) (25,774)
paid
Dividends received 108,543 98,937
Interest paid (13,731) (13,842)
Cash flows from operating activities 58,646 59,321
Investing activities
Purchases of investments (3,604,576) (4,224,563)
Sales of investments 3,904,506 4,155,297
Other capital charges and credits (78) (63)
Cash flows from investing activities 299,852 (69,329)
Cash flows before financing activities 358,498 (10,008)
Financing activities
Equity dividends paid (75,604) (71,837)
Cash flows from share buybacks into treasury (281,473) (73,645)
Cash flows from financing activities (357,077) (145,482)
Net increase/(decrease) in cash and cash equivalents 1,421 (155,490)
Cash and cash equivalents at the beginning of the year 87,170 243,836
Effect of movement in foreign exchange 2,556 (1,176)
Cash and cash equivalents at the end of the year 91,147 87,170
Represented by:
Cash at bank 73,488 39,827
Short-term deposits 17,659 47,343
Cash and cash equivalents at the end of the year 91,147 87,170
Notes
1. Net return per share
2024 2024 2023 2023
pence
£'000s
pence
£'000s
Total return 201.11 999,759 103.29 532,844
Revenue return 17.01 84,557 15.83 81,660
Capital return 184.10 915,202 87.46 451,184
Weighted average ordinary shares in issue, 497,113,190 515,891,788
excluding shares held in treasury - number
2. Dividends
The Directors have proposed a final dividend in respect of the year ended 31
December 2024 of 4.80p payable on 7 May 2025 to all shareholders recorded on
the register at close of business on 11 April 2025. The total dividends paid
and payable in respect of the financial year for the purposes of the income
retention test for Section 1159 of the Corporation Tax Act 2010 are set out
below.
3. Financial Risk Management
The Company is an investment company, listed on the London Stock Exchange, and
conducts its affairs so as to qualify in the UK as an investment trust under
the provisions of Section 1158 of the Corporation Tax Act 2010. In so
qualifying, the Company is exempted in the UK from corporation tax on capital
gains on its portfolio of investments.
The Company's objective is to secure long-term growth in capital and income
through a policy of investing primarily in an internationally diversified
portfolio of publicly listed equities, as well as unlisted securities and
Private Equity, with the use of gearing. In pursuing the objective, the
Company is exposed to financial risks which could result in a reduction of
either or both of the value of the net assets and the profits available for
distribution by way of dividend. These financial risks are principally related
to the market (currency movements, interest rate changes and security price
movements), liquidity and credit. The Board of Directors, together with the
Manager, is responsible for the Company's risk management. The Directors'
policies and processes for managing the financial risks are set out in (a),
(b) and (c) on the following pages.
The full details of financial risks are contained in Note 25 of the Annual
Report.
4. Going Concern
In assessing the going concern basis of accounting the Directors have had
regard to the guidance issued by the Financial Reporting Council. They have
also considered the Company's objective, strategy and investment policy, the
current cash position of the Company, the availability of borrowings and
compliance with covenants and the operational resilience of the Company and
its service providers. More information on the Directors' assessment is
provided in the Annual Report.
5. Annual General Meeting
The annual general meeting will be held on Wednesday 30 April 2025 at 12.00
noon.
6. Annual Report and Accounts
This statement was approved by the Board on 14 March 2025. It is not the
Company's statutory accounts. The statutory accounts for the financial year
ended 31 December 2024 have been approved and audited and received an audit
report which was unqualified and did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying the
report. The statutory accounts for the financial year ended 31 December 2023
received an audit report which was unqualified and did not include a reference
to any matters to which the auditors drew attention by way of emphasis without
qualifying the report.
The Annual Report and Accounts will be posted to shareholders on or around 21
March 2025.
Columbia Threadneedle Investment Business Limited,
Company Secretary, 14 March 2025
For further information, please contact:
Jonathan Latter
For and on behalf of
Columbia Threadneedle Investment Business Limited
020 3530 6283
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
Columbia Threadneedle Investment Business Limited
ENDS
A copy of the Annual Report and Accounts has been submitted to the National
Storage Mechanism and will shortly be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
The Annual Report and Accounts will also shortly be available on the Company's
website at www.fandc.com (http://www.fandc.com) where up to date
information on the Company, including daily NAV and share prices, factsheets
and portfolio information can also be found.
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